Federal Reserve Bulletin, 1996-12

VOLUME 82 • NUMBER 12 • DECEMBER 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 1077 DISTRIBUTION OF CREDIT RISK ber. The utilization of industrial capacity fell AMONG PROVIDERS OF MORTGAGES 0.7 percentage point, to 82.7 percent, its lowest TO LOWER-INCOME AND MINORITY level since March. HOMEBUYERS 1112 ANNOUNCEMENTS Which institutions bear the credit risk for mortgage lending to lower-income and minority Appointment of a committee of senior Fedborrowers and in lower-income and predomi- eral Reserve officials to review the Federal nantly minority neighborhoods? In seeking to Reserve's participation in payment services. answer those questions, the authors went Results of an independent audit of the Los beyond looking at mortgage credit risk in terms Angeles Branch. of numbers or amounts of loans and developed measures based on factors that affect the riski- Approval of the use of certain preferred stock ness of loans, including loan-to-value ratios instruments in tier 1 capital. and associated default and loss severity rates. Amendments to ease firewall restrictions on In 1995, a nonprofit government mortgage section 20 subsidiaries. insurer, the Federal Housing Administration, was the major bearer of credit risk for mort- Approval of an expansion of Fedwire operating gage lending to these groups. The amount of hours. credit risk borne by the profit-seeking origina- Interim rule and proposal regarding amendtors, insurers, and purchasers that finance conments to Regulation Y to comply with proviventional mortgages was small in comparison, sions of the Economic Growth and Regulatory and the risk was widely distributed among Paperwork Act. different types of institutions. Availability of revised lists of over-the-counter stocks and of foreign stocks subject to margin 1103 TREASURY AND FEDERAL RESERVE regulations. FOREIGN EXCHANGE OPERATIONS During the July-September 1996 quarter, the 1115 LEGAL DEVELOPMENTS dollar appreciated 1.6 percent against the Japa- Various bank holding company, bank service nese yen, 0.1 percent against the German mark, corporation, and bank merger orders; and pendand 0.1 percent on a trade-weighted basis ing cases. against currencies of the other Group of Ten countries. The U.S. monetary authorities did AI FINANCIAL AND BUSINESS STATISTICS not undertake any intervention operations in the foreign exchange market during the quarter. These tables reflect data available The U.S. Treasury's Exchange Stabilization as of October 29, 1996. Fund (ESF) received a $7 billion repayment from the United Mexican States related to A3 GUIDE TO TABULAR PRESENTATION drawings by Mexico under the medium-term A4 Domestic Financial Statistics swap facility with the ESF A42 Domestic Nonfinancial Statistics A50 International Statistics 1108 INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION FOR OCTOBER 1996 A63 GUIDE TO STATISTICAL RELEASES AND Industrial production decreased 0.5 percent in SPECIAL TABLES October, to 126.6 percent of its 1987 average, after a revised gain of 0.3 percent in Septem- A64 INDEX TO STATISTICAL TABLES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 BOARD OF GOVERNORS AND STAFF A74 MAPS OF THE FEDERAL RESERVE SYSTEM A68 FEDERAL OPEN MARKET COMMITTEE AND A76 FEDERAL RESERVE BANKS, BRANCHES, STAFF; ADVISORY COUNCILS AND OFFICES A70 FEDERAL RESERVE BOARD PUBLICATIONS All INDEX TO VOLUME 82 All ANTICIPATED SCHEDULE OF RELEASE DATES FOR PERIODIC RELEASES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Distribution of Credit Risk among Providers of Mortgages to Lower-Income and Minority Homebuyers Glenn B. Canner, Wayne Passmore, and Brian J. that analysis we combined 1994 data on mortgages Surette, of the Board's Division of Research and collected pursuant to the Home Mortgage Disclosure Statistics, prepared this article. John L. Gibbons, Act (HMDA) with 1994 data on private mortgage Lisa Kirch, and Gerald W. Talley provided research insurance (PMI) activity made available by private assistance. mortgage insurers. With that unique database we obtained rough measures of the amount of credit risk The financial institutions that bear the credit risk in that the major participants bore and the distribution mortgage lending are critical because without such of that risk across institutions by the income and participants, mortgages cannot be made. Once an racial or ethnic characteristics of the borrowers and institution agrees to assume the risk that a borrower their neighborhoods. We found that the largest govwill not repay a loan as scheduled, the other partici- ernment insurer, the FHA, was the most involved pants in the mortgage process—originators, funders, with lower-income and minority homebuyers, as and purchasers—are readily available. The bearing of measured by both portfolio share (the proportion of credit risk is an ongoing concern of the mortgage an institution's own mortgage portfolio extended to market and the government, and a variety of institu- these groups) and market share (the proportion of all tions have evolved for that purpose. The performance mortgages extended to these groups for which an of these institutions in taking on credit risk has impor- institution bears the credit risk). Depository institutant public policy implications because home owner- tions generally had higher portfolio and market shares ship, particularly within lower-income and minority than the two for-profit government-sponsored entercommunities, is a well-established national goal and prises that are active in the secondary market, the is of intense public interest. Federal National Mortgage Association (Fannie Mae) Assessing the performance of mortgage market and the Federal Home Loan Mortgage Corporation participants in accepting credit risk is not straight- (Freddie Mac). forward for several reasons—lack of data, uncertain- In this article we revisit the issue of who bears the ties about the most appropriate criteria for assessing credit risk associated with mortgage lending using performance, and the influence of government subsi- 1995 data and refined estimates of the amount of dies and regulations. The diversity of the participants' mortgage credit risk borne by market participants.2 In goals and strategies also complicates the task: The our earlier analysis we measured credit risk in terms government mortgage insurers that account for most of the number of mortgages held or insured; here of the risk-bearing activity in the government mort- we go beyond looking at numbers or simple dollar gage system are nonprofit and accept nearly all the amounts of mortgages held or insured and instead credit risk of the mortgages they insure; the mortgage measure risk in terms of the dollar losses that could originators, insurers, and purchasers that make up the be expected on the basis of historical experience. conventional mortgage system are profit-seeking and generally act to spread the risk throughout the system. In an earlier study we assessed the performance of 2. Unless otherwise noted, the focus of this article is mortgages the major participants in the market for home pur- approved during the first ten months of 1995 for the purchase of chase mortgages by examining the distribution of the owner-occupied, single-family homes located in metropolitan statistimortgage credit risk borne by these institutions.1 For cal areas. Mortgages originated in the final two months of 1995 were excluded from analysis because the lenders that originated those loans may not have had the opportunity to sell them by year-end, when HMDA data must be reported. Because of the public-interest focus on 1. Glenn B. Canner and Wayne Passmore, "Credit Risk and the lower-income and minority borrowers and neighborhoods, we present Provision of Mortgages to Lower-Income and Minority Homebuyers," results for only FHA-eligible mortgages (that is, mortgages within the Federal Reserve Bulletin, vol. 81 (November 1995), pp. 989-1016. size limits for FHA-backed single-family loans). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1078 Federal Reserve Bulletin • December 1996 Institutions' expected dollar losses are determined underwriting standards and the sharing of risk among primarily by the distribution of loan-to-value ratios participants in the mortgage market, including borwithin their mortgage portfolios: Higher ratios are rowers. Because different groups of borrowers have associated with higher mortgage default probabilities different credit characteristics, the risk-management and loss severity rates. Data on these aspects of approach taken may affect the distribution of mortmortgage lending are not reported under HMDA and gage borrowers across income groups, race and ethnic are not readily available elsewhere; we obtained the categories, and neighborhoods. information in a variety of ways, including discus- Requiring borrowers to meet certain underwriting sions with industry participants and modeling based standards is the most important step lenders take to on preliminary data from the Federal Reserve's 1995 manage mortgage credit risk. In assessing the pos- Survey of Consumer Finances. sibility that a prospective borrower may default on Who bears the credit risk for mortgage lending a mortgage, lenders evaluate both ability and to lower-income borrowers, black or Hispanic bor- willingness to repay the loan. They look at sources rowers, lower-income neighborhoods, and minority of income, debt-payment-to-income ratios, assets, neighborhoods, and how is that risk distributed? The employment history, and prospects for income findings based on our refined estimates of credit growth. They also review the applicant's credit hisrisk are in accord with our earlier results: In terms tory and estimate the value of the property for which of market share, the FHA, the largest institution in the mortgage is being sought. the government mortgage system, outperforms all Varying the price of credit by charging riskier other institutions or types of institutions. It is the borrowers higher interest rates is another means major bearer of credit risk for these groups. For of managing credit risk. Lenders know, for example, example, the FHA backed about one-third of the that the probability of default, as well as the extent dollar amount of mortgages extended in 1995 to of the loss resulting from default, is strongly related lower-income borrowers but assumed nearly two- to the loan-to-value ratio of the mortgage: The higher thirds of the credit risk associated with lending to that the ratio, the greater the likelihood of default and group. the larger the potential loss.3 To compensate for The market shares of the conventional mortgage greater risk, lenders may require a borrower who system are not only small relative to the amount takes out a mortgage having a high loan-to-value borne by government institutions; they are also ratio to pay a higher interest rate (or, more often, broadly distributed across the major types of institu- to purchase mortgage insurance, which raises the tions in the system. No single institution or set of effective interest rate). They may also price the mortinstitutions stands out as a principal bearer of credit gage according to other characteristics that may influrisk for the conventional mortgages extended to these ence its riskiness; for example, they may charge borrowers. higher interest rates on longer-term loans. The FHA also has a high portfolio share for The sharing of credit risk is common within the lending to lower-income or minority borrowers home mortgage industry. First and foremost, lenders and neighborhoods relative to the participants in share risk with the borrower by requiring the borthe conventional mortgage system. However, some rower to make a down payment toward the purchase profit-seeking portfolio lenders devote a large share of the home. The larger the borrower's equity stake, of their portfolio risk to lower-income borrowers the more the value of the home exceeds the loan and neighborhoods. These lenders—commercial balance, providing the lender with a greater cushion banks, savings associations, and mortgage banks— in case of default. have low-income portfolio shares similar to the Credit risk is also shared among institutional parti- FHA's, although their market shares are only slightly cipants in the mortgage market. For example, lenders larger than those of others in the conventional mort- usually require a borrower to purchase mortgage gage system. insurance from a public or private mortgage insurer if the down payment is less than 20 percent of the THE MANAGEMENT OF MORTGAGE CREDIT RISK 3. Robert B. Avery, Raphael W. Bostic, Paul S. Calem, and Glenn B. Canner, "Credit Risk, Credit Scoring, and the Performance The credit risk associated with mortgage lending is of Home Mortgages," Federal Reserve Bulletin, vol. 82 (July 1996), managed in a variety of ways, mainly by the use of pp. 621^18. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Distribution of Credit Risk among Providers of Mortgages 1079 home's appraised value.4 Lenders also often sell The Nonprofit Government Mortgage System mortgages in the secondary market under terms that relieve themselves of the credit risk associated with The Congress has established nonprofit government the mortgage (that is, the secondary-market institu- institutions to promote home ownership among spetion has no recourse to the seller in the event of cific groups and in the population at large. Of the default). nonprofit government institutions, the FHA and the Credit risk can also be managed by influencing the VA have by far the largest home loan programs. Their probability of default and the extent of losses associ- missions are to promote home ownership by insurated with default. Lenders use a variety of risk- ing mortgages extended, respectively, to lower- and management techniques to encourage timely repay- moderate-income homebuyers and to veterans.6 Subment. For example, they may require a prospective sidization by the federal government helps these borrower to receive credit counseling or homebuyer agencies achieve their goals.7 The FHA plays a larger education before taking out a mortgage and may role in the mortgage market than the VA. work more aggressively with a borrower who The FHA's activity is limited by the Congress in becomes delinquent. To lower the losses associated several ways: by size limits on the mortgages that it with default, lenders may encourage a seriously delin- can insure, by restrictions on its ability to change quent borrower to sell the home before foreclosure insurance premiums, and by limits on the aggregate (a so-called short sale), thereby avoiding the legal amount of insurance that it may write each year. The expenses and other costs associated with the often- FHA relies on the insurance premiums paid by lowerlengthy foreclosure process. Other methods of loss risk borrowers to cross-subsidize the costs imposed management include allowing delinquent borrowers by higher-risk borrowers.8 Consequently, because prito defer payments until their financial circumstances vate mortgage insurance may cost less, lower-risk improve and modifying loan agreements.5 borrowers who qualify for privately insured loans tend not to use FHA programs.9 A higher proportion of lower-income borrowers than of higher-income borrowers choose mortgages THE MAJOR PARTICIPANTS insured by the FHA or the VA. Under these pro- IN THE MORTGAGE MARKET grams, prospective borrowers can qualify for credit with more debt relative to income, with smaller down During the past sixty years, the Congress has created payments, and with weaker credit histories because public institutions—and has both granted advantages the underwriting standards of the FHA and the VA to and imposed restrictions on private institutions—to are generally less strict than those used by private influence underwriting standards and other aspects of mortgage insurers. Many families with lower inmortgage lending and, thus, the level and composicomes need the more relaxed underwriting guidelines tion of mortgage activity. In recent years, congresto qualify for mortgages because they tend to carry sional actions have focused on encouraging the provirelatively higher loads of nonhousing debt, to have sion of mortgage credit to lower-income and minority fewer assets to draw on when making down payments homebuyers and to those seeking to purchase homes in lower-income neighborhoods and central cities. These actions influence the distribution of credit risk 6. For a discussion of the FHA and its influence in the housing among the participants in the mortgage market. market, see U.S. Department of Housing and Urban Development, Office of Policy Development and Research, "An Analysis of FHA's Single-Family Insurance Program," October 1995; and General 4. Some lenders extend low-down-payment mortgages without Accounting Office, "Homeownership: FHA's Role in Helping People insurance but charge higher interest rates or have the borrower take Obtain Home Mortgages" (GAO/RCED-96-123), August 13, 1996. out a second mortgage (usually equal to 10 percent of the home's 7. With respect to its largest single-family mortgage insurance appraised value) at a higher interest rate than the first mortgage program, the FHA's subsidy primarily takes the form of relief from the (usually equal to 80 percent of the home's value), thus effectively need to earn a private market rate of return for shareholders rather providing the mortgage insurance themselves. In addition, some lend- than a direct government appropriation. ers provide low-down-payment mortgages without requiring mortgage 8. A question arises as to why private mortgage insurers do not insurance as part of their efforts to comply with the Community "cherry pick" more of the FHA's least risky borrowers, who pay Reinvestment Act. higher premiums than should, in principle, be available in the private 5. For a discussion of alternatives to foreclosure, see U.S. Depart- market. Among the possible explanations are state regulations limiting ment of Housing and Urban Development, "Providing Alternatives the ability of PMI companies to insure mortgages having loan-toto Mortgage Foreclosure: A Report to Congress," March 1996; and value ratios above 97 percent, the specialization of some mortgage Brent W. Ambrose and Charles A. Capone, Jr., "Cost-Benefit Analy- lenders in FHA loans, and borrowers' preferences to finance their sis of Single-Family Foreclosure Alternatives," The Journal of Real home purchases with government-backed loans. Estate Finance and Economics, vol. 13 (September 1996), pp. 105- 9. See General Accounting Office, "Homeownership: FHA's Role 20. Also see the 1995 annual reports of Fannie Mae and Freddie Mac. in Helping People Obtain Home Mortgages." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1080 Federal Reserve Bulletin • December 1996 and paying closing costs, and to have histories of diverse group: Some are government-sponsored and credit problems or no credit histories at all. At the others are privately sponsored; some have the capacsame time, upper-income borrowers tend to seek ity to hold mortgages in their portfolios whereas mortgages that exceed the limits on the size of mort- others only insure mortgages; and some are strongly gages eligible for FHA insurance or that receive encouraged by government to help meet the credit proportionally less backing from the VA, thus reduc- needs of lower-income homebuyers and neighboring their participation in these programs. hoods whereas others are given no such direction. Like lower-income borrowers, black and Hispanic The three main types of institution in the convenborrowers tend to use FHA and VA mortgages rela- tional mortgage system are private mortgage insurers, tively often. On average, borrowers in the latter government-sponsored enterprises, and portfolio group, compared with their white or Asian counter- lenders. parts, have lower incomes, less wealth, weaker credit histories, and less-stable employment, and they purchase homes with lower values. In addition, black Private Mortgage Insurers and Hispanic borrowers are more likely than equally qualified white and Asian borrowers to choose FHA- Private mortgage insurers are profit-seeking institubacked mortgages.10 tions that insure, but do not originate or purchase, A third nonprofit government institution, the Gov- conventional mortgages. They are not subject to federnment National Mortgage Association (Ginnie eral laws that encourage the provision of credit to Mae), is active in the secondary mortgage market; it lower-income borrowers or in lower-income neighwas created by the Congress to provide liquidity borhoods, such as the Community Reinvestment Act. solely for federal housing initiatives. In contrast to Private mortgage insurance reduces a lender's other secondary-market institutions, which buy credit risk by insuring against losses associated with mortgages and sell securities backed by mortgages, default up to a contractually established percentage Ginnie Mae does not purchase mortgages. Instead, of the claim amount.12 In deciding whether to insure Ginnie Mae guarantees the timely payment of interest a particular mortgage, a PMI company acts as a and principal for privately issued securities backed review underwriter, evaluating both the creditworthiby mortgages insured by the FHA or the VA. In our ness of the prospective borrower and the adequacy of analysis we do not identify Ginnie Mae as a bearer of the collateral offered as security on the loan. Like the credit risk; instead, we assume that the entire risk of FHA and the VA, PMI companies deny insurance to FHA mortgages is borne by the FHA and that the risk prospective borrowers who are judged to pose undue of VA mortgages is borne mainly by the VA. In credit risk; lenders are free to extend credit to such practice, however, Ginnie Mae bears a small amount borrowers, but they must do so without the protection of credit risk if, for example, a lender servicing a of private mortgage insurance. (See appendix A for security backed by FHA and VA loans is unable to data on the disposition of applications for private make timely payments. mortgage insurance in 1995.) Private mortgage insurers focus on mortgages that have high loan-to-value ratios—a type of mortgage The Profit-Seeking often used by lower-income borrowers. However, Conventional Mortgage System they neither receive government support nor have a government mandate to serve lower-income borrow- The conventional mortgage system is made up of ers. Hence, PMI companies serve lower-income bornumerous institutions whose profit-seeking drives rowers to the extent that it is profitable to do so. To them to spread the credit risk of conventional mort- some extent, PMI companies compete directly with gages (that is, mortgages that are not insured by the FHA and the VA to insure mortgages that have the federal government).11 These institutions are a high loan-to-value ratios. 10. Glenn B. Canner, Stuart A. Gabriel, and J. Michael Woolley, 12. The claim amount on a defaulted loan generally includes the "Race, Default Risk and Mortgage Lending: A Study of the FHA and outstanding balance on the loan, delinquent interest payments, Conventional Loan Markets," Southern Economic Journal, vol. 58 expenses incurred during foreclosure, costs to maintain the property, (July 1991), pp. 249-62. and advances the lender made to pay taxes and hazard insurance on 11. One group of nonprofit institutions, credit unions, is also part of the property. For more information on private mortgage insurers, see the conventional mortgage system. Because they account for a very Glenn B. Canner, Wayne Passmore, and Monisha Mittal, "Private small portion of the mortgage market, credit unions are not discussed Mortgage Insurance," Federal Reserve Bulletin, vol. 80 (October in the text; however, they are included in the tables for completeness. 1994), pp. 883-99. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Distribution of Credit Risk among Providers of Mortgages 1081 For homebuyers, private mortgage insurance can Ginnie Mae, which focuses on government-backed differ markedly from FHA or VA insurance.13 Private mortgages, Fannie Mae and Freddie Mac purchase mortgage insurance is generally less expensive for conventional mortgages almost exclusively, acceptborrowers who do not need the underwriting flexi- ing all or part of the credit risk of the mortgages they bility offered by the FHA or the VA, and it is more purchase. Many of these mortgages are securitized, available for borrowers seeking larger mortgages. while others are held directly in their portfolios. However, many homebuyers, particularly lower- Because Fannie Mae and Freddie Mac are profitincome and minority homebuyers, need the FHA's seeking, they may not be able to bear the same degree and VA's more liberal underwriting standards, lower of credit risk as the FHA or the VA. At the same time, down payments, and lower cash requirements at clos- they do not have as much latitude as purely private ing to qualify for a mortgage. entities: They have in their charters a congressionally mandated affirmative obligation to promote home ownership among lower-income households. They Government-Sponsored Enterprises also have annual affordable housing goals, established by the Department of Housing and Urban Government-sponsored enterprises (GSEs) are pri- Development (HUD), for the purchase of mortvately owned institutions that blend the characteris- gages to lower-income households and in targeted tics of public and private institutions; they receive communities. certain benefits from their government sponsorship Even while Fannie Mae and Freddie Mac are and in exchange are expected to advance certain encouraged to promote lending to lower-income public policy goals.14 The GSEs most prominent in households, their charters may also create barriers to the mortgage market, Fannie Mae and Freddie Mac, such lending by limiting the risk they may bear: The are, together with Ginnie Mae, the major players in mortgages they purchase, unless they carry private the secondary mortgage market.15 In contrast to mortgage insurance or some other form of credit enhancement (for example, recourse to the lender), must have loan-to-value ratios of 80 percent or less. 13. From a lender's perspective, the insurance provided by private Therefore, Fannie Mae and Freddie Mac generally mortgage insurers and that provided by the FHA and the VA differ in the level of protection against credit losses. Whereas PMI companies bear the entire credit risk only for mortgages that typically limit coverage to 20 percent to 35 percent of the claim have relatively large down payments—the type of amount on a defaulted loan, the FHA covers 100 percent of the unpaid mortgage that may be used less often by lowerbalance of the mortgage as well as most costs associated with the foreclosure and sale of the property. The VA provides loan guarantees, income households that have limited savings (some with the guaranteed proportion tied to the size of the mortgage; the lower-income households, such as retirees, may have guaranteed proportion may not cover all the lender's losses under all substantial financial assets). circumstances, particularly when property values are falling. For marginally qualified borrowers, some lenders may prefer the added protection afforded by FHA or VA insurance and may encourage these borrowers to apply for such mortgages. 14. For general descriptions of two GSEs—Fannie Mae and Portfolio Lenders Freddie Mac—including the benefits they derive from government sponsorship and their affirmative obligations to promote home owner- Portfolio lenders are privately sponsored institutions ship among lower-income households, see Congressional Budget Ofthat are capable of holding mortgages in their own fice, "Assessing the Public Costs and Benefits of Fannie Mae and Freddie Mac," May 1996; General Accounting Office, "Housing portfolios; among these institutions are commercial Enterprises: Potential Impacts of Severing Government Sponsorship," banks, savings associations, and some mortgage May 1996; U.S. Department of Housing and Urban Development, "Privatization of Fannie Mae and Freddie Mac: Desirability and banks. Portfolio lenders determine their own under- Feasibility," July 1996; and U.S. Department of the Treasury, "Gov- writing standards for the mortgages they hold, ernment Sponsorship of the Federal National Mortgage Association thereby controlling the credit risk of their portfolios. and the Federal Home Loan Mortgage Corporation," July 11, 1996. 15. For 1995, these three institutions accounted for 58 percent of The vast majority of portfolio lenders are deposiall mortgage purchases reported under HMDA (see Special Tables, tory institutions. However, a diverse group of nontable 4.41, Federal Reserve Bulletin, vol. 82 (September 1996), depository portfolio lenders—mortgage bankers, penpp. A74-A75). While these institutions dominate secondary market activity, others—including commercial banks, savings associations, sion funds, insurance companies, and others—also insurance companies, and pension funds—are also active purchasers fund mortgages and bear mortgage credit risk. of mortgages. These other institutions buy the same types of loans Depository institutions are subject to federal laws and purchased by Fannie Mae and Freddie Mac, but they also provide a market for lenders that originate nonconforming loans, such as jumbo regulations that require them to help meet the credit loans (loans larger than the maximum single-family mortgage that needs of lower-income households and neighbormay be purchased by Fannie Mae and Freddie Mac), mobile home hoods, but nondepository portfolio lenders are not loans, loans with lower credit quality, and certain types of adjustablerate mortgages. subject to such rules. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1082 Federal Reserve Bulletin • December 1996 Depository Institutions Subject to CRA. Deposi- adherence of mortgage originators to those standards. tory institutions benefit from federal deposit insur- Risk-adjusted capital requirements also discourage ance and from other services available exclusively to depository institutions from holding some types of depository institutions. In exchange, they are subject nonconforming loans: For mortgages having a loanto many regulations not imposed on other port- to-value ratio of more than 80 percent and no private folio lenders. Among these regulations is the Com- mortgage insurance, they must hold more capital to munity Reinvestment Act (CRA), which requires guard against losses. commercial banks and savings associations (but not credit unions) to help meet the credit needs of their Nondepository Portfolio Lenders. Independent communities.16 mortgage bankers and private nondepository mort- Opposing influences act on depository institutions gage purchasers, such as life insurance companies to affect the extent of their lending to lower-income and pension funds, are among the other profit-seeking and minority borrowers and the extent to which they portfolio lenders that hold credit risk associated with keep these mortgages in their portfolios. On one mortgages. These institutions often focus on particuhand, CRA requirements may lead some depositories lar portions of the mortgage market, such as jumbo to hold mortgages underwritten with greater flexibil- loans, mobile home loans, some types of adjustableity than those insured by private mortgage insurers or rate loans, and loans to borrowers who have poor sold into the secondary market—the type of mort- credit histories or other credit characteristics that gages often sought by lower-income and minority make their loans nontraditional. homebuyers. Moreover, because they may find it Nondepository portfolio lenders are not subject to difficult to originate and fund traditional thirty-year the CRA or to other laws intended to encourage fixed-rate mortgages profitably, depositories may lending to lower-income households and neighborseek out market niches, collecting better information hoods. However, like other participants in the mortabout a particular group of mortgage borrowers, or gage market, they are subject to fair lending laws and may develop products that meet special credit to community pressures to be sensitive to the credit needs.17 Under these circumstances, they may hold needs of lower-income and minority borrowers and relatively high proportions of nontraditional mort- neighborhoods. These institutions may also be subgages, including those extended to lower-income and ject to regulations and other influences that affect minority borrowers. their propensity to hold particular types of mortgages On the other hand, because extending mortgages in portfolio. For example, life insurance companies using more flexible underwriting standards may are subject to risk-adjusted capital requirements that involve more risk-taking, depository institutions may impose higher capital requirements on mortgages be tempted to assume the risk of only the least risky held directly rather than in the form of a mortgagemortgages and to pass that of higher-risk mortgages backed security. to other institutions, either by selling the loans or by obtaining insurance on them from a third party.18 They may find it difficult to sell such mortgages, THE MEASUREMENT OF PERFORMANCE however, because purchasers and insurers guard IN LENDING TO LOWER-INCOME against accepting the risk of higher-risk mortgages AND MINORITY HOMEBUYERS by setting stricter underwriting standards than they would if they had full information about the mort- Several government reports, and extensive debates gages' riskiness and by monitoring closely the surrounding the recent rewriting of the CRA regulations, point to continued public interest in the performance of the major mortgage market participants in serving the mortgage credit needs of lower-income 16. In our analysis we combined the lending activities of commercial banks and savings associations with those of their mortgage households. During the past year, four congressionbanking subsidiaries and affiliates. The CRA regulations allow banks ally mandated government reports reviewed the role and savings associations to include the lending activities of these of Fannie Mae and Freddie Mac in mortgage markets institutions when CRA performance is evaluated. 17. See Joseph Blalock, "Successful Fixed-Rate Lending," Sav- and discussed their performance in serving the credit ings and Community Banker (February 1994), p. 38; and Wayne needs of lower-income homebuyers.19 Generally, Passmore, "Can Retail Depositories Fund Mortgages Profitably?" Journal of Housing Research, vol. 3, no. 2 (1992), pp. 305^0. 18. For a discussion of this behavior, see Wayne Passmore and Roger Sparks, "Putting the Squeeze on a Market for Lemons: 19. These reports, cited in footnote 14, were required by the Government-Sponsored Mortgage Securitization," Journal of Real Federal Housing Enterprises Financial Safety and Soundness Act of Estate Finance and Economics, vol. 13 (July 1996), pp. 27-43. 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Distribution of Credit Risk among Providers of Mortgages 1083 these discussions supported our earlier finding that such comparisons may not take into consideration Fannie Mae and Freddie Mac finance a smaller por- other public and private goals. Recognizing this limition of loans to lower-income homebuyers than do tation is particularly important when nonprofit govthe FHA, the VA, or depository institutions. How- ernment organizations, such as the FHA and the VA, ever, two of the reports emphasized that it is prema- are compared with profit-seeking institutions. ture to judge these GSEs' performance in encour- Moreover, comparing performance on the basis of aging lending to lower-income households because the bearing of credit risk, as we do, does not take into their affordable housing goals set by HUD have been account efforts to encourage lending to lower-income in place only a short period. households and neighborhoods. Almost all institu- The findings of another recent government report, tions in the mortgage market are making special which compared the FHA's performance in financing efforts to extend home ownership to borrowers and loans to lower-income and minority households with communities that have traditionally received relathat of other major institutions in the mortgage mar- tively small proportions of mortgage credit. For ket, are also consistent with our previous research. It example, depository institutions, mortgage bankers, concluded that "FHA serves disproportionate frac- Fannie Mae and Freddie Mac, and the private morttions of lower-income households, blacks and His- gage insurers have worked together to introduce a panics, first-time homebuyers, borrowers making low host of new programs targeted at lower-income down payments, and households living in under- households; prominent among these are Fannie Mae's served neighborhoods when compared with private Community Home Buyers program and Freddie mortgages insurers, the government-sponsored enter- Mac's Affordable Gold program, both of which allow prises, and conventional lenders."20 more flexible underwriting standards for the loans Left unanswered is the larger question of whether these institutions purchase. Recently, these instituthe performance of one institution relative to another tions and others have jointly established the Ameriis the appropriate measure of how well the two can Homeowner Education and Counseling Institute institutions are meeting these needs. One institution to improve both the education of individuals who or type of institution may be performing poorly com- counsel potential and current homebuyers and the pared with another, but it may be performing well effectiveness of that counseling.22 given the other standards and expectations of the As important as these programs are—and despite Congress, regulators, and shareholders. While the concerns about comparing performance and the lack Congress has focused a variety of institutions toward of perfect measurement criteria—the fact remains meeting the needs of lower-income homebuyers—the that the acceptance of credit risk is at the heart of FHA, depository institutions under CRA, and the mortgage lending. Without an institution willing to GSEs with their affordable-housing goals—it has not bear the credit risk of mortgage lending to lowerspecified how performance is to be measured; criteria income and minority households and neighborhoods, for measuring performance have therefore been set such mortgages cannot be made. Originators, funders, by regulators. and purchasers of mortgages are numerous once an Shareholders expect their firms to earn a competi- institution agrees to bear the credit risk of lending. tive rate of return on their equity. The extent to which The bearer of credit risk is therefore the crucial profit-seeking institutions subject to regulations participant in the mortgage lending process. encouraging lending to lower-income households should be expected to forgo profits in pursuit of such lending is unclear. To date, the Congress has allowed THE COMPOSITION OF MORTGAGE ACTIVITY that these institutions are not expected to significantly IN 1995 diminish their profitability or to endanger their safety and soundness.21 Hence, one limitation of directly To identify which institutions bore the credit risk for comparing performance across institutions is that mortgage lending to lower-income and minority borrowers and neighborhoods in 1995, we first looked at mortgages extended by size, by borrower and neigh- 20. See HUD, "An Analysis of FHA's Single-Family Insurance borhood characteristics, and by mortgage holder. Program," p. ES-1. 21. There is little evidence that profits have been significantly diminished by such lending. See Glenn B. Canner and Wayne Passmore, "The Relative Profitability of Commercial Banks Active in 22. Press release, "American Homeowner Education and Counsel- Lower-Income Neighborhoods and to Lower-Income Borrowers," in ing Institute to be Established; Will Lead Industry-wide Effort to Proceedings of the 32nd Annual Conference on Bank Structure and Improve Homeowner Education and Counseling Efforts Nationwide," Competition (Federal Reserve Bank of Chicago, 1996), pp. 531-55. Fannie Mae, May 29, 1996. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1084 Federal Reserve Bulletin • December 1996 Mortgage Borrowers and Loan Size The GSEO-eligible category covered mortgages that exceeded the FHA's single-family mortgage size We began by assigning each mortgage for the pur- limits but not the limits on mortgages that Fannie chase of an owner-occupied home extended during Mae and Freddie Mac may purchase ($203,150 in the first ten months of 1995 to one of three loan-size 1995, with higher limits for Alaska and Hawaii). categories: (1) FHA-eligible, (2) GSE-eligible only About 23 percent of all mortgages extended in 1995 (GSEO-eligible), and (3) jumbo. The first category for the purchase of owner-occupied homes were was based on size restrictions on FHA loans for the GSEO-eligible. Fewer than 2 percent of loans to purchase of single-family homes. In 1995, the legis- lower-income borrowers, and just over 13 percent of lated limit in most areas of the country was $77,197; loans to black or Hispanic borrowers, were in this it ranged up to $152,362 for areas with high housing category. prices and even higher for Alaska and Hawaii. About The jumbo category was for mortgages exceeding 71 percent of all mortgages extended in 1995 for the $203,150. About 7 percent of all mortgages extended purchase of owner-occupied homes were FHA- in 1995 for the purchase of owner-occupied homes eligible (table 1, memo item). Even higher propor- were in this category. Almost none of the loans to tions of loans to lower-income borrowers (98 per- lower-income borrowers, and fewer than 3 percent of cent) and black or Hispanic borrowers (84 percent) loans to black or Hispanic borrowers, were jumbo were FHA-eligible. mortgages. 1. Mortgage loans extended in 1995, grouped by size and distributed by the characteristics of the borrowers and of the census tracts in which the properties are located FHA-eligible GSEO-eligible Jumbo All MEMO: MEMO: MEMO: MEMO: Characteristic As a per- As a per- As a per- As a per- Number Percent centage Number Percent centage Number Percent centage Number Percent centage of charac- of charac- of charac- of characteristic teristic teristic teristic BORROWER Income1 Lower 563,846 38.0 98.1 10,257 2.2 1.8 605 .4 .1 574,708 27.4 100 Middle 535,320 36.1 84.9 91,192 19.2 14.5 3,769 1.7 .6 630,281 30.0 100 Upper 384,059 25.9 43.0 373,866 78.7 41.8 136,073 96.9 15.2 893,998 42.6 100 Total 1,483,225 100 70.7 475,315 100 22.6 140,447 100 6.7 2,098,987 100 100 Racial or ethnic identity Asian, Pacific Islander, or white 1,154,635 77.8 68.9 400,559 84.3 23.9 121,160 86.3 7.2 1,676,354 79.9 100 Black or Hispanic 247,411 16.7 84.3 38,602 8.1 13.2 7,313 5.2 2.5 293,326 14.0 100 Other2 81,179 5.5 62.8 36,154 7.6 28.0 11,974 8.5 9.3 129,307 6.2 100 Total 1,483,225 100 70.7 475,315 100 22.6 140,447 100 6.7 2,098,987 100 100 CENSUS TRACT Income3 Lower 229,214 15.5 91.3 18,248 3.8 7.3 3,652 2.6 1.5 251,114 12.0 100 Middle 856,660 57.8 79.7 187,410 39.4 17.4 31,031 22.1 2.9 1,075,101 51.2 100 Upper 397,351 26.8 51.4 269,657 56.7 34.9 105,764 75.3 13.7 772,772 36.8 100 Total 1,483,225 100 70.7 475,315 100 22.6 140,447 100 6.7 2,098,987 100 100 Minorities (as a percentage of population) Less than 10 743,583 50.1 68.0 278,431 58.6 25.5 71,804 51.1 6.6 1,093,818 52.1 100 10-49 592,271 39.9 71.4 174,504 36.7 21.0 63,283 45.1 7.6 830,058 39.5 100 50-100 147,371 9.9 84.2 22,380 4.7 12.8 5,360 3.8 3.1 175,111 8.3 100 Total 1,483,225 100 70.7 475,315 100 22.6 140,447 100 6.7 2,098,987 100 100 Total 1,483,225 70.7 475,315 22.6 140,447 6.7 2,098,987 100 NOTE. Includes only owner-occupied home purchase mortgages originated in 1. Lower: Less than 80 percent of the median family income of the MSA in 1995 for which action on the application was taken before November 1, 1995, which the property related to the loan is located. Middle: 80 percent to 120 perand for which the property securing the mortgage was located in a metropolitan cent. Upper: 120 percent or more. statistical area (MSA). 2. Includes American Indian or Alaskan native, other minorities, and joint FHA-eligible: Loans that fell within the FHA mortgage size limits for (white and minority co-borrowers) as well as borrowers for whom racial or single-family homes in 1995. Some FHA mortgages are larger than the mort- ethnic identity was not reported. gage limits used for the FHA-eligible category because the FHA establishes 3. Lower. Median family income for census tract less than 80 percent of the higher mortgage limits for two-, three-, and four-family properties. GSEO- median family income of the MSA in which the census tract is located. Middle: eligible: Loans that exceeded the FHA single-family mortgage limits but not the 80 percent to 120 percent. Upper: 120 percent or more. maximum single-family loan size that could be purchased by Fannie Mae or . . . Not applicable. Freddie Mac in 1995. Jumbo: Loans that exceeded the Fannie Mae and Freddie SOURCE. 1995 HMDA data. Mac limits. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Distribution of Credit Risk among Providers of Mortgages 1085 Unadjusted Distribution of Mortgage Lending account for private mortgage insurance coverage, indicates that commercial banks and savings asso- The allocation of credit risk across mortgage holders, ciations held or purchased about 37 percent of the insurers, and purchasers depends on underlying mortgages originated (total column in table 2).23 assumptions about risk-mitigation activities, business relationships, loan-to-value ratio distributions, default rates, and loss severity rates. Because views 23. This number is the sum of the three rows labeled "Depository about the appropriate assumptions may differ, we institutions subject to CRA" in table 2. Other numbers given in this provide information about the number and dollar paragraph similarly are sums across categories. The mortgages insured by the FHA are not included in any other categories because the FHA amount of mortgages before adjusting the data to is assumed to bear all of the credit risk for the loans they insure. For create our measure of credit risk. this portion of the discussion, mortgages backed by the VA and by Measuring the overall distribution of mortgage private mortgage insurers are assigned to the originator or purchaser that shares the credit risk with these institutions; later, we allocate lending in 1995 in terms of the number of home the risk of these mortgages among the originators, purchasers, and purchase loans extended, before adjustments to insurers. 2. Mortgages extended in 1995, grouped by size and distributed by mortgage system and type of holder Percent FHA-eligible GSEO-eligible Jumbo Total MMoorrttggaaggee ssyysstteemm aanndd ttyyppee ooff hhoollddeerr By dollar By dollar By dollar By dollar By number By number By number By number amount amount amount amount GOVERNMENT MORTGAGE SYSTEM: LOANS WITH GOVERNMENT INSURANCE FHA 24.3 26.0 3.4 3.0 .2 .2 18.0 13.7 VA1 6.8 7.6 8.9 8.6 * * 6.8 6.4 Depository institutions subject to CRA2 3.9 4.2 4.7 4.4 * * 3.8 3.4 Independent mortgage companies3 ... 2.8 3.3 4.1 4.1 * * 2.9 2.9 Credit unions .1 .1 .1 .1 * * .1 .1 CONVENTIONAL MORTGAGE SYSTEM: LOANS WITH PRIVATE MORTGAGE INSURANCE4 Depository institutions subject to CRA2 5.8 6.3 8.0 7.7 9.7 8.1 6.6 7.1 Fannie Mae and Freddie Mac 9.2 10.3 13.1 12.8 .6 .4 9.5 9.1 Independent mortgage companies 3 .5 .6 .8 .7 .6 .5 .6 .6 Other5 2.1 2.4 3.3 3.2 3.5 2.8 2.4 2.7 Credit unions .2 .2 .2 .2 .1 * .2 2 Total 17.8 19.8 25.4 24.6 14.5 11.8 19.3 19.7 CONVENTIONAL MORTGAGE SYSTEM: LOANS WITHOUT PRIVATE MORTGAGE INSURANCE4 Government-sponsored enterprises (Fannie Mae or Freddie Mac) 16.4 18.0 27.3 28.2 2.3 2.0 17.9 18.1 Portfolio lenders Depository institutions subject to CRA2 23.6 19.5 24.4 24.7 59.2 62.5 26.2 29.5 Independent mortgage companies3 ... 2.3 2.0 2.2 2.2 6.2 6.0 2.6 2.9 Other5 7.9 6.5 7.7 7.9 17.1 16.7 8.4 8.9 Credit unions 1.0 .8 .8 .8 .6 .6 .9 .7 Total 100 100 100 100 100 100 100 100 MEMO: Number of loans (and percentage distribution) 1,483,225 475,315 140,447 2,098,987 (70.7) (22.6) (6.7) (100.0) Amount of loans, in millions of dollars ((aanndd ppeerrcceennttaaggee ddiissttrriibbuuttiioonn)) 110,370 70,423 44,035 224,827 (49.1) (31.3) (19.6) (100.0) NOTE. Distributions are based on unadjusted dollars (see text). Also see 4. Data reported by holder of mortgage. general note to table 1. 5. Includes mortgages sold to life insurance companies, pension funds, and 1. Data reported by originator of mortgage. other private-sector purchasers. 2. Includes mortgages originated and held in portfolio by commercial banks * Less than 0.05 percent. and savings associations and their mortgage company affiliates and mortgages ... Not applicable. sold to commercial banks or savings associations. SOURCE. 1995 HMDA and PMI data. 3. Includes mortgages originated and held in portfolio by independent mortgage companies and mortgages sold to affiliates by independent mortgage companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1086 Federal Reserve Bulletin • December 1996 Fannie Mae and Freddie Mac purchased about 27 per- number of loans, the relative proportions held by cent, and the FHA backed 18 percent. The remaining institutions change in a way that reflects their special- 18 percent were held by privately sponsored nonde- ization by loan size. The proportion of mortgages pository institutions, such as independent mortgage originated and held by or purchased by commercial companies or their affiliates, or by credit unions. banks and savings associations rises to 40 percent, For the smallest loan-size category, market shares reflecting the relatively large presence of these instidiffered somewhat. The FHA backed about 24 per- tutions in the jumbo mortgage market. Similarly, the cent of FHA-eligible mortgages measured by number FHA's proportion falls to 14 percent, reflecting the of loans. Commercial banks and savings associations limits on the size of mortgages it may insure. held or purchased 33 percent (again summing across loans backed and not backed by private mortgage insurance or the VA), somewhat lower than that Estimation of PMI Coverage group's share of mortgages of all sizes, while the share purchased by Fannie Mae and Freddie Mac was A complete picture of how credit risk is distributed only slightly lower. requires knowledge of which conventional mortgages When the overall distribution of mortgage lending were backed by private mortgage insurance. Coveris measured in terms of dollar amount rather than age by FHA or VA insurance is reported in the HMDA data, but information on coverage of conventional mortgages by private mortgage insurance is not readily available. Therefore, we estimated PMI coverage by matching the individual mortgage records Matching HMDA and PMI Records reported under HMDA with individual records on To determine which mortgages were covered by private loans insured by private mortgage insurers (see box mortgage insurance, we compared individual home mort- "Matching HMDA and PMI Records"). The matchgage records for 1995 submitted under HMDA with ing techniques used here differ from those used in our individual records for that year submitted by private study of mortgage lending in 1994, and comparisons mortgage insurers. Mortgages were identified as privately across years are not appropriate.24 insured if records in the two files "matched" on the From our matching process, we estimated that following characteristics: purpose of loan, location of the roughly 20 percent of the conventional mortgages property securing the loan (same state, metropolitan stathat were originated and retained by or purchased by tistical area, county, and census tract), borrower race or depository institutions or their subsidiaries (measured ethnic status, loan size, and borrower income. To be by number of loans) were backed by private mortconsidered matches, the records had to list the same loan purpose and property location; race or ethnic status had gage insurance (derived from table 2). That most of to be the same unless that information was missing from these conventional mortgages were not backed by the PMI record, in which case the records were consid- private mortgage insurance implies that depository ered to match if all other criteria were satisfied. institutions bear the entire credit risk for most of the To check for matches on loan size and borrower conventional mortgages they hold. income, we did two iterations. In the first, we considered the records to match if loan size or borrower income, or both, differed by no more than $5,000. Of these matches, 24. In our previous study we used statistical matching with replacemore than 75 percent did not differ on loan size and more ment to match PMI and HMDA records (when a PMI record matched than 50 percent did not differ on borrower income. In the a HMDA record, the PMI record was retained for possible additional second iteration, which considered only PMI and HMDA matches); here we use statistical matching without replacement (the PMI record was dropped once it matched a HMDA record). Earlier we records that had not been matched in the first iteration, allocated all of the credit risk of a PMI-insured mortgage to the insurer loan size had to be within $1,000 but income could differ and therefore did not need to know which institution originated or by as much as $10,000.1 This second iteration resulted in purchased the mortgage; here we allocate the credit risk for a given an additional 19,400 matches, bringing to 404,073 the mortgage among institutions and therefore had to know the identity of total number of conventional mortgages we identified as the originator or purchaser—information that is available only from the HMDA record that actually matches the PMI record. privately insured (25.6 percent of the 1,579,681 conven- In the matching process for the current study we made several tional mortgages for home purchase in our database). additions to the process used earlier (see box). We added matches on dates of loan approval and PMI approval to better identify matches, randomized the order of HMDA records before matching to remove 1. In an earlier analysis we considered records to match only if they any potential for bias resulting from the ordering of HMDA data in the were nearly identical on all characteristics. Here we allowed loan size and borrower income to differ somewhat more because it seemed that changes Federal Financial Institution Examination Council databases, and in borrower circumstances and measurement error might cause a borrow- changed the matching criteria to allow greater differences in loan size er's HMDA and PMI records to differ on these criteria. and income. The net result of these changes was more matches, which increased the calculated market share for private mortgage insurers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Distribution of Credit Risk among Providers of Mortgages 1087 By the same process, we estimated that 35 percent of borrowers {portfolio share) and the share of the of the mortgages purchased by Fannie Mae and total dollars extended by an institution to a particular Freddie Mac were backed by private mortgage insur- group relative to the total dollars extended by all ance. In contrast to our estimates, industry sources lenders to that group (market share). The portfolio indicated that nearly half of the home purchase mort- and market shares are calculated using both gages bought in 1995 by Fannie Mae and Freddie unadjusted dollars and risk dollars. Dollar amounts Mac were insured by private mortgage insurance. unadjusted for credit risk are reported to provide a The difference between that figure and our estimate point of reference; however, risk dollars are a better may be a consequence of the large number of PMI measure of risk-bearing and are at the heart of our records (31 percent) and HMDA records (23 percent) analysis. for which detailed geographic information was not reported. (As noted in the box describing the matching process, our procedure required that "matching" Portfolio Shares records match on the location of the property being financed.) The lack of geographic information on Of the major participants in the home mortgage mar- PMI records is unlikely to be related to the type of ket, the FHA had the highest proportion of its risk mortgage holder or purchaser, however, and therefore dollars extended to lower-income and black or Histhe extent of PMI coverage is probably understated panic borrowers and in lower-income and predomifor other institutions as well. As described in appen- nantly minority neighborhoods (table 3). This finding dix B, we accounted for these differences in our is not surprising because the FHA is governmentestimates of risk-bearing. backed and government-subsidized and thus is able to use more-flexible underwriting standards than many of the other major participants in the mortgage THE HOLDERS OF CREDIT RISK market. The other government agency that directly ON MORTGAGES EXTENDED IN 1995 backs mortgages, the VA, also had a relatively large proportion of its risk dollars in lending to lower- To estimate credit risk, we converted data on the income and black or Hispanic borrowers. However, dollar amount of mortgages extended or insured the VA was not among the higher-ranking institutions ("unadjusted dollars") to risk dollars—the long-term for lending in lower-income and predominantly dollar losses that could be expected on the basis minority neighborhoods. of historical experience. This conversion process Among the profit-oriented institutions in the coninvolved using loan-to-value ratio (LTV) distribu- ventional mortgage system, portfolio lenders had tions for each type of institution; estimating the extent relatively large proportions of their risk dollars in of PMI use across institutions; applying historical lending to lower-income borrowers and in lowerdefault and loss severity rates by loan-to-value ratio income neighborhoods. This finding may partly for each type of institution; and reallocating these reflect the ability of these institutions to profitably risk dollars across institutions to account for risk- underwrite and hold the credit risk of nonconforming sharing arrangements between insurers and other mortgages. It may also partly be a function of the institutions. (Details of the conversion process are rapid expansion of the secondary market for noncongiven in appendix B.) Because of the public-interest forming mortgages, which has provided opportunities focus on lower-income and minority borrowers and for purchasers such as pension funds and life insuron lower-income and predominantly minority neigh- ance companies to become involved in nontraditional borhoods, we present results only for FHA-eligible mortgage lending, such as purchasing loans to bormortgages.25 rowers with weak credit histories or unusually high We measured the amount of credit risk borne by debt-payment-to-income ratios. each type of institution in two ways: the share of the The portfolio shares of depository institutions subinstitution's portfolio extended to a particular group ject to CRA requirements did not differ substantially from those of other portfolio lenders, possibly 25. Many households that purchase homes with mortgages larger because both types of institutions are actively inthan the FHA-eligible category limit are not lower income or are volved in nonconforming mortgage markets. The lower income but have substantial wealth. Affordable housing initiarelatively high portfolio shares of conventional morttives are not intended for these households, although some of them may benefit from these efforts. See Glenn B. Canner and Wayne gages held by nondepository institutions may reflect Passmore, "Implementing CRA: What is the Target?" in Proceedings that group's traditional orientation toward nonconof the 31st Annual Conference on Bank Structure and Competition forming mortgages, such as mortgages for mobile (Federal Reserve Bank of Chicago, 1995), pp. 171-91. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1088 Federal Reserve Bulletin • December 1996 homes, as well as the extensive use of FHA programs and black or Hispanic borrowers and for properties in by some nondepositories. Both pursuits may provide lower-income and minority neighborhoods (table 4). opportunities for greater involvement with lower- About two-thirds of the risk dollars extended to these income and minority borrowers. Similarly, CRA- borrowers and neighborhoods were extended by the related programs often generate nonconforming mort- FHA. This finding reflects the large (unadjusted) gages, perhaps accounting for the high portfolio dollar amount of mortgages extended to lowershares of depository institutions. income and black or Hispanic borrowers, and in The shares of the other major participants in the lower-income neighborhoods and minority neighborconventional mortgage market were generally similar hoods, that were insured by the FHA. In addition, the to or somewhat smaller than those held by portfolio FHA insured a relatively large proportion of mortlenders. There were no striking differences among gages having very high loan-to-value ratios— these institutions; the portfolio shares of Fannie Mae mortgages that tend to have relatively high default and Freddie Mac and those of private mortgage insur- and loss severity rates. Moreover, the mortgage ers were similar across all borrower and neighbor- default and loss severity rates for the FHA's singlehood categories. family mortgage portfolio are higher than those experienced by other mortgage lenders or insurers (table B.l). Market Shares None of the other institutions had a large market share relative to the FHA's share. The VA, the second An institution's underwriting standards and business largest holder of risk dollars, held only about onestrategy, along with its charter restrictions and regula- sixth as many risk dollars as the FHA. As with the tory environment, influence the institution's presence FHA, the VA's portfolio included a high proportion in a particular market. An institution that aggres- of loans with high loan-to-value ratios, and these sively encourages mortgage applications from lower- loans had higher default rates than conventional mortincome and minority households may have a larger gages with similar LTVs, resulting in a relatively market share but a smaller portfolio share than one large market share. that makes only a few such mortgages. The institutions in the conventional mortgage sys- The FHA dominated all other lenders in the aggre- tem all had market shares of 10 percent or less within gate amount of risk dollars extended to lower-income any given borrower or neighborhood group. None of 3. Share of institutions' portfolios of FHA-eligible mortgages extended in 1995 to lower-income or black or Hispanic borrowers or in lower-income or predominantly minority census tracts, by mortgage system and type of holder Percent Borrower characteristic Census tract characteristic MMMooorrrtttgggaaagggeee sssyyysssttteeemmm aaannnddd Lower income Black or Hispanic Lower income Predominantly minority tttyyypppeee ooofff hhhooollldddeeerrr Unadjusted Adjusted Unadjusted | Adjusted Unadjusted Adjusted Unadjusted Adjusted GOVERNMENT MORTGAGE SYSTEM FHA 37 38 27 24 16 15 13 13 VA 33 34 20 18 13 11 8 8 CONVENTIONAL MORTGAGE SYSTEM Private mortgage insurers' 25 26 15 13 12 10 9 9 Government-sponsored enterprises (Fannie Mae or Freddie Mac) 24 26 9 14 9 10 8 9 Portfolio lenders Depository institutions subject to CRA2 32 33 11 15 13 14 8 8 Independent mortgage companies3 ... 28 32 17 19 14 13 13 10 Other4 31 31 12 16 13 13 9 9 Credit unions 22 24 7 9 10 11 5 5 All holders 30 35 16 20 13 14 10 11 NOTE. Unadjusted shares are based on dollar amounts of mortgages extended; 3. Includes mortgages originated and held in portfolio by independent mortadjusted shares are based on risk dollars. gage companies and mortgages sold to affiliates by independent mortgage 1. Mortgages backed by private mortgage insurers. companies. 2. Includes mortgages originated and held in portfolio by commercial banks 4. Includes mortgages sold to life insurance companies, pension funds, and and savings associations and their mortgage company affiliates and mortgages other private-sector purchasers. sold to commercial banks and savings associations. SOURCE. Derived from 1995 HMDA and PMI data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Distribution of Credit Risk among Providers of Mortgages 1089 4. Share of market for FHA-eligible mortgages extended in 1995 to lower-income or black or Hispanic borrowers or in lower-income or predominantly minority census tracts, by mortgage system and type of holder Percent Borrower characteristic Census tract characteristic TToottaall MMMooorrrtttgggaaagggeee sssyyysssttteeemmm aaannnddd Lower income Black or Hispanic Lower income Predominantly minority tttyyypppeee ooofff hhhooollldddeeerrr Unadjusted Adjusted Unadjusted Adjusted Unadjusted Adjusted Unadjusted Adjusted Unadjusted Adjusted GOVERNMENT MORTGAGE SYSTEM FHA 32 63 42 67 33 63 35 67 26 57 VA 8 12 9 11 7 10 7 9 8 12 CONVENTIONAL MORTGAGE SYSTEM Private mortgage insurers' 17 7 18 6 18 7 18 8 20 10 Government-sponsored enterprises (Fannie Mae or Freddie Mac) — 14 4 10 4 13 4 14 5 18 6 Portfolio lenders Depository institutions subject to CRA2 20 9 13 7 20 10 17 7 19 10 Independent mortgage companies3 . 2 2 2 2 2 2 3 2 2 2 Other4 7 2 5 2 6 3 6 2 6 3 Credit unions 1 * * * • I * * * 1 * All holders 100 100 100 100 100 100 100 100 100 100 NOTE. Unadjusted shares are based on dollar amounts of mortgages extended; 3. Includes mortgages originated and held in portfolio by independent mortadjusted shares are based on risk dollars. gage companies and mortgages sold to affiliates by independent mortgage 1. Mortgages backed by private mortgage insurers. companies. 2. Includes mortgages originated and held in portfolio by commercial banks 4. Includes mortgages sold to life insurance companies, pension funds, and and savings associations and their mortgage company affiliates and mortgages other private-sector purchasers. sold to commercial banks and savings associations. * Less than 0.5 percent. SOURCE. Derived from 1995 HMDA and PMI data. these institutions seems to play a dominant role in CONCLUSION the bearing of credit risk within this system. To some extent, profit-seeking drives institutions within We have revisited the question of who bears the this system to diversify risk across institutions: Insti- credit risk of home purchase lending to lower-income tutions specialize in a part of the mortgage process and black or Hispanic borrowers and in lower-income or within certain market niches, and they often seek and minority neighborhoods. In an earlier analysis to share the risks they incur outside their specializa- we measured credit risk rather crudely and found that tion or niche. Regulatory or legislative constraints, the FHA was a major bearer of credit risk for mortsuch as the charter requirements restricting the bear- gage lending to these groups. Here we refine our ing of credit risk of high-LTV mortgages by Fannie measure of credit risk, making significant improve- Mae and Freddie Mac and risk-adjusted capital ments in the way risk is allocated across institutions. requirements for depository institutions, also play a To a much greater extent than before, we find that the role. FHA is the primary bearer of credit risk for home Our calculations of market shares are subject to purchase loans to lower-income and black or Hissome uncertainty. We tried many different permuta- panic borrowers and in lower-income and minority tions of the underlying determinants of mortgage neighborhoods. credit risk (loan-to-value distributions, default rates, The FHA dominates all other institutions in market loss severity rates, and risk-sharing arrangements) share, holding about two-thirds of the total credit risk and found our results to be robust to reasonable borne by all institutions for FHA-eligible mortgages changes in these determinants. For example, we cal- extended in 1995 to lower-income and black or Hisculated market and portfolio shares using alternative panic borrowers and in lower-income and minority LTV distributions for portfolio lenders (appendix B). neighborhoods. The other major nonprofit govern- The primary effect was to alter the market share of ment mortgage insurer, the VA, accounted for roughly depository institutions subject to CRA, reducing or one-tenth of the market. The FHA also had the raising the group's market share 2 to 3 percentage greatest proportion of its credit risk portfolio in mortpoints. The gain or loss in market share was almost gages to lower-income and minority borrowers and all accounted for by an offsetting change in the neighborhoods. FHA's market share. The market shares of other In contrast, the conventional mortgage system bore institutions were mostly unaffected by this change. only about one-fourth of the credit risk associated Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1090 Federal Reserve Bulletin • December 1996 with FHA-eligible mortgages extended in 1995 to available from the Federal Reserve Board through its lower-income and black or Hispanic borrowers and HMDA Assistance Line (202-452-2016). in lower-income and minority neighborhoods. All of This appendix summarizes the PMI data for calenthe institutions in this system had small market shares dar year 1995.27 Beginning with the release of the relative to the FHA's, and no single institution or set 1996 PMI data, summary tables of the types preof institutions seems to have dominated the others. sented in this appendix will appear each year in the However, some of the participants in the conven- Financial and Business Statistics section of the Septional mortgage system, particularly portfolio lenders tember issue of the Federal Reserve Bulletin. The such as commercial banks, savings associations, and September Bulletin currently contains, in the same mortgage banks, had larger proportions of their credit section, summary tables for the HMDA data for the risk portfolios in mortgages to lower-income borrow- preceding calendar year. ers and neighborhoods than did the other institutions in this system. Summary of the 1995 Data APPENDIX A: For 1995, the eight PMI companies that are actively PRIVATE MORTGAGE INSURANCE IN 1995 writing home mortgage insurance submitted data to the FFIEC through MICA. In total, these companies In 1993, the Mortgage Insurance Companies of acted on 1,236,237 applications for insurance: America (MICA) asked the Federal Financial Institu- 1,108,512 to insure home purchase mortgages on tions Examination Council (FFIEC) to process data single-family properties and 127,725 to insure mortfrom private mortgage insurance companies on appli- gages for refinancing existing mortgages (table A.l). cations for mortgage insurance and to produce public The total number of policies written in 1995 (that disclosure reports based on the data.26 The MICA is, the total number of loans privately insured) was request was a response to public and congressional down about 15 percent from 1994, primarily because interest in the activities of PMI companies as they of a sharp decline in requests for PMI coverage for relate to issues of fair lending, affordable housing, refinancings. The decline in applications to insure and community development. refinancings reflects a general decline in refinancings: PMI companies record data on each application for From 1994 to 1995 the number of applications for private mortgage insurance they act on during a given conventional home refinancings reported in the period. The data include the action taken on the HMDA data fell 35 percent whereas the number of application (approved, denied, withdrawn, or file applications for conventional home purchase loans closed because information was incomplete); the pur- declined only about 2 percent (data not shown in pose of the mortgage for which insurance was sought tables). (home purchase or refinance); the race or ethnic The two largest PMI companies, Mortgage Guargroup, sex, and annual income of the applicant(s); the anty Insurance Corporation and GE Capital Mortgage amount of the mortgage; and the geographic location Insurance Corporation, in 1995 accounted for about of the property securing the mortgage. half of all applications for private mortgage insurance The FFIEC summarizes the information in disclo- and half of all policies written, a drop from 1994, sure statements similar to those created for financial when the two companies accounted for 55 percent of institutions covered by the Home Mortgage Disclo- all policies written (table A.2, 1994 data not shown). sure Act (HMDA). Disclosure statements for each The decline in share is due entirely to a decline PMI company are publicly available at the compa- in activity by GE Capital. Two smaller companies, ny's corporate headquarters and at a central deposi- Amerin Guaranty and Commonwealth Mortgage tory in each metropolitan statistical area (MSA) in Assurance, saw fairly sizable increases in their shares which HMDA data are held. The central depository of the overall market. also holds aggregate data for all the PMI companies The large share of PMI activity accounted for by active in that MSA. In addition, the PMI data are Mortgage Guaranty and GE Capital extended across 26. Founded in 1973, MICA is the trade association for the PMI 27. For analyses of the 1993 and 1994 data, see, respectively, industry. The costs to the FFIEC for processing the data, preparing Canner, Passmore, and Mittal, "Private Mortgage Insurance," and disclosure statements and other reports, and disseminating the data are Canner and Passmore, "Credit Risk and the Provision of Mortgages to covered by the PMI companies through MICA. Lower-Income and Minority Homebuyers." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Distribution of Credit Risk among Providers of Mortgages 1091 A.l. PMI applications received and policies written, grouped by purpose of loan and distributed by insurance company, 1995 Percent Home purchase Home refinance Total CCoommppaannyy Policies Policies Policies Applications Applications Applications written written written Amerin Guaranty 3.8 4.8 4.5 6.1 3.9 4.9 Commonwealth Mortgage Assurance 10.1 9.6 12.2 11.2 10.3 9.8 GE Capital Mortgage Insurance 23.2 23.0 19.4 19.0 22.8 22.6 Mortgage Guaranty Insurance 26.8 27.3 27.2 27.9 26.8 27.3 PMI Mortgage Insurance 12.7 12.1 13.7 13.0 12.8 12.2 Republic Mortgage Insurance 9.6 9.6 9.5 9.3 9.6 9.6 Triad Guaranty Insurance 1.5 1.5 1.4 1.4 1.5 1.5 United Guaranty 12.2 12.1 12.0 12.0 12.2 12.1 Total 100.0 100.0 100.0 100.0 100.0 100.0 MEMO Number of applications or policies 1,108,512 884,745 127,725 94,244 1,236,237 978,989 SOURCE. Federal Financial Institutions Examination Council. all regions of the country, although GE Capital's Most loans backed by private mortgage insurance market share was relatively smaller in the West and in 1995 were for amounts of less than $150,000 Mortgage Guaranty's share was relatively large in the (table A.3). More than 90 percent of all mortgages Midwest (table A.2, upper panel). Smaller firms gen- backed by private mortgage insurance were at or erally had a more regional orientation, with Amerin below the loan size limits established for Fannie Mae Guaranty more active in the West and Triad Guaranty and Freddie Mac (memo, size conformance items). Insurance Corporation and Republic Mortgage Insur- The average size of the home purchase mortgages ance more active in the South (table A.2, lower backed by private mortgage insurance was $112,546 panel). and that of the refinancings was $128,027. A.2. PMI policies written for home purchase and refinance loans, distributed by insurance company and by region of the country, 1995 Percent Company West Midwest South Northeast All1 Distribution by company Amerin Guaranty 8.5 3.8 4.0 4.6 5.1 Commonwealth Mortgage Assurance 12.0 5.0 11.7 12.3 10.0 GE Capital Mortgage Insurance 16.8 27.1 21.6 26.5 22.8 Mortgage Guaranty Insurance 26.6 33.5 22.9 25.1 27.1 PMI Mortgage Insurance 15.7 8.8 12.0 14.1 12.3 Republic Mortgage Insurance 8.6 8.5 13.0 4.3 9.3 Triad Guaranty Insurance .3 1.6 2.4 .8 1.5 United Guaranty 11.5 11.7 12.4 12.3 12.0 All companies 100 100 100 100 100 MEMO Largest two companies2 43.4 60.6 44.5 51.6 49.9 Largest four companies3 70.6 81.1 68.9 78.0 74.2 Distribution by region Amerin Guaranty 38.2 21.4 26.1 14.3 100 Commonwealth Mortgage Assurance 27.7 14.2 38.8 19.4 100 GE Capital Mortgage Insurance 16.9 33.6 31.3 18.2 100 Mortgage Guaranty Insurance 22.5 35.0 28.0 14.5 100 PMI Mortgage Insurance 29.3 20.2 32.5 18.0 100 Republic Mortgage Insurance 21.2 25.6 46.0 7.1 100 Triad Guaranty Insurance 4.5 31.8 55.0 8.8 100 United Guaranty 22.0 27.6 34.3 16.2 100 AH companies 22.9 28.3 33.1 15.7 100 NOTE. Regions are defined by the Bureau of the Census and contain only 2. Mortgage Guaranty Insurance and GE Capital Mortgage Insurance. whole states; see U.S. Department of Commerce, Statistical Abstract of the 3. Mortgage Guaranty Insurance, GE Capital Mortgage Insurance, PMI Mort- United States: 1995 (Government Printing Office, 1995), map on inside front gage Insurance, and United Guaranty. cover. SOURCE. Federal Financial Institutions Examination Council. 1. Row totals differ from those shown in table A.l because information on region was not available for all PMI policies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1092 Federal Reserve Bulletin • December 1996 A.3. PMI-insured loans, grouped by purpose of loan and distributed by size of loan, 1995 Home purchase Home refinance SSSiiizzzeee ooofff llloooaaannn Privately insured Privately insured (((dddooollllllaaarrrsss))) MMEEMMOO:: AAllll11 MMEEMMOO:: AAllll11 ((ppeerrcceenntt)) ((ppeerrcceenntt)) Number Percent Number Percent Less than 50,000 84,372 9.5 25.9 4,122 4.4 30.9 50,000-74,999 161,517 18.3 17.3 14,502 15.4 19.7 75,000-99,999 174,314 19.7 14.9 16,890 17.9 14.1 100,000-149,999 277,400 31.4 22.5 31,168 33.1 17.5 150,000-199,999 119,686 13.5 10.2 16,466 17.5 8.4 200,000 or more 67,456 7.6 9.2 11,096 11.8 9.3 Total 884,745 100.0 100.0 94,244 100.0 100.0 MEMO Size conformance2 Conforming 830,398 93.9 92.6 85,218 90.4 92.4 Nonconforming 54,347 6.1 7.4 9,026 9.6 7.6 Size statistic (dollars)3 Mean 112,546 102,591 128,027 98,600 Median 103,000 85,000 117,000 73,000 1. Based on all conventional home mortgages reported in 1995 HMDA data. 3. For loans for which loan size was reported. 2. Loans of up to and including $203,000 conform with size limits imposed SOURCE. Federal Financial Institutions Examination Council, on Fannie Mae and Freddie Mac. Compared with all conventional home mortgages the 1995 HMDA data, most of the applicants for in 1995 (table A.3, memo, size statistic items), con- loans backed by PMI were white (about 80 percent) ventional mortgages involving private mortgage and about half of the applicants were seeking insurinsurance were, on average, larger for both home ance for mortgages to be secured by properties purchase loans and refinancings. In particular, PMI located in predominantly white neighborhoods companies insured a much smaller proportion of (neighborhoods with a minority population of less mortgages under $50,000, partly because this size than 10 percent). Overall, about 60 percent of the category includes loans for mobile homes, which are applicants were seeking insurance to help buy a home covered in the conventional home mortgage data or to refinance a mortgage on a property located in reported under HMDA but are rarely insured by the the non-central city portion of MSAs. PMI industry. The distribution of applications to individual PMI companies by applicant income and race or ethnic group generally reflects the aggregate industry distri- Characteristics of Applicants bution (compare table A.4 with table A.5). The differfor Private Mortgage Insurance ences among the companies were small in most cases and may, in part, reflect differences in regional focus In 1995, well over half of all applicants for private or business orientation from company to company. mortgage insurance had incomes at or above the median for the MSA in which the property securing the loan was located (table A.4). The distributions of Disposition of Applications PMI applicants by income differed between those for Private Mortgage Insurance seeking insurance for loans to purchase homes and those applying for insurance to refinance an existing PMI companies approved most of the insurance loan. In particular, the proportion of insurance appli- applications on which they acted during 1995— cants for refinancings who were in the highest income roughly 87 percent of applications to back home grouping (income 120 percent or more of their MSA purchase loans and 85 percent for refinancings median family income) was significantly larger (table A.6). Of the applications for insurance on (59 percent) than the comparable proportion of insur- home purchase loans, 9.3 percent were denied by a ance applicants for home purchase mortgages PMI company and 2.6 percent were withdrawn by the (49 percent). This difference likely reflects the higher lender; in a relatively small percentage of cases, the proportion of first-time, and perhaps younger, home- application file was closed after additional informabuyers in the home purchase category. tion needed by a PMI company to make a decision Like the distribution of applicants for conventional was not provided. For home refinancing applications, home purchase loans and refinancings observed in the denial rate was 11.5 percent and the withdrawal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Distribution of Credit Risk among Providers of Mortgages 1093 rate was 3.2 percent. The denial rate for applications for insurance to more than one PMI company at a to insure mortgages for home purchases was little time. Multiple applications are potentially more comchanged from 1994, while the denial rate for refi- mon for private mortgage insurance than for mortnancings increased, from 8.5 percent to 11.5 percent. gages because PMI companies do not charge for PMI High approval rates for PMI applications are not applications whereas lenders generally charge for surprising: Lenders know the prospective borrowers' mortgage applications. credit circumstances and the credit underwriting Overall, nearly 6 percent of the applications in the guidelines used by the PMI companies and, therefore, 1995 data appear to have involved multiple applicasubmit only those applications they expect to be tions (see box "Multiple Applications"). Analysis approved.28 However, the evaluation of disposition suggests that it was mainly the applications of marpatterns for mortgage insurance applications is com- ginally qualified applicants that were submitted to plicated because lenders may submit an application more than one PMI company. For example, among the multiple applications, the denial rate was roughly 40 percent for insurance for home purchase mort- 28. Also, PMI companies are increasingly delegating decisions gages, compared with 7 percent for all home purabout applications to the lending institutions. In such cases, the PMI company becomes aware of an application for insurance only when a chase applications excluding the multiple applicalender has selected it as the insurance provider. In fact, nearly all of tions (the denial rate for all home purchase the business of one PMI company, Amerin Guaranty Corporation, is applications, 9.3 percent, is shown in table A.6). based on decisions delegated to lenders. A.4. PMI applications, grouped by purpose of loan and distributed by characteristics of applicant and of census tract in which property is located, 1995 Home purchase Home refinance CChhaarraacctteerriissttiicc Number Percent Number Percent APPLICANT Race or ethnic group American Indian or Alaskan native 3,102 .3 399 .4 Asian or Pacific Islander 28,881 3.1 4,159 3.9 Black 67,261 7.2 7,248 6.8 Hispanic 72,406 7.8 6,645 6.2 White 733,187 78.6 85,293 79.5 Other 6,364 .7 1,009 .9 Joint (white and minority) 22,189 2.4 2,478 2.3 Total 933390 100.0 107,231 100.0 Income (percentage of MSA median)1 Less than 80 148,557 20.4 11,291 11.8 80-99 114,329 15.7 12,982 13.5 100-119 112,316 15.4 14,873 15.5 120 or more 353,964 48.5 56,724 59.2 Total 729,166 100.0 95,870 100.0 CENSUS TRACT Racial composition (minorities as percentage of population) Less than 10 371,013 49.6 41,234 42.8 10-19 164,676 22.0 21,962 22.8 20-49 136,585 18.3 21,090 21.9 50-79 46,649 6.2 7,292 7.6 80-100 28,776 3.8 4,651 4.8 Total 747,699 100.0 96,229 100.0 Income2 Lower 89,662 12.0 10,389 10.8 Middle 371,199 49.7 49,752 51.8 Upper 286,223 38.3 35,996 37.4 Total 747,084 100.0 96,137 100.0 Location3 Central city 305,980 40.9 34,316 35.7 Non-central city 441,749 59.1 61,914 64.3 Total 747,729 100.0 96,230 100.0 NOTE. Not all characteristics were reported for all loans. median family income for MSA. Middle: 80 percent to 120 percent. Upper: 1. MSA median is median family income of the metropolitan statistical area 120 percent or more. (MSA) in which the property related to the loan is located. 3. For census tracts located in MSAs. 2. Lower: median family income for census tract less than 80 percent of SOURCE. Federal Financial Institutions Examination Council. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1094 Federal Reserve Bulletin • December 1996 A.5. PMI applications, grouped by insurance company and purpose of loan and distributed by characteristics of applicant and census tract in which property is located, 1995 Percent Amerin Commonwealth GE Capital Mortgage Guaranty Mortgage Assurance Mortgage Insurance Guaranty Insurance Characteristic Purchase Refinance Purchase Refinance Purchase Refinance Purchase Refinance APPLICANT Race or ethnic group American Indian or Alaskan native — .3 .3 .4 .3 .4 .6 .3 .3 Asian or Pacific Islander 3.4 5.0 3.5 4.3 2.6 3.3 3.1 3.4 Black 4.6 4.8 8.7 8.1 8.3 7.7 6.1 5.8 Hispanic 7.1 6.9 10.3 8.9 7.2 4.5 6.9 5.5 White 80.1 77.0 73.5 74.9 79.7 82.3 80.5 81.4 Other 1.7 3.0 1.2 1.2 .0 .0 .8 .9 Joint (white and minority) 2.8 3.0 2.5 2.3 1.7 1.6 2.4 2.6 Total 110000..00 110000..00 110000..00 110000..00 110000..00 110000..00 110000..00 110000..00 Income (percentage of MSA median)l Less than 80 15.3 10.3 21.4 13.2 22.5 12.0 20.2 11.7 80-99 14.8 13.3 15.8 14.3 16.3 13.4 15.8 13.6 100-119 16.9 15.1 15.0 16.1 14.7 15.1 15.6 15.4 120 or more 53.1 61.3 47.8 56.4 46.5 59.5 48.4 59.3 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 CENSUS TRACT Racial composition (minorities as percentage of population) Less than 10 49.2 39.0 43.3 37.3 51.5 49.0 52.5 45.1 10-19 23.1 24.5 23.3 22.6 21.0 21.5 21.6 22.4 20-49 18.6 24.9 20.6 23.6 17.3 18.7 16.9 20.8 50-79 6.2 7.8 7.5 9.6 6.0 6.3 5.6 7.2 80-100 2.8 3.9 5.4 6.9 4.2 4.4 3.2 4.4 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Income2 Low or moderate 9.7 10.6 13.2 13.2 12.9 10.5 11.8 10.5 Middle 49.5 51.3 49.7 53.7 50.0 51.6 50.3 51.5 Upper 40.8 38.0 37.1 33.1 37.1 37.9 37.9 38.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Although most 1995 applications for private mort- Minneapolis-St. Paul, 3.3 percent; Kansas City, gage insurance were approved, there were substantial 3.5 percent; Indianapolis, 4.5 percent; Richmond, differences across metropolitan areas. In particular, 4.5 percent; and St. Louis, 4.5 percent). applications for insurance for home purchase mortgages secured by properties located in nearly all Disposition by Applicant Characteristics California MSAs and in a number of Florida MSAs had relatively high denial rates. These elevated denial In general, the amount, source, and stability of rates continue the pattern first observed in the 1993 income can be expected to affect an applicant's abil- PMI data. In California, weak housing markets ity to qualify for mortgage insurance, although these combined with the aggressive pursuit of customers aspects of income are usually considered in relation by mortgage originators may have led to higher to the applicant's existing and proposed debt burden proportions of marginally qualified applicants for rather than as absolute measures of creditworthiness. mortgage insurance in these markets. The explana- Other factors considered in evaluating creditworthitions for high denial rates in Florida are less certain; ness include the amount of assets available to meet possibilities include a high proportion of relatively down payment and closing cost requirements, risky types of property (condominiums and second employment experience, and credit history. On averhomes) and a local economy that is prone to greater age, lower-income households have fewer assets and volatility in housing prices. In contrast, many MSAs lower net worth and experience more frequent in the Midwest and some in the South had denial employment disruptions than do higher-income rates well below the 8.2 percent national average for households; this combination of factors often results MSAs (for example, Raleigh-Durham, 2.6 percent; in denial of an application. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Distribution of Credit Risk among Providers of Mortgages 1095 A.5.—Continued PMI Republic Triad United Mortgage Insurance Mortgage Insurance Guaranty Insurance Guaranty CChhaarraacctteerriissttiicc Purchase Refinance Purchase Refinance Purchase Refinance Purchase Refinance APPLICANT Race or ethnic group American Indian or Alaskan native — .3 .3 .3 .5 .3 .4 .2 .2 Asian or Pacific Islander 3.9 5.2 2.6 3.3 1.9 1.2 3.4 4.5 Black 7.2 7.0 6.9 6.8 6.4 6.9 7.5 6.6 Hispanic 9.5 8.1 7.9 5.9 3.7 2.6 7.3 6.2 White 75.8 75.8 77.9 80.2 85.2 87.0 78.4 78.9 Other .8 1.0 .6 .7 .6 .4 .9 1.5 Joint (white and minority) 2.4 2.6 3.8 2.6 1.9 1.4 2.2 2.1 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Income (percentage of MSA median)l Less than 80 20.5 11.5 18.9 12.2 16.9 9.6 19.2 11.0 80-99 15.7 13.5 15.5 13.5 14.5 15.0 14.8 12.9 100-119 15.8 15.8 15.7 15.9 16.5 16.2 15.2 15.1 120 or more 48.0 59.2 49.9 58.4 52.1 59.2 50.7 60.9 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 CENSUS TRACT Racial composition (minorities as percentage of population) Less than 10 46.2 36.9 48.0 43.4 55.2 54.5 49.8 40.9 10-19 22.7 24.1 22.9 22.7 22.9 21.7 21.8 24.1 20-49 19.9 24.9 19.1 22.7 16.4 16.8 18.5 22.7 50-79 7.0 8.7 6.6 7.2 3.6 4.1 6.2 7.5 80-100 4.2 5.4 3.5 4.0 1.9 2.9 3.7 4.8 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Income2 Low or moderate 12.5 11.3 11.0 9.9 8.6 8.8 11.0 9.7 Middle 50.1 52.3 48.6 52.6 48.7 49.4 48.2 49.6 Upper 37.4 36.3 40.3 37.4 42.7 41.8 40.8 40.6 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 1. MSA median is median family income of the metropolitan statistical area 80 percent of median family income for MSA of tract. Middle income: 80 per- (MSA) in which the property related to the loan is located. cent to 120 percent. Upper income: 120 percent or more. 2. Low or moderate: median family income for census tract less than SOURCE. Federal Financial Institutions Examination Council. The 1995 data indicate that most applications for can applicants, and 8.5 percent of white applicants private mortgage insurance were approved but that were denied. The rate of denial also generally the rates of approval and denial varied among appli- increased as the proportion of minority and lowercants grouped by income (table A.6). For example, income residents in a neighborhood increased. 90 percent of the applicants for insurance for home Differences in PMI denial rates for applicants purchase loans whose incomes placed them in the grouped by race or ethnicity reflect various factors, highest income group were approved for insurance, including the proportion of each group with relcompared with 83 percent in the lowest income group atively low incomes. In 1995, 19 percent of the (income less than 80 percent of their MSA median). white applicants who applied for insurance to back The same pattern was found for applications for home purchase loans had incomes that were less insurance of refinancings. than 80 percent of the median family income for Examination of the racial or ethnic characteristics their MSA (data not shown in tables). The figures of applicants indicates that greater proportions of for other groups of applicants in the same income Asian, black, and Hispanic applicants than of white category were roughly 40 percent for black, 35 perapplicants had their applications for private mortgage cent for Hispanic, and 18 percent for Asian appliinsurance denied in 1995; the denial rate for Native cants. Differences in the distribution of applicants American applicants was about the same as that for insurance by income account for some of the for white applicants. For example, for insurance for differences in denial rates. However, within each home purchase loans, 13.8 percent of Asian appli- income group, white applicants had lower rates of cants, 19.3 percent of black applicants, 17.6 percent denial than Asian, black, or Hispanic applicants of Hispanic applicants, 10.5 percent of Native Ameri- (table A.7). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1096 Federal Reserve Bulletin • December 1996 Multiple Applications Of the 1,108,512 applications for insurance for home pur- ences of $1,000 or less were allowed.) If two applications chase loans in 1995, 65,714 (5.9 percent) appear to have appeared to match but both were reported to have been been multiple applications, and of the 127,725 applications backed by insurance, the applications were assumed not to for insurance to back refinancings that year, 7,313 (5.7 per- be duplicates. Applications from Hispanic, black, and cent) appear to have been multiple applications.1 Multiple Asian applicants—and from applicants not in the highest applications were identified through a search of the data for income category—were more likely than applications from applications showing identical census tracts, purposes of would-be borrowers in other racial or ethnic categories to loan, and race or ethnic status and similar applicant incomes be sent to more than one PMI company (compare table A.4 and loan sizes. (For applicant income and loan size, differ- with the table below). In addition, denial rates were substantially higher for all categories of applicants with multiple application records (compare table A.6 with the table 1. Most matches were of two applications, indicating that a given application was typically not submitted to more than two PMI companies. below). Distribution and denial rate for PMI applications sent to more than one company, by purpose of loan and characteristics of applicant and of census tract in which property is located, 1995 Percent Home purchase Home refinance CChhaarraacctteerriissttiicc Distribution Denial rate Distribution Denial rate AH applications sent to more than one company 100 40.2 100 47.1 Race or ethnic group of applicant American Indian or Alaskan Native .2 48.8 .2 38.5 Asian or Pacific Islander 4.0 43.3 5.1 44.1 Black 13.0 52.8 10.8 60.6 Hispanic 13.9 47.5 10.2 50.7 White 66.4 38.9 70.8 46.6 Other .5 50.9 .6 60.0 Joint (white and minority) 2.0 43.0 2.3 44.9 Total 100 100 Income of applicant (percentage of MSA median)* Less than 80 28.7 48.3 16.4 56.5 80-99 17.6 42.3 15.4 49.6 100-119 14.8 38.2 16.4 44.2 120 or more 38.9 35.8 51.7 44.4 Total 100 100 Racial composition of census tract (minorities as percentage of population) Less than 10 36.8 34.8 32.8 44.3 10-19 22.4 38.7 20.7 46.7 20-49 23.6 45.0 27.3 47.8 50-79 10.1 46.3 10.8 47.0 80-100 7.1 48.7 8.5 57.7 Total 100 100 Income of census tract2 16.2 47.1 14.7 50.7 Middle 49.6 40.7 51.6 47.9 34.2 36.3 33.7 44.4 Total 100 100 Location of census tract3 Central city 40.3 42.0 34.1 48.0 Non-central city 59.7 39.1 65.9 46.7 Total 100 100 MEMO Number of applications sent to more than one company 65,714 7,313 1. MSA median is median family income of the metropolitan statistical median family income for MSA. Middle: 80 percent to 119 percent, area (MSA) in which the property related to the loan is located. Upper: 120 percent or more. 2. Lower: median family income for census tract less than 80 percent of 3. For census tracts located in MSAs. SOURCE. Federal Financial Institutions Examination Council. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Distribution of Credit Risk among Providers of Mortgages 1097 Denial rates are also explained in part by differ- applicants in California may help account for their ences across racial and ethnic groups in the frequency relatively high denial rate for private mortgage insurof multiple applications for insurance by the same ance. Among Asians applying for home purchase applicants. Generally, applications by minorities are loans with insurance (where the MSA location of the more likely to be submitted to more than one PMI property was reported), 39 percent were seeking to company because minority applicants tend to have buy homes in California. In contrast, only 11 percent lower incomes or more complex credit circumstances. of all PMI applications were for loans to buy homes Excluding multiple applications submitted for the in California. Slightly more than 20 percent of the same individuals reduces denial rates 3 to 4 percent- Asian applicants in California were denied private age points for minorities and less than 2 percentage mortgage insurance, compared with only 8 percent of points for whites. Asian applicants outside California (data not shown The pattern of denial rates by race or ethnicity in tables). differs from the pattern in the HMDA data in one The difference in PMI denial rates between white notable way: In the HMDA data, Asian applicants for applicants and black and Hispanic applicants may home purchase loans have a lower denial rate than do lead some observers to conclude that race influences white applicants.29 The high proportion of Asian the disposition of applications. However, because PMI companies do not have direct contact with prospective borrowers, they would be aware of race or 29. For example, according to the 1995 HDMA data, the denial ethnic identities only from the application. Although rate for home purchase mortgages was 12.5 percent for Asian applithese disparities raise questions, the extent of any cants and 20.6 percent for white applicants. A.6. PMI applications, grouped by characteristics of applicant and of census tract in which property is located and distributed by purpose and disposition of application, 1995 Percent Home purchase Home refinance Approved Denied Withdrawn File closed Total Approved Denied Withdrawn File closed Total Total 87.4 9.3 2.6 .7 100 84.7 11.5 3.2 .6 100 APPLICANT Race or ethnic group American Indian or Alaskan Native 84.7 10.5 3.6 1.1 100 86.5 9.8 3.3 .5 100 Asian or Pacific Islander 82.0 13.8 3.3 .9 100 79.1 15.8 4.4 .7 100 Black 75.7 19.3 3.9 1.1 100 75.3 19.7 4.0 1.0 100 Hispanic 77.6 17.6 3.8 1.1 100 75.6 19.3 4.3 .8 100 White 88.2 8.5 2.3 .7 100 85.4 10.9 3.2 .6 100 Other 84.1 12.6 2.4 .9 100 87.0 10.0 2.2 .8 100 Joint (white and minority) 85.6 11.0 2.7 .7 100 83.4 13.0 3.2 .4 100 Income (percentage of MSA median)l Less than 80 83.2 13.7 2.5 .6 100 78.2 18.0 3.3 .5 100 80-99 87.9 9.4 2.1 .6 100 83.8 12.6 3.1 .6 100 100-119 89.6 7.8 2.0 .5 100 85.4 11.1 2.9 .5 100 120 or more 90.3 7.0 2.2 .5 100 86.0 10.2 3.2 .5 100 CENSUS TRACT Racial composition (minorities as percentage of population) Less than 10 92.1 5.8 1.7 .4 100 88.2 8.8 2.6 .4 100 10-19 88.7 8.6 2.2 .5 100 85.2 11.1 3.3 .5 100 20-49 84.6 12.1 2.7 .6 100 82.1 13.6 3.6 .7 100 50-79 80.5 15.5 3.2 .8 100 78.6 16.8 4.0 .6 100 80-100 76.7 18.7 3.6 1.0 100 73.1 21.9 4.3 .7 100 Income2 Lower 82.7 13.8 2.8 .7 100 79.8 16.2 3.5 .5 100 Middle 88.8 8.6 2.1 .5 100 84.8 11.6 3.1 .5 100 Upper 90.3 7.1 2.1 .5 100 85.9 10.3 3.2 .6 100 Locationi Central city — 88.1 9.2 2.2 .5 100 84.5 11.7 3.2 .5 100 Non-central city 89.0 8.3 2.1 .5 100 84.8 11.5 3.1 .5 100 NOTE. Not all characteristics were reported for all loans. median family income for MSA of tract. Middle: 80 percent to 120 percent. 1. MSA median is median family income of the metropolitan statistical area Upper: 120 percent or more. (MSA) in which the property related to the loan is located. 3. For census tracts located in MSAs. 2. Lower: median family income for census tract less than 80 percent of SOURCE. Federal Financial Institutions Examination Council. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1098 Federal Reserve Bulletin • December 1996 A.7. PMI applications, grouped by purpose and disposition of application, 1995 Percent Home purchase Home refinance AApppplliiccaanntt''ss MMSSAA--rreellaattiivvee iinnccoommee aanndd rraaccee oorr eetthhnniicc ggrroouupp11 Approved Denied Withdrawn 1 File closed Total Approved Denied Withdrawn File closed Total Less than 80 percent American Indian or Alaskan native ... 84.7 12.2 2.7 .4 100 82.0 16.0 2.0 .0 100 Asian or Pacific Islander 80.4 16.2 2.8 .6 100 73.8 22.4 2.8 1.0 100 Black 73.5 22.2 3.5 .8 100 69.3 26.4 3.8 .4 100 Hispanic 76.9 19.3 3.1 .8 100 70.0 24.8 4.5 .8 100 White 85.3 11.9 2.3 .5 100 79.6 16.8 3.0 .6 100 Other 81.8 15.7 1.8 .6 100 81.9 14.9 3.2 .0 100 Joint (white and minority) 79.5 17.7 2.1 .7 100 72.3 25.2 2.5 .0 100 80-99 percent American Indian or Alaskan native ... 87.1 9.7 2.1 1.2 100 82.9 17.1 .0 .0 100 Asian or Pacific Islander 84.0 12.6 2.9 .5 100 77.8 17.6 4.3 .2 100 Black 78.4 17.3 3.5 .9 100 75.6 18.3 4.4 1.7 100 Hispanic 78.3 17.6 3.2 .9 100 76.1 19.3 4.2 .5 100 White 89.7 7.9 1.9 .5 100 84.9 11.8 2.8 .5 100 Other 84.2 14.0 1.4 .4 100 87.4 6.8 3.9 1.9 100 Joint (white and minority) 86.8 11.0 1.7 .5 100 79.6 16.9 3.0 .5 100 100-119 percent American Indian or Alaskan native ... 87.6 8.6 3.2 .6 100 88.6 6.8 2.3 2.3 100 Asian or Pacific Islander 83.8 12.8 2.7 .8 100 82.2 12.4 4.9 .5 100 Black 79.4 16.6 3.2 .7 100 75.4 19.3 3.7 1.5 100 Hispanic 79.3 16.1 3.6 1.0 100 76.7 17.6 4.5 1.1 100 White 91.2 6.5 1.8 .4 100 86.5 10.5 2.5 .5 100 Other 87.2 9.6 2.3 .8 100 89.1 9.4 .7 .7 100 Joint (white and minority) 87.6 9.9 2.0 .6 100 84.7 12.9 2.4 .0 100 120 or more percent American Indian or Alaskan native ... 87.1 8.5 3.4 1.0 100 86.6 7.5 5.3 .5 100 Asian or Pacific Islander 82.5 13.1 3.5 .9 100 78.7 15.7 4.8 .7 100 Black 81.2 14.8 3.2 .8 100 75.9 19.6 3.9 .6 100 Hispanic 81.4 14.1 3.5 1.0 100 77.1 17.8 4.1 .9 100 White 91.1 6.3 2.1 .5 100 86.7 9.7 3.1 .5 100 Other 86.7 10.1 2.5 .6 100 86.4 10.6 2.2 .8 100 Joint (white and minority) 88.3 8.7 2.5 .6 100 84.8 11.9 3.1 .2 100 1. Income percentages are the percentages of the median family income of SOURCE. Federal Financial Institutions Examination Council, the MSA in which the property related to the loan is located. discrimination cannot be determined from the data ration of our PMI matching procedure, modified by submitted by the PMI companies because the compa- institutional information, to determine the extent of nies provide little information about the characteris- PMI use across institutions; (3) application of historitics of the properties that applicants seek to purchase cal default rates and loss severity rates by loan-toor refinance or of the financial circumstances of the value ratio for each type of institution to calculate the applicants. For example, applicants' levels of debt, estimated risk dollars held by each group of institutheir credit histories, and their employment experi- tions; and (4) reallocation of these risk dollars across ences are not disclosed. Without information about institutions to account for risk-sharing arrangements these circumstances and about the specific underwrit- between private mortgage insurers and other instituing standards used by PMI companies, the fairness of tions and between the VA and originators of VA the decision process cannot be assessed. mortgages. APPENDIX B: Estimating Loan-to-Value Distributions ADJUSTING THE COMPOSITION OF MORTGAGE ACTIVITY FOR CREDIT RISK For most institutions, the distribution of loan-to-value ratios for their mortgage portfolios was not publicly The process of converting dollar amounts of mort- available. Therefore, we developed a model for estigages extended or insured ("unadjusted dollars") to mating LTVs for home purchase loans reported in the risk dollars—the long-term expected loss for each 1995 HMDA data using preliminary information mortgage extended—involved four steps: (1) the use from the Federal Reserve's 1995 Survey of Conof econometric and institutional information about sumer Finances (details of this procedure are availloan-to-value ratio (LTV) distributions to create such able upon request from the authors). For some of the distributions for each type of institution; (2) incorpo- institutions for which exact aggregate LTV distribu- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Distribution of Credit Risk among Providers of Mortgages 1099 tions were available, we adjusted our estimates to way of directly evaluating the validity of our estireflect those figures. mates. However, aggregate data were available for Our estimates, together with institutional knowl- insured and uninsured conventional home purchase edge, suggest that there are essentially five different mortgages originated by depository institutions and distributions of loan-to-value ratios across mortgage mortgage bankers as a group.30 Those data suggest holders and insurers (table B.l). The FHA, the VA, that our estimates underpredicted the proportion in Fannie Mae and Freddie Mac, and the PMI compa- the lowest LTV category but were close to correct for nies appear to have LTV distributions significantly the highest LTV category (table B.2). different from each other. But the fifth group— For insured mortgages, the distribution of LTVs depository institutions subject to the Community varies by insurer. Generally, government-insured Reinvestment Act, mortgage bankers, other privately loans have very high concentrations of mortgages chartered nondepository institutions, and credit having loan-to-value ratios of 90 percent or higher; unions—appear to differ little from each other. We we estimated that 93 percent of the loans insured by estimated econometrically that roughly 60 percent of the VA in 1995 were in this category. In contrast, the mortgages held by this latter group have loan-to- privately insured mortgages were estimated to be value ratios of 80 percent or less, 20 percent have ratios between 80 percent and 90 percent, and 20 percent have ratios greater than 90 percent. 30. These data are gathered in the Mortgage Interest Rate Survey Because data on LTV distributions for this fifth (MIRS), a monthly survey conducted by the Federal Housing Finance group of institutions were not available, we had no Board. The Finance Board provided us with annual data for 1995. B.l. Estimated loan-to-value ratios, default rates, loss severity rates, and risk-sharing proportions used to derive expected losses on mortgages extended in 1995 Percent Estimated default rate, Estimated loss severity rate, MMMEEEMMMOOO::: Estimated loan-to-value ratio (percent) by loan-to-value ratio1 by loan-to-value ratio2 EEEssstttiiimmmaaattteeeddd eeexxxpppeeecccttteeeddd cccuuummmuuulllaaatttiiivvveee IIInnnsssuuurrraaannnccceee ssstttaaatttuuusss 91 or more 91 or more 91 or more dddooollllllaaarrr lllooossssss aaannnddd tttyyypppeee ooofff rrriiissskkk hhhooollldddeeerrr 8800 oorr 8800 oorr 8800 oorr pppeeerrr $$$111000000 ooofff lleessss 8811--9900 91-95 96 or TToottaall lleessss 8811--9900 91-95 96 or lleessss 8811--9900 91-95 96 or eee mmm xxxttt ooo eeennn rrrttt ddd ggg eee aaa ddd ggg eee bbb sss yyy more more more iiinnnssstttiiitttuuutttiiiooonnn333 INSURED MORTGAGES FHA 6 27 31 36 100 5.2 10.6 12.4 15.5 45.8 44.9 46.8 56.6 6.38 VA 1 6 17 76 100 1.1 3.5 6.6 12.2 45.8 44.9 46.8 56.6 4.70 Private mortgage insurers4 — 2 48 47 3 100 .8 2.7 6.2 9.6 28.4 34.4 47.9 47.9 1.09 UNINSURED MORTGAGES Fannie Mae or Freddie Mac ... 96 2 2 100 .8 2.7 6.2 28.4 34.4 47.9 .59 Depositories subject to CRA5 61 19 20 100 .8 2.7 6.2 28.4 34.4 47.9 .94 Independent mortgage companies6 63 18 19 100 .8 2.7 6.2 28.4 34.4 47.9 1.04 Other7 61 19 20 100 .8 2.7 6.2 28.4 34.4 47.9 1.23 Credit unions 62 19 19 100 .8 2.7 6.2 28.4 34.4 47.9 .91 All risk holders • - 2.90 Proportion of risk borne by insurer under risk-sharing arrangements Private mortgage insurers ... 5500 50 60 60 VA 80 80 80 80 1. Default rates show the percentage of mortgages originated in 1975-83 that 5. Includes mortgages originated and held in portfolio by commercial banks had defaulted by the end of 1992. and savings associations and their mortgage company affiliates and mortgages 2. Total loss before mortgage insurance payout resulting from foreclosure (if sold to commercial banks and savings associations. any) divided by original mortgage amount. 6. Includes mortgages originated and held in portfolio by independent mort- 3. Covers both insured and uninsured mortgages. Derived by multiplying gage companies and mortgages sold to affiliates by independent mortgage default rate by loss severity rate within each loan-to-value range and then companies. summing across loan-to-value ranges weighted by the dollar proportion of an 7. Includes mortgages sold to life insurance companies, pension funds, and institution's mortgages in that category. Losses were then reallocated among other private-sector purchasers. institutions using risk-sharing rules. Losses are cumulative over ten to eighteen . . . Not applicable. years, based on mortgages originated during 1975-83 and tracked through 1992. SOURCE. Federal Housing Administration, U.S. Department of Veterans 4. Based on discussions with individuals at private mortgage insurance Alfairs, Freddie Mac, 1995 Survey of Consumer Finances, and discussions with companies. The default rate for the LTV range "96 or more" was estimated individuals at private mortgage insurance companies. using the relationship between default rates for FHA and VA loans in the two highest LTV ranges. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1100 Federal Reserve Bulletin • December 1996 more concentrated in the 80 percent to 90 percent nated in a given year that are covered by private LTV range. mortgage insurance is unknown. However, the extent For FHA- and VA-insured mortgages, our econo- of the undercount for mortgages purchased by Fannie metric estimates were close to the actual aggregate Mae and Freddie Mac is known. Thus, for our estidistributions (table B.2). We used our estimates for mates of the distribution of risk dollars across types calculating risk dollars for FHA and VA loans of institutions, we increased the estimated number of because our model allows us to vary LTV by income mortgages backed by private insurance for all instiand race or ethnic group in a consistent manner. For tutions in proportion to the known undercount for privately insured mortgages, discussions with indus- Fannie Mae's and Freddie Mac's 1995 home purtry representatives and information available from chase mortgages. annual reports and the trade press indicated that our model significantly overpredicted the proportion of mortgages in the lowest LTV category and under- Applying Default Rates and predicted the proportion in the higher categories. Loss Severity Rates Instead of using the model's prediction, we imposed an LTV distribution based on our information about In the third step we converted dollars of mortgages the industry. However, we applied the model to extended into expected losses by applying average suggest the extent of variation in the LTV distribution default and loss severity rates. The rates we used across groups by income and race or ethnic status. were for mortgages originated from 1975 through For mortgages purchased by Fannie Mae and Fred- 1983, with performance measured through the end of die Mac, the model significantly underpredicted the 1992. The data came from three sources: Freddie actual proportion of uninsured mortgages in the low- Mac, the FHA, and the VA. Default and loss severity est LTV category (table B.2). This underprediction rates for Freddie Mac, which represent a large nummay not be surprising because the Survey of Con- ber of conventional home mortgages but not nonconsumer Finances does not distinguish between mort- forming mortgages, were used to calculate credit risk gages that are sold and those that the originator keeps in the conventional mortgage system (table B.l).31 in its portfolio, and thus the model cannot account for The appropriateness of applying this single set of this type of variation across institutions. rates to all conventional mortgages is unknown; how- As discussed earlier, Fannie Mae and Freddie Mac ever, only Freddie Mac has made these data public. generally are not allowed to purchase mortgages with For the government mortgage system, the FHA and LTVs above 80 percent unless the mortgage is backed the VA, at our request, provided comparable inforby private mortgage insurance or the buyer has mation on mortgages backed by their insurance recourse to the lender. Almost all of these high-LTV programs. mortgages have private mortgage insurance, so only a small proportion of uninsured mortgages purchased by Fannie Mae and Freddie Mac have LTVs above Incorporating Risk-Sharing Relationships 80 percent. For uninsured mortgages purchased by Fannie Mae and Freddie Mac, we used a distribution The final step in calculating risk dollars held by based on information from knowledgeable industry different institutions was to account for risk-sharing sources. As we did for the PMI industry, we used the arrangements. For privately insured mortgages, we model to vary Fannie Mae's and Freddie Mac's LTV estimated that losses are divided 50-50 between the distributions across groups by income or by race or insurer and the insuree if the loan-to-value ratio is ethnic status. Adjusting for Private Mortgage Insurance 31. Information on default and loss severity rates at Freddie Mac was drawn from Robert Van Order and Peter Zorn, "Income, Location and Default: Some Implications for Community Lending," paper The second step in calculating risk dollars was to presented at the Conference on Housing and Economics, Ohio State adjust our estimates of the extent of private mortgage University, Columbus, July 1995. Their default and loss severity rates are estimated through 1992; discussions with the authors as well as the insurance coverage among conventional home pur- FHA and the VA indicate that estimated default and loss severity rates chase mortgages. Our matching of PMI records to have fallen since 1992 and that the difference between the default rate HMDA records probably significantly undercounted for high-LTV loans relative to that for lower-LTV loans is currently less than presented in their study. Because all market participants are the number of mortgages with private mortgage affected in the same manner by these trends, we have not attempted to insurance. The exact proportion of mortgages origi- update those estimates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Distribution of Credit Risk among Providers of Mortgages 1101 B.2. Actual and predicted distributions of loan-to-value ratios for mortgages extended in 1995 Percent FHA mortgages VA mortgages Fannie Mae and Freddie Mac mortgages MIRS mortgages' LLLoooaaannn---tttooo---vvvaaallluuueee rrraaannngggeee Insured Uninsured (((pppeeerrrccceeennnttt))) AAccttuuaall PPrreeddiicctteedd AAccttuuaall PPrreeddiicctteedd AAccttuuaall PPrreeddiicctteedd Actual Predicted Actual Predicted 80 or less 3 6 2 1 0 20 96 59 54 49 81-90 12 27 4 6 43 45 2 20 18 26 91 or more 57 35 2 21 27 25 91-95 34 31 7 17 96 or more 51 36 88 76 AH 100 100 100 100 100 100 100 100 100 100 1. Data for insured and uninsured conventional home purchase mortgages SOURCE. Federal Housing Administration, Department of Veterans Affairs, originated by depository institutions and mortgage bankers as a group. From the and industry sources. Mortgage Interest Rate Survey conducted by the Federal Housing Finance Board. 90 percent or less and 6(M{) if the loan-to-value ratio credit risk of that mortgage. Because we lacked inforis greater than 90 percent.32 mation about which institutions service VA loans, we The VA, like private mortgage insurance compa- assumed that the type of institution that originated a nies, provides guarantees that may not cover all the VA mortgage, as reported in the HMDA data, was the losses associated with mortgage defaults. When a current servicer of the mortgage and hence bore that borrower with a VA mortgage defaults, the VA has portion of the credit risk that was not borne by the the option to "put back" the home to the mortgage VA. holder if it calculates that such a "put back" is the least costly means (to the VA) of implementing its guarantee. In recent years the VA has rarely exercised Testing the Robustness of Our Analysis this option, but it was used for roughly one-fifth of VA defaults (measured by the number of loans) We reviewed the effects of varying some of the during the late 1980s, when home values in some assumptions and parameters used in our analysis. For regions of the country declined sharply. Thus, esti- example, we varied the LTV distribution for mortmates of the long-term credit risk of a VA mortgage gages held by portfolio lenders because we were must provide for this risk-sharing; we estimated that uncertain about the actual distribution. On one hand, 80 percent of the losses are borne by the VA and the 1995 Survey of Consumer Finances indicates that 20 percent by the mortgage originator regardless of 39 percent of the uninsured mortgages had LTVs loan-to-value ratio. higher than 80 percent. As Fannie Mae and Freddie Commercial banks, savings associations, and mort- Mac purchased very few of these loans, the Survey of gage companies are the most frequent users of VA Consumer Finances data suggest that an even greater guarantees and thus share risk with the VA to a proportion of the uninsured mortgages held by portlimited extent. Typically, a VA loan is securitized by folio lenders had an LTV higher than 80 percent. Ginnie Mae. For Ginnie Mae-backed securities, the On the other hand, depository institutions have a institutions that service the mortgages underlying the strong incentive to hold only mortgages that have an securities (that is, collect the mortgage payments and LTV of 80 percent or less or that are covered by distribute them to the holders of the securities) are private mortgage insurance, because capital requireusually the institutions that hold the mortgages and ments for such mortgages are lower. Moreover, data thus partly bear the cost of default. However, in some from the Office of Thrift Supervision, the regulator of cases the originator of a mortgage (who may or may the savings association industry, indicate that only not be the current servicer) may retain some of the about 5 percent of the stock of all mortgages held by these institutions had an LTV higher than 80 percent and no private mortgage insurance. Reasonable adjustments to these data indicate that perhaps only as many as 12 percent of the home purchase origina- 32. Our estimated sharing rule between PMI companies and other institutions is based on conversations with industry participants and tions might be in this category. As discussed in the on comparing the PMI coverage rates used by Fannie Mae and main text, variations in this LTV distribution did not Freddie Mac with the historic estimated loss severity rates for mortalter our conclusions. gages with different LTVs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1102 Federal Reserve Bulletin • December 1996 We also changed the VA risk-sharing arrangement All other institutions lost less than 1 percentage point to allocate more risk to the VA and changed the of their market share. Thus, we conclude that our loan-to-value distributions for the FHA and the VA results are robust to reasonable changes in the to reflect their reported LTV distributions. These assumptions and parameters that underlie our meachanges raised the FHA's share about 2 percentage sures of credit risk. • points and the VA's share about 1 percentage point. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1103 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report describes Treasury and System German mark, and 0.1 percent on a trade-weighted foreign exchange operations for the period from July basis against other Group of Ten currencies. Over through September 1996. It was presented by the quarter, the dollar was supported by expectations Peter R. Fisher, Executive Vice President, Federal that the Federal Reserve would tighten monetary Reserve Bank of New York, and Manager for Foreign policy—in contrast to expectations for steady policy Operations, System Open Market Account. Christine in Germany and Japan. In addition, sentiment for Hall was primarily responsible for preparation of the the prospect of broad participation in the European report.1 Monetary Union shifted from doubt early in the quarter to growing confidence late in the quarter, lend- During the quarter the dollar appreciated 1.6 percent ing support to the dollar against the mark. The U.S. against the Japanese yen, 0.1 percent against the monetary authorities did not undertake any intervention operations in the foreign exchange market during the quarter. However, the U.S. Treasury's Exchange 1. The charts for the report are available on request from Publica- Stabilization Fund (ESF) received a $7 billion repaytions Services, Mail Stop 127, Board of Governors of the Federal ment from the United Mexican States related to draw- Reserve System, Washington, DC 20551. Foreign exchange holdings of U.S. monetary authorities, based on current exchange rates, 1996:Q3 Millions of dollars Quarterly changes in balances by source •V .. . ".V , :.'••• ••:.••• BBaallaannccee,, BBaallaannccee,, Item JJuunnee 3300,, 1199%% Net purchases Impact of Investment Currency SSeepptt.. 3300,, 11999966 and sales1 sales2 income ad v j a u l s u t a m ti e o n n t s3 FEDERAL RESERVE Deutsche marks 12,982.1 110.0 -53.2 13,038.9 Japanese yen 6,497.3 5.2 -125.7 6,376.8 Interest receivables4 74.0 72.0 Other cash flow from investments5 .5 -3.5 Total 19,553.9 19,484.2 U.S. TREASURY EXCHANGE STABILIZATION FUND Deutsche marks 6.571.2 .0 55.4 -26.9 6,599.8 Japanese yen 9.523.3 .0 6.0 -180.8 9,348.5 Mexican pesos6 10,500.0 -7,373.3 373.3 ,07 3,500.0 Interest receivables4 277.3 39.1 Other cash flow from investments3 4.4 1.2 Total 26,876.2 19,488.6 NOTE. Figures may not sum to totals because of rounding. 5. Cash flow differences from payment and collection of funds between 1. Purchases and sales include foreign currency sales and purchases related to quarters. official activity, swap drawings and repayments, and warehousing. 6. See table 4 for a breakdown of Mexican swap activities. Note that the 2. Calculated using marked-to-market exchange rates; represents the differ- investment income on Mexican swaps is sold back to the Bank of Mexico. ence between the sale exchange rate and the most recent revaluation exchange 7. Valuation adjustments on peso balances do not affect profit and loss rate. Realized profits and losses on sales of foreign currencies computed as the because the effect is offset by the unwinding of the forward contract at the difference between the historic cost-of-acquisition exchange rate and the sale repayment date. Although the ESF does not mark to market its peso holdings, exchange rate are shown in table 2. Mexico is obligated to maintain in dollar terms the value of ESF peso hold- 3. Foreign currency balances are marked to market monthly at month-end ings resulting from Mexican drawings under the Medium-Term Stabilization exchange rates. Agreement. 4. Interest receivables for the ESF are revalued at month-end exchange rates. Interest receivables for the Federal Reserve System are carried at average cost of acquisition and are not marked to market until interest is paid. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1104 Federal Reserve Bulletin • December 1996 ings by Mexico under the medium-term swap facility nent Federal Reserve tightening. Subsequently, U.S. with the ESF. An additional $3.5 billion remained stock prices declined sharply and a liquidation of outstanding. long dollar positions ensued. On July 16, the dollar depreciated from opening prices of DM 1.5145 and ¥110.22 to a low of DM 1.4695 and ¥108.27 before GENERAL STABILITY OF EXCHANGE RATES partially recovering to close the day at DM 1.4844 and ¥109.32. For the period as a whole, foreign exchange markets Expectations of a near-term Federal Reserve tightwere relatively stable. The average daily trading ening were scaled back after Chairman Greenspan's range of the dollar was substantially less than the Humphrey-Hawkins testimony in July. Market parranges observed last year. On average the dollar ticipants appeared to focus on his comments about traded in a daily range of 0.6 percent against both the the potential for an economic slowdown in the secmark and the yen. This compares with daily dollar ond half of the year. Subsequent reports of benign ranges of 1.1 percent against the mark and 1.4 per- inflation further diminished expectations for a tightcent against the yen in the third quarter of 1995. ening, and the August meeting of the Federal Open Additionally, implied volatility on dollar-mark and Market Committee ended with no announced change dollar-yen one-month options generally maintained in policy. the low levels of the second quarter of this year. In September, expectations began to build anew for However, the period was marked by a few brief a Federal Reserve tightening at the September 24 episodes of sharp dollar movements. The dollar's FOMC meeting. The August nonfarm payroll data largest one-day move occurred early in the quarter. continued to show robust employment growth. The On July 16, the dollar traded in a 3.1 percent range dollar steadily recovered all of its losses against the against the mark, implied volatility on one-month mark and yen, supported by expectations of higher dollar-mark options spiked higher, and prices of risk U.S. short-term interest rates as well as by ongoing reversals indicated a rise in the perceived risk of a strength in the U.S. stock market in September. further significant dollar decline.2 As with other sharp The FOMC's decision at the September 24 meetdollar moves over the period, the dollar's trading ing to keep policy unchanged surprised many market ranges over subsequent days fell toward the period's participants. Although the dollar declined sharply on average, implied volatility on dollar-mark options reverted toward record-low levels, and risk reversal prices moved closer to neutral. 2. Net profits or losses (-) on U.S. Treasury and Federal Reserve foreign exchange operations, based on historical cost-of-acquisition exchange rates, 1996:Q3 RESPONSE OF THE DOLLAR TO US. INTEREST Millions of dollars RATE EXPECTATIONS AND ASSET MARKET U.S. Treasury PERFORMANCE Federal Exchange Period and item Reserve Stabilization Fund Expectations for a Federal Reserve tightening shifted throughout the period. Signs of strong U.S. economic Valuation profits and losses on outstanding assets and liabilities, growth and tightening labor markets, yet benign June 30, 1996 Deutsche marks 2,118.7 663.5 inflation data, made the near-term interest rate out- Japanese yen 1,337.5 1,968.3 look uncertain. Total 3,456.1 2,631.7 Early in the quarter, the dollar reached a twenty- Realized profits arid losses nine-month high against the yen of ¥111.19 while from foreign currency sales. wsSSBSSBSSSSSM June 30, 1996-Sept. 30, 1996 holding above DM 1.52 against the mark after the Deutsche marks .0 .0 strong U.S. nonfarm payroll report for June, which Japanese yen .0 .0 led many market participants to anticipate an immi- Total .0 .0 Valuation profits and losses on 2. A risk reversal is an option position consisting of a written put o S u ep ts t t . a 3 n 0 d , i n 1 g 9 9 a 6 ss 1 ets and liabdities, and a purchased call that mature on the same date and are equally Deutsche marks 2,065.5 636.6 out-of-the-money. The price of a risk reversal indicates whether the Japanese yen 1,211.2 1,783.0 dollar call or the dollar put is more valuable. If the dollar call is at a Total 3,276.8 2,419.6 premium, the market is willing to pay more to insure against the risk that the dollar will rise sharply. If the dollar put is at a premium, the NOTE. Figures may not sum to totals because of rounding. market is willing to pay more to insure against the risk that the dollar 1. Valuation profits or losses are not affected by peso holdings, which are will fall sharply. canceled by forward contracts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 1105 the day of the announcement, it more than recovered dollar. Subsequently, however, market expectations its losses the following day. Despite the FOMC's of Bundesbank policy gradually shifted as the decision to leave policy unchanged, some market mark appreciated against the dollar, growth in the expectation for a tightening by year-end remained. Bundesbank's M3 monetary aggregate decelerated, and German business sentiment deteriorated. Also, Bundesbank officials made periodic comments that SUPPORT OF THE DOLLAR AGAINST THE MARK held open the possibility of further reductions in the FROM EXPECTATIONS FOR STEADY OR LOWER Bundesbank's key repurchase rate. Long-term inter- GERMAN RATES est rate differentials between the United States and Germany widened further in favor of the dollar and May data for German industrial production and contributed to the stabilization of the dollar after its orders, which were released early in the quarter, sharp decline in mid-July. indicated a third consecutive month-to-month rise in On July 25, at its last meeting before the summer each series. These data contributed to market percep- recess, the Bundesbank disappointed market expectations that German economic recovery would preclude tions, leaving its repo rate unchanged at 3.3 percent, further Bundesbank interest rate cuts and that market and the German mark rose sharply. The dollar fell rates would rise by year-end. The perception that from an opening price of DM 1.4905 to a low of German rates had bottomed contributed to the decline DM 1.4723 on the announcement. in the dollar against the mark in mid-July when However, in a largely unanticipated move, at its declines in U.S. equity prices also weighed on the August 22 meeting the Bundesbank cut its repo rate 30 basis points to 3 percent. The dollar appreciated after the Bundesbank's decision as interest rate differentials between the United States and Germany wid- 3. Currency arrangements, September 30, 1996 ened further in favor of the dollar. After the reduction Millions of dollars market participants generally came to expect that Amount of Outstanding, monetary policy in Germany would remain stable facility Sept. 30, 1996 through the early part of 1997. Reflecting that senti- FEDERAL RESERVE ment, implied yields on three-month Euromark RECIPROCAL CURRENCY ARRANGEMENTS futures contracts through March 1997 declined to levels only slightly above cash rates. Austrian National Bank 250 0 National Bank of Belgium 1,000 The Bundesbank's cut in the repo rate fostered an Bank of Canada 2,000 National Bank of Denmark 250 impression among many market participants that the Bank of England 3,000 Bank of France 2.000 Bundesbank was motivated, at least in part, to ease Deutsche Bundesbank 6,000 pressures on other European Union members to meet Bank of Italy 3,000 the economic convergence criteria of the Maastricht Bank of Japan 5,000 Bank of Mexico1 3,000 Treaty. In addition, the anticipated pressures on Euro- Netherlands Bank 500 pean currencies during the release of government 250 Bank of Sweden 300 budgets across Europe did not materialize. This led to Swiss National Bank 4,000 sales of German marks against higher-yielding Euro- Bank for International Settlements 600 pean currencies. In September, the dollar steadily Dollars against other authorized climbed back above DM 1.52. European currencies 1,250 Total 32,400 0 U.S. TREASURY EXCHANGE STABILIZATION FUND SUPPORT FOR THE DOLLAR AGAINST THE YEN CURRENCY ARRANGEMENTS FROM RECEDING EXPECTATIONS FOR A Deutsche Bundesbank 1,000 0 TIGHTENING BY THE BANK OF JAPAN Bank of Mexico' Regular swaps 3,000 0 United Mexican States' Early in the quarter, most market participants Medium-term swaps 3,500 believed that a hike in Japanese interest rates would Total' 3,500 soon follow any tightening by the Federal Reserve. 1. Facilities available to Mexico comprise short-term swaps between the This assumption came into question, however, as Bank of Mexico and both the Federal Reserve and the ESF, as well as mediumofficial commentary and the Bank of Japan's quarterm swaps and government guarantees between the government of Mexico and the ESF. The total amount available from both medium-term swaps and govern- terly outlook, released in late July, suggested that the ment guarantees is $20 billion, less any outstanding drawings on the shorteconomy had not achieved a "self-sustaining" recovterm facilities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1106 Federal Reserve Bulletin • December 1996 ery. A sharp decline in Japanese stock prices in late Treasury note narrowed from 99 to 43 basis points August further contributed to the belief that the Bank over the period. of Japan would not raise rates in the near term. Additional evidence accumulated to suggest that Japan's economic recovery remained fragile. On INVESTOR OPTIMISM IN MEXICO August 28, a weak August Tankan report showed an unexpected deterioration in business confidence. In The peso strengthened over the quarter despite perimid-September, the second-quarter report on gross odic concerns about a near-term interest rate hike in domestic product showed an annualized quarter-on- the United States. Market participants became optiquarter decline of 2.9 percent. On the last day of the mistic about the strength of Mexico's economic quarter, the dollar reached a two-and-a-half year high recovery, after a 7.2 percent rise in its second-quarter of ¥111.68 against the yen, boosted by expectations GDR Domestic interest rates fell, while Mexican that Japanese investors would increase their invest- Brady debt spreads over U.S. Treasuries fell from ments in higher-yielding foreign assets in the second 669 to 510 basis points. half of the Japanese fiscal year. Mexico successfully raised funds in the interna- The market's reaction to trade data released during tional capital markets in four issues in the third the third quarter was mixed. Early in the period, quarter. In July, Mexico issued $6 billion in five-year, declines in Japan's trade surplus, the U.S. trade defi- floating-rate notes at a spread of 200 basis points over cit, and the U.S.-Japanese bilateral deficit, albeit all of London interbank offered rates, and in September, it which occurred at a slower pace than the rate of placed a $1 billion twenty-year Eurobond issue at decline in previous quarters, supported the dollar. At narrower-than-expected spreads over U.S. Treasuries. the end of the quarter, U.S. trade data for July indicat- On August 5, Mexico repaid in advance $7 billion of ing a widening overall U.S. deficit as well as a larger the $10.5 billion outstanding under the U.S. Treabilateral deficit with Japan, prompted a sharp but sury's ESF medium-term swap facility. Of this temporary decline in the dollar. amount, $5 billion was used to repay the two swaps that had been drawn in April and May of 1995, and $2 billion was used to pay down 80 percent of the July 1995 drawing. The repayments reduced the CONTINUATION OF THE DOWNWARD TREND OF amount outstanding from these swaps to $3.5 billion. INTEREST RATES IN CANADA Low inflation, a firming Canadian dollar, and steady U.S. monetary policy allowed interest rates to con- TREASURY AND FEDERAL RESERVE FOREIGN tinue their downward trend in Canada. Over the EXCHANGE RESERVES period, the Bank of Canada reduced its overnight call money range 75 basis points. The midpoint of the At the end of the quarter, the foreign currency reserve target range ended the quarter at 4 percent, about holdings of the Federal Reserve System and the ESF 125 basis points below the federal funds rate. By the were valued at $19.4 billion and $15.9 billion, respecend of the period, positive yield spreads between tively and consisted of German marks and Japanese Canadian government bonds and comparable U.S. yen. Treasuries existed only beyond the five-year maturity The U.S. monetary authorities invest all their forsector. The spread between the benchmark ten-year eign currency balances in a variety of instruments Canadian government bond and the ten-year U.S. that yield market-related rates of return and have a high degree of liquidity and credit quality. A significant portion of these balances is invested in German and Japanese government securities that are held 4. Drawings/rollovers and repayments (-) by Mexican either directly or under repurchase agreement. As of monetary authorities, 1996:Q3 September 30, outright holdings of government secu- Millions of dollars rities by U.S. monetary authorities totaled $6.4 billion Currency arrangements sta O n u d t in - g, sta O n u d t in - g, and included investments in Japanese treasury bills with the U.S. Treasury June 30, July Aug. Sept. Sept. 30, and German government securities. Japanese and Exchange Stabilization Fund 1996 1996 German government securities held under repurchase Bank of Mexico agreement are arranged either through transactions Regular 0 0 0 0 0 Medium-term 10,500 0 -7,000 0 3,500 executed directly in the market or through agreements with official institutions. Government securi- NOTE. Data are on a value-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 1107 ties held under repurchase agreements by the U.S. invested in deposits at the Bank for International monetary authorities totaled $11.0 billion at the end Settlements and in facilities at other official of the quarter. Foreign currency reserves are also institutions. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1108 Industrial Production and Capacity Utilization for October 1996 Released for publication November 15 September level; this falloff resulted largely from shortages of parts made at strike-affected plants in Industrial production decreased 0.5 percent in Octo- Canada and from a strike that had shut down some ber after a revised gain of 0.3 percent in September. domestic assembly plants late in the month. Manu- Sharp drops in the production of motor vehicles and facturing output fell 0.5 percent, and mining output in the output of related parts and materials accounted dropped 1.0 percent; output at utilities was for the decrease in the overall index. Motor vehicle unchanged. At 126.6 percent of its 1987 average, assemblies dropped more than 7 percent from their total industrial production in October was 3.6 percent Industrial production indexes Twelve-month percent change Twelve-month percent change Materials 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 — Total industry 160 — Manufacturing ^ 160 _ Capacity -"""_ 140 _ Capacity _ 140 120 ^ —^ 120 100 100 Production ^ — . —— Production 80 80 I II 1 1 1 1 1 1 1 1 Percent of capacity Percent of capacity Total industry Manufacturing Utilization 90 Utilization 90 ^ ^^ ~ . 80 80 70 70 1 1 1 1 1 1 1 1 1 1 1 1 1 1 II 1982 1984 1986 1988 1990 1992 1994 1996 1982 1984 1986 1988 1990 1992 1994 1996 All series are seasonally adjusted. Latest series, October. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1109 Industrial production and capacity utilization, October 1996 Industrial production, index, 1987= 100 Percentage change Category 1996 1996' Oct. 1995 to July1 Aug/ Sept.r Oct. P Julyr Aug. Sept. Oct. P Oct. 1996 Total 126.3 126.8 127.2 126.6 .0 .4 .3 -.5 3.6 Previous estimate 126.4 126.8 127.1 .0 .4 .2 Major market groups Products, total2 122.5 122.4 123.0 122.7 .2 -.1 .5 -.3 3.7 Consumer goods ... 117.3 116.4 116.6 115.8 .4 -.8 .2 -.7 .8 Business equipment 170.3 171.0 172.3 172.6 1.0 .4 .8 .2 10.3 Construction supplies 112.0 113.5 114.5 114.3 -1.7 1.3 1.0 -.2 5.5 Materials 132.1 133.6 133.5 132.6 -.4 1.1 -.1 -.7 3.5 Major industry groups Manufacturing 129.0 129.1 129.5 128.9 .3 .1 .3 -.5 3.6 Durable 141.5 142.2 142.6 141.6 .2 .6 .2 -.7 6.1 Nondurable 115.2 114.7 115.1 114.9 .5 -.5 .3 -.2 .5 Mining 100.9 103.5 103.4 102.4 -1.8 2.5 -.1 -1.0 4.3 Utilities 122.6 124.9 125.3 125.3 -3.1 1.9 .3 .0 3.1 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1995 1996 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, OOOcccttt... 111999999555 11996677--9955 11998822 11998888--8899 Oct. Julyr Aug.r Sept.r Oct. P OOOcccttt... ttt ooo 111 999999666 Total 82.1 71.8 84.9 83.0 83.4 83.4 83.4 82.7 4.0 Previous estimate 83.4 83.4 83.3 Manufacturing 81.4 70.0 85.2 82.2 82.5 82.3 82.3 81.6 4.4 Advanced processing 80.7 71.4 83.5 80.5 80.8 80.6 80.5 79.8 5.2 Primary processing . 82.6 66.8 89.0 86.1 86.6 86.6 86.5 86.0 2.5 Mining 87.4 80.6 86.5 87.8 90.3 92.6 92.5 91.6 -.1 Utilities 86.9 76.2 92.6 89.8 89.6 91.1 91.3 91.3 1.4 NOTE. Data seasonally adjusted or calculated from seasonally adjusted 2. Contains components in addition to those shown, monthly data. r Revised, 1. Change from preceding month. p Preliminary. higher than it was in October 1995. The utilization of by another sharp increase in information processing industrial capacity fell 0.7 percentage point, to equipment. The output of industrial equipment edged 82.7 percent, its lowest level since March. down and has changed little, on balance, in recent When analyzed by market group, the data show months. After several weak months, however, the that the output of consumer goods dropped 0.7 per- output of other equipment rebounded strongly with a cent in October, with the decline in motor vehicles 1.2 percent gain attributable to a sharp increase in the accounting for much of the loss. The production of production of farm equipment. other consumer durables, however, also declined The output of construction and business supplies noticeably, in a continuation of the losses that have was little changed, but the aggregate output of indusreduced output in this industry more than 4 percent trial materials fell 0.7 percent. The production of since June. While all major segments of other con- durable goods materials fell 1.0 percent, largely sumer durables have weakened recently, the appli- because of a drop in parts and materials used priance segment has had the largest declines over the marily by the motor vehicle industry. The output of past few months. The production of consumer non- nondurable materials changed little over the past two durables was flat, continuing the sluggishness that months; although the output of both textile and paper has persisted over the past year. materials increased, production in these sectors still The overall output of business equipment, which remained below their levels in July. The production had posted sizable monthly gains since May, edged of energy materials retreated 0.6 percent, with up only 0.2 percent, restrained by the drop in motor declines in the production of coal and crude oil. vehicle assemblies. Excluding motor vehicles, pro- When analyzed by industry group, the data show duction of business equipment rose 0.7 percent, led that factory output decreased 0.5 percent in October Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1110 Federal Reserve Bulletin • December 1996 after a 0.3 percent gain in September; the production output equals 100. Capacity utilization, the ratio of of durable goods dropped 0.7 percent, while that of IP to capacity, will be recomputed on the basis of nondurable goods slipped 0.2 percent. The output of revised IP and capacity measures. durable goods was held down not only by the big The aggregate IP indexes will be constructed with drop in motor vehicles and parts but also by decreases a superlative index formula similar to that introduced of 0.5 percent or more in the production of lumber, by the Bureau of Economic Analysis as the featured primary metals, fabricated metal products, electrical measure of real output in its January 1996 compremachinery, and miscellaneous manufactures. hensive revision of the National Income and Product The only substantial increases in durable goods Accounts. At present, the aggregate IP indexes are production were in computer and office equipment computed as linked Laspeyres indexes, with the and in instruments; small increases occurred in the weights updated every five years. Because of the output of furniture and of stone, clay, and glass rapid fall in the relative price of computers and products. Among nondurables, the indexes for textile peripheral equipment, that periodic updating of mill products, paper, petroleum refining, and leather weights is too infrequent to provide reliable estimates all posted gains of 0.5 percent or more; the produc- of current changes in output, capacity, and capacity tion of foods and of printing and publishing also utilization. With the publication of the revision, advanced. On the negative side, the output of apparel value-added proportions will be updated annually, products and of rubber and plastics products fell and the new index number formula will be applied to more than 1 percent. The production of chemical all aggregates of IP, capacity, and gross value of products also declined. product. For the most part, relative price movements The factory operating rate dropped 0.7 percentage among the 260 individual components of the IP index point, to 81.6 percent. The rate for advanced- are likely to have little visible effect on total IP. processing industries, which includes motor vehicles However, the more frequent updating of the relative and parts, also decreased 0.7 percentage point, to price of the output of the computer industry could 79.8 percent, and the rate for primary-processing lower overall IP growth in some years by as much as industries declined 0.5 percentage point, to 86.0 per- Vi percentage point; in other years, the updating of cent. The operating rate in motor vehicles and parts weights will have virtually no effect. Because the declined 5.3 percentage points. In addition the operat- new index number formula will slow capacity growth ing rate in several of its supplying industries fell at as well as IP growth, the effect of the reaggregation least 1 percentage point; these include primary met- on overall capacity utilization should be small. als, fabricated metals products, electrical machinery, The regular updating of source data for IP will apparel products, and rubber and plastics products. include the introduction of annual data from the 1994 The operating rate at mines fell 0.9 percentage point, Annual Survey of Manufactures and selected 1995 to 91.6 percent, while the rate at utilities remained Current Industrial Reports of the Bureau of the Cenunchanged, at 91.3 percent. sus. Available annual data on mining for 1994 and This release and the history for all published 1995 from the Department of the Interior will also be series are available on the Board's World Wide Web introduced. Revisions to the monthly indicators for site at http://www.bog.frb.fed.us. each industry (physical product data, productionworker hours, or electric power usage) and revised seasonal factors will be incorporated back to 1992. In addition, the benchmark index for semiconductor out- 1996 REVISION ANNOUNCEMENT put will be revised back to 1977 to reflect a hedonic price index, similar in concept to what is used for the The Federal Reserve will publish revisions of its computer industry. measures of industrial production (IP), capacity, The statistics on the industrial use of electric power capacity utilization, and industrial use of electric will be revised back to 1972. These revisions stem power on January 7, 1997. The revisions of IP, capac- from three basic sources. First, the new figures incority, and capacity utilization will incorporate updated porate more complete reports received from utilities source data for recent years and will feature a change for the past few years. Second, an updated panel of in the method of aggregating the indexes. From 1977 reporters on cogeneration will be fully integrated into onward, the value-added proportions used to weight our survey of electric power use. Third, the levels of individual series will be updated annually rather than the monthly electric power series for manufacturing quinquennially. In addition, the IP indexes and the industries will be benchmarked to indexes derived capacity measures will be rebased so that 1992 actual from data published in the Census Bureau's annual Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization 1111 surveys and censuses of manufactures. These indexes through the Economic Bulletin Board of the Departwill also be revised so that 1992 electric power usage ment of Commerce; for information about the Bulleequals 100. tin Board, call 202-482-1986. In addition to the data More detail on the plans for this revision is avail- currently provided, the time series of implicit prices able on the Internet at http://www.bog.frb.fed.us, the necessary for a user to aggregate IP and capacity Board's World Wide Web site. Once the revision is under the new methodology will be provided. For published, the revised data will be available at that information on these revisions, call the Industrial site and on diskettes from the Board of Governors of Output Section of the Board of Governors at the Federal Reserve System, Publications Services, 202-452-3151. • 202-452-3245. The revised data will also be available Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1112 Announcements APPOINTMENT OF A COMMITTEE TO REVIEW San Francisco maintains an "effective internal con- THE FEDERAL RESERVE'S PARTICIPATION trol structure" for financial reporting of its currency IN PAYMENT SERVICES and coin holdings, the Federal Reserve Board announced on October 22, 1996. The audit by Federal Reserve Chairman Alan Greenspan has Coopers & Lybrand confirms the results of an examiappointed a committee of senior Federal Reserve nation by the Board's financial auditors as well as the officials, headed by Board Vice Chair Alice M. Reserve Bank's internal auditors. Rivlin, to conduct a fundamental review of the Fed- The General Accounting Office (GAO) had called eral Reserve's participation in payment services to into question the integrity of the Los Angeles banks and other financial institutions. Branch's internal controls in a recent report. The The Federal Reserve provides payment services, GAO's concern was based on errors made by the including check clearing and electronic transfer of Branch in reports submitted to the Board rather than funds, to financial institutions and charges a price for on an in-depth review of financial controls. These the service. It provides similar services as agent for reports are used only for informational purposes and the U.S. Treasury and other federal agencies. Payment are distinct from financial accounting records. services are also performed by the private sector. The Board retained Coopers & Lybrand to conduct Formation of the special committee is the next step a comprehensive review of the Branch's financial in the continuing review of Federal Reserve payment controls to address GAO's concern. In its opinion, services discussed by Dr. Greenspan in testimony Coopers & Lybrand said: "In our opinion, manageearlier this year before the Senate Banking Commit- ment's assertion that the Los Angeles Branch maintee. In announcing on October 17, 1996, the forma- tained an effective internal control structure over tion of the committee he said: "Given the significant financial reporting for its coin and currency as of changes occurring in payment processing, this is an August 31, 1996, is fairly stated, in all material opportune time to assess the Fed's role in the pay- respects. ..." ments systems of the twenty-first century." As further confirmation of the Branch's internal Besides Dr. Rivlin, other members of the commit- controls, the Board last month ordered an unantee are Federal Reserve Governor Edward W. Kelley, nounced count of all currency and coin holdings at Jr., William J. McDonough, President of the Federal the Branch. The results confirmed that the Branch's Reserve Bank of New York, and Thomas C. Melzer, balance sheet accurately reflected its currency and President of the Federal Reserve Bank of St. Louis. coin holdings. The committee will consider a wide range of options and will solicit views from within the Federal Reserve System, financial institutions active in the APPROVAL OF THE USE OF CERTAIN payment system, and other users. The committee has PREFERRED STOCK INSTRUMENTS IN TIER 1 the discretion to bring in outside specialists and con- CAPITAL sultants as part of its inquiry. Work will begin immediately, but no time frame The Federal Reserve Board on October 21, 1996, was established for the completion of the commit- approved the use of certain cumulative preferred tee's task. Chairman Greenspan asked that the com- stock instruments in tier 1 capital for bank holding mittee report to the Board of Governors on progress companies. and results. These instruments, which are marketed under a variety of proprietary names such as MIPS and TOPRS, are issued out of a special purpose subsidiary RESULTS OF AN INDEPENDENT AUDIT OF THE that is wholly owned by the parent company. The LOS ANGELES BRANCH proceeds are lent to the parent in the form of a very long-term, deeply subordinated note. An independent outside audit has confirmed that the Bank holding companies seeking to issue such Los Angeles Branch of the Federal Reserve Bank of securities should consult with their District Federal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1113 Reserve Bank. Such arrangements, which give rise to The Board is expanding an exception to the finanminority interest upon consolidation of the subsidiary cial assets restriction for the purchase and sale of with the parent holding company, normally will be government securities to include any asset having a accorded tier 1 capital status. Minority interest in readily identifiable and publicly available market consolidated subsidiaries generally qualifies as tier 1 quotation and purchased at that quotation. capital under the Board's current capital adequacy guidelines for bank holding companies. To be eligible as tier 1 capital, such instruments APPROVAL OF AN EXPANSION OF FEDWIRE must provide for a minimum deferral period of five OPERATING HOURS consecutive years on distributions to preferred shareholders. In addition, the intercompany loan must be The Federal Reserve Board on October 30, 1996, subordinated to all subordinated debt and have the approved a December 8, 1997, effective date to open longest feasible maturity. the Fedwire funds transfer service at 12:30 a.m. East- The amount of these instruments, together with ern Time (ET). The current operating hours of the other cumulative preferred stock a bank holding com- Fedwire funds transfer service are 8:30 a.m. to pany may include in tier 1 capital, is limited to 6:30 p.m. ET. The closing time of the Fedwire funds 25 percent of tier 1. Like other preferred stock includ- transfer service remains unchanged. able in capital, these instruments require Federal Previously, the Board determined that expansion of Reserve approval before they may be redeemed. the Fedwire funds transfer service to eighteen hours a day could be a useful component of private-sector initiatives to reduce settlement risk in the foreign AMENDMENTS TO EASE FIREWALL exchange markets and to eliminate an operational RESTRICTIONS ON SECTION 20 SUBSIDIARIES barrier to potentially important innovation in privately provided payment and settlement services. Par- The Federal Reserve Board announced on Octo- ticipation in the earlier Fedwire operating hours is ber 30, 1996, amendments to ease or eliminate three voluntary for depository institutions. of the prudential limitations, or firewalls, imposed on In conjunction with the expansion of Fedwire operthe operations of section 20 subsidiaries of bank ating hours, the Board has also approved a modificaholding companies authorized to underwrite and deal tion to the daylight overdraft posting times to fix at in securities. 8:30 a.m. ET the posting time for certain nonwire The amendments, which are effective January 7, transactions that are tied to the current opening time 1997, will accomplish the following: of the Fedwire funds transfer service. • Modify the prohibition on director, officer, and employee interlocks between a section 20 subsidiary REGULATION Y: INTERIM RULE AND PROPOSED and its affiliated banks or thrift institutions (the inter- ACTION locks restriction) • Eliminate the restriction on a bank or thrift insti- The Federal Reserve Board on October 24, 1996, tution acting as agent for, or engaging in marketing announced an interim rule and requested comment on activities on behalf of, an affiliated section 20 subsid- certain definitions in connection with easing proviiary (the cross-marketing restriction) sions of Regulation Y (Bank Holding Companies) to • Ease the restriction on the purchase and sale of eliminate the requirement that bank holding compafinancial assets between a section 20 subsidiary and nies seek Board approval before engaging de novo in its affiliated bank or thrift institution (the financial permissible nonbanking activities if the bank holding assets restriction). company is well-capitalized and meets other criteria specified in the new Economic Growth and Regula- With respect to interlocks, the Board is (1) elimi- tory Paperwork Act. nating a blanket prohibition on employee interlocks, The interim rule also implements provisions of the (2) replacing a blanket prohibition on director inter- act to establish expedited procedures for welllocks with one limited to a majority of the board of a capitalized bank holding companies that meet the section 20 subsidiary and an affiliated bank, and criteria to obtain Board approval to acquire smaller (3) replacing a blanket prohibition on officer inter- companies that engage in any permissible nonbanklocks with one limited to the chief executive officer ing activities listed in Regulation Y as well as to of each company. engage in nonbanking activities that the Board has Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1114 Federal Reserve Bulletin • December 1996 approved only by order. The interim rule is effective scheduled to be effective in February 1997. These immediately. lists are published for the information of lenders and Comment on the definitions noted in the following the general public. discussion is requested by December 2, 1996. The changes that have been made to the revised Because the statutory changes, which the Board OTC list, which now contains 4,718 OTC stocks, are recommended, are effective immediately, the Board as follows: will apply the procedures now to qualifying proposals. Proposed amendments to Regulation Y will be • Two hundred sixty-two stocks have been issued in the near future to implement the changes. included for the first time, 205 under National Market For purposes of determining the capital levels at System (NMS) designation which a bank holding company shall be considered • Thirty-nine stocks previously on the list have "well-capitalized" under section 2208 of the act and been removed for substantially failing to meet the Regulation Y, the Board has adopted, as an interim requirements for continued listing rule, risk-based capital thresholds that are the same • One hundred nineteen stocks have been removed levels as the levels set for determining that a state for reasons such as listing on a national securities member bank is well-capitalized under the provisions exchange or involvement in an acquisition. established under section 38 of the Federal Deposit Insurance Act and a modified leverage ratio. This The OTC list is composed of OTC stocks that have definition was effective October 23, on an interim been determined by the Board to be subject to margin basis. The Board invites public comment on this requirements in Regulations G (Securities Credit by definition and will adjust the definition as appropriate Persons other than Banks, Brokers, or Dealers), T, in light of public comment. The Board also invites and U (Credit by Banks for Purchasing or Carrying comment on how the statutory definitions in sec- Margin Stocks). It includes OTC stocks qualifying tion 2208 should be applied to foreign banking under Board criteria and also includes all OTC stocks organizations. designated as NMS securities. Additional NMS securities may be added in the interim between quarterly Board publications; these securities are immediately AVAILABILITY OF REVISED LISTS OF marginable upon designation as NMS securities. OVER-THE-COUNTER STOCKS AND OF FOREIGN The foreign list is composed of foreign equity MARGIN STOCKS SUBJECT TO MARGIN securities that are eligible for margin treatment at REGULATIONS broker-dealers. Effective July 1, 1996, foreign stocks may be included on the foreign list by being deemed The Federal Reserve Board on October 25, 1996, to have a "ready market" for purposes of the Securipublished a revised list of over-the-counter (OTC) ties and Exchange Commission's (SEC) net capital stocks that are subject to its margin regulations (OTC rule. The SEC effectively treats all stocks included on list). Also published was a revised list of foreign the Financial Times/Standard & Poor's Actuaries equity securities (foreign list) that meet the margin World Indices (FT/S&P-AW Indices) as having a criteria in Regulation T (Credit by Brokers and ready market for capital purposes. The Board is add- Dealers). ing thirty-six foreign stocks and deleting thirty-one, The lists became effective November 12, 1996, and primarily based on changes to the FT/S&P-AW Indisupersede the previous lists that were effective ces. The revised foreign list now contains 1,965 August 12, 1996. The next revision of the lists is securities displayed in country order. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1115 Legal Developments FINAL RULE—AMENDMENTS TO REGULATIONS G, T, U, Ernst Home Center, Inc.: $.01 par common AND X EV Environmental, Inc.: $.01 par common Exstar Financial Corporation: $.01 par common The Board of Governors is amending 12 C.F.R. Parts 207, 220, 221, and 224, its Regulations G, T, U, and X (Securi- First Charter Bank, N.A. (California): $2.56 par common ties Credit Transactions; List of Marginable OTC Stocks; Forrest Oil Corporation: Warrants (expire 10-01-96) List of Foreign Margin Stocks). The List of Marginable OTC Stocks ("OTC List") is composed of stocks traded over-the-counter ("OTC") in the United States that have Gametek, Inc.: $.01 par common been determined by the Board of Governors of the Federal Gander Mountain, Inc.: $.01 par common Reserve System to be subject to the margin requirements under certain Federal Reserve regulations. The List of Independence Bancorp, Inc. (New Jersey): $1.00 par common Foreign Margin Stocks ("Foreign List") is composed of Interscience Computer Corporation: Warrants (expire foreign equity securities that have met the Board's eligibil- 11-15-96) ity criteria under Regulation T. The OTC List and the Foreign List are published four times a year by the Board. Liposome Company, Inc., The: Depositary Shares This document sets forth additions to and deletions from the previous OTC List and the previous Foreign List. Maxux Energy Corporation: $4.00 par cumulative convertible Effective November 12, 1996, 12 C.F.R. Parts 207, 220, preferred 221, and 224 are amended as follows. Accordingly, pursuant to the authority of sections 7 and 23 of the Securities Medmarco, Inc.: $.001 par common Exchange Act of 1934, as amended (15 U.S.C. 78g and 78w), and in accordance with 12 C.F.R. 207.2(k) and 207.6 New World Power Corporation: $.01 par common (Regulation G), 12 C.F.R. 220.2 and 220.17 (Regulation T), and 12 C.F.R. 221.2(j) and 221.7 (Regulation U), People's Bank (Connecticut): 8.5% Series A, no par noncumuthere is set forth below a listing of deletions from and lative convertible preferred additions to the OTC List and the Foreign List. Rally's Hamburgers, Inc.: Rights (expire 09-20-96) Deletions From The List Of Marginable OTC Republic Security Financial Corp.: Series A, 7.5% par cumu- Stocks lative convertible preferred Stocks Removed For Failing Continued Listing Seven Hills Financial Corporation: No par common Requirements Syquest Technology, Inc.: $.001 par common American White Cross, Inc.: $.01 par common AW Computer Systems, Inc.: Class A, $.01 par common Tapistron International, Inc.: $.0004 par common; Warrants (expire 06-23-97) Ben Franklin Retail Stores, Inc.: $.01 par common Tinsley Laboratories, Inc.: No par common Biosys, Inc.: No par common BPI Packaging Technologies, Inc.: Class B, Warrants (expire U.S. Diagnostic Labs, Inc.: Class B, Warrants (expire 10-14-99) 10-07-96) U.S. Homecare Corporation: $.01 par common Capstone Pharmacy Services, Inc.: Warrants (expire Ultradata Systems, Inc.: Class A, Warrants (expire 02-01-98) 08-23-96) Urethane Technologies, Inc.: $.01 par common Cel-Sci Corporation: Warrants (expire 02-06-97) Clothestime, Inc.: $.001 par common Veterinary Centers of America, Inc.: Warrants (expire 10-10-96) Danskin, Inc.: $.01 par common David White, Inc.: $3.00 par common Watermarc Food Management Company: $.05 par common Diacrin Inc.: Units (expire 12-31-2000) Weitzer Homebuilders, Inc.: Class A, $.01 par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1116 Federal Reserve Bulletin • December 1996 Stocks Removed For Listing On A National Fluorsocan Imaging System: $.0001 par common; Redeem- Securities Exchange Or Being Involved In An able Warrants (expire 07-11-99) Acquisition Geriatric & Medical Companies, Inc.: $.10 par common AES Corporation, The: $.01 par common Golf Enterprises, Inc.: $.01 par common Agrium Inc.: No par common Guest Supply, Inc.: No par common Alexander Energy Corporation: $.03 par common Allegiance Banc Corporation: $1.00 par common Hometown Bancorporation Inc.: $1.00 par common Ambar, Inc.: $.01 par common Hometown Buffet, Inc.: $.01 par common America Online Inc.: $.01 par common Amserv Healthcare Inc.: $.01 par common Image Industries, Inc.: $.01 par common Applied Bioscience International, Inc.: $.01 par common Innkeepers USA Trust: $.01 par common Atria Software, Inc.: $.01 par common Interim Services Inc.: $.01 par common International Jensen Inc.: $.01 par common Bailey Corporation: $.10 par common Interpoint Corporation: No par common BayBanks, Inc. (Massachusetts): $2.00 par common Bayport Restaurant Group, Inc.: $.001 par common JLG Industries, Inc.: $.20 par common Brenco, Inc.: $1.00 par common Brooktree Corporation: No par common Kahler Realty Corporation: $.10 par common Bugaboo Creek Steak House: $.01 par common KFX Inc.: $.001 par common Builders Warehouse Association: $.008 par common BW/IP, Inc.: Class A, $.01 par common Landmark Graphics Corporation: $.05 par common Leader Financial Corporation: $1.00 par common Canyon Resources Corporation: $.01 par common CCB Financial Corporation: $5.00 par common Loewen Group Inc., The: No par common Cellular Communications International, Inc.: $.01 Lomak Petroleum, Inc.: $.01 par common par common CFB Bancorp (Florida): $2.00 par common Maic Holdings, Inc.: $1.00 par common CFI Industries, Inc.: $1.00 par common Mark Twain Bancshares, Inc.: $1.25 par common Charter Bancshares, Inc.: $1.00 par common MDT Corporation: $1.25 par common Chartwell RE Corporation: $.01 par common Mercury General Corporation: No par common Chromcraft Revington, Inc.: $.01 par common Microtek Medical, Inc.: $.01 par common Circle Financial Corporation: $1.00 par common Midlantic Corporation: $3.00 par common Citicasters Inc.: Class A, No par common Mississippi Chemical Corp.: $.01 par common Citizens Security Group, Inc.: $.01 par common Mountasia Entertainment, Inc.: No par common Clinton Gas Systems Inc.: No par common MSB Bancorp, Inc. (New York): $.01 par common Commerce Bancorp, Inc. (New Jersey): $1.5625 par common Computer Identics Corporation: $.10 par common N.S. Bancorp, Inc. (Illinois): $.01 par common CTL Credit, Inc.: $.01 par common Netstar, Inc.: $.01 par common Network Express, Inc.: No par common Dairy Mart Convenience Stores: Class A, $.01 par common; NHS Financial, Inc.: No par common Class B, $.01 par common NMR of America, Inc.: $.01 par common Davidson & Associates, Inc.: $10.00 par common NYCOR, Inc.: $1.00 par common; Class A, $1.00 par com- DNA Plant Technology Corporation: $.01 par common; mon $.01 par convertible exchangeable Douglas & Lomason Company: $2.00 par common Orbit Semiconductor, Inc.: $.001 par common Eaton Vance Corporation: Non-voting, $.125 par common Pacific Basin Bulk Shipping: $.7327 par common; Warrants Equity Inns, Inc.: $.01 par common (expire 09-30-99) Parkway Properties, Inc.: $1.00 par common Fahnestock Viner Holdings: Class A, No par common Patlex Corporation: $.10 par common Fairfax Bank & Trust Comp: $1.25 par common PCI Services, Inc.: $.001 par common Financial Security Corporation: $.01 par common Pediatrix Medical Group, Inc.: $.01 par common Financing for Science International Inc.: $.01 par common; Perpetual State Bank (North Carolina): $5.00 par common Warrants (expire 05-19-99) Firefox Communications, Inc.: $.001 par common Pet Practice, Inc., The: $.01 par common First Washington Realty Trust, Inc.: $.01 par common; Premier Financial Bancorp, Inc.: No par common Series A, cumulative convertible preferred Professional Sports Care Management Inc.: $.01 par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1117 Quaker Chemical Corporation: $1.00 par common Asia Pacific Resources, Ltd.: No par common Atria Communities, Inc.: $.10 par common Regional Acceptance Corp.: No par common Ault Incorporated: No par common Renaissancere Holdings, Ltd.: $1.00 par common Aware, Inc.: $.01 par common RFS Hotel Investors, Inc.: $.01 par common Roto-Rooter, Inc.: $1.00 par common Bank of Los Angeles: No par common; Warrants (expire 12-01-98) Scientific Games Holding Corp.: $.001 par common Bank United Corporation: $.01 par common Security Capital Bancorp (North Carolina): No par common Barbers Hairstyling for Men & Women, Inc., The: $.01 par Shaw Group, Inc., The: $.01 par common common Sierra On-line, Inc.: $.01 par common Beverly Bancorporation, Inc.: $.01 par common Station Casinos, Inc.: $.01 par common; 7% convertible pre- Big Entertainment, Inc.: $.01 par common ferred Billing Information Concepts Corporation: $.01 par common Sunstone Hotel Investors, Inc.: $.01 par common Blyvooruitzicht Gold Mining Company Limited: American Sybron Chemicals Inc.: $.01 par common Depositary Receipts Syratech Corporation: $.01 par common Bre-X Minerals, Limited: No par common Systemed, Inc.: $.001 par common Buffelsfontein Gold Mines, Ltd.: American Depositary Receipts Third Financial Corporation: $.01 par common Business & Professional Bank (California): No par common Tucker Drilling Company, Inc.: $.01 par common C. R. Anthony Company: $.01 par common U. S. Healthcare, Inc.: $.005 par common Cadus Pharmaceutical Corporation: $.01 par common Uniroyal Chemical Corporation: $.01 par common California Independent Bancorp.: No par common United Companies Financial: $2.00 par common; $2.00 par Cambridge Heart, Inc.: $.001 par common convertible preferred Carriage Services, Inc.: Class A, $.01 par common Uunet Technologies, Inc.: $.001 par common CCC Information Services Group, Inc.: $.10 par common Cellegy Pharmaceutical, Inc.: No par common Varitronic Systems, Inc.: $.01 par common Cellnet Data Systems, Inc.: $.001 par common Cherokee Inc.: $.02 par common Westcott Communications, Inc.: $.01 par common Chester Bancorp, Inc.: $.01 par common WFS Bancorp, Inc. (Kansas): $.01 par common Chromatics Color Sciences: $.001 par common Claremont Technology Group, Inc.: No par common Additions To The List Of Marginable OTC Stocks CN Biosciences, Inc.: $.01 par common Coffee People, Inc.: No par common Abacus Direct Corporation: $.001 par common Coinmach Laundry Corporation: $.01 par common ABT Global Pharmaceutical Corporation: No par common Colossal Resources Corporation: No par common Accumed International, Inc.: No par common; Warrants Company Doctor, The: $.01 par common (expire 10-14-97) Connect, Inc.: $.001 par common Ace*Comm Corporation: $.01 par common Control Devices, Inc.: $.01 par common Aerodyne Communications, Inc.: $.01 par common Costilla Energy, Inc.: $.01 par common Advance Paradigm, Inc.: $.01 par common County Bank of Chesterfield (Virginia): $5.00 par common Advanced Deposition Technologies, Inc.: $.01 par common CSI Computer Specialists, Inc.: Class A, $.001 par common Advanced Digital Information Corporation: No par common Cuno Incorporated: $.001 par common Advanced Fibre Communications: $.01 par common Cymer, Inc.: $.01 par common Advanced Health Corporation: $.01 par common Afsala Bancorp, Inc. (New York): $.01 par common D&E Communications, Inc.: $.16 par common Algos Pharmaceutical Corporation: $.01 par common Dailey Petroleum Services Corporation: Class A, $.01 par AMB Financial Corporation: $.01 par common common American Bankers Insurance Group: Series B, $1.00 par pre- DBT Online, Inc.: $.10 par common ferred Diacrin, Inc.: $.01 par common; Warrants (expire American Disposal Services, Inc.: $.01 par common 12-31-2000) American Healthchoice, Inc.: $.001 par preferred Dialysis Corporation of America: $.01 par common Anacomp, Inc.: $.01 par common; Warrants (expire Diedrich Coffee: No par common 06-03-2001) Digex, Incorporated: $.01 par common Anchor Financial Corporation: $6.00 par common Digital Solutions, Inc.: $.001 par common Anika Research, Inc.: $.01 par common DNAP Holding Corporation: $.01 par common Applied Analytical Industries, Inc.: $.001 par common Document Sciences Corporation: $.001 par common Arqule, Inc.: $.01 par common Dura Automotive Systems, Inc.: Class A, $.01 par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1118 Federal Reserve Bulletin • December 1996 Durban Roodepoort Deep, Ltd.: American Depositary Kushner-Locke Company, The: Series C, Warrants Receipts (expire 07-25-2001) Dynamex, Inc.: $.01 par common Dynamic Healthcare Technologies, Inc.: $.01 par common Lamar Advertising Company: $.0001 par common Dynamotive Technologies Corporation: No par common Larson-Davis Incorporated: $.001 par common Laser Industries Limited: Ordinary shares (par NIS 0.0001) E*Trade Group, Inc.: $.01 par common Lason, Inc.: $.01 par common Einstein/Noah Bagel Corporation: $.01 par common LCC International, Inc.: Class A, $.01 par common Electrosource, Inc.: $.10 par common Leap Group, Inc., The: $.01 par common Lightbridge, Inc.: $.01 par common Faxsav Incorporated: $.01 par common Lightpath Technologies, Inc.: Class A, $.01 par common Film Roman, Inc.: $.01 par common Liquidation World, Inc.: No par common First Alliance Corporation: Class A, no par common Luther Medical Products, Inc.: No par common First Enterprise Financial Group, Inc.: $.01 par common First M & F Corporation: $5.00 par common Markwest Hydrocarbon, Inc.: $.01 par common Flanders Corporation: $.001 par common Matrix Capital Corporation: $.01 par common McM Corporation: $1.00 par common Fotoball USA, Inc.: $.01 par common; Warrants (expire Medi-Ject Corporation: $.01 par common 08-12-99) Medical Alliance, Inc.: $.002 par common Fountain Powerboat Industries, Inc.: $.01 par common Memberworks, Inc.: $.01 par common FPIC Insurance Group, Inc.: $.10 par common Memco Software Limited: Ordinary shares (NIS .01) FX Energy, Inc.: $.001 par common Metro Networks, Inc.: $.001 par common Metro One Telecommunications, Inc.: No par common Gargoyles, Inc.: No par common Metzler Group, Inc., The: $.001 par common Geron Corporation: $.001 par common Microcap Fund, Inc., The: $.01 par common GKN Holding Corporation: $.0001 par common Microvision, Inc.: No par common; Warrants (expire Golden Bear Golf, Inc.: Class A, $.01 par common 08-27-2001) Gradall Industries, Inc.: $.01 par common Mid-Peninsula Bancorp (California): No par common Grand Premier Financial, Inc.: $.01 par common Midwest Federal Financial Corporation: $.01 par common Greenstone Resources, Ltd.: No par common MIM Corporation: $.0001 par common Grootvlei Propritary Mines: American Depositary Receipts Modacad, Inc.: No par common Motrovac Technologies, Inc.: $.01 par common Harmony Gold Mining Co., Ltd.: American Depositary Mountain Province Mining, Inc.: No par common Receipts Healthcor Holdings, Inc.: $.01 par common Nastech Pharmaceutical Company Inc.: Warrants (expire Hibbett Sporting Goods, Inc: $.01 par common 12-07-96) Home Bancorp of Elgin, Inc.: $.01 par common Neotherapeutics, Inc.: No par common; Warrants (expire Hot Topic, Inc.: No par common 09-26-2001) House of Fabrics, Incorporated: $.01 par common Netvantage, Inc.: Class A, $.001 par common; Warrants Hvide Marine Incorporated: Class A, $.001 par common (expire 05-03-2000) New York Bagel Enterprises, Inc.: $.01 par common Inamed Corporation: $.01 par common Nitinol Medical Technologies, Inc.: $.001 par common Industir-Matematik International Corporation: $.01 par com- North County Bancorp (California): No par common mon Nu-Tech Bio-Med, Inc.: $.01 par common Integrated Living Communities, Inc.: $.01 par common Intelligroup, Inc.: $.01 par common Object Design, Inc.: $.001 par common Intensiva Healthcare Corporation: $.001 par common Ocwen Financial Corporation: $.01 par common Interlink Computer Sciences, Inc.: $.001 par common On Command Corporation: $.01 par common International Network Services: No par common Optika Imaging Systems, Inc.: No par common Interwest Home Medical, Inc.: No par common Orckit Communications Limited: Ordinary shares (NIS .10) Invision Technologies, Inc.: $.001 par common Pacific Gateway Exchange, Inc.: $.001 par common J. W. Charles Financial Services, Inc.: $.001 par common Park Bancorp, Inc. (Illinois): $.01 par common Jacor Communications, Inc.: Warrants (expire 09-18-2001) Parts Source, Inc., The: $.001 par common Peerless Group, Inc.: $.01 par common Kapson Senior Quarters Corporation: $.01 par common Peerless Systems Corporation: $.001 par common Karrington Health, Inc.: No par common Pegasus Communications Corporation: Class A, $.01 par com- Kitty Hawk, Inc.: $.01 par common mon Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1119 Pegasystems, Inc.: $.01 par common Summit Design, Inc.: $.01 par common Petroleum Securities Australia Limited: American Depositary Superior Consultant Holdings Corporation: $.01 par common Receipts Swissray International, Inc.: $.01 par common Pinnacle Banc Group, Inc.: $4.69 par common Synthetech, Inc.: $.001 par common Premis Corporation: $.01 par common Pro-Dex, Inc.: No par common Talx Corporation: $.01 par common Professional Staff, pic: American Depositary Receipts Techniclone International Corporation: No par common Technology Modeling Associates, Inc.: No par common Q.E.P. Co., Inc.: $.001 par common Technology Service Group, Inc.: $.01 par common; Warrants Quadramed Corporation: $.01 par common (expire 05-09-99) Telco Communications Group, Inc.: No par common R & G Financial Corporation: Class B, $.01 par common Telespectrum Worldwide, Inc.: $.01 par common R.H. Phillips, Inc.: No par common Teletech Holdings, Inc.: $.01 par common Rally's Hamburgers, Inc.: Warrants (expire 09-26-2000) Teletek, Inc.: $.0001 par common Raster Graphics, Inc.: $.001 par common Thorn pic: American Depositary Receipts RCM Technologies, Inc.: $.05 par common Transact Technologies, Incorporated: $.01 par common Redwood Trust, Inc.: 9.74% Class B, $.01 par cumulative Transkaryotic Therapies, Inc.: $.01 par common convertible preferred Tri-Point Medical Corporation: $.01 par common Reliance Bancshares, Inc.: $1.00 par common Triteal Corporation: $.001 par common Reliv' International, Inc.: No par common Trusted Information Systems, Inc.: $.01 par common Rental Service Corporation: $.01 par common TV Filme, Inc.: $.01 par common Research Engineers, Inc.: $.01 par common Resources Mortgage Capital, Inc.: Series C, par cumulative U. S. Opportunity Search, Inc.: $.001 par common convertible preferred Unionbancorp, Inc. (Illinois): $1.00 par common Response USA, Inc.: $.008 par common United Bancorp, Inc. (Ohio): $1.00 par common Restrac, Inc.: $.01 par common Universal Outdoor Holdings, Inc.: $.01 par common RMH Teleservices, Inc.: No par common Usana, Inc.: No par common Rockshox, Inc.: $.01 par common Rofin-Sinar Technologies, Inc.: $.01 par common Ventana Medical Systems, Inc.: $.001 par common RT Industries, Inc.: $.001 par common Versant Object Technology: No par common Viatel Inc.: $.01 par common Schmitt Industries, Inc.: No par common Vion Pharmaceuticals, Inc.: $.01 par common Security Bank Holding Company: $5.00 par common Visigenic Software, Inc.: $.001 par common Seiler Pollution Control Systems, Inc.: $.0001 par common Select Software Tools pic: American Depositary Receipts Warp 10 Technologies, Inc.: No par common Service Experts, Inc.: $.01 par common Westwood Homestead Financial Corporation: $.01 par com- Shell Seafood Restaurants, Inc.: $.01 par common mon Signature Resorts, Inc.: $.01 par common White Pine Software, Inc.: $.01 par common Silicon Gaming, Inc.: $.001 par common Willis Lease Finance Corporation: No par common Skylands Community Bank (New Jersey): $2.50 par common Winton Financial Corporation: No par common Smartserv Online, Inc.: $.01 par common Solar-Mates, Inc.: $.001 par common; Warrants Xavier Corporation: $.0001 par common (expire 09-29-2000) Xionics Document Technologies, Inc.: $.01 par common Source Services Corporation: $.02 par common XLConnect Solutions, Inc.: $.01 par common South Street Financial Corporation: No par common XOMED Surgical Products, Inc.: $.01 par common Specialty Catalog Corporation: $.01 par common Splash Technology Holdings, Inc.: $.001 par common Deletions to the Foreign Margin List SRS Labs, Inc.: $.001 par common Staffmark, Inc.: $.01 par common Australia Stat Healthcare, Inc.: $.01 par common; Warrants Gold Mines of Kalgoorlie Limited: Ordinary shares, (expire 04-21-98) par A$0.05 Stericycle, Inc.: $.01 par common Sterile Recoveries, Inc.: $.001 par common Posgold Limited: Ordinary shares, par A$0.10 Storm Technology, Inc.: $.001 par common Strayer Education, Inc.: $.01 par common Canada Strongsvile Savings Bank (Ohio): No par common Diamond Fields Resources Inc.: No par common Suburban Ostomy Supply Co., Inc.: No par common Hemlo Gold Mines Inc.: No par common Summit Bank Corporation: No par common Scott's Hospitality Inc.: No par common subordinate-voting Toronto Sun Publishing Corporation: No par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1120 Federal Reserve Bulletin • December 1996 France Italy Docks de France SA: Ordinary shares, par 10 French francs Istituto Bancario San Paolo Ditorino: Ordinary shares, par Ecco SA: Ordinary shares, par 25 French francs 10,000 lira Poliet SA: Ordinary shares, par 50 French francs Mediaset SPA: Ordinary shares, par 1000 lira Germany Asko Deutsche Kaughaus AG: Bearer shares par DM 50 Mexico Kaufhof Holding AG: Bearer shares, par DM 50 Apasco SA: Ordinary shares, No par common Kaufhof Holding AG: Non-Voting Preferred, par DM 50 Carso Global Telecom S.A. de C.V.: No par common Italy Cemex S.A. de C.V. (CPO): No par common SME Societa Meridionale Finanziaria: Ordinary shares, par 1000 lira Empresas La Moderna S.A. de C.V.: Class Series A registered, No par common Japan Honshu Paper Co., Ltd.: ¥ 50 par common Gruma S.A. de C.V.: Series 1-B fixed, No par common Mitsubishi Warehouse & Transportation Co., Ltd.: ¥ 50 Grupo Financiero Banammex Accival S.A. de C.V.: Series L, par common . No par variable ordinary shares Grupo Financiero Bancomer S.A. de C.V.: Series L registered, Norway No par common Grupo Financiero Bancomer S.A. de C.V.: Series B, No par Smedvig ASA: Common Shares, par 3 Norwegian krone common Grupo Financiero Inbursa S.A. de C.V.: Series B, No par Transocean ASA: Common Shares, par 5 Norwegian krone common Singapore Grupo Mexico S.A. de C.V.: Series B, No par common AMCOL Holdings Ltd.: Ordinary shares, par S$0.25 Industrias PENOLES S.A. de C.V.: No par common Switzerland Winterthur Schweizer. Versicherungs GES.: Bearer shares, par 20 Swiss francs Norway Smedvig ASA: A shares, par 3 Norwegian krone United Kingdom Smedvig ASA: B shares, par 3 Norwegian krone APV pic: Ordinary shares, par 10 p United Kingdom Alliance Trust pic: Ordinary shares, par 25 p BET pic: Ordinary shares, par value 25 p Bilton pic: Ordinary shares, par .125 p British Biotech Group pic: Ordinary shares, par 5 p Dawson International pic: Ordinary shares, par 25 p Caledonia Investment pic: Ordinary shares, par 5 p Compass Group pic: Ordinary shares, par 5 p Fisons pic: Ordinary shares, par value 25 p Cowie Group pic: Ordinary shares, par 5 p Forte pic: Ordinary shares, par value 25 p Daily Mail & General Trust pic: A Ordinary Shares, non- Laing (John) pic: Ordinary shares, par 25 p voting par 50 p Laing (John) pic: A Ordinary Non-voting 25 p EMAP pic: Ordinary Shares, par 25 p Merchants Trust pic, The: Ordinary shares, par 25 p Hays pic: Ordinary shares, par 1 p Sun Alliance Group pic: Ordinary shares, par 25 p Laird Group pic: Ordinary shares, par 25 p TSB Group pic: Ordinary shares, par value 25 p Orange pic: Ordinary shares, par 20 p William Baird pic: Ordinary shares, par 50 p Perpetual pic: Ordinary shares, par 10 p Additions to the Foreign Margin List Railtrack Group pic: Ordinary shares, par 25 p Germany Refuge Group pic: Ordinary shares, par 5 p Metro AG: Bearer shares, par DM 50 Metro AG: Preferred Type 1, par DM 50 Scottish Investment Trust pic: Ordinary shares, par 25 p Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1121 Scottish Mortgage & Trust pic: Ordinary shares, par 25 p 2461 note), the Board has set forth in paragraph (b) of this Securicor pic: Ordinary shares, par 5 p section adjusted maximum penalty amounts for each civil Stagecoach Holdings pic: Ordinary shares, par 2.5 p money penalty provided by law within its jurisdiction. The adjusted civil penalty amounts provided in paragraph (b) of Thorn pic: Ordinary shares, par 25 p this section replace only the amounts published in the statutes authorizing the assessment of penalties. The autho- WPP Group pic: Ordinary shares, par 10 p rizing statutes contain the complete provisions under which the Board may seek a civil money penalty. The increased penalty amounts apply only to violations occurring after FINAL RULE—AMENDMENT TO REGULATION V October 24, 1996. (b) Maximum civil money penalties. The maximum civil The Board of Governors is repealing 12 C.F.R. Part 245, its money penalties as set forth in the referenced statutory Regulation V (Loan Guarantees for Defense Production) as sections are adjusted as follows: obsolete. This action does not represent any policy change (1) 12 U.S.C. 324: but rather eliminates an outmoded regulation and reduces (i) Inadvertently late or misleading reports, inter regulatory burden. alia—$2,000. Effective October 9,1996, 12 C.F.R. Part 245 is amended as follows: (ii) Other late or misleading reports, inter alia— $22,000. Part 245—[Removed] (iii) Knowingly or recklessly false or misleading reports, inter alia—$1,100,000. (2) 12 U.S.C. 504, 505, 1817(j)(16), 1818(i)(2) and 1. Part 245 is removed. 1972(F): (i) First tier—$5,500. FINAL RULE-AMENDMENT TO RULES OF PRACTICE (ii) Second tier—$27,500. FOR HEARINGS (iii) Third tier—$1,100,000. (3) 12 U.S.C. 1832(c)—$1,100. The Board of Governors is amending 12 C.F.R. Part 263, (4) 12 U.S.C. 1847(b)—$27,500. its Rules of Practice for Hearings, to include a section (5) 12 U.S.C. 1847(d): listing increases in the maximum amounts of each civil (i) First tier—$2,000. money penalty under its jurisdiction. The Board is required (ii) Second tier—$22,000. to enact such regulation by the Debt Collection Improve- (iii) Third tier—$1,100,000. ments Act of 1996, which requires agencies to adjust their (6) 12 U.S.C. 1884—$110. statutorily based civil money penalties to account for infla- (7) 12 U.S.C. 3909(d)—$1,100. tion. (8) 15 U.S.C. 78u-2: Effective October 24, 1996, 12 C.F.R. Part 263 is (i) 15 U.S.C. 78u-2(b)(l)—$5,500 for a natural person amended as follows: and $55,000 for any other person. (ii) 15 U.S.C. 78u-2(b)(2)—$55,000 for a natural per- Part 263—Rules of Practice for Hearings son and $275,000 for any other person. (iii) 15 U.S.C. 78u-2(b)(3)—$110,000 for a natural 1. The authority citation for 12 C.F.R. Part 263 is revised to person and $550,000 for any other person. read as follows: (9) 42 U.S.C. 4012a(f)(5): (i) For each violation—$350. Authority: 5 U.S.C. 504; 12U.S.C. 248, 324, 504, 505, (ii) For the total amount of penalties assessed under 1817(j), 1818, 1828(c), 1831o, 1831p-l, 1847(b), 1847(d), 42 U.S.C 4012a(f)(5) against an institution or enter- 1884(b), 1972(2)(F), 3105, 3107, 3108, 3907, 3909; prise during any calendar year—$105,000. 15 U.S.C. 21, 78o-4,78o-5, 78u-2; and 28 U.S.C. 2461 note. ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT Subpart C—Rules and Procedures for Assessment and Collection of Civil Money Penalties Orders Issued Under Section 3 of the Bank Holding Company Act 2. A new section 263.65 is added to subpart C to read as Nacogdoches Commercial Bancshares, Inc. follows: Nacogdoches, Texas Section 263.65—Civil penalty inflation adjustments. Order Approving Acquisition of a Bank (a) Inflation adjustments. In accordance with the Federal Nacogdoches Commercial Bancshares, Inc. ("NCB"), a Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. bank holding company within the meaning of the Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1122 Federal Reserve Bulletin • December 1996 Holding Company Act ("BHC Act"), has applied for the Texas.4 NCB is the second largest commercial banking Board's approval under section 3 of the BHC Act organization in the market, controlling approximately (12 U.S.C. § 1842) to acquire 6.3 percent of the voting $121 million in deposits, representing 22 percent of total shares of Security National Bank, both of Nacogdoches, deposits in commercial banks in the market ("market de- Texas ("Bank").1 posits"). Bank is the fifth largest commercial banking Notice of the proposal, affording interested persons an organization in the market, with approximately $32 million opportunity to submit comments, has been published in deposits, representing 5.9 percent of market deposits. On (61 Federal Register 36,728 (1996)). The time for filing consummation of the proposal, NCB would remain the comments has expired, and the Board has considered the second largest commercial banking organization in the application and all comments received in light of the Nacogdoches banking market, controlling approximately factors set forth in section 3(c) of the BHC Act. $153 million in deposits, representing 27.9 percent of NCB is the 140th largest commercial banking organiza- market deposits. The Herfindahl-Hirschman Index tion in Texas, controlling approximately $121 million in ("HHI") in the market would increase by 259 points to deposits, representing less than 1 percent of total deposits 2409.5 in commercial banking organizations in the state.2 Bank is The Board believes that several features of the Nacogdothe 501st largest commercial banking organization in ches banking market mitigate the potential anticompetitive Texas, with approximately $32 million in deposits, repre- effects of the proposal. Eight commercial bank competitors senting less than 1 percent of total deposits in commercial would remain in the market in addition to NCB, three of banking organizations in the state. On consummation of which would each control more than 10 percent of market the proposal, NCB would become the 122d largest com- deposits. The Nacogdoches banking market also has sevmercial banking organization in Texas, controlling approx- eral characteristics that make it attractive for entry. Nacogimately $153 million in deposits. doches County has the highest level of total deposits and NCB proposes to acquire less than 25 percent of the the second highest population among all non-MSA counvoting shares of Bank, which is not a normal acquisition ties in Texas, and the average level of deposits and populafor a bank holding company. Nonetheless, the requirement in section 3 of the BHC Act that the Board's approval be obtained before a bank holding company acquires more than 5 percent of the voting shares of a bank suggests that Congress contemplated that a bank holding company may acquire between 5 and 25 percent of the voting shares of a bank or another bank holding company or may acquire 4. The Board and the courts have found that the relevant banking control of a bank or another bank holding company by market for analyzing the competitive effect of a proposal must reflect means other than acquiring 25 percent or more of the commercial and banking realities and should consist of the local area voting shares. Accordingly, the Board has reviewed the where the banks involved offer their services and where local customproposal in accordance with the factors set forth in the ers can practicably turn for alternatives. See St. Joseph Valley Bank, BHC Act.3 68 Federal Reserve Bulletin 673, 674 (1982). The key question to be considered in making this selection "is not where the parties to the merger do business or even where they compete, but where, within the Competitive Considerations area of competitive overlap, the effect of the merger on competition will be direct and immediate." United States v. Philadelphia National NCB and Bank compete directly in the Nacogdoches, Bank, 374 U.S. 321, 357 (1963); United States v. Philipsburg National Texas, banking market, which consists of Nacogdoches Bank, 399 U.S. 350, 364-65 (1969). The Board has considered NCB's contention that the relevant banking market consists of Nacogdoches County and the southern one-third of Rusk County, both in County and Angelina County, also in Texas. The Board believes, however, that the appropriate market for analyzing the competitive effects of the proposal is the Nacogdoches banking market. The Board bases its conclusion on an analysis of employment commuting data, shopping patterns, newspaper circulation, advertising by financial 1. NCB would acquire the shares from its subsidiary bank, Commer- institutions, loan and deposit data, and interviews with local bankers cial Bank of Texas, N.A., Nacogdoches, Texas, which acquired the and other officials conducted in 1991, and updated in 1996, by the shares in the regular course of securing or collecting a debt previously Federal Reserve Bank of Dallas, and other facts of record that indicate contracted in good faith. See 12 U.S.C. § 1842(a)(A)(ii); 12 C.F.R. that commuting, travel, and competition between Nacogdoches 225.12(b). County and Angelina County are limited. 2. All banking data are as of June 30, 1995. 5. Under the revised Department of Justice Merger Guidelines 3. The Board has indicated that acquisitions of less than a (49 Federal Register 26,823 (June 29, 1984)), a market in which the 25-percent voting interest may result in a bank holding company's post-merger HHI is over 1800 is considered to be concentrated. The obtaining the ability to exercise a controlling influence over the Justice Department has informed the Board that a bank merger or management and policies of another bank holding company. See acquisition generally will not be challenged (in the absence of other McLeod Bancshares, Inc., 73 Federal Reserve Bulletin 724 (1987); factors indicating anti-competitive effects) unless the post-merger Hudson Financial Associates, 72 Federal Reserve Bulletin 150 (1986). HHI is at least 1800 and the merger increases the HHI by 200 points. NCB has indicated that it may seek to influence the management or The Justice Department has stated that the higher than normal HHI policies of Bank, including its dividend policies or practices, if, in the thresholds for screening bank mergers'for anti-competitive effects view of NCB, circumstances would warrant such action as a means of implicitly recognize the competitive effect of limited-purpose lenders receiving fair value for its shares. and other non-depository financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1123 tion per banking office in Nacogdoches County substan- three months after the effective date of this order, unless tially exceed the averages for all non-MSA counties in the such period is extended for good cause by the Board or by state.6 Population growth and deposit growth also have the Federal Reserve Bank of Dallas, acting pursuant to substantially exceeded statewide averages for non-MSA delegated authority. counties during recent years.7 Texas law, moreover, per- By order of the Board of Governors, effective October 9, mits Texas banks to branch statewide, thereby providing 1996. easy entry to the market by potential competitors.8 The Nacogdoches banking market also has recently experi- Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and enced both de novo and entry by acquisition.9 The Depart- Governors Kelley, Phillips, Yellen, and Meyer. Absent and not voting: ment of Justice has reviewed the proposal and advised the Governor Lindsey. Board that consummation of the proposal is not likely to have any significantly adverse competitive effects in the JENNIFER J. JOHNSON Deputy Secretary of the Board Nacogdoches banking market and any other relevant banking market.10 Orders Issued Under Section 4 of the Bank Holding Based on these and all the facts of record, the Board Company Act concludes that consummation of the proposal is not likely to have a significantly adverse effect on competition or on First Union Corporation the concentration of banking resources in the Nacogdoches Charlotte, North Carolina banking market or any other relevant banking market. In light of all the facts of record, the Board also con- Order Approving Notice to Acquire a Savings cludes that the financial and managerial resources and Association future prospects of the organizations involved in the proposal are consistent with approval, as are considerations First Union Corporation, Charlotte, North Carolina ("First relating to the convenience and needs of the community to Union"), a bank holding company within the meaning of be served and other supervisory factors the Board must the Bank Holding Company Act ("BHC Act"), has reconsider under the BHC Act. quested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of Conclusion the Board's Regulation Y (12 C.F.R. 225.23) to acquire all the voting shares of Home Financial Corporation ("Home Based on the foregoing and all the facts of record, the Financial") and its wholly owned subsidiary, Home Sav- Board has determined that the proposal should be, and ings Bank, FSB ("Savings Bank"), both of Hollywood, hereby is, approved. The commitments and conditions Florida.1 relied on by the Board in reaching this decision are deemed Notice of the proposal, affording interested persons an to be conditions imposed in writing by the Board in conopportunity to submit comments, has been published nection with its findings and decision, and, as such, may be (61 Federal Register 44,061 (1996)). The time for filing enforced in proceedings under applicable law. comments has expired, and the Board has considered the The proposed acquisition of Bank's voting shares shall notice and all comments received in light of the factors set not be consummated before the fifteenth calendar day forth in section 4(c)(8) of the BHC Act. following the effective date of this order, and not later than First Union, with total consolidated assets of $139.9 billion, operates 12 subsidiary banks in Connecticut, Delaware, the District of Columbia, Florida, Georgia, Maryland, North Carolina, Pennsylvania, South Carolina, Tennessee, and Virginia.2 First Union is the second largest 6. All market comparison data are as of December 31, 1994, except depository organization in Florida, controlling $27.8 bilbanking office deposit data as of June 30, 1995. Nacogdoches County has $59 million per banking office, compared to $32.7 million per lion in deposits, representing approximately 15.7 percent banking office for all non-MSA counties in Texas, and 6,326 persons per banking office, compared to 3,656 persons per banking office for all non-MSA counties in the state. 7. The population in Nacogdoches County increased at an average rate of approximately 1 percent per year from 1990 through 1994, compared to an average decline for all non-MSA counties in Texas during this period. Insured deposits in Nacogdoches County increased at more than twice the average rate for insured deposits in all non- 1. After acquiring Home Financial, First Union proposes to merge MSA counties in Texas during this period. Savings Bank with and into its subsidiary bank, First Union National 8. See Tex. Rev. Civ. Stat. Ann. art. 342-3.203 (West 1996). Bank of Florida, Jacksonville, Florida ("FUNB-FL"). The Office of 9. In 1994, two commercial banks made a de novo entry into the the Comptroller of the Currency ("OCC"), the primary federal supermarket, and two other commercial banks have entered the market in visor of FUNB-FL, has approved the merger under section 18(c) of recent years by acquiring existing banks. the Federal Deposit Insurance Act (12 U.S.C. § 1828(c), (the "Bank 10. In addition, the Office of the Comptroller of the Currency and Merger Act")). the Federal Deposit Insurance Corporation have not objected to the 2. Consolidated asset data are as of June 30, 1996. Deposit data are proposal. as of June 30, 1995. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1124 Federal Reserve Bulletin • December 1996 of total deposits in depository institutions in the state.3 managerial8 resources of the organizations involved in this Home Financial is the 23d largest depository organization proposal are consistent with approval.9 in Florida, controlling $853.2 million in deposits, representing less than 1 percent of total deposits in depository Competitive Considerations institutions in the state. On consummation of the proposal, First Union would remain the second largest depository The Board has carefully reviewed the competitive effects organization in Florida, controlling deposits of $28.7 bil- of this proposal in light of all the facts of record, including lion, representing approximately 16.2 percent of total de- comments from Protestant contending that the proposal posits in depository institutions in the state. would have significant anticompetitive effects in both The Board has determined that the operation of a savings banking markets. First Union and Home Financial compete association by a bank holding company is closely related to directly in the Miami-Fort Lauderdale and Highlands banking for purposes of section 4(c)(8) of the BHC Act.4 County banking markets, both in Florida.10 First Union has committed to conform all activities of First Union operates the second largest depository insti- Savings Bank to those permissible for bank holding com- tution in the Miami-Fort Lauderdale banking market, conpanies under section 4(c)(8) of the BHC Act and Regula- trolling deposits of approximately $8.1 billion, representtion Y.5 ing 17 percent of total deposits in depository institutions in In order to approve the proposal, the Board also must the market ("market deposits").11 Home Financial operdetermine that the proposed activities are a proper incident to banking, that is, that the proposal "can reasonably be expected to produce benefits to the public, such as greater 8. Protestant also contends that two recent settlements by First convenience, increased competition, or gains in efficiency, Union and pending lawsuits related to its sale of mutual funds in that outweigh possible adverse effects, such as undue con- Florida raise adverse managerial considerations. The Board has considered these comments in light of the various settlements of these centration of resources, decreased or unfair competition, matters and the correction or termination by First Union of the conflicts of interests, or unsound banking practices." As practices that gave rise to these matters and the supervisory assesspart of its evaluation of these factors, the Board has care- ments of First Union's managerial resources. Protestant also notes that fully reviewed the financial and managerial resources of First Union is the subject of an employment discrimination lawsuit First Union, Home Financial, and their respective subsid- filed by former employees that were laid off in connection with First Union's acquisition of First American Metro Corp., McLean, Viriaries in light of all the facts of record, and the effect the ginia. Pursuant to Department of Labor regulations, First Union is transaction would have on such resources.6 The facts of required to file an annual report with the Equal Employment Opporturecord include confidential reports of examination from the nity Commission ("EEOC") covering all employees in its corporate primary federal supervisors of the organizations assessing structure. See 41 C.F.R. 60-1.7(a) and 60-1.40. The EEOC has jurisdiction for determining whether companies are in compliance with the their financial and managerial resources. Based on all the equal employment statutes. To date, there has been no finding or facts of record, the Board concludes that the financial7 and adjudication of illegal employment practices by First Union. 9. Protestant also maintains that Banco Santander, S.A., Madrid, Spain ("Banco Santander"), has violated the terms of certain passivity commitments made in connection with its acquisition of a minority interest in First Union. See Banco Santander, S.A., 81 Federal Reserve Bulletin 1139 (1995). The Board previously reviewed and rejected substantially similar comments from Protestant in connection with Banco Santander's acquisition of Banco Central Hispano Puerto Rico, 3. In this context, depository institutions include commercial banks, Hato Rey, Puerto Rico. See Statement by the Board of Governors savings banks, and savings associations. Regarding the Application by Banco Santander, S.A., to Acquire 4. See 12 C.F.R. 225.25(b)(9). Banco Central Hispano Puerto Rico, 82 Federal Reserve Bulletin 833 5. First Union has committed that all impermissible real estate (1996); Letter from Jennifer J. Johnson, Deputy Secretary of the activities will be divested or terminated within two years of consum- Board, to Matthew Lee, Inner City Press/Community on the Move mation of the proposal, that no new impermissible projects or invest- (September 13, 1996). ments will be undertaken during this period, and that capital adequacy 10. The Miami-Fort Lauderdale banking market is approximated by guidelines will be met excluding impermissible real estate invest- Dade and Broward Counties, both in Florida. The Highlands County ments. First Union also has committed that any impermissible securi- banking market is approximated by Highlands County, Florida. ties or insurance activities conducted by Savings Bank will cease on 11. Market data are as of June 30, 1995, and are based on calculaor before consummation of the proposal. Savings Bank may continue tions in which the deposits of thrift institutions are included at 50 to service any impermissible insurance policies for two years after percent. The Board previously has indicated that thrift institutions consummation of the proposal, but may not renew any policies during have become, or have the potential to become, significant competitors this two-year period. of commercial banks. See Midwest Financial Group, 75 Federal 6. Seell C.F.R. 225.24; see also The Fuji Bank, Limited, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly included Reserve Bulletin 155 (1987). thrift deposits in the calculation of market share on a 50-percent 7. In connection with this proposal, the Board received comments weighted basis. See, e.g., First Hawaiian, Inc., 11 Federal Reserve from Inner City Press/Community on the Move ("Protestant") main- Bulletin 52 (1991). Because the deposits of Savings Bank would be taining that the recent downgrading by an independent rating agency acquired by a commercial banking organization under the proposal, of its investor outlook for First Union's debt raises adverse financial those deposits are included at 100 percent in the calculation of First considerations. The Board has carefully reviewed Protestant's infor- Union's pro forma market share. See Norwest Corporation, 78 Fedmation in light of the overall financial condition of First Union and its eral Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal subsidiaries, as assessed by their primary federal supervisors. Reserve Bulletin 669, 670 n.9 (1990). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1125 ates the 20th largest depository institution in the market, banking market for in-state and out-of-state depository controlling deposits of approximately $721 million, repre- organizations.13 Last year, a bank entered the market by senting less than 1 percent of market deposits. On consum- acquiring a thrift branch. mation of this proposal, First Union would continue to The Board sought comments from the United States operate the second largest depository institution in the Attorney General, and the Attorney General stated that Miami-Fort Lauderdale banking market, controlling depos- consummation of the proposal would not likely have any its of approximately $8.8 billion, representing 18.4 percent significantly adverse competitive effects. Based on these of market deposits. On consummation of the proposal, the and all the other facts of record, the Board concludes that market would remain moderately concentrated, as mea- consummation of this proposal is not likely to have a sured by the Herfindahl-Hirschman Index ("HHI"),12 the significantly adverse effect on competition or the concen- HHI would increase by 37 points to 1051, and numerous tration of banking resources in the Miami-Fort Lauderdale competitors would remain in the Miami-Fort Lauderdale or Highlands County banking markets, or any other relebanking market. vant banking market.14 First Union operates the third largest depository institution in the Highlands County banking market, controlling A. Record of Performance under the Community deposits of approximately $147.2 million, representing ap- Reinvestment Act proximately 15.3 percent of total market deposits. Home Financial operates the fifth largest depository institution In acting on a proposal to acquire a savings association in the market, controlling deposits of approximately under section 4(c)(8) of the BHC Act, the Board reviews $132.3 million, representing 6.9 percent of market depos- the records of the relevant depository institutions under the its. On consummation of this proposal, First Union would Community Reinvestment Act (12 U.S.C. § 2901 et seq.) become the second largest depository institution in the ("CRA").15 The Board has evaluated the record of perfor- Highlands County banking market, controlling deposits of mance of First Union's depository institutions and Savings $279.5 million, representing approximately 27.1 percent of Bank in light of the CRA performance examinations by market deposits. The HHI for the Highlands County bank- their primary federal supervisors. ing market would increase 238 points to 2273. The Board has carefully considered comments from A number of factors indicate that the market concentra- Protestant maintaining that First Union's record of closing tion as measured by the HHI tends to overstate the compet- branches, particularly the number of branches closed in itive effect of the proposal in the Highlands County bank- Florida,16 adversely affects its ability to assist in meeting ing market. For example, eight depository institution the credit needs of its communities.17 Protestant also cites competitors, including the subsidiaries of four large bank data submitted under the Home Mortgage Disclosure Act holding companies, would remain in the market after consummation of the proposal. Three of these competitors in addition to First Union would each control more than 13. See Fla. Stat. ch. 168 (1996). 10 percent of market deposits. The Highlands County 14. In analyzing the competitive effects of the proposed transaction, banking market also has several characteristics that make it the Board considered Protestant's assertion that First Union's policy attractive for entry by an out-of-market institution. For of imposing a surcharge on ATM transactions by non-customers would have adverse competitive effects by causing customers of small example, Highlands County is the third largest of the 33 banks to terminate their relationships and become customers of large non-MSA counties in Florida, and its population increased banks with extensive ATM networks, like First Union, to avoid the 9.6 percent between 1990 and 1995, compared to surcharge. The Board notes that Home Financial does not own or 9.3 percent for the 32 other non-MSA counties and 9 operate any ATMs. Thus, the proposed transaction would not expand percent for the state of Florida. In addition, Florida's First Union's surcharge policy in markets currently served by Home Financial. In addition, Home Financial's customers would gain access interstate and branch banking laws permit both statewide to a large ATM network, and would no longer be subject to First branching and interstate banking, and, therefore, present Union's surcharge policy. Moreover, it would be speculative to conlow legal barriers to entry into the Highlands County clude how customers of small banks generally would change their banking relationships in response to surcharge fees implemented by large banks. 15. See Norwest Corporation, 76 Federal Reserve Bulletin 873 (1990). 12. Under the revised Department of Justice Merger Guidelines, 49 16. Protestant claims that between April 1994 and September 1995, Federal Register 26,823 (June 29, 1984), a market in which the First Union closed 119 branches and opened only eight branches in post-merger HHI is between 1000 and 1800 is considered moderately Florida. Protestant also argues that First Union has closed more than concentrated, and a market in which the post-merger HHI is above half the branches operated by a Florida thrift it recently acquired, and 1800 is considered highly concentrated. The Justice Department has that First Union is beginning to close branches acquired in connection informed the Board that a bank merger or acquisition generally will with its acquisition of First Fidelity Bancorporation, Newark, New not be challenged (in the absence of other factors indicating anticom- Jersey, in October 1995, in areas where First Union had no prior petitive effects) unless the post-merger HHI is at least 1800 and the banking operations. merger increases the HHI by more than 200 points. The Justice 17. Protestant also questions whether First Union has correctly Department has stated that the higher than normal threshold for an classified certain branch closings as consolidations or relocations that increase in the HHI when screening bank mergers and acquisitions for would not require prior notice to the bank's primary federal supervisor anticompetitive effects implicitly recognizes the competitive effects of under Section 42 of the Federal Deposit Insurance Corporation Act limited-purpose lenders and other non-depository financial entities. ("FDI Act") as implemented by the Joint Policy Statement Regarding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1126 Federal Reserve Bulletin • December 1996 ("HMDA") by a number of First Union's subsidiary eated communities, and has developed a number of affordbanks18 and First Union's mortgage company to support its able credit products in response to identified needs. In contention that First Union has not adequately provided addition, the 1994 CRA performance evaluation for outreach to, or assisted in meeting the credit needs of, FUNB-FL noted that the bank actively participates in Hispanics and African Americans in its delineated commu- government-sponsored programs such as those of the Small nities, and that First Union may have violated fair lending Business Administration, the Federal Housing Administralaws. tion, the Florida Housing Finance Agency, and the Jack- An institution's most recent CRA performance evalua- sonville Economic Development Authority. Examiners also tion is a particularly important consideration in the applica- noted that FUNB-FL's geographic distribution of credit tions process because it represents a detailed on-site evalu- applications and approvals reflects a reasonable penetration ation of the institution's overall record of performance throughout its delineated communities. The 1994 CRA under the CRA by its primary federal supervisor.19 In performance evaluation for FUNB-FL also stated that the addition, the Board considers an institution's policies and bank had exhibited a high level of participation in commupractices for compliance with applicable fair lending laws. nity development programs, and noted that the bank had The Board also takes into account information on an insti- taken a leadership role in identifying community developtution's lending activities that assist in meeting the credit ment opportunities and making investments in worthwhile needs of low- and moderate-income neighborhoods. programs that benefit its local communities, particularly Performance Examinations. All of First Union's subsid- those that benefit low- and moderate-income ("LMI") iary banks received a CRA performance rating of "satisfac- areas. tory" or "outstanding" in their most recent evaluations for Record of Opening and Closing Branches. Home Sav- CRA performance by their primary federal supervisors. ings Bank Branches. The Board has considered the effect First Union's lead subsidiary bank, First Union National of the proposal on the branches currently operated by Bank of North Carolina, Charlotte, North Carolina, and Savings Bank in light of Protestant's comments and the FUNB-FL received "outstanding" and "satisfactory" rat- Branch Policy Statement.21 Savings Bank operates eight ings, respectively, from their primary federal supervisor, branches in three counties in Florida. First Union indicates the OCC, at their most recent examination for CRA perfor- that two of Savings Bank's branches would cease operamance, as of April 1994.20 Savings Bank also received a tions and would be merged with two branches of FUNB- "satisfactory" rating from its primary federal supervisor, FL. One of the branches is located in a LMI census tract the Office of Thrift Supervision, at its most recent examina- and the other is located in a middle-income census tract. In tion for CRA performance, as of May 1994. each case, the First Union branch that would survive is Examiners noted that FUNB-FL has taken a number of located within one-quarter mile of the Savings Bank actions to ascertain effectively the credit needs of its delin- branch. Savings Bank's customers would continue to be adequately served because the First Union branches operate in the same neighborhood and census tracts as the Branch Closings ("Branch Policy Statement"). 12 U.S.C. § 1831r-l; branches that would cease operations.22 58 Federal Register 49,083 (1993). 18. The banks are located in the District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Tennessee, and Virginia. 21. 58 Federal Register 49,083 (1993). First Union has submitted 19. The Statement of the Federal Financial Supervisory Agencies confidential branch closing information in connection with the pro- Regarding the Community Reinvestment Act provides that a CRA posal. Protestant asserts that this information should be disclosed examination is an important and often controlling factor in the consid- under the Board's application processing procedures that generally eration of an institution's CRA record and that reports of these prohibit ex parte communications during the processing of an applicaexaminations will be given great weight in the applications process. tion. The Board notes that its rules regarding access to information 54 Federal Register 13,742 and 13,745 (1989). under the Freedom of Information Act ("FOIA") provide the appropri- 20. The OCC conducted joint examinations of eight of First Union's ate framework for considering a commenter's challenge to confidensubsidiary banks in April 1994. The remaining six subsidiary banks, tial treatment accorded an applicant's submissions, and that Protes- First Union National Bank of Georgia, Atlanta, Georgia; First Union tant's challenge here was reviewed under those rules and denied. The National Bank of Maryland, Rockville, Maryland; First Union Na- Board's rules do not provide a commenter access to information that tional Bank of South Carolina, Greenville, South Carolina; First is otherwise exempt from disclosure under FOIA. Protestant, more- Union National Bank of Tennessee, Nashville, Tennessee; First Union over, has been provided with all non-confidential submissions by First National Bank of Virginia, Roanoke, Virginia; and First Union Na- Union that respond to particular issues raised by Protestant. tional Bank of Washington D.C. each received "satisfactory" CRA 22. The Board notes that Section 42 of the FDI Act requires that the performance ratings from the OCC. First Union North, Avondale, bank's primary federal supervisor receive notice at least 90 days Pennsylvania (formerly known as First Fidelity Bank, N.A.) also before the date of the proposed branch closing, and that the bank received a "satisfactory" rating from the OCC at its most recent provide the reasons and other supporting data for the closure consisexamination for CRA performance, as of July 1994. In addition, First tent with the institution's written policy for branch closings. For the Union Bank of Connecticut, Stamford, Connecticut (formerly known reasons noted above, the two Home Savings branches that would as First Fidelity Bank), and First Union Bank of Delaware, Wilming- cease operations appear to meet the criteria for a relocation. The Joint ton, Delaware (formerly known as First Fidelity Bank) both received Policy Statement provides that each federal banking agency must "satisfactory" ratings from their primary federal supervisor, the Fed- examine compliance with Section 42 of the FDI Act as part of an eral Deposit Insurance Corporation ("FDIC"), at their most recent institution's CRA performance evaluation and may make adverse examinations for CRA performance, as of March 1995 and April findings in the evaluation or take appropriate enforcement action 1995, respectively. against an institution that fails to comply. The CRA examination for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1127 Other Branches. Protestant's allegations also relate to that the bank had followed its policies in evaluating the the effects of branch closings by First Union banks in impact of branch closings on its communities, including Florida from April 1994 to September 1995 and the branch low- and moderate-income areas. First Union has informed closings in connection with the First Fidelity acquisition. the Board that it followed these policies when it closed the None of these branch closings is related to the transaction Florida branches. First Union also stated that similar poliunder review in this application. cies have been adopted at the former First Fidelity subsid- Section 4 of the BHC Act provides that the Board must iaries and have been followed in connection with those evaluate whether the proposed transaction would result in institutions' branch consolidations and closings. public benefits that outweigh potential adverse effects. HMDA Data and Lending Activities. The Board has Because these branch closings are not related to the Home carefully reviewed HMDA data submitted by First Union Savings transaction, the effect of these branch closings is and First Fidelity in light of Protestant's comments.24 The not directly relevant to the factors that must be considered Board previously has reviewed 1993 and 1994 HMDA data in evaluating the Home Savings transaction. The branch submitted by First Union and First Fidelity in light of closing policies used by First Union would, however, re- similar comments from Protestant.25 The data indicate that flect on the managerial resources and would govern future First Union has continued to increase its percentage of branch closings at Home Savings. Consequently, the home mortgage loans to LMI individuals and Africanbranch closing policies of First Union have been reviewed American borrowers. For example, 1995 HMDA data for in this case. FUNB-FL has adopted First Union's corporate First Union show that, although the overall total number of policy for branch closures that provides for an objective HMDA-related loans reported for First Union's bank and determination of branches to be closed, consideration of mortgage subsidiaries generally decreased, the percentage alternative solutions, examination of options to minimize of applications from LMI individuals and African Ameripotential adverse effects on and inconvenience to the com- can borrowers increased in most of First Union's service munities, and sufficient notice to the communities. The areas. In addition, the number of HMDA-related applicapolicy also requires additional analyses, community con- tions received by FUNB-FL from Hispanics has increased tacts and/or review of need ascertainment calls when any steadily from 1993 to 1995 and the disparity between the branch closing affects a LMI community. rates of approval and denial for Hispanic applicants at In addition, the effect of all branch closings is reviewed FUNB-FL continues to decrease. In 1995, in the Miami in the CRA examination process and the results of these MSA, where approximately 49 percent of the population is on-site examinations have been carefully considered.23 In Hispanic, approximately 52 percent of all HMDA-related this case, the Florida branch closings identified by Protes- applications were from Hispanics. tant will be reviewed by the OCC in the next CRA perfor- The data for First Union and First Fidelity also reflect mance examination of FUNB-FL, and the branches of the some disparities in the rate of loan orginations, denials, and former First Fidelity banks will be reviewed in the next applications by racial group or income level. The Board is CRA performance examination by the appropriate federal concerned when the record of an institution indicates such supervisor for the particular bank that closed the branch. disparities in lending, and believes that all banks are obli- The OCC reviewed the general policy employed by gated to ensure that their lending practices are based on FUNB-FL in closing branches, and the branches actually criteria that assure not only safe and sound lending, but closed by FUNB-FL before April 1994, in connection with also assure equal access to credit by creditworthy applithe bank's 1994 CRA performance examination. The OCC cants regardless of race. The ttoard recognizes, however, determined that FUNB-FL has formal procedures for open- that HMDA data alone provide an incomplete measure of ing and closing offices that are designed to maintain a an institution's lending in its community because these reasonable level of services in each delineated community data cover only a few categories of housing-related lending and that its branches are readily accessible to all segments and provide limited information about the covered loans.26 within its delineated communities. The OCC concluded HMDA data, therefore, have limitations that make the data FUNB-FL noted compliance by the bank with Section 42 of the FDI 24. HMDA data filed by the mortgage subsidiary of First Union and Act. The Board has given the OCC and the FDIC copies of Protes- First Fidelity have been combined with data for the banking subsidtant's comments regarding First Union's designation of recent branch iary operating in each state, as appropriate. First Fidelity's data also closings as consolidations or relocations for evaluation in the next include the data for the First Fidelity Urban Investment Corporation. CRA performance examinations. First Union's data do not include the HMDA data reported by First 23. The on-site CRA examination includes a review of the types of Union Home Equity Bank because the subsidiary takes the majority of lending and banking services provided by the closed branch, the types its applications by telephone and is therefore not required to record the of lending and banking services available from the institution's re- race of the borrower under applicable law. Data for First Union and maining branches and alternative systems for delivering banking First Fidelity have been considered separately because First Union did services, the proximity of the closed branch to the other branches of not consummate its acquisition of First Fidelity until year-end 1995. the institution, and the needs for lending and banking services of the 25. See First Union/First Fidelity, 81 Federal Reserve Bulletin at particular area. An on-site examination also provides examiners with 1147^18. the opportunity to consider the institution's overall business strategy 26. These data, for example, do not provide a basis for an indepenfor closing branches such as cost, profitability and effective service dent assessment of whether an applicant who was denied credit was, delivery. in fact, creditworthy. Credit history problems and excessive debt Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1128 Federal Reserve Bulletin • December 1996 an inadequate basis, absent other information, for conclud- that represent a broad range of communities, including ing that an institution has engaged in illegal discrimination LMI areas. First Union's subsidiary banks also used newsin lending. paper and radio to advertise their products and services to Because of the limitations of HMDA data, the Board has LMI residents, including a series featuring CRA-related carefully reviewed other information, particularly examina- products that is used in local publications that focus on tion reports that provide an on-site evaluation of compli- LMI individuals and minority small business owners. First ance by First Union and Savings Bank with the fair lending Union also has implemented a number of specialized lendlaws.27 The examinations of First Union's subsidiary bank, ing programs such as the Affordable Home Mortgage Loan, the examinations of First Fidelity's subsidiary banks, and which is a specialized product offering flexible terms such Savings Bank found no evidence of prohibited discrimina- as flexible debt-to-income requirements and lower down tion or other illegal credit practices at the institutions. payments. Other programs designed for LMI individuals Examiners also found no evidence at any of the institutions included the Special Home Improvement Loan, which ofof any practices intended to discourage applications for the fers rebates for timely payments, flexible debt-to-income types of credit listed in the banks' CRA statement. ratios, and no origination fee; Special Instant Gash Re- As discussed in more detail in the First Union/First serve, a revolving line of credit that acts as an instant loan Fidelity Order, the 1994 examinations of First Union's and overdraft protection; and Special FirstAdvance, an unsecured line of credit with flexible debt-to-income ratios. subsidiary banks considered that the geographic distribu- First Union banks also offered loans under governmenttion of credit showed reasonable penetration of all seginsured loan programs, such as the Small Business Adminments of each bank's communities, including LMI neighistration, the Federal Housing Authority, and the Veterans borhoods. The 1994 examinations also found that the Administration, and made a number of small business delineations by all of First Union's subsidiary banks of loans to borrowers in LMI census tracts.28 their local communities were reasonable and did not arbitrarily exclude LMI areas. Finally, the 1994 First Union examinations indicated that all of the subsidiary banks B. Conclusion Regarding CRA Considerations solicited and accepted credit applications from all segments of their delineated communities, including individu- The Board has carefully reviewed all the facts of record in als in LMI areas. considering the CRA performance record of Bank, includ- First Union also has taken a number of steps to increase ing information provided by commenters to the proposal, lending by its subsidiary banks to LMI and minority bor- First Union's responses, and results of the performance rowers. For example, First Union has implemented a sec- examinations of First Union's subsidiary banks and Savond review of denied loan applications for mortgages and ings Bank. Based on this review, and for the reasons consumer loans to ensure that consistent loan decisions are discussed above and in the First Union/First Fidelity Order, made. The second review is conducted before a final deci- which are incorporated herein by reference, the Board sion is made for all these types of loans for which denial is concludes that considerations relating to the CRA are conrecommended. Other corporate fair lending programs in- sistent with approval.29 clude semi-annual reviews of files to assess the level of assistance to applicants and the basis for lending decisions, regression modeling to test for variances in rates charged 28. The Board has carefully reviewed Protestant's assertion that to borrowers, matched-pair shopping to gauge the quality First Union's account requirements to qualify for lower fees adversely and level of assistance provided to loan applicants, and alfect the ability of LMI individuals to obtain banking services. The Board previously has noted that First Union provides a full range of annual policy reviews to ensure that policies are nondiscredit products and banking services that assist in meeting the credit criminatory. Examiners noted in First Union's 1994 exam- and banking needs of LMI individuals, including products to provide inations that management of all the subsidiary banks had loans in small amounts to LMI individuals, no-minimum-balance implemented comprehensive training and compliance pro- checking accounts for LMI customers that allow a certain number of free posted checks per statement period, and overdraft protection for grams to support equal treatment in lending and to ensure small business owners. There is no evidence in the record that the fees that all applicants were treated fairly. charged by First Union are based on any factor that would be prohib- First Union has implemented a number of outreach and ited under law. While the Board has recognized that banks help serve lending activities to assist in meeting the credit needs of the banking needs of their communities by making basic banking areas with predominately LMI and minority residents. Out- services available at nominal or no charge, the CRA does not impose any limitation on the fees or surcharges for services. reach efforts noted by examiners included ongoing commu- 29. Another protestant ("Florida Protestant") has reiterated his nications with community, civic, and neighborhood groups contention that First Union practices "price discrimination" by charging customers outside First Union's home state of North Carolina, particularly in Florida, higher fees for certain services. The Board levels relative to income—reasons most frequently cited for a credit previously has reviewed Florida Protestant's comments in light of the denial—are not available from the HMDA data. factors required to be considered under sections 3 and 4 of the BHC 27. As noted in the First Union/First Fidelity Order, the OCC, Act. See First Union/First Fidelity Order, 81 Federal Reserve Bulletin contrary to Protestant's assertion, reviewed a sample of loans made by at 1151; First Union/Society First Order. The Board has also reviewed First Union's mortgage company in reviewing compliance with appli- these comments again in this case and concludes that this proposal and cable fair lending laws by First Union's subsidiary banks in the 1994 prior acquisitions by First Union in Florida would not sufficiently CRA performance evaluations. lessen, and have not sufficiently lessened, competition in the relevant Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1129 Conclusion The Governor and Company of the Bank of Ireland Dublin, Ireland For the reasons discussed above, and in reliance on all the commitments made in connection with this proposal, and Order Approving Notice to Engage in Nonbanking the conditions discussed in this order, the Board concludes Activities that the proposal is not likely to result in decreased or unfair competition, conflicts of interests, unsound banking The Governor and Company of the Bank of Ireland, Dubpractices, undue concentration of resources, or other adlin, Ireland ("BOI"), a bank holding company within the verse effects. The Board expects, moreover, that the acquimeaning of the Bank Holding Company Act ("BHC Act"), sition of Home Financial by First Union would provide has requested the Board's approval under section 4(c)(8) of added convenience to Home Financial's customers. In parthe BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 ticular, Home Financial would be able to offer its customof the Board's Regulation Y (12 C.F.R. 225.23) to acquire ers additional products and services that are currently ofa 50-percent equity interest in BBOI Worldwide LLC, fered by First Union and its subsidiaries, including discount Denver, Colorado ("Company"), a de novo joint venture brokerage services, investment products, credit card sercompany, and thereby engage in providing investment and vices, trust services, management advice, and access to an financial advisory services under section 225.25(b)(4)(ii), extensive ATM network. Accordingly, the Board has deter- (iii) and (iv) of Regulation Y (12 C.F.R. 225.25(b)(4)(ii), mined that this proposal can reasonably be expected to (iii) and (iv)) and administrative services to open-end inproduce public benefits that outweigh any adverse effects vestment companies ("mutual funds" or "funds").1 BOI under the proper incident to banking standard of section would hold its equity interest in Company through its 4(c)(8) of the BHC Act. subsidiary, Bank of Ireland Asset Management (U.S.) Lim- Based on the foregoing and all other facts of record, ited, Dublin, Ireland ("BIAM"). The remaining 50 percent including all the commitments made by First Union in interest in Company would be held by Berger Associates, connection with this proposal, the Board has determined Inc., Denver, Colorado ("Berger"). that the application should be, and hereby is, approved. Notice of the proposal, affording interested persons an The Board's approval is expressly conditioned on compliopportunity to submit comments, has been published ance by First Union with all the commitments made in (61 Federal Register 49,462 (1996)). The time for filing connection with this proposal and with the conditions comments has expired, and the Board has considered the referred to in this order. For purposes of this action, the notice and all comments received in light of the factors set commitments and conditions relied on by the Board in forth in section 4(c)(8) of the BHC Act. reaching this decision are deemed to be conditions im- BOI, with total consolidated assets of approximately posed in writing and, as such, may be enforced in proceed- $32.9 billion, is the 186th largest bank in the world, and ings under applicable law. the second largest banking organization in Ireland.2 In the This proposal shall not be consummated later than three United States, BOI operates a branch in New York, New months following the effective date of this order, unless York, and owns 23.5 percent of the voting shares of Citisuch period is extended for good cause by the Board or by zens Financial Group, Inc., Providence, Rhode Island.3 the Federal Reserve Bank of Richmond, acting pursuant to Both BIAM and Company are investment advisors regisdelegated authority. tered with the SEC under the Investment Advisers Act of By order of the Board of Governors, effective Octo- 1940 (15 U.S.C. § 80b-1 et seq.) ("Advisers Act") and are ber 15, 1996. subject to the recordkeeping and reporting obligations, Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and fiduciary standards, and other requirements of the Advisers Governors Lindsey, Phillips, Yellen, and Meyer. Absent and not Act and the SEC. Initially, Company would provide advivoting: Governor Kelley. sory and administrative services to funds organized by Berger that would bear the name "Berger/BIAM" ("the JENNIFER J. JOHNSON Funds").4 Deputy Secretary of the Board banking markets to permit First Union unilaterally to determine pric- 1. Company would provide advisory services only to institutional ing policy for the banking industry in Florida or act as a price leader in customers as defined in Regulation Y. 12 C.F.R. 225.2(g). the markets. The Board has concluded that First Union's prior acquisi- 2. Asset data are as of March 31, 1996. Foreign ranking data are as tions have not given it a dominant market position, and that other of December 31, 1995. firms are likely to have sufficient capacity to prevent First Union from 3. The subsidiary banks of Citizens Financial Group are Citizens achieving a dominant market position. In addition, there is no evi- Savings Bank and Citizens Trust Company, both of Providence, dence that First Union sets its fees on a basis prohibited under Rhode Island; Citizens Bank of Massachusetts, Boston, Massachuapplicable fair lending or banking laws, and, in general, fair lending setts; and Citizens NH Bank, Manchester, New Hampshire. laws do not prohibit a depository institution from charging different 4. The initial group of the Funds has been organized in a masterfees in different parts of the country. The Board previously has feeder structure in which several feeder funds may invest in a master provided Florida Protestant's comments to the OCC, the primary portfolio ("Portfolio"). In providing services to the Funds, Company federal regulator of FUNB-FL, and the appropriate agency to deter- would enter into an investment advisory agreement and an administramine whether the bank has violated the Equal Credit Opportunity Act tive services agreement with each Portfolio. Company then would (15 U.S.C. §§ 1691 etseq.). enter into a sub-advisory agreement with BIAM and a sub- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1130 Federal Reserve Bulletin • December 1996 Berger also is an investment advisor registered with the Glass-Steagall Act SEC under the Advisers Act, and it provides discretionary investment management services to institutional clients, Under the Glass-Steagall Act, a company that owns a including mutual funds, pension and profit-sharing plans. member bank may not control "through stock ownership Berger provides certain administrative, recordkeeping, and or in any other manner" a company that engages princimarketing services with respect to mutual funds for which pally in distributing, underwriting or issuing securities.8 Berger serves as investment advisor ("Berger Funds"). The Board previously has determined that the Glass- Berger is currently engaged in organizing and sponsoring Steagall Act does not prohibit a bank holding company mutual funds and plans to distribute funds through Berger from serving as investment advisor to a mutual fund.9 Distributors, Inc. Berger has organized seven registered, In Mellon, the Board determined that the bank holding open-end investment companies, with assets of $3.4 bil- company would not control a mutual fund by virtue of lion, as of October 7, 1996. serving as investment advisor to the fund, providing admin- The Board previously has determined by regulation that istrative services to the fund and having limited employee the investment advisory services that BOI proposes to interlocks with the fund. The Board reasoned that control conduct through Company are closely related to banking of the fund would rest with the board of directors of the and permissible for bank holding companies under section fund, which would be wholly independent of Mellon. The 4(c)(8) of the BHC Act.5 The Board also previously has Board noted that the policy-making authority for a fund determined that the administrative services BOI proposes rests with that fund's board of directors, which, under the to provide through Company are closely related to banking federal securities laws, must have a number of independent within the meaning of section 4(c)(8) of the BHC Act.6 directors and is responsible for the selection and review of BOI has committed to conduct the proposed activities the investment advisor, underwriter and other major consubject to the prudential and other limitations established tractors with the fund. Mellon also committed that it would by the Board in Mellon, except as discussed below.7 not have any director or officer interlocks with funds to which it provided both advisory and administrative services. The Board permitted Mellon to have one director interlock with a fund to which Mellon provided only administrative services (but not investment advisory services) on the rationale that the countervailing influence of an independent advisor, in addition to the presence of the administration agreement with Berger. The Funds would be distribindependent directors on the fund's board of directors, uted through Berger's newly formed broker-dealer subsidiary, Berger Distributors, Inc., or through an independent distributor, and would would not permit Mellon to control the fund. not be "proprietary mutual funds" (funds sold primarily to customers This proposal differs from Mellon in the following ways. of BOI). See Barclays PLC, 82 Federal Reserve Bulletin 158 at n. 7 First, BOI proposes that two officers of Company serve on (1996) ("Barclays"). 5. 12 C.F.R. 225.25(b)(4). BOI also proposes to advise customers the 11-member board of trustees of funds for which Comon the purchase of contracts for the forward delivery of foreign pany will serve as both investment advisor and administracurrency to hedge foreign exchange exposure. BOI would provide this tor. Second, BOI proposes that one of these officers also advice only in connection with advising a customer to purchase serve as president of the Funds. These officer and trustee foreign-denominated securities. As proposed, this advice with respect interlocks are in addition to several employee interlocks to forward contracts is incidental to the provision of investment advice. that are consistent with the Board's decision in Mellon.10 6. See Mellon Bank Corporation, 79 Federal Reserve Bulletin 626 In this case, despite the absence of an independent invest- (1993) {"Mellon"). The administrative services that Company would ment advisor, the Board does not believe that the proposed provide to mutual funds include computing the fund's financial data, interlocks between Company and the Funds would compromaintaining and preserving the records of the fund, accounting and recordkeeping, providing office facilities and clerical support for the fund, and preparing and filing tax returns and regulatory reports for the fund. A complete list of the proposed administrative services is 8. 12 U.S.C. §§ 221a and 377. included in Appendix A to this order. 9. 12 C.F.R. 225.25(b)(4); 12 C.F.R. 225.125. 7. Company also would provide telephone shareholder services 10. BOI proposes that up to three employees of Company assist in through a toll-free number. BOI has committed that telephone service the administration of the Funds by serving as assistant secretary, operators would not solicit callers to purchase shares in particular assistant treasurer or assistant vice president of the Funds or Portfolio. mutual funds and that substantive questions about mutual fund perfor- Those employees would be supervised by the board of trustees and mance or strategies would be referred to specific mutual fund distribu- senior-level officers who, except for the proposed president discussed tors or investment advisors. See The Chase Manhattan Corporation, above, would not work for Company. Those employees would have 81 Federal Reserve Bulletin 883 at n. 52 (1995). BOI proposes that no policy-making authority at the Funds or Portfolios, and would not Company be permitted to prepare sales literature for mutual funds it be responsible for, or involved in, making recommendations regarding administers. BOI has committed that Company would prepare such policy decisions. The Board believes that these interlocks, under the literature only at the direction and under the supervision of the conditions described in this order, would not permit BOI to control the distributor for the fund. Responsibility for use of the fund's sales Funds. literature would remain with the distributor, which would be responsi- BOI also proposes to acquire up to 5 percent of the shares of mutual ble for filing advertisements and sales literature with the National funds for which it provides administrative, but not advisory, services. Association of Securities Dealers and for all decisions relating to BOI has committed that such ownership would not be used in any way marketing the fund and arranging for brokers to distribute shares of in marketing or selling the shares of the investment company. See the fund. See Barclays at n. 8. Mellon at n. 21. 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Legal Developments 1131 mise the independence of the boards of trustees of the Proper Incident to Banking Test Funds, or the independent distribution of the Funds, or result in control of the Funds by BOI. In order to approve this proposal, the Board also must find As the Board noted in Mellon, under the Investment that the performance of the proposed activities by BOI Company Act of 1940 (" 1940 Act"), at least 40 percent of "can reasonably be expected to produce benefits to the the board of directors of a mutual fund must be individuals public . . . that outweigh possible adverse effects, such as who are not affiliated with the mutual fund, investment undue concentration of resources, decreased or unfair comadviser or any other major contractor to the mutual fund.11 petition, conflicts of interests, or unsound banking prac- The 1940 Act and related regulatory provisions require that tices." 12 U.S.C. § 1843(c)(8). independent directors annually review and approve the In prior cases, the Board has expressed concern that joint mutual fund's investment advisory contract and any plan ventures might lead to a matrix of relationships between of distribution or related agreement.12 co-venturers that could break down the legally mandated Under this proposal, a majority of the trustees of the separation of banking and commerce.13 The Board has Funds would be independent of BOI, Berger and Com- found this concern to be particularly acute where, as here, pany. Any trustee of the Funds who also serves as an the joint venture involves a relationship between a bank officer or employee of Company would be an "interested holding company and a securities firm, and the potential person" under the 1940 Act and, therefore, would be exists for the mingling of permissible and impermissible required to abstain from voting on the Funds' investment securities activities.14 advisory and other major contracts. In addition, BOI and As noted above, the Board has been concerned that Berger have committed that only disinterested persons interlocks and other relationships between a securities firm would vote on the contract for administrative services co-venturer and a joint venture company might cause the provided to the Funds under the same requirements estab- joint venture company to become engaged in impermissilished for advisory contracts in the 1940 Act. Under these ble securities activities. The Board, previously has permitcircumstances, the Board believes that the proposed direc- ted interlocks between a securities co-venturer and a joint tor interlocks would not allow BOI to control the Funds. venture company if the interlocks did not involve an officer The Board also does not believe that the proposed officer or employee of the securities co-venturer whose responsiinterlock between Company and the Funds would increase bilities consist of selling, marketing, distributing, underthe ability of BOI to control the Funds in this case. The writing or dealing in any bank-ineligible securities, or interlock involves the president of Berger, who, except for overseeing the corporate affairs of any of the securities firm his position at Company would not otherwise be an officer, co-venturer's mutual funds. The Board, however, has perdirector, or employee of BOI or any of its subsidiaries. As mitted a bank holding company directly to advise, administhe president of Berger, the officer could be expected to ter and recommend to customers mutual funds that were represent the interests of Berger in his positions with sold primarily to customers of the bank holding company. Company and the Funds. In this regard, Berger (which is The Board relied on the independence of the board of not subject to the BHC Act or the Glass-Steagall Act) is directors of the funds as well as the independence of the not prohibited from controlling the mutual funds. With the distributors of the funds to determine that the bank holding exception of this interlock, there would be no senior officer company was not engaged in impermissible securities acinterlocks between the Funds and BOI or any of its subsidtivities.15 iaries. Moreover, BOI has committed that there would be In this case, BOI proposes one officer interlock between no other interlock between Berger and Company. The Company and Berger in which the Berger officer also Board believes that, together with the countervailing influ- would provide investment advice to customers of Comence of the independent trustees of the Funds, these facts pany and, unlike prior cases, would recommend to such mitigate the controlling influence that BOI could have on customers shares of the Funds that are both sponsored and the Funds as a result of this interlock. distributed by Berger. This officer is the president of Based on the foregoing, the Board concludes that control Berger, a senior officer of Company, and trustee and presiof the Funds would rest with the independent members of dent of the Funds. His responsibilities at Company would the boards of trustees of the Funds or potentially with include the management of Company's business and ad- Berger, and that the proposed interlocks between Company ministrative issues, the implementation of new products and the Funds would not compromise the independence of and coordination of matters relating to the Funds and the boards of the Funds or permit BOI to control the Funds. Company. BOI has committed that there would be no other Thus, the Board concludes that this proposal is consistent dual officer or employees of Company and Berger. with the Glass-Steagall Act. 13. See, e.g., The Maybaco Company and Equitable Bancorporation, 69 Federal Reserve Bulletin 375 (1983). 14. See The Chuo Trust and Banking Company, Limited, 78 Federal Reserve Bulletin 446 (1992); Amsterdam-Rotterdam Bank, N.V., 70 11. 15 U.S.C. §§ 80a-2(a)(19) and 80a-10(a). Federal Reserve Bulletin 835 (1984). 12. 15 U.S.C. § 15(c); Rule 12b-l(b). 15. See Barclays. 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1132 Federal Reserve Bulletin • December 1996 Notwithstanding these proposed relationships, the Board commitments, coupled with the commitments BIAM has believes that this joint venture arrangement is not a means made regarding its relationship with Berger, lessen the to permit BOI to control Berger or to avoid the BHC Act likelihood that BOI could control Berger in order to engage restrictions on the activities of bank holding companies, or in impermissible securities activities. result in adverse effects such as misleading customers of The Board notes that BOI also would take steps to the joint venture. Berger is owned and controlled by Kan- mitigate concerns about the potential for customer confusas City Southern Industries, Inc., and has operated as an sion over the relationship between Berger and BOI that investment advisor registered with the SEC for 23 years.16 could result from the proposed interlocks. Company pro- Neither BOI nor Company is obligated by any agreement poses to provide investment advice only to institutional to engage in any sales activities for any mutual fund shares investors. Company would provide to customers a number or to enter into any distribution agreement with any mutual of disclosures designed to alert its customers to the relafund. Furthermore, BOI will not participate in any of the tionships among Company, Berger and the Funds. The securities distribution activities prohibited for bank holding disclosures include those required by the Board's interprecompanies.17 Berger Distributors, which would distribute tive rule on investment advisory activities to address conthe Funds, is controlled by Berger, and BOI has committed flicts of interest that may be raised by these relationships.18 that there would be no interlocks between Berger Distribu- Neither BOI nor Company, moreover, would broker shares tors and Company. of any funds for which BOI, Company or Berger acts as an Moreover, BOI has made a number of commitments investment advisor. On this basis, the Board believes that similar to those the Board has relied on in other joint this proposal would not likely result in misleading customventure cases intended to separate the activities of a bank ers of the joint venture. holding company and a joint venture company from the Based on the foregoing, the Board finds that the proimpermissible activities of a securities co-venturer. The posed joint venture between Berger and BOI to provide commitments include restrictions on BOI extending credit advisory and administrative services would not result in to or investing in Berger without first obtaining the Board's Company engaging in any impermissible securities activapproval, having interlocks with Berger, and engaging in ity, and that the joint venture does not appear to present a non-arm's length business transactions with Berger. BOI framework in which BOI may exercise a controlling influhas committed that it will not nominate any director of ence over the management, policies or affairs of Berger. Berger, and has indicated that, aside from Company, there In every case involving the proposal of nonbanking will be no other significant business relationship between activities by a bank holding company under section 4 of Berger and BOI. BOI also has committed that it will seek the BHC Act, the Board also must consider the financial the Board's approval to retain its interest in Company in and managerial resources of the applicant and its subsidiarthe event that Berger expands its activities beyond its ies and the effect of the transaction on those resources.19 In current line of business. The Board believes that these this case, the Board notes that BOI meets the relevant risk-based capital standards established under the Basle Accord and has capital equivalent to that which would be 16. Berger provides discretionary investment management services required of a U.S. banking organization. Based on these to institutional clients. As of October 7, 1996, Berger had over and other facts of record, the Board has determined that $3.8 billion in assets under management. In contrast to the international investment management services provided by BIAM, Berger's financial and managerial considerations are consistent with services are focused on U.S. investments. Berger also provides certain approval of this proposal. marketing, administrative and recordkeeping services to existing The Board expects that de novo entry of Company into Berger funds. It does not underwrite, deal or make a market in the market for the proposed services would provide added bank-ineligible securities. convenience to BOI's customers by offering an expanded 17. As noted above, BOI proposes that these funds bear the name "Berger/BIAM", reflecting the fact that Berger and BIAM would be range of products and investment management expertise providing services to the Funds. The Board's interpretive rule on and would increase the level of competition among existinvestment advisory activities (12 C.F.R. 225.125) states that a bank ing providers of these services by offering an alternative to holding company should not act as an investment advisor to an existing investment advisory firms. In addition, the Board investment company that has a name that is similar to, or a variation of, the name of the holding company or any of its subsidiary banks. In previously has determined that the provision of administrathis case, the name proposed is not identical to the name of the bank tive services to mutual funds within certain parameters is holding company or any of its subsidiary banks. "BIAM" is suffi- not likely to result in the types of subtle hazards at which ciently distinct from "Bank of Ireland" and its use would not likely the Glass-Steagall Act is aimed or any other adverse lead to customer confusion regarding the relationship between BOI effects. There is no evidence in the record, moreover, that and the Funds. The Board's interpretive rule on investment advisory activities requires that if a bank holding company recommends to consummation of this proposal, subject to the commitcustomers shares of a mutual fund that the bank holding company ments noted above, would result in any significantly adadvises it must caution customers to read the fund prospectus before investing and advise customers in writing that the fund's shares are not insured by the FDIC, and are not deposits, obligations of, or endorsed or guaranteed in any way, by any bank, unless that happens 18. See 12 C.F.R. 225.125. to be the case. The holding company must also disclose in writing to 19. 12 C.F.R. 225.24; Barclays', The Fuji Bank, Limited, 75 Federal the customer the role of the company or its affiliate as investment Reserve Bulletin 94 (1989); Bayerishe Vereinbank AG, 73 Federal advisor to the fund. Reserve Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1133 verse effects, such as undue concentration of resources, (5) Preparing reports and other informational materials decreased or unfair competition, conflicts of interests, or regarding the Portfolios and the Funds, including proxies unsound banking practices that are not outweighed by the and other shareholder communications, and reviewing probenefits of this proposal. spectuses. On the basis of the foregoing and all the other facts of (6) Providing legal and other regulatory advice to the record, including the commitments made by BOI, the Portfolios and the Funds in connection with their other Board has determined that the performance of the proposed administrative functions. activities by Company reasonably can be expected to pro- (7) Providing office facilities and clerical support for the duce benefits to the public that would outweigh any possi- Portfolios and the Funds. ble adverse effects under the proper incident to banking (8) Developing and implementing procedures for monitorstandard of section 4(c)(8) of the BHC Act. ing compliance with regulatory requirements and compli- Based on all the facts of record, including all the com- ance with the Portfolios' and the Funds' investment objecmitments and representations made by BOI, and subject to tives, policies and restrictions as established by the trustees all of the terms and conditions set forth in this order, the of the Portfolios and the Funds. Board has determined that the notice should be, and hereby (9) Providing routine fund accounting services and liaison is, approved. The Board's determination is subject to all with outside auditors. the conditions set forth in the Board's Regulation Y, includ- (10) Preparing and filing tax returns. ing those in sections 225.4(d) and 225.23(b), and to the (11) Reviewing and arranging for payment of expenses of Board's authority to require modification or termination of the Funds. the activities of a bank holding company or any of its (12) Providing communication and coordination services subsidiaries as the Board finds necessary to assure compli- with regard to the Portfolios' and the Funds' transfer agent, ance with, or to prevent evasion of, the provisions and custodian, distributor and other service organizations that purposes of the BHC Act and the Board's regulations and render recordkeeping or shareholder communication serorders issued thereunder. The Board's decision is specifi- vices. cally conditioned on compliance with all the commitments (13) Reviewing and providing advice to the distributor and and representations made in the notice, including the com- the Funds regarding sales literature and marketing plans to mitments and conditions discussed in this order. The com- assure regulatory compliance. mitments, representations, and conditions relied on in (14) Providing information to the distributor's personnel reaching this decision shall be deemed to be conditions concerning performance and administration of the Funds. imposed in writing by the Board in connection with its (15) Participating in seminars, meetings and conferences findings and decision, and, as such, may be enforced in designed to present information to brokers and investment proceedings under applicable law. companies, but not in connection with the sale of shares of This proposal shall not be consummated later than three the Funds to the public, concerning the operations of the months after the effective date of this order, unless such Funds, including administrative services provided by Comperiod is extended for good cause by the Board or the pany to the Funds. Reserve Bank of Boston, acting pursuant to delegated (16) Assisting in the development of additional Portfolios authority. and Funds. By order of the Board of Governors, effective (17) Providing reports to the trustees of the Portfolios and October 21, 1996. the Funds with regard to the activities of the Portfolios and the Funds. Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and (18) Providing telephone shareholder services through a Governors Kelley, Phillips, Yellen, and Meyer. Absent and not voting: toll-free 800 number. Governor Lindsey. JENNIFER J. JOHNSON Appendix B Deputy Secretary of the Board Investment Advisory Commitments Appendix A (1) Except as authorized by a client of Company, no (1) Maintaining and preserving the records of the Portfo- confidential information supplied by the client to Company lios and the Funds, including financial and corporate will be made available to BOI or any of its subsidiaries or records. Berger. (2) Computing net asset value, dividends, performance (2) Company will disclose to each client of Company that data and financial information regarding the Funds. Company is an affiliate of BOI and Berger. (3) Furnishing statistical and research data. (3) Advice by Company to any client on an explicit fee (4) Preparing and filing with the SEC and state securities basis will be rendered without regard to correspondent regulators registration statements, notices, reports and other balances maintained by that client at BOI or any depository materials required to be filed under applicable laws. institution subsidiary of BOI. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1134 Federal Reserve Bulletin • December 1996 (4) Company's financial advisory activities will not encom- investment company, BIAM's investment approach and pass the performance of routine tasks or operations for a outlook, and the role of BIAM in relation to the investment client on a daily or continuous basis, other than investment company, provided that BIAM personnel will not solicit company administrative services. callers to invest in the investment company, respond to (5) Company will not act as broker in connection with the requests for investment advice by callers, or answer subpurchase or sale of, and will not purchase in its sole stantive questions about the performance of the investment discretion in a fiduciary capacity, any securities of any company. Fund or any Berger Fund which invests in variable or fixed (8) Company will provide administrative services only to rate annuities. U.S. registered open-end investment companies whose boards of directors consist of a majority of disinterested Administrative Services Commitments persons. (9) Except to the extent permitted under Regulation Y as (6) BOI and its subsidiaries, including Company, will not such regulation may be amended from time to time: provide administrative services to any U.S. registered open- (i) BOI and its subsidiaries (including Company) will end investment company1 that is marketed or sold primar- not purchase for their own account shares of any U.S. ily to customers of BOI or any of its subsidiary banks. registered open-end investment company to which (7) Neither BOI nor any of its affiliates, including Com- BOI or any of its subsidiaries, including Company, pany, will be obligated by any agreement to engage in any provide advisory services, and sales activities with regard to shares of any U.S. registered (ii) In the event that BOI or any of its subsidiaries open-end investment company and will not enter into any provide administrative services, but not advisory serdistribution agreement with any such investment company vices, to a U.S. registered open-end investment comwithout the prior approval of the Board. pany, BOI or its subsidiaries may purchase up to (7A) Company will not engage in the development of 5 percent of such an investment company's shares, marketing plans for any U.S. registered open-end invest- provided that such ownership of the investment comment company except to give advice to the distributor of pany not be used in any way in marketing or selling such investment company regarding regulatory compli- the shares of the investment company. ance. Company will not engage in advertising activities (9A) Any Administrative Services Agreement or Subwith respect to such investment companies. Company per- administration Agreement, and any amendment thereto, sonnel may present information about the operations of will be approved by vote of a majority of the Independent such an investment company at meetings or seminars for Trustees (i.e., the same vote required for approval of Inbrokers of such an investment company, but sales activi- vestment Advisory Agreements). Any agreement between ties, if any, at such events will be conducted solely by the Company and any other U.S. registered open-end investdistributor or another broker-dealer (which will not be an ment company, pursuant to which Company provides adaffiliate of BOI) of the investment company. ministrative services, will be approved by a vote of a (7B) Company may prepare sales literature for a U.S. majority of the trustees or directors of such investment registered open-end investment company only at the direc- company who are not "interested persons," as such term is tion and under the supervision of its distributor. Responsi- defined in the Investment Company Act, if any members of bility for use of such investment company's sales literature the Board of Managers, officers or employees of Company will remain with its distributor, which will be responsible serve as trustees or directors of such investment company. for filing advertisements and sales literature with the National Association of Securities Dealers and for all deci- Joint Venture Commitments sions relating to marketing such investment company and arranging for brokers to distribute shares of such invest- (10) The name of Company will not include the words ment company. "Berger Associates, Inc." or "Berger." (7C) In providing telephone shareholder services through a (11) Neither Berger nor any director, officer, or employee toll-free 800 number in respect of any U.S. registered of Berger will: open-end investment company, Company will not solicit (i) To the knowledge of BOI, acquire any stock or callers to purchase shares in any such investment company interest in, or and will refer to the distributor of such investment com- (ii) Serve concurrently as a director, officer or empany any substantive questions regarding the performance ployee of, BOI or any subsidiary of BOI (other than of such investment company. Company may refer to BIAM Company). questions regarding the composition of the portfolio of the In addition, BOI will not acquire any stock or interest in, or have any directors or management officials on the board or 1. References to a "U.S. registered open-end investment company" committees of, Berger (other than Company); nor shall mean any open-end investment company (mutual fund): BOI's name be used by Berger or Berger's name by BOI or (i) Organized in the United States, any of its affiliates, other than in connection with the (ii) Offered in the United States, or (iii) Sold to U.S. residents. activities of Company. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1135 (12) BOI will apply for the Board's prior approval to retain extend credit directly or indirectly to Company or to any its investment in Company should Berger expand into a customer of Company on terms more favorable than those line of business other than the businesses it currently afforded similar borrowers in similar circumstances. engages in. If required by the Board in such circumstances, (21) Company will not solicit customers of the Berger BOI will divest its investment in Company. Funds in their capacity as customers of the Berger Funds (13) The offices of Berger and Company will have separate and Company will not request or accept access to the entrances. customer lists of any Berger Fund. (14) The names of customers of any of BOI's U.S. subsid- (22) Company will provide advice only to "institutional iaries, including any branches, agencies or other depository customers" as that term is defined in section 225.2(g) of institutions (but not including Company), will not be fur- Regulation Y and as that term may be amended from time nished to Berger. to time. (15) BOI and its subsidiaries will not act as registrar, (23) None of the dual employees of Company and BOI or transfer agent or custodian for any of the Portfolios, the its subsidiaries will be engaged in bank-ineligible securi- Funds or the Berger Funds, provided that BOI may serve ties activities, or activities that are impermissible for bank as foreign sub-custodian for Irish securities of the Portfo- holding companies. lios pursuant to arrangements with the U.S. custodian of (23A)(i) No more than two members of the Board of the Portfolios in accordance with Rule 17f-5 under the Managers, officers or employees of Company will Investment Company Act. serve as Trustees of the Funds or the Portfolios; (16) BOI and its subsidiaries will not, directly or indirectly: (ii) No more than one of such members of the Board (i) Engage in the public sale or distribution of, or of Managers, officers or employees will serve as a purchase for their own account, any shares of the senior officer of the Funds or the Portfolios and any Funds or the Berger Funds, or person serving as such senior officer will also be a (ii) Whether as underwriter, dealer, or in any other director, officer or employee of Berger and will not be capacity, purchase for their account from Berger any a director, officer or employee of BOI or its subsidiarsecurities as to which Berger is acting as underwriter ies (other than the Company); and or dealer. (iii) (A) No more than three officers or employees of Company will serve in junior-level capacities as assistant secretary, assistant treasurer or assistant In addition, the U.S. branches, agencies and subsidiaries of vice president of the Funds or the Portfolios, BOI will not, directly or indirectly, engage in the public (B) Such persons will have no policy-making ausale or distribution of, or purchase for their account, any thority, and will not be responsible for, or involved security as to which Berger is acting as an underwriter. in making recommendations regarding, policy- (16A) No director, officer or employee of Berger Distribumaking functions, and tors, Inc., will serve as a member of the Board of Manag- (C) Such persons may perform administrative serers, officer or employee of Company. vices for the Funds or the Portfolios, but will be (17) Neither BOI nor any of its subsidiaries (including supervised by senior-level officers who do not work Company) will: for Company as well as by the appropriate Boards (i) Purchase in its sole discretion any securities of the of Trustees of the Funds or the Portfolios. Funds or the Berger Funds in a fiduciary capacity (including as managing agent) unless the purchase is specifically authorized by the terms of the instrument Except as described in this commitment, there will be no creating the fiduciary relationship, by court order, or other director, officer or employee interlocks between BOI by the law of the jurisdiction under which the trust is or its subsidiaries (including the Company) and the Funds administered, or or the Portfolios. (ii) Except to the extent permitted under Regulation Y (23B) The restrictions in Commitment 23 A shall apply to as such regulation may be amended from time to time, any other U.S. registered open-end investment company for extend credit to any such Fund or Berger Fund or which Company provides investment advisory or adminisaccept securities of any such Fund or Berger Fund as trative services. collateral for a loan which is for the purpose of (23C) No more than one director, officer or employee of purchasing securities of any such Fund or Berger Berger will serve as a member of the Board of Managers, Fund. officer or employee of Company. (18) BOI and any subsidiary of BOI will obtain the Board's (24) As a subsidiary of a bank holding company, Company prior approval before making any investments in or loans will observe the anti-tying provisions of the BHC Act to Berger, and will not nominate any director of Berger. Amendments of 1970 to the extent required under Regula- (19) No U.S. office of BOI or any of BOI's U.S. subsidiar- tion Y as such regulation may be amended from time to ies will take into account the fact that a potential borrower time. Company will be an affiliate of BOI's U.S. bank and competes with Company or Berger in determining whether thrift subsidiaries for purposes of sections 23A and 23B of to extend credit to that borrower. the Federal Reserve Act. (20) No office of BOI or any of BOI's subsidiaries will (24A) BOI and its U.S. subsidiaries (including Company) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1136 Federal Reserve Bulletin • December 1996 will not provide brokerage services to customers in the than through Company, BOI will not solicit any business U.S. with respect to the shares of a U.S. registered open- for Berger or vice versa, and there will be no advertising or end investment company for which BOI, any of its non- marketing of each other's services. Neither BOI nor its bank subsidiaries (including Company), Berger or any of subsidiaries will refer customers to Berger, and Berger will Berger's subsidiaries acts as an investment adviser. not refer customers to BOI or its subsidiaries, in each case (25) In the event that BOI or any of its U.S. nonbank except for referrals to and by Company. subsidiaries (including Company) provides investment ad- (29) BOI and its subsidiaries (except for Company) will visory services to customers in the U.S. with respect to the not distribute prospectuses or sales literature for the Funds shares of an investment company for which BOI, any of its or the Berger Funds or make any such literature available nonbank subsidiaries (including Company), Berger or any to the public at any of their offices. of Berger's subsidiaries acts as an investment adviser: (30) None of the Portfolios, Funds or Berger Funds will (i) BOI will instruct its officers and employees, and have offices in any building which is likely to be identified the officers and employees of such U.S. nonbank in the public's mind with BOI or its subsidiaries (except subsidiaries, to: for Company). (A) Caution customers to read the prospectus of the investment company before investing, and Orders Issued Under Sections 3 and 4 of the Bank (B) Advise customers in writing that the investment Holding Company Act company's shares: (7) Are not insured by the Federal Deposit Insur- River Valley Bancorp ance Corporation, are not deposits, and are not Madison, Indiana obligations of, or endorsed or guaranteed in any way by, any bank, unless that is the case; and Order Approving the Formation of a Bank Holding (2) Are subject to investment risks, including possi- Company ble loss of the principal invested; and (ii) BOI or such U.S. nonbank subsidiary will disclose River Valley Bancorp ("River Valley") has requested the in writing to the customer the appropriate entity's role Board's approval under section 3 of the Bank Holding as adviser to the investment company, as well as the Company Act ("BHC Act") to become a bank holding existence of any fees, penalties and surrender charges company by acquiring approximately 96 percent of the with respect to the investment company's shares; pro- voting shares of Citizens National Bank of Madison vided that the disclosures described in this commit- ("Bank"), all in Madison, Indiana. River Valley also has ment (ii) may be made orally so long as written requested the Board's approval under section 4(c)(8) of the disclosure is provided to the customer immediately BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of thereafter. the Board's Regulation Y (12 C.F.R. 225.23) to: (26) Neither Company nor any affiliated U.S. bank, thrift, (1) Acquire all the voting shares of Madison First Fedbranch, or agency shall express an opinion on the value or eral Savings and Loan Association, also in Madison, the advisability of the purchase or the sale of ineligible Indiana ("Madison Savings"),1 and thereby engage in securities underwritten or dealt in by Berger unless Com- the operation of a savings association pursuant to section pany or the affiliate notifies the customer that Berger is 225.25(b)(9) of Regulation Y (12 C.F.R. 225.25(b)(9)); underwriting, making a market, distributing or dealing in and the security, and that Company is an affiliate of Berger. (2) Engage de novo in making, acquiring, and servicing (27) Neither Company nor any U.S. bank, thrift, branch, loans pursuant to section 225.25(b)(1) of Regulation Y agency, trust or investment adviser affiliated with BOI shall (12 C.F.R. 225.25(b)(1)). purchase, as a trustee or in any other fiduciary capacity, for accounts over which it has investment discretion ineligible Notice of the proposal, affording interested persons an securities: opportunity to submit comments, has been published (i) Underwritten by Berger as lead underwriter or (61 Federal Register 43,361 (1996)). The time for filing syndicate member during the period of any underwrit- comments has expired, and the Board has considered the ing or selling syndicate, and for a period of 60 days proposal and all comments received in light of the factors after the termination thereof, and set forth in sections 3(c) and 4(c)(8) of the BHC Act. (ii) From Berger if it makes a market in that security, River Valley is a nonoperating corporation that would unless, in either case, such purchase is specifically acquire Madison Savings shortly before acquiring Bank. authorized under the instrument creating the fiduciary Bank is the 165th largest depository institution in Indiana, relationship, by court order, or by the law of the controlling $42.4 million in deposits, representing less than jurisdiction under which the relationship is administered. (28) All business transactions between BOI and Berger 1. The Office of Thrift Supervision has approved Madison Savings's (other than with respect to Company) will be on an arm's- request to convert from a federal mutual savings and loan association length, non-exclusive, and non-preferential basis. Other to a federal stock savings and loan association. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1137 1 percent of total deposits in commercial banking organiza- Savings is the fourth largest depository institution in the tions in the state.2 Madison Savings is the 108th largest Madison banking market, controlling approximately depository institution in Indiana, controlling $79.7 million $79.7 million of the total deposits in depository institutions in deposits, representing less than 1 percent of total depos- in the market ("market deposits"), representing 11.7 perits in depository institutions in the state. On consummation cent of market deposits.6 Bank is the third largest deposiof the proposal, River Valley would become the 76th tory institution in the market, controlling approximately largest depository institution in Indiana, controlling depos- $42.4 million in deposits. On consummation of this proits of $122.1 million. posal, River Valley would become the second largest de- The Board previously has determined by regulation that pository institution in the Madison banking market. River the operation of a savings association by a bank holding Valley would control approximately 32 percent of market company is closely related to banking for purposes of deposits and the Herfindahl-Hirschman Index ("HHI") section 4(c)(8) of the BHC Act. River Valley has commit- would increase by 329 points to a level of 2680.7 ted to conform all activities of Madison Savings to those In order to mitigate the adverse competitive effect that permissible under section 4(c)(8) of the BHC Act and might result from consummation of the proposal, River Regulation Y.3 The Board also has determined by regula- Valley has committed to divest at least one branch in the tion that the proposed lending activities are closely related Madison banking market with deposits totalling at least to banking within the meaning of section 4(c)(8) of the $7.5 million.8 River Valley has committed to sell the BHC Act. River Valley has committed to conduct these activities subject to the limitations in Regulation Y. St. Joseph Valley Bank, 68 Federal Reserve Bulletin 673, 674 (1982). Competitive Considerations The key question to be considered in making this selection "is not where the parties to the merger do business or even where they compete, but where, within the area of competitive overlap, the effect Sections 3 and 4 of the BHC Act require the Board to of the merger on competition will be direct and immediate." United consider the competitive effects of a proposed acquisition States v. Philadelphia National Bant, 374 U.S. 321, 357 (1963); of a depository institution.4 River Valley proposes to ac- United States v. Phillipsburg National Bank, 399 U.S. 350, 364—65 quire two depository institutions—Madison Savings and (1969). The Board believes that the appropriate market for analyzing Bank—that compete directly in the Madison, Indiana, the competitive effects of this proposal is the banking market approxibanking market ("Madison banking market").5 Madison mated by Jefferson and Trimble Counties. The Board bases this conclusion on an analysis of employment commuting data, the shopping opportunities available to Trimble County residents in Madison, Indiana, which is the largest city in the market and connected to 2. All banking data are as of June 30, 1995, and have been adjusted Trimble County by a bridge over the Ohio River, and the results of an to reflect mergers and acquisitions since that date. In this context, informal survey of local bankers in Trimble County regarding compedepository institutions include commercial banks, savings banks, and tition with a bank that serves Madison and areas of Trimble County. savings associations. The Board notes that other facts of record indicate that Carroll County 3. River Valley has committed that all impermissible real estate residents are unlikely to commute to Jefferson or Trimble Counties for activities will be divested or terminated within two years of consum- employment or shopping because of the greater distance to Madison mation of the proposal, that no new impermissible projects or invest- and the presence of Carrollton, the second largest city in the threements will be undertaken during this period, and that capital adequacy county area, in Carroll County. guidelines will be met, excluding specified real estate investments. 6. Market deposit data are as of June 30, 1996. Market share data River Valley also has committed that any impermissible securities or are based on calculations in which the deposits of thrift institutions are insurance activities conducted by Madison Savings will cease on or included at a 50-percent weighted basis. The Board previously has before consummation. indicated that thrift institutions have become, or have the potential to 4. See Section 3 of the BHC Act (12 U.S.C. § 1842(c)), which become, major competitors of commercial banks. See Midwest Finanprohibits the Board from approving an application if the proposal cial Group, 75 Federal Reserve Bulletin 386 (1989); National City would result in a monopoly, or if the proposal would substantially Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the lessen competition in any relevant banking market, unless such anti- Board has regularly included thrift deposits in the calculation of competitive effects are clearly outweighed in the public interest by the market share on a 50-percent weighted basis. See, e.g., First Hawaiian probable effect of the transaction in meeting the convenience and Inc., 11 Federal Reserve Bulletin 52 (1991). Because the deposits of needs of the community to be served; and Section 4 of the BHC Act Madison Savings would be acquired by a commercial banking organi- (12 U.S.C. § 1843(c)(8)), which requires the Board to consider zation under this proposal, these deposits are included at 100 percent whether a proposal is likely to result in any significantly adverse in the calculation of River Valley's pro forma market share. Norwest effects, such as greater convenience, increased competition, or gains Corporation, 78 Federal Reserve Bulletin 452 (1992). in efficiency, that outweigh possible adverse effects, such as undue 7. Under the revised Department of Justice Merger Guidelines, concentration of resources, decreased or unfair competition, conflicts 49 Federal Register 26,823 (June 29, 1984), a market in which the of interests, or unsound banking practices. post-merger HHI is above 1800 is considered highly concentrated. 5. The Madison banking market is approximated by Jefferson The Department of Justice has informed the Board that a bank merger County, Indiana, and Trimble County, Kentucky. The Board has or acquisition generally will not be challenged (in the absence of other considered River Valley's contention that the relevant banking market factors indicating anticompetitive effects) unless the post-merger HHI also includes Carroll County, Kentucky, which is located to the east of is at least 1800 and the merger increases the HHI by at least 200 Trimble County, in light of relevant precedent and all the facts of points. The Justice Department has stated that the higher than normal record. The Board and the courts have found that the relevant banking HHI thresholds for screening bank mergers for anticompetitive effects market for analyzing the competitive effect of a proposal must reflect implicitly recognize the competitive effect of limited-purpose lenders commercial and banking realities and should consist of the local area and other non-depository financial entities. where the depository institutions involved offer their services and 8. River Valley has committed to execute a sales agreement to where local customers can practicably turn for alternatives. See accomplish this divestiture before consummation of this proposal and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1138 Federal Reserve Bulletin • December 1996 branch to an out-of-market depository institution or to one commitments made in connection with the proposal, the of the two competitors in the market that each control less Board also concludes that the proposal is not likely to than 5 percent of market deposits. Under the terms of the result in decreased or unfair competition, conflicts of intercommitment, River Valley would not control more than ests, unsound banking practices, undue concentration of approximately 30 percent of market deposits, and the HHI resources, or other adverse effects. In addition, the record would not increase by more than 258 points to 2609.9 in this case indicates that there are numerous competitors At least six depository institutions would remain in the engaged in the lending activities proposed by River Valley. market, the largest of which is a subsidiary of one of the The Board expects, moreover, that the proposal would largest commercial banking organizations in the region. result in efficiencies and economies of scale and, accord- This institution currently controls approximately 41.3 per- ingly, enable River Valley to provide increased convecent of market deposits. Data also indicate that the Madi- nience and improved services to the customers of Bank and son banking market has become less concentrated and Madison Savings such as access to a broader array of more competitive in recent years. During the last five banking products and services than currently is offered by years, for example, the HHI for the market has decreased either institution individually. Accordingly, the Board has by 879 points, and market deposits for the largest institu- determined that the proposal can be expected to produce tion in the market have decreased by approximately public benefits that outweigh any adverse effects under the 12 percentage points. During the same period, three smaller proper incident to banking standard of section 4(c)(8) of competitors in the market each have increased their market the BHC Act. deposits by 3 to 5 percent. In accordance with the BHC Act, the Board sought comments from the Department of Justice ("DOJ"), the Conclusion Office of the Comptroller of the Currency ("OCC"), the Office of Thrift Supervision ("OTS"), and the Federal Deposit Insurance Corporation ("FDIC") on the competi- Based on the foregoing and all the facts of record, includtive effects of the proposal. The DOJ advised the Board ing the proposed divestiture, the Board has determined that that consummation of the proposal would not likely have the proposal should be, and hereby is, approved. The any significantly adverse effects on competition in any Board's approval is specifically conditioned on compliance relevant banking market, and has not objected to consum- by River Valley with the divestiture commitment and other mation of the proposal.10 Based on all the facts of record commitments made in connection with the proposal. The and for the reasons discussed in this order, the Board Board's determination also is subject to all the conditions concludes that consummation of the proposal is not likely in Regulation Y and to the Board's authority to require to have a significantly adverse effect on competition or on such modification or termination of the activities of a the concentration of resources in the Madison banking holding company or any of its subsidiaries as the Board market or in any relevant banking market. finds necessary to assure compliance with, or to prevent evasion of, the provisions and purposes of the BHC Act Other Considerations and the Board's regulations and orders issued thereunder. The commitments and conditions relied on by the Board in In light of all the facts of record, the Board concludes that reaching this decision are deemed to be conditions imthe financial and managerial resources and future prospects posed in writing by the Board in connection with its of the institutions involved are consistent with approval, as findings and decision, and, as such, may be enforced in are considerations relating to the convenience and needs of proceedings under applicable law. the community to be served and other supervisory factors. The acquisition of Bank shall not be consummated be- For the reasons discussed above, and in reliance on all the fore the fifteenth calendar day following the effective date of this order, and the acquisition of Bank and Madison Savings shall not be consummated, and the proposed lendto complete the divestiture within 180 days of consummation. River ing activities of River Valley shall not commence, later Valley also has committed that, if it is unsuccessful in completing the divestiture within 180 days of consummation, it will transfer the than three months following the effective date of this order, unsold branch to an independent trustee that is acceptable to the Board unless such period is extended for good cause by the Board and that will be instructed to sell the assets promptly. In addition, or by the Federal Reserve Bank of St. Louis, acting pursu- River Valley has committed to submit an executed trust agreement ant to delegated authority. acceptable to the Board stating the terms of the divestiture within 150 days of consummation of the acquisition if the sale of the branch By order of the Board of Governors, effective has not been consummated at that time. October 28, 1996. 9. Divestiture to an out-of-market thrift would increase the HHI by 258 points to 2609, and divestiture to an out-of-market commercial Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and bank would increase the HHI by 210 points to 2561. Divestiture to the Governors Kelley, Phillips, Yellen, and Meyer. Absent and not voting: larger of the two in-market competitors would increase the HHI by Governor Lindsey. 223 points to 2574 and divestiture to the smaller in-market competitor would increase the HHI by 219 points to 2570. 10. The OCC, OTS, and FDIC also have not objected to consumma- JENNIFER J. JOHNSON tion of this proposal. Deputy Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1139 ORDERS ISSUED UNDER BANK MERGER ACT to convert the acquired bank offices into branches of the acquiring institution. The Riegle-Neal Act, however, pro- The Chase Manhattan Bank vides that an interstate merger may be approved prior to New York, New York June 1, 1997, "if the home state of each bank involved in the transaction has in effect, as of the date of the approval Order Approving the Merger of Banks and Establishment of such transaction, a law that: of Bank Branches (i) Applies equally to all out-of-state banks; and (ii) Expressly permits interstate merger transactions The Chase Manhattan Bank, New York, New York with all out-of state banks."4 ("Chase Bank"), a state member bank, has requested the Board's approval under section 18(c) of the Federal De- New York and New Jersey have adopted laws, which posit Insurance Act (12 U.S.C. § 1828(c)) (the "Bank apply equally to all out-of-state banks, that allow interstate Merger Act") to merge with Chemical Bank New Jersey, mergers between banks located in their states and out-of- N.A., Morristown, New Jersey ("CBNJ"), with Chase state banks to occur prior to June 1, 1997.5 An application Bank surviving the merger. As part of the transaction, requesting approval of this proposal is pending with the Chase Bank also has applied under section 9 of the Federal New York Superintendent of Banks.6 In light of the forego- Reserve Act (12 U.S.C.321) to establish branch offices at ing, it appears that this proposal complies with the New the current locations of the CBNJ branches.1 York and New Jersey interstate banking laws. Notice of this proposal, affording interested persons an opportunity to submit comments, has been given in accor- Competitive Considerations dance with the Bank Merger Act and the Board's Rules of Procedure (12 C.F.R. 262.3(b)). As required by the Bank The Bank Merger Act provides that the Board may not Merger Act, reports on the competitive effects of the approve an application if the effect of the acquisition of merger were requested from the United States Attorney another bank is to substantially lessen competition in any General, the Office of the Comptroller of the Currency section of the country unless the Board finds that the ("OCC"), and the Federal Deposit Insurance Corporation. anticompetitive effects of the proposal are clearly out- The time for filing comments has expired, and the Board weighed in the public interest by the probable effect of the has considered the proposal and all the facts of record, in proposal in meeting the convenience and needs of the light of the factors set forth in the Bank Merger Act and community.7 The proposal represents a reorganization of section 9 of the Federal Reserve Act. Chase's existing banking operations. Based on all the facts Chase Bank and CBNJ are wholly owned subsidiaries of of record, consummation of the proposal would not have The Chase Manhattan Corporation, New York, New York any significantly adverse effects on competition or concen- ("Chase").2 Chase is the largest commercial banking orga- tration of banking resources in any relevant banking marnization in New York, controlling deposits of approxi- ket. mately $75 billion, representing 30.3 percent of the total deposits in commercial banking organizations in New Other Factors Under the Bank Merger Act York. In New Jersey, Chase is the sixth largest commercial banking organization, controlling deposits of approxi- The Bank Merger Act also requires the Board to consider mately $5 billion, representing 5.7 percent of the total the financial and managerial resources and future prospects deposits in commercial banking organizations in New Jersey.3 Riegle-Neal Act Analysis 4. 12 U.S.C. § 1831u(a)(3)(A) (1994). Section 102 of the Riegle-Neal Interstate Banking and 5. The interstate banking laws of New Jersey provide that an out-of-state bank may establish branches of a New Jersey state bank Branching Efficiency Act of 1994 ("Riegle-Neal Act") acquired by acquisition or merger provided that the state has not opted (Pub. L. No. 103-328, 108 Stat. 2338 (1994)) authorizes out of the provisions concerning interstate branching. N.J. Stat. banks, after June 1, 1997, to conduct interstate mergers and Ann. § 17:9A-148 (1996). Effective February 6, 1996, the New York Banking Law was amended to authorize state-chartered banks to merge with out-of-state banks, and subsequently maintain as branch 1. The locations of the branches that Chase proposes to establish are offices the main office and branches acquired by merger or acquisition. listed in the Appendix. N.Y Banking Law §§ 600(6), 105(5)(a) (1996). In addition, an out-of- 2. On January 5, 1996, the Board approved the merger of Chemical state branch may maintain one or more branches located in New York Banking Corporation ("Old Chemical") and The Chase Manhattan acquired by means of an acquisition transaction, if the superintendent Corporation ("Old Chase"), both of New York, New York. See finds that the laws of the out-of-state bank's home state would Chemical Banking Corporation, 82 Federal Reserve Bulletin 239 authorize a New York bank to maintain branches in that state under (1996) ("Chemical/Chase Order"). The resulting bank holding com- comparable circumstances. Id. at § 223. pany is known as The Chase Manhattan Corporation, and Chase Bank 6. New Jersey does not require an application for mergers involving was formed by a merger of the two lead banks of Old Chemical and a national bank unless the surviving bank is a New Jersey state- Old Chase. chartered bank. 3. Deposit data are as of June 30, 1995. 7. 12 U.S.C. § 1828(c)(5)(B). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1140 Federal Reserve Bulletin • December 1996 of the existing and proposed institutions, and the conve- all factors required to be considered under the Federal nience and needs of the community to be served.8 Reserve Act are consistent with approval. A. Supervisory Factors B. Convenience and Needs Factor The Board carefully has considered the financial and man- The Board has long held that consideration of the conveagerial resources and future prospects of Chase and its nience and needs factor includes a review of the records of subsidiaries in light of all the facts of record, including a the relevant depository institutions under the Community review of confidential reports of examination prepared by Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). As the primary federal supervisors of the organizations assess- provided in the CRA, the Board has evaluated this factor in ing the financial and managerial resources of the organiza- light of examinations by the primary federal supervisors of tions. The Board notes that the proposal represents a corpo- the CRA performance records of the relevant institutions. rate reorganization of Chase and its subsidiaries which will As noted above, this proposal represents a reorganization result in a more efficient organization, and does not involve of Chase's existing banking operations, and would not an expenditure of additional resources. Based on all the result in any expansion of Chase's deposit-taking facilities. facts of record, the Board concludes that these consider- The Board also has carefully considered comments from ations for the organizations involved in the proposal are Protestant alleging that Chase has abandoned LMI areas consistent with approval.9 The Board also concludes that through branch closings since the Chemical/Chase merger.10 In addition, Protestant contends that 1995 HMDA data for Chase indicate some disparities in the rate of denials and originations for housing-related loans by racial 8. Inner City Press/Community on the Move, Bronx, New York groups.11 ("Protestant") contends that the Chemical/Chase Order misanalyzed An institution's most recent CRA performance evaluaand misinterpreted a number of issues raised by the merger of Old tion is a particularly important consideration in the applica- Chemical and Old Chase, including the potential anticompetitive eifects of the merger, the impact of the announced branch closings on tions process because it represents a detailed on-site evalulow- to moderate-income ("LMI") communities and communities ation of the institution's overall record of performance with predominantly minority populations, the reliability of the data under the CRA by its primary federal supervisor.12 In submitted under the Home Mortgage Disclosure Act ("HMDA") addition, the Board considers an institution's policies and relating to loans made through the New York City Housing Partnership, and Chase's luxury auto lending, which Protestant maintains has practices for compliance with applicable fair lending laws. the effect of excluding LMI and minority borrowers. In addition, The Board also takes into account information on an insti- Protestant argues that the availability of new information since the tution's lending activities that assist in meeting the credit Chemical/Chase Order, including Chase's HMDA data for 1995, needs of low- and moderate-income neighborhoods, incriticisms by the General Accounting Office of examiner fair lending training and enforcement policies of the federal financial supervisory agencies, and Chase's characterization of certain branch closings as not in connection with the merger, require the Board to reconsider the these discussions, the NYCHP will send adverse action letters to conclusions reached in the Chemical/Chase Order on these issues. As applicants deemed ineligible for the program. explained in the Chemical/Chase Order, the Board concluded, on the 10. Protestant also contends that Chase has not opened the branches basis of all the facts of record, that the proposal met the competitive, and ATMs in LMI areas identified in connection with the Board's convenience and needs, and other statutory factors the Board is approval of the Chemical/Chase Order and has not made any progress required to consider and should be approved. The Board has already in connection with the CRA commitment discussed in the Chemical/ denied Protestant's request that the Board reconsider its decision in Chase Order. The Board notes that the merger of Old Chemical and the Chemical/Chase merger. Old Chase, which involved two of the largest domestic bank holding 9. Protestant maintains that certain aspects of Chase's operations companies, was not consummated until July 14, 1996, and that Chase raise adverse managerial considerations, including trading in unregis- has already begun to implement the programs and policies discussed tered copper futures by Chase Bank, problems with Automated Teller in the Chemical/Chase Order. Chase's announced CRA commitment Machine ("ATM") services and billing errors in Chase's secured discussed in the Chemical/Chase Order also provides that Chase will credit card program, and the departure of mid- and high-level manage- issue annual public announcements on its performance and will meet ment from Chase. Protestant also alleges that Chase made several with interested groups periodically to discuss its performance in local misleading and inaccurate media announcements regarding branch communities. closings in LMI areas and specific branch closings in Westchester 11. Protestant objects to the pending request filed by The Chase County. For example, Protestant cited press reports stating that Chase Manhattan Bank (USA), Wilmington, Delaware ("Chase Delaware"), would not close any branches in Westchester County before Chase to be designated as a limited-purpose bank under the new regulations subsequently gave notice to close two branches in the county. Protes- jointly promulgated by the federal financial supervisory agencies to tant's allegations regarding the closure of LMI branches are discussed implement the CRA, because the bank offers a wide variety of credit below, and the Board notes that neither of the Westchester County products. See 60 Federal Register 22,156 (May 4, 1995). The OCC, branches proposed for closure is located in a LMI neighborhood. The Chase Delaware's primary federal supervisor, is responsible for acting Board also has received comments from an individual who is gener- on the requested designation, and such requests are not reviewable by ally opposed to the proposal and from another individual who is the Board. See 12 C.F.R. 25.25(b). seeking information regarding certain monies allegedly owed to him 12. The Board notes that the Statement of the Federal Financial by a number of government entities. The Board has reviewed all of Supervisory Agencies Regarding the Community Reinvestment Act these allegations in light of supervisory assessments of Chase's mana- provides that a CRA examination is an important and often controlling gerial resources. The Board also has reviewed the Federal Reserve factor in the consideration of an institution's CRA record and that System's discussions with the New York City Housing Partnership reports of these examinations will be given great weight in the ("NYCHP") referenced in the Chemical/Chase Order. As a result of applications process. 54 Federal Register 13,742, 13,745 (1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1141 eluding programs and activities initiated since its most moved the LMI Branch and two other branches in middlerecent CRA performance examination. income census tracts to a de novo branch. Chase has Performance Examinations. Chase Bank has not been indicated that the new facility, which is located approxievaluated for CRA performance since the merger of Old mately one-half mile from the LMI Branch, would be a Chemical and Old Chase in July 1996. Prior to the merger, more modern full-service facility that would serve custom- Old Chemical's lead bank was rated "outstanding" by the ers better, and would include three 24-hour ATMs that Federal Reserve Bank of New York at its most recent were not available at the LMI Branch. Chase would conexamination for CRA performance, as of March 13, 1995 tinue to operate more than 60 consumer branches in LMI ("1995 Chemical Examination"). Old Chase's lead bank census tracts out of approximately 260 consumer branches also received an overall CRA performance rating of "out- in New York City.13 standing" from its primary federal supervisor, the Office of More generally, since the Chemical/Chase Order, Chase the Comptroller of the Currency ("OCC") at its most indicates that Chase Bank has closed or relocated a total of recent examination for CRA performance, as of Octo- 13 branches through August 1996 (including the LMI ber 27, 1995 ("1995 Chase Examination").13 CBNJ re- branches discussed above), and has provided customer, ceived a "satisfactory" rating from the OCC at its most community and regulatory notifications to close or relocate recent examination for CRA performance, as of December 14 more branches. The record indicates that a substantial 7, 1995 ("CBNJ Examination"). All other subsidiary banks number of these closures are within one mile of another of Old Chemical and Old Chase received "outstanding" or full-service Chase Bank branch ("receptor branches"). In "satisfactory" ratings at the most recent examinations of addition, Chase Bank has added new 24-hour ATMs at their CRA performance by their primary federal supervi- many of the receptor branches to increase services to these sors. areas. Chase also indicates that since the merger, it has Branch Openings and Closings. Protestant alleges that installed 23 of the 47 planned new 24-hour ATMs in Chase has abandoned LMI communities since the branches located in LMI areas. Chemical/Chase merger. The Board notes that Protestant's The Board has also reviewed the branch closing policies contentions generally relate to branch closings resulting for Old Chemical and Old Chase and their records of from the Chemical/Chase transaction, and that Chase has branch openings and closings. The branch closing policies not proposed the closure of any branches as a result of this for both banks require consideration of a number of facproposal. tors, including current market conditions, market potential, Chase previously announced that it would close seven consumer satisfaction and product usage, demographics, branches that it operates in LMI census tracts in New York and community needs. The 1995 Chemical and Chase City in connection with the Chemical/Chase merger. The Examinations concluded that the institutions' branch closrecord indicates that, as of August 1996, Chase had given ing policies were satisfactory and that the institutions' notice to close only one of these branches located in LMI records of opening and closing branches had not negatively census tracts. The Board notes that Chase has also closed affected its communities, including LMI communities. In one additional branch located in an LMI census tract in addition, the effect of all branch closings is reviewed in the New York City that had not been disclosed in the CRA examination process as part of the institution's over- Chemical/Chase application. This branch is located in an all evaluation. Chase has also provided customer, commu- LMI census tract in Queens ("LMI Branch"). The Board nity and regulatory notifications in connection with the has considered Protestant's contention that Chase misrepre- branches closed since the merger.16 sented the number of branches to be closed in LMI areas in HMDA Data and Lending Activities. The Board has light of the entire record.14 Chase has stated that it has carefully reviewed 1994 and 1995 HMDA data in view of Protestant's contention that Chase's bank and mortgage subsidiaries have inadequate and discriminatory lending 13. The 1995 Chase Examination was not publicly released until records. These data show that in some respects, such as in after the Board issued the Chemical/Chase Order. This examination the denial rate to African-American loan applicants as represented a CRA rating increase from "satisfactory" to "outstandcompared to the denial rate to white applicants, Chase's ing" for Old Chase's lead bank. performance is comparable to or exceeds the performance 14. Chase indicates that the LMI Branch was inadvertently identified as a branch that would be retained in an LMI census tract. Chase of lenders in the aggregate in certain markets. In other has stated that it has reviewed its overall branch consolidation plan and has determined that this was an Isolated instance. Section 42 of the Federal Deposit Insurance Act (12 U.S.C. § 1831r-l) ("FDI Act") instances with the Federal Reserve System prior to the 90-day notifiand the Joint Policy Statement on Branch Closings (58 Federal cation. Register 49,083 (1993)) ("Joint Policy Statement") require that a 15. Consumer branches exclude limited access specialized facilities bank's primary federal supervisor receive notice at least 90 days such as private banking, middle market business offices, and private before the date of the proposed branch closing. The Board notes that access corporate locations. Chase complied with Section 42 of the FDI Act, and has provided 16. Protestant states that Chase has characterized its branch closings notice to the Federal Reserve System at least 90 days before the date as consolidations and contends that certain of the closings should not of the proposed branch closing, including the reasons and other be considered consolidations under the Joint Policy Statement. The supporting data for the closure consistent with the institution's written record indicates that regardless of whether the cessation of branch policy for branch closing. Chase also has stated that if its plans for operations was categorized as a consolidation or a closing, Chase has LMI branches vary from previous submissions, it would discuss these complied with Section 42 of the FDI Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1142 Federal Reserve Bulletin • December 1996 respects, however, the data show disparities in application In these applications, particularly the Chemical/Chase and origination rates to African-American loan applicants Order, the Board carefully reviewed the CRA performance as compared to white applicants in certain markets. records of Old Chemical and Old Chase, including their The Board is concerned when the record of an institution lending, marketing and outreach activities, the services indicates such disparities in lending, and believes that all provided through their branches, their branch closing polibanks are obligated to ensure that their lending practices cies, and the actions that both institutions had taken to are based on criteria that assure not only safe and sound increase their lending in LMI areas. lending, but also assure equal access to credit by creditwor- Chase engages in a variety of lending and community thy applicants regardless of race. The Board recognizes, development programs designed to help meet the credit however, that HMDA data alone provide an incomplete needs of the communities in its service area, including the measure of an institution's lending in its community be- credit need of LMI neighborhoods. For example, Chase cause these data cover only a few categories of housing- Bank offers a variety of affordable mortgage products to related lending and provide limited information about the increase the availability of mortgage financing to LMI covered loans.17 HMDA data, therefore, have limitations individuals or communities, including the Federal National that make the data an inadequate basis, absent other infor- Mortgage Association's Affordable Housing Partnership mation, for concluding that an institution has engaged in Program, The Affirmative Mortgage Program which proillegal discrimination in lending. vides flexible underwriting criteria, the Chase Assisted Because of the limitations of HMDA data, the Board has Settlement for Homebuyers Loan which helps borrowers carefully reviewed other information such as the examina- pay for closing costs and part of the down payment, the tions reports of the banks' primary supervisors. The 1995 State of New York Mortgage Agency Mortgage Program Chemical and Chase Examinations found that neither bank which offers a fixed rate of interest below the prevailing engaged in practices that would discourage individuals conventional interest rate and longer repayment terms, and from applying for credit. Examiners at both institutions NYC Urban Home Loan which enables borrowers to fialso found that the community delineations were reason- nance extensive renovations, rehabilitations, and converable and that the geographic analysis of lending data dem- sions of one- to four-family residences in New York City. onstrated that there was a reasonable penetration through- In addition, The Chase Community Development Corporaout each bank's delineated communities, including LMI tion ("CCDC") finances construction and rehabilitation of census tracts. Fair lending reviews were conducted during affordable housing and commercial revitalization projects, both CRA examinations and examiners found no evidence provides financing to small businesses that may qualify for of discrimination or other illegal credit practices.18 In addi- government-guaranteed loans, and finances smaller nontion, examiners noted in the examinations that manage- profit community organizations. The Minority- and ment of the banks had implemented comprehensive written Women-Owned Business Development Program enables policies, procedures, and training programs to support fair businesses owned by minorities and women to have an and equal treatment of loan applicants. Chase has indicated equal opportunity to bid on contracts and receive technical that Chase Bank and its mortgage affiliate have a multiple assistance, and may refer business owners to the CCDC for review process for residential mortgage applications to small business loans. ensure that credit policies and procedures are consistently Conclusion on Convenience and Needs Factor. The applied and that fair lending objectives are met. Board has carefully considered the entire record in its On consummation of the transaction, Chase proposes to review of the convenience and needs factor under the Bank merge Chase Bank with CBNJ, after which the operations Merger Act. As noted above, the proposal is a corporate of CBNJ would be subject to the CRA policies, procedures reorganization of Chase's existing banking operations, and and programs of Chase Bank. The Board has carefully does not represent an expansion of banking activities. reviewed the CRA performance records of the two banks Based on all the facts of record, including information that were merged to form Chase Bank in light of several provided by Protestant and Chase and CRA performance recent applications filed by Old Chemical and Old Chase.19 examinations, the Board concludes that the efforts of Chase to help meet the credit needs of all segments of the communities served, including residents of LMI areas, are consistent with approval. In this light, the Board concludes that 17. For example, these data do not provide a basis for an independent assessment of whether an applicant who was denied credit was in convenience and needs considerations,20 including the fact creditworthy. Thus, credit history problems and excessive debt levels relative to income—reasons most frequently cited for a credit denial—are not available from the HMDA data. 18. The 1995 Chase Examination specifically noted that Chase 20. Protestant refers to a newspaper article that discusses the elimi- Manhattan Mortgage Corporation actively and regularly solicits mort- nation of 300 jobs by Chase in Jericho, New York, where only four gage applications from all segments of the bank's market area. Exam- employees were offered new jobs as an example of the diminished iners also found that the bank was the second largest home purchase access to credit, particularly for LMI households and small busimortgage lender in LMI areas, and noted that no other HMDA nesses, caused by the Chemical/Chase merger. The effect of the reporter in New York City has a better mortgage parity lending record. proposed acquisition on employment in a community is not among the 19. See Chemical/Chase Order; Chase Manhattan Corporation, factors required to be considered under the Bank Merger Act. The 81 Federal Reserve Bulletin 883 (1995); Chase Manhattan Corpora- convenience and needs factor has been consistently interpreted by the tion, 81 Federal Reserve Bulletin 461 (1995). federal banking agencies, the courts, and Congress to relate to the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1143 CRA performance records of Chase and its subsidiary Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and banks are consistent with approval. Governors Kelley, Phillips, Yellen, and Meyer. Absent and not voting: Governor Lindsey. Conclusion JENNIFER J. JOHNSON Deputy Secretary of the Board Based on the foregoing and all the facts of record,21 the Board has determined that the applications should be, and Appendix hereby are, approved.22 The Board's approval of this proposal is specifically conditioned on compliance by Chase Branch offices of CBNJ to be established by Chase Bank: Bank with the commitments made in connection with this proposal and the conditions discussed in this order. For 612 Main Street, Boonton, Morris County, New Jersey 07005 purposes of this action, the commitments and conditions 1459 Main Avenue, Clifton, Passaic County, New Jersey relied on in reaching this decision are both conditions 07011 imposed in writing by the Board and, as such, may be 57 Diamond Spring Road, Denville, Morris County, enforced in proceedings under applicable law. New Jersey 07834 The merger of Chase Bank and CBNJ may not be St. Clare's Hospital, Second Floor, Pocono Road, Denville, consummated before the fifteenth calendar day following Morris County, New Jersey 07834 the effective date of this order, and the proposal may not be 186 Ridgedale Avenue, Florham Park, Morris County, consummated later than three months after the effective New Jersey 07932 date of this order, unless such period is extended for good 188-190 Main Street, Fort Lee, Bergen County, New Jersey cause by the Board or the Federal Reserve Bank of New 07024 York, acting pursuant to delegated authority. 235 Main Street, Hackensack, Bergen County, New Jersey By order of the Board of Governors, effective 07601 October 28, 1996. Village Road, New Vernon, Morris County, New Jersey 07976 331 Lafayette Avenue, Hawthorne, Passaic County, New Jersey 07506 1152 Liberty Avenue, Hillside, Union County, New Jersey 07205 101 Hudson Street, Jersey City, Hudson County, New Jersey 07302 effect of a proposal on the availability and quality of banking services 2 Waverly Place, Madison, Morris County, New Jersey 07940 in the community. See Wells Fargo & Company, 82 Federal Reserve Bulletin 445, 457 (1996). The Board has also considered the steps 180 Franklin Turnpike, Mahwah, Bergen County, New Jersey taken to mitigate the impact of job losses from the Chemical/Chase 07430 merger, which include career transition programs to provide employ- 183 Millburn Avenue, Millburn, Essex County, New Jersey ees with outplacement assistance and financial support for retraining 07041 and education. 21. Protestant contends that the record before the Board is incom- 800 Morris Turnpike, Short Hills, Essex County, New Jersey plete because Chase has not responded to specific issues raised by 07078 Protestant. The Board is required under applicable law and its pro- 475 Bloomfield Avenue, Montclair, Essex County, New Jersey cessing procedures to act on applications within specified time peri- 07042 ods. As discussed above, the Board has carefully reviewed the record 19 North Fullerton Avenue, Montclair, Essex County, in this case, and based on all the facts of record, including Protestant's comments, confidential supervisory information, and reports of exam- New Jersey 07042 ination, the Board concludes that the record is sufficient to act on this 17 Watchung Plaza, Montclair, Essex County, New Jersey proposal at this time, and that delay or denial of this proposal on the 07042 grounds of informational insufficiency is not warranted. 600 Valley Road, Upper Montclair, Essex County, New Jersey 22. Protestant has requested that the Board hold a public meeting or hearing on these applications. The Board is not required under the 07043 Bank Merger Act or the Federal Reserve Act to hold a public hearing 580 Valley Road, Upper Montclair, Essex County, New Jersey or meeting in this case. Under the Board's rules, the Board may, in its 07043 discretion, hold a public hearing or meeting on an application to 636 Speedwell Avenue, Morris Plains, Morris County, clarify factual issues related to the application and to provide an opportunity for testimony, if appropriate. 12 C.F.R. 262.3(e) and New Jersey 07950 262.25(d). The Board has carefully considered Protestant's request. In 296 E. Hanover & Ridgedale Avenues, Morristown, Morris the Board's view, interested parties have had a sufficient opportunity County, New Jersey 07960 to present written submissions, and have submitted substantial written 17 Park Place, Morristown, Morris County, New Jersey 07960 comments that have been considered by the Board. Protestant's re- 225 South Street, Morristown, Morris County, New Jersey quest fails to show why a written presentation would not suffice and to summarize what evidence would be presented at a hearing or meeting. 07960 See 12 C.F.R. 262.3(e). On the basis of all the facts of record, the 460 Bergen Boulevard, Palisades Park, Bergen County, Board has determined that a public meeting or hearing is not neces- New Jersey 07650 sary to clarify the factual record in these applications, or otherwise warranted in this case. Accordingly, the request for a public meeting E. 36 Midland Avenue, Paramus, Bergen County, New Jersey or hearing on these applications is hereby denied. 07652 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1144 Federal Reserve Bulletin • December 1996 100 Parsippany Road, Parsippany, Morris County, New Jersey ORDERS ISSUED UNDER INTERNATIONAL BANKING ACT 07054 53 North Beverwyck Road, Lake Hiawatha, Morris County, Banca di Roma S.p.A. New Jersey 07034 Rome, Italy 1699 Littleton Road, Parsippany, Morris County, New Jersey 07054 Order Approving Establishment of Branches and Agencies 148 Market Street, Paterson, Passaic County, New Jersey 07505 Banca di Roma S.p.A ("Bank"), Rome, Italy, a foreign E. 33rd Street and McLean Boulevard, Paterson, Passaic bank within the meaning of the International Banking Act County, New Jersey 07514 ("IBA"), has applied under section 7(d) of the IB A 124 Haledon Avenue, Prospect Park, Passaic County, (12 U.S.C. § 3105(d)) to establish branches in New York, New Jersey 07508 New York, and Chicago, Illinois, and agencies in San 1 West Hanover Avenue, Mt. Freedom, Morris County, Francisco, California, and Houston, Texas. The Foreign New Jersey 07970 Bank Supervision Enhancement Act of 1991 ("FBSEA"), 84 East Ridgewood Avenue, Ridgewood, Bergen County, which amended the IBA, provides that a foreign bank must New Jersey 07450 obtain the approval of the Board to establish a branch or 686 Kinderkamack Road, River Edge, Bergen County, agency in the United States. New Jersey 07661 Notice of the application, affording interested persons an 67 Summit Avenue, Summit, Union County, New Jersey opportunity to comment, has been published in a newspaper of general circulation in New York (New York Post, 07901 October 27, 1992), Chicago (Chicago Tribune, October 22, 825 Riverview Drive, Totowa, Passaic County, New Jersey 1992), San Francisco (San Francisco Chronicle, Octo- 07512 ber 24, 1992), and Houston (Houston Post, October 21, 2000 Morris Avenue, Union, Union County, New Jersey 1992). The time for filing comments has expired, and the 07083 Board has considered the application and all comments 566 Bloomfield Avenue, Verona, Essex County, New Jersey received. 07044 Bank, with total consolidated assets of approximately 1050 Hamburg Turnpike, Wayne, Passaic County, New Jersey $134 billion, is the second largest bank in Italy.1 Cassa di 07470 Risparmio di Roma Holding S.p.A. ("CRRH"), a financial 865 Bloomfield Avenue, West Caldwell, Essex County, holding company that owns 64.5 percent of Bank's shares, New Jersey 07006 is Bank's largest shareholder. Istituto per la Ricostruzione 206 East Broad Street, Westfield, Union County, New Jersey Industriale ("IRI"), a holding company owned by the 07090 Government of Italy, owns 13.9 percent of Bank's shares and 35 percent of the shares of CRRH. Ente Cassa di 525 Cedar Hill Avenue, Wyckoff, Bergen County, New Jersey Risparmio di Roma ("ECRR"), an Italian foundation, 07481 owns 9.8 percent of Bank's shares and 65 percent of the shares of CRRH (ECRR and IRI are collectively referred Electronic Facilities to herein as "Parents"). No other single shareholder holds 5 percent or more of the shares of Bank. Pocono Road (St. Clare's Hospital), Denville, Morris County, In addition to a network of approximately 1,300 New Jersey 07834 branches in Italy, Bank operates 13 foreign branches and 5 Belmont Drive, Somerset, Somerset County, New Jersey has 9 foreign representative offices. Bank also owns several 08873 subsidiaries, including banks that operate in Europe. 115 South Jefferson Road, Whippany, Hanover Township, Bank was formed as the result of the merger of Banco di Morris County, New Jersey 07981 Roma S.p.A. ("Banco di Roma") and Banco di Santo 110 Cokesbury Road, Lebanon, Hunterdon County, Spirito S.p.A. ("Banco di Santo Spirito"), both of Rome, New Jersey 07430 Italy. Before the merger, each of the two predecessor banks Bay and Highland Avenues, Montclair, Essex County, had operations in the United States.2 The Board was given New Jersey 07042 prior notice of the merger, and, pursuant to Regulation K, 100 Madison Avenue, Morristown, Morris County, New Jersey 07960 15 E. Midland Avenue, Paramus, Bergen County, New Jersey 1. All data are as of December 31, 1995. 2. Banco di Roma operated branches in New York and Chicago and 07652 agencies in San Francisco and Houston. Banco di Santo Spirito, which Simon & Schuster Company, 1 Lake Street, Upper Saddle legally was the surviving corporation in the merger, operated a branch in New York. As a result of the consolidation, the two New York River, Bergen County, New Jersey 07458 branches were combined into one location and now operate as a single 1400 Willowbrook Mall, Wayne, Passaic County, New Jersey branch of Bank. In light of the fact that Bank now operates only one 07470 branch in a single location in New York, a city in which Banco di Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1145 allowed the merger to proceed before an application to Bank's primary supervisor is the Bank of Italy.5 The Bank establish the offices was filed and acted upon by the Board.3 of Italy's supervision extends to CRRH, which is consid- The Bank of Italy, which approved the merger of Banco ered the parent of the banking group. The Bank of Italy di Roma and Banco di Santo Spirito, has no objection to monitors the operations of Bank through information obthe continued operation of the existing branches and agen- tained from a combination of the review of reports submitcies of Bank. Bank also has received the requisite approval ted by Bank and from direct on-site inspections. While from the respective state banking authorities to maintain there is no prescribed frequency for inspections, the Bank the branch in Chicago and the agencies in San Francisco of Italy uses the reports it receives from Bank for purposes and Houston and to change the name and location of the of conducting "off-site reviews" that allow the Bank of New York branch. Italy to monitor the financial condition of Bank. In order to approve an application by a foreign bank to Bank is required to submit a number of reports to the establish branches and agencies in the United States, the Bank of Italy periodically, and the Bank of Italy may IBA and Regulation K require the Board to determine that require such additional information as it deems necessary the foreign bank applicant engages directly in the business to carry out supervision of Bank and Bank's affiliated of banking outside of the United States, and has furnished companies. The Bank of Italy performs regular off-site to the Board the information it needs to adequately assess reviews of reports filed by Bank and its banking company the application. The Board also generally must determine affiliates. Off-site reviews result in periodic ratings of the whether the foreign bank is subject to comprehensive su- bank in the areas of capital, profitability, risks, organizapervision or regulation on a consolidated basis by its home tion, and liquidity. Reports filed by Bank include semicountry supervisor (12 U.S.C. § 3105(d)(2) and (6)). The annual consolidated balance sheets and income statements, Board also may take into account additional standards as quarterly reports on capital ratios, country exposures, loans set forth in the IBA (12 U.S.C. § 3105(d)(3)-(4)) and Reg- and deposits, and credit granted to affiliated companies, ulation K (12 C.F.R. 211.24(c)). and monthly balance sheets and detailed average balances Bank engages directly in the business of banking outside for certain asset and liability accounts. In addition, all the United States through its banking operations in Italy Italian banks are required to transmit to the Bank of Italy and elsewhere. Bank also has provided the Board with the information regarding any violations of law discovered information necessary to assess the application through through their internal control systems. The Bank of Italy submissions that address the relevant issues. also reviews the minutes of meetings of Bank's board of directors, and proposals and findings of Bank's board of Regulation K provides that a foreign bank will be conauditors. sidered to be subject to comprehensive supervision or regulation on a consolidated basis if the Board determines The Bank of Italy employs both general and targeted that the bank is supervised and regulated in such a manner on-site inspections of Bank. General inspections cover all that its home country supervisor receives sufficient infor- the activities of Italian banks. In response to special develmation on the foreign bank's worldwide operations, includ- opments, targeted inspections may be conducted that focus ing the relationship of the foreign bank to any affiliate, to on specific issues. The frequency of general inspections is assess the overall financial condition of the foreign bank in the discretion of the Bank of Italy and is determined by and its compliance with law and regulation (12 C.F.R. matters such as the condition of the bank and the nature of 211.24(c)(1)).4 its operations. The general inspections are designed to The Board has considered the following information assess profitability, capital adequacy, the reliability of the concerning supervision by home country authorities. reports submitted to the Bank of Italy, asset quality, and the quality of Bank's management and internal organization. Inspections also review the adequacy of internal controls related to Bank's worldwide operations and extend to the branches and subsidiaries of Bank outside Italy. Santo Spirito had preexisting authority to operate a branch, Bank's application to establish the New York branch is moot. Italian companies, including banks, are required to em- 3. 12 C.F.R. 211.24(a)(3). ploy statutory auditors. The statutory auditors are elected at 4. In assessing this standard, the Board considers, among other the general shareholders' meeting and are separate from factors, the extent to which the home country supervisors: (i) Ensure that the bank has adequate procedures for monitoring and the internal and external auditors. The statutory auditors controlling its activities worldwide; are required to verify matters relating to corporate gover- (ii) Obtain information on the condition of the bank and its subsid- nance and compliance with law, as well as the company's iaries and offices through regular examination reports, audit reports, accounts. The statutory auditors are required to transmit to or otherwise; (iii) Obtain information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic; (iv) Receive from the bank financial reports that are consolidated on 5. The ultimate responsibility for bank supervision in Italy rests a worldwide basis, or comparable information that permits analysis with the Comitato Interministeriale per il Credito ed il Risparmio of the bank's financial condition on a worldwide consolidated basis; ("CICR"), a body presided over by Italy's Minister of the Treasury (v) Evaluate prudential standards, such as capital adequacy and risk and composed of various government ministers. The CICR is responasset exposure, on a worldwide basis. sible for setting the general principles of supervision which are then These are indicia of comprehensive, consolidated supervision. No single incorporated into regulations and applied to individual banks by the factor is essential and other elements may inform the Board's determination. Bank of Italy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1146 Federal Reserve Bulletin • December 1996 the Bank of Italy copies of the minutes of its meetings and previously had been operated by the two banks prior to the reports of irregularities in the bank's management or viola- merger. Bank continues to maintain controls and procetions of law. dures for the branch and agencies in order to ensure com- Companies listed on an Italian stock exchange, including pliance with U.S. law, as well as controls and procedures Bank, also are required to have their annual financial for its worldwide operations generally. statements audited by external auditors. External auditors The Board also has reviewed the restrictions on discloperform annual audits of Bank's domestic and foreign sure in relevant jurisdictions in which Bank operates and operations. Bank employs the same auditing firm, or its has communicated with relevant government authorities local affiliates, worldwide. Copies of the audited financial about access to information. Bank and Parents have comstatements are provided to the Bank of Italy. mitted to make available to the Board such information on Italian banks are subject to certain restrictions with re- the operations of Bank and any affiliate of Bank that the spect to transactions with affiliates and investments in other Board deems necessary to determine and enforce complicompanies. The Bank of Italy limits the extensions of ance with the IBA, the Bank Holding Company Act of credit to affiliates by a bank or a banking group to 1956, as amended, and other applicable federal law. To the 20 percent of the bank's or banking group's capital. In extent that the provision of such information is prohibited addition, prior approval from the Bank of Italy is required or impeded by law, Bank and Parents have committed to for a bank to make investments in other companies when cooperate with the Board to obtain any necessary consents such investments exceed certain thresholds. or waivers that might be required from third parties in The Bank of Italy has various enforcement powers over connection with disclosure of certain information. In addi- Italian banks, including Bank. These enforcement powers tion, subject to certain conditions, the Bank of Italy may include the power to impose monetary fines, suspend or share information on Bank's operations with other superviterminate a bank's officers, and to dissolve a bank's board sors, including the Board. In light of these commitments of directors. If criminal violations of law are suspected, the and other facts of record, and subject to the condition Bank of Italy refers the case to the appropriate judiciary described below, the Board concludes that Bank has proauthorities. vided adequate assurances of access to any necessary infor- With respect to the monitoring of its worldwide opera- mation the Board may request. tions, Bank's internal audit department conducts regular On the basis of all the facts of record, and subject to the audits of all its foreign and domestic offices and bank commitments made by Bank and Parents, as well as the subsidiaries. In addition, internal auditors are posted at terms and conditions set forth in this order, the Board has each foreign branch of Bank. Any violations of law discov- determined that Bank's application to establish a stateered by Bank's internal auditors must be reported to the licensed branch in Chicago and state-licensed agencies in Bank of Italy. The branches also submit periodic reports to San Francisco and Houston should be, and hereby is, Bank's head office. approved. Should any restrictions on access to information Based on all the facts of record, including the informa- on the operations or activities of Bank and its affiliates tion described above, the Board concludes that Bank is subsequently interfere with the Board's ability to obtain subject to comprehensive supervision on a consolidated information to determine and enforce compliance by Bank basis by its home country supervisor. or its affiliates with applicable federal statutes, the Board The Board also has taken into account the additional may recommend termination of any of Bank's direct or standards set forth in section 7 of the IB A (see 12 U.S.C. indirect activities in the United States. Approval of this § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). Bank has pro- application is also specifically conditioned on Bank's and vided the Board with the information necessary to assess Parents' compliance with the commitments made in conthe application through submissions that address the rele- nection with this application and with the conditions in this vant issues. As noted above, the Bank of Italy does not order.6 The commitments and conditions referred to above object to the continued operation of the existing branches are conditions imposed in writing by the Board in connecand agencies of Bank. In addition, the Bank of Italy may tion with its decision, and may be enforced in proceedings share information on Bank's operations with other supervi- under 12 U.S.C. § 1818 or 12 U.S.C. § 1847 against Bank, sors, including the Board. its offices, and its affiliates. Italy is a signatory to the Basle risk-based capital stan- By order of the Board of Governors, effective October 9, dards, and Italian risk-based capital standards meet those 1996. established by the Basle Capital Accord and the European Union. Bank's capital is in excess of the minimum levels that would be required by the Basle Capital Accord and is considered equivalent to capital that would be required of a U.S. banking organization. 6. The Board's authority to approve establishment of the branch and Managerial and other financial resources of Bank also agencies parallels the continuing authority of the states of Illinois, California, and Texas to license offices of a foreign bank. The Board's are considered consistent with approval. In making this approval of this application does not supplant the authority of these determination, the Board also has taken into account the states to license the respective branch and agencies of Bank in fact Bank will continue to operate only those offices that accordance with any terms or conditions that they may impose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1147 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and market facilities, letters of credit, foreign exchange, capital Governors Kelley, Phillips, Yellen, and Meyer. Absent and not voting: markets products, and structured products related to the Governor Lindsey. Italian market. The New York branch proposes to continue to offer those services and to expand its deposit products. JENNIFER J. JOHNSON Bank also engages indirectly in certain nonbanking activi- Deputy Secretary of the Board ties in the United States. In order to approve an application by a foreign bank to Istituto Bancario San Paolo di Torino, S.p.A. establish a branch in the United States, the IBA and Regu- Turin, Italy lation K require the Board to determine that the foreign bank applicant engages directly in the business of banking Order Approving Establishment of a Branch outside of the United States and has furnished to the Board the information it needs to assess the application ade- Istituto Bancario San Paolo di Torino, S.p.A. ("Bank"), quately. The Board also generally must determine that the Turin, Italy, a foreign bank within the meaning of the foreign bank is subject to comprehensive supervision or International Banking Act (the "IBA"), has applied under regulation on a consolidated basis by its home country section 7(d) of the IBA (12 U.S.C. § 3105(d)) to establish a supervisor (12 U.S.C. § 3105(d)(2) and (6); 12 C.F.R. federally licensed branch in New York, New York. The 211.24(c)(1)). The Board may also take into account addi- Foreign Bank Supervision Enhancement Act of 1991 tional standards set forth in the IBA and Regulation K ("FBSEA"), which amended the IBA, provides that a (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)). foreign bank must obtain the approval of the Board to Bank engages directly in the business of banking outside establish a branch in the United States. of the United States through its banking operations in Italy Notice of the application, affording interested persons an and elsewhere. Bank also has provided the Board with the opportunity to submit comments, has been published in a information necessary to assess the application through newspaper of general circulation in New York, New York submissions that address the relevant issues. (The New York Times, May 13, 1996). The time for filing Regulation K provides that a foreign bank will be concomments has expired, and all comments have been considered to be subject to comprehensive supervision or sidered. regulation on a consolidated basis if the Board determines Bank, with assets of approximately $159 billion as of that the bank is supervised and regulated in such a manner December 31, 1995, is the largest commercial bank in that its home country supervisor receives sufficient infor- Italy. Gruppo Bancario San Paolo di Torino, S.p.A. mation on the worldwide operations of the bank, including ("Gruppo"), Turin, Italy, owns approximately 65 percent its relationship to any affiliates, to assess the bank's overall of Bank's voting shares, and no other single shareholder financial condition and its compliance with law and regulaholds more than 5 percent of Bank's voting shares. Gruppo tion (12 C.F.R. 211.24(c)(1)).2 In making its determination is the sole and wholly owned subsidiary of Compagnia di under this standard, the Board has considered the following San Paolo ("Compagnia"), Turin, Italy, an Italian foundainformation. tion (Gruppo and Compagnia are collectively referred to Bank's primary supervisor is the Bank of Italy. The herein as "Parents"). Bank operates nearly 1200 branches Board previously has determined, in connection with the in Italy and has extensive banking and nonbanking operaapplication involving another Italian bank, Banca di Roma, tions outside Italy. S.p.A., that the bank was subject to home country supervi- In the United States, Bank operates a branch in Los sion on a consolidated basis.3 The Board also has deter- Angeles, California, and a limited branch in New York, New York. Bank's New York branch currently limits its deposit-taking activities to those that are incidental to international or foreign business.1 Bank proposes to convert its existing New York branch to a full-service branch, 2. In assessing this standard, the Board considers, among other which would no longer be subject to such limitations on its factors, the extent to which the home country supervisors: deposit-taking activities. (i) Ensure that the bank has adequate procedures for monitoring The main products offered by Bank's New York limited and controlling its activities worldwide; branch are committed revolving lines of credit, money (ii) Obtain information on the condition of the bank and its subsidiaries and offices through regular examination reports, audit reports, or otherwise; (iii) Obtain information on the dealings with and relationship 1. Currently, Bank's home state under the IBA and Regulation K is between the bank and its affiliates, both foreign and domestic; California. Because Bank's New York branch is outside Bank's home (iv) Receive from the bank financial reports that are consolidated state, under the IBA it cannot engage in full service deposit activities on a worldwide basis, or comparable information that permits and must limit its deposit taking to that of a corporation organized analysis of the bank's financial condition on a worldwide consolunder section 25A of the Federal Reserve Act (the Edge Act) idated basis; and (12 U.S.C. § 611 et seq.). Following approval of its proposed branch (v) Evaluate prudential standards, such as capital adequacy and in New York, Bank would redesignate New York as its home state for risk asset exposure, on a worldwide basis. the purposes of the IBA and Regulation K, transfer the assets and These are indicia of comprehensive, consolidated supervision; no single liabilities of the Los Angeles branch to the New York branch, and factor is essential and other elements may inform the Board's determination. downgrade the Los Angeles branch to a representative office. 3. See Banca di Roma, S.pA., 82 Federal Reserve Bulletin, 1144 (1996). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1148 Federal Reserve Bulletin • December 1996 mined that Bank and Gruppo are supervised by the Bank of determine and enforce compliance by Bank or its affiliates Italy on substantially the same terms and conditions as with applicable federal statutes, the Board may require Banca di Roma and its parent company. Based on all the termination of any of Bank's direct or indirect activities in facts of record, the Board has concluded that Bank is the United States or, in the case of an office licensed by the subject to comprehensive supervision and regulation on a OCC, recommend termination of such office. Approval of consolidated basis by its home country supervisor. this application also is specifically conditioned on Bank's The Board has taken into account the additional stan- and Parents' compliance with the commitments made in dards set forth in section 7 of the IBA and in Regulation K. connection with this application and with the conditions in (,See 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). this order.4 The commitments and conditions referred to Bank has provided the Board with the information neces- above are conditions imposed in writing by the Board in sary to assess the application through submissions that connection with its decision and may be enforced in proaddress the relevant issues. In addition, the Bank of Italy ceedings under 12 U.S.C. § 1818 or 12 U.S.C. § 1847 has no objection to Bank's proposal to establish a branch in against Bank, its offices, or its affiliates. New York. By order of the Board of Governors, effective Italy is a signatory to the Basle risk-based capital stan- October 15, 1996. dards, and Italian risk-based capital standards meet those established by the Basle Capital Accord and the European Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Union. Bank's capital is in excess of the minimum levels Governors Lindsey, Phillips, Yellen, and Meyer. Absent and not voting: Governor Kelley. that would be required by the Basle Capital Accord and is considered equivalent to capital that would be required of a JENNIFER J. JOHNSON U.S. banking organization. Managerial and other financial Deputy Secretary of the Board resources of Bank also are considered consistent with approval, and Bank appears to have the experience and capacity to support the proposed branch. In addition, Bank Unibanco - Uniao de Bancos Brasileiros, S.A., has established controls and procedures in the branch to Sao Paulo, Brazil ensure compliance with applicable U.S. law, as well as controls and procedures for its worldwide operations gener- Order Approving Establishment of a Representative ally. Office Finally, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Bank operates Unibanco - Uniao de Bancos Brasileiros, S.A. ("Bank"), and has communicated with relevant government authori- Sao Paulo, Brazil, a foreign bank within the meaning of the ties about access to information. Bank and Parents have International Banking Act ("IBA"), has applied under seccommitted to make available to the Board such information 10(a) of the IBA (12 U.S.C. § 107(a)) to establish a tion on the operations of Bank and any affiliate of Bank representative office in Miami, Florida. The Foreign Bank that the Board deems necessary to determine and enforce Supervision Enhancement Act of 1991, which amended the compliance with the IBA, the Bank Holding Company Act IBA, provides that a foreign bank must obtain the approval of 1956, as amended, and other applicable federal law. To of the Board to establish a representative office in the the extent that the provision of such information may be United States. prohibited or impeded by law or otherwise, Bank and Notice of the application, affording interested persons an Parents have committed to cooperate with the Board to opportunity to submit comments, has been published in a obtain any necessary consents or waivers that might be newspaper of general circulation in Miami, Florida (Miami required from third parties in connection with disclosure of Daily Business Review, July 17, 1996). The time for filing certain information. In addition, subject to certain condicomments has expired, and the Board has considered the tions, the Bank of Italy may share information on Bank's application and all comments received. operations with other supervisors, including the Board. In Bank, with approximately $24 billion in assets,' is the light of these commitments and other facts of record, and third largest bank in Brazil. Bank has over 800 domestic subject to the condition described below, the Board has branches and operates 31 domestic subsidiaries, which concluded that Bank has provided adequate assurances of access to any necessary information the Board may request. On the basis of all the facts of record, and subject to the 4. The Board's authority to approve the establishment of the procommitments made by Bank and Parents, as well as the posed branch parallels the continuing authority of the Office of the terms and conditions set forth in this order, the Board has Comptroller of the Currency ("OCC") to license federal offices of a determined that Bank's application to establish a federally foreign bank. The Board's approval of this application does not licensed branch in New York should be, and hereby is, supplant the authority of the OCC to license the proposed branch of Bank in accordance with any terms or conditions that the OCC may approved. Should any restrictions on access to information impose. on the operations or activities of Bank or any of its affiliates subsequently interfere with the Board's ability to 1. Data are as of March 31, 1996, unless otherwise noted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1149 provide services such as insurance, leasing, credit card, and whether operating through branches, agencies, or represeninvestment management. Bank also has branches located in tative offices, will be required to provide adequate assur- New York, New York, the Cayman Islands, Nassau, Baha- ances of access to information on their operations and mas, a representative office in London, and bank subsidiar- those of their affiliates necessary to determine compliance ies located in Luxembourg and Paraguay. with U.S. laws. Unibanco Holdings, S.A. ("Unibanco Holdings"), Sao Bank is subject to the regulatory and supervisory author- Paulo, Brazil, is Bank's immediate parent and owns ity of the Central Bank of Brazil ("Central Bank"), which 90 percent of the shares of Bank. The remainder of Bank's is the bank supervisory authority in Brazil and, as such, is shares is widely held. Bank's ultimate parent, E. Johnston the home country supervisor of Bank. The Central Bank Participates Ltda., S.A. ("E. Johnston"), Sao Paulo, Bra- has no objection to Bank's establishment of the proposed zil, indirectly owns 68 percent of Unibanco Holdings.2 representative office. The Board has previously determined Bank, Unibanco Holdings, and E. Johnston are subject to in connection with an application to establish a representathe requirements of the Bank Holding Company Act by tive office by another Brazilian bank that the bank was virtue of Bank's New York branch, and each is a qualifying subject to a significant degree of supervision.4 In this case, foreign banking organization under Regulation K Bank is supervised by the Central Bank on the same terms (12 C.F.R. 211.23(b)). and conditions as the other Brazilian bank. Based on all the The proposed representative office would solicit loans, facts of record, the Board has determined that factors promote Bank's products and services to potential and relating to the supervision of Bank by its home country existing customers, and serve as a liaison between Bank's supervisor are consistent with approval of the proposed correspondent banks, its New York branch, and its head representative office. office. In addition, the proposed representative office would The Board also has determined that Bank engages dimonitor Bank's operations in the U.S. for compliance with rectly in the business of banking outside of the United applicable laws and regulations, conduct compliance train- States through its banking operations in Brazil. Bank has ing for Bank's employees in the United States, oversee the provided the Board with information necessary to address electronic data processing activities of Bank in the United relevant issues and to assess the application adequately. States, and perform other back-office functions in support The Board also has taken into account the additional of Bank's New York branch. standards set forth in section 7 of the IBA and Regula- In acting on an application to establish a representative tion K (12 U.S.C. § 3105(d)(3),(4); 12 C.F.R. 211.24(c)(2)). office, the IBA and Regulation K provide that the Board As noted above, the Central Bank has no objection to shall take into account whether the foreign bank engages Bank's establishment of the proposed representative office. directly in the business of banking outside of the In addition, the Central Bank may share information on United States, has furnished to the Board the informa- Bank's operations with other supervisors, including the tion it needs to assess adequately the application, and is Board. subject to comprehensive supervision or regulation on a Taking into consideration Bank's record of operations in consolidated basis by its home country supervisor its home country, its overall financial resources, and its (12 U.S.C. § 3107(a)(2); 12 C.F.R. 211.24(d)). The Board standing with its home country supervisors, the Board also may also take into account additional standards as set forth has determined that financial and managerial factors are in the IBA (12 U.S.C. § 3105(d)(3)-(4)) and Regulation K consistent with approval of the proposed representative (12 C.F.R. 211.24(c)(2)). office. Bank appears to have the experience and capacity to The Board generally has required foreign banks that support the proposed representative office and has estabpropose to establish a representative office to be subject to lished controls and procedures for the proposed representaa significant degree of supervision by their home country tive office to ensure compliance with U.S. law. supervisor, as determined with reference to a number of The Board also has reviewed the restrictions on disclofactors.3 A foreign bank's financial and managerial re- sure under applicable law and has communicated with sources are reviewed to determine whether its financial relevant government authorities regarding access to inforcondition and performance demonstrate that it is capable of mation about Bank's operations. Bank and its ultimate complying with applicable laws and has an operating parent have committed to make available to the Board such record that would be consistent with the establishment of a information on the operations of Bank and any of its representative office in the United States. All foreign banks, affiliates that the Board deems necessary to determine and enforce compliance with the IBA, the Bank Holding Company Act of 1956, as amended, and other applicable Federal law. To the extent that disclosure of such information 2. Other entities that hold an interest in Unibanco Holdings greater to the Board may be prohibited or impeded by law, Bank than 5 percent but less than 15 percent are Commerzbank AG, Frankfurt, Germany, Dai-Ichi Kangyo Bank, Tokyo, Japan, and Bahema Participacoes, S.A., Sao Paulo, Brazil. 3. See Citizens National Bank, 79 Federal Reserve Bulletin 805 (1993). See also Promstroybank of Russia, 82 Federal Reserve Bulletin 599 (1996)(addressing standards applicable to representative of- 4. See Banco Bandeirantes, S.A., 81 Federal Reserve Bulletin 742 fices with limited activities). (1995). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1150 Federal Reserve Bulletin • December 1996 and its ultimate parent have committed to cooperate with cation and with the conditions in this order.5 The committhe Board to obtain any necessary consents or waivers that ments and conditions referred to above are conditions might be required from third parties in connection with imposed in writing by the Board in connection with its disclosure of certain information. In light of these commit- decision, and may be enforced in proceedings under ments and other facts of record, and subject to the condi- 12 U.S.C. § 1818 against Bank and its affiliates. tion described below, the Board concludes that Bank has By order of the Board of Governors, effective October 9, provided adequate assurances of access to any necessary 1996. information the Board may request. Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and On the basis of all the facts of record, and subject to the Governors Kelley, Phillips, Yellen, and Meyer. Absent and not voting: commitments made by Bank and its ultimate parent, as Governor Lindsey. well as the terms and conditions set forth in this order, the Board has determined that Bank's application to establish a JENNIFER J. JOHNSON representative office should be, and hereby is, approved. Deputy Secretary of the Board Should any restrictions on access to information on the operations or activities of Bank and any of its affiliates subsequently interfere with the Board's ability to deter- 5. The Board's authority to approve the establishment of the promine the compliance by Bank or its affiliates with applica- posed office parallels the continuing authority of the State of Florida ble federal statutes, the Board may require termination of to license offices of a foreign bank. The Board's approval of this any of Bank's direct or indirect activities in the United application does not supplant the authority of the State of Florida and its agent, the Florida Department of Banking and Finance, to license States. Approval of this application is also specifically the proposed office of Bank in accordance with any terms or condiconditioned on compliance by Bank and its ultimate parent tions that the Florida Department of Banking and Finance may imwith the commitments made in connection with this appli- pose. APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Applicant(s) Bank(s) Effective Date Whitney Holding Corporation, Liberty Holding Company, October 7, 1996 New Orleans, Louisiana Pensacola, Florida Liberty Bank, Pensacola, Florida Whitney National Bank of Florida, Pensacola, Florida Section 4 Applicant(s) Bank(s) Effective Date Bank America Corporation, Arrowhead LLC, October 30, 1996 San Francisco, California San Jose, California National City Corporation, Muirfield Mortgage Limited Partnership, October 11, 1996 Cleveland, Ohio Dallas, Texas National City Mortgage Company, Miamisburg, Ohio SouthTrust Corporation, Preferred Bank, A Federal Savings Bank, October 9, 1996 Birmingham, Alabama Palmetto, Florida SouthTrust of Florida, Inc., Jacksonville, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1151 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 1st United Bancorp, Park Bankshares, Inc., Atlanta October 17, 1996 Boca Raton, Florida Lake Park, Florida First National Bank of Lake Park, Lake Park, Florida Central Financial Corporation, Mesquite Financial Corporation, Kansas City October 17, 1996 Hutchinson, Kansas Mesquite, Nevada Chambers Bancshares, Inc., Bank of Rogers, St. Louis October 22, 1996 Danville, Arkansas Rogers, Arkansas Citizens Corporation, Peoples State Bancshares, Inc., Atlanta October 11, 1996 Franklin, Tennessee Grant, Alabama Harrison Group, Inc., Peoples State Bank, Franklin, Tennessee Grant, Alabama Colony Bankcorp, Inc., Broxton State Bank, Atlanta October 4, 1996 Fitzgerald, Georgia Broxton, Georgia Commerce Bancshares, Inc., Geneva State Bank, Minneapolis October 17, 1996 Bloomington, Minnesota Geneva, Minnesota Community Bank Shares of Indiana, Community Bank of Southern Indiana, St. Louis October 9, 1996 Inc., New Albany, Indiana New Albany, Indiana Community First Bankshares, Inc., First National Bank of Boulder County, Kansas City October 23, 1996 Denver, Colorado Boulder, Colorado DCB Financial Corp., The Delaware County Bank & Trust Cleveland October 17, 1996 Delaware, Ohio Company, Delaware, Ohio Delaware International Bancshares, The International Bank, Dallas October 11, 1996 Inc., Corpus Christi, Texas Dover, Delaware Dublin Bancshares, Inc., Gustine-DeLeon Bancshares, Inc., Dallas October 23, 1996 Dublin, Texas DeLeon, Texas Eberhardt, Inc., Pinnacle Financial Corporation, Atlanta October 4, 1996 Elberton, Georgia Elberton, Georgia JAM Family Partnership II, L.P., Elberton, Georgia First Bankshares of West Point, Inc., Canebrake Bancshares, Inc., Atlanta September 27, 1996 West Point, Georgia Uniontown, Alabama First State Bank of Uniontown, Uniontown, Alabama First Financial Company of Saint The First National Bank of Saint Jo, Dallas October 4, 1996 Jo, Saint Jo, Texas Dover, Delaware First International Bancshares, Inc., Delaware International Bancshares, Inc., Dallas October 11, 1996 Corpus Christi, Texas Dover, Delaware The International Bank, Corpus Christi, Texas Hibernia Corporation, Texarkana National Bancshares, Atlanta October 18, 1996 New Orleans, Louisiana Texarkana, Texas Texarkana National Bank, Texarkana, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1152 Federal Reserve Bulletin • December 1996 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Hometown Financial Group, Inc., Flanagan State Bank, Chicago October 7, 1996 Flanagan, Illinois Flanagan, Illinois Keystone Financial, Inc., Keystone National Bank, Philadelphia September 13, 1996 Harrisburg, Pennsylvania Lancaster, Pennsylvania McConnell & Co., Pinnacle Financial Corporation, Atlanta October 4, 1996 Elberton, Georgia Elberton, Georgia JAM Family Partnership I, L.P., Elberton, Georgia Mesquite Financial Corporation, Mesquite State Bank, Kansas City October 17, 1996 Mesquite, Nevada Mesquite, Nevada Nolte Family Limited Partnership, First Kenesaw Company, Inc., Kansas City October 18, 1996 Kenesaw, Nebraska Kenesaw, Nebraska Northern Trust Corporation, Metroplex Bancshares, Inc., Chicago October 11, 1996 Chicago, Illinois Dallas, Texas Metroplex Delaware Financial Corporation, Dallas, Texas Bent Tree National Bank, Dallas, Texas Robertson Holding Company, Commercial BancGroup, Inc., Atlanta October 18, 1996 Speedwell, Tennessee Harrogate, Tennessee The Royal Bank of Scotland Group Farmers & Mechanics Bank, Boston October 11, 1996 pic, Middletown, Connecticut Edinburgh, Scotland, The Royal Bank of Scotland pic, Edinburgh, Scotland The Governor and Company of the Bank of Ireland, Dublin, Ireland Citizens Financial Group, Inc., Providence, Rhode Island Saint Jo Bancshares, Inc., First Financial Company of Saint Jo, Dallas October 4, 1996 Saint Jo, Texas Dover, Delaware The First National Bank of Saint Jo, Saint Jo, Texas Sussex Bancorp, The Sussex County State Bank, New York October 11, 1996 Franklin, New Jersey Franklin, New Jersey Union Illinois Company Employee Union Illinois Company, St. Louis October 22, 1996 Stock Ownership Trust, Swansea, Illinois Swansea, Illinois Valley Bancshares, Inc., Minnesota Bancshares Corporation, Chicago October 21, 1996 Nisswa, Minnesota Augusta, Wisconsin Brainerd National Bank, Baxter, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1153 Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Brunsville Bancorporation, Inc., To engage de novo in insurance agency Chicago October 8, 1996 Brunsville, Iowa activities Caisse Nationale de Credit Agricole, Daniel Breen & Company, L.P., Chicago September 26, 1996 Paris, France Houston, Texas Indosuez Carr Futures, Inc., Chicago, Illinois Banque Indosuez, Paris, France Breen Trust Company, Houston, Texas Cardinal Bankshares Corporation, To engage de novo in making and Richmond October 2, 1996 Floyd, Virginia servicing loans Centura Banks, Inc., CLG, Inc., Richmond October 2, 1996 Rocky Mount, North Carolina Raleigh, North Carolina Commercial Capital Corporation, Kemper Finance, Inc., Atlanta October 16, 1996 DeKalb, Mississippi DeKalb, Mississippi Farmers Capital Bank Corporation, FCB Services, St. Louis September 24, 1996 Frankfort, Kentucky Frankfort, Kentucky FBOP Corporation, Topa Savings Bank, FSB, Chicago October 15, 1996 Oak Park, Illinois Beverly Hills, California Regency Savings Bank, Topa Thrift and Loan, F.S.B., Beverly Hills, California Naperville, Illinois Franklin National Bankshares, Inc., Franklin National Mortgage Dallas October 3, 1996 Mount Vernon, Texas Corporation, Mount Vernon, Texas Fremont Bancorporation, To engage directly de novo in San Francisco October 1, 1996 Fremont, California commercial lending and loan servicing activities Maedgen & White, Ltd., Plains Service Corporation, Dallas October 16, 1996 Lubbock, Texas Lubbock, Texas Plains Capital Corporation, Lubbock, Texas Merrill Bancorporation, Inc., To engage de novo in insurance agency Chicago October 8, 1996 Merrill, Iowa activities Mid Am, Inc., Nemo Industries, Inc., Cleveland October 1, 1996 Bowling Green, Ohio Ft. Meyers, Florida Mid Am Recovery Services, Inc., Toledo, Ohio National Bancorp of Alaska, Inc., To directly engage de novo in the San Francisco October 1, 1996 Anchorage, Alaska activity of making community development investments National Commerce Bancorporation, Kenesaw Leasing, Inc., St. Louis September 26, 1996 Memphis, Tennessee Knoxville, Tennessee Norwest Corporation, The Mortgage Center, Minneapolis October 16, 1996 Minneapolis, Minnesota Springfield, Massachusetts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1154 Federal Reserve Bulletin • December 1996 Section 4—Continued Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Norwest Corporation, To engage de novo in Maine in: Minneapolis October 8, 1996 Minneapolis, Minnesota (1) making, acquiring, or servicing Norwest Financial Services, Inc., loans or other extensions of credit Des Moines, Iowa relating to consumer finance, sales Norwest Financial Inc., finance, and commercial finance Des Moines, Iowa (including but not limited to accounts receivable financing, factoring, and other secured lending activities); (2) underwriting and selling credit life insurance; (3) selling on an agency basis credit accident and health insurance, credit property and casualty insurance, and involuntary unemployment insurance; (4) issuing and selling at retail money orders and traveler's checks; (5) servicing loans and other extensions of credit for other persons; and (6) offering and selling bookkeeping, payroll, and other management reporting and data processing services Peoples Heritage Financial Group, Family Bancorp, Boston October 11, 1996 Inc., Haverhill, Massachusetts Portland, Maine Richey Bancorporation, Inc., To engage in management consulting Minneapolis October 24, 1996 Glendive, Montana Community First Bancorp., Inc., Glendive, Montana The Royal Bank of Scotland Group NYCE Corporation, Boston October 18, 1996 pic, Woodcliff Lake, New Jersey Edinburgh, Scotland The Royal Bank of Scotland pic, Edinburgh, Scotland The Governor and Company of the Bank of Ireland, Dublin, Ireland Citizens Financial Group, Inc., Providence, Rhode Island Summit Bancorp., Central Jersey Financial Corp., New York October 18, 1996 Princeton, New Jersey East Brunswick, New Jersey Central Jersey Savings Bank, SLA, East Brunswick, New Jersey Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1155 Section 4—Continued Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Union-Calhoun Investments, Ltd., Wetter Tax Service, Chicago October 11, 1996 Rockwell City, Iowa Rockwell City, Iowa Washington State Bancshares, Inc. To engage de novo in making, Atlanta October 21, 1996 Washington, Louisiana acquiring, or servicing loans or other extensions of credit, including issuing letters of credit Westamerica Bancorporation, Westamerica Commercial Credit, Inc., San Francisco October 3, 1996 San Rafael, California Fairfield, California Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date The Maddox Corporation, First State Bancshares of Blakely, Inc., Atlanta October 4, 1996 Blakely, Georgia Blakely, Georgia First Southwest Bancorp, Inc., Donalsonville, Georgia First Federal Savings Bank of Southwest Georgia, Donalsonville, Georgia Stichting Prioriteit ABN AMRO CNBC Bancorp, Inc., Chicago September 26, 1996 Holding, Chicago, Illinois Amsterdam, The Netherlands Columbia National Bank of Chicago, Stichting Administratiekantoor ABN Chicago, Illinois AMRO Holding, Columbia Financial Services, Inc., Amsterdam, The Netherlands Chicago, Illinois ABN AMRO Holding N.V., CNBC Development Corporation, Amsterdam, The Netherlands Chicago, Illinois ABN AMRO Bank N.V., CNBC Investment Corporation, Amsterdam, The Netherlands Chicago, Illinois ABN AMRO North America, Inc., CNBC Leasing Corporation, Chicago, Illinois Chicago, Illinois Sky Mortgage Company, Chicago, Illinois Sky Finance Company, Chicago, Illinois Taylor Capital Group, Inc., Cole Taylor Bank, Chicago October 21, 1996 Wheeling, Illinois Chicago, Illinois CT Mortgage Company, Inc., Altamonte Springs, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1156 Federal Reserve Bulletin • December 1996 APPLICATIONS APPROVED UNDER BANK MERGER 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. Applicant(s) Bank(s) Effective Date The Bank of New York, The Bank of New York (NJ), October 7, 1996 New York, New York West Paterson, New Jersey The Putnam Trust Company, Greenwich, Connecticut Compass Bank, Enterprise National Bank, October 22, 1996 Jacksonville, Florida Jacksonville, Florida First Knoxville Bank, Bank of Madisonville, October 24, 1996 Knoxville, Tennessee Madisonville, Tennessee United Southern Bank, Morristown, Tennessee, Manufacturers and Traders Trust Company, GreenPoint Bank, October 30, 1996 Buffalo, New York New York, New York 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 1st United Bank, First National Bank of Lake Park, Atlanta October 17, 1996 Boca Raton, Florida Lake Park, Florida Bank of Gainesville, Douglas County Bank, St. Louis October 16, 1996 Gainesville, Missouri Ava, Missouri Crestar Bank DC, Crestar Bank, Richmond September 26, 1996 Vienna, Virginia Richmond, Virginia Crestar Bank MD, Bethesda, Maryland First Virginia Bank - Colonial, First Virginia Bank - South Hill, Richmond October 10, 1996 Richmond, Virginia South Hill, Virginia Marine Midland Bank, Morgan Guaranty Trust Company of New York October 18, 1996 Buffalo, New York New York, New York, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1157 PENDING CASES INVOLVING THE BOARD OF March 25, 1996, approving an application by CoreStates GOVERNORS Financial Corp., Philadelphia, Pennsylvania to acquire Meridian Bancorp, Inc., Reading, Pennsylvania. The Board's This list of pending cases does not include suits against the motion to dismiss was filed on June 3, 1996. On October Federal Reserve Banks in which the Board of Governors is not 24, 1996, the court dismissed the action. named a party. Kuntz v. Board of Governors, No. 96-1079 (D.C. Cir., filed March 7, 1996). Petition for review of a Board order dated American Bankers Insurance Group, Inc. v. Board of Gover- February 7, 1996, approving applications by The Fifth nors, No. 96-CV-2383-EGS (D.D.C., filed October 16, Third Bank, Cincinnati, Ohio, and The Firth Third Bank of 1996). Action seeking declaratory and injunctive relief in- Columbus, Columbus, Ohio, to acquire certain assets and validating a new regulation issued by the Board under the assume certain liabilities of 25 branches of NBD Bank, Truth in Lending Act relating to treatment of fees for debt Columbus, Ohio. Petitioner has moved to consolidate the cancellation agreements. On October 18, 1996, the district case with Kuntz v. Board of Governors, No. 95-1495. On court denied plaintiffs' motion for a temporary restraining April 8, 1996, the Board filed a motion to dismiss the order, and set a hearing on their motion for preliminary and action. permanent injunctive relief for December 17, 1996. Henderson v. Board of Governors, No. 96-1054 (D.C. Cir., Clifford v. Board of Governors, No. 96-1342 (D.C. Cir., filed filed February 16, 1996). Petition for review of a Board September 17, 1996). Petition for review of Board order order dated January 17, 1996, approving the merger of First dated August 21, 1996, denying petitioners' motion to Citizens BancShares, Inc., Raleigh, North Carolina, with dismiss enforcement action against them. Allied Bank Capital, Inc., Sanford, North Carolina. Petition- Artis v. Greenspan, No. 96-CV-02105 (D. D.C., filed Septem- ers' motion for a stay was denied on March 7, 1996. Oral ber 11, 1996). Class complaint alleging race discrimination argument on the merits is scheduled for January 17, 1996. in employment. Research Triangle Institute v. Board of Governors, No. Leuthe v. Board of Governors, No. 96-5725 (E.D. Pa., filed 1:96CV00102 (M.D.N.C., filed February 12, 1996). Con- August 16, 1996). Action against the Board and other tract dispute. On May 3, 1996, the Board filed a motion to Federal banking agencies challenging the constitutionality dismiss the action. of the Office of Financial Institution Adjudication. Inner City Press I Community on the Move v. Board of Gover- Long v. Board of Governors, No. 96-9526 (10th Cir., filed nors, No. 96-4008 (2nd Cir., filed January 19, 1996). Peti- July 31, 1996). Petition for review of Board order dated tion for review of a Board order dated January 5, 1996, July 2, 1996, assessing a civil money penalty and cease and approving the applications and notices by Chemical Bankdesist order for violations of the Bank Holding Company ing Corporation to merge with The Chase Manhattan Cor- Act. poration, both of New York, New York, and by Chemical Esformes v. Board of Governors, No. 96-1916 (S.D. Fla., filed Bank to merge with The Chase Manhattan Bank, N.A., both July 12, 1996). Complaint challenging Board denial of of New York, New York. Petitioners' motion for an emeradministrative request for confidential supervisory informa- gency stay of the transaction was denied following oral tion. Plaintiffs' motion for an expedited hearing was denied argument on March 26, 1996. The Board's brief on the on August 1, 1996. On September 20, 1996, the Board filed merits was filed July 8, 1996. The case has been consolia motion to dismiss or for summary judgment. On Octo- dated for oral argument and decision with Lee v. Board of ber 8, the plaintiffs moved for voluntary dismissal of the Governors, No. 95^1134 (2d Cir.). action. Menick v. Greenspan, No. 95-CV-01916 (D. D.C., filed Octo- Board of Governors v. Interamericas Investments, Ltd., No. ber 10, 1995). Complaint alleging sex, age, and handicap 96-7108 (D.C. Cir., filed June 14, 1996). Appeal of district discrimination in employment. On October 30, 1996, the court ruling granting, in part, the Board's application to parties filed a stipulation of dismissal. enforce an adminstrative investigatory subpoena for docu- Kuntz v. Board of Governors, No. 95-1495 (D.C. Cir., filed ments and testimony. Appellants' motion for a stay of the September 21, 1995). Petition for review of Board order district court ruling was denied on September 12, 1996. On dated August 23, 1995, approving the applications of The October 23, 1996, appellants filed a voluntary dismissal of Fifth Third Bank, Cincinnati, Ohio, to acquire certain assets the action. and assume certain liabilities of 12 branches of PNC Bank, Interamericas Investments, Ltd. v. Board of Governors, No. Ohio, N.A., Cincinnati, Ohio, and to establish certain 96-60326 (5th Cir., filed May 8, 1996). Petition for review branches. The Board's motion to dismiss was filed on of order imposing civil money penalties and cease and October 26, 1995. desist order in enforcement case. Petitioners' brief was filed Lee v. Board of Governors, No. 95-4134 (2nd Cir., filed on July 26, 1996, and the Board's brief was filed on August 22, 1995). Petition for review of Board orders dated September 27, 1996. On August 20, petitioners' motion for July 24, 1995, approving certain steps of a corporate reorgaa stay of the Board's orders pending judicial review was nization of U.S. Trust Corporation, New York, New York, denied by the Court of Appeals. and the acquisition of U.S. Trust by Chase Manhattan Kuntz v. Board of Governors, No. 96-1137 (D.C. Cir., filed Corporation, New York, New York. On September 12, April 25, 1996). Petition for review of a Board order dated 1995, the court denied petitioners' motion for an emergency Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1158 Federal Reserve Bulletin • December 1996 stay of the Board's orders. The Board's brief was filed on The Federal Reserve Board announced on October 2, 1996, April 16, 1996. the issuance of an Order of Prohibition against Peter R. Beckman v. Greenspan, No. 95-35473 (9th Cir., filed May 4, Nardin, a former officer and institution-affiliated party of 1995). Appeal of dismissal of action against Board and the New York Branch of Credit Suisse, Zurich, Switzerothers seeking damages for alleged violations of constitu- land. tional and common law rights. The appellants' brief was filed on June 23, 1995; the Board's brief was filed on July 12, 1995. Money Station, Inc. v. Board of Governors, No. 95-1182 (D.C. Cir., filed March 30, 1995). Petition for review of a Board order dated March 1, 1995, approving notices by Bank One Corporation, Columbus, Ohio; CoreStates Financial Corp., Philadelphia, Pennsylvania; PNC Bank Corp., TERMINATION OF ENFORCEMENT ACTIONS Pittsburgh, Pennsylvania; and KeyCorp, Cleveland, Ohio, to acquire certain data processing assets of National City The Federal Reserve Board announced on October 9, Corporation, Cleveland, Ohio, through a joint venture sub- 1996, the termination of the following enforcement actions: sidiary. On April 23, 1996, the court vacated the Board's order. On July 31, 1996, the full court granted the Board's Liberty Agency, Inc. suggestion for rehearing en banc, and vacated the April 23 Kirk, Colorado panel decision. In re Subpoena Duces Tecum, Misc. No. 95-06 (D.D.C., filed Written Agreement dated November 18, 1993; terminated January 6, 1995). Action to enforce subpoena seeking pre- August 13, 1996. decisional supervisory documents sought in connection with an action by Bank of New England Corporation's trustee in First FSB Bancshares, Inc. bankruptcy against the Federal Deposit Insurance Corpora- Mt. Calm, Texas tion. The Board filed its opposition on January 20, 1995. Oral argument on the motion was held July 14, 1995. Written Agreement dated February 18, 1994; terminated Board of Governors v. Pharaon, No. 91-CIV-6250 (S.D. New August 23, 1996. York, filed September 17, 1991). Action to freeze assets of individual pending administrative adjudication of civil First Security Banshares, Inc. money penalty assessment by the Board. On September 17, Lake Park, Iowa 1991, the court issued an order temporarily restraining the transfer or disposition of the individual's assets. Written Agreement dated January 23, 1995; terminated September 26, 1996. FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD Citizens Bank OF GOVERNORS BankS outh Corporation First Chattanooga Corporation Peter R. Nardin All of Lawton, Oklahoma New York Branch of Credit Suisse Written Agreements dated August 27, 1992; terminated Zurich, Switzerland October 4, 1996. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 Financial and Business Statistics A3 GUIDE TO TABULAR PRESENTATION Federal Finance A25 Federal fiscal and financing operations DOMESTIC FINANCIAL STATISTICS A26 U.S. budget receipts and outlays A27 Federal debt subject to statutory limitation Money Stock and Bank Credit A27 Gross public debt of U.S. Treasury— Types and ownership A4 Reserves, money stock, liquid assets, and debt A28 U.S. government securities measures dealers—Transactions A5 Reserves of depository institutions, Reserve Bank A29 U.S. government securities dealers— credit Positions and financing A6 Reserves and borrowings—Depository A30 Federal and federally sponsored credit institutions agencies—Debt outstanding A6 Selected borrowings in immediately available funds—Large member banks Securities Markets and Corporate Finance Policy Instruments A31 New security issues—Tax-exempt state and local governments and corporations A7 Federal Reserve Bank interest rates A32 Open-end investment companies—Net sales A8 Reserve requirements of depository institutions and assets A9 Federal Reserve open market transactions A32 Corporate profits and their distribution A3 3 Domestic finance companies—Assets and Federal Reserve Banks liabilities, and consumer, real estate, and business A10 Condition and Federal Reserve note statements credit All Maturity distribution of loan and security holdings Real Estate A34 Mortgage markets Monetary and Credit Aggregates A35 Mortgage debt outstanding A12 Aggregate reserves of depository institutions and monetary base Consumer Installment Credit A13 Money stock, liquid assets, and debt measures A15 Deposit interest rates and amounts outstanding— A36 Total outstanding commercial and BIF-insured banks A36 Terms A16 Bank debits and deposit turnover Flow of Funds Commercial Banking Institutions A37 Funds raised in U.S. credit markets A17 Assets and liabilities, Wednesday figures A39 Summary of financial transactions A40 Summary of credit market debt outstanding A41 Summary of financial assets and liabilities Weekly Reporting Commercial Banks— Assets and liabilities A19 Large reporting banks DOMESTIC NONFINANCIAL STATISTICS A21 Branches and agencies of foreign banks Selected Measures Financial Markets A42 Nonfinancial business activity— A22 Commercial paper and bankers dollar Selected measures acceptances outstanding A42 Labor force, employment, and unemployment A22 Prime rate charged by banks on short-term A43 Output, capacity, and capacity utilization business loans A44 Industrial production—Indexes and gross value A23 Interest rates—money and capital markets A46 Housing and construction A24 Stock market—Selected statistics A47 Consumer and producer prices Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • December 1996 DOMESTIC NONFINANCIAL STATISTICS- A56 Banks' own claims on unaffiliated foreigners CONTINUED A57 Claims on foreign countries— Combined domestic offices and foreign branches Selected Measures—Continued Reported by Nonbanking Business A48 Gross domestic product and income Enterprises in the United States A49 Personal income and saving A58 Liabilities to unaffiliated foreigners A59 Claims on unaffiliated foreigners INTERNATIONAL STATISTICS Securities Holdings and Transactions Summary Statistics A60 Foreign transactions in securities A50 U.S. international transactions—Summary A61 Marketable U.S. Treasury bonds and A51 U.S. foreign trade notes—Foreign transactions A51 U.S. reserve assets A51 Foreign official assets held at Federal Reserve Interest and Exchange Rates Banks A52 Selected U.S. liabilities to foreign official A61 Discount rates of foreign central banks institutions A61 Foreign short-term interest rates A62 Foreign exchange rates Reported by Banks in the United States A52 Liabilities to and claims on foreigners A63 GUIDE TO STATISTICAL RELEASES AND A53 Liabilities to foreigners SPECIAL TABLES A55 Banks' own claims on foreigners A56 Banks' own and domestic customers' claims on foreigners A64 INDEX TO STATISTICAL TABLES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

A4 Domestic Nonfinancial Statistics • December 1996 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1995 1996 1996 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q4 Ql Q2 Q3 May June July Aug.r Sept. Reserves of depository institutions2 1 Total -6.9 -7.9 -6.4 -16.4 -20.8 -2.5 -20.3 -20.9 -21.0 2 Required -7.7 -8.5 -5.7 -16.6 -15.4 -9.1 -18.8 -19.0 -23.3 3 Nonborrowed -6.4 -6.5 -7.6 -17.6 -21.6 -8.3 -20.0 -20.3 -21.9 4 Monetary base" 2.7 1.5 2.1 5.8 1.0 5.7 7.6 6.2 4.5 Concepts of money, liquid assets, and debt4 5 Ml -5.1 -2.7 -.7 -6.9 -6.8 -.5 -8.9r -9.6 -8.4 6 M2 4.1 5.1' 3.8r 2.8 -2.0 5.3 1.7r 3.9 3.4 7 M3 4.6 1.0' 5.r 4.0 2.4r 4.4r 2.5r 4.9 7.4 8 L 6.0 5.0 5.3r n.a. -1.2' 5.7 3.r 6.5 n.a. 9 Debt 4.7 5.0 5.6 n.a. 4.6 5.0 5.2r 3.4 n.a. Nontransaction components 10 In M25 8.4 9.4r 5.1' 6.9 .0 7.7 6.3r 9.6 8.3 11 In M3 only6 6.4 12.3 10.0r 8.7 19.6r i.r 5.3 8.6 22.6 Time and savings deposits Commercial banks 12 Savings, including MMDAs 13.1 22.6 12.7 11.6 4.1 12.3 9.7 17.5 10.4 13 Small time7 4.8 2.5 -2.9 3.5 -2.9 .4' 5.4r 5.8 5.4 14 Large time8'9 19.5 8.0 17.3 17.0 20.3 18.9 16.4r 10.3 23.4 Thrift institutions 15 Savings, including MMDAs -2.8 -.3 8.1 .0 5.2 2.9 -.3 -4.9 -.7 16 Small time7 4.9 -2.3 -3.2 -.4 -2.4 -3.1 -2.7 4.4 4.1 17 Large time8 8.4 6.4 -3.0 8.3 -9.5 4.8 12.7 7.9 20.3 Money market mutual funds 18 Retail 16.9 13.3r 9.4r 13.6 -5.0 20. r i3. r 14.9 17.4 19 Institution-only 10.3 27.9 8.7 18.6 -10.3 29.1 16.8 20.4 25.7 Repurchase agreements and Eurodollars 20 Repurchase agreements10 -14.6 1.4 4.9 -15.9 80.0 -70.7 -24.2 -10.7 18.8 21 Eurodollars10 -6.7 17.0 7.4r -.3 1.2' 6.2r —17.2r 7.5 21.1 Debt components4 22 Federal 2.3 3.0 4.7 n.a. 2.0 2.1 6.0 4.5 n.a. 23 Nonfederal 5.6 5.7 5.9r n.a. 5.5 6.0 4.9r 3.1 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 %itial 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 daily figures Average of daily figures for week ending on date indicated July Aug. Sept. Aug. 14 Aug. 21 Aug. 28 Sept. 4 Sept. 11 Sept. 18 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 425,069r 427,377 424,562r 425,324r 428,176 428,087 426,002 U.S. government securities2 2 Bought outright—System account 383,166 385,637 387,118 384,392 387,926 387,238 387,122 387,539 386,917 3 Held under repurchase agreements 5,677 3,734 4,540 3,044 2,189 2,622 4,993 3,974 4,014 Federal agency obligations 4 Bought outright 2,359 2,336 2,319 2,336 2,336 2,336 2,336 2,329 2,311 5 6 Ac H ce e p ld ta n u c n e d s e r repurchase agreements 4490 8990 8240 7380 5150 1,3000 1,3090 1,7590 2370 Loans to depository institutions 7 Adjustment credit 92 17 95 11 6 35 141 32 15 8 Seasonal credit 2850 3110 3100 2950 3190 3370 324 0 2910 3110 9 Extended credit 10 Float 470 460r 595 345 494r 480r 712 986 549 11 Other Federal Reserve assets 31,314 31,674 31,577 32,703 30,777 30,975 31,238 31,178 31,648 12 Gold stock 11,050 11,050 11,050 11,050 11,050 11,050 11,050 11,050 11,050 13 Special drawing rights certificate account 10,168 9,718 9,718 9,718 9,718 9,718 9,718 9,718 9,718 14 Treasury currency outstanding 24,543 24,606 24,666 24,595 24,609 24,623 24,637 24,651 24,665 ABSORBING RESERVE FUNDS 15 Currency in circulation 428,381 429,507 431,562 429,673 429,499 429,179 432,427 433,324 431,638 16 Treasury cash holdings 269 268 282 268 268 270 277 278 284 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,304 5,107 6,139 4,781 5,129 5,272 5,347 4,669 5,754 18 Foreign 180 186 176 186 181 194 172 173 173 19 Service-related balances and adjustments .. 6,228 6,360r 6,379 6,312 6,367 6,495 6,262 6,301 6,288 20 Other 318 311 357 305 324 309 313 351 366 21 Other Federal Reserve liabilities and capital 13,391 13,993 14,088 13,786 13,842 14,098 14,016 13,914 14,059 22 Reserve balances with Federal Reserve Banks 15,503 14,71 r 13,827 13,917 14,330r 14,898r 14,767 14,496 12,873 End-of-month figures Wednesday figures July Aug. Sept. Aug. 14 Aug. 21 Aug. 28 Sept. 4 Sept. 11 Sept. 18 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 436,332 426,686r 428,167 426,917 425,141r 430,826r 426,652 U.S. government securities2 2 Bought outright—System account 382,378 386,955 383,910 385,806 387,269 386,478 387,506 387,166 386,766 3 Held under repurchase agreements 15,458 4,374 7,014 4,670 3,310 7,572 3,195 7,400 4,910 Federal agency obligations 4 Bought outright 2,336 2,336 2,309 2,336 2,336 2,336 2,311 2,311 5 Held under repurchase agreements 2820 1,2380 1,3380 0 6650 1,7780 1,4950 2,4400 2080 6 Acceptances Loans to depository institutions 7 Adjustment credit 1,423 10 1,360 28 12 42 321 77 35 8 Seasonal credit 2950 3290 2940 3100 3280 3410 3040 2950 3170 9 Extended credit 10 Float 510 220r 640 -99 252r 1,039r 1,865 714 267 11 Other Federal Reserve assets 33,649 31,224r 31,302 32,967 31,239 31,009 31,345 31,837 12 Gold stock 11,050 11,050 11,050 11,050 11,050 11,050 11,050 11,050 11,050 13 Special drawing rights certificate account 10,168 9,718 9,718 9,718 9,718 9,718 9,718 9,718 9,718 14 Treasury currency outstanding 24,567 24,637 24,693 24,595 24,609 24,623 24,637 24,651 24,665 ABSORBING RESERVE FUNDS 15 Currency in circulation 428,715 432,045 430,321 430,353 429,799 431,017 434,135 433,215 431,463 16 Treasury cash holdings 261 277 286 268 268 277 277 283 285 Deposits, other than reserve balances, with Federal Reserve Banks 1 1 7 8 T Fo re r a ei s g u n r y 6,8 1 3 6 6 6 5,1 1 4 7 9 1 7, 2 7 6 0 5 0 5,4 1 4 7 9 7 5,8 1 7 8 9 3 5,8 2 5 1 8 6 5,8 1 2 7 5 1 5,015640 8,2 1 1 6 5 5 19 Service-related balances and adjustments .. 6,281 6,262r 6,541 6,312 6,367 6,495 6,262 6,301 6,288 20 Other 278 293 368 308 322 296 357 351 371 21 Other Federal Reserve liabilities and capital , 14,817 14,007 13,744 13,662 13,581 13,953 13,641 13,953 13,811 22 Reserve balances with Federal Reserve Banks' 24,761 13,887r 14,404 15,752 14,120r 18,105r 12,768 17,850 11,486 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 3. Excludes required clearing balances and adjustments to compensate for float. 2. Includes securities loaned—fully guaranteed by US. government securities pledged with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • December 1996 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1993 1994 1995 1996 Dec. Dec. Dec. Mar. Apr. May June July Aug.' Sept. 1 Reserve balances with Reserve Banks- 29,374 24,658 20.440 18,426 19,181 16,753 16,590 15,392 14,761 13,693 2 Total vault cash3 36,818 40,378 42,088 40,892 40,889 41,146 41,979 42,773 42,517 43,639 3 Applied vault cash4 33,484 36.682 37,460 36,458 36,688 36,382 37,095 37,451 36,880 37,308 4 Surplus vault cash5 3,334 3,696 4,628 4,435 4,201 4,764 4,883 5,322 5,637 6,331 5 Total reserves6 62,858 61,340 57,900 54,884 55,869 53,135 53,685 52,843 51,642 51,001 6 Required reserves 61,795 60,172 56,622 53,747 54,750 52,275 52,535 51,778 50,681 49,957 7 Excess reserve balances at Reserve Banks7 1,063 1,168 1,278 1,137 1,120 860 1,150 1,065 961 1,044 8 Total borrowings at Reserve Banks8 82 209 257 21 91 127 386 368 334 368 9 Seasonal borrowings 31 100 40 10 34 105 192 284 309 306 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 1996 June 5 June 19 July 3 July 17 July 31 Aug. 14 Aug. 28r Sept. IT Sept. 25 Oct. 9 1 Reserve balances with Reserve Banks2 16,341 16,565 16,735 16,049 14,447 14,940 14,612 14,623 13,324 12,682 2 Total vault cash3 40,879 42,824 41,403 42.347 43.492 43.326 41,604 43,007 44,028 43,941 3 Applied vault cash4 36,117 37,747 36,712 37,320 37,740 37,604 36,114 37,083 37,505 37,253 4 Surplus vault cash5 4.762 5,078 4,692 5,027 5,752 5.722 5,490 5,924 6,523 6,688 5 Total reserves6 52,458 54,311 53,447 53,369 52,187 52,543 50,726 51,705 50,829 49,935 6 Required reserves 51,743 53.234 52,007 52,543 50.964 51,514 49,835 50,741 49,745 48,829 7 Excess reserve balances at Reserve Banks7 715 1,078 1,439 826 1.223 1,029 891 964 1,084 1,106 8 Total borrowings at Reserve Banks8 156 469 386 290 442 306 349 394 335 402 9 Seasonal borrowings 138 173 241 273 304 290 328 308 317 274 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 1. Data in this table also appear in the Board's H.3 (502) weekly statistical release. For 5. Total vault cash (line 2) less applied vault cash (line 3). ordering address, see inside front cover. Data are not break-adjusted or seasonally adjusted. 6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash 2. Excludes required clearing balances and adjustments to compensate for float and (line 3). includes other off-balance-sheet "as-of" adjustments. 7. Total reserves (line 5) less required reserves (line 6). 3. Total "lagged" vault cash held by depository institutions subject to reserve 8. Also includes adjustment credit. requirements. Dates refer to the maintenance periods during which the vault cash may be used 9. Consists of borrowing at the discount window under the terms and conditions estabto satisfy reserve requirements. The maintenance period for weekly reporters ends sixteen lished for the extended credit program to help depository institutions deal with sustained days after the lagged computation period during which the vault cash is held. Before Nov. 25, liquidity pressures. Because there is not the same need to repay such borrowing promptly as 1992, the maintenance period ended thirty days after the lagged computation period. with traditional short-term adjustment credit, the money market effect of extended credit is 4. All vault cash held during the lagged computation period by "bound" institutions (that similar to that of nonborrowed reserves. is, those whose required reserves exceed their vault cash) plus the amount of vault cash applied during the maintenance period by "nonbound" institutions (that is, those whose vault cash exceeds their required reserves) to satisfy current reserve requirements. 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Banks1 Millions of dollars, averages of daily figures 1996, week ending Monday SSoouurrccee aanndd mmaattuurriittyy Aug. 5 Aug. 12 Aug. 19 Aug. 26 Sept. 2 Sept. 9 Sept. 16 Sept. 23 Sept. 30 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 80,201 78,496 77,921 72,303 77,908 78,951 74,681 72,796 71,817 2 For all other maturities 13,630 14.649 14,729 16,804 16,122 15,767 16,053 14,397 15,154 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 21,036 18,160 17,835 15,445 15,321 15,949 15,802 18,816 15,419 4 For all other maturities 18,788 19.797 19,880 22,697 22,504 20,546 20,582 19,778 19,277 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 14,777 12,955 15,474 13,056 14,477 14,819 16,969 19,091 17,772 6 For all other maturities 38,984 39,498 34,426 35,857 35,117 34,640 34,492 36,713 36,037 All other customers 7 For one day or under continuing contract 37,215 39,384 39,714r 37,629r 38,622 38,220 39,369 40,237 40,007 8 For all other maturities 13,154 13,285 12,907 13,672r 14,129 14.166 13,721 13,480 13,730 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 69,859 63,772 68,417 70,265 72,693 71,494 65,199 64,451 64,758 10 To all other specified customers2 22,020 21,308 20,455 19,724 20,725 20,800 23,966 23,507 23,324 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

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk 11 O /1 n / 96 Effective date Previous rate 11 O /1 n / 96 Effective date Previous rate 11 O /1 n / 96 Effective date Previous rate Boston 5.00 2/1/96 5.25 5.30 10/24/96 5.35 5.80 10/24/96 5.85 New York 1/31/96 Philadelphia 1/31/96 Cleveland 1/31/96 Richmond 2/1/96 Atlanta 1/31/96 Chicago 2/1/96 St. Louis 2/5/96 Minneapolis 1/31/96 Kansas City 2/1/96 Dallas 1/31/96 San Francisco 5.00 1/31/96 5.25 5.30 10/24/96 5.35 5.80 10/24/96 5.85 Range of rates for adjustment credit in recent years4 Range (or F.R. Bank Range (or F.R. Bank Range (or F.R. Bank level)—All of Effective date level)—All of Effective date level)—All of F.R. Banks N.Y. F.R. Banks N.Y. F.R. Banks N.Y. In effect Dec. 31, 1977 1981—Nov. 2 13-14 13 1988—Aug. 9 6-6.5 6.5 6 13 13 11 6.5 6.5 1978—Jan. 9 6-6.5 6.5 Dec. 4 12 12 20 6.5 6.5 1989—Feb. 24 6.5-7 7 May 11 6.5-7 7 1982—July 20 11.5-12 11.5 27 7 7 12 7 7 23 11.5 11.5 July 3 7-7.25 7.25 Aug. 2 11-11.5 11 1990—Dec. 19 6.5 6.5 10 7.25 7.25 3 11 11 Aug. 21 7.75 7.75 16 10.5 10.5 1991—Feb. 1 6-6.5 6 Sept. 22 8 8 27 10-10.5 10 4 6 6 Oct. 16 8-8.5 8.5 30 10 10 Apr. 30 5.5-6 5.5 20 8.5 8.5 Oct. 12 9.5-10 9.5 May 2 5.5 5.5 Nov. 1 8.5-9.5 9.5 13 9.5 9.5 Sept. 13 5-5.5 5 3 9.5 9.5 Nov. 22 9-9.5 9 17 5 5 26 9 9 Nov. 6 4.5-5 4.5 1979—July 20 10 10 Dec. 14 8.5-9 9 7 4.5 4.5 Aug. 17 10-10.5 10.5 15 8.5-9 8.5 Dec. 20 3.5-4.5 3.5 20 10.5 10.5 17 8.5 8.5 24 3.5 3.5 Sept. 19 10.5-11 11 21 11 11 1984—Apr. 9 8.5-9 9 1992—July 2 3-3.5 3 Oct. 8 11-12 12 13 9 9 7 3 3 10 12 12 Nov. 21 8.5-9 8.5 26 8.5 8.5 1994—May 17 3-3.5 3.5 1980—Feb. 15 12-13 13 Dec. 24 8 8 18 3.5 3.5 19 13 13 Aug. 16 3.5^1 4 May 29 12-13 13 1985—May 20 7.5-8 7.5 18 4 4 30 12 12 24 7.5 7.5 Nov. 15 4-4.75 4.75 June 13 11-12 11 17 4.75 4.75 July 2 1 8 6 101-11 1 1 11 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 Sept. 26 11 11 23. 6.5 6.5 Nov. 17 12 12 July 11 6 6 1996—Jan. 31 5.00-5.25 5.00 Dec. 5 12-13 13 Aug. 21 5.5-6 5.5 Feb. 5 5.00 5.00 8 13 13 22 5.5 5.5 1981—May 5 13-14 14 In effect Nov. 1, 1996 5.00 5.00 14 14 1987—Sept. 4 5.5-6 6 11 6 6 1. Available on a short-term basis to help depository institutions meet temporary needs for of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a funds that cannot be met through reasonable alternative sources. The highest rate established flexible rate somewhat above rates charged on market sources of funds is charged. The rate for loans to depository institutions may be charged on adjustment credit loans of unusual size ordinarily is reestablished on the first business day of each two-week reserve maintenance that result from a major operating problem at the borrower's facility. period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis 2. Available to help relatively small depository institutions meet regular seasonal needs for points. funds that arise from a clear pattern of intrayearly movements in their deposits and loans and 4. For earlier data, see the following publications of the Board of Governors: Banking and that cannot be met through special industry lenders. The discount rate on seasonal credit takes Monetary Statistics, 1914-1941, and 1941-1970; and the Annual Statistical Digest, 1970into account rates charged by market sources of funds and ordinarily is reestablished on the 1979. first business day of each two-week reserve maintenance period; however, it is never less than In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment-credit the discount rate applicable to adjustment credit. borrowings by institutions with deposits of $500 million or more that had borrowed in 3. May be made available to depository institutions when similar assistance is not successive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge was reasonably available from other sources, including special industry lenders. Such credit may in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 percent was reimposed be provided when exceptional circumstances (including sustained deposit drains, impaired on Nov. 17, 1980; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to access to money market funds, or sudden deterioration in loan repayment performance) or 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, practices involve only a particular institution, or to meet the needs of institutions experiencing and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the difficulties adjusting to changing market conditions over a longer period (particularly at times surcharge was changed from a calendar quarter to a moving thirteen-week period. The of deposit disintermediation). The discount rate applicable to adjustment credit ordinarily is surcharge was eliminated on Nov. 17, 1981. charged on extended-credit loans outstanding less than thirty days; however, at the discretion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • December 1996 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Requirement TTyyppee ooff ddeeppoossiitt Percentage of Effective date deposits 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. The exemption applies only to previous reserve requirements, see earlier editions of the Annual Report or the Federal accounts that would be subject to a 3 percent reserve requirement. Effective Dec. 19, 1995, Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions the exemption was raised from $4.2 million to $4.3 million. 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, or telephone or preauthorized transfers for the purpose of making payments to third with an original maturity of less than 1 '/> years was reduced from 3 percent to 1 'A percent for persons or others. However, accounts subject to the rules that permit no more than six the maintenance period that began Dec. 13, 1990, and to zero for the maintenance period that preauthorized, automatic, or other transfers per month (of which no more than three may be began Dec. 27, 1990. For institutions that report quarterly, the reserve requirement on by check, draft, debit card, or similar order payable directly to third parties) are savings nonpersonal time deposits with an original maturity of less than 1 ]/l years was reduced from 3 deposits, not transaction accounts. percent to zero on Jan. 17, 1991. 3. The Monetary Control Act of 1980 requires that the amount of transaction accounts The reserve requirement on nonpersonal time deposits with an original maturity of 1 x/l against which the 3 percent reserve requirement applies be modified annually by 80 percent of years or more has been zero since Oct. 6, 1983. 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 the reserve requirement on nonpersonal time million to $52.0 million. deposits with an original maturity of less than 1V5 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

Policy Instruments A9 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1996 TTyyppee ooff ttrraannssaaccttiioonn 11999933 11999944 11999955 aanndd mmaattuurriittyy Feb. Mar. Apr. May June July Aug. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 17,717 17,484 10,932 0 0 88 0 33,,331111 00 00 2 Gross sales 0 0 0 0 0 0 0 0 0 0 3 Exchanges 332,229 376,277 398,487 39,332 30,556 32,218 40,467 31,726 32,368 34,271 4 Redemptions 0 0 900 0 0 0 0 0 0 0 Others within one year 5 Gross purchases 1,223 1,238 390 0 0 35 0 0 0 1,240 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shifts 31,368 0 0 2,746 0 3,511 5,107 0 2,807 2,780 8 Exchanges -36,582 -21,444 0 -7,575 0 -4,824 -5,448 0 -4,415 -3,580 9 Redemptions 0 0 0 0 0 787 0 0 0 0 One to five years 10 Gross purchases 10,350 9,168 4,966 0 0 1,899 0 0 0 1,279 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shifts -27,140 -6,004 0 -1,908 0 -3,511 -4,049 0 -2,807 -1,409 13 Exchanges 0 17,801 0 5,175 0 4,824 3,748 0 3,694 1,780 Five to ten years 14 Gross purchases 4,168 3,818 1,239 0 0 479 0 0 0 229977 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shifts 0 -3,145 0 -818 0 0 -1,058 0 0 -1,371 17 Exchanges 0 2,903 0 1,500 0 0 1,700 0 721 900 More than ten years 18 Gross purchases 3,457 3,606 3,122 0 0 1,065 0 0 0 900 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shifts 0 -918 0 -20 0 0 0 0 0 0 21 Exchanges 0 775 0 900 0 0 0 0 0 900 All maturities 22 Gross purchases 36,915 35,314 20,649 0 0 3,566 0 3,311 0 3,716 23 Gross sales 0 0 0 0 0 0 0 0 0 0 24 Redemptions 767 2,337 2,376 0 0 787 0 0 0 0 Matched transactions 25 Gross purchases 1,475,941 1,700,836 2,197,736 274,290 251,623 253,482 259,135 248,534 267,438 265,397 26 Gross sales 1,475,085 1,701,309 2,202,030 275,979 251,086 251,510 259,595 249,277 268,975 264,536 Repurchase agreements 27 Gross purchases 475,447 309,276 331,694 6,230 31,602 48,869 30,688 4433,,004488 4466,,115511 4455,,220022 28 Gross sales 470,723 311,898 328,497 6,230 27,706 50,345 27,404 41,666 37,779 56,286 29 Net change in U.S. Treasury securities 41,729 29,882 17,175 -1,689 4,433 3,274 2,824 3,950 6,836 -6,508 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 0 108 82 16 40 52 0 Repurchase agreements 33 Gross purchases 35,063 52,696 36,851 765 5,640 2,372 5,722 5,138 3,145 8,500 34 Gross sales 34,669 52,696 36,776 765 4,640 3,372 4,372 6,488 2,863 7,544 35 Net change in federal agency obligations -380 -1,002 -1,228 0 892 -1,082 1,334 -1,390 231 956 36 Total net change in System Open Market Account ... 41,348 28,880 15,948 -1,689 5,325 2,192 4,158 2,560 7,066 -5,552 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

A10 Domestic Nonfinancial Statistics • December 1996 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements' Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1996 1996 Aug. 28 Sept. 4 Sept. 11 Sept. 18 Sept. 25 July 31 Aug. 31 Sept. 30 Consolidated condition statement ASSETS 1 Gold certificate account 11,050 11,050 11,050 11,050 11,050 11,050 11,050 11,050 2 Special drawing rights certificate account 9,718 9,718 9,718 9,718 9,718 10,168 9,718 9,718 3 Coin 553 531 562 574 584 521 550 596 Loans 4 To depository institutions 383 625 372 352 385 1,718 339 1,654 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 2,336 2,336 2,311 2,311 2,309 22,,333366 2,336 22,,330099 8 Held under repurchase agreements 1,778 1,495 2,440 208 100 282 1,238 1,338 9 Total U.S. Treasury securities 394,050 390,701 394,566 391,676 396,783 397,836 391,329 390,924 10 Bought outright2 386,478 387,506 387,166 386,766 389,613 382,378 386,955 383,910 11 Bills 186,217 187,245 186,906 186,506 189,352 185,833 186,694 183,650 12 Notes 152,392 152,392 152,392 152,392 152,392 150,102 152,392 152,392 13 Bonds 47,869 47,869 47,869 47,869 47,869 46,443 47,869 47,869 14 Held under repurchase agreements 7,572 3,195 7,400 4,910 7,170 15,458 4,374 7,014 15 Total loans and securities 398,547 395,157 399,690 394,548 399,577 402,173 395,242 396,226 16 Items in process of collection 5,923 10,198 6,592 6,731 5,788 6,143 4,100 2,521 17 Bank premises 1,198 1,197 1,202 1,205 1,208 1,190 1,197 1,207 Other assets 18 Denominated in foreign currencies3 20,218 20,039 20,048 20,056 20,064 20,183 20,036 19,484 19 All other4 9,919 9,863 10,121 10,679 10,898 12,349 9,997 10,679 20 Total assets 457,126 457,754 458,983 454,561 458,886 463,777 451,890 451,481 LIABILITIES 21 Federal Reserve notes 407,223 410,306 409,409 407,657 406,999 404,930 408,235 406,510 22 Total deposits 30,933 25,521 29,936 27,359 32,388 38,332 25,846 29,331 23 Depository institutions 24,562 19,169 24,371 18,608 25,008 31,052 20,233 20,997 24 U.S. Treasury—General account 5,858 5,825 5,054 8,215 6,846 6,836 5,149 7,700 25 Foreign—Official accounts 216 171 160 165 165 166 171 265 26 Other 296 357 351 371 369 278 293 368 27 Deferred credit items 5,018 8,286 5,685 5,735 5,398 5,697 3,802 1,897 28 Other liabilities and accrued dividends5 4,524 4,397 4,442 4,273 4,584 5,156 4,585 4,515 29 Total liabilities 447,698 448,510 449,471 445,023 449,369 454,116 442,468 442,252 CAPITAL ACCOUNTS 30 Capital paid in 4,519 4,519 4,541 4,544 4,549 4,437 4,520 4,535 31 Surplus 3,966 3,966 3,966 3,966 3,966 3,966 3,966 3,958 32 Other capital accounts 943 759 1,004 1,029 1,002 1,257 936 736 33 Total liabilities and capital accounts 457,126 457,754 458,983 454,561 458,886 463,777 451,890 451,481 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 564,101 580,109 583,427 579,080 585,105 559,611 567,974 559900,,773300 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 526,560 527,870 529,658 530,932 532,507 521,387 527,475 533,392 36 LESS: Held by Federal Reserve Banks 119,337 117,564 120,249 123,275 125,507 116,457 119,240 126,882 37 Federal Reserve notes, net 407,223 410,306 409,409 407,657 406,999 404,930 408,235 406,510 Collateral held against notes, net 38 Gold certificate account 11.050 11,050 11,050 11,050 11,050 11,050 11,050 11,050 39 Special drawing rights certificate account 9,718 9,718 9,718 9,718 9,718 10,168 9,718 9,718 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 386,455 389,538 388,641 386,889 386,231 383,713 387,467 385,742 42 Total collateral 407,223 410,306 409,409 407,657 406,999 404,930 408,235 406,510 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

Federal Reserve Banks All 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 1996 Aug. 28 Sept. 4 Sept. 11 Sept. 18 Sept. 25 July 31 Aug. 31 Sept. 30 1 Total loans 383 625 372 352 385 568 373 1,654 2 Within fifteen days' 343 508 137 324 353 231 512 1,508 3 Sixteen days to ninety days 40 117 235 28 32 57 43 145 4 Total U.S. Treasury securities 394,050 390,701 394,566 391,676 396,783 397,836 386,955 1.83,910 5 Within fifteen days' 17,481 17,452 21,043 19,801 20,000 28,057 3,250 7,494 6 Sixteen days to ninety days 92,893 89,039 89,313 93,115 93,122 86,783 92,893 91,276 7 Ninety-one days to one year 114,655 115,174 115,174 109,724 114,624 118,032 121,790 115,601 8 One year to five years 95,012 95,027 95,027 95,027 95,022 92,581 95,012 95,531 9 Five years to ten years 33,653 33,653 33,653 33,653 33,653 33,662 33,653 33,653 10 More than ten years 40,356 40,356 40,356 40,356 40,356 38,721 40,356 40,356 11 Total federal agency obligations 4,114 3,831 4,751 2,519 2,409 2,618 2,336 2,309 12 Within fifteen days' 2,100 1,520 2,442 445 435 438 322 335 13 Sixteen days to ninety days 564 891 901 666 566 722 564 566 14 Ninety-one days to one year 484 455 477 477 477 492 484 477 15 One year to five years 475 475 440 440 440 475 475 440 16 Five years to ten years 467 467 467 467 467 467 467 467 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

A12 Domestic Nonfinancial Statistics • December 1996 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 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 . Feb. Mar. Apr. May June July Aug/ Sept. • • Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 54.37 60.52 59.36 56.36 54.85 55.73 55.18 54.23 54.11 53.20 52.27 51.36 2 Nonborrowed reserves4 54.24 60.44 59.16 56.11 54.81 55.71 55.09 54.10 53.73 52.83 51.94 50.99 3 Nonborrowed reserves plus extended credit5 54.24 60.44 59.16 56.11 54.81 55.71 55.09 54.10 53.73 52.83 51.94 50.99 4 Required reserves 53.21 59.46 58.20 55.09 54.00 54.59 54.06 53.37 52.96 52.13 51.31 50.31 5 Monetary base6 351.24 386.88 418.72 435.01 433.67 436.87 436.64 437.01 439.08 441.85 444.14 445.82 Not seasonally adjusted 6 Total reserves7 56.06 62.37 61.13 58.02 53.80 54.97 56.00 53.29 53.87 53.05 51.88 51.27 7 Nonborrowed reserves 55.93 62.29 60.92 57.76 53.77 54.95 55.90 53.16 53.48 52.69 51.55 50.90 8 Nonborrowed reserves plus extended credit5 55.93 62.29 60.92 57.76 53.77 54.95 55.90 53.16 53.48 52.69 51.55 50.90 9 Required reserves8 54.90 61.31 59.96 56.74 52.95 53.84 54.88 52.43 52.72 51.99 50.92 50.23 10 Monetary base9 354.55 390.59 422.51 439.03 430.29 434.86 437.12 436.13 439.88 443.19 444.52 445.49 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves1' 56.54 62.86 61.34 57.90 53.75 54.88 55.87 53.14 53.69 52.84 51.64 51.00 12 Nonborrowed reserves 56.42 62.78 61.13 57.64 53.72 54.86 55.78 53.01 53.30 52.48 51.31 50.63 13 Nonborrowed reserves plus extended credit5 56.42 62.78 61.13 57.64 53.72 54.86 55.78 53.01 53.30 52.48 51.31 50.63 14 Required reserves 55.39 61.80 60.17 56.62 52.90 53.75 54.75 52.28 52.54 51.78 50.68 49.96 15 Monetary base12 360.90 397.62 427.25 444.45 436.26 440.77 442.96 442.17 445.94 449.26 450.70 451.66 16 Excess reserves1^ 1.16 1.06 1.17 1.28 .85 1.14 1.12 .86 1.15 1.07 .96 1.04 17 Borrowings from the Federal Reserve .12 .08 .21 .26 .04 .02 .09 .13 .39 .37 .33 .37 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

Monetary and Credit Aggregates A13 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1996r IItteemm 1 D 9 e 9 c 2 . 1 D 9 e 9 c 3 . D 19 e 9 c 4 . D 19 e 9 c 5 . June July Aug. Sept. Seasonally adjusted Measures2 1 Ml 1,024.4 1,128.6 1,148.7 1,124.9 1,116.7 1,108.4 1,099.5 1,091.8 2 M2 3,438.7 3,494.0 3,509.2 3,657.4 3,737.5 3,742.9 3,755.0 3,765.6 3 M3 4,187.1 4,249.6 4,319.1 4,570.5 4,710.3 4,720.0 4,739.1 4,768.2 4 L 5,075.6 5,164.5 5,302.8 5,679.8 5,823.7 5,838.6 5,870.2 n.a. 5 Debt 11,880.1 12,507.6 13,148.8 13,869.4 14,244.5 14,306.6 14,347.4 n.a. MI components 6 Currency3 292.9 322.4 354.9 373.2 379.4 382.6 385.0 387.4 7 Travelers checks4 8.1 7.9 8.5 8.9 8.6 8.5 8.4 8.4 8 Demand deposits 339.1 384.3 382.4 389.8 413.7 410.5 407.5 405.5 9 Other checkable deposits 384.2 414.0 402.9 353.0 315.0 306.8 298.7 290.5 Nontransaction components 10 In M27 2,414.3 2,365.4 2,360.5 2,532.6 2,620.8 2,634.5 2,655.5 2,673.8 11 In M3 only8 748.5 755.6 809.9 913.1 972.8 977.1 984.1 1,002.6 Commercial banks 12 Savings deposits, including MMDAs 754.1 785.0 751.9 775.0 838.2 845.0 857.3 864.7 13 Small time deposits9 509.3 470.3 505.3 578.3 575.0 577.6 580.4 583.0 14 Large time deposits1 ' 286.5 272.2 298.3 342.1 366.8 371.8 375.0 382.3 Thrift institutions 15 Savings deposits, including MMDAs 433.0 433.8 397.0 359.5 368.8 368.7 367.2 367.0 16 Small time deposits9 361.9 317.6 318.2 359.4 352.5 351.7 353.0 354.2 17 Large time deposits10 67.1 61.5 64.8 75.1 75.4 76.2 76.7 78.0 Money market mutual funds 18 Retail 356.0 358.7 388.1 460.3 486.3 491.6 497.7 550044..99 19 Institution-only 199.8 197.9 183.7 227.2 249.4 252.9 257.2 262.7 Repurchase agreements and Eurodollars 20 Repurchase agreements12 128.1 157.5 180.8 177.6 183.6 179.9 178.3 118811..11 21 Eurodollars12 66.9 66.3 82.3 91.1 97.6 96.2 96.8 98.5 Debt components 22 Federal debt 3,064.3 3,323.3 3,492.2 3,638.8 3,710.7 3,729.4 3,743.4 n.a. 23 Nonfederal debt 8,815.7 9,184.2 9,656.6 10,230.7 10,533.8 10,577.2 10,604.1 n.a. Not seasonally adjusted Measures2 24 Ml 1,046.0 1,153.7 1,174.2 1,150.7 1,112.8 1,108.5 1,095.4 1,089.3 25 M2 3,455.1 3,514.1 3,529.6 3,677.1 3,735.9 3,749.9 3,759.0 3,762.7 26 M3 4,205.1 4,271.2 4,340.9 4,591.6 4,707.6 4,722.2 4,745.1 4,762.9 5,102.9 5,194.1 5,332.3 5,709.3 5,814.9 5,835.8 5,873.3 n.a. 28 Debt 11,881.5 12,509.6 13,150.2 13,869.2 14,196.3 14,245.8 14,292.7 n.a. Ml components 29 Currency3 295.0 324.8 357.5 376.1 380.5 383.7 385.9 386.8 30 Travelers checks 7.8 7.6 8.1 8.5 8.9 9.1 9.0 8.8 31 Demand deposits 354.4 401.8 400.1 407.9 409.8 411.1 405.0 404.7 32 Other checkable deposits6 388.9 419.4 408.4 358.1 313.6 304.5 295.6 289.0 Nontransaction components 33 In M27 2,409.1 2,360.4 2,355.4 2,526.4 2,623.1 2,641.4 2,663.6 2,673.4 34 In M3 only8 750.0 757.1 811.3 914.5 971.7 972.3 986.1 1,000.3 Commercial banks 35 Savings deposits, including MMDAs 752.9 784.3 751.6 775.0 839.9 847.4 860.4 867.1 36 Small time deposits9 507.8 468.2 502.3 574.3 577.1 580.0 581.8 583.1 37 Large time deposits10' 11 286.0 272.0 298.1 342.0 367.5 370.2 375.8 383.1 Thrift institutions 38 Savings deposits, including MMDAs 432.4 433.4 396.9 359.5 369.5 369.7 368.5 368.0 39 Small time deposits9 360.9 316.1 316.3 356.9 353.8 353.1 353.8 354.2 40 Large time deposits 67.0 61.5 64.8 75.1 75.6 75.9 76.9 78.1 Money market mutual funds 41 Retail 355.1 358.3 388.2 460.6 482.9 491.1 499.1 501.1 42 Institution-only 201.1 199.4 185.5 229.4 244.5 250.2 256.9 258.0 Repurchase agreements and Eurodollars 43 Repurchase agreements12 127.2 156.6 179.6 176.2 187.2 180.5 179.3 182.0 44 Eurodollars'2 68.7 67.6 83.4 91.9 96.8 95.5 97.2 99.0 Debt components 45 Federal debt 3,069.8 3,329.5 3,499.0 3,645.9 3,698.1 3,708.3 3,730.9 n.a. 46 Nonfederal debt 8,811.7 9,180.1 9,651.2 10,223.3 10,498.2 10,537.5 10,561.8 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • December 1996 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) weekly these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term statistical release. Historical data starting in 1959 are available from the Money and Reserves Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve separately, and then adding this result to M3. System, Washington, DC 20551. Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial 2. Composition of the money stock measures and debt is as follows: sectors—the federal sector (U.S. government, not including government-sponsored enter- Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of prises or federally related mortgage pools) and the nonfederal sectors (state and local depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all governments, households and nonprofit organizations, nonfinancial corporate and nonfarm commercial banks other than those owed to depository institutions, the U.S. government, and noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and foreign banks and official institutions, less cash items in the process of collection and Federal corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of which are derived from the Federal Reserve Board's flow of funds accounts, are breakwithdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, adjusted (that is, discontinuities in the data have been smoothed into the series) and credit union share draft accounts, and demand deposits at thrift institutions. Seasonally month-averaged (that is, the data have been derived by averaging adjacent month-end levels). adjusted Ml is computed by summing currency, travelers checks, demand deposits, and 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depository OCDs, each seasonally adjusted separately. institutions. M2: Ml plus (1) savings deposits (including MMDAs), (2) small-denomination time 4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. deposits (time deposits—including retail RPs—in amounts of less than $100,000), and (3) Travelers checks issued by depository institutions are included in demand deposits. balances in retail money market mutual funds (money funds with minimum initial invest- 5. Demand deposits at commercial banks and foreign-related institutions other than those ments of less than $50,000). Excludes individual retirement accounts (IRAs) and Keogh owed to depository institutions, the U.S. government, and foreign banks and official institubalances at depository institutions and money market funds. Seasonally adjusted M2 is tions, less cash items in the process of collection and Federal Reserve float. calculated by summing savings deposits, small-denomination time deposits, and retail money 6. Consists of NOW and ATS account balances at all depository institutions, credit union fund balances, each seasonally adjusted separately, and adding this result to seasonally share draft account balances, and demand deposits at thrift institutions. adjusted Ml. 7. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more) money fund balances. issued by all depository institutions, (2) balances in institutional money funds (money funds 8. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities with minimum initial investments of $50,000 or more), (3) RP liabilities (overnight and term) (overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and issued by all depository institutions, and (4) Eurodollars (overnight and term) held by U.S. term) of U.S. addressees. residents at foreign branches of U.S. banks worldwide and at all banking offices in the United 9. Small time deposits—including retail RPs—are those issued in amounts of less than Kingdom and Canada. Excludes amounts held by depository institutions, the U.S. govern- $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are ment, money market funds, and foreign banks and official institutions. Seasonally adjusted subtracted from small time deposits. M3 is calculated by summing large time deposits, institutional money fund balances, RP 10. Large time deposits are those issued in amounts of $100,000 or more, excluding those liabilities, and Eurodollars, each seasonally adjusted separately, and adding this result to booked at international banking facilities. seasonally adjusted M2. 11. Large time deposits at commercial banks less those held by money market funds, L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury depository institutions, the U.S. government, and foreign banks and official institutions. securities, commercial paper, and bankers acceptances, net of money market fund holdings of 12. Includes both overnight and term. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A15 1.22 DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING Commercial and BIF-insured saving banks' 1996 IItteemm D 19 e 9 c 4 . D 19 e 9 c 5 . Jan. Feb. Mar.r Apr.r Mayr Juner July Aug. Sept. Interest rates (annual effective yields)2 INSURED COMMERCIAL BANKS 1 Negotiable order of withdrawal accounts 1.96 1.91 1.90 1.91 1.85 1.88 1.88 1.90 1.90R 1.92R 1.92 2 Savings deposits3 2.92 3.10 3.01 2.98 2.91 2.91 2.89 2.87 2.88 2.86R 2.84 Interest-bearing time deposits with balances of less than $100,000, by maturity 3 7 to 91 days 3.79 4.10 4.02 3.99 4.02 4.01 4.03 4.08 4.13R 4.17 4.11 4 92 to 182 days 4.44 4.68 4.57 4.45 4.49 4.51 4.51 4.55 4.59 4.61 4.61 5 183 days to 1 year 5.12 5.02 4.91 4.79 4.83 4.86 4.88 4.95 5.00 5.00 5.04 6 More than 1 year to 2l/2 years 5.74 5.17 5.03 4.89 4.94 5.03 5.10 5.18 5.25 5.25 5.29 7 More than 2 Y2 years 6.30 5.40 5.26 5.10 5.19 5.28 5.36 5.46 5.50R 5.50 5.54 BIF-INSURED SAVINGS BANKS4 8 Negotiable order of withdrawal accounts 1.94 1.91 1.85 1.84 1.83 1.84 1.81 1.80 1.81 1.81 1.83 9 Savings deposits3 2.87 2.98 2.95 2.92 2.86 2.85 2.84 2.85 2.88 2.86 2.84 Interest-bearing time deposits with balances of less than $100,000, by maturity 10 7 to 91 days 3.80 4.43 4.38 4.26 4.37 4.42 4.49 4.54 4.64 4.65 4.60 11 92 to 182 days 4.89 4.95 4.86 4.77 4.76 4.77 4.83 4.91 5.01 5.06 5.12 12 183 days to 1 year 5.52 5.18 5.06 4.91 4.89 4.91 4.96 5.02 5.09 5.26 5.33 13 More than 1 year to 2x/2 years 6.09 5.33 5.22 5.10 5.15 5.23 5.26 5.35 5.41 5.59 5.62 14 More than 2 Y2 years 6.43 5.46 5.34 5.24 5.24 5.32 5.38 5.51 5.60 5.80 5.82 Amounts outstanding (millions of dollars) INSURED COMMERCIAL BANKS 15 Negotiable order of withdrawal accounts 304,896 248,417 245,749 242,930 218,500 228,551 208,570 202,847 206,832R 192,577R 192,415 16 Savings deposits3 737,068 776,466 768,071 784,035 827,561 805,419 839,319 843,939 840,849R 866,712 859,443 17 Personal 580,438 615,113 612,321 623,110 661,686 639,848 668,788 672,174 667,009R 687,880R 680,289 18 Nonpersonal 156,630 161,353 155,750 160,925 165,875 165,572 170,531 171,765 173,840R 178,833R 179,154 Interest-bearing time deposits with balances of less than $100,000, by maturity 19 7 to 91 days 32,265 32,170 33,783 35,719 35,426 34,117 30,383 31,554 31,758' 32,992R 32,749 20 92 to 182 days 96,650 93,941 95,350 97,219 97,230 96,168 95,911 94,970 94,265R 91,621R 91,747 21 183 days to 1 year 163,062 183,834 184,046 184,095 186,206 190,297 193,821 195,403 197,680R 200,725R 201,551 22 More than 1 year to 2'/I years 164,395 208,601 212,394 210,493 209,051 208,571 208,932 209,679 209,207R 210,008R 212,179 23 More than 2 Vl years 192,712 199,002 199,254 198,922 199,267 198,236 198,922 199,403 198,683R 200,297' 198,856 24 IRA and Keogh plan deposits 144,155 150,546 150,366 149,965 151,517 151,396 151,652 152,765 152,031R 152,312R 152,653 BIF-INSURED SAVINGS BANKS4 25 Negotiable order of withdrawal accounts 11,175 11,918 11,139 11,597 11,671 11,461 11,715 11,206 10,893 10,801 9,880 26 Savings deposits3 70,082 68,643 66,702 67,614 67,215 66,729 67,630 66,814 66,898R 67,944 68,418 27 Personal 67,159 65,366 63,377 64,524 64,152 63,486 64,121 63,527 63,597R 64,394 64,898 28 Nonpersonal 2,923 3,277 3,325 3,090 3,063 3,243 3,510 3,286 3,300 3,549 3,520 Interest-bearing time deposits with balances of less than $100,000, by maturity 29 7 to 91 days 2,144 2,001 2,009 2,131 2,145 2,182 2,349 2,230 2,378 2,356 2,582 30 92 to 182 days 11,361 12,140 12,334 13,247 13,499 13,931 13,955 13,725 13,638 13,633 13,668 31 183 days to 1 year 18,391 25,686 26,304 26,863 26,577 27,305 28,121 27,951 28,605 29,717 29,719 32 More than 1 year to 2 years 17,787 27,482 26,582 26,945 25,959 25,704 25,444 25,515 26,181 26,376 27,286 33 More than 2 l/l years 21,293 22,866 22,449 21,819 22,671 22,547 22,661 22,593 22,616 22,694 22,585 34 IRA and Keogh plan accounts 19,013 21,321 20,827 20,845 20,766 20,697 20,683 20,847 20,763 20,760R 20,826 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

A16 Domestic Financial Statistics • December 1996 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 1996 BBaannkk ggrroouupp,, oorr ttyyppee ooff ddeeppoossiitt Feb. Mar. Apr. May June July DEBITS Seasonally adjusted Demand deposits3 1 All insured banks 334,784.1 369,029.1 397,649.3 447,869.0 422,696.7 463,244.4 470,742.4 423,913.3 494,540.4 2 Major New York City banks 171,224.3 191,168.8 201,161.4 238,538.4 224,066.5 245,440.5 252,388.2 219,267.0 265,160.3 3 Other banks 163,559.7 177,860.3 196,487.9 209,330.6 198,630.2 217,803.9 218,354.2 204,646.3 229,380.1 4 Other checkable deposits4 3,481.5 3,798.6 4,207.4 5,024.4 4,942.7 5,281.2 5,703.6 5,183.2 5,865.7 5 Savings deposits (including MMDAs)5 3,497.4 3,766.3 4,507.8 6,406.6 6,283.1 7,357.1 7,132.9 7,198.9 7,453.9 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 785.9 817.4 874.1 950.6 881.0 970.0 987.3 865.1 1,029.4 7 Major New York City banks 4,198.1 4,481.5 4,867.3 5,852.3 5,608.2 5,884.3 6,032.3 4,921.9 6,080.9 8 Other banks 424.6 435.1 475.2 486.4 451.6 499.7 502.0 459.4 525.1 9 Other checkable deposits4 11.9 12.6 15.4 21.6 21.7 23.3 26.4 24.7 28.7 10 Savings deposits (including MMDAs)5 4.6 4.9 6.1 8.1 7.8 9.0 8.7 8.6 8.9 DEBITS Not seasonally adjusted Demand deposits3 11 All insured banks 334,899.2 369,121.8 397,657.8 414,819.1 442,977.6 456,898.8 459,061.9 436,753.7 493,494.4 12 Major New York City banks 171,283.5 191,226.0 201,182.6 222,007.5 236,954.2 238,335.3 240,893.0 225,760.4 264,100.1 13 Other banks 163,615.7 177,895.7 196,475.3 192,811.6 206,023.4 218,563.4 218,168.8 210,993.3 229,394.3 14 Other checkable deposits4 3,481.7 3,795.6 4,202.6 4,629.1 4,990.4 5,580.9 5,479.7 5,332.4 5,754.2 15 Savings deposits (including MMDAs)5 3,498.3 3,764.4 4,500.8 5,798.9 6,444.7 7,690.2 7,061.9 7,375.0 7,580.0 DEPOSIT TURNOVER Demand deposits3 16 All insured banks 786.1 818.2 874.6 900.9 947.0 956.6 980.2 903.0 1,028.0 17 Major New York City banks 4,197.9 4,490.3 4,873.1 5,427.5 6,060.5 5,774.9 5,963.5 5,188.2 6,127.2 18 Other banks 424.8 435.3 475.4 459.6 480.6 500.9 509.8 479.4 525.0 19 Other checkable deposits4 11.9 12.6 15.3 19.9 21.8 24.1 25.6 25.6 28.6 20 Savings deposits (including MMDAs)5 4.6 4.9 6.1 7.3 7.9 9.4 8.6 8.8 9.0 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

Commercial Banking Institutions All 1.26 ASSETS AND LIABILITIES OF COMMERCIAL BANKS1 Billions of dollars Monthly averages Wednesday figures Account 1995 1996r 1996 Sept. Feb. Mar. Apr. May June July Aug. Sept. 4 Sept. 11 Sept. 18 Sept. 25 ALL COMMERCIAL Seasonally adjusted BANKING INSTITUTIONS Assets 1 Bank credit 3,57 ltf 3,647.6 3,641.6 3,660.6 3,664.7 3,671.6 3,675.8 3,669.9 3,669.9 3,682.2 3,678.4 3,691.1 2 Securities in bank credit 988.9r 998.2 983.2 982.9 989.2 982.9 978.2 966.9 957.8 961.5 955.4 963.7 3 U.S. government securities . . 707.7r 714.8 704.3 704.5 713.3 708.5 708.2 702.3 702.2 704.5 700.4 706.5 4 Other securities 281.3r 283.5 278.9 278.4 275.9 274.4 270.0 264.6 255.6 257.0 255.0 257.3 5 Loans and leases in bank credit2 2,582.1 2,649.4 2,658.4 2,677.7 2,675.4 2,688.7 2,697.6 2,703.0 2,712.0 2,720.7 2,723.0 2,727.4 6 Commercial and industrial . . 707.6 728.3 727.3 733.2 735.6 738.6 742.4 744.0 750.9 754.3 757.3 761.8 7 Real estate 1,071.9 1,089.9 1,095.3 1,097.1 1,098.8 1,102.0 1,103.2 1,109.9 1,111.1 1,111.5 1,111.7 1,111.4 8 Revolving home equity .. . 78.4 79.9 80.0 80.1 79.7 79.3 79.8 80.4 80.7 80.8 81.0 81.1 9 Other 993.5 1,010.0 1,015.3 1,017.0 1,019.1 1,022.7 1,023.4 1,029.6 1,030.4 1,030.7 1,030.7 1,030.2 10 Consumer 489.5 500.3 503.8 507.5 505.0 510.3 512.6 514.0 517.4 520.7 518.5 516.4 11 Security3 86.7 85.7 84.9 85.9 82.6 82.1 80.3 76.7 74.5 78.7 75.0 79.2 12 Other 226.4 245.1 247.1 254.0 253.5 255.7 259.1 258.4 258.2 255.5 260.4 258.6 13 Interbank loans4 192.2 192.3 202.6 208.9 208.7 207.0 199.6 203.3 204.3 202.6 200.3 219.1 14 Cash assets5 214.9 219.6 216.4 222.5 219.4 216.7 216.9 219.3 226.0 212.3 215.3 217.8 15 Other assets6 227.0 242.8 241.8 243.5 243.4 253.7 264.8 268.0 276.8 273.0 273.3 271.4 16 Total assets7 4,1483r 4,245.6 4,245.5 4,2783 4,279.2 4,291.7 4,299.2 4302.6 4319.0 4312.2 4309.4 43413 Liabilities 17 Deposits 2,629.5 2.681.7 2,702.5 2,718.7 2,717.7 2,721.4 2,728.4 2,741.9 2,764.8 2,736.8 2,747.1 2,758.1 18 Transaction 781.1 765.5 766.6 769.9 756.2 749.7 742.5 733.3 738.2 712.4 721.8 732.2 19 Nontransaction 1,848.4 1,916.3 1,936.0 1,948.8 1,961.4 1,971.8 1,985.9 2,008.6 2,026.6 2,024.4 2,025.4 2.025.9 20 Large time 415.6 426.4 429.1 433.3 440.0 445.4 448.0 452.7 456.8 456.3 459.7 460.6 21 Other 1,432.9 1,489.9 1,506.9 1,515.4 1,521.4 1,526.4 1,537.9 1,555.9 1,569.8 1,568.1 1,565.7 1,565.3 22 Borrowings 687.3 691.9 688.9 710.7 710.5 702.3 692.8 700.7 699.9 704.9 701.2 730.1 23 From banks in the U.S 197.9 192.7 204.1 207.7 207.5 203.7 200.4 200.1 194.6 203.2 206.6 227.0 24 From nonbanks in the U.S 489.4 499.2 484.8 503.0 503.0 498.5 492.4 500.6 505.3 501.7 494.6 503.1 25 Net due to related foreign offices. .. . 251.8 276.6 261.6 254.4 255.9 255.1 248.9 243.5 239.4 251.0 254.3 235.5 26 Other liabilities8 222.6 233.8 224.1 231.9 220.3 228.9 226.4 228.6 226.6 228.0 225.7 233.5 27 Total liabilities 3,791.2 3,884.0 3,877.1 3,915.7 3,904.4 3,907.7 3,896.4 3,914.6 3,930.7 3,920.7 3,9283 3,957.2 28 Residual (assets less liabilities)9 . . 357. lr 361.6 368.4 362.7 374.8 384.0 402.8 388.0 388.2 391.5 381.1 384.2 Not seasonally adjusted Assets 99 3,575.9r 3,639.2 3,635.8 3,661.5 3,661.6 3,668.4 3,668.5 3,668.7 3,677.7 3,685.7 3,688.4 3,688.1 30 992.0r 993.2 987.5 987.9 993.7 984.1 974.8 971.0 966.5 966.7 958.3 962.2 31 U.S. government securities 7093' 710.1 708.6 710.5 714.1 708.7 705.9 705.5 706.1 706.6 702.6 706.2 3T 1X1.7 283.0 278.9 277.4 279.6 275.4 269.0 265.5 260.4 260.1 255.8 256.0 33 2,583.9 2,646.0 2,648.3 2,673.6 2,667.9 2,684.3 2,693.7 2,697.7 2,711.2 2,719.0 2,730.0 2,725.9 34 703.0 726.5 731.2 739.1 741.0 741.6 743.5 740.6 745.9 746.6 754.2 756.4 ^5 1,073.8 1,086.8 1,089.7 1,093.2 1,095.7 1,100.7 1,103.0 1,109.5 1,111.5 1,114.2 1,113.7 1,112.5 % Revolving home equity 78.9 79.4 79.2 79.5 79.6 79.3 79.9 80.6 81.0 81.2 81.5 81.7 37 Other 994.9 1,007.4 1,010.5 1,013.7 1,016.1 1,021.4 1,023.1 1,028.9 1,030.5 1,033.0 1,032.2 1,030.7 38 490.8 500.9 499.6 504.7 503.3 506.5 509.8 514.2 518.2 520.5 520.3 518.6 39 86.3 88.7 84.8 86.7 78.4 80.0 77.8 74.7 72.6 78.8 78.3 77.9 40 Other 229.9 243.2 243.0 249.8 249.5 255.6 259.6 258.8 263.0 258.9 263.5 260.5 41 188.0 194.2 200.5 205.9 202.3 203.3 196.8 197.6 206.2 199.6 194.1 204.7 4? 215.8 220.4 209.2 217.0 216.7 214.6 214.6 209.8 242.0 216.4 214.5 211.4 43 Other assets6 228.2 242.2 240.3 241.0 244.4 253.2 265.5 270.0 282.9 275.4 272.0 270.6 44 Total assets7 4,150.8r 4,239.2 4,228.8 4,268.5 4,268.0 4,282.2 4,287.9 4,288.2 4350.5 4318.9 4310.7 4316.6 45 2,628.3 2,672.7 2,688.9 2,715.6 2,707.3 2,718.2 2,721.5 2,729.6 2,797.6 2,752.9 2,740.1 2,723.2 46 779.8 758.3 751.8 768.9 743.9 743.2 735.3 719.6 766.6 721.9 716.7 704.8 4477 1,848.5 1,914.4 1,937.1 1,946.7 1,963.5 1,975.0 1,986.2 2,010.0 2,030.9 2,031.0 2,023.4 2,018.4 4488 414.6 426.9 430.6 433.2 445.4 445.2 445.9 452.0 455.5 456.7 458.2 458.6 40 Other 1,433.9 1,487.5 1,506.5 1,513.5 1,518.0 1,529.8 1,540.3 1,558.0 1,575.4 1,574.3 1,565.3 1,559.8 50 693.5 686.3 680.8 696.7 707.9 712.0 704.9 697.1 7003 702.1 709.3 731.2 51 190.2 194.4 199.3 206.5 204.7 205.4 198.6 193.4 196.1 196.6 196.6 210.2 ST 503.3 491.9 481.5 490.2 503.1 506.6 506.3 503.6 504.1 505.5 512.7 521.0 53 247.4 278.2 262.2 254.6 258.2 247.6 247.5 242.5 233.1 242.5 244.7 244.8 54 Other liabilities8 222.8 234.3 225.5 228.1 223.0 229.7 225.9 228.0 227.8 229.4 224.4 232.8 55 Total liabilities 3,792.0 3,871.5 3,857.4 3,895.1 33%.4 3,907.6 3,899.8 3,897.2 3,958.8 3,927.0 3,918.6 3,932.0 56 Residual (assets less liabilities)9 358.8r 367.7 371.3 373.4 371.5 374.6 388.1 391.0 391.7 391.9 392.1 384.6 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • December 1996 1.26 ASSETS AND LIABILITIES OF COMMERCIAL BANKS1—Continued Billions of dollars Monthly averages Wednesday figures Account 1995 1996r 1996 Sept. Feb. Mar. Apr. May June July Aug. Sept. 4 Sept. 11 Sept. 18 Sept. 25 DOMESTICALLY CHARTERED Seasonally adjusted COMMERCIAL BANKS Assets 57 Bank credit S.BS^ 3,196.2 3,198.3 3,212.2 3,214.4 3,213.5 3,214.8 3,206.9 3,206.6 3,221.0 3,218.2 3,229.3 58 Securities in bank credit 852.5r 852.6 843.0 842.0 845.7 837.9 835.1 822.7 816.5 821.2 818.1 824.0 59 U.S. government securities 642.0r 641.3 633.1 632.9 635.3 629.2 627.5 619.5 619.7 620.1 617.8 621.1 60 Other securities 210.5r 211.3 209.9 209.1 210.3 208.7 207.6 203.2 196.8 201.2 200.3 202.9 61 Loans and leases in bank credit2 2,286.4 2,343.7 2,355.3 2,370.3 2,368.7 2,375.6 2,379.7 2,384.2 2,390.1 2,399.7 2,400.1 2,405.4 62 Commercial and industrial 528.6 541.3 541.8 546.3 548.6 548.7 549.9 552.0 556.0 558.1 559.3 563.0 63 Real estate 1,034.9 1,055.6 1,062.0 1,063.9 1,065.7 1,069.2 1,069.9 1,076.4 1,077.6 1,078.0 1,078.3 1,077.9 64 Revolving home equity 78.3 79.9 79.9 80.1 79.7 79.3 79.7 80.3 80.7 80.8 81.0 81.1 65 Other 956.6 975.7 982.1 983.8 986.0 989.9 990.2 996.1 997.0 997.3 997.3 996.8 66 Consumer 489.5 500.3 503.8 507.5 505.0 510.3 512.6 514.0 517.4 520.7 518.5 516.4 67 Security3 51.7 52.2 51.2 52.9 50.7 46.8 46.1 42.1 39.8 45.7 42.9 46.8 68 Other 181.6 194.2 196.4 199.7 198.8 200.7 201.2 199.7 199.3 197.2 201.0 201.2 69 Interbank loans4 168.2 171.6 181.8 187.8 187.4 184.5 180.4 183.4 184.0 183.6 181.5 201.7 70 Cash assets5 187.9 190.3 189.1 196.3 193.2 191.5 191.6 194.2 201.1 187.1 190.4 193.4 71 Other assets6 171.3 186.3 186.8 188.6 188.0 201.5 215.1 219.8 228.4 224.8 223.4 221.5 72 Total assets7 3,609.6r 3,687.7 3,699.2 3,727.9 3,726.2 3,733.8 3,744.1 3,746.5 3,761.9 3,758.6 3,755.5 3,787.9 Liabilities 73 Deposits 2,458.9 2,516.9 2,534.6 2,549.2 2,545.1 2,549.3 2,553.9 2,567.5 2,590.5 2,563.6 2,572.9 2,585.7 74 Transaction 772.1 754.8 756.7 759.4 745.3 738.8 731.8 722.5 727.8 702.0 711.8 722.4 75 Nontransaction 1,686.8 1,762.1 1,777.9 1,789.8 1,799.8 1,810.5 1,822.0 1,845.0 1,862.7 1,861.6 1,861.1 1,863.3 76 Large time 255.0 274.4 273.3 275.6 279.4 283.1 285.5 290.3 294.7 295.7 297.9 300.4 77 Other 1,431.8 1,487.7 1,504.5 1,514.1 1,520.4 1,527.4 1,536.6 1,554.7 1,568.1 1,565.9 1,563.2 1,562.9 78 Borrowings 569.7 574.2 577.1 591.2 585.5 582.3 576.3 580.4 581.1 585.8 584.5 607.7 79 From banks in the U.S 178.9 173.2 183.6 184.5 184.1 183.4 180.8 179.2 174.5 183.6 186.7 204.8 80 From nonbanks in the U.S 390.8 401.0 393.5 406.7 401.5 398.8 395.5 401.2 406.7 402.2 397.8 402.9 81 Net due to related foreign offices .... 92.2 90.5 81.3 84.5 88.0 79.7 76.9 72.0 63.2 72.9 77.9 71.2 82 Other liabilities8 141.6 153.9 147.1 154.9 146.9 157.9 156.9 160.4 158.2 159.7 156.0 163.8 83 Total liabilities 3,262.4 3,335.5 3,340.1 3,379.8 3,365.5 3369.1 3364.0 33803 3393.0 3382.0 33913 3,428.4 84 Residual (assets less liabilities)' 347.2r 352.2 359.1 348.1 360.7 364.7 380.1 366.2 369.0 376.6 364.3 359.6 Not seasonally adjusted Assets 85 Bank credit 3,142.7r 3,188.1 3,191.1 3,214.9 3,214.8 3,213.7 3,206.8 3,203.5 3,212.7 3,222.6 3,225.2 3,225.0 86 Securities in bank credit 854.5r 848.5 846.2 847.0 849.0 841.2 831.1 824.7 822.8 824.7 820.4 822.1 87 U.S. government securities 644.2r 637.2 636.2 638.6 637.0 630.4 625.4 621.4 623.3 622.6 620.7 621.3 88 Other securities 210.3r 211.4 210.0 208.4 212.0 210.7 205.7 203.3 199.5 202.1 199.7 200.7 89 Loans and leases in bank credit2 2,288.2 2,339.5 2,344.9 2,367.9 2,365.8 2,372.6 2,375.8 2,378.8 2,389.9 2,397.9 2,404.8 2,402.9 90 Commercial and industrial 524.7 540.6 544.9 552.2 554.0 551.1 549.9 547.8 550.9 551.7 556.5 558.4 91 Real estate 1,036.7 1,052.3 1,056.2 1,060.4 1,062.8 1,067.9 1,069.8 1,076.0 1,077.9 1,080.6 1,080.2 1,078.9 92 Revolving home equity 78.9 79.4 79.1 79.5 79.6 79.2 79.8 80.6 81.0 81.2 81.5 81.7 93 Other 957.9 972.9 977.1 980.9 983.2 988.6 989.9 995.4 996.9 999.4 998.7 997.2 94 Consumer 490.8 500.9 499.6 504.7 503.3 506.5 509.8 514.2 518.2 520.5 520.3 518.6 95 Security3 51.6 53.2 51.3 53.9 49.5 47.0 44.8 41.1 39.9 45.5 44.9 45.1 96 Other 184.4 192.5 192.9 196.6 196.2 200.0 201.4 199.8 203.1 199.5 202.9 201.9 97 Interbank loans4 163.1 175.3 180.5 185.7 180.8 182.6 177.6 178.5 187.0 180.5 175.0 185.6 98 Cash assets5 187.9 192.2 182.2 191.4 191.0 188.6 188.9 184.1 216.3 190.7 188.8 185.7 99 Other assets6 172.3 185.1 186.1 187.8 188.3 201.3 216.5 220.8 233.5 226.0 222.5 221.1 100 Total assets7 3,608.9" 3,684.0 3,682.9 3,723.0 3,717.9 3,728.9 3,7323 3,728.9 3,791.4 3,761.5 3,7533 3,759.1 Liabilities 101 Deposits 2,457.9 2,508.2 2,520.5 2,548.4 2,533.3 2,543.9 2,549.3 2,556.9 2,624.6 2,579.8 2,566.9 2,549.9 102 Transaction 770.2 747.6 742.1 758.9 733.6 732.6 724.7 708.9 755.9 711.2 706.0 694.1 103 Nontransaction 1,687.7 1,760.5 1,778.4 1,789.5 1,799.7 1,811.3 1,824.6 1,848.0 1,868.6 1,868.7 1,860.9 1,855.9 104 Large time 254.7 275.8 273.8 277.0 282.7 282.9 285.6 291.7 295.1 296.4 297.8 298.3 105 Other 1,433.0 1,484.7 1,504.6 1,512.5 1,517.1 1,528.4 1,539.0 1,556.3 1,573.5 1,572.3 1,563.1 1,557.6 106 Borrowings 573.3 573.3 569.6 576.4 584.7 587.8 583.0 574.9 577.9 579.7 586.8 608.6 107 From banks in the U.S 171.0 175.7 178.7 184.2 183.0 183.5 178.0 172.7 175.4 175.8 175.8 189.4 108 From nonbanks in the U.S 402.3 397.6 390.9 392.2 401.7 404.3 405.1 402.2 402.5 403.8 411.0 419.2 109 Net due to related foreign offices .... 88.7 92.3 84.5 84.9 93.1 78.5 75.8 70.4 60.9 70.2 72.3 72.3 110 Other liabilities8 141.7 152.3 148.8 153.0 148.4 158.2 156.9 158.9 158.6 160.1 155.1 163.4 111 Total liabilities 3,261.6 3326.1 3323.5 3362.6 3359.4 3368.5 3365.0 3361.1 3,421.9 3389.8 3381.1 3394.2 112 Residual (assets less liabilities)9 347.3r 357.9 359.4 360.4 358.5 360.5 367.3 367.9 369.4 371.7 372.2 364.9 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 A19 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS Millions of dollars, Wednesday figures 1996 AAccccoouunntt July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 Sept. 4 Sept. 11 Sept. 18 Sept. 25 ASSETS 1 Cash and balances due from depository institutions 130,333 112,971 115,647 108,841 116,821 136,782 121,409 121,393 118,312 2 U.S. Treasury and government securities 276,372r 276,185r 274,624 269,187r 270,536 274,654 271,909 270,348 268,917 3 Trading account 21,987r 22,249r 21,912 18,351r 20,047 22,215 20,660 20,788 20,573 4 Investment account 254,385 253,936 252,712 250,836 250,489 252,439 251,249 249,560 248,344 5 Mortgage-backed securities' 116,003 115,524 116,262 114,386 115,089 115,013 115,185 114,256 114,186 All others, by maturity 6 One year or less 31,970 31,664 31,941 32,514 31,858 32,793 33,143 32,045 31,269 7 One year through five years 59,351 59,259 57,032 56,487 56,681 56,301 54,726 55,136 54,868 X More than five years 47,061 47,490 47,476 47,448 46,861 48,333 48,195 48,124 48,021 9 Other securities 116,259r 119,395r 123,372 120,78 r 114,706' 115,721 118,113 115,819 116,819 10 Trading account 4,04 lr 3,994r 3,901 3,670r 3,396' 3,480 4,571 4,058 4,200 11 Investment account 62,278 62,039 62,005 61,482 60,219 60,601 60,762 61,255 61,130 12 State and local government, by maturity 18,770 18,697 18,732 18,694 18,719 18,725 18,712 18,905 18,795 13 One year or less 3,872 3,936 3,966 3,946 3,952 3,929 3,920 3,935 3,946 14 More than one year 14,898 14,760 14,766 14,748 14,767 14,796 14,792 14,970 14,849 15 Other bonds, corporate stocks, and securities 43,509 43,342 43,273 42,788 41,500 41,876 42,050 42,350 42,334 16 Other trading account assets 49,940r 53,362r 57,466 55,629r 51,091' 51,639 52,780 50,507 51,490 17 Federal funds sold2 116,856 100,008 110,234 106,145 102,216 106,971 106.904 106,156 115,386 18 To commercial banks in the United States 87,541 72,475 82,388 79,747 76,740 81,766 76,403 76,043 86,846 19 To nonbank brokers and dealers in securities 22,708 23,566 23,769 21,924 20,437 21,210 26,675 25,927 24,489 20 To others 6,606 3,967 4,076 4,474 5,039 3,995 3,826 4,185 4,051 21 Other loans and leases, gross 1,332,808 1,330,800 1,329,385 l,334,345r 1,333,870' 1,342,473 1,342,365 1,347,097 1,347,992 22 Commercial and industrial 361,158r 359,343r 357,826r 359,622' 358,901' 361,777 361,965 365,994 367,629 23 Bankers acceptances and commercial paper 1,536 1,528 1,570 1,573 1,626 1,721 1,712 1,713 1,760 24 All other 359,622r 357,815r 356,256r 358,049' 357,274' 360,056 360,252 364,281 365,869 25 U.S. addressees 356,795r 355,022r 353,434r 355,169' 354,398' 357,159 357,383 361,401 362,981 26 Non-U.S. addressees 2,828 2,793 2,821 2,880 2,876 2,897 2,869 2,880 2,888 27 Real estate loans 522,362r 523,917r 525,246r 524,802' 524,038' 526,027 526,580 525,181 523,327 28 Revolving, home equity 49,881 49,984 50,027 50,004' 50,132' 50,274 50,335 50,611 50,573 29 All other 472,48 lr 473,933r 475,220r 474,798' 473,906' 475,753 476,245 474,571 472,754 30 To individuals for personal expenditures 262,515r 262,297r 263,721r 265,383' 266,745' 267,809 268,706 267,623 267,417 31 To depository and financial institutions 75,904 76,067 74,952 75,704 75,401 75,330 76,399 76,372 76,708 32 Commercial banks in the United States 43,551 44,175 43,630 44,334 43,461 43,262 44,554 44,885 45,188 33 Banks in foreign countries 3,752 3,918 3,575 3,835 3,996 3,869 3,712 4,056 3,786 34 Nonbank depository and other financial institutions 28,601 27,974 27,747 27,534 27,944 28,199 28,133 27,431 27,734 35 For purchasing and carrying securities 15,186 13,848 13,007 13,544 13,712 13,045 13,368 13,862 15,492 36 To finance agricultural production 7,261r 1,22V 7,194r 7,140' 7,154' 7,198 7,194 7,222 7,155 37 To states and political subdivisions 10,695 10,668 10,596 10,643 10,598 10,670 10,260 10,346 10,397 38 To foreign governments and official institutions 959 939 897 865 888 918 911 898 872 39 All other loans 26,246 25,881 24,833 25,432 25,105 28,083 24,885 27,305 26,531 40 Lease-financing receivables 50,521 50,618 51,113 51,210' 51,329' 51,616 52,096 52,293 52,465 41 LESS: Unearned income 2,132 2,127 2,184 2,156 2,150 2,134 2,170 2,180 2,170 42 Loan and lease reserve3 33,957 33,979 34,020 33,963 33,883 34,241 34,109 34,075 34,089 43 Other loans and leases, net 1,296,719 1,294,694 1,293,181 1,298,226' 1,297,837' 1,306,099 1,306,086 1,310,842 1,311,733 44 All other assets 175,676 177,284 178,485 176,487 177,941' 189,186 182,579 180,363 181,828 45 Total assets 2,112,214r 2,080,537r 2,095,544 2,079,666r 2,080,056r 2,129,413 2,107,000 2,104,921 2,112,995 Footnotes appear on the following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • December 1996 1.27 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures 1996 AAccccoouunntt July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 Sept. 4 Sept. 11 Sept. 18 Sept. 25 LIABILITIES 46 Deposits 1,283,227 1,274,042 1,280,105 1,258,687 1,261,757 1,317,136 1,285,171 1,282,854 1,266,127 47 Demand deposits 331,143 312,771 314,765 296,862 304,377 341,967 313,566 315,252 306,298 48 Individuals, partnerships, and corporations 284,906 269,880 272,386 255,318 261,588 290,914 269,816 266,548 259,918 49 Other holders 46,237 42,891 42,378 41,544 42,789 51,053 43,750 48,704 46,380 50 States and political subdivisions 9,328 8,151 8,006 7,554 8,084 8,403 7,610 8,644 8,996 51 U.S. government 2,321 1,790 1,855 1,801 1,545 1,825 2,283 4,233 1,898 52 Depository institutions in the United States 21,449 21,000 20,419 19,612 19,477 26,214 21,254 22,615 21,893 53 Banks in foreign countries 4,566 4,575 4,268 5,020 5,503 6,499 4,728 5,133 5,579 54 Foreign governments and official institutions 807 551 863 509 541 601 587 554 524 55 Certified and officers' checks 7,766 6,825 6,967 7,049 7,639 7,511 7,288 7,525 7,490 56 Transaction balances other than demand deposits4 70,994 67,187 65,918 66,764 66,830 65,540 62,592 61,837 59,292 57 Nontransaction balances 881,091 894,084 899,422 895,062 890,550 909,629 909,014 905,765 900,537 58 Individuals, partnerships, and corporations 852,344 864,990 870,444 866,554R 862,248R 880,558 879,825 877,405 871,893 59 Other holders 28,747 29,094 28,979 28,508R 28,302R 29,072 29,188 28,360 28,644 60 States and political subdivisions 22.489 22,831 22,570 21,970R 21,938R 22,744 22,843 21,966 22,020 61 U.S. government 4,138 4,123 4,107 4,088 4,076 4,087 4,073 4,091 4,108 62 Depository institutions in the United States 1,684 1,716 1,851 1,998 1,826 1,783 1,794 1,813 2,027 63 Foreign governments, official institutions, and banks .. 436 424 451 451 462 458 478 491 488 64 Liabilities for borrowed money5 407,122 390,314 396,442 391,651R 395,684R 397,410 398,620 402,951 418,981 65 Borrowings from Federal Reserve Banks 1,381 0 20 0 0 319 0 4 55 66 Treasury tax and loan notes 22,647 7,989 5,226 9,566 8,973 12,465 7,064 20,061 28,108 67 Other liabilities for borrowed money6 383,094 382.325 391,197 382,085R 386,71 LR 384,626 391,556 382,887 390,818 68 Other liabilities (including subordinated notes and debentures) . . . 213,806R 209,319R 211,584 221,039 215,181 205,603 213,250 208,509 218,646 69 Total liabilities 1,904,156r l,873,675r 1,888,131 l,871,377r l,872,622r 1,920,150 1,897,041 1,894,315 1,903,753 70 Residual (total assets less total liabilities)7 208,058 206,862 207,413 208,289 207,435 209,263 209,958 210,607 209,242 MEMO 71 Total loans and leases, gross, adjusted, plus securities8 1,711,201R L,709,739R 1,711,597 L,706,375R 1,701,126R 1,714,791 1,718.333 1,718,492 1,717,079 72 Time deposits in amounts of $100,000 or more 130,448 133,259 135,761R 136,350R 136,209R 138,181 138,295 139,516 140,140 73 Loans sold outright to affiliates9 951 942 934 926 919 912 903 886 879 74 Commercial and industrial 263 263 263 262 262 261 261 261 260 75 Other 689 680 671 663 656 651 642 625 618 76 Foreign branch credit extended to U.S. residents10 28,895 28,228 28,406 28,319 28,587 29,012 29.209 29,635 0 77 Net owed to related institutions abroad 71,789R 66,200R 62,858 74,169 68,097 56,920 64,826 65,915 0 1. Includes certificates of participation, issued or guaranteed by agencies of the U.S. 8. Excludes loans to and federal funds transactions with commercial banks in the government, in pools of residential mortgages. United States. 2. Includes securities purchased under agreements to resell. 9. Affiliates include a bank's own foreign branches, nonconsolidated nonbank affiliates of 3. Includes allocated transfer risk reserve. the bank, the bank's holding company (if not a bank), and nonconsolidated nonbank 4. Includes negotiable order of withdrawal (NOWs) and automatic transfer service (ATS) subsidiaries of the holding company. accounts, and telephone and preauthorized transfers of savings deposits. 10. Credit extended by foreign branches of domestically chartered weekly reporting banks 5. Includes borrowings only from other than directly related institutions. to nonbank U.S. residents. Consists mainly of commercial and industrial loans, but includes 6. Includes federal funds purchased and securities sold under agreements to repurchase. an unknown amount of credit extended to other than nonfinancial businesses. 7. This balancing item is not intended as a measure of equity capital for use in capitaladequacy analysis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A21 1.28 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities Millions of dollars, Wednesday figures 1996 AAccccoouunntt July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 Sept. 4 Sept. 11 Sept. 18 Sept. 25 ASSETS 1 Cash and balances due from depository institutions 1155,,550088 15,790 15,450 15,070 15,557 15,613 15,825 15,955 15,411 2 U.S. Treasury and government agency securities 52,247 52,858 54,089 53,680 54,683 52,973 54,006 52,667 54,737 3 Other securities 41,159r 42,142r 40,407' 40,535r 39,614 39,867 38,366 37,449 36,917 4 Federal funds sold1 26,710 26,954 27,591 20,926 23,724 21,780 22,679 25,154 29,329 5 To commercial banks in the United States 5,674 3,827 5,117 3,006 6,078 4,101 5,481 5,609 8,687 6 To others2 21,036 23,127 22,474 17,920 17,646 17,679 17,198 19,546 20,642 7 Other loans and leases, gross 194,729r 194,301r 193,547 194,350 193,996 195,581 195,286 198,030 199,455 8 Commercial and industrial 122,399r 122,092 121,474 122,284 122,473 123,581 124,087 125,954 126,506 9 Bankers acceptances and commercial paper . 4,718 4,653 4,543 4,540 4,555 4,667 4,721 4,693 4,672 10 All other 117,681' 117,439 116,931 117,745 117,918 118,915 119,366 121,261 121,834 11 U.S. addressees 110,744r 110,525r 110,509 111,202 111,333 111,991 112,193 114,052 114,819 12 Non-U.S. addressees 6,937r 6,914r 6,422 6,543 6,585 6,923 7,173 7,209 7,014 13 Loans secured by real estate 1199,,888899rr 19.8461 19,995 20,085 20,067 20,167 20,056 20,034 20,017 14 Loans to depository and financial institutions 39,340 38,918 39,330 38,990 38,849 39,054 38,559 37,989 38,173 15 Commercial banks in the United States 2,584 2,641 2,584 2,553 3,197 2,997 2,831 2,793 2,880 16 Banks in foreign countries 3,370 3,057 3,176 3,155 3,195 3,322 3,301 3,302 3,272 17 Nonbank financial institutions 33,385 33,220 33,570 33,282 32,457 32,736 32,428 31,894 32,021 18 For purchasing and carrying securities 5,472 5,609 5,032 5,316 5,131 5,357 5,115 5,506 6,800 19 To foreign governments and official institutions 933 976 934 840 867 879 849 879 877 20 All other 6,696 6,859 6,782 6,834 6,609 6,543 6,619 7,668 7,083 21 Other assets (claims on nonrelated parties) 35,653r 35,150r 36,715r 35,054r 38,657 36,880 38,346 34,148 34,418 22 Total assets3 393,851R 393,272R 395,737R 391,292R 396,478 390,215 397,237 393,547 399,802 LIABILITIES 23 Deposits or credit balances owed to other than directly related institutions 109,190 107,388 107,220 110,536 113,839 112,171 109,954 113,313 115,662 24 Demand deposits4 4,192 3,982 3,894 3,973 4,102 4,270 3,967 3,754 3,948 25 Individuals, partnerships, and corporations .... 3,416 3,365 3,224 3,317 3,434 3,475 3,354 3,125 3,237 26 Other 776 617 670 656 668 795 613 628 712 77 Nontransaction accounts 104,997 103.405 103,327 106,563 109,737 107,901 105,987 109,559 111,714 28 Individuals, partnerships, and corporations .... 75,548 75,487 76,829 78,953 81,717 81,400 80,229 83,170 84,313 29 Other 2299,,444499 27,918 26,498 27,610 28,020 26,501 25,757 26,388 27,401 30 Borrowings from other than directly related institutions 86,068 87,963 84,257 81,837 81,345 82,310 81,044 75,531 78,882 31 Federal funds purchased5 53,673 56,351 53,072 50,919 47,147 50,958 52,360 47,916 51,029 32 From commercial banks in the United States . . 13,688 13,339 12,363 12,699 10,186 16,347 13,909 8,934 11,956 33 From others 39,985 43,012 40,710 38,220 36,961 34,611 38,451 38,982 39,073 34 Other liabilities for borrowed money 32,395 31,612 31,185 30,917 34,198 31,352 28,684 27,615 27,853 35 To commercial banks in the United States 3,641 3,820 3,597 3,591 3,643 4,053 3,418 3,711 3,134 36 To others 28,754 27,793 27,588 27,326 30,555 27,299 25,265 23,904 24,718 37 Other liabilities to nonrelated parties 58,170r 57,25 lr 57,652r 56,374r 57,650 57,840 58,309 54,121 55,993 38 Total liabilities6 393,851R 393,272R 395,737R 391,292R 396,478 390,215 397,237 393,547 399,802 MEMO 39 Total loans (gross) and securities, adjusted7 306,587r 309,787r 307,934r 303,932r 302,742 303,104 302,025 304,898 308,871 40 Net owed to related institutions abroad 112,579r 114,593r 118,671r 110,869r 113,398 110,372 115,202 120,438 119,730 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

A22 DomesticN onfinancial Statistics • December 1996 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period Year ending December 1996 IItteemm 1991 1992 1993 1994 1995 Mar. Apr. May June July Aug. Commercial paper (seasonally adjusted unless noted otherwise) 1111 AAAAllllllll iiiissssssssuuuueeeerrrrssss 528,832 545,619 555,075 595,382 674,904 695,230 710,690 719,069 731,027 734,730r 753,277 FFFFiiiinnnnaaaannnncccciiiiaaaallll ccccoooommmmppppaaaannnniiiieeeessss'''' 2222 DDDDeeeeaaaalllleeeerrrr----ppppllllaaaacccceeeedddd ppppaaaappppeeeerrrr2222,,,, ttttoooottttaaaallll 212,999 226,456 218,947 223,038 275,815 291,600 302,504 301,670 310,524 317,425r 329,026 3333 DDDDiiiirrrreeeeccccttttllllyyyy ppppllllaaaacccceeeedddd ppppaaaappppeeeerrrr3333,,,, ttttoooottttaaaallll 182,463 171,605 180,389 207,701 210,829 208,880 211,833 221,463 223,236 222,583 230,318 4444 NNNNoooonnnnffffiiiinnnnaaaannnncccciiiiaaaallll ccccoooommmmppppaaaannnniiiieeeessss4444 133,370 147,558 155,739 164,643 188,260 194,750 196,352 195,936 197,267 194,722 193,933 Bankers dollar acceptances (not seasonally adjusted)5 5555 TTTToooottttaaaallll 43,770 38,194 32,348 29,835 29,242 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 are 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. 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 ge Period Av r e a r te a ge Period Av r e a r te a ge 1993—Jan. 1 6.00 1993 6.00 1994—Jan 6.00 1995—June 9.00 1994 7.15 Feb 6.00 July 8.80 1994—Mar. 24 6.25 1995 8.83 Mar 6.06 Aug 8.75 Apr. 19 6.75 Apr. 6.45 Sept 8.75 May 17 7.25 1993—Jan 6.00 May 6.99 Oci 8.75 Aug. 16 7.75 Feb 6.00 June 7.25 Nov 8.75 Nov. 15 8.50 Mar. 6.00 July 7.25 Dec 8.65 Apr 6.00 Aug 7.51 1995—Feb. 1 9.00 May 6.00 Sept 7.75 1996—Jan 8.50 July 7 8.75 June 6.00 Oct 7.75 Feb 8.25 Dec. 20 8.50 July 6.00 Nov 8.15 Mar. 8.25 Aug 6.00 Dec 8.50 Apr. 8.25 1996—Feb. 1 8.25 Sept 6.00 May 8.25 Oct 6.00 1995—Jan 8.50 June 8.25 Nov 6.00 Feb 9.00 July 8.25 Dec 6.00 Mar. 9.00 Aug 8.25 Apr 9.00 Sept 8.25 May 9.00 Ocl 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

Financial Markets A23 1.35 INTEREST RATES Money and Capital Markets Percent per year; figures are averages of business day data unless otherwise noted 1996 1996, week ending IItteemm 11999933 11999944 11999955 June July Aug. Sept. Aug. 30 Sept. 6 Sept. 13 Sept. 20 Sept. 27 MONEY MARKET INSTRUMENTS 1 Federal funds1,2-3 3.02 4.21 5.83 5.27 5.40 5.22 5.30 5.21 5.39 5.16 5.22 5.34 2 Discount window borrowing"4 3.00 3.60 5.21 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 Commercial paper3'5,6 3 1-month 3.17 4.43 5.93 5.45 5.44 5.39 5.45 5.39 5.45 5.45 5.45 5.47 4 3-month 3.22 4.66 5.93 5.49 5.53 5.42 5.52 5.43 5.55 5.52 5.52 5.52 5 6-month 3.30 4.93 5.93 5.57 5.67 5.51 5.66 5.54 5.70 5.68 5.65 5.62 Finance paper, directly placed^,5'7 6 1-month 3.12 4.33 5.81 5.35 5.33 5.28 5.33 5.27 5.34 5.34 5.33 5.33 7 3-month 3.16 4.53 5.78 5.37 5.43 5.31 5.38 5.31 5.44 5.39 5.36 5.35 8 6-month 3.15 4.56 5.68 5.35 5.44 5.33 5.40 5.32 5.44 5.42 5.38 5.38 Bankers acceptances3-5,8 9 3-month 3.13 4.56 5.81 5.38 5.45 5.32 5.39 5.33 5.44 5.42 5.39 5.34 10 6-month 3.21 4.83 5.80 5.47 5.57 5.40 5.51 5.43 5.60 5.53 5.50 5.44 Certificates of deposit, secondary market3,9 11 1-month 3.11 4.38 5.87 5.37 5.37 5.32 5.38 5.32 5.37 5.38 5.38 5.38 12 3-month 3.17 4.63 5.92 5.46 5.53 5.40 5.51 5.42 5.55 5.51 5.49 5.49 13 6-month 3.28 4.96 5.98 5.64 5.75 5.57 5.71 5.61 5.80 5.74 5.69 5.66 14 Eurodollar deposits, 3-month3,10 3.18 4.63 5.92r 5.46 5.49 5.41 5.49 5.40 5.51 5.50 5.48 5.48 U.S. Treasury bills Secondary market3,5 15 3-month 3.00 4.25 5.49 5.09 5.15 5.05 5.09 5.09 5.19 5.13 5.12 4.98 16 6-month 3.12 4.64 5.56 5.25 5.30 5.13 5.24 5.18 5.35 5.28 5.25 5.13 17 1-year 3.29 5.02 5.60 5.48 5.52 5.35 5.50 5.48 5.61 5.54 5.50 5.40 Auction average3,5'" 18 3-month 3.02 4.29 5.51 5.11 5.17 5.09 5.15 5.07 5.19 5.17 5.07 5.18 19 6-month 3.14 4.66 5.59 5.26 5.32 5.17 5.29 5.16 5.38 5.30 5.19 5.30 20 1-year 3.33 5.02 5.69 5.56 5.49 5.36 5.57 n.a. n.a. n.a. 5.57 n.a. U.S. TREASURY NOTES AND BONDS Constant maturities12 21 1-year 3.43 5.32 5.94 5.81 5.85 5.67 5.83 5.81 5.95 5.88 5.82 5.72 22 2-year 4.05 5.94 6.15 6.30 6.27 6.03 6.23 6.22 6.36 6.27 6.23 6.12 23 3-year 4.44 6.27 6.25 6.49 6.45 6.21 6.41 6.41 6.55 6.45 6.40 6.29 24 5-year 5.14 6.69 6.38 6.69 6.64 6.39 6.60 6.60 6.73 6.64 6.59 6.48 25 7-year 5.54 6.91 6.50 6.83 6.76 6.52 6.73 6.73 6.85 6.78 6.72 6.62 26 10-year 5.87 7.09 6.57 6.91 6.87 6.64 6.83 6.84 6.95 6.88 6.82 6.73 27 20-year 6.29 7.49 6.95 7.22 7.14 6.97 7.17 7.17 7.26 7.22 7.15 7.07 28 30-year 6.59 7.37 6.88 7.06 7.03 6.84 7.03 7.03 7.11 7.07 7.01 6.95 Composite 29 More than 10 years (long-term) 6.45 7.41 6.93 7.20 7.13 6.94 7.13 7.14 7.23 7.19 7.12 7.04 STATE AND LOCAL NOTES AND BONDS Moody's series13 30 Aaa 5.38 5.77 5.80 5.67 5.83 5.64 5.57 5.61 5.64 5.59 5.51 5.54 31 Baa 5.83 6.17 6.10 5.98 5.96 5.85 5.79 5.82 5.85 5.80 5.71 5.78 32 Bond Buyer series14 5.60 6.18 5.95 6.02 5.92 5.76 5.87 5.86 5.95 5.89 5.88 5.76 CORPORATE BONDS 33 Seasoned issues, all industries15 7.54 8.26 7.83 8.00 7.95 7.76 7.95 7.95 8.03 8.00 7.93 7.87 Rating group 34 Aaa 7.22 7.97 7.59 7.71 7.65 7.46 7.66 7.66 7.75 7.71 7.63 7.58 35 Aa 7.40 8.15 7.72 7.87 7.82 7.63 7.82 7.82 7.91 7.87 7.80 7.75 36 A 7.58 8.28 7.83 8.02 7.97 7.77 7.95 7.95 8.03 8.01 7.94 7.88 37 Baa 7.93 8.63 8.20 8.40 8.35 8.18 8.35 8.35 8.43 8.40 8.33 8.27 38 A-rated, recently offered utility bonds16 7.46 8.29 7.86 8.13 8.07 7.87 8.06 8.16 8.14 7.99 8.08 7.96 MEMO Dividend-price ratio17 39 Common stocks 2.78 2.82 2.56 2.21 2.28 2.22 2.20 2.21 2.26 2.22 2.17 2.16 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

A24 Domestic Nonfinancial Statistics • December 1996 1.36 STOCK MARKET Selected Statistics 1996 IInnddiiccaattoorr 11999933 11999944 11999955 Jan. Feb. Mar. Apr. May June July Aug. Sept. Prices and trading volume (averages of daily figures)1 Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 249.71 254.16 291.18 329.22 346.46 346.73 347.50 354.84 358.32 345.06 354.59 360.96 2 Industrial 300.10 315.32 367.40 413.05 435.92 439.55 441.99 452.63 458.30 438.58 444.91 459.69 3 Transportation 242.68 247.17 270.14 300.43 315.29 324.77 326.42 334.66 331.57 316.57 321.61 323.12 4 Utility 114.55 104.96 110.64 127.09 135.51 122.83 122.44 124.86 123.60 122.66 122.37 121.12 5 Finance 216.55 209.75 238.48 274.96 290.97 290.44 287.92 290.43 294.42 287.89 302.95 308.16 6 Standard & Poor's Corporation (1941-43 = 10)2 451.63 460.42 541.72 614.42 649.54 647.07 647.17 661.23 668.50 644.06 662.68 674.88 7 American Stock Exchange (Aug. 31, 1973 = 50)3 438.77 449.49 498.13 540.48 562.34 565.69 580.60 600.93 591.99 550.16 554.88 564.87 Volume of trading (thousands of shares) 8 New York Stock Exchange 263,374 290,652 345,729 416,048 434,607 426,198 419,941 404,184 392,413 398,245 333,343 400,951 9 American Stock Exchange 18,188 17,951 20,387 21,069 27,107 22,988 24,886 28,127 23,903 21,281 17,916 19,449 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers4 60,310 61,160 76,680 73,530 77,090 78,308 81,170 86,100 87,160 79,860 82,980 89,300 Free credit balances at brokerss 11 Margin accounts6 12,360 14,095 16,250 14,950 15,840 15,770 15,780 16,890 16,800 17,700 17,520 17,940 12 Cash accounts 27,715 28,870 34,340 32,465 34,700 33,113 33,100 33,760 33,775 32,935 32,680 35,360 Margin requirements (percent of market value and eifective date)7 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. Daily data on prices are available upon request to the Board of Governors. For ordering purchase and carry "margin securities" (as defined in the regulations) when such credit is address, see inside front cover. collateralized by securities. Margin requirements on securities other than options are the 2. In July 1976 a financial group, composed of banks and insurance companies, was added difference between the market value (100 percent) and the maximum loan value of collateral to the group of stocks on which the index is based. The index is now based on 400 industrial as prescribed by the Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U, stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and effective May 1, 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective 40 financial. Nov. 1, 1971. 3. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the previous readings in half. initial margin required for writing options on securities, setting it at 30 percent of the current 4. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the included credit extended against stocks, convertible bonds, stocks acquired through the required initial margin, allowing it to be the same as the option maintenance margin required exercise of subscription rights, corporate bonds, and government securities. Separate report- by the appropriate exchange or self-regulatory organization; such maintenance margin rules ing of data for margin stocks, convertible bonds, and subscription issues was discontinued in must be approved by the Securities and Exchange Commission. Effective Jan. 31, 1986, the April 1984. SEC approved new maintenance margin rules, permitting margins to be the price of the option 5. Free credit balances are amounts in accounts with no unfulfilled commitments to plus 15 percent of the market value of the stock underlying the option. brokers and are subject to withdrawal by customers on demand. Effective June 8, 1988, margins were set to be the price of the option plus 20 percent of the 6. Series initiated in June 1984. market value of the stock underlying the option (or 15 percent in the case of stock-index 7. Margin requirements, stated in regulations adopted by the Board of Governors pursuant options). to the Securities Exchange Act of 1934, limit the amount of credit that can be used to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A25 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1996 11999933 11999944 11999955 Apr. May June July Aug. Sept. U.S. budget1 1 Receipts, total 1,153,535 1,257,737 1,355,213 203,468 90,122 151,995 103,893 99,996 157,668 2 On-budget 841,601 922,711 1,004,134 160,856 60,184 116,794 75,282 71,505 125,806 3 Off-budget 311,934 335,026 351,079 42,612 29,938 35,201 28,611 28,491 31,862 4 Outlays, total 1,408,675 1,460,841 1,519,133 131,064r 147,173r 117,654r 130,749r 141,828 122,298 5 On-budget 1,142,088 1,181,469 1,230,469 105,201r 114,316r 103,997r 104,215r 113,840 90,309 6 Off-budget 266,587 279,372 288,664 25,862 28,856 13,657 26,535r 27,987 31,989 7 Surplus or deficit (-), total -255,140 -203,104 -163,920 72,404r -53,051r 34,340r -26,856r -41,831 35,370 8 On-budget -300,487 -258,758 -226,335 55.654r —54,133r 12,797' -28,932r -42,335 35,496 9 Off-budget 45,347 55,654 62,415 16,750 1,082 21,544 2,076r 504 -127 Source of financing (total) 10 Borrowing from the public 248,619 185,344 171,288 -35,466 20,633 -8,619 29,098 16,160 -5,892 11 Operating cash (decrease, or increase (-)) 6,283 16,564 -2,007 -26,449 43,809 -33,519 1,262 23,705 -31,159 12 Other2 238 1,196 -5,361 - 10,489r -11,391r 1,19%' -3,504r 1,966 1,681 MEMO 13 Treasury operating balance (level, end of period) 52,506 35,942 37,949 48,323 4,514 38,033 36,771 13,066 44,225 14 Federal Reserve Banks 17,289 6,848 8,620 11,042 3,757 7,701 6,836 5,149 7,700 15 Tax and loan accounts 35,217 29,094 29,329 37,281 757 30,332 29,936 7,917 36,525 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

A26 Domestic Nonfinancial Statistics • December 1996 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year SSSooouuurrrccceee ooorrr tttyyypppeee 1994 1995 1996 1996 11999944 11999955 H2 HI H2r HI July Aug. Sept. RECEIPTS 1 All sources 1,257,737 1,355,213 625,781 711,003 656,865 767,099 103,893 99,996 157,668 2 Individual income taxes, net 543,055 590,244 273,315 307,498 292,393 347,285 49,814 46,105 68,672 3 Withheld 459,699 499,927 240,063 251,398 256,916 264,177 48,072 43,834 39,537 4 Nonwithheld 160,433 175,855 42,029 132,001 45,521 162,782 3,631 4,007 30,629 5 Refunds 77,077 85,538 8,787 75,959 10,058 7799,,773355 11,,889933 11,,773377 11,,449955 Corporation income taxes 6 Gross receipts 154,205 174,422 78,393 92,132 88,302 96,480 5,656 3,718 36,378 V Refunds 13,820 17,418 7,747 10,399 7,518 9,704 681 644 1,274 8 Social insurance taxes and contributions, net . . . 461,475 484,473 220,140 261,837 224,269 277,767 39,258 40,953 43,372 9 Employment taxes and contributions2 428,810 451,045 206,615 241,557 211,323 257,446 36,946 36,562 42,817 10 Unemployment insurance 28,004 28,878 11,177 18,001 10,702 18,068 1,939 3,994 206 11 Other net receipts3 4,661 4,550 2,349 2,279 2,247 2,254 372 397 348 12 Excise taxes 55,225 57,484 30,178 27,452 30,014 25,682 4,508 4,033 5,315 13 Customs deposits 20,099 19,301 11,041 8,848 9,849 8,731 1,712 1,807 1,604 14 Estate and gift taxes 15,225 14,763 7,067 7,425 7,718 8,775 1,259 1,566 1,698 15 Miscellaneous receipts4 22,274 31,944 13,395r 16,21 r 11,839 12,087r 2,368r 2,459 1,902 OUTLAYS 16 All types 1,460,841 1,519,133 752,378 761,289 752,856 785,367r 130,749r 141,828 122,298 17 National defense 281,642 272,066 141,885 135,648 132,886 132,600r 22,30 r 26,000 19,738 18 International affairs 17,083 16,434 11,889 4,797 6,908 8,074 497 969 1,007 19 General science, space, and technology 16,227 16,724 7,604 8,611 7,970 8,897 1,660 1,526 1,689 20 Energy 5,219 4,936 2,923 2,358 1,992 1,355 187 153 563 21 Natural resources and environment 21,064 22,105 11,911 10,273 11,384 10,238 2,062 1,821 1,914 22 Agriculture 15,046 9,773 7,623 4,039 3,072 71 843 627 3,309 23 Commerce and housing credit -5,118 -14,441 -4,042 -13,471 -3,941 -6,861 -223 -1,678 1,559 24 Transportation 38,066 39,350 21,835 18,193 20,725 18,291 3,648 3,583 3,540 25 Community and regional development 10,454 10,641 6,283 5,073 5,570 5,237 959 1,021 1,191 26 Education, training, employment, and social services 46,307 54,263 27,450 25,893 26,295 26,137 3,108 5,037 5,082 27 Health 107,122 115,418 54,147 59,057 57,111 59,957 10,077 10,352 10,004 28 Social security and Medicare 464,312 495,701 236,817 251,975 251,388 264,649 45,376 46,205 41,693 29 Income security 214,031 220,449 101,806 117,190 104,760 121,032 18,189 20,125 13,664 30 Veterans benefits and services 37,642 37,938 19,761 19,269 18,687 18,164 3,255 4,657 1,641 31 Administration of justice 15,256 16,223 7,753 8,051 8,091 9,021 1,989 1,460 1,382 32 General government 11,303 13,835 7,355 5,796 7,602 4,641 53 1,390 1,548 33 Net interest5 202,957 232,173 109,434 116,169 119,349 120,579 20,311 21,460 19,243 34 Undistributed offsetting receipts6 -37,772 -44,455 -20,066 -17,631 -26,995 -16,716 -3,543 -2,880 -6,466 1. Functional details do not sum to total outlays for calendar year data because revisions to 4. 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 5. Includes interest received by trust funds. outlays do not correspond to calendar year data because revisions from the Budget have not 6. • 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. Office of Management and Budget, Budget of the U.S. 3. Federal employee retirement contributions and civil service retirement and Government, Fiscal Year 1997\ monthly and half-year totals: U.S. Department of the Treadisability fund. sury, Monthly Treasury Statement of Receipts and Outlays of the U.S. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A25 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1994 1995 1996 IItteemm Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 1 Federal debt outstanding 4,721 4,827 4,891 4,978 5,001 5,017 5,153 5,197 5,260r 2 Public debt securities 4,693 4,800 4,864 4,951 4,974 4,989 5,118 5,161 5,225r 3 Held by public 3,480 3,543 3,610 3,635 3,653 3,684 3,764 3,739 n.a.r 4 Held by agencies 1,213 1,257 1,255 1,317 1,321 1,305 1,354 1,422 n.a.r 5 Agency securities 29 27 27 27 27 28 36 36 35r 6 Held by public 29 27 26 27 27 28 28 28 n.a.r 7 Held by agencies 0 0 0 0 0 0 8 8 n.a.r 8 Debt subject to statutory limit 4,605 4,711 4,775 4,861 4,885 4,900 5,030 5,073 5,137r 9 Public debt securities 4,605 4,711 4,774 4,861 4,885 4,900 5,030 5,073 5.137r 10 Other debt1 0 0 0 0 0 0 0 0 0r MEMO 11 Statutory debt limit 4,900 4,900 4,900 4,900 4,900 4,900 5,500 5,500 5,500r 1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specified SOURCE. 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 1996 TTyyppee aanndd hhoollddeerr 11999922 11999933 11999944 11999955 Q4 Q1 Q2 Q3 1 Total gross public debt 4,177.0 4,535.7 4,800.2 4,988.7 4,988.7 5,117.8 5,161.1 5,224.8 By type ? Interest-bearing 4,173.9 4,532.3 4,769.2 4,964.4 4,964.4 5,083.0 5,126.8 5,220.8 3 Marketable 2,754.1 2,989.5 3,126.0 3,307.2 3,307.2 3,375.1 3,348.4 3,418.4 4 Bills 657.7 714.6 733.8 760.7 760.7 811.9 773.6 761.2 5 Notes 1,608.9 1,764.0 1,867.0 2,010.3 2,010.3 2,014.1 2,025.8 2,0<> 8.7 6 Bonds 472.5 495.9 510.3 521.2 521.2 534.1 534.1 543.5 7 Nonmarketable1 1,419.8 1,542.9 1,643.1 1,657.2 1,657.2 1,707.9 1,778.3 1,802.4 8 State and local government series 153.5 149.5 132.6 104.5 104.5 96.5 97.8 95.7 9 Foreign issues2 37.4 43.5 42.5 40.8 40.8 40.4 37.8 37.5 10 Government 37.4 43.5 42.5 40.8 40.8 40.4 37.8 37.5 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes 155.0 169.4 177.8 181.9 181.9 183.0 183.8 184.2 13 Government account series3 1,043.5 1,150.0 1,259.8 1,299.6 1,299.6 1,357.7 1,428.5 1,454.7 14 Non-interest-bearing 3.1 3.4 31.0 24.3 24.3 34.8 34.3 4.0 By holder 4 15 U.S. Treasury and other federal agencies and trust funds 1,047.8 1,153.5 1,257.1 1,304.5 1,304.5 1,353.8 1,422.4 16 Federal Reserve Banks 302.5 334.2 374.1 391.0 391.0 381.0 391.0 17 Private investors 2,839.9 3,047.4 3,168.0 3,294.9 3,294.9 3,382.8 3,347.3 18 Commercial banks 294.4 322.2 290.1 278.3 278.3 283.8 285.0 19 Money market funds 79.7 80.8 67.6 71.3 71.3 87.3 82.2 20 Insurance companies 197.5 234.5 240.1 250.8 250.8 256.0 258.0 21 Other companies 192.5 213.0 226.5 228.8 228.8 229.0 230.9 n.a. 22 State and local treasuries5'6 563.3 605.9 483.4 352.2 352.2 336.8 340.0 Individuals 23 Savings bonds 157.3 171.9 180.5 185.0 185.0 185.8 186.5 24 Other securities 131.9 137.9 150.7 162.7 162.7 161.4 161.1 25 Foreign and international7 549.7 623.0 688.7 862.1 862.1 930.2 958.6 26 Other miscellaneous investors6,8 673.5 658.3 840.5 903.7 903.7 912.5 845.0 1. Includes (not shown separately) securities issued to the Rural Electrification Administra- 7. 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- 8. 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 SOURCE. 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. 5. Includes state and local pension funds. 6. In March 1996, in a redefinition of series, fully defeased debt backed by nonmarketable federal securities was removed from "Other miscellaneous investors" and added to "State and local treasuries." The data shown here have been revised accordingly. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • December 1996 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions' Millions of dollars, daily averages 1996 1996, week ending Item June July Aug. July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 Sept. 4 Sept. 11 Sept. 18 Sept. 25 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 51,894r 45,934r 45,218 45,143 47,041 43,231 46,545 39,674 56,170 54,019 59,295 49,581 Coupon securities, by maturity 2 Five years or less 98,258r 92,815r 91,717 76,322 104,567 83,093 77,785 97,868 100,599 95,349 108,974 98,959 3 More than five years 43,178' 44,863r 44,894 37,812 62,312 49,012 30,936 35,349 49,807 47,706 51,582 41,368 4 Federal agency 33,225 35,258 33,593 34,819 34,653 32,270 34,576 32,101 35,519 31,362 33,591 33,469 5 Mortgage-backed 35,542 34,569 35,793 24,319 50,491 45,748 21,839 25,725 34,219 63,451 36,515 21,814 By type of counterparty With interdealer broker 6 U.S. Treasury 113,378 106,573 106,811 91,951 125,877 104,309 89,581 103,422 116,945 118,229 128,047 111,151 7 Federal agency 704 664 713 665 732 749 624 752 697 933 826 604 8 Mortgage-backed 13,267 1122,,553377 13,496 7,890 18,927 18,508 8,450 8,664 12,083 21.414 13,105 8,016 With other 9 U.S. Treasury 79,95 lr 77,040r 75,018 67,327 88,043 71,027 65,685 69,470 89,631 78,845 91,805 78,757 10 Federal agency 32,521 34,593 32,880 34,154 33,921 31,521 33,951 31,349 34,822 30,429 32,765 32,865 11 Mortgage-backed 22,275 22,032 22,297 16,429 31,565 27,240 13,389 17,060 22,136 42,037 23,409 13,798 FUTURES TRANSACTIONS3 By type of deliverable security 12 U.S. Treasury bills 539 229 429 100 501 185 492 489 546 972 193 73 Coupon securities, by maturity 13 Five years or less 1,761 1,607 l,649r 1,086 1,411 1.180 1,016 2,457 2,982 2,003 1,713 1,161 14 More than five years 12,742 10,873 11,373 9,513 13,547 12,263 7,848 10,634 14,372 15,658 15,990 10,848 15 Federal agency 0 0 0 0 0 0 0 0 0 0 0 0 16 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 0 OPTIONS TRANSACTIONS4 By type of underlying security 17 U.S. Treasury bills 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 18 Five years or less 2,779r l,898r 2,194r 1,588 2,433r 948 2,239 3,213 2,053 3,328 2,410 5,657 19 More than five years 4,490r 4,016r 4,408' 3,644 4,514 3,633 3,922 5,295 5,076 4,936 3,145 3,219 20 Federal agency 0 0 0 0 0 0 0 0 0 0 0 0 21 Mortgage-backed 786 688 848 489 1,468 679 347 784 1,129 341 759 1,340 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

Federal Finance A25 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1996 1996, week ending June July Aug. July 31 Aug. 7 Aug. 14 Aug. 21 Aug. 28 Sept. 4 Sept. 11 Sept. 18 Positions2 NET OUTRIGHT POSITIONS3 By type of security 1 U.S. Treasury bills 13,791 15,044 13,673 18,225 19,424 12,998 11,995 9,362 15,801 7,620 3,213 Coupon securities, by maturity 2 Five years or less -4,136 -9,294 -3,839 -7,432 1,032 -7,984 -5,983 -1,402 -6,217 -8,083 -2,870 3 More than five years -20,940 -19,269 -14,771 -19,916 -16,741 -14,345 -13,114 -13,132 -18,857 -20,885 -21,048 4 Federal agency 22,350 22,053 22,836 24,804 23,371 26,541 21,955 22,048 16,832 23,053 21,896 5 Mortgage-backed 35,493r 38,241' 36,468 37,511' 36,780 37,482 37,422 35,009 34,550 35,138 38,513 NET FUTURES POSITIONS4 By type of deliverable security 6 U.S. Treasury bills -2,006 -2,592 -4,401 -3,183 -4,692 -4,535 -4,764 -4,064 -3,352 -1,009 -224 Coupon securities, by maturity 7 Five years or less 254 -1,701 -473 -1,518 -2,528 -1,703 -1,148 2,213 2,501 2,134 2,693 8 More than five years -7,798 -13,999 -19,325 -17,018 -23,152 -23,643 -20,824 -14,288 -8,575 -5,893 -7,350 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 -2,515 -1,205 -647 -1,684 -715 -1,656 -108 -161 -522 -915 -1,109 13 More than five years 670 2,650 2,759 4,124 6,180 5,375 3,682 -1,931 -2,542 -2,281 -702 14 Federal agency 0 0 0 0 0 0 0 0 0 0 0 15 Mortgage-backed 3,075 2,614 2,003 2,497 2,808 1,659 1,384 2,102 2,142 1,947 1,539 Financing5 Reverse repurchase agreements 16 Overnight and continuing 240,787 260,875 280,269 274,411 285,085 291,849 278,152 265,900 280,478 274,380 272,331 17 Term 460,370 477,948 480,446 463,241 507,603 517,732 444,359 475,943 424,900 460,411 450,714 Securities borrowed 18 Overnight and continuing 179,225 181,614 179,112 179,293 180,119 181,528 179,466 175,549 178,612 185,212 191,774 19 Term 60,592 60,925 67,680 61,216 63,113 64,606 69,349 73,989 66,898 63,622 67,570 Securities received as pledge 20 Overnight and continuing 5,063 4,636 4,034 4,048 4,097 4,219 4,188 3,620 4,065 4,253 3,943 21 Term 82 51 78 41 58 49 150 57 72 66 63 Repurchase agreements 22 Overnight and continuing 532,929 554,486' 580,621 563,340' 584,929 591,179 579,684 566,864 580,223 565,807 576,726 23 Term 406,928 421,168' 429,700 414,721' 459,451 469,594 396,729 421,859 362,530 399,657 395,454 Securities loaned 24 Overnight and continuing 5,341 4,471 4,210 3,801 4,115 3,871 4,512 4,218 4,502 3,830 3,521 25 Term 3,160 3,258 3,541 0 0 0 3,565 3,536 3,495 3,574 3,597 Securities pledged 26 Overnight and continuing 46,541 38,698 41,671 36,189 38,115 41,662 43,917 42,364 43,127 42,761 41,084 27 Term 6,584 6,917 5,795 6,517 6,032 6,167 5,496 5,395 6,010 6,695 6,728 Collateralized loans 28 Overnight and continuing 10,828 14,943 n.a. 14,584 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 29 Term 1,327 1,419 n.a. 1,459 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 30 Total 12,155 16,304 21,030 15,843 18,666 18,755 23,795 22,676 21,561 16,796 13,690 MEMO: Matched book6 Securities in 31 Overnight and continuing 243,844' 270,197' 278,385 277,085' 297,079 287,724 268,821 263,733 269,482 267,460 267,173 32 Term 446,416' 467,911' 476,525 455,237' 492,452 517,847 448,065 470,319 423,128 458,967 446,364 Securities out 33 Overnight and continuing 339,390' 363,148' 369,543 364,249' 381,823 381,332 365,050 352,696 363,172 356,988 358,125 34 Term 350,879' 370,555' 384,256 363,030' 407,702 423,956 355,390 376,239 322,971 362,156 350,491 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

A30 Domestic Nonfinancial Statistics • December 1996 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1996 11999922 11999933 11999944 11999955 Mar. Apr. May June July 1 Federal and federally sponsored agencies 483,970 570,711 738,928 844,611 846,807 n.a. 868,599 879,355 n.a. 2 Federal agencies 41,829 45,193 39,186 37,347 31,284 31,449 31,029 31,448 30,939 3 Defense Department' 7 6 6 6 6 6 6 6 6 4 Export-Import Bank" " 7,208 5,315 3,455 2,050 2,015 2.015 2,015 1,853 1.853 5 Federal Housing Administration4 374 255 116 97 52 56 56 62 62 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 10,660 9,732 8,073 5,765 300 300 n.a. n.a. n.a. 8 Tennessee Valley Authority 23,580 29,885 27,536 29,429 28,911 29,072 28.952 29,465 28.956 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 442,141 523,452 699,742 807,264 815,523 832,823 837.570 847.807 854.461 11 Federal Home Loan Banks 114,733 139,512 205,817 243,194 239,253 242,437 243,389 249,240 251,169 12 Federal Home Loan Mortgage Corporation 29,631 49,993 93,279 119.961 124,278 136,185 141,248 143.363 146.534 13 Federal National Mortgage Association 166,300 201.112 257,230 299,174 306,815 306,361 305,050 308,385 310,503 14 Farm Credit Banks8 51,910 53,123 53,175 57,379 59,428 60,815 61,197 62,182 60,294 15 Student Loan Marketing Association9 39,650 39,784 50,335 47,529 45,723 47,052 46,735 44,718 46.053 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 Corporation'2 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29.996 29,996 MEMO 19 Federal Financing Bank debt13 154,994 128,187 103,817 78,681 66,725 66,079 64,931 63,654 62,233 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 7,202 5,309 3,449 2,044 2.009 2,009 2,009 1,847 1.847 21 Postal Service6 10,440 9,732 8,073 5,765 300 300 n.a. n.a. n.a. 22 Student Loan Marketing Association 4.790 4,760 n.a. n.a. n.a. n.a. n.a. n.a. 23 Tennessee Valley Authority 6.975 6,325 3,200 3,200 n.a. n.a. n.a. n.a. n.a. 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 42,979 38,619 33,719 21,015 21,015 21.015 21,015 20,625 19,575 26 Rural Electrification Administration 18.172 17,578 17,392 17,144 17,049 16,940 16.944 16.952 16,844 27 Other 64,436 45,864 37,984 29,513 26,352 25.815 24,964 24,230 23.967 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

Securities Market and Corporate Finance A31 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1996r TTyyppee ooff iissssuuee oorr iissssuueerr,, 11999933 11999944 11999955 oorr uussee Feb. Mar. Apr. May June July Aug. Sept. 1 All issues, new and refunding1 279,945 153,950 145,657 12,196 15,794 13,673 15,647 17,496 11,788 12,528 11,594 By type of issue 2 General obligation 90,599 54,404 56,980 5,231 4,944 5,145 5,491 6,709 4,157 4,109 3,459 3 Revenue 189,346 99,546 88,677 6,965 10,850 8,528 10,156 10,787 7,631 8,419 8,135 By type of issuer 4 State 27,999 19,186 14,665 712 910 818 2,803 1,038 671 376 870 5 Special district or statutory authority2 178,714 95,896 93,500 8,135 10,522 10,097 10,313 10,722 7,567 8,449 8,069 6 Municipality, county, or township 73,232 38,868 37,492 3,349 4,362 2,758 2,531 5,736 3,550 3,703 2,655 7 Issues for new capital 91,434 105,972 102,390 6,644 10,599 9,767 9,468 14,193 8,934 7,673 7,852 By use of proceeds 8 Education 16,831 21,267 23,964 2,227 1,896 2,241 2,840 3,396 2,199 2,324 1,505 9 Transportation 9,167 10,836 11,890 370 1,281 964 799 1,400 581 623 846 10 Utilities and conservation 12,014 10,192 9,618 584 981 613 1,375 972 822 408 780 11 Social welfare 13,837 20,289 19,566 975 2,724 1,796 1,633 3,086 2,516 2,610 2,033 12 Industrial aid 6,862 8,161 6,581 137 713 618 382 610 407 286 509 13 Other purposes 32,723 35,227 30,771 2,351 3,004 3,535 2,439 4,729 2,409 1,422 2,179 1. Par amounts of long-term issues based on date of sale. SOURCE. Securities Data Company beginning January 1990; Investment 2. Includes school districts. Dealer's Digest before then. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 1996 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, 11999933 11999944 11999955 oorr iissssuueerr Jan. Feb. Mar. Apr. May June Julyr Aug. 1 All issues' 769,088 583,240 n a. 49,464r 61,884r 55,792r 49,029r 69,250r 66,700 38,917 42,439 2 Bonds2 646,634 498,039 n.a. 44,759r 52,930r 48,363r 36,333r 55,844r 53,786 31,483 36,836 By type of offering 3 Public, domestic 487,029 365,222 408 806 35,438r 45,947r 41,526r 30,574r 46,775r 45,138 25,718 31,601 4 Private placement, domestic3 121,226 76,065 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 38,379 56,755 76,910 9,321 6,984 6,837 5,759 9,069 8,648 5,765 5,235 By industry group 6 Manufacturing 88,160 43,423 42,950 3,952 2,522 3,435r 2,503 5,887 5,942 3,861 2,697 7 Commercial and miscellaneous 58,559 40,735 37,139 2,277 2,840 3,803 2,663 4,933 4,272 2,720 4,007 8 Transportation 10,816 6,867 5,727 664 584 137 120 819 906 525 293 9 Public utility 56,330 13,322 11,974 1,926r 965 788 444 691 1,144 1,046 129 10 Communication 31,950 13,340 18,158 748 2,641 2,253 724 1,097 2,231 647 1,375 11 Real estate and financial 400,820 380,352 369,769 35,192 43,379r 37,948r 29,879r 42,416r 39,292 22,684 28,335 12 Stocks2 122,454 85,155 n.a. 4,705r 8,954r 7,429r 12,696r 13,406r 12,914 7,434 5,603 By type of offering 13 Public preferred 18,897 12,570 10,964 2,167 3,258 967 2,000 1,660 3,309 1,647 1,164 14 Common 82,657 47,828 57,809 2,538r 5,696r 6,462r 10,696' 11,746r 9,605 5,787 4,439 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 17,798 295 l,633r 2,05 lr 3,982r 2,794r 2,649 1,731 984 17 Commercial and miscellaneous 25,761 15,713 n.a. 2,452r 2,512r 3,597r 4,125r 5,103r 6,629 2,549 2,070 18 Transportation 2,237 2,203 38 141 232 37 322 190 104 143 19 Public utility 7,050 2,214 15r 809 319 149 147 569 299 21 20 Communication 3,439 494 200 140r 100 144 1,205 837 1,073 51 21 Real estate and financial 61,004 46,733 l,706r 3,719 1,130 4,258r 3,834r 2,039 1,668 2,335 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- SOURCE. 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

A32 Domestic Nonfinancial Statistics • December 1996 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 1996 IItteemm 11999944 11999955 Jan. Feb. Mar. Apr. May June Julyr Aug. 1 Sales of own shares2 841,286 871,415 112,332 90,370 93,856 101,310 96,501 88,115 93,053 86,225 2 Redemptions of own shares 699,823 699,497 75,354 60,398 65,748 81,005 69,419 69,072 76,485 64,993 3 Net sales3 141,463 171,918 36,978 29,972 28,108 20,305 27,082 19,044 16,568 21,232 4 Assets4 1,550,490 2,067,337 2,143,185 2,181,711 2,212,517 2,293,491 2,356,307 2,363,024 2,297,216 2,366,030 5 Cash5 121,296 142,572 150,772 144,520 142,697 148,777 145,554 144,275 148,647 155,129 6 Other 1,429,195 1,924,765 1,992,414 2,037,191 2,069,820 2,144,713 2,201,752 2,218,749 2,147,337 2,210,901 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 1996 AAccccoouunntt 11999933 11999944 11999955 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2 1 Profits with inventory valuation and capital consumption adjustment 464.4 529.5 586.6 553.1 570.9 560.0 562.3 612.5 611.8 645.1 655.8 2 Profits before taxes 464.3 531.2 598.9 550.8 572.4 594.5 589.6 607.2 604.2 642.2 644.6 3 Profits-tax liability 163.8 195.3 218.7 203.4 213.5 217.3 214.2 224.5 218.7 233.4 236.4 4 Profits after taxes 300.5 335.9 380.2 347.4 358.8 377.2 375.3 382.8 385.5 408.8 408.1 5 Dividends 197.3 211.0 227.4 212.5 218.5 221.7 224.6 228.5 234.7 239.9 243.1 6 Undistributed profits 103.2 124.8 152.8 134.9 140.3 155.5 150.8 154.3 150.8 168.9 165.1 7 Inventory valuation -6.6 -13.3 -28.1 -16.5 -22.8 -51.9 -42.3 -9.3 -8.8 -17.4 -11.0 8 Capital consumption adjustment 6.7 11.6 15.9 18.8 21.3 17.4 15.0 14.6 16.5 20.4 22.3 SOURCE. U.S. Department of Commerce, Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A3 3 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period; not seasonally adjusted 1994 1995 1996 AAccccoouunntt 11999933 11999944 11999955 Q4 Q1 Q2 Q3 Q4 Q1 Q2 ASSETS 1 Accounts receivable, gross" 482.8 551.0 614.6 551.0 568.5 586.9 594.7 614.6 621.8 631.4 2 Consumer 116.5 134.8 152.0 134.8 135.8 141.7 146.2 152.0 151.9 154.6 3 Business 294.6 337.6 375.9 337.6 351.9 361.8 362.4 375.9 380.9 383.7 4 Real estate 71.7 78.5 86.6 78.5 80.8 83.4 86.1 86.6 89.1 93.1 5 LESS: Reserves for unearned income 50.7 55.0 63.2 55.0 58.9 62.1 61.2 63.2 61.5 65.1 6 Reserves for losses 11.2 12.4 14.1 12.4 12.9 13.7 13.8 14.1 14.2 14.9 7 Accounts receivable, net 420.9 483.5 537.3 483.5 496.7 511.1 519.7 537.3 546.1 551.4 8 All other 170.9 183.4 210.7 183.4 194.6 198.1 198.1 210.7 212.8 216.1 9 Total assets 591.8 666.9 748.0 666.9 691.4 709.2 717.8 748.0 758.9 767.5 LIABILITIES AND CAPITAL 10 Bank loans 25.3 21.2 23.1 21.2 21.0 21.5 21.8 23.1 23.5 26.2 11 Commercial paper 159.2 184.6 184.5 184.6 181.3 181.3 178.0 184.5 184.8 183.0 Debt 12 Owed to parent 42.7 51.0 62.3 51.0 52.5 57.5 59.0 62.3 62.3 61.0 13 Not elsewhere classified 206.0 235.0 284.7 235.0 254.4 264.4 272.1 284.7 291.4 301.8 14 All other liabilities 87.1 99.5 106.2 99.5 102.5 102.1 102.4 106.2 105.7 101.9 15 Capital, surplus, and undivided profits 71.4 75.7 87.2 75.7 79.7 82.5 84.4 87.2 91.1 93.6 16 Total liabilities and capital 591.8 666.9 748.0 666.9 691.4 709.2 717.8 748.0 758.9 767.5 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 Credit1 Millions of dollars, amounts outstanding, end of period 1996 TTyyppee ooff ccrreeddiitt 11999933 11999944 11999955 Mar. Apr. May June July Aug. Seasonally adjusted 1 Total 546,103 615,618 691,616 703,398 708,343 710,367 719,536 724,717 727,673 2 Consumer. 160,227 176,085 198,861 203,280 205,184 207,027 210,341 212,814 211,542 3 Real estate' 72,043 78,910 87,077 89,502 89,943 90,180 93,917 95,088 96,480 4 Business. . 313,833 360,624 405,678 410,616 413,216 413,160 415,278 416,815 419,652 Not seasonally adjusted 5 Total 550,751 620,975 697,340 705,650 710,762 712,429 722,597 718,052 721,388 6 Consumer 162,770 178,999 202,101 202,337 203,532 205,678 209,851 210,777 210,781 7 Motor vehicles 56,057 61,609 70,061 72,129 73,810 74,327 74,286 75,038 74,433 8 Other consumer3 60,396 73,221 81,988 79,779 79,489 80,435 80,344 81,311 81,036 9 Securitized motor vehicles4 36,024 31,897 33,633 31,093 30,476 31,435 34,826 33,731 34,636 10 Securitized other consumer4 10,293 12,272 16,419 19,336 19,757 19,481 20,395 20,697 20,676 11 Real estate2 71,727 78,479 86,606 89,056 89,975 90,182 93,100 95,336 96,952 12 Business 316,254 363,497 408,633 414,257 417,255 416,569 419,646 411,939 413,655 13 Motor vehicles 95,173 118,197 133,277 134,098 134,500 134,196 137,477 132,543 134,044 14 Retail loans5 18,091 21,514 25,304 27,140 27,954 27,151 29,032 28,373 28,404 15 Wholesale loans6 31,148 35,037 36,427 33,910 32,155 31,360 32,095 26,506 27,428 16 Leases 45,934 61,646 71,546 73,048 74,391 75,685 76,350 77,664 78,212 17 Equipment 145,452 157,953 177,297 177,285 178,507 178,151 178,983 177,949 178,278 18 Loans7 43,514 49,358 59,109 57,909 57,576 57,327 58,788 57,621 54,865 19 Leases 101,938 108,595 118,188 119,376 120,931 120,824 120,195 120,328 123,413 20 Other business8 53,997 61,495 65,363 69,497 69,193 68,112 67,210 66,548 67,246 21 Securitized business assets4 21,632 25,852 32,696 33,377 35,055 36,110 35,976 34,899 34,087 22 Retail loans 2,869 4,494 4,723 4,067 4,367 4,790 4,688 4,613 4,700 23 Wholesale loans 10,584 14,826 21,327 22,622 24,327 25,028 24,950 23,988 23,151 24 Leases 8,179 6,532 6,646 6,688 6,361 6,292 6,338 6,298 6,236 1. Includes finance company subsidiaries of bank holding companies but not of retailers 5. Passenger car fleets and commercial land vehicles for which licenses are required. and banks. Data are before deductions for unearned income and losses. Data in this table also 6. Credit arising from transactions between manufacturers and dealers, that is, floor plan appear in the Board's G.20 (422) monthly statistical release. For ordering address, see inside financing. front cover. 7. Beginning with the June 1996 data, retail and wholesale business equipment loans have 2. Includes all loans secured by liens on any type of real estate, for example, first and junior been combined and are no longer separately available. mortgages and home equity loans. 8. 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. 4. Outstanding balances of pools upon which securities have been issued; these balances are no longer carried on the balance sheets of the loan originator. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • December 1996 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1996 IItteemm 11999933 11999944 11999955 Mar. Apr. May June July Aug. Sept. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms' 1 Purchase price (thousands of dollars) 163.1 170.4 175.8 184.5 175.2 179.5 180.1 194.0 184.8 187.1 2 Amount of loan (thousands of dollars) 123.0 130.8 134.5 141.5 133.2 137.6 139.4 144.2 141.1 141.7 3 Loan-to-price ratio (percent) 78.0 78.8 78.6 77.8 78.4 79.3 78.7 76.2 77.7 77.2 4 Maturity (years) 26.1 27.5 27.7 26.4 27.1 27.2 25.8 26.7 27.2 27.7 5 Fees and charges (percent of loan amount)2 1.30 1.29 1.21 1.30 1.17 1.16 1.31 1.25 1.38 1.28 Yield (percent per year) 6 Contract rate1 7.03 7.26 7.65 7.25 7.57 7.61 7.75 7.80 7.85 7.77 7 Effective rate1'3 7.24 7.47 7.85 7.49 7.76 7.80 8.05 8.01 8.08 7.98 8 Contract rate (HUD series)4 7.37 8.58 8.05 7.97 8.22 8.34 8.37 8.28 8.45 8.23 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 7.46 8.68 8.18 8.09 8.52 8.57 8.55 8.56 8.58 8.56 10 GNMA securities6 6.65 7.96 7.57 7.40 7.63 7.81 7.91 7.84 7.68 7.85 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 190,861 222,057 253,511 262,014 263,809 267,330 270,042 272,458 275,133 278,003 12 FHA/VA insured 23,857 27,558 28,762 28,744 29,132 30,442 30,936 30,830 30,803 30,840 13 Conventional 167,004 194,499 224,749 233,270 234,677 236,888 239,106 241,628 244,330 247,163 14 Mortgage transactions purchased (during period) 92,037 62,389 56,598 7,681 5,339 6,720 5,421 5,345 5,360 5,353 Mortgage commitments (during period) 15 Issued7 92,537 54,038 56,092 6,293 5,599 5,228 5,280 5,036 5,673 4,264 16 To sell8 5,097 1,820 360 29 0 13 0 0 0 53 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period f 17 Total 55,012 72,693 107,424 117,420 119,520 121,058 123,806 125,574 127,345 129,427 18 FHA/VA insured 321 276 267 220 216 212 209 205 205 205 19 Conventional 54,691 72,416 107,157 117,200 119,304 120,846 123,597 125,369 127,140 129,222 Mortgage transactions (during period) 20 Purchases 229,242 124,697 98,470 11,984 12,740 12,385 10,266 9,934 9,643 8,687 21 Sales 208,723 117,110 85,877 11,384 11,958 11,904 9,969 9,496 8,994 8,167 22 Mortgage commitments contracted (during period)9 274,599 136,067 118,659 14,520 13,009 11,075 11,164 10,626 8,992 9,315 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

Real Estate A3 5 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1995 1996 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999922 11999933 11999944 Q2 Q3 Q4 Ql Q2P 1 AH holders 4,091,827 4,266,657 4,472,693 4,581,594 4,657,832 4,706,654 4,775,361 4,859,561 By type of property 2 One- to four-family residences 3,036,251 3,225,371 3,429,616 3,521,129 3,587,678 3,626,772 3,682,227 3,749,867 3 Multifamily residences 274,234 270,796 275,304 280,429 284,276 287,935 291,979 296,888 4 Nonfarm, nonresidential 700,604 689,296 684,803 696,228 701,525 707,328 715,940 726,308 5 80,738 81,194 82,971 83,808 84,352 84,620 85,215 86,498 By type of holder 6 Major financial institutions 1,769,187 1,767,835 1,815,810 1,868,175 1,895,285 1,888,977 1,894,809 1,916,216 7 Commercial banks2 894,513 940,444 1,004,280 1,053,048 1,072,780 1,080,373 1,087,216 1,099,554 8 One- to four-family 507,780 556,538 611,697 648,705 662,126 663,588 665,405 669,925 9 Multifamily 38,024 38,635 38,916 40,593 43,003 43,846 44,705 45,222 10 Nonfarm, nonresidential 328,826 324,409 331,100 340,176 343,826 349,109 353,174 359,845 11 Farm 19,882 20,862 22,567 23,575 23,824 23,829 23,931 24,561 12 Savings institutions3 627,972 598,330 596,199 599,745 604,614 596,789 595,908 606,163 13 One- to four-family 489,622 469,959 477,499 482,005 489,150 482,765 483,367 492,692 14 Multifamily 69,791 67,362 64,400 64,404 63,569 61,926 60,427 60,720 15 Nonfarm, nonresidential 68,235 60,704 54,011 53,054 51,604 51,809 51,814 52,433 16 Farm 324 305 289 282 291 288 300 317 17 Life insurance companies 246,702 229,061 215,332 215,382 217,892 211,815 211,686 210,499 18 One- to four-family 11,441 9,458 7,910 7,610 7,701 7,476 7,472 7,428 19 Multifamily 27,770 25,814 24,306 24,347 24,638 23,920 23,906 23,764 20 Nonfarm, nonresidential 198,269 184,305 173,539 173,830 175,910 170,783 170,681 169,670 21 Farm 9,222 9,484 9,577 9,596 9,643 9,636 9,627 9,637 22 Federal and related agencies 286,263 327,014 319,327 313,039 314,353 313,760 312,950 314,694 23 Government National Mortgage Association 30 22 6 7 2 2 2 2 24 One- to four-family 30 15 6 7 2 2 2 2 25 Multifamily 0 7 0 0 0 0 0 0 26 Farmers Home Administration4 41,695 41,386 41,781 41,917 41,858 41,791 41,594 41,547 27 One- to four-family 16,912 15,303 13,826 13,217 12,914 12,643 12,327 11,982 28 Multifamily 10,575 10,940 11,319 11,512 11,557 11,617 11,636 11,645 29 Nonfarm, nonresidential 5,158 5,406 5,670 5,949 6,096 6,248 6,365 6,552 30 Farm 9,050 9,739 10,966 11,239 11,291 11,282 11,266 11,369 31 Federal Housing and Veterans' Administrations 12,581 12,215 10,964 10,098 9,535 9,809 8,439 8,052 32 One- to four-family 5,153 5,364 4,753 4,838 4,918 5,180 4,228 3,861 33 Multifamily 7,428 6,851 6,211 5,260 4,617 4,629 4,211 4,191 34 Resolution Trust Corporation 32,045 17,284 10,428 6,456 4,889 1,864 0 0 35 One- to four-family 12,960 7,203 5,200 2,870 2,299 691 0 0 36 Multifamily 9,621 5,327 2,859 1,940 1,420 647 0 0 37 Nonfarm, nonresidential 9,464 4,754 2,369 1,645 1,170 525 0 0 38 Farm 0 0 0 0 0 0 0 0 39 Federal Deposit Insurance Corporation 0 14,112 7,821 6,039 5,015 4,303 5,553 5,016 40 One- to four-family 0 2,367 1,049 731 618 492 839 840 41 Multifamily 0 1,426 1,595 1,135 722 428 1,100 955 42 Nonfarm, nonresidential 0 10,319 5,177 4,173 3,674 3,383 3,614 3,221 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 137,584 166,642 178,059 178,462 182,229 183,782 183,531 186,041 45 One- to four-family 124,016 151,310 162,160 162,674 166,393 168,122 167,895 170,572 46 Multifamily 13,568 15,332 15,899 15,788 15,836 15,660 15,636 15,469 47 Federal Land Banks 28,664 28,460 28,555 28,005 28,151 28,428 28,891 29,362 48 One- to four-family 1,687 1,675 1,671 1,648 1,656 1,673 1,700 1,728 49 Farm 26,977 26,785 26,885 26,357 26,495 26,755 27,191 27,634 50 Federal Home Loan Mortgage Corporation 33,665 46,892 41,712 42,055 42,673 43,781 44,939 44,674 51 One- to four-family 31,032 44,345 38,882 38,794 39,239 39,929 40,877 40,477 52 Multifamily 2,633 2,547 2,830 3,261 3,434 3,852 4,062 4,197 53 Mortgage pools or trusts5 1,433,183 1,562,925 1,717,991 1,759,039 1,795,041 1,853,632 1,894,711 1,946,036 54 Government National Mortgage Association 419,516 414,066 450,934 457,108 463,654 472,317 475,854 485,454 55 One- to four-family 410,675 404,864 441,198 446,862 453,114 461,472 464,675 473,963 56 Multifamily 8,841 9,202 9,736 10,246 10,540 10,845 11,179 11,491 57 Federal Home Loan Mortgage Corporation 407,514 447,147 490,851 498,216 503,370 515,051 524,327 536,671 58 One- to four-family 401,525 442,612 487,725 495,182 500,417 512,238 521,722 534,238 59 Multifamily 5,989 4,535 3,126 3,034 2,953 2,813 2,605 2,433 60 Federal National Mortgage Association 444,979 495,525 530,343 543,669 559,585 582,959 599,546 621,285 61 One- to four-family 435,979 486,804 520,763 533,091 548,400 569,724 585,527 606,271 62 Multifamily 9,000 8,721 9,580 10,578 11,185 13,235 14,019 15,014 63 Farmers Home Administration4 38 28 19 13 12 11 10 9 64 One- to four-family 8 5 3 2 2 2 1 1 65 Multifamily 0 0 0 0 0 0 0 0 66 Nonfarm, nonresidential 17 13 9 6 5 5 5 4 67 Farm 13 10 7 5 5 4 4 4 68 Private mortgage conduits 161,136 206,159 245,844 260,033 268,420 283,294 294,974 302,616 69 One- to four-family6 139,637 171,988 194,145 202,658 207,679 214,635 219,392 221,380 70 Multifamily 6,305 8,701 14,925 17,281 18,903 21,279 24,477 26,696 71 Nonfarm, nonresidential 15,194 25,469 36,774 40,094 41,838 47,380 51,104 54,541 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others7 603,194 608,884 619,565 641,341 653,153 650,286 672,891 682,615 74 One- to four-family 447,795 455,560 461,130 480,234 491,050 486,140 506,798 514,507 75 Multifamily 64,688 65,397 69,601 71,051 71,898 73,237 74,015 75,090 76 Nonfarm, nonresidential 75,441 73,917 76,153 77,301 77,401 78,084 79,182 80,042 77 Farm 15,270 14,009 12,681 12,755 12,804 12,824 12,896 12,975 1. Multifamily debt refers to loans on structures of five or more units. 6. Includes securitized home equity loans. 2. Includes loans held by nondeposit trust companies but not loans held by bank trust 7. Other holders include mortgage companies, real estate investment trusts, state and local departments. credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and 3. Includes savings banks and savings and loan associations. finance companies. 4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from SOURCE. Based on data from various institutional and government sources. Separation of FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 because of accounting nonfarm mortgage debt by type of property, if not reported directly, and interpolations and changes by the Farmers Home Administration. extrapolations, when required for some quarters, are estimated in part by the Federal Reserve. 5. Outstanding principal balances of mortgage-backed securities insured or guaranteed by Line 69 from Inside Mortgage Securities and other sources. the agency indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • December 1996 1.55 CONSUMER INSTALLMENT CREDIT1 Millions of dollars, amounts outstanding, end of period 1996r HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999933 11999944 11999955 Mar. Apr. I May June July Aug. Seasonally adjusted 11 TToottaall 844,118 966,457 1,103,296 1,135,732 1,143,251 1,149,203 1,155,887 1,163,187 1,166,538 22 AAuuttoommoobbiillee 279,786 317,182 350,848 357,752 360,081 360,875 366,059 368,113 368,262 33 RReevvoollvviinngg 287,011 339,337 413,894 431,249 437,643 443,054 444,382 450,008 452,824 44 OOtthheerr22 277,321 309,939 338,554 346,731 345,527 345,275 345,447 345,066 345,452 Not seasonally adjusted 5 Total 863,924 990,247 1,131,881 1,125,387 1,132,513 1,139,449 1,148,737 1,153,478 1,163,374 By major holder 6 Commercial banks 399,683 462,923 507,753 500,929 506,600 505,211 507,715 511,219 516,813 7 Finance companies 116,453 134,830 152,624 151,749 153,299 155,893 155,864 156,430 155,469 8 Credit unions 101,634 119,594 131,939 130,837 131,844 133,367 134,582 136,669 138,646 9 Savings institutions 37,855 38,468 40,106 40,762 41,000 41,000 40,323 40,323 40,000 10 Nonfinancial business3 77,229 86,621 85,061 76,681 73,765 74,680 72,063 71,232 72,249 11 Pools of securitized assets4. . 131,070 147,811 214,398 224,429 226,005 229,298 238,190 237,605 240,197 By major type of credit5 12 Automobile 281,538 319,715 354,055 354,061 355,640 358,201 364,576 366,952 369,691 13 Commercial banks 122,000 141,895 149,094 148,455 150,060 150,524 152,921 154,639 156,308 14 Finance companies 56,057 61,609 70,626 72,129 73,810 74,327 74,286 75,119 74,433 15 Pools of securitized assets4 39,561 36,376 44,411 42,800 40,545 41,021 44,543 42,822 43,318 16 Revolving 302,201 357,307 435,674 425,875 430,929 437,189 439,514 443,655 449,875 17 Commercial banks 149,920 182,021 210,298 196,836 201,122 203,432 204,049 207,926 211,012 18 Nonfinancial business3 50,125 56,790 53,525 47,416 44,526 45,182 42,574 41,715 42,508 19 Pools of securitized assets4 80,242 96,130 147,934 157,901 161,396 164,509 168,844 169,716 171,847 20 Other 280,185 313,225 342,152 345,451 345,944 344,059 344,647 342,871 343,808 21 Commercial banks 127,763 139,007 148,361 155,638 155,418 151,255 150,745 148,654 149,493 22 Finance companies 60,396 73,221 81,998 79,620 79,489 81,566 81,578 81,311 81,036 23 Nonfinancial business3 27,104 29,831 31,536 29,265 29,239 29,498 29,489 29,517 29,741 24 Pools of securitized assets4 11,267 15,305 22,053 23,728 24,064 23,768 24,803 25,067 25,032 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 1996 IItteemm 11999933 11999944 11999955 Feb. Mar. Apr. May June July Aug. INTEREST RATES Commercial banks2 1 48-month new car 8.09 8.12 9.57 9.12 n.a. n.a. 8.93 n.a. 9.11 2 24-month personal 13.47 13.19 13.94 13.63 n.a. n.a. 13.52 n.a. n.a. 13.37 Credit card plan 3 All accounts n.a. 15.69 16.02 15.82 n.a. n.a. 15.44 n.a. 15.65 4 Accounts assessed interest n.a. 15.77 15.79 15.41 n.a. n.a. 15.41 n.a. n.a. 15.64 Auto finance companies 5 New car 9.48 9.79 11.19 9.86 9.77 9.64 9.37 9.53 9.81 10.49 6 Used car 12.79 13.49 14.48 13.28 13.19 13.26 13.49 13.62 13.77 13.92 OTHER TERMS3 Maturity (months) 7 New car 54.5 54.0 54.1 52.3 51.8 51.5 50.8 50.4 50.5 51.4 8 Used car 48.8 50.2 52.2 52.1 52.0 51.8 51.7 51.6 51.7 51.3 Loan-to-value ratio 9 New car 91 92 92 91 91 91 91 91 91 92 10 Used car 98 99 99 98 98 99 99 100 100 100 Amount financed (dollars) 11 New car 14,332 15,375 16,210 16,627 16,520 16,605 16,686 16,854 16,926 16,927 12 Used car 9,875 10,709 11,590 11,990 11,934 12,024 12,233 12,249 12,242 12,132 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

Flow of Funds A37 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1994 1995 1996 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999911 11999922 11999933 11999944 11999955 Q4 Q1 Q2 Q3 Q4 QL Q2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors.... 481.7 543.0 628.5 620.4 722.3 652.7 846.0 869.3 582.5 591.3 869.8 689.4 By sector and instrument 2 Federal government 278.2 304.0 256.1 155.9 144.4 166.8 247.8 184.7 86.0 59.3 239.9 62.4 3 Treasury securities 292.0 303.8 248.3 155.7 142.9 172.5 249.0 183.1 85.6 54.1 242.2 60.2 4 Budget agency securities and mortgages -13.8 .2 7.8 .2 1.5 -5.7 -1.2 1.6 .4 5.1 -2.3 2.2 5 Nonfederal 203.5 239.0 372.3 464.5 577.8 485.9 598.2 684.6 496.5 532.1 630.0 627.0 By instrument 6 Commercial paper -18.4 8.6 10.0 21.4 18.1 30.7 12.3 39.1 13.9 7.2 42.2 15.4 7 Municipal securities 87.8 30.5 74.8 -29.3 -41.3 -53.5 -54.9 -2.2 -100.3 -7.6 -15.2 40.1 8 Corporate bonds 78.8 67.6 75.2 23.3 73.3 6.2 53.0 98.4 59.8 82.0 58.9 70.0 9 Bank loans n.e.c -40.9 -13.7 3.8 73.1 99.6 77.5 145.9 99.0 75.2 78.2 38.4 79.5 10 Other loans and advances -48.5 10.1 -10.2 55.4 58.3 68.9 79.2 55.2 36.1 62.5 35.5 34.4 11 Mortgages 158.4 130.9 157.2 194.3 228.2 215.7 226.0 240.0 254.9 192.1 340.4 306.4 12 Home mortgages 173.6 187.6 187.9 202.4 196.7 221.9 199.2 207.7 221.4 158.7 292.9 245.9 13 Multifamily residential -5.5 -10.4 -6.0 1.3 10.9 -4.2 2.8 14.2 13.7 12.8 14.4 17.7 14 Commercial -10.0 -47.8 -25.0 -11.1 19.0 -3.4 22.4 16.3 17.7 19.5 30.8 37.6 15 Farm .4 1.4 .5 1.8 1.6 1.4 1.6 1.7 2.2 1.1 2.4 5.1 16 Consumer credit -13.7 5.0 61.5 126.3 141.6 140.5 136.7 155.1 156.9 117.7 129.7 81.1 By borrowing sector 17 Household 183.8 198.4 254.6 368.7 380.6 399.1 366.1 401.2 414.9 340.2 435.9 391.0 18 Nonfinancial business -61.9 19.5 55.5 139.3 242.9 155.0 286.3 292.3 185.1 207.9 206.6 199.1 19 Corporate -53.0 34.1 46.5 124.3 208.5 139.4 239.0 258.8 155.0 181.3 166.4 157.3 20 Nonfarm noncorporate -11.0 -16.0 7.0 12.1 32.8 16.4 46.6 30.5 26.5 27.6 40.1 34.8 71 Farm 2.1 1.3 2.0 2.8 1.6 -.8 .8 3.0 3.5 -1.0 .1 7.0 22 State and local government 81.6 21.1 62.3 -43.4 -45.7 -68.2 -54.2 -9.0 -103.5 -16.0 -12.5 36.8 23 Foreign net borrowing in United States 14.8 23.7 70.4 -15.3 69.5 45.5 61.8 43.1 95.5 77.4 43.8 34.9 74 Open market paper 6.4 5.2 -9.0 -27.3 13.6 5.9 37.9 -11.1 30.9 -3.4 -13.8 7.4 75 Bonds 15.0 16.8 82.9 12.2 48.3 39.1 13.9 51.2 55.2 72.7 47.9 11.4 26 Bank loans n.e.c 3.1 2.3 .7 1.4 8.5 -.5 8.1 5.6 8.2 11.9 8.7 15.2 27 Other loans and advances -9.8 -.6 -4.2 -1.6 -.8 1.1 1.9 -2.6 1.3 -3.9 1.1 .9 28 Total domestic plus foreign 496.5 566.7 698.9 605.1 791.7 698.2 907.7 912.4 678.0 668.7 913.6 724.4 Financial sectors 29 Total net borrowing by financial sectors 155.6 240.0 291.1 467.9 447.2 534.2 267.7 439.9 507.1 574.0 319.9 686.6 By instrument 30 U.S. government-related 145.7 155.8 164.2 288.6 205.1 316.1 86.7 196.5 227.7 309.6 143.8 302.0 31 Government-sponsored enterprise securities 9.2 40.3 80.6 176.9 106.9 249.0 62.9 127.2 101.5 136.1 37.4 132.9 32 Mortgage pool securities 136.6 115.6 83.6 116.5 98.2 67.1 23.8 69.3 126.2 173.5 106.5 169.1 33 Loans from U.S. government .0 .0 .0 -4.8 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 9.8 84.2 126.9 179.2 242.1 218.1 181.0 243.4 279.4 264.4 176.0 384.6 35 Open market paper -32.0 -.7 -6.2 41.6 42.6 86.5 37.6 33.9 43.7 55.1 17.8 105.7 36 Corporate bonds 69.9 82.7 120.1 117.5 185.2 84.9 167.6 182.3 217.7 173.4 143.3 201.0 37 Bank loans n.e.c 8.8 2.2 -13.0 -12.3 5.5 3.7 -5.0 20.7 7.9 -1.8 14.9 23.6 38 Other loans and advances -37.3 -.6 22.4 22.6 3.4 38.1 -24.5 1.3 4.9 32.0 -5.5 48.6 39 Mortgages .5 .6 3.6 9.8 5.3 4.9 5.2 5.2 5.2 5.6 5.5 5.8 By borrowing sector 40 Commercial banking -13.2 10.0 13.4 20.1 22.5 20.7 21.7 39.0 37.5 -8.2 -32.5 40.1 41 Savings institutions -44.7 -7.0 11.3 12.8 2.6 36.1 -18.9 -7.2 5.1 31.5 10.9 40.2 42 Credit unions .0 .0 .2 .2 -.1 .2 -.3 -.1 .1 .0 -.1 -.2 43 Life insurance companies .0 .0 .2 .3 -.1 1.3 .0 .1 -.1 -.4 2.5 .3 44 Government-sponsored enterprises 9.1 40.2 80.6 172.1 106.9 249.0 62.9 127.2 101.5 136.1 37.4 132.9 45 Federally related mortgage pools 136.6 115.6 83.6 116.5 98.2 67.1 23.8 69.3 126.2 173.5 106.5 169.1 46 Issuers of asset-backed securities (ABSs) 54.0 58.5 83.3 68.5 132.8 62.8 67.6 113.2 166.4 183.9 132.4 127.2 47 Finance companies 17.7 -1.6 .2 50.2 51.6 53.0 80.2 52.0 19.8 54.3 47.1 54.8 48 Mortgage companies -2.4 8.0 .0 -11.5 .4 1.1 -7.4 14.8 4.0 -10.0 10.0 16.0 49 Real estate investment trusts (REITs) 1.2 .3 3.4 13.7 5.4 6.3 5.2 5.2 5.2 6.0 5.9 6.5 50 Brokers and dealers 3.7 2.7 12.0 .5 -5.0 19.3 -29.5 -.1 2.1 7.7 -31.8 13.1 51 Funding corporations -6.5 13.2 2.9 24.2 32.0 17.2 62.5 26.4 39.4 -.4 31.6 86.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • December 1996 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1—Continued 1994 1995 1996 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999911 11999922 11999933 11999944 11999955 Q4 Q1 Q2 Q3 Q4 Q1 Q2 All sectors 55552222 TTTToooottttaaaallll nnnneeeetttt bbbboooorrrrrrrroooowwwwiiiinnnngggg,,,, aaaallllllll sssseeeeccccttttoooorrrrssss 652.1 806.7 990.0 1,073.0 1,238.9 1,232.4 1,175.4 1,352.3 1,185.1 1,242.7 1,233.5 1,411.0 55553333 OOOOppppeeeennnn mmmmaaaarrrrkkkkeeeetttt ppppaaaappppeeeerrrr -44.0 13.1 -5.1 35.7 74.3 123.1 87.8 61.9 88.5 58.9 46.2 128.6 55554444 UUUU....SSSS.... ggggoooovvvveeeerrrrnnnnmmmmeeeennnntttt sssseeeeccccuuuurrrriiiittttiiiieeeessss 424.0 459.8 420.3 449.3 349.5 482.9 334.5 381.1 313.7 368.9 383.7 364.4 55555555 MMMMuuuunnnniiiicccciiiippppaaaallll sssseeeeccccuuuurrrriiiittttiiiieeeessss 87.8 30.5 74.8 -29.3 -41.3 -53.5 -54.9 -2.2 -100.3 -7.6 -15.2 40.1 55556666 CCCCoooorrrrppppoooorrrraaaatttteeee aaaannnndddd ffffoooorrrreeeeiiiiggggnnnn bbbboooonnnnddddssss 163.6 167.1 278.2 153.0 306.8 130.1 234.5 331.9 332.6 328.2 250.1 282.4 55557777 BBBBaaaannnnkkkk llllooooaaaannnnssss nnnn....eeee....cccc -29.1 -9.3 -8.5 62.2 113.5 80.7 149.0 125.3 91.3 88.3 61.9 118.3 55558888 OOOOtttthhhheeeerrrr llllooooaaaannnnssss aaaannnndddd aaaaddddvvvvaaaannnncccceeeessss -95.6 8.9 8.0 71.7 60.8 108.1 56.5 53.9 42.2 90.7 31.1 83.9 55559999 MMMMoooorrrrttttggggaaaaggggeeeessss 158.9 131.5 160.8 204.1 233.6 220.6 231.2 245.2 260.2 197.6 345.9 312.1 66660000 CCCCoooonnnnssssuuuummmmeeeerrrr ccccrrrreeeeddddiiiitttt -13.7 5.0 61.5 126.3 141.6 140.5 136.7 155.1 156.9 117.7 129.7 81.1 Funds raised through mutual funds and corporate equities 66661111 TTTToooottttaaaallll nnnneeeetttt iiiissssssssuuuueeeessss 209.4 296.6 445.0 156.2 162.6 -79.5 48.9 152.3 207.0 242.3 282.8 411.4 66662222 CCCCoooorrrrppppoooorrrraaaatttteeee eeeeqqqquuuuiiiittttiiiieeeessss 62.2 87.5 121.2 27.3 -11.3 -64.3 -35.2 -12.8 5.0 -2.3 -4.9 73.1 66663333 NNNNoooonnnnffffiiiinnnnaaaannnncccciiiiaaaallll ccccoooorrrrppppoooorrrraaaattttiiiioooonnnnssss 18.3 27.0 21.3 -44.9 -74.2 -118.0 -60.0 -71.3 -92.8 -72.8 -106.8 -16.8 66664444 FFFFiiiinnnnaaaannnncccciiiiaaaallll ccccoooorrrrppppoooorrrraaaattttiiiioooonnnnssss 13.3 28.1 36.6 24.1 12.2 16.3 8.4 17.7 9.6 13.1 12.1 21.1 66665555 FFFFoooorrrreeeeiiiiggggnnnn sssshhhhaaaarrrreeeessss ppppuuuurrrrcccchhhhaaaasssseeeedddd bbbbyyyy UUUU....SSSS.... rrrreeeessssiiiiddddeeeennnnttttssss 30.7 32.4 63.4 48.1 50.7 37.4 16.4 40.8 88.2 57.4 89.8 68.9 66666666 MMMMuuuuttttuuuuaaaallll ffffuuuunnnnddddssss 147.2 209.1 323.7 128.9 173.9 -15.2 84.1 165.0 202.0 244.5 287.6 338.2 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

Flow of Funds A39 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1994 1995 1996 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999911 11999922 11999933 11999944 11999955 Q4 Q1 Q2 Q3 Q4 Ql Q2 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 652.1 806.7 990.0 1,073.0 1,238.9 1,232.4 1,175.4 1,352.3 1,185.1 1,242.7 1,233.5 1,411.0 2 Domestic nonfederal nonfinancial sectors 105.2 88.7 82.5 251.4 -89.1 260.5 14.9 -153.0 -51.3 -166.9 -21.8 85.1 Households 29.0 82.5 69.1 295.7 43.5 375.8 161.4 -111.7 203.9 -79.7 81.4 90.3 4 Nonfinancial corporate business 30.7 27.8 9.1 49.6 -5.8 50.0 -42.6 39.5 -52.4 32.3 -5.0 14.1 5 Nonfarm noncorporate business -5.3 -.1 .6 .7 1.0 .9 „i 1.1 1.2 !.i 1.1 6 State and local governments 50.8 -21.5 3.7 -94.6 -127.7 -166.1 -104.4 - 81.9 -204.0 —120.1 -99.2 -20.4 7 Federal government 10.5 -11.9 -18.4 -24.2 -21.3 -24.3 -13.1 -24.2 -24 0 -24.0 -20.0 -13.8 8 Rest of the world 13.3 98.4 128.5 133.2 271.8 209.0 246.6 320.2 361.6 158.8 343.9 269.7 9 Financial sectors 523.1 631.5 797.3 712.5 1,077.5 787.2 927.0 1.209.3 898.9 1,274.9 931.3 1,070.0 10 Monetary authority 31.1 27.9 36.2 31.5 12.7 25.5 18.4 16.7 -4.1 19.7 16.9 9.4 11 Commercial banking 80.8 95.3 142.2 163.4 265.9 179.8 333.0 319.4 244.8 166.2 121.7 191.2 12 U.S. chartered banks 35.7 69.5 149.6 148.1 186.5 178.4 178.7 222.4 227.0 118.1 80.5 125.5 13 Foreign banking oifices in United States 48.5 16.5 -9.8 11.2 75.4 -4.5 153.5 86.6 25.6 36.1 44.2 58.6 14 Bank holding companies -1.5 5.6 .0 .9 -.3 -2.4 - 1.5 5.3 -9.6 4.6 -5.1 5.3 15 Banks in U.S. affiliated areas -1.9 3.7 2.4 3.3 4.2 8.3 2.4 5.2 1.8 7.4 2.1 1.7 16 Savings institutions -158.9 -79.0 -23.4 6.8 -7.5 5.6 17.6 -11.4 32.0 -68.4 -20.1 5.0 17 Credit unions 12.8 17.7 21.7 28.1 16.2 24.9 11.6 22.8 11.0 19.5 22.3 33.4 18 Bank personal trusts and estates 10.0 8.0 9.5 7.1 -18.8 1.4 -10.8 -20.6 -23.7 -20.2 -18.1 -12.3 19 Life insurance companies 86.5 78.5 100.9 66.3 99.2 76.7 135.2 135.5 72.9 53.3 48.7 117.2 20 Other insurance companies 30.0 6.7 27.7 24.9 21.5 30.4 20.8 20.9 21.9 22.3 23.6 23.7 21 Private pension funds 35.4 41.1 45.9 47.0 61.3 74.7 58.9 57.2 50.5 78.5 65.8 84.3 22 State and local government retirement funds 41.1 23.0 19.8 29.0 21.4 41.8 59.4 4.6 2.7 18.9 55.5 76.1 23 Monev market mutual funds 32.7 4.7 20.4 30.0 86.5 52.8 56.4 134.4 30.0 125.1 175.0 18.4 74 Mutual funds 80.1 126.2 159.5 -7.1 52.5 -78.6 -13.4 23.4 58.0 141.9 67.5 82.1 25 Closed-end funds 12.8 18.2 11.0 -5.5 5.8 -10.0 3.5 6.4 8.4 5.0 -1.2 3.8 26 Government sponsored enterprises 15.1 68.8 90.2 119.1 88.9 171.4 21.9 93.0 50.0 190.5 39.4 134.6 27 Federally related mortgage pools 136.6 115.6 83.6 116.5 98.2 67.1 23.8 69.3 126.2 173.5 106.5 169.1 78 Asset-backed securities issuers (ABSs) 50.0 53.7 80.8 61.9 112.1 42.6 55.5 100.9 154.4 137.4 112.4 119.3 29 Finance companies -9.2 7.5 -9.0 68.2 64.2 80.7 85.1 67.2 50.8 53.7 40.9 38.9 30 Mortgage companies 11.2 .1 .0 -22.9 -3.4 2.1 -14.4 29.9 7.3 -36.4 51.0 -16.4 31 Real estate investment trusts (REITs) -.7 1.1 .6 4.7 1.8 .2 1.8 1.8 1.8 1.9 1.9 1.7 V Brokers and dealers 17.5 -1.3 14.8 -44.2 90.1 - 8.0 30.5 146.2 -1.8 185.6 -109.0 -75.9 33 Funding corporations 8.2 17.7 -34.9 -12.2 9.1 6.2 32.1 -8.3 5.7 7.0 130.6 66.4 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets 652.1 806.7 990.0 1,073.0 1,238.9 1,232.4 1.175.4 1.352.3 1,185.1 1,242.7 1,233.5 1,411.0 Other financial sources 35 Official foreign exchange -5.9 -1.6 .8 -5.8 8.8 -8.6 17.8 10.3 9.0 -1.9 -2.1 .0 36 Special drawing rights certificates .0 -2.0 .0 .0 2.2 .0 .0 .0 8.6 .0 .0 .0 37 Treasury currency .0 .2 .4 .7 .6 .7 .7 .7 .8 .0 .0 .0 38 Foreign deposits -26.5 -3.5 -18.5 54.0 33.5 106.4 34.6 110.8 -29.5 18.2 85.0 8.7 39 Net interbank transactions -3.4 49.4 50.5 89.7 10.1 108.5 - 22.3 -4.5 -13.4 80.7 -90.3 -84.1 40 Checkable deposits and currency 86.3 113.5 117.3 -9.7 -12.8 -37.3 31.3 100.2 -113.1 -69.3 44.3 1.6 41 Small time and savings deposits 1.5 -57.2 -70.3 -40.0 96.5 -42.7 29.8 95.6 145.6 114.9 189.0 -10.2 42 Large time deposits -58.5 -73.2 -23.5 19.6 65.6 36.2 108.8 74.4 80.2 -.9 43.0 85.4 43 Money market fund shares 41.6 4.5 20.2 43.3 142.3 81.1 74.2 221.1 122.9 151.1 244.0 4.1 44 Security repurchase agreements -16.5 43.1 71.2 78.3 110.7 48.5 172.5 115.6 95.0 59.8 -23.7 70.4 45 Corporate equities 62.2 87.5 121.2 27.3 -11.3 -64.3 -35.2 -12.8 5.0 -2.3 -4.9 73.1 46 Mutual fund shares 147.2 209.1 323.7 128.9 173.9 -15.2 84.1 165.0 202.0 244.5 287.6 338.2 47 Trade payables 31.0 46.6 57.4 114.3 94.4 151.7 84.0 72.2 128.3 93.1 72.8 187.3 48 Security credit 51.4 4.6 61.4 -.1 26.7 32.7 -5.4 30.1 32.3 49.7 120.6 -48.3 49 Life insurance reserves 25.7 27.3 35.2 34.0 44.7 21.6 51.6 56.3 34.0 37.0 21.1 69.8 50 Pension fund reserves 198.2 238.6 247.3 248.0 241.9 294.0 268.1 286.7 213.9 199.0 243.6 208.1 51 Taxes payable -7.4 9.7 5.2 3.2 1.3 4.1 12.0 1.0 2.4 -10.2 5.5 7.1 52 Investment in bank personal trusts 16.1 -7.1 1.6 18.8 -47.7 11.9 -44.3 -45.6 -63.9 -37.1 -47.3 -20.2 53 Noncorporate proprietors' equity .5 16.7 3.4 23.5 42.9 18.5 30.6 42.3 54.9 43.6 40.6 30.0 54 Miscellaneous 278.2 280.3 358.9 260.8 500.1 363.1 316.0 484.8 396.9 802.6 542.0 280.7 55 Total financial sources 1,474.0 1,793.0 2,353.5 2,161.9 2,763.3 2,343.3 2,384.5 3,156.5 2.497.0 3,015.3 3,004.4 2,613.0 Liabilities not identified as assets (—) 56 Treasury currency -.6 -.2 -.2 -.2 -.5 -.2 -.2 - .4 -.3 -1.0 -1.1 -.9 57 Foreign deposits -24.0 -2.8 -7.0 44.9 27.4 64.8 41.6 101.8 -55.7 21.9 61.1 44.5 58 Net interbank liabilities 26.2 -4.9 4.2 -2.7 -3.1 3.5 -.4 -.9 12.3 -23.6 10.9 -27.0 59 Security repurchase agreements -9.5 3.6 34.3 31.5 2.5 84.4 66.2 -53.0 23.5 -26.8 -47.8 33.8 60 Taxes payable -2.2 11.9 11.1 8.6 8.7 -.2 -7.5 31.0 9.3 2.2 -23.3 25.1 61 Miscellaneous 9.8 -.2 -133.8 -112.1 -13.2 -45.7 -264.2 51.6 197.6 -195.6 -11.6 Floats not included in assets ( —) 62 Federal government checkable deposits -13.1 .7 -1.5 -4.8 -6.0 -17.1 4.6 -18.6 3.8 -13.8 7.9 -11.3 63 Other checkable deposits 4.5 1.6 -1.3 -2.8 -3.8 -2.3 -3.6 -3.8 -3.2 -4.7 -3.8 -4.2 64 Trade credit 36.1 11.3 -3.6 -2.8 -23.7 -59.6 48.0 33.8 -55.6 -121.2 43.3 -21.2 65 Total identified to sectors as assets 1,446.8 1,772.1 2,451.3 2,202.3 2,775.1 2,315.7 2,499.9 3,014.9 2,600.8 2,984.7 3,152.7 2,585.9 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

A40 Domestic Nonfinancial Statistics • December 1996 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1994 1995 1996 - Q4 Q1 Q2 Q3 Q4 Q1 Q2 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 11,894.5 12,537.8 13,164.4 13,886.7 13,164.4 13,339.1 13,546.6 13,701.3 13,886.7 14,077.8 14,223.8 By sector and instrument 2 Federal government 3,080.3 3,336.5 3,492.3 3,636.7 3,492.3 3,557.9 3,583.5 3,603.4 3,636.7 3,717.2 3,693.8 i Treasury securities 3,061.6 3,309.9 3,465.6 3,608.5 3,465.6 3,531.5 3,556.7 3,576.5 3,608.5 3,689.6 3,665.5 4 Budget agency securities and mortgages 18.8 26.6 26.7 28.2 26.7 26.4 26.8 26.9 28.2 27.6 28.2 5 Nonfederal 8,814.2 9,201.3 9,672.1 10,249.9 9,672.1 9,781.2 9,963.1 10,097.9 10,249.9 10,360.6 10,530.0 By instrument 6 Commercial paper 107.1 117.8 139.2 157.4 139.2 149.8 162.9 163.3 157.4 174.2 181.7 7 Municipal securities and loans 1,302.8 1,377.5 1,348.2 1,307.0 1,348.2 1,335.4 1,331.7 1,309.9 1,307.0 1,304.7 1,311.3 8 Corporate bonds 1,154.5 1,229.7 1,253.0 1,326.3 1,253.0 1,266.3 1,290.9 1,305.8 1,326.3 1,341.0 1,358.5 y Bank loans n.e.c 672.2 676.0 749.0 848.5 749.0 782.8 810.8 824.4 848.5 856.0 879.2 10 Other loans and advances 686.5 676.3 738.0 796.3 738.0 762.0 775.8 781.2 796.3 809.4 817.7 ii Mortgages 4,088.7 4,260.0 4,454.4 4,682.6 4,454.4 4,494.0 4,560.2 4,635.2 4,682.6 4,749.9 4,832.7 12 Home mortgages 3,037.4 3,227.6 3,430.0 3,626.8 3,430.0 3,462.9 3,521.1 3,587.7 3,626.8 3,682.2 3,749.9 13 Multifamily residential 272.5 267.8 269.1 280.0 269.1 269.8 273.4 276.8 280.0 283.6 288.0 14 Commercial 698.1 683.4 672.3 691.2 672.3 677.8 681.9 686.4 691.2 698.9 708.3 15 Farm 80.7 81.2 83.0 84.6 83.0 83.4 83.8 84.4 84.6 85.2 86.5 16 Consumer credit 802.4 863.9 990.2 1,131.9 990.2 990.9 1,030.8 1,078.2 1,131.9 1,125.4 1,148.8 By borrowing sector 17 Households 4,021.4 4,278.4 4,646.7 5,027.3 4,646.7 4,688.0 4,795.3 4,917.2 5,027.3 5,080.1 5,186.6 18 Nonfinancial business 3,696.8 3,764.8 3,910.6 4,153.5 3,910.6 3,991.0 4,071.0 4,106.6 4,153.5 4,213.0 4,270.1 iy Corporate 2,437.6 2,496.5 2,627.4 2,836.0 2,627.4 2,698.6 2,766.9 2,794.3 2,836.0 2,888.0 2,931.2 20 Nonfarm noncorporate 1,122.9 1,129.9 1,142.0 1,174.8 1,142.0 1,153.5 1,161.3 1,167.4 1,174.8 1,184.7 1,193.6 21 Farm 136.3 138.3 141.2 142.7 141.2 138.9 142.8 144.8 142.7 140.3 145.3 22 State and local government 1,095.9 1,158.2 1,114.8 1,069.1 1,114.8 1,102.2 1,096.8 1,074.1 1,069.1 1,067.5 1,073.3 23 Foreign credit market debt held in United States 315.2 385.6 370.4 439.9 370.4 385.7 396.8 419.8 439.9 450.8 459.7 24 Commercial paper 77.7 68.7 41.4 55.0 41.4 50.9 48.1 55.8 55.0 51.5 53.4 25 Bonds 147.2 230.1 242.3 290.6 242.3 245.8 258.6 272.4 290.6 302.5 305.4 26 Bank loans n.e.c 23.9 24.6 26.1 34.6 26.1 28.2 29.6 31.6 34.6 36.8 40.5 21 Other loans and advances 66.4 62.1 60.6 59.7 60.6 60.8 60.5 60.0 59.7 60.0 60.4 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 12,209.7 12,923.4 13,534.8 14,326.6 13,534.8 13,724.7 13,943.4 14,121.1 14,326.6 14,528.6 14,683.5 Financial sectors 29 Total credit market debt owed by financial sectors 3,025.0 3,321.5 3,794.6 4,244.4 3,794.6 3,861.5 3,971.9 4,096.3 4,244.4 4,322.6 4,494.3 By instrument 30 Federal government-related 1,720.0 1,884.1 2,172.7 2,377.9 2,172.7 2,196.2 2,247.1 2,300.1 2,377.9 2,416.6 2,493.5 31 Government-sponsored enterpnses securities 443.1 523.7 700.6 807.5 700.6 716.3 748.1 773.5 807.5 816.9 850.1 32 Mortgage pool securities 1,272.0 1,355.6 1,472.1 1,570.3 1,472.1 1,479.9 1,499.0 1,526.6 1,570.3 1,599.7 1,643.4 a Loans from U.S. government 4.8 4.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 1,305.1 1,437.4 1,621.9 1,866.5 1,621.9 1,665.3 1,724.8 1,796.2 1,866.5 1,906.0 2,000.8 35 Open market paper 394.3 393.5 442.8 488.0 442.8 454.1 462.8 473.6 488.0 491.9 518.5 36 Corporate bonds 738.4 858.5 973.5 1,158.7 973.5 1,012.3 1,056.4 1,112.7 1,158.7 1,191.2 1,240.0 37 Bank loans n.e.c 80.5 67.6 55.3 60.8 55.3 53.4 58.4 60.3 60.8 63.9 69.7 38 Other loans and advances 86.6 108.9 131.6 135.0 131.6 125.4 125.7 127.0 135.0 133.6 145.8 3y Mortgages 5.4 8.9 18.7 24.0 18.7 20.0 21.3 22.6 24.0 25.4 26.9 By borrowing sector 40 Commercial banks 80.0 84.6 94.5 102.6 94.5 95.0 99.9 102.0 102.6 100.5 103.6 41 Bank holding companies 114.6 123.4 133.6 148.0 133.6 137.7 142.9 150.0 148.0 141.4 148.4 42 Savings institutions 88.4 99.6 112.4 115.0 112.4 107.7 105.9 107.2 115.0 117.8 127.8 43 Credit unions .0 .2 .5 .4 .5 .4 .3 .4 .4 .4 .3 44 Life insurance companies .0 .2 .6 .5 .6 .6 .6 .6 .5 1.1 1.2 45 Government-sponsored enteipnses 447.9 528.5 700.6 807.5 700.6 716.3 748.1 773.5 807.5 816.9 850.1 46 Federally related mortgage pools 1,272.0 1,355.6 1,472.1 1,570.3 1,472.1 1,479.9 1,499.0 1,526.6 1,570.3 1,599.7 1,643.4 47 Issuers of asset-backed secunties (ABSs) 404.3 487.6 556.1 688.9 556.1 570.0 596.8 640.2 688.9 718.6 749.0 48 Brokers and dealers 21.7 33.7 34.3 29.3 34.3 26.9 26.8 27.4 29.3 21.4 24.6 49 Finance companies 390.4 390.5 440.7 492.3 440.7 456.7 467.2 471.9 492.3 499.8 511.0 50 Mortgage companies 30.2 30.2 18.7 19.1 18.7 16.9 20.6 21.6 19.1 21.6 25.6 51 Real estate investment Busts (REITs) 13.9 17.4 31.1 36.5 31.1 32.4 33.7 35.0 36.5 38.0 39.6 52 Funding corporations 161.6 169.9 199.3 233.9 199.3 221.1 230.0 239.9 233.9 245.6 269.5 All sectors 53 Total credit market debt, domestic and foreign.... 15,234.7 16,244.8 17,329.4 18,570.9 17,329.4 17,586.2 17,915.3 18,217.4 18,570.9 18,851.2 19,177.8 54 Open market paper 579.0 580.0 623.5 700.4 623.5 654.7 673.8 692.7 700.4 717.6 753.6 55 U.S. government securities 4,795.5 5,215.8 5,665.0 6,014.6 5,665.0 5,754.1 5,830.6 5,903.5 6,014.6 6,133.8 6,187.2 56 Municipal securities 1,302.8 1,377.5 1,348.2 1,307.0 1,348.2 1,335.4 1,331.7 1,309.9 1,307.0 1,304.7 1,311.3 5/ Corporate and foreign bonds 2,040.1 2,318.3 2,468.8 2,775.6 2,468.8 2,524.4 2,605.9 2,690.9 2,775.6 2,834.8 2,903.9 58 Bank loans n.e.c 776.6 768.2 830.4 943.9 830.4 864.4 898.8 916.3 943.9 956.7 989.4 59 Other loans and advances 844.2 852.1 930.1 991.0 930.1 948.2 962.1 968.2 991.0 1,003.0 1,023.9 60 Mortgages 4,094.1 4,269.0 4,473.1 4,706.7 4,473.1 4,514.0 4,581.6 4,657.8 4,706.7 4,775.4 4,859.6 61 Consumer credit 802.4 863.9 990.2 1,131.9 990.2 990.9 1,030.8 1,078.2 1,131.9 1,125.4 1,148.8 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables L.2 through L.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES' Billions of dollars except as noted, end of period 1994 1995 1996 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999922 11999933 11999944 11999955 Q4 Ql Q2 Q3 Q4 Ql Q2 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 15,234.7 16,244.8 17,329.4 18,570.9 17,329.4 17,586.2 17,915.3 18,217.4 18,570.9 18,851.2 19,177.8 2 Domestic nonfederal nonfinancial sectors 2,672.4 2,747.8 3,029.6 2,905.3 3,029.6 2,995.5 2,946.8 2,953.3 2.905.3 2,874.3 2,867.1 3 Households 1,619.3 1,676.7 2,002.7 2,011.0 2,002.7 2,025.2 1,981.5 2,052.7 2,011.0 2,030.8 2,017.4 4 Nonfinancial corporate business 257.8 271.5 321.1 315.3 321.1 292.6 303.9 291.0 315.3 291.4 298.1 5 Nonfarm noncorporate business 38.1 38.8 39.5 40.4 39.5 39.6 39.9 40.2 40.4 40.7 41.0 6 State and local governments 757.2 760.8 666.3 538.5 666.3 638.1 621.6 569.4 538.5 511.4 510.6 7 Federal government 236.0 231.7 207.6 186.2 207.6 204.2 198.2 192.2 186.2 181.2 177.7 8 Rest of the world 1,023.0 1,147.0 1,254.9 1,561.1 1,254.9 1,323.3 1,400.9 1,492.4 1,561.1 1,653.6 1,718.6 9 Financial sectors 11,303.2 12,118.3 12,837.3 13,918.3 12,837.3 13,063.2 13,369.3 13,579.5 13,918.3 14,142.2 14,414.4 10 Monetary authority 300.4 336.7 368.2 380.8 368.2 367.1 375.7 370.6 380.8 379.6 386.3 11 Commercial banking 2,948.6 3,090.8 3,254.3 3,520.1 3,254.3 3,327.8 3,410.1 3,473.2 3,520.1 3,541.6 3,591.1 12 U.S. chartered banks 2,571.9 2,721.5 2,869.6 3,056.1 2,869.6 2,906.5 2,963.7 3,023.7 3,056.1 3,068.8 3,101.3 13 Foreign banking offices in United States 335.8 326.0 337.1 412.6 337.1 373.6 396.0 401.1 412.6 422.2 437.4 14 Bank holding companies 17.5 17.5 18.4 18.0 18.4 18.0 19.3 16.9 18.0 16.8 18.1 15 Banks in U.S. affiliated areas 23.4 25.8 29.2 33.4 29.2 29.8 31.1 31.5 33.4 33.9 34.3 16 Savings institutions 937.4 914.0 920.9 913.3 920.9 925.3 922.4 930.4 913.3 908.3 909.5 17 Credit unions 197.1 218.7 246.8 263.0 246.8 248.1 255.0 258.5 263.0 267.1 276.6 18 Bank personal trusts and estates 231.5 240.9 248.0 229.2 248.0 245.3 240.2 234.2 229.2 224.7 221.6 19 Life insurance companies 1,309.1 1,420.6 1,487.0 1,586.2 1,487.0 1,523.1 1,557.1 1,575.5 1,586.2 1,600.5 1,629.7 20 Other insurance companies 389.4 422.7 446.4 468.7 446.4 451.9 457.3 463.0 468.7 474.5 480.2 21 Private pension funds 571.7 617.6 664.6 725.9 664.6 679.3 693.6 706.2 725.9 742.3 763.4 22 State and local government retirement funds 417.5 437.3 466.3 487.7 466.3 480.7 482.1 481.8 487.7 501.1 520.6 23 Money market mutual funds 408.6 429.0 459.0 545.5 459.0 480.6 508.0 505.7 545.5 595.6 594.7 24 Mutual funds 566.4 725.9 718.8 771.3 718.8 719.3 724.8 739.2 771.3 792.4 812.5 25 Closed-end funds 67.7 78.6 73.1 78.9 73.1 74.0 75.6 77.7 78.9 78.6 79.6 26 Government-sponsored enterprises 457.8 548.0 667.1 756.0 667.1 671.9 695.9 708.4 756.0 765.2 799.5 27 Federally related mortgage pools 1,272.0 1,355.6 1,472.1 1,570.3 1,472.1 1,479.9 1,499.0 1,526.6 1,570.3 1,599.7 1,643.4 28 Asset-backed securities issuers (ABSs) 378.0 458.8 520.7 632.7 520.7 531.5 555.2 595.7 632.7 657.5 685.9 29 Finance companies 496.4 482.8 551.0 615.2 551.0 568.5 586.9 594.7 615.2 621.7 632.6 30 Mortgage companies 60.5 60.4 37.5 34.1 37.5 33.9 41.4 43.2 34.1 46.8 42.7 31 Real estate investment trusts (REITs) 8.1 8.6 13.3 15.1 13.3 13.8 14.2 14.7 15.1 15.6 16.1 32 Brokers and dealers 122.7 137.5 93.3 183.4 93.3 101.0 137.5 137.0 183.4 156.2 137.2 33 Funding corporations 162.5 133.6 129.2 140.9 129.2 140.3 137.4 143.1 140.9 173.4 191.2 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 15,234.7 16,244.8 17,329.4 18,570.9 17,329.4 17,586.2 17,915.3 18,217.4 18,570.9 18,851.2 19,177.8 Other liabilities 35 Official foreign exchange 51.8 53.4 53.2 63.7 53.2 64.1 67.1 65.1 63.7 62.1 61.4 36 Special drawing rights certificates 8.0 8.0 8.0 10.2 8.0 8.0 8.0 10.2 10.2 10.2 10.2 37 Treasury currency 16.5 17.0 17.6 18.2 17.6 17.8 18.0 18.2 18.2 18.2 18.2 38 Foreign deposits 267.7 271.8 324.6 361.4 324.6 333.3 361.0 353.6 361.4 382.7 384.9 39 Net interbank liabilities 138.5 189.3 280.0 290.8 280.0 272.8 265.9 267.3 290.8 266.1 241.8 40 Checkable deposits and currency 1,134.4 1,251.7 1,242.0 1,229.3 1,242.0 1,193.7 1,246.2 1,200.3 1,229.3 1,183.6 1,211.9 41 Small time and savings deposits 2,293.5 2,223.2 2,183.3 2,279.7 2,183.3 2,200.2 2,222.6 2,255.8 2,279.7 2,336.4 2,332.9 42 Large time deposits 415.2 391.7 411.2 476.9 411.2 441.2 456.3 477.5 476.9 490.6 508.6 43 Money market fund shares 539.5 559.6 602.9 745.3 602.9 634.0 678.5 702.7 745.3 816.9 809.5 44 Security repurchase agreements 399.9 471.1 549.4 660.1 549.4 603.4 629.3 655.5 660.1 665.0 679.2 45 Mutual fund shares 992.5 1,375.4 1,477.3 1,852.8 1,477.3 1,553.3 1,661.0 1,782.0 1,852.8 1,994.3 2,112.0 46 Security credit 217.7 279.0 279.0 305.6 279.0 269.5 277.9 286.2 305.6 326.9 316.0 47 Life insurance reserves 433.0 468.2 502.2 546.9 502.2 515.1 529.1 537.7 546.9 552.2 569.6 48 Pension fund reserves 4,055.1 4,471.6 4,691.4 5,426.6 4,691.4 4,885.7 5,084.4 5,298.1 5,426.6 5,559.2 5,714.6 49 Trade payables 995.1 1,053.3 1,167.6 1,262.0 1,167.6 1,160.2 1,180.5 1,213.9 1,262.0 1,252.0 1,299.8 50 Taxes payable 79.7 84.9 88.0 89.3 88.0 94.3 89.2 91.9 89.3 94.2 90.4 51 Investment in bank personal trusts 660.6 691.3 699.4 767.4 699.4 719.7 739.7 758.6 767.4 781.6 791.0 52 Miscellaneous 4,785.7 5,174.1 5,435.9 5,848.2 5,435.9 5,514.9 5,590.1 5,695.3 5,848.2 5,973.2 5,998.3 53 Total liabilities 32,719.0 35,279.4 37,342.7 40,805.2 37,342.7 38,067.5 39,020.2 39,887.2 40,805.2 41,616.7 42,327.7 Financial assets not included in liabilities ( + ) 54 Gold and special drawing rights 19.6 20.1 21.1 22.1 21.1 22.7 22.9 22.1 22.1 22.1 22.2 55 Corporate equities 5,462.9 6,278.5 6,293.4 8,345.4 6,293.4 6,835.8 7,393.0 8,013.8 8,345.4 8,820.5 9,181.0 56 Household equity in noncorporate business 2,458.3 2,476.3 2,565.1 2,642.6 2,565.1 2,572.4 2,599.3 2,607.1 2,642.6 2,657.0 2,665.0 Liabilities not identified as assets ( —) 57 Treasury currency -4.9 -5.1 -5.4 -5.8 -5.4 -5.4 -5.5 -5.6 -5.8 -6.1 -6.3 58 Foreign deposits 217.6 232.6 278.7 309.2 278.7 289.1 314.5 300.6 309.2 324.4 335.6 59 Net interbank transactions -9.3 -4.7 -6.5 -9.0 -6.5 -2.7 -2.9 .1 -9.0 -2.6 -8.0 60 Security repurchase agreements 43.0 77.3 108.8 111.3 108.8 130.4 109.8 129.9 111.3 103.3 102.7 61 Taxes payable 25.2 26.8 25.0 33.7 25.0 10.0 25.6 28.7 33.7 13.4 27.8 62 Miscellaneous -514.0 -660.9 -733.1 -783.3 -733.1 -749.7 -699.7 -660.9 -783.3 -758.2 -773.2 Floats not included in assets ( —) 63 Federal government checkable deposits 6.8 5.6 3.4 3.1 3.4 4.2 2.0 .6 3.1 .0 -3.4 64 Other checkable deposits 42.0 40.7 38.0 34.2 38.0 33.3 35.7 27.3 34.2 29.6 31.8 65 Trade credit -251.1 -247.6 -251.3 -275.0 -251.3 -294.3 -304.5 -330.7 -275.0 -326.1 -347.5 66 Total identified to sectors as assets 41,104.4 44,589.6 46,764.6 52,397.0 46,764.6 48,083.5 49,560.6 51,040.2 52,397.0 53,738.6 54,836.5 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. 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

A42 Domestic Nonfinancial Statistics • December 1996 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1987=100, except as noted 1996 MMeeaassuurree 11999933 11999944 11999955 Jan. Feb. Mar. Apr. May Juner July' Aug. Sept. 1 Industrial production' 111.5 118.1 121.9 122.5 124.2 123.6 124.5 125.4 126.4 126.4 126.8r 127.1 Market groupings 2 Products, total 110.0 115.6 118.3 118.6 120.7 120.0 120.8 121.3 122.3 122.6 122.4 122.9 3 Final, total 112.7 118.3 121.4 121.9 124.5 123.4 124.8 125.1 126.0 126.7 126.5r 126.8 4 Consumer goods 109.5 113.7 115.1 114.6 116.6 115.3 115.9 116.3 116.8 117.4 116.6' 116.6 5 Equipment 117.5 125.3 131.4 133.7 137.3 136.5 139.2 139.2 140.8 141.8 142.6 143.4 6 Intermediate 101.8 107.3 109.0 108.5 109.3 109.6 108.6 110.1 111.3 110.2 110.3r 111.1 7 Materials 113.8 122.0 127.4 128.5 129.4 129.1 130.3 131.6 132.6 132.3 133.7r 133.7 Industry groupings 8 Manufacturing 112.3 119.7 123.9 124.5 126.2 125.2 126.5 127.4 128.5 129.0 129.1 129.4 9 Capacity utilization, manufacturing (percent)2.. 80.6 83.3 83.0 81.4 82.3 81.3 81.9 82.1 82.6 82.5 82.3 82.2 10 Construction contracts3 105.1r 114.2 118.3r 120.0 114.0 127.0r 130.0r 128.0r 125.0 126.0 128.0r 121.0 11 Nonagricultural employment, total4 108.6 112.0 115.0 115.8 116.3 116.5 116.7 117.0 117.3 117.5 117.7 117.7 12 Goods-producing, total 94.6 96.9 98.1 97.7 98.3 98.1 98.1 98.3 98.4 98.3 98.5 98.3 13 Manufacturing, total 95.1 96.4 97.2 96.4 96.5 96.2 96.2 96.3 96.3 96.2 96.3 96.0 14 Manufacturing, production workers 95.3 97.5 98.7 97.7 97.8 97.4 97.5 97.5 97.5 97.4 97.4r 97.2 15 Service-producing 113.1 116.8 120.3 121.6 122.1 122.3 122.6 123.0 123.3 123.6 123.9 123.9 16 Personal income, total 141.3 148.4 157.7 161.7 162.9 163.5 164.3 165.2 166.6 166.8 167.7 n.a. 17 Wages and salary disbursements 136.0 142.6 150.9 154.4 156.0 156.7 157.5 158.3 160.3 160.0 161.3 n.a. 18 Manufacturing 119.3 124.9 130.4 130.8 132.5 131.8 134.4 135.1 135.8 135.9 137.4 n.a. 19 Disposable personal income5 142.4 149.3 158.2 162.2 163.2 163.7 162.8r 165.1r 166.4 166.6 167.4 n.a. 20 Retail sales5 134.7 144.8 152.2 155.3 158.6 159.3 159.1 160.4 159.4 159.6 159.3r 160.4 Prices6 21 Consumer (1982-84=100) 144.5 148.2 152.4 154.4 154.9 155.7 156.3 156.6 156.7 157.0 157.3 157.8 22 Producer finished goods (1982=100) 124.7 125.5 127.9 129.4 129.4 130.1 130.6 131.lr 131.6 131.5 131.9 131.6 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 1996 CCaatteeggoorryy 11999933 11999944 11999955 Feb. Mar. Apr. May June Julyr Aug/ Sept. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 129,200 131,056 132,304 133,018 133,655 133,361 133,910 113333,,666699 113344,,118811 113333,,888855 113344,,334400 Employment 2 Nonagricultural industries3 117,144 119,651 121,460 122,143 122,664 122,726 122,971 123,228 123,382 123,635 123,833 3 Agriculture 3,115 3,409 3,440 3,519 3,487 3,368 3,491 33,,338822 3,502 33,,442211 33,,553355 Unemployment 4 Number 8,940 7,996 7,404 7,355 7,504 7,266 7,448 7,060 7,297 6,830 6,971 5 Rate (percent of civilian labor force) 6.9 6.1 5.6 5.5 5.6 5.4 5.6 5.3 5.4 5.1 5.2 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 110,730 114,172 117,203 118,579 118,737 118,928 119,335 119,554 119,789 120,030 119,990 7 Manufacturing 18,075 18,321 18,468 18,332 18,282 18,283 18,302 18,297 18,268 18,286 18,229 8 Mining 610 601 580 573 574 573 576 575 570 571 569 9 Contract construction 4,668 4,986 5,158 5,349 5,340 5,353 5,384 5,403 5,427 5,438 5,447 10 Transportation and public utilities 5,829 5,993 6,165 6,270 6,289 6,294 6,311 6,327 6,335 6,340 6,343 11 Trade 25,755 26,670 27,585 27,869 27,891 27,972 28,066 28,151 28,257 28,274 28,301 12 Finance 6,757 6,896 6,830 6,919 6,932 6,942 6,964 6,967 6,987 6,998 7,005 13 Service 30,197 31,579 33,107 33,902 34,035 34,114 34,274 34,383 34,463 34,532 34,586 14 Government 18,841 19,128 19,310 19,365 19,394 19,397 19,458 19,451 19,482 19,591 19,510 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

Selected Measures A43 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1995 1996 1995 1996 1995 1996 SSeerriieess Q4 Q1 Q2r Q3 Q4 Ql Q2 Q3 Q4 Ql Q2r Q3 Output (1987=100) Capacity (percent of 1987 output) Capacity utilization rate (percent)2 1 Total industry 122.5 123.4 125.4 126.8 147.7 149.1 150.6 152.0 82.9 82.8 83.3 83.4 2 Manufacturing 124.6 125.3 127.5 129.2 151.9 153.5 155.1 156.8 82.0 81.6 82.2 82.4 3 Primary processing3 117.1 116.7 118.6 119.7 136.1 136.9 137.8 138.6 86.1 85.2 86.1 86.4 4 Advanced processing4 128.1 129.4 131.7 133.6 159.5 161.5 163.5 165.6 80.3 80.1 80.5 80.7 5 Durable goods 134.2 136.0 139.5 142.0 164.2 166.7 169.4 172.1 81.7 81.6 82.4 82.5 6 Lumber and products 105.8 104.6 108.9 108.4 120.9 121.7 122.4 123.1 87.5 85.9 89.0 88.1 7 Primary metals 118.8 118.9 119.6 119.8 129.5 130.3 131.4 132.4 91.8 91.2 91.0 90.4 8 Iron and steel 121.3 122.6 122.7 123.7 133.5 134.4 135.7 137.0 90.9 91.2 90.4 90.3 9 Nonferrous 115.3 113.8 115.3 114.4 124.0 124.8 125.5 126.3 93.0 91.2 91.8 90.6 10 Industrial machinery and equipment 186.8 195.3 201.8 208.9 212.0 218.1 224.5 231.2 88.1 89.5 89.9 90.4 11 Electrical machinery 182.9 186.3 189.0 191.0 213.9 221.8 229.9 238.3 85.5 84.0 82.2 80.1 12 Motor vehicles and parts 140.5 132.6 145.9 151.2 179.2 181.3 182.9 184.6 78.4 73.2 79.8 81.9 13 Aerospace and miscellaneous transportation equipment 79.0 84.0 85.8 88.8 129.3 128.6 128.1 127.6 61.1 65.3 67.0 69.6 14 Nondurable goods 113.9 113.5 114.2 115.0 138.4 139.0 139.6 140.1 82.3 81.7 81.8 82.1 15 Textile mill products 109.4 106.4 109.4 111.6 132.8 133.7 134.2 134.8 82.4 79.6 81.5 82.8 16 Paper and products 118.1 114.6 119.3 120.0 133.9 134.9 135.8 136.8 88.2 85.0 87.8 87.8 17 Chemicals and products 126.4 126.9 127.3 129.2 156.5 157.5 158.5 159.5 80.7 80.6 80.3 81.0 18 Plastics materials 123.1 126.9 132.2 137.1 138.6 139.9 89.7 91.6 94.6 19 Petroleum products 107.7 109.7 110.0 110.9 116.6 116.8 117.1 117.3 92.4 93.9 93.9 94.6 20 Mining 98.2 98.7 101.2 102.9 111.9 111.9 111.8 111.8 87.8 88.2 90.5 92.1 21 Utilities 124.1 126.7 127.1 124.7 135.6 136.0 136.5 137.0 91.5 93.2 93.1 91.0 22 Electric 123.7 126.4 127.0 124.4 133.0 133.4 133.9 134.5 93.1 94.8 94.8 92.5 1973 1975 Previous cycle5 Latest cycle6 1995 1996 High Low High Low High Low Sept. Apr. May Juner Julyr Aug. Sept.? Capacity utilization rate (percent)2 1 Total industry 89.2 72.6 87.3 71.8 84.9 78.0 83.7 83.0 83.3 83.7 83.4 83.4 83.3 2 Manufacturing 88.9 70.8 87.3 70.0 85.2 76.6 82.8 81.9 82.1 82.6 82.5 82.3 82.2 3 Primary processing3 92.2 68.9 89.7 66.8 89.0 77.9 86.9 85.5 8866..11 86.8 86.6 86.3 86.2 4 Advanced processing4 87.5 72.0 86.3 71.4 83.5 76.1 81.1 80.4 8800..55 80.8 80.8 80.7 80.5 5 Durable goods 88.8 68.5 86.9 65.0 84.0 73.7 82.7 82.1 82.1 82.9 82.7 82.6 82.3 6 Lumber and products 90.1 62.2 87.6 60.9 93.3 76.1 88.4 88.7 88.0 90.2 88.0 88.4 87.9 7 Primary metals 100.6 66.2 102.4 46.8 92.8 74.2 93.8 91.0 90.3 91.9 90.1 90.7 90.5 8 Iron and steel 105.8 66.6 110.4 38.3 95.7 72.0 95.4 90.8 89.2 91.2 90.3 90.6 90.1 9 Nonferrous 92.9 61.3 90.5 62.2 88.7 75.2 91.7 91.1 91.6 92.7 89.7 90.9 91.1 10 Industrial machinery and equipment 96.4 74.5 92.1 64.9 84.0 71.8 87.2 89.5 89.7 90.6 89.8 90.8 90.5 11 Electrical machinery 87.8 63.8 89.4 71.1 84.9 77.0 86.6 82.5 82.1 82.1 81.0 80.1 79.3 12 Motor vehicles and parts 93.4 51.1 93.0 44.5 85.1 56.6 80.7 79.1 79.1 81.1 83.9 82.0 79.8 13 Aerospace and miscellaneous transportation equipment 77.0 66.6 81.1 66.9 88.4 78.8 66.2 67.0 66.9 67.1 68.4 69.5 71.0 14 Nondurable goods 87.9 71.8 87.0 76.9 86.7 80.3 82.9 81.5 82.0 82.0 82.3 81.8 82.1 15 Textile mill products 92.0 60.4 91.7 73.8 92.1 78.8 83.7 80.7 81.0 82.7 83.7 82.6 82.2 16 Paper and products 96.9 69.0 94.2 82.0 94.8 86.7 89.0 87.7 88.0 87.7 89.1 86.8 87.4 17 Chemicals and products 87.9 69.9 85.1 70.1 85.9 79.0 80.4 79.7 80.6 80.7 81.3 80.6 81.0 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 88.7 93.4 94.5 95.8 94.7 19 Petroleum products 96.7 81.1 89.5 68.2 88.5 84.6 94.5 93.8 93.8 94.2 93.3 95.1 95.3 20 Mining 94.4 88.4 96.6 80.6 86.5 86.1 89.3 89.7 89.8 91.9 90.7 92.9 92.7 ?l Utilities 95.6 82.5 88.3 76.2 92.6 83.1 90.7 92.7 94.1 92.6 90.0 91.4 91.6 22 Electric 99.0 82.7 88.3 78.7 94.8 86.7 92.5 94.0 96.1 94.5 91.4 93.0 93.3 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

A44 Domestic Nonfinancial Statistics • December 1996 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1995 1996 GGrroouupp pro- 1995 por- avg. tion Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Juner Julyr Aug. Sept.p Index (1987 = 100) MAJOR MARKETS 1 Total index 100.0 121.9 122.8 122.2 122.6 122.8 122.5 124.2 123.6 124.5 125.4 126.4 126.4 126.8 127.1 2 Products 60.6 118.3 119.4 118.3 118.8 119.2 118.6 120.7 120.0 120.8 121.3 122.3 122.6 122.4 122.9 3 Final products 46.3 121.4 122.6 121.3 121.9 122.1 121.9 124.5 123.4 124.8 125.1 126.0 126.7 126.5 126.8 4 Consumer goods, total 28.6 115.1 116.0 114.9 115.9 115.7 114.6 116.6 115.3 115.9 116.3 116.8 117.4 116.6 116.6 5 Durable consumer goods 5.6 124.2 125.8 123.4 124.9 126.3 120.3 125.1 119.3 125.5 126.2 130.4 131.4 128.3 126.1 6 Automotive products 2.5 130.7 132.9 128.5 130.5 132.8 125.9 133.1 120.3 133.5 134.1 138.4 143.4 138.0 135.3 1 Autos and trucks 1.6 131.4 133.1 128.6 129.8 132.1 124.1 133.5 111.1 135.9 135.4 138.9 149.6 141.2 136.4 8 Autos, consumer .9 103.1 102.6 100.2 100.2 99.5 92.8 99.7 77.0 104.1 106.2 110.4 116.1 111.1 107.4 y Trucks, consumer .7 181.7 187.7 179.1 182.8 190.6 180.4 194.4 173.1 192.7 187.3 189.2 209.3 194.7 188.0 1U Auto parts and allied goods .9 127.8 130.8 126.7 130.2 132.7 128.1 130.7 137.2 127.2 129.9 136.0 129.3 129.9 131.5 11 Other 3.0 118.6 119.6 118.9 119.9 120.5 115.5 118.1 118.5 118.5 119.3 123.4 120.9 111199..88 118.1 12 Appliances, televisions, and air conditioners .7 135.5 139.4 140.1 145.3 141.9 132.2 137.5 138.3 139.7 138.9 151.4 146.2 142.0 139.5 Ii Carpeting and furniture .8 105.8 106.9 105.6 104.1 107.4 101.1 103.4 105.7 104.4 106.0 109.4 105.5 105.8 105.2 14 Miscellaneous home goods 1.5 118.2 117.8 116.9 117.6 118.3 116.2 117.7 116.9 117.1 118.2 118.7 118.4 117.7 115.9 13 Nondurable consumer goods 23.0 112.9 113.7 112.9 113.8 113.2 113.3 114.5 114.4 113.6 114.0 113.5 113.9 113.7 114.3 lb Foods and tobacco 10.3 111.3 111.6 111.1 110.9 110.6 110.6 112.0 112.3 112.2 112.0 111.7 111.9 111.1 111.8 17 Clothing 2.4 94.8 93.4 92.9 91.5 89.7 88.2 90.3 88.9 88.8 89.2 88.5 88.4 88.0 88.3 18 Chemical products 4.5 131.3 134.0 135.7 135.0 136.5 138.1 138.1 136.7 133.8 135.2 134.5 137.8 137.1 138.5 iy Paper nroducts 2.9 106.6 107.3 106.6 108.4 106.3 104.9 106.0 105.8 106.1 107.2 106.3 108.2 108.0 108.4 2U Energy 2.9 116.5 119.0 113.1 121.1 119.5 121.0 122.6 123.9 121.8 121.8 121.6 118.1 120.5 120.4 21 Fuels .9 108.8 111.4 107.3 108.2 108.6 108.6 111.8 112.2 111.5 111.7 111.6 111.1 113.3 112.2 22 Residential utilities 2.1 119.6 122.2 115.4 126.6 124.1 126.1 127.2 128.8 126.2 126.0 125.7 120.9 123.5 123.8 23 Equipment 17.7 131.4 133.1 131.5 131.4 132.3 133.7 137.3 136.5 139.2 139.2 140.8 141.8 142.6 143.4 24 Business equipment 13.7 155.7 158.2 156.5 156.9 158.4 160.5 164.8 162.7 166.3 166.0 168.6 170.1 170.8 172.1 23 Information processing and related 5.7 198.1 203.0 206.5 208.1 209.4 213.3 220.5 221.6 224.9 226.2 232.0 232.9 236.0 239.8 26 Computer and office equipment 1.4 373.5 390.0 402.9 417.8 431.7 442.9 463.3 476.0 491.1 505.0 522.0 537.5 552.0 564.6 2/ Industrial 4.0 127.5 128.7 128.6 129.1 129.5 129.6 131.3 130.3 129.9 129.4 128.2 127.9 128.3 128.3 28 Transit 2.6 136.3 137.9 122.3 119.6 124.5 128.1 133.2 121.2 136.1 133.4 136.9 144.2 141.7 141.4 29 Autos and trucks 1.2 140.1 143.3 135.7 134.2 135.3 129.1 136.0 113.6 140.0 138.2 141.9 151.8 143.6 138.5 3D Other 1.4 123.2 123.3 120.9 121.4 121.7 122.1 123.5 122.5 122.1 121.1 123.3 122.9 121.7 121.3 31 Defense and space equipment 3.3 65.9 65.2 64.4 62.9 62.0 61.6 63.1 64.2 64.0 64.3 63.7 64.5 65.2 65.3 32 Oil and gas well drilling .6 87.1 88.3 83.5 83.1 83.8 85.1 89.7 96.3 100.6 104.3 102.3 99.1 99.9 96.2 ii Manufactured homes .2 152.7 158.0 158.9 161.8 164.4 158.1 157.8 168.2 170.7 170.4 172.4 164.8 173.7 34 Intermediate products, total 14.3 109.0 109.5 109.2 109.3 110.1 108.5 109.3 109.6 108.6 110.1 111.3 110.2 110.3 111.1 35 Construction supplies 5.3 108.2 108.4 108.3 108.7 110.5 107.2 109.3 111.5 109.2 111.0 113.9 112.5 113.2 113.5 36 Business supplies 9.0 109.6 110.3 109.9 109.9 110.0 109.6 109.5 108.6 108.4 109.6 109.8 109.0 108.6 109.7 37 Materials 39.4 127.4 128.1 128.1 128.4 128.4 128.5 129.4 129.1 130.3 131.6 132.6 132.3 133.7 133.7 38 Durable goods materials 20.8 141.5 144.1 143.9 145.3 144.8 145.8 147.3 145.5 147.3 148.8 150.5 150.4 152.2 152.2 39 Durable consumer parts 4.0 138.5 139.8 138.6 140.1 139.3 140.6 141.1 132.5 142.1 143.5 148.3 147.6 151.0 149.4 40 Equipment parts 7.5 163.0 169.1 169.4 171.0 170.8 171.7 176.3 176.8 177.2 179.0 180.9 181.1 183.0 183.4 41 Other 9.2 126.2 126.8 126.5 127.9 127.2 128.2 127.8 127.4 126.8 128.1 128.2 128.2 129.3 129.6 42 Basic metal materials 3.1 125.7 127.0 124.3 128.1 126.6 125.7 123.7 124.4 123.7 123.9 125.1 123.7 124.6 124.9 43 Nondurable goods materials 8.9 119.8 117.8 118.7 116.6 117.4 115.7 116.1 116.3 118.8 120.0 120.1 120.9 120.0 120.1 44 Textile materials 1.1 109.2 106.2 107.3 104.8 103.3 100.3 101.8 103.0 104.9 106.2 106.3 108.7 108.6 107.9 45 Paper materials 1.8 120.5 117.0 121.4 114.3 115.2 113.4 113.4 113.7 118.9 118.7 115.2 120.8 118.8 120.0 46 Chemical materials 3.9 124.4 123.3 122.9 122.7 121.9 121.8 121.3 121.6 123.6 125.8 126.8 126.1 125.7 125.8 47 Other 2.1 116.5 115.1 114.6 114.1 118.9 115.2 117.1 116.4 117.8 118.2 119.7 118.2 117.0 116.5 48 Energy materials 9.7 106.6 105.8 105.5 105.7 106.0 105.9 106.1 108.2 107.0 108.1 108.7 106.6 109.2 109.3 4y Primary energy 6.3 101.9 101.2 101.7 100.8 101.0 100.6 101.3 103.9 103.1 102.7 103.7 101.8 104.8 104.9 50 Converted fuel materials 3.3 116.0 115.0 113.1 115.4 116.2 116.6 115.5 116.7 114.9 118.9 118.7 116.3 117.8 118.2 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.2 121.5 122.4 121.9 122.3 122.5 122.4 123.8 123.9 124.1 125.0 126.0 125.7 126.4 126.8 52 Total excluding motor vehicles and parts 95.2 120.9 121.8 121.3 121.7 121.9 121.9 123.3 123.7 123.5 124.4 125.2 125.0 125.6 126.1 53 Total excluding computer and office equipment 98.2 118.2 118.9 118.1 118.4 118.5 118.0 119.5 118.7 119.5 120.2 121.1 120.9 121.2 121.3 54 Consumer goods excluding autos and trucks . 27.0 114.0 114.9 114.0 115.0 114.7 114.0 115.5 115.6 114.6 115.1 115.4 115.2 114.9 115.3 55 Consumer goods excluding energy 25.7 114.9 115.7 115.1 115.3 115.3 113.9 115.9 114.3 115.2 115.7 116.3 117.3 116.1 116.2 56 Business equipment excluding autos and trucks 12.5 157.0 159.5 158.4 159.0 160.5 163.5 167.5 167.5 168.7 168.6 171.1 171.7 173.3 175.3 5/ Business equipment excluding computer and office equipment 12.2 133.0 134.3 131.6 130.8 131.3 132.6 135.5 132.3 134.8 133.5 134.9 135.2 134.8 135.1 58 Materials excluding energy 29.7 134.9 136.1 136.2 136.6 136.4 136.6 137.8 136.6 138.6 140.0 141.2 141.4 142.4 142.4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1992 SIC pro- 1995 Group code por- avg. tion Sept. Oct. Nov. Apr. May June' July' Aug. Sept.' Index (1987 = 100) MAJOR INDUSTRIES 59 Total index 100.0 121.9 122.8 122.2 122.6 122.8 122.5 124.2 123.6 124.5 125.4 126.4 126.4 126.8 127.1 60 Manufacturing 85.4 123.9 124.9 124.4 124.5 124.8 124.5 126.2 125.2 126.5 127.4 128.5 129.0 129.1 129.4 61 Primary processing 26.6 117.6 117.8 117.0 117.1 117.3 116.7 116.3 117.1 117.5 118.5 119.7 119.7 119.6 119.8 62 Advanced processing 58.9 126.8 128.2 127.9 128.0 128.4 128.2 131.0 129.0 130.8 131.5 132.7 133.3 133.6 133.9 63 Durable goods 45.0 132.5 134.4 133.5 134.3 134.8 134.9 137.5 135.6 138.3 139.1 141.1 141.5 142.2 142.4 64 Lumber and products " ' 24 2.0 104.5 106.2 105.7 104.8 106.9 103.1 103.3 107.5 108.4 107.7 110.6 108.1 108.8 108.4 65 Furniture and fixtures 25 1.4 111.6 112.0 110.9 109.8 109.3 109.3 110.5 107.7 108.9 112.1 111.9 110.1 110.5 110.9 66 Stone, clay, and glass products 32 2.1 104.1 103.8 104.5 104.9 104.3 105.5 104.1 102.9 103.6 105.0 105.8 108.0 105.2 105.9 67 Primary metals 33 3.1 119.2 121.0 115.7 120.8 120.0 121.5 117.1 118.0 119.2 118.6 121.0 118.9 120.1 120.2 68 Iron and steel 331,2 1.7 122.4 127.0 115.1 126.1 122.7 128.1 119.5 120.2 122.9 121.0 124.2 123.3 124.1 123.8 69 Raw steel 331PT .1 114.7 118.6 111.3 116.4 118.0 113.9 112.5 114.9 112.9 113.2 115.7 112.9 114.5 115.2 70 Nonferrous 333-6,9 1.4 114.8 113.2 115.8 113.8 116.2 113.0 113.6 114.8 114.2 115.1 116.6 113.1 114.8 115.3 71 Fabricated metal products. . . 34 5.0 113.9 115.1 114.0 114.5 115.0 115.6 117.0 116.1 115.5 116.7 117.3 117.3 117.7 117.7 72 Industrial machinery and equipment 35 8.0 177.8 181.3 183.8 186.5 190.1 191.9 196.1 197.8 199.0 201.2 205.2 205.4 210.0 211.3 73 Computer and office equipment 357 1.8 373.5 390.0 402.9 417.8 431.7 442.9 463.3 476.0 491.1 505.0 522.0 537.5 552.0 564.6 74 Electrical machinery 36 7.2 174.9 180.8 182.4 183.6 182.8 182.4 188.7 187.9 187.3 188.8 191.0 190.6 190.8 191.4 75 Transportation equipment.. . 37 9.5 113.3 114.1 109.3 108.6 109.7 108.3 112.1 103.1 114.6 114.6 116.6 120.3 119.4 118.6 76 Motor vehicles and parts . 371 4.8 141.9 143.3 139.7 140.7 141.2 135.5 141.1 121.3 144.3 144.7 148.7 154.5 151.4 147.8 77 Autos and light trucks . 371PT 2.5 131.3 132.8 128.4 129.6 131.5 123.5 132.8 109.9 135.5 135.3 138.9 149.4 141.3 136.5 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.7 85.8 85.9 80.0 77.7 79.4 82.2 84.2 85.7 86.0 85.7 85.8 87.3 88.6 90.5 79 Instruments 38 5.4 110.7 111.3 111.4 111.5 109.7 111.0 113.4 112.9 112.8 112.4 113.7 112.3 113.3 113.5 80 Miscellaneous 39 1.3 122.7 122.9 122.2 123.3 123.5 122.1 124.0 124.0 122.6 123.0 124.4 124.1 124.4 123.0 81 Nondurable goods 40.5 114.3 114.4 114.3 113.7 113.8 113.1 113.8 113.6 113.5 114.4 114.6 115.1 114.6 115.1 82 Foods "20 9.4 115.3 115.5 115.4 114.8 114.8 114.8 116.0 115.6 115.4 115.6 115.1 115.7 114.5 115.1 83 Tobacco products 21 1.6 90.2 90.2 88.2 88.9 88.4 87.1 90.9 92.6 94.6 91.9 93.0 90.8 92.1 93.1 84 Textile mill products 22 1.8 112.6 110.5 111.1 108.9 108.3 104.1 106.2 109.0 108.2 108.8 111.1 112.7 111.3 110.9 85 Apparel products 23 2.2 95.7 94.5 93.3 92.4 91.5 89.2 90.9 89.7 90.4 90.8 90.9 90.0 89.9 89.7 86 Paper and products 26 3.6 119.8 118.5 119.7 116.2 118.2 114.9 113.5 115.5 118.9 119.5 119.4 121.5 118.7 119.8 87 Printing and publishing 27 6.8 99.4 99.8 98.9 99.3 98.8 97.9 98.7 96.7 96.3 97.7 97.2 97.3 97.2 97.6 88 Chemicals and products .... 28 9.9 125.0 125.3 126.7 126.0 126.5 127.1 127.1 126.5 126.0 127.7 128.1 129.5 128.6 129.5 89 Petroleum products 29 1.4 108.3 110.0 106.9 107.4 108.9 108.9 110.2 109.9 109.7 109.8 110.3 109.4 111.6 111.9 90 Rubber and plastic products . 30 3.5 139.4 139.8 139.7 140.3 139.3 139.0 139.7 140.5 137.6 140.7 142.4 142.3 144.2 144.1 91 Leather and products 31 .3 81.3 80.5 79.7 78.2 76.8 75.6 77.1 76.7 76.2 75.6 76.3 75.5 75.0 74.2 92 Mining 6.9 99.9 100.0 98.2 98.3 98.1 97.1 98.0 101.1 100.4 100.5 102.8 101.4 103.8 103.6 93 Metal "lO .5 169.3 170.8 178.3 175.9 172.8 159.5 157.1 166.1 158.3 161.6 161.3 168.2 166.7 168.8 94 Coal 12 1.0 112.9 116.2 112.3 109.5 108.5 103.3 108.0 114.8 109.5 111.9 113.2 107.1 120.8 120.5 95 Oil and gas extraction 13 4.8 91.9 91.2 89.2 90.1 90.1 90.8 90.2 92.6 93.3 93.2 95.5 94.8 95.4 94.9 96 Stone and earth minerals 14 .6 112.3 113.1 112.4 110.9 112.4 108.9 117.2 117.4 115.6 112.7 118.0 114.6 115.8 116.3 97 Utilities 7.7 122.0 122.7 121.6 125.4 125.1 125.6 126.6 128.0 126.4 128.4 126.6 123.1 125.2 125.7 98 Electric 491,493PT 6.1 122.1 122.7 123.7 123.6 123.9 125.5 126.6 127.1 125.7 128.7 126.7 122.7 125.1 125.6 99 Gas 492,493PT 1.6 121.7 122.4 113.6 132.5 129.9 125.6 126.3 131.5 128.9 127.5 125.8 124.6 125.7 126.3 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.6 122.8 123.8 123.4 123.6 123.9 123.9 125.4 125.4 125.5 126.3 127.3 127.4 127.8 128.3 101 Manufacturing excluding office and computing machines .. . 83.7 119.5 120.3 119.6 119.6 119.7 119.3 120.7 119.5 120.7 121.3 122.3 122.5 122.4 122.6 Gross value (billions of 1992 dollars, annual rates) MAJOR MARKETS 102 Products, total 2,002.9 2,245.6 2,268.1 2,240.3 2,255.8 2,265.7 2,248.9 2,293.1 2,269.5 2,300.3 2,307.8 2,327.6 2,335.5 2,329.8 2,331.8 103 Final 1,552.2 1,748.7 1,768.2 1,741.9 1,756.8 1,761.9 1,753.0 1,794.2 1,766.8 1,801.5 1,804.4 1,817.1 1,830.6 1,824.7 1,822.3 104 Consumer goods 1,033.4 1,130.5 1,141.1 1,125.1 1,139.3 1,139.0 1,124.7 1,148.4 1,129.5 1,144.9 1,147.2 1,151.5 1,156.9 1,148.7 1,143.4 105 Equipment 518.8 618.3 627.1 616.7 617.5 622.9 628.4 645.8 637.3 656.6 657.1 665.6 673.7 675.9 678.8 106 Intermediate 450.7 496.9 499.9 498.4 499.0 503.8 495.9 498.8 502.7 498.8 503.4 510.5 504.9 505.2 509.5 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For Bulletin, vol. 82 (January 1996), pp. 16-25. For a detailed description of the industrial the ordering address, see the inside front cover. The latest historical revision of the industrial production index, see "Industrial Production: 1989 Developments and Historical Revision," production index and the capacity utilization rates was released in November 1995. See "A Federal Reserve Bulletin, vol. 76, (April 1990), pp. 187-204. Revision to Industrial Production and Capacity Utilization, 1991-95," Federal Reserve 2. Standard industrial classification. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • December 1996 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1995 1996 item Nov. Dec. Jan. Feb. Mar. Apr. May June Julyr Aug. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,199 1,372 1,332 1,450 1.487 1,378 1,417 1,423 1,459 1,452 1,415 1,457 1,423 2 One-family 987 1,068 997 1,073 1,123 1,056 1,087 1,097 1,115 1,098 1,085 1,073 1,078 3 Two-family or more 213 303 335 377 364 322 330 326 344 354 330 384 345 4 Started 1,288 1,457 1,354 1,458 1,425 1,453 1,514 1,439 1,511 1,478 1,490 1,470 1,529 5 One-family 1,126 1,198 1,076 1,129 1,150 1,146 1,183 1,163 1,209 1,144 1,209 1,150 1,232 6 Two-family or more 162 259 278 329 275 307 331 276 302 334 281 320 297 7 Under construction at end of period1 680 762 776 790 800 803 800 816 826 826 829 826 827 8 One-family 543 558 547 562 569 569 565 581 591 590 596 594 598 9 Two-family or more 137 204 229 228 231 234 235 235 235 236 233 232 TIQ 10 Completed 1,193 1,347 1,313 1,360 1,225 1,403 1,328 1,391 1,350 1,408 1,418 1,446 1,418 11 One-family 1,040 1,160 1,066 1,081 1,003 1,113 1,052 1,112 1,073 1,120 1,128 1,141 1,126 12 Two-family or more 153 187 247 279 222 290 276 279 277 288 290 305 292 13 Mobile homes shipped 254 304 340 355 352 352 341 364 378 369 372 372 369 Merchant builder activity in one-family units 14 Number sold 666 670 665 679 683 743 784 713 740 734 733 785 820 15 Number for sale at end of period1 293 337 372 368 372 370 355 368 369 362 356 356 349 Price of units sold (thousands of dollars)2 16 Median 126.1 130.4 133.4 137.0 138.6 131.9 139.4 137.0 140.0 136.4 140.0 143.5 136.5 17 Average 147.6 153.7 157.6 160.7 165.6 155.3 163.7 162.1 170.0 163.3 166.5 167.0 158.4 EXISTING UNITS (one-family) 18 Number sold 3,800 3,946 3,801 4,000 3,870 3,720 3,940 4,200 4,200 4,280 4,160 4,150 4.140 Price of units sold (thousands of dollars)2 19 Median 106.5 109.6 112.2 114.3 113.9 114.8 114.0 115.7 116.5 117.6 122.9 121.5 122.3 20 Average 133.1 136.4 138.4 139.5 138.7 141.2 138.7 140.1 141.9 144.4 150.2 149.6 149.9 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 482,737 527,063 547,079 549,745 555,701 558,952 544,577 556,983 564,623r 558,481 563,122 556,925 562,081 22 Private 362,587 400,007 410,197 411,015 417,191 418,896 411,248 419,726 424,233r 418,120 423,106 417,918 423.393 23 Residential 210,455 238,873 236,598 239,938 243,104 242,474 238,558 245,881 248,013r 247,486 246,909 244,084 243.993 24 Nonresidential 152,132 161,134 173,599 171,077 174,087 176,422 172,690 173,845 176,220r 170,634 176,197 173,834 179.400 25 Industrial buildings 26,482 28,947 32,301 32,032 31,996 32,495 30,792 30,593 30,285r 27,310 28.755 28,543 27,816 26 Commercial buildings 53,375 59,728 67,528 65,555 66,447 66,475 66,461 65,503 67,565r 65,834 69,280 67,995 70,636 21 Other buildings 26,219 26,961 26,923 27,418 28,197 28,103 27,470 27,884 27,457r 27,723 28,533 28,385 29.195 28 Public utilities and other 46,056 45,498 46,847 46,072 47,447 49,349 47,967 49,865 50,913r 49,767 49,629 48,911 51,753 29 Public 120,151 127,056 136,884 138,729 138,510 140,056 133,329 137,257 140,390r 140,361 140,016 139,007 138,688 30 Military 2,454 2,319 3,005 3,217 3,211 3,554 3,982 3,126 3,168r 3,020 3,140 3,044 2.907 31 Highway 34,342 37,673 38,161 38,344 40,402 39,444 40,956 39,527 39,454r 37,715 38,308 38,596 36.046 32 Conservation and development 5,908 6,370 6,389 5,888 6,014 5,352 5,455 5,811 5,956r 5,756 6,004 5,508 5,315 33 Other 77,447 80,694 89,329 91,280 88,883 91,706 82,936 88,793 91,812r 93,870 92,564 91,859 94,420 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

Selected Measures A47 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data except as noted Change from 12 Change from 3 months earlier Change from 1 month earlier months earlier (annual rate) IIInnndddeeexxx llleeevvveeelll,,, IIIttteeemmm 1995 1996 1996 SSSeeepppttt... 11999955 11999966 111999999666 111 SSeepptt.. SSeepptt.. Dec. Mar. June Sept. Mayr Juner July Aug. Sept. CONSUMER PRICES2 (1982-84=100) 1 All items 2.5 3.0 2.4 4.0 3.1 2.6 .3 .1 .3 .1 .3 157.8 ? 2.7 3.8 1.9 3.2 4.6 5.3 .1 .7 .5 .4 .5 154.6 3 Energy items -1.8 5.2 1.9 15.8 8.4 -3.9 1.1 -2.2 -.4 -.6 .0 111.7 4 All items less food and energy 2.9 2.7 2.2 3.5 2.2 2.7 .2 .2 .3 .1 .3 166.4 Commodities 1.5 1.2 1.7 2.6 -.3 .9 .0 .0 .0 -.1 .4 141.4 6 Services 3.6 3.3 2.5 3.4 3.9 3.2 .3 .3 .3 .2 .2 180.7 PRODUCER PRICES (1982=100) 7 Finished goods 1.8 2.9 4.4 2.5 1.9 2.2 .2 .1 .0 .3 .2 131.6 8 Consumer foods 3.0 4.2 4.4 .6 4.9 6.1 .2 1.5 .2 1.0 .2 135.6 9 Consumer energy -.8 7.1 10.8 17.8 .0 .5 -.4 -2.3 -.9 .7 .2 84.6 in Other consumer goods 2.2 1.6 3.4 -.3 2.5 .6 .4 .2 -.1 .0 .2 143.5 11 Capital equipment 1.6 1.1 2.9 .0 -.3 2.0 .0 -.1 .3 -.1 .3 137.2 Intermediate materials 12 Excluding foods and feeds 5.0 -.2 -.6 -1.0 .0 .3 .3 -.6 -.4 .2 .2 126.1 13 Excluding energy 6.1 -1.6 -2.9 -3.5 .0 -.3 .1 .0 -.3 .1 .1 133.9 Crude materials 14 Foods 7.4 14.6 20.8 -4.1 58.1 -6.1 6.3 1.1 2.7 -.3 -3.8 124.7 15 Energy -5.5 20.9 33.9 52.8 -15.0 22.9 -4.6 -7.1 3.9 .7 .6 81.5 16 Other 7.2 -10.3 -18.4 -10.6 -7.9 -3.6 .6 -1.5 -1.6 .1 .6 153.1 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

A48 Domestic Nonfinancial Statistics • December 1996 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1995 1996 AAccccoouunntt 11999933 11999944 11999955 Q2 Q3 Q4 Ql Q2r GROSS DOMESTIC PRODUCT 1 Total 6,553.0 6,935.7 7,253.8 7,204.9 7,309.8 7,350.6 7,426.8 7,545.1 By source 2 Personal consumption expenditures 4,454.1 4,700.9 4,924.9 4,910.5 4,957.9 4,990.5 5,060.5 5,139.4 3 Durable goods 530.7 580.9 606.4 604.0 615.8 612.8 625.2 637.6 4 Nondurable goods 1,368.9 1,429.7 1,485.9 1,486.7 1,491.2 1,494.2 1,522.1 1,544.7 5 Services 2,554.6 2,690.3 2,832.6 2,819.8 2,850.9 2,883.5 2,913.2 2,957.1 6 Gross private domestic investment 871.1 1,014.4 1,065.3 1,050.3 1,074.8 1,064.0 1,068.9 1,096.0 1 Fixed investment 850.5 954.9 1,028.2 1,016.3 1,036.6 1,046.2 1,070.7 1,088.0 y 8 No S n t r r e u s c i t d u e r n e t s i al 5 1 9 7 8 1 . . 8 8 6 1 6 8 7 0 . . 2 2 7 1 3 9 8 9 . . 5 7 7 1 3 9 4 7 . . 4 6 7 20 4 2 6 . . 5 3 7 2 4 0 9 4 . . 7 0 7 20 6 8 9 . . 4 0 7 2 7 0 3 7 . . 8 4 1U Producers' durable equipment 427.0 487.0 538.8 536.8 543.8 545.7 560.6 566.3 II Residential structures 251.7 287.7 289.8 281.9 290.3 296.5 301.7 314.2 12 Change in business inventories 20.6 59.5 37.0 34.0 38.2 17.8 -1.7 8.0 13 Nonfarm 26.8 48.0 39.6 36.1 41.5 19.9 2.7 11.3 14 Net exports of goods and services -62.7 -94.4 -94.7 -115.3 -87.6 -67.2 -86.3 -99.2 lb Exports 657.8 719.1 807.4 797.3 819.0 837.0 839.5 850.0 lb Imports 720.5 813.5 902.0 912.6 906.6 904.2 925.8 949.2 17 Government consumption expenditures and gross investment 1,290.4 1,314.7 1,358.3 1,359.4 1,364.6 1,363.4 1,383.7 1,408.8 1 iy 8 F St e a d t e e r a a l n d local 5 76 2 7 2 . . 8 6 5 7 1 9 6 8 . . 4 4 5 8 1 4 6 1. . 7 6 5 83 2 7 2 . . 3 0 5 8 1 4 6 7 . . 8 7 5 8 0 5 7 5 . . 7 7 5 86 1 5 8 . . 1 6 5 8 2 7 9 9 . . 6 2 By major type of product 2200 Final sales, total 6,532.4 6,876.2 7,216.7 7,170.9 7,271.5 7,332.8 7,428.6 7,537.1 21 Goods 2,401.4 2,534.4 2,662.2 2,646.2 2,688.8 2,698.0 2,749.3 2,782.0 11 Durable 1,014.3 1,086.2 1,147.3 1,138.6 1,167.2 1,166.4 1,192.1 1,219.1 23 Nondurable 1,387.2 1,448.3 1,515.0 1,507.7 1,521.6 1,531.7 1,557.1 1,562.9 24 Services 3,584.0 3,746.5 3,926.9 3,908.9 3,950.2 3,992.4 4,027.9 4,087.0 25 Structures 547.0 595.3 627.6 615.7 632.6 642.3 651.4 668.0 26 Change in business inventories 20.6 59.5 37.0 34.0 38.2 17.8 -1.7 8.0 21 Durable goods 15.7 31.9 34.9 28.5 29.2 27.3 12.3 9.9 28 Nondurable goods 4.9 27.7 2.2 5.4 9.1 -9.4 -14.0 -1.9 MEMO 29 Total GDP in chained 1992 dollars 6,386.4 6,608.7 6,742.9 6,713.5 6,776.4 6,780.7 6,814.3 6,892.6 NATIONAL INCOME 30 Total 5,195.3 5,501.6 5,813.5 5,755.4 5,861.4 5,927.4 6,015.3 6,118.7 31 Compensation of employees 3,809.5 4,009.8 4,222.7 4,191.6 4,247.7 4,301.1 4,344.3 4,420.9 32 Wages and salaries 3,095.3 3,257.3 3,433.2 3,406.0 3,454.0 3,501.1 3,540.2 3,606.5 33 Government and government enterprises 584.2 602.5 621.7 619.6 624.1 626.9 634.0 638.9 34 Other 2,511.1 2,654.8 2,811.5 2,786.4 2,829.9 2,874.2 2,906.1 2,967.5 35 Supplement to wages and salaries 714.2 752.4 789.5 785.6 793.7 800.1 804.1 814.4 36 Employer contributions for social insurance 333.3 350.2 365.5 363.6 367.8 369.8 375.0 380.4 SI Other labor income 380.9 402.2 424.0 422.0 425.9 430.2 429.1 434.0 3 3 8 y Pro B p u r s ie in to es r s s ' a i n n d c o p m ro e f 1 essional1 4 3 2 8 0 8. . 1 0 4 4 5 1 0 5 . . 9 9 4 4 7 4 8 9 . . 3 3 4 44 7 7 4 . . 1 7 4 45 7 1 9 . . 5 6 4 4 5 8 4 6. . 7 9 4 46 9 1 9 . . 1 5 4 5 6 1 9 5 . . 4 2 40 Farm1 32.0 35.0 29.0 27.6 28.1 31.8 38.4 45.8 41 Rental income of persons2 102.5 116.6 122.2 121.6 120.9 125.8 126.9 124.5 42 Corporate profits' 464.4 529.5 586.6 562.3 612.5 611.8 645.1 655.8 43 Profits before tax3 464.3 531.2 598.9 589.6 607.2 604.2 642.2 644.6 44 Inventory valuation adjustment -6.6 -13.3 -28.1 -42.3 -9.3 -8.8 -17.4 -11.0 45 Capital consumption adjustment 6.7 11.6 15.9 15.0 14.6 16.5 20.4 22.3 46 Net interest 398.9 394.9 403.6 405.2 400.7 401.9 399.5 402.3 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

Selected Measures A49 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1995 1996 AAccccoouunntt 11999933 11999944 11999955 Q2 Q3 Q4 QL Q2r PERSONAL INCOME AND SAVING 1 Total personal income 5,480.1 5,753.1 6,115.1 6,074.4 6,146.9 6,234.5 6,308.5 6,412.4 2 Wage and salary disbursements 3,090.7 3,241.8 3,430.6 3,403.1 3,451.2 3,500.2 3,538.2 3,606.5 3 Commodity-producing industries 781.3 824.9 863.5 858.7 866.7 873.9 878.7 900.3 4 Manufacturing 593.1 621.1 648.4 645.3 650.1 654.7 654.8 671.8 Distributive industries 698.4 739.2 783.7 777.3 789.3 800.7 810.5 822.3 6 Service industries 1,026.7 1,075.2 1,161.6 1,147.5 1,171.1 1,198.6 1,215.1 1,244.9 7 Government and government enterprises 584.2 602.5 621.7 619.6 624.1 626.9 634.0 638.9 X Other labor income 380.9 402.2 424.0 422.0 425.9 430.2 429.1 434.0 9 Proprietors' income1 420.0 450.9 478.3 474.7 479.6 486.7 499.5 515.2 10 Business and professional1 388.1 415.9 449.3 447.1 451.5 454.9 461.1 469.4 11 Farm1 32.0 35.0 29.0 27.6 28.1 31.8 38.4 45.8 12 Rental income of persons2 102.5 116.6 122.2 121.6 120.9 125.8 126.9 124.5 N Dividends 186.8 199.6 214.8 212.2 215.8 221.7 226.6 229.3 14 Personal interest income 648.1 663.7 717.1 716.6 719.9 727.2 726.1 733.1 15 Transfer payments 910.7 956.3 1,022.6 1,016.8 1,029.9 1,041.4 1,063.0 1,075.6 16 Old age survivors, disability, and health insurance benefits 444.4 472.9 507.4 505.1 510.7 516.1 529.9 536.3 17 LESS: Personal contributions for social insurance 259.6 278.1 294.5 292.7 296.2 298.8 301.0 305.8 18 EQUALS: Personal income 5,480.1 5,753.1 6,115.1 6,074.4 6,146.9 6,234.5 6,308.5 6,412.4 19 LESS: Personal tax and nontax payments 689.9 731.4 794.3 801.5 798.4 807.2 824.9 870.6 20 EQUALS: Disposable personal income 4,790.2 5,021.7 5,320.8 5,272.9 5,348.5 5,427.3 5,483.5 5,541.8 21 LESS: Personal outlays 4,575.8 4,832.3 5,071.5 5,054.4 5,106.6 5,144.7 5,218.1 5,300.7 22 EQUALS: Personal saving 214.4 189.4 249.3 218.5 241.9 282.6 265.4 241.1 MEMO Per capita (chained 1992 dollars) 23 Gross domestic product 24,734.3 25,349.8 25,628.8 25,555.9 25,726.7 25,684.5 2255,,775533..33 2255,,999900..00 24 Personal consumption expenditures 16,806.7 17,158.2 17,399.6 17,395.8 17,453.8 17,459.9 17,570.2 17,675.7 25 Disposable personal income 18,078.0 18,330.0 18,799.0 18,676.0 18,829.0 18,986.0 19,041.0 19,063.0 26 Saving rate (percent) 4.5 3.8 4.7 4.1 4.5 5.2 4.8 4.3 GROSS SAVING 27 Gross saving 935.5 1,056.3 1,151.8 1,102.9 1,168.6 1,220.6 1,217.9 1,244.5 28 Gross private saving 962.4 1,006.7 1,071.8 1,018.5 1,085.9 1,138.9 1,133.8 1,121.6 29 Personal saving 214.4 189.4 249.3 218.5 241.9 282.6 265.4 241.1 30 Undistributed corporate profits' 103.3 123.2 140.6 123.5 159.6 158.4 171.8 176.3 31 Corporate inventory valuation adjustment -6.6 -13.3 -28.1 -42.3 -9.3 -8.8 -17.4 -11.0 Capital consumption allowances 32 Corporate 417.0 441.0 454.0 451.3 456.9 463.6 446655..66 447711..00 33 223.1 237.7 225.2 222.4 224.7 233.4 229.1 233.2 34 Gross government saving -26.9 49.6 80.0 84.4 82.7 81.7 84.1 122.9 35 Federal -187.4 -119.6 -87.9 -86.9 -84.6 -80.7 -82.0 -54.1 36 Consumption of fixed capital 68.2 70.6 73.8 74.2 73.8 73.8 73.2 72.6 37 Current surplus or deficit (—), national accounts -255.6 -190.2 -161.7 -161.1 -158.5 -154.5 -155.2 -126.7 38 State and local 160.5 169.2 167.9 171.3 167.3 162.4 166.1 177.0 39 Consumption of fixed capital 65.6 69.4 72.9 72.3 73.4 74.3 75.1 76.0 40 Current surplus or deficit (-), national accounts 94.9 99.7 95.0 99.0 93.9 88.1 91.0 101.0 41 Gross investment 993.5 1,090.4 1,150.9 1,123.2 1,161.5 1,173.9 1,167.9 1,187.0 42. Gross private domestic investment 871.1 1,014.4 1,065.3 1,050.3 1,074.8 1,064.0 1,068.9 1,096.0 43 Gross government investment 210.6 212.3 221.9 223.7 224.7 220.1 228.8 235.1 44 Net foreign investment -88.2 -136.4 -136.3 -150.8 -138.1 -110.2 -129.9 -144.2 45 Statistical discrepancy 58.0 34.1 -.9 20.3 -7.1 -46.7 -50.0 -57.5 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

A50 International Statistics • December 1996 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 1995 1996 IItteemm ccrreeddiittss oorr ddeebbiittss 11999933 11999944 11999955 Q2 Q3 Q4 Qi Q2P 1 Balance on current account -99,937 -148,405 -148,154 -40,976 -37,688 -30,435 -34,869 -38,779 2 Merchandise trade balance2 -132,609 -166,121 -173,424 -47,927 -42,548 -38,026 -42,730 -46,830 3 Merchandise exports 456,832 502,463 575,940 142,983 144,984 149,422 150,028 153,316 4 Merchandise imports -589,441 -668,584 -749,364 -190,910 -187,532 -187,448 -192,758 -200,146 5 Military transactions, net 881 1,963 3,585 859 1,120 978 489 835 6 Other service transactions, net 59,690 59,779 64,775 15,244 17,093 17,657 18,014 18,120 / Investment income, net 9,742 -4,160 -8,016 -862 -4,361 -1,890 262 -1,604 8 y U U . . S S . . g g o o v v e e r r n n m m e e n n t t g p r e a n n s t i s o ns and other transfers -1 -4 6 , , 0 8 8 2 1 3 -1 -4 5 , , 5 8 4 1 4 6 -1 -3 0 , , 4 9 2 5 0 9 -2 - , 9 3 6 8 7 1 -2 - , 9 9 6 3 4 3 -2 - , 7 7 3 9 1 9 -4 - , 9 2 6 5 0 9 - -1 2 , , 0 2 2 7 5 4 10 Private remittances and other transfers -16,736 -19,506 -20,696 -4,942 -5,095 -5,624 -5,685 -6,001 ii Change in U.S. government assets other than official reserve assets, net (increase, —) -342 -341 -280 -179 252 -199 -152 -429 12 Change in U.S. official reserve assets (increase, —) -1,379 5,346 -9,742 -2,722 -1,893 191 17 -523 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -537 -441 -808 -156 362 -147 -199 -133 15 Reserve position in International Monetary Fund -44 494 -2,466 -786 -991 -163 -849 -220 16 Foreign currencies -797 5,293 -6,468 -1,780 -1,264 501 1,065 -170 17 Change in U.S. private assets abroad (increase, -) -192,890 -155,701 -297,834 -105,398 -37,954 -98,206 -68,615 -48,213 i 1 y 8 N Ba o n n k b - a r n e k p - o r r e t p ed o rt c e l d a im cl s a 3 i ms 29 1 , , 9 5 4 8 7 1 -3 -8 2 , , 1 8 6 0 1 4 - -3 6 4 9 , , 2 1 1 4 9 6 - -2 4 2 1 , , 9 2 0 3 4 6 8 7, , 5 4 0 7 0 6 -1 -7 4 , , 2 27 7 8 2 -12 1 ,7 ,7 0 1 7 4 --55,,114499 20 U.S. purchases of foreign securities, net -146,253 -60,270 -98,960 -23,011 -35,839 -32,539 -34,420 -20,081 21 U.S. direct investments abroad, net -78,165 -54,466 -95,509 -18,247 -18,091 -44,117 -23,202 -22,983 22 Change in foreign official assets in United States (increase, +) 72,153 40,253 109,757 37,380 39,186 11,369 52,021 13,197 23 U.S. Treasury securities 48,952 30,745 68,813 25,208 20,489 12,984 55,600 -3,384 24 Other U.S. government obligations 4,062 6,077 3,734 1,326 518 764 52 1,258 25 Other U.S. government liabilities4 1,713 2,344 1,082 235 -71 1,249 -156 197 26 Other U.S. liabilities reported by U.S. banks3 14,841 3,560 32,862 7,662 18,478 -3,908 -3,264 13,841 27 Other foreign official assets5 2,585 -2,473 3,266 2,949 -228 280 -211 1,285 2 2 8 y C h U an .S ge . b in a n f k o - re re ig p n o r p t r e i d v at l e ia a b s i s l e it t i s e s in 3 United States (increase, +) 1 2 7 0 8 , , 8 8 5 4 9 3 2 1 4 1 5 1 , , 1 8 2 4 3 2 31 2 4 5 , , 7 2 0 8 5 3 7 1 8 0 , , 0 2 4 0 1 0 -2 7 1 9 , , 5 6 4 3 2 0 8 32 7 , , 7 8 6 6 5 0 -3 4 5 7 , , 5 4 7 5 1 0 -- 6 33 7 ,, , 88 1 66 1 22 8 30 U.S. nonbank-reported liabilities 10,489 -7,710 34,578 7,285 6,945 11,272 6,506 31 Foreign private purchases of U.S. Treasury securities, net 24,381 34,225 99,340 30,368 37,269 1,734 11,832 31,680 32 Foreign purchases of other U.S. securities, net 80,092 57,006 95,268 20,496 31,971 27,321 35,993 28,567 33 Foreign direct investments in United States, net 43,022 49,760 60,236 9,692 24,987 14,768 28,690 10,733 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy 43,550 13,724 31,548 33,854 -41,533 29,420 4,148 7,629 36 Due to seasonal adjustment -266 -7,407 1,153 6,279 -743 37 Before seasonal adjustment 43,550 13,724 31,548 34,120 -34,126 28,267 -2,131 8,372 MEMO Changes in official assets 38 U.S. official reserve assets (increase, —) -1,379 5,346 --99,,774422 --22,,772222 --11,,889933 191 17 -523 3Y Foreign official assets in United States, excluding line 25 (increase, +) 70,440 37,909 108,675 37,145 39,257 10,120 52,177 13,000 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) -3,717 -1,529 3,959 -341 6,147 -1,435 -992 5,126 1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 38-40. 4. Associated primarily with military sales contracts and other transactions arranged with 2. Data are on an international accounts basis. The data differ from the Census basis data, or through foreign official agencies. shown in table 3.11, for reasons of coverage and timing. Military exports are excluded from 5. Consists of investments in U.S. corporate stocks and in debt securities of private merchandise trade data and are included in line 5. corporations and state and local governments. 3. Reporting banks include all types of depository institutions as well as some brokers and SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current dealers. Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A51 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1996 IItteemm 11999933 11999944 11999955 Feb. Mar. Apr. May June July Aug." 1 Goods and services, balance -72,037 -104,381 -105,064 -6,783 -7,873 -9,396 -10,455 -8,190 -11,597 -10,831 2 Merchandise -132,607 -166,123 -173,424 -12,784 -14,448 -15,584 -16,791 -14,620 -17,492 -16,985 3 Services 60,570 61,742 68,360 6,001 6,575 6,188 6,336 6,430 5,895 6,154 4 Goods and services, exports 642,953 698,301 786,529 69,226 69,332 69,200 70,170 69,730 67,306 69,315 5 Merchandise 456,834 502,462 575,939 50,883 50,492 50,741 51,384 50,972 48,779 50,662 6 Services 186,119 195,839 210,590 18,343 18,840 18,459 18,786 18,758 18,527 18,653 7 Goods and services, imports -714,990 -802,682 -891,593 -76,009 -77,205 -78,596 -80,625 -77,920 -78,903 -80,146 8 Merchandise -589,441 -668,585 -749,363 -63,667 -64,940 -66,325 -68,175 -65,592 -66,271 -67,647 9 Services -125,549 -134,097 -142,230 -12,342 -12,265 -12,271 -12,450 -12,328 -12,632 -12,499 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 1996 AAsssseett 11999933 11999944 11999955 Feb. Mar. Apr. May June July Aug. Sept.p 1 Total 73,442 74,335 85,832 84,270 84,212 83,710 83,468 83,455 85,099 76,781 75,509 2 Gold stock, including Exchange Stabilization Fund1 11.053 11,051 11,050 11,053 11,053 11,052 11,051 11,050 11,050 11,050 11,050 3 Special drawing rights2,3 9,039 10,039 11,037 11,106 11,049 10,963 11,037 11,046 11,216 10,307 10,177 4 Reserve position in International Monetary Fund2 11,818 12,030 14,649 14,813 15,249 15,117 15,227 15,282 15,665 15,597 15,421 5 Foreign currencies4 41,532 41,215 49,096 47,298 46,861 46,578 46,153 46,077 47,168 39,827 38,861 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 1996 AAsssseett 11999933 11999944 11999955 Feb. Mar. Apr. May June July Aug. Sept.P 1 Deposits 386 250 386 209 191 166 160 182 166 171 265 Held in custody 2 U.S. Treasury securities2 379,394 441,866 522,170 559,741 573,435 573,924 578,608 572,839 580,277 590.367 609,801 3 Earmarked gold3 12,327 12,033 11,702 11,689 11,590 11,445 11,339 11,296 11,273 11,217 11,210 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

A52 International Statistics • December 1996 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1996 IItteemm 11999944 11999955 Feb. Mar. Apr. May June' July Aug.? 1 Total1 520,934 630,867r 670,236r 683,025r 687,239r 689,733r 696,373 699,496r 704,002 By type 2 Liabilities reported by banks in the United States2 73.386 107,343r 103,242 104,060' 111,032' 104,941 118,247 113,416' 111,161 3 U.S. Treasury bills and certificates3 139,571 168,534 191,188 198,382 186,638 188,321 187,171 186,061 189,726 U.S. Treasury bonds and notes 4 Marketable 254,059 293,69 lr 314,987' 319,735' 327,988' 334,470' 327,822 337,451' 341,038 5 Nonmarketable4 6,109 6,491 6,159 6,199 6,238 5,903 5,941 5,980 6,018 6 U.S. securities other than U.S. Treasury securities5 47,809 54,808 54,660 54,649 55,343 56,098 57,192 56,588 56,059 By area 7 Europe1 215,374 222,406' 231,291' 242,517' 241,089' 244,222' 245,368 245,406' 246,761 8 Canada 17,235 19,473 18,850 20,846 20,878 21,670 21,250 20,153 21,803 9 Latin America and Caribbean 41,492 66,720 70,602' 73,184' 71,381' 68,043' 70,142 67,990' 69,061 10 Asia 236,824 310,966 338,999 335,006 341,148 343,206 346,103 350,747 354,266 11 Africa 4,180 6,296 6,574 6,584 7,388 7,173 6,997 6,910 6,722 12 Other countries 5,827 5,004 3,918 4,886 5,353 5,417 6,511 8,288 5,387 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 States' Payable in Foreign Currencies Millions of dollars, end of period 1995' 1996' IItteemm 11999922 11999933 11999944'' Sept. Dec. Mar. June 1 Banks' liabilities 72,796 78,259 89,308 102,220 109,647 107,514 111,651 2 Banks' claims 62,799 62,017 60,711 69,558 74,015 69,159 65,864 3 Deposits 24,240 20,993 19,661 25,768 22,696 22,208 20,876 4 Other claims 38,559 41,024 41,050 43,790 51,319 46,951 44,988 5 Claims of banks' domestic customers2 4,432 12,854 10,878 6,624 6,145 6,353 7,377 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

Nonbank-Reported Data A53 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1996 IItteemm 11999933 11999944 11999955rr Feb. Mar.r Apr. May June' July Aug." BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 926,672 l,015,076r 1,099,790 l,102,424r 1,101,069 l,100,589r l,096,031r 1,097,820 1,084,451 1,062,478 2 Banks' own liabilities 626,919 718,671' 753,652 733,434r 730,448 735,749r 723,534r 731,289 715,848 691,695 3 Demand deposits 21,569 23,386 24,448 23,497' 23,359 23,962r 23,325r 27,368 24,991 23,497 4 Time deposits2 175,106 186,512 192,702 192,098r 193,623 191,999r 181,016r 189,705 193,415 196,062 3 Other3 111,971 113,215r 139,965 149,009 138,321 146,589 144,051 149,070 144,504 129,373 6 Own foreign offices4 318,273 395,558 396,537 368,830r 375,145 373,199r 375,142' 365,146 352,938 342,763 7 Banks' custodial liabilities5 299,753 296,405r 346,138 368,990 370,621 364,840 372,497 366,531 368,603 370,783 8 U.S. Treasury bills and certificates6 176,739 116622,,993388rr 197,355 222233,,339955 228,705 221177,,110066 220,823 221188,,660088 221177,,554488 219,949 9 Other negotiable and readily transferable instruments7 36,289 42,539' 52,250 43,404 40,483 44,823 49,655 51,463 56,345 55,552 10 Other 86,725 90,928 96,533 102,191 101,433 102,911 102,019 96,460 94,710 95,282 11 Nonmonetary international and regional organizations8.. . 10,936 8,606 11,039 ll,156r 9,512 11,31 lr 1 l,994r 12,158 11,742 12,455 12 Banks' own liabilities 5,639 8,176 10,347 10,361r 8,594 10,485r ll,207r 10,914 10,545 11,864 13 Demand deposits 15 29 21 43 16 28 34 123 22 49 14 Time deposits2 2,780 3,298 4,656 3,526r 3,563 4,024r 3,442r 4,052 3,747 4,718 15 Other3 2,844 4,849 5,670 6,792 5,015 6,433 7,731 6,739 6,776 7,097 16 Banks' custodial liabilities5 5,297 430 692 795 918 826 787 1,244 1,197 591 17 US. Treasury bills and certificates6 44,,227755 281 350 555 564 426 376 874 865 345 18 Other negotiable and readily transferable instruments7 1,022 149 341 230 298 400 390 370 330 246 19 Other 0 0 1 10 56 0 21 0 2 0 20 Official institutions' 220,821 212,957 275,877 294,430 302,442 297,670r 293,262 305,418 299,477 300,887 21 Banks' own liabilities 64,144 59,935 83,396 84,077 88,603 91,617r 81,909 91,914 83,783 81,589 22 Demand deposits 1,600 1,564 2,098 1,655 1,423 1,679 1,504 2,211 2,211 1,459 23 Time deposits2 21,653 23,511 30,716 29,904 32,470 36,652r 32,671 38,929 36,841 37,032 24 Other3 40,891 34,860 50,582 52,518 54,710 53,286 47,734 50,774 44,731 43,098 25 Banks' custodial liabilities5 156,677 153,022 192,481 210,353 213,839 206,053 211,353 213,504 215,694 219,298 26 U.S. Treasury bills and certificates6 151,100 139,571 168,534 191,188 198,382 186,638 188,321 118877,,117711 186,061 189,726 27 Other negotiable and readily transferable instruments7 5,482 13,245 23,603 18,138 14,970 19,065 22,661 25,835 29,262 29,281 28 Other 95 206 344 1,027 487 350 371 498 371 291 29 Banks10 592,171 678,612r 691,661 671,265r 667,354 665,516r 662,376r 654,269 642,273 623,073 30 Banks' own liabilities 478,755 563,697r 568,083 541,959r 540,272 537,453r 533,059r 530,569 521,107 499,887 31 Unaffiliated foreign banks 160,482 168,139r 171,546 173,129r 165,127 164,254r 157,917r 165,423 168,169 157,124 32 Demand deposits 9,718 10,633 11,758 10,948 10,971 11,468r 10,663 12,380 11,809 11,104 33 Time deposits2 105,262 111,171 103,623 104,228r 101,047 96,238r 89,120r 90,717 95,353 95,069 34 Other3 45,502 46,335r 56,165 57,953 53,109 56,548 58,134 62,326 61,007 50,951 35 Own foreign offices4 318,273 395,558 396,537 368,830r 375,145 373,199r 375,142r 365,146 352,938 342,763 36 Banks' custodial liabilities5 113,416 114,915r 123,578 129,306 127,082 128,063 129,317 123,700 121,166 123,186 37 U.S. Treasury bills and certificates6 10,712 llll,,226644rr 15,872 17,947 15,967 1166,,880011 17,584 1188,,224411 1188,,009911 1188,,667700 38 Other negotiable and readily transferable instruments7 17,020 14,506r 13,035 12,094 11,864 10,814 11,775 11,021 10,359 10,864 39 Other 85,684 89,145 94,671 99,265 99,251 100,448 99,958 94,438 92,716 93,652 40 Other foreigners 102,744 114,901r 121,213 125,573r 121,761 126,092r 128,399r 125,975 130,959 126,063 41 Banks' own liabilities 78,381 86,863 91,826 97,037r 92,979 96.1941 97,359r 97,892 100,413 98,355 42 Demand deposits 10,236 11,160 10,571 10,851r 10,949 10,787r 1 l,124r 12,654 10,949 10,885 43 Time deposits2 45,411 48,532 53,707 54,440r 56,543 55,085r 55,783r 56,007 57,474 59,243 44 Other3 22,734 27,171 27,548 31,746 25,487 30,322 30,452 29,231 31,990 28,227 45 Banks' custodial liabilities5 24,363 28,038r 29,387 28,536 28,782 29,898 31,040 28,083 30,546 27,708 46 U.S. Treasury bills and certificates6 10,652 11 LL,,882222rr 1122,,559999 1133,,770055 13,792 1133,,224411 14,542 1122,,332222 12,531 1111,,220088 47 Other negotiable and readily transferable instruments7 12,765 14,639r 15,271 12,942 13,351 14,544 14,829 14,237 16,394 15,161 48 Other 946 1,577 1,517 1,889 1,639 2,113 1,669 1,524 1,621 1,339 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 17,567 17,895 9,103 10,544 10,005 8,306 9,284 9,580 7,907 8,276 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

A54 International Statistics • December 1996 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1—Continued 1995r Mar.r Apr. May Juner July Aug AREA 50 Total, all foreigners 926,672 L,015,076R 1,099,790 L,102,424R 1,101,069 1,100,589' L,096,031R 1,097,820 1,084,451 1,062,478 51 Foreign countries 915,736 L,006,470R 1,088,751 L,091,268R 1,091,557 L,089,278R L,084,037R 1,085,662 1,072,709 1,050,023 52 Europe 377,911 390,949' 362,958 374,102' 370,662 375,522' 367,739' 363,744 357,900 356,309 53 Austria 1,917 3,588 3,537 2,996 2,848 3,477 3,624 3,209 3,002 4,733 54 Belgium and Luxembourg 28,670 21,877 24,842 27,182 25,584 27,572 25,955 20,856 22,093 25,105 55 Denmark 4,517 2,884 2,921 3,861 2,876 2,787 2,645 2,796 2,871 2,501 56 Finland 1,872 1,436 2,831 2,409 1,768 2,203 2,188 1,589 1,200 1,113 57 France 40,316 44,365r 39,218 41,095' 41,328 41,300' 39,636' 40,585 36,344 37,364 58 Germany 26,685 27,109 24,035 24,695 25,228 24,854 23,950 25,876 24,373 23,127 59 Greece 1,519 l,400r 2,014 2,062' 1,965 1,714 1,665 1,690 1,811 1,753 60 Italy 11,759 10,885 10,868 12,463' 11,469 10,172' 11,039' 12,103 12,804 12,546 61 Netherlands 16,096 16,033 13,745 12,168' 12,835 12,394' 12,575' 12,159 11,863 11,460 62 Norway 2,966 2,338 1,394 1,246 1,034 915 828 1,388 1,435 1,556 63 Portugal 3,366 2,846 2,761 2,931 2,843 2,529 1,858 1,401 1,783 1,328 64 Russia 2,511 2,726 7,948 9,178' 9,319 8,796' 7,259' 6,938 6,047 4,989 65 Spain 20,496 14,675 10,011 11,588' 18,975 19,547' 19,004' 20,314 19,366 17,507 66 Sweden 2,738 3,094 3,246 2,813 2,256 3,943 2,410 2,693 2,738 1,592 67 Switzerland 41,560 40,724r 43,625 42,008' 39,081 36,803' 37,097' 39,006 39,626 39,073 68 Turkey 3,227 3,341 4,124 4,559 4,103 4,453 4,669 4,926 5,619 7,272 69 United Kingdom 133,993 163,813' 139,272 146,985 144,136 146,627' 146,335 143,780 139,656 137,144 70 Yugoslavia11 372 245 177 163 143 145 146 217 208 207 71 Other Europe and other former U.S.S.R.12 33,331 27,770' 26,389 23,700' 22,871 25,291 24,856 22,218 25,061 25,939 72 Canada 20,235 24,768 30,468 32,029' 31,498 31,283' 33,176' 33,387 28,807 30,718 73 Latin America and Caribbean 362,238 423,847' 440,212 422,376' 434,144 430,878' 433,023' 432,725 430,342 410,817 74 Argentina 14,477 17,203 12,235 11,763' 11,984 14,116' 11,649' 13,579 12,501 13,237 75 Bahamas 73,820 104,014' 94,991 91,257' 88,162 85,749' 86,278' 85,227 85,973 76,231 76 Bermuda 8,117 8,424 4,897 4,702 5,035 4,262 4,998 4,312 4,205 4,214 77 Brazil 5,301 9,145 23,797 21,761 21,558 20,222 20,105 25,902 23,183 24,532 78 British West Indies 193,699 229,599 239,083 227,811' 240,950 239,169' 243,260' 234,391 233,131 225,192 79 Chile 3,183 3,127 2,826 2,773' 2,816 2,883' 2,868' 2,938 2,841 2,461 80 Colombia 3,171 4,615 3,659 3,627' 3,593 3,726' 3,393' 3,642 3,329 3,274 81 Cuba 33 13 8 7 7 13 8 10 10 14 82 Ecuador 880 875 1,314 1,200' 1,273 1,264' 1,283' 1,301 1,405 1,433 83 Guatemala 1,207 1,121 1,275 1,075 1,060 1,085 1,073 1,073 1,092 1,176 84 Jamaica 410 529 481 495 494 516 550 534 562 625 85 Mexico 28,019 12,227 24,560 23,898' 24,575 23,328' 23,212' 24,775 26,314 24,355 86 Netherlands Antilles 4,686 5,217 4,672 4,461 4,402 5,272 4,722 5,162 5,531 3,660 87 Panama 3,582 4,551 4,265 4,166 4,025 3,887 3,846 3,878 3,852 3,994 88 Peru 929 900 974 1,092 962 1,081 1,064 1,013 1,029 1,077 89 Uruguay 1,611 1,597 1,836 1,726 1,908 1,748 1,757 1,769 1,836 1,799 90 Venezuela 12,786 13,986' 11,808 12,609' 13,253 14,242' 14,645' 14,899 15,261 15,029 91 Other 6,327 6,704' 7,531 7,953' 8,087 8,315' 8,312 8,320 8,287 8,514 92 Asia 144,527 154,346' 240,698 249,410' 241,922 237,708' 235,910' 239,231 238,510 238,365 China 93 People's Republic of China 4,011 10,066 33,750 32,200 24,430 25,861 24,857 25,483 28,587 34,224 94 Republic of China (Taiwan) 10,627 9,844 11,714 12,955 15,513 14,953 14,598 16,621 16,079 14,750 95 Hong Kong 17,132 17,104 20,303 22,286 20,187 18,378' 18,606 18,227 19,642 19,373 96 India 1,114 2,338 3,373 3,527 3,990 3,752 3,938 4,012 3,954 4,012 97 Indonesia 1,986 1,587 2,708 2,349 2,169 2,627 2,374 2,315 2,561 2,161 98 Israel 4,435 5,157 4,041 5,750' 5,315 5,420' 5,090' 5,168 4,444 4,364 99 Japan 61,466 62,981 109,193 113,361 117,325 111,635 111,500 113,800 112,684 109,284 100 Korea (South) 4,913 5,124 5,749 5,607 5,875 5,900' 5,703' 6,674 5,661 5,389 101 Philippines 2,035 2,714 3,089 2,366 2,336 2,467 2,897 2,970 3,041 2,532 102 Thailand 6,137 6,466 12,279 13,389 12,158 12,905 13,387 12,253 11,713 10,691 103 Middle Eastern oil-exporting countries13 15,822 15,494' 15,582 13,491 13,741 14,895 14,234 13,379 12,942 13,890 104 Other 14,849 15,471 18,917 22,129' 18,883 18,915' 18,726' 18,329 17,202 17,695 105 Africa 6,633 6,524 7,641 7,843' 7,109 7,832 7,404 7,509 7,558 7,259 106 Egypt 2,208 1,879 2,136 2,375 2,057 2,002 1,873 1,831 2,114 1,920 107 Morocco 99 97 104 52 65 114 113 115 133 121 108 South Africa 451 433 739 665 413 1,001 745 666 648 632 109 Zaire 12 9 10 8 9 8 16 6 13 6 110 Oil-exporting countries14 1,303 1,343 1,797 1,968 1,706 1,904 1,887 2,013 1,928 2,075 111 Other 2,560 2,763 2,855 2,775' 2,859 2,803 2,770 2,878 2,722 2,505 112 Other 4,192 6,036 6,774 5,508' 6,222 6,055' 6,785 9,066 9,592 6,555 113 Australia 3,308 5,142 5,647 4,502' 5,238 4,895' 5,757 7,981 8,387 5,516 114 Other 884 894 1,127 1,006 984 1,160 1,028 1,085 1,205 1,039 1 1 1 1 5 6 No I n n m te o rn ne a t t a io ry n a i l n 15 t ernational and regional organizations. . . 1 6 0 , , 8 9 5 3 1 6 7 8 , , 5 6 3 0 7 6 1 9 1 , , 3 0 0 3 0 9 1 1 0 l , , 0 1 7 5 5 6 r 9 7 , , 5 9 1 3 2 8 1 9 1 , ,3 9 1 6 7 L ' R 1 1 0 1 , , 5 9 7 9 2 4 ' 1 12 0 , , 1 8 5 2 8 4 1 11 0 , , 7 3 4 0 2 3 1 1 0 2 , , 9 4 8 5 0 5 117 Latin American regional16 3,218 613 893 339' 794 482' 649' 527 831 814 118 Other regional17 867 456 846 742 780 862 773 807 608 661 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

Nonbank-Reported Data A55 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 1996 AArreeaa oorr ccoouunnttrryy 11999933 11999944 11999955 Feb.r Mar.r Apr.r Mayr Juner July Aug.P 1 Total, all foreigners 488,497 483,270r 532,751r 522,817 531,842 527,801 519,789 535,945 559,112 549,827 2 Foreign countries 486,092 478,679r 530,820r 520,038 528,028 525,085 516,295 532,916 556,998 547,816 3 Europe 123,741 123,408r 132,150r 139,291 138,802 135,493 134,459 146,181 143,641 149,619 4 Austria 412 692 565 773 892 1,213 1,212 1,088 1,128 917 5 Belgium and Luxembourg 6,532 6,738 7,624r 8,544 6,003 8,688 8,711 6,921 7,021 6,957 6 Denmark 382 1,129 403 599 698 543 482 432 319 230 7 Finland 594 512 1,055 1,313 1,782 1,305 1,282 1,013 1,629 1,322 8 France 11,822 12,146 15,033r 13,266 13,740 11,604 11,954 11,768 10,571 10,758 9 Germany 7,724 7,608 9,263r 8,814 9,260 8,647 8,099 11,831 9,497 7,622 10 Greece 691 604 469r 651 507 622 554 563 527 433 11 Italv 8,834 6,043 5,370r 4,844 5,871 5,702 6,172 5,721 6,026 6,765 12 Netherlands 3,063 2,959 5,346r 5,038 5,585 6,346 5,618 6.546 6,360 6,565 13 Norway 396 504 665 1,408 1,016 793 933 1,243 1,397 1,342 14 Portugal 834 938 888 743 773 889 813 704 667 548 15 Russia 2,310 973 660 775 868 741 482 440 514 803 16 Spain 3,717 3,530 2,166 4,041 5,420 5,092 3,158 2.519 3,341 3,005 17 Sweden 4,254 4,098 2,080r 2,151 2,206 3,534 2,526 2,799 2,802 2,716 18 Switzerland 6,605 55,,774466 7,474r 4,116 4,841 6,370 8,713 12.145 9,520 9,262 19 Turkey 1,301 887788 803r 725 810 973 873 933 912 935 20 United Kingdom 62,013 66,874r 67,784r 78,099 73,717 68,999 69,557 75,814 78,095 85,680 21 Yugoslavia2 473 265 147 118 120 208 204 164 159 87 22 Other Europe and other former U.S.S.R.3 1,784 1,171 4,355r 3,273 4,693 3,224 3,116 3,537 3,156 3,672 23 Canada 18,617 18,490 20,874r 18,974 18,040 22,061 20,885 22,246 23,985 25,141 24 Latin America and Caribbean 225,238 223,523 256,992r 249,038 253,184 246,364 238,235 239,803 265,696 252,476 25 Argentina 4,474 5,844 6,439 6,056 6,215 6,187 6,037 6,446 6,598 7,056 7.6 Bahamas 63,353 66,410 58,818r 63,836 66,156 55,497 56,383 60,608 71,951 65,266 7.7 Bermuda 8,901 8,481 5,741r 4,766 4,829 5,031 2,993 3,620 3,590 3,052 7.8 Brazil 11,848 9,583 13,297 13,904 13,799 14,164 14,186 15,067 15,197 15,155 7.9 British West Indies 99,319 95,741 123,924r 108,843 113,249 118,609 110,780 102,669 100,886 98,379 30 Chile 3,643 3,820 5,024 4,575 4,540 4,587 4,350 4,387 4,321 4,972 31 Colombia 3,181 4,004 4,550 4,488 4,542 4,512 4,511 4,525 4,512 4,724 32 Cuba 0 0 0 0 0 0 0 0 0 0 33 Ecuador 681 682 825 834 968 951 936 956 897 932 34 Guatemala 288 366 457 461 465 473 461 452 463 476 35 Jamaica 195 258 323 362 332 335 345 359 346 335 36 Mexico 15,879 17,749 18,028 17,162 16,948 17,066 16,877 16,820 16,975 17,545 37 Netherlands Antilles 2,683 1,396 9,229 12,973 10,902 8,728 8,674 12,888 29,224 23,718 38 Panama 2,894 2,198 3,008r 2,795 2,597 2,488 2,592 2,567 2,216 2,207 39 Peru 657 997 1,829 1,904 1,914 2,018 2,112 2,362 2,568 2,463 40 Uruguay 969 503 466 463 623 578 602 623 589 563 41 Venezuela 2,910 1,831 1,661 1,572 1,559 1,377 1,279 1,390 1,402 1,728 42 Other 3,363 3,660 3,373r 4,044 3,546 3,763 5,117 4,064 3,961 3,905 43 111,775 107,079 115,569r 107,223 111,429 115,037 116,490 118,126 117,058 114,615 China 44 People's Republic of China 2,271 836 1,023 1,351 2,439 3,405 2,857 2,141 1,344 2,034 45 Republic of China (Taiwan) 2,625 1,448 1,713 1,404 1,729 1,626 1,514 1,490 1,301 1,035 46 Hong Kong 10,828 9,161 12,915r 13,877 15,555 15,339 14,745 15,997 15,732 12,738 47 India 589 994 1,846 1,859 1,869 1,787 1,786 1,794 1,785 2,118 48 Indonesia 11,,552277 11,,447700 l,696r 1,491 1,619 1,539 1,563 1,562 1,744 1,582 49 Israel 882266 668888 739 683 665 642 615 620 658 667 50 Japan 60,032 59,151 61,461r 55,207 52,776 54,627 54,613 54,005 53,454 55,020 51 Korea (South) 7,539 10,286 14,089 15,523 17,362 17,250 18,424 19,261 18,648 17,667 52 Philippines 1,410 662 1,350 779 1,202 779 838 1,298 1,244 1,222 5.3 Thailand 2,170 2,902 2,612r 3,266 3,070 2,970 3,015 3,194 2,824 2,940 54 Middle Eastern oil-exporting countries4 15,115 13,748 9,639 6,410 7,145 7,252 8,976 8.348 9,480 9,489 55 Other 6,843 5,733 6,486r 5,373 5,998 7,821 7,544 8,416 8,844 8,103 56 Africa 3,861 3,050 2,768r 2,914 2,908 2,767 2,715 2,766 2,628 2,748 57 Egypt 196 225 210 237 247 225 217 198 216 221 58 Morocco 481 429 514 561 585 594 628 639 602 577 59 South Africa 633 671 465 520 567 493 468 515 441 512 60 Zaire 4 2 1 1 1 1 1 1 1 11 61 Oil-exporting countries5 1,129 856 552 526 516 501 478 474 470 462 62 Other 1,418 867 l,026r 1,069 992 953 923 939 898 965 63 Other 2,860 3,129 2,467 2,598 3,665 3,363 3,511 3,794 3,990 3,217 64 Australia 2,037 2,186 1,622 2,243 2,645 2,620 2,333 2,513 3,172 2,608 65 Other 823 943 845 355 1,020 743 1,178 1,281 818 609 66 Nonmonetary international and regional organizations6 . . . 2,405 4,591 1,931 2,779 3,814 2,716 3,494 3,029 2,114 2,011 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

A56 International Statistics • December 1996 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 1996 TTyyppee ooff ccllaaiimm 11999933 11999944 11999955 Feb.' Mar.' Apr.' May' June' July Aug." 1 Total 575,818 599,549r 655,518r 659,897 660,827 2 Banks' claims 488,497 483,270r 532,75 lr 522,817 531,842 527,801 519,789 535,945 559,112 549,827 3 Foreign public borrowers 29,228 23,416 22,522 24,380 27,751 26,254 22,208 22,941 20,238 18,823 4 Own foreign offices2 285,510 283,183 307,509 295,675 298,122 299,438 301,887 307,542 312,803 303,943 5 Unaffiliated foreign banks 100,865 109,228 101,410r 99,583 103,518 101,183 98,364 105,304 108,754 111,689 6 Deposits 49,892 59,250 37,658r 37,802 42,153 37,662 35,588 33,996 36,143 39,528 7 Other 50,973 49,978 63,752r 61,781 61,365 63,521 62,776 71,308 72,611 72,161 8 All other foreigners 72,894 67,443r 101,310' 103,179 102,451 100,926 97,330 100,158 117,317 115,372 9 Claims of banks' domestic customers3 87,321 116,279 122,767 128,055 124,882 10 Deposits 41,734 64,829 58,519 68,837 71,441 11 Negotiable and readily transferable instruments4 3311,,118866 36,008 4444,,116611 4411,,440011 37,331 12 Outstanding collections and other claims 14,401 15,442 20,087 17,817 16,110 MEMO 13 Customer liability on acceptances 7,920 8,427 8,410 9,031 9,335 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 29,150 32,796 30,717 32,777 32,913 32,384 34,258 31,136 32,270 33,527 1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are principally of amounts due from the head office or parent foreign bank, and from foreign for quarter ending with month indicated. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. Reporting banks include all types of depository institution as well as some brokers and 3. Assets held by reporting banks in the accounts of their domestic customers. dealers. 4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiar- paper. ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory 5. Includes demand and time deposits and negotiable and nonnegotiable certificates of agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists deposit denominated in U.S. dollars issued by banks abroad. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 1995' 1996 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999922 11999933 11999944'' Sept. Dec. Mar.' June 1 Total 195,119 202,566 200,070 220,439 225,141 233,558 228,400 By borrower 2 Maturity of one year or less 163,325 172,662 168,359 182,006 178,785 193,742 185,918 3 Foreign public borrowers 17,813 17,828 15,435 14,192 15,015 19,567 14,860 4 All other foreigners 145,512 154,834 152,924 167,814 163,770 174,175 171,058 5 Maturity of more than one year 31,794 29,904 31,711 38,433 46,356 39,816 42,482 6 Foreign public borrowers 13,266 10,874 7,838 8,220 7,506 8,104 8,107 7 All other foreigners 18,528 19,030 23,873 30,213 38,850 31,712 34,375 By area Maturity of one year or less 8 Europe 53,300 57,413 55,770 54,211 55,622 57,988 57,157 9 Canada 6,091 7,727 6,690 8,048 6,771 5,473 6,810 10 Latin America and Caribbean 50,376 60,490 58,877 71,325 72,396 84,240 78,432 11 Asia 45,709 41,418 39,851 42,767 40,312 40,317 38,282 12 Africa 1,784 1,820 1,376 1,285 1,295 1,326 1,279 13 All other3 6,065 3,794 5,795 4,370 2,389 4,398 3,958 Maturity of more than one year 14 Europe 5,367 5,310 4,203 4,658 4,995 6,833 8,191 15 Canada 3,287 2,581 3,505 3,571 2,731 2,563 3,689 16 Latin America and Caribbean 15,312 14,025 15,717 20,264 27,845 19,525 19,483 17 Asia 5,038 5,606 5,318 7,385 8,052 8,490 9,088 18 Africa 2,380 1,935 1,583 1,406 1,447 1,474 1,435 19 All other3 410 447 1,385 1,149 1,286 931 596 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

Nonbank-Reported Data A57 3.21 CLAIMS ON FOREIGN COUNTRIES Held by US. and Foreign Offices of U.S. Banks' Billions of dollars, end of period 1994 1995 1996 Area or country i yyi 19yJ June Sept. Dec. Mar. June Sept. Dec. Mar. June 1 Total 344.7 407.7 486.1 486.4 496.6 542.8r S28.2r 530.4r 551.7r 572. lr 604.7r 2 G-10 countries and Switzerland 131.3 161.8 173.3 182.6 190.6 211.5r 204.4' 200.0' 206.0' 202.3 221.8' 3 Belgium and Luxembourg .0 7.4 8.6 9.6 7.0 10.2 9.4 10.7 13.6' 10.7 8.0 4 France 15.3 12.0 18.6 20.7 19.1 19.91 19.9r 18.0' 19.4' 17.9 17.7 5 Germany 9.1 12.6 24.7 24.0 24.7 31.2 30.0' 27.5' 27.3' 31.5 31.4 6 Italy 6.5 7.7 14.0 11.6 11.8 10.6 10.7 12.6 11.5 13.2 14.9 7 Netherlands .0 4.7 3.4 3.4 3.6 3.5 4.3 4.4' 3.7' 3.0 4.7 8 Sweden 2.3 2.7 3.0 2.6 2.7 3.1 3.1' 2.9' 2.7 3.3 2.7 9 Switzerland 4.8 5.9 5.4 5.5 5.1 5.7 6.2 6.6' 6.7' 5.2 6.3 10 United Kingdom 59.7 84.3 64.9 78.4 85.81 90. r 87.1' 80.3' 82.4' 84.8 101.4 11 Canada 6.3 6.9 9.9 10.2 10.0 10.8r 11.3' 13.0' 10.3' 9.7 11.1 12 Japan 18.8 17.6 20.7 16.5 20.7 26.2r 22.7' 24.0 28.5 22.9 23.7' 13 Other industrialized countries 24.0 25.6 42.6 42.6 45.2 44.1 43.3 50.2' 50.2 61.3 55.5 14 Austria 1.2 .4 1.0 1.0 1.1 .9 .7 1.2 .9 1.3 1.2 15 Denmark .9 1.0 1.1 1.0 1.3 1.7 1.1 1.8 2.6 3.4 3.3 16 Finland .7 .4 .8 .8 .9 1.1 .5 .7 .8 .7 .6 17 Greece 3.0 3.2 4.6 4.3 4.5 4.9 5.0 5.1 5.7 5.6 5.6 18 Norway 1.2 1.7 1.6 1.6 2.0 2.4 1.8 2.3 3.2 2.1 2.3 19 Portugal .4 .8 1.1 1.0 1.2 1.0 1.2 1.9 1.3 1.6 1.6 20 Spain 8.9 9.9 12.6 14.0 13.6 14.1 13.3 13.3 11.6 17.5 13.6 21 Turkey 1.3 2.1 2.1 1.8 1.6 1.4 1.4 2.0 1.9 2.0 2.2 22 Other Western Europe 1.7 2.6 2.8 1.0 2.7 2.5 2.6 3.0 4.7 3.8 3.4 23 South Africa 1.7 1.1 1.2 1.2 1.0 1.5 1.4 1.3 1.2 1.7 2.0 24 Australia 2.9 2.3 13.7 15.0 15.4 12.6 14.3 17.4 16.4 21.7 19.7 25 OPEC2 15.8 17.4 21.6 21.7 23.9 19.5 20.3 22.4 22.1 21.2 20.1 26 Ecuador .6 .5 .5 .4 .5 .5 .7 .7 .7 .8 .9 27 Venezuela 5.2 5.1 4.4 3.9 3.7 3.5 3.5 3.0 2.7 2.9 2.3 28 Indonesia 2.7 3.3 3.2 3.3 3.8 4.0 4.1 4.4 4.8 4.7 4.9 29 Middle East countries 6.2 7.4 12.4 13.0 15.0 10.7 11.4 13.6 13.3 12.3 11.5 30 African countries 1.1 1.2 1.1 1.1 .9 .7 .6 .6 .6 .6 .5 31 Non-OPEC developing countries 72.6 83.1 94.8 93.2 96.0 98.5 103.6 104.0 112.6 116.9' 125.9 Latin America 32 Argentina 6.6 7.7 9.8 10.5 11.2 11.4 12.3 10.9 12.9 12.7 14.1 33 Brazil 10.8 12.0 12.0 9.3 8.4 9.2 10.0 13.6 13.7 17.8 22.2 34 Chile 4.4 4.7 5.1 5.5 6.1 6.4 7.1 6.4 6.8 6.4 6.7 35 Colombia 1.8 2.1 2.4 2.4 2.6 2.6 2.6 2.9 2.9 2.9 2.8 36 Mexico 16.0 17.8 18.6 19.8 18.4 17.9r 17.6 16.3 17.3 16.1 15.4 37 Peru .5 .4 .6 .6 .5 .6 .8 .7 .8 .9 1.2 38 Other 2.6 3.1 2.7 2.8 2.7 2.4 2.6 2.6 2.8 3.1 3.1 Asia China 39 People's Republic of China .7 2.0 .8 1.0 1.1 1.1 1.4 1.7 1.8 3.3 2.9 40 Republic of China (Taiwan) 5.2 7.3 7.1 6.9 9.2 8.5 9.0 9.0 9.4 9.7 9.8 41 India 3.2 3.2 3.7 3.9 4.2 3.8 4.0 4.4 4.4 4.7 4.2 42 Israel .4 .5 .4 .4 .4 .6 .7 .5 .5 .5 .6 43 Korea (South) 6.6 6.7 14.3 14.4 16.2 16.9 18.7 18.0 19.1 19.4 21.8 44 Malaysia 3.1 4.4 5.2 3.9 3.1 3.9 4.1 4.3 4.4 4.7 5.0 45 Philippines 3.6 3.1 3.2 2.9 3.3 3.0 3.6 3.3 4.1 3.9 4.7 46 Thailand 2.2 3.1 3.3 3.5 2.1 3.3 3.8 3.9 4.9 5.2 5.4 47 Other Asia 3.1 3.1 3.2 3.4 4.7 4.9 3.5 3.7 4.5 4.3 4.7 Africa 48 Egypt .2 .4 .5 .3 .3 .4 .4 .4 .4 .2 2 49 Morocco .6 .7 .7 .7 .6 .6 .9 .9 .7 .7 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 1.0 .8 1.0 .9 .8 .7 .6 .8' .9 .8' .8 52 Eastern Europe 3.1 3.2 3.2 3.0 2.7 2.3 1.8 3.4 4.2 6.2 5.0 53 Russia4 1.9 1.6 1.3 1.1 .8 .7 .4 .6 1.0 1.4 1.0 54 Yugoslavia5 .6 .6 .5 .5 .5 .4 .3 .4 .3 .3 .3 55 Other .6 .9 1.4 1.5 1.4 1.2 1.0 2.3 2.8 4.5 3.7 56 Offshore banking centers 58.1 73.0 80.6 77.2 71.4 84.4 82.2' 86.0 99.0 101.2' 103.8 57 Bahamas 6.9 10.9 13.3 13.8 10.3 12.5 8.4 12.6 11.0 13.9' 17.3 58 Bermuda 6.2 8.9 6.5 6.0 8.4 8.7r 8.4r 6.1 6.3 5.3 4.1 59 Cayman Islands and other British West Indies 21.5 18.0 23.8 21.5 19.9 19.4 23.7 23.4 32.1 28.5 23.8' 60 Netherlands Antilles 1.1 2.6 2.5 1.7 1.3 .9 2.4 5.5 9.9 10.7 13.0 61 Panama6 1.9 2.4 2.0 1.9 1.3 1.1 1.3 1.3 1.4 1.6 1.7 62 Lebanon 63 Hong Kong 13^9 18 J 2L8 203 19*9 22.5 23J 23.7 25! I 25.7 27.8 64 Singapore 6.5 11.2 10.6 11.8 10.1 19.2 14.8 13.3 13.1 15.4 15.9 65 Other' .0 .1 .0 .0 .1 .0 .0 .1 .1 .1 .1 66 Miscellaneous and unallocated8 39.7 43.4 69.7 65.8 66.7 82.2 72.3 64.0 57.3 62.5 72.2 I. 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

A58 International Statistics • December 1996 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1995 1996 TTyyppee ooff lliiaabbiilliittyy,, aanndd aarreeaa oorr ccoouunnttrryy 11999922 11999933 11999944 Mar. June Sept. Dec. Mar. Junep 1 Total 45,511 50,597 54,309 50,187 49,973 47,673 46,448 49,907 48,971 2 Payable in dollars 37,456 38,728 38,298 35,903 34,281 33,908 33,903 36,273 35,366 3 Payable in foreign currencies 8,055 11,869 16,011 14,284 15,692 13,765 12,545 13,634 13,605 By type 4 Financial liabilities 23,841 29,226 32,954 29,775 29,282 26,237 24,241 26,570 24,817 Payable in dollars 16,960 18,545 18,818 16,704 15,028 13,872 12,903 13,831 12,185 6 Payable in foreign currencies 6,881 10,681 14,136 13,071 14,254 12,365 11,338 12,739 12,632 7 Commercial liabilities 21,670 21,371 21,355 20,412 20,691 21,436 22,207 23,337 24,154 8 Trade payables 9,566 8,802 10,005 9,844 10,527 10,061 11,013 10,815 11,089 9 Advance receipts and other liabilities 12,104 12,569 11,350 10,568 10,164 11,375 11,194 12,522 13,065 10 Payable in dollars 20,496 20,183 19,480 19,199 19,253 20,036 21,000 22,442 23,181 11 Payable in foreign currencies 1,174 1,188 1,875 1,213 1,438 1,400 1,207 895 973 By area or country Financial liabilities 12 Europe 13,387 18,810 21,703 17,541 18,223 16,401 15,622 16,950 1166,,443344 13 Belgium and Luxembourg 414 175 495 612 778 347 369 483 449988 14 France 1,623 2,539 1,727 2,046 1,101 1,365 999 1,679 861 13 Germany 889 975 1,961 1,755 1,589 1,670 1,974 2,161 1,850 16 Netherlands 606 534 552 633 530 474 466 479 444 17 Switzerland 569 634 688 883 1,056 948 895 1,260 1,156 18 United Kingdom 8,610 13,332 15,543 10,764 12,138 10,518 10,138 10,246 10,790 19 Canada 544 859 629 1,817 893 797 632 1,166 951 20 Latin America and Caribbean 4,053 3,359 2,034 2,065 1,950 1,904 1,783 1,876 969 21 Bahamas 379 1,148 101 135 81 79 59 78 31 22 Bermuda 114 0 80 149 138 144 147 126 28 23 Brazil 19 18 207 58 58 111 57 57 8 24 British West Indies 2,850 1,533 998 1,068 1,030 930 866 946 826 25 Mexico 12 17 0 10 3 3 12 16 11 26 Venezuela 6 5 5 5 4 3 2 2 1 27 Asia 5,818 5,956 8,403 8,156 8,023 6,947 5,988 6,390 6,351 28 Japan 4,750 4,887 7,314 7,182 7,141 6,308 5,436 5,980 6,051 29 Middle Eastern oil-exporting countries' 19 23 35 27 25 25 27 26 26 30 Africa 6 133 135 156 151 149 150 131 72 31 Oil-exporting countries2 0 123 123 122 122 122 122 122 61 32 All other3 33 109 50 40 42 39 66 57 40 Commercial liabilities 33 Europe 7,398 6,827 6,773 6,642 6,776 7,263 7,700 8,425 7,924 34 Belgium and Luxembourg 298 239 241 271 311 349 331 370 326 35 France 700 655 728 642 504 528 481 648 678 36 Germany 729 684 604 482 556 660 767 867 839 3/ Netherlands 535 688 722 536 448 566 500 659 617 38 Switzerland 350 375 327 327 432 255 413 428 516 39 United Kingdom 2,505 2,039 2,444 2,848 2,902 3,351 3,568 3,525 3,266 40 Canada 1,002 879 1,037 1,235 1,146 1,219 1,040 959 998 41 Latin America and Caribbean 1,533 1,658 1.857 1,368 1,836 1,607 1,740 2,110 2,301 42 Bahamas 3 21 19 8 3 1 1 28 35 43 Bermuda 307 350 345 260 397 219 205 570 509 44 Brazil 209 214 161 96 107 143 98 128 119 45 British West Indies 33 27 23 29 12 5 56 10 10 46 Mexico 457 481 574 356 420 357 416 468 475 47 Venezuela 142 123 276 273 204 175 221 243 283 48 10,594 10,980 10,741 10,151 9,978 10,275 10,421 10,474 11,389 49 Japan 3,612 4,314 4,555 4,110 3,531 3,475 3,315 3,725 3,943 50 Middle Eastern oil-exporting countries' 1,889 1,534 1,576 1,787 1,790 1,647 1,912 1,747 1,784 51 Africa 568 453 428 463 481 589 619 708 924 52 Oil-exporting countries2 309 167 256 248 252 241 254 254 435 53 Other3 575 574 519 553 474 483 687 661 618 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

Nonbank-Reported Data A59 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1995 1996 TTyyppee ooff ccllaaiimm,, aanndd aarreeaa oorr ccoouunnttrryy 11999922 11999933 11999944 Mar. June Sept. Dec. Mar. Junep 1 Total 45,073 49,159 57,888 52,218 58,051 53,424 52,509 55,394 58,829 2 Payable in dollars 42,281 45,161 53,805 48,425 54,138 49,696 48,711 50,995 53,984 3 Payable in foreign currencies 2,792 3,998 4,083 3,793 3,913 3,728 3,798 4,399 4,845 By type 4 Financial claims 26,509 27,771 33,897 29,606 34,574 29,891 27,398 30,760 33,978 5 Deposits 17,695 15,717 18,507 17,115 22,046 17,974 15,133 17,595 18,364 6 Payable in dollars 16,872 15,182 18,026 16,458 21,351 17,393 14,654 17,044 17,926 7 Payable in foreign currencies 823 535 481 657 695 581 479 551 438 8 Other financial claims 8,814 12,054 15,390 12,491 12,528 11,917 12,265 13,165 15,614 9 Payable in dollars 7,890 10,862 14,306 11,275 11,370 10,689 10,976 11,278 13,217 10 Payable in foreign currencies 924 1,192 1,084 1,216 1,158 1,228 1,289 1,887 2,397 11 Commercial claims 18,564 21,388 23,991 22,612 23,477 23,533 25,111 24,634 24,851 12 Trade receivables 16,007 18,425 21,158 20,415 21,326 21,409 22,998 22,123 22,276 13 Advance payments and other claims 2,557 2,963 2,833 2,197 2,151 2,124 2,113 2,511 2,575 14 Payable in dollars 17.519 19,117 21,473 20,692 21,417 21,614 23,081 22,673 22,841 15 Payable in foreign currencies 1,045 2,271 2,518 1,920 2,060 1,919 2,030 1,961 2,010 By area or country Financial claims 16 Europe 9,331 7,299 7,936 7,630 7,927 7,840 7,609 8,929 9,241 17 Belgium and Luxembourg 8 134 86 146 155 160 193 159 151 18 France 764 826 800 808 730 753 803 1,015 679 19 Germany 326 526 540 527 356 301 436 320 296 20 Netherlands 515 502 429 606 601 522 517 486 488 21 Switzerland 490 530 523 490 514 530 498 470 461 22 United Kingdom 6,252 3,585 4,649 4,040 4,790 4,924 4,303 5,568 6,169 23 Canada 1,833 2,032 3,581 3,848 3,705 3,526 2,851 5,269 4,773 24 Latin America and Caribbean 13,893 16,224 19,536 16,109 21,159 15,345 14,500 13,815 17,628 25 Bahamas 778 1,336 2,424 940 2,355 1,552 1,965 1,538 2,168 26 Bermuda 40 125 27 37 85 35 81 77 84 27 Brazil 686 654 520 528 502 851 830 1,019 1,242 28 British West Indies 11,747 12,699 15,228 13,531 17,013 11,816 10,393 10,088 13,008 29 Mexico 445 872 723 583 635 487 554 461 392 30 Venezuela 29 161 35 27 27 50 32 40 23 31 Asia 864 1,657 1,871 1,504 1,235 2,160 1,579 1,890 1,571 32 Japan 668 892 953 621 471 1,404 871 1,171 852 33 Middle Eastern oil-exporting countries1 3 3 141 4 3 4 3 13 9 34 Africa 83 99 373 141 138 188 276 277 197 35 Oil-exporting countries2 9 1 0 9 9 6 5 5 5 36 All other3 505 460 600 374 410 832 583 580 568 Commercial claims 37 Europe 8,451 9,105 9,540 8,947 9,200 8,862 9,824 9,776 9,812 38 Belgium and Luxembourg 189 184 213 199 218 224 231 247 239 39 France 1,537 1,947 1,881 1,790 1,669 1,706 1,830 1,803 1,658 40 Germany 933 1,018 1,027 977 1,023 997 1,070 1,410 1,335 41 Netherlands 552 423 311 324 341 338 452 442 481 42 Switzerland 362 432 557 556 612 438 520 579 602 43 United Kingdom 2,094 2,377 2,556 2,388 2,469 2,479 2,656 2,607 2,651 44 Canada 1,286 1,781 1,988 2,010 2,003 1,971 1,951 2,045 2,074 45 Latin America and Caribbean 3,043 3,274 4,117 4,140 4,370 4,359 4,364 4,151 4,340 46 Bahamas 28 11 9 17 21 26 30 30 28 47 Bermuda 255 182 234 208 210 245 272 273 264 48 Brazil 357 460 612 695 777 745 898 809 837 49 British West Indies 40 71 83 55 83 66 79 106 103 50 Mexico 924 990 1,243 1,106 1,109 1,026 993 870 1,021 51 Venezuela 345 293 348 295 319 325 285 308 313 52 Asia 4,866 6,014 6,982 6,200 6,516 6,826 7,312 7,100 6,883 53 Japan 1,903 2,275 2,655 1,911 2,011 1,998 1,870 2,010 1,877 54 Middle Eastern oil-exporting countries' 693 704 708 689 707 775 974 1,024 879 55 Africa 554 493 454 468 478 544 654 667 688 56 Oil-exporting countries 78 72 67 71 60 74 87 107 83 57 Other3 364 721 910 847 910 971 1,006 895 1,054 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

A60 International Statistics • December 1996 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1996 1996 Transaction, and area or country 1994 1995 J A an u .— g. Feb. Mar. Apr. Mayr June' July Aug.P U.S. corporate securities STOCKS 1 Foreign purchases 350,593 462,950 400,712 52,260 55,281 53,047 57,552 43,374 49,488 46,136 2 Foreign sales 348,716 451,710 390,897 51,083 54,450 48,774 56,068 42,361 52,142 44,071 3 Net purchases, or sales (—) 1,877 11,240 9,815 1,177 831 4,273 1,484 1,013 -2,654 2,065 4 Foreign countries 1,867 11,445 9,825 1,306 877 4,129 1,479 1,013 -2,653 2,051 5 Europe 6.714 4,912 5,858 -1,072 1,377 1,429 -446 -308 -386 3,310 6 France -201 -1,099 -715 -161 661 -336 -306 -339 -188 -210 / Germany 2,110 -1,837 1,096 -37 86 174 -30 218 363 83 a Netherlands 2,251 3,507 1,531 20 208 237 -66 129 124 219 9 Switzerland -30 -2,283 2,473 -441 566 618 -140 78 615 538 10 United Kingdom 840 8,066 590 -223 -241 345 229 -416 -1,490 2,551 ii Canada -1,160 -1,517 593 518 -90 52 -394 81 31 -250 12 Latin America and Caribbean -2,111 5,814 4,006 2,694 -318 808 1,298 42 -1,077 1,046 13 Middle East1 -1,142 -337 -1,400 -285 -33 -6 -261 -114 -15 -179 14 Other Asia -1,234 2,503 935 -336 -291 1,852 1,380 1,359 -1,347 -1,642 15 Japan 1,162 -2,725 133 -131 -749 1,446 73 802 -611 -791 16 Africa 29 2 -67 -62 -44 31 6 -4 33 -33 1/ Other countries 771 68 -100 -151 276 -37 -104 -43 108 -201 18 Nonmonetary international and regional organizations 10 -205 -10 -129 -46 144 5 0 -1 14 BONDS2 19 Foreign purchases 289,586 293,533 252,844 32,769r 39,984r 24,130r 34,789 35.008 27,462 32,084 20 Foreign sales 229,665 206,951 173,194 23,608 25,151r 18,705r 24,094 25,688 17,352 20,870 21 Net purchases, or sales (-) 59,921 86,582 79,650 9,161r 14,833r 5,425r 10,695 9,320 10,110 11,214 22 Foreign countries 59,036 87,036 79,452 9,240r 14,745r 5,394r 10,690 9,305 9,993 11,235 23 Europe 37,065 70,318 49,106 8,968 6,52 r 3,922r 7,114 4,876 6,108 5,966 24 France 242 1,143 3,550 314 670 785 113 326 334 169 25 Germany 657 5,938 4,753 1,859 467 721 891 1 255 585 26 Netherlands 3,322 1,463 1,422 365 -66 -52 371 53 442 146 21 Switzerland 1,055 494 562 -86 -38 -144 178 233 258 105 28 United Kingdom 31,642 57,591 33,575 6,280 4,724r 2,239r 4,217 3,706 4,407 4,148 29 Canada 2,958 2,569 3,101 235 149 359 952 314 514 474 30 Latin America and Caribbean 5,442 6,141 13,662 -713 7,200r 60r 1,166 770 1,811 1,272 31 Middle East1 771 1,869 436 -334 13 122 205 218 205 201 32 Other Asia 12,153 5,659 13,269 l,171r 864r 1,094 1,279 3,140 1,186 3,243 33 Japan 5,486 2,250 7,054 346r 278r 135 537 1,912 905 2,583 34 Africa -7 234 235 -40 37 49 107 50 31 17 35 Other countries 654 246 -357 -47 -39 -212 -233 -63 138 62 36 Nonmonetary international and regional organizations 885 -454 198 -79 88 31 5 15 117 -21 Foreign securities 37 Stocks, net purchases, or sales (—) -48,071 -50,291 -44,638 -5,704 -10,345 -6,706 -3,167 -7,527 -3,639 -1,116 38 Foreign purchases 386,106 345,540 296,727 37,464 36,115 37,764 43,515 36,728 37,643 34,017 39 Foreign sales 434,177 395,831 341,365 43,168 46,460 44,470 46,682 44,255 41,282 35,133 40 Bonds, net purchases, or sales (—) -9,224 -48,545 -23,204 -1,404 -6,038 -153 -527 -1,887 -3,396 -5,215 41 Foreign purchases 848,368 889,471 684,951 95,201 93,345 81,256 82,453 82,907 80,703 84,448 42 Foreign sales 857,592 938,016 708,155 96,605 99,383 81,409 82,980 84,794 84,099 89,663 43 Net purchases, or sales (—), of stocks and bonds .... -57,295 -98,836 -67,842 -7,108 -16,383 -6,859 -3,694 -9,414 -7,035 -6,331 44 Foreign countries -57,815 -98,031 -67,454 -6,983 -16,387 -6,802 -3,585 -9,361 -7,098 -6,189 45 Europe -3,516 -48,125 -29,907 -2,552 -4,508 -1,949 1,271 -8,356 -4,460 -5,285 46 Canada -7,475 -7,952 -2,995 -58 -1,865 614 -231 -472 829 856 47 Latin America and Caribbean -18,334 -7,634 -9,471 -1,031 -2,582 -1,190 -2,044 975 -2,181 -1,415 48 -24,275 -34,056 -22.930 -2,557 -5,756 -4,094 -2,260 -1,401 -1,174 -1,003 49 Japan -17,427 -25,072 -10,626 -1,592 -3,224 -950 -921 -1,229 231 486 50 Africa -467 -327 -933 -161 -436 -14 -32 -116 -53 -25 51 Other countries -3,748 63 -1,218 -624 -1,240 -169 -289 9 -59 683 52 Nonmonetary international and regional organizations 520 -805 -388 -125 4 -57 -109 -53 63 -142 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

Securities Holdings and Transactions!Interest and Exchange Rates A61 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions1 Millions of dollars; net purchases, or sales (—) during period 1996 1996 AArreeaa oorr ccoouunnttrryy 11999944 11999955 Jan.— Feb. Mar. Apr. May June July Aug.P Aug. 1 Total estimated 78,801 134,074r 134,482 15,451 7,025 15,751 13,896 8,648 47,825 11,868 2 Foreign countries 78,637 133,552 136,655 16,192 6,414 17,126 13,658 9,459 48,261 11,832 3 Europe 38,542 50,000 66,460 8,462 4,083 8,712 7,290 5,734 18,137 6,751 4 Belgium and Luxembourg 1,098 591 611 -120 81 399 -153 221 -39 73 5 Germany 5,709 6,136 10,575 1,829 958 1,833 1,674 1,196 1,233 467 6 Netherlands 1,254 1,891 -1,806 354 -1,597 -2,137 -757 1,067 694 -237 7 Sweden 794 358 1,769 803 372 286 342 -29 322 -282 8 Switzerland 481 -472 932 84 65 1,329 555 -842 395 -730 9 United Kingdom 23,365 34,778 37,520 1,644 2,270 6,070 2,987 5,190 10,911 7,271 10 Other Europe and former U.S.S.R 5,841 6,718 16,859 3,868 1,934 932 2,642 -1,069 4,621 189 11 Canada 3,491 252 5,297 1,863 35 1,766 -669 -139 1,714 -1,140 1? Latin America and Caribbean -10,383 48,609 15,286 -2,931 -4,985 1,993 -1,167 1,524 23,991 -491 13 Venezuela -319 -2 -139 -93 -44 4 -39 13 16 146 14 Other Latin America and Caribbean -20,493 25,152 5,640 -1,896 -2,696 3,865 -2,195 -4,434 986 3,088 15 Netherlands Antilles 10,429 23,459 9,785 -942 -2,245 -1,876 1,067 5,945 22,989 -3,725 16 47,317 32,319 48,632 8,616 6,941 4,478 8,216 2,919 4,183 6,359 17 Japan 29,793 16,863 21,102 3,069 2,443 2,382 4,565 879 2,225 2,920 18 240 1,464 1,082 -100 311 250 -48 22 -31 163 19 Other -570 908 -102 282 29 -73 36 -601 267 190 20 Nonmonetary international and regional organizations 164 522R -2,173 -741 611 -1,375 238 -811 -436 36 21 International 526 92R -1,303 -308 647 -414 -9 -747 -395 -287 22 Latin American regional -154 261 -935 -254 12 -1,008 9 7 -3 347 MEMO 73 Foreign countries 78,637 133,552 136,655 16,192 6,414 17,126 13,658 9,459 48,261 11,832 24 Official institutions 41,822 39,632R 47,347 8,681 4,748 8,253 6,482 -6,648 9,629 3,587 25 Other foreign 36,815 93,920R 89,308 7,511 1,666 8,873 7,176 16,107 38,632 8,245 Oil-exporting countries 26 Middle East2 -38 3,075 4,523 122 1,127 863 2,172 793 -219 332233 27 0 2 0 1 0 0 1 -1 0 -1 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. 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS1 Percent per year, averages of daily figures Rate on Oct. 31, 1996 Rate on Oct. 31, 1996 Country Country Month effective Austria.. 2.5 Apr. 1996 Germany .. . 2.5 Belgium. 2.5 Apr. 1995 Italy 7.5 Canada.. 3.5 Oct. 1996 Japan .5 Denmark , 3.25 Apr. 1996 Netherlands. 2.5 France2 .. 3.2 Oct. 1996 Switzerland . 1.0 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 1996 TTyyppee oorr ccoouunnttrryy 11999933 11999944 11999955rr Apr. May June July Aug. Sept. Oct. 1 Eurodollars 3.18 4.63 5.92r 5.36 5.36 5.46 5.49 5.41 5.49 5.41 2 United Kingdom 5.88 5.45 6.63 5.97 6.03 5.80 5.69 5.72 5.75 5.93 3 Canada 5.14 5.57 7.12r 5.03 4.82 4.87 4.76 4.30 4.10 3.54 4 Germany 7.17 5.25 4.42r 3.22 3.19 3.29 3.29 3.20 3.02 3.04 5 Switzerland 4.79 4.03 2.94 1.68 1.99 2.53 2.52 2.21 1.82 1.56 6 Netherlands 6.73 5.09 4.29r 2.83 2.61 2.81 2.99 2.90 2.70 2.82 7 France 8.30 5.72 6.4 lr 3.87 3.78 3.85 3.73 3.84 3.63 3.39 8 Italy 10.09 8.45 10.421 9.60 8.88 8.73 8.72 8.77 8.42 7.99 9 Belgium 8.10 5.65 4.73 3.23 3.19 3.23 3.29 3.21 3.04 3.02 10 Japan 2.96 2.24 1.20 .61 .62 .57 .67 .62 .53 .52 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

A62 International Statistics • December 1996 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar except as noted 1996 CCoouunnttrryy//ccuurrrreennccyy uunniitt 11999933 11999944 11999955 May June July Aug. Sept. Oct. 1 Australia/dollar2 67.993 73.161 74.073 79.700 79.122 78.974 78.305 79.279 79.179 2 Austria/schilling 11.639 11.409 10.076 10.782 10.755 10.576 10.435 10.610 10.748 3 Belgium/franc 34.581 33.426 29.472 31.502 31.433 30.947 30.553 31.056 31.471 4 Canada/dollar 1.2902 1.3664 1.3725 1.3693 1.3658 1.3697 1.3722 1.3694 1.3508 5 China, P.R./yuan 5.7795 8.6404 8.3700 8.3479 8.3424 8.3409 8.3379 8.3341 8.3299 6 Denmark/krone 6.4863 6.3561 5.5999 5.9160 5.8941 5.8014 5.7327 5.8057 5.8576 7 Finland/markka 5.7251 5.2340 4.3763 4.7541 4.6710 4.5812 4.4793 4.5421 4.5694 8 France/franc 5.6669 5.5459 4.9864 5.1855 5.1787 5.0881 5.0636 5.1307 5.1652 9 Germany/deutsche mark 1.6545 1.6216 1.4321 1.5324 1.5282 1.5025 1.4826 1.5080 1.5277 10 Greece/drachma 229.64 242.50 231.68 243.27 241.75 237.65 237.00 239.67 239.76 11 Hong Kong/dollar 7.7357 7.7290 7.7357 7.7363 7.7404 7.7379 7.7345 7.7328 7.7322 12 India/rupee 31.291 31.394 32.418 35.025 35.100 35.667 35.800 35.870 35.804 13 Ireland/pound2 146.47 149.69 160.35 156.29 158.31 160.31 161.08 160.96 160.83 14 Italy/lira 1,573.41 1,611.49 1,629.45 1,556.71 1,542.30 1,526.82 1,516.62 1,520.48 1,523.82 15 Japan/yen 111.08 102.18 93.96 106.34 108.96 109.19 107.87 109.93 112.41 16 Malaysia/ringgit 2.5738 2.6237 2.5073 2.4936 2.4967 2.4915 2.4933 2.5009 2.5074 17 Netherlands/guilder 1.8585 1.8190 1.6044 1.7135 1.7120 1.6862 1.6633 1.6905 1.7141 18 New Zealand/dollar- 54.127 59.358 65.625 68.571 67.650 69.001 68.860 69.640 70.026 19 Norway/krone 7.1009 7.0553 6.3355 6.5748 6.5376 6.4465 6.4153 6.4613 6.4810 20 Portugal/escudo 161.08 165.93 149.88 157.54 157.40 154.56 152.27 153.99 154.28 21 Singapore/dollar 1.6158 1.5275 1.4171 1.4074 1.4090 1.4160 1.4124 1.4086 1.4124 22 South Africa/rand 3.2729 3.5526 3.6284 4.3679 4.3519 4.3963 4.5289 4.5489 4.5799 23 South Korea/won 805.75 806.93 772.69 780.86 798.45 813.03 817.52 822.40 828.24 24 Spain/peseta 127.48 133.88 124.64 127.97 128.87 126.96 125.72 127.11 128.60 25 Sri Lanka/rupee 48.211 49.170 51.047 54.868 55.529 55.293 55.603 56.050 57.016 26 Sweden/krona 7.7956 7.7161 7.1406 6.7984 6.6807 6.6394 6.6211 6.6427 6.6006 27 Switzerland/franc 1.4781 1.3667 1.1812 1.2539 1.2579 1.2320 1.2029 1.2343 1.2586 28 Taiwan/dollar 26.416 26.465 26.495 27.352 27.674 27.573 27.496 27.500 27.532 29 Thailand/baht 25.333 25.161 24.921 25.289 25.354 25.355 25.289 25.407 25.474 30 United Kingdom/pound2 150.16 153.19 157.85 151.52 154.16 155.30 154.99 155.93 158.63 MEMO 31 United States/dollar3 93.18 91.32 84.25 88.28 88.16 87.25 86.54 87.46 87.99 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

A63 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 1996 A72 SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks March 31, 1994 November 1996 A64 June 30, 1994 November 1996 A68 September 30, 1994 November 1996 A72 December 31, 1994 November 1996 A76 March 31, 1995 November 1996 A80 June 30, 1995 November 1996 A84 September 30, 1995 November 1996 A88 December 31, 1995 November 1996 A92 March 31, 1996 November 1996 A96 June 30, 1996 November 1996 A100 Terms of lending at commercial banks November 1995 February 1996 A68 February 1996 May 1996 A68 May 1996 August 1996 A64 August 1996 November 1996 A104 Assets and liabilities of U.S. branches and agencies of foreign banks September 30, 1995 February 1996 A72 December 31, 1995 May 1996 A72 March 31, 1996 September 1996 A64 June 30, 1996 November 1996 A108 Pro forma balance sheet and income statements for priced service operations June 30, 1995 October 1995 A72 September 30, 1995 January 1996 A68 March 31, 1996 July 1996 A64 June 30, 1996 October 1996 A64 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 1995 September 1996 A68 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 Index to Statistical Tables References are to pages A3-A62 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Deposits (See also specific types) Agricultural loans, commercial banks, 19, 20 Banks, by classes, 4, 17-21 Assets and liabilities (See also Foreigners) Federal Reserve Banks, 5, 10 Banks, by classes, 17—21 Interest rates, 15 Domestic finance companies, 33 Turnover, 16 Federal Reserve Banks, 10 Discount rates at Reserve Banks and at foreign central banks and Financial institutions, 25 foreign countries (See Interest rates) Foreign banks, U.S. branches and agencies, 21 Discounts and advances by Reserve Banks (See Loans) Automobiles Dividends, corporate, 32 Consumer installment credit, 36 Production, 44, 45 EMPLOYMENT, 42 Eurodollars, 23 BANKERS acceptances, 10, 11, 19-22, 23 FARM mortgage loans, 35 Bankers balances, 17-21. (See also Foreigners) Federal agency obligations, 5, 9, 10, 11, 28, 29 Bonds (See also U.S. government securities) Federal credit agencies, 30 New issues, 31 Federal finance Rates, 23 Debt subject to statutory limitation, and types and ownership Branch banks, 21 of gross debt, 27 Business activity, nonfinancial, 42 Receipts and outlays, 25, 26 Business loans (See Commercial and industrial loans) Treasury financing of surplus, or deficit, 25 Treasury operating balance, 25 Federal Financing Bank, 30 CAPACITY utilization, 43 Federal funds, 6, 19, 20, 21, 23, 25 Capital accounts Federal Home Loan Banks, 30 Banks, by classes, 17 Federal Home Loan Mortgage Corporation, 30, 34, 35 Federal Reserve Banks, 10 Federal Housing Administration, 30, 34, 35 Central banks, discount rates, 61 Federal Land Banks, 35 Certificates of deposit, 23 Commercial and industrial loans Federal National Mortgage Association, 30, 34, 35 Commercial banks, 19, 20 Federal Reserve Banks Weekly reporting banks, 19-21 Condition statement, 10 Commercial banks Discount rates (See Interest rates) U.S. government securities held, 5, 10, 11, 27 Assets and liabilities, 17-21 Federal Reserve credit, 5, 6, 10, 11 Commercial and industrial loans, 17-21 Federal Reserve notes, 10 Consumer loans held, by type and terms, 36 Federally sponsored credit agencies, 30 Deposit interest rates of insured, 15 Finance companies Loans sold outright, 20 Assets and liabilities, 33 Real estate mortgages held, by holder and Business credit, 33 property, 35 Loans, 36 Time and savings deposits, 4 Paper, 22, 23 Commercial paper, 22, 23, 33 Financial institutions, loans to, 19, 20, 21 Condition statements (See Assets and liabilities) Float, 5 Construction, 42, 46 Flow of funds, 37^1 Consumer installment credit, 36 Foreign banks, assets and liabilities of U.S. branches and agencies, Consumer prices, 42 20,21 Consumption expenditures, 49, 50 Foreign currency operations, 10 Corporations Foreign deposits in U.S. banks, 5, 20 Profits and their distribution, 32 Foreign exchange rates, 62 Security issues, 31, 61 Foreign trade, 51 Cost of living (See Consumer prices) Foreigners Credit unions, 36 Claims on, 52, 55, 56, 57, 59 Currency in circulation, 5, 13 Customer credit, stock market, 24 Liabilities to, 20, 51, 52, 53, 58, 60, 61 GOLD DEBITS to deposit accounts, 16 Certificate account, 10 Debt (See specific types of debt or securities) Stock, 5, 51 Demand deposits Government National Mortgage Association, 30, 34, 35 Banks, by classes, 17-21 Gross domestic product, 48 Ownership by individuals, partnerships, and corporations, 20, 21 HOUSING, new and existing units, 46 Turnover, 16 Depository institutions INCOME, personal and national, 42, 48, 49 Reserve requirements, 8 Industrial production, 42, 44 Reserves and related items, 4, 5, 6, 12 Installment loans, 36 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Insurance companies, 27, 35 Repurchase agreements, 6 Interest rates Reserve requirements, 8 Bonds, 23 Reserves Consumer installment credit, 36 Commercial banks, 17 Deposits, 15 Depository institutions, 4, 5, 6, 12 Federal Reserve Banks, 7 Federal Reserve Banks, 10 Foreign central banks and foreign countries, 61 U.S. reserve assets, 51 Money and capital markets, 23 Residential mortgage loans, 34 Mortgages, 34 Retail credit and retail sales, 36, 42 Prime rate, 22 International capital transactions of United States, 50-61 SAVING International organizations, 52, 53, 55, 58, 59 Flow of funds, 37-41 Inventories, 48 National income accounts, 48 Investment companies, issues and assets, 32 Savings institutions, 35, 36, 37 Investments (See also specific types) Savings deposits (See Time and savings deposits) Banks, by classes, 17-21 Securities (See also specific types) Commercial banks, 4, 17-21 Federal and federally sponsored credit agencies, 30 Federal Reserve Banks, 10, 11 Foreign transactions, 60 Financial institutions, 35 New issues, 31 Prices, 24 LABOR force, 42 Special drawing rights, 5, 10, 50, 51 Life insurance companies (See Insurance companies) State and local governments Loans (See also specific types) Deposits, 19, 20 Banks, by classes, 17—21 Holdings of U.S. government securities, 27 Commercial banks, 17-21 New security issues, 31 Federal Reserve Banks, 5, 6, 7, 10, 11 Ownership of securities issued by, 19, 21 Financial institutions, 35 Rates on securities, 23 Insured or guaranteed by United States, 34, 35 Stock market, selected statistics, 24 Stocks (See also Securities) New issues, 31 MANUFACTURING Prices, 24 Capacity utilization, 43 Production, 43, 45 Student Loan Marketing Association, 30 Margin requirements, 24 Member banks (See also Depository institutions) TAX receipts, federal, 26 Federal funds and repurchase agreements, 6 Reserve requirements, 8 Thrift institutions, 4. (See also Credit unions and Savings Mining production, 45 institutions) Mobile homes shipped, 46 Time and savings deposits, 4, 13, 15, 17-21 Monetary and credit aggregates, 4, 12 Trade, foreign, 51 Money and capital market rates, 23 Treasury cash, Treasury currency, 5 Money stock measures and components, 4, 13 Treasury deposits, 5, 10, 25 Mortgages (See Real estate loans) Treasury operating balance, 25 Mutual funds, 32 UNEMPLOYMENT, 42 Mutual savings banks (See Thrift institutions) U.S. government balances Commercial bank holdings, 17-21 Treasury deposits at Reserve Banks, 5, 10, 25 NATIONAL defense outlays, 26 U.S. government securities National income, 48 Bank holdings, 17-21, 27 Dealer transactions, positions, and financing, 29 OPEN market transactions, 9 Federal Reserve Bank holdings, 5, 10, 11, 27 Foreign and international holdings and PERSONAL income, 49 transactions, 10, 27, 61 Prices Open market transactions, 9 Consumer and producer, 42, 47 Outstanding, by type and holder, 27, 28 Stock market, 24 Rates, 23 Prime rate, 22 U.S. international transactions, 50-62 Producer prices, 42, 47 Utilities, production, 45 Production, 42, 44 Profits, corporate, 32 VETERANS Administration, 34, 35 REAL estate loans WEEKLY reporting banks, 17-21 Banks, by classes, 19, 20, 35 Wholesale (producer) prices, 42, 47 Terms, yields, and activity, 34 Type of holder and property mortgaged, 35 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman EDWARD W. KELLEY, JR. ALICE M. RIVLIN, Vice Chair LAWRENCE B. LINDSEY OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE JOSEPH R. COYNE, Assistant to the Board EDWIN M. TRUMAN, Staff Director DONALD J. WINN, Assistant to the Board LARRY J. PROMISEL, Senior Associate Director THEODORE E. ALLISON, Assistant to the Board for Federal CHARLES J. SIEGMAN, Senior Associate Director Reserve System Affairs DALE W. HENDERSON, Associate Director LYNN S. FOX, Deputy Congressional Liaison DAVID H. HOWARD, Senior Adviser WINTHROP P. HAMBLEY, Special Assistant to the Board DONALD B. ADAMS, Assistant Director BOB STAHLY MOORE, Special Assistant to the Board THOMAS A. CONNORS, Assistant Director DIANE E. WERNEKE, Special Assistant to the Board PETER HOOPER 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 DAVID S. JONES, Assistant Director BARBARA R. LOWREY, Associate Secretary and Ombudsman STEPHEN A. RHOADES, Assistant Director CHARLES S. STRUCKMEYER, Assistant Director DIVISION OF BANKING ALICE PATRICIA WHITE, Assistant Director JOYCE K. ZICKLER, Assistant Director SUPERVISION AND REGULATION JOHN J. MINGO, Senior Adviser RICHARD SPILLENKOTHEN, Director GLENN B. CANNER, Adviser STEPHEN C. SCHEMERING, Deputy Director WILLIAM A. RYBACK, Associate Director DIVISION OF MONETARY AFFAIRS HERBERT A. BIERN, Deputy Associate Director ROGER T. COLE, Deputy Associate Director DONALD L. KOHN, Director JAMES I. GARNER, Deputy Associate Director DAVID E. LINDSEY, Deputy Director HOWARD A. AMER, Assistant Director BRIAN F. MADIGAN, Associate Director GERALD A. EDWARDS, JR., Assistant Director RICHARD D. PORTER, Deputy Associate Director STEPHEN M. HOFFMAN, JR., Assistant Director VINCENT R. REINHART, Assistant Director JAMES V. HOUPT, Assistant Director NORMAND R. V. BERNARD, Special Assistant to the Board JACK P. JENNINGS, Assistant Director MICHAEL G. MARTINSON, Assistant Director DIVISION OF CONSUMER 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

A67 SUSAN M. PHILLIPS LAURENCE H. MEYER JANET L. YELLEN OFFICE OF DIVISION OF RESERVE BANK OPERATIONS STAFF DIRECTOR FOR MANAGEMENT AND PAYMENT SYSTEMS S. DAVID FROST, Staff Director CLYDE H. FARNSWORTH, JR., Director SHEILA CLARK, EEO Programs Director DAVID L. ROBINSON, Deputy Director (Finance and Control) LOUISE L. ROSEMAN, Associate Director DIVISION OF HUMAN RESOURCES CHARLES W. BENNETT, Assistant Director MANAGEMENT JACK DENNIS, JR., Assistant Director EARL G. HAMILTON, Assistant Director DAVID L. SHANNON, Director JEFFREY C. MARQUARDT, Assistant Director JOHN R. WEIS, Associate Director JOHN H. PARRISH, Assistant Director JOSEPH H. HAYES, JR., Assistant Director FLORENCE M. YOUNG, Assistant Director FRED HOROWITZ, Assistant Director OFFICE OF THE INSPECTOR GENERAL OFFICE OF THE CONTROLLER BRENT L. BOWEN, Inspector General GEORGE E. LIVINGSTON, Controller DONALD L. ROBINSON, Assistant Inspector General STEPHEN J. CLARK, Assistant Controller (Programs and Budgets) BARRY R. SNYDER, Assistant Inspector General 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

68 Federal Reserve Bulletin • December 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 ALICE M. RIVLIN JERRY L. JORDAN ROBERT D. MCTEER, JR. GARY H. STERN EDWARD W. KELLEY, JR. LAURENCE H. MEYER JANET L. YELLEN SUSAN M. PHILLIPS ALTERNATE MEMBERS J. ALFRED BROADDUS, JR. MICHAEL H. MOSKOW ERNEST T. PATRIKIS JACK GUYNN ROBERT T. PARRY STAFF DONALD L. KOHN, Secretary and Economist DAVID E. LINDSEY, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary FREDERIC S. MISHKIN, Associate Economist JOSEPH R. COYNE, Assistant Secretary LARRY J. PROMISEL, Associate Economist GARY P. GILLUM, Assistant Secretary ARTHUR J. ROLNICK, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel HARVEY ROSENBLUM, Associate Economist THOMAS C. BAXTER, JR., Deputy General Counsel CHARLES J. SIEGMAN, Associate Economist MICHAEL J. PRELL, Economist THOMAS D. SIMPSON, Associate Economist EDWIN M. TRUMAN, Economist MARK S. SNIDERMAN, Associate Economist RICHARD W. LANG, Associate Economist DAVID J. STOCKTON, Associate Economist PETER R. FISHER, Manager, System Open Market Account FEDERAL ADVISORY COUNCIL RICHARD G. TILGHMAN, President FRANK V. CAHOUET, Vice President WILLIAM M. CROZIER, JR., First District ROGER L. FITZSIMONDS, Seventh District WALTER V. SHIPLEY, Second District THOMAS H. JACOBSEN, Eighth District WALTER E. DALLER, JR., Third District RICHARD M. KOVACEVICH, Ninth District FRANK V. CAHOUET, Fourth District CHARLES E. NELSON, Tenth District RICHARD G. TILGHMAN, Fifth District CHARLES T. DOYLE, Eleventh District CHARLES E. RICE, Sixth District WILLIAM F. ZUENDT, 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

A69 CONSUMER ADVISORY COUNCIL KATHARINE W. MCKEE, Durham, North Carolina, Chairman JULIA M. SEWARD, Richmond, Virginia, Vice Chairman RICHARD S. AMADOR, LOS Angeles, California ERROL T. LOUIS, Brooklyn, New York THOMAS R. BUTLER, Riverwoods, Illinois WILLIAM N. LUND, Falmouth, Maine ROBERT A. COOK, Baltimore, Maryland RONALD A. PRILL, Minneapolis, Minnesota ALVIN J. COWANS, Orlando, Florida LISA RICE-COLEMAN, Toledo, Ohio ELIZABETH G. FLORES, Laredo, Texas JOHN R. RINES, Detroit, Michigan HERIBERTO FLORES, Springfield, Massachusetts MARGOT SAUNDERS, Washington, D.C. EMANUEL FREEMAN, Philadelphia, Pennsylvania ANNE B. SHLAY, Philadelphia, Pennsylvania DAVID C. FYNN, Cleveland, Ohio REGINALD J. SMITH, Kansas City, Missouri ROBERT G. GREER, Houston, Texas GEORGE P. SURGEON, Arkadelphia, Arkansas KENNETH R. HARNEY, Chevy Chase, Maryland GREGORY D. SQUIRES, Milwaukee, Wisconsin GAIL K. HILLEBRAND, San Francisco, California JOHN E. TAYLOR, Washington, D.C. TERRY JORDE, Cando, North Dakota LORRAINE VANETTEN, Troy, Michigan FRANCINE JUSTA, New York, New York THEODORE J. WYSOCKI, JR., Chicago, Illinois EUGENE I. LEHRMANN, Madison, Wisconsin LILY K. YAO, Honolulu, Hawaii THRIFT INSTITUTIONS ADVISORY COUNCIL E. LEE BEARD, Hazleton, Pennsylvania, President DAVID F. HOLLAND, Burlington, Massachusetts, Vice President BARRY C. BURKHOLDER, Houston, Texas CHARLES R. RINEHART, Irwindale, California MICHAEL T. CROWLEY, JR., Milwaukee, Wisconsin JOSEPH C. SCULLY, Chicago, Illinois GEORGE L. ENGELKE, JR., Lake Success, New York LARRY T. WILSON, Raleigh, North Carolina DOUGLAS A. FERRARO, Englewood, Colorado WILLIAM W. ZUPPE, Spokane, Washington BEVERLY D. HARRIS, Livingston, Montana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, Consumer and Community Affairs Handbook. $75.00 per year. MS-127, Board of Governors of the Federal Reserve System, Monetary Policy and Reserve Requirements Handbook. $75.00 Washington, DC 20551 or telephone (202) 452-3244 or FAX per year. (202) 728-5886. You may also use the publications order Securities Credit Transactions Handbook. $75.00 per year. form available on the Board's World Wide Web site The Payment System Handbook. $75.00 per year. (http://www.bog.frb.fed.us). When a charge is indicated, payment Federal Reserve Regulatory Service. Four vols. (Contains all should accompany request and be made payable to the Board of four Handbooks plus substantial additional material.) $200.00 Governors of the Federal Reserve System or may be ordered via per year. Mastercard or Visa. Payment from foreign residents should be Rates for subscribers outside the United States are as follows drawn on a U.S. bank. and include additional air mail costs: Federal Reserve Regulatory Service, $250.00 per year. Each Handbook, $90.00 per year. FEDERAL RESERVE REGULATORY SERVICE FOR PERSONAL COMPUTERS. Diskettes; updated monthly. BOOKS AND MISCELLANEOUS PUBLICATIONS Standalone PC. $300 per year. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. Network, maximum 1 concurrent user. $300 per year. 1994. 157 pp. Network, maximum 10 concurrent users. $750 per year. ANNUAL REPORT. Network, maximum 50 concurrent users. $2,000 per year. ANNUAL REPORT: BUDGET REVIEW, 1995-96. Network, maximum 100 concurrent users. $3,000 per year. FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or $2.50 Subscribers outside the United States should add $50 to cover each in the United States, its possessions, Canada, and additional airmail costs. Mexico. Elsewhere, $35.00 per year or $3.00 each. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- ANNUAL STATISTICAL DIGEST: period covered, release date, num- COUNTRY MODEL, May 1984. 590 pp. $14.50 each. ber of pages, and price. INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. 1981 October 1982 239 pp. $ 6.50 440 pp. $9.00 each. 1982 December 1983 266 pp. $ 7.50 FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. 1983 October 1984 264 pp. $11.50 December 1986. 264 pp. $10.00 each. 1984 October 1985 254 pp. $12.50 FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- 1985 October 1986 231 pp. $15.00 SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1986 November 1987 288 pp. $15.00 1987 October 1988 272 pp. $15.00 1988 November 1989 256 pp. $25.00 1980-89 March 1991 712 pp. $25.00 EDUCATION PAMPHLETS 1990 November 1991 185 pp. $25.00 Short pamphlets suitable for classroom use. Multiple copies are 1991 November 1992 215 pp. $25.00 available without charge. 1992 December 1993 215 pp. $25.00 1993 December 1994 281 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages 1994 December 1995 190 pp. $25.00 Consumer Handbook to Credit Protection Laws 1990-95 November 1996 404 pp. $25.00 A Guide to Business Credit for Women, Minorities, and Small Businesses Series on the Structure of the Federal Reserve System SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF The Board of Governors of the Federal Reserve System CHARTS. Weekly. $30.00 per year or $.70 each in the United The Federal Open Market Committee States, its possessions, Canada, and Mexico. Elsewhere, Federal Reserve Bank Board of Directors $35.00 per year or $.80 each. Federal Reserve Banks THE FEDERAL RESERVE ACT and other statutory provisions affect- Organization and Advisory Committees ing the Federal Reserve System, as amended through August A Consumer's Guide to Mortgage Lock-Ins A Consumer's Guide to Mortgage Settlement Costs 1990. 646 pp. $10.00. A Consumer's Guide to Mortgage Refinancings REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL Home Mortgages: Understanding the Process and Your Right RESERVE SYSTEM. to Fair Lending ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— How to File a Consumer Complaint Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Making Deposits: When Will Your Money Be Available? Vol. II (Irregular Transactions). 1969. 116 pp. Each volume Making Sense of Savings $2.25. SHOP: The Card You Pick Can Save You Money GUIDE TO THE FLOW OF FUNDS ACCOUNTS. 672 pp. $8.50 each. Welcome to the Federal Reserve FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated When Your Home is on the Line: What You Should Know monthly. (Requests must be prepaid.) About Home Equity Lines of Credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 STAFF STUDIES: Only Summaries Printed in the 163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR- BULLETIN KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary Studies and papers on economic and financial subjects that are of Ann Taylor. March 1992. 37 pp. general interest. Requests to obtain single copies of the full text or 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by to be added to the mailing list for the series may be sent to James T. Fergus and John L. Goodman, Jr. July 1993. Publications Services. 20 pp. 165. THE DEMAND FOR TRADE CREDIT: AN INVESTIGATION OF Staff Studies 1-157 are out of print. MOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES, by Gregory E. Elliehausen and John D. Wolken. September 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- 1993. 18 pp. MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE 166. THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET, by PRODUCTS, by Mark J. Warshawsky with the assistance of Mark Carey, Stephen Prowse, John Rea, and Gregory Udell. Dietrich Earnhart. September 1989. 23 pp. January 1994. Ill pp. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI- 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANK- ARIES OF BANK HOLDING COMPANIES, by Nellie Liang and ING, 1980-93, AND AN ASSESSMENT OF THE "OPERATING Donald Savage. February 1990. 12 pp. PERFORMANCE" AND "EVENT STUDY" METHODOLOGIES, 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- by Stephen A. Rhoades. July 1994. 37 pp. VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by 168. THE ECONOMICS OF THE PRIVATE EQUITY MARKET, by Gregory E. Elliehausen and John D. Wolken. September George W. Fenn, Nellie Liang, and Stephen Prowse. Novem- 1990. 35 pp. ber 1995. 69 pp. 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, 169. BANK MERGERS AND INDUSTRYWIDE STRUCTURE, 1980-94, 1980-90, by Margaret Hastings Pickering. May 1991. by Stephen A. Rhoades. February 1996. 32 pp. 21 pp. 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- GAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Rhoades. February 1992. 11 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 ANTICIPATED SCHEDULE OF RELEASE DATES FOR PERIODIC RELEASES OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (PAYMENT MUST ACCOMPANY REQUESTS) Annual Annual Approximate Corresponding Period or date to Release number and title USPS fax release Bulletin which data refer rate rate days1 table numbers2 Weekly Releases H.2. Actions of the Board: $55.00 n.a. Friday Week ended Applications and Reports previous Received Saturday H.3. Aggregate Reserves of $20.00 n.a. Thursday Week ended 1.20 Depository Institutions and previous the Monetary Base3 Wednesday H.4.1. Factors Affecting Reserve Balances $20.00 n.a. Thursday Week ended 1.11, 1.18 of Depository Institutions and previous Condition Statement of Wednesday Federal Reserve Banks3 H.5. Selected Borrowings in $20.00 n.a. Wednesday Week ended 1.13 Immediately Available Funds Monday of of Large Commercial Banks previous week H.6. Money Stock, Liquid Assets, $35.00 n.a. Thursday Week ended 1.21 and Debt Measures3 Monday of previous week H.8. Assets and Liabilities of $30.00 n.a. Friday Week ended 1.26 Commercial Banks in the previous United States3 Wednesday H.10. Foreign Exchange Rates3 $20.00 $20.00 Monday Week ended 3.28 previous Friday H. 15. Selected Interest Rates3 $20.00 $20.00 Monday Week ended 1.35 previous Friday Monthly Releases G.5. Foreign Exchange Rates3 $ 5.00 $ 5.00 First of month Previous month 3.28 G. 13. Selected Interest Rates $ 5.00 $ 5.00 First Tuesday of Previous month 1.35 month G. 15. Research Library—Recent No charge n.a. First of month Previous month Acquisitions G.17. Industrial Production and $15.00 n.a. Midmonth Previous month 2.12, 2.13 Capacity Utilization3 $ 5.00 $ 5.00 Fifth working day Second month 1.55, 1.56 G.19. Consumer Credit3 of month previous $ 5.00 $ 5.00 Fifth working day Second month 1.51, 1.52 G.20. Finance Companies of month previous Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 Annual Annual Approximate Corresponding Period or date to Release number and title USPS fax release Bulletin rate rate days1 which data refer table numbers2 Quarterly Releases E.2. Survey of Terms of Bank $ 5.00 n.a. Midmonth of February, May, 4.23 Lending to Business March, June, August, and September, and November December E.7. List of OTC Margin Stocks No charge n.a. January, April, February, May, July, and August, and October November E.ll. Geographical Distribution of $ 5.00 n.a. 15th of March, Previous quarter Assets and Liabilities of June, Major Foreign Branches of September, and U.S. Banks December E.15. Agricultural Finance Databook $ 5.00 n.a. End of March, January, April, June, July, and September, and October December E.16. Country Exposure Lending $ 5.00 n.a. January, April, Previous quarter Survey July, and October Z.l. Flow of Funds Accounts $25.00 n.a. Second week of Previous quarter 1.57, 1.58, of the United States: March, June, 1.59, 1.60 Flows and Outstandings3 September, and December Semiannual Release C.9. Balance Sheets for the U.S. $ 5.00 n.a. October and April Previous year Economy Annual Release C.2. Aggregate Summaries of Annual $ 5.00 n.a. February End of previous Surveys of Securities Credit June Extension 1. Please note that for some releases there is normally a certain variability in the release date because of reporting or processing procedures. Moreover, for all series unusual circumstances may, from time to time, result in a release date being later than anticipated. 2. The data in some releases are also reported in the Bulletin statistical appendix. 3. These releases are also available on the Board's World Wide Web site (http://www.bog.frb.fed.us) under Domestic and International Research, Statistical releases. n.a. Not available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Maps of the Federal Reserve System LEGEND Both pages Facing page • Federal Reserve Bank city • Federal Reserve Branch city • Board of Governors of the Federal — Branch boundary Reserve System, Washington, D.C. NOTE The Federal Reserve officially identifies Districts 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

A75 1-A 2-B 3-C 4-D 5-E Pittsburgh Baltimore MD Nf V A y 1 CT *r m cinnati luffalo m ® 11!> NY m ^ NJ ites^- sc BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 7-G 8-H KY D Isville m •Memphis mi ATLANTA CHICAGO ST. LOUIS 9-1 Ml MINNEAPOLIS 10-J 12-L \L \nK.\ KANSAS CITY 11-K San Amm DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 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 John T. Ryan III Harold J. Swart1 Pittsburgh 15230 Claudine B. Malone J. Alfred Broaddus, Jr. RICHMOND* 23219 Robert L. Strickland Walter A. Varvel Michael R. Watson William J. Tignanelli1 Baltimore 21203 James O. Roberson Dan M. Bechter1 Charlotte 28230 Hugh M. Brown Jack Guynn Daniel E. Sweat, Jr. Patrick K. Barron James M. Mckee1 ATLANTA 30303 Donald E. Boomershine Fred R. Herr1 Joan D. Ruffier James D. Hawkins1 Birmingham 35283 R. Kirk Landon James T. Curry III Jacksonville 32231 Paula Lovell Melvyn K. Purcell Miami 33152 Lucimarian Roberts Robert J. Musso Nashville 37203 New Orleans 70161 Robert M. Healey Michael H. Moskow Lester H. McKeever, Jr. William C. Conrad CHICAGO* 60690 Florine Mark David R. Allardice1 Detroit 48231 John F. McDonnell Thomas C. Melzer Susan S. Elliott W. LeGrande Rives ST. LOUIS 63166 Janet M. Jones Robert A. Hopkins John A. Williams Thomas A. Boone Little Rock 72203 Louisville 40232 John V. Myers John P. Baumgartner Memphis 38101 Jean D. Kinsey Gary H. Stern David A. Koch Colleen K. Strand MINNEAPOLIS 55480 Lane W. Basso John D.Johnson Helena 59601 A. Drue Jennings Thomas M. Hoenig Jo Marie Dancik Richard K. Rasdall KANSAS CITY 64198 Peter I. Wold Carl M. Gambs1 Barry L. Eller Kelly J. Dubbert Denver 80217 Oklahoma City 73125 LeRoy W. Thom Harold L. Shewmaker Omaha 68102 Cece Smith Robert D. McTeer, Jr. Roger R. Hemminghaus Helen E. Holcomb DALLAS 75201 Patricia Z. Holland-Branch Sammie C. Clay Issac H Kempner III Robert Smith, III1 E H l o P us a t s o o n 7 7 9 7 9 2 9 5 9 2 Carol L. Thompson James L. Stull1 San Antonio 78295 Judith M. Runstad Robert T. Parry James A. Vohs John F. Moore SAN FRANCISCO 94120 Anita E. Landecker Mark L. Mullinix1 Ross R. Runkel Raymond H. Laurence1 Los Angeles 90051 Gerald R. Sherratt Andrea P. Wolcott Portland 97208 George F. Russell, Jr. Gordon R. G. Werkema3 Salt Lake City 84125 Seattle 98124 * Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; East Rutherford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; Milwaukee, Wisconsin 53202; and Peoria, Illinois 61607. 1. Senior Vice President. 2. Assistant Vice President. 3. Executive Vice President Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 Index to Volume 82 GUIDE TO PAGE REFERENCES IN MONTHLY ISSUES Issue Text "A" Pages Issue Text "A' ' pages Index to Index to tables tables January 1-114 1-80 70 July 621- 700 1- 76 66 February 115-198 1-86 76 August 701- 790 1- 78 68 March 199-284 1-78 68 September 791- 882 1- 86 76 April 285-382 1-78 68 October 883- 982 1- 76 66 May 383-482 1-86 76 November 983-1076 1-122 112 June 483-620 1-76 64 December 1077-1158 1- 87 64 The "A" pages consist of statistical tables and reference information. Statistical tables are indexed separately (see p. A64 of this issue). Pages Pages ADJUSTABLE rate mortgages (ARMs) 116 Bank holding companies—Continued Allison, Theodore E., statement 320 Section 20 subsidiaries 824, 1008, 1113 Amel, Dean F., article 1-15 Bank Holding Companies and Change American Bankruptcy Institute 1001 in Bank Control (Reg. Y) 333, 907, 917, 942, 1113 Analysis of commercial bank exposure to interest Bank Holding Company Act Amendments of 1970, rate risk, article 115-28 orders issued under Annual Report to the Congress on Retail Fees and Capital One Financial Corporation 584 Services of Depository Institutions 515 Huntington Bancshares, Incorporated 688 National City Corporation 688 Annual Statistical Digest, 1994 41 Bank Holding Company Act of 1956 Articles Analysis of commercial bank exposure to interest Applications approved under rate risk 115-28 1st United Bancorp 1151 Bank and nonbank competition for small business credit: ABC Bancorp 602, 865 Evidence from the 1987 and 1993 National Surveys ABN AMRO Bank N.V., Amsterdam, of Small Business Finances 983-95 The Netherlands 187, 774, 1064, 1155 Credit risk, credit scoring, and the performance of home ABN AMRO Holding, N.V., Amsterdam, mortgages 621^48 The Netherlands 187, 774, 1064, 1155 Derivatives disclosures by major U.S. banks, 1995 791-801 ABN AMRO North America, Inc 774, 1064, 1155 ABS Investors, LLC 279 Distribution of credit risk among providers of mortgages to lower-income and minority homebuyers 1077-1102 Absarokee Bancorporation 602 Fiscal position of the state and local government sector: Acadiana Bancshares, Inc 772 Developments in the 1990s 302-11 Adam Financial Corporation 281 Location of U.S. currency: How much is abroad? 883-903 Admiral Steel Corporation 279 Mexican peso crisis 199-209 Alabama National Bancorporation 184, 975 Monetary policy reports to the Congress 285-301, 701-16 Allegiant Bancorp, Inc 1063 Am-First Financial Corp 602 Profits and balance sheet developments at U.S. Ameribanc, Inc 377, 977, 1060 commercial banks in 1995 483-505 Revision to industrial production and capacity utilization, Ameribank Corporation 184 1991-95 16-25 American Bancshares, Inc 1061 Treasury and Federal Reserve foreign American Bank Shares, Inc 110 exchange operations 210-13, 506-9, American National Corporation 279 802-5, 1103-7 Amundson Family Limited Partnership 695 Trends in the structure of federally insured Anita Bancorporation 774 depository institutions, 1984-94 1-15 Appalachian Bancshares, Inc 865 U.S. international transactions in 1995 383-93 Area Bancshares Corporation 110 Avery, Robert B., article 621 Arkansas Banking Company 865 Arkansas National Bancshares, Inc 184 BANK and nonbank competition for small business credit: Arrow Financial Corporation 977 Evidence from the 1987 and 1993 National Surveys Arrow Vermont Corporation 977 of Small Business Finances, article 983-95 ASB Corporation 110 Bank for International Settlements 142, 199 Associated Banc-Corp 377, 695, 772 Bank holding companies {See also Banking institutions Associated Banc-Shares, Inc 695 and Commercial banks) Associated Illinois Banc-Corp 772 Consumer lending trends 815 B&C Bancshares, Inc 869 Index of orders and actions taken Banc One Corporation 377, 464 by the Board 107, 372, 692, 972 BancFirst Corporation, Inc 975 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 Federal Reserve Bulletin • December 1996 Pages Pages Bank Holding Company Act of 1956—Continued Bank Holding Company Act of 1956—Continued Applications approved under—Continued Applications approved under—Continued BancFirst Ohio Corp 867 Chambers Bancshares, Inc 1151 Bancorp of Lucedale, Inc 865 Chaparral Bancshares, Inc 184 BancPlus Corporation 695 Chaparral Delaware Bancshares, Inc 184 Bancshares of Nichols Hills, Inc 377 Chester Bancorp, Inc 1060 BancTenn Corp 602 Citi-Bancshares, Inc 377 BancWest Corporation 379 Citizens Bancshares, Inc 184 Bank America Corporation 1059, 1150 Citizens Bank Group, Inc 696 Bank Corporation of Georgia 184 Citizens Community Bancorp, Inc 184 Bank of Nova Scotia, Toronto, Ontario, Canada 774 Citizens Corporation 1151 Bank of Waunakee Employee Stock Ownership Plan .... 602 Citizens Development Company 1063 Bankers Trust New York Corporation 867 Citizens Financial Group, Inc 1152, 1154 BANKFIRST Corporation, Inc 110 City State Bancshares, Inc 603 Banknorth Group, Inc 279, 281 City State Bancshares, Inc.-Delaware 603 BankWest Nevada Corporation 184 CJSB Bancorporation, Inc 280 BanPonce Corporation 1060 CNB Bancshares, Inc 112, 187, 280 BanPonce Financial Corp 1060 Collective Bancorp, Inc 1064 Banque National de Paris, Paris, France 379 Colonial Banc Corp 282 Barnett Banks, Inc 112, 774 Colonial BancGroup, Inc 772 Bastrop Holdings, Inc 603 Colony Bankcorp, Inc 1151 Baxter Bancshares, Inc 377 Columbia Bancorp 772 Bayerische Vereinsbank AG, Munich, Germany 1063 ComBankshares, Inc 603 Beach First National Bancshares, Inc 603 Commerce Bancshares, Inc 1151 Belknap Partnership, L.P. 975 Commercial Capital Corporation 1153 Berkshire Bancorp 110 Commercial Guaranty Bancshares, Inc 280 Beulah Bancorporation, Inc 280, 464 Commerzbank Aktiengesellschaft, Frankfurt am Main, Big Bend Bancshares Corporation 976 Germany 978 BNCCORP, Inc 280 Community Bancshares of Mississippi, Inc 185, 280 Boatmen's Bancshares, Inc 771 Community Bancshares of Mississippi, Inc., Employee BOK Financial Corporation 184 Stock Ownership Plan 185 Boscobel Bancorp, Inc 774 Community Bancshares, Inc 775 Bourbon Bancshares, Inc 281 Community Bank Shares of Indiana, Inc 112, 1151 Bradford Bancorp, Inc 865 Community Bank System, Inc 775 Bradley County Financial Services, Inc 698 Community Bankshares, Incorporated 772 Brazos Bancshares, Inc 603 Community Central Bank Corporation 1060 Bremer Financial Corporation 463, 869, 1063 Community Financial Group, Inc 603 Bren-Mar Properties, Inc 110 Community First Bancorp, Inc 185, 1154 Brickyard Bancorp, Inc 1060 Community First Bankshares, Inc 112, 606, 696, 1151 Bridgeport Bancshares, Inc 187 Community Holdings Corporation 976 Bridgeport Financial Corporation 187 Community Trust Financial Services Corporation 606 Brookwood Group, L.P. 772 Compass Bancorporation of Texas, Inc 602 Brunsville Bancorporation, Inc 1153 Compass Bancshares, Inc 602 BT Financial Corporation 110, 603 Compass Banks of Texas, Inc 602 Bullsboro Bancshares, Inc 976 Connecticut Bankshares, MHC 696 C Bar M, Inc 280 Coronado, Inc 110 Caddo Financial Corporation 603 Crestar Financial Corporation 187 Caisse Nationale de Credit Agricole, Paris, France 1153 Crestmark Bancorp, Inc 1060 Caldwell Holding Company 462 Crosstown Holding Company 280 Canadian Imperial Bank of Commerce, CU Bancorp 864 Toronto, Ontario, Canada 867 Cullen/Frost Bankers, Inc 185, 280 Canton Financial Corporation 1060 D&D Bancshares, Inc 775 Capital City Bank Group, Inc 602 Dadeland Bancshares, Inc 1063 Capital Corp of the West 606, 867 Dakotah Bankshares, Inc 280 Capitol Bancorp, Limited 695, 1060 Dartmouth Capital Group, Inc 463, 865 Capitol Bankshares, Inc 1063 Dartmouth Capital Group, L.P. 463, 865 Cardinal Bankshares Corporation 1153 DCB Financial Corp 1151 Carnegie Bancorp 603 Decatur Financial, Inc 1063 Carolina First Corporation 281 Delavan Bancshares, Inc 772 Carroll County Bancorporation, Inc 865 Delaware International Bancshares, Inc 1151 Carter County Bancorp, Inc 603 Dentel Bancorporation 185 Castle Creek Capital Partners Fund-I, L.P. 1060 Deutsche Bank AG, Frankfurt (Main), Federal Republic Castle Creek Capital, L.L.C 1060 of Germany 978 Catherine Stuart Schmoker Family Partnership 604 DFC Acquisition Corporation Two 112, 976 CB Holding Co 1060 Dickinson Financial Corporation 112 CBR Holdings, Inc 695 Doniphan Bancshares, Inc 109 CCB Services, Inc 698 Dublin Bancshares, Inc 1151 Centennial Holdings, Ltd 1063 Duke Financial Group, Inc 865 Center Bancorp, Inc 775 Duncanville Bancshares, Inc 696 Central and Southern Holding Company 280 Durden Bankshares, Inc 377 Central Bancorporation of Delaware, Inc 282 East Texas (Delaware) Holdings, Ltd 603 Central Bancorporation, Inc 282 East Texas Bancorp, Inc 976 Central Coast Bancorp 603 East Texas Delaware Financial Corporation 976 Central Financial Corporation 1151 East Texas Financial Corporation 603 Central Wisconsin Bancorporation, Inc 772 East Texas National, Inc 603 Centura Banks, Inc 280, 865, 977, 1060, 1153 East Texas-Dover, Inc 603 Century Bancshares, Inc 978 Eberhardt, Inc 1151 Century South Banks, Inc 110 Eggemeyer Advisory Corp 1060 CFX Corporation 696 Empire Bancshares, Incorporated 185 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 82 A79 Pages Pages Bank Holding Company Act of 1956—Continued Bank Holding Company Act of 1956—Continued Applications approved under—Continued Applications approved under—Continued Evans Bancshares, Inc 377 FirstBank Holding Company of Colorado Employee ExecuFirst Bancorp, Inc 696 Stock Ownership Plan 378, 976 Executive Bancshares, Inc 463 FirstFed Bancorp, Inc 185, 187 F&M Bancorp 1060 FirstMerit Corporation 378 F&M Bancorporation 185, 772 First Value Corporation 1061 F&M National Corporation 463, 976 FNB Bancshares, Inc 976 FABP Bancshares, Inc 377 FNB Corporation 772, 865 Farmers & Merchants Financial Services, Inc 185 FNB Financial Corporation 279, 365 Farmers and Merchants Investment Co 602 FNV Bankshares, Inc 378 Farmers Bancshares, Inc 464 Forrest Bancshares, Inc 604 Farmers Capital Bank Corporation 1153 Forstrom Bancorporation, Inc 187 Farmers State Bancshares, Inc 865 Fort Brooke Bancorporation 772 FBOP Corporation 868, 1153 Fort Wayne National Corporation 604 FBT Bancorp 603 Franklin National Bankshares, Inc 1153 FCB Holding, Inc 185 Freeman Bancstock Investments 976 FCFT, Inc 185, 868 Fremont Bancorporation 1153 FCNB Corp 606 Friendship Bancorp 868 Fidelity Company 463 Frontier Financial Corporation 866 Fifth Third Bancorp 187 FSC Bancshares, Inc 185 Figge Bancshares, Inc 696 Fulton Financial Corporation 280, 1063 Financial Bancorp, Inc Ill FW Financial, Inc 188 Finlayson Bancshares, Inc 869 Gateway Bancshares, Inc 463 First Alliance Bancorp, Inc 1063 George Mason Bankshares, Inc 604, 607 First American Bank Corporation 1060 Goodenow Bancorporation 772 First Bancshares, Inc 282, 377 Governor and Company of the Bank of Ireland, First Bank of Illinois Co 379 Dublin, Ireland 1152, 1154 First Banking Company of Southeast Georgia 865 Grand Premier Financial, Inc 775 First Banks, Inc 280 Grandview Bankshares, Inc 280 First Bankshares of West Point, Inc 1151 Granville Bancshares, Inc 772 First Capital Bankshares, Inc 603 Great Falls Bancorp 185 First Celina Corporation 280 Greater Community Bancorp 978 First Charter Corporation 185 Greene County Bancshares, Inc 110 First Chicago NBD Corporation 606 Guaranty Bankshares, Inc 187 First Citizens Bancorp 696 Gulf West Banks, Inc 868 First Commerce Bancshares, Inc 604 Hamburg Financial, Inc 378 First Commerce Banks of Florida, Inc 696 Harbor Springs Financial Services, Inc 280 Harris Financial, MHC 606 First Commerce Banshares, Inc 604 Harrison Group, Inc 1151 First Commerce Corporation 462 Hartwick Bancshares, Inc 698 First Commercial Corporation 696, 976, 1063 Heartland Bancshares, Inc 464 First Community Bank Holding Corporation 772 Henderson Citizens Bancshares of Delaware, Inc 1061 First Decatur Bancshares, Inc 378 Henderson Citizens Bancshares, Inc 1061 First Fidelity Bancorp, Inc 865 Heritage Bancshares Group, Inc 606 First Financial Bancorp 464 Heritage Financial Corporation 463 First Financial Bankshares of Delaware, Inc 110 Heritage Financial Services, Inc 281 First Financial Bankshares, Inc 110, 185 Hibernia Corporation 281, 1151 First Financial Company of Saint Jo 1151 Higgins Bancorporation, Inc 696 First Financial Corporation 865 Hillister Enterprises II, Inc 110 First Frederick Financial Corporation 696 Hills Bancorporation 773, 866 First Hardee Holding Corporation 280 Hinsbrook Bancshares, Inc 868 First Hawaiian, Inc 772 Hinsbrook Bank and Trust 868 First International Bancshares, Inc 1151 HNB Corporation 866 First Interstate BancSystem of Montana, Inc 976, 1063 Holcomb Bancorp, Inc. Employee Stock First La Grange Bancshares, Inc 865 Ownership Plan 604 First Lakewood, Inc 379, 380 Home Financial Bancorp 698 First Manistique Corporation 280 Hometown Financial Group, Inc 1152 First Merchants Corporation 771 Horizon Bancorp Employee Stock Ownership Plan 773 First Michigan Bank Corporation 604 Horizon Bancorp, Inc 771 First Midwest Financial, Inc 1064 HSBC Holdings BV, Amsterdam, The Netherlands 775 First National Bancorp, Inc 976 HSBC Holdings pic, London, England 775 First National Bancshares, Inc 378 HUBCO, Inc 773, 866 First National Corporation 772 I.S.B. Financial Corp 1063 First National Monahans Bancshares, Inc 604 Ida Grove Bancshares, Inc 1061 First National of Colorado 771 Imperial Bancorp 1063 First National of Nebraska, Inc 109, 771 Independence Community Bank Corp 112 First National Security Company 110, 185 Independent Bancshares, Inc 773, 976 First Savings Bank of Washington Bancorp, Inc 865 Independent Bank Corporation 696 First Sleepy Eye Bancorporation, Inc 282 Independent Bankshares Corporation 696 First Southern Bancshares, Inc 868 Inter-Mountain Bancorp, Inc 866 First State Bank of Rushmore KSOP Plan and Trust 604 International Bancorporation 604 First United Bancorp, Inc 110 InterWest Bancorp 606 First United Bancorporation 280 Investors Bancorp, Inc 976 First United Bancshares, Inc 864 Investors Bancorp, NH 976 First Valley Bank Group, Inc 463 Inwood Bancshares, Inc 976 First Valley Delaware Financial Corporation 463 ISB Financial Corp 281 First Western Bancorp, Inc 112 J. P. Morgan & Co. Incorporated 868 FirstBank Holding Company of Colorado 378, 976 JAM Family Partnership I, L.P. 1152 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 Federal Reserve Bulletin • December 1996 Pages Pages Bank Holding Company Act of 1956—Continued Bank Holding Company Act of 1956—Continued Applications approved under—Continued Applications approved under—Continued JAM Family Partnership II, L.P. 1151 National Bancshares Corporation of Texas 1061 James River Bankshares, Inc 378 National Bank of Canada, Montreal, Quebec, Canada .... 112 James Stuart, Jr. Family Partnership 604 National Bankshares, Inc 605 JS Investments, Limited Partnership 976, 1063 National City Bancshares, Inc 977 JWL-GSW, Ltd 463 National City Corporation 377 Kanbanc, Inc 605 National City Mortgage Company 1150 Key Capital Corporation, Inc 1061 National Commerce Bancorporation 464, 1153 Key Florida Bancorp, Inc 773 National Westminster Bank Pic., London, England 112 KeyCorp 377 NationsBank Corporation 185, 697, 868 Keystone Financial, Inc 109, 1152 NationsBank Texas Bancorporation 185 Kingsbury BDC Financial Services, Inc 977 NationsCredit Consumer Corporation 868 Lake Benton Bancorporation, Inc 464 NB Holdings Corporation 697, 868 Lakes Region Bancorp, Inc 1061 NBar5, Limited Partnership 976, 1063 Landmark Financial Group, Inc 866 NBE Bancshares, Inc 463 Landrum Company 1061 NBNCorp, 978 LanMark Bancshares of Texas, Inc 1061 NBT of Delaware, Inc 1061 Lawton Partners Holding Company 977 NEB Corporation 978 LeMars Bancorporation, Inc 605 Nebraska Bankshares, Inc 463 Lewis Family Partners, L.P. 1061 NEMO Bancshares, Inc Ill Lewis Management Company 1061 Nevada Community Bancshares, Inc 866 LGF Bancshares, Inc 866 Neville Leasing, Inc 187 Libertyville Bancorp, Inc 868 New Galveston Company 185, 280 Lindoe, Inc 773 Newnan Holdings, Inc 773, 775, 868 Lindsey Bancshares, Inc 378 Nolte Family Limited Partnership 1152 LNB Financial Corp 866 Norbanc Group, Inc 605 Lockney Holding Company 696 Norcon Financial Corp Ill Lonoke Bancshares, Inc 185 Norma McLane-Smith Family Limited Partnership 1062 M.B. and I.M. Hampton Family Partnership, Ltd 866 North Shore Community Bancorp, Inc 979 Machey BanCo, Inc 185 Northern California Bancorp, Inc 186 Macon Bank & Trust 868 Northern Trust Corporation 1152 Maddox Corporation 1155 Norwest Corporation Ill, 186, 378, 463, Maedgen & White, Ltd 1153 698, 775, 868, 977, Magna Group, Inc 378 978, 1062, 1153, 1154 Magnolia Midlands Bankshares, Inc 866 Norwest Financial Services, Inc 698, 775, 978, 1154 Magnolia Partnership Investments, Ltd 110 Norwest Financial, Inc 698, 978, 1154 Mahaska Investment Company 698 Norwood Financial Corp 281 Main Street Bancorp, Inc 696 Notice of Progressive Growth Corp 464 MainStreet BankGroup, Incorporated 866 Oak Park River Forest Bankshares, Inc 1062 Marine Bancorp, Inc 378 Ohio Valley Banc Corp 379 Mark Twain Acquisition Corp., II 977 Old Kent Financial Corporation 187 Mark Twain Bancshares, Inc 977 Old National Bancorp 377, 695, 864 Marlin Holding, Ltd 696 Omega City Holding Company 186 Marshall & Ilsley Corporation 868 Omni Bancshares, Inc 1062 Mason Holding Corporation 604, 607 ONB Financial Services, Inc 977 Matewan Bancshares, Inc 463 Otto Bremer Foundation 463, 869, 1063 McConnell & Co 1152 Ouachita Bancshares Corp 977 Medina Community Bancshares of Delaware, Inc 605 Outsource Capital Group, Inc 773, 775 Medina Community Bancshares, Inc 605 Outsource Delaware Capital Group, Inc 773, 775 Mercantile Bancorp, Inc 866, 1061 P.C.B. Bancorp, Inc 697 Mercantile Bancorporation, Inc 110, 111, 378, 464, Padgett Agency, Inc 186 977, 1061, 1063 Palm Beach National Holding Company 773 Meriwether Bank Shares, Inc 866 Palos Bancshares, Inc 869 Merrill Bancorporation, Inc 1153 Palos Bank and Trust Company 869 Mesaba Bancshares, Inc 977 Pan American Bancshares, Inc Ill Mesquite Financial Corporation 1152 Paris Bancshares, Inc 866 Metropolitan Bancshares, Inc 185 Parkers Prairie Bancshares, Inc Ill Mid Am Recovery Services, Inc 1153 Passumpsie Bancorp 186 Mid Am, Inc 606, 698, 1153 PCB Bancorp, Inc 1062 Mid State Banks, Inc 977 Pembina County Bankshares, Ltd 464 Mid-Peninsula Bancorp 1061 Pembroke Bancshares, Inc 866 Middle Georgia Bankshares, Inc 868 Peoples Bancorp, Inc 698 Middlefork Financial Group, Inc 378 Peoples Bancshares, Inc 378 MidSouth Bancorp, Inc 868 Peoples Heritage Financial Group, Inc 1154 Midstates Bancshares, Inc 606 Peoples Holding Corporation 186 Milton Bancshares, Inc Ill Peoples National Bancshares, Inc 697 Minor Financial, L.L.C 697 Peterka Family Partnership 866 Monahans Delaware Financial Corporation 605 Pilot Bancshares, Inc 606 Monarch Bancorp 1061 Pinellas Bancshares Corporation 379 Monocacy Bancshares, Inc 282 Pinnacle Banc Group, Inc 1064 Montgomery Bancorporation, Inc 282 Pioneer Bancshares, Inc 378 Montgomery Bancshares, Inc 698 Pioneer Bancshares, Inc., Employee Stock Monticello Bancshares, Inc 697 Ownership Plan 378 Mountain Bancshares, Inc 1063 Pioneer Bank 697 Mountain Bank Systems, Inc 379 Pittsburgh Home Financial Corp 281 Mountain West Financial Corp Ill Plains Capital Corporation 1153 Naperville Bancorp, Inc Ill Piano Bancshares of Delaware, Inc 773 National Bancorp of Alaska, Inc 1153 Piano Bancshares, Inc 773 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 82 A81 Pages Pages Bank Holding Company Act of 1956—Continued Bank Holding Company Act of 1956—Continued Applications approved under—Continued Applications approved under—Continued Platte Valley Banc, Inc 866 SSB Holdings, Inc 977 Platte Valley Bancshares, Inc 378 St. Clair Agency, Inc 1064 PNC Bank Corp 377, 465 St. Joseph Capital Corporation 1062 Popular International Bank, Inc 1060 Star Banc Corporation 869 Prairie Bancorp, Inc 867 Star Bancshares of Nevada, Inc 605 Prairieland Employees Stock Ownership Plan 465, 773 Star Bancshares, Inc 605 Premier Bancorp, Inc 977 Star Valley Banc Shares, Inc Ill Premier Bancshares, Inc 463 State First Financial Corporation 696 Premier Financial Bancorp, Inc 773 State National Bancshares of Delaware, Inc 774 Premier Financial Services, Inc 187 State National Bancshares, Inc 774 Premier Holdings-Nevada, Inc 463 Stichting Administratiekantoor ABN AMRO Holding, Private Bancorporation, Inc 464 Amsterdam, The Netherlands 187, 774, 1064, 1155 Provesa, Inc 868 Stichting Prioriteit ABN AMRO Holding, Puget Sound Bancorp 464 Amsterdam, The Netherlands 187, 774, 1064, 1155 Quad City Holding, Inc 1064 Stockmens Financial Corporation 464 Quanah Financial Corporation 281 Storm Lake Security Bancorporation 379 Quanah Financial Corporation Employee Stock Stuart Family Partnership 604 Ownership Plan 281 Summit Bancorp 379, 1154 Quantum Capital Corp 186 Summit Financial Corporation 187, 869 Queensborough Company Ill Sunset Bancorp, Inc 379 Quinlan Bancshares, Inc 464 Susquehanna Bancshares, Inc 112 R. Banking Limited Partnership 977 Sussex Bancorp 1152 Randall Bancorp, Inc 605 Swanton Agency, Inc 281 Regency Savings Bank, F.S.B 868, 1153 Synovus Financial Corp 698, 869 Regions Financial 1062 Tampa Banking Company 606 Regions Financial Corporation 186, 379, 464, 465 Tattnall Bancshares, Inc 775 Regions Merger Subsidiary, Inc 379 Taylor Bancshares, Inc 464 Reliance Bancshares, Inc 380 Taylor Capital Group, Inc 1155 Republic Bancorp, Inc 187 TB&C Bancshares, Inc 698, 869 Republic Bancshares, Inc 281 Templar Fund, Inc 186 Republic New York Corporation 282 Texas Bancorp, Inc 1062 Richey Bancorporation, Inc 1154 Texas Bancshares, Inc 606 Ringsmuth Family Limited Partnership 977 Texas Community Bancshares, Inc 379, 380 Rio Bancshares Corporation 976 Texas Financial Bancorporation, Inc Ill, 867, 1062 River Bancorp, Inc 977 Thera Holding Partners, Ltd 867 RMBI Acquisitions, Inc 186 Thomson Investment Company, Inc 774 RNYC Holdings Limited, Marina Bay, Gibraltar 282 Thumb Bancorp, Inc 281 Robertson Holding Company 1152 TIB Financial Corp 867 Rocky Mountain Bancorporation, Inc 186 Tokai Bank, Limited, Nagoya, Japan 978 Roosevelt Financial Group, Inc 979 Tompkins County Trustco, Inc 186 Royal Bank of Scotland Group pic, Total Systems Services, Inc 698 Edinburgh, Scotland 1152, 1154 Traxshares, Inc 380 Royal Bank of Scotland pic, Edinburgh, Scotland . 1152, 1154 U.S. Bancorp 695 S.Y. Bancorp, Inc 977 UJB Financial Corp 112, 282 Saban S.A., Marina Bay, Gibraltar 282 UMB Financial Corporation Ill Sabine Bancshares, Inc 379 Umphrey II Family Limited Partnership Ill Saint Jo Bancshares, Inc 1152 Unicorp Bancshares-Delaware, Inc 697 San Angelo Bancorp, Inc 1062 Unicorp Bancshares-Texas, Inc 697 Santa Barbara Bancorp 869 Union Bancorp, Inc 867 SC Acquisition Corp 866 Union Bancshares, Inc 866 Scott Stuart Family Partnership 604 Union Illinois Company Employee Stock SDN Bancorp, Inc 463 Ownership Trust 1152 Security Banc Corporation 773, 978 Union Planters Corporation 109 Security Bank Holding Company 697 Union-Calhoun Investments, Ltd 1155 Security Bank Holding Company Employee Stock UnionBancorp, Inc 869 Ownership Plan 697 United Bankshares, Inc 465 Security National Corporation 186 United Community Bancorp, Inc 186 Security Pacific Leasing 1059 United Community Bankshares, Inc 867 Sharon Bancshares, Inc 281, 978 Valley Bancorp, Inc 379 Shorebank Corporation 282 Valley Bancshares, Inc 1152 SNBNY Holdings Limited, Marina Bay, Valley Community Bancorp, Inc 605 City of Gibraltar Ill, 697 Valley Ridge Financial Corporation 605 Societe Generale, Paris, France 282, 869 ValliCorp Holdings, Inc 379, 1062 Sooner Southwest Bankshares, Inc 697 Van Diest Investment Company 774 South Alabama Bancorporation, Inc 1062 VCR Bancorporation Ltd 775 South Florida Banking Corporation 112 Vogel Bancshares, Inc 867 South Plains Delaware Financial Corporation 606 Wachovia Corporation 975 South Plains Financial, Inc 606 Washington State Bancshares, Inc 1155 Southeast Bancorp of Texas, Inc 869 Waterhouse Investor Services, Inc 112 Southeast Texas Bancshares, Inc 773 Wells Fargo & Company 380, 978, 979 Southern National Corporation 282 Wells River Bancorp, Inc 379 SouthTrust Corporation 279, 1150 WesBanco, Inc 869, 1062 SouthTrust of Florida, Inc 1150 West Coast Bancorp 774, 869 Southwest Bancorporation of Delaware, Inc 695 West Pointe Banshares, Inc 281 Southwest Bancorporation, Inc 695 West Texas Bancshares, Inc 605 Southwest Financial Group of Iowa, Inc 869 West Texas National Bancshares, Inc 697 Southwest Missouri Bancshares, Inc 1062 Westamerica Bancorporation 1155 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 Federal Reserve Bulletin • December 1996 Pages Pages Bank Holding Company Act of 1956—Continued Bank Holding Company Act of 1956—Continued Applications approved under—Continued Orders issued under—Continued Western Acquisition Partners, L.P. 1062 KeyCorp 358, 848, 946, 958 Westfield Mutual Holding Company Ill Keystone Financial, Inc 84 Westside Financial Corporation 605 Mercantile Bancorporation, Inc 86 Westwood Financial Corp 605 Mille Lacs Bancorporation, Inc 336 WFC, Inc 281 Mitsubishi Bank, Limited, Tokyo, Japan 436 Whitaker Bank Corporation of Kentucky 380 National Bancshares Corporation of Texas 565 White Pine Bancorp, Inc 605 National City Corporation 271, 848 Whitney Holding Corporation 109, 376, 1150 National Westminster Bank Pic, London, England 1044 Wildcat, Inc 774 NationsBank Corporation 154, 172 Wilson Bancshares, Inc 464 NB Holdings, Inc 154 WKS, Inc 977 NBD Bancorp, Inc 93-104 XIT Bancshares, Inc 774 North Fork Bancorporation, Inc 338 Norwest Corporation 156, 580, 667, 683 XIT Delaware, Inc 774 NVE Bancorp, Inc 843 Zions Bancorporation 979 NVE Bancorp, MHC 843 Orders issued under PNC Bank Corp 848 1st United Bancorp 151 Premier Acquisition Corporation 88-93 Area Bancshares Corporation 680 Premier Bancorp, Inc 75-78 Aspen Bancshares, Inc 665 R&G Financial Corporation 745 Banamex USA Bancorp 1047 River Valley Bancorp 1136 Banc One Corporation 88-93, 848 Royal Bank of Canada, Montreal, Quebec, Canada 363 Banco National de Mexico, S.A., Mexico City, Mexico .. 1047 Royal Bank of Scotland Group pic, Edinburgh, Banco Santander, SA., Madrid, Spain 833 Scotland 428 Bank of Boston Corporation 733, 856, 1121 Royal Bank of Scotland pic, Edinburgh, Scotland 428 Bank of New York Company, Inc 748 Shinhan Bank, Seoul, Korea 951 Bank Southwest Corporation 557 Sumitomo Bank, Limited, Osaka, Japan 365 Barretville Corporation 422 Swiss Bank Corporation, Basel Switzerland 685 Berens Corporation 166 Texas Financial Bancorporation, Inc 845 Berens Delaware, Inc 166 Toronto-Dominion Bank, Toronto, Canada 1052 Bessemer Group, Incorporated 569 U.S. Bancorp 177 BNCCORP, INC 673 UJB Financial Corp 343, 345 Boatmen's Bancshares 167 Union Planters Corporation 78-82, 745, 756, 959 Butte Bank Shares, Inc 554 United Jersey Bank 343, 345 Caisse Nationale de Credit Agricole, SA., Paris, France . 754 Valley View Bancshares, Inc 1036 Cambridge Bancorp 1040 Wachovia Corporation 680 Cardinal Bancshares, Inc 674 Wells Fargo & Company 165, 445 Chase Manhattan Corporation 1041 Wilson Bank Holding Company 568 Chemical Bank 239 Woodforest Bancshares, Inc 573 Chemical Banking Corporation 239 Bank Holding Company Supervision Manual, Citizens Financial Group, Inc 428 revision 141, 729 CNB Financial Corp 952 Bank Merger Act Community Bancshares of Marysville, Inc 735 Applications approved under Compagnie Financiere de Paribas, Paris, France 348 1st United Bank 1156 CoreStates Financial Corp 430, 848 Adams Bank & Trust 282, 776 Corporacion Bancaria de Espana,.S.A., Madrid, Spain ... 350 BancFirst 188, 979 Croghan Bancshares, Inc 737 Bank of Clarke County 282 Deutsche Bank AG, Frankfurt, Germany 161 Bank of Essex 188 Dresdner Bank AG, Frankfurt, Germany 676, 850 Bank of Gainesville 1156 Emigrant Bancorp, Inc 555 Bank of Isle of Wight 380 Farmers State Corporation 557 Bank of New York 1156 First American Corporation 153 Bank of Tazewell County 607 First Bancorp, Inc 845 Bank of Waverly 465 First Bank System, Inc 169 Barnett Bank of Polk County 188 First Citizens BancShares, Inc 232 Bay lake Bank 776 First Commerce Banks of Florida, Inc 738 Baylake Bank-Kewaunee 188 First Commerce Corporation 679 Boulder Valley Bank & Trust 979 First Delaware Bancorp, Inc 845 Byron Center State Bank 113 First Hawaiian, Inc 575 Central Trust Company 113 First Merchants Corporation 943 Centura Bank 282, 776, 870, 1065 First National of Nebraska, Inc 82 Chippewa Valley Bank 465 First Southern Bancorp, Inc 424, 854 Citizens Bank of Talladega 188 First State Bancshares of Blakely, Inc 953 Citizens Commercial and Savings Bank 607 First Union Corporation 352, 353, 1123 Community Bank of Mississippi 282 Firstar Corporation 162, 762 Compass Bank 1156 Firstar Corporation of Iowa 162 Crestar Bank DC 1156 Firstar Corporation of Minnesota 762 Crestar Bank MD 607, 1065 Flathead Holding Company of Bigfork 741 Demotte State Bank 870 Fleet Financial Group, Inc 50-74, 558 Elkridge Bank 607 Governor and Company of the Bank of Ireland, F&M Bank 607 Dublin, Ireland 1129 F&M Bank-Hallmark 870 Grupo Financiero Banamex Accival, S.A. de C.V., Farmers Bank of Maryland 465 Mexico City, Mexico 1047 Hibernia Corporation 838, 842 Farmers State Bank of Conrad 282 HSBC Holdings BV, Amsterdam, The Netherlands 356 Fayette Bank 188 HSBC Holdings pic, London, England 356 Fifth Third Bank of Northern Kentucky, Inc 188 Huntington Bancshares, Florida, Inc 236 First Banking Center-Burlington 1065 Huntington Bancshares, Incorporated 236, 680 First Community Bank of Mercer County, Inc 188 InterWest Bancorp, Inc 944 First Community Bank, Inc 1065 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 82 A83 Pages Pages Bank Merger Act—Continued Board of Governors—Continued Applications approved under—Continued Members—Continued First Knoxville Bank 1156 Greenspan, Alan First Trust & Savings Bank 1065 Chairman Pro Tempore 326 First Virginia Bank-Colonial 1156 Chairman, reappointment 727 First Virginia Bank-Commonwealth 465 Lists, 1913-96 196, 778 Meyer, Laurence H., appointment as Member 727 First Virginia Bank-Shenandoa Valley 698 Rivlin, Alice M., Vice Chair and Member, appointment . 727 Firstar Bank Minocqua 282 Policy actions 217 Firstar Bank Wisconsin 283 Publications (See Publications) Harris Trust and Savings Bank 776 Regulations (See Regulations, Board of Governors) Hawkeye Bank 188 Staff changes Home Bank 870 DiGioia, Anthony V. 408 Johnstown Bank and Trust Company 607 Homer, Laura M 408 Manufacturers and Traders Trust Company 1156 Kline, Don E 523 Marine Midland Bank 113, 607, 1156 Struble, Frederick M 141 Mercantile Bank of Polk County 1065 Statements to the Congress (See Statements to the Congress) Midland American Bank 607 Thrift Institutions Advisory Council, new members 217 Northern Trust Company 188 Web site announcement 408 Ohio Bank 465 Bostic, Raphael W., article 621 Pioneer Bank 699 Both Borrower and Lender, videotape available 141 Republic Bank 699 Brunner, Allan D., article 383 Republic Security Bank 113, 188 Business Security Dollar Bank 465 Credit, statement 652 Sisbee State Bank 870 Sector, economic developments 290, 705 Southeastern Bank of Florida 283 Small, credit sources, article 983-95 Texas State Bank 465 Tri-City Bank & Trust Company 870 CALEM, Paul S., article 621 Tri-County Bank 188 Call Report data 119 Triangle Bank 188, 607, 979 Canner, Glenn B., articles 621, 1077 ValliWide Bank 380, 1065 Capital Vectra Bank 380, 608 Account transactions 391 WesBanco Bank Wheeling 699 Federal Reserve Banks, financial statements 720, 782 Westamerica Bank 465 Stock and surplus, definition of 522, 549 Yellowstone Bank 980 Capital Accord to Incorporate Market Risks 220 Orders issued under Census of Governments 305 Adams Bank & Trust 275 Cetes (short-term Mexican government securities) 201 Chase Manhattan Bank 1139 Chase Manhattan Corporation 794 Chemical Bank Bay Area 276 Check collection and funds availability 657 Fifth Third Bank 366 Check Fraud Survey 140, 407 Fifth Third Bank of Columbus 366 Chemical Banking Corporation 794 Morgan Guaranty Trust Company of New York 585 Cities, U.S., fiscal positions 305 Signet Bank 590 Cole, Rebel A., article 983 Wellington State Bank 183 Collateralized mortgage obligations (CMOs) 116, 122 Commercial banks (See also Bank holding companies West One Bank, Idaho 765 and Banking institutions) Bank mergers and industrywide structure, 1980-94, staff study Balance sheet developments 483-505 summary 129 Capital 493 Bank of Canada 199 Earnings tables 495-505 Bank Secrecy Act, enhanced recordkeeping 407, 421 Income and expenses, tables 495-505 Bank supervision 397, 403, 1007 Interest rate risk 115-28 Banking institutions (See also Bank holding companies and Liabilities 489 Commercial banks) Loans (See also Credit and Mortgages) Derivatives disclosures by major U.S. banks, Business 485 1995 article 791-801 Household 486 Investments in foreign companies 140, 149 Revenue and income 490 Reporting suspicious activities 221 Securities holdings 487 Retail, small business, and household trends with 1 Community Development Investment: A Guide for State Risk management, statement 397 Member Banks and Bank Holding Companies, Trading and derivatives activities internationally, public publication 222 disclosure report 40 Condition statement, Federal Reserve Banks 780 Banking system, U.S., supervision and regulation, statement .. 517 Consumer Advisory Council Bankruptcy trends 817 Meetings 407, 656, 1008 Basle Capital Accord 140 New members 217 Basle Committee on Banking Supervision 40, 140, 220 Nominations sought 824 Biern, Herbert A., prime bank financial instruments, Consumer Leasing Act 140, 1008, 1019 statement 809 Consumer lending trends 815-18, 1000-1005 Blinder, Alan S., resignation as Vice Chairman 139 Coopers & Lybrand, accountants 780-89, 1112 Board of Governors (See also Federal Reserve System) Copper trading by Sumitomo Corporation 1006 Consumer Advisory Council Corrections facilities, budgets 306 Meetings 407, 656, 1008 Counterfeit money, detection of 320 New members 217 Counties, fiscal positions 305 Nominations sought 824 Credit Electronic Benefit Transfers, statement 406 And money flows 298 Federal Reserve operations, statement 819-23 Bureaus 627 Index of orders and actions taken 107, 372, 692, 972 Card lending 816 Litigation (See Litigation) Consumer lending trends 1000 Members Finances to small businesses 983 Blinder, Alan S., resignation as Vice Chairman 139 Financial developments 710 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 Federal Reserve Bulletin • December 1996 Pages Pages Credit—Continued Federal Open Market Committee Reports, how to obtain 630 Action to decrease degree of pressure on bank reserve Risks to mortgage companies, articles 621-48, 1077-102 positions 139 Credit by brokers and dealers (Reg. T) 521, 538, 1115 Meeting minutes Criminal justice system, costs 306 Sept. 26, 1995 42-48 Criminal or suspicious activity in the banking system 333 Nov. 15, 1995 142-48 Currency Dec. 19, 1995 223-29 Demand, cross country 901 Jan. 30, 1996 409-20 Estimation methods, biometric and seasonal 891, 893 Mar. 26, 1996 659-64 Holdings of, Los Angeles Branch 1112 May 21, 1996 826-31 U.S., article and statement 320, 883-903 July 2, 1996 909-16 Currency and Monetary Instrument Reports (CMIRs) 885 Aug. 20, 1996 1011-16 Meetings, 1990 transcripts 220 DAIWA Bank, supervision in the United States, Federal Reserve Act statements 31-35, 133-39 Capital stock and surplus, definition 522, 549 Depository institutions Orders issued under Federally insured, trends in 1-15 Community Bank of Nevada 966 Mergers and acquisition trends 2-4 Iowa State Bank 767 Reserve requirement decrease in net transaction accounts . 40, 49 Korea Long Term Credit Bank, Seoul, Korea 767 Deposits, FDIC-insured or uninsured investment products .... 723 Federal Reserve and Treasury foreign exchange operations (See Derivatives Treasury and Federal Reserve foreign exchange operations) Earnings from 801 Federal Reserve Banks End-user 800 Cash access policy 522 Traded 798 Chairmen and deputy chairmen, appointed 39 Derivatives disclosures by major U.S. banks, 1995, Directors, list 469-82 article 791-801 Fee schedules for 1996 40 DiGioia, Anthony V., Assistant Director, Division of Human Financial statements 780-89 Resources Management, retirement 408 Operating income 220 Directors, Federal Reserve Banks and Branches, list 469-82 San Francisco, Los Angeles Branch, audit 1112 Directory: Bank Holding Company Community Statement of condition 728 Development Investments, publication 222 Federal Reserve Board (See Board of Governors) Disclosure requirements adjustment 326 Federal Reserve operations, statement 819-23 Discount rate, reduction 217 Federal Reserve Regulatory Service, diskettes available 326 Distribution of credit risk among providers of mortgages to Federal Reserve Senior Loan Officer Survey 1003 lower-income and minority homebuyers, article 1077-102 Federal Reserve System (See also Board of Governors) Domestic open market operations, authorization 410 Chairmen and deputy chairmen, appointments 39 Duff & Phelps Credit Rating Company 624 Federal Reserve Regulatory Service, diskettes available 326 Payment services, review 1112 EARNINGS from derivatives 801 Fedwire 221,1113 EBT programs 720 Fees (for Federal Reserve services to depository Economy institutions) 40,1112 Outlook, FOMC 143—48 Financial Action Task Force 325 Prospects, statement 404 Financial Crimes Enforcement Network, U.S. Department U.S., performance, monetary policy reports 288, 701 of the Treasury 221 Economics of the private equity market, staff study 26 Financial statements, Federal Reserve Banks 779 Education of the Handicapped Act 308 Fiscal position of the state and local government sector: Education, budgets 308 Developments in the 1990s, article 302-11 Edwards, Gerald A., Jr., article 791 Fiscal positions Electronic Benefit Transfers, statement 406 Cities 305 Electronic Fund Transfer Act 521, 525, 720, 824 Counties 305 Electronic fund transfers, statements 514, 720 Local governments 305 Eller, Gregory E., article 791 School districts 306 End-user derivatives 800 States 304 Entrepreneurial Investment Act of 1996, statement 513 Fisher, Peter R., Executive Vice President, Federal Reserve Equal credit opportunity (Reg. B) 140, 1008, 1017 Bank of New York, articles 210, 506, 802, 1103 Equifax Beacon 627 Foreign bank representative offices, rule 220, 231 Equifax Credit Information Services, Inc 627, 631 Foreign currency directives 412 Examination Manual for the U.S. Branches and Agencies Foreign currency operations, authorization 411-20 of Foreign Banking Organizations, publication 137 Foreign exchange Exchange rate articles 210-13, 506-9, Economic developments 292 802-5, 1103-7 Monetary developments 300 Exchange Stabilization Fund 199, 221, 506, Operations (See Treasury and Federal Reserve foreign 509, 805, 1103, 1106 exchange operations) Export trade developments 386, 388 Foreign stocks, lists of marginable 222, 522, 825, 1114 Extensions of Credit by Federal Reserve Banks (Reg. A) 333 Foreign transactions in 1995, article 383-93 External sector, economic developments 707 Forward contracts 792 Forward rate agreements 792 FAIR, Isaac and Company, Inc 627 Freddie Mac 626 Fannie Mae 626 Futures contracts 792 FDIC-insured deposits 723 Federal Consumer Leasing Act Disclosures, GARWOOD, Griffith L., statement 720 forms 1025, 1027, 1029 GE Capital Mortgage Insurance Corporation 644 Federal Deposit Insurance Corporation Improvement Act Gerdano, Sam 1001 of 1991, actions taken under Ginnie Mae 626, 1080 Fifth Third Bank of Northeastern Ohio 279 Glass-Steagall Act, Section 20 1008 Fifth Third Bank of Northern Kentucky, Inc 184 Gold Measure Worksheet, credit scoring process 643 Federal Home Loan Mortgage Corporation 626 Government National Mortgage Association 626 Federal Housing Administration (FHA) 1079 Government sector, economic developments 291, 706 Federal National Mortgage Association 626 Government sponsored enterprises (GSEs) 1081 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 82 A85 Pages Pages Greenspan, Chairman Alan International Organisation of Securities Commissions, Bank supervision and technological change, statement 403 Technical Committee 40 Chairman Pro Tempore, Board of Governors, Interstate banking operations, foreign organizations 656, 665 announcement 326 Investment adviser activities 907 Chairman, Board of Governors, reappointment 727 Investment income, portfolio and direct 390 Daiwa Bank, supervision in the United States, Investment Scheme Advisory, announcement 728 statements 31-35, 133-39 It's Your Money, educational teleseminar 1009 Economic prospects, statement 404 Federal Reserve operations, statement 819-23 JUDSON, Ruth A., article 883 Monetary policy reports to the Congress, statements 315-20,811-15 KATZIVE, Daniel, articles 506, 802 Securities margin requirements, statement 35-38 Kelley, Governor Edward W., Jr. Crime, effects on the banking system, statement 322-25 HALL, Christine, article 1103 Deposits, insured and uninsured, statement 723 Hamanaka, Yasuo 1006 Supervision and regulation, U.S. banking system, Home buying, videotape on process available 140 statement 517 Home Mortgage Disclosure Act (Reg. C), Loan applications, Kline, Don E., Associate Director, Division of Banking treatment of 140 Supervision and Regulation, retirement 523 Home Ownership and Equity Protection Act of 1994 326 Home page, Board of Governors, announcement 408 LABOR markets, economic developments 293, 708 Homer, Laura M., Assistant Director, Division of Banking Lending in Indian Country: Culture and Legal Issues, Supervision and Regulation, retirement 408 instructional video 657 Houpt, James V., article 115-28 Lindsey, Governor Lawrence B. Household sector, economic developments 288, 704 Consumer lending trends, statement 1000 Humphrey-Hawkins reports (Monetary policy reports Electronic fund transfers, statement 514 to the Congress) 285-301, 701-16 Litigation Final enforcement decisions issued by Board of Governors IGUCHI, Toshihide 133 Cedar Vale Bank Holding Company, Inc 871 Import trade developments 386, 389 Hedrick, Donald E 1067 Income statement, Federal Reserve Banks 781 Interamericas Investments Ltd., Cayman Islands 609 Income, investments, portfolio and direct 390 Rushville National Bank 1067 Index, orders and actions taken by the Board Snyder, John K 1067 on bank holding companies 107, 372, 692, 972 United Security Bancorporation 878 Industrial production and capacity utilization Final enforcement orders issued by Board of Governors Releases 28-30, 130-32, 214-16, 312-14, Bangkok Metropolitan Bank, PCL, Bangkok, Thailand .. 882 394-96, 510-12, 649-51, 717-19, Banque Worms, S.A., Paris, France 467 806-8, 904-6, 996-98, 1108-11 Black, William B. Ill 882 Revision, 1991-95, article 16-25 Colon, Ricardo 700 Instructional tools 140, 141, 657, 725, 1009 Costalas, Constantinos 1 114 Interagency Bank Fraud Working Group, Daiwa Bank, Limited, Osaka, Japan 467 Department of Justice 809 Donner, Joseph G., Jr. 981 Interagency Statement on the Retail Sales of Nondeposit Galietta, Michael 700 Investment Products 723 Hand, Patricia 284 Interest rates Leonard, Keith E 700 Commercial bank risks 115-28 Margolin, Albeit L 981 Discount rate reduction 217 Marteeny, Mark E 882 Economic developments 296, 713 Miller, Howard S 700 Risk management 656 Missner, Gary S 777 International National Bank of Greece, Athens, Greece 1075 Banking operations 220, 231 Nfardin, Peter R 1158 Financial system 206 Noyes, Scott A 882 Trading and derivatives activities, report on public Professional Bank 189 disclosure 40 Ronlov, Steen 381 Transactions in 1995, article 383-93 Swiss Bank Corporation, Basle, Switzerland 467 U.S. currency abroad 884 Vasquez, Mitchell A 381 International Banking Act of 1978, orders issued under Winter, Barry S 700 Banca de Roma S.p.A., Rome, Italy 1144 Index of orders and actions taken 107, 372, 692, 972 CBG Compagnie Bancaire Geneve, Geneva, Switzerland ... 862 Pending cases, lists of, involving Cedel Bank, S.A., Luxembourg 591, 690 the Board of Governors 113, 189, 283, 380, China Construction Bank, Beijing, People's Republic 466, 608, 699, 776, of China 1057 870, 980, 1066, 1157 Commercial Bank "Ion Tiriac," S.A., Bucharest, Romania . 592 Termination of enforcement orders Credit Communal de Belgique S.A., Brussels, Belgium .... 104 Bank Bumiputra Malaysia Berhard, Kuala Lumpur, Creditanstalt-Bankverein, Vienna, Austria 594 Malaysia 777 Instituto Bancario San Paolo di Torino, S.p.A., Bank of White Sulphur Springs 777 Turin, Italy 1147 BankSouth Corporation 1158 Komercni Banka, a.s., Prague, Czech Republic 597 Citizens Bank 1158 Korea Development Bank, Seoul, Korea 969 Dyer F&M Bancshares 777 National Bank of Canada, Montreal, Canada 769 First Bancorp of Oklahoma, Inc 882 Promstroybank of Russia, Moscow, Russian Federation .... 599 First Chattanooga Corporation 1158 Sumitomo Bank, Limited, Osaka, Japan 369 First FSB Bancshares, Inc 1158 Swiss Bank Corporation, Basle, Switzerland 690 First Security Banshares, Inc 1158 Unibanco-Uniao de Bancos Brasileiros, S.A., Liberty Agency, Inc 1158 Sao Paulo, Brazil 1148 Merchants Bancshares, Inc 882 Union Bank of Switzerland, Zurich, Switzerland 370 Piedmont Trust Bank 114 International banking operations 326, 333, 335, 656, 665, 824 Written agreements approved by Federal Reserve Banks International Monetary Fund 199 Bank of Corning Company 981 International Operations of U.S. Banking Operations (Reg. K), Charter State Bank 284 US. investments in foreign companies 140, 149 First Western Bank 284 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 Federal Reserve Bulletin • December 1996 Pages Pages Litigation—Continued Phillips, Governor Susan M. Written agreements approved by Federal Reserve Entrepreneurial Investment Act of 1996, statement 513 Banks—Continued Sumitomo Corporation, statement 1006 Keyesport Bancshares, Inc 700 Policy actions, discount rate 217 Mercantile Capital Corp 284 Porter, Richard D., article 883 Northern Bancorp, Inc 467 Portfolio lenders 1081 Loan Guarantees for Defense Production (Reg. V) 1121 Prices, economic developments 295, 709 Local governments, fiscal positions 305 Prime bank financial instruments 728, 809 Location of U.S. currency: How much is abroad?, article .. 883-903 Private mortgage insurers 1080, 1081, 1086, 1090, 1092-98, 1100 MEDICAID budget 307 Profits and balance sheet developments at U.S. commercial Members, Board of Governors, lists 196, 778 banks in 1995, article 483-505 Membership of State Banking Institutions in the Proposed actions Federal Reserve System (Reg. H) 333, 917, 936 Availability of funds 657 Mexican peso crisis, article 199-209 Capital stock and surplus, definition 41, 549 Mexican swap activity 213 Check Fraud Survey 140 Meyer, Laurence H., Member, Board of Governors, Consumer leasing 140 appointment 727 Electronic Fund Transfers 824 MIPS, use for capital 1112 Equal Credit Opportunity Act 140 Monetary aggregates 712 Insider lending 522 Monetary policy International Operations in U.S. Banking Organizations .... 140 Business sector 290, 705 Management of offshore offices 326 Reserve requirements 728 Credit and money flows 298 Risk-based capital guidelines 408, 908 Economic projections 286 Section 20 subsidiaries 824 External sector 707 Truth in lending 657 Financial developments 296, 710 Truth in savings 657 Foreign exchange 292, 300 Publications (See also Videotapes) Government sector 291, 706 Annual Statistical Digest, 1994 41 Household sector 288, 704 Bank Holding Company Supervision Manual, Labor markets 293, 708 revision 141, 729 Price developments 295, 709 Community Development Investment: A Guide for State Reports to the Congress 285-301, 315-20, Member Banks and Bank Holding Companies 222 701-16, 811-15 Directory: Bank Holding Company Community Money laundering 322-25 Development Investments 222 Money stock data, revision 327-31 Examination Manual for the U.S. Branches and Mortgage Guarantee Insurance Corporation (MGIC) 629, 644 Agencies of Foreign Banking Organizations 137 Mortgage insurers, private 1080, 1086, 1090, Federal Reserve Regulatory Service, diskettes 326 1092-98, 1100 Trading Activities Manual 137 Mortgage Score, The 631 Mortgages RADDOCK, Richard D., article 16-25 Applications, credit scoring 626-30 Regulations (Board of Governors, See also Rules) Home, performance of, articles 621^-8, 1082 A, Extensions of Credit by Federal Reserve Banks 333 Loans B, Equal Credit Opportunity 1008, 1017 Distribution, table, correction 41 C, Home Mortgage Disclosure 140 Evidence of performance 623 D, Reserve Requirements of Depository Institutions . 40, 49, 728 Reverse 407 E, Electronic Fund Transfers 406, 521, 525, 720 Risks to providers 1077 G, Securities Credit by Persons other than Banks, Theory of performance 622 Brokers, or Dealers 521, 1115 Underwriting practices 625 H, Membership of State Banking Institutions Mutual fund sales 723, 908 in the Federal Reserve System 333, 917, 936 Mutual Funds: Understand the Risks, K, International Operations of U.S. Banking educational program 725 Organizations 140, 149, 220, 231, 326, 333, NATIONAL Association of Counties 305 335, 656, 665, 824 National Association of Securities Dealers (NASD) 723, 724 M, Consumer Leasing 140, 1008, 1019 National Conference of State Legislators 303, 304 O, Transactions with Affiliates 549 National Education Association 306 S, Reimbursement for Providing Financial Records; National income and product accounts (NIPA) 302 Recordkeeping Requirements for Certain National League of Cities 305 Financial Records 731 National Mortgage Association 1080 T, Credit by Brokers and Dealers 521, 538, 1115 National Survey of Small Business Finances 983, 984, 993 U, Credit by Banks for Purchasing or Carrying Nelson, William R., article 483 Margin Stocks 140, 521, 1115 New York Cash Office 887 V, Loan Guarantees for Defense Production 1121 Notes, $100 887, 894 Y, Bank Holding Companies and Change in Bank Control Act 333, 907, 917, 942, 1113 OFF-BALANCE-SHEET instruments 117 Z, Truth in lending 140, 326, 407, 657, 1009, 1031 Office of Thrift Supervision (OTS), risk model 120, 122 CC, Availability of Funds and Collection of Checks 657 Oil imports, developments 389 DD, Truth in Savings 140, 657 Operating income, Federal Reserve Banks 220 Reid, Brian K„ article 483 Options contracts 792 Reimbursement for Providing Financial Records; OTS model 120, 122 Recordkeeping Requirements for Certain Over-the-counter margin stocks Financial Records 731 Lists of marginable 222, 522, 825, 1114 Reports of Suspicious Activity, Bank Secrecy Act 333 Proposed action 140 Reserve requirements 40, 49, 729 Retail Sales of Nondeposit Investment Products 723 PASSMORE, Wayne, article 1077 Retail sweep programs 715 Payment services to member banks, review 1112 Retail transaction deposits 715 Pension programs, budget 308 Reverse mortgages 407 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 82 A87 Pages Pages Revision to industrial production and capacity utilization, Statements to the Congress—Continued 1991-95, article 16-25 Small businesses, credit financing (Governor Yellen) 652-55 Rhoades, Stephen A., staff study summary 129 Sumitomo Corporation (Governor Phillips) 1006-1008 Riegle-Neal Interstate Banking and Branching Efficiency Supervision and regulation, U.S. banking system Act of 1994 1, 3 (Governor Kelley) 517-22 Risk management, statement 397 U.S. currency, security of (Theodore E. Allison, Risk-based capital guidelines 220, 408, 907, 908, 917 Assistant to the Board) 320-22 Riskless principal transactions 728 U.S. economy, monetary policy (Chairman Greenspan) ... 811-14 Rivlin, Alice M., Vice Chair and Member, Board of States, U.S., fiscal positions 304 Governors, appointment 727 Stock instruments for tier 1 capital 1112 ROCA system 136 Struble, Frederick M., Associate Director, Division of Rubin, Laura S., article 302 Banking Supervision and Regulation, retirement 141 Rules of Practice for Hearings 1121 Sumitomo Corporation, statement 1006 Rules Regarding Equal Opportunity 150 Supervision, banks and corporations 1007 Surette, Brian J., article 1077 SAFETY and soundness guidelines 907 Survey of Consumer Finances 1001 San Francisco, Los Angeles Branch, audit 1112 Suspicious activities, banking system 221, 333 Savings and investing, teleseminar 1009 Suspicious Activity Report 221 School districts, fiscal positions 306 Swap arrangements 142 School systems, budget 308 Swap contracts 792 Section 20 subsidiaries 824, 1008, 1113 Securities TABLES (For index to tables published monthly, See guide Credit extensions oversight 35-38 at top of page A77; for special tables published Holdings, commercial banks 487 during the year, See list on page A63.) Margin requirements 35-38, 521, 1115 Takemura, Japanese Finance Minister 133 Section 20 824, 1008, 1113 Tesobonos (short-term obligations of the Mexican Senior Loan Officer Opinion Survey on Bank Lending government) 201 Practices 485 Three strikes laws 306 Shin, Soo J., article 210 Thrift Institutions Advisory Council, new members 217 Small businesses TOPRS, use for capital 1112 Bank and nonbank shares in 987 Trading Activities Manual, publication 137 Credit 652, 983-95 Trading and derivatives activities, internationally Sovran Letter 908 by banks 40, 798, 1006 Special Investigations and Examinations Unit, Division of Trans Union 627 Banking Supervision and Regulation 323 Trans Union Empirica 627 Spillenkothen, Richard, statement 397 Treasury and Federal Reserve foreign exchange operations, Staff interpretive letter, rescission 907 articles 210-13, 506-9, Staff studies 802-5, 1103-7 Bank mergers and industrywide structure, 1980-94 129 Treasury, U.S. Department of the 199, 221, 506, Economics of the private equity market 26 509, 805, 1103, 1106 State member banks, Consumer lending trends 815 Trends in the structure of federally insured depository State Street Boston Corporation 794 institutions, 1984-94, article 1-15 State-chartered banking organizations, supervision 656 Truman, Edwin M, article 199 State-Federal Supervisory Protocol 656 Truth in Lending Act (Reg. Z) 140, 221, 326, Statement of condition, Federal Reserve Banks, 407, 657, 1009, 1031 announcement 728 Truth in Savings (Reg. DD) 140, 657 Statement of Financial Accounting Standards (SFAS) TRW 627 105, 107, and 119 796 TRW-FICO 627 Statements to the Congress (including reports and letters) Bank supervision and technological change (Chairman Greenspan) 403 U.S. BANK supervision of Daiwa Bank, Consumer lending trends (Governor Lindsey) 1000-1005 statements 31-35, 133-39 Consumer lending trends (Governor Yellen) 815-18 U.S. currency, article 883-903 Crime, effects on the banking system U.S. international transactions in 1995, article 383-93 (Governor Kelley) 322-25 Unilateral transfers to foreigners 391 Daiwa Bank, supervision in the United States Uninsured investment products 723 (Chairman Greenspan) 31-35, 133-39 United Guaranty Corporation 645 Deposits, insured and uninsured (Governor Kelley) 723-26 Economic prospects (Chairman Greenspan) 404 Electronic Benefit Transfers (Board of Governors) 406 VETERAN'S Administration 1079 Electronic fund transfers Videotapes, instructional tools Governor Lindsey 514-19 Both Borrower and Lender 141 Griffith L. Garwood, Director, Division of Consumer and Home buying process 140 Community Affairs 720-22 Lending in Indian Country: Culture and Legal Issues 657 Entrepreneurial Investment Act of 1996 Mutual Funds: Understand the Risks 725 (Governor-Phillips) 513-18 Federal Reserve operations (Chairman Greenspan) 819-23 WEB site, Board's home page 408 Monetary policy reports to the Congress Wolken, John D„ article 983 (Chairman Greenspan) 315-20 Woodburn, R. Louise, article 983 Prime bank financial instruments (Herbert A. Biern, Deputy Wright, David M., article 115 Associate Director, Division of Banking Supervision and Regulation) 809 Risk management (Richard Spillenkothen, Director, YELLEN, Governor Janet L. Division of Banking Supervision and Regulation ... 397-402 Consumer lending trends, statement 815-18 Securities margin requirements (Chairman Greenspan) .... 35-38 Small business credit, statement 652-55 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Statistical Releases Available on the Commerce Department's Economic Bulletin Board The Board of Governors of the Federal Reserve Sys- For further information regarding a subscription to tem makes some of its statistical releases available to the economic bulletin board, please call (202) 482the public through the U.S. Department of Com- 1986. The releases transmitted to the economic bullemerce's economic bulletin board. Computer access tin board, on a regular basis, are the following: to the releases can be obtained by subscription. Reference Number Statistical release Frequency of release H.3 Aggregate Reserves Weekly/Thursday H.4.1 Factors Affecting Reserve Balances Weekly/Thursday H.6 Money Stock Weekly/Thursday H.8 Assets and Liabilities of Insured Domestically Chartered Weekly/Monday and Foreign Related Banking Institutions H.10 Foreign Exchange Rates Weekly/Monday H.15 Selected Interest Rates Weekly/Monday G.5 Foreign Exchange Rates Monthly/end of month G.17 Industrial Production and Capacity Utilization Monthly/midmonth G.19 Consumer Installment Credit Monthly/fifth business day Z. 1 Flow of Funds Quarterly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications of Interest FEDERAL RESERVE CONSUMER CREDIT PUBLICATIONS The Federal Reserve Board publishes a series of pam- Shop . . . The Card You Pick Can Save You Money is phlets covering individual credit laws and topics, as designed to help consumers comparison shop when pictured below. looking for a credit card. It contains the results of the Three booklets on the mortgage process are available: Federal Reserve Board's survey of the terms of credit A Consumer's Guide to Mortgage Lock-Ins, A Consum- card plans offered by credit card issuers throughout the er 's Guide to Mortgage Refinancings, and A Consumer's United States. Because the terms can affect the amount Guide to Mortgage Settlement Costs. These booklets an individual pays for using a credit card, the booklet were prepared in conjunction with the Federal Home lists the annual percentage rate (APR), annual fee, grace Loan Bank Board and in consultation with other federal period, type of pricing (fixed or variable rate), and a agencies and trade and consumer groups. The Board telephone number for each card issuer surveyed. also publishes the Consumer Handbook to Credit Pro- Copies of consumer publications are available free tection Laws, a complete guide to consumer credit pro- of charge from Publications Services, Mail Stop 127, tections. This forty-four-page booklet explains how to Board of Governors of the Federal Reserve System, shop and obtain credit, how to maintain a good credit Washington, DC 20551. Multiple copies for classroom rating, and how to dispute unfair credit transactions. use are also available free of charge. A Consumer's Guide to Mortgage Lock-Ins SHOP The Card You Pick Can Save You Money Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis