Federal Reserve Bulletin, 1996-05

VOLUME 82 • NUMBER 5 • MAY 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 383 US. INTERNATIONAL TRANSACTIONS IN as well as reiterating his views on some key 1995 issues that are important for the nation's economic prospects over the medium term and says In 1995, after three years of substantial that we have made significant and fundamental increases, the U.S. current account deficit widgains in macroeconomic performance in recent ened only slightly, with some deterioration in years, including lower rates of inflation, and the balances on trade and investment income. that the budget deficit has been narrowed— The current account deficit was counterbalanced developments that will provide the best possible by large recorded net capital inflows and a large macroeconomic climate in which the nation can positive statistical discrepancy. address other economic challenges, before the House Committee on the Budget, March 27, 1996. 394 INDUSTRIAL PRODUCTION AND CAPACITY 406 The Board of Governors comments on its posi- UTILIZATION FOR MARCH 1996 tion with regard to the coverage under the Industrial production declined 0.5 percent in Electronic Fund Transfer Act (EFTA) and the March, to 123.5 percent of its 1987 average, Board's Regulation E of electronic benefit transafter a revised gain of 1.3 percent in February. fer (EBT) programs; the comments note the Capacity utilization dropped 0.7 percentage Board's position that EBT and other electronic point in March, to 82.5 percent. fund transfer (EFT) systems are similar and that all consumers using EFT services should receive substantially the same protection under the 397 STATEMENTS TO THE CONGRESS EFTA and Regulation E absent a showing that the compliance costs outweigh the need for con- Richard Spillenkothen, Director, Division of sumer protections, in a statement submitted for Banking Supervision and Regulation, discusses the record to the House Committee on Banking the Federal Reserve's efforts to increase the and Financial Services, March 27, 1996. focus of examiners and other supervisory personnel on the risk management procedures of 407 ANNOUNCEMENTS banking organizations and says that Federal Reserve examiners will be devoting more atten- Meeting of the Consumer Advisory Council. tion than in the past to reviewing a bank's Approval of a voluntary check-fraud survey. processes and controls to ensure that risk management practices are commensurate with risks, Joint amendment by the Federal Reserve Board before the House Committee on Banking and and the Department of the Treasury to a rule Financial Services, March 13, 1996. regarding recordkeeping related to certain funds transfers by financial institutions. 403 Alan Greenspan, Chairman, Board of Governors, discusses how the rapid pace of techno- Approval of final revisions to the official staff logical change and innovation will affect how commentary to Regulation Z. the Federal Reserve carries out its legislative Proposal to amend an outstanding proposal to mandates, particularly in the areas of superviincorporate a measure for market risk into the sion and regulation of banks, stewardship of the risk-based capital guidelines for banks and bank payments system, and monetary policy, before holding companies. the Senate Committee on Banking, Housing, and Urban Affairs, March 26, 1996. Establishment of a Federal Reserve home page on the World Wide Web. 404 Chairman Greenspan updates an earlier review of current economic conditions and the outlook Changes in Board staff. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

409 MINUTES OF THE FEDERAL OPEN MARKET A1 FINANCIAL AND BUSINESS STATISTICS COMMITTEE MEETING HELD ON These tables reflect data available as of JANUARY 30-31, 1996 March 27, 1996. At its meeting on January 30-31, 1996, the Committee approved without change the tenta- A3 GUIDE TO TABULAR PRESENTATION tive ranges for 1996 that it had established in A4 Domestic Financial Statistics July of last year. In keeping with its usual proce- A45 Domestic Nonfinancial Statistics dures under the Humphrey-Hawkins Act, the A53 International Statistics Committee would review its ranges at midyear, or sooner if interim conditions warranted, in A67 GUIDE TO STATISTICAL RELEASES AND light of the growth and velocity behavior of the SPECIAL TABLES aggregates and ongoing economic and financial developments. A76 INDEX TO STATISTICAL TABLES For the intermeeting period ahead, the Committee adopted a directive that called for a slight A78 BOARD OF GOVERNORS AND STAFF reduction in the degree of pressure on reserve positions, taking account of a possible reduction A80 FEDERAL OPEN MARKET COMMITTEE AND in the discount rate. The directive did not STAFF; ADVISORY COUNCILS include a presumption about the likely direction of an adjustment to policy during the intermeet- A82 FEDERAL RESERVE BOARD PUBLICATIONS ing period. A84 MAPS OF THE FEDERAL RESERVE SYSTEM 421 LEGAL DEVELOPMENTS Various bank holding company, bank service A86 FEDERAL RESERVE BANKS, BRANCHES, corporation, and bank merger orders; and pend- AND OFFICES ing cases. 469 DIRECTORS OF FEDERAL RESERVE BANKS AND BRANCHES List of directors, by Federal Reserve District. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

383 U.S. International Transactions in 1995 Allan D. B runner, of the Board's Division of Interna- 1. U.S. external balances, 1984-95 tional Finance, prepared this article. Virginia Carper provided research assistance. The U.S. current account deficit widened only slightly in 1995 following three years of substantial increases. The deficit flattened over the course of the year, and it narrowed sharply in the fourth quarter, as imports of goods and services flagged while exports picked up (chart 1). The same factors underlying these developments should cause the U.S. external deficit in 1996 to remain close to its 1995 level. Although the balance on trade in goods and services widened in 1995, by $5 billion, the increase was the smallest since the balance began deteriorating again in 1992 (table 1). The values of exports and NOTE. The data are quarterly at seasonally adjusted annual rates. Current account data exclude foreign cash grants received in 1990-92. imports grew rapidly and at about the same rate, but SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. net exports fell because the initial value of imports international transactions accounts. was somewhat higher than the initial value of exports. A small trade surplus with Mexico in 1994 turned into a large deficit last year following the peso crisis and a substantial contraction in Mexican aggre- markedly from robust rates in 1994, in line with gate demand. The trade deficit with Canada also slower economic activity in the United States and worsened as Canadian growth slowed markedly. In abroad. Still, export growth increased steadily contrast, net shipments to Japan picked up signifi- throughout the year, largely in response to the cantly following a rise in the exchange value of the strength of economic activity abroad as well as to a yen in 1994 and early last year. stabilization of exports to Mexico. In contrast, import In quantity terms, the rates of growth of both growth sagged in the second half of the year as a imports and exports of goods and services slowed result of developments in the U.S. domestic economy 1. U.S. external balances, 1990-95 Billions of dollars T 3S IItteemm 1990 1991 1992 1993 1994 1995 1994-95 ——" L Trade in goods and services, net -80.0 -29.4 HP -39.5 -74.8 -106.2 -1114 -5.2 Goods, net -109.0 -74.1 WWKKXXiiff -96.1 -132.6 -166.1 -174.5 -8.4 mm Services, net 29.0 44.7 mmmm 56.6 57.8 59.9 63.1 3.2 Investment income, net 20.7 15.1 10.1 9.0 -9.3 -11.4 -2.1 Portfolio investment, net -35.2 -40.5 -41.5 -47.3 -54.4 -70.6 -16.2 Direct investment, net 55.9 55.6 51.6 56.3 45.1 59.1 14.0 ipfjlili Jjjjjl Unilateral transfers, net -33.4 6.9 Ifllll®: -32.1 -34.1 -35.8 -30.1 5.7 Foreign cash grants to the United States . 17.0 42.5 SS^filffi 1.3 .0 .0 .0 .0 Other transfers, net -50.4 -35.6 -33.4 -34.1 -35.8 -30.1 5.7 itKHSBii'H^SIIs^^^KUtltHlttX^^^^^^^&^^i Current account balance -92.7 -7.4 WmM -61.5 -99.9 -1.7 MEMO: •up -151.2 -152.9 Current account balance excluding foreign Hi cash grants -109.7 -49.9 -62.8 -99.9 -1.7 H -151.2 -152.9 NOTE. In this and the tables that follow, components may not sum to totals SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. because of rounding. international transactions accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

384 Federal Reserve Bulletin • May 1996 and a small increase in the relative price competitive- economies of its major trading partners, as has been ness of U.S. goods in domestic markets. true historically, the increase in U.S. income had a The balance on investment income declined about larger effect on expenditures on foreign goods and $2 billion last year. The deterioration was due entirely services than the comparable increase in foreign to a growing deficit in net portfolio investment income had on expenditures on U.S. goods and serincome, the result of a continued worsening of the vices. This effect was offset somewhat by a small U.S. net portfolio investment position and increases improvement in U.S. price competitiveness last year, in interest rates in the United States in late 1994 and which helped make U.S. goods and services more early 1995. In contrast, net direct investment income attractive at home relative to imports and, to a lesser increased last year. Both receipts from U.S. direct extent, more attractive in foreign markets. investment abroad and payments on foreign direct Financial and economic developments in Mexico investment in the United States increased rapidly, but in late 1994 and in 1995 also had important effects on the increase in receipts was larger because U.S. direct U.S. trade. From 1991 through the third quarter of investment assets abroad are larger than foreign direct 1994, the U.S. balance on trade in goods and services investment assets in the United States and because with Mexico was in surplus, averaging nearly $4 bilthe rates of return reported by U.S. investors abroad lion per year, as the Mexican economy grew somewere larger and increased more than the rates of what faster than the U.S economy and the price of return earned by foreign investors in the United U.S. goods relative to the price of Mexican goods fell States. (chart 2). Following the December 1994 collapse of The current account balance was buoyed some- the peso, the trade balance deteriorated rapidly, what last year by a temporary $6 billion reduction in resulting in a deficit of about $15 billion for 1995. net unilateral transfers to foreigners. Most of the reduction was due to a transient drop in government grants to foreign countries: Because of U.S. government shutdowns in late 1995, government grants that 2. Historical perspective on the U.S. trade balance with were scheduled to be disbursed in the fourth quarter Mexico and its proximate determinants, 1986-95 were delayed until the beginning of 1996. Counterbalancing the continued large current account deficit in 1995 were a large recorded net inflow of capital and a large positive statistical discrepancy, which comprises some combination of unrecorded net capital flows and unrecorded net current account receipts. Much of the recorded net capital inflow was in the form of a record increase in foreign official holdings in the United States, a result of both foreign exchange intervention by certain industrialized countries and substantial reserve accumulation by several developing countries in Asia and Latin America. Private foreign assets in the United States increased sharply, but the increase was about matched by additions to private U.S. assets abroad. MAJOR ECONOMIC INFLUENCES ON U.S. INTERNATIONAL TRANSACTIONS CPI-adjusted peso value of the U.S. dollar The U.S. deficit in traded goods and services widened considerably between 1991 and 1995, but the increase last year was much less than in other recent years. These developments are consistent with recent movements in the two most important determinants of trade flows: relative rates of economic growth and relative price competitiveness. Although the U.S. economy in 1995 grew at about the same pace as the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1995 385 The deterioration of the trade balance was due in part 3. Historical perspective on the U.S. trade balance and its to the direct effects of the real depreciation of the proximate determinants, 1973-95 peso relative to the dollar, which decreased the rela- Billions of 1992 dollars tive attractiveness of U.S exports to Mexico and may U.S. real net exports of goods and services also have increased U.S. demand for less-expensive — 50 Mexican goods and services. Probably a more important factor in the decline, however, was a sharp contraction of Mexican aggregate demand resulting from efforts by the Mexican government to tighten monetary conditions, maintain wage restraint, and reduce government spending. Ratio of foreign to U.S. real GDP1 Relative Rates of Economic Growth The relationship between the U.S. trade balance in goods and services and relative rates of economic growth in other countries is most evident when the balance is compared with deviations of the ratio of foreign GDP to U.S. GDP from its historical trend Ratio scale, 1986:Q4= 100 (chart 3, top and middle panels). The ratio's rising trend means that the output of foreign countries has grown faster, on average, than that of the United States. The trade balance has tended to be closely related to deviations from the trend because of close historical associations between U.S. exports and foreign GDP and between U.S. imports and U.S. GDP. Positive deviations from the trend (that is, ratios 1975 1980 1985 1990 1995 higher than the trend ratio) indicate that foreign NOTE. The data are quarterly. economies are growing even faster relative to the 1. Foreign GDP is a weighted average of the GDPs of the foreign G-10 U.S. economy than has been true on average, and, countries; see notes to table 2 for details. The straight line is the long-term trend. 2. The index is based on the foreign G-10 countries—Belgium-Luxembourg, therefore, positive deviations are generally associated Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, with U.S. trade balance surpluses. Similarly, negative and the United Kingdom—and eight developing countries—Brazil, Hong Kong, Korea, Malaysia, Mexico, the Philippines, Singapore, and Taiwan. deviations are usually associated with trade balance deficits, though they have a somewhat larger effect on net trade than do positive deviations of the same magnitude because U.S. imports are more responsive expenditures on U.S. exports to changes in foreign to changes in U.S. GDP than are U.S. exports to income. changes in foreign GDP. The U.S. economy slowed to a 1 LA percent rate of Although there have been periods (such as the expansion in 1995 after growing at a 3'/2 percent rate 1980s) when swings in relative prices were a more in 1994 (table 2). The slower growth was due partly important determinant of the trade balance than rela- to efforts by businesses to reduce the pace of inventive economic growth, more recently, movements in tory accumulation after a burst of stockpiling in 1994. U.S. price competitiveness, as measured by the price- Final sales also slowed last year, as the growth of adjusted exchange value of the dollar (chart 3, bot- expenditures by both households and businesses tom panel), have been quite modest and the trade slowed from elevated rates of increase in 1994. balance has tended to move more in line with relative Although the growth of real expenditures on imrates of GDP growth. In 1995, the economies of the ported goods and services slowed, to a 414 percent United States and its major trading partners slowed rate in 1995 from IIV2 percent in 1994, imports markedly, to about the same rate of growth. Still, the continued to expand more rapidly than the pace of trade balance deficit widened somewhat for the year overall domestic spending. as a whole, owing to the greater responsiveness of The growth of real GDP in major foreign industrial U.S. expenditures on imports to changes in domestic countries other than Japan slowed sharply in 1995 income compared with the responsiveness of foreign from the robust rates of 1994. In Canada, where Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

386 Federal Reserve Bulletin • May 1996 economic activity had been particularly vigorous U.S. Price Competitiveness through the end of 1994, the slowdown reflected weaker U.S. growth and Canadian macroeconomic U.S. external performance is also influenced by the policies directed toward improving the fiscal balance price competitiveness of those U.S. goods and serand preventing the reemergence of inflationary pres- vices that compete against foreign imports in domessures. In Germany and the other European econo- tic markets and against other goods and services in mies, appreciation of their currencies relative to the foreign markets. U.S. goods and services gained some U.S. dollar in 1994 and in early 1995 and efforts to ground in domestic markets last year: The relative reduce public sector deficits contributed to the decline price of imported goods rose slightly, as price in the rate of real output growth. Japan, in contrast, increases for imported goods just outpaced price showed some tentative signs of recovery late in 1995 increases for domestic goods (chart 4). U.S. exports after almost no growth during the previous three have also become more competitive in world markets years. in recent years. Higher prices for foreign goods and Economic growth in the major developing coun- services (especially in developing countries) relative tries also slowed on average in 1995 from the strong to the prices of U.S. exports were the primary conpace of 1994. The substantial contraction of eco- tributor to this development, though the significant nomic activity in Mexico had important effects on depreciation of the foreign exchange value of the U.S. trade, as noted earlier, but real output also dollar in 1994 and 1995 also played a part. slowed in other developing countries, including Argentina. The economies of the newly industrialized Asian countries—Malaysia, Korea, and Taiwan, for DEVELOPMENTS IN TRADE example—continued to grow rapidly in 1995, at IN GOODS AND SERVICES about the same rate as in 1994. Although growth in most of these countries was driven by a strong expan- Although the values of both exported and imported sion of internal demand, especially for investment, goods and services increased markedly last year, the most countries also benefited from very fast export value of imports rose somewhat more, causing the growth. The marked acceleration of exports was due deficit in goods and services to widen slightly. In at least in part to a real depreciation of those coun- quantity terms, however, the rates of growth of both tries' currencies against the yen and key European exports and imports slowed, in line with the slowing currencies early in the year. of the U.S. and foreign economies. (See the box for a discussion of the effects of using chain-type measures on the measurement of trade quantities as well as prices.) 2. Growth of real GDP in the United States and selected foreign economies, 1993-95 Percent change, fourth quarter to fourth quarter 4. Relative prices of exports and imports, 1987-95 Country 1993 1994 1995' United States 2.2 3.5 1.2 Index, 1989= 1.0 4 Increasing price competitiveness T In o d t u a s l tr fo ia r l e c ig o n u ntries2 2 1 . . 8 8 4 3 . . 5 9 2 1 . . 0 4 1 of U.S. goods » Exports Canada 3.1 5.4 .6 K— 1.25 Western Europe .6 3.7 1.6 Japan -.5 .4 Developing countries3 ... 5.2 6.0 • Asia 7.8 8.0 7.5 — 1.15 Latin America 1.9 3.4 -1.6 Mexico .8 4.0 -6.6 Other Latin America 2.9 2.9 3.0 — 1.05 NOTE. Aggregate measures are weighted by bilateral shares in U.S. nonagricultural merchandise exports in 1987-89. 1. Data for 1995 are partly estimated. 2. The industrial countries index includes Australia and New Zealand in Imports — 0.95 addition to Canada, Japan, and Western Europe. The index for Western Europe comprises Belgium, France, Germany, Italy, the Netherlands, Sweden. Switzerland, the United Kingdom, Austria, Denmark, Finland, Greece, Ireland, Norway, 1 1 1 1 1 1 1 1 1 1 Portugal, Spain, and Turkey. 1987 1989 1991 1993 1995 3. The developing countries in the index for Asia are the Peoples Republic of China, Hong Kong, Korea, Malaysia, Mexico, the Philippines, Singapore, and NOTE. For exports, the index is the ratio of foreign prices to U.S. export Taiwan. The countries in "Other Latin America" are Argentina, Brazil, Chile, prices of nonagricultural products, excluding computers. For imports, the index and Venezuela. is the ratio of U.S. import prices of non-oil imports, excluding computers, to the SOURCE. Various national sources. U.S. GDP deflator. The data are quarterly. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1995 387 Chain-Type Measures of U.S. Trade In 1995, the U.S. Department of Commerce's Bureau of exports and imports, when calculated on a constant (1987) Economic Analysis began computing quantity and price dollar basis, were by far the most important factor in the indexes for the various categories of U.S trade and for other rise in the value of exports and imports and in the widening measures of U.S. economic activity on a chain-type basis. of the deficit in traded goods and services, whereas changes Previously, quantity measures were calculated on a in prices of exports and imports played only a small role constant-dollar basis and price indexes on a fixed-weight (chart, left panels). When calculated on a chain-type basis, basis (specifically, as price deflators). The old measures did changes in the prices of exports and imports show somenot allow for the effects of changes in relative prices or what faster growth, although measured trade movements changes in the composition of goods and services over time. are still dominated by changes in quantities (chart, right In contrast, chain-type measures are calculated using panels). The more rapid rises in prices produced by the weights that shift over time, with weights for a particular chain-type calculations are due mainly to a decrease in the time period based on prices and quantities in adjacent years. weight assigned to computers, whose prices have fallen Although the move to chain-type measures had some precipitously in recent years; in the chained (1992) dollar quantitative effects on the measurement of trade move- series, computers are given about half the weight they were ments, it changed the qualitative nature of these data very given in the constant (1987) dollar series, little. For the past several years, changes in quantities of Constant (1987) dollars Chained (1992) dollars 1994 1995 1993 1994 1995 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

388 Federal Reserve Bulletin • May 1996 3. U.S. international trade in goods and services, 1993-95 Western Europe rebounding to a 15 percent rate of Billions of dollars expansion. Exports to developing countries in Asia and in Latin America (other than Mexico) were also Item 1993 1994 1995 very robust. In contrast, exports to Mexico contracted Balance on goods and services -76 -106 -111 10 percent, following a 21 percent increase in 1994. Exports of goods and services — 645 701 784 Almost half the increase in export value came from Services 188 199 209 Goods 457 503 575 rapid growth in the price of goods and services, as Agricultural 44 47 57 export prices were pushed up somewhat faster than in Computers 29 33 40 Aircraft and parts 33 31 26 recent years. Growth in the quantity of exports (mea- Other capital 120 141 168 Consumer 55 60 64 sured in chained (1992) dollars) picked up as the year Automotive products 52 58 61 progressed and totaled 6V2 percent from the fourth Industrial supplies 112 122 146 Other 12 11 13 quarter of 1994 to the fourth quarter of 1995 Imports of goods and services — 719 807 895 (table 5). The bulk of the 1995 increase was in Services 130 139 146 exports of capital goods. High levels of investment Goods 589 669 749 Petroleum and products 51 51 55 spending in foreign countries, especially in Asia, led Computers 38 46 56 Other capital 114 138 166 to a nearly 20 percent increase in exports of machin- Consumer 134 146 160 Automotive products 102 118 124 ery. Machinery exports to Asian countries other than Industrial supplies 101 114 129 Japan advanced at a 30 percent rate, with Malaysia Foods and other 48 55 59 and other newly industrializing economies (espe- SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. cially Hong Kong, Korea, Singapore, and Taiwan) international transactions accounts. accounting for most of the increase. Shipments of machinery to Latin America were lackluster, prima- Robust Expansion of Exports rily because shipments to Mexico contracted slightly. Exports of computers and semiconductors accounted The value of exported goods and services rose almost for nearly two-thirds of the increase in machinery 12 percent last year, the fastest rate of increase since exports, with the rest of the increase in a wide range 1989 (table 3). Most of the increase was due to a of other machines. The growth of capital goods rapid expansion of exported goods (especially capital exports was held back only slightly by a further goods and industrial supplies); exports of services decline in aircraft exports. advanced at a pace similar to that seen in recent Exports of goods and services other than capital years. Although the pace of economic activity slowed goods, which accounted for about two-thirds of for many U.S. trading partners, demand for U.S. exports last year, grew more slowly as a result of the goods and services increased in most major regions slower pace of consumption spending in industrialof the world (table 4). The rate of growth of exports ized countries. Exports of consumer goods grew only to industrial countries accelerated, with exports to 2 percent, down from a double-digit rate of growth in Japan growing more than 20 percent and exports to 1994. Canada, Japan, and Asia (mostly Hong Kong and Korea) each accounted for about one-fourth of the increase in exported consumer goods; exports to 4. U.S. exports of goods to its major trading partners, Mexico declined more than 15 percent. Automotive 1993-95 Billions of dollars Percent 5. Change in the quantity of U.S. exports, 1993-95 IImmppoorrttiinngg rreeggiioonn 1993 1994 1995 change, 1994-95 Percent change, fourth quarter to fourth quarter Total 457 503 575 14 Type of export 1993 1994 1995 • • •'••B Industrial countries' 268 293 335 m 14 All exports 5.0 10.2 6.5 Canada 101 115 128 11 Western Europe 111 115 132 15 4.7 5.4 3.3 Japan 47 52 63 21 5.1 12.3 7.7 Agricultural -5.7 18.0 -2.9 Developing countries2 188 209 240 15 Computers 22.9 28.5 49.0 Asia 96 104 130 25 Aircraft and parts -9.8 -16.9 -16.7 Latin America 78 92 96 4 Other capital 14.1 22.2 16.8 Mexico 42 51 46 -10 Consumer 4.9 13.0 2.1 Other Latin America — 37 41 50 22 Automotive products 9.4 10.3 -5.2 Industrial supplies .2 7.6 6.5 1. See note 2 to table 2. -1.4 2.5 2.4 2. See note 3 to table 2. SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. NOTE. Quantities are measured in chained (1992) dollars. international transactions accounts. SOURCE. U.S. Department of Commerce, Bureau of the Census. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1995 389 exports (including automotive parts to be assembled Imports of computers continued to expand rapidly, and shipped back to the United States) contracted at a and imports of capital goods other than computers— 5 percent rate, owing to a slowdown in the U.S. and semiconductors and industrial and service machinery, world auto markets. Notably, exports of automotive for example—also posted sharp gains. products to Japan jumped nearly a third, although the Imports of goods other than capital goods grew initial level of exports to Japan was relatively low. much more slowly in 1995 than did imports of capital Exports of automotive products to Mexico contracted goods. Imports of consumer goods grew less than sharply. 1 percent, the slowest rate of increase since 1992, Agricultural exports remained at an elevated level because of slowing imports of consumer durable following a large jump in late 1994. Bountiful U.S. goods. Imports of consumer goods from Mexico and harvests in 1994 and robust world demand in 1995 China accounted for much of the increase, while (especially from Asia) resulted in vigorous shipments imports from Japan were flat. throughout much of the year, although exports fal- Automotive imports contracted last year for the tered somewhat in the second half of the year follow- first year since 1990, in line with the sharp slowdown ing lower-than-expected 1995 harvests in the United in U.S. automobile sales. Imports of automotive prod- States. The quantity of exported industrial supplies ucts from Mexico remained strong, but imports from other than agricultural products grew 6V2 percent Canada were sluggish and imports from Japan conlast year, about the same pace as in 1994. Exports of tracted sharply. Imported quantities of industrial supservices slowed to a 3 percent rate of expansion, plies were also weak, despite marked declines in the likely because of the slowdown in economic activity price of these products (especially metals). in industrial countries. Oil Imports Rapid Growth of Imports The value of oil imports rose more than 7 percent The value of imported goods and services rose rap- from 1994 to 1995, as a $1.73 per barrel (12 percent) idly last year, only somewhat more slowly than in increase in the average price of imported oil more 1994. A significant portion of the increase was due to than offset a nearly 4 percent decline in the volume a $12 billion surge in imports from Mexico. More imported. With the increase, the price returned to the than half the increase in the total value of imports midpoint of its post-Gulf War trading range from was due to higher prices. The quantity of imports depressed levels in early 1994. rose 41/4 percent in 1995, considerably more slowly Changes in the prices of imported oil have tended than the double-digit rates of growth in 1993 and to mirror changes in spot oil prices (West Texas 1994 (table 6). The slowdown reflected slower U.S. intermediate) with a lag of several weeks (chart 5). economic growth and, to a lesser extent, somewhat Spot prices fell during the fourth quarter of 1994 higher import prices relative to the prices of domestic and began 1995 near $17 per barrel. The decline was goods. The sharpest increase was in the quantity of 5. Oil prices, 1983-95 imported capital goods, which grew about 20 percent in 1995 compared with 30 percent in 1994. 6. Change in the quantity of U.S. imports, 1993-95 Percent change, fourth quarter to fourth quarter Type of import 1993 1994 1995 All imports 11.4 11.6 4.3 Services 8.7 .0 5.1 Goods 12.0 14.2 4.2 Petroleum and products 10.0 -.2 -.3 Computers 40.0 36.9 42.3 Other capital 14.1 19.0 11.5 Consumer 8.5 11.2 .3 Automotive products .. 9.2 15.8 -11.8 Industrial supplies 11.7 14.7 -1.0 Foods and other 6.6 4.4 3.5 NOTE. The data are monthly. NOTE. Quantities are measured in chained (1992) dollars. SOURCE. Petroleum Intelligence Weekly, various issues; and U.S. Department SOURCE. U.S. Department of Commerce, Bureau of the Census. of Commerce, Bureau of Economic Analysis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

390 Federal Reserve Bulletin • May 1996 7. U.S. oil consumption, production, and imports, selected years, 1980-95 Millions of barrels per day Item 1980 1985 1992 1993 1994 1995' Consumption 17.1 15.7 17.0 17.2 17.7 17.7 Production 10.8 11.2 9.8 9.6 9.4 9.4 Imports 6.9 5.1 7.9 8.6 9.0 8.8 1. Estimates. SOURCE. U.S. Department of Energy, Energy Information Administration. due to a warmer-than-normal winter as well as to unilateral transfers abroad (table 1). The deterioration increases in non-OPEC oil production, especially in net investment income was due entirely to a larger in the North Sea. Two major factors temporarily deficit in net portfolio investment income; net direct increased prices during the year. The first was a investment income increased. protracted labor strike in Brazil, which trimmed roughly 600,000 barrels per day from non-OPEC oil Net Portfolio Investment Income production and led to price rises through May, to nearly $20 per barrel. During the summer, prices The balance on portfolio income registered a deficit declined, reflecting concerns about an overabundant of $71 billion last year, significantly larger than the supply on world oil markets. Then Gulf of Mexico $54 billion deficit recorded in 1994 (table 8). The hurricanes decreased October production roughly balance on portfolio income has been in deficit since 600,000 barrels per day, and with colder-than-normal 1985 (chart 6), and the size of the deficit has broadly weather, prices rose to $19 per barrel in December. mirrored the net portfolio investment position. The Import prices mirrored these spot price changes and net portfolio position deteriorated further last year, averaged $16.32 per barrel in 1995, $1.73 above the accounting for somewhat less than half the increase average for 1994. in the deficit on portfolio income. The remainder of The quantity of oil imports edged down from a rate the increase was due to a rise in the effective rate of 9 million barrels per day in 1994 to 8.8 million of return on the net portfolio position, with rates of barrels per day in 1995 (table 7). The decrease return on both portfolio assets and liabilities rising, reflected a small drawdown of stocks; U.S. oil conreflecting higher short-term U.S. interest rates in late sumption and production changed little during the 1994 and early 1995 (chart 7). year. Net Direct Investment Income DEVELOPMENTS IN THE NONTRADE CURRENT ACCOUNT The balance on direct investment income rebounded last year, increasing nearly $14 billion after declining The balance on investment income declined about $2 billion last year, but the decline was more than 6. Net portfolio investment: Position and income, 1971-95 offset by a temporary $6 billion reduction in net 8. U.S. net investment income, 1992-95 Billions of dollars Item 1992 1993 1994 Investment income, net 10 Portfolio investment income, net -42 -47 Receipts 67 58 Private 59 53 Government 7 5 Payments 108 105 Private 68 63 Government 41 42 Direct investment income, net 52 56 Receipts 52 62 NOTE. The data are annual averages. The year-end position for 1995 was Payments 0 5 constructed by adding the recorded portfolio investment flows during 1995 to the recorded year-end position for 1994. SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis; and international transactions accounts. the Federal Reserve Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1995 391 7. Rates of return on portfolio investment, 1986-95 lion to $32 billion, thus continuing the recovery from the very depressed levels recorded in the early 1990s. Such payments did not grow between 1988 and 1993, despite continued increases in the foreign direct investment position in the United States (chart 8). Although payments have been boosted in recent years by somewhat higher rates of return on the foreign direct investment position in the United States— bringing the level of payments to record high levels— rates of return remain quite low and are well below their 1977-80 average (table 9). Unilateral Transfers 1987 1989 1991 1993 1995 Net unilateral transfers to foreigners—which include NOTE. For the net position, the data are the ratio of net investment income (receipts minus payments) to net position (claims minus liabilities). For claims government grants and pension payments as well as (or liabilities), the data are the ratio of total receipts (or payments) to claims (or net private transfers to foreigners—declined nearly liabilities). SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis; and $6 billion last year, to $30 billion (table 1). Most of the Federal Reserve Board. the decrease was due to a temporary drop in government grants to foreign countries: Because of U.S. government shutdowns, government grants that were $11 billion in 1994 (table 8). The recovery was more scheduled to be paid in the fourth quarter of 1995 than accounted for by a $23 billion jump in receipts were delayed until the beginning of 1996. on U.S. direct investment abroad. Receipts have tended to fluctuate somewhat with cycles of foreign economic activity and with changes in exchange CAPITAL ACCOUNT TRANSACTIONS rates, but they have generally increased with the growth of the U.S. direct investment position abroad The large US. current account deficit in 1995 was (chart 8). The bulk of the improvement in receipts balanced by a large recorded net capital inflow and was due to a higher rate of return on US. direct by a positive statistical discrepancy in the internainvestment (table 9), although receipts also benefited tional transactions accounts, which comprises both from an increase in the level of U.S. direct investment unrecorded net capital inflows and unrecorded curabroad. rent account transactions (table 10). Most of the large Payments on foreign direct investment in the recorded capital inflow was due to a record $110 bil- United States also increased in 1995, from $23 bil- lion increase in foreign official holdings in the United 8. Direct investment: Position and income, 1977-95 Billions of dollars Millions of dollars Billions of dollars Millions of dollars U.S. direct investment abroad Foreign direct investment 800 in the United States — 80 Receipts IfftiN 600 — 60 Position _ a 400 8 J — 40 Position 200 200 — 20 + + Payments I 1 I I I I I I I I I I I I I 1 I I I 1 1 1977 1980 1983 1986 1989 1992 1995 NOTE. The position data are period averages using the current-cost measures SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis; and as of year-end for the current and previous years. The year-end data for 1995 the Federal Reserve Board. were constructed by adding the recorded direct investment flows during 1995 to the recorded year-end position for 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

392 Federal Reserve Bulletin • May 1996 9. Rates of return on direct investment, 1977-95 Percent Item 1977-80 1981-88 1989 1990 1991 1992 1993 1994 1995' US, investment abroad Current 9.9 8.0 10.2 10.0 8.3 8.0 9.0 9.2 11.3 Market n.a. n.a. 7.3 7.5 6.7 6.4 6.8 6.5 8.3 Foreign investment in the United States Current 7.0 3.1 1.6 .6 -.7 .1 1.0 4.1 5.2 Market n.a. n.a. 1.4 .5 -.6 .1 .7 3.0 4.0 NOTE. The rates of return are calculated as follows: The numerator is direct n.a. Not available. investment receipts or payments, from the U.S. international transactions SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. accounts. The denominator is the average of year-end figures for the value of international transactions accounts and U.S. international investment position. direct investment for the current and previous years. 1. The year-end values of claims and liabilities that appear in the denominators are estimates constructed by adding the recorded direct investment flows during 1995 to the recorded year-end positions for 1994. States, reflecting both intervention on the part of appears to have been financed by repurchase agreecertain industrial countries to support the foreign ments, accounting for a large part of the capital exchange value of the dollar and substantial reserve outflows reported by banks and securities dealers. accumulation by several developing countries in Asia Net purchases of U.S. corporate and other bonds were and Latin America. also at record high levels, in part reflecting the inten- Net purchases of U.S. securities by private foreign- sive use of the Eurobond markets by U.S. corporaers were also quite large in 1995, reflecting the con- tions. Foreign net purchases of U.S. corporate stocks tinued trend toward internationalization of securities (excluding stock swaps associated with cross-border markets. Net purchases of U.S. Treasury securities by mergers) were well below previous peaks despite the private foreigners amounted to $99 billion, far rapid rise in U.S. stock prices in 1995, which has in exceeding net purchases in previous years. In 1995, the past tended to attract capital flows from abroad. as in 1994, much of the foreign activity in the U.S. U.S. net purchases of foreign securities in 1995 Treasury securities markets was channeled through rebounded strongly after a very weak first quarter. Caribbean financial centers, reflecting in part the For the year as a whole, net purchases of stocks from activities of hedge funds. A large portion of the net Japan accounted for almost 40 percent of total U.S. purchases of Treasury securities from the Caribbean purchases of foreign stocks. U.S. investors apparently 10. Composition of U.S. capital flows, 1991-95 Billions of dollars Change, Item 1991 1992 1993 1994 1995 1994-95 Current account balance -7 -62 -100 -151 -153 -2 Official capital, net 26 43 70 44 100 56 Foreign official assets in the United States 17 41 72 39 110 71 U.S. official reserve assets 6 4 -1 5 -10 -15 Other U.S. government assets 3 -2 0 0 0 0 Private capital, net 10 45 -7 121 46 -75 Net inflows reported by U.S. banking offices 3 36 51 115 -39 -154 Securities transactions, net 9 17 -38 43 100 57 Private foreign net purchases of U.S. securities .. 56 64 104 93 194 101 Treasury securities 19 37 24 34 99 65 Corporate and other bonds1 27 31 61 56 82 26 Corporate stocks 10 -4 19 3 13 10 U.S. net purchases of foreign securities -46 -46 -142 -50 -94 -44 Stocks -32 -31 -61 -43 -47 -4 Bonds -15 -15 -81 -7 -47 -40 Direct investment, net -10 -21 -32 0 -22 -22 Foreign direct investment in the United States ... 22 18 41 49 75 26 U.S. direct investment abroad1 -32 -39 -73 -49 -97 -48 Other 8 14 12 -37 7 44 Statistical discrepancy -29 -26 36 -14 7 21 1. For 1991 and 1992, transactions with finance affiliates in the Netherlands SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. Antilles are excluded from direct investment outflows and included in foreign international transactions accounts. purchases of U.S. securities. This adjustment was discontinued in 1993 on the assumption that by then virtually all the Eurobonds issued by Netherlands Antilles had come due. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1995 393 had little interest in adding to their holdings of stocks our major trading partners should support expansion or bonds from emerging markets in Latin America, in of exports of U.S. goods and services. Recent data the wake of increased perceptions of risk resulting also indicate that economic activity in the United from the Mexican peso crisis. States has picked up a bit in the early part of this Direct investment inflows reached $75 billion in year, suggesting a pace of import growth similar to 1995, surpassing the previous record level, with that in 1995. Despite a small appreciation of the mergers and acquisitions adding substantially to the exchange value of the dollar in the first quarter, the inflow of funds from foreign direct investors in the United States appears to be holding on to its recent United States. U.S. direct investment abroad, which gains in international price competitiveness. totaled $97 billion, was even larger than foreign Although the deficit in the balance on portfolio direct investment in the United States and also sur- income is expected to grow larger this year, followpassed previous peak levels. Mergers and acquisi- ing a further deterioration in the net portfolio investtions, as well as privatizations abroad, contributed to ment position, the increase is likely to be more than the outflow. offset by an increase in net direct investment income, assuming that U.S. investors continue to earn high rates of return on their investments abroad similar to the rates earned in 1995. Net unilateral transfers to PROSPECTS FOR 1996 foreigners will be boosted in 1996 by those transfers The U.S. external deficit in 1996 is expected to be that did not take place in the fourth quarter of last year. • near its 1995 level. A pickup in economic activity for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

394 Industrial Production and Capacity Utilization for March 1996 Released for publication April 16 Despite the effects of the strike, overall industrial production grew at an annual rate of 2.7 percent in Industrial production declined 0.5 percent in March the first quarter, up from 0.6 percent in the preceding after a revised gain of 1.3 percent in February. quarter. The quarterly pickup largely reflects the A strike-related drop in motor vehicle assemblies bounceback in the production of aircraft and parts, and parts production more than accounted for the which was sharply curtailed during the fourth quarter decrease in output. Excluding the production of by a strike at a major producer. At 123.5 percent of motor vehicles and parts, which dropped about its 1987 average, industrial production in March was 15 percent, industrial production rose 0.3 percent. 1.3 percent higher than it was in March 1995; exclud- Industrial production indexes Twelve-month percent change Twelve-month percent change Materials 10 10 Durable _ manufacturing Products 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 — Manufacturing Capacity —— 140 —— * - 120 110000 Production 80 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Percent of capacity Percent of capacity Total industry Manufacturing Utilization 90 Utilization 9900 80 80 70 70 J I L J I L 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1982 1984 1986 1988 1990 1992 1994 1996 1982 1984 1986 1988 1990 1992 1994 1996 All series are seasonally adjusted. Latest series, March. Capacity is an index of pclenttiiaall iinndduussttrriiaall pprroodduuccttiioonn.. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

395 Industrial production and capacity utilization, March 1996 Industrial production, index, 1987= 100 Percentage change CCCaaattteeegggooorrryyy 11999955 11999966 19951 1996' MMaarr.. 11999955 ttoo Dec.r Jan.r Feb.r Mar.P Dec/ Jan/ Feb/ Mar.P MMaarr.. 11999966 Total 122.8 122.5 124.1 123.5 .2 -.3 1.3 -.5 1.3 Previous estimate 122.7 122.1 123.7 .1 -.4 1.2 Major market groups Products, total2 119.2 118.6 120.6 119.9 .3 -.4 1.7 -.5 1.2 Consumer goods 115.7 114.3 116.2 115.1 -.2 -1.2 1.6 -.9 -.2 Business equipment 158.4 160.6 164.7 162.9 1.0 1.4 2.5 -1.1 5.0 Construction supplies 110.5 108.0 110.3 110.7 1.6 -2.2 2.1 .4 1.4 Materials 128.4 128.4 129.5 128.9 .0 .0 .8 -.4 1.4 Major industry groups Manufacturing 124.8 124.5 126.4 125.4 .3 -.3 1.5 -.8 1.1 Durable 134.8 134.9 137.6 135.7 .4 .1 2.0 -1.4 2.7 Nondurable 113.8 113.0 114.0 114.0 .1 -.7 .9 .1 -.9 Mining 98.1 97.0 98.5 100.4 -.2 -1.2 1.6 2.0 .1 Utilities 125.1 125.7 124.3 125.1 -.3 .5 -1.1 .7 4.9 Capacity utilization, percent MEMO Capacity, percentage 1995 1996 change, Average, Low, High, Mar. 1995 1967-95 1982 1988-89 to Mar. Dec. Jan. Feb/ Mar.P Mar. 1996 Total 82.1 71.8 84.9 84.6 82.8 82.3 83.2 82.5 3.8 Previous estimate 82.7 82.1 82.9 Manufacturing 81.4 70.0 85.2 84.0 81.9 81.3 82.3 81.4 4.3 Advanced processing 80.7 71.4 83.5 81.9 80.2 79.7 81.1 79.9 4.9 Primary processing . 82.6 66.8 89.0 88.9 85.8 85.2 85.2 85.1 2.8 Mining 87.4 80.6 86.5 89.6 87.6 86.5 87.9 89.6 .1 Utilities 86.9 76.2 92.6 88.6 92.2 92.6 91.4 92.0 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. ing the output of motor vehicles and parts, the gain quarter after having barely increased in the fourth was 2.5 percent. Capacity utilization dropped 0.7 per- quarter; the swing largely reflects the fourth-quarter centage point, to 82.5 percent. strike and the first-quarter return to work at a major When analyzed by market group, the data show aircraft producer. that the output of consumer goods declined 0.9 per- The output of construction supplies, which rose cent. The production of automotive products fell 0.4 percent in March, was up at an annual rate of 11 percent, and the production of other durable con- 2 percent in the first quarter, down from 6 percent in sumer goods eased fractionally after a partial rebound the fourth quarter of 1995. The production of materiin February. The output of consumer nondurable als declined 0.4 percent in March, with the weakness goods, such as foods and utility output for residential concentrated in the durable goods materials used to use, gained 0.4 percent. make motor vehicles. The production of basic metals The production of business equipment declined and parts for equipment, which includes parts for I.1 percent. The drop in assemblies of business vehi- aircraft and components for high-technology equipcles caused the output of transit equipment to plunge ment, rose. The output of nondurable goods materi- II.6 percent. The output of industrial equipment als, such as paper and textiles, advanced 0.5 percent. dipped 0.7 percent after a sizable gain of 1.6 per- The production of energy materials, led by a gain in cent in February. Led by another strong increase in coal mining, increased 1.0 percent. the production of computer and office equipment, When analyzed by industry group, the data show the output of information processing equipment that manufacturing output declined 0.8 percent; advanced further. The output of business equipment excluding motor vehicles and parts, production rose rose at an annual rate of 14.7 percent in the first 0.2 percent. Although production in durable manufac- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

396 Federal Reserve Bulletin • May 1996 turing fell 1.4 percent because of the strike in the machinery, and petroleum refining. In mining, the motor vehicle and parts industry, production rose for utilization rate rose 1.7 percentage points; gains were steel, computers, other transportation equipment, sizable in coal mining and oil and gas well drilling. lumber and products, and instruments. The output of The operating rate for utilities reversed half of Februnondurables was little changed, as gains and losses ary's decline. • were fairly evenly spread among industries. The production in mining increased 2 percent, and output at utilities rose 0.7 percent. The factory operating rate, which had rebounded NOTICE 1 percentage point in February, fell 0.9 percentage point, to 81.4 percent. The utilization rate for motor Updated estimates of industrial capacity for 1995 and vehicles and parts—included in the advanced- 1996 will be included in the G.17 press release schedprocessing grouping—dropped from 78.2 percent to uled to be published on May 15, 1996. The updated 66.4 percent and accounted for most of the overall estimates will incorporate the data on actual and decline in utilization in manufacturing. Among other planned investment by manufacturing industries that advanced-processing industries, the changes in utili- were reported in the Census Bureau's Investment zation were mixed. The utilization rate for primary- Plans Survey issued in late March. The updates affect processing industries edged down 0.1 percentage the capacity utilization rates as of the beginning of point. Rates remain elevated for primary metals, 1995. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

397 Statements to the Congress Statement by Richard Spillenkothen, Director, Divi- actions daily, deal in highly complex instruments, sion of Banking Supervision and Regulation, Board and can significantly alter their risk profiles on relaof Governors of the Federal Reserve System, before tively short notice. the Committee on Banking and Financial Services, Let me emphasize that the traditional approach of U.S. House of Representatives, March 13, 1996 evaluating the quality of a bank's existing assets (that is, its loans and investments) remains highly impor- Thank you for the opportunity to discuss the Federal tant to the Federal Reserve's supervisory process. Reserve's efforts to increase the focus of examiners Our long-standing practice of reviewing credit risk and other supervisory personnel on the risk manage- in a bank's portfolio (including the counterparty ment procedures of banking organizations. The sub- credit risk in derivative instruments) is not being ject of "risk management" has attracted much atten- de-emphasized. While recent attention has focused tion in recent years both in the financial community lately on trading activities and complex instruments, and among the U.S. bank supervisory agencies and is the possibilities for misadventures extend throughout a timely topic for discussion with this committee. a bank, and we cannot forget the lessons of the past. Improvements in risk management procedures have Not long ago, large institutions were experiencing clearly affected the way in which many banks man- serious problems with excessive commercial real age their activities and the agencies review them. estate lending—problems brought about by policies Advances in risk management techniques have also and lending practices that were inconsistent with permitted expanded product lines and more efficient market realities and principles of sound credit risk services, while providing methodologies that, if used management. In addition to asset quality, our examinproperly, can enable institutions to better control the ers will continue to focus on other important and risks associated with ever more complex financial traditional financial indicators, such as capital adeinstruments and growing volumes of transactions. quacy, earnings, and liquidity. Risk management is the process of identifying, Still, technology and innovation have presented measuring, reporting, and controlling risks, which banks with new ways of both taking and managing banks and other businesses have always done. In that risks. With the advent of off-balance-sheet, over-thesense, it is nothing new. What is new is the technol- counter derivative instruments, for example, instituogy that has facilitated product innovation and the tions of all sizes can adjust their yields, risks, and application of financial theory to the development of liquidity much easier and quicker than they could new products. Many of the new products are highly before, with either positive or negative results. complex and are not best addressed by examination Accordingly, by itself, an assessment of the quality of on a transaction-by-transaction basis or by simply a bank's loans, investments, and other balance sheet verifying balance sheet values. Moreover, these prod- values at a point in time no longer provides the ucts highlight the importance of managing a broad assurance it once did that a sound institution is likely range of risk in addition to traditional credit risk. to remain sound in the future. Losses at Barings PLC These risks include potential exposure to market, and other institutions have shown how rapidly the liquidity, operational, legal, reputational, and other financial strength and condition of a bank can change risks. and demonstrate that it is essential for management to Increasingly, therefore, the Federal Reserve has implement and enforce sound controls and risk manengaged in a concentrated effort to focus the attention agement practices that are appropriate for the activiof examiners on evaluating the adequacy of a bank's ties the firm conducts. In the Barings case, it was not processes for identifying, managing, and controlling risky instruments or credit risk but poor controls over all of its risks when developing conclusions about the the actions of a rogue trader that broke the bank. overall safety and soundness of the institution. While Indeed, a breakdown or an absence of internal conmanagement processes at all banks may deserve more trols or risk management systems has been the fundaattention, this focus is particularly important at large mental cause of recent financial problems at several institutions that conduct substantial volumes of trans- institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

398 Federal Reserve Bulletin • May 1996 Bank supervisors cannot be everywhere; nor can trading activities became more complex and quathey prevent every problem. Moreover, too much drupled in volume. Institutions have enhanced their supervision and government oversight would simply information systems to report trading positions on a stifle innovation and lead to a less competitive and more timely basis and have also developed more responsive financial system. Relying more on super- sophisticated risk measurement techniques, such as visory techniques that encourage banks to adopt the "value at risk" (VaR) measure currently used by procedures to prevent excessive risk-taking—while many large trading institutions. This measure considkeeping in place fundamental prudential safeguards ers historical volatilities of market movements in such as adequate capital cushions—minimizes our calculating the probability of material and adverse intrusion while at the same time enhancing safety and changes in the market values of trading portfolios soundness. over the near term. Although specific techniques for Management and the institutions themselves, not calculating VaR differ among institutions and consupervisors, must be the principal source for detect- tinue to evolve, such measures represent a significant ing and deterring abusive and unsound practices advance in the management and measurement of through adequate internal controls and operating pro- market risks. cedures. Particularly at large institutions, market dis- While no one should underestimate the potential cipline can also play an important role, provided the risks in trading and derivatives activities, I would institutions make adequate disclosures. By emphasiz- note that the overall experience of U.S. banks in this ing these points through focused, risk-oriented exami- area has been favorable and that it has not been a nation procedures and efforts that promote sound source of material problems to the banking system. disclosure and accounting standards, supervisors Even in the isolated cases in which we have seen hope to increase the likelihood that a bank's activities large trading losses, as with Barings and Daiwa, the will remain sound for the long term. problems have related to fundamental violations of With that background, let me illustrate some of the the basic tenets of sound internal controls, such as changes taking place within the industry and the inadequate separation of duties, not with the inherent manner in which they are affecting our supervisory complexities of the instruments involved. practices. Moreover, credit risk, the risk that a borrower will default, has always been the most important risk to commercial banks and has also been a difficult risk for bankers to measure and control—whether or not it ADVANCES IN RISK MANAGEMENT entails derivatives instruments. Nevertheless, here, AT BANKING INSTITUTIONS too, opportunities for stronger risk management practices are growing daily as, again, technology makes Advances in computerization and communications, more things possible. For example, through their own globalization of financial markets, and the resulting direct efforts and those of national consulting firms, competition have all served to develop opportunities, banks are significantly improving their loan analysis inspire change, and bring about more efficient use of and internal credit risk ratings to facilitate more effiscarce resources. Throughout the 1980s and 1990s, cient loan pricing and internal capital allocation relafor example, the market for securitized assets grew tive to risk. Many banks are also devoting more rapidly—driven by the need for financial institutions resources to identifying correlations among default to maximize their use of capital and fueled by bank- risks so that their risks can be diversified more effecing assets ranging from auto to commercial loans. tively and managed on a portfolio basis. Financial derivatives also grew dramatically, as institutions found new ways to reallocate risks and rewards to where they were most valued. In the process, identifying and managing financial risk has CHANGES IN BANK SUPERVISION become more complex. It is, indeed, pressures created by market events All aspects of our supervisory process are undergoing that have brought about many of the advances in risk changes in response to advances in risk management management that we have seen, and these advances and industry innovation, including capital adequacy have contributed to a more efficient and financially guidelines, the examination and surveillance process, stronger banking system. For example, during the and efforts to promote more public disclosure and past five years, U.S. banks have been forced to appropriate accounting conventions. These and other improve their management of market risks as their initiatives are discussed briefly below and are listed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 399 in the attachment.1 Taken together, these efforts large trading institutions to meet certain quantitative should improve both the efficiency and the quality and qualitative criteria. The quantitative requireof the supervision process while also reducing the ments produce a level of consistency necessary for a related costs to the banking system. capital standard, while the qualitative requirements The Federal Reserve has always placed much provide specific standards for managing trading risks importance on strong capital adequacy among banks that include the following elements of sound risk and sought nearly a decade ago to develop and pro- management practice: mote capital standards that acknowledged changing practices within the banking system and that were • A risk control unit that is independent of the more sensitive to a bank's risk profile. The previous trading function primary capital standard served its purpose of • A regular program for backtesting the bank's strengthening capital ratios, especially among the performance to validate the accuracy of the VaR nation's largest banks, but had clear limitations. The measure existing risk-based capital standard that was adopted • Procedures for periodic stress testing to evaluate by the Basle Committee on Banking Supervision the impact on a bank's condition of highly unusual (Basle Committee) in 1988 provided a mechanism, market moves missing in the earlier standard, for addressing the • Documented internal policies, controls, and growing volume of off-balance-sheet transactions and procedures also distinguished among broad categories of credit • Independent reviews of the risk management risk in instruments booked on the balance sheet. process by internal auditors. While the current requirement is, itself, still crude in many respects, it has given supervisors and the At the end of February, the Board of Governors banking system a framework for evaluating capital approved for public comment the final element of the adequacy that is more responsive to the level of credit market risk proposal that deals with "backtesting" risk than had previously existed in regulatory stan- the accuracy of a bank's internal model. We expect to dards, and it continues to evolve to meet changing complete the rulemaking process for this proposal needs. For example, within the last two years, the this spring and to implement the new requirements by risk-based capital standard has been amended to the end of 1997. tailor capital requirements to a broader range of off- The vast majority of all derivative transactions of balance-sheet risks and to recognize practices within U.S. banking organizations are held in the trading the financial industry to reduce credit exposures accounts of the largest banks and, thus, will be covthrough netting arrangements. ered by these market risk capital requirements and Supervisors are also adapting the standard to take principles of sound management. As traded instruadvantage of improvements in risk measurement ments, they are also marked-to-market daily, actively methodologies to address market risks in trading managed, and incorporated into the institution's risk activities, that is, the risk to an institution's trading management reports. Derivative instruments are also position resulting from adverse movements in inter- subject to the counterparty credit risk provisions of est rates, foreign exchange rates, or commodity or the existing Capital Accord and continue to be subequity prices. Such market risks were not covered by ject to examiner review from that perspective as well. the risk-based capital agreement in 1988. Although In placing a high importance on the management appropriate rulemaking procedures remain to be final- process for trading and derivative activities, the Fedized in the United States, the Federal Reserve and the eral Reserve recognizes that these activities can rapother U.S. banking agencies expect in the coming idly change an institution's risk profile and transmit months to adopt new standards that will permit large problems from one institution to another. Conse- U.S. trading banks to use their internal "value-at- quently, we have worked with our colleagues domesrisk" models, subject to examiner oversight, to deter- tically and abroad to expand the amount of informamine their future capital requirements for market risk. tion available to supervisors so that they can identify Recognizing not only the advances in risk measure- more efficiently institutions at which strong risk manment but also the importance of sound risk manage- agement and control procedures are most important. ment practices, this forthcoming standard will require Early last year the U.S. banking agencies significantly enhanced the information about derivatives in their bank Call Reports to address the capital amendments 1. The attachment to this statement is available from Publications mentioned earlier and to obtain other information Services, Mail Stop 127, Board of Governors of the Federal Reserve about the underlying nature of derivatives' risks. System, Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

400 Federal Reserve Bulletin • May 1996 These efforts also contributed, last year, to a "joint for example, will normally be expected to have more framework for supervisory information" about trad- formal policies, procedures, limits, and management ing and derivatives activities of banks and securities information systems than smaller banks and must firms that was adopted by the Basle Committee and have more sophisticated measures of the risks they the International Organisation of Securities Commis- take. Nevertheless, all institutions are expected to sions (IOSCO). follow basic sound management practices that are Other supervisory initiatives involve promoting appropriate for their unique circumstances and the and reinforcing sound risk management practices nature and level of the risks they take, whether those throughout the banking industry, training examiners risks involve innovative and complex instruments or in the underlying concepts of risk management and traditional forms of loans. This flexibility will inhermeasurement, requiring more extensive "scoping" of ently require judgment on the part of examiners and a bank's risk profile before an examination, and other supervisory personnel when assessing the adeproviding examiners with the technology and guid- quacy of a bank's policies and procedures. ance they need to make their efforts more efficient. Since 1993, we have issued a series of instructions, policy statements, and examination manuals that have stressed the importance of managing all risks inher- Evaluating Risk Management ent in the business of banking, including market and credit risks, liquidity, legal, and reputational risks, One important step that reflects our increasing focus and, quite important, operational risks. In these docuon risk management and controls is our recent deci- ments and throughout our supervisory process, we sion to assign a formal rating to these areas in con- are emphasizing these four basic elements of sound nection with on-site examinations beginning this year. risk management: While supervisors have long reviewed internal controls during examinations, the rating process will • An active oversight role by bank boards of direcincrease the focus on risk management and is tors and senior management. Directors, in particular, intended to highlight both the quantitative and quali- need not be experts in complex banking matters, but tative aspects of a bank's system for identifying, they should receive adequate information about their measuring, monitoring, and controlling its risks. institution's risks that are measured and described in The rating of risk management will not alter the terms they understand and should communicate to way in which our examiners apply the interagency management their tolerance for accepting risks. CAMEL rating framework, but it will serve as a more Directors and senior managers must ensure that the solid foundation for determining the overall manage- risks of new products are fully understood and that ment component of that system. Moreover, we are adequate controls are in place before new products also working with our colleagues from the other are initiated. They also have the ongoing responsibilfederal banking agencies to develop a consistent ity of ensuring that their directives are adequately framework for incorporating market risks (including implemented and enforced throughout the institution. interest rate risk and foreign exchange risk) as well as • Adequate policies, limits, and procedures. These risk management policies and practices more for- elements should be tailored to the activities of the mally into the bank rating system. institution and should provide specific guidance regarding the nature and volume of risks the bank may take. Limits should be consistent with the Promoting Sound Practices board's willingness to take risks and with the institution's available capital and overall ability to manage In many respects, the increased focus on risk manage- its risks. ment begins by identifying the practices that we • Adequate risk measurement, monitoring, and expect banks to follow and that we direct our examin- management information systems. An institution ers to evaluate. While much is not new, the expansion should be able to identify and measure its material of the more complex trading and derivatives activi- risks and clearly communicate their nature and level ties has encouraged the Federal Reserve to formalize to senior management on a timely basis. Reports its expectations regarding sound risk management should identify instances in which established limits practices in several areas. have been exceeded and should prompt appropriate In all cases, of course, supervisory expectations corrective actions. The sophistication of the risk meamay vary significantly, depending upon the size and sures should be commensurate with the nature of the complexity of the institution's activities. Large banks, institution's activities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 401 • Adequate internal controls and audits. Having For example, through administrative changes and by an internal control process that monitors adherence to making greater use of available technology, we are established policies and procedures is critical to the increasing the time devoted to planning and preparsound conduct of a bank's activities. The complexity ing for an examination in order to tailor the examinaof control procedures may vary significantly among tion to the unique circumstances and risk profile of institutions, but to be effective they should all involve individual institutions. an appropriate segregation of duties, be administered Both the planning and the on-site examination by qualified personnel, and be conducted with suffi- effort will be helped significantly with the introduccient independence, scope, and frequency. Especially tion of the Examiner Workstation, which has been at large institutions, examiners will be directing more recently developed by the Federal Reserve System. attention to the independence of internal auditors This automated system, which is being tested in and their ability to monitor and test the reliability of cooperation with state and federal banking agencies, management information systems and compliance permits examiners to download data directly from a with internal policies and controls. bank's computer, analyze portfolios on their personal computers, and identify concentrations and other These principles are highly consistent with those characteristics within the bank's loan portfolio. As a promoted by the Group of Thirty in its 1993 report result, examiners should be able to reduce materially recommending sound practices in derivatives activi- the amount of time they spend on manual operations ties of financial institutions. Indeed, they are prac- and should be able to devote more time to identifying tices that virtually any business should employ in and evaluating risks. The Federal Reserve is also managing and controlling its risks. In that sense, making greater use of loan-sampling techniques to efforts by the banking agencies to review and pro- test the accuracy of internal loan risk-rating systems mote such practices should serve only to strengthen and to improve the efficiency of the examination the financial condition and management process at process. banking organizations and to reduce the exposure a In addition to these steps, we are also engaged in bank's activities may present to the federal safety net. an ongoing, in-depth review of our examination and This focus on risk management (particularly at large supervisory processes. Our long-term objective is to institutions) should in no way reduce the effective- make the examination process even more riskness of banking organizations to compete, either do- focused, cost-effective, and burden-sensitive without mestically or abroad. sacrificing the quality of our examinations and their I also would stress that while it is important for an ability to identify and evaluate fundamental safety institution to identify and document the policies, pro- and soundness considerations. cedures, and controls it needs, simply maintaining the The risk orientation of our supervisory process also proper documentation is meaningless if the proce- benefits from other factors. Recently we have suppledures and controls are not implemented in practice. mented information from our senior lending officer Consequently, a critical aspect of evaluating risk survey by initiating a quarterly survey of bank management and control procedures is testing and examiners that will give us more timely "hands-on" validating the strength and integrity of the procedures feedback on important developments relating to and checking the extent to which they are understood credit quality and management practices in banking and followed throughout the institution. Such valida- organizations. tion efforts must be conducted by individuals who have proper levels of organizational independence and expertise, such as internal or external auditors, Training on-site examiners, or managers or other professionals within the institution with no direct connection to the Although examiners review the risk management proactivity being reviewed. cess in all activities of a bank, most of the recent efforts of the Federal Reserve to train examiners about risk management practices have been directed More Efficient Examinations at the more rapidly evolving activities of banks— particularly those involving market risks. These In addition to the actions I have outlined, the Federal activities include trading and derivatives activities Reserve has undertaken other initiatives to make the and those of typical asset-liability committees supervision process more efficient and risk-focused, (ALCOs), which oversee a bank's investment portwhile reducing the burden on banking organizations. folios and overall management of interest rate risk. In Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

402 Federal Reserve Bulletin • May 1996 these areas, the Federal Reserve has significantly uniform standards of supervisory reporting and disexpanded its formal capital markets training pro- closure, particularly with respect to internationally grams to address risk management, including internal active banking organizations. We are also supporting controls, at all levels of examiner expertise. the accounting profession in improving accounting and disclosure standards. Capital Markets Coordinators CONCLUSION In recent years, the Federal Reserve's training and capital market surveillance efforts have been facili- Efforts of the Federal Reserve to expand the review tated by capital markets coordinators at each Reserve of a bank's risk management process are important, Bank. These individuals, who are officers or senior particularly in the case of large institutions and those examiners, keep abreast of market activities of instiwith material holdings of derivatives and other comtutions in their Districts and meet together quarterly plex instruments. These institutions and activities to discuss supervisory policies and practices and to must be well managed or they will present unacceptshare their insights and experiences with coordinators able risks to the federal safety net. Our examiners from other Reserve Banks. They also participate will be devoting more attention than in the past to actively in planning and staffing examinations and reviewing a bank's processes and controls, whether have helped significantly in developing and directing they relate to transactions or products new to the conferences and training programs that focus on the bank or to traditional lending activities. Although our risk management of trading and derivatives activities. goal is to ensure that risk management practices are The Board staff has worked closely with these coordicommensurate with risks, we want to encourage all nators in developing examiner guidance and in impleinstitutions to keep abreast of new techniques for menting surveillance screens for monitoring and improving their management of risks. evaluating interest rate risk. We are also working The greater attention given to risk management with the other federal banking agencies to revise the should not, however, be overstated and viewed as a Call Report to further strengthen our oversight and more dramatic change than it is. Strong management supervisory efforts in this area. procedures can go far in preventing problems The Federal Reserve's capital market supervisory throughout a bank, but evaluating their real worth is activities also benefit greatly from the experiences difficult without judging the bank's results. Assessing and insights of its research economists and payment "old fashioned lending" and evaluating loan quality system experts, at both the Board and the Reserve and the adequacy of bank capital and loan-loss Banks. These individuals complement the skills and reserves will remain paramount. perspectives of supervisory personnel and contribute Of course, no set of supervisory procedures will to a stronger supervisory process. Their contributions detect or prevent all problems, and that should not be are particularly helpful with respect to risk manageour goal. In the past, some banks—large and small— ment and market risk issues, which are likely to have had difficulties because of poor policies and become even more important to supervisors in the procedures and have failed as a result, typically future as market practices, risk management procebecause of bad loans. Human nature being what it is, dures, and financial innovations continue to evolve at there will undoubtedly be more problems ahead— a rapid pace. both for banks engaged in traditional lending activities and for those involved in trading and derivatives activities. Our job as supervisors should be to limit Disclosure and Accounting Standards the frequency and scope of these problems and ensure that they do not present unacceptable risks to While capital requirements and supervisory oversight bank customers, the financial system, or the federal are important in maintaining a financially sound safety net. Toward that purpose, we will continue our efforts to review and improve supervisory techniques banking and financial system, market discipline can and encourage sound risk management practices, also help greatly in stifling undesired behavior and while recognizing that banks must take risks if they reinforcing supervisory efforts to encourage sound are to be in a position to serve their customers and risk management practices. For that reason, the Fedcommunities and fulfill their role in the nation's eral Reserve has worked at both the domestic and economy. international levels to promote adequate and more Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 403 Statement by Alan Greenspan, Chairman, Board of vulnerabilities, the Federal Reserve can leverage off Governors of the Federal Reserve System, before the of this trend to enhance our own capabilities to Committee on Banking, Housing, and Urban Affairs, ensure a safe and sound banking system. U.S. Senate, March 26, 1996 Ultimately, the smooth functioning of our financial markets and economy rests on the payments system. I would like to begin by expressing my appreciation The Congress recognized this when it created the to President Clinton for nominating me for another Federal Reserve, making improvements to the payterm as Chairman of the Board of Governors of the ments system one of our preeminent tasks in 1913. Federal Reserve System. I am honored at the confi- We have not lost sight of that objective, but it has dence he has shown in me and pledge to him, to you, been complicated by the speed and volume of transand to the American people that if I am confirmed I actions within the United States and between the will continue to do my best to merit that confidence. United States and other countries. Because large I also want to thank you for scheduling this hearing shocks can be transmitted rapidly around the world, a so expeditiously. I like to think that I have had a breakdown in the payments system anywhere can good, productive relationship with this committee have adverse effects on the United States. and the Congress during my tenure at the Federal Here again, technology is being harnessed to Reserve. If you and the Senate choose to confirm my reduce the risk of a breakdown, especially by shortennomination, I intend to continue to work closely ing the time that passes between when a transaction is with you and your colleagues in both houses on the initiated and when it is settled. Events occurring in many issues confronting our financial system and our that period that prevent the completion of the transaceconomy. tion can threaten the stability of the financial system. As you know, I have come before you frequently We have been able to reduce the interval between to discuss a variety of specific issues related to the initiating and finalizing many types of securities conduct of monetary policy and to banking and finan- transactions, and I expect that reducing it further will cial markets. I thought it appropriate on this occasion be a high priority in years to come. Ideally we seek a to step back from day-to-day concerns and take a bit system in which a transaction would be settled when of a longer view of the forces, especially the evi- it was initiated. Facilities to do that, however, are dently more rapid pace of technological change and costly. Sometimes it is better to accept a minor sysinnovation, that will affect how the Federal Reserve tem risk owing to float than to invest in resources carries out its legislative mandates over the years required to eliminate it. Fortunately, technology is ahead. rapidly reducing costs, perhaps enabling the real Last month, my testimony was concentrated on the world to approach more closely the ideal. impact of these forces on the economy. Today I want We in the United States have a special responsibilto address their effects on the Federal Reserve in ity because the dollar is the world's leading currency, three main areas of responsibility—supervision and and a breakdown in dollar payments would have regulation of banks, stewardship of the payments repercussions far beyond our borders as well as at system, and monetary policy. home. Maintaining the key role of the dollar is impor- The way we supervise financial institutions is an tant to American growth and standards of living. area in which technology is both creating problems Because foreigners want to invest in dollar securities, and simultaneously giving us and the institutions we our markets are more liquid and our interest rates are supervise the tools to solve them. New instruments lower than they otherwise would be. Because foreignand changing business practices have made obsolete ers are willing to hold vast amounts of U.S. currency, in many respects our previous emphasis on balance the interest costs of funding the U.S. government debt sheets in examinations. A generation ago, a month- is reduced $10 billion to $15 billion yearly. old balance sheet was fairly indicative of the current A sound payments system is only one of our state of an institution. Today, owing to the prolifera- responsibilities as the central bank for the world's tion of transactions, a day-old balance sheet can be leading currency. Just as essential is a sound obsolete. Moreover, much of what is important for currency—one whose value is not eroding signifithe health of an institution never finds its way onto cantly or erratically. But price stability is not an the balance sheet, except ultimately through its bot- objective you have given monetary policy just to tom line effect on capital. Accordingly, banks and satisfy international investors. Rather, the fundaother intermediaries are relying increasingly on statis- mental reason for this goal is that its fulfillment is an tical models to measure and manage risk. By moni- essential element in enabling the economy to reach toring these models and by using them to test for its full potential. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

404 Federal Reserve Bulletin • May 1996 A challenge we at the Federal Reserve face, as we which we work; we are looking at how we may have have discussed on a number of occasions, is to assess to adapt to this development. how innovation and technical change are affecting Change always presents problems. Nonetheless, I the workings of the economy and its response to look forward to the opportunity, if you confirm my monetary policy actions. Indeed, technological nomination, to continue to work with you, the Presichange has begun to be felt at the very beginning of dent, and my colleagues at the Federal Reserve to the policy implementation process, enabling deposi- help the American people realize the full benefits our tories to avoid holding non-interest-earning required innovative and entrepreneurial spirit can bestow. reserves and shrinking the reserve base through Statement by Alan Greenspan, Chairman, Board of ing to restrain spending. But the recent data seem to Governors of the Federal Reserve System, before the indicate that those restraining influences are not so Committee on the Budget, U.S. House of Representa- strong as to seriously jeopardize the continued expantives, March 27, 1996 sion of the economy. Data for February showed increases in sales of motor vehicles and other types of I appreciate the opportunity to appear before this goods that are purchased at retail, and housing starts committee once again. As you know, I discussed rose further last month. In the business sector, real current economic conditions and the outlook rather outlays for fixed capital still appear to be trending up. extensively in appearances before House and Senate The labor market reports for February provided Banking committees just over a month ago. Today, I additional evidence that the economy is moving past would like to provide a brief update of comments that the disruptions that had slowed it in previous months. I made then and reiterate my views on some key Payroll employment surged in February, more than issues that are important for our nation's economic reversing the losses of January, and the unemployprospects over the medium term. ment rate, after having ticked up in January, dropped A month ago, the economy clearly had been per- back last month. It is possible that the February data ceived as soft over the latter part of 1995 and the may have exaggerated the strength of the labor marearly weeks of 1996. There were uncertainties, how- ket to some extent, as we have not seen a similar ever, about both the factors that might have given rise degree of strength in other labor market indicators, to the softness in activity and the degree to which that such as initial claims for unemployment insurance. softness might persist. But even so, the current economic expansion seems Although not all of the uncertainties have been to have exhibited staying power. The strike that has resolved, recent data have confirmed the expectation recently affected the motor vehicle industry is likely that a good bit of the economic sluggishness of late to result in additional volatility over the near term, 1995 was related to inventory investment. The efforts but like the disruptions of this past winter, it should of businesses to reestablish more desirable relation- not have a great impact on underlying trends in the ships between their holdings of inventories and their economy. actual and prospective levels of sales held down The most recent reports on inflation also have been production. Toward the end of last year, the inventory reasonably encouraging. Price increases at the conadjustments reached a point at which stocks actually sumer level have been moderate, on average, in the were being reduced in the aggregate. Although Janu- early part of 1996, and the twelve-month change in ary, with its unusually severe weather, apparently the consumer price index has remained near recent resulted in goods being bottled up for a time in some lows. In addition, producer prices have been well parts of the economy, the underlying picture, as best behaved early this year; the prices of finished goods we can discern, seems to be one in which much, but changed little over the first two months of the year, perhaps not all, of the needed inventory correction and materials prices in the producer price index already has been accomplished. continued to edge down. While monetary policy, as always, will need to be alert to inflation risks as we Ultimately, of course, the inventories that busimove forward, the recent economic data suggest that nesses want to hold will depend on the growth of the economy should be able to continue operating at a finai demand. At present, there are some factors, such high level of resource utilization, sustaining growth as high consumer debt levels, that still may be work- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 405 without risking a reversal of progress that has been Fortunately, economic successes of the past decade made toward the goal of price stability. or so have put us in a better position to meet the As I noted last month, structural forces may be challenges that remain. We have made significant and assisting us in this regard. Introduction of new tech- fundamental gains in macroeconomic performance in nologies into a wide variety of production processes recent years that enhance the prospects for maximum is affecting production costs and business pricing sustainable economic growth. Inflation, as measured throughout the economy. Successive generations of by the consumer price index, has been gradually these new technologies are being quickly embodied reduced from a peak of more than 13 percent in 1979 in the nation's capital stock, and older technologies to about 2Vi percent last year. Lower rates of inflation are, at a somewhat slower pace, being phased out. As have brought a variety of benefits to the economy, a consequence, the nation's capital stock is turning including lower long-term interest rates, a sense of over at an increasingly rapid pace, not primarily greater economic stability, an improved environment because of physical deterioration but as a reflection for household and business planning, and more of technological and economic obsolescence. robust investment in capital expenditures. Hopefully, A major challenge that we face during this period the years ahead will see further progress against of rapid technical change is that of altering, with inflation and the eventual achievement of price minimal disruption, not only the existing organiza- stability. tional structures and production methods of firms but, We have also made considerable progress on the even more important, the skills of the labor force. At fiscal front. Over the past ten years and especially present, the more rapid advance of information and since 1993, our elected political leaders, through communications technology and the associated accel- sometimes prolonged and even painful negotiations, eration in the turnover of the capital stock are being have been successful in reaching several agreements mirrored in a brisk restructuring of firms. In line with that have significantly narrowed the budget deficit. their adoption of new organizational structures and But more remains to be done. As I have emphasized technologies, many enterprises are finding that their many times, lower budget deficits are the surest and needs for various forms of labor are evolving just most direct way to increase national saving. Higher as quickly. In some cases, job skills that were ade- national saving would help to reduce real interest quate only five years ago are no longer as relevant. rates further, promoting more rapid accumulation of Partly for that reason, most corporate restructurings productive capital embodying recent technological have involved a significant number of permanent advances. Agreement is widely shared that attaining dismissals. a higher national saving rate quite soon is crucial, It would be neither feasible nor desirable to try to particularly in view of the anticipated shift in the restrain the technical forces that lie behind the huge nation's demographics in the first few decades of the structural changes that are playing themselves out in next century. As recent events in financial markets the business world and in the workplace. But we can seem to have demonstrated, delay in taking meaningtake steps that will help ease the transition between ful action on the budget comes at a cost. Although the the old and the new. Firms and employees alike need backup of long-term interest rates this year surely has to recognize that obtaining the potential rewards of been in large part a reflection of an economy on the new technologies in the years ahead will require a firmer footing than many market participants had renewed commitment to effective education and thought, long-term rates also have been affected by training, especially on-the-job training. Such a com- perceptions in the market that priorities may be shiftmitment is essential if we are to prevent the disrup- ing away from deficit reduction. tions to lives and to the nation's capacity to produce Lower inflation and reduced budget deficits will by that arise from mismatches between jobs and work- no means solve all of the economic problems we ers. We need to improve the preparation for the job face. But the achievement of price stability and fedmarket our schools do, but even better schools are eral budget balance or surplus will provide the best unlikely to be able to provide adequate skills to possible macroeconomic climate in which the nation support a lifetime of work. Indeed, ensuring that our can address other economic challenges, including labor force has the ongoing education and training those that arise as side effects of the otherwise benenecessary to compete in an increasingly sophisticated ficial and highly desirable process of technological world economy is a critical task for the years ahead. advance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

406 Federal Reserve Bulletin • May 1996 Statement of the Board of Governors of the Federal as if the recipient had an ordinary checking account Reserve System with Regard to Coverage by Regu- with direct deposits of government benefits and with lation E of Electronic Benefit Transfers, submitted automated teller machine and point of sale service for the record to the Committee on Banking and available to access the benefits and that all consumers Financial Services, U.S. House of Representatives, using EFT services should receive substantially the March 27, 1996 same protection under the EFTA and Regulation E, absent a showing that compliance costs outweigh the The Board has been asked to comment on its position need for consumer protections. The Board noted that with regard to the coverage under the Electronic it recognized that benefit program agencies were Fund Transfer Act (EFTA), and the Board's Regula- concerned about the operational and cost impacts of tion E, of electronic benefit transfer (EBT) programs. coverage, specifically in the areas of liability for Government benefits that are delivered electronically unauthorized transfers and error resolution, but include food stamps, Aid to Families with Dependent believed that the cost data presented to support Children, and social security benefits. Under amend- exemptions in these areas were not definitive. In ments to Regulation E that the Board adopted in response to concerns expressed by the states about February 1994, such EBT programs will be subject to the potential impact of Regulation E on EBT promodified Regulation E requirements scheduled to grams and at the request of the Federal Electronic take effect on a mandatory basis on March 1, 1997 Benefits Task Force, which represents all the major (see attached February 24, 1994 notice).1 federal agencies with benefit programs, the Board The Board adopted the amendments covering EBT delayed the date of mandatory compliance with the programs pursuant to its authority under 904(c) and final rule for a three year period—to March 1, (d) of the EFTA. Section 904(c) provides that the 1997—so that states could continue to explore opporrules issued by the Board "may contain such classifi- tunities for provision of services through EBT. cations, differentiations, or other provisions ... as in Various bills relating to the status of EBT prothe judgment of the Board are necessary or proper to grams under the EFTA have been introduced in the effectuate the purposes of this title, [or] to prevent Congress. H.R.4, the "Personal Responsibility and circumvention or evasion thereof...." Section 904(d) Work Opportunity Act of 1995," which was passed provides that if EFT services "are made available to by the Congress and vetoed by the President, conconsumers by a person other than a financial institu- tains provisions to exempt EBT programs that distion holding a consumer's account, the Board shall tribute needs-tested benefits and are established or by regulation assure that the disclosures, protections, administered by states or localities. After careful responsibilities, and remedies created by this title are weighing of congressional intent, consumer rights made applicable to such persons and services." The and the concerns about the impact of Regulation E legislative history of the EFTA provides guidance on coverage on development of EBT systems, the Board the Board's authority to determine if particular ser- believes that coverage of EBT programs is required vices should be covered by the act. A Senate Banking under the law as it currently exists. The Board recog- Committee report, in discussing section 904(c), stated nizes that the Congress may well want to reexamine that "since no one can foresee EFT developments in the issues regarding the scope of EFTA coverage in the future, regulations would keep pace with new light of developments since its enactment in 1978 and services and assure that the act's basic protections to balance competing objectives in light of changing continue to apply." (Senate Report 915, 95 Cong., national priorities. In particular, the Board believes it 2 Sess. (GPO, 1978)). would be useful for the Congress to address whether In adopting the amendments, the Board noted its or not EBT programs should be exempted from the belief that the strong similarity of EBT systems and EFTA. However, if an exemption is limited to parother EFT services, the act's legislative history, and ticular categories of EBT programs—or to EBT prothe language of the EFTA and Regulation E sup- grams administered at the state and local level as may ported coverage of EBT programs under the act and be the case under H.R.4 and similar proposals— regulation. The Board stated that, from a recipient's varying rules for different government benefit proviewpoint, an EBT system functions much the same grams would result. This could make it difficult to implement the multipurpose, one-card, unified national delivery system envisioned by the Federal Electronic Benefits Transfer Task Force, established 1. The attachment to this statement is available from Publications in response to Vice President Gore's 1993 Report of Services, Mail Stop 127, Board of Governors of the Federal Reserve the National Performance Review. • System, Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

407 Announcements MEETING OF THE CONSUMER ADVISORY JOINT AMENDMENT TO A RECORDKEEPING COUNCIL RULE IN ACCORDANCE WITH THE BANK SECRECY ACT The Federal Reserve Board announced on March 8, 1996, that the Consumer Advisory Council would The Federal Reserve Board and the Department of meet on Thursday, March 28, in a session open to the the Treasury on March 26, 1996, jointly issued public. The council's function is to advise the Board amendments to their rule that requires enhanced on the exercise of the Board's responsibilities under recordkeeping related to certain funds transfers by the Consumer Credit Protection Act and on other financial institutions, in accordance with the Bank matters on which the Board seeks its advice. Secrecy Act. The amendments revise the rule's definitions and make technical conforming changes to the substan- APPROVAL OF A VOLUNTARY CHECK-FRAUD tive provisions of the rule to conform the definitions SURVEY of the parties to an international funds transfer to their meanings under Article 4A of the Uniform The Federal Reserve Board on March 13, 1996, ap- Commercial Code. These changes are intended to proved conducting a one-time, voluntary check-fraud reduce the confusion of banks and nonbank financial survey. institutions as to the applicability of the recordkeep- The responses to the survey will help the Board to ing rule and to reduce the cost of complying with the fulfill the congressional mandate to accomplish the rule's requirements. following: The Board and the Treasury have also deferred the effective date of the recordkeeping rule from April 1, • Determine whether there is a pattern of signifi- 1996, to May 28, 1996. In addition, the Board cant increases in losses related to check fraud at has deferred the effective date of subpart B of Regudepository institutions attributable to the provisions lation S (Reimbursement to Financial Institutions for of the Expedited Funds Availability Act (EFAA) Assembling or Providing Financial Records), which • Consider whether an extension by one day of the cross-references the recordkeeping requirements. period between the deposit of a local check and the availability of funds for withdrawal would be effective in reducing the volume of losses related to check APPROVAL OF FINAL REVISIONS TO fraud THE OFFICIAL STAFF COMMENTARY • Make recommendations for legislative actions. TO REGULATION Z The survey forms were mailed to a random sample The Federal Reserve Board on March 28, 1996, pubof approximately 5,200 depository institutions and lished final revisions to its official staff commentary requested data on check-fraud losses for the period to Regulation Z (Truth in Lending). January 1, 1995, through December 31, 1995. The The changes provide guidance mainly on issues data obtained from all respondents will be combined relating to reverse mortgages and mortgages bearing to provide an estimate of total check-fraud losses in rates above a certain percentage or fees above a the banking industry. certain amount. The update also addresses issues of To provide comprehensive information to the Con- general interest, such as a card issuer's responsibiligress, the Board encouraged all institutions receiving ties when a cardholder asserts a claim or defense the survey to participate, even if they incurred no relating to a merchant dispute. losses due to check fraud during 1995. Completed The final rule was effective April 1, 1996; howsurvey questionnaires were due on April 12, 1996. ever, compliance is optional until October 1, 1996. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

408 Federal Reserve Bulletin • May 1996 PROPOSED ACTION • A brief definition of each Federal Reserve regulation The Federal Reserve Board along with the Office of • Links to other Federal Reserve web sites operthe Comptroller of the Currency and the Federal ated by the Federal Reserve Banks of New York, Deposit Insurance Corporation on March 7, 1996, Philadelphia, Cleveland, Atlanta, Chicago, Minnerequested comment on a proposal to amend an out- apolis, St. Louis, and Dallas. standing proposal to incorporate a measure for market risk into the risk-based capital guidelines for Other features will be added in the future. These banks and bank holding companies (banking organi- will include speeches and testimony of Board memzations), which was issued in July 1995. Comments bers, the minutes and schedule of meetings of the were requested by April 8, 1996. Federal Open Market Committee, the Beige Book, statistics gathered by the System including historical data, press releases, banking matters including a list- ESTABLISHMENT OF A FEDERAL RESERVE ing of all applications received and actions taken, the HOME PAGE ON THE WORLD WIDE WEB Federal Reserve Bulletin, and the Board's Annual Report. The Federal Reserve Board announced on March 25, 1996, that it had established a home page on the World Wide Web to provide a wide variety of infor- CHANGES IN BOARD STAFF mation to the general public. Initially, the Board's home page (http://www.bog.frb.fed.us) provides the The Federal Reserve Board announced the retirefollowing: ment, effective April 1, 1996, of Anthony V. DiGioia, Assistant Director in the Division of Human • An introductory statement of the role of the Resources Management, after seventeen years of Federal Reserve service. • The text of Purposes and Functions, a book that The Board also announced the retirement, effective explains the mission and operations of the Federal April 12, 1996, of Laura M. Homer, Assistant Direc- Reserve System tor in the Division of Banking Supervision and Regu- • A listing of Board publications and how to order lation, after nearly twenty-five years of service. • them • An explanation of Board and System material available through the U.S. Commerce Department economic bulletin board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

409 Minutes of the Federal Open Market Committee Meeting Held on January 30-31,1996 A meeting of the Federal Open Market Committee Mr. Rosine,1 Senior Economist, Division of Research was held in the offices of the Board of Governors of and Statistics, Board of Governors Mr. Reid,1 Economist, Division of Monetary Affairs, the Federal Reserve System in Washington, D.C., Board of Governors starting on Tuesday, January 30, 1996, at 2:30 p.m. Ms. Low, Open Market Secretariat Assistant, and continuing on Wednesday, January 31, 1996, at Division of Monetary Affairs, Board of 9:00 a.m. Governors Mr. Beebe, Ms. Browne, Messrs. Davis, Dewald, Present: Goodfriend, and Hunter, Senior Vice Presidents, Mr. Greenspan, Chairman Federal Reserve Banks of San Francisco, Boston, Mr. McDonough, Vice Chairman Kansas City, St. Louis, Richmond, and Chicago Mr. Boehne respectively Mr. Jordan Mses. Krieger and Rosenbaum, Vice Presidents, Mr. Kelley Federal Reserve Banks of New York and Atlanta Mr. Lindsey respectively Mr. McTeer Ms. Phillips Mr. Stern In the agenda for this meeting, it was reported that Ms. Yellen advices of the election of the following members and alternate members of the Federal Open Market Com- Messrs. Broaddus, Guynn, Moskow, and Parry, mittee for the period commencing January 1, 1996, Alternate Members of the Federal Open Market and ending December 31, 1996, had been received Committee and that the named individuals had executed their oaths of office. Messrs. Hoenig, Melzer, and Ms. Minehan, Presidents of the Federal Reserve Banks of Kansas City, The elected members and alternate members were St. Louis, and Boston respectively as follows: Mr. Kohn, Secretary and Economist William J. McDonough, President of the Federal Reserve Mr. Bernard, Deputy Secretary Bank of New York, with Ernest T. Patrikis, First Vice Mr. Coyne, Assistant Secretary President of the Federal Reserve Bank of New York, Mr. Gillum, Assistant Secretary as alternate; Mr. Mattingly, General Counsel Edward G. Boehne, President of the Federal Reserve Bank Mr. Prell, Economist of Philadelphia, with J. Alfred Broaddus, Jr., Presi- Mr. Truman, Economist dent of the Federal Reserve Bank of Richmond, as alternate; Messrs. Lang, Lindsey, Mishkin, Promisel, Rolnick, Jerry L. Jordan, President of the Federal Reserve Bank of Rosenblum, Siegman, Simpson, Sniderman, and Cleveland, with Michael H. Moskow, President of the Stockton, Associate Economists Federal Reserve Bank of Chicago, as alternate; Robert D. McTeer, President of the Federal Reserve Bank of Dallas, with Jack Guynn, President of the Federal Mr. Fisher, Manager, System Open Market Account Reserve Bank of Atlanta, as alternate; Gary H. Stern, President of the Federal Reserve Bank of Mr. Winn, Assistant to the Board, Office of Board Minneapolis, with Robert T. Parry, President of the Members, Board of Governors Federal Reserve Bank of San Francisco, as alternate. Mr. Ettin, Deputy Director, Division of Research and Statistics, Board of Governors Mr. Madigan, Associate Director, Division of Monetary Affairs, Board of Governors 1. Attended portions of meeting relating to the Committee's review Mr. Slifman, Associate Director, Division of Research of the economic outlook and establishment of its monetary and debt and Statistics, Board of Governors ranges for 1996. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

410 Federal Reserve Bulletin • May 1996 By unanimous vote, the following officers of the (a) To buy or sell U.S. Government securities, includ- Federal Open Market Committee were elected to ing securities of the Federal Financing Bank, and securities that are direct obligations of, or fully guaranteed as to serve until the election of their successors at the first principal and interest by, any agency of the United States in meeting of the Committee after December 31, 1996, the open market, from or to securities dealers and foreign with the understanding that in the event of the discon- and international accounts maintained at the Federal tinuance of their official connection with the Board of Reserve Bank of New York, on a cash, regular, or deferred Governors or with a Federal Reserve Bank, they delivery basis, for the System Open Market Account at market prices, and, for such Account, to exchange maturwould cease to have any official connection with the ing U.S. Government and Federal agency securities with Federal Open Market Committee: the Treasury or the individual agencies or to allow them to mature without replacement; provided that the aggregate Alan Greenspan Chairman amount of U.S. Government and Federal agency securities William J. McDonough Vice Chairman held in such Account (including forward commitments) at the close of business on the day of a meeting of the Donald L. Kohn Secretary and Economist Committee at which action is taken with respect to a Normand R.V. Bernard Deputy Secretary domestic policy directive shall not be increased or Joseph R. Coyne Assistant Secretary decreased by more than $8.0 billion during the period Gary P. Gillum Assistant Secretary commencing with the opening of business on the day J. Virgil Mattingly, Jr. General Counsel following such meeting and ending with the close of busi- Thomas C. Baxter, Jr. Deputy General Counsel ness on the day of the next such meeting; Michael J. Prell Economist (b) When appropriate, to buy or sell in the open Edwin M. Truman Economist market, from or to acceptance dealers and foreign accounts maintained at the Federal Reserve Bank of New York, on a Richard W. Lang, David E. Lindsey, Frederic S. Mishkin, cash, regular, or deferred delivery basis, for the account of Larry J. Promisel, Arthur J. Rolnick, Harvey Rosen- the Federal Reserve Bank of New York at market discount blum, Charles J. Siegman, Thomas D. Simpson, rates, prime bankers acceptances with maturities of up to Mark S. Sniderman, and David J. Stockton, Associate nine months at the time of acceptance that (1) arise out of Economists the current shipment of goods between countries or within the United States, or (2) arise out of the storage within the By unanimous vote, the Federal Reserve Bank of United States of goods under contract of sale or expected New York was selected to execute transactions for to move into the channels of trade within a reasonable time and that are secured throughout their life by a warehouse the System Open Market Account until the adjournreceipt or similar document conveying title to the underment of the first meeting of the Committee after lying goods; provided that the aggregate amount of bank- December 31, 1996. ers acceptances held at any one time shall not exceed By unanimous vote, Peter R. Fisher was selected to $100 million; serve at the pleasure of the Committee as Manager, (c) To buy U.S. Government securities, obligations System Open Market Account, on the understanding that are direct obligations of, or fully guaranteed as to principal and interest by, any agency of the United States, that his selection was subject to being satisfactory to and prime bankers acceptances of the types authorized for the Federal Reserve Bank of New York. purchase under 1(b) above, from dealers for the account of the Federal Reserve Bank of New York under agreements Secretary's note: Advice subsequently was received for repurchase of such securities, obligations, or accepthat the selection of Mr. Fisher as Manager was satisfactory tances in 15 calendar days or less, at rates that, unless to the board of directors of the Federal Reserve Bank of otherwise expressly authorized by the Committee, shall be New York. determined by competitive bidding, after applying reasonable limitations on the volume of agreements with indi- By unanimous vote, the Authorization for Domes- vidual dealers; provided that in the event Government securities or agency issues covered by any such agreement tic Open Market Operations shown below was are not repurchased by the dealer pursuant to the agreereaffirmed. ment or a renewal thereof, they shall be sold in the market or transferred to the System Open Market Account; and provided further that in the event bankers acceptances covered by any such agreement are not repurchased by the seller, they shall continue to be held by the Federal Reserve AUTHORIZATION FOR DOMESTIC OPEN Bank or shall be sold in the open market. MARKET OPERATIONS 2. In order to ensure the effective conduct of open market operations, the Federal Open Market Committee authorizes and directs the Federal Reserve Banks to lend Reaffirmed January 30, 1996 U.S. Government securities held in the System Open Market Account to Government securities dealers and to banks 1. The Federal Open Market Committee authorizes and participating in Government securities clearing arrangedirects the Federal Reserve Bank of New York, to the ments conducted through a Federal Reserve Bank, under extent necessary to carry out the most recent domestic such instructions as the Committee may specify from time policy directive adopted at a meeting of the Committee: to time. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 411 3. In order to ensure the effective conduct of open tee, because of exceptional circumstances, specifically market operations, while assisting in the provision of short- authorizes a delay. term investments for foreign and international accounts D. To maintain an overall open position in all foreign maintained at the Federal Reserve Bank of New York, the currencies not exceeding $25.0 billion. For this purpose, Federal Open Market Committee authorizes and directs the the overall open position in all foreign currencies is defined Federal Reserve Bank of New York (a) for System Open as the sum (disregarding signs) of net positions in indi- Market Account, to sell U.S. Government securities to such vidual currencies. The net position in a single foreign foreign and international accounts on the bases set forth in currency is defined as holdings of balances in that curparagraph 1(a) under agreements providing for the resale rency, plus outstanding contracts for future receipt, minus by such accounts of those securities within 15 calendar outstanding contracts for future delivery of that currency, days on terms comparable to those available on such i.e., as the sum of these elements with due regard to sign. transactions in the market; and (b) for New York Bank 2. The Federal Open Market Committee directs the Fedaccount, when appropriate, to undertake with dealers, sub- eral Reserve Bank of New York to maintain reciprocal ject to the conditions imposed on purchases and sales of currency arrangements ("swap" arrangements) for the Syssecurities in paragraph 1(c), repurchase agreements in U.S. tem Open Market Account for periods up to a maximum of Government and agency securities, and to arrange corre- 12 months with the following foreign banks, which are sponding sale and repurchase agreements between its own among those designated by the Board of Governors of the account and foreign and international accounts maintained Federal Reserve System under Section 214.5 of Regulation at the Bank. Transactions undertaken with such accounts N, Relations with Foreign Banks and Bankers, and with the under the provisions of this paragraph may provide for a approval of the Committee to renew such arrangements on service fee when appropriate. maturity: By unanimous vote, the Authorization for Foreign Currency Operations shown below was reaffirmed. Amount of arrangement Foreign bank (millions of dollars equivalent) Austrian National Bank 250 National Bank of Belgium 1,000 AUTHORIZATION FOR FOREIGN CURRENCY Bank of Canada 2,000 OPERATIONS National Bank of Denmark 250 Bank of England 3,000 Bank of France 2,000 German Federal Bank 6,000 Reaffirmed January 30, 1996 Bank of Italy 3,000 Bank of Japan 5,000 Bank of Mexico 3,000 1. The Federal Open Market Committee authorizes and Netherlands Bank 500 directs the Federal Reserve Bank of New York, for System Bank of Norway 250 Bank of Sweden 300 Open Market Account, to the extent necessary to carry out Swiss National Bank 4,000 the Committee's foreign currency directive and express Bank for International Settlements: authorizations by the Committee pursuant thereto, and in Dollars against Swiss francs 600 conformity with such procedural instructions as the Com- Dollars against authorized European mittee may issue from time to time: currencies other than Swiss francs 1,250 A. To purchase and sell the following foreign currencies in the form of cable transfers through spot or forward transactions on the open market at home and abroad, Any changes in the terms of existing swap arrangeincluding transactions with the U.S. Treasury, with the U.S. ments, and the proposed terms of any new arrangements Exchange Stabilization Fund established by Section 10 of that may be authorized, shall be referred for review and the Gold Reserve Act of 1934, with foreign monetary approval to the Committee. authorities, with the Bank for International Settlements, 3. All transactions in foreign currencies undertaken and with other international financial institutions: under paragraph l.A. above shall, unless otherwise expressly authorized by the Committee, be at prevailing Austrian schillings Italian lire market rates. For the purpose of providing an investment Belgian francs Japanese yen return on System holdings of foreign currencies, or for the Canadian dollars Mexican pesos purpose of adjusting interest rates paid or received in Danish kroner Netherlands guilders connection with swap drawings, transactions with foreign Pounds sterling Norwegian kroner central banks may be undertaken at non-market exchange French francs Swedish kronor rates. German marks Swiss francs 4. It shall be the normal practice to arrange with foreign central banks for the coordination of foreign currency B. To hold balances of, and to have outstanding for- transactions. In making operating arrangements with forward contracts to receive or to deliver, the foreign curren- eign central banks on System holdings of foreign currencies listed in paragraph A above. cies, the Federal Reserve Bank of New York shall not C. To draw foreign currencies and to permit foreign commit itself to maintain any specific balance, unless banks to draw dollars under the reciprocal currency authorized by the Federal Open Market Committee. Any agreements or understandings concerning the administraarrangements listed in paragraph 2 below, provided that tion of the accounts maintained by the Federal Reserve drawings by either party to any such arrangement shall be Bank of New York with the foreign banks designated fully liquidated within 12 months after any amount outby the Board of Governors under Section 214.5 of Regulastanding at that time was first drawn, unless the Commit- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

412 Federal Reserve Bulletin • May 1996 tion N shall be referred for review and approval to the provided that market exchange rates for the U.S. dollar Committee. reflect actions and behavior consistent with the IMF 5. Foreign currency holdings shall be invested insofar Article IV, Section 1. as practicable, considering needs for minimum working 2. To achieve this end the System shall: balances. Such investments shall be in liquid form, and A. Undertake spot and forward purchases and sales generally have no more than 12 months remaining to of foreign exchange. maturity. When appropriate in connection with arrange- B. Maintain reciprocal currency ("swap") arrangements to provide investment facilities for foreign currency ments with selected foreign central banks and with the holdings, U.S. Government securities may be purchased Bank for International Settlements. from foreign central banks under agreements for repur- C. Cooperate in other respects with central banks chase of such securities within 30 calendar days. of other countries and with international monetary 6. All operations undertaken pursuant to the preceding institutions. paragraphs shall be reported promptly to the Foreign Cur- 3. Transactions may also be undertaken: rency Subcommittee and the Committee. The Foreign Cur- A. To adjust System balances in light of probable rency Subcommittee consists of the Chairman and Vice future needs for currencies. Chairman of the Committee, the Vice Chairman of the B. To provide means for meeting System and Trea- Board of Governors, and such other member of the Board sury commitments in particular currencies, and to facilitate as the Chairman may designate (or in the absence of operations of the Exchange Stabilization Fund. members of the Board serving on the Subcommittee, other C. For such other purposes as may be expressly Board members designated by the Chairman as alternates, authorized by the Committee. and in the absence of the Vice Chairman of the Committee, 4. System foreign currency operations shall be his alternate). Meetings of the Subcommittee shall be conducted: called at the request of any member, or at the request of the A. In close and continuous consultation and coopera- Manager, System Open Market Account ("Manager"), for tion with the United States Treasury; the purposes of reviewing recent or contemplated opera- B. In cooperation, as appropriate, with foreign monetions and of consulting with the Manager on other matters tary authorities; and relating to his responsibilities. At the request of any mem- C. In a manner consistent with the obligations of the ber of the Subcommittee, questions arising from such United States in the International Monetary Fund regarding reviews and consultations shall be referred for determina- exchange arrangements under the IMF Article IV. tion to the Federal Open Market Committee. 7. The Chairman is authorized: By unanimous vote, the Procedural Instructions A. With the approval of the Committee, to enter into with Respect to Foreign Currency Operations shown any needed agreement or understanding with the Secretary below were reaffirmed. of the Treasury about the division of responsibility for foreign currency operations between the System and the Treasury; B. To keep the Secretary of the Treasury fully advised PROCEDURAL INSTRUCTIONS WITH RESPECT TO concerning System foreign currency operations, and to consult with the Secretary on policy matters relating to FOREIGN CURRENCY OPERATIONS foreign currency operations; C. From time to time, to transmit appropriate reports Reaffirmed January 30, 1996 and information to the National Advisory Council on Inter- In conducting operations pursuant to the authorization national Monetary and Financial Policies. and direction of the Federal Open Market Committee as set 8. Staff officers of the Committee are authorized to forth in the Authorization for Foreign Currency Operations transmit pertinent information on System foreign curand the Foreign Currency Directive, the Federal Reserve rency operations to appropriate officials of the Treasury Bank of New York, through the Manager, System Open Department. Market Account ("Manager"), shall be guided by the 9. All Federal Reserve Banks shall participate in the foreign currency operations for System Account in accor- following procedural understandings with respect to condance with paragraph 3 G(l) of the Board of Governors' sultations and clearances with the Committee, the Foreign Statement of Procedure with Respect to Foreign Relation- Currency Subcommittee, and the Chairman of the Commitships of Federal Reserve Banks dated January 1, 1944. tee. All operations undertaken pursuant to such clearances shall be reported promptly to the Committee. 1. The Manager shall clear with the Subcommittee (or By unanimous vote, the Foreign Currency Direcwith the Chairman, if the Chairman believes that consultative shown below was reaffirmed. tion with the Subcommittee is not feasible in the time available): A. Any operation that would result in a change in the System's overall open position in foreign currencies FOREIGN CURRENCY DIRECTIVE exceeding $300 million on any day or $600 million since the most recent regular meeting of the Committee. Reaffirmed January 30, 1996 B. Any operation that would result in a change on any day in the System's net position in a single foreign 1. System operations in foreign currencies shall gener- currency exceeding $150 million, or $300 million when the ally be directed at countering disorderly market conditions, operation is associated with repayment of swap drawings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 413 C. Any operation that might generate a substantial rently scheduled for August 1996. Accordingly, the volume of trading in a particular currency by the System, Committee reaffirmed the warehousing authority by even though the change in the System's net position in that unanimous vote. currency might be less than the limits specified in l.B. By unanimous vote, the Program for Security of D. Any swap drawing proposed by a foreign bank not exceeding the larger of (i) $200 million or (ii) 15 percent of FOMC Information was amended to conform it to the the size of the swap arrangement. treatment of transcripts of FOMC meetings and the 2. The Manager shall clear with the Committee (or with procedures that the Committee had been following the Subcommittee, if the Subcommittee believes that confor some time in regard to redactions of confidential sultation with the full Committee is not feasible in the time information in transcripts and other documents that available, or with the Chairman, if the Chairman believes that consultation with the Subcommittee is not feasible in are released to the public after five years. In addition, the time available): the Committee agreed to amend the program so that A. Any operation that would result in a change in the the automatic extension of Federal Reserve staff System's overall open position in foreign currencies access to confidential material after six months could exceeding $1.5 billion since the most recent regular meetbe suspended for certain particularly sensitive ing of the Committee. documents. B. Any swap drawing proposed by a foreign bank exceeding the larger of (i) $200 million or (ii) 15 percent of On January 23, 1996, the continuing rules, resoluthe size of the swap arrangement. tions, and other instruments of the Committee had 3. The Manager shall also consult with the Subcommit- been distributed with the advice that, in accordance tee or the Chairman about proposed swap drawings by the with procedures approved by the Committee, they System and about any operations that are not of a routine were being called to the Committee's attention before character. the January 30-31 organization meeting to give members an opportunity to raise any questions they might have concerning them. Members were asked to indi- AGREEMENT TO "WAREHOUSE" FOREIGN cate if they wished to have any of the instruments in CURRENCIES question placed on the agenda for consideration at this meeting, and no requests for such consideration At its meeting on January 31-February 1, 1995, the were received. Committee had approved an increase from $5 billion By unanimous vote, the minutes of the meeting of to $20 billion in the amount of eligible foreign cur- the Federal Open Market Committee held on Decemrencies that the System was prepared to "warehouse" ber 19, 1995, were approved. for the Treasury and the Exchange Stabilization Fund The Manager of the System Open Market Account (ESF). The purpose of the warehousing facility, reported on recent developments in foreign exchange which has been in place for many years, is to supple- markets. He indicated that the swap line drawing by ment the U.S. dollar resources of the Treasury and the the Bank of Mexico had been repaid in full on ESF for financing purchases of foreign currencies January 29, 1996. The Committee ratified that transand related international operations. The enlargement action by unanimous vote. of the warehousing agreement was intended to facili- The Manager also reported on recent developments tate U.S. participation in the Multilateral Program to in domestic financial markets and on System open Restore Financial Stability in Mexico, announced by market transactions in U.S. government securities and President Clinton on January 31, 1995, by warehous- federal agency obligations during the period Deceming up to $20 billion in German marks and Japanese ber 19, 1995, through January 30, 1996. By unaniyen held by the Treasury through the ESF. The Com- mous vote, the Committee ratified these transactions. mittee had agreed that it would review each year the The Committee then turned to a discussion of the need to maintain this level of warehousing authority economic and financial outlook, the ranges for the in light of the progress and requirements of the growth of money and debt in 1996, and the impleprogram. mentation of monetary policy over the intermeeting The Treasury and the Exchange Stabilization Fund period ahead. A summary of the economic and finanhad made no use of the warehousing facility over the cial information available at the time of the meeting past year. Nevertheless, consistent with Federal and of the Committee's discussion is provided below, Reserve support for the program of assistance to followed by the domestic policy directive that was Mexico, the members agreed that it was appropriate approved by the Committee and issued to the Federal to postpone consideration of an adjustment in the Reserve Bank of New York. overall size of the facility at least until the end of the Only a limited amount of new information was disbursement phase of the Mexican program cur- available for this meeting because of delays in gov- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

414 Federal Reserve Bulletin • May 1996 ernment releases; that which was available, along consumer confidence in January. Recent indicators of with anecdotal commentary, suggested that the econ- housing demand and activity were mixed. Sales of omy had been growing relatively slowly in recent new homes edged still lower in November (latest data months. Consumer spending had expanded modestly available), and sales of existing homes declined by a on balance, growth in business investment in capital larger amount in December than in November. Howgoods appeared to have slackened somewhat recently, ever, housing starts rebounded in November from a and housing demand seemed to have leveled out. sizable October decline, and conditions in mortgage Slower growth in final sales was leading to inventory markets remained quite favorable, led by a further buildups in a few industries, and these buildups, decline in rates. together with the disruptions from government shut- The sparse statistical data available on business downs and severe weather, were having a restraining fixed investment, along with anecdotal information, effect on economic activity. The demand for labor suggested a moderation recently in the expansion of was still growing at a moderate pace, though, and the business spending on capital goods, including some unemployment rate remained relatively low. The slowing of investment in computers. Investment in recent data on prices and wages had been mixed, but transportation equipment, however, apparently had there was no firm evidence of a change in underlying held up well in the fourth quarter. Incoming data on inflation trends. construction contracts pointed to some slowing in the Nonfarm payroll employment continued to expand growth of nonresidential building activity from a moderately in December; the gain was in line with relatively brisk pace during most of 1995. the average monthly increase for 1995. Employment The information available on business inventories in manufacturing, boosted by the settlement of a suggested that inventory imbalances might have strike at a major aircraft manufacturer, reversed the emerged in a few sectors in association with weakerdeclines of October and November. Construction than-expected sales. Motor vehicle inventories were payrolls rose further in December, despite unfavor- at elevated levels compared with sales in late 1995, able weather in some parts of the country. Job growth and manufacturers responded by offering incentive remained solid in much of the services industry, packages on new cars and trucks and by adjusting although employment at personnel supply firms was downward their January production schedules. Data little changed. The civilian unemployment rate on manufacturing and retail trade inventories for remained at 5.6 percent in December. November had been delayed, but published informa- Industrial production edged up in December and tion on inventories held by wholesale distributors for the fourth quarter as a whole advanced only indicated a decline in that month, reversing part slightly; industrial activity remained sluggish in Janu- of October's sizable run-up. Much of the decline ary according to the limited statistical information occurred in nondurable goods, although machinery that was available. In December, manufacturing out- distributors also reported a sizable liquidation. The put rose a bit in association with an increase in motor inventory-sales ratio for the wholesale trade sector vehicle assemblies and aircraft production. Else- edged down in November but remained near the high where in manufacturing, the growth of output of end of its range in recent years. office and computing equipment slowed somewhat The nominal deficit on U.S. trade in goods and from the rapid pace of previous months, and the services narrowed in October from its average rate production of defense and space equipment and of in the third quarter. The value of imports declined nondurable consumer goods registered sizable more than the value of exports. Much of the contracdeclines. The output of utilities was boosted some- tion in imports reflected reductions in oil and autowhat in December by the effect of colder-than- motive products that more than offset another strong average temperatures on the demand for heating ser- rise in computer goods. For exports, an advance in vices. Utilization of total industrial capacity fell machinery exports to record levels was outweighed slightly but remained at a moderately elevated level. by a reduction in shipments of agricultural and auto- Retail sales continued to grow at a relatively mod- motive products. Available data on economic activity est rate in December, and the fourth-quarter increase in the major foreign industrial countries suggested was considerably smaller than those of the previous that the pace of expansion in Europe had slowed two quarters. In the fourth quarter, lower spending at further on average while growth in Japan had picked general merchandisers offset much of the sales gains up a little. registered at automotive dealerships, furniture and Recent data suggested little change in underlying appliance stores, and building and supply outlets. inflation trends. Consumer prices increased slightly Consumer surveys indicated some deterioration in in December after having been unchanged in Novem- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 415 ber; food prices were quiescent over the two-month Most market interest rates had declined somewhat period while energy prices rose on balance, with a further over the period after the December 19 meet- December rebound more than offsetting a sizable ing. Rates moved lower immediately after the policy November drop. Excluding food and energy items, easing action, and most fell still more on balance consumer prices were up modestly over the over the remainder of the intermeeting interval in November-December period and for all of 1995 response to incoming information about the economy advanced slightly more than in 1994. Producer prices and the prospects for fiscal policy, at least in the near of finished goods were up considerably in November term. Both were seen as suggesting slower economic and December after having risen slowly in earlier expansion for a time and an increased likelihood of months; in large part, the price increases late in the additional easing of monetary policy in coming year reflected sharp upward movements in both fin- months. With bond yields down on balance, and ished foods and finished energy prices. For 1995, occasionally approaching two-year lows, major producer prices of finished goods other than food and indexes of equity prices advanced sharply further. energy rose at a subdued pace, though somewhat The trade-weighted value of the dollar in terms of more than in 1994. Commodity prices had been the other G-10 currencies continued to rise over the mixed recently after having trended down earlier. intermeeting period despite the decline in U.S. inter- Average hourly earnings of production and nonsuper- est rates. The dollar's upward movement against the visory workers increased somewhat in December German mark and other European currencies was after having been unchanged in November. Increases associated with increasing indications of further in average hourly earnings had been trending up over weakening of economic expansion in key European the past several years. countries and greater declines in interest rates in At its meeting on December 19,1995, the Commit- those countries than in the United States. The dollar's tee adopted a directive that called for some slight appreciation relative to the Japanese yen appeared to easing in the degree of pressure on reserve positions, be related in part to a narrowing of Japan's trade and which was expected to result in a decline in the current account surpluses. The dollar was unchanged federal funds rate from around 53/4 percent to around on balance against the Canadian dollar, while the 5Vz percent. The directive did not include a presump- Mexican peso rose considerably in relation to the tion about the likely direction of any adjustments to dollar. policy during the intermeeting period. Accordingly, Growth of M2 and M3 strengthened in December the directive stated that in the context of the Commit- and January. The pickup in M2 growth partly tee's long-run objectives for price stability and reflected the effect of recent declines in short-term sustainable economic growth, and giving careful interest rates; those declines had made money market consideration to economic, financial, and monetary instruments less attractive relative to household savdevelopments, slightly greater reserve restraint or ings accounts in M2, whose offering rates tend to be slightly lesser reserve restraint would be acceptable adjusted downward with a considerable lag. In addiduring the intermeeting period. The reserve condi- tion, the flattening of the term structure of interest tions associated with this directive were expected to rates had lessened the comparative attractiveness of be consistent with moderate growth of M2 and M3 bond mutual funds, which had continued to experiover coming months. ence only light inflows. Faster growth of M3 in After the meeting, open market operations were December and January was associated with both the directed initially toward implementing the slight eas- pickup in M2 expansion and the issuance of addiing in the degree of reserve pressure that had been tional large time deposits to help finance a noticeable adopted by the Committee and thereafter toward step-up in bank loan demand in January. The expanmaintaining this new reserve posture. Operations sion of M2 from the fourth quarter of 1994 to the were complicated by large swings in reserve fourth quarter of 1995 was in the upper half of the demands associated with year-end pressures and the Committee's annual range, and M3 grew at the upper adverse effects of unusually severe winter weather on end of its range. Growth of total domestic nonfinancheck clearings. Although the federal funds rate cial debt had been moderate in recent months, and for exhibited somewhat greater volatility than normal the year was near the midpoint of this aggregate's over the period, it nonetheless averaged close to the monitoring range. expected level of 5V2 percent. The occasional periods The staff forecast prepared for this meeting sugof firmness in reserve market conditions contributed gested that economic activity would expand at a to higher adjustment plus seasonal borrowing, on relatively slow pace over the near term. This forecast average, over the period. was not materially different from that prepared for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

416 Federal Reserve Bulletin • May 1996 the December meeting, except for a slightly weaker possibility of sluggish expansion, while possible outlook for the current quarter that was related in part developments on the upside were more difficult to to an inventory correction and the effects of unusu- identify. With resource use unlikely to vary appreciaally severe winter weather on spending and output. bly, the members generally expected no significant Over the remainder of the two-year forecast horizon, change in the underlying inflation picture over the the economy was expected to grow generally along year ahead. The recent performance of inflation had its estimated potential. Consumer spending was some encouraging aspects, and the odds on greater anticipated to keep pace with the growth of dispos- price pressures seemed relatively small at this time. able income; concerns about job security remained In keeping with the practice at meetings when the and consumer debt burdens had risen further, but the Committee establishes its long-run ranges for growth still-ample availability of credit and the substantial of the money and debt aggregates, the members of rise in the value of household equity holdings would the Committee and the Federal Reserve Bank presisupport additional increases in consumption. The fur- dents not currently serving as members had prepared ther decline in mortgage rates recently from already- individual projections of economic activity, the rate favorable levels would help to sustain homebuilding of unemployment, and inflation for the year 1996. activity at a relatively high level. With sales and Measured on the basis of chain-weighted indexes, the profits projected to grow more slowly, and with utili- forecasts of the growth in real GDP had a central zation of existing capacity having eased considerably, tendency of 2 to VU percent and a full range of IV2 to business investment in new equipment and structures 2Vi percent for the period from the fourth quarter of was expected to expand at a more moderate rate. In 1995 to the fourth quarter of 1996. The members and light of the recent strengthening of the dollar, the nonmember presidents generally anticipated that ecoexternal sector was expected to exert a small restrain- nomic expansion in line with their forecasts would be ing influence on real activity over the projection associated with employment growth close to that of period as a whole. Much uncertainty still surrounded the labor force. Accordingly, their forecasts of the the fiscal outlook, but the recent impasse in the civilian rate of unemployment in the fourth quarter of budget negotiations between the Administration and 1996 were near the current level, with a central the Congress suggested a lower degree of fiscal tendency of 5VI to 53/4 percent and a full range of restraint over coming years than had been assumed in 5VI to 6 percent. Projections of the rate of inflation, the previous forecast. Given the projected outlook, as reflected in the consumer price index, had a central rates of utilization of labor and capital resources and tendency of 23/4 to 3 percent; that central tendency of inflation were not expected to change materially. was on the high side of the outcome for 1995—when In the Committee's discussion of current and pro- the rise in the index was held down by damped spective economic activity, members noted a number increases in food prices and declines in energy of temporary factors that were retarding the expan- prices—but a few of the forecasts anticipated a sion. The weakness in business activity this winter slightly lower rate of inflation. was to some extent the result of the partial shutdown In their review of developments across the nation, of the federal government and the severe storms in a the Federal Reserve Bank presidents reported modest number of regions; both clearly were transitory influ- growth in most major areas of the country. Many ences on the economy. Growth of economic activity referred, however, to an admixture of strengths and also was being constrained by production cutbacks weaknesses in their local economies, and a majority stemming from efforts to bring stocks into better observed that on balance growth in regional business alignment with disappointing sales in a number of activity appeared to have slowed in the last few industries. Even so, in the absence of major over- months. In keeping with the data available for the hangs in inventories of business equipment and con- nation as a whole, the slowing seemed to be concensumer durables, and given favorable conditions in trated in manufacturing and especially at firms profinancial markets, members believed that a resump- ducing motor vehicles and parts. Some presidents tion of moderate, sustainable growth after a relatively referred to relatively negative, or at least cautious, brief period of weakness was the most likely outlook sentiment among many of their business contacts. for the economy. At the same time, many observed Much of the recent softening in economic activity that the risks to such an outcome did not seem appeared to arise from production cutbacks in various balanced. A number of concerns, including the extent sectors of the economy in which involuntary accumuof the damping effects of high debt loads and employ- lation of inventories seemed to have occurred as a ment uncertainty on consumption and questions about result of weaker sales trends in the past few months. the sources of further export growth, suggested the The members expected this inventory adjustment pro- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 417 cess to have a relatively pronounced effect on produc- equipment, including the reduced cost of financing tion and overall business activity in the current quar- such investment, remained positive and this sector of ter and perhaps to some extent in the second. While the economy should continue to provide considerable a greater-than-expected inventory adjustment with impetus to the expansion. spreading effects through the economy could not be The members also viewed the considerable decline ruled out, the underlying strength of demand was that had occurred in mortgage interest rates and the likely to be sufficient to restore and sustain moderate ample availability of housing finance as key factors growth in overall economic activity as the current in their forecasts of sustained residential construction inventory and production adjustments subsided. at relatively high levels. Adverse weather conditions With regard to consumer spending, members appeared to have retarded homebuilding activity in a referred to overall indications of lackluster retail sales number of areas in recent weeks, but several memduring the holiday season and into January. The bers commented that underlying trends in housing anecdotal commentary on retail sales attributed some demand were favorable and that residential construcof the recent weakness in a number of areas to the tion had remained relatively strong in several parts of clearly temporary effects of unusually severe winter the country. weather and the partial shutdown of the federal gov- The outlook for fiscal policy was uncertain, espeernment. The members anticipated that moderate cially with regard to whether longer-term spending growth in retail sales would resume, though some felt and taxation measures would be enacted to implethat the consumer sector might remain vulnerable on ment the goal of a balanced federal budget by the the downside. The consumer spending outlook was year 2002. For the year immediately ahead, however, complicated by a number of crosscurrents. Negative the members continued to anticipate considerable factors cited by the members included ongoing restraint in federal spending, partly as a byproduct of concerns about job security that were being sus- the current budget debate between the Congress and tained by a continuing stream of workforce reduc- the Administration. With regard to the external sector tion announcements by major business concerns, of the economy, prospects for economic growth in increased consumer debt burdens that were showing major trading partners—led by developments in up in rising delinquency rates on some types of loans, Europe—appeared to have weakened, and the recent and the apparent satisfaction of much of the earlier appreciation of the dollar in the foreign exchange pent-up demand for consumer durables. On the posi- markets also might tend to damp net exports. Consetive side, reduced interest rates, still readily available quently, several members saw downside risks in the credit, and the accumulation of financial wealth from foreign trade sector over the year ahead. the sharp rise in stock and bond prices were seen The members anticipated that inflation would as likely to support continuing gains in consumer remain contained in 1996, but they did not expect spending. significant progress toward more stable prices. They Further increases in business fixed investment were referred to crosscurrents bearing on the outlook for viewed as a likely prospect for the year ahead, though wages and prices in the year ahead. Factors pointing the growth of such investment probably would be to potentially higher inflation included increased well below the strong pace experienced earlier in the pressures on food prices stemming from disappointcurrent cyclical expansion. Anecdotal reports indi- ing harvests in some areas and relatively low grain cated continuing strength in nonresidential construc- supplies. More generally, resource utilization was tion in some parts of the country, but declining rates expected to remain high and greater pressures could of capacity utilization augured reduced growth going emerge in labor and product markets. Members noted forward. The expansion of investment in producers' that one broad measure of wages had picked up and durable equipment also was expected to slow, but that there was a small rise in the number of anecdotal from a pace that had seemed unsustainable. While reports indicating that labor shortages were contributappreciable further growth could be expected in ing to higher wages in some parts of the country. In expenditures for high-tech equipment as business addition, unusually muted increases in the costs of firms continued to focus on improving the efficiency worker benefits had been holding down overall comof their operations in a highly competitive environ- pensation costs, and this pattern might not persist. On ment, spending for other types of equipment was the other hand, high levels of resource utilization had likely to be sluggish. Members noted in particular the been associated for some time with lower rates of prospects for weaker business spending for motor growth in costs than would have been anticipated on vehicles, especially for heavy trucks. However, the the basis of historical experience. In particular, a fundamental determinants of investment in business general sense of job insecurity in a period of major Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

418 Federal Reserve Bulletin • May 1996 business restructurings was holding down increases tentative ranges because they could be viewed as in labor compensation. In an environment of strong benchmarks for money growth that would be assocompetition, which was preventing many businesses ciated with price stability, assuming behavior of from passing on rising costs through higher prices, velocity in line with historical experience, and a firms continued to focus on efforts to control costs by reaffirmation of those ranges would underscore the improving the efficiency of their operations, and this Committee's commitment to a policy of achieving was helping to hold down inflation. An apparent price stability over the longer term. Some members decline in inflationary expectations also would pro- also noted that any adjustment of these ranges to vide a moderating influence on inflation trends in the align them more fully with projections of money period ahead. While most of the members saw little growth consistent with the Committee's expectations reason to anticipate appreciably lower inflation over for expansion of the economy and prices in 1996 the year ahead, they also viewed the odds on a pickup could be misinterpreted. Such an action might be in inflation as fairly low; they could see possible seen as suggesting that the Committee had a greater reasons for optimism on the long-run trend in infla- degree of confidence in the relationship between tion; and they generally remained confident that fur- money growth and broad measures of economic perther progress toward price stability would be made formance than was warranted by its current underover the longer term. standing of that relationship or that the Committee In keeping with the requirements of the Full was now placing greater emphasis on the broad Employment and Balanced Growth Act of 1978 (the monetary aggregates as a gauge of the thrust of Humphrey-Hawkins Act), the Committee reviewed monetary policy. the ranges for growth of the monetary and debt Two members favored somewhat higher growth aggregates in 1996 that it had established on a tenta- ranges for M2 and M3 in 1996. They noted that the tive basis at its meeting in July 1995. The tentative expansion of these broad aggregates was anticipated ranges included expansion of 1 to 5 percent for M2 to be around the upper ends of their tentative ranges, and 2 to 6 percent for M3, measured from the fourth and perhaps even higher, given the Committee's quarter of 1995 to the fourth quarter of 1996. The expectations for the performance of the economy and monitoring range for growth of total domestic nonfi- prices. In their view, the higher ranges would be nancial debt was provisionally set at 3 to 7 percent more consistent with what they saw as the Commitfor 1996. The tentative ranges for 1996 were tee's obligations under the Federal Reserve Act to set unchanged from the actual ranges for 1995. In July, ranges consistent with expected or desired economic the range for M3 had been raised 2 percentage points outcomes for the year, and the reasons for establishto reflect developments that seemed to be fostering a ing those ranges could easily be set forth and underreturn to the historical pattern of somewhat faster stood as an appropriate technical adjustment that growth in M3 than in M2. would not imply any lessened commitment to the In their discussion, the members took note of a Committee's price stability goal. staff analysis which indicated that monetary expan- The Committee unanimously preferred to retain sion consistent with the moderate growth of nominal the 3 to 7 percent range for total domestic nonfinan- GDP that the members were projecting for 1996 most cial debt in 1996. This position took account of a staff likely would be around the upper ends of the tentative projection indicating that the debt aggregate was ranges adopted last July. M2 and M3 velocity over likely to continue to grow at a rate generally in line the past couple of years had conformed more closely with the expansion of nominal GDP, although some on balance with historical patterns, and the projec- moderation in private credit demands was anticipated tions assumed that this behavior would continue in and there were indications that lenders were no longer 1996. In light of the experience of earlier years, easing their terms and conditions for granting credit however, when the velocities of these aggregates had to consumers and businesses. exhibited pronounced atypical behavior, substantial At the conclusion of its discussion, the Committee uncertainty still surrounded any projections of mone- voted to approve without change the tentative ranges tary expansion and the linkage between particular for 1996 that it had established in July of last year. rates of money growth and the basic objectives of In keeping with its usual procedures under the monetary policy. Humphrey-Hawkins Act, the Committee would Most members endorsed a proposal to adopt the review its ranges at midyear, or sooner if interim relatively low ranges for growth of M2 and M3 in conditions warranted, in light of the growth and 1996 that the Committee had set on a tentative basis velocity behavior of the aggregates and ongoing ecoin July 1995. These members favored retention of the nomic and financial developments. Accordingly, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 419 the following longer-run policy statement for 1995 Based on experience in the United States and elsewas approved for inclusion in the domestic policy where, many were skeptical about the payoff in terms directive: of greater credibility or flexibility in policy implementation. Moreover, they believed that substantially The Federal Open Market Committee seeks monetary more study and deliberation were required to explore and financial conditions that will foster price stability and fully the alternatives and the consequences of promote sustainable growth in output. In furtherance of changes in the way the Committee formulated and these objectives, the Committee at this meeting established ranges for growth of M2 and M3 of 1 to 5 percent and 2 to communicated its objectives. They also thought that 6 percent respectively, measured from the fourth quarter of any such assessment would need to take account of 1995 to the fourth quarter of 1996. The monitoring range the prospects for, or disposition of, closely related for growth of total domestic nonfinancial debt was set at legislation that was now being considered in the 3 to 7 percent for the year. The behavior of the monetary Congress. The Committee did not take any action on aggregates will continue to be evaluated in the light of progress toward price level stability, movements in their this issue at this meeting, but it recognized that the velocities, and developments in the economy and financial matter would need to be revisited from time to time. markets. In the Committee's discussion of policy for the intermeeting period ahead, the members supported a Votes for this action: Messrs. Greenspan, McDonough, proposal calling for some slight easing in reserve Boehne, Jordan, Kelley, McTeer, Ms. Phillips, and conditions. Although a pickup to an acceptable rate Mr. Stern. Votes against this action: Mr. Lindsey and Ms. Yellen. of expansion was seen as the most likely course for the economy in coming quarters, the risks of a short- Mr. Lindsey and Ms. Yellen dissented because they fall in growth were believed to be significant. At the preferred somewhat higher ranges for M2 and M3. same time, while most members were forecasting They recognized that the relationships between the high levels of resource use and little change in the ranges for the monetary aggregates and broad mea- rate of inflation this year, they saw only a very sures of economic performance were subject to sub- limited risk that a slight easing move might foster stantial uncertainty, but ranges higher than those higher inflation under prevailing circumstances, and adopted on a tentative basis in July 1995 were more some felt that there were favorable prospects for a likely to encompass monetary expansion consistent slightly improved inflation performance. Under the with the central tendency of members' current fore- circumstances, a slight decrease was warranted in the casts of nominal GDP growth for 1996. Raising the real federal funds rate from a level that a number of ranges for M2 and M3 would in their view conform members considered still a bit to the firm side—a those ranges more closely with the provisions in the stance that seemed less appropriate in light of the Federal Reserve Act that require the System to com- reduced threat over the last year of a pickup in municate to the Congress its objectives and plans for inflation. One member pointed out that such a the growth of the aggregates for the calendar year. decrease would tend to counter the effects on aggre- They believed the Committee could readily explain gate demand of the recent rise in the foreign exchange that such an adjustment to the ranges did not repre- value of the dollar, which might continue to move sent a lessened commitment to its price stability goal higher if interest rate declines expected by the maror an increased emphasis on the monetary aggregates kets were not forthcoming. It was noted that postponin policy formulation. ing a decision in this uncertain economic climate The Committee also discussed alternatives to the could be defended on the ground that more evidence monetary aggregates for communicating its inten- was needed to ascertain whether the weakness in the tions with regard to the course of inflation over the economy was quite temporary or more lasting; if longer run. Some members thought that explicit it was the former, inflationary pressures could numerical goals or forecasts for inflation over a re-emerge at lower interest rates. On the other hand, a period of years would have several important bene- few members commented that the currently sluggish fits, including enhanced credibility that could reduce performance of the economy could be read as calling the costs of achieving price stability and greater for a more pronounced easing move, but they preflexibility to respond to the emergence of economic ferred a cautious approach to policy in light of curweakness by easing policy for a limited period rent inflation trends and the uncertainties that surof time without arousing inflation concerns. Other rounded their forecasts of some strengthening in the members, while endorsing fully the long-term goal of economy. price stability, had a number of reservations about The Chairman informed the Committee that he had implementing such proposals, especially at this time. asked the members of the Board of Governors to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

420 Federal Reserve Bulletin • May 1996 convene immediately after this meeting to consider a spending on business equipment, and nonresidential conreduction of VA percentage point in the discount rate. struction has risen appreciably further. The nominal deficit on U.S. trade in goods and services narrowed in October Such a reduction had been proposed by a total of six from its average rate in the third quarter. There has been no Federal Reserve Banks at this point. Given the easing clear change in underlying inflation trends. in reserve markets favored by the Committee and the Most market interest rates have declined somewhat since possibility of a lower discount rate, the members did the Committee meeting on December 19. In foreign not believe that a further policy move was likely to exchange markets, the trade-weighted value of the dollar in terms of the other G-10 currencies has risen further over be needed during the intermeeting period. Accordthe intermeeting period. ingly, they favored an unbiased directive that did not Growth of M2 and M3 strengthened in December and incorporate a presumption about the likely direction January. From the fourth quarter of 1994 to the fourth of any adjustments to policy during the next several quarter of 1995, M2 expanded in the upper half of its range weeks. In keeping with its usual practice, the Com- and M3 grew at the upper end of its range. Growth in total mittee did not rule out the possibility of an intermeet- domestic nonfinancial debt has been moderate in recent months, placing this aggregate near the midpoint of its ing policy change on the basis of unanticipated ecomonitoring range for the year. nomic or financial developments. The Federal Open Market Committee seeks monetary At the conclusion of the Committee's discussion, and financial conditions that will foster price stability and all the members supported a directive that called for a promote sustainable growth in output. In furtherance of these objectives, the Committee at this meeting established slight reduction in the degree of pressure on reserve ranges for growth of M2 and M3 of 1 to 5 percent and 2 to positions and that did not include a bias about the 6 percent respectively, measured from the fourth quarter of likely direction of an adjustment to policy during the 1995 to the fourth quarter of 1996. The monitoring range intermeeting period, should unanticipated develop- for growth of total domestic nonfinancial debt was set at ments warrant a change in policy. Accordingly, the 3 to 7 percent for the year. The behavior of the monetary aggregates will continue to be evaluated in the light of Committee decided that in the context of its long-run progress toward price level stability, movements in their objectives for price stability and sustainable ecovelocities, and developments in the economy and financial nomic growth, and giving careful consideration to markets. economic, financial, and monetary developments, In the implementation of policy for the immediate future, slightly greater or slightly lesser reserve restraint the Committee seeks to decrease slightly the existing would be acceptable during the intermeeting period. degree of pressure on reserve positions, taking account of a possible reduction in the discount rate. In the context of the The reserve conditions contemplated at this meeting Committee's long-run objectives for price stability and were expected to be consistent with moderate growth sustainable economic growth, and giving careful considerin M2 and M3 over coming months. ation to economic, financial, and monetary developments, At the conclusion of the meeting, the Federal slightly greater reserve restraint or slightly lesser reserve restraint would be acceptable in the intermeeting period. Reserve Bank of New York was authorized and The contemplated reserve conditions are expected to be directed, until instructed otherwise by the Commitconsistent with moderate growth in M2 and M3 over tee, to execute transactions in the System Account coming months. in accordance with the following domestic policy directive: Votes for short-run policy: Messrs. Greenspan, McDonough, Boehne, Jordan, Kelley, Lindsey, McTeer, Ms. Phillips, Mr. Stern, and Ms. Yellen. Votes The information reviewed at this meeting suggests that against this action: None. the economy has been growing rather slowly in recent months. Nonfarm payroll employment continued to expand moderately in December, and the civilian unemployment It was agreed that the next meeting of the Commitrate remained at 5.6 percent. Industrial production tee would be held on Tuesday, March 26, 1996. increased only slightly further in the fourth quarter. Growth The meeting adjourned at 12:00 p.m. of consumer spending was modest, on balance, over the past several months. Housing starts rebounded in Novem- Donald L. Kohn ber from a sizable October decline. Orders for nondefense capital goods point to a moderation in the expansion of Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

421 Legal Developments JOINT FINAL RULE—AMENDMENT TO THE BANK is to be credited pursuant to the order or which otherwise is SECRECY ACT REGULATIONS to make payment to the beneficiary if the order does not provide for payment to an account. The Financial Crimes Enforcement Network ("FinCEN") of the Department of the Treasury ("Treasury") and the Board of Governors of the Federal Reserve System (w) Originator's bank. The receiving bank to which the ("Board") jointly have adopted amendments to their final payment order of the originator is issued if the originator is rule that requires enhanced recordkeeping related to certain not a bank or foreign bank, or the originator if the originafunds transfers and transmittals of funds by financial insti- tor is a bank or foreign bank. tutions ("the joint rule"). These amendments revise the joint rule's definitions and make technical conforming changes to the substantive provisions of the joint rule to (y) Payment order. An instruction of a sender to a receiving conform the definitions of the parties to an international bank, transmitted orally, electronically, or in writing, to transfer to their meanings under Article 4A of the Uniform pay, or to cause another bank or foreign bank to pay, a Commercial Code (U.C.C. 4A). The revised definitions fixed or determinable amount of money to a beneficiary if: will also affect the provisions of a Treasury companion rule, adopted in January 1995, known as the travel rule, which requires financial institutions to include in transmit- (aa) Receiving bank. The bank or foreign bank to which tal orders certain information that must be maintained the sender's instruction is addressed, under the joint rule. The amendments are intended to (bb) Receiving financial institution. The financial institureduce confusion of banks and nonbank financial institu- tion or foreign financial agency to which the sender's tions as to the applicability of the joint rule and the travel instruction is addressed. The term receiving financial rule and to reduce the cost of complying with the rules' institution includes a receiving bank. requirements. The Treasury and the Board believe that the amendments will not have a material adverse effect on the rules' usefulness in law enforcement investigations and (dd) Recipient's financial institution. The financial instiproceedings. The amendments should not affect a bank's tution or foreign financial agency identified in a transmitresponsibilities under the rules with respect to domestic tal order in which an account of the recipient is to be funds transfers. credited pursuant to the transmittal order or which other- Effective May 28, 1996, 31 C.F.R. Part 103 is amended wise is to make payment to the recipient if the order as follows: does not provide for payment to an account. The term recipient's financial institution includes a beneficiary's Part 103—Financial Recordkeeping and Reporting bank, except where the beneficiary is a recipient's finanof Currency and Foreign Transactions cial institution. 1. The authority citation for Part 103 is revised to read as (kk) Transmittal order. The term transmittal order infollows: cludes a payment order and is an instruction of a sender to a receiving financial institution, transmitted orally, Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. electronically, or in writing, to pay, or cause another 5311-5330. financial institution or foreign financial agency to pay, a fixed or determinable amount of money to a recipient if: 2. Section 103.11 is amended by revising paragraphs (e), (w), (y) introductory text, (aa), (bb), (dd), (kk) introductory text, (11), and (mm) to read as follows: (11) Transmittor. The sender of the first transmittal order in a transmittal of funds. The term transmittor includes Section 103.11—Meaning of terms. an originator, except where the transmitter's financial institution is a financial institution or foreign financial agency other than a bank or foreign bank, (e) Beneficiary's bank. The bank or foreign bank identified (mm) Transmittor's financial institution. The receiving in a payment order in which an account of the beneficiary financial institution to which the transmittal order of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

422 Federal Reserve Bulletin • May 1996 transmittor is issued if the transmitter is not a financial financial institution other than a bank is subject to the institution or foreign financial agency, or the transmittor requirements of this paragraph (f) with respect to a transif the transmittor is a financial institution or foreign mittal of funds in the amount of $3,000 or more: financial agency. The term transmitter's financial institu- (1) Recordkeeping requirements, (i) For each transmittal tion includes an originator's bank, except where the order that it accepts as a transmitter's financial instituoriginator is a transmitter's financial institution other tion, a financial institution shall obtain and retain than a bank or foreign bank. either the original or a microfilm, other copy, or electronic record of the following information relating to the transmittal order: 3. In section 103.33, paragraphs (e) introductory text, (e)(l)(i) introductory text, (e)(l)(ii), (e)(l)(iii), (e)(6)(i)(A) through (e)(6)(i)(G), (e)(6)(ii), (f) introductory text, (ii) For each transmittal order that it accepts as an (f)(l)(i) introductory text, (f)(l)(ii), (f)(l)(iii), (f)(6)(i)(A) intermediary financial institution, a financial instituthrough (f)(6)(i)(G) and (f)(6)(ii) are revised to read as tion shall retain either the original or a microfilm, follows: other copy, or electronic record of the transmittal order. (iii) for each transmittal order that it accepts as a Section 103.33—Records to be made and retained recipient's financial institution, a financial institution by financial institutions. shall retain either the original or a microfilm, other copy, or electronic record of the transmittal order. (e) Banks. Each agent, agency, branch, or office located within the United States of a bank is subject to the require- (6) Exceptions. * * * (j) * * * ments of this paragraph (e) with respect to a funds transfer in the amount of $3,000 or more: (A) A bank; (1) Recordkeeping requirements, (i) For each payment (B) A wholly owned domestic subsidiary of a bank order that it accepts as an originator's bank, a bank chartered in the United States; shall obtain and retain either the original or a micro- (C) A broker or dealer in securities; film, other copy, or electronic record of the following (D) A wholly owned domestic subsidiary of a broinformation relating to the payment order: ker or dealer in securities; (E) The United States; (F) A state or local government; or (ii) For each payment order that it accepts as an (G) A federal, state or local government agency or intermediary bank, a bank shall retain either the origi- instrumentality; and nal or a microfilm, other copy, or electronic record of (ii) Transmittals of funds where both the transmittor the payment order. and the recipient are the same person and the transmit- (iii) For each payment order that it accepts as a ter's financial institution and the recipient's financial beneficiary's bank, a bank shall retain either the origi- institution are the same broker or dealer in securities. nal or a microfilm, other copy, or electronic record of the payment order. ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT (6) Exceptions. * * * ^ * * * Orders Issued Under Section 3 of the Bank Holding (A) A bank; Company Act (B) A wholly owned domestic subsidiary of a bank chartered in the United States; Barretville Corporation (C) A broker or dealer in securities; Barretville, Tennessee (D) A wholly owned domestic subsidiary of a broker or dealer in securities; Order Approving the Formation of a Bank Holding (E) The United States; Company (F) A state or local government; or (G) A federal, state or local government agency or Barretville Corporation, Barretville ("Barretville"), has apinstrumentality; and plied for the Board's approval under section 3 of the Bank (ii) Funds transfers where both the originator and the Holding Company Act (12 U.S.C. § 1842) ("BHC Act") to beneficiary are the same person and the originator's become a bank holding company by acquiring 39.4 percent bank and the beneficiary's bank are the same bank. of the voting shares of Somerville Bank and Trust Com- (f) Nonbank financial institutions. Each agent, agency, pany, Somerville ("Somerville Bank"), both in Tennessee. branch, or office located within the United States of a The shares currently are owned by Barretville Bank and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 423 Trust Company, Barretville, Tennessee ("Barretville the passage of the Bank Holding Company Act Amend- Bank"), and Barretville would become a wholly owned ments of 1970, and was registered on August 19, 1971. subsidiary of Barretville Bank. Barretville Bank has not increased its interest in Somer- Notice of the application, affording interested persons an ville Bank since it became a bank holding company, and opportunity to submit comments, has been published (60 would not increase its interest in Somerville Bank or any Federal Register 67,359 (1995)). The time for filing com- other bank through this proposal.5 This proposal represents ments has expired, and the Board has considered the appli- only a reorganization that would insert a registered bank cation and all comments received in light of the factors set holding company between Barretville Bank and Somerville forth in section 3(c) of the BHC Act. Bank. Barretville is being formed, and this application has Barretville Bank is the 31st largest commercial banking been filed, at the request of the Federal Deposit Insurance organization in Tennessee, controlling total deposits of Corporation ("FDIC"), Barretville Bank's primary federal approximately $177 million, representing less than 1 per- supervisor, to conform the bank's ownership structure to cent of total deposits in commercial banks in the state.1 section 24 of the Federal Deposit Insurance Act ("FDI Somerville Bank is the 74th largest commercial banking Act").6 Barretville Bank and Somerville Bank are well organization in Tennessee, controlling total deposits of capitalized, and, based on all the facts of record, including approximately $90 million, representing less than 1 percent supervisory information, both banks appear to be in satisof total deposits in commercial banks in the state. Bar- factory condition. retville Bank and Somerville Bank both compete in the Based on the foregoing and other facts of record, the Memphis banking market. This proposal represents a reor- Board has concluded that the financial and managerial ganization by Barretville Bank of its ownership interest in resources and future prospects of Barretville and its subsid- Somerville Bank, and would not result in the acquisition by iary banks, as well as considerations relating to the conve- Barretville Bank of any additional banking assets. Based nience and needs of the community to be served and other on all the facts of record, the Board concludes that the supervisory factors the Board is required to consider under proposal would not have a significantly adverse effect on section 3 of the BHC Act are consistent with approval. competition in any relevant banking market. Accordingly, the Board has determined that the application The Board previously has stated, and continues to be- should be, and hereby is, approved. The Board's approval lieve, that ownership of a depository institution by another is specifically conditioned on compliance with all the comdepository institution raises serious policy concerns. Al- mitments made in connection with this application. The though banks are not precluded under the BHC Act from commitments and conditions relied on by the Board in owning other banks, the Board's policy since 1978 has reaching this decision are deemed to be conditions imbeen to discourage the ownership of a bank by another posed in writing by the Board in connection with its bank.2 findings and decision, and, as such, may be enforced in This policy is based on a recognition that the use of proceedings under applicable law. insured deposits to make such acquisitions is inappropriate This transaction shall not be consummated before the because the depositors of the parent bank would bear the fifteenth calendar day following the effective date of this risk of failure of the subsidiary bank that should be borne, order or later than three months after the effective date of and in the case of a nonbank parent company is borne, by this order, unless such period is extended for good cause by the parent bank's shareholders. The parent bank also would the Board or by the Federal Reserve Bank of St. Louis, be required to serve as a source of strength for the subsid- acting pursuant to delegated authority. iary bank.3 In addition, when a parent bank uses insured By order of the Board of Governors, effective March 18, deposits rather than new equity capital to make a bank 1996. acquisition, the parent bank would generally continue with the same amount of capital as before the acquisition, thereby resulting in a structure that is financially less secure. The Board has carefully reviewed this policy in light of the facts presented by this application. Barretville Bank's 5. Barretville Bank does not own more than 5 percent of the voting ownership of its interest in Somerville Bank predates the shares of any bank or bank holding company other than Somerville enactment of the BHC Act in 1956.4 Barretville Bank Bank. 6. Section 24 of the FDI Act prohibits state banks after Decembecame a bank holding company only as a consequence of ber 19, 1992, from retaining an equity investment that is not permissible for a national bank, unless the insured state bank retains the equity investment in a majority-owned subsidiary. See 12 U.S.C. § 1831a(c); see also 12 C.F.R. 362.3. Barretville Bank's equity investment in 1. Statewide deposit data are as of June 30, 1995. Somerville Bank would not be permissible for a national bank. See 2. See, e.g., Depositors Trust Company, 64 Federal Reserve Bulletin 12 U.S.C. § 24 (Seventh); see also 12 C.F.R. 1.7(b). Accordingly, 213 (1978); The Bank of Tokyo, Ltd., 78 Federal Reserve Bulletin 685 Barretville Bank may retain its interest in Somerville Bank only if the (1988). FDIC approves its transfer to a majority-owned subsidiary, as this 3. See 12 C.F.R. 225.4(a). proposal represents. The FDIC has approved this transaction, subject 4. Barretville Bank acquired its interest in Somerville Bank prior to to the formation of a bank holding company to hold Barretville Bank's 1948. equity investment in Somerville Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

424 Federal Reserve Bulletin • May 1996 Voting for this action: Governors Kelley, Lindsey, Phillips, and a bank holding company proposes to acquire less than a Yellen. Absent and not voting: Chairman Pro Tempore Greenspan. controlling interest in a bank or bank holding company. Accordingly, the Board previously has approved the acqui- JENNIFER J. JOHNSON sition by a bank holding company of less than a controlling Deputy Secretary of the Board interest in a bank or bank holding company.4 First Southern has stated that it does not propose to First Southern Bancorp, Inc. control Casey and will not control Casey without obtaining Stanford, Kentucky the prior approval of the Board. First Southern has made a number of commitments that are similar to commitments Order Approving Acquisition of Shares of a Bank previously relied on by the Board in determining that an Holding Company investing bank holding company would not be able to exercise a controlling influence over another bank holding First Southern Bancorp, Inc., Stanford, Kentucky ("First company or bank for purposes of the BHC Act.5 First Southern"), a bank holding company within the meaning Southern has committed not to exercise or attempt to of the Bank Holding Company Act ("BHC Act"), has exercise a controlling influence over the management or applied under section 3 of the BHC Act (12 U.S.C. § 1842) policies of Casey or any of its subsidiaries; not to seek or to acquire up to 24.99 percent of the voting shares of Casey accept representation on the board of directors of Casey or County Bancorp, Inc. ("Casey") and thereby indirectly any of its subsidiaries; and not to have any representative acquire an interest in Casey's wholly owned subsidiary of First Southern serve as an officer, agent, or employee of bank, Casey County Bank, both of Liberty, Kentucky. Casey or any of its subsidiaries. First Southern also has Notice of the proposal, affording interested persons an committed not to attempt to influence the dividend poliopportunity to submit comments, has been published (60 cies, loan decisions or operations of Casey or any of its Federal Register 66,971 (1995)). The time for filing comsubsidiaries. The Board has adequate supervisory authority ments has expired, and the Board has considered the applito monitor First Southern's compliance with its commitcation and all comments received in light of the factors set ments, and expressly retains authority to initiate a control forth in section 3 of the BHC Act. proceeding against First Southern if facts presented later First Southern, with consolidated assets of approxiindicate that First Southern or any of its subsidiaries or mately $206 million, is the 28th largest commercial bankaffiliates in fact controls Casey for purposes of the BHC ing organization in Kentucky, controlling deposits of ap- Act.6 Based on these commitments and all other facts of proximately $179 million, representing less than 1 percent record, it is the Board's judgment that First Southern of total deposits in commercial banking organizations in would not acquire control of Casey for purposes of the the state.1 Casey, with consolidated assets of approxi- BHC Act through consummation of this proposal. mately $79 million, is the 91 st largest commercial banking The Board's inquiry, however, does not end with its organization in Kentucky, controlling approximately finding that First Southern would not control Casey. The $66 million in deposits, representing less than 1 percent of total Board previously has stated that noncontrolling interests in deposits in commercial banking organizations in the state. directly competing banks or bank holding companies may Casey has objected to this proposal. Casey contends that raise serious questions under the BHC Act.7 The Board has First Southern would attempt to control Casey and would noted that one company need not acquire control of andivert the attention of Casey's management from the operation of Casey. As noted above, First Southern proposes to acquire less 4. See, e.g., North Fork (acquisition of 19.9 percent of the voting than 25 percent of the voting shares of Casey. The Board shares of a bank holding company); Mansura Bancshares, Inc., 79 Federal Reserve Bulletin 37 (1993) {"Mansura") (acquisition of previously has indicated that the acquisition of less than a 9.7 percent of the voting shares of a bank holding company); and controlling interest in a bank or bank holding company is SunTrust Banks, Inc., 76 Federal Reserve Bulletin 542 (1990) ("Sunnot a normal acquisition for a bank holding company.2 The Trust") (acquisition of up to 24.99 percent of the voting shares of a requirement in section 3(a)(3) of the BHC Act that the bank). Board's approval be obtained before a bank holding com- 5. See, e.g., Mansura at 39. The commitments provided by First Southern are set forth in the Appendix. pany acquires more than 5 percent of the voting shares of a 6. Casey contends that First Southern contacted a number of sharebank suggests, however, that Congress contemplated the holders of Casey with an offer to acquire shares of Casey and, acquisition by bank holding companies of between 5 per- therefore, indicated an intent to acquire control of Casey. The BHC cent and 25 percent of the voting shares of a bank or a bank Act and the Board's Regulation Y do not prohibit a bank holding holding company.3 Nothing in section 3(c) of the BHC Act, company from making an offer to purchase more than 5 percent of the voting securities of a bank or bank holding company as long as the moreover, requires denial of an application solely because bank holding company obtains Board approval before acquiring the shares. There is no evidence that First Southern acquired more than 5 percent of the voting shares of Casey without receiving the Board's 1. Asset and deposit data are as of September 30, 1995. approval. Moreover, as explained above, First Southern has stated that 2. See, e.g., North Fork Bancorporation, Inc., 81 Federal Reserve it does not intend to exercise control over Casey and has made a Bulletin 734 (1995) ("North Fork")-, State Street Boston Corporation, number of commitments to the Board designed to limit the possibility 67 Federal Reserve Bulletin 862 (1981). that First Southern could exercise control over Casey. 3. 12 U.S.C. § 1842(a)(3); 12 C.F.R. 225.11(c). 7. See, e.g., North Fork; Mansura; and SunTrust. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 425 other company in order to substantially lessen competition involved in this proposal are consistent with approval.13 between them and that the specific facts of each case will The convenience and needs factor and the other supervidetermine whether a minority investment would have sig- sory factors the Board must consider under section 3 of the nificant anticompetitive effects.8 It is possible, for example, BHC Act also are consistent with approval.14 that the acquisition of a substantial ownership interest in a Based on the foregoing and all the facts of record, the competitor or a potential competitor of the acquiring firm Board has determined that the application should be, and might alter the market behavior of both firms in such a way hereby is, approved. The Board's approval is expressly as to weaken or eliminate independence of action between conditioned on First Southern's compliance with all the the organizations and increase the likelihood of coopera- commitments made in connection with this application. tive operations.9 The commitments and conditions relied on by the Board in First Southern and Casey compete directly in the Dan- reaching this decision are deemed to be conditions imville, Kentucky, banking market ("Danville banking mar- posed in writing by the Board in connection with its ket").10 First Southern is the second largest commercial findings and decision, and, as such, may be enforced in bank or thrift institution ("depository institution") in the proceedings under applicable law. market, controlling deposits of approximately $103 mil- The transaction shall not be consummated before the lion, representing approximately 17 percent of total depos- fifteenth calendar day following the effective date of this its in depository institutions in the market ("market depos- order, and the transaction shall not be consummated later its").11 Casey is the fourth largest depository institution in than three months after the effective date of this order, the market, controlling deposits of approximately $62 mil- unless such period is extended for good cause by the Board lion, representing approximately 11 percent of market de- or the Federal Reserve Bank of Cleveland, acting pursuant posits. As a combined organization, First Southern would to delegated authority. be the largest depository institution in the Danville banking By order of the Board of Governors, effective March 4, market, controlling deposits of approximately $165 mil- 1996. lion, representing approximately 28 percent of market deposits. The Herfindahl-Hirschman Index ("HHI") would Voting for this action: Chairman Pro Tempore Greenspan and increase 370 points to 1648.12 Numerous competitors Governors Lindsey, Phillips, and Yellen. Absent and not voting: would remain in the market. Thus, even if the Board were Governor Kelley. to conclude that First Southern would control Casey after JENNIFER J. JOHNSON consummation of this proposal, the elimination of competi- Deputy Secretary of the Board tion between the two entities would not substantially lessen competition in any relevant banking market. In light of all Appendix the facts of record, the Board concludes that competitive considerations are consistent with approval. First Southern will not, directly or indirectly: The Board also concludes that the managerial and financial resources and future prospects of the organizations (1) Take any action that would cause Casey or any of its subsidiaries to become a subsidiary of First Southern. 8 .Id. 9. See Mansura at 38. 10. The Danville banking market consists of Boyle and Lincoln 13. Casey contends that First Southern engaged in a tender offer for counties, the Lancaster and Bryantsville divisions of Garrard County, Casey's shares without complying with applicable rules of the Securiand the northern portion of Casey County, all in Kentucky. ties and Exchange Commission ("SEC"). See 17 C.F.R. 240.14d-l 11. Market share data are as of June 30, 1994, and are based on et seq. Based on a review of the record, and after consulting with staff calculations in which the deposits of thrift institutions are included at of the SEC, which is the federal agency with primary jurisdiction over 50 percent. The Board previously has indicated that thrift institutions matters dealing with tender offers, the Board concludes that Casey has have become, or have the potential to become, significant competitors not provided sufficient facts or information to support its allegation of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin that First Southern is or was engaged in a tender offer. The Board has 788 (1990); National City Corporation, 70 Federal Reserve Bulletin provided the SEC with a copy of Casey's allegation for consideration, 743 (1984). Thus, the Board has regularly included thrift deposits in and the Board retains the authority to consider this matter in connecthe calculation of market share on a 50-percent weighted basis. See, tion with its evaluation of future applications by First Southern or in e.g.. First Hawaiian Inc., 11 Federal Reserve Bulletin 52 (1991). the context of its general supervisory jurisdiction over First Southern 12. Under the revised Department of Justice Merger Guidelines, if any violations of applicable law are substantiated. 49 Federal Register 26,823 (June 29, 1984), a market in which the 14. The subsidiary banks of First Southern and Casey received post-merger HHI is between 1000 and 1800 is considered to be "satisfactory" ratings under the Community Reinvestment Act moderately concentrated. The Justice Department has informed the (12U.S.C. § 2901 et seq. ) ("CRA") from their primary federal Board that a bank merger or acquisition generally will not be chal- supervisors at their most recent CRA performance evaluations. Casey lenged (in the absence of other factors indicating anticompetitive contends that the acquisition by another bank holding company of effects) unless the post-merger HHI is at least 1800 and the merger control of Casey is not in the best interest of Casey's employees and increases the HHI by more than 200 points. The Justice Department shareholders and the communities served by Casey and its subsidiary has stated that the higher than normal HHI thresholds for screening bank. As discussed above, First Southern has stated that, after consumbank mergers for anticompetitive effects implicitly recognize the mation of the proposal, it would be a passive investor in Casey and competitive effect of limited-purpose lenders and other non-depository would not control or attempt to control Casey; and that it would not financial entities. attempt to alter the policies or operations of Casey. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

426 Federal Reserve Bulletin • May 1996 (2) Acquire or retain shares of Casey that would cause the Notice of the proposal, affording interested persons an combined interests of First Southern, its affiliates, officers, opportunity to submit comments, has been published and directors to equal or exceed 25 percent of the outstand- (61 Federal Register 1760 (1996)). The time for filing ing voting shares of Casey. comments has expired, and the Board has considered the (3) Exercise or attempt to exercise a controlling influence over application and all comments received in light of the the management or policies of Casey or any of its subsidiar- factors set forth in section 3 of the BHC Act. ies. BOI, with approximately $31.8 billion in total consoli- (4) Seek or accept representation on the board of directors of dated assets, is the second largest banking organization in Casey or any of its subsidiaries. Ireland and the 191st largest banking organization in the (5) Serve, or have or seek to have any representative of First world.2 BOI operates a branch in New York. Holdings, Southern serve, as an officer, agent, or employee of Casey with approximately $4.2 billion in total consolidated asor any of its subsidiaries. sets, is the 101st largest commercial banking organization (6) Propose a director or a slate of directors in opposition to in the United States and controls less than 1 percent of total any nominee or slate of nominees proposed by management banking assets in the United States. Holdings operates one or the board of directors of Casey. subsidiary bank in New Hampshire. RBS Group, with (7) Solicit or participate in soliciting proxies with respect to approximately $80.8 billion in total consolidated assets, is any matter presented to the shareholders of Casey. the sixth largest banking organization in Great Britain and (8) Attempt to influence Casey's or any of its subsidiaries' the 92d largest banking organization in the world. RBS dividend policies; loan, credit, or investment decisions; Group's only direct subsidiary, RBS, operates a branch in pricing of services; personnel decisions; operations activi- New York and an agency in California. Citizens, with ties, including the location of any offices or branches or approximately $10.2 billion in total consolidated assets, is their hours of operation, etc.; or any similar activities or the 60th largest commercial banking organization in the decisions of Casey or any of its subsidiaries. United States and controls less than 1 percent of total (9) Enter into any banking or nonbanking transactions with banking assets in the United States. Citizens operates sub- Casey, except that First Southern may establish and main- sidiary banks in Rhode Island and Massachusetts. After tain deposit accounts with Casey or the bank subsidiaries of consummation of this proposal, Citizens would become the Casey, provided that the aggregate balance of all such 36th largest commercial banking organization in the United deposit accounts does not exceed $500,000, and provided States and would control less than 1 percent of total bankthat the accounts are maintained on substantially the same ing assets in the United States. terms as those prevailing for comparable accounts of persons unaffiliated with Casey. Interstate Analysis (10) Dispose or threaten to dispose of shares of Casey in any manner as a condition of specific action or non-action by Section 3(d) of the BHC Act, as amended by section 101 of Casey or any of its subsidiaries. the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, allows the Board to approve an application by a bank holding company to acquire control of a The Governor and Company of the Bank of Ireland bank located in a state other than the home state of such Dublin, Ireland bank holding company if certain conditions are met.3 These conditions are met in this case.4 In view of all the facts of Order Approving Acquisition of Banks The Governor and Company of the Bank of Ireland, Dublin, Ireland ("BOI"), a bank holding company within the iary bank, First NH Bank, Manchester, New Hampshire ("First NH"). meaning of the Bank Holding Company Act ("BHC Act"), In consideration for the merger, BOI would receive newly issued has applied under section 3 of the BHC Act (12U.S.C. shares of the voting stock of Citizens, thereby reducing the shareholding interest of RBS and RBS Group in Citizens to 76.5 percent. RBS § 1842) for approval to acquire 23.5 percent of the vot- Group, RBS, and Citizens have filed applications under the BHC Act ing shares and control of Citizens Financial Group, Inc., to acquire Holdings and First NH. See The Royal Bank of Scotland Providence, Rhode Island ("Citizens"), and Citizens' sub- Group pic, 82 Federal Reserve Bulletin 428 (1996). sidiary banks, Citizens Savings Bank and Citizens Trust 2. Asset and domestic ranking data are as of September 30, 1995. Foreign ranking data are as of December 31, 1994. Company, both of Providence, Rhode Island, and Citizens 3. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding Bank of Massachusetts, Boston, Massachusetts.1 company's home state is that state in which the operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the company became a bank 1. Citizens would be considered a subsidiary of BOI. Citizens holding company, whichever is later. For purposes of the BHC Act, currently is a wholly owned subsidiary of The Royal Bank of Scotland the home state of BOI is New Hampshire. pic ("RBS"), which is a wholly owned subsidiary of The Royal Bank 4. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). of Scotland Group pic ("RBS Group"), both of Edinburgh, Scotland. BOI is adequately capitalized and adequately managed. The require- As part of this proposal, BOI would merge its wholly owned subsid- ment of Massachusetts law that BOI make a percentage of its assets iary bank holding company, Bank of Ireland First Holdings, Inc., available for call by a state-sponsored housing entity has been satis- Manchester, New Hampshire ("Holdings"), into Citizens. As a result, fied. Upon consummation, BOI and its affiliates would control less Citizens would acquire control of Holdings's wholly owned subsid- than 10 percent of the total amount of deposits of insured depository Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 427 record, the Board is permitted to approve this proposal involves a foreign bank unless the bank is "subject to under section 3(d) of the BHC Act. comprehensive supervision or regulation on a consolidated basis by the appropriate authorities in the bank's home Competitive Considerations country."9 BOI's home country is Ireland, where it is engaged in extensive banking and nonbanking activities. Holdings and Citizens compete directly in the Boston The Central Bank of Ireland ("Central Bank") is the home banking market.5 Holdings is the 13th largest banking or country supervisor for BOI. thrift organization ("depository organization") in the mar- The Board has previously determined, in connection ket, controlling deposits of approximately $449 million, with an application by BOI under section 3 of the BHC Act representing less than 1 percent of total deposits in deposi- and the International Banking Act (12 U.S.C. § 3101 tory institutions in the market ("market deposits").6 Citi- et seq.) ("IBA") that BOI was subject to home country zens is the sixth largest depository organization in the supervision by the Central Bank.10 Based on all the facts of market, controlling deposits of approximately $3.1 billion, record, the Board has determined that the requirements of representing 4.7 percent of market deposits. After consum- section 3(c)(3)(B) of the BHC Act regarding comprehenmation of this proposal, Citizens would become the fifth sive, consolidated supervision are met in this case. largest depository organization in the market, controlling In addition, BOI has committed that, to the extent not deposits of approximately $3.6 billion, representing prohibited by applicable law, it will make available to the 5.4 percent of market deposits. The market would remain Board such information on the operations of BOI and any moderately concentrated, as measured by the Herfindahl- of its affiliates that the Board deems necessary to determine Hirschman Index ("HHI"),7 and numerous competitors and enforce compliance with the BHC Act, the IBA, and would remain. Based on all the facts of record, the Board other applicable federal law. BOI also has committed to concludes that consummation of this proposal would not cooperate with the Board to obtain any waivers or exempresult in any significantly adverse effects on competition or tions that may be necessary in order to enable it to make the concentration of banking resources in the Boston bank- any information available to the Board. In light of these ing market or any other relevant banking market. commitments and other facts of record, the Board has concluded that BOI has provided adequate assurances of Financial, Managerial, and Other Supervisory access to any appropriate information the Board may re- Considerations quest. For these reasons, and based on all the facts of record, the Board concludes that the supervisory factors it Under section 3 of the BHC Act, as amended by the is required to consider under section 3 of the BHC Act are Foreign Bank Supervision Enhancement Act of 1991,8 the consistent with approval. Board may not approve any application by a company that The Board also must take into account the financial condition of a foreign bank that files a section 3 application.11 BOI must comply with capital standards that coninstitutions in the United States, and less than the applicable state limit form to the Basle Capital Accord, as implemented by the on deposits in Massachusetts. Republic of Ireland. BOI's capital exceeds the minimum 5. The Boston banking market is approximated by the Boston RMA standards, and is equivalent to capital that would be reand the towns of Greenville, Lyndeborough, Mason, and New Ipswich quired of a United States banking organization. The finanin Hillsborough County, all in New Hampshire. 6. Market share data are as of June 30, 1994, and include acquisi- cial and managerial resources of BOI, Holdings, and First tions consummated after that date. Market share data are based on NH are considered consistent with approval of this procalculations in which the deposits of thrift institutions are included at posal. Factors relating to the convenience and needs of the 50 percent. The Board previously has indicated that thrift institutions communities served by Holdings, Citizens, and their rehave become, or have the potential to become, significant competitors spective subsidiaries are consistent with approval, as are of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50-percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991). 7. After consummation of this proposal, the HHI would increase by 6 points to 1020. Under the revised Department of Justice Merger 9. 12 U.S.C. § 1842(c)(3)(B). As provided in Regulation Y, the Guidelines (49 Federal Register 26,823 (June 29, 1984)), a market in Board determines whether a foreign bank is subject to consolidated which the post-merger HHI is between 1000 and 1800 is considered to home country supervision under the standards set forth in Regulabe moderately concentrated. The Justice Department has informed the tion K. 12 C.F.R. 225.13(b)(5). Regulation K provides that a foreign Board that a bank merger or acquisition generally will not be chal- bank may be considered to be subject to consolidated supervision if lenged (in the absence of other factors indicating anti-competitive the Board determines that the bank is supervised or regulated in such a effects) unless the post-merger HHI is at least 1800 and the merger manner that its home country supervisor receives sufficient informaincreases the HHI by 200 points. The Justice Department has stated tion on the worldwide operations of the foreign bank, including the that the higher than normal HHI thresholds for screening bank merg- relationship of the bank to its affiliates, to assess the foreign bank's ers for anti-competitive effects implicitly recognize the competitive overall financial condition and compliance with law and regulation. elfect of limited-purpose lenders and other non-depository financial 12 C.F.R. 211.24(c)(l)(ii). entities. 10. See Bank of Ireland, 81 Federal Reserve Bulletin 511 (1995). 8. Pub. L. No. 102-242, § 201 et seq. , 105 Stat. 2286 (1991). 11 .See 12 C.F.R. 225.13(b)(1). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

428 Federal Reserve Bulletin • May 1996 the other supervisory factors the Board is required to The Royal Bank of Scotland Group pic consider under section 3 of the BHC Act.12 Edinburgh, Scotland The Royal Bank of Scotland pic Conclusion Edinburgh, Scotland Citizens Financial Group, Inc. Based on the foregoing and all other facts of record, Providence, Rhode Island including all the commitments provided by BOI and its affiliates in connection with this proposal, the Board has Order Approving Merger of Bank Holding Companies determined that the application should be, and hereby is, approved. The Board's approval of this proposal is specifi- The Royal Bank of Scotland Group pic ("RBS Group") cally conditioned on compliance by BOI and its affiliates and The Royal Bank of Scotland pic ("RBS"), both of with all the commitments made in connection with this Edinburgh, Scotland, and Citizens Financial Group, Inc., proposal and with the conditions referred to in this order. Providence, Rhode Island ("Citizens"), bank holding com- Should any restrictions on access to information on the panies within the meaning of the Bank Holding Company operations or activities of BOI and any of its affiliates Act ("BHC Act"), have applied under section 3 of the subsequently interfere with the Board's ability to deter- BHC Act (12 U.S.C. § 1842) for approval for Citizens to mine the compliance by BOI or its affiliates with applicable merge with Bank of Ireland First Holdings, Inc. ("Holdfederal statutes, the Board may require termination of any ings"), and thereby acquire control of Holdings' subsidiary of BOI's or its affiliates' direct or indirect activities in the bank, First NH Bank ("First NH"), both of Manchester, United States. These commitments and conditions shall be New Hampshire.1 deemed to be conditions imposed in writing by the Board Notice of the proposal, affording interested persons an in connection with its findings and decisions, and, as such, opportunity to submit comments, has been published may be enforced in proceedings under applicable law. (61 Federal Register 1760 (1996)). The time for filing This transaction shall not be consummated before the comments has expired, and the Board has considered the fifteenth calendar day following the effective date of this application and all comments received in light of the order, or later than three months after the effective date of factors set forth in section 3 of the BHC Act. this order, unless such period is extended for good cause by RBS Group, with approximately $80.8 billion in total the Board or by the Federal Reserve Bank of Boston, consolidated assets, is the sixth largest banking organizaacting pursuant to delegated authority. tion in Great Britain and the 92nd largest banking organiza- By order of the Board of Governors, effective March 6, tion in the world.2 RBS Group's only direct subsidiary, 1996. RBS, operates a branch in New York and an agency in California. Citizens, with approximately $10.2 billion in Voting for this action: Chairman Pro Tempore Greenspan and total consolidated assets, is the 60th largest commercial Governors Lindsey, Phillips, and Yellen. Absent and not voting: banking organization in the United States and controls less Governor Kelley. than one percent of total banking assets in the United States. Citizens operates subsidiary banks in Rhode Island JENNIFER J. JOHNSON and Massachusetts. Holdings's parent company, The Gov- Deputy Secretary of the Board ernor and Company of the Bank of Ireland, Dublin, Ireland ("BOI"), with approximately $31.8 billion in total consolidated assets, is the second largest banking organization in Ireland and the 191st largest banking organization in the world. BOI operates a branch in New York. Holdings, with approximately $4.2 billion in total consolidated assets, is the 101st largest commercial banking organization in the United States and controls less than 1 percent of total 12. The Board has received a comment from a community organiza- 1. Citizens is a wholly owned subsidiary of RBS, which is a wholly tion commending First NH for its record of support for economic owned subsidiary of RBS Group. Holdings is a wholly owned subsiddevelopment and the production of housing for low- and moderate- iary of The Governor and Company of the Bank of Ireland, Dublin, income households in New Hampshire and stating the commenter's Ireland ("BOI"). In connection with this proposal, Citizens would expectations for future efforts by Citizens and First NH in these and issue additional shares of its voting stock to BOI, which would result other areas of community development. The Board notes that First NH in RBS Group's owning 76.5 percent and BOI's owning 23.5 percent received a rating of "outstanding" in its most recent examination for of the voting shares of Citizens. BOI has filed an application under the performance by the Federal Deposit Insurance Corporation ("FDIC"), BHC Act to acquire its interest in Citizens. See The Governor and its primary supervisor, under the Community Reinvestment Act Company of the Bank of Ireland, 82 Federal Reserve Bulletin 426 (12 U.S.C. § 2901 et seq.) ("CRA"), as of December 1994. In addi- (1996). tion, each subsidiary bank of Citizens was rated "outstanding" by the 2. Asset and domestic ranking data are as of September 30, 1995. FDIC as of its most recent examination for CRA performance. Foreign ranking data are as of December 31, 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 429 banking assets in the United States. Holdings operates one 5.4 percent of market deposits. The market would remain subsidiary bank in New Hampshire. On consummation of moderately concentrated, as measured by the Herfindahlthis proposal, Citizens would become the 36th largest Hirschman Index ("HHI"),7 and numerous competitors commercial banking organization in the United States and would remain. Based on all the facts of record, the Board would control less than 1 percent of total banking assets in concludes that consummation of this proposal would not the United States. result in any significantly adverse elfects on competition or the concentration of banking resources in the Boston bank- Interstate Analysis ing market or any other relevant banking market. Section 3(d) of the BHC Act, as amended by section 101 of Financial, Managerial, and Other Supervisory the Riegle-Neal Interstate Banking and Branching Effi- Considerations ciency Act of 1994, allows the Board to approve an application by a bank holding company to acquire control of a Under section 3 of the BHC Act, as amended by the bank located in a state other than the home state of such Foreign Bank Supervision Enhancement Act of 1991,8 the bank holding company if certain conditions are met.3 These Board may not approve any application by a company that conditions are met in this case.4 In view of all the facts of involves a foreign bank unless the bank is "subject to record, the Board is permitted to approve this proposal comprehensive supervision or regulation on a consolidated under section 3(d) of the BHC Act. basis by the appropriate authorities in the bank's home country.9 RBS Group is the parent company for various Competitive Considerations banking and nonbanking companies, including a subsidiary bank located in the United Kingdom. The Bank of England Citizens and Holdings compete directly in the Boston is the home country supervisor for RBS Group. banking market.5 Citizens is the sixth largest banking or The Board previously has determined, in connection thrift organization ("depository organization") in the mar- with an application by RBS Group under section 3 of the ket, controlling deposits of approximately $3.1 billion, BHC Act and the International Banking Act (12 U.S.C. representing 4.7 percent of total deposits in depository § 3101 et seq.) ("IBA"), that RBS Group was subject to institutions in the market ("market deposits").6 Holdings is home country supervision by the Bank of England.10 The the 13 th largest depository organization in the market, RBS Group also is subject to supervision in the United controlling deposits of approximately $449 million, repre- Kingdom by self-regulatory organizations that act under senting less than 1 percent of market deposits. After con- authority delegated by the Department of Trade and Indussummation of this proposal, Citizens would become the try to the Securities and Investment Board, which estabfifth largest depository organization in the market, controlling deposits of approximately $3.6 billion, representing 7. After consummation of this proposal, the HHI would increase by 6 points to 1020. Under the revised Department of Justice Merger 3. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding Guidelines (49 Federal Register 26,823 (June 29, 1984)), a market in company's home state is that state in which the operations of the bank which the post-merger HHI is between 1000 and 1800 is considered to holding company's banking subsidiaries were principally conducted be moderately concentrated. The Justice Department has informed the on July 1, 1966, or the date on which the company became a bank Board that a bank merger or acquisition generally will not be chalholding company, whichever is later. For purposes of the BHC Act, lenged (in the absence of other factors indicating anti-competitive the home state of RBS Group, RBS, and Citizens is Rhode Island. effects) unless the post-merger HHI is at least 1800 and the merger 4. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). increases the HHI by 200 points. The Justice Department has stated RBS Group, RBS, and Citizens are adequately capitalized and ade- that the higher than normal HHI thresholds for screening bank mergquately managed. First NH has been in existence and continuously ers for anti-competitive effects implicitly recognize the competitive operated for more than five years, the minimum period of time effect of limited-purpose lenders and other non-depository financial required under New Hampshire law. Upon consummation of this entities. proposal, RBS Group and its affiliates would control less than 8. Pub. L. No. 102-242, § 201 et seq., 105 Stat. 2286 (1991). 10 percent of the total amount of deposits of insured depository 9. 12 U.S.C. § 1842(c)(3)(B). As provided in Regulation Y, the institutions in the United States, and less than the applicable deposit Board determines whether a foreign bank is subject to consolidated limit in New Hampshire. home country supervision under the standards set forth in Regula- 5. The Boston banking market is approximated by the Boston RMA tion K. 12 C.F.R. 225.13(b)(5). Regulation K provides that a foreign and the towns of Greenville, Lyndeborough, Mason, and New Ipswich bank may be considered to be subject to consolidated supervision if in Hillsborough County, all in New Hampshire. the Board determines that the bank is supervised or regulated in such a 6. Market share data are as of June 30, 1994, and include acquisi- manner that its home country supervisor receives sufficient informations consummated after that date. Market share data are based on tion on the worldwide operations of the foreign bank, including the calculations in which the deposits of thrift institutions are included at relationship of the bank to its affiliates, to assess the foreign bank's 50 percent. The Board previously has indicated that thrift institutions overall financial condition and compliance with law and regulation. have become, or have the potential to become, significant competitors 12 C.F.R. 211.24(c)(l)(ii). of commercial banks. See Midwest Financial Group, 75 Federal 10. See The Royal Bank of Scotland Group pic, 79 Federal Reserve Reserve Bulletin (1989); National City Corporation, 70 Federal Re- Bulletin 1060 (1993) ("RBS Group Order"). The Board has made a serve Bulletin 743 (1984). Thus, the Board has regularly included similar determination for several other United Kingdom banks under thrift deposits in the calculation of market share on a 50-percent the IBA. See also West Merchant Bank, 81 Federal Reserve Bulletin weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve 519 (1995); Singer & Friedlander, Ltd., 79 Federal Reserve Bulletin Bulletin 52 (1991). (1993); Coutts & Co., A.G., 79 Federal Reserve Bulletin 636 (1993). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

430 Federal Reserve Bulletin • May 1996 lishes general principles that the self-regulatory organiza- Conclusion tions apply to firms engaged in particular types of investment and insurance activities. These principles en- Based on the foregoing and all other facts of record, sure that RBS Group or the relevant subsidiary is fit and including all the commitments made by RBS Group and its proper to perform the investment or insurance activities affiliates in connection with this proposal, the Board has and conforms to certain prudential standards, such as mini- determined that the applications should be, and hereby are, mum capital requirements.11 Based on all the facts of approved. The Board's approval of this proposal is specifirecord, the Board has determined that the requirements of cally conditioned on compliance by RBS Group and its section 3(c)(3)(B) of the BHC Act regarding comprehen- affiliates with all the commitments made in connection sive, consolidated supervision are met in this case. with this proposal and with the conditions referred to in In addition, RBS Group has committed that, to the extent this order. Should any restrictions on access to information not prohibited by applicable law, it will make available to on the operations or activities of RBS Group and any of its the Board such information on the operations of RBS affiliates subsequently interfere with the Board's ability to Group and any of its affiliates that the Board deems neces- determine the compliance by RBS Group or its affiliates sary to determine and enforce compliance with the BHC with applicable federal statutes, the Board may require Act, the IBA, and other applicable federal laws. RBS termination of any of RBS Group's or any of its affiliates' Group also has committed to cooperate with the Board to direct or indirect activities in the United States. These obtain any waivers or exemptions that may be necessary in commitments and conditions shall be deemed to be condiorder to enable RBS Group to make any information tions imposed in writing by the Board in connection with available to the Board. In light of these commitments and its findings and decisions, and, as such, may be enforced in other facts of record, the Board has concluded that RBS proceedings under applicable law. Group has provided adequate assurances of access to any This transaction shall not be consummated before the appropriate information the Board may request. For these fifteenth calendar day following the effective date of this reasons and based on all the facts of record, the Board order, or later than three months after the effective date of concludes that the supervisory factors it is required to this order, unless such period is extended for good cause by consider under section 3 of the BHC Act are consistent the Board or by the Federal Reserve Bank of Boston, with approval. acting pursuant to delegated authority. The Board also taken into account the financial condi- By order of the Board of Governors, effective March 6, tion of a foreign bank that files a section 3 application.12 1996. RBS Group must comply with capital standards that conform to the Basle Capital Accord, as implemented by the Voting for this action: Chairman Pro Tempore Greenspan and United Kingdom. RBS Group's capital exceed the mini- Governors Lindsey, Phillips, and Yellen. Absent and not voting: mum standards and is equivalent to capital that would be Governor Kelley. required of a United States banking organization. The JENNIFER J. JOHNSON financial and managerial resources of RBS Group, RBS, Deputy Secretary of the Board Citizens, and their subsidiary banks are considered consistent with approval of this proposal. Factors relating to the Orders Issued Under Sections 3 and 4 of the Bank convenience and needs of the communities served by Citi- Holding Company Act zens, Holdings, and their respective subsidiaries are consistent with approval, as are the other supervisory factors the CoreStates Financial Corp Board is required to consider under section 3 of the BHC Act.13 Philadelphia, Pennsylvania Order Approving the Merger of Bank Holding Companies 11. The self-regulatory organizations that supervise these investment and insurance activities are the Securities and Futures Authority ("SFA"), the Investment Management Regulatory Organization CoreStates Financial Corp, Philadelphia, Pennsylvania ("IMRO"), the Life Assurance and Unit Trust Regulatory Organiza- ("CoreStates"), a bank holding company within the meantion ("LAUTRO"), and the Financial Intermediaries, Managers, and ing of the Bank Holding Company Act ("BHC Act"), has Brokers Regulatory Association ("FIMBRA"). In RBS Group Order, the Board considered the supervision by SFA and IMRO of the applied for the Board's approval under section 3 of the securities and investment activities of RBS Group and its subsidiaries, BHC Act (12 U.S.C. § 1842) to merge with Meridian and the supervision by LAUTRO and FIMBRA of the marketing of life insurance and related products by RBS Group and its subsidiaries. 12. See 12 C.F.R. 225.13(b)(1). 13. The Board received a comment from a community organization commending First NH for its record of support for economic development and the production of housing for low- and moderate-income performance by the Federal Deposit Insurance Corporation ("FDIC"), households in New Hampshire and stating the commenter's expecta- its primary supervisor, under the Community Reinvestment Act tions for future efforts by Citizens and First NH in these and other (12 U.S.C. § 2901 et seq.) ("CRA"), as of December 1994. In addiareas of community development. The Board notes that First NH tion, each subsidiary bank of Citizens was rated "outstanding" by the received a rating of "outstanding" in its most recent examination for FDIC as of its most recent examination for CRA performance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 431 Bancorp, Inc., Reading, Pennsylvania ("Meridian"),1 and assets in the United States. Meridian is the fifth largest thereby indirectly acquire Meridian's subsidiary banks: commercial banking organization in Pennsylvania, control- Meridian Bank, Reading, Pennsylvania ("Meridian ling approximately $9.5 billion in deposits, representing Bank"); Meridian Bank, New Jersey, Cherry Hill, New 7.1 percent of state deposits. Meridian also engages in a Jersey; and Delaware Trust Company, Wilmington, Dela- number of permissible nonbanking activities nationwide. ware.2 CoreStates also has requested approval under sec- After consummation of this proposal, CoreStates would tion 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and be the 18th largest commercial banking organization in the section 225.23 of the Board's Regulation Y (12 C.F.R. United States, with total consolidated assets of approxi- 225.23) of its notice to acquire the nonbanking subsidiaries mately $43.5 billion, and would control 1.2 percent of total of Meridian listed in the Appendix and thereby engage banking assets in the United States, and less than 1 percent nationwide in permissible nonbanking activities.3 of total deposits in banks and savings associations insured CoreStates also requested approval under section 25 of by the Federal Deposit Insurance Corporation. After conthe Federal Reserve Act (12 U.S.C. §§ 601-604a) and summation of this proposal and completion of the prosection 211.3(a)(3) of the Board's Regulation K (12 C.F.R. posed branch divestitures, CoreStates would become the 211.3(a)(3)) of its notice to establish a branch in the second largest commercial banking organization in Penn- Cayman Islands, British West Indies, through the acquisi- sylvania, controlling approximately $23.5 billion in depostion of Meridian Bank's branch at that location. its, representing 17.6 percent of state deposits.6 Notice of the proposal, affording interested persons an opportunity to submit comments, has been published Interstate Analysis (60 Federal Register 67,135 (1995)). The time for filing comments has expired, and the Board has considered the Section 3(d) of the BHC Act, as amended by section 101 of applications and notices and all comments received in light the Riegle-Neal Interstate Banking and Branching Effiof the factors set forth in sections 3 and 4 of the BHC Act ciency Act of 1994, allows the Board to approve an appliand the Federal Reserve Act. cation by a bank holding company to acquire control of a CoreStates, with total consolidated assets of approxi- bank located in a state other than the home state of such mately $28.9 billion, operates subsidiary banks in Pennsyl- bank holding company, if certain conditions are met. For vania, New Jersey, and Delaware.4 CoreStates is the purposes of the BHC Act, the home state of CoreStates is 27th largest commercial banking organization in the United Pennsylvania.7 As noted above, Meridian controls banks in States, controlling less than 1 percent of total banking Pennsylvania, New Jersey, and Delaware. The conditions assets in the United States, and is the third largest commer- for an interstate acquisition enumerated in section 3(d) are cial banking organization in Pennsylvania, controlling met in this case.8 In view of all the facts of record, the approximately $14.1 billion in deposits, representing Board is permitted to approve this proposal under section 10.5 percent of all deposits in commercial banking organi- 3(d) of the BHC Act. zations in the state ("state deposits").5 CoreStates also engages in a number of permissible nonbanking activities Competitive and Other Considerations nationwide. Meridian, with total consolidated assets of approximately $14.6 billion, operates subsidiary banks in CoreStates and Meridian operate subsidiary banks in Penn- Pennsylvania, New Jersey, and Delaware. Meridian is the sylvania, New Jersey, and Delaware. CoreStates and Me- 41st largest commercial banking organization in the United ridian compete directly in ten banking markets in these States, controlling less than 1 percent of total banking 6. On consummation of this proposal, CoreStates would become the 1. CoreStates and Meridian also have granted to each other an fourth largest commercial banking organization in New Jersey, conoption to purchase up to 19.9 percent of the voting shares of the other trolling approximately $5.2 billion in state deposits, and the third organization on the occurrence of certain circumstances, and have largest commercial banking organization in Delaware, controlling applied for the Board's approval to exercise these options. These approximately $1.2 billion in state deposits. options would become moot on consummation of this proposal. 7. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding 2. CoreStates also has applied to acquire Meridian's noncontrolling company's home state is the state in which the operations of the bank investment in 24.9 percent of the voting shares of First Commercial holding company's banking subsidiaries were principally conducted Bank of Philadelphia and 6.7 percent of the voting shares of United on July 1, 1966, or the date on which the company became a bank Bank of Philadelphia, both of Philadelphia, Pennsylvania. CoreStates holding company, whichever is later. has agreed to comply with commitments made by Meridian in connec- 8. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). tion with Meridian's acquisition of these interests. See Board letter CoreStates is adequately capitalized and adequately managed. Merididated March 20, 1992, to Timothy F. Demers, Esq. an's subsidiary banks have been in existence and have continuously 3. In connection with this proposal, Meridian Bank would be operated for at least the minimum period of time required under merged into CoreStates's lead subsidiary bank, CoreStates Bank, applicable state law. In addition, on consummation of this proposal, N.A., Philadelphia, Pennsylvania ("CoreStates Bank"). CoreStates CoreStates and its affiliates would control less than 10 percent of the Bank has filed an application with the Office of the Comptroller of the total amount of deposits of insured depository institutions in the Currency ("OCC") for approval of the bank merger. United States, and less than 30 percent of the total amount of deposits 4. Asset data are as of September 30, 1995, and take into account of insured depository institutions in New Jersey or Delaware. All transactions approved by the Board after this date. other requirements of section 3(d) of the BHC Act also would be met 5. Deposit data are as of June 30, 1995. on consummation of this proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

432 Federal Reserve Bulletin • May 1996 states.9 On consummation of the proposal, eight of these divestitures, the HHI in the Berks County market would banking markets would remain unconcentrated or moder- increase by no more than 200 points to 2304. ately concentrated,10 and the level of concentration in one A number of other factors mitigate the potential effect of market would remain unchanged, as measured by the this proposal on competition in the Berks County banking Herfindahl-Hirschman Index ("HHI").11 In addition, nu- market. Sixteen commercial banking organizations would merous competitors would remain in these markets. remain in the market, including a de novo commercial bank In the Berks County banking market,12 CoreStates is the that entered the market in 1988 and now is the sixth largest third largest banking or thrift organization ("depository depository institution in the market. Moreover, data indiinstitution"), controlling deposits of approximately cate the Berks County banking market is attractive for $554 million, representing 11.8 percent of total deposits in entry. These data show that the population of Berks County depository institutions in the market ("market deposits"). grew 7.7 percent from 1980 to 1990, and 3.6 percent from Meridian is the largest depository institution in the market, 1990 to 1995, compared to less than 1 percent and controlling deposits of approximately $1.9 billion, repre- 1.6 percent during these respective periods for Pennsylvasenting 40.6 percent of market deposits. On consummation nia as a whole. The median household income in Berks of this proposal, CoreStates would become the largest County is also the tenth highest among 67 counties in the depository institution in the market, controlling deposits of state.14 approximately $2.4 billion, representing 52.4 percent of The Board also considered the views of the Justice market deposits. The HHI in the market would increase by Department and the Pennsylvania Attorney General. The 957 points to 3061. Justice Department has advised the Board that, subject to In order to mitigate the potential anticompetitive eifects completion of the divestitures proposed by CoreStates, the of this acquisition in the Berks County banking market, proposal would not result in a significantly adverse effect CoreStates has committed to divest 10 branches with de- on competition in any relevant banking market.15 The posits of approximately $413 million to one or more acqui- Pennsylvania Attorney General also has reviewed the comrors whose purchase of branches would not substantially petitive effects of the proposal and similarly has concluded lessen competition.13 On consummation of the proposed that, subject to completion of the proposed divestitures, the proposal would not result in significantly adverse effects on competition in any banking market in Pennsylvania. Based on all the facts of record, including the commit- 9. These are the Berks County, Harrisburg, Lancaster, Lehigh Valments made in connection with this application, and for the ley, Philadelphia, Scranton/Wilkes-Barre, and York banking markets in Pennsylvania; the Vineland and Metropolitan New York/New Jer- reasons discussed in this order, the Board concludes that sey banking markets in New Jersey; and the Wilmington banking consummation of this proposal is not likely to have a market in Delaware. significantly adverse effect on competition or on the con- 10. Market share data are as of June 30, 1995. Market share data are centration of resources in any relevant banking market.16 based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See Midwest Financial Group, 75 depository institutions in a sale that would not cause the increase in Federal Reserve Bulletin 386 (1989); National City Corporation, 70 the market share following the divestiture to exceed Justice Depart- Federal Reserve Bulletin 743 (1984). Thus, the Board regularly has ment guidelines. CoreStates also has committed that the divestitures included thrift deposits in the calculation of market share on a will be completed within 180 days of consummation and, if they are 50-percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal not, that it will transfer the unsold branches to an independent trustee Reserve Bulletin 52 (1991). that is acceptable to the Board and will be instructed to sell the 11. The HHI in these markets would increase as follows: Harrisburg branches promptly. See BankAmerica Corporation, 78 Federal Re- (89 points to 1064); Lancaster (158 points to 1260); Lehigh Valley serve Bulletin 338 (1992); United New Mexico Financial Corpora- (136 points to 1360); Philadelphia (266 points to 1471); Scranton/ tion, 11 Federal Reserve Bulletin 484 (1991). CoreStates has commit- Wilkes-Barre (13 points to 1140); York (38 points to 1100); Vineland ted to submit to the Board, prior to consummation, an executed trust (154 points to 1551); and Metropolitan New York/New Jersey (1 point agreement acceptable to the Board. to 706). The Wilmington banking market HHI would remain un- 14. Population per banking office is 3,011 in Berks County, comchanged at 1933 points. Under the revised Department of Justice pared to an average of 2,860 persons per banking office in Pennsylva- Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a nia as a whole and 2,767 persons per banking office in MSAs in the market in which the post-merger HHI is less than 1000 is considered state. Rand McNally Commercial Atlas (1995). The average dollar to be unconcentrated, and a market in which the post-merger HHI is volume of deposits per banking office in Berks County is between 1000 and 1800 is considered to be moderately concentrated. $43.6 million, compared to an average of $37.8 million per banking The Justice Department has informed the Board that a bank merger or office in Pennsylvania as a whole and $32.5 million per banking office acquisition generally will not be challenged (in the absence of other in MSAs in the state. factors indicating anticompetitive effects) unless the post-merger HHI 15. In reaching this conclusion, the Justice Department required the is at least 1800 and the merger increases the HHI by more than 200 divestiture of one branch with deposits of $31 million located in points. The Justice Department has stated that the higher than normal Lebanon, Pennsylvania, in addition to the divestitures discussed HHI thresholds for screening bank mergers for anticompetitive effects above. implicitly recognize the competitive effect of limited-purpose lenders 16. In analyzing the competitive effects of this proposal, the Board and other non-depository financial institutions. reviewed comments received from an individual maintaining that the 12. The Berks County banking market is approximated by Berks elimination of a competitor would adversely affect the deposit insur- County, Pennsylvania. ance coverage provided to customers of both institutions generally, 13. CoreStates has committed to execute, prior to consummation of and in the Lehigh Valley banking market specifically. A comment this proposal, agreements to sell these branches to one or more from another individual alleged that Meridian Bank's size and share Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 433 This determination is conditioned on completion of the borhoods, consistent with the safe and sound operations of divestitures proposed by CoreStates in connection with this such institution," and to take that record into account in the proposal. evaluation of bank expansion proposals.19 The Board also has concluded in light of all the facts of In reviewing the effect of this proposal on convenience record that the financial and managerial resources17 and and needs, the Board carefully considered comments from future prospects of CoreStates, Meridian, and their respec- an individual who generally maintains that the managetive subsidiaries, as well as the other supervisory factors ment of CoreStates and Meridian are indifferent to the the Board must consider under section 3 of the BHC Act, needs of the public20 and that branch closings resulting are consistent with approval.18 from the proposal would have an adverse effect on the community.21 The Board has reviewed the CRA perfor- Convenience and Needs Considerations mance records of CoreStates and Meridian, comments and CoreStates's responses, and all other relevant facts of In acting on an applications under section 3 of the BHC record in light of the CRA, the Board's regulations, and the Act, the Board must consider the convenience and needs of Statement of the Federal Financial Supervisory Agencies the communities to be served and take into account the Regarding the Community Reinvestment Act ("Agency records of the relevant depository institutions under the CRA Statement").22 Community Reinvestment Act (12 U.S.C. § 2901 et seq.) The Board has carefully considered the CRA perfor- ("CRA"). The CRA requires the federal financial supervi- mance records of the subsidiary banks of CoreStates and sory agencies to encourage financial institutions to help Meridian, respectively, including in particular the relevant meet the credit needs of the local communities in which reports of examinations of CRA performance. The Agency they operate, consistent with their safe and sound opera- CRA Statement provides that a CRA examination is an tion. To accomplish this end, the CRA requires the appro- important and often controlling factor in the consideration priate federal supervisory authority to "assess the institu- of an institution's CRA record and that reports of these tion's record of meeting the credit needs of its entire examinations will be given great weight in the applications community, including low- and moderate-income neigh- process.23 CoreStates's lead bank, CoreStates Bank, received a CRA performance rating of "outstanding" from its primary federal supervisor, the OCC, at its most recent of market deposits permitted it to have an adverse influence on the examination for CRA performance as of August 21, 1995 financial management of county and municipal governments in Berks ("1995 Examination"). Meridian's lead bank, Meridian County by encouraging local government entities to incur excessive Bank, also received a CRA performance rating of "outamounts of public debt and to enter into publicly financed economic redevelopment projects that interfere with private business initiatives. standing" from the Federal Reserve Bank of Philadelphia 17. In reviewing financial and managerial factors, the Board care- at its most recent examination for CRA performance as of fully considered comments alleging that a nonbanking lending subsid- June 20, 1994.24 All other subsidiary banks of CoreStates iary of CoreStates acted improperly in two commercial bankruptcy and Meridian received either "outstanding" or "satisfactocases in which it was a creditor and that Meridian Bank attempted to ry" ratings at their most recent CRA performance examinacollect from the commenter on a debt not legally owed. The facts of record do not support the allegations concerning the two bankruptcy tions. proceedings involving CoreStates or the allegations regarding the collection efforts of Meridian Bank. The Board also notes that such matters are within the jurisdiction of the bankruptcy court or the court in which the collection efforts are maintained to provide relief if the allegations can be substantiated. 19. 12 U.S.C. § 2903. The Board also considered comments that a nonbanking investment 20. In particular, this individual alleges that Meridian Bank has advisory subsidiary of Meridian failed to disclose a conflict of interest failed to fulfill its public representations that it would support the to certain of its clients concerning low-quality debentures purchased redevelopment of the downtown area of Reading, Pennsylvania. for their accounts. The Securities and Exchange Commission ("SEC") 21. This commenter also maintains that the merger would result in investigated this incident and has taken the actions it deems appropri- vacant real estate at locations currently occupied by CoreStates and ate to enforce the federal securities laws. The record indicates that Meridian as separate institutions. Meridian voluntarily reimbursed its clients for any losses sustained 22. 54 Federal Register 13,742 (1989). when the conflict of interest was discovered at its investment advisory 23. 54 Federal Register at 13,742. subsidiary. No current employees of Meridian were disciplined in the 24. Examiners noted that Meridian Bank's community development 1995 proceeding before the Securities and Exchange Commission as a activities include efforts focusing on Reading, Pennsylvania. The bank result of this incident, and all the recommendations made by an supports the Greater Berks Development Fund, a fund designed to independent auditor to improve the operations of the subsidiary have improve the local economy of Reading and Berks County by providbeen implemented. These allegations involve isolated instances in the ing financing for the acquisition, construction, and renovation of overall operations of CoreStates and Meridian, and have been consid- manufacturing facilities. In 1990, Meridian Bank established the Meered by the Board in light of all the facts of record, including reports ridian Community Partnership Development Corporation, which of examination assessing the managerial resources of CoreStates and makes debt and equity investments in corporations and projects that Meridian. foster community redevelopment, including economic development in 18. An individual commenter also alleged that Meridian Bank and specific geographic areas in Pennsylvania. CoreStates Bank also parother commercial business interests in Berks County have manipu- ticipates in homebuyer assistance programs focused on Reading. lated local government economic redevelopment projects for private These include the PINES project, offered in partnership with Neighgain. The facts of record do not support the commenter's conclusion borhood Housing Services and three other banks, and the Purchase/ that Meridian Bank has acted improperly in its dealings with local Rehab Mortgage Plan, offered by the bank in Berks County and government officials in Berks County. limited additional areas. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

434 Federal Reserve Bulletin • May 1996 The 1995 Examination concluded that CoreStates Bank's half of the branches under consideration for closure would geographic distribution of credit applications and credit be less than one mile from another CoreStates branch. The extensions demonstrated reasonable penetration in all seg- Board has carefully reviewed CoreStates's record of closments of the bank's community, including low- and ing branches under its branch closing policy. Examiners moderate-income areas. Examiners also noted that credit noted in the 1995 Examination that the bank has a well ascertainment efforts included ongoing contact with com- defined branch closing policy, the key criteria of which munity representatives and that products offered effectively include service availability, community views, and CRA responded to the credit needs of the community.25 Core- considerations. During the evaluation period for the 1995 States Bank also uses a variety of methods to inform all Examination, none of the 32 branches closed by the bank parts of its community of credit products available, includ- were in low- or moderate-income areas. ing efforts through its Community Development Depart- The Board also notes that recent amendments to the ment that focus on direct contact with community leaders Federal Deposit Insurance Act require an insured deposiand specialty advertisements in ethnically diverse commu- tory institution to submit a notice of any proposed branch nity newspapers. closing to the appropriate federal banking agency no later CoreStates Bank's Regional Urban Lending department than 90 days before the date of the proposed branch closoffers a number of mortgage products to assist in meeting ing.28 Customers of the insured depository institution also the credit needs of low- and moderate-income individuals. must be notified. The Joint Agency Policy Statement on These programs include the Delaware Valley Mortgage Branch Closings ("Joint Policy Statement") requires that Plan, which features flexible underwriting standards. Core- the notice: (1) identify the branch to be closed and specify States Bank originated 762 loans, totalling $27.9 million, the proposed date of closing; (2) provide a detailed stateunder this program in 1994 as compared to 568 loans, ment of the reasons for the decision to close the branch; totalling $17.3 million, originated in 1993. Other mortgage and (3) provide statistical or other information in support programs assisting low- and moderate-income borrowers of such reasons consistent with the institution's written include the Philadelphia Rehabilitation Plan, the Homestart policy for branch closings.29 Program, and the 100% City Program. The Board has carefully considered all the facts of Examiners also noted that CoreStates Bank actively par- record, including the comments received, in reviewing the ticipated in government sponsored lending programs. The convenience and needs factor under the BHC Act.30 Based bank offers two expedited loan programs sponsored by the on a review of the entire record of performance of Core- Small Business Administration, the LOWDOC and the States and Meridian, the Board concludes that their records FAST TRACK programs.26 In addition, CoreStates Bank of helping to meet the credit needs of their communities, participates in the Philadelphia Housing Authority's Ac- including low- and moderate-income neighborhoods, are tion Loan Program, which provides financing to homeown- consistent with approval of these applications. ers who meet certain income requirements and who may not have equity in their homes.27 The bank also participates in several funds, including the Philadelphia Small Business Micro Loan Fund and the Hispanic Chamber Small Busi- 28. See section 228 of the Federal Deposit Insurance Corporation ness Micro Loan Fund, that are designed to make small Improvement Act of 1991, Pub. L. No. 102-242, 105 Stat. 2308 (1991), which added a new section 39 to the Federal Deposit Insurloans to businesses in amounts of $5,000 to $25,000 for ance Act (codified at 12 U.S.C. § 1831r-l). working capital and improvements. The 1995 Examination 29. 58 Federal Register 49,083 (1993). The Joint Policy Statement also found that CoreStates Bank consistently maintained a also provides that the branch closing notice procedure does not apply high level of participation in community development to the movement of a branch within its immediate neighborhood that projects throughout its delineated community. does not substantially affect the nature of the branch's business or the customers it serves. Movements over short distances are viewed CoreStates has indicated that it does not have a final essentially as branch consolidations or relocations under the Joint branch closing plan and cannot estimate how many Policy Statement. branches in low- and moderate-income census tracts would 30. A commenter maintained that the community would be adversely affected by job losses resulting from the proposal, particularly be closed or consolidated. According to CoreStates, over in Berks County. The Board has previously concluded that the effect of a proposed acquisition on employment in a community is not among the factors included in the BHC Act. See Wells Fargo & 25. One commenter contended that the proposal would reduce the Company, 82 Federal Reserve Bulletin 445 (1996). The convenience availability of banking products for low- and moderate-income bank- and needs factor under the BHC Act has been consistently interpreted ing customers. The Board notes that CoreStates Bank offers several by the federal banking agencies, the courts, and Congress to relate to basic and low-cost products and services, such as a no-fee checking the effect of a proposal on the availability and quality of banking account for senior citizens and a "no frills" checking account with a services in the community. The Board also notes that CoreStates low monthly maintenance fee and a small minimum opening balance, indicates that it has taken several steps to help minimize job losses. and would offer these products following consummation of this pro- For example, CoreStates has instituted a limited hiring freeze to posal. preserve as many open positions as possible for employees whose 26. Total small-business loans outstanding at year-end 1994 were positions are eliminated, and implemented a program to identify and $344.1 million, as compared to $134 million in total small-business train such employees who have job skills directly applicable to other loans outstanding at year-end 1993. business lines in CoreStates. CoreStates also has indicated that it will 27. In 1994, CoreStates Bank originated 24 of these loans totalling provide enhanced severance benefits and outplacement services to $325,000. employees who cannot be immediately placed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 435 Nonbanking Activities consider when reviewing an application to establish a branch pursuant to section 25 of the Federal Reserve Act CoreStates also requested Board approval, pursuant to sec- and, based on all the facts of record, and for the reasons tion 4(c)(8) of the BHC Act, to acquire the nonbanking discussed in this order, finds these factors to be consistent subsidiaries of Meridian listed in the Appendix and thereby with approval. engage in the nonbanking activities described therein. Section 4(c)(8) of the BHC Act provides that a bank holding Conclusion company may, with Board approval, engage in any activity that the Board determines to be "so closely related to Based on the foregoing and all other facts of record, banking or managing or controlling banks as to be a proper including all the commitments provided by CoreStates in incident thereto." The Board previously has determined by connection with this proposal, the Board has determined regulation and order that the proposed activities are closely that the applications and notices should be, and hereby are, related to banking within the meaning of section 4(c)(8) of approved. The Board's approval is expressly conditioned the BHC Act.31 CoreStates has committed that it will on compliance by CoreStates with all the commitments conduct all the proposed activities in accordance with the made by CoreStates in connection with this proposal and Board's regulations and the Meridian Order. with the conditions referred to in this order, including the In order to approve these notices, the Board also must commitment of CoreStates to divest certain branches. The determine that the acquisition of Meridian's nonbanking Board's determination on the proposed nonbanking activisubsidiaries and performance of the proposed activities by ties also are subject to all the conditions set forth in CoreStates "can reasonably be expected to produce bene- Regulation Y, including those in sections 225.7 and fits to the public . .. that outweigh possible adverse effects, 225.23(g) of Regulation Y, and to the Board's authority to such as undue concentration of resources, decreased or require such modification or termination of the activities of unfair competition, or unsound banking practices." As part a bank holding company or any of its subsidiaries as the of the Board's evaluation of these factors, the Board con- Board finds necessary to ensure compliance with, or to siders the financial and managerial resources of the notifi- prevent evasions of, the provisions of the BHC Act and the cant and its subsidiaries and the effect the transaction Board's regulations and orders issued thereunder. These would have on such resources. Based on all the facts of commitments and conditions shall be deemed to be condirecord, the Board concludes that financial and managerial tions imposed in writing by the Board in connection with considerations are consistent with approval. its findings and decisions, and, as such, may be enforced in The Board also concludes, on the basis of the facts of proceedings under applicable law. record, that this proposal should enable CoreStates to pro- The acquisitions of Meridian's subsidiary banks under vide greater convenience and improved services to its this proposal shall not be consummated before the fifteenth customers. In addition, while CoreStates operates subsid- calendar day following the effective date of this order, and iaries that engage in several of these activities in competi- the banking and nonbanking transactions shall not be contion with Meridian, the record indicates that there are summated later than three months after the effective date of numerous providers of these services and that the markets this order, unless such period is extended for good cause by for these services are unconcentrated. There is no evidence the Board or by the Federal Reserve Bank of Philadelphia, in the record to indicate that consummation of this pro- acting pursuant to delegated authority. posal is likely to result in any significantly adverse effects, By order of the Board of Governors, effective March 25, such as undue concentration of resources, decreased or 1996. unfair competition, conflicts of interests, or unsound banking practices that would outweigh the public benefits of Voting for this action: Chairman Pro Tempore Greenspan and this proposal. Accordingly, the Board has determined that Governors Kelley, Lindsey, Phillips, and Yellen. the balance of public interest factors it must consider under section 4(c)(8) of the BHC Act is favorable and consistent JENNIFER J. JOHNSON Deputy Secretary of the Board with approval. CoreStates also requested approval under section 25 of the Federal Reserve Act (12 U.S.C. §§ 601-604a) and Appendix section 211.3(a)(1) of the Board's Regulation K (12 C.F.R. 211.3(a)(1)) for approval to establish a branch in the Cay- Nonbanking Subsidiaries of Meridian to Be Acquired by man Islands, at the location of the Meridian Bank branch CoreStates that CoreStates would acquire as a result of this transaction. The Board has considered the factors it is required to (1) McGlinn Capital Management, Inc., Wyomissing, Pennsylvania, and thereby engage in investment advisory and private placement activities. See Meridian Bancorp, Inc., 80 Federal Reserve Bulletin 736 (1994); 31. See 12 C.F.R. 225.25(b)(1), (3), (4), (8)(i), (15)(i), and (16); Meridian Bancorp, Inc., 80 Federal Reserve Bulletin 736 (1994) (2) Meridian Acceptance Corporation, Trenton, New Jersey, (investment advisory and private placement activities) ("Meridian Order"). and thereby engage in automobile purchase financing activ- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

436 Federal Reserve Bulletin • May 1996 ities pursuant to section 225.25(b)(1) of the Board's Regula- BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of tion Y; the Board's Regulation Y (12 C.F.R. 225.23) to acquire the (3) Meridian Asset Management, Inc., Malvern, Pennsylvania, nonbanking subsidiaries of Bank of Tokyo (see Appendix) and thereby engage in trust activities pursuant to section and thereby engage nationwide in permissible nonbanking 225.25(b)(3) of the Board's Regulation Y; activities. (4) Meridian Commercial Finance Corporation, Philadelphia, Mitsubishi also proposes to acquire all branches, agen- Pennsylvania, and thereby engage in commercial lending cies, and representative offices of Bank of Tokyo in the activities pursuant to section 225.25(b)(1) of the Board's United States. Accordingly, Mitsubishi has applied under Regulation Y; sections 5(a) and 7(d) of the International Banking Act (5) Meridian Investment Company, Malvern, Pennsylvania, (12 U.S.C. §§ 3103(a) and 3105(d)) ("IBA") and secand thereby engage in investment advisory activities pursu- tion 211.24 of the Board's Regulation K (12 C.F.R. 211.24) ant to section 225.25(b)(4) of the Board's Regulation Y; to establish branches in Los Angeles and San Francisco, (6) Meridian Life Insurance Company, Phoenix, Arizona, and California; Chicago, Illinois; New York, New York; Portthereby engage in credit-related insurance underwriting ac- land, Oregon; and Seattle, Washington; and agencies in Coral Gables, Florida; Atlanta, Georgia; and Honolulu, tivities pursuant to section 225.25(b)(8)(i) of the Board's Hawaii. In addition, Mitsubishi has applied under sec- Regulation Y; tion 10(a) of the IBA (12 U.S.C. § 3107(a)) and section (7) Meridian Securities, Inc., Reading, Pennsylvania, and 211.24 of Regulation K (12 C.F.R. 211.24) to establish thereby engage in securities brokerage and related advisory representative offices in Washington, D.C.; and Dallas and activities pursuant to section 225.25(b)(15)(i) and (ii) of the Houston, Texas. Board's Regulation Y, and underwriting and dealing in government obligations and money market instruments pur- Mitsubishi also has given notice under sections 211.4 suant to section 225.25(b)(16) of the Board's Regulation Y; and 211.5 of Regulation K (12 C.F.R. 211.4 and 211.5) to acquire BOT North America International, Inc., New York, (8) Meridian Trust Company, Malvern, Pennsylvania, and New York ("BOTNA"), an Agreement corporation under thereby engage in trust activities pursuant to section section 25 of the Federal Reserve Act (12 U.S.C. §§ 601- 225.25(b)(3) of the Board's Regulation Y; 604a).2 In addition, BanCal has given notice under sec- (9) Meridian Trust Company of California, San Francisco, tion 25 of the Federal Reserve Act and section 211.3 of California (in dissolution), and thereby engage in trust Regulation K (12 C.F.R. 211.3) to acquire the foreign activities pursuant to section 225.25(b)(3) of the Board's branches of Union Bank in Guam, the Commonwealth of Regulation Y. the Northern Mariana Islands, and the Cayman Islands. Notice of this proposal, affording interested persons an The Mitsubishi Bank, Limited opportunity to submit comments, has been published in the Tokyo,Japan Federal Register (60 Federal Register 62,858 (1995)) and in a newspaper of general circulation in each community Order Approving Acquisition of Banks, Establishment of where Mitsubishi would establish a branch, agency, or Branches, Agencies, and Representative Offices, and representative office as a result of this transaction.3 The Notice to Engage in Nonbanking Activities time for filing comments has expired, and the Board has considered the applications and notices and all comments The Mitsubishi Bank, Limited, Tokyo, Japan ("Mitsubreceived in light of the factors set forth in the BHC Act, the ishi"), a bank holding company within the meaning of the Federal Reserve Act, and the IBA. Bank Holding Company Act ("BHC Act"), has applied for Mitsubishi, with approximately $553 billion in consoli- Board approval under section 3 of the BHC Act (12 U.S.C. dated assets, is the sixth largest banking organization in the § 1842) to acquire The Bank of Tokyo, Ltd., Tokyo, Japan world and controls less than 1 percent of total banking ("Bank of Tokyo"), also a bank holding company, and its subsidiary banks, Union Bank, San Francisco, California ("Union Bank"); The Chicago-Tokyo Bank, Chicago, Illinois ("CTB"); and The Bank of Tokyo Trust Company, 2. BOTNA, a wholly owned subsidiary of Bank of Tokyo, holds New York, New York ("BOTT").1 Mitsubishi also has 100 percent of the voting shares of Bank of Tokyo Mexico, S.A., applied for Board approval under section 4(c)(8) of the Mexico City, Mexico. 3. Notices were published in the following communities: Los Angeles, California (The Los Angeles Times, February 12, 1996); San Francisco, California (The San Francisco Chronicle, February 11, 1. Mitsubishi would merge with Bank of Tokyo, with Mitsubishi as 1996); Washington, D.C. (The Washington Post, February 11, 1996); the surviving corporation. As part of this proposal, Union Bank would Coral Gables, Florida (The Miami Herald, February 11, 1996); Attransfer all of its banking assets and liabilities to Mitsubishi's subsid- lanta, Georgia (The Atlanta Journal and Constitution, February 12, iary bank, The Bank of California, N.A., San Francisco, California 1996); Honolulu, Hawaii (The Honolulu Advertiser, February 12, ("BanCal"), and BanCal would change its name to Union Bank of 1996); Chicago, Illinois (The Chicago Tribune, February 11, 1996); California, N.A. ("UBC"). The Office of the Comptroller of the New York, New York (The New York Times, February 12, 1996); Currency ("OCC") approved this transfer on December 29, 1995. Portland, Oregon (The Oregonian, February 11, 1996); Dallas, Texas After consummation of this proposal, UBC would continue to be (The Dallas Morning News, February 11, 1996); Houston, Texas (The owned by an intermediate bank holding company that is 81-percent Houston Chronicle, February 11, 1996); and Seattle, Washington (The owned by Mitsubishi. Seattle Times, February 12, 1996). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 437 assets in the United States.4 In addition to its subsidiary and in view of all the facts of record, the Board is permitbank in California, Mitsubishi operates the following bank- ted to approve the acquisition of BOTT and CTB under ing institutions in the United States: branches in Los Ange- section 3(d) of the BHC Act. les, California; Chicago, Illinois; and New York, New Mitsubishi also proposes to establish state-licensed York; an agency in Houston, Texas; and representative branches in Oregon and Washington. Under section 5(a)(2) offices in San Francisco, California; Atlanta, Georgia; Min- of the IBA, as amended by section 104 of the Riegle-Neal neapolis, Minnesota; Columbus, Ohio; Portland, Oregon; Act, a foreign bank, with the approval of the Board and the and Seattle, Washington. Mitsubishi also engages in a appropriate state banking supervisor, may establish and number of permissible nonbanking activities nationwide. operate a state-licensed branch or agency in any state Bank of Tokyo, with approximately $273 billion in outside the home state of the foreign bank to the extent a consolidated assets, is the 22d largest banking organization state bank with the same home state as the foreign bank in the world and controls less than 1 percent of total could do so under section 44 of the Federal Deposit Insurbanking assets in the United States. In addition to its ance Act ("FDI Act").8 subsidiary banks in California, Illinois, and New York, Section 44 of the FDI Act permits the Board to approve Bank of Tokyo operates the following banking institutions a merger transaction under the Bank Merger Act between in the United States: branches in Chicago, Illinois; Port- state banks with different home states prior to June 1, 1997, land, Oregon; and Seattle, Washington); agencies in if the home state of each bank, as of the date of the Board's Los Angeles and San Francisco, California; Coral Gables, approval, expressly permits interstate merger transactions Florida; Atlanta, Georgia; Honolulu, Hawaii; New York, with all out-of-state banks on an equal basis.9 California New York; and Dallas, Texas; and representative offices in and Oregon law satisfy this requirement.10 All other appli- Washington, D.C., and Houston, Texas. cable conditions of section 44 of the FDI Act also are met On consummation of this proposal, the resulting institu- in this proposal.11 In view of all the facts of record,12 the tion, which would be renamed Bank of Tokyo-Mitsubishi, Ltd. ("BTM"), would become the largest banking organization in the world, with consolidated assets of approximately $826 billion, and would control less than 1 percent 8. 12 U.S.C. § 3103(a)(2) and (a)(5); 12 U.S.C. § 1831u. The home of total banking assets in the United States.5 BTM would state of a foreign bank with a branch, agency, subsidiary commercial remain a qualifying foreign banking organization under lending company, or subsidiary bank in more than one state is the state selected by the foreign bank from among such states. 12 U.S.C. section 211.23(b) of Regulation K (12 C.F.R. 211.23(b)). § 3103(c)(1). For purposes of the IBA, the home state of Mitsubishi is California. In connection with this proposal, Bank of Tokyo has given Interstate Analysis notice to the Board under section 211.22(b) of Regulation K (12 C.F.R. 211.22(b)) of its intention to change its home state to Oregon before consummation of this proposal. As part of this proposal, Mitsubishi would acquire CTB, 9. 12 U.S.C. § 1831u(a)(3)(A). located in Illinois, and BOTT, located in New York. Sec- 10. See 1995 Cal. Stat. ch. 480, § 3820 et seq.; 1995 Or. Laws S.B. tion 3(d) of the BHC Act, as amended by section 101 of the 308, § 3. Riegle-Neal Interstate Banking and Branching Efficiency 11. Section 5(a) of the IBA requires that certain conditions of section 44 of the FDI Act be met in order for the Board to approve an Act of 1994 ("Riegle-Neal Act"), allows the Board to interstate banking transaction under section 5(a)(2) of the IBA. approve an application by a bank holding company to 12 U.S.C. § 3103(a)(3)(C) (referring to sections 44(b)(1), 44(b)(3) acquire control of a bank located in a state other than the and 44(b)(4) of the FDI Act, 12 U.S.C. §§ 1831u(b)(l), (b)(3) and home state of such bank holding company, if certain condi- (b)(4)). As discussed more fully elsewhere in this order, each of tions are met.6 The conditions are met in this proposal,7 Mitsubishi and Bank of Tokyo was adequately capitalized as of the date these applications and notices were filed, and, upon consummation of this proposal, BTM would continue to be adequately capitalized and adequately managed. Bank of Tokyo's branch in Portland, 4. Asset and ranking data are as of September 30, 1995. Oregon, has been in existence and continuously operated for the 5. Assets held by non-FDIC insured depository institutions are not minimum period of time required under Oregon law. Community included in this calculation. reinvestment considerations, as discussed more fully elsewhere in this 6. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding order, also are consistent with approval. All other applicable requirecompany's home state is the state in which the operations of the bank ments of section 44 of the FDI Act also would be met on consummaholding company's banking subsidiaries were principally conducted tion of this proposal. on July 1, 1966, or the date on which the company became a bank 12. In connection with its change of its home state, Bank of Tokyo holding company, whichever is later. For purposes of the BHC Act, is required under section 211.22(b)(2) of Regulation K (12 C.F.R. the home state of Mitsubishi is California. 211.22(b)(2)) to conform all domestic branches and investments in 7. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). banks that it acquired in reliance on its original selection of California As discussed more fully elsewhere in this order, Mitsubishi is ade- as its home state to the domestic branches and investments in banks quately capitalized and adequately managed. On consummation of that would have been permissible had it originally selected Oregon as this proposal, BTM and its affiliates would control less than 10 percent its home state. Based on a review of Bank of Tokyo's domestic of the total amount of deposits of insured depository institutions in the branches and investments in banks in the United States and the United States and less than 30 percent of the total amount of deposits relevant federal and state law concerning interstate banking at all of insured depository institutions in Illinois or New York. Bank of relevant times, the Board has determined that, consistent with the Tokyo's subsidiary banks in Illinois and New York have been in requirements of Regulation K, Bank of Tokyo could retain all its existence and continuously operated for the minimum period of time branches and investments in banks in the United States after changing required under Illinois and New York law, respectively. its home state to Oregon. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

438 Federal Reserve Bulletin • May 1996 Board is permitted to approve this proposal if the remain- The subsidiary banks of Mitsubishi and Bank of Tokyo ing criteria of section 5(a) of the IBA are met.13 compete directly in nine banking markets in California.17 In addition, under section 5(a)(7) of the IBA, the Board After consummation of this proposal, all these banking may approve an application by a foreign bank to establish markets would remain unconcentrated or moderately conand operate an agency or a state-licensed branch that centrated18 as measured by the Herfindahl-Hirschman Inreceives only deposits that may be received by an Edge Act dex ("HHI"),19 and numerous competitors would remain corporation under section 25A of the Federal Reserve Act in each of the markets. Based on all the facts of record, the (12 U.S.C. §§ 611-631) ("limited branch") in any state Board concludes that consummation of the proposal would outside its home state, provided that the operation and not result in a significantly adverse effect on competition in establishment of the agency or limited branch is expressly any relevant banking market. permitted by the state in which it would be located and is approved by the relevant state banking supervisor.14 Under Financial, Managerial, and Other Supervisory this proposal, Mitsubishi would establish agencies outside Considerations its home state in Florida, Georgia, and Hawaii and limited branches outside its home state in Illinois and New York. A. Evaluation under the BHC Act Based on a review of the relevant statutory law of each of these states, and subject to the condition that Mitsubishi In order to approve an application by a foreign bank to receive the approval of the state banking supervisor in each acquire a United States bank or bank holding company, the of these states, the Board has determined that Mitsubishi Board must determine under the BHC Act and Regulamay establish agencies and limited branches in these states tion Y that the foreign bank is subject to comprehensive when it satisfies the other conditions in the IBA. supervision or regulation on a consolidated basis by its Under section 10(d) of the IBA, the Board is prohibited home country supervisor.20 The Board also must determine from approving the establishment of a representative office that the foreign bank has provided adequate assurances that in any state in contravention of state law.15 Based on a it will make available to the Board such information on its review of the relevant statutory law of the District of operations and activities and those of its affiliates that the Columbia and Texas, the Board has determined that Mit- Board deems appropriate to determine and enforce complisubishi's establishment of representative offices is consis- ance with applicable law.21 tent with the laws of these states. Competitive Considerations 17. These banking markets are the Bakersfield RMA, Fresno RMA, Los Angeles RMA, Palm Springs RMA, Riverside-San Bernardino Mitsubishi is the seventh largest commercial banking orga- RMA, Sacramento RMA, San Diego RMA, San Francisco-Oakland nization in California, controlling one bank with deposits RMA, and Stockton RMA. of $3.5 billion, representing approximately 1.5 percent of 18. Market data are as of June 30, 1994. Market share data are based total deposits in commercial banking organizations in the on calculations in which deposits of thrift institutions are included at state.16 Bank of Tokyo is the fourth largest commercial 50 percent. The Board has previously indicated that thrift institutions have become, or have the potential to become, significant competitors banking organization in California, controlling one bank of commercial banks. See Midwest Financial Group, 75 Federal with deposits of $13.5 billion, representing approximately Reserve Bulletin 386 (1989); National City Corporation, 70 Federal 5.9 percent of total deposits in commercial banking organi- Reserve Bulletin 743 (1984). Thus, the Board has regularly included zations in the state. On consummation of this proposal, thrift deposits in the calculation of market concentration on a BTM would become the third largest commercial banking 50-percent weighted basis. See, e.g., First Hawaiian, Inc., 11 Federal Reserve Bulletin 52 (1991). organization in California, with deposits of $17 billion, 19. The HHI would increase in each of the markets as follows: representing approximately 7.5 percent of total deposits in Bakersfield (3 points to 1717), Fresno (11 points to 1542), Los commercial banking organizations in the state. Angeles (6 points to 909), Palm Springs (6 points to 1223), Riverside- San Bernardino (13 points to 1513), Sacramento (3 points to 1359), San Diego (27 points to 1243), San Francisco-Oakland (13 points to 1442), and Stockton (4 points to 1332). Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 13. The Riegle-Neal Act provides that a bank resulting from an 1984), a market in which the post-merger HHI is less than 1000 is interstate merger may, with Board approval, retain and operate, as a considered to be unconcentrated, and a market in which the postbranch, any office that any bank involved in the merger transaction merger HHI is between 1000 and 1800 is considered to be moderately operated as a main office or branch immediately before the merger concentrated. The Justice Department has informed the Board that a transaction. 12 U.S.C. § 1831u(d)(l). The Washington banking author- bank merger or acquisition generally will not be challenged (in the ities do not object to the retention and operation of the Washington absence of other factors indicating anticompetitive effects) unless the branch after the merger. Accordingly, the Board is authorized to post-merger HHI is at least 1800 and the merger increases the HHI by approve the establishment by Mitsubishi of a branch in Seattle, more than 200 points. The Justice Department has stated that the Washington. Bank of Tokyo's branches in Illinois and New York, higher than normal HHI thresholds for screening bank mergers for which are limited purpose branches under the Federal Reserve Act, anticompetitive effects implicitly recognize the competitive effect of are discussed below. limited-purpose lenders and other non-depository financial institu- 14. 12 U.S.C. § 3103(a)(7). tions. 15. 12 U.S.C. § 3107(d). 20. See 12 U.S.C. § 1842(c)(3)(B); 12 C.F.R. 225.13(b)(5). 16. Deposit data are as of September 30, 1995. 21. See 12 U.S.C. § 1842(c)(3)(A); 12 C.F.R. 225.13(b)(4). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 439 The Board considers a foreign bank to be subject to any necessary information it may request.24 For these reacomprehensive supervision or regulation on a consolidated sons, and based on all the facts of record, the Board basis if the Board determines that its home country supervi- concludes that the supervisory factors it must consider sor receives sufficient information on the foreign bank's under section 3 of the BHC Act are consistent with approvworldwide operations, including the bank's relationship to al.25 any affiliate, to assess the bank's overall financial condition The Board also must consider the financial condition of and compliance with law and regulation.22 In making its a foreign bank that files an application under section 3 of determination concerning this proposal, the Board consid- the BHC Act.26 Mitsubishi and Bank of Tokyo must comered the following information. ply with capital standards that conform to the Basle Capital Mitsubishi is subject to the regulatory and supervisory Accord, as implemented by Japan. Mitsubishi's and Bank authority of the Japanese Ministry of Finance ("MOF") of Tokyo's capital exceeds these minimum standards and is and the Bank of Japan. The Board previously has deter- equivalent to the capital required of a United States bankmined in connection with applications involving other Jap- ing organization.27 anese banks that the banks were subject to comprehensive, Based on the foregoing and all the facts of record, the consolidated home country supervision.23 Mitsubishi is Board has determined that the financial and managerial supervised on substantially the same terms and conditions resources and future prospects of Mitsubishi, Bank of as the other Japanese banks. Recently, the MOF announced Tokyo, and their subsidiaries, are consistent with approval plans to enhance its bank supervision in a number of areas, of this proposal, as are the other supervisory factors the including strengthening on-site inspections; establishing Board must consider under section 3 of the BHC Act. more comprehensive guidelines for internal audits, controls, and risk management; increasing enforcement tools B. Evaluation under the IBA for distressed banking institutions; and promoting closer information exchanges with foreign supervisory authori- In order to approve an application by a foreign bank to ties. Based on all the facts of record, the Board has deter- establish a branch or agency, regardless of its location, the mined that Mitsubishi is subject to comprehensive supervi- Board must determine under the IBA and Regulation K sion on a consolidated basis by its home country that each of the foreign bank and any parent foreign bank supervisor. engages directly in the business of banking outside the Mitsubishi also has committed to make available to the United States and that the foreign bank has furnished to the Board such information on its operations and the opera- Board the information it needs to assess the application tions of its affiliates that the Board deems necessary to determine and enforce compliance with the IBA, the BHC Act, and other applicable federal law. To the extent that the 24. Inner City Press/Community on the Move ("Protestant") has provision of such information may be prohibited by law, raised issues about the supervision of the offshore branches of Union Mitsubishi has committed to cooperate with the Board to Bank to be acquired by BanCal. The Board notes that three of the four obtain any consents or waivers from third parties that may olfshore branches of Union Bank are full-service branches, and that all be required to permit disclosure. In light of these commit- the offshore branches of Union Bank, including its "shell" branch in the Cayman Islands, would be subject to consolidated supervision by ments and other facts of record, and subject to the condifederal banking supervisors. Based on all the facts of record, including tions of this order, the Board concludes that Mitsubishi has reports of examinations concerning these offshore branches, the Board provided adequate assurances of access by the Board to believes that the supervisory concerns raised by Protestant are not present in this case. 25. Protestant contends that published press reports, including ac- 22. In assessing this standard, the Board considers, among other counts of certain actions by a Bank of Tokyo employee in Japan, factors, the extent to which the foreign bank's home country supervi- indicate lax supervision and inadequate internal controls on the part of sor: Japanese banks and Japanese banking regulators. Protestant also cites (i) Ensures that the foreign bank has adequate procedures for the consent order entered into by the Board and The Daiwa Bank, monitoring and controlling its activities worldwide; Limited, Osaka, Japan ("Daiwa"), to terminate the banking opera- (ii) Obtains information on the condition of the foreign bank and tions of Daiwa in the United States. The Board has considered these its subsidiaries and offices outside the home country through comments, and in particular, the comments as they relate to the regular reports of examination, audit reports, or otherwise; institutions involved in this acquisition, in light of all the facts of (iii) Obtains information on the dealings and relationships be- record, including supervisory information from Japanese banking tween the foreign bank and its affiliates, both foreign and domes- supervisors. The employee's actions were detected by Bank of Tokyo tic; and Bank of Tokyo conducted an internal review of procedures and (iv) Receives from the foreign bank financial reports that are investigation to detect similar incidents and found no other defalcaconsolidated on a worldwide basis, or comparable information tions. The matter appears to be an isolated incident solely involving that permits analysis of the foreign bank's financial condition on the institution to be acquired. a worldwide, consolidated basis; and 26. See 12 C.F.R. 225.13(b)(1). (v) Evaluates prudential standards, such as capital adequacy and 27. Protestant has questioned whether the financial statements of risk asset exposure, on a worldwide basis. Mitsubishi and Bank of Tokyo accurately reflect their financial condi- The Board considers the foregoing to be indicia of comprehensive, tion in view of news stories concerning economic and banking condiconsolidated supervision. No single factor is essential, and other tions in Japan and the exposure of Bank of Tokyo to losses resulting elements may inform the Board's determination. from the liquidation of jusen companies (real estate-related liabilities). 23. See The Sumitomo Bank, Limited, 82 Federal Reserve Bulletin The Board has taken these comments into consideration in reviewing 365 (1996); Bank of Tokyo, 81 Federal Reserve Bulletin 279 (1995). the overall financial condition of Mitsubishi and Bank of Tokyo. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

440 Federal Reserve Bulletin • May 1996 adequately.28 The Board also must determine that each of the additional conditions specified in section 5(a)(3) of the the foreign bank and any parent foreign bank are subject to IBA are satisfied.30 comprehensive supervision or regulation on a consolidated basis by their home country supervisor.29 Section 5(a) of Convenience and Needs Considerations the IBA also establishes additional criteria that must be met in order for the Board to approve the establishment of In acting on an application to acquire a depository institubranches outside a foreign bank's home state under section tion under the BHC Act, the Board must consider the 5(a)(2) of the IBA. convenience and needs of the communities to be served Mitsubishi engages directly in the business of banking and take into account the records of the relevant depository outside the United States through its extensive banking institutions under the Community Reinvestment Act operations in Japan, Asia, Europe, and elsewhere. Mitsub- (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires the ishi also has provided the Board with the information federal financial supervisory agencies to encourage finannecessary to assess the application adequately. As noted cial institutions to help meet the credit needs of the local above, the Board has concluded that Mitsubishi is subject communities in which they operate, consistent with their to comprehensive supervision on a consolidated basis by safe and sound operation. To accomplish this end, the CRA its home country supervisors. requires the appropriate federal supervisory authority to The Board also has taken into account the additional "assess the institution's record of meeting the credit needs standards set forth in section 7 of the IBA (12 U.S.C. of its entire community, consistent with the safe and sound § 3105(d)(3) and (4)) and section 211.24(c)(2) of Regula- operation of such institution," and to take that record into tion K (12 C.F.R. 211.24(c)(2)). In this regard, the MOF account in its evaluation of applications.31 and the Bank of Japan have no objection to the establish- The Board received a number of comments supporting ment of the proposed branches, agencies, and representa- this proposal,32 including comments from communitytive offices. based organizations in New York and Chicago that com- As noted above, Mitsubishi has capital that exceeds the mended the CRA performance records of BOTT and CTB, minimum standards of the Basle Capital Accord and is particularly their participation in lending programs to supconsidered to be equivalent to that required of a U.S. port the rehabilitation and purchase of housing for lowbanking organization. Mitsubishi has the experience and and moderate-income households and provision of grants capacity to support the proposed offices and has established to support the operating budgets of community organizacontrols and procedures for the proposed offices to ensure tions. Two umbrella community-based groups in Califorcompliance with U.S. law. After consummation of the nia, representing a number of smaller community organizaproposed merger and establishment of the foreign bank tions, also commended a community reinvestment pledge offices described above under the IBA, Mitsubishi would made by BanCal and Union Bank to invest $11.25 billion continue to be adequately capitalized and managed. Based in California community development activities. Under on the record, the Board has determined that financial and this pledge, the two banks have agreed to lend 4.5 percent managerial factors are consistent with approval of the of their combined assets (which equal approximately proposed offices. $25 billion) each year for 10 years to assist inner-city small As noted above, the Board has concluded that Mitsubishi businesses, multi-family housing development, low- and has provided adequate assurances of access to any neces- moderate-income homebuyers, and rural housing developsary information the Board may request. Mitsubishi also ment. Guidance in administering the pledge will be prohas filed applications and notices with state banking supervisors in every state in which it would acquire an office of 30. The Board finds, pursuant to section 5(a)(3)(B) of the IBA, that Bank of Tokyo, and none of the states has objected to this the financial resources of Mitsubishi are equivalent to those required proposal. for a domestic bank to receive approval for interstate branching under Finally, with respect to the proposed establishment by section 44 of the FDI Act. 12 U.S.C. § 3103(a)(3)(B). The Board also Mitsubishi of branches outside its home state pursuant to has consulted with the Department of the Treasury concerning capital equivalency and, as discussed above, has determined that Mitsubishi's section 5(a)(2) of the IBA, the Board has determined that filings with state authorities, as well as factors under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) relevant in this context, are consistent with the proposed establishment of interstate branches under section 5(a)(2) of the IBA. 31. See 12 U.S.C. § 2903. The Board also must consider relevant CRA factors in acting on an interstate merger under section 5(a)(3)(C) of the IBA, as well as any relevant requirements under state commu- 28. 12 U.S.C. § 3105(d)(2); 12 C.F.R. 211.24(c)(1). nity reinvestment laws. Other than with respect to Mitsubishi's owner- 29. Id. In acting on an application to establish a representative ship of BanCal, Mitsubishi is not currently subject to federal or state office, the Board must take into account the standards applicable to the community reinvestment laws. establishment of a branch, agency, or commercial lending company. 32. Protestant contends that the Board should give little weight to 12 U.S.C. § 3107(a)(2); 12 C.F.R. 211.24(d)(2). Because Mitsubishi comments in favor of this proposal from organizations that receive has applied to establish branches and agencies as well as representa- grants from Mitsubishi or Bank of Tokyo. The Board has considered tive offices, the Board has made its findings with respect to the the comments from all commenters supporting or opposing this proproposed representative offices in accordance with the stricter stan- posal in light of the full record in this case and the factors the Board is dards applicable to branch and agency applications. required to consider under the BHC Act and other relevant statutes. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 441 vided by an advisory committee made up of community factory" rating for CRA performance from the FDIC, as of residents where the banks operate. August 22, 1994 ("1994 CTB Examination").37 Comments opposing the proposal were received from Inner City Press/Community on the Move ("Protestant").33 B. CRA Performance Records of Union Bank and These comments criticize the amount of CRA-related lend- BanCal ing by BOTT and CTB in their respective delineated communities. Protestant also expressed concern that the Union Bank's record. The 1995 UB Examination found a announced branch closings resulting from this proposal reasonable distribution of credit extensions, applications, would have an adverse effect on the convenience and needs and denials in all segments of Union Bank's communities, of the communities served by BanCal and Union Bank.34 including low- and moderate-income census tracts. Market- The Board has carefully reviewed the CRA performance ing efforts. included direct mail advertising to low- and records of Mitsubishi and Bank of Tokyo, and their respec- moderate-income households within a mile of a Union tive subsidiary banks, particularly the relevant reports of Bank branch, featuring low-cost checking and savings examinations of the CRA performance records of these products, homebuyer assistance programs, and consumer institutions. The Board also has carefully considered the loans.38 Senior management and the board of directors of comments received on this proposal, as well as Mitsub- the bank analyzed the bank's reports of the geographical ishi's responses to those comments. The Board has re- distribution of loan products and loan denials in establishviewed this information, and all other relevant facts of ing new loan products, policies, marketing strategies, and record, in light of the CRA, the Board's regulations, and outreach efforts. the Statement of the Federal Financial Supervisory Agen- Examiners also noted that Union Bank participated in cies Regarding the Community Reinvestment Act ("Agen- several government-sponsored housing and small business cy CRA Statement").35 loan programs, including the FNMA Community Home Buyer Program, FHA Title I Home Improvement Loan A. CRA Performance Evaluations of the Subsidiary Program, SBA 504 and 7A Programs, and California Pollu- Banks of Mitsubishi and Bank of Tokyo tion Control Finance Authority Program. Union Bank also participated in several housing and economic development The Agency CRA Statement provides that a CRA examina- projects, including a community development corporation tion is an important and often controlling factor in the in the south central area of Los Angeles and a revolving consideration of an institution's CRA record, and that loan pool to provide permanent financing for the developreports of these examinations will be given great weight in ment of housing for low-income and very low-income the applications process.36 The Board notes that all the households. Union Bank also provided construction financsubsidiary banks of Mitsubishi and Bank of Tokyo re- ing for several multi-unit apartment projects for low- and ceived "outstanding" or "satisfactory" ratings in their moderate-income households. most recent CRA performance examinations. BanCal's record. The 1996 BanCal Examination found Mitsubishi's subsidiary bank, BanCal, received a "satis- that the bank actively sought applications and extended factory" rating in its most recent examination for CRA credit throughout its delineated communities, including performance by its primary federal supervisor, the OCC, as low- and moderate-income areas, and that the distribution of January 23, 1996 ("1996 BanCal Examination"). Bank of loans, including mortgage and consumer loans, also was of Tokyo's lead subsidiary bank, Union Bank ("Union reasonable. Bank management conducted a geographical Bank"), received an "outstanding" rating in its most re- analysis of lending patterns at least annually and used the cent examination for CRA performance by its primary information to plan CRA programs and develop marketing federal supervisor, the Federal Deposit Insurance Corpora- strategies. BanCal participated in several loan pools to tion ("FDIC"), as of October 30, 1995 ("1995 UB Exami- provide community development, affordable housing, and nation"). BOTT received an "outstanding" rating for CRA performance from the FDIC, as of December 28, 1994 ("1994 BOTT Examination"), and CTB received a "satis- 37. Examiners noted that CTB's performance could be improved by increasing the percentage of loans within its delineated community. CTB has increased its CRA-related lending in its delineated community, and Mitsubishi and Bank of Tokyo have established a goal to double CTB's aggregate CRA-related lending within three to five years, with approximately equal emphasis on housing and community 33. An individual also commented that the proposal would be development loans and small business loans. Protestant maintains that detrimental to consumers in general. these goals are too vague and unenforceable. The Board has carefully 34. Protestant also argues that Bank of Tokyo should be required to reviewed these issues in light of all the facts of record, including file an application under section 3 of the BHC Act to acquire deposits CTB's overall satisfactory performance rating, supervisory informaof Daiwa Bank Trust Company, New York, New York ("Daiwa tion received from the FDIC, and other aspects of CTB's CRA Bank"). Bank of Tokyo has acquired no deposits from Daiwa Bank performance record. but only agreed to consider applications from Daiwa Bank customers 38. Once every 12 to 18 months, Union Bank prepared a report of to establish new accounts at BOTT. This arrangement does not come consumer loans and deposits in each census tract in all counties in within the filing requirements of the BHC Act. which the bank operated a branch, and focused additional marketing 35. 54 Federal Register 13,742 (1989). efforts on increasing consumer loans in census tracts with low loan 36. Id. at 13,745. penetration. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

442 Federal Reserve Bulletin • May 1996 small business financing, with an aggregate commitment of mance record has been carefully reviewed in light of their $17.6 million. From 1994 to September 30, 1995, BanCal business strategy.40 also made 114 direct loans to small businesses, totaling BOTT's record. BOTT has taken a number of steps that $17.1 million, and 543 home purchase loans, totaling are consistent with its business strategy to help meet the $56 million, to homebuyers in low- and moderate-income credit needs of its community. For example, the bank areas under the bank's Community Outreach Program. participates as a lender or investor in large-scale housing or Branch closings. Mitsubishi has identified 21 branches it community development programs sponsored by local govproposes to consolidate or close after consummation of this ernment and private organizations, and provides grants to proposal. Ten of the branches are in low- or moderate- several community organizations to help cover their operatincome census tracts, and five of these ten branches are in ing costs. As of September 30, 1994, the bank had minority census tracts. One branch is in a middle-income $13.9 million of loans and $7.4 million of commitments census tract with a predominately minority population. outstanding to support the community development pro- Each of these branches would be consolidated with a UBC grams of several organizations in New York City. These branch, located within one-half mile, that would remain programs included more than $7 million invested in a loan open after consummation of this proposal. Mitsubishi also pool administered by a small business investment corporastated that the consolidation of branches was discussed tion primarily to fund loans to purchase taxicab medallions with local community-based organizations. and provide working capital to various small minority- One other branch proposed to be closed is located in a owned commercial establishments. middle-income census tract with a predominately minority BOTT has $1.4 million of loans and $4.9 million of loan population and is more than one mile but less than two commitments outstanding under a program sponsored by miles from another UBC branch that would remain open. the New York City Housing Partnership to help develop The final decision on this branch is subject to the branch housing for sale at below-market cost to low- and closing policy of BanCal. The policy requires the bank to moderate-income households and $1.3 million of loans and contact community groups whenever a proposed branch $1.9 million of commitments outstanding to Community closing would have a significantly adverse impact on the Preservation Corporation, a nonprofit corporation that comavailability of banking services in a community, and to bines public and private financing to construct and rehabilevaluate carefully the comments of community groups and itate low- and moderate-income housing in New York City, integrate them into the bank's final decision and implemen- Long Island, and the Hudson River valley. In addition, tation plans. Actions that may be taken to minimize the BOTT committed $100,000 to the Closing Assistance for impact of a branch closing on a neighborhood, and the Homebuyers Program sponsored by Neighborhood Houspresence of other financial institutions in the neighbor- ing Services of New York, Inc., which provides loans to hood, also must be considered. BanCal's branch closing assist first-time low- and moderate-income homebuyers to policy, and the effect of branches closed under this policy meet down payment and closing cost requirements. on the availability of banking products and services to the The bank also holds a $100,000 certificate of deposit at communities involved, were reviewed by examiners in the Community Capital Bank, a commercial bank in Brooklyn bank's most recent CRA performance examination and operated primarily to serve the housing and small business found to be satisfactory. credit needs of low- and moderate-income neighborhoods. BOTT has provided credit enhancements since 1988 for C. CRA Performance Records of BOTT and CTB $32 million of New York State Housing Finance Agency bonds used to finance the construction of 732 housing units The Board notes that BOTT and CTB focus on providing for low- and moderate-income households. In addition, credit and other banking services to corporate customers. They do not engage in residential or other consumer lending, except to accommodate employees of their corporate 40. See Continental Bank Corporation, 75 Federal Reserve Bulletin customers, or engage in other retail banking businesses, 304 (1989). Protestant maintains that the lending activities of BOTT and CTB should be considered nationwide in evaluating their CRA and both institutions were considered by their primary performance record. Protestant also contends that BOTT's currently federal supervisor to be engaged in wholesale banking delineated community should be expanded to include upper Manhatactivities.39 Institutions like BOTT and CTB, however, are tan, the Bronx, and Brooklyn. The geographic scope of both institurequired to comply with the CRA, and their CRA perfor- tions' delineated communities and the banks' efforts to help meet credit needs within those communities were reviewed in their most recent CRA performance evaluations. After an on-site review of the banks' activities and local communities by their primary federal supervisor, the geographic scope of these areas was found to be 39. Institutions like BOTT and CTB will not be evaluated as reasonable and the banks' overall CRA performance record within wholesale institutions after July 1, 1997, unless they are designated as these areas was found to be outstanding for BOTT and satisfactory for a "wholesale bank" by their primary supervisor under the new CRA CTB. The Board believes that an assessment of an institution's regulations (60 Federal Register 22,156 (1995)). Before that date, delineated community can most effectively be considered in an on-site large depository institutions with a wholesale business strategy may examination by the institution's primary federal supervisor, and that continue to be evaluated under the current CRA regulations or elect to this process provides a better opportunity to consider whether an be designated as a "wholesale bank" and evaluated under the "com- institution's delineated community reflects illegal discrimination in munity development test" in the new CRA regulations. light of all the institution's lending activities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 443 BOTT provides grants up to $5,000 to nonprofit groups review of the entire record, the Board concludes that conthat help to address housing needs, facilitate neighborhood venience and needs considerations, including the CRA stabilization and provide job training and drug rehabilita- records of performance of both organizations' subsidiary tion.41 banks, are consistent with approval of this proposal.43 CTB's record. CTB has adopted a CRA action plan for reaching residents of low- and moderate-income areas of Nonbanking Activities its community, and its board of directors and senior management regularly review CRA activities and are active in Mitsubishi also has given notice under section 4(c)(8) of maintaining contact with and participating in programs that the BHC Act to acquire the nonbanking subsidiaries of assist in community development outside the bank's busi- Bank of Tokyo listed in the Appendix and thereby engage ness strategy. in the nonbanking activities described therein, and Union CTB has taken several steps to support community de- Bank has given notice to retain its nonbanking subsidiaries velopment in Chicago in a manner that is consistent with listed in the Appendix and continue to engage in the its lending focus. The bank provided a $1.5 million revolv- nonbanking activities described therein. Section 4(c)(8) of ing loan to Community Investment Corporation to help the BHC Act provides that a bank holding company may, finance the construction and rehabilitation of housing for with Board approval, engage in any activity that the Board low-income households, and committed $800,000 to determines to be "so closely related to banking or manag- Neighborhood Housing Services of Chicago, Inc., for hous- ing or controlling banks as to be a proper incident thereto." ing rehabilitation and neighborhood stabilization in low- The Board has previously determined by regulation or and moderate-income neighborhoods. CTB also committed order, subject to certain prudential limitations, that each of $1.9 million to a program to finance the purchase of the activities described in the Appendix is closely related fast-food restaurant franchises by low- and moderate- to banking within the meaning of section 4(c)(8) of the income franchise operators. BHC Act44 Mitsubishi has provided the Board with all the In addition, CTB committed $1.5 million to a loan pool commitments the Board obtained in other cases in which it with 46 lenders that is administered to provide financing has approved a bank holding company to engage in these for rental housing for low- and moderate-income house- activities, and Mitsubishi has committed to conduct these holds. The bank also maintains a be low-market rate certifi- activities in accordance with the Board's regulations and cate of deposit for $250,000 at South Shore Bank, a com- prior orders. mercial bank in Chicago operated primarily to finance the In order to approve this proposal, the Board also must rehabilitation of multi-family housing units and provide determine that the proposed activities are a proper incident small business loans in the Chicago area. The bank pur- to banking, that is, that the proposed transaction can reachased $250,000 of municipal bonds from the City of sonably be expected to produce benefits to the public, such Chicago and $1.6 million of revenue bonds issued by the as greater convenience, increased competition, or gains in Illinois Housing Development Authority for its Affordable efficiency, that outweigh possible adverse effects, such as Housing Program. CTB also provides grants to support the undue concentration of resources, decreased or unfair comoperating budgets of nonprofit organizations that help meet petition, conflicts of interests, or unsound banking practichousing needs and facilitate economic development42 es 45 As part of the Board's evaluation of these factors, the Board considers the financial and managerial resources of D. Conclusion on Convenience and Needs the notificant and its subsidiaries and the effect the transac- Considerations tion would have on such resources.46 On the basis of the record, the Board believes that this proposal should enable The Board has carefully considered all the facts of record, BTM to provide greater convenience and improved serincluding the comments received from all commenters and vices to its customers. In addition, while Mitsubishi oper- Mitsubishi's response to those comments, the CRA performance records of the subsidiary banks of Mitsubishi and 43. Protestant has expressed concern about Mitsubishi's plans to Bank of Tokyo, including relevant reports of examination manage BOTT, an insured depository institution subject to the CRA. from their primary federal supervisors. The Board also has As part of this proposal, BTM intends to merge Mitsubishi's subsidconsidered that neither the CRA nor the BHC Act require iary trust company, Mitsubishi Bank Trust Company of New York, that an institution meet the credit and other banking needs New York, New York, into BOTT, with BOTT as the survivor. Mitsubishi has indicated that the variety of community initiatives that of a community in specific ways or provide specific types have been undertaken by BOTT will be continued and enhanced under of products or services. Both statutes, and their implement- BOTT's recently established long-term CRA performance goals. Uning regulations, give a banking institution the freedom to der these goals, BOTT intends to double its level of CRA-related develop its own business strategy and products. Based on a lending over the next three to five years. 44. See, e.g., The Bank of Tokyo, Ltd., 76 Federal Reserve Bulletin 654 (1990); The Bank of Tokyo, Ltd., 76 Federal Reserve Bulletin 546 (1990). 41. The bank made $139,000 in grants under this program in 1994. 45. See 12 U.S.C. § 1843(c)(8). 42. For example, the bank gave a grant of $50,000 to Non-Profit 46. See 12 C.F.R. 225.24; Fuji Bank, Limited, 75 Federal Reserve Financial Corporation, an organization that provides bridge financing Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve for small, nonprofit organizations. Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

444 Federal Reserve Bulletin • May 1996 ates subsidiaries engaged in nonbanking activities that If any restrictions on access to information on the operacompete with several of the nonbanking subsidiaries of tions or activities of BTM and any of its affiliates subse- Bank of Tokyo and Union Bank, the markets for these quently interfere with the Board's ability to determine the services are unconcentrated, and there are numerous pro- compliance by Mitsubishi or its affiliates with applicable viders of these services. As a result, consummation of this federal statutes, the Board may require termination of any proposal would have a de minimis effect on competition for of Mitsubishi's or any of its affiliates' direct or indirect these services, and the Board concludes that the proposal activities in the United States. The Board's determination would not have a significantly adverse effect on competi- on the proposed nonbanking activities also is subject to all tion in any relevant market. the conditions set forth in Regulation Y, including those in There also is no evidence in the record to indicate that sections 225.7 and 225.23(g) of Regulation Y, and to the consummation of this proposal is likely to result in any Board's authority to require such modification or terminasignificantly adverse effects, such as undue concentration tion of the activities of a bank holding company or any of of resources, decreased or unfair competition, conflicts of its subsidiaries as the Board finds necessary to ensure interests, or unsound banking practices that would not be compliance with, and to prevent evasion of, the provisions outweighed by the public benefits reasonably to be ex- of the BHC Act and the Board's regulations and orders pected to result from this proposal. Accordingly, the Board issued thereunder. These commitments and conditions shall has determined that the balance of the public interest be deemed to be conditions imposed in writing by the factors it must consider under section 4(c)(8) of the BHC Board in connection with its findings and decision, and, as Act is favorable and consistent with approval of this pro- such, may be enforced in proceedings under applicable posal. law. Mitsubishi also has given notice of its intention to ac- The banking acquisitions under this proposal shall not be quire BOTNA, a corporation operating under section 25 of consummated before the fifteenth calendar day following the Federal Reserve Act. Based on all the facts of record, the effective date of this order, and this proposal shall not the Board concludes that the financial and managerial be consummated later than three months after the effective resources of Mitsubishi are consistent with the acquisition date of this order, unless such period is extended by the of this corporation. This proposal also would result in the Board or by the Federal Reserve Bank of San Francisco, continuation of the international services currently pro- acting pursuant to delegated authority. vided by this organization and would be in the public By order of the Board of Governors, effective March 8, interest. Accordingly, the Board finds that the continued 1996. operation of BOTNA by BTM is consistent with the Federal Reserve Act and Regulation K. Voting for this action: Chairman Pro Tempore Greenspan, and BanCal also has given notice pursuant to section 25 of Governors Lindsey, Phillips, and Yellen. Absent and not voting: Governor Kelley. the Federal Reserve Act (12 U.S.C. §§ 601-604a) and section 211.3 of Regulation K (12 C.F.R. 211.3) to acquire the JENNIFER J. JOHNSON branches of Union Bank in Guam, the Commonwealth of Deputy Secretary of the Board the Northern Mariana Islands, and the Cayman Islands. The Board has considered the factors it is required to Appendix consider when reviewing a notice to establish branches under section 25 of the Federal Reserve Act and, based on Nonbanking Subsidiaries of Bank of Tokyo to Be all the facts of record, finds these factors to be consistent Acquired by Mitsubishi with approval. (1) BOT Financial Corp., Boston, Massachusetts, and thereby Conclusion engage in making, acquiring, or servicing loans, pursuant to section 225.25(b)(1); providing investment or financial ad- Based on the foregoing and all other facts of record, vice, pursuant to section 225.25(b)(4); leasing activities including all the commitments provided by Mitsubishi in (directly and through its wholly owned subsidiary, BFC connection with this proposal, the Board has determined Assets, Inc., Boston, Massachusetts), pursuant to secthat the applications and notices should be, and hereby are, tion 225.25(b)(5); and providing data processing and data approved. The Board's approval of this proposal is specifitransmission services, pursuant to section 225.25(b)(7) of cally conditioned on compliance by Mitsubishi and BTM the Board's Regulation Y; and with all the commitments made in connection with this (2) BOT Securities, Inc., New York, New York, and thereby proposal and with the conditions referred to in this order.47 engage in making, acquiring, or servicing loans, pursuant to section 225.25(b)(1); providing investment or financial advice, pursuant to section 225.25(b)(4); providing brokerage 47. The Board's authority to approve the establishment of the proposed foreign bank offices parallels the continuing authority of state banking supervisors to license offices of a foreign bank. The Board's approval of these applications and notices does not supplant proposed offices in accordance with any terms or conditions that such the authority of the relevant state banking supervisors to license the state banking supervisors may impose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 445 services, separately and in combination with investment state"),1 and First Interstate's bank and nonbank subsidiaradvisory services, pursuant to section 225.25(b)(15); under- ies.2 Applications and notices have been filed under secwriting and dealing in bank-eligible dealer securities, pursu- tions 3, 4(c)(8), and 4(c)(13) of the BHC Act (12 U.S.C. ant to section 225.25(b)(16); providing general information §§ 1842, 1843(c)(8) and (13)), and section 25 of the and statistical forecasting with respect to foreign exchange Federal Reserve Act (12 U.S.C. § 601). markets, pursuant to section 225.25(b)(17); acting as a Notice of the proposal, affording interested persons an futures commission merchant, pursuant to sec- opportunity to submit comments, has been published (60 tion 225.25(b)(18) of the Board's Regulation Y; and trading Federal Register 58,627 and 62,859 (1995)). In light of the for its own account in certain foreign exchange spot, for- extensive public interest in this proposal, the Board held a ward, futures, and options transactions, pursuant to The series of public meetings to provide interested persons an Bank of Tokyo, Ltd., 76 Federal Reserve Bulletin 654 opportunity to present written information and oral testi- (1990). mony on the proposal (Press Releases dated January 4 and 16,1996). Seven public meetings were held, beginning Nonbanking Subsidiaries of Union Bank to Be Acquired on January 22, 1996, in San Francisco and Los Angeles, California.3 by Mitsubishi The Board received comments on the proposal from (1) Bankers Commercial Corporation, San Diego, California, approximately 834 commenters, 311 of whom testified at and thereby engage in making, acquiring, or servicing loans, the public meetings. Written comments were received from pursuant to section 225.25(b)(1); providing investment or approximately 523 commenters who did not testify at the financial advice, pursuant to section 225.25(b)(4); leasing public meetings and from 166 commenters who testified at activities, pursuant to section 225.25(b)(5); and providing the meetings. The time for filing comments has expired, data processing and data transmission services, pursuant to and the Board has considered the applications and notices section 225.25(b)(7) of the Board's Regulation Y; and all comments received in light of the factors set forth in the BHC Act, the Federal Reserve Act, and regulations (2) Stanco Properties, Inc., San Francisco, California, and promulgated thereunder. thereby engage in escrow and custodial activities, pursuant Wells Fargo, with total consolidated assets of approxito section 225.25(b)(3) of the Board's Regulation Y; mately $49.9 billion, operates subsidiary banks in California and a credit card bank in Arizona.4 Wells Fargo is the (3) UB Leasing, Inc., Los Angeles, California, and thereby 17th largest commercial banking organization in the United engage in making, acquiring, or servicing loans, pursuant to States, controlling approximately 1.2 percent of total banksection 225.25(b)(1); providing investment or financial ading assets in the United States and is the second largest vice, pursuant to section 225.25(b)(4); leasing activities, depository institution in California, controlling approxipursuant to section 225.25(b)(5); and providing data promately $37.3 billion in deposits, representing 13 percent of cessing and data transmission services, pursuant to secall deposits in depository institutions in the state ("state tion 225.25(b)(7) of the Board's Regulation Y; deposits").5 Wells Fargo also engages in a number of (4) UB Mortgage Corp., San Francisco, California, and permissible nonbanking activities nationwide. First Interthereby engage in servicing loans, pursuant to sec- state, with total consolidated assets of approximately tion 225.25(b)(1) of the Board's Regulation Y; and $55.1 billion, operates subsidiary banks in 13 states. First Interstate is the 14th largest commercial banking organiza- (5) Unionbanc Leasing Corp., Los Angeles, California, and tion in the United States, controlling approximately 1.3 thereby engage in making, acquiring, or servicing loans, percent of total banking assets in the United States. First pursuant to section 225.25(b)(1); providing investment or Interstate is the third largest depository institution in Califinancial advice, pursuant to section 225.25(b)(4); leasing fornia, controlling approximately $20.9 billion in deposits, activities, pursuant to section 225.25(b)(5); and providing representing 7.3 percent of state deposits. data processing and data transmission services, pursuant to section 225.25(b)(7) of the Board's Regulation Y. Wells Fargo & Company 1. First Interstate would merge with and into Wells Fargo, with Wells Fargo as the surviving corporation. San Francisco, California 2. First Interstate's subsidiary banks are listed in Appendix A. First Interstate's nonbank and foreign subsidiaries are listed in Appendix B. Order Approving the Acquisition of a Bank Holding 3. Two of these meetings were held in connection with the applica- Company and its Nonbanking and Foreign Subsidiaries tion filed by First Bank System, Minneapolis, Minnesota ("First Bank"), to acquire First Interstate. First Bank subsequently withdrew its application. The Board has considered all comments regarding the Wells Fargo & Company, San Francisco, California CRA performance of Wells Fargo or First Interstate that were made in ("Wells Fargo"), a bank holding company within the connection with First Bank's application. meaning of the Bank Holding Company Act ("BHC Act") 4. Asset data are as of September 30, 1995. 5. Depository institutions include commercial banks, savings banks, (12 U.S.C. § 1841 et seq.), has filed various applications and savings associations. State deposit data are as of June 30, 1995, and notices seeking the Board's approval to acquire First and are based on calculations in which the deposits of thrift institu- Interstate Bancorp, Los Angeles, California ("First Inter- tions are included at 50 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

446 Federal Reserve Bulletin • May 1996 After consummation of the proposal, Wells Fargo would in these markets and have a significant competitive inflube the seventh largest commercial banking organization in ence in many markets. Accordingly, the Board has taken the United States, with total consolidated assets of approx- special care to analyze whether the combination of these imately $102.5 billion, and would control approximately organizations would have a significantly adverse effect on 2.5 percent of the total banking assets in the United States, competition in any relevant banking market. and 2.6 percent of the total deposits in banks and savings In evaluating the competitive effects of this proposal, the associations insured by the Federal Deposit Insurance Cor- Board carefully considered the information and views preporation ("FDIC"). After consummation of the proposal sented by commenters. The Board received approximately and completion of the proposed branch divestitures, Wells 316 comments from individuals and organizations regard- Fargo would remain the second largest depository institu- ing the competitive impact of this proposal. Many comtion in California, controlling approximately $55.7 in de- menters argued that the proposal would eliminate one of posits, representing 19.4 percent of state deposits.6 only three major banking competitors in California, and would result in reduced availability of consumer financial Interstate Analysis services, higher prices for banking services, less flexible credit underwriting standards, and lower deposit rates.10 Section 3(d) of the BHC Act, as amended by Section 101 Commenters also contended that there would be fewer of the Riegle-Neal Interstate Banking and Branching Effi- lenders for small- and medium-sized businesses in many ciency Act of 1994, allows the Board to approve an appli- banking markets, resulting in a reduction in the availability cation by a bank holding company to acquire control of a of, and higher costs for, business credit.11 bank located in a state other than the home state of such In accordance with its policy, the Board has analyzed the bank holding company, if certain conditions are met. For competitive effects of this combination in each market in purposes of the BHC Act, Wells Fargo's home state is which the two organizations operate using the deposit- California.7 As noted above, First Interstate controls banks based Herfindahl-Hirschman Index ("HHI") and the HHI in Alaska, Arizona, California, Colorado, Idaho, Montana, levels set out in the revised Department of Justice Merger Nevada, New Mexico, Oregon, Texas, Utah, Washington, Guidelines ("DOJ Guidelines").12 The Board notes that and Wyoming. The conditions for an interstate acquisition these HHI levels are only guidelines that are used by the enumerated in section 3(d) are met in this case.8 In view of Board and the other banking agencies to help identify cases all the facts of record, the Board is permitted to approve that are in need of a more detailed competitive analysis to this proposal under section 3(d) of the BHC Act. assure that the proposal does not have a significantly adverse effect on competition in any relevant market. Competitive Considerations Where the HHI or other data regarding the competitive environment indicate that a combination is likely to have a This proposal represents a significant acquisition involving the combination of the second and third largest banking organizations in California, organizations that together 10. Some commenters also stated generally that the effect of the control 20.3 percent of all deposits in California and com- proposal on the convenience and needs of the community would be pete in 47 markets throughout the state.9 These organiza- adverse due to branch closures, job losses, real estate vacancies, and less price competition and, consequently, that convenience and needs tions are among the largest providers of banking services factors in this case would not outweigh the anticompetitive effects. Several California cities also commented that the merger would result in less competition and higher cost for government deposit services 6. Deposit and market data are as of June 30, 1995. Asset and because Wells Fargo is not an approved state government depository. deposit data take into account Wells Fargo's commitments to divest 11. Commenters also believed there would be a reduction in the certain assets and deposits, which are discussed later in this order. availability of banking services in low- and moderate-income areas, 7. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding neighborhoods with predominantly African-American residents, and company's home state is that state in which the operations of the bank other underserved areas, particularly in Los Angeles, and reduced holding company's banking subsidiaries were principally conducted competition for affordable housing construction loans, resulting in on July 1, 1966, or the date on which the company became a bank increased fees for such credit. These comments also are addressed in holding company, whichever is later. the convenience and needs discussion, infra. 8. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). 12. Under the revised DOJ Guidelines, 49 Federal Register 26,823 Wells Fargo is adequately capitalized and adequately managed. First (June 29, 1984), a market in which the post-merger HHI is less than Interstate's subsidiary banks have been in existence and have continu- 1000 is considered unconcentrated and a market in which the postously operated for at least the minimum period of time required under merger HHI is between 1000 and 1800 is considered moderately applicable state law. In addition, upon consummation of this proposal, concentrated. A market in which the post-merger HHI is above 1800 Wells Fargo and its affiliates would control less than 10 percent of the is considered to be highly concentrated. In such markets, the Departtotal amount of deposits of insured depository institutions in the ment of Justice (the "DOJ") is likely to challenge a merger that United States, and less than 30 percent of the total amount of deposits increases the HHI by more than 50 points. The DOJ has informed the of insured depository institutions in Arizona, or any other applicable Board that a bank acquisition or merger generally will not be chalstate deposit limit. All other requirements of section 3(d) of the BHC lenged (in the absence of other factors indicating anti-competitive Act also would be met after consummation of this proposal. effects) unless the post-merger HHI is at least 1800 and the merger or 9. A description of these banking markets is contained in Appen- acquisition increases the HHI by at least 200 points. The DOJ has dix C. Wells Fargo and First Interstate do not operate insured deposi- stated that the higher than normal threshold for anti-competitive tory institutions in the same banking markets in any state other than effects implicitly recognizes the competitive effect of limited-purpose California. lenders and other non-depository financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 447 significant effect on competition, the Board must determine these markets and would be in a transaction that would be whether the effect of the combination on competition is consistent with the DO J Guidelines. significantly adverse. A proposal that fails to pass the HHI The Board also notes that numerous competitors, includmarket screen may nonetheless be approved because other ing the largest banking organizations in California, will information, such as data regarding the strength of the remain in nearly all of these markets following consummaremaining competitors or the likelihood of potential entry tion of this proposal. In addition, numerous large thrifts into the market, may indicate that the proposal would not operate in California and have the potential to become have a significantly adverse effect on competition. Simi- active participants or entry points for other participants in larly, in the case of a proposal that passes the screen, these markets. Thrift institutions in California appear espeinformation, such as data about the nature of competition cially focused on mortgage lending activities and are not in the market, may indicate that the proposal would likely strong providers of commercial loans, including small busihave an adverse effect on competition. ness loans. Nevertheless, the Board believes it is signifi- In this case, the combination of Wells Fargo and First cant that these alternative franchises operate in California Interstate, without divestitures, would not pass the tradi- and, specifically, in many of the markets in question in this tional screen in a number of markets and would appear to case. Finally, many of these markets are attractive for entry have a significantly adverse effect on competition in a and California has in place legislation that permits out of number of markets. Wells Fargo has proposed to divest 61 state banking organizations to acquire banks throughout branches representing deposits of approximately $2.5 bil- the state. lion to address these potential competitive effects.13 As The Board also has considered the views of the Departillustrated by the table in Appendix D, after taking account ment of Justice ("DOJ") and the Attorney General of of the divestitures proposed by Wells Fargo, the proposal California. The DOJ has advised the Board that, subject to would meet the initial screen in all markets in which Wells completion of the divestitures proposed by Wells Fargo, Fargo and First Interstate compete.14 the proposal would not result in a significantly adverse In considering whether these divestitures are sufficient to effect on competition in any relevant banking market. The offset the otherwise significantly adverse competitive ef- Attorney General of California has also reviewed the comfects of the combination and the concerns raised by com- petitive effects of the proposal and has similarly concluded menters in writing and at the public meetings, the Board that, subject to completion of the proposed divestitures, the looked at a number of factors. The Board considered the proposal would not result in significantly adverse effects in effect of the proposal on small business lending, agricul- competition in any banking market in California. tural lending, correspondent banking services, and other Based on all of the facts of record, including the analysis services that were of concern to commenters. The Board discussed in this order, and in reliance on the commitments also analyzed pricing data for loans and deposits in Califor- discussed above as well as the other commitments made in nia and the effect of previous mergers between large bank- connection with this application, the Board concludes that ing organizations on the average prices for certain banking consummation of this proposal is not likely to have a products and services in California. significantly adverse effect on competition in any relevant In addition, the Board paid special attention to the size banking market. This determination is subject to compleand the quality of the proposed divestitures. As noted tion of the divestitures as proposed by Wells Fargo in above, the divestitures would cause the resulting HHI in connection with this application.15 In addition, Wells Fargo each banking market to be well within the level specified in must obtain final contracts of sale for all relevant offices the Board's initial screen. Importantly, Wells Fargo has prior to consummation of its acquisition of First Interstate. committed that these divestitures would be to a purchaser that will continue to make commercial loans, including middle-market, small business and agricultural loans, in 13. Wells Fargo has committed to execute sales agreements for each 15. The Board has considered comments suggesting that Wells of the proposed divestitures prior to consummation of this proposal, Fargo should be required to divest five branches in San Diego to a and to complete these divestitures within 180 days of consummation. locally-owned bank, with two of those branches in low-income com- Wells Fargo also has committed that, in the event it is unsuccessful in munities. The proposed divestitures have been structured to maintain completing these divestitures within 180 days of consummation, it significant competition to Wells Fargo in providing banking products will transfer the unsold branches to an independent trustee that is and services in the relevant banking markets. There is no evidence in acceptable to the Board and that will be instructed to sell the branches the record to suggest that this proposal would prevent the establishpromptly. See BankAmerica Corporation, 78 Federal Reserve Bulletin ment of any other bank to serve minority and low- and moderate- 338 (1992); United New Mexico Financial Corporation, 11 Federal income communities or impair the ability of existing banks to serve Reserve Bulletin 484 (1991). In addition, Wells Fargo has committed such communities. As discussed in this order, the Board also has to submit to the Board, prior to consummation of the acquisition, an considered carefully Wells Fargo's record in helping to meet the credit executed trust agreement acceptable to the Board stating the terms of needs of the communities that it serves, including minority and lowthese divestitures. and moderate-income communities and the Board or another federal 14. Market share data used for the table in Appendix D are based on banking agency must consider the Community Reinvestment Act calculations in which the deposits controlled by thrift institutions are record of any institution that acquires these branches from Wells included at 50 percent. Fargo. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

448 Federal Reserve Bulletin • May 1996 Financial, Managerial and Future Prospects Convenience and Needs Considerations Considerations In acting on applications under section 3 of the BHC Act, The Board has reviewed the financial resources of the the Board must consider the convenience and needs of the companies and banks involved in this proposal and the communities to be served and take into account the records effect of the proposed acquisition on the future prospects of of the relevant depository institutions under the Commuthese organizations in light of all the facts of record, nity Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). including the views expressed by Wells Fargo and com- The CRA requires the federal financial supervisory agenmenters. The proposed transaction represents a substantial cies to encourage financial institutions to help meet the acquisition for Wells Fargo, which will more than double credit needs of the local communities in which they operthe size of the organization. ate, consistent with their safe and sound operation. To The Board notes that Wells Fargo, First Interstate, and accomplish this end, the CRA requires the appropriate their subsidiary banks are in satisfactory financial condi- federal supervisory authority to "assess the institution's tion, and are expected to remain so after consummation of record of meeting the credit needs of its entire community, this transaction. Although the purchase accounting adjust- including low- to moderate-income neighborhoods, consisments for this transaction would result in the booking of tent with the safe and sound operation of such institution," significant amounts of goodwill and other intangibles,16 the and to take that record into account in its evaluation of Board notes that Wells Fargo would fully fund the pur- bank expansion proposals. chase price with the issuance of stock, and that its consolidated capital ratios would exceed the "well capitalized" A. Public Comments on Convenience and Needs thresholds after consummation of this transaction. Moreover, Wells Fargo has indicated that it believes its earnings As noted above, the Board held a series of public meetings would remain strong as a result of new opportunities for at which interested persons could present testimony on the revenue growth, greater geographic diversification of its convenience and needs factors and the CRA performance risk profile, and significant cost savings and operational records of the depository institutions in this case. The efficiencies. Wells Fargo also has indicated that it believes Board also provided commenters who commented during the merger would result in a stronger company that can the public comment period an extended period of time in operate more efficiently to provide enhanced services to its which to submit their views.18 A substantial majority of the customers and communities. comments received by the Board, including the comments Based on all the facts of record, including a review of presented by the 311 commenters who appeared at the relevant reports of examination and all comments that have public meetings, related to the convenience and needs been received relating to the financial factors in this pro- aspects of the proposal. These commenters included repreposal, the Board concludes that financial considerations, sentatives of community-based and nonprofit organizaincluding the future prospects of Wells Fargo, are consis- tions, small business owners, customers of Wells Fargo and tent with approval. The Board also has reviewed the mana- First Interstate, First Interstate employees, local and state government officials, members of the United States Congerial resources of Wells Fargo in light of comments received on this proposal,17 and has concluded that based on gress, and individuals.19 all the facts of record, including examination reports and Approximately 135 commenters supported the proposal other supervisory information, managerial factors are con- or commented favorably about the CRA performance sistent with approval. record of Wells Fargo.20 More than 600 commenters either opposed the proposal, requested that the Board approve the 18. The Board also considered additional comments filed after the close of the public comment period. Under the Board's Rules of Procedure, the Board may in its discretion take into consideration the substance of such comments. 12 C.F.R. 262.3(e). 16. Several commenters stated that Wells Fargo's net cost savings 19. Several individual commenters opposed this proposal on the assumptions are overly optimistic. Other commenters have criticized basis of their particular business dealings with Wells Fargo. The Wells Fargo's use of the purchase accounting method or maintained Board believes that such isolated instances should be considered in that the management of First Interstate would receive excessive sever- light of all the facts of record pertaining to Wells Fargo's CRA ance packages compared to nonmanagement employees. performance. The complaints have been sent to the bank's primary 17. Several commenters objected to the loss of management func- supervisor, the Office of the Comptroller of the Currency ("OCC"). tions located in Southern California. Other commenters raised con- 20. The commenters included: (1) The Greenlining Institute, cerns that the management of Wells Fargo does not have the experi- San Francisco, California; (2) National Community Reinvestment ence to operate a multi-state bank holding company. Wells Fargo has Network, Boston, Massachusetts; (3) the Asian Business Association indicated that it intends to operate corporate headquarters in Incorporated, San Francisco, California; (4) the Phoenix Urban San Francisco and Los Angeles, and that one or more of the senior League, Phoenix, Arizona; (5) Los Angeles Community Reinvestment corporate officers would be based in Los Angeles. After consumma- Center, Los Angeles, California; (6) American GI Forum of Califortion of the proposal, Wells Fargo would expand its board of directors nia, Santa Maria, California; (7) the Black Business Association of by up to seven seats, which would be filled by current members of Southern California, Los Angeles, California; and (8) the California First Interstate's board of directors. Hispanic Chamber of Commerce, San Francisco, California. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 449 merger subject to conditions suggested by the commenter, housing-related financing through intermediaries and loan or expressed concerns about the CRA performance record pools on a local and national level. of Wells Fargo or First Interstate.21 Commenters presented Commenters opposing the proposal characterized efforts information on a number of aspects of the CRA perfor- by Wells Fargo and First Interstate in home mortgage mance records of the banks involved, including the follow- lending as inadequate to meet the housing-related credit ing:22 needs of low- and moderate-income ("LMI") and minority Small business lending. A number of commenters ap- borrowers in California and other states served by the plauded Wells Fargo's participation in special loan pro- institutions. Those commenters criticized the decision by grams, particularly in programs for businesses owned by both institutions to cease direct origination of mortgage women and government-sponsored small business loan loans and to refer residential mortgage borrowers to joint programs. Other commenters noted that Wells Fargo had ventures maintained with unaffiliated third parties. One provided assistance to their small businesses, including commenter stated that data filed under the Home Mortgage business advice and increased lines of credit, which permit- Disclosure Act ("HMDA") and other lending data from ted expansion. Some commenters stated that Wells Fargo Wells Fargo and First Interstate indicated disparate lending was the only bank willing to lend to their start-up ventures. patterns for LMI and minority borrowers, and inadequate Other commenters believed that Wells Fargo was unre- outreach and marketing efforts to minority residents in sponsive to the needs of small business, and that the types certain areas. of loans and level of personalized services were inferior to Community development lending. A number of the small business activities of First Interstate. Some com- community-based and nonprofit organizations supported menters contended that the bank's participation in certain the proposal because of Wells Fargo's community reinvestsmall business lending programs sponsored by state and ment programs and projects. Other commenters maintained federal government agencies and nonprofit organizations that Wells Fargo provided less financial support to lending was inadequate. Commenters also asserted that Wells Fargo programs sponsored by community-based organizations, did not sufficiently ascertain the credit needs or market its lending consortia, and community development corporaavailable loans and services to small businesses owned by tions than First Interstate, and that the loss of First Interminorities in certain areas of California. A few comment- state's support would have a significantly adverse effect on ers contended that Wells Fargo's management practices, community redevelopment efforts.23 Those commenters such as limited lending authority for branch managers, also believed that after consummation of the proposal the frequent changes in branch personnel, and inadequate level of community redevelopment activities in California branch facilities, were not conducive to small business would be less than the level of activities provided by Wells lending activities. Fargo and First Interstate as independent organizations. Housing-related lending. Wells Fargo was commended Community reinvestment pledge. Many commenters by some commenters for a strong record of lending to commended the 10-year/$45 billion community reinvestaffordable housing projects in California. Commenters ex- ment pledge proposed by Wells Fargo in connection with plained that the unique nature of some of these projects this proposal. They pointed out that it was the largest and made financing difficult to obtain. In addition, some com- most comprehensive pledge made by a banking organizamenters favorably noted Wells Fargo's financial support of tion, and they believed that specific allocations under the pledge, such as the $25 billion for small business loans and $8.5 billion for commercial loans to middle market businesses, would significantly benefit LMI areas and small 21. The commenters included: (1) California Reinvestment Combusinesses in California. Other commenters noted that mittee, San Francisco, California; (2) Association of Community Wells Fargo had a record of meeting or exceeding its prior Organizations for Reform Now, Washington, D.C.; (3) Black State Employees Association of Texas, Inc., Dallas, Texas; (4) Washington community development pledges. Reinvestment Alliance, Seattle, Washington; (5) Nevada Fair Housing Some commenters criticized the pledge as lacking crite- Center, Inc., Las Vegas, Nevada; (6) Sacramento Housing & Redevel- ria for making funding decisions, and they raised questions opment Agency, Sacramento, California; (7) National Association for about its enforceability. Those commenters contended that the Advancement of Colored People, Los Angeles, California; (8) Small Business Finance Corp, San Diego, California; (9) Commu- Wells Fargo should be required to form partnerships with nities for Accountable Reinvestment, Los Angeles, California; community-based organizations to decide how the funds (10) National Community Reinvestment Coalition, Washington, D.C.; would be allocated. Some commenters noted that Wells (11) East Bay Housing Organizations, Oakland, California; (12) Coa- Fargo had not indicated a plan to address the credit needs lition for Women's Economic Development, Los Angeles, California; (13) members of the U.S. House of Representatives; (14) several members of California's Senate and General Assembly; and (15) officials from several local communities, including mayors, members of city councils, and representatives of local government agencies. 22. Other issues raised by commenters commending or criticizing 23. Some commenters questioned whether specific CRA-related the CRA performance record of the institutions involved or discussing commitments that had been made by First Interstate would be honored the effect of the proposal on the convenience and needs factor also by Wells Fargo. Other commenters expressed concern that First Interhave been carefully considered by the Board. Many of these com- state's strong record of charitable contributions in large urban areas ments are addressed throughout this order. like Los Angeles would not be continued by Wells Fargo. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

450 Federal Reserve Bulletin • May 1996 of areas outside California that were currently served by B. CRA Performance Evaluations of Wells Fargo First Interstate.24 and First Interstate Branches and branch closings. A number of commenters raised issues about Wells Fargo's emphasis on provid- The Board has carefully reviewed the CRA performance ing banking services through "alternative distribution records of Wells Fargo and First Interstate and their subsidpoints" in local supermarkets. Some commenters argued iary depository institutions, particularly the relevant rethat Wells Fargo's strategy of focusing on delivering bank- ports of examinations of the CRA performance. The Board ing products and services electronically and through super- also has carefully considered the comments and testimony market facilities would impede access to these products presented at the public meetings and in written submisand services by unsophisticated people and would dispro- sions,27 as well as Wells Fargo's responses to those comportionately disadvantage elderly and immigrant custom- ments. The Board has reviewed this information and all ers, as well as residents in LMI, minority, and rural areas. other relevant facts of record, in light of the CRA, the fair Other commenters contended that this approach did not lending laws28 and other relevant credit-related laws, the adequately serve LMI areas and areas with predominately Board's regulations, and the Statement of the Federal Fiminority residents because these areas are not generally nancial Supervisory Agencies Regarding the Community served by supermarkets. The commenters also maintained Reinvestment Act ("Agency CRA Statement").29 that many communities would be adversely affected by The Agency CRA Statement provides that a CRA exam- Wells Fargo's announced decision to close a large number ination is an important and often controlling factor in the of First Interstate's "brick and mortar" branches in connec- consideration of an institution's CRA record and that retion with this acquisition.25 Some commenters believed ports of these examinations will be given great weight in that the level of service provided by Wells Fargo at its the applications process.30 Wells Fargo's lead bank, Wells branches to small business and retail customers was less Fargo Bank N.A., San Francisco, California ("Wells Fargo personalized, and generally inferior to, that of First Inter- Bank"), which controls more than 97.6 percent of Wells state.26 Fargo's total assets, received a CRA performance rating of "outstanding" from its primary federal supervisor, the Office of the Comptroller of the Currency ("OCC"), at its most recent examination for CRA performance as of April 1994 ("Wells Fargo Examination").31 This represents Wells Fargo Bank's third consecutive outstanding CRA 24. A few commenters maintained that Wells Fargo should meet with community-based organizations and reach agreements to provide performance rating since January 1991. loans, grants or assistance in specific amounts, or to participate in First Interstate's lead bank, First Interstate Bank of Caliparticular programs or projects. While communications by depository fornia, Los Angeles, California ("FICAL"), which coninstitutions with community groups provide a valuable method of trols almost half of First Interstate's total assets, received a assessing and determining how an institution can best address the credit needs of the community, the Board believes that the CRA does CRA performance rating of "outstanding" from the Fednot require that a depository institution enter into agreements with any eral Reserve Bank of San Francisco ("Reserve Bank") at organization. Accordingly, in reviewing the proposal, the Board has its most recent examination for CRA performance as of focused on the programs and policies that Wells Fargo has in place to August 1995 ("FICAL Examination"). All other subsidserve the credit needs of its communities. See Fifth Third Bancorp, 80 iary banks of First Interstate received either "outstanding" Federal Reserve Bulletin 838 (1994). 25. Some commenters raised concerns that Wells Fargo's plans to or "satisfactory" ratings in their most recent CRA perforclose a number of First Interstate branches would result in a large mance examinations by the OCC, their primary federal number of vacant buildings in California, which would fall into a state supervisor.32 of disrepair or become targets for graffiti. One commenter also criticized Wells Fargo's maintenance of properties that it acquired in satisfaction of debts previously contracted in the southern sector of Dallas, Texas. In response to these concerns. Wells Fargo stated that it 27. Some commenters maintained that the number of commenters has and would continue to maintain the properties that it occupies or supporting this proposal should be discounted because many of them owns in a responsible manner, and would pursue opportunities for had received grants or other services from Wells Fargo. The descripeffective use of the branches to be closed. tion in this order of the number of commenters does not represent a 26. Several commenters believed that Wells Fargo's efforts to attract weighing by the Board of the comments. The Board has considered and hire minority and women vendors are inadequate and stated that the testimony and written submissions of all commenters supporting Wells Fargo should acquire more goods and services from businesses and opposing this proposal in light of the full record in this case and owned by women and minorities. Some of the commenters maintained the factors the Board is required to consider under the BHC Act. that Wells Fargo should implement minority vendor outreach pro- 28. The Equal Credit Opportunity Act (15 U.S.C. § 1691 et seq.) grams to inform minority vendors about opportunities and should ("ECOA") and the Fair Housing Act (42 U.S.C. § 3601 et seq.) are conduct seminars to introduce minority vendors to available contract- collectively referred to as "fair lending laws." ing opportunities. Wells Fargo indicated that it encourages the use of 29. 54 Federal Register 13.742 (1989). Minority/Women/Disabled-Owned Business Enterprise vendors 30. 54 Federal Register at 13,742. throughout the company. Wells Fargo also has indicated its intention 31. Wells Fargo Bank, N.A., Phoenix, Arizona, a de novo credit to develop, within the next year, purchasing goals for Minority/ card bank formed in 1995, and Wells Fargo HSBC Trade Bank, N.A., Women/Disabled-Owned Business Enterprise vendors, and has set a San Francisco, California, a de novo bank approved by order dated long-term goal of purchasing 40 percent of its goods and services September 18, 1995 (81 Federal Reserve Bulletin 1037 (1995)), have from businesses owned by women, minorities, and disabled indivi- not been examined for CRA performance. duals. 32. The ratings are set forth in Appendix E. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 451 C. Wells Fargo Bank's CRA Performance Record $1.2 billion, in 1994, and 28,660 new small business loans, totalling approximately $1.1 billion, through Septem- In general. The Wells Fargo Examination found that the ber 30, 1995.37 Of these loans, 6,487, totalling approxibank's community delineation was reasonable and did not mately $351 million, were made to borrowers in LMI arbitrarily exclude LMI neighborhoods. Examiners noted census tracts in 1994. During the first nine months of 1995, that Wells Fargo Bank's geographic distribution of credit the bank made 7,540 loans, totalling approximately $303 extensions, applications, and denials was reasonable, and million, to borrowers in LMI census tracts. that the distribution of consumer and business credit was Under its Community and Economic Development Loan consistent with demographic patterns in the bank's com- Program ("CEDL Program"), Wells Fargo Bank offers a munity. Wells Fargo has stated that the delineated commu- number of business loan products, including loans to small nity for the combined institution would consist of all areas businesses, businesses owned by minorities and women, currently included in the delineated community of each and small farms.38 Examiners concluded that the bank's institution. performance in lending to small businesses and small farms The Wells Fargo Examination found that the bank's was strong. ascertainment of community credit needs, which consisted Wells Fargo Bank is actively involved in a number of of community contacts, outreach programs, and an annual other small business lending programs.39 In particular, the internal bank-wide survey of credit needs, was extensive." Wells Fargo Examination noted that the bank strongly Examiners also concluded that the bank's marketing pro- supported state legislation to create the California Capital gram was designed to inform all members of the commu- Access Program ("CalCAP"), which allows small businity of its credit services, including specific advertising and nesses that do not qualify for traditional bank financing to alternate marketing methods to reach LMI individuals.34 raise capital through a loan funded jointly by the state and For example, the bank advertised mortgage products in the bank 40 Since April 1994, Wells Fargo Bank has made Spanish and English and printed product brochures in approximately 1,000 small business loans under CalCAP, English, Spanish, Korean, Chinese, and Vietnamese. The totalling $140 million. In addition, examiners noted that Wells Fargo Examination also found that the bank had the bank is the largest Small Business Administration engaged in several direct mail campaigns to market its ("SBA") 504 lender in California.41 Other Wells Fargo mortgage, consumer, and small business loan products.35 Bank special lending programs include an alliance with the These direct mail efforts included a joint campaign in National Association of Women Business Owners to pro- Spanish with a local Los Angeles company experienced in vide a new $1 billion loan fund for women business marketing to the Hispanic community in central Los Ange- owners nationwide and a Minority Business Loan Outreach les. Wells Fargo Bank also participated in numerous con- Program to facilitate loans to minority business communiferences, seminars, and community activities, several of ties in California. In addition, in 1995, Wells Fargo Bank which specifically focused on small businesses owned by women and minorities. Small business lending. Wells Fargo Bank's business 37. This includes Small Business Administration, California Capital strategy for lending activities focuses on commercial and Access Program, small farm loans, and loans made under other government-guaranteed lending programs. Early in 1995, the bank corporate lending. The strategy includes an emphasis on announced a goal of $2 billion for new loans to small businesses in small business lending.36 Wells Fargo Bank made 24,957 California by the end of 1995. Wells Fargo Bank indicated that new small business loans, totalling approximately preliminary results of 1995 loan approvals show that the bank exceeded its $2 billion small business lending goal by approximately $1.7 million. 33. Examiners noted that the bank's management maintained ongo- 38. Wells Fargo Bank defines small farms as farms with annual ing and productive contacts with a wide range of organizations, revenues of $1 million or less. including federal, state, and local public officials; community, minor- 39. Wells Fargo Bank originates small business loans through its ity, and consumer groups; affordable housing developers; small busi- branches, by telephone, through direct mail solicitations, and through ness owners; and nonprofit agencies. Information derived from these the use of specialized business financing officers, who are trained contacts was used in the development of new products as well as in specifically to help small business owners. In addition, Wells Fargo modifications to existing products. indicated that its National Business Banking Center, a new telephone 34. Several commenters criticized Wells Fargo Bank's outreach and banking center, allows small business customers to address all their marketing efforts to minority residents in certain geographic areas. banking needs 24 hours a day, seven days a week, with a telephone 35. One commenter contended that Wells Fargo Bank does not call. For example, small business customers can handle account market its small business loans in the South Bronx, New York. Wells maintenance, funds transfers, problem resolution, credit line increases, Fargo Bank indicated that the bank acquires small business prospect consultations, and overdraft notification, and can open new accounts lists from national third party suppliers and uses internal selection by using the National Business Banking Center. criteria that are not limited geographically by zip code or census tract. 40. CalCAP assists small businesses by using public money to While Wells Fargo Bank is located in California and does not operate attract private sector financing and by providing timely decisions on any offices in New York state, the bank reported that, in 1995, it sent the government's guarantee. 9,789 solicitations for revolving small business lines of credit to small 41. The SBA 504 loan program offers greater underwriting flexibilbusinesses in the South Bronx. ity and longer terms on real estate and major equipment. The bank's 36. Wells Fargo Bank defines small businesses as businesses with data show it made 295 SBA 504 loans, totalling $125.7 million, in annual revenues of $5 million or less. The Bank indicated that more 1994, and 324 SBA 504 loans, totalling $128.9, through Novemthan 80 percent of its 1995 small business loans in California were for ber 30, 1995. Wells Fargo Bank also offers several other types of SBA $50,000 or less. loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

452 Federal Reserve Bulletin • May 1996 committed to make a total of $50 million in senior secured California.42 Wells Fargo also offered mortgage products bank loans for projects funded by the Los Angeles Com- under the CEDL Program that feature no points, no applimunity Development Bank ("LACDB"), which is sched- cation fees, and downpayments as low as 5 percent. uled to open in 1996. The LACDB is a multi-bank, city and In April 1995, Wells Fargo Bank announced a joint federal effort to provide venture capital to small businesses venture with Norwest Mortgage, Inc. ("Norwest Mortto finance business expansion in the economically disad- gage"), called Towne Square, Inc. ("Towne Square"), vantaged areas of South Central Los Angeles and the whereby Norwest Mortgage will underwrite and fund and San Fernando Valley. Wells Fargo Bank will service residential mortgage loans Wells Fargo Bank also has provided investments, contri- made to Wells Fargo Bank customers.43 First Interstate has butions, and technical assistance for several organizations entered into a similar arrangement with PHH Mortgage Co. that provide micro-loans and/or start-up small business ("PHH"). financing. These organizations include the Kern Small A number of commenters argued that these joint ven- Business Loan Fund, Operation Hope, the Pasadena Enter- tures indicate that Wells Fargo Bank is no longer commitprise Center, the San Francisco Renaissance, Assign Inter- ted to serving the mortgage credit needs of its communities national, the Black Economic Development Task Force, and, consequently, that the bank's performance under the Inc., the City Heights Community Development Corpora- CRA is inadequate. The Board notes that the CRA contemtion, and the Community Financial Resource Center. In plates that depository institutions may choose to focus on particular, the bank recently announced a $500,000 invest- addressing particular credit needs of the community consisment in the Vermont Slauson Community Development tent with the bank's overall business strategy, and that the Corporation, which provides micro-lending for start-up CRA does not require banks to provide any specific type of small businesses in South Central Los Angeles. loan product or to participate in any specific type of loan Housing-related lending. Wells Fargo Bank participates program. As explained above, Wells Fargo Bank has foin various affordable housing activities, including lending cused its activities principally on commercial lending and to developers of city-sponsored, nonprofit and for-profit has established and implemented significant commercial housing development projects. For example, the Wells lending programs throughout its delineated community. Fargo Examination noted that Wells Fargo Bank had com- The joint venture with Norwest Mortgage is an attempt by mitted $106 million to the development of 1,507 affordable Wells Fargo Bank to assure that customers throughout its housing units in 20 development projects in 1994. Examin- delineated community continue to have access to mortgage ers also found that Wells Fargo Bank had provided a credit, while allowing Wells Fargo Bank to focus its atten- $2.5 million capital investment in the California Equity tion on the small business credit needs of it community.44 Fund, a nonprofit affiliate of the Local Initiatives Support Moreover, Wells Fargo Bank is a substantial source of Corporation ("LISC"), which provides equity for the de- credit for the construction of affordable housing. velopment of low-income housing projects throughout Cal- The Board also has reviewed HMDA data in considering ifornia; approximately $2 million in capital contributed to comments relating to the past mortgage origination activiorganizations that sponsor affordable housing or small ties of both institutions. Those data indicate that from 1993 business loan pools; and a $6.2 million line of credit to the to 1994 Wells Fargo Bank increased its percentage of loan San Diego Housing Commission for a loan pool to support originations to minorities from 25.7 percent to 40.5 percent rehabilitation in LMI communities. In addition, examiners noted that Wells Fargo Bank had committed $50 million to 42. Wells Fargo Bank estimated that approximately one-third of its a $300 million lending pool established by the Bay Area loans for construction financing of affordable housing have supported Residential Investment and Development Group to fund affordable housing in rural areas. The bank also indicated that it is the construction of up to 5,000 very low-, low-, and actively involved in financing rural self-help housing projects sponsored by the Farmers Home Mortgage Administration and the Califormoderate-income housing units. nia Housing Finance Agency. Since the Wells Fargo Examination, the bank continued 43. Wells Fargo Bank believes that the joint venture will result in to provide construction financing for affordable housing, many benefits to its customers, including mortgage loans with more including the extension of 63 affordable housing-related flexible underwriting criteria under an arrangement with the Federal National Mortgage Association, access to Norwest Mortgage's Fedloan commitments, totalling $270 million, through Septemeral Housing Administration ("FHA") and Veterans Administration ber 30, 1995. Wells Fargo Bank also stated that it commit- ("VA") loan programs, easier application and approval processes, and ted over $30 million to the California Community Rein- the introduction of a counseling program for new homebuyers. vestment Corporation's ("CCRC") revolving loan pool, 44. Several commenters have criticized the lending records of these which provides funds for permanent financing of afford- joint ventures in LMI census tracts and census tracts with predominately minority populations in various cities. Wells Fargo responds able housing projects. CCRC has funded over 10,000 units that Norwest Mortgage was selected for its joint venture after careful of housing in California since 1989, and Wells Fargo Bank consideration of Norwest Mortgage's lending activities involving LMI is the second largest investor in the CCRC. In addition, and minority borrowers. In particular, Wells Fargo notes that Norwest Wells Fargo Bank made a $1 million contribution to LISC Mortgage has been recognized for its mortgage activities by the U.S. in 1995 to finance nonprofit community development cor- Department of Housing and Urban Development and ranks as one of the top five FHA lenders in 1994. Wells Fargo also intends to review porations, to construct affordable housing, and to provide First Interstate's joint venture with PHH to determine if it should be services in low-income urban and rural communities in retained. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 453 and to LMI minority borrowers from 5 percent to 11.2 per- ety of community development activities, including loans cent.45 From 1993 to 1994, FICAL also increased its per- totalling approximately $400 million for community revicentage of loan originations to minority borrowers from talization and job retention initiatives since 1991, donation 21.3 percent to 27.8 percent, and to LMI minority borrow- of office space to community-based organizations, and ers from 4.5 percent to 6.7 percent.46 However, HMDA sponsorship of educational seminars and credit-related data also indicate that there are disparities in the denial trade shows. Examiners also noted that Wells Fargo Bank rates for both banks according to race. engaged in a number of programs to assist disaster relief The Board is concerned when an institution's record throughout California. For example, the bank provided indicates disparities in lending to minority applicants, and grants, low-interest loans, and unsecured loans to support it believes that all banks are obligated to ensure that their fire, rainstorm, and earthquake relief. In addition, Wells lending practices are based on criteria that assure not only Fargo Bank participated in the Rebuild Los Angeles Comsafe and sound lending, but also equal access to credit by munity Lending Corporation, which was formed in 1992 creditworthy applicants regardless of race. The Board rec- after the civil disturbances in Los Angeles. ognizes, however, that HMDA data alone provide an in- Wells Fargo Bank indicated that it also provides ecocomplete measure of an institution's lending in its commu- nomic development contributions to programs that increase nity. The Board also recognizes that HMDA data have the supply and availability of entry-level employment oplimitations that make the data an inadequate basis, absent portunities and that help provide employees entering the other information, for determining that an institution has workforce with current workplace skills. In addition, the engaged in illegal discrimination in making lending deci- bank stated that it provides both staff and financial contrisions. butions to organizations that offer credit education and Because of the limitations of HMDA data, the Board has counseling services, such as the Los Angeles Community carefully reviewed other information, particularly examina- Financial Resource Center and Consumer Credit Counseltion reports that provide an on-site evaluation of compli- ors.49 ance by these institutions with fair lending laws. The most Wells Fargo Bank also offers a variety of consumer recent examinations of Wells Fargo Bank and FICAL products designed to help meet the credit needs of its LMI found no practices that were intended to discourage credit communities, including the Installment Loan Low Income applications nor were there any findings of prohibited Finance Terms and Credit Card Low Income Finance discrimination or other illegal credit practices.47 Both insti- Terms products (collectively, "L.I.F.T. loans"), and Setutions were found to be in compliance with applicable fair cured Credit Cards. L.I.F.T. loans, which are extended only lending laws and regulations 48 Examiners noted moreover, to low-income borrowers, feature low minimum loan that Wells Fargo Bank's board and senior management had amounts starting at $500, and offer smaller monthly paywritten policies and procedures that effectively support ments through longer terms. Wells Fargo Bank indicated compliance with fair lending laws, and that the bank's that it set a $10 million goal for originating both auto and personnel at all levels receive regular training on compli- consumer L.I.F.T. loans in 1995, and noted that, through ance with fair lending laws and regulations. The Wells October 31, 1995, the bank made 9,116 consumer L.I.F.T. Fargo Examination also found that the bank actively solic- loans, totalling $31.6 million.50 ited applications for its credit products throughout its delin- Community reinvestment pledge. In connection with this eated community. proposal, Wells Fargo announced a 10-year, $45 billion Community development and other lending. The Wells community reinvestment pledge ("CRA Pledge").51 The Fargo Examination found that the bank engaged in a vari- major elements of the CRA Pledge include the following: (1) $7 billion in affordable housing and community development, including construction financing for af- 45. The bank also reported an increase in loan applications for the acquisition of properties located in LMI census tracts and census tracts with predominantly minority populations and from minority 49. In response to commenters who expressed concern that certain applicants for the review period, despite a decline in these applications types of loans, loan programs, or investments offered by First Interfor lenders in the aggregate. state would cease after consummation of the proposal, Wells Fargo 46. From 1993 to 1994, the percentage of applications from African stated that it will review all existing First Interstate lending commit- Americans increased from 2.9 percent to 4.4 percent, Hispanics from ments, programs, and investments, as well as its own CRA-related 8.5 percent to 12.6 percent, and Asians from 3.8 percent to 4.1 per- activities, and would continue to participate in those activities that cent. work best in assisting to meet community needs. 47. Several commenters made general allegations that Wells Fargo 50. Wells Fargo Bank indicated that, in 1994, it originated 1,387 violated fair lending laws. consumer L.I.F.T. loans, totalling approximately $4.1 million, in LMI 48. One commenter's allegations regarding First Interstate's compli- census tracts, and that during the first nine months of 1995, it origiance with fair lending laws were considered by the Board in the First nated 2,606 consumer L.I.F.T. loans, totalling approximately Interstate Bancorp, 80 Federal Reserve Bulletin 1016 (1994) (order $7.9 million. dated September 22, 1994) ("Sacramento Saving Order"), and for the 51. Several commenters characterized Wells Fargo's pledge as a reasons discussed in that order, which are incorporated herein, were public relations strategy designed to win public opinion and condetermined not to warrant denial of the application. The recent FICAL tended that the pledge is too vague and is largely unenforceable. The Examination noted two technical violations of the ECOA. Examiners, Board's consideration of Wells Fargo's record of CRA performance is however, determined that the violations were isolated and did not based on all the facts of record, and Wells Fargo's pledge for future adversely affect the bank's performance under the CRA. performance is only one aspect of this consideration. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

454 Federal Reserve Bulletin • May 1996 fordable housing development, and non-residential traditional branches, particularly small business customers community/economic development projects that offer and residents of LMI communities. In addition, some comneighborhood stabilization and job growth; menters expressed concern that Wells Fargo's focus on (2) $8.5 billion in commercial loans to middle market electronic banking facilities, including banking by personal businesses in support of economic development, includ- computer, would not serve the needs of the elderly, the ing loans to businesses which are at least 50-percent disabled, non-English speaking individuals, people without owned and controlled by minorities, women, or disabled access to or familiarity with electronic facilities, and LMI individuals, and loans to businesses located within estab- neighborhoods. lished Enterprise or Empowerment Zones; The Board has carefully considered these and the other (3) $25 billion in small business loans to businesses comments regarding branching in light of the facts of generally smaller than those served by the Commercial record. Wells Fargo has indicated that it has not finally Banking Group,52 and small farm loans; determined either the number or location of branches that (4) $2 billion in residential second mortgage loans to will be closed or consolidated as a result of this transaction. one-to-four unit owner-occupied properties located in Wells Fargo has explained that a decision regarding branch low-income census tracts, or to LMI borrowers regard- closures and consolidations cannot be made until it has had less of property location;53 an opportunity to obtain and evaluate data regarding cus- (5) $2 billion in consumer loans to low-income individu- tomer usage of various facilities. Wells Fargo has provided als who do not meet the standard underwriting require- a preliminary indication of branch locations that are, or are ments for a loan, but have established some credit and expected to be, under review. More than 55 percent of the employment history; and branches under review are within one-half mile of another (6) $500 million in equity investments in community traditional full-service branch operated by Wells Fargo, development projects. more than 75 percent are within one mile of another full-service branch, and approximately 93 percent are In addition to its CRA Pledge,Wells Fargo also has pledged within 1.5 miles of a traditional full service Wells Fargo that the organization would make at least $300 million in branch. Nearly all of the offices under review are also corporate contributions over 10 years, 75 percent of which within closer proximity to an in-store banking facility. would be devoted to community economic development Wells Fargo has indicated that it would follow its existprojects, social services for the disadvantaged, and educa- ing branch closure policy before closing any branches tional efforts primarily designed to benefit low-income, acquired in this transaction. Under this policy, the bank's disabled, and minority students.54 Community Development Department must analyze a Wells Fargo notes that its 1990 pledge of $1 billion in number of factors before determining that a branch may be CRA-related lending over seven years under its CEDL closed. These factors include identifying the impact of the Program was exceeded in two and a half years. In addition, branch closure on customers, evaluating alternative locain April 1993, Wells Fargo pledged $5 billion in CRA- tions and facilities to service customers, analyzing patterns related lending over ten years, and projects that the goal of customer usage, and analyzing a number of real estate will be exceeded in approximately three years.55 issues, including the attractiveness and usefulness of the Branches and branch closings. A number of comment- facility. An important element of the branch closure policy ers have raised concerns that the branch closures projected is an on-site visit to the branch and the affected neighborby Wells Fargo in connection with this proposal would hood by a member of the bank's Community Development have an adverse effect on access to banking services, Department to assess the potential effect of a branch cloparticularly in LMI communities. Many commenters also sure on the availability of banking services in the commuexpressed concern with Wells Fargo Bank's general strat- nity before a decision is made whether to close the branch. egy of closing traditional "brick and mortar" branches in A member of the bank's Community Development Departfavor of smaller in-store branches and banking centers. ment also responds to concerns expressed by community These commenters contended that the in-store banking representatives about proposed branch closings and assists centers would not serve the needs of customers as well as in determining actions that can be taken to mitigate those concerns. The Wells Fargo Examination found that the bank's 52. Wells Fargo's Commercial Banking Group generally markets record of opening and closing branches reflected responcredit to businesses with annual sales in excess of $5 million. siveness to the needs of its community, and that branch 53. Several commenters maintained that Wells Fargo's CRA Pledge closures did not adversely affect access to the bank's loan does not meet the needs of LMI rural areas, particularly in central California and outside California. products and services.56 Examiners noted that the bank's 54. Wells Fargo also intends to honor all the charitable contribution commitments made by FICAL to date. 55. Wells Fargo contends that the CRA Pledge increases the amount of community lending for both institutions. Wells Fargo notes that, in 56. One commenter claimed that Wells Fargo Bank closed a large 1993, FICAL announced a separate 10-year/$2 billion lending pledge number of branches since the bank's last CRA examination, and that which, when added to Wells Fargo's earlier pledge of $5 billion, the Board should review the impact of these closures on the convewould make the aggregate CRA-related lending goals for both institu- nience and needs of the community. Wells Fargo indicated that, in tions $7 billion. recent years, the bank has closed a number of branches, but has Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 455 formal branch closure policy requires management to con- ing centers accept loan applications and assist customers in sider the potential impact on the community before closing applying for loans, opening new accounts, answering quesa branch, and that the bank refrains from closing branches tions regarding banking services, and assisting customers in areas where there are no other Wells Fargo Bank in using the ATMs and telephone services. In-store branches nearby. branches and banking centers focus on providing banking In order to address the specific concerns raised by com- products and services to retail customers. menters regarding branch closures that may result from Wells Fargo currently addresses the credit needs of comthis proposal, Wells Fargo indicated that it will not close mercial customers, including small business customers, branches in LMI communities without offering alternative through a combination of business loan representatives facilities to meet the needs of the surrounding neighbor- who operate out of regional business loan centers and full hood.57 In addition, Wells Fargo stated that it is continuing service branches. Wells Fargo expects to continue to emto identify opportunities for new banking outlets in low- phasize its business loan representatives as the direct conincome communities, independent of this proposal,58 and tacts for business lending activities. In addition to direct would consider locations other than supermarkets in areas contacts with business loan representatives, Wells Fargo where no major supermarkets are available. Wells Fargo will accept small business loan applications at all of its also indicated that it would continue to be flexible in the in-store branches and banking centers. Wells Fargo also design of in-store banking outlets to accommodate commu- stated that it will continue to attempt to ensure that a nity needs, including small business needs.59 traditional branch is located within a reasonable distance to As noted above, a number of commenters also expressed areas with a high concentration of small retail businesses concern about the strategy followed by Wells Fargo of that need coin and cash services. In addition, Wells Fargo converting traditional branch bank locations to banking is planning to open Merchant Banking Centers that are centers in supermarkets. Wells Fargo has explained that its tailored to the specific needs of small businesses and will overall strategy is to increase the number, access, and offer a full line of business services, including coin and convenience of distribution points for banking services so teller services. that it can better serve its communities.60 A major component of this strategy is to offer products and services D. First Interstate's CRA Performance Record through in-store branches and in-store banking centers.61 The supermarket branches and banking centers operated by Record in California. The FICAL Examination found that Wells Fargo typically are open for longer hours than tradi- the bank's community delineation was reasonable and did tional branches and typically are staffed with bank person- not exclude any LMI areas that the bank would be exnel seven days a week as well as during evening hours on pected to serve. Examiners also concluded that FICAL weeknights. Personnel at supermarket branches and bank- effectively markets its products and services in a manner that ensures that all segments of its local communities are aware of those products, including advertisements in Enestablished a greater number of banking outlets than it has closed, in glish, Mandarin, and Spanish in various local print mean effort to expand its distribution system and enhance customer dia.62 FICAL also conducts various direct mailing camconvenience and accessibility. paigns with prospect lists developed by outside agencies 57. Wells Fargo indicated that, in addition to major supermarket and from its existing customer base. chains, it has entered into arrangements with smaller grocery store operations. In addition, where there is no grocery store branch alterna- FICAL engages in lending activities through a number tive, Wells Fargo maintained that it would not close a traditional of programs designed to help meet the credit needs of its branch unless there is a convenient traditional branch nearby. local communities, including LMI neighborhoods.63 58. For example, Wells Fargo indicated that it was in the process of Examiners noted that FICAL had exceeded its 1993 opening three new banking outlets in South Central Los Angeles. 59. Wells Fargo indicated that it is committed to using technology to 10-year/$2 billion lending commitment to make loans to improve its level of service and variety of products, and to meet the needs of customers for alternative delivery systems. Wells Fargo indicated that, because residents in LMI communities may not yet be able to use new technology to obtain banking services, it would rely 62. One commenter alleged that FICAL does not effectively market on other delivery systems in those communities, including an in- its products and services in LMI areas and communities with predomcreased number of staffed banking outlets. inantly minority residents and that the bank lacks an effective mecha- 60. For example, Wells Fargo indicated that, in 1995, it increased its nism to measure the success of its marketing efforts. number of banking outlets by 54 percent, and now has a total of 974 63. Several commenters contended that First Interstate has not distribution points in California as compared to 633 in 1994. Wells complied with the commitments made in the Sacramento Savings Fargo estimated that, by year-end 1996, the bank will have approxi- Order. Commenters also raised concerns about whether Wells Fargo mately 1,318 banking outlets in California. would continue to comply with commitments made in the Sacramento 61. An in-store branch is staffed with 4-6 full time banking officers, Savings case and in connection with First Interstate's acquisition of and generally can conduct the full range of retail banking services San Diego Financial Corporation, San Diego, California, First Interavailable at a traditional branch. An in-store banking center is state Bancorp, 80 Federal Reserve Bulletin 351 (1994). Based on all equipped with an ATM, a 24-hour telephone line to Wells Fargo the facts of record, including information from Wells Fargo and Bank's customer service center, and a sales kiosk, is staffed by a bank supervisory reports of the Federal Reserve Bank of San Francisco officer, and can conduct the full range of retail banking services ("Reserve Bank"), the Board concludes that First Interstate has comavailable at a traditional branch, other than check cashing and mer- plied substantially with the commitments made in the Sacramento chant coin and currency services. Savings Order. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

456 Federal Reserve Bulletin • May 1996 assist in programs for the construction and acquisition of Unit.71 FICAL also offers First Interstate's Responsive low-income single and multi-family housing, state and Specialized Terms ("F.I.R.S.T.") consumer loan program federally guaranteed loan programs, small business devel- to meet the special needs of low-income borrowers who opment and expansion, and nonprofit community-based may not meet standard underwriting criteria.72 organizations.64 The bank also committed $50 million to Record in other states. The Board also has considered fund a portfolio loan program, the Mortgage Assistance First Interstate's CRA performance record in states outside Program ("MAP"), with flexible underwriting criteria for California, and in particular, Nevada, Oregon, and Washnonconforming mortgage loans.65 In addition, examiners ington, in light of comments received.73 As noted above, noted that FICAL offers several other specialized mortgage all of First Interstate's subsidiary banks in these states programs to help meet the needs of LMI individuals, received either "outstanding" or "satisfactory" ratings including: from the OCC in their most recent examinations for CRA (1) The Down Payment Assistance Program, which of- performance (collectively, "OCC Examinations").74 fers below-market interest rates, The OCC Examinations found that the community delin- (2) The Home Buyers Assistance Program, which allows eations for all of First Interstate's subsidiary banks outside downpayments to consist of a gift from a family member of California were generally reasonable and did not exor a grant, and clude any LMI neighborhoods. None of the banks was (3) The Community Advancement Program, which is found to have engaged in illegal credit practices or pracavailable to residences in LMI or predominantly minor- tices that discouraged applications for credit. Examiners ity neighborhoods. also determined that the banks' ascertainment efforts were effective, and that marketing activities were generally ade- These mortgage products also finance up to 95 percent of quate and, in some cases, commendable. The banks enthe appraisal value of the home.66 In addition, FICAL gaged in various lending activities and community develactively participates in FHA, VA, and Farmers Home Ad- opment programs to help meet the credit needs of its ministration loan programs.67 communities, including LMI neighborhoods. Examiners The FICAL Examination also found an increase in the indicated that all these banks offered some type of program bank's level of small business lending.68 In addition, exam- to support affordable housing and small business lending in iners noted favorably FICAL's small business lending ac- their communities, and that all banks participated to some tivities through its Government Guaranteed Lending Unit extent in federal and local government-sponsored loan and its support of the statewide California Economic De- programs. The OCC Examinations, moreover, found that velopment Lending Initiative ("CEDLI"), a small business many of First Interstate's subsidiary banks were actively loan consortium.69 FICAL participates in community de- involved in community development lending programs in velopment lending activities through two specialized lend- conjunction with local nonprofit organizations or commuing units in its Community Lending Department, the Eco- nity development corporations. nomic Development Unit70 and the Affordable Housing The FI Nevada Examination determined that the bank had been active in its efforts to address a significant portion of the identified credit needs in its delineated community, and found that the bank's loans for residential mortgages, 64. FICAL's 1994 lending goal was $214 million ($110 million in mortgage lending, $17 million in affordable housing, $70 million in housing rehabilitation, home improvement, small business, small business lending, and $17 million in government guaranteed and small farms were available throughout the community. lending). FICAL originated more than $371 million in loans in 1994. 65. In 1994, FICAL funded $16.9 million under the MAP program, and the bank funded an additional $3.1 million under the program, as commitments, totalling $8.6 million, since the bank's last CRA perforof August 1995. mance examination in April 1994. 66. One commenter alleged that denial rates under this program 71. The Affordable Housing unit provides financing to developers of were too high. affordable housing for LMI households, including the construction of 67. Examiners noted that FICAL funded 298 FHA and VA loans, new properties and the rehabilitation of existing properties. The totalling approximately $24 million in 1994 (includes applications FICAL Examination noted that this unit originated 27 loans, totalling received in 1993 and funded in 1994). over $132 million, since the bank's last CRA performance examina- 68. One commenter criticized FICAL's small business lending as tion in April 1994. insufficient for an institution of its size. The FICAL Examination 72. F.I.R.S.T. loans have longer terms and provide for lower noted that, in the first two quarters of 1995, the bank extended 11,738 monthly payments than standard personal loans and can be unsecured small business loans, totalling $265 million, compared to 10,095 small personal loans. business loans, totalling approximately $65 million, in the first two 73. Wells Fargo also indicated that it intends to meet with quarters of 1994. FICAL defines small business loans as loans in community-based organizations outside California to discuss CRAprincipal amounts of $250,000 or less. related issues in areas outside of California that are served by First 69. Wells Fargo has agreed to honor FICAL's commitments to Interstate. CEDLI. 74. The dates of the CRA examinations for subsidiaries operating in 70. The Economic Development Unit extends credit to organiza- Nevada, Oregon and Washington are: First Interstate Bank of Nevada, tions providing basic social services, promoting economic develop- Las Vegas, Nevada, in September 1994 ("FI Nevada Examination"); ment and creating jobs in low-income areas, such as nonprofit groups First Interstate Bank of Oregon, Portland, Oregon, in November 1994 and organizations owned by minorities or women and new and ex- ("FI Oregon Examination"); and First Interstate Bank of Washington, panding businesses. The FICAL Examination noted that this unit had Seattle, Washington in November 1994 ("FI Washington Examinaoriginated 41 loans, totalling $14.5 million, and has made seven loan tion"). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 457 In addition, the FI Nevada Examination noted that the bank ment assistance, such as career counseling and job search offered a number of credit products to meet the credit needs support, will be offered to employees. Wells Fargo also has of its delineated community, including: announced plans to increase its lending to small busi- (1) Loans under the State of Nevada Good Neighbors nesses, particularly small businesses located in California, Program, which provides below market rate mortgages which Wells Fargo believes will help create additional job for LMI applicants, opportunities in its community. (2) The City of Henderson Home Improvement Loan, which focuses on owner-occupied houses for low- Conclusion Regarding Convenience and Needs income borrowers in Henderson, and Considerations (3) Small business loans. The Board recognizes that this proposal represents a major The FI Oregon Examination found that the bank had a transaction that will affect many communities, particularly strong level of loan originations, with a majority of loans in in California.75 Consideration of the effect of this proposal its delineated community, and strong lending performance on the convenience and needs of communities is an imporin LMI areas, small business loans, and consumer loans. tant component of the Board's review of this proposal. As Examiners also found that the bank provided products that explained above, the information in this case demonstrates were responsive to the needs of its communities, including that Wells Fargo has a strong record of helping to meet the consumer loans in amounts as small as $300, a streamlined convenience and needs of the communities that it serves. small business loan program for loans up to $250,000, the This record of performance has been demonstrated over use of alternative credit history for a variety of consumer time and has been strongly rated through the course of loan products, and no-minimum-amount mortgage loans. several examinations. Numerous commenters, including The FI Washington Examination also found that the many community representatives and organizations as well bank had a high level of loan originations in its delineated as individual customers, have provided testimonials regardcommunity and a commitment to lend to individuals in ing the efforts made by Wells Fargo. LMI areas and small businesses. In addition, the FI Wash- First Interstate also has demonstrated a strong commitington Examination noted that the bank's overall level of ment to its communities. Wells Fargo has indicated that it lending showed strong growth in all major loan categories. will review the CRA-related programs initiated by First For example, from June 30, 1993, through June 30, 1994, Interstate, and will continue to participate in those activithe bank generated more than $41.2 million in small busi- ties that work best in assisting to meet community needs. ness loans of $100,000 or less. Differences in the business strategies between the two organizations will likely result, however, in changes in the types of and manner in which banking products and ser- E. Effect on Employment vices will be provided to customers of First Interstate and the communities that it serves. A significant number of The Board received a number of comments expressing commenters have expressed concern about these potential concern that the proposal would result in substantial job losses among First Interstate's employees and would adversely affect the California economy. The BHC Act spe- 75. Several commenters maintained that the proposed merger would cifically enumerates the factors the Board may consider in have a significant impact in areas outside California, and that the reviewing a proposal under that Act. These factors relate to Board should hold public meetings or hearings in these areas, such as the effect of the proposal on competition, the financial and Dallas and Houston, Texas, and Portland, Oregon. Section 3(b) of the managerial resources of the institutions involved, certain BHC Act does not require the Board to hold a public hearing on an supervisory factors, and the convenience and needs of the application unless the appropriate supervisory authority for the bank to be acquired makes a timely written recommendation of denial of communities served by the institutions involved. The effect the application. In this case, neither the OCC nor any appropriate state of the proposed acquisition on employment in a commu- supervisory authority has recommended denial. nity is not among the factors included in the BHC Act. The Under the Board's rules, the Board may, in its discretion, hold a convenience and needs factor has been consistently inter- public hearing or meeting on an application to clarify factual issues related to the application and to provide an opportunity for testimony, preted by the federal banking agencies, the courts, and if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has Congress to relate to the effect of a proposal on the avail- carefully considered these requests in light of all the facts of record. ability and quality of banking services in the community. As explained above, the Board held seven public meetings on this The Board notes in this case that Wells Fargo has indi- proposal at which 311 commenters provided testimony. In the Board's view, commenters have had ample opportunity to submit their views cated that it will provide support to displaced employees and have, in fact, submitted substantial materials that have been and has taken several steps to minimize any adverse effects considered by the Board in acting on the application and notices. of this proposal on employment or the economy. For exam- Commenters' requests fail to demonstrate why their written submisple, Wells Fargo has initiated a hiring freeze in October sions and oral testimony do not adequately present their allegations. 1995, and has established special programs, such as reloca- Based on all the facts of record, the Board has determined that additional public hearings or meetings are not necessary to clarify the tion assistance, training, and incentives, to reassign emfactual record or otherwise warranted in this case, and, accordingly, ployees into growth areas of the company. Wells Fargo the requests for additional public hearings or meetings on the applicaalso has indicated that severance payments and outplace- tion are denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

458 Federal Reserve Bulletin • May 1996 changes and the effects they may have on the availability consolidation and closing of First Interstate branches and and quality of banking services in their communities. the effect of the branching strategy announced by Wells However, neither the CRA nor the BHC Act require that Fargo on the availability of banking services and convean institution help to meet the credit and other banking nience and needs of the community. needs of a community in specific ways or provide specific types of products or services. Both Acts, and the regula- Other Considerations tions implementing those Acts, provide a banking institution with freedom to develop its own business strategy and Wells Fargo also has filed notice under section 4(c)(8) of product offering. the BHC Act to acquire First Interstate Resource Finance As noted above, the record in this case shows that Wells Associates, Newport Beach, California, and thereby en- Fargo is making and has made very strong efforts to help gage in making, acquiring, and servicing loans, and First meet the credit needs of its communities and has indicated Interstate's voting interest in Star System, Inc., a California its commitment generally to continue those efforts. In nonprofit mutual benefit corporation, and thereby engage connection with this proposal, Welis Fargo also has an- in providing data transmission services through an elecnounced plans to strengthen its efforts further. tronic funds transfer network. The Board previously has The Board has carefully weighed the concerns expressed determined by regulation that the proposed activities are by commenters, including concerns about branch closures, closely related to banking for purposes of section 4(c)(8) of the continuation of First Interstate programs, the availabil- the BHC Act.77 Wells Fargo has committed that it will ity of various banking products and services, and the effect conduct these activities in accordance with the Board's of this proposal on various communities, and the informa- regulations and orders approving these activities for bank tion obtained through the examination process as well as holding companies.78 information supplied by Wells Fargo and other comment- In order to approve these notices, the Board also must ers regarding the record of Wells Fargo in meeting the determine that the acquisition of First Interstate's nonbankcredit and banking needs of its communities, Wells Fargo's ing subsidiaries and performance of the proposed activities record of providing banking services to customers through by Wells Fargo "can reasonably be expected to produce traditional and nontraditional means, and Wells Fargo's benefits to the public . . . that outweigh possible adverse plans for strengthening the products and services that it effects, such as undue concentration of resources, demakes available to the community.76 The Board believes, creased or unfair competition, conflicts of interests, or after considering all of these facts of record, including unsound banking practices."79 Wells Fargo maintains that consideration of the assessments of performance of rele- consummation of the proposal would expand the products vant institutions under the CRA and the information pro- and services that it offers its customers. The record in this vided by commenters, that the convenience and needs case indicates that there are numerous providers of these factors in this case are consistent with approval. The Board lending and data processing services, and there is no eviwill continue to monitor and review the performance ef- dence in the record to indicate that consummation of this forts made by Wells Fargo in future applications. In this proposal is likely to result in any significantly adverse regard, the Board will monitor Wells Fargo's implementa- effects, such as undue concentration of resources, detion of its branch closing policy in connection with the creased or unfair competition, conflicts of interests, or unsound banking practices that would outweigh the public benefits of this proposal. Accordingly, the Board has deter- 76. Some commenters believed that, because the First Bank pro- mined that the balance of public interest factors it must posal was withdrawn, the comment period should have been reoper.ed consider under section 4(c)(8) of the BHC Act is favorable to allow the public to comment solely on the Wells Fargo proposal, and consistent with approval. and that Wells Fargo should be required to file a new application to acquire First Interstate. The Board is required under applicable law Wells Fargo also has applied under section 25 of the and its processing procedures to act on applications submitted under Federal Reserve Act (12 U.S.C. § 601) and secthe BHC Act within specified time periods. The Board notes, more- tion 211.3(a)(1) of the Board's Regulation K (12 C.F.R. over, that the commenters and Wells Fargo have had ample opportu- 211.3(a)(1)), to establish branches in the following locanity, including seven public meetings, to submit information for the tions, which are First Interstate branches that Wells Fargo record and have, in fact, provided substantial submissions. As discussed above, the Board has carefully reviewed the record in this case, would acquire as a result of the merger: London, United including information provided by commenters and Wells Fargo about Kingdom; Seoul, South Korea; and Taipei, Taiwan. The its CRA performance since the most recent performance examinations Board has considered the factors it is required to consider of its subsidiary banks and information relating to the possible effects when reviewing applications for establishing branches purof this merger on the convenience and needs of the communities to be served. Moreover, the Board considered all comments on the perfor- suant to section 25 of the Federal Reserve Act and, based mance record of Wells Fargo, including comments made at the public meetings, in connection with the First Bank application that was withdrawn. Although Wells Fargo provided additional information on this proposal, no new application was required because of the with- 77. See 12 C.F.R. 225.25 (b)(1) and (7). drawal of the First Bank application. Based on all the facts of record, 78. Wells Fargo also has committed that it will not reactivate any the Board concludes that the record is sufficient to act on this proposal currently inactive subsidiaries of First Interstate without first obtainat this time, and that delay or denial of this proposal on the grounds of ing the Board's approval. informational insufficisncy is not warranted. 79. 12 U.S.C. § 1843(c)(8). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 459 on all the facts of record and for the reasons discussed in The Board's determination as to the nonbanking activithis order, finds those factors to be consistent with ap- ties to be conducted by Wells Fargo is subject to all the proval. conditions in the Board's Regulation Y, including those in Wells Fargo also has provided notice under sec- sections 225.7 and 225.23(g) (12 C.F.R. 225.7 and tions 211.5(b)(2)(i) and 211.5(c)(2) of the Board's Regula- 225.23(g)), and to the Board's authority to require such tion K (12 C.F.R. 211.5(b)(2)(i) and 211.5(c)(2)), of its modification or termination of the activities of a holding proposed acquisition of 100 percent of the First Interstate company or any of its subsidiaries as the Board finds Bank of Canada, Toronto, Canada. In addition, Wells Fargo necessary to assure compliance with, or to prevent evasion has provided notice under section 4(c)(13) of the BHC Act of, the provisions and purposes of the BHC Act and the (12 U.S.C. § 1843(c)(13) and section 211.5(c)(2) of Regu- Board's regulations and orders issued thereunder. The comlation K (12 C.F.R. 211.5(c)(2)) of its intention to acquire mitments and conditions relied on by the Board in reaching 100 percent of certain foreign subsidiaries of First Inter- this decision are deemed to be conditions imposed in state.80 writing by the Board in connection with its findings and decision, and as such may be enforced in proceedings Conclusion under applicable law. The acquisition of First Interstate's subsidiary banks Based on the foregoing, including the commitments made shall not be consummated before the fifteenth calendar day to the Board by Wells Fargo in connection with the applica- following the effective date of this order, and the banking tions and notices, and in light of all the facts of record, the and nonbanking transactions shall not be consummated Board has determined that the applications and notices later than three months following the effective date of this should be, and hereby are, approved.81 The Board's ap- order, unless such period is extended for good cause by the proval is specifically conditioned on compliance by Wells Board or by the Reserve Bank, acting pursuant to delegated Fargo with all commitments made in connection with the authority. applications and notices as well as the conditions discussed By order of the Board of Governors, effective March 6, in this order. 1996. Voting for this action: Chairman Pro Tempore Greenspan, and Governors Lindsey, Phillips, and Yellen. Absent and not voting: 80. Under section 211.5(d)(6) of Regulation K (12 C.F.R. Governor Kelley. 211.5(d)(6)), these subsidiaries, listed in Appendix B, hold and own property or problem assets associated with First Interstate's prior JENNIFER J. JOHNSON operations in London. Wells Fargo has committed that it will not Deputy Secretary of the Board reactivate any inactive foreign subsidiary of First Interstate or foreign branch of FICAL without prior approval from the Board. 81. Several commenters also alleged that Wells Fargo Bank does Appendix A not have a sufficient number of African Americans and other minorities in senior management and that it discriminates against minorities First Interstate subsidiary banks: in its employment practices. Other commenters alleged that the proposal would result in a loss of jobs that currently are held by minorities and women. One commenter asserted that First Interstate (1) First Interstate Bank of Alaska, National Association, engaged in employment discrimination. Wells Fargo indicated that it Anchorage, Alaska formed a Cultural Diversity Committee in 1990, staffed by senior (2) First Interstate Bank of Arizona, National Association, managers who report directly to the Chairman, to recommend ways to attract, retain, and promote employees and managers who reflect the Phoenix, Arizona communities that it serves. Wells Fargo stated that it annually reviews (3) First Interstate Bank of California, Los Angeles, California its affirmative action plans, and noted that, as of the third quarter 1995, (4) First Interstate Bank of Denver, National Association, 30 percent of Wells Fargo's officials and managers were minorities and 58 percent were women. Moreover, Wells Fargo indicated that 35 Denver, Colorado percent of its current board of directors are minorities or women. (5) First Interstate Bank of Englewood, National Association, The Board notes that, because Wells Fargo Bank employs more than Englewood, Colorado 50 people, serves as a depository of government funds, and acts as an (6) First Interstate Bank of Idaho, National Association, Boise, agent in selling or redeeming U.S. savings bonds and notes, it is required by regulations of the Department of Labor to: Idaho (1) file annual reports with the Equal Employment Opportunity (7) First Interstate Bank of Montana, National Association, Commission ("EEOC"); and Kalispell, Montana (2) have in place a written affirmative action compliance program which states efforts and plans to achieve equal opportunity in the (8) First Interstate Bank of Nevada, National Association, employment, hiring, promotion, and separation of personnel. Las Vegas, Nevada See 41 C.F.R. 60-1.7(a), 60-1.40. The Board also notes that, (9) First Interstate Bank of New Mexico, National Associapursuant to regulations of the Department of Labor, Wells Fargo, as tion, Santa Fe, New Mexico the parent company, also is required to file an annual report with the EEOC covering all employees in its entire corporate structure. The (10) First Interstate Bank of Oregon, National Association, EEOC has jurisdiction for determining whether companies are in Portland, Oregon compliance with the equal employment statutes. The Board is not aware of any finding or adjudication of illegal employment practices (11) First Interstate Bank of Texas, National Association, to date by Wells Fargo or First Interstate. Houston, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

460 Federal Reserve Bulletin • May 1996 (12) First Interstate Bank of Utah, National Association, Fresno Fresno RMA, plus Kinsburg, Selma, Salt Lake City, Utah Kerman, and Caruthers (13) First Interstate Bank of Washington, National Associa- Grass Valley Western Nevada County tion, Seattle, Washington Hemet Hemet RMA Kings County Kings County (14) First Interstate Bank of Wyoming, National Association, Lancaster Lancaster RMA, plus Rosamond Casper, Wyoming Los Angeles Los Angeles RMA, plus Rancho (15) First Interstate Bank, Ltd., Los Angeles, California Santa Margarita (16) First Interstate Central Bank, Calabasas, California Los Banos Southwestern Merced County outside the modified Merced RMA Appendix B Madera Western Madera County Merced Merced RMA, plus Livingston Wells Fargo has filed notices under section 4(c)(8) of the Modesto Modesto RMA, plus Escalon, Hugh- BHC Act to acquire the nonbanking subsidiaries of First son, Ripon, and Oakdale Interstate including: Monterey-Seaside Monterey-Seaside RMA Napa Napa RMA, plus St. Helena (1) Star Systems, Inc., California, and thereby engage in data Oceanside Oceanside RMA, plus Bonsall and processing activities, pursuant to 12 C.F.R. 225.25(b)(7); Fallbrook and Oroville Southern Butte County outside the (2) First Interstate Resource Finance Associates, Newport modified Chico RMA Beach, California, and thereby engage in making, acquir- Oxnard-Ventura Oxnard-Ventura RMA, plus Fillmore, Santa Paula, Ojai, and Riru ing, and servicing loans, pursuant to 12 C.F.R. 225.25(b)(1). Palm Springs Palm Springs RMA, plus Yucca Valley, Joshua Tree, Twentynine Palms, Wells Fargo has provided notice under section 4(c)(13) Indio, Coachella, and La Quinta of the BHC Act to acquire the foreign subsidiaries of Placerville Western El Dorado County outside First Interstate including: the Sacramento RMA Porterville Porterville RMA (1) FIL Holding Co., London, England, and thereby hold Redding Redding RMA property or other problem assets, pursuant to 12 C.F.R. Riverside- Riverside-San Bernardino RMA, 211.5(d)(6); San Bernardino plus Lake Arrowhead, Blue Jay, Per- (2) First Interstate Holding (UK) Ltd., London, England, and ris, Nuevo, Beaumont, and Banning thereby hold property or other problem assets, pursuant to Sacramento Sacramento RMA, plus Lincoln 12 C.F.R. 211.5(d)(6); and Salinas Salinas RMA, plus Soledad and (3) First Interstate Services Co. (UK) Ltd., London, England, Gonzales and thereby hold property or other problem assets, pursuant San Diego San Diego RMA to 12 C.F.R. 211.5(d)(6). San Francisco- San Francisco-Oakland-San Jose Oakland-San Jose RMA Appendix C San Luis Obispo San Luis Obispo County excluding the Santa Maria RMA Description of California Banking Markets in Which Santa Barbara Santa Barbara RMA Wells Fargo and First Interstate Compete Santa Cruz Santa Cruz RMA Santa Maria Santa Maria RMA, plus Guadalupe Auburn Western Placer County outside of the Santa Rosa Santa Rosa RMA, plus Healdsburg modified Sacramento Ranally Metro- Sonoma Southern Sonoma County outside of politan Area ("RMA") the modified Santa Rosa RMA Bakersfield Bakersfield RMA, plus Shafter, Stockton Stockton RMA, plus Lodi, Linden, Arvin, and Buttonwillow Lockeford, Manteca, Gait, Walnut Chico Chico RMA, plus Magalia, Surham, Grove, and Woodbridge and Paradise Sun City Western Riverside County outside Davis Davis RMA, plus Dixon the Riverside RMA and the Hemet Delano Northern Kern County north of the RMA Bakersfield RMA Tehama County Tehama County El Centro Central Imperial County outside of Tracy Western San Joaquin County outside the Calexico RMA the modified Stockton RMA Eureka-Arcata Eureka-Arcata RMA, plus Scotia and Turlock Southwestern Stanislaus County out- Ferndale side the modified Modesto RMA, Fairfield-Vacaville Fairfield-Vacaville RMA, plus Win- plus part of northwestern Merced ters County Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 461 Victorville Southwestern San Bernardino Woodland Yolo County outside the modified County north of the Riverside RMA Davis, Sacramento, and Fairfield- Visalia Visalia RMA, plus Tulare, Exeter, Vacaville RMAs Woodlake, Three Rivers, and Lind- Yuba City- Yuba City-Marysville RMA, plus say Marysville Live Oak Appendix D Summary of Market Shares for California Banking Markets Pre-Divestiture AAmmoouunntt HHHHII PPrroo ffoorrmmaa PPrroo ffoorrmmaa MMaarrkkeett HHI HHI ((MM dd ii ii ll vv ll ee iioo ss nn ttee ss dd ooff ddiivvee pp ss oo tt ss iitt tt uu -- rree11 CChhaannggee mm sshh aa aa rr rr kk ee ee 11 tt ccoomm rr pp aa ee nn tt kk iitt // oo rrss11 before after Change ddoollllaarrss)) Auburn 1337 1557 220 44.3 1337 0 14.6 1/9 Bakersfield 1579 2214 634 254.0 1632 53 23.1 1/12 Chico 1377 1797 421 74.8 1488 111 22.3 2/11 Davis 1732 2036 304 52.9 1732 0 15.2 3/7 Dalano 2547 3529 982 47.5 2547 0 20.5 4/3 El Centra 2032 2428 396 35.8 2124 92 21.5 2/6 Eureka-Arcata 1971 2024 54 0 2024 54 17.3 3/6 Fairfield-Vacaville 1468 1726 258 0 1726 258 23.7 2/10 Fresno 1740 1817 78 0 1817 78 14.3 2/17 Grass Valley 1458 1679 221 48.0 1458 0 13.8 2/12 Hemet 960 1031 70 13.8 1003 42 11.3 3/13 Kings County 1493 1735 243 22.4 1493 0 23.3 1/9 Lancaster 1478 1815 337 53.5 1564 86 20.1 2/8 Los Angeles 879 1014 135 0 1014 135 16.5 2/186 Los Banos 2351 2839 488 18.6 2351 0 27.5 2/5 Madera 1956 2404 448 28.9 1956 0 25.5 2/6 Merced 1672 1891 219 15.8 1788 116 19.7 3/7 Modesto 964 1146 182 0 1146 182 22.2 1/22 Monterey-Seaside 1282 1683 401 73.9 1394 112 24.2 1/13 Napa 1239 1326 87 0 1326 87 17.8 3/11 Oceanside 1291 1559 268 46.1 1412 121 20.9 2/14 Oroville 1505 1771 266 39.1 1505 0 12.5 3/7 Oxnard-Ventura 1348 1672 324 160.4 1445 97 20.7 2/22 Palm Springs 1012 1197 184 112.4 1056 44 14.4 2/21 Placerville 1318 1652 334 49.5 1318 0 14.9 3/9 Porterville 2236 2408 172 0 2408 172 18.7 2/5 Redding 1334 1518 184 0 1518 184 19.2 2/9 Riverside-San Bernardino 1444 1519 76 0 1519 76 12.6 2/37 Sacramento 1156 1639 483 525.6 1345 189 26.1 1/38 Salinas 1500 1620 120 0 1620 120 21.6 2/10 San Diego 1153 1488 336 582.1 1333 181 23.6 1/49 San Francisco-Oakland- San Jose 1403 1514 111 16.1 1513 110 21.7 2/107 San Luis Obispo 1427 1464 37 0 1464 37 10.1 4/12 Santa Barbara 1515 1573 58 0 1573 58 12.2 3/15 Santa Cruz 1247 1350 76 0 1350 76 15.5 3/12 Santa Maria 1407 1437 30 0 1437 30 8.9 4/11 Santa Rosa 944 1010 66 0 1010 66 13.3 3/16 Sonoma 1511 1711 200 15.5 1511 0 24.9 1/9 Stockton 974 1110 136 0 1110 136 18.0 1/21 Sun City 1203 1452 249 48.7 1270 67 18.1 2/14 Tehama County 1750 1941 191 0 1941 191 21.0 2/5 Tracy 1584 1972 388 21.4 1584 0 25.4 1/7 Turlock 1212 1567 355 42.7 1300 88 21.1 1/11 Victorville 1068 1133 65 0 1133 65 12.1 3/15 Visalia 1478 1588 110 0 1588 110 16.3 2/13 Woodland 1588 1938 350 35.3 1588 0 22.7 2/8 Yuba City-Marysville 1351 1840 488 61.4 1469 118 23.5 1/11 NOTE. APPROXIMATE TOTAL DIVESTITURE: $2.5 billion. 1. All post-divestiture HHI calculations and pro forma information assume that branches would be divested to out-of-market firms. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

462 Federal Reserve Bulletin • May 1996 Appendix E First Interstate CRA Performance Examination Ratings CRA rating First Interstate subsidiary banks Date from the OCC First Interstate Bank of Alaska, N.A., Anchorage, Alaska satisfactory 11/1/94 First Interstate Bank of Arizona, N.A., Phoenix, Arizona outstanding 8/2/94 First Interstate Bank of Denver, N.A., Denver, Colorado satisfactory 9/8/94 First Interstate Bank of Englewood, N.A., Englewood, Colorado outstanding 12/9/93 First Interstate Bank of Idaho, N.A., Boise, Idaho satisfactory 8/9/93 First Interstate Bank of Montana, N.A., Kalispell, Montana satisfactory 11/1/94 First Interstate Bank of Nevada, N.A., Las Vegas, Nevada satisfactory 9/13/94 First Interstate Bank of New Mexico, N.A., Santa Fe, New Mexico satisfactory 11/19/93 First Interstate Bank of Oregon, N.A., Portland, Oregon outstanding 11/1/94 First Interstate Bank of Texas, N.A., Houston, Texas satisfactory 7/30/93 First Interstate Bank of Utah, N.A., Salt Lake City, Utah satisfactory 11/18/93 First Interstate Bank of Washington, N.A., Seattle, Washington satisfactory 11/1/94 First Interstate Bank of Wyoming, N.A., Casper, Wyoming satisfactory 10/15/93 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 First Commerce Corporation, Louisiana Independent Bankshares, Inc., March 19, 1996 New Orleans, Louisiana Baton Rouge, Louisiana First National Banker's Bank, Baton Rouge, Louisiana 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 Caldwell Holding Company, Citizens Progressive Bank, Dallas March 11, 1996 Columbia, Louisiana Columbia, Louisiana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 463 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Dartmouth Capital Group, Inc., Liberty National Bank, San Francisco February 15, 1996 Encinitas, California Huntington Beach, California Dartmouth Capital Group, L.P., Encinitas, California SDN Bancorp, Inc., Encinitas, California Executive Bancshares, Inc., Collin County National Bank, Dallas March 6, 1996 Paris, Texas McKinney, Texas F & M National Corporation, FB&T Financial Corporation, Richmond March 14, 1996 Winchester, Virginia Fairfax, Virginia Fidelity Company, Valley State Bank (In Organization), Chicago February 28, 1996 Dyersville, Iowa Guttenberg, Iowa First Valley Bank Group, Inc., Pharr Financial Corporation, Dallas March 13, 1996 Harlingen, Texas Pharr, Texas Security State Bank, Pharr, Texas First Valley Delaware Financial Pharr Financial Corporation, Dallas March 13, 1996 Corporation, Pharr, Texas Dover, Delaware Security State Bank, Pharr, Texas Gateway Bancshares, Inc., Gateway Bank and Trust, Atlanta February 23, 1996 Ringgold, Georgia Ringgold, Georgia Heritage Financial Corporation, Heritage National Bank, St. Louis March 6, 1996 Lawrenceville, Illinois Lawrenceville, Illinois JWL - GSW, Ltd., Gulf Southwest Bancorp, Dallas March 12, 1996 Houston, Texas Inc., Houston, Texas Gulf Southwest Nevada Bancorp, Inc., Reno, Nevada Merchants Bank, Houston, Texas Mate wan Bancshares, Inc., Bank One, Pikeville, N.A., Richmond February 15, 1996 Williamson, West Virginia Pikeville, Kentucky NBE Bancshares, Inc., Pinnacle Bancshares, Incorporated, Chicago March 4, 1996 Earlville, Illinois Paw Paw, Illinois State Bank of Paw Paw, Illinois Paw Paw, Illinois Nebraska Bankshares, Inc., Stockmens Financial Corporation, Kansas City February 28, 1996 Farnam, Nebraska Rushville, Nebraska Norwest Corporation, Benson Financial Corporation, Minneapolis March 19, 1996 Minneapolis, Minnesota San Antonio, Texas Norwest Corporation, Regional Bank of Colorado, N.A., Minneapolis March 19, 1996 Minneapolis, Minnesota Rifle, Colorado Otto Bremer Foundation, First American Bank of Wahpeton, Minneapolis February 13, 1996 St. Paul, Minnesota Wahpeton, North Dakota Bremer Financial Corporation, St. Paul, Minnesota Premier Bancshares, Inc., Premier Holdings - Nevada, Inc., Dallas March 6, 1996 La Grange, Texas Carson City, Nevada La Grange State Bank, La Grange, Texas Premier Holdings - Nevada, Inc., La Grange State Bank, Dallas March 6, 1996 Carson City, Nevada La Grange, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

464 Federal Reserve Bulletin • May 1996 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Private Bancorporation, Inc., Private Bank Minnesota, Minneapolis February 15, 1996 Minneapolis, Minnesota Minneapolis, Minnesota Puget Sound Bancorp, First National Bank of Port Orchard, San Francisco February 22, 1996 Port Orchard, Washington Port Orchard, Washington Quinlan Bancshares, Inc., Citizens State Bank, Dallas February 26, 1996 Quinlan, Texas Royse City, Texas Regions Financial Corporation, First Gwinnett Bancshares, Inc., Atlanta March 6, 1996 Birmingham, Alabama Norcross, Georgia Stockmens Financial Corporation, Stockmens Management Company, Kansas City February 28, 1996 Rushville, Nebraska Rushville, Nebraska Leffler Bank Holding Company, Sidney, Nebraska Nebraska State Bank, Cozad, Nebraska Taylor Bancshares, Inc., First National Bank of Fairfax, Minneapolis March 6, 1996 North Mankato, Minnesota Fairfax, Minnesota Wilson Bancshares, Inc., The Wilson State Bank, Kansas City February 27, 1996 Wilson, Kansas Wilson, Kansas Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Banc One Corporation, Banc One Leasing Corporation, Cleveland March 4, 1996 Columbus, Ohio Columbus, Ohio Beulah Bancorporation, Inc., To engage de novo in making and Minneapolis February 27, 1996 Sioux Falls, South Dakota servicing loans Farmers Bancshares, Inc., Breckinridge Loan, Inc., St. Louis February 16, 1996 Hardinsburg, Kentucky Hardinsburg, Kentucky Farmers Bancshares Finance Corp., Inc.. Hardinsburg, Kentucky First Financial Bancorp, First Finance Mortgage Company of Cleveland March 14, 1996 Hamilton, Ohio Southwestern Ohio, Fairfield, Ohio Heartland Bancshares, Inc., To engage in making and servicing Chicago March 13, 1996 Lenox, Iowa loans Lake Benton Bancorporation, Inc. To engage de novo in making and Minneapolis February 27, 1996 Sioux Falls, South Dakota servicing loans Mercantile Bancorporation Inc., Metro Savings Bank, F.S.B., St. Louis February 16, 1996 St. Louis, Missouri Wood River, Illinois Metro Financial Service Corporation, Inc., Wood River, Illinois National Commerce Bancorporation, USI Alliance Corp., St. Louis February 13, 1996 Memphis, Tennessee Memphis, Tennessee Notice of Progressive Growth Corp., Progressive Service Corp., Minneapolis February 28, 1996 Gaylord, Minnesota Gaylord, Minnesota Synectic Solutions, Inc., Gaylord, Minnesota Pembina County Bankshares, Ltd., To commence de novo in the extension Minneapolis February 27, 1996 Cavalier, North Dakota of credit to borrowers of its subsidiary bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 465 Section 4—Continued Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date PNC Bank Corp., First Data Corporation, Cleveland March 18, 1996 Pittsburgh, Pennsylvania Hackensack, New Jersey Regions Financial Corporation, First Federal Bank of Northwest Atlanta February 27, 1996 Birmingham, Alabama Georgia, Federal Savings Bank, Cedartown, Georgia United Bankshares, Inc., Eagle Bancorp, Inc., Richmond March 6, 1996 Charleston, West Virginia Charleston, West Virginia Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Prairieland Employees Stock Prairieland Bancorp, Chicago March 8, 1996 Ownership Plan, Bushnell, Illinois Bushnell, Illinois 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 The Bank of Waverly, First Union National Bank of Virginia, Richmond February 15, 1996 Waverly, Virginia Roanoke, Virginia Chippewa Valley Bank, First National Bank of Ohio, Cleveland February 23, 1996 Rittman, Ohio Akron, Ohio Farmers Bank of Maryland, First Virginia Bank-Maryland, Richmond February 29, 1996 Annapolis, Maryland Upper Marlboro, Maryland First Virginia Bank - First Virginia Bank of Tidewater, Richmond February 29, 1996 Commonwealth, Norfolk, Virginia Grafton, Virginia The Ohio Bank, Society National Bank, Cleveland February 22, 1996 Findlay, Ohio Cleveland, Ohio The Security Dollar Bank, National City Bank, Northeast, Cleveland February 29, 1996 Niles, Ohio Akron, Ohio Texas State Bank, The Border Bank, Dallas March 13, 1996 McAllen, Texas Hidalgo, Texas First State Bank and Trust Company, Mission, Texas Westamerica Bank, Napa Valley Bank, San Francisco March 8, 1996 San Rafael, California Napa, California Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

466 Federal Reserve Bulletin • May 1996 PENDING CASES INVOLVING THE BOARD OF and assume certain liabilities of 12 branches of PNC Bank, GOVERNORS Ohio, N.A., Cincinnati, Ohio, and to establish certain branches. The Board's motion to dismiss was filed on This list of pending cases does not include suits against the October 26, 1995. Federal Reserve Banks in which the Board of Governors is not Lee v. Board of Governors, No. 95—4134 (2nd Cir., filed named a party. August 22, 1995). Petition for review of Board orders dated July 24, 1995, approving certain steps of a corporate reorganization of U.S. Trust Corporation, New York, New York, Kuntz v. Board of Governors, No. 96-1079 (D.C. Cir., filed and the acquisition of U.S. Trust by Chase Manhattan March 7, 1996). Petition for review of a Board order dated Corporation, New York, New York. On September 12, February 7, 1996, approving applications by The Fifth 1995, the court denied petitioners' motion for an emergency Third Bank, Cincinnati, Ohio, and The Firth Third Bank of stay of the Board's orders. Columbus, Columbus, Ohio, to acquire certain assets and assume certain liabilities of 25 branches of NBD Bank, Beckman v. Greenspan, No. 95-35473 (9th Cir., filed May 4, Columbus, Ohio. Petitioner has moved to consolidate the 1995). Appeal of dismissal of action against Board and case with Kuntz v. Board of Governors, No. 95-1495. others seeking damages for alleged violations of constitutional and common law rights. The appellants' brief was Henderson v. Board of Governors, No. 96-1054 (D.C. Cir., filed on June 23, 1995; the Board's brief was filed on filed February 16, 1996). Petition for review of a Board July 12, 1995. order dated January 17, 1996, approving the merger of First Citizens BancShares, Inc., Raleigh, North Carolina, with Board of Governors v. Scott, Misc. No. 95-127 (LFO/PJA) Allied Bank Capital, Inc., Sanford, North Carolina. Petition- (D. D.C., filed April 14, 1995). Application to enforce an ers' motion for a stay was denied on March 7, 1996. administrative investigatory subpoena for documents and testimony. On August 3, 1995, the magistrate judge issued Research Triangle Institute v. Board of Governors, No. an order granting in part and denying in part the Board's 1-.96CV00102 (M.D.N.C., filed February 12, 1996). Contract dispute. application. On September 18, 1995, the intervenor moved for reconsideration of a portion of the magistrate's ruling. In re: Subpoena Duces Tecum, Misc. No. 96-MS-43(TPJ) (D. Money Station, Inc. v. Board of Governors, No. 95-1182 D.C., filed February 7, 1996). Motion to enforce a subpoena (D.C. Cir., filed March 30, 1995). Petition for review of a issued to the Board seeking, among other things, bank Board order dated March 1, 1995, approving notices by examination material. On March 18, 1996, the matter was Bank One Corporation, Columbus, Ohio; CoreStates Finanstayed pending the disposition of the application for a writ cial Corp., Philadelphia, Pennsylvania; PNC Bank Corp., of certiorari from In re: Bankers Trust Co., 61 F.3d 465 (6th Pittsburgh, Pennsylvania; and KeyCorp, Cleveland, Ohio, Cir. 1996). to acquire certain data processing assets of National City Inner City Press/Community on the Move v. Board of Gover- Corporation, Cleveland, Ohio, through a joint venture subnors, No. 96-4008 (2nd Cir., filed January 19, 1996). Peti- sidiary. Oral argument was heard on February 2, 1996. tion for review of a Board order dated January 5, 1996, Jones v. Board of Governors, No. 95-1142 (D.C. Cir., filed approving the applications and notices by Chemical Bank- March 3, 1995). Petition for review of a Board order dated ing Corporation to merge with The Chase Manhattan Cor- February 2, 1995, approving the applications by First Comporation, both of New York, New York, and by Chemical merce Corporation, New Orleans, Louisiana, to merge with Bank to merge with The Chase Manhattan Bank, N.A., both City Bancorp, Inc., New Iberia, Louisiana, and First Bankof New York, New York. Petitioners' motion for an emershares, Inc., Slidell, Louisiana. Oral argument was heard on gency stay of the transaction was denied following oral February 27, 1996. On March 26, 1996, the court denied the argument on March 26, 1996. petition for review. Hotchkiss v. Board of Governors, No. 3:96CV7033 (N.D. In re Subpoena Duces Tecum, Misc. No. 95-06 (D.D.C., filed Ohio, filed January 19, 1996). Appeal of order of bank- January 6, 1995). Action to enforce subpoena seeking preruptcy court granting Board's motion for summary judgdecisional supervisory documents sought in connection with ment in adversary proceeding challenging dischargeability an action by Bank of New England Corporation's trustee in of Board consent order. The Board's brief is due April 1, bankruptcy against the Federal Deposit Insurance Corpora- 1996. tion. The Board filed its opposition on January 20, 1995. Menick v. Greenspan, No. 95-CV-01916 (D. D.C., filed Octo- Oral argument on the motion was held July 14, 1995. ber 10, 1995). Complaint alleging sex, age, and handicap Board of Governors v. Pharaon, No. 91-CIV-6250 (S.D. New discrimination in employment. York, filed September 17, 1991). Action to freeze assets of Kuntz v. Board of Governors, No. 95-1495 (D.C. Cir., filed individual pending administrative adjudication of civil September 21, 1995). Petition for review of Board order money penalty assessment by the Board. On September 17, dated August 23, 1995, approving the applications of The 1991, the court issued an order temporarily restraining the Fifth Third Bank, Cincinnati, Ohio, to acquire certain assets transfer or disposition of the individual's assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 467 FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD Swiss Bank Corporation OF GOVERNORS Basle, Switzerland Banque Worms, S.A. The Federal Reserve Board announced on March 6, 1996, Paris, France the issuance of an Order of Assessment of a Civil Money Penalty against Swiss Bank Corporation, Basle, Switzerland. The Federal Reserve Board announced on March 21, 1996, the issuance of an Order of Assessment of a Civil Money Penalty against Banque Worms, S.A., Paris, France, and WRITTEN AGREEMENTS APPROVED BY FEDERAL Banque Worms Capital Corporation, New York, New RESERVE BANKS York, and the execution of a Written Agreement by and among Banque Worms, Banque Worms Capital Corpora- Northern Bancorp, Inc. tion, and the Federal Reserve Bank of New York. Woburn, Massachusetts The Federal Reserve Board announced on March 8, 1996, The Daiwa Bank, Limited the execution of a Written Agreement by and among the Osaka, Japan Federal Reserve Bank of Boston; the Office of the Commissioner of Banks of the Commonwealth of Massachusetts; The Federal Reserve Board announced on March 22, 1996, Northern Bancorp, Inc., Woburn, Massachusetts ("Norththe issuance of an Order against The Daiwa Bank, Limited, ern"); James J. Mawn, President and director of Northern; Osaka, Japan. and Robert L. McCrensky, a director of Northern. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

469 Directors of Federal Reserve Banks and Branches Regional decentralization and a combination of govern- Directors are chosen without discrimination as to race, mental and private characteristics are important hallmarks creed, color, sex, or national origin. of the uniqueness of the Federal Reserve System. Under Class A directors of each Reserve Bank represent the the Federal Reserve Act, decentralization was achieved by stockholding member banks of the Federal Reserve Disdivision of the country into twelve regions called Federal trict. Class B and Class C directors represent the public and Reserve Districts, and the establishment in each District of are chosen with due, but not exclusive, consideration to the a separately incorporated Federal Reserve Bank with its interests of agriculture, commerce, industry, services, labor, own board of directors. The blending of governmental and and consumers; they may not be officers, directors, or private characteristics is provided through ownership of the employees of any bank. In addition, Class C directors may stock of the Reserve Bank by member banks in its District, not be stockholders of any bank. The Board of Governors which also elect the majority of the board of directors, and designates annually one Class C director as chairman of by the general supervision of the Reserve Banks by the the board of directors of each District Bank and designates Board of Governors, an agency of the federal government. another Class C director as deputy chairman. The Board also appoints a minority of each board of Each of the twenty-five Branches of the Federal Reserve directors. Thus, there are essential elements of regional Banks has a board of either seven or five directors, a participation and counsel in the conduct of the System's majority of whom are appointed by the parent Federal affairs for which the Federal Reserve relies importantly on Reserve Bank; the others are appointed by the Board of the contributions of the directors of the Federal Reserve Governors. One of the Board's appointees is designated Banks and Branches. annually as chairman of the board of that Branch in a The following list of directors of Federal Reserve Banks manner prescribed by the parent Federal Reserve Bank. and Branches shows for each director the class of director- The names of the chairman and deputy chairman of the ship, the principal business affiliation, and the date the board of directors of each Reserve Bank and of the chaircurrent term expires. Each Federal Reserve Bank has nine man of each Branch are published monthly in the Federal members on its board of directors: The member banks elect Reserve Bulletin.1 the three Class A and three Class B directors, and the Board of Governors appoints the three directors in Class C. 1. The current list appears on page A86 of this Bulletin. Term expires DISTRICT 1—BOSTON December 31 Class A G. Kenneth Perine President and Chief Executive Officer, National Bank of Middlebury, 1996 Middlebury, Vermont Jane C. Walsh President, Northmark Bank, North Andover, Massachusetts 1997 Marshall N. Carter Chairman and Chief Executive Officer, State Street Bank and Trust 1998 Company, Boston, Massachusetts Class B Stephen L. Brown Chairman and Chief Executive Officer, John Hancock Mutual Life 1996 Insurance Company, Boston, Massachusetts Edward Dugger III President and Chief Executive Officer, UNC Ventures, Inc., Boston, 1997 Massachusetts Robert R. Glauber Adjunct Lecturer, John F. Kennedy School of Government, Harvard 1998 University, Cambridge, Massachusetts Class C John E. Flynn Executive Director, The Quality Connection, East Dennis, Massachusetts 1996 Jerome H. Grossman Health Quality, Inc., Boston, Massachusetts 1997 William C. Brainard Chairman, Department of Economics, Yale University, New Haven, 1998 Connecticut Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

470 Federal Reserve Bulletin • May 1996 Term expires DISTRICT 2—NEW YORK December 31 Class A Chairman and Chief Executive Officer, The First National Bank of Long 1996 J. William Johnson Island, Glen Head, New York Chairman and Chief Executive Officer, The Bank of New York, New York, 1997 J. Carter Bacot New York Chairman, President, and Chief Executive Officer, Manufacturers and 1998 Robert G. Wilmers Traders Trust Company, Buffalo, New York Class B Sandra Feldman President, United Federation of Teachers, New York, New York 1996 Eugene R. McGrath Chief Executive Officer, Consolidated Edison Company of New York, Inc., 1997 New York, New York William C. Steere, Jr. Chairman and Chief Executive Officer, Pfizer Inc., New York, New York 1998 Class C John C. Whitehead Chairman, AEA Investors Inc., New York, New York 1996 Thomas W. Jones Vice Chairman, President, and Chief Operating Officer, Teachers Insurance 1997 and Annuity Association-College Retirement Equities Fund, New York, New York Peter G. Peterson Chairman, The Blackstone Group, New York, New York 1998 BUFFALO BRANCH Appointed by the Federal Reserve Bank Louise C. Woerner Chairman and Chief Executive Officer, HCR, Rochester, New York 1996 William E. Swan President and Chief Executive Officer, Lockport Savings Bank, Lockport, 1997 New York Mark W. Adams Owner and Operator, Adams Poultry Farm, Naples, New York 1997 George W. Hamlin IV President and Chief Executive Officer, The Canandaigua National Bank 1998 and Trust Company, Canandaigua, New York Appointed by the Board of Governors Joseph J. Castiglia Former President and Chief Executive Officer, Pratt & Lambert United, 1996 Inc., Buffalo, New York Louis J. Thomas Director, United Steelworkers of America, Buffalo, New York 1997 Bal Dixit President and Chief Executive Officer, Newtex Industries, Inc., Victor, 1998 New York DISTRICT 3—PHILADELPHIA Class A Terry K. Dunkle Chairman, United States National Bank, Johnstown, Pennsylvania 1996 Dennis W. DiLazzero President and Chief Executive Officer, Minotola National Bank, Vineland, 1997 New Jersey Albert B. Murry President and Chief Executive Officer, Lebanon Valley National Bank, 1998 Lebanon, Pennsylvania Class B J. Richard Jones President and Chief Executive Officer, Jackson-Cross Company, 1996 Philadelphia, Pennsylvania Robert D. Burris President and Chief Executive Officer, Burris Foods, Inc., Milford, 1997 Delaware Howard E. Cosgrove Chairman, President, and Chief Executive Officer, Delmarva Power and 1998 Light Company, Wilmington, Delaware Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 471 Term expires DISTRICT 3—PHILADELPHIA—Continued December 31 Class C Joan Carter President and Chief Operating Officer, UM Holdings Ltd., Haddonfield, 1996 New Jersey Donald J. Kennedy Business Manager, International Brotherhood of Electrical Workers, Local 1997 Union No. 269, Trenton, New Jersey Charisse R. Lillie Partner, Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania 1998 DISTRICT 4—CLEVELAND Class A Alfred C. Leist Chairman, President, and Chief Executive Officer, The Apple Creek 1996 Banking Company, Apple Creek, Ohio David S. Dahlmann President and Chief Executive Officer, Southwest National Corporation, 1997 Greensburg, Pennsylvania David A. Daberko Chairman and Chief Executive Officer, National City Corporation, 1998 Cleveland, Ohio Class B Thomas M. Nies President, Cincom Systems, Inc., Cincinnati, Ohio 1996 Michele Tolela Myers President, Denison University, Granville, Ohio 1997 I.N. Rendall Harper, Jr. President and Chief Executive Officer, American Micrographics Company, 1998 Inc., Monroeville, Pennsylvania Class C Robert Y. Farrington Executive Secretary-Treasurer, Ohio State Building and Construction 1996 Trades Council, Columbus, Ohio G. Watts Humphrey, Jr. President, GWH Holdings, Inc., Pittsburgh, Pennsylvania 1997 A. William Reynolds Chief Executive, Old Mill Group, Hudson, Ohio 1998 CINCINNATI BRANCH Appointed by the Federal Reserve Bank Judith G. Clabes Director, Special Projects, Scripps Howard, Cincinnati, Ohio 1996 Phillip R. Cox President, Cox Financial Corporation, Cincinnati, Ohio 1996 Jerry A. Grundhofer Chairman, President, and Chief Executive Officer, Star Banc Corporation, 1997 Cincinnati, Ohio Jean R. Hale President and Chief Executive Officer, Pikeville National Bank & Trust, 1998 Pikeville, Kentucky Appointed by the Board of Governors John N. Taylor, Jr. Chairman and Chief Executive Officer, Kurz-Kasch, Inc., Dayton, Ohio 1996 C. Wayne Shumate Chairman and Chief Executive Officer, Kentucky Textiles, Inc., Paris, 1997 Kentucky Thomas Revely III President and Chief Executive Officer, Cincinnati Bell Supply Co., 1998 Cincinnati, Ohio PITTSBURGH BRANCH Appointed by the Federal Reserve Bank Randall L.C. Russell President and Chief Executive Officer, Ranbar Technology, Inc., Glenshaw, 1996 Pennsylvania Wesley W. von Schack Chairman, President, and Chief Executive Officer, DQE, Pittsburgh, 1996 Pennsylvania Thomas J. O'Shane President and Chief Executive Officer, First Western Bancorp, Inc., 1997 New Castle, Pennsylvania Edward V. Randall, Jr. President and CEO/Pittsburgh, PNC Bank, N.A., Pittsburgh, Pennsylvania 1998 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

472 Federal Reserve Bulletin • May 1996 Term expires DISTRICT 4—CLEVELAND—Continued December 31 PITTSBURGH BRANCH—Continued Appointed by the Board of Governors Sandra L. Phillips Executive Director, Pittsburgh Partnership for Neighborhood Development, 1996 Pittsburgh, Pennsylvania John T. Ryan III Chairman, President, and Chief Executive Officer, Mine Safety Appliances 1997 Company, Pittsburgh, Pennsylvania Gretchen R. Haggerty Vice President and Treasurer, USX Corporation, Pittsburgh, Pennsylvania 1998 DISTRICT 5—RICHMOND Class A Chairman and Chief Executive Officer, Signet Banking Corporation, 1996 Robert M. Freeman Richmond, Virginia President and Chief Executive Officer, Horizon Bancorp, Inc., Greenbrier 1997 Philip L. McLaughlin Valley National Bank, Lewisburg, West Virginia Chairman and Chief Executive Officer, The National Capital Bank of 1998 George A. Didden III Washington, Washington, D.C. Class B Paul A. DelaCourt Chairman, The North Carolina Enterprise Corporation, Raleigh, 1996 North Carolina L. Newton Thomas, Jr. Senior Vice President (Retired), ITT/Carbon Industries, Inc., Charleston, 1997 West Virginia Craig A. Ruppert President and Owner, The Ruppert Companies, Ashton, Maryland 1998 Class C Stephen Brobeck Executive Director, Consumer Federation of America, Washington, D.C. 1996 Claudine B. Malone President, Financial & Management Consulting, Inc., McLean, Virginia 1997 Robert L. Strickland Chairman, Lowe's Companies, Inc., Winston-Salem, North Carolina 1998 BALTIMORE BRANCH Appointed by the Federal Reserve Bank Morton I. Rapoport, M.D. President and Chief Executive Officer, University of Maryland Medical 1996 System, Baltimore, Maryland Thomas J. Hughes President and Chief Executive Officer, Navy Federal Credit Union, Vienna, 1997 Virginia F. Levi Ruark Chairman, President, and Chief Executive Officer, The National Bank of 1997 Cambridge, Cambridge, Maryland Jeremiah E. Casey Chairman, First Maryland Bancorp, Baltimore, Maryland 1998 Appointed by the Board of Governors Michael R. Watson President, Association of Maryland Pilots, Baltimore, Maryland 1996 Rebecca Hahn Windsor Chairman and Chief Executive Officer, Hahn Transportation, Inc., 1997 New Market, Maryland Daniel R. Baker President and Chief Executive Officer, Tate Access Floors, Inc., Jessup, 1998 Maryland CHARLOTTE BRANCH Appointed by the Federal Reserve Bank Jim M. Cherry, Jr. President and Chief Executive Officer, Williamsburg First National Bank, 1996 Kingstree, South Carolina Dorothy H. Aranda President, Dohara Associates, Inc., Hilton Head Island, South Carolina 1997 J. Walter McDowell President and Chief Executive Officer, Wachovia Bank of North Carolina, 1997 N.A., Winston-Salem, North Carolina William G. Stevens President and Chief Executive Officer, Greenwood Bank & Trust, 1998 Greenwood, South Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 473 Term expires DISTRICT 5—RICHMOND—Continued December 31 CHARLOTTE BRANCH—Continued Appointed by the Board of Governors Dennis D. Lowery Chief Executive Officer and Chairman, Continental Ltd., Charlotte, 1996 North Carolina Joan H. Zimmerman President, Southern Shows, Inc., Charlotte, North Carolina 1997 James O. Roberson President, Research Triangle Foundation of North Carolina, Research 1998 Triangle Park, North Carolina DISTRICT 6—ATLANTA Class A Chairman and Chief Executive Officer, SunTrust Banks, Inc., Atlanta, 1996 James B. Williams Georgia Chairman and Chief Executive Officer, Compass Bancshares, Inc., 1997 D. Paul Jones, Jr. Birmingham, Alabama Chairman and Chief Executive Officer, First Farmers and Merchants 1998 Waymon L. Hickman National Bank, Columbia, Tennessee Class B Andre M. Rubenstein Chairman and Chief Executive Officer, Rubenstein Brothers, Inc., 1996 New Orleans, Louisiana Maria Camila Leiva Executive Vice President, Miami Free Zone Corporation, Miami, Florida 1997 Larry W. Kinderman President and Chief Executive Officer, Stockham Valves and Fittings, Inc., 1998 Birmingham, Alabama Class C Daniel E. Sweat, Jr. Program Director, The America Project, Atlanta, Georgia 1996 Hugh M. Brown President and Chief Executive Officer, BAMSI, Inc., Titusville, Florida 1997 David R. Jones President and Chief Executive Officer, Atlanta Gas Light Company, 1998 Atlanta, Georgia BIRMINGHAM BRANCH Appointed by the Federal Reserve Bank Julian W. Banton Chairman, President, and Chief Executive Officer, SouthTrust Bank of 1996 Alabama, N.A., Birmingham, Alabama Marlin D. Moore, Jr. Chairman, Pritchett-Moore, Inc., Tuscaloosa, Alabama 1997 Columbus Sanders President, Consolidated Industries, Inc., Huntsville, Alabama 1997 J. Stephen Nelson Chairman and Chief Executive Officer, First National Bank of Brewton, 1998 Brewton, Alabama Appointed by the Board of Governors Donald E. Boomershine President, The Better Business Bureau of Central Alabama, Inc. and the 1996 Counties of the Wiregrass, Birmingham, Alabama D. Bruce Carr International Representative, Laborers' International Union of North 1997 America, Gadsden, Alabama Patricia B. Compton President, Patco, Inc., Georgiana, Alabama 1998 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

474 Federal Reserve Bulletin • May 1996 Term expires DISTRICT 6—ATLANTA—Continued December 31 JACKSONVILLE BRANCH Appointed by the Federal Reserve Bank William G. Smith, Jr. President and Chief Executive Officer, Capital City Bank Group, 1996 Tallahassee, Florida Terry R. West Chief Executive Officer, Jax Navy Federal Credit Union, Jacksonville, 1997 Florida Arnold A. Heggestad Chester Holloway Professor of Entrepreneurship, University of Florida, 1997 Gainesville, Florida Royce B. Walden Vice President, Ward Bradford & Company, Orlando, Florida 1998 Appointed by the Board of Governors Joan Dial Ruffier General Partner, Sunshine Cafes, Orlando, Florida 1996 Patrick C. Kelly Chairman and Chief Executive Officer, Physician Sales & Service, Inc., 1997 Jacksonville, Florida Judy Jones Executive Director, Florida Black Business Investment Board, Tallahassee, 1998 Florida MIAMI BRANCH Appointed by the Federal Reserve Bank Pat L. Tornillo, Jr. Executive Vice President, United Teachers of Dade, Miami, Florida 1996 Steven C. Shimp President, O-A-K/Florida, Inc., Fort Myers, Florida 1996 Carlos A. Migoya South Florida Regional President, First Union National Bank of Florida, 1997 Miami, Florida E. Anthony Newton President and Chief Executive Officer, Island National Bank and Trust 1998 Company, Palm Beach, Florida Appointed by the Board of Governors Michael T. Wilson President, Vinegar Bend Farms, Inc., Belle Glade, Florida 1996 Kaaren Johnson-Street Vice President, Diversity Business Enterprise, Burger King Corporation, 1997 Miami, Florida R. Kirk Landon Chairman, American Bankers Insurance Group, Miami, Florida 1998 NASHVILLE BRANCH Appointed by the Federal Reserve Bank Williams E. Arant, Jr. Chairman, First Knoxville Bank, Knoxville, Tennessee 1996 Jack J. Vaughn President, Hospitality & Attractions Group, Gaylord Entertainment 1997 Company, Nashville, Tennessee John E. Seward, Jr. President and Chief Executive Officer, Paty Lumber Company, Inc., 1997 Piney Flats, Tennessee Dale W. Polley President, First American National Bank, Nashville, Tennessee 1998 Appointed by the Board of Governors Paula Lovell President, Lovell Communications, Inc., Nashville, Tennessee 1996 James E. Dalton, Jr. President and Chief Executive Officer, Quorum Health Group, Inc., 1997 Brentwood, Tennessee Frances F. Marcum Chairman and Chief Executive Officer, Micro Craft, Inc., Tullahoma, 1998 Tennessee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 475 Term expires DISTRICT 6—ATLANTA—Continued DECEMBER 31 NEW ORLEANS BRANCH Appointed by the Federal Reserve Bank Howard C. Gaines Chairman and Chief Executive Officer, First National Bank of Commerce, 1996 New Orleans, Louisiana Angus R. Cooper II Chairman and Chief Executive Officer, Cooper/T. Smith Corporation, 1997 Mobile, Alabama Kay L. Nelson President, Nelson Capital Corporation, New Orleans, Louisiana 1997 Howell N. Gage Chairman and Chief Executive Officer, Merchants Bank, Vicksburg, 1998 Mississippi Appointed by the Board of Governors Victor Bussie President, Louisiana AFL-CIO, Baton Rouge, Louisiana 1996 Jo Ann Slaydon President, Slaydon Consultants and Insight Productions and Advertising, 1997 Baton Rouge, Louisiana Lucimarian Roberts President, Mississippi Coast Coliseum Commission, Biloxi, Mississippi 1998 DISTRICT 7—CHICAGO Class A David W. Fox Chairman and Chief Executive Officer (Retired), Northern Trust 1996 Corporation and The Northern Trust Company, Chicago, Illinois Stefan S. Anderson Chairman, President, and Chief Executive Officer, First Merchants 1997 Corporation, Muncie, Indiana Arnold C. Schultz Chairman, President, and Chief Executive Officer, Grundy National Bank, 1998 Grundy Center, Iowa Class B A. Charlene Sullivan Associate Professor of Management, Krannert Graduate School of 1996 Management, Krannert Center, Purdue University, West Lafayette, Indiana Thomas C. Don- President and Chief Executive Officer, Dorr's Pine Grove Farm Co., 1997 Marcus, Iowa Donald J. Schneider President, Schneider National, Inc., Green Bay, Wisconsin 1998 Class C Robert M. Healey Member, Illinois State Labor Relations Board, Chicago, Illinois 1996 Lester H. McKeever, Jr. Managing Partner, Washington, Pittman & McKeever, Chicago, Illinois 1997 Arthur C. Martinez Chairman and Chief Executive Officer, Sears, Roebuck & Co., 1998 Hoffman Estates, Illinois DETROIT BRANCH Appointed by the Federal Reserve Bank William E. Odom Chairman and Chief Executive Officer, Ford Motor Credit Company, 1996 Dearborn, Michigan Charles E. Allen President and Chief Executive Officer, Graimark Realty Advisors, Inc., 11999966 Detroit, Michigan Charles R. Weeks Chairman and Chief Executive Officer, Citizens Banking Corporation, 1997 Flint, Michigan Richard M. Bell President and Chief Executive Officer, The First National Bank of Three 1998 Rivers, Three Rivers, Michigan Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

476 Federal Reserve Bulletin • May 1996 Term expires DISTRICT 7—CHICAGO—Continued December 31 DETROIT BRANCH—Continued Appointed by the Board of Governors Florine Mark President and Chief Executive Officer, The WW Group, Inc., Farmington 1996 Hills, Michigan John D. Forsyth President and Chief Executive Officer, University of Michigan Hospitals, 1997 Ann Arbor, Michigan Stephen R. Polk Chairman and Chief Executive Officer, R.L. Polk & Co., Detroit, Michigan 1998 DISTRICT 8—ST. LOUIS Class A W.D. Glover Chairman and Chief Executive Officer, First National Bank of Eastern 1996 Arkansas, Forrest City, Arkansas Michael A. Alexander Chairman and President, The First National Bank of Mount Vernon, 1997 Mount Vernon, Illinois Douglas M. Lester Chairman and Chief Executive Officer, Trans Financial Bank, N.A., 1998 Bowling Green, Kentucky Class B Warren R. Lee President, United Benefit Services, Inc., Louisville, Kentucky 1996 Sandra B. Sanderson President and Chief Executive Officer, Sanderson Plumbing Products, Inc., 1997 Columbus, Mississippi Richard E. Bell President and Chief Executive Officer, Riceland Foods, Inc., Stuttgart, 1998 Arkansas Class C Veo Peoples, Jr. Partner, Peoples & Hale, St. Louis, Missouri 1996 Susan S. Elliott President and Chief Executive Officer, Systems Service Enterprises, Inc., 1997 St. Louis, Missouri John F. McDonnell Chairman, McDonnell Douglas Corporation, St. Louis, Missouri 1998 LITTLE ROCK BRANCH Appointed by the Federal Reserve Bank Lee Frazier Vice President, St. Vincent Infirmary, Little Rock, Arkansas 1996 James V. Kelley Chairman, President, and Chief Executive Officer, First United Bancshares, 1996 Inc., El Dorado, Arkansas Lunsford W. Bridges President and Chief Executive Officer, Metropolitan National Bank, Little 1997 Rock, Arkansas Mark A. Shelton III President, M.A. Shelton Farming Company, Altheimer, Arkansas 1998 Appointed by the Board of Governors Janet M. Jones President, The Janet Jones Company, Little Rock, Arkansas 1996 Robert D. Nabholz, Jr. Chief Executive Officer, Nabholz Construction Corporation, Conway, 1997 Arkansas Betta M. Carney Chief Executive Officer and Chairman, World Wide Travel Service, Inc., 1998 Little Rock, Arkansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 97 Term expires DISTRICT 8—ST. LOUIS—Continued December 31 LOUISVILLE BRANCH Appointed by the Federal Reserve Bank Charles D. Storms President and Chief Executive Officer, Red Spot Paint and Varnish 1996 Company, Inc., Evansville, Indiana Robert M. Hall Owner, East Fork Growers Farm, Seymour, Indiana 1996 Thomas E. Spragens, Jr. President, Farmers National Bank, Lebanon, Kentucky 1997 Malcolm B. Chancey, Jr. Chairman and Chief Executive Officer, Bank One, Kentucky, N.A., 1998 Louisville, Kentucky Appointed by the Board of Governors John A. Williams Chairman and Chief Executive Officer, Computer Services, Inc., Paducah, 1996 Kentucky Debbie Scoppechio Chairman, President, and Chief Executive Officer, Creative Alliance, Inc., 1997 Louisville, Kentucky Roger Reynolds President and Chief Executive Officer, Material Resource Planners, Inc. 1998 and Interlink Inc., Louisville, Kentucky MEMPHIS BRANCH Appointed by the Federal Reserve Bank Katie S. Winchester President, First Citizens National Bank, Dyersburg, Tennessee 1996 Benjamin W. Rawlins, Jr. Chairman and Chief Executive Officer, Union Planters Corporation, 1996 Memphis, Tennessee Lewis F. Mallory, Jr. Chairman, President, and Chief Executive Officer, NBC Capital 1997 Corporation, Starkville, Mississippi Anthony M. Rampley President and Chief Executive Officer, Arkansas Glass Container 1998 Corporation, Jonesboro, Arkansas Appointed by the Board of Governors Woods E. Eastland President and Chief Executive Officer, Staple Cotton Cooperative 1996 Association, Greenwood, Mississippi Carol G. Crawley President, Mid-South Minority Business Council, Memphis, Tennessee 1997 John V. Myers President, Better Business Bureau, Memphis, Tennessee 1998 DISTRICT 9—MINNEAPOLIS Class A Jerry B. Melby President, First National Bank, Bowbells, North Dakota 1996 William S. Pickerign President, The Northwestern Bank of Chippewa Falls, Chippewa Falls, 1997 Wisconsin Vacancy 1998 Class B Clarence D. Mortenson President, M/C Professional Associates Inc., Pierre, South Dakota 1996 Kathryn L. Ogren Owner, Bitterroot Motors, Missoula, Montana 1997 Dennis W. Johnson President, TMI Systems Design Corporation, Dickinson, North Dakota 1998 Class C David A. Koch Chairman, Graco, Inc., Minneapolis, Minnesota 1996 Jean D. Kinsey Professor, Consumption Economics, and Director, Retail Food Industry 1997 Center, University of Minnesota, St. Paul, Minnesota James J. Howard Chairman, President, and Chief Executive Officer, Northern States Power 1998 Company, Minneapolis, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

478 Federal Reserve Bulletin • May 1996 Term expires DISTRICT 9—MINNEAPOLIS—Continued DECEMBER 31 HELENA BRANCH Appointed by the Federal Reserve Bank Donald E. Olsson, Jr. President, Ronan State Bank, Ronan, Montana 1996 Sandra M. Stash Manager, Montana Facilities, Atlantic Richfield Company (ARCO), 1996 Anaconda, Montana Ronald D. Scott President and Chief Executive Officer, The First State Bank of Malta, 1997 Malta, Montana Appointed by the Board of Governors Lane W. Basso President, Deaconess Medical Center, Billings, Montana 1996 Matthew J. Quinn President, Carroll College, Helena, Montana 1997 DISTRICT 10—KANSAS CITY Class A Lawrence W. Menefee Chairman and Chief Executive Officer, Union Colony Bank, Greeley, 1996 Colorado Samuel P. Baird President, Farmers State Bank & Trust Co., Superior, Nebraska 1997 William L. McQuillan President, Chief Executive Officer, and Director, City National Bank, 1998 Greeley, Nebraska Class B Charles W. Nichols Managing Partner, Davison & Sons Cattle Company, Arnett, Oklahoma 1996 Jo Marie Dancik Area Managing Partner, Ernst & Young LLP, Denver, Colorado 1997 Frank A. Potenziani M & T Trust, Albuquerque, New Mexico 1998 Class C Executive Director, Kansas City Neighborhood Alliance, Kansas City, 1996 Colleen D. Hernandez Missouri Chairman, President, and Chief Executive Officer, Kansas City Power & 1997 A. Drue Jennings Light Company, Kansas City, Missouri Chairman and Chief Executive Officer, Godfather's Pizza, Inc., Omaha, 1998 Herman Cain Nebraska DENVER BRANCH Appointed by the Federal Reserve Bank Peter R. Decker President, Peter R. Decker & Associates, Denver, Colorado 1996 Richard I. Ledbetter President and Chief Executive Officer, First National Bank of Farmington, 1997 Farmington, New Mexico Clifford E. Kirk President and Chief Executive Officer, First National Bank of Gillette, 1997 Gillette, Wyoming Albert C. Yates President, Colorado State University, Ft. Collins, Colorado 1998 Appointed by the Board of Governors Teresa N. McBride President and Chief Executive Officer, McBride and Associates, Inc., 1996 Albuquerque, New Mexico Donald E. Gallegos President, King Soopers, Denver, Colorado 1997 Peter I. Wold Partner, Wold Oil & Gas Company, Casper, Wyoming 1998 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 479 Term expires DISTRICT 10—KANSAS CITY—Continued December 31 OKLAHOMA CITY BRANCH Appointed by the Federal Reserve Bank William H. Braum President, Braum Ice Cream Co., Oklahoma City, Oklahoma 1996 Michael S. Samis President and Chief Executive Officer, Macklanburg-Duncan Co., 1997 Oklahoma City, Oklahoma Betty Bryant Shaull President-Elect and Director, Bank of Cushing and Trust Company, 1998 Cushing, Oklahoma Dennis M. Mitchell President, Citizens Bank of Ardmore, Ardmore, Oklahoma 1998 Appointed by the Board of Governors Hans Helmerich President and Chief Executive Officer, Helmerich & Payne, Inc., Tulsa, 1996 Oklahoma Victor R. Schock President and Chief Executive Officer, Credit Counseling Centers, Tulsa, 1997 Oklahoma Barry L. Eller Senior Vice President and General Manager, MerCruiser, Stillwater, 1998 Oklahoma OMAHA BRANCH Appointed by the Federal Reserve Bank Bruce R. Lauritzen President, First National Bank of Omaha, Omaha, Nebraska 1996 Donald A. Leu President and Chief Executive Officer, Consumer Credit Counseling 1997 Service, Omaha, Nebraska Thomas H. Olson Chairman, First National Bank, Sidney, Nebraska 1997 Robert L. Peterson Chairman, President, and Chief Executive Officer, IBP, Inc., Dakota City, 1998 Nebraska Appointed by the Board of Governors LeRoy W. Thom President, T-L Irrigation Company, Hastings, Nebraska 1996 Arthur L. Shoener Executive Vice President-Operations, Union Pacific Railroad, Omaha, 1997 Nebraska Gladys Styles Johnston Chancellor, University of Nebraska at Kearney, Kearney, Nebraska 1998 DISTRICT 11—DALLAS Class A Gayle M. Earls President and Chief Executive Officer, Texas Independent Bank, Dallas, 1996 Texas Kirk A. McLaughlin President and Chief Executive Officer, Security Bank, Ralls, Texas 1997 Dudley K. Montgomery President and Chief Executive Officer, The Security State Bank of Pecos, 1998 Pecos, Texas Class B J.B. Cooper, Jr. Farmer, Roscoe, Texas 1996 Vacancy 1997 Milton Carroll Chairman and Chief Executive Officer, Instrument Products, Inc., Houston, 1998 Texas Class C James A. Martin Second General Vice President, International Association of Bridge, 1996 Structural, & Ornamental Iron Workers, Horseshoe Bay, Texas Cece Smith General Partner, Phillips-Smith Specialty Retail Group, Dallas, Texas 1997 Roger R. Hemminghaus Chairman, President, and Chief Executive Officer, Diamond Shamrock, 1998 Inc., San Antonio, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

480 Federal Reserve Bulletin • May 1996 Term expires DISTRICT 11—DALLAS—Continued December 31 EL PASO BRANCH Appointed by the Federal Reserve Bank Ben H. Haines, Jr. President and Chief Executive Officer, First National Bank of Dona Ana 1996 County, Las Cruces, New Mexico Veronica K. Callaghan Vice President and Principal, KASCO Ventures, Inc., El Paso, Texas 1996 Hugo Bustamante, Jr. Owner and Chief Executive Officer, CarLube, Inc., ProntoLube, Inc., 1997 El Paso, Texas Lester L. Parker President and Chief Operating Officer, Bank of the West, El Paso, Texas 1998 Appointed by the Board of Governors Patricia Z. Holland-Branch President and Director of Design, PZH Contract Design, Inc., El Paso, 1996 Texas Alvin T. Johnson President, Management Assistance Corporation of America, El Paso, Texas 1997 Beauregard Brite White Rancher, J.E. White, Jr. & Sons, Marfa, Texas 1998 HOUSTON BRANCH Appointed by the Federal Reserve Bank Judith B. Craven President, United Way of the Texas Gulf Coast, Houston, Texas 1996 Walter E. Johnson President and Chief Executive Officer, Southwest Bank of Texas, Houston, 1996 Texas Tieman H. Dippel, Jr. Chairman and President, Brenham Bancshares, Inc., Brenham, Texas 1997 J. Michael Solar Principal Attorney, Solar & Fernandes, L.L.P., Houston, Texas 1998 Appointed by the Board of Governors Robert C. McNair Chairman and Chief Executive Officer, Cogen Technologies, Inc., Houston, 1996 Texas Isaac H. Kempner III Chairman, Imperial Holly Corporation, Sugar Land, Texas 1997 Edward O. Gaylord Chairman, EOTT Energy Corp. and General Partner, EOTT Energy 1998 Partners, L.P., Houston, Texas SAN ANTONIO BRANCH Appointed by the Federal Reserve Bank Juliet V. Garcia President, The University of Texas at Brownsville, Brownsville, Texas 1996 Douglas G. Macdonald President, South Texas National Bank, Laredo, Texas 1996 Calvin R. Weinheimer President and Chief Operating Officer, Kerrville Communications 1997 Corporation, Kerrville, Texas Richard W. Evans, Jr. Chairman and Chief Executive Officer, Frost National Bank, San Antonio, 1998 Texas Appointed by the Board of Governors Erich Wendl Vice President, Webro Investment Corporation, Corpus Christi, Texas 1996 H.B. Zachry, Jr. Chairman and Chief Executive Officer, H.B. Zachry Company, 1997 San Antonio, Texas Carol L. Thompson President, The Thompson Group, Austin, Texas 1998 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 481 Term expires DISTRICT 12—SAN FRANCISCO DECEMBER 31 Class A Richard L. Mount Chairman, President, and Chief Executive Officer, Saratoga Bancorp, 1996 Saratoga, California Gerry B. Cameron Chairman and Chief Executive Officer, U.S. Bancorp, Portland, Oregon 1997 Warren K.K. Luke Vice Chairman, President, and Chief Executive Officer, Hawaii National 1998 Bank, Honolulu, Hawaii Class B Gary G. Michael Chairman and Chief Executive Officer, Albertson's, Inc., Boise, Idaho 1996 Krestine Corbin President and Chief Executive Officer, Sierra Machinery, Inc., Sparks, 1997 Nevada Stanley T. Skinner Chairman and Chief Executive Officer, Pacific Gas and Electric Co., 1998 San Francisco, California Class C James A. Vohs Chairman and Chief Executive Officer (Retired), Kaiser Foundation Health 1996 Plan, Inc. and Kaiser Foundation Hospitals, Oakland, California Judith M. Runstad Partner, Foster Pepper & Shefelman, Seattle, Washington 1997 Cynthia A. Parker Executive Director, Anchorage Neighborhood Housing Services, Inc., 1998 Anchorage, Alaska Los ANGELES BRANCH Appointed by the Federal Reserve Bank Vacancy 1996 William S. Randall Scottsdale, Arizona 1997 Antonia Hernandez President and General Counsel, Mexican American Legal Defense and 1997 Educational Fund, Los Angeles, California Stephen G. Carpenter Chairman and Chief Executive Officer, California United Bank, N.A., 1998 Encino, California Appointed by the Board of Governors Anita Landecker Western Regional Vice President, Local Initiatives Support Corporation, 1996 Los Angeles, California David L. Moore President, Western Growers Association, Irvine, California 1997 Anne L. Evans Chairman, Evans Hotels, San Diego, California 1998 PORTLAND BRANCH Appointed by the Federal Reserve Bank Elizabeth K. Johnson President, TransWestern Aviation, Inc., Scappoose, Oregon 1996 Cecil W. Drinkward President and Chief Executive Officer, Hoffman Corporation, Portland, 1996 Oregon Thomas C. Young Chairman, President, and Chief Executive Officer, Northwest National 1997 Bank, Vancouver, Washington John D. Eskildsen President and Chief Executive Officer, U.S. National Bank of Oregon, 1998 Portland, Oregon Appointed by the Board of Governors Ross R. Runkel Professor of Law, Willamette University, Salem, Oregon 1996 Marvin R. O'Quinn Chief Operating Officer, Providence Portland Medical Center, Portland, 1997 Oregon Carol A. Whipple Proprietor, Rocking C Ranch, Elkton, Oregon 1998 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

482 Federal Reserve Bulletin • May 1996 Term expires DISTRICT 12—SAN FRANCISCO—Continued DECEMBER 31 SALT LAKE CITY BRANCH Appointed by the Federal Reserve Bank Nancy Mortensen Vice President-Marketing Services, ZCMI, Salt Lake City, Utah 1996 R.D. Cash Chairman, President, and Chief Executive Officer, Questar Corporation, 1997 Salt Lake City, Utah J. Pat McMurray Chairman, President, and Chief Executive Officer, First Security Bank of 1998 Idaho, Boise, Idaho Roy C. Nelson President, Bank of Utah, Ogden, Utah 1998 Appointed by the Board of Governors Constance G. Hogland Executive Director, Boise Neighborhood Housing Services, Inc., Boise, 1996 Idaho Gerald R. Sherratt President, Southern Utah University, Cedar City, Utah 1997 Richard E. Davis President and Chief Executive Officer, Salt Lake Convention & Visitors 1998 Bureau, Salt Lake City, Utah SEATTLE BRANCH Appointed by the Federal Reserve Bank Tomio Moriguchi Chairman and Chief Executive Officer, Uwajimaya, Inc., Seattle, 1996 Washington John V. Rindlaub Chairman and Chief Executive Officer, Seafirst Bank, Seattle, Washington 1996 Thomas E. Cleveland Chairman and Chief Executive Officer, Access Business Finance, Bellevue, 1997 Washington Constance L. Proctor Partner, Alston, Courtnage, MacAulay & Proctor, Seattle, Washington 1998 Appointed by the Board of Governors George F. Russell, Jr. Chairman, Frank Russell Company, Tacoma, Washington 1996 William R. Wiley Senior Vice President, Science & Technology Policy, Battelle Memorial 1997 Institute, Richland, Washington Helen M. Rockey President and Chief Executive Officer, Brooks Sports, Inc., Bothell, 1998 Washington Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 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 A33 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 A36 Domestic finance companies—Assets and Federal Reserve Banks liabilities, and consumer, real estate, and business All Condition and Federal Reserve note statements credit A12 Maturity distribution of loan and security holdings Real Estate Monetary and Credit Aggregates A37 Mortgage markets A38 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 All 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 • May 1996 DOMESTIC NONFINANCIAL STATISTICS- Reported by Nonbanking Business CONTINUED Enterprises in the United States A61 Liabilities to unaffiliated foreigners Selected Measures—Continued A62 Claims on unaffiliated foreigners A51 Gross domestic product and income A52 Personal income and saving Securities Holdings and Transactions A63 Foreign transactions in securities INTERNATIONAL STATISTICS A64 Marketable U.S. Treasury bonds and notes—Foreign transactions Summary Statistics Interest and Exchange Rates A53 U.S. international transactions—Summary A54 U.S. foreign trade A65 Discount rates of foreign central banks A54 U.S. reserve assets A65 Foreign short-term interest rates A54 Foreign official assets held at Federal Reserve A66 Foreign exchange rates Banks A55 Selected U.S. liabilities to foreign official A67 GUIDE TO STATISTICAL RELEASES AND institutions SPECIAL TABLES Reported by Banks in the United States A55 Liabilities to and claims on foreigners SPECIAL TABLES A56 Liabilities to foreigners A68 Terms of lending at commercial banks, A58 Banks' own claims on foreigners February 1996 A59 Banks' own and domestic customers' claims on A72 Assets and liabilities of U.S. branches and foreigners agencies of foreign banks, December 31, 1995 A59 Banks' own claims on unaffiliated foreigners A60 Claims on foreign countries— Combined domestic offices and foreign branches A76 INDEX TO STATISTICAL TABLES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected G-10 Group of Ten e Estimated GNMA Government National Mortgage Association n.a. Not available GDP Gross domestic product n.e.c. Not elsewhere classified HUD Department of Housing and Urban P Preliminary Development r Revised (Notation appears on column heading IMF International Monetary Fund when about half of the figures in that column 10 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 Financial Statistics • May 1996 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1995 1995r 1996 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Ql Q2 Q3 Q4r Oct. Nov. Dec. Jan.r Feb. Reserves of depository institutions2 1 Total -4.r -7.5r -1.5r -6.9 -10.6 -10.7 .7 -16.1 -16.4 2 Required —4.4r —6.6r -2.5r -7.7 -13.5 -7.9 -6.6 -21.0 -2.7 3 Nonborrowed -2.8r — 8.2r — 2.4r -6.4 -9.9 -9.8 -.5 -11.5 -16.3 4 Monetary base3 6.0 5.8r 1.7 2.7 2.9 1.3 5.0 .4 -4.2 Concepts of money, liquid assets, and debt4 5 Ml -.1 -.4 -1.5 -5.1 -8.8 -3.0 -4.5 —6.2 -2.1 6 M2 1.0r 3.8r 6.9r 3.9 2.3 3.6 5.5 4.9 5.0 7 M3 4.5r 6.3r 8.0 4.3 3.9 2.6 3.6 7.5 9.8 8 L 6.r 7.3r 9.1r 5.8 5.6 1.1 5.3 4.8 n.a. 9 Debt 5.4r 7.0 4.6 4.5 4.3 6.2 3.6 2.2 n.a. Nontransaction components 10 In M25 1.6r 5.8r 10.9r 8.1 7.4 6.5 9.9 9.7 8.1 11 In M3 only6 19.9r 16.9 12.1 6.1 10.4 -1.2 -3.9 18.4 28.8 Time and savings deposits Commercial banks 12 Savings, including MMDAs -12.7 -6.5 9.0 13.1 12.2 10.2 23.2 28.2 16.6 13 Small time7 24.5 20.4 11.0 3.9 3.1 4.6 1.7 4.6 -3.9 14 Large time8'9 11.8 13.6 13.T 19.4 31.6 19.0 6.0 -6.7 18.0 Thrift institutions 15 Savings, including MMDAs -20.1 -14.5 -7.3 -2.8 .3 -6.3 -2.7 -3.0 6.4 16 Small time7 19.7 23.5 4.3 4.7 4.4 6.1 3.7 -8.0 .7 17 Large time8 22.6 16.7 13.7r 8.0 11.4 4.8 4.8 16.0 3.2 Money market mutual funds 18 Retail 8.0r 14.2r 36.9r 16.5 12.5 13.5 13.0 9.0 15.6 19 Institution-only 17.6 30.5 27.6 9.2 10.3 2.1 12.9 17.5 70.0 Repurchase agreements and Eurodollars 20 Repurchase agreements10 32.4r 7.4r —5.0r -14.9 -16.2 -29.7 -51.2 49.4 19.5 21 Eurodollars10 26.0 18.6 9.4 -6.3 -10.2 -28.4 9.3 53.8 8.8 Debt components4 22 Federal 5.1 5.4 4.6 2.3 2.9 4.4 -.4 -3.3 n.a. 23 Nonfederal 5.4 7.6r 4.7r 5.3 4.8 6.8 5.0 4.2 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 U.S. 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. Jan. Feb. Jan. 17 Jan. 24 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 420,757 416,469 408,619 416,530 412,457 409,555' 407,277 407,323 408,952 410,744 U.S. government securities2 2 Bought outright—System account 378,548 376,397 373,807 377,756 374,412 373,871 372,294 372,280 375,178 375,090 3 Held under repurchase agreements 5,626 1,810 215 548 0 0 0 0 0 890 Federal agency obligations 4 Bought outright 2,654 2,634 2,634 2,634 2,634 2,634 2,634 2,634 2,634 2,634 5 Held under repurchase agreements 343 590 26 643 0 0 0 0 0 109 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 139 76 27 33 12 10 28 7 8 69 8 Seasonal credit 40 5 7 3 4 5 6 8 8 8 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 1,176 2,461 1,139 2,475 2,836' 653 817 628 1,382 1,834 11 Other Federal Reserve assets 32,231 32,496 30,764 32,439 32,558 32,382 31,498 31,767 29,742 30,110 12 Gold stock 11,050 11,051 11,053 11,050 11,050 11,052 11,052 11,052 11,053 11,053 13 Special drawing rights certificate account 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 14 Treasury currency outstanding 23,969' 24,043r 24,104 24,039' 24,053' 24,067' 24,081 24,095 24,109 24,123 ABSORBING RESERVE FUNDS 15 Currency in circulation 419,598' 417,900' 412,780 419,185' 415,719' 412,357' 411,927 412,404 413,270 413,351 16 Treasury cash holdings 271 247 276 225 271 271 273 274 279 279 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,762 6,298 4,953 5,548 7,218 6,963 5,493 5,204 5,137 3,883 18 Foreign 204 191 220 174 174 207 204 177 220 279 19 Service-related balances and adjustments 5,487 5,997 6,005 5,428 6,421 6,317 6,842 5,835 5,784 5,592 20 Other 366 333 386 287 310 344 408 375 393 376 21 Other Federal Reserve liabilities and capital 12,847 12,741 12,600 12,940 12,877 12,701 12,040 12,659 12,779 12,856 22 Reserve balances with Federal Reserve Banks3 . . . 20,410 18,024 16,724 18,000 14,738' 15,684' 15,392 15,710 16,421 19,472 End-of-month figures Wednesday figures Dec. Jan. Feb. Jan. 17 Jan. 24 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 428,440 413,136' 409,890 426,583 408,769' 413,136' 406,608 409,636 412,823 416,515 U.S. government securities2 2 Bought outright—System account 378,197 378,208 376,519 377,701 372,514 378,208 372,061 374,081 375,706 376,928 3 Held under repurchase agreements 12,762 0 0 1,500 0 0 0 0 0 6,230 Federal agency obligations 4 Bought outright 2,634 2,634 2,634 2,634 2,634 2,634 2,634 2,634 2,634 2,634 5 Held under repurchase agreements 1,100 0 0 3,000 0 0 0 0 0 765 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 111 10 12 142 13 10 8 20 3 78 8 Seasonal credit 24 5 6 3 4 5 6 9 9 8 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 107 928' 396 9,237 929' 928' 273 996 4,490 -749 11 Other Federal Reserve assets 33,504 31,350 30,322 32,367 32,675 31,350 31,626 31,896 29,981 30,621 12 Gold stock 11,050 11,052 11,053 11,050 11,052 11,052 11,052 11,053 11,053 11,053 13 Special drawing rights certificate account 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 14 Treasury currency outstanding 24,01 lr 24,067' 24,137 24,039' 24,053' 24,067' 24,081 24,095 24,109 24,123 ABSORBING RESERVE FUNDS 15 Currency in circulation 424,253r 412,652' 413,951 418,666' 414,445' 412,652' 412,884 413,386 414,066 414,253 16 Treasury cash holdings 270 273 279 270 272 273 273 278 280 279 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,979 8,210 5,632 7,859 7,089 8,210 5,219 5,177 5,192 4,700 18 Foreign 386 165 209 166 173 165 235 173 294 167 19 Service-related balances and adjustments 6,349 6,317 5,764 5,428 6,421 6,317 6,842 5,835 5,784 5,592 70 Other 932 406 318 306 313 406 360 378 368 320 21 Other Federal Reserve liabilities and capital 12,342 11,832 13,062 12,678 12,633 11,832 12,166 12,610 12,642 12,692 22 Reserve balances with Federal Reserve Banks3 .. 23,159 18,568' 16,033 26,466 12,696' 18,568' 13,930 17,114 19,527 23,856 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 Financial Statistics • May 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. Aug. Sept. Oct. Nov. Dec. Jan.' Feb. 1 Reserve balances with Reserve Banks2 29,374 24,658 20,440 20,565 20,519 20,055 20,066 20,440 17,763 16,792 2 Total vault cash3 36,818 40,378 42,117 40,186 40,652 40,564 40,576 42,117 44,790 42,205 3 Applied vault cash4 33,484 36,682 37,460 36,255 36,640 36,345 36,332 37,460 39,170 36,957 4 Surplus vault cash5 3,334 3,696 4,657 3,932 4,012 4,219 4,244 4,657 5,620 5,248 5 Total reserves6 62,858 61,340 57,900 56,819 57,159 56,400 56,397 57,900 56,934 53,749 6 Required reserves 61,795 60,172 56,622 55,832 56,209 55,319 55,454 56,622 55,449 52,898 7 Excess reserve balances at Reserve Banks7 1,063 1,168 1,278 988 950 1,081 943 1,278 1,485 851 8 Total borrowings at Reserve Banks8 82 209 257 282 278 245 204 257 38 35 9 Seasonal borrowings 31 100 40 258 252 199 73 40 7 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 Nov. 8 Nov. 22 Dec. 6 Dec. 20 Jan. 3 Jan. 17 Jan. 31r Feb. 14 Feb. 28 Mar. 13 1 Reserve balances with Reserve Banks2 19,334 20,270 20,438 19,563 21,558 19,658 15,055 15,546 17,938 18,189 2 Total vault cash3 41,126 40,218 40,653 42,943 41,865 44,166 46,042 44,132 40,326 41,536 3 Applied vault cash4 36,846 36,071 36,274 38,053 37,353 39,104 39,626 38,455 35,468 36,844 4 Surplus vault cash5 4,280 4,148 4,379 4,890 4,513 5,062 6,416 5,677 4,858 4,692 5 Total reserves6 56,180 56,341 56,712 57,615 58,910 58,762 54,681 54,001 53,406 55,032 6 Required reserves 55,129 55,544 55,623 56,508 57,313 57,143 53,356 53,288 52,436 53,925 7 Excess reserve balances at Reserve Banks7 1,052 797 1,089 1,107 1,597 1,619 1,326 713 970 1,107 8 Total borrowings at Reserve Banks8 121 236 233 300 218 22 16 24 47 15 9 Seasonal borrowings 116 63 51 41 34 4 5 7 8 8 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 statistica lrelease. 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 1996, week ending Monday SSoouurrccee aanndd mmaattuurriittyy Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 Feb. 5 Feb. 12 Feb. 19 Feb. 26 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 87,495 94,378 90,305 85,691 78,477 84,184 83,771 84,683 79,608 2 For all other maturities 1177,,778811 1144,,776655 14,524 13,759 14,068 13,704 13,211 13,189 13,147 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 20,342 23,127 23,688 24,098 19,658 23,281 23,504 23,102 23,785 4 For all other maturities 21,663 19,427 19,529 19,155 19,908 18,768 19,861 19,558 18,911 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 17,233 20,104 20,047 19,938 18,932 21,283 20,264 22,225 21,598 6 For all other maturities 22,925 25,774 27,454 26,854 28,083 28,316 32,043 28,315 28,358 All other customers 7 For one day or under continuing contract 41,272 45,524 43,602 43,700 41,234 41,233 41,155 39,608 38,913 8 For all other maturities 18,286 16,154 16,790 15,799 15,225 15,369 15,691 16,552 15,665 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 64,799 68,303 64,929 65,987 60,616 59,372 58,204 60,125 57,919 10 To all other specified customers2 30,267 34,492 37,095 32,429 29,037 30,104 29,055 29,222 30,887 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 Financial Statistics • May 1996 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit" Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk 4/ O 5/ n 9 6 Effective date Previous rate 4/ O 5/ n 9 6 Effective date Previous rate 4/ O 5/ n 9 6 Effective date Previous rate Boston 5.00 2/1/96 5.25 5.30 3/28/96 5.30 5.80 3/28/96 5.80 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 Dal'as 1/3 !/96 San Francisco 5.00 1/31/96 5.25 5.30 3/28/96 5.30 5.80 3/28/96 5.80 Range of rates for adjustment credit in recent years4 Range (or F.R. Bank •inge (or F.R. Bank Range (or F.R. Bank level)—All of \el)—All of Effective date level)—All of F.R. Banks N.Y. R. Banks N.Y. F.R. Banks N.Y. In effect Dec. 31, 1977 1981—Nov. 2 13-14 13 1988—Aua. 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—Mav 20 7.5-8 7.5 18 4 4 30 12 12 24 7.5 7.5 Now 15 4-4.75 4.75 June 13 11-12 11 17 4.75 4.75 July 2 1 8 6 101-11 1 1 1 1 0 1986—Mar. 1 7 0 7- 7 7 .5 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 N Se o p v t . . 2 1 6 7 1 1 1 2 111 2 July 2 1 3 1 . 6 6 .5 6 6 . 5 1996—Jan. 31 5.00-5.25 5.00 Dec. 5 12-13 13 Auc. 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 IInn eeffffeecctt AApprr.. 55,, 11999966 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 tlexible rate somewhat above rates charged on market sources of funds is charged. The rate for loans to depository institutions may be charged oil 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 efl'cctive 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 w as 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 Requirement TTyyppee ooff ddeeppoossiitt Per d c e e p n o ta s g it e s of Effective date Net transaction accounts2 1 $0 million-$52.0 million3 33333 1111122222/////1111199999/////9999955555 2 More than $52.0 million4 1111100000 1111122222/////1111199999/////9999955555 00000 1111122222/////2222277777/////9999900000 00000 1111122222/////2222277777/////9999900000 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. Effective 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 11/2 years was reduced from 3 percent to 1 ]/l 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 V5 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 ]/l 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. Effective 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 'A 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 Financial Statistics • May 1996 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1995 TTyyppee ooff ttrraannssaaccttiioonn aanndd mmaattuurriittyy 11999933 11999944 11999955 July Aug. Sept. Oct. Nov. Dec. Jan. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 17,717 17,484 10,932 0 433 409 1,350 4,271 0 0 2 Gross sales 0 0 0 0 0 0 0 0 0 0 Exchanges 332,229 376,277 398,487 25,213 39,195 30,333 29,397 39,057 31,535 31,476 4 Redemptions 0 0 900 0 0 0 900 0 0 0 Others within one year 5 Gross purchases 1,223 1,238 390 0 0 0 0 0 390 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shifts 31,368 0 0 2,063 7,805 0 1,745 6,108 0 2,048 8 Exchanges -36,582 -21,444 0 -562 -5,599 0 -2,049 -4,937 0 -3,287 9 Redemptions 0 0 0 300 0 485 0 0 0 11,,222288 One to five years 10 Gross purchases 10,350 9,168 4,966 0 0 100 0 0 2,317 0 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shifts -27,140 -6,004 0 -2,063 -3,379 0 -1,745 -5,292 0 -2,048 13 Exchanges 0 17,801 0 562 4,905 0 22,,004499 33,,223377 0 33,,228877 Five to ten years 14 Gross purchases 4,168 3,818 1,239 0 0 0 0 400 0 0 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shifts 0 -3,145 0 0 -319 0 0 -816 0 0 17 Exchanges 0 22,,990033 0 0 11,,880000 0 0 11,,770000 0 0 More than ten years 18 Gross purchases 3,457 3,606 3,122 0 0 100 0 0 1,884 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shifts 0 -918 0 0 -525 0 0 0 0 0 21 Exchanges 0 775 0 0 1,100 0 0 0 0 0 All maturities 22 Gross purchases 36,915 35,314 20,649 0 433 609 1,350 4,671 4,591 0 23 Gross sales 0 0 0 0 0 0 0 0 0 0 24 Redemptions 767 2,337 2,376 0 0 0 1,385 0 0 1,228 Matched transactions 25 Gross purchases 1,475,941 1,700,836 2,197,736 166,674 179,571 195,830 216,755 226,340 227,858 260,425 26 Gross sales 1,475,085 1,701,309 2,202,030 163,490 185,711 198,587 213,161 228,419 228,071 259,186 Repurchase agreements 27 Gross purchases 475,447 309,276 331,694 8,527 4,130 43,286 28,825 44,569 34,325 16,040 28 Gross sales 470,723 311,898 328,497 24,851 1,075 39,896 32,980 39,876 28,546 28,802 29 Net change in U.S. Treasury securities 41,729 29,882 17,175 -13,141 -2,651 1,241 -597 7,285 10,157 -12,751 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 1,303 333 122 46 83 120 58 0 Repurchase agreements 33 Gross purchases 35,063 52,696 36,851 711 1,610 1,434 3,740 3,763 2,888 9,793 34 Gross sales 34,669 52,696 36,776 1,172 1,510 1,459 3,605 3,973 1,788 10,893 35 Net change in federal agency obligations -380 -1,002 -1,228 -794 -22 -71 52 -330 1,042 -1,100 36 Total net change in System Open Market Account... 41,348 28,880 15,948 -13,935 -2,673 1,170 -545 6,955 11,199 -13,851 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 Statements' Millions of dollars Wednesday End of month Account 1996 1995 1996 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 Dec. 31 Jan. 31 Feb. 29 Consolidated condition statement ASSETS 1 Gold certificate account 11,052 11,052 11,053 11,053 11,053 11,050 11,052 11,053 2 Special drawing rights certificate account 10,168 10,168 10,168 10,168 10,168 10,168 10,168 10,168 3 513 535 551 550 543 424 513 547 Loans 4 To depository institutions 15 14 29 12 86 135 15 18 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 2,634 2,634 22,,663344 8 Held under repurchase agreements 0 0 0 0 765 1,100 0 0 9 Total U.S. Treasury securities 378,208 372,061 374,081 375,706 383,158 390,959 378,208 376,519 10 Bought outright2 378,208 372,061 374,081 375,706 376,928 378,197 378,208 376,519 11 Bills 184,355 178,207 180,227 181,852 183,074 183,116 184,355 182,666 1? Notes 149,785 149,785 149,785 148,885 148,885 151,013 149,785 148,885 13 Bonds 44,069 44,069 44,069 44,969 44,969 44,069 44,069 44,969 14 Held under repurchase agreements 0 0 0 0 6,230 12,762 0 0 15 Total loans and securities 380,857 374,709 376,744 378,352 386,643 394,829 380,857 379,171 16 Items in process of collection 6,374 6,001 6,579 13,201 5,577 4,769 6,374 4,791 17 Bank premises 1,134 1,134 1,138 1,141 1,141 1,126 1,134 1,140 Other assets 18 Denominated in foreign currencies 19,798 19,808 19,816 19,824 19,833 21,099 19,798 20,212 19 All other4 10,447 10,701 10,976 8,899 9,625 11,258 10,447 8,965 20 Total assets 440,344 434,108 437,024 443,188 444,582 454,723 440,344 436,048 LIABILITIES 21 Federal Reserve notes 389,371 389,610 390,120 390,786 390,952 400,935 389,371 390,640 22 Total deposits 33,903 26,943 29,141 31,551 35,524 36,908 33,903 28,135 23 Depository institutions 25,122 21,128 23,362 25,696 30,337 29,611 25,122 21,768 24 U.S. Treasury—General account 8,210 5,219 5,177 5,192 4,700 5,979 8,210 5,632 25 Foreign—Official accounts 165 235 173 294 167 386 165 209 26 406 360 378 368 320 932 406 318 27 Deferred credit items 5,239 5,389 5,154 8,209 5,414 4,538 5,239 4,211 28 Other liabilities and accrued dividends' 4,181 4,111 4,270 4,192 4,185 4,409 4,181 4,158 29 Total liabilities 432,693 426,053 428,683 434,738 436,075 446,790 432,693 427,144 CAPITAL ACCOUNTS 30 Capital paid in 3,996 4,007 4,024 4,036 4,037 3,966 3,996 4,031 31 Surplus 3,654 3,835 3,918 3,938 3,945 3,966 3,654 3,945 32 Other capital accounts 1 214 399 476 525 0 1 928 33 Total liabilities and capital accounts 440344 434,108 437,024 443,188 444,582 454,723 440,344 436,048 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 509,044 509,346 515,332 523,930 529,208 500,174 509,044 553366,,447766 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 489,867 492,212 494,847 497,637 500,359 481,044 489,867 501,002 36 LESS: Held by Federal Reserve Banks 100,496 102,602 104,727 106,851 109,407 80,109 100,496 110,362 37 Federal Reserve notes, net 389,371 389,610 390,120 390,786 390,952 400,935 389,371 390,640 Collateral held against notes, net 38 Gold certificate account 11,052 11,052 11,053 11,053 11,053 11,050 11,052 11,053 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 368,150 368,390 368,899 369,565 369,730 379,717 368,150 369,419 42 Total collateral 389,371 389,610 390,120 390,786 390,952 400,935 389,371 390,640 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 Financial Statistics • May 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. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 Dec. 31 Jan. 31 Feb. 29 1 Total loans 15 34 15 16 77 87 15 35 2 Within fifteen days' 15 30 10 15 75 85 15 32 3 Sixteen days to ninety days 4 5 7 2 2 3 4 Total U.S. Treasury securities 378,208 372,061 374,081 375,706 383,158 378,197 378,208 376,519 5 Within fifteen days' 20,294 20,849 16,830 13,271 20,393 7,580 20,294 4,962 6 Sixteen days to ninety days 84,103 81,990 83,529 87,393 87,722 93,738 84,103 87,722 7 Ninety-one days to one year 119,461 114,871 119,371 116,519 117,566 123,217 119,461 124,656 8 One year to five years 85,961 85,961 85,961 88,571 87,524 85,273 85,961 89,228 9 Five years to ten years 31,469 31,469 31,469 32,150 32,151 31,469 31,469 32,151 10 More than ten years 36,921 36,921 36,921 37,801 37,801 36,921 36,921 37,801 11 Total federal agency obligations 2,634 2,634 2,634 2,635 3,399 2,634 2,634 2,634 12 Within fifteen days' 141 0 0 365 1,180 240 141 415 13 Sixteen days to ninety days 660 859 909 544 510 474 660 510 14 Ninety-one days to one year 617 604 604 604 615 527 617 615 15 One year to five years 664 619 569 569 543 841 664 543 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 D 19 e 9 c 2 . D 19 e 9 c 3 . D 19 e 9 c 4 . D 19 e 9 c 5 . July Aug. Sept. Oct: Nov. Dec. Jan.' Feb. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 54.37r 60.52' 59.36' 56.36' 57.68 57.50 57.34 56.84 56.33 56.36' 55.61 54.85 2 Nonborrowed reserves4 54.24r 60.44' 59.16' 56.11' 57.31 57.22 57.07 56.59 56.13 56.11' 55.57 54.81 3 Nonborrowed reserves plus extended credit5 54.24' 60.44' 59.16' 56.11' 57.31 57.22 57.07 56.59 56.13 56.11' 55.57 54.81 4 Required reserves 53.21' 59.46' 58.20' 55.09' 56.59 56.51 56.39 55.76 55.39 55.09' 54.12 54.00 5 Monetary base6 351.24' 386.88' 418.72' 435.01' 429.82 430.81 431.69 432.74 433.21 435.01' 435.15 433.62 Not seasonally adjusted 6 Total reserves7 56.06 62.37 61.13 58.02' 57.50 56.94 57.30 56.56 56.57 58.02' 56.95 53.80 7 Nonborrowed reserves 55.93 62.29 60.92 57.76 57.13 56.66 57.03 56.31 56.37 57.76 56.91 53.77 8 Nonborrowed reserves plus extended credit5 55.93 62.29 60.92 57.76 57.13 56.66 57.03 56.31 56.37 57.76 56.91 53.77 9 Required reserves8 54.90 61.31 59.96 56.74 56.41 55.96 56.35 55.48 55.63 56.74 55.47 52.95 10 Monetary base9 354.55 390.59 422.51 439.03' 431.31 431.09 431.64 431.60 433.22 439.03' 435.99 430.24 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves" 56.54 62.86 61.34 57.90 57.39 56.82 57.16 56.40 56.40 57.90 56.93 53.75 12 Nonborrowed reserves 56.42 62.78 61.13 57.64 57.02 56.54 56.88 56.15 56.19 57.64 56.90 53.72 13 Nonborrowed reserves plus extended credit5 56.42 62.78 61.13 57.64 57.02 56.54 56.88 56.15 56.19 57.64 56.90 53.72 14 Required reserves 55.39 61.80 60.17 56.62 56.30 55.83 56.21 55.32 55.45 56.62 55.45 52.90 15 Monetary base12 360.90 397.62 427.25 444.45' 435.56 435.59 436.20 436.34 438.19 444.45' 441.94 436.21 16 Excess reserves13 1.16 1.06 1.17 1.28 1.09 .99 .95 1.08 .94 1.28 1.49 .85 17 Borrowings from the Federal Reserve .12 .08 .21 .26 .37 .28 .28 .25 .20 .26 .04 .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 • May 1996 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1995' 1996 Item 1992 1993 1994 1995' Dec. Dec. Dec. Dec. Nov. Dec. Jan.' Feb. Seasonally adjusted Measures2 1 Ml 1,024.4 1,128.6 1,148.7 1,124.8 1,129.0 1,124.8 1,119.0 1,117.0 2 M2 3,438.7 3,494.1 3,509.4 3,660.2 3,643.6 3,660.2 3,675.0 3,690.2 3 M3 4,187.3 4,249.6 4,319.7r 4,572.7 4,559.0 4,572.7 4,601.3 4,638.9 4 L 5,075.8 5,164.5 5,303.7r 5,683.2 5,658.2 5,683.2 5,705.9 n.a. 5 Debt 11,881.7 12,516.4 13,153.2 13,871.3 13,829.6 13,871.3 13,897.1 n.a. Ml components 6 Currency3 292.9 322.4 354.9 373.2 371.6 373.2 373.6 373.3 7 Travelers checks4 8.1 7.9 8.5 8.9 8.9 8.9 8.9 8.9 8 Demand deposits5 339.1 384.3 382.4 389.8 388.2 389.8 393.5 397.4 9 Other checkable deposits6 384.2 414.0 402.9 353.0 360.3 353.0 343.0 337.5 Nontransaction components 10 In M27 2,414.3 2,365.4 2,360.7 2,535.4 2,514.6 2,535.4 2,556.0 2,573.3 11 In M3 only8 748.6 755.6 810.3r 912.4 915.4 912.4 926.4 948.6 Commercial banks 12 Savings deposits, including MMDAs 754.1 785.0 751.9 775.0 760.3 775.0 793.2 804.2 13 Small time deposits9 509.3 470.4 505.4 576.2 575.4 576.2 578.4 576.5 14 Large time deposits10' " 286.6 272.3 298.7 342.4 340.7 342.4 340.5 345.6 Thrift institutions 15 Savings deposits, including MMDAs 433.0 433.8 397.0 359.5 360.3 359.5 358.6 360.5 16 Small time deposits9 361.9 317.6 318.2 359.5 358.4 359.5 357.1 357.3 17 Large time deposits'0 67.1 61.5 64.8 75.0 74.7 75.0 76.0 76.2 Money market mutual funds 18 Retail 356.0 358.7 388.1 465.1 460.1 465.1 468.6 474.7 19 Institution-only 199.8 197.9 183.7 226.4 224.0 226.4 229.7 243.1 Repurchase agreements and Eurodollars 20 Repurchase agreements'2 128.1 157.5 180.8r 177.3 185.2 177.3 184.6 187.6 21 Eurodollars'2 66.9 66.3 82.3 91.4 90.7 91.4 95.5 96.2 Debt components 22 Federal debt 3,068.6 3,328.3 3,497.6 3,644.6 3,645.8 3,644.6 3,634.7 23 Nonfederal debt 8,813.1 9,188.1 9,655.6 10,226.7 10,183.9 10,226.7 10,262.4 n.a. Not seasonally adjusted Measures2 24 Ml 1,046.0 1,153.7 1,174.2 1,150.7 1,136.5 1,150.7 1,127.9 1,103.3 25 M2 3,455.1 3,514.1 3,529.8 3,679.9 3,649.2 3,679.9 3,676.7 3,670.7 26 M3 4,205.3 4,271.3 4,341.5' 4,593.8 4,571.9 4,593.8 4,605.9 4,620.0 27 L 5,103.1 5,194.2 5,333.2' 5,712.7 5,671.5 5,712.7 5,719.3 n.a. 28 Debt 11,883.2 12,509.3 13,145.8 13,858.0 13,793.1 13,858.0 13,891.5 n.a. Ml components 29 Currency3 295.0 324.8 357.5 376.1 371.7 376.1 371.7 370.8 30 Travelers checks4 7.8 7.6 8.1 8.5 8.7 8.5 8.5 8.5 31 Demand deposits5 354.4 401.8 400.1 408.0 395.8 408.0 399.0 388.3 32 Other checkable deposits6 388.9 419.4 408.4 358.0 360.3 358.0 348.7 335.7 Nontransaction components 33 In M27 2,409.1 2,360.4 2,355.6 2,529.2 2,512.7 2,529.2 2,548.8 2,567.4 34 In M3 only8 750.2 757.1 811.7' 913.8 922.7 913.8 929.2 949.3 Commercial banks 35 Savings deposits, including MMDAs 752.9 784.3 751.6 775.0 763.4 775.0 789.5 799.0 36 Small time deposits9 507.8 468.2 502.5 572.3 572.6 572.3 576.1 575.6 37 Large time deposits10' " 286.2 272.1 298.5 342.3 343.6 342.3 337.8 344.1 Thrift institutions 38 Savings deposits, including MMDAs 432.4 433.4 396.9 359.5 361.7 359.5 356.9 358.2 39 Small time deposits9 360.9 316.1 316.4 357.0 356.7 357.0 355.6 356.7 40 Large time deposits10 67.0 61.5 64.8 75.0 75.4 75.0 75.4 75.8 Money market mutual funds 41 Retail 355.1 358.3 388.2 465.4 458.3 465.4 470.6 478.0 42 Institution-only 201.1 199.4 185.5 228.6 226.3 228.6 237.3 248.7 Repurchase agreements and Eurodollars 43 Repurchase agreements'2 127.2r 156.6r 179.6' 175.8 185.1 175.8 183.3 184.8 44 Eurodollars12 68.7r 61.6' 83.4' 92.1 92.4 92.1 95.4 95.8 Debt components 45 Federal debt 3,069.8 3,329.5 3,499.0 3,645.9 3,635.9 3,645.9 3,634.4 n.a. 46 Nonfederal debt 8,813.4 9,179.8 9,646.8 10,212.1 10,157.2 10,212.1 10,257.1 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 • 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 US. 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 Financial Statistics • May 1996 1.22 DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING Commercial and BIF-insured saving banks1 1995 1996 1993 1994 Dec. Dec. June July Aug. Sept. Oct. Nov. Dec. Jan.' Feb. Interest rates (annual effective yields)2 INSURED COMMERCIAL BANKS 1 Negotiable order of withdrawal accounts 1.86 1.96 1.97 1.93 1.93 1.94 1.93 1.95 1.92 1.92 1.94 2 Savings deposits3 2.46 2.92 3.17 3.13 3.12 3.14 3.11 3.13 3.10 3.01 2.98 Interest-bearing time deposits with balances of less than $100,000, by maturity 3 7 to 91 days 2.65 3.79 4.20 4.17 4.10 4.10 4.11 4.12 4.11 4.01 3.97 4 92 to 182 days 2.91 4.44 4.81 4.77 4.77 4.75 4.75 4.74 4.69 4.57 4.47 5 183 days to 1 year 3.13 5.12 5.27 5.18 5.15 5.14 5.15 5.12 5.03 4.92 4.79 6 More than 1 year to 2 years 3.55 5.74 5.53 5.38 5.39 5.32 5.31 5.27 5.18 5.03 4.90 7 More than 2 V2 years 4.28 6.30 5.79 5.62 5.63 5.60 5.56 5.49 5.41 5.26 5.11 BIF-INSURED SAVINGS BANKS4 8 Negotiable order of withdrawal accounts 1.87 1.94 1.98 1.97 1.98 1.98 1.97 1.94 1.91 1.85 1.84 9 Savings deposits3 2.63 2.87 2.97 2.97 2.96 2.96 2.97 2.99 2.99 2.95 2.92 Interest-bearing time deposits with balances of less than $100,000, by maturity 10 7 to 91 days 2.81 3.80 4.24 4.28 4.34 4.29 4.34 4.45 4.44 4.38 4.29 11 92 to 182 days 3.02 4.89 5.22 5.16 5.12 5.08 5.06 5.02 4.95 4.87 4.79 12 183 days to 1 year 3.31 5.52 5.61 5.47 5.45 5.35 5.32 5.28 5.19 5.07 4.93 13 More than 1 year to 2'/i years 3.67 6.09 5.78 5.62 5.60 5.51 5.50 5.46 5.32 5.22 5.11 14 More than 2 Vi years 4.62 6.43 5.99 5.82 5.78 5.74 5.69 5.64 5.47 5.34 5.25 Amounts outstanding (millions of dollars) INSURED COMMERCIAL BANKS 15 Negotiable order of withdrawal accounts 305,237 304,896 276,406 274,140 267,644 253,174 258,411 259,259 252,434 248,464 246,906 16 Savings deposits3 767,035 737,068 721,498 726,697 735,930 744,839 747,943 767,431 793,168 774,748 798,356 17 Personal 598,276 580,438 566,220 570,299 575,204 584,239 587,235 599,787 628,372 617,570 634,471 18 Nonpersonal 168,759 156,630 155,279 156,398 160,726 160,600 160,707 167,644 164,796 157,177 163,885 Interest-bearing time deposits with balances of less than $100,000, by maturity 19 7 to 91 days 29,362 32,265 32,258 33,142 30,937 29,804 29,940 31,083 32,807 34,275 36,879 20 92 to 182 days 109,050 96,650 92,364 91,975 90,796 92,220 94,418 97,401 96,902 96,811 101,149 21 183 days to 1 year 145,386 163,062 189,110 189,011 189,565 189,338 188,859 188,043 187,828 186,068 186,561 22 More than 1 year to 2 l/l years 139,781 164,395 198,805 202,467 204,453 203,548 206,993 211,169 211,388 214,093 214,984 23 More than 2lA years 180,461 192,712 195,689 195,623 201,306 200,182 200,201 202,357 203,227 200,849 202,184 24 IRA and Keogh plan deposits 144,011 144,097 149,488 150,426 150,648 149,570 151,094 151,869 152,390 152,984 155,305 BIF-INSURED SAVINGS BANKS4 25 Negotiable order of withdrawal accounts 11,191 11,175 11,237 11,147 10,999 11,408 11,317 11,613 12,727 11,410 12,047 26 Savings deposits3 80,376 70,082 66,952 66,409 66,478 69,752 69,636 70,265 71,402 67,540 71,129 27 Personal 77,263 67,159 63,736 63,194 63,149 66,403 66,193 66,688 67,919 64,172 67,798 28 Nonpersonal 3,113 2,923 3,216 3,215 3,329 3,349 3,443 3,577 3,482 3,369 3,331 Interest-bearing time deposits with balances of less than $100,000, by maturity 29 7 to 91 days 2,746 2,144 1,555 1,769 1,856 1,739 1,768 1,903 2,115 1,988 2,231 30 92 to 182 days 12,974 11,361 10,939 11,030 11,079 11,258 11,231 11,848 12,754 12,581 14,053 31 183 days to 1 year 17,469 18,391 21,545 21,969 22,294 24,837 25,036 25,887 27,072 26,750 28,400 32 More than 1 year to 2 l/l years 16,589 17,787 24,413 24,876 25,029 27,825 27,755 28,247 28,966 26,968 27,891 33 More than 2 V2 years 20,501 21,293 22,733 22,713 22,563 23,351 23,470 23,574 24,247 22,769 22,733 34 IRA and Keogh plan accounts 19,791 19,008 20,196 20,286 20,333 21,913 21,784 21,758 21,949 21,229 21,251 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 A13 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 July Aug. Sept. Oct.r Nov/ Dec. DEBITS Seasonally adjusted Demand deposits3 1 All insured banks 334,784.1 369,029.1 397,649.3 391,053.7 407,389.4 397,843.6 413,927.0 409,460.9 397,538.3 2 Major New York City banks 171,224.3 191,168.8 201,161.4 197,712.2 206,835.9 207,576.7 210,336.6 204,484.0 203,977.5 3 Other banks 163,559.7 177,860.3 196,487.9 193,341.5 200,553.5 190,266.9 203,590.4 204,976.9 193,560.8 4 Other checkable deposits4 3,481.5 3,798.6 4,207.4 3,593.7 4,236.1 4,366.8 4,690.4 4,891.5 4,595.5 5 Savings deposits (including MMDAs)5 3,497.4 3,766.3 4,507.8 3,986.7 4,745.4 4,898.4 5,328.6 5,679.4 5,703.6 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 785.9 817.4 874.1 849.3 887.9 858.0 907.5 905.5 852.7 7 Major New York City banks 4,198.1 4,481.5 4,867.3 4,624.7 4,970.9 5,018.0 5,269.7 5,222.3 5,069.7 8 Other banks 424.6 435.1 475.2 462.9 480.7 450.5 489.2 496.3 454.4 9 Other checkable deposits4 11.9 12.6 15.4 12.9 15.5 16.3 18.0 19.1 18.6 10 Savings deposits (including MMDAs)5 4.6 4.9 6.1 5.5 6.5 6.6 7.1 7.5 7.4 DEBITS Not seasonally adjusted Demand deposits3 11 All insured banks 334,899.2 369,121.8 397,657.8 390,226.6 421,875.3 395,203.2 413,547.6 398,219.1 411,802.7 12 Major New York City banks 171,283.5 191,226.0 201,182.6 196,873.1 213,958.6 207,994.2 212,506.0 202,744.5 210,780.0 13 Other banks 163,615.7 177,895.7 196,475.3 193,353.5 207,916.7 187,209.0 201,041.7 195,474.6 201,022.7 14 Other checkable deposits4 3,481.7 3,795.6 4,202.6 3,525.4 4,203.3 4,431.9 4,565.4 4,566.6 4,784.8 15 Savings deposits (including MMDAs)5 3,498.3 3,764.4 4,500.8 4,054.1 4,750.1 4,849.1 5,075.1 5,388.7 6,013.9 DEPOSIT TURNOVER Demand deposits3 16 All insured banks 786.1 818.2 874.6 848.2 936.7 856.4 895.4 860.5 847.5 17 Major New York City banks 4,197.9 4,490.3 4,873.1 4,657.5 5,343.0 5,069.5 5,292.2 5,046.6 4,900.9 18 Other banks 424.8 435.3 475.4 462.8 506.7 445.3 476.7 462.5 453.9 19 Other checkable deposits4 11.9 12.6 15.3 12.9 15.6 16.7 17.7 17.8 19.0 20 Savings deposits (including MMDAs)5 4.6 4.9 6.1 5.6 6.5 6.6 6.8 7.1 7.8 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 • May 1996 1.26 ASSETS AND LIABILITIES OF COMMERCIAL BANKS1 Billions of dollars Monthly averages Wednesday figures Account 1995 1995r 1996 1996 Feb. Aug. Sept. Oct. Nov. Dec. Jan.r Feb. Feb. 7 Feb. 14 Feb. 21 Feb. 28 ALL COMMERCIAL Seasonally adjusted BANKING INSTITUTIONS Assets 1 Bank credit 3,367.5 3,543.5 3,566.3 3,578.3 3,588.5 3,599.4 3,625.0 3,635.1 3,624.4 3,635.3 3,640.5 3,643.1 2 Securities in bank credit 939.3 980.2 984.3 987.1 988.9 991.4 990.5 995.8 995.5 993.5 996.6 1,000.3 3 U.S. government securities 724.8 708.5 708.4 713.9 715.8 712.8 704.5 717.0 714.1 714.8 717.8 723.3 4 Other securities 214.5 271.7 275.9 273.2 273.1 278.6 286.0 278.8 281.4 278.7 278.8 277.0 5 Loans and leases in bank credit2 . .. 2,428.2 2,563.3 2,582.0 2,591.2 2,599.6 2,608.0 2,634.5 2,639.3 2,628.9 2,641.8 2,644.0 2,642.9 6 Commercial and industrial 670.2 702.0 708.6 710.8 715.1 718.4 725.0 728.6 727.9 728.8 729.8 728.4 7 Real estate 1,021.8 1,068.1 1,072.1 1,075.4 1,076.7 1,077.2 1,083.9 1,086.7 1,085.0 1,086.3 1,087.0 1,087.9 8 Revolving home equity 76.0 78.2 78.4 78.4 78.8 79.2 79.7 79.9 79.9 79.8 79.8 80.2 9 Other 945.9 989.9 993.7 997.0 997.9 998.0 1,004.1 1,006.8 1,005.1 1,006.5 1,007.2 1,007.8 10 Consumer 459.4 485.7 489.4 489.2 491.2 493.2 497.5 497.5 496.0 496.8 499.0 498.1 11 Security3 73.4 84.3 86.6 86.6 86.2 82.7 83.9 84.5 79.3 88.9 83.7 86.6 12 Other 203.3 223.3 225.3 229.2 230.3 236.5 244.1 241.9 240.6 241.1 244.5 241.8 13 Interbank loans4 178.9 189.3 191.9 192.9 193.7 192.7 199.4 190.4 185.2 190.3 189.4 195.7 14 Cash assets5 213.7 211.6 214.9 222.2 216.0 223.5 232.9 218.9 220.4 214.5 229.1 212.8 15 Other assets6 232.0 221.5 223.8 224.5 225.2 231.6 229.1 233.4 231.4 233.1 235.2 232.8 16 Total assets7 3,935.5 4,108.9 4,140.1 4,161.0 4,166.8 4,190.7 4,229.4 4,221.1 4,204.8 4,216.4 4,237.5 4,227.8 Liabilities 17 Deposits 2,545.9 2,616.9 2,629.6 2,642.6 2,638.2 2,653.1 2,680.0 2,673.6 2,674.8 2,672.4 2,681.8 2,663.4 18 Transaction 801.4 783.3 781.1 777.8 766.1 770.8 779.8 763.0 764.8 759.4 776.6 751.4 19 Nontransaction 1,744.5 1,833.6 1,848.5 1,864.9 1,872.1 1,882.4 1,900.2 1,910.6 1,910.0 1,913.0 1,905.2 1,912.0 20 Large time 374.6 409.5 415.9 423.7 423.2 421.9 422.0 426.0 426.1 425.2 423.6 428.9 21 Other 1,369.9 1,424.1 1,432.7 1,441.2 1,449.0 1,460.5 1,478.2 1,484.6 1,483.9 1,487.8 1,481.7 1,483.1 22 Borrowings 644.7 687.8 687.3 682.4 672.7 687.8 701.5 686.3 683.3 692.4 682.9 689.9 23 From banks in the U.S 181.3 194.3 197.9 197.8 195.8 194.5 204.5 192.3 190.6 196.0 186.7 194.5 24 From nonbanks in the U.S 463.4 493.5 489.5 484.6 476.9 493.3 497.1 494.1 492.7 496.4 496.2 495.4 25 Net due to related foreign offices 248.0 244.8 252.0 257.3 263.7 263.4 270.2 276.0 279.3 273.9 277.3 274.7 26 Other liabilities8 170.6 212.6 219.1 219.2 220.2 227.6 220.7 224.4 224.6 227.0 222.5 224.5 27 Total liabilities 3,609.2 3,762.0 3,788.0 3,801.6 3,794.8 3,831.9 3,872.4 3,860.4 3,862.0 3,865.7 3,864.5 3,852.5 28 Residual (assets less liabilities)9 326.3 346.8 352.1 359.5 372.0 358.8 357.1 360.7 342.7 350.7 373.0 375.3 Not seasonally adjusted Assets 29 Bank credit 3,359.6 3,542.1 3,571.1 3,580.0 3,594.8 3,606.9 3,615.4 3,626.6 3,618.4 3,631.3 3,623.4 3,634.8 30 Securities in bank credit 934.6 983.8 987.3 988.8 987.8 981.6 978.0 990.9 990.5 991.5 988.8 993.8 31 U.S. government securities 720.2 711.4 710.1 712.1 714.1 708.0 698.9 712.4 709.6 710.9 712.4 717.5 32 Other securities 214.4 272.4 277.2 276.7 273.6 273.6 279.0 278.5 280.9 280.5 276.4 276.3 33 Loans and leases in bank credit2 . .. 2,425.0 2,558.4 2,583.9 2,591.2 2,607.0 2,625.3 2,637.4 2,635.7 2,627.9 2,639.9 2,634.6 2,641.0 34 Commercial and industrial 668.6 698.8 704.0 706.8 713.4 716.6 722.1 726.7 724.7 726.4 726.9 728.8 35 Real estate 1,019.0 1.067.8 1,074.0 1,078.6 1,082.4 1,081.9 1,083.6 1,083.6 1.083.5 1,084.5 1,082.5 1,083.6 36 Revolving home equity 75.5 78.5 78.9 79.1 79.3 79.2 79.6 79.5 79.4 79.5 79.3 79.6 37 Other 943.5 989.3 995.2 999.5 1,003.1 1,002.7 1,004.1 1,004.2 1,004.1 1,005.0 1,003.1 1,004.1 38 Consumer 459.9 485.8 490.7 489.8 492.0 499.0 502.1 498.1 498.1 498.1 499.3 497.2 39 Security3 75.8 82.1 86.3 85.2 87.5 86.5 85.6 87.3 82.0 91.1 84.9 91.7 40 Other 201.8 223.9 228.8 230.8 231.7 241.3 243.9 240.0 239.5 239.7 241.1 239.8 41 Interbank loans4 180.6 184.5 187.8 192.1 197.0 205.0 208.1 192.6 189.3 194.9 189.4 195.7 42 Cash assets5 214.4 202.6 215.8 223.2 220.1 238.1 240.3 219.7 210.6 213.3 240.3 216.5 43 Other assets6 231.4 223.3 224.9 224.9 224.7 231.3 229.7 232.8 231.4 232.0 232.7 234.0 44 Total assets7 3,929.5 4,095.6 4,142.5 4,163.5 4,179.8 4,224.4 4,237.0 4,215.1 4,193.1 4,214.9 4,229.2 4,224.4 Liabilities 45 Deposits 2,537.3 2,603.8 2,628.4 2,642.6 2,654.2 2,684.2 2,686.7 2,664.7 2,661.2 2,666.3 2,672.3 2,656.0 46 Transaction 794.5 769.0 779.8 778.0 779.7 805.9 791.5 755.9 752.3 754.7 769.8 746.6 47 Nontransaction 1,742.8 1,834.8 1,848.6 1,864.6 1,874.5 1,878.3 1,895.2 1,908.8 1,908.8 1,911.7 1,902.5 1,909.4 48 Large time 375.1 408.7 414.9 422.2 424.2 420.9 419.0 426.6 425.8 425.5 424.0 430.7 49 Other 1,367.6 1,426.1 1,433.7 1,442.5 1,450.3 1,457.5 1,476.2 1,482.2 1,483.0 1,486.1 1,478.5 1,478.7 50 Borrowings 644.2 686.2 693.5 688.1 681.7 692.2 688.7 680.7 669.4 682.3 681.8 691.0 51 From banks in the U.S 183.0 188.3 190.2 192.9 197.9 207.3 211.3 193.9 191.4 196.0 190.5 196.8 52 From nonbanks in the U.S 461.2 497.9 503.3 495.2 483.7 484.9 477.4 486.8 478.0 486.3 491.3 494.1 53 Net due to related foreign offices 249.6 243.1 247.6 258.4 262.6 264.0 277.3 278.2 272.4 272.8 286.6 283.5 54 Other liabilities8 170.5 212.4 219.3 218.5 222.1 222.9 222.4 225.0 225.4 227.5 221.4 226.0 55 Total liabilities 3,601.6 3,745.5 3,788.9 3,807.7 3,820.6 3,8633 3,875.0 3,848.5 3,828.3 3,848.9 3,862.0 3,856.3 56 Residual (assets less liabilities)9 327.9 350.1 353.7 355.9 359.3 361.1 362.0 366.6 364.8 366.0 367.2 368.1 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 Feb. Aug. Sept. Oct. Nov. Dec. Jan.r Feb. Feb. 7 Feb. 14 Feb. 21 Feb. 28 DOMESTICALLY CHARTERED Seasonally adjusted COMMERCIAL BANKS Assets 57 Bank credit 3,005.8 3,121.6 3,139.0 3,148.8 3,160.1 3,172.9 3,193.7 3,192.4 3,185.7 3,192.2 3,197.3 3,195.9 58 Securities in bank credit 852.0 848.2 852.7 853.1 855.2 856.2 855.6 854.1 854.3 853.5 855.4 855.1 59 U.S. government securities 659.2 641.5 642.7 647.3 648.2 645.0 641.2 644.2 642.9 643.8 645.1 646.7 60 Other securities 192.8 206.7 210.0 205.7 207.0 211.2 214.5 209.8 211.4 209.7 210.2 208.3 61 Loans and leases in bank credit2 2,153.9 2,273.4 2,286.3 2,295.8 2.3W.9 2,316.7 2,338.1 2,338.3 2,331.4 2,338.7 2,342.0 2,340.8 62 Commercial and industrial 499.3 525.4 528.5 531.4 534.5 534.7 539.8 540.8 540.4 540.8 541.2 541.1 63 Real estate 981.6 1,030.8 1,035.2 1,038.1 1,040.1 1,041.4 1,049.2 1,053.0 1,051.2 1,052.6 1,053.1 1,054.5 64 Revolving home equity 75.9 78.2 78.4 78.4 78.8 79.2 79.7 79.9 79.9 79.8 79.8 80.2 65 Other 905.7 952.6 956.8 959.7 961.2 962.2 969.5 973.1 971.3 972.7 973.3 974.4 66 Consumer 459.4 485.7 489.4 489.2 491.2 493.2 497.5 497.5 496.0 496.8 499.0 498.1 67 Security3 46.8 51.0 51.7 51.6 53.6 56.4 55.8 52.5 49.8 54.7 52.3 53.4 68 Other 166.7 180.4 181.6 185.4 185.5 191.0 195.8 194.5 194.0 193.9 196.4 193.7 69 Interbank loans4 155.1 165.4 168.1 167.2 168.8 173.1 181.7 173.6 167.4 172.0 177.4 176.7 70 Cash assets5 187.5 184.4 187.9 194.0 185.8 193.0 201.3 189.1 190.8 182.9 199.3 183.8 71 Other assets6 177.2 170.9 171.6 172.8 173.6 178.1 175.8 177.9 176.4 178.0 179.3 177.3 72 Total assets7 3,469.1 3,585.4 3,609.9 3,626.1 3,631.8 3,660.6 3,695.5 3,676.4 3,663.8 3,668.5 3,696.6 3,677.2 Liabilities 73 Deposits 2,395.5 2,448.4 2,458.9 2,469.8 2,471.4 2,488.4 2,519.5 2,512.5 2,514.3 2,510.6 2,524.6 2,498.7 74 Transaction 791.3 774.0 772.1 768.7 756.6 760.8 769.7 753.0 755.0 748.1 766.7 742.0 75 Nontransaction 1,604.2 1,674.4 1,686.8 1,701.1 1,714.8 1,727.7 1,749.8 1,759.6 1,759.4 1,762.5 1,757.9 1,756.7 76 Large time 236.1 250.3 255.0 260.9 267.5 269.8 271.6 273.5 274.2 273.8 273.6 272.6 77 Other 1,368.1 1,424.1 1,431.8 1,440.1 1,447.3 1,457.9 1,478.2 1,486.1 1,485.2 1,488.7 1,484.3 1,484.2 78 Borrowings 537.7 567.2 569.6 567.0 565.1 577.2 590.3 572.3 572.3 576.9 570.2 572.5 79 From banks in the U.S 163.3 175.9 178.8 178.0 176.0 176.0 182.8 172.4 172.5 175.5 168.0 173.1 80 From nonbanks in the U.S 374.4 391.3 390.7 389.0 389.1 401.2 407.6 399.8 399.8 401.4 402.3 399.4 81 Net due to related foreign offices .... 86.8 90.8 92.2 92.6 89.8 91.4 93.2 90.1 90.0 84.8 92.8 93.3 82 Other liabilities8 126.8 136.9 141.6 141.2 142.8 146.7 144.5 146.4 146.2 148.7 145.7 145.4 83 Total liabilities 3,146.8 3,243.3 3,2623 3,270.6 3,269.0 3303.7 3347.5 3321.2 3322.9 3321.0 33333 3309.9 84 Residual (assets less liabilities)9 322.3 342.1 347.6 355.5 362.8 356.9 348.0 355.2 340.9 347.5 363.3 367.2 Not seasonally adjusted Assets 85 Bank credit 2,998.0 3,118.8 3,142.8 3,153.5 3,169.7 3,178.6 3,181.7 3,184.3 3,179.1 3,187.0 3,184.6 3,186.9 86 Securities in bank credit 847.9 850.3 854.7 854.1 856.0 849.5 844.4 850.2 850.2 851.0 849.9 850.2 87 U.S. government securities 655.0 643.5 644.9 646.3 647.2 641.1 633.8 640.2 638.5 640.1 640.8 642.0 88 Other securities 192.9 206.8 209.8 207.8 208.8 208.4 210.6 210.0 211.7 210.9 209.1 208.2 89 Loans and leases in bank credit2 2,150.1 2,268.6 2,288.1 2,299.4 2,313.7 2,329.1 2,337.4 2,334.1 2,328.9 2,335.9 2,334.7 2,336.7 90 Commercial and industrial 498.6 521.5 524.5 528.9 533.5 532.6 536.6 540.0 538.6 539.5 540.0 541.7 91 Real estate 978.5 1,030.4 1,036.9 1,041.3 1,045.5 1,046.2 1,049.0 1,049.7 1,049.5 1,050.5 1,048.5 1,050.1 92 Revolving home equity 75.5 78.4 78.9 79.1 79.3 79.2 79.5 79.4 79.4 79.5 79.3 79.6 93 Other 903.0 952.0 958.1 962.2 966.2 967.0 969.5 970.3 970.1 971.0 969.1 970.5 94 Consumer 459.9 485.8 490.7 489.8 492.0 499.0 502.1 498.1 498.1 498.1 499.3 497.2 95 Security3 47.8 49.9 51.6 51.9 55.5 57.1 54.1 53.5 49.9 55.4 53.1 55.7 96 Other 165.3 180.9 184.3 187.5 187.2 194.2 195.5 192.7 192.8 192.4 193.8 192.0 97 Interbank loans4 158.3 161.3 163.0 164.6 172.8 184.0 189.4 177.4 174.4 178.3 177.4 177.9 98 Cash assets5 189.1 174.8 187.9 194.6 190.2 207.9 209.1 190.9 181.6 183.2 212.1 188.6 99 Other assets6 176.1 171.6 172.6 173.5 172.3 177.4 176.7 176.9 175.2 176.2 177.3 177.9 100 Total assets7 3,465.0 3,569.6 3,609.2 3,629.6 3,648.4 3,6913 3,7003 3,672.9 3,653.8 3,668.1 3,694.7 3,674.8 Liabilities 101 Deposits 2,387.1 2,436.7 2,457.9 2,471.4 2,486.3 2,518.6 2,525.3 2,503.8 2,500.7 2,505.0 2,515.5 2,491.2 102 Transaction 784.5 759.7 770.2 768.7 770.0 795.6 781.3 745.8 742.3 743.5 759.9 737.2 103 Nontransaction 1,602.6 1,677.0 1,687.7 1,702.7 1,716.3 1,723.1 1,744.0 1,758.0 1,758.3 1,761.5 1,755.6 1,754.0 104 Large time 237.3 251.4 254.6 260.7 267.2 265.5 269.0 274.9 275.0 275.3 275.1 274.4 105 Other 1,365.3 1,425.6 1,433.0 1,442.0 1,449.0 1,457.6 1,475.1 1,483.1 1,483.3 1,486.2 1,480.5 1,479.6 106 Borrowings 541.1 564.1 573.2 574.7 576.1 583.3 580.8 571.1 561.3 571.4 576.1 577.7 107 From banks in the U.S 165.6 170.0 171.0 174.5 178.4 187.6 189.5 174.9 173.5 175.8 173.6 176.3 108 From nonbanks in the U.S 375.5 394.0 402.2 400.2 397.7 395.7 391.3 396.2 387.8 395.6 402.5 401.4 109 Net due to related foreign offices .... 88.6 89.1 88.7 92.0 88.4 89.3 92.9 92.3 88.5 84.5 97.9 98.9 110 Other liabilities8 125.6 135.8 141.7 141.6 144.4 144.9 145.1 144.9 144.3 146.9 143.8 144.7 111 Total liabilities 3,142.4 3,225.6 3,261.6 3,279.7 3,295.1 3336.1 3,344.2 3312.1 3,294.8 3307.9 33333 3312.5 112 Residual (assets less liabilities)9 322.7 344.0 347.6 349.9 353.3 355.1 356.2 360.8 359.0 360.2 361.4 362.3 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics • May 1996 NOTES TO TABLE 1.26 1. Covers the following types of institutions in the fifty states and the District of 4. Consists of federal funds sold to, reverse repurchase agreements with, and loans to Columbia: domestically chartered commercial banks that submit a weekly report of condition commercial banks in the United States. (large domestic); other domestically chartered commercial banks (small domestic); branches 5. Includes vault cash, cash items in process of collection, demand balances due from and agencies of foreign banks; New York State investment companies, and Edge Act and depository institutions in the United States, balances due from Federal Reserve Banks, and agreement corporations (foreign-related institutions). Excludes international banking facili- other cash assets. ties. Data are Wednesday values, or pro rata averages of Wednesday values. Large domestic 6. Excludes the due-from position with related foreign offices, which is included in lines banks constitute a universe; data for small domestic banks and foreign-related institutions are 25, 53, 81, and 109. estimates based on weekly samples and on quarter-end condition reports. Data are adjusted 7. Excludes unearned income, reserves for losses on loans and leases, and reserves for for breaks caused by reclassifications of assets and liabilities. transfer risk. Loans are reported gross of these items. 2. Excludes federal funds sold to, reverse repurchase agreements with, and loans to 8. Excludes the due-to position with related foreign offices, which is included in lines 25, commercial banks in the United States. 53, 81, and 109. 3. Consists of reserve repurchase agreements with broker-dealers and loans to purchase 9. This balancing item is not intended as a measure of equity capital for use in capital and carry securities. adequacy analysis. 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 1996 AAccccoouunntt Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 ASSETS 1 Cash and balances due from depository institutions 160,189 125,982 157,574 114,680 124,466 114,156 114,434 135,342 117,264 2 U.S. Treasury and government securities 287,313 285,647 286,376 283,857 285,431 288,919 289,779 291,741 290,002 i Trading account 25,123 25,614 26,136 22,866 23,713 25,041 26,625 29,457 27,636 4 Investment account 262,190 260,033 260,240 260,991 261,717 263,877 263,154 262,284 262,366 5 Mortgage-backed securities' 109,253 109,422 110,128 110,486 111,449r 111,233 111,554 111,866 111,686 All others, by maturity 6 One year or less 41,356 39,877 39,562r 38,921r 38,288r 39,096 39,354 38,611 37,680 7 One year through five years 63,494 62,864 63,137r 63,688r 63,583r 64,007 63,871 61,725 62,798 8 More than five years 48,088 47,870 47,412 47,896 48,398r 49,542 48,374 50,082 50,203 9 Other securities 126,712 124,219 125,452 125,849 125,312 126,331 125,351 123,731 122,189 10 Trading account 2,022 1,693 1,572 1,579 1,544 1,472 1,512 1,496 1,493 11 Investment account 64,916 66,311 66,107 66,067 65,380 64,858 64,526 63,822 63,437 12 State and local government, by maturity 19,036 19,036 19,034 19,038 18,997 18,920 18,894 18,847 18,885 13 One year or less 4,473 4,455 4,441 4,442 4,424 4,344 4,341 4,309 4,291 14 More than one year 14,563 14,581 14,594 14,596 14,573 14,577 14,553 14,537 14,594 15 Other bonds, corporate stocks, and securities 45,880 47,275 47,072 47,029 46,382 45,937 45,633 44,975 44,552 16 Other trading account assets 59,774 56,216 57,773 58,202 58,388 60,002 59,312 58,413 57,259 17 Federal funds sold2 129,208 113,626 119,105 110,323 110,591 99,437 109,726 104,420 107,153 18 To commercial banks in the United States 89,162 75,639 83,482 73,330 74,148 62,420 69,746 67,806 70,082 19 To nonbank brokers and dealers in securities 33,045 30,551 29,494 30,575 29,894 28,656 32,119 29,421 29,951 20 To others1 7,001 7,437 6,128 6,418 6,549 8,361 7,862 7,192 7,119 21 Other loans and leases, gross 1,296,495 1,292,137 1,292,323 1,281,905 1,285,560 1,280,238 1,283,005 1,283,551 1,283,655 22 Commercial and industrial 351,660 348,203 349,183 349,477 352,561 351,278 351,669 351,919 352,951 23 Bankers acceptances and commercial paper 1,402 1,372 1,366 1,404 1,318 1,409 1,450 1,495 1,465 24 All other 350,258 346,832 347,817 348,073 351,242 349,868 350,218 350,424 351,485 25 U.S. addressees 347,574 344,149 345,096 345,327 348,472 347,086 347,443 347,652 348,669 26 Non-U.S. addressees 2,684 2,683 2,721 2,746 2,770 2,782 2,776 2,772 2,816 27 Real estate loans 503,704 508,026r 507,772r 505,832 506,327 507,327 507,318 504,417 505,117 28 Revolving, home equity 47,971 47,998r 48,050r 48,019 48,000 47,882 47,922 47,781 47,985 29 All other 455,734 460,028 459,722 457,813 458,327 459,445 459,396 456,635 457,132 30 To individuals for personal expenditures 255,780 255,982r 255,078r 252,221 251,132 250,113 250,065 250,181 247,835 31 To depository and financial institutions 74,024 72,530r 72,985 71,046 69,537 69,070 68,847 69,881 69,468 32 Commercial banks in the United States 44,798 43,943 44,792 42,887 41,267 40,599 39,487 40,410 40,573 33 Banks in foreign countries 3,691 2,983 3,108 3,701 3,153 3,263 3,209 3,655 2,788 34 Nonbank depository and other financial institutions 25,536 25,603 25,085 24,458 25,117 25,207 26,151 25,816 26,107 35 For purchasing and carrying securities 18,335 15,716 16,165 15,425 17,495 14,857 17,063 17,445 19,657 36 To finance agricultural production 6,892 6,700 6,594 6,579 6,522 6,485 6,460 6,408 6,532 37 To states and political subdivisions 10,492 10,549 10,554 10,713 10,606 10,513 10,547 10,458 10,553 38 To foreign governments and official institutions 1,136 1,364 1,196 1,182 1,159 1,154 1,228 1,140 1,281 39 All other loans 32,557 30,777 30,364 26,975 27,530 26,597 26,522 28,321 26,754 40 Lease-financing receivables 41,915 42,289 42,431 42,455 42,691 42,847 43,286 43,382 43,509 41 LESS: Unearned income 1,729 1,764 1,732 1,736 1,735 1,721 1,770 1,770 1,778 42 Loan and lease reserve3 33,591 33,457 33,455 33,288 33,277 33,400 33,471 33,348 33,276 43 Other loans and leases, net 1,261,175 1,256,916 1,257,135 1,246,880 1,250,548 1,245,117 1,247,764 1,248,434 1,248,601 44 All other assets 143,573 141,847 142,533 138,716 142,061 138,588 141,000 139,700 141,311 45 Total assets 2,108,169 2,048,237 2,088,176 2,020,305 2,038,409 2,012,548 2,028,054 2,043,366 2,026,520 Footnotes appear on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Financial Statistics • May 1996 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures 1996 AAccccoouunntt Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 LIABILITIES 46 Deposits 1,265,024 1,229,595 1,249,088 1,191,403 1,211,570 1,203,600 1,208,803 1,212,020 1,194,299 47 Demand deposits 358,957 323,010 341,290 299,095 316,255 299,712 304,213 314,317 298,494 48 Individuals, partnerships, and corporations 299,667 272,983 282,675 251,544 265,977 253,056 257,472 261,851 255,046 49 Other holders 59,290 50,027 58,615 47,551 50,278 46,656 46,741 52,466 43,448 50 States and political subdivisions 10,314 8,330 9,010 9,167 10,164 8,468 8,223 9,133 8,317 51 U.S. government 2,738 2,235 3,528 2,384 2,382 1,999 1,949 1,494 1,709 52 Depository institutions in the United States 28,236 23,228 28,776 20,075 21,497R 19,743 20,010 25,727 19,880 53 Banks in foreign countries 5,213 5,615 5,171 5,204 5,615 4,929 5,300 5,410 5,842 54 Foreign governments and official institutions 649 914 619 565 709 524 693 607 553 55 Certified and officers' checks 12,140 9,706 11,511 10,157 9,911 10,993 10,567 10,095 7,147 56 Transaction balances other than demand deposits4 95,501 93,267 93,456 87,023 88,848 86,072 84,896 86,086 85,171 57 Nontransaction balances 810,566 813,318 814,342 805,286 806,467 817,817 819,695 811,617 810,634 58 Individuals, partnerships, and corporations 787,318 789,721 791,014 781,919 782,628 793,226 795,020 787,117 786,155 59 Other holders 23,248 23,597 23,328 23,366 23,839 24,591 24,675 24,500 24,479 60 States and political subdivisions 21,038 21,176 20,747 20,581 20,905 21,558 21,583 21,534 21,512 61 U.S. government 649 647 747 772 829 862 894 730 739 62 Depository institutions in the United States 1,198 1,415 1,475 1,669 1,835 1,901 1,929 1,968 1,943 63 Foreign governments, official institutions, and banks .. 364 359 358 344 270 270 269 269 285 64 Liabilities for borrowed money5 428,120 413,913 418,726 406,710 409,504 396,891 406,215 410,656 410,004 65 Borrowings from Federal Reserve Banks 170 0 130 0 0 0 0 0 0 66 Treasury tax and loan notes 5,393 4,444 10,501 23,060 21,404' 3,560 5,233 5,295 21,228 67 Other liabilities for borrowed money6 422,557 409,469 408,095 383,650 388,100' 393,331 400,981 405,360 388,776 68 Other liabilities (including subordinated notes and debentures)... 222,939 211,286 226,170 227,098 221,315 215,939 215,868 223,966 225,510 69 Total liabilities 1,916,083 1,854,794 1,893,983 1,825,211 1,842,390 1,816,430 1,830,886 1,846,641 1,829,813 70 Residual (total assets less total liabilities)7 192,086 193,443 194,193 195,094 196,019 196,118 197,168 196,724 196,707 MEMO 71 Total loans and leases, gross, adjusted, plus securities8 1,705,768 1,696,047 1,694,982 1,685,716 1,691,478 1,691,906 1,698,628 1,695,227 1,692,344 72 Time deposits in amounts of $100,000 or more 113,989 116,464 118,011 117,244 118,296 120,278 120,108 119,102 118,214 73 Loans sold outright to affiliates9 1,286 1,246 1,237 1,226 1,215 1,208 1,196 1,187 1,177 74 Commercial and industrial 277 277 277 276 275 275 275 275 275 75 Other 1,009 970 960 950 940 933 921 912 902 76 Foreign branch credit extended to U.S. residents 26,955 27,812 27,364 27,143 27,814 27,584 27,767 27,990 27,714 77 Net owed to related institutions abroad 91,510" 80,395R 91,158' 91,156R 83,845 82,637 78,912 92,098 92,665 1. Includes certificates of participation, issued or guaranteed by agencies of the US. 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 1996 AAccccoouunntt Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 ASSETS 1 Cash and balances due from depository institutions 18,596 18,650 18,805 19,282 18,636 17,402 18,058 16,949 16,736 2 U.S. Treasury and government agency securities 42,284 42,760 42,772 42,214 42,544 46,388 46,201 46,714 49,319 3 Other securities 40,773r 40,854 43,387 43,857 46,968 44,397 44,610 43,079 43,606 4 Federal funds sold1 27,848 32,484 31,089 29,905 27,917 28,750 31,485 25,529 31,387 5 To commercial banks in the United States 7,933 8,993 8,890 8,091 7,602 6,251 6,845 4,414 7,963 6 To others2 19,915 23,491 22,199 21,814 20,314 22,499 24,640 21,114 23,425 7 Other loans and leases, gross 183,946r 182,012 181,623 180,999 181,613 181,988 184,179 184,096 185,279 8 Commercial and industrial 118,Ol5r 117,610 118,359 118,615 118,802 120,234 120,718 120,720 120,880 9 Bankers acceptances and commercial paper . 4,655r 4,753 4,920 5,035 5,134 5,141 5,080 5,163 5,271 10 All other 113,360r • 112,856 113,439 113,580 113,668 115,093 115,638 115,556 115,609 11 U.S. addressees 107,67lr 107,167 107,713 107,626 107,765 109,132 109,617 109,635 109,686 12 Non-U.S. addressees 5,689 5,689 5,725 5,954 5,903 5,961 6,021 5,921 5,923 13 Loans secured by real estate 2211,,775599 21,510 21,502 21,253 21,165 21,326 21,280 21,285 21,009 14 Loans to depository and financial institutions 30,495r 30,330 30,089 29,737 30,063 28,888 29,382 29,575 29,673 15 Commercial banks in the United States 2,656r 2,618 2,387 2,630 2,444 2,341 2,791 2,381 2,413 16 Banks in foreign countries 3,209 3,235 3,003 2,844 2,819 2,907 2,781 2,703 3,050 17 Nonbank financial institutions 24,629 24,478 24,699 24,262 24,800 23,640 23,809 24,491 24,210 18 For purchasing and carrying securities 6,807 5,267 5,033 4,732 4,888 4,891 5,781 5,850 7,027 19 To foreign governments and official institutions 633 650 642 643 587 641 735 661 666611 20 All other 4,654 4,957 4,476 4,491 4,557 4,488 4,694 4,486 4,505 21 Other assets (claims on nonrelated parties) 40,739 40,274 38,941 39,981 40,209' 41,902 41,571 41,321 41,942 22 Total assets3 380,013r 382,644 384,586 383,607 386,917' 388,078 392,354 385,614 3%,525 LIABILITIES 23 Deposits or credit balances owed to other than directly related institutions 102,209 102,853 101,358 100,494 100,709 101,265 100,901 99,493 104,173 24 Demand deposits4 4,541 4,556 4,354 4,134 4,483 4,280 4,910 4,247 3,887 25 Individuals, partnerships, and corporations .... 3,653 3,809 3,584 3,118 3,416 3,289 3,335 3,268 3,166 26 Other 888 747 770 1,015 1,067 991 1,576 980 721 27 Nontransaction accounts 97,668 98,297 97,004 96,360 96,226 96,985 95,991 95,246 100,287 28 Individuals, partnerships, and corporations .... 69,031 69,258 67,936 66,080 65,759 66,191 64,697 65,020 68,828 29 Other 2288,,663377 29,039 29,067 30,280 30,466 30,794 31,294 30,226 31,458 30 Borrowings from other than directly related institutions 74,151 73,765 73,802 72,761 71,685 73,162 73,791 71,983 75,816 31 Federal funds purchased5 48,649 50,333 48,196 47,355 47,553 44,921 45,700 43,012 45,012 32 From commercial banks in the United States .. 10,481 10,122 10,882 9,604 11,188 7,831 9,046 7,648 10,198 33 From others 38,168 40,212 37,314 37,751 36,365 37,090 36,654 35,365 34,814 34 Other liabilities for borrowed money 25,502 23,431 25,606 25,406 24,132 28,240 28,091 28,971 30,803 35 To commercial banks in the United States 4,212 3,786 4,396 4,090 4,013 4,119 4,479 3,864 4,304 36 To others 21,290 19,646 21,210 21,316 20,119 24,122 23,612 25,107 26,500 37 Other liabilities to nonrelated parties 59,281r 58,626 60,148 62,936 64,667r 64,812 63,753 62,228 64,960 38 Total liabilities6 380,013r 382,644 384,586 383,607 386,917r 388,078 392,354 385,614 396,525 MEMO 39 Total loans (gross) and securities, adjusted7 284,26 lr 286,499 287,593 286,254 288,996 292,930 296,838 292,622 299,217 40 Net owed to related institutions abroad 118,545r 121,790 121,309 120,048 120,826' 121,589 127,658 123,983 123,321 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 • May 1996 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period Year ending December 1995' 1996 IItteemm 1991 1992 1993 1994 1995r Aug. Sept. Oct. Nov. Dec. Jan. Commercial paper (seasonally adjusted unless noted otherwise) 1111 AAAAllllllll iiiissssssssuuuueeeerrrrssss 528,832 545,619 555,075 595,382 674,903 663,032 670,642 673,241 669,656 674,903 685,795 FFFFiiiinnnnaaaannnncccciiiiaaaallll ccccoooommmmppppaaaannnniiiieeeessss'''' 2222 DDDDeeeeaaaalllleeeerrrr----ppppllllaaaacccceeeedddd ppppaaaappppeeeerrrr2222,,,, ttttoooottttaaaallll 212,999 226,456 218,947 223,038 275,815 262,969 269,636 271,299 276,223 275,815 288,367 3333 DDDDiiiirrrreeeeccccttttllllyyyy ppppllllaaaacccceeeedddd ppppaaaappppeeeerrrr3333,,,, ttttoooottttaaaallll 182,463 171,605 180,389 207,701 210,828 216,238 215,179 215,982 213,574 210,828 208,164 4444 NNNNoooonnnnffffiiiinnnnaaaannnncccciiiiaaaallll ccccoooommmmppppaaaannnniiiieeeessss4444 133,370 147,558 155,739 164,643 188,260 183,825 185,827 185,960 179,859 188,260 189,264 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 t a e g e Period Av r e a r t a e g e Period Av r e a r t a e g e 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 88..8833 6.06 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 Oct 8.75 Dec. 20 8.50 July 6.00 Nov 8.15 Nov 8.75 Aug 6.00 Dec 8.50 Dec 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 Mar. 8.25 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 • May 1996 1.35 INTEREST RATES Money and Capital Markets Percent per year; figures are averages of business day data unless otherwise noted 1995 1996 1996, week ending IItteemm 11999933 11999944 11999955 Nov. Dec. Jan. Feb. Jan. 26 Feb. 2 Feb. 9 Feb. 16 Feb. 23 MONEY MARKET INSTRUMENTS 1 Federal funds1,2,3 3.02 4.21 5.83 5.80 5.60 5.56 5.22 5.44 5.53 5.21 5.09 5.17 2 Discount window borrowing2,4 3.00 3.60 5.21 5.25 5.25 5.24 5.00 5.25 5.21 5.00 5.00 5.00 Commercial papei,3,5,6 3 1-month 3.17 4.43 5.93 5.80 5.84 5.56 5.29 5.51 5.42 5.28 5.29 5.28 4 3-month 3.22 4.66 5.93 5.74 5.64 5.40 5.15 5.35 5.26 5.16 5.12 5.14 5 6-month 3.30 4.93 5.93 5.59 5.43 5.23 4.99 5.17 5.09 4.98 4.93 4.99 Finance paper, directly placed3,5,7 6 1-month 3.12 4.33 5.81 5.69 5.70 5.44 5.20 5.40 5.30 5.20 5.21 5.18 7 3-month 3.16 4.53 5.78 5.59 5.47 5.25 5.00 5.19 5.08 5.01 4.99 4.99 8 6-month 3.15 4.56 5.68 5.35 5.20 5.01 4.77 4.95 4.83 4.76 4.75 4.78 Bankers acceptances3,5,8 9 3.13 4.56 5.81 5.64 5.52 5.31 5.07 5.28 5.14 5.06 5.05 5.07 10 6-month 3.21 4.83 5.80 5.47 5.34 5.14 4.91 5.10 4.98 4.89 4.85 4.94 Certificates of deposit, secondary market3,9 11 1-month 3.11 4.38 5.87 5.75 5.75 5.47 5.23 5.44 5.33 5.24 5.22 5.22 12 3-month 3.17 4.63 5.92 5.74 5.62 5.39 5.15 5.36 5.23 5.15 5.13 5.14 13 6-month 3.28 4.96 5.98 5.64 5.49 5.28 5.03 5.23 5.13 5.00 4.99 5.06 14 Eurodollar deposits, 3-month1,10 3.18 4.63 5.93 5.75 5.64 5.40 5.14 5.34 5.23 5.15 5.13 5.14 U.S. Treasury bills Secondary market3,5 15 3-month 3.00 4.25 5.49 5.36 5.14 5.00 4.83 4.97 4.93 4.81 4.79 4.82 16 6-month 3.12 4.64 5.56 5.27 5.13 4.92 4.77 4.90 4.81 4.75 4.70 4.82 17 1-year 3.29 5.02 5.60 5.14 5.03 4.82 4.69 4.79 4.69 4.61 4.57 4.78 Auction average3,5,'' 18 3-month 3.02 4.29 5.51 5.35 5.16 5.02 4.87 4.99 5.01 4.88 4.80 4.78 19 6-month 3.14 4.66 5.59 5.29 5.15 4.97 4.79 4.88 4.90 4.79 4.71 4.75 20 1-year 3.33 5.02 5.69 5.15 5.06 4.89 4.64 n.a. n.a. 4.64 n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities'2 21 1-year 3.43 5.32 5.94 5.43 5.31 5.09 4.94 5.05 4.93 4.85 4.81 5.04 22 2-year 4.05 5.94 6.15 5.48 5.32 5.11 5.03 5.09 4.98 4.91 4.84 5.15 23 3-year 4.44 6.27 6.25 5.57 5.39 5.20 5.14 5.18 5.10 5.03 4.94 5.28 24 5-year 5.14 6.69 6.38 5.69 5.51 5.36 5.38 5.35 5.28 5.27 5.20 5.52 25 7-year 5.54 6.91 6.50 5.83 5.63 5.54 5.64 5.53 5.50 5.51 5.46 5.81 2b 10-year 5.87 7.09 6.57 5.93 5.71 5.65 5.81 5.65 5.64 5.67 5.65 5.97 27 20-year 6.29 7.49 6.95 6.33 6.12 6.11 6.30 6.11 6.11 6.17 6.16 6.46 28 30-year 6.59 7.37 6.88 6.26 6.06 6.05 6.24 6.06 6.08 6.13 6.11 6.39 Composite 29 More than 10 years (long-term) 6.45 7.41 6.93 6.31 6.11 6.07 6.28 6.08 6.08 6.14 6.14 6.44 STATE AND LOCAL NOTES AND BONDS Moody's series13 30 5.38 5.77 5.80 5.63 5.40 5.27 5.24 5.30 5.21 5.25 5.23 5.21 31 Baa 5.83 6.17 6.10 5.79 5.66 5.59 5.59 5.61 5.55 5,63 5.60 5.54 32 Bond Buyer series14 5.60 6.18 5.95 5.64 5.45 5.43 5.43 5.46 5.40 5.37 5.33 5.48 CORPORATE BONDS 33 Seasoned issues, all industries15 7.54 8.26 7.83 7.30 7.11 7.10 7.27 7.10 7.11 7.15 7.15 7.42 Rating group 34 Aaa 7.22 7.97 7.59 7.02 6.82 6.80 6.99 6.81 6.82 6.87 6.86 7.13 35 Aa 7.40 8.15 7.72 7.18 6.99 6.99 7.16 7.00 7.01 7.05 7.04 7.31 36 A 7.58 8.28 7.83 7.32 7.13 7.12 7.31 7.13 7.14 7.19 7.19 7.45 37 Baa 7.93 8.63 8.20 7.68 7.49 7.47 7.63 7.47 7.46 7.50 7.50 7.77 38 A-rated, recently offered utility bonds16 7.46 8.29 7.86 7.30 7.10 7.09 7.31 7.11 7.22 7.18 7.28 7.47 MEMO Dividend-price ratio17 39 Common stocks 2.78 2.82 2.56 2.37 2.30 2.31 2.22 2.30 2.25 2.21 2.20 2.22 1. The daily effective 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 June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Prices and trading volume (averages of daily figures) CCCCCCoooooommmmmmmmmmmmoooooonnnnnn ssssssttttttoooooocccccckkkkkk pppppprrrrrriiiiiicccccceeeeeessssss ((((((iiiiiinnnnnnddddddeeeeeexxxxxxeeeeeessssss)))))) 111111 NNNNNNeeeeeewwwwww YYYYYYoooooorrrrrrkkkkkk SSSSSSttttttoooooocccccckkkkkk EEEEEExxxxxxcccccchhhhhhaaaaaannnnnnggggggeeeeee ((((((DDDDDDeeeeeecccccc...... 333333111111,,,,,, 111111999999666666555555 ====== 555555000000)))))) 249.71 254.16 291.18 289.52 298.18 300.05 310.41 311.78 317.58 327.90 329.22 346.46 222222 IIIIIInnnnnndddddduuuuuussssssttttttrrrrrriiiiiiaaaaaallllll 300.10 315.32 367.40 366.75 379.13 379.79 390.42 389.63 398.66 412.11 413.05 435.92 333333 TTTTTTrrrrrraaaaaannnnnnssssssppppppoooooorrrrrrttttttaaaaaattttttiiiiiioooooonnnnnn 242.68 247.17 270.14 256.80 279.15 285.63 295.54 291.16 300.06 303.53 300.43 315.29 444444 UUUUUUttttttiiiiiilllllliiiiiittttttyyyyyy 114.55 104.96 114.61 108.12 109.59 111.06 114.67 123.59 119.49 173.95 127.09 135.51 555555 FFFFFFiiiiiinnnnnnaaaaaannnnnncccccceeeeee 216.55 209.75 238.48 236.26 240.49 245.27 260.72 265.12 266.12 273.36 274.96 290.97 666666 SSSSSSttttttaaaaaannnnnnddddddaaaaaarrrrrrdddddd &&&&&& PPPPPPoooooooooooorrrrrr''''''ssssss CCCCCCoooooorrrrrrppppppoooooorrrrrraaaaaattttttiiiiiioooooonnnnnn ((((((111111999999444444111111------444444333333 ====== 111111000000))))))'''''' 451.63 460.42 541.72 539.35 557.37 559.11 578.77 582.92 595.53 614.57 614.42 649.54 777777 AAAAAAmmmmmmeeeeeerrrrrriiiiiiccccccaaaaaannnnnn SSSSSSttttttoooooocccccckkkkkk EEEEEExxxxxxcccccchhhhhhaaaaaannnnnnggggggeeeeee ((((((AAAAAAuuuuuugggggg...... 333333111111,,,,,, 111111999999777777333333 ====== 555555000000))))))222222 438.77 449.49 498.13 492.60 513.25 526.86 547.64 530.26 529.93 538.01 540.48 562.34 VVVVVVoooooolllllluuuuuummmmmmeeeeee ooooooffffff ttttttrrrrrraaaaaaddddddiiiiiinnnnnngggggg ((((((tttttthhhhhhoooooouuuuuussssssaaaaaannnnnnddddddssssss ooooooffffff sssssshhhhhhaaaaaarrrrrreeeeeessssss)))))) 888888 NNNNNNeeeeeewwwwww YYYYYYoooooorrrrrrkkkkkk SSSSSSttttttoooooocccccckkkkkk EEEEEExxxxxxcccccchhhhhhaaaaaannnnnnggggggeeeeee 263,374 290,652 345,729 345,547 363,780 309,879 352,184 365,108 360,199 384,310 416,048 434,607 999999 AAAAAAmmmmmmeeeeeerrrrrriiiiiiccccccaaaaaannnnnn SSSSSSttttttoooooocccccckkkkkk EEEEEExxxxxxcccccchhhhhhaaaaaannnnnnggggggeeeeee 18,188 17,951 20,387 24,622 23,283 21,825 25,422 17,865 16,724 21,085 21,069 27,107 Customer financing (millions of dollars, end-of-period balances) 111111000000 MMMMMMaaaaaarrrrrrggggggiiiiiinnnnnn ccccccrrrrrreeeeeeddddddiiiiiitttttt aaaaaatttttt bbbbbbrrrrrrooooookkkkkkeeeeeerrrrrr------ddddddeeeeeeaaaaaalllllleeeeeerrrrrrssssss333333 60,310 61,160 76,680 66,340 67,600 71,440 77,076 75,005 77,875 76,680 73,530 77,090 FFFFFFrrrrrreeeeeeeeeeee ccccccrrrrrreeeeeeddddddiiiiiitttttt bbbbbbaaaaaallllllaaaaaannnnnncccccceeeeeessssss aaaaaatttttt bbbbbbrrrrrrooooookkkkkkeeeeeerrrrrrssssss444444 111111111111 MMMMMMaaaaaarrrrrrggggggiiiiiinnnnnn aaaaaaccccccccccccoooooouuuuuunnnnnnttttttssssss555555 12,360 14,095 16,250 13,710 13,830 13,900 14,806 14,753 15,590 16,250 14,950 15,840 111111222222 CCCCCCaaaaaasssssshhhhhh aaaaaaccccccccccccoooooouuuuuunnnnnnttttttssssss 27,715 28,870 34,340 29,860 28,600 29,190 29,796 29,908 30,340 34,340 32,465 34,700 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 111111333333 MMMMMMaaaaaarrrrrrggggggiiiiiinnnnnn ssssssttttttoooooocccccckkkkkkssssss 70 80 65 55 65 50 111111444444 CCCCCCoooooonnnnnnvvvvvveeeeeerrrrrrttttttiiiiiibbbbbblllllleeeeee bbbbbboooooonnnnnnddddddssssss 50 60 50 50 50 50 111111555555 SSSSSShhhhhhoooooorrrrrrtttttt ssssssaaaaaalllllleeeeeessssss 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 Financial Statistics • May 1996 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1995 1996 11999933 11999944rr 11999955'' Sept. Oct. Nov. Dec. Jan. Feb. U.S. budget1 1 Receipts, total 1,153,535' 1,257,745 1,355,213 143,219 95,593 90,008 138,271 142,922 89,349 2 On-budget 841,60r 922,719 1,004,134 112,510 72,200 63,651 110,322 110,615 60,912 3 Off-budget 311,934 335,026 351,079 30,709 23,393 26,357 27,949 32,307 28,437 4 Outlays, total 1,408,205' 1,460,914 1,519,133 135,972' 118,352 128,458 132,984 123,647 133,644 5 On-budget 1,141,618' 1,181,542 1,230,469 119,796' 92,151 101,767 121,753 98,057 105,711 6 Off-budget 266,587 279,372 288,664 30,835' 26,200 26,691 11,232 25,591 27,933 7 Surplus or deficit (-), total -255,670' -203,169 -163,920 7,247' -22,758 -38,450 5.286 19,274 -44.295 8 On-budget -300,017' 258,823 -226,335 7,412 -19,951 -38,116 -11,431 12,558 -44,799 9 Off-budget 45,347 55,654 62,415 -126 -2,807 -334 16,717 6,716 504 Source of financing (total) 10 Borrowing from the public 248,594 184,998 171,288 -6,618 13,353 38,339 -18,358 -4,747 47,022 11 Operating cash (decrease, or increase (—)) 6,283 16,564 -2,007 -19,820 16,755 -4,911 5,610 -16,959 6,297 12 Other2 429 1,540 -5,468 19,191' -7,350 5,022 7,462 2,432 -9,024 MEMO 13 Treasury operating balance (level, end of period) 52,506 35,942 37,949 37,949 21,194 26,105 20,495 37,454 31,157 14 Federal Reserve Banks 17,289 6,848 8,620 8,620 7,018 5,703 5,979 8,210 5,632 15 Tax and loan accounts 35,217 29,094 29,329 29,329 14,176 20,402 14,515 29,243 25,525 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 U.S. 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. Monthly totals: U.S. Department of the Treasury, Monthly Treasury Statement of International Monetary Fund (IMF); loans to the IMF; other cash and monetary assets; Receipts and Outlays of the U.S. Government; fiscal year totals: U.S. Office of Management accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous and Budget, Budget of the 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 A29 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year SSSooouuurrrccceee ooorrr tttyyypppeee 1994 1995 1995 1996 11999944 11999955 HI H2 HI H2 Dec. Jan. Feb. RECEIPTS 1 All sources 1,257,737 1,355,213 652,234 625,557 710,542 656,400 138,271 142,922 89,349 2 Individual income taxes, net 543,055 590,244 275,052 273,474 307,498 292,393 53,179 86,192 40,327 3 Withheld 459,699 499,927 225,387 240,062 251,398 256,918 50,597 55,351 46,722 4 Presidential Election Campaign Fund 70 69 63 10 58 9 0 1 7 5 Nonwithheld 160,047 175,786 117,937 42,031 132,006 43,100 3,227 31,159 3,163 6 Refunds 76,761 85,538 68,325 9,207 75,958 10,058 646 319 9,565 Corporation income taxes 7 Gross receipts 154,205 174,422 80,536 78,392 92,132 88,302 38,954 6,381 3,797 8 Refunds 13,820 17,418 6,933 7,331 10,399 7,518 932 1,223 2,105 9 Social insurance taxes and contributions, net . .. 461,475 484,473 248,301 220,141 261,837 224,269 37,762 42,197 38,960 10 Employment taxes and contributions2 428,810 451,045 228,714 206,613 228,663 211,323 37,123 40,742 36,011 11 Self-employment taxes and contributions3 . 24,433 27,127 20,762 4,135 23,429 3,557 333 2,188 278 12 Unemployment insurance 28,004 28,878 17,301 11,177 18,001 10,702 223 1,081 2,546 13 Other net receipts4 4,661 4,550 2,284 2,349 2,267 2,247 416 374 403 14 Excise taxes 55,225 57,484 26,444 30,062 27,452 30,014 4,870 4,241 4,308 15 Customs deposits 20,099 19,301 9,500 11,042 8,847 9,849 1,439 1,482 1,456 16 Estate and gift taxes 15,225 14,763 8,197 7,071 7,424 7,718 1,383 1,288 1,090 17 Miscellaneous receipts5 22,274 31,944 11,170 13,305 15,749 11,374 1,618 2,364 1,517 OUTLAYS 18 All types 1,460,841 1,519,133 710,620 752,151 760,824 752,505 132,984 123,647 133,644 19 National defense 281,642 272,066 133,844 141,885 135,862r 132,954 25,376 20,243 21,691 20 International affairs 17,083 16,434 5,800 11,889 4,791r 6,994 431 1,089 2,604 21 General science, space, and technology 16,227 16,724 8,502 7,604 8,611 8,810 1,274 1,536 1,326 22 Energy 5,219 4,936 2,237 2,923 2,358 2,203 -163 115 54 23 Natural resources and environment 21,064 22,105 10,111 11,911 10,273 12,633 1,711 1,869 1,817 24 Agriculture 15,046 9,773 7,451 7,623 4,040 3,062 708 336 345 25 Commerce and housing credit -5,118 -14,441 -4,962 -4,270 - 13,936r -4,412 -451 -2,014 -1,024 26 Transportation 38,066 39,350 16,739 21,835 18,193r 19,931 3,117 3,094 2,960 27 Community and regional development 10,454 10,641 4,571 6,283 4,858r 6,085 912 1,009 396 28 Education, training, employment, and social services 46,307 54,263 19,262 27,450 25,738 24,820 3,623 5,418 4,498 29 Health 107,122 115,418 53,195 54,147 58,759 57,013 8,567 8,665 9,542 30 Social security and Medicare 464,312 495,701 232,777 236,817 251,975 251,387 43,299 42,786 42,950 31 Income security 214,031 220,449 109,080 101,806 117,638r 104,214 19,738 17,188 23,812 32 Veterans benefits and services 37,642 37,938 16,686 19,761 19,267r 18,684 4,435 2,165 2,901 33 Administration of justice 15,256 16,223 7,718 7,753 8,062 8,113 1,233 1,806 1,281 34 General government 11,303 13,835 5,084 7,355 5,798r 7,623 1,924 391 1,575 35 Net interest6 202,957 232,173 99,844 109,434 116,170 119,350 19,934 20,765 19,771 36 Undistributed offsetting receipts7 -37,772 -44,455 -17,308 -20,066 -17,632 -26,994 -2,683 -2,812 -2,855 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 receipts and 6. Includes interest received by trust funds. outlays do not correspond to calendar year data because revisions from the Budget have not 7. Rents and royalties for the outer continental shelf, U.S. government contributions for been fully distributed across months. employee retirement, and certain asset sales. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. SOURCE. Fiscal year totals: U.S. Department of the Treasury, Monthly Treasury Statement 3. Old-age, disability, and hospital insurance. of Receipts and Outlays of the U.S. Government-, monthly and half-year totals: U.S. Office of 4. Federal employee retirement contributions and civil service retirement and Management and Budget, Budget of the U.S. Government, Fiscal Year 1997. disability fund. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • May 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. 7 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 debt' 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 holder4 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 17 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 25 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 A31 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 1995 1996 1996, week ending Item Nov. Dec. Jan. Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 57,014 54,313 53,618 47,601 52,037 50,869 56,486 56,939 66,365 56,382 63,493 75,724 Coupon securities, by maturity 2 Five years or less 94,461 84,303 103,365 62,937 80,614 100,864 126,171 121,484 124,315 97,119 139,440 149,129 3 More than five years 50,029 43,615 54,608 36,055 53,920 54,687 59,142 58,119 69,703 71,497 71,386 61,941 4 Federal agency 26,013 26,368 27,947 28,180 26,535 28,897 29,975 26,477 26,486 26,419 27,570 26,578 5 Mortgage-backed 34,071 33,205 37,009 18,185 53,361 46,897 28,581 28,703 49,268 47,660 34,847 30,067 By type of counterparty With interdealer broker 6 U.S. Treasury 114,669 104,651 123,512 82,108 109,151 119,761 141,748 139,201 148,974 129,505 155,082 164,587 7 Federal agency 775 672 954 623 631 750 1,328 1,200 1,367 1,377 945 799 8 Mortgage-backed 12,428 12,863 12,634 6,594 16,778 16,481 10,475 99,,998899 16,433 17,213 14,038 1100,,995500 With other 9 U.S. Treasury 86,835 77,580 88,079 64,485 77,421 86,659 100,050 97,341 111,408 95,493 119,236 122,206 10 Federal agency 25,238 25,696 26,993 27,557 25,904 28,147 28,647 25,278 25,119 25,041 26,625 25,779 11 Mortgage-backed 21,643 20,342 24,375 11,591 36,584 30,416 18,107 18,714 32,835 30,447 20,809 19,117 FUTURES TRANSACTIONS3 By type of deliverable security 12 U.S. Treasury bills 764 603 451r 294 459 297 405 675 203 358 524 305 Coupon securities, by maturity 13 Five years or less 2,154 2,045 1,592 1,715 1,159 1,344 2,254 1,513 1,206 1,153 3,664 3,186 14 More than five years 14,536 12,577 14,331 9,722 15,565 14,384 14,646 14,583 14,504 15,602 23,229 17,566 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 1,655 1,098 1,860 928 1,472 2,793 2,046 1,688 1,544 2,513 2,614 3,918 19 More than five years 4,668 3,898 4,109 2,828 3,853 3,832 4,862 4,345 4,066 3,874 7,542 3,653 20 Federal agency 0 0 0 0 0 0 0 0 0 0 0 0 21 Mortgage-backed 1,099 862 860 954 989 919 821 685 972 1,159 2,476 909 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

A32 Domestic Nonfinancial Statistics • May 1996 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1995 1996 1996, week ending Nov. Dec. Jan. Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Positions2 NET OUTRIGHT POSITIONS3 By type of security 1 U.S. Treasury bills 11,391 16,960 9,173 7,601 14,302 14,043 6,551 2,468 7,984 7,984 1,932 Coupon securities, by maturity 2 Five years or less 12,423 21,659 21,332 23,756 18,612 17,387 25,287 23,003 20,116 10,734 8,146 3 More than five years -9,732 -11,698 -14,408 -12,069 -11,958 -14,101 -15,848 -16,726 -12,740 -8,641 -14,695 4 Federal agency 21,768 22,446 23,115 25,356 24,789 24,991 23,637 18,084 25,297 23,052 21,080 5 Mortgage-backed 35,869 39,509 38,362 39,621 37,124 37,785 40,213 37,788 38,760 41,553 39,944 NET FUTURES POSITIONS4 By type of deliverable security 6 U.S. Treasury bills -5,175 -2,484 -2,787 -2,393 -3,001 -3,147 -2,505 -2,663 -2,901 -2,652 -2,882 Coupon securities, by maturity 7 Five years or less -4,508 -4,338 -2,534 -4,351 -3,176 -3,158 -1,144 -1,878 -2,375 -2,704 1,241 8 More than five years -17,358 -17,662 -12,781 -14,745 -10,127 -13,600 -14,908 -11,649 -10,968 -16,809 -5,373 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 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 12 Five years or less 479 -1,439 -931 -1,058 -1,443 -145 -273 -1,808 -1,829 -850 1,112 13 More than five years 3,629 7,216 7,488 8,742 4,819 8,255 8,121 8,221 6,682 7,324 -2,341 14 Federal agency 0 0 0 0 0 0 0 0 0 0 0 15 Mortgage-backed 1,199 -90 638 608 1,219 209 498 640 1,686 1,777 3,410 Financing5 Reverse repurchase agreements 16 Overnight and continuing 249,011 240,460 258,137 247,477 248,451 253,892 243,761 291,013 261,033 272,198 269,437 17 Term 404,181 389,626 405,768 368,655 396,047 403,107 446,293 393,531 450,293 464,098 381,535 Securities borrowed 18 Overnight and continuing 152,800 154,078 171,843 164,769 175,912 173,330 168,665 172,495 164,331 159,871 171,620 19 Term 64,611 62,835 59,920 58,637 60,169 59,834 60,040 60,188 65,626 64,365 64,703 Securities received as pledge 20 Overnight and continuing 2,005 4,132 3,114 4,712 5,002 2,461 2,286 2,022 1,577 1,658 2,117 21 Term 56 69 53 28 39 79 47 58 315 68 77 Repurchase agreements 22 Overnight and continuing 522,501 535,088 553,719 533,654 556,821 549,853 543,788 573,013 557,489 566,822 572,853 23 Term 370,772 355,266 368,819 340,117 351,104 366,579 405,734 364,158 412,886 434,282 342,983 Securities loaned 24 Overnight and continuing 6,001 5,543 5,566 6,051 6,155 5,524 5,678 4,699 4,401 4,129 5,052 25 Term 2,794 1,916 1,578 1,479 1,657 1,534 1,564 1,600 1,780 2,670 2,655 Securities pledged 26 Overnight and continuing 28,087 34,010 34,769 35,559 35,999 34,854 33,846 34,040 32,277 29,935 35,183 27 Term 4,577 5,518 5,597 4,892 5,250 5,301 5,488 6,650 6,906 6,547 7,299 Collateralized loans 28 Overnight and continuing 17,639 12,694 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 29 Term 2,092 1,989 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 30 Total n.a. n.a. 17,606 15,856 14,310 18,617 20,973 17,275 18,124 14,891 12,828 MEMO: Matched book6 Securities in 31 Overnight and continuing 244,861 240,188 264,459 255,769 258,116 271,371 253,080 278,995 257,499 266,238 251,446 32 Term 401,682 391,284 403,403 367,770 397,677 401,084 441,503 388,620 449,324 460,794 388,695 Securities out 33 Overnight and continuing 313,847 311,005 334,864 310,539 339,072 328,967 330,979 350,865 338,919 341,946 341,216 34 Term 318,594 309,089 318,147 296,576 304,557 321,064 347,962 308,250 354,223 372,456 287,026 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 Aug. Sept. Oct. Nov. Dec. 1 Federal and federally sponsored agencies 442,772 483,970 570,711 738,928 801,819 811,182 n.a. n.a. n.a. 2 Federal agencies 41,035 41,829 45,193 39,186 39,581 38,030 38,237R 39,207 37,346 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 2,512 2,512 2,512 2,049 5 Federal Housing Administration4 397 374 255 116 83 87 88 93 97 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 7,265 7,265 7,265 5,765 8 Tennessee Valley Authority 22,401 23,580 29,885 27,536 28,225 28,160 28,366 29,331 29,429 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 401,737 442,141 523,452 699,742 762,238 773,152 n.a. n.a. n.a. 11 Federal Home Loan Banks 107,543 114,733 139,512 205,817 228,299 236,851 234,192 239,034 243,194 12 Federal Home Loan Mortgage Corporation 30,262 29,631 49,993 93,279 112,341 111,610 115,626 115,603 119,961 13 Federal National Mortgage Association 133,937 166,300 201,112 257,230 275,271 277,192 280,582 289,768 299,174 14 Farm Credit Banks8 52,199 51,910 53,123 53,175 54,979 55,800 56,529 56,694 57,379 15 Student Loan Marketing Association9 38,319 39,650 39,784 50,335 51,323 51,672 51,906 50,535 47,529 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 86,776 84,297 82,622 81,693 78,681 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 9,803 7,202 5,309 3,449 2,646 2,506 2,506 2,506 2,043 21 Postal Service6 8,201 10,440 9,732 8,073 8,615 7,265 7,265 7,265 5,765 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 27,384 26,845 26,210 21,015 21,015 26 Rural Electrification Administration 18,562 18,172 17,578 17,392 17,276 17,276 17,045 17,141 17,144 27 Other 84,931 64,436 45,864 37,984 27,655 27,205 26,396 30,566 29,514 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 Farmers 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 Domestic Nonfinancial Statistics • May 1996 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1995r 1996 TTyyppee ooff oo iiss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11999933 11999944 11999955rr July Aug. Sept. Oct. Nov. Dec. Jan. Feb. 1 All issues, new and refunding1 279,945 153,950 147,067 12,110 13,126 9,750 13,898 16,839 16,978 ll,340r 11,598 By type of issue 2 General obligation 90,599 54,404 55,963 4,466 4,592 3,482 6,184 6,194 5,489 22,,665522 2,063 3 Revenue 189,346 99,546 88,826 7,644 8,534 6,268 7,714 10,645 11,489 88,,668888 9,535 By type of issuer 4 State 27,999 19,186 14,762 818 609 1,510 1,825 1,491 951 1,630 695 5 Special district or statutory authority2 178,714 95,896 92,797 9,314 8,089 5,807 8,155 10,736 11,678 6,909 7,820 6 Municipality, county, or township 73,232 38,868 37,230 1,978 4,428 2,433 3,918 4,612 4,349 2,801 3,083 7 Issues for new capital 91,434 105,972 100,941 8,929 6,364 6,095 7,868 11,415 11,070 6,399 6,383 By use of proceeds 8 Education 16,831 21,267 24,926 2,598 1,227 1,474 1,785 3,377 2,968 2,010 2,226 9 Transportation 9,167 10,836 11,887 1,120 870 447 367 1,469 1,178 566 359 10 Utilities and conservation 12,014 10,192 10,125 623 690 569 1,780 554 1,664 422 582 11 Social welfare 13,837 20,289 19,502 1,335 1,391 1,140 1,716 2,177 1,614 930 904 12 Industrial aid 6,862 8,161 6,566 612 256 654 227 650 1,325 316 110 13 Other purposes 32,723 35,227 27,935 2,640 1,930 1,811 1,993 3,188 2,321 2,155 2,202 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 1995 1996 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, oorr iissssuueerr 11999933 11999944 11999955 June July Aug. Sept. Oct.' Nov.' Dec.' Jan. 1 AH issues' 769,088 583,216r n.a. 57,054 36,621r 50,163r 57,258r 52,098 55,336 40,121 43,192 2 Bonds2 646,634 498,018r n.a. 49,293 31,955r 43,911r 49,905r 43,452 47,568 34,619 38,500 By type of offering 3 Public, domestic 487,029 365,198r 408,806' 43,106 25,617 34,490' 43,137 36,692 43,336 32,219 30,000 4 Private placement, domestic3 121,226 76,065r n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 38,379 56,755r 76,910' 6,186 6,337' 9,421' 6,768' 6,760 4,232 2,399 8,500 By industry group 6 Manufacturing 88,160 43,423 42,950' 6,808 4,456 4,082' 3,284 3,397 4,017 3,205 4,566 7 Commercial and miscellaneous 58,559 40,735' 37,139' 4,528 1,403 2,480 2,607 3,532 4,178 3,099 1,643 8 Transportation 10,816 6,867 5,727 657 10 133 908 187 225 1,240 764 9 Public utility 56,330 13,298 11,974' 2,675 540 640 911 1,241 485 685 22,,112299 10 Communication 31,950 13,340 18,158 1,745 1,520 1,240 2,829 2,389 3,333 648 884488 11 Real estate and financial 400,820 379,834 369,769' 32,880 24,026' 35,335' 39,365' 32,706 35,330 25,742 28,550 12 Stocks2 122,454 85,155 n a. 7,761 4,666r 6,252 7,353r 8,646 7,768 5,502 4,692 By type of offering 13 Public preferred 18,897 12,570r 10,964' 742 768 1,261 1,035 836 2,210 890 2,167 14 Common 82,657 47,828 57,750' 7,019 3,898 5,005 6,318' 7,810 5,558 4,612 2,525 15 Private placement3 20,900 24,800 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 16 Manufacturing 22,271 17,798 2,345 1,306 n.a.' 2,389' 1,801 2,200 678 388 17 Commercial and miscellaneous 25,761 15,713 n.a. 2,749 2,031 1,541 2,791' 4,628 2,969 2,631 2,370 18 Transportation 2,237 2,203 0 0 87 32' 39 97 148 38 19 Public utility 7,050 2,214 209 133 91 190 60 336 322 114 20 Communication 3,439 494 0 64 0 47 0 0 0 200 21 Real estate and financial 61,004 46,733 2,458 1,132 2,273 1,905' 2,118 2,166 1,724 1,582 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 A35 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 1995 1996 IItteemm 11999933 11999944 June July Aug. Sept. Oct. Nov. Dec.r Jan. 1 Sales of own shares' 851,885 841,286 74,749 76,081 72,113 68,694 72,730 70,499 94,719 112,332 2 Redemptions of own shares 567,881 699,823 61,932 56,344 57,610 54,473 56,174 52,727 67,945 75,354 3 Net sales3 284,004 141,463 12,817 19,736 14,503 14,221 16,556 17,772 26,774 36,978 4 Assets4 1,510,209 1,550,490 1,808,753 1,880,754 1,908,525 1,962,817 1,963,496 2,032,958 2,067,337 2,143,185 5 Cash5 100,209 121,296 122,461 126,340 127,173 127,446 133,653 141,489 142,572 150,772 6 Other 1,409,838 1,429,195 1,686,292 1,754,415 1,781,352 1,835,371 1,829,843 1,891,470 1,924,765 1,992,414 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 Qi Q2 Q3 Q4 Qi Q2 Q3 Q4 1 Profits with inventory valuation and capital consumption adjustment 464.5 526.5 n.a. 455.9 531.5 549.8 568.9 559.6 561.1 614.9 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 -9.3 -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 • May 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 99.5 102.5 102.1 102.4R 15 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 564.9 591.8 666.9 602.9 621.9 638.1 666.9 691.4 709.2 717.81" 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 1996 TTyyppee ooff ccrreeddiitt 11999933 11999944 11999955RR Aug. Sept. Oct. Nov. Dec.r Jan. Seasonally adjusted 1 Total .... 545,533 614,784 690,191 671,807 675,247 682,627 687,187 690,191 695,943 2 Consumer., 160,349 176,198 198,860 191,806 193,555 194,620 197,303 198,860 199,175 3 Real estate' 71,965 78,770 86,944 85,756 86,121 87,266 87,699 86,944 87,959 4 Business.. 313,219 359,816 404,387 394,245 395,571 400,741 402,185 404,387 408,810 Not seasonally adjusted 5 Total 550,751 620,975 697,340 665,535 672,653 681,965 687,944 697,340 696,413 6 Consumer 162,770 178,999 202,101 190,830 193,615 194,931 198,072 202,101 201,070 7 Motor vehicles. 56,057 61,609 70,061 68,271 68,857 70,816 68,167 70,061 70,847 8 Other consumer . 60,396 73,221 81,988 77,251 77,345 77,865 78,926 81,988 81,002 9 Securitized motor vehicles ^ 36,024 31,897 33,633 31,551 31,693 30,096 34,394 33,633 32,128 1 1 0 1 Re S al e c e u s r t i a t t i e z 2 e d other consumer 7 1 1 0 , , 7 2 2 9 7 3 7 1 8 2 , , 4 2 7 7 9 2 8 1 6 6 , , 6 4 0 1 6 9 8 1 6 3 , , 1 7 0 5 7 7 8 1 6 5 , , 1 7 2 2 8 0 8 1 7 6 , , 4 1 7 5 1 4 8 1 7 6 , , 6 5 7 8 2 5 8 1 6 6 , , 6 4 0 1 6 9 8 1 8 7 , , 3 0 7 9 9 3 12 Business 316,254 363,497 408,633 388,598 392,910 399,563 402,200 408,633 406,964 1 1 1 4 3 5 Mo R W to e h r t o a v l i e e l s h 5 a . i . l c . e l 6 e s 9 3 1 5 1 8 , , , 1 1 0 7 4 9 3 8 1 1 2 3 1 5 1 8 , , , 0 5 1 3 1 9 7 4 7 1 2 3 3 5 6 3 , , , 3 4 2 0 2 7 4 7 7 1 2 3 2 3 1 4 , , , 8 3 4 8 9 4 3 2 4 1 2 2 2 9 5 5 , , , 3 0 0 1 5 0 3 3 6 1 2 3 2 2 5 9 , , , 2 7 2 0 5 1 9 2 6 1 2 3 2 4 3 9 , , , 5 5 7 1 6 0 9 4 8 1 2 3 3 6 5 3 , , , 4 3 2 2 0 7 7 4 7 1 2 3 3 4 5 1 , , , 1 6 7 6 8 9 6 9 2 16 Leasing 45,934 61,646 71,546 69,169 70,734 71,255 71,625 71,546 71,937 17 Equipment 145,452 157,953 177,297 170,825 171,239 172,657 173,183 177,297 176,159 1 1 8 9 R W e h t o a l i e l s . a . l . e . 6 35 8 , , 5 0 1 0 3 1 39 9 , , 6 6 8 7 0 8 4 1 8 0 , , 8 2 4 6 3 6 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 8 0 , , 8 2 4 6 3 6 49 9 , , 1 2 0 3 9 3 20 Leasing 101,938 108,595 118,188 115,426 116,206 117,379 118,100 118,188 117,817 21 Other business 53,997 61,495 65,363 64,941 66,111 66,238 66,678 65,363 66,840 22 Securitized business assets 21,632 25,852 32,696 28,388 30,507 31,452 32,631 32,696 32,173 23 Retail 2,869 4,494 4,723 4,587 4,818 4,586 4,974 4,723 4,467 24 Wholesale 10,584 14,826 21,327 17,986 19,773 20,390 21,208 21,327 20,923 25 Leasing 8,179 6,532 6,646 5,815 5,916 6,476 6,449 6,646 6,783 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 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms' 1 Purchase price (thousands of dollars) 163.1 170.4 175.8 170.4 174.8 174.3 178.6 181.7 179.2 181.7 2 Amount of loan (thousands of dollars) 123.0 130.8 134.5 130.6 131.8 133.0 136.4 140.9 135.8 143.2 3 Loan-to-price ratio (percent) 78.0 78.8 78.6 78.9 78.1 77.8 78.9 79.1 77.3 80.3 4 Maturity (years) 26.1 27.5 27.7 27.3 28.0 26.6 27.7 27.6 27.7 27.8 5 Fees and charges (percent of loan amount)2 1.30 1.29 1.21 1.12 1.20 1.11 1.22 1.21 1.07 1.24 Yield (percent per year) 6 Contract rate1 7.03 7.26 7.65 7.56 7.50 7.39 7.27 7.20 7.15 7.00 7 Effective rate1'3 7.24 7.47 7.85 7.75 7.69 7.58 7,46 7.40 7.32 7.20 8 Contract rate (HUD series)4 7.37 8.58 8.05 7.91 7.78 7.62 7.46 7.30 7.23 7.56 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 7.46 8.68 8.18 8.03 8.03 7.61 7.51 7.52 7.11 7.57 10 GNMA securities6 6.65 7.96 7.57 7.49 7.26 7.16 7.01 6.82 6.71 6.85 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) II Total 190,861 222,057 253,511 238,850 241,378 246,234 249,928 253,511 255,619 257,970 12 FHA/VA insured 23,857 27,558 28,762 28,787 28,726 28,765 28,901 28,762 28,622 28,502 13 Conventional 167,004 194,499 224,749 210,063 212,652 217,469 221,027 224,749 226,997 229,468 14 Mortgage transactions purchased (during period) 92,037 62,389 56,598 5,688 5,002 7,443 6,148 6,243 4,810 5,371 Mortgage commitments (during period) 15 Issued7 92,537 54,038 56,092 6,284 6,019 6,732 6,038 4,765 5,750 7,013 16 To sell8 5,097 1,820 360 53 9 0 10 0 3 0 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period f 17 Total 55,012 72,693 107,424 91,544 94,989 99,758 102,997 107,424 111,143 114,793 18 FHA/VA insured 321 276 267 246 281 276 271 267 226R 225 19 Conventional 54,691 72,416 107,157 91,298 94,708 99,482 102,726 107,157 110,917' 114,568 Mortgage transactions (during period) 20 Purchases 229,242 124,697 98,470 9,594 11,458 11,092 9,989 13,108 13,357 10,891 21 Sales 208,723 117,110 85,877 8,161 10,239 9,856 9,011 11,712 11,624 9,733 22 Mortgage commitments contracted (during period)9 274,599 136,067 118,659 10,578 12,469 10,388 11,339 14,609 12,765 10,378 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 • May 1996 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1994 1995 Type of holder and property 11999922 11999933 11999944 Q4 Q1 Q2 Q3 Q4P 1 All holders 4,092,984R 4,268,919R 4,475,242 4,475,242 4,516,816R 4,584,661R 4,660,895 4,724,076 By type of property 2 One- to four-family residences 3,037,408 3,227,633 3,432,165 3,432,165 3,466,026' 3,524,474' 3,591,013 3,640,099 3 Multifamily residences 274,234 270,796 275,304 275,304 276,398' 280,390' 284,237 289,187 4 Commercial 700,604r 689,296' 684,803 684,803 690,988' 695,947' 701,225 710,498 5 Farm 80,738 81,194 82,971 82,971 83,403' 83,850 84,420 84,292 By type of holder 6 Major financial institutions 1,769,187 1,767,835 1,815,810 1,815,810 1,841,815 1,868,175 1,895,285 1,901,935 7 Commercial banks2 894,513 940,444 1,004,280 1,004,280 1,024,854 1,053,048 1,072,780 1,080,320 8 One- to four-family 507,780 556,538 611,697 611,697 625,378 648,705 662,126 665,044 9 Multifamily 38,024 38,635 38,916 38,916 39,746 40,593 43,003 43,522 10 Commercial 328,826 324,409 331,100 331,100 336,795 340,176 343,826 347,927 11 Farm 19,882 20,862 22,567 22,567 22,936 23,575 23,824 23,827 12 Savings institutions3 627,972 598,330 596,199 596,199 601,777 599,745 604,614 602,855 13 One- to four-family 489,622 469,959 477,499 477,499 483,625 482,005 489,150 488,234 14 Multifamily 69,791 67,362 64,400 64,400 63,778 64,404 63,569 62,171 15 Commercial 68,235 60,704 54,011 54,011 54,085 53,054 51,604 52,160 16 Farm 324 305 289 289 288 282 291 290 17 Life insurance companies 246,702 229,061 215,332 215,332 215,184 215,382 217,892 218,759 18 One- to four-family 11,441 9,458 7,910 7,910 7,892 7,911 8,006 8,038 19 Multifamily 27,770 25,814 24,306 24,306 24,250 24,310 24,601 24,700 20 Commercial 198,269 184,305 173,539 173,539 173,142 173,565 175,643 176,353 21 Farm 9,222 9,484 9,577 9,577 9,900 9,596 9,643 9,668 22 Federal and related agencies 286,263 328,598 323,491 323,491 319,770 315,208 314,358 310,408 23 Government National Mortgage Association . . . 30 22 6 6 15 7 2 2 24 One- to four-family 30 15 6 6 15 7 2 2 25 Multifamily 0 7 0 0 0 0 0 0 26 Farmers Home Administration4 41,695 41,386 41,781 41,781 41,857 41,917 41,858 41,791 27 One- to four-family 16,912 15,303 13,826 13,826 13,507 13,217 12,914 12,643 28 Multifamily 10,575 10,940 11,319 11,319 11,418 11,512 11,557 11,617 29 Commercial 5,158 5,406 5,670 5,670 5,807 5,949 6,096 6,248 30 Farm 9,050 9,739 10,966 10,966 11,124 11,239 11,291 11,282 31 Federal Housing and Veterans' Administrations 12,581 12,215 10,964 10,964 10,890 10,098 9,535 9,497 32 One- to four-family 5,153 5,364 4,753 4,753 4,715 4,838 4,918 4,867 33 Multifamily 7,428 6,851 6,211 6,211 6,175 5,260 4,617 4,629 34 Resolution Trust Corporation 32,045 17,284 10,428 10,428 9,342 6,456 4,889 1,700 35 One- to four-family 12,960 7,203 5,200 5,200 4,755 2,870 2,299 761 36 Multifamily 9,621 5,327 2,859 2,859 2,494 1,940 1,420 515 37 Commercial 9,464 4,754 2,369 2,369 2,092 1,645 1,170 424 38 Farm 0 0 0 0 0 0 0 0 39 Federal Deposit Insurance Corporation 0 14,112 7,821 7,821 6,730 6,039 5,015 4,303 40 One- to four-family 0 2,367 1,049 1,049 840 731 618 492 41 Multifamily 0 1,426 1,595 1,595 1,310 1,135 722 428 42 Commercial 0 10,319 5,177 5,177 4,580 4,173 3,674 3,383 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 137,584 166,642 178,059 178,059 177,615 178,462 182,229 183,782 45 One- to four-family 124,016 151,310 162,160 162,160 161,780 162,674 166,393 168,122 46 Multifamily 13,568 15,332 15,899 15,899 15,835 15,788 15,836 15,660 47 Federal Land Banks 28,664 28,460 28,555 28,555 28,065 28,005 28,151 28,019 48 One- to four-family 1,687 1,675 1,671 1,671 1,651 1,648 1,656 1,652 49 Farm 26,977 26,785 26,885 26,885 26,414 26,357 26,495 26,367 50 Federal Home Loan Mortgage Corporation 33,665 48,476 45.876 45,876 45,256 44,224 42,678 41,315 51 One- to four-family 31,032 45,929 43,046 43,046 42,122 40,963 39,244 37,463 52 Multifamily 2,633 2,547 2,830 2,830 3,134 3,261 3,434 3,852 53 Mortgage pools or trusts5 1,434,264 1,563,453 1,716,209 1,716,209 1,731,272 1,759,314 1,797,162 1,849,640 54 Government National Mortgage Association .. . 419,516 414,066 450,934 450,934 454,401 457,101 463,654 472,298 55 One- to four-family 410,675 404,864 441,198 441,198 444,632 446,855 453,114 461,453 56 Multifamily 8,841 9,202 9,736 9,736 9,769 10,246 10,540 10,845 57 Federal Home Loan Mortgage Corporation 407,514 446,029 486,480 486,480 488,723 496,139 503,457 517,609 58 One- to four-family 401,525 441,494 483,354 483,354 485,643 493,105 500,504 514,796 59 Multifamily 5,989 4,535 3,126 3,126 3,080 3,034 2,953 2,813 60 Federal National Mortgage Association 444,979 495,525 530,343 530,343 533,262 543,669 559,585 582,959 61 One- to four-family 435,979 486,804 520,763 520,763 523,903 533,091 548,400 569,724 62 Multifamily 9,000 8,721 9,580 9,580 9,359 10,578 11,185 13,235 63 Farmers Home Administration4 38 28 19 19 14 13 12 11 64 One- to four-family 8 5 3 3 2 2 2 2 65 Multifamily 0 0 0 0 0 0 0 0 66 Commercial 17 13 9 9 7 6 5 5 67 Farm 13 10 7 7 5 5 5 4 68 Private mortgage conduits 162,217 207,806 248,433 248,433 254,871 262,393 270,454 276,763 69 One- to four-family 140,718 173,635 196,733 196,733 201,314 205,018 209,713 208,354 70 Multifamily 6,305 8,701 14,925 14,925 15,743 17,281 18,903 22,436 71 Commercial 15,194 25,469 36,774 36,774 37,814 40,094 41,838 45,972 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others6 603,270r 609,032' 619,732 619,732 623,960' 641,964' 654,089 662,092 74 One- to four-family 447,871 455,709 461,297 461,297 464,252' 480,834' 491,954 498,452 75 Multifamily 64,688 65,397 69,602 69,602 70,305' 71,049' 71,896 72,763 76 Commercial 75,44 lr 73,917' 76,153 76,153 76,667' 77,284' 77,368 78,025 77 Farm 15,270 14,009 12,681 12,681 12,736 12,796 12,872 12,853 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 CREDIT1 Millions of dollars, amounts outstanding, end of period 1995 1996 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999933 11999944 11999955rr Aug. Sept. Oct. Nov. Dec.r Jan. Seasonally adjusted 1 Total 790,351 902,853 1,024,809 989,695 993,843 1,005,178 l,015,029r 1,024,809 1,035,114 2 Automobile 280,566 317,237 353,326 339,770 341,155 344,671 349,138r 353,326 356,053 3 Revolving 286,588 334,511 395,234 379,669 382,094 387,180 390,123r 395,234 400,545 4 Other2 223,197 251,106 276,249 270,255 270,595 273,326 275,768r 276,249 278,516 Not seasonally adjusted 5 Total 809,440 925,000 1,050,642 990,428 996,525 1,005,423 l,018,961r 1,050,642 1,045,035 By major holder Commercial banks 367,566 427,851 464,993 451,784 449,502 451,232 453,690 464,993 459,740 7 Finance companies 116,453 134,830 152,059 145,522 146,202 148,681 147,093 152,059 151,849 8 Credit unions 101,634 119,594 132,033 128,424 129,027 130,261 130,970r 132,033 131,443 9 Savings institutions 37,855 38,468 38,500 38,634 38,894 38,500 38,500 38,500 38,500 10 Nonfinancial business3 55,296 60,957 57,497 55,723 54,177 54,607 53,139 57,497 54,702 11 Pools of securitized assets4 130,636 143,300 205,560 170,341 178,723 182,142 195,569 205,560 208,801 By major type of credit 12 Automobile 281,458 318,213 354,395 341,716 344,401 347,513 351,024r 354,395 335544,,331133 13 Commercial banks 122,000 141,851 151,057 148,549 148,901 150,782 149,905 151,057 152,290 14 Finance companies 56,057 61,609 70,061 68,271 68,857 70,816 68,167 70,061 70,847 15 Pools of securitized assets4 39,481 34,918 43,666 36,681 37,476 36,453 43,240 43,666 41,901 16 Revolving 301,837 352,266 416,187 377,784 380,341 384,625 392,689r 416,187 409,006 17 Commercial banks 149,920 180,183 198,076 189,163 185,572 186,463 189,405 198,076 189,317 18 Nonfinancial business3 50,125 55,341 51,971 48,976 48,968 49,358 47,839 51,971 49,267 19 Pools of securitized assets4 79,878 94,376 142,721 117,729 123,749 126,739 132,978 142,721 147,083 20 Other 226,145 254,521 280,060 269,467 271,845 273,285 275,248r 280,060 281,716 21 Commercial banks 95,646 105,817 115,860 114,072 115,029 113,987 114,380 115,860 118,133 22 Finance companies 60,396 73,221 81,998 77,251 77,345 77,865 78,926 81,998 81,002 73 Nonfinancial business3 5,171 5,616 5,526 5,286 5,271 5,249 5,300 5,526 5,435 24 Pools of securitized assets4 11,277 14,006 19,173 15,931 17,498 18,950 19,351 19,173 19,817 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 CREDIT1 Percent per year except as noted 1995 1996 IItteemm 11999933 11999944 11999955 July Aug. Sept. Oct. Nov. Dec. Jan. INTEREST RATES Commercial hanks2 1 48-month new car 8.09 8.12 9.57 n.a. 9.44 n.a. n.a. 9.36 n.a. n.a. 2 24-month personal 13.47 13.19 13.94 n.a. 13.84 n.a. n.a. 13.80 n.a. n.a. Credit card plan 3 All accounts n.a. 15.69 16.02 n.a. 15.98 n.a. n.a. 15.81 n.a. n.a. 4 Accounts assessed interest n.a. 15.77 15.79 n.a. 15.94 n.a. n.a. 15.71 n.a. n.a. Auto finance companies 5 New car 9.48 9.79 11.19 11.01 10.85 10.75 10.89 10.84 10.52 9.74 6 Used car 12.79 13.49 14.48 14.35 14.23 14.12 14.06 13.98 13.83 13.27 OTHER TERMS3 Maturity (months) 1 New car 54.5 54.0 54.1 54.1 53.5 53.4 54.6 54.5 53.6 51.8 8 Used car 48.8 50.2 52.2 52.4 52.3 52.3 52.3 52.2 51.8 52.2 Loan-to-value ratio 9 New car 91 92 92 92 92 92 92 92 92 92 10 Used car 98 99 99 100 99 100 99 99 99 99 Amount financed (dollars) 11 New car 14,332 15,375 16,210 16,086 16,056 16,402 16,430 16,583 17,034 16,698 12 Used car 9,875 10,709 11,590 11,637 11,662 11,725 11,883 12,012 12,152 12,059 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 DomesticN onfinancial Statistics • May 1996 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1994 1995r Transaction category or sertor 11999911 11999922 11999933 11999955 Q2 Q3 Q4 Ql Q2 Q3 Q4 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors.... 480.6 545.3 625.9 617.0 716.7 581.2 579.9r 654.3 839.7 879.3 529.6 618.4 By sector and instrument 2 U.S. government 278.2 304.0 256.1 155.9 144.4 131.3 135.6 150.1 266.8 202.8 65.8 42.4 3 Treasury securities 292.0 303.8 248.3 155.7 142.9 126.6 132.8 155.7 268.0 201.2 65.4 37.2 4 Budget agency issues and mortgages -13.8 .2 7.8 .2 1.5 4.7 2.9 -5.7 -1.2 1.6 .4 5.1 5 Private 202.4 241.3 369.8 461.1 572.3 449.9 444.3 504.2 572.9 676.5 463.9 576.0 By instrument 6 Municipal securities 87.8 30.5 74.8 -29.3 -47.2 -20.7 -58.4 -53.8 -48.2 -9.5 -113.0 -18.0 1 Corporate bonds 78.8 67.6 75.2 23.3 75.0 37.4 15.4 6.2 55.3 99.0 60.7 84.8 Mortgages 158.4 130.9 157.2 196.5 243.5 194.2 203.9 213.5 217.7 236.1 278.2 242.0 y Home mortgages 173.6 187.6 187.9 204.5 207.9 186.2 208.8 219.8 192.1 203.8 244.6 191.2 10 Multifamily residential -5.5 -10.4 -6.0 1.3 12.1 4.0 5.6 -4.2 2.6 14.2 13.7 18.0 n Commercial -10.0 -47.8 -25.0 -11.1 22.1 1.1 -12.7 -3.4 21.2 16.3 17.6 33.4 12 Farm .4 1.4 .5 1.8 1.3 2.9 2.2 1.4 1.7 1.8 2.3 -.5 13 Consumer credit -14.8 7.3 58.9 121.2 130.8 129.8 124.8 165.2 93.8 158.1 109.6 161.8 14 Bank loans n.e.c -40.9 -13.7 3.8 72.7 99.7 58.7 97.1 77.1 146.6 97.3 85.4 69.5 13 Commercial paper -18.4 8.6 10.0 21.4 18.1 9.7 26.4 23.5 23.1 37.5 16.0 -4.1 16 Other loans and advances -48.5 10.1 -10.2 55.4 52.4 40.8 35.1 72.4 84.5 58.0 26.9 40.0 By borrowing sector 17 Household 182.7 200.7 246.5 360.3 373.1 349.9 379.7 419.1 303.5 390.4 401.8 396.5 18 Nonfinancial business -61.9 19.5 61.0 144.3 250.8 139.4 130.0 153.6 316.8 302.4 178.3 205.5 19 Farm 2.1 1.3 2.0 2.8 1.7 7.8 2.4 -2.0 .9 3.6 4.3 -2.2 20 Nonfarm noncorporate -11.0 -16.0 7.0 12.1 37.9 10.0 8.8 16.5 51.3 34.4 29.8 36.2 21 Corporate -53.0 34.1 52.0 129.3 211.1 121.7 118.8 139.1 264.6 264.3 144.1 171.5 22 State and local government 81.6 21.1 62.3 -43.4 -51.5 -39.5 -65.4 -68.5 -47.5 -16.3 -116.2 -26.1 23 Foreign net borrowing in United States 14.8 22.6 68.8 -20.3 67.4 -34.2 19.6 33.5 61.4 40.4 97.5 70.1 24 Bonds 15.0 15.7 81.3 7.1 47.3 -17.4 20.8 27.7 13.5 49.9 55.0 70.8 25 Bank loans n.e.c 3.1 2.3 .7 1.4 8.3 -4.5 4.7 -.5 8.1 5.6 8.2 11.3 2b Commercial paper 6.4 5.2 -9.0 -27.3 13.6 -5.2 -8.1 5.9 37.9 -11.1 30.9 -3.4 27 Other loans and advances -9.8 -.6 -4.2 -1.6 -1.8 -7.1 2.2 .4 1.9 -4.0 3.4 -8.6 28 Total domestic plus foreign 495.4 568.0 694.7 596.6 784.1 546.9r 599.5 687.8 901.1 919.7 627.2 688.5 Financial sectors 29 Total net borrowing by financial sectors 154.5 240.1 290.8 459.4 455.9 380.1 419.7 544.8 264.9 433.6 461.7 663.5 B\ instrument 30 U.S. government-related 145.7 155.8 164.2 284.3 213.6 264.5 245.7 317.5 93.0 197.7 230.1 333.5 31 Government-sponsored enterprises securities 9.2 40.3 80.6 176.9 108.5 146.6 152.1 249.0 62.9 127.2 101.5 142.2 32 Mortgage pool securities 136.6 115.6 83.6 112.1 105.1 117.9 93.6 68.5 30.0 70.5 128.6 191.3 33 Loans from U.S. government .0 .0 .0 -4.8 .0 .0 .0 .0 .0 .0 .0 .0 34 8.7 84.3 126.6 175.2 242.4 115.5 174.0 227.3 172.0 236.0 231.6 329.9 33 Corporate bonds 68.8 82.8 119.8 113.4 180.8 96.4 99.5 96.5 155.7 174.2 170.2 223.1 36 Mortgages .5 .6 3.6 9.8 5.3 12.4 12.0 4.9 5.2 5.2 5.2 5.6 37 Bank loans n.e.c 8.8 2.2 -13.0 -12.3 8.0 -27.4 -11.7 1.9 -3.0 21.2 7.1 6.6 38 Open market paper -32.0 -.7 -6.2 41.6 42.6 4.3 41.3 85.9 38.5 34.0 43.3 54.6 39 Other loans and advances -37.3 -.6 22.4 22.6 5.7 29.8 32.8 38.1 -24.5 1.3 5.9 40.1 By borrowing sector 40 Government-sponsored enterprises 9.1 40.2 80.6 172.1 108.5 146.6 152.1 249.0 62.9 127.2 101.5 142.2 41 Federally related mortgage pools 136.6 115.6 83.6 112.1 105.1 117.9 93.6 68.5 30.0 70.5 128.6 191.3 42 Private financial sectors 8.7 84.3 126.6 175.2 242.4 115.5 174.0 227.3 172.0 236.0 231.6 329.9 43 Commercial banks -10.7 7.7 4.6 9.9 9.7 10.6 23.9 4.1 6.3 18.2 9.6 4.5 44 Bank holding companies —2.5 2.3 8.8 10.3 15.3 10.1 11.5 16.0 13.3 23.8 25.2 -1.3 43 Funding corporations -6.5 13.2 2.9 24.2 45.2 -10.5 47.3 11.1 61.5 21.7 52.1 45.5 46 Savings institutions -44.7 -7.0 11.3 12.8 3.4 5.8 14.8 36.1 -18.9 -7.2 5.3 34.2 47 Credit unions .0 .0 .2 .2 -.1 .2 .5 .2 -.3 -.1 .1 .0 48 Life insurance companies .0 .0 .2 .3 -.1 .0 .0 1.3 .0 .1 -.1 -.4 4y Finance companies 17.7 -1.6 .2 50.2 51.6 63.6 16.3 57.3 83.1 57.2 6.5 59.6 30 Mortgage companies -2.4 8.0 .0 -11.5 2.9 -18.2 -7.0 1.1 -7.4 14.8 4.0 .0 31 Real estate investment trusts (REITs) 1.2 .3 3.4 13.7 5.4 15.3 18.8 6.3 5.2 5.2 5.2 6.0 52 Brokers and dealers 3.7 2.7 12.0 .5 -5.0 .3 -7.6 19.3 -29.5 -.1 2.1 7.7 53 Issuers of asset-backed securities (ABSs) 52.9 58.6 83.0 64.5 114.1 38.5 55.4 74.5 58.8 102.2 121.6 174.1 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 MARKETS1—Continued 1994 1995r TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999911 11999922 11999944 Q2 Q3 Q4 Ql Q2 Q3 Q4 All sectors 54 Total net borrowing, all sectors 649.9 808.0 985.5 1,056.0 1,240.0 927.0 1,019.2 1,232.6 1,166.0 1,353.4 1,088.9 1,351.9 55 U.S. government securities 424.0 459.8 420.3 444.9 358.0 395.8 381.3 467.5 359.8 400.5 295.9 375.9 56 Municipal securities 87.8 30.5 74.8 -29.3 -47.2 -20.7 -58.4 -53.8 -48.2 -9.5 -113.0 -18.0 57 Corporate and foreign bonds 162.5 166.1 276.3 143.8 303.0 116.4 135.7 130.4 224.5 323.1 285.9 378.7 58 Mortgages 158.9 131.5 160.8 206.3 248.8 206.6 215.9 218.4 223.0 241.4 283.4 247.6 59 Consumer credit -14.8 7.3 58.9 121.2 130.8 129.8 124.8 165.2 93.8 158.1 109.6 161.8 60 Bank loans n.e.c -29.1 -9.3 -8.5 61.8 116.0 26.8 90.1 78.5 151.7 124.1 100.7 87.4 61 Open market paper -44.0 13.1 -5.1 35.7 74.3 8.8 59.6 115.3 99.5 60.4 90.2 47.1 62 Other loans and advances -95.6 8.9 8.0 71.7 56.2 63.5 70.2 111.0 61.8 55.4 36.2 71.5 Funds raised through mutual funds and corporate equities 63 Total net share issues 209.4r 294.9r 442.1r 150.8r 157.1 263.9r 113.2r -8i.r 18.1 169.2 190.1 250.9 64 Mutual funds 147.2r 209. f 323.7r 128.9r 171.1 199.6r 129.7r -12.6' 65.1 174.1 195.7 249.7 65 Corporate equities 62.2 85.8 118.4 21.9r -14.1 64.3' — 16.4r -68.5 -46.9 -4.9 -5.6 1.2 66 Nonfinancial corporations 18.3 27.0 21.3 -44.9 -76.0 -2.0 -50.0 -118.0 -68.4 -59.6 -98.8 -77.2 67 Financial corporations 13.3 28.1 36.6 24. r 14.2 20.4r 10.5r 16.3 8.7 17.7 11.2 19.0 68 Foreign shares purchased by U.S. residents 30.7 30.7 60.5 42.7 47.8 45.9 23.1 33.2 12.8 37.0 82.0 59.4 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables F.2 through F.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • May 1996 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1994 1995' TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999900 11999911 11999922 11999933 11999944 Q2 Q3 Q4 Qi Q2 Q3 Q4 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 904.1 649.9 808.0 985.5 1,056.0 927.0 1,019.2 1,232.6 1,166.0 1,353.4 1,088.9 1,351.9 2 Private domestic nonfinancial sectors 216.1' 104.lr 90.2 62.7' 252.9' 255.5' 205.1' 252.0' .0 -158.5 -124.7 -137.1 Households 198.1r 27.9' 84.0r 37.1' 294.8' 297.6' 283.9' 336.7' 179.7 -99.4 131.5 -5.3 4 Nonfarm noncorporate business -3.5 -5.3 -.1 .6 .7 1.5 .7 .9 .5 -1.0 -1.0 -2.2 Nonfinancial corporate business -26.1 30.7 27.8 21.3 51.9 27.5 37.4' 84.1 -85.2 47.5 -47.3 37.5 6 State and local governments 47.6r 50.8 -21.5r 3.7 -94.6r -71.1 -117.0 -169.7 -94.9 -105.7 -207.9 -167.1 1 U.S. government 33.7 10.5 -11.9 -18.4 -24.2 -14.6 -11.3 -24.4 -13.2 -24.3 -23.4 -30.1 8 Rest of the world 86.7 13.3 98.2 128.3 134.4 65.7 137.5 210.9 244.9 325.9 352.8 159.8 y Financial sectors 567.7r 522.0r 631.5r 812.8' 693.0' 620.4' 687.9' 794.0' 934.3 1,210.2 884.2 1,359.3 10 Government sponsored enterprises 14.0 15.1 68.8 90.2 123.2 100.9 125.4 175.2 11.2 86.9 50.8 166.8 n Federally related mortgage pools 150.3 136.6 115.6 83.6 112.1 117.9 93.6 68.5 30.0 70.5 128.6 191.3 12 Monetary authority 8.1 31.1 27.9 36.2 31.5 24.9 29.7 30.0 16.3 20.8 -11.1 24.7 13 Commercial banking 125.1 80.8 95.3 142.2 163.4 128.5 183.4 174.5 342.7 316.0 243.5 153.6 14 U.S. chartered banks 94.9 35.7 69.5 149.6 148.1 136.1 155.6 174.2 183.4 222.4 227.5 112.9 15 Foreign banking offices in United States 28.4 48.5 16.5 -9.8 11.2 -10.0 22.9 -5.6 158.8 83.9 24.1 34.3 16 Bank holding companies -2.8 -1.5 5.6 .0 .9 .2 2.7 -2.4 -2.0 5.7 -9.0 6.0 17 Banks in U.S. affiliated areas 4.5 -1.9 3.7 2.4 3.3 2.1 2.2 8.3 2.4 4.0 1.0 .4 18 Funding corporations -6.3r 8.2' 17.7 -19.1' -27.4' -35.6' -45.5' -11.4' 47.1 -9.6 -22.0 -42.8 19 Thrift institutions -157.6 -146.1 -61.3 -1.7 34.9 41.5 53.8 32.4 28.2 9.4 40.9 1.6 20 Life insurance companies 107.2 86.5 78.5 100.9 66.3 26.7 89.5 79.4 132.4 131.2 77.0 91.5 21 Other insurance companies 26.4 30.0 6.7 27.7 24.9 22.3 25.3 30.4 19.2 21.7 21.8 22.8 22 Private pension funds 54.0 35.4 41.1 45.9 47.0 49.9 42.5 74.7 58.9 57.2 47.5 61.6 23 State and local government retirement funds 32.8 41.1 23.0 19.8 29.0 46.4 -11.1 36.6 62.4 3.2 53.0 12.1 24 Finance companies 29.5 -9.2 7.5 -9.0 68.2 61.2 63.1 80.4 91.8 70.1 42.9 47.3 25 Mortgage companies .0 11.2 .1 .0 -22.9 -36.3 -14.0 2.1 -14.4 29.9 7.3 .6 2b Mutual funds 36.2 80.1 126.2 159.5 -7.1' 55.4' -29.3' -70.4' -28.8 21.6 51.3 162.0 27 Closed-end funds 1.3 12.8 18.2 11.0 -5.5 -11.6 -13.6 -10.0 3.5 6.4 8.4 5.0 28 Money market mutual funds 77.5 32.7 4.7 20.4 30.0' 26.6 57.7 53.9' 53.1 135.2 33.2 124.6 29 Real estate investment trusts (REITs) -.7 -.7 1.1 .6 4.7 6.6 5.5 .2 1.8 1.8 1.8 1.9 30 Brokers and dealers 2.8 17.5 -1.3 14.8 -44.2 -57.7 -21.9 -8.0 30.5 146.2 -1.8 177.0 31 Asset-backed securities issuers (ABSs) 51.1 48.9 53.8 80.5 57.8 42.8 46.3 54.3 46.7 89.8 109.7 156.9 32 Bank personal trusts 15.9 10.0 8.0 9.5 7.1 10.2 7.7 1.4 1.6 1.8 1.5 .8 RELATION OF LIABILITIES TO FINANCIAL ASSETS 33 Net flows through credit markets 904.1 649.9 808.0 985.5 1,056.0 927.0 1,019.2 1,232.6 1,166.0 1,353.4 1,088.9 1,351.9 Other financial sources 34 Official foreign exchange 2.0 -5.9 -1.6 .8 -5.8 -14.6 .2 -8.6 17.8 10.3 9.0 -1.9 35 Special drawing rights certificates • 1.5 .0 -2.0 .0 .0 .0 .0 .0 .0 .0 8.6 .0 36 Treasury currency 1.0 .0 .2 .4 .7 .6 .8 .7 .7 .7 .8 .0 3/ Life insurance reserves 25.7 25.7 27.3 35.2 34.0 21.7 67.7 21.6 54.0 49.9 29.9 41.5 38 Pension fund reserves 243.5r 198.2r 238.6r 247.3' 248.0' 220.7' 238.0' 293.4' 302.5 310.7 214.2 166.2 39 Interbank claims 35.0 -3.4 43.5 56.4' 89.4' 110.7' 4.1' 98.4r -17.4 28.7 -41.4 56.7 40 Checkable deposits and currency 43.6 86.3 113.5 117.3 -9.7 -44.9 -66.0 -40.5 42.8 133.5 -150.5 -76.1 41 Small time and savings deposits 63.7 1.5 -57.2 -70.3 -40.0 -57.5 -51.8 -46.9 18.1 112.0 107.6 120.3 42 Large time deposits -66.1 -58.5 -73.2 -23.5 19.6 -3.6 84.0 36.5 116.8 69.2 111.5 24.7 43 Money market fund shares 68.6 41.6 4.5 20.2 43.3 34.0 56.4 86.5 59.9 233.5 121.2 154.8 44 Security repurchase agreements -24.2 -16.5 43.1 71.2 78.3 166.0 86.0 51.9 161.8 130.7 85.1 65.0 45 Foreign deposits 27.9 -26.5 -3.5 -18.5 45.8 50.6 28.1 97.9 39.2 90.6 28.0 10.0 46 Mutual fund shares 62.9r 147.2r 209. r 323.7' 128.9' 199.6' 129.7' -12.6' 65.1 174.1 195.7 249.7 47 Corporate equities -44.6 62.2 85.8 118.4 21.9' 64.3' -16.4' -68.5 -46.9 -4.9 -5.6 1.2 48 Security credit 3.5 51.4 4.6 61.4 -.1 -20.7 -59.3 37.1 -10.7 30.8 35.4 26.9 49 Trade payables 35.8r 31.0r 46.6r 37.8' 111.9' 114.4' 95.4' 156.3' 112.1 32.5 184.2 77.1 50 Taxes payable -4.8 -6.2 8.5 4.5 3.0 -13.1 10.1 4.3 15.5 -4.0 4.4 -9.3 51 Noncorporate proprietors' equity 9.8r -,2r 16.9r 4.0' 23.8' 36.8' 46.6' 24.2' 28.1 32.6 48.3 33.6 52 Investment in bank personal trusts 29.7 16.1 -7.1 1.6 18.8 24.7 23.6 11.9 21.0 22.3 20.8 18.0 53 Miscellaneous 162.0r 277.4r 287.2 296.3' 265.9' 129.4' 269.0' 372.1' 366.0 467.2 289.2 516.6 54 Total financial sources l,580.6r l,471.4r l,792.8r 2,269.8r 2,133.8r 1,946.2' 1,965.5' 2,348.4' 2,512.3 3,273.6 2,385.3 2,827.2 Floats not included in assets (—) 55 U.S. government checkable deposits 3.3 -13.1 .7 -1.5 -4.8 .8 7.4 -24.4 13.2 -16.3 3.5 -24.3 56 Other checkable deposits 8.5 4.5 1.6 -1.3 -2.8 -3.5 -3.3 -2.3 -3.7 -3.9 -3.5 -4.2 5 7 Trade credit -11.2r 36. r 11.3' 29.7' -3.0' 20.3' 16.0' -29.7' 25.7 19.9 -6.0 -41.5 Liabilities not identified as assets (—) 58 Treasury currency .2 -.6 -.2 -.2 -.2 -.2 -.2 -.2 -.2 -.4 -.3 -.9 59 Interbank claims 1.6 26.2 -4.9 4.2 -2.7 5.4 10.1 -1.7 .8 8.2 7.6 -29.4 60 Security repurchase agreements -27.r -9.5 3.6' 34.3 27.9' 108.1' -47.3' 83.0' 73.5 -40.1 13.6 -12.9 61 Foreign deposits 25.9 -24.0 -2.8 -7.1 36.9' 56.1 39.5' 55.8' 46.0 81.7 -1.8 15.8 62 Taxes payable -1.7 -1.0 10.8 10.4 8.5 6.2 10.8 -.8 -8.7 31.9 11.2 -13.1 63 Miscellaneous -75.8r 8.9r .8' -48.8' -109.6' -336.3' -73.1' 14.8' -226.8 -125.1 -32.4 -5.9 64 Total identified to sectors as assets 1,657.0' l,443.8r 1,772.0r 2,250.0' 2,183.7' 2,089.3' 2,005.7' 2,254.0' 2,592.5 3,317.5 2,393.5 2,943.7 1. Data in this table also appear in the Board's Z.l (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 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 11,348.2 11,896.7 12,537.4 13,160.6 12,808.0 12,962.6 13,160.6 13,338.7r 13,544.3r 13,686.8r 13,877.3 By sector and instrument 2 U.S. government 2,776.4 3,080.3 3,336.5 3,492.3 3,395.4 3,432.3 3,492.3 3,557.9 3,583.5 3,603.4 3,636.7 3 Treasury securities 2,757.8 3,061.6 3,309.9 3,465.6 3,368.0 3,404.1 3,465.6 3,531.5 3,556.7 3,576.5 3,608.5 4 Budget agency issues and mortgages 18.6 18.8 26.6 26.7 27.4 28.2 26.7 26.4 26.8 26.9 28.2 5 Private 8,571.8 8,816.3 9,200.9 9,668.3 9,412.6 9,530.3 9,668.3 9,780.8r 9,960.8r 10,083.4r 10,240.6 By instrument 6 Municipal securities 1,272.2 1,302.8 1,377.5 1,348.2 1,372.2 1,362.6 1,348.2 l,334.8r l,329.8r l,306.6r 1,301.1 7 Corporate bonds 1,086.9 1,154.5 1,229.7 1,253.0 1,247.6 1,251.5 1,253.0 1,266.8 1,291.6 1,306.8 1,328.0 8 Mortgages 3,957.8 4,088.7 4,260.0 4,456.5 4,345.8 4,401.9 4,456.5 4,496.8r 4,563.3r 4,638.2r 4,700.0 9 Home mortgages 2,849.8 3,037.4 3,227.6 3,432.2 3,318.7 3,376.0 3,432.2 3,466.0r 3,524.5r 3,591.0r 3,640.1 10 Multifamily residential 282.8 272.5 267.8 269.1 268.8 270.2 269.1 269.8 273.3r 276.8r 281.2 11 Commercial 745.9 698.1 683.4 672.3 676.3 673.1 672.3 611.6' 681.6r 686.lr 694.4 12 Farm 79.3 80.7 81.2 83.0 82.1 82.6 83.0 83.4 83.9 84.4 84.3 13 Consumer credit 797.2 804.6 863.5 984.7 891.6 929.4 984.7 987.9 1,026.5 1,060.8 1,115.5 14 Bank loans n.e.c 686.0 672.2 676.0 748.6 705.3 724.7 748.6 781.8r 810.3' 826.0r 848.3 15 Commercial paper 98.5 107.1 117.8 139.2 135.7 138.7 139.2 149.8 162.9 163.3 157.4 16 Other loans and advances 673.2 686.5 676.3 738.0 714.4 721.6 738.0 762.9r 776.4r 781.8r 790.4 By borrowing sector 17 Household 3,822.9 4,023.6 4,272.4 4,632.3 4,407.5 4,511.8 4,632.3 4,675. lr 4,780.3r 4,890.0r 5,005.4 18 Nonfinancial business 3,674.2 3,696.8 3,770.3 3,921.1 3,860.9r 3,885.6 3,921.1 4,004.2r 4,085.6r 4,122.6r 4,171.9 19 Farm 135.0 136.3 138.3 141.2 141.5 143.1 141.2 138.9 142.8 144.9 142.8 20 Nonfarm noncorporate 1,137.3 1,122.9 1,129.9 1,142.0 1,135.6 1,137.4 1,142.0 1,154.5 l,163.3r l,170.4r 1,180.0 21 Corporate 2,401.9 2,437.6 2,502.0 2,638.0r 2,583.7 2,605.0 2,638.0r 2,710.7r 2,779.4r 2,807.3r 2,849.1 22 State and local government 1,074.8 1,095.9 1,158.2 1,114.8 1,144.2 1,132.8 1,114.8 l,101.6r 1,094.9r l,070.8r 1,063.3 23 Foreign credit market debt held in United States 299.7 313.1 381.9 361.6 348.7 352.4 361.6 376.8 387.6 410.7 429.0 24 Bonds 130.5 146.2 227.4 234.6 222.4 227.6 234.6 237.9 250.4 264.2 281.9 25 Bank loans n.e.c 21.6 23.9 24.6 26.1 25.1 26.3 26.1 28.2 29.6 31.6 34.4 26 Commercial paper 81.8 77.7 68.7 41.4 42.0 39.9 41.4 50.9 48.1 55.8 55.0 27 Other loans and advances 65.9 65.3 61.1 59.6 59.2 58.6 59.6 59.8 59.5 59.1 57.7 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 11,647.9 12,209.7 12,919.3 13,522.2 13,156.7 13,315.0 13,522.2 13,715.5r 13,931.9r 14,097.5r 14,306.3 Financial sectors 29 Total credit market debt owed by financial sectors 2,769.2 3,024.9 3,321.0 3,785.7 3,545.3 3,648.1 3,785.7 3,853.5r 3,964.8r 4,078.0r 4,244.3 By instrument 30 U.S. government-related 1,564.2 1,720.0 1,884.1 2,168.4 2,030.5 2,089.8 2,168.4 2,192.7 2,245.0 2,300.2 2,381.9 31 Government-sponsored enterprises securities 402.9 443.1 523.7 700.6 600.3 638.3 700.6 716.3 748.1 773.5 809.1 32 Mortgage pool securities 1,156.5 1,272.0 1,355.6 1,467.8 1,430.1 1,451.5 1,467.8 1,476.4 1,496.9 1,526.7 1,572.9 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 1,514.9 1,558.3 1,617.3 l,660.8r l,719.8r 1,777.7r 1,862.3 35 CCoorrppoorraattee bboonnddss 649.1 738.2 858.0 969.0 920.0 944.8 969.0 l,007.9r l,051.4r l,094.0r 1,149.8 36 MMoorrttggaaggeess 4.8 5.4 8.9 18.7 14.5 17.5 18.7 20.0 21.3r 22.6r 24.0 37 Bank loans n.e.c 78.4 80.5 67.6 55.3 56.3 53.4 55.3 53.4r 58.4r 60.3r 63.3 38 Open market paper 385.7 394.3 393.5 442.8 410.3 420.5 442.8 454.1 462.8 473.6 488.0 39 Other loans and advances 87.1 86.6 108.9 131.6 113.8 122.0 131.6 125.4 125.7 127.2 137.2 By borrowing sector 40 Government-sponsored enterprises 407.7 447.9 528.5 700.6 600.3 638.3 700.6 716.3 748.1 773.5 809.1 41 Federally related mortgage pools 1,156.5 1,272.0 1,355.6 1,467.8 1,430.1 1,451.5 1,467.8 1,476.4 1,496.9 1,526.7 1,572.9 42 Private financial sectors 1,205.1 1,304.9 1,436.9 1,617.3 1,514.9 1,558.3 1,617.3 l,660.8r l,719.8r l,777.7r 1,862.3 43 Commercial banks 72.3 80.0 84.6 94.5 86.7 92.6 94.5 95.0 99.9 102.2 104.1 44 Bank holding companies 112.3 114.6 123.4 133.6 126.8 129.6 133.6 137.0r 142.9 149.2 148.9 45 Funding corporations 139.1 161.6 169.9 199.3 191.5 200.6 199.3 221.0r 229.9 240.0r 247.1 46 Savings institutions 95.4 88.4 99.6 112.4 99.7 103.4 112.4 107.7 105.9r 107.2 115.8 47 Credit unions .0 .0 .2 .5 .3 .4 .5 .4 .3 .4 .4 48 Life insurance companies .0 .0 .2 .6 .3 .3 .6 .6 .6 .6 .5 49 Finance companies 391.9 390.4 390.5 440.7 414.2 420.9 440.7 456.7 467.2 471.9 492.3 50 Mortgage companies 22.2 30.2 30.2 18.7 20.2 18.5 18.7 16.9 20.6 21.6r 21.6 51 Real estate investment trusts (REITs) 13.6 13.9 17.4 31.1 24.8 29.5 31.1 32.4r 33.7r 35.0 36.5 52 Brokers and dealers 19.0 21.7 33.7 34.3 31.3 29.4 34.3 26.9 26.8 27.4 29.3 53 Issuers of asset-backed securities (ABSs) 339.3 404.2 487.2 551.6 519.2 533.0 551.6 566.3r 591.9r 622.3r 665.8 All sectors 54 Total credit market debt, domestic and foreign.... 14,417.1 15,234.6 16,240.3 17,307.9 16,702.0 16,963.1 17,307.9 17,569.1r 17,896.7r 18,175.4r 18,550.6 55 U.S. government securities 4,335.7 4,795.5 5,215.8 5,660.7 5,425.9 5,522.1 5,660.7 5,750.6 5,828.5 5,903.6 6,018.7 56 Municipal securities 1,272.2 1,302.8 1,377.5 1,348.2 1,372.2 1,362.6 1,348.2 l,334.8r l,329.8r l,306.6r 1,301.1 57 Corporate and foreign bonds 1,866.5 2,038.9 2,315.2 2,456.5 2,390.0 2,423.9 2,456.5 2,512.7r 2,593.4r 2,664.9r 2,759.6 58 Mortgages 3,962.6 4,094.1 4,269.0 4,475.2 4,360.3 4,419.4 4,475.2 4,516.8r 4,584.7r 4,660.9r 4,724.1 59 Consumer credit 797.2 804.6 863.5 984.7 891.6 929.4 984.7 987.9 1,026.5 1,060.8 1,115.5 60 Bank loans n.e.c 785.9 776.6 768.2 830.0 786.7 804.3 830.0 863.3 898.2 917.9 946.0 61 Open market paper 565.9 579.0 580.0 623.5 587.9 599.2 623.5 654.7 673.8 692.7 700.4 62 Other loans and advances 831.0 843.1 851.1 929.1 887.4 902.2 929.1 948. r 961,7r 968. lr 985.4 1. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables L.2 through L.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • May 1996 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES' Billions of dollars except as noted, end of period 1994 1995 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999911 11999922 11999933 11999944 Q2 Q3 Q4 Qi Q2 Q3' Q4 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 14,417.1 15,234.6 16,240.3 17,307.9 16,702.0 16,963.1 17,307.9 17,569.1' 17,896.7' 18,175.4 18,550.6 2 Private domestic nonfinancial sectors 2,591.4 2,673.7 2,729.3 3,012.5' 2,824.7' 2,893.9' 3,012.5' 2,983.7' 2,929.5' 2,916.3 2,903.4 3 Households 1,544.4r 1,620.6r 1,646.0' 1,971.1' 1,747.4' 1,839.5' 1,971.1' 1,996.3' 1,953.1' 2,007.1 2,018.7 4 Nonfarm noncorporate business 38.3 38.1 38.8 39.5 39.1 39.3 39.5 39.6 39.4 39.1 38.6 5 Nonfinancial corporate business 230.0 257.8 283.7 335.6 298.5 306.8 335.6 307.2' 319.0' 306.4 323.7 6 State and local governments 778.7r 151.2' 760.8r 666.3r 739.8' 708.3' 666.3' 640.6' 618.1' 563.7 522.4 7 U.S. government 246.9 235.0 230.7 206.5 215.4 212.6 206.5 203.2 197.1 191.3 183.8 8 Rest of the world 928.8 1,022.8 1,146.6 1,255.7 1,205.4 1,240.7 1,255.7 1,325.3' 1,403.4' 1,492.7 1,526.6 9 Financial sectors 10,650.1 11,303.1 12,133.7 12,833.2' 12,456.6' 12,615.9' 12,833.2' 13,056.9' 13,366.6' 13,575.1 13,936.9 10 Government-sponsored enterprises 389.0 457.8 548.0 671.2 596.0 627.5 671.2 673.3 695.8 708.5 750.1 11 Federally related mortgage pools 1,156.5 1,272.0 1,355.6 1,467.8 1,430.1 1,451.5 1,467.8 1,476.4 1,496.9 1,526.7 1,572.9 12 Monetary authority 272.5 300.4 336.7 368.2 351.6 356.8 368.2 367.1 375.7 370.6 380.8 13 Commercial banking 2,853.3 2,948.6 3,090.8 3,254.3 3,155.9 3,203.9 3,254.3 3,327.7 3,409.8 3,472.9 3,518.2 14 U.S. chartered banks 2,502.5 2,571.9 2,721.5 2,869.6 2,780.3 2,822.3 2,869.6 2,906.5 2,963.7 3,023.7 3,056.1 15 Foreign banking offices in United States 319.2 335.8 326.0 337.1 330.8 335.5 337.1 373.6 396.0 401.1 412.4 16 Bank holding companies 11.9 17.5 17.5 18.4 18.3 19.0 18.4 17.9 19.3 17.0 18.6 17 Banks in U.S. affiliated areas 19.7 23.4 25.8 29.2 26.5 27.1 29.2 29.8 30.8 31.0 31.1 18 Funding corporations 144.8 162.5 149.5 129.8' 138.7' 130.5' 129.8' 140.2' 135.7' 134.0 125.6 19 Thrift institutions 1,192.6 1,134.5 1,132.7 1,167.6 1,146.1 1,160.4 1,167.6 1,173.4 1,177.3 1,188.1 1,187.7 20 Life insurance companies 1,224.6 1,309.1 1,420.6 1,487.0 1,449.0 1,470.7 1,487.0 1,523.1 1,557.1 1,575.5 1,595.0 21 Other insurance companies 376.6 389.4 422.7 446.4 433.1 439.1 446.4 451.8' 458.5' 464.4 471.9 22 Private pension funds 530.6 571.7 617.6 664.6 635.3 645.9 664.6 679.3' 693.6' 705.5 720.9 23 State and local government retirement funds 394.5 417.5 437.3 466.3 459.2 454.3 466.3 480.7 482.1 493.3 498.9 24 Finance companies 488.9 496.4 482.8 551.0 511.3 524.1 551.0 568.5 586.9 594.7 614.0 25 Mortgage companies 60.3 60.5 60.4 37.5 40.4 37.0 37.5 33.9' 41.4' 43.2 43.3 26 Mutual funds 440.2 566.4 725.9 718.8' 747.8' 741.8' 718.8' 715.9 721.5 735.6 770.3 27 Closed-end funds 49.5 67.7 78.6 73.1 79.0 75.6 73.1 74.0' 75.6' 77.7 78.9 28 Money market mutual funds 403.9 408.6 429.0 459.0' 433.5 437.9 459.0' 480.6 508.0 505.7 545.5 29 Real estate investment trusts (REITs) 7.0 8.1 8.6 13.3 11.9 13.3 13.3 13.8' 14.2' 14.7 15.1 30 Brokers and dealers 124.0 122.7 137.5 93.3 100.8 95.3 93.3 101.0 137.5 137.0 181.3 31 Asset-backed securities issuers (ABSs) 317.8 377.9 458.4 516.1 491.0 502.6 516.1 527.8' 550.3' 577.7 616.9 32 Bank personal trusts 223.5 231.5 240.9 248.0 245.7 247.7 248.0 248.4 248.8 249.2 249.4 RELATION OF LIABILITIES TO FINANCIAL ASSETS 33 Total credit market debt 14,417.1 15,234.6 16,240.3 17,307.9 16,702.0 16,963.1 17,307.9 17,569.1' 17,896.7' 18,175.4 18,550.6 Other liabilities 34 Official foreign exchange 55.4 51.8 53.4 53.2 54.9 55.5 53.2 64.1 67.1 65.1 63.7 35 Special drawing rights certificates 10.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 10.2 10.2 36 Treasury currency 16.3 16.5 17.0 17.6 17.3 17.5 17.6 17.8 18.0 18.2 18.2 37 Life insurance reserves 405.7 433.0 468.2 502.2 479.9 496.8 502.2 515.7 528.1 535.6 546.0 38 Pension fund reserves 3,655.4 4,055.1 4,471.6 4,693.9 4,524.0 4,677.0' 4,693.9 4,895.7' 5,095.4' 5,320.1 5,435.3 39 Interbank claims 96.4 132.6 189.3r 279.7' 237.5' 250.1' 279.7' 271.7' 265.5' 267.4 287.0 40 Deposits at financial institutions 5,024.3 5,050.2 5,154.9 5,296.0 5,186.7 5,212.4 5,296.0 5,389.5' 5,572.4' 5,638.7 5,748.4 41 Checkable deposits and currency 1,020.9 1,134.4 1,251.7 1,242.0 1,229.9 1,205.0 1,242.0 1,193.9 1,246.3 1,200.7 1,229.5 42 Small time and savings deposits 2,350.7 2,293.5 2,223.2 2,183.3 2,214.4 2,199.1 2,183.3 2,200.1 2,222.4' 2,247.0 2,272.7 43 Large time deposits 488.4 415.2 391.7 411.2 379.3 402.6 411.2 441.1 456.2 486.2 491.8 44 Money market fund shares 535.0 539.5 559.6 602.9 569.2 578.7 602.9 634.0 678.5 702.7 745.3 45 Security repurchase agreements 355.8 399.9 471.1 549.4 522.1 548.1 549.4 603.4' 629.3' 655.6 660.1 46 Foreign deposits 273.5 267.7 257.6 307.1 271.9 278.9 307.1 316.9 339.6 346.6 349.1 47 Mutual fund shares 769.5 992.5 1,375.4 1,477.3 1,445.4 1,515.8 1,477.3 1,552.8 1,664.4 1,789.6 1,865.0 48 Security credit 188.9 217.7 279.0 279.0 279.1 263.9 279.0 269.5 277.9 286.2 299.6 49 Trade payables 948.3r 995. r 1,032.8' 1,144.8' 1,059.9' 1,082.3' 1,144.8' 1,143.8' 1,158.6' 1,202.0 1,246.2 50 Taxes payable 71.2 79.7 84.2 87.3 82.0 86.3 87.3 93.5 88.6 91.4 88.9 51 Investment in bank personal trusts 639.3 660.6 691.3 699.4 680.0 701.1 699.4 736.3 774.6 817.0 841.7 52 Miscellaneous 4,443.8 4,791.2 5,102.9' 5,363.9' 5,239.7' 5,322.2' 5,363.9' 5,437.9' 5,510.4' 5,586.2 5,724.6 53 Total liabilities 30,741.8r 32,718.6' 35,168.3' 37,210.2r 35,996.6' 36,652.0' 37,210.2r 37,965.3' 38,925.7r 39,803.2 40,725.4 Financial assets not included in liabilities ( + ) 54 Gold and special drawing rights 22.3 19.6 20.1 21.1 20.8 21.0 21.1 22.7 22.9 22.1 22.1 55 Corporate equities 4,863.6 5,462.9 6,278.5 6,293.4 5,965.8 6,228.7 6,293.4 6,835.8 7,393.0 8,013.8 8,345.4 56 Household equity in noncorporate business 2,521.0r 2,458.3r 2,476.3' 2,564.6' 2,523.9' 2,550.9' 2,564.6' 2,576.8' 2,608.5' 2,622.2 2,635.6 Floats not included in assets ( —) 57 U.S. government checkable deposits 3.8 6.8 5.6 3.4 .9 1.2 3.4 4.2 2.0 .6 3.1 58 Other checkable deposits 40.4 42.0 40.7 38.0 38.7 30.6 38.0 33.3 35.7 27.3 34.2 59 Trade credit -263.r — 251,0r -215.1' -219.0' -280.2' -282.3' -219.0' -258.1' -277.1' -283.9 -219.5 Liabilities not identified as assets (-) 60 Treasury currency -4.7 -4.9 -5.1 -5.4 -5.2 -5.3 -5.4 -5.4 -5.5 -5.6 -5.8 61 Interbank claims -4.2 -9.3 -4.7 -6.5 -7.4 -3.4 -6.5 -2.7 -2.9 .1 -9.1 62 Security repurchase agreements 38.4r 43.0r 77.3' 105.2' 99.3' 98.0' 105.2' 131.6' 115.0' 130.4 113.7 63 Foreign deposits 222.6 217.6 218.3 258.7' 231.4 241.3' 258.7' 270.2' 290.6 290.2 294.1 64 Taxes payable 17.8 25.3 26.2 24.2 21.3 22.0 24.2 7.9 21.2' 23.6 38.0 65 Miscellaneous -639.0r —514.4r -589.8' -723.9' -569.2' -612.4' -723.9' -782.6' -787.4' -802.6 -785.0 66 Total identified to sectors as assets 38,736.6r 41,104.3r 44,389.7' 46,614.6' 44,977.5r 45,963.0' 46,614.6' 48,002.3' 49,558.5' 51,081.2 52,264.7 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 11999933 11999944 11999955 June July Aug. Sept. Oct. Nov.' Dec. Jan.' Feb. 1 Industrial production1 111.5 118.1 121.9 121.4 121.5 122.7 122.8 122.2 122.6 122.7R 122.1 123.7 Market groupings 2 Products, total 110.0 115.6 118.3 117.9 118.0 119.2 119.4 118.3 118.8 118.9' 118.4 120.0 3 Final, total 112.7 118.3 121.3 121.1 121.2 122.4 122.6 121.3 121.9 121.8' 121.4 123.3 4 Consumer goods 109.5 113.7 115.0 114.8 114.6 115.9 116.0 114.9 115.9 115.2' 113.7 115.1 5 Equipment 117.5 125.3 131.4 131.2 131.6 132.9 133.1 131.5 131.4 132.2' 133.9 136.4 6 Intermediate 101.8 107.3 109.0 108.2 108.5 109.4 109.5 109.2 109.3 110.1' 109.0 110.1 7 Materials 113.8 122.0 127.4 126.8 126.8 128.1 128.1 128.1 128.4 128.4' 128.0 129.3 Industry groupings 112.3 119.7 123.9 123.3 123.3 124.2 124.9 124.4 124.5 124.7 124.3 126.1 8 Manufacturing 80.6 83.3 82.9 82.6 82.3 82.6 82.8 82.1 81.9 81.8 81.2 82.1 9 Capacity utilization, manufacturing (percent)' 10 Construction contracts3 105.1 114.2 117.5r 122.0 119.0r 123.0 120.0r 119.0' 120.0 113.0' 114.0 108.0 11 Nonagricultural employment, total4 1 9 0 4 8 . . 3 4 1 9 1 5 1 . . 6 3 1 9 1 8 4 . . 2 4 1 9 1 8 4 . . 2 3 1 9 1 7 4 . . 9 3 1 9 1 7 4 . . 9 6 1 9 1 7 4 . . 9 7 1 9 1 7 4 . . 9 8 1 9 1 7 5 . . 8 0 1 9 1 8 5 . . 0 1 1 9 1 7 4 . . 7 9 1 9 1 8 5 . . 4 6 12 Goods-producing, total 94.8 95.1 96.9 97.0 96.6 96.6 96.4 96.3 96.2 96.4 96.0 96.1 13 Manufacturing, total 95.3 97.4 98.3 98.3 97.8 97.9 97.7 97.5 97.4 97.7 97.1 97.3 14 Manufacturing, production workers 112.9 116.3 119.5 119.4 119.6 119.9 120.1 120.1 120.4 120.6 120.4 121.1 15 Service-producing 141.3 148.3 157.4 157.0 157.9r 158.0r 158.8r 159.6' 160.0 161.0 161.2 n.a. 16 Personal income, total 136.0 142.6 150.5 149.9 151.3' 151.r 152.0' 153.0' 152.9 153.7 153.5 n.a. 17 Wages and salary disbursements 119.3 125.0 129.3 128.8 129.0 129.3 129.6 129.5 129.5 130.0 128.1 n.a. 18 Manufacturing 142.4 149.2 157.8 157.4 158.4r 158.5r 159.3' 159.9' 160.5 161.5 161.9 n.a. 2 1 0 9 Ret D ai i l s p s o a s l a e b s5 l e personal income5 134.7 145.1 152.7r 153.5 152.9 153.9 153.8 153.4 154.7 155.8' 155.6 156.8 Prices6 21 Consumer (1982-84=100) 144.5 148.2 152.4 152.5 152.5 152.9 153.2 153.7 153.6 153.5 154.4 154.9 22 Producer finished goods (1982=100) 124.7 125.5 127.9 128.2 128.2 128.1 127.9 128.7' 128.6 129.0 129.5 129.4 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 July Aug. Sept. Oct. Nov. Dec.' Jan.' Feb. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 128,040 131,056 132,304 132,342' 132,298' 132,501' 132,473' 132,471' 132,352 132,903 133,018 Employment 2 Nonagricultural industries3 116,232 119,651 121,460 121,423' 121,483' 121,701' 121,810' 121,739' 121,656 121,698 122,143 3 Agriculture 3,074 3,409 3,440 3,409 3,376' 3,335' 3,434' 3,323' 3,325 3,529 3,519 Unemployment 4 Number 8,734 7,996 7,404 7,510' 7,439' 7,465' 7,229' 7,409' 7,371 7,677 7,355 5 Rate (percent of civilian labor force) 6.8 6.1 5.6 5.7 5.6 5.6 5.5 5.6 5.6 5.8 5.5 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 110,525 113,423 116,597 116,575 116,838 116,932 117,000 117,212 117,357 117,169 117,874 7 Manufacturing 18,003 18,064 18,406 18,353 18,357 18,322 18,301 18,272 18,307 18,232 18,258 8 Mining 611 604 579 577 575 573 571 567 569 568 574 9 Contract construction 4,642 4,916 5,244 5,226 5,233 5,262 5,287 5,295 5,297 5,314 5,435 10 Transportation and public utilities 5,787 5,842 6,194 6,195 6,217 6,206 6,217 6,240 6,231 6,230 6,246 11 Trade 25,675 26,362 27,156 27,184 27,177 27,245 27,256 27,362 27,376 27,319 27,501 12 Finance 6,712 6,789 6,948 6,938 6,947 6,957 6,977 6,991 7,001 7,003 7,028 13 Service 30,278 31,805 32,788 32,820 32,986 33,047 33,076 33,185 33,248 33,204 33,491 14 Government 18,817 19,041 19,282 19,282 19,346 19,320 19,315 19,300 19,328 19,299 19,341 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 • May 1996 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1995 1995 1995 QI Q2 Q3 Q4r Qi Q2 Q3 Q4 QI Q2 Q3 Q4r Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (percent)2 1 Total industry 121.8 121.4 122.3 122.5 143.7 145.0 146.4 147.8 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 85.9 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 105.3 102.9 104.6 105.8 117.4 118.0 118.6 119.2 89.7 87.2 88.2 88.7 / Primary metals 121.2 119.1 118.2 118.9 126.9 127.5 128.0 128.6 95.6 93.4 92.3 92.4 8 Iron and steel 125.4 121.9 121.3 121.4 130.9 131.7 132.5 133.2 95.8 92.6 91.6 91.1 9 Nonferrous 115.6 115.1 113.9 115.2 121.5 121.9 122.2 122.5 95.2 94.5 93.2 94.0 10 Industrial machinery and equipment 171.9 174.4 178.9 186.8 194.8 199.6 204.5 209.7 88.2 87.4 87.5 89.1 11 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 79.0 132.2 132.2 132.1 132.1 67.8 67.1 65.8 59.8 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 116.4 113.7 110.9 109.4 129.1 130.1 131.1 132.1 90.2 87.5 84.6 82.8 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 125.3 124.0 124.6 126.2 153.7 154.7 155.6 156.6 81.5 80.1 80.1 80.6 18 Plastics materials 127.5 122.9 118.3 123.0 132.1 133.8 135.4 137.1 96.5 91.9 87.3 89.7 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 118.4 120.7 124.7 123.9 134.4 134.8 135.2 135.6 88.0 89.5 92.3 91.4 22 Electric 118.9 120.4 125.0 123.7 131.7 132.1 132.5 133.0 90.3 91.1 94.3 93.1 1973 1975 Previous cycle5 Latest cycle6 1995 1995r 1996 High Low High Low High Low Feb. Sept. Oct. Nov. Dec. Jan. Feb." Capacity utilization rate (percent)2 1 Total industry 89.2 72.6 87.3 71.8 84.9 78.0 84.7 83.6 82.9 82.9 82.7 82.1 82.9 2 Manufacturing 88.9 70.8 87.3 70.0 85.2 76.6 84.2 82.8 82.1 81.9 81.8 81.2 82.1 3 Primary processing3 92.2 68.9 89.7 66.8 89.0 77.9 89.3 86.8 86.0 85.9 85.7 84.9 85.7 4 Advanced processing4 87.5 72.0 86.3 71.4 83.5 76.1 82.0 81.1 80.5 80.3 80.1 79.6 80.6 5 Durable goods 88.8 68.5 86.9 65.0 84.0 73.7 84.2 83.0 82.0 82.2 82.1 81.6 82.8 6 Lumber and products 90.1 62.2 87.6 60.9 93.3 76.1 89.4 89.4 88.8 87.9 89.5 87.3 88.1 7 Primary metals 100.6 66.2 102.4 46.8 92.8 74.2 95.2 94.4 90.1 93.9 93.3 94.2 95.4 8 Iron and steel 105.8 66.6 110.4 38.3 95.7 72.0 95.4 95.7 86.5 94.7 92.2 95.1 95.5 9 Nonferrous 92.9 61.3 90.5 62.2 88.7 75.2 94.9 92.6 94.6 92.9 94.6 93.0 95.3 10 Industrial machinery and equipment 96.4 74.5 92.1 64.9 84.0 71.8 88.2 87.9 88.4 88.9 89.8 89.8 90.6 11 Electrical machinery 87.8 63.8 89.4 71.1 84.9 77.0 87.5 87.8 87.6 87.2 85.9 84.3 85.9 12 Motor vehicles and parts 93.4 51.1 93.0 44.5 85.1 56.6 86.2 80.9 78.5 78.7 78.7 75.4 78.1 13 Aerospace and miscellaneous transportation equipment 77.0 66.6 81.1 66.9 88.4 78.8 67.9 65.0 60.6 58.8 60.0 63.0 64.0 14 Nondurable goods 87.9 71.8 87.0 76.9 86.7 80.3 84.1 82.4 82.2 81.6 81.3 80.7 81.2 15 Textile mill products 92.0 60.4 91.7 73.8 92.1 78.8 89.8 84.1 84.3 82.5 81.7 78.1 81.7 16 Paper and products 96.9 69.0 94.2 82.0 94.8 86.7 92.7 89.2 90.0 87.1 88.0 85.9 86.3 17 Chemicals and products 87.9 69.9 85.1 70.1 85.9 79.0 81.1 80.4 81.1 80.5 80.4 80.3 80.2 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 95.6 88.7 89.4 90.3 89.5 19 Petroleum products 96.7 81.1 89.5 68.2 88.5 84.6 93.1 94.5 91.8 92.1 93.3 94.2 95.7 20 Mining 94.4 88.4 96.6 80.6 86.5 86.1 90.0 89.2 87.6 87.7 87.2 86.8 88.1 21 Utilities 95.6 82.5 88.3 76.2 92.6 83.1 88.2 90.7 89.8 92.5 91.9 90.7 89.6 22 Electric 99.0 82.7 88.3 78.7 94.8 86.7 90.4 92.5 93.1 93.0 93.1 92.2 91.7 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 Reserve 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 1995 GGrroouupp por- avg. tion Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov.r Dec.r Jan. Feb.p Index (1987 = 100) MAJOR MARKETS 1 Total index 100.0 121.9 121.7 121.9 121.4 121.3 121.4 121.5 122.7 122.8 122.2 122.6 122.7 122.1 123.7 2 Products 60.6 118.3 118.3 118.5 117.7 117.5 117.9 118.0 119.2 119.4 118.3 118.8 118.9 118.4 120.0 3 Final products 46.3 121.3 121.1 121.5 120.9 120.6 121.1 121.2 122.4 122.6 121.3 121.9 121.8 121.4 123.3 4 Consumer goods, total 28.6 115.0 114.9 115.3 114.4 114.1 114.8 114.6 115.9 116.0 114.9 115.9 115.2 113.7 115.1 5 Durable consumer goods 5.6 124.2 127.3 126.0 124.9 121.6 122.3 121.4 124.0 125.8 123.4 124.9 126.2 120.1 124.6 6 Automotive products 2.5 130.7 135.3 134.4 131.7 127.1 129.1 125.3 130.7 132.9 128.5 130.5 132.8 125.4 132.6 7 Autos and trucks 1.6 131.4 138.2 137.5 132.8 127.4 129.5 123.9 132.0 133.1 128.6 129.8 132.1 123.9 133.4 8 Autos, consumer .9 103.1 111.5 111.2 105.5 99.4 99.2 101.0 100.6 102.6 100.2 100.2 99.5 92.8 99.9 9 Trucks, consumer .7 181.7 185.2 183.6 180.9 177.1 183.6 163.9 188.2 187.7 179.1 182.8 190.6 179.9 193.6 10 Auto parts and allied goods .9 127.8 127.9 126.7 128.0 125.0 126.8 126.6 126.6 130.8 126.7 130.2 132.7 127.0 129.4 11 Other 3.0 118.6 120.4 118.6 119.0 116.7 116.3 118.1 118.1 119.6 118.9 119.9 120.4 115.5 117.5 12 Appliances, televisions, and air conditioners .7 135.5 135.0 132.2 131.6 131.2 131.4 132.2 135.8 139.4 140.1 145.3 141.9 130.6 134.6 13 Carpeting and furniture .8 105.8 108.3 106.1 109.1 103.0 101.8 107.9 104.4 106.9 105.6 104.1 107.1 102.2 104.3 14 Miscellaneous home goods 1.5 118.2 120.7 119.7 118.8 118.1 118.0 117.4 118.0 117.8 116.9 117.6 118.3 116.4 117.5 1 1 5 6 No F n o d o u d ra s b a le n d c o to n b s a u c m c e o r goods 2 1 3 0 . . 0 3 1 1 1 1 2 1 . . 8 2 1 11 1 0 1 . . 1 9 1 11 1 1 2 . . 5 7 1 1 1 1 1 1 . . 2 8 1 1 1 1 1 2 . . 5 4 1 1 1 1 3 3 . . 1 1 1 11 1 2 3 . . 8 0 1 11 1 1 3 . . 8 9 1 1 1 1 1 3. . 7 6 1 1 1 1 2 1 . . 9 1 1 1 1 1 0 3 . . 9 8 1 11 1 0 2 . . 2 6 1 11 1 0 2 . . 0 2 1 1 1 1 2 1 . . 9 0 17 Clothing 2,4 94.9 98.3 98.7 96.9 96.7 94.6 93.6 93.9 93.4 92.9 91.5 89.9 88.0 90.2 18 Chemical products 4.5 131.2 129.2 129.7 126.9 127.3 128.6 128.6 132.6 134.0 135.7 135.0 135.4 135.8 136.0 19 Paper products 2.9 106.6 106.6 105.9 106.9 106.5 106.3 107.6 106.7 107.3 106.6 108.4 105.9 105.0 104.8 20 Energy 2.9 116.3 113.1 113.9 112.2 115.8 115.8 116.1 122.3 119.0 113.1 121.1 118.0 117.5 117.2 21 Fuels .9 108.8 108.7 110.4 108.8 108.2 108.8 108.2 108.4 111.4 107.3 108.2 108.6 109.4 113.0 22 Residential utilities 2.1 119.3 114.8 115.2 113.5 119.0 118.7 119.4 128.2 122.2 115.4 126.6 121.9 120.9 118.8 23 Equipment 17.7 131.4 131.0 131.4 131.3 130.8 131.2 131.6 132.9 133.1 131.5 131.4 132.2 133.9 136.4 24 Business equipment 13.7 155.7 154.3 155.1 155.0 154.3 155.1 155.7 157.5 158.2 156.5 156.9 158.2 160.7 163.8 25 Information processing and related 5.7 198.1 188.7 191.6 194.5 193.9 196.0 197.2 201.0 203.0 206.5 208.1 209.7 213.5 218.7 26 Computer and office equipment 1.4 373.4 334.9 343.6 356.4 362.1 363.2 371.7 379.6 390.0 402.9 417.8 431.6 446.2 458.7 27 Industrial 4,0 127.4 127.2 126.9 126.1 126.5 126.2 127.1 129.1 128.7 128.6 129.1 129.1 129.3 130.4 28 Transit 2,6 136.3 145.9 145.7 142.9 139.6 140.3 139.8 138.0 137.9 122.3 119.6 124.1 130.0 133.9 29 Autos and trucks 1,2 140.1 147.7 146.2 141.5 137.8 139.5 139.9 141.3 143.3 135.7 134.2 135.3 129.0 136.0 30 Other 1,4 123.2 127.2 126.3 123.2 122.7 122.6 122.6 122.2 123.3 120.9 121.4 121.7 121.8 122.6 31 Defense and space equipment 3.3 65.9 68.2 67.8 67.1 66.8 66.8 66.5 66.1 65.2 64.4 62.9 62.0 61.6 61.8 32 Oil and gas well drilling .6 87.1 88.8 87.2 89.3 90.5 86.8 88.4 89.5 88.3 83.5 83.1 83.8 85.1 89.7 33 Manufactured homes .2 152.7 144.6 145.8 146.6 148.3 149.6 148.6 155.9 158.0 158.9 161.8 164.4 158.1 34 Intermediate products, total 14.3 109.0 109.5 109.2 108.2 108.2 108.2 108.5 109.4 109.5 109.2 109.3 110.1 109.0 110.1 35 Construction supplies 5.3 108.2 109.5 109.2 108.0 106.6 107.2 107.3 107.0 108.4 108.3 108.7 110.4 108.0 110.5 36 Business supplies 9.0 109.6 109.6 109.3 108.5 109.4 109.1 109.5 111.0 110.3 109.9 109.9 110.1 109.8 110.0 37 Materials 39.4 127.4 127.1 127.2 127.0 127.2 126.8 126.8 128.1 128.1 128.1 128.4 128.4 128.0 129.3 38 Durable goods materials 20.8 141.5 140.2 140.3 139.8 139.8 139.7 140.2 142.3 144.1 143.9 145.3 144.9 145.2 147.4 39 Durable consumer parts 4.0 138.5 142.6 140.4 137.9 135.9 135.8 133.9 138.4 139.8 138.6 140.1 139.2 139.6 140.1 40 Equipment parts 7.5 163.0 155.4 157.3 158.9 160.3 161.7 164.4 167.1 169.1 169.4 171.0 170.9 171.2 175.7 41 Other 9.2 126.2 127.0 127.0 125.9 125.6 124.5 124.4 124.9 126.8 126.5 127.9 127.5 127.7 129.0 42 Basic metal materials 3.1 125.7 126.4 126.7 126.1 125.5 123.5 124.9 123.1 127.0 124.3 128.1 127.0 126.9 129.5 43 Nondurable goods materials 8.9 119.8 121.5 121.5 121.7 122.2 120.4 118.9 118.8 117.8 118.7 116.6 117.3 115.6 116.6 44 Textile materials 1.1 109.2 113.5 113.6 113.2 112.8 109.0 102.6 109.2 106.2 107.3 104.8 103.1 99.2 103.9 45 Paper materials 1.8 120.4 121.6 122.5 122.3 125.6 121.0 123.9 120.4 117.0 121.4 114.3 115.0 113.3 113.5 46 Chemical materials 3.9 124.4 125.7 125.6 125.6 126.2 125.2 124.4 123.1 123.3 122.9 122.7 122.0 121.7 122.1 47 Other 2.1 116.5 117.8 117.4 118.4 116.9 117.4 113.8 114.6 115.1 114.6 114.1 118.8 115.4 116.1 48 Energy materials 9.7 106.6 106.4 106.4 106.6 107.2 107.2 107.5 108.5 105.8 105.5 105.7 105.9 105.1 105.0 49 Primary energy 6.3 101.8 102.3 102.1 102.2 102.3 103.0 102.3 101.4 101.2 101.7 100.8 100.4 99.7 100.1 50 Converted fuel materials 3.3 116.1 114.5 114.9 115.5 116.9 115.5 118.1 122.8 115.0 113.1 115.4 116.8 116.1 115.0 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.2 121.5 121.1 121.3 120.9 121.0 121.1 121.2 122.3 122.4 121.9 122.3 122.3 122.0 123.3 52 Total excluding motor vehicles and parts 95.2 120.9 120.4 120.6 120.3 120.5 120.5 120.7 121.7 121.8 121.3 121.7 121.7 121.5 122.8 53 Total excluding computer and office equipment 98.2 118.2 118.4 118.5 117.9 117.8 117.8 117.8 118.9 118.9 118.1 118.4 118.3 117.6 119.0 54 Consumer goods excluding autos and trucks . 27.0 113.9 113.4 113.8 113.1 113.3 113.9 114.0 114.8 114.9 114.0 115.0 114.1 113.1 113.9 55 Consumer goods excluding energy 25.7 114.9 115.1 115.4 114.6 113.9 114.7 114.5 115.1 115.7 115.1 115.3 114.9 113.3 114.9 56 Business equipment excluding autos and trucks 12.5 157.0 154.7 155.8 156.2 155.8 156.5 157.2 158.9 159.5 158.4 159.0 160.4 163.8 166.5 57 Business equipment excluding computer and office equipment 12.2 133.0 134.6 134.8 133.7 132.5 133.2 133.2 134.4 134.3 131.6 130.8 131.1 132.6 134.8 58 Materials excluding energy 29.7 134.9 134.5 134.6 134.3 134.4 133.8 133.7 135.1 136.1 136.2 136.6 136.5 136.2 138.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • May 1996 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1992 Group S co IC de p p r o o r - - 1 a 9 v 9 g 5 . Mar. Apr. May June July Aug. Sept. Oct. Nov.r Dec Feb.p Index (1987 = 100) MAJOR INDUSTRIES 59 Total index 100.0 121.9 121.7 121.9 121.4 121.3 121.4 121.5 122.7 122.8 122.2 122.6 122.7 122.1 123.7 60 Manufacturing 85.4 123.9 123.9 124.0 123.5 123.2 123.3 123.3 124.2 124.9 124.4 124.5 124.7 124.3 126.1 61 Primary processing 26.6 117.6 119.1 118.9 118.2 117.9 117.1 116.9 116.6 117.8 117.0 117.1 117.2 116.4 117.6 62 Advanced processing 58.9 126.8 126.2 126.5 126.0 125.7 126.3 126.3 127.8 128.2 127.9 128.0 128.3 128.0 130.1 63 Durable goods 45.0 132.5 132.1 132.2 131.6 131.1 131.5 131.5 133.2 134.4 133.5 134.3 134.8 134.6 137.2 64 Lumber and products "'24 2.0 104.5 105.0 103.9 103.9 101.7 103.0 103.7 103.7 106.2 105.7 104.8 106.9 104.4 105.4 65 Furniture and fixtures 25 1.4 111.6 114.9 113.4 111.4 110.8 111.3 111.1 110.9 112.0 110.9 109.8 109.3 108.6 109.0 66 Stone, clay, and glass products 32 2.1 104.1 104.7 104.7 103.4 104.1 103.8 103.2 103.0 103.8 104.5 104.9 104.2 104.5 105.9 67 Primary metals 33 3.1 119.2 120.8 121.3 120.2 119.5 117.5 118.3 115.4 121.0 115.7 120.8 120.1 121.5 123.2 68 Iron and steel 331,2 1.7 122.4 124.9 125.8 123.5 123.0 119.2 119.3 117.7 127.0 115.1 126.1 123.1 127.1 127.9 69 Raw steel 331PT .1 114.7 116.4 116.8 114.7 113.0 112.9 111.5 114.2 118.6 111.3 116.4 118.0 113.9 70 Nonfeirous 333-6,9 1.4 114.8 115.3 115.4 115.7 114.8 114.9 116.5 111.9 113.2 115.8 113.8 116.0 114.1 117.0 71 Fabricated metal products. . . 34 5.0 113.9 115.0 114.3 112.3 113.7 113.7 112.4 114.3 115.1 114.0 114.5 114.9 114.4 115.3 72 Industrial machinery and equipment 35 8.0 177.8 171.8 172.4 174.3 174.6 174.4 176.0 179.5 181.3 183.8 186.5 190.0 191.6 194.8 73 Computer and office equipment 357 1.8 373.4 334.9 343.6 356.4 362.1 363.2 371.7 379.6 390.0 402.9 417.8 431.6 446.2 458.7 74 Electrical machinery 36 7.2 174.9 167.7 169.4 169.6 171.1 173.0 175.7 178.7 180.8 182.4 183.6 182.8 181.2 186.4 75 Transportation equipment. . . 37 9.5 113.3 118.5 118.0 115.7 113.2 113.4 111.6 114.1 114.1 109.3 108.6 109.6 108.9 112.1 76 Motor vehicles and parts . 371 4.8 141.9 148.4 147.6 143.0 138.8 139.7 136.7 142.1 143.3 139.7 140.7 141.2 135.7 140.8 77 Autos and light trucks . 371PT 2.5 131.3 138.6 137.9 132.9 127.3 129.2 124.3 131.6 132.8 128.4 129.6 131.5 123.3 132.7 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.7 85.8 89.7 89.5 89.4 88.5 88.1 87.6 87.2 85.9 80.0 77.7 79.2 83.2 84.5 79 Instruments 38 5.4 110.7 110.5 110.9 111.2 109.6 110.9 110.2 111.4 111.3 111.4 111.5 110.0 110.4 111.9 80 Miscellaneous 39 1.3 122.7 124.1 123.3 122.7 122.3 123.1 121.4 122.4 122.9 122.2 123.3 123.5 122.3 123.7 81 Nondurable goods 40.5 114.3 114.8 115.1 114.6 114.4 114.3 114.3 114.3 114.4 114.3 113.7 113.5 112.9 113.8 82 Foods 20 9.4 115.3 114.2 115.0 115.1 115.9 116.1 115.3 115.5 115.5 115.4 114.8 114.8 115.0 115.7 83 Tobacco products 21 1.6 90.0 88.1 92.3 92.0 89.3 96.4 99.1 91.3 90.2 88.2 88.9 85.9 85.1 86.1 84 Textile null products 22 1.8 112.6 115.9 116.2 117.2 113.6 110.4 109.9 112.4 110.5 111.1 108.9 108.2 103.6 108.5 85 Apparel products 23 2.2 95.7 99.8 99.3 97.4 97.5 95.5 94.8 94.5 94.5 93.3 92.4 91.6 89.2 91.1 86 Paper and products 26 3.6 119.8 121.0 121.1 121.2 122.4 119.9 121.3 118.6 118.5 119.7 116.2 117.7 115.1 116.0 87 Printing and publishing 27 6.8 99.4 100.3 99.3 99.2 99.0 98.6 99.0 100.5 99.8 98.9 99.3 99.0 98.5 99.0 88 Chemicals and products .... 28 9.9 125.0 124.7 125.0 123.5 124.0 124.4 124.0 124.4 125.3 126.7 126.0 126.1 126.2 126.4 89 Petroleum products 29 1.4 108.3 108.0 109.1 107.8 107.4 108.6 109.0 108.5 110.0 106.9 107.4 108.8 109.9 111.8 90 Rubber and plastic products . 30 3.5 139.4 141.9 141.1 140.8 138.2 137.8 137.7 138.7 139.8 139.7 140.3 139.0 138.2 139.1 91 Leather and products 31 .3 81.3 85.1 85.8 82.7 83.0 81.2 78.7 80.8 80.5 79.7 78.2 76.8 76.0 77.6 92 Mining 6.9 99.9 100.8 100.3 100.6 100.5 101.0 100.7 100.0 100.0 98.2 98.3 97.8 97.3 98.8 93 Metal 10 .5 169.6 165.5 164.5 164.6 164.3 166.8 172.2 172.1 170.8 178.3 175.9 175.8 174.2 175.5 94 Coal 12 1.0 112.9 115.1 114.0 112.3 110.8 112.2 117.0 109.7 116.2 112.3 109.5 108.5 103.3 108.0 95 Oil and gas extraction 13 4.8 91.8 93.0 92.2 93.1 93.4 93.6 91.9 92.4 91.2 89.2 90.1 89.4 90.1 90.6 96 Stone and earth minerals 14 .6 112.3 111.3 114.2 112.7 111.1 111.9 113.5 111.6 113.1 112.4 110.9 112.3 111.0 115.3 97 Utilities 7.7 122.0 118.5 119.2 118.8 122.1 121.0 122.7 128.8 122.7 121.6 125.4 124.7 123.2 121.8 98 Electric 491,493PT 6.1 122.1 119.1 119.5 118.9 121.2 121.2 122.2 130.0 122.7 123.7 123.6 123.9 122.8 122.2 99 Gas 492,493PT 1.6 121.3 116.4 118.0 118.4 125.5 120.6 124.5 124.3 122.4 113.6 132.5 127.7 125.0 120.1 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.6 122.8 122.4 122.6 122.3 122.2 122.3 122.5 123.1 123.8 123.4 123.6 123.7 123.6 125.2 101 Manufacturing excluding office and computing machines . . . 83.7 119.5 120.0 120.1 119.3 118.9 119.1 118.9 119.8 120.3 119.6 119.6 119.6 119.0 120.6 Gross value (billions of 1992 dollars, annual rates) MAJOR MARKETS 102 Products, total 2,002.9 2,245.1 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 2,255.8 2,261.1 2,246.4 2,283.0 103 Final 1,552.2 1,748.2 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 1,756.8 1,757.1 1,747.8 1,779.9 KM Consumer goods 1,033.4 1,130.0 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 1,139.3 1,134.7 1,118.1 1,137.8 105 Equipment 518.8 618.2 617.5 619.5 617.9 615.1 617.1 619.2 624.8 627.1 616.7 617.5 622.4 629.7 642.2 106 Intermediate 450.7 496.9 498.3 497.0 493.4 494.0 493.5 495.6 497.3 499.9 498.4 499.0 504.1 498.6 503.0 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 Reser\'e 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 1996 IItteemm 11999933 11999944 11999955rr Apr. May June July Aug. Sept. Oct. Nov.r Dec.r Jan. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,199 l,375r 1,333 1,243 1,243 1,275 1,355 1,368 1,405 1,384 1,448 1,478 1,372 2 One-family 987 l,067r 999 905 930 958 1,011 1,044 1,073 1,051 1,069 1,110 1,050 3 Two-family or more 213 308r 334 338 313 317 344 324 332 333 379 368 322 4 Started 1,288 1,457 1,354 1,278 1,300 1,301 1,450 1,401 1,401 1,351 1,458 1,425 1,447 5 One-family 1,126 1,198 1,076 1,017 1,005 1,036 1,125 1,135 1,130 1,109 1,129 1,150 1,140 6 Two-family or more 162 259 278 261 295 265 325 266 271 242 329 275 307 7 Under construction at end of period1 680 762 778 7621 755 755r 762' 772' 783' 78 r 790 803 813 8 One-family 543 558 549 545r 537r 533r 539r 547r 555r 560r 562 572 578 9 Two-family or more 137 204 229 217r 218r 222 223 225 228 22 lr 228 231 235 10 Completed 1,193 1,347 1,311 1,331r l,324r 1,256 l,332r l,247r 1,267' 1,320r 1,360 1,213 1,358 11 One-family 1,040 1,160 1,065 l,085r l,058r l,049r l,034r l,019r l,009r 1,039r 1,081 995 1,072 12 Two-family or more 153 187 247 246r 266r 207r 298r 228r 258r 28 lr 279 218 286 13 Mobile homes shipped 254 304 340 327 335 333 337 344 352 354 355 352 352 Merchant builder activity in one-family units 14 Number sold 666 670 665 608r 667 724r 782r 707r 684r 673r 679 685 709 15 Number for sale at end of period1 293 337r 375 349r. 347 347 344 349 350r 360r 368 375 377 Price of units sold (thousands 16 Median 126.5r 130.0r 133.0 134.0 133.9 133.7 131.0 134.9 130.0 135.2r 137.0 138.0 130.0 17 Average 147.8' I52.9r 157.6 157.8 158.0 160.2 154.2 162.0 155.6r 156.2r 160.7 165.1 152.0 EXISTING UNITS (one-family) 18 Number sold 3,802r 3,946 3,807 3,470r 3,620r 3,800 3,970r 4,050r 4,090r 4,070r 4,000 3,870 3,720 Price of units sold (thousands of dollars)2 19 Median 106.8r 109.8r 112.9 108.0r 109. r 116.2 116.0r 117.6 114.8r 113.2r 114.3 113.9 114.8 20 Average 133.5' 136.7r 138.9 134.2 135.5r 143.3 142.5r 144.5r 140.2r 138.7 139.5 138.7 141.2 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 464,504 506,904 527,037 522,094 514,515 518,934 528,673 528,397 535,106 537,589 533,444 535,957 537,594 22 Private 339,161 376,566 384,192 382,220 376,148 377,486 384,307 385,653 386,960 390,111 388,164 390,241 388,599 23 Residential 210,455 238,884 236,236 234,109 231,342 228,388 231,002 233,982 237,618 238,302 240,269 241,850 240,526 24 Nonresidential 128,706 137,682 147,956 148,111 144,806 149,098 153,305 151,671 149,342 151,809 147,895 148,391 148,073 25 Industrial buildings 19,533 21,121 24,154 24,707 24,760 24,416 24,399 24,202 24,096 24,940 24,554 24,130 24,810 26 Commercial buildings 42,627 48,552 55,159 55,011 51,779 55,420 57,015 55,709 55,079 56,576 55,570 57,158 55,813 27 Other buildings 23,626 23,912 23,990 23,948 24,319 23,447 24,525 24,015 23,962 24,557 23,710 23,946 23,521 28 Public utilities and other 42,920 44,097 44,653 44,445 43,948 45,815 47,366 47,745 46,205 45,736 44,061 43,157 43,929 29 Public 125,342 130,337 142,847 139,874 138,367 141,447 144,366 142,744 148,146 147,478 145,280 145,716 148,995 30 Military 2,454 2,319 2,938 2,736 2,442 2,569 3,124 3,010 3,090 3,164 3,186 3,215 3,492 31 Highway 37,431 39,882 42,221 41,158 38,657 40,875 44,274 42,902 42,942 44,416 43,277 43,792 44,195 32 Conservation and development 5,978 6,228 6,434 6,273 5,531 6,117 6,603 6,769 6,469 6,483 6,197 6,141 5,788 33 Other 79,479 81,908 91,254 89,707 91,737 91,886 90,365 90,063 95,645 93,415 92,620 92,568 95,520 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 • May 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 llleeevvveeelll,,, 1995 1995 1996 FFFeeebbb... 11999955 11999966 111999999666 111 FFeebb.. FFeebb.. Mar. June Sept. Dec. Oct. Nov. Dec. Jan. Feb. CONSUMER PRICES2 (1982-84=100) 1 All items 2.9 2.7 3.2 3.5 1.6 2.4 .3 .1 .2 .4 .2 154.9 2 Food 3.1 2.3 .3 3.6 2.7 1.9 .3 .0 .1 .1 .1 150.8 3 Energy items 1.7 1.2 -1.5 5.8 -10.5 1.9 .3 -.9 1.1 1.9 .4 104.9 4 All items less food and energy 3.0 2.9 4.1 3.0 2.8 2.2 .3 .1 .1 .3 .2 164.2 5 Commodities 1.9 1.7 2.6 .9 2.0 1.7 .2 .1 .1 .4 -.1 140.8 6 Services 3.4 3.4 4.8 4.3 3.0 2.5 .3 .2 .1 .3 .3 177.6 PRODUCER PRICES (1982=100) 7 Finished goods 1.7 2.0 1.6 1.3 1.6 4.1 .2' .2' .6 .3 -.2 129.4 y 8 C C o o n n s s u u m m e e r r e fo n o er d g s y 2 1 . . 3 3 1 1 . . 8 9 -2 3 . . 5 6 -2 1 .5 .5 -10 8 . . 2 8 1 4 0 . . 4 3 - - . . R R — 1 1 .0 ,O R R 3. . 7 2 - 2 . . 2 7 - -. . 7 3 1 7 3 8 0 . . 0 8 n 10 O Ca th p e it r a l c o e n q s u u i m pm er e n g t o ods 1 1. . 5 9 2 1 . . 3 7 2 2 . . 7 6 2 1 . . 9 8 2 1 . . 3 8 2 3 . . 7 1 , . 3 3 r r . . 3 2 ' . . 2 1 - - . . 1 1 . . 1 1 1 13 4 8 4 . . 4 0 Intermediate materials 12 Excluding foods and feeds 6.3 .6 9.5 3.9 -.6 -.9 -.2 — .2' .1 .1 -.3 124.8 13 Excluding energy 7.1 .4 10.5 4.2 1.5 -3.2 -.2 -.2 -.4 -.3 -.2 134.4 Crude materials 14 Foods -8.0 10.6 -4.6 4.0 34.8 20.4 2.4r 2.7r -.3 -.4 -.5 115.1 15 Energy 1.9 6.6 -4.5 14.6 -21.0 15.7 -.7 2.1 2.3 7.3 -1.1 74.2 16 Other 16.4 -8.7 20.5 3.9 -17.6 -19.6 -2.4r -2.0r -1.0 .0 -.5 161.6 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 QI Q2 Q3R Q4 GROSS DOMESTIC PRODUCT 1 Total 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 4,988.8 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 10 Producers' durable equipment 427.0 487.0 539.8 509.1 529.0 536.8 543.8 549.5 11 Residential structures 251.7 287.7 289.4 293.5 290.4 281.9 290.3 295.2 12 Change in business inventories 20.6 59.5 38.1 58.7 58.1 34.0 38.2 22.2 13 Nonfarm 20.1 45.9 40.7 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 Federal 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 20 Final sales, total 6,529.7 6,871.8 7,209.6 7,021.3 7,089.7 7,162.5 7,260.3 7,325.9 21 Goods 2,400.9 2,534.2 2,660.7 2,600.9 2,617.3 2,642.3 2,684.5 2,698.5 22 Durable 1,013.8 1,085.9 1,146.9 1,113.3 1,118.6 1,134.0 1,162.5 1,172.6 23 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 24 Services 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 Nondurable goods 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 6,783.8 NATIONAL INCOME 30 Total 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 32 Wages and salaries 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 714.2 752.4 789.7 763.6 778.6 785.6 793.7 800.8 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 Farm' 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 Corporate profits' 464.5 526.5 n.a. 568.9 559.6 561.1 614.9 n.a. 43 Profits before tax3 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 Net interest 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 • May 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 Q4 Qi Q2 Q3 Q4 PERSONAL INCOME AND SAVING 5,479.2 5,750.2 6,101.0 5,893.9 5,995.5 6,061.9 6,135.6 6,210.9 2 Wage 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 3 Commodity-producing industries 781.3 825.0 858.7 846.0 856.2 855.0 859.9 863.8 593.1 621.3 642.9 636.0 643.4 640.5 642.9 644.8 5 Distributive industries 698.4 739.3 787.8 762.7 768.8 778.6 795.4 808.5 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 Other labor income 380.9 402.2 424.0 407.8 417.7 422.0 425.9 430.2 420.0 450.9 477.9 469.4 472.0 474.7 479.6 485.2 10 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 12 Rental income of persons 102.5 116.6 122.2 121.9 120.6 121.6 120.9 125.7 13 Dividends 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 15 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 age 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 EQUALS: 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 LESS: Personal tax and nontax payments 689.9 731.4 794.6 748.1 770.0 801.5 798.4 808.3 20 EQUALS: Disposable personal income 4,789.3 5,018.8 5,306.4 5,145.8 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 EQUALS: Personal saving 216.4 192.4 240.7 217.8 253.3 211.4 232.6 265.4 MEMO Per capita (chained 1992 dollars) 23 Gross domestic product 24,724.2 25,332.6 25,620.7r 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 17,397.9r 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 18,752.0r 18,544.0 18,672.0 18,634.0 18,794.0 18,907.0 26 Saving 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. 1,064.9 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. 29 Personal saving 216.4 192.4 240.7 217.8 253.3 211.4 232.6 265.4 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 32 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 34 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 State and local 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. 38 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 Net foreign investment -88.2 -139.6 n.a. -161.9 -144.4 -160.1 -148.9 n.a. 55.1 31.3 n.a. 39.7 3,2 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 11999933 11999944 11999955 Q4 Ql Q2 Q3 Q4P 1 Balance on current account -99,925 -151,245 -152,915 -43,277 -38,454r -43,142' -40,250 -31,073 2 Merchandise trade balance2 -132,618 -166,099 -174,469 -43,488 -44,459' -48,654' -43,326 -38,030 3 Merchandise exports 456,823 502,485 574,879 133,926 138,325' 142,667' 145,050 148,837 4 Merchandise imports -589,441 -668,584 -749,348 -177,414 -182,784' -191,321' -188,376 -186,867 5 Military transactions, net 448 2,148 2,810 679 542 587 889 792 6 Other service transactions, net 57,328 57,739 60,242 15,342 15,013' 14,726' 15,130 15,369 7 Investment income, net 9,000 -9,272 -11,402 -4,571 -2,030' -2,684' -5,163 -1,527 8 U.S. government grants -16,311 -15,814 -11,027 -6,245 -2,867 -2,284 -2,942 -2,934 y U.S. government pensions and other transfers -3,785 -4,247 -3,114 -1,063 -682' -889' -887 -656 10 Private remittances and other transfers -13,988 -15,700 -15,954 -3,931 -3,971' -3,944' -3,951 -4,087 n Change in U.S. government assets other than official reserve assets, net (increase, -) -330 -322 -326 -931 -152 -180 246 -240 12 Change in U.S. official reserve assets (increase, -) -1,379 5,346 -9,742 2,033 -5,318 -2,722 -1,893 191 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -537 -441 -808 -121 -867 -156 362 -147 Ii Reserve position in International Monetary Fund -44 494 -2,466 -27 -526 -786 -991 -163 16 Foreign currencies -797 5,293 -6,468 2,181 -3,925 -1,780 -1,264 501 17 Change in U.S. private assets abroad (increase, -) -182,880 -130,875 -270,028 -56,258 -69,985' -97,453' -25,870 -76,720 18 Bank-reported claims3 29,947 915 -59,004 -16,651 -29,284 -39,982 14,631 -4,369 19 Nonbank-reported claims 1,581 -32,621 -20,358 -12,449 -11,518 -18,499 9,659 20 U.S. purchases of foreign securities, net -141,807 -49,799 -93,769 -15,238 -6,567 -21,731 -33,998 -31,473 21 U.S. direct investments abroad, net -72,601 -49,370 -96,897 -11,920 -22,616' -17,241' -16,162 -40,878 22 Change in foreign official assets in United States (increase, +) 72,146 39,409 110,483 -421 22,308 37,836 39,346 10,993 23 U.S. Treasury securities 48,952 30,723 68,773 7,470 10,131 25,169 20,489 12,984 24 Other U.S. government obligations 4,062 6,025 3,734 1,228 1,126 1,326 518 764 25 Other U.S. government liabilities4 1,706 2,211 1,814 692 -154 506 89 1,373 26 Other U.S. liabilities reported by U.S. banks3 14,841 2,923 32,896 -9,856 10,940 7,886 18,478 -4,408 27 Other foreign official assets5 2,585 -2,473 3,266 45 265 2,949 -228 280 28 Change in foreign private assets in United States (increase, +) 176,382 251,956 315,842 85,136 72,533 86,496' 77,198 79,616 29 U.S. bank-reported liabilities3 20,859 114,396 19,906 34,676 -531 12,239 -21,578 29,776 30 U.S. nonbank-reported liabilities 10,489 -4,324 27,578 -5,242 10,113 10,527 6,938 31 Foreign private purchases of U.S. Treasury securities, net 24,063 33,811 99,081 25,929 29,910 30,315 37,192 1,664 32 Foreign purchases of other U.S. securities, net 79,864 58,625 94,576 10,195 15,816 20,549 30,977 27,234 33 Foreign direct investments in United States, net 41,107 49,448 74,701 19,578 17,225 12,866' 23,669 20,942 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy 35,985 -14,269 6,684 13,718 19,068' 19,165' -48,777 17,233 36 Due to seasonal adjustment 782 6,162' 317' -7,076 600 37 Before seasonal adjustment 35,985 -14,269 6,685 12,936 12,906' 18,847 -41,702 16,633 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) -1,379 5,346 -9,742 2,033 -5,318 -2,722 -1,893 191 39 Foreign official assets in United States, excluding line 25 (increase, +) 70,440 37,198 108,669 -1,113 22,462 37,330 39,257 9,620 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) -3,717 -1,184 4,482 1,120 -322 -11 6,278 -1,463 1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 38^10. 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 • May 1996 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1995' 1996 IItteemm 11999933 11999944 11999955rr July Aug. Sept. Oct. Nov. Dec. Jan.p 1 Goods and services, balance -74,842 -106,214 -111,505 -10,978 -8,256 -8,070 -8,165 -6,837 -6,958 -10,267 2 Merchandise -132,618 -166,101 -174,555 -16,177 -13,453 -13,697 -13,692 -12,125 -12,306 -15,421 3 Services 57,777 59,887 63,050 5,199 5,197 5,627 5,527 5,288 5,348 5,154 4 Goods and services, exports 644,579 701,200 783,705 63,688 66,545 67,574 66,652 67,393 68,109 66,597 5 Merchandise 456,824 502,484 574,877 46,310 49,023 49,717 48,920 49,523 50,398 48,871 6 Services 187,755 198,716 208,828 17,378 17,522 17,857 17,732 17,870 17,711 17,726 7 Goods and services, imports -719,421 -807,414 -895,210 -74,666 -74,801 -75,644 -74,817 -74,230 -75,067 -76,864 8 Merchandise -589,442 -668,585 -749,432 -62,487 -62,476 -63,414 -62,612 -61,648 -62,704 -64,292 9 Services -129,979 -138,829 -145,778 -12,179 -12,325 -12,230 -12,205 -12,582 -12,363 -12,572 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 July Aug. Sept. Oct. Nov. Dec. Jan. Feb.p 1 Total 71,323 73,442 74,335 91,534 86,648 87,152 86,224 85,755 85,832 82,717 84,270 2 Gold stock, including Exchange Stabilization Fund1 11,056 11,053 11,051 11,053 11,053 11,051 11,051 11,050 11,050 11,052 11,053 3 Special drawing rights2'3 8,503 9,039 10,039 11,487 11,146 11,035 10,949 11,034 11,037 10,778 11,106 4 Reserve position in International Monetary Fund2 11,759 11,818 12,030 14,761 14,470 14,681 14,700 14,572 14,649 14,312 14,813 5 Foreign currencies4 40,005 41,532 41,215 54,233 49,979 50,385 49,524 49,099 49,096 46,575 47,298 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 July Aug. Sept. Oct. Nov. Dec. Jan. Feb.p 1 Deposits 205 386 250 190 165 201 275 194 386 165 209 Held in custody 2 U.S. Treasury securities" 314.481 379,394 441,866 505,613 502,737 506,572 507,075 522,950 522,170 532,776 559,741 3 Earmarked gold3 13,118 12,327 12,033 11,728 ll,728r 11,728 11,709 11,702 11,702 11,702 11,689 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 1996 IItteemm 11999933 11999944 July Aug. Sept. Oct. Nov. Dec. Jan." 1 Total1 482,915 520,828r 604,548 612,972 619,517 618,417 632,446 629,660 643,813 By type 2 Liabilities reported by banks in the United States 69,721 73,28 lr 93,801 104,791 110,051 107,870 109,232 106,143 102,748 3 U.S. Treasury bills and certificates3 151,100 139,570 159,654 157,516 163,093 115577,,998877 117711,,336666 116688,,553344 117733,,994499 U.S. Treasury bonds and notes 4 Marketable 212,237 254,059 291,132 290,768 286,243 291,948 291,033 293,684 306,299 5 Nonmarketable4 5,652 6,109 6,288 6,329 6,366 6,407 6,449 6,491 6,534 6 U.S. securities other than U.S. Treasury securities5 44,205 47,809 53,673 53,568 53,764 54,205 54,366 54,808 54,283 By area / Europe1 207,034 215,274' 224,380 221,130 222,869 222,679 228,180 221,724 223,039 8 15,285 17,235 21,746 21,508 20,522 20,355 19,535 19,473 19,078 9 Latin America and Caribbean 55,898 41,492 58,126 63,383 63,424 61,335 62,060 66,206 70,064 10 197,702 236,819 290,878 297,343 303,809 305,053 311,638 310,955 320,502 11 Africa 4,052 4,179 4,309 4,433 4,684 4,761 6,086 6,296 6,924 12 Other countries 2,942 5,827 5,107 5,173 4,207 4,232 4,945 5,004 4,204 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 1995 IItteemm 11999922 11999933 11999944 Mar. June Sept. Dec. 1 Banks' liabilities 72,796 78,259 89,661 96,190 106,715 102,160r 112,288 2 Banks' claims 62,799 62,017 60,279 72,694 77,171 69,312 74,615 3 Deposits 24,240 20,993 19,670 24,440 28,915 25,648 22,481 4 Other claims 38,559 41,024 40,609 48,254 48,256 43,664 52,134 5 Claims of banks' domestic customers2 4,432 12,854 10,587 8,732 9,890 6,274 11,095 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 • May 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 1996 IItteemm 11999933 11999944 11999955'' July Aug. Sept. Oct. Nov. Dec. Jan.p BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 926,672 1,018,472 1,094,699 1,060,388 1,076,427' 1,074,023' 1,099,217' 1,105,264' 1,094,699 1,094,132 2 Banks' own liabilities 626,919 722,155 748,784 731,017 745,680' 735,136' 762,708' 755,019' 748,784 742,733 3 Demand deposits 21,569 23,386 24,452 24,104 21,779 23,704' 23,161' 23,114 24,452 22,161 4 Time deposits2 175,106 186,512 192,988 191,793 197,101' 188,153 202,532 193,829 192,988 198,037 5 Other3 111,971 116,699 139,172 141,518 139,335' 136,550' 146,456' 154,115' 139,172 141,645 6 Own foreign offices4 318,273 395,558 392,172 373,602 387,465' 386,729' 390,559 383,961 392,172 380,890 7 Banks' custodial liabilities5 299,753 296,317 345,915 329,371 330,747 338,887 336,509 350,245 345,915 351,399 8 U.S. Treasury bills and certificates6 176,739 162,857 197,101 188,621 187,318 193,070 189,285 201,890 197,101 203,478 9 Other negotiable and readily transferable instruments7 36,289 42,532 52,247 44,514 45,175 47,279 47,905 50,220 52,247 46,973 10 Other 86,725 90,928 96,567 96,236 98,254 98,538 99,319 98,135 96,567 100,948 11 Nonmonetary international and regional organizations8. . . 10,936 8,606 10,593 12,185 10,319' 13,011 10,294' 9,739' 10,593 10,337 12 Banks' own liabilities 5,639 8,176 9,901 11,114 9,015' 12,120 8,466' 8,284' 9,901 9,343 13 Demand deposits 15 29 21 43 40 24 77 33 21 30 14 Time deposits2 2,780 3,298 4,411 5,057 4,642 4,315 3,901 3,576 4,411 4,227 15 Other3 2,844 4,849 5,469 6,014 4,333' 7,781 4,488' 4,675' 5,469 5,086 16 Banks' custodial liabilities5 5,297 430 692 1,071 1,304 891 1,828 1,455 692 994 17 U.S. Treasury bills and certificates6 4,275 281 350 551 826 354 1,342 962 350 764 18 Other negotiable and readily transferable instruments7 1,022 149 341 520 478 537 486 493 341 230 19 Other 0 0 1 0 0 0 0 0 1 0 20 Official institutions9 220,821 212,851' 274,677 253,455 262,307 273,144 265,857 280,598 274,677 276,697 21 Banks' own liabilities 64,144 59,830' 82,206 75,437 83,392 85,998 83,588 85,277 82,206 84,019 22 Demand deposits 1,600 1,564 2,101 1,429 1,547 1,362 1,646 1,690 2,101 1,522 23 Time deposits2 21,653 23,511 30,601 29,411 31,600 32,048 30,385 30,353 30,601 27,197 24 Other3 40,891 34,755' 49,504 44,597 50,245 52,588 51,557 53,234 49,504 55,300 25 Banks' custodial liabilities5 156,677 153,021 192,471 178,018 178,915 187,146 182,269 195,321 192,471 192,678 26 U.S. Treasury bills and certificates6 151,100 139,570 168,534 159,654 157,516 163,093 157,987 171,366 168,534 173,949 27 Other negotiable and readily transferable instruments7 5,482 13,245 23,593 18,159 20,735 23,777 24,028 23,600 23,593 18,382 28 Other 95 206 344 205 664 276 254 355 344 347 29 Banks10 592,171 681,051' 687,416 665,993 684,265' 670,548' 699,343' 687,674' 687,416 684,390 30 Banks' own liabilities 478,755 566,161' 564,076 545,391 562,825' 547,940' 575,912' 562,374' 564,076 555,788 31 Unaffiliated foreign banks 160,482 170,603' 171,904 171,789 175,360 161,211' 185,353' 178,413' 171,904 174,898 32 Demand deposits 9,718 10,633 11,745 12,121 10,061 11,818' 11,341' 11,232 11,745 10,250 33 Time deposits2 105,262 111,171 104,195 104,477 108,855 98,861 114,650 105,675 104,195 111,098 34 Other3 45,502 48,799' 55,964 55,191 56,444 50,532' 59,362 61,506' 55,964 53,550 35 Own foreign offices4 318,273 395,558 392,172 373,602 387,465' 386,729' 390,559 383,961 392,172 380,890 36 Banks' custodial liabilities5 113,416 114,890 123,340 120,602 121,440 122,608 123,431 125,300 123,340 128,602 37 U.S. Treasury bills and certificates6 10,712 11,240 15,634 15,535 15,489 16,170 16,429 16,687 15,634 15,995 38 Other negotiable and readily transferable instruments7 17,020 14,505 13,035 10,583 10,142 9,690 9,754 13,070 13,035 13,740 39 Other 85,684 89,145 94,671 94,484 95,809 96,748 97,248 95,543 94,671 98,867 40 Other foreigners 102,744 115,964 122,013 128,755 119,536' 117,320 123,723 127,253 122,013 122,708 41 Banks' own liabilities 78,381 87,988 92,601 99,075 90,448' 89,078 94,742 99,084 92,601 93,583 42 Demand deposits 10,236 11,160 10,585 10,511 10,131 10,500 10,097 10,159 10,585 10,359 43 Time deposits2 45,411 48,532 53,781 52,848 52,004' 52,929 53,596 54,225 53,781 55,515 44 Other3 22,734 28,296 28,235 35,716 28,313 25,649 31,049 34,700 28,235 27,709 45 Banks' custodial liabilities5 24,363 27,976 29,412 29,680 29,088 28,242 28,981 28,169 29,412 29,125 46 U.S. Treasury bills and certificates6 10,652 11,766 12,583 12,881 13,487 13,453 13,527 12,875 12,583 12,770 47 Other negotiable and readily transferable instruments7 12,765 14,633 15,278 15,252 13,820 13,275 13,637 13,057 15,278 14,621 48 Other 946 1,577 1,551 1,547 1,781 1,514 1,817 2,237 1,551 1,734 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 17,567 17,895 9,098 10,179 10,409 9,938 10,290 10,064 9,098 10,479 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

Bank-Reported Data A57 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1—Continued 1995 1996 IItteemm 11999933 11999944 11999955rr July Aug. Sept. Oct. Nov, Dec. Jan.p AREA 50 Total, all foreigners 926,672 1,018,472 1,094,699 1,060,388 1,076,427' l,074,023r 1,099,217r l,105,264r 1,094,699 1,094,132 51 Foreign countries 915,736 1,009,866 1,084,106 1,048,203 l,066,108r l,061,012r l,088,923r l,095,525r 1,084,106 1,083,795 52 Europe 377,911 393,141 364,270 377,662 376,545 362,080 377,103' 384,238 364,270 367,840 53 Austria 1,917 3,653 3,537 3,923 3,869 5,221 4,887 4,755 3,537 3,437 54 Belgium and Luxembourg 28,670 21,978 24.815 24,803 24,598 24,039 25,192 28,357 24,815 24,881 55 Denmark 4,517 2,784 2,921 2,131 2,468 2,476 3,177 3,418 2,921 2,979 56 Finland 1,872 1,436 2,831 2,390 2,270 1,972 2,419 2,315 2,831 2,421 57 France 40,316 45,217 39,198 42,880 43,314 38,117r 43,134r 40,415' 39,198 39,697 58 Germany 26,685 27,191 24,085 33,794 31,257 31,390 26,362 26,798 24,085 25,975 59 Greece 1,519 1,393 2,011 2,311 2,398 2,119 2,033 2,265 2,011 1,998 60 Italy 11,759 10,885 10,670 10,223 10,823 8,947 10,251 10,759 10,670 9,616 61 Netherlands 16,096 16,033 15,212 11,743 10,685 13,107 15,609 15,541 15,212 11,055 62 Norway 2,966 2,338 1,394 1,119 2,087 1,011 1,048 1,287 1,394 1,067 63 Portugal 3,366 2,846 2,761 3,165 2,933 3,033 2,902 2,718 2,761 3,055 64 Russia 2,511 2,714 7,949 6,313 7,265 6,367 7,338 8,979 7,949 7,858 65 Spain 20,496 14,675 10,012 9,127 10,000 10,100 13,467 10,809 10,012 11,837 66 Sweden 2,738 3,094 3,245 2,209 2,896 3,167 2.035 3,720 3,245 2,555 67 Switzerland 41,560 41,956 43,610 42,192 41,644 41,406 42,588 41,178 43,610 40,834 68 Turkey 3.227 3,341 4,124 2,973 3,523 3,936 4,067 4,010 4,124 4,301 69 United Kingdom 133,993 163,793 139,438 151,341 150.781 141,577 147,448 148,384 139,438 152,627 70 Yugoslavia" 372 245 177 214 146 215 210 171 177 163 71 Other Europe and other former U.S.S.R.12 33,331 27,769 26,280 24,811 23,588 23,880r 22,936' 28,359' 26,280 21,484 72 Canada 20,235 24,727 26,219 28,898 28,296 28,872 35,358 27,730 26,219 28,616 73 Latin America and Caribbean 362,238 423,797 438,379 436,258 447,521r 434,352 439,956 436,613 438,379 436,302 74 Argentina 14,477 17,203 12,236 12,404 11,541r 11,180 11,539 13,034 12,236 13,524 75 Bahamas 73,820 104,002 94,622 88,731 96,017 92,850 96,287 87,719 94,622 96,500 76 Bermuda 8,117 8,445 4,897 7,092 6,794 5,996 6,589 6,561 4,897 5,028 77 Brazil 5,301 9,145 23,816 21,232 26,743 27,592 27,366 27,364 23,816 21,863 78 British West Indies 193,699 229,525 237,529 245,078r 244,305' 234,643r 236,053r 240,353' 237,529 234,801 79 Chile 3,183 3.126 2,825 2,677 2,890 2.698 2,574 2,696 2,825 2,978 80 Colombia 3,171 4,615 3,666 3,432 3,348' 3,257 3,399 3,443 3,666 3,713 81 Cuba 33 13 8 5 3 4 13 8 8 7 82 Ecuador 880 875 1,315 1,118 1,160 1,130 1,311 1,307 1,315 1,236 83 Guatemala 1,207 1,121 1,275 1,100 1,122 1,197 1.068 1,210 1,275 1,058 84 Jamaica 410 529 481 426 444 484 430 447 481 500 85 Mexico 28,019 12.250 24,582 21,006 22,120 22,069 20,924 21,010 24,582 23,632 86 Netherlands Antilles 4,686 5,217 4,685 6,068 4,778 5,016 5,349 5,644 4,685 4,448 87 Panama 3,582 4,551 4,264 4,641 4,998 4,682 4,561 4,287 4,264 4,030 88 Peru 929 900 974 944 1,028 909 897 916 974 1,025 89 Uruguay 1,611 1,597 1,835 1,953 l,933r 1,839 1,856 1,912 1,835 1,800 90 Venezuela 12,786 13,983 11,812 11,482 11,195 11,971 12,642 11,624 11,812 12,660 91 Other 6,327 6,700 7,557 6,869r 7,102r 6,835' 7,098r 7,078' 7,557 7,499 92 144,527 115555,,664422 224400,,880066 192,264 199,624 223,08 lr 222,980' 232,298' 240,806 238,146 China 93 People's Republic of China 4,011 10,066 33,774 11,908 13,208 22,273 22,364 29,898 33,774 35,733 94 Republic of China (Taiwan) 10,627 9,844 11,706 9,165 9,838 10,253 10,729 11,365 11,706 12,310 95 Hong Kong 17,132 17,102 20,319 25,134 24,152 21,852 21,879 20,273 20,319 20,295 96 India 1,114 2,338 3,373 2,271 2,745 2,914 3,010 3,272 3,373 3,262 97 Indonesia 1,986 1,587 2,708 1,966 2,175 2,366 2,174 2,485 2,708 2,011 98 Israel 4,435 5,157 4,073 4,599 4,723 4,209 3,812 4,110' 4,073 4,371 99 Japan 61.466 64,284 109,192 85,833 89,117 104,315 104,566 105,546 109,192 106,727 100 Korea (South) 4,913 5,124 5,770 5,068 4,883 5,484r 5,368' 5,593 5,770 5,079 101 Philippines 2,035 2,714 3,090 2,653 2,793 2,786 2,844 2,889 3,090 2,394 102 Thailand 6,137 6,466 12,279 11,244 11,177 11,803 10,458 12,144 12,279 13,121 103 Middle Eastern oil-exporting countries13 15,822 15,489 15,585 16,474 15,779 16,895 17,350 16,277 15,585 14,390 104 Other 14,849 15,471 18,937 15,949 19,034 17,931 18,426 18,446 18,937 18,453 105 6,633 6,523 7,641 6,966 6,989 7,033 7,211 7,793 7,641 7,679 106 Egypt 2,208 1,879 2,136 1,840 1,924 2,127 1,948 1,907 2,136 1,848 107 Morocco 99 97 104 94 87 79 66 60 104 99 108 South Africa 451 433 739 1,002 746 467 934 1,206 739 1,217 109 Zaire 12 9 10 13 15 9 4 9 10 11 110 Oil-exporting countries14 1.303 1,343 1,797 1,364 1,667 1,792 1,544 1,826 1,797 1,774 111 Other 2,560 2,762 2,855 2,653 2,550 2,559 2,715 2,785 2,855 2,730 112 Other 4,192 6,036 6,791 6,155 7,133 5,594 6,315 6,853 6,791 5,212 113 Australia 3.308 5,142 5,648 5,473 5,459 4,777 5,007 5,758 5,648 4,334 114 Other 884 894 1,143 682 1,674 817 1,308 1,095 1,143 878 115 Nonmonetary international and regional organizations. . . 10,936 8,606 10,593 12,185 10,319r 13,011 10,294' 9,739r 10,593 10,337 116 International15 6,851 7,537 8,944 10,496 8,303r 11,279 8,458' 8,415' 8,944 9,354 117 Latin American regional16 3,218 613 893 834 1,010 876 552 371 893 349 118 Other regional17 867 456 756 855 1,006 856 1,284 953 756 634 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 • May 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 1996 AArreeaa oorr ccoouunnttrryy 11999933 11999944 11999955'' July Aug. Sept. Oct. Nov.' Dec. Jan.p 1 Total, all foreigners 488,497r 486,263 526,060 508,977 521,137r 515,059r 522,650r 533,896 526,060 522,758 2 Foreign countries 486,092r 481,672 524,208 507,660 519,720r 512,232r 520,992r 532,475 524,208 520,485 3 Europe 123,741' 125,807 130,211 127,027 127,681 116,578 131,526' 131,665 130,211 134,175 4 Austria 412 692 565 616 685 670 880 639 565 683 5 Belgium and Luxembourg 6,532 6,738 7,557 8,073 8,257 7,056 7,103 10,691 7,557 8,365 6 Denmark 382 1,030 404 443 428 410 634 602 404 541 ) Finland 594 691 1,055 967 1,001 1,221 1,916 1,097 1,055 1,397 8 France 11,822 12,768 14,770 15,443 15,200 13,956 14,807 15,259 14,770 12,242 9 Germany 7,724 7,608 8,842 7,149 8,731 8,691 8,081 8,431 8,842 8,062 10 Greece 691 604 441 445 386 385 404 378 441 555 11 Italy 8,834 6,043 5,364 6,070 5,757 5,921 5,651 5,390 5,364 5,010 12 Netherlands 3,063 2,957 5.049 4,478 4,354 4,696 4,471 4,907 5,049 4,599 13 Norway 396 504 665 1,206 1,047 1,392 1,457' 1,376 665 1,098 14 Portugal 834 938 888 987 916 986 1,036 862 888 853 15 Russia 2,310 949 660 495 506 421 696 949 660 678 16 Spain 3,717 3,530 2,166 3,640 3,494 3,520 3,162 3,191 2,166 3,811 17 Sweden 4,254 4,098 2,060 3,580 2,840 2,700 2,642 2,362 2,060 2,315 18 Switzerland 6,605 7,493 7,074 7,540 7,362 7,207 6,335' 5,925 7,074 4,606 19 Turkey 1,301 874 785 725 768 802 830 926 785 732 20 United Kingdom 62,013' 66,858 67,389 63,871 64,607 54,522 69,022' 66,918 67,389 75,133 21 Yugoslavia2 473 265 147 230 230 234 233 237 147 481 22 Other Europe and other former U.S.S.R.3 1.784 1,167 4,330 1,069 1,112 1,788 2,166 1,525 4,330 3,014 23 Canada 18,617' 18,298 16,120 18,903 17,306 18,623 17,835' 17,015 16,120 15,679 24 Latin America and Caribbean 225,238' 224,060 257,356 238,847 250,189 250,335 251,307' 266,623 257,356 256,948 25 Argentina 4,474 5,845 6,439 6,242 6,151 6,114 6,003 6,090 6,439 6,185 26 Bahamas 63,353 66,775 59,236 59,906 61,224 62,888 55,788 60,030 59,236 60,284 27 Bermuda 8,901 8,481 5,718 6,373 8,944 6,295 5,537 8,096 5,718 5,011 28 Brazil 11,848 9,582 13,297 12,511 12,962 13,022 13,334 12,983 13,297 13,252 29 British West Indies 99,319 95,766 123,899 114,504 117,892 120,013 123,682 129,460 123,899 121,895 30 Chile 3,643 3,819 5,024 4,264 4,663 4,388 4,660 4,775 5,024 5,842 31 Colombia 3,181 4,004 4,550 4,183 4,270 4,358 4,593 4,516 4,550 4,622 32 Cuba 0 0 0 0 0 0 0 0 0 0 33 Ecuador 681 681 823 768 725 805 846 847 823 841 34 Guatemala 288 366 457 340 350 361 385 424 457 439 35 Jamaica 195 258 323 277 290 287 289 285 323 299 36 Mexico 15,879' 17,728 18,028 17,152 16,832 16,486 16,657' 16,826 18,028 16,986 37 Netherlands Antilles 2,683 1,580 9,229 2,730 6,313 5,602 9,233 12,048 9,229 11,043 38 Panama 2,894 2,184 3,003 2,520 2,503 2,594 2,846 3,049 3,003 2,793 39 Peru 657 997 1,829 1,333 1.368 1,464 1,501 1,577 1,829 1,762 40 Uruguay 969 503 474 424 424 386 441 451 474 422 41 Venezuela 2,910 1,831 1,656 1,650 1,596 1,480 1,826 1,678 1,656 1,575 42 Other 3,363 3,660 3,371 3,670 3,682 3,792 3,686 3,488 3,371 3,697 43 111,775 107,350 115,298 117,212 118,264' 120,211' 111144,,557755'' 111111,,443355 111155,,229988 108,797 China 44 People's Republic of China 2,271 836 1,023 1,206 1,163 1,316 1,241 1,069 1,023 1,014 4b Republic of China (Taiwan) 2,625 1,447 1,713 1,915 1,600 1,584 1,595 1,484 1,713 1,407 46 Hong Kong 10,828 9,162 12,895 14,756 14,520 15,677 12,539 10,713 12,895 13,235 47 India 589 994 1,846 1,732 1,905 1,944 1,924 1,823 1,846 1,864 48 Indonesia 1,527 1,470 1,678 1,516 1,620 1,596 1,623 1,583 1,678 1,369 49 Israel 826 688 739 749 700 712 886 728 739 668 50 Japan 60,032 59,428 61,303 61,280 63,301 63,075 61,878 60,522 61,303 55,901 51 Korea (South) 7,539 10,286 14,067 13,134 12,866' 12,992' 13,357' 14,107 14,067 14,345 52 Philippines 1,410 662 1,350 598 623 725 673 789 1,350 814 53 Thailand 2,170 2,902 2,581 2,670 2,594 2,594 2,568 2,538 2,581 2,376 54 Middle Eastern oil-exporting countries4 15,115 13,743 9,638 11,948 11,403 11,723 9,963 9,604 9,638 8,142 55 Other 6,843 5,732 6,465 5,708 5,969 6,273 6,328 6,475 6,465 7,662 56 3,861 3,028 2,727 2,907 2,826 2,705 2,783 2,732 2,727 2,798 5 7 Egypt 196 225 210 193 194 202 224 268 210 208 58 Morocco 481 429 514 645 653 647 457 433 514 514 59 South Africa 633 671 465 531 544 454 604 462 465 483 60 Zaire 4 2 1 7 2 2 1 1 1 3 61 Oil-exporting countries5 1,129 842 552 659 614 615 586 578 552 589 62 Other 1,418 859 985 872 819 785 911 990 985 1,001 63 Other 2,860 3,129 2,496 2,764 3,454 3,780 2,966 33,,000055 2,496 2,088 64 Australia 2,037 2,186 1.622 2,072 2,072 2,639 2,095 11,,996699 1,622 1,819 65 Other 823 943 874 692 1,382 1,141 871 1,036 874 269 66 Nonmonetary international and regional organizations6. . . 2,405 4,591 1,852 1,317 1,417 2,827 1,658 1,421 1,852 2,273 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

Bank-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 1996 TTyyppee ooff ccllaaiimm 11999933 11999944 11999955'' July Aug. Sept.' Oct.' Nov.' Dec. Jan.P 1 Total 575,613' 601,615 648,746 647,660 648,746 2 Banks' claims 488,497r 486,263 526,060 508,977 521,137' 515,059 522,650 533,896 526,060 522,758 3 Foreign public borrowers 29,228r 23,410 22,468 19,734 21,449 22,292 20,888 19,376 22,468 23,090 4 Own foreign offices2 285,510 283,548 303,963 293,151 297,060' 298,240 303,979 308,911 303,963 299,864 5 Unaffiliated foreign banks 100,865 111,682 98,542 113,753 112,029 107,294 103,928 99,530 98,542 97,401 6 Deposits 49,892 59,230 37,331 59,798 57,718 50,764 47,107 42,905 37,331 35,753 7 Other 50,973 52,452 61,211 53,955 54,311 56,530 56,821 56,625 61,211 61,648 8 All other foreigners 72,894r 67,623 101,087 82,339 90,599' 87,233 93,855 106,079 101,087 102,403 9 Claims of banks' domestic customers3 87,116 115,352 122,686 132,601 122,686 10 Deposits 41,734 64,829 57,529 66,067 57,529 11 Negotiable and readily transferable instruments4 31,186 36,008 45,265 45,190 45,265 12 Outstanding collections and other claims 14,196 14,515 19,892 21,344 19,892 MEMO 13 Customer liability on acceptances 7,918' 8,427' 8,380 8,821 8,380 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 29,150 32,565 30,245 34,221 35,452 34,274 33,828 30,955 30,245 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 US. 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 States1 Payable in U.S. Dollars Millions of dollars, end of period 1995 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999922 11999933'' 11999944 Mar. June Sept. Dec.p 1 Total 195,119 202,566 202,705 199,836 219,628' 216,646 221,559 By borrower 2 Maturity of one year or less 163,325 172,662 176,870 171,297 191,144' 184,482 175,766 3 Foreign public borrowers 17,813 17,828 15,597 15,792' 15,963' 14,747 14,970 4 All other foreigners 145,512 154,834 161,273 155,505' 175,181' 169,735 160,796 5 Maturity of more than one year 31,794 29,904 25,835 28,539 28,484' 32,164 45,793 6 Foreign public borrowers 13,266 10,874 7,670 7,689 7,726 7,721 7,492 7 All other foreigners 18,528 19,030 18,165 20,850 20,758' 24,443 38,301 By area Maturity of one year or less 8 Europe 53,300 57,413 58,473 54,763 60,749 52,374 53,901 9 Canada 6,091 7,727 7,482 7,472 8,219 7,721 6,097 10 Latin America and Caribbean 50,376 60,490 62,477 64,073 71,732' 73,977 72,118 11 Asia 45,709 41,418 40,696 38,227 44,365 44,219 40,041 12 Africa 1,784 1,820 1,376 1,227 1,447 1,261 1,270 13 All other3 6,065 3,794 6,366 5,535 4,632 4,930 2,339 Maturity of more than one year 14 Europe 5,367 5,310 3,901 4,533 3,704 4,170 4,733 15 Canada 3,287 2,581 2,521 3,622 3,110 2,815 2,654 16 Latin America and Caribbean 15,312 14,025 12,293 13,074 14,243' 17,491 27,707 17 Asia 5,038 5,606 4,744 5,228 5,493 5,707 7,983 18 Africa 2,380 1,935 1,561 1,605 1,389 1,389 1,430 19 All other3 410 447 815 477 545 592 1,286 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 • May 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 Dec. Mar. June Sept. Dec. Mar. June Sept. Dec.p 1 Total 343.5 344.7 407.7r 478.9r 487.9r 487.3r 499.6 539.9 523.9 524.5 548.9 2 G-10 countries and Switzerland 137.5 131.3 161.8r 180.8 175.4 183.8 193.0 208.3 200.3 195.3 200.2 3 Belgium and Luxembourg .0 5.6 7.4 8.0 8.6 9.6 7.0 8.3 7.3 8.5 12.1 4 France 11.3 15.3 12.0 16.6 19.1 21.2 19.7 20.1 19.3 17.5 19.2 5 Germany 8.3 9.1 12.6 29.9 25.0 24.2 24.7 31.3 29.9 28.6 26.8 6 Italy 5.6 6.5 7.7 15.6 14.0 11.6 11.8 10.6 10.7 12.6 11.5 7 Netherlands .0 2.8 4.7 4.1 3.6 3.5 3.6 3.6 4.3 3.9 3.3 8 Sweden 1.9 2.3 2.7 2.9 3.0 2.6 2.7 3.1 3.0 2.7 2.7 9 Switzerland 3.4 4.8 5.9 6.3 6.5 6.2 6.9 6.2 6.1 6.0 6.1 10 United Kingdom 68.4 59.7 84.3r 70.0 65.1 78.4 85.8 89.9 86.7 79.8 80.7 11 Canada 5.8 6.3 6.9 7.8 9.7 10.0 9.8 10.7 10.8 11.7 9.4 12 Japan 22.2 18.8 17.6 19.6 20.7 16.5 21.0 24.5 22.1 24.0 28.5 13 Other industrialized countries 22.8 24.0 25.6 42.2 42.6 42.5 45.3 43.9 43.2 49.7 50.0 14 Austria .6 1.2 .4 1.0 1.0 1.0 1.1 .9 .7 1.2 .9 15 Denmark .9 .9 1.0 1.1 1.1 .9 1.2 1.6 1.1 1.6 22..66 16 Finland .7 .7 .4 1.0 .8 .8 1.0 1.1 .5 .7 ..88 17 Greece 2.6 3.0 3.2 3.8 4.6 4.3 4.5 4.9 5.0 5.1 5.7 18 Norway 1.4 1.2 1.7 1.6 1.6 1.6 2.0 2.4 1.8 2.3 3.2 19 Portugal .6 .4 .8 1.2 1.1 1.0 1.2 1.0 1.2 1.7 1.1 20 Spain 8.3 8.9 9.9 13.2 12.6 14.0 13.6 14.1 13.3 13.3 11.6 21 Turkey 1.4 1.3 2.1 2.4 2.1 1.8 1.6 1.4 1.4 2.0 1.9 22 Other Western Europe 1.8 1.7 2.6 3.1 2.8 1.0 2.7 2.5 2.6 3.0 4.7 23 South Africa 1.9 1.7 1.1 1.2 1.2 1.2 1.0 1.4 1.4 1.3 1.2 24 Australia 2.7 2.9 2.3 12.7 13.7 15.0 15.4 12.6 14.3 17.4 16.4 25 OPEC2 14.5 15.8 17.4 22.9 21.6 21.6 23.9 19.5 20.3 22.3 22.3 26 Ecuador .7 .6 .5 .5 .5 .4 .5 .5 .7 .7 .7 27 Venezuela 5.4 5.2 5.1 4.7 4.5 3.9 3.7 3.5 3.5 3.0 2.7 28 Indonesia 2.7 2.7 3.3 3.4 3.2 3.3 3.8 4.0 4.1 4.4 5.0 29 Middle East countries 4.2 6.2 7.4 13.2 12.4 13.0 15.0 10.7 11.4 13.5 13.3 30 African countries 1.5 1.1 1.2 1.1 1.1 1.0 .9 .7 .6 .6 .6 31 Non-OPEC developing countries 64.3 72.6 83. lr 94.4r 94.7r 93.r 95.9 98.4 103.6 103.5 112.0 Latin America 32 Argentina 4.8 6.6 7.7 8.7 9.9 10.5 11.2 11.4 12.3 10.9 12.9 33 Brazil 9.6 10.8 12.0 (2.7 12.0 9.3 8.4 9.2 10.0 13.1 13.1 34 Chile 3.6 4.4 4.7 5.1 5.1 5.5 6.1 6.4 7.1 6.4 6.8 35 Colombia 1.7 1.8 2.1 2.2 2.4 2.4 2.6 2.6 2.6 2.9 2.9 36 Mexico 15.5 16.0 17.8r 19.0r 18.6r 19.8r 18.4 17.8 17.6 16.3 17.3 37 Peru .4 .5 .4 .6 .6 .6 .5 .6 .8 .7 .8 38 Other 2.1 2.6 3.1 2.8 2.7 2.8 2.7 2.4 2.6 2.6 2.8 Asia China 39 People's Republic of China .3 .7 2.0 .8 .8 1.0 1.1 1.1 1.4 1.7 1.8 40 Republic of China (Taiwan) 4.1 5.2 7.3 7.6 7.1 6.9 9.2 8.5 9.0 9.0 9.4 41 India 3.0 3.2 3.2 3.4 3.7 3.9 4.2 3.8 4.0 4.4 4.4 42 Israel .5 .4 .5 .4 .4 .4 .4 .6 .6 .5 .5 43 Korea (South) 6.8 6.6 6.7 14.1 14.3 14.4 16.2 16.9 18.7 18.0 1199..11 44 Malaysia 2.3 3.1 4.4 5.2 5.2 3.9 3.1 3.9 4.1 4.3 44..44 45 Philippines 3.7 3.6 3.1 3.4 3.2 2.9 3.3 3.0 3.6 3.3 4.1 46 Thailand 1.7 2.2 3.1 3.0 3.3 3.5 2.1 3.3 3.8 3.9 4.9 47 Other Asia 2.4 3.1 3.1 3.1 3.2 3.4 4.7 4.9 3.5 3.6 4.5 Africa 48 Egypt .4 .2 .4 .4 .5 .3 .3 .4 .4 .4 .4 49 Morocco .7 .6 .7 .7 .7 .7 .6 .6 .9 .9 .7 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 .7 1.0 .8 1.0 .9 .9 .8 .7 .6 .7 .9 52 Eastern Europe 2.4 3.1 3.2 3.4 3.0 3.0 2.7 2.3 1.8 3.4 4.2 53 Russia4 .9 1.9 1.6 1.5 1.2 1.1 .8 .6 .4 .6 1.0 54 Yugoslavia5 .9 .6 .6 .5 .5 .5 .5 .4 .3 .4 .3 55 Other .7 .6 .9 1.4 1.4 1.5 1.4 1.2 1.0 2.3 2.8 56 Offshore banking centers 53.8 58.1 73.0 78.9 80.6 77.2 72.0 85.3 82.4 86.4 103.0 57 Bahamas 11.9 6.9 10.9 13.7 13.3 13.8 10.7 13.3 8.4 12.6 15.0 58 Bermuda 2.3 6.2 8.9 8.9 6.5 6.0 8.4 8.7 8.5 6.3 6.3 59 Cayman Islands and other British West Indies 15.5 21.5 18.0 17.9 23.8 21.5 19.9 19.4 23.7 23.4 32.0 60 Netherlands Antilles 1.2 1.1 2.6 3.5 2.5 1.7 1.5 .9 2.5 5.5 9.9 61 Panama6 1.4 1.9 2.4 2.0 1.9 1.9 1.3 1.1 1.3 1.3 11..44 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 ..11 63 Hong Kong 14.3 13.9 18.7 19.7 21.8 20.3 19.9 22.4 23.1 23.7 25.1 64 Singapore 7.1 6.5 11.2 13.0 10.6 11.8 10.1 19.2 14.8 13.3 1133..11 65 Other .0 .0 .1 .0 .0 .0 .1 .0 .0 .1 ..11 66 Miscellaneous and unallocated8 47.9 39.7 43.4 55.9 69.7 65.8 66.7 82.0 72.1 63.7 56.9 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. 1 Total 44,708 45,511 50,597 57,193 59,163 55,656 51,530 51,236 48,921 2 Payable in dollars 39,029 37,456 38,728 43,410 43,412 39,645 37,246 35,530 35,169 3 Payable in foreign currencies 5,679 8,055 11,869 13,783 15,751 16,011 14,284 15,706 13,752 By type 4 Financial liabilities 22,518 23,841 29,226 35,256 37,973 34,301 31,118 30,545 27,485 5 Payable in dollars 18,104 16,960 18,545 23,461 24,091 20,165 18,047 16,277 15,133 6 Payable in foreign currencies 4,414 6,881 10,681 11,795 13,882 14,136 13,071 14,268 12,352 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 y 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 16,746 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 1,365 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 6,992 28 Japan 4,116 4,750 4,887 5,064 7,248 7,314 7,182 7,153 6,308 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 Allother3 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 countries1 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 • May 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. 1 Total 45,262 45,073 49,159 52,510 54,833 57,888 52,218 58,030 53,646 2 Payable in dollars 42,564 42,281 45,161 48,003 50,460 53,805 48,425 54,145 49,918 3 Payable in foreign currencies 2,698 2,792 3,998 4,507 4,373 4,083 3,793 3,885 3,728 By type 4 Financial claims 27,882 26,509 27,771 30,234 32,236 33,897 29,606 34,567 29,862 b Deposits 20,080 17,695 15,717 17,824 19,118 18,507 17,115 22,021 17,945 6 Payable in dollars 19,080 16,872 15,182 17,203 18,502 18,026 16,458 21,349 17,364 7 Payable in foreign currencies 1,000 823 535 621 616 481 657 672 581 8 Other financial claims 7,802 8,814 12,054 12,410 13,118 15,390 12,491 12,546 11,917 y Payable in dollars 6,910 7,890 10,862 11,057 11,903 14,306 11,275 11,388 10,689 10 Payable in foreign currencies 892 924 1,192 1,353 1,215 1,084 1,216 1,158 1,228 n Commercial claims 17,380 18,564 21,388 22,276 22,597 23,991 22,612 23,463 23,784 12 Trade receivables 14,468 16,007 18,425 19,475 19,825 21,158 20,415 21,312 21,657 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 21,865 lb Payable in foreign currencies 806 1,045 2,271 2,533 2,542 2,518 1,920 2,055 1,919 By area or country Financial claims 16 Europe 13,441 9,331 7,299 7,372 8,914 7,936 7,630 7,923 7,840 17 Belgium and Luxembourg 13 8 134 84 115 86 146 155 160 18 France 269 764 826 995 931 800 808 731 753 19 Germany 283 326 526 459 413 540 527 355 301 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 4,924 23 Canada 2,642 1,833 2,032 3,470 3,812 3,581 3,848 3,705 3,526 24 Latin America and Caribbean 10,717 13,893 16,224 16,465 16,608 19,536 16,109 21,160 15,316 2b 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 27 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 11,787 2y Mexico 212 445 872 629 691 723 583 638 487 30 Venezuela 40 29 161 32 31 35 27 27 50 31 640 864 1,657 2,221 2,176 1,871 1,504 1,231 2,160 32 Japan 350 668 892 1,344 661 953 621 467 1,404 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 3b Oil-exporting countries2 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 8,896 38 Belgium and Luxembourg 194 189 184 189 178 213 199 218 224 39 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 1,023 997 41 Netherlands 645 552 423 294 331 311 324 341 338 42 Switzerland 295 362 432 686 538 557 556 612 438 43 United Kingdom 2,086 2,094 2,377 2,445 2,505 2,556 2,388 2,459 2,513 44 Canada 1,121 1,286 1,781 1,875 1,906 1,988 2,010 2,003 2,004 45 Latin America and Caribbean 2,655 3,043 3,274 3,904 3,963 4,117 4,140 4,368 4,543 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 50 Mexico 842 924 990 1,048 1,137 1,243 1,106 1,108 1,026 51 Venezuela 203 345 293 304 388 348 295 319 325 52 4,591 4,866 6,014 6,330 6,679 6,982 6,200 6,514 6,826 53 Japan 1,899 1.903 2,275 2,498 2,591 2,655 1,911 2,010 1,998 b4 Middle Eastern oil-exporting countries' 620 693 704 642 617 708 689 707 775 55 Africa 430 554 493 480 447 454 468 478 544 56 Oil-exporting countries" 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 1996 1995 1996 Transaction, and area or country 1994 1995 Jan.- July Aug. Sept. Oct. Nov. Dec. Jan.p Jan. U.S. corporate securities STOCKS 1 Foreign purchases 350,593 462,884 43,574 42,444 41,908 44,450 41,492 41,937 46,479 43,574 2 Foreign sales 348,716 451,709 41,948 40,009 39,366 44,218 42,860 39,071 44,372 41,948 3 Net purchases, or sales (—) 1,877 11,175 1,626 2,435 2,542 232 -1,368 2,866 2,107 1,626 4 Foreign countries 1,867 11,380 1,623 2,443 2,565 295 -1,328 2,877 2,109 1,623 5 Europe 6,714 4,847 1,954 2,045 1,836 -1,319 1,647 954 1,028 1,954 6 France -201 -1,099 164 261 17 -126 -54 -58 -382 164 7 Germany 2,110 -1,837 239 8 -104 -136 5 -131 -11 239 8 Netherlands 2,251 3,507 660 364 431 197 528 230 373 660 9 Switzerland -30 -2,283 639 -20 -847 9 449 227 191 639 10 United Kingdom 840 8,001 -165 1,445 2,330 -1,114 878 543 1,277 -165 11 Canada -1,160 -1,517 645 -425 -10 -197 -74 405 -175 645 12 Latin America and Caribbean -2,111 5,814 -487 881 1,811 752 -2,920 1,361 219 -487 13 Middle East1 -1,142 -337 -507 -24 -5 -77 -8 -63 148 -507 14 Other Asia -1,234 2,503 -40 107 -961 1,048 61 342 883 -40 15 Japan 1,162 -2,725 94 141 -1,076 -598 56 -406 1,231 94 16 Africa 29 2 6 -5 17 34 -17 -26 -1 6 17 Other countries 771 68 52 -136 -123 54 -17 -96 7 52 18 Nonmonetary international and regional organizations 10 -205 3 -8 -23 -63 -40 -11 -2 3 BONDS2 19 Foreign purchases 289,586 291,950R 26,525 23,911 24,742 27,212 26,367 31,642 21,698 26,525 20 Foreign sales 229,665 206,951 17,596 14,949 16,741 17,759 19,199 20,741 21,117 17,596 21 Net purchases, or sales (—) 59,921 84,999r 8,929 8,962 8,001 9,453 7,168 10,901 581 8,929 22 Foreign countries 59,036 85,453r 8,887 9,129 7,982 9,431 7,236 10,948 553 8,887 23 Europe 37,065 68,735R 5,688 6,340 5,561 6,959 6,361 9,759 1,309 5,688 24 France 242 1,143 839 7 538 63 732 101 137 839 25 Germany 657 5,806 -26 51 1,163 916 113 894 236 -26 26 Netherlands 3,322 1,463 156 557 45 203 204 219 101 156 27 Switzerland 1,055 494 171 317 -99 343 148 101 -381 171 28 United Kingdom 31,642 56,140R 3,803 5,063 3,775 4,511 4,542 6,999 925 3,803 29 Canada 2,958 2,569 104 169 415 349 139 20 181 104 30 Latin America and Caribbean 5,442 6,141 2,096 1,145 754 1,719 -61 1,426 -848 2,096 31 Middle East1 771 1,869 -194 348 281 241 -246 188 187 -194 32 Other Asia 12,153 5,659 1,272 1,189 919 139 1,126 -705 -293 1,272 33 Japan 5,486 2,250 338 1,026 1,008 -371 645 -899 -904 338 34 Africa -7 234 -16 -13 64 23 -223 240 86 -16 35 Other countries 654 246 -63 -49 -12 1 140 20 -69 -63 36 Nonmonetary international and regional organizations 885 -454 42 -167 19 22 -68 -47 28 42 Foreign securities 37 Stocks, net purchases, or sales (—) -48,071 -50,720' -6,395 -8,188 -5,904 -7,959 -5,755 -1,725 -6,830 -6,395 38 Foreign purchases 386,106 345,498R 33,462 28,582 30,867 28,712 29,382 30,307 32,366 33,462 39 Foreign sales 434,177 396,218R 39,857 36,770 36,771 36,671 35,137 32,032 39,196 39,857 40 Bonds, net purchases, or sales (—) -9,224 -46,928' -4,439 -4,079 -3,755 -5,206 -7,580 -6,235' -3,989 -4,439 41 Foreign purchases 848,368 892,578 84,527 67,187 72,277 83,396 76,889 78,563 80,310 84,527 42 Foreign sales 857,592 939,506' 88,966 71,266 76,032 88,602 84,469 84,798' 84,299 88,966 43 Net purchases, or sales (—), of stocks and bonds .... -57,295 —97,648r -10,834 -12,267 -9,659 -13,165 -13,335 -7,960r -10,819 -10,834 44 Foreign countries -57,815 -96,843" -10,865 -12,048 -9,486 -13,220 -13,226 -7,882r -10,878 -10,865 45 Europe -3,516 -47,913' -3,943 -7,955 -2,539 -2,928 -7,243 -4,609 -6,099 -3,943 46 Canada -7,475 -7,871' -2,649 -1,301 -851 -3,471 1,311 -494' -14 -2,649 47 Latin America and Caribbean -18,334 -7,071' -3 -185 817 781 -3,883 -184' -802 -3 48 -24,275 -33,744' -4,645 -3,158 -7,250 -7,533 -2,503 -2,001 -4,389 -4,645 49 Japan -17,427 -24,773' -3,427 -3,586 -5,499 -5,360 -849 -1,388 -3,685 -3,427 50 Africa -467 -327' -96 -45 34 -117 5 19 -44 -96 51 Other countries -3,748 83r 471 596 303 48 -913 -613 470 471 52 Nonmonetary international and regional organizations 520 -805 31 -219 -173 55 -109 -78 59 31 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 • May 1996 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions' Millions of dollars; net purchases, or sales (—) during period 1996 1995 1996 AArreeaa oorr ccoouunnttrryy 11999944 11999955 Jan.- July Aug. Sept. Oct. Nov. Dec. Jan.p Jan. 1 Total estimated 78,801 133,991r 14,008 31,871 26,082 -11,072 4,819 15,307 -9,454 14,008 2 Foreign countries 78,637 133,552 13,703 31,382 26,442 -11,002 4,650 14,936 -9,016 13,703 3 Europe 38,542 50,000r 7,281 13,336 9,170 6,377 -4,608 821 -1,120 7,281 4 Belgium and Luxembourg 1,098 591 149 -53 580 143 -25 81 171 149 .1 Germany 5,709 6,136 1,385 1,039 2,995 2,568 2,831 52 452 1,385 6 Netherlands 1,254 1,891 807 883 -1,468 -1,915 160 833 381 807 7 Sweden 794 358 -45 124 100 61 92 -30 -285 -45 8 Switzerland 481 -472 76 206 -515 818 174 -568 -664 76 9 United Kingdom 23,365 34,778r 1,167 7,315 7,950 5,570 -5,965 1,309 -4,377 1,167 in Other Europe and former U.S.S.R 5,841 6,718 3,742 3,822 -472 -868 -1,875 -856 3,202 3,742 u Canada 3,491 252 1,867 720 -825 -2,284 -1,864 -43 208 1,867 12 Latin America and Caribbean -10,383 48,609 -2,648 513 11,265 -5,299 17,453 13,496 3,762 -2,648 13 Venezuela -319 -2 -142 -114 -359 -524 -92 232 61 -142 14 Other Latin America and Caribbean -20,493 25,152 8,922 1,034 5,364 1,171 3,033 3,723 4,710 8,922 15 Netherlands Antilles 10,429 23,459 -11,428 -407 6,260 -5,946 14,512 9,541 -1,009 -11,428 16 47,317 32,319 6,920 16,490 7,322 -10,055 -6,879 -107 -11,843 6,920 17 Japan 29,793 16,863 2,619 6,658 5,430 -4,021 -10,115 1,316 -5,695 2,619 18 Africa 240 1,464' 515 -1 -130 108 501 458 252 515 19 Other -570 908 -232 324 -360 151 47 311 -275 -232 20 Nonmonetary international and regional organizations 164 439r 305 489 -360 -70 169 371 -438 305 21 International 526 9r 210 311 -140 -196 2 368 -347 210 22 Latin American regional -154 261 -45 105 -10 -6 185 -43 -115 -45 MEMO 23 Foreign countries 78,637 133,552 13,703 31,382 26,442 -11,002 4,650 14,936 -9,016 13,703 24 Official institutions 41,822 39,625 12,615 16,790 -364 -4,525 5,705 -915 2,651 12,615 25 Other foreign 36,815 93,927 1,088 14,592 26,806 -6,477 -1,055 15,851 -11,667 1,088 Oil-exporting countries 26 Middle East2 -38 3,075 -658 3,582 1,890 -50 -624 -826 -1,085 -658 27 0 2 0 0 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 BANKS1 Percent per year, averages of daily figures Rate on Mar. 31, 1996 Rate on Mar. 31, 1996 Country Country Month Month effective effective Austria.., 3.0 Dec. 1995 Germany . .. 3.0 Dec. 1995 Belgium. , 3.0 Dec. 1995 Italy 9.0 June 1995 Canada.. , 5,25 Mar. 1996 Japan .5 Sept. 1995 Denmark . 3.75 Feb. 1996 Netherlands . 2.75 Dec. 1995 France2 .. 3.8 Mar. 1996 Switzerland . 1.5 Dec. 1995 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 RATES1 Percent per year, averages of daily figures 1995 1996 TTyyppee oorr ccoouunnttrryy 11999933 11999944 11999955 Sept. Oct. Nov. Dec. Jan. Feb. Mar. 1 Eurodollars 3.18 4.63 5.93 5.74 5.81 5.75 5.64 5.40 5.14 5.28 2 United Kingdom 5.88 5.45 6.63 6.71 6.69 6.61 6.42 6.31 6.13 6.02 3 Canada 5.14 5.57 7.14 6.66 6.66 6.02 5.91 5.58 5.22 5.23 4 Germany 7.17 5.25 4.43 4.09 4.00 3.91 3.82 3.51 3.26 3.25 5 Switzerland 4.79 4.03 2.94 2.67 2.15 1.98 1.94 1.65 1.61 1.68 6 Netherlands 6.73 5.09 4.30 3.85 3.88 3.73 3.58 3.20 3.00 3.09 7 France 8.30 5.72 6.43 5.86 6.73 5.74 5.47 4.56 4.29 4.14 8 Italy 10.09 8.45 10.43 10.36 10.74 10.65 10.58 10.05 9.90 9.82 9 Belgium 8.10 5.65 4.73 4.20 4.14 3.87 3.74 3.47 3.23 3.25 10 Japan 2.96 2.24 1.20 .56 .51 .54 .52 .55 .61 .60 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 • May 1996 3.28 FOREIGN EXCHANGE RATES' Currency units per dollar except as noted 1995 1996 CCoouunnttrryy//ccuurrrreennccyy uunniitt 11999933 11999944 11999955 Oct. Nov. Dec. Jan. Feb. Mar. 1 Australia/dollar2 67.993 73.161 74.073 75.699 74.534 74.053 74.171 75.557 77.136 2 Austria/schilling 11.639 11.409 10.076 9.955 9.974 10.142 10.296 10.321 10.391 3 Belgium/franc 34.581 33.426 29.472 29.105 29.154 29.615 30.081 30.115 30.371 4 Canada/dollar 1.2902 1.3664 1.3725 1.3458 1.3534 1.3693 1.3669 1.3752 1.3656 5 China, P.R./yuan 5.7795 8.6404 8.3700 8.3353 8.3334 8.3350 8.3384 8.3338 8.3495 6 Denmark/krone 6.4863 6.3561 5.5999 5.4912 5.4923 5.5791 5.6618 5.6749 5.7074 7 Finland/markka 5.7251 5.2340 4.3763 4.2781 4.2489 4.3361 4.4510 4.5532 4.6066 8 France/franc 5.6669 5.5459 4.9864 4.9374 4.8882 4.9565 5.0117 5.0440 5.0583 9 Germany/deutsche mark 1.6545 1.6216 1.4321 1.4143 1.4173 1.4406 1.4635 1.4669 1.4776 10 Greece/drachma 229.64 242.50 231.68 232.65 234.16 238.06 240.91 242.21 241.54 11 Hong Kong/dollar 7.7357 7.7290 7.7357 7.7317 7.7338 7.7345 7.7329 7.7323 7.7325 12 India/rupee 31.291 31.394 32.418 34.656 34.710 34.966 35.812 36.595 34.485 13 Ireland/pound2 146.47 149.69 160.35 161.32 160.54 159.18 158.18 158.10 157.21 14 Italy/lira 1,573.41 1,611.49 1,629.45 1,605.69 1,592.67 1,593.88 1,584.87 1,570.00 1,562.43 15 Japan/yen 111.08 102.18 93.96 100.84 101.94 101.85 105.75 105.79 105.94 16 Malaysia/ringgit 2.5738 2.6237 2.5073 2.5324 2.5389 2.5399 2.5563 2.5487 2.5417 17 Netherlands/guilder 1.8585 1.8190 1.6044 1.5846 1.5877 1.6127 1.6388 1.6424 1.6540 18 New Zealand/dollar2 54.127 59.358 65.625 65.899 65.224 64.996 66.195 67.495 68.079 19 Norway/krone 7.1009 7.0553 6.3355 6.2397 6.2536 6.3579 6.4275 6.4103 6.4277 20 Portugal/escudo 161.08 165.93 149.88 148.94 148.68 151.03 151.90 152.49 152.93 21 Singapore/dollar 1.6158 1.5275 1.4171 1.4231 1.4128 1.4148 1.4211 1.4115 1.4095 22 South Africa/rand 3.2729 3.5526 3.6286 3.6502 3.6499 3.6632 3.6413 3.7420 3.9293 23 South Korea/won 805.75 806.93 772.82 767.20 769.78 771.31 787.13 780.12 781.31 24 Spain/peseta 127.48 133.88 124.64 122.51 121.81 122.53 123.38 123.65 124.39 25 Sri Lanka/rupee 48.211 49.170 51.047 52.539 53.199 53.808 53.874 53.716 53.748 26 Sweden/krona 7.7956 7.7161 7.1406 6.8301 6.6088 6.6393 6.7405 6.8775 6.7318 27 Switzerland/franc 1.4781 1.3667 1.1812 1.1453 1.1437 1.1631 1.1818 1.1967 1.1959 28 Taiwan/dollar 26.416 26.465 26.495 26.925 27.257 27.315 27.406 27.485 27.400 29 Thailand/baht 25.333 25.161 24.921 25.115 25.166 25.164 25.298 25.250 25.251 30 United Kingdom/pound2 150.16 153.19 157.85 157.79 156.25 154.05 152.88 153.60 152.71 MEMO 31 United States/dollar3 93.18 91.32 84.25 84.10 84.14 85.07 86.23 86.41 86.57 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 U.S. 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 May 1995 August 1995 A68 August 1995 November 1995 A68 November 1995 February 1996 A68 February 1996 May 1996 A68 Assets and liabilities of U.S. branches and agencies of foreign banks March 31, 1995 October 1995 A68 June 30, 1995 November 1995 A72 September 30, 1995 February 1996 A72 December 31, 1995 May 1996 A72 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 Special Tables • May 1996 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 5-9, 1996' Commercial and industrial loans Type o an f d l o m an a turity (t A ho m u lo o sa a u n n n d s t s o f o f ( A th v o e u r s a a g n e d s s iz o e f W m a a v e t e i u g r r a h i g t t e y e d 2 Wei L g o h a t n ed r ate (percent) s L ec o b u a y r n e s d Lo c a o u n m n s d m e m i r t a - de pat P io a n rt ic lo i- ans dollars) dollars) average collateral ment (percent) Days effective3 (percent) (percent) ALL BANKS 1 Overnight6 13,640,713 7,753 2 One month or less (excluding overnight) 13,851,955 1,871 6.37 21.5 63.0 5.8 3 Fixed rate 11,556,700 2,889 6.29 19.5 58.7 6.1 4 Floating rate 2,295,255 674 6.76 32.0 84.6 3.9 5 More than one month and less than one year 9,972,188 189 146 7.31 47.7 6 Fixed rate 4,910,574 259 126 6.49 35.1 12.2 7 Floating rate 5,061,614 149 165 8.10 59.9 5.6 8 Demand7 19,456,682 311 7.07 44.7 60.5 5.5 9 Fixed rate 8,792,514 1,672 5.79 15.9 49.0 7.7 10 Floating rate 10,664,167 186 8.12 68.5 70.0 3.6 11 Total short-term 56,921,538 457 6.67 31.7 65.7 12 Fixed rate (thousands of dollars) 38,900,501 1,298 27 6.08 17.9 60.6 5.3 13 1-99 354,339 16 127 9.77 84.2 47.6 4.5 14 100-499 509,988 216 102 7.60 68.6 77.8 7.9 15 500-999 627,405 694 61 7.03 45.4 78.6 11.3 16 1,000-4,999 5,624,317 2,399 36 6.68 35.7 73.4 5.6 17 5,000-9,999 5,370,005 6,645 34 6.27 19.7 62.9 7.4 18 10,000 or more 26,414,448 21,542 20 5.81 11.3 56.8 4.6 19 Floating rate (thousands of dollars) 18,021,037 191 119 7.94 61.5 76.6 4.2 20 1-99 1,833,124 26 164 9.67 80.5 86.1 1.5 21 100-499 3,561,980 199 154 9.10 73.8 87.6 5.4 22 500-999 1,537,083 671 150 8.55 66.5 90.1 7.0 23 1,000-4,999 3,960,005 1,892 119 8.10 58.6 86.4 4.8 24 5,000-9,999 1,519,985 6,626 7.13 42.2 82.4 8.6 25 10,000 or more 5,608,860 19,108 6.58 53.3 54.2 2.0 26 Total long-term 7,996,293 290 7.90 64.5 78.6 27 Fixed rate (thousands of dollars).. 2,201,220 193 7.90 68.1 58.6 10.1 28 1-99 198,295 20 9.79 93.8 29.1 .5 29 100-499 194,712 197 9.10 85.3 50.2 6.3 30 500-999 107,721 693 7.44 71.8 76.2 7.3 31 1,000 or more 1,700,492 5,039 7.57 62.8 61.9 11.9 32 Floating rate (thousands of dollars) 5,795,073 358 7.90 63.1 86.2 7.6 33 1-99 305,194 30 9.56 88.1 71.6 3.0 34 100-499 904,935 215 8.95 76.3 83.2 9.4 35 500-999 608,727 675 8.51 70.6 84.2 10.7 36 1,000 or more 3,976,217 4,390 7.44 57.1 88.3 7.0 Loan rate (percent) Days Effective Nominal LOANS MADE BELOW PRIME10 37 Overnight6 13,287,632 9,746 5.86 5.69 9.7 60.7 .4 38 One month or less (excluding overnight) . 13,233,783 4,327 17 6.23 6.05 19.2 62.2 5.7 39 More than one month and less than one year 6,693,269 711 135 6.27 6.12 32.4 85.8 10.3 40 Demand' 12,418,928 2,446 5.84 5.68 29.0 44.9 5.9 41 Total short-term 45,633,612 2,413 42 Fixed rate 37,464,802 3,908 5.95 5.78 15.5 60.3 5.3 43 Floating rate 8,168,810 876 6.36 6.19 46.4 61.8 3.0 44 Total long-term 4,295,927 45 Fixed rate 1,387,530 476 6.76 6.59 63.1 62.6 15.3 46 Floating rate .. . 2,908,397 1,196 6.67 6.48 57.2 86.1 4.3 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A69 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 5-9, 19961--Continued Commercial and industrial loans—Continued Weighted Loan rate (percent) Loans Loans made Amount of Average size average secured under Partici- Type o an f d l o m an a turity (thou lo sa an n s d s of (thousands of maturity2 Weighted by commit- pation loans dollars) dollars) average collateral ment (percent) Days effective3 (percent) (percent) LARGE BANKS 1 Overnight6 11,415,352 2 One month or less (excluding overnight) 10,629,994 4,311 6.31 18.1 63.1 4.3 3 Fixed rate 9,284,565 5,527 6.26 16.3 58.8 4.5 4 Floating rate 1,345,429 1,711 6.66 30.5 92.8 2.5 5 More than one month and less than one year 5,911,705 767 134 7.00 38.7 89.6 9.4 6 Fixed rate 3,148,029 2,608 109 6.38 28.6 90.9 11.4 7 Floating rate 2,763,676 425 161 7.70 50.3 88.2 7.0 8 Demand7 12,814,043 535 6.50 40.1 55.5 6.6 9 Fixed rate 6,791,434 5,158 5.49 12.5 47.9 9.8 10 Floating rate 6,022,609 266 7.63 71.3 64.2 3.1 11 Total short-term 40,771,093 1,155 6.36 25.6 64.5 12 Fixed rate (thousands of dollars) 30,639,379 5,689 22 5.97 14.2 61.2 4.8 13 1-99 17,217 27 133 8.34 73.7 73.5 5.2 14 100-499 227,503 253 84 7.31 56.3 80.9 8.5 15 500-999 390,403 699 53 6.93 40.3 83.3 9.2 16 1,000-4,999 3,980,516 2,374 33 6.62 31.9 71.4 4.9 17 5,000-9,999 4,153,493 6,646 33 6.25 18.8 62.2 7.1 18 10,000 or more 21,870,248 21,877 16 5.77 9.1 58.5 4.3 19 Floating rate (thousands of dollars) 10,131,713 339 114 7.52 60.1 74.6 4.1 20 1-99 613,178 32 149 9.45 76.4 90.4 1.3 21 100-499 1,614,338 204 151 8.97 71.5 92.2 3.7 2 2 2 3 5 1 0 ,0 0 0 - 0 9 - 9 4 9 , 999 2,0 7 3 7 6 5 , , 6 9 8 2 5 0 1, 6 9 6 3 3 0 1 1 1 45 6 7 8 . . 8 3 2 8 6 52 3 . . 9 1 9 9 2 2 . . 8 3 8 5 . . 2 8 24 5,000-9,999 927,082 6,611 78 6.98 38.4 91.0 5.4 25 10,000 or more 4,164,511 20,261 108 6.49 61.1 49.6 2.7 26 Total long-term 5,324,265 7.86 61.1 86.4 27 Fixed rate (thousands of dollars). . 1,395,880 1,764 7.70 61.0 66.0 14.5 28 1-99 9,623 32 8.90 90.3 63.3 9.4 29 100-499 60,114 267 8.36 74.2 84.6 12.4 30 500-999 54,384 686 7.27 70.5 82.5 2.3 31 1,000 or more 1,271,759 6,764 7.68 59.8 64.5 15.2 32 Floating rate (thousands of dollars) 3,928,385 728 7.92 61.2 93.6 8.1 33 1-99 81,005 43 9.20 83.6 88.2 4.2 34 100-499 533,589 234 8.90 72.7 87.9 10.0 35 500-999 386,093 688 8.53 65.8 93.7 10.3 36 1,000 or more 2,927,699 4,339 7.63 57.8 94.7 7.5 Loan rate (percent) Days Effective Nominal' LOANS MADE BELOW PRIME1" 37 Overnight6 11,177,782 11,145 5.85 5.68 7.8 62.0 .3 38 One month or less (excluding overnight) 10,400,816 5,392 17 6.25 6.07 17.2 63.1 4.3 39 More than one month and less than one year 4,425,262 2,593 123 6.26 6.10 26.9 88.7 9.0 40 Demand7 9,636,925 3,790 5.64 5.49 30.6 42.5 7.3 41 Total short-term 35,640,785 4,963 42 Fixed rate 30,025,511 6,632 5.91 5.75 12.9 60.6 4.9 43 Floating rate 5,615,274 2,116 6.24 6.07 51.9 59.0 2.0 44 Total long-term 2,867,846 2,675 6.53 9.2 45 Fixed rate 939,619 2,273 6.64 6.47 60.0 65.1 20.9 46 Floating rate .. . 1,928,228 2,928 6.76 6.56 58.1 96.7 3.5 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • May 1996 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 5-9, 1996'—Continued Commercial and industrial loans—Continued Weighted Loan rate (percent) Loans Loans made Amount of Average size average secured under Partici- Type o an f d l o m an a turity (thou lo sa an n s d s of (thousands of maturity2 Weighted by commit- pation loans dollars) dollars) average collateral ment (percent) Days effective3 (percent) (percent) OTHER BANKS 1 Overnight6 2,225,361 3,856 2 One month or less (excluding overnight) 3,221,961 652 6.58 32.9 62.7 10.6 3 Fixed rate 2,272,135 979 6.44 32.4 58.5 12.6 4 Floating rate 949,826 363 6.91 34.1 72.9 6.0 5 More than one month and less than one year 4,060,483 163 7.76 60.8 77.8 8.1 6 Fixed rate 1,762,545 156 6.68 46.7 68.2 13.6 7 Floating rate 2,297,939 169 8.58 71.5 85.2 3.8 8 Demand7 6,642,639 172 8.17 53.6 70.1 3.3 9 Fixed rate 2,001,081 508 6.81 27.1 53.1 .7 10 Floating rate 4,641,558 134 8.76 65.0 77.5 4.4 11 Total short-term 16,150,445 181 47.2 68.6 5.7 12 Fixed rate (thousands of dollars) 8,261,122 336 50 31.8 58.6 6.9 13 1-99 337,122 16 127 9.84 84.7 46.2 4.4 14 100-499 282,484 193 116 7.83 78.6 75.3 7.4 15 500-999 237,002 686 73 7.19 54.0 70.8 14.9 16 1,000-4,999 1,643,802 2,462 44 6.84 44.7 78.3 7.2 17 5,000-9,999 1,216,512 6,644 37 6.35 22.7 65.7 8.6 18 10,000 or more 4,544,200 20,064 44 6.01 21.7 48.9 6.1 19 Floating rate (thousands of dollars) 7,889,323 122 125 8.48 63.2 79.2 4.4 20 1-99 1,219,946 23 168 9.78 82.6 84.0 1.7 21 100-499 1,947,642 196 155 9.21 75.7 83.8 6.9 22 500-999 761,163 680 155 8.73 70.1 87.4 5.7 23 1,000-4,999 1,923,321 1,854 125 8.40 64.6 80.2 3.7 24 5,000-9,999 592,903 6,650 95 7.37 48.0 68.9 13.5 25 10,000 or more 1,444,349 16,415 60 6.86 30.7 67.3 .0 26 Total long-term 2,672,028 125 7.98 71.2 63.1 5.3 27 Fixed rate (thousands of dollars). . 805,340 76 8.26 80.3 45.7 2.5 28 1-99 188,672 20 9.84 94.0 27.3 .1 29 100-499 134,598 176 9.43 90.3 34.9 3.5 30 500-999 53,337 701 7.61 73.2 69.8 12.4 31 1,000 or more 428,733 2,869 7.27 71.9 54.3 2.0 32 Floating rate (thousands of dollars) 1,866,688 173 7.86 67.2 70.7 6.5 33 1-99 224,189 27 9.69 89.8 65.6 2.6 34 100-499 371,346 193 9.04 81.5 76.5 8.4 35 500-999 222,634 655 8.47 78.9 67.8 11.5 36 1,000 or more 1,048,518 4,537 6.92 54.9 70.2 5.7 Loan rate (percent) Days Effective3 Nominal1 LOANS MADE BELOW PRIME10 37 Overnight6 2,109,850 5,853 5.91 5.74 19.7 53.9 1.5 38 One month or less (excluding overnight) . 2,832,967 2,508 16 6.14 5.97 26.5 59.2 10.8 39 More than one month and less than one year 2,268,006 158 6.30 6.14 43.1 80.0 12.7 40 Demand' 2,782,003 6.53 6.35 23.5 53.1 1.0 41 Total short-term 9,992,826 852 42 Fixed rate 7,439,291 1,471 6.10 5.94 25.8 58.8 6.9 43 Floating rate 2,553,536 383 6.63 6.45 34.2 67.8 5.4 44 Total long-term 1,428,081 334 6.66 6.49 45 Fixed rate 447,911 179 7.01 6.84 69.6 57.3 3.5 46 Floating rate .. . 980,169 553 6.50 6.32 55.4 65.2 6.0 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A71 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 5-9, 1996'—Continued NOTES 1. The survey of terms of bank lending to business collects data on gross loan extensions 4. The chances are about two out of three that the average rate shown would differ by less made during the first full business week in the mid-month of each quarter by a sample of 340 than the amount of the standard error from the average rate that would be found by a complete commercial banks of all sizes. A sample of 250 banks reports loans to farmers. The sample survey of lending at all banks. data are blown up to estimate the lending terms at all insured commercial banks during that 5. The rate used to price the largest dollar volume of loans. Base pricing rates include the week. The estimated terms of bank lending are not intended for use in collecting the terms of prime rate (sometimes referred to as a bank's "basic" or "reference" rate); the federal funds loans extended over the entire quarter or residing in the portfolios of those banks. Construc- rate; domestic money market rates other than the federal funds rate; foreign money market tion and land development loans include both unsecured loans and loans secured by real rates; and other base rates not included in the foregoing classifications. estate. Thus, some of the construction and land development loans would be reported on the 6. Overnight loans mature on the following business day. statement of condition as real estate loans and the remainder as business loans. Mortgage 7. Demand loans have no stated date of maturity. loans, purchased loans, foreign loans, and loans of less that $1,000 are excluded from the 8. Nominal (not compounded) annual interest rate calculated from the stated rate and other survey. As of September 30, 1990 assets of most of the large banks were at least $7.0 billion. terms of the loans and weighted by loan size. For all insured banks, total assets averaged $275 million. 9. Calculated by weighting the prime rate reported by each bank by the volume of loans 2. Average maturities are weighted by loan size; excludes demand loans. reported by that bank, summing the results, and then averaging over all reporting banks. 3. Effective (compounded) annual interest rate calculated from the stated rate and other 10. The proportion of loans made at rates below the prime may vary substantially from the terms of the loans and weighted by loan size. proportion of such loans outstanding in banks' portfolios. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • May 1996 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 1995'—Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm in I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 inc T I l B o u F t d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s I Total assets4 761,508 301,212 589,617 248,316 70,469 27,970 58,733 15,629 2 Claims on nonrelated parties 682,750 149,052 528,166 123,637 65,649 11,606 54.058 8,624 3 Cash and balances due from depository institutions 120.704 89,843 108,043 78,871 4,210 3,570 6,859 6,408 4 Cash items in process of collection and unposted debits 3,190 0 3,011 0 19 0 106 0 3 Currency and coin (U.S. and foreign) 23 n.a. 16 n.a. I n.a. I n.a. 6 Balances with depository institutions in United States 74,524 52.309 66,364 45,395 33,,000000 2.422 44,,660077 44,,229911 / U.S. branches and agencies of other foreign banks (including IBFs) 69,780 50,540 62,312 43,726 2,582 2,322 4,533 4,291 Other depository institutions in United States (including IBFs).... 4,744 1.769 4,052 1,669 419 100 74 0 y Balances with banks in foreign countries and with foreign central banks 42.263 37,533 38,026 33,476 1.158 1,148 2,138 2,118 10 Foreign branches of U.S. banks 2,169 1,558 1,937 1,352 3 3 155 155 u Other banks in foreign countries and foreign central banks 40.094 35,976 36.090 32,124 1,156 1,145 1,983 1,963 12 Balances with Federal Reserve Banks 704 n.a. 626 n.a. 31 n.a. 7 n.a. 13 Total securities and loans 413,627 48,541 286,090 35,759 55,676 6,958 39,997 1,736 14 Total securities, book value 94,934 10,205 87,142 8,978 4,275 624 2,910 578 1.1 U.S. Treasury 26.379 n.a. 25.242 n.a. 611 n.a. 406 n.a. 16 Obligations of U.S. government agencies and corporations 25,389 n.a. 24,776 n.a. 416 n.a. 52 n.a. 1/ Other bonds, notes, debentures, and corporate stock (including state and local securities) 43,165 10,205 37,124 8,978 3,248 624 2,452 578 18 Securities of foreign governmental units 14,294 4,493 12,948 3,965 701 272 547 230 19 All Other 28.872 5.712 24,176 5.013 2,547 352 1,906 347 20 Federal funds sold and securities purchased under agreements to resell 53.260 5,994 49.800 5,252 1,366 514 1,478 190 21 U.S. branches and agencies of other foreign banks 11,621 3,786 10,536 3,407 564 329 252 50 22 Commercial banks in United States 13.906 92 12.753 87 483 0 359 0 '23 Other 27.734 2,117 26,511 1,759 318 186 867 140 24 Total loans, gross 318.836 38,343 199,040 26,785 51,440 6,336 37,091 1,158 25 LESS: Unearned income on loans 142 7 93 4 39 2 4 0 26 EQUALS: Loans, net 318.693 38,336 198.948 26,781 51.401 6,334 37,087 1,158 Total loans, gross, h\ category 21 Real estate loans 34,397 204 20,499 52 9,738 151 2,154 0 28 Loans to depository institutions 34.385 22,403 22,799 14,550 6,241 4,612 879 576 29 Commercial banks in United States (including IBFs) 13.283 7,281 7,767 3.794 4,611 3,119 479 303 30 U.S. branches and agencies of other foreign banks 12.091 7,031 6,903 3,592 4,503 3,089 393 289 31 Other commercial banks in United States 1.192 249 864 202 108 30 86 14 32 Other depository institutions in United States (including IBFs) 73 0 68 0 5 0 0 0 a Banks in foreign countries 21,030 15,122 14,964 10,756 1,625 1,493 400 273 34 Foreign branches of U.S. banks 443 338 364 315 20 20 0 0 35 Other banks in foreign countries 20.586 14,784 14,600 10,441 1,605 1,473 400 273 36 Loans to other financial institutions 32,227 784 25,619 481 2,229 55 3,546 205 37 Commercial and industrial loans 197.330 12,640 112,798 9,578 32,240 1,464 28,881 366 38 U.S. addressees (domicile) 171.229 46 93,922 14 29,464 28 27,672 1 39 Non-U.S. addressees (domicile) 26,102 12,595 18,876 9,564 2,777 1,437 1,209 366 40 Acceptances of other banks 957 84 476 76 297 0 124 0 41 U.S. banks 113 2 85 0 11 0 0 0 42 Foreign banks 844 82 391 76 286 0 124 0 43 Loans to foreign governments and official institutions (including foreign central banks) 3.456 1,918 2,956 1,765 173 53 94 11 44 Loans for purchasing or carrying securities (secured and unsecured) . . . 8,886 146 8,677 146 87 0 78 0 45 All other loans 5.402 136 3,425 107 435 0 1,332 0 46 Assets held in trading accounts 47.202 488 44,035 401 542 86 2,622 0 4/ All other assets 47.957 4,187 40,198 3,354 3,854 478 3,103 289 48 Customers' liabilities on acceptances outstanding 9.551 n.a. 6,662 n.a. 2,030 n.a. 503 n.a. 49 U.S. addressees (domicile) 7,087 n.a. 4.684 n.a. 1,879 n.a. 354 n.a. 50 Non-U.S. addressees (domicile) 2.464 n.a. 1,978 n.a. 151 n.a. 149 n.a. 51 Other assets including other claims on nonrelated parties 38,406 4,187 33,535 3.354 1,824 478 2,600 289 52 Net due from related depository institutions5 78.758 152,160 61,451 124,679 4.820 16,364 4,675 7,004 53 Net due from head office and other related depository institutions5. . . 78.758 n.a. 61,451 n.a. 44,,882200 n.a. 44,,667755 n.a. 54 Net due from establishing entity, head offices, and other related depository institutions5 n.a. 152,160 n.a. 124.679 n.a. 16,364 n.a. 7,004 55 Total liabilities4 761,508 301,212 589,617 248,316 70,469 27,970 58,733 15,629 56 Liabilities to nonrelated parties 630.030 285,493 531.300 235,869 45,193 27,519 35,243 13,932 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A73 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 1995'—Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm ex I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 exc T IB l o u F t d a s i l n g I o B n F ly s exc T IB l o u F t d a s i l n g I o B n F ly s exc T IB l o u F t d a s i l n g I o B n F ly s 57 Total deposits and credit balances 161,662 214,291 137,059 193,848 5,479 5,769 10 810 7,666 58 Individuals, partnerships, and corporations 111,785 15,386 91,138 10,407 4,498 599 9,389 194 59 U.S. addressees (domicile) 99,249 170 84,356 170 3,045 0 8,534 0 60 Non-U.S. addressees (domicile) 12,536 15,216 6,782 10,237 1,452 599 855 194 61 Commercial banks in United States (including IBFs) 27,644 49,966 25,103 46,224 88 1,649 1,154 1,836 62 U.S. branches and agencies of other foreign banks 16,514 46,550 15,048 43,303 84 1,487 531 1,526 63 Other commercial banks in United States 11,130 3,417 10,055 2,921 304 162 623 310 64 Banks in foreign countries 8 320 119,645 7,779 111,937 241 2,442 86 3,334 65 Foreign branches of U.S. banks 2,575 4,680 2,474 4,204 50 120 0 291 66 Other banks in foreign countries 5,745 114,965 5,305 107,733 191 2,322 86 3,043 67 Foreign governments and official institutions (including foreign central banks) 3,945 29,210 3,558 25,196 198 1,079 13 2,301 68 All other deposits and credit balances 9,609 85 9,177 84 26 0 159 1 69 Certified and official checks 359 304 28 9 70 Transaction accounts and credit balances (excluding IBFs) 8,783 7,028 429 368 71 Individuals, partnerships, and corporations 6,815 5,394 330 355 72 U.S. addressees (domicile) 4,890 4,212 249 323 73 Non-U.S. addressees (domicile) 1,925 1,182 82 32 74 Commercial banks in United States (including IBFs) 98 92 2 0 75 U.S. branches and agencies of other foreign banks 51 49 0 0 76 Other commercial banks in United States 47 43 1 0 77 Banks in foreign countries 905 720 40 1 78 Foreign branches of U.S. banks 2 1 0 0 79 Other banks in foreign countries 903 719 40 1 80 Foreign governments and official institutions (including foreign central banks) 443 388 3 2 81 All other deposits and credit balances 164 130 26 2 82 Certified and official checks 359 304 28 9 83 Demand deposits (included in transaction accounts and credit balances) 8,239 6,812 337 356 84 Individuals, partnerships, and corporations 6,389 5,251 259 342 85 U.S. addressees (domicile) 4,723 4,151 194 310 86 Non-U.S. addressees (domicile) 1,666 1,100 65 32 87 Commercial banks in United States (including IBFs) 94 89 1 0 88 U.S. branches and agencies of other foreign banks 50 n.a. 49 n a. 0 n.a. 0 n a. 89 Other commercial banks in United States 43 40 0 0 90 Banks in foreign countries 882 699 39 1 91 Foreign branches of U.S. banks 2 1 0 0 92 Other banks in foreign countries 880 698 39 1 93 Foreign governments and official institutions (including foreign central banks) 413 382 3 2 94 All other deposits and credit balances 103 87 8 1 95 Certified and official checks 359 304 28 9 96 Nontransaction accounts (including MMDAs, excluding IBFs) 152,879 130,031 5,051 10,442 97 Individuals, partnerships, and corporations 104,970 85,744 4,168 9,035 98 U.S. addressees (domicile) 94,360 8C 144 2,797 8,212 99 Non-U.S. addressees (domicile) 10,611 5,600 1,371 823 100 Commercial banks in United States (including IBFs) 27,546 25,011 487 1,154 101 U.S. branches and agencies of other foreign barks 16,463 14,999 184 531 102 Other commercial banks in United States 11,083 10,012 303 622 103 Banks in foreign countries 7,415 7,059 201 85 104 Foreign branches of U.S. banks 2,573 2,473 50 0 105 Other banks in foreign countries 4,842 4,586 151 85 106 Foreign governments and official institutions (including foreign central banks) 3,502 3,170 195 11 107 All other deposits and credit balances 9,445 9,047 0 158 108 IBF deposit liabilities 214,291 193,848 5,769 7,666 109 Individuals, partnerships, and corporations 15,386 10,407 599 194 110 U.S. addressees (domicile) 170 170 0 0 111 Non-U.S. addressees (domicile) 15,216 10,237 599 194 112 Commercial banks in United States (including IBFs) 49,966 46,224 1,649 1,836 113 U.S. branches and agencies of other foreign banks 46,550 43,303 1,487 1,526 114 Other commercial banks in United States n a. 3.417 n.a. 2,921 n a. 162 n.a. 310 115 Banks in foreign countries 119,645 111,937 2,442 3,334 116 Foreign branches of U.S. banks 4,680 4,204 120 291 11/ Other banks in foreign countries 114,965 107.733 2.322 3.043 118 Foreign governments and official institutions (including foreign central banks) 29.210 25.196 1.079 2.301 119 All other deposits and credit balances 85 84 0 1 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • May 1996 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 1995'—Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm in I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 inc T I l B o u t F d a i s l n g I o B n F ly s inc T I l B o u t F d a i s l n g I o B n F ly s inc T I l B o u t F d a i s l n g I o B n F ly s 1 ?0 Federal funds purchased and securities sold under agreements to 75,448 18,i 48 66,761 15,288 5,789 2,876 22,,552255 643 121 U.S. branches and agencies of other foreign banks 11,235 4,346 7.849 2,720 2,532 1,469 733 123 17? Other commercial banks in United States 6,804 346 4,169 310 1,824 27 750 10 173 Other 57,409 14,257 54,743 12,259 1,434 1,381 1,042 510 124 Other borrowed money 92,884 47,212 56,043 22,420 24,614 18,406 10,338 5,424 125 Owed to nonrelated commercial banks in United States (including IBFs) 27,364 12,637 13,369 4,413 10,649 6,751 2,301 1,110 126 Owed to U.S. offices of nonrelated U.S. banks 8,147 1,179 5,312 335 1,885 713 557 102 177 Owed to U.S. branches and agencies of nonrelated foreign banks 19,218 11,458 8,057 4,078 8,764 6,038 1,744 1,008 128 Owed to nonrelated banks in foreign countries 35,608 32,936 19,544 17,102 11,373 11,238 4,020 3,995 179 Owed to foreign branches of nonrelated U.S. banks 1,781 1,628 585 518 959 929 206 181 130 Owed to foreign offices of nonrelated foreign banks 33,827 31,308 18,960 16,584 10,414 10,309 3,814 3,814 131 Owed to others 29,912 1,639 23,130 904 2,592 417 4,016 318 132 All other liabilities 85,744 5,041 77,589 4,314 3,542 467 3,904 200 133 Branch or agency liability on acceptances executed and outstanding 9,932 n. a. 66,,999999 n. a. 22,,002211 n. a. 550077 n.a. 134 Trading liabilities 41,712 116 40,091 69 429 47 1,172 0 135 Other liabilities to nonrelated parties 34,100 4,925 30,500 4,245 1,092 421 2,226 200 136 Net due to related depository institutions5 131,478 15,719 58,317 12,447 25,275 452 23,489 1,697 137 Net owed to head office and other related depository institutions'. . . 131,478 n a. 58,317 n.a. 25,275 n a. 23,489 n.a. 138 Net owed to establishing entity, head office, and other related depository institutions5 n.a. 15,719 n.a. 12,447 n.a. 452 n.a. 1,697 MEMO 134 Non-interest-bearing balances with commercial banks in United States 1,252 0 1,018 0 107 0 43 0 140 Holding of commercial paper included in total loans 832 772 6 35 141 Holding of own acceptances included in commercial and industrial loans 4,957 3,735 1,016 110088 142 Commercial and industrial loans with remaining maturity of one year or less 115,255 63,756 20,684 17,639 143 Predetermined interest rates 68,469 n.a. 38,342 n.a. 11,498 n.a. 12,578 n.a. 144 Floating interest rates 46,785 25,414 9,186 5,062 145 Commercial and industrial loans with remaining maturity of more than one year 82,076 49,042 11,557 11,242 146 Predetermined interest rates 19,219 11,774 2,480 3,392 147 Floating interest rates 62,857 37,267 9,076 7,850 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A75 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 1995'—Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm ex I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 exc T IB l o u F t d a s i l n g I o B n F ly s exc T I l B o u F t d a s i l n g I o B n F ly s exc T IB l o u F t d a s i l n g I o B n F ly s 111144448888 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ooooffff I 1 1 1 nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddiiiinnnngggg IIIIBBBBFFFFssss 155,853 133,579 5,320 10,577 111144449999 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 119,470 101,917 3,717 8,353 111155550000 OOOOtttthhhheeeerrrr ttttiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 111155551111 TTTTiiiimmmmeeee CCCC oooorrrr DDDD mmmm ssss oooo iiiinnnn rrrreeee ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 28,789 n1.a. 25,118 n * .a . 1,005 nJ.a. 1,881 n1.a. wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss 7,594 6,544 598 343 All states2 New York California Illinois inc T l o u t d a i l n g IBFs inc T l o u t d a i l n g IBFs inc T l o u t d a i l n g IBFs inc T l o u t d a i l n g IBFs IBFs only IBFs only IBFs only IBFs only 111155552222 MMMMaaaarrrrkkkkeeeetttt vvvvaaaalllluuuueeee ooooffff sssseeeeccccuuuurrrriiiittttiiiieeeessss hhhheeeelllldddd 0 0 0 0 0 0 0 0 111155553333 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 51,290 n.a. 25,799 n.a. 18,574 n.a. 5,735 n.a. 111155554444 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd6666 526 0 251 0 119 0 47 0 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, "Report of either because the item is not an eligible IBF asset or liability or because that level of detail is Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks." The form was first not reported for IBFs. From December 1981 through September 1985, IBF data were used for reporting data as of June 30, 1980, and was revised as of December 31, 1985. From included in all applicable items reported. November 1972 through May 1980, U.S. branches and agencies of foreign banks had filed a 4. Total assets and total liabilities include net balances, if any, due from or owed to related monthly FR 886a report. Aggregate data from that report were available through the Federal banking institutions in the United States and in foreign countries (see note 5). On the former Reserve monthly statistical release G.l 1, last issued on July 10,1980. Data in this table and in monthly branch and agency report, available through the G.ll monthly statistical release, the G.l 1 tables are not strictly comparable because of differences in reporting panels and in gross balances were included in total assets and total liabilities. Therefore, total asset and total definitions of balance sheet items. liability figures in this table are not comparable to those in the G.l 1 tables. 2. Includes the District of Columbia. 5. Related depository institutions includes the foreign head office and other U.S. and 3. Effective December 1981, the Federal Reserve Board amended Regulations D and Q to foreign branches and agencies of a bank, a bank's parent holding company, and majoritypermit banking offices located in the United States to operate international banking facilities owned banking subsidiaries of the bank and of its parent holding company (including (IBFs). Since December 31, 1985, data for IBFs have been reported in a separate column. subsidiaries owned both directly and indirectly). These data are either included in or excluded from the total columns as indicated in the 6. In some cases two or more offices of a foreign bank within the same metropolitan area headings. The notation "n.a." indicates that no IBF data have been reported for that item, file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Index to Statistical Tables References are to pages A3-A75 although the prefix 'A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Deposits—Continued Agricultural loans, commercial banks, 21, 22 Banks, by classes, 4, 18-23 Assets and liabilities (See also Foreigners) Federal Reserve Banks, 5,11 Banks, by classes, 18-23 Interest rates, 16 Domestic finance companies, 36 Turnover, 17 Federal Reserve Banks, 11 Discount rates at Reserve Banks and at foreign central banks and Financial institutions, 28 foreign countries (See Interest rates) Foreign banks, U.S. branches and agencies, 23, 72-75 Discounts and advances by Reserve Banks (See Loans) Automobiles Dividends, corporate, 35 Consumer installment credit, 39 Production, 47, 48 EMPLOYMENT, 45 Eurodollars, 26 BANKERS acceptances, 11, 12, 21-24, 26 FARM mortgage loans, 38 Bankers balances, 18-23, 72-75. (See also Foreigners) Federal agency obligations, 5, 10, 11, 12, 31, 32 Bonds (See also U.S. government securities) Federal credit agencies, 33 New issues, 34 Federal finance Rates, 26 Debt subject to statutory limitation, and types and ownership Branch banks, 23 of gross debt, 30 Business activity, nonfinancial, 45 Receipts and outlays, 28, 29 Business loans (See Commercial and industrial loans) Treasury financing of surplus, or deficit, 28 Treasury operating balance, 28 CAPACITY utilization, 46 Federal Financing Bank, 33 Capital accounts Federal funds, 7, 21, 22, 23, 26, 28 Banks, by classes, 18 Federal Home Loan Banks, 33 Federal Reserve Banks, 11 Federal Home Loan Mortgage Corporation, 33, 37, 38 Central banks, discount rates, 65 Federal Housing Administration, 33, 37, 38 Certificates of deposit, 26 Federal Land Banks, 38 Commercial and industrial loans Federal National Mortgage Association, 33, 37, 38 Commercial banks, 21, 22 Federal Reserve Banks Weekly reporting banks, 21-23 Condition statement, 11 Commercial banks Discount rates (See Interest rates) Assets and liabilities, 18-23, 68-71 U.S. government securities held, 5, 11, 12, 30 Commercial and industrial loans, 18-23 Federal Reserve credit, 5,6, 11, 12 Consumer loans held, by type and terms, 39 Federal Reserve notes, 11 Deposit interest rates of insured, 16 Federally sponsored credit agencies, 33 Loans sold outright, 22 Finance companies Real estate mortgages held, by holder and property, 38 Assets and liabilities, 36 Terms of lending, 68-71 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 Consumption expenditures, 52, 53 agencies, 22, 23, 72-75 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 INCOME, personal and national, 45, 51, 52 Reserves and related items, 4, 5, 6, 13 Industrial production, 45, 47 Deposits (See also specific types) Installment loans, 39 Banks, by classes, 4, 18—23 Insurance companies, 30, 38 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 Interest rates Reserve requirements, 9 Bonds, 26 Reserves Commercial banks, 68-71 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 Thrift institutions, 4. (See also Credit unions and Savings Reserve requirements, 9 institutions Mining production, 48 Time and savings deposits, 4, 14, 16, 18-23 Mobile homes shipped, 49 Trade, foreign, 54 Monetary and credit aggregates, 4, 13 Treasury cash, Treasury currency, 5 Money and capital market rates, 26 Treasury deposits, 5, 11, 28 Money stock measures and components, 4, 14 Mortgages (See Real estate loans) Treasury operating balance, 28 Mutual funds, 35 UNEMPLOYMENT, 45 U.S. government balances Mutual savings banks (See Thrift institutions) Commercial bank holdings, 18-23 Treasury deposits at Reserve Banks, 5, 11, 28 NATIONAL defense outlays, 29 U.S. government securities National income, 51 Bank holdings, 18-23, 30 Dealer transactions, positions, and financing, 32 OPEN market transactions, 10 Federal Reserve Bank holdings, 5, 11, 12, 30 Foreign and international holdings and PERSONAL income, 52 transactions, 11,30, 64 Prices Open market transactions, 10 Consumer and producer, 45, 50 Outstanding, by type and holder, 30, 31 Stock market, 27 Rates, 26 Prime rate, 25 U.S. international transactions, 53-66 Producer prices, 45, 50 Utilities, production, 48 Production, 45, 47 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 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman 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 LARRY J. PROMISEL, Senior Associate Director DONALD J. WINN, Assistant to the Board THEODORE E. ALLISON, Assistant to the Board for Federal CHARLES J. SIEGMAN, Senior Associate Director Reserve System Affairs DALE W. HENDERSON, Associate Director LYNN S. FOX, Deputy Congressional Liaison DAVID H. HOWARD, Senior Adviser WINTHROP P. HAMBLEY, Special Assistant to the Board DONALD B. ADAMS, Assistant Director BOB STAHLY MOORE, Special Assistant to the Board THOMAS A. CONNORS, Assistant Director DIANE E. WERNEKE, Special Assistant to the Board PETER HOOPER III, Assistant Director PORTIA W. THOMPSON, Equal Employment Opportunity KAREN H. JOHNSON, Assistant Director Programs Adviser CATHERINE L. MANN, Assistant Director RALPH W. SMITH, JR., Assistant Director LEGAL DIVISION DIVISION OF RESEARCH AND STATISTICS J. VIRGIL MATTINGLY, JR., General Counsel 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 CHARLES S. STRUCKMEYER, Assistant Director DIVISION OF BANKING 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 BRIAN F. MADIGAN, Associate Director HOWARD A. AMER, Assistant Director RICHARD D. PORTER, Deputy Associate Director GERALD A. EDWARDS, JR., Assistant Director STEPHEN M. HOFFMAN, JR., Assistant Director VINCENT R. REINHART, 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 RHOGER H PUGH, Assistant Director AND COMMUNITY AFFAIRS SIDNEY M. SUSSAN, Assistant Director GRIFFITH L. GARWOOD, Director MOLLY S. WASSOM, Assistant Director GLENN E. LONEY, Associate Director WILLIAM SCHNEIDER, Project Director, DOLORES S. SMITH, Associate Director National Information Center MAUREEN P. ENGLISH, Assistant Director IRENE SHAWN MCNULTY, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A79 SUSAN M. PHILLIPS JANET L. YELLEN OFFICE OF DIVISION OF RESERVE BANK OPERATIONS STAFF DIRECTOR FOR MANAGEMENT AND PA YMENT SYSTEMS S. DAVID FROST, Staff Director CLYDE H. FARNSWORTH, JR., Director SHEILA CLARK, EEO Programs Director DAVID L. ROBINSON, Deputy Director (Finance and Control) LOUISE L. ROSEMAN, Associate Director DIVISION OF HUMAN RESOURCES JACK DENNIS, JR., Assistant Director MANAGEMENT EARL G. HAMILTON, Assistant Director JEFFREY C. MARQUARDT, Assistant Director DAVID L. SHANNON, Director JOHN H. PARRISH, Assistant Director JOHN R. WEIS, Associate 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

A80 Federal Reserve Bulletin • May 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 VACANCY, 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

A81 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 LILY K. YAO, Honolulu, Hawaii EUGENE I. LEHRMANN, Madison, Wisconsin 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

A82 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated MS-127, Board of Governors of the Federal Reserve System, monthly. (Requests must be prepaid.) Washington, DC 20551 or telephone (202) 452-3244 or FAX Consumer and Community Affairs Handbook. $75.00 per year. (202) 728-5886. When a charge is indicated, payment should Monetary Policy and Reserve Requirements Handbook. $75.00 accompany request and be made payable to the Board of Gover- per year. nors 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. BOOKS AND MISCELLANEOUS PUBLICATIONS Rates for subscribers outside the United States are as follows THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. and include additional air mail costs: 1994. 157 pp. Federal Reserve Regulatory Service, $250.00 per year. ANNUAL REPORT. Each Handbook, $90.00 per year. ANNUAL REPORT: BUDGET REVIEW, 1994-95. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or $2.50 COUNTRY MODEL, May 1984. 590 pp. $14.50 each. each in the United States, its possessions, Canada, and INDUSTRIAL PRODUCTION —1986 EDITION. December 1986. Mexico. Elsewhere, $35.00 per year or $3.00 each. 440 pp. $9.00 each. ANNUAL STATISTICAL DIGEST: period covered, release date, num- FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. ber of pages, and price. December 1986. 264 pp. $10.00 each. 1981 October 1982 239 pp. $ 6.50 FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- 1982 December 1983 266 pp. $ 7.50 SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1983 October 1984 264 pp. $11.50 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 SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF Federal Reserve Bank Board of Directors 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

A83 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 to be added to the mailing list for the series may be sent to 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by Publications Services. James T. Fergus and John L. Goodman, Jr. July 1993. 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. 21pp. 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

A84 Maps of the Federal Reserve System 1 B B M B M F C G *^ ^ BOCTON MINNEAPOLIS • wmmmmmsmmmrnm^ms liliiiii ii I I I IK S V MH 1 ^ ^ • NEW YORK CHICAGO • 12 CLEVELAND PSLADELPHIA • SAN FRANCISCO 10 4 $ KANSAS CITY • G RICHMOND ST. LOUIS G 5 liiiillliliiiii ifflliilllSf I ^ATLANTA U • DALLAS ALASKA HAWAII f! 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

A85 1-A 2-B 3-C 4-D 5-E BavltiimjoLre M"D i* A VT / • wv NH Buffalo nc / •Cincinnati •Charlotte HA / cr ^RI BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H •Nashville MJ Birmingham W| Detroit* Louisville IIAA U^ • TN LA Jacksonville •Memphis A New Orleans JFIR IN Li Miami ATLANTA CHICAGO ST. LOUIS 9-1 m MINNEAPOLIS 10-J 12-L wy 1 NB CO Omaha* • Defy* •WA / ^SEATTTE / MM. 1 Oklahotra City Portland m OR ) KANSAS CITY / m NV"7 11-K • • * ) S alt Lake City ANPFTTE HAWAII * AZ DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02106 Jerome H. Grossman Cathy E. Minehan William C. Brainard Paul M. Connolly NEW YORK* 10045 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 DanM. 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. Thorn Harold L. Shewmaker DALLAS 75201 Cece Smith Robert D. McTeer, Jr. Roger R. Hemminghaus Helen E. Holcomb 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 vacant Portland 97208 Ross R. Runkel Raymond H. Laurence Salt Lake City 84125 Gerald R. Sherratt Andrea P. Wolcott Seattle 98124 George F. Russell, Jr. Gordon Werkema1 *Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; East Rutherford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; Milwaukee, Wisconsin 53202; and Peoria, Illinois 61607. 1. Senior Vice President. 2. Assistant Vice President. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications of Interest FEDERAL RESERVE CONSUMER CREDIT PUBLICATIONS The Federal Reserve Board publishes a series of 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. Business Credit for Women, Minorities, and Small Businesses SHOP The Card You Pick Can Save You Money Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications of Interest FEDERAL RESERVE REGULATORY SERVICE To promote public understanding of its regulatory 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