Federal Reserve Bulletin, 1995-03

VOLUME 81 • NUMBER 3 • MARCH 1995 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Richard Spillenkothen • Edwin M. Truman The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 219 MONETARY POLICY REPORT TO THE corporate, and individual users of derivative CONGRESS products and highly leveraged investment strategies and focuses on the relationship The economy turned in a strong performance between dealers in financial markets and their in 1994. Output rose substantially, unemploycustomers; he says that the Board has sugment fell, and inflation remained subdued. gested steps that institutions should take to Looking ahead to 1995, the members of the control their risk from financial market trans- Board of Governors and the Reserve Bank actions and has also issued guidance for banks presidents anticipate continued expansion of that act as dealers in sophisticated riskreal gross domestic product, but at a more management instruments that encourages moderate pace than in 1994. The unemploythem to ensure that the counterparties underment rate is expected to hold at about the low stand the nature of, and the risks inherent in, levels of recent months. Inflation in 1995 is the agreed transactions, before the Senate expected to run a little higher than in 1994. Committee on Banking, Housing, and Urban Affairs, January 5, 1995. 244 TREASURY AND FEDERAL RESERVE FOREIGN EXCHANGE OPERATIONS 253 Chairman Greenspan expresses his views on During the fourth quarter of 1994, the dollar some of the most important issues involved in fell 0.1 percent against the German mark but producing the budget of the U.S. government rose 0.5 percent against the Japanese yen and and says that in addressing the problem of the 1.0 percent on a trade-weighted basis. Over long-run structural deficit, the focus should be the period, U.S. monetary authorities pur- on how fiscal actions affect the potential of the chased dollars against both the mark and the economy to produce greater output and taxyen. In other operations, U.S. and Mexican able income on a sustained, ongoing basis; monetary authorities activated their $6 billion although full dynamic estimates of individual swap facility after Mexico announced on budget initiatives should be the goal, the ana- December 22 that the peso would be allowed lytical tools required to achieve these estito float. mates are deficient, and we must avoid resting key legislative decisions on controversial esti- 248 INDUSTRIAL PRODUCTION mates of revenues and outlays, before a Joint Hearing of the Senate and House Committees AND CAPACITY UTILIZATION on the Budget, January 10, 1995. FOR JANUARY 1995 Industrial production rose 0.4 percent in January, about half as much as in November and 255 Chairman Greenspan reviews the current con- December. Capacity utilization edged up dition of the economy and says that although 0.1 percentage point, to 85.5 percent, its high- its recent performance has been encouraging, est level since October 1979. much of the improvement is in the nature of cyclical developments and that the central role of the Federal Reserve is to ensure that the 251 STATEMENTS TO THE CONGRESS economy remains on a sustainable, noninfla- Alan Greenspan, Chairman, Board of Gover- tionary path, before the Senate Committee on nors, discusses issues involving municipal, Finance, January 25, 1995. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

258 Chairman Greenspan offers an economic and companies with regard to the regulatory capifiscal backdrop for policy discussions and says tal treatment of certain transfers of assets with that the United States must sustain higher recourse. levels of investment to achieve healthy Publication of the Examination Manual for increases in productivity and to be successful U.S. Branches and Agencies of Foreign Bankin competing internationally; to support ining Organizations. vestment we need to raise the level of domestic saving or, absent a rise in private saving, Availability of revised lists of OTC stocks eliminate the structural deficit in the federal and of foreign stocks subject to margin budget, before the Senate Committee on the regulations. Budget, January 26, 1995. Change in Board staff. 261 Chairman Greenspan reviews the Mexican economic and financial situation and says that 271 LEGAL DEVELOPMENTS unless Mexico's efforts to restore economic Various bank holding company, bank service stability and financial market confidence succorporation, and bank merger orders; and ceed, years of economic reforms in Mexico pending cases. will be threatened by pressures to reimpose controls in many areas of its economy and to reestablish governmental interference in its AI FINANCIAL AND BUSINESS STATISTICS increasingly vibrant private sector; also, a These tables reflect data available as of reversal of Mexico's economic reforms and January 27, 1995. a spread of its financial difficulties to other emerging markets could halt, or even reverse, A3 GUIDE TO TABULAR PRESENTATION the global trend toward market-oriented reform and democratization, before the Senate A4 Domestic Financial Statistics Committee on Foreign Relations, January 26, A45 Domestic Nonfinancial Statistics 1995. (Chairman Greenspan presented identi- A53 International Statistics cal testimony before the House Committee on Banking and Financial Services, January 25, A67 GUIDE TO STATISTICAL RELEASES AND 1995, and before the Senate Committee on SPECIAL TABLES Banking, Housing, and Urban Affairs, January 31, 1995.) A68 INDEX TO STATISTICAL TABLES 265 ANNOUNCEMENTS A70 BOARD OF GOVERNORS AND STAFF Change in the discount rate. All FEDERAL OPEN MARKET COMMITTEE Adoption of a procedure for disclosing policy AND STAFF; ADVISORY COUNCILS decisions of the Federal Open Market Committee. A74 FEDERAL RESERVE BOARD Increase in the reciprocal currency arrange- PUBLICATIONS ment with the Bank of Mexico. A76 MAPS OF THE FEDERAL RESERVE Appointment of new members to the Con- SYSTEM sumer Advisory Council. Proposal to amend the capital adequacy guide- A78 FEDERAL RESERVE BANKS, BRANCHES, lines for state member banks and bank holding AND OFFICES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress Report submitted to the Congress on February 21, Federal Reserve began to firm money market con- 1995, pursuant to the Full Employment and Bal- ditions last February. The Federal Reserve continanced Growth Act of 19781 ued to tighten policy over the course of the year and into 1995, as economic growth remained unexpectedly strong, eroding remaining margins of unused resources and intensifying price increases MONETARY POLICY AND THE at early stages of production. Developments in ECONOMIC OUTLOOK FOR 1995 financial markets—for example, easier credit avail- The U.S. economy turned in a strong performance ability through banks and a decline in the foreign in 1994. Real gross domestic product increased exchange value of the dollar—may have muted the 4 percent over the four quarters of the year. The effects of the tightening of monetary policy. employment gains associated with this rise in pro- Short-term interest rates have increased about duction outpaced growth of the labor force by a 3 percentage points since the start of 1994, with the sizable margin, and the unemployment rate thus federal funds rate rising from 3 percent to 6 perdeclined substantially. Price increases picked up in cent. Other market interest rates have risen between some sectors of the economy in 1994 as labor and IV2 percentage points and 3 percentage points, on product markets tightened, but broader measures of net, with the largest increases coining at interprice change showed inflation holding fairly steady: mediate maturities. Through much of the year, The consumer price index increased about 23A per- intermediate- and long-term rates were lifted by cent over the year, the same as the rise during 1993. more rapid actual and expected economic growth, Signs that growth is moderating have emerged in fears of a pickup in inflation, and market expectathe past month or so, but the bulk of the evidence tions of additional policy moves. However, a fursuggests that the economy continues to advance at ther substantial tightening in November and some an appreciable pace. tentative signs of moderation in economic activity Federal Reserve policy during 1994 and early around year-end and in early 1995 appeared to 1995 was aimed at fostering a financial environ- reduce market concerns about increased inflation ment conducive to sustained economic growth. As pressures and additional Federal Reserve policy the economy moved back toward high rates of actions. As a result, long-term rates declined, on resource utilization, pursuit of this aim necessitated net, from mid-November through mid-February. acting to prevent a buildup of inflationary pres- The foreign exchange value of the dollar in sures. Federal Reserve policy had remained very terms of other Group of Ten (G-10) currencies accommodative in 1993 in order to offset factors declined almost 6V2 percent last year, even as the that had been inhibiting economic growth. By early economy picked up and interest rates rose. The 1994, however, the expansion clearly had gathered positive effects on the dollar that would normally momentum, and maintenance of the prevailing have been expected from higher U.S. interest rates stance of policy would eventually have led to rising were offset in large part by upward movements in inflation that, in turn, would have jeopardized long-term interest rates abroad. Indeed, foreign economic and financial stability. Taking account of long-term rates increased as much on average as anticipated lags in the effects of policy changes, the U.S. rates during 1994, owing to much more rapid than expected growth abroad, especially in Europe. Concerns about U.S inflation may have contributed 1. The charts for the report are available on request from Publi- to the weakness in the dollar in the middle part of cations Services, Board of Governors of the Federal Reserve Syslast year; late in the year, the dollar rallied for a tem, Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

220 Federal Reserve Bulletin • March 1995 time, as tighter monetary policy apparently reduced unusually large shifts from M2 deposits to bond investors' inflation fears. The dollar weakened and stock mutual funds. Rather, it seemed to reflect again, however, in early 1995, perhaps reflecting behavior similar to that in earlier periods of rising the emerging indicators of moderating growth in short-term market interest rates. During such perithe United States. In addition, financial markets ods, changes in the rates available on retail deposits were roiled early this year by severe financial diffi- usually lag changes in market rates, providing an culties in Mexico. A sharp depreciation of the peso incentive to redirect savings from these deposits to had adverse effects not only in Mexico but also in a market instruments. These shifts tend to have an number of other countries, and these developments especially marked effect on Ml because yields on also may have contributed to the weakness of the its components either cannot adjust or adjust quite dollar. slowly to shifts in market rates. Ml growth last Despite the rise in U.S. interest rates in 1994, year was 2VA percent; it had been IOV2 percent in private-sector borrowing, abetted in part by more 1993. Only continued strong growth in currency, aggressive lending by intermediaries, picked up in much of which likely reflected increased use support of increased spending. The debts of both abroad, supported Ml. households and businesses grew at their fastest rates in five years. The step-up in growth of private debt was accompanied by changes in its composi- Money and Debt Ranges for 1995 tion. Businesses shifted toward short-term funding sources as bond yields rose, increasing their bank At its most recent meeting, the Federal Open borrowing and commercial paper issuance, while Market Committee (FOMC) reaffirmed the 1995 cutting back on new bond issues. Similarly, house- growth ranges for money and debt that were holds turned increasingly to adjustable-rate mort- chosen on a provisional basis last July. The money gages as rates on fixed-rate mortgages increased ranges—1 percent to 5 percent for M2 and 0 persubstantially. Banks encouraged the shift of house- cent to 4 percent for M3—are consistent with the holds and businesses to bank borrowing by easing Committee members' expectations of a slowing of lending standards and not allowing all of the rise in nominal income growth as the expansion moves to market rates to show through to loan rates. By a more sustainable pace but also rest on the anticicontrast, federal borrowing was slowed in 1994 by pation of further increases in the velocities of these policies adopted in previous years to narrow the aggregates. The velocity of M2 is likely to be federal deficit, as well as by the effects of the boosted by lagged effects of the increases in shortstrong economy on tax receipts and spending. term interest rates during 1994 and early 1995 and Taken together, the debt of all nonfinancial sectors possibly by increased flows from M2 deposits into expanded 5 VA percent, about the same as the long-term mutual funds, as investor concerns about increase of a year earlier and a figure that was in capital market volatility recede. The M2 range also the middle portion of the 1994 monitoring range of provides an indication of the longer-run growth 4 percent to 8 percent. that could be expected under conditions of reason- Growth in the broad monetary aggregates able price stability if that aggregate's velocity remained subdued in 1994. M3 expanded about resumes its historical pattern of no long-term trend. IV2 percent, well within its 0 percent to 4 percent M3 velocity has been on a steep upward path in target range and slightly more than its increase in 1993. M3 was buoyed by growth of more than 7 percent in large time deposits, as banks turned to 1. Ranges for growth of monetary and debt aggregates1 wholesale markets to fund credit expansion. For Percent the year, M2 rose only 1 percent, an increase that Aggregate 1993 1994 1995 was at the lower bound of its 1 percent to 5 percent M2 1-5 1-5 1-5 target range. In contrast to 1992 and 1993, the slow M3 0-4 0-4 0-4 growth in M2, and the resulting further substantial Debt2 4-8 4-8 3-7 increase in its velocity (the ratio of nominal GDP 1. Change from average for fourth quarter of preceding year to average to the money stock), was not a consequence of for fourth quarter of year indicated. 2. Monitoring range for debt of domestic nonfinancial sectors. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 221 recent years, but the rate of increase might be GDP over the four quarters of 1995 to be in a range expected to slow in the near term. Part of the of 2 percent to 3 percent. increase in M3 velocity in the early 1990s resulted Effects of the past year's increases in interest from weak growth of bank credit, in part reflecting rates probably will show through more strongly in substantial loan losses and consequent capital the coming year, reflecting the typical lags between impairment, and the contraction of the thrift sector Federal Reserve policy actions and changes in the as failed institutions were liquidated. However, the pace of economic growth. Residential building, recent strength in bank credit and the end of the especially of single-family units, is the part of the contraction in thrift sector credit suggest that M3 economy in which those effects are likely to growth could pick up, perhaps appreciably, and its emerge earliest and stand out most clearly, but velocity could begin to level out. The resumption reactions to the higher rates probably will be showof a more normal relationship between M3 and ing up in other interest-sensitive sectors as well. nominal income might call for a technical adjust- Other influences also will be working to moderment of the target range for M3 at mid-year or in ate the rate of growth. For example, large increases 1996. in real outlays for consumer durables over the past The monitoring range for growth in the debt three years, partly financed in recent quarters by aggregate in 1995 is 3 percent to 7 percent. This unsustainably rapid growth in the volume of conrange is 1 percentage point lower than the monitor- sumer credit, probably have exhausted most of the ing range in 1994, reflecting the more moderate pent-up demand that had accumulated when the path anticipated for expansion in nominal spend- economy was sluggish early in the 1990s. Simiing and borrowing. Private-sector debt growth larly, business investment in new equipment has will likely remain fairly strong in the coming year, been rising extremely rapidly for some time and boosted by substantial capital investment as well as has moved to quite a high level; businesses likely merger and acquisition activity. Credit availability will be shifting to more moderate rates of spending is unlikely to constrain private-sector borrowing, as growth before too long. Inventory investment banks continue to be eager to lend and as quality seems likely to moderate as well, as sustained spreads in financial markets remain relatively nar- additions to stocks at the pace of recent quarters row. The outlook for the federal deficit suggests would almost surely generate an unwanted backup that Treasury borrowing will be comparable to that of inventories at some point. in 1994. In other areas, however, increased strength may The monetary and debt aggregates will continue be forthcoming. Nonresidential construction, which to be among the variables monitored by the Com- often tends to lag other sectors of the economy mittee to inform its policy deliberations. Given the over the course of the business cycle, now appears uncertainties about the behavior of the velocities of the aggregates, however, the Committee will also need to continue assessing a wide variety of other 2. Economic projections for 1995 financial and economic indicators. Percent Federal Reserve Governors and Reserve Bank presidents Economic Projections for 1995 IInnddiiccaattoorr AAddmmiinniissttrraattiioonn Ranee Central g tendency The members of the Board of Governors and the Change, fourth quarter Reserve Bank presidents, all of whom participate to fourth quarter1 Nominal GDP 444333///444---666'''///222 555---666 555...444 in the deliberations of the Federal Open Market Real GDP 222---333111///444 222---333 222...444 Consumer price index2 .. 222333///444---333%%% 333---333 ^^^ 333...222 Committee, expect the economy to settle into a pattern of more moderate expansion in 1995, after Average level, fourth quarter a burst of growth that has brought rates of resource Unemployment rate 555VVV444---666 AAAbbbooouuuttt 555YYYiii 555...555---555...888333 utilization to the highest levels since the latter part 1. Change from average for fourth quarter of preceding year to average of the 1980s. Most of the Board members and for fourth quarter of 1995. 2. All urban consumers. Reserve Bank presidents expect the rise in real 3. Annual average. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

222 Federal Reserve Bulletin • March 1995 to be picking up steam. In addition, net exports Over the coming year, the Federal Reserve will may be a less negative factor in coming quarters seek to foster continued economic expansion while than they were in 1994. Many foreign industrial avoiding the provision of so much liquidity that the economies entered the new year with considerable expected near-term step-up in inflation develops forward momentum; that should keep real exports sustained momentum. Much progress has been of goods and services on a solid uptrend, even made over the past couple of business cycles in allowing for lower exports to Mexico as a conse- reducing the role that inflation plays in the ecoquence of the peso's devaluation and the likelihood nomic decisions of households and businesses. of little or no growth in that country in 1995. Moving ahead, the challenge will be to preserve Imports, meanwhile, should begin to slow as and extend this progress, given that the Federal growth of demand in this country eases. Reserve can best contribute to long-run prosperity The Board members and Reserve Bank presi- by establishing an environment of effective price dents expect that output growth of the magnitude stability. they anticipate will be accompanied by moderate Economic prospects for the long run will be increases in employment and little change in the further enhanced if the Congress and the Adminisunemployment rate. Forecasts of the unemploy- tration succeed in making further progress in reducment rate for the fourth quarter of 1995 are tightly ing the federal budget deficit. An improved outlook clustered around 5lA percent. for the federal deficit over the remainder of this An especially encouraging development in 1994 decade and beyond could have significant, favorwas that inflation remained relatively quiescent able effects in financial markets, including a shift in even as the economy moved to high rates of re- long-term interest rates to a trajectory lower than source utilization. However, the costs of materials that which would otherwise prevail. Such a shift in and components have been rising rapidly, squeez- long-term rates would be an essential part of a ing profit margins in some sectors, and anecdotal process in which a larger share of the nation's reports of pressures on wages and finished goods limited supply of savings would be channeled to prices have proliferated in recent months; increases productivity-improving investment, thereby boostin average hourly earnings and consumer prices ing growth in output and living standards. picked up in January. Assessing the prospects, members of the Board of Governors and the Reserve Bank presidents think that the most likely THE PERFORMANCE OF THE ECONOMY outcome for this year is that inflation will run somewhat higher than in 1994. Such an outcome The economy recorded a third year of strong would be consistent with patterns of price change expansion in 1994. Real GDP grew 4 percent over during earlier periods when the economy was oper- the four quarters of the year, industrial output rose ating at levels of resource utilization like those nearly 6 percent, and the number of jobs on nonseen recently. The central tendency of the Federal farm payrolls increased about V/i million, the larg- Reserve officials' CPI forecasts, measured in terms est gain in ten years. Labor and product markets of the change from the final quarter of 1994 to the tightened appreciably. Price pressures intensified in final quarter of 1995, spans a range of 3 percent to the markets for materials, but broader measures of 3V2 percent. price change showed inflation holding steady. The economic prospects anticipated by the As in 1992 and 1993, the economic advance governors and Reserve Bank presidents for 1995 during 1994 was driven mainly by sharp increases appear to be closely in line with those of the in the real expenditures of households and busi- Administration. The Administration's forecasts of nesses. Consumer purchases of motor vehicles rose real GDP growth and inflation are in the middle of further in 1994, and purchases of other consumer the Federal Reserve's central tendency ranges, and durables increased even faster than they had in the the Federal Reserve forecasts of the unemployment two previous years. Residential investment posted rate are centered near the low end of the annual a small gain, on net, over the four quarters of the range that was published in the Economic Report year, despite sharp increases in mortgage interest of the President. rates. Business investment in office and computing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 223 equipment slowed from the spectacular pace of the rate of capacity utilization climbed nearly 3 per- 1993 but continued to rise rapidly nonetheless, and centage points. Its level in recent months has been business investment in other types of equipment essentially in line with the highest level achieved accelerated. Real outlays for nonresidential con- during the economic expansion of the 1980s. struction, which had been a weak sector of the Inflation pressures picked up in some markets in economy in previous years, picked up in 1994; 1994. Prices of raw industrial commodities rose outlays for office construction ended a long slide even more rapidly than in 1993, and price increases that had stretched well back into the 1980s. Busi- for intermediate materials accelerated sharply, ness investment in inventories, which had been especially after midyear. However, the inflation quite restrained in previous years of the expan- impulse in these markets did not carry through with sion, increased appreciably in 1994. Much of the any visible force to the consumer level, probably inventory buildup apparently was intentional and because unit labor costs, which make up by far the reflected the desires of firms to stock up in antici- largest part of value added in production and pation of continued strength in sales or to build marketing, continued to rise at a modest rate. The stronger buffers against potential delays in supply. employment cost index of hourly compensation in In contrast to the strength in private expendi- private nonfarm industries actually slowed noticetures, government purchases of goods and services ably from the pace of 1993, and productivity gains edged down on net over the four quarters of 1994. in 1994 held close to the pace of the previous year. Federal purchases of goods and services, which As for retail prices, 1994 was the fourth year in a had declined sharply in 1993, fell further in 1994 as row in which the rise in the total CPI has been a consequence of actions taken in recent years to around 3 percent. The CPI excluding food and reduce the size of the federal deficit. Meanwhile, energy rose just 2.8 percent over the four quarters the real purchases of state and local governments of 1994, after an increase of 3.1 percent in 1993; rose only modestly. Although the expanding econ- the rate of rise in this index, which is widely used omy has provided states and localities with a stron- as an indicator of underlying inflation trends, fell ger revenue base, many of these jurisdictions are almost half from 1990 to 1994. striving to hold spending in check; a number of states have chosen to cut taxes. As in the two previous years, a significant por- The Household Sector tion of the rise in domestic spending in 1994 went for imports of goods and services, which increased Real personal consumption expenditures advanced about 15 percent in real terms during the year. nearly percent over the four quarters of 1994, Meanwhile, growth of real exports of goods and about in line with the average pace of the two services picked up noticeably, with gains cumu- previous years. Support for the rise in spending lating to about 10 percent over the year. Foreign came from rapid income growth, and, according to economies strengthened in 1994, and the price surveys, sharp increases in consumer confidence. competitiveness of this country's products in world Outlays for durable goods continued to rise espemarkets was aided by a subdued rate of rise in cially rapidly, seemingly little affected by rising production costs and a somewhat lower exchange interest rates. Nor did spending appear to be much value of the U.S. dollar. affected, in the aggregate, by poor performance of Labor and product markets tightened in 1994. the stock and bond markets, which cut into the real After ticking up in January of last year in conjunc- value of household assets. Credit generally was tion with the introduction of a new labor market readily available during 1994, and growth of consurvey, the civilian unemployment rate fell sharply sumer installment debt picked up substantially, to a over the remainder of the year, to 5.4 percent in pace comparable with some of the larger increases December. The level of the unemployment rate in that were observed during the expansions of the January of this year—5.7 percent—was a full per- 1970s and 1980s. centage point below that of a year earlier. In manu- Real consumer expenditures for durable goods facturing, gains in production exceeded the growth increased about 8 percent in 1994, bringing the of capacity by a sizable margin during 1994, and cumulative rise in these outlays over the past three Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

224 Federal Reserve Bulletin • March 1995 years to nearly 30 percent. The stock of durable pace with the average rate of growth in other types goods that households wish to hold apparently con- of income. Farm income rose moderately on an tinued to rise quite rapidly in 1994, and at least annual average basis, as an increase in the volume some households probably were still making up for of output more than offset the effects of sharp purchases that had been put off earlier in the 1990s declines in farm output prices that developed over when the economy was sluggish and concerns the course of the year. about job prospects were widespread. Real expen- Consumers' perceptions of economic and finanditures for motor vehicles moved up an additional cial conditions brightened considerably during 3 percent over the four quarters of 1994, after gains 1994. By year-end, the composite measures of conof about 9 percent in each of the two preceding sumer confidence that are prepared by the Conferyears; increases in sales of vehicles in 1994 might ence Board and the University of Michigan Survey have been a bit stronger still but for capacity con- Research Center had both moved to new highs for straints and various supply disruptions that some- the current business expansion. Consumers became times limited the availability of certain models. more optimistic over the year in regard to both Real outlays for durable goods other than motor current and future economic conditions. Percepvehicles rose about IIV2 percent over the four tions of employment prospects also improved, with quarters of 1994, a pickup from the already rapid a growing proportion of respondents saying that rates of expansion of the two previous years. Pur- jobs were plentiful and a reduced proportion saying chases of personal computers and other electronic that jobs were hard to find. Surveys taken early this equipment continued to surge in 1994, and spend- year indicate that confidence remains high. ing on furniture and household appliances moved In contrast to most other indicators for the houseup further. hold sector of the economy, household balance Consumer expenditures for nondurables and ser- sheets—which had strengthened appreciably in previces exhibited mixed patterns of change in 1994. vious years—showed no further improvement in Real outlays for nondurables increased 3 percent 1994. According to preliminary data, the aggregate over the year, a pickup from the subdued rate of net worth of households appears to have recorded a growth recorded in the previous year and, for this relatively small increase in nominal terms over the category, a larger-than-average advance by histori- year, and, in real terms, net worth probably cal standards. By contrast, real expenditures for declined slightly. Household assets rose only modservices increased roughly 2 XA percent, a slightly erately in nominal terms, and the growth of nomismaller gain than that of 1993; growth of outlays nal liabilities picked up somewhat, as a result of the for services was held down, to some degree, by a sharp increase in use of consumer credit. Early this decline in real outlays for energy, as warm weather year, stock and bond prices have risen, on net, late in 1994 reduced the amount of fuel needed for giving some renewed lift to household wealth. heating. With personal income growing faster than net Real disposable personal income rose 4V4 per- worth during 1994, the ratio of wealth to income cent during 1994. Except for a couple of occasions fell over the course of the year. In the past, declines in previous years when income growth was boosted in this ratio sometimes have prompted households temporarily by special factors, the rise in real dis- to boost the proportion of current income that is posable income in 1994 was the largest increase saved, in an attempt to restore wealth to more since the 1983-84 period. Growth of wages and desirable levels, and this same tendency may have salaries accelerated in 1994 in conjunction with the been at work, to some extent, in 1994. After dipstep-up of employment growth. Income from capi- ping in the first quarter of the year to the lowest tal also rose: Dividends moved up along with cor- level of the current expansion, the personal saving porate profits, and interest income turned back up rate rose a full percentage point over the remainder after three years of decline. By contrast, transfer of the year, to a fourth-quarter level of 4.6 percent. payments, the growth of which tends to slow as the Even then, however, the saving rate remained quite economy strengthens, registered the smallest low by historical standards. Rising levels of income annual increase since 1987. The net income of and employment and increased confidence in the nonfarm proprietors appears to have about kept outlook apparently convinced consumers to push Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 225 ahead with increases in outlays, most notably the fourth quarter. Sizable gains in employment those on consumer durables. In addition, although and income and rising optimism about the future of improvement in household balance sheets appar- the economy apparently helped to blunt the effects ently flagged, signs of outright stress in household of increases in interest rates during the second half financial conditions were not much in evidence: of the year. In addition, the availability of a widen- Delinquency rates on mortgages and other house- ing variety of alternative mortgage instruments and, hold loans generally remained quite low relative to perhaps, some easing of loan qualification stantheir historical ranges. dards may have permitted some buyers who other- Residential investment held up remarkably well wise would not have been able to obtain financing in 1994 in the face of sharp increases in mortgage to go ahead with their purchases. interest rates. Preliminary data indicate that, in real Late in 1994 and in early 1995, a softer tone terms, these investment outlays were up about seems to have taken hold in key indicators of 2 percent, on net, over the four quarters of the year, single-family housing activity. Sales of new homes after gains of 17 percent and 8 percent, respec- tailed off toward the end of last year, and the ratio tively, in 1992 and 1993. Although starts and sales of the number of unsold homes to the number of of single-family houses fell back from the excep- sales, which had turned up early in 1994, continued tionally high peaks that were reached briefly in late to rise. The ratio in December was slightly to the 1993, they remained at elevated levels. In total, high side of the long-run average for this series. 1.20 million single-family units were started in Starts of new single-family houses, which had 1994, topping, very slightly, the highest annual increased in November and December, fell sharply total of die 1980s. Sales of existing homes were in January, to a level noticeably below the lower about the same as the previous annual peak, set in bound of the range of monthly readings reported 1978, and although sales of new homes remained during 1994. well short of previous highs, their annual total was Various measures of house prices showed smallclosely in line with the brisk pace of 1993. Only in to-moderate increases in 1994. The median transthe past month or so have indications of a weaken- action prices of new and existing homes that were ing in housing activity started to show up more sold in the first half of the year were roughly consistently in the incoming data. 3Vi percent above the level of a year earlier, and a Declines in the starts and sales of single-family similar rise was reported during that period in price houses in early 1994 basically reversed the huge indexes that adjust for changes in the quality and gains of late 1993. Whatever tendency there may regional mix of homes that are sold. After midhave been for these indicators to exhibit at least year, the four-quarter changes in transaction prices a temporary setback after a period of unusual slowed, but the rate of rise in the quality-adjusted strength was probably reinforced by the initial reac- indexes picked up somewhat. All told, prices have tions of builders and homebuyers to increases in been firmer in the past couple of years than they mortgage interest rates that had begun in the final were earlier in the 1990s. quarter of 1993. Exceptionally severe winter After falling to exceptionally low levels in late weather in the Northeast and Midwest early in 1992 and early 1993, construction of multifamily 1994, coming on the heels of favorable conditions housing units increased throughout 1994. Although in late 1993, probably also helped to account for the level of activity in this part of the housing the sharpness of the downturn. In any event, starts sector was not especially high, gains during the of single-family homes ticked back up a bit in the year were large in percentage terms: Starts of these second quarter of the year, sales of existing homes units moved up about 65 percent from the fourth flattened out, and the rate of decline in sales of new quarter of 1993 to the fourth quarter of 1994, at homes slowed. which point they were more than double the In the second half of the year, the signals were lows of a couple years ago. The national average mixed: Sales of existing homes trended down at a vacancy rate for multifamily rental units remained moderate pace during this period; however, single- relatively high in 1994, but markets in some areas family starts and sales of new single-family homes of the country had tightened enough to make conchanged little, on net, from the second quarter to struction of new multifamily units economically Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

226 Federal Reserve Bulletin • March 1995 attractive. Reauthorization in August 1993 of a tax small margins, the peaks of the late 1970s and late credit on low-income housing units also provided 1980s. some incentive for new construction. The financing After rising 23 V2 percent over the four quarters of multifamily projects was facilitated through of 1993, corporate profits increased another 4 permore ready availability of credit and increased cent over the first three quarters of 1994. The equity investment. profits earned by nonfinancial corporations from their domestic operations increased about IV2 percent over the first three quarters of 1994, after a gain of 21V2 percent in 1993. Although the 1994 The Business Sector gain in these profits was partly the result of Robust expansion was evident in 1994 in most of increased volume, profits per unit of output also the economic indicators for the business sector of rose. In the second and third quarters, before-tax the economy. Real output of nonfarm businesses profits of nonfinancial corporations amounted to increased about 4lA percent over the four quarters nearly 11 percent of the gross domestic output of of the year, nearly matching the large gain of 1993. those businesses—the highest that this measure of For a second year, business investment in fixed the profit share has been since the late 1970s. A capital advanced exceptionally rapidly. Inventory shift in the capital structure of corporations toward investment also picked up appreciably, spurred reduced reliance on debt, as well as cyclical recovby large, sustained increases in sales. Business ery of the economy, has helped to push the profit finances remained on a sound footing: Investment share to this high level. In contrast to the experiexpenditures continued to be financed predomi- ence of nonfinancial corporations, the profits of nantly with internal funds, and signs of financial private financial institutions from their domestic stress were largely absent. operations fell about 7 percent on net over the first Industry entered 1994 with considerable momen- three quarters of the year, as net interest margins tum, and expansion was maintained at a rapid pace narrowed. The decline reversed some of the large throughout the year. Industrial production rose rise in profits that these institutions had reported in nearly 6 percent over the four quarters of 1994, a 1993. rate of expansion exceeded in only one of the past Business fixed investment increased 13 percent ten years. The production of business equipment in real terms over the four quarters of 1994, after a advanced especially rapidly, buoyed by rising gain of 16 percent during 1993. Outlays for office investment in the domestic economy and further and computing equipment, which had registered an large increases in exports of capital goods. Pro- astonishing gain in 1993, slowed in 1994, but the duction of intermediate products—which consist rise in these outlays still amounted to nearly 20 permainly of supplies used in business and cent in real terms. Meanwhile, the growth of real construction—also moved up substantially during expenditures for most other types of business 1994, as did the output of materials, especially equipment picked up. those used as inputs in the production of durable Business investment in motor vehicles rose about goods. The industrial sector also appears to have I8V2 percent over the four quarters of 1994. With had a strong start in 1995, as industrial production the gains of 1994 coming on the heels of big rose 0.4 percent in January. increases in each of the two previous years, annual The rate of capacity utilization in industry business outlays for vehicles reached a level about increased about 2Vi percentage points over the one-third higher than the peak year of the 1980s. twelve months of 1994. In manufacturing, the oper- Outlays for communications equipment also scored ating rate rose about 3 percentage points during the an especially big gain in 1994, more than 25 peryear. By year-end, utilization rates in some indus- cent in real terms. Business purchases of industrial tries had moved to exceptionally high levels. Most equipment advanced about 13 percent during 1994, notably, the average operating rate among manu- one of the larger gains of the past two decades. By facturers engaged in primary processing (basically, contrast, commercial aircraft once again was a the producers of materials) had climbed to the notable area of weakness; the investment cycle highest level since the end of 1973, surpassing, by in that sector has been sharply out of phase with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 227 those of most other industries, owing to persistent and thus were probably reluctant to hold stocks in excess capacity and poor profitability in the airline house. At the end of 1993, the level of real invenbusiness. tories in the nonfarm business sector was only Business investment in nonresidential structures 2 percent larger than it had been at the start of the rose about 4 percent during 1994, after an increase recovery in early 1991. of IV2 percent in 1993 and declines in each of the Circumstances changed in 1994, however. Marthree years preceding 1993. Investment in indus- kets tightened as demand continued to surge, and trial structures rose for the first time since 1990, supplies became more difficult to obtain on a timely more than likely a response to high—and rising— basis. Anticipation of further growth in demand rates of capacity utilization. Investment in office and increased concern about possible bottlenecks buildings also turned up in 1994, after a long string apparently prompted businesses to begin investing of declines that, in total, had brought spending on more heavily in inventories. Some firms may also these structures down about 60 percent from the have been trying to stock up on materials in peak of the mid-1980s; declining vacancy rates and advance of anticipated price increases. For the year a firming of property values provided additional as a whole, accumulation of nonfarm inventories evidence of improvement in this sector of the econ- was more than twice what it had been in 1993. This omy in 1994. The investment data for other types additional accumulation brought to a halt the previof structures showed a mix of pluses and minuses: ous downtrend in the ratio of nonfarm inventories Expenditures on commercial structures other than to business sales, but the ratio remained quite low offices moved up further, after large gains in 1992 by the standards of the past quarter-century. and 1993; however, outlays for drilling declined for Inventory accumulation in the farm sector of the a fourth year, to the lowest level since the early economy also picked up in 1994. Stocks of farm 1970s. products had been drawn down in 1993, when farm Because a large share of the growth in business production fell sharply because of floods in the fixed investment in recent years has gone for items Midwest and droughts in some other regions of the that depreciate relatively quickly—computers country. However, crop conditions in 1994 were being a prime example—net additions to the stock unusually favorable throughout the year, and the of productive capital have not been as impressive output of some major crops climbed to levels conas the data on gross investment expenditures might siderably above previous peaks. With the demand seem to indicate. Nonetheless, with the further for farm output rising much less rapidly than proincrease in gross investment in 1994, net additions duction, inventories of crops increased sharply. to the capital stock appear to have become more Livestock production also rose appreciably in 1994; substantial. Still unclear is the degree to which inventories of livestock, which consist mainly of these increases in the capital stock will ultimately the cattle and hogs on farms and ranches, continued translate into higher rates of increase in output per to expand. worker and faster rates of increase in living standards; as discussed in more detail below, the trend The Government Sector of growth in labor productivity, which is affected by the amount and quality of capital that workers Federal purchases of goods and services, the part have available, seems to have picked up in recent of federal spending that is included in GDP, fell years but by a relatively small amount. 6.2 percent in real terms over the four quarters of Business investment in inventories picked up 1994. Real outlays for defense remained on a sharp sharply in 1994. Earlier in the expansion, firms had downtrend, and nondefense outlays, which had refrained from building stocks, even as the econ- risen rapidly early in the 1990s, declined moderomy strengthened. Increased reliance on "just-in- ately for a second year. time" systems of inventory control reduced the Total federal outlays, measured in nominal dollevel of stocks that firms needed to maintain their lars in the unified budget, increased 3.7 percent in normal operations, and, with a degree of slack still fiscal 1994, after a rise of 2.0 percent the previous present in the economy, businesses usually were fiscal year. These increases are among the smallest able to obtain goods quickly from their suppliers of recent decades. Nominal outlays for defense Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

228 Federal Reserve Bulletin • March 1995 fell again in fiscal 1994. In addition, the growth on that score has been difficult to achieve because of outlays for income security (a category that of increased outlays for entitlements and rising includes the expenditures on unemployment com- demand for many of the public services that tradipensation and welfare benefits) slowed further as tionally have been provided by state and local the economy continued to strengthen. Increases in governments. Transfers of income from state and social security outlays also slowed somewhat in local governments to persons rose about 9 percent fiscal 1994; the rise was about 1 percentage point in nominal terms over the four quarters of 1994, less than that of nominal GDR Outlays for Medi- roughly the same as the rise during 1993 but less caid slowed as well, but the rate of rise in those than the increases of previous years; from 1988 to expenditures continued to exceed the growth of 1992, the average compound rate of growth in nominal GDP by a large margin. these transfers was about 15 percent a year. In Federal receipts were up 9 percent in fiscal 1994, categories other than transfers, increases in spendthe largest rise in several years. With rapid expan- ing have been fairly restrained in recent years; sion of the economy giving a strong boost to nominal purchases of goods and services (which almost all types of income, the major categories of account for about 80 percent of the total expendifederal receipts all showed sizable gains. Com- tures of state and local governments) have been bined receipts from individual income taxes and trending up less rapidly than nominal GDP since social insurance taxes increased a bit more than the early 1990s. 7 percent in fiscal 1994, after moving up 5.4 per- In real terms, the 1994 rise in purchases of goods cent in the previous fiscal year. Receipts from taxes and services by state and local governments on corporate profits increased nearly 20 percent, amounted to just 2 percent. Compensation of slightly more than the gain of 1993. employees, which accounts for about two-thirds of The federal budget deficit declined to $203 bil- total state and local purchases, increased IV2 perlion in fiscal 1994, an amount that was equal to cent in real terms over the four quarters of 1994, a 3.1 percent of nominal GDP. Earlier in the 1990s, gain that was roughly in line with the growth of when the economy was sluggish, the federal deficit state and local employment over that period. Conhad climbed to a cyclical peak of 4.9 percent of struction outlays declined slightly in real terms nominal GDP. The previous cyclical low in the during 1994, as gains over the final three quarters ratio of the deficit to nominal GDP, 2.9 percent, of the year were not sufficient to offset a firstwas reached in fiscal 1989. Since fiscal 1989, quarter plunge. Nonetheless, real outlays for strucdefense spending as a share of GDP has dropped tures remained at high levels; a strong uptrend in appreciably, but this source of deficit reduction has construction expenditures over the past ten or been essentially offset by increased outlays for twelve years has more than reversed a long contrachealth and social insurance. Thus, the ratio of total tion that began in the latter half of the 1960s and federal outlays to GDP has changed little, on net; it bottomed out in the first half of the 1980s. was about 22 percent in both fiscal 1989 and fiscal The deficit in the combined operating and capital 1994. The ratio of federal receipts to nominal GDP accounts of all state and local governments (a was about 19 percent in both of those fiscal years. measure that excludes the surpluses in state and The stronger economy of recent years has pro- local social insurance funds) amounted to about vided state and local governments with a growing 0.6 percent of nominal GDP in calendar 1994, little revenue base and a broadening set of fiscal options. changed from the corresponding figure for 1993 Some governments have responded to these devel- and down only slightly from a cyclical peak of opments by cutting taxes, in most cases by small 0.8 percent in 1991. The recent cyclical peak in this amounts. Effective tax rates of state and local measure was larger than the peaks reached in recesgovernments appear to have edged down a bit, on sions of the 1970s and 1980s, and declines in the average, over the four quarters of 1994, and nomi- deficit during this expansion have not been as large nal receipts apparently rose somewhat less rapidly as the declines that occurred during other recent than nominal GDP over that period. expansions. Historically, the combined operating and capital accounts of state and local governments Many states and localities also have been trying have been in deficit more often than they have been to restrain the growth of expenditures, but success Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 229 in surplus; as a share of nominal GDP, the annual against the yen and by recovery in the industrial surpluses and deficits since World War II have countries. Growth in China, although still quite averaged out to a deficit of 0.3 percent. rapid, was somewhat slower than that in 1992-93, as credit conditions were tightened somewhat further and various controls were imposed to damp The External Sector demand. In Mexico, real GDP growth rose markedly dur- When adjusted for differing rates of increase in ing the second and third quarters of 1994 from its consumer prices, the trade-weighted average for- near-zero rate in 1993, in part because of fiscal eign exchange value of the U.S. dollar declined stimulus. However, the economic policy program 5Vi percent against the currencies of the other G-10 put in place at the end of the year in response to the countries in 1994. This depreciation was slightly peso crisis is likely to restrain growth once again smaller than the almost 6V2 percent nominal depre- in the coming year. The Mexican macroeconomic ciation of the dollar, as U.S. inflation exceeded stabilization program is designed to maintain wage foreign inflation by a small amount. An index of restraint, reduce government spending and develexchange rates that also includes the currencies of opment bank lending, and result in significant several of the major U.S. trading partners in Latin improvement in the current account deficit in 1995. America and East Asia showed about the same The program includes guidelines on increases in degree of real depreciation as did the index for the wages, guidelines on increases in final energy prodcurrencies of the G-10 countries. In the first few uct prices to consumers and to industry, net cuts weeks of 1995, the dollar has weakened, on bal- in public expenditures, and a reduction of lending ance, in nominal terms against the currencies of the by development banks. Mexico has committed to G-10 countries, but it has moved up in terms of the maintain the current floating exchange rate regime, Mexican peso. and the Bank of Mexico has agreed to restrain Growth of real GDP in the major foreign indus- the growth of money. Structural reform measures trial countries rebounded sharply during 1994, sig- include continued privatization and lessened nificantly exceeding the pace of recovery widely restrictions on foreign investment. Further meaexpected at the start of the year. In the United sures could be required if inflation and the Kingdom and Canada, where recovery was already exchange rate do not respond as projected. well established, growth continued to be vigorous. The nominal U.S. trade deficit in goods and In Germany, France, and other continental Euro- services increased to about $110 billion in 1994, pean countries, where activity had been sluggish compared with $75 billion in 1993. Imports grew during 1993, strong expansion of real GDP re- noticeably faster than exports, as U.S. growth about sumed and strengthened as the year progressed. equaled that of U.S. trading partners and as the Recovery was evident in Japan as well, but the lagged effects of dollar appreciation during 1993 pace of expansion there remained somewhat sub- continued to be felt. The current account deficit dued relative to that of the other industrial coun- averaged about $150 billion at an annual rate over tries. Although most of these economies clearly the first three quarters. Net investment income had moved past the troughs of their recessions, moved from a small positive to a moderately negaconsiderable slack remained. As a result, consumer tive figure in 1994, reflecting recovery of foreign price inflation remained low and, in some cases, earnings on direct investment in the United States fell further. On average, in the ten major foreign and the effects of higher interest rates on high and industrial countries, consumer prices rose 2 percent rising U.S. net external indebtedness. during the year, even less than the price increase in Based on initial estimates for the fourth quarter, the United States. exports of goods and services grew 10 percent in Economic growth in the major developing coun- real terms during 1994. Computer exports contintries in 1994 continued at about the strong pace of ued to rise rapidly in real terms, about 30 percent 1993. In Asia, the newly industrializing economies for the year; this gain contributed significantly to grew rapidly, as external demand was sustained by the double-digit growth in total exports. After lagged effects of depreciation of their currencies declining in 1993, agricultural exports bounced Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

230 Federal Reserve Bulletin • March 1995 back last year; the much-improved harvest of 1994 rencies produced capital losses for U.S. holders of eased supply constraints that previously had been long-term bonds and resulted in flows out of U.S. limiting shipments of farm products. Other cate- global bond funds. In the first three quarters of gories of merchandise exports averaged more than 1994, U.S. investors made heavy net purchases of 8 percent real growth during the year, as the stocks in Japan; Japan alone accounted for more pace of activity in the economies of U.S. trading than one-third of all U.S. net foreign stock purpartners improved significantly. Geographically, chases. In developing countries, those that received the increase in U.S. merchandise exports was the largest net equity inflows from U.S. investors in accounted for by increased shipments both to 1993 (Hong Kong, Mexico, Argentina, Brazil, and developing countries in Latin America and Asia Singapore) were less favored by investors in 1994, and to Canada and Japan. while interest picked up in a wide assortment of Imports of goods and services rose about 15 per- other developing countries, including South Korea, cent in real terms over the four quarters of 1994, Chile, Indonesia, China, India, and Peru. reflecting the vigorous growth of U.S. income dur- The first three quarters of 1994 also witnessed a ing the year. Imports of computers continued to revival of foreign direct investment in the United expand extremely rapidly in real terms. Of the States while U.S. direct investment abroad reother import categories, imports of machinery and mained at near-record levels. The direct investment automotive products were particularly buoyant. inflow was swelled by takeovers of U.S. companies Import prices rose about 4 percent in 1994, influ- and by the revival of profits and reinvested earnenced by depreciation of the U.S. dollar, increases ings reported by affiliates of foreign companies in in world commodity prices, and a rebound in oil the United States. prices, which had declined in 1993 and early 1994. In the first three quarters of 1994, recorded net capital inflows were substantially larger than those Labor Markets of 1993, an increase that coincided not only with the growing current account deficit, but also with a Employment rose substantially in 1994. The total sharp swing in unrecorded transactions in the U.S. number of jobs in the nonfarm sector of the econinternational accounts, from a positive figure in omy increased 3.5 million over the twelve months 1993 to a negative one in the first three quarters of ended in December, after a gain of 2.3 million 1994.2 during 1993.3 About a quarter of a million of the Among the recorded capital flows, increases in rise in jobs during 1994 was in the government foreign official assets in the United States were sector, mostly at the local level. Job growth in the substantial in 1994 but were somewhat smaller private nonfarm sector amounted to 3.2 million, the than in 1993. In particular, the large reserve accu- largest gain since 1984. Increases in employment at mulations in 1993 by certain developing countries nonfarm establishments were sizable in each quarin Latin America experiencing massive private ter of 1994. A further gain in payroll employment, capital inflows were not repeated in 1994. smaller than the average increase of the past year, U.S. net purchases of foreign securities, particu- was reported in January of this year; however, total larly bonds, fell sharply from record 1993 levels. labor input rose considerably faster than employ- Private foreign net purchases of U.S. securities also ment in January as the workweek lengthened. fell, but only slightly. Rising interest rates on bonds Producers of goods boosted employment more denominated in dollars and many other major cur- than half a million in 1994. The job count in construction increased about 300,000 over the year; employment at general building contractors rose 2. In effect, recorded net capital inflows in the first three quarters of 1994 were larger than necessary to balance the rising current account deficit. Moreover, outflows of currency to foreigners, an item that is not reflected in recorded transactions and, therefore, is a 3. The Bureau of Labor Statistics has announced that the level part of unrecorded net inflows in the international accounts, of nonfarm payroll employment in March 1994 will be raised increased substantially in 1994, suggesting that the other unre- 760,000 when revised estimates are released this summer. The corded outflows of capital may have been even larger than the revision may lead to larger estimates of job growth in both 1993 published data on errors and omissions indicate. and 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 231 briskly for a second year, as did the number of jobs Strength also was evident in 1994 in data from at firms involved in special trades related to con- the monthly survey of households. After ticking up struction. The number of jobs in manufacturing in January 1994, when a redesigned household increased about 275,000 during 1994, after five survey was implemented and new population estiyears of decline. Producers of durables accounted mates were introduced, the civilian unemployment for most of the rise in manufacturing employment; rate turned back down in February and declined in among these producers, job gains were widespread. most months thereafter. The rate increased last Employment at factories that produce nondurables month, to 5.7 percent, but was still a full percentrose slightly in total, as advances in some age point below that of a year earlier.4 Appreciable industries—such as printing and publishing and net declines in unemployment rates have been rubber and plastics—were partly offset by contin- reported over the past year for nearly all occupaued secular declines in the number of jobs in indus- tional and demographic groups. tries such as apparel, tobacco, and leather goods. Data on the reasons why individuals are unem- The average workweek in manufacturing, which ployed seem to be tracing out patterns fairly similar had stretched out in 1992 and 1993 when factory to those seen in previous business cycles. Most employment was declining, lengthened further in notably, the number of persons who are unem- 1994, rising to new highs for the postwar period. ployed because they lost their last job has declined The high fixed costs that are associated with adding sharply, on net, over the past year. The number of new workers probably continued to be an important individuals in this category had soared earlier in factor in firms' decisions to rely still more heavily the 1990s, when the economy was struggling to on a longer workweek as a way to boost labor gain momentum and many large companies were input. Growth of factory output surpassed the rise restructuring their operations. However, with the in labor input by a sizable amount in 1994, a more recent decline, the number of these "job reflection of substantial gains in productivity that losers," measured as a percentage of the labor were realized in this sector of the economy in the force, has moved back toward the lows of the late most recent year. 1980s. Much of the decline in the number of job Employment in the private service-producing losers this past year has been among workers who sector rose nearly 2% million during 1994, after a were permanently separated from their previous gain of 2 million in 1993. The number of jobs in jobs. The number of persons unemployed for rearetail trade increased about 800,000 over the year. sons other than the loss of a job (that is, the sum Auto dealers, stores that sell building materials, of "job leavers" and new entrants or re-entrants and those that sell general merchandise were unable to find work) has also declined over the past among the retail outlets that reported impressive year. As in other business cycles, the number of gains. Hiring at eating and drinking places also these individuals, measured relative to the size of moved up briskly; after three years of slow growth the labor force, has been displaying a cyclical around the start of the decade, hiring at these pattern considerably more muted than that of job establishments has increased substantially in each losers. of the past three years. Employment at firms that Growth of the civilian labor force—which consupply services to other businesses rose about sists of the individuals who are employed and those 710,000 in 1994, even more than in 1993. Once who are seeking employment but have not yet again, job growth within this category was espe- found it—picked up a bit in the second half of 1994 cially rapid at personnel supply firms—those and in early 1995. However, even with these that essentially lease the services of their workers to other employers, often on a temporary basis. Employment at businesses that supply health ser- 4. Research undertaken by the Bureau of Labor Statistics sugvices increased a quarter of a million in 1994, gests that the unemployment rate would have run about two-tenths of a percentage point lower in 1994 but for the changes that were about the same as the gain in 1993; hiring at introduced in January of last year. Other series from the household hospitals has flattened out over the past couple of survey were also affected by the introduction of the new survey and years, but elsewhere in the health sector job growth the revised population estimates; therefore, data for the period starting in January 1994 are not directly comparable with those for has continued at a rapid clip. the period ended in December 1993. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

232 Federal Reserve Bulletin • March 1995 increases, the cumulative rise in the labor force in ended in December 1994, after increases of 3.6 perthe current business expansion has been relatively cent in 1993 and 3.5 percent in 1992. The rise in small compared with the gains recorded in other the wage component of compensation was slightly recent expansions; growth of the working-age less than that of 1993, and the rate of increase in population has been slower this decade than it was hourly benefits slowed appreciably. Increases in in the expansions of the 1970s and 1980s, and the benefits were restrained, in large part, by another share of the population participating in the labor year of deceleration in health care costs and a force, which trended up in earlier expansions, has further slowing in workers' compensation insurchanged little, on net, during this one. ance costs. The rise in nominal compensation per According to preliminary data, output per hour hour in 1994 was the smallest yearly increase in the of labor input in the nonfarm business sector fifteen-year history of the series, the previous low increased 1.4 percent over the four quarters of of 3.2 percent having come midway through the 1994, after a rise of 1.8 percent in 1993 and still expansion of the 1980s. Toward the end of that larger gains in 1992 and 1991. Over the business decade, as bidding for labor resources intensified, cycle, productivity gains typically are largest in the increases in compensation moved up for a time to early years of expansion, and, in that regard, the around 5 percent a year. recent experience does not appear to be unusual. Unit labor costs in the nonfarm business sector Abstracting from cyclical variation, the trend of rose 2.0 percent over the four quarters of 1994, productivity growth in recent years seems to have after an increase of just 0.6 percent over the four picked up somewhat from the unusually sluggish quarters of 1993. In manufacturing, a sector of the pace that prevailed through much of the 1970s and economy in which productivity has advanced quite 1980s, but, at the same time, the pickup has not rapidly in recent years, a rise in output per hour of been nearly so large as some anecdotal reports 4.6 percent during 1994 more than offset a modest might appear to suggest. For example, from late increase in hourly compensation, and unit labor 1988 to late 1994, an interval of time that is long costs declined noticeably for a second year. enough to capture all the phases that productivity goes through during the business cycle, the average Price Developments rate of rise in output per hour in the nonfarm business sector amounted to slightly more than Although price increases picked up in some parts VA percent, up only modestly from an average rate of the economy in 1994, the broader measures of of rise of about 3A percent during most of the 1970s price change continued to yield readings that were and 1980s.5 quite favorable. The rise in the total CPI was about The rate of increase in hourly compensation 23/ percent in 1994, the same as the increase 4 moved down another notch in 1994. The employ- during 1993. The CPI excluding food and energy ment cost index for private industry, a measure of also rose about 23A percent over the four quarters hourly labor costs that comprises both wages and of 1994, after increasing slightly more than 3 perbenefits, rose 3.1 percent during the twelve months cent in 1993. The producer price index for finished goods increased VA percent during 1994, after edging up just lA percent during the previous year. 5. Whether even this small degree of improvement in the pro- As in 1992 and 1993, the past year's increases in ductivity trend will stand up through future revisions of the data is all these price indexes were among the lowest not clear. For example, among the many difficult issues that are involved in the measurement of productivity is the choice of an readings of the past quarter-century. Measures of appropriate set of prices to be used in valuing the output of goods inflation expectations held steady in 1994, but conand services. Currently, aggregate output is tallied by using the tinued to show readings that were somewhat higher, prices of 1987, but some major changes in relative prices have taken place since then, the most notable of which is a huge decline on average, than the actual rates of price increase. in the price of office and computing equipment. Using the prices of Price data for January of this year were less favora more recent year to gauge real output would result in less weight able than those of 1994: The total CPI moved up being given to office and computing equipment and, in turn, a smaller contribution from this rapidly growing category to growth 0.3 percent last month, and the CPI excluding food of real output. All else equal, the growth of productivity would also and energy jumped 0.4 percent, the largest monthly be negatively affected by switching to the prices of a more recent rise in that measure since late 1992. year. 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Monetary Policy Report to the Congress 233 The pickup of price increases last year was of months in which the index had increased very confined largely to markets for materials. Prices of slowly. primary industrial inputs, which had moved up The CPI for non-energy services, a category that sharply during 1993, continued to surge in 1994, accounts for about half of the total CPI, rose and price increases for intermediate materials slightly less than 3V2 percent over the four quarters accelerated as the year progressed. Prices of of 1994, after an increase of about 33A percent in imports also picked up somewhat, influenced by 1993. The increase in these prices in 1994 was just the depreciation in the exchange value of the dol- a bit more than half the rise that was recorded in lar; as was true in the domestic economy, the 1990, when CPI inflation hit its most recent peak. largest price increases for imported goods were Prices of medical services continued to slow in those for materials. Gains in productivity appar- 1994, and airline fares, which have been an espeently enabled manufacturers of finished goods to cially volatile category in the CPI in recent years, absorb these increases in the costs of domestically fell appreciably after having risen sharply the previproduced and imported materials without raising ous year. However, auto finance charges turned up, their own prices very much. and the rate of rise in owners' equivalent rent, a Early this year, materials prices continued to category that has a weight of nearly 20 percent in surge. The producer price index for crude materials the total CPI, rose slightly faster over the four other than food and energy jumped 3 percent in quarters of 1994 than it had during the correspond- January, to a level about HVi percent above that of ing period of 1993. Like the prices of goods, the a year earlier. Further along in the production CPI for non-energy services accelerated sharply in chain, the PPI for intermediate materials other than January of this year. food and energy rose 1 percent last month; the In 1994, for a fourth year, neither food prices nor index has moved up 6 percent during the past energy prices provided much impetus to the inflatwelve months, the largest such rise since the late tion process. The consumer price index for food 1980s, when the twelve-month rate of increase in rose a shade more than 2Vi percent over the four intermediate materials prices topped out at slightly quarters of 1994, about the same as the rise of more than 7 percent. By contrast, the PPI for 1993. Food prices in 1994 were restrained, in part, finished goods other than food and energy again by sharp declines in the prices of domestically showed only a modest increase in January. Since produced farm products, which, in turn, were mid-January, the prices of a number of industrial pulled down by the huge increases in crop commodities have backed away from earlier highs, and livestock production noted previously. With but, given the volatility that these prices sometimes beef and pork prices declining over the year, the exhibit, the experience of a few weeks may not CPI for meats, poultry, fish, and eggs changed little signal the emergence of a new trend. in total. Retail prices of dairy products rose only a In the CPI, the prices of commodities other than small amount. Prices of foods that are more heavily food and energy rose IV2 percent over the four influenced by the costs of nonfarm inputs also quarters of 1994, about the same as the rise of showed only small to moderate advances in 1994: 1993. Prices of new cars and new trucks, respond- The increase in the CPI for prepared foods ing to strong demand and, at times, shortages in the amounted to about 2 V2 percent, slightly less than supply of some models, moved up faster than prices the previous year's increase, and, for a third year, in general; prices of used cars rose especially rap- the rise in the price index for food away from home idly for a third year. The prices of tobacco prod- was less than 2 percent. Coffee was the only item ucts, which had fallen sharply in 1993 when pro- in the CPI for food to show sustained price accelducers made steep one-time price reductions, eration; freeze damage to the crop in Brazil caused turned back up in 1994, rising moderately over the world prices of raw coffee to surge and led to a four quarters of the year. By contrast, prices of price rise of more than 50 percent at retail over the home furnishings changed little over the year, and four quarters of 1994. Fresh vegetable prices, the CPI for apparel fell noticeably. In January which tend to be especially sensitive to short-run 1995, the CPI for goods other than food and energy supply developments, took a jump toward year-end jumped 0.4 percent; this rise followed a string after Hurricane Gordon had damaged crops in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

234 Federal Reserve Bulletin • March 1995 Florida, but the run-up was partly reversed last ful indicator than the favorable trends in the annual month. price data of recent years. The CPI for energy rose about IV2 percent during 1994, after edging down V2 percent in 1993. Gasoline prices increased 4V6 percent over the four MONETARY AND FINANCIAL DEVELOPMENTS quarters of 1994, reversing the decline of the previous year. Much of the increase in gasoline prices With the economy generally strong, financial marcame in the third quarter and followed, with a short kets in 1994 and early 1995 have been characterlag, a second-quarter rise in crude oil prices, which ized by somewhat more rapid growth in private were moving back up from the low levels of late debt and by higher interest rates. The increase in 1993 and early 1994. Prices of other energy prod- interest rates reflected, in part, the policy actions of ucts exhibited brief periods of rapid increase, but the Federal Reserve. Concerned about inflationary sustained upward pressures in these prices did not pressures resulting from rapid economic growth materialize. Fuel oil prices shot up temporarily and dwindling margins of available resources, the early in 1994, when stocks were pulled down for a Federal Reserve firmed policy on seven occasions. time by cold weather in the Midwest and the North- These actions were taken to foster a financial envieast; later in the year, however, stocks were replen- ronment more likely to be consistent with sustained ished and the earlier price increases were more economic growth and low inflation. In total, the than reversed. Natural gas prices followed a pattern policy tightenings raised the federal funds rate by similar to the price of fuel oil, rising sharply in the a cumulative 3 percentage points between early first quarter of the year but falling back thereafter, February 1994 and early February 1995. Other to a fourth-quarter level that was about 2X A percent short-term rates rose by similar amounts. Over this lower than that of a year earlier. Electricity prices span, the Board of Governors hiked the discount rose only slightly during the year. In January of rate on four occasions by a total of 2XA percentage this year, energy prices were up moderately in the points. CPI. Longer-term rates increased 1V2 percentage With the favorable inflation performance of the points to 3 percentage points on balance since past year, the average rate of rise in the total CPI January 1994, with the largest increases posted at since the business cycle trough in early 1991 has intermediate maturities. In addition to the policy been 2.9 percent at an annual rate. Excluding food actions, these rates were boosted through much of and energy, the rate of rise has been 3.3 percent at 1994 by greater-than-expected underlying strength an annual rate. Inflation rates lower than these have in the economy and the resulting higher demand not been sustained through the first few years of for credit, as well as by upward revisions to expecany business expansion since that of the 1960s, tations in financial markets about the policy tightwhen both the CPI and the CPI excluding food and enings that would be required to counter an incipienergy showed average rates of increase of less ent increase in inflation. Since late last fall, than 1.5 percent during the first four years after the however, the extent of Federal Reserve actions, business cycle trough of early 1961. Average rates along with incoming data suggesting some moderaof price increase during the current expansion have tion in the pace of expansion, have calmed inflation been much smaller than those reported during the fears and trimmed estimates of the eventual rise in expansion that began in the mid-1970s. They also short-term interest rates. As a consequence, longerhave been somewhat smaller than those reported term rates have retraced some of their earlier during the first few years of the expansion that upward movements. began in late 1982, a period when price increases Increases in intermediate- and long-term rates were braked in part by unusually steep declines in over the course of the year caused significant capioil prices. In measuring the progress that has been tal losses for some investors. Well-publicized made toward bringing the economy closer to the losses at a number of investment funds in the first goal of long-run price stability, the ratcheting down half of the year, along with substantial portfolio of the rate of price advance from cycle to cycle reallocations in view of the changed economic since the 1970s is perhaps an even more meaning- and financial outlook, may have contributed to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 235 increased financial market volatility at that time. The foreign exchange value of the dollar de- On the whole, however, risk premiums remained clined in terms of the other G-10 currencies last modest, and volatility ebbed over the course of the year, even as the U.S. economy expanded briskly year. Late in the year, the tax-exempt securities and interest rates rose. In part, the weakness was market dipped following the bankruptcy of Orange the result of unexpectedly strong growth abroad, County that resulted from mounting losses in especially in Europe, where the recovery in many its investment fund, but the effects, beyond those countries was more rapid than had been anticion the fund's investors, proved to be small and pated. As a result, long-term interest rates in many short-lived. of the other G-10 countries increased by amounts One consequence of the higher and more volatile similar to rates in the United States. Heightened long-term interest rates was a shift in business concerns about inflation prospects in the United borrowing away from the capital markets and States may also have contributed to the weakness toward shorter-term sources, such as banks. This of the dollar. Indeed, the dollar rebounded late in shift, which reversed the move toward long-term the fall when tighter monetary policy evidently financing that occurred as bond yields fell in 1992 eased those concerns. The dollar declined, howand 1993, was marked by the first annual increase ever, in early 1995 amid the signs of slower U.S. in bank business loans in several years. Consumer growth and concerns about the implications for the lending also accelerated in 1994, as the improved United States of turmoil in Mexican financial economic outlook encouraged increased use of con- markets. sumer credit. Higher interest rates likely held down household mortgage debt growth, in that the resulting decline in refinancing activity limited the abil- The Course of Policy and Interest Rates ity of households to "cash out" some of the equity in their homes. Higher rates also encouraged house- In early 1994, short-term interest rates remained at holds to shift to adjustable-rate mortgages, which the very low levels reached in late 1992, with the offered lower initial interest costs. The debt of all federal funds rate fluctuating around 3 percent— nonfinancial sectors increased 5lA percent in 1994, roughly in line with the rate of inflation. The Fedabout the same increase as in 1993, as the pickup in eral Reserve had maintained an accommodative business and household borrowing was offset by policy stance throughout 1993. This stance was lower growth in government debt. The effects of unusual so far into the expansion phase of a busithe strong economy on government expenditures ness cycle, but it was believed to be necessary and receipts, policy moves to reduce the federal because of a number of extraordinary factors that deficit, and retirements of tax-exempt securities seemed to be inhibiting growth. These factors that had been advance-refunded all contributed to included efforts by households, firms, and financial the slowdown in government borrowing. intermediaries to repair strained balance sheets, Banks funded much of the pickup in their loans business restructuring activities, and the fiscal conwith nondeposit funds and, in the second half of traction associated, in part, with the downsizing of the year, with sales of securities. As a result, the defense industries. doubling of loan growth was not reflected in During the recovery and expansion, however, significantly stronger expansion of the monetary considerable progress had been made by houseaggregates. M3, which was boosted by relatively holds and businesses in decreasing their debtheavy issuance of large CDs, rose 1V2 percent, a service burdens, and lending institutions had sucsomewhat larger increase than in 1993. With banks ceeded in rebuilding their capital positions. By late pricing savings and small time deposits unaggres- 1993, the economy was expanding rapidly, and sively as market interest rates rose, M2 grew 1 per- incoming data early last year suggested that much cent over the year, somewhat below its l3A percent of that momentum had likely carried over into pace in 1993. The increase in market interest rates 1994. In the circumstances, continued accommodarelative to rates on transaction deposits slowed the tive policy risked pushing the demands on producgrowth of Ml to just 2lA percent from the double- tive resources to levels that ultimately would be digit increases posted in 1992 and 1993. associated with increased inflation. Consequently, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

236 Federal Reserve Bulletin • March 1995 the FOMC, at its meeting in early February 1994, ment, a rebound in nonresidential construction folagreed that policy should be moved to a less stimu- lowing bad weather earlier in the year, and a pickup lative stance. in inventory investment. Inflation was of growing The pace at which the adjustment to policy concern, as commodity prices increased rapidly, should be made was less clear: A rapid shift in and measures of slack suggested that the economy policy stance would minimize the risk of allowing was entering a range in which pressures on broad inflation pressures to build, while a more gradual price indexes might begin to build. In part reflectmove would allow financial markets time to adjust ing this concern, long-term rates moved up, and the to the changed environment. Although many mar- dollar weakened. Given the relatively large policy ket participants seemed to anticipate a firming action in May, however, the Committee decided to move fairly soon, it would be the first tightening in take no action at the July meeting and to wait for many years, and some investors would undoubt- more information on the performance of the econedly reconsider their portfolio strategies, possibly omy. The Committee saw the possible need for causing sharp movements in bond and stock prices. tighter policy, however, and issued an asymmetric In addition, a slower initial shift would allow more directive to the Federal Reserve Bank of New York time to assess the strength of the economy and the suggesting that policy would respond promptly to effects of the change in policy. evidence of increased inflation pressures. In the event, the Committee tightened policy In the interval between the Committee meetings gradually through the winter and early spring. Pres- in early July and mid-August, the economy consures on reserve positions were increased by rela- tinued to expand robustly, and, coming into the tively small amounts in February, March, and August meeting, it appeared that the markets April; once market participants seemed to have expected a small further increase in reserve presmade substantial adjustments to the new direction sures. At its meeting, the Committee agreed that a of policy, a larger tightening move was imple- prompt further tightening move was needed to promented in May. Taken together, the four policy vide greater assurance that inflationary pressures in actions raised the federal funds rate about 1 lA per- the economy would remain subdued, and the memcentage points. The May policy action was accom- bers chose a tightening action somewhat larger panied by an increase of V2 percentage point in the than had been expected by the markets. A rise of discount rate, voted by the Board of Governors. V2 percentage point in the discount rate, voted by Other interest rates moved up between 1 percent- the Board of Governors, was allowed to show age point and 2 percentage points as a result of through fully to the federal funds rate. Short-term these policy moves, with the largest increases com- market rates rose following the policy move, while ing at intermediate maturities. Besides the effect of long-term yields declined slightly, perhaps as a the policy actions, longer-term rates were boosted result of downward revisions to expectations of by incoming data suggesting continued robust future tightening. growth, which heightened market concerns about a In advance of the meeting in late September, pickup in inflation and expectations of further tight- most market rates increased as incoming economic ening by the Federal Reserve. In addition, uncer- data were seen in the market as raising the likelitainty about the timing and magnitude of future hood of higher inflation and the resulting need for policy actions, as well as the capital losses that tighter reserve conditions. The data suggested that followed the tightenings, encouraged investors to the economy had not yet been greatly affected by shorten the maturity of their investments and the tightening in monetary policy: Employment reduce their degree of leverage. The resulting was growing strongly, and final sales, especially of portfolio adjustments likely contributed to in- consumer goods, appeared to have firmed. Manucreased market volatility and may have intensi- facturing activity had continued to expand rapidly, fied the upward pressure on longer-term interest boosted in part by an increase in motor vehicle rates. production. Given the uncertain duration of lags between changes in monetary policy and the result- Incoming data in the late spring and early ing effects on the economy, however, it was not summer suggested that the economy continued to clear whether the effects of the earlier interest rate expand significantly, led by sales of business equip- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 237 increases were smaller than had been expected Financial markets were focused in early Decemor were still in train. Another possibility was that ber on the failure of an investment fund run by the underlying momentum of the expansion was Orange County, California, and the subsequent greater than had been evident earlier. Given these bankruptcy of the county itself. The municipal uncertainties, the Committee took no immediate securities market bore the brunt of these developtightening action at its September meeting. As in ments, with rates rising for a time relative to those July, however, the Committee agreed to an asym- on comparable Treasury issues. The failure had a metric directive suggesting that the likely direction substantial effect on the finances of the municipaliof any move over the intermeeting period was ties that had invested in the fund. In addition, toward additional restraint. investors had to consider the likelihood of other Broad measures of inflation remained moderate state and local governments having similar investthrough the fall in spite of continued substantial ment difficulties. Over the following days and economic growth in an economy that was running weeks, however, only a few other problem situaclose to its estimated potential. Nonetheless, strong tions emerged, and they were on a much smaller economic data and continued upward pressure on scale. prices at earlier stages of production apparently In the period leading up to the December meetheightened investors' inflation concerns, as well as ing, incoming data continued to show robust expectations of future policy tightenings. Conse- growth and subdued inflation. The Committee felt quently, most market interest rates rose appreciably that the effects on economic activity of the policy between the September and November meetings, actions during the year, and especially the substanwith the largest increases occurring at intermediate tial tightening moves in the second half of the year, maturities. At the November meeting, the Commit- were not yet visible, owing to the lags in the effects tee members agreed that the stance of policy was of monetary policy on the economy. As a result, the not sufficiently restrained given the clear risks of Committee decided to take no further policy action higher inflation. As a result, they chose a sizable at the meeting, and to await additional information firming of monetary policy, tightening reserve con- on the underlying strength in the economy and the ditions in line with the increase of % percentage effects of the earlier policy actions. This decision point in the discount rate approved by the Federal was reinforced by concerns that the financial mar- Reserve Board. kets might be somewhat unsettled owing both to The yield curve flattened appreciably in response the usual year-end adjustments and to uncertainty to the larger-than-expected policy action. The about the effects and incidence of the sizable marincrease in the federal funds rate pushed up most ket losses sustained by some investors over the short-term interest rates. Long-term rates increased year. In view of the substantial strength evident in initially, but in late November and early December the incoming data, however, the Committee again these rates more than reversed the earlier increases. chose an asymmetric directive pointing toward Evidently, market participants ultimately inter- further restraint. preted the substantial policy tightening as demon- In advance of the Committee meeting at the end strating the Committee's intention to take the of January, broad measures of inflation remained actions necessary to contain inflation at relatively modest, although anecdotal reports suggested that low levels. By contrast, intermediate-term rates some firms intended to raise prices early in the new increased over the weeks following the November year. Incoming data on production and employmeeting as a variety of incoming data indicated ment continued to be upbeat, with healthy growth that the economy's growth had accelerated further reported in virtually all industries and regions. in the fourth quarter and additional tightenings Some indicators, however, raised the possibility of might be required to slow growth to a more sustain- a slowing in the pace of the expansion. Nonetheable pace. By the time of the December meeting, less, output growth in the fourth quarter was the rates on two-year Treasury notes were only a fastest of the year, and the Committee felt that, little below those on thirty-year Treasury bonds, with output and employment at or even beyond although both yields remained well above short- estimates of their sustainable levels, the risks of term rates. rising inflation were still considerable. As a result, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

238 Federal Reserve Bulletin • March 1995 the Board of Governors voted an increase of Vi per- term sources of funds. In part as a result of this centage point in the discount rate, and the Com- shift, financial intermediaries supplied a larger mittee agreed to allow the increase to be fully share of new debt than they had for several years. reflected in the federal funds rate. Because it had Much of the depository credit growth was funded been widely anticipated in the financial markets, with nondeposit funds, however, and growth in the other interest rates and the foreign exchange value broad monetary aggregates, which consist priof the dollar were little affected by the policy marily of deposits, remained subdued. action. Interest rates turned down subsequently, as Debt growth both in the federal and in the state additional information on the economy seemed to and local government sectors slowed last year. reinforce the possibility that a slowdown was in Growth of federal government debt was smaller process. because of the narrowing of the federal budget At the same meeting, the Committee also for- deficit. The outstanding volume of state and local mally adopted two practices that had been followed government debt actually declined as bonds that on a provisional basis during 1994. First, the Com- previously had been refunded in advance of their mittee voted to continue to announce any change earliest call date were retired. Much of the bulge in in the stance of policy on the day the decision is tax-exempt issues in 1993 had been for the advance made. These announcements, which had followed refunding of higher-cost debt issued in the 1980s. each of the policy tightenings agreed to in 1994, These offerings subsided early in 1994, as the are intended to minimize any confusion and uncer- amount of bonds eligible for advance refunding tainty about the stance of policy. In addition, a dwindled and borrowing costs rose. public announcement ensures that all financial mar- Household debt growth increased modestly in ket participants have the same access to informa- 1994, as an acceleration in consumer credit was tion regarding changes in monetary policy. Second, partly offset by slower growth in mortgage debt. the Committee agreed to continue releasing the The pickup in consumer debt reflected, in part, transcripts of Committee meetings with a five-year increased demand for consumer durables. In addidelay. The published minutes of Committee meet- tion, responses to Federal Reserve surveys of banks ings, which are available soon after the subsequent indicated that many respondents were more willing meeting, provide a relatively complete summary to extend credit to households last year, which may of the arguments presented and the reasons for a have led them to ease terms and standards on policy choice. The transcripts provide additional consumer loans. Indeed, spreads between consumer information, however, that may be of use to those loan rates and market rates narrowed significantly interested in the details of the policy process. The last year, as increases in loan rates lagged those in Committee decided that a five-year delay struck an market interest rates. Consumer credit may also appropriate balance between the right of interested have been boosted somewhat by the increased use members of the public to obtain this added detail of credit cards offering rebates or other incentives. and the Committee's need to debate policy issues Rising mortgage rates in 1994 greatly reduced the openly and without the sort of restraint that more volume of mortgage refinancings from the very rapid disclosure might generate. high levels reached in 1993. The refinancings had contributed to an increase in mortgage debt because some households had taken the opportunity afforded by refinancing to cash out a portion of the Credit and Money Flows in 1994 equity in their properties. Higher rates on fixed-rate The debt of all nonfinancial sectors grew 5LA per- mortgages also induced many borrowers to shift to adjustable-rate mortgages that carried much lower cent in 1994, somewhat below the middle of its initial rates. Concessional starting rates and the monitoring range of 4 percent to 8 percent, and growing use of adjustable-rate contracts with initial about the same increase as that of a year earlier. fixed-rate periods lasting several years also may More rapid growth of private-sector debt was offset have contributed to this shift. Over the last few by slower growth of public-sector debt. As longmonths of the year about half of all new home term rates rose well above their late 1993 lows, mortgages were of the adjustable-rate variety. The private-sector borrowing shifted toward shorter- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 239 shift to adjustable-rate mortgages and the sluggish levels of other securities holdings were boosted by adjustment of consumer loan rates mitigated the an accounting change.6 Much of this growth was effect of higher market interest rates on household reversed later in the year, however, as banks used debt-service burdens. sales of securities to fund loan growth. Reported The debt of nonfinancial businesses expanded in securities growth was also damped by declining 1994 after three years of stagnation. Earlier efforts securities prices.7 to restructure balance sheets by increasing equity In 1994 thrift sector credit expanded for the first capital and refinancing higher-cost credit appeared time in several years, as the Resolution Trust Corto leave businesses in a better position to increase poration virtually completed its liquidation of insoldebt in 1994, as the sector's debt-service burden vent thrift institutions. In part, the increase in thrift had fallen about one-third from its peak five years sector credit also likely reflected the shift by houseearlier. A decline in equity issuance, perhaps result- holds toward adjustable-rate mortgages. Thrift ing from the lackluster performance of the stock institutions and banks find holding adjustable-rate market, may also have boosted business borrowing. mortgages less risky than holding fixed-rate mort- Business financing needs were strengthened by gages, and so adjustable-rate loans are less likely to increased spending on capital and inventories, as be securitized and sold. well as merger and acquisition activity. The total With bank credit growth picking up and thrift value of mergers and acquisitions increased sub- sector credit rising, growth of depository credit in stantially last year, and the share of such activity 1994 nearly matched that of total nonfinancial debt. requiring cash payments to shareholders—rather Thus, the share of credit provided by these intermethan swaps of shares—rose sharply, although it diaries stabilized last year after having declined remained below the levels reached in the late substantially since 1988. Despite the growth in 1980s. depository credit, the broad monetary aggregates Rising and more volatile long-term interest rates continued to expand sluggishly. Domestic banks encouraged businesses to rely more heavily on funded much of their credit expansion from nonshort-term debt in 1994. This shift was reinforced deposit sources, such as borrowings from their by changes in supply conditions in various mar- foreign offices, that are not included in the monkets. Capital losses early in the year likely caused etary aggregates. Funds from these sources are not some of those supplying long-term funds to subject to deposit insurance premiums, which may become more cautious; for example, some savers help account for their recent rise. The broadest backed away from bond mutual funds. At the same monetary aggregate, M3, did pick up a bit as banks time, banks were loosening terms on business loans turned, in part, to large time deposits to fund asset as well as easing their underwriting standards. growth. M3 expanded about IV2 percent, well Banks attributed the easing of loan terms and stan- above the lower bound of its 0 percent to 4 percent dards to increased competition for business custom- annual range and a somewhat larger increase than ers from other banks and also from nonbank lend- that in 1993. Growth in large time deposits topped ers. The competitive posture of banks likely 7 percent for the year, marking the first annual reflected, in part, the high level of profits earned increase in this component since 1989. Much of the by banks in recent years and the resultant strength- increase in large time deposits was in senior bank ening of their balance sheets. As a result of these notes, which are not subject to deposit insurance factors, bank business loans increased more than premiums. 9 percent, their first annual increase in several years. Other sources of short-term business finance, 6. New Financial Accounting Standards Board rules, effective at including commercial paper and finance company the start of the year, limited the ability of banks to net off-balanceloans, also expanded over the year. sheet items for reporting purposes. The new rules affected items such as swaps and options, the cash values of which are reported on The effect of the pickup in business and conbalance sheets in the other securities category. sumer loans on bank credit growth was partially 7. A Financial Accounting Standards Board rule implemented at offset by slower growth in bank securities holdings. the start of the year required each bank to divide its investment account securities into those that it intended to hold to maturity, Early in the year, banks purchased a significant which could be reported at book value, and those that were availvolume of government securities, and reported able for sale, which had to be marked to market. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

240 Federal Reserve Bulletin • March 1995 M2 grew 1 percent in 1994—the lower bound result of portfolio shifts toward bond and equity of its annual range. The slow growth reflected, in mutual funds. Indeed, the growth in M2 plus longpart, relatively sluggish upward adjustment of term mutual funds ran slightly below the 1 percent retail deposit rates. Rates on savings accounts pace of M2 growth. Net sales of equity mutual and other checkable deposits (OCDs), including funds continued at a high level in 1994, although NOW accounts, responded about as slowly as the pace of sales slowed somewhat late in the they have in the past to the increase in market year. Equity fund sales were partly offset, howrates, while the response of rates on small time ever, by outflows from bond mutual funds in deposits was sluggish relative to historical the last three quarters of the year. Apparently, norms. Evidently, banks believed that generat- falling bond prices and greater market uncering increased retail deposits would be more tainty, and, perhaps, reports of derivatives losses expensive than raising wholesale funds given that at some funds, led households to scale back their higher retail rates would have to be paid on exist- holdings of bond mutual funds in favor of investing liquid deposits and on time deposits as they ments that posed less risk of capital loss. With were rolled over, as well as on any new deposits. deposit rates lagging, however, these outflows Increasing retail deposits would also require higher did not translate into faster M2 growth. Some advertising, administrative, and deposit insurance of the withdrawals from bond funds may have costs. been invested directly in Treasury securities. In contrast to the previous several years, M2 Reflecting such portfolio shifts, net noncombehavior in 1994 was roughly consistent with its petitive tenders for Treasury bills, which had long-run historical relation with movements in been negative in 1993, totaled more than nominal income and opportunity costs as tradition- $16 billion last year, and net noncompetitive ally defined—that is, the difference between rates tenders for Treasury notes also increased on short-term instruments (for example, Treasury substantially.8 bills) and those offered on retail balances. This consistency suggests that, unlike the past few 8. The Treasury permits noncompetitive bids at its auctions to years, the slow growth in M2 last year was not the make it easier for smaller, less sophisticated bidders to participate. 3. Growth of money and debt Percent Domestic Period Ml M2 M3 nonfinancial debt Year1 1980 7.4 8.9 9.6 9.1 1981 5.4 (2.5J) 9.3 12.4 9.9 1982 8.8 9.2 9.9 9.6 1983 10.4 12.2 9.9 11.8 1984 5.5 8.1 10.9 14.4 1985 12.0 8.7 7.6 14.1 1986 15.5 9.3 8.9 13.5 1987 6.3 4.3 5.7 10.2 1988 4.3 5.3 6.3 9.0 1989 .6 4.8 3.8 8.0 1990 4.2 4.0 1.7 6.5 1991 7.9 2.9 1.2 4.6 1992 14.3 2.0 .5 4.7 1993 10.5 1.7 1.0 5.2 1994 2.3 1.0 1.4 5.3 Quarter (annual rate)3 1994: 1 55..55 1.8 .6 5.3 2 2.6 1.7 1.3 5.6 3 2.4 .8 2.0 4.4 4 -1.2 -.4 1.7 5.5 1. From average for fourth quarter of preceding year to average for fourth 2. Adjusted for shifts to NOW accounts in 1981. quarter of year indicated. 3. From average for preceding quarter to average for quarter indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 241 Consistent with its historical behavior, Ml In contrast to transaction deposits, the currency growth slowed sharply last year in response to component of Ml continued to register strong widening differentials between market interest rates growth last year. Currency increased 10V4 percent, and those offered on transaction deposits. Ml the same rise as 1993 and close to the record expanded only 2lA percent—down substantially increase in 1990. As has been the case since 1990, from the double-digit increases recorded the pre- much of the currency growth appeared to reflect vious two years. Following the typical pattern, rapid expansion in U.S. currency circulating demand deposits and OCDs were especially abroad. Informal reports suggest that foreign responsive to the rise in short-term interest rates. demand was particularly strong in 1994 in Russia On balance, demand deposits edged up only Vi per- and the other former Soviet republics. cent, compared with growth of 131A percent in 1993, as higher market rates encouraged deposit holders to economize on these non-interest-earning Foreign Exchange Developments assets. In addition, the turnaround reflected the decline in home mortgage refinancing activity last The trade-weighted foreign exchange value of the year: Demand deposits had been boosted in 1993 dollar in terms of the other G-10 currencies because prepayments of securitized mortgages declined nearly 6V2 percent on balance from were held primarily in such deposits for a time December 1993 to December 1994. After displaybefore they were distributed. The rates offered on ing some strength at the start of 1994, the weighted- OCD accounts adjusted slowly to higher market average foreign exchange value of the dollar fell rates last year, encouraging households to shift about 10 percent from February through early funds into higher-yielding assets. OCD growth also November. Although U.S. growth continued to be was depressed by the introduction of sweep stronger than expected, market perceptions about account programs at some large banks. In these the strength of economic activity in the other indusprograms, the portion of customers' OCD balances trial countries were also revised sharply higher as in excess of a predetermined level are swept into the year progressed. These changed perceptions led money market deposit accounts at the end of each market participants to raise their expectations of day. market interest rates abroad, which, together with increased concerns over potential inflation pressures in the U.S. economy, put downward pressure Those submitting noncompetitive tenders are assured of receiving on the dollar against most foreign currencies. The the security, and the yield on the security they obtain is the average issue rate established at the auction. The level of net noncompeti- dollar rebounded somewhat at the end of the year tive tenders during a period is the dollar volume of securities as the greater-than-expected tightening action by purchased under noncompetitive tenders less the volume of repaythe Federal Reserve in November reassured market ments of maturing securities that had been purchased under noncompetitive tenders. participants that U.S. inflation risks were being addressed. In early 1995, however, with U.S. growth appearing to moderate and the turmoil in 4. Net sales of shares in long-term mutual funds1 Mexican financial markets raising concerns about Millions of dollars (monthly average) possible implications for the United States, the Period Total Equity Bond dollar declined on balance, nearly reaching its fall funds funds 1994 low. Year 1991 10,820 3,821 7,000 Long-term interest rates in major foreign indus- 1992 16,844 7,268 9,576 1993 23,445 11,832 11,634 trial countries generally rose during the year. On 1994 9,674 11,073 -1,399 average, yields on foreign government issues with Quarter maturities of ten years increased 200 basis points in 1994: 1 17,438 13,744 3,694 2 10,128 10,935 -808 the twelve months to December, about the same 3 9,826 11,166 -1,340 as in the United States. In Japan, where the evi- 4 1,306 8,447 -7,141 dence for a buoyant recovery remained somewhat 1. Gross sales of shares less redemptions. mixed, long-term rates rose less. In contrast to SOURCE. Investment Company Institute. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

242 Federal Reserve Bulletin • March 1995 long-term rates, foreign short-term rates were little from the increases in U.S. short-term rates, conchanged on average and even declined slightly in cerns over the large fiscal deficits of the central several countries, including France and Germany. government and the provinces, and, at times, per- Major exceptions were Canada, where short-term ceived risks associated with possible secession by market rates rose about 300 basis points, and the Quebec. In the first few weeks of 1995, the Cana- United Kingdom, where they rose 100 basis points. dian dollar weakened further, as markets appar- In both countries, official lending rates were ently became more concerned about the large outincreased during the year to contain inflation risks standing Canadian federal and provincial debt and in the face of vigorous economic growth. During the persistent federal government deficit. As a the first few weeks of this year, foreign long-term result, market interest rates have risen further, and rates on average rose slightly further, but they have the Bank of Canada has moved up overnight rates since retraced most of that rise. several times, including an increase to match the During 1994, the dollar depreciated 8 percent upward shift in the U.S. federal funds rate followin terms of the mark and declined by similar ing the most recent FOMC meeting. In response, amounts in terms of the other currencies in the the Canadian dollar strengthened but, more exchange rate mechanism (ERM) of the European recently, has given up some of these gains. Monetary System. The German economy expanded The dollar depreciated nearly 5 percent in 1994 over the year, and the growth of the targeted against the currencies of major U.S. trading partmonetary aggregate, M3, remained above target ners in Latin America and East Asia when adjusted until the very end of the year. Market participants for relative changes in consumer prices. The dollar trimmed their expectations of further declines in appreciated sharply against the Mexican peso, howofficial Bundesbank lending rates, and German ever, first in March and more significantly during long-term interest rates rose. The dollar depreci- the final two weeks of the year and in early 1995. ated by lesser amounts in terms of sterling and In response to continuing downward pressures the lira, both of which had been withdrawn from on the peso and sizable losses of international the ERM in 1992. The persistent strength of the reserves over the course of 1994, the Bank of U.K. recovery raised concerns of renewed infla- Mexico announced on December 20 a 13 percent tion pressures there, and the political uncertainties change in the lower bound of the range that it in Italy and, to a lesser extent, in the United King- unilaterally had set for the peso-dollar exchange dom held back market enthusiasm for the two rate. The peso immediately fell to the new lower currencies. limit, from about 3.5 to 4 pesos per dollar, and The dollar also depreciated about 8 percent in reserve losses continued. As a consequence, the terms of the yen during the year. At times, the Bank of Mexico on December 22 permitted the dollar-yen rate fluctuated in response to develop- peso to float and activated the North American ments in U.S.-Japanese trade talks. The dollar Swap Facility, which provides up to $6 billion of reached a historic low of 96.11 yen in November short-term funds to the Bank of Mexico, evenly and was very weak against the German mark as split between the Federal Reserve and the Treasury, well, and the Federal Reserve joined the U.S. Trea- and an additional C$1 billion from the Bank of sury in intervention purchases of dollars against Canada. yen and marks at that time. Subsequently, the dol- During the following days the peso remained lar rebounded somewhat in terms of the yen and volatile on exchange markets, fluctuating in a range European currencies. In early 1995 the dollar weak- between 5 and nearly 6 pesos to the dollar. On ened further, especially against the mark, in part January 2, a package was announced totaling because that currency attracted funds from markets $18 billion in international financial support for upset by the peso crisis. Mexico, including an increase from $6 billion to In contrast to its experience in terms of the ERM $9 billion in the swap facilities extended by the currencies and the yen, the dollar appreciated in United States (again split between the Federal terms of the Canadian dollar nearly 4V6 percent Reserve and the Treasury), an additional during 1994. The relative weakness of the Cana- C$500 million in the swap facility of the Bank of dian currency appeared to reflect pressures arising Canada, $5 billion in credit supported by other Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 243 central banks acting through the Bank for Interna- support of the bipartisan leadership of the Contional Settlements (BIS), and $3 billion in credit gress, announced a new plan to provide $20 billion from commercial banks. On January 6 the IMF to support financial stabilization in Mexico using began talks with Mexico on a standby arrangement the resources of the Exchange Stabilization Fund in support of Mexico's economic reform program, (ESF) and, in the short run, the Federal Reserve. and on January 12, against the background of On February 1, the Federal Reserve's swap line increased turbulence in international capital mar- with the Bank of Mexico was increased further to kets, the Clinton Administration, with the support $6 billion as part of this package. The package of the bipartisan leadership of the Congress, will consist of short-term swaps, which will be announced a proposal to provide $40 billion in provided by the Federal Reserve and the ESF, and guarantees on securities to be issued by Mexico in swaps with maturities of three to five years and an effort to restore investor confidence. securities guarantees with maturities of five to ten Subsequently, the peso weakened further as sup- years provided by the ESF. Repayment will be port within the Congress for the guarantee proposal assured from the proceeds of exports of Mexican appeared to decline. The Mexican stock market oil. Additional multilateral support for Mexico also continued to slide, and short-term peso interest included an increase from $7.8 billion to $17.8 bilrates rose sharply. In late January the peso reached lion in the funds provided by the International a new low of 6.55 pesos to the dollar amid signs Monetary Fund under a standby arrangement that that problems in Mexico were having effects on was approved on February 1 and an increase from financial markets in other countries. In particular, $5 billion to $10 billion in the short-term credit equity markets in Argentina and Brazil had supported by the central banks of a number of declined in volatile trading. More generally, inves- major industrial countries acting through the BIS. tors appeared to be retreating from investments in The peso rebounded during the week following a variety of emerging market economies, some of the announcement of the January 31 program and, which have substantial current account deficits, on net, has since held most of that gain in volatile while others maintain fixed exchange rates that trading. Through mid-February, the dollar on balpose the risk of becoming overvalued. On Jan- ance has appreciated substantially against the peso uary 31 the Administration withdrew the request since December 19, the day before the peso's for approval of the guarantee program and, with the devaluation. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

244 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report describes Treasury and Sys- previous quarter after a partial trade agreement tem foreign exchange operations for the period between the United States and Japan was from October through December 1994. It was pre- announced on October 1. Soon thereafter, howpared by Peter R. Fisher, Executive Vice President, ever, the dollar started to decline against both Federal Reserve Bank of New York, and Manager currencies. for Foreign Operations, System Open Market Early in the period, continued signs of robust Account. Carol Osier was primarily responsible for growth in the U.S. economy led market participants preparation of the report.1 to question the Federal Reserve's decision not to raise rates at its September 27 meeting, and con- During the fourth quarter of 1994, the dollar fell cern that the stance of monetary policy was inade- 0.1 percent against the German mark but rose quate to contain price pressures began to grow. At 0.5 percent against the Japanese yen and 1.0 per- the same time, market participants perceived shortcent on a trade-weighted basis.2 On November 2, term and long-term U.S. rates as too low relative to the U.S. monetary authorities purchased $800 mil- comparable foreign rates and found in these differlion against the German mark and an equal amount entials an explanation for the dollar's weakness against the Japanese yen, and Treasury Secretary during the year and a reason for further dollar Lloyd Bentsen issued a statement affirming the weakness. Administration's support for a stronger dollar. On Against the mark, the dollar started to decline November 3, the U.S. monetary authorities inter- sharply on October 13. This decline occurred as vened again, this time purchasing $500 million expectations rose that the coalition government of against the German mark and an equal amount Chancellor Helmut Kohl would be returned to against the Japanese yen. In other operations, the office in Germany's October 16 federal elections U.S. and Mexican monetary authorities activated and as German bond and stock markets rallied. The their $6 billion swap facility after Mexico dollar's downward movement accelerated as it announced, before the market opened on Decem- breached a number of important technical points. ber 22, that the peso would be allowed to float. From its closing level of DM1.5405 on October 12, the dollar fell to DM1.4937 on October 17. After this abrupt decline, market discomfort with the THE DOLLAR DECLINES DURING OCTOBER level of U.S. interest rates grew more pronounced and market participants began to express the view Having closed the previous period at DM1.5510, that the U.S. Administration was becoming less the dollar traded fairly steadily against the German concerned about the dollar. At the same time, the mark. Against the Japanese yen, the dollar rose dollar also began to decline against the yen, briefly from ¥99.10, its close at the end of the particularly as a result of heavy dollar sales by Japanese exporters. By October 25, the dollar had declined to ¥96.40 1. The charts for the report are available on request from Publi- and a period low of DM1.4860. The release on cations Services, Mail Stop 127, Board of Governors of the Federal October 28 of gross domestic product data contain- Reserve System, Washington, DC 20551. 2. The dollar's movements on a trade-weighted basis in terms of ing encouraging news about the U.S. price deflator other Group of Ten (G-10) currencies are measured using an index provided a brief respite, but as November began, developed by staff at the Board of Governors of the Federal pressure on the dollar intensified once again. Reserve System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

245 U.S. MONETARY AUTHORITIES ENTER THE another country. All the dollar purchases of the MARKET TO BUY DOLLARS AGAINST THE U.S. monetary authorities were divided equally MARK AND THE YEN between the Federal Reserve and the Exchange Stabilization Fund (ESF) of the Department of the Treasury. On the morning of Wednesday, November 2, the dollar fell to a new postwar low of ¥96.11 and was trading at DM1.4910. Shortly after 11:00 a.m., the Federal Reserve Bank of New York's Foreign THE DOLLAR CONTINUES TO STRENGTHEN Exchange Desk entered the market, purchasing dol- DURING NOVEMBER lars for the U.S. monetary authorities. During the course of the day, the Desk purchased $800 million After the intervention, the dollar continued to rise against the mark and $800 million against the yen. against the mark as market participants became increasingly confident that the Federal Reserve As the intervention began, Treasury Secretary would raise official U.S. interest rates at the Bentsen issued the following statement: November 15 meeting of the Federal Open Market Committee (FOMC). On November 9, in Asian I believe that recent movements in the dollar are inconsistent with the fundamentals of a strong investment-led and early European trading hours, the dollar rose recovery in the United States and the greatly enhanced abruptly in response to the results of the previous ability of U.S. firms to compete around the world. This day's U.S. elections, in which the Republican party Administration is committed to sound economic policies took control of both the House and the Senate. that expand the economy's capacity and sustain recov- From its closing levels the day before, the dollar ery with low inflation. Continuation of recent foreign exchange trends would be counterproductive for the rose nearly two pfennigs to DM1.5265 and about United States and the world economy. A stronger dollar half a yen to ¥97.70 by the time the New York will reduce inflation pressures, improve American living market opened on November 9, then traded around standards, and promote investment. We will continue to these levels for the rest of the day. monitor developments closely in cooperation with our G-7 (Group of Seven) partners. By the eve of the November 15 FOMC meeting, the dollar had risen further, reaching DM1.5441 Later that day Bundesbank President Hans Tiet- and ¥98.28. In the event, the Federal Reserve's meyer expressed support for the U.S. operation, decision to raise the federal funds and discount saying "I welcome the fact that the American rates 75 basis points surprised many market particimonetary authorities have clearly expressed their pants, who had generally expected the Federal interest in a stronger dollar and want to back this Reserve to raise rates only 50 basis points. The with an appropriate policy. This statement (by Sec- dollar spiked higher in response. The perceived retary Bentsen) is likely to contribute to bringing aggressiveness of the action also encouraged some the value of the dollar on markets more into line market participants to anticipate additional tightenwith the fundamental data." After reaching intra- ing in December. day highs of DM1.5220 and ¥98.00, the dollar The dollar's rally continued through the end of closed at DM1.5149 and ¥97.60. November, as the notable widening of short-term Shortly after 11:00 a.m. on Thursday, November 3, with the dollar trading at DM1.5145 and ¥97.65, the Desk intervened a second time on 1. Foreign exchange holdings of U.S. monetary behalf of the U.S. monetary authorities. During the authorities at period-end course of the day, the Desk purchased $500 million Millions of dollars against the mark and $500 million against the yen. The dollar reached intraday highs of DM1.5260 Federal U.S. Treasury Item Exchange Reserve and ¥98.30 before closing at DM1.5185 and Stabilization Fund ¥97.73. German marks 13,405.2 7,500.6 Japanese yen 8,510.0 11,801.0 On both days of intervention, the yen operations of the U.S. monetary authorities were coordinated Total 21,915.2 19,301.6 with the operations of the monetary authorities of NOTE. Figures may not sum to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

246 Federal Reserve Bulletin • March 1995 interest rate differentials encouraged market partici- coming on December 28 in thin market conditions. pants to accumulate dollar positions. Market behav- The dollar closed the quarter at DM1.5490 and ior began to reflect the perception that the Federal ¥99.55. Reserve would bring short-term interest rates to levels that were high enough to restrain incipient inflationary pressures. Indeed, the dollar rose on THE CANADIAN DOLLAR DECLINES STEADILY stronger-than-expected U.S. data on consumer confidence, third-quarter GDP, and November nonfarm After opening at C$1.3450, the Canadian dollar payrolls. Market participants also came to view weakened steadily against the U.S. currency and U.S. rates as sufficiently high to compensate inves- finished the quarter at C$1.4025, down 4.2 percent. tors for the continued risk of dollar decline. For International investors were discouraged from purexample, three-month U.S. rates, which had only chasing Canadian dollars by short-term interest rate moved above equivalent German rates in Septem- differentials that, for much of the period, favored ber, had come to surpass German rates by about the U.S. currency, especially after the mid- 100 basis points. For foreign exchange market par- November rise in U.S. short-term rates. These ticipants, the stability and subsequent decline of investors also expressed concern about large Canalong-term U.S. bond yields during late November dian government budget deficits at the federal and also helped to support the dollar because these provincial levels, and about political uncertainty developments suggested good demand for long- stemming from Quebec's quest for sovereignty. term U.S. paper. The dollar closed the month at DM1.5692 and ¥98.90, up 4.4 percent and 2.1 percent respectively over its values at the end of MEXICAN AUTHORITIES ALLOW October. THE PESO TO FLOAT Over the quarter, the peso declined 30 percent THE DOLLAR TRADES QUIETLY against the dollar from its initial level of 3.3930 AGAINST THE MARK AND YEN new pesos (NP) per dollar. The move began as a DURING MOST OF DECEMBER gradual depreciation within the permissible range set by the government. The peso remained within The dollar's rise came to an end in early December its band through November and for a few weeks and, with the volume of transactions reduced by the past President Zedillo's December 1 inauguration, holiday season, the currency traded for most of the despite considerable financial market pressures and month around the DM1.57 and ¥100 levels. Expec- increasing concern among market participants tations among some market participants that the about possible inconsistencies within the Mexican Federal Reserve would raise interest rates in late economic strategy. The view increasingly took hold December—a view partly based on Chairman Greenspan's December 7 testimony before Congress, in which he characterized U.S. growth as 2. Net profits or losses (-) on U.S. Treasury and Federal Reserve foreign exchange operations, stronger than expected—helped support the dollar. based on historical cost-of-acquisition exchange rates At the same time, however, strong German GDP Millions of dollars data for the third quarter and volatility in U.S. interest rate markets, caused by the liquidation of U.S. Treasury Federal Exchange Period and item the financing positions of the Orange County Reserve Stabilization Fund investment pool and of other portfolios, appeared Valuation profits and losses on to limit the dollar's upside. At its December 20 outstanding assets and liabilities meeting, the Federal Reserve left U.S. interest rates as of Sept. 30, 1994 4,973.4 4,356.7 Realized profits and losses, unchanged, a decision that had no immediate Sept. 30, 1994-Dec. 31, 1994 ... 313.7 270.9 Valuation profits and losses on impact on the dollar. By the end of the period, outstanding assets and liabilities however, the dollar was nearly three pfennigs and as of Dec. 31, 1994 4,577.6 4,054.1 about half a yen lower, with most of the decline NOTE. Data are on a value-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 247 3. Federal Reserve reciprocal currency arrangements currency would freely determine the exchange rate Millions of dollars until the exchange market stabilized." It was also announced that Mexican and U.S. monetary Amount of Drawings Institution facility, during period authorities had jointly activated a pre-existing swap Dec. 31, 1994 facility of $6 billion. The peso closed the day at Austrian National Bank 250 0 NP4.70, 15.7 percent below its close on Decem- National Bank of Belgium 1,000 i k Bank of Canada 2,000 ber 20. National Bank of Denmark 250 Bank of England 3,000 During the rest of December the peso remained Bank of France 2,000 volatile as foreign investors continued to reduce Deutsche Bundesbank 6,000 Bank of Italy 3,000 their peso exposure. The peso closed the year at Bank of Japan 5,000 NP4.85 per dollar. Bank of Mexico 3,000 Netherlands Bank 500 Bank of Norway 250 Bank of Sweden 300 Swiss National Bank 4,000 TREASURY AND FEDERAL RESERVE FOREIGN Bank for International Settlements EXCHANGE RESERVES Dollars against Swiss francs 600 r Dollars against other authorized European currencies 1,250 0 The U.S. monetary authorities intervened twice dur- Total 32,400 0 ing the period, purchasing a total of $2,600 million against German marks and Japanese yen. This amount was divided equally between the Federal that, even at the lower limit of the band, the peso Reserve and the Treasury Department's Exchange was overvalued given Mexico's past inflation and a Stabilization Fund (ESF). The Federal Reserve current account deficit estimated at nearly 8 percent and the ESF realized profits of $313.7 million and of the country's GDP. Nevertheless, investors $270.9 million respectively on this intervention remained hopeful that Mexico would not ultimately activity. These profits are based on historical costbe required to change its exchange rate policy. of-acquisition exchange rates. From the start of the quarter through Monday, At the end of the period, the current values of the December 19, the peso declined 2 percent to reach foreign exchange reserve holdings of the Federal 3.4632. On the morning of December 20, the Mexi- Reserve and the ESF were $21.9 billion and can financial authorities, in agreement with rep- $19.3 billion respectively. The U.S. monetary resentatives of labor and business, changed the authorities regularly invest their foreign currency peso's lowest permissible value against the dollar balances in a variety of instruments that yield by 0.53 pesos, to NP4.0016 from NP3.4712 the market-related rates of return and have a high previous day. Market participants reacted nega- degree of liquidity and credit quality. A portion of tively, and the peso was quickly pushed to its new the balances is invested in securities issued by limit. The peso's value against the dollar dropped foreign governments. As of December 31, the Fed- 12.5 percent on the day. With pressure on the peso eral Reserve and the ESF held, either directly or continuing unabated, the Mexican financial authori- under repurchase agreement, $9.2 billion and ties announced before the market opened on $12.5 billion respectively in foreign government December 22 that "the supply and demand for securities. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

248 Industrial Production and Capacity Utilization for January 1995 Released for publication February 14 In contrast, with the arrival of more normal winter temperatures, the output at utilities rose after some Industrial production rose 0.4 percent in January, recent weakness. Industrial production in January about half as much as in November and December. was at 121.9 percent of its 1987 average and The slowing was widespread in manufacturing. 6.2 percent higher than it was in January 1994. Industrial production indexes Twelve-month percent change Twelve-month percent change 10 10 Materials 5 5 Products Nondurable manufacturing I I 1989 1990 1991 1992 1993 1994 1995 1989 1990 1991 1992 1993 1994 1995 Capacity and industrial production Ratio scale, 1987 production =100 Ratio scale, 1987 production = 100 — Total industry Capacity 140 — Manufacturing Capacity . - 140 ^^ - 120 - 120 110000 100 PPrroodduuccttiioonn Production 80 80 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Percent of capacity Percent of capacity Total industry Manufacturing Utilization 90 Utilization 90 80 80 70 70 J I I L J 1 L J I I I I L J I I L 1981 1983 1985 1987 1989 1991 1993 1995 1981 1983 1985 1987 1989 1991 1993 1995 All series are seasonally adjusted. Latest series, January. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

249 Industrial production and capacity utilization, January 1995 Industrial production, index, 1987=100 Percentage change CCaatteeggoorryy 11999944 11999955 19941 1995 JJaann.. 11999944 ttoo Oct/ Nov/ Dec/ Jan.p Oct/ Nov/ Dec/ Jan.? JJaann.. 11999955 Total 119.5 120.4 121.4 121.9 6.2 Previous estimate 119.4 120.3 121.4 .4 .7 1.0 Major market groups Products, total2 116.9 117.6 118.5 118.9 .4 .6 .8 .4 5.1 Consumer goods 113.0 113.9 115.0 115.4 .0 .8 1.0 .3 3.6 Business equipment 150.9 151.4 153.1 154.5 1.0 .3 1.1 .9 10.1 Construction supplies 109.7 109.7 110.6 110.7 1.1 .0 .8 .1 7.5 Materials 123.4 124.6 125.9 126.4 .4 1.0 1.1 .4 7.9 Major industry groups Manufacturing 121.5 122.6 123.8 124.2 .5 1.0 1.0 .3 7.3 Durable 128.0 129.2 131.0 131.9 .6 .9 1.4 .6 9.0 Nondurable 114.2 115.3 115.9 115.7 .4 1.0 .5 -.2 5.2 Mining 99.2 98.4 99.9 100.2 -.9 -.8 1.5 .3 2.4 Utilities 117.2 116.9 116.0 117.6 .5 -.2 -.7 1.3 -2.2 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1994 1994 1995 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, JJJaaannn... 111999999444 11996677--9944 11998822 11998888--8899 tttooo Jan. Oct/ Nov/ Dec/ Jan.p JJJaaannn... 111999999555 Total 82.0 71.8 84.9 82.7 84.4 84.8 85.4 85.5 2.8 Previous estimate 84.3 84.7 85.4 Manufacturing 81.3 70.0 85.2 81.8 83.8 84.4 85.0 85.1 3.1 Advanced processing 80.7 71.4 83.5 80.1 82.1 82.4 83.0 83.2 3.6 Primary processing . 82.5 66.8 89.0 85.9 88.3 89.4 90.2 89.7 2.1 Mining 87.4 80.6 86.5 87.7 89.0 88.3 89.6 89.9 .0 Utilities 86.7 76.2 92.6 89.5 86.4 86.1 85.4 86.4 1.2 NOTE. Data seasonally adjusted or calculated from seasonally adjusted 2. Contains components in addition to those shown, monthly data. r Revised, 1. Change from preceding month. p Preliminary. Capacity utilization edged up 0.1 percentage point, foods and tobacco products, and drugs and to 85.5 percent, its highest level since October medicines. 1979. The production of business equipment increased When analyzed by market group, the data show 0.9 percent, a growth rate roughly in line with that the output of both durable and nondurable those of the past few months and the past year. consumer goods slowed noticeably. The produc- With the notable exception of the commercial airtion of durable consumer goods rose 0.6 percent, craft industry, the advances in business equipment compared with 2.2 percent in December; the continued to be quite broadly based. The output of production of automotive products, which had defense and space equipment, which had recovered risen a total of more than 5 percent over the pre- a bit in November and December, edged down ceding two months, advanced 0.7 percent. The 0.1 percent; the cumulative drop over the past output of other consumer durables rose 0.6 per- twelve months was 7.3 percent. cent, half as much as in December; in particular, The output of construction supplies edged up, the output of appliances fell back. The produc- while that of business supplies fell 0.4 percent tion of consumer nondurables gained 0.3 per- because paper business supplies and job printing cent as declines in clothing, paper products, and had weakened somewhat. The production of mategasoline partly offset gains in residential utilities, rials, which had risen about 1 percent in November Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

250 Federal Reserve Bulletin • March 1995 and again in December, increased 0.4 percent. The Factories operated at 85.1 percent of capacity, output of durable goods materials and energy mate- still just below the recent cyclical peak reached in rials rose roughly 0.7 percent, while nondurable January 1989. Although the utilization rate in the materials declined nearly as much. Within durable primary-processing industries fell 0.5 percentage goods materials, the production of semiconductors point, to 89.7 percent, it remained above the cycliand inputs for consumer goods rose again, but the cal high reached in January 1989 and equaled the output of steel fell. high of November 1978. Utilization for advanced- When analyzed by industry group, the data show processing industries rose 0.2 percentage point, to that manufacturing output rose 0.3 percent, to a 83.2 percent, but remained 0.3 percentage point level 7.3 percent higher than that of January 1994. below the January 1989 high. The production in nondurable manufacturing indus- With the end of unusually mild weather, operattries declined 0.2 percent; among these, the output ing rates at utilities rebounded 1 percentage point, of only the chemicals and tobacco products indus- to 86.4 percent, a level still below the 1994 average tries rose noticeably. The strength in durable manu- of 87.2 percent. Operating rates at mines rose, with facturing continued to be centered in machinery, gains in coal, metal ores, stone and earth minerals, equipment, and motor vehicles. The output of steel and oil and gas well drilling. • and lumber fell back after gains in December, while the long decline in aerospace and miscellaneous transportation equipment resumed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

251 Statements to the Congress Statement by Alan Greenspan, Chairman, Board of holders of bonds amounted to many hundreds of Governors of the Federal Reserve System, before the billions of dollars in 1994. Derivatives transfer risk Committee on Banking, Housing, and Urban Affairs, from one market participant to another, and in such a U.S. Senate, January 5, 1995 market they inevitably will be involved in large gross losses. Of necessity, they also accounted for large gross gains because contracts tend to cancel each I am pleased to be here today with the other members other, net, but the gains are less newsworthy. of the President's Working Group on Financial Mar- Although the convenience and low cost of using kets to discuss issues involving municipal, corporate, derivative instruments to meet portfolio objectives and individual users of derivative products and highly may have facilitated some investors reaching for more leveraged investment strategies. Over the past year, unconventional and possibly riskier strategies, it losses by some institutions, including corporations would be a serious mistake to respond to these and governmental units, have attracted considerable developments by singling out derivative instruments attention. Much of this attention has been on so-called for special regulatory treatment. Such a response "derivative" instruments, although that term is poorly would create artificial incentives to structure transacdefined, and it is by no means clear that these losses tions on the basis of regulatory rules rather than of the have been attributable solely, or in some cases, even economic characteristics of the transactions themprimarily, to financial instruments that would typi- selves. For example, restrictions on investments in cally be called derivatives. derivative instruments could be circumvented by in- We need to view these issues in a broad context. vesting in other financial instruments that provide The decline in the value of many portfolios has been similar returns and entail similar risks, though prea consequence of the rise in interest rates over the past sumably at somewhat higher transaction costs. A shift year. This rise was a by-product of a strong economic to the use of less efficient instruments as a substitute expansion and of the efforts by the Federal Reserve to for derivatives would mean greater cost to hedgers as foster conditions that will sustain the expansion. well as speculators and a net loss in market efficiency. Many investors and borrowers had established posi- You have raised several issues regarding derivations that were especially vulnerable to higher rates. tives, leverage, and related issues. As I have described These positions were taken during a prolonged period in detail in previous testimony and correspondence of recession and subpar economic growth in which with members of the Congress, the Federal Reserve interest rates were relatively low and declining and has been addressing many of these issues in its role as the yield curve was steeply upward sloped. Further- supervisor of state member banks and bank holding more, interest rate volatility was relatively low companies. In the remainder of my testimony today, I throughout this period. This unusual environment would like to focus on one aspect of the market for encouraged some investors to adopt riskier positions financial transactions that has drawn considerable to boost the returns they were getting or to reduce the attention in the wake of recent losses—the relationcosts of borrowing. These positions often rested on ship between dealers in financial markets and their the presumption that the unusual configuration of customers. yields and subdued volatility would persist. Even Markets function most efficiently when both parties experienced investors forgot the axiom that all invest- to financial transactions are free to enter into transacment yields in excess of the short-term riskless rate of tions at their own discretion, unhampered by any interest are, by definition, risky. perceived need to serve the interests of their counter- That derivatives have been implicated in many parties. To date, losses in the financial markets have recent losses should not be surprising. Losses to not led to broader systemic problems. Moreover, both Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

252 Federal Reserve Bulletin • March 1995 dealers and their customers, somewhat shaken by the may serve as a means for customers to shift the risks volatility of recent markets, are responding to these of the transaction back to the dealer retroactively events by exercising greater caution. If discipline through legal actions. If such legal risks are exacerfrom incurring losses from mistakes were mitigated, bated, dealers will likely charge an additional previgilance would be relaxed, the market's natural mium to compensate them for the uncertainties of adaptive response would be blunted, and the value of future legal claims, and some dealers may move their decentralized market decisions as allocators of scarce activities offshore or withdraw from the market—in capital resources would be reduced. I believe that we any case causing their investments to incur higher should start with the principle that parties to financial costs. transactions are responsible for their own decisions With these considerations in mind, the Federal and only use regulation to adjust the balance of Reserve, in its role as a supervisor of banking instiresponsibilities between the parties cautiously after tutions, has recently taken several actions that bear on the benefit has been clearly established. relationships between dealers and their customers. We are not saying that financial markets should The Board has had long-standing risk-management operate without rules or that any and all behavior in guidance for banks that are users of sophisticated the sales or marketing of transactions is acceptable. instruments. In the wake of losses on investments in Misrepresentation or fraud in financial transactions structured notes, the Board recently reiterated the cannot be tolerated. Moreover, in some cases, a dealer applicability of this guidance to investments in such in financial transactions may assume responsibilities instruments. Although the Board has suggested steps beyond the role of a mere counterparty. For example, that institutions should take to control their risk from a dealer that provides its customers with advisory financial market transactions, it has not prohibited the services may have a duty to ensure that its advice is use of any types of transactions and leaves the not tainted by its own profit or loss in any transactions institution responsible for choosing specific transacit undertakes with those customers. tions. In addition, there may be cases in which certain The Board has also issued guidance for banks customers can, in principle, use complex instruments that act as dealers in sophisticated risk-management to reduce risk or enhance yield but, in practice, cannot instruments. The primary purpose of this guidance reasonably be expected to understand the instruments is to assure that dealing in financial market transand the risks sufficiently well to achieve these objec- actions is conducted safely and soundly. The guidtives without assistance. For such customers, a way ance encourages dealers to ensure that the countermust be found to ensure that transactions are used parties understand the nature of, and the risks effectively for the purposes for which they are in- inherent in, the agreed transactions. When the tended. The approaches to ensuring safe and efficient counterparties are unsophisticated, either generally use of the financial markets by the unsophisticated or with respect to a particular type of transaction, vary and include restricting their access to certain the guidance encourages additional steps to ensure markets, providing guidance for their investment and that counterparties are made aware of the risks risk management practices, encouraging them to ob- attendant in the specific type of transaction. The tain independent advice, encouraging diversification guidance notes that counterparties are ultimately of their portfolios, and shifting some of the risk of loss responsible for the transactions that they choose to from the unsophisticated customers to the dealer by enter into, but when a bank recommends specific establishing special responsibilities for dealers' trans- transactions for an unsophisticated counterparty, actions with their less sophisticated customers. Each the guidance encourages the bank to ensure that it of these approaches has its own costs and benefits; the has adequate information regarding its counterparty approach that may appear easiest, however—placing on which to base its recommendation. additional responsibilities on the dealer community— In an action consistent with this guidance, the may entail considerable indirect costs to the economy Federal Reserve recently entered into a written superin terms of interfering with liquid and efficient mar- visory agreement with Bankers Trust Corporation. kets. Rules that create a duty on the part of dealers in The agreement focuses on Bankers Trust's policies derivative instruments to ensure that these transac- and procedures for marketing practices and affiliate tions are being appropriately used by their customers transactions in its leveraged derivative transaction Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 253 business. Basically, the agreement reflects our conclu- Finally, as you are aware, the Government Securision that Bankers Trust had not put in place adequate ties Act Amendments of 1993 gave the Board the procedures and controls to ensure that its employees' authority to adopt sales practice rules for state memdealings with its customers met applicable standards ber banks that are government securities brokers or and would not damage the company's business by dealers. Many of the recent losses in the financial detracting from its reputation as a reliable financial markets, particularly losses by governmental entities, intermediary. This action was specific to Bankers have involved investments in securities issued by Trust and was based on a particular group of the government-sponsored enterprises, which are defined transactions in which Bankers Trust had engaged and as government securities for the purposes of this act. the practices followed in these transactions. Thus, the Although we have no evidence of sales practice provisions of the Bankers Trust agreement should not abuses involving these securities by state member be taken as new general guidelines for the derivatives banks, we are currently exploring with the other bank dealers. Rather, this action should be viewed as regulators the possible adoption of sales practice rules implementing existing guidance in the context of this for these dealers. In this process, we will be carefully institution's particular circumstances. Each institution assessing the benefits of adopting rules that parallel needs to have effective procedures and controls tai- the rules currently under development for nonbank lored to that institution's own products and practices. brokers and dealers. • Statement by Alan Greenspan, Chairman, Board of namic over the years, and estimating techniques have Governors of the Federal Reserve System, before a improved. What is still generally not taken into Joint Hearing of the Senate and House Committees on account, however, is the effect of fiscal initiatives on the Budget, January 10, 1995 macroeconomic variables like gross domestic product, total labor compensation, and aggregate investment. Concerns that current estimating procedures do I am pleased to appear here today to address some of not fully track the effects of changes in behavior on the most important issues involved in producing the aggregate economic activity, and hence on overall budget of the U.S. government. The views I will be budget receipts and outlays, are justified. The current expressing are my own and not necessarily those of method is admittedly incomplete, especially for polthe Federal Reserve Board. icy initiatives with broad economic impacts. The budget process has improved significantly in One central issue with respect to a more dynamic recent years. The caps on discretionary spending and scoring is whether cyclical, aggregate demand effects the pay-as-you-go rules have restrained deficit- of fiscal changes should be taken into account—or expanding programs far better than many had antici- only permanent effects on aggregate supply. There are pated. Budget scoring is crucial to this process. Unless a number of ways of looking at this, but I would estimates of the outlays and revenues from budget suggest that including aggregate demand effects initiatives are credible, the current system cannot would be confusing, if not misleading, in many work effectively. This joint hearing of the Congress's contexts. Among other things, the scope for realizing budget committees, unprecedented in my experience, such demand effects on economic activity would be a attests to the importance of budget scoring. function of the particular phase of the business cycle Accurate estimates of the effects of tax and spend- and could be viewed in a sense as transitory. Particing policies on the budget are difficult to make, some ularly when we are addressing the problem of the more than others. In particular, concern has been long-run structural deficit, the focus should be on how raised that current methods are too "static." As other fiscal actions affect the potential of the economy to witnesses have indicated, current scoring procedures produce greater output and taxable income on a already allow for some response in the spending, sustained, ongoing basis. Thus, if a more dynamic saving, and investment behavior of individuals and scoring were to be adopted, I would recommend firms. Indeed, although it is difficult to measure, the limiting the analysis to appropriate supply-side efbudget-scoring process has become increasingly dy- fects. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

254 Federal Reserve Bulletin • March 1995 Apart from that consideration, full dynamic esti- with any degree of precision the impact of such a mates of individual budget initiatives should be our proposal on the deficit within the horizon of the goal. Unfortunately, the analytical tools required to current budget process. achieve it are deficient. In fact, the goal ultimately If, as many advocate, outlays are reduced well may be unreachable. The estimation of full dynamic below current service levels in the years ahead, the effects requires a model that both captures microeco- debate over scoring will likely move off center stage. nomic and macroeconomic processes and produces This will occur because the outlay cuts will free up reliable long-run forecasts of economic outcomes. significant revenues for tax cuts, regardless of Unfortunately, no such model exists. Indeed, no whether the current or a more dynamic scoring is model currently in use can predict macroeconomic employed. And, if total revenues turn out to be greater developments without substantial ad hoc adjustments than current procedures project, deficits will trend that effectively override the internal structure of the lower than estimated. If we inadvertently produce a model. We should not assume that models can capture budget surplus by such miscalculations, the implicathe long-run dynamic effects of specific tax and outlay tions will be positive for long-run economic growth. changes any better than they can forecast the econ- More to the point, if we fail to achieve adequate omy. reductions in outlays, budget scoring will not substi- Even current procedures require relatively sophis- tute for hard political choices. ticated techniques to determine the budget conse- Clearly, our political process has a bias toward quences of particular tax and outlay programs. deficit spending. Accordingly, we should be espe- Changes in the tax structure alter economic incentives cially cautious about adopting technical scoring proin ways that may be extraordinarily complex. For cedures that might be susceptible to overly optimistic entitlement programs, one has to assess, for example, assessments of the budgetary consequences of fiscal how greater public awareness of the existence of such actions. Currently, real long-term interest rates remain a program will affect participation and how behavior relatively high, partly because of the expected growth will change to take advantage of the entitlement. The of budget deficits later in this decade and thereafter. disappointing history of projections for Medicare and Upward revisions to market expectations of deficits Medicaid attests to the difficulty of pinning down such resulting from a perception that tax and outlay choices responses. The assumptions required for realistic es- were being driven by optimistic scoring would only timates, in many instances, constitute little more than exacerbate this trend, with negative consequences for informed guesses, largely because accurate informa- financial stability and economic growth. In current tion is scarce and our understanding of human behav- circumstances, the risks of more conservative assessior is limited. Not surprisingly, objective analysts ments, which might overstate the loss in revenues, for often reach quite different conclusions about the example, seem modest. Moreover, should the budget impact of a specific outlay or tax program, even deficit turn out smaller than expected, the resultant without trying to trace the feedback effects on the favorable effect on real interest rates would tend to budget estimates from resulting changes in GDP and stimulate private investment. other macroeconomic variables. We must avoid resting key legislative decisions on This does not mean we have no judgments about controversial estimates of revenues and outlays. the dynamic effect of various policy proposals. Martin Should financial markets lose confidence in the integ- Feldstein and others have already made useful contri- rity of our budget-scoring procedures, the rise in butions to our understanding of the long-run effects of inflation premiums and interest rates could more than the tax structure on work, saving, and federal reve- offset any statistical difference between so-called nues. Thus, we may know, or suspect, the direction of static and more dynamic scoring. a long-run response. But our knowledge of its mag- In summary, the current, relatively straightforward nitude and timing is imprecise. For example, although scoring system has served us well in many regards. In the empirical evidence is admittedly mixed, I strongly particular, its very straightforwardness may limit the suspect that the elimination of, or a major reduction possibilities for major estimating differences. Neverin, the rate of taxation on capital gains would entail theless, current scoring does fail to reflect potentially little, if any, loss of total tax revenue over the long important long-term structural supply-side benefits run. However, it is currently not possible to estimate and accordingly unfavorably biases the choice of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 255 fiscal programs. At a minimum, these supply-side indexed federal programs—social security, Suppleeffects should be estimated. Thus, even if not officially mental Security Income, veterans' pensions, military scored, they might influence policy choices. The retirement, and civilian pensions. Once the additional Congress may choose to pass a tax cut with highly interest outlays required to finance the cumulatively favorable supply-side effects on the economy and be higher federal debt are added in, a rough estimate willing to cut spending to accommodate it. In any suggests that, all else equal, the deficit for fiscal year event, in the longer run, we should seek to find a way 1994 would have been smaller by $50 billion if the to embody such effects in our official scoring. overindexing had not occurred. Let me reiterate that, although scoring is a major Although little can be done to remedy errors of the factor in the budget process, process does not mean past, greater efforts should be made in the future to much if real deficit control is not achieved. I do not ensure that the indexing of spending and tax programs intend to get into the deeper programmatic issues accurately reflects trends in the cost of living. In that involved in deficit reduction—and I probably could regard, concerns have been raised that, for a variety of not add very much to the knowledge of these com- reasons, the official CPI may currently be overstating mittees in that regard. I would, however, like to the increase in the true cost of living by perhaps Vi comment briefly on the sensitivity of deficits to the percent to Wi percent per year. To be sure, the particular cost-of-living measure used to index enti- overstatement may be a little less for retirees, whose tlement programs and the income tax structure. Many spending patterns differ from those of younger age difficulties have arisen in the past and doubtless will groups and who are the main recipients of indexed continue to arise in the future. For example, as you federal benefits. But even for this group, it doubtless may know, the Bureau of Labor Statistics made a remains significant. Thus, when the Congress reviews significant change in how it calculates the consumer the methods of indexing spending programs and price index (CPI) in 1983, when it shifted from a taxes, attention should be given to the biases in the method in which the price index for housing was price indexes that are used. Removing the bias in the constructed as if each household were paying the CPI would have a very large impact on the deficit. For current home price and mortgage rate on its residence example, if the annual inflation adjustments to into one that is a more realistic measure of the cost of dexed programs and taxes were reduced 1 percentage home occupancy. Because of the run-up in house point—and making the admittedly strong assumption prices and interest rates between the late 1960s and that there are no other changes in the economy—the early 1980s, the official CPI rose about 9 percent more level of the deficit will be lower by about $55 billion than indicated by the newer, superior measure. By the in the fifth year, including the effects of lower debt time the index was changed, this overstatement had levels. The cumulative five-year savings, I might add, added substantially to the level of outlays in the large would approximate $150 billion. • Statement by Alan Greenspan, Chairman, Board of I perhaps should begin with a brief review of the Governors of the Federal Reserve System, before the current condition of the economy. There is no ques- Committee on Finance, U.S. Senate, January 25, 1995t ion that the past year was one of remarkable progress along many dimensions of macroeconomic perfor- I am pleased to be able to appear here today, to offer mance. The official estimates for the fourth quarter are my thoughts on the economic backdrop for your not yet available, but it is clear that real gross policy discussions. domestic product expanded about 4 percent over the The U.S. economy has recorded some notable course of 1994—the best gain in some time, and one achievements over the past few years, but there is that surpassed most expectations. Importantly, we saw nonetheless much left to be accomplished. The fiscal an accelerated expansion of employment as well. decisions made by the Congress in the next several Cumulatively, payrolls have now increased roughly 6 months will play a critical role in determining the million over the past couple of years, belying in economic welfare of our citizens over the years— dramatic fashion the notion that had developed earlier indeed, the decades—to come. in this decade that our economy had lost its job- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

256 Federal Reserve Bulletin • March 1995 generating ability. With the rapid growth of employ- the probable upward bias of the CPI, it would appear ment, the national unemployment rate has fallen that we have gotten close to achieving effective price sharply, to less than 5Vi percent this past month. stability, though we are not there yet. The economic gains have been broad. They have In 1994, we had a difficult reversal in monetary encompassed almost all major segments of industry policy to navigate. The overhang of debt and the and all parts of the country. The expansion in recent strains that emerged among our financial intermediquarters has been paced by growth of business invest- aries, especially out of the commercial real estate ment and exports, and, as a consequence, we have collapse of the late 1980s, required a heavy dose of seen not only a continuation of robust increases in monetary ease beginning in 1989 to alleviate a sigservice sector employment but also a significant nificant credit crunch. The danger of overstaying that upturn in job creation in the manufacturing sector. policy of ease was clear, particularly as we moved Manufacturing output increased 6.8 percent last year, through 1993, but the right time to change course was and measured factory employment rose almost difficult to determine. Judging from the developments 300,000. I say "measured" because it has been true of the past year, it appears that our policy reversal last for some time now that manufacturers have relied to February was timely—but we will not know for sure an increasing degree on workers supplied by tempo- except in retrospect. rary help firms, which are recorded separately in the As I have stated many times in congressional service industry. But it is clear that last year saw a testimony, I believe firmly that a key ingredient in significant gain in the overall factory work force. achieving the highest possible levels of productivity, Moreover, I would note the reports in the recent real incomes, and living standards is the achievement "Beige Book" survey assembled by our regional of price stability. Thus, I see it as crucial that we Reserve Banks that manufacturers now are expressing extend the recent trend of low and, hopefully, declina greater inclination to add workers directly to their ing inflation in the years ahead. The prospects in this payrolls. This is a sign of the greater confidence that regard are fundamentally good, but there are reasons firms now have that future levels of activity will for some concern, at least with respect to the nearer remain high. term. Those concerns relate primarily to the fact that Geographically, contractions in some sectors such resource utilization rates already have risen to high as defense and finance have left their negative imprint levels by recent historical standards. The current on certain locales, but rising activity and improving unemployment rate, for example, is comparable to the job opportunities have characterized most areas of the average of the late 1980s, when wages and prices country. Notably, California—accounting for roughly accelerated appreciably. The same is true of the one-eighth of the nation's economy—appears to be in capacity utilization rate in the industrial sector. the process of turning around. Unemployment rates Clearly, one factor in judging the inflationary risks have fallen in all regions and are now lower in most in the economy is the potential for expansion of our than they were at the peak of the last business cycle productive capacity. If "potential GDP" is growing expansion. Moreover, the gains in employment have rapidly, actual output can also continue to grow benefited all major demographic segments of the labor rapidly without intensifying pressures on resources. In force as well. this regard, many commentators, myself included, Of crucial importance to the sustainability of these have remarked that there is something of a more-thangains, they have been achieved without a deterioration cyclical character to the evident improvement of in the overall inflation rate. The consumer price index America's competitive capabilities in recent years. (CPI) rose 2.7 percent last year, the same as in 1993. Our dominance in computer software, for example, Inflation at the retail level, as measured by the CPI, has moved us back to a position of clear leadership in has been a bit less than 3 percent for three years advanced technology after some faltering in the running now—the first time that has occurred since 1970s. But, although most analysts have increased the early 1960s. This is a signal accomplishment, for their estimates of America's long-term productivity it marks a move toward a more stable economic growth, it is still too soon to judge whether that environment in which households, businesses, and improvement is a few tenths of a percentage point governmental units can plan with greater confidence annually, or even more, perhaps moving us much and operate with greater efficiency. When we consider closer to the more vibrant pace that characterized the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 257 early post-World War II period. It is fair to note, managers report slower supplier deliveries and inhowever, that the fact that labor and factory utilization creasing shortages of materials. Indeed, firms appear rates have risen as much as they have in the past year to have been building their inventories of materials in or so does argue that the rate of increase in potential recent months so as to ensure that they will have is appreciably below the 4 percent growth rate of adequate supplies on hand to meet their production 1994. schedules. These pressures have been mirrored in a Knowing in advance our true growth potential sharp rise over the past year in the prices of raw obviously would be useful in setting policy because materials and intermediate components. There are history tells us that economies that strain labor force increasing reports that firms are considering marking and capital stock limits tend to engender inflationary up the prices of final goods to offset those increased instabilities, which undermine growth. Moreover, in costs. In the labor market, anecdotal reports of "shortsuch an environment asset prices can begin to rise ages" of workers have become more common—as unsustainably, contributing to an unstable financial indicated, for example, in our Beige Book last week— and economic environment. It is true, however, that in and there are vague signs of upward pressures on modern economies output levels may not be so rigidly wages. To be sure, increased wages are a good thing constrained in the short run as they used to be when if they can be achieved without commensurate accellarge segments of output were governed by facilities eration in prices, but they are not beneficial if they are such as the old open hearth steel furnaces that had merely a part of a general pickup in inflation. A rated capacities that could not be exceeded for long hopeful sign in this regard, however, is that to date the without breakdown. Rather, the appropriate analogy is trends in money and credit expansion have remained a flexible ceiling that can be stretched when pressed, subdued. They do not suggest that what I have but as the degree of pressure increases, the extent of referred to elsewhere as the "financial tinder" needed flexibility diminishes. It is possible for the economy to support an ongoing inflation process is in place. to exceed "potential" for a time without adverse That kind of ongoing process also would be exconsequences by extending workhours, by deferring pected to involve a different expectational climate maintenance, and by forgoing longer-term projects. than seems to prevail today. Despite the marked Moreover, as world trade expands, access to foreign improvement in consumer confidence overall, the sources of supply augments to a degree the flexibility survey readings on consumers' views of whether jobs of domestic productive facilities for goods and some are easy to get fall far short of the previous cyclical services. peak in 1989. Moreover, there is evidence that the Aggregative indicators, such as the unemployment number of people voluntarily leaving their jobs is rate and capacity utilization, may be suggestive of subnormal currently. This suggests that the deepemerging inflation and asset price instability prob- seated fear of job insecurity has not fully dissipated lems. But, they cannot be determinative. History despite ample evidence of strong job growth recently. shows clearly that given levels of resource utilization Some analysts attribute this phenomenon to workcan be associated with a wide range of inflation rates. ers' concerns about losing health insurance and, for Accordingly, policymakers must monitor develop- some, pension coverage if they change jobs. Whatever ments on an ongoing basis to gauge when economic the cause, the lingering sense of insecurity doubtless potential actually is beginning to become strained— has been a factor damping wage growth and overall irrespective of where current unemployment rates or labor costs. Because the latter, on a consolidated capacity utilization rates may lie. If we are endeavor- basis, account for roughly two-thirds of overall costs ing to fend off instability before it becomes debilitat- in our economy, slower wage growth combined with ing to economic growth, direct evidence of the emerg- strong cyclical productivity growth has restrained ing process is essential. Consequently, one must look increases in unit labor costs and hence in prices of beyond broad indicators to gauge the inflationary final goods and services. tendencies in the economy. As overall output growth of necessity slows in an In this context, aggregate measures of pressure in environment of high resource utilization, however, so labor and product markets do seem to be validated by will cyclical productivity growth. Moreover, if labor finer statistical and anecdotal indications of tensions. market tightness assuages fears of job insecurity, In the manufacturing sector, for example, purchasing pressures to raise wages will intensify and unit labor Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

258 Federal Reserve Bulletin • March 1995 costs could accelerate. In the later stages of previous risk premium is costly because it raises the hurdle that business cycles, profit margins were squeezed, but must be surpassed when looking at the expected some of the increases in the underlying unit labor cost returns on possible investment projects. were nonetheless passed through into final goods But the influence of the fiscal imbalance of the prices and inflation picked up. Thus far in the current federal government on capital formation is broader cycle, any tendency toward the emergence of this kind than that. The federal deficit drains off a large share of of process has been muted by a prevailing concern a regrettably small pool of domestic private saving, among firms that, despite capacity pressures, enough thus contributing further—and perhaps to an even slack and subdued unit costs remain in the system to greater degree—to the elevation of real rates of foster competitive inroads on those who try to price interest in the economy. Admittedly, there is some above the market. But this form of discipline may also uncertainty about the causes of what seem to be become less effective as pressures on resources per- relatively high real long-term rates around the world, sist. Consequently, it may be that these pressures will as was noted by leaders of the largest industrial lead to some deterioration in the price picture in the nations at their summit meeting last year. But the vast near term, but any such deterioration should be majority of analysts would agree that in the United contained if the Federal Reserve remains vigilant. States the current sizable federal deficits, and the The actions of the Congress and the Administration projected growth of those deficits over the decades in the fiscal sphere will also be important in maintain- ahead, are a significant element in the story. ing public confidence that inflation will be subdued. In sum, the recent performance of the macro- There can be no doubt that the persistence of large economy has been encouraging. But much of the federal budget deficits represents in the minds of improvement is in the nature of cyclical developmany individuals a potential risk. Although we clearly ments, and we all have our work cut out for us if we have avoided it in recent years, history is replete with are to extend these gains and foster long-term trends examples of fiscal pressures leading to monetary that enhance the welfare of all of our citizens. The excesses and then to greater inflation. Currently, I central role of the Federal Reserve today is to ensure strongly suspect that investors here and abroad are that our economy remains on a sustainable, noninflaexacting from issuers of dollar-denominated debt an tionary path. For the Congress, a crucial focus should extra inflation risk premium that reflects not their be continuing the process of fiscal consolidation and estimate of the most likely rate of price level increase rectifying the secular shortfall in domestic saving that over the life of the obligation but the possibility that is limiting the growth of our nation's productive it could prove to be significantly greater. This inflation potential. • Statement by Alan Greenspan, Chairman, Board of I perhaps should begin with a brief review of the Governors of the Federal Reserve System, before the current condition of the economy. In 1994, we had a Committee on the Budget, U.S. Senate, January 26, difficult reversal in monetary policy to navigate. The 1995 overhang of debt and the strains that emerged among our financial intermediaries, especially out of the commercial real estate collapse of the late 1980s, I am pleased to be able to appear here today to offer required a heavy dose of monetary ease beginning in my thoughts on the economic and fiscal backdrop for 1989 to alleviate a significant credit crunch. The danger your policy discussions. of overstaying that policy of ease was clear, particularly The U.S. economy has recorded some notable as we moved through 1993, but the right time to change achievements over the past few years, but there is course was difficult to determine. Judging from the nonetheless much left to be accomplished. The fiscal developments of the past year, it appears that our policy decisions made by the Congress in the next several reversal last February was timely—but we will not know months will play a critical role in determining the for sure except in retrospect. economic welfare of our citizens over the years— There is no question that the past year was one of indeed, the decades—to come. remarkable progress along many dimensions of mac- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 259 roeconomic performance. The official estimates for outlook for prices and the economy. There can be no the fourth quarter are not yet available, but it is clear doubt that the persistence of large federal budget that real gross domestic product expanded 4 percent deficits represents in the minds of many individuals a over the course of 1994—the best gain in some time potential risk. Although we clearly have avoided it in and one that surpassed most expectations. Impor- recent years, history is replete with examples of fiscal tantly, we saw an accelerated expansion of employ- pressures leading to monetary excesses and then to ment as well. Cumulatively, payrolls have now in- greater inflation. Currently, I strongly suspect that creased roughly 6 million over the past couple of investors here and abroad are exacting from issuers of years, belying in dramatic fashion the notion that had dollar-denominated debt an extra inflation risk predeveloped earlier in this decade that our economy had mium that reflects not their estimate of the most likely lost its job-generating ability. With the rapid growth rate of price level increase over the life of the of employment, the national unemployment rate has obligation but the possibility that it could prove to be fallen sharply, to less than 5Vi percent this past month. significantly greater. This inflation risk premium is Of crucial importance to the sustainability of these costly because it raises the hurdle that must be gains, they have been achieved without a deterioration surpassed when looking at the expected returns on in the overall inflation rate. The consumer price index possible investment projects. (CPI) rose 2.7 percent last year, the same as in 1993. But the influence of the fiscal imbalance of the Inflation at the retail level, as measured by the CPI, federal government on capital formation is broader has been a bit less than 3 percent for three years than that. The federal deficit drains off a large share of running now—the first time that has occurred since a regrettably small pool of domestic private saving, the early 1960s. This is a signal accomplishment, for thus contributing further—and perhaps to an even it marks a move toward a more stable economic greater degree—to the elevation of real rates of environment in which households, businesses, and interest in the economy. Admittedly, there is some governmental units can plan with greater confidence uncertainty about the causes of what seem to be and operate with greater efficiency. When we consider relatively high real long-term rates around the world, the probable upward bias of the CPI, it would appear as was noted by leaders of the largest industrial that we have made considerable progress toward nations at their summit meeting last year. But the vast achieving price stability. majority of analysts would agree that in the United I have stated many times in congressional testi- States the current sizable federal deficits, and the mony that I believe firmly that a key ingredient in projected growth of those deficits over the decades achieving the highest possible levels of productivity, ahead, are a significant element in the story. real incomes, and living standards is the achievement I am sure that you are aware of the general picture of price stability. Thus, I see it as crucial that we with respect to the flows of saving and investment in extend the recent trend of low and, hopefully, declin- the economy, but it may be worth spending a few ing inflation in the years ahead. The prospects in this minutes to review the recent data. I have attached a regard are fundamentally good, but there are reasons couple of charts to my statement to aid you in for some concern, at least with respect to the nearer following my description.1 As you can see in the term. Those concerns relate primarily to the fact that upper chart, there has been a dramatic decline over the resource.utilization rates already have risen to high past couple of decades in the ratio of net domestic levels by recent historical standards. The current nonfederal saving to net domestic product. The ratio unemployment rate, for example, is comparable to the last year, based on data for the first three quarters of average of the late 1980s, when wages and prices the year, was about 6 percent, as compared with more accelerated appreciably. The same is true of the than 9 percent, on average, during the 1960s and the capacity utilization rate in the industrial sector. It may 1970s. In the past few years, net business saving has be that these pressures will lead to some deterioration moved up, as corporate profitability has experienced a in the price picture in the near term, but any such cyclical improvement, but the personal saving rate has deterioration should be contained if the Federal Reserve remains vigilant. 1. The attachment to this statement is available from Publications The actions of the Congress and the Administration Services, Board of Governors of the Federal Reserve System, in the fiscal sphere will also be important to the Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

260 Federal Reserve Bulletin • March 1995 been running at its lowest levels in nearly half a in the international marketplace. To support that century. The causes of the low private saving rate are investment, we shall need to raise the level of domeshotly debated by economists, and it is fair to say that tic saving. Absent a rise in private saving, it will be it is not yet understood. Americans have not always necessary to eliminate the structural deficit in the been low savers, but—for whatever reasons—that has federal budget. Indeed, it has long been my judgment been the pattern recently and it is a reality with that it would be wise to target achievement of at least important implications for the financial markets. a modest surplus down the road. If we were a high-saving nation, we might be in a If the Congress were to pass a balanced budget position to better tolerate the federal fiscal imbalance. amendment, the need for aiming at a structural surplus But the federal deficit has generally been absorbing would become even more important. Unless there half or more of the available domestic saving since the were a surplus to provide some cushion, the inevitable early 1980s. Even with the decline in the federal cyclical fluctuations in economic activity would credeficit last year, it amounted to almost 45 percent of ate pressures either to set aside the requirements of the domestic nonfederal saving. amendment or to take budgetary actions that are How then, one might ask, has it been possible for inimical to economic stability. It should not be necthe United States to experience the impressive growth essary to raise taxes or cut spending in response to a in business fixed investment that it has of late? There transitory weakening of the economy. are several arithmetic components to the answer, but I I recognize that the achievement of structural balshall focus on two particularly central points. The first ance, let alone surplus, is no small political challenge. is that while gross investment has been rising rapidly Moreover, as the Kerrey-Danforth entitlement comand has been accounting for a substantial share of mission recently documented, the problem that must GDP, net investment has only recently reached appre- be addressed is not one with a 2002 endpoint. The ciable dimensions. The difference between gross and outlook is for a mounting fiscal imbalance during the net investment is, of course, depreciation, and the fact twenty-first century, given current programs and is that depreciation has been rising steeply because of likely population and labor force trends. We should the shift in the composition of the capital stock toward not be seduced by the mounting trust fund surpluses equipment—especially computers—with shorter use- today into thinking that we can postpone dealing with ful lives. Another ingredient in the reconciliation of the entitlement gap; the cost of waiting is going to be the domestic saving and investment balance is saving far more painful adjustments, which could be avoided from abroad. Our nation has been running persistent by moderate actions legislated today to become effecand often sizable deficits in its current account posi- tive after the turn of the century. tion vis a vis the rest of the world; once a leading This longer-range perspective obviously has releprovider of capital to other nations, we have become vance for the tax and spending measures the Congress a net importer of capital. will be considering. Some basic economic principles In today's more open and integrated international must be observed if you are to maximize the federal capital markets, it is easier to finance investment government's contribution to the fostering of high abroad. And economic efficiency may be served by real incomes and to alleviating the entitlement probthe tendency for capital to flow across borders to lem. Most importantly, not all taxes or expenditures where the potential returns on real investment appear are equal in terms of their influence on the productive highest and the risks the lowest. But this does not capacity of the economy. Although, as I testified mean that we should view the pattern of U.S. external recently, I would caution against major changes in deficits as sustainable in the long run. Looking back at budget-scoring techniques at this time, I do not mean the history of the past century or more, the record that the Congress should not give a good deal of would suggest that nations ultimately must rely on attention to the effects of its fiscal actions on the their domestic savings to support domestic invest- incentives faced by private decisionmakers. ment. In sum, the recent performance of the macro- The challenge for the United States over the com- economy has been encouraging. But much of the ing decades is clear. We must sustain higher levels of improvement is in the nature of cyclical developinvestment if we are to achieve healthy increases in ments, and we all have our work cut out for us if we productivity and be strong and successful competitors are to extend these gains and foster long-term trends Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 261 that enhance the welfare of all of our citizens. The be continuing the process of fiscal consolidation and central role of the Federal Reserve today is to ensure rectifying the secular shortfall in domestic saving that that our economy remains on a sustainable, noninfla- is limiting the growth of our nation's productive tionary path. For the Congress, a crucial focus should potential. • Statement by Alan Greenspan, Chairman, Board of ward significant improvement in its economic and Governors of the Federal Reserve System, before the financial structure. As a consequence, Mexico has Committee on Foreign Relations, U.S. Senate, Januaryb een able to broaden its participation in the global 26, 1995 economic and financial environment. Over the past decade Mexico has made major strides. It has shed what was an inflation-prone, highly I am pleased to appear before this committee today to unstable economic structure with excessive governreview the Mexican economic and financial situation ment involvement and has taken on the characteristics and the important efforts under way to avoid a major of a vibrant economy oriented toward open markets. international financial disruption and to restore mar- As a result, in 1990 Mexico was able to reenter the ket confidence in Mexico. international credit markets on a significant scale. Mexico's current financial difficulties are best un- Foreign investors began voluntarily lending to Mexderstood in the context of much broader trends in ico substantial amounts for the first time since 1982. international finance during the past ten to fifteen Shortly thereafter, as is characteristic of the new years—the globalization of finance—in which Mex- global financial system, foreign capital investment in ico in recent years has participated and from which it Mexico began to accelerate. Indeed, in 1992 and 1993 has benefited. As a result of very rapid increases in the inflow of capital was so considerable that the Bank telecommunications and computer-based technologies of Mexico had to buy dollars on a substantial scale to and products, a dramatic expansion in financial flows prevent the peso from becoming too strong. As a across borders and within countries has emerged. The consequence, Mexico's international reserves inpace has become truly remarkable. These positive creased to well over $25 billion at their peak in early technology-based pressures have affected the behav- 1994 from under $10 billion in 1990. Nonetheless, ior of markets to a point where governments, even Mexico's trade deficit soared, and its current account reluctant ones, increasingly felt compelled to deregu- deficit reached approximately 6 percent of gross late and free up internal credit and financial markets. domestic product in 1993. Although there can be little doubt that these ex- As part of efforts to accelerate its move toward traordinary changes in global finance have, on bal- status as an industrial country, the government of ance, been beneficial in facilitating significant im- Mexico endeavored to link the peso to the U.S. dollar. provements in economic structures and living It adopted a complex exchange rate regime through standards throughout the world, they also have some which the Mexican peso was linked to the U.S. dollar potential negative consequences. In fact, although the via a moving exchange rate band. Like many nations speed of transmission of positive economic events has that have tried to "import" the anti-inflationary polibeen an important plus for the world in recent years, cies of another country by locking their exchange it is becoming increasingly obvious—and Mexico is rates, to a greater or lesser extent, to the currency of a the first major case—that significant mistakes in major trading partner, Mexico hoped to gain quick macroeconomic policy also reverberate around the benefits through significant reductions in inflation. world at a prodigious pace. In any event, progress— And indeed, Mexico was remarkably successful for and indeed developments affecting the emerging several years. The inflation rate fell sharply from global financial system are truly that—is not revers- almost 160 percent in 1987 to 7 percent by 1994, but ible. We must learn to live with it. at the same time Mexico was losing international Mexico, which had been hobbled for a number of competitiveness and its current deficit widened. years after the debt crisis of 1982, has more recently However, the exchange rate policy adopted by gone through a major economic metamorphosis to- Mexico was risky, with little tolerance for policy error Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

262 Federal Reserve Bulletin • March 1995 or capacity to absorb shocks. This fact is especially short of a significant further tightening of monetary relevant in the context of a world in which portfolio policy. But by then it was by no means clear that the investments can shift rapidly into and out of a country. degree of tightening required to support the peso was At a minimum, a close adherence to the monetary consistent with economic growth. Mexican authorities policy of the host nation is required. The breakdown were apparently loath to risk recession, hoping instead of the Exchange Rate Mechanism of the European for a spontaneous return of foreign confidence and Monetary System in 1992 was a particularly striking capital. But in retrospect it is clear that even if private case of trying to lock exchange rates together when capital inflows had again accelerated, it was unrealiscomparable economic forces were not close to being tic to expect them to match the pace of 1993, which identical among the countries. was arguably unsustainable. The chosen alternative to Moreover, a considerable part of the surge of a dramatically tightened monetary policy—borrowing capital into Mexico in the 1990s has been in portfolio via Tesobonos and drawing on reserves to intervene in investments, which may move in quite rapidly but the foreign exchange market—had a limit. Indeed, also can try to move out just as rapidly, as has been that limit was reached on December 20, and the demonstrated in recent months. defense of the peso came to an abrupt end. Investors' appreciation of the momentum behind Had the adjustment of the peso been made much Mexico's transformation began to wane in early 1994, earlier in the context of a much tighter monetary at least in substantial part as a consequence of regime, it would likely have resulted in a more limited noneconomic events—the Chiapas uprising, political decline rather than in the abrupt collapse that Mexico assassination, and the August election. Foreign inves- experienced. tors at times became somewhat hesitant. Such hesita- I suspect that if this episode had played out, say a tion presented problems because Mexico needed to couple of decades ago, when the global financial continue to financet he large excess of its imports over system was far less sophisticated, the immediate its exports, which emerged initially as a consequence decline in the peso's value would have been far of the earlier spontaneous capital inflows. Moreover, smaller than the more than 30 percent decline expe- Mexico needed not only to attract new portfolio and rienced since December 20. The ability of foreign direct investments but also to hold on to the portfolio and, no doubt, domestic portfolio capital to flee into investments it already had. Direct investment by its dollars was far less twenty years ago. Conversely, it very nature, of course, is largely immobile, but probably would not have been possible for Mexico to portfolio investments are less so. In this context, have attracted so much foreign portfolio capital in the simply allowing the trade balance to adjust precipi- first place. tously to the reversals of capital inflows could well Looking back, the moving exchange rate band for destabilize Mexico's economic and trading relations. the peso apparently failed to compensate fully for As 1994 progressed, private foreign investment the widening differential in prices of tradable goods inflows slowed. In their endeavor to support the denominated in dollars compared to such prices exchange rate and to finance the very large current denominated in pesos. Accordingly, the peso exaccount deficit, the Mexican authorities drew down change rate at 3.5 to the U.S. dollar was arguably Mexico's foreign exchange reserves. At the same not sustainable indefinitely—short of an unrealistitime, Mexico borrowed short term in dollars and in cally massive increase in domestic saving in Mex- Tesobonos, which are debt obligations the peso value ico or a continuation of the very large foreign of which is linked to the peso-dollar exchange rate. capital inflows of 1992 and 1993 with such inflows Mexican authorities evidently believed, or fervently being heavily invested in cost-reducing capital hoped, that the reduction in foreign investor interest formation. It is imaginable that such a continuation was temporary and that after the uncertainty of the of private flows could have sustained the exchange August election was behind them, confidence and rate while bringing the underlying Mexican cost private capital inflows would reemerge. If so, they structure into line with 3.5 pesos to the dollar. But were tragically mistaken. the needed level of private capital inflows that would have to have been invested in capital forma- Meanwhile, it became increasingly clear to many tion—rather than being devoted to increased conobservers during the autumn that the prevailing level sumption—could not credibly be sustained. In the of Mexico's exchange rate could not be sustained Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 263 end, Mexico's high-risk exchange rate strategy torts the incentives perceived by investors. Thus, failed. appropriate conditionally must be associated with the As a consequence of Mexico's financial difficulties, guarantees to underline the fact that they are being and the potential movement of vast financial resources provided at high cost and on rigorous terms in around the world, the problem that we now face is that exceptional circumstances. Moreover, Mexico's ecothere have been withdrawals of capital from a number nomic policies are the key to ensuring that the of widely dispersed nations—industrial as well as guarantee facility actually does help to stabilize the developing. If economically advanced Mexico is hav- Mexican economic and financial situation; ultimately ing difficulties, it is being argued, perhaps the outlook only sound policies that are sustained over time will for other nations dependent on foreign capital inflows restore investors' confidence in Mexico. External is more suspect generally. Financial markets in Brazil guarantees can only offer temporary support. Noneand Argentina have already felt the repercussions of theless, I see no viable alternative to the type of Mexico's problems. There is also some evidence that program that is being presented to the Congress if the similar pressures have emerged in other developing financial erosion is to be stanched before it threatens countries, those not even remotely related to Mexico, to become a wider problem. for example, in Asia and in central Europe, as well as I want to emphasize that once the Mexican situation in a few industrial countries. is stabilized, it will be important for the authorities of Financial officials both here and abroad initially leading governments to examine closely the lessons to thought it possible that the difficulties in Mexico be learned from this latest episode in international would reach a climax and resolve themselves and that finance, and to determine how to deal with similar market adjustments would quickly be made, removing emerging financial problems that have implications the threat of widespread contagion affecting the inter- for the health of our free market-based international national financial system. Mexican financial markets financial system. and the peso continued to fester and showed no I have no doubt that, as a consequence of the evidence of stabilizing, and we at the Treasury and the Mexican episode, other developing nations have be- Federal Reserve concluded that a resolution of the come sensitized to the problems of depending too situation was not imminent, short of more dramatic heavily on large inflows of foreign portfolio capital. action to confront Mexico's confidence problem. This tendency of the new global financial system The situation had moved beyond one capable of should, as a consequence, become largely selfbeing addressed by short-term lending facilities pro- correcting in much the same manner that recent losses vided by the Exchange Stabilization Fund of the U.S. on derivative instruments have helped to condition Treasury, the swap arrangement of the Federal Re- those markets. serve System, and other central banks acting through What happens to Mexico is of particular importhe Bank for International Settlements. The decision tance to the United States. Because of the extensive to implement the type of guarantees of credit market interchanges across our common border, our ecoborrowings by Mexico that now appears to be neces- nomic destinies are closely intertwined. Mexico is the sary has broad implications that can only be addressed third largest market for U.S. exports and the third appropriately by the political leadership of this coun- largest source of U.S. imports, with about $50 billion try. shipped each way last year. Illegal immigration from The objective of the proposed guarantee program is Mexico is inversely related to economic growth and to halt the erosion in Mexico's financing capabilities progress in Mexico. It is important to the United before it has dramatic impacts far beyond those States politically as well as economically, therefore, already evident around the world. This program, in that Mexico succeed in reestablishing sustained nonmy judgment, is the least worst of the various initia- inflationary growth. To achieve this, market confitives that present themselves as possible solutions to a dence in Mexico's economic potential and financial very unsettling international financial problem. Our stability must be restored. concerns are not so much with potential losses to the However, what happens in Mexico must also be U.S. taxpayer, which we believe will be minimized, viewed from a larger, historical perspective. The but with what economists call moral hazard—when developments of recent weeks also need to be evaluthe active involvement of an external guarantor dis- ated in the context of the Cold War and its aftermath. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

264 Federal Reserve Bulletin • March 1995 It became particularly evident to developing countries and consulted with, their counterparts in Mexico to over the past decade that the economic and political learn the mechanisms that the Mexican authorities regime that characterized the Soviet Union was fatally had employed to achieve near-first-world status. flawed and that the economic structure of the United Indeed, in 1994 Mexico was admitted to the Orga- States and the rest of the industrial world based on nization for Economic Cooperation and Developfree markets and private ownership was clearly a ment, the organization of industrial nations, a de superior model for developing nations to emulate. facto badge of first-world status. Indeed, in recent years there has been a remarkable Unless Mexico's efforts to restore economic stabiltrend in that direction characterized by pervasive ity and financial market confidence succeed, years of privatization, price and wage decontrol, and the de- economic reforms in Mexico would be threatened by velopment of financial structures as developing coun- pressures to reimpose controls in many areas of its tries endeavored to replicate elements of the advanced economy and to reestablish governmental interference free-market economies. in Mexico's increasingly vibrant private sector. In The model of economic and political transition addition, a reversal of Mexico's economic reforms from a rigid state-directed system toward a free- and a spread of Mexico's financial difficulties to other market structure was perceived to be Mexico. emerging markets could halt, or even reverse, the Starting from a low base in the mid-1980s, Mexico global trend toward market-oriented reform and demanaged to turn itself around in such an extraordi- mocratization. This would be a tragic setback not only nary way that many of the finance ministers and for these countries but for the United States and the central bankers of the developing nations looked to, rest of the world as well. • Chairman Greenspan presented identical testimony before the Committee on Banking and Financial Services, U.S. House of Representatives, January 25, 1995, and before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, January 31, 1995. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

265 Announcements CHANGE IN THE DISCOUNT RATE ing the past year. These procedures, now standard, are the following: The Federal Reserve Board approved on February 1, 1995, an increase in the discount rate from 1. Announce each change in the stance of mon- 43A percent to 5LA percent, effective that day. etary policy, including intermeeting changes, on In a related move, the Federal Open Market the day they are made. When no change is made Committee agreed that this increase should be re- at a meeting, the Committee will normally just flected fully in interest rates in the reserve markets. announce when the meeting ended and that there Despite tentative signs of some moderation in are no further announcements. However, in some growth, economic activity has continued to infrequent circumstances, the Committee might advance at a substantial pace, while resource utili- decide to issue a statement even when no policy zation has risen further. In these circumstances, the action is taken. Federal Reserve views these actions as necessary to 2. Transcripts of FOMC meetings for an entire keep inflation contained, and thereby foster sustain- year will be released with a five-year lag. Tranable economic growth. scripts will be lightly edited, as they are now, In taking the discount action, the Board to enhance readability and redact confidential approved requests submitted by the Boards of material. Directors of the Federal Reserve Banks of Boston, New York, Richmond, Chicago, St. Louis, No change was made in the procedure for release Kansas City, and San Francisco. Subsequently, the of FOMC minutes, which will continue to be avail- Board approved actions by the Boards of Directors able, with dissenting statements, at 4:30 p.m. on of the Federal Reserve Banks of Philadelphia, the Friday after the next meeting. Atlanta, Minneapolis, and Dallas, effective February 2, and by the Federal Reserve Bank of Cleveland, effective February 9, increasing the discount INCREASE IN THE RECIPROCAL CURRENCY rates of those banks from 43A percent to 5LA per- ARRANGEMENT WITH THE BANK OF MEXICO cent. The discount rate is the interest rate that is charged depository institutions when they borrow The Federal Reserve announced on February 1, from their District Federal Reserve Banks. 1995, that its reciprocal currency "swap" arrangement with the Bank of Mexico had been increased from $4.5 billion to $6 billion. This temporary ADOPTION OF PROCEDURE increase is part of the Multilateral Program to FOR DISCLOSING POLICY DECISIONS Restore Financial Stability in Mexico. BY THE FEDERAL OPEN MARKET COMMITTEE A swap arrangement is a renewable, short-term facility under which a central bank agrees to The Federal Reserve announced on February 2, exchange on request its own currency for the cur- 1995, adoption of formal procedures for disclosing rency of the other party up to a specified amount policy decisions made by the Federal Open Market over a limited period of time. Committee (FOMC) and for the release of tran- In all swap arrangements, the Federal Reserve scripts of future FOMC meetings. Bank of New York acts on behalf of the Federal Procedures adopted by the Committee are the Reserve under the direction of the Federal Open same as those followed on a provisional basis dur- Market Committee. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

266 Federal Reserve Bulletin • March 1995 APPOINTMENT OF NEW MEMBERS TO THE Housing Development Corporation, which was founded in 1977 to revitalize local urban neighborhoods by reha- CONSUMER ADVISORY COUNCIL bilitating or constructing safe, affordable housing units for lower-income families and individuals. Under The Federal Reserve Board on January 13, 1995, Mr. Freeman's leadership, the corporation identifies and named thirteen new members to its Consumer develops affordable housing properties and offers an Advisory Council to replace those members whose array of home ownership and employment counseling services to prospective residents of those properties. The terms had expired and designated a new Chairman corporation also recently developed the Freedom Square and Vice Chairman of the council for 1995. Shopping Center, a 20,000-square-foot retail center, The Consumer Advisory Council was estab- which has provided jobs and shopping opportunities for lished by the Congress in 1976, at the suggestion of neighborhood residents. the Board, to advise the Board on the exercise of its duties under the Consumer Credit Protection Act David C. Fynn and on other consumer-related matters. The thirty- Cleveland, Ohio member council, with staggered three-year terms Mr. Fynn is Senior Vice President of National City Bank of office, meets three times a year. and Manager of Regulatory Risk for National City James L. West, President of Jim West Financial Corporation, a $31 billion bank holding company with Group, Inc. in Tijeras, New Mexico, was desig- offices in Ohio, Kentucky, and Indiana. He manages the nated Chairman. His term will run through Decem- regulatory compliance responsibilities of the corporaber 1995. Katharine W. McKee, Transition Direc- tion, including its performance under the Community Reinvestment Act. He has also served for six years tor for the Community Development Financial as treasurer of Neighborhood Housing Services in Institutions Fund in Washington, D.C., was desig- Cleveland. nated Vice Chairman. She is the former Associate Director of the Center for Community Self-Help in Robert G. Greer Durham, North Carolina. Her term on the council Houston, Texas expires in December 1996. The thirteen new members are the following: Mr. Greer is Chairman of the Board of Tanglewood Bank, a financial institution with $220 million in assets Thomas R. Butler located in the Tanglewood and Memorial sections of Houston. The bank recently has developed affordable, Riverwoods, Illinois low-to-moderate-income mortgage and home improve- Mr. Butler is President and Chief Operating Officer of ment products and continues to support the programs of Discover Card Services. He oversees marketing, sales, area schools. Mr. Greer co-chairs the Development operations, and credit policy administration for Discover Board of "I Have a Dream-Houston," a group that Card, which is the credit and financial services card tutors, mentors, and provides college scholarships for issued by Dean Witter, Discover & Co. Mr. Butler also minority children in Houston's inner city. Mr. Greer has serves as chairman of Greenwood Trust Company in served as a director of the Federal Reserve Bank of Greenwood, Delaware, the issuing bank for the Discover Dallas and as a member of its Advisory Council on Card. Financial Institutions. He is also a past president of the Texas Bankers Association. Robert A. Cook Baltimore, Maryland Kenneth R. Harney Mr. Cook is a partner in the law firm of Venable, Baetjer Chevy Chase, Maryland and Howard, where he concentrates in the areas of Mr. Harney is a journalist associated with the Washingbanking and consumer financial transactions. Mr. Cook ton Post Writers Group and for the past fifteen years has chairs the Truth in Lending Subcommittee of the Ameriwritten a nationally syndicated, consumer-oriented can Bar Association's Committee on Consumer Financolumn called "The Nation's Housing." Since 1982, he cial Services. He has served as chairman of the Conhas also managed an independent business that offers sumer Credit Committee of the Maryland State Bar services in connection with continuing education pro- Association. grams and seminars—typically involving fair lending, community development, and real estate issues—for the Emanuel Freeman legal, accounting, commercial and residential housing, Philadelphia, Pennsylvania and mortgage finance industries. Mr. Harney is writing a Mr. Freeman is President of the Greater Germantown book about the American system of consumer credit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 267 Gail K. Hillebrand accounts for about 7 million active credit cards issued San Francisco, California for Target, Mervyn's, Dayton's, Hudson's, and Marshall Field's stores around the country. Ms. Hillebrand is Litigation Counsel for the West Coast Regional Office of Consumers Union of U.S., Inc. She Lisa Rice-Coleman oversees litigation and directs and performs legisla- Toledo, Ohio tive and administrative advocacy efforts for low- and moderate-income consumers in the areas of credit, Ms. Rice-Coleman is Executive Director of the Fair finance, banking, the Commercial Code, and the impact Housing Center, which was created in 1975 to eliminate on consumers of changes to the legal system. Ms. Hille- discriminatory housing practices in the Toledo area. She brand also is involved in negotiating for commitments oversees all complaint investigations, administrative by financial institutions in connection with their perfor- filings, and complaint litigation by the center. Ms. Ricemance under the Community Reinvestment Act and in Coleman also provides consulting and educational sermonitoring their progress in implementing those com- vices on behalf of the center to both housing professionmitments. Ms. Hillebrand is a founding incorporator and als and individuals seeking housing. As the center's serves on the executive committee of the California general operating manager, she handles fiscal manage- Reinvestment Committee. She also serves as a fellow ment matters and fund-raising activities. Ms. Riceto the American Bar Association's Committee on Con- Coleman is a member of the board of directors for the sumer Financial Services and as an observer to the National Fair Housing Alliance and serves on its Legal Drafting Committees on Articles 2 and 9 of the National Issues Committee. She has also been appointed by Gov- Conference on Uniform State Laws. ernor Voinovich to the Ohio Housing Trust Fund Advisory Committee. Terry Jorde Cando, North Dakota John R. Rines Detroit, Michigan Ms. Jorde is President and Chief Executive Officer of Towner County State Bank, a $24 million bank in an Mr. Rines is President of General Motors Acceptance agricultural community of about 1,600 residents. Corporation, one of the largest financial services compa- Ms. Jorde serves on the executive committee of the nies in the United States. He oversees GMAC's activities Independent Bankers Association of America and on worldwide, including its insurance and mortgage subsid- North Dakota's State Banking Board. She is also a past iaries. Mr. Rines joined General Motors in 1970 and held president of the Independent Community Bankers of a succession of positions until being named President of North Dakota. GMAC in 1992 and elected as a Vice President of General Motors last year. Eugene I. Lehrmann Madison, Wisconsin Julia M. Seward Richmond, Virginia Mr. Lehrmann is President of the American Association of Retired Persons (AARP), a national membership Ms. Seward is Vice President and Corporate Community group for individuals aged fifty and over that is head- Reinvestment Officer for Signet Bank, a $10.8 billion quartered in Washington, D.C. The AARP provides leg- bank with 250 branches in Virginia, Maryland, and the islative advocacy, research, informative programs, and District of Columbia. She coordinates all aspects of the community services through a network of local chapters bank's performance under the Community Reinvestment and volunteers around the country. Mr. Lehrmann has Act. Ms. Seward also co-chairs the Community Reintestified, on behalf of AARP, before numerous congres- vestment Committee of the Consumer Bankers Associasional committees representing the interests of older tion and chairs the Virginia Bankers Community Rein- Americans. Until his retirement in 1979, Mr. Lehrmann vestment Task Force. Previously she was a staff member was a teacher of vocational education and a school of the Richmond Urban Institute and worked as a private administrator. community reinvestment consultant to both financial institutions and community groups. Ronald A. Prill Minneapolis, Minnesota Other council members, whose terms continue through 1995 and 1996, are listed below, together Mr. Prill is Vice President, Credit, for Mervyn's, a with the expiration date of each one's term of 280-store retail chain that operates in fifteen states. He office. oversees all aspects of Mervyn's credit card marketing, credit standards, and credit operations. Later this year, Mr. Prill will assume responsibility for all credit card D. Douglas Blanke, Director of Consumer Policy, operations of the Dayton Hudson Corporation. He will Office of the Attorney General, St. Paul, Minnesota, head up an office in Minneapolis that will manage the December 31, 1995 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

268 Federal Reserve Bulletin • March 1995 Alvin J. Cowans, President and CEO, McCoy Federal PUBLICATION OF THE EXAMINATION Credit Union, Orlando, Florida, December 31, 1996 MANUAL FOR U.S. BRANCHES AND Michael Ferry, Staff Attorney, Consumer Unit, Legal AGENCIES OF FOREIGN BANKING Services of Eastern Missouri, Inc., St. Louis, Missouri, ORGANIZATIONS December 31, 1995 The 1995 Examination Manual for U.S. Branches Elizabeth G. Flores, Senior Vice President, Laredo and Agencies of Foreign Banking Organizations National Bank, Laredo, Texas, December 31, 1996 has been published by the Board's Division of Norma L. Freiberg, Community Activist, New Or- Banking Supervision and Regulation and is now leans, Louisiana, December 31, 1995 available for purchase by the public. The Manual Lori Gay, Executive Director, Los Angeles Neighbor- will serve as a primary reference source of uniform hood Housing Services, Los Angeles, California, guidelines and procedures to be used by examiners December 31, 1995 at U.S. state and federal banking agencies in con- Ronald A. Homer, Chairman and CEO, Boston Bank ducting examinations of foreign bank branches and of Commerce, Boston, Massachusetts, December 31, agencies operating in the United States. 1995 The Manual provides a comprehensive overview Thomas L. Houston, Executive Director, The Dallas of the broad range of banking activities that are Black Chamber of Commerce, Dallas, Texas, Decemconducted by foreign bank branches and agencies ber 31, 1995 and specific guidance on how to evaluate these Anne B. Shlay, Associate Director, Institute for Public activities at a branch and agency in the context of Policy Studies, Temple University, Philadelphia, Pennthe foreign banking organization of which it is an sylvania, December 31, 1996 integral part. It includes the newly adopted ROCA Reginald J. Smith, President, United Missouri Mort- rating system that examiners will use to assess the gage Company, Kansas City, Missouri, December 31, condition of foreign bank branches and agencies 1996 and to identify and address any of the unique John E. Taylor, President and CEO, The National supervisory issues raised by these offices. Community Reinvestment Coalition, Washington, D.C., The Manual may be obtained from Publications December 31, 1996 Services, Mail Stop 127, Board of Governors of the Lorraine VanEtten, Vice President and Community Federal Reserve System, Washington, DC 20551, Lending Officer, Standard Federal Bank of Troy, Troy, at a cost of $40.00. Charge orders paid by Visa and Michigan, December 31, 1996 Mastercard may be sent by fax to (202) 728-5886. Grace W. Weinstein, Financial Writer and Consultant, Updates will be available periodically at a cost to Englewood, New Jersey, December 31, 1995 be determined at the time they become available. Lily K. Yao, Chairman and CEO, Pioneer Federal Savings Bank, Honolulu, Hawaii, December 31, 1996 AVAILABILITY OF REVISED LISTS OF OTC Robert O. Zdenek, Senior Program Officer, Annie E. STOCKS AND OF FOREIGN STOCKS SUBJECT Casey Foundation, Greenwich, Connecticut, Decem- TO MARGIN REGULATIONS ber 31, 1995. The Federal Reserve Board published on January 27, 1995, a revised list of over-the-counter (OTC) PROPOSED ACTION stocks that are subject to its margin regulations (OTC List). The Board also published a revised list The Federal Reserve Board on January 26, 1995, of foreign equity securities (Foreign List) that meet requested public comment on a proposal to amend the margin criteria in Regulation T (Credit by its capital adequacy guidelines for state member Brokers and Dealers). The lists are published for banks and bank holding companies (banking orga- the information of lenders and the general public. nizations) with regard to the regulatory capital The lists were effective February 13, 1995, and treatment of certain transfers of assets with re- supersede the previous lists that were effective course. Comments are requested by February 27, November 14, 1994. The next revision of these 1995. lists is scheduled to be effective in May 1995. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 269 The changes that have been made to the revised The foreign list specifies those foreign equity OTC list, which now contains 4,074 OTC stocks, securities that are eligible for margin treatment at are as follows: broker-dealers. There are no additions to, and only one deletion from, the foreign list, which now • One hundred forty-three stocks have been contains 687 foreign equity securities. included for the first time, 110 under National Market System (NMS) designation. • Fifty-three stocks previously on the list have been removed for substantially failing to meet the CHANGE IN BOARD STAFF requirements for continued listing. The Board of Governors has approved the appoint- • Seventy-two stocks have been removed for ment of Sheila Clark to the position of EEO Proreasons such as listing on a national securities grams Director. Ms. Clark succeeds Portia Thompexchange or involvement in an acquisition. son who was assigned the new position of Equal The OTC list is composed of OTC stocks that Employment Opportunity Programs Adviser, have been determined by the Board to be subject to Office of Board Members. Ms. Clark assumed her margin requirements in Regulations G (Securities duties with the Board on February 13, 1995. She Credit by Persons Other Than Banks, Brokers, or will have overall responsibility for the Board's Dealers), T, and U (Credit by Banks for the Pur- Equal Employment Opportunity (EEO) and Affirpose of Purchasing or Carrying Margin Stocks). It mative Action (AA) planning programs. includes OTC stocks qualifying under Board crite- Ms. Clark had been employed since 1987 by ria and also includes all OTC stocks designated as Dow Jones and Company, New York, with respon- NMS securities. Additional NMS securities may be sibility for work/family, college recruiting, and added in the interim between quarterly Board pub- EEO/AA programs. She holds a B.A. in Manlications; these securities are immediately margin- agement from Marymount College, Tarrytown, able upon designation as NMS securities. New York. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

271 Legal Developments FINAL RULE—AMENDMENTS TO REGULATIONS G, T, Continental Savings of America, A Federal Savings Bank: U, AND X Series A, noncumulative convertible preferred CPI Aerostructures, Inc.: Warrants (expire 09-16-95) The Board of Governors is amending 12 C.F.R. Parts 207, 220, 221, and 224, its Regulations G, T, U, and X (Securi- Delphi Information Systems, Inc.: $.10 par common ties Credit Transactions; List of Marginable OTC Stocks; Digital Products Corporation: $.025 par common; Class A, List of Foreign Margin Stocks). The List of Marginable Warrants (expire 02-07-95); Class B, Warrants (expire OTC Stocks (OTC List) is composed of stocks traded 02-07-97) over-the-counter (OTC) in the United States that have been determined by the Board of Governors of the Federal Re- Enzon, Inc.: Warrants (expire 11-01-94) serve System to be subject to the margin requirements Equivest Finance, Inc.: $.05 par common under certain Federal Reserve regulations. The List of For- Erox Corporation: No par common eign Margin Stocks (Foreign List) is composed of foreign equity securities that have met the Board's eligibility crite- Gateway Industries, Inc.: No par common ria under Regulation T. The OTC List and the Foreign List Genzyme Corporation: Warrants (expire 12-31-94) are published four times a year by the Board. This docu- Global Spill Management, Inc.: $.001 par common ment sets forth additions to and deletions from the previous Great American Recreation, Inc.: $1.00 par common OTC List and deletions from the previous Foreign List. Greenwich Pharmaceuticals, Inc.: $.10 par common Effective February 13, 1995, accordingly, pursuant to the authority of sections 7 and 23 of the Securities Exchange Highwood Resources Ltd.: No par capital Act of 1934, as amended (15 U.S.C. 78g and 78w), and in Hoenig Group Inc.: Class A, Warrants (expire 10-31-94) accordance with 12 C.F.R. 207.2(k) and 207.6 (Regulation G), 12 C.F.R. 220.2(u) and 220.17 (Regulation T), and Inotek Technologies Corporation: $.01 par common 12 C.F.R. 221.20) and 221.7 (Regulation U), there is set forth below a listing of deletions from and additions to the Jackpot Enterprises, Inc.: Warrants (expire 01-31-96) OTC List, and one deletion from the Foreign List. JB Oxford Holdings Inc.: $.01 par common Deletions from the List of Marginable OTC Stocks Kendall Square Research Corp.: $.01 par common Stocks Removed for Failing Continued Listing Media Vision Technology, Inc.: Convertible subordinated Requirements debentures due 2003 Menley & James, Inc.: $.01 par common Absolute Entertainment, Inc.: No par common Microcarb, Inc.: $.01 par common Applied Carbon Technology, Inc.: No par common MPTV, Inc.: $.005 par common MRV Communications, Inc.: Warrants (expire 12-07-97) Baker Hughes Incorporated: Warrants (expire 03-31-95) Base Ten Systems, Inc.: Series B, rights expire 11-10-94 Nahama & Weagant Energy Company: No par common National Convenience Stores, Inc.: Warrants (expire Breakwater Resources, Ltd.: No par common 03-09-98) National Diagnostics, Inc.: No par common; Warrants C-Tec Corporation: Transferable subscription rights (expire 09-19-97) Centocor, Inc.: Warrants (expire 12-31-94) NYCAL Corporation: No par common Communications & Entertainment Corporation: Class A, $.05 par common Opto Mcchanik, Inc.: $.10 par common Community Health Computing Corp.: $.01 par common Computer Concepts Corporation: $.0001 par common P & F Industries, Inc.: $10.00 par cumulative convertible Comstock Bank (Nevada): $.50 par common preferred Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

272 Federal Reserve Bulletin • March 1995 Price Reit, Inc., The: $.01 par common Galey & Lord, Inc.: $.01 par common Puroflow Incoprorated: $.06-2/3 par common Gencare Health Systems, Inc.: $.02 par common General Atlantic Resources, Inc.: $.01 par common SGI International: No par common Germantown Savings Bank (Pennsylvania): $.10 par com- Sports/Leisure, Inc.: $.01 par common mon Grenada Sunburst System Corporation: $1.00 par common TAT Technologies Ltd.: Class A, Warrants (expire 03-30-95) Home Federal Savings Bank (Washington, D.C.): $.01 par Telios Pharmaceuticals, Inc.: Warrants (expire 09-26-96) common TJ Systems Corporation: Series A, $.01 par convertible preferred IDB Communications Group, Inc.: $.01 par common Information America, Inc.: $.01 par common U.S. Capital Group, Inc.: $.10 par common Input/Output, Inc.: $.01 par common United States Exploration, Inc.: $.0001 par common Intergroup Healthcare Corporation: $.001 par common Ithaca Bancorp, Inc. (New York): $1.00 par common Vest, H.D., Inc.: Class B; Warrants (expire 11-21-94) Jones Spacelink, Ltd.: Class A, $.01 par common Stocks Removed for Listing on a National Securities Exchange or Being Involved in an Keptel, Inc.: No par common Acquisition Kirschner Medical Corporation: $.10 par common Knowledge ware, Inc.: No par common Agnico-Eagle Mines Limited: No par common Koll Management Services, Inc.: $.01 par common Amerifed Financial Corporation (Illinois): $.01 par common Laser Precision Corporation: $.10 par common Amity Bancshares, Inc. (Illinois): $.01 par common LCI International, Inc.: $.01 par common; 5% cumulative Amvestors Financial Corp.: No par common convertible exchangeable preferred Anchor Bancorp, Inc. (New York): $.01 par common Associated Communications Corp.: Class A, $.10 par com- Medstat Group, Inc., The: $.01 par common mon; Class B, $.10 par common National Convenience Stores, Inc.: $.01 par common Babbage's, Inc.: $.10 par common Banyan Mortgage Investors L.P.: Depositary units of lim- Orthomet, Inc.: $.10 par common ited partnership interest Barrett Resources Corporation: $.01 par common Palmer Tube Mills Limited: American Depositary Receipts Biosurface Technology, Inc.: $.01 par common Premiere Page, Inc.: $.01 par common Brock Candy Company: Class A, $.01 par common Price Reit, Inc., The: Series B, $.01 par common Providential Corporation: $.0001 par common Carenetwork, Inc.: $.01 par common Purolator Products Company: $.01 par common Carson Pirie Scott & Co.: $.01 par common Central Indiana Bancorp: No par common Quincy Savings Bank (Massachusetts): $.10 par common Central Jersey Bancorp: $2.50 par common Charter FSB Bancorp Inc.: $.01 par common Relife, Inc.: Class A, $.01 par common Coastal Healthcare Group, Inc.: $.01 par common RHNB Corporation: $2.50 par common Commerce Bank (Virginia): $2.50 par common Rock Financial Corporation: $3.33-1/3 par common Corrections Corporation of America: $1.00 par common; Warrants (expire 09-14-97) Scott's Liquid Gold, Inc.: $.10 par common Seagate Technology, Inc.: $.01 par common; 6-3A% con- Datasouth Computer Corporation: $.01 par common vertible subordinated debentures Digidesign, Inc.: $.001 par common Services Fracturing Company: $1.00 par common Eastover Corporation: No par shares of beneficial interest Snapple Beverage Corporation: $.01 par common Soricon Corporation: $.01 par common F & C Bancshares, Inc. (Florida): $1.00 par common Summit Bancorp, Inc. (Washington): $.01 par common F & M National Corporation: $2.00 par common Synergen, Inc.: $.01 par commom First Western Financial Corporation: $1.00 par common Synoptics Communications, Inc.: $.01 par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 273 Trico Products Corporation: No par common Conestoga Enterprises, Inc.: $5.00 par common Triconex Corporation: No par common Covenant Bank for Savings (New Jersey): $5.00 par common UNSL Financial Corp.: $1.00 par common Covenant Transport, Inc.: Class A, $.01 par common Crocker Realty Investors, Inc.: $.001 par common Winston Furniture Company, Inc.: $.01 par common D & K Wholesale Drug, Inc.: $.01 par common Zenith Laboratories, Inc.: No par common Diplomat Corporation: Warrants (expire 11-04-98) Duckwall-Alco Stores, Inc.: $.0001 par common Additions to the List of Marginable OTC Stocks East Texas Financial Services, Inc.: $.01 par common 7th Level, Inc.: $.01 par common Edelbrock Corporation: $.01 par common Elron Electronic Industries, Ltd.: Warrants (expire Aber Resources Ltd.: No par common 09-01-98) Adia S.A.: American Depositary Receipts Emcare Holdings Inc.: $.01 par common Alabama National Bancorporation: $1.00 par common Epic Design Technology, Inc.: No par common Amerco: $.25 par common Equity Corporation: $.01 par common American Cinema Stores, Inc.: $.001 par common American Resources of Delaware, Inc.: $.00001 par com- FB&T Financial Corporation: $1.25 par common mon Family Golf Centers, Inc.: $.01 par common American Sensors, Inc.: No par common Fidelity Southern Corporation: No par common Andyne Computing Ltd.: No par common First American Health Concepts, Inc.: No par common Apollo Group, Inc.: Class A; No par common First Savings Bank of New Jersey, S.L.A.: $.10 par com- Applied Voice Technology, Inc.: $.01 par common mon Applix, Inc.: $.0025 par common FirstFederal Financial Services Corporation: Series B, 6-V2 Arel Communications & Software Ltd.: Ordinary shares; No par cumulative convertible preferred Series A; Warrants (expire 12-01-96) Flores & Rucks Inc.: $.01 par common Ark Restaurants Corporation: $.01 par common Florsheim Shoe Company, The: No par common Aspen Technology, Inc.: $.01 par common FPA Medical Management, Inc.: $.001 par common Associated Group, Inc., The: Class A, $.10 par common; FSB Financial Corporation: $.01 par common Class B, $.10 par common Avert, Inc.: No par common; Warrants (expire 12-22-95) Genzyme Corproation (Tissue Repair): $.01 par common Goran Capital, Inc.: No par common B.U.M. International, Inc.: $.02 par common Gyrodyne Company of America, Inc.: $1.00 par common Barry's Jewelers, Inc.: No par common; Warrants (expire 07-01-2002) Harcor Energy Company: $.10 par common Bitwise Designs, Inc.: $.001 par common Haskel International, Inc.: Class A, No par common Bolle America, Inc.: $.01 par common Health-Mor Inc.: $1.00 par common Bonso Electronics International, Inc.: $.0005 par common; Herzfeld Caribbean Basin Fund, Inc., The: $.001 par com- Warrants (expire 12-16-99) mon Bridgeport Machines, Inc.: $.01 par common BTG, Inc.: No par common ICC Technologies, Inc.: $.01 par common Innovative Tech Systems, Inc.: $.001 par common Cameo Financial Corporation: $1.00 par common International Verifact, Inc.: No par common; Warrants Cannondale Corporation: $.01 par common (expire 01-05-98) Carver Federal Savings Bank (New York): $.01 par com- Interstate National Dealer Services, Inc.: $.01 par common mon Isolyser Company, Inc.: $.001 par common Century Communications Corporation: Class A, $.01 par ITI Technologies, Inc.: $.01 par common common IWI Holding, Limited: No par common Cincinnati Microwave, Inc.: Warrants (expire 12-31-98) Clucker's Wood Roasted Chicken, Inc.: $.01 par common JP Foodservice, Inc.: $.01 par common Community Financial Holding Corp.: $5.00 par common Community Savings, F.A. (Florida): $1.00 par common KFX Inc.: $.001 par common Concordia Paper Holdings, Ltd.: American Depositary Knight Transportation, Inc.: $.01 par common Shares KS Bancorp, Inc. (North Carolina): No par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

274 Federal Reserve Bulletin • March 1995 LIN Television Corporation: $.01 par common Sport-Haley, Inc.: No par common LTX Corporation: 13-'/2% convertible debentures Stillwater Mining Company: $.01 par common Manhattan Bagel Company: No par common Tele-Matic Corporation: $.01 par common Medcath Incorporated: $.01 par common Telemundo Group, Inc.: Series A, $.01 par common Medplus, Inc.: No par common Telewest Communications PLC: American Depositary Micrel, Incorporated: No par common Receipts Micrion Corporation: No par common Teltronics, Inc.: $.001 par common Microtec Research, Inc.: $.001 par common Thompson PBE, Inc.: $.01 par common Mid-States PLC: American Depositary Receipts TMBR/Sharp Drilling, Inc.: $.10 par common Multi-Market Radio, Inc.: Class A, $.01 par common; Tower Semiconductor Ltd.: Ordinary Shares (NIS $1.00) Class A, Warrants (expire 03-23-99); Class B, Warrants Trans World Gaming Corporation: $.001 par common; (expire 03-23-99) Warrants (expire 12-15-99) Transport Corporation of America, Inc.: $.01 par common National Gaming Corporation: $.01 par common Netcom On-Line Communication Services, Inc.: $.01 par Unitech Industries, Inc.: No par common common New England Community Bancorp, Inc.: Class A, $.10 par Veeco Instruments, Inc.: $.01 par common common Videonics, Inc.: No par common New England Realty Assoiates Limited Partnership: Depositary Receipts Wavephore, Inc.: No par common Northwest Savings Bank (Pennsylvania): $.01 par common Wescast Industries, Inc.: Class A, No par common Novametrix Medical Systems, Inc.: Class A, Warrants Williams, Controls, Inc.: $.01 par common (expire 12-08-97); Class B, Warrants (expire 12-08-99) Xenova Group PLC: American Depositary Shares OIS Optical Imaging Systems, Inc.: $.01 par common Old York Road Bancorp, Inc. (Pennsylvania): $1.00 par Young Broadcasting, Inc.: Class A, $.01 par common common Orbit Semiconductor, Inc.: $.001 par common Deletion from the List of Foreign Margin Stocks Ortel Corporation: $.001 par common Orthodontic Centers of America, Inc.: $.01 par common Jefferson Smurfit Group, PLC: Ordinary shares, par value Owosso Corporation: $.01 par common .25L Panda Project, Inc., The: $.01 par common Phamis, Inc.: $.0025 par common FINAL RULE—AMENDMENT TO RULES REGARDING Physicial Reliance Network, Inc.: No par common ACCESS TO PERSONAL INFORMATION UNDER THE Pinnacle Systems, Inc.: No par common PRIVACY ACT Plasma-Therm, Inc.: $.01 par common Price Enterprises, Inc.: $.0001 par common The Board of Governors is amending 12 C.F.R. Part 261a, Pulaski Bank, A Savings Bank: $1.00 par common its Rules Regarding Access to Personal Information Under the Privacy Act, as part of its regulatory review and im- Quality Semiconductor, Inc.: $.001 par common provement process. Effective February 16, 1995, 12 C.F.R. Part 261a is Republic Bank (Florida): $2.00 par common amended as follows: Ride Snowboard Company: No par common Part 261a—Rules Regarding Access to Personal Information Under the Privacy Act of 1974 Santa Fe Financial Corporation: $.10 par common Security Dynamics Technologies, Inc.: $.01 par common Subpart A—General Provisions Shiva Corporation: $.01 par common Singing Machine Company, Inc., The: $.01 par common; Warrants (expire 11-10-99) Section 261a.l—Authority, purpose and scope. SMC Corporation: No par common Section 261a.2—Definitions. Sparta Pharmaceuticals, Inc.: $.001 par common Section 261a.3—Custodian of records; delegations of Specialty Teleconstructors, Inc.: Warrants (expire authority. 11-02-99) Section 26 la.4—Fees. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 275 Subpart B—Procedures for Requests by Individual (d) Individual means a natural person who is either a citizen to Whom Record Pertains of the United States or an alien lawfully admitted for permanent residence. Section 261a.5—Request for access to record. (e) Maintain includes maintain, collect, use, disseminate, or Section 261a.6—Board procedures for responding to control. (f) Record means any item, collection, or grouping of inforrequest for access. mation about an individual maintained by the Board that Section 261a.7—Special procedures for medical records. contains the individual's name, or the identifying number, Section 26la.8—Request for amendment to record. symbol, or other identifying particular assigned to the indi- Section 261a.9—Agency review of request for amendment vidual, such as a fingerprint, voice print, or photograph. of record. (g) Routine use means, with respect to disclosure of a Section 26la. 10—Appeal of adverse determination of record, the use of such recori for a purpose that is compatirequest for access or amendment. ble with the purpose for whic i it was collected or created. (h) System of records means i group of any records under Subpart C—Disclosure to Person Other than the control of the Board from vhich information is retrieved Individual to Whom Record Pertains by the name of the indiviuual or by some identifying number, symbol, or other identifying particular assigned to Section 26la. 11—Restrictions on disclosure. the individual. Section 261 a. 12—Exceptions. Section 26la.3—Custodian of records; delegations Subpart D—Exempt Records of authority. Section 26la. 13—Exemptions. (a) Custodian of records. The Secretary of the Board is the official custodian of all records of the Board in the posses- Authority: 5 U.S.C. 552a. sion or control of the Board. (b) Delegated authority of Secretary. With regard to this Subpart A—General Provisions regulation, the Secretary of the Board is delegated the authority to: Section 261a.l—Authority, purpose and scope. (1) Respond to requests for access or amendment to records contained in a system of records, except for such (a) Authority. This part is issued by the Board of Governors requests regarding systems of re ords maintained by the of the Federal Reserve System (the Board) pursuant to the Board's Office of the Inspector General (OIG); Privacy Act of 1974 (5 U.S.C. 552a). (2) Approve the publication of revv systems of records (b) Purpose. The purpose of this part is to implement the and amend existing systems of records, except systems of provisions of the Privacy Act of 1974 (5 U.S.C. 552a) with records exempted pursuant to sections 26la. 13(b), (c) regard to the maintenance, protection, disclosure, and and (d); amendment of records contained within systems of records (3) File the biennial reports required by the Privacy Act. maintained by the Board. (c) Delegated authority of designee. Any action or determi- (c) Scope. This part covers requests for access to, or amendnation required or permitted by this part to be done by the ment of, records concerning individuals that are contained Secretary of the Board may be done by an Associate Secrein systems of records maintained by the Board. tary or other responsible employee of the Board who has been duly designated for this purpose by the Secretary. Section 261a.2—Definitions. (d) Delegated authority of Inspector General. With regard to systems of records maintained by the OIG, the Inspector For the purposes of this part, the following definitions General is delegated the authority to respond to requests for apply: access or amendment. (a) Business day means any day except Saturday, Sunday or a legal Federal holiday. Section 261a.4—Fees. (b) Designated system of records means a system of records maintained by the Board that has been listed in the Federal Register pursuant to the requirements of 5 U.S.C. 552a(e). (a) Copies of records. Copies of records requested pursuant (c) Guardian means the parent of a minor, or the legal to section 261a.5 of this part shall be provided at the same guardian of any individual who has been declared to be cost charged for duplication of records and/or production of incompetent due to physical or mental incapacity or age by computer output under the Board's Rules Regarding Availa court of competent jurisdiction. ability of Information, section 261.10 of this part. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

276 Federal Reserve Bulletin • March 1995 (b) No fee. Documents may be furnished without charge (c) Verification of identity. The Board shall require proof of where total charges are less than $5. identity from a requester and reserves the right to determine (c) Waiver of fees. In connection with any request by an the adequacy of such proof. In general, the following shall employee, former employee, or applicant for employment, be considered adequate proof of identity: for records for use in prosecuting a grievance or complaint (1) For a current Board employee, his or her Board of discrimination against the Board, fees shall be waived identification card; or where the total charges (including charges for information (2) For an individual other than a current Board emprovided under the Freedom of Information Act) are $50 or ployee, either: less; but the Secretary may waive fees in excess of that (i) Two forms of identification, one of which has a amount. picture of the individual requesting access; or (ii) A notarized statement attesting to the identity of Subpart B—Procedures for Requests by Individual the requester. to Whom Record Pertains (d) Verification of identity not required. No verification of identity shall be required of individuals seeking access to records that are otherwise available to any person under Section 261a.5—Request for access to record. 5 U.S.C. 552, Freedom of Information Act. (e) Request for accounting of previous disclosures. An individual making a request pursuant to paragraph (a) of (a) Procedures for making request. (1) Any individual (or this section may also include a request for an accounting guardian of an individual) other than a current Board (pursuant to 5 U.S.C. 552a(c)) of previous disclosures of employee desiring to learn of the existence of, or to gain records pertaining to such individual in a designated system access to, his or her record in a designated system of of records. records shall submit a request in writing to the Secretary of the Board, Board of Governors of the Federal Reserve Section 261a.6—Board procedures for responding to System, 20th and Constitution Avenue, N.W., Washingrequest for access. ton, DC 20551. (2) A request by a current Board employee for that employee's own personnel records may be made in per- (a) Compliance with Freedom of Information Act. Every son during regular business hours at the Division of request made pursuant to section 261a.5 of this part shall Human Resources, Board of Governors of the Federal also be handled by the Board as a request for information Reserve System, 20th and Constitution Avenue, N.W., pursuant to the Freedom of Information Act (5 U.S.C. 552), Washington, DC 20551. except that the time limits set forth in paragraph (b) of this (3) A request by a current Board employee for informa- section and the fees specified in section 261a.4 of this part tion other than personnel information may be made in shall apply to such requests. person during regular business hours at the Freedom of (b) Time limits. Every request made pursuant to section Information Office, Board of Governors of the Federal 261a.5 of this part shall be acknowledged or, where practi- Reserve System, 20th and Constitution Avenue, N.W., cable, substantially responded to within 10 business days Washington, DC 20551. from receipt of the request. (4) Requests for information contained in a system of (c) Disclosure. (1) Information to be disclosed pursuant to records maintained by the Board's OIG shall be submit- this part and the Privacy Act, except for information ted in writing to the Inspector General, Board of Gover- maintained by the Board's OIG, shall be made available nors of the Federal Reserve System, 20th and Constitu- for inspection and copying during regular business hours tion Avenue, N.W., Washington, DC 20551. at the Board's Freedom of Information Office. (b) Contents of request. A request made pursuant to para- (2) Information to be disclosed that is maintained by the graph (a) of this section shall include the following: Board's OIG shall be made available for inspection and (1) A statement that it is made pursuant to the Privacy copying at the OIG. Act of 1974; (3) When the requested record cannot reasonably be put (2) The name of the system of records expected to into a form for individual inspection (e.g., computer contain the record requested or a concise description of tapes), or when the requester asks that the information be such system of records. forwarded, copies of such information shall be mailed to (3) Necessary information to verify the identity of the the requester. requester pursuant to paragraph (c) of this section; and (4) Access to or copies of requested information shall be (4) Any other information that may assist in the rapid promptly provided after the acknowledgement as proidentification of the record for which access is being vided in paragraph (b) of this section, unless good cause requested {e.g., maiden name, dates of employment, etc.). for delay is communicated to the requester. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 277 (d) Other authorized presence. The requester of information Section 261a.9—Board review of request for may be accompanied in the inspection of that information amendment of record. by a person of the requester's own choosing upon the requester's submission of a written and signed statement (a) Time limits. The Board shall acknowledge a request for authorizing the presence of such person. amendment of a record within 10 business days of receipt of (e) Denial of request. A denial of a request made pursuant the request. Such acknowledgement may request additional to section 261a.5 of this part shall include a statement of the information necessary for a determination on the request for reason(s) for denial and the procedures for appealing the amendment. To the extent possible, a determination upon a denial. request to amend a record shall be made within 10 business days after receipt of the request. (b) Contents of response to request for amendment. The Section 261a.7—Special procedures for medical response to a request for amendment shall include the records. following: (1) The decision to grant or deny, in whole or in part, the request for amendment; and Medical or psychological records requested pursuant to (2) If the request is denied: section 261a.5 of this part shall be disclosed directly to the (i) The reasons for denial of any portion of the request requester unless such disclosure could, in the judgment of for amendment; the Privacy Officer, in consultation with the Board's physi- (ii) The requester's right to appeal any denial; and cian, have an adverse effect upon the requester. Upon such (iii) The procedures for appealing the denial to the determination, the information shall be transmitted to a appropriate official. licensed physician named by the requester, who will disclose those records to the requester in a manner the physi- Section 26la. 10—Appeal of adverse determination cian deems appropriate. of request for access or amendment. Section 26la.8—Request for amendment of record. (a) Appeal. A requester may appeal a denial of a request made pursuant to section 261a.5 or section 261a.8 of this part to the Board, or any official designated by the chairman (a) Procedures for making request. (1) An individual desir- of the Board, within 10 business days of issuance of notifiing to amend a record in a designated system of records cation of denial. The appeal shall: that pertains to him or her shall submit a request in (1) Be made in writing to the Secretary of the Board, with writing to the Secretary of the Board (or to the Inspector the words "PRIVACY ACT APPEAL" written promi- General for records in a system of records maintained by nently on the first page; the OIG) in an envelope clearly marked "Privacy Act (2) Specify the previous background of the request; and Amendment Request." (3) Provide reasons why the initial denial is believed to (2) Each request for amendment of a record shall: be in error. (i) Identify the system of records containing the record (b) Determination. The Board or an official designated by the for which amendment is requested; Chairman of the Board shall make a determination with re- (ii) Specify the portion of that record requested to be spect to such appeal not later than 30 business days from its amended; and receipt, unless the time is extended for good cause shown. (iii) Describe the nature of and reasons for each re- (1) If the Board or designated official grants an appeal quested amendment. regarding a request for amendment, the Board shall take (3) Each request for amendment of a record shall be the necessary steps to amend the record, and, when subject to verification of identity under the procedures set appropriate and possible, notify prior recipients of the forth in section 261a.5(c) of this part, unless such verifi- record of the Board's action. cation has already been made in a related request for (2) If the Board or designated official denies an appeal, the access or amendment. Board shall inform the requester of such determination, give (b) Burden of proof. The request for amendment of a record a statement of the reasons therefor, and inform the requester shall set forth the reasons the individual believes the record of the right of judicial review of the determination. is not accurate, relevant, timely, or complete. The burden of (c) Statement of disagreement. (1) Upon receipt of a denial proof for demonstrating the appropriateness of the re- of an appeal regarding a request for amendment, the quested amendment rests with the requester, and the re- requester may file a concise statement of disagreement quester shall provide relevant and convincing evidence in with the denial. Such statement shall be maintained with support of the request. the record the requester sought to amend, and any disclo- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

278 Federal Reserve Bulletin • March 1995 sure of the record shall include a copy of the statement of (j) To the Comptroller General, or any of his authorized disagreement. representatives, in the course of the performance of the (2) When practicable and appropriate, the Board shall duties of the General Accounting Office; provide a copy of the statement of disagreement to any (k) Pursuant to the order of a court of competent jurisdicperson or other agency to whom the record was previ- tion; or ously disclosed. (1) To a consumer reporting agency in accordance with 31 U.S.C. 3711(f). Subpart C—Disclosure to Person Other than Individual to Whom Record Pertains Subpart D—Exempt Records Section 26la. 11—Restrictions on disclosure. Section 261 a. 13—Exemptions. No record contained in a designated system of records shall be disclosed to any person or agency without the prior (a) Information compiled for civil action. Nothing in this written consent of the individual to whom the record per- regulation shall allow an individual access to any informatains unless the disclosure is authorized by section 26la. 12 tion compiled in reasonable anticipation of a civil action or of this part. proceeding. (b) Law enforcement information. Pursuant to section (k)(2) Section 261 a. 12—Exceptions. of the Privacy Act of 1974 (5 U.S.C. 552a(k)(2)), the Board has deemed it necessary to exempt certain designated sys- The restrictions on disclosure in section 261 a. 11 of this part tems of records maintained by the Board from the requiredo not apply to any disclosure: ments of the Privacy Act concerning access to accountings (a) To those officers and employees of the Board who have of disclosures and to records, maintenance of only relevant a need for the record in the performance of their duties; and necessary information in files, and certain publication (b) That is required under the Freedom of Information Act provisions, respectively, 5 U.S.C. 552a(c)(3), (d), (e)(1), (5 U.S.C. 552); (e)(4)(G), (H) and (I), and (f), and sections 261a.5, 261a.7 (c) For a routine use listed with respect to a designated and 26la.8 of this part. Accordingly, the following desigsystem of records; nated systems of records are exempt from these provisions, (d) To the Bureau of the Census for purposes of planning or but only to the extent that they contain investigatory matericarrying out a census or survey or related activity pursuant als compiled for law enforcement purposes: to the provisions of title 13 of the United States Code; (1) BGFRS-1 Recruiting and Placement Records. (e) To a recipient who has provided the Board with advance (2) BGFRS-2 Personnel Background Investigation Reports. adequate written assurance that the record will be used solely (3) BGFRS-4 General Personnel Records. as a statistical research or reporting record, and the record is to (4) BGFRS-5 EEO Discrimination Complaint File. be transferred in a form that is not individually identifiable; (5) BGFRS-9 Consultant and Staff Associate File. (f) To the National Archives of the United States as a record (6) BGFRS-16 Regulation G Reports. that has sufficient historical or other value to warrant its contin- (7) BGFRS-18 Consumer Complaint Information System. ued preservation by the United States government, or for (8) BGFRS-21 Supervisory Tracking and Reference Sysevaluation by the administrator of General Services or his tem. designee to determine whether the record has such value; (9) BGFRS/OIG-1 OIG Investigatory Records. (g) To another agency or to an instrumentality of any (c) Confidential references. Pursuant to section (k)(5) of the governmental jurisdiction within or under the control of the Privacy Act of 1974 (5 U.S.C. 552a(k)(5)), the Board has United States for a civil or criminal law enforcement activ- deemed it necessary to exempt certain designated systems ity if the activity is authorized by law, and if the head of the of records maintained by the Board from the requirements agency or instrumentality has made a written request to the of the Privacy Act concerning access to accountings of Board specifying the particular portion desired and the law disclosures and to records, maintenance of only relevant enforcement activity for which the record is sought; and necessary information in files, and certain publication (h) To a person pursuant to a showing of compelling cir- provisions, respectively 5 U.S.C. 552a(c)(3), (d), (e)(1), cumstances affecting the health or safety of an individual if (e)(4)(G), (H) and (I), and (f), and sections 261a.5, 261a.7 upon such disclosure notification is transmitted to the last and 261a.8 of this part. Accordingly, the following systems known address of such individual; of records are exempt from these provisions, but only to the (i) To either House of Congress, or, to the extent of matter extent that they contain investigatory material compiled to within its jurisdiction, any committee or subcommittee determine an individual's suitability, eligibility, and qualifithereof, any joint committee of Congress or subcommittee cations for Board employment or access to classified inforof any such joint committee; mation, and the disclosure of such material would reveal the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 279 identity of a source who furnished information to the Board Company Act ("BHC Act"), has applied under section under a promise of confidentiality. 3(a)(3) of the BHC Act (12 U.S.C. § 1842(a)(3)) to acquire (1) BGFRS-1 Recruiting and Placement Records. up to 100 percent of the voting shares of The Chicago- (2) BGFRS-2 Personnel Background Investigation Re- Tokyo Bank, Chicago, Illinois ("Bank").1 ports. Notice of the application, affording interested persons an (3) BGFRS-4 General Personnel Records. opportunity to submit comments, has been published (59 (4) BGFRS-9 Consultant and Staff Associate File. Federal Register 12,927 (1994)). The time for filing com- (5) BGFRS-10 General File on Board Members. ments has expired, and the Board has considered the appli- (6) BGFRS-11 Official General Files. cation and all comments received in light of the factors set (7) BGFRS-13 General File of Examiners and Assistant forth in section 3 of the BHC Act. Examiners at Federal Reserve Banks. BOT, with total consolidated assets equivalent to approx- (8) BGFRS-14 General File of Federal Reserve Bank and imately $271.9 billion, is the 16th largest banking organiza- Branch Directors. tion in Japan and the 23d largest banking organization in the (9) BGFRS-15 General Files of Federal Reserve Agents, world.2 In the United States, BOT controls banks in New Alternates and Representatives at Federal Reserve Banks. York, New York, and San Francisco, California. In addi- (10) BGFRS/OIG-2 OIG Personnel Records. tion, BOT operates branches in Portland, Oregon; Seattle, (d) Criminal law enforcement information. Pursuant to Washington; and Chicago, Illinois; agencies in New York, 5 U.S.C. 552a(j)(2), the Board has determined that portions New York; Atlanta, Georgia; Coral Gables, Florida; Dallas, of the OIG Investigatory Records (BGFRS/OIG-1) shall be Texas; Honolulu, Hawaii; and Los Angeles and San Franexempt from any part of the Privacy Act (5 U.S.C. 552a), cisco, California; and representative offices in Houston, except the provisions regarding disclosure, the requirement Texas; and Washington, D.C. BOT also engages directly to keep an accounting, certain publication requirements, and through subsidiaries in permissible nonbanking activicertain requirements regarding the proper maintenance of ties in the United States and abroad. systems of records, and the criminal penalties for violation of the Privacy Act, respectively, 5 U.S.C. 552a(b), (c)(1), Douglas Amendment Analysis and (2), (e)(4)(A) through (F), (e)(6), (e)(7), (e)(9), (e)(10), (e)( 11) and (i). This designated system of records is main- For purposes of section 3(d) of the BHC Act tained by the OIG, a Board component that performs as its (12 U.S.C. § 1842(d)), the Douglas Amendment, BOT is a principal function an activity pertaining to the enforcement California bank holding company because its subsidiary of criminal laws. The exempt portions of the records consist bank in California is its largest U.S. bank. California also is of: BOT's home state under section 5 of the International (1) Information compiled for the purpose of identifying Banking Act (12 U.S.C. § 3103) ("IBA"). The Board previindividual criminal offenders and alleged offenders; ously has determined that the interstate banking statutes of (2) Information compiled for the purpose of a criminal Illinois permit a California bank holding company to acinvestigation, including reports of informants and investi- quire banking organizations located in Illinois.3 In addition, gators, and associated with an identifiable individual; or the Illinois Commissioner of Banks and Trust Companies (3) Reports identifiable to an individual compiled at any has approved this transaction. Accordingly, based on all the stage of the process of enforcement of the criminal laws facts of record, consummation of this proposal is not prohibfrom arrest or indictment through release from supervision. ited by the Douglas Amendment or the IBA. Competitive Considerations ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT BOT and Bank both operate in the Chicago, Illinois, banking market, where each has a relatively small market share.4 Orders Issued Under Section 3 of the Bank Holding Based on all the facts of record, consummation of this Company Act proposal would not have a significantly adverse effect on competition in the Chicago, Illinois, banking market or any The Bank of Tokyo, Ltd. other relevant banking market. Tokyo, Japan Order Approving an Application to Acquire a Commercial 1. BOT currently owns approximately 4.93 percent of Bank's total outstanding voting shares. Bank 2. Asset data are as of March 31, 1994. Ranking data are as of December 1994. 3. See BankAmerica Corporation, 80 Federal Reserve Bulletin 832 (1994). The Bank of Tokyo, Ltd., Tokyo, Japan ("BOT"), a bank 4. The Chicago, Illinois, banking market is approximated by Cook, holding company within the meaning of the Bank Holding Du Page, and Lake Counties, all in Illinois. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

280 Federal Reserve Bulletin • March 1995 Supervisory Considerations tains communications with almost all major financial institutions with respect to domestic and inter-bank set- In order to approve an application by a foreign bank to tlements and money transfers for these financial instituacquire a U.S bank or bank holding company, the BHC Act tions. The MOF's and BOJ's supervision of BOT is and the Board's Regulation Y require the Board to deter- conducted on a consolidated basis and consists of on-site mine that the foreign bank is subject to comprehensive examinations and the review of required periodic finansupervision or regulation on a consolidated basis by its cial reports. home country supervisor.5 The Board also must determine The MOF has primary examination authority for Japathat the foreign bank has provided adequate assurances that nese banks and examines Japanese banks once every it will make available to the Board such information on its three to four years and as deemed necessary. Examinaoperations and activities and those of its affiliates that the tion powers extend to foreign branches and wholly Board deems appropriate to determine and enforce compli- owned subsidiaries of BOT, both domestic and foreign, ance with applicable law.6 and include on-site examinations of such operations. The The Board considers a foreign bank to be subject to primary objective of MOF examinations is an evaluation comprehensive supervision or regulation on a consolidated of management's ability to manage risk. Examinations basis if the Board determines that its home country supervi- and inspections focus on capital adequacy, asset quality, sor receives sufficient information on the foreign bank's management, earnings, liquidity, compliance with appliworldwide operations, including the bank's relationship to cable laws, and risk management. Examinations and inany affiliate, to assess the bank's overall financial condition spections also involve an assessment of foreign trade and and compliance with law and regulation.7 In making its foreign exchange transactions. determination on this application, the Board considered the The BOJ also conducts examinations of BOT on a regufollowing information. lar basis. The BOJ's examination powers extend to BOT's The Ministry of Finance (the "MOF") is BOT's lead wholly owned subsidiaries, both domestic and foreign, and regulator and has extensive regulatory authority over the include on-site examinations of such subsidiaries. Like bank under the banking laws of Japan. The MOF is those of the MOF, the BOJ examinations evaluate manageresponsible for licensing banks, approving branch open- ment's ability to manage risk. ings, approving the formation of and investments in The MOF and BOJ also review BOT's operations subsidiaries (both in Japan and abroad), providing admin- through the periodic receipt of consolidated financial istrative guidance on legal and regulatory matters, and reports and the MOF may request financial information inspecting financial institutions and their affiliated com- from banks and their wholly owned subsidiaries whenpanies. The MOF provides administrative guidance, ever deemed necessary. Annual reports submitted by which banks are required to follow, regarding the estab- BOT to the MOF and the BOJ include balance sheets and lishment of branches, the scope of business activities, income statements on both a parent-only and a consoliand the conduct of banking business. The Bank of Japan dated basis.8 Semiannually, BOT submits to the MOF (the "BOJ"), which is the central bank of Japan, also and the BOJ a report that includes an unconsolidated monitors and supervises banks that use its services. The balance sheet, an income statement, information on ma- BOJ gives guidance to banks within the private sector jor shareholders, and information detailing profits, losses, regarding lending policies and related matters. In addi- loan loss reserves, expenses, trading account securities, tion, in its capacity as the central bank, the BOJ main- and capital.9 BOT's transactions with its affiliates10 are monitored by the MOF and the BOJ through reporting requirements 5. See 12 U.S.C. § 1842(c)(3)(B); 12 C.F.R.225.13(b)(5). and lending restrictions. BOT submits annual reports to 6. See 12 U.S.C. § 1842(c)(3)(A); 12 C.F.R.225.13(b)(4). the MOF and the BOJ on its domestic related parties11 7. In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisor: (i) Ensures that the foreign bank has adequate procedures for monitoring and controlling its activities worldwide; (ii) Obtains information on the condition of the foreign bank and its 8. The consolidated financial statements include the accounts of BOT and subsidiaries and offices outside the home country through regular reports all of its majority-owned subsidiaries, including its subsidiary banks, Bank of of examination, audit reports, or otherwise; Tokyo Trust Company, New York, New York, and Union Bank, San Fran- (iii) Obtains information on the dealings and relationships between the cisco, California. All of BOT's affiliates which are 20 percent to 50 percent foreign bank and its affiliates, both foreign and domestic; owned are accounted for by the equity method of accounting. (iv) Receives from the foreign bank financial reports that are consolidated 9. While not consolidated, these semiannual reports include data on losses on a worldwide basis, or comparable information that permits analysis of at all bank affiliates, both foreign and domestic. the foreign bank's financial condition on a worldwide, consolidated basis; 10. "Affiliates" as used in this section refers to domestic "related parties" and and controlled off-shore entities, as described below. (v) Evaluates prudential standards, such as capital adequacy and risk asset 11. "Related parties" for the purposes of these reports include wholly exposure, on a worldwide basis. owned domestic subsidiaries whose activities are incidental to the business These are indicia of comprehensive, consolidated supervision. No single of banking, and "associated" companies whose activities are considered to factor is essential, and other elements may inform the Board's determination. be peripheral to the business of banking (e.g., leasing, venture capital, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 281 which include information on the total amount of reve- Other Considerations nue the affiliate derives from its transactions with BOT, as well as the balance and terms of the affiliate's borrow- The Board also considers the financial condition of a forings from BOT. BOT also submits annual reports to the eign bank involved in a section 3 application.12 BOT must MOF for all foreign entities in which BOT holds a comply with capital standards that conform to the Basle majority interest or otherwise exercises management au- Accord, as implemented by Japan. BOT's capital exceeds thority. In addition, transactions with affiliates are re- these minimum standards, and is equivalent to capital that viewed as part of the examination process. Examinations would be required of a U.S. banking organization. may include a review of all aspects of such transactions, Based on the foregoing and all facts of record, the including fund placement, lending, and securities pur- Board has determined that the financial and managerial chases and sales between the bank and its affiliated resources and future prospects of BOT, its subsidiaries, companies. The MOF may use a variety of administrative and Bank, and the other supervisory factors the Board sanctions against Japanese banks to ensure compliance must consider under section 3 of the BHC Act, are with applicable law or regulation. consistent with approval of the proposal. In addition, the The MOF and the BO J ensure that BOT has adequate convenience and needs of the communities to be served, procedures for monitoring and controlling its activities the supervision of BOT, and the Board's access to inforworldwide through their review of BOT's internal con- mation, are all consistent with approval of BOT's protrols and procedures as part of their regular examina- posal. tions. BOT monitors its worldwide activities through several divisions of its head office which perform on-site Conclusion inspections of its offices, provide internal consulting services to its offices to ensure the maintenance of proper Based on all the facts of record, the Board has determined operational procedures, and monitor expenses, asset qual- that this application should be, and hereby is, approved. The ity, funding and foreign exchange operations, portfolio Board's approval is specifically conditioned on compliance investments, and internal controls. Internal audits of all by BOT with all the commitments and conditions made in offices are conducted by the auditing department of that connection with this application. For purposes of this acoffice or by the auditing department of a larger BOT tion, these commitments and conditions will both be considoffice in the region. Furthermore, all of BOT's offshore ered conditions imposed in writing and, as such, may be affiliates must submit to the head office annual financial enforced in proceedings under applicable law. statements that are audited by independent certified pub- This acquisition shall not be consummated before the lic accountants. fifteenth calendar day following the effective date of this Based on all the facts of record, the Board concludes that order, or later than three months after the effective date of BOT is subject to comprehensive supervision on a consoli- this order, unless such period is extended for good cause dated basis by its home country supervisor. by the Board or by the Federal Reserve Bank of San The Board has reviewed relevant provisions of Japanese Francisco, acting pursuant to delegated authority. law and has communicated with the appropriate govern- By order of the Board of Governors, effective ment authorities concerning access to information about January 30, 1995. BOT's operations. BOT has committed that it will make available to the Board information on the operations of Voting for this action: Chairman Greenspan, Vice Chairman BOT, and any affiliate of BOT, that the Board deems neces- Blinder, and Governors Kelley, LaWare, Lindsey, Phillips, and Yellen. sary to determine and enforce compliance with the IBA, the BHC Act, as amended, and other applicable federal law. To JENNIFER J. JOHNSON the extent that the provision of such information to the Deputy Secretary of the Board Board may be prohibited or impeded by law, BOT has committed to cooperate with the Board in obtaining any Battle Creek State Company necessary consents or waivers that might be required from Battle Creek, Nebraska third parties for disclosure. In light of these commitments and other facts of record, and subject to the conditions of Order Approving the Formation of a Bank Holding this order, the Board concludes that BOT has provided Company adequate assurances of access to any necessary information the Board may request. Battle Creek State Company, Battle Creek, Nebraska ("Battle Creek"), has applied under section 3 of the Bank management consulting). Japanese banks' investments in such associated companies are limited to 5 percent of the company's equity. 12. See 12 C.F.R. 225.13(b)(1). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

282 Federal Reserve Bulletin • March 1995 Holding Company Act (12 U.S.C. § 1842 et seq.) ("BHC proved this proposal, and the FDIC has indicated that it has Act"), to become a bank holding company by acquiring no objection to consummation of this proposal. In this light, 80.7 percent of the voting shares of Battle Creek State and based on all the facts of record, including the financial Bank, Battle Creek, Nebraska ("Bank"). condition of Bank and relevant examination information, Notice of the application, affording interested persons the Board concludes that considerations relating to the an opportunity to submit comments, has been published financial and managerial resources and future prospects of (59 Federal Register 60,361 (1994)). The time for filing Battle Creek and Bank are consistent with approval of this comments has expired, and the Board has considered the proposal. The Board also concludes that considerations application and all comments received in light of the relating to the convenience and needs of the community to factors set forth in section 3(c) of the BHC Act. be served and other supervisory factors the Board is re- Battle Creek is a nonoperating company formed for the quired to consider under section 3 of the BHC Act also are purpose of acquiring Bank. Bank is the 290th largest com- consistent with approval. mercial banking organization in Nebraska, controlling de- Based on the foregoing and all the facts of record, the posits of $11.9 million, representing less than 1 percent of Board has determined that this application should be, and total deposits in commercial banking organizations in the hereby is, approved.3 The Board's approval is specifically state.1 Based on all the facts of record, the Board believes conditioned on compliance with all the commitments made that consummation of the proposal would not result in any by Battle Creek in connection with this application. For significantly adverse effects on competition or concentra- purposes of this action, the commitments and conditions tion of banking resources in any relevant banking market. relied on in reaching this decision are deemed to be condi- Accordingly, the Board concludes that competitive consid- tions imposed in writing by the Board and, as such, may be erations are consistent with approval of this application. enforced in proceeding under applicable law. A minority shareholder of Bank ("Protestant") alleges The transaction should not be consummated before the that consummation of this proposal would have a detrimen- fifteenth calendar day following the effective date of this tal effect on the financial condition of Bank.2 The Board has order, or later than three months after the effective date of carefully reviewed this comment in light of all the facts of this order, unless such period is extended for good cause by record, including relevant reports of examination, informa- the Board or by the Federal Reserve Bank of Kansas City, tion provided by Bank's primary federal supervisor, the acting pursuant to delegated authority. Federal Deposit Insurance Corporation ("FDIC"), and in- By order of the Board of Governors, effective formation provided by Battle Creek. January 30, 1995. The Board notes that Battle Creek would be formed through an exchange of shares, and that no debt would be Voting for this action: Chairman Greenspan, Vice Chairman incurred as part of this transaction. The Board has consid- Blinder, and Governors Kelley, LaWare, Lindsey, Phillips, and Yellen. ered the level of dividends payable on the preferred shares that would be issued as part of this proposal, and Battle JENNIFER J. JOHNSON Creek's commitment to pay no dividend that would jeopar- Deputy Secretary of the Board dize the capital position of Bank. The Board also notes that the Nebraska Director of Banking and Finance has ap- 3. Protestant has requested that the Board hold a public meeting or hearing 1. All banking data are as of June 30, 1993. on this application. Section 3(b) of the BHC Act does not require the Board 2. Protestant also alleges that this proposal would substantially dilute the to hold a public hearing or meeting on an application unless the appropriate influence of Bank's minority shareholders over Bank's operations and man- supervisory authority for the bank to be acquired makes a timely written agement, enrich some principal shareholders through excessive exchange recommendation of denial of the application. No supervisory agency has ratios for their Bank stock, and diminish Protestant's opportunities to per- recommended denial of the proposal. suade holding company shareholders to support Protestant's positions on Generally, under its rules, the Board may, in its discretion, hold a public issues involving Bank. Protestant also asserts that Protestant was excluded hearing or meeting on an application to clarify factual issues related to the from participating in the bank holding company formation and in the pricing application and to provide an opportunity for testimony, if appropriate. of Bank's shares prior to the share exchange. Battle Creek responds that 12 C.F.R. 262.3(e) and 262.25(d). In the Board's view, all interested parties Protestant was offered the same price as other Bank shareholders under the have had ample opportunity to submit their views, and substantial written terms of the share exchange, and that issues related to the management submissions have been received. Protestant supports this request for a structure effected by the holding company formation were presented to hearing by posing several questions and providing conclusory statements Bank's shareholders at the time they approved the transaction. without identifying disputed material facts necessary to resolve these issues. The courts have determined that the Board is precluded from considering Protestant also identifies written materials and unspecified oral testimony stock pricing, exchange ratios, and similar matters except as they relate to a that would be produced at a hearing. In the Board's view, Protestant has factor specifically enumerated in the BHC Act. See Western Bancshares, Inc. failed to demonstrate why the issues raised in Protestant's request for a v. Board of Governors, 480 F.2d 749 (10th Cir. 1973). In this case, the hearing cannot be resolved with written submissions in lieu of a hearing as matters questioned by Protestant have been resolved by the majority vote of required by the Board's rules. 12 C.F.R. 225.14(f) and 262.3(e). For these Bank's shareholders. Based on this, and after considering the other facts of reasons, and based on all the facts of record, the Board has determined that a record, including relevant examination reports and other information, the public meeting or hearing is not necessary to clarify the factual record in this Board concludes that these matters do not reflect adversely on factors that the application, or otherwise warranted in this case. Accordingly, Protestant's Board is required to consider under the BHC Act. See id. request for a public hearing or meeting on this application is denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 283 Coal City Corporation the facts of record, the Board concludes that consummation Coal City, Illinois of this proposal is not likely to result in significantly adverse effects on competition or the concentration of banking Manufacturers National Corporation resources in the Chicago banking market or any other Chicago, Illinois relevant banking market. Order Approving the Acquisition of a Bank Convenience and Needs Considerations Coal City Corporation, Coal City, Illinois ("CCC") and its In acting on applications to acquire a depository institution, subsidiary, Manufacturers National Corporation, Chicago, the Board must consider the convenience and needs of the Illinois ("MNC") (together "Applicant"), bank holding communities to be served, and take into account the records companies within the meaning of the Bank Holding Com- of the relevant depository institutions under the Community pany Act ("BHC Act"), have applied under section 3 of the Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). The BHC Act (12 U.S.C. § 1842) to acquire at least 82.35 per- CRA requires the federal financial supervisory agencies to cent of the voting shares of Peterson Bank, Chicago, Illi- encourage financial institutions to help meet the credit nois. needs of the local communities in which they operate, Notice of the application, affording interested persons an consistent with the safe and sound operation of such instituopportunity to submit comments, has been published (59 tions. To accomplish this end, the CRA requires the appro- Federal Register 52,792 (1994)). The time for filing com- priate federal supervisory authority to "assess the instituments has expired, and the Board has considered the appli- tion's record of meeting the credit needs of its entire cation and all comments received in light of the factors set community, including low- and moderate-income neighborforth in section 3(c) of the BHC Act. hoods, consistent with the safe and sound operation of such Applicant is the 63d largest commercial banking organi- institutions," and to take that record into account in its zation in Illinois, controlling deposits of $286.5 million, evaluation of these applications.4 representing less than 1 percent of total deposits in commer- The Board has reviewed comments submitted by an cial banks in the state.1 Peterson Bank is the 125th largest individual ("Protestant") criticizing the record of Applicommercial banking organization in Illinois, controlling cant's subsidiary bank, Manufacturers Bank, Chicago, Illiapproximately $153.4 million in deposits, representing less nois, under the CRA. Protestant alleges that Manufacturers than 1 percent of total deposits in commercial banks in the Bank has insufficient lending in its delineated community; state. Upon consummation of the proposal, Applicant would lacks participation in government-sponsored programs; enbecome the 44th largest commercial banking organization gages in a low level of lending to low- and moderatein Illinois, controlling approximately $439.9 million in de- income and minority residents; and provides insufficient posits, representing less than 1 percent of total deposits in mortgage funding. Protestant also questions whether Allied commercial banks in the state. Bank of Coal City, N.A., Coal City, Illinois ("Allied Applicant and Peterson Bank compete directly in the Bank"), which is owned by Applicant, and Peterson Bank Chicago, Illinois, banking market.2 After consummation of meet the credit needs of their respective communities.5 this proposal, numerous competitors would remain in the The Board has carefully reviewed the entire CRA performarket, the market would remain unconcentrated, and the mance record of Applicant's subsidiary banks, Allied Bank, increase in market concentration, as measured by the and Manufacturers Bank, as well as Peterson Bank, all Herfindahl-Hirschman Index ("HHI"), would not exceed comments received on these applications, Applicant's rethe Department of Justice merger guidelines.3 Based on all 4. 12 U.S.C. § 2903. 1. Deposit and state data are as of June 30, 1993. 5. Protestant also alleges that Applicant did not comply with the represen- 2. The Chicago banking market is approximated by Cook, Du Page, and tations and commitments it made in its 1992 application to acquire MNC. In Lake Counties in Illinois. particular, Protestant alleges that Manufacturers Bank represented in 1992 3. Under the revised Department of Justice Merger Guidelines, 49 Federal that it would expand its mortgage lending and participation in the secondary Register 26,823 (June 29, 1984), a market in which the post- merger HHI is mortgage market. less than 1000 is considered to be unconcentrated. In such markets, the Since 1992, the Federal Reserve Bank of Chicago has monitored compli- Justice Department is unlikely to challenge a merger. The Justice Department ance by Applicant with the commitments made in connection with the 1992 has informed the Board that a bank merger or acquisition generally will not application to acquire MNC. The record indicates that Manufacturers Bank be challenged (in the absence of other factors indicating anticompetitive has expanded its mortgage lending activities, and Applicant has participated effects) unless the post-merger HHI is at least 1800 and the merger increases in the secondary market for mortgage loans through Allied Bank. In addition, the HHI by more than 200 points. The Justice Department has stated that the in June 1993, the bank's primary supervisor, the Federal Deposit Insurance higher than normal HHI thresholds for screening bank mergers for anticom- Corporation ("FDIC"), examined the bank and determined that the bank's petitive effects implicitly recognize the competitive effect of limited-purpose CRA performance is satisfactory. Based on the examination report, Applilenders and other non-depository financial entities. In this case, the HHI for cant's compliance reports, and other facts of record, the Board believes the Chicago banking market would not increase as a result of this transaction, Applicant is in compliance with the representations and commitments that it and the post-merger HHI would remain at 595. made to the Board in the 1992 application. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

284 Federal Reserve Bulletin • March 1995 sponse to these comments, and all other relevant facts of program, and offers student loans in cooperation with a record, in light of the CRA, the Board's regulations and the third-party lender. Statement of the Federal Financial Supervisory Agencies The Board has carefully reviewed the data filed by Man- Regarding the Community Reinvestment Act ("Agency ufacturers Bank under the Home Mortgage Disclosure Act CRA Statement").6 (12 U.S.C. § 2801 et seq.) ("HMDA") from 1991 through 1994, in light of Protestant's allegations that the bank A. Record of CRA Performance engages in low levels of lending for low- and moderateincome individuals, minorities, and affordable housing. The The Agency CRA Statement provides that a CRA examina- HMDA data indicate that there are some disparities in the tion is an important and often controlling factor in the application and denial rates for low- and moderate-income consideration of an institution's CRA record, and that these and minority mortgage loan applicants compared with other reports will be given great weight in the applications pro- groups.9 cess.7 The Board notes that Applicant's subsidiary banks The Board is concerned when the record of an institution each received a "satisfactory" rating at their most recent indicates disparities in lending to applicants in minority examination for CRA performance. Allied Bank received a communities, and it believes all banks are obligated to "satisfactory" rating for its CRA performance from the adopt and implement lending practices that ensure not only Office of the Comptroller of the Currency ("OCC") dated safe and sound lending, but also equal access to credit by October 25, 1991, and, as noted above, Manufacturers Bank creditworthy applicants regardless of race. The Board recreceived a "satisfactory" CRA rating from the FDIC in ognizes, however, that HMDA data alone provide an incom- June 1993 ("1993 Examination"). In addition, Peterson plete measure of an institution's lending in its community. Bank received a "satisfactory" rating from its primary The Board also recognizes that HMDA data have limitaregulator, the FDIC, at its most recent examination as of tions that make the data an inadequate basis, absent other March 22, 1993. information, for conclusively determining whether an institution has engaged in illegal discrimination in making lend- B. Lending Activities ing decisions. The 1993 examination of Manufacturers Bank found no Manufacturers Bank is a relatively small bank, with approx- evidence of illegal discrimination or of practices intended to imately $316 million in total assets, and operates in the discourage credit applications. The examination concluded Chicago, Illinois, banking market, primarily as a commer- that Manufacturers Bank was in compliance with anticial lender. The record indicates that the bank has extended discrimination laws and regulations. The examinations for commercial loans throughout its community, including in Allied Bank and Peterson Bank did not find any discriminapredominantly minority and low- and moderate-income ar- tory practices on the part of either bank, and the examinaeas. Between December 31, 1992, and September 30, 1994, tions indicate that both banks are active lenders in all areas Manufacturers Bank increased the number of loans that it of their communities. extended to borrowers in its delineated community from 50 Although Manufacturers Bank is primarily a commercial to 88 and the dollar volume of these loans increased from lender,10 it has taken steps to enhance its levels of housing- $9.9 million to $26.7 million. Approximately 75 percent of related lending in the low- and moderate-income commuthese commercial loans were to borrowers in predominantly nity. From June 1993 to June 1994, Manufacturers Bank has minority census tracts and approximately 90 percent increased its 1-4 family residential lending by 12.8 percent. were extended to borrowers in low- and moderate-income From 1991 to 1993, the number of HMDA-related applicacensus tracts. More than 90 percent of the loans are tions from low- and moderate-income areas increased from extended to small businesses that operate in Manufactur- six to 34 applications. Between 1992 and 1993, the total of ers Bank's community.8 HMDA loans extended within its delineated community In 1993, Manufacturers Bank began to offer consumer increased from $1.1 million to $2.6 million. loans. More than $1 million in consumer loans have been Manufacturers Bank also seeks to improve its provision made since 1993. Manufacturers Bank has actively mar- of mortgage credit by increasing the types of products it keted these loans in its delineated community and has offers and participating in community development organioriginated such loans in 17 low- and moderate-income zations. Manufacturers Bank has an arrangement under tracts. Manufacturers Bank also developed a used-car loan 9. The 1993 Examination found Manufacturers Bank's delineated community to be reasonable. The bank's delineated community is comprised almost entirely of low- and moderate-income census tracts. In September 1994, the 6. 54 Federal Register 13,742 (1989). bank expanded its delineated community to include four new census tracts 7. Id. at 13,745. and to exclude one census tract. 8. Applicant defines a small business as one with annual sales of less than 10. Only 9.8 percent of Manufacturers Bank's loan portfolio is in residen- $5 million. tial lending and consumer loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 285 which it refers candidates for government-sponsored pro- C. Other Considerations grams to a qualified local mortgage company. Since June 1994, Manufacturers Bank has offered a five-year and a ten- Protestant also alleges that consummation of the proposal year home improvement loan, and has made a $500,000 would result in a decline in Applicant's capital and that commitment to the Community Investment Corporation, Applicant would not be able to service the debt that it would which focuses its programs on the construction of multi- incur as part of this proposal. The Board has reviewed the family dwellings. Twenty-four loans, totalling $68,000 have effects of this transaction on Applicant's financial resources been originated under the Community Investment Corpora- and the resources of the subsidiary banks. Applicant's debt tion program. Manufacturers Bank also purchased a service projections appear reasonable and are consistent $100,000 security from the Illinois Housing Development with the Board's guidelines. In addition, Applicant, its Authority. This year Manufacturers Bank will initiate a new subsidiary banks, and Peterson Bank would remain "well loan program called the Chicago West Town Purchase/ capitalized" after consummation of this transaction.12 Rehab Loan Program to develop a low-income home lend- Accordingly, the Board concludes that financial and maning and home improvement program for the western part of agerial resources and future prospects of CCC, MNC, and Manufacturers Bank's delineated community. their respective subsidiary banks, and the other supervisory The record indicates that Applicant's subsidiary bank, factors that the Board must consider under section 3 of the Allied Bank, meets the credit needs of its community. BHC Act, are consistent with approval of this proposal.13 Allied Bank extends almost all of its commercial loans to small business owners. As of January 9, 1995, Allied had made 110 loans with $11.4 million outstanding to small 12. Applicant is purchasing shares of Peterson Bank that are subject to a businesses. In addition, Allied Bank participates in the voting agreement, and Protestant asserts that the agreement results in a bank holding company that has not obtained the necessary Board approval. Protes- Illinois Guaranteed Student Loan Program and has over tant bases this assertion on the fact that one party to the agreement previously $475,000 in loans outstanding. Allied Bank also has ex- had participated in another voting agreement. tended $200,000 in loans as part of the State of Illinois The Board has reviewed the voting agreement in light of the Board's statement on Voting Trusts and Buy-Sell Agreements ("Policy Statement"). Agriculture Program. Allied Bank makes most of its Secretary Letter to the Presidents of the Reserve Banks no. 2196, 2 FRRS HMDA-related loans to borrowers in its delineated commu- f 4.185 (May 4,1972). In its Policy Statement, the Board determined that in nity and its originations increased from $4.4 million in 1992 most cases, a voting trust or buy-sell agreement would not be viewed as a "company" under section 2(b) of the BHC Act if the agreement: to $5.9 million in 1993. In 1994, over 80 percent of its (1) Relates only to the shares of a single bank; applications came from within its community. The percent- (2) Terminates within 25 years; age of HMDA-related applications Allied Bank received (3) Engages in no other activity except to hold and vote the shares of a single bank; and from low- and moderate-income areas increased to (4) Involves parties who are not participants in any other similar arrange- 6.6 percent of all applications in 1993 from 3.7 percent in ment with respect to any other bank or nonbank business. 1992.11 The Board's review of the agreement indicates that the agreement meets all the Policy Statement's criteria. The Board does not believe, as Protestant alleges, that the participation by a single member of this voting agreement in an agreement with a different group of individuals regarding an unrelated Conclusion bank would cause the voting agreement involving Peterson Bank to constitute a "company" for purposed of the BHC Act. In addition, the Board notes The Board has carefully considered all the facts of record, that the Peterson Bank agreement does not involve Applicant or its shareholders, and terminates after consummation of this proposal. Based on these including the comments received, in reviewing the CRA and all the other facts of record, the Board concludes that the voting records of performance for Manufacturers Bank, Allied agreement involving Peterson Bank does not violate the BHC Act. Bank, and Peterson Bank. Based on a review of the entire Protestant also asserts that the participation of Peterson Bank's ESOP as a party to the agreement violates the Employees Retirement Income Security record, including the information from Protestant and Ap- Act of 1974 ("ERISA"). The Department of Labor, which is the agency plicant, and relevant reports of examination, the Board responsible for enforcing ERISA, has informed the Board that ERISA does not prohibit the ESOP from owning securities that are subject to the restricconcludes that convenience and needs considerations, intions of the voting agreement. cluding the CRA records of performance of all three banks Protestant also alleges that Peterson Bank and its officers and directors are consistent with approval of this application. The Board breached their fiduciary duty to the minority shareholders of Peterson Bank in negotiating and accepting Applicant's offer, as structured. These questions expects Manufacturers Bank to continue its efforts to in- raise matters under state law governing shareholder rights and the fiduciary crease lending within its delineated community. duty of corporate officers and directors. The courts have determined that the Board does not have authority under the BHC Act to consider these matters unless they directly relate to a factor specified in the BHC Act. Western Bancshares, Inc., v. Board of Governors, 480 F.2d 749 (10th Cir. 1973). After considering the managerial and financial resources of the Applicant, and reviewing the relevant examinations of Applicant's bank subsidiaries and Peterson Bank, the Board concludes that Protestant's comments on these matters do not reflect so adversely on the factors the Board is required to consider under the BHC Act as to warrant denial of this proposal. 11. Since 1992, Allied Bank sold over 200 loans to FNMA and serviced an additional 197 loans, totalling $12.2 million, for FNMA. Peterson Bank also 13. The Protestant also alleges that a new issue of preferred shares may be participates in the secondary mortgage market by selling loans through an purchased by controlling shareholders and that the shareholders have not independent FHA and VA lender. made the appropriate filings under the Change in Bank Control Act ("CIBC Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

286 Federal Reserve Bulletin • March 1995 Based on the foregoing and all the facts of record, the tion in North Dakota, controlling deposits of $26.9 million, Board has determined that the application should be, and representing less than 1 percent of total deposits in commerhereby is, approved. The Board's approval is expressly cial banking organizations in the state. Upon consummation conditioned on Applicant's compliance with all the commit- of this proposal, First Bancshares would become the 16th ments made in connection with this application. The com- largest commercial banking organization in North Dakota, mitments and conditions relied on by the Board in reaching controlling deposits of $84 million, representing approxithis decision shall be deemed to be conditions imposed in mately 1.2 percent of total deposits in commercial banking writing by the Board in connection with its findings and organizations in the state. decision, and, as such, may be enforced in proceedings First Bancshares and Strehlow do not compete directly in under applicable law. any relevant banking markets. Based on all the facts of The acquisition shall not be consummated before the record, the Board concludes that the acquisition of Strehlow fifteenth calendar day following the effective date of this and its subsidiary bank would not result in any significantly order, or later than three months after the effective date of adverse effects on competition or concentration of banking this order, unless such period is extended for good cause by resources in any relevant banking market. The Board also the Board or by the Federal Reserve Bank of Chicago, concludes that the financial and managerial resources and acting pursuant to delegated authority. future prospects of First Bancshares, Strehlow, and their By order of the Board of Governors, effective respective subsidiaries, and other supervisory factors the January 17, 1995. Board must consider under section 3 of the BHC Act, are consistent with approval. Considerations relating to the Voting for this action: Chairman Greenspan, Vice Chairman convenience and needs of the communities to be served also Blinder, and Governors Kelley, LaWare, Lindsey, Phillips, and Yellen. are consistent with approval of this application. Based on all the facts of record, the Board has deter- JENNIFER J. JOHNSON mined that this application should be, and hereby is, ap- Deputy Secretary of the Board proved. The Board's approval is specifically conditioned on compliance by First Bancshares with all the commitments First Bancshares of Valley City, Inc. made in connection with this application. For the purpose of Valley City, North Dakota this action, the commitments and conditions relied on by the Board in reaching its decision are deemed to be condi- Order Approving the Merger of Bank Holding Companies tions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in First Bancshares of Valley City, Inc., Valley City, North proceedings under applicable law. Dakota ("First Bancshares"), a bank holding company The acquisition of Strehlow shall not be consummated within the meaning of the Bank Holding Company Act before the fifteenth calendar day following the effective date ("BHC Act"), has applied under section 3 of the BHC Act of this order, and neither transaction shall be consummated (12 U.S.C. § 1842) to acquire all of the voting shares of later than three months after the effective date of this order, Insurance by Strehlow, Inc. ("Strehlow"), and thereby indiunless such period is extended for good cause by the Board rectly acquire The First State Bank of Casselton, both of or by the Federal Reserve Bank of Minneapolis, acting Casselton, North Dakota.1 pursuant to delegated authority. Notice of the application, affording interested persons an By order of the Board of Governors, effective opportunity to submit comments, has been published (59 January 11, 1995. Federal Register 47,336 (1994)). The time for filing comments has expired and the Board has considered the applica- Voting for this action: Chairman Greenspan, Vice Chairman tion and all comments received in light of the factors set Blinder, and Governors Kelley, LaWare, Lindsey, Phillips, and forth in section 3 of the BHC Act. Yellen. First Bancshares is the 25th largest commercial banking organization in North Dakota, controlling deposits of JENNIFER J. JOHNSON $57.1 million, representing less than 1 percent of total Deputy Secretary of the Board deposits in commercial banking organizations in the state.2 Strehlow is the 55th largest commercial banking organiza- KeyCorp Cleveland, Ohio Act"). Applicant has not issued the shares at this time, and thus it is Order Approving Acquisition of a Bank uncertain whether a CIBC Act filing would be required. 1. Strehlow does not engage directly or indirectly in any nonbanking KeyCorp, Cleveland, Ohio ("KeyCorp"), and its wholly activities. 2. Asset and state deposit data are as of June 30, 1994. owned subsidiary, Key Bancshares of Maine, Inc., Portland, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 287 Maine ("Key Maine"), both bank holding companies within teristics of these markets, the increase in the concentration the meaning of the Bank Holding Company Act ("BHC of total deposits in depository institutions5 in these markets Act"), have applied under section 3 of the BHC Act as measured by the Herfindahl-Hirschman Index ("HHI"),6 (12 U.S.C. § 1842) to acquire Casco Northern Bank, N.A., and commitments made by KeyCorp. Portland, Maine ("Bank"), and thereby indirectly acquire In five banking markets in Maine, specifically Bridgton, Bank's subsidiaries.1 Sanford, Augusta, Lewiston-Auburn, and Brunswick, an Notice of the application, affording interested persons an increase in the concentration of total deposits in depository opportunity to submit comments, has been published (59 institutions in the market, as measured by the HHI, indi- Federal Register 52,306 (1994)). The time for filing com- cates that the proposal could result in significantly adverse ments has expired, and the Board has considered the appli- competitive effects. In order to mitigate the potential that cation and all comments received in light of the factors set this proposal may result in adverse competitive effects in forth in section 3 of the BHC Act. these markets, KeyCorp has committed to divest branches KeyCorp, through Key Maine, is the second largest com- in these five banking markets7 to an acquiror that could mercial banking organization in Maine, controlling deposits purchase the branches without substantially lessening of of $2 billion, representing 29.3 percent of total deposits in competition in these markets.8 After consummation of this commercial banking organizations in the state.2 Bank is the proposal and the divestiture of the branch offices in these third largest commercial banking organization in Maine, five banking markets, the competitive effect of this proposal controlling $895.5 million in deposits, representing in these markets would be consistent with the merger guide- 13.5 percent of total deposits in commercial banking organi- lines established by the Justice Department and the paramezations in the state. ters applied by the Board in previous decisions.9 Douglas Amendment Analysis 5. Market data are as of June 30, 1993. In this context, depository Section 3(d) of the BHC Act, the Douglas Amendment, institutions include commercial banks, savings banks, and savings associations. Market share data are based on calculations in which the deposits of prohibits the Board from approving an application by a thrift institutions are included at 50 percent. The Board previously has bank holding company to acquire control of any bank indicated that thrift institutions have become, or have the potential to located outside its home state unless such acquisition is become, significant competitors of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); National City Corporation, 70 Federal "specifically authorized by the statute laws of the State in Reserve Bulletin 743 (1984). which such bank is located, by language to that effect and 6. Under the revised Department of Justice Merger Guidelines, 49 Federal not merely by implication."3 For purposes of the Douglas Register 26,823 (June 29, 1984), a market in which the post-merger HHI is above 1800 is considered to be highly concentrated. In such markets, the Amendment, the home state of KeyCorp is Ohio. Justice Department is likely to challenge a merger that increases the HHI by The statute laws of Maine permit an out-of-state bank more than 50 points. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence holding company, such as KeyCorp, to acquire a bank of other factors indicating anti-competitive effects) unless the post-merger located in Maine.4 Based on a review of the relevant state HHI is at least 1800 and the merger or acquisition increases the HHI by at least 200 points. The Justice Department has stated that the higher than statutes, the Board has concluded that approval of this normal threshold for an increase in the HHI when screening bank mergers proposal is not prohibited by the Douglas Amendment. The and acquisitions for anti-competitive effects implicitly recognizes the com- Board's action on this proposal is specifically conditioned petitive effect of limited-purpose lenders and other non-depository financial entities. upon KeyCorp's receiving all required state approvals. 7. The Bridgton banking market consists of the Cumberland County townships of Bridgton and Harriston, and the Oxford County townships of Competitive Considerations Denmark and Sweden. The Sanford banking market consists of the York County townships of Acton, Alfred, Limerick, Newfield, Sanford, Shapleigh, and Waterboro. The Augusta banking market consists of the Augusta RMA KeyCorp and Casco compete directly in ten banking mar- plus the Somerset County townships of Canaan and Smithfield; the Waldo County townships of Freedom, Palermo, Thomdike, Troy, and Unity; the kets in Maine and one in New Hampshire. The Board has Lincoln County townships of Jefferson, Somerville, Whitefield, and Hibberts carefully considered the effects that consummation of this Gore; the Knox County townships of Washington; and the Kennebec County proposal would have on competition in these banking mar- townships of Albion, Belgrade, China, Clinton, Fayette, Litchfield, Monmouth, Mount Vernon, Rome, Sydney, Smithfield, Vienna, Wayne, and kets, in light of all the facts of record, including the charac- Windsor. The Lewiston-Auburn banking market consists of the Lewiston- Auburn RMA plus the Androscoggin County townships of Durham, Leeds, Turner and Wales; the Oxford County township of Hebron; and the Cumberland County township of New Gloucester. The Brunswick banking market 1. Bank controls twelve wholly owned subsidiaries that are engaged in consists of the Brunswick/Bath RMA plus the Sagadahoc County townships holding assets acquired in the ordinary course of collecting a debt previously of Arrowsic, Bowdoin, Georgetown, Phippsburg, and Woolwich; and the contracted in good faith. Lincoln County townships of Alna, Dresden, Westport, and Wiscasset 2. State deposit data are as of June 30,1994. 8. KeyCorp has committed to sell these branches either to an organization 3. 12 U.S.C. § 1842(d). A bank holding company's home state is that state that does not currently operate in these markets or to certain in-market in which the operations of the bank holding company's banking subsidiaries competitors. were principally conducted on July 1, 1966, or the date on which the 9. Taking the proposed divestitures into account, upon consummation of company became a bank holding company, whichever is later. this proposal, the HHI in these five banking markets would not increase by 4. See Me. Rev. Stat. Ann. tit. 9-B, § 1013 (1993). more than the following amounts: Bridgton would remain at 3547; Sanford Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

288 Federal Reserve Bulletin • March 1995 KeyCorp and Bank also compete in the Portland and market, as measured by the HHI, tend to overstate the Bangor banking markets. In the Portland banking market,10 competitive effects of this proposal. Upon consummation of KeyCorp would, absent divestitures, become the largest this proposal, eight depository institutions would remain in depository institution in the market upon the acquisition of this market, several of which would have a significant Bank, controlling $1.1 billion in deposits, representing ap- market share. In addition, the market is relatively attractive proximately 33.3 percent of total deposits in depository for entry as evidenced by the entry to this market of one institutions in the market. In connection with this proposal, new bank and two de novo entrants during 1991 and 1992, KeyCorp has committed to divest branches in these markets and credit unions also have a competitive effect on banking to an out-of-market competitor, or to a specific in-market, services offered in this market.14 full-service competitor. Upon consummation of this pro- Consummation of this proposal in the remaining banking posal, and after completing the proposed divestitures, the markets where KeyCorp and Bank compete would not HHI would increase by no more than 368 points to 2167.11 exceed Justice Department guidelines and numerous com- A number of factors indicate that the increase in concentra- petitors would remain in each of these banking markets.15 tion levels in the Portland banking market, as measured by In accordance with the BHC Act, the Board has sought the HHI, tend to overstate the competitive effects of this comments from the Justice Department on the competitive proposal. For example, upon consummation of this pro- effects of this proposal. The Justice Department has indiposal, 13 depository institutions would remain in the mar- cated that, in light of the proposed divestitures, this proket, several with significant market shares. The divestiture posal is not likely to have a significantly adverse effect on of approximately $127 million of deposits and $118 million competition in any relevant banking market. Based on all of loans in this market would create a strong competitor to the facts of record, including the facts discussed above and replace Bank. In addition, the Portland banking market is the divestitures proposed by KeyCorp,16 the Board conrelatively attractive for entry, with two new banks having cludes that consummation of this proposal is not likely to entered this market between 1991 and 1994. Finally, credit have a significantly adverse effect on competition or on the unions have a competitive effect on banking services of- concentration of resources in any relevant banking marfered in the Portland banking market.12 ket.17 In the Bangor banking market,13 KeyCorp would become The Board also has concluded that the financial and the second largest depository institution after acquiring managerial resources and future prospects of KeyCorp and Bank, controlling $174 million of deposits, representing Bank and their respective subsidiaries, and all other superviapproximately 22.7 percent of total deposits in depository sory factors the Board must consider under section 3 of the institutions in the banking market. The HHI would increase BHC Act, are consistent with approval of this proposal.18 by 214 points to 2076. A number of factors indicate that the increase in concentration levels in the Bangor banking 14. There are 11 credit unions in this market, controlling approximately 17 percent of the combined deposits in depository institutions and credit would remain at 2165; Augusta would increase by 199 points to 2083; unions in the market. Lewiston-Auburn would increase by 199 points to 2212; and Brunswick 15. The changes in the HHI in the three remaining banking markets in would increase by 414 points to 1763. Maine would be as follows: Damariscotta would increase by 59 points to 10. The Portland banking market consists of the Portland RMA plus the 3615; Ellsworth would increase by 70 points to 2195; and Rockland would Cumberland County townships of Baldwin, Casco, Naples, Pownal, Sebago; increase by 77 points to 3250. The HHI in the Portsmouth-Dover-Rochester, and the York County townships of Dayton, Hollis, Kennebunkport, Liming- New Hampshire, banking market would increase 7 points to 1090. ton, Lyman, North Kennebunkport, and the city of Biddeford. 16. As part of its commitment to divest branches in the Bridgton, Sanford, 11. Market share data are based on calculations in which the deposits of Augusta, Lewiston-Auburn, Brunswick and Portland banking markets, Key- Peoples Heritage Savings Bank, Portland, Maine ("Peoples Bank") are Corp has committed to execute sales agreements for each of the proposed included at 100 percent. The deposits of all other thrifts in this market are divestitures prior to consummation of this proposal, and to complete these included at 50 percent. The Board previously has indicated that Peoples divestitures within 180 days of consummation. KeyCorp also has committed Bank offers all or virtually all of the cluster of banking products and services, that in the event it is unsuccessful in completing these divestitures within 180 including commercial loans, and, thus, is a full competitor of commercial days of consummation of the proposal, it will transfer these branch offices to banks. See Peoples Heritage Financial Group, 80 Federal Reserve Bulletin an independent trustee that will be instructed to sell the branches promptly. 755 (1994); Fleet/Norstar Financial Group, Inc., 77 Federal Reserve Bulle- See BankAmerica Corporation, 78 Federal Reserve Bulletin 338, 340 (1992); tin 750 (1991). In the Portland banking market, Peoples Bank ranks second United New Mexico Financial Corporation, 77 Federal Reserve Bulletin in market deposits, and non-real-estate commercial loans outstanding as of 484, 485 (1991). June 30, 1994, accounted for 9.7 percent of total assets. 17. The Board received comments from an individual ("Protestant") 12. There are 28 credit unions in this market, controlling approximately alleging that this proposal would have anti-competitive effects on banking 19 percent of the combined deposits in depository institutions and credit services in Maine. For the reasons set forth above, the Board concludes that unions in the market, which is substantially higher than the 5.6 percent competitive considerations are consistent with approval of this application. national average of deposits controlled by credit unions. 18. In evaluating financial and managerial resource considerations, the 13. The Bangor banking market consists of the Bangor RMA plus the Board carefully considered comments received from Protestant alleging that Penobscot County townships of Alton, Amherst, Argyle, Bradford, Bradley, lax management and supervision by KeyCorp have resulted in excessive Carmel, Charleston, Clifton, Corinth/East Corinth, Dixmont, Etna, Green- expenses for its Maine operations. Protestant has provided no evidence to bush, Greenfield, Hudson, LaGrange, Levant, Milford, Newburgh, and Stet- support these allegations. The Board has carefully reviewed these allegations son; the Hancock County townships of Bucksport, Castine, Dedham, Orland, in light of all facts of record, including relevant reports of examination. The Otis, and Verona; the Waldo County townships of Frankfort, Prospect, and Board notes that the findings and conclusions in these examinations do not Stockton Springs; and the unorganized townships T1N.D. and T32M.D. support Protestant's allegations. The Protestant also commented on other Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 289 Considerations relating to convenience and needs of the com- Peak Banks of Colorado, Inc. munities to be served also are consistent with approval.19 Nederland, Colorado Based on the foregoing and all the other facts of record, the Board has determined that the application should be, Order Approving Formation of a Bank Holding Company and hereby is, approved.20 The Board's approval of this proposal is expressly conditioned on KeyCorp's compliance Peak Banks of Colorado, Inc., Nederland, Colorado ("Apwith all the commitments made in connection with this plicant"), has applied under section 3(a)(1) of the Bank application, and on the receipt by KeyCorp and its subsid- Holding Company Act ("BHC Act") (12U.S.C. iary banks of all necessary approvals from federal and state § 1842(a)(1)) to become a bank holding company by acquirregulators. For purposes of this action, these commitments ing all the voting shares of Peak National Bank, Nederland, and conditions will both be considered conditions imposed Colorado ("Bank").1 in writing by the Board in connection with its findings and Notice of the application, affording interested persons an decision, and, as such, may be enforced in proceedings opportunity to submit comments, has been published under applicable law. (59 Federal Register 35,122 (1994)). The time for filing The acquisition of Bank shall not be consummated before comments has expired, and the Board has considered the the fifteenth calendar day following the effective date of this application and all comments received in light of the factors order, and the transaction shall not be consummated later set forth in section 3 of the BHC Act. than three months after the effective date of this order, Applicant is a nonoperating corporation formed for the unless such period is extended for good cause by the Board purpose of acquiring Bank. Bank is the 97th largest comor by the Federal Reserve Bank of Cleveland, acting pursu- mercial banking organization in Colorado, controlling deant to delegated authority. posits of approximately $40 million, representing less than By order of the Board of Governors, effective 1 percent of total deposits in commercial banking organiza- January 17, 1995. tions in the state.2 Based on all the facts of record, including the fact that this transaction constitutes a corporate reorgani- Voting for this action: Chairman Greenspan, Vice Chairman zation, the Board believes that consummation of this pro- Blinder, and Governors Kelley, LaWare, Lindsey, Phillips, and posal would not have a significantly adverse effect on Yellen. competition or the concentration of banking resources in any relevant banking market. Accordingly, the Board con- JENNIFER J. JOHNSON cludes that competitive considerations are consistent with Deputy Secretary of the Board approval. The Board also concludes that the financial and managerial resources and future prospects of Applicant and Bank, aspects of the operations of KeyCorp and its subsidiary banks, including and the convenience and needs and other supervisory factheir record under the Community Reinvestment Act and transactions and dealings between the Protestant and KeyCorp's subsidiary banks. All of tors that the Board is required to consider under section 3 of these concerns were carefully reviewed and considered by the Board in the BHC Act, are consistent with approval of this proposal. connection with KeyCorp's application to acquire BANKVERMONT Corporation. See BANKVERMONT Corporation, 81 Federal Reserve Bulletin 160 Based on the foregoing and all the facts of record, the (1995). For the reasons explained in that order, and based on all facts of Board has determined that the application should be, and record, the Board does not believe that the comments warrant denial of this hereby is, approved. The Board's approval is expressly proposal. 19. In connection with this application, the Board received 21 comments conditioned on compliance with all the commitments made from individuals, organizations, local businesses and public officials support- by Applicant, including commitments made by the princiing this proposal and commending KeyCorp for its commitment to its pals of Applicant, in connection with this application. The community, and, in particular, its commitment to meeting the credit and banking needs of local citizens and businesses. commitments and conditions relied on by the Board in 20. Protestant has requested that the Board hold a public meeting or reaching this decision are deemed to be conditions imposed hearing on this application. Section 3(b) of the BHC Act does not require the Board to hold a public hearing on an application unless the appropriate in writing by the Board in connection with its findings and supervisory authority for the bank to be acquired makes a timely written decision, and, as such, may be enforced in proceedings recommendation of denial of the application. In this case, the Board has not under applicable law. received such a recommendation. Generally, under its rules, the Board may, in its discretion, hold a public meeting or hearing on an application to clarify This transaction shall not be consummated before the factual issues related to the application and to provide an opportunity for fifteenth calendar day following the effective date of this testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has carefully considered Protestant's request. In the Board's view, Protestant has order, or later than three months after the effective date of had ample opportunity to present written submissions, and Protestant has submitted substantial written comments that have been considered by the Board in connection with this application and KeyCoip's application to acquire BANKVERMONT Corporation. In light of the foregoing and all the facts of record, the Board has determined that a public meeting or hearing is 1. This transaction constitutes a reorganization of interests by the sharenot necessary to clarify the factual record on this application, or otherwise holders of Bank. After consummation of this transaction, all shareholders of warranted in this case. Accordingly, the request for a public meeting or Bank would become shareholders of Applicant. hearing on this application is denied. 2. Deposit data are as of September 30, 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

290 Federal Reserve Bulletin • March 1995 this order, unless such period is extended for good cause by Douglas Amendment the Federal Reserve Bank of Kansas City, acting pursuant to delegated authority. Section 3(d) of the BHC Act, the Douglas Amendment, By order of the Board of Governors, effective prohibits the Board from approving an application by a January 30, 1995. bank holding company to acquire control of any bank located outside the bank holding company's home state, Voting for this action: Chairman Greenspan, Vice Chairman unless such acquisition is "specifically authorized by the Blinder, and Governors Kelley, LaWare, Lindsey, Phillips, and statute laws of the State in which such bank is located, by Yellen. language to that effect and not merely by implication."2 For purposes of the Douglas Amendment, Applicant's home JENNIFER J. JOHNSON state is Louisiana.3 Deputy Secretary of the Board Alabama4 and Louisiana5 have enacted banking statutes Whitney Holding Corporation that permit out-of-state bank holding companies to acquire New Orleans, Louisiana banks in their respective states, provided that the home state of the acquiring bank holding company permits the acquisition of banks in that state on a reciprocal basis. The Ala- Order Approving the Acquisition of a Bank bama state banking supervisor concluded that Applicant's proposal is authorized under Alabama law and has ap- Whitney Holding Corporation, New Orleans, Louisiana proved this transaction. In light of the foregoing, and based ("Applicant"), a bank holding company within the meaning on an analysis of the interstate banking statutes involved, of the Bank Holding Company Act ("BHC Act"), has the Board has determined that its approval of this proposal applied under section 3(a)(3) of the BHC Act is not prohibited by the Douglas Amendment. (12 U.S.C. § 1842(a)(3)) to acquire all the voting shares of Whitney Bank of Alabama, Mobile, Alabama ("Alabama Convenience and Needs Considerations Bank"), a de novo bank. Following consummation of this transaction, Alabama Bank would acquire substantially all In acting on an application under the BHC Act to acquire a the assets and assume substantially all the liabilities of five depository institution, the Board must consider the conveof the nine branches of Peoples Bank, Elba, Alabama nience and needs of the communities to be served, and take ("Peoples Bank"). into account the records of the relevant depository institu- Notice of the application, affording interested persons tions under the Community Reinvestment Act an opportunity to submit comments, has been published (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires the (59 Federal Register 53,988 (1994)). The time for filing federal financial supervisory agencies to encourage financomments has expired, and the Board has considered the cial institutions to help meet the credit needs of the local applications and all comments received in light of the communities in which they operate, consistent with their factors set forth in section 3 of the BHC Act. safe and sound operation. To accomplish this end, the CRA Applicant, a one-bank holding company, is the fourth requires the appropriate federal supervisory authority to largest commercial banking organization in Louisiana, con- "assess the institution's record of meeting the credit needs trolling approximately $2.4 billion in deposits, representing of its entire community, including low- and moderateapproximately 7.2 percent of total deposits in commercial income neighborhoods, consistent with the safe and sound banks in the state.1 Peoples Bank is the 19th largest comoperation of such institution," and to take that record into mercial banking organization in Alabama, controlling deaccount in its evaluation of bank holding company applicaposits of approximately $174.3 million, representing less tions.6 than 1 percent of total deposits in commercial banking The Board received comments from the Plaisance Develorganizations in Alabama. Upon consummation of the proopment Corporation ("Protestant"), maintaining that Appliposal, Applicant would become the 43d largest commercial cant and its subsidiary bank, Whitney National Bank, New banking organization in Alabama, controlling approxi- Orleans, Louisiana ("Whitney"), have failed to meet the mately $92 million in deposits, representing less than banking needs of all segments of Whitney's delineated 1 percent of total deposits in commercial banks in the state. Applicant and Peoples Bank do not compete directly in any banking market. Accordingly, consummation of this 2. 12 U.S.C. § 1842(d). proposal would not have a significantly adverse effect on 3. A bank holding company's home state is that state in which the competition or on the concentration of banking resources in operations of the bank holding company's banking subsidiaries were princiany relevant banking market. pally conducted on July 1,1966, or the date on which the company became a bank holding company, whichever is later. 4. Ala. Code § 5-31A-1 et seq. (West Supp. 1994). 5. La. Rev. Stat. Ann. § 6:531 et seq. (West Supp. 1994). 1. Banking data are as of September 30,1994. 6. 12 U.S.C. § 2903. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 291 communities,7 especially African Americans, and to com- B. HMDA Data and Lending Practices ply with fair lending laws.8 Protestant also contends that disparities in the rates of home-related loan applications The Board has carefully reviewed Whitney's 1992, 1993, from and loan originations to African Americans compared and preliminary 1994 HMDA data in light of Protestant's with those for white residents in Whitney's 1992 and 1993 comments. In general, these data indicate an improvement data collected under the Home Mortgage Disclosure Act in Whitney's record of HMDA-reported loans to African ("HMDA") indicate illegal discrimination.9 Americans in its delineated communities. For example, the The Board has carefully reviewed the CRA performance 1993 HMDA data indicate an increase in the number and record of Whitney, all comments received on this applica- percentages of HMDA-reported loans originated to African tion, including Whitney's response to these comments, and Americans in Whitney's New Orleans and Lafayette delinall other facts of record, in light of the CRA, the Board's eated communities. The preliminary 1994 HMDA data indiregulations, and the Statement of the Federal Financial cate an increase in loan applications from and loan origina- Supervisory Agencies Regarding the Community Reinvest- tions to African Americans in each of Whitney's New ment Act ("Agency CRA Statement").10 Orleans, Baton Rouge and Lafayette delineated communities.12 However, these data also reflect disparities at Whit- Record of CRA Performance ney in the rate of loan originations, denials, and applications by racial group or income level. A. Evaluation of CRA Performance The Board is concerned when the record of an institution indicates disparities in lending to minority applicants and it The Agency CRA Statement provides that a CRA examina- believes that all banks are obligated to ensure that their tion is an important and often controlling factor in the lending practices are based on criteria that assure not only consideration of an institution's CRA record and that re- safe and sound lending, but also equal access to credit by ports of these examinations will be given great weight in the creditworthy applicants regardless of race. The Board recapplications process.11 The Board notes that Whitney re- ognizes, however, that HMDA data alone provide an incomceived a "satisfactory" rating from its primary federal plete measure of an institution's lending in its community. supervisor, the Office of the Comptroller of the Currency The Board also recognizes that HMDA data have limita- ("OCC"), at its most recent examination for CRA perfor- tions that make the data an inadequate basis, absent other mance as of November 16, 1994 ("1994 CRA Examina- information, for concluding that an institution has engaged tion"). Peoples Bank also received a "satisfactory" rating in illegal discrimination in making lending decisions. from its primary federal supervisor, the Federal Deposit The Board has carefully reviewed Protestant's allegations Insurance Corporation, at its most recent CRA performance regarding Whitney's record in lending to minorities, particexamination as of January 18,1994. ularly African Americans, in light of information from its primary supervisor, the OCC. The report of the 1994 CRA Examination ("1994 CRA Examination Report") stated that examiners found no evidence of prohibited discrimination or any practices or procedures that would discourage 7. Whitney's three delineated communities include New Orleans (Orleans, applications for available credit from any segment of Whit- Jefferson, and St. Tammany Parishes), Baton Rouge (East Baton Rouge ney's delineated communities, or other illegal credit prac- Parish), and Lafayette (Lafayette Parish). 8. In particular, Protestant alleges that Applicant and Whitney have failed tices. Examiners also found that Whitney was in complito: ance with the substantive provisions of the fair lending (1) Develop and implement CRA policies; laws. Moreover, examiners reported that the geographic (2) Provide capital and financing to African-American homeowners; (3) Provide funds, grants, and loans to African-American community distribution of Whitney's HMDA-reported loan applicaorganizations; tions, approvals, and denials represents a reasonable pene- (4) Provide capital to businesses owned by African Americans; tration of all segments of its delineated communities, in- (5) Participate in community development projects to improve economic opportunities in African-American communities; and cluding low- and moderate-income areas. In addition, the (6) Locate branches in African-American communities. OCC conducted a fair lending review as part of its 1994 9. Protestant also maintains that several factors contribute to Applicant's CRA Examination of Whitney and found no evidence of and Whitney's alleged failure to comply with fair lending laws, including the following: delineation of service areas to exclude the African-American illegal discriminatory treatment of minority applicants. The community; solicitation of real estate agents and developers serving predominately white residential areas; employment of few African-American loan 1994 CRA Examination Report also noted that Whitney has officers; use of a compensation program for lending officers that provides adopted adequate policies, procedures, and training proincentives to solicit and originate mortgages only on higher-priced homes; failure to use media and images oriented to the African-American community in advertising its loan products; and infrequent marketing of its Federal Housing Administration, Veterans Administration, and Small Business Ad- 12. Beginning in 1994, Whitney has excluded data on loans sold into the ministration loan products in the African-American community. secondary market in its HMDA reporting at the request of the OCC. The 10. 54 Federal Register 13,742 (1989). Board's analysis of Whitney's preliminary 1994 HMDA data includes such 11. Id. at 13,745. loans for purposes of comparison with prior years. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

292 Federal Reserve Bulletin • March 1995 grams, including fair lending training, to support nondis- Neighborhood Housing Services ("NHS") of New Orleans, criminatory lending decisions.13 Inc., St. Tammany Community Homeowner Counseling Whitney has taken several steps to increase its lending to Center, and various housing authorities in its New Orleans minority and low- and moderate-income borrowers. For community; NHS of Lafayette LA, Inc., in its Lafayette example, Whitney has a second review process for all community; and Mid City Redevelopment Alliance and mortgage, small business, and consumer loan applications Second Chance Academy in its Baton Rouge community. recommended for denial to determine whether a denial is Since October 1993, Whitney has funded 60 mortgage justified, and to determine whether there are alternative loans, totalling $3.2 million, to clients of NHS of New means of meeting the applicant's credit needs. This process Orleans, Inc., and nine mortgage loans, totalling approxiis designed to ensure that all applicants, including minority mately $427,000, to clients of NHS of Lafayette, LA, Inc., and low- and moderate-income applicants, receive equitable both non-profit corporations that assist minorities and lowconsideration in credit decisions. and moderate-income residents in obtaining flexible-term In addition, in late 1993, Whitney initiated a special loan mortgage loans and meeting down payment and closing product through its Neighborhood Housing Program that costs. During this same period, Whitney also made 25 focuses on low- and moderate-income borrowers. This mortgage loans totalling approximately $1.2 million to lowproduct, which is available in each of Whitney's delineated and moderate-income graduates of the Neighborhood Decommunities, offers a below-market interest rate for borrow- velopment Foundation's Homebuyer Training Program. ers with income under 80 percent of median income, and In addition, Whitney has financed 36 mortgage loans to offers an even lower rate for borrowers with income under African-American borrowers, totalling more than $865,000, 50 percent of median income. The product also provides for through the New Orleans Home Mortgage Authority PRIDE higher than standard debt-to-income ratios, non-traditional Program ("NOHMA"), which provides interest-free loans methods of establishing credit histories, and reduced down for up to one-half of the down payment and closing costs in payments and closing costs, and requires no private mort- connection with Whitney mortgage loans. Whitney also gage insurance, discount points or origination fees. The participates in a program sponsored by the City of New 1994 CRA Examination Report found that, as of October Orleans, "Inner-City Vision: A Plan for Today and Tomor- 1994, Whitney had made 144 loans under its Neighborhood row," which has designated 12 inner-city neighborhoods for Housing Program, totalling more than $7 million. Seventy- redevelopment.14 In addition, Whitney extended a line of six of these loans, totalling $3.4 million, were to African credit to a community-based organization in Baton Rouge Americans. for the purchase of houses formerly owned by the U.S. In 1994, Whitney began underwriting loans through Fed- Department of Housing and Urban Development that will eral Housing Administration ("FHA") and Veterans Admin- be sold to low-income residents. Moreover, Whitney existration ("VA") loan programs. Examiners reported that, as tended a line of credit to a minority mortgage company that of October 1994, Whitney had made FHA and VA loans focuses on lending in minority neighborhoods in New Ortotalling more than $850,000. In addition, in 1994, Whitney leans. began participating in the Louisiana Housing Finance In the past four years, Whitney has extended a line of Agency Bond Program. The Board notes that Whitney also credit to a developer to fund the rehabilitation of more than implemented a goal-oriented, incentive-based compensa- 150 residences in New Orleans that he subsequently sold to tion plan as part of its efforts to encourage housing-related low- and moderate-income homeowners, including African loans to low- and moderate-income residents. Americans. In addition, in the last two years, Whitney Whitney also assists in meeting the affordable housing loaned up to $3 million to renovate 124 affordable housing needs of minority and low- and moderate-income residents rental units in a New Orleans apartment complex in which throughout its delineated communities through active partici- the majority of the residents are African Americans. In its pation in various affordable housing programs and projects Baton Rouge community, Whitney has loaned more than of government agencies, non-profit organizations, and pri- $530,000 to purchase and renovate four low- and moderatevate businesses. For example, through its Neighborhood income apartment complexes, with predominantly African- Housing Program, Whitney works closely with several non- American residents. Whitney also has made annual contriprofit housing organizations that offer homebuyer training butions exceeding $250,000 to various neighborhood, programs for low- to moderate-income residents, including housing, and other organizations, including those that pri- 13. Whitney responded to Protestant's comments that Whitney employs few minority lending officers by noting that the managers of Whitney's 14. Whitney also donated funds to cover start-up costs to help establish Mortgage Loan Operations, its Neighborhood Housing Program, and many New Orleans and Baton Rouge offices of the Local Initiatives Support of its branches are minorities. In addition, Whitney notes that, in September Corporation ("LISC"), a national nonprofit organization that assists in 1994, it hired a minority as the full-time mortgage lending officer for the organizing community development companies to redevelop low- and Baton Rouge community. moderate-income neighborhoods. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 293 marily benefit African Americans, in its delineated commu- As of October 1994, Whitney had approximately nities. $25 million in loans outstanding under these and other To help meet consumer credit needs of low- and government-related small business loan programs, includmoderate-income residents, including minorities, Whitney ing $2.8 million in loans through the Louisiana Small offers its "Opportunity Loan" product, which provides Business Linked-Deposit Program, through which small smaller loan amounts and flexible underwriting criteria to business borrowers receive loans with below-market interassist low- and moderate-income borrowers who otherwise est rates, and $9 million in industrial revenue bond loan might not qualify for credit. Since the product's inception in participations. In addition, Whitney loaned $100,000 for the December 1993, Whitney has made 108 loans totalling organizational expenses of a new minority-owned deposi- $232,000, including 46 loans totalling $101,000 in predom- tory institution in New Orleans. inantly minority census tracts. In addition, Whitney offers a secured credit card to assist persons who have had difficul- D. Ascertainment and Marketing ties establishing or re-establishing credit. Whitney also offers a Senior Economic Checking Account, which has no Whitney uses various methods to ascertain community monthly charges, as well as government check cashing credit needs and to reach all segments of its delineated services. communities. The 1994 CRA Examination Report stated that Whitney established a formal ascertainment program C. Small Business Lending that is administered by the Community Affairs Officer and supervised by the CRA Officer. In 1993, Whitney implemented a Needs Ascertainment Program, under which Whit- Whitney also actively engages in small business lending, ney's calling officers have made 140 community contacts with special programs focusing on minority-owned busiand have held many meetings with government representanesses and businesses in low- and moderate-income areas. tives. Whitney has established an Economic Development Lend- The 1994 CRA Examination Report stated that bank ing Department, which specializes in making loans to entreemployees also participated in numerous trade shows, spepreneurs and owners of existing small businesses, who do cial events, and bank fairs throughout Whitney's delineated not meet all the requirements for conventional commercial communities, featuring home buyer, affordable housing, and bank financing. Whitney also participates in numerous fedsmall business lending programs. In addition, Whitney pareral and state government-related small business loan proticipated in affordable housing seminars for real estate programs. For example, Whitney began participating in Small fessionals. Whitney also has conducted educational work- Business Administration ("SBA") loan programs in 1993. shops and credit seminars in cooperation with a university As a certified SBA lender, Whitney participates in various and various community organizations that primarily serve SBA lending programs, including the SBA Women Prethe African-American community, including workshops and qualified Loan Program and the SBA Small Loan Pilot seminars in minority churches, and has contacted residents Program, and had SBA loans outstanding totalling approxiof local housing projects. mately $4.9 million as of October 1994. In addition, examiners reported that Whitney's marketing In addition, Whitney invested $250,000 in the New Orprogram is designed to reach all segments of its delineated leans Small Business and Industrial Development Corporacommunities. Whitney markets its products and services tion, Inc., a private community development financial instithrough a variety of advertising methods, including print tution that makes loans to small businesses within the city, and broadcast media and billboards. These activities include and funded three such loans totalling $400,000, including marketing efforts directed toward African Americans and two loans to African Americans. As of year end 1994, Hispanics, such as advertising in newspapers circulated Whitney had made seven loans totalling $500,000 through primarily in the African-American and Hispanic communithe Jefferson Parish Economic Development Commission ties. Whitney also has increased the use of minority models ("JEDCO"). In addition, Whitney committed $1 million to in its advertising. In April 1994, Whitney began a cultural the JEDCO Loan Pool, the first commercial bank pool for diversity media campaign, including a series of advertisesmall business loans in southern Louisiana. Whitney also ments in minority publications, which features many Afrimade 15 loans totalling approximately $5 million in con- can Americans and the diverse cultures of the region. junction with the Regional Loan Corporation ("RLC"), which administers a number of economic development loan E. Community Delineation and Branch Locations programs for the City of New Orleans and surrounding parishes. In 1994, Whitney donated funds to help establish the Louisiana Capital Certified Development Corporation, The 1994 CRA Examination Report indicated that Whitthe certified development corporation for Lafayette Parish, ney's delineation of its three communities using parish and loaned approximately $93,000 through the corporation. boundaries is reasonable, is consistent with Whitney's size Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

294 Federal Reserve Bulletin • March 1995 and resources, and does not arbitrarily exclude low- and Conclusion on Convenience and Needs Factors moderate-income areas. Examiners noted that Whitney's branches are reasonably accessible to all segments of its On the basis of all the facts of record, including information community, including low- and moderate-income neighbor- provided by the Protestant, Applicant's responses, and the hoods. relevant reports of examination, the Board concludes that The Board notes that, of Whitney's 44 branches, 18 are convenience and needs considerations, including the CRA located in or immediately adjacent to low- and moderate- performance records of the institutions involved in the income census tracts, which also represent predominantly proposal, are consistent with approval of this application. African-American neighborhoods. In addition, examiners The Board will monitor and assess the success of Whitney's reported that Whitney added loan officers in various continued efforts to increase its lending to minorities and branches, including branches in Lafayette and Baton Rouge, low- and moderate-income borrowers in, and to residents in to make mortgage lending services more accessible and minority and low- and moderate-income areas of, each of its extended business hours at 27 branches to accommodate all delineated communities, especially its Baton Rouge and segments of its delineated community. The Board notes that Lafayette communities, in connection with future applica- Whitney had only one branch in its Baton Rouge delineated tions by Applicant to expand its deposit-taking facilities. community until March 1994, when it acquired six additional branches, of which three are located in or adjacent to Other Considerations predominantly African-American census tracts. The 1994 CRA Examination Report also indicated that The Board also has reviewed information concerning the Whitney has a comprehensive branch closing policy, which financial and managerial resources and future prospects of requires an assessment of the adverse impact that a closing Applicant and Alabama Bank and the other supervisory would have on the branch's community. The Board notes factors the Board must consider under section 3 of the BHC that Whitney has not closed any branches in the last nine Act, and concludes that these factors are consistent with years. approval of this proposal. F. CRA Policies and Procedures Conclusion Whitney has adopted and implemented formal CRA poli- Based on the foregoing, including all the facts of record, the cies and procedures consistent with an effective CRA pro- Board has determined that this application should be, and gram. The 1994 CRA Examination Report stated that Whit- hereby is, approved.16 The Board's approval is conditioned ney's board of directors has adopted a CRA strategic plan on Applicant's compliance with all commitments made in that outlines CRA goals and objectives and provides spe- connection with this application. For purposes of this accific strategies to achieve them. Examiners also reported tion, the commitments and conditions relied on by the that the CRA Committee has adopted CRA action plans for Board in reaching its decision are deemed to be conditions each of Whitney's three delineated communities. In addition, examiners reported that the board of directors maintains active oversight of Whitney's CRA program through various reporting mechanisms, including monthly Alabama Bank's board of directors and its CRA Committee in CRA planning reports on Whitney's CRA activities, quarterly CRA moni- and implementation; effective ascertainment of the credit needs of Alabama toring reports that inform the board of directors and senior Bank's delineated community; affordable housing programs and consumer loan products targeted to low- and moderate-income residents, including management of progress in implementing the CRA strategic minorities; government-related small business products; implementation of a plan, and annual CRA self-assessment reports that evaluate second review process substantially similar to Whitney's second review process, discussed above; marketing and media plans and significant out- Whitney's CRA activities and recommend improvements. reach and educational efforts by Alabama Bank's staff to reach all segments The board of directors also receives needs ascertainment of Alabama Bank's delineated community; analyses of the geographic distrireports that identify community needs and actions taken to bution of Alabama Bank's loans and deposits with action plans to take appropriate steps to provide Alabama Bank's products and services to all address such needs, and geographic loan distribution analysegments of its delineated community; and fair lending and cultural diversity ses that report Whitney's loans and deposits by census tract. training for all of Alabama Bank's employees. In addition, examiners noted that Whitney provides fair 16. Protestant also appears to maintain that Applicant and Whitney discriminate against African Americans in their employment practices. The lending and cultural diversity training to its employees at all Board notes that, because Whitney employs more than 50 people, serves as a levels, including the board of directors.15 depository of government funds, and acts as agent in selling or redeeming U.S. savings bonds and notes, Applicant and its subsidiaries are subject to regulations enforceable by the Department of Labor that require: (1) The filing of annual reports with the Equal Employment Opportunity 15. Applicant has committed to implement its CRA program at Alabama Commission; and Bank. In particular, Applicant has committed to adopt a CRA strategic plan (2) A written affirmative action compliance program which states efforts and a CRA action plan tailored to the needs of Alabama Bank's delineated and plans to achieve equal opportunity in the employment, hiring, promocommunity, which include elements that address active involvement of tion, and separation of personnel. See 41 C.F.R. 50-1.7(a), 60-1.40. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 295 imposed in writing by the Board and, as such, may be Applicant, with $144.4 million in total consolidated asenforced in proceedings under applicable law. sets, is the 11th largest commercial banking organization in This transaction shall not be consummated before the North Dakota, controlling $119.8 million in deposits.2 Apfifteenth calendar day following the effective date of this plicant operates three subsidiary banks in North Dakota. order, or later than three months after the effective date of Company is a going concern with offices in Bismarck, this order, unless such period is extended for good cause by North Dakota. the Board or by the Federal Reserve Bank of Atlanta, acting Section 4(c)(8) of the BHC Act provides that a bank pursuant to delegated authority. holding company may, with Board approval, engage in any By order of the Board of Governors, effective activity that the Board determines to be "so closely related January 24, 1995. to banking or managing or controlling banks as to be a proper incident thereto." The Board has previously deter- Voting for this action: Chairman Greenspan, and Governors mined that certain data processing activities are closely Kelley, LaWare, Lindsey, Phillips and Yellen. Absent and not related to banking and permissible for bank holding compavoting: Vice Chairman Blinder and Governor Lindsey. nies under section 4(c)(8) of the BHC Act. In particular, Regulation Y permits bank holding companies to provide JENNIFER J. JOHNSON data processing and transmission services, facilities, data Deputy Secretary of the Board bases, or access to such services, facilities, or data bases by any technological means, so long as the data to be pro- Orders Issued Under Section 4 of the Bank Holding cessed or furnished are "financial, banking, or economic" Company Act in nature.3 Applicant proposes to provide comprehensive data processing services needed in the operation of a finan- BNCCORP, INC. cial institution.4 Except as discussed below, all of Compa- Bismarck, North Dakota ny's proposed activities would specifically involve financial, banking, or economic data, and Applicant has Order Approving Notice to Conduct Data Processing committed that Company will conduct its data processing Activities and transmission activities in accordance with the requirements set forth in Regulation Y, including the limitation on BNCCORP, INC., Bismarck, North Dakota ("Applicant"), the nature of the data to be processed or furnished.5 a bank holding company within the meaning of the Bank Company's proposed activities would include processing Holding Company Act ("BHC Act"), has given notice certain nonfinancial data, such as personnel information, for under section 4(c)(8) of the BHC Act (12 U.S.C. financial institutions in their internal operations. Services § 1843(c)(8)) and section 225.23(a) of the Board's Regularelating to such nonfinancial data would be provided only as tion Y (12 C.F.R. 225.23(a)) of its intention to acquire all part of a larger package of data processing services to a the voting shares of JMS Systems, Inc., Bismarck, North financial institution, and would not be offered on a stand- Dakota ("Company"), and thereby engage in data processing and data transmission activities pursuant to section 225.25(b)(7) of Regulation Y for depository institutions 2. Asset and deposit data are as of September 30, 1994. such as banks and savings associations ("financial institu- 3. See 12 C.F.R.225.25(b)(7). Regulation Y also requires that the services tions") and for other customers. Company's activities be provided pursuant to a written agreement, and places certain limitations on the facilities and hardware provided with the data processing services. In would be limited to data processing and transmission ser- particular, the facilities must be designed, marketed, and operated for the vices, and would not include the provision of management processing and transmission of financial, banking, or economic data; hardware must be provided only in conjunction with permissible software; and assistance or advice to any financial institution or other general purpose hardware must not constitute more than 30 percent of the customer.1 cost of any packaged offering. See id. Notice of this proposal, affording interested persons an 4. These data processing activities are described in the Appendix, and include services relating to matters such as deposit account transactions and opportunity to submit comments, has been published (59 securities recordkeeping. Company also proposes to provide data processing Federal Register 30,587,61,895 (1994)). The time for filing services that the Board has previously determined are permissible for bank holding companies to provide to nonfinancial customers, such as accounts comments has expired, and the Board has considered the receivable and payable services. These services also are described in the notice and all comments received in light of the factors set Appendix. forth in section 4(c)(8) of the BHC Act. 5. The data processing activities that Company would conduct pursuant to section 225.25(b)(7) of Regulation Y are described in the Appendix. Company also would provide data processing and transmission services for affiliates pursuant to section 4(c)(1)(C) of the BHC Act and section 225.22(a) 1. For example, in providing data processing services to financial institu- of Regulation Y. In addition, as an incident to its data processing activities tions for loan processing and credit analysis, Company would not make conducted pursuant to section 225.25(b)(7) of Regulation Y, Company would lending or credit decisions for its customers, would not process loan or credit provide excess capacity, by-products of permissible data processing activiapplications using the underwriting or credit standards of a bank affiliated ties, and data processing services not otherwise reasonably available in the with Company, and would not provide software that incorporates the under- relevant market area in accordance with the Board's regulations and interprewriting or credit standards of any such affiliated bank. tations. See 12 C.F.R. 225.21(a)(2); 12 C.F.R. 225.123(e). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

296 Federal Reserve Bulletin • March 1995 alone basis or to customers other than financial institutions. Based on all the facts of record, the Board has deter- Applicant notes that nonfinancial data processing would mined that the notice should be, and hereby is, approved.8 constitute a relatively small portion of Company's services, The Board's approval is specifically conditioned on complibut contends that this aspect of the proposal would permit ance with the commitments made in connection with this Company to offer competitively complete data processing notice and with the conditions referred to in this order. The services to financial institutions. Board's determination also is subject to all the conditions Data processing services for financial institutions relate set forth in Regulation Y, including those in sections 225.7 largely to financial and banking data. However, financial and 225.23(b) of Regulation Y, and to the Board's authority institutions must also process some nonfinancial informa- to require such modification or termination of the activities tion to support their internal operations. These data typi- of a bank holding company or any of its subsidiaries as the cally represent a relatively small percentage of the data Board finds necessary to ensure compliance with, and to processing activities of financial institutions. The Board prevent evasion of, the provisions of the BHC Act and the believes that processing nonfinancial data is a necessary Board's regulations and orders issued thereunder. For purpart of providing general data processing services to finan- poses of this action, these commitments and conditions are cial institutions. The Board has concluded that the proposed deemed to be conditions imposed in writing by the Board in activity is incidental to providing data processing services connection with its findings and decision, and, as such, may be enforced in proceedings under applicable law. for financial institutions, and, therefore, is permissible under section 4 of the BHC Act and Regulation Y.6 This transaction shall not be consummated later than In every case involving a nonbanking acquisition by a three months after the effective date of this order, unless bank holding company under section 4 of the BHC Act, the such period is extended for good cause by the Board or by Board also considers the financial condition and resources the Federal Reserve Bank of Minneapolis, acting pursuant of the applicant and its subsidiaries and the effect of the to delegated authority. transaction on those resources.7 Based on all the facts of By order of the Board of Governors, effective record, the Board has concluded that financial and manage- January 9, 1995. rial considerations are consistent with approval of this proposal. Voting for this action: Chairman Greenspan and Governors Kelley, LaWare, Lindsey, Phillips, and Yellen. Absent and not In order to approve this notice, the Board also must voting: Vice Chairman Blinder. determine that the proposed activities are a proper incident to banking, that is, that the performance of the proposed JENNIFER J. JOHNSON activities by Applicant through Company "can reasonably Deputy Secretary of the Board be expected to produce benefits to the public . . . that outweigh possible adverse effects, such as undue concentra- Appendix tion of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices." (1) Company would provide data processing services to 12 U.S.C. § 1843(c)(8). The Board expects that the particifinancial institutions relating to the following areas of operpation of Company in the market for the proposed data ation: opening and closing customer accounts; deposits, processing services would maintain or increase the level of loan payments, and other account transactions; account competition among providers of those services. The Board reconciliation, the calculation of account balances, fees, and also anticipates that Company's proposed activities would interest payments, and the preparation of account stateresult in a wider range of services and products, enhanced ments; the issuance of certificates of deposit; credit analysis efficiency, and increased convenience for customers. In and financial modeling; monitoring of data processing costs; addition, there is no evidence in the record that consummaaccess to financial and economic data bases; bill payments tion of the proposed activities would result in any signifiand other home banking transactions (for example, opening cantly adverse effects, such as undue concentration of reor closing accounts, or transferring funds between acsources, decreased or unfair competition, conflicts of counts); check collection and processing; loan processing interests, or unsound banking practices. Accordingly, the and documentation; trade finance; cash management; bank Board has concluded that the balance of the public interest retail operations; tax documentation; signature verification; factors it is required to consider under the proper incident to banking standard of section 4(c)(8) of the BHC Act is favorable, and consistent with approval of this notice. 8. Company also may develop additional data processing and transmission services not described in the notice. Applicant has committed that it will consult with the Federal Reserve System before Company commences any 6. See 12 C.F.R. 225.21(a)(2). new activity not described in the notice to ensure that the activity satisfies the 7. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75 Federal criteria set forth in the BHC Act and Regulation Y, and to allow the Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve Reserve System to consider whether a separate notice should be reviewed in Bulletin 155 (1987). any particular case. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 297 lockbox operations; securities recordkeeping; and general mestic and global custody arrangements, and portfolio acrecordkeeping. counting. (2) Company would provide data processing services to Company is a Missouri state-chartered trust company other customers relating to the following areas: billing and insured by the Federal Deposit Insurance Corporation payroll; accounts receivable and payable; inventory; ac- ("FDIC") that engages in trust and fiduciary activities, as counting and bookkeeping; economic forecasting; and ac- well as activities that are not permitted for trust companies cess to financial and economic data bases. under the BHC Act, including significant nonfiduciary (3) Company would provide on-line data processing and deposit-taking, incidental commercial lending, offering transmission services; home banking and bill payment ser- FDIC-insured deposits through its affiliates, and using the vices; data processing services with computer output to Federal Reserve System's payment services. Company opoptical digital disks, and related storage, retrieval, pro- erates under a special exemption from the definition of cessing, and transmission capabilities; and on-site data pro- "bank" under the BHC Act.2 The BHC Act provides that cessing and transmission facilities. Company loses its special exemption upon a change in (4) As an incident to the foregoing activities, Company ownership.3 would purchase, sell, rent, and maintain electronic equip- State Street proposes to operate Company as a trust ment used to perform permissible data processing and trans- company and not as a bank as defined in the BHC Act.4 mission services subject to the specific limits in sec- State Street has made a number of commitments to conform tion 225.25(b)(7) of Regulation Y. Company's activities to those of a trust company. In particular, Company proposes to divest all its nonfiduciary and State Street Boston Corporation demand deposit accounts within 90 days after its acquisition Boston, Massachusetts by State Street, and to cease marketing FDIC-insured deposits through its affiliates immediately after its acquisition by Order Approving Acquisition of a Nonbanking Company State Street. Moreover, within one year of consummation, Company proposes to terminate all deposit taking, termi- State Street Boston Corporation, Boston, Massachusetts nate its FDIC deposit account insurance, and cease to be an ("State Street"), a bank holding company within the mean- insured bank under section 3(h) of the FDI Act ing of the Bank Holding Company Act ("BHC Act"), has (12 U.S.C. § 1813(h)). Within a year, Company also proapplied under section 4(c)(8) of the BHC Act poses to terminate making incidental commercial loans to (12 U.S.C. § 1843(c)(8)) and section 225.23(a) of the its mutual fund clients and using the Federal Reserve pay- Board's Regulation Y (12 C.F.R. 225.23(a)) to acquire IFTC ment system.5 Company's long-standing operations have Holdings, Inc., and its wholly owned subsidiary, Investors been conducted under a specific legislative grant of author- Fiduciary Trust Company ("Company"), both of Kansas ity, and State Street contends that a shorter divestiture period would cause significant operational difficulties. The City, Missouri, and thereby engage in providing trust and Board believes, in light of the facts in this case, that custody services and transfer, paying, clearing, and settlepermitting Company a year to conform the activities of ment agency services to mutual funds and other entities pursuant to section 225.25(b)(3) of Regulation Y (12 C.F.R. 225.25(b)(3)). Company also proposes to engage in providing administrative services to mutual funds.1 Notice of the application, affording interested persons an 2. The Competitive Equality Banking Act of 1987 ("CEBA") amended the opportunity to submit comments, has been published definition of "bank" in section 3 of the BHC Act to include any organization that is an insured bank within the meaning of the Federal Deposit Insurance (59 Federal Register 64,427 (1994)). The time for filing Act ("FDI Act"). See 12 U.S.C. § 1841(c)(1)(A). CEBA also enacted section comments has expired, and the Board has considered the 2(c)(2)(I) of the BHC Act that specifically exempts Company by name from this amended definition. See 12 U.S.C. § 1841(c)(2)(I). application and all comments received in light of the factors 3. 12 U.S.C. § 1841(c)(2)(I). Company does not qualify for the exception set forth in section 4 of the BHC Act. from the definition of bank that is provided in section 2(c)(2)(D) of the BHC State Street, with total consolidated assets of approxi- Act (12 U.S.C. § 1841(c)(2)(D)). 4. The law of Company's home state (Missouri) does not authorize the mately $22.4 billion, operates one commercial bank subsid- acquisition of Missouri banks by Massachusetts bank holding companies. iary, State Street Bank and Trust Company, Boston, Massa- 5. Company would continue to make certain interest-free advances to unit chusetts ("Bank"). Through offices in 32 locations investment trusts and retirement plans in its capacity as trustee for those plans. These advances would not be outstanding for more than three days and worldwide, State Street also provides a broad range of are for the payment of ordinary operating expenses of the plan or for a financial asset services, such as corporate trusteeship, do- purpose incidental to the ordinary operation of the plan. The legislative history of the provision creating Company's exemption indicates that Congress considered these advances to be in the nature of normal and customary advances in a trust or fiduciary capacity that would not cause Company to be engaged in the business of making commercial loans. See H.R. Conf. Rep. No. 261, 100th Cong., 1st Sess. 121 (1987). In light of Company's commit- 1. A list of the proposed administrative services is included in the ment to terminate its demand deposit taking activities, this lending activity Appendix. would not cause Company to become a bank for purposes of the BHC Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

298 Federal Reserve Bulletin • March 1995 Company to those of a trust company is consistent with mance of these activities is also consistent with its status as section 4 of the BHC Act.6 a trust company. Under these circumstances, and for the In addition to its trust activities, Company proposes to reasons discussed in Mellon, Company's proposed adminisengage in several activities permissible under section 4 of trative activities for mutual funds are not prohibited by the the BHC Act.7 In particular, Company would act as a Glass-Steagall Act (12 U.S.C. §§ 221a and 377) and are trustee, custodian, paying agent, dividend disbursing agent, permissible nonbanking activities for bank holding compasecurities clearing agent, general transfer agent, and would nies.11 provide certain settlement services to mutual fund clients. In order to approve this proposal, the Board also must These types of agency activities are traditional activities find that the performance of the proposed activities by performed by trust companies under Federal and state law.8 Company "can reasonably be expected to produce benefits Company also proposes to continue to provide adminis- to the public ... that outweigh possible adverse effects, trative services to mutual funds.9 The administrative ser- such as undue concentration of resources, decreased or vices that Company provides to mutual funds include com- unfair competition, conflicts of interests, or unsound bankputing the fund's net asset value and performance data, ing practices." 12 U.S.C. § 1843(c)(8). The Board has detercoordinating communications and activities between the mined previously that the provision of the proposed admininvestment advisor and the other service providers, account- istrative services within certain parameters is not likely to ing and recordkeeping, disbursing payments for the fund's result in the types of subtle hazards at which the Glassexpenses, providing office space for the fund, and preparing Steagall Act is aimed or any other adverse effects.12 The and filing regulatory reports for the fund. The Board previ- Board believes that the performance of the proposed activiously has approved these activities, and Company has com- ties by Company can reasonably be expected to produce mitted to conduct these activities involving mutual funds benefits to the public such as a wider range of products, subject to the prudential limitations previously established increased efficiency, and greater convenience for Compaby the Board.10 The Board believes that Company's perfor- ny's and State Street's customers. There is no evidence in the record to indicate that consummation of this proposal, subject to the commitments noted above, would result in significant adverse effects, such as undue concentration of 6. See The Mitsui Bank, Limited, 76 Federal Reserve Bulletin 381 (1990). That application involved an acquisition by a California bank holding resources, decreased or unfair competition, conflicts of incompany of a New York bank that became a trust company because the laws terests, or unsound banking practices, that are not outof New York did not authorize California bank holding companies to acquire New York banks. The trust company was given a year to divest all its weighed by the expected public benefits of the proposal. In impermissible deposits and loans. making this determination, the Board has considered the 7. The conduct of these activities by Company would not cause it to be financial and managerial resources of State Street and its deemed a bank under the BHC Act. Under the BHC Act, an uninsured company is deemed a bank if it engages both in accepting demand deposits subsidiaries, and those of Company, and the effect of this or deposits that the depositor may withdraw by check or similar means and in proposal upon such resources, and has concluded that these the business of making commercial loans. As noted above, within 90 days factors are consistent with approval of this application. after consummation of this proposal, Company will have ceased collecting demand deposits and other nontrust deposits. Based on all the facts of record, the Board finds that the 8. Serving as a paying agent, dividend disbursing agent, and securities public benefits of Company's proposed activities outweigh clearing agent are permissible trust company agency activities. See 12 C.F.R. any adverse effects and, therefore, the activities are a proper 225.25(b)(3)(ii); 12 C.F.R. 9.20 (national banks as transfer agents) and 12 C.F.R. 208.8(f) (state member banks as transfer agents); see also 12 C.F.R. incident to banking for purposes of section 4(c)(8) of the 225.125(i). Company is currently registered with the FDIC as a transfer BHC Act. agent pursuant to 12 C.F.R. Part 241. Company also would continue to invest in a variety of securities, including government or municipal securities, mortgage-backed securities, and corporate debt securities that are sold on the secondary market. State Street has committed that Company will divest all its equity securities before or immediately after consummation of in any marketing, sales or advertising activities relative to any mutual fund. the proposal. Company would provide the distributor of a fund with performance and Company would also continue to provide financial data processing and portfolio data, and Company would review marketing materials prepared by accounting services to its business customers by maintaining inventories and the distributor for the sole purpose of ensuring compliance with all pertinent other economic data on domestic and foreign securities, and providing such regulatory requirements. State Street would not acquire for its own account services as general ledger accounting, recordkeeping, and market valuation more than 5 percent of the shares of any fund administered by Company. for those securities. The Board has previously determined such activities to 11. State Street does not propose to have any director or senior officer be closely related to banking. See BankAmerica Corporation, 66 Federal interlocks between Company, State Street, or any of its subsidiaries and any Reserve Bulletin 511 (1980); Citicorp (Citishare), 68 Federal Reserve Bulle- fund that Company administers. Company would provide junior level offictin 505 (1982); see also 12 C.F.R. 225.25(b)(7). ers and employees to some of its mutual fund clients under the circumstances 9. Company would not provide any administrative services to mutual permitted in Mellon. State Street also will comply with the Investment funds the shares of which are sold or marketed primarily to customers of Company Act of 1940 (15 U.S.C. §§ 80a-2, 80a-10), which requires that at Bank. least 40 percent of the board of directors of a mutual fund consist of 10. See Mellon Bank Corporation, 79 Federal Reserve Bulletin 626 (1993) disinterested individuals who are not affiliated with the investment advisor, ("Mellon"). In particular, the distributor of the funds would not be affiliated with any person that the SEC has determined to have a material business or with Company or State Street, and neither State Street nor Company will be professional relationship with the fund, with any employee or officer of the involved in the distribution of the shares of any mutual fund. Company fund, with any registered broker or dealer, or with any other interested or would also not be involved in the promotion or sale of the shares of any affiliated person. mutual fund, and State Street has committed that Company would not engage 12. See Mellon. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 299 Based on the foregoing and all the facts of record, includ- (7) Providing office facilities and clerical support for the ing all of State Street's commitments and representations, fund; and subject to all the terms and conditions set forth in this (8) Developing and implementing procedures for monitororder, the Board has determined that the application should ing compliance with regulatory requirements and complibe, and hereby is, approved. The Board's determination is ance with the fund's investment objectives, policies, and subject to all the conditions set forth in Regulation Y, restrictions as established by the fund's board; including those in sections 225.7 and 225.23(b)(3) of Regu- (9) Providing routine fund accounting services and liaison lation Y (12 C.F.R. 225.7 and 225.23(b)(3)), and to the with outside auditors; Board's authority to require modification or termination of (10) Preparing and filing tax returns; the activities of a bank holding company or any of its (11) Reviewing and arranging for payment of the fund's subsidiaries as the Board finds necessary to assure compli- expenses; ance with, and to prevent evasion of, the provisions of the (12) Providing communication and coordination services BHC Act and the Board's regulations and orders issued with regard to the fund's investment advisor, transfer agent, thereunder. The Board's decision is specifically conditioned custodian, distributor and other service organizations that on State Street's compliance with all the commitments and render recordkeeping or shareholder communication serrepresentations made in connection with this application, vices; including the commitments and conditions discussed in this (13) Reviewing and providing advice to the distributor, the order. The commitments, representations, and conditions fund and investment advisor regarding sales literature and relied on in reaching this decision shall be deemed to be marketing plans to assure regulatory compliance; conditions imposed in writing by the Board in connection (14) Providing information to the distributor's personnel with its findings and decision and may be enforced in concerning the fund's performance and administration; proceedings under applicable law. (15) Participation in seminars, meetings, and conferences This transaction shall not be consummated later than designed to present information to brokers and investment three months after the effective date of this order, unless companies, but not in connection with the sale of shares of such period is extended for good cause by the Board or by the funds to the public, concerning the operations of the the Federal Reserve Bank of Boston, acting pursuant to funds, including administrative services provided by Comdelegated authority. pany to the funds; By order of the Board of Governors, effective (16) Assisting existing funds in the development of addi- January 30, 1995. tional portfolios; and (17) Providing reports to the fund's board with regard to its Voting for this action: Chairman Greenspan, Vice Chairman activities. Blinder, and Governors Kelley, LaWare, Lindsey, Phillips, and Yellen. Orders Issued Under Sections 3 and 4 of the Bank JENNIFER J. JOHNSON Holding Company Act Deputy Secretary of the Board Boatmen's Bancshares, Inc. Appendix St. Louis, Missouri List of Administrative Services Order Approving the Acquisition of a Bank Holding Company (1) Maintaining and preserving the records of the fund, including financial and corporate records; (2) Computing net asset value, dividends, performance data Boatmen's Bancshares, Inc., St. Louis, Missouri ("Boatand financial information regarding the fund; men's), a bank holding company within the meaning of the (3) Furnishing statistical and research data; Bank Holding Company Act ("BHC Act"), has applied (4) Preparing and filing with the SEC and state securities under section 3 of the BHC Act (12 U.S.C. § 1842) to regulators registration statements, notices, reports and other acquire all the voting shares of Worthen Banking Corporamaterial required to be filed under applicable laws; tion, Little Rock, Arkansas ("Worthen"), and thereby indi- (5) Preparing reports and other informational materials re- rectly acquire the subsidiary banks of Worthen listed in the garding the fund including proxies and other shareholder Appendix. communications and reviewing prospectuses; Boatmen's also has applied under section 4(c)(8) of the (6) Providing legal and regulatory advice in connection BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the with its other administrative services; Board's Regulation Y (12 C.F.R. 225.23) to acquire: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

300 Federal Reserve Bulletin • March 1995 (1) Worthen TrustCompany, Little Rock, Arkansas, and located outside the bank holding company's home state, thereby engage in trust company activities pursuant to unless such acquisition is "specifically authorized by the section 225.25(b)(3) of Regulation Y; and statute laws of the State in which such bank is located, by (2) Consumer Protective Life Insurance Company, Little language to that effect and not merely by implication."3 For Rock, Arkansas, and thereby engage in credit-related purposes of the Douglas Amendment, the home state of insurance activities pursuant to section 225.25(b)(8)(i) of Boatmen's is Missouri.4 Regulation Y. Missouri5 and Arkansas6 have enacted banking statutes that permit out-of-state bank holding companies to acquire Notice of the applications, affording interested persons an banks in these states, provided that the home state of the opportunity to submit comments, has been published (59 acquiring bank holding company permits the acquisition of Federal Register 52,791 (1994)). The time for filing com- banks in that state on a reciprocal basis. The Board previments has expired, and the Board has considered the appli- ously has determined that the interstate banking statutes of cations and all comments received in light of the factors set Texas permit out-of-state bank holding companies to acforth in sections 3 and 4 of the BHC Act. quire established banking organizations in Texas.7 The Ar- Boatmen's, with total consolidated assets of $28.6 bil- kansas and Texas state banking supervisors have informally lion, controls 45 depository institutions1 in eight states.2 indicated that the proposed acquisition appears to be ex- Boatmen's is the seventh largest depository institution in pressly authorized under their respective state statutes. In Arkansas, controlling deposits of $774.8 million, represent- light of the foregoing, and based on an analysis of the ing approximately 2.7 percent of the total deposits in depos- interstate banking statutes involved, the Board has deteritory institutions in the state. Worthen, with total consoli- mined that its approval of this proposal is not prohibited by dated assets of $3.5 billion, controls ten banks in Arkansas the Douglas Amendment. Approval of this proposal is conand one bank in Texas. Worthen is the largest depository ditioned on receipt by Boatmen's of all required state reguinstitution in Arkansas, controlling deposits of approxi- latory approvals. mately $3 billion, representing approximately 10.8 percent of total deposits in depository institutions in the state. Upon Competitive Considerations consummation of this proposal, Boatmen's would become the largest depository institution in Arkansas, controlling Boatmen's and Worthen own depository institutions that deposits of approximately $3.7 billion, representing approxi- compete directly in the Arkansas banking markets of Little mately 13.4 percent of total deposits in depository institu- Rock, Garland County, Faulkner County, Fayetteville/ tions in the state. Springdale, Russellville, and Harrison, and in the Missouri Boatmen's is the 13th largest commercial banking organi- banking market of West Plains. The Board has carefully zation in Texas, controlling deposits of approximately considered the effects that consummation of this proposal $1.3 billion, representing less than 1 percent of the total would have on competition in these banking markets in deposits in commercial banking organizations in the state. light of all the facts of record, including the number of Worthen is the 170th largest commercial banking organi- competitors that would remain in these markets, the inzation in Texas, controlling deposits of approximately crease in the concentration of total deposits in depository $102.3 million, representing less than 1 percent of total institutions8 in these markets ("market deposits") as meadeposits in commercial banking organizations in the state. Upon consummation of this proposal, Boatmen's would become the 12th largest commercial banking organization 3. 12 U.S.C. § 1842(d). 4. A bank holding company's home state is that state in which the in Texas, controlling deposits of approximately $1.4 billion, operations of the bank holding company's banking subsidiaries were princirepresenting less than 1 percent of total deposits in commer- pally conducted on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. cial banking organizations in the state. 5. Mo. Rev. Stat. § 362.925 (Vernon Supp. 1994). 6. Ark. Code Ann. § 23-32-1804(e) (1993). The Arkansas Regional Bank- Douglas Amendment Analysis ing Act also imposes certain conditions. Boatmen's has sought the approval of the Arkansas state banking supervisor and appears to have satisfied the other conditions under Arkansas law. Section 3(d) of the BHC Act, the Douglas Amendment, 7. Boatmen's Bancshares, Inc., 79 Federal Reserve Bulletin 1179 (1993). prohibits the Board from approving an application by a Under Texas law, each bank to be acquired must have been in existence for at least five years, and the proposed transaction must not result in the acquiring bank holding company to acquire control of any bank 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). The proposed acquisition in Texas appears to meet these requirements. 1. Depository institutions include commercial banks, savings banks, and 8. Market deposit data are as of June 30,1993. Market share data are based savings associations. on calculations in which the deposits of thrift institutions are included at 2. All asset data are as of September 30, 1994, and all state deposit data are 50 percent. The Board previously has indicated that thrift institutions have as of June 30, 1993. These figures are adjusted to reflect mergers approved become, or have the potential to become, major competitors of commercial through December 5, 1994. banks. See Midwest Financial Group 75 Federal Reserve Bulletin 386 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 301 sured by the Herfindahl-Hirschman Index ("HHI"),9 and depository institutions that compete in these markets would certain commitments made by Boatmen's. remain unchanged.14 Upon consummation of the proposal, Boatmen's would In the Little Rock banking market15 and the Harrison become the second largest depository institution in both the banking market,16 Boatmen's would become the largest Faulkner County banking market ("Faulkner banking mar- depository institution, and these banking markets would be ket")10 and the Garland County banking market ("Garland considered highly concentrated under the Department of banking market").11 Both markets would be considered Justice Merger Guidelines upon consummation of the prohighly concentrated under the Department of Justice Merger posal.17 Currently, Boatmen's is the fourth largest deposi- Guidelines, and Boatmen's would control more than tory institution in the Little Rock banking market and the 35 percent of the market deposits in each market.12 To fifth largest in the Harrison banking market. A number of mitigate the potential that this transaction may have adverse factors indicate that the increased level of concentration in competitive effects in these markets, Boatmen's has com- the Little Rock and Harrison markets, as measured by the mitted to divest to an out-of-market depository institution: HHI, tends to overstate the competitive effects of this pro- (1) A branch of either Worthen or Superior Federal Bank, posal. For example, numerous competitors would remain in FSB, Fort Smith, Arkansas ("Superior FSB"), a Boat- these markets after consummation of this proposal.18 Both men's savings association subsidiary, with at least of these markets also are attractive for entry. In the Little $17.5 million in total deposits and loans in the Faulkner Rock banking market, which encompasses the state's capibanking market; and tal and largest city, the population growth rate from 1980 to (2) A branch of either Worthen or Superior FSB with at 1992 increased at almost twice the rate of the state's populeast $7 million in total deposits and loans in the Garland lation growth as a whole. The per capita income in the Little market.13 Rock banking market also is substantially higher than any other area of the state. Five de novo banks have entered this market in the last six years, demonstrating the attractiveness Under these divestiture commitments, consummation of of this market for new entrants. In the Harrison banking this proposal would not exceed the threshold levels in the market, the population growth, per capita income, and ratios Department of Justice Merger Guidelines and the number of of population and deposits per banking office exceed the average of other rural counties in Arkansas, which also makes this market attractive for new entrants. The Department of Justice has not objected to consummation of this proposal or indicated that the proposal would have any (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). significantly adverse competitive effects. Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50 percent weighted basis. See, e.g., First Hawaiian Inc., In the Arkansas banking markets of Russellville and 77 Federal Reserve Bulletin 52 (1991). Fayetteville/Springdale and in the Missouri banking market 9. 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 of West Plains,19 consummation of this proposal would not above 1800 is considered to be highly concentrated. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases 14. Upon completion of the proposed divestitures, in the Faulkner banking the HHI by more than 200 points. The Justice Department has stated that the market, Boatmen's would control approximately 40 percent of the total higher than normal HHI thresholds for screening bank mergers for anticom- market deposits, and the HHI would increase by no more than 173 points to petitive effects implicitly recognize the competitive effect of limited-purpose 3489. In the Garland banking market, Boatmen's would control approxilenders and other non-depository financial entities. mately 36 percent of the total market deposits, and the HHI would increase 10. The Faulkner County banking market is approximated by Faulkner by no more than 165 points to 3923. County. 15. The Little Rock banking market is approximated by Pulaski and Saline 11. The Garland County banking market is approximated by Garland Counties; Butler, Caroline, Magness, Oak Grove, Ward, and York townships County. in Lonoke County; and El Paso, Royal and Union townships in White 12. Without any divestiture, the HHI in the Faulkner banking market County. would increase by 475 points to 3791, and Boatmen's would control approxi- 16. The Harrison banking market is approximated by Boone, Marion, mately 44 percent of market deposits upon consummation. In the Garland Newton and Searcy Counties. banking market, consummation of the proposal would increase the HHI by 17. In the Little Rock banking market, the HHI would increase 249 points 232 points to 3990 without any divestiture, and Boatmen's would control to 2159, and Boatmen's would control approximately 32.3 percent of market approximately 37 percent of market deposits. deposits. In the Harrison banking market, the HHI would increase 344 points 13. Boatmen's has committed to submit to the Board, prior to consumma- to 1854, and Boatmen's would control approximately 27.6 percent of market tion of its acquisition of Worthen, a binding contract acceptable to the Board deposits. for the sale of these branches. Boatmen's also has committed that, if it does 18. In the Little Rock banking market, 18 competitors would remain, not consummate such divestiture transactions within 180 days after consum- including the second and third largest banking organizations in the market, mation of the acquisition of Worthen, it will transfer these branches to an which would have market shares of approximately 28 percent and independent trustee, who will be authorized to supervise the operations of 16 percent, respectively. In the Harrison market, seven competitors would these branches and instructed to prompdy find a suitable buyer. In addition, remain in the market after consummation of this proposal, including the Boatmen's has committed to submit to the Board, before consummation of second, fourth and eighth largest commercial banking organizations operatthe acquisition of Worthen, an executed trust agreement acceptable to the ing in the state. Board stating the terms of this divestiture. The Board's action on the 19. The Russellville, Arkansas, banking market is approximated by Pope application is expressly conditioned on compliance with these commitments. and Yell Counties in Arkansas; the Fayetteville/Springdale, Arkansas, bank- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

302 Federal Reserve Bulletin • March 1995 exceed the threshold standards in the Department of Justice the needs of its communities, including low- and moderate- Merger Guidelines.20 In addition, numerous competitors income neighborhoods. In particular, the OCC states that would remain in all these markets. Boatmen's has demonstrated substantial flexibility through Based on all the facts of record, including the proposed product innovations and has provided substantial commudivestitures, the attractiveness of these markets to potential nity support. entrants, and the number of competitors that would remain, The Board also received comments from the national the Board concludes that consummation of this proposal office of the Association of Community Organization for would not have a significantly adverse effect on competition Reform Now ("ACORN") in Washington, D.C., and or concentration of banking resources in any relevant bank- ACORN members in St. Louis, Missouri; Little Rock, Aring market. kansas; Kansas City, Missouri; Dallas, Texas; Philadelphia, Pennsylvania; Chicago, Illinois; Boston, Massachusetts; and Convenience and Needs Considerations Minneapolis, Minnesota (collectively, "Protestant"), which generally criticize the performance and commitment of In acting on an application to acquire a depository institu- Boatmen's under the CRA in helping to meet the credit tion under the BHC Act, the Board must consider the needs of minority and low- and moderate-income communiconvenience and needs of the communities to be served, ties. In particular, Protestant maintains that 1993 data coland take into account the records of the relevant depository lected under the Home Mortgage Disclosure Act institutions under the Community Reinvestment Act ("HMDA") indicate disparities in the rates of HMDA- (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires the reported loans originated to African-American and Hispanic federal financial supervisory agencies to encourage finan- loan applicants as compared to rates of loan originations to cial institutions to help meet the credit needs of the local white loan applicants at several Boatmen's subsidiaries, communities in which they operate, consistent with the safe including its lead bank subsidiary, The Boatmen's National and sound operation of such institutions. To accomplish this Bank of St. Louis, St. Louis, Missouri ("Boatmen's end, the CRA requires the appropriate federal supervisory St. Louis").22 Protestant also questions Superior FSB's authority to "assess the institution's record of meeting the efforts to ascertain its delineated community's credit needs credit needs of its entire community, including low- and and criticizes its outreach to minority neighborhoods. In moderate-income neighborhoods, consistent with the safe addition, Protestant contends that Sunwest Albuquerque and sound operation of such institution," and to take that does not have enough branches in predominantly minority record into account in its evaluation of bank expansion areas.23 proposals.21 The Board has carefully reviewed the CRA performance The Board received a number of comments on the pro- records of Boatmen's and its subsidiary depository instituposal, including comments from 30 community groups, tions; all comments received regarding these applications; government officials, and development organizations that information provided by Boatmen's on its CRA activities; support the proposal. These commenters note the active and all other relevant facts of record in light of the CRA, the involvement of Boatmen's in various affordable housing Board's regulations, and the Statement of the Federal Finanand community development programs and small business cial Supervisory Agencies Regarding the Community Reindevelopment projects throughout its delineated community vestment Act ("Agency CRA Statement").24 and support approval of this proposal. In addition, the Midwestern District Office of the Office of the Comptroller of the Currency ("OCC"), which supervises 20 Boatmen's bank subsidiaries, submitted a comment supporting the proposal, stressing that Boatmen's, through its subsidiary 22. The other Boatmen's subsidiaries that were the subject of Protestant's banks, has demonstrated a strong commitment to meeting comments include: Boatmen's mortgage subsidiary, Boatmen's Mortgage Company, St. Louis, Missouri ("Boatmen's Mortgage"); Sunwest Bank of Albuquerque, N.A., Albuquerque, New Mexico ("Sunwest Albuquerque"); Boatmen's First National Bank of Kansas City, Kansas City, Missouri ("Boatmen's Kansas City"); Boatmen's First National Bank of Oklahoma, ing market is approximated by Benton and Washington Counties in Arkan- Oklahoma City, Oklahoma ("Boatmen's Oklahoma"); Boatmen's Bank of sas; and the West Plains, Missouri, banking market is approximated by Tennessee, Memphis, Tennessee ("Boatmen's Tennessee"); Sunwest Bank Howell and Oregon Counties in Missouri; and Fulton County in Arkansas. of El Paso, El Paso, Texas ("Sunwest El Paso"); and Superior FSB. 20. Boatmen's would become the largest depository institution in the 23. The Board also received comments relating to two loan transactions at Russellville banking market, controlling 25.4 percent of market deposits, and Boatmen's St. Louis and a loan transaction at Superior FSB. The Board has the HHI would increase by 195 points to 1927. In the Fayetteville/Springdale carefully reviewed these comments, in light of the relevant reports of banking market, Boatmen's would become the second largest depository examination of the institutions and other available information. The cominstitution, controlling 19.2 percent of market deposits, and the HHI would plaints have been referred to the institutions' primary federal supervisors, increase by 31 points to 2353. Boatmen's would remain the largest deposi- which have authority to investigate and resolve claims of this type. Based on tory institution in the West Plains, Missouri, banking market, controlling all facts of record, the Board does not believe that these comments warrant approximately 30 percent of market deposits, and the HHI would increase by denial of the applications under the statutory factors that the Board must 118 points to 1551. consider under the BHC Act. 21. 12 U.S.C. § 2903. 24. 54 Federal Register 13,742 (1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 303 Record of Performance Under the CRA Boatmen's Oklahoma, Sunwest El Paso, Boatmen's Tennessee, and Superior FSB in light of Protestant's concerns. In A. CRA Performance Examinations general, the 1993 HMDA data indicate that Boatmen's St. Louis and Boatmen's Mortgage, Sunwest Albuquerque, The Agency CRA Statement provides that a CRA examina- Boatmen's Kansas City, Boatmen's Tennessee, and Supetion is an important and often controlling factor in the rior FSB have improved their lending records of home consideration of an institution's CRA record and that re- mortgage loans to African-American and/or Hispanic loan ports of these examinations will be given great weight in the applicants. For example, these data of Boatmen's St. Louis applications process.25 The Board notes that Boatmen's and Boatmen's Mortgage, Boatmen's Kansas City, Boat- St. Louis, which represents approximately 37 percent of men's Tennessee, and Superior FSB indicate an increase in Boatmen's total assets, received three consecutive "out- loan applications from African Americans and loans origistanding" ratings from its primary federal supervisor, the nated to African Americans. The 1993 HMDA data of OCC, in its last three CRA performance examinations, Boatmen's Oklahoma and Sunwest El Paso similarly indiincluding its most recent examination as of August 26, cate an increase in loan applications from and loans to 1994. All the other depository institution subsidiaries of Hispanics. In addition, the 1993 HMDA data of Superior Boatmen's that were discussed by Protestant were exam- FSB, which Boatmen's acquired in 1992, indicate a deined recently for CRA performance by their primary federal crease in the percentage of denied loan applications from supervisors. Five of these institutions received "outstand- African-American applicants. The 1993 HMDA data of ing" ratings and one received a "satisfactory" rating.26 The Sunwest Albuquerque, similarly, indicate a decrease in the remaining Boatmen's depository institution subsidiaries re- percentage of denied loan applications from Hispanic loan ceived either "outstanding" or "satisfactory" ratings at applicants since Boatmen's acquired the bank in 1992. their most recent examinations for CRA performance.27 However, these data also reflect some disparities at Boat- Each of Worthen's bank subsidiaries also received either men's subsidiaries in the rate of loan origination, denials, "outstanding" or "satisfactory" ratings from their primary and applications by racial group or income level. federal supervisor, the OCC, in the most recent examina- The Board is concerned when the record of an institution tions of their CRA performance.28 indicates disparities in lending to minority applicants and it believes that all banks are obligated to ensure that their B. HMDA Data and Lending Practices lending practices are based on criteria that assure not only safe and sound lending, but also equal access to credit by The Board has carefully reviewed the 1992 and 1993 creditworthy applicants regardless of race. The Board rec- HMDA data of Boatmen's St. Louis and Boatmen's Mort- ognizes, however, that HMDA data alone provide an incomgage,29 Boatmen's Albuquerque, Boatmen's Kansas City, plete measure of an institution's lending in its community. The Board also recognizes that HMDA data have limitations that make the data an inadequate basis, absent other 25. Id. at 13,745. information, for concluding that an institution has engaged 26. The following Boatmen's subsidiary institutions received "outstanding" ratings at their most recent CRA performance examinations: Sunwest in illegal discrimination in making lending decisions. Albuquerque (OCC—May 5, 1994); Boatmen's Kansas City (OCC— The Board has carefully reviewed Protestant's allegations March 14, 1994); Sunwest El Paso (Federal Deposit Insurance Corporation regarding the record of Boatmen's lending to minorities, ("FDIC")—July 17, 1994); and Superior FSB (Office of Thrift Supervision ("OTS")—August 8, 1994). Boatmen's Tennessee received an "outstand- particularly African Americans and Hispanics, and to lowing" rating from the FDIC at its CRA performance examination as of and moderate-income residents in light of information from November 23, 1992, and the FDIC indicated that this rating likely will not change as a result of its most recent CRA examination as of December 12, the OCC, the primary federal supervisor of Boatmen's 1994. Boatmen's Oklahoma received a "satisfactory" rating from the OCC St. Louis, Sunwest Albuquerque, Boatmen's Kansas City, at its most recent CRA performance examination as of July 21, 1994. and Boatmen's Oklahoma; from the FDIC, the primary 27. Of Boatmen's remaining depository institution subsidiaries, 17 received "outstanding" ratings and 21 received "satisfactory" ratings at their federal supervisor of Boatmen's Tennessee and Sunwest El most recent examinations for CRA performance. Paso; and from the OTS, the primary federal supervisor of 28. Of these institutions, nine received a CRA performance rating of Superior FSB. The 1994 CRA performance examinations of "satisfactory," and two received a CRA performance rating of "outstanding." these institutions found no evidence of prohibited discrimi- 29. Historically, Boatmen's Mortgage has operated principally in the nation or any practices or procedures that would discourage St. Louis area, originating a majority of its loans through a relationship with Boatmen's St. Louis. Before 1994, all Boatmen's loans in the St. Louis area applications for available credit from any segment of their that met secondary market eligibility standards were originated by Boat- respective delineated communities, or other illegal credit men's Mortgage and sold into the secondary market, with Boatmen's Mortpractices. Moreover, the Board notes that the examinations gage retaining the servicing rights. Loan applications failing to meet secondary market eligibility standards were referred back to Boatmen's St. Louis of all these institutions found that the geographic distribufor further underwriting using the bank's non-conforming loan products. In tion of HMDA-reported loans represents a reasonable pene- 1994, Boatmen's St. Louis began originating all its mortgage loans and tration of their respective delineated communities. In addiselling mortgage loans eligible for the secondary market to Boatmen's Mortgage for further packaging and sale into the secondary market. tion, the OCC compared a sample of African-American and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

304 Federal Reserve Bulletin • March 1995 white applicants for mortgage loans during its 1994 CRA elude the participation of Boatmen's Community Developperformance examination of Boatmen's St. Louis and found ment Corporation ("BCDC") in the St. Louis Equity Fund no evidence of discrimination or other illegal credit prac- ("SLEF"), a not-for-profit corporation that promotes lowtices. The OCC also conducted a fair lending examination income housing development in St. Louis. Since 1993, as part of its 1994 CRA performance evaluations of Sun- BCDC has invested at least $1 million in SLEF and has west Albuquerque and Boatmen's Oklahoma, which in- loaned $1.9 million to three of SLEF's low-income, multicluded a comparison of a sample of home-related loan family housing projects.31 Boatmen's intends to enhance applications from African Americans and/or Hispanics with Worthen's current community development efforts by proother applicants, and found no evidence of discrimination or viding additional support services and capital for lowother illegal credit practices. income housing development, expansion of businesses Through each of its depository institution subsidiaries owned by women and minorities, and other community and and their branch offices, Boatmen's offers various lending economic development initiatives. programs designed to enhance its lending to minorities and Other Boatmen's subsidiary institutions also have acto residents of low- and moderate-income communities. For tively engaged in community development programs. Sunexample, Boatmen's has a second review process at its west Albuquerque has loaned more than $7.5 million to subsidiaries for HMDA-reportable loan applications prior to develop affordable rent-subsidized housing and affordable denial. This process is designed to ensure that all applicants, housing for families headed by single women. Boatmen's including minority and low- and moderate-income appli- Kansas City has contributed $2 million to a newly formed cants, receive equitable consideration in credit decisions. consortium of banks that will provide $14 million for flexi- Boatmen's has committed to continue Worthen's second ble mortgage loans to low- and moderate-income borrowers review process, which is substantially similar to the second in the Kansas City area.32 In 1993, Boatmen's Oklahoma review process implemented at Boatmen's subsidiaries. provided $1.2 million in loans for the purchase and rehabil- In addition, Boatmen's St. Louis offers special home itation of a 160-unit apartment complex for low- and purchase loan products, through its CRP BASIC mortgage moderate-income persons.33 Similarly, Sunwest El Paso has program ("BASIC mortgage program"), that focus on low- provided approximately $800,000 in financing for the rehaand moderate-income borrowers. These BASIC mortgages bilitation and construction of two low-income housing offer flexible terms such as higher loan-to-value and debt-to- projects, and has committed to finance approximately 30 income ratios than standard mortgage loans, the elimination mortgage loans for low- and moderate-income residents of private mortgage insurance requirements, and lower clos- through the Lower Valley Housing Corporation's 1994 Selfing costs. The 1994 CRA performance examination of Help Housing Project. In addition, Boatmen's Tennessee, Boatmen's St. Louis notes that, in 1993 and the first eight together with another lending institution, has provided apmonths of 1994, the bank originated 442 residential mort- proximately $5.5 million in loans to finance the reconstrucgage loans under its BASIC mortgage program, totalling tion of a 484-unit apartment complex in Whitehaven, a more than $24 million. primarily minority and low- and moderate-income neigh- Boatmen's Kansas City, Boatmen's Oklahoma, Sunwest borhood in Memphis. Boatmen's Tennessee also has pro- El Paso, and Boatmen's Tennessee offer similar mortgage products targeted to low- and moderate-income borrowers, 31. The 1994 CRA performance examination of Boatmen's St. Louis also which offer more flexible terms and underwriting standards reports that the bank participates in programs of the Missouri Housing and lower costs than conventional mortgage products.30 In Development Commission, which provides various types of assistance to addition, Sunwest Albuquerque has developed a "Sweat borrowers primarily for residential mortgage lending. Examiners also report that, in the first eight months of 1994, Boatmen's St. Louis provided more Equity" Loan Program in response to community needs than 18 construction loans and other financing for several federal programs through which home improvement loans are extended to that provide gap and rehabilitation financing for low-income single-family housing. In addition, Boatmen's St. Louis has provided financing to the low- and moderate-income residents who use their own Technical Assistance Corporation (and its related partnerships), formed by labor to replace a traditional down payment. In 1994, Sun- the Mayor of St. Louis to promote redevelopment, affordable housing, and west Albuquerque extended loans totalling more than job creation, including a $960,000 loan to renovate low-income and student housing units. $450,000 under this program. 32. The 1994 CRA performance examination of Boatmen's Kansas City Boatmen's also assists in meeting the affordable housing reports that, as of November 30, 1993, the bank originated 23 loans, totalling needs of low- and moderate-income residents throughout its approximately $875,000 under Kansas City's "70/30" and "80/20" Programs, through which first-time, low- and moderate-income home buyers delineated community through a variety of community de- receive partially subsidized mortgages. Boatmen's Kansas City also provided velopment programs with government agencies, non-profit $1.7 million in funding for the acquisition and construction or rehabilitation of two low-income, multi-family housing complexes. In 1993, BCDC inorganizations, and private developers. These projects invested $5.8 million in an 84-unit apartment complex in a low- and moderateincome neighborhood in Kansas City. 33. The 1994 CRA performance examination of Boatmen's Oklahoma also reports that the bank has committed $200,000 to the Central Oklahoma 30. For example, Boatmen's Kansas City made at least 217 of such loans Clearing House Association Low-Income Residential Loan Program, which in 1993 and 1994, totalling more than $8.4 million. has lent over $2 million to low- and moderate-income home purchasers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 305 vided funding and operating expenses for the Cooper/ and moderate-income areas. Examiners also report that, in Young Development Corporation, which is rehabilitating 12 1993, Sunwest El Paso made 23 SBA loans totalling over houses in the Cooper Young neighborhood, another primar- $2.4 million. ily minority and low- and moderate-income neighborhood Boatmen's also actively participates in public and private in Memphis. The bank has provided low-interest housing joint ventures to help meet the small business needs of and commercial loans to residents and businesses in the minority-owned businesses and businesses located in low- Cooper Young neighborhood, totalling more than $2.4 mil- and moderate-income areas. For example, Boatmen's lion.34 St. Louis recently invested in the St. Louis Business Devel- The 1994 CRA performance examination of Superior opment Fund, a newly formed multi-bank lending consor- FSB reported that Superior FSB also actively engages in tium that will provide special financing for minority-owned affordable housing programs, including the provision of businesses, and in the St. Louis Local Development Commore than $800,000 in financing for the rehabilitation of 25 pany Contractor Revolving Loan Program, which provides houses in low-income neighborhoods in Little Rock; contri- working capital at below-market interest rates to small and butions to the Local Initiatives Support Corporation, a loan minority contractors. In addition, Boatmen's St. Louis is the pool formed by local depository institutions to provide largest participant in lending through the Business Consorfinancing for two multi-family, low-income housing tium Fund, Inc., which provides capital and loans at reasonprojects in Little Rock; participation in numerous Habitat able interest rates to minority-owned firms. Boatmen's for Humanity programs throughout its delineated commu- St. Louis also has taken a leadership role in the developnity; and a $1.2 million loan for a low-income housing ment and organization of a Specialized Small Business complex in Conway, Arkansas. Investment Company, which will use private capital and Boatmen's also has designed special products to meet the SBA funding to provide venture capital loans for small consumer needs of low- and moderate-income residents. businesses and minority entrepreneurs.35 For example, the 1994 CRA performance examination of In addition, the 1992 CRA performance examination of Boatmen's St. Louis notes that the bank, together with Boatmen's Tennessee reports that the bank participates in Grace Hill Neighborhood Services, a community redevelop- the Minority Purchasing Council Revolving Loan Fund. ment organization operating in 11 low-income neighbor- Examiners also report that Sunwest El Paso has committed hoods in St. Louis, developed the MORE Cache Card pilot funds to a micro lending program, Accion International, program through which the bank has provided Grace Hill which is designed to meet the particular credit needs of residents personal bank accounts, with no minimum balance small businesses in El Paso. requirement or service charges, and automated teller ma- Boatmen's has committed to add relevant programs to chine ("ATM") and health care record access devices. In Worthen's existing programs designed to meet the credit addition, other Boatmen's subsidiary institutions offer free needs of minority and low- and moderate-income communiand/or low-cost checking accounts and government check ties. In addition, Boatmen's has coi mitted to incorporate cashing services for non-account customers. its CRA, diversity, and fair lending training programs into Boatmen's also actively engages in small business lend- Worthen's staff training curriculum.36 ing with special programs focusing on minority-owned businesses and businesses in low- and moderate-income areas. For example, the 1994 CRA performance examination of Boatmen's St. Louis noted that the bank has hired a Specialized Small Business Lender to help meet the needs of small businesses owned by minorities and women through active participation in various city, state, and federal small busi- 35. Since 1992, Boatmen's St. Louis also has made at least 11 loans totalling more than $38 million under the Mo-Bucks Program, a low interestness lending programs. Examiners reported that, in the first linked-deposit loan program administered by the Missouri State Treasurer's eight months of 1994, Boatmen's St. Louis made 23 loans office to assist in creating and sustaining jobs for Missouri businesses. The to such businesses, totalling more than $5 million and, since 1994 CRA performance examination report of Boatmen's Kansas City reports that the bank has made commercial and residential loans totalling 1992, made 91 Small Business Administration ("SBA") over $500,000, through Kansas City's Linked-Deposit Program, to borrowloans totalling over $10 million. The 1994 CRA perfor- ers in city-designated low- and moderate-income census tracts. mance examination of Boatmen's Oklahoma reports that, in 36. Protestant also objects to the failure of Boatmen's to continue negotiating a lending agreement with Protestant. The Board has indicated in previous 1993, the bank extended SBA loans totalling $10 million in orders and in the Agency CRA Statement that communication by depository Tulsa, 44 percent of which were made to businesses in low- institutions with community groups provides a valuable method of assessing and determining how best to address the credit needs of the community. However, neither the CRA nor the Agency CRA Statement require depository institutions to enter into agreements with particular organizations. Ac- 34. Boatmen's Tennessee, in participation with the City of Memphis, also cordingly, the Board's review has focused on the programs and policies that helped establish the Housing Resource Center, which, when it opens in 1995, Boatmen's has in place to serve the credit needs of its entire community. See will provide credit and home purchase counselling and minor home repairs First Empire State Corporation, 80 Federal Reserve Bulletin 1111 (1994); for low-income residents in Memphis. Fifth Third Bancorp, 80 Federal Reserve Bulletin 838 (1994). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

306 Federal Reserve Bulletin • March 1995 C. Ascertainment and Outreach Efforts service branches, motor bank offices, ATMs, and a mobile branch at locations reasonably accessible to all segments of Boatmen's uses various methods to ascertain community its community, including low- and moderate-income neighcredit needs, including direct contacts, community outreach borhoods. Examiners reported that products and services programs, credit and homebuyer seminars, and membership provided at these facilities were suitable for the needs of the in numerous public and private organizations. In addition, community. Examiners also reported that the bank had a Boatmen's conducts annual focus group meetings with comprehensive branch closing policy, but had not closed members of the African-American, Hispanic and other mi- any branches since 1992. In addition, the Board notes that nority communities as well as women entrepreneurs in its 11 of Sunwest Albuquerque's 35 branches are in predomivarious markets to discuss their financial needs and expecta- nantly minority census. tions. Boatmen's uses input from these focus groups to market suitable products and services more effectively to Conclusion Regarding Convenience and Needs Factors such segments of its delineated community. For example, as a result of such focus groups, Sunwest Albuquerque has On the basis of all the facts of record, including informalaunched a comprehensive marketing effort in Hispanic and tion provided by commenters supporting the proposal Native-American communities. and the Protestant, the responses of Boatmen's, and the Each of Boatmen's subsidiary institutions, including Su- relevant reports of examination, the Board concludes that perior FSB, also ascertains community credit needs through convenience and needs considerations, including the active involvement with various community organizations. CRA performance records of the institutions involved in The 1994 CRA performance examination of Superior FSB the proposal, are consistent with approval of these applireports that the institution communicates regularly with cations.38 local community development, affordable housing, minority, and government agencies within its delineated commu- Other Considerations nity, and actively participates in numerous affordable housing seminars conducted by government and affordable The Board also has reviewed information about the finanhousing agencies. In addition, Superior FSB co-sponsored cial and managerial resources and future prospects of two bank fairs, in 1994, designed to introduce low- and Boatmen's, Worthen, and their respective subsidiaries, moderate-income residents to home loan, consumer finance, and other supervisory factors the Board must consider and additional bank services of Superior and other area under section 3 of the BHC Act, and concludes that these institutions. factors are consistent with approval of this proposal. In addition, Boatmen's markets its products and services Boatmen's also has applied, pursuant to section 4(c)(8) through a variety of advertising activities, including print of the BHC Act, to engage in trust company and creditmedia, direct mail, and radio and television.37 These activi- related insurance activities. The Board has previously ties include marketing efforts directed toward African- determined by regulation that these activities are closely American and Hispanic consumers. For example, Boat- related to banking for purposes of section 4(c)(8) of the men's St. Louis, Boatmen's Kansas City, and Superior FSB BHC Act.39 Boatmen's has committed that it will conadvertise in newspapers circulated primarily in the African- duct these activities in accordance with the Board's American community and on minority radio stations. Sun- regulations. The record in this case indicates that there west Albuquerque and Sunwest El Paso advertise in Spanish on billboards, on Spanish-speaking radio stations and 38. The Protestant has requested that the Board hold a public hearing or television channels, and in Spanish language publications. public meeting to consider the record of Boatmen's in meeting its responsibilities under the CRA. Section 3(b) of the BHC Act does not require the D. Branch Locations Board to hold a hearing or meeting on an application unless the appropriate supervisory authority of the bank to be acquired makes a timely written recommendation of denial of the application. In this case, the Board has not The 1994 CRA performance examination of Sunwest Albu- received such a recommendation. Generally, under the Board's Rules of Procedure, the Board may, in its discretion, hold a public hearing or meeting querque found that Sunwest Albuquerque operated fullon an application to clarify factual issues related to the application and to provide an opportunity for testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has carefully considered the Protestant's request. In the Board's view, the Protestant has had an opportunity to present written 37. Other examples of Boatmen's ascertainment and outreach efforts submissions, and has submitted substantial written comments that have been include the Neighborhood Partnership Program ("NPP") administered by considered by the Board. In addition, a number of other public comments Boatmen's St. Louis. The NPP is a grant program to promote development in have been submitted. Boatmen's and Protestant also have held several low- and moderate-income neighborhoods through which the bank has private meetings to discuss Boatmen's CRA performance. In light of all the extended grants totalling more than $200,000 to 20 organizations since 1992. facts of record, the Board has determined that a public hearing or meeting is In response to suggestions from NPP participants and others in the commu- not necessary to clarify the factual record in this application, and is not nity, Boatmen's St. Louis developed and revised the CRP BASIC mortgage otherwise warranted in this case. Accordingly, the Protestant's request for a program, discussed above, to respond to community affordable housing public hearing or meeting on this application is denied. needs. 39. See 12 C.F.R. 225.25(b)(3) and (b)(8)(i). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 307 are numerous providers of these nonbanking services, Appendix and there is no evidence in the record to indicate that Wort hen Subsidiary Banks consummation of this proposal is likely to result in any significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of Worthen National Bank of Arkansas, interests, or unsound banking practices that would out- Little Rock, Arkansas weigh the public benefits of this proposal. Accordingly, Worthen National Bank of Batesville, the Board has determined that the balance of public Batesville, Arkansas interest factors it must consider under section 4(c)(8) of Worthen National Bank of South Arkansas, the BHC Act is favorable and consistent with approval. Camden, Arkansas Worthen National Bank of Conway, Conway, Arkansas Conclusion Worthen National Bank of Harrison, Harrison, Arkansas Worthen National Bank of Hot Springs, Hot Springs, Arkansas Based on the foregoing, including the commitments made Worthen National Bank of Newark, to the Board by Boatmen's in connection with these Newark, Arkansas applications, and in light of all the facts of record, the Worthen National Bank of Northwest Arkansas, Board has determined that these applications should be, Fayetteville, Arkansas and hereby are, approved. The Board's approval is spe- Worthen National Bank of Pine Bluff, cifically conditioned upon compliance by Boatmen's with Pine Bluff, Arkansas all commitments made in connection with these applica- Worthen National Bank of Russellville, tions as well as the conditions discussed in this order. Russellville, Arkansas The Board's determinations as to the nonbanking ac- Worthen National Bank of Texas, tivities to be conducted by Boatmen's are subject to all Austin, Texas the conditions in Regulation Y, including those in sections 225.7 and 225.23(b) (12 C.F.R. 225.7 and Southern National Corporation 225.23(b)), and to the Board's authority to require such Lumberton, North Carolina modification or termination of the activities of a holding company or any of its subsidiaries as the Board finds Order Approving Merger of Bank Holding Companies necessary to assure compliance with, or to prevent evasion of, the provisions and purposes of the BHC Act and Southern National Corporation, Lumberton, North Carolina the Board's regulations and orders issued thereunder. The ("Southern"), a bank holding company within the meaning commitments and conditions relied on by the Board in of the Bank Holding Company Act ("BHC Act"), has reaching this decision are deemed to be conditions imapplied under section 3 of the BHC Act (12 U.S.C. § 1842) posed in writing by the Board in connection with its to acquire BB&T Financial Corporation, Wilson, North findings and decision, and as such may be enforced in Carolina ("BB&T"), and thereby indirectly acquire Branch proceedings under applicable law. Banking and Trust Company, Wilson, North Carolina; The acquisition of Worthen's subsidiary banks shall Branch Banking and Trust Company of South Carolina, not be consummated before the fifteenth calendar day Greenville, South Carolina; Lexington State Bank, Lexingfollowing the effective date of this order, and the banking ton, South Carolina; and Community Bank of South Caroand the nonbanking transactions shall not be consumlina, Varnville, South Carolina.1 Southern also has apmated later than three months following the effective plied under section 4(c)(8) of the BHC Act (12 U.S.C. date of this order, unless such period is extended for good § 1843(c)(8)) and the Board's Regulation Y (12 C.F.R. cause by the Board or by the Federal Reserve Bank of St. 225.25) to: Louis, acting pursuant to delegated authority. (1) Acquire 15 percent of the voting shares of Southeast By order of the Board of Governors, effective Switch, Inc., Maitland, Florida ("Switch"), and thereby January 18, 1995. engage in providing data processing services and man- Voting for this action: Vice Chairman Blinder and Governors Kelley, LaWare, Lindsey, Phillips, and Yellen. Absent and not voting: Chairman Greenspan. 1. In connection with these applications, both Southern and BB&T have requested approval to acquire options to purchase up to 19.9 percent of the JENNIFER J. JOHNSON voting shares of the other organization. These options will terminate upon Deputy Secretary of the Board consummation of this proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

308 Federal Reserve Bulletin • March 1995 agement consulting advice pursuant to sections The acquisition of BB&T by Southern would signifi- 225.25(b)(7) and (b)(l 1) of Regulation Y;2 and cantly increase market concentration in the Goldsboro, (2) Engage in community development activities pursu- Moore County, Mount Airy, Sanford, and Statesville bankant to section 225.25(b)(6) of Regulation Y. ing markets,6 as measured by the HHI. In order to mitigate the potential adverse competitive effects that may result Notice of the applications, affording interested persons an from this acquisition, Southern has committed to divest opportunity to submit comments, has been published (59 branches in each of these markets to an acquiror that could Federal Register 52,306 (1994)). The time for filing com- purchase the branches without substantially lessening comments has expired, and the Board has considered the appli- petition in these markets.7 After consummation of this cations and all comments received in light of the factors set proposal and the divestiture of the branch offices in the forth in sections 3 and 4 of the BHC Act. Goldsboro, Moore County, Mount Airy, Sanford, and Southern is the sixth largest commercial banking organi- Statesville banking markets, the competitive effect of this zation in North Carolina, controlling deposits of $4 billion, proposal in those markets would be consistent with the representing 6.7 percent of total deposits in commercial merger guidelines established by the Justice Department banking organizations in the state,3 and is the third largest and the parameters applied by the Board in previous decicommercial banking organization in South Carolina, con- sions.8 Based on these proposed divestitures, the Justice trolling deposits of $2 billion, representing 9 percent of Department has indicated that this proposal is not likely to total deposits in commercial banking organizations in the have a significantly adverse effect on competition in these state. BB&T is the fourth largest commercial banking orga- banking markets. nization in North Carolina, controlling deposits of Consummation of this proposal in the remaining banking $6.2 billion, representing 10.3 percent of total deposits in markets where Southern and BB&T compete would not commercial banking organizations in the state, and is the exceed Justice Department guidelines and numerous comsixth largest commercial banking organization in South petitors would remain in each of these banking markets.9 Carolina, controlling deposits of $1 billion, representing Based on these and all the facts of record, including the 4.7 percent of total deposits in commercial banking organi- proposed divestitures,10 the Board concludes that consumzations in the state. Upon consummation of this proposal, mation of this proposal is not likely to have a significantly Southern would become the fourth largest commercial banking organization in North Carolina, controlling deposits of $10.2 billion, representing 17 percent of total deposits above 1800 is considered to be highly concentrated. In such markets, the in commercial banking organizations in the state, and it Justice Department is likely to challenge a merger that increases the HHI by would remain the third largest commercial banking organi- more than 50 points. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence zation in South Carolina, controlling $3 billion in deposits, of other factors indicating anti-competitive effects) unless the post-merger representing 13.7 percent of total deposits in commercial HHI is at least 1800 and the merger or acquisition increases the HHI by at least 200 points. The Justice Department has stated that the higher than banking organizations in the state. normal threshold for an increase in the HHI when screening bank mergers Southern and BB&T compete directly in 22 banking and acquisitions for anti-competitive effects implicitly recognizes the competitive effect of limited-purpose lenders and other non-depository financial markets in North Carolina and South Carolina. The Board entities. has carefully considered the effects that consummation of 6. The Goldsboro banking market consists of the Goldsboro, North Carothis proposal would have on competition in these banking lina RMA, the remainder of Wayne County, and La Grange in Lenoir County, North Carolina; the Moore County banking market consists of markets in light of all the facts of record, including the Moore County, North Carolina; the Mount Airy banking market consists of characteristics of the markets, the increase in the concentra- Surry County, North Carolina, plus the adjoining portions of Carroll and tion of total deposits in depository institutions4 in the mar- Patrick Counties in Virginia; the Sanford banking market consists of Lee County, North Carolina; and the Statesville banking market consists of kets as measured by the Herfindahl-Hirschman Index Iredell County, North Carolina, excluding the town of Mooresville. ("HHI"),5 and commitments made by Southern. 7. Southern has committed to sell these branches either to a commercial banking organization that does not currently operate in these markets or to a current market competitor whose acquisition of these branches would not exceed the Justice Department merger guidelines. 2. The data processing services are provided to federally insured deposi- 8. Taking the proposed divestitures into account, upon consummation of tory institutions who participate in Switch's shared electronic funds transfer this proposal, the HHI in these five banking markets would not increase by network, or who participate in other electronic funds transfer networks. more than the following amounts: Goldsboro by 166 points to 2087; Moore 3. All banking data are as of June 30, 1994. County by 569 points to 1799; Mount Airy by 172 points to 1867; Sanford 4. Market data are as of June 30, 1994. In this context, depository by 172 points to 1961; and Statesville by 194 points to 2070. institutions include commercial banks, savings banks, and savings associa- 9. The changes in the HHI in the 17 remaining banking markets are set tions. Market share data are based on calculations in which the deposits of forth in the Appendix. thrift institutions are included at 50 percent. The Board previously has 10. Southern has committed to execute a sales agreement for the proposed indicated that thrift institutions have become, or have the potential to divestitures before consummation of this proposal, and to complete these become, significant competitors of commercial banks. See WM Bancorp, 76 divestitures within 180 days of consummation of this proposal. Southern also Federal Reserve Bulletin 788 (1990); National City Corporation, 70 Federal has committed that, in the event it is unsuccessful in completing these Reserve Bulletin 743 (1984). divestitures within 180 days of consummation of the proposal, it will transfer 5. Under the revised Department of Justice Merger Guidelines, 49 Federal these branch offices to an independent trustee that will be instructed to sell Register 26,823 (June 29, 1984), a market in which the post-merger HHI is the branches promptly. See BankAmerica Corporation, 78 Federal Reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 309 adverse effect on competition or on the concentration of consummation of this proposal would result in any signifiresources in any relevant banking market. cantly adverse effects, such as undue concentration of re- The Board also has concluded that the financial and sources, decreased or unfair competition, conflicts of intermanagerial resources and future prospects of Southern and ests, or unsound banking practices, that would outweigh the BB&T and their respective subsidiaries, and all other super- public benefits of this proposal. Accordingly, the Board has visory factors the Board must consider under section 3 of determined that the balance of public interest factors it must the BHC Act, are consistent with approval of this propos- consider under section 4(c)(8) of the BHC Act is favorable al.11 Considerations relating to the convenience and needs and consistent with approval of Southern's section 4 appliof the communities to be served also are consistent with cation. approval. Based on the foregoing and all the other facts of record, Southern also has applied, pursuant to section 4(c)(8) of the Board has determined that the applications should be, the BHC Act, to acquire 15 percent of the voting shares of and hereby are, approved. The Board's approval of this Switch, and thereby provide data processing and transmis- proposal is expressly conditioned on compliance with all sion services and bank management consulting advice to the commitments made by Southern in connection with depository institutions, and to engage in community devel- these applications, and on receipt by Southern and its subopment activities. As noted above, the Board previously has sidiary banks of all necessary approvals from federal and determined that these activities are closely related to bank- state regulators. The determination on the nonbanking activing and generally permissible for bank holding companies ities is subject to all the conditions in Regulation Y, includunder section 4(c)(8) of the BHC Act and Regulation Y,12 ing those in sections 225.7 and 225.23(b) (12 C.F.R. 225.7 and Southern proposes to conduct these activities in accor- and 225.23(b)), and to the Board's authority to require such dance with the Board's regulations. modification or termination of the activities of a holding In order to approve this proposal, the Board also must company or any of its subsidiaries as the Board finds find that the performance of the proposed activities by necessary to assure compliance with or to prevent evasion Southern "can reasonably be expected to produce benefits of, the provisions and purposes of the BHC Act and the to the public . . . that outweigh possible adverse effects, Board's regulations and orders issued thereunder. For pursuch as undue concentration of resources, decreased or poses of this action, these commitments and conditions will unfair competition, conflicts of interests, or unsound bank- both be considered conditions imposed in writing by the ing practices." 12 U.S.C. § 1843(c)(8). The Board expects Board in connection with its findings and decision, and, as that the continuation of these activities by Southern would such, may be enforced in proceedings under applicable law. maintain the level of competition among providers of these The acquisition of BB&T shall not be consummated services. In addition, there is no evidence in the record that before the fifteenth calendar day following the effective date of this order, and the banking and nonbanking transactions shall not be consummated later than three months after the Bulletin 338, 340 (1992); United New Mexico Financial Corporation, 11 effective date of this order, unless such period is extended Federal Reserve Bulletin 484, 485 (1991). for good cause by the Board or by the Federal Reserve Bank 11. In evaluating the financial resources of Southern and BB&T, the Board carefully considered comments received from several of Southern's share- of Richmond, acting pursuant to delegated authority. holders, and several members of the public criticizing a post-employment By order of the Board of Governors, effective consulting agreement and non-compete agreement entered into by Southern January 17, 1995. and its current chief executive officer. The Atlanta Regional Office of the Federal Deposit Insurance Corporation also recommended that the Board carefully review these agreements. Southern has argued that it is in the best Voting for this action: Chairman Greenspan, Vice Chairman interest of the surviving entity to have only one chief executive officer, and Blinder, and Governors Kelley, LaWare, Lindsey, Phillips, and that the post-employment remuneration package is fair and reasonable pay- Yellen. ment for an agreement to terminate the individual's employment prematurely, and for the individual to refrain from competing with the surviving entity. JENNIFER J. JOHNSON The complete terms of the arrangement with this individual were disclosed Deputy Secretary of the Board to the shareholders of Southern and BB&T in proxy solicitation material explaining the merger, and the shareholders of both institutions overwhelmingly approved the merger. Two independent benefit consulting firms have Appendix indicated that the present value of the post-employment remuneration package is less than the present value of payments required by the individual's current employment agreement. After considering the size of the companies Markets in which Southern and BB&T currently compete involved, the current employment contract of the individual and comparably situated individuals, the individual's continuing service to the surviving in which the post-merger increase in HHI is within the entity, the capitalization and the financial strength of the surviving entity, the Justice Department Merger Guidelines. agreement not to compete, the analysis of the benefit consulting firms, and all the other facts of record, the Board concludes that the post-employment consulting and non-compete agreement does not reflect so adversely on the (1) The Burlington RMA banking market consists of managerial or financial resources of Southern as to warrant denial of this proposal. Alamance County and Gibsonville, North Carolina. The 12. 12 C.F.R. 225.25(b)(6), (b)(7) and (b)(ll). HHI would increase by 30 points to 1322. 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310 Federal Reserve Bulletin • March 1995 (2) The Charlotte RMA banking market consists of Meck- ORDERS ISSUED UNDER FEDERAL RESERVE ACT lenburg and York Counties, Mooresville, Indian Trial, Harrisburg, Midland, Denver, and Stanley, North Carolina. The Marine Midland Bank HHI would increase by 14 points to 2273. Buffalo, New York (3) The Durham RMA banking market consists of Durham and Orange Counties and Creedmore, and Butner, North Order Approving Establishment of a Branch and an Carolina. The HHI would increase by 15 points to 1704. Offsite Electronic Facility (4) The Fayetteville RMA banking market consists of Cumberland County and Parkton, North Carolina. The HHI Marine Midland Bank, Buffalo, New York ("Bank"), a would increase by 290 points to 1470. state member bank, has applied under section 9 of the (5) The Gastonia RMA banking market consists of Gaston Federal Reserve Act ("Act") (12 U.S.C. § 321 et seq.) to County and Kings Mountain, North Carolina, excluding establish a branch office at P&C Store # 130, 3577 West Stanley. The HHI would increase by 457 points to 1725. Genesee Street, Syracuse, New York ("Syracuse Branch") (6) The Greensboro RMA banking market consists of Guil- and an Offsite Electronic Facility on the first floor of the dord and Davidson Counties, excluding Gibsonville, and Wilson Commons Building at the University of Rochester, Northern Randolph and Southern Rockingham Counties, Rochester, New York ("Rochester ATM"). North Carolina. The HHI would increase by 218 points to Notice of the applications, affording interested persons an 1361. opportunity to submit comments, has been published. The (7) The Hickory RMA banking market consists of Alex- time for filing comments has expired, and the Board has ander, Burke, Caldwell and Catawba Counties, North Caro- considered the applications and all comments received in lina. The HHI would increase by 351 points to 1623. light of the factors contained in the Federal Reserve Act. (8) The Kinston banking market consists of Lenoir County, Bank is the fifth largest commercial banking organization North Carolina, excluding La Grange, Hookerton, and Snow in New York State, controlling deposits of $12.4 billion, Hill, North Carolina. The HHI would increase by 93 points which represent 5.1 percent of the total deposits in commerto 2297. cial banks in the state.1 Bank is wholly owned by HSBC (9) The Raleigh RMA banking market consists of Wake, Holdings pic, London, England, which also wholly owns Harnett, Johnston, and Franklin Counties, North Carolina. Hongkong and Shanghai Banking Corporation Limited, The HHI would increase by 79 points to 1181. Hong Kong. (10) The Rockingham County market consists of Rockingham County, North Carolina, excluding the southern por- Community Reinvestment Act Performance Record tion of the Greensboro RMA. The HHI would increase by 316 points to 1677. In acting on branch applications,2 the Board is required to (11) The Rocky Mount banking market consists of Wilson, take into account the bank's record under the Community Nash, and Edgecomb Counties, North Carolina. The HHI Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). The would increase by 135 points to 2236. CRA requires the federal financial supervisory agencies to (12) The Wilmington RMA banking market consists of encourage financial institutions to help meet the credit New Hanover, Brunswick, and Pender Counties, North needs of the local communities in which they operate, Carolina. The HHI would increase by 61 points to 1285. consistent with the safe and sound operation of such institu- (13) The Winston-Salem RMA banking market consists of tions. To this end, the CRA requires the appropriate federal Forsyth, Stokes, and Davie Counties, North Carolina. The supervisory authority to "assess the institution's record of HHI would increase by 156 points to 3194. meeting the credit needs of its entire community, including (14) The Columbia RMA banking market consists of Rich- low- and moderate-income neighborhoods, consistent with land and Lexington Counties, South Carolina. The HHI the safe and sound operation of such institution," and to would increase by 142 points to 1885. take that record into account in its evaluation of branch (15) The Greenville RMA banking market consists of applications. Greenville, and Pickens Counties, South Carolina, and Pel- The Board has received comments from the Greater zer, Powdersville, and Piedmont, South Carolina. The HHI Rochester Community Reinvestment Coalition, Rochester, would increase by 311 points to 1378. New York ("Protestant"), that criticize Bank's CRA perfor- (16) The Oconee County banking market consists of mance record. Protestant maintains that Rochester needs Oconee County, South Carolina. The HHI would increase additional branches in low- and moderate-income areas, as by 30 points to 1545. does Syracuse, and opposes Bank's proposed Syracuse (17) The Spartanburg RMA banking market consists of Spartanburg County, South Carolina, excluding the Green- 1. Deposit data are as of September 30, 1994. ville, South Carolina, RMA. The HHI would increase by 54 2. The Board has determined that electronic facilities, such as ATMs, are points to 1315. included in the term "branch". Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 311 branch because it is located in a suburb of Syracuse. Protes- concerned when an institution's record indicates disparities tant also alleges that Bank's data filed under the Home in lending to minority applicants, and it believes that all Mortgage Disclosure Act ("HMDA") show insufficient banks are obligated to ensure that their lending practices are lending in low- and moderate-income census tracts in the based on criteria that assure not only safe and sound lend- Rochester Metropolitan Statistical Area ("MSA")3 in 1992 ing, but also equal access to credit by creditworthy appliand 1993 and indicate the possibility of illegal discrimina- cants regardless of race. The Board recognizes, however, tion in that MSA in 1993. that HMDA data alone provide an incomplete measure of The Board has carefully reviewed the entire record of an institution's lending in its community. The Board also Bank's CRA performance, the comments received, Bank's recognizes that HMDA data have limitations that make the response to those comments, and all other relevant facts of data an inadequate basis, absent other information, for record in light of the CRA, the Board's regulations, and the concluding that an institution has engaged in illegal discrim- Statement of the Federal Financial Supervisory Agencies ination in lending. Regarding the Community Reinvestment Act ("Agency Bank's most recent CRA examination as of January CRA Statement").4 31, 1994 (the "1994 Examination"), found that its loan The Board notes that Bank's overall CRA performance policies and underwriting criteria were reasonable and record was recently reviewed in connection with its applica- did not discriminate on any prohibited basis. Specifically, tion to acquire six retail branch banking offices of examiners noted that the loan terms, qualifying ratios and Hongkong and Shanghai Banking Corporation Limited in underwriting guidelines for residential mortgage loans New York, New York. This review included consideration were reasonable and comparable with industry standards. of Bank's special mortgage programs, small business lend- The examination also noted that Bank used a second ing, community development activities, and ascertainment review program for all declined residential mortgage and marketing efforts. For reasons set forth in the order applications, in which underwriting supervisors reviewed approving that application, the Board concluded that Bank's the original underwriter's decision and had to concur in overall performance record was generally consistent with the denial of an application. approval of the acquisition.5 The 1994 Examination did not find any practices that were intended to discourage credit applications. Examiners A. CRA Performance Examinations noted that Bank solicited credit applications from all segments of its communities, including low- and moderate- The Agency CRA Statement provides that a CRA examina- income areas. Moreover, the examination found that Bank's tion is an important and often controlling factor in the credit practices complied with antidiscrimination laws and consideration of an institution's CRA record, and that re- regulations. Examiners also found that Bank generally had a ports on these examinations will be given great weight in reasonable geographic distribution of residential mortgage the applications process.6 The Board notes that Bank and home improvement loans and applications from lowreceived a "satisfactory" rating from the Office of the and moderate-income census tracts throughout its delin- Comptroller of the Currency for CRA performance as of eated service areas. March 31, 1992, and a "satisfactory" rating from the Fed- Bank offers several special mortgage programs to its eral Reserve Bank of New York7 ("Reserve Bank") for communities. Since 1990, Bank has participated in the CRA performance as of January 31, 1994. Federal National Mortgage Association's Community Homebuyers and FannieNeighbors programs, both of which B. HMDA Data and Lending Practices provide flexible down payment methods for borrowers who do not exceed the Department of Housing and Urban Devel- The Board has reviewed Bank's 1992 and 1993 HMDA opment's median income guidelines. In addition, Bank redata8 for Rochester and Syracuse. These data reflect some cently started its own Affordable Housing Loan Program for disparities in the rate of loan originations, denials, and low- and moderate-income borrowers who do not qualify applications by racial group or income level.9 The Board is for other residential lending programs; Bank has committed $10 million to this program to finance residential mortgage loans and an additional $300,000 to assist in financing 3. Protestant also believes that similar issues are raised by the HMDA data down payments. In Rochester, Bank participates with the for the Syracuse area. In addition, Protestant asked the Board to review the HMDA data for Binghamton and Buffalo, New York. City of Rochester and Rochester Neighborhood Housing 4. 54 Federal Register 13,742 (1989). Services in a city-wide housing rehabilitation initiative, to 5. See Marine Midland Bank, 81 Federal Reserve Bulletin 56 (1995). which it has offered $100,000 at very low rates for the loan 6. Id. at 13,745. 7. Bank has been a state member bank of the Federal Reserve System pool and will commit $1 million in below-market home since December 31, 1993. improvement loans with flexible credit standards. In 1994, 8. The Board's review included HMDA data for both Bank and Marine Bank introduced a low minimum amount personal install- Midland Mortgage Corporation. 9. Data for Binghamton and Buffalo showed generally similar patterns. ment loan program and a secured credit card program. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

312 Federal Reserve Bulletin • March 1995 Bank also participates in several governmentally insured C. Ascertainment and Marketing loan programs. Bank has been named one of the top two Small Business Administration ("SBA") lenders for New Bank ascertains community credit needs in various ways. York State during 1992 and 1993, and continues to hold the For example, Bank has a directed call program, and its SBA's preferred lender status for its commitment to small officers and employees participate in a number of commubusiness lending. In addition to SBA lending, Bank offers nity organizations.11 Moreover, in June 1993, Bank con- VA, FHA 203B,10 and State of New York Mortgage Associ- ducted a CRA survey in five New York State markets using ation ("SONYMA") loans to borrowers who meet the pro- a random sample of customers residing in low- and grams' income requirements. moderate-income zip codes to determine the level of aware- The 1994 Examination found that Bank participates in ness of Bank and its products and services. various community development programs in New York Bank markets its products and services primarily through State and provides loans and lines of credit to a wide variety advertisements in daily newspapers, local weekly news and of local organizations that support housing, economic devel- trade publications, and some journals and special audience opment, rehabilitation or small business development. From publications that focus on specific minority groups and low- July 1992 to July 1994, the bank's community development and moderate-income areas including two in the Rochester financing totalled $27.2 million. Examiners also found that region. Bank also conducts free seminars throughout its many of Bank's officers and employees provided technical delineated community. During the 18 months covered by assistance to organizations located throughout the state that the 1994 Examination, Bank conducted 16 first-time homepromote community development programs. buyer seminars, one SONYMA seminar, and three seminars In the Rochester area, Bank opened a $1.97 million line entitled "Women and Investing." Bank's representatives of credit to a not-for-profit corporation for construction of a actively marketed its student loan and educational financing low-income housing project. Bank also had working capital options throughout New York State, and participated in lines of credit to not-for-profit organizations. For example, housing fairs sponsored by the Long Island Board of Real- Bank had a working capital line to a housing development tors, the Federal National Mortgage Association and the corporation that provides weatherization services for low- New York State Housing Coalition. Bank also advertised in income housing, and one to a housing council that assists in publications and annual reports by not-for-profit agencies solving housing problems in Rochester and throughout including Kensington-Bailey Neighborhood Housing Ser- Monroe County. In addition, Bank provided capitalization vices, People's Equal Action and Community Effort funding to a local minority enterprise small business associ- (P.E.A.C.E.) Inc., Spanish Action Coalition, Inc., The Iberoation for businesses owned by women and minorities in the American Action League, Inc., and Syracuse Housing Partarea, in which funds provided for direct loans and invest- nership, among others. ments are leveraged three times by the SBA. Bank also had loans outstanding for renovation of a low-income apartment D. Branch Locations complex, to a developer of affordable housing, to a not-forprofit agency for a homeless shelter/community residence, As of the 1994 Examination date, Bank had 312 branch to a not-for-profit corporation operating low- and moderate- offices and 309 ATM locations in New York State. Bank income housing projects, and to a not-for-profit low- and opened two offices in 1992, none in 1993, and subsequent to moderate-income housing project on city-owned land. the Examination date, acquired six branches in 1994. Exam- In Syracuse, Bank has granted a $1.2 million credit line iners concluded that Bank has an adequate branch closing to a not-for-profit corporation that revives low-income resi- policy that requires Bank to take actions to minimize the dential areas. Bank has also made a loan for rehabilitation impact of a branch closing on the local community. Branch and permanent financing to an organization that provides hours vary by location and are based on customer conveaffordable housing, and has funded a commitment to a nience and local competition. In the Rochester MSA, 36 not-for-profit agency that purchases homes and refurbishes percent of Bank's branches are in low- to moderate-income them for affordable housing. In addition, Bank has commit- census tracts, including five branches in the areas identified ted $200,000 annually to an association of five local banks by Protestant, more than any other bank. In the Syracuse and a non-profit business development corporation, which MSA, 29 percent of its branches are in low- to moderatewill focus on and service small business loans under income census tracts. $50,000 and will emphasize businesses owned by women and minorities. 11. In addition, the 1994 Examination noted that the directed call program reached 66 organizations involved with affordable housing development, 10. A fixed-rate, HUD-insured loan product only available in New York. community development, and rehabilitation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 313 E. Conclusion must obtain the approval of the Board to establish a branch, agency, commercial lending company, or repre- The Board has carefully considered the entire record, in- sentative office in the United States under the Foreign cluding Protestant's comments and Bank's CRA record of Bank Supervision Enhancement Act of 1991, which performance. In light of all the facts of record, the Board amended the IBA. believes that Bank's efforts to help meet the credit needs of Notice of the application, affording interested persons all segments of its communities, including low- and an opportunity to submit comments, has been published moderate-income neighborhoods, are consistent with ap- in a newspaper of general circulation in New York, New proval of these applications and that Protestant's comments York (New York Post, October 22, 1992). The time for do not warrant their denial. filing comments has expired and the Board has considered the application and all comments received. Other Considerations Bank, with assets of $2.7 billion,1 is the seventh largest bank in Turkey. It operates more than 300 branch The Board has also concluded that the factors it is required offices in Turkey, and has representative offices in Gerto consider under section 9 of the Federal Reserve Act and many and Austria. The General Directorate of Foundaregulations thereunder, including Bank's financial condi- tions, an agency of the Turkish government, owns 80 tion, the general character of its management, and the percent of Bank's shares. Bank's pension fund owns the proposed exercise of corporate powers, are consistent with remainder of Bank's shares. approval of these applications. Bank currently operates a representative office in New Based on the foregoing and all other facts of record, York. Bank does not engage in nonbanking activities in including commitments made by Bank, the Board has deter- the United States and would be a qualifying foreign mined that the applications should be, and hereby are, banking organization within the meaning of Regulaapproved. The Board's approval is specifically conditioned tion K after establishing the proposed branch. 12 C.F.R. on all commitments made in connection with applications. 211.23(b). The commitments and conditions relied on by the Board are In order to approve an application by a foreign bank to deemed conditions imposed in writing by the Board in establish a branch in the United States, the IBA and connection with its findings and decision, and, as such, may Regulation K require the Board to determine that the be enforced in proceedings under applicable law. This ap- foreign bank applicant engages directly in the business of proval is subject to completion of the facilities and their banking outside the United States and has furnished the being in operation within one year of the date of this order, Board with the information it needs to assess adequately and to approval by the appropriate state authorities. the application. The Board also must determine that each By order of the Board of Governors, effective of the foreign bank applicant and any foreign bank parent January 25, 1995. is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisors. Voting for this action: Chairman Greenspan, and Governors 12 U.S.C. § 3105(d)(2); 12 C.F.R. 211.24(c)(1). The IBA Lindsey, Phillips, and Yellen. Absent and not voting: Vice Chair- and Regulation K also permit the Board to take into man Blinder and Governors Kelley and LaWare. account additional standards. 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2). JENNIFER J. JOHNSON Bank engages directly in the business of banking outside Deputy Secretary of the Board of the United States through its banking operations in Turkey. Bank also has provided the Board with the information necessary to assess the application through submissions ORDERS ISSUED UNDER INTERNATIONAL BANKING that address the relevant issues. ACT Regulation K provides that a foreign bank will be considered to be subject to comprehensive supervision or regula- Turkiye Vakiflar Bankasi, T.A.O. tion on a consolidated basis if the Board determines that the Ankara, Turkey bank is supervised and regulated in such a manner that its home country supervisor receives sufficient information on Order Approving Establishment of a Branch the bank's worldwide operations, including its relationship to any affiliate, to assess the bank's overall financial condi- Turkiye Vakiflar Bankasi, T.A.O. ("Bank"), Ankara, tion and its compliance with law and regulation. 12 C.F.R. Turkey, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 7(d) of the IBA (12 U.S.C. § 3105(d)) to establish a statelicensed branch in New York, New York. A foreign bank 1. Financial data are as of September 30, 1994, unless otherwise noted. 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314 Federal Reserve Bulletin • March 1995 211.24(c)(1).2 In making its determination under this stan- Bank's internal auditors conduct annual audits of individdard, the Board has considered the following information. ual branches, departments, and units of Bank. At least two Bank is supervised primarily by the Turkish Undersecre- auditors who represent the interests of Bank's shareholders tariat of Treasury and Foreign Trade (the "Treasury") hold non-voting seats on Bank's board of directors. These through its Banking Directorate and the Board of Sworn auditors review and approve all quarterly and annual finan- Auditors ("Auditors"), as well as by the Central Bank of cial statements that are submitted to the Treasury and the Turkey ("Central Bank"). The Treasury serves as Bank's Central Bank. Bank's annual financial reports also must be primary home country supervisor. As a state-owned institu- reviewed by an independent external auditor that has been tion, Bank is also subject to supervision by the Prime certified by the Turkish Board of Independent Auditors. The Ministry Supreme Board of Supervisors ("Board of Super- auditor's report assesses whether Bank has conformed to visors"). To monitor the condition of Bank, these supervi- international generally accepted accounting principles, and sory authorities use information obtained through on-site reviews asset quality, liquidity, adequacy of loan loss reexaminations, periodic financial and other reporting, meet- serves, and capitalization. All external audit reports must be ings with Bank management, and information exchanges submitted to the Treasury and the Central Bank. among the authorities. The Treasury obtains information and monitors the condi- The Treasury assumes the leading role in the supervision of tion of Bank's affiliates through review of periodic financial Bank through annual on-site targeted or comprehensive exam- statements, consultation with other regulatory entities, and inations. These examinations are conducted by the Auditors through examination, if necessary. In addition, Turkish law and include review of Bank's capital adequacy, asset quality, imposes lending and other limits on Bank's transactions managerial resources, and compliance with applicable banking with affiliates. The Treasury monitors Bank's compliance regulations. The Auditors also conduct periodic special exami- with these limits through regular reports submitted by Bank. nations and audits of institutions that engage in or are sus- Turkish banking law also limits Bank's investments in nonpected of engaging in questionable activities. financial companies. The Treasury and the Central Bank also monitor Bank's A single directorate within the Treasury has overall recondition through review of periodic financial reports. Bank is sponsibility for supervising Bank's banking, leasing, insurrequired to submit to the Treasury and to the Central Bank ance, factoring, and capital markets activities and affiliates. various weekly, monthly, quarterly, and annual financial state- The Treasury exercises its supervisory authority over these ments, including balance sheets and income statements for affiliates by reviewing quarterly and annual balance sheets Bank's headquarters and domestic and foreign branches. Bank and income statements, and by conducting on-site examinaalso is required to submit annual reports to the Treasury, the tions, if necessary. The Turkish Board of Securities also Turkish Ministry of Industry and Commerce, and the Central regulates Bank's affiliates engaged in capital markets activ- Bank on the financial position and transactions of all branches ities, and shares information with the Treasury concerning abroad. Recently enacted amendments to Turkish banking law the condition of these affiliates. Bank's internal auditors will require Bank to submit separate audited balance sheets submit reports to the Treasury on their reviews of affiliates and income statements for all affiliated companies to the Trea- in which Bank holds a controlling interest. sury on an annual basis.3 The Board of Supervisors receives The Central Bank receives substantially similar reporting regulatory reports prepared by Bank, including those relating from Bank and consults regularly with the Treasury on the to affiliates, and has the authority to investigate, inspect, and condition and activities of Bank and its affiliates engaged in audit affiliates. financial activities. In addition, the Board of Supervisors notifies the Treasury of problems identified during inspections of Bank and its affiliates. 2. In assessing this standard, the Board considers, among other factors, the Based on all the facts of record, which include the extent to which the home country supervisors: information described above, the Board concludes that Bank (i) Ensure that the bank has adequate procedures for monitoring and controlling its activities worldwide; is subject to comprehensive supervision and regulation on a (ii) Obtain information on the condition of the bank and its subsidiaries consolidated basis by its home country supervisors. and offices through regular examination reports, audit reports, or other- The Board has also taken into account the additional wise; (iii) Obtain information on the dealings with and relationship between standards set forth in section 7 of the IBA and Regulathe bank and its affiliates, both foreign and domestic; tion K. See 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. (iv) Receive from the bank financial reports that are consolidated on a 211.24(c)(2). Bank has received the consent of the Treasury worldwide basis, or comparable information that permits analysis of the bank's financial condition on a worldwide consolidated basis; and to establish the proposed state-licensed branch. In addition, (v) Evaluate prudential standards, such as capital adequacy and risk subject to certain conditions, the Treasury may share inforasset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No single mation on Bank's operations with other supervisors, includfactor is essential and other elements may inform the Board's determination. ing the Board. 3. Under Turkish banking law, an ownership interest of 10 percent or more Bank is in compliance with risk-based capital standards of a company's voting stock triggers certain reporting obligations and requirements governing transactions with affiliates. adopted by Turkey, which conform generally to the Basle Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 315 Capital Accord, with some variation for Turkish accounting should be, and hereby is, approved. Should any restrictions practices. In addition, Bank's capital is in excess of the on access to information on the operations or activities of minimum levels that would be required by the Basle Capital Bank or any of its affiliates subsequently interfere with the Accord and is considered equivalent to capital that would Board's ability to determine the safety and soundness of be required of a U.S. banking organization. Managerial and Bank's U.S. operations or compliance by Bank or its affiliother financial resources of Bank are also considered consis- ates with applicable Federal statutes, the Board may require tent with approval in light of commitments and conditions termination of any of Bank's direct or indirect activities in reflected in the record. Bank appears to have the experience the United States. Approval of this application is also and capacity to support the proposed branch and has estab- specifically conditioned on compliance by Bank with the lished controls and procedures for its U.S. offices to ensure commitments made in connection with this application, and compliance with U.S. law. with the conditions in this order.4 The commitments and Finally, Bank has committed to make available to the conditions referred to above are conditions imposed in Board such information on the operations of Bank and any writing by the Board in connection with its decision, and of its affiliates that the Board deems necessary to determine may be enforced in proceedings under 12 U.S.C. § 1818 or and enforce compliance with the IB A, the Bank Holding 12 U.S.C. § 1847 against Bank, including its offices and its Company Act of 1956, as amended, and other applicable affiliates. Federal law, to the extent not prohibited by law or regula- By order of the Board of Governors, effective tion. The Board has reviewed the restrictions on disclosure January 4, 1995. in Turkey and has communicated with certain government authorities concerning access to information. Bank has com- Voting for this action: Chairman Greenspan, Vice Chairman mitted to cooperate with the Board to obtain any approvals Blinder, and Governors Kelley, LaWare, Lindsey, Phillips, and Yellen. or consents that may be needed to gain access to information that may be requested by the Board. In light of these JENNIFER J. JOHNSON commitments and other facts of record, and subject to the Deputy Secretary of the Board condition described below, the Board concludes that Bank has provided adequate assurances of access to any necessary information the Board may request. 4. The Board's authority to approve the establishment of the proposed branch office parallels the continuing authority of the State of New York to On the basis of all the facts of record, and subject to all license offices of a foreign bank. The Board's approval of this application commitments made by Bank, as well as the terms and does not supplant the authority of the State of New York, and its agent, the New York State Banking Department, to license the proposed branch office conditions set forth in this order, the Board has determined of Bank in accordance with any terms or conditions that the State of New that Bank's application to establish a state-licensed branch York may impose. ACTIONS TAKEN UNDER SECTIONS 5(D)(3) AND 18(C) OF THE FEDERAL DEPOSIT INSURANCE 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. Acquiring Acquired Approval Bank(s) Thrift Date SouthTrust Bank of West Florida, Anchor Savings Bank, Federal Savings January 11, 1995 St. Petersburg, Florida Bank, Hewlett, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

316 Federal Reserve Bulletin • March 1995 ACTIONS TAKEN UNDER SECTIONS 5(D)(3) AND 18(C) OF THE FEDERAL DEPOSIT INSURANCE 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. Acquiring Acquired Reserve Approval Bank(s) Thrift Bank Date Crestar Bank, TideMark Bank, Richmond January 19, 1995 Richmond, Virginia Newport News, Virginia APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Effective Applicant(s) Bank(s) Date Bank of Boston Corporation, Bank of Boston (Maine), January 30, 1995 Boston, Massachusetts National Association, BancBoston Holdings, Inc., South Portland, Maine Boston, Massachusetts Paladon Management Co., Inc. Panhandle Bancshares, Inc., January 18, 1995 Panhandle, Texas Panhandle, Texas Paladon Investments, Ltd., First National Bank of Panhandle, Panhandle, Texas Panhandle, Texas Section 4 Effective Applicant(s) Bank(s) Date Bank of Boston Corporation, Ganis Credit Corporation, January 20, 1995 Boston, Massachusetts Newport Beach, California Thor Credit Corporation, Newport Beach, California Dacotah Bank Holding Co., Grue Abstract Company, January 27, 1995 Aberdeen, South Dakota Webster, South Dakota Signet Banking Corporation, Signet Strategic Capital Corporation, January 6, 1995 Richmond, Virginia Richmond, Virginia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 317 APPUCATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant(s) Bank(s) Bank Date The Aurora Holding Company, State Bank of Aurora, Minneapolis January 13, 1995 Aurora, Minnesota Aurora, Minnesota Bancook Corporation, The First National Bank of Kansas City January 4, 1995 Cook, Nebraska Summerfield, Summerfield, Kansas Boatmen's Bancshares, Inc., Salem Community Bancorp, St. Louis January 23, 1995 St. Louis, Missouri Inc., Salem, Illinois Boatmen's-Illinois, Inc., Boatmen's Bank of South St. Louis January 23, 1995 St. Louis, Missouri Central Illinois, Mt. Vernon, Illinois Citizens National Corporation, The First National Bank of Kansas City January 12, 1995 Wisner, Nebraska Attica, Attica, Kansas CNB Bancshares, Inc., The Bank of Orleans, St. Louis January 11, 1995 Evansville, Indiana Orleans, Indiana Commerce Bancshares, Inc., Cotton Exchange Kansas City January 18, 1995 Kansas City, Missouri Bancshares, Inc., Kennett, Missouri Commerce Bancshares, Inc., UBI Financial Services, Inc., Kansas City January 24, 1995 Kansas City, Missouri Wichita, Kansas Commerce Bancshares, Inc., Union Bancshares, Inc., Kansas City January 24, 1995 Kansas City, Missouri Wichita, Kansas Community First BancShares, Inc. Community First Bank, Cleveland January 5, 1995 Forest, Ohio N.A., Forest, Ohio FBOP Corporation, North Houston Bank, Chicago January 20, 1995 Oak Park, Illinois Houston, Texas Firstar Corporation, First Moline Financial Chicago January 9, 1995 Milwaukee, Wisconsin Corp., Firstar Corporation of Iowa, Moline, Illinois Des Moines, Iowa First Banks, Inc., CCB Bancorp, Inc., St. Louis January 13, 1995 Clayton, Missouri Santa Ana, California Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

318 Federal Reserve Bulletin • March 1995 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date First Bank System, Inc., First Bank, Fergus Falls, Minneapolis January 10, 1995 Minneapolis, Minnesota National Association, Fergus Falls, Minnesota First Bank Grand Rapids, National Association, Grand Rapids, Minnesota First Bank Maple Grove, National Association, Maple Grove, Minnesota First Bank Minneapolis South, National Association, Minneapolis, Minnesota First Bank Saint Cloud, National Association, Saint Cloud, Minnesota Liberty Industrial Bank, Kansas City First State Bancshares, Inc., January 18, 1995 Scottsbluff, Nebraska Colorado Springs, Colorado Heritage Bancorp, Inc., Heritage Bank, Inc., Cleveland January 4, 1995 Burlington, Kentucky Burlington, Kentucky HF Limited Partnership, Wood & Huston Kansas City January 3, 1995 Marshall, Missouri Bancorporation, Inc., Marshall, Missouri KeyCorp, OmniBancorp, Cleveland January 4, 1995 Cleveland, Ohio Denver, Colorado Marshall & Ilsley Corporation, Financial Services Chicago January 13, 1995 Milwaukee, Wisconsin Corporation of the Midwest, Rock Island, Illinois Menard Bancshares, Inc., Menard National Bank, Dallas December 30, 1994 Menard, Texas Menard, Texas Mission-Heights Management Prime Bancshares, Inc., Dallas December 30, 1994 Company, Ltd., Channelview, Texas Channelview, Texas Norwest Corporation, First National Bank of Bay Minneapolis January 5, 1995 Minneapolis, Minnesota City, Bay City, Texas Norwest Corporation, Independent Bancorp of Minneapolis January 12, 1995 Minneapolis, Minnesota Arizona, Inc., Phoenix, Arizona Pea River Capital Corporation, The Peoples Bank of Coffee Atlanta January 6, 1995 Elba, Alabama County, Elba, Alabama Philipps Investment Company Gratiot Bancshares, Inc., Chicago January 5, 1995 Limited Partnership, Gratiot, Wisconsin Spring Hill, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 319 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank Date Philipps Investments Limited Gratiot Bancshares, Inc., Chicago January 5, 1995 Partnership, Gratiot, Wisconsin Wapiti, Wyoming Shawmut National Corporation, Shawmut Bank New York, Boston January 24, 1995 Hartford, Connecticut National Association, Shawmut National Corporation, Schenectady, New York Boston, Massachusetts Northeast Federal Corp., Hartford, Connecticut Tilden Bancshares, Inc., Tilden Enterprises, Inc., Kansas City January 4, 1995 Tilden, Nebraska Tilden, Nebraska Triangle Bancorp, Inc., Atlantic Community Richmond January 23, 1995 Raleigh, North Carolina Bancorp, Inc., Rocky Mount, North Carolina Union Bancshares, Inc., CBI-Central Kansas, Inc., Kansas City January 24, 1995 Wichita, Kansas Kansas City, Missouri West Bancorp, Inc., Bankers' Bank of the West, Kansas City January 20, 1995 Denver, Colorado Denver, Colorado Wes-Tenn Bancorp, Inc., West Tennessee Financial St. Louis January 10, 1995 Covington, Tennessee Corporation, Selmer, Tennessee Winton Jones Limited Partnership, First National Bank of Minneapolis January 19, 1995 Wayzata, Minnesota Farmington, Anchor Bancorp, Inc., Farmington, Minnesota Wayzata, Minnesota Section 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date American National Corporation, ANB Mezzanine Chicago December 30, 1994 Chicago, Illinois Corporation, Chicago, Illinois Associated Bank-Corp, Associated Investment Chicago January 19, 1995 Green Bay, Wisconsin Services, Inc., Green Bay, Wisconsin Associated Brokerage, Inc., Green Bay, Wisconsin Associated Financial Center, Ltd., Menomonee Falls, Wisconsin Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

320 Federal Reserve Bulletin • March 1995 Section 4—Continued Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date BanPonce Corporation, Popular International Bank, New York January 20, 1995 Hato Rey, Puerto Rico Hato Rey, Puerto Rico BanPonce Financial, Inc., Mt. Laurel, New Jersey Banco Popular, Federal Savings Bank, Newark, New Jersey Cabot Bankshares, Inc., Bank of Cabot Mortgage St. Louis January 19, 1995 Cabot, Arkansas Company, Cabot, Arkansas Crestar Financial Corporation, TideMark Bancorp, Inc., Richmond January 19, 1995 Richmond, Virginia Newport News, Virginia Firstar Corporation, Investors Insurance Agency, Chicago January 26, 1995 Milwaukee, Wisconsin Inc., Firstar Corporation of Minnesota, Wayzata, Minnesota Bloomington, Minnesota First United Bancorporation, Eagle Finance Company, Richmond December 30, 1994 Anderson, South Carolina Inc., Hartsville, South Carolina Huxley Bancorp, to engage in the activity of Chicago December 30, 1994 Huxley, Iowa making and servicing loans by purchasing loan participations, in an aggregate amount, up to $500 thousand Norwest Corporation, Norwest Investment Minneapolis January 5, 1995 Minneapolis, Minnesota Services, Inc., Minneapolis, Minnesota Premier Bankshares Corporation, Premier Trust Company, Richmond December 29, 1994 Bluefield, Virginia Bluefield, Virginia Security State Agency of Aitkin, Norshor Agency, Inc., Minneapolis January 12, 1995 Inc., Aitkin, Minnesota Aitkin, Minnesota Sections 3 and 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank Date Stearns Financial Services, Inc., Stearns Financial Services, Minneapolis January 18, 1995 Employee Stock Ownership Plan, Inc., Albany, Minnesota Albany, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 321 APPUCATIONS 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 BancFirst, State National Bank, Kansas City January 24, 1995 Oklahoma City, Oklahoma Marlow, Oklahoma First Interstate Bank of Commerce, First Citizens Bank of Minneapolis January 12, 1995 Billings, Montana Bozeman, Bozeman, Montana Triangle East Bank, Standard Bank and Trust Richmond January 10, 1995 Raleigh, North Carolina Company, Dunn, North Carolina Columbus National Bank, Whiteville, North Carolina Triangle East Bank, Unity Bank & Trust Richmond January 23, 1995 Raleigh, North Carolina Company, Rocky Mount, North Carolina PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Jackson v. Board of Governors, No. 94-16789 (9th Cir., Federal Reserve Banks in which the Board of Governors is filed September 22, 1994). Appeal of dismissal of pro se not named a party. action for violation of a prisoner's civil rights. On December 1, 1994, the court dismissed the appeal. Board of Governors v. MacCallum, No. 94 Civ. 5652 (WK) Kuntz v. Board of Governors, No. 95-3044 (6th Cir., filed (S.D. New York, filed August 3, 1994). Action to freeze January 12, 1995). Petition for review of a Board order assets of individual pending administrative adjudication dated December 19, 1994, approving an application by of civil money penalty assessment by the Board. On KeyCorp, Cleveland, Ohio, to acquire BANKVERMONT August 3, 1994, the court issued an order temporarily Corp., Burlington, Vermont. restraining the transfer or disposition of the individual's In re Subpoena Duces Tecum, Misc. No. 95-06 (D.D.C., assets. On December 22, 1994, the order was dissolved filed January 6, 1995). Action to enforce subpoena seek- by agreement of the parties. ing pre-decisional supervisory documents. The Board In re Subpoena Duces Tecum, No. 94-MS-214 (D. D.C., filed its opposition on January 20,1995. filed June 27, 1994). Subpoena enforcement case in Cavallari v. Board of Governors, No. 94-4183 (2d Cir., which the plaintiff in a securities fraud class action seeks filed October 17, 1994). Petition for review of Board examination reports and internal Board memos. The order of prohibition against a former outside counsel Board's opposition to subpoena was filed on July 8, to a national bank (80 Federal Reserve Bulletin 1046 1994. (1994)). The case was consolidated with a petition for National Title Resource Agency v. Board of Governors, review of orders of the Comptroller of the Currency No. 94-2050 (8th Cir., filed April 28, 1994). Petition imposing a civil money penalty and cease and desist for review of Board's order, issued under section 4 of order against petitioner (Cavallari v. OCC, No. 94- the Bank Holding Company Act, approving the appli- 4151). The agencies filed their consolidated brief on cation of Norwest Corp., Minneapolis, Minnesota, to January 17, 1995. acquire Double Eagle Financial Corp., Phoenix, Ari- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

322 Federal Reserve Bulletin • March 1995 zona, and its subsidiary, United Title Agency, Inc., and FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD thereby engage in title insurance agency activities and OF GOVERNORS real estate settlement services (80 Federal Reserve Bulletin 453 (1994)). On January 10, 1995, the court DLG Financial Corp. denied the petition and affirmed the Board's order. The Woodlands, Texas Beckman v. Greenspan, No. CV 94-41-BCG-RWA (D. Mont., filed April 13, 1994). Action against Board and The Federal Reserve Board announced on January 18,1995, others seeking damages for alleged violations of constitu- the issuance of a Combined Consent Order of Assessment tional and common law rights. The Board's motion to of Civil Money Penalties against DLG Financial Corp., The dismiss was filed May 19, 1994. Woodlands, Texas, and an Order of Prohibition against Scott v. Board of Governors, No. 94-0104 (D. D.C., filed Daniel S. De La Garza, the president and sole shareholder January 21, 1994). Petition for review of a Board order of DLG Financial. approving the application of Society Corporation, Cleveland, Ohio, to merge with KeyCorp, Albany, New York Sunnie S. Kim (80 Federal Reserve Bulletin 253 (1994)). On Decem- Los Angeles, California ber 7, 1994, the court granted the Board's motion to The Federal Reserve Board announced on January 18, 1995, dismiss. the joint issuance with the Office of the Comptroller of the In re Subpoena Duces Tecum, Misc. Nos. 93-261 and Currency of a Cease and Desist Order against Sunnie S. Kim, a 93-260 (D. D.C., filed August 17, 1993). Subpoena former officer of the NARA Bank, N.A., Los Angeles, Califorenforcement case in which plaintiff seeks examination nia, and the California Center Bank, Los Angeles, California. and other supervisory material in connection with a shareholder derivative action against a bank holding company. On January 25, 1995, the court granted in part and denied in part the plaintiff's motion to compel WRITTEN AGREEMENTS APPROVED BY FEDERAL production. On January 26, 1995, the plaintiff filed his RESERVE BANKS notice of appeal. Bennett v. Greenspan, No. 93-1813 (D. D.C., filed April 20, RT. Bank Ekspor Impor Indonesia (Persero) 1993). Employment discrimination action. A jury verdict Jakarta, Indonesia for the plaintiff was rendered on October 13, 1994. The The Federal Reserve Board announced on January 18,1995, Board's motion for a new trial on the issue of damages the execution of a Written Agreement between the Federal was denied on January 9, 1995. Reserve Bank of New York, the Superintendent of Banks of Zemel v. Board of Governors, No. 92-1056 (D. D.C., filed the State of New York, and the P.T. Bank Ekspor Impor May 4, 1992). Age Discrimination in Employment Act Indonesia (Persero), Jakarta, Indonesia. case. On November 29, 1994, the court granted the Board's motion for summary judgment. P.T. Bank Niaga Board of Governors v. Ghaith R. Pharaon, No. 91-CIV- Jakarta, Indonesia 6250 (S.D. New York, filed September 17,1991). Action to freeze assets of individual pending administrative adju- The Federal Reserve Board announced on January 26, 1995, dication of civil money penalty assessment by the Board. the execution of a Second Amendment to the Written On September 17, 1991, the court issued an order tempo- Agreement, dated January 8, 1993, involving the Federal rarily restraining the transfer or disposition of the individ- Reserve Bank of San Francisco, and the P.T. Bank Niaga, ual's assets. Jakarta, Indonesia, and its Los Angeles Agency. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 Financial and Business Statistics CONTENTS WEEKLY REPORTING COMMERCIAL BANKS A3 Guide to Tabular Presentation Assets and liabilities A21 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 A3 3 Federal and federally sponsored credit A12 Maturity distribution of loan and security agencies—Debt outstanding holdings MONETARY AND CREDIT AGGREGATES SECURITIES MARKETS AND CORPORATE FINANCE A13 Aggregate reserves of depository institutions and monetary base A34 New security issues—Tax-exempt state and local A14 Money stock, liquid assets, and debt measures governments and corporations A16 Deposit interest rates and amounts outstanding— A35 Open-end investment companies—Net sales commercial and BIF-insured banks and assets A17 Bank debits and deposit turnover A3 5 Corporate profits and their distribution A35 Nonfarm business expenditures on new plant and equipment 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 • March 1995 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 A3 8 Mortgage debt outstanding A58 Banks' own claims on foreigners A59 Banks' own and domestic customers' claims on CONSUMER INSTALLMENT CREDIT foreigners 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 A53 U.S. international transactions—Summary A54 U.S. foreign trade A54 U.S. reserve assets A54 Foreign official assets held at Federal Reserve 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 Nonfinancial Statistics • March 1995 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1994 1994 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q1 Q2 Q3 Q4 Aug. Sept. Oct/ Nov/ Dec. Reserves of depository institutions2 1 Total 3.1 -4.4 -2.5 -3.7 -6.0 -.7 -6.3 -3.2 -.2 2 Required 2.5 -3.6 -2.6 -3.2 -4.0 -1.9 -1.2 -7.4 -3.1 3 Nonborrowed 3.7 -5.4 -4.2 -2.4 -6.3 -1.1 -4.2 -.6 .6 4 Monetary base3 10.2 8.4 7.3 6.4 6.4r 5.5r 6.8 8.9 1.8 Concepts of money, liquid assets, and debf4 5 Ml 6.0 1.9 3.0 -1.4 -2.2 ,9r -3.5 -.9 .0 6 M2 2.1r 1.7r .9r -.5 -1.9 -.4 -1.7 .5 1.9 7 M3 .5r .5' 1.9r 1.9 -1.9 1.4f 2.5 2.1 4.3 8 L 2.6r 1.3r 1.3r n.a. -1.6 -1.2r 6.6 2.8 n.a. 9 Debt 5.3 5.6 4.4 n.a. 6.2 5.7 4.4 6.3 n.a. Nontransaction components 10 In M25 .3r 1.6r .0r -.1 -1.8 -l.lr -.7 1.3 2.8 11 In M3 only6 -8.0 -5.6r 7.4r 15.1 -2.2r 11.7r 25.0 10.6 17.1 Time and savings deposits Commercial banks 12 Savings, including MMDAs 4.3 -3.3 -4.1 -8.5 -2.8 -3.6 -12.1 -9.9 -11.5 13 Small time7 -5.2 .1 8.9 16.8 15.1 12.6 17.5 17.5 21.4 14 Large time8'9 -2.6 -2.1r 9.3r 20.4 12.1r 19.3' 21.5 23.7 17.5 Thrift institutions 15 Savings, including MMDAs .5 .2 -11.1 -17.7 -16.7 -16.9 -15.7 -21.5 -21.0 16 Small time7 - 10.7r -5.9r -2.1r 9.6 -3.5r 2.0r 13.4 19.8 5.7 17 Large time8 -8.5 -4.5r 6.8r 14.2 —5.8r 23.4r 23.0 5.6 5.6 Money market mutual funds 18 General purpose and broker-dealer 1.2r 13.2r 2.1r 8.3 -2.0 -2.0 9.3 15.9 20.9 19 Institution-only -26.7 -22.8 -6.0 15.3 -11.2 -9.9 52.9 2.1 6.8 Debt components4 20 Federal 7.3 5.4 3.9 n.a. 6.1 6.0 5.4 8.5 n.a. 21 Nonfederal 4.6 5.6 4.6 n.a. 6.3 5.5r 4.1 5.5 n.a. 1. Unless otherwise noted, rates of change are calculated from average amounts Kingdom and Canada, and (3) balances in both taxable and tax-exempt, institution-only outstanding during preceding month or quarter. money market funds. Excludes amounts held by depository institutions, the U.S. govern- 2. Figures incorporate adjustments for discontinuities, or "breaks," associated with ment, money market funds, and foreign banks and official institutions. Also excluded is regulatory changes in reserve requirements. (See also table 1.20.) the estimated amount of overnight RPs and Eurodollars held by institution-only money 3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally market funds. Seasonally adjusted M3 is computed by adjusting its non-M2 component as adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency a whole and then adding this result to seasonally adjusted M2. component of the money stock, plus (3) (for all quarterly reporters on the "Report of L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters securities, commercial paper, and bankers acceptances, net of money market fund holdwhose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted ings of these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, difference between current vault cash and the amount applied to satisfy current reserve short-term Treasury securities, commercial paper, and bankers acceptances, each seasonrequirements. ally adjusted separately, and then adding 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 vaults of nonfinancial sectors—the federal sector (U.S. government, not including governmentdepository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all sponsored enterprises or federally related mortgage pools) and the nonfederal sectors commercial banks other than those owed to depository institutions, the U.S. government, (state and local governments, households and nonprofit organizations, nonfinancial corpoand foreign banks and official institutions, less cash items in the process of collection and rate and nonfarm noncorporate businesses, and farms). Nonfederal debt consists of Federal Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable mortgages, tax-exempt and corporate bonds, consumer credit, bank loans, commercial order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository paper, and other loans. The data, which are derived from the Federal Reserve Board's flow institutions, credit union share draft accounts, and demand deposits at thrift institutions. of funds accounts, are break-adjusted (that is, discontinuities in the data have been Seasonally adjusted Ml is computed by summing currency, travelers checks, demand smoothed into the series) and month-averaged (that is, the data have been derived by deposits, and OCDs, each seasonally adjusted separately. averaging adjacent month-end levels). M2: Ml plus (1) overnight (and continuing contract) repurchase agreements (RPs) 5. Sum of (1) overnight RPs and overnight Eurodollars, (2) money market fund issued by all depository institutions and overnight Eurodollars issued to US. residents by balances (general purpose and broker-dealer), (3) savings deposits (including MMDAs), foreign branches of U.S. banks worldwide, (2) savings (including MMDAs) and small and (4) small time deposits. time deposits (time deposits—including retail RPs—in amounts of less than $100,000), 6. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. residents, and (3) balances in both taxable and tax-exempt general-purpose and broker-dealer and (4) money market fund balances (institution-only), less (5) a consolidation adjustment money market funds. Excludes individual retirement accounts (IRAs) and Keogh balances that represents the estimated amount of overnight RPs and Eurodollars held by institutionat depository institutions and money market funds. Also excludes all balances held by only money market funds. This sum is seasonally adjusted as a whole. U.S. commercial banks, money market funds (general purpose and broker-dealer), foreign 7. Small time deposits—including retail RPs—are those issued in amounts of less governments and commercial banks, and the U.S. government. Seasonally adjusted M2 is than $100,000. All IRA and Keogh account balances at commercial banks and thrift computed by adjusting its non-Mi component as a whole and then adding this result to institutions are subtracted from small time deposits. seasonally adjusted Ml. 8. Large time deposits are those issued in amounts of $100,000 or more, excluding M3: M2 plus (1) large time deposits and term RP liabilities (in amounts of $100,000 or those booked at international banking facilities. more) issued by all depository institutions, (2) term Eurodollars held by U.S. residents at 9. Large time deposits at commercial banks less those held by money market funds, foreign branches of U.S. banks worldwide and at all banking offices in the United depository institutions, the U.S. government, and foreign banks and official institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT1 Millions of dollars Average of Average of daily figures for week ending on date indicated daily figures 1994 Nov. 16 Nov. 23 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 394,856 399,252' 405,187 399,576 400,702 400,887' 400,295 402,024 405,775 U.S. government securities 2 Bought outright—System account 354,275 357,686 364,374 358,166 359,509 359,214 363,847 364,693 364,572 3 Held under repurchase agreements 1,648 2,899 3,278 2.743 3,553 3,134 0 718 3,086 Federal agency obligations 4 Bought outright 3,772 3,730 3,653 3.744 3,744 3,684 3,674 3,661 3,644 5 Held under repurchase agreements 349 969 648 807 1,193 1,694 0 300 1,157 6 Acceptances 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 20 103 87 40 57 97 111 28 133 8 Seasonal credit 344 159 101 164 140 127 97 91 104 9 Extended credit 0 0 0 0 0 0 0 0 0 10 Float 559 720' 825 705 764 674' 874 575 834 11 Other Federal Reserve assets 33,890 32,987 32,220 33,208 31,743 32,264 31,692 31,957 32,244 12 Gold stock 11,054 11,052 11,051 11,052 11,052 11,051 11,051 11,051 11,051 13 Special drawing rights certificate account 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 14 Treasury currency outstanding 22,825r 22,905' 22,972 22,899' 22,917' 22,934' 22,948 22,962 22,976 ABSORBING RESERVE FUNDS 15 Currency in circulation 388,884' 393,906' 398,876 394,309' 394,280' 396,145' 396,044 397,003 398,301 16 Treasury cash holdings 367 379 350 371 396 390 383 347 342 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,553 5,250 6,113 5,225 4,821 5,351 4,337 6,044 6,697 18 Foreign 192 192 195 181 197 224 175 189 178 19 Service-related balances and adjustments .. 4,849 4,612' 4,573 4,685 4,537 4,451' 4,454 4,876 4,546 20 Other 336 316 342 318 310 302 317 320 317 21 Other Federal Reserve liabilities and capital . 11,724 12,020 12,000 11,755 12,098 11,902 11,246 11,706 12,403 22 Reserve balances with Federal Reserve Banks 24,848 24,553' 24,778 24,701 26,049 24,125' 25,356 23,570 25,035 End-of-month figures Wednesday figures Nov. Nov. 23 Nov. 30 Dec. 7 Dec. 14 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding /395,756 411,369 399,901 403,171 402,176' 398,397 402,658 408,235 U.S. government securities 2 Bought outright—System account 352,313 359,190 364,519 358,817 359,627 359,190 360,535 364,100 365,323 3 Held under repurchase agreements 3,615 6,510 9,565 3,310 4,306 6,510 0 1,675 5,120 Federal agency obligations 4 Bought outright 3,744 3,674 3,637 3,744 3,744 3,674 3,674 3,644 3,644 5 Held under repurchase agreements 400 1,655 1,025 850 2,050 1,655 0 700 100 6 Acceptances 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 17 31 148 16 338 31 720 22 811 8 Seasonal credit 247 113 75 163 131 113 93 97 104 9 Extended credit 0 0 0 0 0 0 0 0 0 10 Float 579 -424' -715 1,317 930 -424' 1,541 244 657 11 Other Federal Reserve assets 34,841 31,428 33,115 31,685 32,046 31,428 31,834 32,177 32,476 12 Gold stock 11,053 11,052 11,051 11,052 11,052 11,052 11,051 11,051 11,051 13 Special drawing rights certificate account 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 14 Treasury currency outstanding 22,865' 22,934' 23,004 22,899' 22,917' 22,934' 22,948 22,962 22,976 ABSORBING RESERVE FUNDS 15 Currency in circulation 389,682' 396,795' 403,853 394,665' 395,885' 396,795' 397,278 398,354 400,566 16 Treasury cash holdings 363 389 335 397 391 389 347 344 335 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,164 5,348 7,161 4,250 4,532 5,348 4,970 5,977 8,751 18 Foreign 223 230 250 184 198 230 166 206 192 19 Service-related balances and adjustments .. 4,782 4,451' 4,464 4,685 4,537 4,451' 4,454 4,876 4,546 20 Other 392 302 876 331 290 302 324 314 319 21 Other Federal Reserve liabilities and capital . 12,584 11,133 11,959 11,567 11,905 11,133 11,354 11,837 12,376 22 Reserve balances with Federal Reserve Banks' 24,502 25,532' 24,543 25,792 27,420 25,532' 21,519 22,782 23,194 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 float. 2. Includes securities loaned—fully guaranteed by US. government securities pledged with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • March 1995 1.12 RESERVES AND BORROWINGS Depository Institutions' Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1991 1992 1993 1994 Dec. Dec. Dec. June July Aug. Sept. Oct. Nov/ Dec. 1 Reserve balances with Reserve Banks2 25,368 29,374 24,637 26,502 25,996 25,284 25,157 24,745 24,715 24,637 2 Total vault cash-' 34,542 36,812 40,363 36,898 37,635 37,614 38,431 38,231 38,931 40,363 3 Applied vault cash4 31,172 33,484 36,682 33,422 34,096 34,052 34,794 34,745 35,291 36,682 4 Surplus vault cash5 3,370 3,328 3,681 3,476 3,539 3,562 3,637 3,486 3,640 3,681 5 Total reserves6 56,540 62,858 61,319 59,924 60,092 59,337 59,951 59,490 60,006 61,319 6 Required reserves 55,385 61,795 60,171 58,819 58,985 58,333 58,891 58,686 58,999 60,171 7 Excess reserve balances at Reserve Banks1 1,155 1,063 1,147 1,105 1,107 1,004 1,060 804 1,008 1,147 8 Total borrowings at Reserve Banks8 124 82 209 333 458 469 487 380 249 209 9 Seasonal borrowings 18 31 100 226 364 445 444 339 164 100 10 Extended credit9 1 0 0 0 0 0 0 0 0 0 Biweekly averages of daily figures for two week periods ending on dates indicated 1994 Aug. 31 Sept. 14 Sept. 28 Oct. 12 Oct. 26 Nov. 9 Nov. 23 Dec. 7r Dec. 21 Jan. 4 1 Reserve balances with Reserve Banks2 25,099 25,720 24,641 24,824 25,025 23,771 25,360 24,638 24,288 25,124 2 Total vault cash3 36,913 38,451 38,397 38,539 37,608 39,236 38,235 39,934 40,862 39,965 3 Applied vault cash4 33,455 34,839 34,700 35,138 34,137 35,506 34,677 36,245 37,082 36,428 4 Surplus vault cash5 3,458 3,612 3,697 3,401 3,472 3,730 3,558 3,689 3,780 3,538 5 Total reserves6 58,554 60,559 59,341 59,962 59,161 59,276 60,037 60,883 61,370 61,551 6 Required reserves 57,559 59,643 58,138 58,907 58,587 58,435 59,092 59,538 60,291 60,449 7 Excess reserve balances at Reserve Banks7 995 917 1,204 1,055 574 841 945 1,346 1,080 1,103 8 Total borrowings at Reserve Banks8 498 447 535 433 346 351 201 216 179 246 9 Seasonal borrowings 468 437 458 403 326 223 152 112 98 95 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 1. Data in this table also appear in the Board's H.3 (502) weekly statistical release. For cash applied during the maintenance period by "nonbound" institutions (that is, those ordering address, see inside front cover. whose vault cash exceeds their required reserves) to satisfy current reserve requirements. 2. Excludes required clearing balances and adjustments to compensate for float and 5. Total vault cash (line 2) less applied vault cash (line 3). 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 may be 7. Total reserves (line 5) less required reserves (line 6). used to satisfy reserve requirements. The maintenance period for weekly reporters ends 8. Also includes adjustment credit. sixteen days after the lagged computation period during which the vault cash is held. 9. Consists of borrowing at the discount window under the terms and conditions Before Nov. 25, 1992, the maintenance period ended thirty days after the lagged established for the extended credit program to help depository institutions deal with computation period. sustained liquidity pressures. Because there is not the same need to repay such borrowing 4. All vault cash held during the lagged computation period by "bound" institutions promptly as with traditional short-term adjustment credit, the money market impact of (that is, those whose required reserves exceed their vault cash) plus the amount of vault extended credit is similar to that of nonborrowed 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 Oct. 31 Nov. 7 Nov. 14 Nov. 21 Nov. 28 Dec. 5 Dec. 12 Dec. 19 Dec. 26 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 69,873 75,143 72,603 76,387 75,368 81,910 78,942 78,752 77,920 2 For all other maturities 15,923 16,685 14,817 17,343 15,334 13,801 13,651 14,003 14,640 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 16,902 17,835 18,979 20,140 18,621 18,989 17,824 17,600 22,326 4 For all other maturities 22,242 22,074 22,471 21,515 21,441 20,252 20,683 20,087 20,816 Repurchase agreements on US. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 22,000 22,406 23,109 25,838 17,864 24,632 19,819 20,422 20,530 6 For all other maturities 32,215 31,392 29,513 27,429 33,284 28,624 31,472 31,867 26,825 All other customers 7 For one day or under continuing contract 32,802 34,363 33,299 35,679 34,426 35,109 35,426 35,089 34,904 8 For all other maturities 17,134 16,875 16,955 17,389 19,759 17,824 18,391 18,726 19,546 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 59,630 60,309 61,075 60,169 63,006 64,465 63,841 70,480 73,660 10 To all other specified customers2 21,842 22,347 22,091 22,698 22,601 23,074 22,093 21,769 20,361 1. Banks with assets of $4 billion or more as of Dec .31,1988. 2. Brokers and nonbank dealers in securities, other depository institutions, foreign Data in this table also appear in the Board's H.S (507) weekly statistical release. For banks and official institutions, and U.S. government agencies, ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • March 1995 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk 2/ O 3/ n 9 5 Effective date Previous rate 2/ O 3/ n 9 5 Effective date Previous rate 2/ O 3/ n 9 5 Effective date Previous rate Boston 5.25 2/1/95 4.75 5.90 2/2/95 5.85 6.40 2/2/95 6.35 New York 2/1/95 Philadelphia 2/2/95 Cleveland 2/9/95 Richmond 2/1/95 Atlanta 2/2/95 Chicago 2/1/95 St. Louis 2/1/95 Minneapolis 2/2/95 Kansas City 2/1/95 Dallas 212195 San Francisco 5.25 2/1/95 4.75 5.90 2/2/95 5.85 6.40 2/2/95 6.35 Range of rates for adjustment credit in recent years4 Range (or F.R. Range (or F.R. Range (or F.R. l A ev ll e F l) . — R. B o an f k Effective l A e l v l e F l) . — R. B o an f k Effective date l A e l v l e F l) . — R. B o an f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31,1977 6 6 1981—Nov. 2 .. 13-14 13 1987—Sept. 4 5.5-6 6 6 .. 13 13 11 6 6 1978—Jan. 9 6-6.5 6.5 Dec. 4 .. 12 12 20 6.5 6.5 1988—Aug. 9 6-6.5 6.5 May 11 6.5-7 7 1982—July 20 .. 11.5-12 11.5 11 6.5 6.5 12 7 7 23 .. 11.5 11.5 July 3 7-7.25 7.25 Aug. 2 .. 11-11.5 11 1989—Feb. 24 6.5-7 7 10 7.25 7.25 3 .. 11 11 27 7 7 Aug. 21 7.75 7.75 16 .. 10.5 10.5 Sept. 22 8 8 27 .. 10-10.5 10 1990—Dec. 19 6.5 6.5 Oct. 16 8-8.5 8.5 30 .. 10 10 20 8.5 8.5 Oct. 12 .. 9.5-10 9.5 1991—Feb. 1 6-6.5 6 Nov. 1 8.5-9.5 9.5 13 .. 9.5 9.5 4 6 6 3 9.5 9.5 Nov. 22 .. 9-9.5 9 Apr. 30 5.5-6 5.5 26 .. 9 9 May 2 5.5 5.5 1979—July 20 10 10 Dec. 14 .. 8.5-9 9 Sept. 13 5-5.5 5 Aug. 17 10-10.5 10.5 15 .. 8.5-9 8.5 17 5 5 20 10.5 10.5 17 .. 8.5 8.5 Nov. 6 4.5-5 4.5 Sept. 19 10.5-11 11 7 4.5 4.5 21 11 11 1984—Apr. 9 .. 8.5-9 9 Dec. 20 3.5-4.5 3.5 Oct. 8 11-12 12 13 .. 9 9 24 3.5 3.5 10 12 12 Nov. 21 .. 8.5-9 8.5 26 .. 8.5 8.5 1992—July 2 3-3.5 3 1980—Feb. 15 12-13 13 Dec. 24 .. 8 8 7 3 3 19 13 13 May 29 12-13 13 1985—May 20 .. 7.5-8 7.5 1994—May 17 3-3.5 3.5 30 12 12 24 .. 7.5 7.5 18 3.5 3.5 June 13 11-12 11 Aug. 16 3.5-1 4 16 11 11 1986—Mar. 7 .. 7-7.5 7 18 4 4 July 28 10-11 10 10 .. 7 7 Nov. 15 4—4.75 4.75 29 10 10 Apr. 21 .. 6.5-7 6.5 17 4.75 4.75 Sept. 26 11 11 23... 6.5 6.5 Nov. 17 12 12 July 11 .. 6 6 1995—Feb. 1 4.75-5.25 5.25 Dec. 5 12-13 13 Aug. 21 .. 5.5-6 5.5 9 5.25 5.25 8 13 13 22 .. 5.5 5.5 1981—May 5 13-14 14 In effect Feb. 3, 1995 4.75-5.25 5.25 14 14 1. Available on a short-term basis to help depository institutions meet temporary needs thirty days; however, at the discretion of the Federal Reserve Bank, this time period may for funds that cannot be met through reasonable alternative sources. The highest rate be shortened. Beyond this initial period, a flexible rate somewhat above rates charged on established for loans to depository institutions may be charged on adjustment credit loans market sources of funds is charged. The rate ordinarily is reestablished on the first of unusual size that result from a major operating problem at the borrower's facility. business day of each two-week reserve maintenance period, but it is never less than the 2. Available to help relatively small depository institutions meet regular seasonal needs discount rate applicable to adjustment credit plus 50 basis points. for funds that arise from a clear pattern of intrayearly movements in their deposits and 4. For earlier data, see the following publications of the Board of Governors: Banking loans and that cannot be met through special industry lenders. The discount rate on and Monetary Statistics, 1914-1941, and 1941-1970; and the Annual Statistical Digest, seasonal credit takes into account rates charged by market sources of funds and ordinarily 1970-1979. is reestablished on the fiTst business day of each two-week reserve maintenance period; In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustmenthowever, it is never less than the discount rate applicable to adjustment credit. credit borrowings by institutions with deposits of $500 million or more that had borrowed 3. May be made available to depository institutions when similar assistance is not in successive weeks or in more than four weeks in a calendar quarter. A 3 percent reasonably available from other sources, including special industry lenders. Such credit surcharge was in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 may be provided when exceptional circumstances (including sustained deposit drains, percent was reimposed on Nov. 17, 1980; the surcharge was subsequently raised to 3 impaired access to money market funds, or sudden deterioration in loan repayment percent on Dec. 5,1980, and to 4 percent on May 5,1981. The surcharge was reduced to 3 performance) or practices involve only a particular institution, or to meet the needs of percent effective Sept. 22, 1981, and to 2 percent effective Oct. 12, 1981. As of Oct. 1, institutions experiencing difficulties adjusting to changing market conditions over a longer 1981, the formula for applying the surcharge was changed from a calendar quarter to a period (particularly at times of deposit disintermediation). The discount rate applicable to moving thirteen-week period. The surcharge was eliminated on Nov. 17, 1981. adjustment credit ordinarily is charged on extended-credit loans outstanding less than 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-$54.0 million.. 12/20/94 2 More than $54.0 million4 . 12/20/94 3 Nonpersonal time deposits5 12/27/90 4 Eurocurrency liabilities6... 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve no more than three may be checks (accounts subject to such limits are considered savings Banks or vault cash. Nonmember institutions may maintain reserve balances with a deposits). Federal Reserve Bank indirectly, on a pass-through basis, with certain approved The Monetary Control Act of 1980 requires that the amount of transaction accounts institutions. For previous reserve requirements, see earlier editions of the Annual against which the 3 percent reserve requirement applies be modified annually by 80 Report or the Federal Reserve Bulletin. Under provisions of the Monetary Control Act percent of the percentage change in transaction accounts held by all depository instituof 1980, depository institutions include commercial banks, mutual savings banks, tions, determined as of June 30 of each year. Effective Dec. 20, 1994, the amount was savings and loan associations, credit unions, agencies and branches of foreign banks, increased from $51.9 million to $54.0 million. and Edge Act corporations. 4. The reserve requirement was reduced from 12 percent to 10 percent on 2. The Garn-St Germain Depository Institutions Act of 1982 requires that $2 million Apr. 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions that of reservable liabilities of each depository institution be subject to a zero percent reserve report quarterly. requirement. The Board is to adjust the amount of reservable liabilities subject to this zero 5. For institutions that report weekly, the reserve requirement on nonpersonal time percent reserve requirement each year for the succeeding calendar year by 80 percent of deposits with an original maturity of less than l'/z years was reduced from 3 percent to the percentage increase in the total reservable liabilities of all depository institutions, I1/! percent for the maintenance period that began Dec. 13, 1990, and to zero for the measured on an annual basis as of June 30. No corresponding adjustment is to be made in maintenance period that began Dec. 27, 1990. The reserve requirement on nonpersonal the event of a decrease. On Dec. 20, 1994, the exemption was raised from $4.0 million to time deposits with an original maturity of 1 '/> years or more has been zero since Oct. 6, $4.2 million. The exemption applies only to accounts that would be subject to a 3 percent 1983. reserve requirement. For institutions that report quarterly, the reserve requirement on nonpersonal time 3. Includes all deposits against which the account holder is permitted to make with- deposits with an original maturity of less than 1 Vi years was reduced from 3 percent to drawals by negotiable or transferable instruments, payment orders of withdrawal, and zero on Jan. 17, 1991. telephone and preauthorized transfers for the purpose of making payments to third persons 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to or others, other than money market deposit accounts (MMDAs) and similar accounts that zero in the same manner and on the same dates as was the reserve requirement on permit no more than six preauthorized, automatic, or other transfers per month, of which nonpersonal time deposits with an original maturity of less than 1 VS years (see note 5). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • March 1995 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1994 TTyyppee ooff ttrraannssaaccttiioonn aanndd mmaattuurriittyy 11999911 11999922 11999933 May June July Aug. Sept. Oct. Nov. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 20,158 14,714 17,717 1,395 4,143 0 1,610 0 518 6,109 2 Gross sales 120 1,628 0 0 0 0 0 0 0 0 3 Exchanges 277,314 308,699 332,229 29,807 39,484 29,559 36,281 29,668 29,361 36,543 4 Redemptions 1,000 1,600 (r 0 0 0 0 0 0 0 Others within one year 5 Gross purchases 3,043 1,096 1,223 155 0 0 0 151 450 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shifts 24,454 36,662 31,368 5,413r 1,197 1,692 6,131 961 460 1,790 8 Exchanges -28,090 -30,543 -36,582 917' -3,192 -1,626 -4,089 -2,203 0 -5,795 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 0 0 2,530 0 200 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shifts -21,211 -34,478 -27,140 —3,449r -1,197 -1,692 -5,506 -837 -460 ' -1,123 13 Exchanges 24,594 25,811 0 -917' 3,192 1,626 2,889 2,203 0 4,192 Five to ten years 14 Gross purchases 1,280 2,818 4,168 0 0 0 0 938 0 0 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shifts -2,037 -1,915 0 -l,510r 0 0 -549 -125 0 -278 17 Exchanges 2,894 3,532 0 0 0 0 750 0 0 1,603 More than ten years 18 Gross purchases 375 2,333 3,457 0 0 0 0 840 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 -76 0 0 -389 21 Exchanges 600 1,200 0 -453r 0 0 450 0 0 0 All maturities 22 Gross purchases 31,439 34,079 36,915 155r 4,143 0 1,610 4,459 968 6,309 23 Gross sales 120 1,628 0 0 0 0 0 0 0 0 24 Redemptions 1,000 1,600 767r 0 0 302r 0 C 979' 0 Matched transactions 25 Gross sales 1,570,456 1,482,467 1,475,085 135,796 133,939 125,181 170,356 151,589 137,242 147,858 26 Gross purchases 1,571,534 1,480,140 1,475,941 137,195 133,075 126,677 169,018 151,029 136,556 148,425 Repurchase agreements 27 Gross purchases 310,084 378,374 475,447 21,517 10,059 28,085 44,948 4,975 17,088 35,456 28 Gross sales 311,752 386,257 470,723 17,112 4,405 35,374 41,199 9,354 15,613 32,561 29 Net change in U.S. Treasury securities 29,729 20,642 41,729r 5,691r 8,933 -6,095r 4,022 -479' 778' 9,771 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 774r 70 58 20r 63 31' 62' 70 Repurchase agreements 33 Gross purchases 22,807 14,565 35,063 4,195 580 9,472 8,491 3,620 2,868 8,615 34 Gross sales 23,595 14,486 34,669 2,895 1,300 8,702 8,109 4,982 2,838 7,360 35 Net change in federal agency obligations -1,085 -554 -380* 1,230 -778 750' 319 -1,393' -32' 1,185 36 Total net change in System Open Market Account... 28,644 20,089 41,348 6,921' 8,155 —5,345 4341 -1,872 746 10,956 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market Account; all other figures increase such holdings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks All 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1994 1994 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 Oct. 31 Nov. 30 Dec. 31 Consolidated condition statement ASSETS 1 Gold certificate account 11,052 11,051 11,051 11,051 11,051 11,053 11,052 11,051 2 Special drawing rights certificate account 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 3 Coin 321 330 341 341 321 360 321 320 Loans 4 To depository institutions 144 813 119 915 168 264 144 222233 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 3,674 3,674 3,644 3,644 33,,663377 3,744 33,,667744 33,,663377 8 Held under repurchase agreements 1,655 0 700 100 1,000 400 1,655 1,025 9 Total U.S. Treasury securities 365,700 360,535 365,775 370,443 370,962 355,928 365,700 374,084 10 Bought outright2 359,190 360,535 364,100 365,323 364,942 352,313 359,190 364,519 11 Bills 176,294 173,394 176,959 178,182 177,801 169,617 176,294 177,378 12 Notes 141,150 144,143 144,143 144,143 144,143 140,860 141,150 144,143 13 Bonds 41,746 42,998 42,998 42,998 42,998 41,836 41,746 42,998 14 Held under repurchase agreements 6,510 0 1,675 5,120 6,020 3,615 6,510 9,565 15 Total loans and securities 371,172 365,022 370,237 375,102 375,767 360,336 371,172 378,969 16 Items in process of collection 4,983 7,171 6,085 7,038 11,921 2,477 4,983 4,688 17 Bank premises 1,067 1,068 1,071 1,072 1,075 1,068 1,067 1,076 Other assets 18 Denominated in foreign currencies 21,909 21,925 21,941 21,959 21,974 23,922 21,909 2222,,003311 19 All other4 8,373 8,794 9,140 9,423 9,853 9,848 8,373 10,333 20 Total assets 426,895 423,379 427,884 434,002 439,979 417,080 426,895 436,487 LIABILITIES 21 Federal Reserve notes 374,571 375,008 376,077 378,266 382,170 367,540 374,571 381,505 22 Total deposits 36,554 31,534 34,474 37,489 38,769 35,050 36,554 39,075 23 Depository institutions 30,674 26,074 27,983 28,227 30,648 29,271 30,674 30,789 24 US. Treasury—General account 5,348 4,970 5,977 8,751 7,677 5,164 5,348 7,161 25 Foreign—Official accounts 230 166 206 192 173 223 230 250 26 Other 302 324 314 319 271 392 302 876 27 Deferred credit items 4,637 5,483 5,496 5,871 6,767 1,906 4,637 3,948 28 Other liabilities and accrued dividends5 4,210 4,026 4,187 4,610 4,473 3,992 4,210 4,592 29 Total liabilities 419,973 416,051 420,233 426,236 432,179 408,488 419,973 429,120 CAPITAL ACCOUNTS 30 Capital paid in 3,668 3,682 3,675 3,680 3,685 3,643 3,668 3,683 31 Surplus 3,178 3,336 3,390 3,401 3,401 3,401 3,178 3,683 32 Other capital accounts 77 310 585 686 714 1,548 77 0 33 Total liabilities and capital accounts 426,895 423,379 427,884 434,002 439,979 417,080 426,895 436,487 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 416,344 415,332 413,713 418,499 411,727 407,851 416,344 410,405 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 453,444 455,963 457,181 456,900 455,472 449,946 453,444 454,642 36 LESS: Held by Federal Reserve Banks 78,873 80,955 81,105 78,634 73,302 82,406 78,873 73,137 37 Federal Reserve notes, net 374,571 375,008 376,077 378,266 382,170 367,540 374,571 381,505 Collateral held against notes, net 38 Gold certificate account 11,052 11,051 11,051 11,051 11,051 11,053 11,052 11,051 39 Special drawing rights certificate account 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 355,502 355,938 357,008 359,197 363,101 348,469 355,502 362,437 42 Total collateral 374,571 375,008 376,077 378,266 382,170 367,540 374,571 381,505 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 in 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged Treasury bills maturing within ninety days. with Federal Reserve Banks—and excludes securities sold and scheduled to be bought 5. Includes exchange-translation account reflecting the monthly revaluation at market back under matched sale-purchase transactions. exchange rates of foreign exchange commitments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Nonfinancial Statistics • March 1995 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday TTyyppee ooff hhoollddiinngg aanndd mmaattuurriittyy 1994 1994 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 Oct. 31 Nov. 30 Dec. 31 1 Total loans 144 813 119 915 168 264 224 223 2 Within fifteen days' 65 731 32 914 159 133 201 202 3 Sixteen days to ninety days 79 82 87 2 8 131 23 21 4 Ninety-one days to one year 0 0 0 0 0 0 0 0 5 Total acceptances 0 0 0 0 0 0 0 0 6 Within fifteen days' 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 US. Tteasury securities 359,196 360,535 364,102 365,328 364,948 352,313 359,1% 364,519 10 Within fifteen days1 15,444 12,205 15,299 14,413 18,210 10,538 15,444 11,685 11 Sixteen days to ninety days 83,053 83,236 87,927 85,581 81,254 83,281 83,053 87,450 12 Ninety-one days to one year 111,940 112,165 107,946 112,405 112,555 109,980 111,940 112,455 13 One year to five years 87,773 90,031 90,031 90,031 90,031 88,463 87,773 90,031 14 Five years to ten years 27,036 28,053 28,053 28,053 28,053 25,711 27,036 28,053 15 More than ten years 33,950 34,845 34,845 34,845 34,845 34,339 33,950 34,845 16 Total federal agency obligations 3,675 3,674 3,644 3,644 3,638 3,744 3,675 3,637 17 Within fifteen days' 334 0 8 232 253 119 334 252 18 Sixteen days to ninety days 494 749 742 517 573 725 494 573 19 Ninety-one days to one year 915 992 992 992 912 747 915 912 20 One year to five years 1,390 1,390 1,390 1,390 1,387 1,603 1,390 1,387 21 Five years to ten years 518 518 488 488 488 525 518 488 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 11 .. DD 1199 ee 99 cc 22 .. DD 1199 ee 99 cc 33 .. DD 1199 ee 99 cc 44 .. May June July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted AAAADDDDJJJJUUUUSSSSTTTTEEEEDDDD FFFFOOOORRRR CCCCHHHHAAAANNNNGGGGEEEESSSS IIIINNNN RRRREEEESSSSEEEERRRRVVVVEEEE RRRREEEEQQQQUUUUIIIIRRRREEEEMMMMEEEENNNNTTTTSSSS2222 1111 TTTToooottttaaaallll rrrreeeesssseeeerrrrvvvveeeessss3333 45.53 54.34 60.48 59.00 59.91 59.71 59.82 59.52 59.48 59.17 59.01 59.00 2222 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss4444 45.34 54.22 60.39 58.79 59.71 59.37 59.36 59.05 59.00 58.79 58.76 58.79 3333 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss pppplllluuuussss eeeexxxxtttteeeennnnddddeeeedddd ccccrrrreeeeddddiiiitttt5555 45.34 54.22 60.39 58.79 59.71 59.37 59.36 59.05 59.00 58.79 58.76 58.79 4444 RRRReeeeqqqquuuuiiiirrrreeeedddd rrrreeeesssseeeerrrrvvvveeeessss 44.55 53.19 59.41 57.86 59.00 58.60 58.71 58.51 58.42 58.37 58.00' 57.86 5555 MMMMoooonnnneeeettttaaaarrrryyyy bbbbaaaasssseeee6666 317.12 350.61 385.86 417.08 401.73 404.32 407.04 409.20r 411.08r 413.40r 416.46' 417.08 Not seasonally adjusted 6666 TTTToooottttaaaallll rrrreeeesssseeeerrrrvvvveeeessss7777 46.98 56.06 62.37 60.81 58.97 59.56 59.66 58.84 59.39 58.87 59.32 60.81 7777 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss 46.78 55.93 62.29 60.61 58.77 59.22 59.20 58.37 58.90 58.49 59.07 60.61 8888 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss pppplllluuuussss eeeexxxxtttteeeennnnddddeeeedddd ccccrrrreeeeddddiiiitttt5555 46.78 55.93 62.29 60.61 58.77 59.22 59.20 58.37 58.90 58.49 59.07 60.61 9999 RRRReeeeqqqquuuuiiiirrrreeeedddd rrrreeeesssseeeerrrrvvvveeeessss8888 46.00 54.90 61.31 59.67 58.06 58.45 58.55 57.84 58.33 58.06 58.32 59.67 11110000 MMMMoooonnnneeeettttaaaarrrryyyy bbbbaaaasssseeee9999 321.07 354.55 390.59 422.22 400.26 404.72 408.17 408.97r 411. 1C 412.85r 416.75' 422.22 NNNNOOOOTTTT AAAADDDDJJJJUUUUSSSSTTTTEEEEDDDD FFFFOOOORRRR CCCCHHHHAAAANNNNGGGGEEEESSSS IIIINNNN RRRREEEESSSSEEEERRRRVVVVEEEE RRRREEEEQQQQUUUUIIIIRRRREEEEMMMMEEEENNNNTTTTSSSS11110000 11111111 TTTToooottttaaaallll rrrreeeesssseeeerrrrvvvveeeessss"""" 55.53 56.54 62.86 61.32 59.27 59.92 60.09 59.34 59.95 59.49 60.01 61.32 11112222 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss 55.34 56.42 62.78 61.11 59.07 59.59 59.63 58.87 59.47 59.11 59.76 61.11 11113333 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss pppplllluuuussss eeeexxxxtttteeeennnnddddeeeedddd ccccrrrreeeeddddiiiitttt5555 55.34 56.42 62.78 61.11 59.07 59.59 59.64 58.87 59.47 59.11 59.76 61.11 11114444 RRRReeeeqqqquuuuiiiirrrreeeedddd rrrreeeesssseeeerrrrvvvveeeessss 54.55 55.39 61.80 60.17 58.36 58.82 58.99 58.33 58.89 58.69 59.00 60.17 11115555 MMMMoooonnnneeeettttaaaarrrryyyy bbbbaaaasssseeee 333.61 360.90 397.62 427.19 406.59 410.94 414.39 414.92r 416.701 418.19' 421.90' 427.19 11116666 EEEExxxxcccceeeessssssss rrrreeeesssseeeerrrrvvvveeeessss11113333 .98 1.16 1.06 1.15 .92 1.11 1.11 1.00 1.06 .80 1.01 1.15 11117777 BBBBoooorrrrrrrroooowwwwiiiinnnnggggssss ffffrrrroooommmm tttthhhheeee FFFFeeeeddddeeeerrrraaaallll RRRReeeesssseeeerrrrvvvveeee .19 .12 .08 .21 .20 .33 .46 .47 .49 .38 .25 .21 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) 8. To adjust required reserves for discontinuities that are due to regulatory changes in weekly statistical release. Historical data starting in 1959 and estimates of the impact on reserve requirements, a multiplicative procedure is used to estimate what required required reserves of changes in reserve requirements are available from the Money and reserves would have been in past periods had current reserve requirements been in effect. Reserves Projections Section, Division of Monetary Affairs, Board of Governors of the Break-adjusted required reserves include required reserves against transactions deposits Federal Reserve System, Washington, DC 20551. and nonpersonal time and savings deposits (but not reservable nondeposit liabilities). 2. Figures reflect adjustments for discontinuities, or "breaks," associated with regula- 9. The break-adjusted monetary base equals (1) break-adjusted total reserves (line 6), tory changes in reserve requirements. (See also table 1.10) plus (2) the (unadjusted) currency component of the money stock, plus (3) (for all 3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, break- quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault adjusted required reserves (line 4) plus excess reserves (line 16). Cash" and for all those weekly reporters whose vault cash exceeds their required 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally ad- reserves) the break-adjusted difference between current vault cash and the amount applied justed, break-adjusted total reserves (line 1) less total borrowings of depository institu- to satisfy current reserve requirements. tions from the Federal Reserve (line 17). 10. Reflects actual reserve requirements, including those on nondeposit liabilities, with 5. Extended credit consists of borrowing at the discount window under no adjustments to eliminate the effects of discontinuities associated with regulatory the terms and conditions established for the extended credit program to help depository changes in reserve requirements. institutions deal with sustained liquidity pressures. Because there is not the same need to 11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy repay such borrowing promptly as with traditional short-term adjustment credit, the reserve requirements. money market impact of extended credit is similar to that of nonborrowed reserves. 12. The monetary base, not break-adjusted and not seasonally adjusted, consists of (1) 6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally total reserves (line 11), plus (2) required clearing balances and adjustments to compensate adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency for float at Federal Reserve Banks, plus (3) the currency component of the money stock, component of the money stock, plus (3) (for all quarterly reporters on the "Report of plus (4) (for all quarterly reporters on the "Report of Transaction Accounts, Other Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters Deposits and Vault Cash" and for all those weekly reporters whose vault cash exceeds whose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted their required reserves) the difference between current vault cash and the amount applied difference between current vault cash and the amount applied to satisfy current reserve to satisfy current reserve requirements. Since the introduction of contemporaneous reserve requirements. requirements in February 1984, currency and vault cash figures have been measured over 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus the computation periods ending on Mondays. excess reserves (line 16). 13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • March 1995 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1994 IItteemm 1991 1992 1993 1994 Dec. Dec. Dec. Dec. Sept/ Oct/ Nov/ Dec. Seasonally adjusted Measures2 1 Ml 897.7 1,024.8 1,128.4 1,147.6 1,151.9 1,148.5 1,147.6 1,147.6 2 M2 3,455.2 3,509.0 3,567.9 3,600.0 3,597.6 3,592.6 3,594.2 36000 3 M3 4,180.4 4,183.0 4,232.0 4,282.4 4,250.9 4,259.6 4,267.0 4,282.4 4 L 4,992.9 5,057.1 5,135.0 n.a. 5,176.9 5,205.5 5,217.8 n.a. 5 Debt 11,171.1 11,706.1 12,335.4 n.a. 12,809.5 12,856.8 12,924.3 n.a. Ml components 6 Currency3 267.1 292.2 321.4 353.6 347.4 350.0 352.9 353.6 7 Travelers checks4 7.7 8.1 7.9 8.4 8.4 8.4 8.4 8.4 8 Demand deposits5 290.0 339.6 384.8 383.3 388.0 385.8 383.4 383.3 9 Other checkable deposits6 332.8 384.9 414.3 402.3 408.2 404.3 402.8 402.3 Nontransaction components 10 In M27 2,557.5 2,484.2 2,439.5 2,452.5 2,445.6 2,444.1 2,446.7 2,452.5 11 In M38 only 725.2 674.0 664.1 682.4 653.3 666.9 672.8 682.4 Commercial banks 12 Savings deposits, including MMDAs 665.5 754.6 785.3 752.3 773.7 765.9 759.6 752.3 13 Small time deposits9 602.9 508.7 468.6 502.7 479.8 486.8 493.9 502.7 14 Large time deposits10' 11 342.4 292.8 277.2 299.1 284.0 289.1 294.8 299.1 Thrift institutions 15 Savings deposits, including MMDAs 375.6 429.0 430.2 393.2 412.9 407.5 400.2 393.2 16 Small time deposits9 464.5 361.8 317.1 315.5 305.5 308.9 314.0 315.5 17 Large time deposits10 83.4 67.5 61.8 64.5 62.7 63.9 64.2 64.5 Money market mutual funds 18 General purpose and broker-dealer 370.4 352.0 348.8 374.5 360.5 363.3 368.1 374.5 19 Institution-only 181.0 201.5 197.0 176.6 167.9 175.3 175.6 176.6 Debt components 20 Federal debt 2,763.3 3,067.9 3,328.0 n.a. 3,454.0 3,469.4 3,494.0 n.a. 21 Nonfederal debt 8,407.8 8,638.1 9,007.4 n.a. 9,355.5 9,387.3 9,430.3 n.a. Not seasonally adjusted Measures2 22 Ml 916.7 1,046.7 1,153.8 1,173.5 1,146.0 1,147.3 1,155.3 1,173.5 23 M2 3,470.3 3,527.6 3,590.5 3,623.5 3,587.1 3,591.0 3,603.8 3,623.5 24 M3 4,191.9 4,198.2 4,251.4 4,302.9 4,240.2 4,254.1 4,279.9 4,302.9 25 L 5,018.0 5,087.6 5,169.9 n.a. 5,164.9 5,197.8 5,241.6 n.a. 26 Debt 11,168.5 11,708.9 12,327.6 n.a. 12,765.8 12,816.3 12,895.4 n.a. Ml components 27 Currency3 269.9 295.0 324.9 357.7 347.1 349.7 353.3 357.7 28 Travelers checks4 7.4 7.8 7.6 8.1 8.8 8.5 8.2 8.1 29 Demand deposits5 303.1 355.1 402.6 401.1 385.6 388.8 391.7 401.1 30 Other checkable deposits6 336.3 388.9 418.6 406.6 404.5 400.3 402.0 406.6 Nontransaction components 31 InM27 2,553.7 2,480.8 2,436.7 2,450.0 2,441.1 2,443.6 2,448.5 2,450.0 32 In M38 721.6 670.6 660.9 679.4 653.1 663.1 676.1 679.4 Commercial banks 33 Savings deposits, including MMDAs 664.0 752.9 783.9 751.1 772.4 765.2 761.3 751.1 34 Small time deposits9 601.9 507.8 467.6 501.5 481.2 487.7 493.1 501.5 35 Large time deposits10, 11 341.3 291.7 276.0 297.9 285.0 288.8 295.2 297.9 Thrift institutions 36 Savings deposits, including MMDAs 374.8 428.1 429.4 392.6 412.2 407.1 401.1 392.6 37 Small time deposits9 463.7 361.1 316.4 314.8 306.4 309.5 313.5 314.8 38 Large time deposits10 83.1 67.2 61.6 64.3 62.9 63.8 64.2 64.3 Money market mutual funds 39 General purpose and broker-dealer 368.5 350.2 347.2 372.9 355.8 359.2 366.0 372.9 40 Institution-only 180.4 200.4 195.8 175.5 165.1 170.5 175.0 175.5 Repurchase agreements and Eurodollars 41 Overnight and continuing 80.6 80.7 92.3 117.2 113.1 114.9 113.6 117.2 42 Term 130.1 126.8 143.8 157.3 154.8 155.5 158.0 157.3 Debt components 43 Federal debt 2,765.0 3,069.8 3,329.5 n.a. 3,438.4 3,448.7 3,485.3 n.a. 44 Nonfederal debt 8,403.5 8,639.1 8,998.1 n.a. 9,327.3 9,367.6 9,410.1 n.a. Footnotes appeal- 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) short-term Treasury securities, commercial paper, and bankers acceptances, each seasonweekly statistical release. Historical data starting in 1959 are available from the Money ally adjusted separately, and then adding this result to M3. and Reserves Projections Section, Division of Monetary Affairs, Board of Governors of Debt: The debt aggregate is the outstanding credit market debt of the domestic the Federal Reserve System, Washington, DC 20551. nonfinancial sectors—the federal sector (U.S. government, not including government- 2. Composition of the money stock measures and debt is as follows: sponsored enterprises or federally related mortgage pools) and the nonfederal sectors Ml: (1) currency outside the US. Treasury, Federal Reserve Banks, and the vaults of (state and local governments, households and nonprofit organizations, nonfinancial corpodepository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all rate and nonfarm noncorporate businesses, and farms). Nonfederal debt consists of commercial banks other than those owed to depository institutions, the U.S. government, mortgages, tax-exempt and corporate bonds, consumer credit, bank loans, commercial and foreign banks and official institutions, less cash items in the process of collection and paper, and other loans. The data, which are derived from the Federal Reserve Board's flow Federal Reserve float, and (4), other checkable deposits (OCDs), consisting of negotiable of funds accounts, are break-adjusted (that is, discontinuities in the data have been order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository smoothed into the series) and month-averaged (that is, the data have been derived by institutions, credit union share draft accounts, and demand deposits at thrift institutions. averaging adjacent month-end levels). Seasonally adjusted Ml is computed by summing currency, travelers checks, demand 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of deposideposits, and OCDs, each seasonally adjusted separately. tory institutions. M2: Ml plus (1) overnight (and continuing contract) repurchase agreements (RPs) 4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issued by all depository institutions and overnight Eurodollars issued to U.S. residents by issuers. Travelers checks issued by depository institutions are included in demand foreign branches of U.S. banks worldwide, (2) savings (including MMDAs) and small deposits. time deposits (time deposits—including retail RPs—in amounts of less than $100,000), 5. Demand deposits at commercial banks and foreign-related institutions other than and (3) balances in both taxable and tax-exempt general-purpose and broker-dealer those owed to depository institutions, the U.S. government, and foreign banks and official money market funds. Excludes individual retirement accounts (IRAs) and Keogh balances institutions, less cash items in the process of collection and Federal Reserve float. at depository institutions and money market funds. Also excludes all balances held by 6. Consists of NOW and ATS account balances at all depository institutions, credit U.S. commercial banks, money market funds (general purpose and broker-dealer), foreign union share draft account balances, and demand deposits at thrift institutions. governments and commercial banks, and the U.S. government. Seasonally adjusted M2 is 7. Sum of (1) overnight RPs and overnight Eurodollars, (2) money market fund computed by adjusting its non-Mi component as a whole and then adding this result to balances (general purpose and broker-dealer), (3) savings deposits (including MMDAs), seasonally adjusted Ml. and (4) small time deposits. M3: M2 plus (1) large time deposits and term RP liabilities (in amounts of $100,000 or 8. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. residents, more) issued by all depository institutions, (2) term Eurodollars held by U.S. residents at and (4) money market fund balances (institution-only), less (5) a consolidation adjustment foreign branches of US. banks worldwide and at all banking offices in the United that represents the estimated amount of overnight RPs and Eurodollars held by institution- Kingdom and Canada, and (3) balances in both taxable and tax-exempt, institution-only only money market funds. money market fluids. Excludes amounts held by depository institutions, the U.S. govern- 9. Small time deposits—including retail RPs—are those issued in amounts of less ment, money market funds, and foreign banks and official institutions. Also excluded is than $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions the estimated amount of overnight RPs and Eurodollars held by institution-only money are subtracted from small time deposits. market funds. Seasonally adjusted M3 is computed by adjusting its non-M2 component as 10. Large time deposits are those issued in amounts of $100,000 or more, excluding a whole and then adding this result to seasonally adjusted M2. those booked at international banking facilities. L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury 11. Large time deposits at commercial banks less those held by money market funds, securities, commercial paper, and bankers acceptances, net of money market fund hold- depository institutions, the U.S. government, and foreign banks and official institutions. ings of these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Nonfinancial Statistics • March 1995 1.22 DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING Commercial and BIF-insured saving banks' 1994 I-tem 1992 1993 Dec. Dec. Apr. May June July Aug. Sept. Oct. Nov.r Dec. Interest rates (annual effective yields)2 INSURED COMMERCIAL BANKS 1 Negotiable order of withdrawal accounts 2.33 1.86 1.81 1.83 1.82 1.83 1.85 1.87 1.88 1.92 1.96 2 Savings deposits3 2.88 2.46 2.45 2.50 2.54 2.57 2.63 2.67 2.72 2.81 2.91 Interest-bearing time deposits with balances of less than $100,000, by maturity 3 7 to 91 days 2.90 2.65 2.87 2.99 3.08 3.17 3.29 3.36 3.47 3.68 3.81 4 92 to 182 days 3.16 2.91 3.13 3.28 3.36 3.44 3.61 3.75 3.93 4.22 4.44 5 183 days to 1 year 3.37 3.13 3.42 3.64 3.76 3.88 4.11 4.27 4.49 4.85 5.12 6 More than 1 year to 2l/i years 3.88 3.55 3.87 4.12 4.26 4.39 4.61 4.80 5.08 5.42 5.74 7 More than 2 Vi years 4.77 4.29 4.67 4.89 5.02 5.14 5.33 5.47 5.76 6.09 6.30 BIF-INSURED SAVINGS BANKS4 9 8 N Sa e v g i o n t g ia s b d le e p o o r s d i e ts r 3 of withdrawal accounts 2 3 . . 4 2 5 0 2 1 . . 6 8 3 7 2 1 . . 6 8 5 6 2 1 . . 6 8 7 6 2 1 . . 6 8 9 8 2 1 . . 6 8 7 9 2 1 . . 7 8 4 9 2 1 . . 7 9 8 1 2 1 . . 7 8 6 8 2 1 . . 8 9 3 1 2 1 . . 8 9 9 5 Interest-bearing time deposits with balances of less than $100,000, by maturity 10 7 to 91 days 3.13 2.70 2.72 2.77 2.84 2.98 3.03 3.11 3.31 3.49 3.78 11 92 to 182 days 3.44 3.02 3.13 3.21 3.41 3.53 3.69 3.87 4.09 4.41 4.88 12 183 days to 1 year 3.61 3.31 3.47 3.67 3.92 4.02 4.24 4.47 4.78 5.15 5.49 13 More than 1 year to 2'/I years 4.02 3.66 3.96 4.12 4.38 4.56 4.83 5.04 5.36 5.68 6.06 14 More than 2vi years 5.00 4.62 4.85 5.08 5.24 5.35 5.47 5.64 5.78 6.16 6.40 Amounts outstanding (millions of dollars) INSURED COMMERCIAL BANKS 15 Negotiable order of withdrawal accounts 286,541 305,223 293,888 292,797 290,220 290,631 295,320 286,787 294,069 294,276 303,712 16 Savings deposits3 738,253 766,413 771,869 773,170 767,539 765,751 764,035 755,249 751,300 746,618 734,489 17 Personal 578,757 597,838 611,720 612,648 608,132 605,881 600,892 595,175 591,304 584,645 578,529 18 Nonpersonal 159,496 168,575 160,149 160,522 159,407 159,870 163,143 160,074 159,996 161,973 155,961 Interest-bearing time deposits with balances of less than $100,000, by maturity 19 7 to 91 days 38,474 29,455 29,467 29,950 28,763 28,659 27,959 28,312 31,387 31,312 32,495 20 92 to 182 days 127,831 110,069 105,615 104,400 102,439 100,424 98,085 96,398 95,328 94,573 95,729 21 183 days to 1 year 163,098 146,565 146,733 148,102 151,165 152,216 155,964 157,253 158,564 159,697 161,900 22 More than 1 year to 2 xfi years 152,977 141,223 139,313 140,764 144,686 146,875 150,807 152,514 155,251 158,417 162,461 23 More than 2 V2 years 169,708 181,528 181,977 180,381 181,843 182,944 186,490 190,209 188,456 189,243 190,958 24 IRA and Keogh plan deposits 147,350 143,985 142,448 142,047 142,513 142,649 142,617 142,700 142,742 143,075 143,321 BIF-INSURED SAVINGS BANKS4 25 Negotiable order of withdrawal accounts 10,871 11,151 11,051 11,052 10,792 10,925 11,016 10,769 11,136 10,998 11,317 26 Savings deposits3 81,786 80,115 78,982 78,817 77,289 77,337 75,108 74,659 73,416 72,597 70,643 27 Personal 78,695 77,035 75,717 75,474 74,121 74,064 72,040 71,525 70,215 69,387 67,674 28 Nonpersonal 3,091 3,079 3,265 3,344 3,168 3,273 3,068 3,134 3,201 3,210 2,969 Interest-bearing time deposits with balances of less than $100,000, by maturity 29 7 to 91 days 3,867 2,793 2,697 2,702 2,614 2,531 2,523 2,402 2,258 2,205 2,166 30 92 to 182 days 17,345 12,946 13,058 12,822 12,515 12,511 12,292 12,276 11,896 11,895 11,793 31 183 days to 1 year 21,780 17,426 17,504 17,444 17,310 17,591 17,593 17,928 18,213 18,483 18,753 32 More than 1 year to 2'/S years 18,442 16,546 16,453 16,477 16,493 16,901 16,824 17,287 17,521 17,932 17,802 33 More than 2'/> years 18,845 20,464 21,454 21,546 21,079 21,573 21,531 21,923 21,625 21,652 21,598 34 IRA and Keogh plan accounts 21,713 19,356 19,860 19,772 19,511 19,757 19,445 19,532 19,550 19,521 19,312 1. BIF, Bank Insurance Fund. Data in this table also appear in the Board's H.6 (508) 2. As of October 31, 1994, interest rate data for NOW accounts and savings deposits Special Supplementary Table monthly statistical release. For ordering address, see inside reflect a series break caused by a change in the survey used to collect these data. front cover. Estimates are based on data collected by the Federal Reserve System from a 3. Includes personal and nonpersonal money market deposits. stratified random sample of about 425 commercial banks and 77 savings banks on the last 4. Includes both mutual and federal savings banks. day of each month. Data are not seasonally adjusted and include IRA and Keogh deposits and foreign currency-denominated deposits. Data exclude retail repurchase agreements and deposits held in U.S. branches and agencies of foreign 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 BBaannkk ggrroouupp,, oorr ttyyppee ooff ddeeppoossiitt May' June' July' Aug.' Sept.' Oct. DEBITS Seasonally adjusted Demand deposits3 1 All insured banks 277,741.7 313,179.6 334,375.0 376,214.2 371,498.9 345,258.7 384,044.9 370,520.1 346,126.1 2 Major New York City banks 137,337.2 165,484.6 171,310.7 200,277.1 195,079.6 182,408.2 196,505.6 186,294.9 176,701.9 3 Other banks 140,404.5 147,695.1 163,064.2 175,937.1 176,419.3 162,850.5 187,539.3 184,225.2 169,424.2 4 Other checkable deposits4 3,643.1 3,780.7 3,468.9 3,884.1 3,861.3 3,508.5 3,873.5 3,925.7 3,826.4 5 Savings deposits (including MMDAs)5 3,206.4 3,310.6 3,511.0 3,498.9 3,784.9 3,405.8 3,852.0 3,802.7 3,545.8 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 803.7 825.8 785.4 834.0 828.6 756.3 852.3 820.1 766.8 7 Major New York City banks 4,267.1 4,794.5 4,200.5 4,714.8 4,480.9 4,074.6 4,635.6 4,503.6 4,300.5 8 Other banks 448.1 428.7 423.7 430.6 435.8 395.5 459.4 448.9 412.9 9 Other checkable deposits4 16.2 14.4 11.8 12.9 12.8 11.5 12.8 13.0 12.8 10 Savings deposits (including MMDAs)5 5.2 4.7 4.6 4.5 4.9 4.4 5.0 5.0 4.7 DEBITS Not seasonally adjusted Demand deposits* 11 All insured banks 277,752.4 313,344.9 334,354.6 364,448.1 387,201.1 347,403.9 394,394.4 365,063.0 352,652.7 12 Major New York City banks 137,307.2 165,595.0 171,283.5 188,885.2 204,251.8 182,452.9 202,845.6 186,161.8 181,406.6 13 Other banks 140,445.2 147,749.9 163,071.0 175,563.0 182,949.3 164,951.0 191,548.8 178,901.2 171,246.1 14 Other checkable deposits4 3,645.2 3,783.6 3,467.5 3,700.5 3,918.9 3,515.0 3,861.2 3,960.9 3,797.0 15 Savings deposits (including MMDAs)5 3,209.2 3,310.0 3,509.5 3,535.3 3,906.8 3,521.8 3,873.3 3,716.4 3,472.3 DEPOSIT TURNOVER Demand deposits3 16 All insured banks 803.6 826.1 785.4 823.3 868.5 761.9 889.5 811.9 774.8 17 Major New York City banks 4,269.0 4,803.5 4,197.9 4,449.3 4,878.2 4,150.3 4,960.2 4,539.5 4,435.8 18 Other banks 448.1 428.8 423.8 438.7 452.9 400.4 475.9 437.8 413.4 19 Other checkable deposits4 16.2 14.4 11.8 12.4 13.1 11.8 13.0 13.3 12.9 20 Savings deposits (including MMDAs)5 5.2 4.7 4.6 4.5 5.0 4.6 5.0 4.9 4.6 1. Historical tables containing revised data for earlier periods can be obtained from the 3. Represents accounts of individuals, partnerships, and corporations and of states and Publications Section, Division of Support Services, Board of Governors of the Federal political subdivisions. Reserve System, Washington, DC 20551. 4. As of January 1994, other checkable deposits (OCDs), previously defined as Data in this table also appear in the Board's G.6 (406) monthly statistical release. For automatic transfer to demand deposits (ATSs) and negotiable order of withdrawal (NOW) ordering address, see inside front cover. accounts, were expanded to include telephone and preauthorized transfer accounts. This 2. Annual averages of monthly figures. change redefined OCDs for debits data to be consistent with OCDs for deposits data. 5. Money market deposit accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • March 1995 1.26 ASSETS AND LIABILITIES OF COMMERCIAL BANKS1 Billions of dollars Monthly averages Wednesday figures Account 1993 1994r 1994 Dec. June July Aug. Sept. Oct. Nov. Dec. Dec. 7 Dec. 14 Dec. 21 Dec. 28 ALL COMMERCIAL Seasonally adjusted BANKING INSTITUTIONS Assets 1 Bank credit 3,105 i.3.e r 3,224.0 3,260.3 3,270.8 3,280.3 3,287.6 3,297.1 3323.3 3308.8 3313.9 3330.5 3333.8 2 Securities in bank credit 91 974.6 979.5 971.8 968.0 957.5 950.6 950.5 947.5 9527 948.6 953.3 3 U.S. government securities 727.3 750.9 751.5 746.7 740.9 727.9 719.9 717.7 716.9 718.0 716.2 718.4 4 Other securities 184.4r 223.7 228.0 225.1 227.0 229.7 230.7 232.8 230.6 234.7 2324 234.9 5 Loans and leases in bank credit2 ... 2,193.6' 2,249.4 2,280.8 238.9 23123 2330.1 2346.5 2372.8 2361.3 2361.2 23820 2380.5 6 Commercial and industrial 583.4' 610.4 618.9 623.6 628.1 634.1 639.4 644.3 641.5 6428 646.8 645.1 7 Real estate 940.8' 956.0 9629 971.6 979.1 984.0 990.4 1,000.0 996.2 997.8 1,0025 1,001.7 8 Revolving home equity 73.2 74.1 74.2 74.4 74.7 75.0 75.6 76.0 75.8 75.8 76.0 76.1 9 Other 867.6r 881.9 888.7 897.2 904.4 908.9 914.8 924.0 920.4 921.9 926.5 925.6 10 Consumer 391.2 416.3 424.3 430.3 435.2 4421 444.9 450.2 447.1 448.7 4503 453.5 11 Security3 87.7 76.2 77.7 75.0 69.1 72.1 73.3 76.6 77.1 724 81.6 75.5 12 Other 190.5' 190.5 197.1 198.4 200.8 197.8 198.5 201.7 199.3 199.5 200.8 204.9 13 Inteibank loans4 152.9 156.7 160.2 158.5 159.2 163.6 171.7 174.6 173.0 170.6 178.0 176.5 14 Cash assets5 219.2 214.5 210.9 203.3 2024 209.7 204.8 208.3 203.8 2023 206.3 2125 15 Other assets6 213.4' 219.2 226.1 227.5 221.1 221.6 223.9 234.8 233.4 236.2 236.0 233.2 16 Total assets7 3,6324' 3,757.4 3^00.1 3£02Ji 3JS05.6 3^25.1 3,840.7 3£84.1 3^624 3JB663 3J S93JS 3^99.1 Liabilities 17 Deposits 2537.6 2507.0 2,513.5 2517.1 2520.5 2534.6 2530.9 2537.5 2537.0 2536.5 2533.9 2539.9 18 Transaction. 819.0 808.8 809.8 807.6 803.1 806.9 798.1 797.0 797.3 795.8 791.4 799.0 19 Nontransaction 1,718.6 1,698.2 1,703.6 1,709.5 1,717.4 1,727.7 1,732.8 1,740.5 1,739.7 1,740.7 1,7425 1,741.0 20 Large time 349.8 334.4 339.2 342.7 349.0 357.9 362.6 365.8 367.5 369.0 365.4 363.2 21 Other 1368.8 1,363.8 1,364.4 1366.8 1368.4 1369.8 1370.2 1374.7 13723 1,371.7 1377.1 1377.7 22 Borrowings 523.9 568.8 572.2 567.9 577.0 576.2 578.2 604.7 565.6 588.3 627.7 633.6 23 From banks in the U.S 154.1 155.2 161.7 158.1 156.0 164.7 171.4 176.8 176.0 175.5 177.7 176.8 24 From nonbanks in the U.S 369.8 413.6 410.5 409.7 421.0 411.5 406.8 428.0 389.6 412.8 450.0 456.8 25 Net due to related foreign offices 118.9 184.6 200.7 211.2 215.6 213.9 208.4 221.4 221.2 212.6 224.9 220.0 26 Other liabilities8 143.0 1716 178.8 174.1 173.6 175.0 174.4 183.0 181.9 185.9 184.3 181.0 27 Total liabUitlcs 3,323.5 3/133.0 3,465-2 3/470J 3/186.7 3y499.7 3/492.0 3^46.7 3^05.7 3,5233 3^70.7 3^745 28 Residual (assets less liabilities)9 324.4 334.8 332.6 319.0 325.4 348.7 337.4 356.7 343.0 323.1 324.6 Not seasonally adjusted Assets 29 Bank credit 3,219.1 3,243.9 3,2626 330.6 3,291.4 3309.6 3337.6 3326.3 33321 33427 3344.1 30 Securities in bank credit 911.2' 971.1 973.2 971.2 969.4 9621 957.7 947.9 952.1 951.9 945.3 943.8 31 U.S. government securities 726.8 748.5 745.8 746.0 7425 729.5 723.6 717.4 721.8 721.0 715.9 712.6 32 Other securities 184.4' 222.6 227.3 225.3 226.9 2326 234.1 230.5 230.2 230.9 229.4 231.1 33 Loans and leases in bank credit2 ... 2,209.7 2248.0 2270.7 2291.3 2311.2 2329.3 2351.9 2389.7 2374.2 2380.2 2397.4 2400.4 34 Commercial and industrial 585.4r 611.4 616.7 619.8 624.3 631.9 640.2 646.4 641.6 642.6 650.3 649.5 35 Real estate 944.0 956.4 963.7 970.6 979.3 985.7 993.4 1,003.1 1,001.1 1,002.9 1,003.6 1,004.1 36 Revolving home equity 73.5 73.9 74.0 74.4 75.0 75.7 76.1 76.2 76.3 76.1 76.2 76.1 37 Other 870.5' 882.5 889.7 896.2 904.3 910.0 917.3 926.9 924.8 926.8 927.3 928.0 38 Consumer 395.5 414.4 421.6 429.6 436.3 441.8 445.0 455.1 448.7 452.5 456.1 460.8 39 Security3 89.6 74.3 72.5 724 68.3 70.9 73.3 78.6 79.2 78.4 81.7 75.9 40 Other 195.2r 191.5 196.2 198.9 202.9 198.9 199.9 206.6 203.7 203.8 205.7 210.0 41 Interbank loans4 161.2T 154.4 155.6 155.0 156.4 161.6 171.9 184.1 182.7 1823 185.3 184.3 42 Cash assets5 2325 212.2 207.5 197.7 204.0 209.0 211.5 221.2 203.8 211.6 216.9 237.3 43 Other assets6 217.4' 216.5 224.4 225.8 2223 224.0 227.0 239.6 237.5 240.9 238.9 239.1 44 Total assets7 3,7453 3,774.7 3,783.9 3JW6.0 3,829.0 3,8629 3,925.2 3,893.1 3,909.5 3,926^ 3,947.6 Liabilities 45 Deposits 2566.4 2,508.6 2^07.3 2505.5 2517.3 2525.7 2541.3 2,564.8 2553.7 2555.2 2555.0 2574.7 46 Transaction 853.5 807.2 801.9 7924 799.7 800.6 809.6 830.2 813.2 817.5 821.5 846.1 47 Nontransaction 1,713.0 1,701.4 1,705.4 1,713.1 1,717.6 1,725.1 1,731.7 1,734.6 1,740.4 1,737.7 1,733.5 1,728.6 48 Large time 346.0 337.2 339.6 344.2 348.6 353.8 359.3 361.8 364.4 365.1 361.0 359.1 49 Other 1,366.9 1,364.2 1,365.9 1,368.8 1,369.0 1,371.2 1,372.4 1,372.8 1,376.0 1,372.6 1,372.5 1,369.5 50 Borrowings 534.0 575.1 580.1 583.5 588.7 590.5 602.9 618.4 608.4 609.2 634.1 623.2 51 From banks in the U.S 161.4 154.6 156.0 155.1 156.4 161.6 171.9 184.1 1827 182.3 185.3 184.3 52 From nonbanks in the U.S 372.6 420.4 424.1 428.5 4323 428.9 431.0 434.3 425.6 426.9 448.8 438.9 53 Net due to related foreign offices 126.0 179.8 1929 200.4 203.7 212.6 211.6 229.3 217.1 226.6 226.3 240.8 54 Other liabilities8 146.5 168.7 175.1 173.5 174.2 178.5 181.8 187.5 187.5 190.8 187.5 185.3 55 Total liabilities 3373.0 3,4321 3/1553 3/1629 3/U&9 3^07.3 3437.6 3399.9 3,566.7 3,581.8 3,6029 3,624.0 56 Residual (assets less liabilities)9 300.2 313.2 319.4 321.0 3222 321.6 325.3 325.3 326.4 327.7 323.6 323.6 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 1994r 1994 Dec. June July Aug. Sept. Oct. Nov. Dec. Dec. 7 Dec. 14 Dec. 21 Dec. 28 DOMESTICALLY CHARTERED Seasonally adjusted COMMERCIAL BANKS Assets 57 Bank credit 27725' 2,877.2 2,903.0 2,914.3 2,921.4 2,931.5 29423 2,962.2 2,947.1 2957.1 2967.9 2968.7 58 Securities in bank credit 834.3r 885.7 892.1 883.2 876.9 868.1 865.4 866.5 863.4 870.2 865.2 867.5 59 U.S. government securities 673.9 690.2 691.6 686.3 679.7 669.7 665.5 665.7 664.4 668.0 664.9 665.0 60 Other securities 160.5r 195.5 200.5 196.9 197.2 198.4 199.9 200.7 199.0 2021 200.3 2025 61 Loans and leases in bank credit2 1,938.? 1,991.5 2,010.9 2,031.1 2,044.5 2,063.3 2,076.9 2,095.7 2083.7 2,086.9 2102.7 2101.2 67 Commercial and industrial 435.6r 455.8 461.0 464.4 468.2 4721 474.7 478.5 475.3 475.6 480.5 480.5 63 Real estate 894.6r 912.8 920.6 929.5 937.3 943.3 949.8 959.4 955.8 957.0 961.6 961.0 64 Revolving home equity 73.2 74.0 74.2 74.4 74.7 75.0 75.6 75.9 75.8 75.8 76.0 76.1 65 Other 821.4r 838.7 846.4 855.1 862.7 868.3 874.2 883.5 880.0 881.2 885.7 884.9 66 Consumer 391.? 416.3 424.3 430.3 435.2 4421 444.9 450.2 447.1 448.7 450.3 453.5 67 Security3 58.2 49.6 46.5 47.0 43.3 46.7 47.4 46.7 46.4 45.4 50.0 44.5 68 Other 158^ 157.0 158.6 159.9 160.4 159.2 160.1 160.8 159.2 160.3 160.2 161.8 69 Interbank loans4 133.4 131.6 133.7 134.0 135.7 138.9 148.8 1527 150.5 149.6 156.2 153.7 70 Cash assets5 193.8 188.6 185.5 179.6 180.7 187.0 181.6 182.6 179.5 176.9 180.2 186.3 71 Other assets6 171.? 166.4 170.6 172.3 167.6 167.0 168.3 170.5 168.5 170.3 1727 170.2 72 Total assets7 3^1Z6r 330&8 3,335.5 3342.9 3348.1 3367.0 33843 3/111.1 3389.0 33973 3*4200 3y421.9 Liabilities 73 Deposits 2379.2 2,369.0 2371.4 2371.9 2,368.4 2,374.9 2371.0 2,374.0 2371.3 2371.1 2371.4 2377.4 74 Transaction 808.1 798.4 799.9 797.8 793.2 797.4 788.9 787.7 787.8 787.2 7822 788.9 75 Nontransaction 1,571.1 1,570.6 1371.5 1374.2 1375.2 1377.4 1382.1 1386.4 1383.5 1383.9 1389.2 1388.4 76 Large time 208.9 210.1 211.4 212.5 211.3 214.7 218.9 220.3 219.6 220.0 221.1 220.2 77 Other 1,362.2 1360.5 1360.1 1361.6 1363.9 1362.8 1363.1 1,366.0 1,363.9 1,363.9 1368.0 1368.2 78 Borrowings 416.9 462.4 462.2 461.0 473.5 477.6 476.0 497.2 459.9 484.6 520.1 519.4 79 From banks in the U.S 122.6 131.9 140.6 139.1 138.3 148.4 154.2 159.8 158.4 160.9 159.6 159.5 80 From nonbanks in the U.S 294.3 330.5 321.6 321.9 335.2 329.2 321.8 337.5 301.4 323.7 360.6 359.9 81 Net due to related foreign offices.... 1.7 32.6 44.6 53.4 59.9 64.6 64.6 77.6 71.1 70.8 78.0 83.4 82 Other liabilities8 105.1 129.8 132.5 127.6 128.4 128.1 126.8 124.5 122.8 125.8 126.2 124.3 83 Total UabUities 24W2.9 2^93.9 3,010.8 3,013.9 3,030.1 3,<M5.2 3,0384 3,0734 3,025.2 3,052-2 3,095.8 3,1043 84 Residual (assets less liabilities)9 309.6r 312.9 324.8 329.0 317.9 321.8 345.8 337.6 363.8 345.0 324.2 317.4 Not seasonally adjusted Assets 85 Bank credit 2,779.3r 2876.2 2,895.1 2,910.0 2,925.6 2,937.8 2,952.9 2,967.1 2,957.0 2964.5 2,972.1 2,968.8 86 Securities in bank credit 831./ 885.1 887.8 884.0 879.8 873.1 871.1 861.9 866.3 866.9 860.1 856.4 87 U.S. government securities 671.2 689.8 687.7 686.8 682.4 671.4 667.8 663.1 667.5 667.7 662.2 657.1 88 Other securities 160.5r 195.3 200.1 197.2 197.3 201.7 203.3 198.8 198.8 199.1 197.9 199.4 89 Loans and leases in bank credit2 1,947.6r 1,991.0 2,007.4 2,026.0 2,045.8 2,064.7 2,081.8 2,105.1 2,090.8 2,097.6 2,111.9 2,112.4 90 Commercial and industrial 435.(? 456.9 459.6 461.5 465.7 471.5 475.6 478.4 474.4 474.9 481.0 481.3 91 Real estate 897.9r 913.5 921.4 928.4 937.5 944.9 952.7 962.6 960.4 962.2 963.1 963.7 92 Revolving home equity 73.5 73.9 74.0 74.4 75.0 75.7 76.0 76.2 76.3 76.1 76.2 76.1 93 Other 824.5 839.6 847.4 854.0 862.5 869.2 876.7 886.5 884.1 886.1 886.9 887.6 94 Consumer 395.5 414.4 421.6 429.6 436.3 441.8 445.0 455.1 448.7 452.5 456.1 460.8 95 Security3 57.5 48.8 45.7 46.0 43.6 46.0 47.3 46.1 46.3 46.4 49.3 42.7 96 Other 161.lr 1573 159.0 160.5 1627 160.5 161.2 162.9 161.0 161.6 162.4 163.9 97 Interbank loans4 138.7 130.7 129.6 131.9 132.6 136.3 148.9 158.8 158.5 157.6 161.3 155.9 98 Cash assets5 206.8 186.1 182.4 173.4 181.4 185.3 188.2 195.3 179.7 186.2 190.7 209.9 99 Other assets6 173.? 165.3 170.1 170.9 169.0 169.4 169.5 172.3 168.8 171.7 173.0 174.2 100 Total assets7 3,2393' 3301.4 3320.7 3329.1 33513 3371.9 3*4023 3,43&4 3^06L8 3,4226 3,439.8 3451.6 Liabilities 101 Deposits 2,411.2 2366.7 2364.1 2,360.3 2366.7 2,372.2 2,385.6 2,404.3 2392.6 2393.4 2,394.9 2,413.5 10? Transaction 8424 796.9 791.9 782.8 789.4 791.0 800.4 820.6 804.2 808.6 812.0 835.6 103 Nontransaction 1368.8 1369.8 1372.3 1377.5 1,577.2 1381.1 1385.3 1383.7 1388.4 1384.9 1382.9 1377.9 104 Large time 207.5 209.6 211.1 213.9 212.3 215.8 219.4 218.8 220.0 219.4 218.8 217.3 105 Other 1,361.3 1,360.2 1,361.2 1,363.6 1,364.9 1,365.3 1,365.9 1,364.8 1,368.4 1,365.5 1,364.0 1,360.6 106 Borrowings 425.6 468.3 469.8 475.6 483.7 489.7 500.4 510.8 500.4 506.4 525.8 511.4 107 From banks in the U.S 127.5 132.1 134.6 135.8 137.9 145.5 154.5 165.9 164.1 165.8 166.5 165.9 108 From nonbanks in the U.S 298.1 336.2 335.2 339.7 345.9 344.2 345.9 344.9 336.3 340.6 359.3 345.5 109 Net due to related foreign offices .... -1.8 32.9 43.5 51.0 55.4 623 64.1 73.9 66.6 71.1 72.0 81.6 110 Other liabilities8 107.8 126.3 129.9 127.3 129.1 131.9 132.8 127.7 126.6 129.7 129.2 127.2 111 Total UabUities 2^428 2p942 3,007.4 3,0141 3,034.9 3,056.0 3,083.0 3,116.7 3,086.1 3,100.6 3,121.9 3,133.7 112 Residual (assets less liabilities)9 296.5' 307.2 313.3 315.0 316.4 315.9 319.5 319.6 320.7 322.0 317.9 317.9 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • March 1995 NOTES TO TABLE 1.26 1. Covers the following types of institutions in the fifty states and the District of 5. Includes vault cash, cash items in process of collection, demand balances due from Columbia: domestically chartered commercial banks that submit a weekly report of depository institutions in the United States, balances due from Federal Reserve Banks, condition (large domestic); other domestically chartered commercial banks (small domes- and other cash assets. tic); branches and agencies of foreign banks; New York State investment companies, and 6. Excludes the due-from position with related foreign offices, which is included in Edge Act and agreement corporations (foreign-related institutions). Excludes interna- lines 25,53, 81, and 109. tional banking facilities. Data are Wednesday values, or pro rata averages of Wednesday 7. Excludes unearned income, reserves for losses on loans and leases, and reserves for values. Large domestic banks constitute a universe; data for small domestic banks and transfer risk. Loans are reported gross of these items. foreign-related institutions are estimates based on weekly samples and on quarter-end 8. Excludes the due-to position with related foreign offices, which is included in lines condition reports. Data are adjusted for breaks caused by reclassifications of assets and 25, 53, 81, and 109. liabilities. 9. This balancing item is not intended as a measure of equity capital for use in capital 2. Excludes federal funds sold to, reverse repurchase agreements with, and loans to adequacy analysis. commercial banks in the United States. NOTE. Data have been benchmarked to the September 1994 Call Report. Earlier tables 3. Consists of reserve repurchase agreements with broker-dealers and loans to pur- were benchmarked to the June 1994 Call Report. In addition, seasonally adjusted data chase and carry securities. reflect new seasonal factors. 4. Consists of federal funds sold to, reverse repurchase agreements with, and loans to commercial banks in the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A21 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS Millions of dollars, Wednesday figures 1994 AAccccoouunntt Nov. 2 Nov. 9 Nov. 16 Nov. 23 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 ASSETS 1 Cash and balances due from depository institutions 114,500 102,414 119,851 120,520 119,636 109,554 115,474 117,958 132,014 7 US. Treasury and government securities 305,139 300,233 302,400 299,623 302,617 303,847 303,528 299,048 293,571 Trading account 26,700 22,978 26,552 21,680 24,125 24,765 23,768 21,152 17,116 4 Investment account 278,439 277,256 275,848 277,944 278,492 279,082 279,760 277,896 276,455 5 Mortgage-backed securities1 91,636 91,499 92,735 92,528 93,608 93,801 94,786 95,055 94,343 All others, by maturity 6 One year or less 43,096 42,541 41,135 44,240 45,063 45,730 44,878 4433,,442200 4433,,558833 7 One year through five years 78,029 77,235 75,071 74,177 74,093 73,822 74,726 74,677 73,890 8 More than five years 65,677 65,980 66,907 66,998 65,728 65,728 65,370 64,743 64,639 9 Other securities 120,038 117,339 116,326 115,692 114,482 112,148 111,921 110,942 112,176 10 Trading account 1,846 1,721 1,830 1,775 1,849 1,660 1,758 2,053 2,135 11 Investment account 62,499 62,743 62,623 62,904 62,746 62,441 62,433 62,219 62,177 12 State and local government, by maturity 21,706 21,684 21,730 21,829 21,817 21,567 21,426 21,413 21,441 n One year or less 5,400 5,439 5,419 5,424 5,502 5,496 5,457 5,482 5,472 14 More than one year 16,306 16,245 16,311 16,404 16,315 16,071 15,969 15,931 15,969 15 Other bonds, corporate stocks, and securities 40,793 41,060 40,894 41,075 40,930 40,874 41,007 40,805 40,736 16 Other trading account assets 55,693 52,875 51,872 51,014 49,887 48,046 47,730 46,669 47,864 17 Federal funds sold2 99,136 99,777 97,740 105,780 107,882 105,518 105,276 111,556 107,395 18 To commercial banks in the United States 68,342 70,180 68,877 72,972 77,877 74,436 74,867 80,354 79,484 19 To nonbank brokers and dealers in securities 25,600 23,794 23,333 27,298 24,406 25,029 24,761 26,209 21,551 70 To others3 5,193 5,803 5,529 5,510 5,599 6,053 5,647 4,994 6,361 ?1 Other loans and leases, gross 1,129,609 1,129,041 1,134,465 1,134,335 l,142,808r 1,137,188 1,142,977 1,154,995 1,156,139 77 Co B m a m nk e e rc rs ia a l c a c n e d p t i a n n d c u e s s t r a ia n l d commercial paper 309 3 , , 2 2 7 7 5 0 308 3 , , 1 1 5 4 5 3 31 3 0, , 2 2 0 7 5 3 311 3 , , 3 2 1 9 6 5 311 3 , , 3 4 7 2 8 0 r 308 3 , , 9 2 6 5 2 2 309 2 , , 6 9 5 7 5 6 31 3 4 , , 0 6 1 5 9 6 31 2 4 , , 6 1 8 7 0 6 ?4 All other 306,005 305,012 306,932 308,021 307,958r 305,710 306,679 311,638 311,496 75 304,034r 302,977 304,731 305,899r 305,683r 303,406 304,495 309,556 309,416 76 Non-U.S. addressees 1,970 2,035 2,201 2,121 2,275 2,304 2,184 2,082 2,080 77 448,517 449,586 449,948 450,716 453,289 455,192 456,407 456,900 456,401 78 Revolving, home equity 46,303 46,318 46,357 46,584 46,812 46,858 46,720 46,774 46,686 79 All other 402,214 403,268 403,591 404,132 406,477 408,334 409,687 410,126 409,716 30 To individuals for personal expenditures 234,561 235,525 234,684 234,508 237,353r 232,834 235,029 237,853 240,776 31 To depository and financial institutions 47,330r 46,498 47,923 48,783 48,237 50,964 50,844 52,160 52,805 37 Commercial banks in the United States 27,325 27,123 28,145 28,749 27,923 31,444 31,607 32,516 32,792 33 Banks in foreign countries 3,063 2,334 2,835 3,217 3,614 2,803 2,703 2,890 2,851 34 Nonbank depository and other financial institutions 16,941 17,041 16,942 16,817 16,700 16,717 16,534 16,754 17,162 35 For purchasing and carrying securities 16,296 17,041 17,006 16,004 18,628 15,668 16,059 17,636 16,050 36 To finance agricultural production 6,357 6,335 6,344 6,300 6,347 6,236 6,232 6,286 6,389 37 To states and political subdivisions 11,453 11,373 11,296 11,392 11,493 11,396 11,324 11,338 11,299 38 To foreign governments and official institutions 917 921 1,087 906 1,070 916 923 888800 934 39 24,531 23,031 25,374 23,661 24,048 23,975 25,124 2255,,774455 25,564 40 Lease-financing receivables 30,372 30,575 30,598 30,749 30,965 31,044 31,382 31,540 31,743 41 LESS: Unearned income 1,597 1,598 1,609 1,611 1,595 1,606 1,756 1,769 1,764 47 Loan and lease reserve 34,606 34,826 34,765 34,704 34,721 34,616 34,554 34,460 34,267 43 Other loans and leases, net 1,093,406 1,092,617 1,098,092 1,098,020 l,106,492r 1,100,966 1,106,667 1,118,766 1,120,108 44 All other assets 141,350 138,946 136,734 134,852 140,643r 136,410 138,650 140,928 136,366 45 Total assets6 1,873,568 1,851,326 1,871,142 1,874,487 1,891,753 1,868,442 1,881,514 1,899,198 1,901,630 Footnotes appear on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • March 1995 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures 1994 AAccccoouunntt Nov. 2 Nov. 9 Nov. 16 Nov. 23 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 LIABILITIES 46 Deposits 1,149,509 1,138,825 1,157,563 1,150,053 1,158,859 1,153,177 1,157,592 1,159,222 1,173,858 47 Demand deposits7 299,232 287,119 308,311 302,406 308,991 298,539 306,960 307,963 327,647 48 Individuals, partnerships, and corporations 250,961 244,352 257,254 253,224 259,552 252,689 259,483 259,175 274,439 49 Other holders 48,272 42,767 51,058 49,182 49,439 45,850 47,477 48,789 53,208 50 States and political subdivisions 8,755 7,607 9,180 8,976 9,648 8,809 9,375 10,405 9,845 51 U.S. government 2,554 2,262 3,157 2,867 2,345 1,821 3,058 2,506 2,144 52 Depository institutions in the United States 21,485 18,171 22,064 20,748 20,655 20,071 19,260 19,631 23,143 53 Banks in foreign countries 5,424 4,811 5,508 6,115 6,508 5,574 5,772 5,538 5,910 54 Foreign governments and official institutions 756 693 774 1,466 680 761 598 846 816 55 Certified and officers' checks 9,298 9,223 10,374 9,010 9,603 8,813 9,414 9,862 11,350 56 Transaction balances other than demand deposits4 125,644 125,756 125,659 125,070 125,698 128,755 126,770 128,378 127,581 57 Nontransaction balances 724,632 725,950 723,593 722,577 724,170 725,883 723,861 722,880 718,630 58 Individuals, partnerships, and corporations 704,023 705,467 703,312 701,736 703,073 706,123 704,552 702,696 698,678 59 Other holders 20,609 20,483 20,281 20,841 21,097 19,760 19,309 20,185 19,952 60 States and political subdivisions 16,932 16,968 16,941 17,242 17,372 17,341 17,015 16,965 16,833 61 U.S. government 1,725 1,545 1,423 1,402 1,426 304 301 1,278 1,279 62 Depository institutions in the United States 1,519 1,492 1,477 1,671 1,773 1,592 1,470 1,409 1,327 63 Foreign governments, official institutions, and banks . . 433 478 439 526 526 523 523 533 513 64 Liabilities for borrowed money5 369,587R 358,219' 358,147' 364,079' 380,588' 365,098 366,424 383,294 365,997 65 Borrowings from Federal Reserve Banks 0 54 0 100 0 607 0 765 0 66 Treasury tax and loan notes 20,506R 6,177 4,513' 4,320 15,354 137 2,786 27,985 9,835 67 Other liabilities for borrowed money6 349,08 lr 351,988' 353,634' 359,658' 365,234' 364,355 363,639 354,543 356,163 68 Other liabilities (including subordinated notes and debentures) ... 180,970R 180,378' 181,822' 186,966' 178,471' 175,594 182,373 183,364 187,867 69 Total liabilities 1,700,066 1,677,422 1,697,531 1,701,097 1,717,918 1,693,869 1,706,389 1,725,879 1,727,722 70 Residual (total assets less total liabilities)7 173,502 173,904 173,611 173,390 173,835 174,573 175,125 173,318 173,908 MEMO 71 Total loans and leases, gross, adjusted, plus securities8 1,558,253 1,549,087 1,553,908 1,553,710 1,561,989' 1,552,821 1,557,228 1,563,671 1,557,006 72 Time deposits in amounts of $100,000 or more 99,739' 99,298' 98,666' 99,654' 100,141' 99,650 98,973 98,311 97,481 73 Loans sold outright to affiliates9 681 677 669 667 670 660 668 667 617 74 Commercial and industrial 339 339 338 337 340 340 340 339 298 75 Other 342 338 331 330 330 320 328 328 319 76 Foreign branch credit extended to U.S. residents10 22,743 22,662 22,646 23,034 23,211 23,138 23,123 23,108 22,936 77 Net owed to related institutions abroad 51,274 55,984 58,042 67,078 56,131 60,516 64,502 65,832 75,100 1. Includes certificates of participation, issued or guaranteed by agencies of the U.S. 8. Excludes loans to and federal funds transactions with commercial banks in the government, in pools of residential mortgages. United States. 2. Includes securities purchased under agreements to resell. 9. Affiliates include a bank's own foreign branches, nonconsolidated nonbank affiliates 3. Includes allocated transfer risk reserve. of the bank, the bank's holding company (if not a bank), and nonconsolidated nonbank 4. Includes negotiable order of withdrawal (NOWs) and automatic transfer service subsidiaries of the holding company. (ATS) accounts, arid telephone and preauthorized transfers of savings deposits. 10. Credit extended by foreign branches of domestically chartered weekly reporting 5. Includes borrowings only from other than directly related institutions. banks to nonbank U.S. residents. Consists mainly of commercial and industrial loans, but 6. Includes federal funds purchased and securities sold under agreements to repur- includes an unknown amount of credit extended to other than nonfinancial businesses. chase. 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 AAccccoouunntt Nov. 2 Nov. 9 Nov. 16 Nov. 23 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 ASSETS 1 Cash and balances due from depository institutions 14,700 14,984 14,954 15,677 15,481 15,723 16,633 17,115 17,987 2 U.S. Treasury and government agency securities 38,659 37,688 38,494 37,868 37,757 36,749 35,999 3366,,338866 3377,,667788 3 Other securities 12,494 12,351 12,261 12,624 12,550 12,605 12,775 12,696 12,791 4 Federal funds sold1 25,981 26,238 23,403 26,462 30,071 33,324 31,769 29,973 35,824 5 To commercial banks in die United States 6,786 5,686 4,921 6,514 10,018 7,230 7,181 6,614 9,094 6 To others2 19,195 20,552 18,482 19,948 20,053 26,094 24,588 23,359 26,730 7 Other loans and leases, gross 162,554 163,066 164,471 164,837 166,162 166,958 168,189 172,187 170,760 8 Commercial and industrial 104,021 104,491 105,521 105,967 106,891r 106,511 106,882 108,268 107,588 9 Bankers acceptances and commercial paper . 2,889 3,096 3,143 3,180 3,101 3,179 3,328 3,620 3,668 10 All other 101,131 101,396 102,378 102,787 103,790r 103,332 103,553 104,649 103,920 11 U.S. addressees 97,116 97,402 98,368 98,656 99,692r 99,289 99,485 100,397 99,746 1? Non-U.S. addressees 4,015 3,994 4,010 4,131 4,098 4,043 4,069 4,251 4,174 13 Loans secured by real estate 26,135 26,096 26,134 26,093 26,079 25,902 25,914 25,845 25,788 14 Loans to depository and financial institutions 24,761 24,898 25,119 25,496 25,288r 26,415 27,044 28,714 2288,,662255 1 *> Commercial banks in the United States 5,094 5,129 5,190 5,386 5,361 5,417 5,736 6,013 5,806 16 Banks in foreign countries 1,998 2,005 1,994 1,949 1,800 1,987 1,912 2,052 2,097 17 Nonbank financial institutions 17,669 17,764 17,935 18,160 18,127r 19,011 19,395 20,649 20,722 18 For purchasing and carrying securities 3,463 3,677 3,799 3,432 4,057 3,923 4,305 5,070 4,671 19 To foreign governments and official institutions 335 338 380 369 372 356 395 442233 337788 70 All other 3,840 3,566 3,518 3,480 3,476 3,850 3,650 3,867 3,710 21 Other assets (claims on nonrelated parties) 36,344r 36,901r 36,581 37,506r 38,679 45,231 45,571 43,442 42,775 22 Total assets3 318,204R 320,672R 318,253 321,610R 325,715 337,310 338,716 338,782 343,193 LIABILITIES 23 Deposits or credit balances owed to other than directly related institutions 96,149 98,385 97,645 99,184 98,952 101,054 102,211 99,722 9999,,663399 24 Demand deposits4 4,046 4,198 4,173 3,878 3,864 3,892 3,885 4,126 4,737 25 Individuals, partnerships, and corporations .... 3,414 3,412 3,464 3,198 3,253 3,120 3,184 3,211 3,911 76 Other 632 786 709 680 611 772 701 915 826 27 Nontransaction accounts 92,103 94,187 93,472 95,306 95,088 97,162 98,326 95,596 94,902 28 Individuals, partnerships, and corporations .... 62,702 64,076 63,670 64,322 63,757 64,854 65,416 63,580 64,012 29 Other 29,400 30,110 29,803 30,984 31,331 32,308 32,910 32,016 30,890 30 Borrowings from other than directly related institutions 72,563 74,574 72,846 75,449 75,076 78,632 75,112 7777,,223366 7799,,994488 31 Federal funds purchased5 37,099 37,905 36,653 37,824 38,259 42,585 39,217 40,877 43,489 3? From commercial banks in the United States .. 6,511 7,547 6,065 6,373 7,894 7,443 6,633 7,556 6,620 33 From others 30,588 30,358 30,588 31,451 30,365 35,142 32,584 33,320 36,869 34 Other liabilities for borrowed money 35,464 36,669 36,193 37,624 36,817 36,046 35,895 36,360 36,459 35 To commercial banks in the United States 6,591 6,394 6,387 5,929 6,232 5,838 5,765 6,746 6,425 36 To others 28,873 30,275 29,806 31,695 30,585 30,209 30,130 29,614 30,034 37 Other liabilities to nonrelated parties 34,060 33,784r 33,390 34,665r 35,844 42,825 43,190 40,588 40,192 38 Total liabilities6 318,204R 320,672R 318,253 321,610R 325,715 337,310 338,716 338,782 343,193 MEMO 39 Total loans (gross) and securities, adjusted 227,807 228,529 228,518 229,892 231,160 236,989 235,815 238,615 242,153 40 Net owed to related institutions abroad 87,9fff 84,486r 86,284 85,677r 90,827 88,079 90,423 94,253 98,037 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" position, 3. For U.S. branches and agencies of foreign banks having a net "due from" position, includes net owed to related institutions abroad. includes net due from related institutions abroad. 7. Excludes loans to and federal funds transactions with commercial banks in the 4. Includes other transaction deposits. United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • March 1995 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 June July Aug. Sept. Oct. Nov. Commercial paper (seasonally adjusted unless noted otherwise) 11 AAllll iissssuueerrss 525,831 562,656 528,832 545,619 555,075 563,454 572,925 564,639 574,471 592,518 580,673 FFiinnaanncciiaall ccoommppaanniieess'' DDeeaalleerr--ppllaacceedd ppaappeerr 22 22 TToottaall 183,622 214,706 212,999 226,456 218,947 214,313 222,780 214,769 214,349 224,280 215,748 33 BBaannkk--rreellaatteedd ((nnoott sseeaassoonnaallllyy aaddjjuusstteedd))33 ...... n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. DDiirreeccttllyy ppllaacceedd ppaappeerr44 44 TToottaall 210,930 200,036 182,463 171,605 180,389 199,555 199,561 199,031 203,573 207,296 202,781 55 BBaannkk--rreellaatteedd ((nnoott sseeaassoonnaallllyy aaddjjuusstteedd))33...... n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 66 NNoonnffiinnaanncciiaall ccoommppaanniieess55 131,279 147,914 133,370 147,558 155,739 149,586 150,584 150,839 156,549 160,942 162,144 Bankers dollar acceptances (not seasonally adjusted)6 7 Total 62,972 54,771 43,770 38,194 32,348 30,659 30,390 30,448 31,164 30,413 29,760 By holder 8 Accepting banks 9,433 9,017 11,017 10,555 12,421 12,334 11,608 11,543 11,299 11,061 11,689 9 Own bills 8,510 7,930 9,347 9,097 10,707 11,273 10,838 10,824 10,475 9,931 10,548 10 Bills bought from other banks 924 1,087 1,670 1,458 1,714 1,061 770 719 824 1,130 1,142 Federal Reserve Banks7 11 Foreign correspondents 1,066 918 1,739 1,276 725 453 386 325 388 332 234 12 Others 52,473 44,836 31,014 26,364 19,202 17,872 18,396 18,580 19,477 19,020 17,836 By basis 13 Imports into United States 15,651 13,095 12,843 12,209 10,217 10,625 10,956 10,486 10,985 10,674 10,272 14 Exports from United States 13,683 12,703 10,351 8,096 7,293 6,576 6,399 6,458 6,575 6,754 6,688 15 All other 33,638 28,973 20,577 17,890 14,838 13,458 13,035 13,505 13,604 12,986 12,800 1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales, 6. Data on bankers dollar acceptances are gathered from approximately 100 institupersonal, and mortgage financing; factoring, finance leasing, and other business lending; tions. The reporting group is revised every January. insurance underwriting; and other investment activities. 7. In 1977 the Federal Reserve discontinued operations in bankers dollar acceptances 2. Includes all financial-company paper sold by dealers in the open market. for its own account. 3. Series were discontinued in January 1989. 4. As reported by financial companies that place their paper directly with investors. 5. Includes public utilities and firms engaged primarily in such activities as communications, construction, manufacturing, mining, wholesale and retail trade, transportation, and services. 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 Average Average Average Date of change rate rate rate 1992—Jan. 1 6.50 1992 6.25 1993—Jan. . 6.00 Apr. 6.45 July 2 6.00 1993 6.00 Feb. 6.00 May 6.99 1994 7.15 Mar. 6.00 June 7.25 1994—Mar. 24 6.25 Apr. 6.00 July . 7.25 Apr. 19 6.75 -Jan. . 6.50 May 6.00 Aug. 7.51 May 17 7.25 Feb. 6.50 June 6.00 Sept. 7.75 Aug. 16 7.75 Mar. 6.50 July . 6.00 Oct. . 7.75 Nov. 15 8.50 Apr. 6.50 Aug. 6.00 Nov. 8.15 May 6.50 Sept. 6.00 Dec. 8.50 1995—Feb. 1 9.00 June 6.50 Oct. . 6.00 July . 6.02 Nov. 6.00 1995—Jan. . 8.50 Aug. 6.00 Dec. 6.00 Sept. 6.00 Oct. . 6.00 1994—Jan. . 6.00 Nov. 6.00 Feb. 6.00 Dec. 6.00 Mar 6.06 1. The prime rate is one of several base rates that banks use to price short-term recent Call Report. Data in this table also appear in the Board's H.15 (519) weekly and business loans. The table shows the date on which a new rate came to be the predominant G.13 (415) monthly statistical releases. For ordering address, see inside front cover. one quoted by a majority of the twenty-five largest banks by asset size, based on the most Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • March 1995 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 11999922 11999933 11999944 Sept. Oct. Nov. Dec. Dec. 2 Dec. 9 Dec. 16 Dec. 23 Dec. 30 MONEY MARKET INSTRUMENTS 1 Federal funds1'2,3 3.52 3.02 4.21 4.73 4.76 5.29 5.45 5.85 5.47 5.48 5.56 5.45 2 Discount window borrowing2,4 3.25 3.00 3.60 4.00 4.00 4.40 4.75 4.75 4.75 4.75 4.75 4.75 Commercial paper3,5,6 3 1-month 3.71 3.17 4.43 4.90 5.02 5.40 6.08 5.79 6.09 6.12 6.05 6.06 4 3-month 3.75 3.22 4.66 5.02 5.51 5.81 6.26 6.05 6.26 6.30 6.25 6.29 5 6-month 3.80 3.30 4.93 5.32 5.70 6.01 6.62 6.30 6.58 6.67 6.63 6.70 Finance paper, directly placed3,5,7 6 1-month 3.62 3.12 4.33 4.79 4.91 5.30 5.93 5.68 5.94 6.02 5.90 5.86 7 3-month 3.65 3.16 4.53 4.89 5.36 5.67 6.12 5.95 6.11 6.18 6.12 6.11 8 6-month 3.63 3.15 4.56 4.99 5.30 5.58 6.17 5.95 6.13 6.24 6.18 6.19 Bankers acceptances3,5,8 9 3-month 3.62 3.13 4.56 4.95 5.41 5.71 6.18 5.99 6.17 6.20 6.14 6.23 10 6-month 3.67 3.21 4.83 5.24 5.59 5.93 6.53 6.26 6.51 6.55 6.53 6.61 Certificates of deposit, secondary market3,9 11 1-month 3.64 3.11 4.38 4.85 4.98 5.38 6.01 5.85 6.04 6.07 5.95 5.96 12 3-month 3.68 3.17 4.63 5.03 5.51 5.79 6.29 6.08 6.28 6.30 6.26 6.36 13 6-month 3.76 3.28 4.% 5.40 5.79 6.11 6.78 6.47 6.72 6.82 6.78 6.88 14 Eurodollar deposits, 3-month3,10 3.70 3.18 4.63 5.01 5.52 5.78 6.27 6.06 6.28 6.28 6.24 6.34 U.S. Treasury bills Secondary market ,5 15 3-month 3.43 3.00 4.25 4.62 4.95 5.29 5.60 5.53 5.70 5.66 5.49 5.52 16 6-month 3.54 3.12 4.64 5.04 5.39 5.72 6.21 5.97 6.20 6.27 6.20 6.23 17 1-year 3.71 3.29 5.02 5.43 5.75 6.13 6.67 6.45 6.62 6.73 6.66 6.74 Auction average3,5,11 18 3-month 3.45 3.02 4.29 4.64 4.96 5.25 5.64 5.44 5.83 5.76 5.59 5.56 19 6-month 3.57 3.14 4.66 5.02 5.39 5.69 6.21 5.86 6.33 6.32 6.30 6.24 20 1-year 3.75 3.33 4.98 5.38 5.72 6.09 6.75 n.a. n.a. 6.75 n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities12 21 1-year 3.89 3.43 5.32 5.76 6.11 6.54 7.14 6.89 7.10 7.20 7.12 7.21 22 2-year 4.77 4.05 5.94 6.39 6.73 7.15 7.59 7.41 7.51 7.61 7.63 7.69 23 3-year 5.30 4.44 6.27 6.69 7.04 7.44 7.71 7.62 7.64 7.73 7.74 7.79 24 5-year 6.19 5.14 6.69 7.08 7.40 7.72 7.78 7.79 7.74 7.78 7.79 7.81 25 7-year 6.63 5.54 6.91 7.28 7.58 7.83 7.80 7.83 7.76 7.81 7.82 7.81 26 10-year 7.01 5.87 7.09 7.46 7.74 7.96 7.81 7.89 7.79 7.82 7.82 7.81 27 20-year n.a. 6.29 7.49 7.87 8.08 8.20 7.99 8.10 7.99 8.00 7.97 7.96 28 30-year 7.67 6.59 7.37 7.71 7.94 8.08 7.87 7.99 7.88 7.87 7.85 7.83 Composite 29 More than 10 years (long-term) 7.52 6.45 7.41 7.81 8.02 8.16 7.97 8.07 7.97 7.97 7.95 7.93 STATE AND LOCAL NOTES AND BONDS Moody's series13 30 6.09 5.38 5.77 5.87 6.05 6.57 6.62 6.65 6.55 6.62 6.65 6.65 31 Baa 6.48 5.82 6.17 6.23 6.37 6.89 7.17 6.96 7.15 7.15 7.18 7.18 32 Bond Buyer series14 6.44 5.60 6.18 6.28 6.52 6.97 6.80 6.90 6.88 6.77 6.74 6.71 CORPORATE BONDS 33 Seasoned issues, all industries15 8.55 7.54 8.26 8.60 8.83 8.94 8.73 8.84 8.74 8.73 8.71 8.70 Rating group 34 8.14 7.22 7.97 8.34 8.57 8.68 8.46 8.57 8.47 8.46 8.45 8.43 35 Aa 8.46 7.40 8.15 8.49 8.71 8.83 8.62 8.73 8.63 8.62 8.60 8.59 36 A 8.62 7.58 8.28 8.61 8.82 8.94 8.73 8.84 8.75 8.74 8.71 8.70 37 Baa 8.98 7.93 8.63 8.98 9.20 9.32 9.10 9.21 9.11 9.10 9.08 9.08 38 A-rated, recently offered utility bonds16 8.52 7.46 8.29 8.62 8.80 8.95 8.78 8.81 8.78 8.79 8.75 8.78 MEMO Dividend-price ratio17 39 Preferred stocks18 7.46 6.89 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 40 Common stocks 2.99 2.78 2.82 2.80 2.82 2.86 2.91 2.91 2.93 2.91 2.90 2.89 1. The daily effective federal funds rate is a weighted average of rates on trades 12. Yields on actively traded issues adjusted to constant maturities. Source: U.S. through New York brokers. Department of the Treasury. 2. Weekly figures are averages of seven calendar days ending on Wednesday of the 13. General obligations based on Thursday figures; Moody's Investors Service. current week; monthly figures include each calendar day in the month. 14. State and local government general obligation bonds maturing in twenty years are 3. Annualized using a 360-day year for bank interest. used in compiling this index. The twenty-bond index has a rating roughly equivalent to 4. Rate for the Federal Reserve Bank of New York. Moodys' A1 rating. Based on Thursday figures. 5. Quoted on a discount basis. 15. Daily figures from Moody's Investors Service. Based on yields to maturity on 6. An average of offering rates on commercial paper placed by several leading dealers selected long-term bonds. for firms whose bond rating is AA or the equivalent. 16. Compilation of the Federal Reserve. This series is an estimate of the yield on 7. An average of offering rates on paper directly placed by finance companies. recently offered, A-rated utility bonds with a thirty-year maturity and five years of call 8. Representative closing yields for acceptances of the highest-rated money center protection. Weekly data are based on Friday quotations. banks. 17. Standard & Poor's corporate series. Preferred stock ratio is based on a sample of 9. An average of dealer offering rates on nationally traded certificates of deposit. ten issues: four public utilities, four industrials, one financial, and one transportation. 10. Bid rates for Eurodollar deposits at 11:00 a.m. London time. Data are for indication Common stock ratio is based on the 500 stocks in the price index. purposes only. 18. Data for the preferred stock yield was discontinued as of June 29, 1994. 11. Auction date for daily data; weekly and monthly averages computed on an NOTE. Some of the data in this table also appear in the Board's H.15 (519) weekly and issue-date basis. G. 13 (415) monthly statistical releases. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A27 1.36 STOCK MARKET Selected Statistics 1994 IInnddiiccaattoorr 11999922 11999933 11999944 Apr. May June July Aug. Sept. Oct. Nov. Dec. Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 229.00 249.71 254.16 247.97 249.56 251.21 249.29 256.08 257.61 255.22 252.48 248.65 2 Industrial 284.26 300.10 315.32 304.48 307.58 308.66 307.34 316.56 322.19 321.53 319.33 313.92 3 Transportation 201.02 242.68 247.17 250.43 244.75 246.64 244.21 244.67 239.10 230.71 227.44 218.93 4 Utility 99.48 114.55 104.96 105.04 102.89 103.27 102.73 105.61 102.30 101.67 100.07 100.01 5 Finance 179.29 216.55 209.75 208.12 211.30 215.89 210.91 214.77 211.90 203.33 198.38 195.25 6 Standard & Poor's Corporation (1941-43 = 10)' 415.75 451.63 460.42 447.23 450.90 454.83 451.40 464.24 466.96 463.81 461.01 455.19 7 American Stock Exchange (Aug. 31, 1973 = 50)2 391.28 438.77 449.49 437.01 437.54 436.08 430.10 444.89 456.31 456.25 445.16 427.39 Volume of trading (thousands of shares) 8 New York Stock Exchange 202,558 263,374 290,652 301,242 269,812 265,341 250,382 277,877 292,356 301,327 297,001 302,049 9 American Stock Exchange 14,171 18,188 n.a. 15,805 15,727 18,400 14,378 15,874 18,785 20,731 18,465 18,745 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers3 43,990 60,310 61,160 60,700 59,870 60,800 61,930 63,070 61,630 62,150 61,000 61,160 Free credit balances at brokers4 11 Margin accounts5 8,970 12,360 14,095 13,175 12,715 12,560 12,620 12,090 12,415 12,875 13,635 14,095 12 Cash accounts 22,510 27,715 28,870 24,800 23,265 28,585 25,790 24,400 25,230 24,180 25,625 28,870 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, was credit is collateralized by securities. Margin requirements on securities other than options added to the group of stocks on which the index is based. The index is now based on 400 are the difference between the market value (100 percent) and the maximum loan value of industrial stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility collateral as prescribed by the Board. Regulation T was adopted effective Oct. 15, 1934; (formerly 60), and 40 financial. Regulation U, effective May 1, 1936; Regulation G, effective Mar. 11, 1968; and 2. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting Regulation X, effective Nov. 1, 1971. previous readings in half. On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T 3. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has the initial margin required for writing options on securities, setting it at 30 percent of the included credit extended against stocks, convertible bonds, stocks acquired through the current market value of the stock underlying the option. On Sept. 30, 1985, the Board exercise of subscription rights, corporate bonds, and government securities. Separate changed the required initial margin, allowing it to be the same as the option maintenance reporting of data for margin stocks, convertible bonds, and subscription issues was margin required by the appropriate exchange or self-regulatory organization; such maintediscontinued in April 1984. nance margin rules must be approved by the Securities and Exchange Commission. 4. Free credit balances are amounts in accounts with no unfulfilled commitments to Effective Jan. 31, 1986, the SEC approved new maintenance margin rules, permitting brokers and are subject to withdrawal by customers on demand. margins to be the price of the option plus 15 percent of the market value of the stock 5. Series initiated in June 1984. underlying the option. 6. Margin requirements, stated in regulations adopted by the Board of Governors Effective June 8, 1988, margins were set to be the price of the option plus 20 percent of pursuant to the Securities Exchange Act of 1934, limit the amount of credit that can be the market value of the stock underlying the option (or 15 percent in the case of used to purchase and carry "margin securities" (as defined in the regulations) when such stock-index options). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Financial Statistics • March 1995 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1994 11999922 11999933 11999944 July Aug. Sept. Oct. Nov. Dec. U.S. budget1 1 Receipts, total 1,090,453 1,153,226 1,257,187 84,827 97,338 135,895 89,024 87,673 130,810 2 On-budget 788,027 841,292 922,161 60,145 70,949 105,212 65,385 62,083 103,859 3 Off-budget 302,426 311,934 335,026 24,681 26,389 30,683 23,639 25,590 26,951 4 Outlays, total 1,380,856 1,408,532 1,460,557 118,025 121,608 131,903 121,480r 125,131 134,874 5 On-budget 1,128,518 1,141,945 1,181,185 93,164 95,279 103,189 95,307r 99,464 123,490 6 Off-budget 252,339 266,587 279,372 24,861 26,329 28,714 26,174 25,668 11,383 7 Surplus or deficit (-), total -290,403 -255,306 -203,370 -33,198 -24,270 3,993 —32,457r -37,458 -4,063 8 On-budget -340,490 -300,653 -259,024 -33,018 -24,330 2,024 -29,922r -37,381 -19,631 9 Off-budget 50,087 45,347 55,654 -180 60 1,969 -2,535 -78 15,568 Source of financing (total) 10 Borrowing from the public 310,918 248,594 184,998 -3,245 52,350 -11,996 32,457 40,528 -13,316 11 Operating cash (decrease, or increase (-)) -17,305 6,283 16,564 30,705 -9,802 -5,855 -480 9,366 476 12 Other2 -3,210 429 1,808 5,737 -18,374 13,858 480r -12,436 16,903 MEMO 13 Treasury operating balance (level, end of period) 58,789 52,506 35,942 20,285 30,087 35,942 36,422 27,056 26,580 14 Federal Reserve Banks 24,586 17,289 6,848 3,683 5,994 6,848 5,164 5,348 7,161 15 Tax and loan accounts 34,203 35,217 29,094 16,603 24,093 29,094 31,258 21,709 19,419 1. Since 1990, off-budget items have been the social security trust funds (federal gold; net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF old-age survivors insurance and federal disability insurance) and the U.S. Postal Service. loan-valuation adjustment; and profit on sale of gold. 2. Includes special drawing rights (SDRs); reserve position on the U.S. quota in the SOURCES. U.S. Department of the Treasury, Monthly Treasury Statement of Receipts and International Monetary Fund (IMF); loans to the IMF; other cash and monetary assets; Outlays of the U.S. Government; and U.S. Office of Management and Budget, Budget of accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous the U.S. Government. liability (including checks outstanding) and asset accounts; seigniorage; increment on Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A3 3 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year SSSooouuurrrccceee ooorrr tttyyypppeee 1993 1994 1994 11999933 11999944 HI H2 HI H2 Oct. Nov. Dec, RECEIPTS 1 All sources 1,153,226 1,257,453 593,212 582,038 652,236 625,557 89,024 87,673 130,810 2 Individual income taxes, net 509,680 543,055 255,556 262,073 275,053 273,474 43,239 37,414 54,315 3 Withheld 430,211 459,699 209,517 228,423 225,387 240,062 40,480 37,882 50,680 4 Presidential Election Campaign Fund 28 70 25 2 63 10 0 2 0 5 Nonwithheld 154,989 160,364 113,510 41,768 118,245 42,031 3,919 1,857 3,635 6 Refunds 75,546 77,077 67,468 8,115 68,642 9,207 1,160 2,327 579 Corporation income taxes 7 Gross receipts 131,548 154,205 69,044 68,266 80,536 78,392 5,513 22,,668822 3322,,661166 8 Refunds 14,027 13,820 7,198 6,514 6,933 7,331 2,043 1,185 700 9 Social insurance taxes and contributions, net ... 428,300 461,475 227,177 206,176 248,301 220,141 32,687 37,387 36,358 10 Employment taxes and contributions2 396,939 428,810 208,776 192,749 228,714 206,613 31,263 33,786 35,708 11 Self-employment taxes and contributions3 . 20,604 24,433 16,270 4,335 20,762 4,135 464 0 0 12 Unemployment insurance 26,556 28,004 16,074 11,010 17,301 11,177 1,073 3,249 230 13 Other net receipts4 4,805 4,661 2,326 2,417 2,284 2,349 351 352 420 14 Excise taxes 48,057 55,225 23,398 25,994 26,444 30,062 4,275 5,518 4,587 15 Customs deposits 18,802 20,099 8,860 10,215 9,500 11,042 1,848 1,827 1,747 16 Estate and gift taxes 12,577 15,225 6,494 6,617 8,197 7,071 1,206 1,220 1,092 17 Miscellaneous receipts5 18,273 22,041 9,879 9,227 11,170 13,305 2,300 2,811 1,375 OUTLAYS 18 All types 1,408,532 1,461,067 673,915 727,685r 710,620' 753,255 121,480 125,131 134,874 19 National defense 291,086 281,451 140,535 146,672r 133,739 141,092 18,801 22,428 26,348 20 International affairs 16,826 17,249 6,565 10,186 5,800 12,056 4,339 2,177 1,334 21 General science, space, and technology 17,030 17,602 7,996 8,880 8,502 8,979 1,115 1,673 1,529 22 Energy 4,319 5,398 2,462 1,663 2,036 2,949 525 166 417 23 Natural resources and environment 20,239 20,902 8,592 11,221' 9,179 12,373 3,418 1,797 1,622 24 Agriculture 20,443 15,131 11,872 7,516 7,451 7,697 2,048 2,784 1,938 25 Commerce and housing credit -22,725 -4,851 -14,537 -1,490 -5,114 -2,678 858 -1,244 -2,166 26 Transportation 35,004 36,835 16,076 19,570' 16,772 20,489 3,434 3,506 3,021 27 Community and regional development 9,051 11,877 4,929 4,288 5,592 7,070 1,171 1,109 1,102 28 Education, training, employment, and social services 50,012 44,730 24,080 26,753' 18,976 25,887 33,,770055 44,,002255 55,,777799 29 Health 99,415 106,495 49,882 52,958 53,121 54,123 8,631 9,525 9,246 30 Social security and Medicare 435,137 464,314 195,933 223,735 232,777 236,819 37,801 39,299 41,216 31 Income security 207,257 213,972 107,870 102,380' 109,103 101,743 15,275 16,151 19,331 32 Veterans benefits and services 35,720 37,637 16,385 19,852 16,686 19,757 1,677 3,337 4,277 33 Administration of justice 14,955 15,283 7,482 7,400 7,718 7,800 1,340 1,176 1,278 34 General government 13,009 11,348 5,205 6,531 5,076 7,393 1,261 1,556 1,972 35 Net interest6 198,811 202,957 99,635 99,914 99,844 109,435 18,669 18,242 19,302 36 Undistributed offsetting receipts7 -37,386 -37,772 -17,035 -20,344 -17,308 -20,065 -2,596 -2,575 -2,671 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 total for 6. Includes interest received by trust funds. outlays does not correspond to calendar year data because revisions from the Budget have 7. Rents and royalties for the outer continental shelf, U.S. government contributions for not been fully distributed across months. 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 Receipts and 3. Old-age, disability, and hospital insurance. Outlays of the U.S. Government-, and U.S. Office of Management and Budget, Budget of 4. Federal employee retirement contributions and civil service retirement and 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 • March 1995 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1992 1993 1994 IItteemm Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding 4,1% 4,250 4,373 4,436 4,562 4,602 4,673 4,721r 4,800 2 Public debt securities 4,177 4,231 4,352 4,412 4,536 4,576 4,646 4,693 n.a. 3 Held by public 3,129 3,188 3,252 3,295 3,382 3,434 3,443r 3,480 n.a. 4 Held by agencies 1,048 1,043 1,100 1,117 1,154 1,142 l,203r 1,213 n.a. 5 Agency securities 19 20 21 25 27 26 28r 29 n.a. 6 Held by public 19 20 21 25 27 26 27 29 n.a. 7 Held by agencies 0 0 0 0 0 0 0 0 n.a. 8 Debt subject to statutory limit 4,086 4,140 4,256 4,316 4,446 4,491 4,559 4,605 4,711 9 Public debt securities 4,085 4,139 4,256 4,315 4,445 4,491 4,559 4,605 4,711 10 Other debt1 0 0 0 0 0 0 0 0 0 MEMO 11 Statutory debt limit 4,145 4,145 4,370 4,900 4,900 4,900 4,900 4,900 4,900 1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specified SOURCES. U.S. Department of the Treasury, Monthly Statement of the Public Debt of the participation certificates, notes to international lending organizations, and District of United States and Treasury Bulletin. Columbia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1994 TTyyppee aanndd hhoollddeerr 11999911 11999922 11999933 11999944 Q1 Q2 Q3 Q4 1 Total gross public debt 3,801.7 4,177.0 4,535.7 n.a. 4,575.9 4,645.8 4,692.8 n.a. By type 2 Interest-bearing 3,798.9 4,173.9 4,532.3 4,769.2 4,572.6 4,642.5 4,689.5 4,769.2 i Marketable 2,471.6 2,754.1 2,989.5 3,126.0 3,042.9 3,051.0 3,091.6 3,126.0 4 Bills 590.4 657.7 714.6 733.8 721.2 698.5 697.3 733.8 5 Notes 1,430.8 1,608.9 1,764.0 1,867.0 1,802.5 1,835.7 1,867.5 1,867.0 6 Bonds 435.5 472.5 495.9 510.3 504.2 501.8 511.8 510.3 7 Nonmarketable1 1,327.2 1,419.8 1,542.9 1,643.1 1,529.7 1,591.5 1,597.9 1,643.1 8 State and local government series 159.7 153.5 149.5 132.6 145.5 143.4 137.4 132.6 9 Foreign issues2 41.9 37.4 43.5 42.5 42.7 42.2 42.0 42.5 10 Government 41.9 37.4 43.5 42.5 42.7 42.2 42.0 42.5 11 Public .0 .0 .0 .0 .0 .0 .0 0 12 Savings bonds and notes 135.9 155.0 169.4 177.8 172.6 174.9 176.4 177.8 13 Government account series3 959.2 1,043.5 1,150.0 1,259.8 1,138.4 1,200.6 1,211.7 1,259.8 14 Non-interest-bearing 2.8 3.1 3.4 31.0 3.3 3.3 3.2 31.0 By holder4 15 U.S. Treasury and other federal agencies and trust funds 968.7 1,047.8 1,153.5 1,141.7 1,203.0 1,213.1 16 Federal Reserve Banks 281.8 302.5 334.2 342.6 357.7 355.2 17 Private investors 2,563.2 2,839.9 3,047.7 3,094.6 3,088.2 3,127.8 18 Commercial banks 233.4 294.0 316.0 345.0r 330.7' 325.0 19 Money market funds 80.0 79.4 80.5 70.5 59.5 59.9 20 Insurance companies 168.7 197.5 216.0 n.a. 236.9r 244. lr 250.0 n.a. 21 Other companies 150.8 192.5 213.0 216.3 226.3 229.3 22 State and local treasuries 520.3 534.8 564.0 517.4r 520.1r 521.0 Individuals 23 Savings bonds 138.1 157.3 171.9 175.0 177.1 178.6 24 Other securities 125.8 131.9 137.9 140.1 144.0 148.6 25 Foreign and international5 491.8 549.7 623.3 632.7r 632.5r 653.8 26 Other miscellaneous investors6 651.3 702.4 725.0 760.7r 754.0r 761.6 1. Includes (not shown separately) securities issued to the Rural Electrification Admin- 5. Consists of investments of foreign balances and international accounts in the United istration, depository bonds, retirement plan bonds, and individual retirement bonds. States. 2. Nonmarketable series denominated in dollars, and series denominated in foreign 6. Includes savings and loan associations, nonprofit institutions, credit unions, mutual currency held by foreigners. savings banks, corporate pension trust funds, dealers and brokers, certain U.S. Treasury 3. Held almost entirely by U.S. Treasury and other federal agencies and trust funds. deposit accounts, and federally sponsored agencies. 4. Data for Federal Reserve Banks and U.S. government agencies and trust funds are SOURCES. U.S. Treasury Department, data by type of security, Monthly Statement of the actual holdings; data for other groups are Treasury estimates. Public Debt of the United States; data by holder, Treasury Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A3 3 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 1994 1994, week ending IItteemm Sept. Oct. Nov. Nov. 2 Nov. 9 Nov. 16 Nov. 23 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Dec. 28 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 52,362 53,226 53,350 49,072 44,646' 69,320 54,915 46,232 57,812 58,332 58,271 49,130 Coupon securities, by maturity 2 Five years or less 80,253r 87,677r 101,637 9944,,339900rr 95,546' 108,153 108,468 97,280 115,203 9911,,001133 80,604 5566,,883388 3 More than five years 40,275 42,801r 52,337 49,959r 52,267' 59,668 51,878 46,486 50,510 38,323 28,754 26,223 4 Federal agency 17,398 17,787 19,003 19,748 16,133 18,394 19,681 21,507 23,080 22,669 22,369 25,442 5 Mortgage-backed 34,616 38,452 31,733 26,645 42,862 35,861 31,400 18,842 31,638 36,313 23,603 11,179 By type of counterparty With interdealer broker 6 U.S. Treasury 99,684r 106,361r 121,000 112,898r 114,555' 136,995 127,867 107,823 131,712 111,298 95,694 73,710 7 Federal agency 732 650 544 825 511 470 557 527 468 683 485 399 8 Mortgage-backed 13,004 14,137 10,683 9,300 13,453 12,226 11,266 6,339 9,305 11,065 9,975 3,380 With other 9 U.S. Treasury 73,205r 77,342r 86,325r 80,524' 77,904' 100,146 87,395 82,175 91,813 76,370 71,934 58,482 10 Federal agency 16,665 17,137 18,459 18,924 15,622 17,924 19,124 20,980 22,612 21,987 21,884 25,043 11 Mortgage-backed 21,613 24,316 21,050 17,345 29,409 23,634 20,134 12,503 22,333 25,247 13,628 7,798 FUTURES TRANSACTIONS3 By type of deliverable security 12 U.S. Treasury bills 1,157 1,080 1,667 606 873 2,522 2,024 1,675 2,672 1,442 884433 886655 Coupon securities, by maturity 13 Five years or less 3,521 2,593 3,642 2,490 2,082 4,268 3,951 4,728 5,549 22,,880066 22,,665588 11,,771144 14 More than five years 13,548 12,402 14,287 13,582 12,179 16,870 14,178 14,202 17,302 11,238 8,474 5,509 15 Federal agency 0 0 0 0 0 0 0 0 0 0 0 0 16 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 0 OPTIONS TRANSACTIONS4 By type of underlying security 17 US. Treasury bills 0 0 0 00 0 0 00 00 00 00 00 00 Coupon securities, by maturity 18 Five years or less 3,566 4,712 2,722 2,729 2,203 3,748 3,070 1,866 1,877 864 1,548 1,063 19 More than five years 4,714 5,527 5,327 4,605 4,902 6,568 6,043 4,084 3,649 3,201 2,825 2,034 20 Federal agency 0 0 0 0 0 0 0 0 0 0 0 0 21 Mortgage-backed 523 559 463 753 364 422 494 458 468 267 236 324 1. Transactions are market purchases and sales of securities as reported to the Federal Forward transactions are agreements made in the over-the-counter market that specify Reserve Bank of New York by the U.S. government securities dealers on its published list delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt of primary dealers. Monthly averages are based on the number of trading days in the securities are included when the time to delivery is more than five business days. Forward month. Transactions are assumed evenly distributed among the trading days of the report contracts for mortgage-backed agency securities are included when the time to delivery is week. Immediate, forward, and futures transactions are reported at principal value, which more than thirty business days. does not include accrued interest; options transactions are reported at the face value of the 3. Futures transactions are standardized agreements arranged on an exchange. All underlying securities. futures transactions are included regardless of time to delivery. Dealers report cumulative transactions for each week ending Wednesday. 4. Options transactions are purchases or sales of put and call options, whether arranged 2. Outright transactions include immediate and forward transactions. Immediate deliv- on an organized exchange or in the over-the-counter market, and include options on ery refers to purchases or sales of securities (other than mortgage-backed federal agency futures contracts on U.S. Treasury and federal agency securities. securities) for which delivery is scheduled in five business days or less and "when- NOTE, "n.a." indicates that data are not published because of insufficient activity. issued" securities that settle on the issue date of offering. Transactions for immediate delivery Major changes in the report form filed by primary dealers induced a break in the dealer of mortgage-backed agency securities include purchases and sales for which delivery is scheduled data series as of the week ending July 6, 1994. in thirty business days or less. Stripped securities are reported at market value by maturity of coupon or corpus. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • March 1995 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1994 1994, week ending IItteemm Sept. Oct. Nov. Nov. 2 Nov. 9 Nov. 16 Nov. 23 Nov. 30 Dec. 7 Dec. 14 Dec. 21 Positions2 NET OUTRIGHT POSITIONS3 By type of security 1 US. Treasury bills 1,906 3,177 12,980 4,251 6,260 16,778 12,958 18,418 16,225 22,114 15,696 Coupon securities, by maturity 2 Five years or less -16,175 -16,957 -6,941 -14,383 -7,634 -8,299 -2,146 -7,560 -8,827 -12,994 -4,305 3 More than five years -22,799 -27,282 -30,270 -28,513 -27,736 -33,172 -32,612 -28,060 -32,519 -30,407 -31,539 4 Federal agency 21,306 22,584 20,097 22,739 22,151 18,761 20,745 17,977 21,742 19,650 19,508 5 Mortgage-backed 37,645 37,701 36,127 38,947 35,102 37,598 36,077 34,926 32,397 32,061 34,996 NET FUTURES POSITIONS By type of deliverable security 6 US. Treasury bills -2,829 -776 -275 -2,752 -1,313 -717 604 1,035 -383 -1,691 -1,612 Coupon securities, by maturity 7 Five years or less 8,285 8,205' 7,470 8,517' 8,162 7,406 6,747 7,264 8,240 6,901 3,916 8 More than five years -1,681 83' 2,308 5' 1,871 5,106 1,347 1,566 1,506 342 345 9 Federal agency 0 0 0 0 0 0 0 0 0 0 0 10 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 Financing5 Reverse repurchase agreements 11 Ovemight and continuing 261,844 259,660 248,670 258,797 241,378 269,105 223,898 257,407 267,953 245,936 227,393 12 Term 387,958 388,809 343,089 385,956 391,524 312,801 355,649 300,136 364,244 374,706 353,877 Securities borrowed 13 Overnight and continuing 174,381 181,291 180,702 183,089 179,611 187,161 178,637 176,715 183,995 176,735 183,162 14 Term 44,574 45,783 46,394 51,228 54,201 40,062 48,052 41,881 44,203 48,395 45,331 Securities received as pledge 15 Overnight and continuing 2,015 2,058 2,392 2,100 1,915 1,933 2,658 3,146 3,472 3,258 3,016 16 Term 129 53 32 n.a. 32 n.a. n.a. n.a. n.a. n.a. 26 Repurchase agreements 17 Overnight and continuing 473,761 461,787 438,464 461,525 452,491 482,294 365,714 446,770 462,503 447,454 442233,,992255 18 Term 359,336 360,693 338,786 363,599 373,293 289,697 402,988 282,076 343,304 362,227 345,402 Securities loaned 19 Overnight and continuing 5,402 5,592 6,262 5,828 5,904 6,847 5,968 6,454 6,407 6,119 5,403 20 Term 922 1,234 1,285 1,743 1,609 1,476 1,018 904 1,631 1,355 1,351 Securities pledged 21 Overnight and continuing 32,972 34,263 33,695 34,786 31,205 31,165 36,266 35,831 38,562 33,544 34,771 22 Term 4,525 4,095 3,416 4,610 4,516 4,027 2,159 2,619 1,646 1,753 1,450 Collateralized loans 23 Overnight and continuing 18,407 19,273 17,871 20,729 18,093 18,472 16,333 17,771 16,354 13,060 11,828 24 Term 6,130 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. MEMO: Matched book6 Securities in 25 Overnight and continuing 225,440 228,104 224,758 232,463 223,740 249,760 209,480 213,850 246,477 228,039 217,211 26 Term 355,640 363,804 323,287 364,511 368,392 293,829 336,610 282,540 336,578 341,469 325,317 Securities out 27 Overnight and continuing 283,925 276,523 260,138 268,206 280,615 290,586 215,238 251,808 280,575 261,263 244,323 28 Term 294,295 301,669 272,124 306,609 309,287 234,890 310,998 223,467 280,174 294,017 284,788 1. Data for positions and financing are obtained from reports submitted to the Federal 4. Futures positions reflect standardized agreements arranged on an exchange. All Reserve Bank of New York by the U.S. government securities dealers on its published list futures positions are included regardless of time to delivery. of primary dealers. Weekly figures are close-of-business Wednesday data. Positions for 5. Overnight financing refers to agreements made on one business day that mature on calendar days of the report week are assumed to be constant. Monthly averages are based the next business day; continuing contracts are agreements that remain in effect for more on the number of calendar days in the month. than one business day but have no specific maturity and can be terminated without 2. Securities positions are reported at market value. advance notice by either party; term agreements have a fixed maturity of more than one 3. Net outright positions include immediate and forward positions. Net immediate business day. Financing data are reported in terms of actual funds paid or received, positions include securities purchased or sold (other than mortgage-backed agency securi- including accrued interest. ties) that have been delivered or are scheduled to be delivered in five business days or less 6. Matched-book data reflect financial intermediation activity in which the borrowing and "when-issued" securities that settle on the issue date of offering. Net immediate and lending transactions are matched. Matched-book data are included in the financing positions for mortgage-backed agency securities include securities purchased or sold that breakdowns given above. The reverse repurchase and repurchase numbers are not always have been delivered or are scheduled to be delivered in thirty business days or less. equal because of the "matching" of securities of different values or different types of Forward positions reflect agreements made in the over-the-counter market that specify collateralization. delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt Noic. "n.a." indicates that data are not published because of insufficient activity. securities are included when the time to delivery is more than five business days. Forward Major changes in the report form filed by primary dealers induced a break in the dealer contracts for mortgage-backed agency securities are included when the time to delivery is data series as of the week ending July 6, 1994. more than thirty business days. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A3 3 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1994 AAggeennccyy 11999900 11999911 11999922 11999933 June July Aug. Sept. Oct. 1 Federal and federally sponsored agencies 434,668 442,772 483,970 570,711 646,661 659,206 674,020 0 0 2 Federal agencies 42,159 41,035 41,829 45,193 43,040 43,416 43,861 42,544 39,037 3 Defense Department' 7 7 7 6 6 6 6 6 6 4 Export-Import Bank2-3 11,376 9,809 7,208 5,315 4,389 4,389 4,389 3,932 3,932 5 Federal Housing Administration 393 397 374 255 138 82 101 112 114 6 Government National Mortgage Association certificates of participation5 0 0 0 0 0 0 0 0 0 7 Postal Service6 6,948 8,421 10,660 9,732 9,473 9,473 9,773 8,973 7,773 8 Tennessee Valley Authority 23,435 22,401 23,580 29,885 29,037 29,466 29,592 29,521 27,212 9 United States Railway Association6 0 0 0 0 0 0 0 0 0 10 Federally sponsored agencies7 392,509 401,737 442,141 525,518 603,621 615,790 630,159 0 0 11 Federal Home Loan Banks 117,895 107,543 114,733 141,577 160,822 166,137 169,284 174,414 185,894 12 Federal Home Loan Mortgage Corporation 30,941 30,262 29,631 49,993 73,340 78,929 81,270 83,947 88,680 13 Federal National Mortgage Association 123,403 133,937 166,300 201,112 227,897 230,484 237,564 239,320 242,575 14 Farm Credit Banks8 53,590 52,199 51,910 53,123 53,692 52,276 53,844 54,333 53,609 15 Student Loan Marketing Association9 34,194 38,319 39,650 39,784 47,940 48,069 48,313 49,692 0 16 Financing Corporation 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation 23,055 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt13 179,083 185,576 154,994 128,187 115,603 113,689 112,804 109,357 106,935 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 11,370 9,803 7,202 5,309 4,383 4,383 4,383 33,,992266 33,,992266 21 Postal Service6 6,698 8,201 10,440 9,732 9,473 9,473 9,773 8,973 7,773 22 Student Loan Marketing Association 4,850 4,820 4,790 4,760 0 0 0 0 0 23 Tennessee Valley Authority 14,055 10,725 6,975 6,325 4,375 4,375 4,375 3,400 3,200 24 United States Railway Association6 0 0 0 0 0 0 0 0 0 Other lending14 25 Farmers Home Administration 52,324 48,534 42,979 38,619 35,999 35,104 34,594 34,129 33,869 26 Rural Electrification Administration 18,890 18,562 18,172 17,578 17,357 17,372 17,402 17,316 17,322 27 Other 70,896 84,931 64,436 45,864 44,016 42,982 42,322 41,613 40,845 1. Consists of mortgages assumed by the Defense Department between 19S7 and 1963 10. The Financing Corporation, established in August 1987 to recapitalize the Federal under family housing and homeowners assistance programs. Savings and Loan Insurance Corporation, undertook its first borrowing in October 1987. 2. Includes participation certificates reclassified as debt beginning Oct. 1,1976. 11. The Farm Credit Financial Assistance Corporation, established in January 1988 to 3. On-budget since Sept. 30, 1976. provide assistance to the Farm Credit System, undertook its first borrowing in July 1988. 4. Consists of debentures issued in payment of Federal Housing Administration 12. The Resolution Funding Corporation, established by the Financial Institutions insurance claims. Once issued, these securities may be sold privately on the securities Reform, Recovery, and Enforcement Act of 1989, undertook its first borrowing in October market. 1989. 5. Certificates of participation issued before fiscal year 1969 by the Government 13. The FFB, which began operations in 1974, is authorized to purchase or sell National Mortgage Association acting as trustee for the Farmers Home Administration, obligations issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt the Department of Health, Education, and Welfare, the Department of Housing and Urban solely for the purpose of lending to other agencies, its debt is not included in the main Development, the Small Business Administration, and the Veterans' Administration. portion of the table in order to avoid double counting. 6. Off-budget. 14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loans 7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. In- guaranteed by numerous agencies, with the amounts guaranteed by any one agency cludes Federal Agricultural Mortgage Corporation, therefore details do not sum to total. generally being small. The Farmers Home Administration entry consists exclusively of Some data are estimated. agency assets, whereas the Rural Electrification Administration entry consists of both 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is agency assets and guaranteed loans. shown on line 17. 9. Before late 1982, the association obtained financing through the Federal 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 onfinancial Statistics • March 1995 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1994 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11999911 11999922 11999933 May June July Aug. Sept. Oct. Nov. Dec. 1 All issues, new and refunding' 154,402 226,818 279,945 13,563 15,076 13,400 12,175 7,810 10,537 11,685 9,502 By type of issue 2 General obligation 55,100 78,611 90,599 4,029 5,556 7,110 4,177 2,309 2,891 5,592 2,261 3 Revenue 99,302 136,580 189,346 8,359 9,223 5,340 8,133 5,325 6,899 6,093 7,241 By type of issuer 4 State 24,939 24,874 27,999 1,158 1,733 4,686 1,675 1,009 952 1,528 151 5 Special district or statutory authority2 80,614 138,327 178,714 8,085 9,335 4,931 7,963 4,962 6,511 6,148 7,270 6 Municipality, county, or township 48,849 63,617 73,232 3,145 3,711 2,833 2,672 1,663 2,327 4,009 2,081 7 Issues for new capital 116,953 101,865 91,434 9,465 9,913 10,843 10,479 6,155 8,893 10,137 8,486 By use of proceeds 8 Education 21,121 18,852 16,831 1,933 1,945 1,147 2,075 883 1,596 1,716 1,725 9 Transportation 13,395 14,357 9,167 1,037 2,033 290 1,088 334 1,135 799 299 10 Utilities and conservation 21,039 12,164 12,014 423 856 694 784 433 1,887 644 1,244 11 Social welfare 25,648 16,744 13,837 2,136 1,312 1,698 2,117 1,897 1,887 1,535 2,172 12 Industrial aid 8,376 6,188 6,862 657 935 959 1,128 403 420 688 1,007 13 Other purposes 30,275 33,560 32,723 2,939 2,645 5,560 3,401 2,011 2,396 4,750 2,039 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 1994 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, 11999911 11999922 11999933 oorr iissssuueerr Apr. May June July Aug. Sept. Oct/ Nov. 1 All issues1 465,246 559,827 764,509 35,110 44,263 49,457 29,153r 38,437r 29,406r 32,161 33,566 2 Bonds2 389,822 471,502 641,498 29,645 40,589 43,126 25,489r 35,061r 25,973r 28,600 28,100 By type of offering 3 Public, domestic 286,930 378,058 486,879 26,436 33,414 38,387 21,772r 30,655r 22,726r 24,000 23,300 4 Private placement, domestic3 74,930 65,853 116,240 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 27,962 27,591 38,379 3,209 7,175 4,738 3,718 4,406 3,248 4,600 4,800 By industry group 6 Manufacturing 86,628 82,058 88,002 2,229 3,266 2,093 l,857r 2,251 2,165 2,500 2,600 7 Commercial and miscellaneous 36,666 43,111 60,443 990 2,496 3,177 1,413 3,604r 2,052r 2,039 2,302 8 Transportation 13,598 9,979 10,756 97 150 1,082 248 315 229 327 339 9 Public utility 23,944 48,055 56,272 546 1,071 681 472 520r 707 1,601 1,649 10 Communication 9,431 15,394 31,950 1,298 944 618 429 345 526 379 421 11 Real estate and financial 219,555 272,904 394,076 24,484 32,662 35,475 21,070r 28,027r 20,294' 21,754 20,789 12 Stocks2 75,424 88,325 113,472 5,465 3,674 6,331 3,664 3376r 3,433r 3,561 5,466 By type of offering 13 Public preferred 17,085 21,339 18,897 2,248 695 1,366 599 710 555 1,191 279 14 Common 48,230 57,118 82,657 3,218 2,979 4,965 3,065 2,666r 2,877r 2,370 5,187 15 Private placement3 10,109 9,867 11,917 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 16 Manufacturing 24,111 22,723 22,271 2,696 956 1,056 489 569 904r 745 1,970 17 Commercial and miscellaneous 19,418 20,231 25,761 773 850 1,853 708 838 821r 1,105 1,717 18 Transportation 2,439 2,595 2,237 106 105 449 75 50 223 79 76 19 Public utility 3,474 6,532 7,050 75 239 297 0 180 78 4 333 20 Communication 475 2,366 3,439 0 32 28 0 0 0 0 0 21 Real estate and financial 25,507 33,879 49,889 1,815 1,492 2,647 2,386 l,734r l,407r 1,628 1,350 1. Figures represent gross proceeds of issues maturing in more than one year, they are 2. Monthly data cover only public offerings. the principal amount or number of units calculated by multiplying by the offering price. 3. Monthly data are not available. Figures exclude secondary offerings, employee stock plans, investment companies other SOURCES. Beginning July 1993, Securities Data Company and the Board of Governors than closed-end, intracorporate transactions, equities sold abroad, and Yankee bonds. of the Federal Reserve System. 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 Assets' Millions of dollars 1994 IItteemm 11999922 11999933 Apr. May June July Aug. Sept. Oct.r Nov. 1 Sales of own shares2 647,055 851,885 71,164 65,179 65,333 59,258 64,833 62,263 59,285 56,849 2 Redemptions of own shares 447,140 567,881 61,925 55,036 56,068 50,275 53,242 53,383 53,743 55,757 3 Net sales3 199,915 284,004 9,239 10,144 9,265 8,983 1,592 8,880 5,543 1,092 4 Assets4 1,056,310 1,510,209 1,510,827 1,529,478 1,509,998 1,552,652 1,604,961 1,588,277 1,601,363 1,549,186 5 Cash5 73,999 100,209 118,221 119,982 114,885 120,129 120,315 121,575 126,766 125,843 6 Other 982,311 1,409,838 1,392,606 1,409,496 1,395,113 1,432,523 1,484,646 1,466,702 1,474,597 1,423,344 1. Data on sales and redemptions exclude money market mutual funds but include 4. Market value at end of period, less current liabilities. limited-maturity municipal bond funds. Data on asset positions exclude both money 5. Includes all U.S. Treasury securities and other short-term debt securities. market mutual funds and limited-maturity municipal bond funds. SOURCE. Investment Company Institute. Data based on reports of membership, which 2. Includes reinvestment of net income dividends. Excludes reinvestment of capital comprises substantially all open-end investment companies registered with the Securities gains distributions and share issue of conversions from one fund to another in the same and Exchange Commission. Data reflect underwritings of newly formed companies after group. 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 Q4 Q1 Q2 Q3 Q4 Ql Q2 Q3 1 Profits with inventory valuation and capital consumption adjustment 390.3 405.1 485.8 432.5 442.5 473.1 493.5 533.9 508.2 546.4 556.0 2 Profits before taxes 365.2 395.9 462.4 413.5 432.7 456.6 458.7 501.7 483.5 523.1 538.1 3 Profits-tax liability 131.1 139.7 173.2 148.6 159.8 171.8 169.9 191.5 184.1 201.7 208.6 4 Profits after taxes 234.1 256.2 289.2 264.8 273.0 284.8 288.9 310.2 299.4 321.4 329.5 5 Dividends 160.0 171.1 191.7 182.1 188.2 190.7 193.2 194.6 196.3 202.5 207.9 6 Undistributed profits 74.1 85.1 97.5 82.7 84.7 94.1 95.6 115.6 103.0 118.9 121.6 7 Inventory valuation 5.8 -6.4 -6.2 2.1 -11.2 -10.0 3.0 -6.5 -12.3 -14.1 -19.6 8 Capital consumption adjustment 19.4 15.7 29.5 16.9 21.0 26.5 31.7 38.8 37.0 37.4 37.5 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 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 1 Total nonfarm business 546.60 586.73 638.37 563.48 578.95 594.56 604.51 61934 637.08 651.92 645.13 Manufacturing 2 Durable goods industries 73.32 81.45 92.78 78.19 80.33 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 8.98 9.10 11.09 10.92 11.43 10.70 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 other2 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 • March 1995 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities' Billions of dollars, end of period; not seasonally adjusted 1993 1994 AAccccoouunntt 11999911 11999922 11999933 Ql Q2 Q3 Q4 Ql Q2 Q3 ASSETS 1 Accounts receivable, gross2 484.6 491.8 482.8 477.9 473.7 474.0 482.8 494.5 511.3 524.2 2 Consumer 121.7 118.3 116.5 112.6 110.6 111.0 116.5 120.1 124.3 130.3 3 Business 295.8 301.3 294.6 292.7 291.8 291.9 294.6 302.3 313.2 317.2 4 Real estate 67.1 72.2 71.7 72.5 71.4 71.1 71.7 72.1 73.8 76.6 5 LESS: Reserves for unearned income 56.1 53.2 50.7 50.1 49.7 49.5 50.7 51.2 51.9 51.1 6 Reserves tor losses 13.1 16.2 11.2 15.2 10.8 11.2 11.2 11.6 12.1 12.1 7 Accounts receivable, net 415.4 422.4 420.9 412.6 413.2 413.3 420.9 431.7 447.3 460.9 8 All other 144.9 142.5 170.9 150.6 151.5 163.9 170.9 171.2 174.6 177.2 9 Total assets 560-3 564.9 591.8 5633 564.7 5773 591.8 602.9 621.9 638.1 LIABILITIES AND CAPITAL 10 Bank loans 42.3 37.6 25.3 34.1 29.4 25.8 25.3 24.2 23.3 21.6 11 Commercial paper 159.5 156.4 159.2 149.8 144.5 149.9 159.2 165.9 171.2 171.0 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 35.5 39.5 42.7 43.1 45.0 44.6 42.7 41.1 44.7 50.0 15 Not elsewhere classified 190.2 196.3 206.0 197.3 199.9 204.2 206.0 211.7 219.6 228.2 16 All other liabilities 68.4 68.0 87.1 72.5 77.8 83.8 87.1 90.5 89.9 95.0 1/ Capital, surplus, and undivided profits 64.5 67.1 71.4 66.5 68.1 68.9 71.4 69.5 73.2 72.3 18 Total liabilities and capital 560.3 564.9 591.8 5633 564.7 5773 591.8 602.9 621.9 638.1 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 Type of credit July Aug. Sept. Seasonally adjusted 1 Total .... 523,824 540,679 546,020 576,239 571,470 579,032 590,512 596,397 603,274 2 Consumer., 154,389 157,857 160,802 168,531 166,639 166,921 172,547 173,178 175,135 3 Real estate: 67,376 72,496 71,991 74,503 75,321 75,524 76,424 76,971 77,991 4 Business.. 302,060 310,325 313,226 333,205 329,510 336,587 341,542 346,248 350,148 Not seasonally adjusted 5 Total 527,329 544,691 550,387 577,546 568,648 575,769 588,525 596,054 604,115 6 Consumer 155,671 159,558 162,770 167,909 164,749 166,501 172,002 172,813 174,928 7 Motor vehicles 62,232 57,259 56,057 59,788 58,107 58,589 60,522 60,750 61,372 8 Other consumer3 59,468 61,020 60,396 64,530 65,095 66,608 69,784 70,812 72,312 9 Securitized motor vehicles4 23,361 29,734 36,024 32,705 31,848 31,787 32,372 31,592 31,494 10 Securitized other consumer4 10,610 11,545 10,293 10,886 9,699 9,517 9,324 9,659 9,750 11 Real estate2 67,132 72,243 71,727 73,755 75,379 76,012 76,585 77,235 77,907 12 Business 304,526 312,890 315,890 335,882 328,520 333,256 339,938 346,006 351,280 13 Motor vehicles 91,554 89,011 95,173 105,828 101,878 102,655 106,365 110,089 113,222 14 Retail5 23,967 20,541 18,091 21,024 20,670 20,272 21,164 21,645 22,113 15 Wholesale6 31,164 29,890 31,148 31,188 26,154 25,875 27,201 29,302 30,614 16 Leasing 36,423 38,580 45,934 53,616 55,054 56,508 58,000 59,142 60,495 17 Equipment 140,396 151,424 145,452 151,542 151,480 151,388 152,782 152,675 154,312 18 Retail 30,952 33,521 35,513 39,062 39,348 39,629 39,357 38,584 38,912 19 Wholesale6 9,671 8,680 8,001 8,419 8,859 8,968 9,119 9,134 9,484 20 Leasing 99,773 109,223 101,938 104,061 103,273 102,791 104,306 104,957 105,916 21 Other business7 63,802 60,856 53,997 55,849 54,444 56,389 58,101 59,314 59,893 22 Securitized business assets4 8,774 11,599 21,268 22,663 20,718 22,824 22,690 23,928 23,853 23 Retail 576 1,120 2,483 2,619 2,480 2,656 2,564 2,956 2,853 24 Wholesale 5,285 5,756 10,584 14,240 12,817 14,147 14,411 15,173 15,311 25 Leasing 2,913 4,723 8,201 5,804 5,421 6,021 5,715 5,799 5,689 1. Includes finance company subsidiaries of bank holding companies but not of 4. Outstanding balances of pools upon which securities have been issued; these retailers and banks. Data are before deductions for unearned income and losses. Data in balances are no longer carried on the balance sheets of the loan originator. this table also appear in the Board's G.20 (422) monthly statistical release. For ordering 5. Passenger car fleets and commercial land vehicles for which licenses are required. address, see inside front cover. 6. Credit arising from transactions between manufacturers and dealers, that is, floor 2. Includes all loans secured by liens on any type of real estate, for example, first and plan financing. junior mortgages and home equity loans. 7. Includes loans on commercial accounts receivable, factored commercial accounts, 3. Includes personal cash loans, mobile home loans, and loans to purchase other types and receivable dealer capital; small loans used primarily for business or farm purposes; of consumer goods such as appliances, apparel, general merchandise, and recreation and wholesale and lease paper for mobile homes, campers, and travel trailers. vehicles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A3 7 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1994 IItteemm 11999922 11999933 11999944 June July Aug. Sept. Oct. Nov. Dec. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms' 1 Purchase price (thousands of dollars) 158.1 163.1 170.4 172.6 166.0 167.6 170.6 173.4 178.2 184.9 2 Amount of loan (thousands of dollars) 118.1 123.0 130.8 130.0 129.0 129.3 133.7 131.9 136.2 136.2 3 Loan-to-price ratio (percent) 76.6 78.0 78.8 78.0 79.4 79.0 79.4 78.3 78.0 76.9 4 Maturity (years) 25.6 26.1 27.5 26.5 27.5 28.0 27.9 27.6 27.9 28.0 5 Fees and charges (percent of loan amount)2 1.60 1.30 1.29 1.30 1.35 1.38 1.36 1.22 1.30 1.38 Yield (percent per year) 6 Contract rate1 7.98 7.02 7.26 7.41 7.50 7.45 7.48 7.55 7.59 7.61 7 Effective rate1,3 8.25 7.24 7.47 7.62 7.71 7.67 7.70 7.76 7.81 7.83 8 Contract rate (HUD series)4 8.43 7.37 n.a. 8.72 8.64 8.68 8.96 9.19 9.34 n.a. SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 8.46 7.46 n.a. 9.03 8.65 8.66 9.10 9.23 9.53 n.a. 10 GNMA securities6 7.71 6.65 7.96 8.01 8.23 8.15 8.28 8.66 8.86 8.76 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 158,119 190,861 222,057 208,180 210,666 212,680 215,249 218,479 220,377 222,057 12 FHA/VA insured 22,593 23,857 28,377 25,390 25,477 25,604 25,800 26,226 27,118 28,377 13 Conventional 135,526 167,004 194,499 182,790 185,189 187,076 189,449 192,253 193,259 194,499 Mortgage transactions (during period) 14 Purchases 75,905 92,037 62,389 4,386 4,628 4,077 4,266 5,003 3,549 3,399 Mortgage commitments (during period) 15 Issued7 74,970 92,537 54,038 4,268 3,798 3,776 4,880 3,421 2,696 2,910 16 To sell8 10,493 5,097 1,820 1 0 0 0 48 20 55 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of periodf 17 Total 33,665 55,012 72,693 62,232 62,993 64,118 66,478 69,340 70,757 72,693 18 FHA/VA insured 352 321 276 299 296 291 287 284 279 276 19 Conventional 33,313 54,691 72,416 61,933 62,697 63,827 66,191 69,057 70,477 72,416 Mortgage transactions (during period) 20 Purchases 191,125 229,242 124,697 8,341 6,535 6,407 5,512 8,351 3,022 4,890 21 179,208 208,723 117,110 8,097 6,338 5,828 5,213 8,139 2,865 3,769 Mortgage commitments (during periodf 22 Contracted 261,637 274,599 136,067 7,252 5,820 5,649 5,035 7,288 3,454 2,412 1. Weighted averages based on sample surveys of mortgages originated by major 6. Average net yields to investors on fully modified pass-through securities backed by institutional lender groups for purchase of newly built homes; compiled by the Federal mortgages and guaranteed by the Government National Mortgage Association (GNMA), Housing Finance Board in cooperation with the Federal Deposit Insurance Corporation. assuming prepayment in twelve years on pools of thirty-year mortgages insured by the 2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or Federal Housing Administration or guaranteed by the Department of Veterans Affairs. the seller) to obtain a loan. 7. Does not include standby commitments issued, but includes standby commitments 3. Average effective interest rate on loans closed for purchase of newly built homes, converted. 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 mortgages; from 9. Includes conventional and government-underwritten loans. The Federal Home Loan U.S. Department of Housing and Urban Development (HUD). Based on transactions on Mortgage Corporation's mortgage commitments and mortgage transactions include activthe first day of the subsequent month. ity under mortgage securities swap programs, whereas the corresponding data for FNMA 5. Average gross yield on thirty-year, minimum-downpayment first mortgages exclude swap activity. 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 • March 1995 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1993 1994 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999900 11999911 11999922 Q3 Q4 Ql Q2 Q3 1 All holders 3,763,628 3,926,154 4,056,233 4,174,202 4,215,480 4,239,496 4,290,640 4,346,606 By type of property 2 One- to four-family residences 2,617,044 2,781,416 2,963,391 3,098,344 3,147,255 3,178,389 3,225,062 3,276,039 3 Multifamily residences 309,369 306,410 295,417 290,690 290,489 288,988 290,109 291,907 4 Commercial 758,313 759,023 716.687 704,032 696,542 690,726 692,584 694,842 5 78,903 79,306 80,738 81,136 81,194 81,393 82,886 83,818 By type of holder 6 Major financial institutions 1,914,315 1,846,726 1,769,187 1,769,950 1,767,835 1,746,474 1,763,249 1,784,191 7 Commercial banks- 844,826 876,100 894,513 922,670 940,444 937,944 956,793 981,350 8 One- to four-family 455,931 483,623 507,780 537,661 556,538 554,117 570,325 590,244 9 Multifamily 37,015 36,935 38,024 37,655 38,635 38,451 37,948 38,130 10 Commercial 334,648 337,095 328,826 326,507 324,409 324,122 326,605 330,568 11 Farm 17,231 18,447 19,882 20,848 20,862 21,254 21,916 22,408 12 Savings institutions3 801,628 705,367 627,972 609,654 598,330 584,531 585,671 587,375 13 One- to four-family 600,154 538,358 489,622 478,456 469,959 458,075 462,240 466,414 14 Multifamily 91,806 79,881 69,791 68,440 67,362 66,914 66,245 65,611 15 Commercial 109,168 86,741 68,235 62,439 60,704 59,245 56,887 55,058 16 Farm 500 388 324 320 305 297 299 292 17 Life insurance companies 267,861 265,258 246,702 237,626 229,061 223,999 220,785 215,466 18 One- to four-family 13,005 11,547 11,441 9,835 9,458 9,245 9,107 8,877 19 Multifamily 28,979 29,562 27,770 26,844 25,814 25,232 24,855 24,227 20 Commercial 215,121 214,105 198,269 191,660 184,305 180,152 177,463 172,977 21 Farm 10,756 10,044 9,222 9,287 9,484 9,370 9,360 9,385 22 Federal and related agencies 239,003 266,146 286,263 306,578 317,486 323,464 327,690 334,284 23 Government National Mortgage Association 20 19 30 43 22 20 12 12 24 One- to four-family 20 19 30 37 15 13 12 12 25 Multifamily 0 0 0 7 7 7 0 0 26 Farmers Home Administration4 41,439 41,713 41,695 41,424 41,386 41,209 41,370 41,390 27 One- to four-family 18,527 18,496 16,912 15,714 15,303 14,870 14,459 14,063 28 Multifamily 9,640 10,141 10,575 10,830 10,940 11,037 11,147 11,254 29 Commercial 4,690 4,905 5,158 5,347 5,406 5,399 5,526 5,587 30 Farm 8,582 8,171 9,050 9,533 9,739 9,903 10,239 10,485 31 Federal Housing and Veterans' Administrations 8,801 10,733 12,581 11,797 12,215 11,344 11,169 10,657 32 One- to four-family 3,593 4,036 5,153 4,850 5,364 4,738 4,826 4,503 33 Multifamily 5,208 6,697 7,428 6,947 6,851 6,606 6,343 6,154 34 Resolution Trust Corporation 32,600 45,822 32,045 19,925 17,284 14,241 13,908 15,401 35 One- to four-family 15,800 14,535 12,960 8,381 7,203 6,308 6,045 6,984 36 Multifamily 8,064 15,018 9,621 6,002 5,327 4,208 4,230 4,528 37 Commercial 8,736 16,269 9,464 5,543 4,754 3,726 3,633 3,889 38 Farm 0 0 0 0 0 0 0 0 39 Federal National Mortgage Association 104,870 112,283 137,584 160,721 166,642 172,343 175,377 177,200 40 One- to four-family 94,323 100,387 124,016 146,009 151,310 156,576 159,437 161,255 41 Multifamily 10,547 11,896 13,568 14,712 15,332 15,767 15,940 15,945 42 Federal Land Banks 29,416 28,767 28,664 28,810 28,460 28,181 28,475 28,538 43 One- to four-family 1,838 1,693 1,687 1,695 1,675 1,658 1,675 1,679 44 Farm 27,577 27,074 26,977 27,115 26,785 26,523 26,800 26,859 45 Federal Home Loan Mortgage Corporation 21,857 26,809 33,665 43,858 51,476 56,127 57,379 61,087 4b One- to four-family 19,185 24,125 31,032 41,314 48,929 53,571 54,799 58,432 4/ Multifamily 2,672 2,684 2,633 2,544 2,547 2,556 2,580 2,655 48 Mortgage pools or trusts5 1,079,103 1,250,666 1,425,546 1,517,003 1,550,818 1,604,449 1,643,627 1,668,496 49 Government National Mortgage Association 403,613 425,295 419,516 415,076 414,066 423,446 435,709 444,976 50 One- to four-family 391,505 415,767 410,675 405,963 404,864 414,194 426,363 435,511 51 Multifamily 12,108 9,528 8,841 9,113 9,202 9,251 9,346 9,465 52 Federal Home Loan Mortgage Corporation 316,359 359,163 407,514 433,090 443,029 459,949 470,183 469,062 53 One- to four-family 308,369 351,906 401,525 428,155 438,494 455,779 466,361 465,614 54 Multifamily 7,990 7,257 5,989 4,935 4,535 4,170 3,822 3,448 55 Federal National Mortgage Association 299,833 371,984 444,979 481,880 495,525 507,376 514,855 523,512 56 One- to four-family 291,194 362,667 435,979 473,599 486,804 498,489 505,730 514,375 57 Multifamily 8,639 9,317 9,000 8,281 8,721 8,887 9,125 9,137 58 Farmers Home Administration4 66 47 38 30 28 26 22 20 59 One- to four-family 17 11 8 6 5 5 4 3 60 Multifamily 0 0 0 0 0 0 0 0 61 Commercial 24 19 17 14 13 12 10 9 62 Farm 26 17 13 10 10 9 8 8 63 Private mortgage conduits 59,232 94,177 153,499 186,927 198,171 213,653 222,858 230,926 64 One- to four-family 53,335 84,000 132,000 158,000 164,000 177,000 179,500 182,300 65 Multifamily 731 3,698 6,305 7,991 8,701 9,202 11,514 13,891 66 Commercial 5,166 6,479 15,194 20,936 25,469 27,451 31,844 34,735 67 Farm 0 0 0 0 0 0 0 0 68 Individuals and others6 531,208 562,616 575,237 580,670 579,341 565,109 556,074 559,635 69 One- to four-family 350,247 370,246 382,572 388,669 387,334 373,752 364,178 365,772 70 Multifamily 85,969 83,796 85,871 86,391 86,516 86,700 87,014 87,462 71 Commercial 80,761 93,410 91,524 91,588 91,482 90,621 90,617 92,020 72 Farm 14,232 15,164 15,270 14,023 14,009 14,037 14,264 14,380 1. Multifamily debt refers to loans on structures of five or more units. 6. Other holders include mortgage companies, real estate investment trusts, state and 2. Includes loans held by nondeposit trust companies but not loans held by bank trust local credit agencies, state and local retirement funds, noninsured pension funds, credit departments. unions, and finance companies. 3. Includes savings banks and savings and loan associations. SOURCES. Based on data from various institutional and government sources. Separation 4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated of nonfarm mortgage debt by type of property, if not reported directly, and interpolations from FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 because of and extrapolations, when required for some quarters, are estimated in part by the Federal accounting changes by the Fanners Home Administration. Reserve. Line 64 from Inside Mortgage Securities. 5. Outstanding principal balances of mortgage-backed securities insured or 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 June July Aug. Sept. Oct/ Nov. Seasonally adjusted 1 Total 728,389 731,098 794,300 847,715 854,469 869,628 879,961 891,603 904,487 2 Automobile 259,594 257,678 282,036 303,526 305,193 309,721 315,162 318,036 322,808 3 Revolving 245,281 257,304 287,875 309,472 313,591 321,365 322,823 327,707 334,428 4 Other 223,514 216,117 224,389 234,717 235,685 238,542 241,976 245,860 247,251 Not seasonally adjusted 5 Total 744,039 747,690 812,782 842,126 847,727 868,049 880,609 891,442 906,162 By major holder 6 Commercial banks 340,713 330,088 368,549 386,235 393,927 404,438 410,312 414,833 421,634 7 Finance companies 121,700 118,279 116,453 124,318 123,202 125,197 130,306 131,562 133,684 8 Credit unions 90,302 91,694 101,634 108,183 109,838 113,122 114,699 116,325 118,050 9 Savings institutions 41,373 37,049 37,855 38,134 38,055 37,975 37,943 38,122 38,275 10 Nonfinancial business 46,658 49,184 57,637 55,374 55,775 56,496 55,967 56,020 58,591 11 Pools of securitized assets2 103,293 121,396 130,654 129,882 126,930 130,821 131,382 134,580 135,928 By major type of credit* 12 Automobile 259,863 258,226 282,825 302,874 304,026 310,925 331166,,777788 332200,,118822 323,104 13 Commercial banks 112,666 109,623 123,358 136,038 138,907 142,452 144,260 146,456 148,128 14 Finance companies 62,232 57,259 56,057 59,788 58,107 58,589 60,522 60,750 61,372 15 Pools of securitized assets2 28,588 33,888 39,490 35,817 34,436 34,584 35,149 34,394 33,664 16 Revolving 258,841 271,368 303,444 305,758 309,716 319,003 321,205 325,872 336,158 17 Commercial banks 138,005 132,966 149,527 153,032 156,940 161,417 164,724 165,561 171,244 18 Nonfinancial business 41,658 43,974 52,113 49,845 50,218 50,873 50,314 50,332 52,819 19 Pools of securitized assets2 63,333 74,931 79,887 82,075 81,704 85,644 85,051 88,762 90,775 20 Other 225,335 218,096 226,513 233,494 233,985 238,121 242,626 245,388 246,900 21 Commercial banks 90,042 87,499 95,664 97,165 98,080 100,569 101,328 102,816 102,262 22 Finance companies 59,468 61,020 60,396 64,530 65,095 66,608 69,784 70,812 72,312 23 Nonfinancial business 5,000 5,210 5,524 5,529 5,557 5,623 5,653 5,688 5,772 24 Pools of securitized assets2 11,372 12,577 11,277 11,990 10,790 10,593 11,182 11,424 11,489 1. The Board's series on amounts of credit covers most short- and intermediate-term 2. Outstanding balances of pools upon which securities have been issued; these credit extended to individuals that is scheduled to be repaid (or has the option of balances are no longer carried on the balance sheets of the loan originator. repayment) in two or more installments. 3. Totals include estimates for certain holders for which only consumer credit totals are Data in this table also appear in the Board's G.19 (421) monthly statistical release. For available. ordering address, see inside front cover. 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent per year except as noted 1994 IItteemm 11999911 11999922 11999933 May June July Aug. Sept. Oct. Nov. INTEREST RATES Commercial banks2 1 48-month new car 11.14 9.29 8.09 7.76 n.a. n.a. 8.41 n.a. n.a. 8.75 2 24-month personal 15.18 14.04 13.47 12.96 n.a. n.a. 13.33 n.a. n.a. 13.59 3 120-month mobile home 13.70 12.67 11.87 11.60 n.a. n.a. 12.04 n.a. n.a. n.a. 4 Credit card 18.23 17.78 16.83 16.15 n.a. n.a. 16.25 n.a. n.a. n.a. Auto finance companies 5 New car 12.41 9.93 9.48 9.92 9.96 10.17 10.32 10.13 10.39 10.53 6 Used car 15.60 13.80 12.79 13.51 13.78 13.86 13.92 13.98 14.01 14.19 OTHER TERMS3 Maturity (months) 7 New car 55.1 54.0 54.5 53.5 53.3 53.9 54.2 54.3 54.9 54.6 8 Used car 47.2 47.9 48.8 50.6 50.0 50.2 50.1 50.2 50.2 50.3 Loan-to-value ratio 9 New car 88 89 91 93 94 93 93 93 92 93 10 Used car 96 97 98 99 100 100 100 100 100 100 Amount financed (dollars) 11 New car 12,494 13,584 14,332 15,194 15,180 15,319 15,283 1155,,441199 15,827 15,971 12 Used car 8,884 9,119 9,875 10,606 10,656 10,735 10,755 10,906 10,554 11,202 1. The Board's series on amounts of credit covers most short- and intermediate-term 2. Data are available for only the second month of each quarter, credit extended to individuals that is scheduled to be repaid (or has the option of 3. At auto finance companies, 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 Nonfinancial Statistics • March 1995 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS' Billions of dollars; quarterly data at seasonally adjusted annual rates 1993 1994 11998899 11999900 11999911 11999922 Ql Q2 Q3 Q4 Ql Q2 Q3 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors.... 729.0 635.6 475.8 536.1 628.1 481.4 740.5 613.3 677.2 651.2 543.4 612.3 By sector and instrument 2 U.S. government 146.4 246.9 278.2 304.0 256.1 240.5 336.4 173.4 274.2 210.6 122.9 134.1 3 Treasury securities 144.7 238.7 292.0 303.8 248.3 237.4 332.3 157.2 266.5 211.8 118.2 129.8 4 Budget agency issues and mortgages 1.6 8.2 -13.8 .2 7.8 3.2 4.1 16.3 7.7 -1.3 4.7 4.4 5 Private 582.7 388.7 197.5 232.1 372.0 240.9 404.1 439.9 403.0 440.6 420.5 478.1 By instrument 6 Tax-exempt obligations 69.8 48.7 68.7 31.1 78.1 88.7 130.3 66.2 27.4 22.6 -9.8 -41.2 7 Corporate bonds 73.8 47.1 78.8 67.5 75.2 85.7 75.7 72.0 67.4 35.1 38.9 24.6 H Mortgages 281.2 199.5 161.4 123.9 155.6 99.8 152.2 222.1 148.5 151.5 162.2 219.4 9 Home mortgages 224.5 185.6 163.8 179.5 183.9 120.9 193.5 236.5 184.5 180.2 144.9 199.6 10 Multifamily residential 11.5 4.8 -3.1 -11.2 -6.1 -5.5 -11.4 -4.9 -2.6 -6.1 4.3 7.1 11 Commercial 47.8 9.3 .4 -45.5 -22.5 -15.7 -30.9 -9.9 -33.6 -23.4 7.1 8.9 12 Farm -2.5 -.3 .4 1.1 .5 .2 1.0 .4 .2 .8 6.0 3.7 13 Consumer credit 45.8 16.0 -15.0 5.5 62.3 20.3 41.6 76.2 111.3 72.7 121.9 127.1 14 Bank loans n.e.c 27.3 .4 -40.9 -13.8 5.0 -16.2 -.2 7.8 28.5 74.2 73.0 93.5 15 Commercial paper 21.4 9.7 -18.4 8.6 10.0 -14.1 33.2 17.2 3.8 8.0 16.4 33.8 16 Other loans 63.3 67.4 -37.1 9.2 -14.3 -23.3 -28.6 -21.7 16.2 76.5 17.8 20.9 By borrowing sector 17 Household 281.6 218.9 170.9 217.7 284.5 167.5 264.1 368.5 337.7 299.4 303.6 370.5 18 Nonfinancial business 233.1 123.7 -35.9 -2.0 21.9 -11.6 26.7 24.1 48.2 131.4 144.7 156.4 19 Farm .6 2.3 2.1 1.0 2.0 -2.3 2.7 4.1 3.6 3.1 11.8 3.6 20 Nonfarm noncorporate 40.3 10.1 -28.5 -43.9 -26.0 -28.6 -33.4 -26.2 -15.6 8.4 16.5 26.9 21 Corporate. 192.1 111.3 -9.6 40.9 45.8 19.3 57.4 46.3 60.2 119.9 116.4 125.9 22 State and local government 68.0 46.0 62.6 16.4 65.7 85.0 113.2 47.3 17.1 9.9 -27.8 -48.8 23 Foreign net borrowing in United States 10.2 23.9 13.9 21.3 46.9 38.9 42.8 83.1 22.9 -66.3 -1.9 -3.4 24 Bonds 4.9 21.4 14.1 14.4 59.4 66.5 45.3 84.5 41.4 29.0 11.1 6.6 25 Bank loans n.e.c -.1 -2.9 3.1 2.3 .7 1.5 6.6 1.0 -6.3 6.0 -.8 .9 26 Commercial paper 13.1 12.3 6.4 5.2 -9.0 -21.7 -.6 -1.6 -12.0 -101.8 -5.2 -8.1 27 U.S. government and other loans -7.6 -7.0 -9.8 -.6 -4.2 -7.5 -8.4 -.8 -.1 .5 -7.0 -2.7 28 Total domestic plus foreign 739.2 659.4 489.6 557.4 675.0 520.3 783-3 696.4 700.2 584.9 541.5 608.9 Financial sectors 29 Total net borrowing by financial sectors 225.1 202.9 152.6 237.1 286.1 180.4 175.5 438.9 349.8 477.0 294.9 345.6 By instrument 30 U.S. government-related 149.5 167.4 145.7 155.8 161.2 169.4 56.6 287.3 131.3 320.8 245.2 224.9 31 Government-sponsored enterprises securities 25.2 17.1 9.2 40.3 80.6 32.2 68.8 167.8 53.4 160.0 146.6 152.1 32 Mortgage pool securities 124.3 150.3 136.6 115.6 80.6 137.2 -12.2 119.5 77.9 180.0 98.6 72.8 33 Loans from U.S. government .0 -.1 .0 .0 .0 .0 .0 .0 .0 -19.2 .0 .0 34 75.7 35.5 6.8 81.3 125.0 11.0 118.9 151.6 218.5 156.2 49.7 120.7 35 Corporate bonds 41.5 46.3 67.6 78.5 118.3 99.0 92.4 143.4 138.3 148.6 59.9 65.3 36 Mortgages .3 .6 .5 .6 3.6 1.4 1.4 6.2 5.5 .2 .6 .1 37 Bank loans n.e.c 13.5 4.7 8.8 2.2 -14.0 -34.6 12.8 -16.1 -18.0 -18.3 -45.1 -17.6 38 Open market paper 31.3 8.6 -32.0 -.7 -6.2 -75.1 -16.2 -9.4 76.0 36.6 2.1 42.1 39 Loans from Federal Home Loan Banks -11.0 -24.7 -38.0 .8 23.3 20.4 28.4 27.4 16.8 -10.8 32.3 30.7 By borrowing sector 40 Government-sponsored enterprises 25.2 17.0 9.1 40.2 80.6 32.2 68.8 167.8 53.4 140.8 146.6 152.1 41 Federally related mortgage pools 124.3 150.3 136.6 115.6 80.6 137.2 -12.2 119.5 77.9 180.0 98.6 72.8 42 Private 75.7 35.5 6.8 81.3 125.0 11.0 118.9 151.6 218.5 156.2 49.7 120.7 43 Commercial banks -1.4 -.7 -11.7 8.8 5.6 3.5 11.3 6.5 1.2 2.0 12.4 22.8 44 Bank holding companies 6.2 -27.7 -2.5 2.3 8.8 21.1 1.3 .5 12.2 3.5 8.2 11.7 45 Funding corporations 12.5 15.4 -6.5 13.2 2.9 -31.4 -1.6 7.9 36.7 47.4 -17.1 47.0 46 Savings institutions -15.1 -30.2 -44.5 -6.7 11.1 9.7 12.6 13.5 8.8 -5.6 5.8 14.8 47 Credit unions .0 .0 .0 .0 .2 .0 .3 .3 .1 .1 .2 .5 48 Life insurance companies .0 .0 .0 .0 .2 .1 .6 -.1 .4 .0 .0 .0 49 Finance companies 27.4 24.0 18.6 -3.6 .2 -19.6 -13.6 17.5 16.3 63.3 67.0 16.9 50 Mortgage companies 10.1 .0 -2.4 8.0 -1.0 -25.2 32.4 -.8 -10.4 -27.6 -33.2 -10.0 51 Real estate investment trusts (REITs) 1.4 .8 1.2 .3 3.5 .4 1.3 6.0 6.2 1.2 2.2 2.3 52 Issuers of asset-backed securities (ABSs) 28.3 52.3 51.0 56.3 81.5 62.0 60.5 85.8 117.6 81.8 4.0 22.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1—Continued 1993 1994 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998899 11999900 11999911 11999922 11999933 Ql Q2 Q3 Q4 Ql Q2 Q3 All sectors S3 Total net borrowing, all sectors 964.4 862.3 642.2 794.5 961.2 700.7 958.8 1,135.3 1,050.0 1,061.9 836.4 954.5 54 U.S. government securities 295.8 414.4 424.0 459.8 417.3 409.9 393.0 460.7 405.5 550.5 368.1 359.0 55 Tax-exempt securities 69.8 48.7 68.7 31.1 78.1 88.7 130.3 66.2 27.4 22.6 -9.8 -41.2 56 Corporate and foreign bonds 120.2 114.7 160.5 160.4 252.9 251.2 213.4 299.9 247.1 212.6 109.8 96.5 57 Mortgages 281.6 200.1 161.9 124.5 159.2 101.2 153.5 228.3 154.0 151.8 162.7 219.6 58 Consumer credit 45.8 16.0 -15.0 5.5 62.3 20.3 41.6 76.2 111.3 72.7 121.9 127.1 59 Bank loans n.e.c 40.7 2.2 -29.1 -9.4 -8.3 -49.2 19.2 -7.3 4.2 61.9 27.1 76.8 60 Open market paper 65.9 30.7 -44.0 13.1 -5.1 -110.9 16.4 6.3 67.7 -57.2 13.3 67.8 61 Other loans 44.7 35.6 -84.9 9.5 4.7 -10.4 -8.7 4.9 32.9 47.0 43.1 49.0 Funds raised through mutual funds and corporate equities 62 Total net share issues -60.8 19.7 215.4 296.0 436.9 343.9 471.9 498.0 434.0 214.5 218.6 117.4 63 Mutual funds 37.2 65.3 151.5 211.9 316.8 268.9 358.0 348.9 291.5 114.0 152.7 131.2 64 Corporate equities -98.0 -45.6 64.0 84.1 120.1 75.0 113.9 149.1 142.4 100.5 65.8 -13.8 65 Nonfinancial corporations -124.2 -63.0 18.3 27.0 21.3 8.2 23.2 32.3 21.5 -9.6 -2.0 -50.0 66 Financial corporations 9.0 10.0 15.1 26.4 38.2 35.2 38.6 38.2 40.9 40.7 29.0 21.6 67 Foreign shares purchased in United States 17.2 7.4 30.7 30.7 60.6 31.6 52.1 78.6 80.0 69.4 38.9 14.6 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 • March 1995 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1993 1994 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11998899 11999900 11999911 11999922 11999933 Q1 Q2 Q3 Q4 Q1 Q2 Q3 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 964.4 862.3 642.2 794.5 961.2 700.7 958.8 1,135.3 1,050.0 1,061.9 836.4 954.5 2 Private domestic nonfinancial sectors 137.0 190.1 -7.5 72.0 6.8 -23.1 -3.7 -39.5 93.3 458.8 346.1 208.8 3 Households 94.7 157.2 -39.6 70.7 -9.6 -74.8 -75.6 -69.7 181.8 462.2 412.3 316.4 4 Nonfarm noncorporate business -.8 -1.7 -3.7 -1.1 -3.2 -3.0 -3.2 -3.3 -3.5 -3.6 -1.8 -1.9 Nonfinancial corporate business 13.7 -3.7 6.7 29.2 18.0 -2.4 17.3 41.2 16.0 21.9 23.8 -1.7 6 State and local governments 29.3 38.3 29.2 -26.8 1.5 57.0 57.7 -7.7 -101.0 -21.6 -88.2 -104.0 7 U.S. government -3.1 33.7 10.5 -11.9 -18.4 -23.2 -27.1 -15.4 -7.9 -40.8 -8.2 -6.6 8 Foreign 86.6 85.5 26.6 100.5 126.0 65.9 93.4 123.5 221.2 127.5 51.9 113.1 9 Financial sectors 743.8 553.0 612.5 633.9 846.8 681.1 896.2 1,066.6 743.3 516.4 446.7 639.3 10 Government sponsored enterprises -4.1 13.9 15.2 69.0 90.2 16.7 128.0 144.8 71.2 92.4 101.1 135.6 11 Federally related mortgage pools 124.3 150.3 136.6 115.6 80.6 137.2 -12.2 119.5 77.9 180.0 98.6 72.8 12 Monetary authority -7.3 8.1 31.1 27.9 36.2 42.5 35.7 28.2 38.5 48.8 17.9 24.0 13 Commercial banking 177.2 125.1 80.8 95.3 142.2 100.5 133.4 146.7 188.1 184.7 112.7 183.5 14 U.S. commercial banks 146.1 94.9 35.7 69.5 149.6 103.4 137.4 160.3 197.3 120.6 128.4 164.7 15 Foreign banking offices 26.7 28.4 48.5 16.5 -9.8 -1.4 -14.3 -16.9 -6.5 59.0 -17.8 19.2 16 Bank holding companies 2.8 -2.8 -1.5 5.6 .0 -4.5 7.9 1.2 -4.8 3.1 .2 -2.4 17 Banks in U.S. affiliated areas 1.6 4.5 -1.9 3.7 2.4 3.0 2.4 2.2 2.1 2.1 1.9 1.9 18 Funding corporations 8.0 16.1 15.8 23.5 18.1 -3.8 1.1 32.4 42.6 17.8 35.3 18.7 19 Thrift institutions -90.0 -154.0 -123.5 -61.3 -2.0 -30.7 15.2 21.0 -13.3 13.5 42.1 44.7 20 Life insurance companies 101.8 94.4 83.2 79.1 105.1 113.0 109.4 111.8 86.4 53.7 6.1 33.3 21 Other insurance companies 29.7 26.5 32.6 12.8 33.3 27.3 36.0 37.6 32.1 27.9 20.8 16.0 22 Private pension funds 81.1 17.2 85.7 37.3 40.2 118.0 11.1 91.9 -60.1 -97.7 -30.7 -13.4 23 State and local government retirement funds 46.1 34.9 46.0 34.4 25.5 -9.8 47.5 27.4 36.9 45.3 51.2 41.1 24 Finance companies 32.0 29.0 -12.7 1.7 -9.0 -33.3 -34.7 9.4 22.6 72.1 49.8 59.0 25 Mortgage companies 20.1 .0 11.2 .1 .0 -50.4 65.1 -1.6 -13.3 -55.4 -66.2 -20.0 26 Mutual funds 23.8 41.4 90.3 123.7 164.0 148.6 194.4 174.6 138.4 -72.6 11.3 -18.6 27 Closed-end funds 6.6 .2 14.7 17.4 10.2 16.7 10.5 5.9 7.7 8.7 3.6 1.4 28 Money market funds 67.1 80.9 30.1 1.3 12.9 -57.3 33.3 25.3 50.3 -37.4 33.7 54.4 29 Real estate investment trusts (REITs) .5 -.7 -.7 1.1 .6 .2 .8 1.0 .2 .7 .7 .7 30 Brokers and dealers 80.2 2.8 17.5 -6.9 9.2 75.2 52.5 -7.8 -82.8 -56.1 -52.6 -14.4 31 Asset-backed securities issuers (ABSs) 27.1 51.1 48.9 53.8 80.1 61.5 59.4 88.6 111.1 81.0 6.2 17.5 32 Bank personal trusts 19.7 15.9 10.0 8.0 9.5 9.1 10.0 9.9 8.9 9.3 5.2 2.9 RELATION OF LIABILITIES TO FINANCIAL ASSETS 33 Net flows through credit markets 964.4 862.3 642.2 794.5 961.2 700.7 958.8 1,135.3 1,050.0 1,061.9 836.4 954.5 Other financial sources 34 Official foreign exchange 24.8 2.0 -5.9 -1.6 .8 3.4 -4.0 1.7 2.2 -.2 -11.2 -.6 35 Special drawing rights certificates 3.5 1.5 .0 -2.0 .0 .0 .0 .0 .0 .0 .0 .0 36 Treasury currency .6 1.0 .0 .2 .4 .3 .4 .4 .7 .7 .6 .8 37 Life insurance reserves 28.8 25.7 25.7 27.3 35.2 38.6 35.3 46.6 20.5 20.0 8.1 23.8 38 Pension fund reserves 321.2 165.1 360.3 249.7 304.7 331.7 333.7 359.9 193.6 -18.8 64.3 197.8 39 Interbank claims -16.2 35.4 -3.9 61.7 42.1 63.8 130.2 -7.6 -18.1 150.8 195.7 -44.5 40 Checkable deposits and currency 6.4 43.3 86.4 113.8 117.3 99.7 214.4 73.1 81.9 173.1 -68.0 -81.0 41 Small time and savings deposits 98.7 63.7 1.5 -57.2 -70.3 -108.5 -67.8 -68.1 -36.6 2.5 -59.9 -61.5 42 Large time deposits 16.9 -66.1 -58.5 -73.2 -23.5 -21.6 -26.8 -59.5 13.7 -39.6 -4.8 80.6 43 Money market fund shares 90.1 70.3 41.2 3.9 15.8 -46.8 61.8 .6 47.7 -10.9 67.8 50.3 44 Security repurchase agreements 77.8 -24.2 -16.5 35.5 65.5 170.7 37.9 67.8 -14.4 12.8 176.3 68.3 45 Foreign deposits 35.7 38.2 -16.7 -7.2 -22.1 -11.9 -17.1 -50.7 -8.6 24.9 35.9 5.0 46 Mutual fund shares 37.2 65.3 151.5 211.9 316.8 268.9 358.0 348.9 291.5 114.0 152.7 131.2 47 Corporate equities -98.0 -45.6 64.0 84.1 120.1 75.0 113.9 149.1 142.4 100.5 65.8 -13.8 48 Security credit 15.6 3.5 51.4 4.2 61.9 44.8 40.0 76.6 86.5 29.7 -17.3 -62.3 49 Trade debt 68.2 37.0 3.6 41.5 49.0 43.4 51.0 49.6 51.9 30.3 67.2 61.6 50 Taxes payable 2.4 -4.8 -6.2 8.5 4.6 7.9 7.3 -1.8 4.9 13.7 -3.4 5.9 51 Noncorporate proprietors' equity -25.8 -28.3 -3.3 18.4 -10.2 -6.6 -14.8 6.2 -25.8 -45.8 -47.2 -39.9 52 Investment in bank personal trusts 19.6 29.7 16.1 -7.1 1.6 -4.2 -7.2 .1 17.6 15.4 -15.5 6.7 53 Miscellaneous 313.8 135.7 197.2 257.6 302.1 197.9 404.0 222.3 384.0 279.6 204.8 316.8 54 Total financial sources 1,985.7 1,410.6 1,530.2 1,764.5 2^73.0 1,847.1 2,608.9 2^50.7 2,285.5 1,914.8 1,648.4 1,599.4 Floats not included in assets (-) 55 U.S. government checkable deposits 8.4 3.3 -13.1 .7 -1.5 4.7 2.9 2.1 -15.5 -2.4 .3 14.7 56 Other checkable deposits -2.2 8.5 4.5 1.6 -1.3 -2.0 8.3 -5.2 -6.2 .6 -1.1 -6.2 57 Trade credit 7.0 9.1 9.7 4.1 16.5 5.8 25.7 22.2 12.5 -27.0 -10.3 -2.2 Liabilities not identified as assets (-) 58 Treasury currency -.2 .2 -.6 -.2 -.2 -.2 -.2 -.2 -.2 -.2 -.2 .0 59 Interbank claims -4.4 1.6 26.2 -4.9 4.2 2.7 .5 -10.4 24.0 -29.1 5.3 11.4 60 Security repurchase agreements 32.4 -24.0 6.2 27.9 81.1 179.6 60.8 66.6 17.3 7.1 119.1 63.8 61 Taxes payable 2.7 .1 1.3 14.0 1.0 -6.9 18.2 1.2 -8.6 -.7 12.4 -1.4 62 Miscellaneous -55.6 -35.4 -45.3 -46.0 -45.3 -101.5 -97.6 -18.4 36.4 -87.6 -173.7 79.9 63 Total identified to sectors as assets 1,997.6 1,447.2 1,541.2 1,767.2 2,218.5 1,765.0 2^90.2 2,292.9 2^25.9 2,054.2 1,696.6 ly439.4 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, 2. Excludes corporate equities and mutual fund shares, 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 1993 1994 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999900 11999911 11999922 11999933 Ql Q2 Q3 Q4 Ql Q2 Q3 Nonfinancial sectors 1 Total credit market debt owed by 1100,,771122..66 1111,,118811..55 1111,,772200..77 1122336633..11 1111,,881166..11 1122,,000088..99 12,155.3 1122336633..11 1122,,448855..55 1122,,662299..77 1122,,777755..00 By sector and instrument 2 U.S. government 2,498.1 2,776.4 3,080.3 3,336.5 3,140.2 3,201.2 3,247.3 3,336.5 3,387.7 3,395.5 3,432.5 3 Treasury securities 2,465.8 2,757.8 3,061.6 3,309.9 3,120.6 3,180.6 3,222.6 3,309.9 3,361.4 3,368.0 3,403.9 4 Budget agency issues and mortgages 32.4 18.6 18.8 26.6 19.6 20.6 24.7 26.6 26.3 27.5 28.6 5 Private 8,214.5 8,405.1 8,640.4 9,026.6 8,675.9 8,807.7 8,908.1 9,026.6 9,097.8 9,234.3 9,342.5 By instrument 6 Tax-exempt obligations 1,039.9 1,108.6 1,139.7 1,217.8 1,160.7 1,202.2 1,210.0 1,217.8 1,222.3 1,229.5 1,209.9 7 Corporate bonds 1,008.2 1,086.9 1,154.4 1,229.6 1,175.9 1,194.8 1,212.8 1,229.6 1,238.4 1,248.1 1,254.3 8 Mortgages 3,758.5 3,920.0 4,043.9 4,206.5 4,061.5 4,109.9 4,166.6 4,206.5 4,230.5 4,281.5 4,337.4 9 Home mortgages 2,616.3 2,780.0 2,959.6 3,147.3 2,979.3 3,038.1 3,098.3 3,147.3 3,178.4 3,225.1 3,276.0 10 Multifamily residential 307.9 304.8 293.6 287.5 292.3 289.4 288.2 287.5 286.0 287.1 288.8 11 Commercial 755.4 755.8 710.3 690.6 709.2 701.4 699.0 690.6 684.7 686.5 688.7 12 Farm 78.9 79.3 80.4 81.2 80.8 81.0 81.1 81.2 81.4 82.9 83.8 13 Consumer credit 812.4 797.4 803.0 866.5 788.2 800.2 824.3 866.5 863.6 8953 932.1 14 Bank loans n.e.c 726.9 686.0 672.1 677.2 660.9 666.3 665.6 677.2 688.8 712.6 732.7 15 Commercial paper 116.9 98.5 107.1 117.8 113.9 124.0 123.2 117.8 129.9 135.7 138.7 16 Other loans 751.8 707.8 720.2 711.1 714.9 710.2 705.5 711.1 724.3 731.4 737.5 By borrowing sector 17 Household 3,614.3 3,784.7 4,002.3 4,292.0 4,012.6 4,093.0 4,190.9 4,292.0 4,330.4 4,420.7 4,518.5 18 Nonfinancial business 3,751.7 3,709.3 3,710.5 3,741.5 3,715.7 3,729.8 3,729.1 3,741.5 3,772.9 3,816.4 3,848.4 19 Farm 135.4 135.0 136.0 138.3 133.4 136.7 138.7 138.3 136.7 142.4 144.3 20 Nonfarm noncorporate 1,147.0 1,116.4 1,074.1 1,049.1 1,067.2 1,059.4 1,052.2 1,049.1 1,050.4 1,055.1 1,061.2 21 Corporate 2,469.2 2,458.0 2,500.4 2,554.1 2,515.1 2,533.7 2,538.3 2,554.1 2,585.7 2,618.9 2,642.9 22 State and local government 848.6 911.1 927.5 993.2 947.6 984.9 988.0 993.2 994.4 997.2 975.7 23 Foreign credit market debt held in United States 28S.0 298.8 310.9 357.8 319.8 332.0 3513 357.8 340.3 341.2 339.0 24 Bonds 115.4 129.5 143.9 203.4 160.6 171.9 193.0 203.4 210.6 213.4 215.0 25 Bank loans n.e.c 18.5 21.6 23.9 24.6 24.3 25.9 26.2 24.6 26.2 26.0 26.2 26 Commercial paper 75.3 81.8 77.7 68.7 72.3 72.1 71.7 68.7 433 42.0 39.9 27 U.S. government and other loans 75.7 65.9 65.3 61.1 62.7 62.0 60.3 61.1 603 59.9 57.8 28 Total credit market debt owed by nonfinandal sectors, domestic and foreign 10,997.6 11,4803 12,031.6 12,720.8 12,135.9 12340.9 12,506.6 12,720.8 12,825.8 12,971.0 13,114.0 Financial sectors 29 Total credit market debt owed by financial sectors 2,599.5 2,752.1 3,004.7 3,297.3 3,047.0 3,096.6 3,204.7 3,297.3 3,412.3 3,492.5 3,577.1 By instrument 30 U.S. government-related 1,418.4 1,564.2 1,720.0 1,881.1 1,755.8 1,774.5 1,845.2 1,881.1 1,954.5 2,021.1 2,075.9 31 Government-sponsored enterprises securities 393.7 402.9 443.1 523.7 451.2 468.4 510.3 523.7 563.7 600.3 638.3 32 Mortgage pool securities 1,019.9 1,156.5 1,272.0 1,352.6 1,299.8 1,301.3 1,330.1 1,352.6 1,390.8 1,420.8 1,437.6 33 Loans from U.S. government 4.9 4.8 4.8 4.8 4.8 4.8 4.8 4.8 .0 .0 .0 34 Private 1,181.1 1,187.9 1,284.8 1,416.1 1,291.3 1,322.2 1,359.5 1,416.1 1,457.9 1,471.4 1,501.1 35 CCoorrppoorraattee bboonnddss 572.4 640.0 724.8 844.1 751.0 774.8 810.5 844.1 879.3 895.0 911.1 36 MMoorrttggaaggeess 4.3 4.8 5.4 8.9 5.7 6.0 7.6 8.9 9.0 9.1 9.2 37 Bank loans n.e.c 69.6 78.4 80.5 66.5 70.3 73.3 69.2 66.5 60.3 48.9 44.5 38 Open market paper 417.7 385.7 394.3 393.5 379.3 375.9 373.2 393.5 408.8 409.9 420.1 39 Loans from Federal Home Loan Banks 117.1 79.1 79.9 103.1 85.0 92.1 98.9 103.1 100.4 108.5 116.2 By borrowing sector 40 Government-sponsored enterprises 398.5 407.7 447.9 528.5 456.0 473.2 515.1 528.5 563.7 600.3 638.3 41 Federally related mortgage pools 1,019.9 1,156.5 1,272.0 1,352.6 1,299.8 1,301.3 1,330.1 1,352.6 1,390.8 1,420.8 1,437.6 42 Private financial sectors 1,181.1 1,187.9 1,284.8 1,416.1 1,291.3 1,322.2 1,359.5 1,416.1 1,457.9 1,471.4 1,501.1 43 Commercial banks 76.7 65.0 73.8 79.5 73.1 76.6 77.9 79.5 78.4 82.1 87.5 44 Bank holding companies 114.8 112.3 114.6 123.4 119.9 120.2 120.3 123.4 124.2 126.3 129.2 45 Funding corporations 145.7 139.1 161.6 169.9 162.2 166.5 166.3 169.9 190.4 191.1 200.3 46 Savings institutions 139.1 94.6 87.8 99.0 90.3 93.4 96.8 99.0 97.6 99.0 102.7 47 Credit unions .0 .0 .0 .2 .0 .1 .2 .2 .3 3 .4 48 Life insurance companies .0 .0 .0 .2 .0 .2 .1 .2 .3 .3 .3 49 Finance companies 374.4 393.0 389.4 390.5 381.3 373.8 380.0 390.5 401.9 414.2 420.9 50 Mortgage companies 24.6 22.2 30.2 29.2 23.9 32.0 31.8 29.2 22.3 14.0 11.5 51 Real estate investment trusts (REITs) 12.4 13.6 13.9 17.4 14.0 14.4 15.8 17.4 17.7 18.3 18.8 52 Issuers of asset-backed securities (ABSs) 278.1 329.1 391.7 473.2 407.2 422.3 443.8 473.2 493.6 494.6 500.2 All sectors 53 Total credit market debt, domestic and foreign.... 13,597.1 14,2323 15,0363 16,018.1 15,183.0 15,437.5 15,7113 16,018.1 16,238.1 16,463.5 16,691.0 54 U.S. government securities 3,911.7 4,335.7 4,795.5 5,212.8 4,891.2 4,970.9 5,087.7 5,212.8 5,342.2 5,416.5 5,508.3 55 Tax-exempt securities 1,039.9 1,108.6 1,139.7 1,217.8 1,160.7 1,202.2 1,210.0 1,217.8 1,222.3 1,229.5 1,209.9 56 CCoorrppoorraattee aanndd ffoorreeiiggnn bboonnddss 1,696.0 1,856.5 2,023.1 2,277.0 2,087.4 2,141.5 2,216.3 2,277.0 2,328.3 2,356.5 2,380.4 57 MMoorrttggaaggeess 3,762.9 3,924.8 4,049.3 4,215.5 4,067.2 4,116.0 4,174.2 4,215.5 4,239.5 4,290.6 4,346.6 58 Consumer credit 812.4 797.4 803.0 866.5 788.2 800.2 824.3 866.5 863.6 895.3 932.1 59 Bank loans n.e.c 815.0 785.9 776.6 768.4 755.4 765.5 761.0 768.4 775.4 787.5 803.5 60 Open market paper 609.9 565.9 579.0 580.0 565.5 572.0 568.2 580.0 582.0 587.5 598.7 61 Other loans 949.4 857.5 870.2 880.1 867.4 869.1 869.6 880.1 884.9 899.8 911.5 Digitized for FR1.A DSatEa Rin this table also appear in the Board's Z.l (780) quarterly statistical release, http://fraser.statlboleus iLs.f2e thdr.oougrhg /L .4. For ordering address, see inside front cover. Federal Reserve Bank of St. Louis

A44 Domestic Financial Statistics • March 1995 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES' Billions of dollars except as noted, end of period 1993 1994 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999900 11999911 11999922 11999933 Ql Q2 Q3 Q4 Ql Q2 Q3 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 13,597.1 14,232.3 15,036.3 16,018.1 15,183.0 15,437.5 15,711.3 16,018.1 16,238.1 16,463.5 16,691.0 2 Private domestic nonfinancial sectors 2,260.8 2,240.2 2,318.0 2,340.9 2,301.4 2,296.4 2,285.0 2,340.9 2,429.1 2,511.5 2,562.9 3 Households 1,499.3 1,446.5 1,523.1 1,557.5 1,501.8 1,501.4 1,488.3 1,557.5 1,657.1 1,747.0 1,826.8 4 Nonfarm noncorporate business 47.8 44.1 42.9 39.7 42.2 41.4 40.6 39.7 38.8 38.4 37.9 5 Nonfinancial corporate business 189.6 196.2 225.4 248.1 220.1 227.3 234.7 248.1 243.7 252.5 249.6 6 State and local governments 524.1 553.3 526.5 495.6 537.3 526.2 521.5 495.6 489.5 473.6 448.6 7 U.S. government 239.0 246.9 235.0 216.6 229.4 223.1 218.8 216.6 206.3 204.7 202.6 8 Foreign 918.3 958.1 1,052.7 1,175.1 1,061.8 1,084.0 1,118.1 1,175.1 1,206.8 1,219.1 1,250.4 9 Financial sectors 10,179.0 10,787.2 11,430.6 12,285.5 11,590.3 11,834.0 12,089.4 12,285.5 12,395.9 12,528.2 12,675.1 10 Government-sponsored enterprises 375.6 390.7 459.7 549.8 463.0 495.5 531.8 549.8 572.0 597.9 631.9 11 Federally related mortgage pools 1,019.9 1,156.5 1,272.0 1,352.6 1,299.8 1,301.3 1,330.1 1,352.6 1,390.8 1,420.8 1,437.6 12 Monetary authority 241.4 272.5 300.4 336.7 303.6 318.2 324.2 336.7 341.5 351.6 356.8 13 Commercial banking 2,772.5 2,853.3 2,948.6 3,090.8 2,956.6 2,998.8 3,036.4 3,090.8 3,120.2 3,157.1 3,203.1 14 U.S. commercial banks 2,466.7 2,502.5 2,571.9 2,721.5 2,589.4 2,628.5 2,670.2 2,721.5 2,743.8 2,780.3 2,822.4 LB Foreign banking offices 270.8 319.2 335.8 326.0 326.7 327.1 322.3 326.0 331.8 331.7 335.7 16 Bank holding companies 13.4 11.9 17.5 17.5 16.4 18.4 18.7 17.5 18.2 18.3 17.7 1/ Banks in U.S. affiliated areas 21.6 19.7 23.4 25.8 24.2 24.8 25.3 25.8 26.4 26.8 27.3 18 Funding corporations 35.7 51.5 75.0 93.1 74.0 74.3 82.4 93.1 97.5 106.3 111.0 19 Thrift institutions 1,320.5 1,192.6 1,134.5 1,132.5 1,124.8 1,129.8 1,136.2 1,132.5 1,134.0 1,145.7 1,157.9 20 Life insurance companies 1,116.5 1,199.6 1,278.8 1,383.9 1,313.3 1,343.9 1,372.1 1,383.9 1,404.2 1,409.1 1,417.8 21 Other insurance companies 344.0 376.6 389.4 422.7 396.3 405.3 414.6 422.7 429.6 434.8 438.8 22 Private pension funds 607.4 693.0 730.4 770.6 759.8 762.6 785.6 770.6 746.2 738.5 735.1 23 State and local government retirement funds 433.9 479.9 514.3 542.6 514.6 526.5 533.4 542.6 553.9 566.7 577.0 24 Finance companies 497.6 484.9 486.6 482.8 477.9 473.7 474.0 482.8 494.5 511.3 524.2 25 Mortgage companies 49.2 60.3 60.5 60.4 47.9 64.1 63.8 60.4 46.6 30.0 25.0 26 Mutual funds 360.2 450.5 574.2 738.2 611.4 659.9 703.6 738.2 720.0 722.9 718.2 21 Closed-end funds 35.6 50.3 67.7 77.9 71.9 74.5 76.0 77.9 80.1 81.0 81.3 28 Money market funds 372.7 402.7 404.1 417.0 404.5 403.9 400.6 417.0 422.2 422.0 425.1 29 Real estate investment trusts (REITs) 7.7 7.0 8.1 8.6 8.1 8.3 8.6 8.6 8.8 9.0 9.1 30 Brokers and dealers 106.5 124.0 117.1 126.3 135.9 149.0 147.1 126.3 112.3 99.2 95.6 31 Asset-backed securities issuers (ABSs) 268.9 317.8 377.9 458.0 393.3 408.1 430.2 458.0 478.2 479.8 484.2 32 Bank personal trusts 213.4 223.5 231.5 240.9 233.7 236.2 238.7 240.9 243.3 244.6 245.3 RELATION OF LIABILITIES TO FINANCIAL ASSETS 33 Total credit market debt 13,597.1 14,2323 15,036.3 16,018.1 15,183.0 15,437.5 15,7113 16,018.1 16,238.1 16,463.5 16,691.0 Other liabilities 34 Official foreign exchange 61.3 55.4 51.8 53.4 54.5 53.9 55.6 53.4 56.4 54.9 55.5 35 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 16.6 16.7 16.8 17.0 17.1 17.3 17.5 37 Life insurance reserves 380.0 405.7 433.0 468.2 442.6 451.4 463.1 468.2 473.2 475.2 481.2 38 Pension fund reserves 3,484.2 4,138.3 4,516.5 4,945.1 4,652.7 4,710.4 4,869.4 4,945.1 4,890.7 4,880.8 5,016.8 39 Interbank claims 95.3 96.4 132.8 175.2 135.7 144.3 165.4 175.2 201.6 223.9 238.9 40 Deposits at financial institutions 5,005.3 5,044.8 5,059.1 5,141.8 5,055.3 5,097.1 5,088.5 5,141.8 5,155.8 5,182.8 5,201.3 41 Checkable deposits and currency 934.2 1,020.6 1,134.4 1,251.7 1,089.1 1,168.0 1,181.9 1,251.7 1,220.5 1,229.3 1,206.5 42 Small time and savings deposits 2,349.2 2,350.7 2,293.5 2,223.2 2,275.7 2,255.0 2,236.6 2,223.2 2,233.8 2,214.7 2,198.3 43 Large time deposits 546.9 488.4 415.2 391.7 410.6 401.1 389.4 391.7 382.6 378.9 402.0 44 Money market fund shares 498.4 539.6 543.6 559.4 556.6 549.8 547.9 559.4 582.4 576.4 586.1 45 Security repurchase agreements 372.3 355.8 392.3 457.8 446.2 450.4 472.5 457.8 472.4 510.3 534.0 46 Foreign deposits 304.3 289.6 280.1 258.0 277.1 272.8 260.2 258.0 264.3 273.2 274.5 47 Mutual fund shares 602.1 813.9 1,042.1 1,429.3 1,134.6 1,225.8 1,342.4 1,429.3 1,439.0 1,443.1 1,563.7 48 Security credit 137.4 188.9 217.3 279.3 225.0 234.7 254.5 279.3 282.7 278.1 263.2 49 Trade debt 942.2 935.9 977.4 1,026.4 976.9 989.7 1,009.6 1,026.4 1,022.3 1,039.5 1,062.5 50 Taxes payable 77.4 71.2 79.6 84.2 82.9 81.2 82.8 84.2 88.8 84.4 88.1 51 Investment in bank personal trusts 522.1 608.3 629.6 660.9 639.0 637.6 651.2 660.9 655.3 640.2 656.8 52 Miscellaneous 2,820.4 2,992.2 3,160.2 3,414.6 3,174.9 3,249.9 3,316.5 3,414.6 3,503.2 3,550.8 3,673.6 53 Total liabilities 27,751.1 29,609.6 31,360.1 33,721.3 31,781.7 32,338.1 33,035.0 33,721.3 34,032.4 34,342.6 35,018.1 Financial assets not included in liabilities (+) 54 Gold and special drawing rights 22.0 22.3 19.6 20.1 19.8 20.0 20.3 20.1 20.4 20.8 21.0 55 Corporate equities 3,530.2 4,863.6 5,462.9 6,186.5 5,647.3 5,683.7 5,941.7 6,186.5 6,052.2 5,877.7 6,135.1 56 Household equity in noncorporate business 2,529.1 2,444.4 2,411.5 2,427.7 2,419.5 2,434.2 2,445.3 2,427.7 2,457.8 2,478.9 2,487.3 Floats not included in assets (—) 57 U.S. government checkable deposits 15.0 3.8 6.8 5.6 3.4 3.5 2.2 5.6 .3 .9 1.2 58 Other checkable deposits 35.9 40.4 42.0 40.7 36.7 41.6 33.7 40.7 36.3 38.7 30.6 59 Trade credit -130.3 -129.3 -124.6 -101.7 -130.9 -135.0 -130.4 -101.7 -121.6 -135.1 -136.0 Liabilities not identified as assets (—) 60 Treasury currency -4.1 -4.8 -4.9 -5.1 -5.0 -5.0 -5.1 -5.1 -5.2 -5.2 -5.3 61 Interbank claims -32.0 -4.2 -9.3 -4.7 -5.8 -5.7 -7.8 -4.7 -7.7 -7.4 -3.5 62 Security repurchase agreements 3.0 9.2 38.1 119.2 94.9 108.0 132.6 119.2 133.0 160.3 186.3 63 Taxes payable 17.8 17.8 25.2 26.2 14.5 24.3 24.3 26.2 15.2 23.6 23.8 64 Miscellaneous -261.2 -330.7 -398.4 -451.0 -432.7 -409.3 -452.6 -451.0 -470.3 -441.1 -456.3 65 Total identified to sectors as assets 34,1883 37,337.6 39,679.1 42,726.5 40,293.1 40,853.6 41,845.5 42,726.5 42,982.9 43,085.3 44,020.8 1. Data in this table also appear in the Board's Z.l (780) quarterly statistica lrelease, 2. Excludes corporate equities and mutual fund shares, 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 1994 MMeeaassuurree 11999922 11999933 11999944 Apr. May June July Aug. Sept. Oct. Nov. Dec. 1 Industrial production1 107.6 112.0 118.1 116.7 117.4 118.0 118.2 119.1 119.0 119.4r 120.3r 121.4 Market groupings 7 Products, total 106.5 110.7 115.9 114.7 115.3 115.9 116.2 116.7 116.4 116.8r 111177..66rr 111188..55 3 Final, total 109.0 113.4 118.4 117.3 117.8 118.4 118.5 119.2 118.9 119.1r 119.8r 121.0 4 Consumer goods 105.9 109.4 113.1 112.3 112.8 113.5 113.3 113.8 113.0r 112.6r 113.6 114.6 5 Equipment 113.4 119.3 126.7 124.9 125.4 125.8 126.4 127.5 128.0r 129.2r 129.6 130.9 6 Intermediate 98.8 102.4 108.1 106.9 107.7 108.5 109.1 109.2 108.6r 109.9r 110.8' 110.8 7 Materials 109.2 114.1 121.4 119.7 120.5 121.2 121.4 122.8 122.9r 123.4r 124.3' 125.9 Industry groupings 8 Manufacturing 108.0 112.9 119.7 118.4 119.0 119.3 119.8 120.9 112200..99 112211..44rr 112222..66 112233..99 9 Capacity utilization, manufacturing (percent)2.. 79.2 80.9 83.4 83.0 83.2 83.2 83.3 83.8 83.6 83.8r 84.4 85.1 10 Construction contracts3 97.7 104.4 106.9 103.0 108.0 105.0 109.0 110.0 109.0 107.0 111.0 101.0 11 Nonagricultural employment, total4 106.5 108.4 111.3 110.5 110.8 111.2 111.4 111.7 112.0 112.2 112.6' 112.9 17, Goods-producing, total 94.2 94.3 95.6 95.3 95.3 95.6 95.6 95.8 95.9 96.1 96.6 96.7 n Manufacturing, total 95.3 94.8 95.1 94.8 94.8 95.0 95.0 95.2 95.3 95.5 95.7 96.0 14 Manufacturing, production workers 94.9 94.9 96.1 95.7 95.7 96.0 96.0 96.3 96.4 96.7 97.0 97.5 1 5 Service-producing 110.5 112.9 116.3 115.4 115.7 116.1 116.5 116.8 117.1 117.3 117.8' 118.0 16 Personal income, total 135.6 141.4 n.a. 148.3 149.0 149.3 150.0 150.7 151.7 153.9 153.6 n.a. 17 Wages and salary disbursements 131.6 136.2 n.a. 143.3 144.3 144.5 145.2 145.5 146.4 148.4 148.2 n.a. 18 Manufacturing 118.0 120.0 n.a. 124.8 124.9 125.3 125.6 126.2 126.7 128.9 128.0 n.a. 19 Disposable personal income5 137.0 142.5 n.a. 148.2 149.8 150.1 150.9 151.6 152.6 154.8 154.5 n.a. 20 Retail sales5 126.9 135.2 145.3 143.1 143.0 144.3 144.5 146.6 147.8 149.6r 149.8' 149.7 Prices6 71 Consumer (1982-84=100) 140.3 144.5 148.2 147.4 147.5 148.0 148.4 149.0 149.4 149.5 114499..77 114499..77 22 Producer finished goods (1982=100) 123.2 124.7 125.5 125.0 125.3 125.6 126.0 126.5r 125.5 125.8 126.1 126.2 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. covers employees only, excluding personnel in the armed forces. For the ordering address, see the inside front cover. The latest historical revision of the 5. Based on data from U.S. Department of Commerce, Survey of Current Business. industrial production index and the capacity utilization rates was released in November 6. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the 1994. See "Industrial Production and Capacity Utilization: A Revision," Federal Reserve price indexes can be obtained from the U.S. Department of Labor, Bureau of Labor Bulletin, vol. 81 (January 1995), pp. 16-26. For a detailed description of the industrial Statistics, Monthly Labor Review. production index, see "Industrial Production: 1989 Developments and Historical Revi- NOTE. Basic data (not indexes) for series mentioned in notes 4 and 5, and indexes for sion," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. series mentioned in notes 3 and 6, can also be found in the Survey of Current Business. 2. Ratio of index of production to index of capacity. Based on data from the Federal Figures for industrial production for the latest month are preliminary, and many figures Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other sources. for the three months preceding the latest month have been revised. See "Recent Develop- 3. Index of dollar value of total construction contracts, including residential, nonresi- ments in Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June dential, and heavy engineering, from McGraw-Hill Information Systems Company, F.W. 1990), pp. 411-35. See also "Industrial Production Capacity and Capacity Utilization Dodge Division. since 1987," Federal Reserve Bulletin, vol. 79 (June 1993), pp. 590-605. 4. Based on data from U.S. Department of Labor, Employment and Earnings. Series 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data seasonally adjusted except as noted 1994 CCaatteeggoorryy 11999922'' 11999933'' 11999944 May June July Aug. Sept. Oct.' Nov.' Dec. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 126,982 128,040 131,056 130,699' 130,538' 130,774' 131,086' 131,291' 131,646 131,718 131,725 7 Nonagricultural industries3 114,391 116,232 119,651 119,290' 119,341' 119,448' 119,761' 120,233' 120,647 120,903 121,038 3 Agriculture 3,207 3,074 3,409 3,413' 3,294' 3,333' 3,436' 3,411' 3,494 3,500 3,532 Unemployment 4 Number 9,384 8,734 7,996 7,996' 7,903' 7,993' 7,889r 7,647' 77,,550055 77,,331155 77,,115555 5 Rate (percent of civilian labor force) 7.4 6.8 6.1 6.1' 6.1' 6.1 6.0' 5.8' 5.7 5.6 5.4 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 108,604 110,525 113,423 112,951 113,334 113,624 113,914 114,186 114,348 114,836 115,092 7 18,104 18,003 18,064 18,009 18,044 18,045 18,095 18,096 18,142 18,181 18,235 8 635 611 604 603 605 601 603 605 599 597 595 9 Contract construction 4,492 4,642 4,916 4,907 4,927 4,944 4,942 4,972 4,974 5,047 5,041 10 Transportation and public utilities 5,721 5,787 5,842 5,843 5,849 5,857 5,866 5,865 5,867 5,881 5,906 11 Trade 25,354 25,675 26,362 26,190 26,328 26,439 26,484 26,565 26,629 26,735 26,837 17 6,602 6,712 6,789 6,787 6,798 6,797 6,801 6,794 6,786 6,790 6,793 N 29,052 30,278 31,805 31,598 31,765 31,918 32,036 32,138 32,231 32,411 32,521 14 Government 18,645 18,817 19,041 19,014 19,018 19,023 19,087 19,151 19,120 19,194 19,164 1. Beginning January 1994, reflects redesign of current population survey and popula- 4. Includes all full- and part-time employees who worked during, or received pay for, tion controls from the 1990 census. the pay period that includes the twelfth day of the month; excludes proprietors, self- 2. Persons sixteen years of age and older, including Resident Armed Forces. Monthly employed persons, household and unpaid family workers, and members of the armed figures are based on sample data collected during the calendar week that contains the forces. Data are adjusted to the March 1992 benchmark, and only seasonally adjusted data twelfth day; annual data are averages of monthly figures. By definition, seasonality does are available at this time. not exist in population figures. SOURCE. Based on data from U.S. Department of Labor, Employment and Earnings. 3. Includes self-employed, unpaid family, and domestic service workers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • March 1995 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1994 1994 1994 Qi Q2 Q3r Q4 Qi Q2 Q3 Q4 Ql Q2 Q3r Q4 Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (percent)2 1 Total industry 115.7 117.4 118.8 120.4 139.0 140.0 140.9 141.9 83.2 83.8 84.3 84.8 2 Manufacturing 116.8 118.9 120.5 122.6 142.0 143.1 144.2 145.3 82.3 83.1 83.6 84.4 3 Primary processing3 112.4 114.7 115.9 118.0 130.3 131.0 131.6 132.3 86.3 87.6 88.1 89.2 4 Advanced processing4 118.9 120.9 122.7 124.8 147.4 148.7 150.0 151.3 80.7 81.3 81.8 82.5 5 Durable goods 122.0 124.1 126.5 129.6 148.8 150.2 151.6 153.0 82.0 82.6 83.4 84.7 6 Lumber and products 104.4 105.4 106.6 108.0 115.1 115.5 116.0 116.5 90.7 91.2 91.9 92.7 / Primary metals 110.6 114.4 114.1 118.2 124.7 125.0 125.2 125.4 88.6 91.6 91.1 94.3 8 Iron and steel 114.5 120.2 115.8 121.2 127.5 127.9 128.4 128.8 89.8 93.9 90.2 94.1 y Nonferrous 105.3 106.9 111.4 114.1 120.6 120.5 120.5 120.5 87.3 88.7 92.4 94.6 10 Industrial machinery and equipment 152.1 157.6 162.6 168.1 176.5 179.0 181.6 184.1 86.2 88.0 89.6 91.3 ii Electrical machinery 150.3 156.8 163.5 170.0 175.8 179.9 184.1 188.3 85.5 87.1 88.8 90.3 12 Motor vehicles and parts 140.0 133.3 135.0 141.7 156.7 158.5 160.3 162.2 89.4 84.1 84.2 87.3 13 Aerospace and miscellaneous transportation equipment 83.7 84.2 82.1 82.1 130.1 129.8 129.4 129.1 64.4 64.9 63.5 63.6 14 Nondurable goods 111.0 113.1 113.8 114.8 134.0 134.8 135.5 136.3 82.9 83.9 84.0 84.3 15 Textile mill products 106.8 108.7 108.9 111.7 120.1 120.8 121.4 122.0 88.9 90.1 89.7 91.5 16 Paper and products 115.1 115.9 118.5 120.6 126.0 126.6 127.1 127.7 91.4 91.6 93.2 94.4 17 Chemicals and products 122.1 123.6 124.4 125.1 150.5 151.9 153.3 154.7 81.1 81.4 81.1 80.9 18 Plastics materials 120.6 124.3 126.9 129.2 130.0 130.8 93.4 95.6 97.0 19 Petroleum products 103.7 106.3 104.9 105.8 115.4 115.3 115.2 115.1 89.9 92.2 91.1 91.9 20 Mining 99.3 100.7 100.1 99.2 111.5 111.5 111.5 111.4 89.1 90.3 89.8 89.0 21 Utilities 119.3 117.2 118.1 116.0 134.6 135.0 135.4 135.8 88.6 86.8 87.2 85.4 22 Electric 117.6 118.0 118.2 116.4 132.1 132.6 133.1 133.6 89.0 89.0 88.8 87.1 1973 1975 Previous cycle5 Latest cycle6 1993 1994 High Low High Low High Low Dec. July Aug. Sept.' Oct/ Nov/ Dec.p Capacity utilization rate (percent^ 2 1 Total industry 89.2 72.6 87.3 71.8 84.9 78.0 82.9 84.1 84.5 84.2 84.3 84.7 85.4 2 Manufacturing 88.9 70.8 87.3 70.0 85.2 76.6 82.2 83.3 83.8 83.6 83.8 84.4 85.1 3 Primary processing5 92.2 68.9 89.7 66.8 89.0 77.9 86.9 87.7 88.3 88.2 88.3 89.3 90.0 4 Advanced processing4 87.5 72.0 86.3 71.4 83.5 76.2 80.3 81.5 82.1 81.8 82.0 82.5 83.1 5 Durable goods 88.8 68.5 86.9 65.0 84.0 73.7 81.9 82.8 83.7 83.6 84.0 84.6 85.5 6 Lumber and products 90.1 62.2 87.6 60.9 93.3 76.3 91.1 92.2 91.0 92.6 91.8 93.0 93.3 7 Primary metals 100.6 66.2 102.4 46.8 92.8 74.0 91.0 90.0 90.7 92.6 92.4 94.0 96.4 8 Iron and steel 105.8 66.6 110.4 38.3 95.7 72.1 93.2 90.5 88.0 92.0 92.2 93.2 96.8 9 Nonferrous 92.9 61.3 90.5 62.2 88.7 75.0 88.4 89.6 94.2 93.5 92.7 95.2 96.0 10 Industrial machinery and equipment 96.4 74.5 92.1 64.9 84.0 72.5 86.5 88.9 89.5 90.2 90.9 91.2 91.7 11 Electrical machinery 87.8 63.8 89.4 71.1 84.9 76.6 85.1 88.4 89.2 88.9 89.4 90.1 91.4 12 Motor vehicles and parts 93.4 51.1 93.0 44.5 85.1 57.6 87.3 81.1 86.1 85.3 85.7 8877..22 89.1 13 Aerospace and miscellaneous transportation equipment 77.0 66.6 81.1 66.9 88.4 79.4 65.1 63.9 63.6 62.9 63.1 63.5 64.2 14 Nondurable gocds 87.9 71.8 87.0 76.9 86.7 80.4 82.7 84.0 84.1 83.8 83.6 84.4 84.8 15 Textile mill products 92.0 60.4 91.7 73.8 92.1 78.9 88.3 90.3 89.8 89.0 90.6 91.3 92.6 16 Paper and products 96.9 69.0 94.2 82.0 94.8 86.5 93.6 91.8 94.6 93.2 93.2 94.9 95.0 17 Chemicals and products 87.9 69.9 85.1 70.1 85.9 78.9 80.8 81.6 81.4 80.4 80.2 81.0 81.4 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 94.4 97.9 97.3 95.7 93.3 19 Petroleum products 96.7 81.1 89.5 68.2 88.5 83.7 91.0 90.5 91.4 91.4 90.3 92.6 92.9 20 Mining 94.4 88.4 96.6 80.6 86.5 86.0 88.2 89.8 89.7 89.8 89.0 88.5 89.6 21 Utilities 95.6 82.5 88.3 76.2 92.6 83.2 86.1 88.0 87.8 86.0 86.4 85.3 84.5 22 Electric 99.0 82.7 88.3 78.7 94.8 86.5 87.4 89.5 89.0 87.9 88.4 87.0 86.1 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. 3. Primary processing includes textiles; lumber; paper; industrial chemicals; petroleum For the ordering address, see the inside front cover. The latest historical revision of the refining; rubber and plastics; stone, clay, and glass; and primary and fabricated metals. industrial production index and the capacity utilization rates was released in November 4. Advanced processing includes food, tobacco, apparel, furniture, printing, chemical 1994. See "Industrial Production and Capacity Utilization: A Revision," Federal Reserve products such as drugs and toiletries, leather and products, machinery, transportation Bulletin, vol. 81 (January 1995), pp. 16—26. For a detailed description of the industrial equipment, instruments, miscellaneous manufacturing, and ordnance. production index, see "Industrial Production: 1989 Developments and Historical Revi- 5. Monthly highs, 1978-80; monthly lows, 1982. sion," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. 6. Monthly highs, 1988-89; monthly lows, 1990-91. 2. Capacity utilization is calculated as the ratio of the Federal Reserve's 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 1992 1993 1994r 1994 GGrroouupp por- avg. tion Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.p Index (1987 = 100) MAJOR MARKETS 1 Total index 100.0 118.1 114.7 114.7 115.6 116.6 116.7 117.4 118.0 118.2 119.1 119.0 119.4 120.3 121.4 7 Products 60.9 115.9 112.9 113.1 114.0 114.7 114.7 115.3 115.9 116.2 116.7 116.4 116.8 117.6 118.5 3 Final products 46.6 118.4 115.5 115.9 117.0 117.4 117.3 117.8 118.4 118.5 119.2 118.9 119.1 119.8 121.0 4 Consumer goods, total 28.5 113.1 110.9 111.5 112.4 112.9 112.3 112.8 113.5 113.3 113.8 113.0 112.6 113.6 114.6 5 Durable consumer goods 5.5 119.4 117.1 118.6 121.1 119.0 117.8 116.4 118.0 118.0 120.7 119.1 119.5 120.8 123.1 6 Automotive products 2.5 125.5 123.1 126.6 131.5 126.4 124.1 120.1 121.0 119.5 124.9 123.8 124.5 127.1 130.5 7 Autos and trucks 1.6 125.4 125.9 128.3 134.8 127.7 125.0 118.1 118.5 115.0 126.0 122.5 122.3 126.5 131.5 8 Autos, consumer .9 94.9 95.0 98.7 102.7 98.8 96.0 90.4 89.6 86.5 91.7 90.2 92.9 94.0 100.5 9 Trucks, consumer .7 180.7 181.8 181.5 192.7 179.6 177.2 168.0 170.7 166.6 189.0 181.5 175.5 185.8 187.3 10 Auto parts and allied goods .9 123.0 114.7 120.4 121.9 121.1 119.8 121.9 123.8 126.6 120.0 123.9 126.6 125.6 125.8 11 Other 3.0 114.2 112.0 111.8 112.2 112.7 112.5 113.2 115.4 116.' 117.1 115.2 115.3 115.5 116.7 12 Appliances televisions and air conditioners .7 126.4 127.5 124.0 121.6 124.3 120.7 125.6 132.8 129.7 135.1 130.2 125.3 129.9 132.9 13 Carpeting and furniture .8 104.9 100.9 102.3 103.5 103.1 104.5 103.3 103.6 108.4 106.9 104.1 107.6 105.5 106.4 14 Miscellaneous home goods 1.5 113.8 111.2 111.4 112.7 112.8 113.2 113.1 114.2 115.3 114.6 114.6 114.9 114.4 115.1 15 Nondurable consumer goods 23.0 111.6 109.5 109.8 110.4 111.5 111.0 112.0 112.5 112.2 112.2 111.7 111.0 111.9 112.7 16 Foods and tobacco 10.3 110.3 106.6 106.5 107.6 109.8 110.2 110.9 110.5 110.6 111.2 111.9 111.1 112.0 112.9 17 Clothing 2.4 95.8 95.2 93.6 94.5 95.7 96.4 97.2 96.3 96.5 95.9 95.5 96.3 95.7 95.9 18 Chemical products 4.5 129.4 127.9 127.7 128.7 130.3 128.4 129.5 131.4 131.1 129.8 127.5 127.1 129.4 131.2 19 Paper products 2.9 104.8 104.3 104.0 103.9 103.9 105.1 105.6 105.8 105.2 105.9 105.2 103.6 104.8 105.6 20 Energy 2.9 113.8 113.2 118.4 117.3 114.5 110.0 112.4 115.5 114.3 113.1 110.5 110.1 110.0 109.0 21 Fuels .9 106.5 107.9 105.8 105.4 105.8 108.3 107.4 106.5 105.8 105.8 107.4 103.9 107.9 107.4 22 Residential utilities 2.1 116.9 115.3 123.6 122.2 118.1 110.5 114.4 119.3 117.8 116.1 111.8 112.6 110.8 109.6 23 Equipment 18.1 126.7 122.6 122.7 123.8 124.3 124.9 125.4 125.8 126.4 127.5 128.0 129.2 129.6 130.9 24 Business equipment 14.0 146.9 140.0 140.4 142.0 142.6 143.5 144.5 145.5 146.9 148.9 149.5 151.4 152.0 153.7 25 Information processing and related 5.7 176.5 165.0 167.1 168.5 170.0 170.2 171.8 173.7 177.1 179.7 181.1 183.7 184.8 188.1 26 Computer and office equipment 1.5 284.5 262.5 265.5 267.6 270.9 270.8 271.6 276.5 282.6 288.9 295.8 301.1 307.0 313.0 27 Industrial 4.0 121.1 115.7 114.6 116.4 117.8 119.2 120.7 120.6 122.1 122.3 123.0 124.6 124.9 126.0 28 Transit 2.6 138.7 139.0 140.1 142.3 139.3 138.0 135.3 136.1 132.6 137.9 136.8 138.6 140.4 141.9 29 Autos and trucks 1.2 148.0 147.9 149.1 154.6 148.1 145.9 140.0 141.7 138.2 149.4 147.7 149.2 151.7 152.6 30 Other 1.7 129.4 122.5 121.1 122.3 123.3 127.1 129.4 130.5 132.6 133.5 133.3 134.3 132.9 132.5 31 Defense and space equipment 3.4 71.1 75.2 74.5 73.6 73.7 73.6 72.4 71.3 69.9 69.2 68.8 68.8 69.0 69.3 32 Oil and gas well drilling .5 90.8 88.1 88.9 91.9 92.1 93.2 94.6 94.2 93.7 89.6 93.9 88.3 86.0 86.0 33 Manufactured homes .2 128.9 132.4 131.5 135.6 132.4 135.2 137.8 133.3 134.5 138.4 142.0 143.1 34 Intermediate products, total 14.3 108.1 104.7 104.6 104.9 106.3 106.9 107.7 108.5 109.1 109.2 108.6 109.9 110.8 110.8 35 Construction supplies 5.3 106.7 103.7 102.9 102.7 103.2 104.7 106.1 106.4 107.9 108.2 108.6 109.6 110.2 110.4 36 Business supplies 9.0 109.2 105.5 105.8 106.5 108.4 108.5 108.8 110.1 110.0 109.9 108.7 110.2 111.3 111.2 37 Materials 39.1 121.4 117.5 117.1 118.1 119.5 119.7 120.5 121.2 121.4 122.8 122.9 123.4 124.3 125.9 38 Durable goods materials 20.6 131.2 125.4 125.2 126.2 128.3 129.2 129.8 130.0 130.9 132.6 133.3 134.2 136.0 138.4 39 Durable consumer parts 3.9 132.2 128.5 129.9 129.7 131.5 130.1 129.7 129.2 130.4 133.2 133.1 133.9 136.1 139.0 40 Equipment parts 7.5 143.3 133.2 134.1 135.6 137.9 139.6 140.5 142.1 143.8 145.2 146.7 149.0 150.7 154.1 41 Other 9.1 121.2 117.8 116.0 117.1 119.3 120.4 121.2 120.8 121.1 122.3 122.8 122.6 124.3 125.8 42 Basic metal materials 3.0 119.7 118.5 114.4 116.9 117.6 119.7 120.0 119.6 118.8 119.3 121.1 121.4 123.0 125.8 43 Nondurable goods materials 8.9 118.3 116.3 114.6 115.6 116.7 115.9 118.2 118.1 118.6 120.3 i 19.8 120.0 121.0 121.7 44 Textile materials 1.1 105.5 101.3 101.8 102.7 104.0 104.4 104.2 104.8 104.8 105.7 105.9 106.5 109.8 112.1 45 Paper materials 1.8 118.7 117.7 113.8 116.3 117.8 116.1 118.9 118.4 117.5 122.5 121.5 120.5 121.9 121.6 46 Chemical materials 4.0 123.0 119.3 119.5 120.0 120.6 120.6 123.8 122.9 123.4 124.8 124.0 124.8 125.1 125.7 47 Other 2.0 116.3 118.0 113.4 114.0 115.6 113.3 114.8 116.5 118.6 118.1 118.2 118.4 118.6 119.7 48 Energy materials 9.6 105.2 103.2 103.8 104.7 105.0 104.8 104.6 106.7 105.2 106.1 105.6 105.2 104.6 105.3 49 Primary energy 6.3 100.1 98.3 97.3 99.4 100.5 100.9 100.4 100.2 100.3 100.9 100.8 100.3 99.6 100.7 50 Converted fuel materials 3.3 115.2 113.1 116.9 115.2 114.0 112.5 112.8 119.9 114.9 116.3 115.1 115.1 114.6 114.4 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.2 117.6 114.1 114.1 114.8 116.1 116.2 117.1 117.7 118.1 118.7 118.6 119.0 119.8 120.9 52 Total excluding motor vehicles and parts 95.2 117.1 113.6 113.5 114.3 115.5 115.7 116.6 117.3 117.7 118.2 118.0 118.4 119.2 120.2 53 Total excluding computer and office equipment 98.3 115.3 112.2 112.2 113.1 114.0 114.1 114.8 115.4 115.5 116.4 116.1 116.5 117.3 118.4 54 Consumer goods excluding autos and trucks . 26.9 112.3 109.9 110.4 111.0 111.9 111.5 112.4 113.2 113.2 113.0 112.4 112.0 112.7 113.5 55 Consumer goods excluding energy 25.6 113.0 110.6 110.7 111.9 112.7 112.5 112.8 113.2 113.2 113.8 113.3 112.9 114.0 115.2 56 Business equipment excluding autos and trucks 12.8 146.7 139.1 139.4 140.7 142.0 143.2 144.8 145.7 147.7 148.8 149.5 151.5 151.9 153.7 57 Business equipment excluding computer and office equipment 12.5 130.9 125.4 125.6 127.2 127.6 128.5 129.4 130.0 131.1 132.7 132.7 134.3 134.5 135.8 58 Materials excluding energy 29.5 127.2 122.6 121.9 122.9 124.8 125.1 126.2 126.4 127.2 128.8 129.2 129.9 131.4 133.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • March 1995 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1992 Group c S o I d C e2 p p r o o r - - 1 a 9 v 9 g 4 . tion Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov/ Dec.1 Index (1987 = 100) MAJOR INDUSTRIES 59 Total index 100.0 118.1 114.7 114.7 115.6 116.6 116.7 117.4 118.0 118.2 119.1 119.0 119.4 120.3 121.4 60 Manufacturing 85.5 119.7 116.1 115.8 116.7 118.0 118.4 119.0 119.3 119.8 120.9 120.9 121.4 122.6 123.9 61 Primary processing 26.5 115.2 112.9 111.7 112.2 113.3 114.0 115.2 114.7 115.3 116.3 116.2 116.6 118.1 119.3 62 Advanced processing 59.0 121.8 117.6 117.7 118.9 120.2 120.5 120.8 121.5 121.9 123.1 123.1 123.7 124.7 126.1 63 Durable goods 45.1 125.6 121.2 121.0 122.1 122.9 123.7 124.0 124.6 125.2 127.0 127.2 128.2 129.5 131.2 64 Lumber and products "24 2.0 106.1 104.6 105.3 103.8 104.0 103.9 106.0 106.2 106.8 105.5 107.6 106.7 108.3 108.8 65 Furniture and fixtures 25 1.4 111.1 107.0 105.8 107.6 107.7 110.2 110.1 111.8 114.0 115.5 112.4 115.0 112.7 111.7 66 Stone, clay, and glass products 32 2.1 104.8 104.4 101.8 101.8 103.7 105.0 105.5 104.4 104.3 105.8 105.8 105.5 106.9 108.1 67 Primary metals 33 3.1 114.2 113.4 108.0 111.6 112.1 114.8 114.8 113.7 112.7 113.5 116.0 115.8 117.9 121.0 68 Iron and steel 331,2 1.7 117.8 118.6 110.8 116.0 116.7 121.5 120.9 118.2 116.1 113.0 118.2 118.6 120.1 124.8 69 Raw steel .1 110.9 102.0 105.8 106.0 105.3 105.7 106.3 104.7 107.0 109.9 109.0 114.2 70 Nonfarous 333-6,9 1.4 1093 106.6 104.1 105.8 106.0 106.2 106.9 107.6 108.0 113.6 112.7 111.8 114.7 115.7 71 Fabricated metal products... 34 5.0 110.7 107.1 107.2 106.6 108.5 109.6 110.0 110.2 111.7 112.4 111.6 112.4 113.4 114.1 72 Industrial and commercial machinery and computer equipment... 35 7.9 160.0 151.3 150.3 151.9 154.0 156.1 157.7 158.9 160.6 162.6 164.6 166.6 167.9 169.7 73 Computer and office equipment 357 1.7 284.5 262.5 265.5 267.6 270.9 270.8 271.6 276.5 282.6 288.9 295.8 301.1 307.0 313.0 74 Electrical machinery 36 7.3 160.2 147.3 148.1 150.1 152.6 154.3 156.5 159.5 161.5 164.1 165.0 167.1 169.6 173.4 75 Transportation equipment... 37 9.6 109.9 109.8 110.8 112.3 110.7 109.5 107.6 107.5 105.7 109.5 108.8 109.3 111.1 113.2 76 Motor vehicles and parts . 371 4.8 138.0 135.9 138.7 142.6 138.8 136.2 131.6 132.2 129.6 138.1 137.4 138.4 141.5 145.0 77 Autos and light trucks . 371 2.5 131.9 132.3 135.2 141.9 134.7 131.7 124.4 124.6 120.8 131.9 128.4 128.6 132.8 138.4 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.8 83.0 84.9 84.1 83.3 83.8 84.1 84.6 83.8 82.8 82.3 81.4 81.5 82.0 82.8 79 Instruments 38 5.4 107.5 104.9 105.9 106.3 106.9 106.6 106.4 106.8 108.5 108.7 108.0 108.6 108.1 108.7 80 Miscellaneous 39 1.3 116.2 112.4 112.6 113.5 114.1 115.2 115.4 115.8 118.6 117.1 117.0 118.4 118.8 118.1 81 Nondurable goods 40.5 113.2 110.4 110.0 110.7 112.5 112.4 113.4 113.4 113.6 114.0 113.7 113.8 115.0 115.8 82 Foods 20 9.4 112.8 110.3 109.9 109.9 112.9 111.9 112.8 112.8 113.4 113.7 114.6 113.0 114.5 115.1 83 Tobaoco products 21 1.6 94.7 86.9 87.0 93.6 93.0 98.1 98.5 95.9 93.7 96.2 96.1 97.7 95.2 97.1 84 Textile mill products 22 1.8 109.0 105.7 106.0 106.4 107.9 108.6 108.9 108.7 109.4 109.0 108.3 110.4 111.4 113.3 85 Apparel products 23 2.2 96.2 94.7 93.5 94.9 95.7 96.2 97.1 97.0 97.0 96.8 96.8 97.1 96.4 96.9 86 Paper and products 26 3.6 117.4 117.6 114.0 115.7 115.7 114.4 116.7 116.6 116.6 120.2 118.7 118.9 121.3 121.6 87 Printing and publishing 27 6.8 101.3 98.8 98.2 98.8 101.3 101.7 101.6 102.4 102.1 101.5 100.9 101.6 102.5 102.7 88 Chemicals and products 28 9.9 123.9 120.9 121.3 121.8 123.1 122.4 124.0 124.4 124.7 124.7 123.7 123.7 125.3 126.3 89 Petroleum products 29 1.4 105.1 105.1 104.0 103.8 103.4 107.5 107.0 104.5 104.3 105.2 105.3 103.9 106.5 106.9 90 Rubber and plastic products . 30 3.5 133.4 127.4 128.3 128.2 130.9 130.8 132.4 132.8 134.5 134.5 134.7 136.3 138.2 139.8 91 Leather and products 31 .3 85.9 86.6 86.8 85.4 87.0 87.6 85.9 85.5 86.3 85.5 85.4 85.6 84.9 85.1 92 Mining 6.8 99.8 98.4 97.8 99.5 100.5 100.7 100.7 100.6 100.1 100.0 100.1 99.2 98.7 99.9 93 Metal 10 .4 160.5 167.8 164.2 161.6 165.2 157.0 156.4 162.8 159.5 156.6 160.0 161.4 160.3 161.5 94 Coal 12 1.0 112.0 104.7 101.6 112.0 117.7 118.3 111.5 113.4 108.6 111.4 110.7 110.2 110.1 117.6 95 Oil and gas extraction 13 4.7 92.9 92.5 92.4 92.7 92.9 93.2 94.3 93.8 93.9 93.5 93.7 92.1 91.3 91.4 96 Stone and earth minerals 14 .6 107.2 103.1 103.6 104.8 104.7 105.9 108.1 105.6 107.9 106.6 106.7 109.1 110.5 111.8 97 Utilities 7.7 118.1 115.6 120.3 119.6 117.9 114.7 115.8 121.1 119.0 118.8 116.5 117.2 115.8 114.9 98 Electric 49L3PT 6.1 117.6 115.2 118.1 117.5 117.2 116.4 116.2 121.4 119.0 118.4 117.1 117.9 116.2 115.2 99 Gas 492,3PT 1.6 119.9 117.0 128.9 128.1 120.5 107.9 114.1 120.0 118.9 120.4 114.2 114.5 114.2 113.8 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.7 118.6 114.9 114.4 115.2 116.7 117.3 118.2 118.6 119.2 119.8 119.9 120.4 121.5 122.6 101 Manufacturing excluding office and computing machines ... 83.8 116.5 113.2 112.8 113.7 114.9 115.3 115.9 116.2 116.6 117.6 117.5 118.0 119.1 120.3 Gross value (billions of 1987 dollars, annual rates) MAJOR MARKETS 102 Products, total 1,707.0 2,006.5 1,958.9 1,964.4 1,977.8 1,985.6 1,985.8 1,990.7 2,002.5 2,002.1 2,020.2 2,015.6 2,020.8 2,039.4 2,055.5 103 Final 1,314.6 1,576.6 1,542.4 1,547.1 1,559.9 1,563.6 1,559.9 1,561.7 1,571.1 1,569.3 1,586.6 1,584.2 1,584.9 1,600.2 1,615.0 104 Consumer goods 866.6 982.0 968.8 972.5 979.6 981.3 976.0 977.1 983.0 979.0 987.3 981.5 976.0 987.0 995.2 105 Equipment 448.0 594.6 573.6 574.6 580.4 582.3 583.9 584.5 588.1 590.3 599.3 602.7 609.0 613.2 619.7 106 Intermediate 392.5 429.8 416.5 417.3 417.8 422.0 425.9 429.0 431.4 432.9 433.5 431.4 435.9 439.2 440.5 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. Bulletin, vol. 81 (January 1995), pp. 16-26. For a detailed description of the industrial For the ordering address, see the inside front cover. The latest historical revision of the production index, see "Industrial Production: 1989 Developments and Historical Reviindustrial production index and the capacity utilization rates was released in November sion," Federal Reserve Bulletin, vol. 76, (April 1990), pp. 187-204. 1994. See "Industrial Production and Capacity Utilization: A Revision," Federal Reserve 2. Standard industrial classification. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1994 IItteemm 11999911 11999922 11999933 Feb. Mar. Apr. May June July Aug. Sept/ Oct/ Nov. Private residential real estate activity (thousands of units except as noted)' NEW UNITS 1 Permits authorized 949 1,095 1,199 1,252 1,313 1,380 1,357 1,316 1,337 1,354 1,425 1,398 1,388 2 One-family 754 911 986 1,054 1,068 1,069 1,083 1,046 1,034 1,046 1,052 1,047 1,035 3 Two-family or more 195 184 213 198 245 311 274 270 303 308 373 351 353 4 Started 1,014 1,200 1,288 1,328 1,519 1,471 1,491 1,358 1,439 1,463 1,509 1,436 1,545 5 One-family 840 1,030 1,126 1,121 1,271 1,211 1,200 1,163 1,219 1,176 1,234 1,153 1,193 6 Two-family or more 174 169 162 207 248 260 291 195 220 287 275 283 352 7 Under construction at end of period1 606 612 680 720 732 740 748 751 758 768 772 779 795 8 One-family 434 473 543 578 585 585 582 584 585 587 589 588 594 9 Two-or-more-family 173 140 137 142 147 155 166 167 173 181 183 191 201 10 Completed 1,091 1,158 1,193 1,334 1,273 1,354 1,446 1,329 1,282 1,342 1,400 1,365 1,347 11 One-family 838 964 1,040 1,185 1,115 1,192 1,257 1,151 1,160 1,145 1,157 1,155 1,112 12 Two-or-more-family 253 194 153 149 158 162 189 178 122 197 243 210 235 13 Mobile homes shipped 171 210 254 301 308 290 292 292 286 288 301 310 323 Merchant builder activity in one-family units 14 Number sold 507 610 666 697 722 673 692 628 630 673r 701 711 693 15 Number for sale at end of period1 284 266 294 298 298 298 301 313 317 322r 327 331 336 Price of units sold (thousands of dollars)1 16 Median 120.0 121.3 126.1 129.9 132.3 129.0 129.9 133.5 124.4 133.3 129.6 130.0 128.7 17 Average 147.0 144.9 147.6 150.7 152.8 152.9 151.8 158.4 144.4 154.9r 155.8 151.3 155.2 EXISTING UNITS (one-family) 18 Number sold 3,219 3,520 3,800 3,840 4,070 4,120 4,110 3,960 3,970 3,930 3,890 3,910 3,820 Price of units sold (thousands of dollars)2 19 Median 99.7 103.6 106.5 107.2 107.6 108.9 109.8 112.8 111.7 112.4 108.4 108.0 108.1 20 Average 127.4 130.8 133.1 133.3 134.4 135.5 136.6 140.9 139.3 140.6 135.2 133.7 134.2 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 403,644 435,355 466,365 485,894 496,042 497,035 504,356 506,144 505,445r 505,470r 514,197 518,937 522,689 22 Private 293,536 316,115 341,101 361,895 371,681 374,091 378,235 379,345 376,463r 376,216' 382,287 383,205 390,628 7.3 Residential 157,837 187,870 210,455 233,322 236,767 238,049 241,162 240,694 237,775r 236,871' 238,529 237,274 239,266 24 Nonresidential 135,699 128,245 130,646 128,573 134,914 136,042 137,073 138,651 138,688r 139,345' 143,758 145,931 151,362 25 Industrial buildings 22,281 20,720 19,533 19,972 19,905 21,221 21,338 20,960 21,117r 22,012' 22,621 22,297 24,002 26 Commercial buildings 48,482 41,523 42,627 42,065 46,602 47,481 47,912 48,410 48,607' 48,185' 50,180 50,909 52,732 27 Other buildings 20,797 21,494 23,626 22,258 23,918 23,824 23,956 24,439 23,838r 23,648' 24,784 24,059 24,972 28 Public utilities and other 44,139 44,508 44,860 44,278 44,489 43,516 43,867 44,842 45,126r 45,500' 46,173 48,666 49,656 7.9 Public 110,107 119,238 125,262 123,999 124,361 122,944 126,121 126,799 128,982' 129,255' 131,910 135,733 132,061 30 Military 1,837 2,502 2,454 2,404 2,231 1,959 2,024 2,277 2,35 LR 2,357' 2,364 2,556 2,255 31 Highway 32,041 34,899 37,355 36,329 38,830 39,508 40,655 40,300 40,305r 40,057' 40,797 41,809 40,887 32 Conservation and development 5,010 6,021 5,976 6,731 5,206 5,851 5,677 4,605 5,935r 5,754' 7,521 7,911 7,001 33 Other 71,219 75,816 79,477 78,535 78,094 75,626 77,765 79,617 80,391r 81,087' 81,228 83,457 81,918 1. Not at annual rates. SOURCES. Bureau of the Census estimates for all series except (1) mobile homes, which 2. Not seasonally adjusted. are private, domestic shipments as reported by the Manufactured Housing Institute and 3. Recent data on value of new construction may not be strictly comparable with data seasonally adjusted by the Census Bureau, and (2) sales and prices of existing units, for previous periods because of changes by the Bureau of the Census in its estimating which are published by the National Association of Realtors. All back and current figures techniques. For a description of these changes, see Construction Reports (C-30-76-5), are available from the originating agency. Permit authorizations are those reported to the issued by the Census Bureau in July 1976. Census Bureau from 17,000 jurisdictions beginning in 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • March 1995 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data except as noted Change from 12 Change from 3 months earlier months earlier (annual rate) Change from 1 month earlier IIInnndddeeexxx IIIttteeemmm llleeevvveeelll,,, 1994 1994 DDDeeeccc... 11999933 11999944 111999999444111 DDeecc.. DDeecc.. Mar. June Sept. Dec. Aug. Sept. Oct. Nov. Dec. CONSUMER PRICES2 (1982-84=100) 1 All items 2.7 2.7 2.5 2.5 3.6 2.2 3 .2 .1 3 .2 149.7 2 Food 2.9 2.9 -1.1 2.8 5.1 5.0 .4 .3 .0 .2 1.0 146.8 3 Energy items -1.4 2.2 4.7 -4.9 10.9 -1.1 1.4 -.7 -.7 .7 -.3 104.7 4 All items less food and energy 3.2 2.6 2.9 3.1 2.6 2.0 .3 .2 .2 .2 .1 157.9 5 Commodities 1.6 1.4 .6 4.2 .6 .3 -.1 .1 .0 .1 .0 137.6 6 Services 3.9 3.2 4.2 2.4 3.6 2.6 .4 .2 .2 .3 .1 169.6 PRODUCER PRICES (1982=100) 7 Finished goods .2 1.7 3.6 -.3 2.6 1.0 .5' -.3' -.5 .5 .2 126.2 8 Consumer foods 2.4 1.0 -.6 -5.5 3.9 6.8 .3r ,2r -.2 .2 1.6 128.5 9 Consumer energy -4.1 3.4 15.4 -1.0 3.2 -2.6 1.8 -2.9 -1.2 2.1 -1.5 75.8 10 Other consumer goods -.4 1.4 2.0 1.5 2.0 .3 .4 .If -.3 .2 .1 139.9 11 Capital equipment 1.8 2.0 4.3 3.0 2.4 -1.8 ,2r .2' -1.0 .1 .4 135.1 Intermediate materials 12 Excluding foods and feeds .8 4.8 2.8 3.1 5.9 7.9 .1' .2' .4 1.1 .4 121.6 13 Excluding energy 1.6 5.1 1.9 3.9 6.2 9.0 ,5r .5r .7 .9 .6 130.8 Crude materials 14 Foods 7.2 -9.3 -4.5 -20.6 -12.9 2.0 -1 .<f .lr -2.0 1.5 1.1 101.7 15 Energy -12.3 -1.9 10.1 21.0 -20.5 -12.3 ,4r -6.R .0 -1.0 -2.3 68.7 16 Other 10.7 17.0 22.7 -.8 18.8 30.7 1.5r ,8r .9 3.4 2.5 168.0 1. Not seasonally adjusted. SOURCE. US. Department of Labor, Bureau of Labor Statistics. 2. Figures for consumer prices are for all urban consumers and reflect a rentalequivalence 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 Q3 Q4 QI Q2 GROSS DOMESTIC PRODUCT 1 Total 5,724.8 6,020.2 6,343.3 6,359.2 6,478.1 6,574.7 6,689.9 By source 4 2 3 5 Pe N r D S s e o o u r n n r v a a d i b l c u l e r e c s a o b g n l o s e o u d g m s o p o t d io s n expenditures 2 3 1 , , , 4 1 9 2 5 8 0 5 8 6 2 7 . . . . 1 6 4 8 2 4 1 , , , 4 3 1 2 9 4 3 9 2 8 6 5 . . . . 7 7 9 5 4 2 1 , , , 3 5 5 3 7 3 0 3 8 1 8 9 . . . . 2 0 0 2 4 2 1 , , , 5 4 5 3 1 0 4 4 9 1 1 0 . . . . 1 2 9 2 4 2 1 , , , 5 4 5 3 5 6 6 5 1 2 9 5 . . . . 6 8 6 2 4 2 1 , , , 5 5 5 3 7 3 8 6 6 9 5 8 . . . . 2 9 0 9 4 2 1 , , . 5 6 5 3 8 2 8 8 6 4 0 1 . . . . 7 4 4 3 6 Gross private domestic investment 744.8 788.3 882.0 882.2 922.5 966.6 1,034.4 7 Fixed investment 746.6 785.2 866.7 868.3 913.5 942.5 967.0 8 Nonresidential 557.0 561.4 616.1 619.0 646.3 665.4 683.3 9 Structures 182.9 171.1 173.4 173.9 176.7 172.7 181.8 10 Producers' durable equipment 374.1 390.3 442.7 445.1 469.6 492.7 501.5 11 Residential structures 189.6 223.8 250.6 249.3 267.2 277.1 283.6 12 Change in business inventories -1.8 3.0 15.4 13.9 9.0 24.1 67.4 13 Nonfarm -1.2 -2.7 20.1 24.2 10.7 22.3 60.4 14 Net exports of goods and services -19.9 -30.3 -65.3 -77.0 -71.2 -86.7 -97.6 15 Exports 601.1 638.1 659.1 649.0 680.3 674.2 704.5 16 Imports 620.9 668.4 724.3 726.0 751.4 760.9 802.1 17 Government purchases of goods and services . . 1,097.4 1,125.3 1,148.4 1,152.9 1,157.2 1,159.8 1,166.7 18 Federal 445.8 449.0 443.6 442.7 439.8 437.8 435.1 19 Suite and local 651.6 676.3 704.7 710.2 717.4 722.0 731.5 By major type of product 20 Final sales, total 5.726.6 6,017.2 6,327.9 6,345.4 6.469.2 6,550.6 6,622.5 21 Goods 2.225.7 2,292.0 2,390.4 2,381.9 2.452.6 2.489.1 2,493.7 22 Durable 934.2 968.6 1.032.4 1,026.8 1,072.9 1.098.2 1,099.4 23 Nondurable 1,291.5 1,323.4 1,358.1 1,355.1 1.379.7 1,390.9 1.394.3 24 Services 3,028.9 3,227.2 3.405.5 3,429.3 3.459.3 3,503.8 3.555.4 25 Structures 472.0 498.1 532.0 534.1 557.2 557.7 573.4 26 Change in business inventories -1.8 3.0 15.4 13.9 9.0 24.1 67.4 27 Durable goods -16.9 -13.0 8.6 14.9 9.0 20.6 38.2 28 Nondurable goods 15.1 16.0 6.7 -1.1 .0 3.5 29.2 MEMO 29 Total GDP in 1987 dollars 4,867.6 4,979.3 5,134.5 5,139.4 5,218.0 5,261.1 5,314.1 NATIONAL INCOME 30 Total 4,608.2 4,829.5 5,131.4 5,138.5 5,262.0 5,308.7 5,430.7 31 Compensation of employees 3,404.8 3,591.2 3,780.4 3.801.7 3,845.8 3,920.0 3.979.3 3 3 3 3 3 3 2 3 5 6 7 4 W Su a G E O O p g p m o t t e h h l v s e p e e e m l r r a r o n n e y l d a n m e b t r e s o t n a c r o l t o a i n w r n a i t n c a e r o d i s g b m e u g s e t o i a v o n e n d r s n s m f a o e l r a n r s t i o e c e s i n a t l e r i p n r s i u s r e a s n c . e . 2 2 , , 5 5 2 8 2 2 8 1 8 4 7 9 9 6 8 5 0 9 . . . . . . 0 8 8 4 6 0 2 2 , , 6 9 5 3 3 3 3 5 0 6 8 2 6 7 4 7 7 8 . . . . . . 7 4 8 5 7 3 3 2 , , 6 3 1 5 5 3 2 7 0 1 8 5 4 0 9 7 3 5 . . . . . . 3 8 0 6 8 3 3 2 , . 5 6 1 5 3 3 8 8 1 2 2 5 6 5 5 9 7 8 . . . . . . 1 9 9 0 8 8 3 2 , , 1 5 6 3 5 3 4 3 8 6 9 6 8 0 0 7 7 6 . . . . . . 4 6 7 8 4 8 3 2, ,2 5 7 3 6 3 0 9 3 1 1 7 5 8 2 8 1 3 . . . . . . 6 7 3 5 7 2 3 2. , 6 6 2 7 3 3 0 5 5 4 2 7 1 5 7 3 2 8 . . . . . . 4 9 2 6 0 4 38 Proprietors' income' 376.2 418.7 441.6 420.3 462.9 471.0 471.3 39 Business and professional' 339.5 374.4 404.3 404.5 418.5 423.8 431.9 40 Farm' 36.7 44.4 37.3 15.8 44.4 47.2 39.3 41 Rental income of persons2 —10.5 —5.5 24.1 26.3 30.3 15.3 34.1 42 Corporate profits' 390.3 405.1 485.8 493.5 533.9 508.2 546.4 43 Profits before tax3 365.2 395.9 462.4 458.7 501.7 483.5 523.1 44 Inventory valuation adjustment 5.8 -6.4 -6.2 3.0 -6.5 -12.3 -14.1 45 Capital consumption adjustment 19.4 15.7 29.5 31.7 38.8 37.0 37.4 46 Net interest 447.4 420.0 399.5 396.7 389.1 394.2 399.7 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 • March 1995 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1993 1994 AAccccoouunntt 11999911 11999922 Q3 Q4 Ql Q2 Q3 PERSONAL INCOME AND SAVING 1 Total personal income 4,8603 5,1543 5,375.1 5395.9 5,484.6 5,555.8 5,659.9 5,734.5 7 Wage and salary disbursements 2,816.1 2,974.8 3,080.8 3,115.9 3,148.4 3,208.3 3,257.2 3,293.9 Commodity-producing industries 738.4 757.6 773.8 781.4 791.0 801.9 811.6 821.8 4 557.4 578.3 588.4 594.9 601.7 609.4 612.8 618.3 648.0 682.3 701.9 709.6 712.6 728.6 742.5 753.5 6 884.2 967.6 1,021.4 1,038.8 1,057.0 1,082.0 1,101.2 1,114.3 7 Government and government enterprises 545.5 567.3 583.8 586.1 587.8 595.7 601.9 604.4 8 299.0 328.7 355.3 358.8 366.8 373.2 378.4 383.7 9 Proprietors' income 376.2 418.7 441.6 420.3 462.9 471.0 471.3 467.0 10 Business and professional1 339.5 374.4 404.3 404.5 418.5 423.8 431.9 437.1 11 36.7 44.4 37.3 15.8 44.4 47.2 39.3 29.8 1? Rental income of persons2 -10.5 -5.5 24.1 26.3 30.3 15.3 34.1 32.6 N 150.5 161.0 181.3 182.8 184.1 185.7 191.7 196.9 14 695.1 665.2 637.9 634.1 627.7 631.1 649.4 674.2 15 Transfer payments 770.1 860.2 915.4 921.6 931.0 947.4 957.6 969.0 16 Old age survivors, disability, and health insurance benefits 382.3 414.0 444.4 446.8 452.1 463.8 470.7 476.5 17 LESS: Personal contributions for social insurance 236.2 248.7 261.3 263.8 266.6 276.3 279.9 282.9 18 EQUALS: Personal income 4,860.3 5,154.3 5,375.1 5,395.9 5,484.6 5,555.8 5,659.9 5,734.5 19 LESS: Personal tax and nontax payments 623.7 648.6 686.4 695.4 707.0 723.0 746.4 744.1 20 EQUALS: Disposable personal income 4,236.6 4,505.8 4,688.7 4,700.5 4,777.6 4,832.8 4,913.5 4,990.3 21 LESS: Personal outlays 4,025.0 4,257.8 4,496.2 4,518.2 4,588.2 4,657.3 4,712.4 4,787.0 22 EQUALS: Personal saving 211.6 247.9 192.6 182.3 189.4 175.5 201.1 203.3 MEMO Per capita (1987 dollars) 73 19,263.3 19,489.7 19,878.8 19,871.2 20,119.1 2200,,223355..22 2200,,338899..77 2200,,553366..55 24 Personal consumption expenditures 12,898.9 13,110.4 13,390.8 13,425.1 13,518.9 13,639.8 13,650.9 13,716.6 25 Disposable personal income 14,003.0 14,279.0 14,341.0 14,338.0 14,451.0 14,535.0 14,625.0 14,697.0 26 Saving rate (percent) 5.0 5.5 4.1 3.9 4.0 3.6 4.1 4.1 GROSS SAVING 27 Gross saving 751.4 722.9 787.5 788.9 825.8 886.2 9233 922.6 28 Gross private saving 937.3 980.8 1,002.5 989.9 1,011.4 1,037.3 1,041.4 1,052.7 7,9 Personal saving 211.6 247.9 192.6 182.3 189.4 175.5 201.1 203.3 30 Undistributed corporate profits' 99.2 94.3 120.9 130.3 147.9 127.7 142.3 139.5 31 Corporate inventory valuation adjustment 5.8 -6.4 -6.2 3.0 -6.5 -12.3 -14.1 -19.6 Capital consumption allowances 3? 383.3 396.8 407.8 413.3 411.1 443322..22 442255..99 443322..66 33 Noncorporate 243.1 261.8 261.2 264.1 263.0 301.8 272.1 277.3 34 Government surplus, or deficit (-), national income and product accounts -185.9 -257.8 -215.0 -201.0 -185.6 -151.1 -118.1 --113300..11 35 -202.9 -282.7 -241.4 -224.9 -220.1 -176.2 -145.1 -154.0 36 State and local 17.0 24.8 26.3 23.9 34.5 25.2 27.0 23.9 37 Gross investment 752.9 731.7 789.8 783.4 8093 850.2 8993 901.5 38 Gross private domestic investment 744.8 788.3 882.0 882.2 922.5 966.6 1,034.4 1,055.1 39 Net foreign investment 8.1 -56.6 -92.3 -98.8 -113.2 -116.4 -135.1 -153.6 40 Statistical discrepancy 1.5 8.8 2.3 -5.5 -16.5 -36.1 -24.0 -21.1 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 1993 1994 IItteemm ccrreeddiittss oorr ddeebbiittss 11999911 11999922 11999933 Q3 Q4 Ql Q2r Q3P 1 Balance on current account -6,952 -67,886 -103,896 -27,856 -30,587 -32,317 -37,906 -41,722 2 Merchandise trade balance -74,068 -96,097 -132,575 -36,488 -33,169 -36,962 -41,632 -44,633 3 Merchandise exports 416,913 440,361 456,866 111,736 119,679 118,018 122,683 127,817 4 Merchandise imports -490,981 -536,458 -589,441 -148,224 -152,848 -154,980 -164,315 -172,450 5 Military transactions, net -5,485 -3,034 -763 -87 -444 -338 177 376 6 Other service transactions, net 51,082 58,747 57,613 14,317 13,637 12,972 14,809 14,746 7 Investment income, net 14,833 4,540 3,946 2,015 -590 -811 -2,809 -3,948 8 U.S. government grants 23,959 -15,010 -14,620 -3,114 -5,591 -2,371 -3,590 -2,789 9 U.S. government pensions and other transfers -3,461 -3,735 -3,785 -986 -987 -968 -974 -1,550 10 Private remittances and other transfers -13,811 -13,297 -13,712 -3,513 -3,443 -3,839 -3,887 -3,924 11 Change in U.S. government assets other than official reserve assets, net (increase, —) 2,900 -1,652 -306 -192 -321 490 446622 --111188 12 Change in U.S. official reserve assets (increase, -) 5,763 3,901 -1,379 -545 -673 -59 3,537 -165 13 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -177 2,316 -537 -118 -113 -101 -108 -111 15 Reserve position in International Monetary Fund -367 -2,692 -44 -48 -80 -3 251 273 16 Foreign currencies 6,307 4,277 -797 -378 -480 45 3,394 -327 17 Change in U.S. private assets abroad (increase, -) -60,175 -63,759 -146,213 -34,915 -62,628 -48,667 -11,030 -20,111 18 Bank-reported claims3 4,763 22,314 32,238 7,335 -9,293 -1,236 15,248 -3,458 19 Nonbank-reported claims 11,097 45 -598 4,838 -303 1,941 -4,264 20 U.S. purchases of foreign securities, net -44,740 -45,114 -119,983 -40,777 -30,349 -24,605 -14,007 -7,146 21 U.S. direct investments abroad, net -31,295 -41,004 -57,871 -6,311 -22,683 -24,767 -8,007 -9,507 22 Change in foreign official assets in United States (increase, +) 17,199 40,858 71,680 19,259 23,962 11,530 8,925 17,496 23 U.S. Treasury securities 14,846 18,454 48,702 19,098 22,856 1,193 6,033 15,207 24 Other U.S. government obligations 1,301 3,949 4,062 1,345 970 50 2,355 2,003 25 Other U.S. government liabilities 1,177 2,572 1,666 1,121 825 938 252 526 26 Other U.S. liabilities reported by U.S. banks -1,484 16,571 14,666 -2,489 -587 10,139 1,241 539 27 Other foreign official assets5 1,359 -688 2,585 184 -102 -790 -956 -779 28 Change in foreign private assets in United States (increase, +) 80,935 105,646 159,017 52,675 66,200 83,548 40,332 49,943 29 U.S. bank-reported liabilities3 3,994 15,461 18,452 27,618 7,370 35,200 25,539 16,826 30 U.S. nonbank-reported liabilities -3,115 13,573 14,282 1,169 4,733 5,867 3,662 31 Foreign private purchases of U.S. Treasury securities, net 18,826 36,857 24,849 3,474 7,996 9,260 -7,434 5,661 32 Foreign purchases of other U.S. securities, net 35,144 29,867 80,068 17,445 38,008 21,258 13,152 14,162 33 Foreign direct investments in United States, net 26,086 9,888 21,366 2,969 8,093 11,963 5,413 13,294 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 -39,670 -17,108 21,096 -8,427 4,047 -14,525 -4,320 -5,323 36 Due to seasonal adjustment -6,643 103 5,810 639 -6,919 37 Before seasonal adjustment -39,670 -17,108 21,096 -1.785 3,944 -20,335 -4,959 1,596 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) 5,763 3,901 -1,379 -545 -673 -59 33,,553377 --116655 39 Foreign official assets in United States, excluding line 25 (increase, +) 16,022 38,286 70,015 18,138 23,137 10,592 8,673 16,970 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) -4,882 5,942 -3,847 -3,194 -229 -1,674 --44,,114499 33,,559922 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 arranged 2. Data are on an international accounts basis. The data differ from the Census basis with or through foreign official agencies. data, shown in table 3.11, for reasons of coverage and timing. Military exports are 5. Consists of investments in U.S. corporate stocks and in debt securities of private excluded from merchandise trade data and are included in line 5. corporations and state and local governments. 3. Reporting banks include all types of depository institution as well as some brokers SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of and dealers. Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • March 1995 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1994 IItteemm 11999911 11999922 11999933 May June July Aug. Sept. Oct. Nov.p 1 Goods and services, balance -28,472 -40,384 -75,725 -9,219 -8,845 -10,953 -9,060 -9,354 -10,097 -10,531 2 Merchandise -74,068 -96,097 -132,575 -14,272 -14,020 -15,955 -14,101 -14,433 -15,051 -15,562 3 Services 45,596 55,713 56,850 5,053 5,175 5,002 5,041 5,079 4,954 5,031 4 Goods and services, exports 580,127 616,924 641,677 56,258 58,333 56,297 60,292 60,063 59,847 61,160 5 Merchandise 416,913 440,361 456,866 40,276 42,028 40,128 44,121 43,596 43,380 44,535 6 Services 163,214 176,563 184,811 15,982 16,305 16,169 16,171 16,467 16,467 16,625 7 Goods and services, imports -608,599 -657,308 -717,402 -65,477 -67,178 -67,250 -69,352 -69,417 -69,944 -71,691 8 Merchandise -490,981 -536,458 -589,441 -54,548 -56,048 -56,083 -58,222 -58,029 -58,431 -60,097 9 Services -117,618 -120,850 -127,961 -10,929 -11,130 -11,167 -11,130 -11,388 -11,513 -11,594 MEMO 10 Balance on merchandise trade, Census basis -66,723 -84,501 —115,568 -12,885 -13,028 -14,845 -12,758 -13388 -13,815 -14,521 1. Data show monthly values consistent with quarterly figures in the U.S. balance of SOURCE. FT900, U.S. Department of Commerce, Bureau of the Census and Bureau of payments accounts. Economic Analysis. 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1994 AAsssseett 11999911 11999922 11999933 June July Aug. Sept. Oct. Nov. Dec.p 1 Total 77,719 71,323 73,442 75,732 75,443 75,740 76,532 78,172 74,000 74,335 2 Gold stock, including Exchange Stabilization Fund1 11,057 11,056 11,053 11,052 11,052 11,054 11,054 11,053 11,052 11,051 3 Special drawing rights2,3 11,240 8,503 9,039 9,731 9,696 9,837 9,971 10,088 10,017 10,039 4 Reserve position in International Monetary Fund2 9,488 11,759 11,818 12,184 12,183 12,161 12,067 12,339 12,037 12,030 5 Foreign currencies4 45,934 40,005 41,532 42,765 42,512 42,688 43,440 44,692 40,894 41,215 1. Gold held "under earmark" at Federal Reserve Banks for foreign and international been used. U.S. SDR holdings and reserve positions in the IMF also have been valued on accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold this basis since July 1974. stock is valued at $42.22 per fine troy ounce. 3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the 2. Special drawing rights (SDRs) are valued according to a technique adopted by the year indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—$710 mil- International Monetary Fund (IMF) in July 1974. Values are based on a weighted average lion; 1979—$1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net of exchange rates for the currencies of member countries. From July 1974 through transactions in SDRs. December 1980, sixteen currencies were used; since January 1981, five currencies have 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 June July Aug. Sept. Oct. Nov. Dec.1" 1 Deposits 968 205 386 604 181 188 342 223 230 250 Held in custody 2 U.S. Treasury securities2 281,107 314,481 379,394 411,580 423,715 427,574 429,819 439,854 444,339 441,866 3 Earmarked gold3 13,303 13,118 12,327 12,065 12,056 12,044 12,044 12,039 12,037 12,033 1. Excludes deposits and U.S. Treasury securities held for international and regional 3. Held in foreign and international accounts and valued at $42.22 per fine troy ounce; organizations. 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 11999922 11999933 Mayr June July Aug. Sept. Oct/ Nov.p 1 Total1 412,624 482,858' 489,555 501,827 516,466r 518,785r 520,585r 530,968 523,703 By type 2 Liabilities reported by banks in the United States 54,967 69,808 78,255 80,887r 84,889 79,806r 82,582r 79,356 73,411 3 U.S. Treasury bills and certificates3 104,596 150,900 134,568 141,338 146,244r 143,400 138,261 147,849 143,132 U.S. Treasury bonds and notes 4 Marketable 210,931 212,253r 226,144 228,823r 223333,,772200'' 242,936r 247,624' 250,425 253,070 5 Nonmarketable4 4,532 5,652 5,837 5,875 5,913 5,952 5,990 6,031 6,069 6 U.S. securities other than U.S. Treasury securities 37,598 44,245 44,751 44,904 45,700 46,691 46,128 47,307 48,021 By area 7 Europe1 189,230 206,921 214,880 221,957 227,466r 226,234' 225,600* 223,162 217,404 8 Canada 13,700 15,285 14,505 15,996 18,656 18,597 19,287 18,402 17,339 9 Latin America and Caribbean 37,973 55,898 43,741 42,646r 42,749 44,224 44,427 47,847 45,306 10 Asia 164,690 197,758r 209,082 211,250r 217,93 lr 221,IOC 222,971r 232,126 233,835 11 Africa 3,723 4,052 3,969 4,110 3,862 4,259 4,388 4,232 4,673 12 Other countries6 3,306 2,942 3,376 5,866 5,800 4,369 3,910 5,197 5,144 1. Includes the Bank for International Settlements. 5. Debt securities of U.S. government corporations and federally sponsored agencies, 2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, and U.S. corporate stocks and bonds. negotiable time certificates of deposit, and borrowings under repurchase agreements. 6. Includes countries in Oceania and Eastern Europe. 3. Includes nonmarketable certificates of indebtedness (including those payable in SOURCE. Based on U.S. Department of the Treasury data and on data reported to the foreign currencies through 1974) and Treasury bills issued to official institutions of department by banks (including Federal Reserve Banks) and securities dealers in the foreign countries. United States, and on the 1989 benchmark survey of foreign portfolio investment in the 4. Excludes notes issued to foreign official nonreserve agencies. Includes bonds and United States. 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 1994r IItteemm 11999900 11999911 11999922 Dec/ Mar. June Sept, 1 Banks' liabilities 70,477 75,129 72,796 78,120 86,459 72,312 82,183 2 Banks' claims 66,796 73,195 62,799 59,262 72,696 55,978 58,536 3 Deposits 29,672 26,192 24,240 19,404 19,684 20,499 19,623 4 Other claims 37,124 47,003 38,559 39,858 53,012 35,479 38,913 5 Claims of banks' domestic customers2 6,309 3,398 4,432 3,058 3,655 4,182 4,987 1. Data on claims exclude foreign currencies held by U.S. monetary authorities. 2. Assets owned by customers of the reporting bank located in the United 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 • March 1995 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1994r IItteemm 11999911 11999922 11999933 May June July Aug. Sept. Oct. Nov.p BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 756,066 810,259 920,995' 964,290 991,779 997,239 993,475 993,564 1,006,237 982,450 2 Banks' own liabilities 575,374 606,444 622,847r 666,349 685,581 697,021 692,920 706,331 708,822 685,870 3 Demand deposits 20,321 21,828 21,574r 27,824 24,521 23,549 22,962 23,541 24,627 23,969 4 Time deposits2 159,649 160,385 175,116r 182,416 183,568 185,826 184,552 178,006 181,169 178,629 5 Other3 66,305 93,237 110,144r 124,769 118,657 127,500 118,816 134,614 133,678 123,849 6 Own foreign offices4 329,099 330,994 316,013r 331,340 358,835 360,146 366,590 370,170 369,348 359,423 7 Banks' custodial liabilities5 180,692 203,815 298,148r 297,941 306,198 300,218 300,555 287,233 297,415 296,580 8 U.S. Treasury bills and certificates6 110,734 127,644 176,523 161,145 171,315 170,064 170,592 164,341 174,291 168,667 9 Other negotiable and readily transferable instruments7 18,664 21,974 36,289r 48,776 49,915 46,257 46,416 39,033 37,681 40,050 10 Other 51,294 54,197 85,336r 88,020 84,968 83,897 83,547 83,859 85,443 87,863 11 Nonmonetary international and regional organizations8... 8,981 9,350 10,936' 8,364 9,042 7,318 5,323 7,279 7,591 6,182 12 Banks' own liabilities 6,827 6,951 5,639 6,437 5,667 5,511 4,328 6,302 5,814 5,416 13 Demand deposits 43 46 15 35 31 29 36 28 83 35 14 Time deposits 2,714 3,214 2,780 2,785 3,223 3,469 2,691 2,699 2,845 2,817 15 Other3 4,070 3,691 2,844 3,617 2,413 2,013 1,601 3,575 2,886 2,564 16 Banks' custodial liabilities5 2,154 2,399 5,291' 1,927 3,375 1,807 995 977 1,777 766 17 U.S. Treasury bills and certificates6 1,730 1,908 4,275 857 2,825 1,082 836 767 1,572 501 18 Other negotiable and readily transferable instruments7 424 486 l,022r 1,070 548 725 159 205 205 265 19 Other 0 5 0 0 2 0 0 5 0 0 20 Official institutions9 131,088 159,563 220,708 212,823 222,225 231,133 223,206 220,843 227,205 216,543 21 Banks' own liabilities 34,411 51,202 64,231 66,158 67,641 73,967 67,619 72,109 67,500 60,655 22 Demand deposits 2,626 1,302 1,601 1,435 2,029 1,472 1,232 1,691 2,028 1,682 23 Time deposits2 16,504 17,939 21,654 23,644 24,925 27,497 25,948 26,909 23,801 20,634 24 Other3 15,281 31,961 40,976 41,079 40,687 44,998 40,439 43,509 41,671 38,339 25 Banks' custodial liabilities5 96,677 108,361 156,477 146,665 154,584 157,166 155,587 148,734 159,705 155,888 26 U.S. Treasury bills and certificates6 92,692 104,596 150,900 134,568 141,338 146,244 143,400 138,261 147,849 143,132 27 Other negotiable and readily transferable instruments7 3,879 3,726 5,482 12,053 13,112 10,863 12,054 10,407 11,820 12,739 28 Other 106 39 95 44 134 59 133 66 36 17 29 Banks10 522,265 547,320 588,448r 629,488 646,058 649,670 652,508 646,547 652,398 640,929 30 Banks' own liabilities 459,335 476,117 476,426r 511,082 530,866 536,234 536,398 538,016 545,187 532,073 31 Unaffiliated foreign banks 130,236 145,123 160,413r 179,742 172,031 176,088 169,808 167,846 175,839 172,650 32 Demand deposits 8,648 10,170 9,719 15,551 12,323 11,792 11,837 10,555 11,023 11,259 33 Time deposits2 82,857 90,296 105,192 109,083 108,366 106,888 107,110 101,741 106,646 106,317 34 Other3 38,731 44,657 45,502r 55,108 51,342 57,408 50,861 55,550 58,170 55,074 35 Own foreign offices4 329,099 330,994 316,013r 331,340 358,835 360,146 366,590 370,170 369,348 359,423 36 Banks' custodial liabilities5 62,930 71,203 112,022r 118,406 115,192 113,436 116,110 108,531 107,211 108,856 37 U.S. Treasury bills and certificates6 7,471 11,087 10,707 11,407 10,834 10,138 12,249 10,951 10,771 11,586 38 Other negotiable and readily transferable instruments7 5,694 7,555 17,020 22,081 22,347 21,446 22,049 15,388 13,248 13,654 39 Other 49,765 52,561 84,295r 84,918 82,011 81,852 81,812 82,192 83,192 83,616 40 Other foreigners 93,732 94,026 100,903' 113,615 114,454 109,118 112,438 118,895 119,043 118,796 41 Banks' own liabilities 74,801 72,174 76,55 lr 82,672 81,407 81,309 84,575 89,904 90,321 87,726 42 Demand deposits 9,004 10,310 10,239r 10,803 10,138 10,256 9,857 11,267 11,493 10,993 43 Time deposits2 57,574 48,936 45,490r 46,904 47,054 47,972 48,803 46,657 47,877 48,861 44 Other3 8,223 12,928 20,822 24,965 24,215 23,081 25,915 31,980 30,951 27,872 45 Banks' custodial liabilities5 18,931 21,852 24,352 30,943 33,047 27,809 27,863 28,991 28,722 31,070 46 U.S. Treasury bills and certificates6 8,841 10,053 10,641 14,313 16,318 12,600 14,107 14,362 14,099 13,448 47 Other negotiable and readily transferable instruments7 8,667 10,207 12,765 13,572 13,908 13,223 12,154 13,033 12,408 13,392 48 Other 1,423 1,592 946 3,058 2,821 1,986 1,602 1,596 2,215 4,230 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 7,456 9,111 17,567 26,385 27,075 25,589 25,338 19,160 16,813 17,582 1. Reporting banks include all types of depository institutions, as well as some brokers 6. Includes nonmarketable certificates of indebtedness and Treasury bills issued to and dealers. official institutions of foreign countries. 2. Excludes negotiable time certificates of deposit, which are included in "Other 7. Principally bankers acceptances, commercial paper, and negotiable time certificates negotiable and readily transferable instruments." of deposit. 3. Includes borrowing under repurchase agreements. 8. Principally the International Bank for Reconstruction and Development, the Inter- 4. For U.S. banks, includes amounts owed to own foreign branches and foreign American Development Bank, and the Asian Development Bank. Excludes "holdings of subsidiaries consolidated in quarterly Consolidated Reports of Condition filed with bank dollars" of the International Monetary Fund. regulatory agencies. For agencies, branches, and majority-owned subsidiaries of foreign 9. Foreign central banks, foreign central governments, and the Bank for International banks, consists principally of amounts owed to the head office or parent foreign bank, and Settlements. to foreign branches, agencies, or wholly owned subsidiaries of die head office or parent 10. Excludes central banks, which are included in "Official institutions." 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 States'—Continued 1994 IItteemm 11999911 11999922 11999933 May June July Aug. Sept. Oct.' Nov.p AREA 1 Total, all foreigners 756,066 810,259 920,995' 964,290' 991,779' 997039' 993,475' 993,564' 1,006,237 982,450 2 Foreign countries 747,085 800,909 910,059' 955,926' 982,737' 989,921' 988,152' 986,285' 998,646 976,268 3 Europe 249,097 307,670 376,988r 405,793' 412,178' 422,577' 419,932' 406,937' 413,700 393,100 4 Austria 1,193 1,611 1,917 3,309 3,578 3,364 3,349 3,014 3,610 4,263 5 Belgium and Luxembourg 13,337 20,567 28,627 32,612 25,298' 25,145 27,159 27,593 23,591 22,346 6 Denmark 937 3,060 4,517 3,207 3,473 2,877 2,634 2,128 2,374 2,307 7 Finland 1,341 1,299 1,872 1,849 2,649 2,504 1,747 2,319 2,601 1,587 8 France 31,808 41,411 39,741 42,131' 43,246 41,410 41,911 43,143 44,209 41,160 9 Germany 8,619 18,630 26,613 28,215' 33,114 30,838 31,046' 31,889' 33,136 31,049 10 Greece 765 913 1,519 1,453 1,377 1,153 1,199 1,227 1,711 1,477 11 Italy 13,541 10,041 11,559 13,015 12,771 11,537 11,725 10,781 10,701 9,685 17 Netherlands 7,161 7,365 16,096 ls.soc 18,691' 18,446' 17,199' 18,754' 18,034 17,310 13 Norway 1,866 3,314 2,966 3,278 4,018 3,731 3,195 2,861 3,400 2,807 14 Portugal 2,184 2,465 3,366 2,853 2,920 2,865 2,867 3,023 2,859 2,919 15 Russia 241 577 2,511 4,016 4,497 4,593 3,794 2,899 2,337 2,367 16 Spain 11,391 9,793 20,493 17,832' 15,839 17,137' 15,455' 14,198' 16,324 15,037 17 Sweden 2,222 2,953 2,572 3,443 4,043 5,709' 4,149' 4,651' 3,467 3,361 18 Switzerland 37,238 39,440 41,555 40,174 38,075 41,378 43,486 41,050' 41,834 41,756 19 Turkey 1,598 2,666 3,227 2,759 3,250 3,515 3,238 3,013 3,133 3,032 7.0 United Kingdom 100,292 111,805 133,936 158,961' 163,338' 171,239* 174,078' 160,361' 172,376 162,775 21 Yugoslavia" 622 504 570 424 434 230 227 224 220 240 22 Other Europe and other former U.S.S.R. 12,741 29,256 33,331r 27,762' 31,567 34,906 31,474 33,909' 27,983 27,822 23 Canada 21,605 22,420 20,227 25,948 25,480 26,625 26,341' 24,660 23,115 23,295 74 Latin America and Caribbean 345,529 317,228 357,380r 360,056' 381,263' 375,700' 377,864' 384,805' 385,829 390,645 25 Argentina 7,753 9,477 14,477 13,474 13,750 14,592 14,806' 13,783 15,577 15,950 76 Bahamas 100,622 82,284 73,150r 79.64C 85,817 87,264 83,260 86,011 88,086 89,515 77 Bermuda 3,178 7,079 7,830 8,182 8,975 10,103 8,422 10,334 8,936 7,615 78 Brazil 5,704 5,584 5,301 5,572 5,708 6,261' 5,697' 5,670' 6,195 6,722 79 British West Indies 163,620 153,033 190,446r 189,785' 206,466' 198,471' 204,677' 208,452' 204,625 209,202 30 Chile 3,283 3,035 3,183 3,286 3,523 3,353 2,988 3,407 3,078 3,741 31 Colombia 4,661 4,580 3,171 3,865 3,929 3,773 3,726 4,027 4,471 4,413 37 Cuba 2 3 33 11 11 12 13 13 7 7 33 Ecuador 1,232 993 880 842 812 819 847 823 830 825 34 Guatemala 1,594 1,377 1,207 1,137 1,143 1,207' 1,142' 1,103' 1,076 1,035 35 Jamaica 231 371 410 526 475 518 531 565 589 513 36 Mexico 19,957 19,454 28,018 21,900 21,286 20,182' 20,821' 19,937' 21,254 19,191 37 Netherlands Antilles 5,592 5,205 4,195 7,021 4,885 4,301 5,058 4,268 4,146 4,838 38 Panama 4,695 4,177 3,582 3,811 3,861 4,087 3,843 4,082' 4,077 4,598 39 Peru 1,249 1,080 926 91'2 930 916 1,027 1,079 1,027 935 40 Uruguay 2,096 1,955 1,611 1,561 1,597 1,420 1,336 1,399 1,471 1,189 41 Venezuela 13,181 11,387 12,786 12,023' 11,655 12,004 13,157 13,297 13,805 13,829 42 Other 6,879 6,154 6,174 6,508 6,440 6,417' 6,513' 6,555' 6,579 6,527 43 120,462 143,540 144,639r 152,054' 148,721' 151,279' 152,530' 158,328' 163,346 157,086 China 44 People's Republic of China 2,626 3,202 4,011 5,358 6,158 5,018 4,394 5,062 5,625 8,017 45 Republic of China (Taiwan) 11,491 8,408 10,633 9,820 8,375 8,811 8,737 8,863 9,483 10,929 46 Hong Kong 14,269 18,499 17,233 21,665 19,111 18,759' 18,679' 18,244 17,572 47 India 2,418 1,399 1,114 1,521 2,136 1,695 1,777 2,187 2,376 2,378 48 Indonesia 1,463 1,480 1,986 1,537 2,002 1,676 1,835 1,828 1,734 1,613 49 Israel 2,015 3,773 4,435 3,460 3,762 3,822 3,436 3,204 6,607 5,066 50 Japan 47,069 58,435 61,466r 62,971' 64,084' 65,671' 65,755' 68,242' 66,145 63,331 51 Korea (South) 2,587 3,337 4,913 4,523 4,581 5,310* 4,873 4,622 4,740 5,016 52 Philippines 2,449 2,275 2,035 2,590 3,150 3,396 3,214 3,135 3,158 3,064 53 Thailand 2,252 5,582 6,137 5,788 4,851 5,222 6,364 6,503 5,682 5,926 54 Middle Eastern oil-exporting countries 15,752 21,437 15,824 14,895 14,374 14,935 15,928 17,138 17,232 17,678 55 Other 16,071 15,713 14,852 17,926' 16,137 16,964 17,538 18,725 22,320 16,496 56 4,825 5,884 6,633r 6,166 6,411 6,153 6,360 6,278 6,375 6,939 57 Egypt 1,621 2,472 2,208 1,984 1,999 1,706 1,914 2,014 1,996 2,097 58 Morocco 79 76 99 .93 78 80 82 72 66 67 59 South Africa 228 190 451 230 290 289 417 197 245 693 60 Zaire 31 19 12 8 7 8 8 9 9 10 61 Oil-exporting countries14 1,082 1,346 1,303 1,057 1,204 1,291 1,156 1,186 1,176 1,227 62 Other 1,784 1,781 2,560" 2,794 2,833 2,779 2,783 2,800 2,883 2,845 63 Other 5,567 4,167 4,192 5,909 8,684 7,587 5,125 5,277 6,281 5,203 64 Australia 4,464 3,043 3,308 2,796 5,804 6,288 3,935 3,966 5,114 4,094 65 Other 1,103 1,124 884 3,113 2,880 1,299 1,190 1,311 1,167 1,109 66 Nonmonetary international and regional organizations.... 8,981 9,350 10,936' 8,364' 9,042' 7,318 5,323' 7,279' 7,591 6,182 67 International15 6,485 7,434 6,85 lr 5,635' 7,058' 5,446 3,998' 5,350' 5,847 4,336 68 Latin American regional16 1,181 1,415 3,218 909 847 612 418 1,058 950 1,094 69 Other regional11 1,315 501 867 1,820 1,137 1,260 907 871 794 752 11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 14. Comprises Algeria, Gabon, Libya, and Nigeria. 12. Includes the Bank for International Settlements. Since December 1992, has 15. Principally the International Bank for Reconstruction and Development. Excludes included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and "holdings of dollars" of the International Monetary Fund. Slovenia. 16. Principally the Inter-American Development Bank. 13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United 17. Asian, African, Middle Eastern, and European regional organizations, except the Arab Emirates (Trucial States). Bank for International Settlements, which is included in "Other Europe." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • March 1995 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 1994r AArreeaa oorr ccoouunnttrryy 11999911 11999922 11999933rr May June July Aug. Sept. Oct. Nov.p 1 Total, all foreigners 514,339 499,437 483,600 472,814 476,201 468,933 478,179 474,585 478,743 464,477 2 Foreign countries 508,056 494,355 481,195 471,088 473,780 467,537 476,220 471,321 476,738 463,184 3 Europe 114,310 123,377 121,253 123,645 119,779 123,072 124,237 119,758 131,506 119,252 4 Austria 327 331 413 486 416 470 442 282 440 369 5 Belgium and Luxembourg 6,158 6,404 6,535 6,389 7,113 6,915 6,543 7,250 6,323 6,237 6 Denmark 686 707 382 1,332 539 622 464 521 880 668 7 Finland 1,907 1,418 594 656 695 735 507 599 591 718 8 France 15,112 14,723 11,497 13,089 13,750 13,263 15,992 14,829 16,292 12,906 9 Germany 3,371 4,222 7,693 8,303 7,264 7,927 9,996 8,650 8,496 8,114 10 Greece 553 717 679 682 661 583 657 613 520 518 11 Italy 8,242 9,047 8,845 6,753 6,093 6,039 5,518 5,308 6,652 5,957 12 Netherlands 2,546 2,468 3,063 3,272 3,003 3,006 2,948 2,854 3,358 3,319 13 Norway 669 355 396 605 620 751 826 650 905 985 14 Portugal 344 325 834 948 989 1,035 1,040 1,182 1,056 1,006 15 Russia 1,970 3,147 2,310 1,656 1,605 1,541 1,378 1,272 1,220 1,172 16 Spain 1,881 2,755 2,766 2,823 2,497 1,900 2,664 2,211 2,731 2,188 17 Sweden 2,335 4,923 4,082 3,386 3,383 3,601 4,168 3,903 3,156 3,596 18 Switzerland 4,540 4,717 6,567 6,487 6,674 9,028 6,938 5,854 7,670 6,544 19 Turkey 1,063 962 1,287 1,324 1,210 1,208 1,152 1,024 1,142 895 20 United Kingdom 60,395 63,430 60,997 63,160 61,170 62,492 61,264 60,518 68,231 62,545 21 Yugoslavia^. 825 569 536 361 340 275 273 258 266 266 22 Other Europe and other former U.S.S.R.3 1,386 2,157 1,777 1,933 1,757 1,681 1,467 1,980 1,577 1,249 23 Canada 15,113 13,845 18,413 17,187 20,496 19,888 19,678 19,226 16,384 17,750 24 Latin America and Caribbean 246,137 218,078 224,112 219,696 221,604 215,608 223,297 220,137 221,254 217,065 25 Argentina 5,869 4,958 4,427 5,178 5,506 5,811 5,876 5,585 5,588 5,715 26 Bahamas 87,138 60,835 65,060 64,993 64,088 67,955 63,358 63,096 65,196 62,039 27 Bermuda 2,270 5,935 8,034 6,876 6,276 5,783 7,328 5,430 5,186 6,697 28 Brazil 11,894 10,773 11,812 11,933 11,285 10,547 10,051 10,278 10,188 9,759 29 British West Indies 107,846 101,507 97,997 94,245 98,112 89,528 100,519 100,657 99,345 95,972 30 Chile 2,805 3,397 3,616 3,353 3,419 3,327 3,410 3,391 3,429 3,624 31 Colombia 2,425 2,750 3,179 3,229 3,366 3,326 3,414 3,459 3,670 3,768 32 Cuba 0 0 0 0 0 8 0 0 12 3 33 Ecuador 1,053 884 680 683 707 683 604 624 628 632 34 Guatemala 228 262 286 291 312 308 320 310 337 335 35 Jamaica 158 162 195 198 194 186 210 204 255 251 36 Mexico 16,567 14,991 15,838 16,095 16,463 16,378 16,459 16,223 16,825 17,282 37 Netherlands Antilles 1,207 1,379 2,367 2,872 2,366 2,118 2,139 1,295 1,158 1,781 38 Panama 1,560 4,654 2,892 2,324 2,197 2,335 2,386 2,372 2,307 2,304 39 Peru 739 730 653 909 908 926 924 943 857 884 40 Uruguay 599 936 952 551 608 748 706 711 800 652 41 Venezuela 2,516 2,525 2,907 2,475 2,428 2,240 2,146 2,055 1,934 1,950 42 Other 1,263 1,400 3,217 3,491 3,369 3,401 3,447 3,504 3,539 3,417 43 Asia 125,262 131,789 110,751 103,851 110044,,885599 110022,,440088 110022,,339911 110055,,559977 110011,,009988 110033,,225533 China 44 People's Republic of China 747 906 2,299 802 784 951 764 1,177 822 817 45 Republic of China (Taiwan) 2,087 2,046 2,628 2,024 1,948 1,786 1,807 1,256 1,467 1,485 46 Hong Kong 9,617 9,642 10,878 9,016 9,782 10,045 9,921 13,066 10,354 11,228 47 India 441 529 589 738 784 791 829 950 951 1,001 48 Indonesia 952 1,189 1,522 1,378 1,319 1,369 1,363 1,343 1,326 1,361 49 Israel 860 820 826 710 671 638 675 663 860 696 50 Japan 84,807 79,172 59,616 53,048 55,496 53,286 52,597 52,872 50,032 53,261 51 Korea (South) 6,048 6,179 7,569 7,410 7,974 8,112 8,553 8,639 8,869 9,252 52 Philippines 1,910 2,145 1,408 914 654 514 533 562 639 583 53 Thailand 1,713 1,867 2,154 2,947 2,979 2,839 2,784 2,686 2,756 2,676 54 Middle Eastern oil-exporting countries4 8,284 18,540 14,398 18,323 16,565 16,342 16,080 15,293 15,424 14,455 55 Other 7,796 8,754 6,864 6,541 5,903 5,735 6,485 7,090 7,598 6,438 56 4,928 4,279 3,857 3,698 3,784 3,456 3,659 3,473 3,147 3,080 57 Egypt 294 186 196 219 281 234 229 250 237 229 58 Morocco 575 441 481 477 518 479 485 490 468 480 59 South Africa 1,235 1,041 633 575 556 492 656 569 480 454 60 Zaire 4 4 4 5 4 3 3 3 3 3 61 Oil-exporting countries5 1,298 1,002 1,129 1,217 1,235 1,194 1,189 1,103 955 879 62 Other 1,522 1,605 1,414 1,205 1,190 1,054 1,097 1,058 1,004 1,035 63 Other 2,306 2,987 2,809 3,011 3,258 3,105 2,958 3,130 3,349 2,784 64 Australia 1,665 2,243 2,072 1,369 1,489 1,587 1,390 1,810 2,158 1,687 65 Other 641 744 737 1,642 1,769 1,518 1,568 1,320 1,191 1,097 66 Nonmonetary international and regional organizations6... 6,283 5,082 2,405 1,726 2,421 1,396 1,959 3,264 2,005 1,293 1. Reporting banks include all types of depository institutions, as well as some brokers 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab and dealers. 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 included 6. Excludes the Bank for International Settlements, which is included in "Other all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. Europe." 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 1994r TTyyppee ooff ccllaaiimm 11999911 11999922 11999933rr May June July Aug. Sept. Oct. Nov.P 1 Total 579,683 559,495 535,131 532,770 528,301 2 Banks' claims 514,339 499,437 483,600 472,814 476,201 468,933 478,179 474,585 478,743 464,477 3 Foreign public borrowers 37,126 31,367 28,904 22,198 21,250 21,536 22,392 24,419 22,124 20,517 4 Own foreign offices2 318,800 303,991 286,880 284,907 289,930 283,848 287,022 283,308 287,037 277,104 5 Unaffiliated foreign banks 116,602 109,342 98,165 98,741 101,908 100,922 102,200 100,414 106,564 103,374 6 Deposits 69,018 61,550 47,039 50,394 51,016 50,849 49,809 50,736 52,699 50,415 7 Other 47,584 47,792 51,126 48,347 50,892 50,073 52,391 49,678 53,865 52,959 8 All other foreigners 41,811 54,737 69,651 66,968 63,113 62,627 66,565 66,444 63,018 63,482 9 Claims of banks' domestic customers3 65,344 60,058 51,531 56,569 53,716 10 Deposits 15,280 15,452 20,006 24,051 24,441 11 Negotiable and readily transferable instruments4 37,125 31,474 17,842 18,853 16,260 12 Outstanding collections and other claims 12,939 13,132 13,683 13,665 13,015 MEMO 13 Customer liability on acceptances 8,974 8,655 7,854 7,493 7,605 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 43,024 38,623r 26,073 23,161 23,748 22,880 23,026 24,456 23,029 n.a. 1. For banks' claims, data are monthly; for claims of banks' domestic customers, data and to foreign branches, agencies, or wholly owned subsidiaries of the head office or are for quarter ending with month indicated. parent foreign bank. Reporting banks include all types of depository institution, as well as some brokers and 3. Assets held by reporting banks in the accounts of their domestic customers. dealers. 4. Principally negotiable time certificates of deposit and bankers acceptances. 2. For U.S. banks, includes amounts due from own foreign branches and foreign 5. Includes demand and time deposits and negotiable and nonnegotiable certificates of subsidiaries consolidated in quarterly Consolidated Reports of Condition filed with bank deposit denominated in U.S. dollars issued by banks abroad. For description of changes in regulatory agencies. For agencies, branches, and majority-owned subsidiaries of foreign data reported by nonbanks, see Federal Reserve Bulletin, vol. 65 (July 1979), p. 550. banks, consists principally of amounts due from the head office or parent foreign bank, 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 Dec.r Mar.r Juner Sept. 1 Total 206,903 195,302 195,119 195,180 193,306 185,359 190,087 By borrower 2 Maturity of one year or less 165,985 162,573 163,325 166,567 166,741 160,270 164,622 3 Foreign public borrowers 19,305 21,050 17,813 17,563 15,953 12,786 16,683 4 All other foreigners 146,680 141,523 145,512 149,004 150,788 147,484 147,939 5 Maturity of more than one year 40,918 32,729 31,794 28,613 26,565 25,089 25,465 6 Foreign public borrowers 22,269 15,859 13,266 10,813 9,260 8,056 7,379 7 All other foreigners 18,649 16,870 18,528 17,800 17,305 17,033 18,086 By area Maturity of one year or less 8 Europe 49,184 51,835 53,300 56,432 58,919 51,037 57,732 9 Canada 5,450 6,444 6,091 7,545 7,272 8,258 7,197 10 Latin America and Caribbean 49,782 43,597 50,376 56,720 58,942 56,552 56,779 11 Asia 53,258 51,059 45,709 40,341 36,007 37,992 36,116 12 Africa 3,040 2,549 1,784 1,821 1,620 1,798 1,496 13 All other3 5,272 7,089 6,065 3,708 3,981 4,633 5,302 Maturity of more than one year 14 Europe 3,859 3,878 5,367 4,404 3,840 3,327 3,609 15 Canada 3,290 3,595 3,287 2,553 2,548 2,451 2,612 16 Latin America and Caribbean 25,774 18,277 15,312 13,863 13,023 12,420 12,145 17 Asia 5,165 4,459 5,038 5,412 4,704 4,607 4,801 18 Africa 2,374 2,335 2,380 1,934 2,001 1,849 1,836 19 All other3 456 185 410 447 449 435 462 1. Reporting banks include all kinds of depository institutions besides commercial 2. Maturity is time remaining to maturity, 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 • March 1995 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 Sept. Dec. Mar. June Sept. Dec. Mar. June Sept.p 1 Total 320.1 343.6 344.5 346.5 361.0 377.0 3883 403.7 488.9 4953 502.8 2 G-10 countries and Switzerland 132.2 137.6 136.0 132.9 142.4 150.0 153.3 161.0 178.0 165.6 183.8 3 Belgium and Luxembourg .0 6.0 6.2 5.6 6.1 7.0 7.1 7.4 7.9 8.6 9.5 4 France 10.4 11.0 15.3 15.3 13.5 14.0 12.3 11.7 16.4 18.8 19.3 5 Germany 10.6 8.3 10.9 9.3 9.9 10.8 12.4 12.6 28.7 24.3 24.3 6 Italy 5.0 5.6 6.4 6.5 6.7 7.9 8.7 7.6 15.5 14.0 11.6 7 Netherlands .0 4.7 3.7 2.8 3.6 3.7 3.7 4.7 4.1 3.6 3.4 8 Sweden 2.2 1.9 2.2 2.3 3.0 2.5 2.5 2.5 2.8 2.9 2.6 9 Switzerland 4.4 3.4 5.2 4.8 5.3 4.7 5.6 5.9 6.3 6.5 6.2 10 United Kingdom 60.9 68.5 61.0 60.8 65.7 73.5 74.7 84.5 69.8 57.7 81.0 11 Canada 5.9 5.8 6.3 6.3 8.2 8.0 9.7 6.6 7.6 9.5 9.8 12 Japan 24.0 22.6 18.9 19.3 20.4 17.9 16.8 17.4 18.8 19.6 16.0 13 Other industrialized countries 22.9 22.8 25.0 24.0 25.4 27.2 26.0 24.6 41.2 43.2 41.5 14 Austria 1.4 .6 .7 1.2 1.2 1.3 .6 .4 1.0 1.0 1.0 15 Denmark 1.1 .9 1.5 .9 .8 1.0 1.1 1.0 1.1 1.1 .8 16 Finland .7 .7 1.0 .7 .7 .9 .6 .4 1.0 .8 .8 17 Greece 2.7 2.6 3.0 3.0 2.7 3.1 3.2 3.2 3.8 4.6 4.3 18 Norway 1.6 1.4 1.6 1.2 1.8 1.8 2.1 1.7 1.6 1.6 1.6 19 Portugal .6 .6 .5 .4 .7 .9 1.0 .8 1.2 1.1 1.0 20 Spain 8.3 8.3 9.7 8.9 9.5 10.5 9.3 8.9 12.3 13.2 13.0 21 Turkey 1.7 1.4 1.5 1.3 1.4 2.1 2.1 2.1 2.4 2.1 1.8 22 Other Western Europe 1.2 1.8 1.5 1.7 2.0 1.7 2.2 2.6 3.0 2.8 1.0 23 South Africa 1.8 1.9 1.7 1.7 1.6 1.3 1.2 1.1 1.2 1.2 1.2 24 Australia 1.8 2.7 2.3 2.9 2.9 2.5 2.8 2.3 12.7 13.7 15.0 25 OPEC2 12.8 14.5 15.9 16.1 16.6 15.7 14.8 16.7 22.4 21.5 21.5 26 Ecuador 1.0 .7 .7 .6 .6 .6 .5 .5 .5 .5 .4 27 Venezuela 5.0 5.4 5.4 5.2 5.1 5.5 5.4 5.1 4.7 4.4 3.9 28 Indonesia 2.7 2.7 3.0 3.0 3.1 3.1 2.8 3.2 3.4 3.2 3.2 29 Middle East countries 2.5 4.2 5.4 6.2 6.6 5.4 4.9 6.7 12.8 12.4 13.0 30 African countries 1.7 1.5 1.4 1.1 1.1 1.1 1.1 1.2 1.0 1.1 1.0 31 Non-OPEC developing countries 65.4 63.9 72.8 72.1 74.4 76.6 77.0 82.5 93.4 93.9 91.9 Latin America 32 Argentina 5.0 4.8 6.2 6.6 7.0 6.6 7.2 7.7 8.7 9.8 10.5 33 Brazil 14.4 9.6 10.8 10.8 11.6 12.3 11.7 12.0 12.5 11.8 9.1 34 Chile 3.5 3.6 4.2 4.4 4.6 4.6 4.7 4.7 5.1 5.1 5.4 35 Colombia : 1.8 1.7 1.7 1.8 1.9 1.9 2.0 2.1 2.2 2.4 2.4 36 Mexico 13.0 15.5 17.1 16.0 16.8 16.8 17.5 17.7 18.7 18.3 19.5 37 Peru .5 .4 .5 .5 .4 .4 .3 .4 .5 .6 .6 38 Other 2.3 2.1 2.5 2.6 2.6 2.7 2.6 3.0 2.6 2.7 2.7 Asia China 39 Peoples Republic of China .2 .3 .3 .7 .6 1.6 .5 2.0 .8 .7 1.0 40 Republic of China (Taiwan) 3.5 4.1 5.0 5.2 5.3 5.9 6.4 7.3 7.5 7.1 6.9 41 India 3.3 3.0 3.6 3.2 3.1 3.1 2.9 3.2 3.6 3.7 3.9 42 Israel .5 .5 .4 .4 .5 .4 .4 .5 .4 .4 .4 43 Korea (South) 6.2 6.8 7.4 6.6 6.5 6.9 6.5 6.7 13.9 14.1 13.9 44 Malaysia 1.9 2.3 3.0 3.1 3.4 3.7 4.1 4.4 5.2 5.2 3.9 45 Philippines 3.8 3.7 3.6 3.6 3.4 2.9 2.6 3.1 3.4 3.2 2.9 46 Thailand 1.5 1.7 2.2 2.2 2.2 2.4 2.8 3.1 2.9 3.3 3.4 47 Other Asia 1.7 2.0 2.7 2.7 2.7 2.6 3.0 2.9 3.1 3.5 3.6 Africa 48 Egypt .4 .4 .3 .2 .2 .2 .2 .4 .4 .5 .3 49 Morocco .8 .7 .6 .6 .5 .6 .6 .6 .7 .7 .7 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa' 1.0 .7 .9 1.0 .8 .9 .8 .8 1.0 .9 .9 52 Eastern Europe 2.3 2.4 3.1 3.1 2.9 3.2 3.0 3.0 3.3 3.0 3.4 53 Russia4 .2 .9 1.8 1.9 1.7 1.9 1.7 1.6 1.5 1.2 1.1 54 Yugoslavia5 1.2 .9 .7 .6 .6 .6 .6 .6 .5 .5 .5 55 Other .9 .7 .7 .6 .7 .7 .7 .9 1.4 1.4 1.9 56 Offshore banking centers 44.7 54.2 54.5 58.3 60.2 58.0 67.9 72.5 78.3 76.6 77.9 57 Bahamas 2.9 11.9 8.9 6.9 9.7 7.1 12.7 12.6 15.4 13.5 16.4 58 Bermuda 4.4 2.3 3.8 6.2 4.1 4.5 5.5 8.1 8.4 6.1 5.3 59 Cayman Islands and other British West Indies 11.7 15.8 16.9 21.8 17.6 15.6 15.1 16.9 17.2 20.1 20.5 60 Netherlands Antilles 7.9 1.2 .7 1.1 1.6 2.5 2.8 • 2.3 2.7 2.4 1.7 61 Panama6 1.4 1.4 2.0 1.9 2.0 2.1 2.1 2.4 2.0 1.9 1.8 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 9.7 14.4 15.2 13.8 16.7 16.9 19.1 18.7 19.7 21.8 20.3 64 Singapore 6.6 7.1 6.8 6.5 8.4 9.3 10.4 11.2 12.7 10.6 11.7 65 Other' .0 .0 .0 .0 .0 .0 .0 .1 .0 .0 .1 66 Miscellaneous and unallocated8 39.9 48.0 36.8 39.7 38.8 46.2 46.3 43.3 72.0 91.0 82.5 1. The banking offices covered by these data include U.S. offices and foreign branches 3. Excludes Liberia. Beginning March 1994 includes Namibia. of U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices net 4. As of December 1992, excludes other republics of the former Soviet Union. covered include U.S. agencies and branches of foreign banks. Beginning March 1994, the 5. As of December 1992, excludes Croatia, Bosnia and Hercegovinia, and Slovenia. data include large foreign subsidiaries of U.S. banks. The data also include other types of 6. Includes Canal Zone. U.S. depository institutions as well as some types of brokers and dealers. To eliminate 7. Foreign branch claims only. duplication, the data are adjusted to exclude the claims on foreign branches held by a U.S. 8. Includes New Zealand, Liberia, and international and regional organizations. office or another foreign branch of the same banking institution. 2. Organization of Petroleum Exporting Countries, shown individually; other members of OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates); and Bahrain and Oman (not formally members of OPEC). 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 1993 1994 Type of liability, and area or country 11999900 11999911 11999922 June Sept. Dec. Mar. June Sept.p 1 Total 46,043 44,708 45,331' 46,502' 48,513' 49,645' 51,728' 55,265 56,712 2 Payable in dollars 40,786 39,029 37,276 36,988r 39,270* 38,361' 38,074' 42,463 41,880 3 Payable in foreign currencies 5,257 5,679 8,055r 9,514r 9,243r 11,284' 13,654' 12,802 14,832 By type 4 Financial liabilities 21,066 22,518 23,661r 25,100 26,731 28,254 30,111 33,226 35,483 5 Payable in dollars 16,979 18,104 16,780 16,935 18,705 18,175 18,481 22,424 22,533 6 Payable in foreign currencies 4,087 4,414 6,881 8,165 8,026 10,079 11,630 10,802 12,950 7 Commercial liabilities 24,977 22,190 21,670 21,402r 21,782r 21,391' 21,617' 22,039 21,229 8 Trade payables 10,683 9,252 9,566 9,358r 9,215r 8,787' 8,944' 9,855 9,504 9 Advance receipts and other liabilities ... 14,294 12,938 12,104 12,044 12,567 12,604' 12,673 12,184 11,725 10 Payable in dollars 23,807 20,925 20,496 20,053r 20,565r 20,186' 19,593' 20,039 19,347 11 Payable in foreign currencies 1,170 1,265 1,174 l,349r 1,217' 1,205' 2,024' 2,000 1,882 By area or country Financial liabilities 12 Europe 10,978 12,003 13,207 14,199 16,445 18,185 20,293 23,564 23,455 13 Belgium and Luxembourg 394 216 414 268 278 175 525 503 650 14 France 975 2,106 1,623 2,219 2,077 2,326 2,589 1,590 2,241 15 Germany 621 682 889 863 855 975 1,214 939 1,467 16 Netherlands 1,081 1,056 606 585 573 534 564 533 648 17 Switzerland 545 408 569 491 378 634 1,200 631 633 18 United Kingdom 6,357 6,528 8,430 9,118 11,694 12,925 13,595 18,151 16,501 19 Canada 229 292 544 493 663 859 508 698 618 20 Latin America and Caribbean 4,153 4,784 4,053 4,199 3,719 3,359 3,553 3,282 3,159 21 Bahamas 371 537 379 476 1,301 1,148 1,157 1,052 1,112 22 Bermuda 0 114 114 124 114 0 120 115 15 23 Brazil 0 6 19 18 18 18 18 18 7 24 British West Indies 3,160 3,524 2,850 2,901 1,600 1,533 1,613 1,454 1,364 25 Mexico 5 7 12 11 15 17 14 13 15 26 Venezuela 4 4 6 5 5 5 5 5 5 27 Asia2 5,295 5,381 5,818r 6,039 5,754 5,689 5,601 5,643 8,099 28 Japan 4,065 4,116 4,750r 4,857 4,725 4,620 4,589 4,709 6,897 29 Middle Eastern oil-exporting countries' 5 13 19 19 23 23 24 24 31 30 Africa 2 6 6 130 132 133 133 9 133 0 4 0 123 124 123 124 0 123 31 Oil-exporting countries4 409 52 33 40 18 29 23 30 19 32 All other5 Commercial liabilities 10,310 8,701 7,398 6,804r 7,048r 6,830' 6,545r 6,903 6,830 33 Europe 275 248 298 269 257 239' 252' 254 287 34 Belgium and Luxembourg 1,218 1,039 700 774r 642r 654' 553r 711 741 35 France 1,270 1,052 729 603 571 684 577 669 551 36 Germany 844 710 535 576r 600' 688' 628 642 648 37 Netherlands 775 575 350 441 536 375 387 472 390 38 Switzerland 2,792 2,297 2,505 2,186 2,319 2,051 2,155f 2,309 2,349 39 United Kingdom 40 Canada 1,261 1,014 1,002 939r 845' 881' 1,037' 1,062 1,061 41 Latin America and Caribbean 1,672 1,355 1,533 l,824r 1,754' 1,663' 1,907' 2,004 1,784 42 Bahamas 12 3 3 6 4 21 8 2 6 43 Bermuda 538 310 307 356 340 348 493 416 198 44 Brazil 145 219 209 226 214 216 211 217 148 45 British West Indies 30 107 33 16 35' 26 19 23 32 46 Mexico 475 307 457 658r 576' 483' 556' 705 670 47 Venezuela 130 94 142 172 173 126 150 194 192 48 Asia2 9,483 9,334 10,594 10,518r 10,915' 10,961' 10,904' 10,898 10,427 49 Japan 3,651 3,721 3,612 3,390 3,726 4,31 (f 4,612' 4,385 4,231 50 Middle Eastern oil-exporting countries' 2,016 1,498 1,889 1,815 1,968 1,526' 1,533 1,813 1,675 51 Africa 844 715 568 665 641 464' 490 523 482 52 Oil-exporting countries 422 327 309 378 320 171 199 247 271 53 Other5 1,406 1,071 575 652 579 592 734 649 645 1. For a description of the changes in the international statistics tables, see Federal 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Reserve Bulletin, vol. 65, (July 1979), p. 550. Emirates (Trucial States). 2. Revisions include a reclassification of transactions, which also affects the totals for 4. Comprises Algeria, Gabon, Libya, and Nigeria. Asia and the grand totals. 5. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • March 1995 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1993 1994r TTyyppee ooff ccllaaiimm,, aanndd aarreeaa oorr ccoouunnttrryy 11999900 11999911 11999922rr June Sept. Dec.r Mar. June Sept.p 1 Total 35,348 45,262 45,073 45,680r 46,002r 48,853 48,849 50,664 51,334 2 Payable in dollars 32,760 42,564 42,281 42,245r 42,314r 45,523 45,312 47,028 47,859 3 Payable in foreign currencies 2,589 2,698 2,792 3,435r 3,688r 3,330 3,537 3,636 3,475 By type 4 Financial claims 19,874 27,882 26,509 25,632r 26,902' 28,537 28,607 29,706 30,126 5 Deposits 13,577 20,080 17,695 14,298r 14,512r 16,815 16,943 17,449 18,650 6 Payable in dollars 12,552 19,080 16,872 13,329r 13,503r 16,041 16,117 16,598 17,795 7 Payable in foreign currencies 1,025 1,000 823 969 1,009 774 826 851 855 8 Other financial claims 6,297 7,802 8,814 ll,334r 12,390r 11,722 11,664 12,257 11,476 9 Payable in dollars 5,280 6,910 7,890 10,185r ll,282r 10,641 10,575 11,163 10,555 10 Payable in foreign currencies 1,017 892 924 1,149 1,108 1,081 1,089 1,094 921 11 Commercial claims 15,475 17,380 18,564 20,048' W.lOO' 20,316 20,242 20,958 21,208 12 Trade receivables 13,657 14,468 16,007 17,565r 16,122r 17,372 17,404 18,187 18,486 13 Advance payments and other claims 1,817 2,912 2,557 2,483 2,978 2,944 2,838 2,771 2,722 14 Payable in dollars 14,927 16,574 17,519 18,731r 17,529r 18,841 18,620 19,267 19,509 15 Payable in foreign currencies 548 806 1,045 l,317r l,571r 1,475 1,622 1,691 1,699 By area or country Financial claims 16 Europe 9,645 13,441 9,331 9,745r 8,376r 8,136 7,545 8,093 8,966 17 Belgium and Luxembourg 76 13 8 74 70 131 122 83 114 18 France 371 269 764 781 708 785 753 859 825 19 Germany 367 283 326 383 362 452 419 407 331 20 265 334 515 500r 485 502 503 480 512 21 Switzerland 357 581 490 494 512 515 520 495 747 22 United Kingdom 7,971 11,534 6,252 6,579 5,230 4,608 4,136 4,696 5,373 23 Canada 2,934 2,642 1,833 2,034r 2,103r 2,206 2,573 3,547 3,374 24 Latin America and Caribbean 6,201 10,717 13,893 10,095r 12,965r 15,834 15,363 15,393 15,061 25 Bahamas 1,090 827 778 827r 980* 968 1,157 1,187 1,198 26 Bermuda 3 8 40 258 197 125 34 65 52 27 Brazil 68 351 686 590 590 599 567 370 341 28 British West Indies 4,635 9,056 11,747 7,484r 10,000* 12,807 12,463 12,940 12,655 29 Mexico 177 212 445 665 882 865 782 507 433 30 Venezuela 25 40 29 24 25 161 26 33 32 31 Asia 860 640 864 3,016 2,754r 1,785 2,646 2,209 2,169 32 Japan 523 350 668 2,485 2,213' 1,047 1,782 1,351 677 33 Middle Eastern oil-exporting countries2 8 5 3 10 5 3 5 2 19 34 Africa 37 57 83 125 88 99 76 74 87 35 Oil-exporting countries3 0 1 9 1 1 1 0 1 1 36 All other4 195 385 505 617 616 477 404 390 469 Commercial claims 37 Europe 7,044 8,193 8,451 9,083r 8,201r 8,897 8,534 8,726 8,591 38 Belgium and Luxembourg 212 194 189 173 163 184 173 179 172 39 France 1,240 1,585 1,537 1,511 1,438 1,941 1,817 1,761 1,758 40 Germany 807 955 933 1,046 935 999 923 920 860 41 Netherlands 555 645 552 565 410 417 351 288 323 42 Switzerland 301 295 362 442 376 424 404 675 530 43 United Kingdom 1,775 2,086 2,094 2,561r 2,287r 2,268 2,219 2,338 2,371 44 Canada 1,074 1,121 1,286 1,359 1,360 1,355 1,440 1,451 1,483 45 Latin America and Caribbean 2,375 2,655 3,043 3,456 3,071 3,210 3,505 3,809 3,844 46 Bahamas 14 13 28 17 20 11 12 17 33 47 Bermuda 246 264 255 239 225 173 210 285 236 48 Brazil 326 427 357 788 407 462 422 494 465 49 British West Indies 40 41 40 43 39 70 58 66 48 50 Mexico 661 842 924 913 866 946 986 1,000 1,040 51 Venezuela 192 203 345 317 286 295 291 303 381 52 Asia 4,127 4,591 4,866 5,220 5,538 5,836 5,772 6,041 6,341 53 Japan 1,460 1,899 1,903 1,885 2,519 2,154 2,339 2,327 2,427 54 Middle Eastern oil-exporting countries2 460 620 693 673 456 709 656 601 604 55 Africa 488 430 554 516 493 513 512 483 447 56 Oil-exporting countries 67 95 78 99 107 84 101 90 68 57 Other4 367 390 364 414 437 505 479 448 502 1. For a description of the changes in the international statistics tables, see Federal 3. Comprises Algeria, Gabon, Libya, and Nigeria. 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 N a o n v .- . May June July Aug. Sept. Oct. Nov.p U.S. corporate securities STOCKS 1 Foreign purchases 221,367 319,728 321,032 26,699 28,273' 24,332 29,312 28,849 27,794 28,719 2 Foreign sales 226,503 298,145 322,466 25,113 30,249 25,174 26,400 30,431 29,841 27,640 3 Net purchases, or sales (—) -5,136 21,583 4,566 1,586 —l,976r -842 2,912 —1,582 -2,047 1,079 4 Foreign countries -5,169 21,311 4,558 1,569 —l,967r -846 2,914 -1,596 -2,079 1,056 5 Europe -4,927 10,665 8,031 1,219 -378 -291 1,424 -1,198 -1,394 205 6 France -1,350 -103 -99 210 -241 -68 -22 -63 -198 -25 7 Germany -80 1,647 2,521 398 119 56 73 -104 -158 -57 8 Netherlands -262 -600 1,640 176 89 357 266 -134 316 264 9 Switzerland 168 2,986 18 30 74 82 136 -104 -655 -557 10 United Kingdom -3,301 4,560 1,893 174 -322 -830 866 -641 -557 560 11 Canada 1,407 -3,213 -1,266 156 -529 -313 -366 57 -416 -116 12 Latin America and Caribbean 2,203 5,724 -1,036 -207 -839 -476 989 -625 -516 673 13 Middle East1 -88 -328 -991 49 -111 -94 -281 -431 -75 1 14 Other Asia -3,943 8,198 -874 476 -219' 280 1,031 589 335 290 15 Japan -3,598 3,825 1,472 335 171 555 1,132 761 251 289 16 Africa 10 63 55 -1 6 -7 0 10 12 -4 17 Other countries 169 202 639 -123 103 55 117 2 -25 7 18 Nonmonetary international and regional organizations 33 272 8 17 -9 4 -2 14 32 23 BONDS2 19 Foreign purchases 214,922 283,946' 273,025 24,955 31,875' 25,166 22,963 19,131 20,204 22,362 20 Foreign sales 175,842 217,932r 216,783 20,868 21,123 18,898 15,686 17,540' 16,304 15,946 21 Net purchases, or sales (—) 39,080 66,014r 56,242 4,087 10,752r 6,268 7,277 l,591r 3,900 6,416 22 Foreign countries 37,964 65,476r 55,623 4,025 10,624' 5,883 7,344 l,574r 3,901 6,408 23 Europe 17,435 22,586r 34,788 528 6,031 4,531 5,152 2,406 3,546 3,696 24 France 1,203 2,346 239 -3 47 21 -18 -16 105 -106 25 Germany 2,480 885 196 -244 52 52 34 -355 449 200 26 Netherlands 540 -290 3,058 358 868 29 610 -64 125 412 27 Switzerland -579 -627 901 136 144 -192 -9 292 4 351 28 United Kingdom 12,421 19,686r 31,006 894 5,624 4,409 4,497 1,997 1,475 3,672 29 Canada 237 1,668 2,556 286 422 625 519 194 460 201 30 Latin America and Caribbean 9,300 15,697 4,387 762 1,553 -527 -81 -1,852' -981 1,290 31 Middle East1 3,166 3,257 926 17 339 375 157 -76 56 -86 32 Other Asia 7,545 20,846 12,247 2,287 2,263r 766 1,558 857 745 1,301 33 Japan -450 11,569 5,682 1,575 1,396 712 763 340 375 419 34 Africa 354 1,149 48 10 9 -23 18 2 20 8 35 Other countries -73 273 671 135 7 136 21 43 55 -2 36 Nonmonetary international and regional organizations 1,116 538 619 62 128 385 -67 17 -1 8 Foreign securities 37 Stocks, net purchases, or sales (—) -32,259 -63,287r -45,036 -4,028 -6,715 -3,093 -4,568 679 -4,350 -2,550 38 Foreign purchases 150,051 245,561' 358,437 30,946 31,098 29,291 30,534 37,367 29,875 28,246 39 Foreign sales3 182,310 308,848r 403,473 34,974 37,813 32,384 35,102 36,688 34,225 30,796 40 Bonds, net purchases, or sales (—) -15,605 -70,136r -20,033 -152' 427 -2,282' 861 -1,150 -4,156 -1,899 41 Foreign purchases 513,589 828,922' 839,813 64,158 71,762 59,351 67,288 78,604 70,415 66,487 42 Foreign sales 529,194 899,058' 859,846 64,310' 71,335 61,633' 66,427 79,754 74,571 68,386 43 Net purchases, or sales (-), of stocks and bonds —47,864 —133,423r -65,069 -4,180r -6,288 -5,375r -3,707 -471 —8,506 -4,449 44 Foreign countries —51,274 —133,584r -64,834 —4,467r -6,281 —S,557r -3,890 56 -8,356 -4,402 45 Europe -31,350 -90,005' -8,865 -1,296' 4,268 -2,490' -174 -2,931 -4,548 -1,049 46 Canada -6,893 -14,997 -9,080 436 -769 -2,041 -600 865 -815 -991 47 Latin America and Caribbean -4,340 -9,229 -21,631 -2,421 -4,997 -1,437 -2,287 4,819 -1,573 -1,995 48 Asia -7,923 -15,300' -20,868 -528 -4,309 339 -321 -1,913 -1,249 719 49 Africa -13 -185 -529 -4 -45 29 48 -22 -73 -269 50 Other countries -755 -3,868 -3,861 -654 -429 43 -556 -762 -98 -817 51 Nonmonetary international and regional organizations 3,410 161 -235 287 -7 182 183 -527 -150 -47 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). corporations organized to finance direct investments abroad. 2. Includes state and local government securities and securities of U.S. government Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • March 1995 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions1 Millions of dollars; net purchases, or sales (—) during period 1994 1994 AArreeaa oorr ccoouunnttrryy 11999922 11999933 Jan.- May June July Aug. Sept. Oct. Nov.p Nov. 1 Total estimated 39,288 23,451r 66,147 19,778 —5,353 1,710 15,160 ll,085r 10,590 13,151 2 Foreign countries 37,935 23,225' 65,842 19,727 -4,901 2,043 14,744 11,163' 9,495 13,139 3 Europe 19,625 -2,403 30,194 8,772 -2,702 4,891 8,274 3,922 -1,430 7,780 4 Belgium and Luxembourg 1,985 1,218 623 147 -170 -78 529 -15 32 19 Germany 2,076 -9,975 5,944 2,279 143 714 1,795 -243 254 924 6 Netherlands -2,959 -515 1,256 21 560 120 -15 -68 954 -2 7 Sweden -804 1,421 733 150 257 100 -158 105 -37 211 8 Switzerland 488 -1,501 -261 -211 158 -416 -259 441 -718 -1,512 9 United Kingdom 24,184 6,167 16,461 4,955 -5,562 4,820 5,361 3,522 -1,822 7,728 10 Other Europe and former U.S.S.R -5,345 782 5,438 1,431 1,912 -369 1,021 180 -93 412 11 Canada 562 10,309 3,805 98 -11 2,937 1,888 1,515 -420 -1,282 12 Latin America and Caribbean -3,222 -4,572 -10,826 -2,652 -7,080 -7,273 -2,310 -666 6,683 713 13 Venezuela 539 390 -361 -130 -9 17 -132 19 7 43 14 Other Latin America and Caribbean -1,956 -5,806 -20,125 -2,708 -6,744 -7,663 3,172 1,487 -446 -2,086 15 Netherlands Antilles -1,805 844 9,660 186 -327 373 -5,350 -2,172 7,122 2,756 16 23,517 20,581' 42,605 13,286 5,128 2,522 5,987 6,761' 4,386 4,942 17 Japan 9,817 17,070 27,517 8,185 5,099 -812 3,681 3,210 2,190 4,551 18 Africa 1,103 1,156 182 -29 16 5 80 200 135 -11 19 Other -3,650 -1,846 -118 252 -252 -1,039 825 -569 141 997 20 Nonmonetary international and regional organizations 1,353 226 305 51 -452 -333 416 -78 1,095 12 21 International 1,018 -279 351 70 -395 -425 317 -65 1,074 48 22 Latin American regional 533 654 78 -111 54 23 -4 -1 6 4 MEMO 23 Foreign countries 37,935 23,225' 65,842 19,727 -4,901 2,043 14,744 11,163' 9,495 13,139 24 Official institutions 6,876 1,322' 40,817 11,253 2,679 4,897 9,216 4,688 2,801 2,645 25 Other foreign2 31,059 21,903 25,025 8,474 -7,580 -2,854 5,528 6,475' 6,694 10,494 Oil-exporting countries 26 Middle East2 4,317 -8,836 426 -342 -495 12 621 3 445 623 27 11 -5 1 0 0 0 1 0 0 0 1. Official and private transactions in marketable US. Treasury securities having an 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab original maturity of more than one year. Data are based on monthly transactions reports. Emirates (Trucial States). Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of 3. Comprises Algeria, Gabon, Libya, and Nigeria. 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 Jan. 31, 1995 Rate on Jan. 31, 1995 Rate on Jan. 31, 1995 Country Country Country e M ffe o c n ti t v h e e M ffe o c n t t i h v e Month effective 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.. 8.23 Jan. 1995 Japan 1.75 Sept. 1993 United Kingdom 12.0 Sept. 1992 Denmark 5.0 May 1994 Netherlands 4.5 May 1994 France2 . 5.0 July 1994 1. Rates shown are mainly those at which the central bank either discounts or makes 2. Since February 1981, the rate has been that at which the Bank of France discounts advances against eligible commercial paper or government securities for commercial Treasury bills for seven to ten days. 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 1995 TTyyppee oorr ccoouunnttrryy 11999922 11999933 11999944 July Aug. Sept. Oct. Nov. Dec. Jan. 3.70 3.18 4.63 4.74 4.80 5.01 5.52 5.78 6.27 6.23 9.56 5.88 5.45 5.15 5.47 5.65 5.83 5.98 6.30 6.50 6.76 5.14 5.57 6.28 5.71 5.61 5.56 5.77 6.75 7.86 9.42 7.17 5.25 4.86 4.89 4.95 5.12 5.10 5.29 5.04 7.67 4.79 4.03 4.17 4.21 4.00 4.02 3.86 4.07 3.95 9.25 6.73 5.09 4.84 4.88 4.98 5.12 5.15 5.35 5.09 10.14 8.30 5.72 5.51 5.46 5.50 5.52 5.49 5.82 5.76 8 Italy 13.91 10.09 8.45 8.39 8.88 8.68 8.80 8.72 8.98 9.10 9.31 8.10 5.65 5.53 5.47 5.34 5.15 5.09 5.42 5.29 4.39 2.96 2.24 2.14 2.28 2.31 2.33 2.33 2.34 2.31 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 • March 1995 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar except as noted 1994 1995 CCoouunnttrryy//ccuurrrreennccyy uunniitt 11999922 11999933 11999944 Aug. Sept. Oct. Nov. Dec. Jan. 1 Australia/dollar2 73.521 67.993 73.161 74.010 74.200 73.787 75.492 77.389 76.469 2 Austria/schilling 10.992 11.639 11.409 11.010 10.904 10.695 10.838 11.063 10.769 3 Belgium/franc 32.148 34.581 33.424 32.248 31.871 31.284 31.694 32.329 31.542 4 Canada/dollar 1.2085 1.2902 1.3664 1.3783 1.3540 1.3503 1.3647 1.3893 1.4132 5 China, P.R./yuan 5.5206 5.7795 8.6295 8.6072 8.5581 8.5492 8.5370 8.3833 8.4608 6 Denmark/krone 6.0372 6.4863 6.3561 6.1845 6.1038 5.9479 6.0268 6.1614 6.0311 7 Finland/markka 4.4865 5.7251 5.2340 5.1493 4.9689 4.6866 4.7388 4.8590 4.7505 8 France/franc 5.2935 5.6669 5.5459 5.3602 5.2975 5.2025 5.2867 5.4132 5.2912 9 Germany/deutsche mark 1.5618 1.6545 1.6216 1.5646 1.5491 1.5195 1.5396 1.5716 1.5302 10 Greece/drachma 190.81 229.64 242.50 237.11 235.98 233.06 237.38 242.96 238.21 11 Hong Kong/dollar 7.7402 7.7357 7.7290 7.7272 7.7275 7.7276 7.7306 7.7379 7.7439 12 India/rupee 28.156 31.291 31.394 31.373 31.372 31.373 31.394 31.389 31.374 13 Ireland/pound2 170.42 146.47 149.69 152.22 154.61 158.64 156.39 153.36 155.67 14 Italy/lira 1,232.17 1,573.41 1,611.49 1,582.15 1,565.79 1,548.29 1,583.81 1,633.71 1,611.53 15 Japan/yen 126.78 111.08 102.18 99.94 98.77 98.35 98.04 100.18 99.72 16 Malaysia/ringgir. 2.5463 2.5738 2.6237 2.5633 2.5575 2.5589 2.5604 2.5626 2.5556 17 Netherlands/guilder 1.7587 1.8585 1.8190 1.7570 1.7372 1.7028 1.7261 1.7601 1.7159 18 New Zealand/dollar2 53.792 54.127 59.358 60.119 60.297 60.898 62.093 63.726 64.018 19 Norway/krone 6.2142 7.0979 7.0553 6.8644 6.7961 6.6166 6.7297 6.8561 6.6968 20 Portugal/escudo 135.07 161.08 165.93 159.80 157.91 155.26 157.27 161.21 157.86 21 Singapore/dollar 1.6294 1.6158 1.5275 1.5045 1.4885 1.4761 1.4682 1.4657 1.4532 22 South Africa/rand 2.8524 3.2729 3.5534 3.5968 3.5570 3.5420 3.5256 3.5703 3.5404 23 South Korea/won 784.66 805.75 806.93 806.83 803.69 801.98 799.46 794.81 793.08 24 Spain/peseta 102.38 127.48 133.88r 129.90 128.60* 126.34 128.34 132.31 132.62 25 Sri Lanka/rupee 44.013 48.211 49.170 49.241 49.260 49.112 49.163 49.531 49.870 26 Sweden/krona 5.8258 7.7956 7.7161 7.7420 7.5227 7.2631 7.3637 7.5161 7.4774 27 Switzerland/franc 1.4064 1.4781 1.3667 1.3184 1.2892 1.2648 1.2956 1.3289 1.2863 28 Taiwan/dollar 25.160 26.416 26.465r 26.419 26.210 26.132 26.188 26.381* 26.300 29 Thailand/baht 25.411 25.333 25.161 25.021 24.968 25.001 24.992 25.109 25.133 30 United Kingdom/pound2 176.63 150.16 153.19 154.22 156.61 160.64 158.92 155.87 157.46 MEMO 31 United States/dollar3 86.61 93.18 91.32 89.26 88.08 86.66 87.71 89.64 88.29 1. Averages of certified noon buying rates in New York for cable transfers. Data in this world trade of that country divided by the average world trade of all ten countries table also appear in the Board's G.5 (405) monthly statistical release. For ordering combined. Series revised as of August 1978 (see Federal Reserve Bulletin, vol. 64 address, see inside front cover. (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 the 1972-76 average 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 December 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 February 1994 May 1994 A74 May 1994 August 1994 A68 August 1994 November 1994 A68 November 1994 February 1995 A68 Assets and liabilities of U.S. branches and agencies of foreign banks December 31, 1993 May 1994 A78 March 31, 1994 August 1994 All June 30, 1994 November 1994 A72 September 30, 1994 February 1995 A72 Pro forma balance sheet and income statements for priced service operations June 30, 1991 November 1991 A80 September 30, 1991 January 1992 A70 March 30, 1992 August 1992 A80 June 30, 1992 October 1992 A70 Assets and liabilities of life insurance companies June 30, 1991 December 1991 A79 September 30, 1991 May 1992 A81 December 31, 1991 August 1992 A83 September 30, 1992 March 1993 All Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Index to Statistical Tables References are to pages A3-A66 although the prefix 'A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 21,22 Ownership by individuals, partnerships, and Assets and liabilities (See also Foreigners) corporations, 23 Banks, by classes, 18-22 Turnover, 17 Domestic finance companies, 36 Depository institutions Federal Reserve Banks, 11 Reserve requirements, 9 Financial institutions, 28 Reserves and related items, 4, 5, 6, 13 Foreign banks, U.S. branches and agencies, 23 Deposits (See also specific types) Automobiles Banks, by classes, 4, 18-22, 24 Consumer installment credit, 39 Federal Reserve Banks, 5, 11 Production, 47,48 Interest rates, 16 Turnover, 17 Discount rates at Reserve Banks and at foreign central banks and BANKERS acceptances, 10, 22, 26 foreign countries (See Interest rates) Bankers balances, 18-22. (See also Foreigners) Discounts and advances by Reserve Banks (See Loans) Bonds (See also U.S. government securities) Dividends, corporate, 35 New issues, 35 Rates, 26 EMPLOYMENT, 45 Branch banks, 23 Eurodollars, 26 Business activity, nonfinancial, 45 Business expenditures on new plant and equipment, 35 FARM mortgage loans, 38 Business loans (See Commercial and industrial loans) Federal agency obligations, 5, 10, 11, 12, 31, 32 Federal credit agencies, 33 CAPACITY utilization, 46 Federal finance Capital accounts Debt subject to statutory limitation, and types and ownership Banks, by classes, 18 of gross debt, 30 Federal Reserve Banks, 11 Receipts and outlays, 28, 29 Central banks, discount rates, 65 Treasury financing of surplus, or deficit, 28 Certificates of deposit, 26 Treasury operating balance, 28 Commercial and industrial loans Federal Financing Bank, 28, 33 Commercial banks, 21 Federal funds, 7, 19, 21, 22, 23, 26, 28 Weekly reporting banks, 21-23 Federal Home Loan Banks, 33 Commercial banks Federal Home Loan Mortgage Corporation, 33, 37, 38 Assets and liabilities, 18-22 Federal Housing Administration, 33, 37, 38 Commercial and industrial loans, 18-23 Federal Land Banks, 38 Consumer loans held, by type and terms, 39 Federal National Mortgage Association, 33, 37, 38 Deposit interest rates of insured, 16 Federal Reserve Banks Loans sold outright, 21 Condition statement, 11 Discount rates (See Interest rates) Real estate mortgages held, by holder and property, 38 U.S. government securities held, 5, 11, 12, 30 Time and savings deposits, 4 Federal Reserve credit, 5, 6, 11, 12 Commercial paper, 24, 26, 36 Federal Reserve notes, 11 Condition statements (See Assets and liabilities) Federally sponsored credit agencies, 33 Construction, 45, 49 Finance companies Consumer installment credit, 39 Consumer prices, 45,46 Assets and liabilities, 36 Consumption expenditures, 52, 53 Business credit, 36 Corporations Loans, 39 Paper, 24, 26 Nonfinancial, assets and liabilities, 35 Financial institutions, loans to, 21, 22, 23 Profits and their distribution, 35 Float, 5 Security issues, 34, 65 Cost of living (See Consumer prices) Flow of funds, 40, 42, 43,44 Credit unions, 39 Foreign banks, assets and liabilities of U.S. branches and Currency in circulation, 5, 14 agencies, 22, 23 Customer credit, stock market, 27 Foreign currency operations, 11 Foreign deposits in U.S. banks, 5, 11, 21, 22 Foreign exchange rates, 66 DEBITS to deposit accounts, 17 Foreign trade, 54 Debt (See specific types of debt or securities) Foreigners Demand deposits Claims on, 55, 58, 59, 60, 62 Banks, by classes, 18-23 Liabilities to, 22, 54, 55, 56, 61, 63, 64 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A69 GOLD REAL estate loans Certificate account, 11 Banks, by classes, 21, 22, 38 Stock, 5, 54 Terms, yields, and activity, 37 Government National Mortgage Association, 33, 37, 38 Type of holder and property mortgaged, 38 Gross domestic product, 51 Repurchase agreements, 7, 21-23 Reserve requirements, 9 HOUSING, new and existing units, 49 Reserves Commercial banks, 18 INCOME, personal and national, 45, 51,52 Depository institutions, 4, 5, 6, 13 Industrial production, 45, 47 Federal Reserve Banks, 11 Installment loans, 39 US. reserve assets, 54 Insurance companies, 30, 38 Residential mortgage loans, 37 Interest rates Retail credit and retail sales, 39, 40, 45 Bonds, 26 Consumer installment credit, 39 SAVING Deposits, 16 Flow of funds, 40, 42, 43, 44 Federal Reserve Banks, 8 National income accounts, 51 Foreign central banks and foreign countries, 66 Savings and loan associations, 38, 39, 40 Money and capital markets, 26 Savings banks, 38, 39 Mortgages, 37 Savings deposits (See Time and savings deposits) Prime rate, 25 Securities (See also specific types) International capital transactions of United States, 53-65 Federal and federally sponsored credit agencies, 33 International organizations, 55, 56, 58, 61, 62 Foreign transactions, 63 Inventories, 51 New issues, 34 Investment companies, issues and assets, 35 Prices, 27 Investments (See also specific types) Special drawing rights, 5, 11, 53, 54 Banks, by classes, 18-23 State and local governments Commercial banks, 4, 18-23 Deposits, 21, 22 Federal Reserve Banks, 11, 12 Holdings of U.S. government securities, 30 Financial institutions, 38 New security issues, 34 Ownership of securities issued by, 21, 22 LABOR force, 45 Rates on securities, 26 Life insurance companies (See Insurance companies) Stock market, selected statistics, 27 Loans (See also specific types) Stocks (See also Securities) Banks, by classes, 18-23 New issues, 34 Commercial banks, 4, 18-23 Prices, 27 Federal Reserve Banks, 5, 6, 8, 11, 12 Financial institutions, 38 Student Loan Marketing Association, 33 Insured or guaranteed by United States, 37, 38 TAX receipts, federal, 29 MANUFACTURING Thrift institutions, 4. (See also Credit unions and Savings and Capacity utilization, 46 loan associations) Production, 46, 48 Time and savings deposits, 4, 14, 16, 18-23 Margin requirements, 27 Trade, foreign, 54 Member banks (See also Depository institutions) Treasury cash, Treasury currency, 5 Federal funds and repurchase agreements, 7 Treasury deposits, 5, 11, 28 Reserve requirements, 9 Treasury operating balance, 28 Mining production, 48 UNEMPLOYMENT, 45 Mobile homes shipped, 49 U.S. government balances Monetary and credit aggregates, 4, 13 Commercial bank holdings, 18-23 Money and capital market rates, 26 Treasury deposits at Reserve Banks, 5, 11, 28 Money stock measures and components, 4, 14 U.S. government securities Mortgages (See Real estate loans) Bank holdings, 18-23, 30 Mutual funds, 35 Dealer transactions, positions, and financing, 32 Mutual savings banks (See Thrift institutions) Federal Reserve Bank holdings, 5, 11, 12, 30 Foreign and international holdings and NATIONAL defense outlays, 29 transactions, 11, 30, 64 National income, 51 Open market transactions, 10 Outstanding, by type and holder, 28, 30 OPEN market transactions, 10 Rates, 25 U.S. international transactions, 53-66 PERSONAL income, 52 Utilities, production, 48 Prices Consumer and producer, 45, 50 VETERANS Administration, 37, 38 Stock market, 27 Prime rate, 25 WEEKLY reporting banks, 22-24 Producer prices, 45, 50 Wholesale (producer) prices, 45, 50 Production, 45, 47 Profits, corporate, 35 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 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 PORTIA W. THOMPSON, Equal Employment Opportunity KAREN H. JOHNSON, Assistant Director Programs Adviser CATHERINE L. MANN, Assistant Director RALPH W. SMITH, JR., Assistant Director LEGAL DIVISION DIVISION OF RESEARCH AND STATISTICS J. VIRGIL MATTINGLY, JR., General Counsel SCOTT G. ALVAREZ, Associate General Counsel MICHAEL J. PRELL, Director RICHARD M. ASHTON, Associate General Counsel EDWARD C. ETTIN, Deputy Director OLIVER IRELAND, Associate General Counsel DAVID J. STOCKTON, Deputy Director KATHLEEN M. O'DAY, Associate General Counsel MARTHA BETHEA, Associate Director ROBERT DEV. FRIERSON, Assistant General Counsel WILLIAM R. JONES, Associate Director KATHERINE H. WHEATLEY, Assistant General Counsel MYRON L. KWAST, Associate Director PATRICK M. PARKINSON, Associate Director OFFICE OF THE SECRETARY THOMAS D. SIMPSON, Associate Director WILLIAM W. WILES, Secretary LAWRENCE SLIFMAN, Associate Director JENNIFER J. JOHNSON, Deputy Secretary MARTHA S. SCANLON, Deputy Associate Director BARBARA R. LOWREY, Associate Secretary PETER A. TINSLEY, Deputy Associate Director DAY W. RADEBAUGH, JR., Assistant Secretary1 FLINT BRAYTON, Assistant Director DAVID S. JONES, Assistant Director DIVISION OF BANKING STEPHEN A. RHOADES, Assistant Director CHARLES S. STRUCKMEYER, Assistant Director SUPERVISION AND REGULATION ALICE PATRICIA WHITE, Assistant Director RICHARD SPILLENKOTHEN, Director JOYCE K. ZICKLER, Assistant Director STEPHEN C. SCHEMERING, Deputy Director JOHN J. MINGO, Senior Adviser DON E. KLINE, Associate Director GLENN B. CANNER, Adviser WILLIAM A. RYBACK, Associate Director FREDERICK M. STRUBLE, Associate Director DIVISION OF MONETARY AFFAIRS HERBERT A. BIERN, Deputy Associate Director ROGER T. COLE, Deputy Associate Director DONALD L. KOHN, Director JAMES I. GARNER, Deputy Associate Director DAVID E. LINDSEY, Deputy Director HOWARD A. AMER, Assistant Director BRIAN F. MADIGAN, Associate Director GERALD A. EDWARDS, JR., Assistant Director RICHARD D. PORTER, Deputy Associate Director JAMES D. GOETZINGER, Assistant Director VINCENT R. REINHART, Assistant Director NORMAND R.V. BERNARD, Special Assistant to the Board STEPHEN M. HOFFMAN, JR., Assistant Director LAURA M. HOMER, Assistant Director DIVISION OF CONSUMER JAMES V. HOUPT, Assistant Director JACK P. JENNINGS, Assistant Director AND COMMUNITY AFFAIRS MICHAEL G. MARTINSON, Assistant Director GRIFFITH L. GARWOOD, Director RHOGER H PUGH, Assistant Director GLENN E. LONEY, Associate Director SIDNEY M. SUSSAN, Assistant Director DOLORES S. SMITH, Associate Director MOLLY S. WASSOM, Assistant Director MAUREEN P. ENGLISH, Assistant Director WILLIAM SCHNEIDER, Project Director, IRENE SHAWN MCNULTY, Assistant Director National Information Center 1. On loan from the Division of Information Resources Management Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 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 SHEILA CLARK, EEO Programs Director DAVID L. ROBINSON, Deputy Director (Finance and Control) DIVISION OF HUMAN RESOURCES LOUISE L. ROSEMAN, Associate Director MANAGEMENT CHARLES W. BENNETT, Assistant Director DAVID L. SHANNON, Director JACK DENNIS, JR., Assistant Director JOHN R. WEIS, Associate Director EARL G. HAMILTON, Assistant Director ANTHONY V. DIGIOIA, Assistant Director JEFFREY C. MARQUARDT, Assistant Director JOHN H. PARRISH, Assistant Director JOSEPH H. HAYES, JR., Assistant Director FLORENCE M. YOUNG, Assistant Director FRED HOROWITZ, Assistant Director OFFICE OF THE INSPECTOR GENERAL OFFICE OF THE CONTROLLER GEORGE E. LIVINGSTON, Controller BRENT L. BOWEN, Inspector General STEPHEN J. CLARK, Assistant Controller (Programs and DONALD L. ROBINSON, Assistant Inspector General 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 ELIZABETH B. RIGGS, Assistant Director RICHARD C. STEVENS, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72 Federal Reserve Bulletin • March 1995 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman ALAN S. BLINDER LAWRENCE B. LINDSEY MICHAEL H. MOSKOW THOMAS M. HOENIG THOMAS C. MELZER SUSAN M. PHILLIPS EDWARD W. KELLEY, JR. CATHY E. MINEHAN JANET L. YELLEN JOHN P. LAWARE ALTERNATE MEMBERS EDWARD G. BOEHNE ROBERT D. MCTEER GARY H. STERN JERRY L. JORDAN JAMES H. OLTMAN STAFF DONALD L. KOHN, Secretary and Economist THOMAS E. DAVIS, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary WILLIAM G. DEWALD, Associate Economist JOSEPH R. COYNE, Assistant Secretary DAVID E. LINDSEY, Associate Economist GARY P. GILLUM, Assistant Secretary FREDERIC S. MISHKIN, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel LARRY J. PROMISEL, Associate Economist ERNEST T. PATRIKIS, Deputy General Counsel CHARLES J. SIEGMAN, Associate Economist MICHAEL J. PRELL, Economist LAWRENCE SLIFMAN, Associate Economist EDWIN M. TRUMAN, Economist DAVID J. STOCKTON, Associate Economist LYNN E. BROWNE, Associate Economist CARL E. VANDER WILT, Associate Economist PETER R. FISHER, Manager, System Open Market Account FEDERAL ADVISORY COUNCIL ANTHONY P. TERRACCIANO, President MARSHALL N. CARTER, Vice President MARSHALL N. CARTER, First District ROGER L. FITZSIMONDS, Seventh District WALTER V. SHIPLEY, Second District ANDREW B. CRAIG, III, Eighth District ANTHONY P. TERRACCIANO, Third District RICHARD M. KOVACEVICH, Ninth District FRANK V. CAHOUET, Fourth District CHARLES E. NELSON, Tenth District RICHARD G. TILGHMAN, Fifth District CHARLES R. HRDLICKA, Eleventh District CHARLES E. RICE, Sixth District EDWARD A. CARSON, Twelfth District HERBERT V. PROCHNOW, Secretary Emeritus JAMES ANNABLE, Co-Secretary WILLIAM J. KORSVIK, Co-Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 CONSUMER ADVISORY COUNCIL JAMES L. WEST, Tijeras, New Mexico, Chairman KATHARINE W. MCKEE, Washington, D.C., Vice Chairman D. DOUGLAS BLANKE, St. Paul, Minnesota THOMAS L. HOUSTON, Dallas, Texas THOMAS R. BUTLER, Riverwoods, Illinois TERRY JORDE, Cando, North Dakota ROBERT A. COOK, Baltimore, Maryland EUGENE I. LEHRMANN, Madison, Wisconsin ALVIN J. COWANS, Orlando, Florida RONALD A. PRILL, Minneapolis, Minnesota MICHAEL FERRY, St. Louis, Missouri LISA RICE-COLEMAN, Toledo, Ohio ELIZABETH G. FLORES, Laredo, Texas JOHN R. RINES, Detroit, Michigan EMANUEL FREEMAN, Philadelphia, Pennsylvania JULIA M. SEWARD, Richmond, Virginia NORMA L. FREIBERG, New Orleans, Louisiana ANNE B. SHLAY, Philadelphia, Pennsylvania DAVID C. FYNN, Cleveland, Ohio REGINALD J. SMITH, Kansas City, Missouri LORI GAY, LOS Angeles, California JOHN E. TAYLOR, Washington, D.C. ROBERT G. GREER, Houston, Texas LORRAINE VANETTEN, Troy, Michigan KENNETH R. HARNEY, Chevy Chase, Maryland GRACE W. WEINSTEIN, Englewood, New Jersey GAIL K. HILLEBRAND, San Francisco, California LILY K. YAO, Honolulu, Hawaii RONALD A. HOMER, Boston, Massachusetts ROBERT O. ZDENEK, Greenwich, Connecticut THRIFT INSTITUTIONS ADVISORY COUNCIL CHARLES JOHN KOCH, Cleveland, Ohio, President STEPHEN D. TAYLOR, Miami, Florida, Vice President E. LEE BEARD, Hazleton, Pennsylvania DAVID F. HOLLAND, Burlington, Massachusetts JOHN E. BRUBAKER, San Mateo, California JOSEPH C. SCULLY, Chicago, Illinois MALCOLM E. COLLIER, Lakewood, Colorado JOHN M. TIPPETS, DFW Airport, Texas GEORGE L. ENGELKE, JR., Lake Success, New York LARRY T. WILSON, Raleigh, North Carolina BEVERLY D. S. HARRIS, Livingston, Montana WILLIAM W. ZUPPE, Spokane, Washington Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 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.) $200.00 per year. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. Rates for subscribers outside the United States are as follows 1994. 157 pp. and include additional air mail costs: ANNUAL REPORT. Federal Reserve Regulatory Service, $250.00 per year. ANNUAL REPORT: BUDGET REVIEW, 1994-95. Each Handbook, $90.00 per year. FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- $2.50 each in the United States, its possessions, Canada, COUNTRY MODEL, May 1984. 590 pp. $14.50 each. and Mexico. Elsewhere, $35.00 per year or $3.00 each. WELCOME TO THE FEDERAL RESERVE. March 1989. 14 pp. ANNUAL STATISTICAL DIGEST: period covered, release date, INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. number of pages, and price. 440 pp. $9.00 each. 1981 October 1982 239 pp. $ 6.50 FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. 1982 December 1983 266 pp. $ 7.50 December 1986. 264 pp. $10.00 each. 1983 October 1984 264 pp. $11.50 FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- 1984 October 1985 254 pp. $12.50 SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1985 October 1986 231 pp. $15.00 1986 November 1987 288 pp. $15.00 1987 October 1988 272 pp. $15.00 EDUCATION PAMPHLETS 1988 November 1989 256 pp. $25.00 Short pamphlets suitable for classroom use. Multiple copies are 1980-89 March 1991 712 pp. $25.00 available without charge. 1990 November 1991 185 pp. $25.00 1991 November 1992 215 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages 1992 December 1993 215 pp. $25.00 Consumer Handbook to Credit Protection Laws 1993 December 1994 281 pp. $25.00 A Guide to Business Credit for Women, Minorities, and Small Businesses Series on the Structure of the Federal Reserve System SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES The Board of Governors of the Federal Reserve System OF CHARTS. Weekly. $30.00 per year or $.70 each in the The Federal Open Market Committee United States, its possessions, Canada, and Mexico. Else- Federal Reserve Bank Board of Directors where, $35.00 per year or $.80 each. Federal Reserve Banks Organization and Advisory Committees THE FEDERAL RESERVE ACT and other statutory provisions A Consumer's Guide to Mortgage Lock-Ins affecting the Federal Reserve System, as amended through A Consumer's Guide to Mortgage Settlement Costs August 1990. 646 pp. $10.00. A Consumer's Guide to Mortgage Refinancings REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL Home Mortgages: Understanding the Process and Your Right RESERVE SYSTEM. to Fair Lending ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— How to File a Consumer Complaint Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Making Deposits: When Will Your Money Be Available? Vol. II (Irregular Transactions). 1969. 116 pp. Each vol- Making Sense of Savings ume $2.25. SHOP: The Card You Pick Can Save You Money 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

A75 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

A76 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. Digitized for FRASER tories as follows: the New York Bank serves the http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 1-A 2-B 3-C 4-D 5-E Jffe Pittsburgh Baltimore MD Ml y wv •CSiarifSte Buffalo A* | / \ - NJ NY CT RI BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 7-G 8-H UM« Rock ATLANTA CHICAGO ST. LOUIS 9-1 M MINNEAPOLIS 10-J 12-L KANSAS CITY 11-K EL P, San Antonio DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 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 William C. Brainard 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 Michael R. Watson Ronald B. Duncan1 Charlotte 28230 James O. Roberson Walter A. Varvel1 ATLANTA 30303 Leo Benatar Robert P. Forrestal Hugh M. Brown JJaacckk GGuuyynnnn Donald E. Nelson1 Birmingham 35283 Patricia B. Compton Fred R. Herr1 Jacksonville 32231 Lana Jane Lewis-Brent James D. Hawkins1 Miami 33152 Michael T. Wilson James T. Curry III Nashville 37203 James E. Dalton, Jr. Melvyn K. Purcell New Orleans 70161 Jo Ann Slaydon Robert J. Musso CHICAGO* 60690 Robert M. Healey Michael H. Moskow Richard G. Cline William C. Conrad Detroit 48231 John D. Forsyth Roby L. Sloan1 ST. LOUIS 63166 Robert H. Quenon Thomas C. Melzer John F. McDonnell James R. Bowen Little Rock 72203 Janet M. Jones Karl W. Ashman Louisville 40232 Daniel L. Ash Howard Wells Memphis 38101 Woods E. Eastland John P. Baumgartner MINNEAPOLIS 55480 Gerald A. Rauenhorst Gary H. Stern Jean D. Kinsey Colleen K. Strand Helena 59601 Matthew J. Quinn John D.Johnson KANSAS CITY 64198 Herman Cain Thomas M. Hoenig A. Drue Jennings Richard K. Rasdall Denver 80217 Sandra K. Woods 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 W. Thomas Beard, III Sammie C. Clay Houston 77252 Isaac H. Kempner, III Robert Smith, III1 San Antonio 78295 Carol L. Thompson James L. Stull1 SAN FRANCISCO .... 94120 Judith M. Runstad Robert T. Parry James A. Vohs Patrick K. Barron Los Angeles 90051 Anita E. Landecker John F. Moore1 Portland 97208 Ross R. Runkel A. Kenneth Ridd Salt Lake City 84125 Gerald R. Sherratt Andrea P. Wolcott Seattle 98124 George F. Russell, Jr. Gordon Werkema1 •Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; East Rutherford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202. 1. Senior Vice President. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications of Interest FEDERAL RESERVE CONSUMER CREDIT PUBLICATIONS The Federal Reserve Board publishes a series of Three booklets on the mortgage process are also pamphlets covering individual credit laws and topics, available: A Consumer's Guide to Mortgage Lock-Ins, as pictured below. The series includes such subjects A Consumer's Guide to Mortgage Refinancings, and as how the Equal Credit Opportunity Act protects A Consumer's Guide to Mortgage Settlement Costs. women against discrimination in their credit dealings, These booklets were prepared in conjunction with the how to use a credit card, and how to resolve a billing Federal Home Loan Bank Board and in consultation error. with other federal agencies and trade and consumer The Board also publishes the Consumer Handbook groups. to Credit Protection Laws, a complete guide to con- Copies of consumer publications are available free sumer credit protections. This forty-four-page booklet of charge from Publications Services, mail stop 127, explains how to shop and obtain credit, how to main- Board of Governors of the Federal Reserve System, tain a good credit rating, and how to dispute unfair Washington, DC 20551. Multiple copies for classcredit transactions. room use are also available free of charge. A Consumer's A ^^ttUVSHUQF*® Guide to Guide to Mortgage Mortgage Lock-Ins Settlement Costs 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

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