Federal Reserve Bulletin, 1996-04

VOLUME 82 • NUMBER 4 • APRIL 1996 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Richard Spillenkothen • Edwin M. Truman The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 285 MONETARY POLICY REPORT TO THE 315 STATEMENTS TO THE CONGRESS CONGRESS Alan Greenspan, Chairman of the Board of Gov- The economy performed well in 1995. Moderate ernors, presents the Federal Reserve's semieconomic growth kept the unemployment rate at annual report on monetary policy and says that a relatively low level, and inflation, as measured the U.S. economy performed reasonably well in by the change in the consumer price index, was 1995 with the unemployment rate at the lowest in a range of 3 percent or less for the fifth sustained level in five years and with the constraight year, the first such occurrence in thirty sumer price index rising less than 3 percent— years. This desirable combination of low infla- the fifth year running at 3 percent or below, tion and low unemployment provided further before the Subcommittee on Domestic and Intersubstantiation of a fundamental point that the national Monetary Policy of the House Commit- Board has made in past reports—namely, that tee on Banking and Financial Services, Febthere is no trade-off in the long run between the ruary 20, 1996. (Chairman Greenspan presented monetary policy goals of maximum employ- identical testimony before the Senate Commitment and stable prices set in the Federal Reserve tee on Banking, Housing, and Urban Affairs, Act. February 21, 1996.) 320 Theodore E. Allison, Assistant to the Board, presents information on the security of U.S. cur- 302 THE FISCAL POSITION OF THE STATE rency and says that the currency of the United AND LOCAL GOVERNMENT SECTOR: States is safe—that is, relatively free from DEVELOPMENTS IN THE 1990S counterfeits—both domestically and internation- After a difficult period during the early 1990s, ally and that the Federal Reserve is confident the fiscal position of state and local governments that its procedures permit thorough identificahas improved considerably in the past three tion of counterfeits and thus prevent their reissuyears. States, as a group, have fared relatively ance, before the Subcommittee on General well, although some local governments are still Oversight and Investigations of the House Comstruggling with fiscal difficulties. In addition, the mittee on Banking and Financial Services, Febsector as a whole continues to face persistent ruary 27, 1996. underlying structural problems. This article first 322 Edward W. Kelley, Jr., member, Board of Govexamines the primary budget concepts that are ernors, discusses the impact of crime on the generally used to evaluate the fiscal condition of stability of the banking system and the Federal state and local governments. Then it surveys the Reserve's efforts to assist banks and law status of the various levels of government, and enforcement officials in countering criminal finally, it discusses some of the underlying probactivity and says that a banking organization's lems in state and local budgeting, particularly in best protection against illicit activities is its own the areas of health care, education, corrections, policies and procedures designed to identify and and pensions. then reject potentially illegal or damaging transactions; in this effort the Federal Reserve and other regulators have implemented various 312 INDUSTRIAL PRODUCTION AND CAPACITY directives for banks to establish internal controls UTILIZATION FOR FEBRUARY 1996 and procedures designed to detect unusual or Industrial production rose 1.2 percent in Febru- suspicious transactions that, if unchecked, could ary, to 123.7 percent of its 1987 average, after lead to fraud, money laundering, or other types having fallen 0.4 percent in January. Capacity of criminal misconduct, before the House Comutilization rose 0.8 percentage point in February, mittee on Banking and Financial Services, Febto 82.9 percent. ruary 28, 1996. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

326 ANNOUNCEMENTS A3 GUIDE TO TABULAR PRESENTATION Election of Alan Greenspan as Chairman Pro A4 Domestic Financial Statistics Tempore of the Board of Governors of the A45 Domestic Nonfinancial Statistics Federal Reserve System. A53 International Statistics Final rule to amend Regulation K. A67 GUIDE TO STATISTICAL RELEASES AND Adjustment of dollar amount triggering disclo- SPECIAL TABLES sure requirements under Regulation Z. Proposed revision to Regulation K. A68 INDEX TO STATISTICAL TABLES Availability of the Federal Reserve Regulatory A70 BOARD OF GOVERNORS AND STAFF Service on computer diskette with search-andretrieval software. A72 FEDERAL OPEN MARKET COMMITTEE AND Revisions to the money stock data. STAFF; ADVISORY COUNCILS 333 LEGAL DEVELOPMENTS A74 FEDERAL RESERVE BOARD PUBLICATIONS Various bank holding company, bank service corporation, and bank merger orders; and pend- A76 MAPS OF THE FEDERAL RESERVE SYSTEM ing cases. A78 FEDERAL RESERVE BANKS, BRANCHES, A1 FINANCIAL AND BUSINESS STATISTICS AND OFFICES These tables reflect data available as of February 27, 1996. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress Report submitted to the Congress on February 20, the year further reduced the potential for inflationary 1996, pursuant to the Full Employment and Balanced pressures going forward. To forestall an undue Growth Act of 19781 increase in real interest rates as inflation slowed, and to guard against the possibility of unnecessary slack developing in the economy, the Committee eased MONETARY POLICY AND THE reserve conditions in December and again at the end ECONOMIC OUTLOOK of January 1996, reducing the federal funds rate a total of Vi percentage point. The economy performed well in 1995. Moderate Monetary policy easings since mid-1995 contribeconomic growth kept the unemployment rate at a uted to declines in short-term market interest rates, relatively low level, and inflation, as measured by the which by mid-February were down 1 to 2 percentage change in the consumer price index, was in a range points from the highs reached early last year. of 3 percent or less for the fifth straight year, the Intermediate- and long-term rates also moved sharply first such occurrence in thirty years. This desirable lower last year as the risks of rising inflation receded combination of low inflation and low unemployment and as prospects for substantial progress in reducing provided further substantiation of a fundamental the federal budget deficit seemed to improve. As of point that the Board has made in past reports— mid-February, these rates were 13A to 23A percentage namely, that there is no trade-off in the long run points below their levels at the beginning of 1995. between the monetary policy goals of maximum Helped by lower interest rates and favorable earnemployment and stable prices set in the Federal ings, major equity price indexes rose 30 percent to Reserve Act. Indeed, it is by fostering price stability 40 percent last year and have moved still higher in that a central bank can make its greatest contribution early 1996. These financial developments reduced the to the efficient operation and overall ability of the cost to businesses of financing investment and to nation's economy to create jobs and advance living households of buying homes and consumer durables; standards over time. households were also aided by substantial additions As economic prospects changed in 1995 and early to financial wealth from rising bond and equity 1996, the Federal Reserve found that promoting full prices. employment and price stability required several The foreign exchange value of the U.S. dollar, adjustments in its policy settings. Last February, the measured in terms of the currencies of the other economy still seemed to be pressing against its poten- Group of Ten (G-10) countries, fell about 5 percent, tial, and prices were tending to accelerate. To reduce on net, during 1995. The dollar appreciated substanthe risk that inflation might mount, with the attendant tially from the summer on and has advanced further threat to continued economic expansion, the Federal on balance in 1996 but not enough to offset a sharp Open Market Committee raised the federal funds rate decline that took place in the first four months of an additional V2 percentage point, to 6 percent. Infla- 1995. Interest rates fell in most other foreign industion did, in fact, pick up in the first part of 1995, but trial countries, which also were experiencing slower data released during the spring indicated that price economic growth, but by less than the decline in rates pressures were receding, and the Committee reduced in the United States. Early in 1995, the dollar also the federal funds rate lA percentage point at its July was pulled down by the reactions to the crisis in meeting. Through the remainder of the year, inflation Mexico, but the negative influence on the dollar from was even more favorable than had been anticipated in this source appeared to lessen as Mexican financial July, and inflation expectations decreased. In addimarkets stabilized over the balance of the year. Inflation, an apparent slowing of economic activity late in tion rates in major industrial countries held fairly steady in 1995 at levels somewhat lower than those prevailing in this country; thus, depreciation of the 1. The charts for the report are available on request from Publica- dollar in real terms against other G-10 currencies was tions Services, Mail Stop 127, Board of Governors of the Federal less than the depreciation in nominal terms. Against Reserve System, Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

286 Federal Reserve Bulletin • April 1996 the currencies of a broader group of U.S. trading Without these shifts, Ml would have risen in 1995, partners, the dollar's real depreciation in 1995 was although slowly. even smaller. Borrowing and spending in the United States was facilitated not only by lower interest rates but also Economic Projections for 1996 by favorable supply conditions in credit markets. Spreads between interest rates on securities issued by The relatively small amount of information that is private firms and those issued by the Treasury gener- available for 1996 indicates that the economy has ally remained narrow, and banks continued to ease started off slowly early this year, but fundamental terms and qualifying standards on loans to businesses conditions appear to be more encouraging than recent and households through most of the year. Total debt data might seem to suggest. Bad weather in a number of domestic nonfinancial sectors grew slightly more of regions and the partial shutdown of the federal than 5 percent last year, just above the midpoint of government have been disruptive to the economy this the Committee's 3 percent to 7 percent monitoring winter. These influences seem likely to leave only range. Rapid growth of business spending on inven- temporary imprints on spending and production, cretories and fixed capital early in the year boosted the ating volatility in incoming data over the near term credit demands of firms, despite strong corporate while having little effect on underlying trends. profits. Borrowing was also lifted by the financing of The economy has also been slowed by production heavy net retirements of equity shares in connection adjustments in some industries in which efforts are with mergers and share repurchase programs. Growth being made to bring stocks into better alignment with of household debt slowed a bit but remained brisk; sales. Inventory accumulation apparently slowed in consumer credit continued to grow quite rapidly. the fourth quarter, and with financial conditions Federal debt growth was relatively modest for a remaining broadly conducive to growth of private second year, influenced by a lower deficit and con- final sales, inventory problems of a degree that might straints on normal seasonal borrowing at year-end prompt a sustained period of widespread production owing to the federal debt ceiling. Outstanding state adjustments do not seem likely. In the household and local government debt ran off more rapidly than sector, the accumulation of financial wealth brought in 1994. on by the rise in the stock market has provided Commercial banks and thrift institutions again the wherewithal for increases in consumption greater financed a large portion of the borrowing last year; than would otherwise have been expected— their share of total outstanding debt of nonfederal countering the potential negative influences of more sectors edged up in 1994 and 1995 after having burdensome levels of consumer debt. At the same declined for more than fifteen years. The growth in time, reductions in mortgage interest rates have put depository credit was funded primarily with deposits, the cost of financing a house within reach of a greater boosting the expansion of the broad monetary aggre- number of families and made it possible for a signifigates. M3 grew 6 percent, at the upper end of its cant number of households to ease their debt-service 2 percent to 6 percent annual range established by the burdens by refinancing their homes at lower rates. In Committee at midyear. Depositories relied heavily on large-denomination time deposits for funding, but 1. Economic projections for 1996 retail deposits also showed gains as declining market Percent interest rates made these deposits more attractive to retail customers. M2 advanced 4lA percent, putting it a F nd ed R er e a s l e r R v e e s e B r a v n e k G p o r v e e s r id n e o n rs ts in the upper portion of its 1 percent to 5 percent IInnddiiccaattoorr AAddmmiinniissttrraattiioonn D Central annual range. The expansion of M2 was the largest in Ran«e tendency six years, and its velocity was unchanged after hav- Change, fourth quarter ing increased during the previous three years. None- to fourth quarter1 Nominal GDP 4444----5555 4444<<<<////4444----44443333AAAA 5555....1111 theless, growth of the aggregate was erratic through Real GDP2 llll''''////2222----2222''''////2222 2222----2222VVVVaaaa 2222....2222 the year, and the stability of its relationship to nomi- Consumer price index3 .. 2222''''////2222----3333 22223333AAAA----3333 3333....1111 nal spending remains in doubt. Ml declined last year Average level, fourth quarter for the first time since the beginning of the official Civilian unemployment rate 5555''''////2222----6666 5555''''////2222----5555%%%% 5555....77774444 series in 1959. An increasing number of banks introduced retail sweep accounts, which shift money 1. Change from average for fourth quarter of preceding year to average for fourth quarter of 1996. from interest-bearing checkable accounts to savings 2. Chain-weighted. accounts to reduce banks' reserve requirements. 3. All urban consumers. 4. Annual average. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 287 the business sector, reductions in the cost of financing was favorable in 1995, and with businesses still investment in new capital are providing some offset tightly focused on cost control and efficiency gain, to the slowing tendencies that normally accompany a broad tendencies toward increased rates of price cyclical moderation in the growth of aggregate out- increase are not anticipated. The Administration foreput. In addition, business investment in high-tech cast of inflation is higher than the forecasts of the equipment likely will continue to be boosted not only Federal Reserve officials, but the difference is not by the ready availability of finance but also by tech- significant given the uncertainties of forecasting. nological upgrades and ongoing steep declines in the Price increases like those being forecast for the effective price of real computing power. coming year would leave inflation no higher than it In the U.S. external sector, growth of exports was in the first year or so of the current economic strengthened after some sluggishness early in 1995. expansion, with the rate of increase holding apprecia- Expansion of income abroad seems likely to pick up bly below the average rate seen during the expansion this year, although the prospects still are subject to of the 1980s. Although the Federal Reserve's longsome downside risk. Imports, meanwhile, have run goal of restoring price stability has not yet been slowed from the very rapid pace seen earlier in the achieved, the capping of inflation and its diminution expansion. On net, the underlying trends in exports over recent business cycles is a clear indication of the and imports of goods and services appear to be substantial progress that has been made to date. essentially canceling out in terms of their combined contribution to growth of U.S. real gross domestic product. Money and Debt Ranges for 1996 Against the backdrop of these developments, members of the Board of Governors and the Reserve Bank The Committee's intention to make further progress Presidents, all of whom participate in the delibera- over time toward price stability formed the basis for tions of the Federal Open Market Committee, antici- the selection of the growth ranges for the monetary pate that the U.S. economy will grow moderately, aggregates in 1996. In reaffirming the ranges that with little change in underlying inflation trends. The were adopted on a provisional basis in July, the central tendency of the participants' forecasts of real Committee noted that it viewed them as benchmarks GDP growth ranges from 2 percent to 2V4 percent, for what would be expected under conditions of measured as the cumulative change in output from reasonable price stability and historical velocity the final quarter of 1995 to the final quarter of 1996. behavior. The Committee set the range for M2 at The rise in activity is expected to be accompanied by 1 percent to 5 percent and the range for M3 at further expansion of job opportunities and little 2 percent to 6 percent. change, on net, in the civilian unemployment rate Given its expectations for inflation in 1996, the over the four quarters of 1996. The central tendency Committee anticipates that nominal GDP will grow of the unemployment rate forecasts for the fourth somewhat faster this year than would be the case if quarter of 1996 is a range of 5'A percent to 5 3A per- the economy already were at price stability. If velocicent, compared with an average of 5.6 percent in the ties of the aggregates were to exhibit roughly normal final quarter of 1995. The Committee's forecasts of behavior this year and nominal income were to economic growth and unemployment are quite simi- expand as anticipated by the Committee, M2 and M3 lar to those of the Administration. might grow near the upper ends of their ranges. In The central tendency of the Governors' and assessing the possible outcomes, the Committee Reserve Bank presidents' forecasts of the rise in the noted that considerable uncertainty remains about the consumer price index over the four quarters of 1996 usefulness of the monetary aggregates in guiding the is a range of 23A percent to 3 percent, a shade to the high side of the actual outcome of 1995. At this early point in 1996, with grain stocks exceptionally tight, 2. Ranges for growth of monetary and debt aggregates there is some risk that food price increases at retail Percent could be larger than those of recent years, especially Aggregate 1994 1995 1996 if crop production should remain subpar again this year; and, even though recent upward pressures on M2 1-5 1-5 1-5 energy prices should diminish with the return of M De 3 b t2 4 0 - - 8 4 3 2 - - 7 6 1 2 3 - - 6 7 normal weather, another year of declining prices can- NOTE.. Change from average for fourth quarter of preceding year to average not be taken as a given. Nonetheless, the experience for fourth quarter of year indicated. with inflation at high levels of resource utilization 1. Revised at July 1995 FOMC meeting. 2. Monitoring range for debt of domestic nonfinancial sectors. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

288 Federal Reserve Bulletin • April 1996 pursuit of its macroeconomic objectives. Although The Household Sector the monetary aggregates have been behaving more in line with historical patterns than was the case earlier Real personal consumption expenditures rose at an in the decade, the effects of financial innovation and annual rate of about 2lA percent over the first three deregulation over the years have raised questions quarters of 1995 after having risen slightly more than about the stability of the relationships between the 3 percent over the four quarters of 1994. Available aggregates and nominal GDP that have yet to be data suggest that growth of real outlays slowed furresolved. ther in the fourth quarter. The reduced rate of rise in The Committee also reaffirmed the 3 percent to consumption spending this past year came against the 7 percent growth range for debt. Although there are backdrop of moderate gains in employment and indications that lenders may no longer be easing income. The financial wealth of households surged, terms and conditions for granting credit to businesses but impetus to spending from this source evidently and households, the Committee anticipated that credit was countered by other influences, such as increases supplies would remain ample and that debt would in debt burdens among some households and an grow at about the same pace as nominal GDP. Such apparent rise, according to survey data, in consumincreases would be consistent with containing infla- ers' concerns about job security. tion and promoting sustainable growth. Real consumer expenditures for durable goods increased at an annual rate of 2XA percent over the first three quarters of 1995, a slower rate of rise than in other recent years. Consumer expenditures for THE PERFORMANCE OF THE ECONOMY motor vehicles declined slightly, on net, over the first three quarters after having moved up nearly 20 per- Measured in terms of the chain-type indexes that are cent over the three previous years; in the fourth now being emphasized by the Bureau of Economic quarter, unit sales of cars and light trucks, a key Analysis, growth of real GDP averaged slightly less indicator of real outlays for vehicles, were down than 1 Vz percent at an annual rate over the first three slightly from their third-quarter pace. Incentive proquarters of 1995 after a gain of percent in 1994. grams that provided price concessions of one sort or The rise in aggregate output this past year was another to buyers probably gave some lift to sales accompanied by an increase in payroll employment in 1995. However, "pent-up" demand, which had of PA million, and the unemployment rate, after helped to boost sales earlier in the expansion, probhaving fallen sharply in 1994, held fairly steady over ably was no longer an important factor. Recent sales the course of 1995, keeping to a range of about data do not seem to point to any big shifts in demand 5Vi percent to 53A percent. Consumer prices, as mea- for vehicles around the turn of the year: The average sured by the CPI for all items, rose 23A percent over rate of sales of cars and light trucks in December and the four quarters of 1995, an increase that was virtu- January was a touch above the average for 1995 as a ally the same as those of the two previous years. whole. Growth of output during the past year was slowed Real outlays for durable goods other than motor in part by the actions of businesses to reduce the pace vehicles continued to rise at a brisk pace in 1995 but of inventory accumulation after a burst of stockpiling not so rapidly as in other recent years. Spending for in 1994. Final sales—a measure of current output that furniture and household equipment hit a temporary does not end up in inventories—rose at an average lull in the first part of 1995 but picked up again over rate of 2 percent over the first three quarters of 1995 the next two quarters, lifted in part by a rebound in after an increase of 3 percent over the four quarters of construction of new houses. Fourth-quarter data on 1994. The slowing of final sales was largely a reflec- retail sales seem to point to a further sizable increase tion of a downshifting in growth of the real outlays of in outlays for household durables; according to most households and businesses, from elevated rates of anecdotal accounts, spending for home computers increase in 1994 to rates that were more sustainable. and other electronic gear, which has been surging in Real government outlays for consumption and invest- recent years, continued to move up rapidly through ment edged down slightly, on net, during the first the latter part of 1995. three quarters of 1995. Increases in real exports Consumer expenditures for nondurables increased and real imports of goods and services were smaller at an annual rate of about 1Vi percent, in real terms, than those of 1994; their combined contribution to over the first three quarters of 1995, a little less than GDP growth in the first three quarters was slightly the average of the previous ten years and considernegative. ably less than in 1994. The growth of real expendi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 289 tures on apparel slowed sharply after three years of been limited, as sustained increases in personal sizable advances. In the fourth quarter, real outlays income helped to facilitate timely repayment of for nondurables appear to have been lackluster. obligations. Real expenditures for services—which account for Consumers maintained relatively upbeat percepmore than half of total consumer outlays—increased tions of current and future economic conditions durat an annual rate of about 23A percent over the first ing 1995. The measure of consumer confidence that three quarters of 1995, moderately faster than in is prepared by the Conference Board held fairly either 1993 or 1994. After having declined in 1994, steady at a high level. The index of consumer sentioutlays for energy services increased sharply over the ment that is compiled by the University of Michigan first three quarters of 1995: The unusually mild Survey Research Center edged down a little, on net, weather of late 1994 gave way, first, to more normal from the end of 1994 to the end of 1995, but its level winter conditions in early 1995 and, later on, to hot also remained relatively high. By contrast, some sursummer weather that lifted fuel requirements for vey questions dealing specifically with perceptions of cooling. Spending gains for other categories of ser- labor market conditions pointed to increased convices proceeded at an annual rate of about 2X A per- cerns about job prospects during the year; although cent over the first three quarters of 1995, about the employment continued to rise in the aggregate, same rate of rise as in the two previous years. announcements of job cuts by some major corpora- Real disposable personal income rose at an average tions may have rekindled consumers' anxieties about annual rate of about 2Vi percent over the first three job security. In January of this year, consumer assessquarters of 1995, a gain that was about in line with ments of labor market conditions softened further, the previous year's increase. Monthly data through and the broader indexes of sentiment also declined. November suggest that growth of real income may The January levels of the indexes were on the low have picked up a little in the fourth quarter. Nominal side of their averages of the past couple of years but personal income appears to have increased slightly were well above levels that were reported through faster in 1995 than it did in 1994, and growth of most of the first three years of the expansion. nominal disposable income, which excludes income Consumers tended to save a slightly higher proportaxes, apparently held close to its 1994 pace. Inflation tion of their income in 1995 than they had in 1994. continued to take only a moderate bite from increases Large increases in financial wealth usually cause in nominal receipts: The chain-type price index for households to spend a greater share of their current personal consumption expenditures rose at an annual income, thereby reducing the share of income that is rate of 2Vi percent over the first three quarters of saved. However, rising debt burdens and increased 1995, matching, almost exactly, the increases in each nervousness about job prospects would work in the of the two previous years. opposite direction, and these influences may have After little change during 1994, the real value of offset the effect of increases in wealth. Some househousehold wealth surged in 1995. The value of assets holds also may have started focusing more intently was boosted substantially by huge increases in the on saving for retirement, especially in light of prices of stocks and bonds. Liabilities continued to increased political debate about curbing the growth rise fairly rapidly but at a rate well below the rate of of entitlements provided under government programs. increase in household assets; rapid growth of con- Nonetheless, the personal saving rate for all of 1995, sumer credit was again the most notable feature on while moving up a little, remained in a range that was the liability side. Behind these aggregate measures of relatively low by historical standards. household assets and liabilities was some wide varia- Residential investment fell in the first half of 1995 tion in the circumstances of individual households. but turned up in the third quarter. Both the down- Appreciation of share prices and the rally in the bond swing in the first half and the subsequent rebound market provided a substantial boost to the wealth of after midyear appear to have been shaped, at least in households holding large amounts of those assets. a rough way, by swings in mortgage interest rates. However, households holding few such assets bene- Although housing activity had been slow to respond fited little from the rally in securities prices, and to increases in mortgage interest rates through much some of these households began to experience greater of 1994, sizable declines in sales of new and existing financial pressure in 1995. Debts taken on earlier homes started to show up toward the end of that year, proved to be difficult to repay in some instances, and and by early 1995, permits and starts also were a rising number of households saw their loans fall dropping. However, the decline in activity proved to into delinquency. Overall, however, the incidence of be relatively short and mild. By March, mortgage financial stress among households appears to have interest rates already were down appreciably from the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

290 Federal Reserve Bulletin • April 1996 peaks of late 1994, and midway through the second and eventual bankruptcy for some enterprises. More quarter, most indicators of housing activity were start- generally, however, business profits remained high in ing to rebound. Sales of new homes surged to espe- 1995, as firms continued to emphasize strategies that cially high levels during the summer, and permits have served them well throughout the 1990s—most and starts of single-family units rose appreciably. notably, tight control over costs and rapid adoption of In the autumn, sales retreated from their midyear new technologies, achieved by way of heavy investpeaks. Starts also slipped back somewhat during the ment in high-tech equipment. autumn, but permits held firm. In total, real business fixed investment increased at The intrayear swings in the various housing indica- an annual rate of 8 percent over the first three quartors left the annual totals for these indicators at fairly ters of 1995 after a gain of 10 percent in 1994. elevated levels. The average pace of sales of existing Growth in business spending for equipment continhomes over the first eleven months of 1995 was well ued to outpace the growth of investment in structures, above the average for the 1980s, even after having even though the latter scored its largest gain of the adjusted for increases in the stock of houses. Starts past several years. On a quarterly basis, investment and sales of new single-family dwellings in 1995 remained very strong through the first quarter of were about one-tenth higher than their averages for 1995. After having slowed sharply in the spring, it the 1980s. So far in the 1990s, demographic influ- then picked up somewhat in the third quarter. Fragences have been less supportive of housing activity mentary data for the fourth quarter suggest that than in the 1980s, as the rate of household formation investment in plant and equipment recorded a gain of has lagged—in part because many young adults have at least moderate size in that period. delayed setting up their own domiciles. However, an Businesses continued to invest heavily in computoffsetting impetus to demand has come from the ers in 1995. In real terms, these expenditures rose at improved affordability of housing, brought about in an annual rate of nearly 30 percent over the first three particular by declines in mortgage interest rates. quarters of the year, an increase that was even more Construction of multifamily units, after having rapid than that of 1994. Excluding computers, real taken a notable step toward recovery in 1994, rose investment outlays increased less rapidly, on balance, only moderately further in 1995. Over the first eleven than in 1994, and growth after the first quarter was months of 1995, starts of multifamily units amounted modest, on net. In the equipment category, outlays to 280,000 at an annual rate, compared with about for information-processing equipment other than 260,000 the previous year and a low of 162,000 in computers moved up at an annual rate of about 1993. Financing for the construction of new multi- 13 percent in the first half of 1995 but fell back a family projects appeared to be readily available this little in the third quarter. Spending for industrial past year. However, the national vacancy rate for equipment followed a roughly similar pattern, with a multifamily rental units, while down from the peaks small third-quarter decline coming on the heels of of a few years ago, remained relatively high, and large gains in the first half of the year. Real outlays increases in rents were not of a magnitude to provide for transportation equipment declined in the second much incentive for the construction of new units. quarter but rebounded in the third. Real investment in nonresidential structures moved up in each of the first three quarters of 1995, at an annual rate of The Business Sector more than 6 percent, on average, after a gain of 3V2 percent during 1994; the most recent year brought Most indicators of business activity remained favor- increased construction of most types of nonresidenable in 1995, but strength was less widespread than it tial buildings. had been in 1994, and growth overall was less robust. In the industrial sector, elevated levels of invest- The output of all nonfarm businesses rose at an ment in equipment and structures in 1995 led to a annual rate of slightly less than 2 percent over the gain of about 4 percent in industrial capacity. Howfirst three quarters of 1995, after a gain of 4 percent ever, in a turnabout from the outcome of the previous in 1994—a pace that could not have been sustained year, output of the industrial sector rose considerably given already high operating levels. Inventory prob- less rapidly than capacity: A gain of IVi percent in lems cropped up in some lines of manufacturing and total industrial production over the four quarters of trade in 1995 and prompted production adjustments. 1995 was a sharp slowdown from a 1994 rise of more Scattered structural problems were apparent as well, than 6V2 percent. Production of consumer goods folespecially in parts of retail trade in which intense lowed a choppy pattern during 1995 and rose less competition for market share caused financial losses than V2 percent over the year as a whole, the smallest Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 291 annual increase of the current expansion. The output at commercial banks, and rising profits of securities of business equipment advanced in each quarter, but dealers. The economic profits earned by nonfinancial a cumulative gain of 4Vz percent for this category corporations from their domestic operations rose at was smaller than the increases of other recent years. an annual rate of about 3V2 percent over the first three Production of materials faltered temporarily in the quarters of 1995 after three years in which the annual second quarter, but production gains resumed there- increases were 15 percent or more. A moderation of after, leading to a rise of about 2lA percent over the output growth at nonfinancial corporations and a four quarters of the year. flattening of the rise in profits per unit of output both With capacity expanding rapidly and production worked to reduce the rate of growth in nominal growth slowing, the rate of capacity utilization in earnings in 1995. Nonetheless, with unit costs also industry turned down sharply in 1995, backing away moving up at a moderate pace, the share of the value from the high operating rates of late 1994. As of this of nonfinancial corporate output that ended up as past December, the utilization rate in manufacturing profits changed little, on net, in the first three quarwas about Vi percentage point above its long-term ters, holding in a range that was relatively high in average. In January of this year, utilization rates fell comparison to the average profit share over the past noticeably: Vehicle producers reduced assembly rates couple of decades. last month, and winter storms temporarily shut down manufacturing operations more generally. After having risen rapidly during 1994, business The Government Sector inventories continued to build at a substantial pace in the early part of 1995. By the end of the first quarter, At the federal level, combined real outlays for investreal inventories of nonfarm businesses were about ment and consumption fell at an annual rate of about 5Vi percent above the level of a year earlier. Mean- 4 lA percent over the first three quarters of 1995, while, strength that had been evident in final sales dropping to a level about 13 percent below its annual during 1994 gave way to more subdued growth in the peak in 1990. Both investment and consumption were first quarter of 1995, and the ratio of inventories to cut back over the first three quarters of 1995. Outlays sales rose. In the second and third quarters, growth of for defense continued to contract, and nondefense inventories was roughly in line with growth of busi- expenditures turned down, reversing a moderate ness final sales; consequently, aggregate inventory- increase that took place over the four quarters of sales ratios held fairly steady during this period. 1994. Although data on inventory change in the year's final Federal outlays in the unified budget, which covers quarter are not yet complete, the available indicators items such as transfers and grants, as well as consuggest that significant imbalances probably were sumption and investment expenditures other than the present in only a few industries at year-end. Potential consumption of fixed capital, rose 33A percent in for wider inventory problems appears to have been nominal terms in fiscal 1995, matching almost contained through a combination of production exactly the percentage rise of the previous fiscal year. restraint late in 1995, caution in ordering merchan- Nominal outlays for defense declined 3lA percent in dise from abroad, and discounting by some retailers both fiscal 1995 and fiscal 1994. Outlays for social during the holiday shopping season. Wholesalers security increased about 5 percent in both years. reduced their inventories in the final two months of Spending for Medicare and Medicaid continued to 1995, and manufacturers' stocks rose only slightly; rise at rates appreciably faster than the growth of aggregate inventory-sales ratios moved down in both nominal GDP. Net interest payments jumped in fiscal sectors. 1995 after three years of relatively little change, but Business profits rose further over the first three working in the other direction, net outlays for deposit quarters of 1995. Economic profits of all U.S. corpo- insurance were more negative than in 1994 (that is, rations increased at an annual rate of nearly 11 per- the margin between insurance premiums and the paycent, a pace similar to that seen over the four quarters out for losses increased). Proceeds from auctions of of 1994. The profits of corporations from their opera- spectrum rights also helped to hold down expenditions in the rest of the world moved up sharply, on tures; like the premiums for deposit insurance, these net, and earnings from domestic operations also con- proceeds enter the budget as a negative outlay. In the tinued to advance. The strongest gains in domestic first three months of fiscal 1996—that is, the threeprofits came at financial corporations and reflected, in month period ended in December—federal outlays part, an increased volume of lending by financial were about 1 percent lower in nominal terms than in institutions, reduced premiums on deposit insurance the comparable period of fiscal 1995. Nominal out- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

292 Federal Reserve Bulletin • April 1996 lays for defense have continued to trend down this than other outlays. In real terms, combined state and fiscal year, and the spending restraint embodied in local outlays for consumption and investment recent continuing budget resolutions has translated increased at an annual rate of about 2lA percent over into sharp cuts in nondefense outlays. the first three quarters of 1995. Real investment Federal receipts rose IV2 percent in fiscal 1995, expenditures, which consist mainly of outlays for after having increased 9 percent in fiscal 1994. In construction, moved up at an annual rate of almost both years, categories of receipts that are most closely 7 percent. By contrast, consumption expenditures, related to the state of the economy showed sizable which are about four times the size of investment increases. With receipts moving up more rapidly than outlays, rose only modestly in real terms—at an spending in fiscal 1995, the federal budget deficit fell average annual rate of about 1V2 percent. for a third consecutive year, to $164 billion. Progress in reducing the deficit in recent years has come from cyclical expansion of the economy, tax increases, nonrecurring factors such as the sale of spectrum The External Sector rights, and adherence to the budgetary restraints embodied in the Budget Enforcement Act of 1990 Growth of real GDP in the major foreign industrial and the Omnibus Budgetary Reconciliation Act of countries other than Japan slowed sharply in 1995 1993. from the robust rates of 1994. In Canada, where The economic expansion also has helped to relieve economic activity had been particularly vigorous budgetary pressures that many state and local govern- through the end of 1994, the slowdown reflected ments were experiencing earlier in the 1990s. Exclud- weaker U.S. growth as well as macroeconomic poliing social insurance funds, surpluses in the combined cies intended to achieve improved fiscal balance and current accounts of state and local governments were to prevent the reemergence of inflationary pressures. equal to about V2 percent of nominal GDP in the first In Germany and the other European economies, three quarters of 1995; this figure was more than appreciation of their currencies in terms of the dollar double the average for 1991 and 1992, when budget- during the early months of the year and efforts to ary pressures were most severe. reduce public sector deficits contributed to the decline Even so, state and local budgets remain at the in the rate of real output growth. In contrast, Japan center of strongly competing pressures, with the showed some tentative signs of recovery late in 1995 demand for many of the services that typically are after almost no growth during the previous three provided by these governments continuing to rise at a years. time when the public also is expressing desire for tax With the expansion of real GDP slowing in the relief. Although states and localities have responded foreign G-10 countries at a time when some slack to these pressures in different ways, the aggregate remained, inflation stayed low. The average rate of picture is one in which expenditures and revenues consumer price inflation in these countries remained have continued to rise faster than nominal GDP—but about 2 percent last year, essentially the same as in by smaller margins than in the early part of the 1994 and somewhat less than in the United States. 1990s. In total, the current expenditures of state and Economic growth in the major developing counlocal governments, made up mainly of transfers and tries slowed on average in 1995 from the strong pace consumption expenditures, were equal to about recorded for 1994. The substantial contraction of I2V2 percent of nominal GDP in the first three quar- economic activity in Mexico had important effects on ters of 1995, up slightly from the percentages of the U.S. trade, but real output also slowed in other develtwo previous years and about PA percentage points oping countries, including Argentina. In response to higher than the comparable figure for 1989. Total the December 1994 collapse of the Mexican peso, receipts of state and local governments were equal to the Mexican government adopted a set of policies about 133/4 percent of nominal GDP in the first three intended to tighten monetary conditions, maintain quarters of 1995, up just a touch from the comparable wage restraint, and reduce government spending to percentages of the two previous years but about mitigate the inflationary impact of the peso's devalu- VA percentage points higher than the percentage in ation and to achieve significant reduction in the cur- 1989. rent account deficit in 1995. Through the third quar- State and local outlays that are included in GDP ter, the Mexican current account was approximately have been rising less rapidly than the current expendi- balanced; a deficit of about $20 billion had cumulated tures of these jurisdictions because GDP excludes during the comparable three quarters of 1994. The transfer payments, which have been growing faster merchandise trade balance improved to moderate Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 293 surplus in 1995 from a substantial deficit in 1994. in Asia rose sharply. Exports to Western Europe, The improved trade performance in part reflected a Canada, and Japan increased as well. severe contraction in aggregate demand. Mexican Imports of goods and services increased at an real output fell sharply early in the year but picked up annual rate of about 6 percent in real terms during the toward the end of the year, for an annual decline of first three quarters, a slower rate of advance than nearly 7 percent. during 1994. Imports of computers and semiconduc- The newly industrializing economies in Asia—for tors rose sharply, but imports of other machinery, example, Malaysia, Korea, and Taiwan—continued consumer goods, and industrial supplies slowed. to grow rapidly during 1995, at about the same rate as Import prices increased about 21/2 percent in the in 1994. Although growth in most of these countries twelve months ending in December 1995. An end to was driven by a strong expansion in internal demand, the very rapid rise in world non-oil commodity prices especially in investment, most countries also bene- and low inflation abroad helped to restrain the rise in fited from very fast export growth. The marked accel- import prices. eration in exports was attributable at least in part to a In the first three quarters of 1995, recorded net real depreciation of their currencies against the yen capital inflows into the United States were substantial and key European currencies during the early part of and nearly balanced the deficit in the U.S. current the year. account. Sharp increases were reported in both for- In the first eleven months of 1995 the nominal U.S. eign assets in the United States and U.S. assets trade deficit in goods and services reached about abroad. $115 billion at a seasonally adjusted annual rate, a Foreign official asset holdings in the United States level slightly greater than the $106 billion recorded increased almost $100 billion through September. for 1994. U.S. income growth in 1995 was similar to These increases reflected both intervention by certain the average for our trading partners, but as is typi- industrial countries to support the foreign exchange cally the case, comparable increases in income value of the dollar and very substantial accumulation seemed to bring forth an increase in U.S. demand for of reserves by several developing countries in Asia imports that was larger than the average increases in and Latin America. Private foreign assets in the demand for our exports by the foreign countries with United States also rose rapidly. Net purchases of U.S. which we trade. Effects of the dollar's depreciation Treasury securities by private foreigners totaled during 1994 and early 1995 worked in the opposite $97 billion, an amount far exceeding previous direction, tending to boost exports and hold down records. Net purchases of U.S. government agency imports. Overall, the result of these offsetting tenden- bonds and corporate bonds were also very large. cies was that the dollar value of exports grew some- Direct investment inflows reached almost $50 bilwhat faster than the dollar value of imports through lion in the first three quarters of 1995; this total was November. Nonetheless, with the level of imports about equal to the inflow during all of 1994 and exceeding the level of exports at the start of the year, almost matched the record pace of 1989. Mergers and these growth rates translated into a slightly larger acquisitions added substantially to the inflow of funds deficit. The current account deficit averaged about from foreign direct investors in the United States. $160 billion at an annual rate during the first three U.S. direct investment abroad was even larger than quarters of 1995. Both the trade deficit and the deficit foreign direct investment in the United States and on net investment income widened somewhat, result- also approached previous peak rates. U.S. net puring in an increase from the $150 billion current chases of foreign stocks and bonds were up from account deficit experienced in 1994. 1994 but below the 1993 peak rate. The bulk of the Real exports of goods and services grew at an net U.S. purchases of foreign securities were from the annual rate of about 5 percent over the first three industrial countries; net purchases from emerging quarters of 1995. Agricultural exports remained at markets played a relatively small role. elevated levels, and the volume of computer exports continued to rise sharply. Other merchandise exports expanded in real terms at a marginally slower rate Labor Markets than did the total; within this broad category, machinery and industrial supplies accounted for the largest The number of jobs on nonfarm payrolls increased increases. Tabulation of the export data by country of l3/4 million over the twelve months ended in Decemdestination showed divergent patterns: Exports to ber 1995. After a sharp rise during 1994, gains in Mexico dropped in response to the economic crisis in employment slowed in the first part of 1995, and the that country, but shipments to developing countries second quarter brought only a small increase. There- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

294 Federal Reserve Bulletin • April 1996 after, increases picked up somewhat. Nearly 450,000 help agencies—added jobs at a much slower rate than jobs were added in the final three months of the year, in other recent years. a gain of about IV2 percent at an annual rate. In Results from the monthly survey of households January of this year, with the weather keeping many showed the civilian unemployment rate holding in a workers at home during the reference week for the narrow range throughout 1995, and the rate reported monthly survey of establishments, payroll employ- in December—5.6 percent of the labor force— ment fell sharply. was near the midpoint of that narrow range. In Janu- As in 1994, increases in payroll employment in ary of this year, the unemployment rate ticked up to 1995 came mainly in the private sector of the econ- 5.8 percent. omy, but gains there were more mixed than those of The proportion of working-age persons choosing 1994. In manufacturing, employment fell about to participate in the labor force edged down slightly, 160,000 over the twelve months ended in December, on net, over the course of 1995. It has changed little, reversing almost half of the previous year's gain. on balance, since the start of the 1990s. By contrast, Losses were concentrated in industries that produce the two previous decades brought substantial net nondurables. A decline this past year in the number increases in labor force participation, although of jobs at apparel manufacturers was one of the longer-term trends during the two decades were interlargest ever in that industry. Sizable reductions in rupted at times by spells of cyclical sluggishness in employment also were reported by manufacturers of the economy. Two or three years ago, cyclical influtextiles, tobacco, leather products, and petroleum and ences also seemed to be a plausible explanation for coal. In many of these industries, cyclical decelera- the sluggishness of labor force participation in the tion of the economy in 1995 compounded the effects current business expansion. But, with the participaof adjustments stemming from longer-run structural tion rate remaining sluggish as job opportunities have changes. In contrast to the widespread contraction in continued to expand, the evidence is pointing increasemployment among producers of nondurables, em- ingly toward a slower rate of rise in the trend of ployment at the manufacturers of durable goods participation. Slower growth of participation will tend increased slightly during 1995. Hiring continued to to limit the growth of potential output unless an expand briskly at firms that produce business equip- offsetting rise is forthcoming in the trend of producment. Metal fabricators also sustained growth in tivity growth. So far in the current expansion, meaemployment but at a slower pace than in 1994. The sured increases in productivity seem to have followed number of jobs in transportion equipment declined, a fairly typical cyclical pattern, with larger increases on net. early in the expansion and smaller gains, on average, in subsequent years. Overall, however, this pattern In most other sectors of the economy, employment has not yielded evidence of a significant pickup in the rose moderately last year. The number of jobs in longer-term trend of productivity growth. construction increased 140,000 over the twelve months ended in December, a rise of more than The average unemployment rate for all of 1995 3 percent. In the private service-producing sector, was about V2 percentage point below the average for which now accounts for about three-fourths of all 1994, and it was only a little above the levels to jobs in the private sector, employment increased which the unemployment rate fell in the latter stages 1.7 million in 1995 after having advanced 2.6 million of the long business expansion of the 1980s. The low in 1994. Establishments that are involved in whole- unemployment rates reached back then proved to be sale trade continued to boost payrolls at a relatively unsustainable, as they eventually were accompanied brisk pace in 1995. Retailers also added to employ- by a significant step-up in the rate of inflation, ment but at a considerably slower rate than in 1994; brought on in part by faster rates of rise in hourly within retail trade, employment at apparel outlets fell compensation and unit labor costs. The current substantially last year, and payrolls at stores selling expansion, in contrast, has remained relatively free of general merchandise dropped moderately after a large increased inflation pressures working through the increase in 1994. Providers of health services added labor markets. The employment cost index for hourly slightly more jobs than in other recent years. At firms compensation of workers in private nonfarm industhat supply services to other businesses, employment tries rose only 2.8 percent over the twelve months growth was sizable again in 1995 but less rapid than ended in December, the smallest annual increase on in either of the two previous years; in this category, record in a series that goes back to the start of the providers of computer services expanded their job 1980s. Hourly wages increased 2.8 percent during the counts at an accelerated pace in 1995, but suppliers past year, the same relatively low rate of increase as of personnel—a category that includes temporary in 1994. The cost of fringe benefits, prorated to an Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 295 hourly basis, rose only 2.7 percent last year, the last three-year period in which prices of these goods smallest annual rise on record. With many firms still rose by such small amounts came in the middle part undergoing restructurings and reorganizations, many of the 1960s. Apparel prices continued to decline last of which have involved permanent job losses, work- year but not so rapidly as in the previous year. Price ers probably have been more reluctant to press for increases for vehicles moderated. The 1995 rise in wage increases than they normally would have been the CPI for services other than energy was 33A perduring a period of tight labor markets. Also, firms cent; although this increase exceeded the 1994 rise by have been making unprecedented efforts to gain bet- a slight amount, the results for both years were ter control over the rate of rise in the cost of benefits among the smallest increases for this category in the provided to employees, especially those related to last three decades. health care. Although some of these efforts may have Trends in food prices and energy prices remained only a one-time effect on the level of benefit costs, favorable to consumers in 1995. The rise in food groundwork also seems to have been laid for slower prices from the final quarter of 1994 to the final growth of benefits over time than would otherwise quarter of 1995 was slightly more than 2lA percent, have prevailed. almost exactly the same as the increases of the two previous years. The last yearly increase in food prices in excess of 3 percent came five years ago, in 1990. Prices In the intervening years, production adjustments by farmers and weather problems of one sort or another Early in 1995, inflation pressures that had started have caused temporary surges in the prices of some building in 1994 seemed to be gaining in intensity. farm commodities, but these surges have not resulted Indexes of spot commodity prices continued to surge in widespread pressures on food prices at the retail in the early part of last year, and in the producer price level. Moderate rates of increase in the costs of index, materials prices recorded some of the largest nonfarm inputs that contribute heavily to value added monthly increases of the past decade and a half. have been an important anchor in the setting of food Consumer prices also began to exhibit some upward prices at the consumer level. Also, if only by chance, pressure, with the index for items other than food and years of poor crops—like that of 1995, when grain energy moving up fairly rapidly over the first four and oilseed production plummeted—have tended to months of the year. be interspersed with years of good crops, a pattern The surge in inflation proved to be relatively short- that has prevented sustained upward pressures on lived, however. The spot prices of industrial com- farm and food prices. In the energy area, prices at the modities turned down in the spring of the year and consumer level fell l3A percent, on net, over the four fell further, on net, after midyear. Price increases for quarters of 1995, more than reversing a moderate intermediate materials slowed in the second and third 1994 increase. Gasoline prices dropped nearly 5 perquarters of 1995, and by the final quarter of the year cent, on net, over the four quarters of the year, and these prices also were declining. Monthly increases consumer prices of natural gas also declined apprein the core CPI slowed in May; thereafter, increases ciably. However, some upward pressures developed generally were small over the remainder of the year. in late 1995 and early this year, largely in response to The slowing of the economy after the start of the year unexpectedly cold temperatures that boosted fuel appears to have cut short the buildup of inflationary requirements for winter heating. pressures before they could have much effect on the All told, the price developments of 1995 appear to underlying processes of wage and price determina- have left a favorable imprint on expectations of future tion. In the end, the rise in the CPI excluding food rates of inflation, if results from various surveys of and energy from the final quarter of 1994 to the final consumers and forecasters are an accurate reflection quarter of 1995 amounted to 3 percent, an increase of the views held by the broader public. Monthly that differed little from those of the two previous responses to the surveys tend to bounce around someyears. The increase in the total CPI in 1995 came in what, but over 1995 as a whole, average readings of at 23/ percent, the fifth consecutive year in which it anticipated price increases one year into the future 4 has been in a range of 3 percent or less. were slightly lower than those of 1994, and survey In the aggregate, rates of price increase held fairly responses about inflation prospects over the longer steady for both goods and services this past year. The term came down more substantially. Although the CPI for commodities other than food and energy rose responses regarding expected inflation still tended, on l3/4 percent over the four quarters of 1995 after balance, to run to the high side of actual rates of price increases of IV2 percent in both 1993 and 1994. The increase, the easing of inflation expectations this past Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

296 Federal Reserve Bulletin • April 1996 year provided another encouraging sign that inflation the year but moderated later in 1995. For the year, processes that helped to undermine other recent debt grew 5lA percent, a bit above the midpoint of its business expansions are still in check in the current annual growth range. Initially, household and nonexpansion. financial business credit demands were concentrated in floating-rate or short-term debt instruments. As the yield curve flattened, credit demands shifted to fixed- FINANCIAL, CREDIT, AND MONETARY rate, long-term debt instruments. DEVELOPMENTS Because depository institutions are important sources of short-term and floating-rate credit to In 1995 and early 1996, the Federal Reserve had to households and businesses, depository assets grew adjust its policy stance several times to promote rapidly early on and then backed off. The need to credit market conditions supportive of sustained fund the increase in assets, along with declines in growth with low inflation. At the beginning of 1995, market interest rates relative to yields on retail depossome risk remained that inflation might rise. To pro- its, led to the fastest growth in M2 and M3 since the vide additional insurance against that development, late 1980s; M2 ended the year in the upper part of its the Federal Open Market Committee (FOMC) tight- annual range, and M3 was at the upper end of its ened reserve conditions, raising the intended federal range. In contrast, Ml declined for the first time since funds rate Vi percentage point, to 6 percent, thereby the beginning of the official series in 1959, as many extending the episode of policy firming that had banks introduced retail sweep accounts that shifted begun one year earlier. As time passed, it became deposits from interest-bearing checking accounts to clear that these policy tightenings had been success- savings-type accounts in order to reduce reserve ful in containing inflationary pressures, and the Sys- requirements. tem initiated lA point reductions in the federal funds rate in July and December 1995 and January 1996. Most market interest rates had peaked before the The Course of Policy and Interest Rates policy tightening last February. During the spring, interest rates declined appreciably, as market partici- The Federal Reserve entered 1995 having tightened pants increasingly came to believe that no additional policy appreciably during the previous year. Shortpolicy restraint would be forthcoming, and, indeed, term interest rates had risen more than 2Vi percentage that easing might be in the cards. Mounting evidence points from the end of 1993, and long-term rates that the growth of spending had downshifted and were up 2 percentage points. Policy tightening had price pressures were muted, along with greater hopes been necessitated by the threat of rising inflation that substantial progress would be made toward posed by unusually low real short-term interest rates reducing the federal budget deficit, contributed to the earlier in the 1990s. Rates had been kept low to change in attitudes and to the drop in interest rates, counter the effects of impediments to credit flows and especially longer-term rates. On balance during 1995, economic growth. But as these impediments were interest rates dropped 1 to 2Vi percentage points, reduced, the economy expanded at an unsustainable with the largest declines registered on intermediate- pace and margins of underutilized labor and capital and long-term securities. This year, short- and began to erode. Ultimately, absent a firmer policy, intermediate-term interest rates have fallen somewhat excessive demands on productive resources and further, while long-term rates are unchanged to a resulting higher inflation would have produced little higher. strains, threatening economic expansion. During the first part of last year, expectations of In early February the policy actions taken in 1994 lower U.S. interest rates relative to other G-10 coun- did not appear to be sufficient to head off inflationary tries and other factors such as the crisis in Mexico pressures. The growth of economic activity had not contributed to a 10 percent depreciation of the trade- shown convincing signs of slowing to a more sustainweighted exchange value of the dollar. By year-end, able pace, and available information, including a though, the dollar had retraced about half of these marked rise in materials prices during the last half of losses, and it has appreciated further on balance in 1994, seemed indicative of emerging resource con- 1996. straints and building inflationary pressures. In these The course of interest rates during the year influ- circumstances, the FOMC agreed on a Vi percentage enced overall credit flows and their composition. The point increase in the federal funds rate, and the Board expansion of the total debt of domestic nonfinancial of Governors approved an equal increase in the dissectors was relatively strong during the first half of count rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 297 During the remainder of the winter and through the lA percentage point decline in the intended federal spring, incoming data signaled that economic growth funds rate. was finally moderating. At first, it was unclear if the Although financial market participants had anticislowdown was temporary or if it was a lasting shift pated a decline in the federal funds rate at some toward a sustainable rate of economic expansion in point, bond and equity markets rallied strongly immethe neighborhood of the economy's potential. Adding diately after the change in policy was announced. to the uncertainty was a pickup of consumer price However, a pickup in economic growth during the inflation and a pronounced weakening in the foreign summer made further reductions in the funds rate exchange value of the dollar. At the March meeting, appear less likely, and interest rates backed up for a the FOMC determined that it would be prudent to time. await further information before taking any addi- The Committee did keep rates unchanged at the tional policy actions, but it alerted the Manager of the August and September meetings. Although inflation System Open Market Account that, if intermeeting had improved, the slowdown had been anticipated to action were to be required, the step would more a considerable extent. Moreover, uncertainties about likely be to firm than to ease. federal budget policies and their effects on the econ- By the May meeting, substantial evidence had omy remained substantial. accumulated that the threat of rising inflation had At the November meeting, the economic signals lessened. Economic growth had slowed; although the were mixed. Anecdotal information tended to suggest adjustment to inventory imbalances that had devel- a softening in spending after the third quarter, but the oped earlier in the year was contributing to the slow- extent of any slowing of spending and inflation was down, the underlying trajectory of final sales was still unclear. Although short-term rates remained above uncertain. The FOMC determined that the existing long-term averages on a real, inflation-adjusted basis, stance of policy was appropriate and expressed no substantial rallies in bond and stock markets were presumption as to the direction of potential policy thought likely to buoy spending. Against this backaction over the intermeeting period, issuing a sym- drop, the FOMC voted to maintain the existing stance metric directive to the Account Manager. of monetary policy. Intermediate- and long-term interest rates had The generally positive news about inflation and fallen throughout the winter and spring, as evidence hopes for a budget agreement had helped propel the accumulated that the expansion of economic activity bond market higher throughout the fall. By the was slowing and that inflationary pressures were December meeting, intermediate- and long-term ebbing. Furthermore, budget discussions in the interest rates were \3A to IVi percentage points below Congress seemed to foreshadow significant fiscal their levels at the beginning of the year. The bond restraint over the balance of the decade, putting addi- market rally, along with strong earnings reports, tional downward pressure on these rates. Short-term pushed equity prices higher during the year, and by rates had declined less, but in late spring, financial mid-December, equity price indexes were up about market participants had begun to anticipate an 35 percent from levels at the beginning of the year. easing of monetary policy. By midyear, the three- Since the last easing in July, inflation had been somemonth Treasury bill rate had declined about lA per- what more favorable than anticipated, and the expancentage point from its level at the beginning of the sion of economic activity had moderated substanyear, while rates on securities with maturities greater tially after having posted a strong third quarter. With than one year had dropped as much as 2 percentage both inflation and inflation expectations more subpoints. dued than expected, and with the slowing in eco- Employment data released shortly after the May nomic growth suggesting that price pressures would FOMC meeting were surprisingly weak, and by the continue to be contained, the FOMC decided to re- July meeting it appeared that growth of aggregate duce the intended federal funds rate an additional output had sagged markedly during the second quar- lA percentage point, bringing it to 5Vi percent. ter as businesses sought to keep inventories from The data available at the time of the FOMC meetrising to undesirable levels. This deceleration of out- ing in late January gave stronger evidence of slowing put growth was accompanied by a softening of indus- economic expansion. This development reduced trial prices and a marked reduction in the pace at potential inflationary pressures going forward and which materials prices were rising. With the econ- raised questions about whether monetary policy omy growing more slowly than had been anticipated might unduly restrain the pace of expansion. The and potential inflationary pressures receding, the Committee believed that a further slight easing in FOMC voted to ease reserve pressures slightly with a monetary policy was consistent with keeping infla- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

298 Federal Reserve Bulletin • April 1996 tion contained and fostering sustainable growth, prices bolstered the overall financial condition of given that price and cost trends were already sub- households. dued. In these circumstances, the Committee lowered Federal debt rose VA percent in 1995, slightly less the intended federal funds rate lA percentage point, to than in 1994. The federal government's demands for 5Y4 percent, and the Board approved an equivalent credit fell largely because the budget deficit shrank reduction in the discount rate, to 5 percent. about 20 percent for the calendar year. Federal debt Partly as a consequence of the System actions in growth also slowed toward year-end as the Treasury December and January, short- and intermediate-term drew down its cash balance to keep borrowing within interest rates have fallen XA to Vi percentage point the $4.9 trillion debt ceiling. since mid-December. However, on balance, longer- State and local government debt fell 5Vi percent— term rates are unchanged to a little higher. The more than in 1994. A few years earlier, municipalities absence of a firm agreement to reduce the federal had taken advantage of low long-term rates to prebudget deficit, and some tentative signs most recently refund a substantial volume of issues, many of which that the economy might not be so sluggish as some were eligible to be called in 1995. As those securities market participants had feared, have held up longer- were called, and with gross issuance light, the stock term rates. of municipal securities contracted for a second consecutive year. Despite the overall reduction in debt outstanding, the ratios of tax-exempt to taxable yields Credit and Money Flows jumped in the first half of the year and, for long-term debt, held at an elevated level during the remainder On balance in 1995, the debt of the domestic nonfi- of the year. This increase was associated with connancial sectors grew at about the same pace as in the cerns about the effect on demands for tax-free previous year, although within the year, debt growth municipal debt of proposals for changes in federal was much stronger in the first half than in the second. taxation that would sharply reduce the tax advantages Credit supplies remained plentiful: Banks continued of holding municipal bonds. to be willing lenders, and in securities markets most Household borrowing remained robust in 1995, interest-rate spreads remained quite narrow. Debt moderating only a bit from 1994, and the ratio of burdens for households increased, but except for a household debt to disposable personal income rose few types of consumer credit obligations, delin- further. Even so, the financial condition of this sector quency rates remained at low levels. Rising equity remained good on balance, although there were signs 3. Growth of money and debt Percent Domestic Period Ml M2 M3 nonfinancial debt Year1 1980 7.5 8.7 9.6 9.5 1981 5.4 (2.5 2) 9.0 12.4 10.2 1982 8.8 8.8 9.7 9.8 1983 10.3 11.8 9.5 11.9 1984 5.4 8.1 10.8 14.6 1985 12.0 8.6 7.7 14.3 1986 15.5 9.2 9.0 13.3 1987 6.3 4.2 5.9 9.9 1988 4.3 5.7 6.3 9.0 1989 .5 5.2 4.0 7.8 1990 4.2 4.1 1.8 6.8 1991 7.9 3.1 1.2 4.6 1992 14.3 1.8 .6 4.7 1993 10.5 1.4 1.0 5.2 1994 2.4 .6 1.6 5.2 1995 -1.8 4.2 6.1 5.3 Quarter (annual rate)3 1995:1 -.1 1.4 4.8 5.3 2 -.5 4.3 6.7 7.0 3 -1.5 7.0 8.0 4.6 4 -5.1 4.0 4.4 3.9 1. From average for fourth quarter of preceding year to average for fourth 2. Adjusted for shifts to NOW accounts in 1981. quarter of year indicated. 3. From average for preceding quarter to average for quarter indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 299 of deterioration. The rally in the domestic equity increase by reducing their securities holdings, markets supported household balance sheets by although higher market prices of securities and offboosting net worth sharply. In addition, delinquency balance-sheet contracts left reported securities holdrates on home mortgages and closed-end consumer ings slightly higher for the year. In fact, bank security loans at banks, while rising, remained at low levels. holdings relative to the size of their balance sheets Other indicators, however, provided evidence that remained elevated and, together with banks' strong some households were likely beginning to experience capital positions, indicated that late in the year banks increased financial pressures. For instance, delin- were well positioned to continue accommodating the quency rates on credit card debt held by banks and on credit demands of households and businesses. auto loans booked at captive finance companies rose Although qualitative information suggested that sharply. Furthermore, the average household debt- banks were no longer reducing the standards busiservice burden—calculated as the share of disposable nesses needed to meet to qualify for loans, some income needed to meet required payments on mort- easing of credit terms continued, with interest rate gage and consumer debt—continued to rise last year. spreads on business loans narrowing further. Growth This measure of debt burden has now reversed about of real estate loans held by banks slowed over the one-half of the decline it posted earlier in the decade. year as the share of fixed rate mortgages in total The average debt-service burden of nonfinancial originations rose with the decline in long-term rates. corporations—the ratio of net interest payments to Banks tend to securitize fixed rate mortgages more cash flow—also rose last year, but it remained well than adjustable rate loans. Consumer loans on the beneath the most recent peak reached in 1990. The books of banks began the year growing at very high increase in debt burden was in part associated with rates; this growth decelerated throughout 1995 as the the relatively strong growth of the debt of nonfinan- volume of securitization increased. In response to cial businesses. This sector's debt growth was espe- rising delinquency rates, some banks tightened terms cially robust early in the year, when business fixed and standards for consumer loans toward the end of investment picked up further and inventory accumu- 1995 and early 1996. lation was rapid. Debt issuance was also boosted Total assets of thrift institutions are estimated to by the rising wave of mergers, although a good have risen slightly last year. Growth at healthy thrift number involved stock swaps. Financing needs fell institutions more than offset a substantial transfer of back later on as investment growth slowed and profits thrift assets to commercial banks through mergers. increased. Funding patterns also shifted as bond The revival of growth in thrift assets, along with the yields fell, and firms relied more heavily on longer- strong showing of bank credit, helped to nudge up term debt. Despite the increase in credit demands, depository credit as a share of domestic nonfinancial interest rate spreads of investment-grade private debt for the second straight year after fifteen years of securities over comparable Treasuries widened only declines. Banks and thrift institutions still account for slightly and remained narrow by historical standards, more than one-third of all credit to nonfinancial suggesting that lenders continued to view balance sectors. sheets of nonfinancial corporations as remaining Banks and thrift institutions funded a large share of healthy on the whole. Spreads on below-investment- their asset growth with deposits, and M3 grew 6 pergrade debt rose more sharply but stayed well beneath cent. The non-M2 portion of M3 was especially levels reached early in the decade. strong, in part as depository institutions substituted Commercial banks met a significant portion of the large time deposits for nondeposit sources of funds. increase in business credit demands last year, which, The sharp reduction in deposit insurance premiums, in turn, contributed to the rapid expansion of bank which made large time deposits a more attractive balance sheets. Banks funded a portion of the loan source of funds, probably contributed to this shift. Late in the year, branches and agencies of Japanese banks, facing some resistance in U.S. funding markets, ran off time deposits while continuing to 4. Distribution of bank assets by capital status increase their funding from overseas offices. Percentage of industry assets M2 rose as lower market interest rates and a flatter 1990:Q4 1995:Q3 yield curve increased the relative attractiveness of Undercapitalized 31.3 .5 retail deposits.2 As is typical, deposit interest rates, Adequately capitalized 38.6 2.9 Well capitalized 30.1 96.6 2. In February 1996 M2 was redefined to exclude overnight repur- NOTE. Adjusted for examiner ratings. chase agreements (RPs) and overnight Eurodollars; these instruments Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

300 Federal Reserve Bulletin • April 1996 and to a lesser extent returns on money market a rare decline in the currency component of Ml this mutual funds, adjusted slowly to declines in market past summer, the first decrease since the early 1960s. rates last year. Falling interest rates for comparable The demand for existing Federal Reserve notes also maturity market instruments were not the whole story slackened in anticipation of the introduction of a for the growth of M2, however. As the yield curve newly designed $100 bill that will be more difficult to flattened, the relative gains from holding longer-term counterfeit. assets with less certain price behavior fell, and this probably strengthened household demand for components of M2. Even so, M2 velocity was about Foreign Exchange Developments unchanged after having increased for four years. Ml fell almost 2 percent in 1995, the first annual The weighted-average foreign exchange value of the decline since the beginning of the Board's official dollar in terms of the other G-10 currencies declined series in 1959. Sweeps of deposits from reservable about 5 percent on balance last year. The dollar fell checking accounts, a component of Ml, to nonreserv- sharply through April and reached a low almost able money market deposit accounts were a major 10 percent below its value at the end of 1994. The influence. Without these sweeps, Ml would have downward pressure against the dollar was sparked by risen 1 percent. By the end of last year, sweeps had indications of some slowing of the pace of U.S. real spread to thirty-two bank holding companies, and the output growth, which contributed to expectations that initial amounts swept by these programs totaled further increases in U.S. interest rates were unlikely, $54 billion. The corresponding decline of more and by the acrimony surrounding the ongoing trade than $5 billion in required reserves largely showed dispute between the United States and Japan. The through to reserve balances maintained at Federal crisis in Mexico also weighed on the dollar. On Reserve Banks. As banks continue to introduce retail several occasions in March and early April the Tradsweep programs in the future, the aggregate level of ing Desk at the Federal Reserve Bank of New York, required reserve balances will tend to fall further. joined by some other central banks, intervened to buy Although it has not happened yet, one possible conse- dollars on behalf of the Department of the Treasury quence of the declining required reserve balances is and the Federal Reserve System in an effort to greater instability in the aggregate demand for counter the pressure for dollar depreciation. reserves and in overnight interest rates. In 1991, after The release by the G-7 officials of the communique the cut in reserve requirements at the end of 1990, from their meeting in late April supporting an orderly unusually low levels of required reserve balances reversal of the dollar's decline and the signing of a were associated with greater variability in the federal trade agreement between the United States and Japan funds rate, as banks' volatile clearing needs began to at the end of June helped to stabilize the dollar, which dominate the demand for reserves, making daily re- had fluctuated narrowly until early August. The dolserve demand more difficult to estimate. lar then rebounded somewhat and remained within a The run-off in reserve balances held down the narrow range through the end of the year. The recovgrowth of the monetary base to 4 percent in 1995. In ery of the dollar stemmed, in part, from perceptions addition, currency growth slowed, primarily owing to that its earlier decline, particularly in terms of the reduced shipments abroad. Foreign demand moder- yen, had been excessive in light of the underlying ated with the stabilization of financial conditions in fundamentals. Moreover, weakness in the economies some countries where dollars circulate widely. of some other major industrial countries began to Indeed, reduced demands from abroad contributed to emerge, reducing prospective returns available abroad. At times from May through August, the Trading Desk again entered the market in conjuncwill remain in M3. These items were first included in M2 in 1980 tion with other central banks to intervene in support because they were being substituted for demand deposits as businesses were in the process of managing their cash holdings more of the dollar, reinforcing the view that U.S. authoriclosely. Since then, other uses of overnight RPs and Eurodollars have ties were committed to a strong dollar. come to dominate movements. Moreover, while RPs and Eurodollars are only 3 percent of M2, they contribute substantially to the short-run In all of the major foreign industrial countries, volatility of that aggregate. Removing these components from M2 long-term interest rates declined during 1995, nearly should make the weekly levels of the aggregate less volatile and reversing the increases that had occurred during the reduce the reporting burden on banks that have had to distinguish previous year. On average, rates on foreign governbetween overnight and term RPs and Eurodollars. On a monthly and quarterly basis, the relationships of the two measures of M2 to income ment issues with maturities of ten years fell about and interest rates are almost indistinguishable. The historical M2 150 basis points in the twelve months to December, data presented in this report exclude overnight RPs and overnight somewhat less than the decline that occurred in the Eurodollars. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 301 comparable U.S. rate. In Canada, where economic Bank of Japan, sometimes in conjunction with U.S. activity slowed sharply, the drop in long-term rates and foreign monetary authorities, contributed to the nearly matched that in the United States, while in appreciation of the dollar in terms of the yen during Italy, where political uncertainty remained a concern the second half of the year. However, the fundamenthroughout the year, rates fell only 100 basis points. tal cause of the yen's decline during that period During the first few weeks of this year, long-term probably was the easing of monetary policy by the rates abroad generally moved down somewhat more Bank of Japan that pushed short-term market interest but then most recently returned to their December rates to extremely low levels. average levels. An important exception is Japan, In terms of the Mexican peso, the dollar appreciwhere rates have risen from their late-December lev- ated sharply from the onset of the crisis in late els, apparently reflecting market perceptions that the December 1994 to March. The dollar subsequently stage is set for a Japanese economic recovery. Short- retraced some of those gains, and the peso-dollar rate term market rates in the major foreign industrial fluctuated narrowly through the middle of the year. countries were mixed, but on average rates moved Uncertainty about the prospects for Mexican ecodown. nomic performance and macroeconomic policy On balance, the dollar depreciated about 8 percent sparked renewed appreciation of the dollar in terms in terms of the German mark during 1995 and by of the peso in November. Since November, data similar amounts in terms of most other currencies indicating that the decline in Mexican real economic participating in the Exchange Rate Mechanism of the activity may have ended, some intervention by the European Union. After substantial depreciation Bank of Mexico in support of the peso, and a percepagainst the mark early in the year, the dollar stabi- tion that the decline in the peso may have gone too lized and then partly recovered as economic indica- far given the underlying fundamentals have contribtors revealed significant softening in economic activ- uted to some rebound of the peso. During the year, ity in Germany. Easing by the Bundesbank during the the Mexican authorities drew $3 billion on shortsecond half of the year reinforced the view that mark term swap lines with the Federal Reserve and the interest rates were not likely to rise and might fall Exchange Stabilization Fund (ESF) of the U.S. Treafurther. The dollar depreciated slightly, on balance, in sury and $10.5 billion on a medium-term swap facilterms of the Canadian dollar, despite periods of sell- ity provided by the ESF. By the end of January 1996, ing pressure on the Canadian dollar during the year the short-term drawings had been entirely repaid. related to Canada's fiscal situation and possible Adjusted for relative consumer price inflation, the secession by Quebec. dollar was little changed, on balance, against a Although the dollar did fall to a record low, below multilateral-trade-weighted average of the currencies 80 yen to the dollar in mid-April, by year-end the of eight developing countries that are important dollar had appreciated slightly in terms of the yen U.S. trading partners. The dollar's 30 percent real from its level at the end of 1994. So far this year, the appreciation against the Mexican peso was about dollar has appreciated somewhat further against the offset by real depreciations against the other seven yen. Resolution of the trade dispute and repeated currencies. • episodes of exchange market intervention by the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

302 The Fiscal Position of the State and Local Government Sector: Developments in the 1990s Laura S. Rubin, of the Board's Division of Research which are the primary accounts for financing day-toand Statistics, prepared this article. Jeff Campione day operations of both state and local governments. and Robin McKnight provided research assistance. In every state except Vermont, the general fund and many other budget accounts are required to be bal- After difficulties during the early 1990s, the fiscal anced, either within each fiscal year or over a twoposition of state and local governments has improved year period. The accompanying box discusses state considerably in the past three years. States, as a balanced-budget requirements and the ways states group, have fared relatively well, although some local meet them. governments are still struggling with fiscal difficul- The general fund accounts of state governments ties. In addition, the sector as a whole continues to exclude earmarked funds, federal funds, and pension face persistent underlying structural problems. This funds. They also exclude most outlays for capital article first examines the primary budget concepts investment. As a result, the general fund accounts of that are generally used to evaluate the fiscal condition all state and local governments cover only about half of state and local governments. Next it surveys the of the sector's spending, and therefore any reading of status of the various levels of government, that is, states, cities, counties, and school districts. Then it 1. State and local sector surplus, 1968-95 discusses some of the underlying problems in state and local budgeting, particularly in the areas of health care, education, corrections, and pensions. BUDGET CONCEPTS The national income and product accounts (NIPA), published by the Commerce Department, provide a comprehensive summary of the receipts and expenditures of all state and local governments and their enterprises. Up-to-date NIPA information for the state governments and the local governments separately is not available, although social insurance fund data for the sector are published and will be discussed later. According to the NIPA, the fiscal position of state and local governments, excluding their social insurance funds, has improved in recent years: Although the surplus of current accounts dipped markedly in 1990, it then trended up for several years and remained about unchanged over 1994 and 1995. A similar pattern is apparent for the surplus as a share of GDP, but more broadly, when measured this way, the surplus has been on a general downward trend for the past quarter-century (chart 1). The examination of data published by a variety of state and local organizations provides some insight into how the various levels of government are faring. NOTE. Shaded areas indicate periods of recession as defined by the National Bureau of Economic Research. Data are quarterly and on a NIPA basis; they These sources focus on the general fund budgets, exclude social insurance funds; the figure for 1995 is through Q3. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

303 the fiscal position of a government based solely on its wise tenuous budgetary picture. The following are general fund budget is incomplete. However, data on examples of budgetary practices used by many states. the general fund accounts, particularly for states, are readily available and are viewed as a good indicator • States focus on a general funds measure that of state fiscal conditions. Although both the general reflects their balance sheet position rather than the fund accounts and the NIPA include interest outlays, difference between revenues and outlays over a year. only the NIPA includes the services of capital Thus, states whose current-year expenditures exceed assets—equipment and structures—as expenditures.1 their current-year revenues could still be reporting a The general fund accounts of state and local gov- positive year-end general fund "balance" as long as ernments may include revenues that are not counted that gap does not exceed the net surpluses accumuin the NIPA but that could buoy, or mask, an other- lated in previous years. For example, for fiscal year 1995, which ended June 30, 1995, the National Con- 1. Until the revision to the NIPA, released in January 1996, the ference of State Legislators (NCSL) projected a closspending measure that determined the NIPA surplus or deficit for state ing balance of $4 billion even though planned expenand local governments included purchases of all durable goods and ditures were expected to exceed revenues by more structures. However, the NIPA now feature a current account measure of the surplus or deficit. Thus, outlays for equipment, a component of than $1 billion.2 durable goods, and structures have been reclassified as investment, and services of these assets, along with compensation and spending on other services, nondurable goods, and certain durable goods that are 2. Corina L. Eckl, Karen Carter, and Arturo Perez, State Budget not capitalized, like parts, are being reported as current-account pur- Actions 1994, National Conference of State Legislatures (November chases or government consumption expenditures. 1994), p. 42. State Requirements for Balanced Budgets The definition of "balance" used by state governments does may be transferred from a state's education or transportanot necessarily accord with the generally accepted view, say tion trust fund to the general fund near year-end and then for individuals, that current revenues cover current expen- transferred back shortly thereafter. Generally, these types of ditures. For state governments, a balanced general fund transfers do not involve pension funds. budget for a given fiscal year requires that revenues plus Some states have also used proceeds of short-term debt surpluses from preceding years be at least as large as offerings, and occasionally bonds, to cover shortoutlays. Forty-nine states have balanced-budget require- falls in their general fund accounts, thereby "balancing" ments. They focus on general fund budgets, although, in those budgets. Other balancing techniques employed when many states, other state funds are also expected to balance. shortfalls appear toward the end of the fiscal year include More states have constitutionally mandated balanced- the postponement of payments until after the end of the year budget requirements than statutory requirements. Generally, or, sometimes, the acceleration of some receipts into the the governor must submit a balanced budget or the legisla- year. Finally, certain functions may be moved outside the ture must enact one. In some states the budget need not be realm of the general fund budget. Thus, although a simple in balance at the end of the fiscal year, whereas other states comparison of expected outlays and receipts from current allow the carryover of a deficit into the next fiscal year if sources may imply a deficit, considerable fiscal maneuvernecessary. ing can produce a "balance." If a shortfall in the general fund is anticipated during the Analysts emphasize that state officials want and try to act planning stages of a budget, which occur during the legisla- responsibly to balance their budgets. Moreover, concern tive session preceding a given fiscal year, state governments about a state's municipal bond rating may encourage actions usually cut spending or increase taxes, fees, and charges. In to balance its budget. Therefore, even without explicit laws, addition, many governments rely on interfund transfers, for the manifest intention of officials is to balance state and example, from so-called rainy-day funds or from other local budgets according to the terms and definitions defunds, to ensure fiscal balance. Forty-five states have budget scribed above, and the primary motivation for balanced stabilization, or rainy-day, funds whose primary purpose is budgets is not the formal requirement but rather "tradition, to provide revenue during periods of fiscal distress.1 In practice, and public expectation."2 Wyoming is a case in addition, some states transfer money from trust funds, which point: Although the state is not legally required by constitualways have a large, positive balance. For example, funds tion or statutory provision to balance its budget, the expectation is so strong that it is considered to have the requirement in practice. 1. Revenues for the rainy-day funds are determined through appropriations or automatically as a function of a state's budget surplus. Only Arkansas, Hawaii, Illinois, Montana, and Oregon, along with the District of 2. Ron Snell, State Balanced Budget Requirements: Provisions and Prac- Columbia, do not have rainy-day funds. tice, National Conference of State Legislatures, forthcoming. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

304 Federal Reserve Bulletin • April 1996 • Second, governments may count the proceeds of National Conference of State Legislatures (NCSL), short-term debt offerings as a source of funds (reve- general fund balances have risen from less than 1 pernue), although these are not included in the NIPA. cent of states' expenditures in fiscal 1992 to an • Third, governments may transfer funds into their estimated 5.1 percent in fiscal 1995 (chart 2). Indeed, general fund from other accounts, or they may sell an the recent improvement compares favorably with the asset. For example, in the period from fiscal 1991 to period from 1984 to 1990 when general fund bal- 1994, the State of New York sold more than ances averaged 4 percent of expenditures. Even so, $300 million of assets to public authorities, which while the improvement is nationwide, weakness is borrowed to finance the purchases. A transaction of still apparent in a number of states. this type increases revenue in the general fund but In fiscal 1995, which ended last June for most state does not change the fiscal condition for the state on a governments, tax collections were stronger than NIPA basis. expected; as a result, budgets improved despite considerable growth in outlays and small legislated tax reductions. However, budget officers are expecting THE CURRENT FISCAL CONDITION OF STATES their fiscal stance to weaken a little in fiscal 1996 AND LOCAL GOVERNMENTS because they are expecting revenue growth to slow. Like the NIPA, the general fund accounts of states According to a midyear survey of the 1996 fiscal and many local governments suggest significant situation by NCSL, forty states estimated that reveimprovement from weakness earlier in the 1990s. nues would come in at or above target for the current Expenditures for the sector are split about evenly fiscal year. But ten states were expecting revenues to between states and local governments. At the local be below projections, compared with just two states government level, the share of expenditures is last year. Several of these states indicated that the roughly one-third each for cities and school districts, weakness was due to smaller-than-expected sales and with counties making up most of the remaining out- excise taxes, whereas a few states blamed weaker lays. State revenues have come in above the expecta- personal income tax collections. The states reporting tions of state budget planners for the past few years, problems were Idaho, Hawaii, Maine, Maryland, and year-end balances have grown to more than Nebraska, New Mexico, Rhode Island, South Dakota, 5 percent of expenditures. For some local govern- Vermont, and Wyoming. On the spending side, most ments, general fund data are not available. However, states indicated that expenditures were expected to even though the data sources are varied, the story is end up close to planned levels, and fewer states than clear: Many local governments still appear to be last year are expecting overruns. struggling to improve their budgetary positions. The strengthening in fiscal positions since the early 1990s reflects several factors. Among these factors were tax hikes and spending restraint early in the States decade and a slowing of the growth in outlays for The fiscal position of most states has continued to Medicaid from the enormous advances seen early in improve. According to a recent survey by the the 1990s. Even so, Medicaid payments increased 2. Indicators of the fiscal position of states Percent Percent Fiscal year-end balances Net tax changes of general fund accounts by fiscal year of enactment as a percentage of expenditures' as a percentage of collections in previous year 1980 1985 1990 1995 1985 1987 1989 1991 1993 1995 1. Annual data. Figure for 1995 is an estimate and for 1996, a forecast. SOURCE. National Conference of State Legislatures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The State and Local Government Sector 305 nearly 10 percent in each of the past two years, and cits. A more recent opinion survey indicates that in they are expected to rise at about the same rate in fiscal 1995 economic and fiscal conditions continued fiscal 1996. to improve; as a result, the budgetary position of With the improvements in budget positions, many many cities may turn out to have been better than states have cut taxes in recent years. In 1995, many expected earlier. The factors having the most negastates cut the personal income tax, and some acted to tive effects on the fiscal position of cities included reduce local property taxes. However, according to infrastructure needs and spending, unfunded federal the Center for the Study of the States, "Few of the and state mandates, city employee health benefits, reductions were large enough to make a big differ- and crime. ence in the income of taxpayers or the fiscal situation of the states."3 States tend to raise taxes during or immediately after a recession to make up for short- Counties falls and then to hold the line or even cut taxes several years later when receipts are strong. The The National Association of Counties has been sursmall tax reductions in fiscal 1995, like those in 1985, veying counties for only a few years. In general, the followed that general cyclical pattern (chart 2). survey reports suggest continuing fiscal weakness. According to the 1995 report, when counties were asked to describe their fiscal condition, less than Local Governments 5 percent of respondents said that revenues were expanding and that they were able to undertake new Although no comprehensive data sources on the curprograms. In contrast, more than 60 percent either rent fiscal position of local governments are available, information from various sources indicates that the budgets of local governments as a group have not 3. Indicators of the fiscal position of local governments, fared as well as those of states. According to the 1985-95 Census of Governments, which is available only through 1992, local governments experienced considerably more fiscal distress than states between the mid-1980s and 1992. Although local governments recorded deficits beginning in 1986, state governments were not in deficit until 1991. In addition, local government deficits were larger as a percentage of their expenditures than were state government deficits. Other data sources also substantiate the continuation of fiscal difficulties at the local government level. Cities Public school districts According to survey data from the National League Surplus (deficit) as percentage of expenditures of Cities, the fiscal condition of cities improved considerably in 1993 and 1994. In fiscal 1995, however, more than half of large cities reporting were expecting to run deficits in their general fund accounts (chart 3). If, after final data are available, these deficits are substantiated, the percentage of cities with deficits in 1995 will be the largest since at least 1985. Fiscal 1994 turned out to be a better year than had been projected primarily because cities succeeded in holding down the growth of expenditures. Even so, in 1985 1987 1989 1991 1993 1995 1994, nearly 30 percent of cities were reporting defi- NOTE. For cities, figure for 1995 is an estimate. For school districts, figures for 1994 and 1995 are estimates. SOURCES. For cities. National League of Cities, City Fiscal Conditions in 3. Steven D. Gold, "1995 Tax Cuts: Widespread But Not Revolu- 1995, June 1995. For public school districts, National Education Association, tionary," State Fiscal Brief (December 1995), p. 1. 1994-95 Estimates of School Statistics, April 1995. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

306 Federal Reserve Bulletin • April 1996 were having difficulty maintaining services or were political and economic events, such as reductions in reducing discretionary programs, and 4 percent char- federal aid or an economic downturn, as well as from acterized their fiscal position as in crisis. the fundamental underlying changes in demand that have been stretching governments for the past decade. Three particular areas of concern—corrections, School Districts health, and education—reflect both demographic and social trends. In addition, with a considerable share Data from the National Education Association sugof state and local pension plans underfunded, meetgest that the fiscal condition of school districts ing payments for future retirees could add signifiappears no better than that of cities and counties. cantly to fiscal pressure. Finally, if legislation to Public school districts, whose data include capital reduce the federal budget deficit is enacted, it will accounts, ran a surplus through the school year endlikely entail reductions in aid to state and local ing in 1989 and have been in deficit ever since governments. (chart 3). The deficits reflect imbalances in operating accounts as well as a step-up in school construction early in the 1990s. Corrections In summary, a number of local governments have Though still a relatively small portion of total spendcontinued to experience budgetary problems. The ing, corrections has been one of the fastest-growing weakness probably is due partly to reductions in aid programs of state and local governments in recent by state governments, especially in the early 1990s, years. Spurred by rising crime rates and a growing as states tried to deal with their own fiscal distress. awareness of and concern about safety, legislators For example, the growth of state aid for public educa- have been eager to get tough on criminals. As a tion slowed sharply beginning in 1991 (chart 4). result, governments have been quick to adopt mea- However, after years of cutting aid to local govern- sures that set mandatory minimum sentences and to ments, about half the states are planning to help local try juveniles as adults. Between 1993 and the end of governments during fiscal 1996, particularly through 1995, twenty-four states had passed "three strikes increased school aid. and you're out" type of laws, which require mandatory sentences for habitual offenders. Not surprisingly, the costs of the criminal justice CONTINUING PRESSURES system appear to be rising. In fiscal 1995, appropriations for corrections rose at least 10 percent in four- Although the current situation looks more favorable teen states. Funds were spent on hiring additional for many governments, difficult problems may be prosecutors and policemen, adding beds to existing looming on the horizon. Problems could arise from facilities, and building new jails and prisons. The "three strikes" laws could prove particularly costly as they raise the need for prison capacity. Several 4. State aid for public education (K-12) measured by the states have estimated significant increases in state percentage change from year to year, 1986-95 expenditures to build more prisons in the years ahead. In addition, some states anticipate additional court costs. For example, the California Judicial Council anticipates a rising number of felony jury trials.4 Defendants may be more willing to accept the risk of a trial and less willing to take a plea bargain that would result in a lengthy jail term. The number of prison inmates rose dramatically between 1980 and 1995, with the number of state prisoners tripling to about 1 million in 1995 (chart 5).5 By comparison, the state prison population 4. Donna Lyons, 'Three Strikes' Legislation Update, National Con- 1986 1989 1992 1995 ference of State Legislatures (December 1995). 5. In 1994, state facilities held 62 percent of incarcerated individu- NOTE. Figures for 1994 and 1995 are estimates. SOURCE. National Education Association, 1994-95 Estimates of School Sta- als, and jails under the jurisdictions of local governments held 33 pertistics, April 1995. cent; federal prisons held the remaining 6 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The State and Local Government Sector 307 was essentially flat from 1930 to 1970 and rose only The recent increases in prison populations reflect a little during the 1970s. The recent wave of anti- both more arrests and an increased likelihood of crime legislation, including the "three strikes" laws, incarceration after arrest. These trends are associated appears to be bolstering prison populations further. In with the increase in anti-crime measures and the rise 1995, the number of prisoners under the jurisdiction of illegal drug use; notably, the percentage of prisonof state authorities jumped 9.1 percent, compared ers serving sentences for drug-related charges rose with a gain of 7.2 percent, on average, during the from 6 percent to 22 percent during the past fifteen preceding five years. years. However, the good news is that the rate of violent crime came down a little in 1993 and 1994 and that the rate for property crime has fallen 9 per- 5. Demand for state and local services, 1977-95 cent since its high in 1991. These developments likely are improving the perception of public safety. Medicaid Medicaid provides specific medical services to most recipients of federal cash assistance programs (Aid to Families with Dependent Children and Supplemental Security Income) and to others meeting a separate test of financial need. States administer the program and, with the federal government, fund it. The programs vary considerably because states may choose to offer optional services that are not mandated and because their policies on reimbursement and administration differ. The federal match is a function of the per capita income of the particular state, and the federal government's share ranges from 50 percent to 78 percent. Between 1988 and 1993, total transfer payments for Medicaid rose from 10 percent to more than 16 percent of state and local government expenditures.6 The increase reflected various factors including the recession, rising health care costs, a surge in the use of provider taxes, and the shift of many beneficiaries from state general assistance programs to Medicaid.7 The number of recipients also rose because federal mandates were expanded to require states to cover individuals at higher levels of income and to include previously optional services. In particular, coverage of pregnant women and children was significantly expanded primarily by raising the income limit below which families qualified and by extending the age limit for eligible children. 6. State and local transfer payments for Medicaid include the federal matching grant along with state and local government payments. 7. Early in the decade, many states accepted donations from or 1. Annual data as of June 30 of each year. imposed taxes on health care providers, such as hospitals, in schemes 2. Figure for 1995 is estimated by the Health Care Financing Administration. to help bolster federal matching requirements for Medicaid. The term 3. Figures for 1994 and 1995 are estimates by the Department of Education. "provider taxes" includes these taxes, fees, and contributions. In SOURCES. Data for the number of state prison inmates are from the Department of Justice; for Medicaid recipients, the Health Care Financing Administra- recent years, the use of provider taxes has been muted by federal tion; for public school enrollment, the Department of Education. regulations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

308 Federal Reserve Bulletin • April 1996 In recent years, the pressure on state budgets from result of the Education of the Handicapped Act Medicaid expenditures has waned as the economy passed in 1975, proportionately more handicapped has strengthened and the rise in health care costs has children were educated in the public school system. slowed. Moreover, most of the newly eligible indi- In addition, programs for gifted, learning-disabled, viduals have now been added to the rolls. Notably, and bilingual children were expanded, all adding the growth of Medicaid recipients has slowed from a significantly to costs. Besides the increase in prohigh of 12 percent in 1991 to just 3 percent in 1995 grams, some states adopted quality standards for their (chart 5). Correspondingly, the share of Medicaid education systems, and these measures also helped to spending has stabilized since 1993 as advances in speed up growth in operational outlays. state and local government expenditures on Medicaid Because of the reordering of priorities, in fiscal have come down from the nearly 30 percent increase 1991 growth in actual K-12 spending—at less than in 1991. Nevertheless, at a range of 8-9 percent, half the pace of the previous year—fell far short of growth in Medicaid spending has remained high in planned increases in appropriations, as states made recent years and is expected to exceed increases in midyear adjustments to spending plans with the goal most other state and local programs in the near term of balancing their budgets. Again in 1994, growth in (chart 6). actual spending fell short of appropriations. On balance, states reduced the growth in aid to local public schools in the 1990s (chart 4). Higher education took Education an even bigger hit: Growth in appropriations fell in 1991 and 1992, and the level of appropriations actu- After a major push to upgrade public school systems ally declined slightly in fiscal 1993. in the 1970s and 1980s, many state and local govern- With the improvement in state budgets in recent ments reduced their efforts in the 1990s. Although years, some efforts are being made to make up for state spending on education increased during the first cuts earlier in the decade. For fiscal 1995, growth in half of the 1990s, states assigned higher priorities to actual spending rose about 8 percent for K-12 educaother programs, particularly corrections and Medi- tion, but based on appropriations, growth in outlays caid, and the pace of growth of education spending for education is likely to slow again in fiscal 1996. lagged. As a result, state spending on education fell Growth in spending for higher education rose someas a share of general fund spending from just under what to nearly 4 percent in fiscal 1995 and is 50 percent in 1989 to less than 42 percent in 1995, expected to remain at that pace in 1996. In addition, even as public school enrollment steadily increased some states are working on plans to aid local govern- (chart 5). ments in 1996. Nonetheless, the demographics are The increase in public education programs during such that state and local governments will be facing a the 1970s and 1980s added noticeably to costs. As a rising demand for public education. Annual increases in K-12 enrollment in public schools are expected to hover in the 2 percent range through 1997 and then to rise more gradually over the next decade. Public Comparison of nominal government expenditures by program, 1988-95 elementary school enrollment is expected to peak in 2002, whereas enrollment in high schools is forecast to advance for several more years. As a result, gov- Medicaid ernments may be forced to increase spending on All other education in the years ahead, even if they are not expanding programs. Pensions Another area of concern affecting state and local budgets is pensions. Many are considerably underfunded, and meeting pension obligations will add to fiscal pressure in the years ahead for many governments. NOTE. Expenditures are measured as percentage changes from Q4 to Q4. State and local public employee retirement systems Figures for 1995:Q4 are estimates by Federal Reserve Board staff members. (PERS), along with other social insurance systems, SOURCE. NIPA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The State and Local Government Sector 309 are included in the NIPA. Inflows to the insurance of which is the expected rate of return on pension funds include contributions by employers and person- fund investments. In the early 1990s, many states nel as well as interest earnings. Offsetting these reve- adopted unrealistically high rates of return, which nues are transfer payments to retirees and administra- allowed them to reduce their own contributions, tive expenses. Surpluses of state and local social thereby freeing up funds for general government insurance funds are a source of saving that is avail- purposes. Meanwhile, some states took other steps to able each year to the rest of the economy through the help bolster the general fund. For example, California credit and equity markets. Through the 1970s and postponed normal employer contributions for fiscal 1980s the surpluses grew steadily on a NIPA basis; 1994 until fiscal 1995, and Maine made the decision after peaking at $68 billion in 1992, the surplus fell to to spread the unfunded pension liability over more $58 billion in 1995. years. As a result, government contributions actually For the state and local sector as a whole, the fell in real terms in the late 1980s and early 1990s. retirement systems constitute approximately 90 per- According to the Government Accounting Office, in cent of all the social insurance funds, which in some 1991 only 80 percent of actuarially required annual states also include workers' compensation and tem- contributions were being made. porary disability insurance. Roughly 90 percent of Based on definitions applied by state and local the pension assets of all state and local government governments, in the early 1990s total assets of PERS workers are held by about 10 percent of the approxi- covered more than 80 percent of total liabilities, mately 6,000 pension funds in the sector. About which are calculated to include current liabilities plus 90 percent of state and local government employees liabilities based on assumed future salary and service are covered by defined benefit pension plans, and increases up to retirement.10 Governments expect to 9 percent of workers are covered by defined contribu- exist indefinitely and therefore include the stream of tion plans.8 PERS alone control more than $1 trillion future benefits in this calculation. The ratio of assets in assets—nearly 30 percent of all pension assets. to liabilities is referred to as the actuarial accrued Assets of PERS are invested mainly in U.S. gov- liability funding ratio. By comparison, for private ernment securities and in corporate stocks and bonds. sector pension plans, the funding ratio omits liabili- State and local governments administer the retire- ties accruing from future services. ment systems, and state and local laws govern the The view of the PPCC is that PERS are fairly well provision of retirement benefits and the protection of funded and that plan participants are also protected the plans' assets. In some cases the pension fund is by the laws of state and local governments.11 In 1975, the sole guarantor, and in others the employers, that the funding level was just 51 percent. Then, spurred is, the governments themselves, stand behind the partly by concern about the prospect of being systems. The Public Pension Coordinating Council included under the terms of ERISA, state and local (PPCC) provides information and helps coordinate governments worked to increase the level of funding activities of the pension administrators.9 Unlike in the pension funds up to the 82 percent level in private pension plans, however, PERS are not subject fiscal 1992. However, the funding status of public to the provisions of the Employee Retirement Income pension plans varies widely, and many plans are Security Act of 1974 (ERISA). ERISA provides stan- significantly underfunded, with funding ratios of less dards for participation, vesting, funding, fiduciary than 75 percent. In addition, the funding ratios may duties, disclosure, and reporting and prescribes vary according to the type of plan. For example, mechanisms to enforce these standards. proportionately more plans for police and firefighters An important distinction exists between the cor- are poorly funded compared with plans for general pus, or assets, of state and local pension trusts and the government employees (chart 7). government's contributions. Although state and local Data from the Bureau of Economic Analysis indigovernments have rarely borrowed from the corpus, cate that net inflows to state and local pension funds, they have, at times, altered their pension fund contri- in the aggregate, deteriorated between the late 1980s butions in response to budgetary distress. Annual and 1995. The accumulated surpluses of these contributions depend on actuarial assumptions, one 10. Current liabilities are accrued benefits earned to date by work- 8. State and local government employees have the option of partici- ers and retirees based on years of service and salaries. pating in social security, but given the broad availability of the public 11. Some analysts argue that one can compare the pension funding employees retirement systems, most have chosen not to do so. ratio to a home mortgage; that is, if 80 percent of a home mortgage is 9. PPCC is conducting a survey to determine the proportion of paid off, with twenty to twenty-five years left on the mortgage, the those systems backed by the governments themselves. mortgage holder is in good shape. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

310 Federal Reserve Bulletin • April 1996 accounts fund future pension liabilities, and the Clearly, problems exist for many state and local adequacy of these surpluses must be judged in rela- retirement systems, and some governments will find tion to the growth of liabilities. Although a good pension fund requirements a source of financial strain measure of liabilities is not available, total wages and in the years ahead. However, although data are not salaries is used as a very rough indicator. The surplus yet available, the stock market boom of 1995 appears of the social insurance funds measured in relation to to have raised the assets of pension funds considerstate and local employee wages and salaries rose ably and probably helped improve funding ratios for steadily through the 1970s and leveled off in the many state and local pension plans. 1980s.12 However, in recent years, the surplus has come down relative to payrolls (chart 8). Much of SUMMARY this decline can be explained by the weakness in real government contributions as previously noted; per- Some states have only recently pulled out of the sonal contributions by government workers trended period of fiscal distress that characterized much of up until 1994 and then flattened. Meanwhile, the the early 1990s, and many cities, counties, and school growth in real benefits to annuitants appears to have districts are still wrestling to balance their budgets. In accelerated. In addition, the ratio of active state and addition, tax burdens have remained at roughly the local workers to retirees is declining. same high levels that have prevailed for the past twenty-five years (chart 9), and some citizens appear to be calling for lower taxes and less government. 12. The charts show social insurance funds instead of retirement funds because the data are more readily available. Therefore, many governments may not be in a financial or political position to make up possible federal 7. Distribution of state and local pension plans cutbacks in aid. by funding ratio, fiscal year 1992 On balance, despite the recent rosy picture, the sector's future fiscal health is far from certain. As Number of plans described, many governments are coping with under- General employees lying structural changes, particularly growing popu- — 30 lations of prisoners, school-age children, and low- 8. State and local social insurance funds, 1973-95 Percent Surplus as a percentage of total state and local „—- — 20 wages and salaries1 N. 15 — 10 — 5 1 II 1! 1 1 t I II 11 1 1 1 1 1 II 1 1 1 Billions of chained (1992) dollars Real revenue and payments2 — 80 Benefits to annuitants — — 60 — —- 40 Government contributions — 20 Funding ratio Personal contributions 60 or 60- 70- 80- 90- 100- 110- 120- 130- 140 or less 70 80 90 100 110 120 130 140 more 1 1 1 1 1 1 1 M 1 1 1 11 1 II 11 ( 1 1 II 1975 1980 1985 1990 1995 NOTE. The funding ratio is the ratio of plan assets to the actuarial accrued liability. NOTE. Data are annual and on a NIPA basis. SOURCE. Public Pension Coordinating Council, Survey of State and Local 1. Data for 1995 are averages of the first three quarters. Government Employee Retirement Systems. 2. Deflated by the personal consumption expenditures deflator. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The State and Local Government Sector 311 income individuals in need of health care. In addi- some time, and the current impasse in Washington is tion, some governments will need to add to pension creating uncertainty for state and local budget planfunds in the years ahead to bring them to full funding. ners. Many state and local officials are concerned; Many governments may not be prepared if the however, most have still not developed specific copeconomy weakens or if federal aid is cut. Reductions ing strategies, and most state legislatures have not in federal grants have been under consideration for taken any formal action. Rather, planning has centered on fiscal analysis, data collection, and issue monitoring. Some governments have established interagency review committees, but quite a few have 9. State and local tax revenue as a percentage of nominal GDP, 1959-95 adopted a wait-and-see approach. In addition, some private groups, such as charitable organizations and Percent business groups, have developed proposals. Another important factor contributing to the uncer- — 10.0 tain future for the state and local sector is the direction of aggregate economic activity. Most forecasters are calling for continued growth in 1996 and 1997, perhaps at a somewhat slower pace than in the previous two years. Generally, state and local planners incorporate those forecasts into their own revenue projections. As always, unexpected weakness in economic growth could upset state and local fiscal positions. Given the uncertainties on the receipt side and continuing demand pressures, state and local govern- 1960 1965 1970 1975 1980 1985 1990 1995 ments may have to work hard to maintain program goals and keep their budgets in balance. • NOTE. Data are annual and on a NIPA basis; the figure for 1995 is through Q3. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

312 Industrial Production and Capacity Utilization for February 1996 Released for publication March 15 ment and in related durable goods materials; the recovery of aircraft and parts production after the Industrial production rose 1.2 percent in February settlement of a strike at a major manufacturer in after having fallen 0.4 percent in January; part of the mid-December accounted for nearly one-third of the gain reflects a bounceback from the temporary dis- overall growth in total industrial output since the end ruptions caused by the blizzard that hit the East Coast of last year. Among other major market groups, the in early January. The level of total output in February levels of production of consumer goods and construcwas 0.8 percent higher than in December, with the tion supplies were about the same as in December, improvement concentrated mainly in business equip- while the output of materials other than durables Industrial production indexes Twelve-month percent change Twelve-month percent change Manufacturing 5 - A ^ /y \ — + 0 — 5 1 1 i i i i Materials 10 10 Durable _ manufacturing C\\/ 5 + Products 0 v' W /—r ~T Nondurable \/ manufacturing 5 - — i i 1 1 1 1 1990 1991 1992 1993 1994 1995 1996 1990 1991 1992 1993 1994 1995 1996 Capacity and industrial production Ratio scale, 1987 production = 100 Ratio scale, 1987 production = 100 140 — Manufacturing Capacity - —_ 140 120 —— " - 120 r ~~~ 110000 100 Production 80 80 i i i i I 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 I I I I I I I I 1 1 1 1 J L I ll 1982 1984 1986 1988 1990 1992 1994 1996 1982 1984 1986 1988 1990 1992 1994 1996 All series are seasonally adjusted. Latest series, February. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

313 Industrial production and capacity utilization, February 1996 Industrial production, index, 1987=100 Percentage change CCCaaattteeegggooorrryyy 11999955 11999966 19951 1996' FFeebb.. 11999955 ttoo Nov.r Dec.r Jan.r Feb. p Nov/ Dec.r Jan.r Feb. p FFeebb.. 11999966 Total 122.6 122.7 122.1 123.7 .3 .1 -.4 1.2 1.6 Previous estimate 122.4 122.6 121.9 .2 .2 -.6 Major market groups Products, total2 118.8 118.9 118.4 120.0 .4 .1 -.5 1.4 1.5 Consumer goods 115.9 115.2 113.7 115.1 .9 -.6 -1.3 1.2 .2 Business equipment 156.9 158.2 160.7 163.8 .2 .9 1.6 1.9 6.2 Construction supplies 108.7 110.4 108.0 110.5 .3 1.6 -2.2 2.3 .9 Materials 128.4 128.4 128.0 129.3 .3 .0 -.3 1.0 1.8 Major industry groups Manufacturing 124.5 124.7 124.3 126.1 .1 .2 -.3 1.4 1.7 Durable 134.3 134.8 134.6 137.2 .6 .4 -.2 1.9 3.9 Nondurable 113.7 113.5 112.9 113.8 -.5 -.2 -.6 .8 -.9 Mining 98.3 97.8 97.3 98.8 .1 -.6 -.4 1.5 -2.0 Utilities 125.4 124.7 123.2 121.8 3.1 -.6 -1.1 -1.2 2.7 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1995 1996 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, FFFeeebbb... 111999999555 11996677--9955 11998822 11998888--8899 Feb. Nov.' | Dec.r Jan.r Feb.P tttooo FFFeeebbb... 111999999666 Total 82.1 71.8 84.9 84.7 82.9 82.7 82.1 82.9 3.9 Previous estimate 82.8 82.7 81.9 Manufacturing 81.4 70.0 85.2 84.2 81.9 81.8 81.2 82.1 4.3 Advanced processing 80.7 71.4 83.5 82.0 80.3 80.1 79.6 80.6 4.9 Primary processing 82.6 66.8 89.0 89.3 85.9 85.7 84.9 85.7 2.8 Mining 87.4 80.6 86.5 90.0 87.7 87.2 86.8 88.1 .1 Utilities 86.9 76.2 92.6 88.2 92.5 91.9 90.7 89.6 1.1 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. declined, on balance, over the past two months. At which had been sluggish since last summer, picked 123.7 percent of its 1987 average, industrial produc- up. tion in February was up 1.6 percent from February The output of construction supplies increased more 1995. Capacity utilization rose 0.8 percentage point than 2 percent, returning to the high level at the end in February, to 82.9 percent. of last year. The production of materials rose sharply, When analyzed by market group, the data show more than reversing the loss in January. The output of that the production of consumer goods rebounded durable materials rose 1.5 percent after having posted 1.2 percent after having dropped a similar amount in a small gain in January. February's gain in the January. The output of durable consumer goods rose production of durable materials mainly reflected 3.7 percent but remained below its December level, increases in parts and components for equipment, as the pickup in production of goods for the home, particularly those used in information processing such as appliances, did not fully reverse its drop in equipment and in aircraft; the output of basic metals January. The production of motor vehicles was about also rose sharply. The production of nondurable 1 percent higher than in December. The output of materials rose 0.9 percent but remained 0.7 percent nondurable consumer goods rose 0.6 percent, to a below its level in December. The output of energy level a bit higher than in December. The production materials was about unchanged. of consumer chemicals and food exceeded their When analyzed by industry group, the data show December levels. The output of business equipment that manufacturing output rose 1.4 percent in Febrose sharply in both January and February, reflecting, ruary and was more than 1 percent higher than in in part, the increase in aircraft production. The out- December. The strength since the end of last year has put of information processing equipment remained been primarily concentrated in durables; in addition strong, and the production of industrial equipment, to the rebound in the production of aircraft and parts, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

314 Federal Reserve Bulletin • April 1996 noticeable growth occurred in primary metals, indus- in October. Utilization in the advanced-processing trial machinery and equipment, electrical machinery, industries rose 1.0 percentage point, to 80.6 perinstruments, and stone, clay, and glass products. The cent, its highest level since last September. Among level of output of nondurables was just slightly higher the primary-processing industries, utilization rose than in December; the food and petroleum industries 0.8 percentage point, to 85.7 percent, the same as showed the most notable improvements, while the it was in December. The rate of factory utilization output of apparel fell. The output of mining rose increased for all major manufacturing industries 1.5 percent, with a rebound in coal mining account- except chemicals. The operating rate in mining ing for nearly half of the gain. The output at utilities advanced 1.3 percentage points, to 88.1 percent, fell 1.2 percent, its third successive monthly decline. while the rate at utilities declined 1.1 percentage Capacity utilization in manufacturing rose 0.9 per- points, to 89.6 percent. • centage point, to 82.1 percent, the same as it was Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

315 Statements to the Congress Statement by Alan Greenspan, Chairman, Board of vent serious inventory imbalances, and the growth Governors of the Federal Reserve System, before the of economic activity slowed substantially. With infla- Subcommittee on Domestic and International Mone- tion pressures apparently receding, the previous tary Policy, Committee on Banking and Financial degree of restraint in monetary policy was no longer Services, US. House of Representatives, February 20, deemed necessary, and the Federal Open Market 1996 Committee (FOMC) consequently implemented a small reduction in reserve market pressures last July. I appreciate the opportunity to appear before this During the summer and early fall, aggregate committee to present the Federal Reserve's semi- demand growth strengthened. As a result, business annual report on monetary policy.1 stocks of raw materials and finished goods appeared The U.S. economy performed reasonably well in somewhat better aligned with sales. In sum, the econ- 1995. One and three-quarter million new jobs were omy, as hoped, appeared to have moved onto a trajecadded to payrolls over the year, and the unemploy- tory that could be maintained—one less steep than in ment rate was at the lowest sustained level in five 1994, when the rate of growth was clearly unsustainyears. Despite the relatively high level of resource able, but one that nevertheless would imply continutilization, inflation remained well contained, with ued significant growth in employment and incomes. the consumer price index (CPI) rising less than 3 per- Importantly, the performance of the economy cent—the fifth year running at 3 percent or below. A seemed to be consistent with maintaining low inflareduction in inflation expectations, together with tion. Despite the step-up in growth and the relatively anticipation of significant progress toward eliminat- high levels of resource utilization, measured inflation ing federal budget deficits, was reflected in financial abated a little, and many of the signs that had been markets, where long-term interest rates dropped pointing toward greater price pressures gradually dissharply and stock prices rose dramatically over the appeared. Expectations of both near- and longer-term year. inflation fell substantially over the second half of the This outcome was influenced, in part, by monetary year, as gauged by survey results as well as by the policy actions taken by the Federal Reserve in recent downward movements in longer-term interest rates. years. Responding to evidence that inflationary pres- The fall in bond rates was also encouraged by sures were building, we progressively raised short- improving prospects for significant progress in reducterm interest rates over 1994 and early 1995. Rates ing the federal budget deficit. The declines in actual had been purposely held at quite low, stimulative and expected inflation meant that maintaining the levels in 1993. We moved in 1994 to levels more existing nominal federal funds rate would raise real consistent with sustainable growth. Our intent was to short-term interest rates, implying a slight effective be preemptive—to head off an incipient increase in firming in the stance of monetary policy. Such a shift inflationary pressures and to forestall the emergence would have been particularly inappropriate because of imbalances that so often in the past have under- economic growth near the end of the year seemed to mined economic expansions. be slowing, and some FOMC members were con- As we entered the spring of 1995, it became cerned about the risks of prolonged sluggishness. increasingly evident that our policy was likely to Consequently, the Committee decided in December succeed. Although various price indexes were rising that a further reduction in the funds rate was a bit more rapidly, there were indications that pres- warranted. sures would not continue to intensify and might even Information becoming available in late December reverse to a degree. Moderating overall demand and January raised additional questions about the growth left businesses with excess inventories. In prospective pace of expansion. The situation was response, firms initiated production cutbacks to pre- difficult to judge, partly because economic statistics were more sparse than usual, mainly because of the government shutdowns. In addition, harsh weather in 1. See "Monetary Policy Report to the Congress," in this issue. January disrupted both data flows and patterns of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

316 Federal Reserve Bulletin • April 1996 economic activity. But several indicators—including vidual business cycle are not always clear, expaninitial claims for unemployment insurance, purchas- sions usually end because serious imbalances eventuing managers' surveys, and consumer confidence ally develop. measures—appeared to signal some softening in the When aggregate demand exceeds the economy's economy. Consonant with this pattern, some Reserve potential, for example, inflationary pressures pick up. Bank presidents reported that they seemed to be The inevitable increase in market interest rates, as detecting anecdotal indications of weakness in the inflation expectations rise and price pressures intenexpansion within their Districts with somewhat sify, depresses final demand. Lagging demand, in greater frequency than previously. Moreover, growth turn, sets off an inventory correction that frequently in several of our major trading partners seemed to be triggers a downturn in the economy. As I noted, we lagging, which could tend to moderate demand for acted in 1994 to forestall such a process. Monetary exports. policy began to tighten in advance of the buildup A number of factors have prompted the recent of inflationary pressures, and at least to date, these tendency toward renewed weakness. Some are clearly pressures appear to have been held in check. quite transitory—related, for example, to bad weather Capital expenditures by households and firms can or to the federal government shutdown. Others may also contribute significantly to the development of be somewhat more significant but still temporary. cycle-ending imbalances. The levels of stocks of The constraint on government spending while perma- such real assets have effects on output very similar to nent budget authorizations are being negotiated is those of business inventories. In typical cycles, capione. Another may be a temporary reduction in output tal expenditures tend to grow rapidly in the early in some industries as businesses have further adjusted stages of recovery: Pent-up demands coming out of a inventories to disappointing sales. As I noted last recession by consumers and businesses are satisfied July, the change in the pace of inventory investment by rapid growth of spending on capital assets. There when the economy shifts gears can be substantial. is a limit, however, on, say, how many cars people Inventory investment surged in 1994 and into the choose to own or how many square feet of floor early months of 1995 but proceeded to fall markedly space retailers need to service customers. Spending throughout the rest of the year. This has placed sig- on such assets generally tends to grow more slowly nificant downward pressure on output, which should after the pent-up demand is met. As with business lift as inventory adjustments subside. But for the inventories, the downshifting of spending on conmoment, the pressures remain in the motor vehicle sumer durable goods or business plant and equipment industry and elsewhere. may not occur smoothly. The dynamics of expanding Ultimately, of course, it is the path of final demand output and rising profit expectations often create a after the temporary influences work themselves out degree of exuberance, which, as in much of human that determines the trajectory of the economy. There nature, tends on occasion to excess—in this case, in are some factors, such as high consumer debt levels, the form of a temporary overaccumulation of assets. that may be working to restrain spending. But as I The ensuing correction in demand for such assets shall be detailing shortly, a number of fundamentals triggers production adjustments that can significantly point to an economy basically on track for sustained mute growth for a time or even cause a downturn if growth, so any weakness is likely to be temporary. the imbalances are large enough. Nonetheless, the Committee decided in late January The current extent of any asset overhang is difficult that the evidence suggested sufficient risk of subpar to determine. The growth of demand for durables and performance going forward to warrant another slight some categories of capital goods has evidently easing of the stance of monetary policy. Given the slowed, but the available evidence does not suggest a subdued trends in costs and wages, the odds that such degree of saturation in capital assets that would tip a move would boost inflation pressures seemed low. the economy into a downturn. In assessing the likely course of the economy and Moreover, financial conditions are likely to be genthe appropriate stance of policy, one question is the erally supportive of spending. The low level of longsignificance, if any, of the age of the business expan- term interest rates should have an especially favorsion. Some analysts, viewing recent weakness, have able effect. Low rates increase the affordability of observed that the expansion is approaching the start housing for consumers and foster investment in proof its sixth year and is now one of the longer peace- ductive plant and equipment by businesses. The time spans of growth in the past half century. Eco- decline in interest rates has also contributed to a nomic expansions, however, do not necessarily die of pronounced rise in stock prices. The spread of mutual old age. Although the factors governing each indi- fund investments has meant that the gain in wealth as Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 317 financial asset prices have risen has been shared by money growth and velocity have been erratic in an ever-wider segment of households. These develop- recent years, but should the monetary aggregates at ments should tend to counter, in part, the depressing some point reestablish their previous trend relationeffects on spending of rising debt burdens. In addi- ships with nominal income, average growth near the tion, with the condition of most financial institutions center of these ranges should be consistent with the strong, lenders are likely to remain willing to extend eventual achievement of price stability. credit to firms and households on favorable terms. Determining whether further changes to the stance We have seen some move by lenders toward tighter of monetary policy will be necessary in the months standards, but these actions are a modest correction ahead to foster progress toward our goals will be a after a marked swing toward ease and should not continuing challenge. In formulating monetary polconstrain the availability of funds to creditworthy icy, while we have in mind a forecast of the most borrowers. likely outcome, we must also evaluate the conse- Against this backdrop, Federal Reserve policymak- quences of other possible developments. Thus, it is ers expect that the most likely outcome for 1996 as a sometimes the case that we take out monetary policy whole is further moderate growth. On the new chain- "insurance" when we perceive an imbalance in the weighted basis, the central tendency of the forecasts net costs or benefits of coming out on one side or the of Board members and Reserve Bank presidents is other of the most probable scenario. For example, in for real gross domestic product to expand 2 percent our most recent actions, we saw a decline in the to 2'/ percent on a fourth-quarter-to-fourth-quarter federal funds rate as not increasing inflationary risks 4 basis, similar to the Administration's outlook. With unacceptably, while addressing the downside risks to output expanding roughly in line with standard esti- the most likely forecast. In assessing the costs and mates of the increase in the productive capacity of the benefits of adjustments to the stance of policy, memeconomy, the unemployment rate is expected to bers of the Committee recognize that policy affects remain around recent levels, as is also forecast by the the economy and inflation with a lag and thus needs Administration. to be formulated with a focus on the future. Over the The Federal Open Market Committee expects a past year, we have kept firmly in mind our goals of continuation of reasonably good inflation perfor- containing inflation in the near term and moving over mance in 1996. The success during 1995 in keeping time toward price stability, and they will continue to the increase in the consumer price index below 3 per- guide us in the period ahead. cent in the fifth year of an expansion illustrates that Structural forces may be assisting us in this regard. an extended period of growth with low inflation is Increases in producers' costs and in output prices possible. And most on the Committee anticipate con- proved to be a little lower last year than many had sumer price inflation at or somewhat below 3 percent anticipated. Although it is too soon to draw any in 1996. Although well-known biases in the CPI, as definitive conclusions, this experience provides some well as the more favorable price performance of tentative evidence that basic, ongoing changes in the business equipment, which is not included in that structure of the economy may be helping to hold index, indicate that the true rate of inflation for the down price pressures. These changes stem from the whole economy would be significantly lower than introduction of new technologies into a wide variety 3 percent, the Committee recognized that its expecta- of production processes throughout the economy. tions for inflation do not imply that price stability has Successive generations of these new technologies are as yet been reached. Nonetheless, keeping inflation being quickly embodied in the nation's capital stock, from rising significantly during economic expansions and older technologies are, at a somewhat slower will permit a gradual ratcheting down of inflation pace, being phased out. As a consequence, the over the course of successive business cycles that nation's capital stock is turning over at an increaswill eventually result in the achievement of price ingly rapid pace, not primarily because of physical stability. deterioration but reflecting technological and eco- To emphasize its continued commitment to price nomic obsolescence. stability, the Committee chose to reaffirm the rela- The more rapid advance of information and comtively low ranges for money growth in 1996 that it munications technology and the associated accelerahad selected on a provisional basis last July. These tion in the turnover of the capital stock are being ranges are identical to those employed in 1995— mirrored in a brisk restructuring of firms, in line with 1 percent to 5 percent for M2 and 2 percent to their adoption of new organizational structures and 6 percent for M3. The Committee also reaffirmed the technologies, many enterprises are finding that their 3 percent to 7 percent range for debt. Patterns of needs for various forms of labor are evolving just as Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

318 Federal Reserve Bulletin • April 1996 quickly. In some cases, the job skills that were the difficulty and cost of transporting information. adequate only five years ago are no longer as rele- Once fiber-optic and satellite technologies are in vant. Partly for that reason, most corporate restructur- place, the added resource cost of another 200 miles or ings have involved a significant number of permanent 2,000 miles is often quite trivial. As a consequence, dismissals. the movement of inputs and outputs across geo- The phenomenon of restructuring can be especially graphic distance is progressively becoming a smaller unfortunate for those workers directly caught up in component of overall business expenses, particularly the process. Many dedicated, long-term workers in as intellectual—and therefore immaterial—products all types of U.S. businesses—including long- become proportionately more important in the econestablished, stable, and profitable firms—have been omy. This enables an average business firm to let go. broaden markets and sales far beyond its original An important consequence of the layoffs and dis- domicile. Accordingly, fixed costs are spread more missals associated with restructuring activity is a widely. For the world market as a whole, the specialsignificant and widely reported increase in the sense ization of labor is enhanced to the benefit of stanof job insecurity. Concern about employment has dards of living of all market participants. been manifested in unusually low levels of indicators To be sure, advancing technology, with its proof labor unrest. Work stoppages, for example, were at found implications for the nature of the economy, is a fifty-year low last year. And contract negotiators for nothing new, and the pace of improvement has never labor unions have sought to obtain greater job secu- been even. But it is possible that we may be in the rity for their members through very long-term labor midst of a quickening of the process. It is possible contracts, including some with virtually unprec- that the rate at which earlier computer technologies edented lengths of five or six years. are being applied to new production processes is still Of particular relevance to the inflation outlook, the increasing. This would explain the recent decline in sense of job insecurity is having a pronounced effect the growth of unit costs. Nonetheless, we have to be in damping labor costs. For example, the increase in careful in projecting a further acceleration in the the employment cost index for compensation in the application of technology indefinitely into the future, private sector, which includes both wage and salary as would be required for technological change to payments and benefit costs, slowed further in 1995, depress the rate of increase in unit business costs to 23A percent, despite labor market conditions that, even more. Similarly, suppressed wage cost growth by historical standards, were fairly tight. With pro- as a consequence of job insecurity can be carried only ductivity also expanding, the increase in unit labor so far. At some point in the future, the tradeoff of costs was even lower. In manufacturing, such costs subdued wage growth for job security has to come to have actually been falling in recent years. While the an end. While it is difficult to judge the time frame on link between labor costs, which account for two- such adjustments, the risks to cost and price inflation thirds of consolidated business sector costs, and going forward are not entirely skewed to the downprices is not rigid, these very limited increases in side, especially with the economy so recently operatlabor expenses nonetheless constitute a significant ing at high levels of resource utilization. restraint on inflation. In light of the quickened pace of technological In addition to its effect on labor costs, the more change, the question arises whether the U.S. economy rapid pace of technological change is reducing busi- can expand more rapidly on an ongoing basis than the ness costs through other channels. Initially most 2 percent to 2V4 percent range for measured GDP important, the downsizing of products resulting from forecasted for 1996 by government agencies and semiconductor technologies, together with the most private forecasters without adding to inflationincreasing proportion of national output accounted ary pressures, which, in turn, would undermine for by high-tech products, has reduced costs of trans- growth. The Federal Reserve would certainly welporting the average unit of gross domestic product. come faster growth—provided that it is sustainable. Quite simply, small products can be moved more The particular rate of maximum sustainable growth quickly and at lower cost. in an economy as complex and ever-changing as ours More recently, dramatic advances in telecommuni- is difficult to pin down. Fortunately, the Federal cations technologies have lowered the costs of pro- Reserve does not need to have a firm judgment on duction for a variety of products by further slashing such an estimate, for persistent deviations of actual the information component of those costs. Increas- growth from that of capacity potential will soon send ingly, the physical distance between communications signals that a policy adjustment is needed. Should the endpoints is becoming less relevant in determining nation's true growth potential exceed actual growth, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 319 for example, the disparity and lessened strain would that were designed for steam-driven power plants. It be signaled in shorter lead times on the delivery of was not until the gradual conversion of previously materials, declining overtime, and ebbing inflationary vertical factories into horizontal facilities, mainly in pressures. Conversely, actual growth in excess of the the 1920s, that firms were able to take full advantage economy's true potential would soon result in tight- of the synergies implicit in the electric dynamo, thus ened markets and other distortions that, as history achieving dramatic productivity increases. Analoamply demonstrates, would propel the economy into gously, existing production systems today to some recession. Consequently, we must be cautious in degree cannot be easily integrated with new informareaching conclusions that growth in productivity and tion and communication technologies. Some existing hence of potential output has as yet risen to match the equipment is not capable of control by computer, for evident step-up in technological advance. example. Thus, it may be that the full advantage of The hypothesis that advancing technology has even the current generation of information and comenhanced productivity growth would be more persua- munication equipment will be exploited over a span sive if national data on productivity increases showed of quite a few years and only after a considerably a distinct improvement. To a degree, the lack of any updated stock of physical capital has been put in marked pickup may be a shortcoming of the statistics place. rather than a refutation of the hypothesis. Faulty data While the Federal Reserve does not need to estabcould be arising, in part, because business purchases lish targets—and definitely not limits—for long-term are increasingly concentrated in items that are growth, it is helpful in coming to shorter-run policy expensed but which market prices suggest should be insights to have some judgments about the growth in capitalized. Growing disparities between book capital potential GDP in the past and what it is likely to be in and its valuation in equity markets may, in part, the future. Judgments of potential, quite naturally, are reflect widening effects of this misclassification. If based on experience. Through the four quarters of this problem is indeed growing, we may be under- 1994, for example, real GDP, pressed by strong estimating the growth of our GDP and productivity. demand, rose 3 ¥2 percent. If that were the true rate of This classification problem compounds other diffi- increase in the economy's long-run potential, then we culties with measuring output in the increasingly would have expected no change in rates of resource important service sector. The output of services—and utilization. Instead, industrial capacity utilization rose the productivity of labor in that sector—is particu- nearly 3 percentage points, and the unemployment larly hard to measure. In part, the statisticians have rate dropped 1 percentage point. Moreover, we began simply thrown up their hands, gauging output in to see signs of strains on facilities; deliveries of some service industries just in terms of labor input. materials slowed appreciably, and factory overtime By construction, such a procedure will miss improve- rose sharply. These signs of developing pressures on ments in productivity caused by other inputs. In capacity suggest that the growth rate in economic manufacturing, where output is more tangible and potential in 1994 was below 3V2 percent. In general, therefore easier to assess, measured productivity has as we get close to presumed potential, we are required been rising briskly, suggesting that technological to step up our surveillance for inflationary pressures. advances are indeed having some effect. Estimates of potential growth necessarily recog- Nonetheless, there is still a nagging inconsistency: nize that expansion in the economy over time comes The evidence of significant restructurings and essentially from three factors—growth in population, improvements in technology and real costs within increases in labor force participation, and gains in business establishments does not seem to be fully average labor productivity. Of these factors, the first reflected in our national productivity measurements. two are determined basically by demographic and It is possible that some of the frenetic pace of busi- social factors and seem unlikely to change dramatiness restructuring is mere wheel spinning—changing cally over the next few years. Thus, the source of any production inputs without increasing output—rather significant pickup of output growth would need to be than real increases in productivity. One cause of the a more rapid pace of productivity growth. Here, the wheel spinning, if that is what it is, may be that it uncertainty of the pace of conversion of rapid technotakes some time for firms to adapt in such a way that logical advance into productivity gains is crucial to major new technology is translated into increased the determination. output. To be fully effective in achieving potential produc- In an intriguing parallel, electric motors in the late tivity improvements, technological innovations also nineteenth century were well known as a technology require a considerable amount of human investment but were initially integrated into production systems on the part of workers who have to deal with these Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

320 Federal Reserve Bulletin • April 1996 devices on a day-to-day basis. On this score, we still interest rates, a sense of greater economic stability, an may not have progressed very far. Many workers still improved environment for household and business possess only rudimentary skills in manipulating planning, and more robust investment in capital advanced information technology. In these circum- expenditures. The years ahead should see further stances, firms and employees alike need to recognize progress against inflation and the eventual achievethat obtaining the potential rewards of the new tech- ment of price stability. nologies in the years ahead will require a renewed We have also made considerable progress on the commitment to effective education and training, espe- fiscal front. Over the past ten years and especially cially on-the-job training. This is especially the case since 1993, our elected political leaders, through if we are to prevent the disruptions to lives and the sometimes prolonged and even painful negotiations, nation's capacity to produce that arise from mis- have been successful in reaching several agreements matches between jobs and workers. We need to that have significantly narrowed the budget deficit. improve the preparation for the job market our But more remains to be done. As I have emphasized schools do, but even better schools are unlikely to be many times, lower budget deficits are the surest and able to provide adequate skills to support a lifetime of most direct way to increase national saving. Higher work. Indeed, the need to ensure that our labor force national saving would help to reduce real interest has the ongoing education and training necessary to rates further, promoting more rapid accumulation of compete in an increasingly sophisticated world econ- productive capital embodying recent technological omy is a critical task for the years ahead. advances. Agreement is widely shared that attaining Our nation faces many important and difficult chal- a higher national saving rate quite soon is crucial, lenges in economic policy. Nonetheless, we have particularly in view of the anticipated shift in the made significant and fundamental gains in macro- nation's demographics in the first few decades of the economic performance in recent years that enhance next century. the prospects for maximum sustainable economic Lower inflation and reduced budget deficits will by growth. Inflation, as measured by the consumer price no means solve all of the economic problems we index, has been gradually reduced from a peak of face. But the achievement of price stability and fedmore than 13 percent in 1979 to IVi percent last year. eral budget balance or surplus will provide the best Lower rates of inflation have brought a variety of possible macroeconomic climate in which the nation benefits to the economy, including lower long-term can address other economic challenges. Chairman Greenspan presented identical testimony before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, February 21, 1996. Statement by Theodore E. Allison, Assistant to the circulation. I will outline the equipment and proce- Board, Board of Governors of the Federal Reserve dures used to verify the genuineness of the notes System, before the Subcommittee on General Over- processed by the Federal Reserve Banks. We are sight and Investigations of the Committee on Banking confident that these procedures permit thorough idenand Financial Services, U.S. House of Representa- tification of counterfeits and thus prevent the reissutives, February 27, 1996 ing of counterfeits. Finally, I will report the level of counterfeit notes that we detect, which is very low. Thank you for providing the Federal Reserve Board I recommend for the subcommittee's further conan opportunity to present information on the security sideration an important statement on this subject preof U.S. currency. I am Theodore E. Allison, Assistant sented by the Honorable Edward W. Kelley, Jr., to the Board with responsibility for the security of Member of the Board of Governors, to the House Federal Reserve notes. Banking Committee on July 13, 1994, setting forth In my statement today, I will provide evidence that the Federal Reserve's support for design improvethe currency of the United States is safe—that is, ments in the currency notes.1 That statement relatively free from counterfeits—both domestically describes, among other things, the enormous conand internationally. To do so, I will show that the Federal Reserve receives from circulation a sufficient quantity of currency notes to always have an up-to- 1. The attachment to this statement is available from Publications Services, Mail Stop 127, Board of Governors of the Federal Reserve date and reasonably accurate view of the notes in System, Washington DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 321 fidence and esteem with which our currency is Because $100 notes circulate somewhat more regarded throughout the world and the importance of slowly than notes of other denominations, Reserve maintaining that confidence and esteem. I would sug- Banks have a somewhat less frequent opportunity to gest that a copy of Governor Kelley's statement be inspect them. Nevertheless, the data show that for included along with mine in the record. $100 notes, as for other denominations, the Federal Despite the relatively low level of counterfeiting of Reserve has a fairly good picture of the outstanding Federal Reserve notes at this time, counterfeiting is a circulation, both at home and abroad. serious crime. If it were to take place in much higher Having established that we have a fairly clear and volumes, it might undermine confidence in the genu- current view on the outstanding circulation, I will ine currency and might, in extreme circumstances, turn now to the Federal Reserve's tools and procealso threaten the nation's economic stability. For this dures for examining incoming receipts of currency reason, the Federal Reserve has developed proce- notes. dures for ensuring that all notes paid out by the Each of the 22 billion notes received by the Fed- Reserve Banks are genuine. eral Reserve each year is individually inspected by a The Federal Reserve's confidence in the safety of highly automated and highly sophisticated counting- U.S. currency notes in circulation has two foun- and-verification machine. The machines count the dations. The first is the large proportion of outstand- notes and examine each one for genuineness, correct ing notes that the Reserve Banks receive from denomination, and fitness (essentially, cleanliness and circulation each year and are therefore able to exam- absence of tears). At the end of the line, shredders in ine. The second is the ability of note-counting equip- the machines destroy all genuine notes that are not fit ment at Reserve Banks to distinguish genuine notes to be issued again. accurately. The machine examination of each $100 note and Depository institutions in the United States make $50 note for genuineness involves three independent frequent deposits with the Federal Reserve of cur- levels of scrutiny.2 To be regarded by the machine as rency notes that will not be needed to meet their a genuine note that is potentially suitable to be recircustomers' requirements, for credit to the depository culated, the note must successfully pass all three institution's reserve account at the Reserve Bank. levels. We have great confidence in the security fea- (Similarly, depository institutions withdraw currency tures in the notes to which the sensors in the notes from the Federal Reserve, for a charge to their machines are keyed. We have a similarly very high reserve account, when their stocks fall to insufficient level of confidence in the accuracy and reliability of levels.) the sensors. Moreover, to reduce to a practical mini- During 1995, the Federal Reserve received from mum the probability of falsely accepting a counterfeit circulation 22 billion currency notes having a value note as genuine, we set the decision criteria in the of $344 billion. The amount outstanding was 17 bil- processing machines to be very suspicious of poslion notes with a value of about $390 billion, in sible counterfeits. circulation worldwide, at year-end. The Federal Every note that is separated out by a machine as Reserve received the currency notes estimated to be possibly not genuine is then put back through a circulating within the United States, on average, more second, slower-speed processing machine equipped than twice during the year, so that the Reserve Banks with the same sensors for a second check for genreceive and examine a number of notes equal to about uineness. If the second machine also separates out a 20 percent of the domestic circulation each month. note as a possible counterfeit, the note is inspected by Consequently, the Federal Reserve has an up-to-date, a Federal Reserve technician. These individuals are and quite clear, picture of the notes in circulation in highly trained, both by the Reserve Bank itself and the United States. Moreover, if there were an increase periodically by the Secret Service, and they have the in the passing of counterfeit notes in the future, the final word as to genuineness. Any note that is identi- Federal Reserve would be able to detect it promptly. fied by the technician as counterfeit is set aside to be Importantly, given the concerns of this subcommit- forwarded to the Secret Service. The combination of tee, about $1 in every seven that were held outside our highly sophisticated processing machines, our the United States was sent back through a depository practice of operating the machines at a high level of institution to the Federal Reserve. This amount represents a significant sample of the U.S. currency notes held abroad and also gives the Federal Reserve a fairly good picture of the notes in circulation outside 2. This statement describes the procedures for genuineness examination of $100 notes and $50 notes. Procedures for other denominathe country. tions are similar but not identical. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

322 Federal Reserve Bulletin • April 1996 suspicion, and our highly capable technicians enable $5 notes, the proportions were seven per million, us to detect virtually all counterfeits that we receive. sixteen per million, and two per million respectively. So far, it has been established both that the Federal The grand total was $8.8 million of counterfeits in Reserve has an up-to-date and reasonably clear view incoming receipts of $344 billion. on the outstanding circulation, at home and abroad, Depository institutions, exchange houses, and and that we have the tools and procedures to identify retailers, both domestic and foreign, also detect counvirtually all counterfeit notes in the deposits that we terfeit notes. Based on Secret Service statistics, the receive. total value of counterfeit notes detected in the United The remaining issue is, what fraction of counter- States was about $32 million in 1995, an amount that, feits do we see in our incoming deposits and, as at about 12 cents per capita, was still relatively low. a consequence, what may we say about the safety The Federal Reserve does not believe that counterof the outstanding circulation? The answers are feiting is an inconsequential matter. Counterfeiting at reassuring. any level is unacceptable. Counterfeits successfully Counterfeits in $100 deposits at the Federal passed on the public represent real losses to real Reserve during 1995 amounted to three-quarters of individuals and firms. The existence of this level of 1 percent of 1 percent (.0075%). That is, we found on successful passing demonstrates that the dollar is a average seventy-five counterfeits in every 1 million frequent target of would-be counterfeiters and that notes processed. In value, the total was $6.9 million constant vigilance is essential, both by law enforcein receipts of $93 billion. ment personnel and by the general public who handle Deposits of $100 notes at the Federal Reserve that $1 notes. were understood to have originated outside the There is considerable evidence from the Federal United States had a lower proportion, about fifty-five Reserve's note-processing activity, however, that the counterfeits in every million notes processed. successful passing of counterfeits, within the United Counterfeits in $50 deposits at the Federal Reserve States and abroad, is so small as to be insignificant during the year amounted to eight per million of the from a macroeconomic perspective and has no dis- $50 notes processed. For $20 notes, $10 notes, and cernible effect on public confidence in U.S. currency. Statement by Edward W. Kelley, Jr., Member, Board of about $4.2 trillion, combined capital of approxiof Governors of the Federal Reserve System, before mately $350 billion, and earnings of $37 billion for the Committee on Banking and Financial Services, the first three quarters of 1995. U.S. House of Representatives, February 28, 1996 In view of the current financial strength of the U.S. banking system and estimates of the extent of banks' I am pleased to appear before the banking committee losses resulting from criminal misconduct, which on behalf of the Federal Reserve to discuss the impact include the banking industry's 1994 estimates of of crime on the stability of the banking system and approximately $800 million in losses associated with the Federal Reserve's efforts to assist banks and law check fraud and $700 million from credit card fraud, enforcement officials in countering criminal activity. we believe that losses from criminal activities do not As a bank supervisory agency, the Federal Reserve pose a systemic risk to the banking system. Also, we Board places a high priority on providing assistance have no information that suggests that any individual in deterring, detecting, and reporting criminal activi- U.S. banking organization has been overtaken or subties directed at banking organizations, and we appre- stantially threatened by criminal organizations or ciate the committee's interest in this important area. activities. Your letter of invitation asked me to address the Although we see no systemic threat to the banking threat that criminal activity poses to the banking system, we obviously are concerned about the risks system, and I would like to turn initially to that issue. to the reputation and integrity of our nation's banks Although all bank losses that result from criminal arising from criminal elements using the banking activity are unacceptable, it is important to put the system for illicit purposes. These risks are best illusrisks associated with criminal activities affecting trated by money laundering, estimates of which range banks in the appropriate context. As of September 30, between $300 billion and $500 billion annually. 1995, the more than 10,000 insured commercial Although no amount of money laundering is acceptbanks in the United States had total aggregate assets able, there is no evidence that the flow of these funds Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 323 through U.S. banks on its own poses a systemic risk. tools required to fully investigate and prosecute However, if left unchecked, the use of our banking criminal conduct. This is a function ably handled by system by criminal elements could undermine the our law enforcement colleagues. reputation of banks or weaken the public's confi- In recent years, however, the Federal Reserve dence in banks as safekeepers of their funds. For this determined that in some instances it is necessary to reason, and to support our law enforcement agencies go beyond the scope of an ordinary bank examination in their efforts to combat crime, the Federal Reserve's to determine if violations of law or regulation have efforts to attack the money laundering problem con- occurred. For this reason, in 1993 the Special Investitinue to be one of our highest bank supervisory gations and Examinations Unit was created in the priorities. Board's Division of Banking Supervision and Regulation. This unit's function, in part, continues to be that of taking information developed during the course of an examination and conducting a special- FEDERAL RESERVE ROLE ized investigation or examination to determine what, if any, laws have been violated through activity con- As a banking supervisor, the Federal Reserve has ducted at a bank. The unit notifies the appropriate law an important role in ensuring that criminal activity enforcement agency when apparent criminal violadoes not pose a systemic threat and, as important, in tions are detected and works hand in hand with them improving the ability of individual banking organiza- whenever necessary. tions in the United States and abroad to protect themselves from illicit activities. Because bank systems and bank employees are the first and strongest line of defense against financial crimes, the Federal KNOWING YOUR CUSTOMER AND SUSPICIOUS- Reserve places a high priority on ensuring that bank- TRANSACTION REPORTING ing organizations have appropriate controls in place to protect themselves and their customers from crimi- The Federal Reserve believes that the most prudent nal activities. The Federal Reserve places an equally method for banking organizations to protect themhigh priority on supporting efforts by U.S. law selves from allowing criminal transactions to be conenforcement agencies to apprehend criminal enter- ducted at, or through, their institutions is to adopt prises before they can cause harm to consumers and what has become known as "Know Your Customer" banking organizations. policies and procedures. Safety and soundness con- A banking organization's best protection against siderations dictate that banking organizations have illicit activities is its own policies and procedures adequate policies and procedures in this area, includdesigned to identify and then reject potentially illegal ing procedures to ensure compliance with the rules or damaging transactions. For this reason, the Federal and regulations designed to assist in the detection of Reserve and other regulators have implemented vari- criminal activity; decrease illegal activity through ous directives for banks to establish internal controls increased awareness by employees; protect the repuand procedures designed to detect unusual or suspi- tation of a banking organization; and promote good, cious transactions that, if unchecked, could lead to as opposed to unsavory, customer relationships. fraud, money laundering, or other types of criminal "Know Your Customer" procedures, which are misconduct. applied to all facets of a banking operation, allow the To understand and properly evaluate the effective- organization to identify its customers and the transacness of a banking organization's controls and proce- tions that they conduct on a regular basis, be alert to dures, we have developed extensive examination pro- transactions that may be irregular or abnormal for a cedures and manuals, and our bank examiners are particular customer, determine whether there is an provided with comprehensive training and with apparent valid or lawful purpose for the transactions, timely information to assist them in identifying suspi- and report to the appropriate authorities those transaccious or unusual transactions. I need to emphasize, tions that appear to be suspicious or criminal in however, that we do not expect our examiners to act nature. One of the more significant components of as police. The Federal Reserve is a bank supervisory "Know Your Customer" procedures is the ability of agency, not a criminal law enforcement authority; we banking organizations to identify and report suspisee our role as auxiliary to the legitimate law enforce- cious or potentially criminal activities. For the past ment duties of criminal justice agencies. Our examin- ten years, the Federal Reserve and the other federal ers do not, nor should they, possess the necessary bank supervisory agencies have required banking Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

324 Federal Reserve Bulletin • April 1996 organizations to report suspected criminal activities rity of a bank. One such example was the Federal to us, as well as to various federal law enforcement Reserve's development and issuance of a policy stateagencies. In 1995, more than 70,000 criminal refer- ment on "payable through accounts" in 1994. The rals were filed. purpose of the policy statement was to ensure that To reduce the burden on financial institutions while banks that engage in payable-through activity— increasing the usefulness of the information provided which basically involves the use of a checking on suspected criminal conduct, the Federal Reserve, account at a bank in the United States by an inditogether with the other federal bank supervisory vidual who resides outside of this country—have agencies and the Department of the Treasury, revised appropriate procedures in place to ensure that no the criminal referral process in several significant illicit activities are being conducted through these respects. First, effective on April 1 of this year, the accounts. new process combines the current criminal referral Also, in accordance with section 404 of the Money rules of the bank supervisory agencies with the Laundering Suppression Act of 1994, the Federal Treasury Department's suspicious-activity reporting Reserve has been working with the Treasury to estabrequirements related to money laundering offenses. lish a process whereby the federal law enforcement Second, a uniform interagency reporting form has community will provide, on a regular basis, informabeen developed for purposes of referrals to all agen- tion with regard to new or emerging money laundercies. Third, we have provided for the filing of the ing schemes, which will then be disseminated to uniform form in one location as opposed to the financial institutions. current requirement of filing six or seven copies, and banks will have the ability to use computer software, to be distributed by us, to assist in the preparation and magnetic filing of the reports. ANTI-MONEY LAUNDERING EFFORTS Another important improvement is the statutory protection recently afforded banking organizations The Federal Reserve continues to be a leader among that report suspicious or criminal conduct, which the federal banking supervisory agencies in addressprovides banking organizations and their employees ing money laundering-related matters. The staff of with immunity from civil liability for reporting the Federal Reserve has been in the forefront of the known or suspected criminal offenses or suspicious battle to deter money laundering through banking activities. This protection, long sought by the banking organizations by, among other things, developing community and supported by the Federal Reserve, anti-money laundering guidelines, conducting money gives great comfort to banking organizations that laundering investigations, providing expertise for law they will not be held liable for providing timely and enforcement initiatives, and providing training to useful information to law enforcement authorities. various government agencies. Training provided by the Federal Reserve staff to law enforcement agencies has included programs at the FBI Academy and the Treasury's Federal Law FEDERAL RESERVE INFORMATION ASSISTANCE Enforcement Training Center. Additionally, the Federal Reserve staff has provided training in anti- Over the years the Federal Reserve has also taken the money laundering procedures to foreign governinitiative to provide timely and useful information to ments, such as Russia, Poland, Hungary, the Czech banking organizations with regard to ongoing crimi- Republic, Brazil, Ecuador, Argentina, and several nal conduct or potential schemes that may have an other countries in the Middle East and the Far East. adverse impact on them. In the past few years, the In accordance with section 404 of the Money Federal Reserve and the other federal banking super- Laundering Suppression Act of 1994, the Federal visory agencies have issued bulletins on such matters Reserve chaired a working group that has developed as "Prime Bank Fraud" schemes and credit card enhanced examination procedures to identify approfraud. Such notices to the banking industry are priate anti-money laundering procedures initiated by intended to alert banks of the potential dangers of banking organizations. Along with these enhanced such schemes and practices. money laundering procedures, the Federal Reserve From time to time, the Federal Reserve has also will very shortly release newly revised Bank Secrecy developed and issued policy statements with regard Act examination procedures that will allow examinto activities occurring in banking organizations that ers to determine more efficiently and effectively comwe have determined could pose a threat to the integ- pliance with the Bank Secrecy Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 325 COORDINATION ACTIVITIES bank or a U.S. branch of a foreign bank maintains a deposit relationship with a corporate entity, wherever The Federal Reserve routinely coordinates with fed- it is chartered, it should take steps to identify its eral law enforcement agencies with regard to poten- business and the nature of its routine transactions to tial criminal matters, including anti-money launder- evaluate better whether it is engaging in any suspiing activities. The scope of this coordination ranges cious activities. While no federal bank regulator or from our work on the criminal referral process to law enforcement agency can monitor every transacspecific, case-by-case assistance to law enforcement tion undertaken by every corporation doing business agencies resulting from examinations of banking with a U.S. financial institution, we can, and we organizations. routinely do, measure the internal controls and risk The Federal Reserve is a founding member and management systems implemented by the banks to active participant in the well-regarded interagency make certain that the banks are, in fact, adhering to Bank Fraud Working Group, which consists of repre- their policies and are aware of the business of their sentatives of thirteen federal law enforcement and customers, including any that may use offshore bank supervisory agencies. Among other things, this corporations. group, which has been meeting on a monthly basis With regard to foreign banks, the Board, since since the mid-1980s, has coordinated the dissemina- it was given the power by the Congress in 1991, tion of relevant and timely information on such carefully scrutinizes any foreign bank seeking to do matters of mutual interest or concern as Asian business in the United States. This includes making gangs' use of check fraud and check counterfeiting; certain that the bank is subject to comprehensive West African advance fee schemes and credit card consolidated supervision in its home country, reviewfraud; and asset forfeiture of criminally derived ing the bank's global anti-money laundering procefunds. dures, and conducting background checks with U.S. The Federal Reserve is also an active participant in law enforcement and other agencies. In addition, the Financial Action Task Force (FATF), which was as I mentioned, we thoroughly review the operaestablished by the Group of Seven countries. The tions of these banks in the United States to make Board staff has contributed significantly to the certain their activities here fully comply with U.S. FATF's mission of educating countries around the laws and regulations. The Federal Reserve is also world in anti-money laundering and fraud prevention working in a number of areas to improve the bank efforts. supervisory standards in other banking centers and to make certain that there is adequate cooperation among supervisors so that gaps do not occur in the OFFSHORE CORPORATIONS AND BANKS consolidated supervision of international banking organizations. As a result of our staff's work with law enforcement authorities, we recognize that crime is an international activity that is increasingly making use of CONCLUSION offshore corporations and banks. These are two separate problems that we address in different manners. In conclusion, we have undertaken extensive efforts With regard to offshore corporations, because the and have used significant resources to combat illegal Federal Reserve cannot control a sovereign nation's activities involving domestic and international banklaws governing the establishment of corporations in ing organizations. I believe that the Federal Reserve its territory, we can only address the activities of has made significant contributions to the federal govthese companies when they seek to do business in the ernment's law enforcement endeavors. Because we United States through banks we supervise. In this have a vital interest in protecting the banking system regard, our principal tool is the "Know Your Cus- from criminal elements, we will be continuing our tomer" policy. As I said before, every domestic and cooperative efforts with other bank supervisors and foreign banking organization supervised by the Fed- the criminal justice agencies to develop and impleeral Reserve should have adequate policies in this ment programs to better detect criminal misconduct area. This means, for example, that if a state member involving banks. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

326 Announcements ELECTION OF ALAN GREENSPAN AS CHAIRMAN tion Z (Truth in Lending) for mortgage loans that PRO TEMPORE OF THE BOARD OF GOVERNORS bear fees above a certain amount. OF THE FEDERAL RESERVE SYSTEM The Home Ownership and Equity Protection Act of 1994 bars credit terms such as balloon payments The Federal Reserve Board on March 1,1996, elected and requires additional disclosures when total points Alan Greenspan as Chairman Pro Tempore pending and fees payable by the consumer exceed $400 or Senate confirmation of his appointment to a third 8 percent of the total loan amount, whichever is term as Chairman. The action was effective begin- larger. The Board must adjust this amount each year ning Sunday, March 3. based on the percent change in the consumer price On February 22, President Clinton announced his index as of June 1. Accordingly, the Board has intent to nominate Dr. Greenspan to a third term as adjusted the dollar amount from $400 to $412. Chairman. His current term expired on March 2. The designation as Chairman Pro Tempore will permit Dr. Greenspan to continue to carry out the duties of PROPOSED ACTION the Chairman while the confirmation process is under way. The Federal Reserve Board on February 16, 1996, requested comment on a proposed revision to Regulation K with respect to the management of offshore offices by U.S. branches and agencies of foreign REGULATION K: FINAL RULE banks. Comments were requested by March 25, 1996. The Federal Reserve Board on February 16, 1996, announced a final rule setting out the criteria for evaluating continued operation of a foreign bank in FEDERAL RESERVE REGULATORY SERVICE the United States. The rule applies in cases in which AVAILABLE ON DISKETTE FOR PERSONAL the foreign bank is not subject to comprehensive COMPUTERS supervision or regulation on a consolidated basis by its home-country supervisor. The final rule, which The Federal Reserve Regulatory Service (FRRS) is amends Regulation K (International Banking Opera- available on diskette for use on personal computers. tions), was effective March 25, 1996. Created using Folio VIEWS® search-and-retrieval The Board will take these criteria into account in software, this electronic service allows users to reaching a view regarding whether a foreign bank construct searches that are as simple or as complex that the Board has determined is not subject to com- as they need. The software enables users to do the prehensive, consolidated, home-country supervision following: should be permitted to continue its U.S. operations with or without supervisory constraints or whether • Search for any word, phrase, or combination of such U.S. operations should be terminated. words and phrases • Search the complete text or only main headings • Limit searches to a specific portion of the FRRS (for example, to a statute, a regulation, or one section ADJUSTMENT OF DOLLAR AMOUNT of a statute or regulation) TRIGGERING ADDITIONAL DISCLOSURE • Condense the results of a search to make it easier REQUIREMENTS UNDER REGULATION Z to review. The Federal Reserve Board published on February 1, The electronic version, like the print version, is 1996, an adjustment of the dollar amount that triggers updated once a month. Monthly diskettes are simply additional disclosure requirements under Regula- loaded to update the text on the floppy drive. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

327 Besides an on-screen user's manual and a minor redefinition of M2. Data in tables 1.10 and command-specific help system, a printed user's guide 1.21 in the statistical appendix to the Bulletin reflect will explain the basic features of the software and these changes beginning with this issue. how best to use them in researching the FRRS. A The revisions had no effect on the annual growth telephone number will also be provided for technical rate of M2 over 1995, but they raised the annual assistance. growth rates of Ml and M3 by 0.1 percentage point Other features of this service include the following: over the past year. For earlier years, revisions to the annual growth rates of M2 ranged between -0.5 and • Cross-references and indexes with hypertext +0.4 percentage point, while the annual growth rates links that take the user directly to referenced text in of Ml and M3 were revised by smaller amounts. the FRRS • Pop-up footnotes • The capability of printing text or transferring it Redefinition to a diskette for word processing • Mouse compatability (will operate as a DOS A minor redefinition of M2 was implemented with application under Windows). this year's benchmark. Overnight wholesale repurchase agreements and overnight Eurodollars have The electronic FRRS requires the following: been removed from M2. They are now included in the non-M2 component of M3. These overnight com- • IBM-compatible PC, DOS 3.0 or higher ponents are quite volatile and difficult to measure • Drive capable of handling 3.5-inch high-density accurately. Their movements no longer exhibit the floppy disks negative correlation with demand deposits that had • Available disk space of 17 megabytes been observed in 1980, when they were originally • Available RAM of 512K included in M2. The redefinition does not affect the • EGA or VGA board to view graphics quarterly and annual behavior of M2 nor its relation- • Color monitor (recommended but not required). ship to interest rates and income. The redefinition, which has no effect on Ml or M3, lowered M2 in For a standalone PC, the annual subscription fee is all years since 1969 by amounts that cumulated to $300. For network subscriptions, the annual fee $118 billion in 1995. is $300 for one concurrent user, $750 for a maximum of ten concurrent users, $2,000 for a maximum of fifty concurrent users, and $3,000 for a maximum of Benchmark Revisions one hundred concurrent users. Subscribers outside the United States should add $50 to cover additional The benchmark incorporated minor revisions to data airmail costs. Each network subscriber will receive a reported on the weekly and quarterly deposit reports, single set of diskettes and a corresponding number of and it took account of deposit data from Call Reports user's guides. Additional user's guides may be pur- for banks and thrift institutions that were not weekly chased for $5 each. or quarterly deposit reporters. The benchmark also Orders should be sent to Publications Services, incorporated historical data for a number of money Mail Stop 127, Board of Governors of the Federal market mutual funds that began reporting for the first Reserve System, Washington, DC 20551. All sub- time during 1995, raising the levels of M2 and M3 scription requests must be accompanied by a check or over the year by amounts that cumulated to $ 1 billion money order payable to the Board of Governors and $9 billion respectively. of the Federal Reserve System or charged to VISA or MasterCard. Charge customers only may fax their orders to (202) 728-5886. Seasonal Review Revisions In a process similar to that used in previous years, seasonal factors for the monetary aggregates were REVISIONS TO THE MONEY STOCK DATA revised using the X-ll ARIMA procedure applied to the benchmarked data through December 1995. How- Measures of the money stock were revised in Febru- ever, this year, seasonal factors were constructed for ary of this year to incorporate the result of the annual total repurchase agreements and total Eurodollar benchmark and seasonal factor review, as well as a deposits, both of which are now entirely in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

328 Federal Reserve Bulletin • April 1996 non-M2 component of M3. Furthermore, the non-Mi Washington, DC 20551 (202) 452-3062. The historicomponent of M2 and the non-M2 component of M3 cal data are also available on floppy diskette for a fee have been seasonally adjusted by summing their sea- of $25 per diskette from Publications Services, Mail sonally adjusted components; previously, both the Stop 127, Board of Governors of the Federal Reserve non-Mi component of M2 and the non-M2 compo- System, Washington, DC 20551 (202) 452-3245. nent of M3 were each seasonally adjusted as a whole. Revised monthly historical data for Ml, M2, M3, and Complete historical data are available in printed total nonfinancial debt are also available from the form from the Money and Reserves Projection Sec- Economic Bulletin Board of the U.S. Department of tion, Mail Stop 72, Division of Monetary Affairs, Commerce. Call (202) 482-1986 for information on Board of Governors of the Federal Reserve System, how to gain access to the Economic Bulletin Board. Tables on seasonal factors follow. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 329 1. Monthly seasonal factors used to construct Ml, January 1995-March 1997 Other checkable deposits1 NNoonnbbaannkk ttrraavveelleerrss YYeeaarr aanndd mmoonntthh CCuurrrreennccyy DDeemmaanndd ddeeppoossiittss cchheecckkss Total At banks 1995—January .9950 .9568 1.0140 1.0165 1.0242 February .9943 .9541 .9773 .9953 1.0012 March .9973 .9656 1 . .0 9 0 7 0 67 0 1.0008 1.0024 April 1.0015 .9723 1.0210 1.0196 May 1.0008 .9867 .9763 .9901 .9868 June 1.0032 1.0274 .9905 .9956 .9921 July 1.0049 1.0668 1.0009 .9921 .9874 August 1.0016 1.0745 .9936 .9892 .9878 September .9995 1.0495 .9975 .9943 .9938 October .9978 1.0124 1.0077 .9916 .9901 1.0000 November 1.0002 .9750 1.0197 .9995 December 1.0080 .9584 1.0466 1.0144 1.0168 1996—January .9948 .9557 1.0141 1.0166 1.0243 February .9935 .9527 .9771 .9949 1.0006 March .9974 .9648 .9765 1.0004 1.0016 April .9995 .9740 .9994 1-.0209 1.0195 May 1.0013 .9884 .9752 .9894 .9860 June 1.0030 1.0285 .9907 .9955 .9919 July 1.0031 1.0674 1.0015 .9924 .9876 August 1.0023 1.0753 .9941 .9893 .9880 September .9984 1.0495 .9980 .9948 .9943 October .9965 1.0109 1.0076 1 . .0 9 0 91 0 5 1 .9901 November 1.0005 .9744 1.0193 .9999 December 1.0057 .9581 1.0465 1.0147 1.0171 1997—January .9952 .9551 1.0140 1.0163 1.0241 February .9934 .9522 .9771 .9948 1 1. .0 0 0 0 1 03 1 March .9969 .9649 .9767 1.0003 1. Seasonally adjusted other checkable deposits at thrift institutions are adjusted, and seasonally adjusted other checkable deposits at commercial banks, derived as the difference between total other checkable deposits, seasonally 2. Monthly seasonal factors used to construct M2 and M3, January 1995-March 1997 SSaavviinnggss aanndd SSmmaallll-- LLaarrggee-- Money market mutual funds YYeeaarr aanndd mmoonntthh MMMMDDAA ddeennoommiinnaattiioonn ddeennoommiinnaattiioonn RRPPss EEuurrooddoollllaarrss ddeeppoossiittss11 ttiimmee ddeeppoossiittss'' ttiimmee ddeeppoossiittss11 In M2 In M3 only 1995—January .9952 .9967 .9922 1.0037 1.0315 .9916 .9995 February .9939 .9984 .9952 1.0078 1.0263 .9845 .9999 March .9981 1.0015 .9953 1.0111 1.0032 .9913 1.0102 April .9993 1.0028 .9928 1.0104 .9886 .9954 .9872 May .9981 1.0029 1.0068 .9967 .9915 .9994 .9862 June 1.0022 1.0031 1.0025 .9933 .9792 1.0202 .9909 July 1.0027 1.0039 .9957 .9980 .9876 1.0028 .9897 August 1.0033 1.0023 1.0028 1.0018 .9994 1.0056 1.0011 September 1.0023 1.0004 1.0023 .9918 .9834 1.0045 1.0026 October 1.0019 .9989 1.0069 .9905 .9915 1.0104 1.0110 November 1.0040 .9951 1.0085 .9960 1.0103 .9992 1.0179 December 1.0000 .9932 .9997 1.0006 1.0097 .9919 1.0082 1996—January .9953 .9960 .9920 1.0043 1.0330 .9930 .9986 February .9935 .9983 .9956 1.0069 1.0232 .9851 .9964 March .9976 1.0020 .9957 1.0092 1.0015 .9904 1.0042 April .9988 1.0034 .9923 1.0099 .9888 .9966 .9856 May .9976 1.0037 1.0064 .9961 .9899 1.0016 .9873 June 1.0020 1.0036 1.0021 .9929 .9802 1.0199 .9921 July 1.0029 1.0042 .9955 .9991 .9894 1.0031 .9936 August 1.0036 1 1. .0 0 0 0 0 24 1 1.0022 1.0028 .9988 1.0054 1.0043 September 1.0027 1.0020 .9924 .9823 1.0051 1.0050 October 1.0022 .9985 1.0077 .9902 .9933 1.0096 1.0121 November 1.0041 .9948 1.0090 .9959 1.0101 .9976 1.0166 December .9999 .9928 .9997 1.0007 1.0096 .9907 1.0051 1997—January .9953 .9958 .9918 1.0043 1.0344 .9938 .9993 February .9934 .9983 .9957 1.0070 1.0220 .9866 .9941 March .9974 1.0024 .9963 1.0083 1.0007 .9896 1.0014 1. Seasonal factors are applied to deposits data at both commercial banks and thrift institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ll ] • April 1996 :asi used to construct Ml, December 4, 1995-March 31, 1997 Other checkable deposits1 NNoonnbbaannkk ttrraavveelleerrss :ndi CCuurrrreennccyy cchheecckkss DDeemmaanndd ddeeppoossiittss Total At banks 4 .9981 .9573 1.0284 1.0132 1.0099 11 1.0048 .9578 1.0395 1.0198 1.0187 18 1.0054 .9583 1.0391 1.0130 1.0171 25 1.0173 .9588 1.0449 1.0073 1.0148 1 1.0067 .9593 1.0814 1.0161 1.0219 8 1.0029 .9583 1.0592 1.0497 1.0558 15 .9969 .9566 1.0310 1.0293 1.0386 22 .9931 .9549 .9945 1.0078 1.0187 29 .9866 .9533 .9666 .9827 .9888 5 .9927 .9522 .9880 1.0073 1.0129 12 .9966 .9524 .9787 1.0010 1.0061 19 .9952 .9527 .9795 .9895 .9957 26 .9893 .9530 .9652 .9813 .9882 4 .9947 .9539 .9771 1.0085 1.0111 11 1.0000 .9590 .9786 1.0081 1.0104 18 .9976 .9642 .9766 .9969 .9987 25 .9950 .9693 .9587 .9876 .9887 1 .9956 .9745 .9922 .9981 .9971 8 1.0053 .9754 1.0066 1.0361 1.0295 15 1.0035 .9744 1.0178 1.0380 1.0383 22 .9977 .9735 .9960 1.0259 1.0265 29 .9926 .9726 .9803 .9901 .9901 6 1.0025 .9751 .9865 1.0055 1.0018 13 1.0031 .9822 .9796 .9959 .9919 20 1.0003 .9893 .9756 .9864 .9800 27 1.0002 .9964 .9537 .9717 .9703 3 1.0010 1.0035 .9898 .9950 .9942 10 1.0072 1.0149 .9994 1.0160 1.0084 17 1.0035 1.0262 .9938 1.0024 .9986 24 .9991 1.0375 .9682 .9772 .9760 1 1.0015 1.0488 1.0018 .9806 .9780 8 1.0102 1.0569 1.0247 1.0166 1.0095 15 1.0057 1.0637 1.0181 .9997 .9942 22 1.0010 1.0705 .9909 .9824 .9794 29 .9976 1.0773 .9730 .9733 .9694 5 1.0040 1.0813 1.0058 1.0039 .9984 12 1.0063 1.0783 1.0016 .9983 .9940 19 1.0021 1.0753 1.0034 .9847 .9846 26 .9970 1.0722 .9718 .9710 .9741 2 1.0009 1.0692 .9874 .9913 .9904 9 1.0055 1.0613 1.0138 1.0202 1.0157 16 .9999 1.0525 1.0091 1.0048 1.0032 23 .9946 1.0437 .9801 .9810 .9818 30 .9918 1.0350 .9922 .9722 .9761 7 .9999 1.0262 1.0198 1.0080 1.0042 14 .9992 1.0174 1.0198 1.0000 .9939 21 .9954 1.0087 1.0073 .9887 .9871 28 .9931 .9999 .9827 .9711 .9764 4 .9993 .9912 1.0144 1.0011 .9995 11 1.0046 .9831 1.0162 1.0078 1.0067 18 1.0001 .9750 1.0290 .9993 .9999 25 .9989 .9669 1.0070 .9861 .9898 2 .9952 .9587 1.0308 1.0038 .9994 9 1.0008 .9577 1.0368 1.0243 1.0228 16 1.0030 .9580 1.0417 1.0119 1.0135 23 1.0122 .9582 1.0430 1.0099 1.0158 30 1.0098 .9584 1.0625 1.0097 1.0153 6 1.0021 .9579 1.0797 1.0519 1.0569 13 .9984 .9564 1.0341 1.0393 1.0451 20 .9948 .9549 1.0031 1.0151 1.0266 27 .9896 .9535 .9681 .9795 .9891 3 .9916 .9520 .9835 .9935 .9996 10 .9962 .9521 .9821 1.0109 1.0133 17 .9953 .9522 .9832 .9928 .9976 24 .9895 .9523 .9646 .9814 .9896 3 .9930 .9524 .9745 .9944 1.0016 10 1.0006 .9579 .9859 1.0172 1.0197 17 .9973 .9635 .9836 1.0017 1.0028 24 .9947 .9691 .9621 .9913 .9908 31 .9954 .9748 .9740 .9896 .9874 idju eckable deposits at thrift institutions are adjusted, and seasonally adjusted other checkable deposits at commercial banks, fen total other checkable deposits, seasonally Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 331 4. Weekly seasonal factors used to construct M2 and M3, December 4, 1995-March 31, 1997 Savings and Small- Large- Money market mutual funds Week ending MMDA denomination denomination RPs Eurodollars deposits1 time deposits1 time deposits' In M2 In M3 only 1995—December 4 1.0035 .9937 1.0047 1.0002 1.0066 .9949 1.0133 11 1.0049 .9933 1.0047 1.0067 1.0085 .9906 1.0020 18 1.0014 .9926 1.0011 1.0062 1.0132 .9932 1.0033 25 .9958 .9925 .9976 .9989 1.0072 .9866 1.0083 11999966——JJaannuuaarryy 1 .9951 .9941 .9915 .9887 1.0095 .9962 1.0177 8 1.0008 .9952 .9898 .9919 .9978 .9906 1.0022 15 .9979 .9958 .9929 1.0055 1.0372 .9938 .9987 22 .9921 .9962 .9925 1.0120 1.0419 .9915 .9912 29 .9872 .9966 .9914 1.0093 1.0577 .9986 1.0034 FFeebbrruuaarryy 5 .9922 .9975 .9915 1.0068 1.0372 .9833 .9857 12 .9959 .9980 .9967 1.0086 1.0318 .9873 .9886 19 .9939 .9982 .9966 1.0053 1.0181 .9848 .9969 26 .9913 .9985 .9963 1.0073 1.0207 .9858 1.0083 March 4 .9947 .9999 .9956 1.0067 1.0063 .9819 1.0028 11 .9981 1.0013 .9984 1.0092 1.0046 .9860 .9964 18 .9984 1.0020 .9962 1.0098 1.0032 .9909 1.0040 25 .9966 1.0026 .9966 1.0118 1.0055 .9971 1.0078 AApprriill 1 .9989 1.0036 .9908 1.0071 .9941 .9927 1.0101 8 1.0074 1.0038 .9914 1.0125 .9925 .9965 .9838 15 1.0041 1.0034 .9894 1.0142 .9950 .9943 .9810 22 .9947 1.0031 .9928 1.0123 .9859 .9978 .9827 29 .9898 1.0030 .9946 1.0035 .9852 .9986 .9935 MMaayy 6 .9952 1.0037 1.0001 .9963 .9828 .9965 .9713 13 .9993 1.0038 1.0060 .9952 .9879 .9970 .9725 20 .9980 1.0037 1.0063 .9951 .9933 1.0012 .9880 27 .9956 1.0035 1.0116 .9990 .9975 1.0043 1.0101 June 3 1.0010 1.0036 1.0079 .9931 .9838 1.0132 .9962 10 1.0066 1.0037 1.0082 .9954 .9835 1.0175 .9833 17 1.0048 1.0033 1.0054 .9945 .9833 1.0276 .9901 24 .9988 1.0030 .9991 .9922 .9784 1.0199 .9931 JJuullyy 1 .9975 1.0045 .9918 .9880 .9701 1.0173 1.0014 8 1.0059 1.0053 .9912 .9889 .9756 .9995 .9761 15 1.0056 1.0046 .9952 1.0014 .9893 1.0016 .9861 22 1.0019 1.0038 .9963 1.0025 .9951 1.0028 .9965 29 .9987 1.0032 .9985 1.0040 .9979 1.0074 1.0116 AAuugguusstt 5 1.0037 1.0033 .9999 1.0023 .9923 .9997 1.0044 12 1.0063 1.0031 1.0011 1.0042 .9988 1.0075 1.0026 19 1.0044 1.0025 1.0012 1.0027 .9973 1.0033 .9978 26 1.0008 1.0017 1.0053 1.0054 1.0064 1.0088 1.0094 SSeepptteemmbbeerr 2 1.0025 1.0014 1.0032 .9983 .9949 1.0064 1.0088 9 1.0078 1.0011 1.0022 .9942 .9858 1.0022 .9943 16 1.0065 1.0000 1.0018 .9949 .9886 1.0084 1.0003 23 .9996 .9991 1.0012 .9926 .9789 1.0045 1.0017 30 .9971 .9997 1.0022 .9871 .9721 1.0051 1.0226 October 7 1.0046 1.0008 1.0089 .9867 .9850 .9980 1.0073 14 1.0053 .9994 1.0073 .9922 .9850 1.0105 1.0050 21 1.0014 .9981 1.0065 .9913 .9969 1.0098 1.0101 28 .9974 .9967 1.0080 .9914 1.0004 1.0197 1.0254 November 4 1.0024 .9962 1.0081 .9905 1.0040 1.0102 1.0140 11 1.0070 .9958 1.0119 .9936 1.0068 1.0001 1.0082 18 1.0061 .9948 1.0087 .9946 1.0038 .9952 1.0130 25 1.0018 .9939 1.0091 1.0013 1.0161 .9907 1.0264 December 2 1.0018 .9935 1.0060 .9976 1.0164 .9969 1.0214 9 1.0053 .9931 1.0043 1.0018 1.0034 .9911 .9953 16 1.0032 .9923 1.0039 1.0060 1.0125 .9940 .9998 23 .9960 .9921 1.0002 1.0024 1.0085 .9813 1.0023 30 .9943 .9931 .9904 .9953 1.0117 .9946 1.0183 11999977——JJaannuuaarryy 6 1.0014 .9948 .9871 .9854 .9961 .9906 1.0059 13 1.0009 .9956 .9926 1.0040 1.0329 .9947 1.0007 20 .9947 .9959 .9934 1.0101 1.0427 .9933 .9937 27 .9881 .9961 .9940 1.0125 1.0564 .9980 1.0020 FFeebbrruuaarryy 3 .9899 .9967 .9912 1.0075 1.0414 .9902 .9921 10 .9954 .9975 .9945 1.0083 1.0321 .9827 .9827 17 .9947 .9982 .9959 1.0055 1.0189 .9911 .9945 24 .9918 .9989 .9978 1.0067 1.0174 .9865 1.0024 March 3 .9931 1.0001 .9972 1.0068 1.0091 .9829 1.0004 10 .9986 1.0015 .9996 1.0084 1.0015 .9840 .9909 17 .9994 1.0022 .9979 1.0092 1.0059 .9905 1.0021 24 .9967 1.0029 .9962 1.0102 .9996 .9936 1.0052 31 .9966 1.0040 .9912 1.0060 .9973 .9934 1.0079 1. Seasonal factors are applied to deposits data at both commercial banks and thrift institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

333 Legal Developments FINAL RULE—AMENDMENT TO REGULATION A Under the Bank Secrecy Act), on the reporting of known or suspected criminal and suspicious activities by the domes- The Board of Governors is amending 12 C.F.R. Part 201, tic and foreign banking organizations supervised by the its Regulation A (Extensions of Credit by Federal Reserve Board. This final rule streamlines reporting requirements Banks; Change in Discount Rate) to reflect its approval of by providing that such an organization file a new Suspia decrease in the basic discount rate at each Federal Re- cious Activity Report ("SAR") with the Board and the serve Bank. The Board acted on requests submitted by the appropriate federal law enforcement agencies by sending a Boards of Directors of the twelve Federal Reserve Banks. SAR to the Financial Crimes Enforcement Network of the Effective February 5, 1996, 12 C.F.R. Part 201 is Department of the Treasury to report a known or suspected amended as follows: criminal offense or a transaction that it suspects involves money laundering or violates the Bank Secrecy Act. Part 201—Extensions of Credit by Federal Reserve Effective April 1, 1996, 12 C.F.R. Parts 208, 211, and Banks (Regulation A) 225 are amended as follows: 1. The authority citation for 12 C.F.R. Part 201 continues Part 208—Membership of State Banking to read as follows: Institutions in the Federal Reserve System (Regulation H) Authority: 12 U.S.C. 343 et seq., 347a, 347b, 347c, 347d, 348 et seq., 357, 374, 374a and 461. 1. The authority citation for 12 C.F.R. Part 208 continues 2. Section 201.51 is revised to read as follows: to read as follows: Section 201.51—Adjustment credit for depository institu- Authority: 12 U.S.C. 36, 248(a), 248(c), 321-338a, 371d, tions. 461, 481-486, 601, 611, 1814, 1823(j), 1828(o), 1831o, 1831p-l, 3105, 3310, 3331-3351, and 3906-3909; The rates for adjustment credit provided to depository 15 U.S.C. 78b, 781(b), 781(g), 781(i), 78o-4(c)(5), 78q, institutions under section 201.3(a) are: 78q-l and 78w; 31 U.S.C. 5318; 42 U.S.C. 4102a, 4104a, 4104b, 4106, and 4128. Federal Reserve Bank Rate Effective 2. Section 208.20 and its heading are revised to read as follows: Boston 5.00 February 1, 1996 New York 5.00 January 31, 1996 Philadelphia 5.00 January 31, 1996 Section 208.20—Suspicious Activity Reports. Cleveland 5.00 January 31, 1996 Richmond 5.00 February 1, 1996 (a) Purpose. This section ensures that a state member bank Atlanta 5.00 January 31, 1996 files a Suspicious Activity Report when it detects a known Chicago 5.00 February 1, 1996 or suspected violation of Federal law, or a suspicious St. Louis 5.00 February 5, 1996 Minneapolis 5.00 January 31, 1996 transaction related to a money laundering activity or a Kansas City 5.00 February 1, 1996 violation of the Bank Secrecy Act. This section applies to Dallas 5.00 January 31, 1996 all state member banks. San Francisco 5.00 January 31, 1996 (b) Definitions. For the purposes of this section: (1) FinCEN means the Financial Crimes Enforcement Network of the Department of the Treasury. (2) Institution-affiliated party means any institution- FINAL RULE—AMENDMENTS TO REGULATIONS H, K, AND Y affiliated party as that term is defined in 12 U.S.C. 1786(r), or 1813(u) and 1818(b)(3),(4) or (5). The Board of Governors is amending 12 C.F.R. Parts 208, (3) SAR means a Suspicious Activity Report on the form 211, and 225, its Regulations H, K, and Y (Membership of prescribed by the Board. State Banking Institutions in the Federal Reserve System; (c) SARs required. A state member bank shall file a SAR International Banking Operations; Bank Holding Compa- with the appropriate Federal law enforcement agencies and nies and Change in Control; Reports of Suspicious Activity the Department of the Treasury in accordance with the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

334 Federal Reserve Bulletin • April 1996 form's instructions by sending a completed SAR to Fin- aggregating $5,000 or more in funds or other assets, if CEN in the following circumstances: the bank knows, suspects, or has reason to suspect that: (1) Insider abuse involving any amount. Whenever the (i) The transaction involves funds derived from illegal state member bank detects any known or suspected activities or is intended or conducted in order to hide Federal criminal violation, or pattern of criminal viola- or disguise funds or assets derived from illegal activitions, committed or attempted against the bank or in- ties (including, without limitation, the ownership, navolving a transaction or transactions conducted through ture, source, location, or control of such funds or the bank, where the bank believes that it was either an assets) as part of a plan to violate or evade any law or actual or potential victim of a criminal violation, or regulation or to avoid any transaction reporting reseries of criminal violations, or that the bank was used to quirement under federal law; facilitate a criminal transaction, and the bank has a (ii) The transaction is designed to evade any regulasubstantial basis for identifying one of its directors, tions promulgated under the Bank Secrecy Act; or officers, employees, agents or other institution-affiliated (iii) The transaction has no business or apparent lawparties as having committed or aided in the commission ful purpose or is not the sort in which the particular of a criminal act regardless of the amount involved in customer would normally be expected to engage, and the violation. the bank knows of no reasonable explanation for the (2) Violations aggregating $5,000 or more where a transaction after examining the available facts, includsuspect can be identified. Whenever the state member ing the background and possible purpose of the transbank detects any known or suspected Federal criminal action. violation, or pattern of criminal violations, committed or (d) Time for reporting. A state member bank is required to attempted against the bank or involving a transaction or file a SAR no later than 30 calendar days after the date of transactions conducted through the bank and involving initial detection of facts that may constitute a basis for or aggregating $5,000 or more in funds or other assets, filing a SAR. If no suspect was identified on the date of where the bank believes that it was either an actual or detection of the incident requiring the filing, a state mempotential victim of a criminal violation, or series of ber bank may delay filing a SAR for an additional 30 criminal violations, or that the bank was used to facili- calendar days to identify a suspect. In no case shall reporttate a criminal transaction, and the bank has a substantial ing be delayed more than 60 calendar days after the date of basis for identifying a possible suspect or group of initial detection of a reportable transaction. In situations suspects. If it is determined prior to filing this report that involving violations requiring immediate attention, such as the identified suspect or group of suspects has used an when a reportable violation is on-going, the financial insti- "alias," then information regarding the true identity of tution shall immediately notify, by telephone, an approprithe suspect or group of suspects, as well as alias identifi- ate law enforcement authority and the Board in addition to ers, such as drivers' license or social security numbers, filing a timely SAR. addresses and telephone numbers, must be reported. (e) Reports to state and local authorities. State member (3) Violations aggregating $25,000 or more regardless banks are encouraged to file a copy of the SAR with state of a potential suspect. Whenever the state member bank and local law enforcement agencies where appropriate. detects any known or suspected Federal criminal viola- (f) Exceptions. (1) A state member bank need not file a tion, or pattern of criminal violations, committed or SAR for a robbery or burglary committed or attempted attempted against the bank or involving a transaction or that is reported to appropriate law enforcement authoritransactions conducted through the bank and involving ties. or aggregating $25,000 or more in funds or other assets, (2) A state member bank need not file a SAR for lost, where the bank believes that it was either an actual or missing, counterfeit, or stolen securities if it files a potential victim of a criminal violation, or series of report pursuant to the reporting requirements of criminal violations, or that the bank was used to facili- 17 C.F.R. 240.17f-l. tate a criminal transaction, even though there is no (g) Retention of records. A state member bank shall mainsubstantial basis for identifying a possible suspect or tain a copy of any SAR filed and the original or business group of suspects. record equivalent of any supporting documentation for a (4) Transactions aggregating $5,000 or more that in- period of five years from the date of the filing of the SAR. volve potential money laundering or violations of the Supporting documentation shall be identified and main- Bank Secrecy Act. Any transaction (which for purposes tained by the bank as such, and shall be deemed to have of this paragraph (c)(4) means a deposit, withdrawal, been filed with the SAR. A state member bank must make transfer between accounts, exchange of currency, loan, all supporting documentation available to appropriate law extension of credit, purchase or sale of any stock, bond, enforcement agencies upon request. certificate of deposit, or other monetary instrument or (h) Notification to board of directors. The management of a investment security, or any other payment, transfer, or state member bank shall promptly notify its board of delivery by, through, or to a financial institution, by directors, or a committee thereof, of any report filed pursuwhatever means effected) conducted or attempted by, at ant to this section. or through the state member bank and involving or (i) Compliance. Failure to file a SAR in accordance with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 335 this section and the instructions may subject the state FINAL RULE-AMENDMENT TO REGULATION K member bank, its directors, officers, employees, agents, or other institution- affiliated parties to supervisory action, The Board of Governors is amending 12 C.F.R. Part 211, (j) Confidentiality of SARs. SARs are confidential. Any its Regulation K (International Banking Operations). Secstate member bank subpoenaed or otherwise requested to tion 202(e)(7) of the Federal Deposit Insurance Corporadisclose a SAR or the information contained in a SAR shall tion Improvement Act of 1991 ("FDICIA" or "Act") prodecline to produce the SAR or to provide any information vides that the Board, in consultation with the Treasury, that would disclose that a SAR has been prepared or filed develop and publish criteria to be used in evaluating the citing this section, applicable law (e.g., 31 U.S.C. 5318(g)), operations of any foreign bank in the United States that the or both, and notify the Board. Board has determined is not subject to comprehensive (k) Safe Harbor. The safe harbor provisions of 31 U.S.C. supervision or regulation on a consolidated basis. This final 5318(g), which exempts any state member bank that makes rule amends Regulation K on International Banking Operaa disclosure of any possible violation of law or regulation tions to set out such criteria pursuant to section 202(e)(7) from liability under any law or regulation of the United of FDICIA. States, or any constitution, law or regulation of any state or Effective March 25, 1996, 12 C.F.R. Part 211 is amended political subdivision, covers all reports of suspected or as follows: known criminal violations and suspicious activities to law enforcement and financial institution supervisory authori- Part 211—International Banking Operations ties, including supporting documentation, regardless of (Regulation K) whether such reports are filed pursuant to this section or are filed on a voluntary basis. 1. The authority citation for Part 211 continues to read as follows: Part 211—International Banking Operations (Regulation K) Authority. 12 U.S.C. 221 et seq., 1818, 1841 et seq., 3101 et seq., 3901 et seq. 1. The authority citation for 12 C.F.R. Part 211 continues 2. A new section 211.30 is added to Subpart B to read as to read as follows: follows: Authority: 12 U.S.C. 221 et seq., 1818, 1841 et seq., 3101 Section 211.30—Criteria for evaluating the U.S. et seq., 3901 et seq. operations of foreign banks not subject to consolidated supervision. Sections 211.8 and 211.24. (a) General. Pursuant to the Foreign Bank Supervision 2. In sections 211.8 and 211.24(f), remove the words Enhancement Act, Pub.L. 102-242, 105 Stat. 2286 (1991), "criminal referral form" and add, in their place, the words the Board shall develop and publish criteria to be used in "suspicious activity report". evaluating the operations of any foreign bank in the United States that the Board has determined is not subject to Part 225—Bank Holding Companies and Change in comprehensive supervision or regulation on a consolidated Bank Control (Regulation Y) basis. (b) Criteria. Following a determination by the Board that, 1. The authority citation for 12 C.F.R. Part 225 continues having taken into account the standards set forth in section to read as follows: 211.24(c)(1) of this subpart, a foreign bank is not subject to comprehensive, consolidated supervision by its home Authority. 12 U.S.C. 1817(j)(13), 1818, 1831i, 1831p-l, country supervisor, the Board shall consider the following 1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, 3331- criteria in determining whether the foreign bank's U.S. 3351, 3907, and 3909. operations should be permitted to continue and, if so, whether any supervisory constraints should be placed upon the bank in connection with those operations: Section 225.4—[Amended]. (1) The proportion of the foreign bank's total assets and total liabilities that are located or booked in its home 2. In section 225.4, the heading of paragraph (f) is revised country, as well as the distribution and location of its to read "Suspicious Activity Report.". assets and liabilities that are located or booked elsewhere; 3. In section 225.4(f), remove the words "criminal referral (2) The extent to which the operations and assets of the form" and add, in their place, the words "suspicious foreign bank and any affiliates are subject to supervision activity report". by its home country supervisor; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

336 Federal Reserve Bulletin • April 1996 (3) Whether the appropriate authorities in the home restrictions as the Board, having considered the criteria country of such foreign bank are actively working to set forth in paragraph (b) of this section, determines to establish arrangements for the comprehensive, consoli- be appropriate in order to assure the safety and sounddated supervision of such bank and whether demonstra- ness of its U.S. operations. ble progress is being made; (2) Failure to enter into or comply with agreement. A (4) Whether the foreign bank has effective and reliable foreign bank that is required by the Board to enter into systems of internal controls and management informa- an agreement pursuant to paragraph (c)( 1) of this section tion and reporting, which enable its management prop- and either fails to do so or fails to comply with the terms erly to oversee its worldwide operations; of such agreement may be subject to enforcement action (5) Whether the foreign bank's home country supervisor in order to assure safe and sound banking operations has any objection to the bank continuing to operate in under 12 U.S.C. 1818, or to termination or a recommenthe United States; dation for termination of its U.S. operations under sec- (6) Whether the foreign bank's home country supervisor tion 211.25(a) and (e) of this subpart and section (7)(e) and the home country supervisor of any parent of the of the IBA (12 U.S.C. 3105(e)). foreign bank share material information regarding the operations of the foreign bank with other supervisory authorities; ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT (7) The relationship of the U.S. operations to the other operations of the foreign bank, including whether the Orders Issued Under Section 3 of the Bank Holding foreign bank maintains funds in its U.S. offices that are Company Act in excess of amounts due to its U.S. offices from the foreign bank's non-U.S. offices; Mille Lacs Bancorporation, Inc. (8) The soundness of the foreign bank's overall financial Onamia, Minnesota condition; (9) The managerial resources of the foreign bank, includ- Order Approving the Formation of a Bank Holding ing the competence, experience, and integrity of the Company officers and directors and the integrity of its principal shareholders; Mille Lacs Bancorporation, Inc. ("Applicant"), has applied (10) The scope and frequency of external audits of the under section 3(a)(1) of the Bank Holding Company Act foreign bank; (12 U.S.C. § 1842(a)(1) et seq.) ("BHC Act") to become a (11) The operating record of the foreign bank generally bank holding company by acquiring all the voting shares of and its role in the banking system in its home country; Mille Lacs Bancshares, Inc. ("Bancshares"), and thereby (12) The foreign bank's record of compliance with rele- indirectly acquire First State Bank of Onamia ("Bank"), vant laws, as well as the adequacy of its money launder- all of Onamia, Minnesota.1 ing controls and procedures, in respect of its worldwide Notice of the application, affording interested persons an operations; opportunity to submit comments, has been published (60 (13) The operating record of the U.S. offices of the Federal Register 46,596 (1995)). The time for filing comforeign bank; ments has expired, and the Board has considered the appli- (14) The views and recommendations of the Office of cation and all comments received in light of the factors set the Comptroller of the Currency or the state banking forth in section 3(c) of the BHC Act. regulators in those states in which the foreign bank has Applicant is a nonoperating corporation formed for the operations, as appropriate; purpose of acquiring Bancshares. Based on all the facts of (15) Whether the foreign bank, if requested, has pro- record, the Board believes that consummation of the provided the Board with adequate assurances that such posal would not result in any significantly adverse effects information will be made available on the operations or on competition or the concentration of banking resources activities of the foreign bank and any of its affiliates as in any relevant banking market. Accordingly, the Board the Board deems necessary to determine and enforce concludes that competitive considerations are consistent compliance with the International Banking Act, the Bank with approval. Holding Company Act, and other applicable federal As part of this proposal, the Mille Lacs Band of Ojibwe banking statutes; and Indians ("the Band"), a federally recognized Native Amer- (16) Any other information relevant to the safety and ican tribe with approximately 2,800 enrolled members, soundness of the U.S. operations of the foreign bank. (c) Restrictions on U.S. operations. (1) Terms of agreement. Any foreign bank that the Board 1. Immediately after consummation, Applicant would merge Bancdetermines is not subject to comprehensive supervision shares out of existence. Bank has received preliminary approval from the Oifice of the Comptroller of the Currency to convert from a bank or regulation on a consolidated basis by its home counchartered under the laws of Minnesota to a national banking associatry supervisor may be required to enter into an agreetion, subject to and contingent on the successful completion of Appliment to conduct its U.S. operations subject to such cant's acquisition of Bancshares. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 337 would acquire directly up to 100 percent of the shares of nally for the benefit of the Band's members.9 Based on Applicant. The Band's ownership of more than 25 percent these and all the facts of record, the Board concludes that of the voting shares of Applicant raises the issue of whether the Band would not become a bank holding company on the Band would be considered a "company" within the consummation of its proposal to acquire more than meaning of the BHC Act and, therefore, a bank holding 25 percent of the voting shares of Applicant. company. The Band would own and control Bank through Appli- Section 2(b) of the BHC Act defines "company" as cant, a registered bank holding company. The Band, its "any corporation, partnership, business trust, association, affiliates, Applicant, and Bank have made a number of or similar organization . . . , but shall not include any commitments to ensure that the activities of Applicant and corporation the majority of the shares of which are owned Bank would be consistent with the purposes of the BHC by the United States or by any state."2 The list of types of Act and other federal banking laws. The commitments entities that are within the definition of "company" does separate the Bank's lending activities from certain comnot include a reference to any type of sovereign govern- mercial activities of the Band, recognize that the Band and ment, indicating that Congress did not intend the definition its affiliates are subject to limitations imposed by sections to include sovereign governments. While the definition 23A and 23B of the Federal Reserve Act and the Board's specifically excludes a company the majority of which is Regulation O (Loans to Insiders), and provide the Board owned by the United States or by any state, it does not with adequate assurances that the Band and its affiliates specifically exclude the sovereign government owner of a will make available the information on their operations and company. This suggests that Congress believed that an activities that is necessary for the Board to determine and exclusion for sovereign governments was not necessary enforce compliance with applicable federal banking laws. because sovereign governments were not included within The Band also has recognized the jurisdiction of the Board the definition. to enforce compliance with the banking laws and agreed to the jurisdiction of the federal courts for purposes of en- On this basis, the Board has determined that foreign forcement of the banking laws. The Band also has made governments are not companies for purposes of the BHC Act.3 Native American tribes are unique, domestic sover- several commitments to assure the Board of the safe and sound operation of Bank and Applicant. In light of these eign entities that possess extensive self-government powcommitments, and based on all facts of record, the Board ers and have many of the attributes of a sovereign government.4 The Supreme Court has characterized Native concludes that the future prospects of Bank and Applicant, American tribes as "domestic, dependent nations"5 and, and all other supervisory factors the Board must consider thus, "much more than private, voluntary organizations."6 under section 3 of the BHC Act, are consistent with approval. The Band is a federally recognized Native American tribal government organized under the Indian Reorganiza- Financial and managerial considerations are also consistion Act of 1934,7 which is governed by both a constitution tent with approval, as are considerations relating to the and by-laws adopted by the Band's Legislative Branch. For convenience and needs of the community to be served and these reasons, the Board concludes that the Band should be other supervisory factors the Board is required to consider considered a sovereign government, and, therefore, ex- under section 3 of the BHC Act also are consistent with cluded from the BHC Act's definition of "company."8 In approval. this case, the Band would hold Applicant's shares commu- Based on the foregoing and all the facts of record, the Board has determined that this application should be, and hereby is, approved. The Board's approval is specifically 2. 12 U.S.C. § 1841(b). conditioned on compliance by Applicant with all the com- 3. Although the Board has approved applications in which foreign mitments made in connection with this application, includgovernment ownership of an applicant was noted, it has not applied the BHC Act to a foreign government that controls a bank or bank ing those made by the Band and its affiliates. For purposes holding company. See Letter dated August 19, 1988, from William W. of this action, the commitments and conditions relied on by Wiles, Secretary of the Board, to Patricia S. Skigen; see also Corpora- the Board in reaching this decision are deemed to be tion Bancaria de Espaha, 81 Federal Reserve Bulletin 598 (1995); conditions imposed in writing by the Board in connection Societe Generate, 67 Federal Reserve Bulletin 453 (1981). with its findings and decision, and, as such, may be en- 4. Native American tribes and the Federal government share a unique relationship—while tribes retain certain attributes of sover- forced in proceedings under applicable law. eignty, "all aspects of Indian sovereignty are subject to defeasance by Congress." National Farmers Union Ins. Co. v. Crow Tribe of Indians, 471 U.S. 845, 851 n.16 (1985) (quoting Escondido Mutual Water Co. dated August 19, 1988, from William W. Wiles, Secretary of the v. LaJolla Bands of Mission Indians, 466 U.S. 765, 788 n.30 (1984)); Board, to Patricia S. Skigen. see United States v. Wheeler, 435 U.S. 313, 323 (1977). 9. The stock of Applicant will be owned directly by the Band, and 5. Cherokee Nation v.Georgia, 30 U.S. (5 Pet.) 1 (1831) the Band's Executive Branch would be authorized to vote the shares 6. United States v. Mazurie, 419 U.S. 544, 557 (1975). under the Band's constitution and by-laws. Although the Executive 7. Act of June 18, 1934, ch. 576, § 16, 48 Stat. 987 (codified at Branch's members share certain attributes with trustees, in light of the 25 U.S.C. §461-178). unique form and structure of the Band's proposed stock holdings, the 8. On the other hand, if a company or similar organization that was recognized sovereignty of the Band, and other facts of record, the controlled by a Native American tribe owned a U.S. bank, that Board believes that no regulatory purpose would be served by requirorganization would be, as in the case of a company controlled by a ing a notice under the Change in Bank Control for changes in the foreign government, a "company" under the BHC Act. See Letter Executive Branch's membership. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

338 Federal Reserve Bulletin • April 1996 This transaction shall not be consummated before the $2.8 billion in deposits, representing approximately 1 percent fifteenth calendar day following the effective date of this of total deposits in the state. order, or later than three months after the effective date of North Fork and Extebank compete directly in the Metrothis order, unless such period is extended for good cause by politan New York-New Jersey banking market.3 After conthe Federal Reserve Bank of Minneapolis, acting pursuant summation of this proposal, this banking market would to delegated authority. remain unconcentrated as measured by the Herfin- By order of the Board of Governors, effective Feb- dahl-Hirschman Index ("HHI"),4 and numerous competiruary 28, 1996. tors would remain in the market. Based on all the facts of record, the Board concludes that consummation of this Voting for this action: Chairman Greenspan and Governors Lind- proposal is not likely to result in significantly adverse sey, Phillips and Yellen. Absent and not voting: Governor Kelley. effects on competition in the Metropolitan New York-New Jersey banking market or any other relevant banking mar- WILLIAM W. WILES ket. Secretary of the Board The Board also has reviewed the financial resources of the companies and banks involved in this proposal and the North Fork Bancorporation, Inc. effect of the proposed transaction on the future prospects of Mattituck, New York these organizations. North Fork and NFB are well capitalized and would remain well capitalized following consum- Order Approving the Acquisition of a Bank mation of this proposal.5 North Fork would not incur any additional debt as a result of this transaction. Based on all North Fork Bancorporation, Inc., Mattituck, New York the facts of record, including a review of relevant examina- ("North Fork"), a bank holding company within the meantion reports and other supervisory information, the Board ing of the Bank Holding Company Act ("BHC Act"), has concludes that financial considerations, including the fuapplied under section 3 of the BHC Act (12 U.S.C. § 1842) ture prospects of North Fork and NFB, are consistent with to acquire indirectly all the voting securities of Extebank, approval.6 The Board also has carefully reviewed the man- Stony Brook, New York.1 agerial resources of North Fork and NFB in light of confi- Notice of the applications, affording interested persons dential examination reports and other relevant supervisory an opportunity to submit comments, has been published (60 Federal Register 52,185 and 56,151 (1995)). The time for filing comments has expired, and the Board has consid- 3. The Metropolitan New York-New Jersey banking market is ered the applications and all comments received in light of approximated by New York City; Long Island, and Orange, Putnam, the factors set forth in the BHC Act. Rockland, Sullivan and Westchester Counties in New York; Bergen, North Fork, with total consolidated assets of approxi- Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, Warren and portions of Mercer mately $2.9 billion, is the 15th largest commercial banking Counties in New Jersey; Pike County in Pennsylvania; and portions of organization in New York State, controlling approximately Fairfield and Litchfield Counties in Connecticut. $2.4 billion in deposits, representing approximately 1 per- 4. The HHI for the Metropolitan New York-New Jersey banking cent of total deposits in commercial banking organizations market would remain at 536 points. Under the revised Department of in the state.2 After the transfer of the assets and liabilities Justice Merger Guidelines, 40 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is less than 1000 is related to its international and fiduciary businesses, Exteconsidered to be unconcentrated. The Department of Justice has bank would be the 43d largest commercial banking organi- informed the Board that a bank merger or acquisition will not be zation in New York State, with approximately $442 million challenged (in the absence of other factors indicating anticompetitive in total assets, and would control approximately effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Department of Justice $392 million in deposits, representing less than 1 percent has stated that the higher than normal HHI thresholds for screening of total deposits of commercial banking organizations in bank mergers for anticompetitive effects implicitly recognize the the state. Upon consummation of the proposal, North Fork competitive effect of limited-purpose lenders and other non-depository would become the 13th largest commercial banking organiza- financial entities. tion in New York State, and would control approximately 5. The Board received comments from Inner City Press/Community on the Move ("Protestant") contending that a dividend recently paid by Extebank to Banco Exterior may have left Extebank undercapitalized. The dividend was reviewed and approved by the FDIC and the 1. Extebank is a wholly owned subsidiary of Banco Exterior de Superintendent of the New York State Banking Department Espana, S.A., Madrid, Spain ("Banco Exterior"). Extebank proposes ("NYSBD") before its payment. Extebank did not become undercapto transfer all deposits and assets associated with its fiduciary and italized after payment of the dividend. international banking businesses to Banco Exterior before consumma- 6. Protestant suggests that Extebank has not properly transferred its tion of this proposal. Immediately after acquiring all of the Extebank fiduciary business to Banco Exterior. Protestant provided no substantishares, North Fork would merge Extebank with and into North Fork ation for this claim and bases the allegation solely on Protestant's Bank, Mattituck, New York ("NFB"), a wholly owned subsidiary of contention that Extebank quickly received the customer approvals North Fork. NFB, a state nonmember bank, has received approval necessary to effect this transfer. The record does not support any from the Federal Deposit Insurance Corporation ("FDIC") and the finding of impropriety in the transfer of this business. The Board and New York State Banking Board to effect this merger. the FDIC have sufficient supervisory authority to address any issues 2. Asset and state deposit data are as of June 30, 1995. Market under the federal banking laws that may be raised if any necessary deposit data are as of June 30, 1994. customer approvals for this transfer were not obtained. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 339 information.7 Based on all the facts of record, the Board Protestant alleges, on the basis of data filed under the concludes that managerial factors are consistent with ap- Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.) proval of this proposal,8 as are the other supervisory factors ("HMDA"), that NFB has failed to assist in meeting the that the Board is required to consider under section 3 of the housing-related credit needs of low- to moderate-income BHC Act.9 communities in the New York State counties of Nassau, Westchester, and Rockland. In addition, Protestant criti- Convenience and Needs Considerations cizes NFB's record of marketing and lending to minorities in New York State and alleges that NFB has failed to lend In acting on an application to acquire a depository institu- to individuals in communities with predominantly minority tion, the Board must consider the convenience and needs of populations ("minority communities") in Nassau, Queens, the communities to be served and take into account the Manhattan, the Bronx, and Brooklyn.11 Protestant also records of the relevant depository institutions under the alleges that NFB's lending activities violate the Equal Community Reinvestment Act (12 U.S.C. § 2901 et seq.) Credit Opportunity Act (15 U.S.C. § 1691 et seq.) and the ("CRA"). The CRA requires the federal financial supervi- Fair Housing Act (42 U.S.C. § 3601 et seq.) (together, the sory agencies to encourage financial institutions to help "fair lending laws").12 meet the credit needs of the local communities in which The Board has carefully reviewed the CRA performance they operate, consistent with their safe and sound opera- record of NFB, Protestant's comments and North Fork's tion. To accomplish this end, the CRA requires the appro- responses, and all other relevant facts of record in light of priate federal supervisory authority to "assess the institu- the CRA, relevant fair lending laws and related regulatory tion's record of meeting the credit needs of its entire materials, the Board's regulations, and the Statement of the community, including low- to moderate-income neighbor- Federal Financial Supervisory Agencies Regarding the hoods, consistent with the safe and sound operation of such Community Reinvestment Act ("Agency CRA Stateinstitution," and to take that record into account in its ment").13 evaluation of bank expansion proposals.10 Evaluation of CRA Performance A. Examination Record of CRA Performance 7. Protestant contends that North Fork conducted an inadequate due diligence review of Bayside Federal Savings Bank, Queens, New The Agency CRA Statement provides that a CRA examina- York ("Bayside"), before its acquisition of that institution in Novem- tion is an important and often controlling factor in the ber 1994. Protestant also contends that North Fork and Extebank have consideration of an institution's CRA record, and that taken certain improper actions in anticipation of the approval of this reports of these examinations will be given great weight in proposal, including the implementation by Extebank of changes in its the applications process.14 NFB received a "satisfactory" employee retirement plans and mailing Extebank depositors information about the proposed transaction. In addition, Protestant asserts that rating from the FDIC, its primary federal supervisor, in its its allegations relating to the convenience and needs factor and the most recent examination for CRA performance, as of Norecent departure of certain officers of North Fork and Extebank raise vember 28, 1994.15 Extebank also received a "satisfactoadverse managerial concerns. In reviewing the financial and managery" rating from the FDIC at its most recent CRA perforrial factors in this case, the Board has considered these comments mance examination, as of March 13, 1995. carefully in light of all the facts of record, including relevant examination reports and supervisory information. 8. Protestant alleges that North Fork has violated certain passivity B. HMDA Data and Lending Activities commitments it made to the Board in connection with its acquisition of voting shares of Suffolk Bancorp ("Suffolk") by publicly express- The Board has carefully considered Protestant's allegations ing an interest in acquiring Suffolk and by subsequently agreeing to permit Suffolk to repurchase all of its stock from North Fork. See about NFB's lending in low- to moderate-income commu- North Fork Bancorporation, Inc., 81 Federal Reserve Bulletin 734 nities and to minorities in New York in light of 1993, 1994, (1995). The Board has carefully reviewed these allegations in light of all the facts of record, including a review by the Federal Reserve Bank of New York of North Fork's compliance with the commitments and other confidential supervisory information. Based on all the facts of record, the Board concludes that North Fork's actions have not 11. These areas include the South Bronx, defined as Community constituted the exercise of a controlling influence over Suffolk in Districts 1-4, East and Central Harlem in Manhattan, and the Bushviolation of the commitments made by North Fork or the BHC Act. wick, Bedford-Stuyvesant, Brownsville, and East New York sections 9. Protestant asserts that the amount of a particular loan transaction of Brooklyn. reflected in NFB's 1994 loan application register was unsafe and 12. Protestant also submitted a letter from an anonymous party unsound based on the borrower's stated income. The loan application alleging that certain customers of Extebank are not in favor of the register provides only limited information, which is insufficient to proposed transaction and that consummation of this proposal would permit the evaluation of any single loan transaction. In addition, the result in the loss of services currently provided by Extebank, branch transaction referred to by Protestant is isolated in NFB's loan applica- closures and job losses. tion register of over 1,000 transactions. Based on all the facts of 13. 54 Federal Register 13,742 (1989). record, the Board concludes that this single transaction does not reflect 14. Id. at 13,745. adversely on the financial or managerial resources or safety and 15. The NYSBD also assigned NFB a "satisfactory" rating in its soundness of North Fork or NFB. most recent assessment of the bank's compliance with the CRA, as of 10. 12 U.S.C. § 2903. June 30, 1994, pursuant to section 28-b of New York Banking Law. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

340 Federal Reserve Bulletin • April 1996 and preliminary 1995 HMDA data for NFB.16 The 1994 Bronx and 5 percent of their loans in Manhattan in minor- CRA performance examination by the FDIC concluded, on ity census tracts, based on 1994 HMDA data.22 the basis of 1993 HMDA data, that NFB had achieved an HMDA data for NFB, however, also generally indicate overall satisfactory level of performance in meeting the some disparities in the rate of loan originations, denials, credit needs of low- to moderate-income communities. The and applications by racial group and income level. The data for 1993, 1994, and 1995 generally indicate that NFB Board is concerned when an institution's record indicates is assisting in meeting the housing- related credit needs of disparities in lending to minority applicants and believes low- to moderate-income communities. For example, 1994 that all banks are obligated to ensure that their lending HMDA data indicate that approximately 24 percent of practices are based on criteria that assure not only safe and NFB's loan originations in the five counties currently sound banking, but also equal access to credit by creditworwithin its delineated community were in low- to moderate- thy applicants regardless of race. The Board recognizes, income census tracts.17 This compares favorably to lenders however, that HMDA data alone provide an incomplete in the aggregate, which in 1994 originated approximately measure of an institution's lending in its community and 8 percent of their HMDA-reportable loans in this five- have limitations that make the data an inadequate basis, county area in low- to moderate-income census tracts.18 In absent other information, for concluding that an institution Suffolk, where the majority of NFB's branches are located, has engaged in illegal discrimination in making lending approximately 30 percent of NFB's loan originations in decisions. 1994 and 33 percent in 1993 were in low- to moderate- Because of the limitations of HMDA data, the Board has income census tracts.19 In addition, a comparison of 1993 carefully reviewed other information, particularly examinaand 1994 HMDA data for NFB indicates an increase in the tion reports that provide an on-site evaluation of complinumber of applications received from borrowers in low- to ance by the bank with the fair lending laws. FDIC examinmoderate-income census tracts in Nassau, Westchester, and ers found no evidence of prohibited discriminatory Queens.20 practices or of any practices intended to discourage appli- Preliminary 1995 HMDA data filed by NFB indicate that cations for the types of credit set forth in the bank's CRA approximately 53 percent of the bank's HMDA-reportable statement, in NFB's most recent CRA performance examiloan originations in the Bronx were in minority census nation. During its most recent CRA performance assesstracts, and approximately 24 percent of its HMDA- ment of NFB, the NYSBD also found no evidence of reportable loan originations in Manhattan were in minority illegal discrimination or any lending policies or underwritcensus tracts.21 In comparison, lenders in the aggregate ing standards that would tend to be biased against any class originated approximately 52 percent of their loans in the of persons protected by the fair lending laws. FDIC examiners found that NFB solicits credit applications from all segments of its local community, including low- to moderate-income neighborhoods, and that NFB had 16. Preliminary 1995 HMDA data filed by North Fork reflects lending through November 30, 1995. achieved a reasonable penetration of all segments of its 17. The counties are Suffolk, Nassau, Westchester, Rockland, and delineated community, including low- to moderate-income Queens counties in New York State. communities, based on a review of the bank's aggregate 18. In 1993, approximately 29 percent of NFB's HMDA-reportable 1993 HMDA data. loan originations in this five-county area were for properties in low- to moderate-income census tracts. In 1993, lenders in the aggregate Since 1993, NFB has initiated a number of loan prooriginated approximately 7 percent of their loans in this five-county grams designed to assist in meeting the housing-related area in low- to moderate-income census tracts, based on 1993 HMDA credit needs of low- to moderate-income borrowers. In data. 1994, the bank began participating in the Federal National 19. Approximately 21 percent of the census tracts in Suffolk are Mortgage Association ("FNMA") Community Homebuyer low- to moderate-income census tracts, and lenders in the aggregate originated approximately 16 percent of their loans in Suffolk in low- program, which provides affordable mortgages to qualifyto moderate-income census tracts in 1994 and 1993. ing low- to moderate-income borrowers, and permits loan- 20. The 1994 FDIC performance examination encouraged the bank to-value ratios of up to 97 percent. Also, in 1994, NFB to increase its level of lending in low- to moderate-income areas in began its Alternate Financing for Overextension of Revolv- Nassau, Westchester, and Rockland, based on a review of the bank's 1993 HMDA data. As noted above, NFB's 1994 HMDA data indicate ing Debt ("AFFORD") program. This portfolio mortgage an increase in the number of applications received from low- to product is designed specifically for low- to moderatemoderate-income census tracts in Nassau and Westchester, and the income borrowers, uses flexible underwriting criteria, and percentage of loan applications received by NFB in 1994 from low- to seeks to provide mortgages to persons who do not meet moderate-income census tracts in Westchester exceeded the percent- FNMA and Federal Home Loan Mortgage Corporation age received by lenders in the aggregate in this county in 1994. Rockland County contains only one low- to moderate-income census underwriting guidelines. NFB also developed an tract, and this tract generated less than one-half of 1 percent of HMDA-reportable applications received by all lenders in Rockland in 1994. NFB has developed programs and entered into commitments 22. Comparisons are to aggregate 1994 data because aggregate data with the NYSBD that are designed to increase the bank's lending in for 1995 are not yet available. Preliminary 1995 HMDA data for NFB low- to moderate-income communities in Nassau, Westchester, and indicate that approximately 62 percent of NFB's loan originations in Rockland counties. Brooklyn were in minority census tracts. In comparison, lenders in the 21. In this context, "minority census tracts" is defined as census aggregate originated approximately 32 percent of their loans in Brooktracts with a minority population exceeding 75 percent. lyn in minority census tracts, based on 1994 HMDA data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 341 adjustable-rate mortgage product ("ARM") for first-time NFB has entered into a commitment with the NYSBD to home buyers and low- to moderate-income borrowers that originate $20 million in loans in low- to moderate-income uses flexible underwriting standards, including higher debt- census tracts in Nassau, Westchester, and Rockland counto-income ratios.23 In the third quarter of 1995, NFB also ties between 1996 and 1998.26 Pursuant to this commitreceived approval to offer below- market-rate mortgage ment, NFB will implement a program designed to increase loans with reduced down payment requirements in con- the bank's lending to low- to moderate-income and minorjunction with the State of New York Mortgage Agency. In ity residents of these counties. NFB has committed, for 1994, NFB originated 12 loans, totalling approximately example, that it will launch an advertising campaign in $1.2 million, under these affordable mortgage programs.24 these counties, hire two additional loan originators for the NFB also is a certified Small Business Administration counties, and provide commission incentives to originators ("SBA") lender, and made four SB A loans for a total of of loans to low- to moderate-income and minority individmore than $300,000 in 1994. Moreover, in 1993 and 1994, uals. In addition, the bank will conduct two first-time home NFB provided approximately $750,000 in funding to the buyer seminars in each county during each year of the New York Business Development Corporation, which program. The bank's progress in implementing this promakes loans to small- and medium-sized businesses in gram will be monitored by a committee consisting of the New York. bank's senior management, including its president and NFB has established policies and procedures designed to chief executive officer, and the bank will submit periodic ensure that bank personnel do not discriminate in the progress reports to the NYSBD. lending process on a basis prohibited by the fair lending laws. All branch employees, for example, including em- C. Other Aspects of CRA Performance ployees hired through the acquisition of other banking organizations, are required to participate in a video-based NFB ascertains the credit needs of its delineated commufair lending seminar. Bank tellers also receive instructions nity primarily through a call program that maintains ongoon the requirements of the CRA, HMDA, and fair lending ing contact with business owners and civic, community, laws during this introductory training program. In 1994, and religious leaders. During the first six months of 1994, NFB began conducting annual fair lending seminars for NFB contacted 23 community organizations and more than key branch employees. Attendance at annual seminars is 100 charitable organizations.27 Examiners noted that NFB mandatory for branch managers, assistant branch manag- maintained regular contact with the Community Preservaers, and client service representatives, and approximately tion Corporation ("CPC"), the Mount Vernon Economic 356 employees attended the seminars conducted in 1995. Council, the Long Island Mid-Suffolk Business Associa- In 1995, the bank's lending division conducted fair lending tion, and the Chamber of Commerce in the bank's delinsessions for all lending personnel involved with the bank's eated communities. In addition, examiners noted that NFB consumer, commercial, and residential lending programs. maintained frequent contacts with the Board of Realtors of Self-testing materials are distributed to employees during Long Island to determine the housing-related credit needs each training program. NFB's compliance officer also con- of the bank's Long Island communities. ducts annual fair lending compliance audits of the bank's Examiners also concluded that NFB's marketing prolending departments, and the results of the reviews are gram was designed to inform all segments of its delineated given to the bank's management and board of directors.25 community of the bank's credit products, and that the bank solicited credit applications from all segments of its local community, including low- to moderate-income neighborhoods. For example, NFB advertised its credit products in local newspapers, including free publications, and spon- 23. Application fees on this ARM may be waived if the loan is generated at an NFB-sponsored home buyer seminar. sored first-time home buyer seminars to inform community 24. During the first ten months of 1995, NFB originated an addi- members of the affordable housing products offered by the tional nine loans, totalling over $1 million, under these programs. bank.28 25. Protestant contends that the multi-family lending program of NYSBD examiners noted that the bank had a total of Bayside Federal Savings Bank ("Bayside"), prior to North Fork's $57.5 million in commitments outstanding to small busiacquisition of Bayside, illegally "redlined" predominantly minority areas in New York, and that North Fork continued these practices after nesses, non-profit organizations that benefit low- to acquiring Bayside. Protestant alleges that a current shareholder of moderate-income individuals, minorities, and other disad- North Fork ("Shareholder") participated in the discriminatory lending practices of Bayside and other financial institutions, and that Shareholder and his affiliates are involved in the multi-family lending activities of North Fork. North Fork has denied these allegations. 26. Specifically, NFB has committed to lend at least $9.7 million, Preliminary 1995 HMDA data filed by North Fork indicate that a $9.2 million, and $1.1 million in low- to moderate-income census substantial percentage of NFB's multi-family loan originations in the tracts in Nassau, Westchester, and Rockland counties, respectively, Bronx (56 percent), Brooklyn (62 percent), and Manhattan (28 per- during the three-year period ending December 31, 1998. cent) were for properties in census tracts with a minority population 27. In 1993, NFB contacted more than 190 religious and charitable exceeding 75 percent. North Fork also states that Shareholder, who groups, and 37 local community groups. controls approximately 2.6 percent of North Fork's outstanding shares, 28. NYSBD examiners noted that the bank held two first-time home holds no position with North Fork or NFB and does not control the buyer seminars in the first quarter of 1994, and an additional four multi-family lending activities of North Fork or NFB. seminars were scheduled for the remainder of 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

342 Federal Reserve Bulletin • April 1996 vantaged communities, as of May 31, 1994. NFB partici- Board in connection with this proposal and found not to pated in a variety of community development activities, arbitrarily exclude low- to moderate-income communieither through loans to community development organiza- ties.33 Furthermore, NFB's most recent performance astions or through direct loans to nonprofit or community sessment by the NYSBD and performance examination by service organizations. For example, in 1994, NFB commit- the FDIC concluded that the bank's community delineation ted $816,000 to the revolving loan and permanent financ- was reasonable and did not arbitrarily exclude low- to ing lending facilities of the CPC, which provides construc- moderate-income neighborhoods. After this performance tion and permanent loans for the rehabilitation of low- to examination and assessment, NFB acquired branches in moderate-income housing and funding for the purchase Queens County through its acquisition of Bayside in Noand rehabilitation of foreclosed properties.29 Furthermore, vember 1994, and NFB subsequently adjusted its local NFB provided $146,000 in permanent funding to the delineation to include all of Queens County.34 Greenport Affordable Housing Project in 1994 for the The reasonableness of an institution's delineated local construction of two residential properties. In 1994, NFB community depends on a number of factors, including a also provided a $157,000 commercial mortgage and a careful review of the areas surrounding the locations of an $32,000 unsecured term note to the Selden-Centereach institution's main office, branches and deposit-taking auto- Community Coalition, a nonprofit foster care residence,30 mated teller machines. The review of an institution's delinand a $600,000 revolving line of credit to A Planned eated community also requires consideration of whether Program for Life Enrichment, Inc., a nonprofit social ser- the institution has arbitrarily excluded low- and moderatevice provider. income areas, taking into account the institution's size and financial condition. The Board believes that an assessment D. Community Delineation of an institution's delineated community can be most effectively considered in an on-site examination by the institu- Protestant alleges that NFB improperly excludes the Bronx, tion's primary federal supervisor. The Board also believes Brooklyn, Manhattan, and portions of Queens from its that an on-site examination provides a better opportunity to delineated local community for purposes of the CRA.31 consider whether an institution's delineated community NFB currently operates branches in Suffolk, Nassau, reflects illegal discrimination in light of all the institution's Westchester, Rockland, and Queens counties, and the lending activities. bank's delineation consists of those counties. NFB selected NFB has followed applicable regulations in establishing those counties for its delineated community using a meth- its community delineation. NFB's primary supervisors odology permitted by applicable regulations.32 The bank's have reviewed this delineation during the bank's most delineation was reviewed by the New York State Banking recent CRA examinations and since the completion of the examinations and found the bank's delineation to be reasonable. In light of NFB's recent acquisitions, the Board 29. In 1995, NFB committed approximately $1 million for CPC's expects NFB to review its delineated community under financing activities. applicable regulations with its primary federal supervisor 30. The term note was used by the Coalition for partial funding of at its upcoming CRA examination. The Board notes that its purchase of a safe house for abused and abandoned children. NFB has recognized in the past that an acquisition may 31. Protestant also asserts that North Fork should be required to require NFB to expand its delineated community beyond submit its branch closing plans. The Board also received comments from the East Yaphank Civic Association, Yaphank, New York, that of the acquired institution. As noted above, NFB contending that its community would be adversely affected if Exte- recently expanded its local community to include all of bank's Yaphank branch were closed. North Fork has indicated that it Queens County as a result of the Bayside acquisition, and does not plan to close any branch in a low- to moderate-income census the bank has indicated that it would reassess Extebank's tract in connection with this proposal, and that no decision has been made regarding the Yaphank branch. The Board notes that branch closing decisions would be made under NFB's branch closure policy, which requires that the bank solicit the views of community leaders 33. Protestant alleges that North Fork has violated fair lending laws and customers to determine if reasonable alternatives exist to any by expanding its branch presence outside Suffolk County in a manner proposed branch closure. NFB's branch closure policy also requires that avoids minority and low- to moderate-income communities, parthat the bank provide customers, the NYSBD, and the FDIC at least ticularly the Bronx. North Fork acquired its branches in Westchester, 90 days prior notice of any proposed branch closure. Rockland, and Queens through the acquisition of other banking orga- 32. NFB has 28 branches in Suffolk, seven branches in Nassau, nizations. FDIC and NYSBD examiners found no evidence of prohibseven branches in Queens, four branches in Westchester, and three ited discrimination by NFB in its delineation, branch locations or branches in Rockland. A bank may delineate its local community by other activities. As discussed above, NFB has adopted policies deusing any one of the following methods: signed to prevent lending discrimination on a basis prohibited by the (1) The existing boundaries, such as those of standard metropolitan fair lending laws. statistical areas or counties in which the bank's office or offices are 34. The Board notes that, prior to North Fork's acquisition of located, and adjacent areas if appropriate; Bayside, the Office of Thrift Supervision had concluded, at the most (2) The local areas around each office or group of offices where it recent CRA evaluation of Bayside, as of November 1993, that Baymakes a substantial portion of its loans and all other areas equidis- side's delineated community, which included all of New York City tant from its offices; and (including the Bronx, Manhattan, and Brooklyn), and Nassau, Suffolk, (3) Any other reasonable delineation that meets the purpose of the and Westchester counties, was unreasonably large. Bayside accord- CRA and does not exclude low- and moderate-income neighbor- ingly reduced the size of its delineation to include only portions of hoods. See, e.g., 12 C.F.R. 228.3(b). Queens County. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 343 delineated local community in Manhattan after operating and hereby are, approved.38 The Board's approval is specif- Extebank's Manhattan branch for a period of time.35 NFB ically conditioned on compliance by North Fork and NFB also has made a commitment to file with the NYSBD a with the commitments made in connection with these apcomprehensive CRA plan that will include a study of its plications, as well as the conditions discussed in this order. delineated community.36 For purposes of this action, the commitments and conditions relied on in reaching this decision are deemed to be Conclusion Regarding Convenience and Needs conditions imposed in writing by the Board and, as such, Considerations may be enforced in proceedings under applicable law. These transactions shall not be consummated before the The Board has carefully considered all the facts of record, fifteenth calendar day following the effective date of this including Protestant's comments, in reviewing the conve- order, or later than three months after the effective date of nience and needs factor under the BHC Act. Based on a this order, unless such period is extended for good cause by review of North Fork's entire record of performance, in- the Board or the Reserve Bank, acting pursuant to delecluding information submitted by North Fork and Protes- gated authority. tant, the Board concludes that North Fork's record of By order of the Board of Governors, effective Februperformance in helping to meet the credit needs of its ary 26, 1996. community, including low- and moderate-income neighborhoods, is consistent with approval of these applications. Voting for this action: Chairman Greenspan and Governors Kelley, The Board expects North Fork to continue to strengthen its Lindsey, Phillips, and Yellen. CRA performance and will monitor North Fork's progress in considering future applications by North Fork to acquire JENNIFER J. JOHNSON deposit-taking facilities.37 To permit the Board to monitor Deputy Secretary of the Board North Fork's progress, North Fork must file with the Fed- UJB Financial Corp. eral Reserve Bank of New York ("Reserve Bank") the Princeton, New Jersey CRA plan and other information filed by NFB with the NYSBD for a period of two years from the date of this United Jersey Bank order. In addition, North Fork must file quarterly reports Hackensack, New Jersey with the Reserve Bank on its lending in minority communities within the five counties currently in its delineated Order Approving the Acquisition and Merger of a Bank community for two years from the date of this order. Based on the foregoing and all the facts of record, the UJB Financial Corp., Princeton, New Jersey ("UJB Finan- Board has determined that these applications should be, cial") a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has applied under section 3 of the BHC Act (12 U.S.C. § 1842) to 35. North Fork has indicated that it will modify its delineated community to reflect its proposed acquisition of Extebank by adopting acquire Flemington National Bank and Trust Company, Extebank's current delineated area in Manhattan. FDIC examiners Flemington, New Jersey ("Flemington"). UJB Financial's found Extebank's delineation of this area to be reasonable at Exte- lead bank subsidiary, United Jersey Bank, Hackensack, bank's most recent CRA performance examination, as of March 1995. New Jersey ("UJB Bank"), a state member bank, also has 36. A preliminary plan must be submitted to the NYSBD by applied pursuant to section 18(c) of the Federal Deposit March 31, 1996. 37. Protestant contends that the Board should delay consideration of Insurance Act (12 U.S.C. § 1828(c)) (the "Bank Merger this proposal and consider it in conjunction with NFB's proposed purchase of ten branches from First Nationwide Bank, FSB, Dallas, Texas ("First Nationwide"). Protestant also suggests that the Board delay consideration of this proposal until Protestant's suit against the 38. Protestant has requested that the Board hold a public hearing or NYSBD stemming from its approval of this proposal is resolved and meeting on these applications. Section 3(b) of the BHC Act does not the Board obtains additional information from North Fork, including require the Board to hold a hearing or meeting on an application information about North Fork's multi-family lending activities and its unless the appropriate supervisory authority of the bank to be acquired relationship with Shareholder or his affiliates. Because the First Na- makes a timely written recommendation of denial of the application. tionwide branches would be acquired directly by NFB, a state non- In this case, the Board has not received such a recommendation. member bank, no application to the Federal Reserve System is re- Generally, under the Board's Rules of Procedure, the Board may, in its quired for that proposal. That proposal is subject to approval by the discretion, hold a public hearing or meeting on an application to FDIC, which is the primary federal supervisor of NFB. The Board clarify factual issues related to the application and to provide an notes that Protestant has filed extensive comments on this branch opportunity for testimony, if appropriate. 12 C.F.R. 262.3(e) and acquisition with the FDIC. The Board is required under applicable law 262.25(d). Protestant has had an opportunity to present written suband its processing procedures to act on applications submitted under missions, and has submitted substantial written comments that have the BHC Act within specified time periods. As discussed above, the been considered by the Board. Protestant's request fails to demon- Board has carefully reviewed the record of this case, including Protes- strate why its written submissions do not adequately present its tant's comments relating to North Fork's multi-family lending activi- allegations or why a public hearing or meeting is otherwise warranted ties. Based on all the facts of record, the Board concludes that the in this case. Based on all the facts of record, the Board has determined record is sufficient to act on this proposal at this time, and that delay or that a public hearing or meeting is not necessary to clarify the factual denial of this proposal on the grounds of informational insufficiency is record in these applications, and is not warranted in this case. Accordnot warranted. ingly, Protestant's request for a public hearing or meeting is denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

344 Federal Reserve Bulletin • April 1996 Act"), and section 9 of the Federal Reserve Act (12 U.S.C. ington is the 111th largest insured depository institution in § 321) to merge with Flemington and to establish branches the market, controlling $241.7 million in deposits, repreat the locations set forth in the Appendix. senting less than 1 percent of market deposits. Upon con- Notice of the applications, affording interested persons summation of these proposals, UJB Financial would rean opportunity to submit comments, has been published main the sixth largest commercial banking organization in (60 Federal Register 58,361 (1995)). As required by the the market, controlling approximately $13.6 billion, repre- Bank Merger Act, reports on the competitive effects of the senting approximately 4.6 percent of market deposits. The merger were requested from the United States Attorney Herfindahl-Hirschman Index ("HHI") would increase by General, the Office of the Comptroller of the Currency, and less than 1 point to 783.5 Based on all the facts of record, the Federal Deposit Insurance Corporation ("FDIC"). The the Board concludes that consummation of this proposal time for filing comments has expired, and the Board has would not have a significantly adverse effect on competiconsidered this proposal and all comments received in light tion or the concentration of banking resources in any of the factors set forth in the BHC Act, the Bank Merger relevant market. Act and section 9 of the Federal Reserve Act. The financial and managerial resources and future pros- UJB Financial, with total consolidated assets of pects of UJB Financial and Flemington, and their respec- $21.2 billion, controls subsidiary banks in New Jersey and tive subsidiaries are consistent with approval of this pro- Pennsylvania.1 UJB Financial is the second largest com- posal, as are the other supervisory factors the Board must mercial banking organization in New Jersey, controlling consider under the BHC Act, Bank Merger Act, and the $15.1 billion in deposits, representing 11.9 percent of total Federal Reserve Act. Considerations relating to the convedeposits in insured depository institutions in the state.2 nience and needs of the communities to be served are also Flemington is the 67th largest insured depository institu- consistent with approval. tion in New Jersey, controlling $253.2 million in deposits, Based on the foregoing and other facts of record, the representing less than 1 percent of total deposits in insured Board has determined that the applications should be, and depository institutions in the state. Upon consummation of hereby are, approved.6 The Board's approval is specifically this proposal, UJB Financial would remain the second conditioned on compliance with all the commitments made largest commercial banking organization in New Jersey, by UJB Financial in connection with this application. For controlling deposits of approximately $15.4 billion, repre- purposes of this action, the commitments and conditions senting approximately 12.1 percent of total deposits in relied on in reaching this decision shall be deemed to be insured depository institutions in the state. conditions imposed in writing by the Board and, as such, UJB Financial and Flemington compete in the New may be enforced in proceedings under applicable law. York-New Jersey Metropolitan banking market,3 where The transactions shall not be consummated before the UJB Financial is the sixth largest commercial banking fifteenth calendar day following the effective date of this organization, controlling $13.4 billion in deposits, repre- order, or later than three months after the effective date of senting 3.9 percent of the total deposits in insured deposi- this order, unless such period is extended for good cause by tory institutions in the market ("market deposits").4 Flem- the Federal Reserve Bank of New York, acting pursuant to delegated authority. 1. Asset data are as of September 30, 1995. All data have been updated to reflect the Board's approval of UJB Financial's application to acquire Summit Bancorporation, Summit, New Jersey. UJB Financial Corp., 82 Federal Reserve Bulletin 345 (1996) ("Summit Order"). 2. State deposit data are as of June 30, 1995. In this context, insured depository institutions include commercial banks, savings banks, and 5. Under the revised Department of Justice Merger Guidelines, savings associations. 49 Federal Register 26,823 (June 29, 1984), a market in which the 3. The New York-New Jersey Metropolitan banking market in- post- merger HHI is less than 1000 is considered unconcentrated. The cludes Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Justice Department has informed the Board that a bank merger or Morris, Ocean, Passaic, Somerset, Sussex, Union, and Warren Coun- acquisition generally will not be challenged (in the absence of other ties, and seven municipalities in Mercer County, all in New Jersey; factors indicating anti-competitive effects) unless the post-merger Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens, HHI is at least 1800 and the merger increases the HHI by more than Richmond, Rockland, Suffolk, Sullivan, Ulster, and Westchester 200 points. The Justice Department has stated that the higher than Counties in New York; Pike County, Pennsylvania; and 22 municipal- normal threshold for an increase in the HHI when screening bank ities in Fairfield and Litchfield Counties in Connecticut. mergers and acquisitions for anticompetitive effects implicitly recog- 4. Market deposit data are as of June 30, 1994. Market share data nizes the competitive effect of limit-purpose lenders and other nonare based on calculations in which the deposits of thrift institutions are depository financial entities. included at 50 percent. The Board previously has indicated that thrift 6. The Board received comments from an individual ("Protestant") institutions have become, or have the potential to become, major requesting that this proposal be denied or delayed until the Board can competitors of commercial banks. See Midwest Financial Group, 75 conduct an investigation and hold a hearing or public meeting on the Federal Reserve Bulletin 386 (1989); National City Corporation, 70 issues raised in her comments. These comments were carefully consid- Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly ered by the Board in connection with the proposal by UJB Financial to included thrift deposits in the calculation of market concentration on a acquire Summit. Based on all the facts of record, and for the reasons 50-percent weighted basis. See e.g., First Hawaiian, Inc., 77 Federal explained in the Summit Order, which are incorporated herein by Reserve Bulletin 51 (1991). reference, Protestant's requests relating to this proposal are denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 345 By order of the Board of Governors, effective Febru- Bank Merger Act, reports on the competitive effects of the ary 5, 1996. merger were requested from the United States Attorney General, the Office of the Comptroller of the Currency, and Voting for this action: Chairman Greenspan and Governors Kelley, the Federal Deposit Insurance Corporation ("FDIC"). The Lindsey, Phillips, and Yellen. time for filing comments has expired, and the Board has considered this proposal and all comments received in light JENNIFER J. JOHNSON of the factors set forth in the BHC Act, the Bank Merger Deputy Secretary of the Board Act and section 9 of the Federal Reserve Act. UJB Financial, with total consolidated assets of Appendix $15.5 billion, controls subsidiary banks in New Jersey and Pennsylvania.2 UJB Financial is the third largest commer- Main Office, 56 Main Street, Flemington, New Jersey cial banking organization in New Jersey, controlling Circle Office, 224 South Main Street, Flemington, New $10.6 billion in deposits, representing 8.4 percent of total Jersey deposits in insured depository institutions in the state.3 Clinton Point Office, 189 Center Street, Clinton Township, Summit is the seventh largest commercial banking organi- New Jersey zation in New Jersey, controlling $4.5 billion in deposits, Ringoes Office, Highway 179 and Boss Road, East Amwell representing 3.5 percent of total deposits in insured depos- Township, New Jersey itory institutions in the state. Upon consummation of this Sergeantsville Office, 775 Rte 523, Delaware Township, proposal, UJB Financial would become the second largest New Jersey commercial banking organization in New Jersey, control- Shop Rite Office, Commerce St., Rte 202 & 31, Raritan ling deposits of $15.1 billion, representing 11.9 percent of Township, New Jersey total deposits in insured depository institutions in the state. Three Bridges Office, 698 Broad Street, Three Bridge, New UJB Financial and Summit compete in the New York- Jersey New Jersey Metropolitan banking market.4 In the New Lambertville Office, 333 North Main St., Suite 1, Larn- York-New Jersey Metropolitan market, UJB Financial is bertville, New Jersey the seventh largest commercial banking organization, controlling $9 billion in deposits, representing 2.6 percent of UJB Financial Corp. the total deposits in insured depository institutions in the Princeton, New Jersey market ("market deposits").5 Summit is the 14th largest commercial banking organization in the market, control- United Jersey Bank ling $4.4 billion in deposits, representing 1.3 percent of Hackensack, New Jersey market deposits. On consummation of these proposals, UJB Financial would become the sixth largest commercial Order Approving the Merger of Bank Holding banking organization in the market, controlling $13.4 bil- Companies, the Merger of Banks, and Establishment of lion in deposits, representing 3.9 percent of market depos- Branches its, and numerous banking institutions would remain in the market. The Herfindahl-Hirschman Index ("HHI") would UJB Financial Corp., Princeton, New Jersey ("UJB Financial"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has applied under section 3 of the BHC Act (12 U.S.C. § 1842) to merge with Summit Bancorporation ("Summit"), and 2. Asset data are as of September 30, 1995. 3. State deposit data are as of June 30, 1995. In this context, insured thereby indirectly acquire Summit Bank ("Summit depository institutions include commercial banks, savings banks, and Bank"), both in Chatham, New Jersey.1 UJB Financial's savings associations. lead subsidiary bank, United Jersey Bank, Hackensack, 4. The New York-New Jersey Metropolitan banking market in- New Jersey ("UJB Bank"), a state member bank, also has cludes Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, and Warren Counapplied pursuant to section 18(c) of the Federal Deposit ties, and seven municipalities in Mercer County, all in New Jersey; Insurance Act (12 U.S.C. § 1828(c)) (the "Bank Merger Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens, Act"), and section 9 of the Federal Reserve Act (12 U.S.C. Richmond, Rockland, Suffolk, Sullivan, Ulster, and Westchester §321) to merge with Summit Bank, and to establish Counties in New York; Pike County, Pennsylvania; and 22 municipalbranches at the locations set forth in the Appendix. ities in Fairfield and Litchfield Counties in Connecticut. 5. Market deposit data are as of June 30, 1994. Market share data Notice of the applications, affording interested persons are based on calculations in which the deposits of thrift institutions are an opportunity to submit comments, has been published included at 50 percent. The Board previously has indicated that thrift (60 Federal Register 58,627 (1995)). As required by the institutions have become, or have the potential to become, major competitors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 1. UJB Financial also has applied to acquire up to 19.9 percent of Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly the voting shares of Summit through the exercise of an option granted included thrift deposits in the calculation of market concentration on a by Summit in connection with this proposal. Upon consummation of 50-percent weighted basis. See e.g., First Hawaiian, Inc., 11 Federal this proposal, this option would become moot. Reserve Bulletin 51 (1991). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

346 Federal Reserve Bulletin • April 1996 increase by 7 points to 782.6 Based on all the facts of Based on the foregoing and other facts of record, the record, the Board concludes that consummation of this Board has determined that the applications should be, and proposal would not have a significantly adverse effect on hereby are, approved.10 The Board's approval is specificompetition or the concentration of banking resources in cally conditioned on compliance with all the commitments any relevant market. made by UJB Financial in connection with this application. The financial and managerial resources7 and future pros- For purposes of this action, the commitments and condipects of UJB Financial, Summit, and their respective sub- tions relied on in reaching this decision shall be deemed to sidiaries, and other supervisory factors the Board must be conditions imposed in writing by the Board and, as consider under the BHC Act, Bank Merger Act, and the such, may be enforced in proceedings under applicable Federal Reserve Act are consistent with approval of this law. proposal.8 Considerations relating to the convenience and The transactions shall not be consummated before the needs of the communities to be served also are consistent fifteenth calendar day following the effective date of this with approval.9 order, or later than three months after the effective date of this order, unless such period is extended for good cause by the Federal Reserve Bank of New York, acting pursuant to 6. Under the revised Department of Justice Merger Guidelines, 49 delegated authority. Federal Register 26,823 (June 29, 1984), a market in which the post- By order of the Board of Governors, effective Februmerger HHI is less than 1000 is considered unconcentrated. The ary 5, 1996. Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anti-competitive effects) unless the post-merger Voting for this action: Chairman Greenspan and Governors Kelley, HHI is at least 1800 and the merger increases the HHI by more than Lindsey, Phillips, and Yellen. 200 points. The Justice Department has stated that the higher than normal threshold for an increase in the HHI when screening bank JENNIFER J. JOHNSON mergers and acquisitions for anticompetitive effects implicitly recog- Deputy Secretary of the Board nizes the competitive effect of limit-purpose lenders and other nondepository financial entities. 7. The Board has carefully reviewed comments from an attorney ("Protestant") based on allegations contained in several lawsuits filed by Protestant against UJB Bank, UJB Financial, and its wholly owned subsidiary Trico Mortgage Company, Inc. ("Trico"), on behalf of individual borrowers. These allegations relate to certain activities by a mortgage broker employed from 1988 to 1989 by First Central Mort- ry" or "outstanding" by their primary federal supervisors, in their gage Services, Inc. ("First Central"), an unaffiliated mortgage origina- most recent examinations for CRA performance, and examiners found tor that sold mortgages to UJB Financial and other financial institu- no evidence of discriminatory or other illegal credit practices. UJB tions. UJB Financial and its subsidiaries have denied these allegations Bank received a "satisfactory" CRA performance rating as of July and have said that they had no knowledge of these activities at the 1995, from the Reserve Bank. Summit Bank was also rated "satisfactime they occurred. None of the individuals involved in these allega- tory" in its most recent examination for CRA performance by its tions is currently employed by or associated with UJB Financial or primary federal supervisor. any of its subsidiaries, and there are no allegations that management 10. Protestant requests that the Board delay action on these applicaof UJB Financial was involved in these matters. UJB Financial is in tions until the Board has conducted an investigation and held a the process of liquidating Trico, and the amount of the mortgage hearing or a public meeting on the issues raised in her comments. transactions in dispute represents a small percentage of UJB Finan- Section 3(b) of the BHC Act does not require the Board to hold a cial's total assets. The civil actions initiated by Protestant are in their public hearing or meeting on an application unless the appropriate preliminary stages and have not to date resulted in any findings of supervisory authority for the bank to be acquired makes a timely wrongdoing by UJB Financial or any of its subsidiaries or manage- written recommendation of denial of the application. The Board has ment. The Board has also considered information contained in rele- not received such a recommendation from any state or federal supervivant reports of examination assessing the managerial resources of sory authority in this case. Under its Rules of Procedure, the Board UJB Financial and its subsidiaries. If a court determines, or an may, in its discretion, hold a public hearing or meeting on an applicaexamination finds, that UJB Financial or any of its subsidiaries have tion to clarify factual issues related to the application and to provide engaged in improper activities, the Board or the primary federal an opportunity for testimony, if appropriate. 12 C.F.R. 262.3(e) and supervisor of the relevant subsidiary of UJB Financial retains jurisdic- 262.25(d). The Board is also required under applicable law and its tion and full supervisory authority to take appropriate action. processing procedures to act on applications submitted under the BHC 8. Protestant maintains that UJB Financial failed to disclose the Act and the Bank Merger Act within specified time periods. existence of pending litigation related to the events at First Central to Protestant has had ample opportunity to submit her views and has, the Board in connection with these applications and to examiners from in fact, submitted materials that have been considered by the Board in the Federal Reserve Bank of New York ("Reserve Bank") during a acting on these applications. Protestant's request fails to demonstrate recent consumer compliance examination. Protestant contends that why her written submissions do not adequately present her allegathese omissions raise supervisory issues relevant to these applications tions. As discussed above, the Board has carefully reviewed the record and to UJB Bank's performance rating under the Community Rein- in this case, including information provided by the Protestant and UJB vestment Act ("CRA"). After a review of all the facts of record, Financial, and contained in relevant reports of examination. Based on including relevant reports of examination, information made available all the facts of record, the Board concludes that the record is sufficient to the examiners, and information provided by UJB Financial during to act on this proposal at this time, and that delay or denial of this the processing of these applications, the Board concludes that issues proposal on the grounds of informational insufficiency or inaccuracy related to this litigation have been fully disclosed to the Board in is not warranted. The Board also concludes that a public meeting or connection with the Reserve Bank's examination and this application. hearing is not necessary to clarify the factual record in these applica- 9. Protestant also questions the record of UJB Financial under the tions, or otherwise warranted in this case, and, therefore, the request CRA. All of UJB Financial's subsidiary banks were rated "satisfacto- for a public hearing or meeting on these applications is denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 347 Appendix 619 East Main Street, Finderne, New Jersey 15 Mountain View Road, Warren-Chubb, New Jersey One State Bank Plaza, Manville, New Jersey 401 Hackensack Avenue, Hackensack, New Jersey Martinsville Road, West Gate/Chubb, New Jersey 80 Main Street, West Orange, New Jersey 3421 Rte 22 East, Branchburg, New Jersey 343 Millburn Avenue, Millburn, New Jersey Lamington Road, Bedminster, New Jersey 250 Passaic Avenue, Fairfield, New Jersey 367 Springfield Avenue, Summit, New Jersey 161 Maplewood Avenue, Maplewood, New Jersey DeForest Avenue & Beechwood, Summit, New Jersey 161 Eagle Rock Avenue, Roseland, New Jersey 467 Park Avenue, Scotch Plains, New Jersey 1521 Springfield Avenue, Maplewood, New Jersey 26 Morris Turnpike, Short Hills, New Jersey One Newark Center, Newark, New Jersey 600 Mountain Avenue, Bell Labs, New Jersey 1882 Springfield Avenue, Maplewood, New Jersey 1322 Sea Girt Avenue, Wall Township, New Jersey 301 South Livingston Avenue, Livingston, New Jersey 634 Newman Springs Road, Lincroft, New Jersey 263 Rte 202-31 South, Flemington, New Jersey First Avenue at Rte 36, Atl. Highlands, New Jersey 400 Voorhees Corner Road, Flemington, New Jersey 611 Main Street, Belmar, New Jersey 92 Rte 173, Clinton, New Jersey 99 Broad Avenue, Eatontown, New Jersey 16 Nassau Street, Princeton, New Jersey Route 66 at Neptune Blvd, Neptune Twp, Monmouth 11 State Road, Princeton, New Jersey County, New Jersey 5001 Stelton Road, South Plainfield, New Jersey 155 Main Street, Manasquan, New Jersey 800 Inman Avenue, Colonia, New Jersey 517 Prospect Avenue, Little Silver, New Jersey 900 Oak Tree Road, South Plainfield, New Jersey 405 Union Avenue, Brielle, New Jersey 1876 Highway 27, Edison, New Jersey 1184 Rte 35, Middletown, New Jersey 378 Amboy Avenue, Woodbridge, New Jersey Route 9 and Campbell Court, Freehold, New Jersey 46 Parsonage Road, Menlo Park, New Jersey 30 Columbia Turnpike, Florham Park, New Jersey 1050 Raritan Road, Clark, New Jersey 1031 Valley Road, Stirling, New Jersey 135 Jefferson Avenue, Elizabeth, New Jersey 117 Main Street, Madison, New Jersey 10 Westfield Avenue, Clark/Rahway, New Jersey 355 Madison Avenue, Morristown, New Jersey Lincoln Boulevard & Broadway, Clark/Rahway, New Jer- 3799 Rte 46, Parsippany, New Jersey sey 269 Main Street, Chatham, New Jersey 145 Snyder Avenue, Berkeley Heights, New Jersey Erie Lackawana RR Station, Chatham, New Jersey 556 Morris Avenue, Ciba/Geigy, New Jersey 188 South Street, Morristown, New Jersey 100 First Street, Elizabeth, New Jersey 10 Park Place, Morristown, New Jersey 15 South Street, New Providence, New Jersey 38 Broadway, Denville, New Jersey Village Shopping Center, New Providence, New Jersey 640 Shunpike Road, Chatham, New Jersey 173 Elm Street, Westfield, New Jersey 16 Waverly Place, Madison, New Jersey 865 Mountain Avenue, Mountainside, New Jersey 1501 Long Beach Blvd, Ship Bottom, New Jersey 335 East Front Street, Plainfield, New Jersey 1051 Rte 37 West, West Dover, New Jersey 175 Morris Avenue, Springfield, New Jersey 200 Webster Avenue, Seaside Heights, New Jersey 707 New Brunswick Avenue, Pohatcong, New Jersey 2232 Bridge Avenue, Bridge Avenue, New Jersey Route 57 at Mill Pond, Washington, New Jersey 889 Fischer Boulevard, Toms River, New Jersey 382 Memorial Parkway, Phillipsburg, New Jersey 401 Bay Avenue, Beach Haven, New Jersey 711 Lacey Road, Lacey, New Jersey Rte 35 & Atlantic Ave., Manasquan Borough, Monmouth 785 Rte 72, Manahawkin, New Jersey County, New Jersey 200 Rte 37 East, Toms River, New Jersey 150 Chambers Bridge Road, Brick Township, Ocean 65 Nautilus Drive, Ocean Acres, New Jersey County, New Jersey 2114 Lake wood Road, Pleasant Plains, New Jersey 2 Rte 37 West at Rte 9, Dover Township, Ocean County, 501 Arnold Avenue, Point Pleasant Beach, New Jersey New Jersey 1508 Central Avenue, Barnegat Light, New Jersey 2284 West County Line Road, Jackson Township, New 385 Adamston Road, Adamston, New Jersey Jersey 531 Main Avenue, Bay Head, New Jersey 206 East Kennedy Boulevard, Lakewood Township, Ocean 2205 Grand Central Avenue, Lavallette, New Jersey County, New Jersey Manhattan Street, Jackson, New Jersey 395 Rte 70, Lakewood Township, Ocean County, New 137 Van Zile Road, Channel Plaza, New Jersey Jersey 2701 Lake wood Road, Rte 88, Ocean County, New Jersey Columbus Blvd & Hamilton Ave., Seaside Hgts, Ocean 60 Stirling Road, Watchung Circle, New Jersey County, New Jersey Somerset Shopping Center, Bridgewater, New Jersey Rte 37 & Law Road, Dover Township, Ocean County, New Washington Valley Road, Martinsville, New Jersey Jersey 50 West Main Street, Somerville, New Jersey 111 Lacey Road, Manchester Township, Ocean County, 19 West High Street, Somerville, New Jersey New Jersey Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

348 Federal Reserve Bulletin • April 1996 Orders Issued Under Section 4 of the Bank Holding after customers' calls are completed (such as the date, Company Act time, duration, and destination of the call); additional data provided by the Operator concerning the terms of custom- Compagnie Financiere de Paribas ers' service contracts (such as subscription fees, applicable Paris, France discounts, and special charges); and individual account Order Approving Notice to Provide Mobile Telephone balances. Based on these data, CABS produces the billing Billing Software statements that the Operator sends to its customers for payment by customers directly to the Operator. Compagnie Financiere de Paribas, Paris, France ("Pari- CABS also performs general accounting services, such bas"), a bank holding company within the meaning of the as making summary entries in the Operator's general led- Bank Holding Company Act ("BHC Act"), has given ger reflecting payments and changes in accounts receivable notice under section 4(c)(8) of the BHC Act (12 U.S.C. and payable, and recording payments automatically and § 1843(c)(8)) and section 225.23(a) of the Board's Regulamaking pre-authorized debits directly from customers' tion Y (12 C.F.R. 225.23(a)) to engage de novo through a bank or credit card accounts. CABS also reports past due new United States subsidiary ("Company") in providing and closed accounts to the Operator. In addition, CABS certain data processing and transmission services nationcan submit call data to a network clearing house and wide, under section 225.25(b)(7) of Regulation Y (12 C.F.R. 225.25(b)(7)).1 receive such data from a clearing house to ensure proper billing and account settlements for multi-network tele- Paribas, through Company, would offer an integrated phone calls. software program ("CABS") to operators of digital mobile To facilitate these billing functions, CABS stores basic telephone networks ("Operator") to perform billing and information (such as name, address, and telephone numaccount-related services for the Operator's customer acber) necessary to identify a customer when a new account counts. CABS would not be a part of an Operator's netis opened.4 CABS also stores information that identifies the work operating and switching system, and it would be services to be provided to the customer and the customer's operated on dedicated hardware that is separate from the handset. CABS transmits the latter information, and inforhardware and software that runs the network. mation about the payment status of each account and Notice of this proposal, affording interested persons an instructions for the issuance of personal identification numopportunity to submit comments, has been published (60 bers, to the Operator's caller and equipment verification Federal Register 62,092 (1995)). The time for filing comfiles, for use by the Operator to limit access to the telements has expired, and the Board has considered the notice phone network. The caller and equipment verification files and all comments received in light of the factors set forth in section 4(c)(8) of the BHC Act.2 are maintained by the Operator independently of CABS. As noted previously, CABS is not part of and does not Paribas, with $282.5 billion in consolidated assets, is the intervene in the operation of the Operator's network access fifth largest commercial banking organization in France or switching system.5 CABS is operated on dedicated and the 29th largest commercial banking organization in hardware that is separate from the hardware and software the world, and it engages in a wide range of banking and nonbanking activities outside the United States.3 Paribas that runs the mobile telephone network itself. operates branches in New York, New York, and Chicago, Closely Related to Banking Analysis Illinois; agencies in Los Angeles, California, and Houston, Texas; and representative offices in San Francisco, Califor- Section 4(c)(8) of the BHC Act provides that a bank nia, and Dallas, Texas. Paribas also engages through its holding company may, with Board approval, engage in any subsidiaries in the United States in a broad range of nonactivity that the Board determines to be "so closely related banking activities. to banking or managing or controlling banks as to be a proper incident thereto."6 The Board has determined that Proposed Activities CABS calculates an Operator's customer bills based on data provided by the Operator's network operating system 4. Company would play no role in soliciting or contacting new or prospective customers. These functions would be handled by the Operator or a third party. 5. Data compiled by CABS for billing purposes may be reported by 1. Paribas owns 50.1 percent and France Telecom, the French CABS to the Operator for use in identifying atypical usage patterns national telephone operating company, owns 49.9 percent of Financi that indicate fraudulent use. All access determinations, including re Sema, a French investment company that owns 41.6 percent of the those based on usage patterns and customer and equipment identificavoting shares of Sema Group pic, London, England ("Sema Group"). tion and account data, are made by the Operator. Sema Group developed the software described in this order and 6. 12 U.S.C. § 1843(c)(8). See National Courier Association proposes to establish Company as a wholly owned United States Board of Governors of the Federal Reserve System, 516 F.2d 1229, subsidiary to sell the described software in the United States. 1237 (D.C. Cir. 1975) ("National Courier"). In addition, the Board 2. The Board received one comment from another banking organiza- may consider any other basis that may demonstrate that the proposed tion supporting this proposal. activity has a reasonable or close connection or relationship to bank- 3. Asset data are as of June 30, 1995. Ranking data are as of ing or managing or controlling banks. See Board Statement Regarding December 31, 1994. Regulation Y, 49 Federal Register 806 (1984); Securities Industry Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 349 certain data processing activities are closely related to In making this change, the Board deleted the reference to banking and, therefore, permissible for bank holding com- specific examples of permissible data processing functions, panies under section 4(c)(8) of the BHC Act. Section such as performing payroll, accounts receivable, and bill- 225.25(b)(7) of Regulation Y permits bank holding compa- ing services. The Board stated, however, that it intended nies to provide data processing and data transmission ser- the changes to expand the delineation of permissible data vices, facilities (including software), or data bases, or processing services and types of data that could be proaccess thereto, by any technological means, so long as the cessed by bank holding companies. On this basis, the data to be processed or furnished are "financial, banking, Board has continued to approve data processing proposals or economic" in nature.7 Regulation Y also provides that to provide billing services for nonfinancial customers.14 bank holding companies may engage in incidental activi- The principal function of CABS is to collect data necesties that are necessary to carry on an activity that is closely sary to prepare and transmit bills for Operators. In light of related to banking.8 the foregoing, the Board has determined that the perfor- In 1971, when data processing services were added to mance of these billing functions—including opening cus- Regulation Y's list of activities deemed closely related to tomer accounts, preparing customer account statements, banking, the performance of billing services was specifi- initiating payments by customers and other networks, recally included in the rule as an example of processing cording payments and accounts receivable and payable in "banking, financial, or related economic data".9 The Board the Operator's general ledger, and reporting past due and noted at that time that banks historically had performed closed accounts—is an activity that is closely related to certain types of billing services for nonfinancial custom- banking and constitutes the processing and transmission of ers,10 and commenters had suggested that billing services banking, financial, or economic data within the meaning of (like the other services specifically mentioned) were inte- Regulation Y and prior Board decisions. grally related to the "basic money transfer function" of As described above, CABS also would perform certain banks.11 limited nonfinancial data processing and transmission ser- In 1982, the Board amended its data processing regula- vices in connection with its billing functions. These sertion to expand the types of services that could be per- vices are the transmission of customer identification and formed by bank holding companies and the types of data account information to the Operator's verification files; and on which data processing could be performed.12 In particu- the generation or certain reports based on these data that lar, the types of permissible data were expanded to include may be used by the Operator to detect possible fraudulent all "financial, banking or economic" information.13 This use of the network. The data that CABS processes and change permitted bank holding companies to process all transmits to the Operator for access and security purposes types of economic data and eliminated the requirement that consist of data that CABS stores and uses to perform its economic data be "related" to other banking or financial basic billing function. data. Paribas has stated that CABS would not perform these functions apart from its billing services, and that these functions would be a relatively small part of its operation.15 In light of the foregoing, the Board has concluded that the limited role to be played by CABS in an Operator's Association v. Board of Governors of the Federal Reserve System, access and security functions appears to be incidental to 468 U.S. 207, 210-211 n.5 (1984). 7. Regulation Y also requires that the services be provided pursuant the primary billing and account functions that would be to a written agreement and places certain limitations on the facilities provided to the Operator, and therefore permissible under and hardware provided with the data processing services. In particular, Regulation Y and prior Board decisions. the facilities must be designed, marketed, and operated for the processing and transmission of financial, banking, or economic data; hardware must be provided only in conjunction with permissible Other Considerations software; and general purpose hardware must not constitute more than In order to approve this proposal, the Board also must 30 percent of the cost of any packaged offering. See 12 C.F.R. 225.25(b)(7). Paribas has committed that Company will comply with determine that the proposed activity is a proper incident to these requirements and limitations in providing the proposed services. banking, that is, that the proposal "can reasonably be 8. See 12 C.F.R. 225.21(a)(2); National Courier, 516 F.2d at 1239- expected to produce benefits to the public, such as greater 41. convenience, increased competition, or gains in efficiency, 9. Approved data processing activities included "storing and processing other banking, financial, or related economic data, such as that outweigh possible adverse effects, such as undue conperforming payroll, accounts receivable or payable, or billing ser- centration of resources, decreased or unfair competition, vices." 57 Federal Reserve Bulletin 512 (1971). conflicts of interests, or unsound banking practices."16 As 10. See Memorandum from Legal Division to Board of Governors (June 7, 1971) at 8. 11. See Supplemental Statement of the American Bankers Association (April 30, 1971), at 6-7; see also BankAmerica Corporation, 66 14. See, e.g., BNCCORP, INC., 81 Federal Reserve Bulletin 295, Federal Reserve Bulletin 511 (1980). 297 (1995). 12. See 47 Federal Register 37,368 (August 26, 1982); Memoran- 15. Paribas indicates that it is likely that less than 5 percent of the dum from Legal Division to Board of Governors (August 12, 1982). data screens generated by CABS would consist of fraud detection and 13. The language of the 1982 amendment remains in the current other network access information. version of Regulation Y. See 12 C.F.R. 225.25(b)(7). 16. 12 U.S.C. § 1843(c)(8). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

350 Federal Reserve Bulletin • April 1996 part of the Board's evaluation of these factors, the Board Corporation Bancaria de Espana, S.A. considers the financial and managerial resources of the Madrid, Spain notificant and its subsidiaries and the effect the transaction would have on such resources.17 The record indicates that Order Approving a Notice to Engage De Novo in Certain Company's de novo entry would enhance competition in Securities Brokerage, Investment Advisory, "Riskless the market for the proposed services. In addition, the Principal," and Private Placement Activities experience of Sema Group in providing the described services abroad should assist it in making improved billing Corporation Bancaria de Espana, S.A., Madrid, Spain and account-related services available to Operators. More- ("Notificant"), a bank holding company within the meanover, there is no evidence in the record to indicate that this ing of the Bank Holding Company Act ("BHC Act"), has proposal would lead to any undue concentration of re- requested the Board's approval pursuant to section 4(c)(8) sources, conflicts of interests, unsound banking practices, of the BHC Act (12 U.S.C. § 1843(c)(8)) and section or other adverse effects that would outweigh the public 225.23 of the Board's Regulation Y (12 C.F.R. 225.23) to benefits of this proposal.18 Accordingly, the Board has engage de novo through its wholly owned subsidiary, Ardetermined that the balance of the public interest factors it gentaria International Securities Inc., New York, New York is required to consider under the proper incident to banking ("Company"), in the following securities-related activistandard of section 4(c)(8) of the BHC Act is favorable and ties: consistent with approval of this notice. (1) Providing financial and investment advisory services Based on all the facts of record, the Board has deter- pursuant to section 225.25(b)(4) of Regulation Y mined that the notice should be, and hereby is, approved. (12 C.F.R. 225.25(b)(4)); The Board's approval is specifically conditioned on com- (2) Providing full-service brokerage services pursuant to pliance with the commitments made in connection with section 225.25(b)(15) of Regulation Y (12 C.F.R. this notice and with the conditions referred to in this order. 225.25(b)(15)); The Board's determination also is subject to all the condi- (3) Acting as agent in the private placement of all types tions set forth in Regulation Y, including those in sections of securities; and 225.7 and 225.23(g) of Regulation Y, and to the Board's (4) Buying and selling all types of securities on the order authority to require such modification or termination of the of investors as a "riskless principal." activities of a bank holding company or any of its subsidiaries as the Board finds necessary to ensure compliance Notificant proposes to engage in these activities worldwith, and to prevent evasion of, the provisions of the BHC wide. Act and the Board's regulations and orders issued thereun- Notice of this proposal, affording interested persons an der. For purposes of this action, these conditions and opportunity to submit comments, has been published (61 commitments are deemed to be conditions imposed in Federal Register 1029 (1996)). The time for filing comwriting by the Board in connection with its findings and ments has expired, and the Board has considered the notice decision, and, as such, may be enforced in proceedings and all comments received in light of the factors set forth under applicable law. in section 4(c)(8) of the BHC Act. This transaction shall not be consummated later than Notificant, with consolidated assets equivalent to apthree months after the effective date of this order, unless proximately $89.5 billion, is the third largest commercial such period is extended for good cause by the Board or by banking organization in Spain and provides a wide range the Federal Reserve Bank of New York, acting pursuant to of banking, financial, and related services worldwide delegated authority. through its various subsidiaries and affiliated companies.1 By order of the Board of Governors, effective Febru- Through its subsidiary, Banco Exterior de Espana, S.A., ary 26, 1996. Madrid, Spain ("Banco Exterior"), Notificant controls Extebank, Stonybrook, New York, the 40th largest com- Voting for this action: Chairman Greenspan and Governors Kelley, mercial bank in New York.2 Banco Exterior also maintains Lindsey, Phillips, and Yellen. an agency in Miami, Florida, and a branch in New York, New York. JENNIFER J. JOHNSON Company intends to register as a broker-dealer with the Deputy Secretary of the Board Securities and Exchange Commission ("SEC"), and to seek admission to the National Association of Securities Dealers Inc. ("NASD"). Upon registration with the SEC 17. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75 and admission to the NASD, Company would be subject to Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 the recordkeeping, reporting, fiduciary standards, and other Federal Reserve Bulletin 155 (1987). The Board notes that Paribas's requirements of the Securities Exchange Act of 1934 capital ratios satisfy applicable risk-based standards under the Basle (15 U.S.C. § 78a et seq.), the SEC, and the NASD. Accord and are considered equivalent to the capital levels that would be required of a U.S. banking organization. 18. Paribas also has made certain commitments previously relied on by the Board to address potentially adverse competitive and other 1. Asset data are as of December 31, 1994. effects that may be presented by joint venture proposals. 2. Deposit data are as of September 30, 1995. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 351 The Board previously has determined by regulation that ing and dealing in ineligible securities.6 Notificant has engaging in financial and investment advisory activities committed that Company will conduct its private placeand securities brokerage activities is closely related to ment and "riskless principal" activities in a manner consisbanking and permissible for bank holding companies under tent with the limitations, methods, and procedures estabsection 4(c)(8) of the BHC Act.3 Notificant has committed lished by the Board in prior orders, as modified to reflect that Company will conduct these activities in accordance the status of Notificant as a foreign banking organization.7 with the limitations of sections 225.25(b)(4) and (15) of In order to approve these notices, the Board also is Regulation Y. required to determine that the performance of the proposed Private placement involves the placement of new issues activities by Notificant can reasonably be expected to proof securities with a limited number of sophisticated pur- duce public benefits that would outweigh possible adverse chasers in a nonpublic offering. A financial intermediary in effects under the proper incident to banking standard of a private placement transaction acts solely as an agent of section 4(c)(8) of the BHC Act.8 The public benefits in this the issuer in soliciting purchasers, and does not purchase case are expected to include increased competition and the securities and attempt to resell them. Securities that are new services for Notificant's customers. In every case privately placed are not subject to the registration require- involving a nonbanking acquisition by a bank holding ments of the Securities Act of 1933 (15 U.S.C. 77a et seq.) company under section 4 of the BHC Act, the Board and are offered only to financially sophisticated institutions considers the financial condition and resources of the appliand individuals and not to the public. Notificant has com- cant and its subsidiaries and the effect of the proposal on mitted that Company will not privately place registered those resources that are not outweighed by public benefits securities, and will only place securities with "institutional in this case.9 In this case, the Board notes that Notificant customers" as that term is defined in section 225.2(g) of and its subsidiaries meet the relevant risk-based capital Regulation Y (12 C.F.R. 225.2(g)). standards established under the Basle Accord, and have "Riskless principal" is the term used in the securities capital equivalent to that which would be required of a business to refer to a transaction in which a broker-dealer, United States banking organization. In view of these and after receiving an order from a customer to buy (or sell) a other facts of record, the Board has determined that finansecurity, purchases (or sells) the security for its own ac- cial factors are consistent with approval of this proposal. count to offset a contemporaneous sale to (or purchase The managerial resources of Notificant also are consistent from) the customer.4 "Riskless principal" transactions are with approval. Under the framework established in this and understood in the industry to include only transactions in prior decisions, consummation of this proposal is not likely the secondary market. Thus, under the proposal, Company to result in any significantly adverse effects, such as undue would not act as a "riskless principal" in selling securities concentration of resources, decreased or unfair competiat the order of a customer that is the issuer of the securities tion, conflicts of interests, or unsound banking practices. to be sold, or in any transaction where Company has a contractual agreement to place the securities as agent of the issuer. Company also would not act as a "riskless princi- 6. Id. pal" in any transaction involving a security for which it 7. See The Sumitomo Bank, Limited, 77 Federal Reserve Bulletin 339 (1991); Creditanstalt-Bankverein, 77 Federal Reserve Bulletin makes a market. 183 (1991); The Royal Bank of Scotland Group PLC, 76 Federal The Board previously has determined by order that, Reserve Bulletin 866 (1990); Canadian Imperial Bank of Commerce, subject to prudential limitations that address the potential et al, 76 Federal Reserve Bulletin 158 (1990). Among the prudential for conflicts of interests, unsound banking practices, and limitations detailed more fully in these orders are that Company will maintain specific records that will clearly identify all "riskless princiother adverse effects, the proposed private placement and pal" transactions, and that Company will not engage in any "riskless riskless principal activities are so closely related to bankprincipal" transactions for any securities carried in its inventory. ing as to be a proper incident thereto within the meaning of When acting as a "riskless principal," Company will only engage in section 4(c)(8) of the BHC Act.5 The Board also has transactions in the secondary market, and not at the order of a previously determined that acting as agent in the private customer that is the issuer of the securities to be sold; will not act as a "riskless principal" in any transaction involving a security for which placement of securities, and purchasing and selling securiit makes a market; and will not hold itself out as making a market in ties on the order of investors as a "riskless principal," do the securities that it buys and sells as a "riskless principal." Moreover, not constitute underwriting and dealing in securities for Company will not engage in "riskless principal" transactions on purposes of section 20 of the Glass-Steagall Act (12 U.S.C. behalf of its foreign affiliates that engage in securities dealing activities outside the United States and will not act as "riskless principal" § 377), and that revenue derived from such activities is not for registered investment company securities. In addition, Company subject to the 10-percent revenue limitation on underwritwill not act as a "riskless principal" with respect to any securities of investment companies that are advised by Notificant or any of its affiliates. With regard to private placement activities, Notificant has committed that Company will not privately place registered invest- 3. See 12 C.F.R. 225.25(b)(4) and (15). ment company securities or securities of investment companies that 4. See Securities and Exchange Commission Rule 10b-10 (17 C.F.R. are advised by Notificant or any of its affiliates. 240.1 Ob- 10(a)(8)(i». 8. 12 U.S.C. § 1843(c)(8). 5. See J.P. Morgan & Company Incorporated, 76 Federal Reserve 9. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 Federal Reserve Bulletin 26 (1990); Bankers Trust New York Corporation, 75 Federal Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve Reserve Bulletin 829 (1989). Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

352 Federal Reserve Bulletin • April 1996 Based on the foregoing and other facts of record, and its national providing bank subsidiaries and transfer those subject to the commitments made by Notificant, the Board shares to First Union.1 has determined that the balance of public interest factors it Notice of this proposal, affording interested persons an is required to consider under section 4(c)(8) is favorable. opportunity to submit comments, has been published (61 Accordingly, the Board has determined that this notice Federal Register 1758 (1996)). The time for filing comshould be, and hereby is, approved, subject to all the terms ments has expired, and the Board has considered the notice and conditions set forth in this order, and in the regulations and all comments received in light of the factors set forth and orders noted above. The Board's determination also is in section 4(c)(8) of the BHC Act. subject to all the terms and conditions set forth in its First Union, with total consolidated assets of $129 bil- Regulation Y, including those in sections 225.7 and lion, operates banks in Connecticut, Delaware, Florida, 225.23(b), and to the Board's authority to require modifica- Georgia, Maryland, New Jersey, New York, North Carotion or termination of the activities of a bank holding lina, Pennsylvania, South Carolina, Tennessee, Virginia, company or any of its subsidiaries as it finds necessary to and the District of Columbia.2 First Union engages in a assure compliance with, and to prevent evasion of, the number of banking and nonbanking activities in these provisions of the BHC Act, and the Board's regulations states and nationwide.3 and orders issued thereunder. The Board's decision is Section 4(c)(8) of the BHC Act provides that a bank specifically conditioned on compliance with all the com- holding company may, with Board approval, engage in any mitments made in connection with this notice, including activity that the Board determines to be "so closely related those discussed in this order and the conditions set forth in to banking or managing or controlling banks as to be a the Board regulations and orders noted above. These com- proper incident thereto."4 The Board previously has determitments and conditions shall be deemed to be conditions mined by regulation that, subject to the limitations estabimposed in writing by the Board in connection with its lished in Regulation Y, certain data processing and manfindings and decisions, and, as such, may be enforced in agement consulting activities are closely related to banking proceedings under applicable law. for purposes of section 4(c)(8) of the BHC Act and, there- This transaction shall not be consummated later that fore, are permissible for bank holding companies.5 First three months after the effective date of this order, unless Union has committed that the proposed activities will be such period is extended for good cause by the Board or by conducted in conformity with the limitations established in the Federal Reserve Bank of New York, acting pursuant to Regulation Y. delegated authority. In order to approve this notice, the Board is required to By order of the Board of Governors, effective Febru- determine that the continued performance of the proposed ary 12, 1996. activities by First Union can reasonably be expected to produce benefits to the public that would outweigh possi- Voting for this action: Chairman Greenspan and Governors Lind- ble adverse effects under the proper incident to banking sey, Phillips, and Yellen. Absent and not voting: Governor Kelley. standard of section 4(c)(8) of the BHC Act.6 The Board JENNIFER J. JOHNSON expects that this proposal would maintain or increase the Deputy Secretary of the Board level of competition among providers of those services. The Board also anticipates that First Union's proposed activities would result in enhanced efficiency and increased convenience for customers. Moreover, there is no evidence First Union Corporation in the record that consummation of this proposal would Charlotte, North Carolina result in any significantly adverse effects, such as undue concentration of resources, decreased or unfair competi- Order Approving Notice to Engage in Data Processing tion, conflicts of interests, or unsound banking practices Activities that are not outweighed by the benefits of this proposal. Accordingly, the Board has concluded that the balance of the public interest factors it is required to consider under First Union Corporation, Charlotte, North Carolina ("First the proper incident to banking standard of section 4(c)(8) Union"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has given notice under section 4 of the BHC Act (12 U.S.C. 1. In January 1994, First Union received approval to acquire up to § 1843(c)(8)) and section 225.23 of the Board's Regula- 9.4 percent of the Internet's voting shares (80 Federal Reserve Bulletin 263 (1994)). First Union acquired the additional shares through its tion Y (12 C.F.R. 225.23) of its proposal to acquire up to subsidiary national banks (First Union National Bank of Virginia, 20 percent the voting shares of Internet, Inc., Reston, Roanoke, Virginia, acquired 4 percent in October 1995, and First Virginia ("Internet"), and thereby continue to engage in Union acquired an additional 5.7 percent, when it acquired First data processing and transmission services pursuant to Fidelity Bank, N.A., Elkton, Maryland). 12 C.F.R. 225.25(b)(7), and providing bank management 2. Asset data are as of December 31, 1995. 3. State deposit data are as of June 30, 1995. consulting advice to depository institutions pursuant to 4. 12 U.S.C. § 1843(c)(8). 12 C.F.R. 225.25(b)(l 1). This application would permit 5. 12 C.F.R. 225.25(b)(7) and (11). First Union to retain shares of Internet it acquired through 6. 12 U.S.C. § 1843(c)(8). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 353 of the BHC Act is favorable and consistent with approval Voting for this action: Chairman Greenspan, and Governors Kelley, of this notice. Lindsey, Phillips, and Yellen. In every case involving a nonbanking acquisition by a JENNIFER J. JOHNSON bank holding company under section 4 of the BHC Act, the Deputy Secretary of the Board Board also considers the financial condition and resources of the applicant and its subsidiaries and the effect of the First Union Corporation transaction on those resources. Based on all the facts of Charlotte, North Carolina record, the Board has concluded that the financial considerations are consistent with approval of this proposal.7 Order Approving Acquisition of a Savings Association Based on the foregoing and all the facts of record, the Board has determined that this notice should be, and hereby First Union Corporation, Charlotte, North Carolina ("First is, approved. The Board's approval is specifically condi- Union"), a bank holding company within the meaning of tioned on compliance by First Union with all commitments the Bank Holding Company Act ("BHC Act"), has given made in connection with this notice and the conditions notice under section 4 of the BHC Act (12 U.S.C. referred to in this order. The Board's determination also is § 1843(c)(8)) and section 225.23 of the Board's Regulasubject to all the conditions in Regulation Y, including those in sections 225.7 and 225.23(b)(3) (12 C.F.R. 225.7 tion Y (12 C.F.R. 225.23) of its proposal to acquire all the and 225.23(b)(3)), and to the Board's authority to require voting shares of Society First Federal Savings Bank, Fort such modification or termination of the activities of a Myers, Florida ("Society FSB").1 holding company or any of its subsidiaries as the Board Notice of this proposal, affording interested persons an finds necessary to assure compliance with, or to prevent opportunity to submit comments, has been published (61 evasion of, the provisions and purposes of the BHC Act Federal Register 1758 (1996)). The time for filing comand the Board's regulations and orders issued thereunder. ments has expired, and the Board has considered the notice The commitments and conditions relied on by the Board in and all comments received in light of the factors set forth reaching this decision are deemed to be conditions im- in section 4(c)(8) of the BHC Act. posed in writing by the Board in connection with its The Board has determined that the operation of a savings findings and decision, and as such may be enforced in association by a bank holding company is closely related to proceedings under applicable law. banking for purposes of section 4(c)(8) of the BHC Act.2 The Board requires savings associations acquired by bank This transaction shall not be consummated later than holding companies to conform their direct and indirect three months following the effective date of this order, activities to those permissible for bank holding companies unless such period is extended for good cause by the Board under section 4(c)(8) of the BHC Act and Regulation Y. or by the Federal Reserve Bank of Richmond, acting First Union has committed to conform all activities of pursuant to delegated authority. Society FSB to those requirements.3 By order of the Board of Governors, effective Febru- First Union, with total consolidated assets of $129 bilary 26, 1996. lion, operates banks in Connecticut, Delaware, Florida, Georgia, Maryland, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, 7. The Board has received comments from Inner City and the District of Columbia.4 First Union is the second Press/Community on the Move ("Protestant") objecting to First Union's management in light of reported investigations by the Securi- largest commercial depository institution in Florida, conties and Exchange Commission with regard to First Union and a trolling $26.7 billion in deposits, representing approxipassive investor, Banco Santander. Protestant's comments regarding First Union's management were carefully considered by the Board in connection with the proposal by First Union to acquire Society First Federal Savings Bank, Fort Myers, Florida ("Society FSB"). In 1. Following the acquisition of Society FSB and approval by the addition, Protestant objects to this notice on the basis that First Union Office of the Comptroller of the Currency ("OCC"), First Union failed to notify the Board of its increased ownership of Internet. The proposes to merge Society FSB with and into its subsidiary bank, First Board has reviewed the circumstances surrounding the acquisition of Union National Bank of Florida, Jacksonville, Florida ("FUNB-FL"). the additional Internet shares and notes that in this application, First 2. See 12 C.F.R. 225.25(b)(9). Union seeks approval to retain the shares of Internet. Based on these 3. First Union has committed that all impermissible real estate and all the other facts of record, including review of relevant reports activities will be divested or terminated within two years of consumof examination and the findings explained in the Society FSB Order, mation of the proposal, that no new impermissible projects or investwhich are incorporated herein by reference, the Board believes that ments will be undertaken during this period, and that capital adequacy managerial factors are consistent with approval of this proposal. The guidelines will be met, excluding specified real estate investments. Board also notes that Protestant's comments relating to First Union's First Union also has committed that any impermissible securities or performance under the Community Reinvestment Act (12 U.S.C. insurance activities conducted by Society FSB will cease on or before § 2901 et seq.) ("CRA") are not relevant to the factors required to be consummation. considered in an application under section 4(c)(8) of the BHC Act to First Union also has committed to divest Society FSB's interest in acquire a nondepository company because the CRA by its terms does Florida Informanagement Services, Inc. ("FIS"), which is a company not apply to such applications. See The Mitsui Bank, Ltd., 76 Federal engaged in data processing activities, within two years of consumma- Reserve Bulletin 381 (1990). The Board, however, reviewed Protes- tion of this proposal, pending consideration by the Board of First tant's allegations regarding the CRA record of First Union in connec- Union's notice to acquire FIS. tion with the review of First Union's proposal to acquire Society FSB. 4. Asset data are as of December 31, 1995. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

354 Federal Reserve Bulletin • April 1996 mately 15.5 percent of total deposits in depository institu- as measured by the HHI,10 the number of competitors that tions in the state.5 Society FSB is the 17th largest would remain in these markets, and all other facts of depository institution in Florida, controlling $1.1 billion in record, the Board concludes that consummation of this deposits, representing less than one percent of total depos- proposal would not result in any significantly adverse its in depository institutions in Florida.6 On consummation effects on competition or the concentration of banking of this proposal, First Union would remain the second resources in any relevant banking market. largest depository institution in the state, controlling deposits of $27.8 billion, representing approximately 16.2 per- Convenience and Needs Considerations cent of total deposits in depository institutions in the state. In acting on an application to acquire a savings association Competitive Considerations under section 4 of the BHC Act, the Board reviews the records of the relevant depository institutions under the Under section 4(c)(8) of the BHC Act the Board is required Community Reinvestment Act (12U.S.C. § 2901 et seq.) to consider whether a proposal is likely to result in any ("CRA").11 The CRA requires the federal financial supersignificantly adverse effects, such as undue concentration visory agencies to encourage financial institutions to help of resources or unfair competition, conflicts of interests, or meet the credit needs of the local communities in which unsound banking practices. First Union and Society FSB they operate, consistent with their safe and sound operacompete directly in four banking markets in Florida.7 Con- tion. To accomplish this end, the CRA requires the approsummation of this proposal would not result in concentra- priate federal supervisory authority to "assess the institution levels in those markets that would exceed the thresh- tion's record of meeting the credit needs of its entire old standards of market concentration as measured by the community, including low- and moderate-income neigh- Herfindahl-Hirschman Index ("HHI") under the Depart- borhoods, consistent with the safe and sound operation of ment of Justice merger guidelines.8 After considering First such institution," and to take that record into account in its Union's share of total deposits in depository institutions9 in evaluation of bank holding company applications.12 the market ("market share"), the change in concentration The Board received comments from Protestant criticizing the CRA performance record of First Union and maintaining that First Union's branch closing and fee policies present adverse considerations under the CRA.13 In partic- 5. State deposit data are as of June 30, 1995. ular, Protestant contends that First Union's past practices 6. Depository institutions include commercial banks, savings banks, indicate that a substantial number of Society FSB's and savings associations. branches would be closed to the detriment of low- and 7. These banking markets are Fort Myers, Naples, Polk County, and moderate-income areas. Protestant also maintains that First Punta Gorda, all in Florida. The Inner City Press/Community on the Union's recently announced policy to charge a fee for Move ("Protestant") maintains that the increase in concentration and in First Union's share of deposits that would result from this proposal inquiries about balances and other information to account would adversely affect competition in these banking markets. 8. Market data are as of June 30, 1995. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 10. Upon consummation of the proposal, the HHI for the four (June 29, 1984), a market in which the post-merger HHI is over 1800 Florida banking markets would increase as follows: in Fort Myers is considered to be highly concentrated. In such markets, the Justice (379 points to 1698), in Naples (91 points to 1638), in Polk County Department is likely to challenge a merger that increases the HHI by (52 points to 1576), and in Punta Gorda (72 points to 1542). After more than 50 points. The Justice Department has informed the Board consummation, First Union's relative size and market share in each that a bank merger or acquisition generally will not be challenged (in market would be as follows: Fort Myers (the largest with 28.1 percent the absence of other factors indicating anticompetitive effects) unless market share); Naples (second largest with 18.9 percent market share); the post-merger HHI is at least 1800 and the merger increases the HHI Polk County (second largest with 19.3 percent market share); and by more than 200 points. The Justice Department has stated that the Punta Gorda (fourth largest with 16.3 percent market share). higher than normal HHI thresholds for screening bank mergers for 11. The Board previously has determined that the CRA by its terms anticompetitive effects implicitly recognize that the competitive ef- generally does not apply to applications by bank holding companies to fects of limited-purpose lenders and other non-depository financial acquire nonbanking companies under section 4(c)(8) of the BHC Act. entities. The Mitsui Bank, Ltd., 76 Federal Reserve Bulletin 381 (1990). The 9. Market data before consummation are based on calculations in Board also has stated that, unlike other companies that may be which the deposits of thrift institutions are included at 50 percent. The acquired by bank holding companies under section 4(c)(8) of the BHC Board previously has indicated that thrift institutions have become, or Act, savings associations are depository institutions, as that term is have the potential to become, major competitors of commercial banks. defined in the CRA, and thus acquisitions of savings associations are See Midwest Financial Group, 75 Federal Reserve Bulletin 386 subject to review under the express terms of the CRA. Norwest (1989); National City Corporation, 70 Federal Reserve Bulletin 743 Corporation, 76 Federal Reserve Bulletin 873 (1990). (1984). Thus, the Board has regularly included thrift deposits in the 12. 12 U.S.C. § 2903. calculation of market share on a 50 percent weighted basis. See, e.g., 13. Protestant also contends that a number of Society FSB employ- First Hawaiian Inc., 11 Federal Reserve Bulletin 52 (1991). Because ees would lose their jobs as a result of this proposal. Although First the deposits of Society FSB would be controlled by a commercial Union has not indicated the number, if any, of jobs that will be banking organization after consummation of the proposal, they have eliminated as a result of this proposal, the record indicates that in been included at 100 percent in the calculation of the market share of previous cases, First Union has taken several steps to minimize First Union after consummation of this proposal. See Norwest Corpo- adverse effects on employees. These steps include outplacement serration, 78 Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 vices to displaced workers and giving employees priority consider- Federal Reserve Bulletin 669, 670 n.9 (1990). ation for other openings at First Union. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 355 holders who do not maintain a minimum balance would the Affordable Home Mortgage Loan, a specialized prodprimarily disadvantage low-income account holders in uct that offered flexible terms, such as higher-than-normal New Jersey, New York, and Connecticut. debt-to-income requirements and lower down payments. The Board has carefully reviewed the CRA performance FUNB-NC also participated, directly or through First records of First Union, its subsidiary banks, and Society Union Mortgage, in government-insured loan programs, FSB, and all the comments received on this application, including programs sponsored by the Small Business Adresponses to those comments submitted by First Union, ministration, the Farmers Home Administration, Federal and all other relevant facts of record in light of the CRA, Housing Administration, and the Veterans Administration. the Board's regulations, and the Statement of the Federal First Union's subsidiary banks also engaged in other small Financial Supervisory Agencies Regarding the Community business lending activity. For example, in July 1993, Reinvestment Act ("Agency CRA Statement").14 FUNB-NC introduced a program for small business own- The Board recently reviewed the CRA performance ers to borrow amounts up to $100,000. All of First Union's record of First Union in light of similar issues raised by subsidiary banks also participated and invested in local Protestant and other commenters in the context of another community development projects. In light of these and application.15 In evaluating that proposal, the Board care- other facts discussed in detail in the First Union/First fully considered First Union's CRA performance record Fidelity Order, which are incorporated by reference, the and, in particular, the record of its lead subsidiary bank, Board concluded that the CRA performance record of First First Union National Bank of North Carolina, Charlotte, Union was consistent with approval of the applications North Carolina ("FUNB-NC"). under the BHC Act. FUNB-NC received an "outstanding" rating from its Protestant alleges that First Union's fees in general and primary federal supervisor, the OCC, at its most recent its recently announced phone and teller fees, illegally dispublicly available examination for CRA performance in criminate against low- and moderate-income individuals.19 April 1994, and First Union's remaining seven subsidiary The Board notes that First Union offers a full range of banks,16 received "satisfactory" ratings from the OCC in credit products and banking services that assist in meeting the most recent examinations of their CRA performance, the credit and banking needs of low- and moderate-income including its subsidiary bank in Florida, First Union Na- individuals, including products to provide loans in small tional Bank of Florida, Jacksonville, Florida ("FUNB- amounts to low- and moderate-income individuals, no- FL).17 Examiners also found that all of First Union's banks minimum-balance checking accounts for low- and were in compliance with applicable antidiscrimination laws moderate-income customers that allow ten free posted and regulations and that none of the banks engaged in checks per statement period, and overdraft protection for practices that would discourage individuals from applying small business owners. First Union has also stated that it for credit.18 would not impose fees for "chargeable inquiries," such as The 1994 CRA performance examinations for both inquiries about account balances and information on out- FUNB-NC and FUNB-FL found that geographic distribu- standing checks on customer accounts not maintaining a tion of credit throughout the delineated communities of minimum balance in urban communities with low- and both banks were reasonable and that management of both moderate-income census tracts served by the former First banks developed policies and procedures to identify and Fidelity banks in New Jersey, New York, and Connecticut, address customer needs, including adjusting its normal including the Bronx. There is no evidence in the record of business hours. First Union's CRA plans and related lend- this application that the fees charged by First Union are ing activities were developed locally by its subsidiary based on any factor that would be prohibited under law. banks to incorporate the unique credit needs of particular communities. For example, First Union has several specialized lending programs designed to improve its lending to 19. Protestant also contends that the allegations of "price discrimilow- and moderate-income communities. In particular, the nation," which were reviewed in the First Union/First Fidelity Order, 1994 FUNB-NC Examination found that the bank offered should be reconsidered in this application because First Union would increase its market share in Florida. Those allegations were based on information provided by a commenter on the First Union/First Fidelity application, that alleged that customers outside First Union's home 14. 54 Federal Register 13,742 (1989). state of North Carolina, particularly in Florida, paid higher fees for 15. See First Union Corporation, 81 Federal Reserve Bulletin 1143 certain services than First Union's North Carolina customers. The (1995) ("First Union/First Fidelity Order"). Board reviewed this matter carefully in the First Union/First Fidelity 16. The OCC conducted a joint CRA examination of all of First Order and adopts the reasons and findings on this matter explained in Union's subsidiary banks in April 1994. the First Union/First Fidelity Order. The Board has also considered 17. In May 1995, Society FSB also received a "satisfactory" CRA the facts of record developed in this case, including the fact that there performance rating from the Office of Thrift Supervision, its primary is no evidence of discrimination on an illegal basis and that there are federal supervisor. numerous other depository institution competitors. As explained 18. The OCC's examiners noted that First Union and its bank above, the Board concludes that First Union would not, as a result of subsidiaries had implemented a comprehensive program to promote this acquisition, gain a dominant position in any Florida banking compliance with fair lending laws and regulations and to promote market that could support anticompetitive pricing by First Union. The consistent treatment of all credit applicants. Examiners also noted that Board also notes that the Department of Justice has full statutory First Union's compliance efforts were periodically assessed through authority to investigate and redress any illegal pricing practices that internal reviews by its management. Protestant can substantiate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

356 Federal Reserve Bulletin • April 1996 While the Board has recognized that banks help serve the through which First Union could serve its customers in banking needs of their communities by making basic bank- Florida. In addition, former Society FSB customers would ing services available at a nominal or no charge, the CRA have increased services, including special lending and leasdoes not require that banks limit fees for services. ing programs, corporate banking products, trust services, First Union has indicated that any branches of Society and investment management services, and access to First that are closed would be subject to its branch closing Union's extensive banking network in Florida. The Board policy, which was carefully reviewed in the First Union! also finds that consummation of this proposal is not likely First Fidelity Order. First Union's subsidiary banks have to result in any significantly adverse effects, such as undue adopted a branch closing policy that provides for objective concentration of resources, decreased or unfair competideterminations of branches to be closed, consideration of tion, conflicts of interests, or unsound banking practices alternative solutions, examination of options to minimize that would outweigh the public benefits of this proposal. potential adverse effects and inconvenience on the commu- Accordingly, the Board has determined that the balance of nities, and sufficient advance notice to communities. The public interest factors it must consider under section 4(c)(8) policy also specifies that if an action affects a low- and of the BHC Act is favorable and consistent with approval. moderate-income community, additional analyses, commu- Based on the foregoing and all the facts of record, the nity contacts and/or review of needs ascertainment calls Board has determined that this notice should be, and hereby are appropriate. Each subsidiary bank's branch closing is, approved. The Board's approval is specifically condipolicy was reviewed as part of its CRA performance evalu- tioned on compliance by First Union with all commitments ation by the OCC and found to be satisfactory.20 made in connection with this notice. The Board's determi- The Board has carefully reviewed all the facts of record nation is also subject to all the conditions in Regulation Y, in considering the CRA performance records of First Union including those in sections 225.7 and 225.23(b)(3) and Society FSB. Based on these facts, including informa- (12 C.F.R. 225.7 and 225.23(b)(3)) and to the Board's tion provided by the Protestant and First Union and the authority to require such modification or termination of the facts and review in the First Union/First Fidelity Order, activities of a holding company or any of its subsidiaries as which are incorporated by reference in this order, the the Board finds necessary to assure compliance with, or to Board concludes that considerations relating to the CRA prevent evasion of, the provisions and purposes of the are consistent with approval. BHC Act and the Board's regulations and orders issued thereunder. The commitments and conditions relied on by Other Considerations the Board in reaching this decision are deemed to be conditions imposed in writing by the Board in connection The Board also concludes that the financial and managerial with its findings and decision, and as such may be enforced resources of First Union and Society FSB are consistent in proceedings under applicable law. with approval of this proposal.21 The transaction shall not be consummated later than The record also indicates that consummation of this three months following the effective date of this order, proposal would result in a broader financial network unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Richmond, acting pursuant to delegated authority. 20. Protestant has requested that the Board deny this application as By order of the Board of Governors, effective Februinformationally incomplete or, in the alternative, delay this proposal ary 26, 1996. until First Union provides information regarding Society FSB branches that would be closed. As explained above, the Board has Voting for this action: Chairman Greenspan, and Governors Kelley, evaluated First Union's branch closing policy and believes that the Lindsey, Phillips, and Yellen. policy is adequate. The Board is required under applicable law and its processing procedures to act on applications submitted under the BHC JENNIFER J. JOHNSON Act within a specified time. Based on all the facts of record, including reports of examination and other information from regulatory agen- Deputy Secretary of the Board cies, the Board concludes that the record is sufficient to act on this proposal at this time, and that delay or denial of this proposal on the grounds of informational insufficiency is not warranted. 21. Protestant maintains, based on several media sources, that HSBC Holdings pic investigations by the Securities and Exchange Commission ("SEC") into insider trading violations by Banco Santander, a passive investor London, England in First Union, and into alleged violations of standard practices in the sale of mutual funds by a brokerage subsidiary of First Union's subsidiary national bank warrant denial or delay of this application HSBC Holdings BV until the Board can conduct its own investigation of the alleged matters currently under consideration by the SEC. Based on all the Amsterdam, The Netherlands facts of record, including confidential information from the relevant supervisory agencies, the Board does not believe that the reports cited by the Protestant warrant denial of this proposal. The Board and the Order Approving a Notice to Engage in Underwriting OCC, the primary supervisor of First Union's subsidiary banks, also retain sufficient supervisory authority to address any improper prac- and Dealing in Bank-Ineligible Securities on a Limited tices that are substantiated. Basis, and Certain Other Nonbanking Activities Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 357 HSBC Holdings pic, London, England, and HSBC Hold- requirements of the Securities Exchange Act of 1934 ings BV, Amsterdam, The Netherlands (together, "Notifi- (15 U.S.C. 78a et seq.), the SEC, and the NASD. cants"), bank holding companies within the meaning of the The Board previously has determined by regulation and Bank Holding Company Act ("BHC Act"), have requested order that the proposed lending and derivatives trading the Board's approval under section 4(c)(8) of the BHC Act activities are closely related to banking and permissible for (12 U.S.C. § 1843(c)(8)) and section 225.23(a) of the bank holding companies under section 4(c)(8) of the BHC Board's Regulation Y (12 C.F.R. 225.23(a)) to engage Act.3 Notificants have stated that HSBC Securities would de novo in the following activities through their wholly conduct these activities in accordance with the limitations owned subsidiary, HSBC Securities, Inc., New York, New previously imposed by the Board. York ("HSBC Securities"):1 (1) Underwriting and dealing in, to a limited extent, all Underwriting and Dealing in Bank-Ineligible Securities types of debt and equity securities, other than ownership interests in open-end investment companies; The Board also has determined that, subject to the pruden- (2) Trading futures, options on futures, and options tial framework of limitations established in previous decibased on U.S. government securities, certificates of de- sions to address the potential for conflicts of interests, posit and other money market instruments that are per- unsound banking practices, or other adverse effects ("secmissible investments for national banks, and non-U.S. tion 20 firewalls"), the proposed activities of underwriting sovereign debt securities; and and dealing in bank-ineligible securities are so closely (3) Acting as agent in the syndication of loans. related to banking as to be a proper incident thereto within the meaning of section 4(c)(8) of the BHC Act.4 Notifi- Notificants propose to conduct these activities worldwide. cants have committed that HSBC Securities will conduct the proposed underwriting and dealing activities using the Notice of this proposal, affording interested persons an same methods and procedures and subject to the prudential opportunity to submit comments, has been published (61 limitations established by the Board in the Section 20 Federal Register 1936 (1996)). The time for filing com- Orders. ments has expired, and the Board has considered the notice The Board also has determined that the conduct of these and all comments received in light of the factors set forth securities underwriting and dealing activities is consistent in section 4(c)(8) of the BHC Act. with section 20 of the Glass-Steagall Act (12 U.S.C. Notificants, with consolidated assets equivalent to ap- § 377), provided that the company engaged in the activities proximately $344 billion, provide a wide range of banking, derives no more than 10 percent of its total gross revenue financial, and related services worldwide through various from underwriting and dealing in bank-ineligible securities subsidiaries and affiliated companies.2 Notificants own Ma- over any two-year period.5 Notificants have committed that rine Midland Bank, Buffalo, New York, which has deposits of approximately $16.6 billion. In addition, Notificants' Hong Kong banking subsidiaries, The Hongkong and 3. See 12 C.F.R. 225.25(b)(1); Swiss Bank Corporation, 81 Federal Reserve Bulletin 182(1995). Shanghai Banking Corporation Limited and Hang Seng 4. See Canadian Imperial Bank of Commerce, et al., 76 Federal Bank Limited, maintain branches in Los Angeles and Reserve Bulletin 158 (1990); J.P. Morgan & Co. Incorporated, et al., San Francisco, California; Chicago, Illinois; New York, 75 Federal Reserve Bulletin 192 (1989), aff'd sub nom. Securities New York; Portland, Oregon; and Seattle, Washington; and Industries Ass'n v. Board of Governors of the Federal Reserve System, an agency in Houston, Texas. Midland Bank pic, London, 900 F.2d 360 (D.C. Cir. 1990); Citicorp, et al., 73 Federal Reserve Bulletin 473 (1987), aff'd sub nom. Securities Industry Ass'n v. Board England, a banking subsidiary of Notificants, maintains a of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir. branch in New York, New York. 1988), cert, denied, 486 U.S. 1059 (1988) (collectively, "Section 20 HSBC Securities is a broker-dealer registered with the Orders"). 5. See Section 20 Orders. Compliance with the 10-percent revenue Securities and Exchange Commission ("SEC") and is a limitation shall be calculated in accordance with the method stated in member of the National Association of Securities Dealers the Section 20 Orders, as modified by the Order Approving Modifica- ("NASD"). Accordingly, HSBC Securities is subject to the tions to the Section 20 Orders, 75 Federal Reserve Bulletin 751 recordkeeping, reporting, fiduciary standards, and other (1989); the Order Approving Modifications to the Section 20 Orders, 19 Federal Reserve Bulletin 226 (1993); and the Supplement to Order Approving Modifications to Section 20 Orders, 79 Federal Reserve Bulletin 360 (1993) (collectively, "Modification Orders"). The Board notes that Notificants have not adopted the Board's alternative 1. Notificants recently merged their wholly owned subsidiary, James indexed-revenue test to measure compliance with the 10-percent limi- Capel, Inc., New York, New York, into HSBC Securities. HSBC tation on bank-ineligible securities activities, and, absent such elec- Securities is currently engaged in a number of nonbanking activities, tion, will continue to employ the Board's original 10-percent revenue including securities brokerage, underwriting and dealing in bank- test. The Board also notes that HSBC Securities may engage in eligible securities, and trading foreign exchange for nonhedging pur- activities that are necessary incidents to the proposed underwriting poses. See HSBC Holdings pic, 81 Federal Reserve Bulletin 728 and dealing activities, provided they are treated as part of the bank- (1995); The Hong Kong Shanghai Banking Corporation, 72 Federal ineligible securities activities, unless HSBC Securities receives spe- Reserve Bulletin 345 (1986); The Hong Kong Shanghai Banking cific approval under section 4(c)(8) of the BHC Act to conduct the Corporation, 75 Federal Reserve Bulletin 217 (1989). activities independently. Until such approval is obtained, any revenues 2. Asset data are as of June 30, 1995, and use exchange rates then in from the incidental activities must be counted as ineligible revenues effect. Deposit data are as of December 31, 1995. subject to the 10-percent revenue limitation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

358 Federal Reserve Bulletin • April 1996 HSBC Securities will conduct its underwriting and dealing For example, HSBC Securities has instituted internal activities in bank-ineligible securities subject to the controls to restrict the credit risk, market risk, and opera- 10-percent revenue test. tions risk associated with futures and options trading. Notificants would establish credit exposure limits for HSBC Securities. The Credit Manager of HSBC Securities would manage and monitor the company's exposure to credit Financial Factors, Managerial Resources, and Other risk.8 Considerations Market risk at HSBC Securities is controlled by impos- In order to approve this notice, the Board also must deter- ing exposure limits for each business unit and for the mine that the proposed activities "can reasonably be ex- portfolio as a whole. The HSBC Securities board of direcpected to produce benefits to the public, such as greater tors formally adopts market sensitivity limits and stop loss convenience, increased competition, or gains in efficiency, limitations for the company, which are set forth in HSBC that outweigh possible adverse effects, such as undue con- Securities's Market Risk Limit Mandate. Each trading desk centration of resources, decreased or unfair competition, is subject to specific exposure limits, and trading desk conflicts of interests, or unsound banking practices."6 In managers set trading limits that restrict each trader's auevaluating these factors under section 4(c)(8) of the BHC thority to open or close positions. Act, the Board considers the financial and managerial Operations risk is mitigated by comprehensive review resources of the notificant and its subsidiaries and the effect and monitoring procedures, including independent verificathe transaction would have on such resources.7 The Board tion of trade data and compliance with trading limits, as notes that Notificants' capital ratios satisfy applicable risk- well as the hiring of experienced operations staff and the based standards established under the Basle Accord, and implementation of detailed recordkeeping procedures and are considered equivalent to the capital levels that would systems. Monitoring and enforcement of HSBC Securibe required of a U.S. banking organization. The Board also ties's risk management policies and procedures would be has reviewed the capitalization of Notificants and HSBC facilitated by computer systems that would report all posi- Securities in accordance with the standards set forth in the tions on a real-time basis. Section 20 Orders. Based on all the facts of record, includ- Senior management and internal auditing personnel ing Notificants' projections of the volume of underwriting would be closely involved with monitoring the conduct of and dealing in bank-ineligible securities that would be the proposed derivatives trading activities. HSBC Securiperformed by HSBC Securities, the Board concludes the ties's Risk Management Unit would oversee directly all the capitalization of Notificants and HSBC Securities is consis- proposed trading activities. Trading managers would be tent with approval. On the basis of all the facts of record, responsible for monitoring intra-day compliance with esincluding the foregoing, the Board has concluded that tablished trading limits and the Risk Management Unit and financial and managerial considerations are consistent with senior management would review daily reports of HSBC approval of this notice. Securities's positions. As a registered broker-dealer, HSBC Securities would be Notificants and HSBC Securities have substantial experirequired to comply with the SEC's net capital rule.9 Notifience in trading bank-eligible securities and derivative prodcants anticipate that HSBC Securities's position in derivaucts. HSBC Securities, as a primary dealer, currently entive instruments would be small in comparison with its gages in a significant volume of dealing in U.S. government primary dealer operations. securities for its own account, and has broad experience in trading and monitoring bank-eligible securities positions. HSBC Securities has gained substantial experience in trading derivative products based on bank-eligible securities in connection with its primary dealer activities. Moreover, 8. Exchange-traded derivatives transactions of HSBC Securities would be executed and cleared by HSBC Futures, Inc., New York, Notificants have extensive, worldwide experience in trad- New York ("HSBC Futures"). HSBC Futures also provides futuresing futures, options, and options on futures contracts based related services to unaffiliated parties. In order to minimize any on financial instruments. potential conflicts of interests that could result from the related activi- The Board has reviewed the risk management policies, ties of HSBC Securities and HSBC Futures, Notificants have committed that HSBC Futures will disclose to its customers its affiliate procedures, systems and controls to be used by HSBC relationship with HSBC Securities, and the fact that HSBC Securities Securities in conducting and monitoring the proposed actrades futures, options, and options on futures contracts for its own tivities. These policies and risk management systems account. This disclosure will occur both at the beginning of the should help in minimizing the likelihood of significant customer relationship and upon confirmation of any order. In addition, losses that could result from the activities that are the Notificants have committed that HSBC Futures will not share nonpublic customer information with HSBC Securities without the exsubject of this notice. press written consent of the customer, and that in any case in which HSBC Futures knowingly executes a transaction to which HSBC Securities is a party, it will make prior disclosure of that fact to its 6. 12 U.S.C. § 1843(c)(8). customer and obtain the customer's prior consent to the arrangement. 7. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75 See The Dai-Ichi Kangyo Bank, Limited, 80 Federal Reserve Bulletin Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 148 (1994). Federal Reserve Bulletin 155 (1987). 9. See 15 C.F.R. 240.15c3-l. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 359 Under the framework established in this and prior deci- debt and equity securities that is adequate to ensure complisions, consummation of this proposal is not likely to result ance with the requirements of this order and the Section 20 in significantly adverse effects, such as undue concentra- Orders. On the basis of the Reserve Bank's review and all tion of resources, decreased or unfair competition, conflicts the facts of record, including the steps taken and the of interests, or unsound banking practices.10 The Board policies and procedures implemented by Notificants and by also expects that HSBC Securities's engaging in the pro- HSBC Securities in connection with this notice and in posed activities de novo would enhance market competi- response to the infrastructure review, the Board has detertion and provide greater convenience to HSBC Securities's mined that HSBC Securities has in place the managerial customers. On the basis of the foregoing and all the other and operational infrastructure and other policies and procefacts of record, the Board has concluded that the balance of dures necessary to comply with the requirements of the public interest factors it is required to consider under Section 20 Orders and this order. Accordingly, HSBC section 4(c)(8) of the BHC Act is favorable, and, therefore, Securities may commence underwriting and dealing in all that the proposed activities constitute a proper incident to types of debt and equity securities as permitted by and banking within the meaning of the BHC Act. subject to the conditions of this order. Accordingly, and for the reasons set forth in this order The Board's determination is also subject to all the terms and in the Section 20 Orders, the Board has concluded that and conditions set forth in Regulation Y, including those in Notificants' proposal to engage through HSBC Securities sections 225.7 and 225.23(g), and to the Board's authority in the proposed activities is consistent with the Glass- to require modification or termination of the activities of a Steagall Act, and that the proposed activities are so closely bank holding company or any of its subsidiaries as the related to banking as to be proper incidents thereto within Board finds necessary to assure compliance with, and to the meaning of section 4(c)(8) of the BHC Act, provided prevent evasion of, the provisions of the BHC Act and the that Notificants limit HSBC Securities's activities as speci- Board's regulations and orders issued thereunder. The fied in this order and the Section 20 Orders, as modified by Board's decision is specifically conditioned on compliance the Modification Orders. with all the commitments made in connection with this On the basis of the record, the Board has determined to, notice, including the commitments discussed in this order and hereby does, approve this notice subject to all the and the conditions set forth in the above-noted Board terms and conditions discussed in this order and in the regulations and orders. These commitments and conditions Section 20 Orders as modified by the Modification Orders. shall be deemed to be conditions imposed in writing by the The Board's approval of this proposal extends only to Board in connection with its findings and decisions, and activities conducted within the limitations of those orders may be enforced in proceedings under applicable law. and this order, including the Board's reservation of author- This transaction shall not be consummated later than ity to establish additional limitations to ensure that HSBC three months after the effective date of this order unless Securities's activities are consistent with safety and sound- such period is extended for good cause by the Board or by ness, conflicts of interests, and other relevant consider- the Federal Reserve Bank of New York, acting pursuant to ations under the BHC Act. Underwriting and dealing in delegated authority. any manner other than as approved in this order and the By order of the Board of Governors, effective Feb- Section 20 Orders (as modified by the Modification Or- ruary 15, 1996. ders) is not authorized for HSBC Securities. The Federal Reserve Bank of New York has reviewed Voting for this action: Chairman Greenspan and Governors Kelley, the operational and managerial infrastructure of HSBC Lindsey, Phillips, and Yellen. Securities, including its computer, audit, and accounting systems, and internal risk management procedures and JENNIFER J. JOHNSON Deputy Secretary of the Board controls. The Reserve Bank has determined that HSBC Securities has established an operational and managerial infrastructure for underwriting and dealing in all types of KeyCorp Cleveland, Ohio 10. The Board notes that in order to address potential conflicts of Order Approving a Notice to Engage in Certain interests arising from HSBC Securities's conduct of full-service bro- Nonhanking Activities kerage activities together with underwriting and dealing in bankineligible securities, Notificants have committed that HSBC Securities will inform its customers at the commencement of the relationship Key Corp, Cleveland, Ohio ("Notificant"), a bank holding that, as a general matter, HSBC Securities may be a principal or may company within the meaning of the Bank Holding Combe engaged in underwriting with respect to, or may purchase from an affiliate, those securities for which brokerage and advisory services pany Act ("BHC Act"), has given notice under section are provided. In addition, at the time any brokerage order is taken, the 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and seccustomer will be informed (usually orally) whether HSBC Securities tion 225.23 of the Board's Regulation Y (12 C.F.R. 225.23) is acting as agent or principal with respect to a security. Confirmations of its intention to establish a de novo subsidiary, Key sent to customers also will state whether HSBC Securities is acting as agent or principal. See PNC Financial Corp., 75 Federal Reserve Capital Markets, Inc., Cleveland, Ohio ("Company"), and Bulletin 396 (1989). thereby engage in the following nonbanking activities: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

360 Federal Reserve Bulletin • April 1996 (1) Underwriting and dealing in, to a limited extent, Activities Approved by Regulation certain municipal revenue bonds (including certain unrated municipal revenue bonds), family mortgage- As noted above, Company's proposed investment and firelated securities, consumer receivable-related securi- nancial advisory, securities brokerage, bank-eligible securities, and commercial paper ("bank-ineligible ties underwriting and dealing, and foreign exchange advisecurities"); sory and transactional service activities have been (2) Acting as agent in the private placement of all types determined by regulation to be activities that are closely of securities, and buying and selling all types of securi- related to banking for purposes of section 4(c)(8) of the ties on the order of customers as a "riskless principal"; BHC Act.2 Notificant has committed that Company will (3) Trading for its own account, for purposes other than conduct these activities in accordance with the limitations hedging, in futures, options, and options on futures set forth in Regulation Y and the Board's orders relating to contracts based on bank-eligible securities and certifi- these activities.3 cates of deposits or other money market instruments eligible for investment by national banks; Underwriting and Dealing in Bank-Ineligible Securities (4) Providing investment and financial advisory services, pursuant to section 225.25(b)(4) of Regulation Y The Board has determined that, subject to the prudential (12 C.F.R. 225.25(b)(4)); framework of limitations established in previous decisions (5) Providing discount and full-service securities broker- to address the potential for conflicts of interests, unsound age services, pursuant to section 225.25(b)(15) of Regu- banking practices, or other adverse effects, the proposed lation Y (12 C.F.R. 225.25(b)(15)); activities of underwriting and dealing in bank-ineligible (6) Underwriting and dealing in obligations of the United securities are so closely related to banking as to be a proper States and other obligations that state member banks incident thereto within the meaning of section 4(c)(8) of may underwrite and deal in under 12 U.S.C. §§335 and the BHC Act.4 Notificant has committed that Company 24(7) ("bank-eligible securities"), pursuant to section will conduct the proposed underwriting and dealing activi- 225.25(b)(16) of Regulation Y (12 C.F.R. ties in bank-ineligible securities using the same methods 225.25(b)(16)); and and procedures and subject to the same prudential limita- (7) Providing foreign exchange advisory and transac- tions established by the Board in the Section 20 Orders. tional services, pursuant to section 225.25(b)(17) of Regulation Y (12 C.F.R. 225.25(b)(17)). Notice of this proposal, affording interested persons an 2. See 12 C.F.R. 225.25(b)(4), (b)(15), (b)(16), and (b)(17). 3. The Board notes that in order to address potential conflicts of opportunity to submit comments, has been published (60 interests arising from Company's conduct of full-service brokerage Federal Register 67,136 (1995)). The time for filing comactivities along with underwriting and dealing in bank-ineligible secuments has expired, and the Board has considered the notice rities, Notificant has committed that Company will inform its full-serand all comments received in light of the factors set forth vice brokerage customers at the commencement of the relationship in section 4(c)(8) of the BHC Act. that, as a general matter, Company may be a principal or may be engaged in underwriting with respect to, or may purchase from an Notificant, with total consolidated assets of approxiaffiliate, those securities for which brokerage and advisory services mately $68 billion, is the eighth largest banking organiza- are provided. In addition, at the time any brokerage order is taken, the tion in the United States.1 Notificant operates banking customer will be informed (usually orally) whether the Company is subsidiaries in Alaska, Colorado, Idaho, Indiana, Maine, acting as agent or principal with respect to a security. Confirmations sent to customers also will state whether the Company is acting as Michigan, New York, Ohio, Oregon, Utah, and Washingagent or principal. See PNC Financial Corp., 75 Federal Reserve ton and engages, through other subsidiaries, in various Bulletin 396 (1989). permissible nonbanking activities. Company has applied to 4. See Citicorp, et al, 73 Federal Reserve Bulletin 473 (1987), aff'd register as a broker-dealer with the Securities and Ex- sub nom. Securities Industry Ass'n v. Board of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir.), cert, denied, 486 U.S. change Commission ("SEC") under the Securities Ex- 1059 (1988), as modified by Order Approving Modifications to Secchange Act of 1934 (15 U.S.C. § 78a et seq.) and has tion 20 Orders, 75 Federal Reserve Bulletin 751 (1989) (collectively, sought membership in the National Association of Securi- "Section 20 Orders"). Notificant proposes that Company underwrite ties Dealers, Inc. ("NASD"). On registration with the SEC and deal in, to a limited extent, "private ownership" industrial develand admission to the NASD, Company would be subject to opment bonds that are issued for the provision of the following governmental services: water facilities, sewer facilities, solid waste the recordkeeping and reporting obligations, fiduciary standisposal facilities, electric energy and gas facilities, and local district dards, and other requirements of the Securities Exchange heating or cooling facilities (collectively, "traditional governmental Act of 1934, the SEC, and the NASD. services"). All "private ownership" bonds that Company proposes to underwrite and deal in would qualify as "exempt facility bonds" under the Internal Revenue Code. See 26 U.S.C. § 142. The Board previously has concluded that underwriting and dealing in "private ownership" industrial development bonds issued for traditional government services is a permissible activity under section 4(c)(8) of the BHC Act if conducted subject to the conditions and prudential limitations set forth in the Section 20 Orders. See Bank South Corporation, 1. Asset and ranking data are as of September 30, 1995. 81 Federal Reserve Bulletin 1116 (1995). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 361 Notificant has requested that the Board permit limited any two-year period.7 Notificant has committed that Comdirector and officer interlocks between Company and the pany will conduct its underwriting and dealing activities in bank and thrift subsidiaries of Notificant, or the subsidiar- bank- ineligible securities subject to the 10-percent reveies of such banks and thrifts ("affiliated banks"). Notifi- nue test established by the Board in previous orders.8 cant proposes to have two director interlocks between Company and affiliated banks. The directors would not be Private Placement and "Riskless Principal" Activities officers of the affiliated banks, nor would they have authority to conduct the day-to-day business of affiliated banks or Private placement involves the placement of new issues of to handle individual transactions. In addition, the interlock- securities with a limited number of sophisticated purchasing directors would represent less than a majority of the ers in a nonpublic offering. A financial intermediary in a board of Company and the affiliated banks. Notificant also private placement transaction acts solely as an agent of the has requested the Board to permit one officer interlock issuer in soliciting purchasers and does not purchase the between Company and its affiliated banks. This officer securities and attempt to resell them. Securities that are would be an attorney or other officer of a nonbanking privately placed are not subject to the registration requiresubsidiary of Notificant who would serve as assistant secre- ments of the Securities Act of 1933 and are offered only to tary of Company and its affiliated banks. Notificant has financially sophisticated institutions and individuals and indicated that this interlock is sought primarily to facilitate not to the public. Company would not privately place the provision of corporate legal and recordkeeping services registered securities and would place securities only with to Company. The officer would provide only legal counsel customers that qualify as accredited investors. and corporate recordkeeping services to Company, and "Riskless principal" is the term used in the securities would not serve as a management official of or have policy business to refer to a transaction in which a broker-dealer, making responsibilities for Company, nor would the officer after receiving an order to buy (or sell) a security for a have any sales responsibilities or have any contact with customer, purchases (or sells) the security for its own customers of Company or the general public. account to offset a contemporaneous sale to (or purchase The Board previously has permitted the type of limited from) the customer.9 Riskless principal transactions are director and officer interlocks proposed by Notificant.5 In understood in the industry to include only transactions in view of the limitations and commitments proposed by the secondary market. Thus, Company would not act as a Notificant, the Board believes that Company would remain riskless principal in selling securities at the order of a operationally distinct from its affiliated banks and that the customer that is the issuer of the securities to be sold or in proposed interlocks are not likely to result in conflicts of any transaction where Company has a contractual agreeinterests, unsound banking practices, or other adverse ef- ment to place the securities as agent of the issuer. Company fects. Accordingly, the Board has concluded that Notifi- also would not act as a riskless principal in any transaction cant's proposed interlocks should be permitted. The Board involving a security for which it makes a market. expects Notificant to ensure that the framework established The Board has determined by order that, subject to pursuant to the Section 20 Orders will be maintained in all prudential limitations that address the potential for conother respects.6 flicts of interests, unsound banking practices, or other The Board also has determined that the conduct of the adverse effects, the proposed private placement and risksecurities underwriting and dealing activities proposed by less principal activities are so closely related to banking as Notificant is consistent with section 20 of the Glass- to be a proper incident thereto within the meaning of Steagall Act (12 U.S.C. § 377), provided that the company engaged in the underwriting and dealing activities derives 7. See Section 20 Orders. Compliance with the 10-percent revenue no more than 10 percent of its total gross revenue from limitation shall be calculated in accordance with the method stated in underwriting and dealing in bank-ineligible securities over J.P. Morgan & Co. Incorporated, 75 Federal Reserve Bulletin 192 (1989), as modified by the Order Approving Modifications to the Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989); the Order Approving Modifications to the Section 20 Orders, 79 Federal Reserve 5. See National City Corporation, 80 Federal Reserve Bulletin 346 Bulletin 226 (1993); and the Supplement to Order Approving Modifi- (1994). cations to Section 20 Orders, 79 Federal Reserve Bulletin 360 (1993). 6. In connection with its proposal to underwrite and deal in unrated The Board notes that Notificant has not adopted the Board's alternamunicipal revenue bonds, including unrated public ownership and tive indexed-revenue test to measure compliance with the 10-percent "private ownership" industrial development bonds, Notificant has limitation on bank-ineligible securities activities, and, absent such committed that Company will not underwrite any unrated municipal election, Notificant would continue to employ the Board's original revenue bond until Company conducts an independent credit review 10-percent revenue test. and determines that the securities are of investment grade quality. 8. Company also may engage in activities that are necessary inci- Notificant also has committed that no single issue of unrated munici- dents to the proposed underwriting and dealing activities, provided pal revenue bonds, including unrated public ownership and "private that they are treated as part of the bank-ineligible securities activities, ownership" industrial development bonds, underwritten by Company unless Company has received specific approval under section 4(c)(8) would exceed $7.5 million, and has provided other commitments of the BHC Act to conduct the activities independently. Until such previously relied upon by the Board in authorizing a section 20 approval is obtained, any revenues from the incidental activities must company to underwrite and deal in, to a limited extent, unrated be counted as ineligible revenues subject to the 10-percent revenue municipal revenue bonds. See Letter Interpreting Section 20 Orders, limitation. 81 Federal Reserve Bulletin 198 (1995). 9. See SEC Rule 10b-10(a)(8)(i) (17 C.F.R. 240.10b-10(a)(8)(i)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

362 Federal Reserve Bulletin • April 1996 section 4(c)(8) of the BHC Act.10 The Board also has traded and over-the-counter futures, options, and options determined that acting as agent in the private placement of on futures based on bank-eligible securities and certificates securities and purchasing and selling securities on the of deposit or other money market instruments eligible for order of investors as a riskless principal do not constitute investment by national banks is closely related to bankunderwriting and dealing in securities for purposes of ing.14 section 20 of the Glass-Steagall Act, and that revenue derived from these activities is not subject to the Proper Incident to Banking Standard and Other 10-percent revenue limitation on bank-ineligible securities Considerations underwriting and dealing.11 Notificant has committed that Company will conduct its Under the proper incident to banking standard of section private placement and riskless principal activities using the 4(c)(8) of the BHC Act, in order to approve this notice, the same methods and procedures, and subject to the same Board must determine that the performance of the proprudential limitations established by the Board in Bankers posed activities by Notificant can reasonably be expected Trust and J.P. Morgan,12 including the comprehensive to produce public benefits that would outweigh possible framework of restrictions imposed by the Board in connec- adverse effects. As part of the Board's evaluation of these tion with underwriting and dealing in bank-ineligible secu- factors, the Board considers the financial and managerial rities, which were designed to avoid potential conflicts of resources of the notificant and its subsidiaries and the effect interests, unsound banking practices, and other adverse the transaction would have on such resources.15 Based on effects.13 all the facts of record, the Board concludes that financial and managerial considerations are consistent with approval Trading Futures and Options on Bank Eligible of this notice. Instruments As noted above, Notificant has committed that Company will conduct its bank-ineligible securities underwriting and The Board also previously has determined that purchasing dealing activities in accordance with the prudential frameand selling, for purposes other than hedging, exchange- work established by the Board in its Section 20 Orders. Under the framework and conditions established in this order and the Section 20 Orders, the Board concludes that Company's proposed underwriting and dealing in, to a 10. See J.P. Morgan & Company Incorporated, 76 Federal Reserve Bulletin 26 (1990) ("J.P. Morgan")-, Bankers Trust New York Corpo- limited extent, bank-ineligible securities is not likely to ration, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust"). result in significantly adverse effects, such as undue con- 11. See Bankers Trust. centration of resources, decreased or unfair competition, 12. Among the prudential limitations discussed more fully in Bankconflicts of interest, or unsound banking practices. Moreers Trust and J.P. Morgan are that Company will maintain specific over, the Board expects that the de novo entry of Company records that will clearly identify all riskless principal transactions, and that Company will not engage in any riskless principal transactions for into the market for the proposed services would provide any securities carried in its inventory. When acting as a riskless added convenience to Notificant's customers and would principal, Company will not hold itself out as making a market in the increase the level of competition among existing providers securities that it buys and sells as a riskless principal. In addition, of these services. Company will not act as a riskless principal for open-end investment company securities or with respect to any securities of investment With respect to trading activities, Notificant, through its companies that are advised by Notificant or any of its affiliates. With bank subsidiaries, has gained substantial experience in regard to private placement activities, Notificant has committed that trading and monitoring positions in bank-eligible securi- Company will not privately place registered investment company ties. In connection with these activities, Notificant has securities or securities of investment companies that are sponsored or developed expertise in trading derivative instruments readvised by Notificant or any of its affiliates. 13. In previous orders approving riskless principal activities, the lated to bank-eligible securities and money market instru- Board has relied on commitments by bank holding companies to ments and has established comprehensive operational, acrefrain from entering quotes for specific securities in the NASDAQ or counting, and control systems to limit and monitor the risks any other dealer quotation system in connection with riskless principal associated with trading derivative products based on banktransactions. See Bankers Trust. Notificant proposes that Company, in acting as a riskless principal, be permitted to enter bid or ask quota- eligible securities and money market instruments. The tions, or publish "offering wanted" or "bid wanted" notices, on Board has carefully reviewed the operational, accounting, trading systems other than an exchange or the NASDAQ. and risk management policies and systems used by Notifi- In order to ensure that Company would not hold itself out as a cant and its subsidiaries in connection with their trading market maker with respect to securities for which it acts as riskless activities. These policies and systems are designed to mitiprincipal, Notificant has committed that Company will not enter price quotations on different sides of the market for a particular security gate the credit risk, market risk, and operations risk that during the same two business day period. In other words, Company would not enter an "ask" quote for two business days after entering a "bid" quote with respect to the same security, and vice versa. The 14. See Swiss Bank Corporation, 81 Federal Reserve Bulletin 185 Board previously has determined that these activities are permissible (1995); Swiss Bank Corporation, 11 Federal Reserve Bulletin 759 and do not constitute underwriting and dealing in securities for pur- (1991) ("1991 Swiss Bank Order"). poses of the Glass-Steagall Act. See BankAmerica Corporation, 79 15. See 12 C.F.R. 225.24; see also The Fuji Bank, Limited, 75 Federal Reserve Bulletin 1163 (1993); Dauphin Deposit Corporation, Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 11 Federal Reserve Bulletin 672 (1991). Federal Reserve Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 363 arise from the proposed trading activities and are similar to sion of, the provisions of the BHC Act and the Board's the policies and systems relied on by the Board in approv- regulations and orders issued thereunder. In approving this ing such activities for section 20 companies.16 proposal, the Board has relied on all the facts of record and Notificant has indicated that Company would implement all the representations and commitments made by Notifithe procedures and systems currently in place at Notifi- cant. These commitments and conditions shall be deemed cant's bank subsidiaries for conducting and monitoring to be conditions imposed in writing by the Board in con- Company's proposed trading activities in bank-eligible se- nection with its findings and decisions, and may be encurities and related derivative instruments.17 The Board forced in proceedings under applicable law. also notes that Notificant proposes to transfer to Company This transaction shall not be consummated later than personnel who have substantial experience in operating three months after the effective date of this order, unless Notificant's risk management systems. Based on these such period is extended for good cause by the Board or the representations and all other facts of record, the Board has Federal Reserve Bank of Cleveland, acting pursuant to determined that the performance of the proposed activities delegated authority. by Notificant can reasonably be expected to produce public By order of the Board of Governors, effective Febbenefits that outweigh possible adverse effects under the ruary 20, 1996. proper incident to banking standard of section 4(c)(8) of the BHC Act.18 Voting for this action: Chairman Greenspan and Governors Kelley, Based on all the facts of record, and subject to the Lindsey, and Phillips. Absent and not voting: Governor Yellen. commitments made by Notificant, as well as the terms and conditions set forth in this order and in the Board orders JENNIFER J. JOHNSON Deputy Secretary of the Board noted above, the Board has determined that the notice should be, and hereby is, approved. Approval of this pro- The Royal Bank of Canada posal is specifically conditioned on compliance by Notifi- Montreal, Quebec, Canada cant and Company with the commitments made in connection with this notice and the conditions referenced in this Order Approving a Notice to Engage in Data Processing order and the above- cited Board regulations and orders. Activities The Board's determination also is subject to all the terms and conditions set forth in Regulation Y, including those in The Royal Bank of Canada, Montreal, Quebec, Canada sections 225.7 and 225.23(g) (12 C.F.R. 225.7 and ("RBOC"), a foreign banking organization that is subject 225.23(g)) and to the Board's authority to require modifito the provisions of the Bank Holding Company Act cation or termination of the activities of a bank holding ("BHC Act"), has requested approval under section 4(c)(8) company or any of its subsidiaries as the Board finds of the BHC Act (12 U.S.C. § 1843(c)(8)) and section necessary to assure compliance with, and to prevent eva- 225.23(a) of the Board's Regulation Y (12 C.F.R. 225.23(a)) to acquire 20 percent of the voting shares of 16. See Swiss Bank Corporation, 81 Federal Reserve Bulletin 185 MECA Software, L.L.C., Fairfield, Connecticut ("Com- (1995); The Dai-Ichi Kangyo Bank, Limited, 80 Federal Reserve pany"). As a result of this proposal, RBOC would engage Bulletin 148 (1994); 1991 Swiss Bank Order. through Company in the development, production, and 17. Notificant has committed that Company will not become a provision of home banking, personal financial managespecialist or market-maker with respect to eligible derivative instrument, and other computer software pursuant to section ments. The Board notes that Company would use the instruments listed in the 1991 Swiss Bank Order to hedge the market risk resulting 225.25(b)(7) of Regulation Y (12 C.F.R. 225.25(b)(7)) from its proposed derivative activities, and that Company, as a regis- throughout the United States and Canada. tered broker-dealer, would be required to comply with the SEC's Notice of the proposal, affording interested persons an minimum net capital rules. See 15 C.F.R. 240.15c3-l. opportunity to submit comments, has been published (61 18. Society Asset Management, Inc. ("SAMI"), an indirect wholly owned subsidiary of Notificant's subsidiary bank, Society National Federal Register 168 (1996)). The time for filing com- Bank, Cleveland, Ohio, engages in providing investment advice on ments has expired, and the Board has considered this certain of the derivative instruments proposed to be traded in by proposal and all comments received, in light of the factors Company. In order to minimize any potential conflicts of interests that set forth in section 4(c)(8) of the BHC Act. could result from the related activities of Company and SAMI, Notificant has committed that SAMI will disclose to its customers that it is RBOC, with total consolidated assets equivalent to apaffiliated with Company, and that Company trades futures, options, proximately $136.5 billion, operates a branch in New York, and options on futures for its own account. This disclosure will occur New York; a representative office in Chicago, Illinois; and both at the commencement of the customer relationship and upon agencies in Los Angeles, California, and Miami, Florida.1 confirmation of any order. In addition, Notificant has committed that RBOC also engages through subsidiaries in permissible SAMI will not share nonpublic customer information with Company without the express written consent of the customer, and that in any nonbanking activities in the United States. case in which SAMI knowingly executes a transaction to which Company is a party, it will make prior disclosure of that fact to its customer and obtain the customer's prior consent to the arrangement. These commitments are similar to commitments relied on by the Board in similar previous cases. See The Dai-Ichi Kangyo Bank, 1. Asset data are as of October 31, 1995, and are based on exchange Limited, 80 Federal Reserve Bulletin 148 (1994). rates then in effect. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

364 Federal Reserve Bulletin • April 1996 Company is currently jointly owned by national bank Company also previously developed several nonfinansubsidiaries of BankAmerica Corporation, San Francisco, cial software products, including games, a computer secu- California, and NationsBank Corporation, Charlotte, North rity program, a medical reference library, and a program Carolina.2 providing basic legal forms. RBOC indicates that Company does not dedicate any employees or resources exclu- Proposed Activities sively to the development or marketing of nonfinancial software, and that revenues from the separate sale of nonfi- Company currently develops, produces, markets, and sup- nancial software accounted for approximately 7 percent of ports computer software products that enable individuals to Company's 1994 revenues. RBOC also indicates that Comorganize their personal finances. Company's principal soft- pany has no intention to develop any new nonfinancial ware product is Managing Your Money, a computer pro- software or to upgrade, enhance, or promote its current gram that permits customers to conduct basic banking nonfinancial programs, and that this portion of Company's transactions and personal financial management using their business is expected to diminish over time. In view of the personal computers.3 Following consummation of this pro- limited nature of this activity in this case, the Board posal, Company would continue to market Managing Your concludes that RBOC may proceed to acquire the proposed Money and other financial software to financial institutions 20 percent interest in Company. and other customers. In addition, Company would continue In order to approve this notice, the Board also must to provide customized financial and banking computer determine that the proposed activities are a proper incident software to financial institutions to permit them to offer to banking, that is, that the performance of the proposed home banking and personal finance services to their cus- activities by RBOC through Company "can reasonably be tomers. expected to produce benefits to the public, such as greater The Board previously has determined that processing convenience, increased competition, or gains in efficiency, financial, banking, and economic data is closely related to that outweigh possible adverse effects, such as undue conbanking and therefore permissible for bank holding compa- centration of resources, decreased or unfair competition, nies under section 4(c)(8) of the BHC Act.4 The Board conflicts of interests, or unsound banking practices."6 believes that the development, production, and sale of As part of its review of these factors in every case computer software, such as Managing Your Money, to involving a nonbanking acquisition by a bank holding process financial, banking, or economic data, is closely company under section 4 of the BHC Act, the Board related to banking under section 4(c)(8) of the BHC Act considers the financial and managerial resources of the and encompassed within the activities permissible under notificant and its subsidiaries, and the company to be the Board's data processing regulation. RBOC has commit- acquired, and the effect of the proposed transaction on ted that Company will conduct these data processing activ- those resources.7 Based on all the facts of record, the Board ities in accordance with the requirements set forth in Regu- has concluded that financial and managerial considerations lation Y.5 are consistent with approval of this proposal. The Board expects that the proposed capital investment by RBOC in Company would improve Company's ability to compete in the financial software market. RBOC's par- 2. OCC Interpretative Letter No. 677, reprinted in [1994-1995 ticipation in Company also would likely result in an expantransfer Binder] Fed. Banking L. Rep. (CCH) t 83,625. National bank sion of Company's customer base and thereby help estabsubsidiaries of Fleet Financial Group, Inc., Providence, Rhode Island, lish Company as a viable competitor in the industry. The and First Bank Systems, Inc., Minneapolis, Minnesota, have applied Board also anticipates that Company's proposed activities, to the Office of the Comptroller of the Currency to acquire an interest which should be enhanced as a result of this proposal, in Company. 3. For example, Managing Your Money enables customers to pay would result in a wider range of services and products, bills, view and reconcile checking account registers, gain access to greater efficiency, and increased convenience for customers their checking and savings account statements, transfer funds between of RBOC and other financial institutions. accounts, receive stock quotations, and engage in tax and financial There is no evidence in the record that consummation of planning. 4. In particular, section 225.25(b)(7) of Regulation Y permits bank this proposal would result in any significantly adverse holding companies to provide data processing and data transmission effects, such as undue concentration of resources, deservices, facilities (including software), data bases, or access to such creased or unfair competition, conflicts of interests, or services, facilities, or data bases by any technological means, so long unsound banking practices that are not outweighed by the as the data to be processed or furnished are "financial, banking, or public benefits of this proposal. RBOC does not currently economic" in nature. See 12 C.F.R. 225.25(b)(7). 5. Regulation Y also requires that the services be provided pursuant provide these products and services and the Board notes to a written agreement and places certain limitations on the facilities and hardware provided with the data processing services. In particular, the facilities must be designed, marketed and operated for the pro- agreement and will provide facilities and hardware within the limitacessing and transmission of financial, banking, or economic data; tions established by Regulation Y. hardware must be provided only in conjunction with permissible 6. 12 U.S.C. § 1843(c)(8). software; and general purpose hardware must not constitute more than 7. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75 30 percent of the cost of any packaged offering. RBOC has committed Federal Reserve Bulletin 94 (1989); and Bayerische Vereinsbank, AG, that Company will provide the proposed services pursuant to a written 73 Federal Reserve Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 365 that there is no evidence that the proposed transaction Trust Company, New York, New York ("Sumitomo would decrease the level of existing or potential competi- Trust"), the trust business of Daiwa Bank Trust Company, tion among providers of these services. New York, New York ("Daiwa Trust"), a wholly owned On the basis of the foregoing and all the facts of record, subsidiary of The Daiwa Bank, Limited, Osaka, Japan the Board has concluded that the balance of the public ("Daiwa"), and the custody business of the New York interest factors it is required to consider under the proper branch of Daiwa and thereby engage in trust company incident to banking standard of section 4(c)(8) of the BHC activities pursuant to section 225.25(b)(3) of Regulation Y Act is favorable, and consistent with approval of this (12 C.F.R. 225.25(b)(3)). notice. Notice of this proposal, affording interested persons an opportunity to submit comments, has been published Conclusion (61 Federal Register 352 (1996)). The time for filing comments has expired, and the Board has considered the notice and all comments received in light of the factors set Based on the foregoing and all the facts of record, the forth in section 4(c)(8) of the BHC Act. Board has determined that the notice should be, and hereby Sumitomo, with total consolidated assets equivalent to is, approved. Approval of this proposal is specifically conapproximately $541 billion, is the fourth largest banking ditioned on compliance by RBOC with the commitments organization in Japan and the world.1 In the United States, made in connection with this notice and with the condiin addition to Sumitomo Trust, a limited purpose trust tions referred to in this order. The Board's determination company, Sumitomo operates The Sumitomo Bank of Calalso is subject to all the conditions set forth in Regulaifornia, San Francisco, California, and owns a 13.6 percent tion Y, including those in sections 225.7 and 225.23(g) of interest in CPB Inc., Honolulu, Hawaii ("CPB").2 Sumi- Regulation Y (12 C.F.R. 225.7 and 225.23(g)), and to the tomo operates branches in Los Angeles and San Francisco, Board's authority to require such modification or termina- California; Chicago, Illinois; and New York, New York. tion of the activities of a bank holding company or any of Sumitomo also operates agencies in Atlanta, Georgia, and its subsidiaries as the Board finds necessary to ensure Houston, Texas; and a representative office in Seattle, compliance with, and to prevent evasion of, the provisions Washington. Sumitomo also engages directly and through of the BHC Act and the Board's regulations and orders subsidiaries in other permissible nonbanking activities in issued thereunder. For purposes of this action, these comthe United States and abroad. mitments and conditions shall be deemed to be conditions The Board previously has determined by regulation that, imposed in writing by the Board in connection with its subject to the limitations established in Regulation Y, enfindings and decision, and, as such, may be enforced in gaging in trust related and custodial activities is closely proceedings under applicable law. related to banking within the meaning of the BHC Act and, This transaction shall not be consummated later than therefore, is permissible for bank holding companies.3 three months after the effective date of this order, unless Sumitomo has committed that these proposed activities such period is extended for good cause by the Board or by will be conducted in conformity with the limitations estabthe Federal Reserve Bank of New York, acting pursuant to lished in Regulation Y. delegated authority. In order to approve this notice, the Board is required to By order of the Board of Governors, effective Februdetermine that the performance of the proposed activities ary 6, 1996. by Sumitomo can reasonably be expected to produce benefits to the public that would outweigh possible adverse Voting for this action: Chairman Greenspan and Governors Kelley, Lindsey, Phillips, and Yellen. effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act.4 JENNIFER J. JOHNSON The Board expects that this proposal would provide Deputy Secretary of the Board gains in efficiency, added convenience to Sumitomo customers, and another source of trust services for Daiwa's The Sumitomo Bank, Limited former customers.5 Moreover, consummation of this pro- Osaka, Japan posal is not likely to result in any significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or Order Approving a Notice to Engage in Trust Company Activities 1. Asset data are as of September 30, 1995. The Sumitomo Bank, Limited, Osaka, Japan ("Sumi- 2. CPB controls 100 percent of the voting shares of Central Pacific tomo"), a bank holding company within the meaning of Bank, Honolulu, Hawaii. the Bank Holding Company Act ("BHC Act"), has given 3. See 12 C.F.R. 225.25(b)(3). notice under section 4(c)(8) of the BHC Act (12 U.S.C. 4. 12 U.S.C. § 1843(c)(8). 5. On November 1, 1995, Daiwa and Daiwa Trust entered into § 1843(c)(8)) and section 225.23 of the Board's Regulaconsent orders with the Board and other federal and state authorities to tion Y (12 C.F.R. 225.23) of its proposal to acquire, terminate the banking operations of Daiwa and Daiwa Trust in the through its subsidiary, the Sumitomo Bank of New York United States by February 2, 1996. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

366 Federal Reserve Bulletin • April 1996 unsound banking practices. Accordingly, the Board has subsidiaries as the Board finds necessary to assure compliconcluded that the performance of the proposed activities ance with, and to prevent evasion of, the provisions of the by Sumitomo can reasonably be expected to produce pub- BHC Act, and the Board's regulations and orders issued lic benefits that would outweigh any adverse effects under thereunder. The Board's decision also is specifically condithe proper incident to banking standard of section 4(c)(8) tioned on compliance with all the commitments made in of the BHC Act.6 connection with this notice, including, but not limited to, In every case involving a nonbanking acquisition by a commitments made with respect to retention and maintebank holding company under section 4 of the BHC Act, the nance of documents, and the conditions set forth in this Board considers the financial condition and resources of order and in the Board's regulations as noted above. These the notificant and its subsidiaries and the effect of the commitments and conditions shall be deemed to be conditransaction on these resources.7 The Board notes that Sumi- tions imposed in writing by the Board in connection with tomo meets the relevant risk-based capital standards estab- its findings and decisions and, as such, may be enforced in lished under the Basle Accord, and has capital equivalent proceedings under applicable law. to that which would be required of a United States banking This transaction shall not be consummated later than organization. In view of these and other facts of record, the three months following the effective date of this order, Board has determined that the financial factors are consis- unless such period is extended for good cause by the Board tent with approval of the notice. The managerial resources or by the Federal Reserve Bank of San Francisco, acting of Sumitomo and its subsidiaries also are consistent with pursuant to delegated authority. approval. By order of the Board of Governors, effective Febru- Based on the foregoing and all the facts of record, the ary 2, 1996. Board has determined that the notice should be, and hereby is, approved. The Board's determination is subject to all Voting for this action: Chairman Greenspan, Vice Chairman the terms and conditions set forth in Regulation Y, includ- Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen. ing those in sections 225.7 and 225.23(b), and to the Board's authority to require modification or termination of WILLIAM w. WILES Secretary of the Board the activities of a bank holding company or any of its ORDERS ISSUED UNDER BANK MERGER ACT 6. The Board received comments from the Inner City Press/ Community on the Move ("ICP") on this proposal. ICP urges the The Fifth Third Bank Board to scrutinize closely the transaction in light of the Board's consent order terminating the operations of Daiwa and to pay particu- Cincinnati, Ohio lar attention to compliance by Sumitomo and Daiwa with the Community Reinvestment Act (12U.S.C. § 2901 et seq.) ("CRA"). ICP The Fifth Third Bank of Columbus argues that the proposal by Sumitomo to acquire only the nonbanking Columbus, Ohio operations of Daiwa Trust through a nonbank company will eliminate a financial institution that currently is subject to the CRA in favor of one that is not subject to the CRA. In addition, ICP argues that the Order Approving the Merger of Banks and Establishment Board should carefully evaluate whether the possibility that Sumi- of Branches tomo might merge with Daiwa could result in a circumvention of the Board's termination order. The Fifth Third Bank, Cincinnati, Ohio ("Fifth Third- The Board has carefully reviewed this transaction, including Sumitomo's compliance record, in light of all the facts of record and the Cincinnati"), and The Fifth Third Bank of Columbus, standards that apply under the BHC Act. The Board does not believe Columbus, Ohio ("Fifth Third-Columbus") (collectively, that ICP's concern that the transaction would result in the elimination "Fifth Third"), both state member banks, have applied of an institution that is subject to the CRA justifies denial of this under section 18(c) of the Federal Deposit Insurance Act proposal. The CRA does not provide any basis for the Board to require that Daiwa and Daiwa Trust transfer their trust and custody (12 U.S.C. § 1828(c)) (the "Bank Merger Act") to acquire operations to an institution that is subject to the CRA. certain assets and assume certain liabilities of 25 branches The Board believes there is no evidence in the record to show that of NBD Bank, Columbus, Ohio ("NBD"). Fifth Third also the proposal would circumvent the regulators' termination order. has applied under section 9 of the Federal Reserve Act Sumitomo, which would acquire the trust operations of Daiwa and (12 U.S.C. § 321) to establish branches at the current loca- Daiwa Trust, is a separate commercial bank that currently has an established trust and banking business in the United States. ICP tions of 14 of the NBD branches.1 provides no evidence that, if Sumitomo were to acquire all of Daiwa's Notice of the proposals, affording interested persons an operations in the future, the proposed acquisition of the United States opportunity to submit comments, has been given in accoroperations of Daiwa by Sumitomo at this time would in fact permit dance with the Bank Merger Act and the Board's Rules of Daiwa to continue to operate in the United States in contravention of the Board's termination order. If Sumitomo or any other organization were to acquire or merge with Daiwa in the future, the Board would retain jurisdiction to review the facts surrounding such a transaction and monitor and enforce its termination order with Daiwa. 7. See 12 C.F.R. 225.24; Fuji Bank, Limited, 75 Federal Reserve 1. The locations of the branches that each bank proposes to acquire Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve are listed in the Appendix, which includes 11 branches to be acquired Bulletin 155 (1987). and merged into existing branches of Fifth Third. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 367 Procedure (12 C.F.R. 262.3(b)).2 As required by the Bank sured by the Herfindahl-Hirschman Index ("HHI").5 In Merger Act, reports on the competitive effects of the light of the competition offered by other depository institumerger were requested from the United States Attorney tions in the market, the number of competitors that would General, the Office of the Comptroller of the Currency, and remain in the market after consummation of the proposal, the Federal Deposit Insurance Corporation ("FDIC"). The the relatively small increase in concentration as measured time for filing comments has expired, and the Board has by the HHI,6 and all other facts of record, the Board considered the proposal and all comments received in light concludes that consummation of the proposal would not of the factors set forth in the Bank Merger Act and the result in a significantly adverse effect on competition in Federal Reserve Act. any relevant banking market. Fifth Third Bancorp, Cincinnati, Ohio ("Bancorp"), controls six banks and one thrift institution in Ohio, includ- Convenience and Needs Considerations ing Fifth Third-Cincinnati and Fifth Third-Columbus. Bancorp is the fourth largest commercial banking or thrift In acting on an application under the Bank Merger Act, the organization in Ohio, controlling deposits of $8.5 billion, Board must consider the convenience and needs of the representing approximately 6.5 percent of total deposits in communities to be served and take into account the records depository institutions in Ohio.3 The branches of NBD that of the relevant depository institutions under the Commu- Fifth Third-Cincinnati and Fifth Third-Columbus propose nity Reinvestment Act (12 U.S.C § 2901 et seq.) to acquire control deposits of $529 million, representing ("CRA"). The CRA requires the federal financial superviless than 1 percent of total deposits in depository institu- sory agencies to encourage financial institutions to help tions in Ohio. On consummation of the proposed transac- meet the credit needs of the local communities in which tion, Bancorp would remain the fourth largest commercial they operate, consistent with their safe and sound operabanking or thrift organization in Ohio, controlling deposits tion. To accomplish this end, the CRA requires the approof $9 billion, representing approximately 6.9 percent of priate federal supervisory authority to "assess the institutotal deposits in depository institutions in the state. tion's record of meeting the credit needs of its entire Fifth Third-Cincinnati and NBD compete directly in the community, including low- and moderate-income neigh- Dayton, Ohio banking market, and Fifth Third-Columbus borhoods, consistent with the safe and sound operation of and NBD compete directly in the Columbus, Ohio banking such institution," and to take that record into account in its market.4 On consummation of this proposal, these banking evaluation of bank expansion proposals.7 markets would remain moderately concentrated as mea- Protestant generally contends that Fifth Third has failed to meet the credit needs of commercial borrowers in Dayton, Ohio, and that NBD illegally discriminates against 2. The Board received comments from an individual ("Protestant") making loans on commercial properties in certain areas in who maintains that notice of this proposal should have been provided Dayton.8 The Board has carefully reviewed the CRA perto all customers of the affected institutions in their monthly account statements and to the public through an electronic on-line data base. formance records of Fifth Third and NBD; Protestant's Protestant also believes that access to applications filed with the comments and applicants' responses to those comments; Federal Reserve System should be made available through an on-line and all other relevant facts of record in light of the CRA, data base similar to the access provided by the Government Printing Office for the Congressional Record, the Federal Register, and other publications distributed by the Superintendent of Documents, pursuant to the Government Printing Office Electronic Information Access Union Counties, Perry Township in Hocking County, and Thorn Enhancement Act of 1993, P.L. 103-40, 107 Stat. 112 (June 8, 1993) Township in Perry County, all in Ohio. ("Access Act"). 5. Under the revised Department of Justice Merger Guidelines, 49 The Board's Rules of Procedure (12 C.F.R. 262.3(b)(3)) require an Federal Register 26,823 (June 29, 1984), a market in which the postapplicant state member bank to publish notice at least three times in a merger HHI is less than 1000 is considered unconcentrated, and a newspaper of general circulation in the community in which the head market in which the post-merger HHI is between 1000 and 1800 is office of each of the banks to be a party to the merger is located and to considered moderately concentrated. The Justice Department has inprovide a public comment period of at least 30 days after publication formed the Board that a bank merger or acquisition generally will not of the first notice. Applicants have complied with these publication be challenged (in the absence of other factors indicating anticompetirequirements. In addition, copies of the nonconfidential portion of tive effects) unless the post-merger HHI is at least 1800 and the applications filed with the System, which are not subject to the Access merger increases the HHI by more than 200 points. The Justice Act, are provided by the Federal Reserve Banks or the Board upon Department has stated that the higher than normal HHI thresholds for request, and a copy of all nonconfidential portions of these applica- screening bank mergers for anticompetitive effects implicitly recogtions has been provided to Protestant. Based on all the facts of record, nize the competitive effect of limited-purpose lenders and other nonthe Board concludes that notice and copies of this proposal have been depository financial institutions. provided in accordance with the Board's rules, and that the public, 6. The HHI would increase by 21 points to 1550 in the Columbus including Protestant, was adequately informed of the proposal. banking market, and by 76 points to 1494 in the Dayton banking 3. Deposit data are as of June 30, 1995. In this context, depository market. institutions include commercial banks, savings banks, and savings 7. 12 U.S.C. § 2903. associations. 8. Protestant cites the denial of his loan application by NBD as 4. The Dayton banking market is approximated by Greene, Miami, evidence of illegal discrimination against commercial borrowers. Fifth and Montgomery Counties; Bethel and Mad River Townships in Clark Third responds that financial considerations were not consistent with County; and Clear Creek, Wayne, and Massie Townships in Warren approval of the loan request. Protestant's allegations relating to his County, all in Ohio. The Columbus banking market is approximated loan denial have been referred to NBD's primary federal supervisor, by Franklin, Delaware, Fairfield, Licking, Madison, Pickaway, and the FDIC, for consideration. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

368 Federal Reserve Bulletin • April 1996 the Board's regulations, and the Statement of the Federal Based on the foregoing and all the facts of record, the Financial Supervisory Agencies Regarding the Community Board has determined that these proposals should be, and Reinvestment Act ("Agency CRA Statement").9 hereby are, approved.13 The Board's approval is specifi- The Agency CRA Statement provides that a CRA exam- cally conditioned on compliance by Fifth Third with ination is an important and often controlling factor in the all commitments made in connection with these proposals. consideration of an institution's CRA record and that re- The commitments and conditions relied on by the Board ports of these examinations will be given great weight in are deemed to be conditions imposed in writing by the the applications process.10 Fifth Third-Cincinnati and Fifth Board in connection with its findings and decision, and, as Third-Columbus both received "outstanding" ratings from such, may be enforced in proceedings under applicable law. the Federal Reserve Bank of Cleveland and the FDIC, These transactions may not be consummated before the respectively, in their most recent examinations for CRA fifteenth calendar day after the effective date of this order, performance, as of December 1994 and February 1994. or later than three months after the effective date of this NBD also received an "outstanding" CRA rating from the order, unless such period is extended by the Board or by FDIC in its most recent examination for CRA perfor- the Federal Reserve Bank of Cleveland, acting pursuant to mance, as of May 1994. Examiners found no evidence of delegated authority. practices intended to discourage loan applications at any of By order of the Board of Governors, effective Februthese institutions and found all of the banks to be in ary 7, 1996. compliance with federal fair lending laws. The Board also notes that it reviewed Fifth Third- Voting for this action: Chairman Greenspan and Governors Kelley, Cincinnati's record of CRA performance, particularly its Lindsey, and Phillips. Absent and not voting: Governor Yellen. small business lending activities in low- and moderateincome areas in Ohio, in light of substantially similar BARBARA R. LOWREY Associate Secretary of the Board comments submitted by Protestant in connection with a recent application filed by the bank.11 The bank's small Appendix business lending activities include Small Business Administration lending programs, officer call programs, and a Branch offices of NBD to he acquired by Fifth second review program. The bank also participates in Third-Cincinnati: Ohio's Mini-Loan Program, and has provided funding and technical assistance to the Dayton Minority Business De- 100 West Second Street, Dayton, Ohio* velopment Center. Based on all the facts of record, includ- 5130 Salem Avenue, Trotwood, Ohio* ing for the reasons explained in the Fifth Third Order, 896 E. National Road, Vandalia, Ohio* which are incorporated herein by reference, the Board 2829 Miamisburg-Centerville, Miamisburg, Ohio* believes that considerations relating to the convenience and 2601 Far Hills Avenue, Oakwood, Ohio needs of the communities to be served, including the CRA 1 E. Central Avenue, West Carrollton, Ohio performance records of the banks involved, are consistent 4884 Airway Road, Dayton, Ohio with approval. 3245 E. Patterson Road, Beavercreek, Ohio* Other Considerations Branch offices of NBD to be acquired by Fifth Third-Columbus: The Board also concludes that the financial and managerial resources and future prospects of Fifth Third are consistent 6500 Tussing Road, Reynoldsburg, Ohio* with approval, as are the other factors required to be 2757 Festival Lane, Dublin, Ohio* considered under the Bank Merger Act and the Federal Reserve Act.12 company. Based on all the facts of record, including supervisory information, and for the reasons stated in the Fifth Third Order, these 9. 54 Federal Register 13,742 (1989). allegations do not warrant denial of this proposal. 10. Id. at 13,745. 13. Protestant maintains that applicants should be required to pro- 11. See The Fifth Third Bank, 81 Federal Reserve Bulletin 976 vide additional information related to their CRA performance, other (1995) ("Fifth Third Order") (Order dated August 23, 1995, approv- business activities, and compliance with the Board's Regulations C ing the acquisition of certain branches from PNC Bank, Ohio, N.A., and CC. The Board is required under applicable law and its applica- Cincinnati, Ohio, "PNC"). Protestant asserts that, in connection with tion processing regulations to act on applications submitted under the this acquisition, Fifth Third-Cincinnati lost materials related to his Bank Merger Act and the Federal Reserve Act within specified time loan application, which was denied later by PNC. Applicants state that periods. As discussed above, the Board has carefully reviewed the files on loans that had been denied were not acquired in this proposal. record in this case, including information provided by Protestant, the As noted in the Fifth Third Order, Protestant's comments on his applicants, and by relevant reports of examination. Based on all the denied loan application have been referred to PNC's primary federal facts of record, the Board concludes that delay or denial of this supervisor, the Office of the Comptroller of the Currency, for consider- proposal on the grounds of informational insufficiency is not waration. ranted. 12. Protestant reiterates his allegations that fees were improperly *Branch offices of NBD to be merged into Fifth Third upon consumassessed by Fifth Third against an account maintained by Protestant's mation of the proposed transaction. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 369 1330 Morse Road, Columbus, Ohio* expired, and the Board has considered the applications and 175 S. 3rd Street, Columbus, Ohio* all comments received.2 6300 Frantz Road, Dublin, Ohio* Bank, with total consolidated assets equivalent to ap- 1851 W. Henderson Road, Upper Arlington, Ohio proximately $541 billion,3 is the fourth largest banking 1756 W. Lane Avenue, Columbus, Ohio organization in Japan and the world. In the United States, 54 W. Wilson Bridge Road, Worthington, Ohio Bank currently operates subsidiary banks in San Francisco, 2500 Dublin-Granville Road, Columbus, Ohio California and Honolulu, Hawaii; a limited purpose trust 3407 Cleveland Avenue, Columbus, Ohio company in New York, New York; branches in Los Ange- 45 Huber Village Boulevard, Westerville, Ohio les and San Francisco, California; Chicago, Illinois; and 3460 S. High Street, Columbus, Ohio New York, New York; agencies in Atlanta, Georgia; and 3870 E. Livingston Avenue, Columbus, Ohio Houston, Texas; and a representative office in Seattle, 2450 E. Main Street, Bexley, Ohio Washington. Bank also engages directly and through sub- 7070 E. Main Street, Reynoldsburg, Ohio* sidiaries in other permissible nonbanking activities in the 2680 W. Broad Street, Columbus, Ohio* United States and abroad. 5727 Emporium Square, Columbus, Ohio* The proposed representative offices would assume the existing business of certain offices of The Daiwa Bank, Limited.4 The proposed representative offices would en- ORDERS ISSUED UNDER INTERNATIONAL BANKING ACT gage in traditional representative functions, including loan production and researching potential markets. The proposed representative offices would not accept any deposits The Sumitomo Bank, Limited or make any loans, and would limit their operations to Osaka, Japan those consistent with the Board's regulations.5 In acting on applications to establish representative of- Order Approving Establishment of Representative Offices fices, the IBA and Regulation K provide that the Board shall take into account whether the foreign bank engages The Sumitomo Bank, Limited, Osaka, Japan ("Bank"), a directly in the business of banking outside of the United foreign bank within the meaning of the International Bank- States and has furnished the Board with the information it ing Act ("IBA"), has applied under section 10(a) of the needs to assess the application adequately. The Board also IBA (12 U.S.C. § 3107(a)) to establish representative shall take into account whether the foreign bank and any offices in the following locations: Los Angeles and San foreign bank parent is subject to comprehensive supervi- Francisco, California; Miami and Tampa, Florida; Atlanta, sion or regulation on a consolidated basis by its home Georgia; Baltimore, Maryland; Boston, Massachusetts; country supervisor (12 U.S.C. § 3105(d)(2); 12 C.F.R. Minneapolis, Minnesota; St. Louis, Missouri; New York, 211.24).6 The Board may also take into account additional New York; Philadelphia and Pittsburgh, Pennsylvania; and Dallas and Houston, Texas. The Foreign Bank Supervision Enhancement Act of 1991, which amended the IBA, provides that a foreign bank must obtain the approval of the 2. For discussion of the comment received from the Inner City Press/Community on the Move, see the Board's Order dated Febru- Board to establish representative offices in the United ary 2, 1996, approving the notice by Bank to engage in trust company States. activities. Notice of the applications, affording interested persons 3. All financial data are as of September 30, 1995. 4. On November 1, 1995, The Daiwa Bank, Limited entered into a an opportunity to submit comments, has been published in Consent Order with the Board and other Federal and state authorities a newspaper of general circulation with regard to each to terminate its banking operations in the United States by February 2, representative office.1 The time for filing comments has 1996. 5. 12 C.F.R. 211.24(d)(1). 6. In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors: 1. Notices were published in the following communities where (i) Ensure that the bank has adequate procedures for monitoring Bank proposes to establish representative offices: Los Angeles, Cali- and controlling its activities worldwide; fornia (The Los Angeles Times, December 15, 1995); San Francisco, (ii) Obtain information on the condition of the bank and its California (The San Francisco Chronicle, December 15, 1995); Mi- subsidiaries and offices through regular examination reports, ami, Florida (The Miami Herald, December 15, 1995); Tampa, Florida audit reports, or otherwise; {The Tampa Tribune, December 15, 1995); Atlanta, Georgia (The (iii) Obtain information on the dealings with and relationship Atlanta Journal and Constitution, December 15, 1995); Baltimore, between the bank and its affiliates, both foreign and domestic; Maryland (The Baltimore Sun, December 14, 1995); Boston, Massa- (iv) Receive from the bank financial reports that are consolidated chusetts (The Boston Globe, December 15, 1995); Minneapolis, Min- on a worldwide basis, or comparable information that permits nesota (The Star Tribune, December 15, 1995); St. Louis, Missouri analysis of the bank's financial condition on a worldwide consol- (The St. Louis Post-Dispatch, December 15, 1995); New York, New idated basis; and York (The New York Times, December 15, 1995); Philadelphia, Penn- (v) Evaluate prudential standards, such as capital adequacy and sylvania (The Philadelphia Inquirer, December 15, 1995); Pittsburgh, risk asset exposure, on a worldwide basis. Pennsylvania (The Pittsburgh Post-Gazette, December 15, 1995); These are indicia of comprehensive, consolidated supervision. No Dallas, Texas (The Daily Commercial Record, December 15, 1995); single factor is essential and other elements may inform the Board's and Houston, Texas (The Houston Chronicle, December 15, 1995). determination. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

370 Federal Reserve Bulletin • April 1996 standards as set forth in the IBA and Regulation K quate assurances of access to any necessary information (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)). the Board may request. In this case, with respect to the issue of supervision by On the basis of all the facts of record, and subject to the home country authorities, the Board has considered the commitments made by Bank, as well as the terms and following information. Bank is subject to the regulatory conditions set forth in this order, the Board has determined and supervisory authority of the Japanese Ministry of Fi- that Bank's applications to establish representative offices nance ("MOF") and the Bank of Japan. The Board previ- should be, and hereby are, approved. Should any restricously has determined in connection with an application tions on access to information on the operations or activiinvolving another Japanese bank that the bank was subject ties of Bank and any of its affiliates subsequently interfere to comprehensive, consolidated home country supervi- with the Board's ability to determine the compliance by sion.7 In this case, Bank is supervised on substantially the Bank or its affiliates with applicable federal statutes, the same terms and conditions as the other Japanese bank. Board may require termination of any of Bank's or its Moreover, the MOF recently announced plans to enhance affiliates' direct or indirect activities in the United States. its bank supervision in a number of areas, including Approval of these applications is also specifically condistrengthening on-site inspections; establishing more com- tioned on compliance by Bank with all commitments made prehensive guidelines for internal audits, controls, and risk in connection with these applications, including but not management; increasing enforcement tools for distressed limited to commitments made with respect to retention and banking institutions; and promoting closer information ex- maintenance of documents, and with the conditions in this changes with foreign supervisory authorities. Based on all order.8 The commitments and conditions referred to above the facts of record, the Board has determined that Bank is are conditions imposed in writing by the Board in connecsubject to comprehensive supervision on a consolidated tion with its decision, and may be enforced in proceedings basis by its home country supervisors. under 12 U.S.C. § 1818 against Bank, its offices, and its The Board also notes that Bank engages directly in the affiliates. business of banking outside the United States through its By order of the Board of Governors, effective Februbanking operations in Japan and elsewhere. Bank has pro- ary 2, 1996. vided the Board with the information necessary to assess the application adequately. Voting for this action: Chairman Greenspan, Vice Chairman The Board also has taken into account the additional Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen. standards set forth in section 7 of the IBA and Regulation K (See 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. WILLIAM W. WILES Secretary of the Board 211.24(c)(2)). In this regard, the Japanese Ministry of Finance has consented to the establishment of the proposed Union Bank of Switzerland representative offices. Zurich, Switzerland Taking into consideration Bank's record of operations in its home country, its overall financial resources, and its Order Approving Establishment of a Branch standing with its home country supervisors, the Board also has determined that financial and managerial factors are Union Bank of Switzerland ("Bank"), Zurich, Switzerconsistent with approval of the proposed representative land, a foreign bank within the meaning of the Internaoffices. Bank appears to have the experience and capacity tional Banking Act ("IBA"), has applied under section 7(d) to support the proposed representative offices and has of the IBA (12 U.S.C. § 3105(d)) to establish a stateestablished controls and procedures for the proposed reprelicensed limited branch in New York, New York. The sentative offices to ensure compliance with U.S. law. Foreign Bank Supervision Enhancement Act of 1991 Finally, with respect to access to information about ("FBSEA"), which amended the IBA, provides that a Bank's operations, Bank has committed to make available foreign bank must obtain the approval of the Board to to the Board such information on the operations of Bank establish a branch in the United States. and its affiliates that the Board deems necessary to deter- Notice of the application, affording interested persons an mine and enforce compliance with the IBA, the Bank opportunity to submit comments, has been published in a Holding Company Act of 1956, as amended, and other newspaper of general circulation in New York, New York applicable Federal law. To the extent that the provision of (The New York Times, November 17, 1995). The time for such information may be prohibited by law, Bank has committed to cooperate with the Board in obtaining any consents or waivers that might be required from third parties for disclosure. In light of these commitments and other facts of record, and subject to the condition described 8. The Board's authority to approve the establishment of the probelow, the Board concludes that Bank has provided ade- posed offices parallels the continuing authority of state banking regulators to license offices of a foreign bank. The Board's approval of these applications does not supplant the authority of the relevant state banking regulators to license the proposed offices of Bank in accordance with any terms or conditions that such state banking regulators 7. Bank of Tokyo, 81 Federal Reserve Bulletin 279 (1995). may impose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 371 filing comments has expired, and all comments have been Bank engages directly in the business of banking outside considered. of the United States through its commercial banking opera- Bank, with total consolidated assets of approximately tions in Switzerland and several other countries. Bank also $306.6 billion,1 is the largest bank in Switzerland, and it has provided the Board with the information necessary to engages in a wide range of banking activities worldwide assess the application through submissions that address the directly and through subsidiaries.2 As of December 31, relevant issues. 1995, shares of Bank representing approximately 10.7 per- Regulation K provides that a foreign bank will be concent of total voting rights were held by BK Vision AG, BZ sidered to be subject to comprehensive supervision or Stiftung, and Stillhalter Vision AG, which are members of regulation on a consolidated basis if the Board determines the BZ Group. No other shareholder holds more than that the bank is supervised and regulated in such a manner 5 percent of total voting rights. that its home country supervisor receives sufficient infor- In the United States, Bank operates branches in New mation on the foreign bank's worldwide operations, includ- York, New York; Chicago, Illinois; and Los Angeles, Cali- ing the relationship of the foreign bank to any affiliate, to fornia; an agency in Houston, Texas; and a representative assess the overall financial condition of the foreign bank office in San Francisco, California. Bank also operates and its compliance with law and regulation (12 C.F.R. UBS Securities, Inc., New York, New York, a subsidiary 211.24(c)(1)).4 In making its determination under this stanengaged in securities activities that are grandfathered under dard, the Board has considered the following information. the IBA; UBS Finance (Delaware) Inc., Wilmington, Dela- Bank is supervised and regulated by the SFBC. The ware, a commercial paper issuing subsidiary; and several SFBC is responsible for the prudential supervision and other subsidiaries in the United States. regulation of credit institutions. The Board has previously Bank's primary purpose for establishing the proposed determined, in connection with an application involving limited branch is to provide private banking and asset another Swiss bank, Coutts & Co., AG ("Coutts"), that management services in the U.S. market. Bank already Coutts was subject to home country supervision on a provides similar services at its existing New York branch. consolidated basis.5 Bank is supervised by the SFBC on the As a limited branch, the proposed branch would be prohib- same terms and conditions as Coutts. Bank also has proited from accepting deposits from sources other than those vided additional information regarding the supervision and permitted under section 5 of the IBA and section 25 A of regulation of Bank's activities by entities other than the the Federal Reserve Act.3 Bank would continue to be a SFBC. Based on all the facts of record, the Board has qualifying foreign banking organization within the mean- determined that Bank is subject to comprehensive superviing of Regulation K after establishing the proposed branch. sion and regulation on a consolidated basis by its home 12 C.F.R. 211.23(b). country supervisors. Bank has received approvals from the Swiss Federal The Board has also taken into account the additional Banking Commission ("SFBC") and the New York State standards set forth in section 7 of the IBA (See 12 U.S.C. Banking Department of its proposal to establish the pro- §3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). Bank has proposed branch. vided the Board with the information necessary to assess In order to approve an application by a foreign bank to the application through submissions that address the releestablish a branch in the United States, the IBA and Regu- vant issues. As noted above, Bank has received the consent lation K require the Board to determine that the foreign of the SFBC to establish the proposed state-licensed bank applicant engages directly in the business of banking branch. outside of the United States, and has furnished to the Board Switzerland is a signatory to the Basle risk-based capital the information it needs to adequately assess the applica- standards, and Swiss risk-based capital standards meet tion. The Board also must determine that the foreign bank is subject to comprehensive supervision or regulation on a consolidated basis by its home country supervisor 4. In assessing this standard, the Board considers, among other (12 U.S.C. § 3105(d)(2)). The Board may also take into factors, the extent to which the home country supervisors: (i) Ensure that the bank has adequate procedures for monitoring account additional standards as set forth in the IBA and controlling its activities worldwide; (12 U.S.C. § 3105(d)(3)-(4» and Regulation K (12 C.F.R. (ii) Obtain information on the condition of the bank and its 211.24(c)). subsidiaries and offices through regular examination reports, audit reports, or otherwise; (iii) Obtain information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic; (iv) Receive from the bank financial reports that are consolidated on a worldwide basis, or comparable information that permits analysis of the bank's financial condition on a worldwide consol- 1. Asset data are as of June 30, 1995. idated basis; 2. The principal subsidiaries of Bank are engaged in the securities (v) Evaluate prudential standards, such as capital adequacy and and banking business. risk asset exposure, on a worldwide basis. 3. Bank's home state is California. Under section 5 of the IBA, a These are indicia of comprehensive, consolidated supervision. No foreign bank may establish a branch outside its home state that limits single factor is essential, and other elements may inform the Board's its deposit-taking to that of an Edge corporation operating under determination. section 25A of the Federal Reserve Act. 5. See Coutts & Co., AG, 79 Federal Reserve Bulletin 636 (1993). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

372 Federal Reserve Bulletin • April 1996 those established by the Basle Capital Accord and the commitments made by Bank, as well as the terms and European Union. Bank's capital is in excess of the mini- conditions set forth in this order, the Board has determined mum levels that would be required by the Basle Capital that Bank's application to establish a state-licensed limited Accord and is considered equivalent to capital that would branch should be, and hereby is, approved. Should any be required of a U.S. banking organization. Managerial and restrictions on access to information on the operations or other financial resources of Bank also are considered con- activities of Bank and its affiliates subsequently interfere sistent with approval, and Bank appears to have the experi- with the Board's ability to obtain information to determine ence and capacity to support the proposed branch. Bank and enforce compliance by Bank or its affiliates with has established controls and procedures for the proposed applicable federal statutes, the Board may require terminabranch in order to ensure compliance with US. law, as well tion of any of the Bank's direct or indirect activities in the as controls and procedures for its worldwide operations in United States. Approval of this application is also specifigeneral. cally conditioned on Bank's compliance with the commit- Finally, the Board has reviewed the restrictions on dis- ments made in connection with this application, and with closure in relevant jurisdictions in which Bank operates the conditions in this order.6 The commitments and condiand has communicated with relevant government authori- tions referred to above are conditions imposed in writing ties about access to information. Bank has committed that by the Board in connection with its decision, and may be it will make available to the Board such information on the enforced in proceedings under 12 U.S.C. §1818 or operations of Bank and any affiliate of Bank that the Board 12 U.S.C. § 1847 against Bank, its office, and its affiliates. deems necessary to determine and enforce compliance with By order of the Board of Governors, effective Februthe IBA, the Bank Holding Company Act of 1956, as ary 28, 1996. amended, and other applicable federal law. To the extent that the provision of such information is prohibited or Voting for this action: Chairman Greenspan and Governors Lindimpeded by law, Bank has committed to cooperate with the sey, Phillips and Yellen. Absent and not voting: Governor Kelley. Board to obtain any necessary consents or waivers that might be required from third parties in connection with WILLIAM W. WILES Secretary of the Board disclosure of certain information. In addition, subject to certain conditions, the SFBC may share information on Bank's operations with other supervisors, including the Board. In light of these commitments and other facts of 6. The Board's authority to approve the establishment of the prorecord, and subject to the condition described below, the posed branch parallels the continuing authority of the State of New Board concludes that Bank has provided adequate assur- York to license offices of a foreign bank. The Board's approval of this application does not supplant the authority of the State of New York, ances of access to any necessary information the Board and its agent, the New York State Banking Department, to license the may request. proposed branch of Bank in accordance with any terms or conditions On the basis of all the facts of record, and subject to the that the State of New York may impose. INDEX OF ORDERS ISSUED OR ACTIONS TAKEN BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (October 1,1995-December 31, 1995) Bulletin Merged or Acquired Bank Date of Applicant Volume or Activity Approval and Page 1st United Bancorp, The American Bancorporation of the December 11, 82, 151 Boca Raton, Florida South, 1995 Merritt Island, Florida The American Bank of the South, Merritt Island, Florida Banc One Corporation, Premier Acquisition Corporation, November 29, 82, 88 Columbus, Ohio Columbus, Ohio 1995 Premier Bancorp, Inc., Baton Rouge, Louisiana Premier Bank, N.A., Baton Rouge, Louisiana Banco Santander, S.A., First Union Corporation, October 26, 81, 1139 Madrid, Spain Charlotte, North Carolina 1995 FFB Participates e Servigos, S.A. Funchal, Portugal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 373 Index of Orders—Continued Bulletin Merged or Acquired Bank DDaattee ooff Applicant Volume or Activity AApppprroovvaall and Page Bank South Corporation, Bank South Securities Corporation, October 24, 81, 1116 Atlanta, Georgia Atlanta, Georgia 1995 Barclays PLC, Wells Fargo Investment Advisors, December 21, 82, 158 London, England San Francisco, California 1995 Barclays Bank PLC, The Nikko Building U.S.A., Inc., London, England San Francisco, California Wells Fargo Institutional Trust Company, N.A., San Francisco, California Wells Fargo Nikko Investment Advisors, San Francisco, California Wells Fargo Nikko Investment Advisors International, San Francisco, California Wells Fargo Foreign Funds Advisors, San Francisco, California 401(k) Master Works Division of Wells Fargo Bank, N.A., San Francisco, California The Berens Corporation, First National Bank of Dayton, December 6, 82, 166 Houston, Texas Dayton, Texas 1995 Berens Delaware, Inc., Berens Credit Corporation, Wilmington, Delaware Houston, Texas Boatmen's Bancshares, Inc., Fourth Financial Corporation, December 21, 82, 167 St. Louis, Missouri Wichita, Kansas 1995 Bank IV, N.A., Wichita, Kansas Bank IV Oklahoma, N.A., Tulsa, Oklahoma Chemical International Finance Chemical Bank Norge, A.S., October 2, 81, 1160 Limited, Oslo, Norway 1995 New York, New York Citibank Overseas Investment Citibank Espana, S.A., October 4, 81, 1161 Corporation, Madrid, Spain 1995 New Castle, Delaware Credit Communal de Belgique S.A., To establish a state-licensed branch in November 20, 82, 104 Brussels, Belgium New York, New York 1995 Deutsche Bank AG, Deutsche Bank Sharps Pixley, Inc., December 13, 82, 161 Frankfurt, Germany New York, New York 1995 Deutsche Sharps Pixley Metals, Inc., New York, New York First American Corporation, First City Bancorp, December 11, 82, 153 Nashville, Tennessee Murfreesboro, Tennessee 1995 First City Bank, Murfreesboro, Tennessee Citizens Bank, Smithville, Tennessee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

374 Federal Reserve Bulletin • April 1996 Index of Orders—Continued Bulletin Merged or Acquired Bank Date of Applicant Volume or Activity Approval and Page Firstar Corporation, Harvest Financial Corp., December 11, 82, 162 Milwaukee, Wisconsin Dubuque, Iowa 1995 Firstar Corporation of Iowa, Harvest Savings Bank, a Federal Des Moines, Iowa Savings Bank, Dubuque, Iowa First Bank System, Inc., FirsTier Financial, Inc., December 18, 82, 169 Minneapolis, Minnesota Omaha, Nebraska 1995 First Union Corporation, First Fidelity Bancorporation, October 26, 81, 1143 Charlotte, North Carolina Newark, New Jersey 1995 First Union Corporation of New First Fidelity Bancorporation, Jersey, Philadelphia, Pennsylvania Newark, New Jersey First Fidelity Bank, N.A., Elkton, Maryland First Fidelity Bank, Stamford, Connecticut First Fidelity Bank, Delaware, Wilmington, Delaware First National of Nebraska, Inc., First Technology Solutions, Inc., November 27, 82, 82 Omaha, Nebraska Omaha, Nebraska 1995 First Union Corporation, Raleigh Federal Savings Bank, October 26, 81, 1118 Charlotte, North Carolina Raleigh, North Carolina 1995 RS Financial Corporation, Raleigh, North Carolina Fleet Bank, Shawmut Bank New York, November 14, 82, 50 Albany, New York Schenectady, New York 1995 Fleet Bank-NH, Shawmut Bank NH, November 14, 82, 50 Nashua, New Hampshire Manchester, New Hampshire 1995 Fleet Financial Group, Shawmut National Corporation, November 14, 82, 50 Providence, Rhode Island Hartford, Connecticut, 1995 Shawmut National Corporation, Boston, Massachusetts Keystone Financial, Inc., Martindale Andres & Company, Inc., November 6, 82, 84 Harrisburg, Pennsylvania West Conshohocken, Pennsylvania 1995 Mercantile Bancorporation Inc., Security Bank of Conway, F.S.B., November 29, 82, 86 St. Louis, Missouri Conway, Arkansas 1995 National Australia Bank Limited, Michigan National Corporation, October 16, 81, 1153 Melbourne, Australia Farmington Hills, Michigan 1995 National Equities Limited, Michigan National Bank, Melbourne, Australia Farmington Hills, Michigan National Australia Group Limited, London, England National Americas Holding Limited, London, England MNC Acquisition Co., Melbourne, Australia NationsBank Corporation, CSF Holdings, Inc., October 17, 81, 1121 Charlotte, North Carolina Miami, Florida 1995 Citizens Federal Bank, a Federal Savings Bank, Miami, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 375 Index of Orders—Continued Bulletin Merged or Acquired Bank DDaattee ooff Applicant Volume or Activity AApppprroovvaall and Page NationsBank Corporation, Bank South Corporation, December 18, 82, 172 Charlotte, North Carolina Atlanta, Georgia 1995 Bank South, Atlanta, Georgia NationsBank Corporation, Intercontinental Bank, October 17, 81, 1105 Charlotte, North Carolina Miami, Florida 1995 NB Holdings, Inc., Charlotte, North Carolina NationsBank Corporation, North Florida Bank Corporation, December 6, 82, 154 Charlotte, North Carolina Madison, Florida 1995 NB Holdings, Inc., Bank of Madison County, National Charlotte, North Carolina Association, Madison, Florida NBD Bancorp, Inc., First Chicago Corporation, November 7, 82, 93 Detroit, Michigan Chicago, Illinois 1995 American National Corporation, Chicago, Illinois First National Bank of Chicago, Chicago, Illinois American National Bank & Trust Company, Chicago, Illinois FCC National Bank, Wilmington, Delaware Norwest Corporation, Canton Bancshares, Inc., December 18, 82, 156 Minneapolis, Minnesota Canton, Illinois 1995 Canton State Bank, Canton, Illinois Norwest Corporation, The Foothill Group, Inc., October 17, 81, 1128 Minneapolis, Minnesota Los Angeles, California 1995 Norwest Corporation, Orlandi Valuta, October 17, 81, 1130 Minneapolis, Minnesota Los Angeles, California 1995 Norwest Financial Services, Inc., Orlandi Valuta Nacional, Des Moines, Iowa Boulder City, Nevada Premier Bancorp, Inc., HNB Corporation, November 9, 82, 75 Baton Rouge, Louisiana Homer, Louisiana 1995 Homer National Bank, Homer, Louisiana The Shorebank Corporation, Indecorp, Inc., October 16, 81, 1107 Chicago, Illinois Chicago, Illinois 1995 Independence Bank, Chicago, Illinois Drexel National Bank, Chicago, Illinois Signet Bank/Virginia, Signet Bank/Maryland, October 2, 81, 1157 Richmond, Virginia Baltimore, Maryland 1995 SouthTrust Corporation, SouthTrust Securities, Inc., October 30, 81, 1132 Birmingham, Alabama Birmingham, Alabama 1995 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

376 Federal Reserve Bulletin • April 1996 Index of Orders—Continued Bulletin Merged or Acquired Bank Date of Applicant Volume or Activity Approval and Page Stichting Prioriteit ABN AMRO Alfred Berg, Inc., October 30, 81, 1134 Holding, New York, New York 1995 Amsterdam, The Netherlands Stichting Administratiekantoor ABN AMRO Holding, Amsterdam, The Netherlands ABN AMRO Holding N.V., Amsterdam, The Netherlands ABN AMRO Bank N.V., Amsterdam, The Netherlands SunTrust Banks, Inc., SunTrust Capital Markets, Inc., October 16, 81, 1137 Atlanta, Georgia Atlanta, Georgia 1995 UB&T Financial Corporation, United Bank & Trust, N.A., October 23, 81, 1112 Dallas, Texas Dallas, Texas 1995 UB&T Delaware Financial Southeast Bancshares, Inc., Corporation, Dallas, Texas Dover, Delaware Commercial National Bank, Dallas, Texas Union Planters Corporation, Capital Bancorporation, Inc., November 20, 82, 78 Memphis, Tennessee Cape Girardeau, Missouri 1995 Maryland Avenue Bancorporation, Clayton, Missouri Century State Bancshares, Jackson, Missouri U.S. Bancorp, West One Bancorp, December 11, 82, 177 Portland, Oregon Boise, Idaho 1995 Wellington State Bank, Bank of America Texas, N.A., December 6, 82, 183 Wellington, Texas Irving, Texas 1995 Wells Fargo & Company, Wells Fargo Equity Capital, Inc., December 13, 82, 165 San Francisco, California San Francisco, California 1995 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 Whitney Holding Corporation, First Citizens BancStock, Inc., February 9, 1996 New Orleans, Louisiana Morgan City, Louisiana First National Bank in St. Mary Parish, Morgan City, Louisiana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 377 Section 4 Applicant(s) Bank(s) Effective Date Old National Bancorp, Advantage Financial Services, Inc., February 13, 1996 Evansville, Indiana Indianapolis, Indiana 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 Ameribanc, Inc., MidAmerican Corporation, Kansas City January 25, 1996 St. Louis, Missouri Roeland Park, Kansas MidAmerican Insurance Agency, Inc. Roeland Park, Kansas Associated Banc-Corp., Associated Banc-Shares, Inc., Chicago February 8, 1996 Green Bay, Wisconsin Madison, Wisconsin Greater Columbia Bancshares, Inc., Portage, Wisconsin The First National Bank of Portage, Portage, Wisconsin Banc One Corporation, Electronic Payment Services, Inc., Cleveland February 13, 1996 Columbus, Ohio Wilmington, Delaware KeyCorp, Cleveland, Ohio National City Corporation, Cleveland, Ohio PNC Bank Corp, Pittsburgh, Pennsylvania Bancshares of Nichols Hills, Inc. Bank of Nichols Hills, Kansas City February 16, 1996 Ponca City, Oklahoma Oklahoma City, Oklahoma Baxter Bancshares, Inc., The Baxter State Bank, Kansas City February 15, 1996 Baxter Springs, Kansas Baxter Springs, Kansas People's National Bank, Seneca, Missouri Citi-Bancshares, Inc., Citizens First Bancshares, Inc., Atlanta February 15, 1996 Leesburg, Florida Ocala, Florida Durden Bankshares, Inc., Durden Banking Company, Inc., Atlanta February 20, 1996 Twin City, Georgia Twin City, Georgia Evans Bancshares, Inc., Olmsted National Bank, Chicago February 16, 1996 Evansdale, Iowa Rochester, Minnesota FABP Bancshares, Inc., First American Bank of Pensacola, Atlanta February 16, 1996 Pensacola, Florida National Association, Pensacola, Florida The First Bancshares, Inc., The First National Bank of Mississippi, Atlanta February 8, 1996 Hattiesburg, Mississippi Hattiesburg, Mississippi Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

378 Federal Reserve Bulletin • April 1996 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date FirstBank Holding Company of Bank of Douglas County, Kansas City February 2, 1996 Colorado, Castle Rock, Colorado Lakewood, Colorado FirstBank Holding Company of Colorado Employee Stock Ownership Plan, Lakewood, Colorado First Decatur Bancshares, Inc., First Shelby Financial Group, Inc., Chicago January 30, 1996 Decatur, Illinois Shelbyville, Illinois First Trust Bank, Shelbyville, Illinois FirstMerit Corporation, FirstMerit Bank, N.A., Cleveland February 12, 1996 Akron, Ohio Clearwater, Florida First National Bancshares, Inc., First National Bank of Edmond, Kansas City February 21, 1996 Edmond, Oklahoma Edmond, Oklahoma FNB Bankshares, Inc., First National Bank, Minneapolis February 7, 1996 Milnor, North Dakota Lisbon, North Dakota Hamburg Financial, Inc., Thurman State Corporation, Chicago February 5, 1996 Hamburg, Iowa Lincoln, Nebraska United National Bank of Iowa, Sidney, Iowa James River Bankshares, Inc., Bank of Isle of Wight, Richmond February 8, 1996 Suffolk, Virginia Smithfield, Virginia Lindsey Bancshares, Inc., Harrisonville Bancshares, Inc., Kansas City February 15, 1996 Harrisonville, Missouri Harrisonville, Missouri Marine Bancorp, Inc., Marine Bank, Springfield, St. Louis February 1, 1996 Springfield, Illinois Springfield, Illinois Magna Group, Inc., River Bend Bancshares, Inc., St. Louis February 6, 1996 St. Louis, Missouri East Alton, Illinois Mercantile Bancorporation, Inc., Mercantile Bank of Jackson County, In Kansas City January 25, 1996 St. Louis, Missouri Organization, Kansas City, Missouri Middlefork Financial Group, Inc. Farmers & Traders Bank of Campton, Cleveland January 29, 1996 Hyden, Kentucky Campton, Kentucky Norwest Corporation, Henrietta Bancshares, Inc., Minneapolis February 6, 1996 Minneapolis, Minnesota Henrietta, Texas Henrietta Delaware Financial Corporation, Dover, Delaware The First National Bank of Henrietta, Henrietta, Texas First State Bank of Hubbard, Hubbard, Texas Peoples Bancshares, Inc., Lindsey Bancshares, Inc., Kansas City February 15, 1996 Kansas City, Missouri Harrisonville, Missouri Pioneer Bancshares, Inc., Bancshares of Nichols Hills, Inc., Kansas City February 16, 1996 Ponca City, Oklahoma Ponca City, Oklahoma Pioneer Bancshares, Inc., Employee Stock Ownership Plan, Ponca City, Oklahoma Platte Valley Bancshares, Inc., Lindsey Bancshares, Inc., Kansas City February 15, 1996 Kansas City, Missouri Harrisonville, Missouri Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 379 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Regions Merger Subsidiary, Inc. First National Bancorp, Atlanta January 26, 1996 Gainesville, Georgia Gainesville, Georgia Sabine Bancshares, Inc., First Community Bancshares, Inc., Dallas February 1, 1996 Many, Louisiana Winnfield, Louisiana Winn Bancshares, Inc., Winnfield, Louisiana Storm Lake Security Security Trust & Savings Bank, Chicago January 31, 1996 Bancorporation, Storm Lake, Iowa Storm Lake, Iowa Sunset Bancorp, Inc., Bank of Sunset and Trust Company, Atlanta January 26, 1996 Sunset, Louisiana Sunset, Louisiana Valley Bancorp, Inc., Valley Bank of Arizona, San Francisco February 6, 1996 Phoenix, Arizona Phoenix, Arizona ValliCorp Holdings, Inc., Commerce Bank of San Luis Obispo, San Francisco February 20, 1996 Fresno, California National Association, San Luis Obispo, California CoBank Financial Corporation, San Luis Obispo, California Wells River Bancorp, Inc., Perpetual Savings Bank, Cleveland February 2, 1996 Wellsville, Ohio Wellsville, Ohio Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Banque Nationale de Paris, Northbay Financial Corporation, San Francisco February 16, 1996 Paris, France Petaluma, California BancWest Corporation, Northbay Savings Bank, F.S.B., San Francisco, California Petaluma, California Firstbank of Illinois Co., MidCountry Financial, Inc., Chicago January 30, 1996 Springfield, Illinois Highland, Illinois Mountain Bank Systems, Inc., Mountain Financial, Inc., Minneapolis February 13, 1996 Whitefish, Montana Eureka, Montana Ohio Valley Banc Corp., Loan Central, Inc., Gallipolis, Ohio Cleveland January 26, 1996 Gallipolis, Ohio Pinellas Bancshares Corporation, Eickhoff, Pieper & Willoughby, Inc., Atlanta January 26, 1996 St. Petersburg, Florida Tampa, Florida Regions Financial Corporation, First National Bancorp, Atlanta January 26, 1996 Birmingham, Alabama Gainesville, Georgia Regions Merger Subsidiary, Inc., FF Bancorp, Inc., Gainesville, Georgia New Smyrna Beach, Florida First Federal Savings Bank of New Smyrna Beach, New Smyrna Beach, Florida First Federal Savings Bank of Citrus County, Inverness, Florida Summit Bancorp, Summit Banc Investments Corporation, Cleveland February 15, 1996 Akron, Ohio Akron, Ohio Texas Community Bancshares, Inc. Fiduciary Consulting Services, LLC, Dallas February 16, 1996 Dallas, Texas Dallas, Texas First Lakewood, Inc., Dover, Delaware Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

380 Federal Reserve Bulletin • April 1996 Section 4—Continued Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Texas Community Bancshares, Inc. Texas Community Financial Services, Dallas January 31, 1996 Dallas, Texas Inc., First Lakewood, Inc., Dallas, Texas Dover, Delaware Traxshares, Inc., To engage de novo in making loans for Minneapolis February 1, 1996 Le Center, Minnesota its own account Wells Fargo & Company, To engage de novo in the activities of San Francisco February 14, 1996 San Francisco, California installing, owning, operating, and maintaining automatic teller machines in the State of Oregon Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Reliance Bancshares, Inc., Reliance Savings Bank, Chicago February 16, 1996 Milwaukee, Wisconsin Milwaukee, Wisconsin Whitaker Bank Corporation of Mount Sterling National Holding Cleveland February 2, 1996 Kentucky, Corporation, Lexington, Kentucky Mount Sterling, Kentucky 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 Isle of Wight, BIW Acquisition Bank, Richmond February 8, 1996 Smithfield, Virginia Suffolk, Virginia ValliWide Bank, Commerce Bank of San Luis Obispo, San Francisco February 20, 1996 Fresno, California National Association, San Luis Obispo, California Vectra Bank, Vectra Bank of Boulder, Kansas City February 1, 1996 Denver, Colorado Boulder, Colorado PENDING CASES INVOLVING THE BOARD OF Research Triangle Institute v. Board of Governors, No. GOVERNORS 1:96CV00102 (M.D.N.C., filed February 12, 1996). Contract dispute. This list of pending cases does not include suits against the In re: Subpoena Duces Tecum, Misc. No. 96-MS-(TPJ) (D. Federal Reserve Banks in which the Board of Governors is not D.C., filed February 7, 1996). Motion to enforce a subpoena named a party. issued to the Board seeking, among other things, bank examination material. The Board's opposition was filed on February 20, 1996. Henderson v. Board of Governors, No. 96-1054 (D.C. Cir., filed February 16, 1996). Petition for review of a Board Inner City Press/Community on the Move v. Board of Goverorder dated January 17, 1996, approving the merger of First nors, No. 96-4008 (2nd Cir., filed January 19, 1996). Peti- Citizens BancShares, Inc., Raleigh, North Carolina, with tion for review of a Board order dated January 5, 1996, Allied Bank Capital, Inc., Sanford, North Carolina. On approving the applications and notices by Chemical Bank- February 16, the petitioners moved for a stay of the Board's ing Corporation to merge with The Chase Manhattan Cororder. The Board opposed the motion on February 26, 1996. poration, both of New York, New York, and by Chemical Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 381 Bank to merge with The Chase Manhattan Bank, N.A., both Board order dated March 1, 1995, approving notices by of New York, New York. Bank One Corporation, Columbus, Ohio; CoreStates Finan- Hotchkiss v. Board of Governors, No. 3:96CV7033 (N.D. cial Corp., Philadelphia, Pennsylvania; PNC Bank Corp., Ohio, filed January 19, 1996). Appeal of order of bank- Pittsburgh, Pennsylvania; and KeyCorp, Cleveland, Ohio, ruptcy court granting Board's motion for summary judg- to acquire certain data processing assets of National City ment in adversary proceeding challenging dischargeability Corporation, Cleveland, Ohio, through a joint venture subof Board consent order. The Board's brief is due April 1, sidiary. Oral argument was heard on February 2, 1996. 1996. Jones v. Board of Governors, No. 95-1142 (D.C. Cir., filed Menick v. Greenspan, No. 95-CV-01916 (D. D.C., filed Octo- March 3, 1995). Petition for review of a Board order dated ber 10, 1995). Complaint alleging sex, age, and handicap February 2, 1995, approving the applications by First Comdiscrimination in employment. merce Corporation, New Orleans, Louisiana, to merge with Kuntz v. Board of Governors, No. 95-1495 (D.C. Cir., filed City Bancorp, Inc., New Iberia, Louisiana, and First Bank- September 21, 1995). Petition for review of Board order shares, Inc., Slidell, Louisiana. Oral argument was heard on dated August 23, 1995, approving the applications of The February 27, 1996. Fifth Third Bank, Cincinnati, Ohio, to acquire certain assets In re Subpoena Duces Tecum, Misc. No. 95-06 (D.D.C., filed and assume certain liabilities of 12 branches of PNC Bank, January 6, 1995). Action to enforce subpoena seeking pre- Ohio, N.A., Cincinnati, Ohio, and to establish certain decisional supervisory documents sought in connection with branches. The Board's motion to dismiss was filed on an action by Bank of New England Corporation's trustee in October 26, 1995. bankruptcy against the Federal Deposit Insurance Corpora- Lee v. Board of Governors, No. 94^-134 (2nd Cir., filed tion. The Board filed its opposition on January 20, 1995. August 22, 1995). Petition for review of Board orders dated Oral argument on the motion was held July 14, 1995. July 24, 1995, approving certain steps of a corporate reorganization of U.S. Trust Corporation, New York, New York, Board of Governors v. Pharaon, No. 91-CIV-6250 (S.D. New and the acquisition of U.S. Trust by Chase Manhattan York, filed September 17, 1991). Action to freeze assets of Corporation, New York, New York. On September 12, individual pending administrative adjudication of civil 1995, the court denied petitioners' motion for an emergency money penalty assessment by the Board. On September 17, stay of the Board's orders. 1991, the court issued an order temporarily restraining the Jones v. Board of Governors, No. 95-1359 (D.C. Cir., filed transfer or disposition of the individual's assets. July 17, 1995). Petition for review of a Board order dated June 19, 1995, approving the application by First Commerce Corporation, New Orleans, Louisiana, to acquire FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD Lakeside Bancshares, Lake Charles, Louisiana. On Novem- OF GOVERNORS ber 15, 1995, the court granted the Board's motion to dismiss. On December 26, 1995, the petitioner filed a Steen Ronlov request for reconsideration. The motion was denied on Lakewood, Colorado February 26, 1996. Beckman v. Greenspan, No. 95-35473 (9th Cir., filed May 4, The Federal Reserve Board announced on February 2, 1995). Appeal of dismissal of action against Board and 1996, the issuance of an Order of Prohibition against Steen others seeking damages for alleged violations of constitu- Ronlov, a former institution- affiliated party of the Jefferson tional and common law rights. The appellants' brief was Bank and Trust, Lakewood, Colorado, a former state memfiled on June 23, 1995; the Board's brief was filed on ber bank. July 12, 1995. Board of Governors v. Scott, Misc. No. 95-127 (LFO/PJA) (D. Mitchell A. Vasquez D.C., filed April 14, 1995). Application to enforce an ad- New York, New York ministrative investigatory subpoena for documents and testimony. On August 3, 1995, the magistrate judge issued an The Federal Reserve Board announced on February 29, order granting in part and denying in part the Board's 1996, the issuance of a Combined Cease and Desist Order application. On September 18, 1995, the intervenor moved and Assessment of a Civil Money Penalty against Mitchell for reconsideration of a portion of the magistrate's ruling. A. Vasquez, a former employee of BT Securities Corpora- Money Station, Inc. v. Board of Governors, No. 95-1182 tion, New York, a subsidiary of Bankers Trust New York (D.C. Cir., filed March 30, 1995). Petition for review of a Corporation, New York, New York. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 Financial and Business Statistics A3 GUIDE TO TABULAR PRESENTATION Federal Finance A28 Federal fiscal and financing operations DOMESTIC FINANCIAL STATISTICS A29 U.S. budget receipts and outlays A30 Federal debt subject to statutory limitation Money Stock and Bank Credit A30 Gross public debt of U.S. Treasury— Types and ownership A4 Reserves, money stock, liquid assets, and debt A31 U.S. government securities measures dealers—Transactions A5 Reserves of depository institutions, Reserve Bank A32 U.S. government securities dealers— credit Positions and financing A6 Reserves and borrowings—Depository A3 3 Federal and federally sponsored credit institutions agencies—Debt outstanding A7 Selected borrowings in immediately available funds—Large member banks Securities Markets and Corporate Finance Policy Instruments A34 New security issues—Tax-exempt state and local governments and corporations A8 Federal Reserve Bank interest rates A35 Open-end investment companies—Net sales A9 Reserve requirements of depository institutions and assets A10 Federal Reserve open market transactions A35 Corporate profits and their distribution Federal Reserve Banks A36 Domestic finance companies—Assets and liabilities, and consumer, real estate, and business A11 Condition and Federal Reserve note statements credit A12 Maturity distribution of loan and security holdings Real Estate Monetary and Credit Aggregates A37 Mortgage markets A3 8 Mortgage debt outstanding A13 Aggregate reserves of depository institutions and monetary base Consumer Installment Credit A14 Money stock, liquid assets, and debt measures A16 Deposit interest rates and amounts outstanding— A39 Total outstanding commercial and BIF-insured banks A39 Terms A17 Bank debits and deposit turnover Flow of Funds Commercial Banking Institutions A40 Funds raised in U.S. credit markets A18 Assets and liabilities, Wednesday figures A42 Summary of financial transactions A43 Summary of credit market debt outstanding Weekly Reporting Commercial Banks— A44 Summary of financial assets and liabilities Assets and liabilities A21 Large reporting banks DOMESTIC NONFINANCIAL STATISTICS A23 Branches and agencies of foreign banks Selected Measures Financial Markets A45 Nonfinancial business activity— A24 Commercial paper and bankers dollar Selected measures acceptances outstanding A45 Labor force, employment, and unemployment A25 Prime rate charged by banks on short-term A46 Output, capacity, and capacity utilization business loans A47 Industrial production—Indexes and gross value A26 Interest rates—money and capital markets A49 Housing and construction A27 Stock market—Selected statistics A50 Consumer and producer prices Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • April 1996 DOMESTIC NONFINANCIAL STATISTICS- A60 Claims on foreign countries— CONTINUED Combined domestic offices and foreign branches Selected Measures—Continued Reported by Nonbanking Business A51 Gross domestic product and income Enterprises in the United States A52 Personal income and saving A61 Liabilities to unaffiliated foreigners A62 Claims on unaffiliated foreigners INTERNATIONAL STATISTICS Securities Holdings and Transactions Summary Statistics A63 Foreign transactions in securities A53 U.S. international transactions—Summary A64 Marketable U.S. Treasury bonds and A54 U.S. foreign trade notes—Foreign transactions A54 U.S. reserve assets A54 Foreign official assets held at Federal Reserve Banks Interest and Exchange Rates A55 Selected U.S. liabilities to foreign official A65 Discount rates of foreign central banks institutions A65 Foreign short-term interest rates A66 Foreign exchange rates Reported by Banks in the United States A55 Liabilities to and claims on foreigners A56 Liabilities to foreigners A67 GUIDE TO STATISTICAL RELEASES AND A58 Banks' own claims on foreigners SPECIAL TABLES A59 Banks' own and domestic customers' claims on foreigners A59 Banks' own claims on unaffiliated foreigners A68 INDEX TO STATISTICAL TABLES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected G-10 Group of Ten e Estimated GNMA Government National Mortgage Association n.a. Not available GDP Gross domestic product n.e.c. Not elsewhere classified HUD Department of Housing and Urban P Preliminary Development r Revised (Notation appears on column heading IMF International Monetary Fund when about half of the figures in that column IO Interest only are changed.) IPCs Individuals, partnerships, and corporations * Amounts insignificant in terms of the last decimal IRA Individual retirement account place shown in the table (for example, less than MMDA Money market deposit account 500,000 when the smallest unit given is millions) MSA Metropolitan statistical area 0 Calculated to be zero NOW Negotiable order of withdrawal Cell not applicable OCD Other checkable deposit ATS Automatic transfer service OPEC Organization of Petroleum Exporting Countries BIF Bank insurance fund OTS Office of Thrift Supervision CD Certificate of deposit PO Principal only CMO Collateralized mortgage obligation REIT Real estate investment trust FFB Federal Financing Bank REMIC Real estate mortgage investment conduit FHA Federal Housing Administration RP Repurchase agreement FHLBB Federal Home Loan Bank Board RTC Resolution Trust Corporation FHLMC Federal Home Loan Mortgage Corporation SAIF Savings Association Insurance Fund FmHA Farmers Home Administration SCO Securitized credit obligation FNMA Federal National Mortgage Association SDR Special drawing right FSLIC Federal Savings and Loan Insurance Corporation SIC Standard Industrial Classification G-7 Group of Seven VA Department of Veterans Affairs GENERAL INFORMATION In many of the tables, components do not sum to totals because of include not fully guaranteed issues) as well as direct obligarounding. tions of the Treasury. "State and local government" also in- Minus signs are used to indicate (1) a decrease, (2) a negative cludes municipalities, special districts, and other political figure, or (3) an outflow. subdivisions. "U.S. government securities" may include guaranteed issues of U.S. government agencies (the flow of funds figures also Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • April 1996 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted' 1995r 1995r 1996 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Ql Q2 Q3 Q4 Sept. Oct. Nov. Dec. Jan. Resenes of depository institutions2 1 Total -3.7 -8.0 -1.2 -7.2 -3.1 -11.4 -11.7 1.4 -15.7 2 Required -4.0 -7.0 -2.3 -8.0 -2.3 -14.4 -8.9 -5.9 -20.6 3 Nonborrowed -2.4 -8.6 -2.2 -6.7 -3.0 -10.8 -10.8 .3 -11.1 4 Monetary base3 6.0 5.7 1.7 2.7 2.4 2.9 1.2 5.2 .4 Concepts of money, liquid assets, and debt4 5 Ml -.1 -.4 -1.5 -5.1 -3.8 -8.8 -3.0 -4.5 -6.1 6 M2 1.4 4.3 7.0 4.0 4.4 2.3 3.7 5.6 5.2 7 M3 4.8 6.7 8.0 4.4 5.5 3.9 2.7 3.7 7.8 8 L 6.3 7.6 9.0 5.9 9.9 5.7 1.5 5.8 n.a. 9 Debt 5.3 7.0 4.6 4.0 3.4 3.6 5.5 3.0 n.a. Nontransaction components 10 In M25 2.2 6.6 11.0 8.1 8.2 7.5 6.6 10.1 10.1 11 In M3 only6 19.8 16.9 12.1 5.9 9.7 9.8 -.9 -3.8 18.4 Time and savings deposits Commercial banks 12 Savings, including MMDAs -12.7 -6.5 9.0 13.1 11.7 12.2 10.2 23.2 29.7 13 Small time7 24.5 20.4 11.0 3.9 4.0 3.1 4.6 1.7 4.4 14 Large time8'9 11.8 13.6 13.2 20.2 12.6 32.7 20.4 7.0 4.9 Thrift institutions 15 Savings, including MMDAs -20.1 -14.5 -7.3 -2.8 -1.0 .3 -6.3 -2.7 -2.7 16 Small time7 19.7 23.5 4.3 4.7 4.7 4.4 6.1 3.7 -9.3 17 Large time8 22.6 16.7 14.1 8.2 6.5 11.4 4.8 4.8 16.0 Money market mutual funds 18 Retail 11.7 19.0 36.5 16.8 18.6 12.8 14.0 13.8 9.9 19 Institution-only 17.6 30.5 27.6 9.2 17.6 10.3 2.1 12.9 17.0 Repurchase agreements and Eurodollars 20 Repurchase agreements10 31.7 7.8 -5.3 -13.5 -2.5 -15.6 -25.4 -46.6 33.7 21 Eurodollars10 26.0 18.6 9.4 -13.6 7.7 -20.5 -39.1 -5.4 44.6 Debt components'' 22 Federal 5.1 5.4 4.6 2.1 .8 2.9 4.4 -2.4 n.a. 23 Nonfederal 5.4 7.5 4.6 4.7 4.4 3.8 5.9 4.9 n.a. 1. Unless otherwise noted, rates of change are calculated from average amounts outstand- amounts held by depository institutions, the U.S. government, money market funds, and ing during preceding month or quarter. foreign banks and official institutions. Seasonally adjusted M3 is calculated by summing large 2. Figures incorporate adjustments for discontinuities, or "breaks," associated with time deposits, institutional money fund balances, RP liabilities, and Eurodollars, each regulatory changes in reserve requirements. (See also table 1.20.) seasonally adjusted separately, and adding this result to seasonally adjusted M2. 3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency securities, commercial paper, and bankers acceptances, net of money market fund holdings of component of the money stock, plus (3) (for all quarterly reporters on the "Report of these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whose Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference separately, and then adding this result to M3. between current vault cash and the amount applied to satisfy current reserve requirements. Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial 4. Composition of the money stock measures and debt is as follows: sectors—the federal sector (U.S. government, not including government-sponsored enter- Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of prises or federally related mortgage pools) and the nonfederal sectors (state and local depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all governments, households and nonprofit organizations, nonfinancial corporate and nonfarm commercial banks other than those owed to depository institutions, the U.S. government, and noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and foreign banks and official institutions, less cash items in the process of collection and Federal corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of which are derived from the Federal Reserve Board's flow of funds accounts, are breakwithdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, adjusted (that is, discontinuities in the data have been smoothed into the series) and credit union share draft accounts, and demand deposits at thrift institutions. Seasonally month-averaged (that is, the data have been derived by averaging adjacent month-end levels). adjusted Ml is computed by summing currency, travelers checks, demand deposits, and 5. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail OCDs, each seasonally adjusted separately. money fund balances, each seasonally adjusted separately. M2: Ml plus (1) savings (including MMDAs), (2) small-denomination time deposits (time 6. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities deposits—including retail RPs—in amounts of less than $100,000), and (3) balances in retail (overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and money market mutual funds (money funds with minimum initial investments of less than term) of U.S. addressees, each seasonally adjusted separately. $50,000). Excludes individual retirement accounts (IRAs) and Keogh balances at depository 7. Small time deposits—including retail RPs—are those issued in amounts of less than institutions and money market funds. Seasonally adjusted M2 is calculated by summing $100,000. All IRA and Keogh account balances at commercial banks and thrift institutions savings deposits, small-denomination time deposits, and retail money fund balances, each are subtracted from small time deposits. seasonally adjusted separately, and adding this result to seasonally adjusted M1. 8. Large time deposits are those issued in amounts of $100,000 or more, excluding those M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2) booked at international banking facilities. balances in institutional money funds (money funds with minimum initial investments of 9. Large time deposits at commercial banks less those held by money market funds, $50,000 or more), (3) RP liabilities (overnight and term) issued by all depository institutions, depository institutions, the U.S. government, and foreign banks and official institutions. and (4) Eurodollars (overnight and term) held by US. residents at foreign branches of U.S. 10. Includes both overnight and term. banks worldwide and at all banking offices in the United Kingdom and Canada. Excludes 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 Dec. 20 Dec. 27 Jan. 3 Jan. 10 Jan. 17 Jan. 24 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 413,165 416,469 421,941 424,004r 416,530 412,457 U.S. government securities2 2 Bought outright—System account 373,648 378,548 376,397 378,879 378,595 378,555 378,425 377,756 374,4120 3 Held under repurchase agreements 3,249 5,626 1,810 4,848 7,997 11,794 2,556 548 Federal agency obligations 4 Bought outright 2,796 2,654 2,634 2,6370 2,636 2,634 2,634 2,634 2,6340 5 Held under repurchase agreements 3200 3430 5900 0 9790 8850 1,5720 6430 0 6 Acceptances Loans to depository institutions 7 Adjustment credit 166 139 76 516 44 324 4 33 12 8 Seasonal credit 670 400 50 430 430 240 40 03 40 9 Extended credit 10 Float 901 l,176r 2,461 2,769 895r 1,082 3,950 2,475 2,837 11 Other Federal Reserve assets 32,018 32,231 32,496 32,249 32,815 33,252 32,358 32,439 32,558 12 Gold stock 11,050 11,050 11,051 11,050 11,050 11,050 11,050 11,050 11,050 13 Special drawing rights certificate account 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 14 Treasury currency outstanding 23,893r 23,958r 24,020 23,960r 23,974r 23,988 24,002 24,016 24,030 ABSORBING RESERVE FUNDS 15 Currency in circulation 414,038r 419,587' 417,877 418,824r 422,532r 424,346 421,507 419,161 415,696 16 Treasury cash holdings 287 271 247 271 270 262 217 225 271 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,410 6,762 6,298 8,633 7,169 6,306 5,313 5,548 7,218 18 Foreign 203 204 191 210 172 297 182 174 174 19 Service-related balances and adjustments . . 5,108 5,487r 5,997 5,250 5,558r 6,349 5,672 5,428 6,421 20 Other 326 366 333 304 296 741 232 287 310 21 Other Federal Reserve liabilities and capital , 13,006 12,847 12,741 13,164 13,070 12,463 12,593 12,940 12,877 22 Reserve balances with Federal Reserve Banks 19,897 20,410r 18,024 20,465 20,130r 22,992 21,005 18,000 14,739 End-of-month figures Wednesday figures Jan. 3 Jan. 10 Jan. 17 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 428,440r 425,020r 435,257 415,603 426,583 U.S. government securities2 2 Bought outright—System account 373,819 378,197 378,2080 378,439 381,141 378,749 376,5430 377,701 372,5140 3 Held under repurchase agreements 6,983 12,762 8,235 6,724 11,745 1,500 Federal agency obligations 4 Bought outright 2,6920 2,634 2,6340 2,6370 2,6340 2,634 2,6340 2,634 2,6340 5 Held under repurchase agreements 0 1,1000 0 0 0 1,5920 0 3,0000 0 6 Acceptances Loans to depository institutions 7 Adjustment credit 5 111 10 3,432 22 289 5 142 13 8 Seasonal credit 500 240 05 450 410 100 40 03 40 9 Extended credit 10 Float -1,817 107' 929 4,125 l,642r 7,240 4,190 9,237 930 11 Other Federal Reserve assets 31,136 33,504 31,350 32,424 32,815 32,998 32,228 32,367 32,675 12 Gold stock 11,050 11,050 11,052 11,050 11,050 11,050 11,050 11,050 11,052 13 Special drawing rights certificate account 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 14 Treasury currency outstanding 23,932r 23,988r 24,044 23,960r 23,974r 23,988 24,002 24,016 24,030 ABSORBING RESERVE FUNDS 15 Currency in circulation 416,719r 424,230r 412,629 421,304r 424,680r 424,595 420,591 418,643 414,422 16 Treasury cash holdings 276 270 273 270 270 217 218 270 272 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,703 5,979 8,210 11,383 5,779 4,787 5,796 7,859 7,089 18 Foreign 194 386 165 220 178 165 177 166 173 19 Service-related balances and adjustments .. 5,239 6,349r 6,317 5,250 5,558r 6,349 5,672 5,428 6,421 20 Other 282 932 406 308 279 257 236 306 313 21 Other Federal Reserve liabilities and capital , 12,697 12,342 11,832 12,959 12,838 12,459 12,557 12,678 12,633 22 Reserve balances with Federal Reserve Banks 16,908 23,159r 18,569 22,820 20,630r 31,634 15,577 26,466 12,697 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 U.S. government securities pledged with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • April 1996 1.12 RESERVES AND BORROWINGS Depository Institutions' Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1993 1994 1995 1995 1996 Dec. Dec. Dec. July Aug. Sept. Oct. Nov. Dec. Jan. 1 Reserve balances with Reserve Banks2 29,374 24,658 20,440r 20,840 20,565 20,519 20,055 20,066 20,440' 17,766 2 Total vault cash3 36,818 40,378r 42,117 40,530r 40,186' 40,652r 40,564r 40,576' 42,117 44,790 3 Applied vault cash4 33,484 36,682 37,460r 36,550 36,255 36,640 36,345 36,332 37,460' 39,172 4 Surplus vault cash5 3,334 3,696r 4,657r 3,980r 3,932r 4,012r 4,219r 4,244 4,657' 5,619 5 Total reserves6 62,858 61,340 57,900r 57,390 56,819 57,159 56,400 56,397 57,900' 56,937 6 Required reserves 61,795 60,172 56,622 56,300 55,832 56,209 55,319 55,454 56,622 55,451 7 Excess reserve balances at Reserve Banks7 1,063 1,168 1,278 1,090 988 950 1,081 943 1,278 1,486 8 Total borrowings at Reserve Banks8 82 209 257 371 282 278 245 204 257 38 9 Seasonal borrowings 31 100 40 231 258 252 199 73 40 7 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 Biweekly averages of daily figures for two week periods ending on dates indicated 1995 1996 Sept. 27 Oct. 11 Oct. 25 Nov. 8 Nov. 22 Dec. 6 Dec. 20 Jan. 3' Jan. 17 Jan. 31 1 Reserve balances with Reserve Banks 20,182 19,886 20,496 19,334 20,270 20,438 19,563 21,558 19,658 15,060 2 Total vault cash3 40,631' 41,156' 39,859' 41,126' 40,218 40,653 42,943 41,865 44,166 46,042 3 Applied vault cash4 36,556 36,805 35,770 36,846 36,071 36,274 38,053 37,353 39,104 39,629 4 Surplus vault cash5 4,075' 4,352' 4,090' 4,280' 4,148 4,379 4,890 4,513 5,062 6,413 5 Total reserves6 56,738 56,690 56,265 56,180 56,341 56,712 57,615 58,910 58,762 54,689 6 Required reserves 55,781 55,312 55,406 55,129 55,544 55,623 56,508 57,313 57,143 53,361 7 Excess reserve balances at Reserve Banks7 957 1,378 860 1,052 797 1,089 1,107 1,597 1,619 1,329 8 Total borrowings at Reserve Banks8 274 338 227 121 236 233 300 218 22 16 9 Seasonal borrowings 261 240 204 116 63 51 41 34 4 5 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 1. Data in this table also appear in the Board's H.3 (502) weekly statistical release. For 5. Total vault cash (line 2) less applied vault cash (line 3). ordering address, see inside front cover. Data are not break-adjusted or seasonally adjusted. 6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash 2. Excludes required clearing balances and adjustments to compensate for float and (line 3). includes other off-balance-sheet "as-of" adjustments. 7. Total reserves (line 5) less required reserves (line 6). 3. Total "lagged" vault cash held by depository institutions subject to reserve 8. Also includes adjustment credit. requirements. Dates refer to the maintenance periods during which the vault cash may be used 9. Consists of borrowing at the discount window under the terms and conditions estabto satisfy reserve requirements. The maintenance period for weekly reporters ends sixteen lished for the extended credit program to help depository institutions deal with sustained days after the lagged computation period during which the vault cash is held. Before Nov. 25, liquidity pressures. Because there is not the same need to repay such borrowing promptly as 1992, the maintenance period ended thirty days after the lagged computation period. with traditional short-term adjustment credit, the money market effect of extended credit is 4. All vault cash held during the lagged computation period by "bound" institutions (that similar to that of nonborrowed reserves. is, those whose required reserves exceed their vault cash) plus the amount of vault cash applied during the maintenance period by "nonbound" institutions (that is, those whose vault cash exceeds their required reserves) to satisfy current reserve requirements. 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 Banks' Millions of dollars, averages of daily figures 1995, week ending Monday 1996, week ending Monday SSoouurrccee aanndd mmaattuurriittyy Dec. 4 Dec. 11 Dec. 18 Dec. 25 Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 92,013 91,010 95,899 93,042 87,495 94,378 90,305 85,691 78,477 2 For all other maturities 1144,,338822 14,208 14,699r 1166,,223300rr 17,781 14,765 14,524 13,759 14,068 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 22,676 22,680 20,692 20,590 20,342 23,127 23,688 24,098 19,658 4 For all other maturities 19,903 20,178 19,985 21,315 21,663 19,427 19,529 19,155 19,908 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 19,435 16,784 18,413 16,121 17,233 20,104 20,047 19,938 18,932 6 For all other maturities 25,700 27,003 24,221 25,024 22,925 25,774 27,454 26,854 28,083 All other customers 7 For one day or under continuing contract 44,887 42,598 43,097 41,224 41,272 45,524 43,602 43,700 41,234 8 For all other maturities 16,251 16,079 16,103 17,141 18,286 16,154 16,790 15,799 15,225 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 60,904 58,461 63,983 67,332 64,799 68,303 64,929 65,987 60,616 10 To all other specified customers2 30,909 28,636 32,478 30,494 30,267 34,492 37,095 32,429 29,037 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 banks Data in this table also appear in the Board's H.5 (507) weekly statistical release. For and official institutions, and U.S. government agencies, ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • April 1996 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit' Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk 3/ O 8/ n 9 6 Effective date Previous rate 3/ O 8/ n 9 6 Effective date Previous rate 3/ O 8/ n 9 6 Effective date Previous rate Boston 5.00 2/1/96 5.25 5.20 2/29/96 5.15 5.70 2/29/96 5.65 New York 1/31/96 Philadelphia 1/31/96 Cleveland 1/31/96 Richmond 2/1/96 Atlanta 1/31/96 Chicago 2/1/96 St. Louis 2/5/96 Minneapolis 1/31/96 Kansas City 2/1/96 Dallas 1/31/96 San Francisco 5.00 1/31/96 5.25 5.20 2/29/96 5.15 5.70 2/29/96 5.65 Range of rates for adjustment credit in recent years4 Range (or F.R. Bank Range (or F.R. Bank Range (or F.R. Bank level)—All of evel)—All of Effective date level)—All of F.R. Banks N.Y. F.R. Banks N.Y. F.R. Banks N.Y. In effect Dec. 31, 1977 1981—Nov. 2 13-14 13 1988—Aug. 9 6-6.5 6.5 6 13 13 11 6.5 6.5 1978—Jan. 9 6-6.5 6.5 Dec. 4 12 12 20 6.5 6.5 1989—Feb. 24 6.5-7 7 May 11 6.5-7 7 1982—July 20 11.5-12 11.5 27 7 7 12 7 7 23 11.5 11.5 July 3 7-7.25 7.25 Aug. 2 11-11.5 11 1990—Dec. 19 6.5 6.5 10 7.25 7.25 3 11 11 Aug. 21 7.75 7.75 16 10.5 10.5 1991—Feb. 1 6-6.5 6 Sept. 22 8 8 27 10-10.5 10 4 6 6 Oct. 16 8-8.5 8.5 30 10 10 Apr. 30 5.5-6 5.5 20 8.5 8.5 Oct. 12 9.5-10 9.5 May 2 5.5 5.5 Nov. 1 8.5-9.5 9.5 13 9.5 9.5 Sept. 13 5-5.5 5 3 9.5 9.5 Nov. 22 9-9.5 9 17 5 5 26 9 9 Nov. 6 4.5-5 4.5 1979—July 20 10 10 Dec. 14 8.5-9 9 7 4.5 4.5 Aug. 17 10-10.5 10.5 15 8.5-9 8.5 Dec. 20 3.5-4.5 3.5 20 10.5 10.5 17 8.5 8.5 24 3.5 3.5 Sept. 19 10.5-11 11 21 11 11 1984—Apr. 9 8.5-9 9 1992—July 2 3-3.5 3 Oct. 8 11-12 12 13 9 9 7 3 3 10 12 12 Nov. 21 8.5-9 8.5 26 8.5 8.5 1994—May 17 3-3.5 3.5 1980—Feb. 15 12-13 13 Dec. 24 8 8 18 3.5 3.5 19 13 13 Aug. 16 3.5-4 4 May 29 12-13 13 1985—May 20 7.5-8 7.5 18 4 4 30 12 12 24 7.5 7.5 Nov. 15 4—4.75 4.75 June 13 11-12 11 17 4.75 4.75 16 11 11 1986—Mar. 7 7-7.5 7 July 28 10-11 10 10 7 7 1995—Feb. 1 4.75-5.25 5.25 29 10 10 Apr. 21 6.5-7 6.5 9 5.25 5.25 Sept. 26 11 11 23. 6.5 6.5 Nov. 17 12 12 July 11 6 6 1996—Jan. 31 5.00-5.25 5.00 Dec. 5 12-13 13 Aug. 21 5.5-6 5.5 Feb. 5 5.00 5.00 8 13 13 22 5.5 5.5 1981—May 5 13-14 14 In effect Mar. 8, 1996 5.00 5.00 14 14 1987—Sept. 4 5.5-6 6 11 6 6 1. Available on a short-term basis to help depository institutions meet temporary needs for of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a funds that cannot be met through reasonable alternative sources. The highest rate established flexible rate somewhat above rates charged on market sources of funds is charged. The rate for loans to depository institutions may be charged on adjustment credit loans of unusual size ordinarily is reestablished on the first business day of each two-week reserve maintenance that result from a major operating problem at the borrower's facility. period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis 2. Available to help relatively small depository institutions meet regular seasonal needs for points. funds that arise from a clear pattern of intrayearly movements in their deposits and loans and 4. For earlier data, see the following publications of the Board of Governors: Banking and that cannot be met through special industry lenders. The discount rate on seasonal credit takes Monetary Statistics, 1914-1941, and 1941-1970; and the Annual Statistical Digest, 1970into account rates charged by market sources of funds and ordinarily is reestablished on the 1979. first business day of each two-week reserve maintenance period; however, it is never less than In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment-credit the discount rate applicable to adjustment credit. borrowings by institutions with deposits of $500 million or more that had borrowed in 3. May be made available to depository institutions when similar assistance is not successive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge was reasonably available from other sources, including special industry lenders. Such credit may in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 percent was reimposed be provided when exceptional circumstances (including sustained deposit drains, impaired on Nov. 17, 1980; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to access to money market funds, or sudden deterioration in loan repayment performance) or 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, practices involve only a particular institution, or to meet the needs of institutions experiencing and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the difficulties adjusting to changing market conditions over a longer period (particularly at times surcharge was changed from a calendar quarter to a moving thirteen-week period. The of deposit disintermediation). The discount rate applicable to adjustment credit ordinarily is surcharge was eliminated on Nov. 17, 1981. charged on extended-credit loans outstanding less than thirty days; however, at the discretion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Type of deposit Net transaction accounts 1 $0 million-$52.0 million3 . . 12/19/95 2 More than $52.0 million4 . . 12/19/95 3 Nonpersonal time deposits5. 12/27/90 4 Eurocurrency liabilities6. . .. 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve Banks succeeding calendar year by 80 percent of the percentage increase in the total reservable or vault cash. Nonmember institutions may maintain reserve balances with a Federal liabilities of all depository institutions, measured on an annual basis as of June 30. No Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For corresponding adjustment is made in the event of a decrease. Eifective Dec. 19, 1995, the previous reserve requirements, see earlier editions of the Annual Report or the Federal exemption was raised from $4.2 million to $4.3 million. The exemption applies only to Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions accounts that would be subject to a 3 percent reserve requirement. include commercial banks, mutual savings banks, savings and loan associations, credit 4. The reserve requirement was reduced from 12 percent to 10 percent on unions, agencies and branches of foreign banks, and Edge Act corporations. Apr. 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions that 2. Transaction accounts include all deposits against which the account holder is permitted report quarterly. to make withdrawals by negotiable or transferable instruments, payment orders of with- 5. For institutions that report weekly, the reserve requirement on nonpersonal time deposits drawal, and telephone and preauthorized transfers for the purpose of making payments to with an original maturity of less than 1V5 years was reduced from 3 percent to 1 Vi percent for third persons or others. However, money market deposit accounts (MMDAs) and similar the maintenance period that began Dec. 13, 1990, and to zero for the maintenance period that accounts subject to the rules that permit no more than six preauthorized, automatic, or other began Dec. 27, 1990. The reserve requirement on nonpersonal time deposits with an original transfers per month, of which no more than three may be checks, are savings deposits, not maturity of 1 l/i years or more has been zero since Oct. 6, 1983. transaction accounts. For institutions that report quarterly, the reserve requirement on nonpersonal time deposits 3. The Monetary Control Act of 1980 requires that the amount of transaction accounts with an original maturity of less than 1 years was reduced from 3 percent to zero on Jan. 17, against which the 3 percent reserve requirement applies be modified annually by 80 percent of 1991. the percentage change in transaction accounts held by all depository institutions, determined 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero as of June 30 of each year. Eifective Dec. 19, 1995, the amount was decreased from $54.0 in the same manner and on the same dates as was the reserve requirement on nonpersonal million to $52.0 million. time deposits with an original maturity of less than 1 Vi years (see note 5). Under the Garn-St Germain Depository Institutions Act of 1982, the Board adjusts the amount of reservable liabilities subject to a zero percent reserve requirement each year for the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic NonfinancialS tatistics • April 1996 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1995 TTyyppee ooff ttrraannssaaccttiioonn aanndd mmaattuurriittyy 11999933 11999944 11999955 June July Aug. Sept. Oct. Nov. Dec. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 17,717 17,484 10,932 4,470 0 433 409 1,350 4,271 0 2 Gross sales 0 0 0 0 0 0 0 0 0 0 Exchanges 332,229 376,277 398,487 42,983 25,213 39,195 30,333 29,397 39,057 31,535 4 Redemptions 0 0 900 0 0 0 0 900 0 0 Others within one year 5 Gross purchases 1,223 1,238 390 0 0 0 0 0 0 390 6 Gross sales 0 0 0 0 0 0 0 0 0 0 / Maturity shifts 31,368 0 0 2,177 2.063 7,805 0 1,745 6,108 0 8 Exchanges -36,582 -21,444 0 -1,392 -562 -5,599 0 -2,049 -4,937 0 9 Redemptions 0 0 0 0 300 0 485 0 0 0 One to five years 10 Gross purchases 10,350 9,168 4,966 0 0 0 100 0 0 2,317 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shifts -27,140 -6,004 0 -2,177 -2,063 -3,379 0 -1,745 -5,292 0 13 Exchanges 0 17,801 0 1,392 562 4,905 0 22,,004499 33,,223377 0 Five to ten years 14 Gross purchases 4,168 3,818 1,239 0 0 0 0 0 400 0 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shifts 0 -3,145 0 0 0 -319 0 0 -816 0 17 Exchanges 0 2,903 0 0 0 1,800 0 0 11,,770000 0 More than ten years 18 Gross purchases 3,457 3,606 3,122 0 0 0 100 0 0 1,884 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shifts 0 -918 0 0 0 -525 0 0 0 0 21 Exchanges 0 775 0 0 0 1,100 0 0 0 0 All maturities 22 Gross purchases 36,915 35,314 20,649 4,470 0 433 609 1,350 4,671 4,591 23 Gross sales 0 0 0 0 0 0 0 0 0 0 24 Redemptions 767 2,337 2,376 0 0 0 0 1,385 0 0 Matched transactions 25 Gross purchases 1,475,941 1,700,836 2,197,736 170,083 166,674 179,571 195,830 216,755 226,340 227,858 26 Gross sales 1,475,085 1,701,309 2,202,030 171,959 163,490 185,711 198,587 213,161 228,419 228,071 Repurchase agreements 27 Gross purchases 475,447 309,276 331,694 40,989 8,527 4,130 43,286 28,825 44,569 34,325 28 Gross sales 470,723 311,898 328,497 28,196 24,851 1,075 39,896 32,980 39,876 28,546 29 Net change in U.S. Treasury securities 41,729 29,882 17.175 15,387 -13,141 -2,651 1,241 -597 7,285 10,157 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 774 1,002 1,303 262 333 122 46 83 120 58 Repurchase agreements 33 Gross purchases 35,063 52,696 36,851 1,941 711 1,610 1,434 3,740 3,763 22,,888888 34 Gross sales 34,669 52,696 36,776 2,180 1,172 1,510 1,459 3,605 3,973 11,,778888 35 Net change in federal agency obligations -380 -1,002 -1,228 -501 -794 -22 -71 52 -330 1,042 36 Total net change in System Open Market Account. .. 41,348 28,880 15,948 14,886 -13,935 -2,673 1,170 -545 6,955 11,199 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market Account; all other figures increase such holdings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks All 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1996 1995 1996 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 Nov. 30 Dec. 31 Jan. 31 Consolidated condition statement ASSETS 1 Gold certificate account 11,050 11,050 11,050 11,052 11,052 11,050 11,050 11,052 2 Special drawing rights certificate account 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 3 Coin 412 417 447 492 513 442 424 513 Loans 4 To depository institutions 299 8 145 17 15 55 135 15 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 2,634 2,634 2,634 2,634 2,634 2,692 22,,663344 22,,663344 8 Held under repurchase agreements 1,592 0 3,000 0 0 0 1,100 0 9 Total U.S. Treasury securities 390,494 376,543 379,201 372,514 378,208 380,802 390,959 378,208 10 Bought outright2 378,749 376,543 377,701 372,514 378,208 373,819 378,197 378,208 11 Bills 183,667 181,461 183,847 178,660 184,355 183,328 183,116 184,355 12 Notes 151,013 151,013 149,785 149,785 149,785 147,881 151,013 149,785 13 Bonds 44,069 44,069 44,069 44,069 44,069 42,610 44,069 44,069 14 Held under repurchase agreements 11,745 0 1,500 0 0 6,983 12,762 0 15 Total loans and securities 395,019 379,185 384,980 375,165 380,857 383,549 394,829 380,857 16 Items in process of collection 15,725 10,434 18,912 5,797 6,374 4,319 4,769 6,374 17 Bank premises 1,125 1,130 1,135 1,135 1,134 1,146 1,126 1,134 Other assets 18 Denominated in foreign currencies3 21,102 21,113 21,124 21,134 19,798 21,049 21,099 19,798 19 All other4 10,756 10,098 10,130 10,406 10,447 8,860 11,258 10,447 20 Total assets 465,357 443,596 457,945 435,350 440,344 440,582 454,723 440,344 LIABILITIES 21 Federal Reserve notes 401,236 397,224 395,344 391,156 389,371 393,505 400,935 389,371 22 Total deposits 43,525 28,565 40,266 26,473 33,903 30,549 36,908 33,903 23 Depository institutions 38,316 22,356 31,936 18,898 25,122 24,369 29,611 25,122 24 U.S. Treasury—General account 4,787 5,796 7,859 7,089 8,210 5,703 5,979 8,210 25 Foreign—Official accounts 165 177 166 173 165 194 386 165 26 Other 257 236 306 313 406 282 932 406 27 Deferred credit items 8,137 5,250 9,656 5,087 5,239 3,832 4,538 5,239 28 Other liabilities and accrued dividends5 4,328 4,141 4,280 4,192 4,181 4,645 4,409 4,181 29 Total liabilities 457,225 435,180 449,547 426,910 432,693 432,531 446,790 432,693 CAPITAL ACCOUNTS 30 Capital paid in 3,976 3,983 3,988 3,991 3,996 3,958 3,966 3,996 31 Surplus 3,964 3,966 3,966 3,966 3,654 3,671 3,966 3,654 32 Other capital accounts 192 466 444 483 1 422 0 1 33 Total liabilities and capital accounts 465,357 443,596 457,945 435,350 440,344 440,582 454,723 440,344 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 502,958 504,929 506,981 503,921 509,044 506,035 500,174 509,044 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 480,013 480,114 480,715 484,906 489,867 477,946 481,044 489,867 36 LESS: Held by Federal Reserve Banks 78,778 82,890 85,371 93,750 100,496 84,441 80,109 100,496 37 Federal Reserve notes, net 401,236 397,224 395,344 391,156 389,371 393,505 400,935 389,371 Collateral held against notes, net 38 Gold certificate account 11,050 11,050 11,050 11,052 11,052 11,050 11,050 11,052 39 Special drawing rights certificate account 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 380,018 376,006 374,126 369,936 368,150 372,286 379,717 368,150 42 Total collateral 401,236 397,224 395,344 391,156 389,371 393,505 400,935 389,371 1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly statistical 3. Valued monthly at market exchange rates. release. For ordering address, see inside front cover. 4. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with bills maturing within ninety days. Federal Reserve Banks—and excludes securities sold and scheduled to be bought back under 5. Includes exchange-translation account reflecting the monthly revaluation at market matched sale-purchase transactions. exchange rates of foreign exchange commitments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Nonfinancial Statistics • April 1996 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month TTTyyypppeee ooofff hhhooollldddiiinnnggg aaannnddd mmmaaatttuuurrriiitttyyy 1996 1995 1996 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 Nov. 30 Dec. 31 Jan. 31 1 Total loans 299 8 145 17 15 55 87 15 2 Within fifteen days' 297 6 144 16 15 29 85 15 3 Sixteen days to ninety days 2 2 1 1 26 2 4 Total U.S. Treasury securities 390,494 376,543 379,201 372,514 378,208 373,819 378,197 378,208 5 Within fifteen days' 26,631 14,549 11,546 14,402 20,294 5,924 7,580 20,294 6 Sixteen days to ninety days 88,402 90,887 92,858 83,280 84,103 87,792 93,738 84,103 7 Ninety-one days to one year 121,568 117,234 121,502 121,537 119,461 130,641 123,217 119,461 8 One year to five years 85,503 85,503 84,904 84,904 85,961 82,956 85,273 85,961 9 Five years to ten years 31,469 31,469 31,469 31,469 31,469 30,876 31,469 31,469 10 More than ten years 36,921 36,921 36,921 36,921 36,921 35,630 36,921 36,921 11 Total federal agencv obligations 4,226 2,664 5,634 2,634 2,634 2,692 2,634 2,634 12 Within fifteen days' 1,592 0 3,141 141 141 372 240 141 13 Sixteen days to ninety days 1,754 754 613 613 660 384 474 660 14 Ninety-one days to one year 487 647 647 664 617 531 527 617 15 One year to five years 841 681 681 664 664 853 841 664 16 Five years to ten years ' 527 527 527 527 527 527 527 527 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 in NOTE. Total acceptances data have been deleted from this table because data are no longer accordance with maximum maturity of the agreements. 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 1995 1996 IItteemm 11999922 11999933 11999944 11999955 DDeecc.. DDeecc.. DDeecc.. DDeecc.. June July Aug. Sept. Oct. Nov. Dec. Jan. Seasonally adjusted AAAADDDDJJJJUUUUSSSSTTTTEEEEDDDD FFFFOOOORRRR CCCCHHHHAAAANNNNGGGGEEEESSSS IIIINNNN RRRREEEESSSSEEEERRRRVVVVEEEE RRRREEEEQQQQUUUUIIIIRRRREEEEMMMMEEEENNNNTTTTSSSS2222 1111 TTTToooottttaaaallll rrrreeeesssseeeerrrrvvvveeeessss3333 54.35 60.50 59.34 56.33r 57.35 57.66 57.52 57.37 56.82 56.27 56.33' 55.60 2222 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss4444 54.23 60.42 59.13 56.08 57.08 57.28 57.23 57.09 56.58 56.07 56.08 55.56 3333 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss pppplllluuuussss eeeexxxxtttteeeennnnddddeeeedddd ccccrrrreeeeddddiiiitttt5555 54.23 60.42 59.13 56.08 57.08 57.28 57.23 57.09 56.58 56.07 56.08 55.56 4444 RRRReeeeqqqquuuuiiiirrrreeeedddd rrrreeeesssseeeerrrrvvvveeeessss 53.20 59.44 58.17 55.06 56.39 56.57 56.53 56.42 55.74 55.33 55.06 54.11 5555 MMMMoooonnnneeeettttaaaarrrryyyy bbbbaaaasssseeee6666 351.27r 386.90r 418.74r 435.02r 429.26r 429.79' 430.78' 431.65' 432.70' 433.15' 435.02' 435.17 Not seasonally adjusted 6666 TTTToooottttaaaallll rrrreeeesssseeeerrrrvvvveeeessss7777 56.06 62.37 61.13 58.01 57.13 57.49 56.93 57.29 56.54 56.56 58.01 56.96 7777 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss 55.93 62.29 60.92 57.76 56.85 57.12 56.65 57.01 56.30 56.35 57.76 56.93 8888 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss pppplllluuuussss eeeexxxxtttteeeennnnddddeeeedddd ccccrrrreeeeddddiiiitttt5555 55.93 62.29 60.92 57.76 56.85 57.12 56.65 57.01 56.30 56.35 57.76 56.93 9999 RRRReeeeqqqquuuuiiiirrrreeeedddd rrrreeeesssseeeerrrrvvvveeeessss8888 54.90 61.31 59.96 56.74 56.16 56.40 55.95 56.34 55.46 55.62 56.74 55.48 11110000 MMMMoooonnnneeeettttaaaarrrryyyy bbbbaaaasssseeee9999 354.55 390.59 422.51 439.01r 430.26 431.30 431.08 431.62 431.58' 433.21' 439.01' 435.98 NNNNOOOOTTTT AAAADDDDJJJJUUUUSSSSTTTTEEEEDDDD FFFFOOOORRRR CCCCHHHHAAAANNNNGGGGEEEESSSS IIIINNNN RRRREEEESSSSEEEERRRRVVVVEEEE RRRREEEEQQQQUUUUIIIIRRRREEEEMMMMEEEENNNNTTTTSSSS''''0000 11111111 TTTToooottttaaaallll rrrreeeesssseeeerrrrvvvveeeessss"""" 56.54 62.86 61.34 57.90 57.04 57.39 56.82 57.16 56.40 56.40 57.90 56.94 11112222 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss 56.42 62.78 61.13 57.64 56.77 57.02 56.54 56.88 56.15 56.19 57.64 56.90 11113333 NNNNoooonnnnbbbboooorrrrrrrroooowwwweeeedddd rrrreeeesssseeeerrrrvvvveeeessss pppplllluuuussss eeeexxxxtttteeeennnnddddeeeedddd ccccrrrreeeeddddiiiitttt5555 56.42 62.78 61.13 57.64 56.77 57.02 56.54 56.88 56.15 56.19 57.64 56.90 11114444 RRRReeeeqqqquuuuiiiirrrreeeedddd rrrreeeesssseeeerrrrvvvveeeessss 55.39 61.80 60.17 56.62 56.08 56.30 55.83 56.21 55.32 55.45 56.62 55.45 11115555 MMMMoooonnnneeeettttaaaarrrryyyy bbbbaaaasssseeee11112222 360.90 397.62 427.25 444.44r 434.57 435.56 435.59 436.20 436.34' 438.19' 444.44' 441.92 11116666 EEEExxxxcccceeeessssssss rrrreeeesssseeeerrrrvvvveeeessss''''3333 1.16 1.06 1.17 1.28 .96 1.09 .99 .95 1.08 .94 1.28 1.49 11117777 BBBBoooorrrrrrrroooowwwwiiiinnnnggggssss ffffrrrroooommmm tttthhhheeee FFFFeeeeddddeeeerrrraaaallll RRRReeeesssseeeerrrrvvvveeee .12 .08 .21 .26 .27 .37 .28 .28 .25 .20 .26 .04 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly 8. To adjust required reserves for discontinuities that are due to regulatory changes in statistical release. Historical data starting in 1959 and estimates of the effect on required reserve requirements, a multiplicative procedure is used to estimate what required reserves 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. Break- Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve adjusted required reserves include required reserves against transactions deposits and nonper- System, Washington, DC 20551. sonal time and savings deposits (but not reservable nondeposit liabilities). 2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory 9. The break-adjusted monetary base equals (1) break-adjusted total reserves (line 6), plus changes in reserve requirements. (See also table 1.10.) (2) the (unadjusted) currency component of the money stock, plus (3) (for all quarterly 3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, break- reporters on the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all adjusted required reserves (line 4) plus excess reserves (line 16). those weekly reporters whose vault cash exceeds their required reserves) the break-adjusted 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted, difference between current vault cash and the amount applied to satisfy current reserve break-adjusted total reserves (line 1) less total borrowings of depository institutions from the requirements. Federal Reserve (line 17). 10. Reflects actual reserve requirements, including those on nondeposit liabilities, with no 5. Extended credit consists of borrowing at the discount window under the terms and adjustments to eliminate the effects of discontinuities associated with regulatory changes in conditions established for the extended credit program to help depository institutions deal reserve requirements. with sustained liquidity pressures. Because there is not the same need to repay such 11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve borrowing promptly as with traditional short-term adjustment credit, the money market effect requirements. of extended credit is similar to that of nonborrowed reserves. 12. The monetary base, not break-adjusted and not seasonally adjusted, consists of (1) total 6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally reserves (line 11), plus (2) required clearing balances and adjustments to compensate for float adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency at Federal Reserve Banks, plus (3) the currency component of the money stock, plus (4) (for component of the money stock, plus (3) (for all quarterly reporters on the "Report of all quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters Cash" and for all those weekly reporters whose vault cash exceeds their required reserves) the whose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference between current vault cash and the amount applied to satisfy current reserve difference between current vault cash and the amount applied to satisfy current reserve requirements. Since the introduction of contemporaneous reserve requirements in February requirements. 1984, currency and vault cash figures have been measured over the computation periods 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess ending on Mondays. 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 • April 1996 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1995r 1996 IItteemm 1992r 1993r 1994r 1995r Dec. Dec. Dec. Dec. Oct. Nov. Dec. Jan. Seasonally adjusted Measures2 1 Ml 1,024.4 1,128.6 1,148.7 1,124.8 1,131.8 1,129.0 1,124.8 1,119.1 2 M2 3,438.7 3,494.1 3,509.4 3,670.2 3,642.1 3,653.2 3,670.2 3,686.0 3 M3 4,187.3 4,249.6 4,319.4 4,582.0 4,557.5 4,567.9 4,582.0 4,611.8 4 L 5,075.8 5,164.5 5,303.4 5,695.1 5,660.6 5,667.9 5,695.1 n.a. 5 Debt 11,881.7 12,516.4 13,153.2 13,841.8 13,745.0 13,807.8 13,841.8 n.a. Ml components 6 Currency3 292.9 322.4 354.9 373.2 370.8 371.6 373.2 373.6 7 Travelers checks4 8.1 7.9 8.5 8.9 8.8 8.9 8.9 8.9 8 Demand deposits5 339.1 384.3 382.4 389.8 388.1 388.2 389.8 393.5 9 Other checkable deposits6 384.2 414.0 402.9 353.0 364.1 360.3 353.0 343.1 Nontransaction components 10 In M27 2,414.3 2,365.4 2,360.7 2,545.4 2,510.3 2,524.2 2,545.4 2,566.9 11 In M3 only8 748.6 755.6 809.9 911.8 915.4 914.7 911.8 925.8 Commercial hanks 12 Savings deposits, including MMDAs 754.1 785.0 751.9 775.0 753.9 760.3 775.0 794.2 13 Small time deposits9 509.3 470.4 505.4 576.2 573.2 575.4 576.2 578.3 14 Large time deposits'0, " 286.6 272.3 298.7 343.5 335.8 341.5 343.5 344.9 Thrift institutions 15 Savings deposits, including MMDAs 433.0 433.8 397.0 359.5 362.2 360.3 359.5 358.7 16 Small time deposits9 361.9 317.6 318.2 359.5 356.6 358.4 359.5 356.7 17 Large time deposits'0 67.1 61.5 64.8 75.1 74.5 74.8 75.1 76.1 Money market mutual funds 18 Retail 356.0 358.7 388.1 475.1 464.3 469.7 475.1 479.0 19 Institution-only 199.8 197.9 183.7 226.4 223.6 224.0 226.4 229.6 Repurchase agreements and Eurodollars 20 Repurchase agreements12 128.1 157.5 180.4 178.1 189.3 185.3 178.1 183.1 21 Eurodollars'2 66.9 66.3 82.3 88.7 92.1 89.1 88.7 92.0 Debt components 22 Federal debt 3,068.6 3,328.3 3,497.6 3,638.4 3,632.6 3,645.8 3,638.4 23 Nonfederal debt 8,813.1 9,188.1 9,655.6 10,203.4 10,112.3 10,162.1 10,203.4 n.a. Not seasonally adjusted Measures2 24 Ml 1,046.0 1,153.7 1,174.2 1,150.7 1,131.0 1,136.5 1,150.7 1,128.0 25 M2 3,455.1 3,514.1 3,529.8 3,689.9 3,638.1 3,658.8 3,689.9 3,687.8 26 M3 4,205.3 4,271.3 4,341.1 4,603.0 4,557.3 4,580.8 4,603.0 4,616.4 27 L 5,103.1 5,194.2 5,332.9 5,724.7 5,650.1 5,681.2 5,724.7 n.a. 28 Debt 11,883.2 12,509.3 13,145.8 13,828.6 13,703.7 13,771.3 13,828.6 n.a. Ml components 29 Currency3 295.0 324.8 357.5 376.1 370.0 371.7 376.1 371.7 3 3 0 1 T D r e a m ve a l n e d r s d c e h p e o c s k it s s 4 5 354 7 . . 4 8 401 7 . . 8 6 400 8 . . 1 1 408 8 . . 0 5 391 8 . . 1 9 395 8 . . 8 7 408 8 . . 0 5 399 8 . . 0 5 32 Other checkable deposits6 388.9 419.4 408.4 358.0 361.0 360.3 358.0 348.8 Nontransaction components 33 In M27 2,409.1 2,360.4 2,355.6 2,539.2 2,507.0 2,522.3 2,539.2 2,559.8 34 In M3 only8 750.2 757.1 811.4 913.2 919.3 922.0 913.2 928.6 Commercial banks 35 Savings deposits, including MMDAs 752.9 784.3 751.6 775.0 755.4 763.4 775.0 790.4 36 Small time deposits9 507.8 468.2 502.5 572.3 572.6 572.6 572.3 576.0 37 Large time deposits'0, " 286.2 272.1 298.5 343.4 338.1 344.3 343.4 342.2 Thrift institutions 38 Savings deposits, including MMDAs 432.4 433.4 396.9 359.5 362.9 361.7 359.5 357.0 39 Small time deposits9 360.9 316.1 316.4 357.1 356.2 356.7 357.1 355.2 40 Large time deposits'0 67.0 61.5 64.8 75.1 75.0 75.5 75.1 75.5 Money market mutual funds 41 Retail 355.1 358.3 388.2 475.3 459.9 467.8 475.3 481.1 42 Institution-only 201.1 199.4 185.5 228.6 221.8 226.3 228.6 237.2 Repurchase agreements and Eurodollars 43 Repurchase agreements12 127.2 156.6 179.2 176.7 191.2 185.1 176.7 181.8 44 Eurodollars'2 68.7 67.6 83.4 89.4 93.2 90.7 89.4 91.9 Debt components 45 Federal debt 3,069.8 3,329.5 3,499.0 3,639.8 3,610.1 3,635.9 3,639.8 n.a. 46 Nonfederal debt 8,813.4 9,179.8 9,646.8 10,188.8 10,093.6 10,135.4 10,188.8 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) weekly these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term statistical release. Historical data starting in 1959 are available from the Money and Reserves Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve separately, and then adding this result to M3. System, Washington, DC 20551. Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial 2. Composition of the money stock measures and debt is as follows: sectors—the federal sector (U.S. government, not including government-sponsored enter- Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of prises or federally related mortgage pools) and the nonfederal sectors (state and local depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all governments, households and nonprofit organizations, nonfinancial corporate and nonfarm commercial banks other than those owed to depository institutions, the U.S. government, and noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and foreign banks and official institutions, less cash items in the process of collection and Federal corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of which are derived from the Federal Reserve Board's flow of funds accounts, are breakwithdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, adjusted (that is, discontinuities in the data have been smoothed into the series) and credit union share draft accounts, and demand deposits at thrift institutions. Seasonally month-averaged (that is, the data have been derived by averaging adjacent month-end levels). adjusted Ml is computed by summing currency, travelers checks, demand deposits, and 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depository OCDs, each seasonally adjusted separately. institutions. M2: Ml plus (1) savings deposits (including MMDAs), (2) small-denomination time 4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. deposits (time deposits—including retail RPs—in amounts of less than $100,000), and (3) Travelers checks issued by depository institutions are included in demand deposits. balances in retail money market mutual funds (money funds with minimum initial invest- 5. Demand deposits at commercial banks and foreign-related institutions other than those ments of less than $50,000). Excludes individual retirement accounts (IRAs) and Keogh owed to depository institutions, the U.S. government, and foreign banks and official institubalances at depository institutions and money market funds. Seasonally adjusted M2 is tions, less cash items in the process of collection and Federal Reserve float. calculated by summing savings deposits, small-denomination time deposits, and retail money 6. Consists of NOW and ATS account balances at all depository institutions, credit union fund balances, each seasonally adjusted separately, and adding this result to seasonally share draft account balances, and demand deposits at thrift institutions. adjusted Ml. 7. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more) money fund balances. issued by all depository institutions, (2) balances in institutional money funds (money funds 8. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities with minimum initial investments of $50,000 or more), (3) RP liabilities (overnight and term) (overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and issued by all depository institutions, and (4) Eurodollars (overnight and term) held by U.S. term) of U.S. addressees. residents at foreign branches of U.S. banks worldwide and at all banking offices in the United 9. Small time deposits—including retail RPs—are those issued in amounts of less than Kingdom and Canada. Excludes amounts held by depository institutions, the U.S. govern- $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are ment, money market funds, and foreign banks and official institutions. Seasonally adjusted subtracted from small time deposits. M3 is calculated by summing large time deposits, institutional money fund balances, RP 10. Large time deposits are those issued in amounts of $100,000 or more, excluding those liabilities, and Eurodollars, each seasonally adjusted separately, and adding this result to booked at international banking facilities. seasonally adjusted M2. 11. Large time deposits at commercial banks less those held by money market funds, L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury depository institutions, the U.S. government, and foreign banks and official institutions. securities, commercial paper, and bankers acceptances, net of money market fund holdings of 12. Includes both overnight and term. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Nonfinancial Statistics • April 1996 1.22 DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING Commercial and BIF-insured saving banks1 1995 1996 1993 1994 Dec. Dec. May June July Aug. Sept. Oct. Nov. Dec.r Jan. Interest rates (annual effective yields)2 INSURED COMMERCIAL BANKS 1 Negotiable order of withdrawal accounts 1.86 1.96 2.00 1.97 1.93 1.93 1.94 1.93 1.95 1.92 1.92 2 Savings deposits3 2.46 2.92 3.19 3.17 3.13 3.12 3.14 3.11 3.13 3.10 3.01 Interest-hearing time deposits with balances of less than $100,000, by maturity 3 7 to 91 days 2.65 3.79 4.25 4.20 4.17 4.10 4.10 4.11 4.12 4.11 3.97 4 92 to 182 days 2.91 4.44 4.93 4.81 4.77 4.77 4.75 4.75 4.74 4.69 4.58 5 183 days to 1 year 3.13 5.12 5.49 5.27 5.18 5.15 5.14 5.15 5.12 5.03 4.92 6 More than 1 year to 2'/? years 3.55 5.74 5.82 5.53 5.38 5.39 5.32 5.31 5.27 5.18 5.04 7 More than 2vz years 4.28 6.30 6.11 5.79 5.62 5.63 5.60 5.56 5.49 5.41 5.26 BIF-INSURED SAVINGS BANKS4 8 Negotiable order of withdrawal accounts 1.87 1.94 1.97 1.98 1.97 1.98 1.98 1.97 1.94 1.91 1.84 9 Savings deposits3 2.63 2.87 2.93 2.97 2.97 2.96 2.96 2.97 2.99 2.99 2.96 Interest-bearing time deposits with balances of less than $100,000, by maturity 10 7 to 91 days 2.81 3.80 4.27 4.24 4.28 4.34 4.29 4.34 4.45 4.44 4.39 11 92 to 182 days 3.02 4.89 5.34 5.22 5.16 5.12 5.08 5.06 5.02 4.95 4.87 12 183 days to 1 year 3.31 5.52 5.82 5.61 5.47 5.45 5.35 5.32 5.28 5.19 5.07 13 More than 1 year to 2 '/2 years 3.67 6.09 6.09 5.78 5.62 5.60 5.51 5.50 5.46 5.32 5.22 14 More than 2'A years 4.62 6.43 6.33 5.99 5.82 5.78 5.74 5.69 5.64 5.47 5.34 Amounts outstanding (millions of dollars) INSURED COMMERCIAL BANKS 15 Negotiable order of withdrawal accounts 305,237 304,896 275,446 276,406 274,140 267,644 253,174 258,411 259,259 252,434 250,508 16 Savings deposits3 767,035 737,068 715,843 721,498 726,697 735,930 744,839 747,943 767,431 793,168 785,837 17 Personal 598,276 580,438 561,875 566,220 570,299 575,204 584,239 587,235 599,787 628,372 626,183 18 Nonpersonal 168,759 156,630 153,968 155,279 156,398 160,726 160,600 160,707 167,644 164,796 159,654 Interest-bearing time deposits with balances of less than $100,000, by maturity 19 7 to 91 days 29,362 32,265 31,655 32,258 33,142 30,937 29,804 29,940 31,083 32,807 33,846 20 92 to 182 days 109,050 96,650 93,084 92,364 91,975 90,796 92,220 94,418 97,401 96,902 98,494 21 183 days to 1 year 145,386 163,062 185,983 189,110 189,011 189,565 189,338 188,859 188,043 187,828 188,948 22 More than 1 year to 2 [/2 years 139,781 164,395 195,557 198,805 202,467 204,453 203,548 206,993 211,169 211,388 215,161 23 More than 2 Vl years 180,461 192,712 194,400 195,689 195,623 201,306 200,182 200,201 202,357 203,227 204,178 24 IRA and Keogh plan deposits 144,011 144,097 149,496 149,488 150,426 150,648 149,570 151,094 151,869 152,390 153,056 BIF-INSURED SAVINGS BANKS4 25 Negotiable order of withdrawal accounts 11,191 11,175 10,967 11,237 11,147 10,999 11,408 11,317 11,613 12,727 11,950 26 Savings deposits3 80,376 70,082 67,349 66,952 66,409 66,478 69,752 69,636 70,265 71,402 69,619 27 Personal 77,263 67,159 64,127 63,736 63,194 63,149 66,403 66,193 66,688 67,919 66,095 28 Nonpersonal 3,113 2,923 3,222 3,216 3,215 3,329 3,349 3,443 3,577 3,482 3,524 Interest-bearing time deposits with balances of less than $100,000, by maturity 29 7 to 91 days 2,746 2,144 1,804 1,555 1,769 1,856 1,739 1,768 1,903 2,115 2,074 30 92 to 182 days 12,974 11,361 11,323 10,939 11,030 11,079 11,258 11,231 11,848 12,754 13,046 31 183 days to 1 year 17,469 18,391 21,491 21,545 21,969 22,294 24,837 25,036 25,887 27,072 27,907 32 More than 1 year to 2 [/l years 16,589 17,787 23,996 24,413 24,876 25,029 27,825 27,755 28,247 28,966 28,124 33 More than 2[/i years 20,501 21,293 22,548 22,733 22,713 22,563 23,351 23,470 23,574 24,247 23,923 34 IRA and Keogh plan accounts 19,791 19,008 20,200 20,196 20,286 20,333 21,913 21,784 21,758 21,949 22,089 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 day 4. Includes both mutual and federal savings banks. 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 1995 BBaannkk ggrroouupp,, oorr ttyyppee ooff ddeeppoossiitt 1199993322 June July Aug. Sept. Oct.r Nov. DEBITS Seasonally adjusted Demand deposits3 1 All insured banks 313,128.1 334,784.1 369,029.1 413,335.1 391,053.7 407,389.4 397,843.6 413,944.4 409,491.8 2 Major New York City banks 165,447.7 171,224.3 191,168.8 203,342.3 197,712.2 206,835.9 207,576.7 210,336.4 204,483.4 3 Other banks 147,680.4 163,559.7 177,860.3 209,992.8 193,341.5 200,553.5 190,266.9 203,608.0 205,008.4 4 Other checkable deposits4 3,780.3 3,481.5 3,798.6 4,142.3 3,593.7 4,236.1 4,366.8 4,690.6 4,891.5 5 Savings deposits (including MMDAs)5 3,309.1 3,497.4 3,766.3 4,326.8 3,986.7 4,745.4 4,898.4 5,328.5 5,702.9 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 825.9 785.9 817.4 901.8 849.3 887.9 858.0 907.7 905.8 7 Major New York City banks 4,795.3 4,198.1 4,481.5 4,718.9 4,624.7 4,970.9 5,018.0 5,269.7 5,222.2 8 Other banks 428.7 424.6 435.1 505.7 462.9 480.7 450.5 489.3 496.5 9 Other checkable deposits4 14.4 11.9 12.6 15.1 12.9 15.5 16.3 18.0 19.1 10 Savings deposits (including MMDAs)5 4.7 4.6 4.9 6.0 5.5 6.5 6.6 7.1 7.6 DEBITS Not seasonally adjusted Demand deposits' 11 All insured banks 313,344.9 334,899.2 369,121.8 425,855.1 390,226.6 421,875.3 395,203.2 413,565.0 398,249.2 12 Major New York City banks 165,595.0 171,283.5 191,226.0 209,349.5 196,873.1 213,958.6 207,994.2 212,506.0 202,744.5 13 Other banks 147,749.9 163,615.7 177,895.7 216,505.6 193,353.5 207,916.7 187,209.0 201,059.0 195,504.7 14 Other checkable deposits4 3,783.6 3,481.7 3,795.6 4,261.6 3,525.4 4,203.3 4,431.9 4.565.7 4,566.5 15 Savings deposits (including MMDAs)5 3,310.0 3,498.3 3,764.4 4,432.7 4,054.1 4,750.1 4,849.1 5,075.0 5,411.1 DEPOSIT TURNOVER Demand deposits3 16 All insured banks 826.1 786.1 818.2 941.3 848.2 936.7 856.4 895.5 860.8 17 Major New York City banks 4,803.5 4,197.9 4,490.3 4,972.0 4,657.5 5,343.0 5,069.5 5,292.2 5,046.6 18 Other banks 428.8 424.8 435.3 527.7 462.8 506.7 445.3 476.8 462.7 19 Other checkable deposits4 14.4 11.9 12.6 15.7 12.9 15.6 16.7 17.7 17.8 20 Savings deposits (including MMDAs)5 4.7 4.6 4.9 6.1 5.6 6.5 6.6 6.8 7.2 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 automatic Publications Section, Division of Support Services, Board of Governors of the Federal transfer to demand deposits (ATSs) and negotiable order of withdrawal (NOW) accounts, Reserve System, Washington, DC 20551. were expanded to include telephone and preauthorized transfer accounts. This change Data in this table also appear in the Board's G.6 (406) monthly statistical release. For 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 • April 1996 1.26 ASSETS AND LIABILITIES OF COMMERCIAL BANKS1 Billions of dollars Monthly averages Wednesday figures Account 1995 1995r 1996 1996 Jan. July Aug. Sept. Oct. Nov. Dec. Jan. Jan. 10 Jan. 17 Jan. 24 Jan. 31 ALL COMMERCIAL Seasonally adjusted BANKING INSTITUTIONS Assets 1 Bank credit 3,354.8 3,526.2 3,541.3 3,564.1 3,576.2 3,586.2 3,595.8 3,621.9 3,622.2 3,618.2 3,627.2 3,622.7 2 Securities in bank credit 950.1 975.9 978.1 982.2 985.1 986.8 989.1 988.6 983.1 986.6 991.7 994.3 3 U.S. government securities 729.3 703.9 708.5 708.4 713.9 715.8 712.7 704.5 706.2 702.4 703.4 704.3 4 Other securities 220.8 272.0 269.6 273.8 271.2 271.1 276.4 284.1 276.9 284.2 288.3 290.0 5 Loans and leases in bank credit2 . . . 2,404.6 2,550.3 2,563.2 2,581.9 2,591.1 2,599.4 2,606.7 2,633.2 2,639.1 2,631.6 2,635.4 2,628.4 6 Commercial and industrial 656.7 697.8 701.9 708.5 710.7 715.0 718.3 725.1 722.9 725.0 726.9 726.8 7 Real estate 1,013.8 1,062.3 1,068.1 1.072.1 1,075.5 1,076.8 1,077.0 1,083.6 1,083.6 1,084.0 1,083.9 1,085.1 8 Revolving home equity 75.7 78.0 78.2 78.4 78.4 78.8 79.2 79.7 79.6 79.7 79.7 79.8 9 Other 938.0 984.3 989.8 993.7 997.1 997.9 997.9 1,003.9 1,004.0 1,004.4 1,004.2 1,005.3 10 Consumer 457.2 481.1 485.7 489.5 489.3 491.2 493.3 497.7 498.0 499.0 497.2 497.0 11 Security3 73.3 87.1 84.3 86.6 86.6 86.2 82.7 83.9 87.8 81.4 84.9 79.1 12 Other 203.6 222.1 223.2 225.2 229.1 230.2 235.4 242.8 246.7 242.2 242.6 240.5 13 Interbank loans4 177.0 192.8 189.4 192.1 193.0 193.9 193.7 200.3 201.3 203.3 198.7 195.2 14 Cash assets5 218.8 213.8 211.6 214.9 222.2 216.0 223.5 232.9 234.5 245.2 216.0 232.5 15 Other assets6 225.7 223.7 223.2 225.6 226.2 226.9 233.4 231.1 230.9 234.1 230.1 228.1 16 Total assets7 3,919.4 4,099.5 4,108.6 4,139.9 4,160.9 4,166.5 4,189.9 4,2293 4,231.7 4,243.8 4,215.2 4,221.7 Liabilities 17 Deposits 2,540.0 2,609.0 2,616.9 2,629.6 2,642.5 2,638.1 2,653.2 2,680.0 2,688.1 2,687.2 2,663.4 2,682.3 18 Transaction 805.7 792.0 783.3 781.1 777.8 766.1 770.8 779.9 785.3 785.5 767.0 783.4 19 Nontransaction 1,734.3 1,817.0 1,833.6 1,848.5 1,864.7 1,872.0 1,882.4 1,900.1 1,902.8 1,901.7 1,896.4 1,898.8 20 Large time 366.4 402.4 409.5 415.8 423.6 423.1 421.8 421.9 424.2 421.3 419.0 423.5 21 Other 1,367.9 1,414.6 1,424.1 1,432.7 1,441.1 1,448.8 1,460.5 1,478.1 1,478.5 1,480.4 1,477.4 1,475.4 22 Borrowings 645.9 685.8 687.8 687.3 682.3 672.6 687.7 701.5 695.7 702.8 704.6 700.0 23 From banks in the U.S 181.5 195.6 194.3 197.9 197.8 195.9 194.6 204.4 205.7 207.8 202.0 200.4 24 From nonbanks in the U.S 464.4 490.2 493.5 489.5 484.5 476.7 493.2 497.1 490.0 495.0 502.6 499.6 25 Net due to related foreign offices 244.9 235.7 244.7 252.0 257.6 264.0 263.6 270.2 265.0 278.5 268.6 267.3 26 Other liabilities8 166.1 210.6 212.4 219.0 219.1 220.0 227.4 220.6 213.2 219.7 224.5 225.4 27 Total liabilities 3,596.9 3,741.0 3,761.9 3,787.9 3,801.5 3,794.8 3,831.8 3,872.4 3,862.0 3,888.2 3,861.2 3,874.9 28 Residual (assets less liabilities)9 322.5 358.4 346.7 352.0 359.4 371.8 358.1 356.9 369.8 355.6 354.0 346.8 Not seasonally adjusted Assets 29 Bank credit 3,348.2 3,518.9 3,540.0 3,568.9 3,577.9 3.592.6 3,603.3 3,612.4 3,616.4 3,613.1 3,603.5 3,611.0 30 Securities in bank credit 940.6 972.6 981.7 985.2 986.8 985.8 979.5 976.3 972.8 975.1 975.7 981.8 31 U.S. government securities 723.7 701.9 711.4 710.1 712.1 714.1 708.0 699.0 699.4 698.7 697.8 699.8 32 Other securities 216.9 270.8 270.4 275.2 274.7 271.7 271.5 277.3 273.4 276.4 277.9 282.0 33 Loans and leases in bank credit2 . . . 2,407.6 2,546.3 2,558.2 2.583.7 2,591.1 2,606.9 2,623.9 2,636.2 2,643.6 2,638.0 2,627.8 2,629.2 34 Commercial and industrial 653.9 698.6 698.7 703.9 706.7 713.3 716.5 722.1 719.5 721.7 722.3 724.6 35 Real estate 1,013.4 1,062.2 1,067.7 1,074.0 1,078.6 1,082.4 1,081.8 1,083.4 1,085.0 1,084.6 1,082.1 1,083.2 36 Revolving home equity 75.6 78.1 78.5 78.9 79.1 79.3 79.2 79.6 79.5 79.5 79.6 79.6 37 Other 937.8 984.1 989.3 995.1 999.6 1,003.1 1,002.6 1,003.9 1,005.4 1,005.1 1,002.5 1,003.6 38 Consumer 461.5 478.6 485.9 490.8 489.9 492.1 499.1 502.3 504.0 503.5 500.6 499.7 39 Security-1 75.3 84.3 82.1 86.3 85.2 87.5 86.5 85.6 87.7 85.1 84.4 83.1 40 Other 203.5 222.7 223.8 228.7 230.7 231.5 240.1 242.6 247.4 243.1 238.4 238.6 41 Interbank loans4 185.1 189.6 184.6 187.9 192.2 197.2 206.0 209.1 211.9 216.6 199.2 201.5 42 Cash assets5 225.5 211.7 202.6 215.8 223.2 220.1 238.1 240.3 2293 272.2 213.7 228.2 43 Other assets6 226.4 224.0 225.1 226.7 226.6 226.5 233.1 231.7 230.1 234.3 227.7 232.6 44 Total assets7 3,928.8 4,087.5 4,0953 4,1423 4,163.4 4,179.6 4,223.8 4,237.0 4,231.0 4,279.7 4,187.7 4,216.8 Liabilities 45 Deposits 2,547.7 2,601.6 2,603.8 2.628.4 2,642.5 2,654.0 2,684.3 2,686.7 2,698.7 2,7183 2,633.9 2,667.4 46 Transaction 818.1 784.2 769.0 779.8 778.0 779.7 805.9 791.6 797.3 820.1 745.6 775.7 47 Nontransaction 1,729.6 1,817.4 1,834.8 1,848.6 1,864.5 1,8743 1,878.3 1,895.1 1,901.4 1,898.2 1,888.3 1,891.8 48 Large time 363.9 400.5 408.7 414.9 422.0 424.2 420.8 419.0 419.9 418.2 417.7 421.5 49 Other 1,365.6 1,416.9 1,426.1 1,433.7 1,442.5 1,450.2 1,457.5 1,476.1 1,481.5 1,480.1 1,470.7 1,470.2 50 Borrowings 636.8 695.4 686.2 693.5 688.0 681.6 692.1 688.7 686.0 694.9 682.5 684.1 51 From banks in the U.S 187.4 193.7 188.3 190.2 192.9 198.0 207.4 211.3 214.3 219.1 201.6 202.7 52 From nonbanks in the U.S 449.4 501.7 497.9 503.3 495.1 483.6 484.8 477.4 471.8 475.8 480.9 481.4 53 Net due to related foreign offices 251.3 234.0 243.0 247.6 258.7 262.9 264.1 277.3 270.3 283.2 282.8 272.2 54 Other liabilities8 167.3 209.8 212.3 219.2 218.4 222.0 222.7 222.3 215.4 221.1 225.9 229.2 55 Total liabilities 3,603.1 3,740.8 3,7453 3,788.7 3,807.6 3,820.5 3,863.2 3,875.0 3,870.5 3,917.5 3,825.0 3352.9 56 Residual (assets less liabilities)' 325.7 346.7 350.0 353.6 355.8 359.1 360.6 362.1 360.5 362.1 362.6 363.9 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 BANKS'—Continued Billions of dollars Monthly averages Wednesday figures Account 1995 1995r 1996 1996 Jan. July Aug. Sept. Oct. Nov. Dec. Jan. Jan. 10 Jan. 17 Jan. 24 Jan. 31 DOMESTICALLY CHARTERED Seasonally adjusted COMMERCIAL BANKS Assets 57 Bank credit 3,001.4 3.109.9 3.121.6 3,139.0 3.148.9 3,160.0 3.171.7 3.192.6 3.191.7 3.190.5 3,196.2 3,192.8 58 Securities in bank credit 867.4 849.3 848.2 852.7 853.1 855.2 856.1 855.7 852.4 854.9 85S.1 857.7 59 U.S. government securities 669.1 639.8 641.5 642.7 647.4 648.1 645.0 641.2 641.8 639.0 640.8 642.0 60 Other securities 198.3 209.5 206.7 210.0 205.8 207.0 211.2 214.5 210.6 215.9 217.4 215.7 61 Loans and leases in bank credit2 2,133.9 2.260.6 2.273.3 2,286.3 2,295.8 2.304.9 2.315.5 2,336.8 2.339.2 2.335.6 2.338.1 2,335.2 6? Commercial and industrial 491.5 522.8 525.4 528.5 531.4 534.5 534.7 539.9 538.6 539.4 540.4 541.6 63 Real estate 973.2 1.024.4 1,030.8 1,035.2 1.038.2 1,040.1 1,041.3 1.048.9 1,048.6 1.049 1 1.049.4 1,051.0 64 Revolving home equity • 75.7 78.0 78.2 78.4 78.4 78.8 79.2 79.7 79.6 79.7 79.7 79.8 65 Other 897.5 946.4 952.6 956.8 959.8 961.3 962.2 969.2 969.0 969.5 969.7 971.2 66 Consumer 457.2 481.1 485.7 489.5 489.3 491.2 493.3 497.7 498.0 499.0 497.2 497.0 67 Security-' 46.0 51.9 51.0 51.7 51.6 53.6 56.4 55.7 56.5 54.1 56.7 53.2 68 Other 165.9 180.4 180.4 181.5 185.3 185.4 189.9 194.5 197.5 193.9 194.5 192.3 69 Interbank loans4 153.0 171.3 165.4 168.1 167.2 168.8 173.9 182.6 181.4 184.4 182.2 179.0 70 Cash assets5 191.6 187.0 184.4 187.9 194.0 185.8 193.0 201.3 203.0 213.9 183.4 201.0 71 Other assets6 172.5 171.7 170.9 171.6 172.8 173.7 178.2 176.0 177.4 178.7 173.7 172.4 72 Total assets7 3,461.7 3,582.9 3.585.4 3,609.9 3,6263 3,631.8 3,660.3 3,695.5 3,696.4 3,710.5 3,678.8 3,688.5 Liabilities 73 Deposits 2.388.3 2.445.1 2.448.4 2.458.9 2,469.8 2,471.3 2,488.5 2,519.5 2.522.4 2.527.7 2.506.4 2,523.6 74 Transaction 795.7 782.6 774.0 772.1 768.7 756.6 760.8 769.8 774.6 775.7 757.2 773.1 75 Nontransaction 1,592.6 1.662.5 1,674.4 1,686.8 1,701.1 1.714.7 1.727.7 1,749.7 1.747.8 1.752.1 1,749.3 1,750.5 76 Large time 227.4 248.2 250.3 255.0 260.9 267.4 269.8 271.6 270.4 271.9 271.5 273.1 77 Other 1.365.2 1.414.3 1.424.1 1.431.8 1,440.1 1.447.3 1.458.0 1,478.1 1.477.4 1.480.2 1.477.8 1,477.4 78 Borrowings 542.5 567.2 567.2 569.6 567.0 565.1 577.2 590.3 584.4 591.3 592.5 590.3 79 From banks in the U.S 164.6 176.5 175.9 178.8 178.1 176.1 176.0 182.7 185.5 184.9 179.1 179.3 80 From nonbanks in the U.S 378.0 390.7 391.3 390.7 388.9 389.0 401.1 407.6 398.9 406.4 413.3 411.0 81 Net due to related foreign offices .... 90.1 82.9 90.8 92.2 92.6 89.8 91.4 93.3 88.3 98.8 92.2 S8.8 82 Other liabilities8 122.7 137.2 136.9 141.6 141.2 142.8 146.7 144.4 140.0 145.2 146.7 145.6 83 Total liabilities 3,143.7 3.2323 3.2433 3.262.3 3,270.6 3,268.9 3,303-8 3347.5 3335.1 3363.0 3337.8 3,348.4 84 Residual (assets less liabilities)9 318.1 350.6 342.1 347.6 355.6 362.9 356.5 348.0 361.3 347.5 341.0 340.2 Not seasonally adjusted Assets 85 Bank credit 2,990.1 3.102.3 3.118.8 3,142.8 3.153.6 3.169.7 3.177.4 3,180.6 3,183.3 3.181.3 3,173.1 3,178.3 86 Securities in bank credit 856.8 845.4 850.3 854.7 854.2 856.0 849.5 844.5 842.8 843.9 844.5 845.8 87 U.S. government securities 661.6 637.9 643.5 644.9 646.3 647.2 641.1 633.9 633.8 633.2 633.1 634.S 88 Other securities 195.2 207.5 206.8 209.8 207.8 208.8 208.4 210.6 209.1 210.7 211.4 211.0 89 Loans and leases in bank credit2 2.133.3 2,256.9 2.268.5 2,288.1 2,299.4 2,313.7 2,327.9 2,336.1 2.340.4 2,337.4 2.328.6 2,332.4 90 Commercial and industrial 488.6 522.7 521.5 524.5 528.9 533.5 532.6 536.7 534.5 536.1 536.2 539.5 91 Real estate 972.9 1.024.3 1,030.4 1.036.9 1.041.4 1,045.6 1.046.1 1.048.8 1.050.1 1,049.8 1.047.7 1.049.1 92 Revolving home equity 75.6 78.1 78.4 78.9 79.0 79.3 79.2 79.5 79.5 79.5 79.5 ,'9.6 93 Other 897.4 946.3 952.0 958.1 962.3 966.3 966.9 969.3 970.5 970.3 968.1 969.5 94 Consumer 461.5 478.6 485.9 490.8 489.9 492.1 499.1 502.3 504.0 503.5 500.6 499.7 95 Security1 44.9 50.5 49.9 51.6 51.9 55.5 57.1 54.1 54.0 53.2 53.3 53.6 96 Other 165.4 180.8 180.8 184.2 187.4 187.1 193.1 194.1 197.8 194.8 190.7 190.5 97 Interbank loans4 159.7 168.2 161.3 163.0 164.6 172.8 184.9 190.4 191.9 197.2 180.7 184.3 98 Cash assets5 198.7 184.4 174.8 187.9 194.6 190.2 207.9 209.1 198.2 241.0 181.7 197.3 99 Other assets6 173.3 172.6 171.6 172.6 173.5 172.3 177.5 176.9 176.3 179.9 171.9 176.S 100 Total assets7 3,465.4 3,570.8 3369.6 3,609.2 3,629.7 3,648.4 3,691.0 3,700.4 3,693.2 3,742.9 3.651.0 3,680.3 Liabilities 101 Deposits 2.395.3 2.439.4 2.436.7 2.457.9 2,471.4 2.486.2 2.518.7 2,525.3 2.533.9 2.558.2 2.474.6 2.506.7 10? Transaction 808.0 774.8 759.7 770.2 768.8 770.0 795.6 781.4 786.8 810.0 735.8 765.3 103 Nontransaction 1,587.3 1.664.6 1.677.0 1,687.7 1,702.7 1,716.2 1,723.1 1.743.9 1.747.2 1.748.3 I.73S.8 1.741.4 104 Large time 225.2 248.3 251.4 254.6 260.7 267.2 265.4 268.9 267.5 269.5 269.5 271.2 105 Other 1,362.0 1.416.3 1.425.6 1.433.0 1,442.0 1,449.0 1,457.7 1,475.0 1,479.7 1,478.8 1.469.3 1.4 70.2 106 Borrowings 536.8 571.6 564.1 573.2 574.7 576.1 583.3 580.8 578.0 585.8 575.3 577.9 107 From banks in the U.S 170.0 173.6 170.0 171.0 174.6 178.5 187.7 189.5 193.3 195.9 IS0.9 1 S0.6 108 From nonbanks in the U.S 366.7 398.0 394.0 402.2 400.2 397.6 395.6 391.4 384.7 389.8 394.5 397.3 109 Net due to related foreign offices .... 89.9 81.8 89.1 88.7 92.0 88.4 89.3 93.0 85.6 96.' 97.4 90.0 110 Other liabilities8 123.3 137.0 135.8 141.7 141.6 144.4 144.8 145.1 141.0 145" 146.9 14/.6 111 Total liabilities 3,145 J 3,229.8 3,225.6 3,261.6 3,279.7 3,295.1 3336.2 3344.2 3338.4 3386.6 3,294.2 3.322.2 112 Residual (assets less liabilities)' 320.1 341.0 344.0 347.6 350.0 353.4 354.8 356.3 354.8 356.3 356.8 35S.1 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • April 1996 NOTES TO TABLE 1.26 1. Covers the following types of institutions in the fifty states and the District of 5. Includes vault cash, cash items in process of collection, demand balances due from Columbia: domestically chartered commercial banks that submit a weekly report of condition depository institutions in the United States, balances due from Federal Reserve Banks, and (large domestic); other domestically chartered commercial banks (small domestic); branches other cash assets. and agencies of foreign banks; New York State investment companies, and Edge Act and 6. Excludes the due-from position with related foreign offices, which is included in lines agreement corporations (foreign-related institutions). Excludes international banking facili- 25, 53, 81, and 109. ties. Data are Wednesday values, or pro rata averages of Wednesday values. Large domestic 7. Excludes unearned income, reserves for losses on loans and leases, and reserves for banks constitute a universe: data for small domestic banks and foreign-related institutions are transfer risk. Loans are reported gross of these items. estimates based on weekly samples and on quarter-end condition reports. Data are adjusted 8. Excludes the due-to position with related foreign offices, which is included in lines 25, for breaks caused by reclassifications of assets and liabilities. 53, 81, and 109. 2. Excludes federal funds sold to, reverse repurchase agreements with, and loans to 9. This balancing item is not intended as a measure of equity capital for use in capital commercial banks in the United States. adequacy analysis. 3. Consists of reserve repurchase agreements with broker-dealers and loans to purchase NOTE. Data have been benchmarked to the September 1995 Call Report; they also reflect and carry securities. new seasonal factors. 4. Consists of federal funds sold to, reverse repurchase agreements with, and loans to commercial banks in the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A21 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS Millions of dollars, Wednesday figures 1995 1996 AAccccoouunntt Dec. 6 Dec. 13 Dec. 20 Dec. 27 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 ASSETS 1 Cash and balances due from depository institutions 120,350 120,285r 132,782 135,731 160,189 125,982 157,574 114,680 124,466 2 U.S. Treasury and government securities 295,845r 293,978r 293,621' 287,030' 287,313 285,647 286,376 283,857 285,431 3 Trading account 24,677r 24,564r 25,260' 24,106' 25,123 25,614 26,136 22,866 23,713 4 Investment account 271,169 269,413 268,361 262,924 262,190 260,033 260,240 260,991 261,717 5 Mortgage-backed securities1 108,656r 107,348r 107,863' 106,580' 109,253 109,422 110,128 110,486 111,662 All others, by maturity 6 One year or less 43,437 43,358 47,111' 44,425 41,356 39,877 39,607 39,031 38,404 7 One year through five years 67,73 lr 68,185r 63,794' 63,310' 63,494 62,864 63,092 63,578 63,467 8 More than five years 51,345' 50,52 r 49,594' 48,609' 48,088 47,870 47,412 47,896 48,185 9 Other securities 125,071r 123,914r 122,374' 122,753' 126,712 124,219 125,452 125,849 125,312 10 Trading account 1,617 1,562 1,955 1,780 2,022 1,693 1,572 1,579 1,544 11 Investment account 65,353 65,261 64,489 64,541 64,916 66,311 66,107 66,067 65,380 12 State and local government, by maturity 19,459 19,320 19,281 19,236 19,036 19,036 19.034 19,038 18,997 13 One year or less 4,893 4,839 4,797 4,768 4,473 4,455 4,441 4,442 4,424 14 More than one year 14,566 14,480 14,485 14,469 14,563 14,581 14,594 14,596 14,573 15 Other bonds, corporate stocks, and securities 45,894 45,942 45,207 45,304 45,880 47,275 47,072 47,029 46,382 16 Other trading account assets 58,102r 57,090r 55,930' 56,432' 59,774 56,216 57,773 58,202 58,388 17 Federal funds sold2 107,412 102,984 118,032 110,392 129,208 113,626 119,105 110,323 110,591 18 To commercial banks in the United States 70,763 67,252 80,700 75,328 89,162 75,639 83,482 73,330 74,148 19 To nonbank brokers and dealers in securities 32,068 30,350 32,102 30,039 33,045 30,551 29,494 30,575 29,894 20 To others3 4,581 5,382 5,230 5,025 7,001 7,437 6,128 6,418 6,549 21 Other loans and leases, gross l,266,093r 1,267,937' 1,280,818' 1,285,900' 1,296,495 1,292,137 1,292,323 1,281,905 1,285,560 22 Commercial and industrial 346,883r 345,045' 348,165' 348,306' 351,660 348,203 349,183 349,477 352,561 23 Bankers acceptances and commercial paper 1,397 1,408 1,303 1,361 1,402 1,372 1,366 1,404 1,318 24 All other 345,486r 343,637' 346,862' 346,945' 350,258 346,832 347,817 348,073 351,242 25 U.S. addressees 342,889r 341,018' 344,228' 344,352' 347,574 344,149 345,096 345,327 348,472 26 Non-U.S. addressees 2,598 2,619 2,634 2,592' 2,684 2,683 2,721 2,746 2,770 27 Real estate loans 503,917r 503,270' 502,152' 500,807' 503,704 508,009 507,755 505,832 506,327 28 Revolving, home equity 47,573r 47,706' 47,771' 47,838' 47,971 47,982 48,033 48,019 48,000 29 All other 456,344r 455,564' 454,381' 452,969' 455,734 460,028 459,722 457,813 458,327 30 To individuals for personal expenditures 246,755r 248,985' 252,212' 255,865' 255,780 255,999 255,095 252,221 251,132 31 To depository and financial institutions 66,36 lr 66,672' 67,814' 73,288' 74,024 72,529 72,985 71,046 69,537 32 Commercial banks in the United States 37,792r 38,293' 38,825' 44,399' 44,798 43,943 44,792 42,887 41,267 33 Banks in foreign countries 3,078 2,877 4,075 3,560 3,691 2,983 3,108 3,701 3,153 34 Nonbank depository and other financial institutions 25,491 25,501 24,914 25,329 25,536 25,603 25,085 24,458 25,117 35 For purchasing and carrying securities 16,006 16,599 20,609 18,950 18,335 15,716 16,165 15,425 17,495 36 To finance agricultural production 6,454r 6,489' 6,483' 6,532' 6,892 6,700 6,594 6,579 6,522 37 To states and political subdivisions 10,769 10,936 10,807 10,672 10,492 10,549 10,554 10,713 10,606 38 To foreign governments and official institutions 1,021 1,131 1,091 1,121 1,136 1,364 1,196 1,182 1,159 39 All other loans 28,060 28,799' 31,221 29,664 32,557 30,777 30,364 26,975 27,530 40 Lease-financing receivables 39,867 40,011 40,262 40,694' 41,915 42,289 42,431 42,455 42,691 41 LESS: Unearned income 1,736 1,732 1,731 1,757' 1,729 1,764 1,732 1,736 1,735 42 Loan and lease reserve3 33,686r 33,704' 33,620 33,462 33,591 33,457 33,455 33,288 33,277 43 Other loans and leases, net 1,230,67 lr 1,232,501' 1,245,468' 1,250,681' 1,261,175 1,256,916 1,257,135 1,246,880 1,250,548 44 All other assets 142,038' 139,979' 145,076' 141,504' 143,573 141,847 142,533 138,716 142,061 45 Total assets 2,021,387 2,013,640r 2,057,352 2,048,090r 2,108,169 2,048,237 2,088,176 2,020,305 2,038,409 Footnotes appear on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • April 1996 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures 1995 1996 AAccccoouunntt Dec. 6 Dec. 13 Dec. 20 Dec. 27 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 LIABILITIES 46 Deposits 1,204,606 1,201,626R 1,213,783 1,218,774" 1,265,024 1,229,595 1,249,088 1,191,403 1,211,570 47 Demand deposits 311,726 312.540"" 327,561 335,375 358,957 323,010 341,290 299,095 316,255 48 Individuals, partnerships, and corporations 262,860 263.308R 270,614 280,300 299,667 272,983 282,675 251,544 265,977 49 Other holders 48,866 49,232 56,947 55,075 59,290 50,027 58,615 47,551 50,278 50 States and political subdivisions 8,204 8,635 9,874 10,388 10,314 8,330 9,010 9,167 10,164 51 U.S. government 1,806 1,878 2,356 1,895 2,738 2,235 3,528 2,384 2,382 52 Depository institutions in the United States 20,880 19.885 22.719 23,659 28,236 23,228 28,776 20,075 21,496 53 Banks in foreign countries 5,134 5,166 4,986 5,837 5,213 5,615 5,171 5,204 5,615 54 Foreign governments and official institutions 818 625 675 596 649 914 619 565 709 55 Certified and officers' checks 12,023 13,043 16,337 12,700 12,140 9,706 11,511 10,157 9,911 56 Transaction balances other than demand deposits4 96,862 95,104 96,214 95,598 95,501 93,267 93,456 87,023 88,848 57 Nontransaction balances 796,017 793,982 790,009 787,801" 810,566 813,318 814,342 805,286 806,467 58 Individuals, partnerships, and corporations 773,224R 771,594" 768,096R 765,886" 787,318 789,721 791,014 781,919 782,628 59 Other holders 22,793R 22,388R 21,913R 21,915" 23,248 23,597 23,328 23,366 23,839 60 States and political subdivisions 20,393R 20,064R 19,667R 19,518" 21,038 21,176 20,747 20,581 20,905 61 U.S. government 594 628 554 623 649 647 747 772 829 62 Depository institutions in the United States 1,512 1.404 1,393 1,474 1,198 1,415 1,475 1,669 1,835 63 Foreign governments, official institutions, and banks . . 294 293 300 300 364 359 358 344 270 64 Liabilities for borrowed money5 407,442R 401,459R 435,442R 419,136" 428,120 413,913 418,726 406,710 409,504 65 Borrowings from Federal Reserve Banks 0 0 3,405 0 170 0 130 0 0 66 Treasury tax and loan notes 3,232 5,028 30,895 17,121" 5,393 4,444 10,501 23,060 21,405 67 Other liabilities for borrowed money6 404,210R 396,43 1" 401,142R 402,014"" 422,557 409,469 408,095 383,650 388,099 68 Other liabilities (including subordinated notes and debentures) . . . 216,566R 2I7,677R 215,603R 219,014" 222,939 211,286 226,170 227,098 221,315 69 Total liabilities 1,828,613 1,820,762r 1,864,829 l,856,923r 1,916,083 1,854,794 1,893,983 1,825,211 1,842,390 70 Residual (total assets less total liabilities)7 192,774 192,878 192,524 191,167 192,086 193,443 194,193 195,094 196,019 MEMO 71 Total loans and leases, gross, adjusted, plus securities8 L,685,866R L,683,267R 1,695,319" 1,686,348" 1,705,768 1,696,047 1,694,982 1,685,716 1,691,478 72 Time deposits in amounts of $100,000 or more 116,043 116,040 114,751 112,085" 113,989 116,464 118,011 117,244 118,296 73 Loans sold outright to affiliates9 1,328 1,318 1,309 1,294 1,286 1,246 1,237 1,226 1,215 74 Commercial and industrial 279 279 279 277 277 277 277 276 275 75 Other 1,049 1,038 1,030 1,017 1,009 970 960 950 940 76 Foreign branch credit extended to U.S. residents10 26,125 26,120 26,414 27,092 26,955 27,812 27,364 27,143 27,814 77 Net owed to related institutions abroad 77,108 79,467 82,925 88,067"" 91,518 80,409 91,151 91,295 83,845 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 of 3. Includes allocated transfer risk reserve. 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 (ATS) subsidiaries of the holding company. accounts, and telephone and preauthorized transfers of savings deposits. 10. Credit extended by foreign branches of domestically chartered weekly reporting banks 5. Includes borrowings only from other than directly related institutions. to nonbank U.S. residents. Consists mainly of commercial and industrial loans, but includes 6. Includes federal funds purchased and securities sold under agreements to repurchase. an unknown amount of credit extended to other than nonfinancial businesses. 7. This balancing item is not intended as a measure of equity capital for use in capitaladequacy 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 1996 AAccccoouunntt Dec. 6 Dec. 13 Dec. 20 Dec. 27 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 ASSETS 1 Cash and balances due from depository institutions 17,596 17,445 18,439 18,852 18,596 18,650 18,805 19,282 18,636 2 U.S. Treasury and government agency securities 44,123 44,605 44,127 42,680 42,284 42,760 42,772 42,214 42,544 3 Other securities 40,228 40,464 39,537 39,985 40,604 40,854 43,387 43,857 46,968 4 Federal funds sold1 27,315 27,534 25,573 29,623 27,848 32,484 31,089 29,905 27,917 5 To commercial banks in the United States 8,761 9,952 7,415 11,597 7,933 8,993 8,890 8,091 7,602 6 To others2 18,554 17,582 18,158 18,026 19,915 23,491 22,199 21,814 20,314 7 Other loans and leases, gross 180,857 180,452 182,299 182,989 183,954 182,012 181,623 180,999 181,613 8 Commercial and industrial 116,785 116,560 117,064 117,715 117,927 117,610 118,359 118,615 118,802 9 Bankers acceptances and commercial paper . 4,602 4,542 4,358 4,548 4,559 4,753 4,920 5,035 5,134 10 All other 112,183 112,018 112,706 113,166 113,368 112,856 113,439 113,580 113,668 11 U.S. addressees 107,087 106,909 107,399 107,448 107,679 107,167 107,713 107,626 107,765 12 Non-U.S. addressees 5,095 5,110 5,307 5,718 5,689 5,689 5,725 5,954 5,903 13 Loans secured by real estate 2222,,220022 22,027 22,057 22,016 21,759 21,510 21,502 21,253 21,165 14 Loans to depository and financial institutions 30,231 29,724 29,708 30,290 30,590 30,330 30,089 29,737 30,063 15 Commercial banks in the United States 3,239 3,118 3,117 2,746 2,752 2,618 2,387 2,630 2,444 16 Banks in foreign countries 3,145 2,994 3,129 3,254 3,209 3,235 3,003 2,844 2,819 17 Nonbank financial institutions 23,846 23,612 23,462 24,290 24,629 24,478 24,699 24,262 24,800 18 For purchasing and carrying securities 5,611 6,152 7,458 6,417 6,807 5,267 5,033 4,732 4,888 19 To foreign governments and official institutions 467 452 455 452 633 650 642 643 587 20 All other 4,150R 4,131R 4,146R 4,55 R 4,654 4,957 4,476 4,491 4,557 21 Other assets (claims on nonrelated parties) 43,138 45,088 40,703 39,567 40,739 40,274 38,941 39,981 40,230 22 Total assets3 380,121 381,261 378,404 380,079 379,852 382,644 384,586 383,607 386,938 LIABILITIES 23 Deposits or credit balances owed to other than directly related institutions 104,370 105,439 107,409 105,326 102,209 102,853 101,358 100,494 100,709 24 Demand deposits4 4,059 4,380 4,398 5,094 4,541 4,556 4,354 4,134 4,483 25 Individuals, partnerships, and corporations .... 3,145 3,190 3,620 4,016 3,653 3,809 3,584 3,118 3,416 26 Other 914 1,190 777 1,079 888 747 770 1,015 1,067 27 Nontransaction accounts 100,311 101,059 103,011 100,231 97,668 98,297 97,004 96,360 96,226 28 Individuals, partnerships, and corporations .... 72,925 74,155 74,527 71,569 69,031 69,258 67,936 66,080 65,759 29 Other 2277,,338866 26,904 28,484 28,663 28,637 29,039 29,067 30,280 30,466 30 Borrowings from other than directly related institutions 72,197 73,498 74,531 72,072 74,151 73,765 73,802 72,761 71,685 31 Federal funds purchased5 45,535 44,606 45,723 44,607 48,649 50,333 48,196 47,355 47,553 32 From commercial banks in the United States . . 8,425 9,166 9,760 9,503 10,481 10,122 10,882 9,604 11,188 33 From others 37,110 35,440 35,963 35,104 38,168 40,212 37,314 37,751 36,365 34 Other liabilities for borrowed money 26,662 28,892 28,808 27,466 25,502 23,431 25,606 25,406 24,132 35 To commercial banks in the United States 4,446 4,551 4,498 4,587 4,212 3,786 4,396 4,090 4,013 36 To others 22,217 24,341 24,310 22,878 21,290 19,646 21,210 21,316 20,119 37 Other liabilities to nonrelated parties 65,823 66,092 60,434 59,897 59,171 58,626 60,148 62,936 64,696 38 Total liabilities6 380,121 381,261 378,404 380,079 379,852 382,644 384,586 383,607 386,938 MEMO 39 Total loans (gross) and securities, adjusted7 280,522 279,985 281,004 280,935 284,005 286,499 287,593 286,254 288,996 40 Net owed to related institutions abroad 110,865 110,559 108,304 116,402 118,495 121,790 121,309 120,048 120,818 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 United 4. Includes other transaction deposits. States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • April 1996 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period Year ending December 1995 IItteemm 1991 1992 1993 1994 1995 July Aug. Sept. Oct. Nov. Dec. Commercial paper (seasonally adjusted unless noted otherwise) 1111 AAAAllllllll iiiissssssssuuuueeeerrrrssss 528,832 545,619 555,075 595,382 671,577 657,938 660,719 669,686 673,392 671,081 671,577 FFFFiiiinnnnaaaannnncccciiiiaaaallll ccccoooommmmppppaaaannnniiiieeeessss'''' 2222 DDDDeeeeaaaalllleeeerrrr----ppppllllaaaacccceeeedddd ppppaaaappppeeeerrrr2222,,,, ttttoooottttaaaallll 212,999 226,456 218,947 223,038 273,978 262,695 261,904 268,838 271,299 277,337 273,978 3333 DDDDiiiirrrreeeeccccttttllllyyyy ppppllllaaaacccceeeedddd ppppaaaappppeeeerrrr3333,,,, ttttoooottttaaaallll 182,463 171,605 180,389 207,701 208,136 215,473 215,361 213,883 215,214 214,420 208,136 4444 NNNNoooonnnnffffiiiinnnnaaaannnncccciiiiaaaallll ccccoooommmmppppaaaannnniiiieeeessss4444 133,370 147,558 155,739 164,643 189,463 179,770 183,454 186,965 186,879 179,324 189,463 Bankers dollar acceptances (not seasonally adjusted)5 5555 TTTToooottttaaaallll 43,770 38,194 32,348 29,835 BBBByyyy hhhhoooollllddddeeeerrrr 6666 AAAAcccccccceeeeppppttttiiiinnnngggg bbbbaaaannnnkkkkssss 11,017 10,555 12,421 11,783 7777 OOOOwwwwnnnn bbbbiiiillllllllssss 9,347 9,097 10,707 10,462 8888 BBBBiiiillllllllssss bbbboooouuuugggghhhhtttt ffffrrrroooommmm ooootttthhhheeeerrrr bbbbaaaannnnkkkkssss 1,670 1,458 1,714 1,321 FFFFeeeeddddeeeerrrraaaallll RRRReeeesssseeeerrrrvvvveeee BBBBaaaannnnkkkkssss6666 9999 FFFFoooorrrreeeeiiiiggggnnnn ccccoooorrrrrrrreeeessssppppoooonnnnddddeeeennnnttttssss 1,739 1,276 725 410 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 11110000 OOOOtttthhhheeeerrrrssss 31,014 26,364 19,202 17,642 BBBByyyy bbbbaaaassssiiiissss 11111111 IIIImmmmppppoooorrrrttttssss iiiinnnnttttoooo UUUUnnnniiiitttteeeedddd SSSSttttaaaatttteeeessss 12,843 12,209 10,217 10,062 11112222 EEEExxxxppppoooorrrrttttssss ffffrrrroooommmm UUUUnnnniiiitttteeeedddd SSSSttttaaaatttteeeessss 10,351 8,096 7,293 6,355 11113333 AAAAllllllll ooootttthhhheeeerrrr 20,577 17,890 14,838 13,417 1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales, 5. Data on bankers dollar acceptances are gathered from approximately 100 institutions. personal, and mortgage financing; factoring, finance leasing, and other business lending; The reporting group is revised every January. Beginning January 1995, data for Bankers insurance underwriting; and other investment activities. 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 for 3. As reported by financial companies that place their paper directly with investors. 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 1993—Jan. 1 66..0000 1993 6.00 1994—jan 6.00 1995—Jan 8.50 1994 7.15 Feb 6.00 Feb 9.00 1994—Mar. 24 6.25 1995 8.83 Mar 6.06 Mar 9.00 Apr. 19 6.75 Apr 6.45 Apr. 9.00 May 17 7.25 1993—Jan 6.00 May 6.99 May 9.00 Aug. 16 7.75 Feb 6.00 June 7.25 June 9.00 Nov. 15 8.50 Mar 6.00 July 7.25 July 8.80 Apr 6.00 Aug 7.51 Aug 8.75 1995—Feb. 1 9.00 May 6.00 Sept 7.75 Sept 8.75 July 7 8.75 June 6.00 Ocl 7.75 Ocl 8.75 Dec. 20 8.50 July 6.00 Nov 8.15 Nov 8.75 Aug 6.00 Dec 8.50 Dei. 8.65 1996—Feb. 1 8.25 Sept 6.00 Oct 6.00 1996—Jan 8.50 Nov 6.00 Feb 8.25 Dec 6.00 1. The prime rate is one of several base rates that banks use to price short-term business Report. Data in this table also appear in the Board's H.15 (519) weekly and G.13 (415) loans. The table shows the date on which a new rate came to be the predominant one quoted monthly statistical releases. For ordering address, see inside front cover, by a majority of the twenty-five largest banks by asset size, based on the most recent Call Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • April 1996 1.35 INTEREST RATES Money and Capital Markets Percent per year; figures are averages of business day data unless otherwise noted 1995, 1995 1996 week 1996, week ending ending IItteemm 11999933 11999944 11999955 Oct. Nov. Dec. Jan. Dec. 29 Jan. 5 Jan. 12 Jan. 19 Jan. 26 MONEY MARKET INSTRUMENTS 1 Federal funds1,2,3 3.02 4.21 5.83 5.76 5.80 5.60 5.56 5.48 5.35 5.53 5.61 5.44 2 Discount window borrowing2,4 3.00 3.60 5.21 5.25 5.25 5.25 5.24 5.25 5.25 5.25 5.25 5.25 Commercial papeP,5,6 3 1-month 3.17 4.43 5.93 5.81 5.80 5.84 5.56 5.83 5.63 5.59 5.57 5.51 4 3-month 3.22 4.66 5.93 5.82 5.74 5.64 5.40 5.61 5.49 5.45 5.40 5.35 5 6-month 3.30 4.93 5.93 5.71 5.59 5.43 5.23 5.39 5.32 5.29 5.23 5.17 Finance paper, directly placed3,5,7 6 1-month 3.12 4.33 5.81 5.71 5.69 5.70 5.44 5.60 5.50 5.47 5.44 5.40 7 3-month 3.16 4.53 5.78 5.66 5.59 5.47 5.25 5.39 5.34 5.32 5.26 5.19 8 6-month 3.15 4.56 5.68 5.51 5.35 5.20 5.01 5.12 5.10 5.06 5.01 4.95 Bankers acceptances3,5,8 9 3-month 3.13 4.56 5.81 5.71 5.64 5.52 5.31 5.46 5.37 5.36 5.32 5.28 10 6-month 3.21 4.83 5.80 5.61 5.47 5.34 5.14 5.28 5.21 5.20 5.14 5.10 Certificates of deposit, secondary market3,9 11 1-month 3.11 4.38 5.87 5.75 5.75 5.75 5.47 5.64 5.53 5.52 5.48 5.44 12 3-month 3.17 4.63 5.92 5.79 5.74 5.62 5.39 5.53 5.44 5.45 5.39 5.36 13 6-month 3.28 4.96 5.98 5.76 5.64 5.49 5.28 5.42 5.35 5.35 5.28 5.23 14 Eurodollar deposits, 3-month3,10 3.18 4.63 5.93 5.81 5.75 5.64 5.40 5.56 5.49 5.47 5.39 5.34 U.S. Treasury hills Secondary market3,5 15 3-month 3.00 4.25 5.49 5.28 5.36 5.14 5.00 4.89 5.02 5.03 4.98 4.97 16 6-month 3.12 4.64 5.56 5.32 5.27 5.13 4.92 4.98 5.00 4.98 4.85 4.90 17 1-year 3.29 5.02 5.60 5.28 5.14 5.03 4.82 4.94 4.91 4.89 4.77 4.79 Auction average3,5,11 18 3-month 3.02 4.29 5.51 5.30 5.35 5.16 5.02 4.91 5.04 5.03 5.02 4.99 19 6-month 3.14 4.66 5,59 5.34 5.29 5.15 4.97 5.04 5.03 5.02 4.93 4.88 20 1-year 3.33 5.02 5.69 5.30 5.15 5.06 4.89 n.a. n.a. 4.89 n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturitiesu 21 1-year 3.43 5.32 5.94 5.59 5.43 5.31 5.09 5.21 5.18 5.17 5.03 5.05 22 2-year 4.05 5.94 6.15 5.70 5.48 5.32 5.11 5.22 5.18 5.20 5.04 5.09 23 3-year 4.44 6.27 6.25 5.77 5.57 5.39 5.20 5.29 5.26 5.29 5.13 5.18 24 5-year 5.14 6.69 6.38 5.86 5.69 5.51 5.36 5.44 5.39 5.44 5.30 5.35 25 7-year 5.54 6.91 6.50 5.97 5.83 5.63 5.54 5.56 5.54 5.62 5.47 5.53 26 10-year 5.87 7.09 6.57 6.04 5.93 5.71 5.65 5.64 5.63 5.74 5.58 5.65 27 20-year 6.29 7.49 6.95 6.45 6.33 6.12 6.11 6.06 6.06 6.18 6.06 6.11 28 30-year 6.59 7.37 6.88 6.37 6.26 6.06 6.05 6.00 6.00 6.12 6.01 6.06 Composite 29 More than 10 years (long-term) 6.45 7.41 6.93 6.43 6.31 6.11 6.07 6.04 6.03 6.14 6.03 6.08 STATE AND LOCAL NOTES AND BONDS Moody's series'3 30 Aaa 55..3388 5.77 5.80 5.74 5.63 5.40 5.27 5.29 5.22 5.25 5.30 5.30 31 Baa 5.83 6.17 6.10 5.95 5.79 5.66 5.59 5.00 5.59 5.45 5.69 5.61 32 Bond Buyer series14 5.60 6.18 5.95 5.80 5.64 5.45 5.43 5.44 5.37 5.50 5.40 5.46 CORPORATE BONDS 33 Seasoned issues, all industries15 7.54 8.26 7.83 7.39 7.30 7.11 7.10 7.05 7.05 7.15 7.08 7.10 Rating group 34 Aaa 7.22 7.97 7.59 7.12 7.02 6.82 6.80 6.76 6.75 6.86 6.80 6.81 35 Aa 7.40 8.15 7.72 7.27 7.18 6.99 6.99 6.93 6.94 7.02 6.96 7.00 36 A 7.58 8.28 7.83 7.39 7.32 7.13 7.12 7.07 7.07 7.18 7.11 7.13 37 BBaaaa 7.93 8.63 8.20 7.75 7.68 7.49 7.47 7.43 7.42 7.52 7.45 7.47 38 AA--rraatteedd,, rreecceennttllyy ooffffeerreedd uuttiilliittyy bboonnddss1166 7.46 8.29 7.86 7.36 7.30 7.10 7.09 6.98 7.08 7.17 7.00 7.11 MEMO Dividend-price ratio17 39 Common stocks 2.78 2.82 2.56 2.41 2.37 2.30 2.31 2.31 2.28 2.37 2.35 2.30 1. The daily eifective federal funds rate is a weighted average of rates on trades through 12. Yields on actively traded issues adjusted to constant maturities. Source: U.S. Depart- New York brokers. ment 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 used 3. Annualized using a 360-day year for bank interest. in compiling this index. The twenty-bond index has a rating roughly equivalent to Moodys' 4. Rate for the Federal Reserve Bank of New York. A1 rating. Based on Thursday figures. 5. Quoted on a discount basis. 15. Daily figures from Moody's Investors Service. Based on yields to maturity on selected 6. An average of offering rates on commercial paper placed by several leading dealers for long-term bonds. firms whose bond rating is AA or the equivalent. 16. Compilation of the Federal Reserve. This series is an estimate of the yield on recently 7. An average of offering rates on paper directly placed by finance companies. offered, A-rated utility bonds with a thirty-year maturity and five years of call protection. 8. Representative closing yields for acceptances of the highest-rated money center banks. Weekly data are based on Friday quotations. 9. An average of dealer offering rates on nationally traded certificates of deposit. 17. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks in 10. Bid rates for Eurodollar deposits at approximately 11:00 a.m. London time. Data are the price index. for indication purposes only. NOTE. Some of the data in this table also appear in the Board's H.15 (519) weekly and 11. Auction date for daily data; weekly and monthly averages computed on an issue-date G.13 (415) monthly statistical releases. For ordering address, see inside front cover. basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A27 1.36 STOCK MARKET Selected Statistics 1995 1996 IInnddiiccaattoorr 11999933 11999944 11999955 May June July Aug. Sept. Oct. Nov. Dec. Jan. Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 249.71 254.16 291.18 281.81 289.52 298.18 300.05 310.41 311.78 317.58 327.90 329.22 2 Industrial 300.10 315.32 367.40 357.01 366.75 379.13 379.79 390.42 389.63 398.66 412.11 413.05 3 Transportation 242.68 247.17 270.14 254.70 256.80 279.15 285.63 295.54 291.16 300.06 303.53 300.43 4 Utility 114.55 104.96 114.61 106.02 108.12 109.59 111.06 114.67 123.59 119.49 173.95 127.09 5 Finance 216.55 209.75 238.48 228.45 236.26 240.49 245.27 260.72 265.12 266.12 273.36 274.96 6 Standard & Poor's Corporation (1941-43 = 10)' 451.63 460.42 541.72 523.83 539.35 557.37 559.11 578.77 582.92 595.53 614.57 614.42 7 American Stock Exchange (Aug. 31, 1973 = 50)2 438.77 449.49 498.13 487.03 492.60 513.25 526.86 547.64 530.26 529.93 538.01 540.48 Volume of trading (thousands of shares) 8 New York Stock Exchange 263,374 290,652 345,729' 341,905 345,547 363,780 309,879 352,184 365,108' 360,199 384,310 416,048 9 American Stock Exchange 18,188 17,951 20,387 19,266 24,622 23,283 21,825 25,422 17,865 16,724 21,085 21,069 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers3 60,310 61,160 76,680 64,070 66,340 67,600 71,440 77,076 75,005 77,875 76,680 73,530 Free credit balances at brokers4 11 Margin accounts5 12,360 14,095 16,250 13,403 13,710 13,830 13,900 14,806 14,753 15,590 16,250 14,950 12 Cash accounts 27,715 28,870 34,340 27,464 29,860 28,600 29,190 29,796 29,908 30,340 34,340 32,465 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. In July 1976 a financial group, composed of banks and insurance companies, was added collateralized by securities. Margin requirements on securities other than options are the to the group of stocks on which the index is based. The index is now based on 400 industrial difference between the market value (100 percent) and the maximum loan value of collateral stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and as prescribed by the Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U, 40 financial. effective May 1, 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective 2. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting Nov. 1, 1971. previous readings in half. On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the 3. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has initial margin required for writing options on securities, setting it at 30 percent of the current included credit extended against stocks, convertible bonds, stocks acquired through the market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the exercise of subscription rights, corporate bonds, and government securities. Separate report- required initial margin, allowing it to be the same as the option maintenance margin required ing of data for margin stocks, convertible bonds, and subscription issues was discontinued in by the appropriate exchange or self-regulatory organization; such maintenance margin rules April 1984. must be approved by the Securities and Exchange Commission. Effective Jan. 31, 1986, the 4. Free credit balances are amounts in accounts with no unfulfilled commitments to SEC approved new maintenance margin rules, permitting margins to be the price of the option brokers and are subject to withdrawal by customers on demand. plus 15 percent of the market value of the stock underlying the option. 5. Series initiated in June 1984. Effective June 8, 1988, margins were set to be the price of the option plus 20 percent of the 6. Margin requirements, stated in regulations adopted by the Board of Governors pursuant market value of the stock underlying the option (or 15 percent in the case of stock-index to the Securities Exchange Act of 1934, limit the amount of credit that can be used to options). purchase and carry "margin securities" (as defined in the regulations) when such credit is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • April 1996 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1995 1996 11999933 11999944 11999955 Aug. Sept. Oct. Nov. Dec. Jan. U.S. budget1 1 Receipts, total 1,153,226 1,257,45 lr 1,350,576 96,560 143,219 95,593 90,008 138,271 142,922 2 On-budget 841,292 922,425r 999,496 69,265 112,510 72,200 63,651 110,322 110,615 3 Off-budget 311,934 335,026 351,080 27,295 30,709 23,393 26,357 27,949 32,307 4 Outlays, total 1,408,532 l,460,553r 1,514.389 130,411 135,933 118,352 128,458 132,984 123,647 5 On-budget 1,141,945 l,181,181r 1.225,724 104,135 105,098 92,151 101,767 121,753 98,057 6 Off-budget 266,587 279,372 288,665 26,276 30,836 26,200 26,691 11,232 25,591 7 Surplus or deficit (-), total -255,306 -203,370 -163,813 -33,851 7,286 -22,758 -38,450 5,286 19,274 8 On-budget -300,653 258.756r -226,228 -34,870 7,412 -19,951 -38,116 -11,431 12,558 9 Off-budget 45,347 55,654 62,415 1,019 -126 -2,807 -334 16,717 6,716 Source of financing (total) 10 Borrowing from the public 248,594 184,696r 171,288 16,071 -6,618 13,353 38,339 -18,358 -4,747 11 Operating cash (decrease, or increase (—)) 6,283 16,564 -2,007 30,776 -19,820 16,755 -4,911 5,610 -16,959 12 Other 2 429 1,842r -5.468 -12,996 19,152 -7,350 5,022 7,462 2,432 MEMO 13 Treasury operating balance (level, end of period) 52,506 35,942 37,949 18,129 37,949 21,194 26,105 20,495 37,454 14 Federal Reserve Banks 17,289 6,848 8,620 4,767 8,620 7,018 5,703 5,979 8,210 15 Tax and loan accounts 35,217 29,094 29,329 13,363 29,329 14,176 20,402 14,515 29,243 1. Since 1990, off-budget items have been the social security trust funds (federal old-age net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF loansurvivors insurance and federal disability insurance) and the US. Postal Service. valuation adjustment; and profit on sale of gold. 2. Includes special drawing rights (SDRs); reserve position on the U.S. quota in the SOURCE. U.S. Department of the Treasury, Monthly Treasury Statement of Receipts and International Monetary Fund (IMF); loans to the IMF; other cash and monetary assets: Outlays of the U.S. Government; and U.S. Office of Management and Budget, Budget of the accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous U.S. Government. liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A3 3 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS' Millions of dollars Fiscal year Calendar year SSSooouuurrrccceee ooorrr tttyyypppeee 1994 1995 1995 1996 11999944 11999955 HI H2 HI H2 Nov. Dec. Jan. RECEIPTS 1 All sources 1,257,453 1,350,576 652,234 625,557 710,542 656,400 90,008 138,271 142,922 2 Individual income taxes, net 543,055 590,157 275,052 273,474 307,498 292,393 39,524 53,179 86,192 3 Withheld 459,699 499,898 225,387 240,062 251,398 256,918 39,945 50,597 55,351 4 Presidential Election Campaign Fund 70 69 63 10 58 9 1 0 1 5 Nonwithheld 160,047 175,815 117,937 42,031 132,006 43,100 1,991 3,227 31,159 6 Refunds 76,761 85,624 68,325 9,207 75,958 10,058 2,414 646 319 Corporation income taxes 7 Gross receipts 154,205 174,422 80,536 78,392 92,132 88,302 3,056 38,954 6,381 8 Refunds 13,820 17,334 6,933 7,331 10,399 7,518 1,362 932 1,223 9 Social insurance taxes and contributions, net .. . 461,475 484,474 248,301 220,141 261,837 224,269 38,199 37,762 42,197 10 Employment taxes and contributions2 428,810 451,046 228,714 206,613 228,663 211,323 34,919 37,123 40,742 11 Self-employment taxes and contributions3 . 24,433 27,127 20,762 4,135 23,429 3,557 91 333 2,188 12 Unemployment insurance 28,004 28,878 17,301 11,177 18,001 10,702 2,940 223 1,081 13 Other net receipts4 4,661 4,550 2,284 2,349 2,267 2,247 340 416 374 14 Excise taxes 55,225 57,485 26,444 30,062 27,452 30,014 5,154 4,870 4,241 15 Customs deposits 20,099 19,300 9,500 11,042 8,847 9,849 1,593 1,439 1,482 16 Estate and gift taxes 15,225 14,764 8,197 7,071 7,424 7,718 1,349 1,383 1,288 17 Miscellaneous receipts5 21,988 27,306 11,170 13,305 15,749 11,374 2,496 1,618 2,364 OUTLAYS 18 All types 1,460,553 1,514,428 710,620 752,151 760,824 752,505 128,458 132,984 123,647 19 National defense 281,563 272,179 133,844 141,885 135,930r 132,954 21,234 25,376 20,243 20 International affairs 17,083 16,448 5,800 11,889 4,726r 6,994 1,616 431 1,089 21 General science, space, and technology 16,227 17,563 8,502 7,604 8,611 8,810 1,474 1,274 1,536 22 Energy 5,219 5,146 2,237 2,923 2,358 2,203 489 -163 115 23 Natural resources and environment 21,064 23,328 10,111 11,911 10,273 12,633 2,245 1,711 1,869 24 Agriculture 15,057 9,763 7,451 7,623 4,040r 3,062 2,291 708 336 25 Commerce and housing credit -5,122 -18,740 -4,962 -4,270 - 13,937r -4,412 -1,465 -451 -2,014 26 Transportation 38,134 38,555 16,739 21,835 18,192 19,931 3,284 3,117 3,094 27 Community and regional development 10,454 11,000 4,571 6,283 4,857r 6,085 1,087 912 1,009 28 Education, training, employment, and social services 46,307 52,706 19,262 27,450 25,738 24,820 4,185 3,623 5,418 29 Health 106,836 114,760 53,195 54,147 58,759 57,013 10,189 8,567 8,665 30 Social security and Medicare 464,312 495,700r 232,777 236,817 251,975 251,387r 41,947 43,299 42,786 31 Income security 214,036 220,214 109,080 101,806 117,639 104,214 18,134 19,738 17,188 32 Veterans benefits and services 37,642 37,935 16,686 19,761 19,268r 18,684 3,280 4,435 2,165 33 Administration of justice 15,238 16,255 7,718 7,753 8,062 8,113 1,258 1,233 1,806 34 General government 11,316 13,856 5,084 7,355 5,797 7,623 717 1,924 391 35 Net interest6 202,957 232,175 99,844 109,434 116,170 119,350 19,058 19,934 20,765 36 Undistributed offsetting receipts -37,772 -44,455 -17,308 -20,066 -17,632 -26,994 -2,565 -2,683 -2,812 1. Functional details do not sum to total outlays for calendar year data because revisions to 5. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts. monthly totals have not been distributed among functions. Fiscal year total for outlays does 6. Includes interest received by trust funds. not correspond to calendar year data because revisions from the Budget have not been fully 7. Rents and royalties for the outer continental shelf, U.S. government contributions for distributed across months. employee retirement, and certain asset sales. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. SOURCE. U.S. Department of the Treasury, Monthly Treasury Statement of Receipts and 3. Old-age, disability, and hospital insurance. Outlays of the U.S. Government-, and U.S. Office of Management and Budget, Budget of the 4. Federal employee retirement contributions and civil service retirement and U.S. Government, Fiscal Year 1996. disability fund. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic NonfinancialS tatistics • April 1996 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1993 1994 1995 IItteemm Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding 4,562 4,602 4,673 4,721 4,827 4,891 4,978 5,001 5,017 2 Public debt securities 4,536 4,576 4,646 4,693 4.800 4,864 4,951 4,974 4,989 3 Held by public 3,382 3,434 3,443 3,480 3,543 3,610 3,635 3,653 n.a. 4 Held by agencies 1,154 1,142 1,203 1,213 1,257 1,255 1,317 1,321 n.a. 5 Agency securities 27 26 28 29 27 27 27 27 28 6 Held by public 27 26 27 29 27 26 27 27 n.a. / Held by agencies 0 0 0 0 0 0 0 0 n.a. 8 Debt subject to statutory limit 4,446 4,491 4,559 4,605 4,711 4,775 4,861 4,885 4,900 9 Public debt securities 4,445 4,491 4,559 4,605 4,711 4,774 4,861 4,885 4,900 10 Other debt1 0 0 0 0 0 0 0 0 0 MEMO 11 Statutory debt limit 4,900 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 the participation certificates, notes to international lending organizations, and District of Colum- United States and Treasury Bulletin. bia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1995 TTyyppee aanndd hhoollddeerr 11999922 11999933 11999944 11999955 Qi Q2 Q3 Q4 1 Total gross public debt 4,177.0 4,535.7 4,800.2 4,988.7 4,864.1 4,951.4 4,974.0 4,988.7 By type 2 Interest-bearing 4,173.9 4,532.3 4,769.2 4,964.4 4,860.5 4,947.8 4,950.6 4,964.4 3 Marketable 2,754.1 2,989.5 3,126.0 3,307.2 3,227.3 3,252.6 3,260.5 3,307.2 4 Bills 657.7 714.6 733.8 760.7 756.5 748.3 742.5 760.7 5 Notes 1.608.9 1,764.0 1,867.0 2,010.3 1,938.2 1,974.7 1,980.3 2,010.3 6 Bonds 472.5 495.9 510.3 521.2 517.7 514.7 522.6 521.2 7 Nonmarketable1 1.419.8 1,542.9 1,643.1 1,657.2 1,633.2 1,695.2 1,690.2 1,657.2 8 State and local government series 153.5 149.5 132.6 104.5 122.9 121.2 113.4 104.5 9 Foreign issues2 37.4 43.5 42.5 40.8 41.8 41.4 41.0 40.8 10 Government 37.4 43.5 42.5 40.8 41.8 41.4 41.0 40.8 11 Public .0 .0 .0 .0 .0 .0 .0 ,0 12 Savings bonds and notes 155.0 169.4 177.8 181.9 178.8 180.1 181.2 181.9 13 Government account series3 1,043.5 1.150.0 1,259.8 1,299.6 1,259.2 1,322.0 1,324.3 1,299.6 14 Non-interest-bearing 3.1 3.4 31.0 24.3 3.6 3.6 23.3 24.3 By holder 4 15 U.S. Treasury and other federal agencies and trust funds 1,047.8 1,153.5 1,257.1 1,254.7 1,316.6 1,320.8 16 Federal Reserve Banks 302.5 334.2 374.1 369.3 389.0 374.1 1/ Private investors 2,839.9 3,047.7 3,168.0 3,239.2 3,245.0 3,279.5 18 Commercial banks 294.4 322.2 290.6 307.5 297.7 295.0 19 Money market funds 79.7 80.8 67.6 67.7 58.7 64.2 20 Insurance companies 197.5 234.5 242.8 249.2 253.5 255.0 21 Other companies 192.5 213.0 226.5 n.a. 230.3 227.7 224.1 n.a. 22 State and local treasuries 476.7 508.9 440.8 402.7 375.8 370.0 Individuals 23 Savings bonds 157.3 171.9 180.5 181.4 182.6 183.5 24 Other securities 131.9 137.9 150.7 161.4 161.6 162.4 23 Foreign and international5 549.7 623.0 688.6 729.0 784.1 847.8 26 Other miscellaneous investors6 760.2 755.4 879.9 910.0 903.4 877.5 1. Includes (not shown separately) securities issued to the Rural Electrification Administra- 5. Consists of investments of foreign balances and international accounts in the United tion, depository bonds, retirement plan bonds, and individual retirement bonds. States. 2. Nonmarketable series denominated in dollars, and series denominated in foreign cur- 6. Includes savings and loan associations, nonprofit institutions, credit unions, mutual rency 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 actual SOURCES. U.S. Treasury Department, data by type of security, Monthly Statement of the 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 1995r 1995, week ending 1996, week ending IItteemm Oct. Nov. Dec. Dec. 6 Dec. 13 Dec. 20 Dec. 27 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 45,200 57,014 54,313 52,604 59,422 63,364 41,678 47,601 52,037 50,869 56,486 56,939 Coupon securities, by maturity 2 Five years or less 91,621 94,461 84,303 98,063 93,082 94,515 57,488 62,937 80,614 100,864 126,171 121,484 3 More than five years 49,845 50,029 43,615 63,752 45,811 45,429 22,243 36,055 53,920 54,687 59,142 58,119 4 Federal agency 24,426 26,013 26,368 26,334 23,038 27,843 27,813 28,180 26,535 28,897 29,975 26,477 5 Mortgage-backed 29,520 34,071 33,205 46,112 49,166 29,672 12,273 18,185 53,361 46,897 28,581 28,703 By type of counterparty With interdealer broker 6 U.S. Treasury 108,427 114,669 104,651 121,087 118,376 115,336 68,973 82,108 109,151 119,761 141,748 139,201 7 Federal agency 711 775 672 860 649 724 470 623 631 750 1,328 1,200 8 Mortgage-backed 11,425 12,428 12,863 16,360 19,343 12,312 5,091 6,594 16,778 16,481 10,475 9,989 With other 9 U.S. Treasury 78,238 86,835 77,580 93,332 79,940 87,972 52,436 64,485 77,421 86,659 100,050 97,341 10 Federal agency 23,715 25,238 25,696 25,474 22,389 27,118 27,343 27,557 25,904 28,147 28,647 25,278 11 Mortgage-backed 18,095 21,643 20,342 29,752 29,823 17,360 7,182 11,591 36,584 30,416 18,107 18,714 FUTURES TRANSACTIONS3 By type of deliverable security 12 U.S. Treasury bills 617 764 603 903 907 390 345 294 459 297 405 678 Coupon securities, by maturity 13 Five years or less 1,583 2,154 2,045 3,682 1,798 2,082 835 1,715 1,159 1,344 2,254 1,513 14 More than five years 14,720 14,536 12,577 17,398 14,199 14,180 5,150 9,722 15,565 14,384 14,646 14,583 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 2,111 1,655 1,098 985 1,227 1,272 918 928 1,472 2,793 2,046 1,688 19 More than five years 4,709 4,668 3,898 5,771 3,175 4,366 2,881 2,828 3,853 3,832 4,862 4,345 20 Federal agency 0 0 0 0 0 0 0 0 0 0 0 0 21 Mortgage-backed 971 1,099 862 1,229 618 537 1,161 954 989 919 821 685 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 of delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt primary dealers. Monthly averages are based on the number of trading days in the month. securities are included when the time to delivery is more than five business days. Forward Transactions are assumed evenly distributed among the trading days of the report week. contracts for mortgage-backed agency securities are included when the time to delivery is Immediate, forward, and futures transactions are reported at principal value, which does not more than thirty business days. include accrued interest; options transactions are reported at the face value of the underlying 3. Futures transactions are standardized agreements arranged on an exchange. All futures securities. 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 on 2. Outright transactions include immediate and forward transactions. Immediate delivery an organized exchange or in the over-the-counter market, and include options on futures refers to purchases or sales of securities (other than mortgage-backed federal agency securi- contracts on U.S. Treasury and federal agency securities. ties) for which delivery is scheduled in five business days or less and "when-issued" NOTE, "n.a." indicates that data are not published because of insufficient activity. securities that settle on the issue date of offering. Transactions for immediate delivery of mortgage- Major changes in the report form filed by primary dealers induced a break in the dealer data backed agency securities include purchases and sales for which delivery is scheduled in thirty business series as of the week ending July 6, 1994. 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

A131 Domestic Nonfinancial Statistics • April 1996 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1995 1995, week ending 1996, week ending Oct. Nov. Dec. Dec. 6 Dec. 13 Dec. 20 Dec. 27 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Positions2 NET OUTRIGHT POSITIONS3 By type of security 1 U.S. Treasury bills -64 11,391 16,960 20,027 28,476 13,812 11,313 7,601 14,302 14,043 6,551 Coupon securities, by maturity 2 Five years or less 14,476 12,423 21,659 25,979 18,846 20,330 20,901 23,756 18,612 17,387 25,287 3 More than five years -15,124 -9,732 -11,698 -10,167 -10,082 -13,002 -13,109 -12,069 -11,958 -14,101 -15,848 4 Federal agency 24,009 21,768 22,446 20,212 21,058 21,540 24,992 25,356 24,789 24,991 23,637 5 Mortgage-backed 36,240 35,869 39,509 39,964 39,497 39,062 39,516 39,621 37,124 37,785 40,213 NET FUTURES POSITIONS4 By type of deliverable security 6 U.S. Treasury bills -3,462 -5,175 -2,484 -4,142 -1,899 -1,973 -2,212 -2,393 -3,001 -3,147 -2,505 Coupon securities, by maturity 7 Five years or less -930 -4,508 -4,338 -3,263 -4,088 -5,242 -4,596 -4,351 -3,176 -3,158 -1,144 8 More than five years -13,744 -17,358 -17,662 -19,050 -18,305 -17,328 -17,830 -14,745 -10,127 -13,600 -14,908 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 NET OPTIONS POSITIONS By type of deliverable security 11 U.S. Treasury bills n.a. 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 12 Five years or less 3,044 479 -1,439 -1,120 -1,550 -1,158 -2,101 -1,058 -1,443 -147 -273 13 More than five years -427 3,629 7,216 6,800 6,173 6,978 7,980 8,748 4,854 8,286 8,149 14 Federal agency 0 0 0 0 0 0 0 0 0 0 0 15 Mortgage-backed 1,591 1,199 -90 -9 -427 -752 440 608 1,219 209 498 Financing5 Reverse repurchase agreements 16 Overnight and continuing 228,244 249,011 240,460 235,317 247,871 243,019 230,890 247,477 248,451 253,892 243,761 17 Term 420,502 404,181 389,626 398,590 409,436 382,918 380,824 368,655 396,047 403,107 446,293 Securities borrowed 18 Overnight and continuing 162,865 152,800 154,078 153,410 152,319 149,905 154,473 164,769 175,912 173,330 168,665 19 Term 65,506 64,611 62,835 64,263 63,508 62,352 63,822 58,637 60,169 59,834 60,040 Securities received as pledge 20 Overnight and continuing 2,377 2,005 4,132 3,683 4,118 3,988 4,343 4,712 5,002 2,461 2,286 21 Term 43 56 69 89 88 21 106 28 39 79 47 Repurchase agreements 22 Overnight and continuing 509,729 522,501 535,088 538,239 537,813 546,540 519,030 533,654 556,821 549,853 543,788 23 Term 356,662r 370,772r 355,266 352,087 378,976 349,504 348,698 340,117 351,104 366,579 405,734 Securities loaned 24 Overnight and continuing 5,715 6,001 5,543 5,726 5,607 5,175 5,402 6,051 6,155 5,524 5,678 25 Term 2,710 2,794 1,916 2,572 2,610 1,560 1,265 1,479 1,657 1,534 1,564 Securities pledged 26 Overnight and continuing 30,091 28,087 34,010 29,342 33,127 33,274 38,743 35,559 35,999 34,854 33,846 27 Term 3,958 4,577 5,518 5,543 5,639 5,508 5,744 4,892 5,250 5,301 5,488 Collateralized loans 28 Overnight and continuing 16,631 17,639 12,694 17,223 15,213 10,960 7,316 n.a. n.a. n.a. n.a. 29 Term 2,367 2,092 1,989 1,964 2,010 n.a. n.a. n.a. n.a. n.a. n.a. MEMO: Matched book6 Securities in 30 Overnight and continuing 232,058 244,861 240,188 234,682 240,410 243,757 232,213 255,769 258,116 271,371 253,080 31 Term 410,727 401,682 391,284 402,536 412,825 385,012 379,807 367,770 397,677 401,084 441,503 Securities out 32 Overnight and continuing 321,797 313,847 311,005 310,366 317,969 315,510 300,351 310,539 339,072 328,967 330,979 33 Term 302,123 318,594 309,089 308,691 330,882 303,412 300,465 296,576 304,557 321,064 347,962 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 futures Reserve Bank of New York by the U.S. government securities dealers on its published list of positions are included regardless of time to delivery. primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar 5. Overnight financing refers to agreements made on one business day that mature on the days of the report week are assumed to be constant. Monthly averages are based on the next business day; continuing contracts are agreements that remain in effect for more than one number of calendar days in the month. business day but have no specific maturity and can be terminated without advance notice by 2. Securities positions are reported at market value. either party; term agreements have a fixed maturity of more than one business day. Financing 3. Net outright positions include immediate and forward positions. Net immediate posi- data are reported in terms of actual funds paid or received, including accrued interest. tions include securities purchased or sold (other than mortgage-backed agency securities) that 6. Matched-book data reflect financial intermediation activity in which the borrowing and have been delivered or are scheduled to be delivered in five business days or less and lending transactions are matched. Matched-book data are included in the financing break- "when-issued" securities that settle on the issue date of offering. Net immediate positions for downs given above. The reverse repurchase and repurchase numbers are not always equal mortgage-backed agency securities include securities purchased or sold that have been because of the "matching" of securities of different values or different types of collateralizadelivered or are scheduled to be delivered in thirty business days or less. tion. Forward positions reflect agreements made in the over-the-counter market that specify NOTE, "n.a." indicates that data are not published because of insufficient activity. delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt Major changes in the report form filed by primary dealers induced a break in the dealer data securities are included when the time to delivery is more than five business days. Forward series as of the week ending July 6, 1994. contracts for mortgage-backed agency securities are included when the time to delivery is 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 1995 AAggeennccyy 11999911 11999922 11999933 11999944 July Aug. Sept. Oct. Nov. 1 Federal and federally sponsored agencies 442,772 483,970 570,711 738,928 788,323 801,819 811,182 n.a. n.a. 2 Federal agencies 41,035 41,829 45,193 39,186 39,403 39,581 38,030 38,273 39,207 3 Defense Department1 7 7 6 6 6 6 6 6 6 4 Export-Import Bank2,3 9,809 7,208 5,315 3,455 2,652 2,652 2.512 2,512 2,512 5 Federal Housing Administration4 397 374 255 116 84 83 87 88 93 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 8,421 10,660 9.732 8,073 8,615 8,615 7,265 7,265 7,265 8 Tennessee Valley Authority 22,401 23,580 29,885 27,536 28,046 28,225 28,160 28.366 29.331 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 401,737 442,141 523,452 699,742 748,920 762,238 773,152 n.a. n.a. 11 Federal Home Loan Banks 107,543 114,733 139,512 205,817 223.100 228,299 236,851 234,192 239,034 12 Federal Home Loan Mortgage Corporation 30,262 29,631 49,993 93,279 111,427 112,341 111,6)0 115,626 115,603 13 Federal National Mortgage Association 133,937 166,300 201,112 257,230 268,458 275,271 277,192 280.582 289.768 14 Farm Credit Banks8 52,199 51,910 53,123 53,175 54,635 54,979 55,800 56,529 56.694 15 Student Loan Marketing Association9 38,319 39,650 39,784 50,335 51,325 51,323 51,672 51,906 50,535 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 Corporation" 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1.261 18 Resolution Funding Corporation12 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt13 185,576 154,994 128,187 103,817 88,892 86,776 84,297 82,622 81,693 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 9,803 7,202 5,309 3,449 2,646 2,646 2,506 2,506 2,506 21 Postal Service6 8,201 10,440 9,732 8,073 8,615 8,615 7,265 7,265 7,265 22 Student Loan Marketing Association 4,820 4,790 4,760 n.a. n.a. n.a. n.a. n.a. n.a. 23 Tennessee Valley Authority 10,725 6,975 6,325 3,200 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 48,534 42,979 38,619 33,719 28,419 27,384 26,845 26,210 21,015 26 Rural Electrification Administration 18,562 18,172 17,578 17,392 17,274 17,276 17,276 17,045 17,141 27 Other 84,931 64,436 45,864 37,984 28,738 27,655 27.205 26,396 30.566 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 insurance 12. The Resolution Funding Corporation, established by the Financial Institutions Reform. claims. Once issued, these securities may be sold privately on the securities market. Recovery, and Enforcement Act of 1989. undertook its first borrowing in October 1989. 5. Certificates of participation issued before fiscal year 1969 by the Government National 13. The FFB, which began operations in 1974, is authorized to purchase or sell obligations Mortgage Association acting as trustee for the Fanners Home Administration, the Department issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt solely for the of Health, Education, and Welfare, the Department of Housing and Urban Development, the purpose of lending to other agencies, its debt is not included in the main portion of the table to Small Business Administration, and the Veterans Administration. 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. Includes guaranteed by numerous agencies, with the amounts guaranteed by any one agency generally Federal Agricultural Mortgage Corporation; therefore details do not sum to total. Some data being small. The Farmers Home Administration entry consists exclusively of agency assets, are estimated. whereas the Rural Electrification Administration entry consists of both agency assets and 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is guaranteed loans. shown on line 17. 9. Before late 1982, the association obtained financing through the Federal Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 DomesticN onfinancial Statistics • April 1996 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1995 1996 TTyyppee ooff ii oo ss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11999933 11999944 11999955 June July Aug. Sept. Oct. Nov. Dec. Jan. 1 All issues, new and refunding1 279.945 153,950 146,204 17,230 11,575 12.450 9,698 13,336 16,580 17,220 10,351 By type of issue 2 Genet al obligation 90.599 54,404 56.265 5.755 3.529 4.519 3.635 6,252 6,084 5,680 3 Revenue 189.346 99.546 88.197 12.201 6.248 7.789 6,129 7.322 10,496 11,540 BY type of issuer 4 State 27.999 19.186 14.762 1.329 645 617 1,510 1,825 1,491 951 5 Special district or statutory authority" 178.714 95.896 92.470 11.382 7.399 7.491 5,821 7,831 10,477 11,920 6 Municipality, countv, or township 73.232 38,868 37.230 5.245 1.733 4,200 2,433 3,918 4,612 4,349 7 Issues for new capital 91,434 105,972 102,823 13,083 8,740 6,685 6,339 7,828 11,439 11,929 n.a. By ML of proceeds 8 Education 16.831 21,267 23.963 2.494 1.924 1.180 1,929 1,725 3.250 2,463 9 Transportation 9,167 10,836 12.596 3.127 1.926 869 446 631 1,452 1,174 10 Utilities and conservation 12.014 10.192 11.125 1.235 485 1.504 563 1,794 756 1,741 11 Social wcllare 13.837 20,289 19.380 2.062 1.333 1,421 1.228 1,587 2.253 1,604 12 Industrial aid 6,862 8.161 6.032 411 500 201 627 203 404 1,269 13 Other purposes 32.723 35.227 31.339 4.467 2.216 1.967 2.050 2,114 3,324 3,678 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 1995r TTyyppee ooff iissssuuee,, ooffffeerriinngg,, oorr iissssuueerr 11999933 11999944 11999955 May June July Aug. Sept. Oct. Nov. Dec. 1 All issues' 769,088 582,569 n a. 55,145 57,054 36,437 50,052 56,980 53,850 56,115 40,452 2 Bonds2 646,634 497,414 n.a. 48,807 49,293 31,833 43,800 49,655 45,197 48,506 34,836 By type of offering 3 Public, domestic 487,029 365.115 487.071 40.280 43.106 25.617 34.465 43,137 36.792 43,232 32,112 4 Private placement, domestic3 121.226 76.061 n a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 38.379 56.238 79.384 8.528 6.186 6,216 9.335 6.518 8,406 5,274 2,723 By iiul't.sH v group 6 MamilaaLirinsi 88.160 43.423 42.439 2.359 6,808 4,456 4.057 3,284 3.497 4,092 3,305 7 Commercial and miscellaneous 58,559 40,652 37,001 6.085 4.528 1,403 2.480 2,607 3,532 4,178 3,099 8 Transportation 10.816 6,867 5,727 1.005 657 10 133 908 187 225 1,240 9 Public utility 56.330 13.298 12.270 2.530 2.675 540 640 911 1.241 782 685 10 Communication 31.950 13.340 18.158 1.767 1.745 1,520 1,240 2,829 2.389 3,333 648 11 Real estate and financial 400,820 379.834 371.475 35.061 32,880 23.904 35,249 39,115 34.352 35.897 25,858 12 Stocks2 122,454 85,155 n.a. 6,338 7,761 4,604 6,252 7,353 8,646 7,768 5,502 By f.vc of offering 13 Public preferred 18.897 12,527 11,048 1,548 742 768 1,261 1,035 836 2.210 890 14 Common 82.657 47,828 57.228 4,702 7.019 3.836 4,991 6,318 7.810 5,558 4,612 15 Private placement' 20.900 24.800 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 16 Man.uiaUuiing 22.271 17,798 2,370 2.345 1.306 2.254 2,389 1,801 2,200 678 17 Commercial and miscellaneous 25.761 15,713 n a. 1.134 2.749 1.969 1,533 2,791 4,628 2,969 2,631 18 Transportation 2.237 2.203 101 0 0 87 32 39 97 148 19 Public utility 7,050 2.214 185 209 133 91 190 60 336 322 20 Communication 3.439 494 0 0 64 0 47 0 0 0 21 Real estate and financial 61.004 46.733 2.536 2.458 1.132 2,287 1,905 2,118 2.166 1,724 1. Figures represent gross proceeds of issues maturing in more than one year; they are the 2. Monthly data cover only public offerings. principal amount or number of units calculated by multiplying by the offering price. Figures 3. Monthly data are not available. exclude secondary offerings, employee stock plans, investment companies other than closed- SOURCES. Beginning July 1993. Securities Data Company and the Board of Governors of end. intracorporate transactions, equities sold abroad, and Yankee bonds. Stock data include the Federal Reserve System. ownership securities issued by limited partnerships. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Market and Corporate Finance A3 5 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 1995 IItteemm 11999933 11999944 May June July Aug. Sept. Oct. Nov. Dec. 1 Sales of own shares2 851,885 841,286 70,798 74,749 76,081 72,113 68,694 72,730 70,499 99,059 2 Redemptions of own shares 567,881 699,823 57,033 61,932 56,344 57,610 54,473 56,174 52,727 67,885 3 Net sales3 284,004 141,463 13,765 12,817 19,736 14,503 14,221 16,556 17,772 31,173 4 Assets4 1,510,209 1,550,490 1,769,287 1,808,753 1,880,754 1,908,525 1,962,817 1,963,496 2,032,958 2,070,527 5 Cash5 100,209 121,296 128,375 122,461 126,340 127,173 127,446 133,653 141,489 142,852 6 Other 1,409,838 1,429,195 1,640,913 1,686,292 1,754,415 1,781,352 1,835,371 1,829,843 1,891,470 1,927,675 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 market 5. Includes all U.S. Treasury securities and other short-term debt securities. 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 gains comprises substantially all open-end investment companies registered with the Securities and distributions and share issue of conversions from one fund to another in the same group. Exchange Commission. Data reflect underwritings of newly formed companies after their 3. Excludes sales and redemptions resulting from transfers of shares into or out of money initial offering of securities. 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 1994 1995 AAccccoouunntt 11999933 11999944 11999955 01 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 Profits with inventory valuation and capital consumption adjustment 464.5 526.5 n.a. 455.9 531.5 549.8 568.9 559.6 561.1 614.9r n.a. 2 Profits before taxes 464.3 528.2 n.a. 471.7 523.2 547.5 570.4 594.1 588.4 609.6 n.a. 3 Profits-tax liability 163.8 195.3 n.a. 171.4 192.8 203.4 213.5 217.3 214.2 224.5 n.a. 4 Profits after taxes 300.5 332.9 n.a. 300.3 330.4 344.1 356.8 376.8 374.1 385.1 n.a. 5 Dividends 197.3 211.0 227.4 204.4 208.8 212.5 218.5 221.7 224.6 228.5 234.7 6 Undistributed profits 103.3 121.9 n.a. 95.9 121.7 131.6 138.3 155.1 149.6 156.6 n.a. 7 Inventory valuation -6.6 -13.3 -27.6 -3.9 -9.8 -16.5 -22.8 -51.9 -42.3 —9.3r -6.8 8 Capital consumption adjustment 6.7 11.6 15.9 -11.8 18.1 18.8 21.3 17.4 15.0 14.6 16.5 SOURCE. U.S. Department of Commerce, Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • April 1996 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities' Billions of dollars, end of period; not seasonally adjusted 1994 1995 AAccccoouunntt 11999922 11999933 11999944 QL Q2 Q3 Q4 QL Q2 Q3 ASSETS 1 Accounts receivable, gross2 491.8 482.8 551.0 494.5 511.3 524.1 551.0 568.5 586.9 594.7 2 Consumer 118.3 116.5 134.8 120.1 124.3 130.3 134.8 135.8 141.7 146.2 3 Business 301.3 294.6 337.6 302.3 313.2 317.2 337.6 351.9 361.8 362.4 4 Real estate 72.2 71.7 78.5 72.1 73.8 76.6 78.5 80.8 83.4 86.1 5 LESS: Reserves for unearned income 53.2 50.7 55.0 51.2 51.9 51.1 55.0 58.9 62.1 61.2 6 Reserves for losses 16.2 11.2 12.4 11.6 12.1 12.1 12.4 12.9 13.7 13.8 7 Accounts receivable, net 422.4 420.9 483.5 431.7 447.3 460.9 483.5 496.7 511.1 519.7 8 All other 142.5 170.9 183.4 171.2 174.6 177.2 183.4 194.6 198.1 198.1 9 Total assets 564.9 591.8 666.9 602.9 621.9 638.1 666.9 691.4 709.2 717.8 LIABILITIES AND CAPITAL 10 Bank loans 37.6 25.3 21.2 24.2 23.3 21.6 21.2 21.0 21.5 21.8 11 Commercial paper 156.4 159.2 184.6 165.9 171.2 171.0 184.6 181.3 181.3 178.0 Debt 12 Owed to parent 39.5 42.7 51.0 41.1 44.7 50.0 51.0 52.5 57.5 59.0 13 Not elsewhere classified 196.3 206.0 235.0 211.7 219.6 228.2 235.0 254.4 264.4 272.1 14 All other liabilities 68.0 87.1 99.5 90.5 89.9 95.0 99.5 102.5 102.1 101.7 13 Capital, surplus, and undivided profits 67.1 71.4 75.7 69.5 73.2 72.3 75.7 79.7 82.5 84.4 16 Total liabilities and capital 564.9 591.8 666.9 602.9 621.9 638.1 666.9 691.4 709.2 717.1 1. Includes finance company subsidiaries of bank holding companies but not of retailers 2. Before deduction for unearned income and losses, 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 Credit' Millions of dollars, amounts outstanding, end of period 1995 July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted 1 Total 545,533 614,784 686,645 661,656 671,807 675,247 682,627 687,187 686,645 2 3 C Re o a n l s u e m sta er t e2 1 7 6 1 0 , , 9 3 6 4 5 9 1 7 7 8 6 , , 7 1 7 9 0 8 1 8 9 6 5 , , 9 8 4 9 4 5 1 8 8 4 9 , , 8 89 8 8 6 1 8 9 5 1 , , 7 8 5 0 6 6 1 8 9 6 3 , , 1 5 2 5 1 5 1 8 9 7 4 , , 2 62 6 0 6 1 8 9 7 7 , , 6 3 9 0 9 3 1 8 9 6 5 , , 9 89 4 5 4 4 Business 313,219 359,816 403,805 386,872 394,245 395,571 400,741 402,185 403,805 Not seasonally adjusted 5 Total 550,751 620,975 693,739 658,140 665,535 672,653 681,965 687,944 693,739 6 Consumer 162,770 178.999 199,088 187,803 190,830 193,615 194,931 198,072 199,088 / Motor vehicles 56,057 61,609 69,650 65,861 68,271 68,857 70,816 68,167 69,650 10 9 8 S S O e e t c c h u u er r r i i t t c i i o z z e e n d d s u o m m t o h e t e r o r ' r c v o e n h s i u c m le e s r 4 4 3 6 1 6 0 0 , , , 0 3 2 2 9 9 4 6 3 3 7 1 1 3 2 . , . 2 8 2 2 9 7 1 7 2 3 8 1 3 0 5 , , , 6 7 0 3 3 7 3 2 3 7 3 1 2 6 3 , , , 3 3 2 8 0 5 1 2 9 7 3 1 1 7 3 , , , 5 2 7 5 5 5 1 1 7 3 7 1 1 7 5 , , , 6 3 7 9 4 2 3 5 0 3 7 1 0 7 6 , , , 0 8 1 9 6 5 6 5 4 3 7 1 4 8 6 , , , 3 9 5 9 2 8 4 6 5 3 8 1 3 0 5 , , , 6 7 0 3 7 3 3 3 2 11 Real estate' 71,727 78.479 86,606 84,987 86,107 86,128 87,471 87,672 86,606 12 316,254 363,497 408,045 385,350 388,598 392,910 399,563 402,200 408,045 1 1 1 3 4 5 Mo W R to e h r t o ai v l l e e 5 s h a i l c e l 6 e s 9 3 1 5 1 8 , , , 1 1 0 7 9 4 3 1 8 1 2 3 1 1 5 8 , . , 5 0 1 1 9 3 4 7 7 1 2 3 3 5 6 3 , , , 1 4 2 5 0 4 7 2 2 1 2 3 2 2 2 4 , , , 9 1 0 5 0 4 3 5 7 1 2 3 2 3 1 4 , , , 8 3 4 8 4 9 3 4 2 1 2 2 2 5 9 5 , , , 0 3 0 0 5 1 6 3 3 1 2 3 2 5 2 9 , , , 7 2 2 0 1 5 9 6 2 1 2 3 2 4 3 9 , , , 5 5 7 6 0 1 4 8 9 1 2 3 3 5 6 3 , , , 1 4 2 5 0 4 7 2 2 16 Leasing 45,934 61,646 71,683 68,905 69,169 70,734 71,255 71,625 71,683 17 Equipment 145,452 157,953 176,745 170,253 170,825 171,239 172,657 173,183 176,745 1 1 8 9 W Re h ta o i l l e sale6 35 8 , ,0 5 0 1 1 3 39 9 , , 6 6 8 7 0 8 4 1 6 0 , , 4 2 2 5 0 4 4 1 2 2 , , 5 1 4 1 1 1 4 1 3 2 , , 1 2 2 7 1 8 4 1 2 2 , , 8 2 2 1 3 0 4 1 3 1 , , 6 5 9 8 7 1 4 1 4 0 , , 1 8 9 8 4 9 4 1 6 0 , , 4 2 2 5 0 4 2 2 1 0 Oth L e e r a s b i u n s g i ness7 1 5 0 3 1 , , 9 9 9 3 7 8 1 6 0 1 8 , , 4 5 9 9 5 5 1 6 2 5 0 . , 3 0 6 7 3 1 1 6 1 3 5 , , 8 6 6 0 9 1 1 6 1 4 5 , , 9 4 4 2 1 6 1 6 1 6 6 , , 1 2 1 0 1 6 1 6 1 6 7 , , 2 3 3 7 8 9 1 6 1 6 8 , , 6 1 7 0 8 0 1 6 2 5 0 , , 3 0 6 7 3 1 22 Securitized business assets4 21,632 25,852 32,695 27,223 28,388 30,507 31,452 32,631 32,695 23 Retail 2,869 4,494 4,723 4,784 4,587 4,818 4,586 4,974 4,723 24 Wholesale 10,584 14.826 21,327 16,469 17,986 19,773 20,390 21,208 21,327 23 Leasing 8,179 6.532 6,645 5,970 5,815 5,916 6,476 6,449 6,645 1. Includes finance company subsidiaries of bank holding companies but not of retailers 4. Outstanding balances of pools upon which securities have been issued; these balances and banks. Data are before deductions for unearned income and losses. Data in this table also are no longer carried on the balance sheets of the loan originator. appear in the Board's G.20 (422) monthly statistical release. For ordering address, see inside 5. Passenger car fleets and commercial land vehicles for which licenses are required. front cover. 6. Credit arising from transactions between manufacturers and dealers, that is, floor plan 2. Includes all loans secured by liens on any type of real estate, for example, first and junior financing. mortgages and home equity loans. 7. Includes loans on commercial accounts receivable, factored commercial accounts, and 3. Includes personal cash loans, mobile home loans, and loans to purchase other types of receivable dealer capital; small loans used primarily for business or farm purposes; and consumer goods such as appliances, apparel, general merchandise, and recreation vehicles. wholesale and lease paper for mobile homes, campers, and travel trailers. 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 1995 1996 IItteemm 11999933 11999944 11999955 July Aug. Sept. Oct. Nov. Dec. Jan. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms' 1 Purchase price (thousands of dollars) 163.1 170.4 175.8 169.4 170.4 174.8 174.3 178.6 181.7 179.2 2 Amount of loan (thousands of dollars) 123.0 130.8 134.5 130.4 130.6 131.8 133.0 136.4 140.9 135.8 3 Loan-to-price ratio (percent) 78.0 78.8 78.6 78.9 78.9 78.1 77.8 78.9 79.1 77.3 4 Maturity (years) 26.1 27.5 27.7 26.6 27.3 28.0 26.6 27.7 27.6 27.7 5 Fees and charges (percent of loan amount)2 1.30 1.29 1.21 1.18 1.12 1.20 1.11 1.22 1.21 1.07 Yield (percent per year) 6 Contract rate1 7.03 7.26 7.65 7.58 7.56 7.50 7.39 7.27 7.20 77..1155 7 Effective rate1,3 7.24 7.47 7.85 7.78 7.75 7.69 7.58 7.46 7.40 7.32 8 Contract rate (HUD series)4 7.37 8.58 8.05 7.98 7.91 7.78 7.62 7.46 7.30 7.23 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 7.46 8.68 8.18 8.09 8.03 88..0033 7.61 7.51 7.52 77..1111 10 GNMA securities6 6.65 7.96 7.57 7.27 7.49 7.26 7.16 7.01 6.82 6.71 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 190,861 222,057 253,511 235,882 238,850 241,378 246,234 249,928 253,511 255,619 1? FHA/VA insured 23,857 27,558' 28,762' 28,655' 28,787' 28,726' 28,765' 28,901' 28,762' 28,622 13 Conventional 167,004 194,499 224,749 207,227 210,063 212,652 217,469 221,027 224,749 226,997 14 Mortgage transactions purchased (during period) 92,037 62,389 56,598 5,657 5,688 5,002 7,443 6,148 6,243 4,810 Mortgage commitments (during period) 15 Issued7 92,537 54,038 56,092 4,512 6,284 6,019 6,732 6,038 4,765 5,750 16 To sell8 5,097 1,820 360 26 53 9 0 10 0 3 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period f 17 Total 55,012 72,693 107,424 88,874 91,544 94,989 99,758 102,997 107,424 111,143 18 FHA/VA insured 321 276 267 250 246 281 276 271 267 270 19 Conventional 54,691 72,416 107,157 88,624 91,298 94,708 99,482 102,726 107,157 110,873 Mortgage transactions (during period) 70 Purchases 229,242 124,697 98,470 7,316 9,594 11,458 11,092 9,989 13,108 13,357 21 208,723 117,110 85,877 6,074 8,161 10,239 9,856 9,011 11,712 11,624 22 Mortgage commitments contracted (during period)9 274,599 136,067 118,659 8,106 10,578 12,469 10,388 11,339 14,609 12,765 1. Weighted averages based on sample surveys of mortgages originated by major institu- 6. Average net yields to investors on fully modified pass-through securities backed by tional lender groups for purchase of newly built homes; compiled by the Federal Housing mortgages and guaranteed by the Government National Mortgage Association (GNMA), 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 the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. 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 U.S. 9. Includes conventional and government-underwritten loans. The Federal Home Loan Department of Housing and Urban Development (HUD). Based on transactions on the first Mortgage Corporation's mortgage commitments and mortgage transactions include activity day of the subsequent month. under mortgage securities swap programs, whereas the corresponding data for FNMA 5. Average gross yield on thirty-year, minimum-downpayment first mortgages insured exclude swap activity. 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 • April 1996 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1994 1995 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999911 11999922 11999933 Q3 Q4 Q1 Q2 Q3p 1 All holders 3,962,607 4,094,067 4,268,983 4,419,367 4,475,242 4,517,245 4,585,646 4,654,573 By type of property 2 One- to four-family residences 2,849,780 3,037,408 3,227,633 3,375,955 3,432,165 3,466,120 3,524,669 3,583,881 3 Multifamily residences 284,412 274,234 270,796 275,956 275,304 276,445 280,602 283,767 4 Commercial 749,110 701,687 689,360 684,831 684,803 691,276 696,526 702,506 3 79,305 80,738 81,194 82,625 82.971 83,404 83,850 84,419 By type of holder 6 Major financial institutions 1,846,726 1,769,187 1,767,835 1,786,074 1,815,810 1,841,815 1,868,175 1,895,299 / Commercial banks2 876,100 894,513 940,444 981,365 1,004.280 1,024,854 1,053,048 1,072,791 8 One- to four-family 483,623 507.780 556,538 592,021 611,697 625,378 648,705 663,307 9 Multifamily 36,935 38,024 38,635 38,004 38,916 39,746 40,593 42,537 10 Commercial 337,095 328,826 324,409 328,931 331,100 336,795 340,176 343,123 11 Farm 18,447 19,882 20,862 22,408 22,567 22,936 23,575 23,823 12 Savings institutions' 705,367 627,972 598,330 587,545 596,199 601,777 599,745 604,616 13 One- to four-family 538,358 489,622 469,959 466,704 477,499 483,625 482,005 488.707 14 Multifamily 79,881 69,791 67,362 65,532 64,400 63,778 64,404 63,437 13 Commercial 86,741 68,235 60,704 55,017 54,011 54,085 53,054 52,182 lb Farm 388 324 305 291 289 288 282 291 1/ Life insurance companies 265,258 246,702 229,061 217,165 215,332 215,184 215,382 217,892 18 One- to four-family 11,547 11,441 9,458 7,984 7,910 7.892 7,911 8,006 19 Multifamily 29,562 27,770 25,814 24,534 24,306 24,250 24,310 24,601 20 Commercial 214,105 198,269 184,305 175,168 173,539 173,142 173,565 175,643 21 Farm 10,044 9,222 9,484 9,479 9,577 9,900 9,596 9,643 22 Federal and related agencies 266,146 286,263 328,598 329,304 323,491 319,770 315,208 314,358 23 Government National Mortgage Association 19 30 22 12 6 15 7 2 24 One- to four-family 19 30 15 12 6 15 7 2 23 Multifamily 0 0 7 0 0 0 0 0 26 Farmers Home Administration4 41,713 41,695 41,386 41,587 41,781 41,857 41,917 41,858 27 One- to four-family 18,496 16,912 15,303 14,084 13,826 13,507 13,217 12,914 28 Multifamily 10,141 10,575 10,940 11,243 11,319 11,418 11,512 11,557 29 Commercial 4,905 5,158 5,406 5,608 5,670 5,807 5,949 6,096 30 Farm 8,171 9,050 9,739 10,652 10,966 11,124 11,239 11,291 31 Federal Housing and Veterans' Administrations 10,733 12,581 12,215 10,533 10,964 10,890 10,098 9,535 32 One- to four-family 4,036 5,153 5,364 4,321 4,753 4,715 4,838 4,918 33 Multifamily 6,697 7,428 6,851 6,212 6,211 6,175 5,260 4,617 34 Resolution Trust Corporation 45,822 32,045 17,284 15,403 10,428 9,342 6,456 4,889 33 One- to four-family 14,535 12,960 7,203 6,998 5,200 4,755 2,870 2,299 36 Multifamily 15,018 9,621 5,327 4.569 2,859 2,494 1,940 1,420 3/ Commercial 16.269 9,464 4,754 3,836 2,369 2,092 1,645 1,170 38 Farm 0 0 0 0 0 0 0 0 39 Federal Deposit Insurance Corporation 0 0 14,112 9,169 7,821 6,730 6,039 5,015 40 One- to four-family 0 0 2,367 1,241 1,049 840 731 618 41 Multifamily 0 0 1,426 2,090 1,595 1,310 1,135 722 42 Commercial 0 0 10,319 5,838 5.177 4,580 4,173 3,674 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 112,283 137,584 166,642 177,200 178,059 177,615 178,462 182,229 43 One- to four-family 100,387 124,016 151,310 161,255 162,160 161,780 162,674 166,393 46 Multifamily 11,896 13,568 15,332 15,945 15,899 15,835 15,788 15,836 41 Federal Land Banks 28,767 28,664 28,460 28,538 28,555 28,065 28,005 28,151 48 One- to four-family 1,693 1,687 1,675 1,679 1,671 1,651 1,648 1,656 49 Farm 27,074 26,977 26,785 26,859 26,885 26,414 26,357 26,495 30 Federal Home Loan Mortgage Corporation 26,809 33,665 48,476 46,863 45,876 45,256 44,224 42,678 31 One- to four-family 24,125 31,032 45,929 44,208 43,046 42,122 40,963 39,244 32 Multifamily 2,684 2,633 2,547 2,655 2,830 3,134 3,261 3,434 53 Mortgage pools or trusts5 1,258,155 1,434,264 1,563,453 1,693,908 1,716,209 1,731,272 1,759,314 1,797,162 34 Government National Mortgage Association 425,295 419,516 414,066 444,976 450,934 454,401 457,101 463,654 33 One- to four-family 415,767 410,675 404,864 435,511 441,198 444,632 446,855 453,114 36 Multifamily 9,528 8,841 9,202 9,465 9,736 9,769 10,246 10,540 3/ Federal Home Loan Mortgage Corporation 359,163 407,514 446,029 482,987 486,480 488,723 496,139 503,457 38 One- to four-family 351,906 401,525 441,494 479,539 483,354 485,643 493,105 500,504 39 Multifamily 7,257 5,989 4,535 3,448 3,126 3,080 3,034 2,953 60 Federal National Mortgage Association 371,984 444,979 495,525 523,512 530,343 533,262 543,669 559,585 61 One- to four-family 362,667 435,979 486,804 514,375 520,763 523,903 533,091 548,400 62 Multifamily 9,317 9,000 8,721 9,137 9,580 9,359 10,578 11,185 63 Farmers Home Administration4 47 38 28 20 19 14 13 12 64 One- to four-family 11 8 5 4 3 2 2 2 63 Multifamily 0 0 0 0 0 0 0 0 66 Commercial 19 17 13 9 9 7 6 5 67 Farm 17 13 10 7 7 5 5 5 68 Private mortgage conduits 101,665 162,217 207,806 242,413 248,433 254,871 262,393 270,454 69 One- to four-family 91,489 140,718 173,635 193,787 196,733 201,314 205,018 209,713 10 Multifamily 3,698 6,305 8,701 13,891 14,925 15,743 17,281 18,903 n Commercial 6,479 15,194 25,469 34,735 36,774 37,814 40,094 41,838 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others6 591,580 604,353 609,097 610,080 619,732 624,388 642,949 647,754 7 4 One- to four-family 431,122 447,871 455,709 452,232 461,297 464,346 481,028 484,084 73 Multifamily 61,798 64,688 65,397 69,230 69,602 70,352 71,261 72,024 76 Commercial 83,496 76,524 73,982 75,689 76,153 76,955 77,864 78,774 7/ 15,164 15,270 14,009 12,929 12,681 12,736 12,796 12,871 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 local 2. Includes loans held by nondeposit trust companies but not loans held by bank trust credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and departments. finance companies. 3. Includes savings banks and savings and loan associations. SOURCE. Based on data from various institutional and government sources. Separation of 4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from nonfarm mortgage debt by type of property, if not reported directly, and interpolations and FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 because of accounting extrapolations, when required for some quarters, are estimated in part by the Federal Reserve. changes by the Farmers Home Administration. Line 69 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 CREDIT' Millions of dollars, amounts outstanding, end of period 1995 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999933 11999944 11999955 July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted 1 Total 790,351 902,853 1,022,925 979,375 989,695 993,843 1,005,178 l,015,031r 1,022,925 ? Automobile 280,566 317,237 353,105 337,127 339,770 341,155 344,671 349,080r 353,105 3 Revolving 286,588 334,511 394,752 375,272 379,669 382,094 387,180 390,140 394,752 4 Other2 223,197 251,106 275,067 266,976 270,255 270,595 273,326 275,811 275,067 Not seasonally adjusted 5 Total 809,440 925,000 1,048,715 971,965 990,428 996,525 1,005,423 l,018,963r 1,048,715 By major holder Commercial banks 367,566 427,851 464,993 441,165 451,784 449,502 451,232 453,690 464,993 7 Finance companies 116,453 134,830 150,382 142,163 145,522 146,202 148,681 147,093 150,382 8 Credit unions 101,634 119,594 133,128 126,500 128,424 129,027 130,261 130,972 133,128 9 Savings institutions 37,855 38,468 38,500 38,907 38,634 38,894 38,500 38,500 38.500 in Nonfinancial business3 55,296 60,957 57,497 56,360 55,723 54,177 54,607 53,139 57,497 u Pools of securitized assets4 130,636 143,300 204,215 166,870 170,341 178,723 182,142 195,569r 204,215 By major type of credit5 12 Automobile 281,458 318,213 354,174 336,154 341,716 344,401 347,513 350,966r 354,174 13 Commercial banks 122,000 141,851 151,057 146,149 148,549 148,901 150,782 149,905 151,057 14 Finance companies 56,057 61,609 69,650 65,861 68,271 68,857 70,816 68,167 69,650 15 Pools of securitized assets4 39,481 34,918 43,666 37,071 36,681 37,476 36,453 43,240r 43,666 16 Revolving 301,837 352,266 415,679 370,520 377,784 380,341 384,625 392,706 415,679 17 Commercial banks 149,920 180,183 198,076 184,245 189,163 185,572 186,463 189,405 198,076 18 Nonfinancial business3 50,125 55,341 51,971 50,520 48,976 48,968 49,358 47,839 51,971 19 Pools of securitized assets4 79,878 94,376 142,722 114,338 117,729 123,749 126,739 132,978 142,722 70 Other 226,145 254,521 278,862 264,734 269,467 271,845 273,285 275,291 278,862 71 Commercial banks 95,646 105,817 115,860 110,771 114,072 115,029 113,987 114,380 115,860 22 Finance companies 60,396 73,221 80,732 76,302 77,251 77,345 77,865 78,926 80,732 23 Nonfinancial business3 5,171 5,616 5,526 5,283 5,286 5,271 5,249 5,300 5,526 24 Pools of securitized assets 11,277 14,006 17.827 15,461 15,931 17,498 18,950 19,351 17,827 1. The Board's series on amounts of credit covers most short- and intermediate-term credit 3. Includes retailers and gasoline companies. extended to individuals that is scheduled to be repaid (or has the option of repayment) in two 4. Outstanding balances of pools upon which securities have been issued; these balances or more installments. Data in this table also appear in the Board's G.19 (421) monthly are no longer carried on the balance sheets of the loan originator. statistical release. For ordering address, see inside front cover. 5. Totals include estimates for certain holders for which only consumer credit totals are 2. Comprises mobile home loans and all other installment loans that are not included in available. automobile or revolving credit, such as loans for education, boats, trailers, or vacations. These loans may be secured or unsecured. 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT' Percent per year except as noted 1995 IItteemm 11999933 11999944 11999955 June July Aug. Sept. Oct. Nov. Dec. INTEREST RATES Commercial banks' 1 48-month new car 8.09 8.12 9.57 n.a. n.a. 9.44 n.a. n.a. 9.36 n.a. 2 24-month personal 13.47 13.19 13.94 n.a. n.a. 13.84 n.a. n.a. 13.80 n.a. Credit card plan 3 All accounts n.a. 15.69 16.02 n.a. n.a. 15.98 n.a. n.a. 15.81 n.a. 4 Accounts assessed interest n.a. 15.77 15.79 n.a. n.a. 15.94 n.a. n.a. 15.71 n.a. Auto finance companies 5 New car 9.48 9.79 11.19 11.08 11.01 10.85 10.75 10.89 10.84 10.52 6 Used car 12.79 13.49 14.48 14.63 14.35 14.23 14.12 14.06 13.98 13.83 OTHER TERMS3 Maturity (months) 7 New car 54.5 54.0 54.1 53.9 54.1 53.5 53.4 54.6 54.5 53.6 8 Used car 48.8 50.2 52.2 52.3 52.4 52.3 52.3 52.3 52.2 51.8 Loan-to-value ratio 9 New car 91 92 92 92 92 92 92 92 92 92 10 Used car 98 99 99 99 100 99 100 99 99 99 Amount financed (dollars) 11 New car 14,332 15,375 16,210 16,083 16,086 16,056 16,402 16,430 16,583 17,034 12 Used car 9,875 10,709 11,590 11,518 11,637 11,662 11,725 11,883 12,012 12,152 1. The Board's series on amounts of credit covers most short- and intermediate-term credit 2. Data are available for only the second month of each quarter, extended to individuals that is scheduled to be repaid (or has the option of repayment) in two 3. At auto finance companies, or more installments. Data in this table also appear in the Board's G.19 (421) monthly statistical release. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic NonfinancialS tatistics • April 1996 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1994 1995 Transaction ratpporv nr sector 11999900 11999911 11999922 11999933 Ql Q2 Q3 Q4 Ql Q2 Q3 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors.... 669.4 480.6 545.3 625.9 617.0 652.5 581.2 580.0 654.3 831.0 877.5 513.1 By sector and instrument 2 U.S. government 246.9 278.2 304.0 256.1 155.9 206.4 131.3 135.6 150.1 266.8 202.8 65.8 3 Treasury securities 238.7 292.0 303.8 248.3 155.7 207.7 126.6 132.8 155.7 268.0 201.2 65.4 4 Budget agency issues and mortgages 8.2 -13.8 .2 7.8 .2 -1.3 4.7 2.9 -5.7 -1.2 1.6 .4 5 Private 422.5 202.4 241.3 369.8 461.1 446.1 449.9 444.3 504.2 564.2 674.8 447.3 By instrument 6 Municipal securities 49.3 87.8 30.5 74.8 -29.3 15.7 -20.7 -58.4 -53.8 -53.3 -10.6 -115.8 7 Corporate bonds 47.1 78.8 67.6 75.2 23.3 34.2 37.4 15.4 6.2 55.3 99.0 60.7 8 Mortgages 232.4 158.4 130.9 157.2 196.5 174.2 194.2 203.9 213.5 219.6 238.8 251.9 y Home mortgages 226.3 173.6 187.6 187.9 204.5 203.3 186.2 208.8 219.8 192.5 204.2 215.3 10 Multifamily residential 1.5 -5.5 -10.4 -6.0 1.3 -.3 4.0 5.6 -4.2 2.9 15.0 11.9 11 Commercial 6.1 -10.0 -47.8 -25.0 -11.1 -29.4 1.1 -12.7 -3.4 22.5 17.8 22.4 12 Farm -1.6 .4 1.4 .5 1.8 .6 2.9 2.2 1.4 1.7 1.8 2.3 13 Consumer credit 15.6 -14.8 7.3 58.9 121.2 65.0 129.8 124.8 165.2 93.8 158.1 109.6 14 Bank loans n.e.c .4 -40.9 -13.7 3.8 72.7 57.7 58.7 97.1 77.1 143.5 94.4 99.4 15 Commercial paper 9.7 -18.4 8.6 10.0 21.4 26.1 9.7 26.4 23.5 23.1 37.5 16.0 16 Other loans and advances 68.1 -48.5 10.1 -10.2 55.4 73.2 40.8 35.1 72.4 82.2 57.7 25.6 By borrowing sector 17 Household 263.7 182.7 200.7 246.5 360.3 292.3 349.9 379.7 419.1 301.8 388.9 380.3 18 Nonfinancial business 112.2 -61.9 19.5 61.0 144.3 154.1 139.4 130.0 153.6 314.5 302.8 187.0 19 Farm 1.0 2.1 1.3 2.0 2.8 3.1 7.8 2.4 -2.0 .9 3.6 4.3 20 Nonfarm noncorporate 1.1 -11.0 -16.0 7.0 12.1 13.2 10.0 8.8 16.5 51.3 43.5 21.5 21 Corporate 110.0 -53.0 34.1 52.0 129.3 137.7 121.7 118.8 139.1 262.3 255.7 161.1 22 State and local government 46.6 81.6 21.1 62.3 -43.4 -.3 -39.5 -65.4 -68.5 -52.1 -16.9 -119.9 23 Foreign net borrowing in United States 23.9 14.8 22.6 68.8 -20.3 -100.3 -34.2 19.6 33.5 61.4 40.4 97.5 24 Bonds 21.4 15.0 15.7 81.3 7.1 -2.6 -17.4 20.8 27.7 13.5 49.9 55.0 25 Bank loans n.e.c -2.9 3.1 2.3 .7 1.4 6.0 -4.5 4.7 -.5 8.1 5.6 8.2 26 Commercial paper 12.3 6.4 5.2 -9.0 -27.3 -101.8 -5.2 -8.1 5.9 37.9 -11.1 30.9 27 Other loans and advances -7.0 -9.8 -.6 -4.2 -1.6 -1.8 -7.1 2.2 .4 1.9 -4.0 3.4 28 Total domestic plus foreign 693.2 495.4 568.0 694.7 596.6 552.2 547.0 599.5 687.8 892.4 918.0 610.6 Financial sectors 29 Total net borrowing by financial sectors 210.9 154.5 240.1 290.8 459.4 493.1 380.1 419.7 544.8 268.7 432.0 407.7 fiv instrument 30 U.S. government-related 167.4 145.7 155.8 164.2 284.3 309.4 264.5 245.7 317.5 93.0 197.7 230.1 31 Government-sponsored enterprises securities 17.1 9.2 40.3 80.6 176.9 160.0 146.6 152.1 249.0 62.9 127.2 101.5 32 Mortgage pool securities 150.3 136.6 115.6 83.6 112.1 168.5 117.9 93.6 68.5 30.0 70.5 128.6 33 Loans from U.S. government -.1 .0 .0 .0 -4.8 -19.2 .0 .0 .0 .0 .0 .0 34 43.6 8.7 84.3 126.6 175.2 183.8 115.5 174.0 227.3 175.7 234.4 177.6 35 Corporate bonds 53.5 68.8 82.8 119.8 113.4 161.1 96.4 99.5 96.5 156.5 170.2 133.0 36 Mortgages .6 .5 .6 3.6 9.8 9.8 12.4 12.0 4.9 5.1 4.8 2.3 37 Bank loans n.e.c 4.7 8.8 2.2 -13.0 -12.3 -12.0 -27.4 -11.7 1.9 .1 24.1 -6.8 38 Open market paper 8.6 -32.0 -.7 -6.2 41.6 35.1 4.3 41.3 85.9 38.5 34.0 43.3 39 Other loans and advances -23.9 -37.3 -.6 22.4 22.6 -10.3 29.8 32.8 38.1 -24.5 1.3 5.9 By borrowing sector 40 Government-sponsored enterprises 17.0 9.1 40.2 80.6 172.1 140.8 146.6 152.1 249.0 62.9 127.2 101.5 41 Federally related mortgage pools 150.3 136.6 115.6 83.6 112.1 168.5 117.9 93.6 68.5 30.0 70.5 128.6 42 Private financial sectors 43.6 8.7 84.3 126.6 175.2 183.8 115.5 174.0 227.3 175.7 234.4 177.6 43 Commercial banks .9 -10.7 7.7 4.6 9.9 .9 10.6 23.9 4.1 6.3 18.2 9.6 44 Bank holding companies -27.7 -2.5 2.3 8.8 10.3 3.5 10.1 11.5 16.0 13.3 23.8 25.2 45 Funding corporations 15.4 -6.5 13.2 2.9 24.2 48.8 -10.5 47.3 11.1 61.6 21.4 41.9 46 Savings institutions -30.9 -44.7 -7.0 11.3 12.8 -5.5 5.8 14.8 36.1 -18.9 -6.8 4.9 47 Credit unions .0 .0 .0 .2 .2 .1 .2 .5 .2 -.3 -.1 .1 48 Life insurance companies .0 .0 .0 .2 .3 .0 .0 .0 1.3 .0 .1 -.1 49 Finance companies 23.8 17.7 -1.6 .2 50.2 63.7 63.6 16.3 57.3 83.1 57.2 6.5 50 Mortgage companies .0 -2.4 8.0 .0 -11.5 -21.8 -18.2 -7.0 1.1 -7.4 14.8 -12.0 51 Real estate investment trusts (REITs) .8 1.2 .3 3.4 13.7 14.5 15.3 18.8 6.3 6.9 6.4 2.2 52 Brokers and dealers 1.5 3.7 2.7 12.0 .5 -9.9 .3 -7.6 19.3 -29.5 -.1 2.1 53 Issuers of asset-backed securities (ABSs) 59.8 52.9 58.6 83.0 64.5 89.4 38.5 55.4 74.5 60.8 99.4 97.1 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 MARKETS'—Continued 1994 1995 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999944 Ql Q2 Q3 Q4 Ql Q2 Q3 All sectors 54 Total net borrowing, all sectors 904.1 649.9 808.0 985.5 1,056.0 1,045.3 927.0 1,019.2 1,232.6 1,161.1 1,350.0 1,018.3 55 U.S. government securities 414.4 424.0 459.8 420.3 444.9 534.9 395.8 381.3 467.5 359.8 400.5 295.9 5b Municipal securities 49.3 87.8 30.5 74.8 -29.3 15.7 -20.7 -58.4 -53.8 -53.3 -10.6 -115.8 5/ Corporate and foreign bonds 122.0 162.5 166.1 276.3 143.8 192.7 116.4 135.7 130.4 225.3 319.1 248.7 58 Mortgages 233.0 158.9 131.5 160.8 206.3 184.0 206.6 215.9 218.4 224.7 243.6 254.2 59 Consumer credit 15.6 -14.8 7.3 58.9 121.2 65.0 129.8 124.8 165.2 93.8 158.1 109.6 60 Bank loans n.e.c 2.2 -29.1 -9.3 -8.5 61.8 51.8 26.8 90.1 78.5 151.7 124.1 100.7 61 Open market paper 30.7 -44.0 13.1 -5.1 35.7 -40.7 8.8 59.6 115.3 99.5 60.4 90.2 62 Other loans and advances 37.1 -95.6 8.9 8.0 71.7 41.9 63.5 70.2 111.0 59.6 55.0 34.8 Funds raised through mutual funds and corporate equities 63 Total net share issues 18.4 209.1 293.5 428.6 140.7 294.4 252.8 104.7 -89.1 5.2 161.2 193.9 64 Mutual funds 63.0 146.9 207.7 310.2 119.6 187.2 190.2 121.8 -20.6 56.1 165.1 168.8 65 Corporate equities -44.6 62.2 85.8 118.4 21.1 107.2 62.6 -17.1 -68.5 -50.9 -3.9 25.1 66 Nonfinancial corporations -63.0 18.3 27.0 21.3 —44.9 -9.6 -2.0 -50.0 -118.0 -68.4 -59.6 -84.8 67 Financial corporations 11.0 13.3 28.1 36.6 23.3 48.3 18.6 9.8 16.3 4.8 18.7 27.9 68 Foreign shares purchased by U.S. residents 7.4 30.7 30.7 60.5 42.7 68.5 45.9 23.1 33.2 12.8 37.0 82.0 1. Data in this table also appear in the Board's Z. 1 (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 • April 1996 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1994r 1995r TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999900rr 11999911rr 11999922rr 11999933rr 11999944rr Ql Q2 Q3 Q4 Ql Q2 Q3 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 904.1 649.9 808.0 985.5 1,056.0 1,045.3 927.0 1,019.2 1,232.6 1,161.1 1,350.0 1,018.3 2 Private domestic nonfinancial sectors 223.6 96.6 90.2 49.4 262.5 284.3 344.2 167.7 253.9 6.9 -176.0 -173.8 3 Households 210.6 20.4 87.0 23.8 307.5 258.5 386.3 246.5 338.6 198.3 -118.0 63.7 4 Nonfarm noncorporate business -3.5 -5.3 -.1 .6 .7 -.4 1.5 .7 .9 .5 -1.0 -1.0 5 Nonfinancial corporate business -26.1 30.7 27.8 21.3 51.9 58.6 27.5 37.5 84.1 -85.0 48.6 -28.5 6 State and local governments 42.6 50.8 -24.5 3.7 -97.6 -32.4 -71.1 -117.0 -169.7 -106.9 -105.7 -208.0 / U.S. government 33.7 10.5 -11.9 -18.4 -24.2 -46.4 -14.6 -11.3 -24.4 -13.2 -24.3 -23.4 8 Rest of the world 86.7 13.3 98.2 128.3 134.4 123.3 65.7 137.5 210.9 242.6 325.5 354.7 y Financial sectors 560.2 529.5 631.6 826.2 683.3 684.2 531.7 725.3 792.1 924.8 1,224.8 860.8 10 Government sponsored enterprises 14.0 15.1 68.8 90.2 123.2 91.3 100.9 125.4 175.2 11.2 86.9 50.8 N Federally related mortgage pools 150.3 136.6 115.6 83.6 112.1 168.5 117.9 93.6 68.5 30.0 70.5 128.6 12 Monetary authority 8.1 31.1 27.9 36.2 31.5 41.5 24.9 29.7 30.0 16.3 20.8 -11.1 13 Commercial banking 125.1 80.8 95.3 142.2 163.4 167.4 128.5 183.4 174.5 342.7 316.0 243.8 14 U.S. chartered banks 94.9 35.7 69.5 149.6 148.1 126.3 136.1 155.6 174.2 183.4 222.4 227.5 15 Foreign banking offices in United States 28.4 48.5 16.5 -9.8 11.2 37.3 -10.0 22.9 -5.6 158.8 83.9 24.3 16 Bank holding companies -2.8 -1.5 5.6 .0 .9 3.1 .2 2.7 -2.4 -2.0 5.7 -9.0 1/ Banks in U.S. affiliated areas 4.5 -1.9 3.7 2.4 3.3 .7 2.1 2.2 8.3 2.4 4.0 1.0 18 Funding corporations -13.8 15.7 17.7 -5.7 -34.2 -2.4 -73.1 -37.3 -23.9 -8.4 -23.1 -12.9 iy Thrift institutions -157.6 -146.1 -61.3 -1.7 34.9 11.8 41.5 53.8 32.4 28.2 9.1 40.9 20 Life insurance companies 107.2 86.5 78.5 100.9 66.3 69.7 26.7 89.5 79.4 132.4 131.2 77.0 21 Other insurance companies 26.4 30.0 6.7 27.7 24.9 21.8 22.3 25.3 30.4 20.7 20.4 18.6 22 Private pension funds 54.0 35.4 41.1 45.9 47.0 20.9 49.9 42.5 74.7 93.6 87.8 103.5 2 3 State and local government retirement funds 32.8 41.1 23.0 19.8 29.0 44.1 46.4 -11.1 36.6 62.4 3.2 52.9 24 Finance companies 29.5 -9.2 7.5 -9.0 68.2 67.9 61.2 63.1 80.4 91.8 70.1 40.3 25 Mortgage companies .0 11.2 .1 .0 -22.9 -43.5 -36.3 -14.0 2.1 -14.8 29.7 -24.0 26 Mutual funds 36.2 80.1 126.2 159.5 -10.6 15.8 4.2 -.1 -62.4 -14.8 21.6 22.0 27 Closed-end funds 1.3 12.8 18.2 11.0 -5.5 13.2 -11.6 -13.6 -10.0 -.5 7.2 10.0 28 Money market mutual funds 77.5 32.7 4.7 20.4 30.7 -17.9 26.6 57.7 56.5 50.5 135.2 32.4 2y Real estate investment trusts (REITs) -.7 -.7 1.1 .6 4.7 6.6 6.6 5.5 .2 2.5 3.1 2.1 30 Brokers and dealers 2.8 17.5 -1.3 14.8 -44.2 -89.3 -57.7 -21.9 -8.0 30.5 146.2 -.8 31 Asset-backed securities issuers (ABSs) 51.1 48.9 53.8 80.5 57.8 87.9 42.8 46.3 54.3 48.7 87.0 85.2 32 Bank personal trusts 15.9 10.0 8.0 9.5 7.1 8.9 10.2 7.7 1.4 1.6 1.8 1.5 RELATION OF LIABILITIES TO FINANCIAL ASSETS 33 Net flows through credit markets 904.1 649.9 808.0 985.5 1,056.0 1,045.3 927.0 1,019.2 1,232.6 1,161.1 1,350.0 1,018.3 Other financial sources 34 Official foreign exchange 2.0 -5.9 -1.6 .8 -5.8 -.2 -14.6 .2 -8.6 17.8 10.3 9.0 35 Special drawing rights certificates 1.5 .0 -2.0 .0 .0 .0 .0 .0 .0 .0 .0 8.6 36 Treasury currency 1.0 .0 .2 .4 .7 .7 .6 .8 .7 .7 .7 .8 37 Life insurance reserves 25.7 25.7 27.3 35.2 34.0 24.9 21.7 67.7 21.6 54.0 49.9 29.9 38 Pension fund reserves 241.7 196.4 236.8 244.8 244.9 237.3 217.5 234.8 290.0 307.2 280.3 252.6 3y Interbank claims 35.0 -3.4 43.5 57.9 89.6 143.8 113.5 3.1 98.1 -22.6 30.5 -16.5 40 Checkable deposits and currency 43.6 86.3 113.5 117.3 -9.7 112.6 -44.9 -66.0 -40.5 42.8 133.4 -150.3 41 Small time and savings deposits 63.7 1.5 -57.2 -70.3 -40.0 -3.7 -57.5 -51.8 -46.9 18.1 112.9 106.4 42 Large time deposits -66.1 -58.5 -73.2 -23.5 19.6 -38.7 -3.6 84.0 36.5 116.8 69.0 110.0 43 Money market fund shares 68.6 41.6 4.5 20.2 43.3 -3.8 34.0 56.4 86.5 59.9 233.5 120.8 44 Security repurchase agreements -24.2 -16.5 43.1 71.2 78.3 9.3 166.0 86.0 51.9 163.6 129.5 85.2 45 Foreign deposits 27.9 -26.5 -3.5 -18.5 45.8 6.6 50.6 28.1 97.9 39.2 90.6 31.0 46 Mutual fund shares 63.0 146.9 207.7 310.2 119.6 187.2 190.2 121.8 -20.6 56.1 165.1 168.8 47 Corporate equities -44.6 62.2 85.8 118.4 21.1 107.2 62.6 -17.1 -68.5 -50.9 -3.9 25.1 48 Security credit 3.5 51.4 4.6 61.4 -.1 42.6 -20.7 -59.3 37.1 -10.7 30.8 14.0 49 Trade payables 35.5 29.7 46.0 34.4 116.3 86.6 110.7 104.5 163.5 112.6 29.3 118.6 50 Taxes payable -4.8 -6.2 8.5 4.5 3.0 10.8 -13.1 10.1 4.3 15.5 -3.9 5.1 51 Noncorporate proprietors' equity 13.0 4.5 23.8 10.2 33.6 -24.4 53.3 63.5 42.1 42.9 45.0 61.8 52 Investment in bank personal trusts 29.7 16.1 -7.1 1.6 18.8 15.0 24.7 23.6 11.9 21.0 22.3 20.8 53 Miscellaneous 154.5 284.9 287.2 335.8 250.8 307.6 32.4 301.9 361.0 231.0 459.5 113.7 54 Total financial sources 1,574.3 1,480.1 1,795.9 2,297.5 2,119.9 2,267.0 1,850.5 2,011.7 2,350.6 2,376.0 3,234.8 2,133.6 Floats not included in assets ( —) 55 U.S. government checkable deposits 3.3 -13.1 .7 -1.5 -4.8 -3.1 .8 7.4 -24.4 13.2 -16.3 2.9 56 Other checkable deposits 8.5 4.5 1.6 -1.3 -2.8 -1.9 -3.5 -3.3 -2.3 -3.7 -3.9 -3.5 5/ Trade credit -8.2 30.8 13.0 15.4 35.3 100.6 54.4 33.6 -47.5 25.5 49.0 -12.9 Liabilities not identified as assets (—) 58 Treasury currency .2 -.6 _ I -.2 -.2 -.2 -.2 -.2 -.2 -.2 -.4 -.3 59 Interbank claims 1.6 26.2 -4.9 4.2 -2.7 -24.8 5.4 10.1 -1.7 .8 8.2 7.9 60 Security repurchase agreements -32.1 -9.5 .6 34.3 29.3 -25.1 103.9 -19.2 57.6 73.8 -42.0 7.4 61 Foreign deposits 25.9 -24.0 -2.8 -7.1 36.5 -3.7 56.1 38.7 54.8 47.1 82.2 1.5 62 Taxes payable -1.7 -1.0 10.8 10.4 8.5 17.7 6.2 10.8 -.8 -8.7 31.9 11.8 63 Miscellaneous -86.3 20.8 -1.4 23.7 -141.6 -148.1 -514.1 -57.4 153.1 -340.3 -156.9 -178.7 64 Total identified to sectors as assets 1,663.2 1,446.0 1,778.6 2,219.5 2,162.6 2,355.6 2,141.5 1,991.2 2,162.0 2,568.5 3,282.8 2,297.6 1. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. F.6 and F.7. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A43 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1994 1995 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999911 11999922 11999933 11999944 Ql Q2 Q3 Q4 Ql Q2 Q3 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 11,348.2 11,896.7 12,537.4 13,160.6 12,676.2 12,808.0 12,962.6 13,160.6 13,336.6 13,541.7 13,680.0 By sector and instrument 2 U.S. government 2,776.4 3,080.3 3,336.5 3,492.3 3,387.7 3,395.4 3,432.3 3,492.3 3,557.9 3,583.5 3,603.4 3 Treasury securities 2,757.8 3,061.6 3,309.9 3,465.6 3,361.4 3,368.0 3,404.1 3,465.6 3,531.5 3,556.7 3,576.5 4 Budget agency issues and mortgages 18.6 18.8 26.6 26.7 26.3 27.4 28.2 26.7 26.4 26.8 26.9 5 Private 8,571.8 8,816.3 9,200.9 9,668.3 9,288.5 9,412.6 9,530.3 9,668.3 9,778.6 9,958.2 10,076.6 By instrument 6 Municipal securities 1,272.2 1,302.8 1,377.5 1,348.2 1,379.9 1,372.2 1,362.6 1,348.2 1,333.6 1,328.3 1,304.3 7 Corporate bonds 1,086.9 1,154.5 1,229.7 1,253.0 1,238.3 1,247.6 1,251.5 1,253.0 1,266.8 1,291.6 1,306.8 8 Mortgages 3,957.8 4,088.7 4,260.0 4,456.5 4,289.7 4,345.8 4,401.9 4,456.5 4,497.2 4,564.4 4,632.8 9 Home mortgages 2,849.8 3,037.4 3,227.6 3,432.2 3,264.6 3,318.7 3,376.0 3,432.2 3,466.1 3,524.7 3,583.9 10 Multifamily residential 282.8 272.5 267.8 269.1 267.8 268.8 270.2 269.1 269.8 273.6 276.6 11 Commercial 745.9 698.1 683.4 672.3 676.0 676.3 673.1 672.3 677.9 682.3 687.9 12 Farm 79.3 80.7 81.2 83.0 81.3 82.1 82.6 83.0 83.4 83.9 84.4 13 Consumer credit 797.2 804.6 863.5 984.7 859.6 891.6 929.4 984.7 987.9 1,026.5 1,060.8 14 Bank loans n.e.c 686.0 672.2 676.0 748.6 686.5 705.3 724.7 748.6 781.0 808.8 828.0 15 Commercial paper 98.5 107.1 117.8 139.2 129.9 135.7 138.7 139.2 149.8 162.9 163.3 16 Other loans and advances 673.2 686.5 676.3 738.0 704.5 714.4 721.6 738.0 762.3 775.8 780.8 By borrowing sector 17 Household 3,822.9 4,023.6 4,272.4 4,632.3 4,311.9 4,407.5 4,511.8 4,632.3 4,674.6 4,779.5 4,883.8 18 Nonfinancial business 3,674.2 3,696.8 3,770.3 3,921.1 3,819.9 3,860.8 3,885.6 3,921.1 4,003.6 4,085.1 4,124.2 19 Farm 135.0 136.3 138.3 141.2 136.7 141.5 143.1 141.2 138.9 142.8 144.9 20 Nonfarm noncorporate 1,137.3 1,122.9 1,129.9 1,142.0 1,132.9 1,135.6 1,137.4 1,142.0 1,154.5 1,165.6 1,170.6 21 Corporate 2,401.9 2,437.6 2,502.0 2,637.9 2,550.3 2,583.7 2,605.0 2,637.9 2,710.1 2,776.7 2,808.8 22 State and local government 1,074.8 1,095.9 1,158.2 1,114.8 1,156.6 1,144.2 1,132.8 1,114.8 1,100.4 1,093.5 1,068.5 23 Foreign credit market debt held in United States 299.7 313.1 381.9 361.6 356.5 348.7 352.4 361.6 376.8 387.6 410.7 24 Bonds 130.5 146.2 227.4 234.6 226.8 222.4 227.6 234.6 237.9 250.4 264.2 25 Bank loans n.e.c 21.6 23.9 24.6 26.1 26.2 25.1 26.3 26.1 28.2 29.6 31.6 26 Commercial paper 81.8 77.7 68.7 41.4 43.3 42.0 39.9 41.4 50.9 48.1 55.8 27 Other loans and advances 65.9 65.3 61.1 59.6 60.3 59.2 58.6 59.6 59.8 59.5 59.1 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 11,647.9 12,209.7 12,919.3 13,522.2 13,032.7 13,156.7 13,315.0 13,522.2 13,713.4 13,929.3 14,090.7 Financial sectors 29 Total credit market debt owed by financial sectors 2,769.2 3,024.9 3,321.0 3,785.7 3,447.3 3,545.3 3,648.1 3,785.7 3,854.5 3,965.4 4,065.0 By instrument 30 U.S. government-related 1,564.2 1,720.0 1,884.1 2,168.4 1,961.5 2,030.5 2,089.8 2,168.4 2,192.7 2,245.0 2,300.2 31 Government-sponsored enterprises securities 402.9 443.1 523.7 700.6 563.7 600.3 638.3 700.6 716.3 748.1 773.5 32 Mortgage pool securities 1,156.5 1,272.0 1,355.6 1,467.8 1,397.8 1,430.1 1,451.5 1,467.8 1,476.4 1,496.9 1,526.7 33 Loans from U.S. government 4.8 4.8 4.8 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 1,205.1 1,304.9 1,436.9 1,617.3 1,485.8 1,514.9 1,558.3 1,617.3 1,661.8 1,720.3 1,764.8 35 Coiporate bonds 649.1 738.2 858.0 969.0 895.9 920.0 944.8 969.0 1,008.1 1,050.6 1,083.9 36 Mortgages 4.8 5.4 8.9 18.7 11.4 14.5 17.5 18.7 20.0 21.2 21.8 37 Bank loans n.e.c 78.4 80.5 67.6 55.3 63.4 56.3 53.4 55.3 54.2 59.9 58.3 38 Open market paper 385.7 394.3 393.5 442.8 408.8 410.3 420.5 442.8 454.1 462.8 473.6 39 Other loans and advances 87.1 86.6 108.9 131.6 106.3 113.8 122.0 131.6 125.4 125.7 127.2 By borrowing sector 40 Government-sponsored enterpnses 407.7 447.9 528.5 700.6 563.7 600.3 638.3 700.6 716.3 748.1 773.5 41 Federally related mortgage pools 1,156.5 1,272.0 1,355.6 1,467.8 1,397.8 1,430.1 1,451.5 1,467.8 1,476.4 1,496.9 1,526.7 42 Private financial sectors 1,205.1 1,304.9 1,436.9 1,617.3 1,485.8 1,514.9 1,558.3 1,617.3 1,661.8 1,720.3 1,764.8 43 Commercial banks 72.3 80.0 84.6 94.5 83.7 86.7 92.6 94.5 95.0 99.9 102.2 44 Bank holding companies 112.3 114.6 123.4 133.6 124.2 126.8 129.6 133.6 136.9 142.9 149.2 45 Funding corporations 139.1 161.6 169.9 199.3 190.7 191.5 200.6 199.3 221.1 229.9 237.4 46 Savings institutions 95.4 88.4 99.6 112.4 98.3 99.7 103.4 112.4 107.7 106.0 107.2 47 Credit unions .0 .0 .2 .5 .3 .3 .4 .5 .4 .3 .4 48 Life insurance companies .0 .0 .2 .6 .3 .3 .3 .6 .6 .6 .6 49 Finance companies 391.9 390.4 390.5 440.7 401.9 414.2 420.9 440.7 456.7 467.2 471.9 50 Mortgage companies 22.2 30.2 30.2 18.7 24.8 20.2 18.5 18.7 16.9 20.6 17.6 51 Real estate investment trusts (REITs) 13.6 13.9 17.4 31.1 21.0 24.8 29.5 31.1 32.8 34.4 35.0 52 Brokers and dealers 19.0 21.7 33.7 34.3 31.3 31.3 29.4 34.3 26.9 26.8 27.4 53 Issuers of asset-backed securities (ABSs) 339.3 404.2 487.2 551.6 ' 509.5 519.2 533.0 551.6 566.8 591.7 615.9 All sectors 54 Total credit market debt, domestic and foreign.... 14,417.1 15,234.6 16,240.3 17,307.9 16,480.0 16,702.0 16,963.1 17,307.9 17,567.8 17,894.6 18,155.7 55 U.S. government securities 4,335.7 4,795.5 5,215.8 5,660.7 5,349.2 5,425.9 5,522.1 5,660.7 5,750.6 5,828.5 5,903.6 56 Municipal securities 1,272.2 1,302.8 1,377.5 1,348.2 1,379.9 1,372.2 1,362.6 1,348.2 1,333.6 1,328.3 1,304.3 57 Corporate and foreign bonds 1,866.5 2,038.9 2,315.2 2,456.5 2,360.9 2,390.0 2,423.9 2,456.5 2,512.9 2,592.6 2,654.8 58 Mortgages 3,962.6 4,094.1 4,269.0 4,475.2 4,301.1 4,360.3 4,419.4 4,475.2 4,517.2 4,585.6 4,654.6 59 Consumer credit 797.2 804.6 863.5 984.7 859.6 891.6 929.4 984.7 987.9 1,026.5 1,060.8 60 Bank loans n.e.c 785.9 776.6 768.2 830.0 776.1 786.7 804.3 830.0 863.3 898.2 917.9 61 Open market paper 565.9 579.0 580.0 623.5 582.0 587.9 599.2 623.5 654.7 673.8 692.7 62 Other loans and advances 831.0 843.1 851.1 929.1 871.2 887.4 902.2 929.1 947.5 961.0 967.1 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 NonfinancialS tatistics • April 1996 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 1994r 1995r iyy i iyy3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 14,417.1 15,234.6 16,240.3 17,307.9 16,480.0 16,702.0 16,963.1 17,307.9 17,567.8 17,894.6 18,155.7 2 Private domestic nonfinancial sectors 2,591.4 2,673.7 2,729.3 3,018.0 2,780.8 2,856.2 2,910.6 3,018.0 2,985.3 2,922.4 2,897.7 3 Households 1,561.4 1,640.6 1,666.0 1,999.6 1,719.5 1,801.9 1,879.3 1,999.6 2,023.8 1,971.7 2,009.5 4 Nonfarm noncorporate business 38.3 38.1 38.8 39.5 38.7 39.1 39.3 39.5 39.6 39.4 39.1 3 Nonfinancial corporate business 230.0 257.8 283.7 335.6 291.5 298.5 306.8 335.6 307.3 319.3 311.5 6 State and local governments 761.7 737.2 740.8 643.3 731.1 716.8 685.3 643.3 614.6 592.1 537.7 / U.S. government 246.9 235.0 230.7 206.5 219.0 215.4 212.6 206.5 203.2 197.1 191.3 8 Rest of the world 928.8 1,022.8 1,146.6 1,255.7 1.192.0 1,205.4 1,240.7 1,255.7 1,324.7 1,402.8 1,492.5 y Financial sectors 10,650.1 11,303.1 12,133.7 12,827.7 12,288.2 12,425.0 12,599.1 12,827.7 13,054.6 13,372.3 13,574.2 10 Government-sponsored enterprises 389.0 457.8 548.0 671.2 570.2 596.0 627.5 671.2 673.3 695.8 708.5 n Federally related mortgage pools 1,156.5 1,272.0 1,355.6 1,467.8 1,397.8 1,430.1 1,451.5 1,467.8 1,476.4 1,496.9 1,526.7 12 Monetary authority 272.5 300.4 336.7 368.2 341.5 351.6 356.8 368.2 367.1 375.7 370.6 13 Commercial banking 2,853.3 2,948.6 3,090.8 3,254.3 3,119.8 3,155.9 3,203.9 3,254.3 3,327.7 3,409.8 3,473.0 14 U.S. chartered banks 2,502.5 2,571.9 2,721.5 2,869.6 2,743.8 2,780.3 2,822.3 2,869.6 2,906.5 2,963.7 3,023.7 IS Foreign banking offices in United States 319.2 335.8 326.0 337.1 331.8 330.8 335.5 337.1 373.6 396.0 401.2 16 Bank holding companies 11.9 17.5 17.5 18.4 18.2 18.3 19.0 18.4 17.9 19.3 17.0 17 Banks in U.S. affiliated areas 19.7 23.4 25.8 29.2 26.0 26.5 27.1 29.2 29.8 30.8 31.0 18 Funding corporations 144.8 162.5 149.5 127.2 142.8 120.0 119.2 127.2 130.2 128.1 128.7 iy Thrift institutions 1,192.6 1,134.5 1,132.7 1.167.6 1,134.2 1,146.1 1,160.4 1,167.6 1,173.4 1,177.3 1,188.1 20 Life insurance companies 1,224.6 1,309.1 1.420.6 1,487.0 1,441.1 1,449.0 1,470.7 1,487.0 1,523.1 1,557.1 1,575.5 21 Other insurance companies 376.6 389.4 422.7 446.4 427.8 433.1 439.1 446.4 451.3 456.1 460.5 22 Private pension funds 530.6 571.7 617.6 664.6 622.8 635.3 645.9 664.6 688.0 709.9 735.8 23 State and local government retirement funds 394.5 417.5 437.3 466.3 447.2 459.2 454.3 466.3 480.7 482.1 493.3 24 Finance companies 488.9 496.4 482.8 551.0 494.5 511.3 524.1 551.0 568.5 586.9 594.1 25 Mortgage companies 60.3 60.5 60.4 37.5 49.5 40.4 37.0 37.5 33.8 41.2 35.2 26 Mutual funds 440.2 566.4 725.9 715.3 733.8 735.0 736.3 715.3 715.9 721.5 728.3 27 Closed-end funds 49.5 67.7 78.6 73.1 81.9 79.0 75.6 73.1 73.0 74.8 77.3 28 Money market mutual funds 403.9 408.6 429.0 459.6 434.1 433.5 437.9 459.6 480.6 508.0 505.5 29 Real estate investment trusts (REITs) 7.0 8.1 8.6 13.3 10.3 11.9 13.3 13.3 13.9 14.7 15.2 30 Brokers and dealers 124.0 122.7 137.5 93.3 115.2 100.8 95.3 93.3 101.0 137.5 137.3 31 Asset-backed securities issuers (ABSs) 317.8 377.9 458.4 516.1 480.3 491.0 502.6 516.1 528.3 550.1 571.4 32 Bank personal trusts 223.5 231.5 240.9 248.0 243.2 245.7 247.7 248.0 248.4 248.8 249.2 RELATION OF LIABILITIES TO FINANCIAL ASSETS 33 Total credit market debt 14,417.1 15,234.6 16,240.3 17,307.9 16,480.0 16,702.0 16,963.1 17,307.9 17,567.8 17,894.6 18,155.7 Other liabilities 34 Official foreign exchange 55.4 51.8 53.4 53.2 56.4 54.9 55.5 53.2 64.1 67.1 65.1 33 Special drawing rights certificates 10.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 10.2 36 Treasury currency 16.3 16.5 17.0 17.6 17.1 17.3 17.5 17.6 17.8 18.0 18.2 3/ Life insurance reserves 405.7 433.0 468.2 502.2 474.4 479.9 496.8 502.2 515.7 528.1 535.6 38 Pension fund reserves 3,655.4 4,055.1 4,471.6 4,693.9 4,469.6 4,524.0 4,675.6 4,693.9 4,905.9 5,110.8 5,356.1 3y Interbank claims 96.4 132.6 190.8 281.4 223.4 239.6 251.9 281.4 272.1 266.3 274.5 40 Deposits at financial institutions 5,024.3 5,050.2 5,154.9 5,296.0 5,158.1 5,186.7 5,212.4 5,296.0 5,390.0 5,572.7 5,639.1 41 Checkable deposits and currency 1,020.9 1,134.4 1,251.7 1,242.0 1,220.5 1,229.9 1,205.0 1,242.0 1,193.9 1,246.3 1,200.7 42 Small time and savings deposits 2,350.7 2,293.5 2,223.2 2,183.3 2,233.9 2,214.4 2,199.1 2,183.3 2,200.1 2,222.7 2,246.9 43 Large time deposits 488.4 415.2 391.7 411.2 382.7 379.3 402.6 411.2 441.1 456.2 485.8 44 Money market fund shares 535.0 539.5 559.6 602.9 575.6 569.2 578.7 602.9 634.0 678.5 702.6 4b Security repurchase agreements 355.8 399.9 471.1 549.4 486.2 522.1 548.1 549.4 603.9 629.5 655.7 46 Foreign deposits 273.5 267.7 257.6 307.1 259.2 271.9 278.9 307.1 316.9 339.6 347.3 41 Mutual fund shares 769.5 992.5 1,375.4 1,477.3 1,414.2 1,445.4 1,515.8 1,477.3 1,552.8 1,664.4 1,793.1 48 Security credit 188.9 217.7 279.0 279.0 283.7 279.1 263.9 279.0 269.5 277.9 280.9 49 Trade payables 957.6 1,003.7 1,038.2 1,154.5 1,033.3 1,068.3 1,093.1 1,154.5 1,155.7 1,170.5 1,197.5 30 Taxes payable 71.2 79.7 84.2 87.3 89.2 82.0 86.3 87.3 93.5 88.6 91.6 31 Investment in bank personal trusts 639.3 660.6 691.3 699.4 685.4 680.0 701.1 699.4 736.3 774.6 817.0 32 Miscellaneous 4,443.8 4,791.2 5,128.9 5,379.0 5,240.0 5,232.3 5,328.2 5,379.0 5,426.2 5,502.1 5,534.0 5533 Total liabilities 3300,,775511..00 3322,,772277..22 3355,,220011..22 3377,,223366..88 35 632 8 3355,,999999..55 3366,,666699..11 3377,,997755..44 Financial assets not included in liabilities ( + ) 54 Gold and special drawing rights 22.3 19.6 20.1 21.1 20.4 20.8 21.0 21.1 22.7 22.9 22.1 33 Corporate equities 4,863.6 5,462.9 6,278.5 6,293.4 6,142.6 5,965.8 6,228.7 6,293.4 6,835.8 7,393.0 8,013.8 36 Household equity in noncorporate business 2,519.4 2,451.7 2,448.6 2,548.9 2,498.8 2,531.2 2,559.7 2,548.9 2,564.6 2,584.2 2,597.6 Floats not included in assets (-) 57 U.S. government checkable deposits 3.8 6.8 5.6 3.4 .3 .9 1.2 3.4 4.2 2.0 .4 38 Other checkable deposits 40.4 42.0 40.7 38.0 36.3 38.7 30.6 38.0 33.3 35.7 27.3 SY Trade credit -192.1 -178.3 -156.6 -122.3 -190.8 -203.6 -203.2 -122.3 -177.9 -193.2 -203.9 Liabilities not identified as assets ( —) 60 Treasury currency -4.7 -4.9 -5.1 -5.4 -5.2 -5.2 -5.3 -5.4 -5.4 -5.5 -5.6 61 Interbank claims -4.2 -9.3 -4.7 -6.5 -7.7 -7.4 -3.4 -6.5 -2.7 -2.9 .1 62 Security repurchase agreements 25.9 27.5 61.8 91.1 63.6 84.5 90.3 91.1 117.6 100.5 114.3 63 Foreign deposits 222.6 217.6 218.3 258.3 217.4 231.4 241.1 258.3 270.1 290.6 291.0 64 Taxes payable 17.8 25.3 26.2 24.2 15.5 21.3 22.0 24.2 7.9 21.3 23.8 63 Miscellaneous -700.7 -578.4 -594.6 -755.9 -546.2 -634.4 -666.2 -755.9 -821.1 -833.3 -882.7 66 Total identified to sectors as assets 38,747.5 41,113.2 44,356.8 46,575.2 44,711.4 44,991.1 45,971.5 46,575.2 47,972.7 49,528.8 51,037.3 1. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. 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 1995 1996 MMeeaassuurree 11999933 11999944 11999955 May June July Aug. Sept. Oct. Nov. Dec. Jan. 1 Industrial production1 111.5 118.1 121.9 121.3 121.4 121.5 122.7 122.8 122.2r 122.4r 122.6r 121.9 Market groupings 2 Products, total 110.0 115.6 118.3 117.5 117.9 118.0 119.2 119.4 118.3r 118.6r 119.0 118.2 3 Final, total 112.7 118.3 121.3 120.6 121.1 121.2 122.4 122.6 121.3r 121.7r 121.9r 121.2 4 Consumer goods 109.5 113.7 115.0 114.1 114.8 114.6 115.9 116.0 114.9r 115.5 115.3r 113.6 5 Equipment 117.5 125.3 131.4 130.8 131.2 131.6 132.9 133.1 131.5 131.3r 132.4r 133.4 6 Intermediate 101.8 107.3 109.0 108.2 108.2 108.5 109.4 109.5 109.2r 109.4r 110.0r 109.1 7 Materials 113.8 122.0 127.4 127.2 126.8 126.8 128.1 128.1 128.1r 128.3r 128.2r 127.6 Industry groupings 8 Manufacturing 112.3 119.7 123.9 123.2 123.3 123.3 124.2 124.9 124.4 124.5' 124.7r 112244..00 9 Capacity utilization, manufacturing (percent)2.. 80.6 83.3 82.9 82.8 82.6 82.3 82.6 82.8 82.T 82.0r 81.8 81.0 10 Construction contracts3 105.1 114.2 115.8 119.0 122.0 118.0 123.0 119.0 116.0 114.0 107.0 n.a. 11 Nonagricultural employment, total4 108.4 111.3 114.4 114.0 114.3 114.3 114.6 114.7 114.8 115.0 115.1 114.9 12 Goods-producing, total 94.3 95.6 98.2 98.2 98.2 97.9 97.9 97.9 97.9 97.8 98.0 97.8 13 Manufacturing, total 94.8 95.1 96.9 97.1 97.0 96.6 96.6 96.4 96.3 96.2 96.4 96.0 14 Manufacturing, production workers 95.3 97.4 98.3 98.6 98.3 97.8 97.9 97.7 97.5 97.4 97.7 97.2 15 Service-producing 112.9 116.3 119.5 119.1 119.4 119.6 119.9 120.1 120.1 120.4 120.6 120.4 16 Personal income, total 141.3 148.3 157.4 155.9 157.0 157.8 157.9 158.7 159.9 160.2 n.a. n.a. 17 Wages and salary disbursements 136.0 142.6 150.5 148.5 149.9 151.2 150.9 151.9 153.2 153.1 n.a. n.a. 18 Manufacturing 119.3 125.0 129.3 128.5 128.8 129.0 129.3 129.6 129.5 129.6 n.a. n.a. 19 Disposable personal income 142.4 149.2 n.a. 156.5 157.4 158.2 158.3 159.0 160.2 160.6 n.a. n.a. 20 Retail sales5 134.7 145.1 152.6 152.2 153.5 152.9 153.9 153.8 153.4 154.7r 155.7r 155.2 Prices6 21 Consumer (1982-84=100) 144.5 148.2 152.4 152.2 152.5 152.5 152.9 153.2 153.7 153.6 153.5 154.4 22 Producer finished goods (1982=100) 124.7 125.5 127.9 128.1 128.2 128.2 128.1 127.9 128.5 128.6 129.0 129.5 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For 5. Based on data from U.S. Department of Commerce, Survey of Current Business. the ordering address, see the inside front cover. The latest historical revision of the industrial 6. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the price production index and the capacity utilization rates was released in November 1995. See "A indexes can be obtained from the U.S. Department of Labor, Bureau of Labor Statistics, Revision to Industrial Production and Capacity Utilization, 1991-95," Federal Reserve Monthly Labor Review. Bulletin, vol. 82 (January 1996), pp. 16—25. For a detailed description of the industrial NOTE. Basic data (not indexes) for series mentioned in notes 4 and 5, and indexes for series production index, see "Industrial Production: 1989 Developments and Historical Revision," mentioned in notes 3 and 6, can also be found in the Survey of Current Business. Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. Figures for industrial production for the latest month are preliminary, and many figures for 2. Ratio of index of production to index of capacity. Based on data from the Federal the three months preceding the latest month have been revised. See "Recent Developments in Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other sources. Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 1990), pp. 3. Index of dollar value of total construction contracts, including residential, nonresiden- 411-35. See also "Industrial Production Capacity and Capacity Utilization since 1987," tial, and heavy engineering, from McGraw-Hill Information Systems Company, F.W. Dodge Federal Reserve Bulletin, vol. 79 (June 1993), pp. 590-605. 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 1995 1996 CCaatteeggoorryy 11999933 11999944 11999955 June July Aug. Sept. Oct. Nov. Dec. Jan. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 128,040 131,056 132,304 131,869 132,519 132,211 132,591 132,648 132,442 132,284 132,837 Employment 2 Nonagricultural industries3 116,232 119,651 121,460 121,034 121,550 121,417 121,867 121,944 121,734 121,598 121,615 3 Agriculture 3,074 3,409 3,440 3,451 3,409 3,362 3,273 3,455 3,276 3,306 3,548 Unemployment 4 Number 8,734 7,996 7,404 7,384 7,559 7,431 7,451 7,249 7,432 7,380 7,674 5 Rate (percent of civilian labor force) 6.8 6.1 5.6 5.6 5.7 5.6 5.6 5.5 5.6 5.6 5.8 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 110,525 113,423 116,597 116,547 116,575 116,838 116,932 117,000 117,212 117,373 117,172 7 Manufacturing 18,003 18,064 18,406 18,428 18,353 18,357 18,322 18,301 18,272 18,316 18,244 8 Mining 611 604 579 582 577 575 573 571 567 566 565 9 Contract construction 4,642 4,916 5,244 5,230 5,226 5,233 5,262 5,287 5,295 5,302 5,315 10 Transportation and public utilities 5,787 5,842 6,194 6,192 6,195 6,217 6,206 6,217 6,240 6,251 6,242 11 Trade 25,675 26,362 27,156 27,118 27,184 27,177 27,245 27,256 27,362 27,362 27,317 12 Finance 6,712 6,789 6,948 6,930 6,938 6,947 6,957 6,977 6,991 7,001 7,009 13 Service 30,278 31,805 32,788 32,784 32,820 32,986 33,047 33,076 33,185 33,250 33,167 14 Government 18,817 19,041 19,282 19,283 19,282 19,346 19,320 19,315 19,300 19,325 19,313 1. Beginning January 1994, reflects redesign of current population survey and population 4. Includes all full- and part-time employees who worked during, or received pay for, the controls from the 1990 census. pay period that includes the twelfth day of the month; excludes proprietors, self-employed 2. Persons sixteen years of age and older, including Resident Armed Forces. Monthly persons, household and unpaid family workers, and members of the armed forces. Data are figures are based on sample data collected during the calendar week that contains the twelfth adjusted to the March 1992 benchmark, and only seasonally adjusted data are available at this day; annual data are averages of monthly figures. By definition, seasonality does not exist in time. 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 • April 1996 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1995 1995 1995 Ql Q2 Q3 Q4r Ql Q2 Q3 Q4 Ql Q2 Q3 Q4r Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (percent)2 1 Total industry 121.8 121.4 122.3 122.4 143.7 145.0 146.4 147.8 84.8 83.7 83.6 82.8 2 Manufacturing 124.0 123.3 124.1 124.5 147.2 148.7 150.3 152.0 84.3 82.9 82.6 82.0 3 Primary processing3 119.1 117.7 117.1 117.1 133.4 134.4 135.4 136.4 89.3 87.6 86.5 85.8 4 Advanced processing4 126.3 126.0 127.5 128.1 153.8 155.6 157.5 159.5 82.2 81.0 80.9 80.3 5 Durable goods 132.0 131.4 133.0 134.2 156.8 158.9 161.1 163.4 84.2 82.7 82.5 82.1 6 Lumber and products 105.3 102.9 104.6 105.9 117.4 118.0 118.6 119.2 89.7 87.2 88.2 88.8 / Primary metals 121.2 119.1 118.2 118.7 126.9 127.5 128.0 128.6 95.6 93.4 92.3 92.3 8 Iron and steel 125.4 121.9 121.3 121.5 130.9 131.7 132.5 133.2 95.8 92.6 91.6 91.2 y Nonferrous 115.6 115.1 113.9 114.8 121.5 121.9 122.2 122.5 95.2 94.5 93.2 93.7 10 Industrial machinery and equipment 171.9 174.4 178.9 186.4 194.8 199.6 204.5 209.7 88.2 87.4 87.5 88.9 u Electrical machinery 167.9 171.2 178.4 182.9 191.6 197.6 203.9 210.4 87.7 86.7 87.5 86.9 12 Motor vehicles and parts 147.7 140.5 140.7 140.5 172.1 174.2 176.4 178.7 85.8 80.6 79.8 78.6 13 Aerospace and miscellaneous transportation equipment 89.6 88.7 86.9 79.3 132.2 132.2 132.1 132.1 67.8 67.1 65.8 60.0 14 Nondurable goods 115.2 114.4 114.3 113.9 136.6 137.5 138.4 139.4 84.3 83.2 82.6 81.7 15 Textile mill products 116.4 113.7 110.9 109.6 129.1 130.1 131.1 132.1 90.2 87.5 84.6 83.0 16 Paper and products 121.0 121.2 119.5 117.9 130.6 131.5 132.5 133.4 92.7 92.1 90.2 88.4 17 Chemicals and products 125.3 124.0 124.6 125.9 153.7 154.7 155.6 156.6 81.5 80.1 80.1 80.4 18 Plastics materials 127.5 122.9 118.3 132.1 133.8 135.4 96.5 91.9 87.3 19 Petroleum products 108.3 108.0 109.2 107.7 116.0 116.2 116.4 116.6 93.3 92.9 93.8 92.4 20 Mining 100.6 100.7 100.2 98.1 112.0 112.0 112.0 112.1 89.8 89.9 89.4 87.5 21 Utilities 118.4 120.7 124.7 123.0 134.4 134.8 135.2 135.6 88.0 89.5 92.3 90.7 22 Electric 118.9 120.4 125.0 123.7 131.7 132.1 132.5 133.0 90.3 91.1 94.3 93.0 1973 1975 Previous cycle5 Latest cycle6 1995 1995 1996 High Low High Low High Low Jan. Aug. Sept. Oct.r Nov.r Dec. Jan.p Capacity utilization rate (percent)" 1 Total industry 89.2 72.6 87.3 71.8 84.9 78.0 85.1 83.8 83.6 82.9 82.8 82.7 81.9 2 Manufacturing 88.9 70.8 87.3 70.0 85.2 76.6 84.6 82.6 82.8 82.1 82.0 81.8 81.0 3 Primary processing3 92.2 68.9 89.7 66.8 89.0 77.9 89.7 86.1 86.8 86.0 85.9 85.6 85.0 4 Advanced processing4 87.5 72.0 86.3 71.4 83.5 76.1 82.5 81.2 81.1 80.5 80.3 80.1 79.3 5 Durable goods 88.8 68.5 86.9 65.0 84.0 73.7 84.4 82.6 83.0 82.0 82.2 82.1 81.4 6 Lumber and products 90.1 62.2 87.6 60.9 93.3 76.1 91.4 87.5 89.4 88.8 88.6 89.1 87.4 7 Primary metals 100.6 66.2 102.4 46.8 92.8 74.2 96.0 90.1 94.4 90.1 94.1 92.6 94.3 8 Iron and steel 105.8 66.6 110.4 38.3 95.7 72.0 96.1 88.9 95.7 86.5 95.0 92.0 95.7 9 Nonferrous 92.9 61.3 90.5 62.2 88.7 75.2 95.7 91.6 92.6 94.6 93.0 93.4 92.5 10 Industrial machinery and equipment 96.4 74.5 92.1 64.9 84.0 71.8 88.7 87.8 87.9 88.4 88.8 89.5 89.2 11 Electrical machinery 87.8 63.8 89.4 71.1 84.9 77.0 87.9 87.7 87.8 87.6 87.2 86.0 84.4 12 Motor vehicles and parts 93.4 51.1 93.0 44.5 85.1 56.6 85.9 80.6 80.9 78.5 78.7 78.7 75.3 13 Aerospace and miscellaneous transportation equipment 77.0 66.6 81.1 66.9 88.4 78.8 67.7 66.0 65.0 60.6 58.8 60.6 62.4 14 Nondurable goods 87.9 71.8 87.0 76.9 86.7 80.3 84.9 82.6 82.4 82.2 81.6 81.3 80.5 15 Textile mill products 92.0 60.4 91.7 73.8 92.1 78.8 91.0 85.7 84.1 84.3 82.7 81.8 79.7 16 Paper and products 96.9 69.0 94.2 82.0 94.8 86.7 92.9 89.6 89.2 90.0 87.1 88.0 87.0 17 Chemicals and products 87.9 69.y 85.1 70.1 85.9 79.0 82.3 80.0 80.4 81.1 80.3 79.9 79.3 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 100.6 85.4 88.7 89.4 90.3 19 Petroleum products 96.7 81.1 89.5 68.2 88.5 84.6 92.9 93.2 94.5 91.8 92.2 93.3 94.2 20 Mining 94.4 88.4 96.6 80.6 86.5 86.1 89.8 89.2 89.2 87.6 87.5 87.4 87.2 21 Utilities 95.6 82.5 88.3 76.2 92.6 83.1 87.3 95.3 90.7 89.8 90.9 91.4 90.6 22 Electric 99.0 82.7 88.3 78.7 94.8 86.7 89.7 98.1 92.5 93.1 93.0 93.0 92.0 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For 3. Primary processing includes textiles; lumber; paper; industrial chemicals; synthetic the ordering address, see the inside front cover. The latest historical revision of the industrial materials; fertilizer materials; petroleum products; rubber and plastics; stone, clay, and glass; production index and the capacity utilization rates was released in November 1995. See "A primary metals; and fabricated metals. Revision to Industrial Production and Capacity Utilization, 1991-95," Federal Reserve 4. Advanced processing includes foods; tobacco; apparel; furniture and fixtures; printing Bulletin, vol. 82 (January 1996), pp. 16—25. For a detailed description of the industrial and publishing; chemical products such as drugs and toiletries; agricultural chemicals; leather production index, see "Industrial Production: 1989 Developments and Historical Revision," and products; machinery; transportation equipment; instruments; and miscellaneous manufac- Federal Resen-e Bulletin, vol. 76 (April 1990), pp. 187-204. tures. 2. Capacity utilization is calculated as the ratio of the Federal Reserve's seasonally adjusted 5. Monthly highs, 1978-80; monthly lows, 1982. 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 1995 1996 GGrroouupp p p r o o r - - a 1 v 9 g 9 . 5 r tion Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct/ Nov.1" Dec. Jan.p Index (1987 = 100) MAJOR MARKETS 1 Total index 100.0 121.9 121.8 121.7 121.9 121.4 121.3 121.4 121.5 122.7 122.8 122.2 122.4 122.6 121.9 2 Products 60.6 118.3 118.4 118.3 118.5 117.7 117.5 117.9 118.0 119.2 119.4 118.3 118.6 119.0 118.2 3 Final products 46.3 121.3 121.3 121.1 121.5 120.9 120.6 121.1 121.2 122.4 122.6 121.3 121.7 121.9 121.2 4 Consumer goods, total 28.6 115.0 115.5 114.9 115.3 114.4 114.1 114.8 114.6 115.9 116.0 114.9 115.5 115.3 113.6 5 Durable consumer goods 5.6 124.2 127.1 127.3 126.0 124.9 121.6 122.3 121.4 124.0 125.8 123.4 124.9 126.4 121.4 6 Automotive products 2.5 130.7 134.4 135.3 134.4 131.7 127.1 129.1 125.3 130.7 132.9 128.5 130.5 132.9 126.6 7 Autos and trucks 1.6 131.4 136.6 138.2 137.5 132.8 127.4 129.5 123.9 132.0 133.1 128.6 129.8 132.1 123.4 8 Autos, consumer .9 103.1 111.4 111.5 111.2 105.5 99.4 99.2 101.0 100.6 102.6 100.2 100.2 99.5 92.0 y Trucks, consumer .7 181.7 180.6 185.2 183.6 180.9 177.1 183.6 163.9 188.2 187.7 179.1 182.8 190.6 179.9 10 Auto parts and allied goods .9 127.8 128.4 127.9 126.7 128.0 125.0 126.8 126.6 126.6 130.8 126.7 130.2 133.0 131.4 N Other 3.0 118.6 120.8 120.4 118.6 119.0 116.7 116.3 118.1 118.1 119.6 118.9 120.0 120.7 116.8 12 Appliances, televisions, and air conditioners .7 135.6 137.9 135.0 132.2 131.6 131.2 131.4 132.2 135.8 139.4 140.1 145.3 142.7 131.4 13 Carpeting and furniture .8 105.8 106.4 108.3 106.1 109.1 103.0 101.8 107.9 104.4 106.9 105.6 104.3 107.0 104.9 14 Miscellaneous home goods 1.5 118.3 121.3 120.7 119.7 118.8 118.1 118.0 117.4 118.0 117.8 116.9 117.6 118.6 117.0 15 Nondurable consumer goods 23.0 112.8 112.7 111.9 112.7 111.8 112.4 113.1 113.0 113.9 113.7 112.9 113.3 112.6 111.8 16 Foods and tobacco 10.3 111.3 111.5 110.1 111.5 111.2 111.5 113.1 112.8 111.8 111.6 111.1 111.3 110.5 109.7 17 Clothing 2.4 95.0 99.6 98.3 98.7 96.9 96.7 94.6 93.6 93.9 93.4 92.9 91.9 90.9 88.4 18 Chemical products 4.5 131.1 131.3 129.2 129.7 126.9 127.3 128.6 128.6 132.6 134.0 135.7 134.3 134.1 133.4 19 Paper products 2.9 106.6 106.0 106.6 105.9 106.9 106.5 106.3 107.6 106.7 107.3 106.6 108.4 106.1 105.9 20 Energy 2.9 115.8 110.9 113.1 113.9 112.2 115.8 115.8 116.1 122.3 119.0 113.1 116.8 117.6 117.7 21 Fuels .9 108.8 107.6 108.7 110.4 108.8 108.2 108.8 108.2 108.4 111.4 107.3 108.2 108.7 109.3 22 Residential utilities 2.1 118.7 112.2 114.8 115.2 113.5 119.0 118.7 119.4 128.2 122.2 115.4 120.3 121.4 121.2 23 Equipment 17.7 131.4 130.4 131.0 131.4 131.3 130.8 131.2 131.6 132.9 133.1 131.5 131.3 132.4 133.4 24 Business equipment 13.7 155.7 153.2 154.3 155.1 155.0 154.3 155.1 155.7 157.5 158.2 156.5 156.8 158.5 160.0 25 Information processing and related 5.7 198.1 187.3 188.7 191.6 194.5 193.9 196.0 197.2 201.0 203.0 206.5 207.7 210.0 212.9 26 Computer and office equipment 1.4 373.4 324.2 334.9 343.6 356.4 362.1 363.2 371.7 379.6 390.0 402.9 417.4 430.8 441.8 27 Industrial 4.0 127.4 126.5 127.2 126.9 126.1 126.5 126.2 127.1 129.1 128.7 128.6 129.1 129.1 128.7 28 Transit 2.6 136.3 143.8 145.9 145.7 142.9 139.6 140.3 139.8 138.0 137.9 122.3 119.7 124.3 128.2 29 Autos and trucks 1.2 140.1 145.6 147.7 146.2 141.5 137.8 139.5 139.9 141.3 143.3 135.7 134.2 135.3 128.5 30 Other 1.4 123.3 127.2 127.2 126.3 123.2 122.7 122.6 122.6 122.2 123.3 120.9 121.9 122.1 121.6 31 Defense and space equipment 3.3 65.9 68.9 68.2 67.8 67.1 66.8 66.8 66.5 66.1 65.2 64.4 62.8 62.1 61.6 32 Oil and gas well drilling .6 87.1 87.7 88.8 87.2 89.3 90.5 86.8 88.4 89.5 88.3 83.5 83.1 83.8 85.1 33 Manufactured homes .2 152.7 153.1 144.6 145.8 146.6 148.3 149.6 148.6 155.9 158.0 158.9 161.8 164.4 34 Intermediate products, total 14.3 109.0 109.5 109.5 109.2 108.2 108.2 108.2 108.5 109.4 109.5 109.2 109.4 110.0 109.1 35 Construction supplies 5.3 108.2 109.7 109.5 109.2 108.0 106.6 107.2 107.3 107.0 108.4 108.3 109.2 110.6 109.1 36 Business supplies 9.0 109.6 109.5 109.6 109.3 108.5 109.4 109.1 109.5 111.0 110.3 109.9 109.7 109.8 109.2 37 Materials 39.4 127.4 127.1 127.1 127.2 127.0 127.2 126.8 126.8 128.1 128.1 128.1 128.3 128.2 127.6 38 Durable goods materials 20.8 141.5 140.0 140.2 140.3 139.8 139.8 139.7 140.2 142.3 144.1 143.9 145.2 144.7 144.3 39 Durable consumer parts 4.0 138.5 142.9 142.6 140.4 137.9 135.9 135.8 133.9 138.4 139.8 138.6 140.0 139.5 136.9 40 Equipment parts 7.5 163.1 154.0 155.4 157.3 158.9 160.3 161.7 164.4 167.1 169.1 169.4 170.9 171.5 171.3 41 Other 9.2 126.1 127.7 127.0 127.0 125.9 125.6 124.5 124.4 124.9 126.8 126.5 127.6 126.5 126.9 42 Basic metal materials 3.1 125.6 126.7 126.4 126.7 126.1 125.5 123.5 124.9 123.1 127.0 124.3 128.4 126.3 128.5 43 Nondurable goods materials 8.9 119.7 122.2 121.5 121.5 121.7 122.2 120.4 118.9 118.8 117.8 118.7 116.7 117.1 116.0 44 Textile materials 1.1 109.2 115.1 113.5 113.6 113.2 112.8 109.0 102.6 109.2 106.2 107.3 104.8 103.0 100.9 45 Paper materials 1.8 120.4 120.9 121.6 122.5 122.3 125.6 121.0 123.9 120.4 117.0 121.4 114.3 115.0 113.3 46 Chemical materials 3.9 124.4 126.4 125.7 125.6 125.6 126.2 125.2 124.4 123.1 123.3 122.9 122.7 121.9 121.4 47 Other 2.1 116.5 119.5 117.8 117.4 118.4 116.9 117.4 113.8 114.6 115.1 114.6 114.1 118.0 116.7 48 Energy materials 9.7 106.5 106.2 106.4 106.4 106.6 107.2 107.2 107.5 108.5 105.8 105.5 105.4 105.7 105.0 49 Primary energy 6.3 101.8 102.0 102.3 102.1 102.2 102.3 103.0 102.3 101.4 101.2 101.7 100.4 100.3 99.8 50 Converted fuel materials 3.3 116.0 114.3 114.5 114.9 115.5 116.9 115.5 118.1 122.8 115.0 113.1 115.3 116.5 115.5 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.2 121.5 121.3 121.1 121.3 120.9 121.0 121.1 121.2 122.3 122.4 121.9 122.1 122.3 121.8 52 Total excluding motor vehicles and parts 95.2 120.8 120.5 120.4 120.6 120.3 120.5 120.5 120.7 121.7 121.8 121.3 121.5 121.7 121.2 53 Total excluding computer and office equipment 98.2 118.1 118.6 118.4 118.5 117.9 117.8 117.8 117.8 118.9 118.9 118.1 118.2 118.3 117.4 54 Consumer goods excluding autos and trucks . 27.0 113.9 114.1 113.4 113.8 113.1 113.3 113.9 114.0 114.8 114.9 114.0 114.6 114.2 113.0 55 Consumer goods excluding energy 25.7 114.9 116.0 115.1 115.4 114.6 113.9 114.7 114.5 115.1 115.7 115.1 115.4 115.0 113.2 56 Business equipment excluding autos and trucks 12.5 157.0 153.7 154.7 155.8 156.2 155.8 156.5 157.2 158.9 159.5 158.4 158.9 160.6 163.0 57 Business equipment excluding computer and office equipment 12.2 133.0 134.3 134.6 134.8 133.7 132.5 133.2 133.2 134.4 134.3 131.6 130.7 131.4 132.2 58 Materials excluding energy 29.7 134.8 134.6 134.5 134.6 134.3 134.4 133.8 133.7 135.1 136.1 136.2 136.4 136.3 135.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • April 1996 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1992 Group S co IC de p p o ro r- - a 1 v 9 g 9 . 5 r tion Apr. May June July Aug. Sept. Oct.r Nov/ Dec Index (1987 = 100) MAJOR INDUSTRIES 59 Total index 100.0 121.9 121.8 121.7 121.9 121.4 121.3 121.4 121.5 122.7 122.8 122.2 122.4 122.6 121.9 60 Manufacturing 85.4 123.9 124.1 123.9 124.0 123.5 123.2 123.3 123.3 124.2 124.9 124.4 124.5 124.7 124.0 61 Primary processing 26.6 117.6 119.4 119.1 118.9 118.2 117.9 117.1 116.9 116.6 117.8 117.0 117.2 117.1 116.4 62 Advanced processing 58.9 126.8 126.4 126.2 126.5 126.0 125.7 126.3 126.3 127.8 128.2 127.9 128.0 128.3 127.6 63 Durable goods 45.0 132.5 131.8 132.1 132.2 131.6 131.1 131.5 131.5 133.2 134.4 133.5 134.3 134.8 134.2 64 Lumber and products "24 2.0 104.5 107.1 105.0 103.9 103.9 101.7 103.0 103.7 103.7 106.2 105.7 105.6 106.4 104.5 65 Furniture and fixtures 25 1.4 111.6 113.8 114.9 113.4 111.4 110.8 111.3 111.1 110.9 112.0 110.9 110.3 109.3 108.0 66 Stone, clay, and glass products 32 2.1 104.0 105.5 104.7 104.7 103.4 104.1 103.8 103.2 103.0 103.8 104.5 104.6 104.0 103.4 67 Primary metals 33 3.1 119.2 121.5 120.8 121.3 120.2 119.5 117.5 118.3 115.4 121.0 115.7 121.1 119.3 121.6 68 Iron and steel 331,2 1.7 122.4 125.5 124.9 125.8 123.5 123.0 119.2 119.3 117.7 127.0 115.1 126.5 122.8 128.0 69 Raw steel 331PT .1 114.7 114.9 116.4 116.8 114.7 113.0 112.9 111.5 114.2 118.6 111.3 116.4 118.0 70 Nonferrous 333-6,9 1.4 114.7 116.2 115.3 115.4 115.7 114.8 114.9 116.5 111.9 113.2 115.8 114.0 114.5 11X5 71 Fabricated metal products... 34 5.0 113.9 114.3 115.0 114.3 112.3 113.7 113.7 112.4 114.3 115.1 114.0 114.5 115.1 113.8 72 Industrial machinery and equipment 35 8.0 177.7 171.4 171.8 172.4 174.3 174.6 174.4 176.0 179.5 181.3 183.8 186.2 189.3 190.2 73 Computer and office equipment 357 1.8 373.4 324.2 334.9 343.6 356.4 362.1 363.2 371.7 379.6 390.0 402.9 417.4 430.8 441.8 74 Electrical machinery 36 7.2 174.9 166.7 167.7 169.4 169.6 171.1 173.0 175.7 178.7 180.8 182.4 183.6 182.8 181.3 75 Transportation equipment.. . 37 9.5 113.4 117.8 118.5 118.0 115.7 113.2 113.4 111.6 114.1 114.1 109.3 108.6 110.0 108.4 76 Motor vehicles arid parts . 371 4.8 141.9 147.3 148.4 147.6 143.0 138.8 139.7 136.7 142.1 143.3 139.7 140.7 141.2 135.5 77 Autos and light trucks . 371PT 2.5 131.3 137.1 138.6 137.9 132.9 127.3 129.2 124.3 131.6 132.8 128.4 129.6 131.5 122.7 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.7 85.9 89.5 89.7 89.5 89.4 88.5 88.1 87.6 87.2 85.9 80.0 77.7 80.0 82.4 79 Instruments 38 5.4 110.7 110.8 110.5 110.9 111.2 109.6 110.9 110.2 111.4 111.3 111.4 111.2 110.8 110.7 80 Miscellaneous 39 1.3 122.7 123.5 124.1 123.3 122.7 122.3 123.1 121.4 122.4 122.9 122.2 123.3 123.6 123.0 81 Nondurable goods 40.5 114.3 115.6 114.8 115.1 114.6 114.4 114.3 114.3 114.3 114.4 114.3 113.8 113.5 112.6 82 Foods 20 9.4 115.3 115.9 114.2 115.0 115.1 115.9 116.1 115.3 115.5 115.5 115.4 115.2 114.9 114.7 83 Tobacco products 21 1.6 90.0 88.6 88.1 92.3 92.0 89.3 96.4 99.1 91.3 90.2 88.2 89.2 86.2 83.7 84 Textile mill products 22 1.8 112.6 117.2 115.9 116.2 117.2 113.6 110.4 109.9 112.4 110.5 111.1 109.3 108.3 105.7 85 Apparel products 23 2.2 95.8 100.6 99.8 99.3 97.4 97.5 95.5 94.8 94.5 94.5 93.3 92.5 92.5 90.3 86 Paper and products 26 3.6 119.8 121.0 121.0 121.1 121.2 122.4 119.9 121.3 118.6 118.5 119.7 116.3 117.7 116.6 87 Printing and publishing 27 6.8 99.4 100.1 100.3 99.3 99.2 99.0 98.6 99.0 100.5 99.8 98.9 99.4 98.9 98.2 88 Chemicals and products .... 28 9.9 124.9 126.2 124.7 125.0 123.5 124.0 124.4 124.0 124.4 125.3 126.7 125.7 125.4 124.7 89 Petroleum products 29 1.4 108.3 107.7 108.0 109.1 107.8 107.4 108.6 109.0 108.5 110.0 106.9 107.5 108.8 109.9 90 Rubber and plastic products . 30 3.5 139.4 141.8 141.9 141.1 140.8 138.2 137.8 137.7 138.7 139.8 139.7 140.1 139.2 138.3 91 Leather and products 31 .3 81.3 85.4 85.1 85.8 82.7 83.0 81.2 78.7 80.8 80.5 79.7 78.3 77.0 75.6 92 Mining 6.9 99.9 100.6 100.8 100.3 100.6 100.5 101.0 100.7 100.0 100.0 98.2 98.1 98.0 97.7 93 Metal 10 .5 169.4 164.2 165.5 164.5 164.6 164.3 166.8 172.2 172.1 170.8 178.3 175.7 174.1 173.7 94 Coal 12 1.0 112.9 116.0 115.1 114.0 112.3 110.8 112.2 117.0 109.7 116.2 112.3 109.5 108.5 103.6 95 Oil and gas extraction 13 4.8 91.8 92.4 93.0 92.2 93.1 93.4 93.6 91.9 92.4 91.2 89.2 89.7 89.8 90.5 96 Stone and earth minerals 14 .6 112.3 113.1 111.3 114.2 112.7 111.1 111.9 113.5 111.6 113.1 112.4 111.7 112.2 111.4 97 Utilities 7.7 121.7 117.3 118.5 119.2 118.8 122.1 121.0 122.7 128.8 122.7 121.6 123.3 124.1 123.0 98 Electric 491,493PT 6.1 122.1 118.0 119.1 119.5 118.9 121.2 121.2 122.2 130.0 122.7 123.7 123.6 123.8 122.5 99 Gas 492.493PT 1.6 120.0 114.3 116.4 118.0 118.4 125.5 120.6 124.5 124.3 122.4 113.6 121.9 125.3 125.0 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.6 122.8 122.8 122.4 122.6 122.3 122.2 122.3 122.5 123.1 123.8 123.4 123.6 123.7 123.3 101 Manufacturing excluding office and computing machines ... 83.7 119.5 120.4 120.0 120.1 119.3 118.9 119.1 118.9 119.8 120.3 119.6 119.6 119.6 118.7 Gross value (billions of 1992 dollars, annual rates) MAJOR MARKETS 102 Products, total 2,002.9 2,244.7 2,247.3 2,246.9 2,252.0 2,236.5 2,231.5 2,239.1 2,238.8 2,257.8 2,268.1 2,240.3 2,251.7 2,261.0 2,244.6 103 Final 1,552.2 1,747.9 1,748.3 1,748.6 1,755.0 1,743.1 1,737.4 1,745.6 1,743.2 1,760.5 1,768.2 1,741.9 1,752.3 1,758.0 1,745.6 104 Consumer goods 1,033.4 1,129.6 1,134.6 1,131.1 1,135.5 1,125.2 1,122.3 1,128.4 1,124.0 1,135.7 1,141.1 1,125.1 1,135.1 1,134.9 1,118.6 105 Equipment 518.8 618.2 613.8 617.5 619.5 617.9 615.1 617.1 619.2 624.8 627.1 616.7 617.2 623.1 627.1 106 Intermediate 450.7 496.8 499.0 498.3 497.0 493.4 494.0 493.5 495.6 497.3 499.9 498.4 499.4 503.0 498.9 1. Data in this table also appear in the Board's G. 17 (419) monthly statistical release. For Bulletin, vol. 82 (January 1996), pp. 16-25. For a detailed description of the industrial the ordering address, see the inside front cover. The latest historical revision of the industrial production index, see "Industrial Production: 1989 Developments and Historical Revision," production index and the capacity utilization rates was released in November 1995. See "A Federal Reserve Bulletin, vol. 76, (April 1990), pp. 187-204. Revision to Industrial Production and Capacity Utilization, 1991-95," 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 1995 IItteemm 11999933 11999944 11999955 Mar. Apr. May June July Aug. Sept. Oct.r Nov. Dec. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,199 1,372 1,331 1,235 1,243 1,243 1,275 1,355 1,368 1,405 1,384 1,448r 1,478 ? One-family 987 1,068 997 911 905 930 958 1,011 1,044 1.073 1,051 l,069r 1,110 3 Two-family or more 213 303 335 324 338 313 317 344 324 332 333 379r 368 4 Started 1,288 1,457 1,351 1,241r l,278r 1,300r 1,30 lr 1,450r l,401r 1,401r 1,351 l,458r 1,385 5 One-family 1,126 1,198 1,073 992r 1,017r l,005r l,036r 1,125r l,135r 1,130r 1,109 1,129r 1,116 6 Two-family or more 162 259 277 249r 261r 295r 265r 325 266 271 242 329r 269 7 Under construction at end of period' 680 762 769 763 755 756 761 773 781 785 795 F 8 One-family 543 558 1 552 544 536 534 538 548 553 562 566 1 9 Two-family or more 137 204 n.a. 217 219 219 222 223 225 228 223 229 n.a. 10 Completed 1,193 1,347 1 1,443 1,334 1,342 1,256 1,345 1,246 1,254 1,312 1,337 1 11 One-family 1,040 1,160 1 1,222 1,089 1,072 1,053 1,037 1,012 998 1,032 1,043 1 12 Two-family or more 153 187 i 221 245 270 203 308 234 256 280 294 f 13 Mobile homes shipped 254 304 340 326r 327r 335r 333r 337r 344r 352r 354 355 352 Merchant builder activity in one-family units 14 Number sold 666 670 n.a. 612 607 667 723 781 703 682 663 649 n.a. 15 Number for sale at end of period' 293 338 n.a. 347 348 347 347 344 349 352 362 375 n.a. Price of units sold (thousands of dollars)2 16 Median 126.1 130.4 n.a. 130.0 134.0 133.9 133.7 131.0 134.9 130.0 137.0 132.4 n.a. 17 Average 147.6 153.7 n.a. 153.3 157.8 158.0 160.2 154.2 162.0 156.0 155.3 155.5 n.a. EXISTING UNITS (one-family) 18 Number sold 3,800 3,946 3,812 3,620 3,390 3,550 3,800 3,990 4,120 4,150 4,110 4,040 3,910 Price of units sold (thousands of dollars)2 19 Median 106.5 109.6 112.2 107.9 108.1 109.0 116.2 115.9 117.6 115.2 113.3 114.3 113.8 20 Average 133.1 136.4 138.4 134.5 134.2 135.4 143.3 142.2 144.4 140.5 138.7 139.7 138.6 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 464,504 506,904 527,169 523,467 522,094 514,515 518,934 528,673r 528,397r 535,106r 537,589 532,856 537,452 22 Private 339,161 376,566 384,366 383,301 382,220 376,148 377,486 384,307r 385,653' 386,960' 390,111 387,824 392,31 1 23 Residential 210,455 238,884 236,175 237,894 234,109 231,342 228,388 231,002r 233,982' 237.618' 238,302 239,459 241,163 24 Nonresidential 128,706 137,682 148,191 145,407 148,111 144,806 149,098 153,305r 151,671' 149,342' 151,809 148,365 151,148 25 Industrial buildings 19,533 21,121 24,138 23,911 24,707 24,760 24,416 24,399r 24,202' 24,096' 24,940 24,579 24,050 26 Commercial buildings 42,627 48,552 55,261 55,439 55,011 51,779 55,420 57,015r 55,709 55,079' 56,576 55,842 58,888 27 Other buildings 23,626 23,912 23,993 23,062 23,948 24,319 23,447 24,525r 24,015' 23,962' 24,557 23,760 24,063 28 Public utilities and other 42,920 44,097 44,799 42,995 44,445 43,948 45,815 47,366r 47,745' 46,205' 45,736 44,184 44,147 29 Public 125,342 130,337 142,806 140,166 139,874 138,367 141,447 144,366' 142,744' 148,146' 147,478 145,032 145,141 30 Military 2,454 2,319 2,938 3,048 2,736 2,442 2,569 3,124r 3,010' 3,090' 3,164 3,169 3,194 31 Highway 37,431 39,882 42,258 40,667 41,158 38,657 40,875 44,274' 42,902' 42,942' 44,416 43,319 44,286 32 Conservation and development 5,978 6,228 6,425 7,139 6,273 5,531 6,117 6,603' 6,769' 6,469' 6,483 6,189 6,028 33 Other 79,479 81,908 91,185 89,312 89,707 91,737 91,886 90,365' 90,063' 95,645' 93,415 92,355 91,633 1. Not at annual rates. SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, which are 2. Not seasonally adjusted. private, domestic shipments as reported by the Manufactured Housing Institute and season- 3. Recent data on value of new construction may not be strictly comparable with data for ally adjusted by the Census Bureau, and (2) sales and prices of existing units, which are previous periods because of changes by the Bureau of the Census in its estimating techniques. published by the National Association of Realtors. All back and current figures are available For a description of these changes, see Construction Reports (C—30-76-5), issued by the from the originating agency. Permit authorizations are those reported to the Census Bureau Census Bureau in July 1976. from 19,000 jurisdictions beginning in 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • April 1996 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data except as noted Change from 12 Change from 3 months earlier months earlier (annual rate) Change from 1 month earlier IIInnndddeeexxx IIIttteeemmm 1995r 1995r 1996 llleee JJJaaa vvv nnn eee ... lll ,,, 11999955 11999966 111999999666 111 JJaann.. JJaann.. Mar. June Sept. Dec. Sept. Oct. Nov. Dec. Jan. CONSUMER PRICES2 (1982-84=100) 1 All items 2.8 2.7 3.2 3.5 1.6 2.4 .1 .3 .1 .2 .4 154.4 2 Food 2.6 2.4 .3 3.6 2.7 1.9 .3 .3 .0 .1 .1 151.0 3 Energy items 2.9 .8 -1.5 5.8 -10.5 1.9 -1.3 .3 -.9 1.1 1.9 105.0 4 All items less food and energy 2.9 3.0 4.1 3.0 2.8 2.2 .2 .3 .1 .1 .3 163.4 5 Commodities 1.7 1.9 2.6 .9 2.0 1.7 .1 .2 .1 .1 .4 140.3 6 Services 3.5 3.4 4.8 4.3 3.0 2.5 .3 .3 .2 .1 .3 176.6 PRODUCER PRICES (1982=100) 7 Finished goods 1.7 2.3 1.6 1.3 1.6 4.1 .3 .0 .4 .6 .3 129.5 8 Consumer foods .7 2.3 -2.5 -2.5 8.8 4.4 1.2 -.2 1.1 .2 -.2 130.9 9 Consumer energy 4.1 2.5 3.6 1.5 -10.2 10.3 -.5 -.8 -.4 3.7 2.7 78.5 10 Other consumer goods 1.4 2.3 2.6 2.9 2.3 3.1 .3 .2 .3 .2 -.1 143.8 11 Capital equipment 2.0 1.8 2.7 1.8 1.8 2.7 .1 .1 .4 .1 -.1 138.3 Intermediate materials 12 Excluding foods and feeds 5.9 1.9 9.5 3.9 -.6 -.9 -.2 -.2 -.1 .1 .1 125.3 13 Excluding energy 6.3 1.6 10.5 4.2 1.5 -3.2 .0 -.2 -.2 -.4 -.3 134.7 Crude materials 14 Foods -8.9 12.1 -4.6 4.0 34.8 20.4 3.5 2.1 2.9 -.3 -.4 114.6 15 Energy -4.3 7.4 -4.5 14.6 -21.0 15.7 2.7 -.7 2.1 2.3 7.3 75.0 16 Other 17.7 -7.1 20.5 3.9 -17.6 -19.6 -1.7 -2.3 -2.1 -1.0 .0 161.7 1. Not seasonally adjusted. SOURCE. U.S. Department of Labor, Bureau of Labor Statistics. 2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence measure of homeownership. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A51 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1994 1995 AAccccoouunntt 11999933 11999944 11999955 Q4 Ql Q2 Q3r Q4 GROSS DOMESTIC PRODUCT 1 6,550.2 6,931.4 7,247.7 7,080.0 7,147.8 7,196.5 7,298.5 7,348.1 By source 2 Personal consumption expenditures 4,454.1 4,698.7 4,923.4 4,796.0 4,836.3 4.908.7 4,960.0 44,,998888..88 3 Durable goods 530.7 580.9 606.5 602.7 593.0 604.0 615.8 613.2 4 Nondurable goods 1,368.9 1,429.7 1,485.2 1.459.0 1.471.6 1.486.9 1,491.4 1,491.2 5 Services 2,554.6 2,688.1 2,831.7 2,734.4 2.771.7 2.817.9 2,852.8 2,884.4 6 Gross private domestic investment 871.1 1,014.4 1,067.5 1,050.1 1.072.0 1.050.3 1.074.8 1,072.7 7 Fixed investment 850.5 954.9 1,029.3 991.4 1.013.9 1,016.3 1.036.6 1,050.5 8 Nonresidential 598.8 667.2 739.9 697.9 723.6 734.4 746.3 755.3 9 Structures 171.8 180.2 200.1 188.8 194.5 197.6 202.5 205.8 in Producers' durable equipment 427.0 487.0 539.8 509.1 529.0 536.8 543.8 549.5 n Residential structures 251.7 287.7 289.4 293.5 290.4 281.9 290.3 295.2 17. Change in business inventories 20.6 59.5 38.1 58.7 58.1 34.0 38.2 22.2 13 20.1 45.9 n.a. 55.1 60.8 36.1 41.5 24.4 14 Net exports of goods and services -64.9 -96.4 -101.7 -99.7 -106.6 -122.4 -100.8 -76.9 15 Exports 660.0 722.0 804.5 763.6 778.6 796.9 812.5 830.1 16 Imports 724.9 818.4 906.2 863.3 885.1 919.3 913.3 907.0 17 Government consumption expenditures and gross investment 1,289.9 1,314.7 1,358.5 1,333.5 1,346.0 1,359.9 1,364.5 1,363.5 18 522.1 516.3 516.8 520.9 519.9 522.6 516.7 508.0 19 State and local 767.8 798.4 841.7 812.6 826.1 837.3 847.7 855.4 By major type of product 70 Final sales, total 6,529.7 6,871.8 7,209.6 7,021.3 7,089.7 77..116622..55 77,,226600..33 77,,332255..99 71 2,400.9 2,534.2 2,660.7 2,600.9 2,617.3 2,642.3 2,684.5 2,698.5 ?? 1,013.8 1,085.9 1,146.9 1,113.3 1,118.6 1,134.0 1.162.5 1,172.6 73 Nondurable 1,387.2 1,448.3 1,513.8 1,487.6 1,498.7 1,508.3 1.522.1 1,525.9 74 3,581.7 3,742.4 3.921.2 3,806.3 3,852.6 3.904.5 3,943.2 3,984.6 25 Structures 547.0 595.3 627.7 614.1 619.8 615.7 632.6 642.8 26 Change in business inventories 20.6 59.5 38.1 58.7 58.1 34.0 38.2 22.2 27 Durable goods 15.7 31.9 35.3 33.1 54.4 28.5 29.2 28.9 28 4.9 27.7 2.9 25.6 3.7 5.4 9.1 -6.7 MEMO 29 Total GDP in chained 1992 dollars 6,383.8 6,604.2 6,740.8 6,691.3 6,701.6 6,709.4 6,768.3 66,,778833..88 NATIONAL INCOME 30 5,194.4 5,495.1 n.a. 5,635.0 5,697.7 5,738.9 5,849.2 n.a. 31 Compensation of employees 3,809.4 4,008.3 4,209.4 4.083.7 4,141.6 4.178.9 4,235.9 4,281.1 3? 3,095.2 3,255.9 3,419.7 3,320.2 3,363.0 3.393.3 3.442.3 3,480.3 33 Government and government enterprises 584.2 602.5 621.7 608.3 616.3 619.6 624.1 626.9 34 Other 2,511.0 2,653.4 2,798.0 2,711.9 2,746.6 2,773.6 2.818.2 2,853.4 35 Supplement to wages and salaries 714.2 752.4 789.7 763.6R 778.6 785.6 793.7 800.8 36 Employer contributions for social insurance 333.3 350.2 365.7 355.8 360.8 363.6 367.8 370.6 37 Other labor income 380.9 402.2 424.0 407.8 417.7 422.0 425.9 430.2 38 Proprietors' income1 420.0 450.9 477.9 469.4 472.0 474.7 479.6 485.2 39 Business and professional1 388.1 415.9 449.2 437.1 443.5 447.1 451.5 454.7 40 32.0 35.0 28.7 32.3 28.5 27.6 28.1 30.6 41 Rental income of persons" 102.5 116.6 122.2 121.9 120.6 121.6 120.9 125.7 42 464.5 526.5 n.a. 568.9 559.6 561.1 614.9 n.a. 43 464.3 528.2 n.a. 570.4 594.1 588.4 609.6 n.a. 44 Inventory valuation adjustment -6.6 -13.3 -27.6 -22.8 -51.9 -42.3 -9.3 -6.8 45 Capital consumption adjustment 6.7 11.6 15.9 21.3 17.4 15.0 14.6 16.5 46 398.1 392.8 n.a. 391.1 403.9 402.6 397.8 n.a. 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. U.S. Department of Commerce, Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • April 1996 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1994 1995 AAccccoouunntt 11999933 11999944 11999955 Q4 Ql Q2 Q3r Q4 PERSONAL INCOME AND SAVING 1 Total personal income 5,479.2 5,750.2 6,101.0 5,893.9 5,995.5 6,061.9 6,135.6 6,210.9 ? Wacc and salary disbursements 3.090.6 3,241.1 3,419.7 3,318.5 3,361.6 3,393.3 3,442.3 3,481.8 Commodity-producing industries 781.3 825.0 858.7 846.0 856.2 855.0 859.9 863.8 4 593.1 621.3 642.9 636.0 643.4 640.5 642.9 644.8 698.4 739.3 787.8 762.7 768.8 778.6 795.4 808.5 6 Service industries 1,026.6 1,074.3 1,151.4 1,101.6 1,120.2 1,140.0 1,162.8 ' 1,182.5 7 Government and government enterprises 584.2 602.5 621.7 608.3 616.3 619.6 624.1 626.9 8 380.9 402.2 424.0 407.8 417.7 422.0 425.9 430.2 0 Proprietors' income1 420.0 450.9 477.9 469.4 472.0 474.7 479.6 485.2 in Business and professional1 388.1 415.9 449.2 437.1 443.5 447.1 451.5 454.7 11 farm1 32.0 35.0 28.7 32.3 28.5 27.6 28.1 30.6 i? Rental income of persons" 102.5 116.6 122.2 121.9 120.6 121.6 120.9 125.7 n Di\idends 186.8 199.6 214.8 206.7 209.5 212.2 215.8 221.7 14 Personal interest income 647.3 661.6 714.4 678.4 701.9 713.9 717.5 724.2 Transfer payments 910.7 956.3 1,022.6 974.7 1,002.4 1,016.8 1,029.9 1,041.4 16 Old ace survivors, disability, and health insurance benefits 444.4 472.9 507.4 482.1 497.6 505.1 510.7 516.3 17 Less. Personal contributions for social insurance 259.6 278.1 294.6 283.5 290.2 292.7 296.2 299.4 18 Eor\! S: Personal income 5,479.2 5,750.2 6,101.0 5,893.9 5,995.5 6,061.9 6,135.6 6,210.9 19 l.FSS: Personal tax and nontax payments 689.9 731.4 794.6 748.1 770.0 801.5 798.4 808.3 20 EQCAI S: Disposable personal income 4,789.3 5,018.8 5,306.4 5,145.8r 5,225.5 5,260.4 5,337.2 5,402.5 21 LESS: Personal outlays 4,572.9 4,826.5 5,065.7 4,927.9 4,972.2 5,049.0 5,104.6 5,137.2 22 EOU AI S: Personal saving 216.4 192.4r 240.7 217.8 253.3 211.4 232.6 265.4 Mr\io Per t apiia i chained 1992 dollars) ?3 Gross domestic product 24,724.2 25,332.6 34,199.9 25,568.6 25,559.1 25,540.2 25,695.9 25,696.2 24 Personal consumption expenditures 16.807.5 17,150.4 23,223.7 17,280.5 17,280.3 17,391.7 17,465.5 17,461.0 25 Disposable personal income 18.075.0 18,320.0 25,033.0 18,544.0 18,672.0 18,634.0 18,794.0 18,907.0 26 Savins rate (percent) 4.5 3.8 4.5 4.2 4.8 4.0 4.4 4.9 GROSS SAVING 27 Gross saving 938.4 1,055.9 n.a. l,064.9r 1,110.5 1,092.3 1,155.7 n.a. 28 Gross private saving 964.5 1,006.0 n.a. 1,012.8 1,039.9 1,007.3 1,076.1 n.a. 79 Personal saving 216.4 192.41" 240.7 217.8 253.3 211.4 232.6 265.4 30 Undistributed corporate profits' 103.4 120.2 n.a. 136.8 120.6 122.3 162.0 n.a. 31 Corporate inventory valuation adjustment -6.6 -13.3 -27.6 -22.8 -51.9 -42.3 -9.3 -6.8 Capital consumption allowances Corporate 417.0 441.0 454.0 439.3 444.4 451.3 456.9 446633..66 33 Noncorporate 223.1 237.7 225.1 217.3 220.2 222.4 224.7 233.3 ~4 Government surplus, or deficit ( —), national income and product accounts -159.8 -90.2 n.a. -91.1 -74.4 -61.5 -67.7 n.a. 35 Federal -254.7 -189.9 n.a. -190.4 -173.3 -160.5 -161.6 n.a. 36 94.9 99.7 n.a. 99.3 99.0 99.0 93.9 n.a. 37 Gross investment 993.5 1,087.2 n.a. 1,104.5 1,146.7 1,113.9 1,150.7 n.a. ^S Gross private domestic investment 871.1 1,014.4 1,067.5 1,050.1 1,072.0 1,050.3 1,074.8 1,072.7 39 N'et foreign investment -88.2 -139.6 n.a. -161.9 -144.4 -160.1 -148.9 n.a. 40 Statistical discrepancy 55.1 31.3 n.a. 39.7 36.2 21.6 -5.0 n.a. 1. With inventory valuation and capital consumption adjustments. SOURCE. U.S. Department of Commerce, Survey of Current Business. 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A53 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 1994 1995 IItteemm ccrreeddiittss oorr ddeebbiittss 11999922 11999933 11999944 Q3 Q4 Ql Q2 Q3P 1 Balance on current account -61,548 -99,925 -151,245 -39,714 -43,277 -39,025 -43,267 -39,482 2 Merchandise trade balance2 -96,106 -132,618 -166,099 -44,627 -43,488 -45,050 -48,802 -43,433 3 Merchandise exports 440,352 456,823 502,485 127,384 133,926 138,061 142,850 145,315 4 Merchandise imports -536,458 -589,441 -668,584 -172,011 -177,414 -183,111 -191,652 -188,748 5 Military transactions, net -2,142 448 2,148 1,124 679 542 587 736 6 Other service transactions, net 58,767 57,328 57,739 14,696 15,342 15,068 14,782 15,178 7 Investment income, net 10,080 9,000 -9,272 -2,533 -4,571 -1,961 -2,614 -4,153 8 U.S. government grants -15,083 -16,311 —15,814 -3,488 -6,245 -2,867 -2,284 -2,834 9 U.S. government pensions and other transfers -3,735 -3,785 -4,247 -1,064 -1,063 -782 -989 -987 10 Private remittances and other transfers -13,330 -13,988 -15,700 -3,822 -3,931 -3,975 -3,947 -3,989 11 Change in U.S. government assets other than official reserve assets, net (increase, —) -1,661 -330 -322 -283 -931 -152 -180 136 12 Change in U.S. official reserve assets (increase, —) 3,901 -1,379 5,346 -165 2,033 -5,318 -2,722 -1,893 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) 2,316 -537 -441 -111 -121 -867 -156 362 15 Reserve position in International Monetary Fund -2,692 -44 494 273 -27 -526 -786 -991 16 Foreign currencies 4,277 -797 5,293 -327 2,181 -3,925 -1,780 -1,264 17 Change in U.S. private assets abroad (increase, —) -68,115 -182,880 -130,875 -27,492 -56,258 -69,873 -97,340 -41,095 18 Bank-reported claims3 20,895 29,947 915 1,590 -16,651 -29,284 -39,982 14,851 19 Nonbank-reported claims 45 1,581 -32,621 -8,051 -12,449 -11,518 -18,499 20 U.S. purchases of foreign securities, net -46,415 -141,807 -49,799 -10,976 -15,238 -6,567 -21,731 -34,251 21 U.S. direct investments abroad, net -42,640 -72,601 -49,370 -10.055 -11,920 -22,504 -17,128 -21,695 22 Change in foreign official assets in United States (increase, +) 40,466 72,146 39,409 19,691 -421 22,308 37,836 39,479 23 U.S. Treasury securities 18,454 48,952 30,723 16,477 7,470 10,131 25,169 20,597 24 Other U.S. government obligations 3,949 4,062 6,025 2,222 1,228 1,126 1,326 518 25 Other U.S. government liabilities4 2,180 1,706 2,211 494 692 -154 506 194 26 Other U.S. liabilities reported by U.S. banks3 16,571 14,841 2,923 1,298 -9,856 10,940 7,886 18,398 27 Other foreign official assets5 -688 2,585 -2,473 -800 45 265 2,949 -228 28 Change in foreign private assets in United States (increase, +) 113,357 176,382 251,956 60,045 85,136 72,533 86,495 66,185 29 U.S. bank-reported liabilities3 15,461 20,859 114.396 19,650 34,676 -531 12,239 -19,958 30 U.S. nonbank-reported liabilities 13,573 10,489 -4,324 487 -5,242 10,113 10,527 31 Foreign private purchases of U.S. Treasury securities, net 36,857 24,063 33,811 5,428 25,929 29,910 30,315 36,778 32 Foreign purchases of other U.S. securities, net 29,867 79,864 58,625 14,762 10,195 15,816 20,549 30,024 33 Foreign direct investments in United States, net 17,599 41,107 49,448 19,718 19,578 17,225 12,865 19,341 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy -26,399 35,985 -14,269 -12,082 13,718 19,527 19,178 -23,330 36 Due to seasonal adjustment -6,641 782 6,183 331 -7,086 37 Before seasonal adjustment -26,399 35,985 -14,269 -5,441 12,936 13,344 18,847 -16,244 MEMO Changes in official assets 38 U.S. official reserve assets (increase, —) 3,901 -1,379 5,346 -165 2,033 -5,318 -2,722 -1,893 39 Foreign official assets in United States, excluding line 25 (increase, +) 38,286 70,440 37,198 19,197 -1,113 22,462 37,330 39,285 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 5,942 -3,717 -1,184 3,564 1,120 -322 -11 6,365 1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 38^40. 4. Associated primarily with military sales contracts and other transactions arranged with 2. Data are on an international accounts basis. The data differ from the Census basis data, or through foreign official agencies. shown in table 3.11, for reasons of coverage and timing. Military exports are excluded from 5. Consists of investments in U.S. corporate stocks and in debt securities of private merchandise trade data and are included in line 5. corporations and state and local governments. 3. Reporting banks include all types of depository institutions as well as some brokers and SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current dealers. Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • April 1996 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1995 IItteemm 11999933 11999944 11999955 June July Aug. Sept. Oct. Nov. Dec.p 1 Goods and services, balance -74,842 -106,214 -111,042 -11,385 -11,070 -8,248 -8,245 -8,160 -6,712 -6,777 2 Merchandise -132,618 -166,101 -174,469 -16,493 -16,226 -13,504 -13,746 -13,742 -12,176 -12,264 3 Services 57,777 59,887 63,427 5,108 5,156 5,256 5,501 5,582 5,464 5,487 4 Goods and services, exports 644,579 701,200 783,661 64,681 63,645 66,410 67,460 66,738 67,584 68,329 3 Merchandise 456,824 502,484 574,878 47,381 46,372 49,084 49,779 48,982 49,584 50,461 6 Services 187,755 198,716 208.783 17,300 17,273 17,326 17,681 17,756 18,000 17,868 7 Goods and services, imports -719,421 -807,414 -894,703 -76,066 -74,715 -74,658 -75,705 -74,898 -74,296 -75,106 8 Merchandise -589,442 -668,585 -749,347 -63,874 -62,598 -62,588 -63,525 -62,724 -61,760 -62,725 9 Services -129,979 -138,829 -145,356 -12,192 -12,117 -12,070 -12,180 -12,174 -12,536 -12,381 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 1995 1996 AAsssseett 11999922 11999933 11999944 June July Aug. Sept. Oct. Nov. Dec. Jan.p 1 Total 71,323 73,442 74,335 90,063 91,534 86,648 87,152 86,224 85,755 85,832 82,717 2 Gold stock, including Exchange Stabilization Fund' 11,056 11,053 11,051 11,054 11,053 11,053 11,051 11,051 11,050 11,050 11,052 3 Special drawing rights2'3 8,503 9,039 10,039 11,869 11,487 11,146 11,035 10,949 11,034 11,037 10,778 4 Reserve position in International Monetary Fund2 11,759 11,818 12,030 14,276 14,761 14,470 14,681 14,700 14,572 14,649 14,312 5 Foreign currencies4 40,005 41,532 41,215 52,864 54,233 49,979 50,385 49,524 49,099 49,096 46,575 1. Gold held "under earmark" at Federal Reserve Banks for foreign and international SDR holdings and reserve positions in the IMF also have been valued on this basis since July accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold 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 year 2. Special drawing rights (SDRs) are valued according to a technique adopted by the indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—$710 million; 1979— International Monetary Fund (IMF) in July 1974. Values are based on a weighted average of $1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net transactions in SDRs. exchange rates for the currencies of member countries. From July 1974 through December 4. Valued at current market exchange rates. 1980, sixteen currencies were used; since January 1981, five currencies have been used. U.S. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1995 1996 AAsssseett 11999922 11999933 11999944 June July Aug. Sept. Oct. Nov. Dec. Jan.p 1 Deposits 205 386 250 167 190 165 201 275 194 386 165 Held in custody 2 U.S. Treasury securities2 314.481 379,394 441,866 482,506 505,613 502,737 506,572 507,075 522,950 522,170 532,776 3 Earmarked gold3 13,118 12,327 12,033 11,725 11,728 1 l,728r 11,728 11,709 11,702 11,702 11,702 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; not organizations. 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 1995 IItteemm 11999933 11999944 June July Aug. Sept. Oct. Nov, Dec.p 1 Total1 482,915 520,578 580,151 604,548 612,972 619,517 618,417 632,446 629,160 By type 2 Liabilities reported by banks in the United States 69,721 73,031 91,573 93,801 104,791 110,051 107,870 109,232 105,643 3 U.S. Treasury bills and certificates3 151,100 139,570 154,517 115599,,665544 115577,,551166 116633,,009933 115577,,998877 117711,,336666 116688,,553344 U.S. Treasury bonds and notes 4 Marketable 212,237 254,059 274,342 291,132 290,768 286,243 291,948 291,033 293,684 5 Nonmarketable4 5,652 6,109 6,245 6,288 6,329 6,366 6,407 6,449 6,491 6 U.S. securities other than U.S. Treasury securities5 44,205 47,809 53,474 53,673 53,568 53,764 54,205 54,366 54,808 By area 7 Europe1 207,034 215,024 223,853 224,380 221,130 222,869 222,679 228,180 221,604 8 Canada 15,285 17,235 19,549 21,746 21,508 20,522 20,355 19,535 19,473 9 Latin America and Caribbean 55,898 41,492 50,327 58,126 63,383 63,424 61,335 62,060 65,826 10 Asia 197,702 236,819 278,767 290,878 297,343 303,809 305,053 311,638 310,955 11 Africa 4,052 4,179 4,427 4,309 4,433 4,684 4,761 6,086 6,296 12 Other countries 2,942 5,827 3,226 5,107 5,173 4,207 4,232 4,945 5,004 1. Includes the Bank for International Settlements. Venezuela, beginning December 1990, 30-year maturity issue; Argentina, beginning April 2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, 1993, 30-year maturity issue. negotiable time certificates of deposit, and borrowings under repurchase agreements. 5. Debt securities of U.S. government corporations and federally sponsored agencies, and 3. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official U.S. corporate stocks and bonds. institutions of foreign countries. SOURCE. Based on U.S. Department of the Treasury data and on data reported to the 4. Excludes notes issued to foreign official nonreserve agencies. Includes current value of department by banks (including Federal Reserve Banks) and securities dealers in the United zero-coupon Treasury bond issues to foreign governments as follows: Mexico, beginning States, and on the 1989 benchmark survey of foreign portfolio investment in the United March 1988, 20-year maturity issue and beginning March 1990, 30-year maturity issue; States. 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 1994 1995 IItteemm 11999911 11999922 11999933rr Dec. Mar. June Sept. 1 Banks' liabilities 75,129 72,796 78,259 89,661 96,190 106,715 102,148 2 Banks' claims 73,195 62,799 62,017 60,279 72,694 77,171 69,312 3 Deposits 26,192 24,240 20,993 19,670 24,440 28,915 25,648 4 Other claims 47,003 38,559 41,024 40,609 48,254 48,256 43,664 5 Claims of banks' domestic customers2 3,398 4,432 12,854 10,587r 8,732r 9,890r 6,274r 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 • April 1996 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States' Payable in U.S. dollars Millions of dollars, end of period 1995 IItteemm 11999933 11999944 11999955 June July Aug. Sept. Oct.' Nov. Dec? BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 926,672 l,018,472r 1,093,270 1,058,071r l,060,388r l,076,399r l,073,999r 1,099,123 1,105,061 1,093,270 2 Banks' own liabilities 626,919 722,155r 747,355 735,824r 731,017' 745,652' 735,112' 762,614 754,816 747,355 3 Demand deposits 21,569 23,386r 24,353 22,252' 24,104' 21,779' 23,703' 23,159 23,114 24,353 4 Time deposits2 175,106 186,512r 192,680 195,237' 191,793' 197,099' 188,153' 202,532 193,829 192,680 5 Other3 111,971 116,699 138,240 123,304' 141,518' 139,305' 136,559' 146,364 153,912 138,240 6 Own foreign offices4 318,273 395,558 392,082 395,031 373,602 387,469 386,697' 390,559 383,961 392,082 7 Banks' custodial liabilities5 299,753 296,317 345,915 322,247 329,371 330,747 338,887 336,509 350,245 345,915 8 U.S. Treasury bills and certificates6 176,739 162,857 197,101 182,204 188,621 187,318 193,070 189,285 201,890 197,101 9 Other negotiable and readily transferable instruments7 36,289 42,532 52,247 45,112 44,514 45,175 47,279 47,905 50,220 52,247 10 Other 86,725 90,928 96,567 94,931 96,236 98,254 98,538 99,319 98,135 96,567 11 Nonmonetary international and regional organizations8 .. . 10,936 8,606 9,461 9,966' 12,185' 10,289r 13,011' 10,202 9,561 9,461 12 Banks' own liabilities 5,639 8,176 8,769 9,162' 11,114r 8,985' 12,120' 8,374 8,106 8,769 13 Demand deposits 15 29 21 114 43 40 24r 77 33 21 14 Time deposits2 2,780 3,298 4,311 4,579' 5,057' 4,642' 4,315 3,901 3,576 4,311 15 Other3 2,844 4,849 4,437 4,469' 6,014' 4,303' 7,781r 4,396 4,497 4,437 16 Banks' custodial liabilities5 5,297 430 692 804 1,071 1,304 891 1,828 1,455 692 17 U.S. Treasury bills and certificates6 44,,227755 281 350 312 551 826 354 1,342 962 350 18 Other negotiable and readily transferable instruments7 1,022 149 341 492 520 478 537 486 493 341 19 Other 0 0 1 0 0 0 0 0 0 1 20 Official institutions9 220,821 212,601 274,177 246,090 253,455 262,307 273,144 265,857 280,598 274,177 21 Banks' own liabilities 64,144 59,580 81,706 73,119 75,437 83,392 85,998 83,588 85,277 81,706 22 Demand deposits 1,600 1,564 2,101 1,398 1,429 1,547 1,362 1,646 1,690 2,101 23 Time deposits2 21,653 23,511 30,101 27,253 29,411 31,600 32,048 30,385 30,353 30,101 24 Other3 40,891 34,505 49,504 44,468 44,597 50,245 52,588 51.557 53,234 49,504 25 Banks' custodial liabilities5 156,677 153,021 192,471 172,971 178,018 178,915 187,146 182,269 195,321 192,471 26 U.S. Treasury bills and certificates6 151,100 139,570 168,534 154,517 159,654 157,516 163,093 157,987 171,366 168,534 27 Other negotiable and readily transferable instruments7 5,482 13,245 23,593 18,325 18,159 20,735 23,777 24,028 23,600 23,593 28 Other 95 206 344 129 205 664 276 254 355 344 29 Banks10 592,171 681,301 687,649 685,827' 665,993 684,269 670,524' 699,341 687,649 687,649 30 Banks' own liabilities 478,755 566,411 564,309 566,356' 545,391 562,829 547,916' 575,910 562,349 564,309 31 Unaffiliated foreign banks 160,482 170,853 172,227 171,325' 171,789 175,360 161,219 185,351 178,388 172,227 32 Demand deposits 9,718 10,633 11,740 10,554 12,121 10,061 11,817 11,339 11,232 11,740 33 Time deposits2 105,262 111,171 104,423 111,435 104,477 108,855 98,861 114,650 105,675 104,423 34 Other3 45,502 49,049 56,064 49,336' 55,191 56,444 50,541 59,362 61,481 56,064 35 Own foreign offices4 318,273 395,558 392,082 395,031 373,602 387,469 386,697' 390,559 383,961 392,082 36 Banks' custodial liabilities5 113,416 114,890 123,340 119,471 120,602 121,440 122,608 123,431 125,300 123,340 37 U.S. Treasury bills and certificates6 1100,,771122 11,240 15,634 15,021 15,535 15,489 16,170 16,429 16,687 15,634 38 Other negotiable and readily transferable instruments7 17,020 14,505 13,035 11,188 10,583 10,142 9,690 9,754 13,070 13,035 39 Other 85,684 89,145 94,671 93,262 94,484 95,809 96,748 97,248 95,543 94,671 40 Other foreigners 102,744 115,964r 121,983 116,188' 128,755' 119,534' 117,320' 123,723 127,253 121,983 41 Banks' own liabilities 78,381 87,988r 92,571 87,187' 99,075' 90,446' 89,078' 94,742 99,084 92,571 42 Demand deposits 10,236 11,160r 10,491 10,186' 10,511' 10,131' 10,500' 10,097 10,159 10,491 43 Time deposits2 45,411 48,532r 53,845 51,970r 52,848r 52,002r 52,929' 53,596 54,225 53,845 44 Other3 22,734 28,296 28,235 25,031' 35,716' 28,313' 25,649' 31,049 34,700 28,235 45 Banks' custodial liabilities5 24,363 27,976 29,412 29,001 29,680 29,088 28,242 28,981 28,169 29,412 46 U.S. Treasury bills and certificates6 10,652 11,766 12,583 12,354 12,881 13,487 13,453 13,527 12,875 12,583 47 Other negotiable and readily transferable instruments7 12,765 14,633 15,278 15,107 15,252 13,820 13,275 13,637 13,057 15,278 48 Other 946 1,577 1,551 1,540 1,547 1,781 1,514 1,817 2,237 1,551 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 17,567 17,895 9,098 12,157 10,179 10,409 9,938 10,290 10,064 9,098 1. Reporting banks include all types of depository institutions as well as some brokers and 6. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official dealers. Excludes bonds and notes of maturities longer than one year. institutions of foreign countries. 2. Excludes negotiable time certificates of deposit, which are included in "Other negotia- 7. Principally bankers acceptances, commercial paper, and negotiable time certificates of ble and readily transferable instruments." 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 subsidiar- American Development Bank, and the Asian Development Bank. Excludes "holdings of ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory dollars" of the International Monetary Fund. agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists 9. Foreign central banks, foreign central governments, and the Bank for International principally of amounts owed to the head office or parent foreign bank, and to foreign Settlements. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. 10. Excludes central banks, which are included in "Official institutions." 5. Financial claims on residents of the United States, other than long-term securities, held by or through reporting banks for foreign customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A57 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued 1995 IItteemm 11999933 11999944 11999955 June July Aug. Sept. Oct.' Nov. Dec.p AREA 50 Total, all foreigners 926,672 l,018,472r 1,093,270 l,058,071r l,060,388r l,076,399r l,073,999r 1,099,123 1,105,061 1,093,270 51 Foreign countries 915,736 l,009,866r 1,083,809 1,048,105r l,048,203r 1,066,110r l,060,988r 1,088,921 1,095,500 1,083,809 52 Europe 377,911 393,141 364,276 374.85 Ir 377,662r 376,545' 362,080r 377,102 384,238 364,276 53 Austria 1,917 3,653 3,726 3,855 3,923 3,869 5,221 4,887 4,755 3,726 54 Belgium and Luxembourg 28,670 21,978 24,626 21,079 24,803r 24,598r 24,039r 25,192 28,357 24,626 55 Denmark 4,517 2,784 2,921 2,432 2,131 2,468 2,476 3,177 3,418 2,921 56 Finland 1,872 1,436 2,829 1,455 2,390 2,270 1,972 2,419 2,315 2,829 5/ France 40,316 45,217 39,194 45,038r 42,880r 43,314r 38,112r 43,128 40,410 39,194 58 Germany 26,685 27,191 24,062 34,345 33,794r 31,257r 31,390 26,362 26,798 24,062 59 Greece 1,519 1,393 2,011 2,365 2,311 2,398 2,119 2,033 2,265 2,011 60 Italy 11,759 10,885 10,670 10.373 10,223r 10,823r 8,947r 10,251 10,759 10,670 61 Netherlands 16,096 16,033 15,211 11,449 11,743 10,685 13,107 15,609 15,541 15,211 62 Norway 2,966 2,338 1,394 1,305 1,119 2,087 1,011 1,048 1,287 1,394 63 Portugal 3,366 2,846 2,755 2,675 3,165 2,933 3,033 2,902 2,718 2,755 64 Russia 2,511 2,714 7,949 7,177 6,313 7,265 6,367 7,338 8,979 7,949 65 Spain 20,496 14,675 10,011 10,558 9,127r 10,000r 10,100 13,467 10,809 10,011 66 Sweden 2,738 3,094 3,245 3,471 2,209r 2,896r 3,167r 2,035 3,720 3,245 67 Switzerland 41,560 41,956 43,604 47,285r 42,192 41,644 41,406 42,588 41,178 43,604 68 Turkey 3,227 3,341 4,124 3,255 2,973 3,523 3,936 4,067 4,010 4,124 69 United Kingdom 133,993 163,793 139,419 141,165r 151,341 150,781 141,577 147,448 148,384 139,419 70 Yugoslavia" 372 245 177 220 214 146 215 210 171 177 71 Other Europe and other former U.S.S.R.'2 33,331 27,769 26,348 25,349 24,811 23,588 23,885 22,941 28,364 26.348 72 Canada 20,235 24,727 26,139 29,458 28,898 28,296 28,872 35,358 27,730 26,139 73 Latin America and Caribbean 362,238 423,797 438,213 444,989 436,258 447,523 434,352' 439,956 436,613 438.213 74 Argentina 14,477 17,203 12,236 10,873 12,404 11,539 11,180 11,539 13,034 12,236 75 Bahamas 73,820 104,002r 94,622 97,402r 88,731r 96,017r 92,850' 96,287 87,719 94,622 76 Bermuda 8,117 8,445r 4,897 7,074r 7,092r 6,794r 5,996' 6,589 6,561 4,897 77 Brazil 5,301 9,145 23,764 18,250 21,232 26,743 27,592' 27,366 27,364 23,764 78 British West Indies 193,699 229,525 236,853 252,401 245,065 244,291 234,629 236,039 240,339 236,853 79 Chile 3,183 3,126 3,421 3,320 2,677 2,890 2,698 2,574 2,696 3,421 80 Colombia 3,171 4,615 3,658 3,276 3,432 3,349 3,257 3,399 3,443 3,658 81 Cuba 33 13 8 5 5 3 4 13 8 8 82 Ecuador 880 875 1,315 1,179 1,118 1,160 1,130 1,311 1.307 1,315 83 Guatemala 1,207 1,121 1,271 1,129 1,100 1,122 1,197 1,068 1,210 1,271 84 Jamaica 410 529 477 449 426 444 484 430 447 477 85 Mexico 28,019 12,250 24,580 19,201 21,006 22,120 22,069 20,924 21,010 24,580 86 Netherlands Antilles 4,686 5,217 4,682 4,628 6,068 4,778 5,016 5,349 5,644 4,682 87 Panama 3,582 4,551 4,260 4,314 4,641 4,998 4,682' 4,561 4,287 4,260 88 Peru 929 900 973 997 944 1,028 909 897 916 973 89 Uruguay 1,611 1,597 1,828 2,031 1,953 1,937 1,839 1,856 1,912 1,828 90 Venezuela 12,786 13,983 11,781 11,248 11,482 11,195 11,971 12,642 11,624 11,781 91 Other 6,327 6,700 7,587 7,212 6,882 7,115 6,849 7,112 7,092 7,587 92 Asia 144,527 155,642r 240,750 188,352r 192,264r 199,624r 223,057' 222,979 232,273 240,750 China 93 People's Republic of China 4,011 10,066 33,774 10,579 11,908 13,208 22,273 22,364 29,898 33,774 94 Republic of China (Taiwan) 10,627 9,844 11.706 9,751 9,165 9,838 10,253 10,729 11,365 11,706 95 Hong Kong 17,132 17,102 20,319 23,040 25,134 24,152 21,852 21,879 20,273 20,319 96 India 1,114 2,338 3,373 2,106 2,271 2,745 2,914 3,010 3,272 3,373 97 Indonesia 1,986 1,587 2,708 2,119 1,966 2,175 2,366 2,174 2,485 2,708 98 Israel 4,435 5,157 4,071 4,573 4,599 4,723 4,209' 3,812 4,085 4,071 99 Japan 61,466 64,284r 109,192 83,370r 85,833r 89,117r 104,315' 104,566 105.546 109,192 100 Korea (South) 4,913 5,124 5,743 4,989r 5,068r 4,883r 5,460' 5,367 5,593 5,743 101 Philippines 2,035 2,714 3,090 2,539 2,653 2,793 2,786 2,844 2,889 3,090 102 Thailand 6,137 6,466 12,253 11,502 11,244 11,177 11,803 10,458 12,144 12,253 103 Middle Eastern oil-exporting countries'- 15,822 15,489 15,582 16,851 16,474 15,779 16,895' 17,350 16,277 15,582 104 Other 14,849 15,471 18,939 16,933r 15,949 19,034 17,931 18,426 18,446 18,939 105 Africa 6,633 6,523 7,641 6,784 6,966 6,989 7,033 7,211 7,793 7,641 106 Egypt 2,208 1.879 2,136 2,144 1,840 1,924 2,127 1,948 1,907 2,136 107 Morocco 99 97 104 90 94 87 79 66 60 104 108 South Africa 451 433 739 596 1,002 746 467 934 1,206 739 109 Zaire 12 9 10 18 13 15 9 4 9 10 110 Oil-exporting countries'4 1,303 1,343 1,797 1,418 1,364 1,667 1,792 1,544 1,826 1,797 111 Other 2,560 2,762 2,855 2,518 2,653 2,550 2,559 2,715 2,785 2,855 112 Other 4,192 6,036 6,790 3,671 6,155 7,133 5,594 6,315 6,853 6,790 113 Australia 3,308 5,142 5.648 2,944 5,473 5,459 4,777 5,007 5,758 5,648 114 Other 884 894 1,142 727 682 1,674 817 1,308 1,095 1,142 115 Nonmonetary international and regional organizations. .. 10,936 8,606 9,461 9,966r 12,185r 10,289r 13,011' 10.202 9,561 9,461 116 International" 6,851 7,537 7,812 8,314r 10,496r 8,273r 11,279' 8,366 8,237 7,812 117 Latin American regional'6 3,218 613 893 804 834 1,010 876 552 371 893 118 Other regional17 867 456 756 848 855 1,006 856 1,284 953 756 11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 15. Principally the International Bank for Reconstruction and Development. Excludes 12. Includes the Bank for International Settlements. Since December 1992, has "holdings of dollars" of the International Monetary Fund. included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. 16. Principally the Inter-American Development Bank. 13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 17. Asian, African, Middle Eastern, and European regional organizations, except the Bank Emirates (Trucial States). for International Settlements, which is included in "Other Europe." 14. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • April 1996 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1995 AArreeaa oorr ccoouunnttrryy 11999933 11999944 11999955 June July Aug.' Sept.' Oct.' Nov. Dec.p 1 Total, all foreigners 488,384r 486,263r 525,963 521,761r 508,977r 521,107 515,042 522,609 533,806 525,963 2 Foreign countries 485,979r 481,672r 524,097 519,128r 507,660r 519,690 512,215 520,951 532,385 524,097 3 Europe 123,784r 125,807r 130,424 129,976r 127,027' 127,681 116,578 131,504 131,643 130,424 4 Austria 412 692 565 581 616 685 670 880 639 565 3 Belgium and Luxembourg 6,532 6,738 7,557 5,149 8,073' 8,257 7,056 7,103 10,691 7,557 6 Denmark 382 . 1,030 404 599 443 428 410 634 602 404 7 Finland 594 691 1,055 394 967 1,001 1,221 1,916 1,097 1,055 8 France 11,822 12,768 14,742 15,363 15,443' 15,200 13,956 14,807 15,259 14,742 9 Germany 7,724 7,608 8,812 8,862 7,149' 8,731 8,691 8,081 8,431 8,812 10 Greece 691 604 441 442 445 386 385 404 378 441 11 Italy 8,834 6,043 5,364 6,736 6,070' 5,757 5,921 5,651 5,390 5,364 12 Netherlands 3,063 2,957 5,048 4,356 4,478 4,354 4,696 4,471 4,907 5,048 13 Norway 396 504 665 1,019 1,206 1,047 1,392 1,456 1,375 665 14 Portugal 834 938 897 1,208 987 916 986 1,036 862 897 13 Russia 2,310 949 660 508 495 506 421 696 949 660 16 Spain 3,717 3,530 2,169 3,566 3,640' 3,494 3,520 3,162 3,191 2,169 1/ Sweden 4,254 4,098 2,057 2,940 3,580' 2,840 2,700 2,642 2,362 2,057 18 Switzerland 6,605 7,493 7,087 10,291 7,540 7,362 7,207 6,320 5,910 7,087 19 Turkey 1,301 874 785 713 725 768 802 830 926 785 20 United Kingdom 62,056r 66,858r 67,661 65,949r 63,871' 64,607 54,522 69,016 66,912 67,661 21 Yugoslavia2 473 265 147 229 230 230 234 233 237 147 22 Other Europe and other former U.S.S.R.3 1,784 1,167 4,308 1,071 1,069 1,112 1,788 2,166 1,525 4,308 23 Canada 18,620r 18,298r 16,017 19,750r 18,903' 17,306 18,623 17,834 17,014 16,017 24 Latin America and Caribbean 225,079r 224,060r 257,243 244,315r 238,847' 250,189 250,335 251,306 266,631 257,243 23 Argentina 4,474 5,845 6,440 6,598 6,242 6,151 6,114 6,003 6,090 6,440 26 Bahamas 63,353r 66,775r 59,236 63,93 lr 59,906' 61,224 62,888 55,788 60,030 59,236 27 Bermuda 8,901 8,481 5,818 8,549 6,373 8,944 6,295 5,537 8,096 5,818 28 Brazil 11,848 9,582 13,297 11,525 12,511 12,962 13,022 13,334 12,978 13,297 29 British West Indies 99,319r 95,766' 123,797 114,258' 114,504' 117,892 120,013 123,682 129,500 123,797 30 Chile 3,643 3,819 5,036 4,341 4,264 4,663 4,388 4,660 4,775 5,036 31 Colombia 3,181 4,004 4,544 4,033 4,183 4,270 4,358 4,593 4,516 4,544 32 Cuba 0 0 0 0 0 0 0 0 0 0 33 Ecuador 681 681 811 768 768 725 805 846 847 811 34 Guatemala 288 366 447 344 340 350 361 385 424 447 33 Jamaica 195 258 323 264 277 290 287 289 285 323 36 Mexico 15,720 17,728 17,985 17,285 17,152 16,832 16,486 16,656 16,804 17,985 37 Netherlands Antilles 2,683 1,580 9,228 2,881 2,730 6,313 5,602 9,233 12,048 9,228 38 Panama 2,894 2,184 3,021 2,514 2,520 2,503 2,594 2,846 3,044 3,021 39 Peru 657 997 1,818 1,360 1,333 1,368 1,464 1,501 1,577 1,818 40 Uruguay 969 503 472 377 424 424 386 441 451 472 41 Venezuela 2,910 1,831 1,656 1,611 1,650 1,596 1,480 1,826 1,678 1,656 42 Other 3,363 3,660 3,314 3,676 3,670 3,682 3,792 3,686 3,488 3,314 43 111,775 107,350 115,273 118,807r 117,212' 111188,,223344 112200,,119944 111144,,555588 111111,,336600 111155,,227733 China 44 People's Republic of China 2,271 836 1,023 1,143 1,206 1,163 1,316 1,241 1,069 1,023 43 Republic of China (Taiwan) 2,625 1,447 1,713 1,796 1.915 1,600 1,584 1,595 1,484 1,713 46 Hong Kong 10,828 9,162 12,890 14,934 14,756 14,520 15,677 12,539 10,710 12,890 4/ India 589 994 1,846 1,210 1,732 1,905 1,944 1,924 1,823 1,846 48 Indonesia 1,527 1,470 1,675 1,443 1,516 1,620 1,596 1,623 1,580 1,675 49 Israel 826 688 736 950 749 700 712 886 728 736 30 Japan 60,032 59,428 61,303 61,050' 61,280' 63,301 63,075 61,878 60,522 61,303 31 Korea (South) 7,539 10,286 14,062 12,669 13,134 12,836 12,975 13,340 14,038 14,062 32 Philippines 1,410 662 1,350 918 598 623 725 673 789 1,350 33 Thailand 2,170 2,902 2,581 2,688 2,670 2,594 2,594 2,568 2,538 2,581 34 Middle Eastern oil-exporting countries4 15,115 13,743 9,629 12,571 11,948 11,403 11,723 9,963 9,604 9,629 33 Other 6,843 5,732 6,465 7,435 5,708 5,969 6,273 6,328 6,475 6,465 56 3,861 3,028 2,724 2,919 2,907 2,826 2,705 2,783 2,732 2,724 37 Egypt 196 225 209 204 193 194 202 224 268 209 38 Morocco 481 429 514 686 645 653 647 457 433 514 59 South Africa 633 671 459 563 531 544 454 604 462 459 60 Zaire 4 2 1 2 7 2 2 1 1 1 61 Oil-exporting countries5 1,129 842 552 657 659 614 615 586 578 552 62 Other 1,418 859 989 807 872 819 785 911 990 989 63 Other 2,860 3,129r 2,416 3,361 2,764 3,454 3,780 2,966 3,005 2,416 64 Australia 2,037 2,186 1.571 1,999 2,072 2,072 2,639 2,095 1,969 1,571 65 Other 823 943r 845 1,362 692 1,382 1,141 871 1,036 845 66 Nonmonetary international and regional organizations6... 2,405 4,591 1.866 2,633 1,317 1,417 2,827 1,658 1,421 1,866 1. Reporting banks include all types of depository institutions as well as some brokers and 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 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 all 6. Excludes the Bank for International Settlements, which is included in "Other Europe." parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.19 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1995 TTyyppee ooff ccllaaiimm June' Julyr Aug.r Sept.r Oct/ Nov. Dec.p 1 Total 575,500 601,615 649,455 641,020 2 Banks' claims 488,384 486,263 525,963 521,761 508,977 521,107 515,042 522,609 533,806 525,963 3 Foreign public borrowers 29,069 23,410 21,681 23,790 19,734 21,449 22,292 20,888 19,359 21,681 4 Own foreign offices2 285,510 283,548 303,944 301,847 293,151 297,045 298,238 303,977 308,931 303,944 5 Unaffiliated foreign banks 100,865 111,682 97,725 112,479 113,753 112,029 107,294 103,904 99,483 97,725 6 Deposits 49,892 59,230 37,344 58,793 59,798 57,718 50,764 47,106 42,904 37,344 7 Other 50,973 52,452 60,381 53,686 53,955 54,311 56,530 56,798 56,579 60,381 8 All other foreigners 72,940 67,623 102,613 83,645 82,339 90,584 87,218 93,840 106,033 102,613 9 Claims of banks' domestic customers3 87,116 115,352 127,694 125,978 10 Deposits 41,734 64,829 69,362 59,417 11 Negotiable and readily transferable instruments4 3311,,118866 3366,,000088 39,237 45,217 12 Outstanding collections and other claims 14,196 14,515 19,095 21,344 MEMO 13 Customer liability on acceptances 7,850 8,377 8,739 8,751 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 29,150 32,565 n.a. 35,599 34,221 35,452 34,274 32,821 30,197 n.a. 1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are principally of amounts due from the head office or parent foreign bank, and from foreign for quarter ending with month indicated. branches, agencies, or wholly owned subsidiaries of the head office or 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, bankers acceptances, and commercial 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiar- paper. ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory 5. Includes demand and time deposits and negotiable and nonnegotiable certificates of agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists deposit denominated in U.S. dollars issued by banks abroad. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 1994 1995 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999911 11999922 11999933rr Dec. Mar. June Sept.r 1 Total 195,302 195,119 202,576 202,705r 199,836r 219,480r 216,480 By borrower 2 Maturity of one year or less 162,573 163,325 172,662 176,870r 171,297r 191,090r 184,419 3 Foreign public borrowers 21,050 17,813 17,772 15,575 15,758 15,954 14,745 4 All other foreigners 141,523 145,512 154,890 161,295r 155,539r 175,136r 169,674 5 Maturity of more than one year 32,729 31,794 29,914 25,835 28,539 28,390 32,061 6 Foreign public borrowers 15,859 13,266 10,881 7,670 7,689 7,726 7,721 7 All other foreigners 16,870 18,528 19,033 18,165 20,850 20,664 24,340 By area Maturity of one year or less 8 Europe 51,835 53,300 57,413 58,473r 54,763r 60,749r 52,374 9 Canada 6,444 6,091 7,727 7,482r 7,472r 8,219r 7,721 10 Latin America and Caribbean 43,597 50,376 60,490 62,477r 64,073r 71,678r 73,923 11 Asia 51,059 45,709 41,418 40,696 38,227 44,365 44,210 12 Africa 2,549 1,784 1,820 1,376 1,227 1,447 1,261 1.3 All other3 7,089 6,065 3,794 6,366 5,535 4,632 4,930 Maturity of more than one year 14 Europe 3,878 5,367 5,310 3,901 4,533 3,704 4,170 15 Canada 3,595 3,287 2,581 2,521 3,622 3,110 2,815 16 Latin America and Caribbean 18,277 15,312 14,028 12,293 13,074 14,149 17,397 17 Asia 4,459 5,038 5,611 4,744 5,228 5,493 5,698 18 Africa 2,335 2,380 1,936 1,561 1,605 1,389 1,389 19 All other3 185 410 448 815 477 545 592 1. Reporting banks include all types of depository institutions as well as some brokers and 2. Maturity is time remaining until maturity, dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • April 1996 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 Sept. Dec. Mar. June Sept. Dec. Mar. June Sept. 1 Total 343.5 344.7 387.4 407.6r 478.7r 487.7r 487.2r 499.6r 539.9r 523.9r 524.5r 2 G-10 countries and Switzerland 137.5 131.3 152.0 161.9r 180.8 175.41" 183.8 193.0 208.3 200.3r 195.3r 3 Belgium and Luxembourg .0 5.6 7.1 7.4 8.0 8.6 9.6 7.0 8.3 7.3 8.5 4 France 11.3 15.3 12.3 12.0 16.6 19.1 21.2 19.7 20.1 19.3 17.5r 5 Germany 8.3 9.1 12.2 12.6 29.9 25.0 24.2 24.7 31.3 29.9 28.6 6 Italy 5.6 6.5 8.7 7.7 15.6 14.0 11.6 11.8 10.6 10.7 12.6 7 Netherlands .0 2.8 3.7 4.7 4.1 3.6 3.5 3.6 3.6 4.3 3.9 8 Sweden 1.9 2.3 2.5 2.7 2.9 3.0 2.6 2.7 3.1 3.0 2.7 9 Switzerland 3.4 4.8 5.6 5.9 6.3 6.5 6.2 6.9 6.2 6.1 6.0 10 United Kingdom 68.4 59.7 73.9 84.4 70.0 65. r 78.4 85.8r 89.9 86.7r 19.8' 11 Canada 5.8 6.3 9.7 6.9r 7.8 9.7 10.0 9.8 10.7 10.8 11.7 12 Japan 22.2 18.8 16.4 17.6 19.6 20.7 16.5 21.0 24.5 22.1 24.0 13 Other industrialized countries 22.8 24.0 26.0 25.6 42.2 42.6 42.5 45.3 43.9 43.2 49.7r 14 Austria .6 1.2 .6 .4 1.0 1.0 1.0 1.1 .9 .7 1.2 15 Denmark .9 .9 1.1 1.0 1.1 1.1 .9 1.2 1.6 1.1 1.6 16 Finland .7 .7 .6 .4 1.0 .8 .8 1.0 1.1 .5 .7 17 Greece 2.6 3.0 3.2 3.2 3.8 4.6 4.3 4.5 4.9 5.0 5.1 18 Norway 1.4 1.2 2.1 1.7 1.6 1.6 1.6 2.0 2.4 1.8 2.3 19 Portugal .6 .4 1.0 .8 1.2 1.1 1.0 1.2 1.0 1.2 1.7 20 Spain 8.3 8.9 9.3 9.9 13.2 12.6 14.0 13.6 14.1 13.3 13.3 21 Turkey 1.4 1.3 2.1 2.1 2.4 2.1 1.8 1.6 1.4 1.4 2.0 22 Other Western Europe 1.8 1.7 2.2 2.6 3.r 2.8 1.0 2.7 2.5 2.6 3.0 23 South Africa 1.9 1.7 1.2 1.1 1.2 1.2 1.2 1.0 1.4 1.4 1.3 24 Australia 2.7 2.9 2.8 2.3 12.7 13.7 15.0 15.4 12.6 14.3 17.4 25 OPEC2 14.5 15.8 14.8 17.4 22.9 21.6 21.6 23.9 19.5 20.3 22.3 26 Ecuador .7 .6 .5 .5 .5 .5 .4 .5 .5 .7 .7 27 Venezuela 5.4 5.2 5.4 5.1 4.7 4.5 3.9 3.7 3.5 3.5 3.0 28 Indonesia 2.7 2.7 2.8 3.3 3.4 3.2 3.3 3.8 4.0 4.1 4.4 29 Middle East countries 4.2 6.2 4.9 7.4 13.2 12.4 13.0 15.0 10.7 11.4 13.5 30 African countries 1.5 1.1 1.1 1.2 1.1 1.1 1.0 .9 .7 .6 .6 31 Non-OPEC developing countries 64.3 72.6 77.4 83.0 94.2 94.5 93.0 95.9 98.4 103.6 103.5 Latin America 32 Argentina 4.8 6.6 7.2 7.7 8.7 9.9 10.5 11.2 11.4 12.3 10.9 33 Brazil 9.6 10.8 11.7 12.0 12.7 12.0 9.3 8.4 9.2 10.0 13.1 34 Chile 3.6 4.4 4.7 4.7 5.1 5.1 5.5 6.1 6.4 7.1 6.4 35 Colombia 1.7 1.8 2.0 2.1 2.2 2.4 2.4 2.6 2.6 2.6 2.9 36 Mexico 15.5 16.0 17.5 17.6 18.8 18.4 19.6 18.4 17.8 17.6 16.3 37 Peru .4 .5 .3 .4 .6 .6 .6 .5 .6 .8 .7 38 Other 2.1 2.6 2.7 3.1 2.8 2.7 2.8 2.7 2.4 2.6 2.6 Asia China 39 People's Republic of China .3 .7 .5 2.0 .8 .8 1.0 1.1 1.1 1.4 1.7 40 Republic of China (Taiwan) 4.1 5.2 6.4 7.3 7.6 7.1 6.9 9.2 8.5 9.0 9.0 41 India 3.0 3.2 2.9 3.2 3.4 3.7 3.9 4.2 3.8 4.0 4.4 42 Israel .5 .4 .4 .5 .4 .4 .4 .4 .6 .6 .5 43 Korea (South) 6.8 6.6 6.5 6.7 14.1 14.3 14.4 16.2 16.9 18.7 18.0 44 Malaysia 2.3 3.1 4.1 4.4 5.2 5.2 3.9 3.1 3.9 4.1 4.3 45 Philippines 3.7 3.6 2.6 3.1 3.4 3.2 2.9 3.3 3.0 3.6 3.3 46 Thailand 1.7 2.2 2.8 3.1 3.0 3.3 3.5 2.1 3.3 3.8 3.9 47 Other Asia 2.4 3.1 3.4 3.1 3.1 3.2 3.4 4.7 4.9 3.5 3.6 Africa 48 Egypt .4 1 .2 .4 .4 .5 .3 .3 .4 .4 .4 49 Morocco .7 .6 .6 .7 .7 .7 .7 .6 .6 .9 .9 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 .7 1.0 .8 .8 1.0 .9 .9 .8 .7 .6 .7 52 Eastern Europe 2.4 3.1 3.0 3.2 3.4 3.0 3.0 2.7 2.3 1.8 3.4 53 Russia4 .9 1.9 1.7 1.6 1.5 1.2 1.1 .8 .6 .4 .6 54 Yugoslavia5 .9 .6 .6 .6 .5 .5 .5 .5 .4 .3 .4 55 Other .7 .6 .7 .9 1.4 1.4 1.5 1.4 1.2 1.0 2.3 56 Offshore banking centers 53.8 58.1 67.9 73.0r 78.9r 80.6r 11.2' 72.0r 85.3r 82.4r 86.4r 57 Bahamas 11.9 6.9 12.7 10.9r 13.7 13.3 13.8 10.7r 13.3r 8.4r 12.6r 58 Bermuda 2.3 6.2 5.5 8.9 8.9 6.5 6.0 8.4 8.7 8.5 6.3 59 Cayman Islands and other British West Indies 15.5 21.5 15.1 18.0r 17.9r 23.8r 21.5r 19.9 19.4 23.1' 23.4r 60 Netherlands Antilles 1.2 1.1 2.8 2.6 3.5 2.5 1.7 1.5 .9 2.5 55..55 61 Panama6 1.4 1.9 2.1 2.4 2.0 1.9 1.9 1.3 1.1 11..33 11..33 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 ..11 .1 63 Hong Kong 14.3 13.9 19.1 18.7 19.7 21.8 20.3 19.9 22.4 23.1 23.7 64 Singapore 7.1 6.5 10.4 11.2 13.0 10.6 11.8 10.1 19.2 14.8r 13.3 65 Other' .0 .0 .0 .1 .0 .0 .0 .1 .0 .0 .1 66 Miscellaneous and unallocated8 47.9 39.7 46.2 43.4 55.9 69.7 65.8 66.7 82.0 72.1 63.7r 1. The banking offices covered by these data include U.S. offices and foreign branches of 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 covered OPEC (Algeria, Gabon, Iran, Iraq. Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United include U.S. agencies and branches of foreign banks. Beginning March 1994, the data include Arab Emirates); and Bahrain and Oman (not formally members of OPEC). large foreign subsidiaries of U.S. banks. The data also include other types of U.S. depository 3. Excludes Liberia. Beginning March 1994 includes Namibia. institutions as well as some types of brokers and dealers. To eliminate duplication, the data 4. As of December 1992, excludes other republics of the former Soviet Union. are adjusted to exclude the claims on foreign branches held by a U.S. office or another foreign 5. As of December 1992. excludes Croatia, Bosnia and Hercegovinia, and Slovenia. 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 country 7. Foreign branch claims only. risk or exposure of U.S. banks. More complete data on the country risk exposure of U.S. banks 8. Includes New Zealand, Liberia, and international and regional organizations. 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 States Millions of dollars, end of period 1994 1995 TTyyppee ooff lliiaabbiilliittyy,, aanndd aarreeaa oorr ccoouunnttrryy 11999911 11999922 11999933 June Sept. Dec. Mar. June Sept.p 1 Total 44,708 45,511 50,597 57,193 59,163 55,656 51,530 51,236 48,912 2 Payable in dollars 39,029 37,456 38,728 43,410 43,412 39,645 37,246 35,530 35,147 3 Payable in foreign currencies 5,679 8,055 11,869 13,783 15,751 16,011 14,284 15,706 13,765 By type 4 Financial liabilities 22,518 23,841 29,226 35,256 37,973 34,301 31,118 30,545 27,476 5 Payable in dollars 18,104 16,960 18,545 23,461 24,091 20,165 18,047 16,277 15,111 6 Payable in foreign currencies 4,414 6,881 10,681 11,795 13,882 14,136 13,071 14,268 12,365 7 Commercial liabilities 22,190 21,670 21,371 21,937 21,190 21,355 20,412 20,691 21,436 8 Trade payables 9,252 9,566 8,802 9,911 9,550 10,005 9,844 10,527 10,061 9 Advance receipts and other liabilities 12,938 12,104 12,569 12,026 11,640 11,350 10,568 10,164 11,375 10 Payable in dollars 20,925 20,496 20,183 19,949 19,321 19,480 19,199 19,253 20,036 11 Payable in foreign currencies 1,265 1,174 1,188 1,988 1,869 1,875 1,213 1,438 1,400 By area or country Financial liabilities 12 Europe 12,003 13,387 18,810 25,396 25,614 22,018 17,880 18,571 16,735 13 Belgium and Luxembourg 216 414 175 524 661 495 612 778 347 14 France 2,106 1,623 2,539 1,590 2,241 1,727 2,046 1,101 1,354 15 Germany 682 889 975 939 1,467 1,961 1,755 1,589 1,670 16 Netherlands 1,056 606 534 533 648 552 633 530 474 17 Switzerland 408 569 634 631 633 688 883 1,056 948 18 United Kingdom 6,528 8,610 13,332 19,962 18,649 15,858 11,103 12,486 10,876 19 Canada 292 544 859 698 618 629 1,817 893 797 20 Latin America and Caribbean 4,784 4,053 3,359 3,125 3,139 3,021 3,024 2,808 2,762 21 Bahamas 537 379 1,148 1,052 1,112 926 931 851 849 22 Bermuda 114 114 0 115 15 80 149 138 144 23 Brazil 6 19 18 18 7 207 58 58 111 24 British West Indies 3,524 2,850 1,533 1,297 1,344 1,160 1,231 1,118 1,018 25 Mexico 7 12 17 13 15 0 10 3 3 26 Venezuela 4 6 5 5 5 5 5 4 3 27 Asia 5,381 5,818 5,956 5,998 8,450 8,448 8,201 8,080 6,994 28 Japan 4,116 4,750 4,887 5,064 7,248 7,314 7,182 7,153 6,310 29 Middle Eastern oil-exporting countries' 13 19 23 24 31 35 27 25 25 30 Africa 6 6 133 9 133 135 156 151 149 31 Oil-exporting countries2 4 0 123 0 123 123 122 122 122 32 All other3 52 33 109 30 19 50 40 42 39 Commercial liabilities 33 Europe 8,701 7,398 6,827 6,887 6,868 6,773 6,642 6,776 7,263 34 Belgium and Luxembourg 248 298 239 254 287 241 271 311 349 35 France 1,039 700 655 680 744 728 642 504 528 36 Germany 1,052 729 684 670 552 604 482 556 660 37 Netherlands 710 535 688 649 674 722 536 448 566 38 Switzerland 575 350 375 473 391 327 327 432 255 39 United Kingdom 2,297 2,505 2,039 2,309 2,350 2,444 2,848 2,902 3,351 40 Canada 1,014 1,002 879 1,070 1,068 1,037 1,235 1,146 1,219 41 Latin America and Caribbean 1,355 1,533 1,658 2,000 1,783 1,857 1,368 1,836 1,607 42 Bahamas 3 3 21 2 6 19 8 3 1 43 Bermuda 310 307 350 418 200 345 260 397 219 44 Brazil 219 209 214 215 147 161 96 107 143 45 British West Indies 107 33 27 24 33 23 29 12 5 46 Mexico 307 457 481 703 672 574 356 420 357 47 Venezuela 94 142 123 192 189 276 273 204 175 48 Asia 9,334 10,594 10,980 10,832 10,370 10,741 10,151 9,978 10,275 49 Japan 3,721 3,612 4,314 4,250 4,128 4,555 4,110 3,531 3,475 50 Middle Eastern oil-exporting countries' 1,498 1,889 1,534 1,835 1,663 1,576 1,787 1,790 1,647 51 Africa 715 568 453 510 468 428 463 481 589 52 Oil-exporting countries2 327 309 167 241 264 256 248 252 241 53 Other3 1,071 575 574 638 633 519 553 474 483 1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon, Libya, and Nigeria. Emirates (Trucial States). 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • April 1996 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1994 1995 TTyyppee ooff ccllaaiimm,, aanndd aarreeaa oorr ccoouunnttrryy 11999911 11999922 11999933 June Sept. Dec. Mar. June Sept.p 1 Total 45,262 45,073 49,159 52,510 54,833 57,888 52,218 58,030 53,616 2 Payable in dollars 42,564 42.281 45,161 48,003 50,460 53,805 48,425 54,145 49,935 3 Payable in foreign currencies 2,698 2,792 3,998 4,507 4,373 4,083 3,793 3,885 3,681 By type 4 Financial claims 27,882 26.509 27,771 30,234 32,236 33,897 29,606 34,567 29,802 Deposits 20,080 17,695 15,717 17,824 19,118 18,507 17,115 22,021 17,889 6 Payable in dollars 19,080 16,872 15,182 17,203 18,502 18,026 16,458 21,349 17,345 / Payable in foreign currencies 1,000 823 535 621 616 481 657 672 544 8 Other financial claims 7,802 8,814 12,054 12,410 13,118 15,390 12,491 12,546 11,913 9 Payable in dollars 6,910 7,890 10,862 11,057 11,903 14,306 11,275 11,388 10,690 10 Payable in foreign currencies 892 924 1.192 1,353 1,215 1,084 1,216 1,158 1,223 11 Commercial claims 17,380 18,564 21,388 22,276 22,597 23,991 22,612 23,463 23,814 12 Trade receivables 14,468 16,007 18,425 19,475 19,825 21,158 20,415 21,312 21,687 13 Advance payments and other claims 2,912 2,557 2,963 2,801 2,772 2,833 2,197 2,151 2,127 14 Payable in dollars 16,574 17.519 19,117 19,743 20,055 21,473 20,692 21,408 21,900 15 Payable in foreign currencies 806 1,045 2,271 2,533 2,542 2,518 1,920 2,055 1,914 By area or country Financial claims 16 Europe 13,441 9,331 7,299 7,372 8,914 7,936 7,630 7,923 7,807 17 Belgium and Luxembourg 13 8 134 84 115 86 146 155 160 18 France 269 764 826 995 931 800 808 731 754 19 Germany 283 326 526 459 413 540 527 355 299 20 Netherlands 334 515 502 472 503 429 606 601 522 21 Switzerland 581 490 530 539 777 523 490 514 530 22 United Kingdom 11,534 6,252 3,585 3,673 5,023 4,649 4,040 4,787 4,895 23 Canada 2,642 1,833 2,032 3,470 3,812 3,581 3,848 3,705 3,525 24 Latin America and Caribbean 10,717 13,893 16,224 16,465 16,608 19,536 16,109 21,160 15,300 23 Bahamas 827 778 1,336 1,376 1,121 2,424 940 2,355 1,552 26 Bermuda 8 40 125 39 52 27 37 85 35 21 Brazil 351 686 654 466 411 520 528 502 851 28 British West Indies 9,056 11.747 12.699 13,390 13,694 15,228 13,531 17,013 11,769 2y Mexico 212 445 872 629 691 723 583 638 490 30 Venezuela 40 29 161 32 31 35 27 27 50 31 Asia 640 864 1,657 2,221 2,176 1,871 1,504 1,231 2,150 32 Japan 350 668 892 1,344 661 953 621 467 1,393 33 Middle Eastern oil-exporting countries' 5 3 3 1 19 141 4 3 4 34 Africa 57 83 99 185 197 373 141 138 188 33 Oil-exporting countries" 1 9 1 0 0 0 9 9 6 36 All other3 385 505 460 521 529 600 374 410 832 Commercial claims 37 Europe 8,193 8,451 9.105 8,976 8,810 9,540 8,947 9,190 8,884 38 Belgium and Luxembourg 194 189 184 189 178 213 199 218 226 3y France 1,585 1,537 1,947 1,788 1,766 1,881 1,790 1,669 1,706 40 Germany 955 933 1,018 940 883 1,027 977 1,023 996 41 Netherlands 645 552 423 294 331 311 324 341 337 42 Switzerland 295 362 432 686 538 557 556 612 437 43 United Kingdom 2,086 2,094 2,377 2,445 2,505 2,556 2,388 2,459 2,501 44 Canada 1,121 1,286 1,781 1,875 1,906 1,988 2,010 2,003 2,001 45 Latin America and Caribbean 2,655 3,043 3,274 3,904 3,963 4,117 4,140 4,368 4,582 46 Bahamas 13 28 11 18 34 9 17 21 101 47 Bermuda 264 255 182 295 246 234 208 210 245 48 Brazil 427 357 460 500 471 612 695 777 745 4y British West Indies 41 40 71 67 49 83 55 83 175 30 Mexico 842 924 990 1,048 1,137 1,243 1,106 1,108 1,023 31 Venezuela 203 345 293 304 388 348 295 319 335 52 Asia 4,591 4.866 6,014 6,330 6,679 6,982 6,200 6,514 6,830 33 Japan 1,899 1.903 2,275 2,498 2,591 2,655 1,911 2,010 1,996 54 Middle Eastern oil-exporting countries' 620 693 704 642 617 708 689 707 778 55 Africa 430 554 493 480 447 454 468 478 546 36 Oil-exporting countries2 95 78 72 83 61 67 71 60 74 57 Other3 390 364 721 711 792 910 847 910 971 1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon, Libya, and Nigeria. Emirates (Trucial States). 3. Includes nonmonetary international and regional organizations. 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 1995 Transaction, and area or country 1994 1995 J D an ec .- . June July Aug. Sept. Oct. Nov. Dec.p U.S. corporate securities STOCKS 1 Foreign purchases 350,593 462,884 462,884 45,445 42,444 41,908 44,450 41,492 41,937 46,479 2 Foreign sales 348,716 451,709 451,709 43,218 40,009 39,366 44,218 42,860 39,071 44,372 3 Net purchases, or sales (—) 1,877 11,175 11,175 2,227 2,435 2,542 232 -1,368 2,866 2,107 4 Foreign countries 1,867 11,380 11,380 2,235 2,443 2,565 295 -1,328 2,877 2,109 5 Europe 6,714 4,847 4,847 -47 2,045 1,836 -1,319 1,647 954 1,028 6 France -201 -1,099 -1,099 -79 261 17 -126 -54 -58 -382 7 Germany 2,110 -1,837 -1,837 -224 8 -104 -136 5 -131 -11 8 Netherlands 2,251 3,507 3,507 70 364 431 197 528 230 373 9 Switzerland -30 -2,283 -2,283 -201 -20 -847 9 449 227 191 10 United Kingdom 840 8,001 8,001 240 1,445 2,330 -1,114 878 543 1,277 11 Canada -1,160 -1,517 -1,517 -740 -425 -10 -197 -74 405 -175 12 Latin America and Caribbean -2,111 5,814 5,814 1,651 881 1,811 752 -2,920 1,361 219 13 Middle East' -1,142 -337 -337 -99 -24 -5 -77 -8 -63 148 14 Other Asia -1,234 2,503 2,503 1,358 107 -961 1,048 61 342 883 15 Japan 1,162 -2,725 -2,725 -466 141 -1,076 -598 56 -406 1,231 16 Africa 29 2 2 15 -5 17 34 -17 -26 -1 17 Other countries 771 68 68 97 -136 -123 54 -17 -96 7 18 Nonmonetary international and regional organizations 10 -205 -205 -8 -8 -23 -63 -40 -11 -2 BONDS2 19 Foreign purchases 289,586 291,938 291,938 27,939 23,911 24,742 27,212 26,367 31,642 21,686 20 Foreign sales 229,665 206,951 206,951 18,835 14,949 16,741 17,759 19,199 20,741 21,117 21 Net purchases, or sales (—) 59,921 84,987 84,987 9,104 8,962 8,001 9,453 7,168 10,901 569 22 Foreign countries 59,036 85,441 85,441 9,111 9,129 7,982 9,431 7,236 10,948 541 23 Europe 37,065 68,723 68,723 7,716 6,340 5,561 6,959 6,361 9,759 1,297 24 France 242 1,143 1,143 44 7 538 63 732 101 137 25 Germany 657 5,806 5,806 667 51 1,163 916 113 894 236 26 Netherlands 3,322 1,463 1,463 -59 557 45 203 204 219 101 27 Switzerland 1,055 494 494 -130 317 -99 343 148 101 -381 28 United Kingdom 31,642 56,128 56,128 7,006 5,063 3,775 4,511 4,542 6,999 913 29 Canada 2,958 2,569 2,569 159 169 415 349 139 20 181 30 Latin America and Caribbean 5,442 6,141 6,141 289 1,145 754 1,719 -61 1,426 -848 31 Middle East1 771 1,869 1,869 64 348 281 241 -246 188 187 32 Other Asia 12,153 5,659 5,659 785 1,189 919 139 1,126 -705 -293 33 Japan 5.486 2,250 2,250 293 1,026 1,008 -371 645 -899 -904 34 Africa -7 234 234 47 -13 64 23 -223 240 86 35 Other countries 654 246 246 51 -49 -12 1 140 20 -69 36 Nonmonetary international and regional organizations 885 -454 -454 -7 -167 19 22 -68 -47 28 Foreign securities 37 Stocks, net purchases, or sales (-) -48,071 -51,250 -51,250 -4,409 -8,188 -5,904 -7,959 -5,755r -1,725 -7,360 38 Foreign purchases 386,106 345,164 345,164 29,123 28,582 30,867 28,712 29,382 30,307 32,032 39 Foreign sales 434,177 396,414 396,414 33,532 36,770 36,771 36,671 35,137r 32,032 39,392 40 Bonds, net purchases, or sales ( —) -9,224 -46,825 -46,825 -7,378 -4,079 -3,755 -5,206 -7,580r -6,058 -4,063 41 Foreign purchases 848,368 892,578 892,578 96,268 67,187 72,277 83,396 76,889r 78,563 80,310 42 Foreign sales 857,592 939,403 939,403 103,646 71,266 76,032 88,602 84,469r 84,621 84,373 43 Net purchases, or sales (—), of stocks and bonds .... -57,295 -98,075 -98,075 -11,787 -12,267 -9,659 -13,165 -13,335r -7,783 -11,423 44 Foreign countries -57,815 -97,270 -97,270 -11,476 -12,048 -9,486 -13,220 — 13,226r -7,705 -11,482 45 Europe -3,516 -48,040 -48,040 -5,788 -7,955 -2,539 -2,928 —7,243r -4,609 -6,226 46 Canada -7,475 -7,805 -7,805 -1,427 -1,301 -851 -3,471 1,311 -434 -8 47 Latin America and Caribbean -18,334 -6,938 -6,938 -513 -185 817 781 -3,883 -67 -786 48 -24,275 -34,097 -34,097 -2,942 -3,158 -7,250 -7,533 —2,503r -2,001 -4,742 49 Japan -17,427 -25,119 -25,119 -1,264 -3,586 -5,499 -5,360 — 849r -1,388 -4,031 50 Africa -467 -475 -475 -67 -45 34 -117 5 19 -192 51 Other countries -3,748 85 85 -739 596 303 48 —913r -613 472 52 Nonmonetary international and regional organizations 520 -805 -805 -311 -219 -173 55 —109 -78 59 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman. Qatar, 2. Includes state and local government securities and securities of U.S. government Saudi Arabia, and United Arab Emirates (Trucial States). agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. corporations organized to finance direct investments abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • April 1996 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions' Millions of dollars; net purchases, or sales (—) during period 1995 1995 AArreeaa oorr ccoouunnttrryy 11999944 11999955 Jan.- June July Aug. Sept. Oct. Nov. Dec.p Dec. 1 Total estimated 78,801 133,987 133,987 22,631 31,871 26,082 -11,072 4,819 15,307 -9,458 2 Foreign countries 78.637 133,552 133,552 22,432 31,382 26,442 -11,002 4,650 14,936 -9,016 3 Europe 38,542 50,004 50,004 2,702 13,336 9,170 6,377 -4,608 821 -1,116 4 Belgium and Luxembourg 1,098 591 591 -148 -53 580 143 -25 81 171 5 Germany 5,709 6,136 6,136 -1,866 1,039 2,995 2,568 2,831 52 452 6 Netherlands 1,254 1,891 1,891 1,078 883 -1,468 -1,915 160 833 381 7 Sweden 794 358 358 63 124 100 61 92 -30 -285 8 Switzerland 481 -472 -472 9 206 -515 818 174 -568 -664 9 United Kingdom 23,365 34,782 34,782 1,396 7,315 7,950 5,570 -5,965 1,309 -4,373 in Other Europe and former U.S.S.R 5,841 6,718 6,718 2,170 3,822 -472 -868 -1,875 -856 3,202 n Canada 3,491 252 252 433 720 -825 -2,284 -1,864 -43 208 17. Latin America and Caribbean -10,383 48,609 48,609 5,368 513 11,265 -5,299 17,453 13,496 3,762 13 Venezuela -319 -2 -2 121 -114 -359 -524 -92 232 61 14 Other Latin America and Caribbean -20,493 25,152 25,152 5,158 1,034 5,364 1,171 3,033 3,723 4,710 15 Netherlands Antilles 10,429 23,459 23,459 89 -407 6,260 -5,946 14,512 9,541 -1,009 16 47,317 32,319 32,319 12,605 16,490 7,322 -10,055 -6,879 -107 -11,843 17 Japan 29,793 16,863 16,863 5,585 6,658 5,430 -4,021 -10,115 1,316 -5,695 18 Africa 240 1,460 1,460 242 -1 -130 108 501 458 248 19 Other -570 908 908 1,082 324 -360 151 47 311 -275 20 Nonmonetary international and regional organizations 164 435 435 199 489 -360 -70 169 371 -442 71 International 526 5 5 -409 311 -140 -196 2 368 -351 22 Latin American regional -154 261 261 623 105 -10 -6 185 -43 -115 MEMO 23 Foreign countries 78,637 133,552 133,552 22,432 31,382 26,442 -11,002 4,650 14,936 -9,016 24 Official institutions 41,822 39,625 39,625 10,87 r 16,790r -364 -4,525 5,705 -915r 2,651 25 Other foreign 36,815 93,927 93,927 1 l,561r 14,592r 26,806 -6,477 -1,055 15,85 r -11,667 Oil-exporting countries 26 Middle East" -38 3,075 3,075 815 3,582 1,890 -50 -624 -826 -1,085 27 Africa3 0 2 2 1 0 0 0 0 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 foreign 3. Comprises Algeria, Gabon, Libya, and Nigeria. 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 BANKS' Percent per year, averages of daily figures Rate on Feb. 29, 1996 Feb. 29, 1996 Country Country Month effective Austria. . . 3.0 Dec. 1995 Germany . . . 3.0 Belgium.. 3.0 Dec. 1995 Italy 9.0 Canada. . 5.5 Feb. 1996 Japan Denmark 4.0 Jan. 1996 Netherlands . France2 . 3.90 Feb. 1996 Switzerland . 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 banks or Treasury bills for seven to ten days. 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 RATES' Percent per year, averages of daily figures 1995 1996 TTyyppee oorr ccoouunnttrryy 11999933 11999944 11999955 Aug. Sept. Oct. Nov. Dec. Jan. Feb. 1 Eurodollars 3.18 4.63 5.93 5.79 5.74 5.81 5.75 5.64 5.40 5.14 2 United Kingdom 5.88 5.45 6.63 6.74 6.71 6.69 6.61 6.42 (i.3l 6.13 3 Canada 5.14 5.57 7.14 6.62 6.66 6.66 6.02 5.91 5.58 5.22 4 Germany 7.17 5.25 4.43 4.35 4.09 4.00 3.91 3.82 3.51 3.26 5 Switzerland 4.79 4.03 2.94 2.79 2.67 2.15 1.98 1.94 1.65 1.61 6 Netherlands 6.73 5.09 4.30 4.02 3.85 3.88 3.73 3.58 3.20 3.00 7 France 8.30 5.72 6.43 5.81 5.86 6.73 5.74 5.47 4.56 4.29 8 Italy 10.09 8.45 10.43 10.45 10.36 10.74 10.65 10.58 10.05 9.90 9 Belgium 8.10 5.65 4.73 4.41 4.20 4.14 3.87 3.74 3.47 3.23 10 Japan 2.96 2.24 1.20 .82 .56 .51 .54 .52 .55 .61 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 • April 1996 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar except as noted 1995 1996 CCoouunnttrryy//ccuurrrreennccyy uunniitt 11999933 11999944 11999955 Sept. Oct. Nov. Dec. Jan. Feb. 1 Australia/dollar" 67.993 73.161 74.073 75.371 75.699 74.534 74.053 74.171 75.557 2 Austria/schilling 11.639 11.409 10.076 10.270 9.955 9.974 10.142 10.296 10.321 3 Belgium/franc 34.581 33.426 29.472 30.044 29.105 29.154 29.615 30.081 30.115 4 Canada/dollar 1.2902 1.3664 1.3725 1.3509 1.3458 1.3534 1.3693 1.3669 1.3752 3 China, P.R./'yuan 5.7795 8.6404 8.3700 8.3374 8.3353 8.3334 8.3350 8.3384 8.3338 6 Denmark/krone 6.4863 6.3561 5.5999 5.6587 5.4912 5.4923 5.5791 5.6618 5.6749 7 5.7251 5.2340 4.3763 4.3754 4.2781 4.2489 4.3361 4.4510 4.5532 8 Francc/franc 5.6669 5.5459 4.9864 5.0352 4.9374 4.8882 4.9565 5.0117 5.0440 9 Germany/dcutsche mark 1.6545 1.6216 1.4321 1.4601 1.4143 1.4173 1.4406 1.4635 1.4669 10 Greece/drachma 229.64 242.50 231.68 235.65 232.65 234.16 238.06 240.91 242.21 ir 11 Hong Konc/dollar 7.7357 7.7290 7.7357 68 7.7317 7.7338 7.7345 7.7329 7.7323 12 India/rupee 31.291 31.394 32.418 ^3.310 34.656 34.710 34.966 35.812 36.595 13 Ireland/'oound" 146.47 149.69 160.35 . \05 161.32 160.54 159.18 158.18 158.10 14 Italy/lira 1,573.41 1,611.49 1.629.45 1 61.'.41 1,605.69 1,592.67 1,593.88 1,584.87 1,570.00 13 Japan/yea 111.08 102.18 93.96 10d.55 100.84 101.94 101.85 105.75 105.79 16 Malaysia, 'nncgit 2.5738 2.6237 2.5073 2.5124 2.5324 2.5389 2.5399 2.5563 2.5487 1/ Netherlands/suilder 1.8585 1.8190 1.6044 1.6354 1.5846 1.5877 1.6127 1.6388 1.6424 18 Neyv Zealand/dollar 54.127 59.358 65.625 65.607 65.899 65.224 64.996 66.195 67.495 19 Norway/krone 7.1009 7.0553 6.3355 6.3943 6.2397 6.2536 6.3579 6.4275 6.4103 20 Portugal/escudo 161.08 165.93 149.88 152.11 148.94 148.68 151.03 151.90 152.49 21 Singapore/dollar 1.6158 1.5275 1.4171 1.4331 1.4231 1.4128 1.4148 1.4211 1.4115 22 South Airica/rand 3.2729 3.5526 3.6286 3.6616 3.6502 3.6499 3.6632 3.6413 3.7420 23 South Korea/won 805.75 806.93 772.82 772.04 767.20 769.78 771.31 787.13 780.12 24 Spain/peseta 127.48 133.88 124.64 125.41 122.51 121.81 122.53 123.38 123.65 23 Sri Lanka/rupee 48.211 49.170 51.047 52.547 52.539 53.199 53.808 53.874 53.716 26 Sweden/krona 7.7956 7.7161 7.1406 7.1227 6.8301 6.6088 6.6393 6.7405 6.8775 27 Switzerland/franc 1.4781 1.3667 1.1812 1.1868 1.1453 1.1437 1.1631 1.1818 1.1967 28 Taiwan/dollar 26.416 26.465 26.495 27.432. 26.925 27.257 27.315 27.406 27.485 29 Thailand/baht 25.333 25.161 24.921 25.129 25.115 25.166 25.164 25.298 25.250 30 United Kingdom/pound2 150.16 153.19 157.85 155.90 157.79 156.25 154.05 152.88 153.60 MEMO 31 United States/dollar3 93.18 91.32 84.25 85.69 84.10 84.14 85.07 86.23 86.41 1. Averages of certified noon buying rates in New York for cable transfers. Data in this 3. Index of weighted-average exchange value of U.S. dollar against the currencies of ten table also appear in the Board's G.5 (405) monthly statistical release. For ordering address. industrial countries. The weight for each of the ten countries is the 1972-76 average world see inside front cover. trade of that country divided by the average world trade of all ten countries combined. Series 2. Value in US. cents. revised as of August 1978 (see Federal Reserve Bulletin, vol. 64 (August 1978), p. 700). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A67 Guide to Statistical Releases and Special Tables STATISTICAL RELEASES—List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases December 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 February 1995 May 1995 A68 May 1995 August 1995 A68 August 1995 November 1995 A68 November 1995 February 1996 A68 Assets and liabilities of U.S. branches and agencies of foreign banks December 31, 1994 May 1995 A72 March 31, 1995 October 1995 A68 June 30, 1995 November 1995 A72 September 30, 1995 February 1996 All Pro forma balance sheet and income statements for priced service operations June 30, 1992 October 1992 A70 March 31, 1995 August 1995 A76 June 30, 1995 October 1995 A72 September 30, 1995 January 1996 A68 Assets and liabilities of life insurance companies June 30, 1991 December 1991 A79 September 30, 1991 May 1992 A81 December 31, 1991 August 1992 A83 September 30, 1992 March 1993 A71 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 Index to Statistical Tables References are to pages A3-A66 although the prefix 'A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Deposits—Continued Agricultural loans, commercial banks, 21, 22 Interest rates, 16 Assets and liabilities (See also Foreigners) Turnover, 17 Banks, by classes, 18-23 Discount rates at Reserve Banks and at foreign central banks and Domestic finance companies, 36 foreign countries (See Interest rates) Federal Reserve Banks, 11 Discounts and advances by Reserve Banks (See Loans) Financial institutions, 28 Dividends, corporate, 35 Foreign banks, U.S. branches and agencies, 23 Automobiles EMPLOYMENT, 45 Consumer installment credit, 39 Eurodollars, 26 Production, 47, 48 FARM mortgage loans, 38 BANKERS acceptances, 11, 12, 21-24, 26 Federal agency obligations, 5, 10, 11, 12, 31, 32 Bankers balances, 18-23. (See also Foreigners) Federal credit agencies, 33 Bonds (See also U.S. government securities) Federal finance New issues, 34 Debt subject to statutory limitation, and types and ownership Rates, 26 of gross debt, 30 Branch banks, 23 Receipts and outlays, 28, 29 Business activity, nonfinancial, 45 Treasury financing of surplus, or deficit, 28 Business loans (See Commercial and industrial loans) Treasury operating balance, 28 Federal Financing Bank, 33 CAPACITY utilization, 46 Federal funds, 7, 21, 22, 23, 26, 28 Capital accounts Federal Home Loan Banks, 33 Banks, by classes, 18 Federal Home Loan Mortgage Corporation, 33, 37, 38 Federal Reserve Banks, 11 Federal Housing Administration, 33, 37, 38 Central banks, discount rates, 65 Federal Land Banks, 38 Certificates of deposit, 26 Federal National Mortgage Association, 33, 37, 38 Commercial and industrial loans Federal Reserve Banks Commercial banks, 21, 22 Condition statement, 11 Weekly reporting banks, 21-23 Discount rates (See Interest rates) Commercial banks U.S. government securities held, 5, 11, 12, 30 Assets and liabilities, 18-23 Federal Reserve credit, 5, 6, 11, 12 Commercial and industrial loans, 18-23 Federal Reserve notes, 11 Consumer loans held, by type and terms, 39 Federally sponsored credit agencies, 33 Deposit interest rates of insured, 16 Finance companies Loans sold outright, 22 Assets and liabilities, 36 Real estate mortgages held, by holder and property, 38 Business credit, 36 Time and savings deposits, 4 Loans, 39 Commercial paper, 24, 26, 36 Paper, 24, 26 Condition statements (See Assets and liabilities) Financial institutions, loans to, 21, 22, 23 Construction, 45, 49 Float, 5 Consumer installment credit, 39 Flow of funds, 40-44 Consumer prices, 45 Foreign banks, assets and liabilities of U.S. branches and agencies, Consumption expenditures, 52, 53 22, 23 Corporations Foreign currency operations, 11 Profits and their distribution, 35 Foreign deposits in U.S. banks, 5, 22 Security issues, 34, 65 Foreign exchange rates, 66 Cost of living (See Consumer prices) Foreign trade, 54 Credit unions, 39 Foreigners Currency in circulation, 5, 14 Claims on, 55, 58, 59, 60, 62 Customer credit, stock market, 27 Liabilities to, 22, 54, 55, 56, 61, 63, 64 DEBITS to deposit accounts, 17 GOLD Debt (See specific types of debt or securities) Certificate account, 11 Demand deposits Stock, 5, 54 Banks, by classes, 18-23 Government National Mortgage Association, 33, 37, 38 Ownership by individuals, partnerships, and Gross domestic product, 51 corporations, 22, 23 Turnover, 17 HOUSING, new and existing units, 49 Depository institutions Reserve requirements, 9 Reserves and related items, 4, 5, 6, 13 INCOME, personal and national, 45, 51, 52 Deposits (See also specific types) Industrial production, 45, 47 Banks, by classes, 4, 18-23 Installment loans, 39 Federal Reserve Banks, 5, 11 Insurance companies, 30, 38 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A69 Interest rates Reserves Bonds, 26 Commercial banks, 18 Consumer installment credit, 39 Depository institutions, 4, 5, 6, 13 Deposits, 16 Federal Reserve Banks, 11 Federal Reserve Banks, 8 U.S. reserve assets, 54 Foreign central banks and foreign countries, 65 Residential mortgage loans, 37 Money and capital markets, 26 Retail credit and retail sales, 39, 45 Mortgages, 37 Prime rate, 25 SAVING International capital transactions of United States, 53-65 Flow of funds, 40-44 International organizations, 55, 56, 58, 61, 62 National income accounts, 51 Inventories, 51 Savings institutions, 38, 39, 40 Investment companies, issues and assets, 35 Savings deposits (See Time and savings deposits) Investments (See also specific types) Securities (See also specific types) Banks, by classes, 18-23 Federal and federally sponsored credit agencies, 33 Commercial banks, 4, 18-23 Foreign transactions, 63 Federal Reserve Banks, 11,12 New issues, 34 Financial institutions, 38 Prices, 27 Special drawing rights, 5,11, 53, 54 LABOR force, 45 State and local governments Life insurance companies (See Insurance companies) Deposits, 21, 22 Loans (See also specific types) Holdings of U.S. government securities, 30 Banks, by classes, 18-23 New security issues, 34 Commercial banks, 18-23 Ownership of securities issued by, 21, 23 Federal Reserve Banks, 5, 6, 8, 11, 12 Rates on securities, 26 Financial institutions, 38 Stock market, selected statistics, 27 Insured or guaranteed by United States, 37, 38 Stocks (See also Securities) New issues, 34 MANUFACTURING Prices, 27 Capacity utilization, 46 Production, 46, 48 Student Loan Marketing Association, 33 Margin requirements, 27 Member banks (See also Depository institutions) TAX receipts, federal, 29 Federal funds and repurchase agreements, 7 Reserve requirements, 9 Thrift institutions, 4. (See also Credit unions and Savings Mining production, 48 institutions) Mobile homes shipped, 49 Time and savings deposits, 4, 14, 16, 18-23 Monetary and credit aggregates, 4, 13 Trade, foreign, 54 Money and capital market rates, 26 Treasury cash, Treasury currency, 5 Money stock measures and components, 4, 14 Treasury deposits, 5, 11, 28 Mortgages (See Real estate loans) Treasury operating balance, 28 Mutual funds, 35 UNEMPLOYMENT, 45 Mutual savings banks (See Thrift institutions) U.S. government balances Commercial bank holdings, 18-23 NATIONAL defense outlays, 29 Treasury deposits at Reserve Banks, 5, 11, 28 National income, 51 U.S. government securities Bank holdings, 18-23, 30 OPEN market transactions, 10 Dealer transactions, positions, and financing, 32 Federal Reserve Bank holdings, 5, 11, 12, 30 PERSONAL income, 52 Foreign and international holdings and Prices transactions, 11, 30, 64 Consumer and producer, 45, 50 Open market transactions, 10 Stock market, 27 Outstanding, by type and holder, 30, 31 Prime rate, 25 Rates, 26 Producer prices, 45, 50 U.S. international transactions, 53-66 Production, 45, 47 Utilities, production, 48 Profits, corporate, 35 VETERANS Administration, 37, 38 REAL estate loans Banks, by classes, 21, 22, 38 WEEKLY reporting banks, 18-23 Terms, yields, and activity, 37 Wholesale (producer) prices, 45, 50 Type of holder and property mortgaged, 38 Repurchase agreements, 7 Reserve requirements, 9 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman Pro Tempore EDWARD W. KELLEY, JR. LAWRENCE B. LINDSEY OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE JOSEPH R. COYNE, Assistant to the Board EDWIN M. TRUMAN, Staff Director DONALD J. WINN, Assistant to the Board LARRY J. PROMISEL, Senior Associate Director THEODORE E. ALLISON, Assistant to the Board for Federal CHARLES J. SIEGMAN, Senior Associate Director Reserve System Affairs DALE W. HENDERSON, Associate Director LYNN S. FOX, Deputy Congressional Liaison DAVID H. HOWARD, Senior Adviser WINTHROP P. HAMBLEY, Special Assistant to the Board DONALD B. ADAMS, Assistant Director BOB STAHLY MOORE, Special Assistant to the Board THOMAS A. CONNORS, Assistant Director DIANE E. WERNEKE, Special Assistant to the Board PETER HOOPER HI, 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 MICHAEL J. PRELL, Director SCOTT G. ALVAREZ, Associate General Counsel EDWARD C. ETTIN, Deputy Director RICHARD M. ASHTON, Associate General Counsel DAVID J. STOCKTON, Deputy Director OLIVER IRELAND, Associate General Counsel MARTHA BETHEA, Associate Director KATHLEEN M. O'DAY, Associate General Counsel WILLIAM R. JONES, Associate Director ROBERT DEV. FRIERSON, Assistant General Counsel MYRON L. KWAST, Associate Director KATHERINE H. WHEATLEY, Assistant General Counsel PATRICK M. PARKINSON, Associate Director THOMAS D. SIMPSON, Associate Director LAWRENCE SLIFMAN, Associate Director OFFICE OF THE SECRETARY MARTHA S. SCANLON, Deputy Associate Director WILLIAM W. WILES, Secretary PETER A. TINSLEY, Deputy Associate Director JENNIFER J. JOHNSON, Deputy Secretary FLINT BRAYTON, Assistant Director BARBARA R. LOWREY, Associate Secretary and Ombudsman DAVID S. JONES, Assistant Director STEPHEN A. RHOADES, Assistant Director DIVISION OF BANKING CHARLES S. STRUCKMEYER, Assistant Director ALICE PATRICIA WHITE, Assistant Director SUPERVISION AND REGULATION JOYCE K. ZICKLER, Assistant Director RICHARD SPILLENKOTHEN, Director JOHN J. MINGO, Senior Adviser STEPHEN C. SCHEMERING, Deputy Director GLENN B. CANNER, Adviser DON E. KLINE, Associate Director WILLIAM A. RYBACK, Associate Director DIVISION OF MONETARY AFFAIRS HERBERT A. BIERN, Deputy Associate Director ROGER T. COLE, Deputy Associate Director DONALD L. KOHN, Director JAMES I. GARNER, Deputy Associate Director DAVID E. LINDSEY, Deputy Director HOWARD A. AMER, Assistant Director BRIAN F. MADIGAN, Associate Director GERALD A. EDWARDS, JR., Assistant Director RICHARD D. PORTER, Deputy Associate Director STEPHEN M. HOFFMAN, JR., Assistant Director VINCENT R. REINHART, Assistant Director LAURA M. HOMER, Assistant Director NORMAND R.V. BERNARD, Special Assistant to the Board JAMES V. HOUPT, Assistant Director JACK P. JENNINGS, Assistant Director DIVISION OF CONSUMER MICHAEL G. MARTINSON, Assistant Director AND COMMUNITY AFFAIRS RHOGER H PUGH, Assistant Director GRIFFITH L. GARWOOD, Director SIDNEY M. SUSSAN, Assistant Director GLENN E. LONEY, Associate Director MOLLY S. WASSOM, Assistant Director DOLORES S. SMITH, Associate Director WILLIAM SCHNEIDER, Project Director, MAUREEN P. ENGLISH, Assistant Director National Information Center IRENE SHAWN MCNULTY, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 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, EE0 Programs Director DAVID L. ROBINSON, Deputy Director (Finance and Control) LOUISE L. ROSEMAN, Associate Director DIVISION OF HUMAN RESOURCES CHARLES W. BENNETT, Assistant Director MANAGEMENT JACK DENNIS, JR., Assistant Director EARL G. HAMILTON, Assistant Director DAVID L. SHANNON, Director JEFFREY C. MARQUARDT, Assistant Director JOHN R. WEIS, Associate Director JOHN H. PARRISH, Assistant Director ANTHONY V. DIGIOIA, Assistant Director FLORENCE M. YOUNG, Assistant Director JOSEPH H. HAYES, JR., Assistant Director FRED HOROWITZ, Assistant Director OFFICE OF THE INSPECTOR GENERAL OFFICE OF THE CONTROLLER BRENT L. BOWEN, Inspector General DONALD L. ROBINSON, Assistant Inspector General GEORGE E. LIVINGSTON, Controller BARRY R. SNYDER, Assistant Inspector General STEPHEN J. CLARK, Assistant Controller (Programs and Budgets) DARRELL R. PAULEY, Assistant Controller (Finance) DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director DAVID L. WILLIAMS, Assistant Director DIVISION OF INFORMATION RESOURCES MANAGEMENT STEPHEN R. MALPHRUS, Director MARIANNE M. EMERSON, Assistant Director Po KYUNG KIM, Assistant Director RAYMOND H. MASSEY, Assistant Director EDWARD T. MULRENIN, Assistant Director DAY W. RADABAUGH, JR., Assistant Director ELIZABETH B. RIGGS, Assistant Director RICHARD C. STEVENS, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72 Federal Reserve Bulletin • April 1996 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman EDWARD G. BOEHNE LAWRENCE B. LINDSEY GARY H. STERN JERRY L. JORDAN ROBERT D. MCTEER, JR. JANET L. YELLEN EDWARD W. KELLEY, JR. SUSAN M. PHILLIPS ALTERNATE MEMBERS J. ALFRED BROADDUS, JR. MICHAEL H. MOSKOW ERNEST T. PATRIKIS JACK GUYNN ROBERT T. PARRY STAFF DONALD L. KOHN, Secretary and Economist DAVID E. LINDSEY, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary FREDERIC S. MISHKIN, Associate Economist JOSEPH R. COYNE, Assistant Secretary LARRY J. PROMISEL, Associate Economist GARY P. GILLUM, Assistant Secretary ARTHUR J. ROLNICK, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel HARVEY ROSENBLUM, Associate Economist THOMAS C. BAXTER, JR., Deputy General Counsel CHARLES J. SIEGMAN, Associate Economist MICHAEL J. PRELL, Economist THOMAS D. SIMPSON, Associate Economist EDWIN M. TRUMAN, Economist MARK S. SNIDERMAN, Associate Economist RICHARD W. LANG, Associate Economist DAVID J. STOCKTON, Associate Economist PETER R. FISHER, Manager, System Open Market Account FEDERAL ADVISORY COUNCIL RICHARD G. TILGHMAN, President FRANK V. CAHOUET, Vice President WILLIAM M. CROZIER, JR., First District ROGER L. FITZSIMONDS, Seventh District WALTER V. SHIPLEY, Second District THOMAS H. JACOBSEN, Eighth District WALTER E. DALLER, JR., Third District RICHARD M. KOVACEVICH, Ninth District FRANK V. CAHOUET, Fourth District CHARLES E. NELSON, Tenth District RICHARD G. TILGHMAN, Fifth District CHARLES T. DOYLE, Eleventh District CHARLES E. RICE, Sixth District WILLIAM E. B. SIART, Twelfth District HERBERT V. PROCHNOW, Secretary Emeritus JAMES ANNABLE, Co-Secretary WILLIAM J. KORSVIK, Co-Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 CONSUMER ADVISORY COUNCIL KATHARINE W. MCKEE, Durham, North Carolina, Chairman JULIA M. SEWARD, Richmond, Virginia, Vice Chairman RICHARD S. AMADOR, Los Angeles, California ERROL T. LOUIS, Brooklyn, New York THOMAS R. BUTLER, Riverwoods, Illinois WILLIAM N. LUND, Falmouth, Maine ROBERT A. COOK, Baltimore, Maryland RONALD A. PRILL, Minneapolis, Minnesota ALVIN J. COWANS, Orlando, Florida LISA RICE-COLEMAN, Toledo, Ohio ELIZABETH G. FLORES, Laredo, Texas JOHN R. RINES, Detroit, Michigan HERIBERTO FLORES, Springfield, Massachusetts MARGOT SAUNDERS, Washington, D.C. EMANUEL FREEMAN, Philadelphia, Pennsylvania ANNE B. SHLAY, Philadelphia, Pennsylvania DAVID C. FYNN, Cleveland, Ohio REGINALD J. SMITH, Kansas City, Missouri ROBERT G. GREER, Houston, Texas GEORGE P. SURGEON, Arkadelphia, Arkansas KENNETH R. HARNEY, Chevy Chase, Maryland GREGORY D. SQUIRES, Milwaukee, Wisconsin GAIL K. HILLEBRAND, San Francisco, California JOHN E. TAYLOR, Washington, D.C. TERRY JORDE, Cando, North Dakota LORRAINE VANETTEN, Troy, Michigan FRANCINE JUSTA, New York, New York THEODORE J. WYSOCKI, JR., Chicago, Illinois EUGENE I. LEHRMANN, Madison, Wisconsin LILY K. YAO, Honolulu, Hawaii THRIFT INSTITUTIONS ADVISORY COUNCIL E. LEE BEARD, Hazleton, Pennsylvania, President DAVID F. HOLLAND, Burlington, Massachusetts, Vice President BARRY C. BURKHOLDER, Houston, Texas CHARLES R. RINEHART, Irwindale, California MICHAEL T. CROWLEY, JR., Milwaukee, Wisconsin JOSEPH C. SCULLY, Chicago, Illinois GEORGE L. ENGELKE, JR., Lake Success, New York RONALD W. STIMPSON, Memphis, Tennessee DOUGLAS A. FERRARO, Englewood, Colorado 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

A74 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated MS-127, Board of Governors of the Federal Reserve System, monthly. (Requests must be prepaid.) Washington, DC 20551 or telephone (202) 452-3244 or FAX Consumer and Community Affairs Handbook. $75.00 per year. Monetary Policy and Reserve Requirements Handbook. $75.00 (202) 728-5886. When a charge is indicated, payment should per year. accompany request and be made payable to the Board of Governors of the Federal Reserve System or may be ordered via Securities Credit Transactions Handbook. $75.00 per year. Mastercard or Visa. Payment from foreign residents should be The Payment System Handbook. $75.00 per year. drawn on a U.S. bank. Federal Reserve Regulatory Service. Four vols. (Contains all four Handbooks plus substantial additional material.) $200.00 per year. Rates for subscribers outside the United States are as follows THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. 1994. 157 pp. and include additional air mail costs: Federal Reserve Regulatory Service, $250.00 per year. ANNUAL REPORT. Each Handbook, $90.00 per year. ANNUAL REPORT: BUDGET REVIEW, 1994-95. FEDE e R a A c L h R i E n S E t R h V e E U B n U i L te L d E T S IN ta . te M s, o n i t t h s l y p . o $ s 2 s 5 es .0 s 0 io n p s e , r y C e a a n r a o d r a , $ 2 a .5 n 0 d THE C U O .S U . N E T C R O Y N M OM OD Y E L IN , M AN a y I N 1 T 9 E 8 R 4. D 5 E 9 P 0 E N p D p E . N $ T 1 4 W .5 O 0 R e L a D c : h . A MULTI- Mexico. Elsewhere, $35.00 per year or $3.00 each. INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. 440 pp. $9.00 each. ANNUAL STATISTICAL DIGEST: period covered, release date, number of pages, and price. FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. December 1986. 264 pp. $10.00 each. 1981 October 1982 239 pp. $ 6.50 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 EDUCATION PAMPHLETS 1986 November 1987 288 pp. $15.00 Short pamphlets suitable for classroom use. Multiple copies are 1987 October 1988 272 pp. $15.00 available without charge. 1988 November 1989 256 pp. $25.00 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 1994 December 1995 190 pp. $25.00 Series on the Structure of the Federal Reserve System The Board of Governors of the Federal Reserve System The Federal Open Market Committee Federal Reserve Bank Board of Directors SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF CHARTS. Weekly. $30.00 per year or $.70 each in the United Federal Reserve Banks States, its possessions, Canada, and Mexico. Elsewhere, Organization and Advisory Committees $35.00 per year or $.80 each. A Consumer's Guide to Mortgage Lock-Ins A Consumer's Guide to Mortgage Settlement Costs THE FEDERAL RESERVE ACT and other statutory provisions affect- A Consumer's Guide to Mortgage Refinancings ing the Federal Reserve System, as amended through August Home Mortgages: Understanding the Process and Your Right 1990. 646 pp. $10.00. to Fair Lending REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL How to File a Consumer Complaint RESERVE SYSTEM. Making Deposits: When Will Your Money Be Available? ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— Making Sense of Savings Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. SHOP: The Card You Pick Can Save You Money Vol. II (Irregular Transactions). 1969. 116 pp. Each volume Welcome to the Federal Reserve $2.25. When Your Home is on the Line: What You Should Know GUIDE TO THE FLOW OF FUNDS ACCOUNTS. 672 pp. $8.50 each. About Home Equity Lines of Credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A75 STAFF STUDIES: Only Summaries Printed in the 163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR- BULLETIN KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary Studies and papers on economic and financial subjects that are of Ann Taylor. March 1992. 37 pp. general interest. Requests to obtain single copies of the full text or 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by to be added to the mailing list for the series may be sent to James T. Fergus and John L. Goodman, Jr. July 1993. Publications Services. 20 pp. 165. THE DEMAND FOR TRADE CREDIT: AN INVESTIGATION OF Staff Studies 1-157 are out of print. MOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES, by Gregory E. Elliehausen and John D. Wolken. September 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- 1993. 18 pp. MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE 166. THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET, by PRODUCTS, by Mark J. Warshawsky with the assistance of Mark Carey, Stephen Prowse, John Rea, and Gregory Udell. Dietrich Earnhart. September 1989. 23 pp. January 1994. Ill pp. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI- 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANK- ARIES OF BANK HOLDING COMPANIES, by Nellie Liang and ING, 1980-93, AND AN ASSESSMENT OF THE "OPERATING Donald Savage. February 1990. 12 pp. PERFORMANCE" AND "EVENT STUDY" METHODOLOGIES, 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- by Stephen A. Rhoades. July 1994. 37 pp. VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by 168. THE ECONOMICS OF THE PRIVATE EQUITY MARKET, by Gregory E. Elliehausen and John D. Wolken. September George W. Fenn, Nellie Liang, and Stephen Prowse. Novem- 1990. 35 pp. ber 1995. 69 pp. 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, 169. BANK MERGERS AND INDUSTRYWIDE STRUCTURE, 1980-94, 1980-90, by Margaret Hastings Pickering. May 1991. by Stephen A. Rhoades. February 1996. 32 pp. 21 pp. 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- GAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Rhoades. February 1992. 11 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Maps of the Federal Reserve System l 9 MINNEAPOLIS ^ BOSTON 7 12 _ O • NEW YORK CHICAGO I 10 CLEVELAND PHILADELPHIA 4 f SAN FRANCISCO KANSAS CITY I RICHMOND ST. LOUIS 6 11 ATLANTA DALLAS ALASKA 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 by num- of Puerto Rico and the U.S. Virgin Islands; the San Franber and Reserve Bank city (shown on both pages) and by cisco Bank serves American Samoa, Guam, and the Comletter (shown on the facing page). monwealth of the Northern Mariana Islands. The Board of In the 12th District, the Seattle Branch serves Alaska, Governors revised the branch boundaries of the System and the San Francisco Bank serves Hawaii. most recently in December 1991. The System serves commonwealths and territories as follows: the New York Bank serves the Commonwealth Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 1-A 2-B 3-C 4-D 5-E Pittsburgh Baltimore XV ^SVA FA f 1 CT \ ' wv —NC~~ •Cincinnati •Charlotte Buffalo Bj MA S NY KY CT BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 7-G 8-H / & )wi LcSisville LA Jacksonville JUL m - #Memphis New Orleans R. Little) Rock < m ATLANTA CHICAGO ST. LOUIS 9-1 MS MINNEAPOLIS 10-J 12-L |se Omaha* Demrer Oklahonra City OK KANSAS CITY 11-K At DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02106 Jerome H. Grossman Cathy E. Minehan William C. Brainard Paul M. Connolly NEW YORK* 10045 John C. Whitehead William J. McDonough Thomas W. Jones Ernest T. Patrikis Buffalo 14240 Joseph J. Castiglia Carl W. Turnipseed1 PHILADELPHIA 19105 Donald J. Kennedy Edward G. Boehne Joan Carter 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 John T. Ryan III Harold J. Swart1 RICHMOND* 23219 Claudine B. Malone J. Alfred Broaddus, Jr. Robert L. Strickland 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 Hugh M. Brown Jack Guynn Daniel E. Sweat, Jr. Patrick K. Barron James M. Mckee1 Birmingham 35283 Donald E. Boomershine Fred R. Herr1 Jacksonville 32231 Joan D. Ruffier James D. Hawkins1 Miami 33152 R. Kirk Landon James T. Curry III Nashville 37203 Paula Lovell Melvyn K. Purcell New Orleans 70161 Lucimarian Roberts Robert J. Musso CHICAGO* 60690 Robert M. Healey Michael H. Moskow Lester H. McKeever, Jr. William C. Conrad Detroit 48231 John D. Forsyth David R. Allardice1 ST. LOUIS 63166 John F. McDonnell Thomas C. Melzer Susan S. Elliott W. LeGrande Rives Little Rock 72203 Janet M. Jones Robert A. Hopkins Louisville 40232 John A. Williams Thomas A. Boone Memphis 38101 John V. Myers John P. Baumgartner MINNEAPOLIS 55480 Jean D. Kinsey Gary H. Stern David A. Koch Colleen K. Strand Helena 59601 Lane W. Basso John D.Johnson KANSAS CITY 64198 Herman Cain Thomas M. Hoenig A. Drue Jennings Richard K. Rasdall Denver 80217 Peter I. Wold Carl M. Gambs1 Oklahoma City 73125 Barry L. Eller Mark L. Mullinix Omaha 68102 LeRoy W. Thom Harold L. Shewmaker DALLAS 75201 Cece Smith Robert D. McTeer, Jr. Roger R. Hemminghaus Tony J. Salvaggio El Paso 79999 Patricia Z. Holland-Branch Sammie C. Clay Houston 77252 Issac 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 John F. Moore Los Angeles 90051 Anita E. Landecker Temporarily vacant3 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. 3. Executive Vice President. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Statistical Releases Available on the Commerce Department's Economic Bulletin Board The Board of Governors of the Federal Reserve Sys- For further information regarding a subscription to tem makes some of its statistical releases available to the economic bulletin board, please call (202) 482the public through the U.S. Department of Com- 1986. The releases transmitted to the economic bullemerce's economic bulletin board. Computer access tin board, on a regular basis, are the following: to the releases can be obtained by subscription. Reference Number Statistical release Frequency of release H.3 Aggregate Reserves Weekly/Thursday H.4.1 Factors Affecting Reserve Balances Weekly/Thursday H.6 Money Stock Weekly/Thursday H.8 Assets and Liabilities of Insured Domestically Chartered Weekly/Monday and Foreign Related Banking Institutions H.10 Foreign Exchange Rates Weekly/Monday H. 15 Selected Interest Rates Weekly/Monday G.5 Foreign Exchange Rates Monthly/end of month G.17 Industrial Production and Capacity Utilization Monthly/midmonth G.19 Consumer Installment Credit Monthly/fifth business day Z.7 Flow of Funds Quarterly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications of Interest FEDERAL RESERVE CONSUMER CREDIT PUBLICATIONS The Federal Reserve Board publishes a series of pam- Shop . . . The Card You Pick Can Save You Money is phlets covering individual credit laws and topics, as designed to help consumers comparison shop when pictured below. looking for a credit card. It contains the results of the Three booklets on the mortgage process are available: Federal Reserve Board's survey of the terms of credit A Consumer's Guide to Mortgage Lock-Ins, A Consum- card plans offered by credit card issuers throughout the er's Guide to Mortgage Refinancings, and A Consumer's United States. Because the terms can affect the amount Guide to Mortgage Settlement Costs. These booklets an individual pays for using a credit card, the booklet were prepared in conjunction with the Federal Home lists the annual percentage rate (APR), annual fee, grace Loan Bank Board and in consultation with other federal period, type of pricing (fixed or variable rate), and a agencies and trade and consumer groups. The Board telephone number for each card issuer surveyed. also publishes the Consumer Handbook to Credit Pro- Copies of consumer publications are available free tection Laws, a complete guide to consumer credit pro- of charge from Publications Services, Mail Stop 127, tections. This forty-four-page booklet explains how to Board of Governors of the Federal Reserve System, shop and obtain credit, how to maintain a good credit Washington, DC 20551. Multiple copies for classroom rating, and how to dispute unfair credit transactions. use are also available free of charge. A tsinr* Business Credit $*tttement for Women, Minorities, and Small Businesses •B SHOP ^ V U H HI 'V The Card You Pick Can Save Vou 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 func- of marginable OTC stocks and its list of foreign margin tions, the Board publishes the Federal Reserve Regu- stocks. latory Service, a four-volume loose-leaf service con- The Consumer and Community Affairs Handbook taining all Board regulations as well as related statutes, contains Regulations B, C, E, M, Z, AA, BB, and DD, interpretations, policy statements, rulings, and staff and associated materials. opinions. For those with a more specialized interest in The Payment System Handbook deals with expedited the Board's regulations, parts of this service are pub- funds availability, check collection, wire transfers, and lished separately as handbooks pertaining to monetary risk-reduction policy. It includes Regulations CC, J, and policy, securities credit, consumer affairs, and the pay- EE, related statutes and commentaries, and policy statement system. ments on risk reduction in the payment system. These publications are designed to help those who For domestic subscribers, the annual rate is $200 for must frequently refer to the Board's regulatory materi- the Federal Reserve Regulatory Service and $75 for als. They are updated monthly, and each contains cita- each Handbook. For subscribers outside the United tion indexes and a subject index. States, the price including additional air mail costs is The Monetary Policy and Reserve Requirements $250 for the Service and $90 for each Handbook. All Handbook contains Regulations A, D, and Q, plus subscription requests must be accompanied by a check related materials. or money order payable to the Board of Governors The Securities Credit Transactions Handbook con- of the Federal Reserve System. Orders should be tains Regulations G, T, U, and X, dealing with exten- addressed to Publications Services, mail stop 127, Board sions of credit for the purchase of securities, together of Governors of the Federal Reserve System, Washingwith related statutes, Board interpretations, rulings, ton, DC 20551. and staff opinions. Also included are the Board's list GUIDE TO THE FLOW OF FUNDS ACCOUNTS A recent Federal Reserve publication, Guide to the Flow dures as seasonal adjustment, extrapolation, and of Funds Accounts, explains in detail how the U.S. interpolation. financial flow accounts are prepared. The accounts, The balance of the Guide contains explanatory tables which are compiled by the Division of Research and corresponding to the tables of financial flows data that Statistics, are published in the Board's quarterly Z.l appeared in the September 1992 Z.l release. These statistical release, "Flow of Funds Accounts, Flows and tables give, for each data series, the source of the data or Outstandings." The Guide updates and replaces Intro- the methods of calculation, along with annual data for duction to Flow of Funds, published in 1980. 1991 that were published in the September 1992 release. The 670-page Guide begins with an explanation of Guide to the Flow of Funds Accounts is available for the organization and uses of the flow of funds accounts $8.50 per copy from Publications Services, Board of and their relationship to the national income and Governors of the Federal Reserve System, Washington, product accounts prepared by the U.S. Department of DC 20551. Orders must include a check or money order, Commerce. Also discussed are the individual data in U.S. dollars, made payable to the Board of Governors series that make up the accounts and such proce- of the Federal Reserve System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis