Federal Reserve Bulletin, 1995-09

VOLUME 81 • NUMBER 9 • SEPTEMBER 1995 FEDERAL RESERVE 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 817 OVERVIEW OF DERIVATIVES 841 STATEMENTS TO THE CONGRESS DISCLOSURES BY MAJOR US. BANKS Edward W. Kelley, Jr., member, Board of This article discusses the disclosures about Governors, presents the views of the Board on derivatives activities in the 1993 and 1994 a bill that would provide for substituting a annual reports of the top ten U.S. banks that $1 coin for the $1 bank note now in circuladeal in derivatives. It also summarizes the tion and says that the $1 coin would produce accounting standards and recommendations of a substantial budgetary gain for the federal industry groups and regulators that contrib- government, provided that the $1 note is uted to the 1994 disclosures. The main thrust withdrawn from circulation, but that the conof these efforts has been to make derivatives venience and needs of the American public, as more "transparent," in that relevant infor- well as cost savings, should weigh heavily in mation is presented in a way that allows the any decision to replace the $1 note, before the public and regulatory authorities to make Senate Committee on Banking, Housing, and informed judgments about a company's de- Urban Affairs, July 13, 1995. rivatives activity. Finally, the article reviews 844 Alan Greenspan, Chairman, Board of Goverthe improvements in qualitative and quantitanors, presents the Federal Reserve's semitive disclosures since 1993. annual report on monetary policy and says that the economic outlook, on balance, is 832 TREASURY AND FEDERAL RESERVE encouraging, despite the inevitable risks and FOREIGN EXCHANGE OPERATIONS that the U.S. economy rests on a solid foundation of entrepreneurial initiative and competi- During the second quarter of 1995, the dollar tive markets, before the Subcommittee on rose 0.6 percent against the German mark, but Domestic and International Monetary Policy it declined 2.1 percent against the Japanese of the House Committee on Banking and yen, 1.9 percent against the Canadian dollar, Financial Services, July 19, 1995. and 0.3 percent on a trade-weighted basis. By the end of the second quarter, the dollar 849 ANNOUNCEMENTS had risen 2.8 percent and 6.1 percent from its historic lows against the mark and the yen Action by the Federal Open Market respectively. Committee. Final guidelines and a final rule on safety and 838 INDUSTRIAL PRODUCTION AND soundness standards for state member banks. CAPACITY UTILIZATION FOR JULY 1995 Final rule on risk-based capital standards. Industrial production was little changed in Interim final rule on capital adequacy July for a third consecutive month. At guidelines. 121.3 percent of its 1987 average, industrial production was 2.6 percent above its level Proposal to amend risk-based capital requireof July 1994. Capacity utilization decreased ments to incorporate a measure for market risk 0.2 percentage point, to 83.4 percent. in foreign exchange and commodity activities Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

and in the trading of debt and equity instru- A1 FINANCIAL AND BUSINESS STATISTICS ments; proposed approach to setting capital These tables reflect data available as of requirements for market risk. July 27, 1995. Federal Reserve sponsorship of educational television programs on the homebuying A3 GUIDE TO TABULAR PRESENTATION process. A4 Domestic Financial Statistics Public meetings on the application of Fleet A45 Domestic Nonfinancial Statistics Financial Group to acquire Shawmut National A53 International Statistics Corporation. Publication of the revised lists of OTC stocks A67 GUIDE TO STATISTICAL RELEASES AND and of foreign stocks subject to margin SPECIAL TABLES regulations. Publication of a group of new statistical tables A76 INDEX TO STATISTICAL TABLES in the Federal Reserve Bulletin with annual data reported under the Home Mortgage A78 BOARD OF GOVERNORS AND STAFF Disclosure Act. A80 FEDERAL OPEN MARKET COMMITTEE 853 MINUTES OF THE FEDERAL OPEN AND STAFF; ADVISORY COUNCILS MARKET COMMITTEE MEETING HELD ON MAY 23, 1995 A82 FEDERAL RESERVE BOARD At its meeting on May 23, 1995, the Commit- PUBLICATIONS tee adopted a directive that called for maintaining the existing degree of pressure on A84 MAPS OF THE FEDERAL RESERVE reserve positions and that did not include a SYSTEM presumption about the likely direction of any adjustments to policy during the intermeeting A86 FEDERAL RESERVE BANKS, BRANCHES, period. AND OFFICES 861 LEGAL DEVELOPMENTS Various bank holding company, bank service corporation, and bank merger orders; and pending cases. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overview of Derivatives Disclosures by Major U.S. Banks Gerald. A. Edwards, Jr., Assistant Director, and BACKGROUND Gregory E. Eller, of the Board's Division of Banking Supervision and Regulation, prepared this In the past year, some highly publicized financial article. losses were attributed to derivative contracts that were held by several large corporations and munici- An important source of information about deriva- palities. As a result, public attention has focused on tives activities has been the published annual derivatives. Although most financial market profesreports and other publicly available financial sionals see derivatives as efficient tools for managreports of banks and other companies. Meaningful ing risk, widespread confusion about them persists disclosures about derivatives help users of financial among the public. Much of the confusion may stem statements to better understand derivatives activi- from the recent increase in the complexity of these ties and thus promote market discipline. Banking instruments. organizations and the accounting profession have A standard definition, which will be used here, is taken a number of steps in recent years to improve that a derivative is a financial contract whose marthe quality of disclosures about derivatives activi- ket value depends on the value of one or more ties. Promoting meaningful disclosures and ana- underlying "goods." The underlying good can be a lyzing this information are important parts of the commodity, such as a metal or an agricultural prod- Federal Reserve's supervisory approach to deriva- uct; a financial instrument, such as a stock, bond, or tives activities of banks.1 foreign currency; or an index, such as an interest This article discusses the disclosures about rate or equity index. More simply, a derivative is derivatives activities in the 1993 and 1994 annual a contract between two parties in which they agree reports of the top ten U.S. banks that deal in deriva- to fix the price of something today for exchange, or tives. It also summarizes the accounting standards settlement, on a future date. The amount of cash and recommendations of industry groups and regu- changing hands between the parties is calculated on lators that contributed to the 1994 disclosures. The the settlement date and is based on the difference main thrust of these efforts has been to make between the prevailing market price for the good derivatives more "transparent," in that relevant and the price specified in the contract. information is presented in a way that allows the The following example illustrates a frequently public and regulatory authorities to make informed used type of derivative, a forward contract, in judgments about a company's derivatives activity. which the buyer agrees to purchase and the seller Finally, the article reviews the improvements in agrees to deliver a commodity at a specified price qualitative and quantitative disclosures since 1993. on a certain date. Two companies, a fuel distributor and a manufacturer, decide to enter into a derivative contract. The distributor has an inventory of 1,000 gallons of 1. Other components to supervision include on-site examina- gasoline, about three months' supply. The manufactions and related off-site monitoring of regulatory reports and turer purchases 1,000 gallons of gasoline about capital standards. The Federal Reserve has also developed extenevery three months for use in its factory. On the sive examination guidance that works to reinforce the development of strong risk management policies within banking organizations. one hand, the distributor is worried that the price Furthermore, the Federal Reserve has been encouraging improve- of gasoline will fall in the near term from its ment in accounting standards for hedging and other derivatives current, or spot, price of $1 per gallon; on the other activities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

818 Federal Reserve Bulletin • September 1995 hand, the manufacturer is concerned about price amount of money that would offset the amount of increases. They enter into a derivative contract in money that it received (or paid) on the contract which the distributor agrees to sell 1,000 gallons of with the manufacturer. The intermediary's compengasoline on a specific date three months hence at sation is the difference between the fixed prices $1 per gallon, and the manufacturer agrees to buy it specified in the two contracts. then at that price. Rather than deliver the gasoline Derivatives can be designed to fit a multitude of on a date that may be close to but not exactly the situations. For example, derivatives are available same as the date on which the manufacturer needs on "catastrophe indexes" for the West Coast to buy it, they will instead settle in cash. Three (earthquakes), Midwest (floods), and East Coast months later, the spot price is $0.85 per gallon. In (hurricanes) that insurance companies may find settlement of the contract, the manufacturer pays useful as alternatives to negotiating reinsurance the distributor $150, that is, $1.00 per gallon contracts with other insurers. Derivative contracts (contract price) - $0.85 per gallon (spot price) x on electricity are being devised, and these may 1,000 gallons. (If the gasoline price had increased become the basis of an important market for utilito $1.15, the distributor would have paid the manu- ties and their customers as electric utilities are facturer $150.) The distributor then sells its inven- deregulated. tory in the open market for $850, and the manufac- Despite this apparent profusion, basically there turer buys its gasoline for $850 on the open market. are only two classes of contracts: forwards (illus- In this example, both parties have hedged against trated in the example) and options. Each can be the risk of unfavorable price changes in a commod- viewed as a "building block," in that it may be ity by entering into the derivative contract that combined with the other in various ways to create compensates them for such a change. The distribu- instruments of greater complexity that may be tor forgoes the gain from a price increase to avoid used in sophisticated hedging strategies or in a loss on the value of its fuel inventory, and the speculative transactions. (See box "Classes of manufacturer forgoes the savings from a price drop Derivatives" for an overview of various types of to avoid increased production costs resulting from derivatives.) Because these contracts can be a rise in the price of gasoline. When the derivative quickly negotiated, a firm's susceptibility to loss contract and the physical commodity are viewed from changes in prices (its "risk profile") can be together, the benefit to the companies is clear: They vastly altered in a matter of days or even hours have effectively locked in the price of 1,000 gal- through the use of derivatives. lons of gasoline at $1 per gallon for three months. Derivatives themselves generally involve risks to The distributor and the manufacturer are seeking, which banks and other companies have long been in the example, to manage their risk from changes exposed, for example, credit, market, liquidity, and in market prices through the derivative contract. legal risks (see box "Risks Associated with Deriva- Reducing their risk exposures is one of the main tives"). However, because derivatives are often purposes for which both financial and nonfinancial more complex, for example, than traditional bank companies use derivatives. products, their risks can be more difficult to mea- Derivatives may also be entered into for specula- sure and manage. tive or trading purposes. In the example, either the distributor or the manufacturer or both could have entered into the contract to profit from their respec- USE OF DERIVATIVES BY BANKS tive predictions about price changes. Alternatively, a financial intermediary could take opposite posi- During the past few years, the use of derivatives in tions in two forward contracts, promising to pay the banking industry has grown rapidly (see box the distributor a fixed price for the gasoline on a "Some Uses of Derivatives by Financial Intermedicertain date and to accept another fixed price from aries"). Derivatives are now an important product the manufacturer for the same quantity of fuel. of many banks, yet measures of the size of this Then, no matter whether the price rose or fell, activity are difficult to devise, in part because the the intermediary, settling in cash, would pay (or contracts represent promises of cash flows in the receive), on the contract with the distributor, an future. As a result, many market observers rely on Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overview of Derivatives Disclosures by Major U.S. Banks 819 Classes of Derivatives Derivatives are contracts that derive their market values rate index, such as the London Interbank Offered Rate by reference to a physical commodity or to another (LIBOR). The parties then exchange payments according contract, such as a debt or equity instrument, or by to a certain schedule for the life of the swap, which may reference to an interest rate or equity index (collectively be several years. Besides interest rates, the structure of referred to as "goods"). Some derivative instruments can exchanging a fixed payment for a floating payment has be settled by the delivery of the referenced good or by the been applied to such goods as foreign exchange, precious payment of cash, while others are settled strictly in cash. metals, and bulk commodities. There are two basic classes of derivatives—forwards and options. Option Contracts An option contract is a unilateral agreement in which one Forward Contracts party, the option writer, is obligated to perform under the A forward is a bilateral agreement in which one party, the contract if the option holder exercises his or her option. buyer, is obligated to purchase the contracted-for good, (The option holder pays a fee or "premium" to the writer and the second party, the seller, is obligated to sell the for this option.) The option holder, however, is not under good to the buyer. A party who is buying or selling a any obligation and will require performance only when good at some time in the future may wish to hedge the exercise price is favorable relative to current market against the risk of interim changes in the price of the prices. If, on the one hand, prices move unfavorably to good by entering into a forward contract today. At the the option holder, the holder loses only the premium. If, inception of the forward contract, the price, quantity, and on the other hand, prices move favorably for the option grade of the good, the delivery date, and the place of holder, the holder has theoretically unlimited gain at the delivery are fixed. The price to be paid in the future under expense of the option writer. In an option contract the a new forward contract will be closely related to the exercise price (strike price), delivery date (maturity date good's current market price (its spot price), with adjust- or expiry), and quantity and quality of the commodity are ments for costs to maintain or carry an inventory of the fixed. good, such as for storage, insurance, and interest. The main types of options are calls and puts. A call Futures. A futures contract is a type of forward in option grants the holder of the contract the right, but not which a clearinghouse normally serves as a counterparty the obligation, to purchase a good from the writer of the to both the buyer and seller. In this arrangement, the time option in consideration for the payment of cash (the and cost of finding a willing counterparty are reduced; option premium). A put option grants the the holder the credit risk is also reduced because the parties are looking right, but not the obligation, to sell the underlying good to the clearinghouse for performance. Clearinghouses to the option writer. typically reduce their credit risk by requiring collateral Interest Rate Caps and Floors. Caps and floors may be and marking positions to market frequently. In order to viewed as a series of call options packaged into a single be traded on organized exchanges, futures contracts must financial instrument in which the underlying good is an have standard commodity-unit and delivery terms to interest rate index. For example, a borrower arranges to ensure their liquidity. Futures are available for agricul- borrow at a variable rate reset quarterly at LIBOR. He tural products and other commodities, bonds and other also purchases a 6.5 percent rate cap. If LIBOR rises to interest-bearing instruments, equity interests, and foreign 9 percent, the borrower pays his creditor 9 percent and exchange. receives from the cap writer 2.5 percent (9 percent - Forward Rate Agreement (FRA). As the name indi- 6.5 percent option exercise price). The borrower has cates, an FRA is a forward contract, settled in cash, in effectively limited his interest expense to a maximum of which required payments are based on the difference 6.5 percent plus the premium paid for the interest rate between a spot market rate and the contractual forward cap. rate. If the spot rate at expiry is higher than the forward Under a floor contract, the borrower writes an option in rate, the seller pays the difference; if the spot rate is which he agrees to pay the difference between the strike lower, the buyer pays the difference. price and the interest rate index specified in the contract. Swaps. An interest rate swap may be viewed as a series The premium received offsets a portion of the overall of forward rate agreements packaged into a single instru- interest expense of the obligation; however, the debtor ment. In a simple interest rate swap contract, one party retains exposure to higher interest rates and forgoes agrees to make fixed cash payments, and the counterparty the benefit of lower interest rates on his floating-rate agrees to make variable payments based on a floating- obligation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

820 Federal Reserve Bulletin • September 1995 notional or principal amounts of contracts in assess- derivatives grew almost 35 percent, from $2.3 triling the size of the market. The notional amount is lion to $3.1 trillion. During the same period, howthe face amount of a contract to which the rates or ever, the notional amounts of derivatives contracts indexes that have been specified in the contract are almost tripled, rising from $6.8 trillion to almost applied to determine cash flows. For example, in an $18 trillion. interest rate swap in which two parties agree to Although the number of banks involved in exchange fixed for floating interest payments on derivatives has risen since 1990, it is still relatively $10 million of debt, the notional amount of the small—about 600 as of March 31, 1995. Also, the contract is $10 million. In general, the notional largest banks account for most of the activity: The amount is never exchanged and does not reflect top fifteen banks hold more than 95 percent of the the risk of the position. Furthermore, aggregate derivatives contracts (as measured by notional notional amounts are often overstated because of amounts) of the U.S. banking industry. double counting of contracts between dealers and because contracts are often used to offset the effect of other derivatives. Nevertheless, changes in ACCOUNTING FOR DERIVATIVES notional amounts over time give an indication of the growth of derivatives activities. The issues involved in the accounting treatment of From 1990 to the end of the first quarter of 1995, derivative contracts are also complex. Accounting the total assets of those U.S. banks involved in theory has not kept up with the innovations Risks Associated with Derivatives Generally, the risks associated with derivative instru- tions. For banks, the value of these positions may change ments are the same as those arising from other bank because of changes in domestic interest rates (interest financial instruments. The major categories of risk are the rate risk) or foreign exchange rates (foreign exchange following. rate risk). For some of the larger institutions, information about Credit Risk is the possibility of loss from the failure of their internal value-at-risk measures and methodology a counterparty to fully perform on its contractual obliga- can improve the understanding of their exposure to martions. Types of information that may be disclosed about ket risk. Value at risk involves the assessment of potencredit risk include the following: tial losses in portfolio value because of adverse movements in market risk factors for a specified statistical • Gross positive market value—the gross replacement confidence level over a defined holding period. cost of a contract, without the effects of any netting arrangements Liquidity Risk has two broad types: market liquidity • Current credit exposure—the replacement cost of a risk and funding risk. Market liquidity risk arises from contract, including the effect of netting arrangements the possibility that a position cannot be eliminated • Potential credit exposure—possible replacement quickly either by liquidating it or by establishing offsetcosts if favorable price movements (making the contract ting positions. Funding risk arises from the possibility more onerous to the counterparty) occur in the future that a firm will be unable to meet the cash requirements • Credit risk concentrations—indicators of a lack of of its contracts. diversification in either geographic areas or industry groups Operational Risk is the possibility that losses may • Collateral and other credit enhancements that may occur because of inadequate systems and controls, human reduce credit risk error, or mismanagement. • Counterparty credit quality, nonperforming contracts, and actual credit losses Legal Risk is the possibility of loss that arises when a contract cannot be enforced—for example, because of Market Risk is the possibility that the value of on- or poor documentation, insufficient capacity or authority of off-balance-sheet positions will adversely change before the counterparty, or uncertain enforceability of the conthe positions can be liquidated or offset with other posi- tract in a bankruptcy or insolvency proceeding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overview of Derivatives Disclosures by Major U.S. Banks 821 represented by the development of derivatives. At duties. Companies typically report a contract in present, financial statements do not effectively their financial statements only after some perforrepresent the risk profile of a company that uses mance has taken place. For example, in a firm derivatives nor its management's intentions for commitment to lend, the amount of the financial controlling risk relating to derivatives. contract does not appear on the balance sheet until Derivative instruments, like traditional loan com- the borrower actually draws on the loan. Another mitments, are executory contracts. That is, the two example is a firm purchase order received by a parties to the contract have made mutual promises, manufacturer. These orders make up the compabut they have not yet performed their promised ny's backlog but are not generally recognized in Some Uses of Derivatives by Financial Intermediaries Use of Interest Rate Swaps The $100 million notional amount, when analyzed as a component of the gap schedule, reduces the liability A finance company of a manufacturer purchases equipsensitivity for the interval of less than three months and ment sales contracts, bearing fixed interest rates, from the decreases the one-year asset sensitivity, resulting in a dealer network. The overall portfolio of sales contracts balanced three-month interval and a $20 million asset has a weighted-average life of three years and a yield of sensitivity in the one-year interval, a result that meets 12 percent. To finance its operations, the finance commanagement's goal. pany sells short-term commercial paper in the secondary market. If a sudden increase in short-term rates occurs, Use of a Put Option the finance company's net interest margin will be decreased. A mortgage company experiences a large increase in To reduce this risk, the finance company could enter demand for home mortgages as a result of a downward into a three-year interest rate swap in which it receives trend in rates. It normally sells the loans it originates in the commercial paper rate and pays a fixed amount, with the secondary market. The company is concerned that a notional amount equal to the amount of commercial mortgage rates may unexpectedly increase, in which case paper outstanding. Because the cash received on the swap many more consumers than usual will seek to fund comequals the company's interest expense on the commercial mitments that were made earlier, at lower rates. These paper, the finance company has effectively locked in its mortgages, bearing below-market rates, will sell at a net interest margin as the difference between the fixed discount in the secondary market. If rates continue to fall, rate received on the sales contract portfolio and the fixed most consumers will allow the commitments to expire. payments on the interest rate swap. The finance company One approach to hedging against the risk of loss from could have achieved the same goal by issuing three-year funding below-market-rate commitments would be to bonds bearing a fixed interest rate; however, using a swap purchase put options on a bond whose market value may be preferable if it offers greater flexibility, speed, or tracks that of home mortgages as interest rates change. a higher net interest margin. The option gives the company the right to sell the bond at A bank performs a gap analysis to analyze its interest the strike price, and if interest rates do indeed rise, the rate sensitivity, and management finds that for the inter- company profits if the bond's market value falls relative val of less than three months, liabilities exceed assets by to the option's strike price. This profit on the option helps $100 million, whereas in the one-year interval, assets offset the loss from selling the below-market-rate mortexceed liabilities by $120 million. Management is con- gages resulting from the loan commitments. If rates are cerned that a sudden increase in interest rates would unchanged or if they fall, the market value of the bond adversely affect income as its liabilities reprice at the underlying the option may exceed the option's strike higher rates more quickly than its assets do, and its goal price, which would render the option worthless at expirais to have no more than a net $25 million in any period. tion. The company then loses the premium. Mortgages, One solution for reducing this exposure would be to however, will be originated and sold at face value. At the enter into a one-year interest rate swap, with a notional cost of the premium paid for the option, the bank has amount of $100 million, in which the bank pays fixed insured against incurring a loss on the commitments interest and receives a quarterly floating rate of interest. resulting from an increase in rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

822 Federal Reserve Bulletin • September 1995 the financial statements until some performance sheet, and reflecting the change in value in reported takes place, such as shipment of the manufacturer's earnings. product. An important focus of accounting is The accounting treatment of derivatives is now matching performance under a contract with its a hodgepodge of mark-to-market accounting and recognition in the financial statements. Because accrual accounting and depends on the type of executory contracts will affect future financial contract and the purpose for which the party results as their terms are fulfilled, under generally entered into the contract. As the use of derivatives accepted accounting principles companies must has expanded, the deficiencies of their accounting nevertheless describe in their current financial treatment have become more evident, and the need statements material, binding commitments that will for more consistency is widely recognized. be performed in the future. Professional organizations that set accounting In keeping with this treatment of executory standards have been exploring a number of alternacontracts, the accounting treatment of derivative tives to current practice but have had much diffiinstruments may reflect only the next required con- culty in reaching a consensus. Although accountractual performance, such as accruing the expected tants cannot now agree whether marking to market payment or receipt of cash, as of the balance sheet or accruing cash flows is the appropriate method date. Under this procedure, an example of accrual for accounting for derivative contracts in every accounting, even though a party to a derivative—an instance, all would agree that until a more consisinterest rate swap, for example—may be obligated tent accounting method is devised, an interim step to make a series of cash payments over several to improving the transparency of off-balance-sheet years because of changes in interest rates, these instruments is more thorough disclosures about the potential future obligations are not reflected on contractual terms of derivatives and discussions the current balance sheet. Hence, the derivative by management of their hedging programs and the contract is "off balance sheet," and its risks and results of those programs. rewards are not clear to the financial statement reader. Furthermore, when used as hedges, gains or losses on derivative contracts may be deferred CHANGES IN DISCLOSURE REQUIREMENTS to match interest income from loans, or interest AND RECOMMENDATIONS expense on deposits or other items being hedged. Future benefits or obligations associated with off- A new accounting standard issued by the Financial balance-sheet contracts, then, are not well captured Accounting Standards Board (FASB) significantly in the financial statements and therefore lack expanded the required disclosures about derivatransparency. tives and was effective for the 1994 annual reports Although executory contracts may not be of both financial and nonfinancial companies. reported on a balance sheet, they nonetheless have Financial institutions also responded to initiatives economic value. A manufacturer with a two-year by several industry and regulatory groups that sales backlog is probably better off than one with called for additional disclosure of derivatives no backlog. Similarly, an interest rate swap enti- activities. tling a company to receive a fixed rate of 8 percent will be more valuable than a contract that pays FASB Requirements before 1994 7 percent. The traditional accounting requirement that some performance occur before a contract Before 1994, the FASB required that all firms appears on the balance sheet, however, is replaced preparing financial statements in conformance with in some situations (such as for a dealer's trading generally accepted accounting principles disclose portfolio) by an estimation of the contract's the following information about financial instrueconomic value. This accounting practice, called ments with off-balance-sheet risk of accounting "marking to market," is the process of determining loss:2 the market value of financial contracts (by market quote, if available; otherwise through estimation 2. "Accounting loss" on a financial contract is a potential loss in techniques), recording that value on the balance excess of the amount of the contract reported on the balance sheet. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overview of Derivatives Disclosures by Major U.S. Banks 823 • The face, contract, or notional principal positions and disaggregate from trading revenues amount the share earned from derivatives. This disaggrega- • The nature and terms of the instrument and tion may be either reported for derivatives alone or a discussion of its credit and market risk, cash broken down by some other method, such as lines requirements, and related accounting policies of business or types of risk exposure (for exam- • The accounting loss the company would incur ple, interest rate or foreign exchange), as long as if any party to the financial instrument did not trading profits from derivative instruments are perform according to the contract's terms and any clearly presented. The FASB encouraged, but did collateral proved to have no value not require, the disclosure of similar data about • The company's policy for requiring collateral nonderivative trading assets and liabilities, whether or other security and a description of collateral they are financial instruments or nonfinancial items, presently held. to give a more comprehensive picture of the firm's trading business. For all financial instruments (those with offbalance-sheet risk of accounting loss and those without), significant concentrations of credit risk End-User Activities from an individual counterparty or groups of counterparties must also be reported. Furthermore, com- For derivatives used for hedging or other riskpanies must disclose the fair market value of their management purposes, a firm is now required to financial instruments, both assets and liabilities, describe its objectives in using derivatives and whether or not they are recognized on the balance discuss its strategies for achieving those objectives. sheet. The firm must also describe how it reports derivatives in its financial statements and give certain details about gains or losses being deferred. The SFAS 119 fair values of end-user derivatives must also be shown separately from the fair value of items In response to calls for improved disclosure of hedged by the derivatives; previously most compaderivatives activities, the FASB issued Statement nies combined the fair values of the two. of Financial Accounting Standards Number 119, SFAS 119 also encourages a firm to disclose Disclosure about Derivative Financial Instruments quantitative information, in a manner consistent and Fair Value of Financial Instruments with its method for managing risk, that would be (SFAS 119). Under this new standard, which was useful to readers of its financial statement in evalueffective for 1994 year-end reports, a company that ating its activities. issues or holds derivatives is required to differentiate in its disclosures between derivatives used for trading purposes and those used for risk manage- Private Groups ment or other end-user reasons. In 1993, the Group of Thirty presented a report containing a number of recommendations on Trading Activities derivatives disclosure.3 The report said that financial statements of dealers and end-users should A dealer is required to report the fair value (both contain sufficient information about their use of year-end and annual average) of its derivatives derivatives to provide an understanding of the purposes for which transactions are undertaken, For example, an interest rate swap that has a value of $100 on the the extent of the transactions, the degree of risk balance sheet date after it is marked to market could result in more than $100 of loss if there is an unfavorable movement in interest rates. This contract, though reported at market value, has offbalance-sheet risk of accounting loss. In contrast, a loan of $100 3. Group of Thirty, Derivatives: Practices and Principles, report has no off-balance-sheet risk of accounting loss (ignoring environ- by the Global Derivatives Study Group (Washington: July 1993). mental or lender liability claims) because the possible loss is The Group of Thirty is a private, nonprofit research organization capped at $100 even if there is a full charge-off of the loan. involved with international economic and financial issues. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

824 Federal Reserve Bulletin • September 1995 involved, and the way the company has accounted quite diverse. As a result, several efforts have been for these transactions. The report also recom- made to harmonize and improve disclosure about mended the disclosure of information about man- derivatives activities internationally. A working agement's attitude toward financial risks, the ways group of the Euro-currency Standing Committee of financial instruments are used, the ways risks the Group of Ten central banks, chaired by Peter R. are monitored and controlled, and analyses of Fisher, Executive Vice President of the Federal derivatives positions at the balance sheet date as Reserve Bank of New York, developed recommenwell as the credit risk inherent in those positions. dations regarding ways to improve the financial The report also recommended that dealers provide reporting of derivative activities; these recommenadditional information on the extent of their activi- dations may have influenced the 1994 annual ties in financial instruments. reports of firms involved in derivatives activity.5 In 1994, a banking industry group, the Institute The Fisher Group recommended principally that a of International Finance (IIF), developed a frame- firm disclose quantitative information about its work for reporting credit exposures arising from market and credit risk exposures and its perforderivatives.4 The framework consisted of manage- mance at managing these risks to frame its discusment discussions about policies and controls affect- sion of qualitative information. The report recoming credit risk and the reporting of quantitative data mended that, to the extent feasible, quantitative on counterparty credit quality and more informa- information on a firm's consolidated portfolios tion about contractual terms. (that is, derivatives and on-balance-sheet financial instruments relating to traditional banking activities) should also be reported. These data should reveal the portfolios' riskiness and manage- Federal Bank Regulatory Agencies ment's success at managing that risk. A key recommendation was that firms base their annual report In 1994, the Federal Reserve and the other federal disclosures on the kinds of information the firm's banking agencies proposed and issued in final form own management uses for analyzing risk. Many expanded regulatory reporting requirements that firms might, for example, disclose value-at-risk applied to all banking organizations. They required, measures for market risk if they use that method in among other things, a more detailed breakdown of their risk management processes. Such measures notional amounts and, for larger banks, the market assess the likelihood of loss from adverse market values of derivative instruments according to broad price movements over a specified time period (see risk exposure and management objectives. For box "Risks Associated with Derivatives"). larger banks, they also required additional information on trading revenues and the effects of end-user For credit risk, the Fisher Group noted that most derivatives on income. This information became firms were disclosing only current credit exposure. available to the public beginning with regulatory It suggested that transparency would be improved reports for the first quarter of 1995. These regula- if information about counterparty credit quality, tory requirements may also have influenced dis- potential exposure, and the variability of credit risk closure in the annual reports for 1994. exposure were disclosed.6 Management's success Euro-currency Standing Committee 5. See Bank for International Settlements, Public Disclosure of Market and Credit Risks by Financial Intermediaries, discussion of the Group of Ten Central Banks paper prepared by a working group of the Euro-currency Standing Committee of the Central Banks of the Group of Ten countries Even though the derivatives market is considered (Basle: September 1994). 6. Current credit exposure is the loss that would be experienced global, disclosure practices among countries are if a counterparty defaulted today. The contract's fair market value today, or replacement cost, is widely viewed as its current credit exposure. Only a contract that is favorable to the bank (that is, an asset) has current credit exposure. A contract that is unfavorable to 4. The Institute of International Finance, Inc., A Preliminary the bank (a liability) presents credit risk to the bank's counterparty. Framework for Public Disclosure of Derivatives Activities and Potential credit exposure attempts to measure the maximum loss Related Credit Exposures (Washington: August 1994). on a derivative contract that may occur over the life of the contract Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overview of Derivatives Disclosures by Major U.S. Banks 825 at controlling credit risk would be indicated to risk. This section of the annual report is not audited financial statement users by the disclosure of actual by independent accountants. The second section, losses and other details about derivatives with the annual financial statements, reports the financredit problems. cial position, income, changes in stockholders' equity, and cash flow and include many footnotes. The financial statements and their footnotes are audited. COMPARISON OF 1993 AND 1994 For purposes of this article, disclosures in both ANNUAL REPORTS OF THE TOP TEN sections of the annual report were reviewed. In U.S. DEALER BANKS analyzing these reports, certain decisions were made to assess whether or not an institution had The analysis of the derivatives disclosures focused made a particular disclosure. For example, one on information presented by the top ten U.S. dealer institution might explicitly state certain quantitabanks (measured by the notional amounts of their tive information. In another bank's annual report derivatives holdings) in their 1994 annual financial similar information could be inferred from other reports (table l).7 complementary data. To distinguish between the In general, substantial improvements were made two types of presentation, the analysis did not in the 1994 annual reports relative to 1993 reports.8 consider indirect presentation to be disclosure. In particular, banks expanded their management's discussion and analysis of their derivatives activities and provided more quantitative information Qualitative Information about these activities than in the 1993 reports. When the 1994 annual reports are compared with As indicated earlier, SFAS 119 now requires firms 1992 year-end financial statements (which generto discuss the use of derivatives in risk manageally disclosed little more than notional amounts, ment activities (table 2). Although firms are not credit exposures, the total value of the trading explicitly required to make this qualitative discloaccount, and total trading profits), it is clear that the sure about trading activities, virtually all of the groups pushing for improved standards have had banks discussed in some detail the various risks significant influence in improving the overall qualthey face in their trading operations and their proity of disclosures about derivatives activities. cesses for controlling their exposures. Nine of the Banks make disclosures about derivative instrutop ten banks (the one missing had the smallest ments on a consolidated basis in two main sections trading portfolio) discussed measurement and conof a typical annual report: management's discussion and analysis and the annual financial statements. The first is an analysis of the bank's financial condition and performance (including financial 1. Ten U.S. banks with the largest notional amount of data) and typically includes a narrative of the derivative contracts outstanding on December 31, 1994 bank's risk exposures and techniques for managing Billions of dollars if the counterparty defaults in the future. This potential loss can be estimated by projecting the fair market value of the contract based on the occurrence of favorable (unfavorable to the counterparty) rate or price changes. The statistical likelihood of favorable price movements can be assessed from historical price data. 7. In this article, "bank" means banking organizations that comprise bank holding companies and their bank affiliates and other subsidiaries that are consolidated for presentation in an annual report. 1. The fair market value, sometimes referred to as the replacement cost or 8. The banks making up the top ten changed from 1993 to 1994. current credit exposure, is for off-balance-sheet derivatives subject to the Continental Bancorp., which was ranked in the top ten in 1993, was risk-based capital standards. acquired by BankAmerica Corp. in 1994. It was replaced by Bank SOURCE. Publicly available regulatory financial statements filed with the of New York, which had been eleventh in 1993. Federal Reserve. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

826 Federal Reserve Bulletin • September 1995 trol of credit and market risks. More than half ting arrangements with counterparties.9 In addition, described how they manage the liquidity demands half of the organizations indicated in their 1994 of their operations. Three banks rounded out their reports whether or not they used leveraged derivamanagement discussion and analysis by describing tives (contracts using multipliers or other means to how they control operating and legal risks. All scale up cash flows relative to the reported notional institutions (to varying degrees) included cash amounts) in their business. This issue was not market financial instruments (for example, bonds) discussed in earlier annual reports. within the scope of their narrative of risk manage- Most organizations described their risk control ment, an approach that provides a more balanced, processes by identifying the management group broad-based discussion of managing risk exposures responsible for setting trading policies and describthan would a strict focus on derivatives. The num- ing the managerial procedures that were in place to ber of banks discussing these specific risks and ensure compliance with these policies. The typical their methods of controlling risk exposure has report gave an overview of risk management that increased significantly since the 1993 annual briefly sketched the bank's business objectives and reports, in which only the four largest dealers did its management philosophies (for example, describso. Few banks explicitly discussed operational ing the extent to which its operations are centralrisks, but all discussed legal risks in varying detail ized or diffuse). Most banks described the informain describing the legal characteristics of their net- tion systems and management tools used for assessing results. As required under generally accepted accounting Number of top ten banks discussing management principles, all organizations discussed in the footobjectives and derivative risks in their annual reports, notes to their financial statements their methods for 1993 and 1994 reporting derivatives used for trading or end-user purposes. Under these standards, a firm must discuss its accounting policies and describe how it values derivative contracts, recognizes income and expense from derivatives, and nets derivatives for financial reporting purposes. Firms have long been required to describe their accounting policies in their annual reports; however, the disclosures in 1994 were much more specific regarding the accounting treatments for derivatives. More recently, firms have been required to disclose the fair value of financial instruments and their means of determining fair value. In line with these requirements, all banks provided much more detailed and useful descriptions of the methods and assumptions used in valuing financial instruments that do not have observable market prices. 9. Under a master netting agreement, the counterparties agree to settle a number of derivatives subject to the agreement on a net basis in the event of default. Thus, the nondefaulting party can offset favorable contracts (assets) against unfavorable contracts (liabilities) owed to the defaulting party. Although master netting agreements are generally enforceable in the United States, in some jurisdictions it is uncertain whether the nondefaulting party's 1. Generally, disclosures about risk management methods and approaches for estimating market value were not as extensive in 1993 as they were in favorable contracts could be abrogated and unfavorable contracts 1994. enforced in an insolvency proceeding of the defaulting party. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overview of Derivatives Disclosures by Major U.S. Banks 827 Quantitative Information Trading Disclosures The top ten institutions continued to expand the For 1994 most dealers expanded the level of detail disclosure of the general terms of their derivative in the reporting of their trading positions and tradcontracts (table 3). All banks last year reported the ing revenues (table 4). The trading account for the notional amounts of various types of derivative first time disaggregated the fair values of derivative contracts, in almost all cases distinguishing dealer contracts in a gain position (assets) from those with positions from those used for end-user purposes. losses (liabilities) because of more restrictive rules This year, all banks not only presented the notional on netting for accounting purposes that were effecamounts of their derivatives but also provided a schedule of certain derivative positions listing their notional amounts by maturity; seven banks provided this type of schedule last year. More than half of the banks this year reported gross positive and 4. Number of top ten banks disclosing in their annual negative market values of their derivative positions reports data on risks and income relating to derivatives as of the report date in contrast to 1993 when no they trade, 1993 and 1994 banks reported gross negative values. Number of banks disclosing Type of quantitative disclosure 1993 1994 — Number of top ten banks disclosing the general terms RISKS OF OFF-BAT ANCE-SHEE r of derivative contracts in their annual reports, 1993 and INSTRUMENTS 1994 f activities • level, Number of holding] banks High and low value at risk. Average value at risk Type of quantitative disclosure g Confidence band determined by j aaiiy value at USK 1993 ! 1994 Daily change in value of portfolio .. Average daily change in value of portfolio Change in portfolio value exceeded 5 9 value at risk 10 10 B 4 Credit risk 0 0 Current credit exposure (that is. with netting) 10 10 Maturity schedule 7 9 1 6 Volatility of credit exposure ... 0 0 7 10 Gross positive market value 7 7 2 1 Potential credit exposure 1 2 - ' ' -'X^SBSi: Counterparty credit quality 4 5 rates Concentrations Receive or pay rates 3 10 Exposure by geographic area .. 4 Receive or pay notional amounts . 2 10 Exposure by industry group or government entity 6 MARKET VALUE DATA Other (for example, exposures than percentage of capital) 6 Gross positive market value Collateral and other credit enhancements 2 Gross negative market value Actual credit losses 6 Nonperforming contracts Risk-based capital credit equivalent Tradi.n6f . a.£.e..° ts for derivatives liabilities SeParated. fr°m .tnld!ng. 10 Cash instrument detail Liquidity risk End-of-period 0 8 ^Average for period „... 0 6 exchange traded derivatives Other End-of-period 0 9 Average for period 0 7 DISAGGREGATION OF TRADING INCOME No detail of trading accounttotals only 10 Risk; eexxppoossuurree o<r line of business Type of instrument End-user derivatives positions Cash positions versus derivative Overall market value .. instruments By related asset or liability being hedged Other By type of derivative Net interest revenue from cash positions . Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

828 Federal Reserve Bulletin • September 1995 tive in 1994.10 These details were supplemented In its paper, the Fisher Group illustrated its with more information on the types of instruments, recommendations with several approaches to disboth cash market and derivative, that made up the closing market risk and the firm's performance in trading portfolio. managing the risk. Some of the top ten banks used these approaches in their 1994 annual reports Market Risk. The four largest derivatives dealers (table 5). Four banks used a graphical approach to (according to the share net trading profits contrib- convey information about their trading portfolios. uted to 1994 pretax income) reported both man- One bank provided a scatter diagram of daily value agement's intended limits on risk exposure (daily at risk and daily changes in portfolio value. Two value at risk at year-end, and high, low, and aver- institutions published a histogram of actual portage value at risk during the year) and actual results folio performance, indicating the distribution of in trading portfolio volatility. This value-at-risk daily profit or loss but not daily value at risk, so disclosure also included the likelihood, or statisti- that gauging results against management's intencal confidence level, that such results would be tions was difficult. The fourth institution showed observed, although assumptions about the holding a bar chart of quarterly high, low, and average period for estimating the results were typically not value at risk and quarterly trading revenue. specified. The disclosure of numerical details of value at risk by the larger dealers is a significant Credit Risk. Besides increasing information on innovation for 1994. In the previous year's annual market risk, the banks disclosed more about their reports the banks disclosed that their risk man- credit risk in the 1994 annual reports (table 4). As agement methods relied on value at risk without in the 1993 reports, all banks reported their current disclosing value-at-risk data, whereas in their 1992 credit exposure. Five banks gave indications of reports many banks were virtually silent about their the credit quality of their derivatives portfolio by risk management techniques. The indicators of disclosing the proportion of credit exposures to actual trading portfolio performance used in 1994 investment-grade and unrated counterparties. One by these four banks included histograms of daily institution broke down its derivatives credit expoprice changes, reporting the annual high, low, and sure by its internal risk rating—the first time this average price changes of the trading portfolio, and disclosure has been made in the annual report of the frequency of daily price changes in excess of a top ten dealer bank. Six institutions published the day's value at risk. details about the concentration of current exposure Four other banks also interwove quantitative according to industry or government entity. Several details in the qualitative discussion about risk man- among these also reported current exposure by agement policies, indicating value-at-risk measure- geographic concentration. Moreover, two instituments (or other methods analogous to value at tions reported the value of collateral and other risk). These banks, however, did not publish infor- credit enhancements connected with their trading mation about the actual performance of their trad- portfolios. The banks provided little quantitative ing portfolios. Only one of these four banks gave information of this type in 1993, when some gave some flavor to the dynamics of their risk-taking only limited data on industry concentrations. during the year by disclosing the high and low limits of its value at risk during 1994. 5. Number of top ten banks with 1994 disclosures about market risk based on Fisher Group recommendations 10. Beginning in 1994, for accounting purposes companies were permitted to net assets and liabilities relating to those derivative contracts with a counterparty that were subject to a legally enforceable master netting agreement and were not permitted to net across counterparties. In previous years, industry practice was to "grandslam" net—that is, report the net fair market value of all derivative contracts across all counterparties. As a result of this change in method, several large dealer institutions saw their assets and liabilities increase by several billions in 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overview of Derivatives Disclosures by Major U.S. Banks 829 In 1993, only four banks quantified their actual are generally considered more liquid than over-thecredit losses and nonperforming derivatives con- counter instruments because of their standardized tracts or explicitly stated that the amounts were terms, readily available price information, and low immaterial. In 1994, two additional banks reported credit risk. information about derivatives with credit problems. Nine institutions furnished a maturity schedule of Dealer Income. To comply with SFAS 119, all derivatives contracts to indicate credit (and mar- of the top ten banks disaggregated their trading ket) risk. revenues in their 1994 annual reports compared Although these types of disclosure are an with eight institutions in 1993 (table 4). Seven improvement over 1993 reports, other measures of banks reported results according to the type of credit risk have yet to be explored in these annual instrument that earned the income. Five banks reports. For example, potential credit exposure (compared with two in 1993) reported their trading has been reported by only two banks (which also income according to their lines of business or risk reported such estimates in 1993), and none of the exposure with little differentiation between derivatop ten reported any measure of the volatility of tives and cash-market instruments. There was concredit risk arising from derivatives. Most banks, siderable variability among the income disclosures, however, quantified in their annual reports the with some providing only the information required benefits of reduced credit exposure resulting from under SFAS 119 and others giving a more comnetting agreements with counterparties. plete picture of profits from trading both derivative The Fisher Group suggested several means of and nonderivative financial instruments. Five instiindicating the firm's credit risk and its performance tutions also disclosed net interest income from in managing it. Many of the quantitative measures traded cash positions. were adopted in 1994 by the top ten banks or had been disclosed in previous years (table 6). As a supplement to their disclosures of credit Disclosures about End-User Derivatives risk and capital adequacy, seven dealer banks reported the credit-equivalent amount of risk-based The primary focus of disclosure about derivatives capital for off-balance-sheet contracts in describing used for hedging or other risk management purtheir risk-weighted assets and risk-based capital poses is market risk. Market risk incorporates inforratios. mation about the institution's exposure to interest rate (and to a lesser extent foreign exchange) risk Liquidity Risk. As in 1993, quantitative informa- arising primarily from traditional bank activities, tion about liquidity risk was limited in 1994 annual such as those involving investments, loans, and reports (table 4). Three banks distinguished deposits. The most common disclosures about exchange-traded contracts from over-the-counter derivatives that had been designated for hedging or instruments, generally through disclosure of the other risk management purposes were schedules of notional amounts related to futures contracts and contractual terms: notional amounts, maturities, exchange-traded purchased options versus over- and (for swaps) rates paid and received. the-counter contracts. Exchange-traded contracts Market Risk. Almost all banks limited their discussion of market risk (outside the trading port- 6. Number of top ten banks with 1994 disclosures about folio) to interest rate risk. The most prevalent credit risk based on Fisher Group recommendations means of communicating how derivatives are used to manage a bank's interest rate risk was a gap position schedule, which was used by eight banks—the same number as in 1993 (table 7). Gap schedules are used in a method of managing interest rate risk that organizes financial assets and liabilities according to maturity or repricing frequency in a number of time intervals. The differ- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

830 Federal Reserve Bulletin • September 1995 ence between assets and liabilities in each time the derivatives on the overall duration of the instiinterval ("gap" or net exposure) forms the basis tution's financial instruments. Most banks, in varyfor assessing interest rate risk. Under this approach, ing detail, described whether the derivatives were derivatives of various maturities can be used to linked to specific components of the balance sheet adjust the net exposure of each time interval to or were used to manage overall risk exposures. alter the overall interest rate risk of the institution. In recognition of the expansion of value-at-risk Gap analysis is the simplest approach to assess- methods to activities not related to trading, two ing interest rate risk. It is a "snapshot" that por- banks furnished quantitative information on the trays the risk for only the date of the balance sheet. value at risk related to end-user derivatives. Also, Thus, it does not capture the dynamics of changes one institution provided a corporate-wide value-atin the bank's mix of products or the effect of risk measure that took into account both trading changes in rates on instruments that can be called and end-user derivatives as well as traditional or redeemed. To remedy this deficiency, banks financial instruments. supplemented the gap schedule with either a dis- SFAS 119 made technical changes to the way cussion of the effect on earnings of a specified rate that the fair value of financial instruments is to be shock or a discussion of earnings-at-risk methods disclosed in annual reports. As a result, disclosure (a method analogous to value at risk) applied to of the fair value of financial instruments in the nontrading portfolios. Four institutions described 1994 reports was generally clearer and more underthe consequences to earnings of an interest rate standable than before. For the first time, firms were shock. One indicated the effect large changes in required to disclose the fair value of financial assets rates that were observed in 1994 would have had and liabilities carried at historical cost separately on that year's earnings had derivatives not been from the fair value of derivatives used to hedge in place for hedging purposes. The other three those instruments. Made in this way, the disclosure reported the effect on projected 1995 income of an showed more clearly whether an instrument was arbitrary shock of 100, 150, or 200 basis points in favorable (an asset) or unfavorable (a liability) at interest rates. The assumptions in the analysis about year-end. how quickly the arbitrary rate shocks developed were either not stated or only vaguely described. Effect of Derivatives on Earnings. Details of the One bank disclosed the duration (the weighted- way derivatives affect income and expense average collection time of an instrument's cash accounted for on an accrual basis (that is, instances flows) of its risk management derivatives but did in which instruments are not marked to market not provide the duration of cash positions; this with gains or losses recognized in income but inomission makes it difficult to assess the effect of stead track cash flows) were more widely reported in 1994. Eight banks, compared with four in 1993, reported the effect that derivatives accounted for on 7. Number of top ten banks disclosing details of end-user an accrual basis had on revenue. Half of these derivatives in their annual reports, 1993 and 1994 institutions also reported the overall effect on net interest margins of their end-user derivatives activities. Five banks disclosed deferred gains or losses on end-user derivatives and provided details of when the deferrals would be reflected in future earnings; only two banks published this information in 1993. CONCLUSION I The level of detail and clarity of annual report disclosures about derivatives activities greatly improved for the top ten dealer banks as a group Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Overview of Derivatives Disclosures by Major U.S. Banks 831 for 1994. The banks that published the more inno- activities. No annual report can be singled out as vative annual reports in 1993 continued to lead the having the best method, and several banks had group in 1994 with quantitative details of value at unique approaches to disclosing some aspects of risk and actual results of their trading activities. their derivatives activities. As new approaches The disclosures in 1994 (as in 1993) were more are developed by the major banks, further progress informative for those banks whose trading reve- in improving derivatives disclosure will likely be nues composed a larger share of their overall made. income. Institutions that focused primarily on tradi- The Federal Reserve has long supported baltional banking activities made fewer disclosures anced improvements in annual report disclosures, about trading than other dealers, perhaps because particularly those about derivatives activities. The trading was an adjunct to their primary business. U.S. federal banking agencies will continue to be The experimentation encouraged by the FASB, interested in improved disclosures about these regulators, and industry groups is evident from the activities and will likely coordinate more extendiversity of methods used by the top ten banks in sively with national supervisors from other counpresenting information about their derivatives tries in this important area. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

832 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report describes Treasury and Sys- the German mark and the Japanese yen. On each tem foreign exchange operations for the period occasion purchases by the U.S. monetary authorifrom April through June 1995. It was prepared by ties were divided evenly between the Federal Peter R. Fisher, Executive Vice President, Federal Reserve System and the U.S. Treasury Depart- Reserve Bank of New York, and Manager for For- ment's Exchange Stabilization Fund (ESF). In eign Operations, System Open Market Account. other operations, the Mexican authorities drew a Claudia Corra was primarily responsible for total of $5 billion on their medium-term swap preparation of the report.1 facility with the ESF. The Bank of Mexico also renewed its short-term swaps with the Federal During the second quarter of 1995, the dollar rose Reserve and the ESF, each for $1 billion for an 0.6 percent against the German mark but it declined additional ninety days. 2.1 percent against the Japanese yen, 1.9 percent against the Canadian dollar, and 0.3 percent on a trade-weighted basis.2 The dollar, which had THE DOLLAR ENTERS THE QUARTER declined sharply during the first quarter of 1995 as UNDER PRESSURE expectations of higher U.S. interest rates subsided, remained under pressure through much of April. Toward the end of the first quarter the dollar contin- The dollar subsequently stabilized as diminished ued to reach successive all-time lows against the expectations of strong economic growth in Japan yen and proceeded to close the quarter at ¥86.50 and Germany prompted market participants to con- and DM 1.3735. Several factors weighing on the sider the prospect for lower interest rates in these dollar at that time carried over into the second two countries and as market participants began to quarter. First, increasingly strong rhetoric from focus on a G-7 communique released in late April. both sides surrounding the U.S.-Japan trade talks By June, foreign exchange market activity had on automobiles and parts, as well as press reports declined substantially as the dollar proceeded to that the United States was considering sanctions, settle into fairly narrow trading ranges despite appeared to herald a breakdown in the negotiations. increased volatility in U.S. interest rate markets. By Second, heavy dollar sales against the yen by Japathe end of the second quarter, the dollar had risen nese corporations and financial institutions contin- 2.8 percent and 6.1 percent from its historic lows ued in early April despite the April 1 start of the against the mark and the yen respectively. new Japanese fiscal year. Finally, market rumors of The U.S. monetary authorities intervened in dollar sales by Asian central banks added pressure the foreign exchange markets on three occasions on the U.S. currency. during the period—on April 3, April 5, and May 31—purchasing a total of $3.6 billion against U.S. MONETARY AUTHORITIES PURCHASE DOLLARS AGAINST THE MARK AND THE YEN 1. The charts for the report are available on request from Publications Services, Mail Stop 127, Board of Governors of the Federal Reserve System, Washington, DC 20551. On April 3, with the dollar trading at ¥86.50, the 2. The dollar's movements on a trade-weighted basis in terms of Federal Reserve Bank of New York's Foreign other Group of Ten (G-10) currencies are measured using an index Exchange Desk entered the market in Asian traddeveloped by staff at the Board of Governors of the Federal Reserve System. ing for the U.S. monetary authorities, purchasing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

833 $500 million against the yen from dealers in Tokyo, and ¥86.00. The Desk was joined in this operation Singapore, Hong Kong, and Sydney. The dollar by the Bundesbank and the Bank of Japan. Treasrallied briefly after the intervention but gave up ury Secretary Rubin confirmed the coordinated all of its gains by the New York open. At about intervention, stating, "In effect, what you have is a 11:20 a.m. in New York, the Desk entered the shared commitment to a strong dollar, because it is market again, buying $750 million against the mark in our interest and in the interests of the other and $250 million against the yen. The dollar-yen economies of the world." During the day, the U.S. operation was coordinated with the Bank of Japan. monetary authorities purchased $850 million Treasury Secretary Robert E. Rubin confirmed the against the mark and $250 million against the yen. operation, stating, "This Administration believes The dollar initially rallied on the intervention, a strong dollar is in America's interest, and we reaching intraday highs of DM 1.3860 and ¥86.63, remain committed to strengthening the fundamen- before drifting lower in thin afternoon markets to tals that are ultimately important to maintaining close essentially unchanged at DM 1.3720 and a strong and stable currency." Overall, the U.S. ¥86.01. monetary authorities purchased $1.5 billion during the course of the global trading day. However, the official purchases met sustained selling on any THE DOLLAR REACHES A NEW HISTORICAL rally, and the dollar ended the day slightly lower, at LOW AGAINST THE YEN DM 1.3722 and ¥86.10. On behalf of the U.S. monetary authorities, on After these operations in early April, the dollar April 5 the Desk again entered the market, at about continued to decline against the yen. Increasingly, 10:20 a.m., with the dollar trading at DM 1.3737 market participants viewed the sustained apprecia- 1. Foreign exchange holdings of U.S. monetary authorities, based on current exchange rates Millions of dollars 217.9 102.45 NOTE. Figures may not sum to totals because of rounding. 5. Valuation adjustments on peso balances do not affect profit and loss 1. Purchases and sales include foreign currency sales and purchases because the effect is offset by the unwinding of the forward contract at the related to official activity, swap drawings and repayments, and warehousing. repayment date. Note that the ESF does not mark-to-market its peso hold- 2. Calculated using marked-to-market exchange rates; represents the dif- ings, but the Federal Reserve System does. However, Mexico is obligated ference between the sale exchange rate and the most recent revaluation to maintain in dollar terms the value of ESF peso holdings resulting from exchange rate. Realized profits and losses on sales of foreign currencies, Mexican drawings under the Medium-Term Exchange Stabilization computed as the difference between the historic cost-of-acquisition exchange Agreement. rate and the sale exchange rate, are shown in table 2. 6. Interest receivables for the ESF are revalued at month-end exchange 3. Foreign currency balances are marked to market monthly at month- rates. Interest receivables for the Federal Reserve System are carried at cost end exchange rates. ;•: and are not marked-to-market until interest is paid. 4. See table 4 for a breakdown of Mexican swap activities. Note that the investment income on Mexican swaps is sold back to the Bank of Mexico. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

834 Federal Reserve Bulletin • September 1995 tion of the yen as a symptom of underlying struc- ters and central bank governors released the followtural problems in the Japanese economy. As a ing statement: result, they began to focus their attention on the need for new monetary, fiscal, and deregulatory The Ministers and Governors expressed concern about recent developments in exchange markets. They agreed measures from the Japanese authorities to stimulate that recent movements have gone beyond the levels domestic demand and spur import growth. To justified by underlying economic conditions in the major help stem the yen's rise, the Japanese authorities countries. They also agreed that orderly reversal of those unveiled an emergency economic plan on April 14. movements is desirable, would provide a better basis for That day the Bank of Japan also cut its official a continued expansion of international trade and investment, and would contribute to our common objectives of discount rate (ODR) 75 basis points, to 1 percent. sustained non-inflationary growth. They further agreed Despite the cut in interest rates, the dollar-yen to strengthen their efforts in reducing internal and exterexchange rate received little support from the pack- nal imbalances and to continue to cooperate closely in age as many dealers viewed the fiscal and deregula- exchange markets. tory measures as lacking in specifics. In addition, the absence of progress in the U.S.-Japan auto talks By the end of April the dollar reached led U.S. officials to raise publicly the possibility of DM 1.3855 and ¥84.15. imposing trade sanctions against Japan, adding In early May, international investors began to further downward pressure on the dollar. On unwind their long German mark positions estab- Wednesday, April 19, the dollar reached a new low lished during the first quarter, when exchange of ¥79.75. rate volatility had created a rush toward mark- The dollar also reached a period low that day of denominated assets. First, investors began to DM 1.3472 against the mark—close to the histori- increase their exposure to the higher yielding Eurocal low of DM 1.3438 reached on March 8, 1995. pean markets, particularly after pre-election uncer- Other factors weighing on the dollar-mark exchange rate included heightened political concerns ahead of the first round of the French presi- Net profits or losses (-) on U.S. Treasury dential election and regional elections in Italy, both and Federal Reserve foreign exchange operations, based on historical cost-of-acquisition exchange rates scheduled for April 23, which led to renewed Millions of dollars appreciation of the mark within Europe. Moreover, in the United States, expectations unwound for any further monetary tightening as a series of weakerthan-expected U.S. economic data releases— particularly declines in retail sales, industrial pro- Valuation profits outstanding as duction, and housing starts—appeared to signal a Mar. 31. 1995 Deutsche 3,747.2 1.569.8 clear slowdown in the pace of U.S. economic Japanese yen 3,520.5 4.939.9 growth. Total 7,267.7 6,509.8 1 Realized profits and losses from foreign currency sales,1 Mar. 31-June 30, 1995 THE DOLLAR BEGINS TO STABILIZE Deutsche i 259.0 196.6 Japanese yen 284.7 285.1 The dollar began to stabilize against both the mark Total 543.7 481.7 and the yen in late April and early May. First, the Valuation profits and losses on outstanding assets and liabilities, overhang of long-dollar positions against the yen, June 30, 1995* evident at the start of the period, apparently began Deutsche marks 3,433.5 1,342.0 Japanese yen ... 3,454.8 4.966.4 to dissipate. Second, anticipation of the April 25 Ibtal 6,888.3 6.308.5 meeting of G-7 finance ministers and central bank governors helped lift the dollar off its lows as NOTE. Figures may not sum to totals because of rounding. 1. As indicated in table 1. foreign currency sales totaled $2,100 million dealers began to speculate about the possibility of a against German Deutsche marks and $1,500 million against Japanese coordinated policy response to dollar weakness. yen. 2. Valuation profits or losses are not affected by peso holdings, which are Subsequent to the meeting, the G-7 finance minis- canceled by forward contracts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 835 tainties in Italy and France receded, and these flows turned quickly positive, a shift that encouraged helped weaken the mark within Europe. Second, some fresh dollar buying. On May 18 and 22, the portfolio managers, many of whom were under- dollar reached intraquarter highs of DM 1.4618 and weight U.S. assets, began to underperform their ¥87.72 respectively. benchmarks when the U.S. bond market rally accel- However, a lack of follow-through buying disaperated. As these investors, in turn, increased their pointed some market participants. The dollar was exposure to the U.S. market, the dollar moved also adversely affected by weaker-than-expected further off its lows. U.S. durable goods data and existing home sales Buoyed by these flows, the dollar remained data, which prompted market participants to specusteady despite further signs of weakness in the U.S. late on a possible interest rate ease by autumn. economy, particularly the April nonfarm payroll With market liquidity reduced because of holidays report, and associated speculation that the Federal in Europe, the dollar fell sharply on May 25 and Reserve might need to lower interest rates. Simi- 26, reaching DM 1.3740 and ¥82.45. larly, the dollar had little reaction to the May 10 announcement that, because of a breakdown in U.S.-Japan trade talks on automobiles and parts, G-10 COUNTRIES INTERVENE TO SUPPORT the United States would initiate sanctions against THE DOLLAR Japan. The dollar's ability to trade through these ostensibly negative developments suggested to On the morning of Wednesday, May 31, with the some market participants that, by early May, the dollar trading at DM 1.3850 and ¥82.70, the Desk dollar's recent problems had become fairly well entered the market in concert with the central banks discounted. of the other G-10 countries, purchasing dollars against marks and yen in an operation initiated by the U.S. monetary authorities. The U.S. monetary THE DOLLAR RALLIES SUDDENLY authorities' purchases totaled $500 million against the mark and $500 million against the yen. On May 11 and 12, several factors came together to The operation took the market by surprise, trigpropel the dollar higher. Early on May 11, the U.S. gering a shortcovering rally. Treasury Secretary House Budget Committee approved a series of Rubin confirmed the intervention as consistent with deficit reduction measures, causing some shortcov- objectives expressed in the G-7 communique of ering on increased optimism over the U.S. fiscal April 25. Market participants interpreted the operaoutlook. During the European trading session, hold- tion as a signal of increased coordination by the ers of short-dollar positions were further unnerved major central banks and a reflection of their mutual by market reports of dollar buying by some desire for a stronger dollar. The dollar closed the large Asian accounts. These factors helped lift the day at DM 1.4135 and ¥84.40. dollar through the technical resistance level of DM 13920, bringing the dollar to DM 1.4120 by the time the New York market opened. Later that THE DOLLAR TRADES IN NARROW RANGES morning, Bundesbank President Hans Tietmeyer AGAINST THE MARK AND THE YEN DURING said that both Germany and its partner economies MOST OF JUNE would suffer if the mark remained overvalued and added that, "We are not . . . interested in a sus- During June, the dollar settled in narrow trading tained currency overvaluation." The dollar subse- ranges of DM 1.3880 to DM 1.4200 and ¥84.00 to quently broke through the long-standing technical ¥85.50. Dealers became increasingly reluctant to resistance level of DM 1.4225, causing the dollar take risks, in part because of May's volatile dollar to spike higher as dealers scrambled to cover sub- moves but also because of fears of further coordistantial short-dollar positions. Over the two-day nated intervention ahead of the G-7 summit, held period, the dollar rose six pfennigs, to DM 1.4465, in Halifax, Canada, on June 15-17. While the G-7 and three yen, to ¥86.65. Buoyed by the dollar's Halifax communique offered no new initiatives on sharp rise, sentiment toward the U.S. currency the dollar, it endorsed the April statement of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Rtfec'-s'e rve Bank of St. Louis

836 Federal Reserve Bulletin • September 1995 G-7 finance ministers and central bank governors, demand and growing concerns over the health of which called for an "orderly reversal" of the dol- Japan's banking system prompted fears that Japan lar's decline. would slip back into recession. Increased uncertainty over the near-term outlook Throughout June, market participants increasfor interest rate differentials with Germany and ingly took the view that the United States would Japan also kept the dollar pinned in narrow trading impose trade sanctions on Japan on June 28, as ranges. The surprisingly weak May nonfarm pay- announced in early May. Despite this possibility, roll number released on June 2 reinforced market the dollar-yen exchange rate traded with a steady perceptions of slower U.S. economic growth and tone, in part, because market participants were increased market participants' expectations of an unable to reach a consensus on the ultimate impact ease in U.S. monetary policy. At the same time, of sanctions. Some viewed the likely imposition of market participants also began to focus on the sanctions as negative for the dollar, while others prospects for rate cuts in Germany and Japan. held the opposite view, expecting that sanctions In Germany, weak industrial production data for would effect a faster reduction in the Japanese February and M3 data for the first quarter intro- trade surplus. The dollar briefly rallied after the duced the idea of a possible Bundesbank ease June 28 agreement between the United States and before the Bundesbank council's midsummer Japan on automobiles and parts but soon gave up recess. In Japan, continued signs of stagnant its gains as dealers came to view the commitments involved as insufficient to materially reduce Japan's trade surplus. The dollar closed the quarter 3. Currency arrangements at DM 1.3812 and ¥84.65. Millions of dollars MEXICAN FINANCIAL MARKETS FIND A FEDERAL RESERVE RANGE OF STABILITY RECIPROCAL ARRANGEMENTS 250 0 1,000 * : of Canada 2.000 Over the period, Mexican financial markets recov- 250 ered substantially as the economy began to show Bank of England 3,000 Bank of France 2,000 the effects of tough monetary and fiscal policies Deutsche Bundesbank 6,000 J » o anK • o X* t Italy I 3.000 and as some foreign investors cautiously returned 5,000 0 Bank of Japan J Bank of Mexico' 3,000 1,000 Regular swaps 3,000 Temporary swaps .. 500 4. Drawings and repayments (-) by Mexican monetary Netherlands Bank .... Bank of Norway 250 authorities Bank of Sweden 300 4,000 Millions of dollars Swiss National Bank . for International Settlements against Swiss francs 600 against other auth 1,250 1' 55,400 1,000 Reciprocal currency arrangements with U.S. TREASURY the Federal Resent EXCHANGE Bank of Mexico STABILIZATION FUND Bundesbank 1,000 0 of Mexico1 Regular swaps .......... 3,000 1,000 Currency arrangements " Mexican States with the U.S. Treasury 8,000 Exchange Stabilization Fund 9,000 Bank of Mexico (regular) 1. Facilities available to Mexico comprise regular and temporary shortterm swaps between the Bank of Mexico and both the Federal Reserve and Medium-term the ESF, as well as medium-term swaps and government guarantees between the government of Mexico and the ESF. The total amount available from NOTE. Data are on a value-date basis. both medium-term swaps and government guarantees is $20 billion, less any 1. Drawing of February 2 was renewed on May 3 for an additional ninety outstanding drawings on the short-term facilities. days. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 837 to the Mexican markets. The Mexican peso stead- quarter at Can$ 1.3990, reached a period high of ied for the first time since the December 1994 Can$ 1.3475 on May 15. devaluation, appreciating approximately 7.5 per- On May 8, the Bank of Canada began to ease cent against the dollar during the quarter. Mexico's monetary policy after a succession of weaker-than- Indice de Precios y Cotizaciones stock market expected Canadian economic data releases. Over index recovered as well, rising 19.8 percent in local the period, the call money target range declined a currency terms. Nominal interest rates fell dramati- cumulative 75 basis points, to 7.00-7.50 percent. cally, reflecting diminished inflation expectations. Initially pressured by the easier monetary policy Mexico's inflation rate peaked in April and then stance, the Canadian dollar withstood the successtarted to decline, prompting most market analysts sive declines in interest rates and proceeded to to anticipate further declines later this year. consolidate in a range of Can$1.3720-Can$ 1.3820. MEXICAN SWAP ACTIVITY TREASURY AND FEDERAL RESERVE FOREIGN EXCHANGE RESERVES The Mexican authorities drew $3 billion on April 19 and $2 billion on May 19 on their The U.S. monetary authorities intervened three medium-term facility with the ESF, bringing the times during the period, buying a total of $1.5 biltotal amount drawn by Mexico under the Medium- lion against yen and $2.1 billion against marks. On Term Exchange Stabilization agreement to $8 bil- all three occasions, intervention operations were lion. In addition, on May 3, the Bank of Mexico divided evenly by the Federal Reserve System and renewed its short-term swaps with the ESF and the the ESF. Federal Reserve System for an additional ninety At the end of the period, the current values of the days, each for $1 billion. foreign exchange reserve holdings of the Federal Reserve System and the ESF were $24 billion and $29.1 billion respectively. The U.S. monetary CANADIAN MONETARY POLICY EASES authorities regularly invest their foreign currency balances in a variety of instruments that yield Canadian financial markets performed positively market-related rates of return and have a high over the period, as concerns over the federal budget degree of liquidity and credit quality. A portion of deficit and fears of Quebec independence receded. the balances is invested in foreign-government- The April 12 decision by Moody's to downgrade issued securities. As of June 30, the Federal the federal government's foreign currency debt to Reserve System and the ESF held, either directly Aa2 from Aal, and its domestic debt to Aal from or under repurchase agreement, $9.8 billion and Aaa, was largely anticipated and had little market $13.5 billion respectively in foreign-governmentimpact. The Canadian dollar, having opened the issued securities. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

838 Industrial Production and Capacity Utilization for July 1995 Released for publication August 15 jumped 3.6 percent owing to abnormally high temperatures through much of the month; mining out- Industrial production was little changed in July for put increased 1 percent. The decline in manufactura third consecutive month. Manufacturing output ing was led by a 3.2 percent drop in the output of decreased 0.2 percent, but the output of utilities motor vehicles and parts, but the output of many Industrial production indexes Twelve-month percent change Twelve-month percent change 10 10 Materials 5 5 Products 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 ^^ 100 100 —^ Production s—-—Production 80 80 II 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 1 1 1 1 1 1 1 i i i i i i i i i i i i i i 1981 1983 1985 1987 1989 1991 1993 1995 1981 1983 1985 1987 1989 1991 1993 1995 All series are seasonally adjusted. Latest series, July. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

839 Industrial production and capacity utilization, July 1995 Industrial production, index, 1987=100 Percentage change CCCCaaaatttteeeeggggoooorrrryyyy 11999955 19951 JJuullyy 11999944 ttoo Apr.' May/ June' JulyP Apr.' May' June' JulyP JJuullyy 11999955 TTTToooottttaaaallll 121.2 121.2 121.1 121.3 -.6 .0 -.1 .1 2.6 PPPPrrrreeeevvvviiiioooouuuussss eeeessssttttiiiimmmmaaaatttteeee 121.1 120.9 121.0 -.7 -.1 .1 MMMMaaaajjjjoooorrrr mmmmaaaarrrrkkkkeeeetttt ggggrrrroooouuuuppppssss PPPPrrrroooodddduuuuccccttttssss,,,, ttttoooottttaaaallll2222 118.0 118.0 118.1 118.1 -.7 .0 .1 .0 1.6 CCCCoooonnnnssssuuuummmmeeeerrrr ggggooooooooddddssss 114.4 114.2 114.2 114.2 -.5 -.2 .0 .0 .8 BBBBuuuussssiiiinnnneeeessssssss eeeeqqqquuuuiiiippppmmmmeeeennnntttt 154.9 154.9 156.0 156.5 -.6 -.1 .7 .4 6.6 CCCCoooonnnnssssttttrrrruuuuccccttttiiiioooonnnn ssssuuuupppppppplllliiiieeeessss 108.6 107.3 107.4 106.5 -1.8 -1.1 .1 -.8 -1.3 MMMMaaaatttteeeerrrriiiiaaaallllssss 126.1 126.2 125.8 126.3 -.5 .1 -.3 .4 4.0 MMMMaaaajjjjoooorrrr iiiinnnndddduuuussssttttrrrryyyy ggggrrrroooouuuuppppssss MMMMaaaannnnuuuuffffaaaaccccttttuuuurrrriiiinnnngggg 123.3 123.2 123.1 122.8 -.7 -.1 -.1 -.2 2.6 DDDDuuuurrrraaaabbbblllleeee 130.4 130.1 130.5 130.2 -.9 -.3 .3 -.2 4.0 NNNNoooonnnndddduuuurrrraaaabbbblllleeee 115.4 115.5 114.8 114.6 -.4 .1 -.6 -.3 .8 MMMMiiiinnnniiiinnnngggg 100.7 100.6 100.9 101.9 .5 -.1 .3 1.0 1.8 UUUUttttiiiilllliiiittttiiiieeeessss 118.0 120.3 119.2 123.5 -.7 1.9 -.9 3.6 3.8 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1994 1995 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, JJJuuulllyyy 111999999444 11996677--9944 11998822 11998888--8899 tttooo July Apr.' May' June' JulyP JJJuuulllyyy 111999999555 Total 82.0 71.8 84.9 84.1 84.1 83.9 83.6 83.4 3.4 Previous estimate 84.1 83.7 83.5 Manufacturing 81.3 70.0 85.2 83.3 83.5 83.1 82.8 82.3 3.8 Advanced processing 80.7 71.4 83.5 81.5 81.8 81.4 81.3 80.9 4.3 Primary processing 82.5 66.8 89.0 87.7 88.0 87.5 86.5 85.8 2.6 Mining 87.4 80.6 86.5 89.8 90.4 90.3 90.6 91.5 -.1 Utilities 86.7 76.2 92.6 88.0 86.4 87.9 87.1 90.0 1.4 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. other industries also decreased significantly. Gains laneous consumer goods. The production of nonat producers of electrical machinery, industrial durable consumer goods increased 0.4 percent, a machinery and computer equipment, and paper rise that was more than accounted for by the helped stanch the decline. Small offsetting revi- increase in electricity sales; decreases in the output sions were made to the output growth estimates of clothing and tobacco products limited the gain. for April to June. At 121.3 percent of its 1987 The production of business equipment picked up average, industrial production in July was 2.6 per- 0.4 percent, again led by significant gains in the cent above its level of July 1994. Capacity utiliza- output of information processing and related equiption decreased 0.2 percentage point in July, to ment; the production of industrial equipment also 83.4 percent. posted a small gain. The output of transit equip- When analyzed by market group, the data show ment fell off sharply in July, with decreases in the that the output of consumer goods was unchanged output of trucks and aircraft and related equipment. in July, as a gain in residential sales by electric The production of other types of business equiputilities was largely offset by a decline in consumer ment edged down. The output of construction suptruck production. Despite an increase in the produc- plies fell; cutbacks occurred in lumber products tion of appliances, the output of consumer durable and fabricated metal products. goods other than automotive products decreased The output of durable and nondurable goods 0.5 percent, with weakness in furniture and miscel- materials was little changed, whereas the surge in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

840 Federal Reserve Bulletin • September 1995 electricity generation pushed the growth in energy machinery has risen 13.1 percent. Most nondurable materials to 1.7 percent. Among durable goods goods industries cut production in July; only the materials, decreases in metals and in motor vehicle production of paper products, which rebounded parts and related equipment were offset by further from a large drop in June, showed a sizable strong gains among electronics components. increase. Among nondurables, the output of paper materials The factory operating rate fell 0.5 percentage partly retraced its June loss, but the production of point in July, retreating further from the peak textile materials fell further. attained around the turn of the year. Last month's When analyzed by industry group, the data show rate, 82.3 percent, is the lowest rate since February that factory output fell 0.2 percent in July, with 1994 but remains 1 percentage point above the decreases at manufacturers of both durable and 1967-94 average. The rate for advanced-processing nondurable goods; manufacturing production last industries has declined about 2 percentage points increased in January. Several major durable goods since its recent peak, while utilization for primaryindustries experienced decreases of 1 percent or processing industries has fallen 5 percentage more; these industries included transportation points. The largest decreases in operating rates equipment, primary metals, fabricated metals prod- since last December have occurred in motor ucts, lumber and products, and miscellaneous vehicles and parts, primary metals, lumber, textiles, manufactures. Another strong advance in the out- apparel, rubber and plastics products, and leather put of computers contributed to an increase of and products. about 1 percent in industrial machinery and equip- The initial estimate of the July operating rate at ment; a rise in semiconductor and appliance output utilities was 90 percent, its highest level this year contributed to a 2.2 percent increase in electrical and just above last year's peak. Gains in coal machinery. Over the past twelve months, the pro- mining and in oil and gas extraction contributed to duction of industrial machinery and equipment has an increase of nearly 1 percentage point in the increased 9.4 percent, and the output of electrical operating rate for mining. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

841 Statements to the Congress Statement by Edward W. Kelley, Jr., Member, Board sentations are quite different for notes and coins, in of Governors of the Federal Reserve System, before substance: the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, July 13, 1995 • Both issuing coins and issuing currency notes lower the government's effective cost of borrowing The Board of Governors is pleased to have the from the public, by approximately the value of the opportunity to present its views on S.874, which coin or currency notes in circulation times the would provide for substituting a $1 coin for the interest rate that the government pays on its debt. $1 bank note now in circulation and on several • There is an offsetting cost to the government benefits and costs of making such a replacement. associated with servicing the outstanding circu- In summary, a $1 coin would produce a substan- lating coins or notes, which involves replacing tial budgetary gain for the federal government, "unfit" coins and notes as they wear out and operprovided that the $1 note is withdrawn from circu- ating the Federal Reserve currency and coinlation. The Board's staff estimates that the gain processing facilities that provide the public with would be about $2.28 billion, in nominal terms, good-quality, genuine coins and notes. during the first five years after introduction of the new coin and would average about $456 million Let us start with the following assumptions to per year, in real discounted present value terms, illustrate the budget and accounting processes: over the assumed thirty-year life of the $1 coin. (1) the Treasury's borrowing rate is 5.5 percent; The Board believes, however, that the convenience (2) 7 billion $1 notes will already be in circulation and needs of the American public, as well as cost at the time of the changeover; (3) $1 notes have savings, should weigh heavily in this decision. a useful life of one and one-half years and cost Experience in Canada and other countries where 3.8 cents each to produce; (4) $1 coins would have similar changes have been made in recent years a useful life of thirty years and cost 8 cents each to suggests that the public will, over time, find a produce; and (5) $1 notes and $1 coins would cost $1 coin more convenient than the $1 note. Finally, 75 cents and 30 cents per thousand pieces respecwe would note that the significance of the U.S. tively to be processed at Federal Reserve Banks. dollar goes beyond the purchasing power it repre- In the issuance of currency notes, the reduction sents or the utility it provides; for Americans, the in net governmental borrowing from the public dollar is a symbol of economic and political stabil- occurs indirectly. The federal government's total ity and a source of national pride; consequently, borrowing and total interest outlays are not any change should be made only for the most affected, but the Federal Reserve System holds a compelling reasons. If, after taking account of all portfolio of government securities equal to the these considerations, the Congress is inclined value of Federal Reserve notes outstanding, and, at toward replacing the $1 note, it should enact legis- the margin, the Federal Reserve returns to the lation with a reasonably delayed effective date so Treasury its full earnings on those securities. These that all those affected can plan adequately for the earnings are, from the Treasury's viewpoint, a transition. return of its own interest outlays.1 The effect on the federal budget of issuing coins and currency notes is not widely understood by • In our simplified model, the $7 billion of outthe public, so it may be useful to devote a part of this statement to reviewing those fundamentals. 1. The federal government budget accounts treat Federal Although the accounting processes and budget pre- Reserve earnings paid to the Treasury as a miscellaneous receipt. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

842 Federal Reserve Bulletin • September 1995 standing $1 notes provides a gross benefit to the $334 million per year, considerably higher than Treasury of $385 million per year.2 that for an equal number of currency notes.11 • The cost of servicing the $1 note issue is the cost of replacing each note every one and one-half At this point in the analysis, replacing $1 notes years, or $177 million per year,3 and of processing with $1 coins would have a favorable effect on the it 1.3 times per year at Reserve Banks, or $7 mil- governmental budget of $133 million per year.12 lion per year.4 However, such a replacement would have a further, and even more significant, benefit. Based on the Thus the net benefit to the Treasury associated with experience of numerous countries that have made a 7 billion of outstanding $1 notes is $201 million comparable substitution, as reported by the General per year.5 Accounting Office, the government can expect to In the issuance of coins, the reduction in net issue at least twice as many $1 coins as it would governmental borrowing from the public occurs have issued $1 notes.13 (This may result partly directly. When the Treasury deposits newly minted from the habit of many people to save their pocket coins at Federal Reserve Banks, it receives credit to change at the end of the day, partly from the stock its checking account, and thus the government is of uncollected coins in a larger number of vending able to make budgeted expenditures without addi- machines, and partly from a tendency for banking tional borrowing, in the amount of the face value of and retail establishments to hold larger quantities the newly deposited coins less their production cost of coins than of notes because of higher transporta- (which amount we call "seigniorage").6 tion costs.) In our simplified model, doubling the number of $1 coins in circulation would add another $334 million per year to the Treasury's • Seven billion new $1 coins would reduce the benefit, for a total benefit of $467 million.14 federal government's total borrowing $6.44 billion7 and total interest outlays $354 million per The simplified model, of course, does not fully year,8 a gross benefit not much different from the reflect the real world. There are factors that would gross benefit from 7 billion notes. both increase and decrease the $467 million annual • But the cost of replacing each coin every thirty benefit shown above. In particular, growth in years would be only $19 million per year9 and of the volume of $1 currency pieces outstanding— processing $1 coins at Reserve Banks 0.2 times historically, more than 4 percent per year—would, only $1 million per year.10 over time, considerably increase the benefit of substituting coins for notes. On the other hand, some Thus the net benefit to the Treasury associated with increase in the use of $2 notes by the public seems 7 billion of outstanding $1 coins would be very likely if the $1 note is no longer issued, and any such increase would reduce the budgetary gain. In addition, the production cost for higher- 2. $7 billion x 5.5 percent. 3. 7 billion notes -s- 1.5 x $.038. denomination notes would rise because fixed costs 4. 7 billion notes x 1.3 x $.00075 ($.75 per 1,000 pieces ). at the Bureau of Engraving and Printing would be 5. $385 million - $177 million - $7 million. spread over a smaller production volume. ($1 notes 6. The budgetary accounting process for coin production sometimes gives rise to the belief that the booking of seigniorage per se account for nearly 50 percent of the total annual reduces the Treasury's borrowing requirement. This is not so. It is currency note production.) being able to spend the newly minted coins that reduces the Treasury's need to borrow. Such spending seldom occurs directly, of course; the Treasury ordinarily deposits newly minted coins at 11. $354 million - $20 million. Federal Reserve Banks for credit to its checking account. Reserve 12. $334 million - $201 million. Banks accept only as many new coins as they expect to need to 13. In six countries that replaced a note valued at about $1 with meet the requirements of depository financial institutions in their a coin, the General Accounting Office found coin-for-note replace- Districts. ment rates ranging from 1.6 to 1 to 4 to 1. General Accounting 7. $7 billion face value - $560 million production cost. Office, National Coinage Proposals, Limited Public Demand for 8. $6.44 billion x 5.5 percent. New Dollar Coin or Elimination of Pennies (GAO, May 1990), 9. 7 billion coins 30 x $.08. p. 39. 10. 7 billion coins x 0.2 x $.00030. Note that $1 notes are 14. An attachment to this statement summarizes these effects typically deposited at Federal Reserve Banks an average of and is available from Publications Services, Mail Stop 127, Board 1.3 times per year. We expect that $1 coins would be deposited of Governors of the Federal Reserve System, Washington, DC only 0.2 times. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 843 Taking account of these additional factors, the of the public should also weigh heavily in this Board's staff estimates that, in the first five years of decision. In this regard, opinion surveys indicate the implementation, the federal government budget that the American public generally is satisfied with position would be improved by a total of $2.28 bil- the present currency system and may not initially lion (in nominal terms). The average yearly gain welcome replacing the $1 note. There is evidence in real present-value terms, over the assumed in the experience of other countries including Canthirty-year life of a $1 coin is estimated to be ada, however, that over time a $1 coin would come $456 million.15 to be recognized as more convenient, cleaner, and There are other factors that could substantially more efficient than the $1 note. add to the gains of such a substitution but that are If designed properly, a $1 coin may well be able inestimable and so are not included in our calcula- to evoke confidence in the currency system and be tions. For example, there is likely to be a very a source of national pride to the same extent that considerable numismatic, or sentimental, collecting the $1 note does now. Market testing, such as with of $1 notes as a result of an announcement that focus groups, can help to achieve this result. they soon would no longer be issued (although $1 If this committee decides to move forward with notes would continue to be legal tender). $1 coin legislation, you should be aware that S.874 These gains are unlikely to be achieved, how- would not, in our view, provide enough preparation ever, if the $1 note is not withdrawn from circula- time for those most involved—the Nation's banktion. First of all, many people, at least initially, ing and retail establishments, the Treasury Bureaus would continue to prefer the note if given a choice. of the Mint and of Engraving and Printing, and the That being true, the private sector (notably banking Federal Reserve Banks. We have two concerns. and retail establishments), not knowing how exten- First, any legislation should, in our view, give sively the public would use the $1 coin, would be the mint adequate time in which to be certain that reluctant to make the infrastructure outlays neces- the coin design will meet the needs of users well sary for the coin to succeed (training employees on into the next century. This change has both physinew cash-register-drawer procedures, ordering of cal and aesthetic design implications and presum- $1 coin inventories, new arrangements with finan- ably would require considerable market testing. cial institutions, and the like). Likewise, the public Closely related is the need for adequate time in would refrain from using the new coin if the retail which to produce a large stock of new $1 coins sector were not prepared.16 In the meantime, the once the design is approved. In our view, any public sector (particularly the Bureau of Engraving legislation should give the Treasury Department a and Printing, the Bureau of the Mint, and the good deal of freedom to set the mint's production Federal Reserve System; perhaps also the Postal schedule so as to optimize costs and resource usage Service and mass transit systems), not knowing at the mint, the Bureau of Engraving and Printing, what the respective demands would be for $1 notes where the effect on bank note production will be and coins, and wanting to be able to meet any substantial; at the Federal Reserve Banks, which likely demand, would inevitably overinvest in pro- will need to adjust considerably their capacity for duction and processing capacity. processing notes and coins as well as draw down As important as the budgetary gains would be, their inventories of $1 notes; and at commercial the Board believes that the convenience and needs banks and retail establishments. Eighteen months, as S.874 provides, would not be enough time for this planning and production. The Board believes 15. The thirty-year estimate uses an inflation rate of zero, a that any legislation should provide at least thirty- Treasury borrowing rate of 3 percent, and a rate for discounting six months. future values to the present of 3 percent. The advantage of expressing the longer-run financial effects in real present-value terms is Our second concern is with the requirement in that it adjusts for inflation and the time value of the magnitudes S.874 that the Federal Reserve discontinue orderinvolved. ing and paying out $1 Federal Reserve notes imme- 16. For an excellent treatment of "network externalities" in currency systems, see John P. Caskey and Simon St. Laurent, "The diately upon introduction of the $1 coin. The length Susan B. Anthony Dollar and the Theory of Coin/Note Substitu- of time in which the Federal Reserve must pay out tions," Journal of Money, Credit, and Banking, vol. 26 (August both coins and notes would be a function not only 1994, Part 1), pp. 495-510. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

844 Federal Reserve Bulletin • September 1995 of the mint's production capacity but also of other A reasonable approach may be for the Congress variables, such as the substitution rate of $1 coins to explore thoroughly the implications—for the for $1 notes and the public's demand for $2 notes, federal budget, for the convenience and needs of that could not be predicted accurately in advance. the public, and for the public's feelings toward the The Board believes that any legislation should give currency—of replacing the $1 note with a coin. If the Federal Reserve freedom to adjust the timetable the Congress judges that the balance of considerfor discontinuing the issuance of $1 notes within a ations weighs in favor of replacing the note, it period of two years after introduction of the new should adopt legislation as promptly as possible $1 coin. that would establish dates in the future for introduc- Moreover, beginning in 1996, the Treasury and ing the new $1 coin, say in about three years, and the Federal Reserve will begin a multiyear intro- for no longer issuing $1 notes, say within two years duction of new designs for Federal Reserve notes after that. In that way, both the public and private that will be completed (with the introduction of a sectors would have a sound basis for beginning newly designed $5 note) in about 1999. It would be immediately to plan for the change. • preferable that these important changes not occur contemporaneously with the introduction of a $1 coin. Statement by Alan Greenspan, Chairman, Board of Reflecting market pressures, prices of raw materi- Governors of the Federal Reserve System, before als and intermediate goods had already risen conthe Subcommittee on Domestic and International siderably, and a surge in the prices of a variety of Monetary Policy, Committee on Banking and imported goods could be expected to follow the Financial Services, U.S. House of Representatives, weakening in the dollar through early 1995. July 19, 1995 Monetary policy tightenings over the previous year had been designed to foster the type of mod- I am pleased to appear today to present the Federal eration in final demand that would help damp infla- Reserve's semiannual report on monetary policy. tion pressures going forward and sustain the eco- In February, when I was last here for this purpose, nomic expansion. When we began the policy- I reported that the U.S. economy had turned in a tightening process, we knew the previous drags on remarkable performance in 1994. Growth had been the economy stemming from balance sheet stresses quite rapid, reaching a torrid pace by the final and restraints on lending were largely behind us. quarter of the year, when real gross domestic prod- But that still did not make it a simple matter to uct rose at a 5 percent annual rate and final sales gauge just what degree of firming in reserve market increased at a 53/4 percent rate. Inflation had conditions would be necessary to produce a finanremained subdued through year-end, although pro- cial environment consistent with sustainable ecoductive resources were stretched: The unemploy- nomic growth. In the event, the federal funds rate ment rate had fallen to its lowest level in years, was raised to 6 percent, as the surprising strength in while manufacturing capacity utilization had been the economy and associated pressures on resources pushed up to a historically high level. required a degree of monetary policy restraint to As I indicated in February, a slowing of eco- ensure that inflation would be contained. nomic growth to a more sustainable pace, with Fortunately, we started the tightening process resource use settling in around its long-run poten- early enough and advanced it far enough that tial, was required to avoid inflationary instabilities monetary restraint began to bite before some potenand the adverse consequences for economic activ- tial problems could assume major proportions. ity that would invariably follow. After having With inadequate monetary restraint, aggregate posted three straight years of consumer price demand could have significantly overshot the increases of less than 3 percent for the first time in economy's long-run supply potential and created decades, inflation seemed poised to move upward. serious inflationary instabilities. Moreover, the per- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 845 ceived capacity constraints and lengthening deliv- capital equipment components have weakened but ery times that come with an overheated economy not enough to have had more than modest effects could have fostered the development of more seri- on production. Prices of key inputs also suggest ous inventory overaccumulation. In such circum- that demand so far is holding up and the inventory stances, the longer the moderation in output growth correction is contained. The price of steel scrap, for is delayed, the larger will be the inventory over- example, has not fallen, and spot prices of nonhang and the more severe will be the subsequent ferrous metals on average have stabilized recently production correction. As hoped, final sales slowed after considerable weakness in the first part of the appreciably in the first quarter of this year, but year. Though still lethargic, the behavior of marinventory investment did not match that slow- kets for durable goods materials and supplies ing, and overall inventory-sales ratios increased scarcely evidences the type of broader inventory slightly. Although the aggregate level of inven- liquidation that has usually been at the forefront of tories remained modest, a few major industries, the major inventory recessions of the past. such as motor vehicles and home goods, found At the finished goods level, we experienced themselves with substantial excesses. Attempts to significant inventory liquidation in both cars and control inventory levels triggered cutbacks in trucks in May and June. We do not have comorders and output that inevitably put a damper on prehensive, up-to-date inventory evaluations for employment and income. recent months as yet, but inferring what we can How the ongoing pattern of inventory invest- from scattered and partial data, the prospects seem ment unfolds is a crucial element in the near-term reasonably good for a reduction in inventory outlook for the economy. Production adjustments investment that moves us a considerable way could fairly quickly shut off unintended inventory toward eliminating unwanted stocks. accumulation without a prolonged period of slack That process and the longer-run outlook for the output—one that could adversely affect personal economy depend ultimately on the behavior of final incomes and business profitability, which, in turn, sales. In that regard, the slowing of the growth of could undermine confidence and depress spending final sales that began in the first quarter seems to plans. Under these conditions, final sales should have continued a little further in the second quarter. continue to grow through and beyond the inventory Combining final sales and the likely reduced correction, leading to sustained moderate economic second-quarter pace of inventory investment, the expansion. But a less favorable scenario certainly level of overall domestic production of final goods cannot be ruled out. The inventory adjustment and services, or real GDP, evidently changed little could be extended and severe enough to drive last quarter. down incomes, disrupt final demand, and set in Going forward, the most probable of the several motion a period of weak growth or even a recession. credible outlooks is for an upturn in the growth rate Useful insights into how an inventory correction of final sales and real GDP over the rest of this year is proceeding can often be gained by evaluating and a moderate pace of expansion next year with developments in industries that supply producers of the economy operating in the neighborhood of its final durable products with key primary inputs— potential. One area of improvement should be our such as steel, aluminum, and capital equipment external sector. A significant downside risk when components and parts. This is because inventory I testified in February related to the situation in adjustments are often larger in durable goods and Mexico. The economic contraction in that country they become magnified at progressively earlier and the depreciation of the peso did act to depress stages in the production process. Typically, when our net exports in the first half of the year. But with purchasing managers for firms producing durable the external adjustment of the Mexican economy goods find their inventories at excessive levels, apparently near completion, this drag should be they reduce orders for materials and also for com- largely behind us. Moreover, our trade with the rest ponents of capital goods, and as a consequence of the world should begin to impart a positive suppliers shorten promised delivery times and cut impetus to our economic activity, partly because of back on production. In the current instance, domes- the strong competitive position of U.S. goods in tic orders for steel and aluminum and for some world markets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

846 Federal Reserve Bulletin • September 1995 Regarding domestic final demand, financial 5Vi percent in February to 53A percent to 6Vs perdevelopments so far this year should provide cent. This outlook for unemployment has been important support over coming quarters. Interest extended through next year as well. Increases in rates, especially on intermediate- and long-term employment costs to date have been modest, and instruments, have fallen a great deal since last fall, labor compensation evinces few signs of exacerbatin reaction to the improved fiscal outlook, the ing inflation pressures, although the recent unusueffects on inflation expectations of our earlier ally favorable behavior of benefit costs is unlikely monetary tightening, and, of course, recently, the to continue. Declines in industrial output over slowed economy. Lower interest rates have helped recent months have already eased factory utilito buoy stock prices, which have soared ever zation rates closer to their long-term averages. higher. The positive implications of the rally in Reflecting a slowing in foreign industrial econofinancial markets for household debt-service mies as well as in the United States, the earlier burdens and wealth and for the cost of capital to surge in prices of materials and supplies has businesses augur well for spending on consumer tapered off. Moreover, the stability of the exchange durables, on housing, and on plant and equipment. value of the dollar in recent months bodes well for These influences should be reinforced by the gener- an abatement of the recent faster increase in import ally strong financial condition and the willingness prices. to lend of depository institutions, as well as the Against this background, most governors and receptiveness of capital markets to offerings of presidents see lower inflation over coming quarters debt and equity. than that experienced in earlier months of 1995. Early signs of a little firming in consumer The central tendency for this year's four-quarter durables spending are already visible in the stabili- rise in the consumer price index (CPI) is 3V& to zation of the motor vehicles sector. Residential 33/s percent. And for next year, the central tendency construction has also started to revive, judging by suggests that CPI inflation will be shaved to 27/s to the recent data on home sales and mortgage appli- 3V4 percent. cations. Unfilled orders are sizable in the capital The success of our previous policy tightenings in goods area, suggesting business investment in damping prospective inflation pressures set the equipment will continue growing, albeit perhaps stage for our recent modest policy easing. Because more slowly than in the recent past. Finally, ris- the risks of inflation apparently have receded, the ing permits suggest expansion in nonresidential previous degree of restriction in policy no longer construction. seemed needed, and we were able at the last meet- An outlook embodying a resumption of moder- ing of the Federal Open Market Committee ate economic growth is conveyed by the central (FOMC) to reduce the federal funds rate lA percenttendencies of the expectations of the Federal age point, to around 53A percent. Reserve governors and Reserve Bank presidents Indeed, inflation pressures were damped somefor real GDR After the second-quarter pause, a what more quickly than we might have expected. projected pickup in activity in the second half This experience underlines the uncertainties and would put output growth over the four quarters of risks in any forecasting exercise. The projections of the year in the neighborhood of Wi to 2 percent. the governors and presidents are for a rather benign For next year, projections of real GDP growth outlook, as are the views of many private sector center on 2Vi percent. forecasters. But these expectations cannot convey The inflation picture is less worrisome than when the risks and subtleties in the developing economic I testified six months ago, just after our last policy situation. tightening. Demands on productive resources A month or so ago, I noted publicly that a should press less heavily on available capacity in moderation in growth was both inevitable and the future than we envisioned in February. This desirable but that the process could not reasonably prospect is evident in the central tendency of the be expected to be entirely smooth and that accordexpectations of the governors and presidents for ingly the risks of a near-term inventory-led recesthe unemployment rate in the fourth quarter of this sion, though small, had increased. More recent year, which has been revised up from about evidence suggests that we may have passed the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 847 point of maximum risk. But we have certainly not purely technical upward revision to the M3 range. yet reached the point at which no risk of undue Last February's Humphrey-Hawkins testimony economic weakness remains. We do not as yet fully and report had noted the potential need for such a understand all the reasons for the degree of slowing revision to this year's M3 range. Starting in 1989, in economic activity in the first half of the year, so the restructuring of thrift institutions and the diffiwe need to be somewhat tentative in our projec- culties facing commercial banks depressed their tions of a rebound. Imbalances seem to be limited; lending and their need for managed liabilities. The financial conditions should be supportive of spend- FOMC responded by reducing the upper and lower ing; and businesses and consumers are largely bounds of the range for M3 to below those of the optimistic about the future. Nonetheless, questions M2 range. This year, M3 growth has begun to remain about the strength of demand for goods and significantly outpace that of M2, as it did for sevservices, not only in the United States but abroad as eral decades before 1989. Overall credit flows have well. picked up some, and a higher proportion has gone Upside risks to the forecast can also be readily through depositories. As a consequence, while M2 identified, particularly if the inventory correction is and debt remain within their respective annual masking a much stronger underlying economy than ranges, M3 has appreciably overshot the upper end that which appears from other evidence to be the of its range. The 2 percentage point increase in the case. If so, spending could strengthen appreciably, upper and lower bounds of the M3 range, to 2 perespecially in light of the very substantial increases cent to 6 percent, was made in recognition of the in financial market values so far this year. evident return this year to a more normal pattern of In a transition period to sustainable growth such M3 growth. The ranges specified for M2, M3, and as this, reactions to unexpected events may be debt this year also were provisionally carried over especially pronounced. This is not a time for the to 1996. The Committee stressed that uncertainties Federal Reserve to relax its surveillance of, and about evolving relationships of these variables to efforts to analyze, the evolving situation. The Fed- income continued to impair their usefulness in eral Reserve must do its best to understand devel- policy. oping economic trends. Although we cannot expect In summary, the economic outlook, on balance, to eliminate cyclical booms and busts—human is encouraging, despite the inevitable risks. The nature being what it is—we should nonetheless try U.S. economy rests on a solid foundation of entrewhere possible to reduce their amplitude. preneurial initiative and competitive markets. With Some observers have viewed prospective year- the cyclical expansion more than likely to persist in by-year budget-deficit reduction as constituting an the period ahead, the circumstances are particularly important downside risk to the economy. I do not opportune for pressing forward with plans to instishare this concern. In response to fiscal consolida- tute further significant deficit reduction. By raising tion, financial markets provide an important shock the share of national saving available to the private absorber for the economy. Declines in long-term sector, such actions should foster declines in real rates help stimulate private, interest-sensitive interest rates and spur capital accumulation. Higher spending when government spending and transfers levels of capital investment, in turn, will raise the are reduced. Clearly, the Federal Reserve will have growth in productivity and living standards well to watch this process carefully and take the likely into the next century. effects of fiscal policy into account in considering The Federal Reserve believes that the main conthe appropriate stance in monetary policy. But there tribution it can make to enhancing the long-run is no doubt, in my judgment, that the net result of health of the U.S. economy is to promote price moving to budget balance will be a more efficient, stability over time. Our short-run policy adjustmore productive U.S. economy. ments, although necessarily undertaken against the With regard to the money and debt ranges cho- background of the current condition of the U.S. sen by the FOMC for this year, the specifications economy, must be consistent with moving toward for M2 and domestic nonfinancial debt were left the long-run goal of price stability. Our recent unchanged, at 1 percent to 5 percent and 3 percent policy action to reduce the federal funds rate to 7 percent respectively. The FOMC also made a 25 basis points was made in this context. As I Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

848 Federal Reserve Bulletin • September 1995 noted in my February testimony, easing would be occurred across successive business cycles in the appropriate if underlying forces were clearly point- last fifteen years. We at the Federal Reserve are ing toward reduced inflation pressures in the future. committed to further progress in this direction. • Considerable progress toward price stability has Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

849 Announcements FEDERAL OPEN MARKET COMMITTEE should achieve, while leaving the methods for ACTION achieving those objectives to each institution. The final rule establishes deadlines for submission and Chairman Alan Greenspan announced on July 6, review of safety and soundness compliance plans 1995, that the Federal Open Market Committee had that the agencies may require for insured deposidecided to decrease slightly the degree of pressure tories that fail to meet the guidelines. on bank reserve positions. The Federal Reserve also issued proposed guide- As a result of the monetary tightening initiated lines for safety and soundness standards relating in early 1994, inflationary pressures had receded to asset quality and earnings. As amended by the enough to accommodate a modest adjustment in Community Development Act, section 132 no monetary conditions. longer requires the agencies to prescribe quantita- The action would be reflected in a decline of 25 tive standards in these areas but rather requires the basis points in the federal funds rate from about agencies to prescribe standards they deem appro- 6 percent to about 53A percent. priate. The agencies are therefore proposing asset quality and earnings standards, in the form of guidelines, that emphasize monitoring, reporting, and preventive or corrective action. Comments on SAFETY AND SOUNDNESS STANDARDS FOR the proposed asset quality and earnings guidelines STATE MEMBER BANKS: FINAL GUIDELINES were requested by August 24, 1995. AND A FINAL RULE The Board initially approved the final rule, final guidelines, and proposed guidelines on February 2, The Federal Reserve Board on July 7, 1995, issued 1995. Publication of the joint guidelines, rule, final guidelines and a final rule regarding safety and proposal was delayed to reach interagency and soundness standards for state member banks agreement. as required by section 132 of the Federal Deposit Insurance Corporation Improvement Act. The final rule and guidelines were effective August 9, 1995. RISK-BASED CAPITAL STANDARDS: The final guidelines and final rule reflect amend- FINAL RULE ments pursuant to the Reigle Community Development and Regulatory Improvement Act of 1994 The Federal Reserve Board issued on August 2, (Community Development Act), which authorized 1995, a final rule revising risk-based capital stanthe agencies to prescribe safety and soundness stan- dards to implement section 305 of the Federal dards by regulation or guideline and eliminated Deposit Insurance Corporation Improvement Act holding companies from the scope of section 132. regarding interest rate risk (IRR). The revision The agencies sought comment on methods to states that the Board will consider "a bank's expomeet the requirements of section 132 through sure to declines in the economic value of its capital an advance notice of proposed rulemaking in due to changes in interest rates" in determining the July 1992 and a notice of proposed rulemaking in institution's capital needs. The final rule was effec- November 1993. The final guidelines take into tive September 1, 1995. account public comments and set forth broad, The Board also requested public comment on a principle-based standards that establish the objec- proposed interagency policy statement regarding tives that proper operations and management the measurement and assessment of IRR. The Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

850 Federal Reserve Bulletin • September 1995 proposed policy statement describes a measure- The Board is also requesting comment on a ment framework that comprises exemption screens, possible approach to setting capital requirements a supervisory model, and use of a bank's own for market risk, which, if feasible, might form the internal model. Comments were requested by basis for future enhancements to supervisory proce- October 2, 1995. dures. Comments were requested by November 1, 1995. CAPITAL ADEQUACY GUIDELINES: EDUCATIONAL PROGRAMS INTERIM FINAL RULE ON THE HOMEBUYING PROCESS The Federal Reserve Board, along with the other The Federal Reserve Board announced on July 25, banking agencies, is amending the capital adequacy 1995, that it will sponsor two hour-long educaguidelines for banks, bank holding companies, and tional programs on the homebuying process to be savings associations (banking organizations) to broadcast nationwide via satellite on October 14 treat originated mortgage servicing rights (OMSRs) and October 21. the same as purchased mortgage servicing rights These live telecasts, designed for first-time buy- (PMSRs) for regulatory capital purposes. The ageners and households with limited resources, will cies are issuing an interim final rule effective originate from the LeCroy Center for Educational August 1, 1995, and requesting comment on this Telecommunications of the Dallas County Commurule by October 2, 1995. nity College District beginning at 1:00 p.m. EST. The interim final capital rules were developed in Both community college and U.S. Department of response to the Financial Accounting Standards Agriculture (USDA) extension service facilities Board's issuance of Statement No. 122, "Accountwill serve as downlink sites for these programs. ing for Mortgage Servicing Rights," which elimi- The Federal Reserve Board is joined in this nates the accounting distinction between OMSRs outreach effort by the National Foundation for Conand PMSRs by requiring OMSRs to be capitalized sumer Credit and the USDA Cooperative State as balance sheet assets, a treatment previously Research Education and Extension Service. required only for PMSRs. The goal of these nationwide distance learning Under the interim rule, both OMSRs and PMSRs programs is to assist first-time buyers and limitedare "included in" (not deducted from) regulatory resource households with some of the complicated capital when determining tier 1 (core) capital for steps in the homebuying process. To accomplish purposes of the agencies' risk-based and leverage this objective, the two programs will focus on capital standards and, when calculating tangible financial preparedness, the various terms and types equity for purposes of prompt corrective action, are of mortgages, the application process, and closing subject to the regulatory capital limitations that or settlement. Participants will be encouraged to previously applied only to PMSRs. Thus, the effect ask questions of the industry experts during each of the interim rule is to permit OMSRs in regulahour-long program by telephone and facsimile. tory capital, subject to certain limitations. The Federal Reserve and its program partners encourage financial institutions, civic and community leaders, and religious groups involved in PROPOSED ACTIONS homebuyer education to take advantage of these teleseminars. Recognizing that many of these orga- The Federal Reserve Board on July 14, 1995, nizations may already sponsor homebuying semirequested comment on a proposal to amend its nars, these live broadcasts are intended to bring risk-based capital requirements to incorporate a communities together. The opportunity is to allow measure for market risk in foreign exchange and someone else to present the basic homebuying commodity activities and in the trading of debt and information so that individualized attention can be equity instruments. Comments were requested by focused on the needs of the participants at the downlink sites. September 18, 1995. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 851 Financial institutions, civic and community lead- Center, Empire State Plaza, Madison Avenue, ers, religious groups, and other parties interested in Albany, NY 12230. learning more about the teleseminars may call their The Federal Reserve Board also announced on local Consumer Credit Counseling Service, USDA July 27 that it would extend the comment period Extension Service, or the Federal Reserve Board. on these applications through September 12, 1995. At the Federal Reserve, the program coordinator is This extension of the comment period permitted Marci Schneider (202-872-7550). interested parties approximately sixty days in After the live telecasts, the program will be pubwhich to submit comments on the applications. licly available in videotape. Single or bulk copies of each of the two hour-long programs may be purchased from VIDICOPY, 650 Vaqueros Avenue, Sunnyvale, CA 94086, at the following rates: PUBLICATION OF THE REVISED LISTS OF OTC STOCKS AND OF FOREIGN STOCKS 1-30 copies @ $12.95, including shipping SUBJECT TO MARGIN REGULATIONS 31-99 copies @ $11.45, including shipping. For additional information on pricing and how to The Federal Reserve Board on July 31, 1995, puborder copies of the videotapes, contact VIDICOPY lished a revised list of over-the-counter stocks that at 1-800-708-7080. are subject to its margin regulations (OTC list). Also published was a revised list of foreign equity securities (foreign list) that meet the margin criteria in Regulation T (Credit by Brokers and Dealers). These lists are published for the information of PUBLIC MEETINGS REGARDING THE lenders and the general public. APPLICATION OF FLEET FINANCIAL GROUP TO ACQUIRE SHAWMUT NATIONAL CORP. The lists became effective August 14, 1995, and supersede the previous lists that were effective May 8, 1995. The next revision of the lists is The Federal Reserve Board announced on July 27, scheduled to be effective November 1995. 1995, that public meetings would be held in The changes that were made to the revised OTC Boston, Hartford, and Albany, beginning on list, which now contains 4,159 OTC stocks, are as August 26, in connection with the application of follows: Fleet Financial Group, Inc., to acquire Shawmut National Corporation. • One hundred ninety-five stocks have been The purpose of these meetings was to collect included for the first time, 166 under National information concerning the effect of this proposal Market System (NMS) designation. on the convenience and needs of the communities • Fifty-six stocks previously on the list have to be served, including the records of performance been removed for substantially failing to meet the of the institutions under the Community Reinvestrequirements for continued listing. ment Act. • Sixty-eight stocks have been removed for The specific dates, times, and locations of the reasons such as listing on a national securities meetings were the following: exchange or involvement in an acquisition. Boston—Saturday, August 26, beginning at 9:00 a.m., EDT, at the Federal Reserve Bank of The OTC list is composed of OTC stocks that Boston, 600 Atlantic Avenue, Boston, MA 02106. have been determined by the Board to be subject to Hartford—Monday, August 28, beginning at margin requirements in Regulations G (Securities 12:00 noon, EDT, at the Wild Auditorium, Gray Credit by Persons other than Banks, Brokers, or Conference Center, University of Hartford, 200 Dealers), T, and U (Credit by Banks for Purchasing Bloomfield Avenue, West Hartford, CT 06117. or Carrying Margin Stocks). It includes OTC stocks Albany—Tuesday, August 29, beginning at qualifying under Board criteria and also includes 12:00 noon, EDT, at the New York State Museum, all OTC stocks designated as NMS securities. Museum Theater, West Gallery, Cultural Education Additional NMS securities may be added in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

852 Federal Reserve Bulletin • September 1995 interim between quarterly Board publications; these erties related to home purchase, home refinancing, securities are immediately marginable upon desig- and home improvement loans they originate or buy. nation as NMS securities. The reporting institutions also disclose information The foreign list specifies those foreign equity about the disposition of home loan applications and securities that are eligible for margin treatment at on the race or national origin, sex, and annual broker-dealers. There were no additions to nor income of applicants. The type of purchaser of a deletions from the foreign list; it now contains 701 loan must also be reported if the loan was sold the foreign equity securities. same year in which it was originated or acquired. A summary of the 1994 HMDA data is provided in a series of tables in the Financial and Business SUMMARY TABLES OF 1994 HMD A DATA Statistics section of this issue of the Bulletin (see Now AVAILABLE IN THE pages A68-A75). Statistical tables similar to these FEDERAL RESERVE BULLETIN covering prior years' HMDA information have appeared in Bulletin articles describing the HMDA The Home Mortgage Disclosure Act of 1975 data since 1990. Summary tables similar to those in (HMDA) requires most depository institutions and this issue will appear each year in the Financial and mortgage companies with offices in metropolitan Business Statistics section of the September issue areas to report the geographic location of the prop- of the Bulletin. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

853 Minutes of the Federal Open Market Committee Meeting Held on May 23,1995 A meeting of the Federal Open Market Committee Mr. Simpson, Associate Director, Division of Research and Statistics, Board of Governors was held in the offices of the Board of Governors Ms. Low, Open Market Secretariat Assistant, of the Federal Reserve System in Washington, Division of Monetary Affairs, Board of D.C., on Tuesday, May 23, 1995, at 9:00 a.m. Governors Present: Messrs. Beebe, Goodfriend, Lang, and Rosenblum Mr. Greenspan, Chairman and Mses. Tschinkel and White, Senior Vice Mr. McDonough, Vice Chairman Presidents, Federal Reserve Banks of Mr. Blinder San Francisco, Richmond, Philadelphia, Mr. Hoenig Dallas, Atlanta, and New York respectively Mr. Kelley Mr. McNees, Vice President, Federal Reserve Bank Mr. Lindsey of Boston Mr. Melzer Mr. Altig, Assistant Vice President, Federal Ms. Minehan Reserve Bank of Cleveland Mr. Moskow Mr. Weber, Senior Research Officer, Federal Ms. Phillips Reserve Bank of Minneapolis Ms. Yellen Secretary's Note. Advice had been received that Messrs. Boehne, Jordan, McTeer, and Stern, Ernest T. Patrikis had been elected by the board of Alternate Members of the Federal Open directors of the Federal Reserve Bank of New York as an Market Committee alternate member of the Federal Open Market Committee for the period June 1, 1995, through December 31, Messrs. Broaddus, Forrestal, and Parry, Presidents 1995, and that he had executed his oath of office. of the Federal Reserve Banks of Richmond, Atlanta, and San Francisco respectively Mr. Kohn, Secretary and Economist PROGRAM FOR SAFEGUARDING Mr. Bernard, Deputy Secretary FOMC INFORMATION Mr. Coyne, Assistant Secretary Mr. Gillum, Assistant Secretary Mr. Mattingly, General Counsel At this meeting the Committee amended its Mr. Baxter, Deputy General Counsel "Program for Security of FOMC Information." Mr. Prell, Economist The changes included an increase in the number of Mr. Truman, Economist staff at the Federal Reserve Banks who could be Messrs. Davis, Dewald, Hunter, Mishkin, Promisel, given access to confidential Class I and Class II Siegman, Slifman, and Stockton, Associate FOMC information. The Committee also liberal- Economists ized its rule relating to attendance at FOMC meetings to allow first vice presidents of the Federal Mr. Fisher, Manager, System Open Market Account Reserve Banks to attend meetings on a rotating basis. Other changes of a technical or updating Mr. Ettin, Deputy Director, Division of Research nature also were made to the program. The Comand Statistics, Board of Governors Mr. Madigan, Associate Director, Division of mittee's brief discussion of this organizational mat- Monetary Affairs, Board of Governors ter was not recorded in keeping with the decision Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

854 Federal Reserve Bulletin • September 1995 made at the meeting on January 31-February 1, less rapidly and inventories had continued to build. 1995, normally not to record discussions unrelated Manufacturing output appeared to be down appreto monetary policy. ciably, in large measure reflecting cutbacks in By unanimous vote, the minutes of the meeting motor vehicle production, and the slump in housing of the Federal Open Market Committee held on starts since the turn of the year was depressing March 28, 1995, were approved. construction activity. Broad indexes of consumer The Manager of the System Open Market and producer prices had increased a little faster Account reported on developments in foreign thus far this year, while advances in labor compenexchange markets and on System foreign currency sation costs had remained subdued. transactions during the period March 28, 1995, Nonfarm payroll employment posted reduced through May 22, 1995. By unanimous vote, the gains in the first quarter and changed little in April; Committee ratified these transactions. special factors and seasonal adjustment difficulties The Manager also reported on developments in may have depressed reported job growth in April. domestic financial markets and on System open Hiring in service-producing industries was down market transactions in government securities and sharply from the pace in previous months, with federal agency obligations during the period jobs in personnel supply services falling for a sec- March 28, 1995, through May 22, 1995. By ond consecutive month after three years of rapid unanimous vote, the Committee ratified these growth. Employment in manufacturing decreased transactions. further, and the number of construction jobs con- The Manager requested a temporary increase of tracted after a sizable weather-related surge in $2 billion, to $10 billion, in the limit on intermeet- March. Initial claims for unemployment insurance ing changes in outright System Account holdings increased considerably in recent weeks, and the of U.S. government and federal agency securities. civilian unemployment rate rose to 5.8 percent in He advised the Committee that the current leeway April. of $8 billion might not be sufficient to accommo- Industrial production fell further in April, with date the potentially large need for additional manufacturing registering a substantial decline. The reserves over the intermeeting period to meet an drop in industrial output largely reflected a cutback anticipated seasonal rise in the domestic demand in the production of motor vehicles and parts, but for currency as well as continued currency outflows declines in output also were evident in other cyclito foreign countries. By unanimous vote, the Com- cally sensitive sectors, such as non-auto consumer mittee amended paragraph 1(a) of the Authoriza- durables and construction supplies. Production of tion for Domestic Open Market Operations to raise business equipment other than motor vehicles regthe limit to $10 billion for the intermeeting period istered a small gain. Total utilization of industrial ending with the close of business on July 5, capacity continued to decline in April; however, 1995. operating rates in manufacturing remained at rela- The Committee then turned to a discussion of the tively high levels. economic and financial outlook and the implemen- Retail sales were down in April after having tation of monetary policy over the intermeeting risen moderately over the first quarter; a steep drop period ahead. A summary of the economic and in sales of motor vehicles accounted for all of the financial information available at the time of the April decline. Total expenditures on other types of meeting and of the Committee's discussion is pro- goods edged higher in April, even though sales vided below, followed by the domestic policy of apparel, furniture, and home appliances were directive that was approved by the Committee and noticeably weaker. Housing starts changed little in issued to the Federal Reserve Bank of New York. April after having declined sharply in the first The information reviewed at this meeting sug- quarter, and the inventory of new homes for sale gested that the expansion of economic activity remained relatively large. On the other hand, sales had slowed considerably further and that rates of of both new and existing homes rose moderately resource utilization had declined. Although busi- in March after sizable declines in February, and ness investment in equipment and structures had recent surveys indicated some improvement in attiremained strong, overall final sales had expanded tudes toward homebuying. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 855 Shipments of nondefense capital goods remained recovery continued in the major foreign industrial on a strong uptrend in March, with outlays for countries as a group but that the pace varied signifioffice and computing equipment registering another cantly across countries. There were signs of sussharp increase. Manufacturers of heavy trucks con- tained growth in the United Kingdom, slower tinued to operate at capacity to meet demand; by growth in Canada, renewed recovery in Japan, and contrast, business expenditures for motor vehicles weakness in France and Italy. reportedly plunged in April. Data on orders for Inflation had picked up somewhat in the early nondefense capital goods pointed to further strong months of 1995. At the consumer level, prices rose expansion of spending on business equipment in a little more rapidly in the first quarter, despite the months ahead, although gains appeared likely unchanged food prices and lower energy prices. to be smaller than those of the past several quarters. In April, a surge in food prices and a rebound in Nonresidential construction continued to rise in energy prices contributed to a further step-up in March, and data on permits for new construction consumer inflation. At the producer level, prices of suggested that building activity would advance fur- finished goods followed a roughly similar pattern, ther in coming months, though perhaps at a some- increasing at a slightly faster pace in the first quarwhat slower rate. ter and then more briskly in April. The April rise Business inventories surged again in March, and partly reflected a sharp jump in the prices of finthe pace of inventory accumulation over the first ished energy goods, but prices of non-energy, nonquarter was substantially higher than the average food items also advanced at a somewhat faster rate. rate for the second half of 1994. Much of the At earlier stages of production, prices of intermedifirst-quarter increase in stocks reflected a buildup ate materials continued to increase rapidly in April. in inventories of motor vehicles at the wholesale By contrast, trends in labor compensation costs and retail levels. Non-auto stocks also increased at remained subdued. Gains in hourly compensation a brisk pace in the first quarter, accompanied by the of private industry workers slowed further in the emergence of scattered signs of inventory imbal- first quarter of 1995, with a continuing moderation ances in furniture, appliances, and apparel at the in the cost of benefits accounting for all of the retail level and in construction supplies at earlier deceleration in compensation. stages of production and distribution. The stock- At its meeting on March 28, 1995, the Committo-sales ratio in manufacturing was unchanged in tee adopted a directive that called for maintaining March from the very low fourth-quarter level. At the existing degree of pressure on reserve positions the wholesale level, the ratio of inventories to sales but that included a bias toward the possible firming rose in March but remained within the range of the of reserve conditions during the intermeeting past several years. Inventory accumulation in the period. Accordingly, the directive stated that in the retail sector slowed in March despite a further rise context of the Committee's long-run objectives for in inventories of motor vehicles. For the retail price stability and sustainable economic growth, sector as a whole, the inventory-to-sales ratio and giving careful consideration to economic, increased in March to the top end of its range of the financial, and monetary developments, somewhat past two years; when the motor vehicle components greater reserve restraint would be acceptable or of stocks and sales are excluded, however, the ratio slightly lesser reserve restraint might be acceptable was near the middle of its range in recent years. during the intermeeting period. The reserve The nominal deficit on U.S. trade in goods and conditions associated with this directive were services was little changed in March from the Feb- expected to be consistent with moderate growth in ruary level and remained substantially narrower the broader monetary aggregates over coming than in January. On a quarterly average basis, the months. trade deficit widened in the first quarter as growth Open market operations during the intermeeting in the value of exports slowed while the expansion period were directed toward maintaining the existin the value of imports continued unabated. A drop ing degree of pressure on reserve positions. Adjustin shipments to Mexico was among the factors ment plus seasonal borrowing trended higher over holding down export growth in March. Data avail- the period, reflecting a rising need for seasonal able for the first quarter indicated that economic credit at the beginning of the planting season, while Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

856 Federal Reserve Bulletin • September 1995 the federal funds rate continued to average close to largely reflected the needs of commercial banks to 6 percent. fund continuing heavy credit demands by house- Most market interest rates moved lower over the holds and businesses. Total domestic nonfinancial intermeeting period in reaction to weaker-than- debt had grown at a rate a little above the midpoint expected incoming economic data, which market of its monitoring range in recent months. participants interpreted as signaling a considerable The staff forecast prepared for this meeting sugslowing of the economic expansion and a growing gested that growth of economic activity was slowlikelihood that the next monetary policy move ing somewhat more than previously anticipated, would be in an easing direction. Market assess- with the recent plunge in motor vehicle sales ments that the prospects for major reductions in prompting a deeper-than-expected reduction in the budget deficits were improving also seemed to production of cars and light trucks. Economic contribute to the drop in rates. In this environment, expansion would average less than the rate of the release of data indicating large increases in increase in the economy's potential output for a consumer and producer prices for April only number of months, but the favorable wealth and temporarily interrupted the decline in rates. interest-cost effects of the extended rally that had Intermediate- and long-term interest rates posted occurred in stock and bond markets were expected the largest declines over the intermeeting period. to provide underlying support for aggregate In foreign exchange markets, the trade-weighted demand later in the year and in 1996. The forecast value of the dollar in terms of the other G-10 continued to anticipate that consumer spending currencies declined substantially further over the would be restrained by smaller gains in real first half of the intermeeting period. In mid-April, incomes and the satisfaction of pent-up demands the dollar reached a record low against the Japa- for motor vehicles and other durable goods. Businese yen and approached a record low against the ness outlays for new equipment were expected to German mark. The dollar's weakness appeared to decelerate substantially in response to the slower have been related in part to further indications of growth of sales and profits. Homebuilding was softening economic activity and related declines in projected to pick up somewhat in lagged response interest rates in the United States and to increasing to the recent decline in mortgage rates. Developtrade tensions with Japan. Late in the period, the ments in Mexico might depress U.S. exports furdollar reversed its course and moved up sharply ther, but mainly in the very near term given the size against the yen and the mark; monetary easing of the adjustments already evident in the Mexican abroad, improving prospects for reductions in the current account. With this influence waning, sus- U.S. budget deficit, and stabilizing financial con- tained growth in the economies of other U.S. tradditions in Mexico appeared to contribute to the ing partners was expected to boost export demand. turnaround. The dollar ended the intermeeting Considerable uncertainty continued to surround the period higher on balance against the other G-10 fiscal outlook, but the forecast maintained the currencies. greater degree of fiscal restraint that had been assumed since early in the year. In the staff's The growth of M2 picked up further in April, judgment, the prospects for some easing of presreflecting in part the need for additional liquid sures on resources suggested that price inflation balances to make unusually heavy final tax paywould likely moderate from its recently higher ments; these payments resulted from the stronger level. economy in 1994 and from new tax regulations allowing individuals to delay a larger portion of In the Committee's discussion of current and their tax payments until April. The expansion of prospective economic conditions, members M2 also appeared to be boosted by the increased reported on statistical and anecdotal indications of relative attractiveness of small time deposits and further slowing in the expansion of economic activmoney market funds following declines in market ity and some related easing of pressures on labor interest rates. For the year through April, M2 grew and other producer resources. A number comat a rate in the lower half of its range for 1995 mented that they anticipated a relatively sluggish while M3 expanded at a rate somewhat above its economic performance over coming months as prorange. The persisting strength of M3 in April duction was cut back to bring inventories into Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 857 better balance with sales. However, underlying generally favorable across the nation. Despite the demand was likely to remain sufficiently robust, softening demand in some markets or industries, especially in light of developments in financial notably that for motor vehicles, business contacts markets, to avert a cumulative decline in business continued to express optimism about the outlook activity and, indeed, to return economic growth to for their firms, though some of their comments a pace broadly in line with potential. Members were tempered by greater caution than had been cited in particular the strength in business fixed observed earlier. A number of members referred to investment and the potential for improvement in the general financial climate as an important elehousing activity and the trade balance as factors ment in the outlook for sustained economic expanthat should help to sustain the expansion. Nonethe- sion. They noted that the decline in interest rates less, the longer-run outlook remained subject to had favorable implications for demand in interestconsiderable uncertainty, especially given the sensitive sectors of the economy. The rise in equity undecided course of fiscal policy and the ongoing prices also was contributing to reductions in the inventory correction; the ultimate extent of that cost of capital to businesses, and banks continued correction and its effects on overall economic per- to ease terms and standards on loans. In addition, formance were subject to a cyclical dynamic whose the rise in stock and bond prices had increased the outcome could not be predicted with confidence. A net worth of many households, though some conworsening in key measures of inflation, including cern was expressed about the sustainability of the the consumer price index and the producer price stock market's strong performance. index for finished goods, was a disappointing—if With regard to developments in key sectors of not unexpected—development. A number of mem- the economy, the slowdown in the growth of conbers expressed concern that the risks were still sumer spending was somewhat more pronounced tilted in the direction of some further step-up in than anticipated earlier. Some rebound in consumer inflation; however, others were more inclined to the demand seemed likely and already appeared to be view that inflation was not likely to rise much occurring in the motor vehicle industry in May. further in a climate of moderate growth in demand, Underlying conditions for further growth in intense competitive pressures in many markets, and consumer spending were viewed as relatively relatively subdued increases in labor costs. favorable; these conditions included strengthened Members commented that a reduction in the rate balance sheets stemming from developments in of inventory investment was likely to be the domi- financial markets, continued growth of incomes, nant influence on the near-term performance of the and aggressive extensions of consumer credit by a economy. Some also saw a risk that a significantly number of lenders. In at least one view, however, greater-than-expected softening in inventory accu- consumer credit had been growing at a pace that mulation might have adverse, and possibly cumula- could not be sustained, and the inevitable corrective, effects of a longer-term nature on production tion could coincide with and exacerbate emerging and incomes and thus on consumer and business weakness in consumer demand. On balance, growth spending. With the exception of the motor vehicle in personal consumption expenditures was seen as industry, however, current inventory levels gener- likely to continue over coming quarters but at a ally were quite low in relation to sales and potential reduced pace given the apparent satisfaction of a inventory adjustments were likely to be limited in large portion of earlier pent-up demands for consize. Once further inventory adjustments were com- sumer durables and some expected moderation in pleted, the rate of accumulation could be expected the growth of jobs and incomes. to remain well below the unsustainable pace expe- Business investment remained on a strong rienced over the past year and perhaps settle into a uptrend as numerous firms continued to respond to pattern where changes in inventories became a the need to relieve pressures on existing capacity relatively neutral factor in the ongoing economic and to increase operating efficiencies in the face of expansion. vigorous competition. Rapid growth in profits and In their comments about broad factors under- a ready availability of financing also were cited lying the economic outlook, members reported that as factors tending to support business investment current business and consumer sentiment remained spending. The increase in such spending was likely Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

858 Federal Reserve Bulletin • September 1995 to moderate over the projection horizon, though to and services were expected to continue trending a still brisk pace, as declining growth in demand lower and the growth of transfer payments was and easing pressures on capacity induced growing likely to be trimmed, but the extent and timing of caution in business investment decisions. Indeed, fiscal restraint could not be determined while fedthe growth in expenditures for producer durable eral deficit reduction continued to be debated in the equipment already appeared to be moderating from Congress. In the view of at least some members, an extremely rapid pace, though nonresidential however, a larger fiscal contraction than was comconstruction was reported to be posting solid gains monly expected might well materialize, perhaps in several parts of the country. starting later this year. The course of fiscal legisla- Members also expected some strengthening tion undoubtedly would continue to affect financial in residential construction following the large markets and, in the opinion of some members, declines in mortgage interest rates that had would need to be taken into account in the formulaoccurred since late 1994. Housing construction had tion of monetary policy. trended lower since the start of the year, but several Concerning inflation, several members comindicators pointed to a revival. The latter included mented that the rise in consumer prices and some surveys showing improving homebuyer attitudes other broad measures of inflation in recent months and builder assessments of the outlook for new appeared to reflect cyclical developments relating home sales, and rising applications to purchase to the tightening of resource and product markets homes. Sizable inventories of unsold new homes over the past year, including the partial passwould probably continue to damp construction through of sizable increases in prices at earlier activity for some months, but contacts in the real stages of production. In addition, higher import estate and mortgage finance industries were more prices might have been playing a role. A number of optimistic about the outlook for housing. members expressed concern that, with the econ- The foreign trade sector likewise was expected omy already producing at or even slightly above its to make an appreciable contribution to the expan- sustainable potential, inflation pressures were likely sion of economic activity in coming quarters. The to intensify if the current pause in the expansion robust uptrend in U.S. exports during 1994 had were to be followed by a period of above-average been slowed to a considerable extent thus far this growth. On the other hand, members who saw the year by the sharp adjustment in trade with Mexico, odds as pointing to a more moderate rebound after but in the view of several members that adjustment a period of relatively sluggish economic performight now be largely completed. In that event, mance were inclined to the view that an upward gains in exports could be expected to resume at a trend in inflation was likely to be averted. In addifairly brisk pace despite indications of reduced tion, the ongoing competitive pressures in many economic growth in some key foreign countries. markets, the restraint in compensation increases, This assessment was supported by anecdotal and the continuing efforts to cut production costs reports of rising foreign demand for some U.S. would help to contain pressures on prices over products in the context of the generally improved time. international competitive position of the United In the Committee's discussion of policy for the States. Concurrently, growth in imports would tend intermeeting period ahead, all the members to be held down by the projected slowing in the endorsed a proposal to maintain the current expansion of domestic demand. On the negative stance of policy. The higher interest rates of 1994 side, some members referred to the possibility that clearly had damped demand, but since year-end a longer period might be needed to resolve the intermediate- and long-term market rates had difficulties being experienced by Mexico, and sev- declined, stock market prices had risen, bank lenderal expressed particular concern about the poten- ing terms had continued to ease, and the dollar had tial for relatively severe disruptions to trade if fallen against the currencies of many major induscurrent negotiations with Japan were not success- trial countries. On balance, it appeared that the fully concluded. current configuration of financial market conditions and degree of monetary restraint was likely to be Fiscal policy was seen as a major uncertainty in consistent with moderate expansion in nominal the economic outlook. Federal purchases of goods Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 859 GDP and prices following a period of some weak- this meeting were expected to be consistent with ness in the economy as inventory imbalances were moderate growth in M2 and M3 over the months corrected. The risks of a different outcome, in ahead. either direction, seemed to be reasonably balanced. At the conclusion of the meeting, the Federal In the circumstances, because the dimensions of Reserve Bank of New York was authorized and the near-term deceleration and the potential directed, until instructed otherwise by the Commitstrength of underlying demand remained uncertain, tee, to execute transactions in the System Account the members concluded that it was desirable to in accordance with the following domestic policy monitor developments carefully and wait for addi- directive: tional information before deciding on the next policy move. The information reviewed at this meeting suggests that the expansion of economic activity has slowed con- With regard to the possible need to adjust policy siderably further. In April, nonfarm payroll employment during the intermeeting period, all the members was about unchanged after posting reduced gains in the were in favor of shifting to an unbiased instruction first quarter, and the civilian unemployment rate rose to that did not incorporate any presumption with 5.8 percent. Industrial production fell in April, largely regard to the direction of potential intermeeting reflecting a cutback in the production of motor vehicles, and capacity utilization rates declined somewhat. changes. The members agreed that no compelling Reflecting markedly weaker demand for motor vehicles, case could be made at this point for potential total retail sales were down in April after rising modadjustments to policy in either direction during erately over the first quarter. Housing starts were the period ahead, and retaining a bias in the unchanged in April after declining sharply in the first directive would give a misleading indication quarter. Orders for nondefense capital goods point to further strong expansion of spending on business equipof the Committee's current intentions for the ment; nonresidential construction has continued to trend period. One member expressed the view that the appreciably higher. The nominal deficit on U.S. trade in costs of being wrong currently seemed higher in goods and services widened in the first quarter from its the direction of accommodating too much inflation, average rate in the fourth quarter. Broad indexes of though signs of a possible cumulative deterioration consumer and producer prices have increased faster on average thus far this year, while advances in labor comin economic activity could not be ignored should pensation costs have remained subdued. they materialize. Another member, who saw the Intermediate- and long-term interest rates have longer-term risks to the economy as tilted to the declined considerably further since the Committee meetdownside of current projections, indicated that ing on March 28, while short-term rates have registered while the recent performance of the economy might small decreases. In foreign exchange markets, the tradeargue for some easing of monetary policy, a steady weighted value of the dollar in terms of the other G-10 currencies, after falling to low levels, rose on balance policy course without any bias in the intermeeting over the intermeeting period. instruction was appropriate for now in light of the M2 and M3 strengthened in March and April. For the generally accommodative financial and banking year through April, M2 expanded at a rate in the lower markets. half of its range for 1995 and M3 grew at a rate somewhat above its range. Total domestic nonfinancial debt At the conclusion of the Committee's discussion, has grown at a rate a bit above the midpoint of its all the members supported a directive that called monitoring range in recent months. for maintaining the existing degree of pressure on The Federal Open Market Committee seeks monetary reserve positions and that did not include a pre- and financial conditions that will foster price stability sumption about the likely direction of any adjust- and promote sustainable growth in output. In furtherance of these objectives, the Committee at its meeting on ments to policy during the intermeeting period. January 31-February 1 established ranges for growth of Accordingly, in the context of the Committee's M2 and M3 of 1 to 5 percent and 0 to 4 percent long-run objectives for price stability and sus- respectively, measured from the fourth quarter of 1994 tainable economic growth, and giving careful to the fourth quarter of 1995. The Committee anticipated consideration to economic, financial, and mone- that money growth within these ranges would be consistent with its broad policy objectives. The monitoring tary developments, the Committee decided that range for growth of total domestic nonfinancial debt was somewhat greater or somewhat lesser reserve lowered to 3 to 7 percent for the year. The behavior of restraint would be acceptable during the intermeet- the monetary aggregates will continue to be evaluated ing period. The reserve conditions contemplated at in the light of progress toward price level stability, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

860 Federal Reserve Bulletin • September 1995 movements in their velocities, and developments in the Votes for this action: Messrs. Greenspan, McDoneconomy and financial markets. ough, Blinder, Hoenig, Kelley, Lindsey, Melzer, In the implementation of policy for the immediate Ms. Minehan, Mr. Moskow, Mses. Phillips and Yellen. future, the Committee seeks to maintain the existing Votes against this action: None. degree of pressure on reserve positions. In the context of the Committee's long-run objectives for price stability It was agreed that the next meeting of the Comand sustainable economic growth, and giving careful mittee would be held on Wednesday-Thursday, consideration to economic, financial, and monetary July 5-6, 1995. developments, somewhat greater reserve restraint or The meeting adjourned at 12:15 p.m. somewhat lesser reserve restraint would be acceptable in the intermeeting period. The contemplated reserve conditions are expected to be consistent with moderate Donald L. Kohn growth in M2 and M3 over coming months. Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

861 Legal Developments FINAL RULE—STANDARDS FOR SAFETY AND Section 30.1—Scope. SOUNDNESS The rules and procedures set forth in this part apply to national banks and federal branches of foreign banks, As required by section 132 of the Federal Deposit that are subject to the provisions of section 39 of the Insurance Corporation Improvement Act of 1991 Federal Deposit Insurance Act ("FDI Act") (section 39) ("FDICIA"), the Office of the Comptroller of the Cur- (12 U.S.C. 183lp-1). rency ("OCC"), the Board of Governors of the Federal Reserve System ("Board of Governors"), the Federal Deposit Insurance Corporation ("FDIC"), and the Office Section 30.2—Purpose. of Thrift Supervision ("OTS") (collectively, the agencies) have adopted a final rule establishing deadlines for Section 39 of the FDI Act, 12 U.S.C. 1831p-l, requires submission and review of safety and soundness complithe Office of the Comptroller of the Currency ("OCC") ance plans. The agencies may require compliance plans to establish safety and soundness standards. Pursuant to to be filed by an insured depository institution for failure section 39, a bank may be required to submit a complito meet the safety and soundness standards prescribed by ance plan if it is not in compliance with a safety and guideline pursuant to section 39 of the Federal Deposit soundness standard prescribed by guideline under sec- Insurance Act (FDI Act). In conjunction with this final tion 39(a) or (b). An enforceable order under section 8 of rule, the agencies have adopted Interagency Guidelines the FDI Act, 12 U.S.C. 1818(b), may be issued if, after Establishing Standards for Safety and Soundness (Guidebeing notified that it is in violation of a safety and lines). The Guidelines will appear as an appendix to each soundness standard prescribed under section 39, the bank of the agencies' final rule. The agencies view the final fails to submit an acceptable compliance plan or fails in rule and Guidelines as a realistic balance between the any material respect to implement an accepted plan. This objectives of section 132 of FDICIA and avoiding overly part establishes procedures for requiring submission of a burdensome regulation. compliance plan and issuing an enforceable order pursu- Effective August 9, 1995, 12C.F.R. Parts 30, 208, ant to section 39. The Interagency Guidelines Establish- 263, 303, 308, 364, and 570 are amended as follows: ing Standards for Safety and Soundness are set forth in Appendix A to this part. 1. A new part 30 is added to read as follows: Section 30.3—Determination and notification of failure to meet safety and soundness standard and Part 30—Safety and Soundness Standards request for compliance plan. (a) Determination. The OCC may, based upon an exami- Section 30.1—Scope. nation, inspection, or any other information that be- Section 30.2—Purpose. comes available to the OCC, determine that a bank has Section 30.3—Determination and notification of failure failed to satisfy the safety and soundness standards conto meet safety and soundness standard and request for tained in the Interagency Guidelines Establishing Stancompliance plan. dards for Safety and Soundness set forth in Appendix A Section 30.4—Filing of safety and soundness complito this part. ance plan. (b) Request for compliance plan. If the OCC determines Section 30.5—Issuance of orders to correct deficiencies that a bank has failed a safety and soundness standard and to take or refrain from taking other actions. pursuant to paragraph (a) of this section, the OCC may Section 30.6—Enforcement of orders. request, by letter or through a report of examination, the submission of a compliance plan and the bank shall be Authority: 12U.S.C. 1831p-l. deemed to have notice of the deficiency three days after Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

862 Federal Reserve Bulletin • September 1995 mailing of the letter by the OCC or delivery of the report section 38 of the FDI Act. For purposes of calculating of examination. an increase in assets, assets acquired through merger or acquisition approved pursuant to the Bank Merger Act (12 U.S.C. 1828(c)) will be excluded, Section 30.4—Filing of safety and soundness (e) Amendment of compliance plan. A bank that has filed compliance plan. an approved compliance plan may, after prior written notice to and approval by the OCC, amend the plan to (a) Schedule for filing compliance plan— reflect a change in circumstance. Until such time as a (1) In general. A bank shall file a written safety and proposed amendment has been approved, the bank shall soundness compliance plan with the OCC within 30 implement the compliance plan as previously approved. days of receiving a request for a compliance plan pursuant to section 30.3(b) unless the OCC notifies Section 30.5—Issuance of orders to correct the bank in writing that the plan is to be filed within a deficiencies and to take or refrain from taking different period. other actions. (2) Other plans. If a bank is obligated to file, or is currently operating under, a capital restoration plan submitted pursuant to section 38 of the FDI Act (a) Notice of intent to issue order— (12U.S.C. 183 lo), a cease-and-desist order entered (1) In general. The OCC shall provide a bank prior into pursuant to section 8 of the FDI Act (12U.S.C. written notice of the OCC's intention to issue an order 1818(b)), a formal or informal agreement, or a re- requiring the bank to correct a safety and soundness sponse to a report of examination or report of inspec- deficiency or to take or refrain from taking other tion, it may, with the permission of the OCC, submit a actions pursuant to section 39 of the FDI Act. The compliance plan under this section as part of that plan, bank shall have such time to respond to a proposed order, agreement, or response, subject to the deadline order as provided by the OCC under paragraph (c) of provided in paragraph (a) of this section. this section. (b) Contents of plan. The compliance plan shall include (2) Immediate issuance of final order. If the OCC a description of the steps the bank will take to correct the finds it necessary in order to carry out the purposes of deficiency and the time within which those steps will be section 39 of the FDI Act, the OCC may, without taken. providing the notice prescribed in paragraph (a)(1) of (c) Review of safety and soundness compliance plans. this section, issue an order requiring a bank immedi- Within 30 days after receiving a safety and soundness ately to take actions to correct a safety and soundness compliance plan under this part, the OCC shall provide deficiency or take or refrain from taking other actions written notice to the bank of whether the plan has been pursuant to section 39. A bank that is subject to such approved or seek additional information from the bank an immediately effective order may submit a written regarding the plan. The OCC may extend the time within appeal of the order to the OCC. Such an appeal must which notice regarding approval of a plan will be pro- be received by the OCC within 14 calendar days of vided. the issuance of the order, unless the OCC permits a (d) Failure to submit or implement a compliance plan— longer period. The OCC shall consider any such ap- (1) Supervisory actions. If a bank fails to submit an peal, if filed in a timely matter, within 60 days of acceptable plan within the time specified by the OCC receiving the appeal. During such period of review, or fails in any material respect to implement a compli- the order shall remain in effect unless the OCC, in its ance plan, then the OCC shall, by order, require the sole discretion, stays the effectiveness of the order. bank to correct the deficiency and may take further (b) Content of notice. A notice of intent to issue an order actions provided in section 39(e)(2)(B). Pursuant to shall include: section 39(e)(3), the OCC may be required to take (1) A statement of the safety and soundness deficiency certain actions if the bank commenced operations or or deficiencies that have been identified at the bank; experienced a change in control within the previous (2) A description of any restrictions, prohibitions, or 24-month period, or the bank experienced extraordi- affirmative actions that the OCC proposes to impose nary growth during the previous 18-month period. or require; (2) Extraordinary growth. For purposes of paragraph (3) The proposed date when such restrictions or prohi- (d)(1) of this section, extraordinary growth means an bitions would be effective or the proposed date for increase in assets of more than 7.5 percent during any completion of any required action; and quarter within the 18-month period preceding the issu- (4) The date by which the bank subject to the order ance of a request for submission of a compliance plan, may file with the OCC a written response to the by a bank that is not well capitalized for purposes of notice. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 863 (c) Response to notice— OCC may seek enforcement of the provisions of section (1) Time for response. A bank may file a written 39 or this part through any other judicial or administraresponse to a notice of intent to issue an order within tive proceeding authorized by law. the time period set by the OCC. Such a response must be received by the OCC within 14 calendar days from 2. A new Appendix A is added to part 30 as set forth at the date of the notice unless the OCC determines that the end of the common preamble: a different period is appropriate in light of the safety and soundness of the bank or other relevant circum- Appendix A to Part 30—Interagency Guidelines stances. Establishing Standards for Safety and Soundness (2) Content of response. The response should include: (i) An explanation why the action proposed by the Part 208—Membership of State Banking OCC is not an appropriate exercise of discretion Institutions in the Federal Reserve System under section 39; (Regulation H) (ii) Any recommended modification of the proposed order; and 1. The authority citation for 12 C.F.R. Part 208 is revised (iii) Any other relevant information, mitigating cirto read as follows: cumstances, documentation, or other evidence in support of the position of the bank regarding the Authority: 12U.S.C. 36, 248(a) and (c), 321-338, 461, proposed order. 481, 486, 601, and 611, 1814, 1823(j), 1831o, 1831p-l, (d) Agency consideration of response. After considering 3906, 3909, 3310, 3331-3351; 15 U.S.C. 78b, 78othe response, the OCC may: 4(c)(5), 78q, 78q-l, 78w, 781(b), 781 (i), and 1781(g). (1) Issue the order as proposed or in modified form; (2) Determine not to issue the order and so notify the 2. A new Subpart D comprising section 208.60 is added bank; or to part 208 to read as follows: (3) Seek additional information or clarification of the response from the bank, or any other relevant source. Subpart D—Standards for Safety and Soundness (e) Failure to file response. Failure by a bank to file with the OCC, within the specified time period, a written Section 208.60—Standards for safety and response to a proposed order shall constitute a waiver of soundness. the opportunity to respond and shall constitute consent to the issuance of the order. The Interagency Guidelines Establishing Standards for (f) Request for modification or rescission of order. Any Safety and Soundness prescribed pursuant to section 39 bank that is subject to an order under this part may, upon of the Federal Deposit Insurance Act (12 U.S.C. a change in circumstances, request in writing that the 1831p-l), as set forth as Appendix D to this part apply to OCC reconsider the terms of the order, and may propose all state member banks. that the order be rescinded or modified. Unless otherwise ordered by the OCC, the order shall continue in place 3. A new Appendix D is added to part 208 as set forth at while such request is pending before the OCC. the end of the common preamble: Section 30.6—Enforcement of orders. Appendix D to Part 208—Interagency Guidelines Establishing Standards for Safety and Soundness (a) Judicial remedies. Whenever a bank fails to comply with an order issued under section 39, the OCC may Part 263—Rules of Practice for Hearings seek enforcement of the order in the appropriate United States district court pursuant to section 8(i)(l) of the FDI Act. 1. The authority citation for 12 C.F.R. Part 263 is revised (b) Failure to comply with order. Pursuant to sec- to read as follows: tion 8(i)(2)(A) of the FDI Act, the OCC may assess a civil money penalty against any bank that violates or Authority: 5 U.S.C. 504; 12 U.S.C. 248, 324, 504, 505, otherwise fails to comply with any final order issued 18170), 1818, 1828(c), 1831o, 1831p-l, 1847(b), under section 39 and against any institution-affiliated 1847(d), 1884(b), 1972(2)(F), 3105, 3107, 3108, 3907, party who participates in such violation or noncompli- 3909; 15 U.S.C. 21, 78o-4, 78o-5, and 78u-2. ance. (c) Other enforcement action. In addition to the actions 2. A new Subpart I, comprising sections 263.300 through described in paragraphs (a) and (b) of this section, the 263.305, is added to part 263 to read as follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

864 Federal Reserve Bulletin • September 1995 Subpart I—Submission and Review of Safety and (b) Request for compliance plan. If the Board determines Soundness Compliance Plans and Issuance of that a State member bank has failed a safety and sound- Orders to Correct Safety and Soundness ness standard pursuant to paragraph (a) of this section, Deficiencies the Board may request, by letter or through a report of examination, the submission of a compliance plan, and Section 263.300—Scope. the bank shall be deemed to have notice of the request Section 263.301—Purpose. three days after mailing of the letter by the Board or Section 263.302—Determination and notification of fail- delivery of the report of examination. ure to meet safety and soundness standard and request for compliance plan. Section 263.303—Filing of safety and soundness Section 263.303—Filing of safety and soundness com- compliance plan. pliance plan. Section 263.304—Issuance of orders to correct deficien- (a) Schedule for filing compliance plan— cies and to take or refrain from taking other actions. (1) In general. A State member bank shall file a Section 263.305—Enforcement of orders. written safety and soundness compliance plan with the Board within 30 days of receiving a request for a Subpart I—Submission and Review of Safety and compliance plan pursuant to section 263.302(b), un- Soundness Compliance Plans and Issuance of less the Board notifies the bank in writing that the plan Orders to Correct Safety and Soundness is to be filed within a different period. Deficiencies (2) Other plans. If a State member bank is obligated to file, or is currently operating under, a capital resto- Section 263.300—Scope. ration plan submitted pursuant to section 38 of the FDI Act (12 U.S.C. 1831o), a cease-and-desist order The rules and procedures set forth in this subpart apply entered into pursuant to section 8 of the FDI Act, a to State member banks that are subject to the provisions formal or informal agreement, or a response to a of section 39 of the Federal Deposit Insurance Act report of examination or report of inspection, it may, ("FDI ACT") (section 39) (12 U.S.C. 1831p-l). with the permission of the Board, submit a compliance plan under this section as part of that plan, order, Section 263.301—Purpose. agreement, or response, subject to the deadline provided in paragraph (a)(1) of this section. Section 39 of the FDI Act requires the Board to establish (b) Contents of plan. The compliance plan shall include safety and soundness standards. Pursuant to section 39, a a description of the steps the State member bank will bank may be required to submit a compliance plan if it is take to correct the deficiency and the time within which not in compliance with a safety and soundness standard those steps will be taken. established by guideline under section 39(a) or (b). An (c) Review of safety and soundness compliance plans. enforceable order under section 8 may be issued if, after Within 30 days after receiving a safety and soundness being notified that it is in violation of a safety and compliance plan under this subpart, the Board shall soundness standard established under section 39, the provide written notice to the bank of whether the plan bank fails to submit an acceptable compliance plan or has been approved or seek additional information from fails in any material respect to implement an accepted the bank regarding the plan. The Board may extend the plan. This subpart establishes procedures for requiring time within which notice regarding approval of a plan submission of a compliance plan and issuing an enforce- will be provided. able order pursuant to section 39. (d) Failure to submit or implement a compliance plan. (1) Supervisory actions. If a State member bank fails Section 263.302—Determination and notification to submit an acceptable plan within the time specified of failure to meet safety and soundness standard by the Board or fails in any material respect to impleand request for compliance plan. ment a compliance plan, then the Board shall, by order, require the bank to correct the deficiency and (a) Determination. The Board may, based upon an exam- may take further actions provided in section ination, inspection, or any other information that be- 39(e)(2)(B). Pursuant to section 39(e)(3), the Board comes available to the Board, determine that a bank has may be required to take certain actions if the bank failed to satisfy the safety and soundness standards con- commenced operations or experienced a change in tained in the Interagency Guidelines Establishing Stan- control within the previous 24-month period, or the dards for Safety and Soundness set out in Appendix B to bank experienced extraordinary growth during the prepart 208 of this chapter. vious 18-month period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 865 (2) Extraordinary growth. For purposes of paragraph (2) A description of any restrictions, prohibitions, or (d)(1) of this section, extraordinary growth means an affirmative actions that the Board proposes to impose increase in assets of more than 7.5 percent during any or require; quarter within the 18-month period preceding the issu- (3) The proposed date when such restrictions or prohiance of a request for submission of a compliance plan, bitions would be effective or the proposed date for by a bank that is not well capitalized for purposes of completion of any required action; and section 38 of the FDI Act. For purposes of calculating (4) The date by which the bank subject to the order an increase in assets, assets acquired through merger may file with the Board a written response to the or acquisition approved pursuant to the Bank Merger notice. Act (12 U.S.C. 1828(c)) will be excluded, (c) Response to notice— (e) Amendment of compliance plan. A State member (1) Time for response. A bank may file a written bank that has filed an approved compliance plan may, response to a notice of intent to issue an order within after prior written notice to and approval by the Board, the time period set by the Board. Such a response amend the plan to reflect a change in circumstance. Until must be received by the Board within 14 calendar such time as a proposed amendment has been approved, days from the date of the notice unless the Board the bank shall implement the compliance plan as previ- determines that a different period is appropriate in ously approved. light of the safety and soundness of the bank or other relevant circumstances. (2) Contents of response. The response should include: Section 263.304—Issuance of orders to correct (i) An explanation why the action proposed by the deficiencies and to take or refrain from taking Board is not an appropriate exercise of discretion other actions. under section 39; (ii) Any recommended modification of the pro- (a) Notice of intent to issue order— posed order; and (1) In general. The Board shall provide a bank prior (iii) Any other relevant information, mitigating cirwritten notice of the Board's intention to issue an cumstances, documentation, or other evidence in order requiring the bank to correct a safety and sound- support of the position of the bank regarding the ness deficiency or to take or refrain from taking other proposed order. actions pursuant to section 39 of the FDI Act. The (d) Agency consideration of response. After considering bank shall have such time to respond to a proposed the response, the Board may: order as provided by the Board under paragraph (c) of (1) Issue the order as proposed or in modified form; this section. (2) Determine not to issue the order and so notify the (2) Immediate issuance of final order. If the Board bank; or finds it necessary in order to carry out the purposes of (3) Seek additional information or clarification of the section 39 of the FDI Act, the Board may, without response from the bank, or any other relevant source. providing the notice prescribed in paragraph (a)(1) of (e) Failure to file response. Failure by a bank to file with this section, issue an order requiring a bank immedi- the Board, within the specified time period, a written ately to take actions to correct a safety and soundness response to a proposed order shall constitute a waiver of deficiency or take or refrain from taking other actions the opportunity to respond and shall constitute consent pursuant to section 39. A State member bank that is to the issuance of the order. subject to such an immediately effective order may (f) Request for modification or rescission of order. Any submit a written appeal of the order to the Board. bank that is subject to an order under this subpart may, Such an appeal must be received by the Board within upon a change in circumstances, request in writing that 14 calendar days of the issuance of the order, unless the Board reconsider the terms of the order, and may the Board permits a longer period. The Board shall propose that the order be rescinded or modified. Unless consider any such appeal, if filed in a timely matter, otherwise ordered by the Board, the order shall continue within 60 days of receiving the appeal. During such in place while such request is pending before the Board. period of review, the order shall remain in effect unless the Board, in its sole discretion, stays the Section 263.305—Enforcement of orders. effectiveness of the order. (b) Contents of notice. A notice of intent to issue an order shall include: (a) Judicial remedies. Whenever a State member bank (1) A statement of the safety and soundness deficiency fails to comply with an order issued under section 39, or deficiencies that have been identified at the bank; the Board may seek enforcement of the order in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

866 Federal Reserve Bulletin • September 1995 appropriate United States district court pursuant to sec- requirements contained in section 308.304(a)(1) of tion 8(i)(l) of the FDI Act. this chapter; (b) Failure to comply with order. Pursuant to sec- (ii) Issue an order requiring the bank immediately tion 8(i)(2)(A) of the FDI Act, the Board may assess a to correct a safety and soundness deficiency or to civil money penalty against any State member bank that take or refrain from taking other actions pursuant to violates or otherwise fails to comply with any final order section 39 of the FDI Act (12 U.S.C. 1831p-l) and issued under section 39 and against any institution- in accordance with the requirements contained in affiliated party who participates in such violation or section 308.304(a)(2) of this chapter; and noncompliance. (iii) Act on requests for modification or rescission (c) Other enforcement action. In addition to the actions of an order. described in paragraphs (a) and (b) of this section, the (3) The authority delegated under paragraph (o)(l) of Board may seek enforcement of the provisions of sec- this section shall be exercised only upon the concurtion 39 or this part through any other judicial or adminis- rent certification by the Associate General Counsel for trative proceeding authorized by law. Compliance and Enforcement, or in cases where a regional director or deputy regional director accepts, rejects or requires new or revised compliance plans or Part 303—Applications, Requests, Submittals, makes any other determinations with respect to com- Delegations of Authority, and Notices Required to pliance plans, by the appropriate regional counsel, that be Filed by Statute or Regulation the action taken is not inconsistent with the Act. (4) The authority delegated under paragraph (o)(2) of this section shall be exercised only upon the concur- 1. The authority citation for 12 C.F.R. Part 303 is revised rent certification by the Associate General Counsel for to read as follows: Compliance and Enforcement that the allegations contained in the notice of intent, if proven, constitute a Authority: 12 U.S.C. 378, 1813, 1815, 1816, 1817(j), basis for the issuance of a final order pursuant to 1818, 1819(Seventh and Tenth), 1828, 1831e, 1831o, section 39 of the FDI Act or that the issuance of a final 1831p-l; 15 U.S.C. 1607. order is not inconsistent with section 39 of the FDI Act or that the stipulated section 39 order is not 2. In section 303.9, a new paragraph (o) is added to read inconsistent with section 39 and is an order which has as follows: become final for purposes of enforcement pursuant to the FDI Act. Section 303.9—Delegation of authority to act on certain enforcement matters. Part 308—Rules of Practice and Procedure 3. The authority citation for Part 308 is revised to read as (o) Compliance plans under section 39 of the FDI Act follows: (standards for safety and soundness) and part 308 of this chapter. Authority. 5 U.S.C. 504, 554-557; 12 U.S.C. 1815(e), (1) Authority is delegated to the Director, and where 1817(a) and 1818(j), 1818, 1828(j), 1829, 1831i, 1831o, confirmed in writing by the Director, to an associate 1831p-l; 15 U.S.C. 781(h), 78(m), 78n(a), 78n(c), director, or to the appropriate regional director or 78n(d), 78n(f), 78(o), 78o-4(c)(5), 78(p), 78(q), 78q-l, deputy regional director, to accept, to reject, to require 78s. new or revised compliance plans or to make any other determinations with respect to the implementation of 4. A new Subpart R, comprising sections 308.300 compliance plans pursuant to Subpart R of Part 308 of through 308.305, is added to part 308 to read as follows: this chapter. (2) Authority is delegated to the Director, and where confirmed in writing by the Director, to an associate Subpart R—Submission and Review of Safety and director, to: Soundness Compliance Plans and Issuance of (i) Issue notices of intent to issue an order requiring Orders to Correct Safety and Soundness the bank to correct a safety and soundness defi- Deficiencies ciency or to take or refrain from taking other actions pursuant to section 39 of the FDI Act Section 308.300—Scope. (12 U.S.C. 1831p-l) and in accordance with the Section 308.301—Purpose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 867 Section 308.302—Determination and notification of fail- mailing of the letter by the FDIC or delivery of the ure to meet a safety and soundness standard and report of examination. request for compliance plan. Section 308.303—Filing of safety and soundness com- Section 308.303—Filing of safety and soundness pliance plan. compliance plan. Section 308.304—Issuance of orders to correct deficiencies and to take or refrain from taking other actions. (a) Schedule for filing compliance plan— Section 308.305—Enforcement of orders. (1) In general. A bank shall file a written safety and soundness compliance plan with the FDIC within 30 Subpart R—Submission and Review of Safety and days of receiving a request for a compliance plan Soundness Compliance Plans and Issuance of pursuant to section 308.302(b), unless the FDIC noti- Orders to Correct Safety and Soundness fies the bank in writing that the plan is to be filed Deficiencies within a different period. (2) Other plans. If a bank is obligated to file, or is Section 308.300—Scope. currently operating under, a capital restoration plan submitted pursuant to section 38 of the FDI Act The rules and procedures set forth in this subpart apply (12 U.S.C. 1831o), a cease-and-desist order entered to insured state nonmember banks and to state-licensed into pursuant to section 8 of the FDI Act, a formal or insured branches of foreign banks, that are subject to the informal agreement, or a response to a report of examprovisions of section 39 of the Federal Deposit Insur- ination or report of inspection, it may, with the permisance Act ("FDI Act") (section 39) (12 U.S.C. 1831p-l). sion of the FDIC, submit a compliance plan under this section as part of that plan, order, agreement, or re- Section 308.301—Purpose. sponse, subject to the deadline provided in paragraph (a)(1) of this section. Section 39 of the FDI Act requires the FDIC to establish (b) Contents of plan. The compliance plan shall include safety and soundness standards. Pursuant to section 39, a a description of the steps the bank will take to correct the bank may be required to submit a compliance plan if it is deficiency and the time within which those steps will be not in compliance with a safety and soundness standard taken. established by guideline under section 39(a) or (b). An (c) Review of safety and soundness compliance plans. enforceable order under section 8 of the FDI Act may be Within 30 days after receiving a safety and soundness issued if, after being notified that it is in violation of a compliance plan under this subpart, the FDIC shall prosafety and soundness standard established under sec- vide written notice to the bank of whether the plan has tion 39, the bank fails to submit an acceptable compli- been approved or seek additional information from the ance plan or fails in any material respect to implement bank regarding the plan. The FDIC may extend the time an accepted plan. This subpart establishes procedures for within which notice regarding approval of a plan will be requiring submission of a compliance plan and issuing provided. an enforceable order pursuant to section 39. (d) Failure to submit or implement a compliance plan— (1) Supervisory actions. If a bank fails to submit an Section 308.302—Determination and notification acceptable plan within the time specified by the FDIC of failure to meet a safety and soundness or fails in any material respect to implement a complistandard and request for compliance plan. ance plan, then the FDIC shall, by order, require the bank to correct the deficiency and may take further (a) Determination. The FDIC may, based upon an exam- actions provided in section 39(e)(2)(B). Pursuant to ination, inspection, or any other information that be- section 39(e)(3), the FDIC may be required to take comes available to the FDIC, determine that a bank has certain actions if the bank commenced operations or failed to satisfy the safety and soundness standards set experienced a change in control within the previous out in part 364 of this chapter and in the Interagency 24-month period, or the bank experienced extraordi- Guidelines Establishing Standards for Safety and Sound- nary growth during the previous 18-month period. ness set forth in Appendix A to Part 364 of this chapter. (2) Extraordinary growth. For purposes of paragraph (b) Request for compliance plan. If the FDIC determines (d)(1) of this section, extraordinary growth means an that a bank has failed a safety and soundness standard increase in assets of more than 7.5 percent during any pursuant to paragraph (a) of this section, the FDIC may quarter within the 18-month period preceding the issurequest, by letter or through a report of examination, the ance of a request for submission of a compliance plan, submission of a compliance plan and the bank shall be by a bank that is not well capitalized for purposes of deemed to have notice of the request three days after section 38 of the FDI Act. For purposes of calculating Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

868 Federal Reserve Bulletin • September 1995 an increase in assets, assets acquired through merger (1) Time for response. A bank may file a written or acquisition approved pursuant to the Bank Merger response to a notice of intent to issue an order within Act (12 U.S.C. 1828(c)) will be excluded, the time period set by the FDIC. Such a response must (e) Amendment of compliance plan. A bank that has filed be received by the FDIC within 14 calendar days from an approved compliance plan may, after prior written the date of the notice unless the FDIC determines that notice to and approval by the FDIC, amend the plan to a different period is appropriate in light of the safety reflect a change in circumstance. Until such time as a and soundness of the bank or other relevant circumproposed amendment has been approved, the bank shall stances. implement the compliance plan as previously approved. (2) Contents of response. The response should include: (i) An explanation why the action proposed by the Section 308.304—Issuance of orders to correct FDIC is not an appropriate exercise of discretion deficiencies and to take or refrain from taking under section 39; other actions. (ii) Any recommended modification of the proposed order; and (a) Notice of intent to issue order— (iii) Any other relevant information, mitigating cir- (1) In general. The FDIC shall provide a bank prior cumstances, documentation, or other evidence in written notice of the FDIC's intention to issue an support of the position of the bank regarding the order requiring the bank to correct a safety and sound- proposed order. ness deficiency or to take or refrain from taking other (d) Agency consideration of response. After considering actions pursuant to section 39 of the FDI Act. The the response, the FDIC may: bank shall have such time to respond to a proposed (1) Issue the order as proposed or in modified form; order as provided by the FDIC under paragraph (c) of (2) Determine not to issue the order and so notify the this section. bank; or (2) Immediate issuance of final order. If the FDIC (3) Seek additional information or clarification of the finds it necessary in order to carry out the purposes of response from the bank, or any other relevant source. section 39 of the FDI Act, the FDIC may, without (e) Failure to file response. Failure by a bank to file with providing the notice prescribed in paragraph (a)(1) of the FDIC, within the specified time period, a written this section, issue an order requiring a bank immedi- response to a proposed order shall constitute a waiver of ately to take actions to correct a safety and soundness the opportunity to respond and shall constitute consent deficiency or take or refrain from taking other actions to the issuance of the order. pursuant to section 39. A bank that is subject to such (f) Request for modification or rescission of order. Any an immediately effective order may submit a written bank that is subject to an order under this subpart may, appeal of the order to the FDIC. Such an appeal must upon a change in circumstances, request in writing that be received by the FDIC within 14 calendar days of the FDIC reconsider the terms of the order, and may the issuance of the order, unless the FDIC permits a propose that the order be rescinded or modified. Unless longer period. The FDIC shall consider any such otherwise ordered by the FDIC, the order shall continue appeal, if filed in a timely matter, within 60 days of in place while such request is pending before the FDIC. receiving the appeal. During such period of review, the order shall remain in effect unless the FDIC, in its Section 308.305—Enforcement of orders. sole discretion, stays the effectiveness of the order. (b) Contents of notice. A notice of intent to issue an (a) Judicial remedies. Whenever a bank fails to comply order shall include: with an order issued under section 39, the FDIC may (1) A statement of the safety and soundness deficiency seek enforcement of the order in the appropriate United or deficiencies that have been identified at the bank; States district court pursuant to section 8(i)(l) of the FDI (2) A description of any restrictions, prohibitions, or Act. affirmative actions that the FDIC proposes to impose (b) Failure to comply with order. Pursuant to secor require; tion 8(i)(2)(A) of the FDI Act, the FDIC may assess a (3) The proposed date when such restrictions or prohi- civil money penalty against any bank that violates or bitions would be effective or the proposed date for otherwise fails to comply with any final order issued completion of any required action; and under section 39 and against any institution-affiliated (4) The date by which the bank subject to the order party who participates in such violation or noncomplimay file with the FDIC a written response to the ance. notice. (c) Other enforcement action. In addition to the actions (c) Response to notice— described in paragraphs (a) and (b) of this section, the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 869 FDIC may seek enforcement of the provisions of sec- Section 570.4—Issuance of orders to correct deficiencies tion 39 or this part through any other judicial or adminis- and to take or refrain from taking other actions. trative proceeding authorized by law. Section 570.5—Enforcement of orders. 5. A new part 364 is added to read as follows: Authority: 12 U.S.C. 1831p-l. Part 364—Standards for Safety and Soundness Section 364.100—Purpose. Section 570.1—Authority, purpose, scope and preservation of existing authority. Section 364.101—Standards for safety and soundness. Authority: 12 U.S.C. 1819(Tenth), 1831p-l. (a) Authority. This part and the Guidelines in Appendix A to this part are issued by the OTS pursuant to Section 364.100—Purpose. section 39 (section 39) of the Federal Deposit Insurance Act ("FDI Act") (12 U.S.C. 1831p-l) as added by sec- Section 39 of the Federal Deposit Insurance Act requires tion 132 of the Federal Deposit Insurance Corporation the Federal Deposit Insurance Corporation to establish Improvement Act of 1991 (FDICIA) (Pub. L. 102-242, safety and soundness standards. Pursuant to section 39, 105 Stat. 2236 (1991)), and as amended by section 956 this part establishes safety and soundness standards by of the Housing and Community Development Act of guideline. 1992 (Pub. L. 102-550, 106 Stat. 3895 (1992)), and as amended by section 318 of the Community Develop- Section 364.101—Standards for safety and ment Banking Act of 1994 (Pub. L. 103-325, 108 Stat. soundness. 2160 (1994)). (b) Purpose. Section 39 of the FDI Act requires the OTS The Interagency Guidelines Establishing Standards for to establish safety and soundness standards. Pursuant to Safety and Soundness prescribed pursuant to section 39 section 39, a savings association may be required to of the Federal Deposit Insurance Act (12 U.S.C. submit a compliance plan if it is not in compliance with 1831p-l), as set forth as Appendix A to this part apply to a safety and soundness standard established by guideline all insured state nonmember banks and to state-licensed under section 39(a) or (b). An enforceable order under insured branches of foreign banks, that are subject to the section 8 of the FDI Act may be issued if, after being provisions of section 39 of the Federal Deposit Insur- notified that it is in violation of a safety and soundness ance Act. standard prescribed under section 39, the savings association fails to submit an acceptable compliance plan or 6. A new Appendix A is added to Part 364 as set forth at fails in any material respect to implement an accepted the end of the common preamble: plan. This part establishes procedures for submission and review of safety and soundness compliance plans Appendix A to Part 364—Interagency Guidelines and for issuance and review of orders pursuant to sec- Establishing Standards for Safety and Soundness tion 39. Interagency Guidelines Establishing Standards for Safety and Soundness pursuant to section 39 of the FDI Act are set forth in Appendix A to this part. 1. A new part 570 is added to read as follows: (c) Scope. This part and the Interagency Guidelines Establishing Standards for Safety and Soundness in Ap- Part 570—Submission and Review of Safety and pendix A to this part implement the provisions of sec- Soundness Compliance Plans and Issuance of tion 39 of the FDI Act as they apply to savings associa- Orders to Correct Safety and Soundness tions. Deficiencies (d) Preservation of existing authority. Neither section 39 of the FDI Act nor this part in any way limits the Section 570.1—Authority, purpose, scope and preserva- authority of the OTS under any other provision of law to tion of existing authority. take supervisory actions to address unsafe or unsound Section 570.2—Determination and notification of failure practices, violations of law, unsafe or unsound condito meet safety and soundness standards and request tions, or other practices. Action under section 39 and this for compliance plan. part may be taken independently of, in conjunction with, Section 570.3—Filing of safety and soundness compli- or in addition to any other enforcement action available ance plan. to the OTS. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

870 Federal Reserve Bulletin • September 1995 Section 570.2—Determination and notification of (d) Failure to submit or implement a compliance plan. If failure to meet safety and soundness standards a savings association fails to submit an acceptable plan and request for compliance plan. within the time specified by the OTS or fails in any material respect to implement a compliance plan, then (a) Determination of failure to meet safety and sound- the OTS shall, by order, require the savings association to correct the deficiency and may take further actions ness standards. The OTS may, based upon an examinaprovided in section 39(e)(2)(B) of the FDI Act. Pursuant tion, inspection, or any other information that becomes to section 39(e)(3), the OTS may be required to take available to the OTS, determine that a savings associacertain actions if the savings association commenced tion has failed to satisfy the safety and soundness stanoperations or experienced a change in control within the dards contained in the Interagency Guidelines Establishprevious 24-month period, or the savings association ing Standards for Safety and Soundness as set forth in experienced extraordinary growth during the previous Appendix A to this part. 18-month period. (b) Request for compliance plan. If the OTS determines that a savings association has failed to meet a safety and (e) Amendment of compliance plan. A savings associasoundness standard pursuant to paragraph (a) of this tion that has filed an approved compliance plan may, after prior written notice to and approval by the OTS, section, the OTS may request by letter or through a amend the plan to reflect a change in circumstance. Until report of examination, the submission of a compliance such time as a proposed amendment has been approved, plan. The savings association shall be deemed to have the savings association shall implement the compliance notice of the request three days after mailing or delivery plan as previously approved. of the letter or report of examination by the OTS. Section 570.4—Issuance of orders to correct Section 570.3—Filing of safety and soundness deficiencies and to take or refrain from taking compliance plan. other actions. (a) Schedule for filing compliance plan— (a) Notice of intent to issue order— (1) In general. A savings association shall file a writ- (1) In general. The OTS shall provide a savings ten safety and soundness compliance plan with the association prior written notice of the OTS's intention OTS within 30 days of receiving a request for a to issue an order requiring the savings association to compliance plan pursuant to section 570.2(b), unless correct a safety and soundness deficiency or to take or the OTS notifies the savings association in writing that refrain from taking other actions pursuant to secthe plan is to be filed within a different period. tion 39 of the FDI Act. The savings association shall (2) Other plans. If a savings association is obligated to have such time to respond to a proposed order as file, or is currently operating under, a capital restora- provided by the OTS under paragraph (c) of this tion plan submitted pursuant to section 38 of the FDI section. Act (12 U.S.C. 1831o), a cease-and-desist order en- (2) Immediate issuance of final order. If the OTS finds tered into pursuant to section 8 of the FDI Act, a it necessary in order to carry out the purposes of formal or informal agreement, or a response to a section 39 of the FDI Act, the OTS may, without report of examination, it may, with the permission of providing the notice prescribed in paragraph (a)(1) of the OTS, submit a compliance plan under this section this section, issue an order requiring a savings associas part of that plan, order, agreement, or response, ation immediately to take actions to correct a safety subject to the deadline provided in paragraph (a)(1) of and soundness deficiency or to take or refrain from this section. taking other actions pursuant to section 39. A savings (b) Contents of plan. The compliance plan shall include association that is subject to such an immediately a description of the steps the savings association will effective order may submit a written appeal of the take to correct the deficiency and the time within which order to the OTS. Such an appeal must be received by those steps will be taken. the OTS within 14 calendar days of the issuance of the (c) Review of safety and soundness compliance plans. order, unless the OTS permits a longer period. The Within 30 days after receiving a safety and soundness OTS shall consider any such appeal, if filed in a compliance plan under this subpart, the OTS shall pro- timely manner, within 60 days of receiving the appeal. vide written notice to the savings association of whether During such period of review, the order shall remain the plan has been approved or seek additional informa- in effect unless the OTS, in its sole discretion, stays tion from the savings association regarding the plan. The the effectiveness of the order. OTS may extend the time within which notice regarding (b) Contents of notice. A notice of intent to issue an approval of a plan will be provided. order shall include: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 871 (1) A statement of the safety and soundness deficiency Section 570.5—Enforcement of orders. or deficiencies that have been identified at the savings association; (2) A description of any restrictions, prohibitions, or (a) Judicial remedies. Whenever a savings association affirmative actions that the OTS proposes to impose or fails to comply with an order issued under section 39 of require; the FDI Act, the OTS may seek enforcement of the order (3) The proposed date when such restrictions or prohi- in the appropriate United States district court pursuant to bitions would be effective or the proposed date for section 8(i)(l) of the FDI Act. completion of any required action; and (b) Administrative remedies. Pursuant to section (4) The date by which the savings association subject 8(i)(2)(A) of the FDI Act, the OTS may assess a civil to the order may file with the OTS a written response money penalty against any savings association that vioto the notice. lates or otherwise fails to comply with any final order (c) Response to notice— issued under section 39 and against any savings (1) Time for response. A savings association may file association-affiliated party who participates in such vioa written response to a notice of intent to issue an lation or noncompliance. order within the time period set by the OTS. Such a (c) Other enforcement action. In addition to the actions response must be received by the OTS within 14 described in paragraphs (a) and (b) of this section, the calendar days from the date of the notice unless the OTS may seek enforcement of the provisions of section OTS determines that a different period is appropriate 39 of the FDI Act or this part through any other judicial in light of the safety and soundness of the savings or administrative proceeding authorized by law. association or other relevant circumstances. (2) Contents of response. The response should in- 2. A new Appendix A is added to Part 570 as set forth at clude: the end of the common preamble: (i) An explanation why the action proposed by the OTS is not an appropriate exercise of discretion under section 39 of the FDI Act; Appendix A to Part 570—Interagency Guidelines (ii) Any recommended modification of the pro- Establishing Standards for Safety and Soundness posed order; and (iii) Any other relevant information, mitigating circumstances, documentation, or other evidence in support of the position of the savings association FINAL RULE—STANDARD FLOOD HAZARD regarding the proposed order. DETERMINATION FORM (d) OTS consideration of response. After considering the response, the OTS may: The Office of the Comptroller of the Currency ("OCC"), (1) Issue the order as proposed or in modified form; the Board of Governors of the Federal Reserve System (2) Determine not to issue the order and so notify the ("Board"), the Federal Deposit Insurance Corporation savings association; or ("FDIC"), the Office of Thrift Supervision ("OTS"), (3) Seek additional information or clarification of the and the National Credit Union Administration response from the savings association, or any other ("NCUA") (collectively, "the Federal entities for lendrelevant source. ing regulation" or "the agencies"), are amending their (e) Failure to file response. Failure by a savings associa- regulations concerning loans in areas having special tion to file with the OTS, within the specified time flood hazards to require depository institutions to use the period, a written response to a proposed order shall Standard Flood Hazard Determination Form (the stanconstitute a waiver of the opportunity to respond and dard form) in determining whether real property offered shall constitute consent to the issuance of the order. as collateral for a loan is located in a special flood hazard (f) Request for modification or rescission of order. Any area. The Farm Credit Administration ("FCA") is adoptsavings association that is subject to an order under this ing this same requirement in new regulations. The stansubpart may, upon a change in circumstances, request in dard form has been developed by the Federal Emergency writing that the OTS reconsider the terms of the order, Management Agency ("FEMA") in consultation with and may propose that the order be rescinded or modified. the Federal entities for lending regulation and other Unless otherwise ordered by the OTS, the order shall agencies. continue in place while such request is pending before Effective January 2, 1996, 12 C.F.R. Parts 22, 208, the OTS. 339, 563, 614, and 760 are amended as follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

872 Federal Reserve Bulletin • September 1995 Part 22—Loans in Areas Having Special Flood collateral security for a loan is located in an area Hazards identified by the Director of the FEMA as having special flood hazards and in which flood insurance has been made available under the National Rood Insur- 1. The authority citation for Part 22 is revised to read as ance Act of 1968. The standard flood hazard determifollows: nation form may be used in a printed, computerized, or electronic manner. Authority: 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128. 2. A new section 22.6 is added to read as follows: Part 339—Loans in Areas Having Special Flood Hazards Section 22.6—Required use of Standard Flood Hazard Determination Form. 1. The authority citation for Part 339 is revised to read as A bank shall use the standard flood hazard determination follows: form developed by the Director of the FEMA (as set forth in Appendix A of 44 C.F.R. Part 65) when deter- Authority: 42 U.S.C. 4012a, 4104a, 4104b, 4106, and mining whether improved real estate or a mobile home 4128. offered as collateral security for a loan is located in an area identified by the Director of the FEMA as having 2. Section 339.7 is added to read as follows: special flood hazards and in which flood insurance has been made available under the National Flood Insurance Section 339.7—Required use of Standard Flood Act of 1968 (12 U.S.C. 4001 et seq.). The standard flood Hazard Determination Form. hazard determination form may be used in a printed, computerized, or electronic manner. A bank shall use the standard flood hazard determination form developed by the Director of the FEMA (as set Part 208—Membership of State Banking forth in Appendix A of 44 C.F.R. Part 65) when deter- Institutions in the Federal Reserve System mining whether improved real estate or a mobile home (Regulation H) offered as collateral security for a loan (as that term is defined in section 339.2(b)) is located in an area identified by the Director of the FEMA as having special flood 1. The authority citation for Part 208 is revised to read as hazards and in which flood insurance has been made follows: available under the National Flood Insurance Act of 1968. The standard flood hazard determination form Authority: 12 U.S.C. 36, 248(a), 248(c), 321-338a, 37Id, may be used in a printed, computerized, or electronic 461, 481-486, 601, 611, 1814, 1823(j), 1828(o), 1831o, manner. 1831p-l, 3105, 3310, 3331-3351, and 3906-3909; 15 U.S.C. 78b, 781(b), 781(g), 781(j), 78o-4(c)(5), 78q, 78q-l, and 78w; 31 U.S.C. 5318; 42 U.S.C. 4012a, Part 563—Operations 4104a, 4104b, 4106, and 4128. 1. The authority citation for Part 563 is revised to read as 2. Section 208.8 is amended by the addition of a new follows: paragraph (e)(4) to read as follows: Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, Section 208.8—Banking practices. 1467a, 1468, 1817, 1828, 3806, 42 U.S.C. 4012a, 4104a, 4104b, 4106, 4128. 2. Section 563.48 is amended by the addition of a new (4) Required use of Standard Flood Hazard Determiparagraph (f) to read as follows: nation Form. A state member bank shall use the standard flood hazard determination form developed by the Director of the FEMA (as set forth in Appendix Section 563.48—Flood disaster protection. A of 44 C.F.R. Part 65) when determining whether improved real estate or a mobile home offered as Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 873 (f) Required use of Standard Flood Hazard Determina- flood hazard determination form may be used in a tion Form. A savings association shall use the standard printed, computerized, or electronic manner. flood hazard determination form developed by the Director of the FEMA (as set forth in Appendix A of Part 760—Flood Insurance 44 C.F.R. Part 65) when determining whether improved real estate or a mobile home offered as collateral security for a loan is located in an area identified by the Director 1. The authority citation for Part 760 is revised to read as of the FEMA as having special flood hazards and in follows: which flood insurance has been made available under the National Flood Insurance Act of 1968. The standard Authority: 12 U.S.C. 1757, 1789; 42 U.S.C. 4012a, flood hazard determination form may be used in a 4104a, 4104b, 4106, and 4128. printed, computerized, or electronic manner. 2. Section 760.12 is added to read as follows: Part 614—Loan Policies and Operations Section 760.12—Required use of Standard Flood 1. The authority citation for Part 614 is revised to read as Hazard Determination Form. follows: A credit union shall use the standard flood hazard deter- Authority: 42 U.S.C. 4012a, 4104a, 4104b, 4106, and mination form developed by the Director of the FEMA 4128: 1.3, 1.5, 1.6, 1.7, 1.9, 1.10, 2.0, 2.2, 2.3, 2.4, 2.10, (as set forth in Appendix A of 44 C.F.R. Part 65) when 2.12, 2.13, 2.15, 3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 3.20, 3.28, determining whether improved real estate or a mobile 4.12, 4.12A, 4.13, 4.13B, 4.14, 4.14A, 4.14C, 4.14D, home offered as collateral security for a loan is located in 4.14E, 4.18, 4.19, 4.36, 4.37, 5.9, 5.10, 5.17, 7.0, 7.2, an area identified by the Director of the FEMA as having 7.6, 7.7, 7.8, 7.12, 7.13, 8.0, 8.5 of the Farm Credit Act special flood hazards and in which flood insurance has (12 U.S.C. 2011, 2013, 2014, 2015, 2017, 2018, 2071, been made available under the National Flood Insurance 2073, 2074, 2075, 2091, 2093, 2094, 2096, 2121, 2122, Act of 1968. The standard flood hazard determination 2124, 2128, 2129, 2131, 2141, 2149, 2183, 2184, 2199, form may be used in a printed, computerized, or elec- 2201, 2202, 2202a, 2202c, 2202d, 2202e, 2206, 2207, tronic manner. 2219a, 2219b, 2243, 2244, 2252, 2279a, 2279a-2, 2279b, 2279b-1, 2279b-2, 2279f, 2279f-l, 2279aa, 2279aa-5); sec. 413 of Pub. L. 100-233, 101 Stat. 1568, 1639. 2. Part 614 is amended by adding a new Subpart S to ORDERS ISSUED UNDER BANK HOLDING COMPANY read as follows: ACT Subpart S—Flood Insurance Requirements Orders Issued Under Section 3 of the Bank Holding Company Act Section 614.4940—Required use of Standard Flood Hazard Determination Form. Henderson Bancshares, Inc. Troy, Alabama Subpart S—Flood Insurance Requirements Section 614.4940—Required use of Standard The Charles Henderson Trust Flood Hazard Determination Form. Troy, Alabama An institution of the Farm Credit System shall use the Order Approving Formation of a Bank Holding standard flood hazard determination form developed by Company the Director of the FEMA (as set forth in Appendix A of 44 C.F.R. Part 65) when determining whether improved real estate or a mobile home offered as collateral security Henderson Bancshares, Inc. ("Henderson"), and The for a loan is located in an area identified by the Director Charles Henderson Trust ("Trust"), a registered bank of the FEMA as having special flood hazards and in holding company, have filed applications under section 3 which flood insurance has been made available under the of the Bank Holding Company Act ("BHC Act") National Flood Insurance Act of 1968. The standard (12 U.S.C. § 1842) in connection with a corporate reor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

874 Federal Reserve Bulletin • September 1995 ganization of Troy Bank & Trust Company ("Bank"), Based on the foregoing and all the facts of record, the all of Troy, Alabama.1 Board has determined that the applications should be, Notice of the applications, affording interested persons and hereby are, approved.5 The Board's approval is an opportunity to submit comments, has been published expressly conditioned on compliance with all the com- (60 Federal Register 20,095 (1995)). The time for filing mitments made by Henderson and Trust in connection comments has expired, and the Board has considered the with these applications. The commitments and condiapplications and all comments received in light of the tions relied on by the Board in reaching this decision are factors set forth in section 3 of the BHC Act. deemed to be conditions imposed in writing by the Henderson is a nonoperating corporation formed for Board in connection with its findings and decision, and, the purpose of acquiring Bank. Bank is the 127th largest as such, may be enforced in proceedings under applicacommercial banking organization in Alabama, control- ble law. ling deposits of approximately $123 million, represent- This transaction shall not be consummated before the ing less than 1 percent of total deposits in commercial fifteenth calendar day following the effective date of this banking organizations in the state.2 Based on all the facts order or later than three months after the effective date of of record, including the fact that this transaction would this order, unless such period is extended for good cause constitute a corporate reorganization, the Board believes by the Federal Reserve Bank of Atlanta, acting pursuant that consummation of this proposal would not have a to delegated authority. significantly adverse effect on competition or the concen- By order of the Board of Governors, effective tration of banking resources in any relevant banking July 24, 1995. market. Accordingly, the Board concludes that competitive considerations are consistent with approval. Voting for this action: Chairman Greenspan, and Governors The Board also concludes that the financial and mana- Kelley, Lindsey, Phillips, and Yellen. Absent and not voting: Vice Chairman Blinder. gerial resources and future prospects of Henderson, Trust and Bank,3 are consistent with approval of this proposal, JENNIFER J. JOHNSON as are the convenience and needs and other supervisory Deputy Secretary of the Board factors that the Board is required to consider under section 3 of the BHC Act.4 Pilot Bancshares, Inc. Tampa, Florida 1. Henderson would be formed as an intermediate holding company through a share exchange with Bank's current shareholders. Order Approving Formation of a Bank Holding Shares not exchanged would be purchased by Bank resulting in Company, Merger of Banks, and Increase of Henderson owning all of Bank's shares. Trust currently owns Investment in Bank Premises 51 percent of Bank, and after the reorganization, Trust would own at least 51 percent of Henderson. 2. Deposit data are as of December 31, 1994. Pilot Bancshares, Inc. ("Pilot"), has applied under sec- 3. The Board has received comments from the Charles Hender- tion 3(a)(1) of the Bank Holding Company Act ("BHC son Memorial Association, Troy, Alabama ("Protestant"), a chari- Act") (12 U.S.C. § 1842(a)(1)) to become a bank holdtable association established under the will of Charles Henderson ing company by acquiring all the voting shares of The ("Will") as the instrumentality responsible for the distribution of Terrace Bank of Florida, both of Tampa, Florida ("Ter- Trust's income in accordance with the provisions of the Will. The trustee under the Will is responsible for the management of the race Bank"), a state member bank. Terrace Bank also Trust. Protestant contends that this proposal could impair income from Trust by reducing the value of Trust's assets and Trust's voting majority, adversely affect the financial condition of Bank, and permit Bank's management to redeem its equity investment in current proposal and concluded that approval of this transaction by Bank while retaining control of Bank. The Board has carefully a majority of Bank's shareholders is in accordance with Alabama reviewed these comments in light of all the facts of record, includ- law. See Ala. Code §§ 10-2B-11.02, 5-7A-2, 5-2A-8 (1994). See ing reports of examination by federal supervisors assessing the also Eva Bancshares, Inc., 79 Federal Reserve Bulletin 504 (1993). financial and managerial strength of Bank and financial information 5. As noted above, Protestant's claims have been adjudicated by and projections provided by Henderson in connection with these an Alabama state circuit court. Protestant requests that the Board applications. The Board also notes that Protestant has challenged in delay consideration of the proposal until final disposition of its an Alabama state circuit court the right of Bank's management, request to the Alabama Supreme Court for review of the circuit who vote the shares owned by Trust, to vote in favor of this court's ruling in favor of the proposal. The BHC Act and the proposal. The court approved the trustee's actions and indicated Board's Rules require the Board to act on applications within that this proposal was in the best interest of Trust. Based on these specified time periods, and the Board believes that the present and other facts of record, the Board does not believe that these record is sufficient to act on these applications. Moreover, Alabama comments warrant denial of this proposal. courts have authority to provide Protestant with an appropriate 4. Protestant also contends that a majority vote by the sharehold- remedy if its allegations can be sustained. Based on all facts of ers of Bank is insufficient to approve this proposal under Alabama record, the Board has concluded that delay or denial of these law. The Alabama Superintendent of Banks has reviewed the applications on this basis is not warranted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 875 has applied under section 18(c) of the Federal Deposit deposits of approximately $50 million, representing less Insurance Act (12 U.S.C. § 1828(c)) ("Bank Merger than 1 percent of total deposits in depository institutions Act") to merge with University State Bank, Tampa, in the market.5 After consummation of this proposal, Florida ("University Bank").1 Terrace Bank also has numerous competitors would remain in the market, the applied to increase its investment in bank premises pur- market would remain moderately concentrated, as measuant to section 24A of the Federal Reserve Act sured by the Herfindahl-Hirschman Index ("HHI"), and (12 U.S.C. §37Id). would not exceed the threshold standards in the Depart- Notice of the applications, affording interested persons ment of Justice's revised guidelines.6 Based on all the an opportunity to submit comments, has been given in facts of record, the Board concludes that consummation accordance with the BHC Act, the Bank Merger Act, of this proposal is not likely to result in significantly and the Board's Rules of Procedure (12 C.F.R. adverse effects on competition or the concentration of 262.3(b)). As required by the Bank Merger Act, reports banking resources in the Tampa Bay banking market or on the competitive effects of the merger were requested any other relevant banking market. from the United States Attorney General, the Office of the Comptroller of the Currency ("OCC"), and the Convenience and Needs Considerations Federal Deposit Insurance Corporation ("FDIC"). The time for filing comments has expired, and the Board has In considering an application to acquire a depository considered the applications and all comments received in institution under the BHC and Bank Merger Acts, the light of the factors set forth in the BHC Act, the Bank Board must consider the convenience and needs of the Merger Act, and the Federal Reserve Act. communities to be served, and take into account the Pilot is a non-operating company formed for the pur- records of the relevant depository institutions under the pose of acquiring Terrace Bank and University Bank. Community Reinvestment Act (12 U.S.C. § 2901 et seq.) Terrace Bank, with $41 million in assets,2 is the 161st ("CRA"). largest commercial banking organization in Florida, con- Terrace Bank received a preliminary rating of "satistrolling deposits of $33.3 million, representing less than factory" for its record of performance under the CRA as 1 percent of total deposits in commercial banking organi- of June 12, 1995. Although examiners noted some minor zations in the state.3 University Bank, with assets of deficiencies, examiners did not find any pattern or prac- $21 million, is the 188th largest commercial banking tice of illegal discrimination or other illegal practices organization in Florida, controlling deposits of intended to discourage applications for credit during the $16.9 million, also representing less than 1 percent of time period covered by this examination. Moreover, total deposits in commercial banking organizations in Terrace Bank has taken steps to address the deficiencies the state. Upon consummation of this proposal, Terrace identified in the examination.7 University Bank also Bank would become the 120th largest commercial banking organization in Florida with $50.2 million in deposits and would continue to control less than 1 percent of 5. In this context, depository institutions include commercial and savings banks. Market share data are based on calculations in the state's banking deposits. which the deposits of thrift institutions are included at 50 percent. Terrace Bank and University Bank compete directly in The Board previously has indicated that thrift institutions have the Tampa Bay, Florida, banking market.4 Terrace Bank become, or have the potential to become, major competitors of and University Bank are the 47th and 58th largest depos- commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Feditory institutions, respectively, in the market. Upon coneral Reserve Bulletin 743 (1984). summation, Terrace Bank would become the 35th largest 6. Under the revised Department of Justice Merger Guidelines, depository institution in the market, controlling total 49 Federal Register 26,823 (1984), a market in which the postmerger HHI is between 1000 and 1800 is considered moderately concentrated. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged 1. Pilot would acquire Terrace Bank after Terrace Bank acquires (in the absence of other factors indicating anticompetitive effects) University Bank. To facilitate this acquisition, Terrace Bank would unless the post-merger HHI is at least 1800 and the merger or be acquired by an interim bank holding company, Pilot First. acquisition increases the HHI by at least 200 points. The Depart- Terrace Bank and University Bank would merge, and Pilot First ment of Justice has stated that the higher than normal HHI threshwould merge with University Bank's parent holding company, olds for screening bank mergers for anticompetitive effects implic- University State Bank Corporation, with Terrace Bank and Pilot itly recognizes the competitive effect of limited purpose lenders and First as the surviving entities. Pilot would then acquire Terrace other non-depository financial entities. Upon consummation of this Bank through a newly chartered interim bank, with Terrace Bank as transaction, the HHI in the Tampa Bay market would remain the survivor, and Pilot First would be dissolved. unchanged at 1650. 2. Asset data are as of March 31, 1995. 7. For example, Terrace Bank has expanded its delineated service 3. State and market deposit data are as of December 31, 1994. area and has agreed to hold quarterly meetings with community 4. The Tampa Bay banking market is approximated by Hernando, leaders and to distribute more information to the community about Hillsborough, Pasco, and Pinellas Counties in Florida. the bank's credit offerings. In addition, Terrace Bank has developed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

876 Federal Reserve Bulletin • September 1995 received a "satisfactory" rating from its primary federal Voting for this action: Chairman Greenspan, Vice Chairman supervisor, the Federal Deposit Insurance Corporation at Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen. its most recent CRA examination as of January 18, 1994. The Board also notes that it has received no comments JENNIFER J. JOHNSON Deputy Secretary of the Board from the public opposing this proposal or contending that Terrace Bank is not serving the credit needs of its Totalbank Corporation of Florida local community, including the low- and moderate- Miami, Florida income neighborhoods. Based on these and all other facts of record, the Board Order Denying the Acquisition of a Bank concludes that convenience and needs considerations are consistent with approval of this proposal. The Board Totalbank Corporation of Florida, Miami, Florida ("Apexpects Terrace Bank to continue to improve its record plicant"), a bank holding company within the meaning of compliance and CRA performance and to comply of the Bank Holding Company Act ("BHC Act"), has with all commitments regarding its compliance and CRA applied under section 3(a)(3) of the BHC Act activities given in connection with these applications. (12 U.S.C. § 1842(a)(3)) to acquire Florida International Bank, Perrine, Florida ("Florida Bank"). Other Considerations Notice of the application, affording interested persons an opportunity to submit comments, has been published The Board also concludes that the financial and manage- (60 Federal Register 32,013 (1995)). The time for filing rial resources and future prospects of University Bank comments has expired, and the Board has considered the and Terrace Bank, and the other supervisory factors the application and all comments received in light of the Board must consider, are consistent with approval of factors set forth in section 3 of the BHC Act. these applications. Applicant operates two subsidiary banks in Florida. Terrace Bank also has applied under section 24A of Applicant is the 50th largest commercial banking organithe Federal Reserve Act (12 U.S.C. § 371d) to increase zation in Florida, controlling deposits of $171.2 million, its investment in bank premises. The Board has considrepresenting less than 1 percent of total deposits in ered the factors it is required to consider when reviewing commercial banking organizations in the state.1 Florida an application for increasing investment in bank pre- Bank is the 87th largest commercial banking organizamises and finds those factors to be consistent with aption in Florida, controlling deposits of $103.6 million, proval. representing less than 1 percent of total deposits in Based on the foregoing and other facts of record, the commercial banking organizations in the state. Upon Board has determined that the applications under the consummation of this proposal, Applicant would be- BHC Act, the Bank Merger Act, and the Federal Reserve come the 29th largest commercial banking organization Act should be, and hereby are, approved. The Board's in Florida, controlling deposits of $274.8 million, repreapproval is specifically conditioned on compliance with senting less than 1 percent of total deposits in commerall the commitments made in connection with these cial banking organizations in the state. applications. For purposes of this action, both the com- Applicant and Florida Bank do not compete directly in mitments and conditions relied on by the Board in reachany relevant banking market. Based on all the facts of ing its decision are commitments imposed in writing by record, the Board concludes that consummation of this the Board in connection with its findings and decision, proposal would not have a significantly adverse effect on and, as such, may be enforced in proceedings under competition or the concentration of banking resources in applicable law. any relevant banking market. This transaction shall not be consummated before the fifteenth calendar day following the effective date of this Convenience and Needs Considerations order, or later than three months following the effective date of this order, unless such period is extended for In acting on an application to acquire a depository instigood cause by the Board or by the Federal Reserve Bank tution under the BHC Act, the Board must consider the of Atlanta, acting pursuant to delegated authority. convenience and needs of the communities to be served, By order of the Board of Governors, effective and take into account the records of the relevant deposi- July 3, 1995. tory institutions under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires the federal financial supervisory agencies to encourage a plan to better ascertain the credit needs of its community and market the bank's services. 1. All banking data are as of June 30, 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 877 financial institutions to help meet the credit needs of the lending record, ascertainment and marketing efforts, and local communities in which they operate, consistent with overall CRA policies. their safe and sound operation. To accomplish this end, For example, FDIC examiners found that the geothe CRA requires the appropriate federal supervisory graphic distribution of Totalbank's credit extensions, authority to "assess the institution's record of meeting credit applications, and credit denials reflected disparate the credit needs of its entire community, including low- lending patterns. The report of examination revealed that and moderate-income neighborhoods, consistent with the bank extended a low percentage of loans within its the safe and sound operation of such institution," and to delineated community. Examiners also concluded that take that record into account in its evaluation of bank Totalbank's activities to ascertain community credit expansion proposals.2 needs and to market its products and services within its delineated community were inadequate, and noted par- The Board has carefully reviewed the CRA perforticularly that Totalbank had not performed ascertainment mance record of Applicant and its subsidiary banks, or marketing efforts in low- and moderate-income areas Totalbank ("Totalbank") and Trade National Bank in its delineated community. ("Trade Bank"), both in Miami, Florida, in light of the CRA, the Board's regulations, and the jointly issued The report of examination also indicated weaknesses Statement of the Federal Financial Supervisory Agencies in the bank's overall implementation of CRA policies Regarding the Community Reinvestment Act ("Agency and programs. For example, the bank has no board of CRA Statement").3 The Agency CRA Statement states director oversight of CRA activities, no CRA program that decisions by agencies to allow a financial institution structured to the needs and goals of the bank, and no to expand will be made pursuant to an analysis of the formal activities under written guidelines for manageinstitution's overall CRA performance and will be based ment. Examiners also considered the CRA training of on the actual record of performance of the institution.4 bank personnel to be inadequate. Trade Bank. The OCC noted deficiencies in several Record of Performance Under the CRA areas of Trade Bank's CRA performance. For example, the OCC examiners indicated that Trade Bank's partici- A. CRA Performance Examinations pation in governmentally insured, guaranteed or subsidized loan programs is very limited and Trade Bank has The Board has stated that a CRA examination is an not participated in local community development or important and often controlling factor in determining redevelopment projects or programs. Examiners also whether convenience and needs factors are consistent concluded that the bank has not developed a CRA prowith approval of an expansionary proposal. In the most gram to ensure that it is adequately fulfilling its CRA recent CRA performance examinations by their primary responsibilities. federal supervisors, both Totalbank and Trade Bank OCC examiners also found that Trade Bank's activireceived less than satisfactory performance ratings. ties to ascertain its credit needs and to market its prod- Totalbank received a "needs to improve" rating from ucts and services were limited. Examiners also indicated the Federal Deposit Insurance Corporation ("FDIC"), as that the bank's marketing efforts, which focused on of August 16, 1994, and Trade Bank received a "needs existing small business loan customers, were informal to improve" rating from the Office of the Comptroller of and that there was no other program to ensure consistent the Currency ("OCC"), as of March 27, 1995. targeting of all sectors in the community, including lowand moderate-income areas. B. CRA Performance Records of Applicant's Banks C. Additional CRA Considerations Totalbank. Totalbank is Applicant's largest subsidiary Applicant maintains that it has taken steps to improve its bank, and represents 65 percent of Applicant's consoli- CRA record since these examinations. Applicant dedated assets. Examiners noted deficiencies in a number scribes efforts by Totalbank that have included increased of areas of CRA performance, including Totalbank's ascertainment and marketing programs, the adoption of a comprehensive compliance plan to be implemented under the direction of the new CRA and Compliance Committee of the board of directors, and implementation 2. 12 U.S.C. §2903. 3. 54 Federal Registerl3,742 (1989). of a compliance training program.5 The FDIC reviewed 4. See First Interstate BancSystem of Montana, Inc., 77 Federal Reserve Bulletin 1007 (1991) ("First Interstate of Montana"); Continental Bank Corporation, 75 Federal Reserve Bulletin 304 (1989); Agency CRA Statement, 54 Federal Register 13,743 5. Applicant also has identified similar initiatives to address (1989). deficiencies in Trade Bank's record of CRA performance, includ- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

878 Federal Reserve Bulletin • September 1995 these initiatives and concluded that additional efforts by subsidiary banks and Totalbank is in compliance with all Totalbank would be required to address all the deficien- applicable consumer lending laws.8 cies in the bank's performance record. The FDIC also By order of the Board of Governors, effective noted that several recommendations made as a result of July 12, 1995. the examination have not been implemented. The Board has also carefully reviewed the CRA perfor- Voting for this action: Chairman Greenspan and Governors mance records of Applicant's banks, taking into consid- Kelley, Phillips, and Yellen. Absent and not voting: Vice Chairman Blinder and Governor Lindsey. eration the fact that Totalbank has recently devoted substantial managerial resources to improving its asset JENNIFER J. JOHNSON quality. The Board believes, nevertheless, that before a Deputy Secretary of the Board banking organization files an application to expand its deposit-taking facilities, the organization should address Orders Issued Under Section 4 of the Bank its CRA responsibilities and have the necessary policies in place and working well.6 The record in this applica- Holding Company Act tion indicates that Totalbank and Trade Bank do not Canadian Imperial Bank of Commerce have satisfactory records of performance in place, and Toronto, Ontario, Canada that efforts to address weaknesses in their performance have not been fully implemented. Order Approving a Notice to Continue to Engage in The Board also notes that Totalbank's report of exam- Securities and Securities-Related Activities ination cites technical violations of the Equal Credit Opportunity, Home Mortgage Disclosure, and Fair Hous- Canadian Imperial Bank of Commerce, Toronto, Oning Acts. In addition, the Board has considered other tario, Canada ("Canadian Imperial"), a foreign bank supervisory information provided by the FDIC on Totalsubject to the Bank Holding Company Act ("BHC bank's record of consumer compliance. The Board has Act"), has provided notice under section 4(c)(8) of the previously stated that disregard for consumer compli- BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of ance laws provides a separate basis for concluding that the Board's Regulation Y (12 C.F.R. 225.23) of its proconvenience and needs considerations do not warrant posal to acquire certain assets and assume certain liabiliapproval of an application, even if an applicant has a satisfactory record of performance under the CRA.7 ties of The Argosy Securities Group, L.P., and The Argosy Group, L.P., both of New York, New York Based on the foregoing and other facts of record, the (collectively, "Argosy"), indirectly through its subsid- Board has concluded that convenience and needs considiary Wood Gundy Corporation, New York, New York erations are not consistent with approval of this pro- ("Company"). Argosy engages in: posal. While the Board believes that financial, manage- (1) Underwriting and dealing in all types of debt and rial and competitive factors are consistent with approval, equity securities; it concludes that these factors do not lend sufficient (2) Acting as agent in the private placement of all weight to warrant approval of this application. It is, types of securities; therefore, the judgment of the Board that approval of this (3) Acting as a riskless principal in the purchase and application would not be in the public interest and that sale of all types of securities on the order of investors; this application should be, and hereby is, denied. The (4) Providing investment advisory services as de- Board notes that this denial is without prejudice to future scribed in section 225.25(b)(4) of Regulation Y applications that might be submitted when Applicant's (12 C.F.R. 225.25(b)(4)); CRA programs are in place and working well at its (5) Providing advice on swaps and related contracts as described in section 225.25(b)(4)(vi)(A)(2) of Regulation Y (12 C.F.R. 225.25(b)(4)(vi)(A)(2)); and (6) Providing financial advice, such as advice on ing the hiring of a CRA officer and implementing CRA and mergers, divestitures, recapitalizations and loan syndicompliance training. The OCC has stated that these initiatives are cations, as described in section 225.25(b)(4)(vi)(A)(l) relatively new and have not been in place for a sufficient period of time to allow for an adequate evaluation of their effectiveness. of Regulation Y (12 C.F.R. 225.25(b)(4)(vi)(A)(l)). 6. First Interstate of Montana, at 1009. 7. See First State Holding Company, Inc., 67 Federal Reserve Bulletin 802 (1981); see also Johnson International, Inc., 81 Federal Reserve Bulletin 507 (1995). The Board notes that Totalbank has undertaken steps to improve its record of consumer compliance. However, these initiatives have not been in place for a sufficient period of time to allow an adequate evaluation of their 8. See Farmers & Merchants Bank of Long Beach, 79 Federal effectiveness or sufficiency. Reserve Bulletin 365 (1993). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 879 Notificant previously received Board approval to en- Imperial has committed that Company will conduct its gage in each of these activities through Company.1 Noti- underwriting and dealing activities in bank-ineligible ficant will continue to adhere to the conditions and securities subject to the 10-percent revenue test.4 limitations imposed by the Board in the Canadian Impe- The Board also must determine that the proposed rial Orders. acquisition can reasonably be expected to produce public Notice of the proposal, affording interested persons an benefits that would outweigh possible adverse effects opportunity to submit comments, has been published (60 under the proper incident to banking standard of sec- Federal Register 32,681 (1995)). The time for filing tion 4(c)(8) of the BHC Act. Under the framework comments has expired, and the Board has considered the established in this and prior decisions, consummation of notice and all comments received in light of the factors this proposal is not likely to result in any significantly set forth in section 4(c)(8) of the BHC Act. adverse effects, such as undue concentration of re- Canadian Imperial, with total consolidated assets sources, decreased or unfair competition, conflicts of equivalent to approximately $106.2 billion, is the 63d interests, or unsound banking practices. The Board exlargest banking organization in the world.2 In the United pects that consummation of the proposal would provide States, Canadian Imperial controls a bank in New York, gains in efficiency to Canadian Imperial and Argosy, and New York. In addition, Canadian Imperial operates a added convenience to their customers. branch in Chicago, Illinois; agencies in Atlanta, Georgia; Under section 4(c)(8) of the BHC Act, the Board New York, New York; and Los Angeles and San Fran- considers the financial and managerial resources of the cisco, California; and a representative office in Houston, notificant and its subsidiaries and the effect of the trans- Texas. Canadian Imperial also engages directly and action upon such resources.5 The Board has reviewed the through subsidiaries in permissible nonbanking activities capitalization of Canadian Imperial and Company in in the United States and abroad. accordance with the standards set forth in the Section 20 Company is, and will continue to be, a broker-dealer Orders, and finds the capitalization of each to be consisregistered with the Securities and Exchange Commission tent with approval. The determination on the capitaliza- ("SEC") under the Securities Exchange Act of 1934 tion of Company is based on all the facts of record, (15 U.S.C. § 78a et seq.) and is a member of the National including Company's projections of the volume of Com- Association of Securities Dealers, Inc. ("NASD"). Ac- pany's underwriting and dealing activities in bankcordingly, Company is subject to the record-keeping and ineligible securities. Accordingly, the Board concludes reporting obligations, fiduciary standards, and other re- that financial and managerial considerations are consisquirements of the Securities Exchange Act of 1934, the tent with approval of this proposal.6 SEC, and the NASD. As noted above, Company currently is engaged in limited underwriting and dealing activities that are per- eral Reserve System, 839 F.2d 47 (2d Cir.), cert, denied, 486 U.S. missible under section 20 of the Glass-Steagall Act 1059 (1988) (collectively, "Section 20 Orders"). Compliance with the 10-percent revenue limitation shall be calculated in accordance (12 U.S.C. § 377). The Board has determined that the with the method stated in the Section 20 Orders, as modified by the conduct of these securities underwriting and dealing Order Approving Modifications to the Section 20 Orders, 75 Fedactivities is consistent with section 20 of the Glass- eral Reserve Bulletin 751 (1989), the Order Approving Modifica- Steagall Act (12 U.S.C. § 377) provided that the com- tions to the Section 20 Orders, 79 Federal Reserve Bulletin 226 pany engaged in the underwriting and dealing activities (1993), and the Supplement to Order Approving Modifications to Section 20 Orders, 79 Federal Reserve Bulletin 360 (1993) (collecderives no more than 10 percent of its total gross revetively, "Modification Orders"). The Board notes that Canadian nue over any two-year period from underwriting and Imperial has not adopted the Board's alternative indexed-revenue dealing in securities that a bank may not underwrite or test to measure compliance with the 10-percent limitation on bankdeal in directly ("bank-ineligible securities").3 Canadian ineligible securities activities, and, absent such election, Canadian Imperial will continue to employ the Board's original 10-percent revenue test. 4. The Board notes that Company may engage in activities that 1. See Canadian Imperial Bank of Commerce, 76 Federal Re- are necessary incidents to the proposed underwriting and dealing serve Bulletin 548 (1990); 76 Federal Reserve Bulletin 158 (1990); activities, provided that any such activities are treated as part of the and 74 Federal Reserve Bulletin 571 (1988) (collectively, "Canadi- bank-ineligible securities activities unless Company has received an Imperial Orders"). specific approval under section 4(c)(8) of the BHC Act to conduct 2. Asset data are as of December 31, 1994. them independently. Until such approval is obtained, any revenues 3. See Canadian Imperial Bank of Commerce, et al., 76 Federal from the incidental activities must continue to be counted as Reserve Bulletin 158 (1990); J.P. Morgan & Company Incorpo- ineligible revenues subject to the 10-percent revenue limitation set rated, et al, 75 Federal Reserve Bulletin 192 (1989), aff'd sub forth in the Section 20 Orders, as modified by the Modification nom, Securities Industry Association v. Board of Governors of the Orders. Federal Reserve System, 900 F.2d 360 (D.C. Cir. 1990); Citicorp, 5. See 12 C.F.R. 225.24. et al., 73 Federal Reserve Bulletin 473 (1987), aff'd sub nom, 6. The Board received comments from a customer of Canadian Securities Industry Association v. Board of Governors of the Fed- Imperial ("Protestant") criticizing the proposed acquisition. Specif- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

880 Federal Reserve Bulletin • September 1995 Based on all the facts of record, and for the reasons set order and the Canadian Imperial Orders and the condiforth in this order, the Canadian Imperial Orders, and tions set forth in the above noted Board regulations and other relevant orders, the Board has concluded that orders.7 These commitments and conditions shall be Canadian Imperial's proposal to acquire Argosy is con- deemed to be conditions imposed in writing by the sistent with the Glass-Steagall Act, and that the pro- Board in connection with its findings and decisions, and posed activities are so closely related to banking as to be may be enforced in proceedings under applicable law. proper incidents thereto within the meaning of sec- This transaction shall not be consummated later than tion 4(c)(8) of the BHC Act, provided that Canadian three months after the effective date of this order unless Imperial limits Company's activities as specified in this such period is extended for good cause by the Board or order, the Canadian Imperial Orders, and other relevant by the Federal Reserve Bank of New York, acting pursuorders. Accordingly, the Board has determined that the ant to delegated authority. acquisition of Argosy and the performance of the pro- By order of the Board of Governors, effective posed activities by Canadian Imperial could reasonably July 31, 1995. be expected to produce public benefits that would outweigh possible adverse effects under the proper incident Voting for this action: Chairman Greenspan, Vice Chairman to banking standard of section 4(c)(8) of the BHC Act. Blinder, and Governor Kelley. Absent and not voting: Governors Lindsey, Phillips, and Yellen. Based on all the facts of record, the Board has determined to, and hereby does, approve this notice subject to WILLIAM W. WILES all the terms and conditions discussed in this order and Secretary of the Board in the Canadian Imperial Orders. The Board's approval of this proposal extends only to activities conducted Societe Generale within the limitations of those orders and this order, Paris, France including the Board's reservation of authority to establish additional limitations to ensure that Company's ac- Order Approving a Notification to Engage in Futures tivities are consistent with safety and soundness, con- Commission Merchant and Foreign Exchange-Related flicts of interests, and other relevant considerations under Activities the BHC Act. Company is not authorized to engage in underwriting and dealing in any manner other than as Societe Generale, Paris, France ("Societe Generale"), a approved in this order and the Canadian Imperial Orforeign banking organization subject to the provisions of ders. the Bank Holding Company Act ("BHC Act"), has The Board's determination also is subject to all the provided notice under section 4(c)(8) of the BHC Act terms and conditions set forth in Regulation Y, including (12 U.S.C. § 1843(c)(8)) and section 225.23 of the those in sections 225.7 and 225.23(b) (12 C.F.R. 225.7 Board's Regulation Y (12 C.F.R. 225.23) of the proposal and 225.23(b)), and to the Board's authority to require that its indirect subsidiary, FTMAT Futures USA, Inc., modification or termination of the activities of a bank Chicago, Illinois ("FIMAT"),1 acquire certain assets and holding company or any of its subsidiaries as the Board assume certain liabilities of Brody, White & Company, finds necessary to assure compliance with, and to pre- Inc., New York, New York ("Brody White").2 Societe vent evasion of, the provisions of the BHC Act and the Board's regulations and orders issued thereunder. The Board's decision is specifically conditioned on compli- 7. As noted below, Canadian Imperial may commence the proance with all the commitments made in connection with posed activities immediately. The Board previously has determined this notice, including the commitments discussed in this that Company has in place the operational and managerial infrastructure necessary to ensure compliance with the conditions in the Canadian Imperial Orders and the Section 20 Orders. ically, Protestant believes that the acquisition of Argosy's high- 1. FIMAT is wholly owned by Fimat International Banque, Paris, yield debt underwriting and dealing business would compromise France, a wholly owned subsidiary of Societe Generale. FIMAT the fiduciary interests of customers of Canadian Imperial and currently engages in various futures commission merchant endanger the safety and soundness of Canadian Imperial. In re- ("FCM"), foreign exchange and securities-related activities. See sponse, Canadian Imperial states that it made the decision to Societe Generale, 80 Federal Reserve Bulletin 646 (1994) ("Socieacquire Argosy after considerable due diligence and that Compa- te Generate")', Societe Generale, 80 Federal Reserve Bulletin 649 ny's entry into the high-yield debt underwriting and dealing busi- (1994). ness would not compromise Canadian Imperial's fiduciary respon- 2. Brody White is a clearing member of certain commodities sibility to its customers or place the money of depositors or the exchanges, including the Coffee, Sugar & Cocoa Exchange, Inc.; safety and soundness of Canadian Imperial at risk. Based on all the Commodity Exchange, Inc.; New York Cotton Exchange; New facts of record, including relevant examination reports and other York Futures Exchange; and Financial Futures Exchange. Societe supervisory information, the Board concludes that these comments Generale has stated that FTMAT would become a clearing member do not warrant denial of this notice. of these exchanges. In addition, FIMAT would provide FCM ser- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 881 Generate would thereby engage indirectly in FCM exe- requirements of the NASD upon approval of its membercution, clearance and advisory activities with respect to ship application. futures and options on futures on financial and non- The Board previously has determined by order and financial commodities3 and buying and selling foreign regulation that the proposed activities are closely related exchange in the spot, forward and over-the-counter op- to banking within the meaning of section 4 of the BHC tions markets on the order of investors as riskless princi- Act.6 The Board also must determine that the proposed pal.4 activities "can reasonably be expected to produce bene- Notice of the proposal, affording interested persons an fits to the public, such as greater convenience, increased opportunity to submit comments, has been published (60 competition, or gains in efficiency, that outweigh possi- Federal Register 28,412 (1995); 60 Federal Register ble adverse effects, such as undue concentration of re- 31,157 (1995)). The time for filing comments has ex- sources, decreased or unfair competition, conflicts of pired, and the Board has considered the notice and all interest, or unsound banking practices." comments received in light of the factors set forth in 12 U.S.C. § 1843(c)(8). section 4(c)(8) of the BHC Act. Societe Generate has committed that FIMAT will en- Societe Generate, with total consolidated assets equiv- gage in the proposed activities in accordance with the alent to approximately $275 billion, is the third largest conditions and limitations previously relied on by the commercial banking organization in France.5 In the Board, with two exceptions. United States, Societe Generate operates branches in New York, New York; Chicago, Illinois; and Los Ange- Provision of Services to Certain Sophisticated les, California; an agency in Dallas, Texas; and represen- Non-institutional Customers tative offices in Atlanta, Georgia; Houston, Texas; and San Francisco, California. First, Societe Generate proposes that FIMAT provide FIMAT is an FCM registered with the Commodity FCM execution, clearance and advisory services with Futures Trading Commission ("CFTC") and a member respect to contracts on both financial and non-financial of the National Futures Association ("NFA"), and, there- commodities to persons that do not qualify as institufore, is subject to the recordkeeping, reporting, fiduciary tional customers7 but that trade futures and options on standards, and other requirements of the Commodity futures solely to hedge risks arising from their business Exchange Act (7 U.S.C. § 1 et seq.), the CFTC, and the activities ("non-institutional commercial hedger custom- NFA. In addition, FIMAT is a broker-dealer registered ers"), such as farmers. The Board previously has limited with the Securities and Exchange Commission ("SEC"), bank holding companies to providing non-financial and has applied to become a member of the National commodities-related FCM services to institutional cus- Association of Securities Dealers, Inc. ("NASD"). Ac- tomers. Similarly, with respect to contracts on financial cordingly, FIMAT is subject to the recordkeeping, report- commodities, the Board has not permitted bank holding ing, fiduciary standards, and other requirements of the companies to provide execution-only or clearing-only Securities Exchange Act of 1934 (15 U.S.C. § 78a services to non-institutional customers and only permits et seq.) and the SEC, and would become subject to the bank holding companies to provide advisory services to financially sophisticated customers that have significant dealings in the underlying commodities.8 vices with respect to two contracts traded on the New York Mercantile Exchange that have not previously been approved by the Board, Heating Oil Crack Spread Options and Gasoline Crack Spread Options, and would purchase and sell through the use of omnibus account arrangements certain futures and options on futures on 6. See 12 C.F.R. 225.25(b)(18) and (19); Northern Trust, J.P. non-financial commodities traded on the Winnipeg Commodity Morgan; Banca Commerciale Italiana S.p.A., 76 Federal Reserve Exchange and the London Commodity Exchange. Bulletin 649 (1990) ("BC/"). 3. These activities include providing execution-only and clearing- 7. Under the Board's regulations, "institutional customer" inonly services to customers. See Northern Trust Corporation, 79 cludes an organization or natural person whose net worth exceeds Federal Reserve Bulletin 723 (1993) ("Northern Trust"); J.P. Mor- $1 million. 12 C.F.R. 225.2(g). A non-institutional commercial gan & Co. Incorporated, 80 Federal Reserve Bulletin 151 (1994) hedger customer would have a net worth of less than $1 million. ("J.P. Morgan"). 8. See Bank of Montreal, 79 Federal Reserve Bulletin 1049 4. FIMAT would provide the proposed riskless principal services (1993) and J.P Morgan (contracts on non-financial commodities); only to institutional customers, except that FIMAT would provide Northern Trust and 12 C.F.R. 225.25(b)(19) (contracts on financial such services to certain non-institutional customers when such commodities). These limitations address concerns that, in futures customers direct FIMAT to convert funds from one currency to transactions, unsophisticated customers may place undue reliance another in order to trade futures and options on futures contracts. on investment advice received from a banking organization and FIMAT would not provide foreign exchange-related advisory ser- may not be able to detect investment advice that is motivated by the vices to these non-institutional customers. advisor's self-interest. Similarly, in cases involving clearing-only 5. Asset and ranking data are as of December 31, 1994, and transactions, the limitation helps address the added risk to the bank employ exchange rates then in effect. holding company that results from the more limited ability of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

882 Federal Reserve Bulletin • September 1995 FIMAT's non-institutional commercial hedger cus- foreign exchange-related transactional and advisory sertomers would be engaged, or would be affiliated with a vices in a subsidiary that purchases and sells foreign commercial enterprise that is engaged, in producing, exchange for its own account.12 For example, the Board manufacturing, processing or merchandising products or has permitted bank holding companies to provide forproviding services related to the commodities underlying eign exchange-related advice and transactional services the futures and options on futures contracts in which the through a subsidiary engaged in purchasing and selling customers would trade, and would not be engaged in foreign exchange for its own account to hedge positions executing their own trades on the floor of any commodi- in permissible interest rate or currency swap transactions ties exchanges. Societe Generale has stated that non- or to hedge risks arising from the permissible securities institutional commercial hedger customers would be re- underwriting and dealing activities of the subsidiary.13 quired by FIMAT to state in writing that they would FIMAT would take positions in foreign exchange only engage in "bona fide hedging transactions," as defined as a means to hedge financial statement translations of by the CFTC.9 In addition, FIMAT would establish an income for its French parent and as necessary for the initial credit review process to determine whether a payment of invoices denominated in foreign currencies, non-institutional commercial hedger customer's pro- and would not enter into a foreign exchange transaction posed hedging activities are appropriate, in light of the for its own account with a customer if the customer is customer's net worth and business activities. FIMAT receiving foreign exchange services from FIMAT relatwould not permit a non-institutional commercial hedger ing to such transaction. Societe Generale has committed customer to trade in any commodities other than those that FIMAT will observe the standards of care and that the customer would trade to hedge risks that arise conduct applicable to fiduciaries with respect to its forfrom its commercial activities and would establish a eign exchange-related advisory activities and will prosystem to detect any unauthorized trading activities. vide foreign exchange-related execution and advisory By limiting transactional services and advice to areas services only to institutional customers. Societe Genein which the customer has special expertise, the pro- rale also has committed that FIMAT personnel engaged posed limitations address the concern that the customer in purchasing and selling foreign exchange for FIMAT's would rely unduly on the bank holding company's ad- account will not have access to information about the vice or be unable to detect conflicts of interest or advice foreign exchange trading activities of customers, and that is motivated by the bank holding company's self- FIMAT's customer representatives will not have access interest. Moreover, Societe Generale would abide by all to information about the foreign exchange activities of the other limitations designed to address more specifi- personnel engaged in purchasing and selling foreign cally the potential risks that may result from clearing- exchange for FIMAT's account.14 only and execution-only services provided to these customers.10 Other Considerations Foreign Exchange Activities In every case under section 4 of the BHC Act, the Board must consider the financial condition and resources of Second, in connection with the proposal that FIMAT buy the notificant and its subsidiaries and the effect of the and sell foreign exchange on the order of customers as riskless principal, Societe Generale has proposed that 12. The Board also previously has noted that in conducting FIMAT be permitted to purchase and sell foreign exforeign exchange operations, commercial banks combine the funcchange for its own account for limited purposes while tions of giving advice, executing transactions and taking positions also providing foreign exchange-related execution and in foreign exchange. See Hongkong and Shanghai Banking Corpoadvisory services.11 In several limited circumstances, the ration, et al., 69 Federal Reserve Bulletin 221, 223 (1983). 13. See The Sumitomo Bank, Limited, 80 Federal Reserve Bulle- Board has permitted a bank holding company to provide tin 157 (1994); NationsBank Corporation, 79 Federal Reserve Bulletin 892 (1993) ("NationsBank"). 14. See NationsBank at 894. In addition, Societe Generale has bank holding company to review and reject trades that have been committed that in order to address potential conflicts of interests executed through another FCM. that may arise in connection with providing the proposed foreign 9. See 17 C.F.R. 1.3(z). exchange riskless principal services, FIMAT will disclose to each 10. See J.P. Morgan and Northern Trust. customer that receives advice relating to over-the-counter transac- 11. FIMAT currently provides foreign exchange-related execu- tions in the foreign exchange market that FIMAT may have an tion and advisory services to its customers. See Societe Generale. interest as a counterparty principal in the course of action ulti- In permitting bank holding companies to provide foreign exchange mately chosen by the customer. Also, in any case in which FIMAT execution and advisory services on a combined basis, the Board has has an interest in a specific over-the-counter foreign exchange relied on the representation that the subsidiary providing the for- transaction as counterparty principal, FIMAT will advise its cuseign exchange-related services would not purchase or sell foreign tomer of that fact before recommending participation in that transexchange for its own account. See BCI; Societe Generale. action. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 883 proposal on these resources.15 In this case, the Board by the Federal Reserve Bank of New York, pursuant to notes that Societe Generale's capital ratios satisfy the delegated authority. applicable risk-based standards established under the By order of the Board of Governors, effective Basle Accord, and are considered equivalent to those July 14, 1995. that would be required of a U.S. banking organization. In view of these and other facts of record, the Board has Voting for this action: Chairman Greenspan and Governors determined that financial factors are consistent with ap- Kelley, Phillips, and Yellen. Absent and not voting: Vice Chairman proval of this proposal. The managerial resources of Blinder and Governor Lindsey. Societe Generale also are consistent with approval. JENNIFER J. JOHNSON The Board expects that consummation of the proposal Deputy Secretary of the Board would provide added convenience to Societe Generale's and Brody White's customers and would increase the Orders Issued Under Sections 3 and 4 of the level of competition among existing providers of these Bank Holding Company Act services. Accordingly, based on the commitments made by Societe Generale regarding its conduct of the pro- The Chase Manhattan Corporation posed activities, the limitations on the activities noted in New York, New York this order, and all the facts of record, the Board has determined that the performance of the proposed activi- Order Approving the Acquisition of a Bank Holding ties by Societe Generale could reasonably be expected to Company and Notice to Engage in Nonbanking produce public benefits that would outweigh the possible Activities adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. The Chase Manhattan Corporation, New York, New York ("Chase"), a bank holding company within the Conclusion meaning of the Bank Holding Company Act ("BHC Act"), has applied under section 3 of the BHC Act Based on the foregoing and all the facts of record, the (12 U.S.C. § 1842) to merge with U.S. Trust Corpora- Board has determined to, and hereby does, approve the tion, New York, New York ("UST"), and thereby indinotification subject to all the terms and conditions set rectly acquire United States Trust Company of New forth in this order, and in the above-noted Board regula- York, New York, New York ("USTNY"), in order to tions and orders that relate to these activities. The acquire the securities processing and related back office Board's determination also is subject to all the terms and activities of these organizations.1 Chase also has filed conditions set forth in the Board's Regulation Y, includnotice, pursuant to section 4(c)(8) of the BHC Act ing those in sections 225.7 and 225.23(b), and to the (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Board's authority to require modification or termination Board's Regulation Y (12 C.F.R. 225.23), to acquire of the activities of a bank holding company or any of its U.S. Trust Company of Wyoming, Cody, Wyoming subsidiaries as the Board finds necessary to assure com- ("USTWY"), a nonbanking subsidiary of UST, and pliance with, and to prevent evasion of, the provisions of thereby engage in providing investment advisory serthe BHC Act, and the Board's regulations and orders vices pursuant to section 225.25(b)(4) of Regulation Y issued thereunder. The Board's decision is specifically (12 C.F.R. 225.25(b)(4)); and to acquire Mutual Funds conditioned on compliance with all the commitments Service Company, Boston, Massachusetts ("MF Sermade by Societe Generale in this notice, including the vice"), a nonbanking subsidiary of UST, and thereby commitments discussed in this order and the conditions provide administrative services to open-end investment set forth in this order and in the above-noted Board regulations and orders. For purposes of this action, these commitments and conditions shall be deemed to be conditions imposed in writing by the Board in connec- 1. Prior to the merger with Chase, UST would undergo a corpotion with its findings and decisions, and, as such, may be rate reorganization that will include the transfer by USTNY of all enforced in proceedings under applicable law. of its businesses, other than its securities processing and related back office activities to be acquired by Chase, to a newly estab- This transaction shall not be consummated later than lished state-chartered bank. A new holding company would also three months after the effective date of this order, unless acquire all of UST's banking and nonbanking subsidiaries that are such period is extended for good cause by the Board or not acquired by Chase upon consummation of this proposal. See U.S. Trust Corporation, 81 Federal Reserve Bulletin 893 (1995), {"U.S. Trust Order"). 15. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 Federal Re- In the proposed merger, Chase also would acquire certain custoserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal dial accounts of U.S. Trust Company of California, N.A., a wholly Reserve Bulletin 155 (1987). owned subsidiary of UST. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

884 Federal Reserve Bulletin • September 1995 companies ("mutual funds") and closed-end investment proposal, UST would transfer to a newly formed bank companies.2 substantially all the deposits currently in USTNY. There- Notice of the proposal, affording interested persons an fore, Chase would only acquire approximately opportunity to submit comments, has been published $522 million in deposits associated with USTNY's secu- (60 Federal Register 16,653 and 24,632 (1995)). The rities processing business, representing less than 1 pertime for filing comments has expired, and the Board has cent of total deposits in depository institutions in the considered the application and notices and all comments market.6 Upon consummation of the proposal, Chase received in light of the factors set forth in sections 3 would remain the third largest depository institution in and 4 of the BHC Act. the Metropolitan New York-New Jersey banking market, controlling $28.1 billion in deposits, representing ap- Competitive Considerations proximately 8.2 percent of total deposits in the market. After consummation of this proposal, numerous compet- Chase, with consolidated assets of $114 billion, operates itors would remain in the market, including a newly subsidiary banks in New York, Connecticut, Delaware, reorganized UST, and the market would remain uncon- Florida, Maryland and New Jersey.3 Chase is the sixth centrated, and the increase in market concentration, as largest banking organization in the United States, con- measured by the Herfindahl-Hirschman Index ("HHI"), would be minimal.7 trolling approximately 2 percent of total U.S. banking assets. Chase also engages in a number of permissible Through its acquisition of UST, Chase would acquire nonbanking activities nationwide. UST, a bank holding the business units of UST that provide the following company with consolidated assets of $3 billion, is the types of services: 118th largest banking organization in the United States, (1) Acting as a trustee for unit investment trusts as controlling less than 1 percent of total U.S. banking defined in section 4 of the Investment Company Act assets. of 1940 (unit investment trust services or "UITS"); Chase and UST own depository institutions that com- (2) Providing processing, custody, funds management pete directly in the Metropolitan New York-New Jersey and investment manager services to corporate, penbanking market.4 Chase is the third largest banking or sion and public entities (institutional asset services or thrift organization ("depository institution") in this mar- "IAS"); and ket, controlling deposits of $27.6 billion, representing (3) Providing administrative, custody, transfer agency approximately 8 percent of total deposits in depository and cash management services to registered investinstitutions in the market.5 Prior to consummation of the ment companies as defined in section 3 of the Investment Company Act of 1940 (mutual fund administrative services or "MFAS"). 2. After the merger of UST into Chase, Chase would merge USTNY with and into Chase Manhattan Bank, N.A., New York, In delineating the relevant product market in which to New York ("Manhattan Bank"). Chase intends to contribute assess the competitive effects of a bank acquisition or USTWY and MF Service to Manhattan Bank immediately followmerger, the Supreme Court has determined that "coming the merger of UST into Chase. Chase has applied to the Office of the Comptroller of the Currency ("OCC") for approval of the mercial banking" is the appropriate line of commerce merger of USTNY and Manhattan Bank and has filed notice with because the cluster of banking products and services the OCC to contribute USTWY and MF Service to Manhattan provided by commercial banks is unique relative to other Bank. 3. Asset data are as of December 31, 1994. 4. The Metropolitan New York-New Jersey banking market is approximated by New York City; Long Island, and Orange, Putnam, Rockland, Sullivan and Westchester Counties in New York; 6. Deposit data for UST on a pro forma basis prior to the Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Mor- proposed merger with Chase is as of December 31, 1994. ris, Ocean, Passaic, Somerset, Sussex, Union, Warren and portions 7. Under the revised Department of Justice Merger Guidelines of Mercer Counties in New Jersey, Pike County in Pennsylvania; (49 Federal Register 26,823 (June 29, 1984)), a market in which and portions of Fairfield and Litchfield Counties in Connecticut. the post- merger HHI is below 1000 is considered unconcentrated. 5. Deposit and market share data for the Metropolitan New The Justice Department has informed the Board that a bank merger York-New Jersey banking market are as of June 30, 1994. Market or acquisition generally will not be challenged (in the absence of share data are based on calculations in which the deposits of thrift other factors indicating anticompetitive effects) unless the postinstitutions are included on a 50 percent weighted basis. The Board merger HHI is at least 1800 and the merger increases the HHI by previously has indicated that thrift institutions have become, or more than 200 points. The Justice Department has stated that the have the potential to become, significant competitors of commer- higher than normal HHI thresholds for screening bank mergers for cial banks. See Midwest Financial Group, 75 Federal Reserve anticompetitive effects implicitly recognizes the competitive effect Bulletin 386 (1989). Thus, the Board has regularly included thrift of limited-purpose lenders and other non-depository financial lenddeposits in the calculation of market share on a 50 percent weighted ers. In this case, the HHI for the Metropolitan New York-New basis. See e.g., Comerica Inc., 81 Federal Reserve Bulletin 476, n.3 Jersey banking market would increase by only 2 points to 538 as a (1995); First Hawaiian Inc., 77 Federal Reserve Bulletin 52 (1991). result of this proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 885 institutions.8 UITS, IAS, and MFAS generally are pro- agent, administrative and informational services to their vided by depository institutions and involve a combina- customers, because the resources required to engage in tion of services that banks have traditionally provided, any one type of service are essentially the same as those including trust, custody, transfer agency, asset manage- required to engage in either, or both, of the other two ment, accounting and administration services. In this types of service. For example, firms providing UITS, regard, the Board notes that Chase currently provides IAS, or MFAS generally maintain data processing, cuseach of these services through Manhattan Bank.9 After tody, accounting and recordkeeping systems that are carefully considering all the facts of record, the Board substantially similar and easily adapted to provide any concludes that UITS, IAS, and MFAS are elements of one of these services. In addition, the personnel rethe cluster of products and services included within the sources and skills required to provide the trustee, cuscommercial banking line of commerce.10 Based on all tody, money management and transfer agency functions the facts of record, the Board concludes that consumma- for any of these services are substantially similar. tion of the proposal would not result in any significantly Accordingly, whether a firm offers only one type of adverse effects on competition or the concentration of service, or all three types of service, will depend on the banking resources in the Metropolitan New York-New supplying firm's perception of market demand and Jersey banking market or any other relevant banking whether a service is likely to be profitable, given the market. nature of the supplying firm's existing and potential In light of the unique structure of this proposal, the customer base. In this regard, firms supplying UITS, Board also has analyzed the competitive effects of the IAS, or MFAS generally have the capacity to respond to proposal assuming that UITS, IAS, and MFAS were not shifts in demand for a particular service, thereby making included in the commercial banking product market. As low barriers to providers of one service entering the noted above, this transaction involves essentially the market for other services.11 transfer by UST of its UITS, IAS, and MFAS lines of There are currently 48 firms offering UITS, IAS, or business and the acquisition by Chase of only those MFAS.12 These firms include 16 of the 20 largest bankdeposits associated with these lines of business. Inner ing organizations in the United States.13 UST is the tenth City Press/Community on the Move ("Protestant") has largest provider of these services, with a market share of submitted comments alleging that UITS, IAS, and approximately 2.9 percent, and Chase is the second MFAS should be regarded as separate and distinct prod- largest provider with a market share of approximately uct markets for purposes of competitive analysis. Protes- 12.1 percent.14 Upon consummation of this proposal, tant contends that this proposal would have significant Chase would become the largest provider of these seradverse effects on competition in the separate markets vices, with a market share of 15 percent. The combined for IAS and MFAS, and in particular, for UITS. Protes- market for such services, as measured by the HHI, tant has provided the Board no evidence that supports its would be considered moderately concentrated, with the contention that UITS, IAS, and MFAS are separate prod- HHI increasing 70 points from 1001 to 1071.15 The uct markets. Chase argues that these services are not Department of Justice has concluded that this proposal distinct product markets and that the proposal would have no adverse competitive effects. Based on all the facts of record, including information 11. Evidence suggests that UITS, IAS, and MFAS may be part of provided by Chase and Protestant's comments, the Board a larger product market that would include, for example, American depositary receipts ("ADR") processing and government securities concludes that, even if UITS, IAS, and MFAS are not clearing. While there are a larger number of competitors in this considered part of the commercial banking product marbroader market, the Board, for purposes of its alternative competiket, each such service should not be considered a sepa- tive analysis, has analyzed this case on the basis of the narrower rate product market for purposes of competitive analysis. market discussed above. UST and Chase currently play either a Institutions providing UITS, IAS, or MFAS generally minor role or no role in the businesses of ADR processing and government securities clearing. have the capacity to provide an array of custody, transfer 12. Because of the nature of these businesses and geographic dispersion of customers seeking these services, the Board has determined that competition for UITS, IAS, and MFAS is, at least, 8. See United States v. Phillipsburg National Bank, 399 U.S. 350, national. 359 (1970); United States v. Philadelphia National Bank, 374 U.S. 13. The total consolidated assets of these 16 firms, as of Decem- 321, 356 (1963). To measure the "cluster of products and ser- ber 31, 1994, range from $40 billion to $250 billion. vices," the Court has used bank deposits as a proxy for the market 14. Market share for these services is calculated on the basis of share of the institution. the dollar value of UITS, IAS, and MFAS assets held by organiza- 9. As indicated above, Chase has applied to the OCC to merge tions providing such services. USTNY into Manhattan Bank and to contribute USTWY and MF 15. Under the revised Department of Justice Merger Guidelines, Service to Manhattan Bank. a market in which the post-merger HHI is between 1000 and 1800 10. See The Bank of New York Company, Inc., 74 Federal is considered moderately concentrated. In a moderately concen- Reserve Bulletin 257 (1988). trated market, the Justice Department will not challenge an acquisi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

886 Federal Reserve Bulletin • September 1995 would not have a significantly adverse effect on competi- tains, on the basis of data filed under the Home Morttion. Based on all the facts of record, including com- gage Disclosure Act (12 U.S.C. § 2801 et seq.) ments by Protestant and Chase, the Board concludes ("HMDA"), that Manhattan Bank, Connecticut Bank, that, even if UITS, IAS, and MFAS are not considered and Chase's mortgage subsidiaries have failed to assist part of the commercial banking product market, consum- in meeting the housing-related credit needs of areas mation of this proposal would not result in a signifi- within their service communities in New York City and cantly adverse effect on competition in the relevant Binghamton, both of New York, and Bridgeport, Conmarket for these services. necticut. Protestant also alleges that Chase and its mortgage subsidiaries have violated the Equal Credit Oppor- Convenience and Needs Considerations tunity Act (15 U.S.C. § 1691 et seq.) and the Fair Housing Act (42 U.S.C. § 3601 et seq.) (together, "fair In acting on an application to acquire a depository insti- lending laws"). tution under the BHC Act, the Board must consider the The Board has carefully reviewed the CRA perforconvenience and needs of the communities to be served mance record of Chase and its subsidiaries in light of the and take into account the records of the relevant deposi- CRA, relevant fair lending laws and related regulatory tory institutions under the Community Reinvestment Act materials, the Board's regulations, the Statement of the (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires Federal Financial Supervisory Agencies Regarding the the federal financial supervisory agencies to encourage Community Reinvestment Act ("Agency CRA Statefinancial institutions to help meet the credit needs of the ment"),20 all comments received, and Chase's response local communities in which they operate, consistent with to these comments. their safe and sound operation. To accomplish this end, the CRA requires the appropriate federal supervisory Evaluation of CRA Performance authority to "assess the institution's record of meeting the credit needs of its entire community, including low- A. Examination Record of CRA Performance and moderate-income neighborhoods, consistent with the safe and sound operation of such institution," and to The Agency CRA Statement provides that a CRA examtake that record into account in its evaluation of applicaination is an important and often controlling factor in the tions.16 consideration of an institution's CRA record, and that Protestant has submitted comments alleging deficien- these reports of examination will be given great weight cies in Chase's record of performance under the CRA. In in the applications process.21 In this case, the Board particular, Protestant contends that Manhattan Bank, notes that all of Chase's subsidiary banks received "out- Chase Manhattan Bank of Connecticut, Bridgeport, Con- standing" or "satisfactory" ratings at the most recent necticut ("Connecticut Bank")17 and Chase's mortgage examinations of their CRA performance by their primary subsidiaries18 have failed to ascertain credit needs, mar- federal supervisors. In particular, Chase's lead bank, ket their services or extend credit in neighborhoods with low- and moderate-income and minority residents in the South Bronx, Upper Manhattan and Brooklyn in New tan Bank of New Jersey, N.A., Oradell, New Jersey ("New Jersey York and in Connecticut.19 In addition, Protestant main- Bank"), in Bergen and Passaic Counties in New Jersey. New Jersey Bank was established in March 1995 to acquire the assets and liabilities of three branches of a failed savings association from the Resolution Trust Corporation. Chase has hired a community investtion (in the absence of other factors indicating anti-competitive ment officer for New Jersey Bank and has developed a CRA effects) unless the merger increases the HHI by 100 points. statement and community investment plan for the bank. The com- 16. See 12 U.S.C. § 2903. munity investment plan establishes preliminary lending goals for 17. Through a multi-step corporate reorganization, Chase merged the bank in its delineated communities, including loans to low- and Connecticut Bank with and into Manhattan Bank, effective May 1, moderate-income individuals and small businesses. The plan also 1995. See Chase Manhattan Corporation, 81 Federal Reserve includes proposed methods for ascertaining the credit needs of the Bulletin 467 (1995) ("Chase Order"). community and calls for New Jersey Bank to sponsor educational 18. Chase recently reorganized its mortgage lending operations seminars for members of its community, including first-time home into a subsidiary of Manhattan Bank, Chase Manhattan Mortgage buyers and small businesses. Moreover, Chase intends to model Corporation ("CMMC"). CMMC was formed by merging Chase New Jersey Bank's CRA program on the CRA programs imple- Home Mortgage Corporation with Troy & Nichols, Inc. ("Troy & mented by Chase's other banks, including Manhattan Bank, all of Nichols") and American Residential Mortgage Company ("Ameri- which, as discussed above, have satisfactory or outstanding records can Residential"), which Chase acquired in 1993 and 1994, respec- of CRA performance. In light of these and other facts of record, the tively. CMMC also includes Chase Manhattan Personal Financial Board does not believe that Protestant's comments regarding Services, Inc., which formerly was a subsidiary of Chase U.S. Chase's CRA performance in New Jersey warrant denial of this Consumer Services, Inc ("CUSCS"). proposal. 19. Protestant also makes similar allegations regarding the CRA 20. 54 Federal Register 13,742 (1989). performance of Chase and its subsidiary bank, The Chase Manhat- 21. See Agency CRA Statement at 13,745. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 887 Manhattan Bank, and Connecticut Bank received "satis- cooperation with affordable housing organizations and factory" ratings from the OCC at their most recent private redevelopers, as illegally discouraging a reasonexaminations for CRA performance both as of October able person from making or pursuing an application on a 1993.22 USTNY also received a "satisfactory" rating prohibited basis such as race, national origin or gender from the Federal Reserve Bank of New York at its most ("pre-screening"). Finally, the Board considered recent examination for CRA performance in September Chase's mortgage-backed securities activities conducted 1994.23 through Chase Mortgage Finance Corporation in light of Protestant's allegations of fair lending law violations. B. Previous Review of Chase's Compliance and Based on all the facts of record, and for the reasons CRA Records stated in the Chase Order, the Board concluded that Protestant's allegations did not support a finding that fair The Board recently reviewed Chase's record of compli- lending laws had been violated.27 ance with fair lending laws and record of performance As explained in the Chase Order, the Board also under the CRA in connection with an application to carefully reviewed the CRA performance records of establish a de novo savings bank to effect the merger of Manhattan Bank and Connecticut Bank. A number of Manhattan Bank and Connecticut Bank in a corporate steps initiated by Manhattan Bank to assist in meeting reorganization.24 This review was conducted in light of the housing-related credit needs in low- and moderatesubstantial comments filed by Protestant and involved income areas of its communities, including Upper Mancareful consideration of a number of the issues that the hattan and the South Bronx, were discussed in the Chase Protestant has raised again in this application. Order.28 The activities of Chase's Small Business Group, In considering Chase's compliance with fair lending which included a pilot lending program to be introduced laws, the Chase Order noted the conclusions by the in the Bronx,29 and the bank's participation in govern- OCC, the primaiy federal supervisor for Manhattan Bank mentally sponsored programs, were also noted.30 Manand Connecticut Bank, that neither these banks nor the hattan Bank's outreach and marketing efforts were found Chase mortgage subsidiaries have engaged in illegal discriminatory lending or credit practices.25 In particular, policy of lending on properties valued in excess of $350,000— the OCC reviewed allegations raised by Protestant that violates fair lending laws. Manhattan Bank's practice of referring loan applicants 27. Protestant also asserts that CMMC violates fair lending laws to specialized lending units on the basis of product by originating mortgage loans that do not meet the underwriting profile and financing requirements violated fair lending criteria used by government-sponsored secondary market purchaslaws.26 The Board also considered Protestant's criticisms ers, such as the Federal National Mortgage Association ("FNMA"). The fact that CMMC originates loans that do not conform to the of lending activities conducted by Manhattan Bank, in underwriting criteria of FNMA does not in and of itself constitute a fair lending violation. Rather, a finding of a fair lending violation must be based on evidence that a lender has discriminated against 22. The Chase Manhattan Bank of Florida, Tampa, Florida, an applicant for credit on a prohibited basis, including on the basis received a "satisfactory" rating from the OCC as of October 1993; of race, national origin or gender. 15 U.S.C. § 1691 and and The Chase Manhattan Bank of Maryland, Baltimore, Mary- 42 U.S.C. § 3604. In addition, the Board notes that, as a subsidiary land, received a "satisfactory" rating from the Federal Reserve of Manhattan Bank, CMMC's lending practices are subject to fair Bank of Richmond as of February 1995. The Chase Manhattan lending examination by the OCC. As explained above, the OCC Bank (USA), Wilmington, Delaware, a specialized bank engaged in found no fair lending violations in the most recent fair lending credit card operations, received an "outstanding" rating from its examinations for Manhattan Bank and several of Chase's mortgage primary supervisor, the Federal Deposit Insurance Corporation, as subsidiaries. of August 1994. 28. These programs included the Tax Advantaged Installment 23. In connection with an application filed by UST to reorganize Loan ("TAIL") product (featuring 100 percent financing and minias part of the proposed sale of assets and businesses to Chase, the mal closing costs) for residents purchasing cooperative units in two Board has reviewed USTNY's record of CRA performance and projects located in the Bronx, and the Ownership Transfer Program concluded that it is consistent with approval of a proposal under the which provided $8.9 million for 487 units of affordable housing in convenience and needs considerations in the BHC Act. See U.S. Upper Manhattan and the Bronx. Trust Order. 29. The Small Business Group's development in 1993 of a Small 24. See Chase Order. Business Plan to achieve higher levels of lending to small busi- 25. The OCC's conclusion was based on the results of its nesses in low- and moderate-income areas has resulted in 20 small performance examinations and fair lending examinations for Man- business loans totalling $1.9 million, with the majority of the hattan Bank, Connecticut Bank and several of Chase's mortgage applicants located in low- to moderate-income areas. The Group subsidiaries. These examinations included a review of samples of has allocated $500,000 for its pilot program in the Bronx. loan files at Manhattan Bank and Connecticut Bank as well as 30. Manhattan Bank has $5 million in Small Business Adminis- Chase Home Mortgage Corporation, Chase Manhattan Personal tration loans for the first half of 1993, $2 million in outstanding Financial Services, Inc., and other nonbank affiliates that sell mort- loans under the New York Business Development Loan Program, gages to Chase's subsidiary banks. and the largest outstanding amount of loans for lenders under the 26. Protestant contends that another aspect of Chase's organiza- New York City Small Business Reserve Fund, with $1.3 million tional structure into specialized lending subsidiaries—CUSCS's outstanding in 1993. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

888 Federal Reserve Bulletin • September 1995 to involve a formal process to ascertain community estant reiterates in comments on this application many of credit needs through focus groups, community contacts, the issues raised and considered recently in connection and independent market research, and marketing pro- with the Chase reorganization, the Board has reaffirmed grams that included specific low- and moderate-income and incorporated in this case the reasons, evidence and areas and communities with predominately minority res- conclusions explained in the Chase Order?5 idents. OCC examiners also have concluded that Manhattan Bank's branch locations provided reasonable ac- C. CRA-Related Activities in Brooklyn cess to most segments of its delineated community, and have noted with approval Chase's efforts to provide Protestant alleges that Manhattan Bank has failed to banking services to underserved areas through the use of ascertain and meet the credit needs of low- and mobile banking units.31 In addition, the Chase Order moderate-income residents in Brooklyn, particularly in considered the findings of OCC examiners that Chase's the Bushwick and Brownsville sections. As a general branch closing policy took into account the views of matter, Manhattan Bank has initiated a number of steps local community groups and political leaders in order to to strengthen its already satisfactory record of meeting minimize any impact a closing would have on an area, the credit needs of residents in low- and moderateand that branch office closings have had no adverse income areas throughout its designated communities, impact on Chase's communities. and the various components of the bank's CRA program Connecticut Bank's record of CRA performance was are available in all areas of New York City, including found to demonstrate that the bank affirmatively solicits Brooklyn. For example, Manhattan Bank makes affordmortgage loans in low- and moderate-income census able housing loans available through the Community tracts and neighborhoods with predominately minority Homebuyers Program ("CHBP") to assist in addressing residents. The Chase Order noted steps taken by the housing-related credit needs. The CHBP provides mortbank to increase mortgage lending in underserved low- gage loans with such features as a low down payment and moderate-income neighborhoods, including origina- and flexible underwriting criteria.36 In addition, the tions at bank branches, hiring low- and moderate-income Chase Community Development Corporation mortgage origination specialists, offering governmen- ("CCDC") is active in providing financing for low- and tally sponsored loans, and increased marketing efforts.32 moderate-income housing in Brooklyn. During 1994, Connecticut Bank's small business lending activities CCDC provided $9.9 million to finance the construction were also found to assist in meeting credit needs.33 of 53 new three-family houses in Brooklyn; $6.6 million Finally, OCC examination findings that the bank's out- through the New York City Housing Authority Turnkey reach and marketing efforts informed its entire commu- Program to finance the construction of a 78 unit apartnity of the credit products and services available, and ment building in Brooklyn; and $185,000 through the that branch locations were reasonably accessible were HPD's Vacant Building Program to finance the rehabilinoted.34 For these and other reasons discussed in the tation of a 41 unit apartment building in Brooklyn. Chase Order, the Board determined that Protestant's comments relating to Chase's compliance with fair lending laws, and the CRA performance records of Connect- 35. Protestant maintains that the conclusions reached in the icut Bank and Manhattan Bank, particularly in Upper Chase Order should not control consideration of the same issues in Manhattan and South Bronx, did not warrant denial of this application. For example, Protestant maintains that the OCC's fair lending examinations were unreliable because they involved the proposal involved in the Chase Order. Because Protthe examination of only a sample of loan files. In addition, Protestant maintains that Chase's organizational structure should be reexamined because a substantial number of Manhattan Bank's mort- 31. The Chase Order noted that 9 of Manhattan Bank's 14 Bronx gage loans are sold on the secondary mortgage market, and, thus, branches and mobile banking units are located in low- to moderate- may not offer flexible underwriting options. The Board notes that income census tracts, and that 11 of the bank's 48 Manhattan file sampling is a recognized examination methodology (see e.g., branches are located in low- to moderate-income census tracts. OCC Examination Bulletin 93-3, Examining for Residential Lend- 32. Connecticut Bank also initiated a pre-approval program for ing Discrimination (April 30, 1993)), and that banks are not relow- and moderate-income home buyers. quired to maintain CRA- related loans in their portfolio. Further- 33. For example, at the time of Connecticut Bank's October 1993 more, the Board notes that Manhattan Bank offers a variety of CRA performance examination, the bank originated $1.6 million in mortgage products that offer flexible underwriting criteria, includ- Small Business Administration loans, $3.9 million in loans under ing, for example, the TAIL program. Finally, because many of the the Connecticut Works Guarantee Fund (a program to create and issues raised by Protestant in this case regarding Chase's record are maintain jobs in Connecticut by means of state guaranteed loans), similar or identical to the issues raised by Protestant in the past case and $900,000 in loans under the Urbank Fund (a lending program and considered less than four months ago, the Board believes that, specifically designed to assist small businesses). to the extent there has been no material change in circumstances, 34. For example, the OCC examination noted that 17 of Connect- the Board may, and should, rely on its previous findings. icut Bank's 51 branches are located in low- and moderate-income 36. During the first half of 1993, Manhattan Bank originated 140 communities. CHBP loans totalling $17 million. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 889 As noted in the Chase Order, Manhattan Bank also ties.40 In addition, these data indicate an increase in the has implemented specific efforts to communicate with number of loan applications from, and originations in, and ascertain the credit needs of low- and moderate- minority census tracts.41 Preliminary 1994 HMDA data income and minority residents within its delineated com- also indicate that Chase received an increased number of munities. These outreach and ascertainment efforts have applications from the Bushwick/Brownsville sections of led to a number of new products, many of which are Brooklyn. HMDA data for Binghamton, New York, and housing related. For example, to assist the housing- Bridgeport, Connecticut, indicate that Chase has assisted related needs of low- and moderate-income residents of in meeting the housing-related credit needs of minorities Brooklyn, Chase offers a 97 percent loan-to-value mort- in these communities. For example, these data indicate gage product and a "Qualifier" mortgage with reduced that, in Binghamton, the percentage of applications reloan-to-value requirements and flexible income and debt ceived by Chase from African Americans in 1993 exunderwriting criteria. Chase also has established a mort- ceeded the percentage received by lenders in the aggregage settlement assistance program, which provides in- gate during 1993 42 Similarly, in Bridgeport, these data stallment loans to help borrowers finance closing costs. indicate an increase from 1993 to 1994 in the number of As previously noted, Manhattan Bank's branch locations applications received from minorities, as well as an also provide reasonable access to most segments of its increase in the number of loan originations to minorities delineated community, and six of Manhattan Bank's during the same period. 16 Brooklyn branches are in low- to moderate-income However, HMDA data for Chase and its mortgage census tracts. subsidiaries in its delineated communities also indicate some disparities in the rate of loan originations, denials, D. HMDA Data and applications by racial group and income levels. The Board is concerned when an institution's record indi- The Board has carefully reviewed 1993 and preliminary cates disparities in lending to minority applicants and 1994 HMDA data for Manhattan Bank and Connecticut believes that all banks are obligated to ensure that their Bank,37 including the relevant mortgage subsidiaries and lending practices are based on criteria that assure not CUSCS, for Brooklyn and Binghamton, New York, and only safe and sound lending, but also equal access to Bridgeport, Connecticut, in light of Protestant's com- credit by creditworthy applicants regardless of race. The ments.38 These data generally indicate that Chase has Board recognizes, however, that HMDA data alone procontinued to provide housing-related loans to low- and vide an incomplete measure of an institution's lending in moderate-income and minority neighborhoods through- its community, and have limitations that make the data out the communities served by these subsidiaries.39 For an inadequate basis, absent other information, for conexample, Chase's preliminary 1994 HMDA data for cluding that an institution has engaged in illegal discrim- Brooklyn indicate an increase in the number of applica- ination in making lending decisions. tions received from, and loan originations to, minori- OCC examiners found no evidence of prohibited discrimination or other illegal credit practices during the most recent CRA performance examinations of Manhattan Bank and Connecticut Bank. The examination also 37. Protestant maintains that Chase has incorrectly prepared its found no evidence of practices intended to discourage 1994 Loan Application Register, because the property location for applications for the types of credit listed in the banks' approximately 16,000 of the entries is listed as "N/A". Chase states CRA statements. Furthermore, Chase has initiated a that these entries represent transactions involving properties lonumber of steps designed to insure the equal treatment cated outside a Metropolitan Statistical Area or applications in which the address of the property was not provided by the appli- of low- and moderate-income and minority borrowers by cant, such as prequalification applications. Protestant also objects all Chase entities. These efforts are discussed in detail in to being provided HMDA data in written rather than electronic the Chase Order and include a second review program, a form and for CMMC on an aggregate basis. Based on all the facts of record, including information provided by Chase, it appears that the property location entries listed as "N/A" were appropriate and that the data have been provided to Protestant in accordance with 40. Applications received from African Americans in Brooklyn applicable regulations. increased from 296 in 1993 to 403 in 1994, and originations 38. The Board previously has considered 1993 HMDA data and increased from 221 to 256 during this period. preliminary 1994 HMDA data reported by Chase for the South 41. During 1994, Chase received 387 applications from minority Bronx and Manhattan and, for the reasons discussed in the Chase census tracts in Brooklyn, and originated 228 HMDA loans in these Order, does not believe that these data would warrant denial of this tracts. This reflects an increase from the 351 applications and 222 proposal. originations reported for 1993 in minority census tracts. 39. The 1993 HMDA data does not include data reported by Troy 42. In addition, the percentage of applications from African & Nichols, which Chase acquired in 1993. The 1994 HMDA data Americans that Chase received during 1994 in Binghamton exinclude data for Troy & Nichols and American Residential, both of ceeded the percentage of African Americans in the Binghamton which now are part of CMMC. Metropolitan Statistical Area. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

890 Federal Reserve Bulletin • September 1995 periodic analysis of HMDA data, a comparative mort- Other Considerations gage loan file review, special advertising programs directed toward minority borrowers in certain geographi- The Board also concludes that the financial46 and manacal areas, and a "mystery shopper" program.43 gerial resources and future prospects47 of Chase and its bank subsidiaries, and other supervisory factors the Conclusion Regarding Convenience and Needs Board must consider under the BHC Act, are consistent Considerations with approval of this proposal. Chase also has filed notice pursuant to section 4(c)(8) The Board has carefully considered all the facts of to acquire MF Service and thereby provide administrarecord, including all comments received, in reviewing tive services to closed-end investment companies48 and the convenience and needs factors under the BHC Act.44 mutual funds.49 The administrative services MF Service Based on a review of the entire record of performance, provides to closed-end funds and mutual funds include including information submitted by both Chase and Protestant in connection with this proposal and the application in the Chase Order, and for the reasons discussed in recent examinations were determined by the OCC at the time of the this order and the Chase Order, the Board believes that Chase Order to be current). The Board is required by the BHC Act the efforts of Chase and its subsidiaries to help meet the and the Board's rules to act on applications submitted under sections 3 and 4 of the BHC Act within specified time periods. Based credit needs of all segments of their communities, inon all the facts of record, including reasons discussed in the Chase cluding low- and moderate-income neighborhoods, and Order, the Board concludes that the record is sufficient to act on their compliance with fair lending laws, are consistent this application and these notices at this time and that delay or, in with approval of this application.45 the alternative, denial on the grounds of informational insufficiency of this application and these notices is not warranted. 46. Protestant argues that a number of recent publicly announced events raise adverse financial considerations, including statements 43. Protestant alleges that certain programs offered by Manhattan by investors and others that Chase's stock is undervalued, reduc- Bank that permit customers to avoid transaction or account fees by tions in first quarter 1995 earnings, proposed branch sales, Chase's maintaining minimum balances in accounts with Manhattan Bank international activities, employment of a cost cutting consultant, or affiliated entities, including mutual funds advised by Manhattan currency trading and swap activities, and certain proposed activities Bank, may violate the fair lending laws and the anti-tying restric- and transactions. The Board has carefully reviewed these events in tions of Regulation Y (12 C.F.R. 225.7). However, Protestant has light of the overall financial condition of Chase and its subsidiaries. presented no evidence suggesting that such programs have a dis- Based on all the facts of record, including reports of examination criminatory effect on any group protected by the fair lending laws. and other supervisory information from Chase's primary federal The Board also notes that recent amendments to Regulation Y supervisors, the Board does not believe that these matters warrant permit a bank to offer discounts to customers who maintain a denial of the proposal. combined minimum balance in products specified by the bank. See 47. Protestant alleges that certain actions taken by the manage- 12 C.F.R. 225.7(b)(4). ment of Chase reflect adversely on the managerial resources of 44. The Board has concluded that a number of issues considered Chase. These include investing in a Norwegian company doing by the Board in the Chase Order and raised again by the Protestant business with Libya, failure of Manhattan Bank to reimburse a in this proposal do not warrant denial. For example, Protestant couple for an unauthorized ATM withdrawal, failure of Manhattan maintains that Chase's CRA performance and fair lending compli- Bank to provide proper disclosure to a bank customer in connection ance should be reviewed on a nationwide basis. For the reasons with the sale of an uninsured investment product, release of a press discussed in the Chase Order, the Board believes that the scope of statement that Protestant maintains inflates the number of mortgage consideration for Chase's CRA-related activities is consistent with loans made by Chase to minorities, and the proposed investment in the requirements of the CRA. The Board also believes that the an insurance company by a limited partnership affiliated with scope of review accorded Protestant's fair lending issues is appro- Chase. The Board has noted that these actions involve, for the most priate in light of all the facts of record. Protestant continues to part, individual complaints or allegations that may be addressed allege that American Residential has violated fair lending laws in through the supervisory authority of the appropriate federal superlight of its 1993 HMDA data. The Board noted in the Chase Order visor if such action is appropriate. The Board has carefully rethat these allegations predated Chase's acquisition of American viewed these matters in light of the overall performance record of Residential and that, as a subsidiary of CMMC, American Residen- the management of Chase. The Board concludes, based on all the tial is now subject to the fair lending and HMDA compliance facts of record, including reports of examination assessing the policies and procedures generally applicable to all CMMC units. In managerial resources and policies of Chase and its subsidiaries, addition, as subsidiaries of a national bank, CMMC and all its that these isolated events, even if assumed to be true, do not lending subsidiaries are subject to the supervisory authority of the warrant denial of this proposal. Protestant also has raised manage- OCC. rial and supervisory matters with respect to UST. These issues have 45. Protestant suggests a number of grounds for delaying consid- been reviewed by the Board and are discussed in the U.S. Trust eration of this proposal, including the need for additional informa- Order. tion from Chase on its small business lending and certain special- 48. The Board has by regulation authorized bank holding compaized mortgage lending programs, resubmission of Chase's 1994 nies to sponsor, organize, and manage closed-end investment com- HMDA data in light of a programming error discovered in Ameri- panies pursuant to 12 C.F.R. 225.25(b)(4). can Residential's reporting of its 1993 HMDA data (which Chase 49. MF Service would not act as a sponsor of any new mutual states has been corrected), and new CRA and fair lending examina- fund. In addition, MF Service would not provide any administrative tions for Chase's banking and nonbanking subsidiaries (the most services to the Vista Funds or to mutual funds the shares of which Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 891 computing the fund's net asset value and performance MF Service "can reasonably be expected to produce data, coordinating communications and activities be- benefits to the public . . . that outweigh possible adverse tween the investment advisor and the other service pro- effects, such as undue concentration of resources, deviders, accounting and recordkeeping, disbursing pay- creased or unfair competition, conflicts of interests, or ments for the fund's expenses, providing office space for unsound banking practices." 12 U.S.C. § 1843(c)(8). the fund, and preparing and filing tax and regulatory The Board previously has determined that the provireports for the fund.50 The Board previously has deter- sion of the proposed administrative services within cermined that these activities are closely related to banking, tain parameters is not likely to result in the types of and MF Service has committed to conduct these activi- subtle hazards at which the Glass-Steagall Act is aimed ties subject to the prudential and other limitations previ- or any other adverse effects.54 The Board believes that ously established by the Board.51 Under these circum- the performance of the proposed activities by MF Serstances, and for the reasons discussed in Mellon, the vice can reasonably be expected to produce benefits to Board concludes that the administrative activities for the public such as a wider range of products, increased mutual funds proposed to be provided by MF Service52 efficiency, and greater convenience for Chase's customare not prohibited by the Glass-Steagall Act ers. Based on all the facts of record, the Board finds that (12 U.S.C. §§ 221a and 377) and are permissible non- the public benefits of MF Service's proposed activities banking activities for bank holding companies.53 outweigh any adverse effects and, therefore, the activi- In order to approve this notice, the Board also must ties are a proper incident to banking for purposes of find that the performance of the proposed activities by section 4(c)(8) of the BHC Act.55 Request for a Hearing are sold or marketed primarily to customers of Chase's subsidiary banks. 50. A list of the proposed administrative services is included in Protestant has requested that the Board hold a public the Appendix. meeting or hearing on the section 3 application to clarify 51. See State Street Boston Corporation, 81 Federal Reserve factual disputes and present certain facts as part of the Bulletin 297 (1995) ("State Street")-, Mellon Bank Corporation, 79 record.56 Section 3(b) of the BHC Act does not require Federal Reserve Bulletin 626 (1993) ("Mellon"). In particular, the distributor of the mutual funds would not be affiliated with MF Service or Chase, and neither Chase nor MF Service would be involved in the distribution of the shares of any mutual fund. MF 54. See Mellon. Protestant disagrees with this conclusion and Service would not be involved in the promotion or sale of the maintains generally that Chase's acquisition of MF Service would shares of any mutual fund, and would not engage in any marketing, result in a violation of the BHC Act and the Glass-Steagall Act. sales or advertising activities relative to any mutual fund. MF For the reasons discussed above and in Mellon, the Board con- Service would provide the distributor of a mutual fund with perfor- cludes that, subject to the conditions contained in this order, conmance and portfolio data, and MF Service would review marketing summation of the proposed transaction is consistent with the BHC materials prepared by the distributor for the sole purpose of ensur- Act and the Glass-Steagall Act. Protestant also alleges that inforing compliance with all pertinent regulatory requirements. Chase mation submitted by Chase on the activities of MF Service conflict would not acquire for its own account more than 5 percent of the with information in press releases submitted by Protestant. Based shares of any mutual fund administered by MF Service, and Chase on all the facts of record, including a review of the relevant has committed not to provide administrative services to any mutual documents, the Board does not believe that the information in the fund to which it or any of its affiliates provides advisory services. documents is inconsistent. 52. Chase also seeks approval for MF Service to provide tele- 55. Chase also has filed notice pursuant to section 4(c)(8) to phone shareholder services ("telephone services") as an additional acquire USTWY and engage in organizing and providing adminisadministrative service through a toll-free 800 number specific to trative services to limited liability companies ("LLCs") established each mutual fund family. Telephone services operators would pro- pursuant to Wyoming law to operate as private investment compavide a variety of information including general share holdings and nies for institutional investors and high-net-worth individuals. Protvaluation information to current shareholders and will mail a pro- estant argues that USTWY's activities violate the BHC Act and the spectus upon the request of existing and potential new sharehold- Glass-Steagall Act. Chase proposes to transfer this company immeers. Telephone services operators would not solicit callers to pur- diately to Manhattan Bank and conduct these activities pursuant to chase shares in particular mutual funds. Substantive questions the OCC's rules governing operating subsidiaries of banks. The regarding mutual fund performance or strategies would be referred Board's regulations provide that a national bank controlled by a to specific mutual fund distributors or investment advisors. In this bank holding company may acquire securities of a company in light, the telephone services are primarily ministerial or clerical in accordance with the rules of the OCC. The Board has determined to nature and do not involve Chase in the distribution of mutual funds. approve this notice on the basis that USTWY will be transferred to Based on all the facts of record, and Chase's representations with Manhattan Bank and that Chase will conduct these activities in regard to these telephone services, the Board believes that the accordance with the regulations of and conditions imposed by the proposed additional telephone services are consistent with the OCC upon its acquisition. In the event that Chase does not transfer activities that the Board approved in State Street and Mellon. USTWY to Manhattan Bank immediately following the acquisition 53. Chase proposes to have limited director and/or employee of these shares, Chase has committed that it will conform the interlocks with certain mutual funds to which it provides adminis- activities of USTWY to the requirements of the BHC Act. trative services. These interlocks must be in accordance with the 56. A substantial portion of the factual disputes alleged by limitations contained in Mellon and State Street. Protestant, including issues relating to the alleged disparate treat- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

892 Federal Reserve Bulletin • September 1995 the Board to hold a public hearing or meeting on an Moreover, after a careful review of all the facts of application unless the appropriate supervisory authority record, the Board concludes that Protestant's request for the bank to be acquired makes a timely written disputes the weight that should be accorded to, and the recommendation of denial of the application.57 No super- conclusions that may be drawn from, the existing facts visory agency has recommended denial of the proposal. of record, or disputes facts that are not material to the Generally, under its rules, the Board may, in its discre- Board's decision. For these reasons, and based on all the tion, hold a public hearing or meeting on an application facts of record, the Board has determined that a public to clarify factual issues related to the application and to meeting or hearing is not necessary to clarify the factual provide an opportunity for testimony, if appropriate. record in this application, or otherwise warranted in this 12 C.F.R. 262.3(e) and 262.25(d). In the Board's view, case. Accordingly, Protestant's request for a public hearall interested parties have had ample opportunity to ing or meeting on this application is denied. submit their views, and substantial written submissions have been received.58 Protestant's request fails to demonstrate why its substantial written submissions do not Conclusion adequately present its allegations or why a public hearing or meeting is otherwise warranted in this case.59 Based on the foregoing and all the facts of record, including all of Chase's commitments and representations, and subject to all the terms and conditions set forth ment of borrowers resulting from Chase's specialized lending in this order, the Board has determined that the section 3 operations and the alleged pre-screening by developers in housing application and the section 4 notice with regard to MF projects involving Chase, were considered in the Chase Order and Service should be, and hereby are, approved.60 The for the reasons set forth in that order and incorporated herein, found Board's determination is subject to all the conditions set not to warrant a hearing or meeting. Other grounds cited by Protestant for a hearing include the opportunity to contest Chase's forth in Regulation Y, including those in sections 225.7 description of its small business activities, to obtain information on and 225.23(b)(3) of Regulation Y (12 C.F.R. 225.7 and various Chase lending activities, to present oral testimony on 225.23(b)(3)), and to the Board's authority to require alleged improper disclosures made in connection with the sale of an modification or termination of the activities of a bank uninsured investment product, and to determine whether Chase has integrated the CRA into its overall business plans. Protestant also holding company or any of its subsidiaries as the Board has requested a hearing on the grounds that the acquisition of MF finds necessary to assure compliance with, and to pre- Service by Chase would create interlocks between Chase and vent evasion of, the provisions of the BHC Act and the mutual funds that are impermissible under the Glass-Steagall Act. 57. Under section 4 of the BHC Act, a protestant is not entitled to a hearing on every notice, but only when there are issues of material fact in dispute. See Connecticut Bankers Association v. Board of Governors, 627 F.2d 245, 251 (D.C. Cir. 1980). After presentations are insufficient. The Board's Rules require that a review of the record in this case, the Board has concluded that there hearing request must "include a statement of why a written presenare no material issues of fact in dispute and that the issues raised by tation would not suffice in lieu of a hearing, identifying specifically Protestant relate principally to interpretations of statutory provi- any questions of fact that are in dispute and summarizing the sions and conclusions of law and fact that must be made by the evidence that would be presented at a hearing." 12 C.F.R. 262.3(e). Board. In light of this, and the fact that Protestant has had an Protestant contends that this rule unfairly penalizes a requestor opportunity to comment and has submitted substantial written because compliance would provide the basis for concluding that comments, the Board does not believe that a public hearing or written submissions would suffice. The Board believes that this rule meeting regarding this matter would be useful or appropriate. provides a reasonable means to assist the Board in determining 58. Protestant alleges that discussions between Chase and Board whether factual disputes cannot be addressed through written substaff during the processing of this proposal have violated the missions. Board's processing procedures. These procedures state that, after 60. Protestant has criticized Chase's record with respect to the the receipt of a protest, System staff should refrain from discussing number of minorities in top management and on the board of issues raised by the protest directly with the applicant or protestant directors. In this regard, the Board notes that because Manhattan without first notifying the other, so that all parties may have an Bank employs more than 50 people, serves as a depository of opportunity to participate in the discussion. The record indicates government funds, and acts as agent in selling or redeeming U.S. that Protestant has raised new issues throughout the processing of savings bonds and notes, it is required by Department of Labor this proposal. When issues were raised by the Protestant, discus- regulations to: sions by staff with Chase on these issues were limited to requests (i) File annual reports with the Equal Employment Opportunity for information needed to clarify the record, and the information Commission ("EEOC"); and was promptly provided to Protestant. Moreover, Protestant has (ii) Have in place a written affirmative action compliance probeen given the opportunity to comment on these issues, and has in gram which states its efforts and plans to achieve equal opportufact presented substantial submissions that have been considered nity in the employment, hiring, promotion, and separation of part of the record in this case. For these reasons, and based on all personnel. the facts of record, the Board does not believe that Protestant's See 41 C.F.R. 60-1.7(a), 60-1.40. The Board notes that, pursuant to comments warrant denial of this proposal. Department of Labor regulations, Chase, as the parent of Manhat- 59. Protestant's request does not identify the evidence Protestant tan Bank, also is required to file an annual report with the EEOC would present to clarify factual issues or explain why written covering all employees in its entire corporate structure. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 893 Board's regulations and orders issued thereunder. The (11) Reviewing and arranging for payment of the fund's Board's decision is specifically conditioned on Chase's expenses; compliance with all the commitments and representa- (12) Providing communication and coordination services tions made in connection with this application and the with regard to the fund's investment advisor, transfer notices, including the commitments and conditions dis- agent, custodian, distributor and other service organizacussed in this order. The commitments and conditions tions that render recordkeeping or shareholder communirelied on in reaching this decision shall be deemed to be cation services; conditions imposed in writing by the Board in connec- (13) Reviewing and providing advice to the distributor, tion with its findings and decision and may be enforced the fund and investment advisor regarding sales literain proceedings under applicable law. ture and marketing plans to assure regulatory compli- The acquisition of UST's banking subsidiary shall not ance; be consummated before the fifteenth calendar day fol- (14) Providing information to the distributor's personnel lowing the effective date of this order, and the acquisi- concerning the fund's performance and administration; tion of the bank and nonbank subsidiaries shall not be (15) Participation in seminars, meetings, and conferconsummated later than three months after the effective ences designed to present information to brokers and date of this order, unless such period is extended for investment companies, but not in connection with the good cause by the Board or by the Federal Reserve Bank sale of shares of the funds to the public, concerning the of New York, acting pursuant to delegated authority. operations of the funds, including administrative ser- By order of the Board of Governors, effective vices provided by MF Service to the funds; July 24, 1995. (16) Assisting existing funds in the development of additional portfolios; Voting for this action: Chairman Greenspan, and Governors (17) Providing reports to the fund's board with regard to Kelley, Lindsey, Phillips, and Yellen. Absent and not voting: Vice its activities; and Chairman Blinder. (18) Providing telephone shareholder services through a toll-free 800 number. WILLIAM W. WILES Secretary of the Board U.S. Trust Corporation New York, New York Appendix Order Approving the Formation of a Bank Holding Company, Merger of Banks, Establishment of List of Administrative Services Branches, Membership in the Federal Reserve System and Notice to Engage in Nonbanking Activities (1) Maintaining and preserving the records of the fund, including financial and corporate records; U.S. Trust Corporation ("U.S. Trust"), a bank holding (2) Computing net asset value, dividends, performance company within the meaning of the Bank Holding Comdata and financial information regarding the fund; pany Act ("BHC Act"), United States Trust Company (3) Furnishing statistical and research data; of New York ("USTNY"), New USTC Holdings Corpo- (4) Preparing and filing with the SEC and state securities ration ("New Holdings"), and New U.S. Trust Company regulators registration statements, notices, reports and of New York ("New USTNY"), all of New York, New other material required to be filed under applicable laws; York (collectively "Applicants"), have filed applications (5) Preparing reports and other informational materials under section 3 of the BHC Act (12 U.S.C. § 1842), regarding the fund including proxies and other share- section 18(c) of the Federal Deposit Insurance Act holder communications and reviewing prospectuses; (12 U.S.C. § 1828(c)) ("Bank Merger Act"), sections 9 (6) Providing legal and regulatory advice in connection and 25 of the Federal Reserve Act (12 U.S.C. §§ 321 and with its other administrative services; 601),1 and notices under section 4 of the BHC Act (7) Providing office facilities and clerical support for the (12 U.S.C. § 1843),2 in connection with the corporate fund; reorganization of U.S. Trust.3 The proposed internal (8) Developing and implementing procedures for monitoring compliance with regulatory requirements and compliance with the fund's investment objectives, poli- 1. These applications are described in Appendix A. cies, and restrictions as established by the fund's board; 2. The nonbanking subsidiaries to be acquired by New Holdings are listed in Appendix B. (9) Providing routine fund accounting services and liai- 3. As part of this proposal, the 401 (k) Plan and Employee Stock son with outside auditors; Option Plan of USTNY and affiliated companies ("Notificant") (10) Preparing and filing tax returns; have filed a notice under the Change in Bank Control Act Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

894 Federal Reserve Bulletin • September 1995 reorganization is a multi-step transaction in which U.S. the federal financial supervisory agencies to encourage Trust would retain ownership of two nonbank subsidiar- financial institutions to help meet the credit needs of the ies and the securities processing business of USTNY, local communities in which they operate, consistent with and a new holding company (New Holdings) would own their safe and sound operation. To accomplish this end, all the remaining subsidiaries of U.S. Trust.4 the CRA requires the appropriate federal supervisory Notice of the proposal, affording interested persons an authority to "assess the institution's record of meeting opportunity to submit comments, has been published the credit needs of its entire community, including low- (60 Federal Register 16,139 (1995)). As required by the and moderate-income neighborhoods, consistent with Bank Merger Act, reports on the competitive effects of the safe and sound operation of such institution," and to the merger were requested from the United States Attor- take that record into account in its evaluation of bank ney General and the Federal Deposit Insurance Corpora- holding company applications.7 tion. The time for filing comments has expired, and the In connection with these applications, the Board has Board has considered the applications and notices and received comments from Inner City Press/Community all comments received in light of the factors set forth in on the Move, Bronx, New York ("Protestant"), raising the BHC Act, the Bank Merger Act, and the Federal issues regarding the CRA performance record of Reserve Act. USTNY. In particular, Protestant maintains that USTNY New Holdings is a non-operating company formed for has concentrated its mortgage lending in affluent, nonthe purpose of acquiring certain banking and nonbanking minority census tracts and provided an overall low level subsidiaries of U.S. Trust. U.S. Trust, with total consoli- of CRA-related investments in its local community. Protdated assets of $3 billion, controls three depository insti- estant also has alleged that U.S. Trust's subsidiary thrift tutions in New York, New York; Dallas, Texas; and in Florida (U.S. Trust Company of Florida Federal Sav- Los Angeles, California.5 Based on all the facts of ings Bank, Palm Beach, Florida, "USTFL") has generrecord, including the fact that this transaction constitutes ally failed to assist in meeting the credit needs, particua corporate reorganization, the Board believes that con- larly the housing-related credit needs, of low- and summation of this proposal would not have a signifi- moderate-income residents in its local community.8 cantly adverse effect on competition or the concentration of banking resources in any relevant banking market. Accordingly, the Board concludes that competitive considerations are consistent with approval.6 7. 12 U.S.C. § 2903. 8. Protestant also maintains that USTNY and USTFL have failed to comply with requirements in the Home Mortgage Disclosure Act Convenience and Needs Considerations (12 U.S.C. § 2801 et seq.) ("HMDA"), the Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.) ("ECOA"), and the Fair Hous- In acting on the applications under the relevant banking ing Act (42 U.S.C. § 3601 et seq.) ("FHA") to report the race and statutes, the Board must consider the convenience and gender of borrowers receiving mortgage loans. Most of the mortneeds of the communities to be served and take into gage applications of these institutions are received by telephone. For written applications, these institutions request race and gender account the records of the relevant depository instituinformation for government monitoring purposes, and these data tions under the Community Reinvestment Act are reported unless an applicant elects not to provide race and (12 U.S.C § 2901 et seq.) ("CRA"). The CRA requires gender information as permitted by Regulations B and C. The Board also notes that, contrary to Protestant's allegations, the FHA does not require the reporting of race and gender data for home mortgages. (12 U.S.C. § 18170)) ("CIBC Act") to acquire 24.9 percent of the Under regulations implementing the HMDA and ECOA, an voting shares of New Holdings (60 Federal Register 26,886 institution is specifically exempted from the requirement of record- (1995)). Notificant currently is a shareholder of U.S. Trust, and ing the race, national origin or gender of an applicant when a would receive shares of New Holdings as a result of the reorganiza- mortgage application is made entirely by telephone. See 12 C.F.R. tion. Based on all the facts of record, the Board hereby determines 203, Appendix A, § V(D)(2) and Appendix B, § 1(B)(4); Official not to disapprove this CIBC Act notice. Staff Commentary on Regulation B, F.R.R.S. f 6-197.6(3). The 4. U.S. Trust proposes to then merge with The Chase Manhattan Board does not believe that providing additional financial and tax Corporation, New York, New York ("Chase"), in a transaction that information to an institution after the telephone contact to verify will be considered by the Board in a separate order. See Chase the information supplied by the applicant makes this exemption Manhattan Corporation, 81 Federal Reserve Bulletin 883 (1995). inapplicable. Furthermore, an institution is not required to record 5. Asset data are as of December 31, 1994. race and gender data under this exemption even if the telephone 6. The Board has determined that the interstate banking statutes applicant has an existing banking relationship with the institution. of Texas and California permit a New York bank holding company For these reasons, the Board concludes that the reporting practices to acquire banking organizations in these states. See State First with respect to the collection of race and gender used in mortgage Financial Corporation, 73 Federal Reserve Bulletin 307 (1987) applications taken by USTNY and USTFL do not violate the (Texas) and Citicorp, 77 Federal Reserve Bulletin 325 (1991) HMDA or ECOA and, in light of this conclusion, that Protestant's (California). Thus, consummation of this transaction is not barred request for a file review of mortgage applications of USTNY and by section 3(d) of the BHC Act (12 U.S.C. § 1842(d)). USTFL is not warranted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 895 The Board has carefully reviewed the CRA perfor- other information, for conclusively determining that an mance records of U.S. Trust and its subsidiary deposi- institution has engaged in illegal discrimination in maktory institutions, all comments received regarding these ing lending decisions. The Board has carefully reviewed applications, U.S. Trust's responses to those comments, Protestant's allegations in this light and in light of all the and all other relevant facts of record in light of the CRA, facts of record. the Board's regulations, and the Statement of the Federal USTNY is a wholesale institution that specializes in Financial Supervisory Agencies Regarding the Commu- providing trust and banking services to institutional cusnity Reinvestment Act ("Agency CRA Statement").9 tomers such as corporations, other types of institutions, and high net worth individuals. USTNY does not engage Evaluation of CRA Performance in residential mortgage lending (or provide other traditional retail credit products) and does not hold itself out A. Examination Record of CRA Performance as a retail lender.13 Examiners found that the bank engages in mortgage lending only as an accommodation The Agency CRA Statement provides that a CRA exam- for its existing customers or as a means of soliciting trust ination is an important and often controlling factor in the and banking services from new customers on a referral consideration of an institution's CRA record and that basis. The 1994 USTNY Examination also found that reports of these examinations will be given great weight the bank had adequate procedures to ensure compliance in the applications process.10 The Board notes that with nondiscriminatory credit practices, and identified USTNY received a "satisfactory" rating from the Fed- no credit practices that were inconsistent with the substantive provisions of the antidiscrimination laws and eral Reserve Bank of New York ("Reserve Bank") at its regulations or that were intended to discourage credit most recent examination for CRA performance in Sepapplications.14 tember 1994 ("1994 USTNY Examination"), and USTFL received a "satisfactory" rating from its primary While the CRA does not require a bank to extend any federal supervisor, the Office of Thrift Supervision particular type of credit, an institution such as USTNY is ("OTS"), at its most recent examination for CRA perfor- not relieved from having its performance record assessed mance in February 1995 ("1995 USTFL Examina- under the CRA.15 USTNY has taken a number of steps tion").11 U.S. Trust's remaining two subsidiary banks to help meet the credit needs of its community. received "satisfactory" ratings from their primary fed- As part of its CRA-related activities, USTNY engages eral supervisor in the most recent examinations of their in a variety of indirect lending activities to assist in CRA performance.12 meeting the housing needs of low- and moderate-income families in New York City.16 For example, the bank has B. USTNY's Record of CRA Performance loaned $415,000 to the Neighborhood Housing Services of New York, which offers programs to help rehabilitate Protestant maintains that USTNY's 1993 HMD A data houses in low- and moderate-income neighborhoods. indicates that a substantial number of the bank's re- Examiners also noted in the 1994 USTNY Examination ported mortgage loans were made to borrowers in upperincome, non-minority census tracts and evidences noncompliance by USTNY with fair lending laws and the 13. USTNY's advertisements and business strategy focus on purpose of the CRA. Protestant also alleges that USTNY asset management and trust services for institutional customers rather than soliciting customers for retail banking products. discourages applications from low- and moderate- 14. Protestant also alleges that 1994 HMDA data for U.S. Trust's income individuals through its underwriting criteria and California subsidiary (USTCA) and Texas subsidiary (USTTX) advertising. The Board has recognized that HMDA data show few loans to or applications from minorities in California and alone provide an incomplete measure of an institution's Texas. The most recent CRA performance evaluations for both lending in its community, and that these data have limi- banks noted that USTCA and USTTX are, like USTNY, wholesale banks that focus on trust administration. In addition, examiners did tations that make that data an inadequate basis, absent not find evidence of prohibited discriminatory or other illegal credit practices. 15. See Continental Bank Corporation, 75 Federal Reserve Bul- 9. 54 Federal Register 13,742 (1989). letin 304 (1989). 10. Id. at 13,745. 16. Protestant maintains that USTNY's delineation of its service 11. Protestant disagrees with the 1995 USTFL Examination and community is too narrow because it does not include all of New has requested the OTS to review the procedures used and conclu- York City and that USTNY does not make investments or grants in sions drawn in this examination. the South Bronx or Upper Manhattan. The 1994 USTNY Examina- 12. U.S. Trust Company of California, N.A., Los Angeles, Cali- tion concluded that the bank's delineation of its local community fornia ("USTCA"), received a "satisfactory" rating from the Of- complied with the requirements of the CRA and the regulations fice of the Comptroller of the Currency ("OCC") in August 1994, thereunder and did not arbitrarily exclude low- and moderateand U.S. Trust Company of Texas N.A., Dallas, Texas ("USTTX"), income areas. USTNY recently expanded its local community to received a "satisfactory" rating from the OCC in March 1995. include the entire Borough of Manhattan. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

896 Federal Reserve Bulletin • September 1995 that the bank has loaned $676,000 to the Community planning, and trust and estate services, and USTFL does Preservation Corporation's ("CPC") revolving credit fa- not offer typical retail bank products, such as small cility, which finances the construction and rehabilitation business loans, consumer installment loans, or credit of low-income housing in New York City. cards. Examiners found no evidence of prohibited dis- USTNY has also provided $623,000 in loans under criminatory or other illegal credit practices. The 1995 another CPC program to help refinance underlying mort- USTFL Examination also disclosed no evidence of pracgages on co-op apartment buildings in low- and tices intended to discourage credit applications that were moderate-income areas in New York City. U.S. Trust has not inherent in USTFL's focus on private banking activiindicated that an additional $416,000 has been commit- ties for affluent customers, and determined that USTFL's ted to this program since the 1994 USTNY examination. delineation of its community was reasonable. In addition, the bank invested $500,000 in the New York Examiners concluded that USTFL addressed housing Equity Fund's ("NYEF") 1992 Limited Partnership, credit needs by originating single-family residential $500,000 in NYEF's 1993 Limited Partnership, and an mortgage loans consistent with the needs identified in its additional $1 million in NYEF's 1994 Limited Partner- delineated communities. The thrift's loan volume, inship. These funds are used by NYEF to leverage other cluding the percentage of loans within its local commuprivate and public sector financing and help rehabilitate nities, was considered reasonable by examiners.17 family and single room housing for low- and moderate- USTFL also assists in meeting the housing credit needs income individuals. of low- and moderate-income borrowers through local USTNY offers several other programs that provide financial intermediaries. For example, USTFL has proassistance to neighborhood and community organiza- vided funding for a first-time homebuyers program spontions that are committed to improving their communi- sored by Collier County which includes the institution's ties. In particular, the bank invested $250,000 in the Naples community. This program provides low- and Non-Profit Facilities Fund, which provides term financ- moderate-income borrowers with interest free loans for ing to non-profit organizations that otherwise would down payment and closing costs. USTFL also has purhave no financing options. USTNY has invested $25,000 chased several loans, totalling over $400,000, that are in the Union Settlement Federal Credit Union, which secured by property in Palm Beach County and originated by another institution under a program designed to provides consumer banking services to East Harlem, a assist low- and moderate-income borrowers through low- and moderate-income community with limited lower fees and flexible underwriting criteria. USTFL banking services. plans to purchase an additional $1 million in loans made The 1994 USTNY Examination also found that the under this program in 1995. bank participated in small business lending programs. For example, USTNY has committed $578,000 to the The 1995 USTFL Examination also noted that the New York Business Development Fund, which operates institution continually explores potential activities or a revolving credit facility that extends loans to small services that would help meet the credit needs of its local businesses. In addition, while USTNY is not a direct communities. For example, USTFL has provided finansmall business lender, examiners found that in 1993, the cial and managerial expertise to the Consumer Credit bank purchased $11 million in Small Business Adminis- Counseling Service of Palm Beach County. The institutration loan pools, generated from loans originated in tion also has supported minority business programs New York. within its local community, including the Minority Busi- U.S. Trust has created the U.S. Trust Foundation ness Committee of Naples and the Latin-American Busi- ("Foundation") to administer its corporate contributions ness and Professional Scholarship Program. program. Through the Foundation, the bank supports not-for-profit community organizations involved in D. Conclusion Regarding Convenience and Needs housing, economic and community development to low- Factors and moderate-income individuals and neighborhoods. Examiners noted that the Foundation contributed The Board has carefully considered the entire record, $143,000 to CRA-related organizations between May including the comments filed in this case, in reviewing 1993 and the 1994 USTNY Examination. the convenience and needs factors under the relevant C. USTFL's Record of CRA Performance 17. The 1995 USTFL examination noted that residential mort- The 1995 USTFL Examination notes that USTFL en- gage loan volume, which represented 9.6 percent of average assets during 1994, was slightly below that of other savings associations gages in private banking activities designed primarily to of similar size. Nevertheless, examiners noted that USTFL consismeet the needs of its trust customers. The institution's tently met the regulatory requirements of mortgage lending under business strategy focuses on asset management, financial the Qualified Lender Test. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 897 banking statutes. Based on a review of the entire record approval.20 Other supervisory factors that the Board of performance, including information provided by Prot- must consider under section 3 of the BHC Act, the Bank estant and U.S. Trust, and the CRA performance exami- Merger Act, and the Federal Reserve Act, are also connations and other information obtained through the su- sistent with approval of this proposal.21 pervisory process, the Board believes that the efforts of New Holdings also has filed notice, pursuant to sec- U.S. Trust to help meet the credit needs of all segments tion 4(c)(8) of the BHC Act, to operate a savings associof the communities served by its subsidiary banks, in- ation, and engage in trust company, community developcluding low- and moderate-income neighborhoods, are ment, investment advisory, securities brokerage and consistent with approval. For these reasons, and based riskless principal activities. The Board has determined on all the facts of record, the Board concludes that by regulation that the operation of a savings association, convenience and needs considerations, including the and that trust company, community development, invest- CRA performance records of the companies and banks ment advisory, and securities brokerage activities are involved in these proposals, are consistent with approval closely related to banking for purposes of section 4(c)(8) of these applications. of the BHC Act.22 The Board also has determined by order that, subject to a number of prudential limitations Other Considerations that address the potential for conflicts of interests, unsound banking practices, and other adverse effects, the The Board has concluded that the financial18 and mana- proposed riskless principal activities are so closely regerial19 resources and future prospects of the holding lated to banking as to be a proper incident thereto within companies and their subsidiaries are consistent with 18. Protestant has objected to U.S. Trust's request for certain approvals from the Board relating to its reorganization, including 20. Protestant has requested denial of these applications and requests to reduce its capital stock; to effect a material change in its notices based on several supervisory matters including the financial business under Regulation H (12 C.F.R. 208 et seq.); and to allow condition of one of U.S. Trust's bank subsidiaries and allegations of New USTNY to pay dividends in the future out of net profits violation of section 23A of the Federal Reserve Act generated after the reorganization and exclusive of charges associ- (12 U.S.C. § 371c). The Board has carefully considered these comated with the reorganization. Protestant has provided no material ments in light of the facts of record, including confidential reports evidence to support its objections. Based on all the facts of record, of examination, supervisory information, and financial information, including reports of examinations, financial information provided and the Board concludes that these comments do not warrant denial by U.S. Trust and the overall nature of the proposed reorganization, of the applications and notices. the Board has determined that U.S. Trust's requests should be The Board also has considered Protestant's contention that operapproved, provided that the Reserve Bank may restrict the payment ation by U.S. Trust of U.S. Trust Company of Wyoming, Cody, of dividends by New USTNY during the first three years after Wyoming ("USTWY"), and Mutual Funds Service Company, Bosconsummation of the reorganization. ton, Massachusetts ("MF Service"), required prior Board approval 19. Protestant contends that the recent removal of USTNY as the and violated the BHC Act and the Glass-Steagall Act. As part of co-executor of the Doris Duke estate by a Manhattan Surrogate the proposed reorganization, U.S. Trust is divesting all ownership Court judge warrants delay or denial of this proposal. Protestant and control of USTWY and MF Service. The Board has considered also maintains that USTNY breached its fiduciary duty and en- Protestant's comments, U.S. Trust's responses, the length of time gaged in unsafe and unsound practices with respect to the Doris these activities were conducted, and the proposed divestiture of Duke estate. Protestant argues that these matters reflect so ad- USTWY and MF Service. Based on all the facts of record, the versely on the management of USTNY as to warrant denial of this Board has determined that these allegations do not warrant denial proposal. The Board notes that this matter is based on determina- of the applications and notices. tions of state law and that review of the matter is pending before 21. Protestant contends that the proxy materials ("Statement") the Supreme Court of the State of New York. The Board also notes provided to U.S. Trust shareholders in connection with the March that the proposal under consideration involves a sale of non-core 1995 vote to approve the proposed acquisition of U.S. Trust by businesses by U.S. Trust and a reorganization of existing operations Chase materially misled these shareholders about their rights as of U.S. Trust that should permit management of U.S. Trust to focus Chase shareholders to call a special meeting, because Chase's on its core businesses, which includes providing trust related ser- board of directors later eliminated this right by amending the Chase vices. Based on all the facts, including a review of the Surrogate by-laws in May 1995. The Statement specifically stated, however, Court's opinion, USTNY's policies and procedures, USTNY's that the board of directors of Chase has authority to alter, amend or managerial resources, management's record of performance, rele- repeal the by-laws of Chase, and this by-law repeal does not appear vant reports of examination, and other supervisory information, the to have violated any applicable covenant of Chase contained in the Board concludes that the managerial resources of Applicants are Agreement and Plan of Merger between U.S. Trust and Chase. consistent with approval of this proposal and that delay of Board Moreover, the Board notes that the Securities and Exchange Comaction on the reorganization represented by this proposal until the mission has the necessary regulatory authority under its rules, matter is resolved by the courts is not warranted. The Board has including Rule 14a-9 implementing Section 14 of the Securities sufficient supervisory authority to address, as appropriate, any Exchange Act of 1934, to investigate and redress any materially issues under the federal banking laws that may be raised by final false or misleading statement contained in the Statement. adjudication of this matter. 22. See 12 C.F.R. 225.25(b)(3), (b)(4), (b)(6), (b)(9), and (b)(15). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

898 Federal Reserve Bulletin • September 1995 the meaning of section 4(c)(8) of the BHC Act.23 More- Section 3(b) of the BHC Act does not require the Board over, the Board has previously approved applications by to hold a public hearing or meeting on an application U.S. Trust to engage in all the proposed activities. New unless the appropriate supervisory authority for the bank Holdings has committed that it will conduct these activi- to be acquired makes a timely written recommendation ties in accordance with the Board's regulations and of denial of the application. No supervisory agency has orders approving these activities for bank holding com- recommended denial of the proposal. panies. Generally, under its rules, the Board may, in its discre- In order to approve these applications and notices, the tion, hold a public hearing or meeting on an application Board also must determine that the performance of the to clarify factual issues related to the application and to proposed activities by U.S. Trust's nonbanking subsidiar- provide an opportunity for testimony, if appropriate. ies "can reasonably be expected to produce benefits to 12 C.F.R. 262.3(e) and 262.25(d). In the Board's view, the public . . . that outweigh possible adverse effects, all interested parties have had ample opportunity to such as undue concentration of resources, decreased or submit their views, and substantial written submissions unfair competition, conflicts of interests, or unsound have been received. Protestant's request fails to demonbanking practices." 12 U.S.C. § 1843(c)(8). This reorga- strate why its substantial written submissions do not nization has been structured to facilitate the sale of the adequately present its allegations or why a public hearsecurities processing business of U.S. Trust to Chase. ing or meeting is otherwise warranted.26 Moreover, after This divestiture will give U.S. Trust the opportunity to a careful review of all the facts of record, the Board focus on its private banking, asset and investment man- concludes that Protestant's request disputes the weight agement, corporate trust and agency and special fidu- that should be accorded to, and the conclusions that may ciary services businesses, and thereby provide services be drawn from, the existing facts of record, or disputes more economically and efficiently. The record in this facts that are not material to the Board's decision. For case indicates that there are numerous providers of these these reasons, and based on all the facts of record, the nonbanking services, and there is no evidence in the Board has determined that a public meeting or hearing is record to indicate that consummation of this proposal is not necessary to clarify the factual record in these applilikely to result in any significantly adverse effects, such cations, or otherwise warranted in this case. Accordas undue concentration of resources, decreased or unfair ingly, Protestant's request for a public hearing or meetcompetition, conflicts of interests, or unsound banking ing on these applications is denied. practices. Accordingly, the Board has determined that the balance of public interest factors it must consider Conclusion under section 4(c)(8) of the BHC Act is favorable and consistent with approval. Based on the foregoing, including the commitments made to the Board by Applicants in connection with Request for a Hearing these applications and notices, and in light of all the facts of record, the Board has determined that these Protestant has requested that the Board hold a public applications and notices should be, and hereby are, apmeeting or hearing on these applications to clarify fac- proved. The Board's approval is specifically conditioned tual disputes.24 Protestant also believes that testimony is on compliance by Applicants with all commitments needed to present certain facts as part of the record.25 made in connection with these applications and notices as well as the conditions discussed in this order and in the above-referenced orders. 23. See Bankers Trust New York Corporation, 75 Federal Re- The Board's determinations as to the nonbanking acserve Bulletin 829 (1989); J. P. Morgan & Company Incorporated, tivities to be conducted by New Holdings are subject to 76 Federal Reserve Bulletin 26 (1990). all the conditions in the Board's Regulation Y, including 24. Protestant argues that factual disputes exist on several matthose in sections 225.7 and 225.23(b)(3) (12 C.F.R. ters, including the percentage of mortgages made to U.S. Trust's existing customers, the size and relevance of projects included in 225.7 and 225.23(b)(3)), and to the Board's authority to USTNY's CRA program, and the role of USTNY's delineated require such modification or termination of the activities community in determining which projects are eligible for the bank's CRA-related investments. 25. For example, Protestant contends that testimony is necessary to show how USTNY excludes low- and moderate-income and 26. Protestant's request does not identify the evidence it would racial groups from the bank's marketing plan, to present evidence present to clarify factual issues or explain why written presentaconcerning particular projects and programs that are part of tions are insufficient. The Board's Rules require that a hearing USTNY's CRA activities, to elicit evidence from U.S. Trust staff request must "include a statement of why a written presentation on how U.S. Trust markets and processes mortgage applications, would not suffice in lieu of a hearing, identifying specifically any and to challenge USTNY's representation that almost all its mort- questions of fact that are in dispute and summarizing the evidence gage applications are received by telephone. that would be presented at a hearing." 12 C.F.R. 262.3(e). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 899 of a holding company or any of its subsidiaries as the (5) New USTNY to establish branches at each of the Board finds necessary to assure compliance with, or to locations where USTNY now operates a branch,2 pursuprevent evasion of, the provisions and purposes of the ant to sections 9 and 25 of the Federal Reserve Act, BHC Act and the Board's regulations and orders issued 12 U.S.C. §§321 and 601; and thereunder. The commitments and conditions relied on (6) New USTNY to become a member of the Federal by the Board in reaching this decision are deemed to be Reserve System, pursuant to section 9 of the Federal conditions imposed in writing by the Board in connec- Reserve Act, 12 U.S.C. §§ 321-328 and invest in bank tion with its findings and decision, and as such may be premises in excess of its capital stock account. enforced in proceedings under applicable law. The acquisition of U.S. Trust's subsidiary banks shall Appendix B not be consummated before the fifteenth calendar day following the effective date of this order, and the bank- New Holdings has filed notices under section 4 of the ing and the nonbanking transactions shall not be con- BHC Act to acquire the following nonbanking summated later than three months following the effective subsidiaries of U.S. Trust: date of this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank (1) U.S. Trust Company of Connecticut, Stamford, Conof New York, acting pursuant to delegated authority. necticut, and thereby perform trust company functions By order of the Board of Governors, effective and engage in investment advisory activities, pursuant to July 24, 1995. sections 225.25(b)(3) and (b)(4) of the Board's Regulation Y (12 C.F.R. 225.25(b)(3) and (b)(4)); Voting for this action: Chairman Greenspan, and Governors (2) U.S. Trust Company of Florida Savings Bank, Palm Kelley, Lindsey, Phillips, and Yellen. Absent and not voting: Vice Beach, Florida, and thereby perform trust company func- Chairman Blinder. tions, engage in investment advisory activities, engage in community development activities, and operate a sav- WILLIAM W. WILES ings association, pursuant to sections 225.25(b)(3), Secretary of the Board (b)(4), (b)(6) and (b)(9) of Regulation Y (12 C.F.R. 225.25(b)(3), (b)(4), (b)(6) and (b)(9)); Appendix A (3) U.S. Trust Company of New Jersey, and its wholly owned subsidiary, UST Securities Corporation, both of U.S. Trust Corporation ("U.S. Trust"), United States Princeton, New Jersey, and thereby provide discount and Trust Company of New York ("USTNY"), New USTC full-service securities brokerage services, pursuant to Holdings Corporation ("New Holdings"), and New sections 225.25(b)(4) and (b)(15) of Regulation Y U.S. Trust Company of New York ("New USTNY"), all (12 C.F.R. 225.25(b)(4) and (b)(15)), and purchasing of New York, New York, have filed the following and selling all types of securities on the order of invesapplications to effect the internal reorganization: tors as a "riskless principal" on the order of customers, pursuant to previous Board orders; (1) New Holdings to become a bank holding company (4) CTMC Holding Company, and its wholly owned by acquiring New USTNY; U.S. Trust Company of subsidiaries, U.S. Trust Company of the Pacific North- Texas, N.A., Dallas, Texas; U.S. Trust Company of west, and CTC Consulting, Inc., all of Portland, Oregon, California, N.A., Los Angeles, California; and USTLPO and thereby perform trust company functions and engage Corporation, Wilmington, Delaware, pursuant to section in investment advisory activities, pursuant to sections 3(a)(1) of the BHC Act;1 225.25(b)(3) and (b)(4) of Regulation Y (12 C.F.R. (2) USTNY to become a bank holding company, for a 225.25(b)(3) and (b)(4)); moment in time, by acquiring New USTNY, pursuant to (5) Campbell, Cowperthwait & Company, New York, section 3(a)(1) of the BHC Act; New York, and thereby engage in investment advisory (3) U.S. Trust to acquire New USTNY, for a moment in activities, pursuant to section 225.25(b)(4) of Regulatime, pursuant to section 3(a)(3) of the BHC Act; tion Y (12 C.F.R. 225.25(b)(4)); and (4) New USTNY to merge with USTNY, pursuant to section 18(c) of the Federal Deposit Insurance Act, 12 U.S.C. § 1828(c); 2. USTNY will close its branch at 20 Exchange Place, New York, New York, before the merger. The remaining branches would be located as follows: (1)11 West 54th Street, New York, New York; 1. In connection with the application under section 3 of the BHC (2) 100 Park Avenue, New York, New York; Act, USTNY will transfer ownership of its Edge Act subsidiary to (3) 111 Broadway, New York, New York; and New USTNY. (4) Cayman Islands. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

900 Federal Reserve Bulletin • September 1995 (6) UST Financial Services Corporation, New York, Competitive Considerations New York, currently inactive. A. Definition of Relevant Banking Market ORDERS ISSUED UNDER BANK MERGER ACT Under the Bank Merger Act, the Board may not approve a proposal that would result in a monopoly or substan- Westamerica Bank tially lessen competition in any relevant market, unless San Rafael, California the Board finds that "the anticompetitive effects of the proposed transaction are clearly outweighed in the pub- Order Approving the Merger of Banks and lic interest by the probable effect of the transaction in Establishment of a Bank Branch meeting the convenience and needs of the community to be served." 12 U.S.C. § 1828(c)(5). In evaluating the Westamerica Bank, San Rafael, California ("West- competitive factors in this case, the Board has carefully america"), a state member bank, has applied under sec- considered the comments submitted by three individuals tion 18(c) of the Federal Deposit Insurance Act and the Board of Supervisors of Mendocino County, (12 U.S.C. § 1828(c)) (the "Bank Merger Act") to ac- California ("Protestants"), who maintain that the proquire certain assets and assume certain liabilities of the posed acquisition would substantially lessen competition Point Arena, California, branch ("Branch") of Bank of for banking services, because it would result in West- America, NT & SA, San Francisco, California ("Bank america operating the only branch in Point Arena. Proof America"). Westamerica also has applied under sec- testants also contend that Point Arena residents would tion 9 of the Federal Reserve Act (12 U.S.C. § 321) to have no alternative for banking services because Westestablish a branch at 200 Main Street, Point Arena, the america currently operates the only branch in the neighcurrent location of Branch. boring town of Gualala, California, which is approxi- Notice of the applications, affording interested persons mately 15 miles south of Point Arena. an opportunity to submit comments, has been given in The Board and the courts have found that the relevant accordance with the Bank Merger Act and the Board's banking market for analyzing the competitive effects of a Rules of Procedure (12 C.F.R. 262.3(b)). As required by proposal must reflect commercial and banking realities the Bank Merger Act, reports on the competitive effects and must consist of the local area where local customers of the merger were requested from the United States can practicably turn for alternatives.2 The Board has Attorney General, the Office of the Comptroller of the considered all the facts in this case, including informa- Currency ("OCC"), and the Federal Deposit Insurance tion provided by Westamerica, Protestants' comments, Corporation ("FDIC"). The time for filing comments and an on-site review conducted by the Federal Reserve has expired, and the Board has considered the applica- Bank of San Francisco ("Reserve Bank"). Based on all tions and all comments received in light of the factors set the facts of record, the Board concludes that the relevant forth in the Bank Merger Act and section 9 of the geographic market in which to evaluate the competitive Federal Reserve Act. effects of this proposal is defined as the southern coastal Westamerica is a subsidiary of Westamerica Bancor- region of Mendocino County, California, which includes poration, San Rafael, California, which is the 12th larg- the towns of Point Arena, Gualala, Mendocino, and Fort est commercial banking organization in California, con- Bragg (the "Mendocino Coast banking market"). Point trolling approximately $1.8 billion in deposits, Arena and Gualala are small towns located on the Pacific representing less than 1 percent of total deposits in coast in the southern portion of Mendocino County.3 commercial banks in the state.1 Bank of America, a Residents in the area are principally employed in the subsidiary of BankAmerica Corporation, San Francisco, construction and agricultural sectors of the economy and California, is the largest commercial banking organiza- employment in manufacturing is significantly lower than tion in California, controlling deposits of $77.6 billion, in the rest of California.4 The largest town in the coastal representing approximately 35.1 percent of total deposits region of Mendocino County is Fort Bragg, which has a in commercial banks in the state. Branch controls deposits of $13.6 million, representing less than 1 percent of Bank of America's deposits in the state. Upon consum- 2. See St. Joseph Valley Bank, 68 Federal Reserve Bulletin 673, mation of the proposed transaction, Westamerica Ban- 674 (1982). corporation would remain the 12th largest commercial 3. Point Arena has a population of 400 and Gualala has a banking organization in California. population of 1500. 4. Data from the 1990 U.S. Census indicate that manufacturing accounts for approximately 4.5 percent of total employment in the area compared to approximately 16.8 percent of total employment 1. State deposit data are as of March 31,1995. for the state. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 901 population of 6000, and is 42 miles north of Point Arena. that Fort Bragg banks have noncommercial deposit rela- Point Arena and Gualala are connected to Fort Bragg by tionships with residents of the census tract that includes Highway 1, a well maintained two-lane state highway Point Arena and Gualala, and that Gualala customers that runs along the California coast of the Pacific Ocean.5 have account and lending relationships with institutions The estimated travel time between Point Arena and Fort located outside of Gualala and Point Arena. Bragg is less than an hour.6 After review of the data described above and other Fort Bragg is the primary commercial center in the facts of record in this case, including comments from the southern coastal area and has substantial economic and Protestants, the Board concludes that the record indisocial links to Point Arena and Gualala. For example, cates that customers in Point Arena reasonably can turn Fort Bragg has many retail stores, including the only to providers of banking services throughout the Mendochain department store, that are a primary source of cino Coast banking market. Based on all the facts of products and services for residents in this area.7 Busi- record, the Board finds that the relevant geographic nesses in Fort Bragg advertise toll-free telephone num- market in this case is the Mendocino Coast banking bers that may be used by residents in Point Arena and market. Gualala.8 Fort Bragg also is the only coastal town in Mendocino County with a hospital and critical care B. Effects in the Relevant Banking Market facility. Numerous departments of the county and state govern- Westamerica is the fourth largest of the five depository ments are also located in Fort Bragg, including the institutions that operate in the Mendocino Coast banking Mendocino County District Attorney, building inspec- market, controlling deposits of $26.3 million, representtion office, food stamp office, Public Health Department, ing 10.7 percent of the total deposits in depository insti- Child Health Services, Housing Authority, and Social tutions in the market ("market deposits").11 Bank of Services Department. The California Department of Mo- America is the second largest depository institution in tor Vehicles, and Employment Development Department the market, controlling deposits of $54.6 million, reprealso maintain offices in Fort Bragg. There are no offices senting 22.2 percent of market deposits. Upon consumfor these county and state services in any other towns in mation of this proposal, Westamerica would become the Mendocino County, except Ukiah, which is the county third largest depository institution in the market, controlseat.9 ling $39.5 million in deposits, representing 16 percent of Financial institutions in Fort Bragg and the surround- market deposits, and Bank of America would control ing area compete for the banking business in Point $41.4 million in deposits, representing 16.8 percent of Arena and Gualala. The Fort Bragg Advocate-News, a market deposits. Five depository institutions, including a weekly newspaper with a circulation of approximately branch of Bank of America, would continue to operate in 5200 that is distributed throughout the Mendocino Coast the market, and the concentration in the market as meabanking market, regularly carries advertisements for sured by the Herfindahl-Hirschman Index ("HHI") for financial institutions located in Fort Bragg and Mendo- the market would decrease.12 Reports on the competitive cino.10 Account data provided by Westamerica indicate Bragg Advocate-News. Bank of America, Westamerica, Savings 5. Mendocino, a small town with a population of 1000, is located Bank of Mendocino County and American Savings Bank have between Fort Bragg and Point Arena on Highway 1. branch offices in Fort Bragg. Savings Bank of Mendocino County 6. The Reserve Bank's on-site review found moderate traffic also has a branch in Mendocino, which is ten miles south of Fort traveling in both directions between Point Arena and Fort Bragg on Bragg. a normal weekday. 11. Deposit and market data for the Mendocino Coast banking 7. Fort Bragg has a 10-block downtown shopping area, a 20-store market are as of June 30, 1994. Market share data are based on shopping center, and an 18-store boutique shopping mall. Fort calculations in which the deposits of thrift institutions are included Bragg also offers the only major supermarket and pharmacies in the on a 50-percent weighted basis. The Board previously has indicated southern coastal region of Mendocino County. that thrift institutions have become, or have the potential to be- 8. The Reserve Bank's review noted that one advertisement come, significant competitors of commercial banks. See WM Banspecifies that the toll-free telephone number is for the use of its corp, 76 Federal Reserve Bulletin 788 (1990); National City Corcustomers located in the southern portion of Mendocino County. poration, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board 9. Ukiah, California, with a population of 14,600, is the only has regularly included thrift deposits in the calculation of market town in Mendocino County with a larger population than Fort share on a 50-percent weighted basis. See e.g., Comerica Inc., 81 Bragg. It is in the central region of Mendocino County, approxi- Federal Reserve Bulletin 476 (1995); First Hawaiian Inc., 77 mately 40 miles from Point Arena and is separated from the Federal Reserve Bulletin 52 (1991). southern coastal region by a small mountain range. Travel between 12. Under the revised Department of Justice Merger Guidelines, Point Arena and Ukiah is difficult because of road conditions, and 49 Federal Register 26,823 (June 29, 1984), a market in which the the estimated travel time is approximately two hours. post-merger HHI is above 1800 is considered to be highly concen- 10. The Reserve Bank's on-site review indicated that all financial trated. In such markets, the Justice Department is likely to chalinstitutions in Fort Bragg regularly place advertisements in the Fort lenge a merger that increases the HHI by more than 50 points. The Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

902 Federal Reserve Bulletin • September 1995 effects of this proposal were sought from the Attorney proposal is conditioned on compliance by Westamerica General, the OCC, and the FDIC. The Department of with the commitments made in connection with these Justice has concluded that consummation of the proposal applications. For purposes of this action, the commitwould not have any significantly adverse competitive ments and conditions relied on in reaching this decision effects, and none of these agencies have objected to are conditions imposed in writing by the Board and, as consummation of this proposal. such, may be enforced in proceedings under applicable In light of all the facts of record, and for the reasons law. discussed in this order, the Board concludes that consum- The acquisition by Westamerica may not be consummation of this proposal is not likely to result in any mated before the fifteenth calendar day following the significantly adverse effect on competition in the Mendo- effective date of this order, and this proposal may not be cino Coast banking market or any other relevant market. consummated later than three months after the effective date of this order, unless such period is extended by the Other Considerations Board or by the Reserve Bank of San Francisco, acting pursuant to delegated authority. The Board also concludes that the financial and manage- By order of the Board of Governors, effective rial resources and future prospects of Westamerica, and July 31, 1995. the factors the Board is required to consider under the Bank Merger Act and the Federal Reserve Act are con- Voting for this action: Chairman Greenspan and Governors sistent with approval of these applications. Consider- Kelley, Phillips, and Yellen. Absent and not voting: Vice Chairman Blinder and Governor Lindsey. ations relating to the convenience and needs of the communities to be served are also consistent with approval.13 WILLIAM W. WILES Secretary of Board Based on the foregoing and all the facts of record, the Board has determined that these applications should be, and hereby are, approved.14 The Board's approval of this ORDERS ISSUED UNDER INTERNATIONAL BANKING ACT Justice Department has informed the Board that a bank merger or The Hongkong and Shanghai Banking acquisition generally will not be challenged (in the absence of other Corporation, Limited factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than Hong Kong 200 points. The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticompeti- Order Approving Establishment of a Representative tive effects implicitly recognize the competitive effect of limited- Office purpose lenders and other non-depository financial entities. Upon consummation of this proposal, the HHI for the market would decrease by 66 points and the post-merger HHI would be 2691. The Hongkong and Shanghai Banking Corporation, Lim- 13. The Board has carefully considered comments from Protes- ited ("Bank"), Hong Kong, a foreign bank within the tants that consummation of the proposal may result in changes in meaning of the International Banking Act ("IBA"), has the Branch's lending policies, which could have a negative effect applied under section 10(a) of the IBA (12 U.S.C. on business development in Point Arena, and may result in the eventual closure of the Branch. Westamerica has indicated that § 3107(a)) to establish a representative office in Dallas, Branch will focus on developing deposit and lending relationships Texas. The Foreign Bank Supervision Enhancement Act with commercial customers in the Point Arena area, and that of 1991 ("FBSEA"), which amended the IBA, provides Westamerica does not intend to close Branch. The Board also notes that a foreign bank must obtain the approval of the that all of Westamerica's subsidiary banks that have been examined Board to establish a representative office in the United for performance under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA") received a "satisfactory" rat- States. ing from their primary supervisor in their most recent CRA performance examinations. In light of all the facts of record, the Board concludes that these comments do not warrant denial of this pro- written comments submitted by Protestants. In the Board's view, posal. interested parties have had ample opportunity to submit comments, 14. One Protestant has requested that the Board extend the public including the opportunity to supplement their comments after the comment period and hold a public meeting or hearing on these close of the comment period, and they have submitted written applications. The Board is not required to hold a public meeting or comments that have been considered by the Board. In light of the hearing on these applications under the Bank Merger Act or the foregoing and all the facts of record, the Board has determined that Federal Reserve Act. Under its rules, the Board may, in its discre- an adequate period has been provided for public comment and that tion, hold a public meeting or hearing on an application to clarify a public meeting or hearing is not necessary to clarify the factual factual issues related to the application and to provide an opportu- record on these applications, or otherwise warranted in this case. nity for testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). Accordingly, the requests to extend the comment period and hold a The Board has carefully considered Protestants' requests, and all public meeting or hearing on these applications are hereby denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 903 Notice of the application, affording interested persons office will not accept any deposits, make any loans, an opportunity to submit comments, has been published make any business decision for the account of Bank, or in a newspaper of general circulation in Dallas, Texas otherwise transact any banking business. (Dallas Morning News, May 15, 1995). The time for In acting on an application to establish a representafiling comments has expired and the Board has consid- tive office, the IBA and Regulation K provide that the ered the application and all comments received. Board shall take into account whether the foreign bank Bank, with total consolidated assets of approximately engages directly in the business of banking outside of $139.4 billion as of December 31, 1994, is the largest the United States and has furnished the Board the inforbank in Hong Kong. Bank engages in a broad range of mation it needs to assess the application adequately. The retail and commercial banking activities and related fi- Board also shall take into account whether the foreign nancial services through a network of branches in Hong bank and any foreign bank parent is subject to compre- Kong. In addition, Bank has six principal subsidiaries, hensive supervision or regulation on a consolidated basis including four in Hong Kong, that are engaged in bank- by its home country supervisor (12 U.S.C. § 3105(d)(2); ing, insurance, merchant banking, and finance. Bank also 12 C.F.R. 211.24). The Board may also take into account operates a banking subsidiary in Australia and a finance additional standards as set forth in the IBA (12 U.S.C. subsidiary in Singapore. Together with its subsidiaries, § 3105(d)(3)-(4)) and Regulation K (12 C.F.R. Bank operates 535 offices in 19 countries in Asia, and 40 211.24(c)). offices in nine other countries. The Board has stated previously that the standards that Bank operates in the United States directly and apply to the establishment of a branch or agency need through its subsidiary, Hang Seng Bank, Limited ("Hang not in every case apply to the establishment of a repre- Seng"), Hong Kong. Bank operates branches in New sentative office because representative offices do not York, New York; Los Angeles and San Francisco, Cali- engage in a banking business and cannot take deposits or fornia; Chicago, Illinois; Seattle, Washington; and Port- make loans.2 In evaluating an application to establish a land, Oregon; agencies in Guam and Houston, Texas; representative office under the IBA and Regulation K, and representative offices in Alhambra and Newport the Board will take into account the standards that apply Beach, California. Hang Seng operates two federally to establishment of branches and agencies, subject to the licensed branches in New York, New York; and a feder- following considerations. With respect to supervision by ally licensed limited branch in San Francisco, California. home country authorities, a foreign bank that proposes to Bank is wholly owned indirectly by HSBC Holdings establish a representative office must be subject to a pic ("Holdings"), London, England, a holding company significant degree of supervision by its home country that engages through its subsidiaries in financial activi- supervisor.3 A foreign bank's financial and managerial ties in over 3,000 offices in 65 countries.1 Holdings also resources will be reviewed to determine whether its directly owns all the outstanding voting shares of Mid- financial condition and performance demonstrate that it land Bank pic ("Midland Bank"), London, the fourth is capable of complying with applicable laws and has an largest bank in England. In addition to Bank's operations operating record that would be consistent with the estabin the United States, Holdings engages in commercial lishment of a representative office of the United States. banking activities in the United States through Midland Finally, all foreign banks, whether operating through Bank's branch in New York, New York, and through branches, agencies or representative offices, will be re- Marine Midland Banks, Inc., a holding company in quired to provide adequate assurances of access to infor- Buffalo, New York, and its subsidiary, Marine Midland mation on the operations of the bank and its affiliates Bank, Buffalo, New York. Holdings also engages in a necessary to determine compliance with U.S. laws. variety of nonbanking activities in the United States The Monetary Authority, Bank's primary supervisor, through various subsidiaries engaged in investment is authorized by law to regulate the domestic and foreign banking, securities activities, asset management, finance, activities of banks licensed in Hong Kong. The duties of and capital markets activities. the Monetary Authority include licensing banks, enforc- The proposed representative office would engage in ing the provisions of Hong Kong's banking laws, and traditional representative functions, including acting as a conducting examinations of banks and their foreign ofliaison in the Dallas-Fort Worth, Texas, area between fices. In executing its responsibilities, the Monetary Au- Bank and its clients in the area engaged in international thority normally conducts annual examinations of Bank, trade, market research, new business development, and receives frequent and comprehensive financial reports preparing loan applications. The proposed representative from Bank on a worldwide consolidated basis, and holds 2. See 58 Federal Register 6348,6351 (1993). 1. Holdings owns Bank through a wholly owned subsidiary, 3. Citizens National Bank, 79 Federal Reserve Bulletin 805 HSBC Holdings BV, a Netherlands holding company. (1993). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

904 Federal Reserve Bulletin • September 1995 periodic discussions with Bank's senior management law, Bank and its ultimate parent have committed to and external auditor. In addition, Bank is required to cooperate with the Board in obtaining any necessary report affiliate-related transactions to the Monetary Au- consents or waivers that might be required from third thority quarterly.4 parties in connection with the disclosure of certain infor- The Board has previously determined, in connection mation. In addition, subject to certain conditions, the with an application involving another Hong Kong bank, Monetary Authority may share information on Bank's that the bank was subject to home country supervision operations with other supervisors, including the Board. on a consolidated basis.5 In this case, Bank is supervised In light of these commitments and other facts of record, by the Monetary Authority on essentially the same terms and subject to the conditions described below, the Board and conditions as the other Hong Kong bank. Based on concludes that Bank has provided adequate assurances all the facts of record, the Board has determined that of access to any necessary information the Board may Bank is subject to comprehensive supervision or regula- request. tion on a consolidated basis by its home country supervi- On the basis of all the facts of record, and subject to sor. the commitments made by Bank and its ultimate parent, The Board also notes that Bank engages directly in the as well as the terms and conditions set forth in this order, business of banking outside of the United States through the Board has determined that Bank's application to its extensive banking operations in Asia and elsewhere. establish a representative office should be, and hereby is, Bank has provided the Board with the information neces- approved. Should any restrictions on access to informasary to assess the application through submissions that tion on the operations or activities of Bank and its address the relevant issues. affiliates subsequently interfere with the Board's ability The Board has also taken into account the additional to determine the compliance by Bank or its affiliates with standards set forth in section 7 of the IBA and applicable federal statutes, the Board may require termi- Regulation K. 12 U.S.C. § 3105(d)(3),(4); 12 C.F.R. nation of any of Bank's direct or indirect activities in the 211.24(c)(2). The Board notes that the Monetary Author- United States. Approval of this application is also specifity has approved the request by Bank to establish the ically conditioned on compliance by Bank and its ultiproposed representative office. mate parent with the commitments made in connection The Board has determined that financial and manage- with this application, and with the conditions of this rial factors are consistent with approval of the proposed order.6 The commitments and conditions referred to representative office. Bank appears to have the experi- above are conditions imposed in writing by the Board in ence and capacity to support the proposed representative connection with its decision, and may be enforced in office and has also established controls and procedures proceedings under 12 U.S.C. § 1818 against Bank and its for the proposed representative office to ensure compli- affiliates. ance with U.S. law. By order of the Board of Governors, effective Finally, with respect to access to information on July 20, 1995. Bank's operations, the Board has reviewed the restrictions on disclosure in certain jurisdictions where Bank Voting for this action: Vice Chairman Blinder, and Governors and Holdings have material operations and has commu- Kelley, Lindsey, Phillips, and Yellen. Absent and not voting: Chairman Greenspan. nicated with the relevant government authorities regarding access to information. Bank and its ultimate parent JENNIFER J. JOHNSON have each committed that they will make available to the Deputy Secretary of the Board Board such information on the operations of Bank and its affiliates that the Board deems necessary to determine and enforce compliance with the IBA, the Bank Holding Company Act of 1956, as amended, and other applicable federal law. To the extent that the provision of such information to the Board is prohibited or impeded by 4. Holdings has also provided information to the Board that it is 6. The Board's authority to approve the establishment of the supervised as a holding company by the Bank of England. Hold- proposed representative office parallels any authority of the Texas ings has stated that the Bank of England monitors the operations of State Banking Department to license offices of a foreign bank. The Holdings on a worldwide basis, including Holdings's consolidated Board's approval of this application would not supplant the authorcapital adequacy and exposures between Holdings and its subsidiar- ity of the State of Texas, and its agent, the Texas State Banking ies and between the subsidiaries. Department, to license the proposed office of Bank in accordance 5. Dah Sing Bank, Limited, 80 Federal Reserve Bulletin 182 with any terms or conditions that the Texas State Banking Depart- (1994). ment may impose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 905 Liu Chong Hing Bank Limited continue to be qualifying foreign banking organizations Hong Kong within the meaning of Regulation K after Bank establishes the proposed branch (12 C.F.R. 211.23(b)). Order Approving Establishment of a Branch Bank has received approvals to convert its agency to a branch from the Hong Kong Monetary Authority (the Liu Chong Hing Bank Limited ("Bank"), Hong Kong, a "Monetary Authority") and the California State Bankforeign bank within the meaning of the International ing Department. Banking Act ("IBA"), has applied under section 7(d) of In order to approve an application by a foreign bank to the IBA (12 U.S.C. § 3105(d)) to establish a state- establish a branch in the United States, the IBA and licensed branch in San Francisco, California.1 A foreign Regulation K require the Board to determine that the bank must obtain the approval of the Board to establish a foreign bank applicant engages directly in the business branch, agency, commercial lending company, or repre- of banking outside of the United States, and has fursentative office in the United States under the Foreign nished to the Board the information it needs to ade- Bank Supervision Enhancement Act of 1991 quately assess the application. The Board must also ("FBSEA"), which amended the IBA. determine that the foreign bank applicant is subject to Notice of the application, affording interested persons comprehensive supervision or regulation on a consolian opportunity to submit comments, has been published dated basis by its home country supervisors. in a newspaper of general circulation (San Francisco (12 U.S.C. § 3105(d)(2); 12 C.F.R. 211.24(c)(1).) The Chronicle, September 6, 1993). The time for filing com- Board may also take into account additional standards as ments has expired and the Board has considered the set forth in the IBA (12 U.S.C. § 3105(d)(3)-(4)) and application and all comments received. Regulation K (12 C.F.R. 211.24(c)). Bank, with total consolidated assets of approximately Bank engages directly in the business of banking $2.5 billion as of December 31, 1994, is the 21st largest outside of the United States through its banking operabank in Hong Kong. Bank's ultimate parent is Liu's tions in Hong Kong and the People's Republic of China. Holdings Limited ("Holdings"), Hong Kong, a holding Bank also has provided the Board with the information company in Hong Kong.2 Bank operates approximately necessary to assess the application through submissions 30 branches throughout Hong Kong and a branch and a that address the relevant issues. representative office in the People's Republic of China, Regulation K provides that a foreign bank will be as well as ten wholly owned subsidiaries in Hong Kong considered to be subject to comprehensive supervision and elsewhere. The activities of Bank's subsidiaries in- or regulation on a consolidated basis if the Board deterclude property management, deposit-taking, nominee ser- mines that the bank is supervised and regulated in such a vices, electronic data processing, banking, merchant manner that its home country supervisor receives suffibanking, stock brokerage, investments, and property in- cient information on the foreign bank's worldwide opervestment. The activities of Bank's San Francisco agency ations, including the relationship of the foreign bank to include commercial and mortgage lending and negotiat- any affiliate, to assess the overall financial condition of ing U.S. dollar letters of credit issued by the head office. the foreign bank and its compliance with law and regula- Bank proposes to convert its existing San Francisco tion (12 C.F.R 211.24(c)(1)).3 In making its determinaagency to a branch to expand its deposit base. It also would expand its lending activities in such areas as trade finance, accounts receivable and inventory financing, and commercial and real estate lending. Other services 3. In assessing this standard, the Board considers, among other to be offered by the branch include remittances, foreign factors, the extent to which the home country supervisor: exchange, and gold coin trading. Neither Bank nor its (i) Ensures that the bank has adequate procedures for monitoring and controlling its activities worldwide; parent companies engage in nonbanking activities in the (ii) Obtains information on the condition of the bank and its United States, and Bank and its parent companies would subsidiaries and offices through regular examination reports, audit reports, or otherwise; (iii) Obtains information on the dealings with and relationship 1. By this application, Bank proposes to convert its existing state between the bank and its affiliates, both foreign and domestic; licensed agency to a branch. (iv) Receives from the bank financial reports that are consoli- 2. Holdings, which is controlled by members of the Liu family in dated on a worldwide basis, or comparable information that Hong Kong, indirectly controls 50.6 percent of Bank's outstanding permits analysis of the bank's financial condition on a worldwide shares through its subsidiaries, Liu Chong Hing Investment Lim- consolidated basis; and ited and Liu Chong Estate Company Limited, both of Hong Kong. (v) Evaluates prudential standards, such as capital adequacy and Liu family members also directly hold 8.3 percent of Bank's risk asset exposure, on a worldwide basis. shares. The Mitsubishi Bank, Limited ("Mitsubishi"), Tokyo, Ja- These are indicia of comprehensive, consolidated supervision. No pan, owns 11.3 percent of Bank's shares and the remaining single factor is essential and other elements may inform the Board's 29.8 percent is widely held. determination. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

906 Federal Reserve Bulletin • September 1995 tion under this standard, the Board has considered the appears to have the experience and capacity to support following information. the proposed branch. Bank has established controls and The Monetary Authority, Bank's primary supervisor, procedures for the proposed branch in order to ensure is authorized by law to regulate the domestic and foreign compliance with U.S. law. activities of banks licensed in Hong Kong. The duties of Finally, with respect to access to information on the Monetary Authority include licensing banks, enforc- Bank's operations, the Board has reviewed the relevant ing the provisions of Hong Kong's banking laws, and provisions of law in Hong Kong and has communicated conducting examinations of banks and their foreign of- with appropriate government authorities regarding acfices. In executing its responsibilities, the Monetary Au- cess to information. Bank and its ultimate parent have thority normally conducts annual examinations of Bank, each committed to make available to the Board such receives frequent and comprehensive financial reports information on the operations of Bank and any affiliate from Bank on a worldwide consolidated basis, and holds of Bank that the Board deems necessary to determine periodic discussions with Bank's senior management and enforce compliance with the IBA, the Bank Holding and external auditor. In addition, Bank is required to Company Act of 1956, as amended, and other applicable report affiliate-related transactions to the Monetary Au- federal law. To the extent that the provision of such thority quarterly. information is prohibited or impeded by law, Bank and The Board has previously determined, in connection its ultimate parent have committed to cooperate with the with an application involving another Hong Kong bank, Board to obtain any necessary consents or waivers that that the bank was subject to home country supervision might be required from third parties in connection with on a consolidated basis.4 In this case, Bank is supervised disclosure of certain information. In addition, subject to by the Monetary Authority on essentially the same terms certain conditions, the Monetary Authority may share and conditions as the other Hong Kong bank.5 Based on information on Bank's operations with other superviall the facts of record, the Board has determined that sors, including the Board. In light of these commitments Bank is subject to comprehensive supervision or regula- and other facts of record, and subject to the condition tion on a consolidated basis by its home country supervi- described below, the Board concludes that Bank has sor. provided adequate assurances of access to any necessary The Board must also take into account the additional information the Board may request. standards set forth in section 7 of the IBA. (See 12 U.S.C. On the basis of all the facts of record, and subject to § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2).) Bank has pro- the commitments made by Bank and its ultimate parent, vided the Board with the information necessary to assess as well as the terms and conditions set forth in this order, the application through submissions that address the the Board has determined that Bank's application to relevant issues. As noted above, Bank has received the establish the branch should be, and hereby is, approved. consent of its home country authorities to establish the Should any restrictions on access to information on the proposed state licensed branch. In addition, subject to operations or activities of Bank and its affiliates subsecertain conditions, the Monetary Authority may share quently interfere with the Board's ability to determine information on Bank's operations with other supervi- the safety and soundness of Bank's U.S operations or the sors, including the Board. compliance by Bank or its affiliates with applicable Bank must comply with Hong Kong capital standards. federal statutes, the Board may require termination of Hong Kong has voluntarily subscribed to the Basle Cap- any of Bank's direct or indirect activities in the United ital Accord ("Accord"). Bank's capital exceeds the min- States. Approval of this application is also specifically imum standards of the Accord and is equivalent to conditioned on compliance with the commitments made capital that would be required of a U.S. banking organi- by Bank and its ultimate parent in connection with this zation. Managerial and other financial resources of Bank application, and with the conditions of this order.6 The are also considered consistent with approval, and Bank commitments and conditions referred to above are conditions imposed in writing by the Board in connection with its decision, and may be enforced in proceedings under 4. Dah Sing Bank, 80 Federal Reserve Bulletin 182 (1994). 5. As noted above, Bank operates several foreign offices and subsidiaries. Bank states that the books and records of its foreign subsidiaries are maintained at its head office in Hong Kong. Conse- 6. The Board's authority to approve the establishment of the quently, the operations of these companies are subject to review by proposed branch parallels the continuing authority of the California the Monetary Authority during its regular on-site examinations of State Banking Department to license offices of a foreign bank. The Bank's Hong Kong operations, as well as to review under Bank's Board's approval of this application does not supplant the authority own internal monitoring procedures. The Monetary Authority also of the State of California, and its agent, the California State reviews the results of Bank's internal audits. Finally, Bank's exter- Banking Department, to license the proposed branch of Bank in nal auditors evaluate Bank's internal controls during their reviews accordance with any terms or conditions that the California State and report any identified weaknesses to the Monetary Authority. Banking Department may impose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 907 12 U.S.C. § 1818 or 12 U.S.C. § 1847 against Bank, its Provident is the eighth largest commercial bank in office and its affiliates. Ohio, controlling deposits of $3.8 billion, representing By order of the Board of Governors, effective approximately 4 percent of total deposits in commercial July 20, 1995. banks in the state.2 Based on all the facts of record, the Board concludes that consummation of the proposed Voting for this action: Vice Chairman Blinder, and Governors reorganization of Bancorp's current subsidiaries would Kelley, Lindsey, Phillips, and Yellen. Absent and not voting: Chair- not have a significantly adverse effect on competition or man Greenspan. the concentration of banking resources in any relevant banking market. The Board also concludes that the finan- JENNIFER J. JOHNSON cial and managerial resources and future prospects of Deputy Secretary of the Board Provident are consistent with approval. Convenience and Needs Considerations ACTIONS TAKEN UNDER THE FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF In acting on an application under the Bank Merger Act, 1991 the Board is required to consider the convenience and needs of the communities to be served and take into By the Board account the records of the relevant depository institutions under the Community Reinvestment Act The Provident Bank (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires Cincinnati, Ohio the federal financial supervisory agencies to encourage financial institutions to help meet the credit needs of the Order Approving the Merger of a Savings Bank local communities in which they operate, consistent with their safe and sound operation. To accomplish this end, The Provident Bank ("Provident"), a state member the CRA requires the appropriate federal supervisory bank, has applied under section 18(c) of the Federal authority to "assess the institution's record of meeting Deposit Insurance Act (12 U.S.C. § 1828(c)) ("Bank the credit needs of its entire community, including low- Merger Act") and section 5(d)(3) of the Federal Deposit and moderate-income neighborhoods, consistent with Insurance Act (12 U.S.C. § 1815(d)(3)) ("FDI Act") to the safe and sound operation of such institution," and to acquire by merger Heritage Savings Bank ("Heritage"), take that record into account in its evaluation of applicaboth of Cincinnati, Ohio.1 Provident and Heritage are tions under the Bank Merger Act.3 wholly owned subsidiaries of Provident Bancorp, Inc., The Board has received comments from an individual Cincinnati, Ohio ("Bancorp"), and this proposal repre- ("Protestant") alleging that Provident has generally sents a corporate reorganization of Bancorp. failed to comply with the CRA and has engaged in a Notice of the proposal, affording interested persons an pattern of illegal discrimination against Africanopportunity to submit comments, has been given in American borrowers.4 In considering the convenience accordance with the Bank Merger Act and the Board's and needs factor under the Bank Merger Act, the Board Rules of Procedure (12 C.F.R. 262.3(b)). As required by the Bank Merger Act, reports on the competitive effects of the merger were requested from the United States 2. Deposit data are as of March 31, 1995. Attorney General, the Office of Thrift Supervision 3. 12 U.S.C. § 2903. ("OTS"), and the Federal Deposit Insurance Corpora- 4. Protestant also alleges that Provident's foreclosure on a loan made to him to renovate his rental property for commercial use tion. The time for filing comments has expired, and the under Cincinnati's Rental Rehabilitation Program ("RRP") evi- Board has considered the proposal, and all comments denced racial discrimination and violated fair housing laws and received in light of the factors set forth in the Bank guidelines of the U.S. Department of Housing and Urban Develop- Merger Act. ment ("HUD") applicable to RRP programs. Provident maintains that foreclosure was initiated only after Protestant defaulted on his mortgage payments and was unable to provide suitable additional collateral and to correct building code violations and tax and utility 1. Prior to the proposed merger, Heritage will transfer its deposit payment delinquencies that caused matching HUD funds to be liabilities in connection with the sale of its main office and branch withheld. Investigations of Protestant's allegations by the Federal facilities to a third party. However, Heritage will remain a member Reserve Bank of Cleveland and HUD found, respectively, no of the Savings Association Insurance Fund ("SAIF"), and the illegal discriminatory actions by Provident or improper administramerger of a member of SAIF with a member of the Bank Insurance tion by Cincinnati of RRP funds. The Board also notes that Protes- Fund requires prior Board approval under section 5(d)(3) of the tant has initiated a civil action in this matter that would afford him FDI Act. In considering such mergers, Section 5(d)(3) requires the appropriate relief if his allegations could be sustained. Based on all Board to follow the procedures and consider the factors set forth in the facts of record, the Board does not believe that these allegations the Bank Merger Act. warrant denial of this proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

908 Federal Reserve Bulletin • September 1995 has carefully reviewed the entire record of CRA perfor- $4.6 million in community development and redevelopmance of Provident, the comments received, and all ment projects. other relevant facts of record in light of the CRA, the Provident's ascertainment and outreach efforts include Board's regulations, and the Statement of the Federal an officer calling program, contacts with local govern- Financial Supervisory Agencies Regarding the Commu- ment and community development groups, homeownernity Reinvestment Act ("Agency CRA Statement").5 ship counseling and small business seminars. The bank's Community Service Action Plan is revised periodically Record of CRA Performance to reflect recommendations received from local community groups. Provident also offers the Key Mortgage A. Evaluation of CRA Performance Loan program to finance the purchase of single-family housing in low- and moderate- income areas.7 All denied The Agency CRA Statement provides that a CRA exam- mortgage applications are subject to a second review to ination is an important and often controlling factor in the ensure that lending criteria are being applied equally. consideration of an institution's CRA record, and that reports of these examinations will be given great weight C. Conclusion Regarding Convenience and Needs in the applications process.6 The Board notes that Provi- Considerations dent received an "outstanding" rating from the Federal Reserve Bank of Cleveland in its most recent CRA The Board has carefully considered all the facts of performance examination as of October 18, 1993 ("1993 record, including Protestant's comments, Provident's Examination"). Heritage received a "satisfactory" rat- CRA record of performance, and information provided ing from its primary supervisor, the OTS, in its most by Provident on its CRA activities, in reviewing the recent CRA performance examination as of August 9, convenience and needs considerations in this proposal. 1994. In light of these facts, the Board believes that consider- The 1993 Examination did not find any evidence of ations relating to Provident's record of CRA perforpractices intended to discourage applications for any mance, as well as all other convenience and needs conkind of credit and indicated that Provident generally siderations, are consistent with approval of this proposal. solicits credit applications from all segments of its delineated community. Examiners also indicated that Provi- Other Considerations dent is in compliance with the substantive provisions of antidiscrimination laws and regulations, including the The Board also has considered the specific factors it Equal Credit Opportunity Act, Fair Housing Act, and must review under section 5(d)(3) of the FDI Act, and other regulations pertaining to nondiscriminatory treat- the record in this case shows that: ment of credit applicants. (1) The transaction will not result in the transfer of any federally insured depository institution's federal B. Other Aspects of CRA Performance deposit insurance from one federal deposit insurance fund to the other; The 1993 Examination also found a variety of programs (2) Bancorp and Provident currently meet, and upon designed to assist commercial borrowers in low- and consummation of the proposed transaction, will conmoderate-income areas. In February 1993, Provident tinue to meet, all applicable capital standards; and opened a Business Outreach Center in a predominantly (3) The proposed transaction would comply with the minority, low- and moderate-income area of Cincinnati interstate banking provision of the Bank Holding to serve as a loan production office and provide informa- Company Act (12 U.S.C. § 1842(d)) if Heritage were tion and developmental assistance to small businesses. a state bank that Provident was applying to acquire. Provident has made approximately $21.9 million in See 12 U.S.C. § 1815(d)(3). small business loans since the 1993 Examination. In addition, Provident maintains a high level of partici- Based on the foregoing and all the facts of record, the pation in development and redevelopment programs in Board has determined that the proposal should be, and its community by providing revolving lines of credit, hereby is, approved. The Board's approval is specifically equity investments, and construction, rehabilitation, and conditioned on compliance by Provident with all compermanent financing. Since the 1993 Examination, Provident has funded or committed to fund approximately 7. This program offers reduced down payment requirements, below-market interest rates and flexible underwriting criteria. The 5. 54 Federal Register 13,742 (1989). 1993 Examination indicates that Provident has made approximately 6. Id. at 13,745. 650 Key Mortgage loans totalling over $35 million. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 909 mitments made in connection with this proposal. The By order of the Board of Governors, effective commitments and conditions relied on by the Board are July 31, 1995. deemed conditions imposed in writing by the Board in connection with its findings and decision, and, as such, may be enforced in proceedings under applicable law. Voting for this action: Chairman Greenspan and Governors The merger of Provident and Heritage may not be Kelley, Phillips, and Yellen. Absent and not voting: Vice Chairman consummated before the fifteenth calendar day after the Blinder and Governor Lindsey. effective date of this order, or later than three months after the effective date of this order, unless such period is extended by the Board or by the Federal Reserve Bank WILLIAM W. WILES of Cleveland, acting pursuant to delegated authority. Secretary of the Board APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Applicant(s) Bank(s) Effective Date The Bank of New York Company, Inc., Putnam Trust Company of Greenwich, July 26, 1995 New York, New York Greenwich, Connecticut Lisco State Company, Woodstock Land & Cattle Company, July 12, 1995 Lisco, Nebraska Fullerton, Nebraska Simmons First National Corporation, DSB Bancshares Inc., July 14, 1995 Pine Bluff, Arkansas Dermott, Arkansas Sun Banks, Inc., Key Biscayne Bankcorp, Inc., July 21, 1995 Orlando, Florida Key Biscayne, Florida Key Biscayne Bank and Trust Company, Key Biscayne, Florida Section 4 Applicant(s) Bank(s) Effective Date The Bank of New York Company, Inc., Continental Trust Company, July 14, 1995 New York, New York Chicago, Illinois BankAmerica Corporation, San Francisco, California GNB Bancorporation, GNB Financial Co., July 20, 1995 Grundy Center, Iowa Grundy Center, Iowa SunTrust Banks, Inc., To engage de novo in leasing personal July 28, 1995 Atlanta, Georgia or real property or acting as agent, broker, or adviser in leasing such property Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

910 Federal Reserve Bulletin • September 1995 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Applicant(s) Bank(s) Reserve Bank Effective Date Andrews Bancshares, Inc., Andrews Delaware Financial Dallas July 24, 1995 Andrews, Texas Corporation, Dover, Delaware The National Bank of Andrews, Andrews, Texas Andrews Delaware Financial The National Bank of Andrews, Dallas July 24, 1995 Corporation, Andrews, Texas Dover, Delaware Associated Banc-Corp., GN Bancorp, Inc., Chicago July 14, 1995 Green Bay, Wisconsin Chicago, Illinois Associated Illinois Banc-Corp, Green Bay, Wisconsin Capitol Bankshares, Inc., Capitol Bank, Chicago July 25, 1995 Madison, Wisconsin Madison, Wisconsin CENIT Bancorp, Inc., Princess Anne Bank, Richmond June 29, 1995 Norfolk, Virginia Virginia Beach, Virginia Central Bancompany, Inc., Pleasant Hope Bancshares, Inc., St. Louis July 26, 1995 Jefferson City, Missouri Pleasant Hope, Missouri Webster County Bank, Marshfield, Missouri CSB Financial Group, Inc., Centralia Savings Bank, St. Louis July 13, 1995 Centralia, Illinois Centralia, Illinois Davis Bancshares, Inc., First National Bank of McClusky, Minneapolis July 11, 1995 McClusky, North Dakota McClusky, North Dakota Eastside Holding Corporation, The Eastside Bank & Trust Company, Atlanta June 27, 1995 Snellville, Georgia Snellville, Georgia Fifth Third Bancorp, Bank of Naples, Cleveland July 20, 1995 Cincinnati, Ohio Naples, Florida Fifth Third Trust Co. & Savings Bank of Naples, Cleveland July 20, 1995 Bank, FSB, Naples, Florida Naples, Florida First Bankshares, Inc., First National Bank of Central Florida, Atlanta June 27, 1995 Longwood, Florida Longwood, Florida First Citizens Bancorporation of SNB Financial Corporation, Richmond July 27, 1995 South Carolina, Inc., Summerville, South Carolina Columbia, South Carolina First Dakota Financial Corporation First Dakota Financial Corporation, Minneapolis July 5, 1995 Employee Stock Ownership Yankton, South Dakota Plan, Yankton, South Dakota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 911 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date First National Corporation, First National Bank, Atlanta July 14, 1995 Folkston, Georgia Folkston, Georgia First Peoples Bankshares, Inc., First Peoples Bank, Atlanta July 5, 1995 Pine Mountain, Georgia Pine Mountain, Georgia First Southern Holding Bancorp, First Southern Bank, Atlanta July 7, 1995 Inc., Boca Raton, Florida Boca Raton, Florida First Sterling Bancshares, Inc., Commerce Bank Corporation, Atlanta July 21, 1995 Auburndale, Florida Winter Haven, Florida Foursquare Cornerstone, Inc., Cornerstone Bank, Chicago July 20, 1995 Brookfield, Wisconsin Brookfield, Wisconsin General Bancshares, Inc., Sparkman Bancshares, Inc., St.. Louis July 7, 1995 Little Rock, Arkansas Sparkman, Arkansas Heartland Financial USA, Inc., Riverside Community Bank, Chicago July 14, 1995 Dubuque, Iowa Rockford, Illinois InterWest Bancorp, Inc., InterWest Savings Bank, San Francisco June 27, 1995 Oak Harbor, Washington Oak Harbor, Washington Keene Bancorp, Inc., 401(k) Keene Bancorp, Inc., Dallas June 27, 1995 Employee Stock Ownership Keene, Texas Plan and Trust, Itasca State Bank, Keene, Texas Itasca, Texas First State Bank, Keene, Texas Mason-Dixon Bancshares, Inc., Bank Maryland Corp, Richmond June 30, 1995 Westminster, Maryland Towson, Maryland Moundville Bancshares, Inc., Bank of Moundville, Atlanta June 23, 1995 Moundville, Alabama Moundville, Alabama Northern Plains Investment, Inc., Stutsman County State Bank, Minneapolis July 26, 1995 Jamestown, North Dakota Jamestown, North Dakota Norwest Corporation, Alice Bancshares, Inc., Minneapolis July 26, 1995 Minneapolis, Minnesota Alice, Texas Omega Financial Corporation, Montour Bank, Philadelphia June 26, 1995 State College, Pennsylvania Danville, Pennsylvania Pony Express Bancorp, Inc., Farmers State Bank, Kansas City July 20, 1995 Elwood, Kansas Lucas, Kansas SNB Bancshares, Inc., SNB Corporation, Dallas July 11, 1995 Houston, Texas Wilmington, Delaware Southern National Bank of Texas, Houston, Texas SNB Corporation, Southern National Bank of Texas, Dallas July 11, 1995 Wilmington, Delaware Houston, Texas Southern Bancshares, Inc., First State Bank Brazoria, Dallas June 30, 1995 Houston, Texas Brazoria, Texas Southwestern Bancshares, Inc., Southwestern Delaware Financial Dallas July 18, 1995 Glen Rose, Texas Corporation, Dover, Delaware Southwestern Delaware Financial First National Bank, Dallas July 18, 1995 Corporation, Glen Rose, Texas Dover, Delaware Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

912 Federal Reserve Bulletin • September 1995 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Trenton Bankshares, Inc., First National Bank of Trenton, Dallas July 13, 1995 Trenton, Texas Trenton, Texas Victoria Bankshares, Inc., Cattlemen's Financial Services, Inc., Dallas July 5, 1995 Victoria, Texas Austin, Texas Victoria Financial Services, Inc., Cattlemen's State Bank, Dallas July 5, 1995 Wilmington, Delaware Austin, Texas Watford City Bancshares, Inc., First International Bank & Trust, Minneapolis July 19, 1995 Watford City, North Dakota Scottsdale, Arizona Whitcorp Financial Company, Western Bancorp, Inc., Kansas City July 12, 1995 Leoti, Kansas Garden City, Kansas Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Abess Properties, Ltd., Turnberry Savings & Loan Atlanta July 20, 1995 Miami, Florida Association, City National Bancshares, Inc., North Miami Beach, Florida Miami, Florida Allied Irish Banks, p.l.c., AIB Investment Managers Limited, Richmond July 7, 1995 Dublin, Ireland Dublin, Ireland Associated Banc-Corp, Great Northern Mortgage, Chicago July 3, 1995 Green Bay, Wisconsin Rolling Meadows, Illinois Citizens Bancshares Corporation, E Z Loan Company, Inc., Richmond July 27, 1995 Olanta, South Carolina Lake City, South Carolina Commercial Bancgroup, Inc., Tennessee Finance Company, Inc., Atlanta July 6, 1995 Harrogate, Tennessee Harrogate, Tennessee Community National Corporation, Document Processing and Imaging Minneapolis July 3, 1995 Grand Forks, North Dakota Corporation, Grand Forks, North Dakota Cooperatieve Centrale Raiffeisen - Rabo Capital Services, Inc., New York July 3, 1995 Boerenleenbank B.A., Rabobank New York, New York Nederland, Utrecht, Netherlands Firstar Bank Illinois, To engage in trust activities Chicago June 27, 1995 Naperville, Illinois First Business Bancshares, Inc., First Madison Capital Corp., Chicago July 19, 1995 Madison, Wisconsin Madison, Wisconsin First Hawaiian, Inc., First Hawaiian Leasing, Inc., San Francisco July 14, 1995 Honolulu, Hawaii Honolulu, Hawaii First National Corporation North Dakota First Insurance Company, Minneapolis July 26, 1995 Dakota, Grand Forks, North Dakota Grand Forks, North Dakota First State Banking Corporation, To engage de novo in providing data Minneapolis July 26, 1995 Alcester, South Dakota processing services to other financial institutions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 913 Section 4—Continued Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Intervest Bancshares Corporation, To engage de novo in making, Atlanta July 17, 1995 New York, New York acquiring, participating in and/or servicing loans secured by mortgages on real estate Marshall & Usley Corporation, Mutual Services, Inc., Chicago July 3, 1995 Milwaukee, Wisconsin Braintree, Massachusetts Mountain Bancshares, Inc., Financial Institution Service, Inc., St. Louis June 29, 1995 Yellville, Arkansas Green Forest, Arkansas National Commerce Transplatinum Service Corp., St. Louis July 14, 1995 Bancorporation, Nashville, Tennessee Memphis, Tennessee Norwest Corporation, Valley-Hi National Bank, Minneapolis July 14, 1995 Minneapolis, Minnesota San Antonio, Texas Regions Financial Corporation, Interstate Billing Service, Inc., Atlanta July 14, 1995 Birmingham, Alabama Decatur, Alabama Summit Financial Corporation, Courtesy Management Corporation, Richmond July 19, 1995 Greenville, South Carolina DBA Courtesy Finance, St. George, South Carolina Swiss Bank Corporation, Government Pricing Information New York June 30, 1995 Basle, Switzerland System, Inc., New York, New York Wisconsin Bank Services, Inc., To make and service loans Chicago July 21, 1995 Black River Falls, Wisconsin Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Lexington Holding, Inc., Lexington Savings Bank, Boston June 28, 1995 Waltham, Massachusetts Lexington, Massachusetts Affiliated Community Bancorp, Main Street Community Bancorp, Inc., Inc., Waltham, Massachusetts Waltham, Massachusetts The Federal Savings Bank, Waltham, Massachusetts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

914 Federal Reserve Bulletin • September 1995 APPLICATIONS APPROVED UNDER BANK MERGER ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Applicant(s) Bank(s) Reserve Bank Effective Date Bank of Naples, Fifth Third Trust Co. & Savings Bank, Atlanta July 20, 1995 Naples, Florida F.S.B., Naples, Florida First Virginia Bank-Colonial, Citizens Federal Bank, a Federal Richmond July 20, 1995 Richmond, Virginia Savings Bank, Miami, Florida Montour Interim Bank, Montour Bank, Philadelphia June 26, 1995 Danville, Pennsylvania Danville, Pennsylvania Princess Anne Bank, CENIT Bank, F.S.B., Richmond June 29, 1995 Virginia Beach, Virginia Norfolk, Virginia Sterling Bank and Trust Co., First Union National Bank of Richmond June 29, 1995 Baltimore, Maryland Maryland, Rockville, Maryland Texas State Bank, First National Bank of South Texas, Dallas July 19, 1995 McAllen, Texas San Antonio, Texas Westamerica Bank, Novato National Bank, San Francisco June 21, 1995 San Rafael, California Novato, California PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the March 31, 1995 denial of Money Station's request for Federal Reserve Banks in which the Board of Governors is reconsideration of the Board's March 1 order (D.C. Cir., not named a party. No. 95-1243). The cases were consolidated on June 2, 1995. Jones v. Board of Governors, No. 95-1359 (D.C. Cir., filed Jones v. Board of Governors, No. 95-1142 (D.C. Cir., filed March 3, 1995). Petition for review of a Board order July 17, 1995). Petition for review of a Board order dated dated February 2, 1995, approving the applications by June 19, 1995, approving the application by First Com- First Commerce Corporation, New Orleans, Louisiana, to merce Corporation, New Orleans, Louisiana, to acquire merge with City Bancorp, Inc., New Iberia, Louisiana, Lakeside Bancshares, Lake Charles, Louisiana. and First Bankshares, Inc., Slidell, Louisiana. Petitioner Board of Governors v. Scott, Misc. No. 95-127 (LFO/PJA) filed a motion for injunctive relief on April 3, 1995. On (D. D.C., filed April 14, 1995). Application to enforce April 17, 1995, the Board filed its opposition to the investigatory subpoenas for documents and testimony. motion. Oral argument took place on June 8, 1995. Money Station, Inc. v. Board of Governors, No. 95-1182 Board of Governors v. Interamericas Investments, Ltd., No. (D.C. Cir., filed March 30, 1995). Petition for review of a H-95-565 (S.D. Texas, filed February 24, 1995). Action Board order dated March 1, 1995, approving notices by to freeze certain assets of a company pending administra- Bank One Corporation, Columbus, Ohio; CoreStates Fi- tive adjudication of civil money penalty. On March 1, nancial Corp., Philadelphia, Pennsylvania; PNC Bank 1995, the court issued a stipulated order requiring the Corp., Pittsburgh, Pennsylvania; and KeyCorp, Cleve- company to deposit $1 million into the registry of the land, Ohio, to acquire certain data processing assets of court. National City Corporation, Cleveland, Ohio, through a In re Subpoena Duces Tecum, No. 95-5034 (D.C. Cir., filed joint venture subsidiary. On May 1, 1995, Money Station January 26, 1995). Appeal of partial denial of plaintiff's filed a separate petition for review of the Board's motion to compel production of examination and other Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 915 supervisory material in connection with a shareholder Stuart G. Urban derivative action against a bank holding company. Oral Cobb, Wisconsin argument is scheduled for November 7, 1995. Kuntz v. Board of Governors, No. 95-3044 (6th Cir., filed The Federal Reserve Board announced on July 14, 1995, January 12, 1995). Petition for review of a Board order the issuance of Orders of Assessment of Civil Money dated December 19, 1994, approving an application by Penalties against Stuart G. Urban, John C. Kirkpatrick, KeyCorp, Cleveland, Ohio, to acquire BANKVERMONT Leslie R. Cohen, Byung Ho Chang, and Robert Arm- Corp., Burlington, Vermont. On February 10, 1995, the bruster, institution-affiliated parties of CSB Investors, Board filed its motion to dismiss. Cobb, Wisconsin, and Iowa-Grant Bankshares, Inc., In re Subpoena Duces Tecum, Misc. No. 95-06 (D.D.C., Cobb, Wisconsin, former bank holding companies. filed January 6, 1995). Action to enforce subpoena seeking pre-decisional supervisory documents sought in connection with an action by Bank of New England Corpora- TERMINATION OF ENFORCEMENT ACTIONS tion's trustee in bankruptcy against the Federal Deposit Insurance Corporation. The Board filed its opposition on The Federal Reserve Board announced on July 12, 1995, January 20, 1995. the termination of the following enforcement actions: Beckman v. Greenspan, No. CV 94-41-BCG-RWA (D. Mont., filed April 13, 1994). Action against Board and Banca Nazionale del Lavaro others seeking damages for alleged violations of constitu- Rome, Italy, and New York, New York tional and common law rights. On April 24, 1995, the Cease and Desist Order dated March 8, 1991; terminated court granted the Board's motion to dismiss. Plaintiffs May 22, 1995. filed a notice of appeal on May 4, 1995. Board of Governors v. Ghaith R. Pharaon, No. 91-CIV- Citizens State Bank & Trust Co. 6250 (S.D. New York, filed September 17, 1991). Action Ellsworth, Kansas to freeze assets of individual pending administrative adjudication of civil money penalty assessment by the Board. CSB Bancshares, Inc. On September 17, 1991, the court issued an order tempo- Ellsworth, Kansas rarily restraining the transfer or disposition of the individual's assets. Written Agreements dated August 23, 1993; terminated May 30, 1995. FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD Columbus Junction State Bank OF GOVERNORS Columbus Junction, Iowa Dane D. Britton Written Agreement dated October 29, 1992; terminated Ellsworth, Kansas June 1, 1995. The Federal Reserve Board announced on July 12, 1995, First Prairie Bankshares, Inc. the issuance of an Order of Assessment of a Civil Money Georgetown, Illinois Penalty against Dane D. Britton, a former officer and institution-affiliated party of the Citizens State Bank and Written Agreement dated December 18, 1991; termi- Trust Company, and Britton Bancshares, Inc., Ellsworth, nated June 15, 1995. Kansas. John "Bud" Harlow, Jr. WRITTEN AGREEMENTS APPROVED BY FEDERAL Mission, Kansas RESERVE BANKS The Federal Reserve Board announced on July 18, 1995, United Bank Limited the issuance of a combined Order of Prohibition and For Karachi, Pakistan Other Affirmative Relief against John "Bud" Harlow, Jr., an appraiser for, and institution-affiliated party of, the The Federal Reserve Board announced on July 17, 1995, Midland Bank of Kansas, Mission, Kansas; the Midland the execution of a Written Agreement among the Federal Bank, Kansas City, Missouri; the College Boulevard Reserve Bank of New York, the Superintendent of Banks National Bank, Overland Park, Kansas; and the Premier of the State of New York, and the United Bank Limited, Bank, Lenexa, Kansas, a state member bank. Karachi, Pakistan, and its New York Branch. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Al Financial and Business Statistics A3 GUIDE TO TABULAR PRESENTATION Financial Markets A24 Commercial paper and bankers dollar DOMESTIC FINANCIAL STATISTICS acceptances outstanding A25 Prime rate charged by banks on short-term Money Stock and Bank Credit business loans A26 Interest rates—money and capital markets A4 Reserves, money stock, liquid assets, and debt All Stock market—Selected statistics measures A5 Reserves of depository institutions, Reserve Bank Federal Finance credit A6 Reserves and borrowings—Depository A28 Federal fiscal and financing operations institutions A29 U.S. budget receipts and outlays A7 Selected borrowings in immediately available A30 Federal debt subject to statutory limitation funds—Large member banks A30 Gross public debt of U.S. Treasury— Types and ownership Policy Instruments A31 U.S. government securities dealers—Transactions A8 Federal Reserve Bank interest rates A32 U.S. government securities dealers— A9 Reserve requirements of depository institutions Positions and financing A10 Federal Reserve open market transactions A3 3 Federal and federally sponsored credit agencies—Debt outstanding Federal Reserve Banks All Condition and Federal Reserve note statements Securities Markets and Corporate Finance A12 Maturity distribution of loan and security A34 New security issues—Tax-exempt state and local holdings governments and corporations A35 Open-end investment companies—Net sales Monetary and Credit Aggregates and assets A13 Aggregate reserves of depository institutions A35 Corporate profits and their distribution and monetary base A35 Nonfarm business expenditures on new A14 Money stock, liquid assets, and debt measures plant and equipment A16 Deposit interest rates and amounts outstanding— A36 Domestic finance companies—Assets and commercial and BIF-insured banks liabilities, and consumer, real estate, and business A17 Bank debits and deposit turnover credit Commercial Banking Institutions Real Estate A18 Assets and liabilities, Wednesday figures A37 Mortgage markets A3 8 Mortgage debt outstanding Weekly Reporting Commercial Banks— Assets and liabilities Consumer Installment Credit A21 Large reporting banks A39 Total outstanding A23 Branches and agencies of foreign banks A39 Terms Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • September 1995 DOMESTIC FINANCIAL STATISTICS- A58 Banks' own claims on foreigners CONTINUED A59 Banks' own and domestic customers' claims on foreigners Flow of Funds A59 Banks' own claims on unaffiliated foreigners A60 Claims on foreign countries— A40 Funds raised in U.S. credit markets Combined domestic offices and foreign branches A42 Summary of financial transactions A43 Summary of credit market debt outstanding A44 Summary of financial assets and liabilities Reported by Nonbanking Business Enterprises in the United States DOMESTIC NONFINANCIAL STATISTICS A61 Liabilities to unaffiliated foreigners A62 Claims on unaffiliated foreigners Selected Measures A45 Nonfinancial business activity— Securities Holdings and Transactions Selected measures A63 Foreign transactions in securities A45 Labor force, employment, and unemployment A64 Marketable U.S. Treasury bonds and A46 Output, capacity, and capacity utilization notes—Foreign transactions A47 Industrial production—Indexes and gross value A49 Housing and construction A50 Consumer and producer prices Interest and Exchange Rates A51 Gross domestic product and income A65 Discount rates of foreign central banks A52 Personal income and saving A65 Foreign short-term interest rates A66 Foreign exchange rates INTERNATIONAL STATISTICS Summary Statistics A67 GUIDE TO STATISTICAL RELEASES AND A53 U.S. international transactions—Summary SPECIAL TABLES A54 U.S. foreign trade A54 U.S. reserve assets Special Tables A54 Foreign official assets held at Federal Reserve Banks A68 Residential lending reported under the Home A55 Selected U.S. liabilities to foreign official Mortgage Disclosure Act, 1994 institutions Reported by Banks in the United States A76 INDEX TO STATISTICAL TABLES A55 Liabilities to and claims on foreigners A56 Liabilities to foreigners 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 Fanners 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 Financial Statistics • September 1995 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1994 1995 1995 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q3 Q4 Q1 Q2 Feb. Mar. Apr. May June Reserves of depository institutions2 1 Total -1.9 -3.3 -3.7 -8.0 -4.2 -7.5 -12.2 —4.1r -8.5 2 Required -1.9 -3.0 -4.0 -7.0 3.9 -4.5 -11.5 -6.8 -10.4 3 Nonborrowed -3.5 -2.1 -2.4 -8.6 -2.6 -7.7 -13.0 -4.9r -11.0 4 Monetary base3 7.5 6.9 6.4 6.2 3.6 8.6 7.8 7.2r -2.7 Concepts of money, liquid assets, and debt* 5 Ml 2.4 -1.2 .0 -.9 -1.8 .6' -7.1 .8 6 M2 1.0r -.3 1.6 4.2 -1.5 2.5 4.1 5.1r 11.4 7 M3 2.2r 1.7 4.4 6.7 2.4 6.2r 6.ff 7.7r 12.0 8 L 2.3r 3.4 7.9 n.a. 9.5 10. lr 9.9 6.9 n.a. 9 Debt 4.2 5.2 5.5r n.a. 7.4 5.51 4.8' 5.4 n.a. Nontransaction components 10 In M25 .3r .<y 2.4 6.5 -1.4 3.2 5.2 10.7r 16.3 11 In M3 only6 8.8r 13.1r 18.9 19.5 22.8r 25.0r 15.& 20.3r 14.5 Time and savings deposits Commercial banks 12 Savings, including MMDAs -4.6 —8.5 -13.2 -7.3 -16.0 -17.8 -12.1 2.2r 17.9 13 Small time7 9.4 16.0 24.2 23.4 27.2 31.1 23.0 17.3 14.5 14 Large time8,9 13.4r 20.(f 14.0r 14.5 30.2r 19.6r ,8r 24.7r 8.3 Thrift institutions 15 Savings, including MMDAs -11.5 -17.6 -20.5 -14.5 -24.9 -19.4 -16.5 -7.2 -4.0 16 Small time7 .9r 10.4r 20.7r 25.4 30.5 33.3' 28.9 19.6 1.7 17 Large time8 8.3r 14.1r 23.3r 14.3 25.2r 35.2r 18.8r -15.2r 6.8 Money market mutual funds 18 General purpose and broker-dealer 5.7 7.5 7.9 17.9 -1.8 -1.8 15.7 28.2 61.0 19 Institution-only -4.5 7.3 10.0 27.1 -38.0 57.2 24.8 11.8 66.5 Debt components4 20 Federal 3.9 5.9 5.2 n.a. 10.6 7.4 .7 5.9 n.a. 21 Nonfederal 4.3 5.0 5.7r n.a. 6.2 4.8' 6.3r 5.2 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 US. 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 U.S. 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. US. 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 1995 1995 Apr. May June May 17 May 24 May 31 June 7 June 14 June 21 June 28 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 411,557 411,139 413,474 410,575 410,252 411,239 411,093 411,523 417,507 411,027 U.S. government securities Bought outright—System account . 367,512 368,962 372,815 369,414 368,386 368,747 372,924 373,605 372,056 372,841 Held under repurchase agreements 4,257 2,773 2,672 1,663 3,201 3,659 796 0 6,743 449 Federal agency obligations Bought outright 3,404 3,367 3,140 3,358 3,358 3,358 3,232 3,137 3,104 3,101 Held under repurchase agreements 462 591 180 429 830 925 56 0 596 0 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions Adjustment credit 30 8 69 5 4 5 25 1 260 9 Seasonal credit 81 140 169 134 145 159 141 132 178 212 Extended credit 0 0 0 0 0 0 0 0 0 0 Float 531 364 360 400 272 77 279 751 299 131 Other Federal Reserve assets 35,278 34,934 34,068 35,172 34,056 34,310 33,640 33,896 34,271 34,283 12 Gold stock 11,054 11,055 11,054 11,055 11,055 11,054 11,054 11,054 11,054 11,054 13 Special drawing rights certificate account . 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 14 Treasury currency outstanding 23,268 23,335 23,397 23,332 23,346 23,360 23,374 23,388 23,402 23,416 ABSORBING RESERVE FUNDS 15 Currency in circulation 405,072 408,336 409,113 408,540 408,040 409,698 410,241 409,721 408,397 407,788 16 Treasury cash holdings 361 340 316 345 335 325 322 316 313 313 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,155 5,791 7,530 5,582 4,823 5,320 4,424 5,286 11,241 6,977 18 Foreign 198 184 209 185 196 175 221 180 218 226 19 Service-related balances and adjustments ... 4,107 4,226r 4,363 4,182 4,186 4,336r 4,267 4,255 4,421 4,468 20 Other 360 312 284 320 316 287 282 290 295 281 21 Other Federal Reserve liabilities and capital 13,498 12,926 12,971 12,925 12,880 12,768 12,783 13,010 13,073 12,905 22 Reserve balances with Federal Reserve Banks3 24,145 21,431 21,157 20,899 21,893 20,76 lr 20,999 20,925 22,023 20,557 End-of-month figures Wednesday figures Apr. May June May 17 May 24 May 31 June 7 June 14 June 21 June 28 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 411,541 412,804 427,848 412,011 414,353 412,804 416,414 410,861 426,352 413,205 U.S. government securities 2 Bought outright—System account 368,554 370,047 372,641 368,850 367,388 370,047 372,706 372,805 371,937 372,540 3 Held under repurchase agreements 2,750 3,531 16,324 3,880 7,214 3,531 5,571 0 15,914 3,146 Federal agency obligations 4 Bought outright 3,388 3,358 3,096 3,358 3,358 3,358 3,172 3,104 3,104 3,096 5 Held under repurchase agreements 500 700 461 1,000 1,650 700 393 0 87 0 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 43 9 2 4 6 9 3 2 7 2 8 Seasonal credit 112 160 214 138 153 160 126 150 196 226 9 Extended credit 0 0 0 0 0 0 0 0 0 0 1 1 0 1 F O l t o h a e t r Federal Reserve assets 35,8 3 0 8 9 4 34, 9 0 9 0 4 5 r 34,8 2 1 9 4 6 34,0 7 6 1 9 3 34,3 2 6 1 7 7 34, 9 0 9 05 4 r 33,8 5 6 7 5 8 33,9 8 8 1 9 1 34,7 3 1 9 0 8 34 -2 ,4 4 3 4 9 12 Gold stock 11,055 11,054 11,054 11,055 11,054 11,054 11,054 11,054 11,054 11,054 13 Special drawing rights certificate account 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 14 Treasury currency outstanding 23,304 23,360 23,430 23,332 23,346 23,360 23,374 23,388 23,402 23,416 ABSORBING RESERVE FUNDS 15 Currency in circulation 405,285 411,104 410,414 409,144 409,324 411,104 411,000 409,970 408,713 409,587 16 Treasury cash holdings 356 322 319 336 326 322 317 313 312 319 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 8,241 4,646 20,977 5,835 4,901 4,646 5,139 5,000 13,636 7,721 18 Foreign 166 227 168 179 164 227 244 164 306 260 19 Service-related balances and adjustments .. 4,390 4,336r 4,504 4,182 4,186 4,336r 4,267 4,255 4,421 4,468 20 Other 339 215 242 320 328 215 271 292 280 282 21 Other Federal Reserve liabilities and capital , 13,095 12,181 13,519 12,688 12,690 12,181 12,847 12,788 12,919 12,696 22 Reserve balances with Federal Reserve Banks: 22,045 22,204r 20,207 21,731 24,850 22,204r 24,774 20,540 28,240 20,359 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 Financial Statistics • September 1995 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1992 1993 1994 1994 1995 Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May' June 1 Reserve balances with Reserve Banks2 25,368 29,374 24,658 24,658 22,291 21,758 22,649 24,217 21,476 21,058 2 Total vault cash3 34,541 36,818 40,365 40,365 42,291 39,795 38,518 38,099 39,038 39,839 3 Applied vault cash4 31,172 33,484 36,682 36,682 38,230 35,941 34,934 34,657 35,281 35,986 4 Surplus vault cash 3,370 3,334 3,683 3,683 4,061 3,855 3,584 3,442 3,757 3,853 5 Total reserves6 56,540 62,858 61,340 61,340 60,521 57,699 57,583 58,874 56,757 57,045 6 Required reserves 55,385 61,795 60,172 60,172 59,182 56,752 56,789 58,120 55,877 56,079 7 Excess reserve balances at Reserve Banks7 1,155 1,063 1,168 1,168 1,339 946 794 753 880 965 8 Total borrowings at Reserve Banks8 124 82 209 209 136 59 69 111 150 272 9 Seasonal borrowings 18 31 100 100 46 33 51 82 137 172 10 Extended credit9 1 0 0 0 4 0 0 0 0 0 Biweekly averages of daily figures for two week periods ending on dates indicated 1995 Mar. 1 Mar. 15 Mar. 29 Apr. 12 Apr. 26 May 10 May 24 June 7r June 21 July 5 1 Reserve balances with Reserve Banks 22,710 22,316 22,869 23,412 25,542 21,994 21,406 20,875 21,478 20,548 2 Total vault cash 37,924 39,318 37,773 38,433 37,481 39,261 38,711 39,373 40,146 39,724 3 Applied vault cash4 34,286 35,636 34,278 34,941 34,158 35,550 34,955 35,549 36,240 35,932 4 Surplus vault cash5 3,638 3,682 3,496 3,492 3,323 3,712 3,756 3,824 3,906 3,792 5 Total reserves 56,995 57,952 57,147 58,353 59,700 57,543 56,361 56,424 57,718 56,480 6 Required reserves 56,111 57,385 56,077 57,939 58,737 56,508 55,552 55,627 56,703 55,462 7 Excess reserve balances at Reserve Banks7 885 566 1,070 414 963 1,035 810 798 1,015 1,018 8 Total borrowings at Reserve Banks8 60 59 79 76 130 148 144 165 286 336 9 Seasonal borrowings 36 44 59 61 90 124 140 150 155 214 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 (S02) 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 1995, week ending Monday SSoouurrccee aanndd mmaattuurriittyy May 1 May 8 May 15 May 22 May 29 June 5 June 12 June 19 June 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 69,011 70,032 73,783 74,449 74,345 80,972 81,756 78,511 73,118 2 For all other maturities 17,801 18,272 18,673 18,903 18,242 17,062 17,723 17,936 18,342 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 19,489 22,258 20,877 25,502 22,007 22,878 23,479 20,391 24,232 4 For all other maturities 31,644 29,667 30,035 30,041 32,946 28,276 27,768 27,115 26,675 Repurchase agreements on US. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 23,793 23,211 24,516 21,952 21,963 21,082 21,848 20,890 21,803 6 For all other maturities 36,810 41,578 41,498 41,078 39,816 39,921 39,524 39,292 36,274 All other customers 7 For one day or under continuing contract 38,404 35,816 37,061 38,061 37,314 39,016 38,330 38,658 38,866 8 For all other maturities 17,186 17,423 17,000 17,579 18,925 18,351 19,198 19,419 18,928 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 65,791 62,208 62,760 59,955 61,464 62,407 59,245 61,144 59,182 10 To all other specified customers2 26,765 28,062 31,005 26,904 27,906 32,232 33,345 31,458 30,147 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 Financial Statistics • September 1995 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk 8/ O 4/ n 9 5 Effective date Previous rate 8/ O 4/ n 9 5 Effective date Previous rate 8/ O 4/ n 9 5 Effective date Previous rate Boston 5.25 2/1/95 4.75 5.80 8/3/95 5.75 6.30 8/3/95 6.25 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 2/2/95 San Francisco 5.25 2/1/95 4.75 5.80 8/3/95 5.75 6.30 8/3/95 6.25 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 l F ) . — R. B o an f k l A ev ll e l F ) . — R. B o an f k Effective date l A ev H e l F )— .R . B o an f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977 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 3.5-4 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 Aug. 4, 1995 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 first 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 Requirement TTyyppee ooff ddeeppoossiitt22 Percentage of deposits Effective date Net transaction accounts3 33333 1111122222/////2222200000/////9999944444 2 More than $54.0 million4 1111100000 1111122222/////2222200000/////9999944444 00000 1111122222/////2222277777/////9999900000 00000 1111122222/////2222277777/////9999900000 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 1 l/i years was reduced from 3 percent to the percentage increase in the total reservable liabilities of all depository institutions, In 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 11/2 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 1VS 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 V5 years (see note 5). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Financial Statistics • September 1995 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1994 1995 TTyyppee ooff ttrraannssaaccttiioonn aanndd mmaattuurriittyy 11999922 11999933 11999944 Nov. Dec. Jan. Feb. Mar. Apr. May US. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 14,714 17,717 17,484 6,109 444 0 0 0 0 0 2 Gross sales 1,628 0 0 0 0 0 0 0 0 0 3 Exchanges 308,699 332,229 376,277' 29,700' 36,726' 30,150' 31,530 36,449 30,983 31,663 4 Redemptions 1,600 0 0 0 0 0 0 0 0 0 Others within one year 5 Gross purchases 1,096 1,223 1,238 0 125 0 0 0 0 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shifts 36,662 31,368 0 1,790 -2,430 2,835 5,872 0 0 0 8 Exchanges -30,543 -36,582 -21,444 -5,795 1,680 -3,167 -4,881 0 0 0 9 Redemptions 0 0 0 0 0 0 0 0 0 0 One to five years 10 Gross purchases 13,118 10,350 9,168 200 2,208 0 0 0 2,549 0 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shifts -34,478 -27,140 -6,004 -1,123 2,430 -2,145 -5,115 0 0 0 13 Exchanges 25,811 0 17,801 4,192 -1,680 3,167 3,031 0 0 0 Five to ten years 14 Gross purchases 2,818 4,168 3,818 0 660 0 0 0 839 0 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shifts -1,915 0 -3,145 -278 0 -690 -757 0 0 0 17 Exchanges 3,532 0 2,903 1,603 0 0 1,150 0 0 0 More than ten years 18 Gross purchases 2,333 3,457 3,606 0 1,252 0 0 0 1,138 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shifts -269 0 -918 -389 0 0 0 0 0 0 21 Exchanges 1,200 0 775 0 0 0 700 0 0 0 All maturities 22 Gross purchases 34,079 36,915 35,314 6,309 4,689 0 0 0 4,526 0 23 Gross sales 1,628 0 0 0 0 0 0 0 0 0 24 Redemptions 1,600 767 2,337 0 0 621 0 0 370 0 Matched transactions 25 Gross purchase 1,480,140 1,475,941 1,700,836 148,425 166,648 163,615' 178,877 168,800 148,306 155,027 26 Gross sales 1,482,467 1,475,085 1,701,309 147,858 166,007 164,526' 176,232 170,724 147,616 153,534 Repurchase agreements 27 Gross purchases 378,374 475,447 309,276 35,456 29,406 32,201 1,300 22,070 36,314 35,158 28 Gross sales 386,257 470,723 311,898 32,561 26,351 39,756 3,310 16,477 39,157 34,377 29 Net change in U.S. Treasury securities 20,642 41,729 29,882 9,771 8,385 -9,087' 634 3,669 2,004 2,274 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 0 0 0 0 0 0 31 Gross sales 0 0 0 0 0 0 0 0 0 0 32 Redemptions 632 774 1,002 70 37 91 55 83 20 30 Repurchase agreements 33 Gross purchases 14,565 35,063 52,696 8,615 5,090 5,243 25 4,926 4,415 6,155 34 Gross sales 14,486 34,669 52,696 7,360 5,720 4,948 1,345 3,821 5,020 5,955 35 Net change in federal agency obligations -554 -380 -1,002 1,185 -667 204 -1,375 1,022 -625 170 36 Total net change in System Open Market Account... 20,089 41,348 28,880 10,956 7,718 -8,883' -741 4,691 1,379 2,444 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market Account; all other figures increase such holdings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks All 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 1995 1995 May 31 June 7 June 14 June 21 June 28 Apr. 30 May 31 June 30 Consolidated condition statement ASSETS 1 Gold certificate account 11,054 11,054 11,054 11,054 11,054 11,055 11,054 11,054 2 Special drawing rights certificate account 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 3 380 378 379 379 368 417 380 358 Loans 4 To depository institutions 169 129 151 202 228 155 169 217 5 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 3,358 3,172 3,104 3,104 3,096 3,388 33,,335588 33,,009966 8 Held under repurchase agreements 700 393 0 87 0 500 700 461 9 Total U.S. Treasury securities 373,578 378,277 372,805 387,851 375,686 371,304 373,578 388,965 10 Bought outright2 370,047 372,706 372,805 371,937 372,540 368,554 370,047 372,641 11 Bills 179,371 182,030 182,129 181,261 181,863 177,878 179,371 181,965 1? Notes 146,998 146,998 146,998 146,998 146,998 146,454 146,998 146,998 N 1 4 He B ld o n u d n s d er repurchase agreements 43 3 , , 6 5 7 3 9 1 43 5 , , 6 5 7 7 9 1 43,679 0 4 1 3 5 , , 6 9 7 1 9 4 43 3 , , 6 1 7 4 9 6 44 2 , , 2 7 2 5 2 0 43 3 , , 6 5 7 3 9 1 4 1 3 6 , , 6 3 7 2 9 4 15 Total loans and securities 377,805 381,971 376,060 391,245 379,010 375,347 377,805 392,739 16 Items in process of collection 8,361 6,147 5,561 5,274 5,106 4,312 8,361 4,067 17 Bank premises 1,090 1,091 1,096 1,097 1,097 1,085 1,090 1,090 Other assets 18 Denominated in foreign currencies 24,122 23,636 23,652 23,668 23,683 24,405 24,122 2233,,996611 19 All other4 8,702 9,058 9,106 9,818 9,620 10,309 8,702 9,936 20 Total assets 439,533 441,354 434,926 450,552 437,955 434,948 439,533 451,223 LIABILITIES 21 Federal Reserve notes 388,447 388,321 387,274 386,003 386,858 382,754 388,447 387,661 22 Total deposits 31,718 34,916 30,239 46,744 33,766 35,085 31,718 46,320 23 Depository institutions 26,630 29,263 24,784 32,524 25,503 26,338 26,630 24,946 24 U.S. Treasury—General account 4,646 5,139 5,000 13,636 7,721 8,241 4,646 20,977 25 Foreign—Official accounts 227 244 164 306 260 166 227 168 26 215 271 292 280 282 339 215 242 7.7 Deferred credit items 7,187 5,268 4,624 4,887 4,635 4,014 7,187 3,723 28 Other liabilities and accrued dividends 4,481 4,818 4,701 4,824 4,610 4,578 4,481 5,018 29 Total liabilities 431,832 433,324 426,839 442,458 429,869 426,432 431,832 442,723 CAPITAL ACCOUNTS 30 Capital paid in 3,807 3,817 3,821 3,817 3,814 3,794 3,807 3,815 31 Surplus 3,670 3,683 3,683 3,683 3,683 3,683 3,670 3,683 32 Other capital accounts 222 529 583 594 589 1,039 222 1,002 33 Total liabilities and capital accounts 439,533 441,354 434,926 450,552 437,955 434,948 439,533 451,223 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 446,653 450,921 452,735 452,305 447,726 440,236 446,653 445566,,442211 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 465,987 466,137 466,712 466,807 466,470 459,648 465,987 466,985 36 LESS: Held by Federal Reserve Banks 77,541 77,816 79,438 80,805 79,612 76,894 77,541 79,324 37 Federal Reserve notes, net 388,447 388,321 387,274 386,003 386,858 382,754 388,447 387,661 Collateral held against notes, net 38 Gold certificate account 11,054 11,054 11,054 11,054 11,054 11,055 11,054 11,054 39 Special drawing rights certificate account 8,018 8,018 8,018 8,018 8,018 8,018 8,018 8,018 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 369,374 369,249 368,202 366,931 367,787 363,681 369,374 368,590 42 Total collateral 388,447 388,321 387,274 386,003 386,858 382,754 388,447 387,661 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 US. 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 Financial Statistics • September 1995 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month TTTyyypppeee ooofff hhhooollldddiiinnnggg aaannnddd mmmaaatttuuurrriiitttyyy 1995 1995 May 31 June 7 June 14 June 21 June 28 Apr. 30 May 31 June 30 1 Total loans 169 129 151 202 228 153 163 239 2 Within fifteen days' 81 24 27 178 205 146 134 163 3 Sixteen days to ninety days 88 105 125 24 23 7 29 75 4 Total U.S. Treasury securities 373,578 378,277 372,805 387,851 375,686 368,554 373,578 372,641 5 Within fifteen days' 22,173 17,907 16,372 33,190 21,088 11,454 22,173 6,277 6 Sixteen days to ninety days 89,258 91,654 87,667 85,645 89,811 94,921 89,258 95,686 7 Ninety-one days to one year 112,151 118,720 118,770 119,020 114,790 112,383 112,151 121,467 8 One year to five years 86,530 86,530 86,530 86,530 86,530 87,850 86,530 85,746 9 Five years to ten years 28,511 28,511 28,511 28,511 28,511 25,263 28,511 28,511 10 More than ten years 34,955 34,955 34,955 34,955 34,955 36,683 34,955 34,955 11 Total federal agency obligations 4,057 3,565 3,104 3,191 3,096 3388 4,057 3,096 12 Within fifteen days' 1,134 451 8 305 210 160 1,134 210 13 Sixteen days to ninety days 408 668 680 470 516 587 408 516 14 Ninety-one days to one year 790 795 795 795 749 831 790 749 15 One year to five years 1,284 1,209 1,179 1,179 1,179 1,368 1,284 1,179 16 Five years to ten years 417 417 417 417 417 417 417 417 17 More than ten years 25 25 25 25 25 25 25 25 1. Holdings under repurchase agreements are classified as maturing within fifteen days NOTE. Total acceptances data have been deleted from this table because data are no in accordance with maximum maturity of the agreements. longer available. 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 1995 IItteemm DD 1199 ee 99 cc 11 .. DD 1199 ee 99 cc 22 .. DD 1199 ee 99 cc 33 .. 1 D 1 D 99 ee 99 cc 44 .. Nov. Dec. Jan. Feb. Mar. Apr. May' June Seasonally adjusted AAAADDDDJJJJUUUUSSSSTTTTEEEEDDDD FFFFOOOORRRR CCCCHHHHAAAANNNNGGGGEEEESSSS IIIINNNN RRRREEEESSSSEEEERRRRVVVVEEEE RRRREEEEQQQQUUUUIIIIRRRREEEEMMMMEEEENNNNTTTTSSSS2222 1111 TTTToooottttaaaallll rrrreeeesssseeeerrrrvvvveeeessss3333 45.54 54.35 60.50 59.34 59.40 59.34 59.12 58.92 58.55 57.96 57.76 57.35 2222 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss4444 45.34 54.23 60.42 59.13 59.15 59.13 58.99 58.86 58.48 57.85 57.61 57.08 3333 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss pppplllluuuussss eeeexxxxtttteeeennnnddddeeeedddd ccccrrrreeeeddddiiiitttt 45.34 54.23 60.42 59.13 59.15 59.13 58.99 58.86 58.48 57.85 57.61 57.08 4444 RRRReeeeqqqquuuuiiiirrrreeeedddd rrrreeeesssseeeerrrrvvvveeeessss 44.56 53.20 59.44 58.17 58.39 58.17 57.79 57.97 57.76 57.20 56.88 56.39 5555 MMMMoooonnnneeeettttaaaarrrryyyy bbbbaaaasssseeee 317.43 351.12 386.60 418.22 416.79 418.22 421.05 422.31 425.35 428.13 430.69 429.73 Not seasonally adjusted 6666 TTTToooottttaaaallll rrrreeeesssseeeerrrrvvvveeeessss7777 46.98 56.06 62.37 61.13 59.73 61.13 60.52 57.72 57.62 58.93 56.82 57.13 7777 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss 46.78 55.93 62.29 60.92 59.48 60.92 60.38 57.66 57.55 58.82 56.68 56.86 8888 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss pppplllluuuussss eeeexxxxtttteeeennnnddddeeeedddd ccccrrrreeeeddddiiiitttt 46.78 55.93 62.29 60.92 59.48 60.92 60.39 57.66 57.55 58.82 56.68 56.86 9999 RRRReeeeqqqquuuuiiiirrrreeeedddd rrrreeeesssseeeerrrrvvvveeeessss 46.00 54.90 61.31 59.96 58.72 59.96 59.18 56.78 56.83 58.18 55.95 56.16 11110000 MMMMoooonnnneeeettttaaaarrrryyyy bbbbaaaasssseeee9999 321.07 354.55 390.59 422.51 417.08 422.51 421.84 419.25 423.27 428.74 429.29 430.23 NNNNOOOOTTTT AAAADDDDJJJJUUUUSSSSTTTTEEEEDDDD FFFFOOOORRRR CCCCHHHHAAAANNNNGGGGEEEESSSS IIIINNNN RRRREEEESSSSEEEERRRRVVVVEEEE RRRREEEEQQQQUUUUIIIIRRRREEEEMMMMEEEENNNNTTTTSSSS11110000 11111111 TTTToooottttaaaallll rrrreeeesssseeeerrrrvvvveeeessss"""" 55.53 56.54 62.86 61.34 60.01 61.34 60.52 57.70 57.58 58.87 56.76 57.05 11112222 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss 55.34 56.42 62.78 61.13 59.76 61.13 60.39 57.64 57.51 58.76 56.61 56.77 11113333 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss pppplllluuuussss eeeexxxxtttteeeennnnddddeeeedddd ccccrrrreeeeddddiiiitttt 55.34 56.42 62.78 61.13 59.76 61.13 60.39 57.64 57.51 58.76 56.61 56.77 11114444 RRRReeeeqqqquuuuiiiirrrreeeedddd rrrreeeesssseeeerrrrvvvveeeessss 54.55 55.39 61.80 60.17 59.00 60.17 59.18 56.75 56.79 58.12 55.88 56.08 11115555 MMMMoooonnnneeeettttaaaarrrryyyy bbbbaaaasssseeee11112222 333.61 360.90 397.62 427.25 421.90 427.25 426.31 423.57 427.56 432.79 433.47 434.54 11116666 EEEExxxxcccceeeessssssss rrrreeeesssseeeerrrrvvvveeeessss .98 1.16 1.06 1.17 1.01 1.17 1.34 .95 .79 .75 .88 .97 11117777 BBBBoooorrrrrrrroooowwwwiiiinnnnggggssss ffffrrrroooommmm tttthhhheeee FFFFeeeeddddeeeerrrraaaallll RRRReeeesssseeeerrrrvvvveeee .19 .12 .08 .21 .25 .21 .14 .06 .07 .11 .15 .27 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 ail 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 cuirency 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 Financial Statistics • September 1995 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1995r 1991 1992 1993 1994 IItteemm Dec. Dec. Dec. Dec. Mar. Apr. May June Seasonally adjusted Measures2 1 Ml 897.3 1,024.4 1,128.6 1,148.0" 1,147.9 1,149.7 1,142.9 1,143.7 2 M2 3,457.9 3,515.3 3,583.6 3,615.6r 3,630.1 3,642.6 3,658.1 3,693.0 3 M3 4,176.0 4,182.9 4,242.5 4,305.0r 4,359.0 4,380.7 4,408.7 4,452.7 4L 4,990.9 5,061.1 5,150.3 5,294.5r 5,409.3 5,454.0 5,485.4 n.a. 5 Debt 11,178.2 11,716.7 12,343.8 12,955.5 13,149.9 13,202.2 13,261.3 n.a. Ml components 6 Currency 267.4 292.8 322.1 354.5 362.5 365.7 368.1 367.4 7 Travelers checks4 7.7 8.1 7.9 8.4 8.8 9.2 9.2 9.0 8 Demand deposits5 289.5 338.9 383.9 382.2r 383.3 381.3 380.7 386.9 9 Other checkable deposits 332.7 384.6 414.7 402.9 393.3 393.6 385.0 380.5 Nontrqnsaction components 10 In M27 2,560.6 2,490.9 2,455.0 2,467.6r 2,482.1 2,492.9 2,515.2 2,549.3 11 In M38 only 718.1 667.6 658.9 689.4 729.0 738.1 750.6 759.7 Commercial banks 12 Savings deposits, including MMDAs 665.6 754.7 785.8 752.3 723.3 716.0 717.3 728.0 13 Small time deposits 602.5 508.1 468.6 502.4 537.6 547.9 555.8 562.5 14 Large time deposits ' " 333.3 286.7 271.2 299.2r 310.6 310.8 317.2 319.4 Thrift institutions 15 Savings deposits, including MMDAs 375.6 428.9 429.8 391.9 371.5 366.4 364.2 363.0 16 Small time deposits 464.1 361.1 316.5 317.7r 340.4 348.6 354.3 354.8 17 Large time deposits 83.3 67.1 61.6 64.9f 70.1 71.2 70.3 70.7 Money market mutual funds 18 General purpose and broker-dealer 374.2 356.9 360.1 389.0 390.9 396.0 405.3 425.9 19 Institution-only 180.0 200.2 198.1 180.8 189.0 192.9 194.8 205.6 Debt components 20 Federal debt 2,763.3 3,067.9 3,328.0 3,497.4 3,557.5 3,559.5 3,577.0 n.a. 21 Nonfederal debt 8,414.8 8,648.8 9,015.9 9,458.1 9,592.4 9,642.7 9,684.3 n.a. Not seasonally adjusted Measures1 22 Ml 916.0 1,046.0 1,153.7 1,173.7C 1,138.1 1,158.7 1,132.0 1,139.1 23 M2 3,472.7 3,533.6 3,606.1 3,639. lr 3,628.1 3,659.0 3,645.7 3,688.5 24 M3 4,189.4 4,201.4 4,266.3 4,331.0r 4,354.9 4,392.4 4,398.5 4,446.4 25 L 5,015.5 5,090.8 5,184.9 5,332.2r 5,408.5 5,464.1 5,464.1 n.a. 26 Debt 11,175.5 11,719.5 12,336.0 12,947.2 13,102.1 13,135.9 13,174.6 n.a. Ml components 27 Currency3 269.9 295.0 324.8 357.6 361.4 365.5 367.8 368.1 28 Travelers checks4 7.4 7.8 7.6 8.1 8.4 8.8 8.9 9.2 29 Demand deposits5 302.4 354.4 401.8 400.3r 374.1 382.0 372.9 382.7 30 Other chectable deposits6 336.3 388.9 419.4 407.6 394.2 402.3 382.4 379.1 Nontransaction components 31 InM27 2,556.6 2,487.7 2,452.4 2,465.4r 2,490.0 2,500.3 2,513.7 2,549.4 32 In M38 716.7 667.7 660.2 691.9' 726.8 733.5 752.7 757.8 Commercial banks 33 Savings deposits, including MMDAs 664.0 752.9 784.3 751.1 723.4 717.9 717.9 730.1 34 Small time deposits9 601.9 507.8 468.2 502.0 537.4 547.3 554.7 562.0 35 Large time deposits ' 11 332.6 286.2 270.8 298.9r 308.5 308.7 319.6 320.8 Thrift institutions 36 Savings deposits, including MMDAs 374.8 427.9 429.0 391.2 371.6 367.4 364.5 364.1 37 Small time deposits9 463.7 360.9 316.2 317.4r 340.3 348.2 353.6 354.6 38 Large time deposits 83.1 67.0 61.5 64.8r 69.6 70.7 70.9 71.1 Money market mutual funds 39 General purpose and broker-dealer 372.2 355.1 358.3 387.1 399.8 404.8 407.8 423.6 40 Institution-only 180.8 201.7 200.0 183.1 190.8 191.3 193.8 199.2 Repurchase agreements and Eurodollars 41 Overnight and continuing 79.9 83.2 96.5 116.7 117.6 114.8 115.2 115.0 42 Term 132.7 127.8 144.1 157.6r 171.0 175.4 181.2 180.0 Debt components 43 Federal debt 2,765.0 3,069.8 3,329.5 3,499.0 3,551.1 3,544.1 3,552.6 n.a. 44 Nonfederal debt 8,410.5 8,649.7 9,006.5 9,448.2 9,551.0 9,591.8 9,621.9 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A15 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) 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 U.S. 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 US. 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 (IRLAS) 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 U.S. 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 funds. 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 Financial Statistics • September 1995 1.22 DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING Commercial and BIF-insured saving banks1 1994 1995 - 1992 1993 Dec. Dec. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May' June Interest rates (annual effective yields)2 INSURED COMMERCIAL BANKS 1 Negotiable order of withdrawal accounts 2.33 1.86 1.88 1.92 1.96 1.98 2.01 2.00 1.95 1.96 1.94 2 Savings deposits3 2.88 2.46 2.72 2.81 2.91 2.98 3.09 3.14 3.17 3.20 3.20 Interest-bearing time deposits with balances of less than $100,000, by maturity 3 7 to 91 days 2.90 2.65 3.47 3.65 3.81 3.96 4.19 4.24 4.28 4.25 4.19 4 92 to 182 days 3.16 2.91 3.93 4.22 4.44 4.67 4.83 4.97 4.94 4.93 4.82 5 183 days to 1 year 3.37 3.13 4.50 4.85 5.12 5.39 5.57 5.60 5.60 5.49 5.27 6 More than 1 year to 2 Vi years 3.88 3.55 5.08 5.42 5.74 6.00 6.12 6.12 6.05 5.83 5.53 7 More than 2 vi years 4.77 4.29 5.77 6.09 6.30 6.47 6.52 6.45 6.37 6.11 5.79 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 . . 7 8 6 8 2 1 . . 8 9 3 1 2 1 . . 8 9 8 5 2 1 . . 9 9 1 9 2 2. . 9 0 5 4 2 1 . . 9 9 4 9 2 1 . . 9 9 3 9 2 2. . 9 0 5 0 2 2 . . 0 9 1 9 Interest-bearing time deposits with balances of less than $100,000, by maturity 10 7 to 91 days 3.13 2.70 3.32 3.51 3.80 3.98 4.17 4.21 4.18 4.24 4.22 11 92 to 182 days 3.44 3.02 4.10 4.42 4.89 5.13 5.33 5.37 5.38 5.31 5.20 12 183 days to 1 year 3.61 3.31 4.80 5.18 5.52 5.75 5.94 5.94 5.87 5.83 5.63 13 More than 1 year to 2 Vi years 4.02 3.66 5.39 5.70 6.09 6.29 6.37 6.32 6.25 6.08 5.77 14 More than 2 Vi years 5.00 4.62 5.79 6.18 6.43 6.68 6.75 6.68 6.59 6.32 5.99 Amounts outstanding (millions of dollars) INSURED COMMERCIAL BANKS 15 Negotiable order of withdrawal accounts 286,541 305,223 294,072 294,282 303,724 291,355 290,188 292,811 286,987 274,281 274,620 16 Savings deposits3 738,253 766,413 751,183 746,605 734,519 723,295 714,955 713,440 698,963 714,989 717,293 17 Personal 578,757 597,838 590,875 584,628 578,459 569,619 564,877 564,086 550,674 560,563 562,367 18 Nonpersonal 159,496 168,575 160,308 161,977 156,060 153,676 150,078 149,354 148,289 154,426 154,926 Interest-bearing time deposits with balances of less than $100,000, by maturity 19 7 to 91 days 38,474 29,455 31,447 31,077 32,375 32,154 31,777 31,623 31,530 31,472 32,321 20 92 to 182 days 127,831 110,069 95,359 94,692 95,901 96,895 98,248 95,583 94,368 93,188 91,707 21 183 days to 1 year 163,098 146,565 158,753 159,645 161,831 163,939 169,103 176,657 179,625 184,560 187,514 22 More than 1 year to 2 Vi years 152,977 141,223 155,111 158,382 162,486 168,515 176,877 183,275 189,652 194,963 199,330 23 More than 2 Vz years 169,708 181,528 188,479 189,741 190,897 190,215 191,383 194,722 194,426 192,542 194,272 24 IRA and Keogh plan deposits 147,350 143,985 142,896 143,075 143,428 143,900 145,040 145,959 146,679 146,842 148,843 BIF-INSURED SAVINGS BANKS4 25 Negotiable order of withdrawal accounts 10,871 11,151 11,120 11,002 11,317 11,127 10,950 11,218 11,005 11,019 11,355 26 Savings deposits3 81,786 80,115 73,416 72,622 70,642 71,639 69,982 68,595 67,453 67,322 67,159 27 Personal 78,695 77,035 70,215 69,412 67,673 68,760 67,144 65,692 64,204 64,484 64,323 28 Nonpersonal 3,091 3,079 3,201 3,211 2,969 2,878 2,837 2,902 3,248 2,838 2,836 Interest-bearing time deposits with balances of less than $100,000, by maturity 29 7 to 91 days 3,867 2,793 2,245 2,209 2,166 2,041 2,086 1,943 1,780 1,885 1,618 30 92 to 182 days 17,345 12,946 11,987 11,913 11,793 12,084 11,953 11,707 11,245 11,449 11,144 31 183 days to 1 year 21,780 17,426 18,123 18,509 18,753 19,336 19,979 20,277 21,051 20,956 21,056 32 More than 1 year to 2Vi years 18,442 16,546 17,519 17,999 17,842 20,460 21,870 22,648 23,445 24,014 24,801 33 More than 2Vi years 18,845 20,464 21,624 21,687 21,600 21,888 22,275 22,446 22,671 22,819 23,193 34 IRA and Keogh plan accounts 21,713 19,356 19,550 19,532 19,325 19,802 20,099 20,221 20,388 20,236 20,458 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 75 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 1995r BBaannkk ggrroouupp,, oorr ttyyppee ooff ddeeppoossiitt 1199992222 1199993322 1199994422 Nov. Dec. Jan. Feb. Mar. Apr. DEBITS Seasonally adjusted Demand depositP 1 All insured banks 313,128.1 334,245.6 367,129.2 369,211.3 371,048.0 370,350.3 384,430.7 393,984.5 363,199.3 2 Major New York City banks 165,447.7 171,227.3 191,169.8 186,350.6 187,955.6 183,457.9 195,127.7 197,659.6 185,763.1 3 Other banks 147,680.4 163,018.3 175,959.4 182,860.7 183,092.4 186,892.5 189,303.0 1%,324.9 177,436.2 4 Other checkable deposits4 3,780.3 3,467.1 3,831.4 4,116.4 4,199.0 4,000.1 3,900.0 4,036.0 3,658.8 5 Savings deposits (including MMDAs) 3,309.1 3,508.8 3,737.1 3,835.7 4,033.1 3,930.8 3,994.7 3,894.2 3,572.0 DEPOSIT TURNOVER Demand depositS3 6 All insured banks 825.9 785.3 813.0 826.5 820.6 822.3 857.6 881.8 808.9 7 Major New York City banks 4,795.3 4,198.1 4,481.6 4,544.7 4,490.8 4,338.4 4,662.0 4,753.9 4,551.5 8 Other banks 428.7 423.6 430.3 450.7 446.3 458.0 465.8 484.5 434.7 9 Other checkable deposits4 14.4 11.8 12.8 13.9 14.2 13.6 13.3 13.9 12.6 10 Savings deposits (including MMDAs)5 4.7 4.6 4.9 5.1 5.4 5.4 5.5 5.4 5.0 DEBITS Not seasonally adjusted Demand deposits^ 11 All insured banks 313,344.9 334,354.6 367,218.8 359,229.9 384,218.7 369,311.0 356,062.1 412,887.7 358,224.1 12 Major New York City banks 165,595.0 171,283.5 191,226.1 184,656.3 194,120.1 181,602.7 181,697.8 209,255.5 180,169.1 13 Other banks 147,749.9 163,071.0 175,992.8 174,573.5 190,098.6 187,708.3 174,364.4 203,632.2 178,055.0 14 Other checkable deposits4 3,783.6 3,467.5 3,827.9 3,845.9 4,365.1 4,343.2 3,593.1 4,075.0 3,866.4 15 Savings deposits (including MMDAs)5 3,310.0 3,509.5 3,734.9 3,640.4 4,244.8 4,109.1 3,615.8 3,994.3 3,733.7 DEPOSIT TURNOVER Demand deposits3 16 All insured banks 826.1 785.4 813.8 785.9 814.9 803.0 812.8 947.9 797.7 17 Major New York City banks 4,803.5 4,197.9 4,490.3 4,391.6 4,343.4 4,128.1 4,334.9 5,145.1 4,459.5 18 Other banks 428.8 423.8 430.6 420.6 445.4 451.3 440.2 515.6 435.7 19 Other checkable deposits4 14.4 11.8 12.7 13.0 14.5 14.4 12.3 14.0 13.0 20 Savings deposits (including MMDAs) 4.7 4.6 4.9 4.8 5.7 5.6 5.0 5.6 5.2 1. Historical tables containing revised data for earlier periods can be obtained from the 4. As of January 1994, other checkable deposits (OCDs), previously defined as Publications Section, Division of Support Services, Board of Governors of the Federal automatic transfer to demand deposits (ATSs) and negotiable order of withdrawal (NOW) Reserve System, Washington, DC 20551. accounts, were expanded to include telephone and preauthorized transfer accounts. This Data in this table also appear in the Board's G.6 (406) monthly statistical release. For change redefined OCDs for debits data to be consistent with OCDs for deposits data. ordering address, see inside front cover. 5. Money market deposit accounts. 2. Annual averages of monthly figures. 3. Represents accounts of individuals, partnerships, and corporations and of states and political subdivisions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • September 1995 1.26 ASSETS AND LIABILITIES OF COMMERCIAL BANKS1 Billions of dollars Monthly averages Wednesday figures Account 1994 1994 1995r 1995 June' Dec. Jan. Feb. Mar. Apr. May June June 7 June 14 June 21 June 28 ALL COMMERCIAL Seasonally adjusted BANKING INSTITUTIONS Assets 1 Bank credit 3,220.0 3,316.5r 3,349.4 3,363.0 3,387.6 3,447.0 3,473.0 3,492.2 3,484.1 3,491.7 3,494.2 3,499.4 2 Securities in bank credit 968.4 947. lr 945.6 937.4 941.5 974.8 971.6 975.3 970.8 977.4 978.5 977.1 3 U.S. government securities 752.1 720.2 721.9 717.0 704.8 704.7 707.4 709.4 707.8 710.7 710.4 710.8 4 Other securities 216.3 226.9r 223.7 220.4 236.7 270.1 264.1 265.9 263.0 266.7 268.1 266.3 5 Loans and leases in bank credit2 ... 2,251.6 2,369.4r 2,403.8 2,425.6 2,446.0 2,472.2 2,501.4 2,516.9 2,513.3 2,514.3 2,515.7 2,522.3 6 Commercial and industrial 611.3 644.6 657.7 669.5 673.0 681.5 689.7 692.4 689.6 692.1 693.8 693.4 7 Real estate 957.3 999.8 1,015.1 1,022.8 1,028.4 1,035.9 1,040.2 1,047.5 1,044.1 1,046.1 1,049.0 1,049.5 8 Revolving home equity 73.8 76.2 76.7 77.0 77.3 78.0 78.7 79.3 79.1 79.2 79.2 79.5 9 Other 883.5 923.6 938.5 945.8 951.2 958.0 961.5 968.2 965.0 966.9 969.7 970.0 10 Consumer 416.1 452.2 457.5 459.7 465.3 471.1 472.8 478.0 478.0 478.2 476.4 479.0 11 Security3 76.2 70.9 68.6 67.8 69.7 73.1 84.5 85.3 89.9 84.2 83.1 85.5 12 Other 190.7 201.9r 204.9 205.8 209.6 210.6 214.3 213.6 211.6 213.7 213.5 215.0 13 Interbank loans4 155.4 175.0 179.0 177.8 180.2 178.7 183.9 187.8 186.1 185.1 190.2 187.8 14 Cash assets5 215.1 209.0 219.4 216.0 206.9 208.1 210.5 211.1 211.4 207.7 216.1 206.5 15 Other assets6 223.2 227.4 237.0 242.4 242.8 232.0 231.8 226.2 234.4 235.9 219.2 213.4 16 Total assets7 3,756.7 3,928.0 3,942.7 3,961.0 4,00&8 4,0423 4,060.0 4,058.9 4,063.2 4,0625 4,049.6 Liabilities 17 Deposits 2,508.0 2,528.8' 2,544.0 2,547.3 2^48.2 2,556.7 2,570.9 2,590.3 2,589.6 2,597.1 2,588.7 2,581.4 18 Transaction 811.4 797.6 808.6 804.9 795.5 791.2 788.4 785.3 783.3 786.6 784.6 781.0 19 Nontransaction 1,696.6 l,731.2r 1,735.4 1,742.4 1,752.7 1,765.5 1,782.5 1,805.0 1,806.3 1,810.6 1,804.2 1,800.3 20 Large time 333.7 362.0" 366.4 373.7 380.1 385.8 389.7 392.4 396.5 395.8 392.3 387.5 21 Other 1,362.9 l,369.2r 1,369.0 1,368.7 1,372.6 1,379.7 1,392.7 1,412.5 1,409.8 1,414.8 1,411.9 1,412.8 22 Borrowings 565.1 602.9' 635.5 637.6 642.9 667.8 674.5 661.7 644.6 661.4 668.6 668.6 23 From banks in the U.S 154.4 176.8 181.1 178.4 182.0 181.5 183.5 185.0 183.4 183.3 186.5 183.8 24 From nonbanks in the U.S • 410.6 426.1r 454.4 459.2 460.9 486.4 491.0 476.7 461.2 478.2 482.1 484.8 25 Net due to related foreign offices 186.6 225.6 244.8 252.5 241.3 234.9 240.0 245.8 245.9 238.4 255.7 244.1 26 Other liabilities8 181.0 185.3r 179.9 184.1 202.0 224.4 219.8 218.5 224.2 228.0 215.5 208.2 27 Total liabilities 3,440.6 3,5425' 3,6043 3,621.5 3,6344 3,683.9 3,705.1 3,7163 3,7044 3,725.0 3,7284 3,7023 28 Residual (assets less liabilities)9 316.1 329.2r 323.7 321.2 326.6 324.9 337.1 343.7 354.5 338.2 334.1 347.3 Not seasonally adjusted Assets 29 Bank credit 3,217.6 3,332.5r 3,345.5' 3,358.9 3,388.1 3,448.1 3,464.7 3,488.7 3,482.7 3,490.8 3,493.5 3,488.0 30 Securities in bank credit 969.1 942.4r 939.6' 936.2 949.3 981.4 973.1 975.7 975.9 978.1 980.5 972.5 31 US. government securities 752.2 719.1 715.7 712.6 709.8 709.0 706.6 708.6 710.1 710.1 711.1 706.0 32 Other securities 216.9 223.3r 223.9' 223.6 239.5 272.4 266.5 267.2 265.8 268.0 269.4 266.4 33 Loans and leases in bank credit2 . .. 2,248.5 2,390. lr 2,405.9' 2,422.7 2,438.8 2,466.7 2,491.6 2,513.0 2,506.8 2,512.8 2,513.0 2,515.6 34 Commercial and industrial 612.9 645.3 654.4' 668.1 676.1 685.9 692.8 694.4 691.7 692.9 696.5 695.1 35 Real estate 957.1 1,006.2 1,013.4 1,018.9 1,023.6 1,031.7 1,038.5 1,047.3 1,043.4 1,046.4 1,047.9 1,049.6 36 Revolving home equity 73.8 76.3 76.6 76.7 76.6 77.4 78.6 79.3 79.0 79.2 79.3 79.7 37 Other 883.3 930.0 936.8 942.3 947.0 954.3 960.0 968.0 964.5 967.2 968.6 970.0 38 Consumer 413.8 457.2 462.2 461.0 461.8 467.9 471.3 475.4 475.1 475.2 474.2 477.0 39 Security3 73.3 75.5 70.8 71.0 70.9 74.0 78.8 81.5 83.7 84.4 80.8 78.7 40 Other 191.3 205.9' 205.0' 203.7 206.4 207.2 210.1 214.4 212.9 213.8 213.6 215.2 41 Interbank loans4 153.7 185.7 185.9 179.9 178.5 178.2 178.5 184.8 185.6 186.0 181.5 181.7 42 Cash assets5 213.4 222.9 224.8 212.6 201.3 204.4 208.0 209.3 207.0 208.3 210.2 202.9 43 Other assets6 221.7 233.2 236.9 240.1 238.0 228.0 231.1 224.8 232.4 233.7 215.5 213.9 44 Total assets7 3,7494 wn.r 3,936.6' 3,934.9 3,949.2 4,002.1 4,0253 4,0504 4,050.6 4,061.6 4,0434 4,0294 Liabilities 45 Deposits 2,506.1 2,561.6r 2^48.0' 2,538.0 2,538.5 2,559.7 2,561.8 2,587.5 2,599.8 2,607.4 2,566.5 2,559.5 46 Transaction 807.2 833.3 818.9 796.0 783.3 796.1 777.2 779.7 783.2 790.1 762.4 764.3 47 Nontransaction 1,698.9 l,728.3r 1,729.0 1,742.0 1,755.1 1,763.6 1,784.7 1,807.8 1,816.7 1,817.3 1,804.1 1,795.2 48 Large time 335.8 360.5' 363.2' 373.9 381.3 384.4 394.0 394.9 401.7 399.9 394.9 386.9 49 Other 1,363.1 1,367.8' 1365.9^ 1,368.0 1,373.8 1,379.2 1,390.7 1,412.9 1,415.0 1,417.4 1,409.2 1,408.3 50 Borrowings 571.3 615.4' 629.0' 634.3 632.4 650.8 660.9 668.0 652.0 658.5 682.2 676.4 51 From banks in the U.S 153.8 185.7 185.9 179.7 178.3 178.0 178.2 184.8 185.3 186.0 181.5 181.7 52 From nonbanks in the U.S 417.5 429.7' 443.1' 454.5 454.1 472.9 482.6 483.2 466.7 472.5 500.7 494.7 53 Net due to related foreign offices 181.3 230.3 251.4 249.5 245.2 237.4 246.0 240.0 237.2 231.7 246.2 246.3 54 Other liabilities8 176.9 188.4' 182.9' 184.7 201.2 219.1 218.0 213.7 219.2 222.0 208.6 206.8 55 Total Uabilities 3/435.6 3^95^ 3,61Ur 3,606.5 3,617.2 3,667.1 3,686.7 3,709.2 3,7083 3,719.6 3,7034 3,689.0 56 Residual (assets less liabilities)9 313.8 322.0' 325.3' 328.4 331.9 334.9 338.6 341.2 342.3 342.0 339.9 340.4 Footnotes appear on following 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 1994 1994 1995" 1995 June" Dec. Jan. Feb. Mar. Apr. May June June 7 June 14 June 21 June 28 DOMESTICALLY CHARTERED Seasonally adjusted COMMERCIAL BANKS Assets 57 Bank credit 2,877.0 2,966. lr 2,997.6 3,001.3 3,020.5 3,052.8 3,074.7 3,088.9 3,088.7 3,090.7 3,085.5 33,,008899..55 58 Securities in bank credit 884.3 868.7" 864.3 848.8 852.7 862.2 859.0 856.1 857.1 861.0 856.0 852.0 59 U.S. government securities 691.8 669.0 668.6 656.9 646.4 643.5 644.4 643.3 645.0 646.3 642.7 640.6 60 Other securities 192.5 199.7r 195.8 191.9 206.3 218.6 214.6 212.8 212.1 214.7 213.3 211.4 61 Loans and leases in bank credit2 1,992.6 2,097.4 2,133.2 2,152.5 2,167.9 2,190.7 2215.7 2232.8 231.5 2229.7 2229.6 2237.6 67 Commercial and industrial 455.7 480.3 492.1 499.0 502.3 510.4 516.3 518.6 517.2 517.9 518.7 519.2 63 Real estate 913.8 958.7 974.6 982.7 988.9 997.2 1,002.2 1,009.8 1,006.3 1,008.2 1,011.3 1,011.7 64 Revolving home equity 73.8 76.2 76.7 77.0 77.2 77.9 78.7 79.3 79.1 79.2 79.2 195 65 Other 840.0 882.5 897.9 905.7 911.6 919.3 923.5 930.5 927.2 929.1 9321 932.2 66 Consumer 416.1 452.2 457.5 459.7 465.3 471.1 472.8 478.0 478.0 478.2 476.4 479.0 67 Security3 49.7 45.4 45.5 46.5 45.9 45.4 54.0 55.5 59.6 55.2 52.9 55.8 68 Other 157.5 160.8 163.5 164.5 165.5 166.6 170.3 170.9 170.5 170.2 170.2 171.8 69 Interbank loans4 130.4 151.4 155.0 155.1 156.4 157.2 160.2 164.8 163.5 165.7 163.3 164.0 70 188.4 181.8 192.2 190.2 180.9 181.2 181.5 183.4 183.1 179.9 188.6 179.0 71 Other assets6 169.9 167.7 171.8 173.3 167.9 165.2 164.2 165.2 164.9 167.6 164.9 163.4 72 Total assets7 3,308.7 3,410.9" 3,459.8 3,463.5 3,4693 3,499.5 3,523.6 3,545.1 3,543.2 3£46£ 3^45.1 3£38£ Liabilities 73 Deposits 2,368.7 2,370.9" 2,390.3 2,395.8 2,394.0 2,396.1 2,406.8 2,422.2 2,417.2 2,425.5 2,422.2 2416.8 74 800.9 787.3 798.6 794.6 784.8 780.8 778.2 775.1 772.7 776.2 774.9 770.9 75 Nontransaction 1,567.8 1,583.5 1,591.7 1,601.1 1,609.1 1,615.3 1,628.6 1,647.1 1,644.5 1,649.3 1,647.3 1,645.8 76 Large time 208.2 219.2" 226.7 235.9 240.5 241.6 243.9 244.1 245.3 245.2 244.1 242.0 77 Other 1,359.6 1,364.3" 1,365.0 1,365.3 1,368.7 1,373.6 1,384.7 1,403.0 1,399.2 1,404.1 1,403.2 1,403.9 78 Borrowings 460.1 501.8" 535.4 534.3 532.0 555.1 561.4 555.4 541.5 555.1 5626 560.7 79 From banks in the U.S 134.8 162.3 164.6 161.5 164.4 162.4 163.2 167.8 168.1 165.6 168.8 166.6 80 From nonbanks in the U.S 325.3 339.5" 370.8 372.8 367.6 392.7 398.3 387.6 373.4 389.6 393.8 394.1 81 Net due to related foreign offices.... 34.9 77.4 91.5 87.9 85.2 82.3 84.3 91.0 91.3 89.8 95.8 89.0 82 Other liabilities8 137.7 133.4" 125.2 126.4 137.0 148.9 143.4 142.5 146.7 147.7 141.4 136.0 83 Total liabilities 3,001.4 3,083.5" 3,1424 3,144.4 3,148.2 3,1824 3,195.9 3,211.1 3,196.7 3^183 3^224 3,2025 84 Residual (assets less liabilities)9 307.3 327.4" 317.4 319.1 321.2 317.1 327.7 334.1 346.6 328.6 323.1 336.0 Not seasonally adjusted Assets S5 Bank credit 2,877/7 2,993.7" 2,988.6 2,996.7 3,019.8 3,057.1 3,073.1 3,089.9 3,092.2 3,095.1 3,087.5 3,083.7 86 Securities in bank credit 886.8 862.4" 856.9 847.9 859.5 870.0 861.4 859.2 863.8 864.7 860.0 851.2 87 U.S. government securities 693.0 665.9 661.1 653.8 650.8 648.9 645.3 644.2 648.6 647.5 644.3 638.7 88 Other securities 193.8 196.6" 195.8 194.2 208.7 221.1 216.1 215.0 215.2 217.3 215.7 212.5 89 Loans and leases in bank credit2 1,990.9 2,111.3 2,131.6 2,148.7 2,160.4 2,187.1 2,211.7 2,230.7 2,228.4 2,230.3 2,227.4 2232.5 90 Commercial and industrial 457.2 480.1 488.5 498.5 505.0 514.7 520.1 520.4 519.5 519.4 521.1 520.3 91 Real estate 913.7 965.1 973.0 978.7 983.9 993.4 1,000.6 1,009.6 1,005.6 1,008.6 1,010.1 1,012.2 97 Revolving home equity 73.8 76.2 76.6 76.6 76.6 77.4 78.6 79.3 78.9 79.2 79.3 79.6 Other 839.9 888.9 896.4 902.1 907.4 916.0 922.1 930.3 926.7 929.4 930.9 932.5 94 Consumer 413.8 457.2 462.2 461.0 461.8 467.9 4713 475.4 475.1 475.2 474.2 477.0 95 Security3 48.8 45.9 44.9 47.8 46.6 46.8 51.9 54.3 57.6 57.1 52.4 51.6 96 Other 157.5 163.1 162.9 162.7 163.0 164.4 167.8 170.9 170.6 170.1 169.6 171.5 97 Interbank loans4 129.9 159.7 160.4 158.1 155.8 157.0 155.3 163.2 165.1 168.2 158.5 155.8 98 186.1 195.5 198.0 187.8 175.8 178.3 180.3 181.0 178.6 179.9 182.2 174.4 99 Other assets6 169.1 170.0 171.3 171.1 164.9 162.9 163.6 164.6 163.4 166.3 162.2 164.6 100 Total assets7 3,306.0 3&2Ar 3,461.9" 3/157.1 3,459.8 3,498.6 3,5153 3^414 3^42-2 3,5523 3,533.1 3^214 Liabilities 101 Deposits 2,364.3 2,403.7 2,394.7 2,385.8 2,382.3 2,400.3 2,395.8 2,416.3 2,423.8 2,432.6 2396.5 2391.7 10? 796.9 822.8 808.7 785.8 773.1 786.1 767.5 769.6 773.1 780.1 753.0 753.7 103 Nontransaction 1,567.4 1,580.9 1,585.9 1,600.0 1,609.2 1,614.2 1,628.3 1,646.7 1,650.8 1,652.5 1,643.6 1,638.0 104 Large time 207.9 217.6" 224.6 236.1 239.3 240.9 245.5 243.6 246.9 245.9 243.7 238.9 105 Other 1,359.6 1,363.3" 1,361.3 1,363.9 1,369.9 1,373.2 1,382.8 1,403.1 1,403.9 1,406.6 1,399.8 1,399.1 106 Borrowings 464.6 513.0" 529.8 533.3 523.2 538.3 552.1 559.9 547.8 550.3 573.3 568.2 107 From banks in the U.S 133.9 169.8 168.8 163.2 160.7 160.0 159.9 167.5 169.8 167.4 164.8 164.6 108 From nonbanks in the U.S 330.6 343.2" 361.0 370.1 362.4 378.2 392.2 392.4 378.0 383.0 408.6 403.5 109 Net due to related foreign offices.... 34.4 74.3 90.2 88.7 90.1 84.6 92.6 90.4 91.4 89.3 92.3 91.8 110 Other liabilities8 134.1 134.6" 127.1 126.1 137.4 145.7 141.3 138.7 142.1 143.2 136.2 134.5 111 Total liabilities 2^974 3,125.r 3,141.8 3,133.9 3,133.0 3,168* 3,181.8 3,2053 3,205.0 3,215.4 3,1984 3,1862 112 Residual (assets less liabilities)9 308.6 316.7" 320.1 323.2 326.8 329.8 333.5 336.1 337.2 336.9 334.8 335.2 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

Weekly Reporting Commercial Banks A21 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS Millions of dollars, Wednesday figures May 3 May 10 May 17 May 24 May 31 June 7 June 14 June 21 June 28 ASSETS 1 Cash and balances due from depository institutions .. 110,882 106,284r 106,788' 105,169' 132,771' 111,792 113,901 116,232 109,017 2 U.S. Treasury and government securities 294,122 291,243 295,674 298,499 303,389' 305,870 303,419 300,719 295,435 3 Trading account 21,656 20,644 22,787 22,872 24,832 27,474 26,576 22,574 20,888 4 Investment account 272,467 270,599 272,888 275,627 278,557' 278,396 276,842 278,145 274,547 5 Mortgage-backed securities1 94,065 94,475 93,892 96,006 97,308' 97,619 96,945 97,543 96,790 All others, by maturity 6 One year or less 47,852 46,735 47,223 46,417 46,704 47,320 46,745 46,475 44,623 7 One year through five years 69,271 69,144 71,329 71,843 72,630' 72,278 71,736 72,978 72,329 8 More than five years 61,280 60,245 60,443 61,361 61,915 61,179 61,415 61,149 60,804 9 Other securities 134,420r 133,750' 129,360' 129,031' 130,293' 130,484 132,364 130,966 127,795 10 Trading account 1,575 1,475 1,313 1,277 1,392 1,418 1,477 1,487 1,660 11 Investment account 60,818 61,853 62,240 62,610 63,012' 62,875 63,655 63,014 62,539 12 State and local government, by maturity 20,007 20,867 20,878 20,898 21,055 20,842 20,843 20,839 20,600 13 One year or less 5,554 5,537 5,552 5,562 5,607 5,603 5,590 5,601 5,573 14 More than one year 14,452 15,330 15,326 15,336 15,449 15,239 15,253 15,239 15,026 15 Other bonds, corporate stocks, and securities ... 40,811 40,986 41,361 41,712 41,956' 42,033 42,812 42,175 41,939 16 Other trading account assets 72,027r 70,422' 65,808' 65,144' 65,889' 66,191 67,232 66,465 63,596 17 Federal funds sold2 105,209 109,162 104,452 108,442 110,584 111,104 113,505 104,656 103,240 18 To commercial banks in the United States 70,158 72,949 66,393 70,194 67,921 67,716 70,843 68,225 65,807 19 To nonbank brokers and dealers in securities 29,294 29,752 31,392 32,003 32,484 37,069 36,353 29,581 30,755 20 To others3 5,756 6,461 6,666 6,245 10,179 6,319 6,309 6,850 6,677 21 Other loans and leases, gross 1,208,744 1,208,417 1,207,698 1,210,259 1,224,565 1,223,268 1,223,610 1,226,473 1,228,699 22 Commercial and industrial 343,955' 343,823' 342,967' 342,249' 344,209' 342,502 342,080 343,178 342,201 23 Bankers acceptances and commercial paper 1,965 2,022 1,733 1,748 1,786 1,691 1,830 1,606 1,580 24 All other 341,990r 341,801' 341,235' 340,501' 342,423' 340,811 340,250 341,572 340,621 25 U.S. addressees 339,344r 339,172' 338,592' 337,765' 339,734' 338,193 337,593 339,012 338,077 26 Non-U.S. addressees 2,646 2,629 2,643 2,736 2,689 2,618 2,657 2,560 2,544 27 Real estate loans 476,831 477,893 477,338 477,632 481,264 483,872 483,940 484,972 485,778 28 Revolving, home equity 47,726 47,858 47,928 47,948 48,555 48,503 48,606 48,667 48,809 29 All other 429,105 430,035 429,410 429,684 432,709 435,369 435,334 436,305 436,969 30 To individuals for personal expenditures 241,477 240,331 240,701 241,270 244,520 244,797 245,595 243,567 245,313 31 To depository and financial institutions 55,470 56,508 55,497 57,241 57,808 59,420 59,507 59,749 61,089 32 Commercial banks in the United States 35,462 35,758 35,395 36,778 37,083 37,638 38,141 38,663 39,219 33 Banks in foreign countries 2,873 3,346 3,114 3,446 3,144 3,635 3,374 3,067 3,203 34 Nonbank depository and other financial institutions 17,135 17,404 16,988 17,017 17,580 18,147 17,993 18,019 18,668 35 For purchasing and carrying securities 14,183 14,410 14,439 15,735 17,550 14,663 14,899 17,440 15,483 36 To finance agricultural production 6,317 6,284 6,373 6,396 6,500 6,475 6,491 6,555 6,559 37 To states and political subdivisions 11,128 11,091 11,161 11,053 11,139 11,089 11,073 11,177 11,164 38 To foreign governments and official institutions ... 904 890 941 930 1,040 928 908 989 863 39 All other loans4 24,779r 23,393' 24,362' 23,728' 26,017' 24,940 24,447 24,106 25,288 40 Lease-financing receivables 33,699 33,793 33,919 34,025 34,517 34,584 34,669 34,740 34,963 41 LESS: Unearned income 1,632 1,640 1,630 1,667 1,646 1,676 1,688 1,689 1,675 42 Loan and lease reserve3 34,546 34,534 34,527 34,512 34,490 34,613 34,621 34,573 34,400 43 Other loans and leases, net 1,172,566 1,172,243 1,171,541 1,174,080 1,188,429 1,186,979 1,187,301 1,190,211 1,192,624 44 All other assets 134,214r 134,046' 134,712' 130,053' 135,001' 134,984 138,533 132,627 133,717 45 Total assets6 11,,995511,,441133'r l,946,727r 1,942,527' l,945,275r 2,000,466' 1,981,213 1,989,023 1,975,411 1,961,828 Footnotes appear on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Financial Statistics • September 1995 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures 1995 AAccccoouunntt May 3 May 10 May 17 May 24 May 31 June 7 June 14 June 21 June 28 LIABILITIES 46 Deposits 1,157,987 1,145,821 1,147,480 1,137,953 1,184,022 1,173,811 1,181,821 1,157,823 1,153,798 47 Demand deposits 293,518 282,000 284,993 278,505 315,230 293,741 303,459 288,478 290,550 48 Individuals, partnerships, and corporations 247,812 239,647 243,584 236,211 264,974 248,414 256,612 242,372 246,963 49 Other holders 45,705 42,353 41,409 42,294 50,257 45,327 46,847 46,105 43,587 50 States and political subdivisions 9,301 7,788 7,695 8,127 8,473 7,653 8,218 8,747 8,527 51 U.S. government 2,131 1,638 1,595 1,719 1,919 2,152 3,474 2,863 1,583 52 Depository institutions in the United States 19,692 17,613 17,401 17,871 22,489 18,885 17,642 17,881 17,358 53 Banks in foreign countries 5,264 5,818 5,139 5,376 5,880 5,617 5,298 4,759 5,781 54 Foreign governments and official institutions 623 633 633 581 866 763 617 597 619 5 5 5 6 Trans C a e c r ti t o if n ie d b a a la n n d c o es ff i o c t e h r e s r ' c th h a e n c k d s e mand deposits4 12 8 3 , ,8 6 4 9 5 4 12 8 0 , , 8 6 6 8 3 4 11 8 9 , , 9 7 4 6 7 0 11 8 5 , , 6 2 1 52 9 11 1 4 0 , , 6 6 5 2 3 9 11 1 4 0 , , 6 25 7 7 0 11 1 3 1 , , 6 5 5 9 3 8 11 1 0 1 , , 5 2 9 5 5 9 10 9 9 , , 7 2 1 2 9 6 57 Nontransaction balances 740,625 743,138 742,727 744,196 754,139 765,400 764,709 758,750 754,023 58 Individuals, partnerships, and corporations 716,864 718,753 719,002 720,480 730,137 741,356 741,042 735,663 731,788 59 Other holders 23,761 24,384 23,725 23,715 24,002 24,044 23,666 23,087 22,235 60 States and political subdivisions 19,730 20,055 19,817 19,792 20,251 20,198 19,885 19,291 18,511 61 U.S. government 2,038 2,059 2,022 2,033 2,001 2,050 2,015 2,019 2,016 62 Depository institutions in the United States 1,682 1,959 1,575 1,577 1,439 1,484 1,461 1,457 1,391 63 Foreign governments, official institutions, and banks .. 311 311 312 313 312 312 306 321 317 64 Liabilities for borrowed money5 396,445R 402,500' 401,616' 406,986' 413,656' 407,789 407,415 423,423 416,654 65 Borrowings from Federal Reserve Banks 15 0 0 0 0 0 0 0 0 66 Treasury tax and loan notes 22,834 17,446 10,968 6,929 14,539 70 4,917 28,714 26,166 67 Other liabilities for borrowed money 373,596R 385,054' 390,648' 400,057' 399,117' 407,719 402,498 394,709 390,488 68 Other liabilities (including subordinated notes and debentures)... 215,353' 215,433' 210,954' 217,576' 218,290' 214,976 214,805 209,400 206,467 69 Total liabilities l,769,785r l,763,754r l,760,050r l,762,514r l,815,968r 1,796,576 1,804,041 1,790,645 1,776,919 70 Residual (total assets less total liabilities)7 181,628 182,973 182,477 182,760 184,498 184,637 184,982 184,766 184,909 MEMO 71 Total loans and leases, gross, adjusted, plus securities8 1,636,875' 1,633,864' 1,635,396' L,639,260R 1,663,826' 1,665,372 1,663,913 1,655,926 1,650,143 72 Time deposits in amounts of $100,000 or more 108,470 108,823 108,969 108,585 108,075 109,392 108,472 106,882 103,504 73 Loans sold outright to affiliates9 563 562 562 564 561 560 559 559 558 74 Commercial and industrial 294 294 294 294 292 292 292 292 292 75 Other 269 268 268 270 268 267 267 267 266 76 Foreign branch credit extended to U.S. residents10 24,941 24,875 25,019 25,487 25,334 25,163 25,115 25,347 25,164 77 Net owed to related institutions abroad 82,624 85,809 86,410 95,627 89,030 87,514 85,373 87,871 86,487 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, and 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 fijnds 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 1995 AAccccoouunntt May 3 May 10 May 17 May 24 May 31 June 7 June 14 June 21 June 28 ASSETS 1 Cash and balances due from depository institutions 16,421r 17,099' 17,155r 17,346r 17,004' 17,795 17,277 1177,,001100 1177,,007700 2 U.S. Treasury and government agency 42,244 43,003 42,016 41,271 4422,,555577 4411,,669988 3366,,557722 3366,,112299 3399,,551122 3 15,107r 15,705r 15,151r 14,815r 15,498' 15,238 13,681 13,782 16,410 4 Federal funds sold1 30,457 30,648 27,013 28,182 29,208 24,932 24,505 27,813 30,346 5 To commercial banks in the United States 5,653 5,577 5,919 8,737 7,301 5,474 4,150 6,648 8,114 6 To others2 24,804 25,071 21,094 19,445 21,908 19,458 20,355 21,165 22,232 7 Other loans and leases, gross 170,136 170,579 171,101 171,675 172,421 172,120 173,052 175,467 174,534 8 Commercial and industrial 110,855 110,926 111,058 111,219 110,709 110,522 110,687 111,937 112,695 9 Bankers acceptances and commercial paper . 3,010 2,993 2,882 3,133 2,889 3,097 3,134 3,132 3,513 10 All other 107,845 107,932 108,176 108,086 107,821 107,425 107,554 108,805 109,182 11 103,089 103,240 103,467 103,249 102,926 102,634 102,741 104,007 104,236 1? Non-U.S. addressees 4,756 4,692 4,709 4,837 4,894 4,791 4,813 4,798 4,946 13 Loans secured by real estate 23,887 23,770 23,689 23,645 23,593 23,626 23,541 23,488 23,496 14 Loans to depository and financial 27,374 27,080 27,364 27,215 27,389 27,767 2288,,228866 2288,,779999 2288,,664477 15 Commercial banks in the United States 4,847 4,866 4,892 4,659 4,561 4,652 4,811 4,825 4,860 16 Banks in foreign countries 2,143 2,321 2,229 2,169 2,312 2,259 2,106 2,137 2,134 17 Nonbank financial institutions 20,385 19,893 20,244 20,387 20,516 20,856 21,369 21,837 21,653 18 For purchasing and carrying securities 3,790 4,319 4,728 5,239 6,150 5,462 5,719 6,732 4,969 19 To foreign governments and official institutions 378 392 370 381 338866 426 556677 335500 336611 70 All other 3,852 4,092 3,891 3,975 4,194 4,317 4,253 4,161 4,366 21 Other assets (claims on nonrelated parties) 65,148r 62,679r 61,628r 58,734r 63,423' 63,579 71,470 66,398 57,756 22 Total assets3 366,650 366,837 360,648 359,141 371,230 364,140 366,534 363,490 360,126 LIABILITIES 73 Deposits or credit balances owed to other than directly related institutions 101,206 102,503 102,604 104,349 107,080 110,581 109,512 110077,,009955 110044,,119955 74 Demand deposits4 3,649 3,521 3,158 3,637 4,224 3,871 3,778 3,513 4,095 25 Individuals, partnerships, and corporations .... 2,901 2,607 2,493 2,910 3,336 3,033 3,030 2,843 3,269 76 Other 748 914 665 727 888 838 748 670 826 77 Nontransaction accounts 97,557 98,982 99,447 100,712 102,856 106,710 105,734 103,582 100,100 78 Individuals, partnerships, and corporations 66,013 67,268 67,433 69,136 69,367 71,130 69,299 68,496 65,315 29 Other 31,543 31,714 32,013 31,576 33,489 35,581 36,435 35,087 34,785 30 Borrowings from other than directly related institutions 87,524r 89,725r 78,936r 75,833r 84,345' 80,410 8822,,005588 8822,,776633 8800,,881144 31 Federal funds purchased 48,634 50,613 43,972 41,832 48,118 44,818 45,536 44,859 42,968 37 From commercial banks in the United States .. 8,375 11,844 8,372 7,559 11,919 8,110 10,318 8,558 8,175 33 40,259 38,768 35,600 34,272 36,199 36,708 35,218 36,301 34,793 34 Other liabilities for borrowed money 38,890r 39,112r 34,963r 34,001' 36,227' 35,592 36,522 37,904 37,846 35 To commercial banks in the United States 5,535 5,655 5,378 4,715 5,046 4,420 5,275 5,705 5,840 36 33,355r 33,457r 29,586r 29,286r 31,182' 31,172 31,247 32,198 32,006 37 Other liabilities to nonrelated parties 61,844r 60,85 f 58,903r 57,068' 59,883' 59,998 61,213 56,375 55,660 38 Total liabilities6 366,650 366,837 360,648 359,141 371,230 364,140 366,534 363,490 360,126 MEMO 39 Total loans (gross) and securities, adjusted 247,444r 249,491r 244,470r 242,548' 247,823' 243,862 238,849 241,719 224477,,882288 40 Net owed to related institutions abroad 88,939 86,632 93,621 94,775 88,803 84,372 83,774 90,367 94,959 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 • September 1995 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period Year ending December 1994 1995 IItteemm 1990 1991 1992 1993 1994 Dec. Jan. Feb. Mar. Apr. May Commercial paper (seasonally adjusted unless noted otherwise) 1111 AAAAllllllll iiiissssssssuuuueeeerrrrssss 562,656 528,832 545,619 555,075 595,382 595,382 612,554 619,150 633,324 651,128 650,580 FFFFiiiinnnnaaaannnncccciiiiaaaallll ccccoooommmmppppaaaannnniiiieeeessss1111 2222 DDDDeeeeaaaalllleeeerrrr----ppppllllaaaacccceeeedddd ppppaaaappppeeeerrrr2222,,,, ttttoooottttaaaallll 214,706 212,999 226,456 218,947 223,038 223,038 231,318 232,231 243,949 252,846 258,006 3333 DDDDiiiirrrreeeeccccttttllllyyyy ppppllllaaaacccceeeedddd ppppaaaappppeeeerrrr3333,,,, ttttoooottttaaaallll 200,036 182,463 17,1,605 180,389 207,701 207,701 215,423 218,570 218,269 219,281 216,879 4444 NNNNoooonnnnffffiiiinnnnaaaannnncccciiiiaaaallll ccccoooommmmppppaaaannnniiiieeeessss4444 147,914 133,370 147,558 155,739 164,643 164,643 165,813 168,349 171,106 179,001 175,695 Bankers dollar acceptances (not seasonally adjusted)5 5555 TTTToooottttaaaallll 54,771 43,770 38,194 32,348 29,835 29,835 BBBByyyy hhhhoooollllddddeeeerrrr 6666 AAAAcccccccceeeeppppttttiiiinnnngggg bbbbaaaannnnkkkkssss 9,017 11,017 10,555 12,421 11,783 11,783 7777 OOOOwwwwnnnn bbbbiiiillllllllssss 7,930 9,347 9,097 10,707 10,462 10,462 8888 BBBBiiiillllllllssss bbbboooouuuugggghhhhtttt ffffrrrroooommmm ooootttthhhheeeerrrr bbbbaaaannnnkkkkssss 1,087 1,670 1,458 1,714 1,321 1,321 FFFFeeeeddddeeeerrrraaaallll RRRReeeesssseeeerrrrvvvveeee BBBBaaaannnnkkkkssss6666 9999 FFFFoooorrrreeeeiiiiggggnnnn ccccoooorrrrrrrreeeessssppppoooonnnnddddeeeennnnttttssss 918 1,739 1,276 725 410 410 n.a. n.a. n.a. n.a. n.a. 11110000 OOOOtttthhhheeeerrrrssss 44,836 31,014 26,364 19,202 17,642 17,642 BBBByyyy bbbbaaaassssiiiissss 11111111 IIIImmmmppppoooorrrrttttssss iiiinnnnttttoooo UUUUnnnniiiitttteeeedddd SSSSttttaaaatttteeeessss 13,095 12,843 12,209 10,217 10,062 10,062 11112222 EEEExxxxppppoooorrrrttttssss ffffrrrroooommmm UUUUnnnniiiitttteeeedddd SSSSttttaaaatttteeeessss 12,703 10,351 8,096 7,293 6,355 6,355 11113333 AAAAllllllll ooootttthhhheeeerrrr 28,973 20,577 17,890 14,838 13,417 13,417 1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales, 5. 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. Beginning January 1995, data for insurance underwriting; and other investment activities. Bankers dollar acceptances will be reported annually in September. 2. Includes all financial-company paper sold by dealers in the open market. 6. In 1977 the Federal Reserve discontinued operations in bankers dollar acceptances 3. As reported by financial companies that place their paper directly with investors. for its own account. 4. 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 Date of change Rate Period Av r e a r te a ge Period Av r e a r te a ge Period Av r e a r te a ge 1992—Jan. 1 6.50 1992 6.25 1993—Jan 6.00 1994—Apr. 6.45 JJuullyy 22 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 Jul) 7.25 Apr. 19 6.75 1992—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 JJuullyy 77 8.75 July 6.02 Nov 6.00 1995—Jan. 8.50 Aug 6.00 Dec 6.00 Feb 9.00 Sept 6.00 Mai 9.00 Oct 6.00 1994—Jan 6.00 Apr 9.00 Nov 6.00 Feb 6.00 May 9.00 Dec 66..0000 66..0066 9.00 July 8.80 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 • September 1995 1.35 INTEREST RATES Money and Capital Markets Percent per year; figures are averages of business day data unless otherwise noted 1995 1995, week ending IItteemm 11999922 11999933 11999944 Mar. Apr. May June June 2 June 9 June 16 June 23 June 30 MONEY MARKET INSTRUMENTS 1 Federal funds1'2'3 3.52 3.02 4.21 5.98 6.05 6.01 6.00 6.02 6.03 6.02 6.00 5.95 2 Discount window borrowing2,4 3.25 3.00 3.60 5.25 5.25 5.25 5.25 5.25 5.25 5.25 5.25 5.25 Commercial paper* 3 1-month 3.71 3.17 4.43 6.07 6.06 6.05 6.05 6.04 6.01 6.05 6.07 6.09 4 3-month 3.75 3.22 4.66 6.15 6.12 6.06 5.94 5.98 5.91 5.96 5.94 5.94 5 6-month 3.80 3.30 4.93 6.30 6.19 6.07 5.79 5.92 5.75 5.82 5.79 5.76 Finance paper, directly placed3,5,7 6 1-month 3.62 3.12 4.33 5.95 5.96 5.94 5.92 5.91 5.89 5.93 5.93 5.93 7 3-month 3.65 3.16 4.53 6.03 6.01 5.91 5.73 5.80 5.74 5.78 5.73 5.68 8 6-month 3.63 3.15 4.56 6.04 6.01 5.81 5.47 5.61 5.45 5.52 5.46 5.44 Bankers acceptances3,5,8 9 3-month 3.62 3.13 4.56 6.04 6.00 5.91 5.80 5.82 5.79 5.83 5.81 5.79 10 6-month 3.67 3.21 4.83 6.14 6.06 5.90 5.65 5.71 5.66 5.68 5.63 5.64 Certificates of deposit, secondary market1 11 1-month 3.64 3.11 4.38 6.02 6.01 5.98 5.97 5.96 5.94 5.98 5.97 6.00 1? 3-month 3.68 3.17 4.63 6.15 6.11 6.02 5.90 5.91 5.88 5.93 5.91 5.91 13 6-month 3.76 3.28 4.96 6.34 6.27 6.07 5.80 5.86 5.78 5.84 5.78 5.80 14 Eurodollar deposits, 3-month3,i0 3.70 3.18 4.63 6.15 6.13 6.03 5.89 5.95 5.85 5.92 5.89 5.87 U.S. Treasury bills Secondary market3,5 15 3-month 3.43 3.00 4.25 5.73 5.65 5.67 5.47 5.55 5.56 5.48 5.42 5.43 16 6-month 3.54 3.12 4.64 5.89 5.77 5.67 5.42 5.49 5.48 5.45 5.40 5.37 17 1-year 3.71 3.29 5.02 6.03 5.88 5.65 5.33 5.38 5.37 5.35 5.29 5.33 Auction average3,5,11 18 3-month 3.45 3.02 4.29 5.73 5.67 5.70 5.50 5.64 5.48 5.57 5.46 5.35 19 6-month 3.57 3.14 4.66 5.91 5.80 5.73 5.46 5.61 5.35 5.56 5.42 5.34 20 1-year 3.75 3.33 4.98 6.16 6.02 5.90 5.38 5.54 n.a. n.a. n.a. 5.22 US. TREASURY NOTES AND BONDS Constant maturities12 21 1-year 3.89 3.43 5.32 6.43 6.27 6.00 5.64 5.71 5.69 5.66 5.59 5.65 22 2-year 4.77 4.05 5.94 6.78 6.57 6.17 5.72 5.76 5.74 5.75 5.66 5.75 23 3-year 5.30 4.44 6.27 6.89 6.68 6.27 5.80 5.83 5.83 5.83 5.73 5.83 24 5-year 6.19 5.14 6.69 7.05 6.86 6.41 5.93 5.98 5.96 5.96 5.86 5.95 25 7-year 6.63 5.54 6.91 7.14 6.95 6.50 6.05 6.08 6.07 6.09 5.99 6.07 26 10-year 7.01 5.87 7.09 7.20 7.06 6.63 6.17 6.23 6.20 6.21 6.10 6.17 71 20-year n.a. 6.29 7.49 7.57 7.45 7.01 6.59 6.66 6.60 6.64 6.54 6.60 28 30-year 7.67 6.59 7.37 7.45 7.36 6.95 6.57 6.62 6.57 6.61 6.53 6.58 Composite 29 More than 10 years (long-term) 7.52 6.45 7.41 7.52 7.41 6.99 6.59 6.65 6.60 6.64 6.55 6.59 STATE AND LOCAL NOTES AND BONDS Moody's series13 30 6.09 5.38 5.77 5.91R 5.74 5.68 5.62 5.60 5.60 5.55 5.70 5.65 31 Baa 6.48 5.83 6.17 6.50r 6.01 5.98 5.89 5.91 5.91 5.88 5.80 5.93 32 Bond Buyer series14 6.44 5.60 6.18 6.10 6.02 5.95 5.84 5.79 5.75 5.86 5.82 5.97 CORPORATE BONDS 33 Seasoned issues, all industries15 8.55 7.54 8.26 8.35 8.25 7.86 7.54 7.55 7.51 7.61 7.51 7.54 Rating group 34 Aaa 8.14 7.22 7.97 8.12 8.03 7.65 7.30 7.33 7.28 7.37 7.27 7.31 35 Aa 8.46 7.40 8.15 8.24 8.12 7.74 7.43 7.43 7.40 7.50 7.40 7.43 36 A 8.62 7.58 8.28 8.33 8.23 7.86 7.53 7.55 7.50 7.60 7.51 7.54 37 Baa 8.98 7.93 8.63 8.70 8.60 8.20 7.90 7.91 7.87 7.97 7.87 7.91 38 A-rated, recently offered utility bonds16 8.52 7.46 8.29 8.40 8.31 7.89 7.60 7.49 7.71 7.62 7.52 7.64 MEMO Dividend-price ratio17 39 Common stocks 2.99 2.78 2.82 2.76 2.68 2.60 2.55 2.58 2.58 2.56 2.53 2.53 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 obligation bonds 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' Al 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. Common stock ratio is based on the 500 stocks 9. An average of dealer offering rates on nationally traded certificates of deposit. in the price index. 10. Bid rates for Eurodollar deposits at 11:00 a.m. London time. Data are for indication NOTE. Some of the data in this table also appear in the Board's H.15 (519) weekly and purposes only. G.13 (415) monthly statistical releases. For ordering address, see inside front cover. 11. Auction date for daily data; weekly and monthly averages computed on an issue-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All 1.36 STOCK MARKET Selected Statistics 1994 1995 IInnddiiccaattoorr 11999922 11999933 11999944 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 229.00 249.71 254.16 255.22 252.48 248.65 253.56 261.86 266.81 274.38 281.81 289.52 2 Industrial 284.26 300.10 315.32 321.53 319.33 313.92 319.93 328.98 337.96 347.69 357.01 366.75 3 Transportation 201.02 242.68 247.17 230.71 227.44 218.93 230.25 237.29 252.37 254.36 254.70 256.80 4 Utility 99.48 114.55 104.96 101.67 100.07 100.01 100.58 103.87 102.08 104.70 106.02 108.12 5 Finance 179.29 216.55 209.75 203.33 198.38 195.25 201.05 211.76 213.29 219.38 228.45 236.26 6 Standard & Poor's Corporation (1941-43 = 10)' 415.75 451.63 460.42 463.81 461.01 455.19 465.25 481.92 493.20 507.91 523.83 539.35 7 American Stock Exchange (Aug. 31, 1973 = 50) 391.28 438.77 449.49 456.25 445.16 427.39 436.09 446.37 456.06 471.54 487.03 492.60 Volume of trading (thousands of shares) 8 New York Stock Exchange 202,558 263,374 290,652 301,327 297,001 302,049 326,652 333,020 338,733 331,184 341,905 345,547 9 American Stock Exchange 14,171 18,188 17,951 20,731 18,465 18,745 18,829 18,424 17,905 19,404 19,266 24,622 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers3 43,990 60,310 61,160 62,150 61,000 61,160 64,380 59,800 60,270 62,520 64,070 66,340 Free credit balances at brokers4 11 Margin accounts5 8,970 12,360 14,095 12,875 13,635 14,095 13,225 12,380 12,745 12,440 13,403 13,710 12 Cash accounts 22,510 27,715 28,870 24,180 25,625 28,870 26,440 25,860 26,680 26,670 27,464 29,860 Margin requirements (percent of market value and effective date) 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 • September 1995 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1995 11999922 11999933 11999944 Jan. Feb. Mar. Apr. May June US budget1 1 Receipts, total 1,090,453 1,153,226 1,257,187 131,801 82,544 92,532 165,392 90,405 147,868 2 On-budget 788,027 841,292 922,161 101,036 54,405 61,971 126,170 61,027 115,998 3 Off-budget 302,426 311,934 335,026 30,765 28,139 30,561 39,222 29,378 31,870 4 Outlays, total 1,380,856 1,408,532 1,461,067 115,172 120,527r 142,458 115,673 129,355 134,296 5 On-budget 1,128,518 1,141,945 1,460,557 89,890 94,050r 116,508 90,628 102,581 119,478 6 Off-budget 252,339 266,587 279,372 25,282 26,478 25,951 25,045 26,774 14,819 7 Surplus or deficit (-), total -290,403 -255,306 -203,370 16,628 -37,983r -49,927 49,720 -38,950 13,571 8 On-budget -340,490 -300,653 -259,024 11,146 -39,644r -54,537 35,542 -41,554 -3,480 9 Off-budget 50,087 45,347 55,654 5,483 1,661 4,610 14,178 2,604 17,051 Source of financing (total) 10 Borrowing from the public 310,918 248,594 184,998 13,337 38,964r 13,645 -27,638 44,740 8,491 11 Operating cash (decrease, or increase (-)) -17,305 6,283 16,564 -23,264 14,000 17,747 -19,972 11,841 -34,312 12 Other2 -3,210 429 1,808 -6,701 -14,980 18,535 -2,110 22,578 12,250 MEMO 13 Treasury operating balance (level, end of period) 58,789 52,506 35,942 49,844 35,844 18,097 38,069 26,228 60,540 14 Federal Reserve Banks 24,586 17,289 6,848 13,964 6,890 4,543 8,241 4,646 20,977 15 Tax and loan accounts 34,203 35,217 29,094 35,880 28,954 13,554 29,828 21,582 39,563 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 International Monetary Fund (IMF); loans to the IMF; other cash and monetary assets; and Outlays of the US. Government; and U.S. Office of Management and Budget, Budget accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous of 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 1995 1995 11999933 11999944 H2 HI H2 HI Apr. May June RECEIPTS 1 All sources 1,153,226 1,257,453 582,038 652,234' 625,557 710,542 165,392 90,405 147,868 ? Individual income taxes, net 509,680 543,055 262,073 275,052r 273,474 307,498 76,441 29,729 61,457 3 Withheld 430,211 459,699 228,423 225,387 240,062 251,398 32,447 43,414 40,901 4 Presidential Election Campaign Fund 28 70 2 63 10 58 16 12 8 5 154,989 160,364 41,768 117,937' 42,031 132,006 64,937 8,691 23,053 6 Refunds 75,546 77,077 8,115 68,325' 9,207 75,958 20,959 22,388 2,505 Corporation income taxes 7 Gross receipts 131,548 154,205 68,266 80,536 78,392 9922,,113322 2255,,777799 33,,557722 3366,,664455 8 14,027 13,820 6,514 6,933 7,331 10,399 2,297 1,379 768 9 Social insurance taxes and contributions, net ... 428,300 461,475 206,176 248,301 220,141 261,837 53,839 48,183 41,341 10 Employment taxes and contributions 396,939 428,810 192,749 228,714 206,613 228,663 50,423 37,226 40,605 11 Self-employment taxes and contributions . 20,604 24,433 4,335 20,762 4,135 23,429 12,640 1,898 4,032 1? Unemployment insurance 26,556 28,004 11,010 17,301 11,177 18,001 3,061 10,601 320 13 Other net receipts4 4,805 4,661 2,417 2,284 2,349 2,267 354 355 416 14 48,057 55,225 25,994 26,444 30,062 27,452 4,602 4,770 4,897 15 Customs deposits 18,802 20,099 10,215 9,500 11,042 8,847 1,349 1,471 1,583 16 Estate and gift taxes 12,577 15,225 6,617 8,197 7,071 7,424 1,906 1,339 1,040 17 Miscellaneous receipts 18,273 22,041 9,227 11,170 13,305 15,749 3,774 2,719 1,674 OUTLAYS 18 All types 1,408,532 1,460,722 727,685 710,620 751,645 757,480 115,673 129,355 134,296 19 National defense 291,086 281,451 146,672 133,844' 141,108 132,588 17,753 22,194 26,148 70 International affairs 16,826 17,249 10,186 5,800 12,056 4,727 95 1,282 818 21 General science, space, and technology 17,030 17,602 8,880 8,502 8,979 8,611 1,298 1,596 1,521 77 Energy 4,319 5,398 1,663 2,237' 3,101 2,358 196 244 601 73 Natural resources and environment 20,239 20,902 11,221 10,111' 12,750 10,273 1,587 1,820 1,698 24 Agriculture 20,443 15,131 7,516 7,451 7,697 4,039 623 236 -328 Commerce and housing credit -22,725 -4,851 -1,490 -4,962' -4,094 -13,936 -1,092 -1,988 -3,041 76 Transportation 35,004 36,835 19,570 16,739' 20,489 18,192 2,560 3,154 3,432 27 Community and regional development 9,051 11,877 4,288 4,571' 6,688 4,858 896 860 1,035 28 Education, training, employment, and social services 50,012 44,730 26,753 19,262' 25,887 25,738 33,,664477 4,205 44,,448800 ?9 Health 99,415 106,495 52,958 53,195 54,123 58,759 9,281 9,952 10,543 30 Social security and Medicare 435,137 464,314 223,735 232,777 236,819 251,975 39,463 42,387 47,721 31 Income security 207,257 213,972 102,380 109,080 101,743 117,639 18,963 20,633 16,426 3? Veterans benefits and services 35,720 37,637 19,852 16,686 19,757 19,267 1,850 3,204 4,552 33 Administration of justice 14,955 15,283 7,400 7,718 7,800 8,062 1,359 1,129 1,419 34 General government 13,009 11,348 6,531 5,084 7,384 5,797 299 1,109 1,781 35 Net interest6 198,811 202,957 99,914 99,844 109,435 116,170 20,017 20,295 18,617 36 Undistributed offsetting receipts -37,386 -37,772 -20,344 -17,308 -20,065 -17,632 -3,121 -2,956 -3,127 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 3. Old-age, disability, and hospital insurance. and Outlays of the US. Government; and US. Office of Management and Budget, Budget 4. Federal employee retirement contributions and civil service retirement and of the US. Government, Fiscal Year 1996. disability fund. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • September 1995 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1993 1994 1995 IItteemm June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30r 1 Federal debt outstanding 4,373 4,436 4,562 4,602 4,673 4,721 4,827 4,864 n.a. 2 Public debt securities 4,352 4,412 4,536 4,576 4,646 4,693 4,800 4,864 4,9151 3 Held by public 3,252 3,295 3,382 3,434 3,443 3,480 3,543 3,610 4 Held by agencies 1,100 1,117 1,154 1,142 1,203 1,213 1,257 1,255 5 Agency securities 21 25 27 26 28 29 27 27 n.a. 6 Held by public 21 25 27 26 27 29 27 26 •1 7 Held by agencies 0 0 0 0 0 0 0 0 8 Debt subject to statutory limit 4,256 4,316 4,446 4,491 4,559 4,605 4,711 4,775 4,861 9 Public debt securities 4,256 4,315 4,445 4,491 4,559 4,605 4,711 4,774 4,861 10 Other debt1 0 0 0 0 0 0 0 0 0 MEMO 11 Statutory debt limit 4,370 4,900 4,900 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 participation certificates, notes to international lending organizations, and District of the 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 1995 TTyyppee aanndd hhoollddeerr 11999911 11999922 11999933 11999944 Q3 Q4 Q1 Q2 1 Total gross public debt 3,801.7 4,177.0 4,535.7 4,800.2 4,692.8 4,800.2 4,864.1 4,951.4 By type 7. Interest-bearing 3,798.9 4,173.9 4,532.3 4,769.2 4,689.5 4,769.2 4,860.5 4,947.8 3 Marketable 2,471.6 2,754.1 2,989.5 3,126.0 3,091.6 3,126.0 3,227.3 3,252.6 4 Bills 590.4 657.7 714.6 733.8 697.3 733.8 756.5 748.3 5 Notes 1,430.8 1,608.9 1,764.0 1,867.0 1,867.5 1,867.0 1,938.2 1,974.7 6 Bonds 435.5 472.5 495.9 510.3 511.8 510.3 517.7 514.7 7 Nonmarketable1 1,327.2 1,419.8 1,542.9 1,643.1 1,597.9 1,643.1 1,633.2 1,695.2 8 State and local government series 159.7 153.5 149.5 132.6 137.4 132.6 122.9 121.2 9 Foreign issues2 41.9 37.4 43.5 42.5 42.0 42.5 41.8 41.4 to Government 41.9 37.4 43.5 42.5 42.0 42.5 41.8 41.4 11 Public .0 .0 .0 .0 .0 .0 .0 .0 17, Savings bonds and notes 135.9 155.0 169.4 177.8 176.4 177.8 178.8 180.1 n Government account series3 959.2 1,043.5 1,150.0 1,259.8 1,211.7 1,259.8 1,259.2 1,322.0 14 Non-interest-bearing 2.8 3.1 3.4 31.0 3.2 31.0 3.6 3.6 By holder4 15 U.S. Treasury and other federal agencies and trust funds 968.7 1,047.8 1,153.5 1,257.1 1,213.1 1,257.1 1,254.7 16 Federal Reserve Banks 281.8 302.5 334.2 374.1 355.2 374.1 369.3 17 Private investors 2,563.2 2,839.9 3,047.7 3,168.0 3,127.8 3,168.0 3,239.1 18 Commercial banks 233.4 294.0 316.0 296.4 313.9' 296.4 285.0 19 Money market funds 80.0 79.4 80.5 67.6 60.1' 67.6 67.8 20 Insurance companies 168.7 197.5 216.0 256.8 253.4' 256.8 260.0 21 Other companies 150.8 192.5 213.0 230.2 229.3 230.2 230.3 n a. 22 State and local treasuries 520.3 534.8 564.0 488.3 504.6' 488.3 480.0 Individuals 23 Savings bonds 138.1 157.3 171.9 180.5 178.6 180.5 181.4 24 Other securities 125.8 131.9 137.9 152.5 148.6 152.5 161.4 25 Foreign and international5 491.8 549.7 623.3 688.1 ess.c 688.1 728.1 26 Other miscellaneous investors6 651.3 702.4 725.0 807.6 784.3' 807.6 845.1 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 1995 1995, week ending IItteemm Mar. Apr. May May 3 May 10 May 17 May 24 May 31 June 7 June 14 June 21 June 28 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 49,948 49,515 52,894 50,191 55,258 53,988 47,285 56,666 55,756 47,982 45,813 45,809 Coupon securities, by maturity 2 Five years or less 96,107 86,779 102,560 84,904 121,759 106,732 98,410 93,934 110,345 103,903 84,282 106,808 3 More than five years 45,128 38,590 59,066 38,391 80,621 60,340 48,827 58,883 72,572 61,528 44,886 50,487 4 Federal agency 23,485 22,120 21,890 22,431 22,095 22,791 19,767 22,584 22,244 21,415 22,591 24,449 5 Mortgage-backed 26,637 26,963 29,333 21,890 48,781 31,367 21,861 19,788 46,142 44,273 24,387 18,041 By type of counterparty With interdealer broker 6 U.S. Treasury 113,505 102,048 125,478 101,552 146,327 132,562 116,186 121,191 142,306 128,968 104,834 122,119 7 Federal agency 745 778 868 865 1,143 761 698 872 758 731 427 724 8 Mortgage-backed 8,758 8,353 10,050 6,512 15,179 11,645 8,541 6,960 14,907 15,660 9,470 6,315 With other 9 U.S. Treasury 77,677 72,836 89,043 71,934 111,310 88,498 78,337 88,292 96,366 84,445 70,147 80,985 10 Federal agency 22,740 21,342 21,022 21,567 20,952 22,030 19,069 21,712 21,486 20,684 22,164 23,725 11 Mortgage-backed 17,879 18,610 19,282 15,378 33,602 19,721 13,320 12,828 31,234 28,613 14,917 11,726 FUTURES TRANSACTIONS3 By type of deliverable security 12 U.S. Treasury bills 1,785 910 1,371 1,133 1,730 1,392 1,636 867 1,664 1,045 721 358 Coupon securities, by maturity 13 Five years or less 2,303r 2,152r 2,877r 2,267r 3,443r 2,613' 2,917' 2,901 3,862 2,865 2,638 2,044 14 More than five years 15,604r ll,781r 17,425r 9,685r 24,534' 17,471' 14,979' 17,358 24,310 20,562 15,249 13,055 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 U.S. Treasury bills 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 18 Five years or less 2,47 lr 2,585r 2,695r 2,297r 3,570' 2,213' 2,471 2,765 3,694 2,534 1,298 2,888 19 More than five years 3,892r 3,425r 5,230r 3,395r 7,361' 4,748' 5,137' 4,777' 6,272 3,884 3,460 3,851 20 Federal agency 0 0 0 0 0 0 0 0 0 0 n.a. n.a. 21 Mortgage-backed 760 726 1,199 752 2,495 723 834 1,014 2,227 1,058 540 903 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 • September 1995 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1995 1995, week ending IItteemm Mar. Apr. May May 3 May 10 May 17 May 24 May 31 June 7 June 14 June 21 Positions2 NET OUTRIGHT POSITIONS3 By type of security 1 U.S. Treasury bills 10,749 7,472 4,533 4,730 6,234 7,102 -1,443 6,156 586 -3,351 -3,877 Coupon securities, by maturity 2 Five years or less -5,840 -1,887 1,996 2,245 3,685 -4,108 4,525 3,774 7,342 3,172 1,073 3 More than five years -28,898 -30,458 -20,487 -31,238 -19,902 -20,133 -19,869 -17,437 -13,788 -12,788 -16,055 4 Federal agency 23,373 22,961 22,564 21,524 24,332 23,744 21,592 21,034 26,935 26,399 22,082 5 Mortgage-backed 32,766 30,809 34,798 30,334 35,417 34,895 36,454 34,338 32,723 31,277 30,370 NET FUTURES POSITIONS4 By type of deliverable security 6 U.S. Treasury bills -10,230 -10,906 -11,208 -11,647 -11,816 -11,035 -10,826 -10,966 -10,222 -8,585 -6,777 Coupon securities, by maturity 7 Five years or less 1,411r 2,296r 1,128 3,195r l,523r l,638r l,331r -868 1,289 1,893 2,475 8 More than five years 79R 2,427r -4,195 l,662r —3,345r -5,360r -5,402r -5,185 -7,772 -8,364 -9,305 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 Overnight and continuing 225,309 227,539 224,729 250,508 221,649 225,460 208,143 232,616 249,171 242,805 238,006 12 Term 360,597 370,576 369,097 378,900 416,466 353,483 368,132 334,105 378,821 399,352 399,890 Securities borrowed 13 Overnight and continuing 173,921 170,977 163,757 170,853 167,201 167,764 158,299 158,722 163,119 158,069 155,799 14 Term 58,737 59,415 55,704 61,233 58,505 54,996 57,720 49,225 51,928 54,099 57,640 Securities received as pledge 15 Overnight and continuing 3,374 3,526 2,552 2,639 2,560 2,640 2,405 2,564 3,101 3,085 3,117 16 Term 54 64 103 187 203 46 56 70 145 118 51 Repurchase agreements 17 Overnight and continuing 468,711 469,832 465,539 489,735 469,837 476,041 440,719 465,191 522,828 510,791 482,517 18 Term 320,370 330,717 323,351 336,599 374,489 311,086 317,486 284,665 308,397 334,407 360,675 Securities loaned 19 Overnight and continuing 3,927 4,946 4,879 4,723 4,651 4,769 4,627 5,534 5,283 5,181 5,108 20 Term 1,216 2,146 1,842 2,022 1,754 1,835 1,837 1,863 2,002 1,949 1,862 Securities pledged 21 Overnight and continuing 29,195 29,139 28,703 27,493 29,671 28,820r 27,214 29,627 28,227 27,922 32,184 22 Term 3,258 3,184 3,742 3,565 3,498 3,073 4,427 4,046 4,488 4,428 4,168 Collateralized loans 23 Overnight and continuing 13,998 16,973 13,004 14,747 12,264 12,439 15,373 11,193 12,525 13,693 12,563 24 Term n.a. 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 7.5 Overnight and continuing 219,569 219,256 212,193 239,196 215,699 215,418 198,568 207,514 227,691 224,856 220,108 26 Term 334,781 344,373 346,228 356,047 384,117 326,509 352,595 317,481 349,979 366,146 374,452 Securities out 77 Overnight and continuing 282,171 289,764 273,963 312,051 274,864 275,662 262,320 266,681 308,103 299,780 277,861 28 Term 263,970 275,791 272,206 284,786 323,542 257,719 269,823 232,349 258,318 276,819 302,085 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 NOTE, "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 1995 AAggeennccyy 11999900 11999911 11999922 11999933 Dec. Jan. Feb. Mar. Apr. 1 Federal and federally sponsored agencies 434,668 442,772 483,970 570,711 741,992 740,521 749,285 757,859 n.a. 2 Federal agencies 42,159 41,035 41,829 45,193 39,186 39,196 39,054 38,759 38,777 3 Defense Department1 7 7 7 6 6 6 6 6 6 4 Export-Import Bank2'3 11,376 9,809 7,208 5,315 3,455 3,455 3,455 3,156 3,156 5 Federal Housing Administration4 393 397 374 255 116 59 60 65 70 6 Government National Mortgage Association certificates of participation5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 7 Postal Service6 6,948 8,421 10,660 9,732 8,073 8,073 7,873 7,873 7,873 8 Tennessee Valley Authority 23,435 22,401 23,580 29,885 27,536 27,603 27,660 27,659 27,672 9 United States Railway Association6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 Federally sponsored agencies7 392,509 401,737 442,141 525,518 702,806 701,325 710,231 719,100 n.a. 11 Federal Home Loan Banks 117,895 107,543 114,733 141,577 208,881 210,905 208,843 213,373 215,223 12 Federal Home Loan Mortgage Corporation 30,941 30,262 29,631 49,993 93,279 95,060 101,417 101,673 106,432 13 Federal National Mortgage Association 123,403 133,937 166,300 201,112 257,230 250,467 255,719 258,653 258,176 14 Farm Credit Banks8 53,590 52,199 51,910 53,123 53,175 55,558 53,846 53,947 53,629 15 Student Loan Marketing Association9 34,194 38,319 39,650 39,784 50,335 49,425 50,506 51,554 n.a. 16 Financing Corporation10 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation11 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation12 23,055 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt13 179,083 185,576 154,994 128,187 103,817 101,157 100,388 98,266 95,374 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 11,370 9,803 7,202 5,309 3,449 3,449 3,449 3,150 3,150 21 Postal Service6 6,698 8,201 10,440 9,732 8,073 8,073 7,873 7,873 7,873 22 Student Loan Marketing Association 4,850 4,820 4,790 4,760 n.a. n.a. n.a. n.a. n.a. 23 Tennessee Valley Authority 14,055 10,725 6,975 6,325 3,200 3,200 3,200 3,200 3,200 24 United States Railway Association6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Other lending14 25 Farmers Home Administration 52,324 48,534 42,979 38,619 33,719 33,669 33,574 32,759 31,769 26 Rural Electrification Administration 18,890 18,562 18,172 17,578 17,392 17,309 17,360 17,293 17,299 27 Other 70,896 84,931 64,436 45,864 37,984 35,457 34,932 33,991 32,083 1. Consists of mortgages assumed by the Defense Department between 1957 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 Fanners 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 Domestic Nonfinancial Statistics • September 1995 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1994 1995 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11999922 11999933 11999944 oorr uussee Nov. Dec. Jan. Feb. Mar. Apr. May June 1 All issues, new and refunding1 226,818 279,945 153,950 11,856 9,541 7,717 7,366 11,844 8,552 11,804 17,956 By type of issue 2 General obligation 78,611 90,599 54,404 5,781 2,272 3,770 3,714 5,459 3,536 4,332 5,755 3 Revenue 136,580 189,346 99,546 6,075 7,269 3,947 3,652 6,385 5,016 7,472 12,201 By type of issuer 4 State 24,874 27,999 19,186 1,530 151 738 1,032 2,315 994 1,315 1,329 5 Special district or statutory authority2 138,327 178,714 95,896r 6,228 7,352 4,835 4,889 6,572 5,814 8,039 11,382 6 Municipality, county, or township 63,617 73,232 38,868 4,098 2,038 2,144 1,445 2,957 1,744 2,450 5,245 7 Issues for new capital 101,865 91,434 105,972 9,629 8,444 5,737 5,670 10,538 6,497 8,406 13,796 By use of proceeds 8 Education 18,852 16,831 21,267 1,780 1,701 1,411 1,464 1,666 1,863 2,594 2,494 9 Transportation 14,357 9,167 10,836 623 307 625 671 454 615 606 3,127 10 Utilities and conservation 12,164 12,014 10,192 974 1,292 538 249 633 345 1,282 1,235 11 Social welfare 16,744 13,837 20,289 1,416 2,208 1,182 869 2,556 1,547 1,738 2,062 12 Industrial aid 6,188 6,862 8,161 981 1,046 384 215 1,011 391 416 411 13 Other purposes 33,560 32,723 35,227 3,855 1,890 1,597 2,202 4,218 1,736 1,770 4,467 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 1995 TTyyppee ooff oo rr ii ssss iiss uu ss ee uu ,, ee oo rr ffffeerriinngg,, 11999922 11999933 11999944 Oct. Nov. Dec. Jan. Feb. Mar. Apr.r May 1 All issues1 559,827 754,969 n.a. 34,481 38,258 23,267 37,216r 42,079r 39,590r 32,617 50,943 2 Bonds2 471,502 641,498 n.a. 30,909 33,286 20,493 34,312r 37,248r 36,670r 27,088 44,944 By type of offering 3 Public, domestic 378,058 486,879 365,050 25,192 27,278 17,809 24,353r 29,350r 32,703r 24,615 38,671 4 Private placement, domestic3 65,853 116,240 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 27,591 38,379 56,238 5,718 6,008 2,684 9,959 7,898r 3,967r 2,473 6,273 By industry group 6 Manufacturing 82,058 88,002 31,981 2,498 2,491 1,508 1,497 4,405r 2,126r 2,814 1,609 7 Commercial and miscellaneous 43,111 60,293 27,900 2,204 1,578 2,469 2,334 3,038 1,941 2,128 6,093 8 Transportation 9,979 10,756 4,573 227 239 269 0 100 403 978 1,045 9 Public utility 48,055 56,272 11,713 695 744 273 659 215 839 297 2,546 10 Communication 15,394 31,950 11,986 279 333 419 813 1,122 399 323 1,716 11 Real estate and financial 272,904 394,226 333,135 25,007 27,902 15,556 29,009r 28,368r 30,962r 20,548 31,935 12 Stocks2 88,325 113,472 n.a. 3,572 4,972 2,774 2,902r 4,831 2,920r 3,529 5,998 By type of offering 13 Public preferred 21,339 18,897 12,504 713 279 178 430 296 205 381 1,407 14 Common 57,118 82,657 47,884 2,859 4,693 2,595 2,472r 4,535r 2,715r 3,148 4,591 15 Private placement3 9,867 11,917 t n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 16 Manufacturing 22,723 22,271 1 745 1,963 1,203 1,086 1,582' 1,010 612 2,356 17 Commercial and miscellaneous 20,231 25,761 n.a. 1,105 1,789 857 39(f l,413r 907r 1,841 1,050 18 Transportation 2,595 2,237 1 79 76 0 19 15 60 48 101 19 Public utility 6,532 7,050 4 333 165 134 258 137 141 185 20 Communication 2,366 3,439 1 0 0 21 496 0 20 0 74 21 Real estate and financial 33,879 52,021 1 1,639 791 527 776 1,564 786 887 2,232 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 Assets1 Millions of dollars 1994 1995 IItteemm 11999933 11999944 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May 1 Sales of own shares2 851,885 841,286 59,285 56,849 73,183 75,099 59,121 69,898 68,294 70,939 2 Redemptions of own shares 567,881 699,823 53,743 55,757 70,747 63,737 50,738 60,970 59,957 57,033 3 Net sales3 284,004 141,463 5,543 1,092 2,436 11,362 8,383 8,928 8,337 13,906 4 Assets4 1,510,209 1,550,490 1,601^63 1,549,186 1,550,490 1,563,187 1,619,705 1,657,370 1,710,280 1,769,249 5 Cash5 100,209 121,296 126,766 125,843 121,296 124,351 126,307 121,424 124,092 128,866 6 Other 1,409,838 1,429,195 1,474,597 1,423,344 1,429,195 1,438,836 1,493,399 1,535,946 1,586,187 1,640,383 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 1993 1994 1995 AAccccoouunntt 11999922 11999933 11999944 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Qlr 1 Profits with inventory valuation and capital consumption adjustment 405.1 485.8 542.7 473.1 493.5 533.9 508.2 546.4 556.0 560.3 569.7 2 Profits before taxes 395.9 462.4 524.5 456.6 458.7 501.7 483.5 523.1 538.1 553.5 570.6 3 Profits-tax liability 139.7 173.2 202.5 171.8 169.9 191.5 184.1 201.7 208.6 215.6 220.0 4 Profits after taxes 256.2 289.2 322.0 284.8 288.9 310.2 299.4 321.4 329.5 337.9 350.7 5 Dividends 171.1 191.7 205.2 190.7 193.2 194.6 196.3 202.5 207.9 213.9 217.1 6 Undistributed profits 85.1 97.5 116.9 94.1 95.6 115.6 103.0 118.9 121.6 124.0 133.5 7 Inventory valuation -6.4 -6.2 -19.5 -10.0 3.0 -6.5 -12.3 -14.1 -19.6 -32.1 -39.0 8 Capital consumption adjustment 15.7 29.5 37.7 26.5 31.7 38.8 37.0 37.4 37.5 38.8 38.1 SOURCE. U.S. Department of Commerce, Survey of Current Business. 1.50 NONFARM BUSINESS EXPENDITURES New Plant and Equipment Billions of dollars; quarterly data at seasonally adjusted annual rates 1993 1994 IInndduussttrryy 11999922 11999933 1199994411 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q41 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 other 268.84 299.44 336.93 284.35 296.35 303.74 310.73 327.20 336.28 343.76 340.48 1. Figures are amounts anticipated by business. SOURCE. U.S. Department of Commerce, Survey of Current Business. 2. "Other" consists of construction, wholesale and retail trade, finance and insurance, personal and business services, and communication. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • September 1995 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period; not seasonally adjusted 1993 1994 1995 AAccccoouunntt 11999922 11999933 11999944rr Q3 Q4 Ql Q2 Q3 Q4' Ql ASSETS 1 Accounts receivable, gross2 491.8 482.8 551.0 474.0 482.8 494.5 511.3 524.1 551.0 568.5 2 Consumer 118.3 116.5 134.8 111.0 116.5 120.1 124.3 130.3 134.8 135.8 3 Business 301.3 294.6 337.6 291.9 294.6 302.3 313.2 317.2 337.6 351.9 4 Real estate 72.2 71.7 78.5 71.1 71.7 72.1 73.8 76.6 78.5 80.8 5 LESS: Reserves for unearned income 53.2 50.7 55.0 49.5 50.7 51.2 51.9 51.1 55.0 58.9 6 Reserves for losses 16.2 11.2 12.4 11.2 11.2 11.6 12.1 12.1 12.4 12.9 7 Accounts receivable, net 422.4 420.9 483.5 413.3 420.9 431.7 447.3 460.9 483.5 496.7 8 All other 142.5 170.9 183.4 163.9 170.9 171.2 174.6 177.2 183.4 194.6 9 Total assets 564.9 591.8 666.9 577.3 591.8 602.9 621.9 638.1 666.9 691.4 LIABILITIES AND CAPITAL 10 Bank loans 37.6 25.3 21.2 25.8 25.3 24.2 23.3 21.6 21.2 21.0 11 Commercial paper 156.4 159.2 184.6 149.9 159.2 165.9 171.2 171.0 184.6 181.3 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 39.5 42.7 51.0 44.6 42.7 41.1 44.7 50.0 51.0 52.5 15 Not elsewhere classified 196.3 206.0 235.0 204.2 206.0 211.7 219.6 228.2 235.0 254.4 16 All other liabilities 68.0 87.1 99.5 83.8 87.1 90.5 89.9 95.0 99.5 102.5 17 Capital, surplus, and undivided profits 67.1 71.4 75.7 68.9 71.4 69.5 73.2 72.3 75.7 79.7 18 Total liabilities and capital 564.9 591.8 666.9 577.3 591.8 602.9 621.9 638.1 666.9 691.4 1. Includes finance company subsidiaries of bank holding companies but not of 2. Before deduction for unearned income and losses, retailers and banks. Data are amounts carried on the balance sheets of finance companies; securitized pools are not shown, as they are not on the books. 1.52 DOMESTIC FINANCE COMPANIES Consumer, Real Estate, and Business Credit1 Millions of dollars, amounts outstanding, end of period 1994 1995' TTyyppee ooff ccrreeddiitt Dec.' Jan. Feb. Mar. Apr. May Seasonally adjusted 1 Total 539,996' 545,533' 614,784 614,784 624,038 630,388 637,911 643,131 651,914 2 Consumer 157,579' 160,349' 176,198 176,198 178,430 178,623 180,029 181,849 186,521 3 Real estate2 72,473r 71,965' 78,770 78,770 79,210 80,326 81,210 81,784 82,656 4 Business 309,944' 313,219' 359,816 359,816 366,398 371,439 376,672 379,497 382,737 Not seasonally adjusted 5 Total 544,691 550,751' 620,975 620,975 624,281 629,486 640,378 645,704 651,538 6 Consumer 159,558 162,770 178,999 178,999 179,979 178,601 180,653 181,672 184,554 7 Motor vehicles 57,259 56,057 61,609 61,609 62,321 61,067 61,256 62,434 63,687 8 Other consumer3 61,020 60,396 73,221 73,221 75,147 73,691 74,534 75,447 75,958 9 Securitized motor vehicles4 29,734 36,024 31,897 31,897 30,262 31,304 32,155 31,261 32,047 10 Securitized other consumer4 11,545 10,293 12,272 12,272 12,249 12,539 12,708 12,530 12,862 11 Real estate2 72,243 71,727 78,479 78,479 79,592 80,754 80,762 82,011 82,548 12 Business 312,890 316,254' 363,497 363,497 364,710 370,131 378,963 382,021 384,436 13 Motor vehicles 89,011 95,173 118,197 118,197 118,979 121,818 125,805 128,052 127,272 14 Retail5 20,541 18,091 21,514 21,514 21,809 21,577 21,652 22,303 21,093 15 Wholesale6 29,890 31,148 35,037 35,037 34,493 36,759 38,868 39,617 39,598 16 Leasing 38,580 45,934 61,646 61,646 62,677 63,482 65,285 66,132 66,581 17 Equipment 151,424 145,452 157,953 157,953 158,820 159,333 161,306 162,212 164,477 18 Retail 33,521 35,513 39,680 39,680 40,387 40,329 42,024 41,182 41,868 19 Wholesale6 8,680 8,001 9,678 9,678 9,372 9,462 8,913 9,660 10,721 20 Leasing 109,223 101,938 108,595 108,595 109,061 109,542 110,369 111,370 111,888 21 Other business7 60,856 53,997 61,495 61,495 61,304 63,339 64,815 64,475 64,197 22 Securitized business assets4 11,599 21,632' 25,852 25,852 25,607 25,641 27,037 27,282 28,490 23 Retail 1,120 2,869' 4,494 4,494 4,251 4,035 4,404 4,937 5,224 24 Wholesale 5,756 10,584 14,826 14,826 14,945 15,465 16,653 16,561 17,676 25 Leasing 4,723 8,179' 6,532 6,532 6,411 6,141 5,980 5,784 5,590 1. Includes finance company subsidiaries of bank holding companies but not of 4. Outstanding balances of pools upon which securities have been issued; these retailer? 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 A37 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1994 1995 IItteemm 11999922 11999933 11999944 Dec. Jan. Feb. Mar. Apr. May June Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 158.1 163.1 170.4 184.9 176.5 175.6 173.3 174.7 178.1 181.7 2 Amount of loan (thousands of dollars) 118.1 123.0 130.8 136.2 134.2 135.6 132.6 134.6 136.3 137.7 3 Loan-to-price ratio (percent) 76.6 78.0 78.8 76.9 78.0 79.3 78.2 79.2 78.7 78.2 4 Maturity (years) 25.6 26.1 27.5 28.0 28.0 28.3 28.6 28.1 28.4 27.2 5 Fees and charges (percent of loan amount)2 1.60 1.30 1.29 1.38 1.31 1.32 1.18 1.14 1.30 1.18 Yield (percent per year) 6 Contract rate1 7.98 7.03 7.26 7.61 7.96 8.07 8.02 7.96 7.79 7.54 7 Effective rate1,3 8.25 7.24 7.47 7.83 8.18 8.28 8.21 8.15 7.99 7.73 8 Contract rate (HUD series)4 8.43 7.37 8.58 9.32 9.11 8.79 8.60 8.44 7.84 7.80 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 8.46 7.46 8.68 9.54 9.10 9.05 8.60 8.56 8.03 8.00 10 GNMA securities6 7.71 6.65 7.96 8.76 8.69 8.38 8.08 7.96 7.53 7.24 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 158,119 190,861 222,057 222,057 222,774 223,137 223,956 226,197 228,078 232,534 12 FHA/VA insured 22,593 23,857 28,377 28,377 28,368 28,420 28,672 28,664 28,576 28,886 13 Conventional 135,526 167,004 194,499 194,499 195,170 195,439 195,998 198,161 200,004 204,022 Mortgage transactions (during period) 14 Purchases 75,905 92,037 62,389 3,399 2,154 1,802 2,390 3,709 3,787 6,575 Mortgage commitments (during period) 15 Issued7 74,970 92,537 54,038 2,910 1,720 1,683 3,372 3,277 6,085 5,605 16 To sell8 10,493 5,097 1,820 55 57 82 64 22 28 9 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period f 17 Total 33,665 55,012 72,693 72,693 73,553 75,184 77,313 79,147 81,008 85,532 18 FHA/VA insured 352 321 276 276 272 270 266 262 257r 253 19 Conventional 33,313 54,691 72,416 72,416 73,281 74,914 77,047 78,885 80,75 lr 85,278 Mortgage transactions (during period) 20 Purchases 191,125 229,242 124,697 4,890 3,254 5,537 4,609 4,530 10,982 7,001 21 179,208 208,723 117,110 3,769 2,862 4,806 3,546 3,805 10,479 5,326 Mortgage commitments (during period)9 22 Contracted 261,637 274,599 136,067 2,412 6,541 7,741 12,704 13,437 4,549 6,198 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 • September 1995 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1994 1995 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999911 11999922 11999933 Q1 Q2 Q3 Q4 Q1 1 All holders 3,926,154 4,056,233 4,229,592 4,258,823 4,314,991 4,374,353 4,425,886 4,466,957 By type of property 2 One- to four-family residences 2,781,327 2,963,391 3,149,634 3,185,330 3,236,909 3,293,166 3,345,755 3,379,380 3 Multifamily residences 306,551 295,417 291,985 292,533 294,709 297,315 296,633 297,691 4 Commercial 759,154 716,687 706,780 699,690 701,541 701,617 700,997 707,217 5 79,122 80,738 81,194 81,269 81,832 82,255 82,500 82,669 By type of holder 6 Major financial institutions 1,846,726 1,769,187 1,767,835 1,746,474 1,763,296 1,786,178 1,815,949 1,839,114 7 Commercial banks 876,100 894,513 940,444 937,944 956,840 981,365 1,004,280 1,024,772 8 One- to four-family 483,623 507,780 556,538 553,894 569,512 592,021 611,697 625,335 9 Multifamily 36,935 38,024 38,635 38,690 38,609 38,004 38,916 39,734 10 Commercial 337,095 328,826 324,409 324,106 326,800 328,931 331,100 336,767 11 Farm 18,447 19,882 20,862 21,254 21,918 22,408 22,567 22,935 12 Savings institutions3 705,367 627,972 598,330 584,531 585,671 587,545 596,198 601,636 13 One- to four-family 538,358 489,622 469,959 458,057 462,219 466,704 477,499 483,476 14 Multifamily 79,881 69,791 67,362 66,924 66,281 65,532 64,400 63,748 15 Commercial 86,741 68,235 60,704 59,253 56,872 55,017 54,011 54,120 16 Farm 388 324 305 297 299 291 289 292 17 Life insurance companies 265,258 246,702 229,061 223,999 220,785 217,269 215,471 212,706 18 One- to four-family 11,547 11,441 9,458 9,245 9,107 8,956 8,876 8,756 19 Multifamily 29,562 27,770 25,814 25,232 24,855 24,442 24,224 23,898 20 Commercial 214,105 198,269 184,305 180,152 177,463 174,514 172,957 170,624 21 Farm 10,044 9,222 9,484 9,370 9,360 9,357 9,414 9,429 22 Federal and related agencies 266,146 286,263 328,598 329,160 329,725 329,304 323,491 319,770 23 Government National Mortgage Association 19 30 22 20 12 12 6 15 24 One- to four-family 19 30 15 13 12 12 6 15 25 Multifamily 0 0 7 7 0 0 0 0 26 Farmers Home Administration4 41,713 41,695 41,386 41,209 41,370 41,587 41,781 41,857 27 One- to four-family 18,496 16,912 15,303 14,870 14,459 14,084 13,826 13,507 28 Multifamily 10,141 10,575 10,940 11,037 11,147 11,243 11,319 11,418 29 Commercial 4,905 5,158 5,406 5,399 5,526 5,608 5,670 5,807 30 Farm 8,171 9,050 9,739 9,903 10,239 10,652 10,966 11,124 31 Federal Housing and Veterans' Administrations 10,733 12,581 12,215 11,344 11,169 10,533 10,964 10,890 32 One- to four-family 4,036 5,153 5,364 4,738 4,826 4,321 4,753 4,715 33 Multifamily 6,697 7,428 6,851 6,606 6,343 6,212 6,211 6,175 34 Resolution Trust Corporation 45,822 32,045 17,284 14,241 13,908 15,403 10,428 9,342 35 One- to four-family 14,535 12,960 7,203 6,308 6,045 6,998 5,200 4,755 36 Multifamily 15,018 9,621 5,327 4,208 4,230 4,569 2,859 2,494 37 Commercial 16,269 9,464 4,754 3,726 3,633 3,836 2,369 2,092 38 Farm 0 0 0 0 0 0 0 0 39 Federal Deposit Insurance Corporation 0 0 14,112 12,696 11,407 9,169 7,821 6,730 40 One- to four-family 0 0 2,367 1,956 1,706 1,241 1,049 840 41 Multifamily 0 0 1,426 2,167 1,701 2,090 1,595 1,310 42 Commercial 0 0 10,319 8,573 8,000 5,838 5,177 4,580 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 112,283 137,584 166,642 172,343 175,377 177,200 178,059 177,615 45 One- to four-family 100,387 124,016 151,310 156,576 159,437 161,255 162,160 161,780 46 Multifamily 11,896 13,568 15,332 15,767 15,940 15,945 15,899 15,835 47 Federal Land Banks 28,767 28,664 28,460 28,181 28,475 28,538 28,555 28,065 48 One- to four-family 1,693 1,687 1,675 1,658 1,675 1,679 1,671 1,651 49 Farm 27,074 26,977 26,785 26,523 26,800 26,859 26,885 26,414 50 Federal Home Loan Mortgage Corporation 26,809 33,665 48,476 49,127 48,007 46,863 45,876 45,256 51 One- to four-family 24,125 31,032 45,929 46,571 45,427 44,208 43,046 42,122 52 Multifamily 2,684 2,633 2,547 2,556 2,580 2,655 2,830 3,134 53 Mortgage pools or trusts5 1,250,666 1,425,546 1,553,818 1,611,449 1,652,999 1,682,421 1,703,076 1,714,357 54 Government National Mortgage Association 425,295 419,516 414,066 423,446 435,709 444,976 450,934 454,401 55 One- to four-family 415,767 410,675 404,864 414,194 426,363 435,511 441,198 444,632 56 Multifamily 9,528 8,841 9,202 9,251 9,346 9,465 9,736 9,769 57 Federal Home Loan Mortgage Corporation 359,163 407,514 446,029 466,949 479,555 482,987 486,480 488,723 58 One- to four-family 351,906 401,525 441,494 462,779 475,733 479,539 483,354 485,643 59 Multifamily 7,257 5,989 4,535 4,170 3,822 3,448 3,126 3,080 60 Federal National Mortgage Association 371,984 444,979 495,525 507,376 514,855 523,512 530,343 533,262 61 One- to four-family 362,667 435,979 486,804 498,489 505,730 514,375 520,763 523,903 62 Multifamily 9,317 9,000 8,721 8,887 9,125 9,137 9,580 9,359 63 Farmers Home Administration4 47 38 28 26 22 20 19 14 64 One- to four-family 11 8 5 5 4 4 3 2 65 Multifamily 0 0 0 0 0 0 0 0 66 Commercial 19 17 13 12 10 9 9 7 67 Farm 17 13 10 9 8 7 7 5 68 Private mortgage conduits 94,177 153,499 198,171 213,653 222,858 230,926 235,300 237,957 69 One- to four-family 84,000 132,000 164,000 177,000 179,500 182,300 183,600 184,400 70 Multifamily 3,698 6,305 8,701 9,202 11,514 13,891 14,925 15,743 71 Commercial 6,479 15,194 25,469 27,451 31,844 34,735 36,774 37,814 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others6 562,616 575,237 579,341 571,739 568,970 576,450 583,370 593,715 74 One- to four-family 370,157 382,572 387,345 378,977 375,152 379,959 387,055 393,848 75 Multifamily 83,937 85,871 86,586 87,829 89,216 90,681 91,013 91,991 76 Commercial 93,541 91,524 91,401 91,020 91,393 93,130 92,929 95,406 77 14,981 15,270 14,009 13,912 13,209 12,681 12,373 12,470 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 1995r HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999922rr 11999933rr 11999944'' Dec.r Jan. Feb. Mar. Apr. May Seasonally adjusted 1 Total 730,847 790,351 902,853 902,853 914,260 918,968 933,717 945,314 956,822 7 257,436 280,566 317,237 317,237 319,408 321,175 323,502 325,231 328,417 3 258,081 286,588 334,511 334,511 340,450 345,630 352,741 359,641 366,276 4 Other 215,331 223,197 251,106 251,106 254,402 252,164 257,474 260,443 262,129 Not seasonally adjusted 5 748,057 809,440 925,000 925,000 922,788 917,652 927,260 936,979 948,345 By major holder 6 Commercial banks 330,088 367,566 427,851 427,851 425,941 423,144 442255,,220088 443311,,444444 443344,,334400 7 Finance companies 118,279 116,453 134,830 134,830 137,468 134,758 135,790 137,881 139,645 8 91,694 101,634 119,594 119,594 120,029 120,603 121,946 123,233 125,076 9 Savings institutions 37,049 37,855 38,468 38,468 38,153 37,835 37,519 37,499 37,500 10 Nonfinancial business 49,561 55,296 60,957 60,957 57,819 55,828 55,351 55,116 55,914 11 Pools of securitized assets 121,386 130,636 143,300 143,300 143,378 145,484 151,446 151,806 155,870 By major type of credit3 17 258,226 281,458 318,213 318,213 317,869 331199,,004422 332211,,559922 332222,,995555 332266,,996688 13 Commercial banks 109,623 122,000 141,851 141,851 141,546 141,801 141,857 142,014 142,421 14 Finance companies 57,259 56,057 61,609 61,609 62,321 61,067 61,256 62,434 63,687 15 Pools of securitized assets2 33,888 39,481 34,918 34,918 33,265 34,312 35,172 34,129 34,984 16 Revolving 271,850 301,837 352,266 352,266 347,641 345,354 348,411 354,998 361,453 17 Commercial banks 132,966 149,920 180,183 180,183 176,959 175,574 175,800 180,609 182,907 18 Nonfinancial business 44,466 50,125 55,341 55,341 52,299 50,405 49,959 49,773 50,595 19 Pools of securitized assets2 74,921 79,878 94,376 94,376 95,826 96,613 101,571 103,174 106,077 70 Other 217,981 226,145 254,521 254,521 257,278 253,256 257,257 259,026 259,924 71 Commercial banks 87,499 95,646 105,817 105,817 107,436 105,769 107,551 108,821 109,012 77, Finance companies 61,020 60,396 73,221 73,221 75,147 73,691 74,534 75,447 75,958 73 Nonfinancial business 5,095 5,171 5,616 5,616 5,520 5,423 5,392 5,343 5,319 24 Pools of securitized assets 12,577 11,277 14,006 14,006 14,287 14,559 14,703 14,503 14,809 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 1995 IItteemm 11999922 11999933 11999944 Nov. Dec. Jan. Feb. Mar. Apr. May INTEREST RATES Commercial banks2 1 48-month new car 9.29 8.09 8.12 8.75 n.a. n.a. 9.70 n.a. n.a. 9.78 2 24-month personal 14.04 13.47 13.19 13.59 n.a. n.a. 14.10 n.a. n.a. 14.03 Credit card plan 3 All accounts n.a. n.a. 15.69' 15.69r n.a. n.a. 16.14r n.a. n.a. 16.15 4 Accounts assessed interest n.a. n.a. 15.77r 15.77r n.a. n.a. 15.27r n.a. n.a. 16.23 Auto finance companies 5 New car 9.93 9.48 9.79 10.53 1100..7722 11.35 1111..8899 11.95 1111..7744 11.43 6 Used car 13.80 12.79 13.49 14.19 14.48 14.57 15.06 15.10 14.99 14.78 OTHER TERMS3 Maturity (months) 7 New car 54.0 54.5 54.0 54.6 53.9 53.9 54.1 54.5 54.6 54.4 8 Used car 47.9 48.8 50.2 50.3 50.3 52.0 52.0 52.1 52.2 52.2 Loan-to-value ratio 9 New car 89 91 92 93 92 92 92 92 92 92 10 Used car 97 98 99 100 100 99 99 99 100 99 Amount financed (dollars) 11 New car 13,584 14,332 15,375 15,971 16,187 16,068 15,774 15,826 16,029 16,155 12 Used car 9,119 9,875 10,709 11,202 11,309 11,185 11,181 11,220 11,505 11,396 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 Financial Statistics • September 1995 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1993 1994 1995 11999900 11999911 11999922 11999933 11999944 Q3 Q4 Q1 Q2 Q3 04 Ql Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors.... 635.6 475.8 536.1 622.1 595.0 613.8 659.6 634.7 530.2 580.8 634.4 816.0 By sector and instrument 2 U.S. government 246.9 278.2 304.0 256.1 155.9 173.4 274.2 210.5 122.9 135.0 155.0 271.8 3 Treasury securities 238.7 292.0 303.8 248.3 155.7 157.2 266.5 211.8 118.2 130.7 162.1 273.0 4 Budget agency issues and mortgages 8.2 -13.8 .2 7.8 .2 16.2 7.7 -1.3 4.7 4.3 -7.1 -1.2 5 Private 388.7 197.5 232.1 366.0 439.2 440.4 385.5 424.1 407.3 445.8 479.4 544.2 By instrument 6 Tax-exempt obligations 48.7 68.7 31.1 75.5 -34.1 65.2 27.3 2.6 -25.4 -63.2 -50.4 -65.6 7 Corporate bonds 47.1 78.8 67.5 75.2 22.0 72.0 67.4 35.4 35.9 14.2 2.7 41.4 8 Mortgages 199.5 161.4 123.9 155.7 186.5 222.1 148.5 162.8 170.4 221.2 191.6 213.0 9 Home mortgages 185.6 163.8 179.5 183.9 196.1 236.5 184.6 198.5 164.5 220.8 200.7 188.3 10 Multifamily residential 4.8 -3.1 -11.2 -6.0 1.4 -4.9 -2.3 -1.0 4.6 6.5 -4.3 2.6 11 Commercial 9.3 .4 -45.5 -22.6 -12.3 -9.9 -33.9 -34.9 -.9 -7.7 -5.8 21.5 12 Farm -.3 .4 1.1 .5 1.3 .4 .2 .3 2.3 1.7 1.0 .7 13 Consumer credit 16.0 -15.0 5.5 62.3 117.5 76.2 111.3 72.7 121.9 125.9 149.4 83.4 14 Bank loans n.e.c .4 -40.9 -13.8 5.0 74.0 7.8 28.5 65.8 55.5 86.8 88.0 156.7 15 Commercial paper 9.7 -18.4 8.6 10.0 21.4 17.2 3.8 8.2 16.4 33.8 27.2 1.1 16 Other loans 67.4 -37.1 9.2 -17.7 51.8 -20.2 -1.3 76.6 32.7 27.1 70.9 114.3 By borrowing sector 17 Household 218.9 170.9 217.7 284.5 351.6 368.5 337.7 310.3 307.3 381.9 407.0 304.7 18 Nonfinancial business 123.7 -35.9 -2.0 18.5 135.8 25.6 30.8 127.3 144.3 134.0 137.5 302.7 19 Farm 2.3 2.1 1.0 2.0 2.4 4.1 3.6 2.6 8.1 1.6 -2.8 -.5 20 Nonfarm noncorporate 10.1 -28.5 -43.9 -24.7 13.5 -23.2 -15.6 5.4 12.5 17.9 18.2 68.8 21 Corporate 111.3 -9.6 40.9 41.2 119.9 44.8 42.7 119.3 123.7 114.5 122.1 234.3 22 State and local government 46.0 62.6 16.4 63.0 -48.2 46.3 17.0 -13.4 -44.3 -70.2 -65.1 -63.1 23 Foreign net borrowing in United States 23.9 13.9 21.3 46.9 -9.8 83.1 22.9 -66.3 -10.1 8.3 29.0 55.7 24 Bonds 21.4 14.1 14.4 59.4 17.6 84.5 41.4 29.0 9.4 8.6 23.4 11.0 25 Bank loans n.e.c -2.9 3.1 2.3 .7 1.4 1.0 -6.3 6.0 -4.5 4.7 -.5 8.3 26 Commercial paper 12.3 6.4 5.2 -9.0 -27.3 -1.6 -12.0 -101.8 -5.2 -8.1 5.9 37.9 27 U.S. government and other loans -7.0 -9.8 -.6 -4.2 -1.5 -.8 -.1 .5 -9.8 3.2 .2 -1.5 28 Total domestic plus foreign 659.4 489.6 557.4 669.1 585.2 696.9 682.6 568.3 520.1 589.1 6633 871.7 Financial sectors 29 Total net borrowing by financial sectors 202.9 152.6 237.1 289.1 451.8 438.9 361.6 518.7 366.7 403.1 518.5 282.5 By instrument 30 U.S. government-related 167.4 145.7 155.8 164.2 284.3 287.3 143.3 336.8 254.7 243.1 302.4 125.4 31 Government-sponsored enterprises securities 17.1 9.2 40.3 80.6 176.9 167.8 53.4 160.0 146.6 152.1 249.0 62.9 32 Mortgage pool securities 150.3 136.6 115.6 83.6 112.1 119.5 89.9 196.0 108.1 91.0 53.4 62.5 33 Loans from U.S. government -.1 .0 .0 .0 -4.8 .0 .0 -19.2 .0 .0 .0 .0 34 35.5 6.8 81.3 124.9 167.5 151.6 218.4 182.0 112.0 160.0 216.1 157.1 35 Corporate bonds 46.3 67.6 78.5 118.2 105.6 143.4 138.1 156.3 91.4 86.9 87.9 115.2 36 Mortgages .6 .5 .6 3.6 9.8 6.2 5.5 9.8 12.4 12.0 4.9 5.1 37 Bank loans n.e.c 4.7 8.8 2.2 -14.0 -12.3 -16.1 -18.0 -9.9 -27.7 -11.9 .5 11.6 38 Open market paper 8.6 -32.0 -.7 -6.2 41.6 -9.4 76.0 36.6 3.6 42.3 84.0 48.9 39 Loans from Federal Home Loan Banks -24.7 -38.0 .8 23.3 22.8 27.4 16.8 -10.8 32.3 30.7 38.8 -23.6 By borrowing sector 40 Government-sponsored enterprises 17.0 9.1 40.2 80.6 172.1 167.8 53.4 140.8 146.6 152.1 249.0 62.9 41 Federally related mortgage pools 150.3 136.6 115.6 83.6 112.1 119.5 89.9 196.0 108.1 91.0 53.4 62.5 42 35.5 6.8 81.3 124.9 167.5 151.6 218.4 182.0 112.0 160.0 216.1 157.1 43 Commercial banks -.7 -11.7 8.8 5.6 10.0 6.5 1.2 2.0 12.4 22.8 2.9 9.6 44 Bank holding companies -27.7 -2.5 2.3 8.8 10.3 .5 12.2 3.5 10.1 11.5 16.0 9.5 45 Funding corporations 15.4 -6.5 13.2 2.9 24.2 7.9 36.7 48.8 -17.2 47.2 17.9 62.9 46 Savings institutions -30.2 -44.5 -6.7 11.1 12.8 13.5 8.8 -5.6 5.8 14.8 36.1 -21.7 47 Credit unions .0 .0 .0 .2 .2 .3 .1 .1 .2 .5 .2 -.3 48 Life insurance companies .0 .0 .0 .2 .3 -.1 .4 .0 .0 .0 1.3 .0 49 Finance companies 24.0 18.6 -3.6 .2 52.4 17.5 16.3 63.3 67.0 16.9 62.6 72.5 50 Mortgage companies .0 -2.4 8.0 -1.0 -11.5 -.8 -10.4 -21.6 -18.2 -7.0 1.0 2.0 51 Real estate investment trusts (REITs) .8 1.2 .3 3.4 13.7 6.0 6.1 14.5 15.3 18.8 6.3 6.9 52 Issuers of asset-backed securities (ABSs) 52.3 51.0 56.3 81.5 54.5 85.8 117.6 86.9 36.5 42.1 52.5 45.3 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 1995 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999900 11999911 11999922 11999933 11999944 Q3 Q4 Ql Q2 Q3 Q4 Ql 53 Total net borrowing, all sectors 862.3 642.2 794.5 958.2 1,037.0 1,135.8 1,044.2 1,087.1 886.8 992.2 1,181.9 1,154.2 54 U.S. government securities 414.4 424.0 459.8 420.3 444.9 460.7 417.5 566.5 377.6 378.1 457.4 397.2 55 Tax-exempt securities 48.7 68.7 31.1 75.5 -34.1 65.2 27.3 2.6 -25.4 -63.2 -50.4 -65.6 56 Corporate and foreign bonds 114.7 160.5 160.4 252.9 145.2 299.9 246.9 220.6 136.6 109.7 114.0 167.5 57 Mortgages 200.1 161.9 124.5 159.2 196.3 228.3 154.0 172.6 182.8 233.2 196.5 218.1 58 Consumer credit 16.0 -15.0 5.5 62.3 117.5 76.2 111.3 72.7 121.9 125.9 149.4 83.4 59 Bank loans n.e.c 2.2 -29.1 -9.4 -8.3 63.2 -7.3 4.2 61.9 23.3 79.5 88.0 176.6 60 Open market paper 30.7 -44.0 13.1 -5.1 35.7 6.3 67.7 -57.0 14.8 68.0 117.1 87.9 61 Other loans 35.6 -84.9 9.5 1.3 68.3 6.4 15.4 47.1 55.2 61.1 109.9 89.2 Funds raised through mutual funds and corporate equities 62 Total net share issues 19.7 215.4 296.0 440.1 169.1 513.0 430.1 344.4 213.1 162.9 -44.1 100.9 63 Mutual funds 65.3 151.5 211.9 320.0 138.3 363.9 287.7 236.2 144.0 165.4 7.7 113.9 64 Corporate equities -45.6 64.0 84.1 120.1 30.7 149.1 142.4 108.1 69.1 -2.5 -51.8 -13.0 65 Nonfinancial corporations -63.0 18.3 27.0 21.3 -40.9 32.3 21.5 -9.6 -2.0 -50.0 -102.0 -46.8 66 Financial corporations 10.0 15.1 26.4 38.2 28.6 38.2 40.9 48.3 24.4 23.7 17.9 15.9 67 Foreign shares purchased in United States 7.4 30.7 30.7 60.6 43.0 78.6 80.0 69.4 46.7 23.8 32.2 17.9 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables F.2 through F.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • September 1995 1.58 SUMMARY OF FINANCIAL TRANSACTIONS' Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1993 1994 1995 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999900 11999911 11999922 11999933 11999944 Q3 Q4 QL Q2 Q3 Q4 QL NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 862.3 642.2 794.5 958.2 1,037.0 1,135.8 1,044.2 1,087.1 886.8 992.2 1,181.9 1,154.2 2 Private domestic nonlinancial sectors 190.1 -7.5 72.0 -3.4 235.8 -52.8 85.8 295.0 299.1 109.5 239.7 -26.0 3 Households 157.2 -39.6 70.7 -19.7 319.4 -83.0 174.3 350.1 400.0 183.5 344.0 81.1 4 Nonfarm noncorporate business -1.7 -3.7 -1.1 -3.2 -2.0 -3.3 -3.5 -3.6 -1.8 -1.9 -.5 -.1 5 Nonlinancial corporate business -3.7 6.7 29.2 18.0 25.5 41.2 16.0 23.0 16.8 25.5 36.6 15.4 6 State and local governments 38.3 29.2 -26.8 1.5 -107.1 -7.7 -101.0 -74.4 -115.9 -97.6 -140.5 -122.3 7 U.S. government 33.7 10.5 -11.9 -18.4 -24.1 -15.4 -7.9 -46.5 -16.2 -9.4 -24.3 -19.2 8 Foreign 85.5 26.6 100.5 122.6 133.3 125.0 203.7 127.7 65.1 124.1 216.1 267.9 9 Financial sectors 553.0 612.5 633.9 857.3 692.0 1,079.0 762.5 710.9 538.8 768.0 750.4 931.5 10 Government sponsored enterprises 13.9 15.2 69.0 90.2 123.3 144.8 71.2 92.4 101.1 125.6 174.3 12.2 11 Federally related mortgage pools 150.3 136.6 115.6 83.6 112.1 119.5 89.9 196.0 108.1 91.0 53.4 62.5 12 Monetary authority 8.1 31.1 27.9 36.2 31.5 28.2 38.5 48.8 17.9 24.0 35.4 24.8 13 Commercial banking 125.1 80.8 95.3 142.2 162.0 146.7 188.1 184.7 109.1 191.3 163.0 337.1 14 U.S. commercial banks 94.9 35.7 69.5 149.6 148.1 160.3 197.3 120.6 128.4 164.6 178.7 177.2 15 Foreign banking offices 28.4 48.5 16.5 -9.8 11.2 -16.9 -6.5 59.0 -21.5 22.1 -15.0 157.8 16 Bank holding companies -2.8 -1.5 5.6 .0 .9 1.2 -4.8 3.1 .2 2.7 -2.4 .4 17 Banks in U.S. affiliated areas 4.5 -1.9 3.7 2.4 1.9 2.2 2.1 2.1 1.9 1.9 1.8 1.7 18 Funding corporations 16.1 15.8 23.5 18.1 13.8 32.4 42.6 19.5 33.5 25.1 -23.0 11.3 19 Thrift institutions -154.0 -123.5 -61.3 -1.7 35.2 21.0 -13.3 13.6 42.6 50.9 33.5 36.2 20 Life insurance companies 94.4 83.2 79.1 105.1 61.1 111.8 86.4 53.7 6.1 83.4 101.1 72.3 21 Other insurance companies 26.5 32.6 12.8 33.3 21.1 37.6 32.1 27.9 20.8 16.0 19.7 13.0 22 Private pension funds 17.2 85.7 37.3 40.2 -42.4 91.9 -60.1 -97.7 -30.7 -17.6 -23.6 97.6 23 State and local government retirement funds 34.9 46.0 34.4 25.5 60.8 27.4 36.9 72.9 69.3 26.3 74.6 67.4 24 Finance companies 29.0 -12.7 1.7 -9.0 68.2 9.4 22.6 72.1 49.8 58.9 91.8 95.7 25 Mortgage companies .0 11.2 .1 .0 -22.9 -1.6 -13.3 -43.5 -36.3 -14.0 2.1 4.0 26 Mutual funds 41.4 90.3 123.7 169.6 7.6 186.9 138.9 61.5 9.3 24.3 -64.7 -5.3 27 Closed-end funds .2 14.7 17.4 10.2 3.5 5.9 7.7 8.3 3.2 1.4 1.0 .8 28 Money market funds 80.9 30.1 1.3 14.6 28.5 25.3 56.9 -45.0 32.2 50.0 76.7 26.5 29 Real estate investment trusts (REITs) -.7 -.7 1.1 .6 4.7 1.0 .2 6.6 6.6 5.5 .2 2.5 30 Brokers and dealers 2.8 17.5 -6.9 9.2 -34.0 -7.8 -82.8 -55.7 -52.6 -19.3 -8.6 32.2 31 Asset-backed securities issuers (ABSs) 51.1 48.9 53.8 80.1 51.0 88.6 111.1 86.0 38.7 37.3 42.1 38.9 32 Bank personal trusts 15.9 10.0 8.0 9.5 7.1 9.9 8.9 8.9 10.2 7.7 1.4 1.6 RELATION OF LIABILITIES TO FINANCIAL ASSETS 33 Net flows through credit markets 862.3 642.2 794.5 958.2 1,037.0 1,135.8 1,044.2 1,087.1 886.8 992.2 1,181.9 1,154.2 Other financial sources 34 Official foreign exchange 2.0 -5.9 -1.6 .8 -5.8 1.7 2.2 -.2 -14.6 .2 -8.6 27.7 35 Special drawing rights certificates 1.5 .0 -2.0 .0 .0 .0 .0 .0 .0 .0 .0 .0 36 Treasury currency 1.0 .0 .2 .4 .7 .4 .7 .7 .6 .8 .7 .7 37 Life insurance reserves 25.7 25.7 27.3 35.2 20.1 36.6 35.5 20.0 8.1 23.8 28.7 25.4 38 Pension fund reserves 165.1 360.3 249.7 309.2 96.1 349.9 251.6 -.7 90.1 147.9 147.1 323.0 39 Interbank claims 35.4 -3.9 61.7 44.6 94.0 -5.0 -14.0 156.0 180.5 -22.1 61.5 23.1 40 Checkable deposits and currency 43.3 86.4 113.8 117.3 -10.1 73.1 81.9 173.1 -66.1 -89.2 -58.0 118.0 41 Small time and savings deposits 63.7 1.5 -57.2 -70.3 -40.5 -68.1 -36.6 2.5 -62.4 -57.2 -44.9 52.8 42 Large time deposits -66.1 -58.5 -73.2 -23.5 19.0 -59.5 13.7 -39.6 -4.4 81.2 39.0 94.3 43 Money market fund shares 70.3 41.2 3.9 19.2 45.4 .6 61.1 -35.1 68.5 49.9 98.4 -7.3 44 Security repurchase agreements -24.2 -16.5 35.5 65.5 84.3 67.8 -14.4 23.0 176.4 82.9 54.8 159.6 45 Foreign deposits 38.2 -16.7 -7.2 -11.7 30.1 -50.7 32.8 16.0 16.9 23.2 64.3 5.0 46 Mutual fund shares 65.3 151.5 211.9 320.0 138.3 363.9 287.7 236.2 144.0 165.4 7.7 113.9 47 Corporate equities -45.6 64.0 84.1 120.1 30.7 149.1 142.4 108.1 69.1 -2.5 -51.8 -13.0 48 Security credit 3.5 51.4 4.2 61.9 -2.3 76.6 86.5 29.9 -17.7 -62.3 40.9 -33.4 49 Trade debt 37.0 3.6 41.5 49.0 92.2 49.6 51.9 35.3 96.3 116.0 121.3 118.2 50 Taxes payable -4.8 -6.2 8.5 4.6 3.4 -1.8 4.9 14.9 -12.7 5.9 5.5 18.9 51 Noncorporate proprietors' equity -28.3 -3.3 18.4 -11.6 -27.4 3.4 -27.2 -43.1 -24.1 -15.5 -26.9 -45.8 52 Investment in bank personal trusts 29.7 16.1 -7.1 1.6 18.8 .1 17.6 15.0 24.7 23.6 11.9 21.0 53 Miscellaneous 135.7 197.2 257.6 290.4 260.9 221.4 344.7 377.4 262.6 299.1 104.7 301.0 54 Total financial sources. 1,410.6 1,530.2 1,764.5 2,280.9 1,885.1 2,345.2 2,367.2 2,176.6 1,822.6 1,763.2 1,778.1 2,457.2 Floats not included in assets (-) 55 U.S. government checkable deposits 3.3 -13.1 .7 -1.5 -4.8 2.1 -15.5 -2.4 -1.4 15.2 -30.7 18.8 56 Other checkable deposits 8.5 4.5 1.6 -1.3 -2.8 -5.2 -6.2 .6 -1.1 -6.2 -4.3 -5.0 57 Trade credit 9.1 9.7 4.1 16.5 5.3 22.2 12.5 -26.9 16.2 29.0 2.8 9.1 Liabilities not identified as assets (—) 58 Treasury currency .2 -.6 -.2 -.2 -.2 -.2 -.2 -.2 -.2 -.2 -.2 -.2 59 Interbank claims 1.6 26.2 -4.9 4.2 -2.7 -10.4 24.0 -29.1 5.3 11.3 1.5 -3.5 60 Security repurchase agreements -24.0 6.2 27.9 82.5 50.1 66.6 23.1 12.2 118.7 66.3 3.0 74.1 61 Taxes payable .1 1.3 14.0 1.0 -1.6 1.2 -8.6 .4 3.1 -1.4 -8.7 -23.5 62 Miscellaneous -35.4 -45.3 -46.0 -49.1 2.5 -19.6 15.4 3.2 -197.4 157.6 46.6 -191.7 63 Total identified to sectors as assets 1,447.2 1,541.2 1,767.2 2,228.8 1,839.5 2,288.6 2,322.7 2,218.9 1,879.3 1,491.7 1,768.1 2,579.2 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 E7. 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 1995 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999911 11999922 11999933 11999944 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 11,181.5 11,720.7 12,370.7 12,965.6 12,1533 12,370.7 12,488.9 12,629.9 12,7673 12,965.6 13,128.5 By sector and instrument 2 U.S. government 2,776.4 3,080.3 3,336.5 3,492.3 3,247.3 3,336.5 3,387.7 3,395.4 3,432.6 3,492.3 3,557.9 3 Treasury securities 2,757.8 3,061.6 3,309.9 3,465.6 3,222.6 3,309.9 3,361.4 3,368.0 3,404.1 3,465.6 3,531.5 4 Budget agency issues and mortgages 18.6 18.8 26.6 26.7 24.7 26.6 26.3 27.4 28.5 26.7 26.4 5 Private 8,405.1 8,640.4 9,034.2 9,473.3 8,906.0 9,034.2 9,101.2 9,234.4 9,334.6 9,473.3 9,570.5 By instrument Tax-exempt obligations 1,108.6 1,139.7 1,215.2 1,181.1 1,207.4 1,215.2 1,214.6 1,218.0 1,192.9 1,181.1 1,163.4 7 Corporate bonds 1,086.9 1,154.4 1,229.6 1,251.7 1,212.8 1,229.6 1,238.5 1,247.4 1,251.0 1,251.7 1,262.0 8 Mortgages 3,920.0 4,043.9 4,220.6 4,407.2 4,166.6 4,220.6 4,247.4 4,300.5 4,356.8 4,407.2 4,447.0 9 Home mortgages 2,780.0 2,959.6 3,149.6 3,345.8 3,098.3 3,149.6 3,185.3 3,236.9 3,293.2 3,345.8 3,379.4 10 Multifamily residential 304.8 293.6 289.0 290.4 288.2 289.0 288.8 289.9 291.5 290.4 291.1 11 Commercial 755.8 710.3 700.8 688.5 699.0 700.8 692.1 691.8 689.9 688.5 693.8 1? Farm 79.3 80.4 81.2 82.5 81.1 81.2 81.3 81.8 82.3 82.5 82.7 n Consumer credit 797.4 803.0 866.5 984.0 824.3 866.5 863.6 895.3 931.8 984.0 983.8 14 Bank loans n.e.c 686.0 672.1 677.2 751.1 665.6 677.2 686.7 706.2 724.5 751.1 783.9 15 Commercial paper 98.5 107.1 117.8 139.2 123.2 117.8 129.9 135.7 138.7 139.2 149.8 16 Other loans 707.8 720.2 707.2 759.0 706.0 707.2 720.4 731.3 738.9 759.0 780.7 By borrowing sector 17 Household 3,784.7 4,002.3 4,294.3 4,645.6 4,190.9 4,294.3 4,335.5 4,426.7 4,527.4 4,645.6 4,686.6 18 Nonfinancial business 3,709.3 3,710.5 3,749.3 3,885.4 3,729.7 3,749.3 3,779.7 3,823.1 3,849.5 3,885.4 3,958.7 19 Farm 135.0 136.0 138.3 140.7 138.7 138.3 136.6 141.3 142.8 140.7 138.2 70 Nonfarm noncorporate 1,116.4 1,074.1 1,050.3 1,063.8 1,053.4 1,050.3 1,050.9 1,054.6 1,058.4 1,063.8 1,080.2 7.1 Corporate 2,458.0 2,500.4 2,560.7 2,680.8 2,537.5 2,560.7 2,592.2 2,627.2 2,648.3 2,680.8 2,740.3 22 State and local government 911.1 927.5 990.6 942.3 985.4 990.6 986.0 984.6 957.8 942.3 925.3 ?3 Foreign credit market debt held in United States 298.8 310.9 357.8 348.1 351.3 357.8 340.3 339.2 339.8 348.1 361.1 74 Bonds 129.5 143.9 203.4 220.9 193.0 203.4 210.6 212.9 215.1 220.9 223.7 ?5 Bank loans n.e.c 21.6 23.9 24.6 26.1 26.2 24.6 26.2 25.1 26.3 26.1 28.2 76 Commercial paper 81.8 77.7 68.7 41.4 71.7 68.7 43.3 42.0 39.9 41.4 50.9 27 U.S. government and other loans 65.9 65.3 61.1 59.6 60.3 61.1 60.3 59.2 58.6 59.6 58.3 7.8 Total credit market debt owed by nonfinancial sectors, domestic and foreign 11,480.3 12,031.6 12,728.5 13,313.7 12,504.5 12,728.5 12,8293 12,969.0 13,107.1 13313.7 13,489.5 Financial sectors 79 Total credit market debt owed by financial sectors 2,752.1 3,004.7 3,300.2 3,757.3 3,204.7 3300.2 3,425.7 3323.9 3,622.8 3,7573 3,818.4 By instrument TO U.S. government-related 1,564.2 1,720.0 1,884.1 2,168.4 1,845.2 1,884.1 1,961.5 2,030.5 2,089.8 2,168.4 2,192.7 31 Government-sponsored enterprises securities 402.9 443.1 523.7 700.6 510.3 523.7 563.7 600.3 638.3 700.6 716.3 32 Mortgage pool securities 1,156.5 1,272.0 1,355.6 1,467.8 1,330.1 1,355.6 1,397.8 1,430.1 1,451.5 1,467.8 1,476.4 33 Loans from U.S. government 4.8 4.8 4.8 .0 4.8 4.8 .0 .0 .0 .0 .0 34 Private 1,187.9 1,284.8 1,416.1 1,588.9 1,359.5 1,416.1 1,464.3 1,493.4 1,532.9 1,588.9 1,625.7 35 Corporate bonds 640.0 724.8 844.0 947.2 810.5 844.0 881.2 904.8 926.3 947.2 976.6 36 Mortgages 4.8 5.4 8.9 18.7 7.6 8.9 11.4 14.5 17.5 18.7 20.0 37 Bank loans n.e.c 78.4 80.5 66.5 54.3 69.2 66.5 62.4 55.3 52.4 54.3 55.5 38 Open market paper 385.7 394.3 393.5 442.8 373.2 393.5 408.8 410.3 420.5 442.8 453.6 39 Loans from Federal Home Loan Banks 79.1 79.9 103.1 125.9 98.9 103.1 100.4 108.5 116.2 125.9 120.0 By borrowing sector 40 Government-sponsored enterprises 407.7 447.9 528.5 700.6 515.1 528.5 563.7 600.3 663388..33 770000..66 716.3 41 Federally related mortgage pools 1,156.5 1,272.0 1,355.6 1,467.8 1,330.1 1,355.6 1,397.8 1,430.1 1,451.5 1,467.8 1,476.4 4? Private financial sectors 1,187.9 1,284.8 1,416.1 1,588.9 1,359.5 1,416.1 1,464.3 1,493.4 1,532.9 1,588.9 1,625.7 43 Commercial banks 65.0 73.8 79.5 89.5 77.9 79.5 78.4 82.1 87.5 89.5 90.4 44 Bank holding companies 112.3 114.6 123.4 133.6 120.3 123.4 124.2 126.8 129.6 133.6 136.0 45 Funding coiporations 139.1 161.6 169.9 199.3 166.3 169.9 190.7 191.5 200.6 199.3 218.7 46 Savings institutions 94.6 87.8 99.0 111.7 96.8 99.0 97.6 99.0 102.7 111.7 106.3 47 Credit unions .0 .0 .2 .5 .2 .2 .3 .3 .4 .5 .4 48 Life insurance companies .0 .0 .2 .6 .1 .2 .3 .3 .3 .6 .6 49 Finance companies 393.0 389.4 390.5 443.0 380.0 390.5 401.9 414.2 420.9 443.0 456.4 50 Mortgage companies 22.2 30.2 29.2 17.8 31.8 29.2 23.8 19.3 17.5 17.8 18.3 51 Real estate investment trusts (REITs) 13.6 13.9 17.4 31.1 15.8 17.4 21.0 24.8 29.5 31.1 32.8 52 Issuers of asset-backed securities (ABSs) 329.1 391.7 473.2 527.6 443.8 473.2 494.9 504.0 514.5 527.6 539.0 All sectors 53 Total credit market debt, domestic and foreign.... 14,2323 15,036.3 16,028.7 17,071.0 15,709.2 16,028.7 16,255.0 16,492.9 16,729.9 17,071.0 17307.9 54 U.S. government securities 4,335.7 4,795.5 5,215.8 5,660.7 5,087.7 5,215.8 5,349.2 5,425.9 5,522.5 5,660.7 5,750.6 55 Tax-exempt securities 1,108.6 1,139.7 1,215.2 1,181.1 1,207.4 1,215.2 1,214.6 1,218.0 1,192.9 1,181.1 1,163.4 56 CCoorrppoorraattee aanndd ffoorreeiiggnn bboonnddss 1,856.5 2,023.1 2,277.0 2,419.8 2,216.3 2,277.0 2,330.3 2,365.2 2,392.4 2,419.8 2,462.2 57 3,924.8 4,049.3 4,229.6 4,425.9 4,174.2 4,229.6 4,258.8 4,315.0 4,374.4 4,425.9 4,467.0 58 Consumer credit 797.4 803.0 866.5 984.0 824.3 866.5 863.6 895.3 931.8 984.0 983.8 59 Bank loans n.e.c 785.9 776.6 768.4 831.5 761.0 768.4 775.4 786.6 803.2 831.5 867.7 60 Open market paper 565.9 579.0 580.0 623.5 568.2 580.0 582.0 587.9 599.2 623.5 654.2 61 Other loans 857.5 870.2 876.2 944.5 870.1 876.2 881.1 899.0 913.7 944.5 959.0 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables L.2 through L.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • September 1995 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 1993 1994 1995 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999911 11999922 11999933 11999944 Q3 Q4 Ql Q2 Q3 Q4 Ql CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 14,232.3 15,036.3 16,028.7 17,071.0 15,709.2 16,028.7 16,255.0 16,492.9 16,729.9 17,071.0 17,307.9 2 Private domestic nonfinancial sectors 2,240.2 2,318.0 2,330.7 2,571.8 2,276.8 2,330.7 2,378.0 2,448.6 2,475.3 2,571.8 2,533.0 3 Households 1,446.5 1,523.1 1,517.8 1,873.0 1,451.6 1,517.8 1,619.7 1,710.0 1,760.2 1,873.0 1,872.4 4 Nonfarm noncorporate business 44.1 42.9 39.7 37.7 40.6 39.7 38.8 38.4 37.9 37.7 37.7 5 Nonfinancial corporate business 196.2 225.4 248.1 273.5 234.7 248.1 244.0 251.1 255.0 273.5 266.7 6 State and local governments 553.3 526.5 525.2 387.5 549.9 525.2 475.5 449.2 422.3 387.5 356.2 7 U.S. government 246.9 235.0 230.7 206.6 218.8 230.7 219.0 215.4 212.6 206.6 201.7 8 Foreign 958.1 1,052.7 1,171.3 1,304.6 1,118.6 1,171.3 1,203.0 1,218.6 1,252.5 1,304.6 1,370.7 9 Financial sectors 10,787.2 11,430.6 12,296.0 12,988.0 12,095.0 12,296.0 12,455.0 12,610.3 12,789.4 12,988.0 13,202.5 10 Government-sponsored enterprises 390.7 459.7 549.8 673.2 531.8 549.8 572.0 597.9 629.4 673.2 675.3 11 Federally related mortgage pools 1,156.5 1,272.0 1,355.6 1,467.8 1,330.1 1,355.6 1,397.8 1,430.1 1,451.5 1,467.8 1,476.4 12 Monetary authority 272.5 300.4 336.7 368.2 324.2 336.7 341.5 351.6 356.8 368.2 367.1 13 Commercial banking 2,853.3 2,948.6 3,090.8 3,252.8 3,036.4 3,090.8 3,120.2 3,156.2 3,204.2 3,252.8 3,320.5 14 U.S. commercial banks 2,502.5 2,571.9 2,721.5 2,869.6 2,670.2 2,721.5 2,743.8 2,780.3 2,822.4 2,869.6 2,906.4 15 Foreign banking offices 319.2 335.8 326.0 337.1 322.3 326.0 331.8 330.8 335.5 337.1 367.4 16 Bank holding companies 11.9 17.5 17.5 18.4 18.7 17.5 18.2 18.3 19.0 18.4 18.5 17 Banks in U.S. affiliated areas 19.7 23.4 25.8 27.8 25.3 25.8 26.4 26.8 27.3 27.8 28.2 18 Funding corporations 51.5 75.0 93.1 106.9 82.4 93.1 97.9 106.3 112.6 106.9 109.7 19 Thrift institutions 1,192.6 1,134.5 1,132.7 1,167.9 1,136.5 1,132.7 1,134.2 1,146.1 1,159.9 1,167.9 1,175.1 20 Life insurance companies 1,199.6 1,278.8 1,383.9 1,445.0 1,372.1 1,383.9 1,404.2 1,409.1 1,430.3 1,445.0 1,470.4 21 Other insurance companies 376.6 389.4 422.7 443.8 414.6 422.7 429.6 434.8 438.8 443.8 447.0 22 Private pension funds 693.0 730.4 770.6 728.2 785.6 770.6 746.2 738.5 734.1 728.2 752.6 23 State and local government retirement funds 479.9 514.3 542.6 603.3 533.4 542.6 560.8 578.1 584.7 603.3 620.2 24 Finance companies 484.9 486.6 482.8 551.0 474.0 482.8 494.5 511.3 524.1 551.0 568.5 25 Mortgage companies 60.3 60.5 60.4 37.5 63.8 60.4 49.5 40.4 37.0 37.5 38.5 26 Mutual funds 450.5 574.2 743.8 751.4 709.0 743.8 759.2 761.5 767.5 751.4 750.1 27 Closed-end funds 50.3 67.7 77.9 81.4 76.0 77.9 80.0 80.8 81.1 81.4 81.6 28 Money market funds 402.7 404.1 418.7 447.1 400.6 418.7 422.0 421.4 423.4 447.1 468.1 29 Real estate investment trusts (REITs) 7.0 8.1 8.6 13.3 8.6 8.6 10.3 11.9 13.3 13.3 13.9 30 Brokers and dealers 124.0 117.1 126.3 92.3 147.1 126.3 112.4 99.3 94.5 92.3 100.4 31 Asset-backed securities issuers (ABSs) 317.8 377.9 458.0 509.0 430.2 458.0 479.5 489.2 498.5 509.0 518.8 32 Bank personal trusts 223.5 231.5 240.9 248.0 238.7 240.9 243.2 245.7 247.7 248.0 248.4 RELATION OF LIABILITIES TO FINANCIAL ASSETS 33 Total credit market debt 14,232.3 15,036.3 16,028.7 17,071.0 15,709.2 16,028.7 16,255.0 16,492.9 16,729.9 17,071.0 17,307.9 Other liabilities 34 Official foreign exchange 55.4 51.8 53.4 53.2 55.6 53.4 56.4 54.9 55.5 53.2 64.1 35 Special drawing rights certificates 10.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 36 Treasury currency 16.3 16.5 17.0 17.6 16.8 17.0 17.1 17.3 17.5 17.6 17.8 37 Life insurance reserves 405.7 433.0 468.2 488.4 459.4 468.2 473.2 475.2 481.2 488.4 494.7 38 Pension fund reserves 4,138.3 4,516.5 4,974.7 5,009.5 4,887.8 4,974.7 4,894.5 4,893.5 5,006.5 5,009.5 5,228.1 39 Interbank claims 96.4 132.8 177.7 272.6 166.9 177.7 205.4 223.9 244.6 272.6 267.5 40 Deposits at financial institutions 5,044.8 5,059.1 5,155.5 5,283.8 5,088.5 5,155.5 5,163.7 5,186.2 5,211.9 5,283.8 5,361.2 41 Checkable deposits and currency 1,020.6 1,134.4 1,251.7 1,241.6 1,181.9 1,251.7 1,220.5 1,229.7 1,204.9 1,241.6 1,193.6 42 Small time and savings deposits 2,350.7 2,293.5 2,223.2 2,182.7 2,236.6 2,223.2 2,233.8 2,214.1 2,198.7 2,182.7 2,206.3 43 Large time deposits 488.4 415.2 391.7 410.7 389.4 391.7 382.6 379.0 402.2 410.7 435.0 44 Money market fund shares 539.6 543.6 562.7 608.2 547.9 562.7 579.7 573.9 583.5 608.2 632.9 45 Security repurchase agreements 355.8 392.3 457.8 542.1 472.5 457.8 474.9 512.9 540.2 542.1 593.6 46 Foreign deposits 289.6 280.1 268.4 298.5 260.2 268.4 272.4 276.6 282.4 298.5 299.7 47 Mutual fund shares 813.9 1,042.1 1,446.3 1,563.9 1,351.7 1,446.3 1,484.8 1,507.8 1,588.6 1,563.9 1,656.4 48 Security credit 188.9 217.3 279.3 277.0 254.5 279.3 282.8 278.0 263.2 277.0 264.2 49 Trade debt 935.9 977.4 1,026.4 1,118.6 1,009.6 1,026.4 1,023.6 1,047.9 1,084.7 1,118.6 1,136.2 50 Taxes payable 71.2 79.6 84.2 87.6 82.8 84.2 89.1 82.3 86.1 87.6 93.4 51 Investment in bank personal trusts 608.3 629.6 660.9 670.0 651.2 660.9 655.2 650.1 671.5 670.0 707.2 52 Miscellaneous 2,992.2 3,160.2 3,403.0 3,717.2 3,314.6 3,403.0 3,515.9 3,573.5 3,668.4 3,717.2 3,714.7 53 Total UabiUties 29,609.6 31,360.1 33,783.1 35,638.3 33,056.5 33,783.1 34,124.7 34,491.7 35,117.5 35,6383 36,321.3 Financial assets not included in liabilities (+) 54 Gold and special drawing rights 22.3 19.6 20.1 21.1 20.3 20.1 20.4 20.8 21.0 21.1 22.7 55 Corporate equities 4,863.6 5,462.9 6,186.5 6,048.8 5,941.7 6,186.5 6,052.2 5,877.7 6,135.1 6,048.8 6,573.6 56 Household equity in noncorporate business 2,444.4 2,411.5 2,420.5 2,510.7 2,446.1 2,420.5 2,471.4 2,500.1 2,524.4 2,510.7 2,474.6 Floats not included in assets (-) 57 U.S. government checkable deposits 3.8 6.8 5.6 3.4 2.2 5.6 .3 .9 1.2 3.4 4.2 58 Other checkable deposits 40.4 42.0 40.7 38.0 33.7 40.7 36.3 38.7 30.6 38.0 32.3 59 Trade credit -129.3 -124.6 -101.7 -96.4 -130.4 -101.7 -120.9 -128.3 -121.4 -96.4 -108.5 Liabilities not identified as assets (-) 60 Treasury currency -4.8 -4.9 -5.1 -5.4 -5.1 -5.1 -5.2 -5.2 -5.3 -5.4 -5.4 61 Interbank claims -4.2 -9.3 -4.7 -6.5 -7.8 -4.7 -7.7 -7.4 -3.5 -6.5 -2.8 62 Security repurchase agreements 9.2 38.1 120.6 170.8 132.6 120.6 135.7 162.7 189.4 170.8 201.6 63 Taxes payable 17.8 25.2 26.2 24.6 24.3 26.2 15.4 21.6 21.7 24.6 6.4 64 Miscellaneous -330.7 -398.4 -484.8 -469.6 -480.0 -484.8 -453.1 -442.7 -449.9 -469.6 -559.7 65 Total identified to sectors as assets 37,337.6 39,679.1 42,813.4 44,560.0 41,895.2 42,813.4 43,068.0 43,250.0 44,135.2 44,560.0 45,824.1 1. Data in this table also appear in the Board's Z.1 (780) quarterly statistical release, 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 1995r Oct. Nov. Apr. 1 Industrial production1 Market groupings 2 Products, total 106.5 110.7 115.9 116.9 117.5 118.7 119.1 119.1 118.9 117.8 3 Final, total 109.0 113.4 118.4 119.2 119.8 121.2 121.6 121.8 121.6 120.6 4 Consumer goods 105.9 109.4 113.2 113.0 113.9 115.5 115.7 115.7 114.9 113.9 5 Equipment 113.4 119.3 126.5 128.8 128.9 130.1 130.9 131.2 132.0 131.2 6 Intermediate 98.8 102.4 108.1 109.9 110.6 110.9 111.3 110.9 110.7 109.3 7 Materials 109.2 114.1 121.5 123.4 124.6 126.3 126.5 126.7 126.7 126.1 Industry groupings 112.9 119.7 122.6 123.2 8 Manufacturing 80.9 83.4 83.8 84.4 85.2 85.2 83.4 9 Capacity utilization, manufacturing (percent)' 97.3r 105.lr 114.1' 115.0r 116^ 108.0r HO.O1 113.0 114.0 104.0 10 Construction contracts3 106.5 108.4 111.3 112.7 113.2 113.4 113.6 113.9 114.1 114.1 11 Nonagricultural employment, total4 94.2 94.3 95.6 97.6 98.0 98.2 98.5 98.6 98.8 98.6 12 Goods-producing, total 95.3 94.8 95.1 96.8 97.1 97.2 97.4 97.5 97.5 97.4 13 Manufacturing, total 94.9 94.9 96.1 98.1 98.5 98.7 98.9 99.1 99.1 99.0 14 Manufacturing, production workers 110.5 112.9 116.3 117.6 118.1 118.3 118.4 118.8 119.0 119.0 15 Service-producing 135.6 141.4 150.0 153.7 153.7 154.7 156.0 156.8 157.6 157.8 16 Personal income, total 131.6 136.2 145.0 148.2 148.1 149.0 150.0 150.7 150.9 151.7 17 Wages and salary disbursements 118.0 120.0 126.0 128.8 127.9 128.6 129.0 131.0 130.6 129.0 18 Manufacturing 137.0 142.5 150.8 154.8 154.7 155.8 156.8 157.6 158.4 157.0 19 Disposable personal income 126.4 134.7 145.2 149.3 149.8 150.0 150.7 149.6 150.6 150.5 20 Retail sales5 Prices6 21 Consumer (1982-84=100) 140.3 144.5 148.2 149.5 149.7 149.7 150.3 150.9 151.4 151.9 22 Producer finished goods (1982=100) 123.2 124.7 125.5 125.8 126.1 126.2 126.6 126.9 126.9 127.6 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. 5. Based on data from U.S. Department of Commerce, Survey of Current Business. For the ordering address, see die inside front cover. The latest historical revision of the 6. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the industrial production index and the capacity utilization rates was released in November price indexes can be obtained from the U.S. Department of Labor, Bureau of Labor 1994. See "Industrial Production and Capacity Utilization: A Revision," Federal Reserve Statistics, Monthly Labor Review. Bulletin, vol. 81 (January 1995), pp. 16-26. For a detailed description of the industrial NOTE. Basic data (not indexes) for series mentioned in notes 4 and 5, and indexes for production index, see "Industrial Production: 1989 Developments and Historical Revi- series mentioned in notes 3 and 6, can also be found in the Survey of Current Business. sion," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. Figures for industrial production for the latest month are preliminary, and many figures 2. Ratio of index of production to index of capacity. Based on data from the Federal for the three months preceding the latest month have been revised. See "Recent Develop- Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other sources. ments in Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 3. Index of dollar value of total construction contracts, including residential, nonresi- 1990), pp. 411-35. See al^> "Industrial Production Capacity and Capacity Utilization dential, and heavy engineering, from McGraw-Hill Information Systems Company, F.W. since 1987," Federal Reserve Bulletin, vol. 79 (June 1993), pp. 590-605. Dodge Division. 4. Based on data from U.S. Department of Labor, Employment and Earnings. Series covers employees only, excluding personnel in the armed forces. 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data seasonally adjusted except as noted 1994 1995 CCaatteeggoorryy 11999922 11999933 11999944 Nov. Dec. Jan. Feb. Mar. Apr/ Mayr June HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 126,982 128,040 131,056 131,718 131,725 132,136 132,308 132,511 132,737 131,811 131,869 7 Nonagricultural industries3 114,391 116,232 119,651 120,903 121,038 121,064 121,469 121,576 121,478 120,962 121,034 3 Agriculture 3,207 3,074 3,409 3,500 3,532 3,575 3,656 3,698 3,594 3,357 3,451 Unemployment 4 Number 9,384 8,734 7,996 7,315 7,155 7,498 7,183 7,237 7,665 77,,449922 77,,338844 5 Rate (percent of civilian labor force) 7.4 6.8 6.1 5.6 5.4 5.7 5.4 5.5 5.8 5.7 5.6 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 108,604 110,525 113,423 115,427 115,624 115,810 116,123 116,302 116,310 116,264 116,479 7 Manufacturing 18,104 18,003 18,064 18,439 18,472 18,502 18,523 18,525 18,506 18,461 18,421 8 Mining 635 611 604 592 592 590 588 589 583 582 583 9 Contract construction 4,492 4,642 4,916 5,144 5,166 5,201 5,213 5,256 5,242 5,191 5,233 10 Transportation and public utilities 5,721 5,787 5,842 6,092 6,121 6,129 6,156 6,175 6,184 6,177 6,195 11 Trade 25,354 25,675 26,362 26,913 26,988 27,011 27,069 27,047 27,062 27,046 27,083 1? 6,602 6,712 6,789 6,937 6,931 6,927 6,929 6,938 6,924 6,926 6,934 13 29,052 30,278 31,805 32,035 32,135 32,228 32,404 32,524 32,548 32,632 32,746 14 Government 18,653 18,817 19,041 19,275 19,219 19,222 19,241 19,248 19,261 19,249 19,284 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 • September 1995 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1994 1995 1994 1995 1994 1995 Q3 Q4 Qlr Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ql Q2 Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (percent)2 1 Total industry 118.8 120.5 122.0 121.0 140.9 141.9 143.1 144.5 84.3 84.9 85.2 83.8 2 Manufacturing 120.5 122.7 124.3 123.1 144.2 145.3 146.6 148.2 83.6 84.5 84.7 83.1 3 Primary processing3 115.9 118.4 119.3 117.2 131.6 132.3 133.2 134.2 88.1 89.5 89.5r 87.4 4 Advanced processing4 122.7 124.8 126.6 125.8 150.0 151.3 152.9 154.7 81.8 82.5 82.8 81.3 5 Durable goods 126.5 129.4 131.6 130.3 151.6 153.1 154.9 157.1 83.4 84.6 84.9 83.0 6 Lumber and products 106.6 107.9 107.6 104.1 116.0 116.5 117.1 118.0 91.9 92.7 91.9 88.3 7 Primary metals 114.1 119.4 120.4 117.3 125.2 125.4 126.7 127.5 91.1 95.2 95.0 92.0 8 Iron and steel 115.8 123.3 125.4 121.8 128.4 128.8 130.9 131.7 90.2 95.8 95.9 92.5 9 Nonferrous 111.4 113.9 113.7 111.3 120.5 120.5 120.9 121.6 92.4 94.5 94. lr 91.5 10 Industrial machinery and equipment 162.6 167.5 171.5 173.0 181.6 184.1 187.8 192.6 89.6 91.0 91.3 89.8 11 Electrical machinery 163.5 169.4 174.0 177.3 184.1 188.5 193.8 199.9 88.8 89.9 89.8 88.7 12 Motor vehicles and parts 135.0 141.5 145.9 135.8 160.3 162.2 164.2 166.5 84.2 87.2 88.8 81.5 13 Aerospace and miscellaneous transportation equipment ... 82.1 80.8 81.5 81.6 129.4 129.1 128.8 128.5 63.5 62.6 63.3r 63.5 14 Nondurable goods 113.8 115.3 116.1 115.0 135.5 136.3 137.1 138.0 84.0 84.6 84.7 83.3 15 Textile mill products 108.9 111.6 111.8 109.3 121.4 122.0 122.7 123.5 89.7 91.4 91.lr 88.5 16 Paper and products 118.5 120.6 120.3 118.8 127.1 127.7 128.4 129.3 93.2 94.4 93.6 91.9 17 Chemicals and products 124.4 126.0 129.7 128.1 153.3 154.7 156.2 157.6 81.1 81.4 83.1 81.3 18 Plastics materials 126.9 130.2 134.3 130.8 131.6 132.6 97.0 98.9 101.3 19 Petroleum products 104.9 106.5 107.8 106.4 115.2 115.1 115.1 115.3 91.1 92.5 93.7 92.3 20 Mining 100.1 99.2 100.3 100.9 111.5 111.4 111.4 111.4 89.8 89.0 90.0r 90.6 21 Utilities 118.1 116.3 118.2 118.5 135.4 135.8 136.3 136.8 87.2 85.6 86.8 86.7 22 Electric 118.2 117.3 118.5 118.7 133.1 133.6 134.1 134.7 88.8 87.8 88.4 88.1 1973 1975 Previous cycle5 Latest cycle6 1994 1995 High Low High Low High Low June Jan. Feb. Mar.r Apr.r May Junep Capacity utilization rate (percent' 2 1 Total industry 89.2 72.$ 87.3 71.8 84.9 78.0 84.1 85.5 85.3 84.9 84.1 83.7 83.5 2 Manufacturing 88.9 70.8 87.3 70.0 85.2 76.6 83.2 85.2 84.7 84.4 83.4 83.0 82.7 3 Primary processing3 92.2 68.9 89.7 66.8 89.0 77.9 87.5 90.2 89.4 89.0 88.0 87.4 86.8 4 Advanced processing4 87.5 72.0 86.3 71.4 83.5 76.2 81.5 83.2 82.8 82.5 81.6 81.2 81.2 5 Durable goods 88.8 68.5 86.9 65.0 84.0 73.7 82.7 85.3 84.9 84.6 83.4 82.8 82.7 6 Lumber and products 90.1 62.2 87.6 60.9 93.3 76.3 91.8 94.3 91.7 89.6 88.9 88.2 87.7 7 Primary metals 100.6 66.2 102.4 46.8 92.8 74.0 90.9 95.6 94.5 94.9 92.6 91.9 91.6 8 Iron and steel 105.8 66.6 110.4 38.3 95.7 72.1 92.3 96.5 94.9 96.2 93.3 92.5 91.8 9 Nonferrous 92.9 61.3 90.5 62.2 88.7 75.0 89.3 94.6 94.2 93.4 91.9 91.2 91.5 10 Industrial machinery and equipment 96.4 74.5 92.1 64.9 84.0 72.5 88.4 92.0 91.1 90.8 90.4 89.7 89.5 11 Electrical machinery 87.8 63.8 89.4 71.1 84.9 76.6 87.9 90.1 89.8 89.5 88.7 88.7 88.8 12 Motor vehicles and parts 93.4 51.1 93.0 44.5 85.1 57.6 83.1 89.4 89.3 87.8 83.7 80.6 80.3 13 Aerospace and miscellaneous transportation equipment 77.0 66.6 81.1 66.9 88.4 79.4 64.7 62.4 63.4 64.0 63.7 63.6 63.3 14 Nondurable goods 87.9 71.8 87.0 76.9 86.7 80.4 84.0 85.1 84.6 84.3 83.6 83.4 83.0 15 Textile mill products 92.0 60.4 91.7 73.8 92.1 78.9 89.8 92.5 90.4 90.4 90.2 87.9 87.5 16 Paper and products 96.9 69.0 94.2 82.0 94.8 86.5 92.0 93.5 93.7 93.7 93.1 93.2 89.4 17 Chemicals and products 87.9 69.9 85.1 70.1 85.9 78.9 81.7 83.8 83.0 82.5 81.3 81.1 81.4 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 97.0 105.6 100.6 97.5 97.1 19 Petroleum products 96.7 81.1 89.5 68.2 88.5 83.7 90.7 93.4 93.5 94.2 93.0 91.9 92.0 20 Mining 94.4 88.4 96.6 80.6 86.5 86.0 90.3 89.7 90.3 89.9 90.4 90.2 91.1 21 Utilities 95.6 82.5 88.3 76.2 92.6 83.2 89.6 85.6 87.5 87.1 86.7 87.1 86.2 22 Electric 99.0 82.7 88.3 78.7 94.8 86.5 91.4 87.5 88.7 88.8 88.1 88.6 87.6 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; synthetic For the ordering address, see the inside front cover. The latest historical revision of the materials; fertilizer materials; petroleum products; rubber and plastics; stone, clay, and industrial production index and the capacity utilization rates was released in November glass; primary metals; and fabricated metals. 1994. See "Industrial Production and Capacity Utilization: A Revision," Federal Reserve 4. Advanced processing includes foods; tobacco; apparel; furniture and fixtures; print- Bulletin, vol. 81 (January 1995), pp. 16-26. For a detailed description of the industrial ing and publishing; chemical products such as drugs and toiletries; agricultural chemicals; production index, see "Industrial Production: 1989 Developments and Historical Revi- leather and products; machinery; transportation equipment; instruments; and miscellasion," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. neous manufactures. 2. Capacity utilization is calculated as the ratio of the Federal Reserve's seasonally 5. Monthly highs, 1978-80; monthly lows, 1982. adjusted index of industrial production to the corresponding index of capacity. 6. Monthly highs, 1988-89; monthly lows, 1990-91. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1994 1995 1994 GGrroouupp por- aavvgg.. tion June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr.r May JJuunneepp Index (1987 = 100) MAJOR MARKETS 1 Total index 100.0 118.1 118.0 118.2 119.1 119.0 119.5 120J 121.7 122.0 122.1 122.0 121.1 120.9 121.0 7 60.9 115.9 115.9 116.2 116.7 116.4 116.9 117.5 118.7 119.1 119.1 118.9 117.8 117.7 117.7 Final products 46.6 118.4 118.4 118.5 119.2 118.9 119.2 119.8 121.2 121.6 121.8 121.6 120.6 120.5 120.7 4 Consumer goods, total 28.5 113.2 113.5 113.3 113.8 113.0 113.0 113.9 115.5 115.7 115.7 114.9 113.9 113.7 113.9 5 Durable consumer goods 5.5 119.4 118.0 118.0 120.7 119.1 119.4 120.5 123.4 124.5 123.4 121.4 119.2 116.4 116.7 6 Automotive products 2.5 125.5 121.0 119.5 124.9 123.8 124.5 127.1 131.1 131.7 132.3 129.7 125.9 120.7 121.1 7 1.6 125.4 118.5 115.0 126.0 122.5 122.3 126.5 131.4 132.7 133.5 130.8 124.6 118.5 118.8 8 Autos, consumer .9 94.9 89.6 86.5 91.7 90.2 92.9 94.0 100.5 103.6 103.6 103.1 93.9 87.5 87.4 9 Trucks, consumer .7 180.7 170.7 166.6 189.0 181.5 175.5 185.8 187.3 184.6 187.1 180.0 180.2 175.3 176.2 10 Auto parts and allied goods .9 123.2 123.8 126.6 120.0 123.9 126.6 125.7 127.8 126.9 127.0 124.8 126.1 122.9 123.5 11 Other 3.0 114.1 115.4 116.7 117.1 115.2 115.2 115.0 116.8 118.3 115.9 114.3 113.5 112.7 113.1 1? Appliances televisions and air conditioners .7 126.0 132.8 129.7 135.1 130.2 124.9 126.9 131.5 132.1 125.8 122.7 120.7 124.2 125.5 N Carpeting and furniture .8 105.0 103.6 108.4 106.9 104.1 107.4 105.9 108.0 110.2 107.9 106.5 106.9 104.0 104.0 14 Miscellaneous home goods 1.5 113.8 114.2 115.3 114.6 114.6 114.9 114.5 114.9 116.5 115.8 114.7 113.7 112.1 112.4 15 Nondurable consumer goods 23.0 111.8 112.5 112.2 112.2 111.7 111.5 112.4 113.7 113.6 113.9 113.5 112.7 113.2 113.3 16 10.3 110.5 110.5 110.6 111.2 111.9 112.2 112.4 114.3 113.1 112.9 112.9 112.3 113.2 114.0 17 Clothing 2.4 95.9 96.3 96.5 95.9 95.5 96.2 96.2 96.8 96.1 94.7 94.6 93.6 93.3 92.3 18 Chemical products 4.5 129.7 131.4 131.1 129.8 127.5 127.2 130.5 134.0 137.0 136.6 135.9 133.7 134.0 135.1 19 Paper products 2.9 104.7 105.8 105.2 105.9 105.2 103.6 104.6 104.3 103.4 104.1 102.9 104.2 104.2 102.9 70 Energy 2.9 113.9 115.5 114.3 113.1 110.5 109.8 110.6 109.6 110.4 114.1 113.3 111.9 112.0 111.3 71 .9 106.7 106.5 105.8 105.8 107.4 103.9 109.8 107.4 107.4 109.1 110.6 109.9 108.6 108.6 22 Residential utilities 2.1 116.8 119.3 117.8 116.1 111.8 112.2 110.7 110.3 111.6 116.0 114.3 112.6 113.3 112.3 73 Equipment 18.1 126.5 125.8 126.4 127.5 128.0 128.8 128.9 130.1 130.9 131.2 132.0 131.2 131.1 131.2 74 Business equipment 14.0 146.7 145.5 146.9 148.9 149.5 150.9 151.0 152.6 153.7 154.5 155.9 154.8 154.5 155.2 75 Information processing and related 5.7 176.4 173.7 177.1 179.7 181.1 183.2 184.2 188.3 188.7 189.1 192.3 193.7 194.2 196.1 76 Computer and office equipment 1.5 284.2 276.5 282.6 288.9 295.8 300.5 305.7 311.9 318.0 325.3 331.8 340.0 346.1 354.2 77 Industrial 4.0 120.9 120.6 122.1 122.3 123.0 124.4 124.1 124.1 125.9 126.1 126.2 124.8 125.0 125.5 78 Transit 2.6 137.9 136.1 132.6 137.9 136.8 137.1 137.5 137.8 139.7 143.4 144.7 140.1 137.0 136.8 ?9 Autos and trucks 1.2 148.0 141.7 138.2 149.4 147.7 149.2 151.6 152.6 157.2 157.7 154.9 146.7 142.3 142.4 30 Other 1.7 129.4 130.5 132.6 133.5 133.3 134.3 133.1 133.1 133.5 132.9 132.6 130.3 130.3 129.2 31 Defense and space equipment 3.4 71.0 71.3 69.9 69.2 68.8 68.7 69.0 68.7 68.6 67.7 67.5 66.7 66.5 66.4 37 Oil and gas well drilling .5 90.8 94.2 93.7 89.6 93.9 88.3 86.0 86.0 86.7 89.1 85.7 89.2 91.9 86.4 33 Manufactured homes .2 137.3 137.8 133.3 134.5 138.4 142.0 143.1 153.6 153.6 147.4 148.3 147.2 150.4 34 Intermediate products, total 14.3 108.1 108.5 109.1 109.2 108.6 109.9 110.6 110.9 111.3 110.9 110.7 109.3 109.3 108.6 Construction supplies 5.3 106.8 106.4 107.9 108.2 108.6 109.7 109.8 111.6 112.2 111.0 110.5 109.0 108.1 107.9 36 Business supplies 9.0 109.1 110.1 110.0 109.9 108.7 110.1 111.3 110.7 110.9 111.0 110.9 109.7 110.3 109.2 37 39.1 121.5 121.2 121.4 122.8 122.9 123.4 124.6 126.3 126.5 126.7 126.7 126.1 125.9 126.2 38 Durable goods materials 20.6 131.2 130.0 130.9 132.6 133.3 134.2 136.0 138.6 139.1 139.2 139.2 138.4 138.1 138.6 39 Durable consumer parts 3.9 132.2 129.2 130.4 133.2 133.1 133.8 135.8 139.7 139.1 139.1 138.3 134.7 132.4 132.3 40 Equipment parts 7.5 143.1 142.1 143.8 145.2 146.7 149.0 150.7 152.3 153.6 155.1 156.2 157.5 158.8 160.5 41 Other 9.1 121.3 120.8 121.1 122.3 122.8 122.7 124.6 127.3 127.6 126.7 126.3 125.2 124.5 124.4 4? Basic metal materials 3.0 119.7 119.6 118.8 119.3 121.1 121.3 123.2 126.0 125.6 124.8 125.2 123.7 123.4 123.5 43 Nondurable goods materials 8.9 118.4 118.1 118.6 120.3 119.8 120.3 121.5 122.8 122.3 121.8 121.7 121.0 121.0 120.1 44 Textile materials 1.1 105.3 104.8 104.8 105.7 105.9 106.9 110.3 108.7 109.8 108.5 108.8 108.1 105.2 105.6 45 Paper materials 1.8 118.7 118.4 117.5 122.5 121.5 120.5 122.1 121.3 120.8 122.1 124.1 122.5 123.9 119.0 46 Chemical materials 4.0 123.2 122.9 123.4 124.8 124.0 124.6 125.9 127.5 128.6 128.3 127.6 126.9 127.1 127.8 47 Other 2.0 116.9 116.5 118.6 118.1 118.2 119.5 119.3 123.4 119.1 116.8 116.0 115.8 115.8 114.9 48 Energy materials 9.6 105.2 106.7 105.2 106.1 105.6 105.2 104.9 105.3 105.6 106.6 106.6 106.7 106.4 107.3 49 Primary energy 6.3 100.3 100.2 100.3 100.9 100.8 100.3 100.7 101.7 101.7 102.0 102.5 102.4 101.9 103.5 50 Converted fuel materials 3.3 114.9 119.9 114.9 116.3 115.1 115.1 113.4 112.3 113.4 115.6 114.7 115.2 115.4 114.6 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.2 117.6 117.7 118.1 118.7 118.6 119.1 119.8 121.1 121.4 121.4 121.4 120.7 120.7 120.8 52 Total excluding motor vehicles and parts 95.2 117.1 117.3 117.7 118.2 U8.0 118.5 119.2 120.5 120.8 120.8 120.8 120.2 120.3 120.3 53 Total excluding computer and office equipment 98.3 115.4 115.4 115.5 116.4 116.1 116.6 117.4 118.7 118.9 111188..99 111188..77 111177..88 111177..66 111177..66 54 Consumer goods excluding autos and trucks . 26.9 112.4 113.2 113.2 113.0 112.4 112.4 113.1 114.5 114.6 114.5 113.9 113.2 113.4 113.6 55 Consumer goods excluding energy 25.6 113.1 113.2 113.2 113.8 113.3 113.3 114.2 116.2 116.3 115.9 115.1 114.1 113.9 114.2 56 Business equipment excluding autos and trucks 12.8 146.5 145.7 147.7 148.8 149.5 151.0 150.9 152.5 153.3 154.1 155.9 155.5 155.6 115566..33 57 Business equipment excluding computer and office equipment 12.5 130.7 130.0 131.1 132.7 132.7 133.8 133.6 134.7 135.4 113355..66 136.6 113344..88 113344..11 113344..11 58 Materials excluding energy 29.5 127.3 126.4 127.2 128.8 129.2 129.9 131.6 133.8 134.0 133.9 133.9 133.1 132.9 133.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1995 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1992 1994 1995 GGrroouupp S co IC de 2 p p o ro r- - 1 a 9 v 9 g 4 . tion June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.r Apr/ May Junep Index (1987 = 100) MAJOR INDUSTRIES 59 Tbtal index 100.0 118.1 118.0 118.2 119.1 119.0 119.5 120.3 121.7 122.0 122.1 122.0 121.1 120.9 121.0 60 Manufacturing 85.5 119.7 119.3 119.8 120.9 120.9 121.5 122.6 124.2 124.5 124.2 124.2 123.2 123.0 123.0 61 Primary processing 26.5 115.3 114.7 115.3 116.3 116.2 116.6 118.4 120.3 119.8 119.1 118.9 117.8 117.3 116.7 62 Advanced processing 59.0 121.8 121.5 121.9 123.1 123.1 123.8 124.6 126.0 126.6 126.6 126.7 125.8 125.6 126.0 63 Durable goods 45.1 125.5 124.6 125.2 127.0 127.2 128.0 129.1 131.2 131.6 131.5 131.6 130.4 130.0 130.4 64 Lumber and products "24 2.0 106.0 106.2 106.8 105.5 107.6 106.7 106.7 110.4 110.2 107.4 105.2 104.6 104.0 103.7 65 Furniture and fixtures 25 1.4 111.4 111.8 114.0 115.5 112.4 114.8 113.0 114.7 116.0 115.6 113.8 112.5 111.3 111.6 66 Stone, clay, and glass products 32 2.1 104.9 104.4 104.3 105.8 105.8 105.4 106.9 110.1 108.7 107.4 108.1 106.0 107.7 108.1 67 Primaty metals 33 3.1 114.5 113.7 112.7 113.5 116.0 115.9 119.1 123.0 120.9 119.8 120.5 117.8 117.1 117.1 68 Iron and steel 331,2 1.7 118.3 118.2 116.1 113.0 118.2 118.8 121.9 129.3 125.9 124.3 126.1 122.5 121.8 121.2 69 Raw steel .1 107.9 106.3 104.7 107.0 109.9 109.0 114.2 121.9 114.6 117.2 117.2 114.3 112.4 70 Nonferrous 333-6,9 1.4 109.3 107.6 108.0 113.6 112.7 111.8 115.2 114.8 114.2 113.8 113.1 111.5 110.9 111.5 71 Fabricated metal products.. . 34 5.0 110.8 110.2 111.7 112.4 111.6 112.2 113.3 115.3 115.3 114.9 114.6 112.9 113.4 113.0 72 Industrial machinery and equipment 35 7.9 159.9 158.9 160.6 162.6 164.6 166.5 167.5 168.5 171.4 171.1 172.0 172.6 172.7 173.7 73 Computer and office equipment 357 1.7 284.2 276.5 282.6 288.9 295.8 300.5 305.7 311.9 318.0 325.3 331.8 340.0 346.1 354.2 74 Electrical machinery 36 7.3 160.0 159.5 161.5 164.1 165.0 166.9 168.8 172.5 172.9 174.0 175.2 175.4 177.3 179.3 75 Transportation equipment. .. 37 9.6 109.7 107.5 105.7 109.5 108.8 109.0 110.5 111.9 112.6 113.5 112.9 109.7 107.4 107.2 76 Motor vehicles and parts . 371 4.8 137.9 132.2 129.6 138.1 137.4 138.4 141.4 144.6 146.1 146.7 144.8 138.8 134.2 134.3 77 Autos and light trucks . 371 2.5 131.9 124.6 120.8 131.9 128.4 128.6 132.7 138.4 140.0 140.8 138.2 130.9 124.2 124.4 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.8 82.6 83.8 82.8 82.3 81.4 80.8 80.9 80.6 80.4 81.7 82.3 81.9 81.7 81.3 79 Instruments 38 5.4 107.4 106.8 108.5 108.7 108.0 108.2 107.7 108.9 108.4 107.7 108.5 108.4 107.1 106.9 80 Miscellaneous 39 1.3 116.2 115.8 118.6 117.1 117.0 118.4 118.6 117.6 119.1 120.3 119.0 118.2 117.3 117.9 81 Nondurable goods 40.5 113.3 113.4 113.6 114.0 113.7 114.2 115.4 116.4 116.5 116.1 115.8 115.2 115.1 114.8 82 Foods "20 9.4 112.8 112.8 113.4 113.7 114.6 113.4 113.9 114.7 115.9 115.7 115.4 115.1 116.4 116.9 83 Tobacco products 21 1.6 96.5 95.9 93.7 96.2 96.1 104.5 101.5 108.0 97.3 96.4 97.9 98.0 96.7 98.4 84 Textile mill products 22 1.8 109.0 108.7 109.4 109.0 108.3 110.6 112.0 112.2 113.3 110.9 111.2 111.2 108.5 108.3 85 Apparel products 23 2.2 96.3 97.0 97.0 96.8 96.8 96.9 96.8 97.0 96.6 95.8 95.4 93.9 93.7 92.3 86 Paper and products 26 3.6 117.4 116.6 116.6 120.2 118.7 118.9 121.3 121.7 119.8 120.3 120.6 120.1 120.4 115.8 87 Printing and publishing 27 6.8 101.1 102.4 102.1 101.5 100.9 101.4 102.0 101.6 101.3 100.8 100.4 99.9 100.0 99.4 88 Chemicals and products .... 28 9.9 124.1 124.4 124.7 124.7 123.7 123.8 126.2 128.0 130.4 129.7 129.2 127.7 127.9 128.7 89 Petroleum products 29 1.4 105.3 104.5 104.3 105.2 105.3 104.0 107.6 107.7 107.4 107.6 108.5 107.2 106.0 106.1 90 Rubber and plastic products . 30 3.5 133.5 132.8 134.5 134.5 134.7 136.7 138.3 140.0 140.2 140.5 139.1 139.6 136.8 136.4 91 Leather and products 31 .3 85.8 85.5 86.3 85.5 85.4 85.6 84.5 84.4 82.9 82.8 82.7 80.5 80.8 78.8 92 Mining 6.8 99.8 100.6 100.1 100.0 100.1 99.2 98.3 100.1 100.0 100.6 100.2 100.7 100.5 101.5 93 Metal 10 .4 159.4 162.8 159.5 156.6 160.0 158.9 154.3 156.2 158.5 160.4 159.3 159.0 161.7 162.8 94 Coal 12 1.0 112.0 113.4 108.6 111.4 110.7 110.2 110.1 117.8 117.9 118.6 117.4 114.1 109.7 115.8 95 Oil and gas extraction 13 4.7 93.0 93.8 93.9 93.5 93.7 92.2 91.2 92.2 91.2 92.3 91.6 93.1 93.6 93.6 96 Stone and earth minerals 14 .6 107.0 105.6 107.9 106.6 106.7 109.3 109.9 109.9 115.1 112.0 114.8 114.2 113.0 113.2 97 Utilities 7.7 118.1 121.1 119.0 118.8 116.5 117.2 116.5 115.2 116.5 119.2 118.9 118.4 119.1 118.1 98 Electric 49L3PT 6.1 117.8 121.4 119.0 118.4 117.1 117.9 117.5 116.5 117.2 119.0 119.3 118.6 119.3 118.1 99 Gas 492,3PT 1.6 119.2 120.0 118.9 120.4 114.2 114.4 112.3 109.8 113.7 120.1 117.3 117.6 118.2 117.8 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.7 118.6 118.6 119.2 119.8 119.9 120.5 121.5 122.9 123.2 122.9 122.9 122.3 122.3 122.4 101 Manufacturing excluding ofiice and computing machines ... 83.8 116.5 116.2 116.6 117.6 117.5 118.1 119.1 120.6 120.8 120.5 120.4 119.3 119.0 119.0 Gross value (billions of 1987 dollars, annual rates) MAJOR MARKETS 102 Products, total 1,707.0 2,006.2 2,002.5 2,002.1 2,020.2 2,015.6 2,020.4 2,037.2 2,056.5 2,063.2 2,066.5 2,065.1 2,048.2 2,045.4 2,045.7 103 1,314.6 1,576.3 1,571.1 1,569.3 1,586.6 1,584.2 1,584.4 1,598.4 1,615.1 1,621.1 1,626.4 1,626.1 1,613.0 1,610.5 1,613.6 104 Consumer goods 866.6 982.5 983.0 979.0 987.3 981.5 977.0 988.5 999.6 1,000.2 1,001.9 997.3 987.8 984.6 985.5 105 Equipment 448.0 593.8 588.1 590.3 599.3 602.7 607.3 609.9 615.5 620.9 624.5 628.7 625.2 625.9 628.1 106 Intermediate 392.5 429.8 431.4 432.9 433.5 431.4 436.0 438.8 441.4 442.0 440.1 439.0 435.2 434.9 432.1 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 die 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 1995 IItteemm 11999922 11999933 11999944 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.r Apr/ May Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,095 1,199 1,372 1,386 1,426 1,401 1,358 1,420 1,293 1,282 1,235 1,243 1,243 ?. One-family 911 987 1,068 1,063 1,066 1,046 1,025 1,105 990 931 911 905 930 3 Two-family or more 184 213 303 323 360 355 333 315 303 351 324 338 313 4 Started 1,200 1,288 1,457 1,463 1,511 1,451 1,536 1,545 1,366 1,319 1,238 1,269 1,264 One-family 1,030 1,126 1,198 1,174 1,235 1,164 1,186 1,250 1,055 1,048 987 1,009 974 6 Two-family or more 170 162 259 289 276 287 350 295 311 271 251 260 290 7 Under constraction at end of period1 612 680 762 770 773 779 787 791 792 797 769 761 753 8 One-family 473 543 558 589 590 587 587 584 578 579 552 545 536 9 Two-family or more 140 137 204 181 183 192 200 207 214 218 217 216 217 10 Completed 1,158 1,193 1,347 1,337 1,400 1,376 1,371 1,388 1,436 1,302 1,443 1,328 1,338 11 One-family 964 1,040 1,160 1,144 1,158 1,169 1,136 1,173 1,209 1,080 1,222 1,081 1,080 12 Two-family or more 194 153 187 193 242 207 235 215 227 222 221 247 258 13 Mobile homes shipped 210 254 304 295 307 314 322 347 361 335 333 318 329 Merchant builder activity in one-family units 14 Number sold 610 666 670 672 691 707 642 627 643 575R 611 602 722 15 Number for sale at end of period1 265 293 338 322 328 330 335 338 342 347 346 346 345 Price of units sold (thousands of dollars)2 16 Median 121.3 126.1 130.4 133.3 129.7 132.0 129.9 135.0 127.9 mm..ttff 130.0 133.0 134.9 17 Average 144.9 147.6 153.7 154.9 157.2 153.0 155.4 159.6 147.4 160.2R 153.4 157.8 158.1 EXISTING UNITS (one-family) 18 Number sold 3,520 3,800 3,946 3,910 3,870 3,820 3,690 3,760 3,610 3,420 3,620 3,390 3,550 Price of units sold (thousands of dollars)2 19 Median 103.6 106.5 109.6 113.0 108.9 107.5 108.7 109.1 108.1 107.0 107.9 108.1 109.0 20 Average 130.8 133.1 136.4 141.2 135.8 133.0 134.7 135.6 135.3 133.4 134.5 134.2 135.4 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 435,022' 464,504r 506,904r 509,853r 518^24' 521,296' 520,183' 521,771' 521,054' 521,429' 523,467 522,402 514,736 ?? Private 315,695R 339,161R 376,566R 379,658R 384,460' 382,946' 387,052' 386,103' 384,806' 383,652' 383,301 382,126 376,493 73 Residential 187,870 210,455 238,884R 240,090' 242,215' 240,484' 242,447' 243,565' 241,938' 240,207' 237,894 234,361 231,142 7.4 Nonresidential 127,825R 128,706R 137,682R 139,568' 142,245' 142,462' 144,605' 142,538' 142,868' 143,445' 145,407 147,765 145,351 25 Industrial buildings 20,720 19,533 21,121R 21,272' 21,935' 21,894' 25,060' 22,769' 22,715' 23,370' 23,911 24,707 23,654 76 Commercial buildings 41,523 42,627 48,552R 48,396' 50,738' 51,195' 52,008' 53,491' 53,338' 53,687' 55,439 54,839 53,248 ?7 Other buildings 21,494 23,626 23,912R 23,610' 23,559' 23,677' 24,147' 24,694' 24,373' 24,039' 23,062 23,999 24,639 28 Public utilities and other 44,088R 42,920R 44,097R 46,290' 46,013' 45,696' 43,390' 41,584' 42,442' 42,349' 42,995 44,220 43,810 ?9 Public 119,322R 125,342' 130,337' 130,195' 133,865' 138,349' 133,131' 135,668' 136,248' 137,777' 140,166 140,276 138,243 30 Military 2,502 2,454 2,319R 2,364' 2,361' 2,344' 2,354' 2,784' 2,925' 2,624' 3,048 2,872 2,592 11 Highway 34,899 37,43 LR 39,882R 40,137' 40,519' 40,992' 39,283' 38,464' 38,574' 38,681' 40,667 40,937 38,685 32 Conservation and development 6,021 5,978R 6,228R 5,775' 7,339' 7,197' 6,331' 7,466' 6,681' 7,128' 7,139 6,392 5,897 33 Other 75,900R 19,419' 81,908R 81,919' 83,646' 87,816' 85,163' 86,954' 88,068' 89,344' 89,312 90,075 91,069 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 19,000 jurisdictions beginning in 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • September 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 Change from 1 month earlier months earlier (annual rate) IIInnndddeeexxx llleeevvveeelll,,, IIIttteeemmm 1994 1995 1995 JJJuuunnneee 11999944 11999955 111999999555 111 JJuunnee JJuunnee Sept. Dec. Mar. June Feb. Mar. Apr. May June CONSUMER PRICES2 (1982-84=100) 1 All items 2.5 3.0 3.6 1.9 3.2 3.2 3 .2 .4 3 .1 152.5 2 Food 2.2 3.1 5.1 3.9 .0 3.6 .3 .0 .7 .1 .1 147.9 3 Energy items -.8 3.4 9.2 .4 -1.1 5.4 -.1 -.5 .4 .5 .5 109.3 4 All items less food and energy 2.9 3.0 2.6 2.0 4.1 3.0 .3 .3 .4 .2 .2 160.9 5 Commodities 1.8 1.2 .9 .3 2.6 .6 .1 .1 .2 .0 -.1 138.9 6 Services 3.5 3.8 3.6 2.6 4.8 4.3 .4 .4 .4 .3 .3 173.4 PRODUCER PRICES (1982=100) 7 Finished goods .1 2.1 1.9 2.2 2.6 1.6 .2 .0 .5 .0 -.1 128.2 8 Consumer foods .4 1.2 1.9 9.2 -1.8 -4.3 ,3r -.2 -.2 -.6 -.3 127.4 9 Consumer energy -2.7 4.1 3.2 .0 9.1 4.1 .3 -.5 2.3 -.2 -1.0 81.5 10 Other consumer goods -.4 2.1 1.7 .6 2.6 3.5 .2' ,lr .3 .4 .2 141.8 11 Capital equipment 2.4 1.8 2.1 -.3 2.4 3.0 .R .(f .3 .2 .2 136.6 Intermediate materials 12 Excluding foods and feeds 1.1 7.0 6.2 7.2 9.9 4.6 .8r .2' .8 .3 .0 126.6 13 Excluding energy 2.1 7.4 6.8 8.3 9.8 4.9 .8 ,3r .7 .2 .2 135.7 Crude materials 14 Foods .6 -5.2 -13.5 -1.2 -5.0 .0 1.3r -2.5' -.9 -3.0 4.0 102.2 15 Energy -7.0 -4.8 -19.2 -7.6 -3.9 14.6 -,3r -.6' 5.3 1.6 -3.4 71.6 16 Other 7.6 18.4 20.3 27.9 20.0 5.8 l.lr .5 1.2 -.3 .6 180.4 1. Not seasonally adjusted. SOURCE. U.S. Department of Labor, Bureau of Labor Statistics. 2. Figures for consumer prices are for all urban consumers and reflect a 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 1995 Q1 Q2 Q3 Q4 GROSS DOMESTIC PRODUCT 1 Total 6,020.2 6,343.3 6,738.4 6,574.7 6,689.9 6,791.7 6,897.2 By source 2 Personal consumption expenditures 4,136.9 4,378.2 4,628.4 4,535.0 4,586.4 4,657.5 4,734.8 3 Durable goods 492.7 538.0 591.5 576.2 580.3 591.5 617.7 4 Nondurable goods 1,295.5 1,339.2 1,394.3 1,368.9 1,381.4 1,406.1 1.420.7 5 Services 2,348.7 2,501.0 2,642.7 2,589.9 2,624.7 2,659.9 2,696.4 6 Gross private domestic investment 788.3 882.0 1,032.9 966.6 1,034.4 1,055.1 1,075.6 7 Fixed investment 785.2 866.7 980.7 942.5 967.0 992.5 1.020.8 8 Nonresidential 561.4 616.1 697.6 665.4 683.3 709.1 732.8 9 Structures 171.1 173.4 182.8 172.7 181.8 184.6 192.0 10 Producers' durable equipment 390.3 442.7 514.8 492.7 501.5 524.5 540.7 11 Residential structures 223.8 250.6 283.0 277.1 283.6 283.4 288.0 12 Change in business inventories 3.0 15.4 52.2 24.1 67.4 62.6 54.8 13 Nonfarm -2.7 20.1 45.9 22.3 60.4 53.4 47.4 14 Net exports of goods and services -30.3 -65.3 -98.2 -86.7 -97.6 -109.6 -98.9 15 Exports 638.1 659.1 718.7 674.2 704.5 730.5 765.5 16 Imports 668.4 724.3 816.9 760.9 802.1 840.1 864.4 17 Government purchases of goods and services ... 1,125.3 1,148.4 1,175.3 1,159.8 1,166.7 1,188.8 1,185.8 18 Federal 449.0 443.6 437.3 437.8 435.1 444.3 431.9 19 State and local 676.3 704.7 738.0 722.0 731.5 744.5 753.8 By major type of product 20 Final sales, total 6,017.2 6,327.9 6,686.2 6,550.6 6,622.5 6,729.1 6.842.4 21 Goods 2,292.0 2,390.4 2,532.4 2.489.1 2,493.7 2,543.6 2,603.3 22 Durable 968.6 1.032.4 1,118.8 1.098.2 1,099.4 1,125.8 1.151.8 23 Nondurable 1,323.4 1,358.1 1,413.6 1,390.9 1.394.3 1,417.8 1.451.5 24 Services 3,227.2 3.405.5 3,576.2 3,503.8 3.555.4 3,603.6 3.641.9 25 Structures 498.1 532.0 577.6 557.7 573.4 581.9 597.3 26 Change in business inventories 3.0 15.4 52.2 24.1 67.4 62.6 54.8 27 Durable goods -13.0 8.6 34.8 20.6 38.2 44.1 36.3 28 Nondurable goods 16.0 6.7 17.4 3.5 29.2 18.5 18.5 MEMO 4,9793 5,134.5 5,344.0 5,261.1 5,314.1 5,367.0 5,433.8 29 Total GDP in 1987 dollars NATIONAL INCOME 4,829.5 5,131.4 5,458.4 5,308.7 5,430.7 5,494.9 5,599.4 30 Total 3,591.2 3,780.4 4,004.6 3,920.0 3.979.3 4,023.7 4.095.3 31 Compensation of employees 2,954.8 3,100.8 3,279.0 3,208.3 3,257.2 3,293.9 3.356.4 32 Wages and salaries 567.3 583.8 602.8 595.7 601.9 604.4 609.0 33 Government and government enterprises ... 2,387.5 2,517.0 2,676.2 2,612.6 2.655.4 2,689.6 2,747.4 34 Other 636.4 679.6 725.6 711.7 722.0 729.7 738.9 35 Supplement to wages and salaries 307.7 324.3 344.6 338.5 343.6 346.0 350.2 36 Employer contributions for social insurance 328.7 355.3 381.0 373.2 378.4 383.7 388.7 37 Other labor income 38 Proprietors' income1 418.7 441.6 473.7 471.0 471.3 467.0 485.7 39 Business and professional1 374.4 404.3 434.2 423.8 431.9 437.1 444.0 40 Farm1 44.4 37.3 39.5 47.2 39.3 29.8 41.7 41 Rental income of persons2 -5.5 24.1 27.7 15.3 34.1 32.6 29.0 42 Corporate profits1 405.1 485.8 542.7 508.2 546.4 556.0 560.3 43 Profits before tax3 395.9 462.4 524.5 483.5 523.1 538.1 553.5 44 Inventory valuation adjustment -6.4 -6.2 -19.5 -12.3 -14.1 -19.6 -32.1 45 Capital consumption adjustment 15.7 29.5 37.7 37.0 37.4 37.5 38.8 46 Net interest 420.0 399.5 409.7 394.2 399.7 415.7 429.2 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. U.S. Department of Commerce, Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • September 1995 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1994 1995 11999922 11999933 11999944 Ql Q2 Q3 Q4 Qlr PERSONAL INCOME AND SAVING 1 Total personal income 5,1543 5375.1 5,701.7 5,555.8 5,659.9 5,734.5 5,856.6 5,962.0 2 Wage and salary disbursements 2,974.8 3,080.8 3,279.0 3,208.3 3,257.2 3,293.9 3.356.4 3,403.4 3 Commodity-producing industries 757.6 773.8 818.2 801.9 811.6 821.8 837.3 848.5 4 Manufacturing 578.3 588.4 617.5 609.4 612.8 618.3 629.5 638.1 5 Distributive industries 682.3 701.9 748.5 728.6 742.5 753.5 769.6 776.8 6 Service industries 967.6 1,021.4 1,109.5 1,082.0 1,101.2 1,114.3 1.140.5 1,160.9 7 Government and government enterprises 567.3 583.8 602.8 595.7 601.9 604.4 609.0 617.2 8 Other labor income 328.7 355.3 381.0 373.2 378.4 383.7 388.7 399.6 9 Proprietors' income1 418.7 441.6 473.7 471.0 471.3 467.0 485.7 493.6 10 Business and professional1 374.4 404.3 434.2 423.8 431.9 437.1 444.0 449.2 11 Farm1 44.4 37.3 39.5 47.2 39.3 29.8 41.7 44.4 12 Rental income of persons -5.5 24.1 27.7 15.3 34.1 32.6 29.0 25.4 13 Dividends 161.0 181.3 194.3 185.7 191.7 196.9 202.7 205.5 14 Personal interest income 665.2 637.9 664.0 631.1 649.4 674.2 701.1 723.6 15 Transfer payments 860.2 915.4 963.4 947.4 957.6 969.0 979.7 1,004.8 16 Old-age survivors, disability, and health insurance benefits 414.0 444.4 473.5 463.8 470.7 476.5 483.1 496.7 17 LESS: Personal contributions for social insurance 248.7 261.3 281.4 276.3 279.9 282.9 286.6 293.8 18 EQUALS: Personal income 5,154.3 5,375.1 5,701.7 5,555.8 5,659.9 5,734.5 5,856.6 5,962.0 19 LESS: Personal tax and nontax payments 648.6 686.4 742.1 723.0 746.4 744.1 754.7 777.6 20 EQUALS: Disposable personal income 4,505.8 4,688.7 4,959.6 4,832.8 4,913.5 4,990.3 5,101.9 5,184.4 21 LESS: Personal outlays 4,257.8 4,496.2 4,756.5 4,657.3 4,712.4 4,787.0 4,869.3 4,920.7 22 EQUALS: Personal saving 247.9 192.6 203.1 175.5 201.1 203.3 232.6 263.7 MEMO Per capita (1987 dollars) 23 Gross domestic product 19,489.7 19,878.8 20,475.8 20,235.2 20,389.7 20.536.5 20,739.8 20,836.3 24 Personal consumption expenditures 13,110.4 13,390.8 13,715.4 13,639.8 13,650.9 13.716.6 13,853.5 13,880.1 25 Disposable personal income 14,279.0 14,341.0 14,696.0 14,535.0 14,625.0 14,697.0 14,927.0 15,048.0 26 Saving rate (percent) 5.5 4.1 4.1 3.6 4.1 4.1 4.6 5.1 GROSS SAVING 27 Gross saving 722.9 787.5 920.6 886.2 923.3 922.6 9503 1,006.0 28 Gross private saving 980.8 1,002.5 1,053.5 1,037.3 1,041.4 1,052.7 1,082.7 1,126.4 29 Personal saving 247.9 192.6 203.1 175.5 201.1 203.3 232.6 263.7 30 Undistributed corporate profits' 94.3 120.9 135.1 127.7 142.3 139.5 130.7 132.6 31 Corporate inventory valuation adjustment -6.4 -6.2 -19.5 -12.3 -14.1 -19.6 -32.1 -39.0 Capital consumption allowances 32 Corporate 396.8 407.8 432.2 432.2 425.9 432.6 438.0 445.3 33 Noncorporate 261.8 261.2 283.1 301.8 272.1 277.3 281.3 284.7 34 Government surplus, or deficit (-), national income and product accounts -257.8 -215.0 -132.9 -151.1 -118.1 -130.1 -132.3 -120.4 35 Federal -282.7 -241.4 -159.1 -176.2 -145.1 -154.0 -161.1 -148.6 36 State and local 24.8 26.3 26.2 25.2 27.0 23.9 28.8 28.2 37 Gross investment 731.7 789.8 889.7 850.2 8993 901.5 907.9 947.4 38 Gross private domestic investment 788.3 882.0 1,032.9 966.6 1,034.4 1,055.1 1,075.6 1,107.8 39 Net foreign investment -56.6 -92.3 -143.2 -116.4 -135.1 -153.6 -167.7 -160.4 40 Statistical discrepancy 8.8 23 -30.9 -36.1 -24.0 -21.1 -42.4 -58.6 1. With inventory valuation and capital consumption adjustments. SOURCE. U.S. Department of Commerce, Survey of Current Business. 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A53 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 1994" 1995 Item credits or debits 11999922 11999933"" 11999944"" Q1 Q2 Q3 Q4 Qlp 1 Balance on current account. -61,548r -99,925 -151,245 -30,271 -37,986 -39,714 -43,276 -40,503 2 Merchandise trade balance -96,106r -132,618 -166,099 -36,490 -41,494 -44,627 -43,488 -45,052 3 Merchandise exports 440,352r 456,823 502,485 118,445 122,730 127,384 133,926 138,059 4 Merchandise imports -536,458 -589,441 -668,584 -154,935 -164,224 -172,011 -177,414 -183,111 5 Military transactions, net -2,142r 448 2,148 -31 376 1,124 679 621 6 Other service transactions, net 58,767r 57,328 57,739 13,505 14,195 14,696 15,342 14,408 7 Investment income, net 10,080" 9,000 -9,272 116 -2,285 -2,533 -4,570 -2,698 8 U.S. government grants -15,083" -16,311 -15,814 -2,378 -3,703 -3,488 -6,245 -2,954 9 U.S. government pensions and other transfers. -3,735 -3,785 -4,247 -1,057 -1,063 -1,064 -1,063 -782 10 Private remittances and other transfers -13,330" -13,988 -15,700 -3,936 -4,012 -3,822 -3,931 -4,046 11 Change in U.S. government assets other than official reserve assets, net (increase, -) -1,661" -330 -322 401 491 -283 -931 23 12 Change in U.S. official reserve assets (increase, -) . 3,901 -1,379 5,346 -59 3,537 -165 2,033 -5,318 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) 2,316 -537 -441 -101 -108 -111 -121 -867 15 Reserve position in International Monetary Fund . -2,692 -44 494 -3 251 273 -27 -526 16 Foreign currencies 4,277 -797 5,293 45 3,394 -327 2,181 -3,925 17 Change in U.S. private assets abroad (increase, -). -68,115" -182,880 -130,875 -37,125 -10,001 -27,492 -56,258 -58,656 18 Bank-reported claims 20,895" 29,947 915 869 15,107 1,590 -16,651 -34,474 19 Nonbank-reported claims 45 1,581 -32,621 -1,891 -10,230 -8,051 -12,449 20 U.S. purchases of foreign securities, net -46,415" -141,807 -49,799 -16,457 -7,128 -10,976 -15,238 -5,778 21 U.S. direct investments abroad, net -42,640" -72,601 -49,370 -19,646 -7,750 -10,055 -11,920 -18,404 22 Change in foreign official assets in United States (increase, +). 40,466" 72,146 39,409 10,977 9,162 19,691 -421 • 21,336 23 U.S. Treasury securities 18,454 48,952 30,723 857 5,919 16,477 7,470 9,949 24 Other U.S. government obligations 3,949 4,062 6,025 215 2,360 2,222 1,228 982 25 Other U.S. government liabilities4 2,180" 1,706 2,211 851 174 494 692 -242 26 Other U.S. liabilities reported by U.S. banks3 16,571 14,841 2,923 9,807 1,674 1,298 -9,856 10,382 27 Other foreign official assets5 -688 2,585 -2,473 -753 -965 -800 45 265 Change in foreign private assets in United States (increase, +) ... 113,357" 176,382 251,956 69,413 37,364 60,045 85,136 63,744 U.S. bank-reported liabilities 15,461 20,859 114,396 31,839 28,231 19,650 34,676 8,647 U.S. nonbank-reported liabilities 13,573 10,489 -4,324 2,478 -2,047 487 -5,242 Foreign private purchases of U.S. Treasury securities, net. 36,857 24,063 33,811 9,771 -7,317 5,428 25,929 29,670 Foreign purchases of other U.S. securities, net 29,867 79,864 58,625 21,117 12,551 14,762 10,195 15,647 Foreign direct investments in United States, net 17,599" 41,107 49,448 4,208 5,946 19,718 19,578 9,780 34 Allocation of special drawing rights. 0 0 0 0 0 0 0 0 3 3 5 6 Dis D c u re e p t a o n c s y e asonal adjustment -26,399" 35,985 -14,269 -13 5 , , 3 2 3 7 6 4 -2,5 5 6 8 7 7 -1 -6 2 , , 6 0 4 8 1 2 13, 7 7 8 1 2 8 1 6 9 , , 5 3 3 7 7 4 37 Before seasonal adjustment -26,399" 35,985 - i 4,269 -18,610 -3,154 -5,441 12,936 13,017 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) 3,901 -1,379 5,346 -59 3,537 -165 2,033 -5,318 39 Foreign official assets in United States, excluding line 25 (increase, +) 38,286 70,440 37,198 10,126 8,988 19,197 -1,113 21,578 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 5,942 -3,717 -1,184 -1,651 -4,217 3,564 1,120 -379 1. Seasonal factors are not calculated for lines 12-16, 18-20,22-34, and 38^H). 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 • September 1995 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1994 1995 IItteemm 11999922 11999933 11999944 Nov. Dec. Jan. Feb. Mar. Apr.r Mayp 1 Goods and services, balance -39,480 -74,842 -106,214 -9,735 -7,894 -10,616 -9,610 -9,792 -11,374 -11,428 2 Merchandise -96,106 -132,618 -166,101 -15,292 -13,272 -15,946 -14,426 -14,678 -16,504 -16,483 3 Services 56,626 57,777 59,887 5,557 5,378 5,330 4,816 4,886 5,130 5,055 4 Goods and services, exports 618,969 644,579 701,200 61,713 63,185 61,989 62,093 64,820 63,977 64,807 5 Merchandise 440,352 456,824 502,484 44,441 46,172 44,772 45,482 47,805 46,923 47,758 6 Services 178,617 187,755 198,716 17,272 17,013 17,217 16,611 17,015 17,054 17,049 7 Goods and services, imports -658,449 -719,421 -807,414 -71,448 -71,079 -72,605 -71,704 -74,613 -75,351 -76,235 8 Merchandise -536,458 -589,442 -668,585 -59,733 -59,444 -60,718 -59,909 -62,484 -63,427 -64,241 9 Services -121,991 -129,979 -138,829 -11,715 -11,635 -11,887 -11,795 -12,129 -11,924 -11,994 MEMO 10 Balance on merchandise trade, Census basis -84,501 -115,568 -150,629 -14,202 -12,010 -15,047 -13,507 -13,024 -14,906 -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 1995 AAsssseett 11999922 11999933 11999944 Nov. Dec. Jan. Feb. Mar. Apr. May Junep 1 Total 77,719 71,323 73,442 74,000 74,335 76,027 81,439 86,761 88,756 90,549 90,063 2 Gold stock, including Exchange Stabilization Fund1 11,057 11,056 11,053 11,052 11,051 11,050 11,050 11,053 11,055 11,054 11,054 3 Special drawing rights2'3 11,240 8,503 9,039 10,017 10,039 10,154 11,158 11,651 11,743 11,923 11,869 4 Reserve position in International Monetary Fund2 9,488 11,759 11,818 12,037 12,030 12,120 12,853 13,418 14,206 14,278 14,276 5 Foreign currencies4 45,934 40,005 41,532 40,894 41,215 42,703 46,378 50,639 51,752 53,294 52,864 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 1995 AAsssseett 11999911 11999922 11999933 Nov. Dec. Jan. Feb. Mar. Apr. May Junep 1 Deposits 968 205 386 230 250 185 188 370 166 227 167 Held in custody 2 U.S. Treasury securities2 281,107 314,481 379,394 444,339 441,866 439,139 447,206 459,694 469,482 474,181 482,506 3 Earmarked gold3 13,303 13,118 12,327 12,037 12,033 12,033 12,033 11,964 11,897 11,800 11,725 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 1994r Jan.r Feb/ Mar/ Apr. 1 Total1 412,624 483,002 523,896 520,278 517,028 527,311 542,494 552,094 By type 2 Liabilities reported by banks in the United States 54,967 69,808 73,530 72,731 74,109 80,326 83,423 85,048 3 U.S. Treasury bills and certificates 104,596 151,100 143,222 139,570 133,014 134,341 141,716 146,417 U.S. Treasury bonds and notes 4 Marketable 210,931 212,237 253,451 254,059 255,888 257,998 262,020 265,164 6 5 U.S N . o s n e m cu a r r i k ti e e t s a b o l t e h 4 e r than U.S. Treasury securities1v 3 4 7 , , 5 5 3 9 2 8 44 5 , , 2 65 0 2 5 47 6 , , 6 06 2 9 4 47 6 , , 8 1 0 0 9 9 47 6 , , 8 13 8 7 0 48 6 , , 5 09 5 5 1 49 6 , ,1 2 3 0 5 0 49 6 , , 2 1 9 7 1 4 By area 7 Europe1 189,230 207,121 217,022 215,024 212,376 213,876 218,355 216,537 8 Canada 13,700 15,285 17,528 17,235 18,041 18,655 19,268 19,248 9 Latin America and Caribbean 37,973 55,898 45,209 41,192 36,982 42,201 39,599 42,176 10 Asia 164,690 197,702 234,318 236,819 240,019 244,650 256,849 266,093 11 Africa 3,723 4,052 4,673 4,179 4,335 4,066 4,583 4,200 12 Other countries6 3,306 2,942 5,144 5,827 5,273 3,861 3,838 3,838 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 1994r 1995 IItteemm 11999911 11999922 11999933rr June Sept. Dec. Mar/ 1 Banks' liabilities 75,129 72,796 78,120 73,016 83,343 89,475 96,003 2 Banks' claims 73,195 62,799 60,663 56,852 63,446 59,711 72,384 3 Deposits 26,192 24,240 20,289 21,562 20,493 19,445 24,172 4 Other claims 47,003 38,559 40,374 35,290 42,953 40,266 48,212 5 Claims of banks' domestic customers2 3,398 4,432 7,320 6,734 7,367 12,229 11,487 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 • September 1995 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States' Payable in U.S. dollars Millions of dollars, end of period 1994R 1995 IItteemm 11999922 11999933 11999944RR Nov. Dec. Jan.' Feb. Mar. Apr. Mayp BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 810,259 925,418r 1,017,034 995,331 1,017,034 1,012,916 1,020,092' l,030,023r 1,036,452 1,042,197 2 Banks' own liabilities 606,444 625,665R 721,751 692,288 721,751 724,503 725,495R 723,940' 719,775 723,496 3 Demand deposits 21,828 21,573 23,373 23,954 23,373 23,424 24,058 22,656 22,916 23,526 4 Time deposits2 160,385 175,078 186,363 178,430 186,363 187,988 185,726R 184,282R 180,714 185,273 5 Other3 93,237 110,635R 115,269 128,793 115,269 124,844 125,641R 120,129R 123,072 126,272 6 Own foreign offices4 330,994 318,379R 396,746 361,111 396,746 388,247 390,070" 396,873R 393,073 388,425 7 Banks' custodial liabilities5 203,815 299,753R 295,283 303,043 295,283 288,413 294,597 306,083 316,677 318,701 8 U.S. Treasury bills and certificates6 127,644 176,739 162,825 169,056 162,825 156,670 160,353 170,138 175,540 182,044 9 Other negotiable and readily transferable instruments7 21,974 36,289 42,177 39,834 42,177 40,502 43,378 44,921 48,427 40,333 10 Other 54,197 86,725R 90,281 94,153 90,281 91,241 90,866 91,024 92,710 96,324 11 Nonmonetary international and regional organizations8... 9,350 10,936 8,506 9,441 8,506 9,821 8,291R 9,263F 8,690 7,923 12 Banks' own liabilities 6,951 5,639 8,076 8,675 8,076 9,355 7,642R 8,639R 7,527 6,956 13 Demand deposits 46 15 29 35 29 24 35 31 214 34 14 Time deposits2 3,214 2,780 3,198 2,917 3,198 3,715 3,484 3,899 3,954 3,491 15 Other3 3,691 2,844 4,849 5,723 4,849 5,616 4,123R 4,709R 3,359 3,431 16 Banks' custodial liabilities5 2,399 5,297 430 766 430 466 649 624 1,163 967 17 U.S. Treasury bills and certificates6 1,908 4,275 281 501 281 280 407 314 763 510 18 Other negotiable and readily transferable instruments7 486 1,022 149 265 149 181 242 307 400 456 19 Other 5 0 0 0 0 5 0 3 0 1 20 Official institutions9 159,563 220,908 212,301 216,752 212,301 207,123 214,667 225,139R 231,465 238,957 71 Banks' own liabilities 51,202 64,231 59,280 60,740 59,280 62,097 67,314 68,922' 67,483 68,497 22 Demand deposits 1,302 1,601 1,564 1,682 1,564 1,598 1,587 1,705 1,485 1,575 73 Time deposits2 17,939 21,654 23,211 20,661 23,211 22,673 25,384R 23,651' 25,492 27,335 24 Other3 31,961 40,976 34,505 38,397 34,505 37,826 40,343R 43,566' 40,506 39,587 75 Banks' custodial liabilities5 108,361 156,677 153,021 156,012 153,021 145,026 147,353 156,217 163,982 170,460 26 US. Treasury bills and certificates6 104,596 151,100 139,570 143,222 139,570 133,014 134,341 141,716 146,417 154,575 27 Other negotiable and readily transferable instruments7 3,726 5,482 13,245 12,773 13,245 11,972 12,943 14,351 17,473 15,771 28 Other 39 95 206 17 206 40 69 150 92 114 79 Banks10 547,320 592,208R 681,727 650,108 681,727 678,182 678,595' 685,528' 681,514 680,008 30 Banks' own liabilities 476,117 478,792R 567,776 534,901 567,776 564,116 561,898R 565,479' 558,950 560,503 31 Unaffiliated foreign banks 145,123 160,413 171,030 173,790 171,030 175,869 171,828R 168,606' 165,877 172,078 32 Demand deposits 10,170 9,719 10,628 11,259 10,628 10,243 10,954 10,788 10,667 11,365 33 Time deposits2 90,296 105,192 111,460 105,998 111,460 112,178 107,429 107,905 99,379 102,345 34 Other3 44,657 45,502 48,942 56,533 48,942 53,448 53,445' 49,913' 55,831 58,368 35 Own foreign offices4 330,994 318,379R 396,746 361,111 396,746 388,247 390,070R 396,873' 393,073 388,425 36 Banks' custodial liabilities5 71,203 113,416R 113,951 115,207 113,951 114,066 116,697 120,049 122,564 119,505 37 U.S. Treasury bills and certificates6 11,087 10,712 11,218 11,792 11,218 10,992 12,328 15,723 15,717 14,437 38 Other negotiable and readily transferable instruments7 7,555 17,020 14,234 13,530 14,234 14,137 15,232 15,254 15,964 10,955 39 Other 52,561 85,684R 88,499 89,885 88,499 88,937 89,137 89,072 90,883 94,113 40 Other foreigners 94,026 101,366' 114,500 119,030 114,500 117,790 118,539R 110,093' 114,783 115,309 41 Banks' own liabilities 72,174 77,003R 86,619 87,972 86,619 88,935 88,641R 80,900' 85,815 87,540 47. Demand deposits 10,310 10,238 11,152 10,978 11,152 11,559 11,482 10,132 10,550 10,552 43 Time deposits2 48,936 45,452 48,494 48,854 48,494 49,422 49,429' 48,827' 51,889 52,102 44 Other3 12,928 21,313R 26,973 28,140 26,973 27,954 27,730 21,941' 23,376 24,886 45 Banks' custodial liabilities5 21,852 24,363 27,881 31,058 27,881 28,855 29,898 29,193 28,968 27,769 46 U.S. Treasury bills and certificates6 10,053 10,652 11,756 13,541 11,756 12,384 13,277 12,385 12,643 12,522 47 Other negotiable and readily transferable instruments7 10,207 12,765 14,549 13,266 14,549 14,212 14,961 15,009 14,590 13,151 48 Other 1,592 946 1,576 4,251 1,576 2,259 1,660 1,799 1,735 2,096 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 9,111 17,567 17,895 17,397 1177,,889955 16,442 17,137 16,759 17,651 11,938 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 the 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 States1—Continued 1994r 1995 IItteemm 11999922 11999933 11999944rr Nov. Dec. Jan.r Feb. Mar. Apr. Mayp AREA 50 Total, all foreigners 810,259 925,418r 1,017,034 995,331 1,017,034 1,012,916 1,020,092' 1,030,023' 1,036,452 1,042,197 51 Foreign countries 800,909 914,482r 1,008,528 985,890 1,008,528 1,003,095 l,011,801r l,020,760r 1,027,762 1,034,274 5? 307,670 377,193 393,021 394,684 393,021 393,767 386,5991 380,685r 367,143 375,743 53 1,611 1,917 3,649 4,267 3,649 3,236 4,021 4,012 4,030 3,963 54 Belgium and Luxembourg 20,567 28,621 21,758 22,324 21,758 21,679 22,094 23,886 22,813 25,673 55 Denmark 3,060 4,517 2,784 2,320 2,784 2,662 1,971 2,396 2,567 2,811 56 1,299 1,872 1,436 1,590 1,436 2,403 1,754 1,223 2,029 1,709 57 41,411 39,746 44,971 41,309 44,971 42,464 44,314 41,300 38,410 40,907 58 18,630 26,613 27,175 31,073 27,175 28,521 27,497 28,276 28,453 31,939 59 913 1,519 1,393 1,489 1,393 1,234 2,065 2,264 2,195 2,199 60 Italy 10,041 11,759 10,882 9,800 10,882 10,269 12,021 8,686 9,417 9,815 61 7,365 16,096 16,723 17,961 16,723 15,629 15,891 15,784 12,545 14,623 6? 3.314 2,966 2,338 2,810 2,338 2,309 2,147 2,066 1,374 1,289 63 2,465 3,366 2,846 2,921 2,846 2,863 4,007 2,810 2,940 2,860 64 577 2,511 2,714 2,843 2,714 2,047 2,642 3,469 5,011 7,042 65 9,793 20,493 14,655 15,038 14,655 15,149 11,106 11,675 9,859 9,827 66 2,953 2,572 3,093 3,361 3,093 2,258 2,247 2,474 1,801 1,445 67 39,440 41,561 41,881 41,759 41,881 39,518 40,100 39,355 41,258 40,011 68 Turkey 2,666 3,227 3,341 3,061 3,341 3,621 2,701 2,513 3,624 3,188 69 United Kingdom 111,805 133,936 163,577 162,796 163,577 173,906 162,638r 159,908' 152,912 149,897 70 504 570 245 240 245 261 258 211 222 229 71 Other Europe and other former U.S.S.R. 29,256 33,331 27,760 27,922 27,760 23,938 27,325 28,477 25,683 26,316 72 Canada 22,420 20,229r 24,612 23,297 24,612 26,503 26,568 27,034 28,563 27,721 73 Latin America and Caribbean 317,228 361,660r 422,720 398,529 422,720 410,039 421,335r 421,976' 431,162 430,536 74 9,477 14,477 17,199 15,971 17,199 12,790 11,886 9,978' 10,154 10,368 75 82,284 73,800 103,684 90,277 103,684 95,227 98,833 100,370 97,352 92,473 76 7,079 7,841 8,467 7,628 8,467 8,906 8,554 8,798 8,764 8,589 77 5,584 5,301 9,140 6,739 9,140 9,004 10,628 10,860 13,114 15,613 78 British West Indies 153,033 193,574r 229,560 216,290 229,560 229,934 233,318r 235,839' 243,856 242,487 79 Chile 3,035 3,183 3,114 3,741 3,114 2,966 3,327 3,587 3,446 2,958 80 4,580 3,171 4,579 4,389 4,579 4,309 4,037 3,644 3,598 3,432 81 Cuba 3 33 13 7 13 12 5 5 6 5 8? 993 880 873 823 873 1,340 1,511 1,117 1,054 1,050 83 1,377 1,207 1,121 1,037 1,121 1,057 1,079 1,062 1,094 1,071 84 371 410 529 533 529 447 464 491 422 542 85 19,454 28,018 12,243 19,202 12,243 12,608 16,770 15,750 17,246 18,263 86 Netherlands Antilles 5,205 4,686r 4,530 4,863 4,530 3,834 4,495 4,013 4,076 6,011 87 4,177 3,582 4,542 4,608 4,542 4,836 4,281 4,361 4,810 5,002 88 1,080 926 899 941 899 901 892 893 931 1,014 89 1,955 1,611 1,594 1,188 1,594 1,798 1,610 1,754 1,930 2,105 90 11,387 12,786 13,975 13,845 13,975 13,461 12,970 12,632 12,130 12,318 91 Other 6,154 6,174 6,658 6,447 6,658 6,609 6,675 6,822 7,179 7,235 9? 143,540 144,575 155,629 157,517 155,629 159,796 166,066r 178,464' 187,669 187,088 China 93 People's Republic of China 3,202 4,011 10,066 8,020 10,066 12,911 15,661 12,017 12,138 9,459 94 Republic of China (Taiwan) 8,408 10,627 9,825 10,954 9,825 9,168 9,941 10,021 9,630 9,187 95 18,499 17,178 17,165 17,559 17,165 18,446 18,ISO1 19,952' 20,117 23,020 96 1,399 1,114 2,338 2,380 2,338 2,296 2,119 2,354 2,194 1,942 9977 1,480 1,986 1,587 1,634 1,587 1,612 1,957 2,107 1,696 2,632 9988 3,773 4,435 5,155 5,067 5,155 5,471 4,953 5,003 5,411 5,331 99 58,435 61,466 64,256 63,493 64,256 61,878 63,200 77,846 84,761 83,180 100 3,337 4,913 5,124 5,026 5,124 4,781 4,175 4,357 4,747 5,034 101 2,275 2,035 2,714 3,065 2,714 2,616 2,363 2,297 2,257 2,722 10? Thailand 5,582 6,137 6,466 5,946 6,466 8,226 9,906 9,564 10,416 11,595 103 Middle Eastern oil-exporting countries 21,437 15,824 15,475 17,701 15,475 16,189 14,935 15,516 15,730 15,639 104 Other 15,713 14,849 15,458 16,672 15,458 16,202 18,706 17,430 18,572 17,347 105 5,884 6,633 6,511 7,001 6,511 6,363 6,203 6,817 7,218 8,145 106 2,472 2,208 1,867 2,134 1,867 1,749 1,830 1,781 2,102 2,045 107 Morocco 76 99 97 73 97 92 73 70 66 73 108 South Africa 190 451 433 693 433 285 400 706 401 542 109 19 12 9 10 9 10 10 9 12 10 110 Oil-exporting countries14 1,346 1,303 1,343 1,227 1,343 1,409 1,122 1,599 1,328 1,303 111 Other 1,781 2,560 2,762 2,864 2,762 2,818 2,768 2,652 3,309 4,172 11? 4,167 4,192 6,035 4,862 6,035 6,627 5,030 5,784 6,007 5,041 113 3,043 3,308 5,141 4,094 5,141 5,395 4,351 5,024 4,912 4,256 114 Other 1,124 884 894 768 894 1,232 679 760 1,095 785 115 Nonmonetary international and regional organizations... 9,350 10,936 8,506 9,441 8,506 9,821 8,291r 9,263' 8,690 7,923 116 7,434 6,851 7,437 7,592 7,437 8,455 7,138r 8,092' 7,153 5,944 117 Latin American regional 1,415 3,218 613 1,094 613 865 582 576 666 1,067 118 Other regional17 501 867 456 755 456 501 571 595 871 912 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 • September 1995 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 1994r 1995 AArreeaa oorr ccoouunnttrryy 11999922 11999933rr 11999944rr Nov. Dec. Jan.r Feb/ Mar/ Apr. Mayp 1 Total, all foreigners 499,437 484,689 480,962 466,097 480,962 482,534 475,227 490,479 478,812 481,064 2 Foreign countries 494,355 482,284 476,371 464,549 476,371 478,952 474,343 486,745 475,875 479,442 3 Europe 123,377 121,934 123,669 120,521 123,669 125,768 122,435 127,390 121,680 121,883 4 Austria 331 413 692 369 692 350 425 589 461 756 5 Belgium and Luxembourg 6,404 6,529 6,649 6,241 6,649 5,553 4,816 7,327 8,390 8,016 6 Denmark 707 382 1,029 658 1,029 478 636 723 549 508 7 Finland 1,418 594 691 713 691 716 452 564 700 431 8 France 14,723 11,537 12,244 12,994 12,244 12,702 11,948 13,259 12,858 13,822 9 Germany 4,222 7,693 6,652 8,320 6,652 8,460 7,640 7,009 7,090 6,574 10 Greece 717 679 592 518 592 668 751 586 535 391 11 Italy 9,047 8,835 6,041 5,907 6,041 6,609 6,538 6,399 6,209 6,219 12 Netherlands 2,468 3,063 3,709 4,086 3,709 3,741 4,200 4,076 3,527 5,978 13 Norway 355 396 504 1,004 504 1,069 988 1,442 1,295 1,382 14 Portugal 325 834 938 1,006 938 988 1,045 907 915 990 15 Russia 3,147 2,310 949 1,172 949 1,148 759 770 657 511 16 Spain 2,755 2,761 3,529 2,171 3,529 2,941 2,800 3,066 2,076 2,138 17 Sweden 4,923 4,082 4,096 3,581 4,096 3,826 4,038 3,372 3,522 3,319 18 Switzerland 4,717 6,565 7,490 6,543 7,490 9,020 8,056 7,837 7,381 7,613 19 Turkey 962 1,300 874 926 874 560 882 690 810 722 20 United Kingdom 63,430 61,641 65,560 62,594 65,560 64,933 64,650 67,497 63,307 61,222 21 Yugoslavia^. 569 536 265 266 265 265 265 247 247 247 22 Other Europe and other former U.S.S.R.3 2,157 1,784 1,165 1,452 1,165 1,741 1,546 1,030 1,151 1,044 23 Canada 13,845 18,534 18,030 17,809 18,030 18,859 18,933 20,207 17,417 20,492 24 Latin America and Caribbean 218,078 223,345 221,388 217,043 221,388 221,874 220,111 224,035 224,065 222,457 25 Argentina 4,958 4,416 5,788 5,728 5,788 5,837 6,312 6,253 6,142 6,316 26 Bahamas 60,835 63,256 66,042 60,879 66,042 64,728 63,877 65,105 64,352 62,169 27 Bermuda 5,935 8,059 7,526 6,730 7,526 14,594 10,944 8,522 11,423 10,244 28 Brazil 10,773 11,813 9,485 9,793 9,485 9,744 10,016 10,751 10,760 11,039 29 British West Indies 101,507 98,661 95,744 96,964 95,744 90,577 91,924 96,315 93,962 95,059 30 Chile 3,397 3,619 3,794 3,628 3,794 3,866 4,207 4,348 4,248 3,867 31 Colombia 2,750 3,179 4,003 3,768 4,003 3,816 3,818 3,983 3,926 4,034 32 Cuba 0 0 0 0 0 0 0 0 2 0 33 Ecuador 884 680 680 635 680 707 659 567 564 663 34 Guatemala 262 288 366 335 366 346 349 379 360 353 35 Jamaica 162 195 254 251 254 253 278 275 262 638 36 Mexico 14,991 15,864 17,672 17,286 17,672 17,338 17,216 17,186 17,181 16,991 37 Netherlands Antilles 1,379 2,682 1,055 1,818 1,055 1,205 1,437 1,187 1,333 1,778 38 Panama 4,654 2,893 2,179 2,304 2,179 2,155 2,340 2,466 2,503 2,429 39 Peru 730 656 996 911 996 1,057 1,117 1,096 1,116 1,095 40 Uruguay 936 954 486 652 486 420 390 344 345 377 41 Venezuela 2,525 2,907 1,828 1,931 1,828 1,705 1,725 1,649 1,679 1,661 42 Other 1,400 3,223 3,490 3,430 3,490 3,526 3,502 3,609 3,907 3,744 43 Asia 131,789 111,720 107,114 103,307 107,114 105,673 106,788 109,389 106,604 108,550 China 44 People's Republic of China 906 2,271 845 827 845 933 869 841 980 879 45 Republic of China (Taiwan) 2,046 2,623 1,381 1,479 1,381 1,245 1,213 1,471 1,451 1,437 46 Hong Kong 9,642 10,872 9,237 11,313 9,237 10,271 11,285 14,459 11,642 12,082 47 India 529 589 990 1,021 990 1,103 1,059 1,039 1,139 1,126 48 Indonesia 1,189 1,527 1,462 1,364 1,462 1,486 1,424 1,511 1,461 1,424 49 Israel 820 826 692 697 692 672 683 811 683 783 50 Japan 79,172 59,945 59,230 53,547 59,230 55,268 57,191 55,512 55,150 58,390 51 Korea (South) 6,179 7,536 10,276 8,863 10,276 10,848 10,754 12,284 11,913 12,197 52 Philippines 2,145 1,409 636 583 636 564 548 548 494 530 53 Thailand 1,867 2,170 2,902 2,720 2,902 2,880 2,635 2,778 2,740 2,752 54 Middle Eastern oil-exporting countries4 18,540 15,109 13,732 14,454 13,732 14,044 13,341 13,069 13,292 11,643 55 Other 8,754 6,843 5,731 6,439 5,731 6,359 5,786 5,066 5,659 5,307 56 4,279 3,857 3,008 3,090 3,008 2,942 2,902 2,858 2,724 2,729 57 Egypt 186 196 225 229 225 227 234 205 181 237 58 Morocco 441 481 429 480 429 415 442 424 440 454 59 South Africa 1,041 633 665 454 665 657 596 644 584 579 60 Zaire 4 4 2 3 2 2 2 2 2 2 61 Oil-exporting countries5 1,002 1,129 842 879 842 825 772 731 700 658 62 Other 1,605 1,414 845 1,045 845 816 856 852 817 799 63 Other 2,987 2,894 3,162 2,779 3,162 3,836 3,174 2,866 3,385 3,331 64 Australia 2,243 2,071 2,219 1,682 2,219 2,198 1,912 1,758 1,804 1,918 65 Other 744 823 943 1,097 943 1,638 1,262 1,108 1,581 1,413 66 Nonmonetary international and regional organizations6... 5,082 2,405 4,591 1,548 4,591 3,582 884 3,734 2,937 1,622 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 Setdements, 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 1995 TTyyppee ooff ccllaaiimm 11999922 11999933rr 11999944rr Nov. Dec. Jan.r Feb/ Mar/ Apr. Mayp 1 Total 559,495 538,471 556,191 556,191 572,313 2 Banks' claims 499,437 484,689 480,962 466,097 480,962 482,534 475,227 490,479 478,812 481,064 3 Foreign public borrowers 31,367 29,095 23,470 21,334 23,470 24,100 18,181 23,712 22,173 19,077 4 Own foreign offices 303,991 284,310 283,135 276,808 283,135 278,928 279,276 293,119 282,696 286,091 5 Unaffiliated foreign banks 109,342 100,030 110,862 103,686 110,862 104,330 105,383 104,434 103,981 102,970 6 Deposits 61,550 48,841 59,065 50,902 59,065 54,445 54,145 53,178 54,648 51,095 7 Other 47,792 51,189 51,797 52,784 51,797 49,885 51,238 51,256 49,333 51,875 8 All other foreigners 54,737 71,254 63,495 64,269 63,495 75,176 72,387 69,214 69,962 72,926 9 Claims of banks' domestic customers3 60,058 53,782 75,229 75,229 81,834 10 Deposits 15,452 21,111 36,190 36,190 36,528 11 Negotiable and readily transferable instruments4 31,474 18,991 25,731 25,731 30,823 12 Outstanding collections and other claims 13,132 13,680 13,308 13,308 14,483 MEMO 13 Customer liability on acceptances 8,655 7,829 8,313 8,313 8,394 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 38,623 26,364 27,185 27,168 27,185 27,459 28,726 26,792 24,927 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 US. 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 1994r 1995 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999911 11999922 11999933rr June Sept. Dec. Mar. 1 Total 195,302 195,119 199,844 190,777 193,973 197,587 197,075 By borrower 2 Maturity of one year or less 162,573 163,325 170,134 164,960 167,271 171,949 168,824 3 Foreign public borrowers 21,050 17,813 17,765 13,244 17,370 15,530 15,739 4 All other foreigners 141,523 145,512 152,369 151,716 149,901 156,419 153,085 5 Maturity of more than one year 32,729 31,794 29,710 25,817 26,702 25,638 28,251 6 Foreign public borrowers 15,859 13,266 10,809 8,053 7,385 7,697 7,695 7 All other foreigners 16,870 18,528 18,901 17,764 19,317 17,941 20,556 By area Maturity of one year or less 8 Europe 51,835 53,300 56,574 51,153 58,784 56,500 53,699 9 Canada 6,444 6,091 7,664 8,278 7,212 7,266 7,333 10 Latin America and Caribbean 43,597 50,376 58,948 59,723 57,782 60,031 62,929 11 Asia 51,059 45,709 41,335 39,036 36,661 40,422 38,105 12 Africa 2,549 1,784 1,820 1,798 1,520 1,365 1,223 13 All other3 7,089 6,065 3,793 4,972 5,312 6,365 55,,553355 Maturity of more than one year 14 Europe 3,878 5,367 5,205 3,744 4,034 3,861 4,490 15 Canada 3,595 3,287 2,558 2,474 2,654 2,459 3,603 16 Latin America and Caribbean 18,277 15,312 13,976 12,551 12,665 12,220 12,952 17 Asia 4,459 5,038 5,587 4,763 5,047 4,732 5,138 18 Africa 2,335 2,380 1,936 1,850 1,840 1,553 1,592 19 All other3 185 410 448 435 462 813 476 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 • September 1995 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks1 Billions of dollars, end of period 1993 1994 1995 AArreeaa oorr ccoouunnttrryy 11999911 11999922 Mar. June Sept. Dec. Mar. June Sept. Dec. Mar. 1 Total 343.6 346.5 361.1 377.1 388.4 404.5r 478.9r 505.8r 510.6r 501.9r 555.5 2 G-10 countries and Switzerland 137.6 132.9 142.5 150.0 153.3 161.8r 179.0r 174.1r 188.3r 176.3r 194.3 3 Belgium and Luxembourg .0 5.6 6.1 7.0 7.1 7.4 8.0 8.7r 9.7 6.9 8.1 4 France 11.0 15.3 13.5 14.0 12.3 11.7 16.4 18.9r 20.7 19.2r 19.8 5 Germany 8.3 9.3 9.9 10.8 12.4 12.6 28.9r 25.9r 25.ff 24.5 30.3 6 Italy 5.6 6.5 6.7 7.9 8.7 7.6r 15.5 14.0 11.6 11.8 12.2 7 Netherlands .0 2.8 3.6 3.7 3.7 4.7 4.1 3.6 3.5 3.6 3.5 8 Sweden 1.9 2.3 3.0 2.5 2.5 2.5 2.8 2.9 2.6 2.7 3.1 9 Switzerland 3.4 4.8 5.3 4.7 5.6 5.9 6.3 6.5 6.2 6.9 6.2 10 United Kingdom 68.5 60.8 65.7 73.5 74.7 84.7 70.3r 63.5r 82.8 70.4r 76.2 11 Canada 5.8 6.3 8.2 8.0 9.7 6.8r 7.7 9.6 9.8 9.6r 10.5 12 Japan 22.6 19.3 20.4 17.9 16.8 17.8 19.01 20.5 16.4 20.7 24.3 13 Other industrialized countries 22.8 24.0 25.4 27.2 26.0 24.6 41.3r 41.7 41.5 45.2 43.9 14 Austria .6 1.2 1.2 1.3 .6 .4 1.0 1.0 1.0 1.1 .9 15 Denmark .9 .9 .8 1.0 1.1 1.0 1.1 1.1 .8 1.2 1.6 16 Finland .7 .7 .7 .9 .6 .4 1.0 .8 .8 1.0 1.1 17 Greece 2.6 3.0 2.7 3.1 3.2 3.2 3.8 4.6 4.3 4.5 4.9 18 Norway 1.4 1.2 1.8 1.8 2.1 1.7 1.6 1.6 1.6 2.0 2.4 19 Portugal .6 .4 .7 .9 1.0 .8 1.2 1.1 1.0 1.2 1.0 20 Spain 8.3 8.9 9.5 10.5 9.3 8.9 12.3 11.7 13.1 13.6 14.1 21 Turkey 1.4 1.3 1.4 2.1 2.1 2.1 2.4 2.1 1.8 1.6 1.4 22 Other Western Europe 1.8 1.7 2.0 1.7 2.2 2.6 3.1r 2.8 1.0 2.7 2.5 23 South Africa 1.9 1.7 1.6 1.3 1.2 1.1 1.2 1.2 1.2 1.0 1.4 24 Australia 2.7 2.9 2.9 2.5 2.8 2.3 12.7 13.7 15.0 15.4 12.6 25 OPEC2 14.5 16.1 16.6 15.7 14.8 17.4 22.9 21.5 21.7 22.1 19.3 26 Ecuador .7 .6 .6 .6 .5 .5 .5 .5 .4 .5 .5 27 Venezuela 5.4 5.2 5.1 5.5 5.4 5.1 4.7 4.4 3.9 3.7 3.5 28 Indonesia 2.7 3.0 3.1 3.1 2.8 3.3 3.4 3.2 3.3 3.6 3.8 29 Middle East countries 4.2 6.2 6.6 5.4 4.9 7.4 13.2 12.4 13.1 13.4 10.7 30 African countries 1.5 1.1 1.1 1.1 1.1 1.2 1.1 1.1 1.0 .9 .7 31 Non-OPEC developing countries 63.9 72.1 74.4 76.7 77.0 82.6 93.9r 94.3r 94.1 98.4r 100.3 Latin America 32 Argentina 4.8 6.6 7.1 6.6 7.2 7.7 8.7 9.8 10.5 11.1 11.4 33 Brazil 9.6 10.8 11.6 12.3 11.7 12.0 12.6 11.9 9.2 8.3r 9.1 34 Chile 3.6 4.4 4.6 4.6 4.7 4.7 5.1 5.1 5.4 6.1 6.3 35 Colombia 1.7 1.8 1.9 1.9 2.0 2.1 2.2 2.4 2.4 2.6 2.6 36 Mexico 15.5 16.0 16.8 16.8 17.5 17.8r 18.7r 18.4r 19.5r 18.3r 17.8 37 Peru .4 .5 .4 .4 .3 .4 .6r .6 .6 .5 .6 38 Other 2.1 2.6 2.7 2.7 2.7 3.0 2.8r 2.7 2.7 2.6r 2.4 Asia China 39 People's Republic of China .3 .7 .6 1.6 .5 2.0 .8 ,8r 1.0 1.1 1.1 40 Republic of China (Taiwan) 4.1 5.2 5.3 5.9 6.4 7.3 7.5 7.1 6.9 9.1 10.5 41 3.0 3.2 3.1 3.1 2.9 3.2 3.6 3.7 3.9 4.2 3.8 42 Israel .5 .4 .5 .4 .4 .5 .4 .4 .4 .4 .6 43 Korea (South) 6.8 6.6 6.5 6.9 6.5 6.7 i4. r 14.3r 14.1 16.2r 16.9 44 Malaysia 2.3 3.1 3.4 3.7 4.1 4.4 5.2 5.2 5.7 4.4 3.8 45 Philippines 3.7 3.6 3.4 2.9 2.6 3.1 3.4 3.2 2.9 3.3 3.0 46 Thailand 1.7 2.2 2.2 2.4 2.8 3.1 3.(f 3.3 3.5 3.8r 3.3 47 Other Asia 2.0 2.7 2.7 2.6 3.0 2.9 3.1 3.5 3.6 4.8 5.2 Africa 48 Egypt .4 .2 .2 .2 .2 .4 .4 .5 .3 .3 .4 49 Morocco .7 .6 .5 .6 .6 .7 .7 .7 .7 .6 .6 50 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 .7 1.0 .8 .9 .8 .8 1.0 .9 .9 .8 .7 52 Eastern Europe 2.4 3.1 2.9 3.2 3.0 3.1 3.4 3.0 3.0 2.7 2.4 53 Russia4 .9 1.9 1.7 1.9 1.7 1.6 1.5 1.2 1.1 .8 .6 54 Yugoslavia5 .9 .6 .6 .6 .6 .6 .5 .5 .5 .5 .4 55 Other .7 .6 .7 .8 .7 .9 1.4 1.4 1.5 1.4 1.3 56 Offshore banking centers 54.2 58.3 60.3 58.0 67.9 71.4r 78. lr 79.1' 76.0r 69.7r 84.0 57 Bahamas 11.9 6.9 9.7 7.1 12.7 10.8r 13.7r 13.4r 13.6r 9.8r 12.2 58 Bermuda 2.3 6.2 4.1 4.5 5.5 8.1 8.5r 6.1 5.4r 7.4 8.4 59 Cayman Islands and other British West Indies 15.8 21.8 17.6 15.6 15.1 17.4r 17.6r 23.3r 21.2r 19.9r 19.2 60 Netherlands Antilles 1.2 1.1 1.6 2.5 2.8 2.6r 3.5r 2.5 1.7 1.0 .9 61 Panama6 1.4 1.9 2.0 2.1 2.1 2.4 2.0 1.9 1.9 1.3 1.1 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 14.4 13.8 16.7 16.9 19.1 18.7 19.7 21.7 20.3 19.9 22.8 64 Singapore 7.1 6.5 8.4 9.3 10.4 11.2 13.0* 10.6' 11.8 10.2 19.2 65 Other' .0 .0 .0 .0 .0 .1 .0 .0 .0 .1 .0 66 Miscellaneous and unallocated8 48.0 39.7 38.8 46.2 46.3 43.4 59.9 91.2' 85.5 87.3r 111.1 1. The banking offices covered by these data include U.S. offices and foreign branches 2. Organization of Petroleum Exporting Countries, shown individually; other members of U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not of OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and covered include U.S. agencies and branches of foreign banks. Beginning March 1994, the United Arab Emirates); and Bahrain and Oman (not formally members of OPEC). data include large foreign subsidiaries of U.S. banks. The data also include other types of 3. Excludes Liberia. Beginning March 1994 includes Namibia. U.S. depository institutions as well as some types of brokers and dealers. To eliminate 4. As of December 1992, excludes other republics of the former Soviet Union. duplication, the data are adjusted to exclude the claims on foreign branches held by a U.S. 5. As of December 1992, excludes Croatia, Bosnia and Hercegovinia, and Slovenia. office or another foreign branch of the same banking institution. 6. Includes Canal Zone. These data are on a gross claims basis and do not necessarily reflect the ultimate 7. Foreign branch claims only. country risk or exposure of U.S. banks. More complete data on the country risk exposure 8. Includes New Zealand, Liberia, and international and regional organizations. of U.S. banks are available in the quarterly Country Exposure Lending Survey published by the Federal Financial Institutions Examination Council. 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 1995 Type of liability, and area or country 11999911 11999922 11999933rr Dec. Mar. June Sept. Dec. Mar.p 1 Total 44,708 45,511 50369 50,369* 52,059* 55,383' 57,204' 54,644 51,488 2 Payable in dollars 39,029 37,456 38,750 38,750r 38,552r 42,957r 42,734' 39,700 37,600 3 Payable in foreign currencies 5,679 8,055 11,619 11,619"^ 13,507r 12,426r 14,470* 14,944 13,888 By type 4 Financial liabilities 22,518 23,841 28,959 28,959r 30,413r 33,245r 35,850* 32,848 29,852 5 Payable in dollars 18,104 16,960 18,545 18,545r 18,930* 22,819r 23,262' 19,792 17,745 6 Payable in foreign currencies 4,414 6,881 10,414 10,414r U,483r 10,426r 12,588' 13,056 12,107 7 Commercial liabilities 22,190 21,670 21,410 21,410 21,646r 22,138 21,354 21,796 21,636 8 Trade payables 9,252 9,566 8,811 8,811 8,976r 9,913 9,552 10,013 10,162 9 Advance receipts and other liabilities ... 12,938 12,104 12,599 12,599 12,670 12,225 11,802 11,783 11,474 10 Payable in dollars 20,925 20,496 20,205 20,205 19,622r 20,138 19,472 19,908 19,855 11 Payable in foreign currencies 1,265 1,174 1,205 1,205 2,024 2,000 1,882 1,888 1,781 By area or country Financial liabilities 12 Europe 12,003 13,387 18,810 ls.sio1 20,5 lC 23,689r 23,792' 20,870 16,804 13 Belgium and Luxembourg 216 414 175 175 525 524 661 495 612 14 France 2,106 11,,662233 2,539 2,539r 2,606 1,590 2,241 1,727 2,046 15 Germany 682 888899 975 975 1,214 939 1,467 1,961 1,755 16 Netherlands 1,056 606 534 534 564 533 648 552 633 17 Switzerland 408 569 634 634 1,200 631 633 688 883 18 United Kingdom 6,528 8,610 13,332 13,332r 13,793r 18,255' 16,827' 14,709 10,025 19 Canada 292 544 859 859 508 698 618 625 1,817 20 Latin America and Caribbean 4,784 4,053 3,359 3,359 3,554r 3,125r 3,139' 3,021 3,024 21 Bahamas 537 379 1,148 1,148 l,158r 1,052 1,112 926 931 22 Bermuda 114 114 0 0 120 115 15 80 149 23 Brazil 6 19 18 18 18 18 7 207 58 24 British West Indies 3,524 2,850 1,533 1,533 1,613 1,297' 1,344' 1,160 1,231 25 Mexico 7 12 17 17 14 13 15 0 10 26 Venezuela 4 6 5 5 5 5 5 5 5 27 Asia2 5,381 5,818 5,689 5,689 5,650 5,694 8,149 8,147 8,011 28 Japan 4,116 4,750 4,620 4,620 4,638 4,760 6,947 7,013 6,990 29 Middle Eastern oil-exporting countries" 13 19 23 23 24 24 31 35 27 30 Africa 6 6 133 133 133 9 133 135 156 4 0 123 123 124 0 123 123 122 31 Oil-exporting countries4 52 33 109 109 58 30 19 50 40 32 All other5 Commercial liabilities 8,701 7,398 6,835 6,835 6,550 6,921 6,867 6,855 6,906 33 Europe 248 298 239 239 251 254 287 231 273 34 Belgium and Luxembourg ..: 1,039 700 655 655 554 712 742 763 696 35 France 1,052 729 684 684 577 670 552 611 510 36 Germany 710 535 688 688 628 649 674 723 576 37 Netherlands 575 350 375 375 388 473 391 335 389 38 Switzerland 2,297 2,505 2,047 2,047 2,151 2,311 2,351 2,450 2,857 39 United Kingdom 40 Canada 1,014 1,002 879 879 l,039r 1,070 1,068 1,038 1,203 41 Latin America and Caribbean 1,355 1,533 1,666 1,666 1,908 2,007 1,790 1,865 1,547 42 Bahamas 3 3 21 21 8 2 6 19 8 43 Bermuda 310 307 350 350 493 418 200 345 265 44 Brazil 219 209 216 216 211 217 148 163 100 45 British West Indies 107 33 27 27 20 24 33 23 29 46 Mexico 307 457 483 483 556 705 673 576 512 47 Venezuela 94 142 126 126 150 194 192 279 276 48 Asia2 9,334 10,594 10,992 10,992 10,939 10,979 10,514 11,077 10,966 49 Japan 3,721 3,612 4,314 4,314 4,617 4,389 4,235 4,808 4,793 50 Middle Eastern oil-exporting countries 1,498 1,889 1,542 1,542 1,542 1,841 1,688 1,610 1,810 51 Africa 715 568 464 464 490 523 482 442 472 52 Oil-exporting countries 327 309 171 171 199 247 271 262 256 53 Other5 1,071 575 574 574 720 638 633 519 542 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 • September 1995 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1993 1994r 1995 TTyyppee ooff ccllaaiimm,, aanndd aarreeaa oorr ccoouunnttrryy 11999911 11999922 11999933rr Dec.r Mar. June Sept. Dec. Mar.p 1 Total 45,262 45,073 48,197 48,197 49,125 48,436 50,320 55,783 50458 2 Payable in dollars 42,564 42,281 44,920 44,920 45,746 44,763 46,839 52,641 47,067 3 Payable in foreign currencies 2,698 2,792 3,277 3,277 3,379 3,673 3,481 3,142 3,491 By type 4 Financial claims 27,882 26,509 27,528 27,528 28,461 27,064 28,672 32,714 27,920 5 Deposits 20,080 17,695 15,681 15,681 15,973 15,769 16,570 18,645 16,573 6 Payable in dollars 19,080 16,872 15,146 15,146 15,471 15,164 16,009 18,194 15,979 7 Payable in foreign currencies 1,000 823 535 535 502 605 561 451 594 8 Other financial claims 7,802 8,814 11,847 11,847 12,488 11,295 12,102 14,069 11,347 9 Payable in dollars 6,910 7,890 10,655 10,655 11,301 9,972 10,914 13,009 10,180 10 Payable in foreign currencies 892 924 1,192 1,192 1,187 1,323 1,188 1,060 1,167 11 Commercial claims 17,380 18,564 20,669 20,669 20,664 21,372 21,648 23,069 22,638 12 Trade receivables 14,468 16,007 17,666 17,666 17,769 18,552 18,867 20,204 19,676 13 Advance payments and other claims 2,912 2,557 3,003 3,003 2,895 2,820 2,781 2,865 2,962 14 Payable in dollars 16,574 17,519 19,119 19,119 18,974 19,627 19,916 21,438 20,908 15 Payable in foreign currencies 806 1,045 1,550 1,550 1,690 1,745 1,732 1,631 1,730 By area or country Financial claims 16 Europe 13,441 9,331 7,249 7,249 7,257 6,698 8,042 7,638 7,222 17 Belgium and Luxembourg 13 8 134 134 125 83 114 86 69 18 France 269 764 826 826 790 995 831 800 805 19 Germany 283 326 526 526 466 459 413 540 443 20 Netherlands 334 515 502 502 503 472 503 429 606 21 Switzerland 581 490 530 530 535 509 747 523 490 22 United Kingdom 11,534 6,252 3,535 3,535 3,699 3,062 4,326 4,395 3,867 23 Canada 2,642 1,833 2,032 2,032 2,207 3,080 3,164 3,801 4,090 24 Latin America and Caribbean 10,717 13,893 16,031 16,031 15,968 14,591 14,808 18,723 14,798 25 Bahamas 827 778 1,310 1,310 1,285 1,281 1,070 2,329 905 26 Bermuda 8 40 125 125 34 39 52 27 37 27 Brazil 351 686 654 654 672 466 411 520 487 28 British West Indies 9,056 11,747 12,536 12,536 12,704 11,792 12,143 14,802 12,574 29 Mexico 212 445 868 868 850 614 655 606 472 30 Venezuela 40 29 161 161 26 33 32 35 27 31 640 864 1,657 1,657 2,550 2,234 2,175 1,835 1,457 32 Japan 350 668 892 892 1,657 1,349 662 931 584 33 Middle Eastern oil-exporting countries 5 3 3 3 5 2 19 141 4 34 Africa 57 83 99 99 76 74 87 249 77 35 Oil-exporting countries3 1 9 1 1 0 1 1 0 9 36 All other4 385 505 460 460 403 387 396 468 276 Commercial claims 37 Europe 8,193 8,451 9,097 9,097 8,772 8,925 8,783 9,579 9,070 38 Belgium and Luxembourg 194 189 184 184 177 179 174 217 199 39 France 1,585 1,537 1,947 1,947 1,830 1,779 1,766 1,886 1,797 40 Germany 955 933 1,018 1,018 947 938 880 1,046 1,000 41 Netherlands 645 552 423 423 355 294 330 314 334 42 Switzerland 295 362 432 432 415 686 538 559 562 43 United Kingdom 2,086 2,094 2,369 2,369 2,342 2,434 2,490 2,554 2,403 44 Canada 1,121 1,286 1,360 1,360 1,483 1,468 1,503 1,543 1,587 45 Latin America and Caribbean 2,655 3,043 3,284 3,284 3,573 3,903 3,971 4,147 4,122 46 Bahamas 13 28 11 11 13 18 34 9 16 47 Bermuda 264 255 182 182 222 295 246 234 202 48 Brazil 427 357 463 463 422 502 473 614 679 49 British West Indies 41 40 71 71 58 67 49 83 58 50 Mexico 842 924 994 994 1,014 1,047 1,137 1,244 1,099 51 Venezuela 203 345 296 296 296 305 394 355 298 52 4,591 4,866 5,906 5,906 5,851 6,141 6,433 6,745 6,840 53 Japan 1,899 1,903 2,173 2,173 2,353 2,359 2,448 2,497 2,595 54 Middle Eastern oil-exporting countries 620 693 716 716 668 616 616 700 697 55 Africa 430 554 521 521 515 492 462 473 481 56 Oil-exporting countries 95 78 85 85 102 90 68 76 82 57 Other4 390 364 501 501 470 443 496 582 538 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 1995 1994 1995 Transaction, and area or country 1993 1994 Jan.- Nov. Dec. Jan. Feb. Mar. Apr. Mayp May U.S. corporate securities STOCKS 1 Foreign purchases 319,664 350,558 158,556 28,696 28,094 24,999 29,443 35,332 30,080 38,702 2 Foreign sales 298,086 348,648 158,453 27,653 29,727 25,893 29,685 37,653 29,204 36,018 3 Net purchases, or sales (-) 21,578 1,910 103 1,043 -1,633 -894 -242 -2^21 876 2,684 4 Foreign countries 21,306 1,900 153 1,020 -1,635 -930 -197 -2,291 877 2,694 5 Europe 10,658 6,717 -1,291 226 -1,110 -516 -10 -1,304 163 376 -103 -201 -678 -25 -119 -255 -27 -250 -80 -66 1,642 2,110 -1,244 -55 -158 -157 -55 -243 -261 -528 8 Netherlands -602 2,251 1,329 265 652 278 232 296 349 174 9 Switzerland 2,986 -30 -2,094 -551 8 -389 -78 -475 -673 -479 10 United Kingdom 4,559 840 2,396 566 -1,265 253 -51 -309 1,123 1,380 11 Canada -3,213 -1,160 -289 -109 175 129 27 -333 -195 83 12 Latin America and Caribbean 5,719 -2,108 2,057 650 -577 991 766 -243 570 -27 13 Middle East1 -321 -1,142 -256 1 -86 -22 -133 -73 59 -87 14 Other Asia 8,198 -1,207 -335 251 -171 -1,469 -851 -342 314 2,013 3,825 1,190 -1,607 262 -174 -860 -541 -321 29 86 63 29 -15 -4 -25 -36 0 -10 -10 41 17 Other countries 202 771 282 5 159 -7 4 14 -24 295 18 Nonmonetary international and regional organizations 272 10 -50 23 2 3366 --4455 --3300 --11 --1100 BONDS2 283,824 291,084r 108,702 22,347" 18,931" 19,247" 22,789 25,390 18,222 23,054 20 Foreign sales 217,824 229,520" 77,529 15,431" 14,702" 12,626" 16,354 17,552 14,111 16,886 21 Net purchases, or sales (-) 66,000 61,564r 31,173 6,916r 4,229r 6,621r 6,435 7,838 4,111 6,168 22 Foreign countries 65,462 60,679" 31,407 6,932r 3,889r 6,417r 6,489 8,151 4,094 6,256 23 Europe 22,587 38,708" 25,041 4,395" 2,711" 6,807" 6,037 4,976 2,330 4,891 2,346 242 -479 -106 4 157 296 -85 -874 27 25 Germany 887 657 1,766 201 451 1,516 526 -176 -83 -17 26 Netherlands -290 3,322 193 346 28 -241 126 154 -37 191 27 Switzerland -627 1,055 195 488 12 -85 304 -61 -87 124 28 United Kingdom 19,686 33,283" 23,630 3,541" 1,929" 5,416" 4,800 5,248 3,455 4,711 29 Canada 1,668 2,958" 1,170 194" 445" 245 175 289 184 277 30 Latin America and Caribbean 15,691 5,442" 1,717 1,305 662 -655 -480 1,285 889 678 31 Middle East1 3,248 771 806 -96 -193 59 119 328 326 -26 32 Other Asia 20,846 12,153 2,499 1,137 240 -28 595 1,150 356 426 33 Japan 11,569 5,486 1,452 497 -174 -396 132 570 275 871 34 Africa 1,149 -7" 10 -2 8 8 -4 22 -11 -5 35 Other countries 273 654 164 -1 16 -19 47 101 20 15 36 Nonmonetary international and regional organizations 538 885 -234 -16 340 220044 --5544 --331133 1177 --8888 Foreign securities 37 Stocks, net purchases, or sales (-) -62,691 -47,232" -9,804 -2,547 -2,359" -159" -1,086" -2,844" -2,147 -3,568 245,490 386,942" 136,058 28,444 26,332" 26,303" 27,154" 28,995" 24,481 29,125 308,181 434,174" 145,862 30,991 28,691" 26,462" 28,240" 31,839" 26,628 32,693 40 Bonds, net purchases, or sales (—) -80,377 -9,332" -8,813 -3,481" 300" -802" -1,851" -1,189" -747 -4,224 41 Foreign purchases 745,952 848,334" 336,047 62,555" 66,461" 68,120" 61,226" 79,056" 53,493 74,152 42 Foreign sales 826,329 857,666" 344,860 66,036" 66,161" 68,922" 63,077" 80,245" 54,240 78,376 43 Net purchases, or sales (-), of stocks and bonds -143,068 -56,564" -18,617 —6,028"' —2,059r —961r —2,937r —4,033r -2,894 -7,792 44 Foreign countries -143,232 —57,084r -18,588 —5,981r —2,814r —l,025r —2,773r -3,944" -3,050 -7,796 -100,872 -2,726" -10,770 -2,709" -2,809" 1,599" -1,290" -1,871" -1,849 -7,359 -15,664 -7,481" -1,654 -512" 1,643" -187" 850" -1,150 -1,195 28 47 Latin America and Caribbean -7,600 -18,387" -3,073 -1,565" 373" -308" -2,496" -1,282" 584 429 48 Asia -15,159 -24,272" -3,908 257" -2,026" -2,044" 13 9 -533 -1,353 -185 -467" -112 -267 -88" 1" -116 85 -14 -68 50 Other countries -3,752 -3,751" 929 -1,185 93" -86" 266" 265 -43 527 51 Nonmonetary international and regional organizations 164 520 -29 -47 755 64 --116644 --8899 115566 4 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 US. government Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • September 1995 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions1 Millions of dollars; net purchases, or sales (—) during period 1995 1994 1995 AArreeaa oorr ccoouunnttrryy 11999933 11999944 J M an ay .- Nov. Dec. Jan. Feb. Mar. Apr. May? 1 Total estimated 23,552 78,796r 53,811 13,118r ll,752r 9,578r 14,103r 9,211 6,400 14,519 2 Foreign countries 23,368 78,632r 53,728 13,068 ll,964r 10,252* 13,385* 9,107 6,416 14,568 3 Europe -2,373 38,608r 23,322 7,763 8,300* 3,258* 13,294* 3,109 3,152 509 4 Belgium and Luxembourg 1,218 1,098 -158 24 434 134 107 51 62 -512 5 Germany -9,976 5,709 -1,935 924 725 60 -543 1,461 1,216 -4,129 6 Netherlands -515 1,254 1,939 -2 156 2,388 -239 -7 -243 40 7 Sweden 1,421 794 233 211 61 -35 97 30 -70 211 8 Switzerland -1,501 48 lr 68 -1,512 68 lr 141* 165 -418 -173 353 9 United Kingdom 6,197 23,438 21,580 7,706 6,243 579* 10,448* 3,099 2,251 5,203 10 Other Europe and former U.S.S.R 783 5,834r 1,595 412 0* -9* 3,259 -1,107 109 -657 11 Canada 10,309 3,491 3,907 -1,350 -559 3,177 1,486 434 -1,391 201 12 Latin America and Caribbean -4,561 -10,179r 2,051 725 978 636 -3,268 -2,332 3,212 3,803 13 Venezuela 390 -319 673 43 91 -211 329 387 184 -16 14 Other Latin America and Caribbean -5,795 -20,493r 959 -2,074 74 3,028 -3,325 -3,358 2,189 2,425 15 Netherlands Antilles 844 10,633 419 2,756 813 -2,181 -272 639 839 1,394 16 Asia 20,582 47,042r 24,786 4,944 3,640 3,577* 1,730 8,445 1,189 9,845 17 Japan 17,070 29,518 17,705 4,551 2,067 3,444 2,316 4,167 1,487 6,291 18 Africa 1,156 240 34 -11 58 -9 49 -9 -36 39 19 Other -1,745 -570 -372 997 -453 -387 94 -540 290 171 20 Nonmonetary international and regional organizations 184 164r 83 50* -212r -674 718 104 -16 -49 21 International -330 526r 420 86r — 131* -708 608 458 -294 356 22 Latin American regional 653 -154r -474 4 -3 -6 199 -367 228 -528 MEMO 23 Foreign countries 23,368 78,632r 53,728 13,068 11,964* 10,252* 13,385* 9,107 6,416 14,568 24 Official institutions 1,306 41,822r 9,295 2,760 608* 1,829* 2,110 4,022 3,144 -1,810 25 Other foreign2 22,062 36,810 44,433 10,308 11,356 8,423* 11,275* 5,085 3,272 16,378 Oil-exporting countries 26 Middle East2 -8,836 -38 -627 623 -405 -360 -89 152 733 -1,063 27 Africa3 -5 0 1 0 -1 0 0 1 0 0 1. Official and private transactions in marketable U.S. 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 June 30, 1995 Rate on June 30, 1995 Rate on June 30, 1995 Country Country Country Month Month Month effective effective effective Austria.. 4.0 Mar. 1995 Germany... 4.0 Mar. 1995 Norway 4.75 Feb. 1994 Belgium. 4.0 Mar. 1995 Italy 9.0 June 1995 Switzerland 3.0 Mar. 1995 Canada.. 6.97 June 1995 Japan 1.0 Apr. 1995 United Kingdom 12.0 Sept. 1992 Denmark 6.0 Mar. 1995 Netherlands 3.75 June 1995 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 1995 TTyyppee oorr ccoouunnttrryy 11999922 11999933 11999944 Jan. Feb. Mar. Apr. May June July 1 Eurodollars 3.70 3.18 4.63 6.23 6.14 6.15 6.13 6.03 5.89 5.79 2 United Kingdom 9.56 5.88 5.45 6.50 6.68 6.61 6.64 6.64 6.63 6.73 3 Canada 6.76 5.14 5.57 7.86 8.14 8.32 8.16 7.56 7.07 6.69 4 Germany 9.42 7.17 5.25 5.04 5.00 4.96 4.58 4.49 4.43 4.46 5 Switzerland 7.67 4.79 4.03 3.95 3.77 3.62 3.33 3.29 3.09 2.77 6 Netherlands 9.25 6.73 5.09 5.09 5.03 5.03 4.60 4.41 4.21 4.14 7 France 10.14 8.30 5.72 5.76 5.70 7.77 7.60 7.29 7.04 6.31 8 Italy 13.91 10.09 8.45 9.10 9.07 10.98 10.94 10.38 10.91 10.93 9 Belgium 9.31 8.10 5.65 5.29 5.33 6.21 5.22 5.16 4.62 4.52 10 Japan 4.39 2.96 2.24 2.31 2.27 2.11 1.55 1.31 1.16 .91 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 • September 1995 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar except as noted 1995 Country/currency unit 11999922 11999933 11999944 Feb. Mar. Apr. May June July 1 Australia/dollar^ 73.521 67.993 73.161 74.473 73.452 73.564 72.716 71.959 72.792 2 Austria/schilling 10.992 11.639 11.409 10.573 9.898 9.720 9.912 9.854 9.765 3 Belgium/franc 32.148 34.581 33.426 30.908 29.035 28.419 29.009 28.790 28.562 4 Canada/dollar 1.2085 1.2902 1.3664 1.4005 1.4077 1.3762 1.3609 1.3775 1.3612 5 China, P.R./yuan 5.5206 5.7795 8.6404 8.4553 8.4483 8.4421 8.3370 8.3288 8.3207 6 Denmark/krone 6.0372 6.4863 6.3561 5.9302 5.6281 5.4391 5.5194 5.4604 5.4073 7 Finland/markka 4.4865 5.7251 5.2340 4.6547 4.3967 4.2884 4.3386 4.3134 4.2592 8 France/franc 5.2935 5.6669 5.5459 5.2252 4.9756 4.8503 4.9869 4.9172 4.8307 9 Germany/deutsche mark 1.5618 1.6545 1.6216 1.5022 1.4061 1.3812 1.4096 1.4012 1.3886 10 Greece/drachma 190.81 229.64 242.50 236.17 228.53 225.19 228.46 226.56 225.45 11 Hong Kong/dollar 7.7402 7.7357 7.7290 7.7314 7.7318 7.7336 7.7351 7.7356 7.7385 12 India/rupee 28.156 31.291 31.394 31.380 31.587 31.407 31.418 31.404 31.385 13 Ireland/pound2 170.42 146.47 149.69 156.20 159.76 162.80 161.98 162.87 163.96 14 Italy/lira 232.17 1,573.41 1,611.49 1,620.58 1,688.99 1,710.89 1,652.78 1,639.75 1,609.71 15 Japan/yen 126.78 111.08 102.18 98.24 90.52 83.69 85.11 84.64 87.40 16 Malaysia/ringgit 2.5463 2.5738 2.6237 2.5526 2.5464 2.4787 2.4684 2.4396 2.4500 17 Netherlands/guilder 1.7587 1.8585 1.8190 1.6844 1.5774 1.5474 1.5779 1.5686 1.5557 18 New Zealand/dollar2... 53.792 54.127 59.358 63.448 64.598 66.723 66.740 66.947 67.417 19 Norway/krone 6.2142 7.1009 7.0553 6.5974 6.2730 6.2050 6.2980 6.2387 6.1710 20 Portugal/escudo 135.07 161.08 165.93 155.36 147.92 145.89 148.40 147.63 145.88 21 Singapore/dollar 1.6294 1.6158 1.5275 1.4541 1.4216 1.3986 1.3947 1.3953 1.3984 22 South Africa/rand 2.8524 3.2729 3.5526 3.5629 3.6013 3.6035 3.6574 3.6627 3.6404 23 South Korea/won 784.66 805.75 806.93 793.19 781.81 770.61 764.43 763.88 760.05 24 Spain/peseta 102.38 127.48 133.88 130.52 128.58 124.14 123.22 121.71 119.71 25 Sri Lanka/rupee 44.013 48.211 49.170 49.895 49.627 49.371 49.558 50.210 50.899 26 Sweden/krona 5.8258 7.7956 7.7161 7.3914 7.2787 7.3455 7.3072 7.2631 7.1749 27 Switzerland/franc 1.4064 1.4781 1.3667 1.2715 1.1709 1.1384 1.1693 1.1588 1.1556 28 Taiwan/dollar 25.160 26.416 26.465 26.339 26.102 25.491 25.537 25.784 26.278 29 Thailand/baht 25.411 25.333 25.161 25.020 24.760 24.572 24.663 24.672 24.755 30 United Kingdom/pound2 176.63 150.16 153.19 157.20 160.02 160.73 158.74 159.48 159.52 MEMO 31 United States/dollar3... 86.61 93.18 91.32 87.29 83.69 81.81 82.73 82.27 81.90 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 June 1995 A76 SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks March 31, 1993 August 1993 A70 June 30, 1993 November 1993 A70 September 30, 1993 February 1994 A70 December 31, 1993 May 1994 A68 Terms of lending at commercial banks August 1994 November 1994 A68 November 1994 February 1995 A68 February 1995 May 1995 A68 May 1995 August 1995 A68 Assets and liabilities of U.S. branches and agencies of foreign banks June 30, 1994 November 1994 A72 September 30, 1994 February 1995 A72 December 31, 1994 May 1995 A72 March 31, 1995 August 1995 A72 Pro forma balance sheet and income statements for priced service operations September 30, 1991 January 1992 A70 March 31, 1992 August 1992 A80 June 30, 1992 October 1992 A70 March 31, 1995 August 1995 A76 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 Residential lending reported under the Home Mortgage Disclosure Act 1994 September 1995 A68 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Special Tables • September 1995 4.34 RESIDENTIAL LENDING ACTIVITY OF FINANCIAL INSTITUTIONS COVERED BY HMDA, 1982-94 Number Item 1982 1983 1984 1985 1986 1987 1988 1989 19901 1991 1992 1993 1994 1 Loans or applications (millions)2 1.13 1.71 1.86 1.98 2.83 3.42 3.39 3.13 6.59 7.89 12.01 15.38 12.19 2 Reporting institutions 8,258 8,050 8,491 8,072 8,898 9,431 9,319 9,203 9,332 9,358 9,073 9,650 9,858 3 Disclosure reports 11,357 10,970 11,799 12,567 12,329 13,033 13,919 14,154 24,041 25,934 28,782 35,976 38,750 1. Before 1990, includes only home purchase, home refinancing, and home improve- 2. Revised from preliminary data published in Glenn B. Canner and Dolores S. Smith, ment loans originated by covered institutions; beginning in 1990 (first year under revised "Home Mortgage Disclosure Act: Expanded Data on Residential Lending," Federal reporting system), includes such loans originated and purchased, applications approved Reserve Bulletin, vol. 77 (November 1991), p. 861, to reflect corrections and the reporting but not accepted by the applicant, applications denied or withdrawn, and applications of additional data. closed because information was incomplete. SOURCE. FFIEC, Home Mortgage Disclosure Act. 4.35 APPLICATIONS FOR HOME LOANS REPORTED UNDER HMDA By Type of Dwelling, Purpose of Loan, and Loan Program, 1994 Thousands One- to four-family dwellings MMuullttiiffaammiillyy LLooaann pprrooggrraamm AAllll ddwweelllliinnggss Home purchase Home refinancing Home improvement All 1 FHA 709.9 333.7 231.1 1,274.7 * 1,275.0 2 VA 293.4 160.0 1.5 454.9 * 455.0 3 FmHA 10.5 .6 * 11.3 • 11.3 4 Conventional 4,186.3 3,298.9 1,460.7 8,945.8 32.9 8,978.7 5 Total 5,200.1 3,7933 1,693.4 10,686.7 33.2 10,719.9 •Fewer than 500. SOURCE. FFIEC, Home Mortgage Disclosure Act. 1. Multifamily dwellings are those for five or more families. 4.36 HOME LOANS ORIGINATED BY LENDERS REPORTING UNDER HMDA By Type of Dwelling, Purpose of Loan, and Type of Lender, 1994 Percent One- to four-family dwellings Home purchase Multifamily Type of lender Home Home dwellings' VA- FmHA- refinancing improvement guaranteed insured 1 Commercial bank ... 8.0 8.6 28.7 27.8 23.7 28.9 70.6 46.9 2 Savings association.. 10.1 9.7 14.7 21.7 19.2 18.5 7.9 48.1 4 3 M Cr o e r d t i g t a u g n e io c n o mpany2.. 81. .2 8 80 1 . . 4 3 56. . 2 4 48 1 . . 8 8 55 1 . . 6 5 48 4 . . 6 0 1 1 1 0 . . 5 0 4. . 6 4 5 Total 100 100 100 100 100 100 100 100 MEMO Distribution of loans 6 Number 519,102 218,052 7,215 2,795,162 3,539,531 2,519,793 1,018,973 7,078,297 23,090 7 Percent 7.3 3.1 .1 39.4 49.8 35.5 14.3 99.7 .3 •Less than 0.05 percent. 2. Comprises all covered mortgage companies, including those affiliated with a com- 1. Multifamily dwellings are those for five or more families. mercial bank, savings association, or credit union. SOURCE. FFIEC, Home Mortgage Disclosure Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure A69 4.37 APPLICATIONS FOR LOANS FOR ONE- TO FOUR-FAMILY HOMES REPORTED UNDER HMDA By Purpose of Loan and Characteristics of Applicant and Census Tract, 1994 Home purchase HHoommee rreeffiinnaanncciinngg HHoommee iimmpprroovveemmeenntt Government-backed1 Conventional CCChhhaaarrraaacccttteeerrriiissstttiiiccc MEMO MEMO Percentage of Percentage of Number Percent characteristic's Number Percent characteristic's Number Percent Number Percent home purchase home purchase loans loans APPLICANT Racial/ethnic identity 1 American Indian or Alaskan Native ... 4,813 .5 18.0 21,887 .5 82.0 17,151 .5 99,,116633 ..77 2 Asian or Pacific Islander 15,508 1.6 10.7 128,992 3.2 89.3 131,306 3.9 21,154 1.5 3 Black 140,900 14.3 36.0 250,267 6.2 64.0 221,910 6.7 155,848 11.1 4 Hispanic 101,919 10.4 31.7 219,844 5.5 68.3 210,231 6.3 119,093 8.5 5 White 681,071 69.3 17.2 3,290,026 81.6 82.8 2,641,947 79.3 1,055,069 75.5 6 Other 5,233 .5 13.7 33,041 .8 86.3 33,898 1.0 13,983 1.0 7 All 33,809 3.4 27.5 89,021 2.2 72.5 74,162 2.2 23,805 1.7 8 Total 983,253 100.0 19.6 4,033,078 100.0 80.4 3,330,605 100.0 1,398,115 100.0 Income (percentage of MSA median)2 9 Less than 80 335,912 41.0 29.3 809,920 27.6 70.7 689,658 25.3 476,650 3377..11 10 80-99 175,207 21.4 30.3 402,921 13.7 69.7 375,005 13.8 189,000 14.7 11 100-119 124,250 15.2 25.0 372,468 12.7 75.0 353,399 13.0 164,184 12.8 12 120 or more 183,607 22.4 12.0 1,345,089 45.9 88.0 1,307,272 48.0 456,154 35.5 13 Total 818,976 100.0 21.8 2,930,398 100.0 78.2 2,725,334 100.0 1,285,988 100.0 CENSUS TRACT Racial/ethnic compostion (minorities as percentage of population) 14 Less than 10 305,923 37.6 16.6 1,536,461 52.6 83.4 1,367,155 45.3 660077,,007711 4488..66 15 10-19 189,742 23.3 23.1 629,939 21.6 76.9 637,288 21.1 218,633 17.5 16 20-49 211,458 26.0 29.9 496,869 17.0 70.1 594,298 19.7 208,429 16.7 17 50-79 64,801 8.0 28.8 160,091 5.5 71.2 228,933 7.6 94,344 7.6 18 80-100 41,538 5.1 30.2 96,042 3.3 69.8 188,931 6.3 120,853 9.7 19 Total 813,462 100.0 21.8 2,919,402 100.0 78.2 3,016,605 100.0 1,249,330 100.0 Income 3 20 Low or moderate 139,723 17.0 28.3 354,253 12.1 71.7 435,193 14.3 272,252 21.3 21 Middle 481,747 58.5 24.9 1,449,151 49.6 75.1 1,543,198 50.7 671,206 52.4 22 Upper 201,450 24.5 15.3 1,118,982 38.3 84.7 1,064,330 35.0 337,594 26.4 23 Total 822,920 100.0 22.0 2,922,386 100.0 78.0 3,042,721 100.0 1,281,052 100.0 Location 4 24 Central city 385,292 46.3 25.2 1,145,411 38.5 74.8 1,215,509 39.4 579,087 44.2 25 Non-central city 447,405 53.7 19.7 1,829,464 61.5 80.3 1,872,041 60.6 730,295 55.8 26 Total 832,697 100.0 21.9 2,974,875 100.0 78.1 3,087,550 100.0 1,309382 100.0 NOTE. Lenders reported 10,719,915 applications for home loans in 1994. Not all the median family income for the MSA in which the tract is located. Categories are characteristics were reported for all applications; thus the number of applications being defined as follows: Low or moderate income, median family income for census tract less distributed by characteristic varies by characteristic. than 80 percent of median family income for MSA; Middle income, median family 1. Loans backed by the Federal Housing Administration, the Department of Veterans income 80 percent to 120 percent of MSA median; Upper income, median family income Affairs, or the Farmers Home Administration. more than 120 percent of MSA median. 2. MSA median is median family income of the metropolitan statistical area (MSA) in 4. For census tracts located in MSAs. which the property related to the loan is located. SOURCE. FFIEC, Home Mortgage Disclosure Act. 3. Census tracts are categorized by the median family income for the tract relative to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Special Tables • September 1995 4.38 APPLICATIONS FOR LOANS FOR ONE- TO FOUR-FAMILY HOMES REPORTED UNDER HMDA By Purpose of Loan, with Denial Rate, and by Characteristic of Applicant, 1994 Home purchase Home refinancing Home improvement Applicant characteristic1 Government-backed Distribution Denial rate Distribution Denial rate American Indian or Alaskan Native 1 One male 28.81 15.39 26.06 33.82 24.66 18.63 27.59 31.35 2 Two males 1.42 17.65 1.47 35.31 1.39 18.14 .94 31.76 3 One female 22.92 14.08 25.44 34.76 20.53 18.50 25.87 33.90 4 Two females 5.95 13.29 3.37 26.16 2.93 17.23 1.09 30.30 5 One male and one female 40.90 16.08 43.66 28.71 50.49 15.43 44.51 26.46 6 Total3 100.00 15.27 100.00 31.62 100.00 16.91 100.00 29.91 Asian or Pacific Islander 7 One male 21.46 11.09 17.68 14.70 14.72 17.19 20.45 32.05 8 Two males 3.76 10.81 3.15 15.31 2.05 19.58 1.21 30.98 9 One female 13.04 11.08 12.78 14.42 11.66 19.18 15.83 29.16 10 Two females 2.38 9.49 1.90 14.13 1.61 19.59 1.19 25.90 11 One male and one female 59.36 10.16 64.49 10.49 69.96 15.79 61.31 23.15 12 Total3 100.00 10.50 100.00 11.97 100.00 16.54 100.00 26.17 Black 13 One male 26.84 18.13 24.74 34.81 21.06 22.03 25.62 37.60 14 Two males 1.03 19.96 .91 33.94 .77 27.07 .49 40.21 15 One female 28.89 17.85 33.53 35.06 27.07 21.74 36.32 38.33 16 Two females 2.70 19.57 2.48 37.18 1.84 22.22 1.73 38.61 17 One male and one female 40.55 19.64 38.34 30.77 49.25 18.83 35.84 32.22 18 Total3 100.00 18.76 100.00 33.44 100.00 20.44 100.00 35.98 Hispanic 19 One male 19.97 12.97 21.27 27.89 16.40 20.19 27.37 43.70 20 Two males 6.13 8.61 3.87 24.91 1.80 25.52 1.07 42.43 21 One female 10.30 14.17 14.12 25.67 14.24 18.72 21.20 47.66 22 Two females 2.04 12.70 2.00 24.99 1.33 20.61 .96 42.46 23 One male and one female 61.56 12.79 58.74 23.09 66.22 19.52 49.40 36.03 24 Total3 100.00 12.71 100.00 24.60 100.00 19.64 100.00 40.74 White 25 One male 22.89 10.98 19.47 21.00 16.77 14.50 20.35 22.25 26 Two males 1.22 10.24 1.20 18.37 1.09 15.53 .60 23.74 27 One female 14.71 9.47 15.19 19.25 12.85 12.64 16.75 22.37 28 Two females 1.05 10.74 1.02 21.24 .76 13.59 .75 24.92 29 One male and one female 60.13 10.44 63.13 14.14 68.53 10.26 61.55 16.20 30 Total3 100.00 10.43 100.00 16.40 100.00 11.37 100.00 18.58 All 31 One male 23.17 12.43 19.89 22.42 17.00 15.63 21.62 26.93 32 Two males 1.77 10.53 1.39 19.90 1.15 17.39 .64 28.16 33 One female 16.36 12.05 16.28 21.66 13.90 14.53 19.42 28.38 34 Two females 1.45 13.50 1.21 23.39 .92 15.93 .89 29.71 35 One male and one female 57.25 11.70 61.23 15.22 67.02 11.55 57.43 19.00 36 Total3 100.00 11.95 100.00 17.89 100.00 12.77 100.00 22.71 1. Applicants are categorized by race of first applicant listed on Loan Application 3. Includes all applicants from racial or ethnic group regardless of whether gender was Register, except for joint white and minority applications, which are not shown in this reported. table. SOURCE. FFIEC, Home Mortgage Disclosure Act. 2. Loans backed by the Federal Housing Administration, the Department of Veterans Affairs, or the Farmers Home Administration. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure A71 4.39 APPLICATIONS FOR HOME LOANS REPORTED UNDER HMDA By Loan Program and Size of Dwelling, 1994 Percent One- to four-family dwellings Home purchase Home refinancing Type of loan Approved Approved Approved Approved and but not Denied Withdrawn Total and but not Denied Withdrawn Total accepted accepted accepted accepted 1 FHA 73.1 1.8 12.1 11.2 1.8 100 60.9 5.9 8.5 18.4 6.3 100 2 VA 74.3 1.0 11.8 11.3 1.6 100 72.4 4.1 6.4 13.8 3.3 100 3 FmHA 68.4 1.6 17.7 11.3 1.0 100 78.9 2.2 6.8 11.5 .6 100 4 Conventional 66.8 6.2 18.1 7.7 1.2 100 66.7 5.0 15.9 10.3 2.1 100 5 All 68.1 5.3 17.0 8.4 1.3 100 66.4 5.1 14.8 11.2 2.5 100 One- to four-family dwellings Home improvement Approved Approved Approved Approved and but not Denied Withdrawn Total and but not Denied Withdrawn TToottaall accepted accepted accepted accepted 1 FHA 30.4 17.2 37.5 10.4 4.5 100 75.9 2.4 14.7 6.1 .8 100 2 VA 20.9 1.6 6.0 69.9 1.6 100 62.5 * 18.8 18.8 * 100 3 FmHA 50.8 4.6 27.7 16.9 # 100 * 16.7 33.3 33.3 16.7 100 4 Conventional 64.9 5.3 24.6 4.5 .8 100 69.6 3.1 16.0 9.9 1.4 100 5 AU 60.2 6.9 26.3 5.3 1.3 100 69.6 3.1 16.0 9.9 1.4 100 NOTE. Loans approved and accepted were approved by the lender and accepted by the *Less than 0.05 percent, applicant. Loans approved but not accepted were approved by the lender but not accepted 1. Multifamily dwellings are those for five or more families, by the applicant. Applications denied were denied by the lender, and applications SOURCE. FFIEC, Home Mortgage Disclosure Act. withdrawn were withdrawn by the applicant. When an application was left incomplete by the applicant, the lender reported file closed and took no further action. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Special Tables • September 1995 4.40 APPLICATIONS FOR ONE- TO FOUR-FAMILY HOME LOANS REPORTED UNDER HMDA By Disposition of Loan and Characteristics of Applicant and Census Tract, 1994 A. Home Purchase Loans Percent Government-backed 1 Conventional Cnaractenstic Approved Denied Withdrawn File closed Total Approved Denied Withdrawn File closed Total APPLICANT Racial or ethnic identity 1 American Indian or Alaskan Native 70.2 15.3 12.6 1.9 100 58.0 31.6 9.2 1.2 100 2 Asian or Pacific Islander.. 76.4 10.5 11.8 1.3 100 76.6 12.0 10.0 1.5 100 3 Black 67.1 18.8 12.0 2.2 100 57.3 33.4 7.6 1.7 100 4 Hispanic 73.0 12.7 12.4 2.0 100 65.0 24.6 8.6 1.7 100 5 White 78.2 10.4 10.1 1.3 100 75.6 16.4 7.1 .9 100 6 Other 68.6 15.0 14.6 1.8 100 65.0 23.8 9.5 1.6 100 7 Joint2 76.4 11.7 10.8 1.1 100 73.6 17.2 8.2 1.0 100 Income ratio (percentage of MSA median)3 8 Less than 80 75.9 13.1 9.8 1.3 100 69.2 22.7 7.1 1.0 100 9 American Indian or Alaskan Native ... 71.7 15.8 10.8 1.7 100 59.8 30.5 8.7 1.1 100 10 Asian or Pacific Islander 77.3 11.1 10.5 1.1 100 74.6 15.0 9.1 1.3 100 11 Black 67.9 19.1 11.1 1.9 100 59.8 30.5 7.9 1.8 100 12 Hispanic 73.6 13.9 10.9 1.6 100 64.0 27.0 7.6 1.4 100 13 White 79.1 11.0 8.9 1.0 100 71.7 21.0 6.5 .8 100 14 Other 70.4 14.5 13.7 1.3 100 62.7 27.9 8.2 1.2 100 15 Joint2 74.4 14.4 10.2 1.0 100 64.4 27.6 7.2 .8 100 16 80-99 81.1 9.3 8.7 1.0 100 77.8 13.7 7.5 1.0 100 17 American Indian or Alaskan Native ... 75.9 11.3 11.8 .9 100 70.3 19.2 9.5 1.0 100 18 Asian or Pacific Islander 79.6 8.9 10.6 .9 100 78.5 11.1 9.2 1.2 100 19 Black 73.2 15.0 10.2 1.6 100 67.1 22.2 8.9 1.8 100 20 Hispanic 78.1 10.8 10.0 1.1 100 69.4 20.7 8.4 1.5 100 21 White 83.6 7.7 8.0 .8 100 80.5 11.9 6.8 .8 100 22 Other 73.8 15.0 9.5 1.6 100 70.9 17.8 9.6 1.7 100 23 Joint2 81.0 9.7 8.8 .6 100 74.8 17.1 7.5 .6 100 24 100-119 81.9 8.5 8.6 1.0 100 80.5 11.0 7.5 1.1 100 25 American Indian or Alaskan Native ... 77.7 10.4 10.8 1.1 100 72.2 15.8 10.6 1.3 100 26 Asian or Pacific Islander 79.2 8.3 11.3 1.2 100 79.3 10.4 9.0 1.3 100 27 Black 74.4 14.3 9.8 1.5 100 69.8 19.0 9.4 1.9 100 28 Hispanic 78.1 10.0 10.6 1.3 100 71.1 18.6 8.5 1.8 100 29 White 84.3 7.1 7.8 .8 100 82.9 9.5 6.9 .8 100 30 Other 77.8 9.7 11.3 1.1 100 72.6 15.0 10.5 1.9 100 31 Joint2 81.4 8.9 8.9 .8 100 78.8 12.6 7.9 .7 100 32 120 or more 81.5 8.2 9.4 1.0 100 83.2 7.8 7.9 1.1 100 33 American Indian or Alaskan Native ... 76.1 12.4 11.0 .5 100 73.3 12.3 13.0 1.4 100 34 Asian or Pacific Islander 79.5 9.0 10.5 .9 100 78.7 10.0 9.9 1.4 100 35 Black 75.2 13.3 10.0 1.4 100 73.5 15.1 9.5 1.9 100 36 Hispanic 76.3 10.0 12.4 1.3 100 74.4 14.1 9.7 1.7 100 37 White 84.0 6.7 8.5 .8 100 85.1 6.7 7.3 .9 100 38 Other 72.5 11.9 14.4 1.2 100 74.4 12.3 11.6 1.8 100 39 Joint2 81.4 8.4 9.4 .8 100 81.9 9.2 8.0 .9 100 CENSUS TRACT Racial or ethnic composition (minorities as percentage of population) 40 Less than 10 81.6 9.0 8.2 1.1 100 81.7 10.5 6.9 .9 100 41 10-19 79.6 10.0 9.2 1.3 100 77.6 13.0 8.2 1.2 100 42 20-49 76.7 11.6 10.3 1.5 100 73.0 16.8 8.8 1.4 100 43 50-79 72.4 14.3 11.3 2.0 100 68.6 20.4 9.4 1.7 100 44 80-100 68.9 15.9 12.8 2.4 100 63.3 24.3 10.2 2.2 100 Income4 45 Low or moderate 73.5 13.9 10.8 1.8 100 68.4 21.6 8.4 1.5 100 46 Middle 79.2 10.3 9.1 1.3 100 77.2 14.4 7.4 1.1 100 47 Upper 79.8 9.2 9.6 1.4 100 82.1 8.7 8.1 1.1 100 Location5 48 Central city 76.8 11.8 9.7 1.6 100 76.5 14.3 8.0 1.2 100 49 Non-central city 79.6 9.7 9.4 1.4 100 78.8 12.5 7.6 1.1 100 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure A73 4.40 APPLICATIONS FOR ONE- TO FOUR-FAMILY HOME LOANS REPORTED UNDER HMDA By Disposition of Loan and Characteristics of Applicant and Census Tract, 1994—Continued B. Home Refinancing and Home Improvement Loans Percent Home refinancing Home improvement CChhaarraacctteerriissttiicc Approved Denied Withdrawn File closed Total Approved Denied Withdrawn File closed Total APPLICANT Racial or ethnic identity 1 American Indian or Alaskan Native 66.4 16.9 14.7 2.1 100 64.7 29.9 4.0 1.4 110000 2 Asian or Pacific Islander.. 68.9 16.5 12.1 2.5 100 65.0 26.2 6.3 2.5 100 3 Black 63.9 20.4 12.3 3.4 100 58.4 36.0 4.2 1.5 100 4 Hispanic 63.6 19.6 13.3 3.5 100 54.6 40.7 3.5 1.1 100 5 White 77.9 11.4 8.8 1.9 100 76.9 18.6 3.9 .7 100 6 Other 55.8 23.6 18.2 2.3 100 63.7 30.0 5.3 1.0 100 7 Joint2 73.0 14.9 10.0 2.0 100 73.7 21.3 4.0 1.0 100 Income ratio (percentage of MSA median)} 8 Less than 80 65.9 20.9 11.0 2.2 100 59.0 3344..88 44..77 11..44 110000 9 American Indian or Alaskan Native . . . 63.8 21.6 13.0 1.5 100 59.0 35.7 4.4 1.0 110000 10 Asian or Pacific Islander 64.0 20.9 12.8 2.3 100 56.1 36.3 5.1 22..55 110000 11 Black 59.6 25.5 12.2 2.6 100 53.2 41.3 4.1 1.5 100 12 Hispanic 60.2 26.3 11.2 2.3 100 50.8 44.0 3.8 1.5 100 13 White 74.3 15.3 8.9 1.5 100 70.1 25.3 3.9 .7 100 14 Other 48.1 31.4 18.5 2.0 100 49.1 41.9 7.9 1.1 100 15 Joint2 68.3 21.0 9.2 1.4 100 62.7 31.9 4.2 1.2 100 16 80-99 72.2 15.7 10.1 2.0 100 68.5 25.4 4.9 1.2 100 17 American Indian or Alaskan Native . . . 67.2 17.2 13.7 1.8 100 69.2 25.8 3.6 1.4 110000 18 Asian or Pacific Islander 69.3 16.5 11.8 2.3 100 63.7 27.6 6.7 2.0 110000 19 Black 63.6 21.7 11.8 2.9 100 60.1 34.3 4.1 1.5 100 20 Hispanic 62.5 23.8 11.3 2.4 100 55.1 40.0 3.7 1.2 100 21 White 78.8 11.6 8.1 1.4 100 77.7 18.0 3.6 .7 100 22 Other 55.6 23.6 18.4 2.4 100 59.4 32.5 7.4 .6 100 23 Joint2 73.0 16.5 9.2 1.3 100 72.2 22.8 4.2 .7 100 24 100-119 74.0 14.3 9.8 1.9 100 71.5 22.5 4.8 1.2 100 25 American Indian or Alaskan Native ... 67.8 16.6 13.9 1.7 100 72.4 23.1 2.7 1.8 110000 26 Asian or Pacific Islander 69.6 16.4 11.9 2.1 100 68.9 22.5 6.4 2.2 100 27 Black 65.6 20.2 11.5 2.7 100 62.9 31.2 4.5 1.4 100 28 Hispanic 62.6 23.0 12.2 2.2 100 54.5 40.8 3.7 1.1 100 29 White 79.9 10.8 7.9 1.3 100 80.1 15.7 3.5 .6 100 30 Other 57.5 23.0 17.5 2.0 100 63.8 29.5 5.1 1.6 100 31 Joint2 74.2 15.3 9.1 1.3 100 74.8 20.5 3.8 .8 100 32 120 or more 76.0 12.5 9.6 1.8 100 76.0 18.1 4.7 1.2 100 33 American Indian or Alaskan Native . .. 67.5 16.6 13.9 2.0 100 75.3 20.1 4.1 .6 110000 34 Asian or Pacific Islander 70.0 16.2 11.4 2.3 100 70.2 20.8 6.7 2.3 110000 35 Black 67.0 19.6 11.0 2.4 100 67.9 26.6 4.2 1.3 100 36 Hispanic 66.7 17.3 14.0 2.0 100 58.6 37.5 3.1 .8 100 37 White 80.2 10.2 8.2 1.4 100 83.7 12.0 3.6 .7 100 38 Other 60.7 20.9 16.1 2.2 100 68.8 23.5 5.8 1.9 100 39 Joint2 74.3 14.8 9.4 1.5 100 78.8 16.5 3.6 1.0 100 CENSUS TRACT Racial or ethnic composition (minorities as percentage of population) 40 Less than 10 77.3 11.4 9.3 2.0 100 75.9 18.8 44..66 ..77 110000 41 10-19 71.4 14.7 11.2 2.6 100 68.6 24.6 5.2 1.6 100 42 20-49 67.3 17.3 12.5 2.9 100 62.4 30.2 5.4 1.9 100 43 50-79 62.2 21.0 13.6 3.1 100 55.8 36.8 5.4 2.0 100 44 80-100 56.4 25.7 14.6 3.4 100 51.0 41.6 5.3 2.1 100 Income4 45 Low or moderate 62.7 21.3 12.9 3.1 100 56.8 36.7 4.9 1.6 110000 46 Middle 72.1 14.5 10.9 2.5 100 69.5 24.6 4.8 1.1 100 47 Upper 74.7 12.5 10.5 2.3 100 73.3 20.3 5.0 1.3 100 Location5 48 Central city 69.4 16.0 11.8 2.8 100 64.7 29.1 4.8 1.4 110000 49 Non-central city 73.2 13.9 10.5 2.3 100 70.4 23.6 4.9 1.1 100 NOTE. Applicant income ratio is applicant income as a percentage of MSA median. 4. Census tracts are categorized by the median family income for the tract relative to MSA median is median family income of the metropolitan statistical area (MSA) in which the median family income for the MSA in which the tract is located. Categories are the property related to the loan is located. defined as follows: Low or moderate income, median family income for census tract less 1. Loans backed by the Federal Housing Administration, the Department of Veterans than 80 percent of median family income for MSA; Middle income, median family Affairs, or the Fanners Home Administration. income 80 percent to 120 percent of MSA median; Upper income, median family income 2. White and minority. more than 120 percent of MSA median. 3. MSA median is median family income of the metropolitan statistical area (MSA) in 5. For census tracts located in MSAs. which the property related to the loan is located. SOURCE. FFIEC, Home Mortgage Disclosure Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Special Tables • September 1995 4.41 HOME LOANS SOLD By Purchaser and Characteristics of Borrower and Census Tract, 1994 Fannie Mae Ginnie Mae Freddie Mac FmHA Commercial bank CChhaarraacctteerriissttiicc Number Percent Number Percent Number Percent Number Percent Number Percent 1 All 1,025,443 100.0 961,032 100.0 760,122 100.0 1,603 100.0 125,283 100.0 BORROWER Racial or ethnic identity 2 American Indian or Alaskan Native .... 4,543 .5 3,035 .5 2,269 .3 176 11.4 308 .3 3 Asian or Pacific Islander 38,623 4.1 11,899 1.8 29,862 4.4 73 4.7 2,045 2.1 4 Black 38,223 4.1 74,361 11.1 20,748 3.0 62 4.0 8,750 9.2 5 Hispanic 47,891 5.1 68,891 10.3 29,906 4.4 168 10.9 6,000 6.3 6 White 773,373 83.1 483,374 72.5 582,623 85.1 999 65.0 75,391 78.9 7 Other 7,092 .8 3,299 .5 4,754 .7 19 1.2 710 .7 8 Joint 21,073 2.3 22,097 3.3 14,655 2.1 41 2.7 2,337 2.4 9 Total 930,818 100.0 666,956 100.0 684,817 100.0 1,538 100.0 95,541 100.0 Income ratio (percentage of MSA median) 10 Less than 80 174,989 22.7 160,818 37.0 123,004 22.0 413 37.1 27,543 29.4 11 80-99 119,941 15.6 92,930 21.4 82,417 14.7 242 21.7 15,219 16.2 12 100-119 116,102 15.1 69,980 16.1 84,394 15.1 142 12.8 13,300 14.2 13 120 or more 359,939 46.7 111,192 25.6 270,028 48.2 316 28.4 37,606 40.1 14 Total 770,971 100.0 434,920 100.0 559,843 100.0 1,113 100.0 93,668 100.0 CENSUS TRACT Racial or ethnic composition (minorities as percentage of population) 15 Less than 10 441,011 52.4 306,164 37.3 328,303 54.7 451 35.4 51,608 47.5 16 10-19 181,678 21.6 199,736 24.3 127,269 21.2 284 22.3 22,723 20.9 17 20-49 144,495 17.2 214,820 26.2 98,616 16.4 313 24.6 21,260 19.6 18 50-79 47,231 5.6 63,633 7.7 30,035 5.0 122 9.6 6,817 6.3 19 80-100 27,525 3.3 36,909 4.5 16,187 2.7 104 8.2 6,287 5.8 20 Total 841,940 100.0 821,262 100.0 600,410 100.0 1,274 100.0 108,695 100.0 Income 21 Low or moderate 80,809 9.6 124,825 15.0 52,230 8.7 239 18.7 14,940 13.7 22 Middle 427,108 50.7 492,475 59.1 304,182 50.6 746 58.5 57,247 52.5 23 Upper 334,407 39.7 216,330 26.0 244,843 40.7 290 22.7 36,927 33.8 24 Total 842,324 100.0 833,630 100.0 601,255 100.0 1,275 100.0 109,114 100.0 Location 25 Central city 323,485 38.4 380,302 45.6 215,715 35.8 561 43.9 42,338 38.8 26 Non-central city 519,449 61.6 453,733 54.4 386,040 64.2 716 56.1 66,883 61.2 27 Total 842,934 100.0 834,035 100.0 601,755 100.0 1,277 100.0 109,221 100.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Home Mortgage Disclosure A75 4.41 HOME LOANS SOLD By Purchaser and Characteristics of Borrower and Census Tract, 1994—Continued Savings bank or savings and Life insurance company Affiliate Other loan association CChhaarraacctteerriissttiicc Number Percent Number Percent Number Percent Number Percent 1 All 63,459 100.0 16,868 100.0 497,015 100.0 1,045,211 100.0 BORROWER Racial or ethnic identity 2 American Indian or Alaskan Native .... 219 .4 5588 ..44 11,,667733 ..44 55,,229900 ..66 3 Asian or Pacific Islander 1,905 3.3 350 2.3 10,498 2.5 31,220 3.3 4 Black 3,077 5.3 1,618 10.9 26,779 6.3 76,879 8.1 2,894 4.9 796 5.3 19,312 4.5 63,234 6.6 6 White 48,673 83.2 11,642 78.1 356,188 83.6 740,792 77.8 7 Other 343 .6 79 .5 2,763 .6 8,822 .9 8 Joint 1,394 2.4 361 2.4 9,049 2.1 25,981 2.7 9 Total 58,505 100.0 14,904 100.0 426,262 100.0 952,218 100.0 Income ratio (percentage of MSA median) 10 Less than 80 11,788 23.4 3,831 28.2 80,604 23.8 208,939 27.2 11 80-99 7,159 14.2 2,527 18.6 46,062 13.6 112,094 14.6 12 100-119 6,994 13.9 2,028 14.9 41,872 12.4 96,334 12.5 13 120 or more 24,456 48.5 5,212 38.3 169,502 50.1 350,578 45.7 14 Total 50,397 100.0 13,598 100.0 338,040 100.0 767,945 100.0 CENSUS TRACT Racial or ethnic composition (minorities as percentage of population) 15 Less than 10 28,596 54.6 6,981 44.6 206,424 57.3 361,905 43.5 16 10-19 10,982 21.0 3,909 25.0 76,841 21.3 197,205 23.7 17 20-49 8,609 16.4 3,354 21.4 53,075 14.7 176,732 21.2 18 50-79 2,656 5.1 867 5.5 14,589 4.1 55,183 6.6 19 80-100 1,564 3.0 553 3.5 9,277 2.6 41,639 5.0 20 Total 52,407 100.0 15,664 100.0 360,206 100.0 832,664 100.0 5,556 10.5 1,852 11.8 37,484 10.3 111111,,339944 1133..44 22 Middle 25,614 48.3 8,529 54.6 171,518 47.3 407,196 48.8 23 Upper 21,843 41.2 5,249 33.6 153,729 42.4 315,349 37.8 24 Total 53,013 100.0 15,630 100.0 362,731 100.0 833,939 100.0 18,593 35.0 6,043 38.6 135,175 37.2 333377,,994488 4400..55 26 Non-central city 34,534 65.0 9,622 61.4 227,929 62.8 497,479 59.5 27 Total 53,127 100.0 15,665 100.0 363,104 100.0 835,427 100.0 NOTE. Includes securitized loans. See also notes to table 4.40. FmHA—Fanners Home Administration Fannie Mae—Federal National Mortgage Association Affiliate—Affiliate of institution reporting the loan Ginnie Mae—Government National Mortgage Association SOURCE. FFIEC, Home Mortgage Disclosure Act. Freddie Mac—Federal Home Loan Mortgage Corporation Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Index to Statistical Tables References are to pages A3-A75 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Depository institutions Agricultural loans, commercial banks, 21, 22 Reserve requirements, 9 Assets and liabilities (See also Foreigners) Reserves and related items, 4, 5, 6, 13 Banks, by classes, 18-23 Deposits (See also specific types) Domestic finance companies, 36 Banks, by classes, 4, 18—23 Federal Reserve Banks, 11 Federal Reserve Banks, 5,11 Financial institutions, 28 Interest rates, 16 Foreign banks, U.S. branches and agencies, 23 Turnover, 17 Automobiles Discount rates at Reserve Banks and at foreign central banks Consumer installment credit, 39 and foreign countries (See Interest rates) Production, 47, 48 Discounts and advances by Reserve Banks (See Loans) Dividends, corporate, 35 BANKERS acceptances, 11, 12, 21-24, 26 EMPLOYMENT, 45 Bankers balances, 18-23. (See also Foreigners) Bonds (See also U.S. government securities) Eurodollars, 26 New issues, 34 Rates, 26 FARM mortgage loans, 38 Branch banks, 23 Federal agency obligations, 5, 10, 11, 12, 31, 32 Business activity, nonfinancial, 45 Federal credit agencies, 33 Business expenditures on new plant and equipment, 35 Federal finance Business loans (See Commercial and industrial loans) Debt subject to statutory limitation, and types and ownership of gross debt, 30 Receipts and outlays, 28, 29 CAPACITY utilization, 46 Treasury financing of surplus, or deficit, 28 Capital accounts Treasury operating balance, 28 Banks, by classes, 18 Federal Financing Bank, 33 Federal Reserve Banks, 11 Federal funds, 7, 21, 22, 23, 26, 28 Central banks, discount rates, 65 Federal Home Loan Banks, 33 Certificates of deposit, 26 Federal Home Loan Mortgage Corporation, 33, 37, 38 Commercial and industrial loans Federal Housing Administration, 33, 37, 38 Commercial banks, 21, 22 Federal Land Banks, 38 Weekly reporting banks, 21-23 Federal National Mortgage Association, 33, 37, 38 Commercial banks Federal Reserve Banks Assets and liabilities, 18-23 Condition statement, 11 Commercial and industrial loans, 18-23 Discount rates (See Interest rates) Consumer loans held, by type and terms, 39 U.S. government securities held, 5, 11, 12, 30 Deposit interest rates of insured, 16 Federal Reserve credit, 5, 6, 11, 12 Loans sold outright, 22 Federal Reserve notes, 11 Real estate mortgages held, by holder Federally sponsored credit agencies, 33 and property, 38, 74 Finance companies Time and savings deposits, 4 Assets and liabilities, 36 Commercial paper, 24, 26, 36 Business credit, 36 Condition statements (See Assets and liabilities) Loans, 39 Construction, 45,49 Paper, 24, 26 Consumer installment credit, 39 Financial institutions, loans to, 21, 22, 23 Consumer prices, 45 Float, 5 Consumption expenditures, 52, 53 Flow of funds, 40-44 Corporations Foreign banks, assets and liabilities of U.S. branches Profits and their distribution, 35 and agencies, 22, 23 Security issues, 34, 65 Foreign currency operations, 11 Cost of living (See Consumer prices) Foreign deposits in U.S. banks, 5, 22 Credit unions, 39 Foreign exchange rates, 66 Currency in circulation, 5, 14 Foreign trade, 54 Customer credit, stock market, 27 Foreigners Claims on, 55, 58, 59, 60, 62 DEBITS to deposit accounts, 17 Liabilities to, 22, 54, 55, 56, 61, 63, 64 Debt (See specific types of debt or securities) Demand deposits GOLD Banks, by classes, 18-23 Certificate account, 11 Ownership by individuals, partnerships, and Stock, 5, 54 corporations, 22, 23 Government National Mortgage Association, 33, 37, 38 Turnover, 17 Gross domestic product, 51 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 HOME Mortgage Disclosure Act Producer prices, 45, 50 Applications for home loans, 68-73 Production, 45, 47 Home loans by lenders, 68, 74, 75 Profits, corporate, 35 Residential lending by financial institutions, 68, 71, 74, 75 Home refinancing and improvement loans, 73 REAL estate loans Housing, new and existing units, 49 Banks, by classes, 21, 22, 38 Terms, yields, and activity, 37 INCOME, personal and national, 45, 51, 52 Type of holder and property mortgaged, 38 Industrial production, 45, 47 Repurchase agreements, 7 Installment loans, 39 Reserve requirements, 9 Insurance companies, 30, 38 Reserves Interest rates Commercial banks, 18 Bonds, 26 Depository institutions, 4, 5, 6, 13 Consumer installment credit, 39 Federal Reserve Banks, 11 Deposits, 16 U.S. reserve assets, 54 Federal Reserve Banks, 8 Residential mortgage loans, 37, 68-75 Foreign central banks and foreign countries, 65 Retail credit and retail sales, 39, 45 Money and capital markets, 26 Mortgages, 37 SAVING Prime rate, 25 Flow of funds, 40-44 International capital transactions of United States, 53-65 National income accounts, 51 International organizations, 55, 56, 58, 61, 62 Savings institutions, 38, 39, 40 Inventories, 51 Savings deposits (See Time and savings deposits) Investment companies, issues and assets, 35 Securities (See also specific types) Investments (See also specific types) Federal and federally sponsored credit agencies, 33 Banks, by classes, 18-23 Foreign transactions, 63 Commercial banks, 4, 18-23 New issues, 34 Federal Reserve Banks, 11,12 Prices, 27 Financial institutions, 38 Special drawing rights, 5, 11, 53, 54 State and local governments LABOR force, 45 Deposits, 21, 22 Life insurance companies (See Insurance companies) Holdings of U.S. government securities, 30 Loans (See also specific types) New security issues, 34 Banks, by classes, 18—23 Ownership of securities issued by, 21, 23 Commercial banks, 18-23, 74, 75 Rates on securities, 26 Conventional, 68, 71 Stock market, selected statistics, 27 Fannie Mae, 74 Stocks (See also Securities) Federal Reserve Banks, 5, 6, 8, 11, 12 New issues, 34 FHA, 68, 71 Prices, 27 Financial institutions, 38 FmHA, 68, 71, 74 Student Loan Marketing Association, 33 Freddie Mac, 74 Ginnie Mae, 74 TAX receipts, federal, 29 Home purchase, 72 Thrift institutions, 4. (See also Credit unions and Savings Insured or guaranteed by United States, 37, 38 institutions) VA, 68,71 Time and savings deposits, 4, 14, 16, 18-23 Trade, foreign, 54 MANUFACTURING Treasury cash, Treasury currency, 5 Capacity utilization, 46 Treasury deposits, 5, 11, 28 Production, 46,48 Treasury operating balance, 28 Margin requirements, 27 UNEMPLOYMENT, 45 Member banks (See also Depository institutions) Federal funds and repurchase agreements, 7 U.S. government balances Reserve requirements, 9 Commercial bank holdings, 18-23 Mining production, 48 Treasury deposits at Reserve Banks, 5, 11, 28 Mobile homes shipped, 49 U.S. government securities Monetary and credit aggregates, 4, 13 Bank holdings, 18-23, 30 Money and capital market rates, 26 Dealer transactions, positions, and financing, 32 Money stock measures and components, 4, 14 Federal Reserve Bank holdings, 5, 11, 12, 30 Mortgages (See Real estate loans) Foreign and international holdings and Mutual funds, 35 transactions, 11, 30, 64 Open market transactions, 10 Mutual savings banks (See Thrift institutions) Outstanding, by type and holder, 30, 31 Rates, 26 NATIONAL defense outlays, 29 U.S. international transactions, 53-66 National income, 51 Utilities, production, 48 OPEN market transactions, 10 VETERANS Administration, 37, 38 PERSONAL income, 52 WEEKLY reporting banks, 18-23 Prices Wholesale (producer) prices, 45, 50 Consumer and producer, 45, 50 Stock market, 27 Prime rate, 25 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman EDWARD W. KELLEY, JR. ALAN S. BLINDER, Vice Chairman LAWRENCE B. LINDSEY OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE JOSEPH R. COYNE, Assistant to the Board EDWIN M. TRUMAN, Staff Director LARRY J. PROMISEL, Senior Associate Director DONALD J. WINN, Assistant to the Board 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 LAWRENCE SLIFMAN, Associate Director WILLIAM W. WILES, Secretary MARTHA S. SCANLON, Deputy Associate Director JENNIFER J. JOHNSON, Deputy Secretary PETER A. TINSLEY, Deputy Associate Director BARBARA R. LOWREY, Associate Secretary and Ombudsman FLINT BRAYTON, Assistant Director DAY W. RADEBAUGH, JR., Assistant Secretary1 DAVID S. JONES, Assistant Director STEPHEN A. RHOADES, Assistant Director DIVISION OF BANKING 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 BRIAN F. MADIGAN, Associate Director HOWARD A. AMER, Assistant Director RICHARD D. PORTER, Deputy Associate Director GERALD A. EDWARDS, JR., Assistant 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

SUSAN M. PHILLIPS JANET L. YELLEN 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 JACK DENNIS, JR., Assistant Director DAVID L. SHANNON, Director EARL G. HAMILTON, Assistant Director JOHN R. WEIS, Associate Director JEFFREY C. MARQUARDT, Assistant Director ANTHONY V. DIGIOIA, 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 BRENT L. BOWEN, Inspector General GEORGE E. LIVINGSTON, Controller DONALD L. ROBINSON, Assistant Inspector General STEPHEN J. CLARK, Assistant Controller (Programs and BARRY R. SNYDER, Assistant Inspector General Budgets) DARRELL R. PAULEY, Assistant Controller (Finance) DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director DAVID L. WILLIAMS, Assistant Director DIVISION OF INFORMATION RESOURCES MANAGEMENT STEPHEN R. MALPHRUS, Director MARIANNE M. EMERSON, Assistant Director Po KYUNG KIM, Assistant Director RAYMOND H. MASSEY, Assistant Director EDWARD T. MULRENIN, Assistant Director ELIZABETH B. RIGGS, Assistant Director RICHARD C. STEVENS, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 Federal Reserve Bulletin • September 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 ALTERNATE MEMBERS EDWARD G. BOEHNE ROBERT D. MCTEER GARY H. STERN JERRY L. JORDAN ERNEST T. PATRIKIS STAFF DONALD L. KOHN, Secretary and Economist WILLIAM G. DEWALD, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary WILLIAM C. HUNTER, 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 THOMAS C. BAXTER, JR., 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 THOMAS E. DAVIS, 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

CONSUMER ADVISORY COUNCIL JAMES L. WEST, Tijeras, New Mexico, Chairman KATHARINE W. MCKEE, Durham, North Carolina, 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, Newark, New Jersey 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, Hillsborough, 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. HARRIS, Livingston, Montana WILLIAM W. ZUPPE, Spokane, Washington Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated MS-127, Board of Governors of the Federal Reserve System, monthly. (Requests must be prepaid.) Washington, DC 20551 or telephone (202) 452-3244 or FAX Consumer and Community Affairs Handbook. $75.00 per (202) 728-5886. When a charge is indicated, payment should year. accompany request and be made payable to the Board of Monetary Policy and Reserve Requirements Handbook. Governors of the Federal Reserve System or may be ordered $75.00 per year. via Mastercard or Visa. Payment from foreign residents should Securities Credit Transactions Handbook. $75.00 per year. be drawn on a U.S. bank. The Payment System Handbook. $75.00 per year. Federal Reserve Regulatory Service. Four vols. (Contains all four Handbooks plus substantial additional material.) $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. INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. ANNUAL STATISTICAL DIGEST: period covered, release date, 440 pp. $9.00 each. number of pages, and price. FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. 1981 October 1982 239 pp. $ 6.50 December 1986. 264 pp. $10.00 each. 1982 December 1983 266 pp. $ 7.50 FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- 1983 October 1984 264 pp. $11.50 SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1984 October 1985 254 pp. $12.50 1985 October 1986 231 pp. $15.00 1986 November 1987 288 pp. $15.00 EDUCATION PAMPHLETS 1987 October 1988 272 pp. $15.00 Short pamphlets suitable for classroom use. Multiple copies are 1988 November 1989 256 pp. $25.00 available without charge. 1980-89 March 1991 712 pp. $25.00 1990 November 1991 185 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages 1991 November 1992 215 pp. $25.00 Consumer Handbook to Credit Protection Laws 1992 December 1993 215 pp. $25.00 A Guide to Business Credit for Women, Minorities, and Small 1993 December 1994 281 pp. $25.00 Businesses Series on the Structure of the Federal Reserve System The Board of Governors of the Federal Reserve System SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES The Federal Open Market Committee OF CHARTS. Weekly. $30.00 per year or $.70 each in the Federal Reserve Bank Board of Directors United States, its possessions, Canada, and Mexico. Else- Federal Reserve Banks where, $35.00 per year or $.80 each. Organization and Advisory Committees A Consumer's Guide to Mortgage Lock-Ins THE FEDERAL RESERVE ACT and other statutory provisions A Consumer's Guide to Mortgage Settlement Costs affecting the Federal Reserve System, as amended through A Consumer's Guide to Mortgage Refinancings August 1990. 646 pp. $10.00. Home Mortgages: Understanding the Process and Your Right REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL to Fair Lending RESERVE SYSTEM. How to File a Consumer Complaint ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— Making Deposits: When Will Your Money Be Available? Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Making Sense of Savings Vol. II (Irregular Transactions). 1969. 116 pp. Each vol- SHOP: The Card You Pick Can Save You Money ume $2.25. Welcome to the Federal Reserve GUIDE TO THE FLOW OF FUNDS ACCOUNTS. 672 pp. $8.50 When Your Home is on the Line: What You Should Know each. About Home Equity Lines of Credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A83 STAFF STUDIES: Only Summaries Printed in the 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM BULLETIN MORTGAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Rhoades. February 1992. 11 pp. Studies and papers on economic and financial subjects that are of general interest. Requests to obtain single copies of the full 163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR- KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, text or to be added to the mailing list for the series may be sent Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary to Publications Services. Ann Taylor. March 1992. 37 pp. 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by Staff Studies 1-157 are out of print. James T. Fergus and John L. Goodman, Jr. July 1993. 20 pp. 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- 165. THE DEMAND FOR TRADE CREDIT: AN INVESTIGATION OF MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE MOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES, PRODUCTS, by Mark J. Warshawsky with the assistance of by Gregory E. Elliehausen and John D. Wolken. Septem- Dietrich Earnhart. September 1989. 23 pp. ber 1993. 18 pp. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSID- 166. THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET, IARIES OF BANK HOLDING COMPANIES, by Nellie Liang by Mark Carey, Stephen Prowse, John Rea, and Gregory and Donald Savage. February 1990. 12 pp. Udell. January 1994. Ill pp. 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by BANKING, 1980-93, AND AN ASSESSMENT OF THE "OPER- Gregory E. Elliehausen and John D. Wolken. September ATING PERFORMANCE" AND "EVENT STUDY" METHOD- 1990. 35 pp. OLOGIES, by Stephen A. Rhoades. July 1994. 37 pp. 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, 1980-90, by Margaret Hastings Pickering. May 1991. 21pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A84 Maps of the Federal Reserve System HAWAII LEGEND Both pages Facing page • Federal Reserve Bank city • Federal Reserve Branch city • Board of Governors of the Federal — Branch boundary Reserve System, Washington, D.C. NOTE The Federal Reserve officially identifies Districts Commonwealth of Puerto Rico and the US. Virgin by number and Reserve Bank city (shown on both Islands; the San Francisco Bank serves American pages) and by letter (shown on the facing page). Samoa, Guam, and the Commonwealth of the In the 12th District, the Seattle Branch serves Northern Mariana Islands. The Board of Governors Alaska, and the San Francisco Bank serves Hawaii. revised the branch boundaries of the System most The System serves commonwealths and terri- recently in December 1991. tories as follows: the New York Bank serves the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A85 2-B 3-C 4-D 5-E Pittsburgh Baltimore MD « n I h NH Buffalo j C / T \ R I MA NJ NY sc BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 7-G 8-H KY MO • J Louisville ""JJOO3$ %'*—TN Jacksonville • Memphis LLiittttllee MS RRoocckk ATLANTA CHICAGO ST. Louis 9-1 MINNEAPOLIS 10-J 12-L KANSAS CITY 11-K •Los Angeles WSmmmw MMHWII San Aatooio^ DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02106 Jerome H. Grossman Cathy E. Minehan William C. Brainard Paul M. Connolly NEW YORK* 10045 Maurice R. Greenberg William J. McDonough David A. Hamburg Ernest T. Patrikis Buffalo 14240 Joseph J. Castiglia Carl W. Turnipseed' 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 Walter A. Varvel Baltimore 21203 Michael R. Watson William J. Tignanelli1 Charlotte 28230 James O. Roberson Dan M. Bechter1 Culpeper 22701 Julius Malinowski, Jr.2 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 Robert A. Hopkins 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 Mark L. Mullinix Omaha 68102 vacancy Harold L. Shewmaker DALLAS 75201 Cece Smith Robert D. McTeer, Jr. Roger R. Hemminghaus TToonnyy JJ.. SSaallvvaaggggiioo EI 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 Raymond H. Laurence 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; Milwaukee, Wisconsin 53202; and Peoria, Illinois 61607. 1. Senior Vice President. 2. Assistant 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 Shop . . . The Card You Pick Can Save You Money pamphlets covering individual credit laws and topics, is designed to help consumers comparison shop when as pictured below. looking for a credit card. It contains the results of the Three booklets on the mortgage process are avail- Federal Reserve Board's survey of the terms of credit able: A Consumer's Guide to Mortgage Lock-Ins, A card plans offered by credit card issuers throughout Consumer's Guide to Mortgage Refinancings, and the United States. Because the terms can affect the A Consumer's Guide to Mortgage Settlement Costs. amount an individual pays for using a credit card, the These booklets were prepared in conjunction with the booklet lists the annual percentage rate (APR), annual Federal Home Loan Bank Board and in consultation fee, grace period, type of pricing (fixed or variable with other federal agencies and trade and consumer rate), and a telephone number for each card issuer groups. The Board also publishes the Consumer surveyed. Handbook to Credit Protection Laws, a complete Copies of consumer publications are available free guide to consumer credit protections. This forty-four- of charge from Publications Services, Mail Stop 127, page booklet explains how to shop and obtain credit, Board of Governors of the Federal Reserve System, how to maintain a good credit rating, and how to Washington, DC 20551. Multiple copies for classdispute unfair credit transactions. room use are also available free of charge. A Guide to Business Credit for Women, Minorities, and Small Businesses SHOP Ths Card You Pick Can Save You Money 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