Federal Reserve Bulletin, 1997-05

VOLUME 83 • NUMBER 5 • MAY 1997 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 officiaJ 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 357 U.S. INTERNATIONAL TRANSACTIONS modernization should not undermine the ability IN 1996 and authority of the central bank of the United States to manage crises, ensure an efficient and After stabilizing in 1995, the U.S. current safe payment system, and conduct monetary polaccount deficit widened in 1996 to $165 billion. icy, and that these responsibilities require the The deficit increased sharply in the first three Federal Reserve to retain a significant and quarters of the year, but, because of strong important role as a bank supervisor, before the export growth, narrowed significantly in the Subcommittee on Capital Markets, Securities fourth quarter. The widening of the deficit by and Government-Sponsored Enterprises of the $17 billion was the net result of moderate-to- House Committee on Banking and Financial strong growth in all the key components of the Services, March 19, 1997. current account: exports and imports of goods and services, income from U.S. and foreign port- 378 Chairman Greenspan highlights some of the key folio and direct investments, and net unilateral aspects of the current economic situation and transfers. says that the current expansion, now entering its seventh year, is a long upswing by historical 368 INDUSTRIAL PRODUCTION AND CAPACITY standards, and yet, in looking ahead the pros- UTILIZATION FOR MARCH 1997 pects for sustaining the expansion are quite favorable, before the Joint Economic Committee Industrial production advanced 0.9 percent in of the U.S. Congress, March 20, 1997. March, to 119.6 percent of its 1992 average, after a revised gain of 0.6 percent in February. 381 Susan M. Phillips, Member, Board of Gover- The utilization of industrial capacity increased nors, discusses the Board's section 20 fire- 0.5 percentage point in March, to 84.1 percent, walls, which are imposed on bank holding comthe highest level since March 1995. panies engaged in underwriting and dealing in securities, and says that the Board has recently 371 STATEMENTS TO THE CONGRESS proposed to eliminate a majority of those restrictions after having completed a comprehen- Alan Greenspan, Chairman, Board of Governors sive review of the twenty-eight firewalls and of the Federal Reserve System, discusses the having benefited from ten years of experience, Federal Reserve's semiannual report to the Consince firewalls were first erected in 1987, gress on monetary policy and also the issue of in supervising section 20 affiliates, before the the bias in the consumer price index (CPI) and Subcommittee on Financial Institutions and says that we have an overarching national inter- Regulatory Relief of the Senate Committee est in building a better measure of consumer on Banking, Housing, and Urban Affairs, prices and in implementing more rational index- March 20, 1997. ation procedures and that these efforts are essential if we are to ensure that the original intent of the relevant pieces of legislation will be fulfilled 387 ANNOUNCEMENTS in insulating taxpayers and benefit recipients Meeting of the Consumer Advisory Council. from the effects of ongoing changes in the cost of living, before the House Committee on the Reductions of automated clearinghouse fees of Budget, March 4, 1997. the Federal Reserve Banks. 373 Chairman Greenspan presents the views of the Revisions to Regulation M and its official staff Board on the supervision of the nation's banking commentary. organizations should they be authorized by the Final amendment to Regulation O. Congress to engage in a wider range of activities and says that the Board believes that financial Amendments to Regulation CC. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Adoption of final rules on standard practices 401 LEGAL DEVELOPMENTS regarding transactions in government securities Various bank holding company, bank service by depository institutions. corporation, and bank merger orders; and pend- Proposal to amend Regulations D and I; pro- ing cases. posal to amend Regulations H and P; proposal by the Federal Reserve Board, along with the 451 DIRECTORS OF THE FEDERAL RESERVE Office of the Comptroller of the Currency and BANKS AND BRANCHES the Federal Deposit Insurance Corporation, to List of Directors, by Federal Reserve District. adopt uniform regulations to implement section 109 of the Riegle-Neal Interstate Banking AI FINANCIAL AND BUSINESS STATISTICS and Efficiency Act of 1994; and request for additional comments on possible legislative These tables reflect data available as of changes to the Truth in Lending Act. March 27, 1997. Availability of a report on the processing of A3 GUIDE TO TABULAR PRESENTATION applications in 1996 by the Federal Reserve. A4 Domestic Financial Statistics Changes in Board staff. A42 Domestic Nonfinancial Statistics A50 International Statistics 390 MINUTES OF THE FEDERAL OPEN MARKET COMMITTEE MEETING HELD ON A63 GUIDE TO STATISTICAL RELEASES AND FEBRUARY 4-5, 1997 SPECIAL TABLES At its meeting on February 4-5, 1997, the Committee approved without change the tentative A76 INDEX TO STATISTICAL TABLES ranges for 1997 that it had established in July of last year. In keeping with its usual proce- A78 BOARD OF GOVERNORS AND STAFF dures under the Humphrey-Hawkins Act, the Committee would review its ranges at midyear, A80 FEDERAL OPEN MARKET COMMITTEE AND or sooner if interim conditions warranted, in STAFF; ADVISORY COUNCILS light of the growth and velocity behavior of the aggregates and ongoing economic and financial A82 FEDERAL RESERVE BOARD PUBLICATIONS developments. For the intermeeting period ahead, the Com- A84 MAPS OF THE FEDERAL RESERVE SYSTEM mittee adopted a directive that called for maintaining the existing degree of pressure on reserve A86 FEDERAL RESERVE BANKS, BRANCHES, positions and that retained a bias toward the AND OFFICES possible finning of reserve conditions during the intermeeting period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1996 Guy V.G. Stevens, of the Board's Division of Interna- 1. U.S. cxtcrn;iI tv , ILJ85-% tional Finance, prepared this article. Virginia Carper Billions of dollars provided research assistance. After stabilizing in 1995, the U.S. current account deficit widened in 1996 to $165 billion. The deficit increased sharply in the first three quarters of the — 50 year, but, because of strong export growth, narrowed significantly in the fourth quarter (chart 1). The widening of the deficit by $17 billion was the net result of moderate-to-strong growth in all the key components of the current account: exports and imports of goods and services, income from U.S. and foreign portfolio and direct investments, and net unilateral transfers. 198S 1990 1992 1994 1996 A $14 billion increase in the deficit on traded NOTE. The data are quarterly al seasonally adjusted annual rates. Current goods and a smaller increase in the surplus on trade account data exclude foreign cash grants received in 1990-92. SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. in services netted out to an overall increase in the international transactions accounts. deficit for trade in goods and services of $9 billion (table 1). The value of exported goods grew at more than 6 percent; however, robust U.S. growth, a strengthening U.S. dollar, and a higher price for oil Net investment income changed only marginally in resulted in import growth that was equally strong in 1996. The net change, again, was the outcome of a percentage terms but, because of the higher initial balancing of positive and negative effects, as a $7 billevel of imports, higher in value terms. A similar lion increase in net direct investment income nearly arithmetic affected the change in the value of net offset a growing net deficit for portfolio investment services, but in the opposite direction. Service exports income. The former was attributable to the continued and imports grew at about the same 6 percent rate, growth of, and remarkable profitability of, U.S. direct but the higher initial value of service exports resulted investment abroad, and the latter primarily to the in a $5 billion increase in the net services balance. large increase in net portfolio liabilities. U.S. L'xurruiL ki\;inccs, Billions of dollars Change, Item 1991 1992 1993 1994 1995 1996 1995 to 1996 Trade in goods and services, net -29.9 -38.3 -72.0 -HH.4 -105.1 -114.2 -9.1 Goods, net -74.1 -96.1 -132.6 -166.1 -173.4 -187.7 -14.3 Services, net 44.2 57.8 60.6 61.7 68.4 73.5 5.1 Investment income, net 15.8. 11.2 9.7 -4.2 -8.0 -8.4 -.4 Portfolio investment, net ... -39.8 -40.4 -46.2 -51.6 -65.5 -72.9 -7.4 Direct investment, net 55.6 51.6 55.9 47.4 57.5 64.4 7.0 Unilateral transfers, net 4.5 -35.5 -37.6 -39.9 -35,1 -42,5 -7.4 Foreign cash grants: to the United States 42.5 1.3 .0 .0 .0 .0 .0 Other transfers,, net -38.0 -36.8 -37.6 -39.9 -35.1 -42.5 -7.4 Current account balance .. -9.5 -99.9 -148.4 -148.2 -165.1 -16.9 MEMO: Current account balance excluding foreign cash grants -52.0 -63.9 -99.9 -148.4 -148.2 -165.1 -16.9 NOTE. In this and the tables that follow, components may not sum to totals SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. because of rounding. international transactions accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

358 Federal Reserve Bulletin • May 1997 The change in the deficit on net unilateral transfers 2. Growth of real CuP in the United States and selected contributed about $7 billion to the overall deficit on foreign economies, 1994—96 the current account. The large size of this increase Percenlage change, year over year should be a one-time occurrence; it was caused by Country 1994 1995 1996' delays in the disbursement of U.S. government grants, mainly because of the budget impasse at the end of United States 3.5 2.0 2.4 1995. Total foreign. 4,4 2.5 3.3 Recorded net capital inflows, both official and pri- Industrial countries3 3.2 2.3 2.1 vate, more than financed the $165 billion current C W a e n s a t d er a n Europe 4 3 . . 1 0 2 2. . 5 3 1 1 , . 5 9 account deficit; as a result, the statistical discrepancy Japan .7 1.3 3.7 Developing countries ' ... 6.6 3.0 5.7 was negative for the first year since 1992. Of the Asia 8.2 7.8 6,6 Latin America 4.4 -3.8 4.4 capital inflows, about $123 billion represented an Mexico 4.5 -6.2 5.1 increase in net foreign official holdings in the United Other Latin America 4.2 2.3 2.7 States and $89 billion an increase in net foreign NOTE. Aggregate measures are weighted by bilateral shares in U.S. nonagricultural merchandise exports in 1987-89. private holdings. 1. Data for 1996 are partly estimated. 2. The industrial countries index includes Australia and New Zealand in addition to Canada, Japan, and Western Europe. The index for Western Europe comprises Belgium, France, Germany, Italy, the Netherlands, Sweden, Switzer- MAJOR ECONOMIC INFLUENCES land, the United Kingdom, Austria, Denmark, Finland, Greece, Ireland, Norway, Portugal, Spain, and Turkey. ON U.S. INTERNATIONAL TRANSACTIONS 3. The developing countries in the index for Asia are the Peoples Republic of China, Hong Kong, Korea, Malaysia, the Philippines, Singapore, and Taiwan. The countries in "Other Latin America" are Argentina, Brazil, Chile, and The proximate determinants of the changes in the Venezuela. U.S. current account include economic growth in the SOURCE. Various national sources. United States and abroad, trends in U.S. international price competitiveness, movements in the U.S. international investment position, and changes in the rates of tries and a strong expansion in the developing counreturn on financial assets at home and abroad. The tries. Growth in the developing countries of Asia first two of these factors explain much of the deterio- continued at almost the strong 1995 pace. In Latin ration of the trade balance in 1996 and earlier years, America, Mexico and Argentina rebounded from and the latter two explain the changes in portfolio and negative growth in 1995 to register year-over-year direct investment income. rates of 5.1 percent and 4.4 percent respectively. Relative Rates of Economic Growth U.S. Price Competitiveness In 1996 growth picked up significantly in both the Broad measures of U.S. price competitiveness, such United States and major foreign countries, with U.S. as the CPI-adjusted foreign exchange value of the growth, at 2.4 percent year over year, about a percent- dollar, have shown a moderate lessening of U.S. age point below average foreign growth (table 2). competitiveness since the middle of 1995 (chart 2). Over the postwar period, in years when the U.S. This real foreign exchange value of the dollar, in economy and foreign economies have grown at terms of the currencies of eighteen of our major approximately the same rate, U.S. imports have trading partners, is computed as the ratio of U.S. tended to increase significantly faster than U.S. consumer prices to foreign consumer prices transexports. In fact, because the response of U.S. imports lated into dollars at current nominal exchange rates. to changes in U.S. growth is considerably greater than The rise in this measure over the past one and onethe corresponding response of U.S. exports to changes half years is primarily the result of the appreciation of in foreign growth, the U.S. trade balance has deterio- the dollar relative to the currencies of our major rated even when foreign growth has been signifi- trading partners. The movements of direct measures cantly stronger than that in the United States. This of relative export and import prices confirm this differential response, in conjunction with a starting moderate loss of U.S. price competitiveness (chart 3). point at which imports substantially exceed exports, U.S. exports lost some of their competitiveness visis a major factor in explaining the change in the U.S. a-vis foreign goods; similarly, imports into the United balance of trade in goods for 1996. States became somewhat more competitive with The overall foreign growth of 3.3 percent was an respect to U.S. domestic goods, primarily because average of moderate growth in the industrial coun- of the continued appreciation of the U.S. dollar. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1996 359 2. Cl'l-adjusted foreign exchange value of the U.S. dollar, 3. Relative prices of exports am! imports, 1074-96 Index. \W)= 1.0 Ralio scale. I9S6:Q4 = 100 I Increasing price competitiveness 1 Increasing price competitiveness ooff UU.SS. goods of U.S. .ggoods •— 80 i M I 11 I I! I I II i I I I I 1 i M 1988 1990 1992 1994 1996 1975 1980 1985 1990 1995 NOTE. For exports, the index is the ratio of foreign prices to U.S. export NOTE. Index based on the Group of Ten (G-10) countries (excluding the prices of nonagricultural products, excluding computers. For imports, the index United Slates) and eight developing countries. The data are quarterly. is the ratio of U.S. import prices of non-oil imports, excluding computers, to the U.S. GDP deflator. The data are quarterly. Because of lags in the impact of the rise of the dollar rather than the actual negative $8.4 billion. The prion the trade balance, the effects of this reduced mary reason for the smaller size of the actual deficit competitiveness are likely to continue into 1997. In is the consistently high rate of return on U.S. direct fact, the net effect of exchange rate changes on investment assets abroad, which, at almost 11 percent the trade balance in 1996 was probably positive, as in 1996, was double the rates of return on nonresident the lagged effects of the dollar depreciation in early holdings of portfolio and direct investment assets in 1995 dominated those of the more recent dollar the United States. appreciation. Changes in rates of return from 1995 to 1996, particularly the fall in the rates of return on portfolio liabilities and foreign direct investment in the United States, explain why net investment income changed The U.S. Net Invest men! Position and so little in 1996 even as net liabilities increased Differential Rates of Return substantially. Despite the fact that variations in rates on U.S. Claims and Liabilities of return on the various claims and liabilities had a Because of the run of current account deficits going back to the early 1980s, U.S. liabilities to 4. Net investment position, 1972 % foreigners—portfolio and direct—have grown much Billions of dollars more rapidly than our claims on foreigners. Net liabilities grew by the end of 1996 to a total of Direct investment 250 approximately $1 trillion (chart 4). This negative overall net investment position is a major factor explaining why net investment income is now negative. The relatively small deficit on net investment income of $8.4 billion in 1996, an amount little changed from 1995, illustrates the important influence of different rates of return on U.S. claims and liabilities. If the rate of return on all U.S. claims and 1,250 liabilities had been the same in 1996, net investment I I ! I 1 ! I 1 II U income would have been equal to that common rate 1975 1980 1985 1990 1995 of return times the net investment position; for a NOTE. For 1972-95, the data are end-of-year totals for net direct investment, 5 percent rate of return, about the 1996 average for net portfolio investment, and their difference (shown as the "net position"). The portfolio claims and liabilities, net investment income year-end position for 1996 was constructed by adding the recorded investment flows during 1996 to the recorded year-end position for 1995. would have been approximately negative $50 billion, SOURCE. U. S. Department of Commerce, Bureau of Economic Analysis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

360 Federal Reserve Bulletin • May 1997 large positive effect on net investment income in these two categories, the change in the value of 1996, the large and increasingly negative net invest- exported goods accounted for three-fourths of the ment position predisposes the United States to total change. The categories of exports showing the increasing deficits in the future. sharpest increases in value were agricultural products, capital goods, and consumer goods. Shipments of aircraft and parts led the increase in DEVELOPMENTS IN TRADE IN GOODS AND the value of exported capital goods, with a jump of SERVICES more than 18 percent. After a period of sluggish sales, deliveries of large jet aircraft rebounded, espe- The values of exports and imports of goods grew cially toward the end of the year, as a result of robust between 6 percent and 7 percent in 1996, down from growth in world air traffic, high airline profits, and the double-digit growth rates of 1995 (table 3). The projections of strong replacement demands. Because deficit on traded goods increased $14 billion, howof the backlog of existing orders from foreign airever, because the value of imports grew faster from lines, this strength in aircraft exports is expected to a larger initial level (table 1). Service exports grew continue throughout 1997. somewhat faster than imports, again from a higher Exports of machinery also expanded vigorously in base, leading to a $5 billion increase in the surplus 1996, in response to strengthening investment expenfor net services. ditures abroad. Relatively large increases were registered in a wide range of categories, notably comput- Exports ers (including peripherals and parts), scientific and medical equipment, and various types of power- The value of exports of goods and services, at generating equipment. The growth of machinery $836 billion for 1996, rose slightly more than 6 per- exports moderated a bit in response to a slowing in cent for the year—less than half the strong rate of shipments of semiconductors and telecommunicaalmost 13 percent in 1995 (table 3). Although the tions equipment during the first part of the year; export value of goods and of services advanced at however, sales turned up toward the end of the year, nearly the same rate, because of the relative size of and small annual increases were recorded in both 3. U.S. international trade in goods and services, 1994-96 Billions of dollars Percentage change Item 1994 to 1995 lWSto 1996 Balance on goods and services . -104 -105 -114 Exports of goods and services 698 787 836 12.6 «.2 Services 196 211 224 7.5 f>.3 Goods 502 576 612 14.6 6.2 Agricultural products 47 57 61 2J.6 14 Nonagricultural goods 435 519 550 13.9 6.1 Capita! goods 205 234 253 13.9 8.2 Aircraft and parts 31 26 31 -17.0 18.1 Computers, pieripherafe, and parts 33 40 44 19.0 10.2 Semiconductors 25 34 36 35.6 4.5 Other capital goods 115 134 143 16.1 6.6 Consumer goods 60 64 70 7.4 8.9 Automotive products 58 62 64 7.0 4.3 Industrial supplies 113 135 138 20.4 1.6 Other exports 20 23 25 17.0 7.9 Imports of goods and services 803 892 950 11.1 6.5 Services 134 142 150 6.1 5.8 Goods 669 749 799 12.1 6.7 Petroleum and products 51 55 68 7.4 24.0 NonpetiBleum goods 617 694 731 12,5 5.3 Capital goods 184 221 229 20.1 3.4 Aircraft and parts 11 II 13 -5.2 17.9 Computers, peripherals, and parts 46 56 62 21.S 9.3 Semiconductors 26 39 37 49.3 -6.0 Other capital goods 101 115 118 14.5 2.3 Consumer goods 146 160 171 9.3 6.9 Automotive products 118 125 1m30 5.5 4.3 Industrial supplies 114 129 13.3 5.7 Foods and other exports 55 59 «5 8.4 9.2 NOTE. Percentage changes in this and subsequent tables may differ from SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. those calculated from data shown in the tables because of rounding. international transactions accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1996 361 categories. An important element in the expansion of In terms of quantity, exports of goods and services these high tech categories is the rapid penetration of grew 6'/2 percent in 1996 (table 5). Service exports, personal computers (PCs) into emerging markets however, expanded more slowly than goods exports. (especially in Asia), indications of the beginning of a With only small increases in receipts from royalties computer upgrade cycle by corporations, and the and license fees and little change in the value of increasing role PCs play in communications. military sales, total service receipts increased about The value of consumer goods exports grew 9 per- 3'/2 percent in real terms in 1996. The drop in agriculcent in 1996, a somewhat faster pace than in 1995. tural exports and the marked slowdown in exports of About 30 percent of the increase went to Mexico, semiconductors held down overall growth in the 40 percent went to major industrial countries, and the quantity of merchandise exports. Real merchandise remaining 30 percent went largely to Korea, China, exports, exclusive of agricultural products, semicon- Eastern Europe, and other countries in Latin America. ductors, and computers, grew 6 percent in 1996—the The increase in the value of agricultural exports same rate as in 1995. Overall, exports of goods and was due entirely to price increases; the quantity of services contributed 0.7 percentage point to U.S. real shipments declined, on balance, below the levels of GDP growth in 1996 (year over year). 1995. Real exports fell sharply in the first three quarters of 1996, after disappointing U.S. harvests of corn and soybeans in the fall of 1995 and of wheat in Imports the spring of 1996. These production shortfalls also pushed inventories of grain and oilseed to historic In 1996 total imports of goods and services rose in lows. As inventories were drawn down to critically value at about the same rate as exports—little more low levels, prices of many agricultural exports rose than half the rate of growth in 1995 (table 3). The to record highs. However, following the improved value of imported services and of imported goods U.S. harvests in the fall of 1996, exports of agri- increased at about the same rate. Varying stories for cultural products recovered strongly and prices fell different import categories combined to produce this substantially. outcome. By area, nearly one-third of the increase in the value of merchandise exports in 1996 went to Mexico. Spurred by the restoration of robust eco- Oil Imports nomic growth, shipments to Mexico jumped more than 23 percent (table 4), with the sharpest increases Although the volume of oil imports increased only in automotive products and consumer goods. Smaller Vi percent from 1995 to 1996, the value of oil imports increases went to Canada, Japan, Asia, and other rose 24 percent because of a 23 percent increase in countries in Latin America. Weak GDP growth in the average price of imported oil. Several factors Western Europe held down the expansion of U.S. contributed to what appears to have been a tempoexports to that area. rary, though large, increase. At the time of this writing, prices have dropped back sharply from the levels prevailing at the end of 1996. 4. US. exports of goorh to its major trailing pari.iu.-rs. 1994-96 Billions of dollars 5. Change in the quantity of U.S. exports, 191)4-96 Percentage .Importing region 1994 1995 1996 change, Percentage change, year over year 1995 to 1996 Type of export 1994 1995 1996 Total 503 576 6\Z 6.2 Industrial countries1 293 335 351 4.6 AH exports 8.2 8.9 6.5 Canada 115 128 134 5,0 Services 3.7 4.7 3.7 Western Europe . 115 132 137 3.6 Goods )0.1 10.6 7.6 Japan 52 63 66 4.5 Agricultural products 3.4 11.7 -2.2 NonagricuUurai goods 10.8 10.5 8.7 Developing countries- ... 209 241 261 8.5 Computers, peripherals, and parts 26.9 41.0 43.8 Asia 104 131 135 3.8 Semiconductors 61.2 43.1 7.5 Latin America 92 96 109 13.9 Other 7.3 6.3 5.7 Mexico 51 46 57 23.4 Other Latin America. 41 50 4.8 MEMO: Contribution of exports to U.S. GDP 1. See note 2 to table 2. growth (percentage points) .... 1.0 2. See note 3 to table 2. SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. NOTE. Quantities are measured in chained (1992) dollars. international transactions accounts. SOURCE. U.S. Department of Commerce, Bureau of the Census. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

362 Federal Reserve Bulletin • May 1997 5. Oil prices, 1984-96 barrel in 1996, about $3.67 above the average for 1995. Spot prices fell back during late January and Dollars per barrel February of this year when Iraqi oil was finally West Texas intermediate offered on the spot market and warmer-than-normal weather softened demand for home heating oil. The quantity of oil imports rose from a rate of 8.8 million barrels per day in 1995 to 9.4 million barrels per day in 1996 (table 6). The higher level of imports more than accounted for an increase in U.S. consumption in the range of I/2 million barrels per 20 day. Non-oil 1 m pods 1986 1988 1990 1992 1994 1996 NOTE. The data are monthly. The value of non-oil imports rose about 5'/2 percent SOURCE. Petroleum Intelligence Weekly, various issues; and U.S. Department in 1996 (table 3). Imports grew in response to the of Commerce, Bureau of Economic Analysis. strength of U.S. economic activity and to the slight boost from the small increase in their price competitiveness; increases were recorded in almost all major Changes in the prices of imported oil have tended import categories. One notable exception was imto mirror changes in spot oil prices (West Texas ports of semiconductors. There was a large buildup in intermediate) with a lag of several weeks (chart 5). inventories in the semiconductor industry in 1995 Spot prices fell during the fourth quarter of 1995 but and early 1996 that was drawn down beginning in then rose at the beginning of 1996 to almost $19 per early spring. After rising strongly during 1995, U.S. barrel. This rise in price reflected increased demand imports of semiconductors dropped during almost all for heating oil and depleted heating oil stocks as a of 1996 and turned up only at year-end. The deficit in result of a winter season that was much colder than the net semiconductor trade balance that had emerged usual throughout the Northern Hemisphere. At the in 1995 and continued into 1996 fell sharply during same time, Iraq approached the United Nations with the year, as imports dropped and as exports turned up a plan to export a limited, although significant, in the second half of the year. amount of oil under U.N. supervision in return for In terms of quantity, imports of goods and services permission to use the proceeds primarily for the grew almost 6'/2 percent in 1996, with imports of purchase of humanitarian supplies. Refiners, uncerservices expanding more slowly than goods (table 7). tain about the availability of crude oil supplies from Overall, imports of goods and services subtracted Iraq and concerned about the effect that such supplies 0.8 percentage point from U.S. real GDP growth in might have on the price of oil, tended to keep their 1996 (year over year). stocks low. With the oil industry operating at minimal, just-in-time inventory levels, oil prices reacted quite strongly to unanticipated shocks. Two such events, the delay in the startup of several North Sea Developments in Trade in Services fields and stronger-than-anticipated economic activity in the United States drove up oil prices during the Unlike the balance on trade in goods, in 1996 the second half of the year. Oil import prices mirrored balance on trade in services was positive and actually the changes in spot prices and averaged $19.76 per increased $5 billion (table 8). The United States 6. U.S. on consumption.pmdilution, and imports.sclcclcd ycars, [9X0-96 Millions of barrels per day Item 1980 1985 1993 1994 1995 1996 17.1 15.7 17.2 17.7 17.7 18.2 Production 10.8 11.2 9.6 9.4 9.4 9.4 6.9 5.1 8.6 9.0 8.8 9.4 SOURCE. U.S. Department of Energy, Energy Information Administration, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1996 363 7. Change in the quantity of U.S. imports, 1994-96 DEVELOPMENTS IN THE NONTRADE CURRENT Percentage change, year over year ACCOUNT Type of impon 1994 j 1995 1 1996 The two major components of the nontrade current All imports 12.0 8.0 6.4 account are net unilateral transfers and net invest- Services 4.8 3.7 3.6 ment income (table 1). Net unilateral transfers include Goods 13.5 8.9 6.9 Petroleum and products 6.2 -1.7 .5 government grant and pension payments as well as Nonpelroleum goods 14.2 9.8 7.4 net private transfers to foreigners. Net investment Computers, peripherals, and parts 36.3 38.8 33.8 Semiconductors 41.5 57.2 6.2 income is the difference between the amount that U.S. Other 11.5 5.4 5.1 residents earn on their assets abroad (receipts) and MEMO: the amount that foreigners earn on their assets in the Contribution of imports to US. GDP growth (percentage points) -1.4 -1.0 United States (payments). As mentioned earlier, the NOTE. Quantities are measured in chained (1992) dollars. deficit on unilateral transfers increased $7 billion SOURCE. U.S. Department of Commerce, Bureau of the Census. because of disbursement delays for U.S. government grants caused by the budget impasse and government shutdown at the end of 1995. For 1996, the balance continues to have a substantial positive balance of on investment income, which first went into deficit in trade with respect to travel and passenger fares, busi- 1994, was virtually unchanged, as an increase in the ness, professional, and technical services, royalties deficit on portfolio income was almost offset by the and license fees, and other private services. With increase in the surplus on direct investment income respect to these last two categories, almost 60 percent (table 9). of the $77 billion of U.S. exports in 1996 represented transactions between "affiliated" enterprises—U.S. parent firms and their foreign subsidiaries; for royal- Net Portfolio investment Income ties and license fees alone, the proportion was 80 percent. Much of the increase in royalties in recent years The first component of investment income, the balhas been associated with affiliated companies in the ance on portfolio income, registered a deficit of computer technology and pharmaceuticals industries. $73 billion in 1996, about $7 billion higher than that In some respects, these exports can be viewed as an recorded in 1995 (table 9). The balance on portfolio additional component of the already robust return on income has been in deficit since 1985, and its size U.S. direct investment abroad. has broadly mirrored the net portfolio investment Transactions in services, 1993-96 Billions of dollars Change. Item 1993 1994 1995 1996 1995 to 1996 Services transactions, net 61 62 68 73 Military, net I 4 3 -1 Sales 13 13 14 0 Expenditures 12 10 10 11 1 Exports of private services 172 183 196 209 13 Travel and passenger fares 74 75 80 84 4 Other transportation 24 26 28 29 1 Insurance1 1 2 1 2 0 Business, professional, technical services .. 13 16 16 17 1 Royalties and license fees 20 22 27 29 2 Other private services 40 42 44 48 4 U.S. government receipts of miscellaneous services 1 Imports of private services 111 121 130 137 Travel and passenger fares 52 57 60 63 Other transportation 26 28 29 29 Insurance2 3 4 5 5 Business, professional, technical services .. 4 4 5 5 Royalties and license fees 5 6 6 7 Other private services 21 22 25 28 U.S. government payments for miscellaneous services 1 Premiums received less losses paid. SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. 2. Premiums paid less amounts recovered. international transactions accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

364 Federal Reserve Bulletin • May 1997 9. U.S. invjMment income, IWJ -V6 7. Rules on U.S. puf I To 1 rr> rin-i~v[nienl. Billions of dollars Item 1993 1994 1995 ! 1996 Investment income, net 10 -8 Portfolio investment income, net -46 -52 -66 -73 Receipts 58 73 94 98 Private 53 69 89 94 Government 5 4 5 5 Payments 105 125 159 172 Private 63 78 98 100 Government 42 47 61 71 Direct investment income, net 56 47 58 64 Receipts 62 69 89 98 Payments 21 31 34 — 4 SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. Claims international transactions accounts. J._..J 1988 1990 1982 1994 19-96 NOTE. The rates of return are annualized versions of quarterly rates calcuposition—claims minus liabilities (chart 6). The net lated as follows: For claims (or liabilities), the numerator is total receipts (or portfolio position deteriorated significantly last year, payments) from the U.S. international transactions accounts, measured on a quarterly basis. The denominator is the average of end-of-quarter claims (or with the net liability position increasing $245 billion, liabilities) for the current and previous quarters. To compute the numerator and or 24 percent (chart 4). The 11 percent increase in net denominator of the annualized rate of return, the numerators and denominators from the four quarterly rates of return are averaged. investment payments to foreigners was relatively The rate of return on the net position is calculated as the ratio of net modest by comparison, as a general decline in inter- investment income (annual receipts minus payments) to the annualized net position (annualized claims minus annualized liabilities). est rates dampened the increase (chart 7). SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. international transactions accounts and U.S. international investment position; and the Federal Reserve Board. iWi't Direct Inrc.utnent Income ondary reason was the small reduction in the rate The second component of net investment income, the of return on foreign direct investment in the balance on net direct investment income, increased United States. $6 billion to a positive $64 billion. Given that U.S. Various alternatives for measuring the rate of direct investment abroad and foreign direct investreturn on direct investment all lead to the same result ment in the United States increased by roughly equal for 1996 and for earlier years, as shown in table 10: amounts in 1996, the increase in net receipts was Rates of return changed little from 1995 to 1996, and primarily the result of the higher rate of return earned the rate of return on U.S. direct investment abroad on U.S. direct investment abroad (chart 8); a seccontinued to be more than double that on foreign direct investment in the United States. Given the importance of this differential, as noted previously, in 6. l portfolio wvestment: Posiimn and income, [972-% mitigating the effect of the negative net investment H illtfflii .if dollar position on the current account deficit, important and perennial questions are whether the differential will persist and whether it reflects biases in measurement rather than a true differential in underlying profitability. Researchers have investigated potential biases in both the numerator of the rate of return—direct investment receipts and payments from the U.S. international transactions accounts (table 9)—and its denominator—some measure of the value of the U.S. (foreign) ownership position in subsidiaries and branches abroad (in the United States). 1975 1980 1985 199Q 1995 Three measures of the value of direct investment NOTE. The net position data are averages of the end-of-year net positions for have been constructed by the Bureau of Economic the current and previous years. The year-end position for 1996 was constructed by adding the recorded portfolio investment flows during 1996 to the recorded Analysis (BEA) and are used as alternative denomiyear-end position for 1995. nators in calculating the rates of return in table 10. SOURCE. US. Department of Commerce. Bureau of Economic Analysis; and the Federal Reserve Board. BEA's original method of valuing direct investment, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1996 365 8. Direcl invsslmuiu abruaii: r'oMliun mid mi/unic1. !L)7K ')fi Bill taw Millions o Millions of dollars U.S. direct investment abroad Receipts f Foreign direct investment m> - ~ 80 HOfl — in the Untied States wiu — — 60 41X1 — — 40 — 20 IJ-lEUiPil ;U .fil'j + f. ,'U 0 Payments I I I t I I I I I I I [ I I I I I I I I I I I I I I I I I | I I 1980 1985 1990 1995 1980 1985 1990 [995 NOTE. The position data are averages using the current-cost measures as of SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis; and year-end for the current and previous years. The year-end data for 1996 were the Federal Reserve Board. constructed by adding the recorded direct investment flows during 1996 to the recorded year-end position for 1995. the historical cost method, values the assets of direct For direct investment abroad, using the two alterinvestors at the prices at which the assets were pur- native measures as denominators results in a significhased. The other two measures attempt to correct for cantly lower rate of return than when the historical the biases inherent in the first. The value of direct cost measure is used; in 1996, for example, the rates investment at current cost adjusts the historical, of return for the current cost and market price meaaccounting values for inventories and for plant and sures differed from the historical cost measures by equipment to reflect current replacement values. The 2.3 and 5.7 percentage points respectively. In convalue of direct investment at market prices adjusts the trast, for direct investment in the United States, using ownership position using indexes of stock market either of the alternatives to the historical cost meaprices. The estimated value of direct investment sure in the denominator reduces the rate of return in abroad is significantly higher when measured by 1996 much less. This smaller reduction of the calcueither of these latter alternatives than it is when lated rate of return is to be expected given the shorter measured at historical costs; in 1995 the current cost length of time that the average foreign subsidiary in measure was 23 percent higher and the market price the United States has been in existence. In summary, measure 83 percent higher than the historical cost the use of corrected measures for direct investment measure. For direct investment in the United States, rather than the historical cost measure does in fact the historical cost and the current cost measures differ narrow the difference between the rates of return on by only 14 percent; however, because of the recent direct investment abroad and in the United States; U.S. stock market increases, the market value mea- for 1996, a difference of 7.4 percentage points is sure is 82 percent greater than the historical cost reduced to 5.7 percentage points when the current measure. cost measure is used and to 4.1 percentage points when 10. liaio-i ol' roiurti on Jiiva iii\L'>imcm, I'• Percent Measure used in calculating the rate of return' 1990 1991 1992 1993 1994 1995 1996 US. invtsaneni abroad Historical cost 15.2 14.5 11.6 10.7 11.5 11.6 13.3 13.0 Current coat 10.2 10.0 8.3 8.0 8.9 9.2 10.7 10.7 Market value 7.3 7.5 6.7 6.4 6.8 6.6 7.5 7,3 Foreign investment in the United Stales Historical cost 1.9 .1 4.4 5.9 5.6 Current cost 1.6 .6 .1 3.8 5.2 5.0 Market value 1.4 .5 .0 2.8 3.5 3.2 1. The rates of return are calculated as follows: The numerator is direct For u discussion of BEA's measure of "direct investment at current cost" and investment receipts or payments, from the U.S. international transactions "direct investment at market value," see J. Steven Landefeld and Ann M. accounts. The denominator is the average of year-end figures for the current and Lawson, "Valuation of the U.S. Net International Investment Position," Survey previous year for the particular measure of Ihe value of direct investment shown. of Current Business, vol. 71 (May 1991), pp. 40-49. Each denominator for 1996 is constructed by adding the recorded direct invest- SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. ment flows during 1996 to the recorded year-end positions for 1995. international transactions accounts and U.S. international investment position. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

366 Federal Reserve Bulletin • May 1997 the market value measure is used. However, the distortion caused by transfer pricing may affect direct adjusted rates of return for U.S. direct investment investment receipts and payments in the balance of abroad in 1996 remain almost twice those for foreign payments to an unknown degree, it will not affect the direct investment in the United States. current account balance: Lower (or higher) direct As for the numerator, a number of potential sources investment profits caused by transfer pricing will of either bias or systematic difference have been be offset one-to-one by higher (or lower) import identified by researchers. Because of problems in the payments. comparability of the rate-of-return data, however, there now exists only indirect evidence on the size and importance of these factors. In particular, a recent CAPITAL ACCOUNT IMNSACTIONS study by Grubert, Goodspeed, and Swenson, has made significant progress in providing such indirect Record inflows of official capital and large net forevidence by using corporate tax return data to ana- eign purchases of U.S. Treasury and corporate bonds lyze differences in rates of return between foreign in 1996 more than offset both the $165 billion deficit subsidiaries in the United States and domestically on the U.S. current account and substantial net capital owned firms in the United States.1 Because the study outflows through banks and for the purchase of forused two sets of firms in the United States, it does not eign securities (table 11). For the first year since provide a direct comparison of the rate of return for 1992, the statistical discrepancy turned negative and these firms with the rate of return on foreign invest- ended the year at $53 billion. ment abroad. It does explain about 50 percent of the Foreign official assets held in the United States difference between the rates of return for the two sets increased by a record $123 billion in 1996, surpassof firms by the following factors: (1) the revaluation ing the previous record set just the year before. Part of the assets of foreign subsidiaries in the United of the increase was associated with exchange market States after they are acquired, which, because of intervention and the accumulation of interest receipts higher depreciation flows, lowered their rate of by the Group of Ten countries, and another small part return; (2) the relative age of the subsidiary, with reflected the effect of favorable oil price developmore mature firms earning higher rates of return; ments on the holdings of OPEC countries. However, (3) the effects of exchange rate changes on the prices more than half the increase was in official holdings of of imported inputs; (4) the amount of repatriated other countries. dividends and royalties from foreign operations con- Private foreign net purchases of Treasury securities trolled by the domestically owned U.S. firms, which and corporate bonds exceeded the already high purraised the rate of return disproportionately for these chases in 1995. Net purchases of Treasury securities, firms; and (5) the effects of transfer pricing, by which at $154 billion, reached a new high; most of the firms shift reported profits to jurisdictions that have transactions were with financial institutions in the lower tax rates. United Kingdom, so the nationality of the ultimate The first two of these factors suggest that, over investors is unclear. Net purchases of Treasury secutime, the rates of return on foreign direct investment rities by financial centers in the Caribbean were large in the United States will rise—narrowing, therefore, and volatile, but the net of purchases and sales in the difference in the rates of return seen in table 10. 1996 was only about two-thirds the size recorded in The third and fourth factors shed no light on long- 1995. term differences in the rates of return. Finally, the Private foreign net purchases of U.S. corporate and effects of transfer pricing may distort the rates of U.S. government agency bonds were also large for return on direct investment in the United States and the year. However, private foreign net purchases of abroad, as profits are shifted to low-tax jurisdictions; U.S. corporate stocks continued to be very small. In how this factor will affect the difference in the rate of contrast, U.S. investors remained interested in both return is unknown. However, while the particular foreign stocks and bonds and purchased a net of $58 billion and $45 billion respectively. Large direct investment capital flows occurred in 1. Harry Grubert, Timothy Goodspeed, and Deborah Swenson, both directions. Foreign direct investment in the "Explaining the Low Taxable Income of Foreign-Controlled Compa- United States surged to a record high $84 billion, nies in the United States," in Alberto Giovannini, R. Glenn Hubbard, and Joel Slemrod, eds., Studies in International Taxation (University reflecting a pickup in foreign acquisitions of U.S. of Chicago Press, 1993). See also the update of this study: Harry firms. U.S. direct investment flows abroad were even Grubert, Another Look at the Low Taxable Income of Foreign- Controlled Companies in the United States (U.S. Department of the stronger, at $88 billion, although off slightly from the Treasury, 1996). record rate of 1995. 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U.S. International Transactions in 1996 367 1 I. (.'iiiiipOMtiiin of I '.V aipiUtl llmw Billions of dollars Item 1992 1993 1994 1995 1996 Change. 1995 to 1996 Current account balance ... -63 -100 -148 -148 -165 -17 Official capita], net 43 70 45 100 129 29 Foreign official assets in the United States .. 41 72 40 110 123 13 U.S. official reserve assets 4 -1 5 -10 7 17 Other US. government assets -2 0 0 0 -1 -1 Private capital, net 45 -14 89 17 89 72 Net inflows reported by U.S. banking offices 36 51 104 -44 -90 -46 Securities transactions, net 14 -42 31 95 180 85 Private foreign net purchases of U.S. securities 64 104 91 193 285 92 Treasury securities 37 24 34 99 154 55 Corporate and other bonds' 31 61 54 81 119 38 Corporate stocks -4 19 3 13 12 -1 U.S. net purchases of foreign securities -49 -146 -60 -99 -105 -6 Stocks -32 -63 -48 -50 -58 -8 Bonds -16 -80 -9 -48 -45 3 Direct investmenl, net -21 -33 _c -35 -4 31 Foreign direct investment in the United States. 18 43 50 60 84 24 US. direct investment abroad1 -39 -76 -55 -96 -88 7 Other 14 12 ^11 0 3 3 Statistical discrepancy -23 44 32 -53 -85 1. For 1992, transactions with finance affiliates in the Netherlands Antilles SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. are excluded from direct investment outflows and included in foreign purchases international transactions accounts. of U.S. securities. This adjustment was discontinued in 1993 oo the assumption that by then virtually all the Eurobonds issued by Netherlands Antilles had come due. PiiOSfCCTS FOR exports to economic growth, along with the recent appreciation of the U.S. dollar, suggests that the cur- Given the prospects for continued moderate growth rent account deficit in 1997 will be larger than abroad and the strength of foreign demand for U.S. in 1996. Whether the deficit actually increases in computer products and aircraft, U.S. exports of goods 1997 will also depend on many other factors, includand services, in both nominal and real terms, should ing changes in the price of oil and in the rates of continue to expand in 1997. However, the tendency return that will be earned on existing U.S. claims and for U.S. imports to be more sensitive than U.S. liabilities. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

368 Industrial Production and Capacity Utilization for March 1997 Released for publication April 16 production grew at an annual rate of 5.6 percent after an increase of 4.5 percent in the final quarter of 1996, Industrial production advanced 0.9 percent in March when growth had been held down by strike-related after a revised gain of 0.6 percent in February. In losses in the motor vehicle industry. Excluding motor recent months, as in the past year, the gains have vehicles and parts, manufacturing output grew at been mostly in durable manufacturing. At 119.6 per- the same strong rate in both quarters; the output cent of its 1992 average, total industrial production in at utilities declined in the first quarter as a result March was 5.6 percent higher than it was in March of unseasonably mild weather. The utilization 1996. For the first quarter as a whole, industrial of industrial capacity increased 0.5 percentage point Industrial production indexes Twelve-month percent change Twelve-month percent change Total industry Manufacturing 5 5 + 0 0 5 5 i i 1 1 1 1 1 Materials Durable - A - 10 — manufacturing 10 5 5 + - 0 0 Products Nondurable 5 manufacturing ~ 5 1 1 1 1 1 1 1 1991 1992 1993 1994 1995 1996 1997 1991 1992 1993 1994 1995 1996 1997 Capacity and industrial production Ratio scale, 1992 production = 100 Ratio scale, 1992 production = 100 — Total industry 160 — Manufacturing 160 Capacity 140 Capacity 140 120 120 ^ -~~ • 100 100 = —— ^s^~ Production Production : - 80 J L J L 1 1 1 1 1 1 Percent of capacity Percent of capacity Total industry Manufacturing 90 - Utilization 90 Utilization! 80 / 70 '- 70 J I I II 1 1 i ii 1983 1985 1987 1989 1991 1993 1995 1997 1983 1985 1987 1989 1991 1993 1995 1997 DigitizedA lflo sre FrieRs AarSe EseRas onally adjusted. Latest series, March. Capacity is an index of potential industrial production. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

369 Industrial production and capacity utilization, March 1997 Industrial production, index, 1992=100 Percentage change Category 1996 1997 19961 1997 Mar. 1996 to Dec.1 Jan.' Feb.' Mar. i" Dec.' Jan. Feb.' Mar. >> Mar. 1997 Total 117.7 117.8 118.5 119.6 .4 .1 5.6 Previous estimate 117.7 117.6 118.1 .4 — I Major market groups Products, total2 114.3 114.3 114.9 115.9 .2 .1 .9 5.0 Consumer goods 112.7 112.0 111.8 112.6 .4 -.7 .7 2.9 Business equipment 130.7 132.1 133.8 135.6 .7 1.0 1.3 1.4 10.6 Construction supplies 117.8 117.6 119.8 120.6 -2.4 1.9 .7 4.4 Materials 123.1 123.3 124.4 125.4 .8 6.6 Major industry groups Manufacturing 119.2 119.3 120.4 121.4 .6 .1 .9 .9 6.6 Durable 128.8 129.4 131.3 133.1 3 .5 1.5 1.3 9.2 Nondurable 108.8 108.4 108.7 109.1 .8 — 4 3 .3 3.5 Mining 104.5 104.2 105.7 106.7 1.0 -3 1.5 .9 3.8 Utilities 112.6 113.5 109.7 110.6 -1.6 .8 -3.4 -3.3 Capacity utilization, percent MEMO Capacity, percentage 1996 1997 change. Average, Low, High, Mar. 1996 1967-96 1982 1988-89 Mar. Dec' Jan.r Feb.' Mar. i' to Mar. 1997 Total 82.1 71.1 85.3 82.6 83.5 83.4 83.6 84.1 3.7 Previous estimate 83.5 83.2 83.3 Manufacturing 81.2 69.0 85.7 81.3 82.5 82.3 82.8 83.3 4.1 Advanced processing 80.6 70.4 84.2 79.4 80.8 80.7 81.1 81.6 4.9 Primary processing . 82.3 66.2 88.9 85.6 86.6 86.1 86.7 87.2 2.3 Mining 87.5 80.3 86.8 90.3 91.9 91.6 92.9 93.7 .0 Utilities 87.2 75.9 92.6 92.2 89.3 89.9 86.7 87.3 2.0 NOTFI. Data seasonally adjusted or calculated from seasonally adjusted 2. Contains components in addition to those shown, monthly data. r Revised, I. Change from preceding month. p Preliminary. in March, to 84.1 percent, the highest level since defense and space equipment edged down; on bal- March 1995. ance, this series is close to the low it reached early When analyzed by market group, the data show last year. that the output of consumer goods advanced 0.7 per- The output of construction supplies rebounded furcent, led by another increase of 1.5 percent in the ther; over February and March, it recouped the output of durable consumer goods. Gains were espe- 2'/2 percent drop of the previous two months. On cially notable for household appliances, home com- balance, the production in this sector has been at a puting equipment, and furniture. The production high level since last summer. The production of mateof automotive products rose 0.8 percent for a second rials rose 0.8 percent for a second month. Gains of consecutive month. After declines in January about 1 Vi percent in February and March in the and February, the production of nondurable con- output of durable goods materials dominated the sumer goods increased 0.5 percent, with gains advance. Among the components of durable materiin gasoline, paper, food, tobacco, and residential als, the output of equipment parts rose more than 2 percent for a second month; semiconductors again utilities. contributed much of the increase. The production of The output of business equipment rose 1.4 percent basic metals and parts for motor vehicles and other further, its third consecutive monthly increase of consumer durables also increased again. The output 1 percent or more. Solid gains were evident in all of nondurable goods materials edged down 0.1 perthe major categories within business equipment, cent and has changed little since the end of last year. with commercial aircraft, office and computing equip- The production of energy materials, which fell in ment, and business vehicles again accounting February because of the benign weather conditions, for much of the monthly increase. The output of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

370 Federal Reserve Bulletin D May 1997 recovered only a bit as weather remained mild. The The factory operating rate rose 0.5 percentage output of coal, which is heavily used to generate point, to 83.3 percent, 2 percentage points above both electricity, declined. its 1967-96 average and its level in March 1996. When analyzed by industry group, the data show Within the durable manufacturing category, rates that manufacturing output rose 0.9 percent in March, remain relatively high for primary metals, light the same amount as in February. The gain was con- trucks, and industrial machinery and equipment. The centrated in durables; the output in this sector rose capacity utilization rate for nondurable manufactur- 1.3 percent in March and 1.5 percent in February, ing is at its long-term average; relatively low rates for with sizable increases in both months for most major apparel, leather and products, and textiles balance groups. The production of nondurables rose 0.3 per- operating rates that exceed 90 percent for petroleum cent; this group has changed little, on balance, so far refining and rubber and plastics products. The utilizathis year. The output at utilities rose, but it recovered tion rates for mining industries, with the exception of only a fraction of the sharp drop in February. Mining coal mining, are high. output increased substantially again, propelled by This release and the history for all published series the continued strong gains in oil and gas drilling are available on the Internet at the Board's World activity. Wide Web site, http://www.bog.frb.fed.us. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

371 Statements to the Congress Statement by Alan Greenspan, Chairman, Board of A useful starting point for discussion of this issue Governors of the Federal Reserve System, before the is to be clear that any index that endeavors to mea- Committee on the Budget, U.S. House of Representa- sure the cost of living should aim to be unbiased. tives, March 4, 1997 That is, a serious examination of all available evidence should yield the conclusion that there is just as I appreciate the opportunity to appear before you great a chance that the index understates the rate of today. As you know, my colleagues and I who serve growth of the true cost of living as there is that it on the Federal Reserve Board just recently submitted overstates it. The present-day consumer price index to the Congress our semiannual report on monetary does not meet this standard. In fact, the best available policy and the economy.1 In brief, the performance of evidence suggests that there is almost a 100 percent the U.S. economy over the past year has been quite probability that we are overcompensating the average favorable, with few signs of the imbalances that social security recipient for increases in the cost of might typically have been expected by the sixth year living and almost a 100 percent probability that we of a cyclical expansion. Indeed, we believe that the are causing the inflation-adjusted burden of the most likely prospect is for continued sustainable eco- income tax system to decline more rapidly than I nomic growth accompanied by low and stable infla- presume the Congress intends. tion, and our objective will be to foster the conditions A major reason for this is that consumers respond most likely to produce that outcome. to changes in relative prices by changing the compo- In that regard, continued low levels of inflation and sition of their actual market basket. At present, howinflation expectations have been a key support for the ever, the market basket used in constructing the CPI healthy economic performance of the past year. They changes only once every decade or so. Moreover, have helped to create a financial and economic envi- new goods and services deliver value to consumers ronment conducive to strong capital spending and even at the relatively elevated prices that often prelonger-range planning generally and so to sustained vail early in their life cycles; currently, that value is economic expansion. Consequently, it is crucial to not reflected in the CPI. keep inflation contained in the near term and ulti- For these and other reasons outlined in the Boskin mately to move toward price stability. Commission report and other studies, we know with If we are successful, a stable macroeconomic envi- near certainty that the current CPI is off. Although we ronment will contribute to your efforts to place the do not know precisely by how much, there is a very fiscal health of the nation on a firmer footing. But high probability that the upward bias ranges between achieving your fiscal objectives will require that this Vi percentage point per year and \lh percentage committee confront additional issues of extraordinary points per year. complexity and importance. I would like to devote In thinking about how to remedy this situation, we the remainder of my prepared remarks to one of these must recognize that there is no sharp dividing line issues, namely the bias in the consumer price index between a pristine estimate of a price and one that is (CPI). not. Although the concept of price is clear enough I want to begin by commending this committee for in theory, it is often extremely difficult to implement your continuing interest in this subject. Indeed, our in practice. To construct a fully satisfactory measure conversation about potential bias in the CPI goes of the price of a given item, one would first have back about two years, when I testified before a joint to specify all the characteristics of that item that meeting of this committee and your counterparts deliver value to consumers. Then one would have from the Senate. The topic remains just as important to reprice the identical bundle of characteristics now as it was then. month in and month out. In practice, both of these steps are difficult because we are often not precisely certain about what consumers value and because the items that are available to consumers are con- 1. See "Monetary Policy Report to the Congress," Federal Reserve Bulletin, vol. 83 (March 1997), pp. 173-87. stantly changing, often in subtle ways. As a result, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

372 Federal Reserve Bulletin • May 1997 virtually all of the components that make up the An even more difficult quality-related issue is CPI are approximations, in some cases very rough whether changes in broad environmental and social approximations. But the essential fact remains that conditions should be reflected in price measures that even combinations of very rough approximations can are used for indexing various components of federal give us a far better judgment of the overall cost of outlays and receipts. That is, should the CPI reflect living than would holding to a false precision of the influence of factors such as the level of crime, the accuracy and thereby delimiting the range of goods quality of air and water, and the emergence of new and services evaluated. We would be far better served diseases, which are not specifically related to prodfollowing the wise admonition of John Maynard ucts that consumers purchase? Little in the record Keynes that "it is better to be roughly right than suggests that, when the Congress enacted the indexprecisely wrong." ation of social security benefits in 1972, it meant to Estimates of the magnitude of the bias in our price insure the beneficiaries of that program against measures are available from a number of sources. changes in such environmental and social factors. Most have been developed from detailed examina- Nor do these issues appear to have been raised when tions of the microstatistical evidence. However, the Congress debated the indexation of various tax recent work by staff economists at the Federal parameters during the 1980s. Taking account of such Reserve Board has added strong corroborating evi- conditions, particularly those that lie outside the mardence of price mismeasurement using a macro- kets for goods and services, would be an interesting economic approach that is essentially independent of exercise in its own right but would appear to extend the exercises performed by other researchers, includ- well beyond the original intent of the Congress. ing those on the Boskin Commission. In particular, A considerable professional consensus already employing the statistical system from which the exists for at least two actions that would almost Commerce Department estimates the national income surely bring the CPI into closer alignment with a true and product accounts, this research finds that the cost-of-living index. First, we should move away measured growth of real output and productivity in from the concept of a fixed market basket at the the service sector are implausibly weak, given that upper level of aggregation and move toward an the return to owners of businesses in that sector aggregation formula that takes into account the tenapparently has been well maintained. Taken at face dency of consumers to alter the composition of their value, the published data indicate that the level of purchases in response to changes in relative prices. output per hour in a number of service-producing Second, we should selectively move away from the industries has been falling for more than two decades. current aggregation formula at the lower level of In other words, the data imply that firms in these aggregation. industries have been becoming less and less efficient Beyond these rather limited steps, most of the for more than twenty years. needed developments will require time, effort, and These circumstances simply are not credible. On quite possibly additional resources. It is important the reasonable assumption that nominal output and that the Congress provide the Bureau with sufficient hours worked and paid of the various industries are resources to pursue the agenda vigorously. accurately measured, faulty price statistics are by far Where will this longer-term effort be required? the most likely cause of the implausible productivity One of the key areas, by all accounts, is quality trends. The source of a very large segment of these adjustment. As the Bureau has rightly noted, they do prices is the CPI. indeed already employ a variety of methods to con- Some observers who are skeptical that the bias in trol for quality change, but available evidence sugthe CPI could be very large have noted that the gests that these are not sufficient to the task. Unfortuevidence on the magnitude of unmeasured quality nately, making improvements on this front will be change and the importance of new items bias is difficult: Each item will have to be considered on its incomplete and inconclusive. Without a doubt, qual- own, and there may well be limited transfer of knowlity change and new items are among the most diffi- edge from one item to the next. cult of the problems currently confronting the Bureau The longer-term agenda should also include conof Labor Statistics (BLS). But since I raised this issue centrated attention to the methods for introducing two years ago, the accumulating evidence continues new items into the index; the development of new to support the view that the current treatment of sources of data such as the information collected by quality change and new items in the CPI results in an bar code scanners; and the analysis of time use, the overstatement of the rate of growth of the cost of latter being important in understanding the value of living. time-saving and convenience-enhancing innovations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 373 Even if the BLS moves aggressively, some upward over, there is no reason why the two tracks could not bias will almost surely remain in the CPI, at least for proceed in parallel. the next several years. Two years ago, I suggested Without the second track, we are implicitly assumthat a workable structure for dealing with this situa- ing, contrary to overwhelming evidence, that the tion might involve a two-track approach. That sug- most accurate estimate of the bias due to quality gestion still seems to me to make sense. The first adjustment problems and introduction of new items is track would involve action by the BLS to address zero. There has been considerable objection that such those aspects of the bias that can be dealt with in a second track procedure would be a political fix. To relatively short order, say within the next year. The the contrary, assuming zero for the remaining bias is second track would involve the establishment of an the political fix. On this issue, we should let eviindependent national commission to set annual cost- dence, not politics, drive policy. of-living adjustment factors for federal receipt and We have an overarching national interest in buildoutlay programs. The Commission would examine ing a better measure of consumer prices and in impleavailable evidence on a periodic basis and estimate menting more rational indexation procedures. These the bias in the CPI, taking into account both the latest efforts are essential if we are to ensure that the research on the sources and magnitudes of the bias original intent of the relevant pieces of legislation and any corrective actions that had been taken by the will be fulfilled in insulating taxpayers and benefit BLS. This type of approach would have the benefit of recipients from the effects of ongoing changes in the being objective, nonpartisan, and sufficiently flexible cost of living. At present this objective is not being to take full account of the latest information. More- met. Statement by Alan Greenspan, Chairman, Board of SUPERVISION AND CENTRAL BANKING Governors of the Federal Reserve System, before the Subcommittee on Capital Markets, Securities and There are compelling reasons why the central bank of Government-Sponsored Enterprises of the Committee the United States—the Federal Reserve—should conon Banking and Financial Services, U.S. House of tinue to be involved in the supervision of banks. The Representatives, March 19, 1997 supervisory activities of the Federal Reserve, for example, have benefited from its economic stabiliza- Thank you for inviting me to present the views of the tion responsibilities and its recognition that safety Federal Reserve Board on the supervision of our and soundness goals for banks must be evaluated nation's banking organizations should they be autho- jointly with its responsibilities for the stability and rized by the Congress to engage in a wider range of growth of the economy. The Board believes that activities. As you know, the Board has supported these joint responsibilities make for better superfinancial modernization for many years and hopes visory and monetary policies than would result from that the Congress will act to facilitate reforms that, by either a supervisor divorced from economic responenhancing competition within the financial services sibilities or a macroeconomic policymaker with no industry, would benefit the consumers of financial practical experience in the review of individual bank products in the United States. operations. Financial modernization may well mean that future To carry out its responsibilities, the Federal banking organizations will be sufficiently different Reserve has been required to develop extensive, from today as to require perhaps substantial changes detailed knowledge of the intricacies of the U. S., in the supervisory process for the entire organization. and indeed the world, financial system. That exper- Just how much modification may be needed will tise is the result of dealing constantly over many depend on the kinds of reforms the Congress adopts. decades with changing financial markets and In evaluating those modifications, I would like to institutions and their relationships with each other underline the significant supervisory role required by and with the economy and from exercising superthe Federal Reserve to carry out its central bank visory responsibilities. It comes as well from ongoing responsibilities. I also would like briefly to discuss interactions with central banks and financial the continued importance of umbrella supervision institutions abroad. These international contacts and the implications of a wider role for bank subsidiare critical because today crises can spread more aries in the modernization process. rapidly than in earlier times—in large part reflecting Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

374 Federal Reserve Bulletin • May 1997 new technologies—and require a coordinated interna- failures—or threats of failures—do not have broad tional response. and serious impacts on financial markets and the national, and indeed the global, economy. The Federal Reserve's ability to respond expedi- CRISIS MANAGEMENT AND SYSTEMIC RISK tiously to any particular incident does not necessitate comprehensive information on each banking institu- Second only to its macrostability responsibilities is tion. But it does require that the Federal Reserve have the central bank's responsibility to use its authority in-depth knowledge of how institutions of various and expertise to forestall financial crises (including sizes and other characteristics are likely to behave systemic disturbances in the banking system) and to and what resources are available to them in the event manage such crises once they occur. In a crisis, the of severe financial stress. Even for those events that Federal Reserve, to be sure, could always flood the might, but do not, precipitate financial crises, the market with liquidity through open market operations authorities turn first to the Federal Reserve, not only and discount window loans; at times it has stood because, as former Chairman Volcker noted last ready to do so, and it does not need supervisory and month, we have the money but also because we have regulatory responsibilities to exercise that power. But the expertise and the experience. We currently gain while sometimes necessary in times of crises, such an the necessary insight by having a broad sample of approach may be costly and distortive to economic banks subject to our supervision and through our incentives and long-term growth as well as an insuffi- authority over bank holding companies. cient remedy. Supervisory and regulatory responsibilities give the Federal Reserve both the insight and the authority to use techniques that are less blunt and more precisely calibrated to the problem at hand. PAYMENT AND SETTLEMENT SYSTEMS Such tools improve our ability to manage crises and, more important, to avoid them. The use of such Virtually all of the U.S. dollar transactions made techniques requires both the authority that comes worldwide—for securities transfers, foreign exchange with supervision and regulation and the understand- and other international capital flows, and for payment ing of the linkages among supervision and regulation, for goods and services—are settled in the U.S. bankprudential standards, risk-taking, relationships among ing system. A small number of transactions that banks and other financial market participants, and comprise the vast proportion of the total value of macroeconomic stability. transactions are transferred over large-dollar payment Our financial system—market oriented and char- systems. Banks use two of these systems—Fedwire, acterized by innovation and rapid change—imparts operated by the Federal Reserve, and CHIPS (Clearsignificant benefits to our economy. But one of the ing House Interbank Payments System), operated by consequences of such a dynamic system is that it is the New York Clearing House—currently to transfer subject to episodes of stress. In the 1980s and early $1.6 trillion and $1.3 trillion a day respectively. 1990s we faced a series of international debt crises, a CHIPS settles its members' net positions on Fedwire. major stock market crash, the collapse of the most These interbank transfers, for banks' own accounts important player in the junk bond market, the virtual and for those of their customers, occur and are settled failure of the savings and loan industry, and extensive over a network and structure that is the backbone of losses at many banking institutions. More recently, the U.S. financial system. Indeed, it is arguably the we faced another Mexican crisis and, while in the linchpin of the international system of payments that event less disruptive, the failure of a large British relies on the dollar as the major international curmerchant bank. In such situations the Federal Reserve rency for trade and finance. Disruptions and disturstands ready to provide liquidity, if necessary, and bances in the U.S. payment system thus can easily monitors continuously the condition of depository have global implications. Fedwire, CHIPS, and the institutions to contain the secondary consequences of specialized depositories and clearinghouses for secuany problem. The objectives of the central bank in rities and other financial instruments are crucial to the crisis management are to contain financial losses and integrity and stability not only of our financial marprevent a contagious loss of confidence so that diffi- kets and economy but those of the world. Similarly, culties at one institution do not spread more widely to adverse developments in transfers in London, Tokyo, others. The focus of its concern is not to avoid the Singapore, and a host of other centers could rapidly failure of entities that have made poor decisions or be transferred here, given the financial interrelationhave had bad luck but rather to see that such ships among the individual trading nations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 375 In all these payment and settlement systems, com- do not have ready access to securities markets. These mercial banks play a central role, both as participants firms are the catalyst for U.S. economic growth and and providers of credit to nonbank participants. Day the prime source of new employment opportunities in and day out, the settlement of payment obligations for our citizens. The Federal Reserve must make and securities trades requires significant amounts of its monetary policy with a view to how banks are bank credit. In periods of stress, such credit demands responding to the economic environment. This was surge just at the time when some banks are least especially important during the "credit crunch" of willing or able to meet them. These demands, if 1990. Our supervisory responsibilities give us imporunmet, could produce gridlock in payment and settle- tant qualitative and quantitative information that not ment systems, halting activity in financial markets. only helps us in the design of monetary policy but Indeed, it is in the cauldron of the payments and provides important feedback on how our policy settlement systems, where decisions involving large stance is affecting bank actions. sums must be made quickly, that all of the risks and The macroeconomic stabilization responsibilities uncertainties associated with problems at a single of the Federal Reserve make us particularly sensitive participant become focused as participants seek to to how regulatory and supervisory postures can influprotect themselves from uncertainty. Better solvent ence bank behavior and hence how banks respond to than sorry, they might well decide, and refuse to monetary policy actions. For example, capital, liquidhonor a payment request. Observing that, others ity, loan-loss reserve, and asset quality evaluation might follow suit. And that is how crises often begin. policies of supervisors will directly influence the Limiting, if not avoiding, such disruptions and manner and speed with which monetary policy ensuring the continued operation of the payment sys- actions work. In the development of interagency rules tem requires broad and in-depth knowledge of bank- and policies, the Federal Reserve brings to the table ing and markets, as well as detailed knowledge and its unique concerns about the impact of these rules on authority with respect to the payment and settlement credit availability, potential responses to changes in arrangements and their linkages to banking opera- interest rates, and the consequences for the economy. tions. This type of understanding and authority— We believe that, as a result, supervisory policy is as well as knowledge about the behavior of key improved. participants—cannot be created on an ad hoc basis. It requires broad and sustained involvement in both the payment infrastructure and the operation of the bank- FEDERAL RESERVE'S SUPERVISORY ROLE ing system. Supervisory authority over the major bank participants is a necessary element. For all of these reasons, the Board believes the Federal Reserve needs to retain a significant supervisory role in the banking system. Just exactly how that is MONETARY POLICY achieved depends critically on the types of reforms the Congress enacts and the direction the banking While financial crises and payment systems disrup- industry takes in structuring and conducting its activitions arise only sporadically, the Federal Reserve ties. In the Board's view, its current authority is conducts monetary policy on an ongoing basis. In adequate for the current structure. For today's finanthis area, too, the Federal Reserve's role in super- cial system, we are able to meet our obligations by vision and regulation provides an important perspec- the intelligence we gain from and the authorities we tive to the policy process. Monetary policy works have over the modest number of large banks we through financial institutions and markets to affect directly supervise and the holding companies of these the economy, and depository institutions are a key and other large banks over which we have a direct element in those markets. Indeed, banks and thrift umbrella supervisory role. Our information is imporinstitutions are more important in this regard than tantly supplemented by our supervision of a number might be suggested by a simple arithmetic calculation of other banks of all sizes, namely state member of their share of total credit flows. While diverse banks. Currently, the latter group gives us a good securities markets handle the lion's share of credit representative sample of organizations of all sizes flows these days, banks are the backup source of outside the largest entities. liquidity to many of the securities firms and large The large entities are essential if we are to address borrowers participating in these markets. Moreover, the Federal Reserve's crisis management and sysbanks at all times are the most important source of temic risk responsibilities, deal with international credit to most small and intermediate-sized firms that financial issues involving foreign central banks, man- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

376 Federal Reserve Bulletin • May 1997 age risk exposures in payment systems, and retain a consolidated basis cannot be reviewed on an our practical knowledge and skill base in rapidly individual legal entity basis by different supervisors. changing financial markets. Large bank holding com- The latter logic motivated the congressional decipanies are typically at the forefront in financial inno- sion just five years ago to require that foreign banks vation and in developing sophisticated techniques for could enter the United States if, and only if, they managing risks. It is crucial that the Federal Reserve were subject to consolidated supervision. This decistay informed of these events and understand directly sion, which is consistent with the international stanhow they work in practice. Directly supervising both dards for consolidated supervision of banking orgathese large organizations and a sample of others is nizations, was a good decision then. It is a good also critical to our ability to conduct monetary policy decision today, especially for those banking organizaby permitting us to gain firsthand, on-the-spot intel- tions whose disruption could cause major financial ligence on how changes in financial markets— disturbances in U.S. and foreign markets. For foreign including those induced by monetary policy—are and for U.S. banking organizations, retreat from conaffecting money and credit flows. solidated supervision would, the Board believes, be a If in the future the holding company becomes a significant step backward. less clear window into the banking system, the Board We have to be careful, however, that consolidated believes that the Congress would need to change the umbrella supervision does not inadvertently so hamsupervisory structure if the central bank is to carry per the decisionmaking process of banking organiout the responsibilities I have discussed today. zations as to render them ineffectual. The Federal Reserve Board is accordingly in the process of reviewing its supervisory structure and other procedures in order to reflect a market-directed shift from UMBRELLA SUPERVISION conventional balance sheet auditing to evaluation of the internal risk-management process. Although The Congress, in its review of financial moderni- focused on the key risk-management processes, it zation, must consider legal entity supervision alone would sharply reduce routine supervisory umbrella versus legal entity supervision supplemented by presence in holding companies. As the committee umbrella supervision. The Board believes that knows, the Board has recently published for comumbrella supervision is a realistic necessity for the ment proposals to expedite the applications process, protection of our financial system and to limit any and the legislation the Congress enacted last year misuse of the sovereign credit, that is, the govern- eased such procedures as well. Nonetheless, the ment's guarantees that support the banking system Board requests even greater modification to its existthrough the safety net. ing statutory mandate so that the required applica- The bank holding company organization increas- tions process could be sharply cut back, particularly ingly is being managed so as to take advantage of the in the area of nonbank financial services. synergies between its component parts in order to In the Board's view, those entities interested in deliver better products to the market and higher banks are really interested in access to the safety net, returns to stockholders. Such synergies cannot occur since it is far easier to engage in the nonsafety net if the model of the holding company is one in which activities of banks without acquiring a bank. If an the parent is just, in effect, a portfolio investor in its organization chooses to deliver some of its services subsidiary. Indeed, virtually all of the large holding with the aid of the sovereign credit by acquiring a companies now operate as integrated units and are bank, it should not be excused from efforts of the managed as such, especially in their management of government to look out for the stability of the overall risk. financial system. For bank holding companies, this One could argue that regulators should be inter- implies umbrella supervision. Although that process ested only in the entities they regulate and, hence, will increasingly be designed to reduce supervisory review the risk-evaluation process only as it relates presence and be as nonintrusive as possible, umbrella to their regulated entity. Presumably each regu- supervision should not be eliminated but recognized lator of each entity—the bank regulators, the Securi- for what it is: the cost of obtaining a subsidy. ties and Exhange Commission, the state insurance Nonetheless, we would hope that should the Conand any state finance company authorities—would gress authorize wider activities for financial services look only at how the risk-management process holding companies that it recognize that a bank which affected their units. It is our belief that this is a minor part of such an organization (and its simply will not be adequate. Risks managed on associated safety net) can be protected through Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 311 adequate bank capital requirements and the applica- of banks' net subsidy that most nonbank financial tion of sections 23A and 23B of the Federal Reserve institutions are required by the market to operate with Act. The case is weak, in our judgment, for umbrella significantly higher capital-to-asset ratios than banks. supervision of a holding company in which the bank Most finance companies, for example, with credit is not the dominant unit and is not large enough to ratings and debenture interest costs equal to banks are induce systemic problems should it fail. forced by today's market to hold 6 or 7 percentage points higher capital-to-asset ratios than those of banks. It is instructive that there are no private deposit SUBSIDIARIES, SUBSIDIES, AND SAFETY NETS insurers competing with the FDIC. For the same product offered by the FDIC, private insurers would The members of this subcommittee are, I think, aware have to charge premiums far higher than those of of the Board's concerns that the safety net con- government insurance, and still not be able to match structed for banks inherently contains a subsidy, that the certainty of payments in the event of default, the conducting new activities in subsidiaries of banks hallmark of a government insurer backed by the will inadvertently extend that subsidy, and that exten- sovereign credit of the United States. sion of any subsidy is undesirable. The subcommittee The Federal Reserve has a similar status with recently heard testimony that there is no net subsidy respect to the availability of the discount window and and, therefore, the authorization of nonbank activities riskless final settlement during a period of national in bank subsidiaries would neither inadvertently economic stress. Providing such services is out of the extend this undesirable side effect of the safety net reach of all private institutions. The markets place nor reduce the importance of the holding company as substantial values on these safety net subsidies, a consequence of the increased incentives to shift clearly in excess of the cost of regulation. To repeat, activities from the holding company to the bank. were it otherwise, some banks would be dropping I would like briefly to comment on these latter their charters if there were not a net subsidy. views. In fact, it is apparently the lower funding costs at Subsidy values—net or gross—vary from bank to banks, that benefit directly from the subsidy of the bank; riskier banks clearly get a larger subsidy from safety net, that has created the tendency for banking the safety net than safer banks. In addition, the value organizations to return to the bank and its subsidiof the subsidy varies over time; in good times, mar- aries many activities that are authorized to banks. kets incorporate a low risk premium and when These activities previously had been conducted in markets turn weak, financial asset holders demand to nonbank affiliates for reasons such as geographic and be compensated by higher yields for holding claims other inflexibilities, which have gradually eased. on riskier entities. It is at this time that subsidy values Indeed, over the past decade the share of consoliare the most noticeable. What was it worth in the late dated assets of bank holding companies associated 1980s and early 1990s for a bank with a troubled loan with nonbank affiliates—other than section 20 securiportfolio to have deposit liabilities guaranteed by the ties affiliates—has declined almost half to just Federal Deposit Insurance Corporation (FDIC), to be 5.2 percent. This tendency reflects the fact that asset growth that earlier had been associated with nonassured that it could turn illiquid to liquid assets at bank affiliates of bank holding companies—consumer once through the Federal Reserve discount window, and commercial finance, leasing, and mortgage and to tell its customers that payment transfers would banking—has most recently occurred largely in the be settled on a riskless Federal Reserve Bank? For bank or in a subsidiary of the bank. To be sure, as many, it was worth not basis points but percentage Chairman Heifer indicated to the subcommittee earpoints. For some, it meant the difference between lier this month, many banking organizations still survival and failure. retain nonbank subsidiaries. Our discussions with It is argued by some that the cost of regulation bank holding companies, however, suggest that in exceeds the subsidy. I have no doubt that the costs of some cases, these affiliates were acquired in the past regulation are large, too large in my judgment. But no and have established names and an interstate network bank has turned in its charter in order to operate whose value would be reduced if subsumed within a without the cost of banking regulation, which would bank. There are also often adverse tax implications require that it operate also without deposit insurance for the shift. And, finally, some of these activities or access to the discount window or payments sysmay not be asset intensive and hence may not benefit tem. To do so would require both higher deposit costs significantly from bank funding. and higher capital. Indeed, it is a measure of the size Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

378 Federal Reserve Bulletin • May 1997 Clearly, the authorization of new activities in bank We must be very careful that in the name of free subsidiaries that are not now permitted either to banks market efficiency we do not countenance greater or their affiliates would tend to accelerate the trend to powers and profits subsidized directly or indirectly reduce holding company activity, even if these activi- by government. ties were also permitted to holding company subsidiaries. The subsidy inherent in the safety net would assure that result, extending the spread of the safety net and requiring that the Federal Reserve's authority and ability to meet its responsibilities be shifted to a CONCLUSION different paradigm. Such a result is reason enough for our concern In conclusion, the Board believes that as the Conabout the spreading of the safety net subsidy. But we gress moves toward financial modernization the should also be concerned because of the distortions newly created structure of financial organizations that subsidies bring to the financial system more should limit, insofar as possible, the real and pergenerally. After all, the broad premise underlying ceived transfer of the subsidy inherent in the safety financial modernization—with its removal of legisla- net to nonbank activities. To maintain a level playing tive and regulatory restrictions—is that free and often field for all competitors, nonbank activities must be intense competition will create the most efficient and financed at market, not subsidized, rates. customer-oriented business system. The Board also believes that financial moderniza- This principle has proved itself, generation by gen- tion should not undermine the ability and authority of eration, with ever higher standards of living. the central bank of the United States to manage In financial, as well as most other, markets the crises, ensure an efficient and safe payment system, principle is rooted in another premise—that the inter- and conduct monetary policy. We believe all of these action of private competitive forces will, with rare require that the Federal Reserve retain a significant exceptions, create a stable error self-correcting sys- and important role as a bank supervisor. In today's tem. This premise is very seriously called into ques- structure, we have adequate authority and coverage to tion if government subsidies are supplied at key meet our responsibilities. But should erosion occur, balancing points. By their nature, subsidies distort the as would likely be the case if new activities are establishment of competitive market prices and cre- authorized in bank subsidiaries, the Congress would ate incentives that misalign private risks with private have to consider what changes would be required gains. Such distortions undermine the error self- in the Board's supervisory authority to ensure that correcting mechanisms that support strong financial it continues to be able to meet its central bank markets. responsibilities. Statement by Alan Greenspan, Chairman, Board of As I told the Congress last month, the performance Governors of the Federal Reserve System, before the of the U.S. economy remains quite favorable. Real Joint Economic Committee, U.S. Congress, March 20, GDP growth picked up to more than 3 percent 1997 over the four quarters of 1996. Moreover, recently released data suggest that activity has retained a great I am pleased to appear here today. Last month, the deal of vigor in early 1997. In addition, nominal Federal Reserve Board submitted its semiannual hourly wages and salaries have risen faster than report on monetary policy to the Congress.1 That prices over the past several quarters, meaning that report and my accompanying testimony covered in workers have reaped some of the benefits of rising detail our assessment of the outlook for the U.S. productivity and thus gained ground in real terms. economy. This morning, I would like to highlight Outside the food and energy sectors, increases in some of the key aspects of the current economic consumer prices have actually continued to edge situation. lower, with core CPI inflation of only 2l/i percent over the past twelve months. The low inflation of the past year is both a symptom and a cause of the good economy. It is symptom- 1. See "Monetary Policy Report to the Congress," Federal Reserve Bulletin, vol. 83 (March 1997), pp. 173-87. atic of the balance and solidity of the expansion and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 379 the evident absence of major strains on resources. At around 5 VA percent—roughly matching the low of the the same time, continued low levels of inflation and last cyclical upswing, in the late 1980s. Also, initial inflation expectations have been a key support for claims for unemployment insurance remained low healthy economic performance. They have helped to into March. In addition, the percentage of households create a financial and economic environment con- telling the Conference Board that jobs are plentiful ducive to strong capital spending and longer-range has risen sharply of late, which suggests that workers planning generally and so to sustained economic may be growing more confident about the job situaexpansion. These types of results are why we stressed tion. Finally, wages rose faster in 1996 than in 1995 in our monetary policy testimony the importance of by most measures—in fact, the acceleration was quite acting promptly—ideally preemptively—to keep sizable by some measures. This, too, raises questions inflation low over the intermediate term and to pro- about whether the transitional period of unusually mote price stability over time. slow wage gains may be drawing to a close. In any For some, the benign inflation outcome of the past event, further increases in labor utilization rates year might be considered surprising, as resource utili- would heighten the risk of additional upward preszation rates—particularly of labor—have been in the sure on wage costs, and ultimately prices. neighborhood of those that historically have been To be sure, the pickup in wage gains to date has associated with building inflation pressures. To be not shown through to underlying price inflation. sure, nominal hourly labor compensation, especially Increases in the core CPI, as well as in several other its wage component, accelerated in 1996. But the rate broad measures of prices, have stayed subdued or of pay increase still was markedly less than historical even edged off further of late. As best I can judge, relationships with labor market conditions would faster productivity growth last year offset the preshave predicted. sure from rising compensation gains on labor costs Atypical restraint on compensation increases has per unit of output. And nonlabor costs, which are been evident for a few years now. Almost certainly, roughly a quarter of total consolidated costs of the it reflects a number of factors, including the sharp nonfinancial corporate sector, were little changed in deceleration in health care costs and the heightened 1996. pressure on firms and workers in industries that com- Owing in part to this subdued behavior of unit pete internationally. Domestic deregulation has also costs, profits and rates of return on capital have risen intensified the competitive forces in some industries. to high levels. As a consequence, a substantial num- But, as I outlined in some detail in testimony last ber of businesses apparently believe that, were they month, I believe that job insecurity has played the to raise prices to boost profits further, competitors dominant role. For example, in 1991, at the bottom of with already ample profit margins would not follow the recession, a survey of workers at large firms by suit; instead, they would use the occasion to capture International Survey Research Corporation indicated a greater market share. This interplay is doubtless a that 25 percent feared being laid off. In 1996, despite significant factor in the evident loss of pricing power the sharply lower unemployment rate and the tighter in U.S. business. Intensifying global competition may labor market, the same survey organization found also be limiting the ability of domestic firms to hike that 46 percent were fearful of a job layoff. prices as well as wages. Whatever the reasons for its persistence, job inse- Competitive pressures here and abroad should concurity cannot suppress wage growth indefinitely. tinue to act as a restraint on inflation in the months Clearly, there is a limit to how long workers will ahead. In addition, crude oil prices have largely remain willing to accept smaller increases in living retraced last year's run-up, and, with the worldwide standards in exchange for additional job security. supply of oil having moved up relative to demand, Even if real wages were to remain permanently on a futures markets project stable prices over the near lower upward track than otherwise as a result of the term. Food prices should also rise less rapidly than greater sense of insecurity, the rate of change of they did in 1996 as some of last year's supply limitawages would revert at some point to a normal rela- tions ease. Nonetheless, the trends in the core CPI tionship with price inflation. The unknown is when a and in broader price measures are likely to come more normal pattern will resume. under pressure from a continued tight labor market, Indeed, the labor markets bear especially careful whose influence on costs will be augmented by the watching for signs that such a process is under way. scheduled increase in the minimum wage later in the So far this year, the demand for labor has stayed year. And, with considerable health care savings strong. Payroll employment grew briskly in January already having been realized, larger increases in and February, and the unemployment rate remained fringe benefits could put upward pressure on overall Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

380 Federal Reserve Bulletin • May 1997 compensation. Moreover, although non-oil import Indeed, although our consumer survey showed that prices should remain subdued in 1997 as the sharp debt usage rose between 1992 and 1995 for almost all rise in the dollar over the past year and a half contin- income groups, changes in financial conditions were ues to feed through to domestic prices, their damping not uniform across families. Notably, the median effects on U.S. inflation probably will not be as great ratio of debt payments to income for families with as in 1996. debt—a useful measure of the typical debt burden— The lagged effects of the increase in the exchange held steady or declined for families with incomes of value of the dollar will also likely restrain real U.S. at least $50,000, but it rose for those with incomes net exports this year. In addition, declines in real below $50,000. We do not know whether these latter federal government purchases should exert a modest families took on the additional debt because they degree of restraint on overall demand, and residential perceived brighter future income prospects or simply construction will probably not repeat the gains of to accelerate purchases they would have made later. 1996. On the other hand, financial conditions overall Nonetheless, these families are probably the most remain supportive to the real economy, and credit- vulnerable to disruptions in income, and the rise in worthy borrowers are finding funding to be readily their debt burdens is likely to make both borrowers available from intermediaries and in the securities and lenders a bit more cautious as we move forward. markets. Moreover, we do not see evidence of wide- Both household and business balance sheets have spread imbalances either in business inventories or in expanded at a pace considerably faster than income stocks of capital equipment and consumer durables and product flows over the past decade. Accordingly, that would lead to a substantial cutback in spending. any percentage change in assets or liabilities has a The trends in consumer spending on items other greater effect on economic growth than it used to. than durables also look solid. Retail sales posted However, identifying such influences in the aggregate robust gains in January and February, and, according data is not always easy. At present, the difficulty is to various surveys, sentiment is decidedly upbeat. compounded by concern that the currently published Moreover, consumers have enjoyed healthy increases national statistics may not provide an accurate readin their real incomes over the past couple of years, ing of the trends in recent years, especially for along with the extraordinary stock-market-driven rise productivity. in their financial wealth. In any event, other data suggest that wealth and Should the higher wealth be sustained, it could debt effects may be exerting a measurable influence provide important support to consumption in 1997. on the consumption and saving decisions of different But, looking at the data through 1996, the surging segments of the population. According to the Constock market does not seem to have imparted as big a sumer Expenditure Survey conducted by the Bureau boost to spending as past relationships would have of Labor Statistics, saving out of current income by predicted. The lack of a more substantial wealth families in the upper-income quintile evidently has effect is especially surprising because we have also declined in recent years. At the same time. Federal seen a noticeable widening in the ownership of stocks Reserve estimates suggest that the use of credit for over the past several years. Indeed, the Federal purchases has leveled off after a sharp run-up from Reserve's recently released Survey of Consumer 1993 to 1996, perhaps because some families are Finances suggests that of the total value of all fami- becoming debt constrained and, as a result, are curlies' holdings of publicly traded stocks and mutual tailing their spending. funds, the share held by those with incomes below The Federal Reserve, of course, will be weighing $100,000 (in 1995 dollars) rose from 32 percent in these and other influences as it makes future policy 1989 to 46 percent in 1995. decisions. Demand has been growing quite strongly It is possible, however, that the wealth effect is in recent months, and the Federal Open Market Combeing offset by other factors. In particular, families mittee (FOMC), at its meeting next week, will have may be reluctant to spend their added wealth because to judge whether that pace of expansion will be they see a greater need to keep it to support spending maintained, and, if so, whether it will continue to be in retirement. Many have expressed heightened con- met by solid productivity growth, as it apparently has cern about their financial security in old age, in part been—official figures to the contrary notwithstandbecause of growing skepticism about the viability of ing. Alternatively, if strong demand is expected to the social security system. This concern has report- persist and does not seem likely to be matched by edly led to stepped-up saving for retirement. productivity improvement, the FOMC will have to The sharp increase in debt burdens in recent years decide whether increased pressures on supply will may also be constraining spending by some families. eventually produce the types of inflationary imbal- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 381 ances that, if not addressed early, will undermine the leaving policy unchanged—we seek to assure ourlong expansion. selves that the expected benefits are large enough to Should we choose to alter monetary policy, risk the cost of a mistake. we know from past experience that, although the In closing, I would like to note that the current financial markets may respond immediately, the main economic expansion is now entering its seventh year. effects on inflationary pressures may not be felt until That makes it already a long upswing by historical late this year and in 1998. Because forecasts that far standards. And yet, looking ahead, the prospects for out are highly uncertain, we rarely think in terms of a sustaining the expansion are quite favorable. The single outlook. Rather, we endeavor to assess the flexibility of our market system and the vibrancy of likely consequences of our decisions in terms of a our private sector remain examples for the whole reasonable range of possible outcomes. Part of our world to emulate. We will endeavor to do our part by evaluation is to judge not only the benefits that are continuing to foster a monetary framework under likely to result from appropriate policy but also the which our citizens can prosper to the fullest possible costs should we be wrong. In any action—including extent. Statement by Susan M. Phillips, Member, Board of director, and employee interlocks between two such Governors of the Federal Reserve System, before the companies. Subcommittee on Financial Institutions and Regulatory Relief of the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, March 20, 1997 THE FIREWALLS IN CONTEXT: INDEPENDENT PROTECTIONS FOR BANKS AND CONSUMERS I am pleased to be here today to discuss the Board's section 20 firewalls—that is, the restrictions the Before I begin this discussion, 1 think it is important Board has imposed on bank holding companies to place the firewalls in their historical and regulatory engaged in underwriting and dealing in securities. As context. Although the firewalls have served an importhe name suggests, the purpose of firewalls is to tant role, they are not the only protection against the insulate a bank and its customers from the potential hazards of affiliation of commercial and investment hazards of combining commercial and investment banks. banking. One important protection is the placement of secu- Since last year the Board has been engaged in a rities activities in a separate subsidiary of the bank comprehensive review of the twenty-eight firewalls it holding company, rather than in the bank itself or a erected in the late 1980s, and the Board has recently subsidiary of the bank. Because nonbank subsidiaries proposed to eliminate a majority of those restrictions. of a bank holding company operating under section This oversight hearing provides a constructive oppor- 20 of the Glass-Steagall Act are affiliates of a bank, tunity for comment and analysis of the Board's pro- they are not under the bank's control, do not have posal. Furthermore, if financial modernization is to their profits or losses consolidated with the bank's, move forward, the issue of firewalls will have to be and are less liable to have their creditors recover confronted again. I hope that the Board's review and against the bank. A bank therefore has less incentive the public comment process can inform the legisla- to risk its own reputation or expose itself or its tive process as well. customers to loss to assist a troubled section 20 Today, I would like to explain why the Board affiliate or a failed underwriting by that affiliate. proposed changes to the firewalls. I will also dis- Also, because securities activities are conducted in cuss the final changes the Board made last year to an affiliate, banks are limited in their ability to fund the revenue test that the Board uses to determine those activities by sections 23A and 23B of the compliance with section 20 of the Glass-Steagall Federal Reserve Act. These restrictions are vitally Act and to firewalls regarding cross-marketing important. Section 23A limits the total value of transbetween a bank and a securities affiliate, and officer, actions with any one affiliate to 10 percent of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

382 Federal Reserve Bulletin • May 1997 bank's capital and limits transactions with all affili- Federal Reserve Act had not been adopted at the time ates to 20 percent of capital. It also requires that of the Board's first section 20 order in 1987. As a substantial collateral be pledged to the bank for any result, many of the firewalls overlap the restrictions extension of credit. Section 23B requires that interaf- of section 23B, which, as I noted, requires interaffilifiliate transactions be at arm's length and on market- ate transactions to be at arm's length and on market terms and imposes other restrictions designed to limit terms but also prohibits a section 20 affiliate from conflicts of interest. representing that an affiliated bank is responsible for Thus, affiliate status prevents the bank from pass- its obligations and prohibits a bank from purchasing ing along the federal subsidy inherent in the federal certain products from a section 20 affiliate. Similarly, safety net to its section 20 affiliate by extending risk-based capital standards did not exist in 1987, and credit. Regulators could conceivably limit a bank's those standards now require a bank to hold capital ability to use credit to subsidize a direct securities against many of the on- and off-balance-sheet exposubsidiary of the bank as well by applying sections sures it maintains in conjunction with a section 20 23A and 23B. But the equity investment in the sub- affiliate. Finally, the Interagency Statement on sidiary would still be funded from subsidized Retail Sales of Nondeposit Investment Products was resources backed by the federal safety net. Even if not adopted until 1994. The Interagency Statement the investment were deducted from the capital of the includes disclosure and other requirements that are bank, the subsidy inherent in the transfer would now the primary means by which the federal banking remain. agencies seek to ensure that retail customers are not A second protection is examination of the bank misled about the nature of nondeposit products they holding company, including the effect of securities are purchasing on bank premises. activities on insured depository institution subsidiaries. The Federal Reserve as holding company regulator monitors compliance with sections 23A and 23B and other aspects of the relationship between a THE BOARD'S REVIEW bank and its section 20 affiliate. In its supervision of bank holding companies, the Board increasingly pays Thus, when the Board last year decided to reexamine attention to risk-management systems and policies the firewalls, we felt it important to do so with a fresh that are centralized at the holding company level and eye, benefiting from our ten years of experience govern both the bank and its section 20 affiliate. supervising the section 20 affiliates, acknowledging A final series of protections is the regulatory regulatory and legal developments since 1987, and regime that applies to all broker-dealers, including focusing on the relevance of the firewalls in today's section 20 subsidiaries. The Securities Act of 1933 financial markets. As we began to look at the conand the Securities Exchange Act of 1934 impose cerns the firewalls were designed to address, we registration, capital and disclosure requirements, anti- asked two questions. Does the affiliation of a comfraud protections, and other investor-protection mea- mercial and an investment bank cause safety and sures. These laws, and their enforcement by the Secu- soundness or other concerns not present with any rities and Exchange Commission, address many of other commercial bank affiliation—concerns not the safety and soundness and conflict-of-interest con- addressed by general bank holding company regulacerns about affiliation of commercial and investment tion? Does operation of a broker-dealer within a banks. bank holding company cause concerns that indepen- I note that most of these important protections dent operation does not—concerns not addressed by were not in place when the Glass-Steagall Act passed broker-dealer regulation? In some areas—most in 1933. Thus, although proponents of high firewalls notably, consumer protection—we believed that the frequently cite the subtle hazards of affiliation dis- answer was "yes." In most other areas, however, the cussed in the legislative history of that act, the regula- Board believed, at least pending public comment, tory environment was far different then. I believe that that the answer was "no." the drafters of the Glass-Steagall Act would have had The answers to these questions are important a very different discussion—and passed a very differ- because the firewalls are far from costless. They ent act—had today's statutory and regulatory protec- impose operational inefficiencies on bank holding tions been present in 1933. companies that increase their costs and reduce their Not only were these protections largely absent in competitiveness, and they limit a bank holding com- 1933, some were not even present in 1987 when the pany's ability to market its products in a way that is Board first erected its firewalls. Section 23B of the both most profitable and desired by its customers. As Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 383 such, the firewalls have served as a significant barrier which a section 20 affiliate is a principal underwriter to entry for small and midsize bank holding compa- during the existence of the underwriting or selling nies because those companies cannot realize suffi- syndicate unless such a purchase has been approved cient synergies or achieve adequate operating reve- by a majority of the bank's board of directors who nues to justify establishing a section 20 subsidiary. are not officers of any bank or any affiliate. If the The loss is not just to these companies but also to purchase is as fiduciary, the purchase must be permittheir customers and market competition. ted by the instrument creating the fiduciary relation- Let me now discuss the most important of the ship, court order, or state law. We believe that these firewalls to which the Board has proposed changes. are substantial protections and have proposed to rely The comment period closed on this proposal last on them in place of a firewall. week, and the comments were overwhelmingly favorable. I will not discuss all twenty-eight firewalls but have attached a summary list and their proposed disposition.1 PROHIBITIONS ON A BANK EXTENDING OR ENHANCING CREDIT IN SUPPORT OF UNDERWRITING OR DEALING BY A SECTION 20 AFFILIATE RESTRICTIONS ON FUNDING The Board proposed to eliminate a series of firewalls Three of the Board's firewalls restrict the ability of a that constitute a blanket prohibition on a bank's fund- bank to assist a section 20 affiliate indirectly, by ing its section 20 affiliate and to rely instead on the enhancing the marketability of its products or lendprotections of sections 23A and 23B of the Federal ing to its customers. These firewalls prohibit a bank Reserve Act. The firewalls in question prohibit a from extending credit or offering credit enhancebank from extending credit to a section 20 affiliate, ments in support of corporate and other nongovernpurchasing corporate and other nongovernmental mental securities being underwritten by its section 20 securities being underwritten by the section 20 affili- affiliate or in which the section 20 affiliate makes a ate, or purchasing from the section 20 affiliate such market; extending credit to issuers of securities to securities in which the affiliate makes a market. These repay principal or interest on securities previously firewalls were intended to prevent a bank from assist- underwritten by a section 20 affiliate; or extending ing a troubled affiliate by lending to it on preferential credit to customers to purchase securities currently terms or by bailing out a failed underwriting by being underwritten by a section 20 affiliate. The purchasing securities that cannot otherwise be sold. firewalls share a common purpose: to prevent a bank from imprudently exposing itself to loss to Except for the prohibition on purchasing securities benefit the underwriting or dealing activities of its during the underwriting period, none of these funding affiliate. firewalls was applied under the Board's original 1987 order but were added in 1989 when the range of However, as financial intermediation has evolved, permissible securities activities was expanded. Bank corporate customers frequently seek to obtain a varisubsidiaries of the fourteen companies operating ety of funding mechanisms from one source. By under the 1987 order have therefore been free to prohibiting banks from providing routine credit or fund, and have in fact funded, their section 20 affili- credit enhancements in tandem with a section 20 ates subject to sections 23A and 23B. The Board has affiliate, these firewalls hamper the ability of bank not encountered problems arising from such funding. holding companies to serve as full-service financial If the Board were to eliminate the funding restric- services providers. The firewall thereby reduces tions for the remaining section 20 subsidiaries, sec- options for their customers. For example, existing tions 23A and 23B would continue to impose quanti- corporate customers of a bank may wish to issue tative and qualitative restrictions on interaffiliate commercial paper or issue debt in some other form. transactions. In addition to requiring that the trans- Although the bank may refer the customer to its action be on market terms, section 23B specifically section 20 affiliate, the bank is prohibited from proprohibits a bank from purchasing any security for viding credit enhancements even though it is the institution best suited to perform a credit analysis— and, with smaller customers, perhaps the only institution willing to do so. As another example, the restric- 1, The attachment to this statement is available from Publications tion on lending for repayment of securities causes a Services, Mail Stop 127, Board of Governors of the Federal Reserve bank compliance problems when renewing a compa- System, Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

384 Federal Reserve Bulletin • May 1997 ny's revolving line of credit if a section 20 affiliate require the section 20 subsidiary to maintain its has underwritten an offering by that company since own capital in keeping with industry norms. These the credit was first extended. The bank must either requirements apply only to section 20 subsidiaries recruit other lenders to participate in the renewal or and not to any other nonbank subsidiary of a bank amend the line of credit to specify that its purpose holding company. does not include repayment of interest or principal on The Board proposed to eliminate the capital deducthe newly underwritten securities. tions for investments in, or credit extended to, a Notably, even if these firewalls were lifted, a bank section 20 subsidiary. The original purpose of the would still be required to hold capital against all deduction was to ensure that the holding company credit enhancements and credit extended to custom- maintained sufficient resources to support its federers of its section 20 affiliate. Section 23B of the ally insured depository institutions. In practice, how- Federal Reserve Act would require that such credit ever, the deductions have created regulatory burden and credit enhancements be on an arm's length basis. without strengthening the capital levels of the insured Similarly, the federal antitying statute would prohibit institutions. a bank from offering discounted credit enhancements The deduction is inconsistent with Generally on the condition that an issuer obtain investment Accepted Accounting Principles, which require conbanking services from a section 20 affiliate. Thus, for solidation of subsidiaries for accounting purposes. example, a bank could not offer such credit enhance- The deduction therefore has created confusion and ments below market prices, or to customers who imposed costs by requiring bank holding companies were poor credit risks, to generate underwriting busi- to prepare statements on two bases. The deduction ness for a section 20 affiliate. does not strengthen the capital of either the bank or The firewall prohibiting lending to retail customers its section 20 affiliate, and elimination of the deducfor securities purchases during the underwriting tion would not create or expose any incentive for a period addresses one of the most important potential bank holding company to divert necessary capital conflicts of interests arising from the affiliation of from a depository institution to a section 20 subsidicommercial and investment banking: the possibility ary. One of the purposes of the system of prompt that a bank would extend credit at below-markel rates corrective action adopted in 1992 is to ensure that a to induce consumers to purchase securities underwrit- bank holding company maintains the capital of its ten by its section 20 affiliate. The concern here is not subsidiary banks. only safety and soundness but customer protection. The Board also sought comment on whether it The Securities Exchange Act of 1934 already pro- should continue to impose a special capital requirehibits a broker-dealer (including a section 20 affili- ment on section 20 subsidiaries in addition to the ate) from extending or arranging for credit to its Securities and Exchange Commission's (SEC's) net customers during the underwriting period. Still, we capital rules. The purpose of this requirement was to recognize that the act would not apply in the absence prevent a section 20 subsidiary from being able to of arranging and, unlike the firewall, would not cover leverage itself more than, and gain a competitive loans to purchase a security in which a section 20 advantage over, its independent competitors by tradaffiliate makes a market. Section 23B of the Federal ing on the reputation of its affiliated bank. Although Reserve Act, and to some extent section 23A, would the SEC imposes capital requirements on all brokeraddress some of these remaining concerns, but per- dealers, these are minimum levels that are far below haps not all. The Board will be reviewing the com- the industry norm. ments on this firewall carefully. This capital firewall has proved confusing and controversial, as "industry norms" are difficult to determine. Federal Reserve examiners have expected section 20 subsidiaries to maintain capital to cover CAPITAL REQUIREMENTS risk exposure in an amount approximately twice what the SEC requires, but some section 20 subsidiaries The next group of firewalls I will discuss imposes have complained that this is more than their competicapital requirements on a bank holding company and tors maintain. They also argue that whereas SEC its section 20 subsidiary. These firewalls require a capital requirements allow all capital to be concenbank holding company to deduct from its capital any trated in the broker-dealer and dedicated to meeting investment in a section 20 subsidiary and most unse- capital requirements, a bank holding company must cured extensions of credit to a section 20 subsidiary meet capital requirements at the bank and holding engaged in debt and equity underwriting; they also company levels as well. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 385 Indeed, bank holding company capital is measured public customer information without the customer's on a consolidated basis and thus includes the capital consent. and assets of the section 20 subsidiary. Therefore, the Board believes it may be unnecessary to impose a separate capital requirement on the bank holding EARLIER BOARD ACTION ON OTHER FIREWALLS company's section 20 subsidiary. AND THE REVENUE LIMIT In addition to describing the Board's recent proposal, you also asked me to discuss other changes the Board REMAINING RESTRICTIONS finalized last year: increasing the section 20 revenue limit from 10 percent to 25 percent; allowing cross- Before leaving the Board's proposal, I should also marketing between a bank and a section 20 affiliate; note which restrictions the Board proposed to permitting employee interlocks between a bank and a retain. The Board proposed to reserve its authority to section 20 affiliate; and scaling back a restriction on reimpose the funding, credit extension, and credit officer and director interlocks. enhancement firewalls in the event that an affiliated The review that led to changes to the crossbank or thrift institution becomes less than well capi- marketing and interlocks firewalls was akin to what talized and the bank holding company does not the Board recently went through for all the firewalls. promptly restore it to the well-capitalized level. The The Board acted on these firewalls before the rest Board considered proposing to reimpose the firewalls because it had previously sought comment on them on less than well capitalized banks automatically—as some years ago and because they were identified by some recent bills introduced in the Congress would— commenters as among the most unduly burdensome but decided against it because a decline in a bank's of all the firewalls. After reviewing its experience capital ratios may be wholly unrelated to the bank's administering these firewalls, the Board decided that dealings with its section 20 affiliate. Thus, for they caused inefficiencies that could not be justified example, forcing a bank suffering serious losses on by any benefit to safety and soundness, and commentreal estate lending to desist from credit enhance- ers agreed overwhelmingly. Repeal of the interlocks ments may be unproductive or—if the business is and cross-marketing restrictions allows increased profitable—counterproductive. synergies in the operation of a section 20 subsidiary and its bank affiliates. Persons may be employed by The Board also proposed to retain existing fireboth companies, and the trend toward coordinated walls requiring adequate internal controls and documanagement of like business functions can accelermentation, including a requirement that a bank exerate, with reporting lines running between companies. cise independent and thorough credit judgment in any Companies need not fund dual back offices or trading transaction involving an affiliate. Although we expect floors, for example. To the extent that senior bank banking organizations to have such internal controls managers may now oversee related operations at a and look for them during examinations, we believe section 20 affiliate, risk management and safety and that they are sufficiently important to warrant reinsoundness may be improved. forcement through the operating standards. They are especially important in the section 20 context Moreover, existing disclosure requirements adebecause of the likelihood that a bank and its sec- quately address concerns about customer confusion tion 20 affiliate may be selling similar products to the arising from increased cross-marketing and employee same customer. interlocks. Most notably, the Interagency Statement Because of the potential for customer confusion as on Retail Sales of Nondeposit Products states that, to which products are federally insured, the Board before the initial sale of a nondeposit product by a proposed to require a section 20 affiliate to make bank employee or on bank premises, the customer disclosures to customers similar to those that the must receive and acknowledge a written statement Interagency Statement requires of a bank selling non- that the product being sold is not federally insured, is deposit products on bank premises. The proposal not a deposit or other obligation of the bank, is not would also continue to prohibit an affiliated bank guaranteed by the bank, and is subject to investment risks including loss of principal. from knowingly advising a customer to purchase securities underwritten or dealt in by a section 20 Finally, with regard to the revenue limit, section 20 affiliate unless it notifies the customer of its affiliate's of the Glass-Steagall Act prohibits a bank from being role. The proposal also continues to prohibit a bank affiliated with any company "engaged principally" in and its section 20 affiliate from sharing any non- underwriting and dealing, and the Board was obliged Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

386 Federal Reserve Bulletin • May 1997 to make a narrow, legal determination of the level of Board currently has pending three applications revenue at which a company becomes "engaged prin- to establish a section 20 subsidiary. As we had anticicipally." The Board interpreted the statute to allow pated, two of these are small to midsize bank holding 25 percent of total revenue to be derived from under- companies that may previously have either found writing and dealing in bank-ineligible securities. In it too expensive to fund the dual staffing required reviewing the revenue limit, the Board was not decid- by the interlocks restrictions or too difficult to gening what level of underwriting and dealing was con- erate sufficient eligible revenue to maintain complisistent with safety and soundness or public policy. If ance with a 10 percent revenue limit. Furtherit were, the Board may well have raised the limit to more, existing section 20 subsidiaries have indicated 100 percent, which would have been consistent with that they have been able to rationalize their orgathe Board's support of repeal of section 20. nization and expand their activities given the I am pleased to report that early indications of the added flexibility with respect to both staffing and effects of these changes have been favorable. The revenue. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

387 Announcements MEETING OF THE CONSUMER ADVISORY Leasing) to implement amendments to the Consumer COUNCIL Leasing Act. The act requires lessors to provide uniform cost The Federal Reserve Board announced on March 31, and other disclosures for car leasing and other types 1997, that the Consumer Advisory Council would of consumer lease transactions. The revisions were hold its next meeting on Thursday, April 17. The effective April 1, 1997, but compliance is optional council's function is to advise the Board on the until October 1, 1997. exercise of the Board's responsibilities under the The revisions primarily implement amendments to Consumer Credit Protection Act and on other matters the act contained in the Economic Growth and Reguon which the Board seeks its advice. latory Paperwork Reduction Act of 1996, which streamline the advertising disclosures for lease transactions. The revisions make the disclosure of upfront REDUCTIONS OF AUTOMATED CLEARINGHOUSE costs in connection with a specific lease agreement FEES OF THE FEDERAL RESERVE BANKS parallel to statutory changes to the advertising rules. The revisions also contain several technical amend- The Federal Reserve Board on March 21, 1997, ments to the regulation. announced further reductions in the Reserve Banks' The Federal Reserve Board on March 27, 1997, automated clearinghouse (ACH) fees. The new ACH issued a revised version of the official staff commenfee schedule was effective May 1, 1997. tary to Regulation M. The revised commentary was The Federal Reserve has reduced its ACH fees effective April 1, 1997, but compliance is optional three times within the past twelve months. These until October 1, 1997. price reductions reflect the efficiencies of the Fed- Regulation M was revised in September 1996 eral Reserve's centralized Fed ACH processing under the Board's Regulatory Planning and Review environment. Program, which calls for the periodic review of Board Under the new ACH volume-based fee schedule, regulations. The commentary applies and interprets the cost to originate ACH transactions will decline an the requirements of Regulation M, as amended in average of 17 percent. Customers that deposit files of March 1997. fewer than 2,500 items will be assessed a file fee of $1.75 and a per item fee of $0,009. Customers that deposit files of more than 2,500 items will be assessed a file fee of $6.75 and a per item fee of REGULATION O: FINAL AMENDMENT $0,007. The cost to receive ACH transactions will decline 10 percent, to $0,009 for all customers. The Federal Reserve Board on March 17, 1997, The Federal Reserve Board also adopted guide- announced a final amendment to Regulation O (Loans lines for the use of volume-based fee structures for to Executive Officers, Directors, and Principal Share- Reserve Bank payment services, which were effec- holders of Member Banks), which limits how much tive March 25, 1997. Volume-based fees are an exten- and on what terms a bank may lend to its own sion of multipart fees currently used by the Reserve insiders and insiders of its affiliates. The final rule Banks. The use of volume-based fees has the poten- was effective April 1, 1997. tial to improve payment system efficiency. Under the final rule, Regulation O will not apply to extensions of credit by a bank to an executive officer or to a director of an affiliate, provided that the REGULATION M: REVISIONS AND REVISED executive officer or director is not engaged in major OFFICIAL STAFF COMMENTARY policymaking functions of the bank and that the affiliate does not account for more than 10 percent of The Federal Reserve Board on March 27, 1997, the consolidated assets of the bank's parent holding announced revisions to Regulation M (Consumer company. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

388 Federal Reserve Bulletin • May 1997 This rule is consistent with changes to the exemp- Regulation D (Reserve Requirements of Depository tive authority of the Board made by the Economic Institutions) and Regulation I (Issue and Cancellation Growth and Regulatory Paperwork Reduction Act of of Capital Stock of Federal Reserve Banks) to define 1996. the location of a depository institution to facilitate interstate branching. Comments were requested by April 18, 1997. REGULATION CC: AMENDMENTS The Federal Reserve Board on March 21, 1997, requested comments on proposed amendments to The Federal Reserve Board on March 18, 1997, Regulation H (Membership of State Banking Instituannounced approval of clarifying and technical tions in the Federal Reserve System) and Regulaamendments to its Regulation CC (Availability of tion P (Minimum Security Devices for Federal Funds and Collection of Checks). Reserve Banks and State Member Banks). Comments Among other things, the amendments, which were were requested by May 27, 1997. effective April 28, reduce compliance burden for The Federal Reserve Board, along with the Office depository institutions in some cases and permit insti- of the Comptroller of the Currency and the Federal tutions to satisfy the requirements to provide notice Deposit Insurance Corporation, on March 12, 1997, and disclosure by electronic means if certain condi- requested comments on a proposal to adopt uniform tions are met. regulations to implement section 109 of the Riegle- A review of the regulation was made under sec- Neal Interstate Banking and Branching Efficiency tion 303 of the Riegle Community Development and Act of 1994 (Interstate Act). Comments were Regulatory Improvement Act of 1994. That section requested by May 2, 1997. directs the federal banking agencies to review their The Federal Reserve Board on March 31, 1997, rules to improve efficiency, reduce unnecessary costs, announced that it was seeking additional public comand remove inconsistencies and outmoded and dupli- ments on possible legislative changes to the Truth in cative requirements. Lending Act. Comments were requested by June 30, 1997. ADOPTION OF FINAL RULES ON STANDARD PRACTICES REGARDING TRANSACTIONS IN GOVERNMENT SECURITIES BY DEPOSITORY AVAILABILITY OF A REPORT ON THE INSTITUTIONS PROCESSING OF APPLICATIONS IN 1996 BY THE FEDERAL RESERVE The Federal Reserve Board on March 12, 1997, announced adoption of final standard practice rules The Federal Reserve Board on March 27, 1997, regarding transactions in government securities by issued a report on the timing of its processing of depository institutions. The final rule is effective applications during 1996. July 1, 1997. The System last year acted on 4,390 applications The Office of the Comptroller of the Currency and and notices filed by bank holding companies and the Federal Deposit Insurance Corporation are adopt- state-chartered member banks. The total number of ing similar rules. The agencies are adopting the final applications increased 25 percent over 1995. Howrules to provide consistent treatment for customers of ever, after adjusting for the effect of certain large both bank and nonbank dealers and brokers in gov- multiple applications in 1995 and 1996, there was a ernment securities. 12 percent increase overall in activity. The rules are substantively identical to the Busi- A breakdown of applications by category proness Conduct and Suitability Rules of the National cessed showed the following percentages: Association of Securities Dealers (NASD) and the • To expand banking operations (other than NASD Suitability Interpretation that apply to non- branching), about 13 percent of total bank brokers and dealers in government securities. • For nonbanking expansion, almost 15 percent • Bank branch notices, 47 percent • Bank holding company formations and change PROPOSED ACTIONS of control notices for state member banks and bank holding companies, about 11 percent The Federal Reserve Board on March 6, 1997, • International activities of U.S. banking organizarequested comments on proposed amendments to tions, about 5 percent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 389 Performance of the Federal Reserve in 1996 in processing applications and notices filed by bank holding companies (BHCs) and state-chartered member banks (SMBKs) Decided within Accepted for processing Decided 60 days of acceptance Type of application Filed or notice Average Average Number number of days Number number of days Number Percent since filing since acceptance Domestic 4.045 3.789 15 4,167 35 4.090 98 413 356 20 336 33 330 98 BHC-SMBK mergers and acquisitions .... 573 552 25 586 30 573 98 BHC nonbank acquisitions 638 579 7 645 47 611 95 BHC-SMBK changes in control 219 168 0 162 42 152 94 Other SMBK actions 1.863 1,830 16 2.147 33 2,141 100 Other BHC actions 339 304 12 291 32 283 97 186 173 66 223 56 189 85 Total domestic and international 4.231 3,962 17 4,390 36 4.279 97 • Various applications, such as those from banks improvement from 38 days and 56 days respectively to become members of the Federal Reserve System in 1995. The average total processing time for interor to invest in bank premises, or bank holding compa- national applications increased from 117 days in 1995 nies seeking relief from commitments or to redeem to 122 days in 1996, and the average total processing stock, about 9 percent. time for domestic applications improved from 54 days in 1995 to 50 days in 1996. The Federal Reserve maintains target dates and procedures for the processing of applications filed under the Bank Holding Company Act, the Bank Merger Act, or the Change in Bank Control Act. The CHANGES IN BOARD STAFF time allowed for a decision is sixty days after acceptance of an application. In 1996, action was taken on The Federal Reserve Board announced that 97 percent of all applications within the established Charles W. Bennett, Assistant Director, Division of time frame. Extra time required to allow for supervi- Reserve Bank Operations and Payment Systems, and sory comments from other regulatory agencies and to most recently assigned to the Office of Board Meminvestigate questions raised about performance with bers, retired on April 14, after having been at the regard to relevant laws and regulations accounted for Board for more than thirty years. a majority of the applications that were not processed The Board also announced that John H. Parrish, within the target time frame. Assistant Director, Division of Reserve Bank Opera- On average, the 4,390 applications and notices tions and Payment Systems, had resigned to accept were processed in 36 calendar days from the date of the position of General Auditor at the Federal acceptance and 53 days from the date of filing, an Reserve Bank of San Francisco. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

390 Minutes of the Federal Open Market Committee Meeting Held on February 4-5, 1997 A meeting of the Federal Open Market Committee Ms. Johnson,2 Assistant Director, Division of was held in the offices of the Board of Governors of International Finance, Board of Governors Messrs. Brady2 and Reifschneider,2 Section Chiefs, the Federal Reserve System in Washington, D.C., on Divisions of Monetary Affairs and Research and Tuesday, February 4, 1997, at 2:30 p.m. and contin- Statistics respectively, Board of Governors ued on Wednesday, February 5, 1997, at 9:00 a.m. Messrs. Brayton2 and Rosine,2 Senior Economists, Division of Research and Statistics, Board of Present: Governors Mr. Greenspan, Chairman Ms. Garrett, Economist, Division of Monetary Affairs, Mr. McDonough, Vice Chairman Board of Governors Mr. Broaddus Ms. Low, Open Market Secretariat Assistant, Mr. Guynn Division of Monetary Affairs, Board of Mr. Kelley Governors Mr. Meyer Ms. Browne, Messrs. Dewald, Hakkio, Lang, Mr. Moskow Rosenblum, and Sniderman, Senior Vice Mr. Parry Presidents, Federal Reserve Banks of Boston, Ms. Phillips St. Louis, Kansas City, Philadelphia, Dallas, and Ms. Rivlin Cleveland respectively Mr. Miller and Ms. Perelmuter, Vice Presidents, Messrs. Hoenig, Jordan, Melzer, and Ms. Minehan, Federal Reserve Banks of Minneapolis and Alternate Members of the Federal Open Market New York respectively Committee In the agenda for this meeting, it was reported that Messrs. Boehne, McTeer, and Stern, Presidents of the advices of the election of the following members and Federal Reserve Banks of Philadelphia, Dallas, alternate members of the Federal Open Market Comand Minneapolis respectively mittee for the period commencing January 1, 1997, Mr. Kohn, Secretary and Economist and ending December 31, 1997, had been received Mr. Bernard, Deputy Secretary and that the named individuals had executed their Mr. Coyne, Assistant Secretary oaths of office. Mr. Gillum, Assistant Secretary Mr. Mattingly, General Counsel The elected members and alternate members were Mr. Baxter, Deputy General Counsel' as follows: Mr. Prell, Economist Mr. Truman, Economist William J. McDonough, President of the Federal Reserve Bank of New York, with Ernest T. Patrikis, First Vice Messrs. Beebe, Eisenbeis, Goodfriend, Hunter, President of the Federal Reserve Bank of New York, Lindsey, Mishkin, Promisel, Siegman, Slifman, as alternate; and Stockton, Associate Economists J. Alfred Broaddus, Jr., President of the Federal Reserve Bank of Richmond, with Cathy E. Minehan, President Mr. Fisher, Manager, System Open Market Account of the Federal Reserve Bank of Boston, as alternate; Michael H. Moskow, President of the Federal Reserve Mr. Ettin, Deputy Director, Division of Research and Bank of Chicago, with Jerry L. Jordan, President of Statistics, Board of Governors the Federal Reserve Bank of Cleveland, as alternate; Mr. Winn, Assistant to the Board, Office of Board Jack Guynn, President of the Federal Reserve Bank of Members, Board of Governors Atlanta, with Thomas C. Melzer, President of the Messrs. Madigan and Simpson, Associate Directors, Federal Reserve Bank of St. Louis, as alternate; Divisions of Monetary Affairs and Research and Statistics respectively, Board of Governors 2. Attended portions of meeting relating to the Committee's review of the economic outlook and establishment of its monetary and debt 1. Attended Tuesday session only. ranges for 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

391 Robert T. Parry, President of the Federal Reserve Bank of (a) To buy or sell U.S. Government securities, includ- San Francisco, with Thomas M. Hoenig, President of ing securities of the Federal Financing Bank, and securities the Federal Reserve Bank of Kansas City, as alternate. that are direct obligations of, or fully guaranteed as to principal and interest by, any agency of the United States in By unanimous vote, the following officers of the the open market, from or to securities dealers and foreign and international accounts maintained at the Federal Federal Open Market Committee were elected to Reserve Bank of New York, on a cash, regular, or deferred serve until the election of their successors at the first delivery basis, for the System Open Market Account at meeting of the Committee after December 31, 1997, market prices, and, for such Account, to exchange maturwith the understanding that in the event of the discon- ing U.S. Government and Federal agency securities with tinuance of their official connection with the Board of the Treasury or the individual agencies or to allow them to mature without replacement; provided that the aggregate Governors or with a Federal Reserve Bank, they amount of U.S. Government and Federal agency securities would cease to have any official connection with the held in such Account (including forward commitments) Federal Open Market Committee: at the close of business on the day of a meeting of the Committee at which action is taken with respect to a Alan Greenspan Chairman domestic policy directive shall not be increased or William J. McDonough Vice Chairman decreased by more than $8.0 billion during the period commencing with the opening of business on the day Donald L. Kohn Secretary and Economist following such meeting and ending with the close of busi- Normand R.V. Bernard Deputy Secretary ness on the day of the next such meeting; Joseph R. Coyne Assistant Secretary (b) When appropriate, to buy or sell in the open Gary P. Gillum Assistant Secretary market, from or to acceptance dealers and foreign accounts J. Virgil Mattingly, Jr. General Counsel Thomas C. Baxter, Jr. Deputy General Counsel maintained at the Federal Reserve Bank of New York, on a Michael J. Prell Economist cash, regular, or deferred delivery basis, for the account of Edwin M. Truman Economist the Federal Reserve Bank of New York at market discount rates, prime bankers acceptances with maturities of up to nine months at the time of acceptance that (1) arise out of Jack H. Beebe, Robert A. Eisenbeis, Marvin S. the current shipment of goods between countries or within Goodfriend, William C. Hunter, David E. Lindsey, the United States, or (2) arise out of the storage within the Frederic S. Mishkin, Larry J. Promisel, Charles J. United States of goods under contract of sale or expected Siegman, Lawrence Slifman, and David J. Stockton, to move into the channels of trade within a reasonable time Associate Economists and that are secured throughout their life by a warehouse receipt or similar document conveying title to the under- By unanimous vote, the Federal Reserve Bank of lying goods; provided that the aggregate amount of New York was selected to execute transactions for bankers acceptances held at any one time shall not exceed the System Open Market Account until the adjourn- $100 million; ment of the first meeting of the Committee after (c) To buy U.S. Government securities, obligations that are direct obligations of, or fully guaranteed as to December 31, 1997. principal and interest by, any agency of the United States, By unanimous vote, Peter R. Fisher was selected to and prime bankers acceptances of the types authorized for serve at the pleasure of the Committee as Manager, purchase under Kb) above, from dealers for the account of System Open Market Account, on the understanding the Federal Reserve Bank of New York under agreements that his selection was subject to being satisfactory to for repurchase of such securities, obligations, or accepthe Federal Reserve Bank of New York. tances in 15 calendar days or less, at rates that, unless otherwise expressly authorized by the Committee, shall be determined by competitive bidding, after applying reason- Secretary's note: Advice subsequently was received that able limitations on the volume of agreements with indithe selection of Mr. Fisher as Manager was satisfactory vidual dealers; provided that in the event Government to the board of directors of the Federal Reserve Bank of New York. securities or agency issues covered by any such agreement are not repurchased by the dealer pursuant to the agreement or a renewal thereof, they shall be sold in the market By unanimous vote, the Authorization for Domesor transferred to the System Open Market Account; and tic Open Market Operations shown below was provided further that in the event bankers acceptances reaffirmed. covered by any such agreement are not repurchased by the seller, they shall continue to be held by the Federal Reserve Bank or shall be sold in the open market. AUTHORIZATION FOR DOMESTIC 2. In order to ensure the effective conduct of open OPEN MARKET OPERATIONS market operations, the Federal Open Market Committee authorizes and directs the Federal Reserve Banks to lend 1. The Federal Open Market Committee authorizes and U.S. Government securities held in the System Open Mardirects the Federal Reserve Bank of New York, to the ket Account to Government securities dealers and to banks extent necessary to carry out the most recent domestic participating in Government securities clearing arrangepolicy directive adopted at a meeting of the Committee: ments conducted through a Federal Reserve Bank, under Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

392 Federal Reserve Bulletin • May 1997 such instructions as the Committee may specify from time fully liquidated within 12 months after any amount outto time. standing at that time was first drawn, unless the Commit- 3. In order to ensure the effective conduct of open tee, because of exceptional circumstances, specifically market operations, while assisting in the provision of short- authorizes a delay. term investments for foreign and international accounts D. To maintain an overall open position in all foreign maintained at the Federal Reserve Bank of New York, the currencies not exceeding $25.0 billion. For this purpose, Federal Open Market Committee authorizes and directs the the overall open position in all foreign currencies is defined Federal Reserve Bank of New York (a) for System Open as the sum (disregarding signs) of net positions in indi- Market Account, to sell U.S. Government securities to such vidual currencies. The net position in a single foreign foreign and international accounts on the bases set forth in currency is defined as holdings of balances in that curparagraph l(a) under agreements providing for the resale rency, plus outstanding contracts for future receipt, minus by such accounts of those securities within 15 calendar outstanding contracts for future delivery of that currency, days on terms comparable to those available on such i.e.. as the sum of these elements with due regard to sign. transactions in the market; and (b) for New York Bank 2. The Federal Open Market Committee directs the Fedaccount, when appropriate, to undertake with dealers, sub- eral Reserve Bank of New York to maintain reciprocal ject to the conditions imposed on purchases and sales of currency arrangements ("swap" arrangements) for the Syssecurities in paragraph l(c), repurchase agreements in U.S. tem Open Market Account for periods up to a maximum of Government and agency securities, and to arrange corre- 12 months with the following foreign banks, which are sponding sale and repurchase agreements between its own among those designated by the Board of Governors of the account and foreign and international accounts maintained Federal Reserve System under Section 214.5 of Regulation at the Bank. Transactions undertaken with such accounts N, Relations with Foreign Banks and Bankers, and with the under the provisions of this paragraph may provide for a approval of the Committee to renew such arrangements on service fee when appropriate. maturity: With Mr. Broaddus dissenting, the Authorization Amount of arrangement for Foreign Currency Operations shown below was Foreign bank (millions of dollars equivalent) reaffirmed. Austrian National Bank 250 National Bank of Belgium 1,000 Bank of Canada 2.000 National Bank of Denmark 250 AUTHORIZATION FOR FOREIGN CURRENCY Bank of England 3,000 Bank of France 2.000 OPERATIONS German Federal Bank 6,000 Bank of Italy 3.000 Bank of Japan 5,000 1. The Federal Open Market Committee authorizes and Bank of Mexico 3,000 directs the Federal Reserve Bank of New York, for System Netherlands Bank 500 Bank of Norway 250 Open Market Account, to the extent necessary to carry out Bank of Sweden 300 the Committee's foreign currency directive and express Swiss National Bank 4.000 authorizations by the Committee pursuant thereto, and in Bank for International Settlements: conformity with such procedural instructions as the Com- Dollars against Swiss francs 600 mittee may issue from time to time: Dollars against authorized European currencies other than Swiss francs 1,250 A. To purchase and sell the following foreign currencies in the form of cable transfers through spot or forward transactions on the open market at home and abroad, Any changes in the terms of existing swap arrangeincluding transactions with the U.S. Treasury, with the U.S. ments, and the proposed terms of any new arrangements Exchange Stabilization Fund established by Section 10 of that may be authorized, shall be referred for review and the Gold Reserve Act of 1934, with foreign monetary approval to the Committee. authorities, with the Bank for International Settlements, 3. All transactions in foreign currencies undertaken and with other international financial institutions: under paragraph l.A. above shall, unless otherwise expressly authorized by the Committee, be at prevailing Austrian schillings Italian lire market rates. For the purpose of providing an investment Belgian francs Japanese yen return on System holdings of foreign currencies, or for the Canadian dollars Mexican pesos purpose of adjusting interest rates paid or received in Danish kroner Netherlands guilders connection with swap drawings, transactions with foreign Pounds sterling Norwegian kroner central banks may be undertaken at non-market exchange French francs Swedish kronor rates. German marks Swiss francs 4. It shall be the normal practice to arrange with foreign central banks for the coordination of foreign currency B. To hold balances of, and to have outstanding transactions. In making operating arrangements with forforward contracts to receive or to deliver, the foreign eign central banks on System holdings of foreign currencurrencies listed in paragraph A above. cies, the Federal Reserve Bank of New York shall not C. To draw foreign currencies and to permit foreign commit itself to maintain any specific balance, unless banks to draw dollars under the reciprocal currency authorized by the Federal Open Market Committee. Any arrangements listed in paragraph 2 below, provided that agreements or understandings concerning the administradrawings by either party to any such arrangement shall be tion of the accounts maintained by the Federal Reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 393 Bank of New York with the foreign banks designated by provided that market exchange rates for the U.S. dollar the Board of Governors under Section 214.5 of Regula- reflect actions and behavior consistent with the IMF tion N shall be referred for review and approval to the Article IV, Section 1. Committee. 2. To achieve this end the System shall: 5. Foreign currency holdings shall be invested to ensure A. Undertake spot and forward purchases and sales that adequate liquidity is maintained to meet anticipated of foreign exchange. needs and so that each currency portfolio shall generally B. Maintain reciprocal currency ("swap"") arrangehave an average duration of no more than 18 months ments with selected foreign central banks and with the (calculated as Macaulay duration). When appropriate in Bank for International Settlements. connection with arrangements to provide investment facili- C. Cooperate in other respects with central banks ties for foreign currency holdings, U.S. Government securi- of other countries and with international monetary ties may be purchased from foreign central banks under institutions. agreements for repurchase of such securities within 30 3. Transactions may also be undertaken: calendar days. A. To adjust System balances in light of probable 6. All operations undertaken pursuant to the preceding future needs for currencies. paragraphs shall be reported promptly to the Foreign Cur- B. To provide means for meeting System and U.S. rency Subcommittee and the Committee. The Foreign Cur- Treasury commitments in particular currencies, and to rency Subcommittee consists of the Chairman and Vice facilitate operations of the Exchange Stabilization Fund. Chairman of the Committee, the Vice Chairman of the C. For such other purposes as may be expressly Board of Governors, and such other member of the Board authorized by the Committee. as the Chairman may designate (or in the absence of 4. System foreign currency operations shall be members of the Board serving on the Subcommittee, other conducted: Board members designated by the Chairman as alternates, A. In close and continuous consultation and cooperaand in the absence of the Vice Chairman of the Committee, tion with the U.S. Treasury; his alternate). Meetings of the Subcommittee shall be B. In cooperation, as appropriate, with foreign monecalled at the request of any member, or at the request of the tary authorities: and Manager, System Open Market Account ("Manager"), for C. In a manner consistent with the obligations of the the purposes of reviewing recent or contemplated opera- United States in the International Monetary Fund regarding tions and of consulting with the Manager on other matters exchange arrangements under the IMF Article IV. relating to his responsibilities. At the request of any member of the Subcommittee, questions arising from such Mr. Broaddus dissented in the votes on the Authoreviews and consultations shall be referred for determination to the Federal Open Market Committee. rization and the Directive because they provide the foundation for foreign exchange market intervention. 7. The Chairman is authorized: A. With the approval of the Committee, to enter into He believed that the Federal Reserve's participation any needed agreement or understanding with the Secretary in foreign exchange market intervention comproof the Treasury about the division of responsibility for mises its ability to conduct monetary policy effecforeign currency operations between the System and the tively. Because sterilized intervention cannot have U.S. Treasury; sustained effects in the absence of conforming mone- B. To keep the Secretary of the Treasury fully advised concerning System foreign currency operations, tary policy actions, Federal Reserve participation in and to consult with the Secretary on policy matters relating foreign exchange operations in his view risks one of to foreign currency operations; two undesirable outcomes. First, the independence of C. From time to time, to transmit appropriate reports monetary policy is jeopardized if the System adjusts and information to the National Advisory Council on Interits policy actions to support short-term foreign national Monetary and Financial Policies. 8. Staff officers of the Committee are authorized to exchange objectives set by the U.S. Treasury. Altertransmit pertinent information on System foreign currency natively, the credibility of monetary policy is damoperations to appropriate officials of the U.S. Treasury aged if the System does not follow interventions with Department. compatible policy actions, the interventions conse- 9. All Federal Reserve Banks shall participate in the quently fail to achieve their objectives, and the Sysforeign currency operations for System Account in accordance with paragraph 3 G(l) of the Board of Governors' tem is associated in the mind of the public with the Statement of Procedure with Respect to Foreign Relation- failed operations. ships of Federal Reserve Banks dated January 1, 1944. By unanimous vote, the Procedural Instructions with Respect to Foreign Currency Operations shown With Mr. Broaddus dissenting, the Foreign Curbelow were reaffirmed. rency Directive shown below was reaffirmed. PROCEDURAL INSTRUCTIONS WITH RESPECT TO FOREIGN CURRENCY DIRECTIVE FOREIGN CURRENCY OPERATIONS 1. System operations in foreign currencies shall gener- In conducting operations pursuant to the authorization ally be directed at countering disorderly market conditions, and direction of the Federal Open Market Committee as set Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

394 Federal Reserve Bulletin • May 1997 forth in the Authorization for Foreign Currency Operations Program to Restore Financial Stability in Mexico. No and the Foreign Currency Directive, the Federal Reserve use of the warehousing facility had been made by the Bank of New York, through the Manager, System Open U.S. Treasury or the ESF during this period, and in Market Account ("Manager"), shall be guided by the light of Mexico's repayment to the U.S. Treasury of following procedural understandings with respect to consultations and clearances with the Committee, the Foreign all the financing provided under the Program and the Currency Subcommittee, and the Chairman of the Commit- termination of that Program, the Committee agreed tee. All operations undertaken pursuant to such clearances that the size of the warehousing arrangement should shall be reported promptly to the Committee. revert to $5 billion. 1. The Manager shall clear with the Subcommittee (or The Report of Examination of the System Open with the Chairman, if the Chairman believes that consultation with the Subcommittee is not feasible in the time Market Account, conducted by the Board's Division available): of Reserve Bank Operations and Payment Systems as A. Any operation that would result in a change in the of the close of business on October 31, 1996, was System's overall open position in foreign currencies accepted. exceeding $300 million on any day or $600 million since By unanimous vote, the Program for Security of the most recent regular meeting of the Committee. FOMC Information was amended to update the docu- B. Any operation that would result in a change on any day in the System's net position in a single foreign ment with regard to certain security classifications, currency exceeding $150 million, or $300 million when the access to FOMC information, and attendance at operation is associated with repayment of swap drawings. FOMC meetings. C. Any operation that might generate a substantial On January 23, 1997, the continuing rules and volume of trading in a particular currency by the System, other standing instructions of the Committee were even though the change in the System's net position in that currency might be less than the limits specified in l.B. distributed with the advice that, in accordance with D. Any swap drawing proposed by a foreign bank not procedures approved by the Committee, they were exceeding the larger of (i) $200 million or (ii) 15 percent of being called to the Committee's attention before the the size of the swap arrangement. February 4-5 organization meeting to give members 2. The Manager shall clear with the Committee (or with an opportunity to raise any questions they might have the Subcommittee, if the Subcommittee believes that consultation with the full Committee is not feasible in the time concerning them. Members were asked to indicate if available, or with the Chairman, if the Chairman believes they wished to have any of the documents in question that consultation with the Subcommittee is not feasible in placed on the agenda for consideration at this meetthe time available): ing, and no requests for consideration were received. A. Any operation that would result in a change in the By unanimous vote, the minutes of the meeting of System's overall open position in foreign currencies exceeding $1.5 billion since the most recent regular meet- the Federal Open Market Committee held on Deceming of the Committee. ber 17, 1996, were approved. The Committee also B. Any swap drawing proposed by a foreign bank discussed its long-standing practice of releasing exceeding the larger of (i) $200 million or (ii) 15 percent of the minutes a few days after the meeting at which the size of the swap arrangement. they were approved, usually on the following Friday. 3. The Manager shall also consult with the Subcommit- The members agreed with a proposal to advance tee or the Chairman about proposed swap drawings by the System and about any operations that are not of a routine the normal release to Thursday to facilitate the character. dissemination and public understanding of these decisions. By unanimous vote, the Committee reduced from The Manager of the System Open Market Account $20 billion to $5 billion the amount of eligible for- reported on developments in foreign exchange mareign currencies that the System was prepared to kets since the meeting on December 17, 1996. There "warehouse" for the U.S. Treasury and the Exchange were no transactions in foreign currencies for System Stabilization Fund (ESF). Warehousing involves spot account during this period, and thus no vote was purchases of foreign currencies from the U.S. Trea- required of the Committee. sury or the ESF and simultaneous forward sales of The Manager also reported on developments in the same currencies to the U.S. Treasury or the ESF domestic financial markets and on System open marat the then-current forward market rates. The effect ket transactions in government securities and federal of warehousing is to supplement the U.S. dollar agency obligations during the period December 18, resources of the U.S. Treasury and the ESF for 1996, through February 4, 1997. By unanimous vote, financing the purchase of foreign currencies and the Committee ratified these transactions. related international operations. The agreement had The Manager advised the Committee that the been enlarged from $5 billion to $20 billion in early anticipated pattern of reserve needs was such that he 1995 to facilitate U.S. participation in the Multilateral might want to add considerably to the System's out- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 395 right holdings of U.S. government securities over the siderably further in December, to a level slightly coming intermeeting period. By unanimous vote, the above its long-term average. Committee amended paragraph l(a) of the Authoriza- Consumer spending registered a sizable increase tion for Domestic Open Market Operations to raise over the fourth quarter after having grown little durthe limit on intermeeting changes in such holdings ing the summer. In December total nominal retail from $8 billion to $12 billion for the period ending sales rose considerably following a small decline with the close of business on the date of the next in November. The December increases were spread meeting, March 25, 1997. across all major categories except for some further The Committee then turned to a discussion of the decline in sales of building materials and supplies. economic and financial outlook, the ranges for the The most recent data on services expenditures growth of money and debt in 1997, and the imple- pointed to moderate advances in October and Novemmentation of monetary policy over the intermeeting ber. Surveys indicated that consumer confidence had period ahead. A summary of the economic and finan- remained elevated in late 1996 and early 1997. cial information available at the time of the meeting Housing starts fell appreciably in December, eviand of the Committee's discussion is provided below, dently reflecting unusually adverse weather condifollowed by the domestic policy directive that was tions in several parts of the country, and were down approved by the Committee and issued to the Federal somewhat for the fourth quarter as a whole. The Reserve Bank of New York. declines were concentrated in single-family units. The information reviewed at this meeting sug- Permits for new home construction were little gested that the growth of the economy had strength- changed in December but edged lower for the fourth ened markedly in the fourth quarter of 1996. To a quarter as a whole. Available data indicated a somelarge extent the gain in final demand during the what slower pace of sales of new and existing homes quarter reflected a surge in exports, but consumer in the fourth quarter. spending also increased substantially after having Growth of business fixed investment moderated risen at a much reduced pace in the third quarter. considerably in the fourth quarter after having Despite some slowing in the growth of business fixed advanced sharply in the previous quarter. The slowinvestment and some easing in housing activity, the down reflected a small decline in spending on prooverall economy had expanded briskly as reflected in ducer durable equipment that was more than offset by data on production and employment. The tightness in an apparent surge in outlays for nonresidential struclabor markets had persisted and was evidenced by tures. Growth in spending on office, computing, and some continued acceleration in labor compensation communications equipment slowed somewhat from in the fourth quarter. There was no discernible change the third-quarter pace but remained on a steep in the underlying trend in price inflation, although a uptrend. Business investment in transportation equipspurt in energy prices had resulted in faster increases ment was weak in the fourth quarter, as sales of in overall consumer and producer prices than in the heavy trucks fell further and work stoppages at a third quarter. major manufacturer prompted cuts in fleet auto sales Private payroll employment rose appreciably fur- in October and November. ther in December after having recorded sizable Business inventory investment picked up someincreases over October and November. The gains what on average in October and November, with remained widespread among employment categories most of the increase occurring in manufacturing. and continued to be led by large advances in the Trade inventories increased moderately on balance services and trade industries. Aggregate hours of over the two-month period. Reflecting considerable private production workers and the average work- strength in shipments and sales, however, inventoryweek edged higher in the fourth quarter. The civilian sales ratios for most industries and trade groupings unemployment rate was unchanged in December at edged lower from their third-quarter levels. 5.3 percent, its average level for the second half of The nominal deficit on U.S. trade in goods and the year. services narrowed considerably in October and Industrial production increased sharply in Novem- November from its rate in the third quarter. Nearly all ber and December. The gains in December were the improvement was accounted for by a very large widely distributed across manufacturing industries increase in exports of goods and services. The rise but were held down by a steep decline in the output was spread among all major trade categories except of utilities after a surge in November. The production automotive products. Economic activity in the major of aircraft and parts extended a strong uptrend. The foreign industrial countries appeared to have continutilization of total manufacturing capacity rose con- ued to expand at a moderate rate on average in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

396 Federal Reserve Bulletin • May 1997 fourth quarter. Available indicators suggested rela- firm side of market expectations; the increases in tively strong economic performances in Japan, Can- such rates appeared to be tempered, however, by ada, and the United Kingdom and slower growth in favorable market reactions to new data on wages and the major continental European countries. Further prices. The generally positive news on economic expansion was reported for several large Latin growth and inflation along with favorable reports on American and some Asian economies. earnings appeared to reinforce the optimism of equity Recent data pointed to little change in underlying market investors, and major indexes of stock prices inflation trends. Overall consumer prices had contin- increased markedly further over the intermeeting ued under upward pressure in November and Decem- period. ber, boosted by large advances in energy prices. In foreign exchange markets, the trade-weighted Excluding food and energy items, consumer prices value of the dollar in terms of the other G-10 currenrose modestly over the two months and increased less cies rose substantially over the intermeeting period. over the twelve months ending in December than The rise, which was most pronounced against the over the previous twelve months. At the producer Japanese yen and continental European currencies, level, a similar pattern prevailed in prices of finished appeared to reflect market perceptions of unexpectgoods, and there was no evidence of increased price edly strong economic growth in the United States and pressures at earlier stages of production. Worker com- a risk of faltering growth in the other countries. The pensation as measured by the employment cost index dollar appreciated less against sterling and declined (ECI) and average hourly earnings of production and somewhat against the Canadian dollar in apparent nonsupervisory workers rose considerably further response to expectations of relative strength in the during the closing months of 1996. For the year, both economies of those countries. measures were up appreciably more than in 1995, After having grown at a considerably faster rate in though much of the acceleration in the ECI occurred the fourth quarter, M2 and M3 apparently increased in the first half of the year. at a more moderate but still brisk pace in January. At its meeting on December 17, 1996, the Commit- The expansion of both aggregates likely was boosted tee issued a directive that called for maintaining the by strong income growth, and the relatively rapid existing degree of pressure on reserve positions. The expansion of M3 reflected heavy bank reliance on the directive included a bias toward the possible firming managed liabilities in M3 to fund robust loan growth. of reserve conditions to reflect a consensus among From the fourth quarter of 1995 to the fourth quarter the members that the risks remained biased toward of 1996, M2 was estimated to have grown at a rate higher inflation and that the next policy move was near the upper end of the Committee's annual range more likely to be toward some tightening than toward and M3 at a rate appreciably above the top of its easing. In this regard, the directive stated that in the range. Total domestic nonfmancial debt had expanded context of the Committee's long-run objectives for moderately on balance over recent months and was price stability and sustainable economic growth, and estimated to have grown last year at a rate near the giving careful consideration to economic, financial, midpoint of its range. and monetary developments, somewhat greater The staff forecast prepared for this meeting sugreserve restraint would be acceptable and slightly gested that the expansion would be sustained at a rate lesser reserve restraint might be acceptable during the a bit above the economy's estimated growth potenintermeeting period. The reserve conditions associ- tial. The increase in consumer spending was proated with this directive were expected to be consis- jected to moderate somewhat from its pace in the tent with some slowing of the growth of M2 and M3 fourth quarter to a rate generally in line with the over coming months. expected rise in disposable income. Homebuilding Open market operations during the intermeeting was forecast to decline somewhat but to stabilize at a period continued to be directed toward maintaining relatively high level in the context of continued the existing degree of pressure on reserve positions. income growth and the generally favorable cash flow The federal funds rate rose briefly in response to affordability of home ownership. Business spending year-end pressures, but it otherwise tended to remain on equipment and structures was projected to expand close to the 5lA percent level expected with an un- less rapidly in light of some anticipated slowing in changed policy stance. Other short-term interest rates the growth of sales and profits. Fiscal policy and the generally were unchanged to slightly higher over the external sector were expected to exert small restrainintermeeting period. Rates on intermediate- and long- ing influences on economic activity over the year term securities edged higher on balance in reaction to ahead. With resource utilization high and rising, incoming data on economic activity that were on the consumer price inflation, as measured by the CPI Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 397 excluding the relatively volatile food and energy recorded in 1996. Specifically, the projections concomponents of the index, was forecast to increase verged on rates of 23A to 3 percent and a full range slightly this year in the context of some further of 23/4 to 3'/2 percent in 1997. These forecasts took pickup in the growth of labor compensation that account of expected developments in the food and would include another legislated rise in the federal energy sectors and further technical improvements in minimum wage. the index by the Bureau of Labor Statistics, both of In the Committee's discussion of current and pro- which were expected to trim the reported rate. The spective economic developments, members com- projections were based on individual views concernmented that the robust performance of the economy ing what would be an appropriate policy over the in the fourth quarter partly reflected some sources of projection horizon to further progress toward the strength, notably a surge in exports, that were evi- Committee's goals. dently temporary, and they anticipated substantial In their review of developments in key sectors of moderation in the pace of the expansion over the the economy, members observed that the available period ahead. The outlook was subject to consider- data and anecdotal information indicated considerable uncertainty, but as they assessed the numerous able strength in consumer spending in recent months, factors bearing on prospective developments, the and they referred to a number of underlying factors members generally concluded as they had at previous that should help to sustain at least moderate further meetings that further growth in aggregate demand at growth in such spending. The latter included the solid a rate averaging near or a bit above the economy's expansion in employment and incomes, the increased potential remained a reasonable expectation. Many financial wealth of many consumers, and the high observed, however, that the risks to such an outlook level of consumer confidence as indicated by recent appeared to be tilted to the upside. The strength of the surveys. However, members also cited some factors expansion in the fourth quarter, and in fact over 1996 that would tend to restrain the growth in consumer as a whole, had heightened concerns that the econ- spending. Among these factors were the effects of the omy had considerable forward momentum at a time high level of consumer debt and rising repayment when it was already operating at a level, especially problems on both the willingness of households to with regard to labor resources, that could tend to borrow and of financial intermediaries to lend, the generate rising inflationary pressures. Indeed, in the likely absence of pent-up demands after an extended view of at least some members, growth of aggregate period of expansion, and the possibility of a setback demand in line with increases in potential output in the stock market. It was difficult to evaluate how posed a risk of rising price inflation because the these differing factors would on balance affect conrecent relatively favorable price performance was sumer spending, but the members concluded that the seen in this view as reflecting at least in part the consumer sector was likely to provide important supbehavior of special factors that could dissipate over port for sustained economic expansion. the projection horizon. The growth in business capital spending was In keeping with the practice at meetings when the expected to moderate somewhat in 1997 in associa- Committee establishes its long-run ranges for the tion with slower growth in sales, profits, and cash growth of money and debt aggregates, the members flows. It also seemed likely after several years of of the Committee and the Federal Reserve Bank robust investment expenditures that many business presidents not currently serving as members had pro- firms now had high levels of up-to-date capital stock vided individual projections of the growth in real and relative to planned production. Members referred, nominal GDP, the rate of unemployment, and the rate however, to a number of favorable factors that should of inflation for the year 1997. The forecasts of the continue to support at least moderate further growth rate of expansion in real GDP had a central tendency in business investment, including the attractive pricof 2 to 2lA percent and a full range of 2 to 2Vi per- ing of and ongoing rapid technological improvements cent. The projections of the civilian unemployment in computer and communications equipment and the rate associated with these growth expectations were wide availability of equity and debt financing on all in a range of 5lA to 5'/2 percent for the fourth favorable terms to business firms. Members also quarter of the year. With regard to nominal GDP reported that commercial building activity had growth in 1997, the forecasts were mainly in a range improved in many areas. Some noted a tendency to of 4lA to 43/4 percent, with an overall range of AlA to underestimate the strength of overall business invest- 5!/4 percent. Nearly all the members anticipated a ment in recent years, including the stimulus provided small decline in the rate of inflation in 1997, as by efforts to improve productivity in highly competimeasured by the consumer price index, from that tive markets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

398 Federal Reserve Bulletin • May 1997 While indicators of housing activity had been lower wages for increased security; such a developsomewhat erratic over the past several months, mem- ment would foster increases in labor costs that ultibers sensed a somewhat softer tone on balance in this mately would feed through to higher prices. The sector of the economy. This assessment was sup- members did not anticipate a sudden surge in inflaported by anecdotal observations in several regions tion, but many expressed concern about the possibilacross the country. Against the background of the ity of a gradual upcreep in coming quarters that might increase that had occurred earlier in mortgage financ- become more considerable later. They generally ing costs and forecasts of some slowing in the growth expected a small decline in overall price inflation this of jobs and incomes, the housing sector was likely to year, reflecting favorable developments in food and weaken slightly over the coming year, but some energy and, for the CPI, further technical improvemembers commented that surprises on the upside of ments by the Bureau of Labor Statistics; however, current forecasts, as in 1996, could not be ruled out. they believed that the risks to their forecasts were in Fiscal policy and foreign trade also were seen as the direction of greater inflation, and several noted likely to exert some modest restraint on overall eco- in particular that projected declines in energy nomic activity. Federal purchases of goods and ser- prices might not materialize as soon or to the extent vices still appeared to be on a declining trend. assumed in many forecasts. Although fiscal policy negotiations were likely to be In keeping with the requirements of the Full difficult and their outcome was uncertain, members Employment and Balanced Growth Act of 1978 (the felt that there was some basis for anticipating the Humphrey-Hawkins Act), the Committee reviewed enactment of further legislation this year to help the ranges for growth of the monetary and debt bring the federal budget into eventual balance. The aggregates in 1997 that it had established on a tentalarge increase in exports in the fourth quarter clearly tive basis at its meeting in July 1996. Those ranges was associated with temporary developments, and net included expansion of 1 to 5 percent for M2 and 2 to exports were expected to weaken this year, reflecting 6 percent for M3, measured from the fourth quarter both some reversal of recent developments and the of 1996 to the fourth quarter of 1997. The monitoring earlier appreciation of the dollar. Some members range for growth of total domestic nonfinancial debt reported that business contacts had already communi- was provisionally set at 3 to 7 percent for 1997. The cated concerns about increased competitive pressures tentative ranges for 1997 were unchanged from the from imports because of the rise in the foreign actual ranges adopted for 1995 (in July of that year exchange value of the dollar. for M3) and 1996. Members commented that inflation had remained In reviewing the tentative ranges, the members remarkably subdued, but they expressed considerable took note of a staff projection indicating that M2 and concern about the risks of rising inflation in the M3 likely would grow in 1997 at rates close to the context of high levels of resource use. They referred upper limit of those ranges, given the Committee's in particular to statistical indications, supported by expectations for the performance of the economy and anecdotal reports from around the nation, of very prices and assuming no major changes in interest tight conditions in labor markets and some upward rates. The staff analysis anticipated that the velocities pressures on wages. Thus far, the rise in compen- of the broad monetary aggregates would continue to sation had been held down by diminishing increases behave in the relatively stable and predictable manin worker benefit costs, and productivity gains also ner that had re-emerged in the last few years and that appeared to have had a favorable effect on unit labor was closer to historical norms than had been the case costs. In addition, the increases in wages themselves in the early 1990s. had continued to be restrained by apparent worker The greater measure of predictability in velocity concerns about job security. To date, there was no recently was an encouraging development, but in evidence that pressures stemming from tight labor view of the substantial changes in financial markets markets had been passed through to a measurable and the increased availability of investment alternaextent to higher prices, tives it would be premature to assume that the pattern While the absence of increasing price inflation was would necessarily continue going forward. Given the a welcome development, members were concerned substantial uncertainty still attached to projections of that the break with historical patterns might not per- money growth consistent with the Committee's basic sist. If labor markets remained under pressure, nomi- objectives for monetary policy, the members agreed nal compensation costs were likely to pick up at some that there was no firm basis for changing the tentative point as one-time savings in worker benefit costs ran ranges set in July 1996. Adopting higher ranges, out and as workers became less willing to trade off which would be more closely centered on money Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 399 growth thought likely to be consistent with the Com- the retention of a bias toward restraint. An unchanged mittee's expectations for economic activity and policy seemed appropriate with inflation still quiesprices, could be misinterpreted as indicating that the cent, with few signs of emerging price pressures, Committee had become much more confident of the with growth in economic activity seen as likely to predictability of velocity and was placing greater moderate appreciably from the unexpectedly strong emphasis on M2 and M3 as gauges of the thrust of and unsustainable pace of the fourth quarter, and with monetary policy. One member, while agreeing with considerable uncertainty about future inflationary dethis assessment, emphasized that a continuation of a velopments. However, the members emphasized that stable and predictable pattern of velocity behavior the extent of the slowdown in economic expansion would raise the question as to whether the Committee was unclear and that the persisting, or even greater, should return to setting ranges consistent with its tightness of labor markets, coupled with potentially expectations for economic developments. Nonethe- faster growth in worker benefits and diminishing less, from a longer-run perspective, the tentative worker insecurity, could put added upward pressure ranges readily encompass rates of growth of M2 and on labor costs and induce some increase in price M3 that, if velocity were to behave in line with inflation over time. Even so, most members thought historical experience, could be expected to be associ- that inflation likely would remain contained for some ated with approximate price stability and a sustain- period ahead and that any strengthening in inflation able rate of real economic growth. In that regard, they pressures probably would be gradual, allowing the continue to serve the useful purpose of benchmarking Committee to respond in a timely manner. Several money growth consistent with the Committee's long- also commented that a tightening policy action was run goal of price stability. not generally anticipated in financial markets, and a At the conclusion of its discussion, the Committee move at this time could have exaggerated repercusvoted to approve without change the tentative ranges sions. A few members emphasized, however, that the for 1997 that it had established in July of last year. recent surge in economic activity had raised the prob- In keeping with its usual procedures under the ability that the level of economic output was now Humphrey-Hawkins Act, the Committee would above the economy's long-run potential, and without review its ranges at midyear, or sooner if interim a significant slowing in economic growth, inflationconditions warranted, in light of the growth and ary pressures were more likely to increase over the velocity behavior of the aggregates and ongoing eco- forecast horizon. While an immediate tightening of nomic and financial developments. Accordingly, the policy would help to forestall such a buildup of following statement of longer-run policy for 1997 pressures, the members agreed that current uncertainwas approved for inclusion in the domestic policy ties about the outlook for both the rate of expansion directive: and inflation warranted a continuing "wait and see" policy stance, or at least made such a policy accept- The Federal Open Market Committee seeks monetary able at this juncture. and financial conditions that will foster price stability and In their discussion of possible adjustments to polpromote sustainable growth in output. In furtherance of icy during the intermeeting period, the members recthese objectives, the Committee at this meeting established ranges for growth of M2 and M3 of 1 to 5 percent ognized that an asymmetric directive tilted toward and 2 to 6 percent respectively, measured from the fourth tightening was consistent with their general view that quarter of 1996 to the fourth quarter of 1997. The monitor- the risks were now more clearly in the direction of an ing range for growth of total domestic nonfinancial debt upward trend in inflation. They agreed that the curwas set at 3 to 7 percent for the year. The behavior of the rent environment called for careful monitoring of monetary aggregates will continue to be evaluated in the light of progress toward price level stability, movements in new developments and for prompt action by the their velocities, and developments in the economy and Committee to counter any tendency for price inflation financial markets. to rise and for higher inflation expectations to become embedded in financial markets and economic Votes for this action: Messrs. Greenspan, McDonough, decisionmaking more generally. Indeed, in the inter- Broaddus, Guynn, Kelley, Meyer, Moskow, Parry, Mses. est of fostering a continuation of sustainable growth Phillips and Rivlin. Votes against this action: None. Absent and not voting: Mr. Lindsey and Ms. Yellen. of the economy, it would be desirable to tighten before any sign of actual higher inflation were to In the Committee's discussion of policy for the become evident. intermeeting period ahead, all the members favored At the conclusion of the Committee's discussion, or could support a proposal to maintain an unchanged all the members indicated that they supported a direcpolicy stance; the members also strongly supported tive that called for maintaining the existing degree of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

400 Federal Reserve Bulletin • May 1997 pressure on reserve positions and that retained a bias brisk, though diminished, pace in January. From the fourth toward the possible firming of reserve conditions quarter of 1995 to the fourth quarter of 1996, M2 is estimated to have grown near the upper end of the Commitduring the intermeeting period. Accordingly, in the tee's annual range and M3 well above the top of its range. context of the Committee's long-run objectives for Total domestic nonfinancial debt has expanded moderately price stability and sustainable economic growth, and on balance over recent months and is estimated to have giving careful consideration to economic, financial, grown last year near the midpoint of its range. and monetary developments, the Committee decided The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and that somewhat greater reserve restraint would be promote sustainable growth in output. In furtherance of acceptable and slightly lesser reserve restraint might these objectives, the Committee at this meeting established be acceptable during the intermeeting period. The ranges for growth of M2 and M3 of 1 to 5 percent and 2 to reserve conditions contemplated at this meeting were 6 percent respectively, measured from the fourth quarter of 1996 to the fourth quarter of 1997. The monitoring range expected to be consistent with some moderation in for growth of total domestic nonfinancial debt was set at the expansion of M2 and M3 over coming months. 3 to 7 percent for the year. The behavior of the monetary The Federal Reserve Bank of New York was author- aggregates will continue to be evaluated in the light of ized and directed, until instructed otherwise by the progress toward price level stability, movements in their Committee, to execute transactions in the System velocities, and developments in the economy and financial markets. Account in accordance with the following domestic In the implementation of policy for the immediate future, policy directive: the Committee seeks to maintain the existing degree of pressure on reserve positions. In the context of the Com- The information reviewed at this meeting suggests that mittee's long-run objectives for price stability and sustainthe economic expansion strengthened markedly in the able economic growth, and giving careful consideration to fourth quarter. Private nonfarm payroll employment economic, financial, and monetary developments, someincreased appreciably further in December after sizable what greater reserve restraint would or slightly lesser gains over October and November. The civilian unemployreserve restraint might be acceptable in the intermeeting ment rate remained at 5.3 percent in December. Industrial period. The contemplated reserve conditions are expected production rose sharply in November and December. Conto be consistent with some moderation in the expansion of sumer spending posted a large increase in the fourth quar- M2 and M3 over coming months. ter after a summer lull. Housing activity moderated somewhat over the closing months of the year. Growth in Votes for this action: Messrs. Greenspan, McDonough, business fixed investment slowed substantially in the fourth Broaddus, Guynn, Kelley, Meyer, Moskow, Parry, Mses. quarter after a sharp rise in the third quarter. The nominal Phillips and Rivlin. Votes against this action: None. deficit on U.S. trade in goods and services narrowed con- Absent and not voting: Mr. Lindsey and Ms. Yellen. siderably in October and November from its rate in the third quarter. Advances in labor compensation trended up in 1996, but price inflation generally diminished apart from It was agreed that the next meeting of the Commitenlarged increases in food and energy prices. tee would be held on Tuesday, March 25, 1997. Most market interest rates have changed little or risen The meeting adjourned at 11:35 a.m. slightly since the Committee meeting on December 17, 1996. In foreign exchange markets, the trade-weighted value of the dollar in terms of the other G-10 currencies has increased substantially over the intermeeting period. Growth of M2 and M3 strengthened considerably in the Donald L. Kohn fourth quarter and appeared to have continued at a fairly Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

401 Legal Developments FINAL RULE-^AMENDMENT TO GOVERNMENT Section 13.2—Definitions. SECURITIES SALES PRACTICES (a) Bank that is a government securities broker or dealer The Office of the Comptroller of the Currency ("OCC"), means a national bank that has filed notice, or is required to Board of Governors of the Federal Reserve System file notice, as a government securities broker or dealer ("Board"), and Federal Deposit Insurance Corporation pursuant to section 15C of the Securities Exchange Act ("FDIC") (collectively, "the agencies") are amending 12 (15 U.S.C. 78o-5) and Department of the Treasury rules C.F.R. Parts 13, 208,211, and 368 (Government Securities under section 15C (17 C.F.R. 400. l(d) and part 401). Sales Practices). They are issuing rules regarding sales (b) Customer does not include a broker or dealer or a practices concerning government securities by depository government securities broker or dealer. institutions within their respective jurisdictions. The agen- (c) Government security has the same meaning as this term cies are adopting the final rules in light of recent statutory has in section 3(a)(42) of the Securities Exchange Act of changes authorizing the agencies to adopt rules governing 1934 (15 U.S.C. 78c(a)(42)). transactions in government securities in order to provide (d) Non-institutional customer means any customer other consistent treatment for government securities customers. than: The final rules minimize regulatory burdens to the extent (1) A bank, savings association, insurance company, or feasible, consistent with the goal of providing purchasers registered investment company; of government securities with consistent treatment regard- (2) An investment adviser registered under section 203 less of whether they engage in transactions in government of the Investment Advisers Act of 1940 (15 U.S.C. securities with banks or nonbank government securities 80b-3); or brokers and dealers. (3) Any entity (whether a natural person, corporation, Effective July 1, 1997, 12 C.F.R. Parts 13, 208, 211, and partnership, trust, or otherwise) with total assets of at 368 are amended as follows: least $50 million. Section 13.3—Business conduct. Part 13—Government Securities Sales Practices A bank that is a government securities broker or dealer Section shall observe high standards of commercial honor and just and equitable principles of trade in the conduct of its business as a government securities broker or dealer. 13.1 Scope. 13.2 Definitions. Section 13.4—Recommendations to customers. 13.3 Business conduct. 13.4 Recommendations to customers. In recommending to a customer the purchase, sale or 13.5 Customer information. exchange of a government security, a bank that is a government securities broker or dealer shall have reasonable Interpretations grounds for believing that the recommendation is suitable for the customer upon the basis of the facts, if any, dis- 13.100 Obligations concerning institutional customers. closed by the customer as to the customer's other security holdings and as to the customer's financial situation and Authority: 12 U.S.C. 1 et seq., and 93a; 15 U.S.C. 78o-5. needs. Section 13.5—Customer information. Section 13.1—Scope. Prior to the execution of a transaction recommended to a This part applies to national banks that have filed notice as, non-institutional customer, a bank that is a government or are required to file notice as, government securities securities broker or dealer shall make reasonable efforts to brokers or dealers pursuant to section 15C of the Securities obtain information concerning: Exchange Act (15 U.S.C. 78o-5) and Department of the (a) The customer's financial status; Treasury rules under section 15C (17 C.F.R. 400. l(d) and (b) The customer's tax status; part 401). (c) The customer's investment objectives; and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

402 Federal Reserve Bulletin • May 1997 (d) Such other information used or considered to be reason- recommendations to an institutional customer are the cusable by the bank in making recommendations to the cus- tomer's capability to evaluate investment risk indepentomer. dently and the extent to which the customer is exercising independent judgement in evaluating a bank's recommen- Interpretations dation. A bank must determine, based on the information available to it, the customer's capability to evaluate invest- Section 13.100—Obligations concerning ment risk. In some cases, the bank may conclude that the customer is not capable of making independent investment institutional customers. decisions in general. In other cases, the institutional cus- (a) As a result of broadened authority provided by the tomer may have general capability, but may not be able to Government Securities Act Amendments of 1993 understand a particular type of instrument or its risk. This is more likely to arise with relatively new types of instru- (15 U.S.C. 78o-3 and 78o-5)), the OCC is adopting sales ments, or those with significantly different risk or volatility practice rules for the government securities market, a marcharacteristics than other investments generally made by ket with a particularly broad institutional component. Acthe institution. If a customer is either generally not capable cordingly, the OCC believes it is appropriate to provide of evaluating investment risk or lacks sufficient capability further guidance to banks on their suitability obligations to evaluate the particular product, the scope of a bank's when making recommendations to institutional customers. customer-specific obligations under section 13.4 would not (b) The OCC's suitability rule (section 13.4) is fundamenbe diminished by the fact that the bank was dealing with an tal to fair dealing and is intended to promote ethical sales institutional customer. On the other hand, the fact that a practices and high standards of professional conduct. customer initially needed help understanding a potential Banks' responsibilities include having a reasonable basis investment need not necessarily imply that the customer for recommending a particular security or strategy, as well did not ultimately develop an understanding and make an as having reasonable grounds for believing the recommenindependent investment decision. dation is suitable for the customer to whom it is made. Banks are expected to meet the same high standards of (g) A bank may conclude that a customer is exercising competence, professionalism, and good faith regardless of independent judgement if the customer's investment decithe financial circumstances of the customer. sion will be based on its own independent assessment of (c) In recommending to a customer the purchase, sale, or the opportunities and risks presented by a potential investexchange of any government security, the bank shall have ment, market factors and other investment considerations. reasonable grounds for believing that the recommendation Where the bank has reasonable grounds for concluding that is suitable for the customer upon the basis of the facts, if the institutional customer is making independent investany, disclosed by the customer as to the customer's other ment decisions and is capable of independently evaluating security holdings and financial situation and needs. investment risk, then a bank's obligations under sec- (d) The interpretation in this section concerns only the tion 13.4 for a particular customer are fulfilled.2 Where a manner in which a bank determines that a recommendation customer has delegated decision-making authority to an is suitable for a particular institutional customer. The man- agent, such as an investment advisor or a bank trust departner in which a bank fulfills this suitability obligation will ment, the interpretation in this section shall be applied to vary, depending on the nature of the customer and the the agent. specific transaction. Accordingly, the interpretation in this (h) A determination of capability to evaluate investment section deals only with guidance regarding how a bank risk independently will depend on an examination of the may fulfill customer-specific suitability obligations under customer's capability to make its own investment decisection 13.4.1 sions, including the resources available to the customer to (e) While it is difficult to define in advance the scope of a make informed decisions. Relevant considerations could bank's suitability obligation with respect to a specific insti- include: tutional customer transaction recommended by a bank, the (1) The use of one or more consultants, investment OCC has identified certain factors that may be relevant advisers, or bank trust departments; when considering compliance with section 13.4. These (2) The general level of experience of the institutional factors are not intended to be requirements or the only customer in financial markets and specific experience factors to be considered but are offered merely as guidance with the type of instruments under consideration; in determining the scope of a bank's suitability obligations. (3) The customer's ability to understand the economic (f) The two most important considerations in determining features of the security involved; the scope of a bank's suitability obligations in making (4) The customer's ability to independently evaluate how market developments would affect the security; and (5) The complexity of the security or securities involved, 1. The interpretation in this section does not address the obligation (i) A determination that a customer is making independent related to suitability that requires that a bank have "... a 'reasonable investment decisions will depend on the nature of the basis' to believe that the recommendation could be suitable for at least some customers." In the Matter of the Application of FJ. Kaufman and Company of Virginia and Frederick J. Kaufman, Jr., 50 SEC 164 (1989). 2. See footnote 1 in paragraph (d) of this section. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 403 relationship that exists between the bank and the customer. Section 208.25—Government securities sales Relevant considerations could include: practices. (1) Any written or oral understanding that exists between the bank and the customer regarding the nature of the relationship between the bank and the customer and (a) Scope. This subpart is applicable to state member banks the services to be rendered by the bank; that have filed notice as, or are required to file notice as, (2) The presence or absence of a pattern of acceptance of government securities brokers or dealers pursuant to secthe bank's recommendations; tion 15C of the Securities Exchange Act (15 U.S.C. 78o-5) (3) The use by the customer of ideas, suggestions, mar- and Department of the Treasury rules under section 15C ket views and information obtained from other govern- (17 C.F.R. 400.1(d) and part 401). ment securities brokers or dealers or market profession- (b) Definitions. (1) Bank that is a government securities als, particularly those relating to the same type of broker or dealer means a state member bank that has securities; and filed notice, or is required to file notice, as a government (4) The extent to which the bank has received from the securities broker or dealer pursuant to section 15C of the customer current comprehensive portfolio information Securities Exchange Act (15 U.S.C. § 78o-5) and Departin connection with discussing recommended transac- ment of the Treasury rules under section 15C (17 C.F.R. tions or has not been provided important information 400.1(d) and part 401). regarding its portfolio or investment objectives. (2) Customer does not include a broker or dealer or a (j) Banks are reminded that these factors are merely guide- government securities broker or dealer. lines that will be utilized to determine whether a bank has (3) Government security has the same meaning as this fulfilled its suitability obligation with respect to a specific term has in section 3(a)(42) of the Securities Exchange institutional customer transaction and that the inclusion or Act of 1934 (15 U.S.C. 78c(a)(42)). absence of any of these factors is not dispositive of the (4) Non-institutional customer means any customer other determination of suitability. Such a determination can only than: be made on a case-by-case basis taking into consideration (i) A bank, savings association, insurance company, all the facts and circumstances of a particular bank/ or registered investment company; customer relationship, assessed in the context of a particu- (ii) An investment adviser registered under section lar transaction. 203 of the Investment Advisers Act of 1940 (k) For purposes of the interpretation in this section, an (15U.S.C.80b-3);or institutional customer shall be any entity other than a (iii) Any entity (whether a natural person, corporation, natural person. In determining the applicability of the partnership, trust, or otherwise) with total assets of at interpretation in this section to an institutional customer, least $50 million. the OCC will consider the dollar value of the securities that (c) Business conduct. A bank that is a government securithe institutional customer has in its portfolio and/or under ties broker or dealer shall observe high standards of commanagement. While the interpretation in this section is mercial honor and just and equitable principles of trade in potentially applicable to any institutional customer, the the conduct of its business as a government securities guidance contained in this section is more appropriately broker or dealer. applied to an institutional customer with at least $10 mil- (d) Recommendations to customers. In recommending to a lion invested in securities in the aggregate in its portfolio customer the purchase, sale or exchange of a government and/or under management. security, a bank that is a government securities broker or dealer shall have reasonable grounds for believing that the recommendation is suitable for the customer upon the basis Part 208—Membership of State Banking of the facts, if any, disclosed by the customer as to the Institutions in the Federal Reserve System customer's other security holdings and as to the customer's (Regulation H) financial situation and needs. (e) Customer information. Prior to the execution of a 1. The authority citation for Part 208 is revised to read as transaction recommended to a non-institutional customer, a follows: bank that is a government securities broker or dealer shall make reasonable efforts to obtain information concerning: Authority: 12 U.S.C. 36, 248(a), 248(c), 321-338a, 37Id, (1) The customer's financial status; 461, 481-486, 601, 611, 1814, 18230, 1828(o), 1831o, (2) The customer's tax status; 1831p-l, 3105,3310,3331-3351 and 3906-3909; 15 U.S.C. (3) The customer's investment objectives; and 78b, 781(b), 781 (g), 781(i), 78o-4(c)(5), 78o-5, 78q, 78q-l, (4) Such other information used or considered to be and 78w: 31 U.S.C. 5318; 42 U.S.C. 4012a, 4104a, 4104b, reasonable by the bank in making recommendations to 4106, and 4128. the customer. 2. A new section 208.25 is added to subpart A to read as 3. A new section 208.129 is added to subpart E to read as follows: follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

404 Federal Reserve Bulletin D May 1997 Section 208.129—Obligations concerning available to it, the customer's capability to evaluate investinstitutional customers. ment risk. In some cases, the bank may conclude that the customer is not capable of making independent investment (a) As a result of broadened authority provided by the decisions in general. In other cases, the institutional cus- Government Securities Act Amendments of 1993 tomer may have general capability, but may not be able to (15 U.S.C. 78o-3 and 78o-5)), the Board is adopting sales understand a particular type of instrument or its risk. This practice rules for the government securities market, a mar- is more likely to arise with relatively new types of instruket with a particularly broad institutional component. Ac- ments, or those with significantly different risk or volatility cordingly, the Board believes it is appropriate to provide characteristics than other investments generally made by further guidance to banks on their suitability obligations the institution. If a customer is either generally not capable when making recommendations to institutional customers. of evaluating investment risk or lacks sufficient capability (b) The Board's Suitability Rule, section 208.25(d), is to evaluate the particular product, the scope of a bank's fundamental to fair dealing and is intended to promote customer-specific obligations under section 208.25(d) ethical sales practices and high standards of professional would not be diminished by the fact that the bank was conduct. Banks' responsibilities include having a reason- dealing with an institutional customer. On the other hand, able basis for recommending a particular security or strat- the fact that a customer initially needed help understanding egy, as well as having reasonable grounds for believing the a potential investment need not necessarily imply that the recommendation is suitable for the customer to whom it is customer did not ultimately develop an understanding and made. Banks are expected to meet the same high standards make an independent investment decision, of competence, professionalism, and good faith regardless (g) A bank may conclude that a customer is exercising of the financial circumstances of the customer. independent judgement if the customer's investment decision will be based on its own independent assessment of (c) In recommending to a customer the purchase, sale, or the opportunities and risks presented by a potential investexchange of any government security, the bank shall have ment, market factors and other investment considerations. reasonable grounds for believing that the recommendation Where the bank has reasonable grounds for concluding that is suitable for the customer upon the basis of the facts, if the institutional customer is making independent investany, disclosed by the customer as to the customer's other ment decisions and is capable of independently evaluating security holdings and financial situation and needs. investment risk, then a bank's obligations under sec- (d) The interpretation in this section concerns only the tion 208.25(d) for a particular customer are fulfilled.2 manner in which a bank determines that a recommendation Where a customer has delegated decision-making authority is suitable for a particular institutional customer. The manto an agent, such as an investment advisor or a bank trust ner in which a bank fulfills this suitability obligation will department, the interpretation in this section shall be vary, depending on the nature of the customer and the applied to the agent. specific transaction. Accordingly, the interpretation in this section deals only with guidance regarding how a bank (h) A determination of capability to evaluate investment may fulfill customer-specific suitability obligations under risk independently will depend on an examination of the section 208.25(d).' customer's capability to make its own investment deci- (e) While it is difficult to define in advance the scope of a sions, including the resources available to the customer to bank's suitability obligation with respect to a specific insti- make informed decisions. Relevant considerations could tutional customer transaction recommended by a bank, the include: Board has identified certain factors that may be relevant (1) The use of one or more consultants, investment when considering compliance with section 208.25(d). advisers, or bank trust departments; These factors are not intended to be requirements or the (2) The general level of experience of the institutional only factors to be considered but are offered merely as customer in financial markets and specific experience guidance in determining the scope of a bank's suitability with the type of instruments under consideration; obligations. (3) The customer's ability to understand the economic (f) The two most important considerations in determining features of the security involved; the scope of a bank s suitability obligations in making (4) The customer's ability to independently evaluate recommendations to an institutional customer are the cus- how market developments would affect the security; and tomer's capability to evaluate investment risk indepen- (5) The complexity of the security or securities involved, dently and the extent to which the customer is exercising (i) A determination that a customer is making independent independent judgment in evaluating a bank's recommenda- investment decisions will depend on the nature of the tion. A bank must determine, based on the information relationship that exists between the bank and the customer. Relevant considerations could include: (1) Any written or oral understanding that exists be- 1. The interpretation in this section does not address the obligation tween the bank and the customer regarding the nature of related to suitability that requires that a bank have "... a 'reasonable basis' to believe that the recommendation could be suitable for at least some customers." In the Matter of the Application of FJ. Kaufman and Company of Virginia and Frederick J. Kaufman, Jr., 50 SEC 164 (1989). 2. See footnote 1 in paragraph (d) of this section. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 405 the relationship between the bank and the customer and required to give notice to the Board under section 15C of the services to be rendered by the bank; the Securities Exchange Act of 1934 (15 U.S.C. 78o-5) and (2) The presence or absence of a pattern of acceptance of the Department of the Treasury rules under section 15C the bank's recommendations; (17 C.F.R. 400. l(d) and part 401) shall be subject to the (3) The use by the customer of ideas, suggestions, mar- provisions of 12 C.F.R. 208.25 to the same extent as a state ket views and information obtained from other govern- member bank that is required to give such notice. ment securities brokers or dealers or market professionals, particularly those relating to the same type of Part 368—Government Securities Sales Practices securities; and (4) The extent to which the bank has received from the Section customer current comprehensive portfolio information in connection with discussing recommended transac- 368.1 Scope. tions or has not been provided important information 368.2 Definitions. regarding its portfolio or investment objectives. 368.3 Business conduct. (j) Banks are reminded that these factors are merely guide- 368.4 Recommendations to customers. lines that will be utilized to determine whether a bank has 368.5 Customer information. fulfilled its suitability obligation with respect to a specific 368.100 Obligations concerning institutional customers. institutional customer transaction and that the inclusion or absence of any of these factors is not dispositive of the Authority: 15 U.S.C. 78o-5. determination of suitability. Such a determination can only be made on a case-by-case basis taking into consideration Section 368.1—Scope. all the facts and circumstances of a particular bank/ customer relationship, assessed in the context of a particu- This part is applicable to state nonmember banks and lar transaction. insured state branches of foreign banks that have filed (k) For purposes of the interpretation in this section, an notice as, or are required to file notice as, government institutional customer shall be any entity other than a securities brokers or dealers pursuant to section 15C of the natural person. In determining the applicability of the Securities Exchange Act (15 U.S.C. 78o-5) and Departinterpretation in this section to an institutional customer, ment of the Treasury rules under section 15C (17 C.F.R. the Board will consider the dollar value of the securities 400.1(d) and part 401). that the institutional customer has in its portfolio and/or under management. While the interpretation in this section Section 368.2—Definitions. is potentially applicable to any institutional customer, the guidance contained in this section is more appropriately (a) Bank that is a government securities broker or dealer applied to an institutional customer with at least $10 mil- means a state nonmember bank or an insured state branch lion invested in securities in the aggregate in its portfolio of a foreign bank that has filed notice, or is required to file and/or under management. notice, as a government securities broker or dealer pursuant to section 15C of the Securities Exchange Act Part 211—International Banking Operations (15 U.S.C. 78o-5) and Department of the Treasury rules under section 15C (17 C.F.R. 400.1(d) and part 401). (Regulation K) (b) Customer does not include a broker or dealer or a 1. The authority citation for Part 211 is revised to read as government securities broker or dealer. follows: (c) Government security has the same meaning as this term has in section 3(a)(42) of the Securities Exchange Act of Authority: 12 U.S.C. 221 et seq., 1818, 1841 et seq., 3101 1934 (15 U.S.C. 78c(a)(42)). et seq., 3109 et seq.; 15 U.S.C. 78o-5. (d) Non-institutional customer means any customer other than: 2. Section 211.24 is amended by revising the section (1) A bank, savings association, insurance company, or heading and adding a new paragraph (g) to read as follows: registered investment company; (2) An investment adviser registered under section 203 Section 211.24—Approval of offices of foreign of the Investment Advisers Act of 1940 (15 U.S.C. banks; procedures for applications; standards for 80b-3); or approval; representative-office activities and (3) Any entity (whether a natural person, corporation, standards for approval; preservation of existing partnership, trust, or otherwise) with total assets of at authority; reports of crimes and suspected crimes; least $50 million. government securities sales practices. Section 368.3—Business conduct. (g) Government securities sales practices. An uninsured A bank that is a government securities broker or dealer state-licensed branch or agency of a foreign bank that is shall observe high standards of commercial honor and just Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

406 Federal Reserve Bulletin • May 1997 and equitable principles of trade in the conduct of its vary, depending on the nature of the customer and the business as a government securities broker or dealer. specific transaction. Accordingly, the interpretation in this section deals only with guidance regarding how a bank may fulfill customer-specific suitability obligations under Section 368.4—Recommendations to customers. section 368.4.' (e) While it is difficult to define in advance the scope of a In recommending to a customer the purchase, sale or bank's suitability obligation with respect to a specific instiexchange of a government security, a bank that is a governtutional customer transaction recommended by a bank, the ment securities broker or dealer shall have reasonable FDIC has identified certain factors that may be relevant grounds for believing that the recommendation is suitable when considering compliance with section 368.4. These for the customer upon the basis of the facts, if any, disfactors are not intended to be requirements or the only closed by the customer as to the customer's other security factors to be considered but are offered merely as guidance holdings and as to the customer's financial situation and in determining the scope of a bank's suitability obligations. needs. (f) The two most important considerations in determining the scope of a bank's suitability obligations in making Section 368.5—Customer information. recommendations to an institutional customer are the customer's capability to evaluate investment risk indepen- Prior to the execution of a transaction recommended to a dently and the extent to which the customer is exercising non-institutional customer, a bank that is a government independent judgement in evaluating a bank's recommensecurities broker or dealer shall make reasonable efforts to dation. A bank must determine, based on the information obtain information concerning: available to it, the customer's capability to evaluate invest- (a) The customer's financial status; ment risk. In some cases, the bank may conclude that the (b) The customer's tax status; customer is not capable of making independent investment (c) The customer's investment objectives; and decisions in general. In other cases, the institutional cus- (d) Such other information used or considered to be reason- tomer may have general capability, but may not be able to able by such bank in making recommendations to the understand a particular type of instrument or its risk. This customer. is more likely to arise with relatively new types of instruments, or those with significantly different risk or volatility characteristics than other investments generally made by Section 368.100—Obligations concerning the institution. If a customer is either generally not capable institutional customers. of evaluating investment risk or lacks sufficient capability to evaluate the particular product, the scope of a bank's (a) As a result of broadened authority provided by the customer-specific obligations under section 368.4 would Government Securities Act Amendments of 1993 not be diminished by the fact that the bank was dealing (15 U.S.C. 78o-3 and 78o-5)), the FDIC is adopting sales with an institutional customer. On the other hand, the fact practice rules for the government securities market, a marthat a customer initially needed help understanding a potenket with a particularly broad institutional component. Actial investment need not necessarily imply that the cuscordingly, the FDIC believes it is appropriate to provide tomer did not ultimately develop an understanding and further guidance to banks on their suitability obligations make an independent investment decision. when making recommendations to institutional customers. (b) The FDIC's suitability rule (section 368.4) is funda- (g) A bank may conclude that a customer is exercising mental to fair dealing and is intended to promote ethical independent judgement if the customer's investment decisales practices and high standards of professional conduct. sion will be based on its own independent assessment of Banks' responsibilities include having a reasonable basis the opportunities and risks presented by a potential investfor recommending a particular security or strategy, as well ment, market factors and other investment considerations. as having reasonable grounds for believing the recommen- Where the bank has reasonable grounds for concluding that dation is suitable for the customer to whom it is made. the institutional customer is making independent invest- Banks are expected to meet the same high standards of ment decisions and is capable of independently evaluating competence, professionalism, and good faith regardless of investment risk, then a bank's obligations under secthe financial circumstances of the customer. tion 368.4 for a particular customer are fulfilled.2 Where a (c) In recommending to a customer the purchase, sale, or customer has delegated decision-making authority to an exchange of any government security, the bank shall have reasonable grounds for believing that the recommendation is suitable for the customer upon the basis of the facts, if any, disclosed by the customer as to the customer's other 1. The interpretation in this section does not address the obligation security holdings and financial situation and needs. related to suitability that requires that a bank have "... a 'reasonable (d) The interpretation in this section concerns only the basis' to believe that the recommendation could be suitable for at least some customers." In the Matter of the Application of FJ. Kaufman manner in which a bank determines that a recommendation and Company of Virginia and Frederick J. Kaufman, Jr., 50 SEC 164 is suitable for a particular institutional customer. The man- (1989). ner in which a bank fulfills this suitability obligation will 2. See footnote 1 in paragraph (d) of this section. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 407 agent, such as an investment advisor or a bank trust depart- lion invested in securities in the aggregate in its portfolio ment, the interpretation in this section shall be applied to and/or under management. the agent. (h) A determination of capability to evaluate investment risk independently will depend on an examination of the FINAL RULE—AMENDMENT TO REGULATION M customer's capability to make its own investment decisions, including the resources available to the customer to The Board of Governors is amending 12 C.F.R. Part 213, make informed decisions. Relevant considerations could its Regulation M (Consumer Leasing), which implements include: the Consumer Leasing Act. The act requires lessors to (1) The use of one or more consultants, investment provide uniform cost and other disclosures about consumer advisers, or bank trust departments; lease transactions. The revisions primarily implement (2) The general level of experience of the institutional amendments to the act contained in the Economic Growth customer in financial markets and specific experience and Regulatory Paperwork Reduction Act of 1996, which with the type of instruments under consideration; streamline the advertising disclosures for lease transac- (3) The customer's ability to understand the economic tions. In addition, the final rule makes the disclosure of features of the security involved; upfront costs in connection with a specific lease agreement (4) The customer's ability to independently evaluate parallel statutory changes to the advertising rules discloshow market developments would affect the security; and ing upfront costs — which now include total amounts due (5) The complexity of the security or securities involved, by lease signing or delivery, if delivery occurs later. Sev- (i) A determination that a customer is making independent eral technical amendments also have been made to the investment decisions will depend on the nature of the regulation. relationship that exists between the bank and the customer. Effective April 1, 1997, 12 C.F.R. Part 213 is amended Relevant considerations could include: as follows: (1) Any written or oral understanding that exists between the bank and the customer regarding the nature of Part 213—Consumer Leasing (Regulation M) the relationship between the bank and the customer and the services to be rendered by the bank; 1. The authority citation for part 213 continues to read as (2) The presence or absence of a pattern of acceptance of follows: the bank's recommendations; (3) The use by the customer of ideas, suggestions, mar- Authority: 15 U.S.C. 1604. ket views and information obtained from other government securities brokers or dealers or market profession- 2. Section 213.1 is amended by revising paragraph (a) to als, particularly those relating to the same type of read as follows: securities; and (4) The extent to which the bank has received from the Section 213.1—Authority, scope, purpose, and customer current comprehensive portfolio information enforcement. in connection with discussing recommended transactions or has not been provided important information (a) Authority. The regulation in this part, known as Regularegarding its portfolio or investment objectives. tion M, is issued by the Board of Governors of the Federal (j) Banks are reminded that these factors are merely guide- Reserve System to implement the consumer leasing provilines that will be utilized to determine whether a bank has sions of the Truth in Lending Act, which is Title I of the fulfilled its suitability obligation with respect to a specific Consumer Credit Protection Act, as amended (15 U.S.C. institutional customer transaction and that the inclusion or 1601 et seq.). Information collection requirements conabsence of any of these factors is not dispositive of the tained in this regulation have been approved by the Office determination of suitability. Such a determination can only of Management and Budget under the provisions of be made on a case-by-case basis taking into consideration 44 U.S.C. 3501 et seq. and have been assigned OMB all the facts and circumstances of a particular bank/ control number 7100-0202. customer relationship, assessed in the context of a particular transaction. (k) For purposes of the interpretation in this section, an 3. Section 213.2 is amended by revising the first sentence institutional customer shall be any entity other than a of paragraph (f) to read as follows: natural person. In determining the applicability of the interpretation in this section to an institutional customer, Section 213.2—Definitions. the FDIC will consider the dollar value of the securities * * * * * that the institutional customer has in its portfolio and/or under management. While the interpretation in this section (f) Gross capitalized cost means the amount agreed upon is potentially applicable to any institutional customer, the by the lessor and the lessee as the value of the leased guidance contained in this section is more appropriately property and any items that are capitalized or amortized applied to an institutional customer with at least $10 mil- during the lease term, including but not limited to taxes, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

408 Federal Reserve Bulletin • May 1997 insurance, service agreements, and any outstanding prior Section 213.5—Renegotiations, extensions, and credit or lease balance. * * * assumptions. * * * * * 4. Section 213.4 is amended as follows: (d)Exceptions. *** (1) A reduction in the rent charge; a. Paragraph (b) is revised; b. Paragraph (f)(l) is revised. * * * ** c. Paragraph (n) is revised; 6. Section 213.7 is amended as follows: d. The headings of paragraphs (o)(l) and (o)(2) are revised; and a. Paragraph (b)(l) is revised; e. New paragraph (t) is added. b. Paragraph (d)(l)(i) is revised, paragraph (d)(l)(ii) is removed and republished, and paragraph (d)(l)(iii) is re- The revisions and additions read as follows: designated as (d)(l)(ii); c. Paragraphs (d)(2)(ii) and (d)(2)(iii) are revised, paragraph (d)(2)(iv) is removed, paragraphs (d)(2)(v) and Section 213.4—Content of disclosures. (d)(2)(vi) are revised and redesignated as paragraphs (d)(2)(iv) and (d)(2)(v) and paragraph (d)(2)(i) is repub- (b) Amount due at lease signing or delivery. The total lished, respectively. amount to be paid prior to or at consummation or by delivery, if delivery occurs after consummation, using the The revisions and republications read as follows: term "amount due at lease signing or delivery." The lessor shall itemize each component by type and amount, includ- Section 213.7—Advertising. ing any refundable security deposit, advance monthly or other periodic payment, and capitalized cost reduction; and in motor-vehicle leases, shall itemize how the amount due will be paid, by type and amount, including any net trade-in (b) Clear and conspicuous standard. * * * allowance, rebates, noncash credits, and cash payments in (1) Amount due at lease signing or delivery. Except for a format substantially similar to the model forms in Appen- the statement of a periodic payment, any affirmative or dix A of this part. negative reference to a charge that is a part of the disclosure required under paragraph (d)(2)(ii) of this section shall not be more prominent than that disclosure. (f) Payment calculation. * * * (1) Gross capitalized cost. The gross capitalized cost, including a disclosure of the agreed upon value of the (d) Advertisement of terms that require additional disclovehicle, a description such as "the agreed upon value of sure. the vehicle [state the amount] and any items you pay for (1) Triggering terms. An advertisement that states any of over the lease term (such as service contracts, insurance, the following items shall contain the disclosures reand any outstanding prior credit or lease balance)," and quired by paragraph (d)(2) of this section, except as a statement of the lessee's option to receive a separate provided in paragraphs (e) and (f) of this section: written itemization of the gross capitalized cost. If re- (i) The amount of any payment; or quested by the lessee, the itemization shall be provided (ii) A statement of any capitalized cost reduction or before consummation. other payment required prior to or at consummation or by delivery, if delivery occurs after consummation. (2) Additional terms. An advertisement stating any item (n) Fees and taxes. The total dollar amount for all official listed in paragraph (d)(l) of this section shall also state and license fees, registration, title, or taxes required to be the following items: paid in connection with the lease, (i) That the transaction advertised is a lease; (o) Insurance. * * * (ii) The total amount due prior to or at consummation (1) Through the lessor. *** or by delivery, if delivery occurs after consummation; (2) Through a third party. * * * (iii) The number, amounts, and due dates or periods of scheduled payments under the lease; (iv) A statement of whether or not a security deposit is (t) Non-motor vehicle open-end leases. Non-motor vehicle required; and open-end leases remain subject to section 182(10) of the (v) A statement that an extra charge may be imposed act regarding end of term liability. at the end of the lease term where the lessee's liability (if any) is based on the difference between the residual 5. Section 213.5 is amended by revising paragraph (d)(l) value of the leased property and its realized value at to read as follows: the end of the lease term. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 409 bank, from participation in major policymaking func- 7. Appendix A to Part 213 is amended by revising Appen- tions of the bank, and the director does not actually dix A-l and Appendix A-2 to read as follows: participate in such functions; (ii) The affiliate does not control the bank; (iii) As determined annually, the assets of the affiliate FINAL RULE—AMENDMENT TO REGULATION O do not constitute more than 10 percent of the consolidated assets of the company that— The Board of Governors is amending 12 C.F.R. Part 215, (A) Controls the bank; and its Regulation O (Loans to Executive Officers, Directors, (B) Is not controlled by any other company; and and Principal Shareholders of Member Banks; Loans to (iv) The director of the affiliate is not otherwise sub- Holding Companies and Affiliates), which implements secject to sections 215.4,215.6, and 215.8. tion 22(h) of the Federal Reserve Act and limits how much and on what terms a bank may lend to its own insiders and (3) For purposes of paragraph (d)(2)(i) of this section, a insiders of its affiliates. Under the final rule, Regulation O resolution of the board of directors or a corporate bylaw will not apply to extensions of credit by a bank to an may— executive officer or director of an affiliate, provided that the (i) Include the director (by name or by title) in a list of executive officer or director is not engaged in major policy- persons excluded from participation in such functions; making functions of the bank and the affiliate does not or account for more than 10 percent of the consolidated assets (ii) Not include the director in a list of persons authoof the bank's parent holding company. Extensions of credit rized (by name or by title) to participate in such to executive officers of an affiliate that accounts for more functions. than 10 percent of the consolidated assets of the bank's (e)(l) * * * parent holding company are covered by Regulation O as a (2) Extensions of credit to an executive officer of an result of the Economic Growth and Regulatory Paperwork affiliate of a bank are not subject to sections 215.4, Reduction Act of 1996. 215.6, and 215.8 if— (i) The executive officer is excluded, by resolution of Effective April 1, 1997, 12 C.F.R. Part 215 is amended the board of directors or by the bylaws of the bank, as follows: from participation in major policymaking functions of the bank, and the executive officer does not actually Part 215—Loans to Executive Officers, Directors participate in such functions; and Principal Shareholders of Member Banks (ii) The affiliate does not control the bank; (Regulation O) (iii) As determined annually, the assets of the affiliate do not constitute more than 10 percent of the consoli- 1. The authority citation for part 215 continues to read as dated assets of the company that— follows: (A) Controls the bank; and (B) Is not controlled by any other company; and Authority: 12 U.S.C. 248(i), 375a(10), 375b(9) and (10), (iv) The executive officer of the affiliate is not other- 1817(k)(3) and 1972(2)(G)(ii); Pub. L. 102-242, 105 Stat. wise subject to sections 215.4, 215.6, and 215.8. 2236. (3) For purposes of paragraphs (e)(l) and (e)(2)(i) of this section, a resolution of the board of directors or a 2. Section 215.2 is amended as follows: corporate bylaw may— a. Paragraph (d) introductory text and paragraphs (d)(l) (i) Include the executive officer (by name or by title) through (d)(3) are redesignated as paragraph (d)(l) intro- in a list of persons excluded from participation in such ductory text and paragraphs (d)(l)(i) through (d)(l)(iii), functions; or respectively; (ii) Not include the executive officer in a list of b. New paragraphs (d)(2) and (d)(3) are added; persons authorized (by name or by title) to participate c. Paragraph (e)(2) is revised; and in such functions. d. A new paragraph (e)(3) is added. The additions and revisions read as follows: 3. Section 215.4 is amended by revising paragraph (a)(2) introductory text to read as follows: Section 215.2—Definitions. * * * * * Section 215.4—General prohibitions. (d)(l) * * * (2) Extensions of credit to a director of an affiliate of a (a) * * * bank are not subject to sections 215.4, 215.6, and 215.8 (2) Exception. Nothing in this paragraph (a) or paraif— graph (e)(2)(ii) of this section shall prohibit any exten- (i) The director of the affiliate is excluded, by resolu- sion of credit made pursuant to a benefit or compensation of the board of directors or by the bylaws of the tion program— Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

410 Federal Reserve Bulletin • May 1997 Appendix A-l Model Open-End or Finance Vehicle Lease Disclosures Federal Consumer Leasing Act Disclosures Date Lessor(s) Lessee(s) Amount Due at Monthly Payments Other Charges (not part of your monthly Total of Payments Lease Signing payment) (The amount you will have or Delivery paid by the end of the lease) Your first monthly payment of $ Disposition fee (if you do (Itemized below)* is due on , followed by not purchase the vehicle) $ . payments of $ . due on the. of each month. The total of your You will owe an additional monthly payments is $ amount if the actual value of Total the vehicle is less than the residual value. * Hemization of Amount Due at Lease Signing or Delivery Amount Due At Lease Signing or Delivery: How the Amount Due at Lease Signing or Delivery will be paid: Capitalized cost reduction $ Net trade-in allowance First monthly payment Rebates and noncash credits Refundable security deposit Amount to be paid in cash Title fees Registration fees Total $ Total $ Your monthly payment is determined as shown below: Gross capitalized cost. The agreed upon value of the vehicle ($_ _) and any items you pay over the lease term (such as service contracts, insurance, and any outstanding prior credit or lease balance) If you want an itemization of this amount, please check this box. D Capitalized cost reduction. The amount of any net trade-in allowance, rebate, noncash credit, or cash you pay that reduces the gross capitalized cost Adjusted capitalized cost. The amount used in calculating your base monthly payment Residual value. The value of the vehicle at the end of the lease used in calculating your base monthly payment Depreciation and any amortized amounts. The amount charged for the vehicle's decline in value through normal use and for other items paid over the lease term Rent charge. The amount charged in addition to the depreciation and any amortized amounts Total of base monthly payments. The depreciation and any amortized amounts plus the rent charge Lease term. The number of months in your lease Base monthly payment Monthly sales/use tax Total monthly payment Rent and other charges. The total amount of rent and other charges imposed in connection with your lease $ . Early Termination. You may have to pay a substantial charge if you end this lease early. The charge may be up to several thousand dollars. The actual charge will depend on when the lease is terminated. The earlier you end the lease, the greater this charge is likely to be. Excessive Wear and Use. You may be charged for excessive wear based on our standards for normal use [and for mileage in excess of miles per year at the rate of per mile]. Purchase Option at End of Lease Term. [You have an option to purchase the vehicle at the end of the lease term for $ land a purchase option fee of $ |.[ [You do not have an option to purchase the vehicle at the end of the lease term.] Other Important Terms. See your lease documents for additional information on early termination, purchase options and maintenance responsibilities, warranties, late and default charges, insurance, and any security interest, if applicable. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 411 Appendix A-l Model Open-End or Finance Vehicle Lease Disclosures Page 2 of 2 [The following provisions are the nonsegregated disclosures required under Regulation M.] Description of Leased Property Year Make Model Body Style Vehicle ID # Official Fees and Taxes. The total amount you will pay for official and license fees, registration, title, and taxes over the term of your lease, whether included with your monthly payments or assessed otherwise: $ . Insurance. The following types and amounts of insurance will be acquired in connection with this lease: We (lessor) will provide the insurance coverage quoted above for a total premium cost of $ . You (lessee) agree to provide insurance coverage in the amount and types indicated above. End of Term Liability, (a) The residual value ($ ) of the vehicle is based on a reasonable, good faith estimate of the value of the vehicle at the end of the lease term. If the actual value of the vehicle at that time is greater than the residual value, you will have no further liability under this lease, except for other charges already incurred [and are entitled to a credit or refund of any surplus.] If the actual value of the vehicle is less than the residual value, you will be liable for any difference up to $ (3 times the monthly payment). For any difference in excess of that amount, you will be liable only if: 1. Excessive use or damage [as described in paragraph ] [representing more than normal wear and use] resulted in an unusually low value at the end of the term. 2. The matter is not otherwise resolved and we win a lawsuit against you seeking a higher payment. 3. You voluntarily agree with us after the end of the lease term to make a higher payment. Should we bring a lawsuit against you, we must prove that our original estimate of the value of the leased property at the end of the lease term was reasonable and was made in good faith. For example, we might prove that the actual was less than the original estimated value, although the original estimate was reasonable, because of an unanticipated decline in value for that type of vehicle. We must also pay your attorney's fees. (b) If you disagree with the value we assign to the vehicle, you may obtain, at your own expense, from an independent third party agreeable to both of us, a professional appraisal of the value of the leased vehicle which could be realized at sale. The appraised value shall then be used as the actual value. Standards for Wear and Use. The following standards are applicable for determining unreasonable or excess wear and use of the leased vehicle: Maintenance. [You are responsible for the following maintenance and servicing of the leased vehicle: [We are responsible for the following maintenance and servicing of the leased vehicle: Warranties. The leased vehicle is subject to the following express warranties: Early Termination and Default, (a) You may terminate this lease before the end of the lease term under the following conditions: The charge for such early termination is: (b) We may terminate this lease before the end of the lease term under the following conditions: Upon such termination we shall be entitled to the following charge(s) for: (c) To the extent these charges take into account the value of the vehicle at termination, if you disagree with the value we assign to the vehicle, you may obtain, at your own expense, from an independent third party agreeable to both of us, a professional appraisal of the value of the leased vehicle which could be realized at sale. The appraised value shall then be used as the actual value. Security Interest. We reserve a security interest of the following type in the property listed below to secure performance of your obligation under this lease: Late Payments. The charge for late payments is: Option to Purchase Leased Property Prior to the End Of the Lease. [You have an option to purchase the leased vehicle prior to the end of the term. The price will be [$ /[the method of determining the price].] [You do not have an option to purchase the leased vehicle.] Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

412 Federal Reserve Bulletin • May 1997 Appendix A-2 Model Closed-End or Net Vehicle Lease Disclosures Federal Consumer Leasing Act Disclosures Date Lessor(s) Lessee(s) Amount Due at Monthly Payments Other Charges (not part of your monthly Total of Payments Lease Signing payment) (The amount you will have or Delivery paid by the end of the lease) Your first monthly payment of $ Disposition fee (if you do (Itemized below)* is due on ., followed by not purchase the vehicle) $ payments of $ due on the. of each month. The total of your monthly payments is $ . Total * Itemi/ation of Amount Due at Lease Signing or Delivery Amount Due At Lease Signing or Delivery: I low the Amount Due at Lease Signing or Delivery will be paid: Capitalized cost reduction $ Net trade-in allowance $ First monthly payment Rebates and noncash credits Refundable security deposit Amount to be paid in cash Title fees Registration fees Total $ Total $ " Your monthly payment is determined as shown below: ~~ Gross capitalized cost. The agreed upon value of the vehicle ($ ) and any items you pay over the lease term (such as service contracts, insurance, and any outstanding prior credit or lease balance) $ If you want an itemization of this amount, please check this box. LJ Capitalized cost reduction. The amount of any net trade-in allowance, rebate, noncash credit, or cash you pay that reduces the gross capitalized cost ~ Adjusted capitalized cost. The amount used in calculating your base monthly payment Residual value. The value of the vehicle at the end of the lease used in calculating your base monthly payment Depreciation and any amortized amounts. The amount charged for the vehicle's decline in value through normal use and for other items paid over the lease term Rent charge. The amount charged in addition to the depreciation and any amortized amounts Total of base monthly payments. The depreciation and any amortized amounts plus the rent charge Lease term. The number of months in your lease ' Base monthly payment Monthly sales/use tax + =$ Total monthly payment Early Termination. You may have to pay a substantial charge if you end this lease early. The charge may be up to several thousand dollars. The actual charge will depend on when the lease is terminated. The earlier you end the lease, the greater this charge is likely to be. Excessive Wear and Use. You may be charged for excessive wear based on our standards for normal use [and for mileage in excess of miles per year at the rate of per milej. Purchase Option at End of Lease Term. [You have an option to purchase the vehicle at the end of the lease term for $ [and a purchase option fee of $ ].] [You do not have an option to purchase the vehicle at the end of the lease term.] Other Important Terms. See your lease documents for additional information on early termination, purchase options and maintenance responsibilities, warranties, late and default charges, insurance, and any security interest, if applicable. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 413 Appendix A-2 Model Closed-End or Net Vehicle Lease Disclosures Page 2 of 2 [The following provisions are the nonsegregated disclosures required under Regulation M.I Description of Leased Properly Year Make Model Body Style Vehicle ID # Official Fees and Taxes. The total amount you will pay for official and license fees, registration, title, and taxes over the term of your lease, whether included with your monthly payments or assessed otherwise: $ . Insurance. The following types and amounts of insurance will be acquired in connection with this lease: We (lessor) will provide the insurance coverage quoted above for a total premium cost of S . You (lessee) agree to provide insurance coverage in the amount and types indicated above. Standards for Wear and Use. The following standards are applicable for determining unreasonable or excess wear and use of the leased vehicle: Maintenance. [You are responsible for the following maintenance and servicing of the leased vehicle: [We are responsible for the following maintenance and servicing of the leased vehicle: Warranties. The leased vehicle is subject to the following express warranties: Early Termination and Default, (a) You may terminate this lease before the end of the lease term under the following conditions: The charge for such early termination is: (b) We may terminate this lease before the end of the lease term under the following conditions: Upon such termination we shall be entitled to the following charge(s) for: (c) To the extent these charges take into account the value of the vehicle at termination, if you disagree with the value we assign to the vehicle, you may obtain, at your own expense, from an independent third party agreeable to both of us, a professional appraisal of the value of the leased vehicle which could be realized at sale. The appraisal value shall then be used as the actual value. Security Interest. We reserve a security interest of the following type in the property listed below to secure performance of your obligation under this lease: Late Payments. The charge for late payments is: Option to Purchase Leased Property Prior to the End of the Lease. [You have an option to purchase the leased vehicle prior to the end of the term. The price will be [$ /[the method of determining the price], | [You do not have an option to purchase the leased vehicle.] Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

414 Federal Reserve Bulletin • May 1997 d. Paragraph (g)(4) is redesignated as paragraph (g)(5) and new paragraph (g)(4) is added; and FINAL RULE-AMENDMENT TO REGULATION CC e. Paragraph (h)(4) is revised. The Board of Governors is amending 12 C.F.R. Part 229, The addition and revisions read as follows: its Regulation CC (Availability of Funds and Collection of Checks). The amendments relate to the availability of Section 229.13—Exceptions. funds and collection of checks. The amendments do not represent any major policy changes and are intended to clarify the regulation and, in some cases, reduce the compliance burden for depository institutions. (g) Notice of exception—(1) * * * Effective April 28, 1997, 12 C.F.R. Part 229 is amended (i) * * * as follows: (B) The date of the deposit; Part 229—Availability of Funds and Collection of (E) The time period within which the funds will be Checks (Regulation CC) available for withdrawal. 1. The authority citation for part 229 continues to read as follows: (4) Emergency conditions exception notice. When a depositary bank extends the time when funds will be Authority: 12 U.S.C. 4001 et seq. available for withdrawal based on the application of the emergency conditions exception contained in paragraph 2. In section 229.2, the first sentence in paragraph (e) (f) of this section, it must provide the depositor with concluding text is revised, paragraph (s) is revised, paranotice in a reasonable form and within a reasonable time graph (pp) is redesignated as paragraph (qq), and a new given the circumstances. The notice shall include the paragraph (pp) is added to read as follows: reason the exception was invoked and the time period within which funds shall be made available for with- Section 229.2—Definitions. drawal, unless the depositary bank, in good faith, does not know at the time the notice is given the duration of the emergency and, consequently, when the funds must (e) * * * be made available. The depositary bank is not required For purposes of subpart C of this part and, in connection to provide a notice if the funds subject to the exception therewith, this subpart A, the term bank also includes any become available before the notice must be sent. person engaged in the business of banking, as well as a Federal Reserve Bank, a Federal Home Loan Bank, and a state or unit of general local government to the extent that (h) Availability of deposits subject to exceptions. * * * the state or unit of general local government acts as a (4) For the purposes of this section, a "reasonable peripaying bank. * * * od" is an extension of up to one business day for checks described in section 229.10(c)(l)(vi), five business days for checks described in section 229.12(b)(l) through (4), (s) Local paying bank means a paying bank that is located and six business days for checks described in section in the same check-processing region as the physical loca- 229.12(c)(l) and (2) or section 229.12(f). A longer extion of the branch, contractual branch, or proprietary ATM tension may be reasonable, but the bank has the burden of the depositary bank in which that check was deposited. of so establishing. 4. Section 229.16(c)(2)(i)(B) is revised to read as follows: (pp) Contractual branch, with respect to a bank, means a branch of another bank that accepts a deposit on behalf of the first bank. Section 229.16—Specific availability policy disclosure. 3. Section 229.13 is amended as follows: * * * ** (c) Longer delays on a case-by-case basis. * * * a. In paragraphs (g)(l) introductory text and (g)(l)(ii)(A), i J \ *r* *t* T^ ill ^^ ^^ the phrase "paragraphs (b) through (f)" is revised to read (B) The date of the deposit; "paragraphs (b) through (e)"; * * * ** b. Paragraphs (g)(l)(i)(B) and (g)(l)(i)(E) are revised; c. Paragraph (g)(l)(ii)(B) is removed and the paragraph 5. In section 229.19, paragraph (a)(l) and the first sentence designation (g)(l)(ii)(A) is removed; of paragraph (a)(5)(ii) are revised to read as follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 415 Section 229.19—Miscellaneous. ment amount against subsequent settlements for checks presented, or for returned checks for which it is the (a) * * * depositary bank, that it receives from the other bank. (1) Funds deposited at a staffed facility, ATM, or contractual branch are considered deposited when they are received at the staffed facility, ATM, or contractual (0 Notice of claim. Unless a claimant gives notice of a branch; claim for breach of warranty under this section to the bank that made the warranty within 30 days after the claimant has reason to know of the breach and the identity of the warranting bank, the warranting bank is discharged to the (ii) After a cut-off hour set by the depositary bank for extent of any loss caused by the delay in giving notice of the receipt of deposits of 2:00 p.m. or later, or, for the the claim. receipt of deposits at ATMs, contractual branches, or off-premise facilities, of 12:00 noon or later. * * * 8. In section 229.36, the heading and the last sentence of paragraph (c) and paragraph (e)(l)(ii) are revised to read as follows: 6. In section 229.30, paragraph (c) is revised to read as follows: Section 229.36—Presentment and issuance of checks. Section 229.30—Paying bank's responsibility for return of checks. (c) Electronic presentment. * * * An electronic presentment agreement may not extend return times or otherwise (c) Extension of deadline. The deadline for return or notice vary the requirements of this part with respect to parties of nonpayment under the U.C.C. or Regulation J (12 C.F.R. interested in the check that are not party to the agreement. part 210), or section 229.36(0(2) is extended to the time of dispatch of such return or notice of nonpayment where a paying bank uses a means of delivery that would ordinarily (e) Issuance of payable-through checks. (1)*** result in receipt by the bank to which it is sent — (1) On or before the receiving bank's next banking day (ii) The words "payable through" followed by the following the otherwise applicable deadline, for all dead- name of the payable-through bank. lines other than those described in paragraph (c)(2) of this section; this deadline is extended further if a paying bank uses a highly expeditious means of transportation, 9. In section 229.39, paragraph (b) is revised to read as even if this means of transportation would ordinarily follows: result in delivery after the receiving bank's next banking day; or Section 229.39—Insolvency of bank. (2) Prior to the cut-off hour for the next processing cycle * * * ** (if sent to a returning bank), or on the next banking day (if sent to the depositary bank), for a deadline falling on (b) Preference against paying or depositary bank. If a a Saturday that is a banking day (as defined in the paying bank finally pays a check, or if a depositary bank applicable U.C.C.) for the paying bank. becomes obligated to pay a returned check, and suspends payment without making a settlement for the check or returned check with the prior bank that is or becomes final, 7. In section 229.34, the section heading and para- the prior bank has a preferred claim against the paying graph (c)(4) are revised and a new paragraph (f) is added to bank or the depositary bank. read as follows: * * * ** 10. Section 229.42 is revised to read as follows: Section 229.34—Warranties. * * * ** Section 229.42—Exclusions. (c) Warranty of settlement amount, encoding, and offset. * * * The expeditious-return (sections 229.30(a) and 229.31 (a)), notice-of-nonpayment (section 229.33), and same-day settlement (section 229.36(0) requirements of this subpart do (4) If a bank settles with another bank for checks pre- not apply to a check drawn upon the United States Treasented, or for returned checks for which it is the deposi- sury, to a U.S. Postal Service money order, or to a check tary bank, in amount exceeding the total amount of the drawn on a state or a unit of general local government that checks, the settling bank may set off the excess settle- is not payable through or at a bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

416 Federal Reserve Bulletin • May 1997 1 ]. A new section 229.43 is added to read as follows: disclosure requirements of Regulation CC (12 C.F.R. Part 229). Although use of these models is not required, banks using them properly to make disclosures required by Section 229.43—Checks payable in Guam, the Regulation CC are deemed to be in compliance. American Samoa, and the Northern Mariana Islands. MODEL AVAILABILITY POLICY DISCLOSURES (a) Definitions. The definitions in section 229.2 apply to this section, unless otherwise noted. In addition, for the purposes of this section— (1) Pacific island bank means an office of an institution MODEL CLAUSES that would be a bank as defined in section 229.2(e) but for the fact that the office is located in Guam, American C-11A Availability of funds deposited at other locations Samoa, or the Northern Mariana Islands; (2) Pacific island check means a demand draft drawn on * * * ** or payable through or at a Pacific island bank, which is not a check as defined in section 229.2(k). MODEL AVAILABILITY POLICY DISCLOSURES (b) Rules applicable to Pacific island checks. To the extent a bank handles a Pacific island check as if it were a check C-l—Next-day availability defined in section 229.2(k), the bank is subject to the following sections of this part (and the word "check" in each such section is construed to include a Pacific island YOUR ABILITY TO WITHDRAW FUNDS check)— (1) Section 229.31, except that the returning bank is not Our policy is to make funds from your cash and check subject to the requirement to return a Pacific island deposits available to you on the first business day after check in an expeditious manner; the day we receive your deposit. Electronic direct depos- (2) Section 229.32; its will be available on the day we receive the deposit. (3) Section 229.34(c)(2), (c)(3), (d), and (e); Once the funds are available, you can withdraw them in (4) Section 229.35; for purposes of section 229.35(c), cash and we will use them to pay checks that you have the Pacific island bank is deemed to be a bank; written. (5) Section 229.36(d); For determining the availability of your deposits, (6) Section 229.37; every day is a business day, except Saturdays, Sundays, (7) Section 229.38(a) and (c) through (h); and federal holidays. If you make a deposit before (time (8) Section 229.39(a), (b), (c) and (e); and of day) on a business day that we are open, we will (9) Sections 229.40 through 229.42. consider that day to be the day of your deposit. However, if you make a deposit after (time of day) or on a 12. Appendix C to Part 229 is amended as follows: day we are not open, we will consider that the deposit was made on the next business day we are open. a. The appendix heading is revised; b. The introductory text is revised; C-2—Next-day availability and section 229.13 exceptions c. The heading above the contents listing for models C-l through C-5 is revised; d. A new item is added to the end of the contents listing for YOUR ABILITY TO WITHDRAW FUNDS Model Clauses; e. The heading immediately above model policy disclosure Our policy is to make funds from your cash and check "C-l—Next-day availability" is revised; and deposits available to you on the first business day after f. Model Availability Policy Disclosures C-l through C-5, the day we receive your deposit. Electronic direct depos- Model Clauses C-9 and C-10, and Model Notices C-12 its will be available on the day we receive the deposit. through C-16 are revised, and a new Model Clause C-11A Once they are available, you can withdraw the funds in is added. cash and we will use the funds to pay checks that you have written. The revisions and additions read as follows: For determining the availability of your deposits, every day is a business day, except Saturdays, Sundays, and federal holidays. If you make a deposit before (time of day) on a business day that we are open, we will APPENDIX C TO PART 229—MODEL AVAILABILITY consider that day to be the day of your deposit. How- POLICY DISCLOSURES, CLAUSES, AND NOTICES ever, if you make a deposit after (time of day) or on a This Appendix contains model availability policy disclo- day we are not open, we will consider that the deposit sures, clauses, and notices to facilitate compliance with the was made on the next business day we are open. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 417 LONGER DELAYS MAY APPLY ever, if you make a deposit after (time of day) or on a day we are not open, we will consider that the deposit Funds you deposit by check may be delayed for a was made on the next business day we are open. longer period under the following circumstances: • We believe a check you deposit will not be paid. LONGER DELAYS MAY APPLY • You deposit checks totaling more than $5,000 on any In some cases, we will not make all of the funds that one day. you deposit by check available to you on the first busi- • You redeposit a check that has been returned unpaid. ness day after the day of your deposit. Depending on the • You have overdrawn your account repeatedly in the type of check that you deposit, funds may not be availlast six months. able until the fifth business day after the day of your • There is an emergency, such as failure of computer or deposit. The first $100 of your deposits, however, may communications equipment. be available on the first business day. We will notify you if we delay your ability to withdraw If we are not going to make all of the funds from your funds for any of these reasons, and we will tell you when deposit available on the first business day, we will notify the funds will be available. They will generally be you at the time you make your deposit. We will also tell available no later than the (number) business day after you when the funds will be available. If your deposit is the day of your deposit. not made directly to one of our employees, or if we decide to take this action after you have left the pre- SPECIAL RULES FOR NEW ACCOUNTS mises, we will mail you the notice by the day after we receive your deposit. If you are a new customer, the following special rules If you will need the funds from a deposit right away, will apply during the first 30 days your account is open. you should ask us when the funds will be available. Funds from electronic direct deposits to your account In addition, funds you deposit by check may be dewill be available on the day we receive the deposit. layed for a longer period under the following circum- Funds from deposits of cash, wire transfers, and the first stances: $5,000 of a day's total deposits of cashier's, certified, • We believe a check you deposit will not be paid. teller's, traveler's, and federal, state and local govern- • You deposit checks totaling more than $5,000 on any ment checks will be available on the first business day one day. after the day of your deposit if the deposit meets certain • You redeposit a check that has been returned unpaid. conditions. For example, the checks must be payable to • You have overdrawn your account repeatedly in the you (and you may have to use a special deposit slip). last six months. The excess over $5,000 will be available on the ninth • There is an emergency, such as failure of computer or business day after the day of your deposit. If your communications equipment. deposit of these checks (other than a U.S. Treasury We will notify you if we delay your ability to withdraw check) is not made in person to one of our employees, funds for any of these reasons, and we will tell you when the first $5,000 will not be available until the second the funds will be available. They will generally be business day after the day of your deposit. available no later than the (number) business day after Funds from all other check deposits will be available the day of your deposit. on the (number) business day after the day of your deposit. SPECIAL RULES FOR NEW ACCOUNTS C-3—Next-day availability, case-by-case holds to statutory limits, and section 229.13 exceptions If you are a new customer, the following special rules will apply during the first 30 days your account is open. Funds from electronic direct deposits to your account YOUR ABILITY TO WITHDRAW FUNDS will be available on the day we receive the deposit. Funds from deposits of cash, wire transfers, and the first Our policy is to make funds from your cash and check $5,000 of a day's total deposits of cashier's, certified, deposits available to you on the first business day after teller's, traveler's, and federal, state and local governthe day we receive your deposit. Electronic direct depos- ment checks will be available on the first business day its will be available on the day we receive the deposit. after the day of your deposit if the deposit meets certain Once they are available, you can withdraw the funds in conditions. For example, the checks must be payable to cash and we will use the funds to pay checks that you you (and you may have to use a special deposit slip). have written. The excess over $5,000 will be available on the ninth For determining the availability of your deposits, ev- business day after the day of your deposit. If your ery day is a business day, except Saturdays, Sundays, deposit of these checks (other than a U.S. Treasury and federal holidays. If you make a deposit before (time check) is not made in person to one of our employees, of day) on a business day that we are open, we will the first $5,000 will not be available until the second consider that day to be the day of your deposit. How- business day after the day of your deposit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

418 Federal Reserve Bulletin • May 1997 Funds from all other check deposits will be available Other Check Deposits on the (number) business day after the day of your deposit. To find out when funds from other check deposits will C-4—Holds to statutory limits on all deposits (includes be available, look at the first four digits of the routing chart) number on the check: YOUR ABILITY TO WITHDRAW FUNDS Personal Check 19 Our policy is to delay the availability of funds from Pay to the your cash and check deposits. During the delay, you may order of 1 S not withdraw the funds in cash and we will not use the dollars funds to pay checks that you have written. (Bank name and Location) DETERMINING THE AVAILABILITY OF A DEPOSIT 123456789 0000000000 000 The length of the delay is counted in business days Routine number from the day of your deposit. Every day is a business day except Saturdays, Sundays, and federal holidays. If Business Check you make a deposit before (time of day) on a business Name of Company day that we are open, we will consider that day to be the Address, City, State 19 day of your deposit. However, if you make a deposit Pay to the after (time of day) or on a day we are not open, we will order of $ consider that the deposit was made on the next business dollars (Bank name and day we are open. Location) The length of the delay varies depending on the type of deposit and is explained below. 000000000 123456789 0000000000 000 Same-Day Availability Routing number Funds from electronic direct deposits to your account Some checks are marked "payable through" and have will be available on the day we receive the deposit. a four- or nine-digit number nearby. For these checks, use this four-digit number (or the first four digits of the Next-Day Availability nine-digit number), not the routing number on the bottom of the check, to determine if these checks are local Funds from the following deposits are available on or nonlocal. Once you have determined the first four the first business day after the day of your deposit: digits of the routing number (1234 in the examples • U.S. Treasury checks that are payable to you. above), the following chart will show you when funds • Wire transfers. from the check will be available: • Checks drawn on (hank name) [unless (any limitations related to branches in different states or check processing regions)]. First four digits When funds are If you make the deposit in person to one of our from routing When funds are available if a deposit employees, funds from the following deposits are also number available is made on a Monday available on the first business day after the day of your [local numbers] $100 on the first Tuesday. deposit: business day after the • Cash. day of your deposit. • State and local government checks that are payable to you [if you use a special deposit slip available from Remaining funds on Wednesday. (where deposit slip may be obtained)]. the second business • Cashier's, certified, and teller's checks that are pay- day after the day of able to you [if you use a special deposit slip available your deposit. from (where deposit slip may be obtained)]. All other numbers $100 on the first Tuesday. • Federal Reserve Bank checks, Federal Home Loan business day after the Bank checks, and postal money orders, if these items day of your deposit. are payable to you. If you do not make your deposit in person to one of Remaining funds on Monday of the our employees (for example, if you mail the deposit), the fifth business day following week. funds from these deposits will be available on the sec- after the day of your ond business day after the day we receive your deposit. deposit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 419 If you deposit both categories of checks, $100 from you make a deposit before (time of day) on a business the checks will be available on the first business day day that we are open, we will consider that day to be the after the day of your deposit, not $100 from each cate- day of your deposit. However, if you make a deposit gory of check. after (time of day) or on a day we are not open, we will consider that the deposit was made on the next business LONGER DELAYS MAY APPLY day we are open. The length of the delay varies depending on the type Funds you deposit by check may be delayed for a of deposit and is explained below. longer period under the following circumstances: • We believe a check you deposit will not be paid. Same-Day Availability • You deposit checks totaling more than $5,000 on any one day. Funds from electronic direct deposits to your account • You redeposit a check that has been returned unpaid. will be available on the day we receive the deposit. • You have overdrawn your account repeatedly in the last six months. Next-Day Availability • There is an emergency, such as failure of computer or communications equipment. Funds from the following deposits are available on the We will notify you if we delay your ability to with- first business day after the day of your deposit: draw funds for any of these reasons, and we will tell you • U.S. Treasury checks that are payable to you. when the funds will be available. They will generally be • Wire transfers. available no later than the (number) business day after • Checks drawn on (bank name) [unless (any limitathe day of your deposit. tions related to branches in different states or check processing regions)]. SPECIAL RULES FOR NEW ACCOUNTS If you make the deposit in person to one of our employees, funds from the following deposits are also available on If you are a new customer, the following special rules the first business day after the day of your deposit: will apply during the first 30 days your account is open. • Cash. Funds from electronic direct deposits to your account • State and local government checks that are payable to will be available on the day we receive the deposit. you [if you use a special deposit slip available from Funds from deposits of cash, wire transfers, and the first (where deposit slip may be obtained)]. $5,000 of a day's total deposits of cashier's, certified, • Cashier's, certified, and teller's checks that are payteller's, traveler's, and federal, state and local govern- able to you [if you use a special deposit slip available ment checks will be available on the first business day from (where deposit slip may be obtained)]. after the day of your deposit if the deposit meets certain • Federal Reserve Bank checks, Federal Home Loan conditions. For example, the checks must be payable to Bank checks, and postal money orders, if these items you (and you may have to use a special deposit slip). are payable to you. The excess over $5,000 will be available on the ninth If you do not make your deposit in person to one of our business day after the day of your deposit. If your employees (for example, if you mail the deposit), funds deposit of these checks (other than a U.S. Treasury from these deposits will be available on the second busicheck) is not made in person to one of our employees, ness day after the day we receive your deposit. the first $5,000 will not be available until the second business day after the day of your deposit. Other Check Deposits Funds from all other check deposits will be available on the (number) business day after the day of your deposit. The delay for other check deposits depends on whether the check is a local or a nonlocal check. To see whether a C-5—Holds to statutory limits on all deposits check is a local or a nonlocal check, look at the routing number on the check: YOUR ABILITY TO WITHDRAW FUNDS If the first four digits of the routing number (1234 in Our policy is to delay the availability of funds from the examples above) are (list of local numbers), then the your cash and check deposits. During the delay, you may check is a local check. Otherwise, the check is a nonlonot withdraw the funds in cash and we will not use the cal check. Some checks are marked "payable through" funds to pay checks that you have written. and have a four- or nine-digit number nearby. For these checks, use the four-digit number (or the first four digits DETERMINING THE AVAILABILITY OF A DEPOSIT of the nine-digit number), not the routing number on the bottom of the check, to determine if these checks are The length of the delay is counted in business days local or nonlocal. Our policy is to make funds from local from the day of your deposit. Every day is a business and nonlocal checks available as follows. day except Saturdays, Sundays, and federal holidays. If 1. Local checks. The first $100 from a deposit of local Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

420 Federal Reserve Bulletin • May 1997 Personal Check first business day after the day of your deposit, not $100 from each category of check. 19 Pay to the order of SPECIAL RULES FOR NEW ACCOUNTS dollars (Bank name and If you are a new customer, the following special rules Location) will apply during the first 30 days your account is open. |~123456789J 0000000000 000 Funds from electronic direct deposits to your account will be available on the day we receive the deposit. Routing number Funds from deposits of cash, wire transfers, and the first $5,000 of a day's total deposits of cashier's, certified, Business Check teller's, traveler's, and federal, state and local govern- Name of Company ment checks will be available on the first business day Address, City, State 19 after the day of your deposit if the deposit meets certain Pay to the conditions. For example, the checks must be payable to order of you (and you may have to use a special deposit slip). dollars The excess over $5,000 will be available on the ninth (Bank name and Location) business day after the day of your deposit. If your deposit of these checks (other than a U.S. Treasury check) is not made in person to one of our employees, 000000000 123456789 0000000000 000 the first $5,000 will not be available until the second Routing number business day after the day of your deposit. Funds from all other check deposits will be available on the {number) business day after the day of your checks will be available on the first business day after deposit. the day of your deposit. The remaining funds will be available on the second business day after the day of MODEL CLAUSES your deposit. For example, if you deposit a local check of $700 on a Monday, $100 of the deposit is available on Tuesday. The remaining $600 is available on Wednesday. C-9—Automated teller machine deposits (extended hold) 2. Nonlocal checks. The first $100 from a deposit of nonlocal checks will be available on the first business day after the day of your deposit. The remaining funds DEPOSITS AT AUTOMATED TELLER MACHINES will be available on the fifth business day after the day of your deposit. Funds from any deposits (cash or checks) made at auto- For example, if you deposit a $700 nonlocal check on mated teller machines (ATMs) we do not own or operate a Monday, $100 of the deposit is available on Tuesday. will not be available until the fifth business day after the The remaining $600 is available on Monday of the day of your deposit. This rule does not apply at ATMs following week. that we own or operate. {A list of our ATMs is enclosed, or A list of ATMs LONGER DELAYS MAY APPLY where you can make deposits but that are not owned or operated by us is enclosed, or All ATMs that we own or Funds you deposit by check may be delayed for a longer operate are identified as our machines.) period under the following circumstances: • We believe a check you deposit will not be paid. C-10—Cash withdrawal limitation • You deposit checks totaling more than $5,000 on any one day. CASH WITHDRAWAL LIMITATION • You redeposit a check that has been returned unpaid. • You have overdrawn your account repeatedly in the We place certain limitations on withdrawals in cash. In last six months. general, $100 of a deposit is available for withdrawal in • There is an emergency, such as failure of computer or cash on the first business day after the day of deposit. In communications equipment. addition, a total of $400 of other funds becoming avail- We will notify you if we delay your ability to withdraw able on a given day is available for withdrawal in cash at funds for any of these reasons, and we will tell you when or after (time no later than 5:00 p.m.) on that day. Any the funds will be available. They will generally be remaining funds will be available for withdrawal in cash available no later than the {number) business day after on the following business day. the day of your deposit. If you deposit both categories of checks, $100 from the checks will be available on the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 421 C-llA—Availability of funds deposited at other locations — The check is drawn on an account with repeated overdrafts. — We are unable to verify the endorsement of a joint DEPOSITS AT OTHER LOCATIONS payee. — Some information on the check is not consistent with other information on the check. This availability policy only applies to funds deposited at {location). Please inquire for information about the — There are erasures or other apparent alterations on the availability of funds deposited at other locations. check. — The routing number of the paying bank is not a current routing number. MODEL NOTICES — The check is postdated or has a stale date. — Information from the paying bank indicates that the C-12—Exception hold notice check may not be paid. — We have been notified that the check has been lost or damaged in collection. — Other: NOTICE OF HOLD Account number: (number) Date of deposit: (date) We are delaying the availability of %(amount being [If you did not receive this notice at the time you made the held) from this deposit. These funds will be available on deposit and the check you deposited is paid, we will refund the (number) business day after the day of your deposit. to you any fees for overdrafts or returned checks that result We are taking this action because: solely from the additional delay that we are imposing. To — A check you deposited was previously returned un- obtain a refund of such fees, (description of procedure for paid. obtaining refund).] — You have overdrawn your account repeatedly in the last six months. — The checks you deposited on this day exceed $5,000. C-14—One-time notice for large deposit and redeposited — An emergency, such as failure of computer or com- check exception holds munications equipment, has occurred. — We believe a check you deposited will not be paid for the following reasons [*]: NOTICE OF HOLD If you deposit into your account: • Checks totaling more than $5,000 on any one day, the first $5,000 deposited on any one banking day will be [*If you did not receive this notice at the time you made available to you according to our general policy. The the deposit and the check you deposited is paid, we will amount in excess of $5,000 will generally be available on refund to you any fees for overdrafts or returned checks the (number) business day after the day of deposit for that result solely from the additional delay that we are checks drawn on (bank name), the (number) business day imposing. To obtain a refund of such fees, (description of after the day of deposit for local checks and (number) procedure for obtaining refund).] business day after the day of deposit for nonlocal checks. If checks (not drawn on us) that otherwise would receive C-13—Reasonable cause hold notice next-day availability exceed $5,000, the excess will be treated as either local or nonlocal checks depending on the location of the paying bank. If your check deposit, exceed- NOTICE OF HOLD ing $5,000 on any one day, is a mix of local checks, nonlocal checks, checks drawn on (bank name), or checks Account number: (number) Date of deposit: (date) that generally receive next-day availability, the excess will We are delaying the availability of the funds you be calculated by first adding together the (type of check), then the (type of check), then the (type of check), then the deposited by the following check: (description of check, (type of check). such as amount and drawer.) These funds will be available on the (number) busi- • A check that has been returned unpaid, the funds will ness day after the day of your deposit. The reason for the generally be available on the (number) business day after delay is explained below: the day of deposit for checks drawn on (bank name), the — We received notice that the check is being returned (number) business day after the day of deposit for local unpaid. checks and the (number) business day after the day of — We have confidential information that indicates that deposit for nonlocal checks. Checks (not drawn on us) that the check may not be paid. otherwise would receive next-day availability will be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

422 Federal Reserve Bulletin • May 1997 treated as either local or nonlocal checks depending on the 2. * * * For example, a bank does not violate its obligations location of the paying bank. under this subpart by holding funds to satisfy a garnishment, tax levy, or court order restricting disbursements C-15—One-time notice for repeated overdraft from the account; or to satisfy the customer's liability exception hold arising from the certification of a check, sale of a cashier's or teller's check, guaranty or acceptance of a check, or NOTICE OF HOLD similar transaction to be debited from the customer's account. Account Number: {number) Date of Notice: (date) We are delaying the availability of checks deposited into your account due to repeated overdrafts of your S. 229.2(s) Local Paying Bank account. For the next six months, deposits will generally 1. "Local paying bank" is defined as a paying bank located be available on the (number) business day after the day in the same check-processing region as the branch, contracof your deposit for checks drawn on (bank name), the tual branch, or proprietary ATM of the depositary bank. (number) business day after the day of your deposit for For example, a check deposited at a contractual branch local checks, and the (number) business day after the would be deemed local or nonlocal based on the location of day of deposit for nonlocal checks. Checks (not drawn the contractual branch with respect to the location of the on us) that otherwise would have received next-day paying bank. availability will be treated as either local or nonlocal * * * ** checks depending on the location of the paying bank. HH. 229.2(hh) Traveler's Check C-16—Case-by-case hold notice 2. * * * Sometimes traveler's checks that are not issued by NOTICE OF HOLD banks do not have any words on them identifying a bank as drawee or paying agent, but instead bear unique routing Account number: (number) Date of deposit: (date) numbers with an 8000 prefix that identifies a bank as We are delaying the availability of $(amount being paying agent. held) from this deposit. These funds will be available on the (number) business day after the day of your deposit [(subject to our cash withdrawal limitation policy)]. PP. 229.2(pp) Contractual Branch [If you did not receive this notice at the time you 1. When one bank arranges for another bank to accept made the deposit and the check you deposited is paid, deposits on its behalf, the second bank is a contractual we will refund to you any fees for overdrafts or returned branch of the first bank. For further discussion of contracchecks that result solely from the additional delay that tual branch deposits and related disclosures, see sections we are imposing. To obtain a refund of such fees, 229.2(s) and 229.19(a) of the regulation and the commen- (description of procedure for obtaining refund).] tary to sections 229.2(s), 229.10(c), 229.14(a), 229.16(a), 229.18(b), and 229.19(a). 13. In Appendix E to Part 229, under section II, 14. In Appendix E, under section IV, in paragraph D.3.a., a. In paragraph E.2., the last sentence is revised; two new sentences are added to the end of the paragraph to b. Paragraph S.I., is revised read as follows: c. In paragraph HH.2., the last sentence is revised; and d. A new paragraph PP. is added. The revisions and additions read as follows: IV. Section 229.10—Next-Day Availability * * * ** APPENDIX E TO PART 229 - COMMENTARY D. 229.10(c) Certain Check Deposits * * * ** 2 * * * a. * * * Employees of a contractual branch would not be II. Section 229.2—Definitions considered employees of the depositary bank for the pur- * * * ** poses of this regulation, and deposits at contractual E. 229.2(d) Available for Withdrawal branches would be treated the same as deposits to a proprietary ATM for the purposes of this regulation. (See also, * * * ** Commentary to section 229.19(a).) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 423 balances, notices are not required if the funds are made 15. In Appendix E, under section VII: available before the notices must be sent. a. In paragraph H. 1 .a, the first sentence is revised and two new sentences are added to the end of the paragraph; /. 229.13(h) Availability of Deposits Subject to Exceptions 1. * * * This provision establishes that an extension of up b. Paragraph H.l.e. is removed and paragraph H.l.f. is to one business day for "on us" checks, five business days redesignated as paragraph H.l.e.; for local checks, and six business days for nonlocal checks c. Paragraph H.4. is redesignated as paragraph H.5. and and checks deposited in a nonproprietary ATM is reasonnew paragraph H.4. is added; able. * * * d. The second sentence in paragraph I.I. is revised; and e. The first sentence in paragraph 1.4. is revised. 4. One business day for "on us" checks, five business days The additions and revisions read as follows: for local checks, and six business days for nonlocal checks or checks deposited in a nonproprietary ATM, in addition * * * ** to the time period provided in the schedule, should provide adequate time for the depositary bank to learn of the VII. Section 229.13—Exceptions nonpayment of virtually all checks that are returned. * * * * * * ** 16. In Appendix E, under section VIII, a new sentence is added to the end of paragraph A.I. to read as follows: H. 229.J3(g) Notice of Exception j * * * a. If a depositary bank invokes any of the safeguard exceptions to the schedules listed above, other than the new account or emergency conditions exception, and extends VIII. Section 229.14—Payment of Interest the hold on a deposit beyond the time periods permitted in sections 229.10(c) and 229.12, it must provide a notice to its customer. * * * A depositary bank satisfies the written A. 229,14(a) In General notice requirement by sending an electronic notice that 1. * * * In the case of a deposit at a contractual branch, displays the text and is in a form that the customer may credit is received on the day the depositary bank receives keep, if the customer agrees to such means of notice. credit for the amount of the deposit, which may be different Information is in a form that the customer may keep if, for from the day the contractual branch receives credit for the example, it can be downloaded or printed. deposit. 4. Emergency conditions exception notice. 17. In Appendix E, under section IX, two new sentences a. If an account is subject to the emergency conditions are added immediately following the second sentence of exception under section 229.13(f), the depositary bank paragraph A. 1. to read as follows: must provide notice in a reasonable form within a reasonable time, depending on the circumstances. For example, a depositary bank may learn of a weather emergency or a power outage that affects the paying bank's operations. IX. Section 229.15—General Disclosure Under these circumstances, it likely would be reasonable Requirements for the depositary bank to provide an emergency conditions exception notice in the same manner and within the same time as required for other exception notices. On the A. 229.15(a) Form of Disclosures other hand, if a depositary bank experiences a weather or 1. * * * A depositary bank satisfies the written disclosure power outage emergency that affects its own operations, it requirement by sending an electronic disclosure that dismay be reasonable for the depositary bank to provide a plays the text and is in a form that the customer may keep, general notice to all depositors via postings at branches and if the customer agrees to such means of disclosure. Infor- ATMs, or through newspaper, television, or radio notices. mation is in a form that the customer may keep if, for b. If the depositary bank extends the hold placed on a example, it can be downloaded or printed. * * * deposit due to an emergency condition, the bank need not provide a notice if the funds would be available for withdrawal before the notice must be sent. For example, if on 18. In Appendix E, under section X, three new sentences the last day of a hold period the depositary bank experi- are added to the end of paragraph A.2., one new sentence is ences a computer failure and customer accounts cannot be added to the end of paragraph B.6., and the last sentence of updated in a timely fashion to reflect the funds as available paragraph C.2.a. is revised to read as follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

424 Federal Reserve Bulletin • May 1997 X. Section 229.16—Specific Availability Policy 2 * * * Funds received at a contractual branch are consid- Disclosure ered deposited when received by a teller at the contractual branch or deposited into a proprietary ATM of the contractual branch. (See also, Commentary to section 229.10(c) A. 229.16(a) General on deposits made to an employee of the depositary bank.) * * * 2. * * * A bank may establish different availability policies for different groups of customers, such as customers in a particular geographic area or customers of a particular 6. ** branch. For purposes of providing a specific availability a. * For receipt of deposits at ATMs, contractual policy, the bank may allocate customers among groups branches, or other off-premise facilities, such as night through good faith use of a reasonable method. A bank depositories or lock boxes, the depositary bank may estabmay also establish different availability policies for depos- lish a cut-off hour of 12:00 noon or later (either local time its at different locations, such as deposits at a contractual of the branch or other location of the depositary bank at branch. which the account is maintained or local time of the ATM, contractual branch, or other off-premise facility). The depositary bank must use the same timing method for estab- B. 229.16(b) Content of Specific Policy Disclosure lishing the cut-off hour for all ATMs, contractual branches, and other off-premise facilities used by its customers. The choice of cut-off hour must be reflected in the bank's 6. * * * If a bank does not have a cut-off time prior to its internal procedures, and the bank must inform its customclosing time, the bank need not disclose a cut-off time. ers of the cut-off hour upon request. This earlier cut-off for ATM, contractual branch, or other off-premise deposits is intended to provide greater flexibility in the servicing of C. 229.16(c) Longer Delays on a Case-by-Case Basis these facilities. 2 * * * E. 229.19(e) Holds on Other Funds a. * * * In addition, the notice must include the account number, the date of the deposit, and the amount of the deposit being delayed. 3 * * * when a customer cashes a check over the counter and the bank places a hold on an account of the customer, the bank must give whatever notice would have been 19. In Appendix E, under section XII, a sentence is added required under sections 229.13 or 229.16 had the check to the end of paragraph B. 1. to read as follows: been deposited in the account. XII. Section 229.18—Additional Disclosure Requirements 21. In Appendix E, under section XVI, a new sentence is added to the end of paragraphs C.I.a. and C. 1 .b. to read as B. 229.18(b) Locations Where Employees Accept Con- follows: sumer Deposits 1. * * * A bank that acts as a contractual branch at a particular location must include the availability policy that applies to its own customers but need not include the XVI. Section 229.30—Paying Bank's policy that applies to the customers of the bank for which it Responsibility for Return of Checks is acting as a contractual branch. C. 229.30(c) Extension of Deadline j * * * 20. In Appendix E, under section XIII, two new sentences are added immediately following the first sentence of para- a. * * * This paragraph applies to the extension of all graph A.2., the last four sentences of paragraph A.6.a. are midnight deadlines except Saturday midnight deadlines revised, and a new sentence is added to the end of para- (see paragraph C.l.b of this appendix). graph E.3. to read as follows: b. * * * This paragraph applies exclusively to the extension of Saturday midnight deadlines. XIII. Section 229.19—Miscellaneous * * * # 22. In Appendix E, under section XVII, the second sen- A. 229.19(a) When Funds Are Considered Deposited tence of paragraph A.7.b. is revised to read as follows: * * * ** Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 425 XVII. Section 229.31—Returning Bank's b. In paragraph E., the first sentence of paragraph E.I. is Responsibility for Return of Checks revised to read as follows: A. 22931 (a) Return of Cheeks XXII. Section 229.36—Presentment and Issuance 7 * * * of Checks b. * * * If the returning bank makes an encoding error in creating a qualified returned check, it may be liable under C. 229.36(c) Electronic Presentment section 229.38 for losses caused by any negligence or 1. Under an electronic presentment agreement, presentunder section 229.34(c)(3) for breach of an encoding warment takes place when the paying bank receives an elecranty. * * * tronic transmission of information describing the check rather than upon delivery of the physical check. Electronic presentment agreements may include a variety of proce- 23. In Appendix E, under section XX, the first sentence of dures in which the physical check is held (truncated) or paragraph A.I. and paragraph C.5. are revised, and a new delayed by the depositary or collecting bank. U.C.C. 4-110 paragraph F. is added as follows: and 4^K)6(b) make express provision for truncation and electronic presentment. 2. This paragraph allows electronic presentment by agreement with the paying bank; however, such agreement may XX. Section 229.34—Warranties not prejudice the interests of other parties to the check. For example, an electronic presentment agreement may not A. 229.34(a) Warranty of Returned Cheek extend the paying bank's time for return. Such an exten- 1. This paragraph includes warranties that a returned check, sion could damage the depositary bank, which must make including a notice in lieu of return, was returned by the funds available to its customers under mandatory availabilpaying bank, or in the case of a check payable by a bank itv schedules. and payable through another bank, the bank by which the check is payable, within the deadline under the U.C.C. (subject to any claims or defenses under the U.C.C, such E. 229.36(e) Issuance of Payable-Through Checks as breach of a presentment warranty). Regulation J 1. If a bank arranges for checks payable by it to be payable (12 C.F.R. Part 210), or section 229.30(c); that the paying through another bank, it must require its customers to use or returning bank is authorized to return the check: that the checks that contain conspicuously on their face the name, returned check has not been materially altered; and that, in location, and first four digits of the nine-digit routing the case of a notice in lieu of return, the original check has number of the bank by which the check is payable and the not been and will not be returned for payment. * * * legend "payable through" followed by the name of the payable-through bank. * * * C. 229.34(c) Warranty of Settlement Amount. Encoding, and Offset 25. In Appendix E, section XXIV is amended as follows: a. In paragraph A.2., the third sentence is revised; and 5. Paragraph (c)(4) provides that a paying bank or a depos- b. In paragraph D.2.b.. the second sentence is removed and itary bank may set off excess settlement paid to another two new sentences are added immediately following the bank against settlement owed to that bank for checks first sentence to read as follows: presented or returned checks received (for which it is the depositary bank) subsequent to the excess settlement. XXIV. Section 229.38—Liability F. 229.34(f) Notice of Claim 1. This paragraph adopts the notice provisions of U.C.C. A. 229.38(a) Standard of care; liability; measure of damsections 4-207(d) and 4-208(e). The time limit set forth in ages this paragraph applies to notices of claims for warranty breaches only. As provided in section 229.38(g), all actions under this section must be brought within one year after the 2. * * * The measure of damages provided in this section date of the occurrence of the violation involved. (loss incurred up to amount of check, less amount of loss party would have incurred even if bank had exercised ordinary care) is based on U.C.C. 4-H)3(e) (amount of the 24. In Appendix E, section XXII is amended as follows: item reduced by an amount that could not have been a. Paragraph C. is revised: and realized by the exercise of ordinary care), as limited by Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

426 Federal Reserve Bulletin • May 1997 4-202(c) (bank is liable only for its own negligence and XXIX. Section 229.43—Checks Payable in Guam, not for actions of subsequent banks in chain of collection). American Samoa, and the Northern Mariana Islands A. 229.43(a) Definitions 1. Bank offices in Guam, American Samoa, and the North- D. 229.38(d) Responsibility for Certain Aspects of Checks ern Mariana Islands (which Regulation CC defines as Pacific island banks) do not meet the definition of bank in section 229.2(e) because they are not located in the United 2.*** States. Some checks drawn on Pacific island banks (deb. * * * Under section 229.33(a), a paying bank that returns fined as Pacific island checks) bear U.S. routing numbers a check in the amount of $2,500 or more must provide and are collected and returned by banks in the same notice of nonpayment to the depositary bank by 4:00 p.m. manner as checks payable in the U.S. on the second business day following the banking day on B. 229.43(b) Rules Applicable to Pacific Island Checks which the check is presented to the paying bank. Even if a 1. When a bank handles a Pacific island check as if it were payable-through check in the amount of $2,500 or more is a check as defined in section 229.2(k), the bank is subject not returned through the payable-through bank as quickly to certain provisions of Regulation CC, as provided in this as would have been required had the check been received section. Because the Pacific island bank is not a bank as by the bank by which it is payable, the depositary bank defined in section 229.2(e), it is not a paying bank as should not suffer damages unless it has not received timely defined in section 229.2(z) (unless otherwise noted in this notice of nonpayment. * * * section). Pacific island banks are not subject to the provisions of Regulation CC. 2. A bank may agree to handle a Pacific island check as a 26. In Appendix E, under section XXV, the first sentence in returned check under section 229.31 and may convert the paragraph C.I. is revised to read as follows: returned Pacific island check to a qualified returned check. The returning bank is not, however, subject to the expeditious-return requirements of section 229.31. The XXV. Section 229.39—Insolvency of Bank returning bank may receive the Pacific island check directly from a Pacific island bank or from another returning bank. As a Pacific island bank is not a paying bank under Regulation CC. section 229.3 l(c) does not apply to a C. 229.39(b) Preference Against Paying or Depositary returning bank settling with the Pacific island bank. Bank 3. A depositary bank that handles a Pacific island check is 1. This paragraph gives a bank a preferred claim against a not subject to the provisions of subpart B of Regulation closed paying bank that finally pays a check without set- CC, including the availability, notice, and interest accrual tling for it or a closed depositary bank that becomes requirements, with respect to that check. If, however, a obligated to pay a returned check without settling for bank accepts a Pacific island check for deposit (or otherwise accepts the check as transferee) and collects the Pacific island check in the same manner as other checks, the bank is subject to the provisions of section 229.32, 27. In Appendix E, under section XXVIII, the first senincluding the provisions regarding time and manner of tence of paragraph A. is revised to read as follows: settlement for returned checks in section 229.32(b). in the event the Pacific island check is returned by a returning bank. If the depositary bank receives the returned Pacific XXVIII. Section 229.42—Exclusions island check directly from the Pacific island bank, however, the provisions of section 229.32(b) do not apply, because the Pacific island bank is not a paying bank under A. Checks drawn on the United States Treasury, U.S. Regulation CC. The depositary bank is not subject to the Postal Service money orders, and checks drawn on states notice of nonpayment provisions in section 229.33 for and units of general local government that are presented Pacific island checks. directly to the state or unit of general local government and 4. Banks that handle Pacific island checks in the same that are not payable through or at a bank are excluded from manner as other checks are subject to the indorsement the coverage of the expeditious-return, notice-of- provisions of section 229.35. Section 229.35(c) eliminates nonpayment, and same-day settlement requirements of sub- the need for the restrictive indorsement "pay any bank." part C of this part. * * * For purposes of section 229.35(c), the Pacific island bank is deemed to be a bank. 5. Pacific island checks will often be intermingled with 28. In Appendix E, section XXIX is redesignated as sec- other checks in a single cash letter. Therefore, a bank that tion XXX, a new section XXIX is added, and newly handles Pacific island checks in the same manner as other designated section XXX is revised to read as follows: checks is subject to the transfer warranty provision in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 421 section 229.34(c)(2) regarding accurate cash letter totals number to be used if a customer has an inquiry regarding a and the encoding warranty in section 229.34(c)(3). A bank deposit. that acts as a returning bank for a Pacific island check is 6. Banks are cautioned against using the models without not subject to the warranties in section 229.34(a). Simi- reviewing their own policies and practices, as well as state larly, because the Pacific island bank is not a "bank" or a and federal laws regarding the time periods for availability "paying bank" under Regulation CC, section 229.34(b), of specific types of checks. A bank using the models will (c)(l), and (c)(4) do not apply. For the same reason, the be in compliance with the Act and the regulation only if the provisions of section 229.36 governing paying bank re- bank's disclosures correspond to its availability policy. sponsibilities such as place of receipt and same-day settle- 7. Banks that have used earlier versions of the models ment do not apply to checks presented to a Pacific island (such as those models that gave Social Security benefits bank, and the liability provisions applicable to paying and payroll payments as examples of preauthorized credits banks in section 229.38 do not apply to Pacific island available the day after deposit, or that did not address the banks. Section 229.36(d), regarding finality of settlement cash withdrawal limitation) are protected from civil liabilbetween banks during forward collection, applies to banks ity under section 229.2l(e). Banks are encouraged, howthat handle Pacific island checks in the same manner as ever, to use current versions of the models when reordering other checks, as do the liability provisions of section or reprinting supplies. 229.38, to the extent the banks are subject to the requirements of Regulation CC as provided in this section, and sections 229.37 and 229.39 through 229.42. B. Model Availability Policy Disclosures, Models C-l through C-5 1. Models C-l through C-5 generally. a. Models C-l through C-5 are models for the availability XXX. Appendix C—Model Availability Policy policy disclosures described in section 229.16. The models Disclosures, Clauses, and Notices accommodate a variety of availability policies, ranging from next-day availability to holds to statutory limits on all deposits. Model C-3 reflects the additional disclosures dis- A. Introduction cussed in sections 229.16 (b) and (c) for banks that have a policy of extending availability times on a case-by-case 1. Appendix C contains model disclosures, clauses, and basis. notices that may be used by banks to meet their disclosure b. As already noted, there are several places in the models responsibilities under the regulation. Banks using the mod- where information must be inserted. This information inels properly will be in compliance with the regulation's cludes the bank's cut-off times, limitations relating to nextdisclosure requirements. day availability, and the first four digits of routing numbers 2. Information that must be inserted by a bank using the for local banks. In disclosing when funds will be available models is (italicized) within parentheses in the text of the for withdrawal, the bank must insert the ordinal number models. Optional information is enclosed in brackets. (such as first, second, etc.) of the business day after deposit 3. Banks may make certain changes to the format or that the funds will become available. content of the models, including deleting material that is c. Models C-l through C-5 generally do not reflect any inapplicable, without losing the Act's protection from lia- optional provisions of the regulation, or those that apply bility for banks that use the models properly. For example, only to certain banks. Instead, disclosures for these proviif a bank does not have a cut-off hour prior to it's closing sions are included in Models C-6 through C-l 1 A. A bank time, or if a bank does not take advantage of the section using one of the model availability policy disclosures 229.13 exceptions, it may delete the references to those should also consider whether it must incorporate one or provisions. Changes to the models may not be so extensive more of Models C-6 through C-l 1 A. as to affect the substance, clarity, or meaningful sequence d. While section 229.10(b) requires next-day availability of the models. Acceptable changes include, for example: for electronic payments. Treasury regulations (31 C.F.R. a. Using "customer" and "bank" instead of pronouns. Part 210) and ACH association rules require that preauthob. Changing the typeface or size. rized credits ("direct deposits") be made available on the c. Incorporating certain state law "plain English" re- day the bank receives the funds. Models C-l through C-5 quirements. reflect these rules. Wire transfers, however, are not gov- 4. Shorter time periods for availability may always be erned by Treasury or ACH rules, but banks generally make substituted for time periods used in the models. funds from wire transfers available on the day received or 5. Banks may also add related information. For example, a on the business day following receipt. Banks should ensure bank may indicate that although funds have been made that their disclosures reflect the availability given in most available to a customer and the customer has withdrawn cases for wire transfers. them, the customer is still responsible for problems with 2. Model C-l Next-day availability. A bank may use this the deposit, such as checks that were deposited being model when its policy is to make funds from all deposits returned unpaid. Or a bank could include a telephone available on the first business day after a deposit is made. 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428 Federal Reserve Bulletin • May 1997 This model may also be used by banks that provide imme- the deposit is made, as addressed in section 229.19(e), diate availability by substituting the word "immediately" must incorporate this type of clause in its availability in place of "on the first business day after the day we policy disclosure. receive your deposit." 4. Model C-8 Appendix B availability (nonlocal checks). A 3. Model C-2 Next-day availability and section 229.13 bank in a check processing region where the availability exceptions. A bank may use this model when its policy is schedules for certain nonlocal checks have been reduced, to make funds from all deposits available to its customers as described in Appendix B of Regulation CC, must incoron the first business day after the deposit is made, and to porate this type of clause in its availability policy discloreserve the right to invoke the new account and other sure. Banks using Model C-5 may insert this clause at the exceptions in section 229.13. In disclosing that a longer conclusion of the discussion titled "Nonlocal checks." delay may apply, a bank may disclose when funds will 5. Model C-9 Automated teller machine deposits (extended generally be available based on when the funds would be holds). A bank that reserves the right to delay availability available if the deposit were of a nonlocal check. of deposits at nonproprietary ATMs until the fifth business 4. Model C-3 Next-day availability, case-by-case holds to day following the date of deposit, as permitted by secstatutory limits, and section 229.13 exceptions. A bank tion 229.12(f), must incorporate this type of clause in its may use this model when its policy, in most cases, is to availability policy disclosure. A bank must choose among make funds from all types of deposits available the day the alternative language based on how it chooses to differafter the deposit is made, but to delay availability on some entiate between proprietary and nonproprietary ATMs, as deposits on a case-by-case basis up to the maximum time required under section 229.16(b)(5). periods allowed under the regulation. A bank using this 6. Model C-10 Cash withdrawal limitation. A bank that model also reserves the right to invoke the exceptions imposes cash withdrawal limitations under section 229.12 listed in section 229.13. In disclosing that a longer delay must incorporate this type of clause in its availability may apply, a bank may disclose when funds will generally policy disclosure. Banks reserving the right to impose the be available based on when the funds would be available if cash withdrawal limitation and using Model C-3 should the deposit were of a nonlocal check. disclose that funds may not be available until the sixth 5. Model C-4 Holds to statutory limits on all deposits. A (rather than fifth) business day in the first paragraph under bank may use this model when its policy is to impose the heading "Longer Delays May Apply." delays to the full extent allowed under section 229..12 and 7. Model C-ll Credit union interest payment policy. A to reserve the right to invoke the section 229.13 excep- credit union subject to the notice requirement of sections. In disclosing that a longer delay may apply, a bank tion 229.14(b)(2) must incorporate this type of clause in its may disclose when funds will generally be available based availability policy disclosure. This model clause is only an on when the funds would be available if the deposit were example of a hypothetical policy. Credit unions may follow of a nonlocal check. Model C-4 uses a chart to show the any policy for accrual provided the method of accruing bank's availability policy for local and nonlocal checks interest is the same for cash and check deposits. and Model C-5 uses a narrative description. 8. Model C-11A Availability of funds deposited at other 6. Model C-5 Holds to statutory limits on all deposits. A locations. A clause similar to Model C-l 1A should be used bank may use this model when its policy is to impose if a bank bases the availability of funds on the location delays to the full extent allowed under section 229.12 and where the funds are deposited (for example, at a contracto reserve the right to invoke the section 229'.13 excep- tual or other branch located in a different check processing tions. In disclosing that a longer delay may apply, a bank region). Similarly, a clause similar to Model C-l 1A should may disclose when funds will generally be available based be used if a bank distinguishes between local and non-local on when the funds would be available if the deposit were checks (for example, a bank using model availability polof a nonlocal check. icy disclosure C-4 or C-5), and accepts deposits in more than one check processing region. C. Model Clauses, Models C-6 through C-11A D. Model Notices, Models C-12 through C-21 1. Models C-6 through C-11A generally. Certain clauses like those in the models must be incorporated into a bank's 1. Model Notices C-12 through C-21 generally. Models availability policy disclosure under certain circumstances. C-12 through C-21 provide models for the various notices The commentary to each clause indicates when a clause required by the regulation. A bank that cashes a check and similar to the model clause is required. places a hold on funds in an account of the customer (see 2. Model C-6 Holds on other funds (check cashing). A section 229.19(e)) should modify the model hold notice bank that reserves the right to place a hold on funds already accordingly. For example, the bank could replace the word on deposit when it cashes a check for a customer, as "deposit" with the word "transaction" and could add the addressed in section 229.19(e), must incorporate this type phrase "or cashed" after the word "deposited." of clause in its availability policy disclosure. 2. Model C-12 Exception hold notice. This model satisfies 3. Model C-7 Holds on other funds (other account). A bank the written notice required under section 229.13(g) when a that reserves the right to place a hold on funds in an bank places a hold based on a section 229.13 exception. If account of the customer other than the account into which a hold is being placed on more than one check in a deposit, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 429 each check need not be described, but if different reasons collections occur more or less frequently, the description of apply, each reason must be indicated. A bank may use the when deposits are received must be adjusted accordingly. actual date when funds will be available for withdrawal 10. Model C-21 Deposit slip notice. This model satisfies rather than the number of the business day following the the notice requirements of section 229.18(a) for deposit day of deposit. A bank must incorporate in the notice the slips. material set out in brackets if it imposes overdraft or returned check fees after invoking the reasonable cause exception under section 229.13(e). FINAL RULE-^AMENDMENT TO RULES REGARDING 3. Model C-13 Reasonable cause hold notice. This notice DELEGATION OF AUTHORITY satisfies the written notice required under section 229.13(g) when a bank invokes the reasonable cause exception under The Board of Governors is amending 12 C.F.R. Part 265, section 229.13(e). The notice provides the bank with a list its Rules Regarding Delegation of Authority. The Board is of specific reasons that may be given for invoking the delegating to an individual member the Board's authority exception. If a hold is being placed on more than one check to approve extensions of the 180-day period for final Board in a deposit, each check must be described separately, and action on applications to establish certain foreign bank if different reasons apply, each reason must be indicated. A offices in the United States. This delegation of authority is bank may disclose its reason for doubting collectibility by intended to aid in the efficient processing of such foreign checking the appropriate reason on the model. If the "Oth- bank office applications. er" category is checked, the reason must be given. A bank Effective March 22, 1997, 12 C.F.R. Part 265 is amended may use the actual date when funds will be available for as follows: withdrawal rather than the number of the business day following the day of deposit. A bank must incorporate in Part 265—Rules Regarding Delegation of Authority the notice the material set out in brackets if it imposes overdraft or returned check fees after invoking the reason- 1. The authority citation for Part 265 continues to read as able cause exception under section 229.13(e). follows: 4. Model C-14 One-time notice for large deposit and redeposited check exception holds. This model satisfies the Authority: 12 U.S.C. 248(i) and (k). notice requirements of section 229.13(g)(2) concerning nonconsumer accounts. 2. Section 265.4 is amended by adding paragraph (a)(4) to 5. Model C-15 One-time notice for repeated overdraft read as follows: exception hold. This model satisfies the notice requirements of section 229.13(g)(3). Section 265/ -Functions delegated to Board 6. Model C-16 Case-by-case hold notice. This model satis- members. fies the notice required under section 229.16(c)(2) when a bank with a case-by-case hold policy imposes a hold on a (a) * * * deposit. This notice does not require a statement of the (4) Extension of time period for final Board action. To specific reason for the hold, as is the case when a sec- extend for an additional 180 days the 180-day period tion 229.13 exception hold is placed. A bank may specify within which final Board action is required on an applithe actual date when funds will be available for withdrawal cation pursuant to section 7(d) of the International Bankrather than the number of the business day following the ing Act. day of deposit when funds will be available. A bank must incorporate in the notice the material set out in brackets if it imposes overdraft fees after invoking a case-by-case hold. 7. Model C-17 Notice at locations where employees accept ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT consumer deposits and Model C-18 Notice at locations where employees accept consumer deposits (case-by-case Orders Issued Under Section 3 of the Bank Holding holds). These models satisfy the notice requirement of Company Act section 229.18(b). Model C-17 reflects an availability policy of holds to statutory limits on all deposits, and AMCORE Financial, Inc. Model C-18 reflects a case-by-case availability policy. Rockford, Illinois 8. Model C-19 Notice at automated teller machines. This model satisfies the ATM notice requirement of sec- Order Approving the Acquisition of Bank Holding tion 229.18(c)(l). Companies 9. Model C-20 Notice at automated teller machines (delayed receipt). This model satisfies the ATM notice require- AMCORE Financial, Inc., Rockford, Illinois ("AMCORE"), ment of section 229.18(c)(2) when receipt of deposits at a bank holding company within the meaning of the Bank off-premises ATMs is delayed under section 229.19(a)(4). Holding Company Act ("BHC Act"), has requested the It is based on collection of deposits once a week. If Board's approval under section 3 of the BHC Act (12 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

430 Federal Reserve Bulletin • May 1997 U.S.C. § 1842) to acquire all the voting shares of First market. Accordingly, the Board concludes that competitive National Bancorp. Inc. ("Bancorp"), and thereby indi- considerations are consistent with approval. rectly acquire its subsidiary bank, First National Bank & Trust ("First National"), both of Monroe. Wisconsin. Other Factors Under the BHC Act Notice of the proposal, affording interested persons an opportunity to submit comments, has been published The BHC Act also requires the Board, in acting on an (61 Federal Register 68,756 (1996)). The time for filing application, to consider the financial and managerial recomments has expired, and the Board has considered the sources of the companies and banks involved, the conveproposal and all comments received in light of the factors nience and needs of the communities to be served, and set forth in section 3 of the BHC Act. certain other supervisory factors. AMCORE, with total consolidated assets of approximately $2.8 billion, operates five banks in Illinois and A. Financial, Managerial, and other Supervisory engages in certain permissible nonbanking activities.1 Factors AMCORE is the 12th largest commercial banking organization in Illinois, controlling approximately $1.8 billion The Board has carefully considered the financial and manin deposits, representing approximately 1 percent of total agerial resources and future prospects of AMCORE, Bandeposits in commercial banks in the state.2 Bancorp is the corp and their respective subsidiary banks and other super- 23d largest commercial banking organization in Wiscon- visory factors in light of all the facts of record. The facts sin, controlling approximately $187.7 million in deposits. include supervisory reports of examination assessing the Bancorp's deposits represent less than 1 percent of total financial and managerial resources of the organizations and deposits in commercial banking organizations in the state. confidential financial information provided by AMCORE. Based on these and all other facts of record, the Board Interstate Analysis concludes that all the supervisory factors under the BHC Act, including financial and managerial resources, weigh in Section 3(d) of the BHC Act, as amended by section 101 of favor of approval of the proposal. the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. allows the Board to approve an appli- B. Convenience and Needs Factor cation by a bank holding company to acquire control of a bank located in a state other than the home state of such The Board also has carefully considered the effect of the bank holding company, if certain conditions are met.3 For proposal on the convenience and needs of the communities purposes of the BHC Act, AMCORE's home state is to be served in light of all the facts of record. As part of the Illinois, and AMCORE would acquire a bank in Wiscon- review of this factor, the Board has considered comments sin. The conditions for an interstate acquisition under sec- from the Wisconsin Rural Development Center. Inc. tion 3(d) are met in this case.4 In view of all the facts of ("Protestant"), alleging that AMCORE has not taken aderecord, the Board is permitted to approve the proposal quate steps to assess the banking needs of low- and under section 3(d) of the BHC Act. moderate-income ("LMI") rural or farm borrowers and rural community credit needs in Illinois where it currently Competitive Considerations operates, and has not demonstrated how it plans to serve the credit needs of the residents in rural and farm areas in AMCORE and Bancorp do not compete with each other in Wisconsin after consummation of the proposal.5 any relevant banking market. Based on all the facts of In reviewing the convenience and needs considerations record, the Board concludes that the proposal would not in the proposal, the Board notes that AMCORE provides a have a significantly adverse effect on competition or on the full range of financial services through its banking subsidconcentration of banking resources in any relevant banking iaries, including a broad range of mortgage, consumer, agricultural, and small business loan products. AMCORE has stated that after consummation of the proposal, it 1. Asset data are as of December 31, 1996. would offer these services, some of which are not available 2. Deposit data are as of June 30, 1996. through First National, in communities currently served by 3. Pub. L. No. 103-328. 108 Stat. 2338 (1994). A bank holding First National. In addition, AMCORE has stated that it company's home state is the state in which the operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966. or the date on which the company became a bank holding company, whichever is later. 5. Protestant also contends that AMCORE's subsidiary banks in 4. See 12 U.S.C. §§ 1842(d)(l)(A) and (B) and 1842(d)(2)(A) rural Illinois invest a significant proportion of their assets in securities, and (B). AMCORE is adequately capitalized and adequately man- thereby reducing funding for loans, and criticizes AMCORE for not aged. In addition, on consummation of the proposal, AMCORE and providing assurances in the proposal that First National's ratio of its affiliates would control less than 10 percent of the total amount of securities investments to total assets would remain consistent with the deposits of insured depository institutions in the United States and less average ratio for Wisconsin institutions serving similar communities. than 30 percent of the total amount of deposits of insured depository The loan-to-deposit ratios of AMCORE's banks serving rural and institutions in Wisconsin. First National also has been in existence and farm areas indicate that the banks engage in significant levels of continuously operated for at least the minimum period required under lending, and the examinations indicated that the level of lending at Wisconsin law. AMCORE's subsidiary banks is adequate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 431 would review First National's products and retain those rating for CRA performance from the OCC as of February that are unique to the local market. Products offered by 1992.» AMCORE would include development and expansion of The Board also has considered AMCORE's record of programs that serve rural and farm areas. helping to meet the credit needs of rural and fanning The Board has long held that consideration of the conve- communities in light of Protestant's comments.9 The most nience and needs factor includes a review of the records of recent CRA performance evaluation of AMCORE Bank, the relevant depository institutions under the Community N.A., Mendota, Mendota, Illinois ("Mendota Bank"), for Reinvestment Act ("CRA"). The CRA requires the federal example, found that the bank's primary business focus was banking agencies to encourage depository institutions to the agricultural and small business segments of the bankhelp meet the credit needs of local communities, including ing market and that the bank defined its delineated commu- LMI communities, but does not establish a statutory prefer- nity as those portions where its agricultural customers ence for any specific type of credit. Accordingly, in review- resided.10 Mendota Bank also participates in governmenting the proposal, the Board has focused on AMCORE's guaranteed loan programs for farmers, including loans performance record in helping to meet the credit needs guaranteed by the Farmers Home Administration of all its communities through the products offered by ("FmHA") and the Farm Service Agency. As of June 1995, AMCORE's subsidiary banks. the bank had 273 small farm loans outstanding, totalling As provided in the CRA, the Board evaluates this factor more than $12 million.11 in light of examinations of the CRA performance records Examiners also noted that AMCORE Bank, Aledo, Illiof the relevant institutions by the primary federal supervi- nois ("Aledo Bank"), participated in government subsisor. An institution's most recent CRA performance evalua- dized loan programs such as the FmHA and the Illinois tion is a particularly important consideration in the applica- Farm Development Association.12 Examiners found in tions process because it represents a detailed on-site Aledo Bank's most recent CRA evaluation that the bank evaluation of an institution's overall record of performance had made approximately $7 million in operating loans at under the CRA by its primary federal supervisor.6 below prime interest rates to 65 farmers through the Illi- All of AMCORE's subsidiary banks received "outstand- nois State Treasurer's Agriculture Loan Linked Deposit ing" or "satisfactory" ratings for CRA performance in Program, and that the bank's agricultural-related lending their most recent evaluations by their primary federal su- comprised approximately 42 percent of its loan portfolio. pervisor. AMCORE's lead subsidiary bank, AMCORE AMCORE proposes to implement similar programs in Bank, N.A., Rockford, Rockford, Illinois, which controls a Wisconsin through First National. As noted above, majority of all the deposits in the AMCORE subsidiary AMCORE recognizes that First National offers some prodbanks, received an "outstanding" rating in its most recent ucts that are uniquely suited to its local community, and CRA performance examination from the Office of the also proposes to expand products to include others offered Comptroller of the Currency ("OCC"), as of August 1995 (the "Rockford Examination"). The Rockford Examinasubsidiary banks' efforts to ascertain the credit needs of their commution concluded that the bank's lending activities and loan nities were found to be satisfactory in their most recent CRA evaluaoriginations reflected excellent responsiveness to meeting tions. community credit needs and that the bank was a leader in a 8. Examiners found no evidence of prohibited discrimination or number of federal loan programs. Examiners also con- other illegal credit practices at any of AMCORE's subsidiary banks or First National, and concluded that the banks were in satisfactory cluded that the bank's distribution of credit products was compliance with the substantive provisions of the fair lending laws. reasonable and significantly penetrated all segments of the Examiners also found no evidence of any practices by the banks that delineated community, including LMI neighborhoods. The were intended to discourage applications for the types of credit listed Rockford Examination also noted that the bank was very in the institutions' CRA statements. active in community development activities, including pro- 9. Protestant asserts that because AMCORE has agreed in principle to acquire another Wisconsin bank holding company, Country Bank viding assistance to several community development orga- Shares Corporation, Mt. Horeb, Wisconsin ("Country"), AMCORE nizations located in LMI areas. The four remaining will close some Wisconsin branch offices. The First National proposal AMCORE subsidiary banks received "satisfactory" rat- represents the initial entry by AMCORE into Wisconsin and therefore ings for CRA performance in their most recent evalua- creates no institutional overlap. In addition, AMCORE has repretions.7 In addition, First National received a "satisfactory" sented that it will serve the convenience and needs of the community through an expanded branch network in the areas in which First National currently has branches. If AMCORE proposed to acquire Country, that proposal, including the effect of the proposal on the 6. The Statement of the Federal Financial Supervisory Agencies convenience and needs of the community, would be subject to review Regarding the Community Reinvestment Act (54 Federal Register under the federal banking laws. 13,742, 13,745 (1989)) provides that a CRA examination is an impor- 10. The bank formed an Agriculture Advisory Committee comtant and often controlling factor in consideration of an institution's posed of members of the agricultural community to better ascertain CRA record and that reports of these examinations will be given great the credit needs of farm areas within the community served by the weight in the applications process. bank. 7. Protestant contends that AMCORE has been unwilling to seek 11. A small farm loan is defined as a loan of $500,000 or less. advice on services, products, and credit needs of the local community 12. In addition, AMCORE Bank N.A., Rock River Valley, Dixon. served by First National. AMCORE denies this assertion, and states and AMCORE Bank N.A., Northwest, Woodstock, both in Illinois, that it has met with members of the community served by First participate in government-guaranteed loan programs such as those National, including Protestant. The Board notes that AMCORE's sponsored by the FmHA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

432 Federal Reserve Bulletin • May 1997 currently through AMCORE subsidiary banks. The Board's approval is specifically conditioned on com- AMCORE's record indicates that it has successfully helped pliance by AMCORE with all the commitments made in serve the credit needs of a variety of communities, includ- connection with this application. The commitments and ing rural and agricultural communities. conditions relied on by the Board in reaching its decision are deemed to be conditions imposed in writing by the Conclusion on the Convenience and Needs Factor. Board in connection with its findings and decision and. as such, may be enforced in proceedings under applicable The Board has carefully considered the entire record in its law. review of the convenience and needs factor under the BHC The proposed acquisitions shall not be consummated Act, including all the information provided by the com- before the fifteenth calendar day following the effective menters.13 Based on all the facts of record, and for the date of this order, and not later than three months after the reasons discussed above, the Board concludes that consid- effective date of this order, unless such period is extended erations relating to the convenience and needs factor, in- by the Board or by the Federal Reserve Bank of Chicago, cluding the CRA performance records of the relevant insti- acting pursuant to delegated authority. tutions, are consistent with approval of the application.14 By order of the Board of Governors, effective March 17, 1997. Conclusion Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Based on all the facts of record, the Board has determined Governors Kelley, Phillips, and Meyer. that this application should be, and hereby is, approved.15 JENNIFER J. JOHNSON Deputy Secretary of the Board 13. Two individual commenters objected to the loss of local control of Bancorp that would result from its acquisition by AMCORE. The First Alamogordo Bancorp of Nevada, Inc. Board believes that an institution's performance should be assessed on Alamogordo, New Mexico the basis of the institution's actual record of assisting to meet the credit needs of its entire community and, accordingly, in reviewing the Order Approving the Formation of a Bank Holding proposal the Board has focused on AMCORE's record as discussed above. Company 14. Protestant and individual commenters have requested that the Board hold a public hearing or public meeting on the application. First Alamogordo Bancorp of Nevada, Inc., Alamogordo Section 3(b) of the BHC Act does not require the Board to hold a ("First Nevada" or "Applicant"), has requested the public hearing or meeting on an application unless the appropriate Board's approval under section 3 of the Bank Holding supervisory authority for the bank to be acquired makes a timely written recommendation of denial. In this case, the Board has not Company Act ("BHC Act") (12 U.S.C. § 1842) to become received such a recommendation from any state or federal supervisory a bank holding company by merging with First Alamogauthority. ordo Bancorp, Inc., Alamogordo ("First New Mexico"), Under its rules, the Board may also, in its discretion, hold a public and thereby acquiring its subsidiary banks, First National hearing or meeting on an application to clarify factual issues related to Bank of Alamogordo, Alamogordo, and First National the application and to provide an opportunity for testimony, if appro- Bank of Ruidoso, Ruidoso, all in New Mexico. priate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has carefully considered these requests in light of all the facts of record. In the Notice of the proposal, affording interested persons an Board's view, the requestors have had ample opportunity to submit opportunity to submit comments, has been published (61 their views, and have, in fact, provided substantive written submis- Federal Register 67,833 (1996)). The time for filing comsions that have been considered by the Board in acting on the proposal. The requests fail to demonstrate why the written submis- ments has expired, and the Board has considered the prosions do not adequately present their views. After a careful review of posal and all comments received in light of the factors set all the facts of record, the Board concludes that the requests dispute forth in section 3 of the BHC Act. the weight that should be accorded to, and the conclusions that may be First Nevada is a nonoperating company formed to acdrawn from, the existing facts of record, but do not identify any genuine dispute about facts that are material to the Board's decision. quire First New Mexico in a corporate reorganization, Based on all the facts of record, the Board has determined that a whereby First New Mexico would be reincorporated in the public hearing or meeting is not necessary to clarify the factual record, state of Nevada. First New Mexico is the 14th largest and is not otherwise warranted in this case. Accordingly, the requests commercial banking organization in New Mexico, controlfor a public hearing or meeting on the proposal are denied. ling $147 million in deposits, representing approximately 15. Protestant requests that the Board withhold approval of the proposal until AMCORE addresses the issues Protestant has raised, 1 percent of total deposits in commercial banking organizathe OCC conducts another CRA performance evaluation of First tions in the state.1 The proposal would not result in the National, and the public has had an opportunity to provide additional acquisition of any additional banking assets. Based on all comments. The Board is required under applicable law and its regulathe facts of record, the Board concludes that the proposal tions to act on applications under the BHC Act within specified time periods. The Board notes, moreover, that Protestant has had a reasonable opportunity to submit information as provided under the Board's application processing procedures and has, in fact, submitted substan- at this time, and that delay or denial of the proposal on the grounds of tive comments that have been carefully considered by the Board. informational insufficiency is not warranted. Based on all the facts of record, and for the reasons discussed above, 1. Deposit data are as of June 30, 1996, and have been adjusted to the Board concludes that the record is sufficient to act on the proposal reflect mergers and acquisitions since that date. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 433 would not have any significantly adverse effects on compe- responds that New Mexico corporate law gives directors tition or on the concentration of banking resources in any broad discretion to decide whether to declare dividends, relevant banking market. that retained earnings have been used to improve and The BHC Act also requires the Board to consider the expand facilities and pay existing debts, and that the fees financial and managerial resources and future prospects of paid do not violate any federal banking law. Applicant also the companies and banks involved in a proposal, and contends that the directors of First New Mexico's subsidcertain other supervisory factors. The Board has carefully iary banks meet frequently and perform the functions as a considered these factors in light of all the facts of record, committee that are normally performed by a chief execuincluding comments from certain minority shareholders of tive officer. First New Mexico ("Protestants") objecting to the pro- Protestants also maintain that actions by management in posal. Under the proposal, all minority shareholders' inter- connection with the preparation of the proposal and its ests in First New Mexico, including Protestants' 24.4 per- presentation to shareholders and the Board raise adverse cent shareholding interest, would be redeemed for cash.2 managerial considerations. For example, Protestants allege Protestants contend that management of First New Mex- that proxy materials relating to the proposal are insufficient ico has underestimated the cost of "cashing out" the and misleading and do not disclose Protestants' pending minority shareholders and that the proposal would have a action in state court challenging the actions of managenegative impact on the financial resources of the institu- ment.5 The Board has provided a copy of Protestants' tions involved. The Board has carefully reviewed all the comments to New Mexico state securities regulators for financial information provided by Applicant and Protes- their review and consideration.6 The Board also notes that tants regarding the proposal, including formal appraisals, Protestants intend to pursue their pending legal action evidence of prior sales, the affidavit of a banking consul- against management, and that the court in their case has the tant, and the assessment of the financial resources of the authority to provide Protestants with an adequate remedy if institutions made in confidential reports of examination by their allegations can be substantiated.7 their primary federal supervisors. Under the proposal sub- Finally, Protestants contend that the proposed merger mitted by Applicant, the projected financial condition of serves no legitimate business purpose and is only designed First Nevada and its subsidiary banks and the projected to eliminate the minority shareholders. Protestants maindebt-service obligation of First Nevada are reasonable and tain that the management of First New Mexico has a consistent with the Board's guidelines.3 Based on all the special responsibility to deal fairly with minority sharefacts of record, and subject to the condition that First holders, and that the elimination of minority shareholders Nevada not exceed certain limitations that are designed to under the circumstances in this case violates this responsiensure that the bank holding company and its subsidiary bility. As noted above, Protestants also consider the offerbanks continue to be strongly capitalized after the shares of ing price for their shares to be inadequate. Applicant rethe minority shareholders are redeemed, the Board con- sponds that the proposal would enable the company to cludes that financial considerations are consistent with operate more efficiently and with greater certainty under approval. Nevada law and thereby increase its profitability. Applicant Protestants allege that First New Mexico's directors also notes that New Mexico law permits dissenting sharehave refused to pay dividends to shareholders since its holders the opportunity to have a state court establish the formation in 1982, despite the profitable performance of fair value of their shares.8 the bank holding company's subsidiary banks. In addition, The BHC Act requires the Board to consider the affect of Protestants assert that First New Mexico's directors, who a proposed transaction on the institutions involved by also serve as directors of First New Mexico's subsidiary banks, are paid fees that are significantly higher than fees paid at institutions with comparable operations.4 Applicant 5. The court proceedings and Protestants' dispute with management 2. The directors and senior officers of First New Mexico currently were disclosed in the record of the application. Protestants also allege hold their shares in a voting trust that controls approximately that the appraisals referred to in the proxy materials did not exist at the 70 percent of First New Mexico's voting shares and would own all the time the materials were distributed and have been improperly withvoting shares of First Nevada on consummation of the proposal. The held from shareholders. Applicant denies the allegations, and has remaining shareholders of First New Mexico, including Protestants, disclosed the appraisals in the record of the application. Applicant also currently control approximately 30 percent of the shares as minority contends it was not required to provide shareholders with a copy of shareholders. the appraisals. 3. Protestants assert that if Applicant is required to pay the minority 6. Securities of First New Mexico are not registered with the shareholders a higher-than-offered value for their shares, which Prot- Securities and Exchange Commission ("SEC"), and the SEC has estants contend is substantially higher than the price used in Appli- informally indicated to the Board that it will not address Protestants' cant's projections, the proposal could adversely affect the financial allegations. condition of First Nevada and its subsidiary banks. The Board has 7. A request by Protestants for a temporary restraining order to reviewed the application in light of all the share pricing information postpone the shareholder meeting of First New Mexico was denied by provided by Protestants and Applicant. a state court. Protestants indicate that they intend to file an amended 4. Protestants have filed an action in New Mexico state court to complaint contesting the legality of the proxy solicitation and the recover these fees and have them redistributed to all shareholders as merger under state law. constructive dividends. This action is in its preliminary stages. 8. See N.M. Stat. Ann. § § 53-15-3 and 53-15-4. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

434 Federal Reserve Bulletin • May 1997 taking into account specific considerations.9 The Board has This transaction shall not be consummated before the carefully considered Protestants' comments and all other fifteenth calendar day following the effective date of this facts of record, including the responses by Applicant and order or later than three months after the effective date of the reports of examination by the institutions' primary this order, unless such period is extended for good cause by federal supervisors. The facts of record indicate that First the Board or by the Federal Reserve Bank of Dallas, acting New Mexico and its subsidiary banks have long records of pursuant to delegated authority. being operated by current management in a safe and sound By order of the Board of Governors, effective March 24, manner and support a finding that managerial resources are 1997. satisfactory. Many of Protestants' specific allegations do not relate to the operations of the banking organizations Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and but rather to Protestants' contention that they have been Governors Kelley, Phillips, and Meyer. denied a fair return on their investment in the past and JENNIFER J. JOHNSON would not receive the fair value of their investment under the proposal.10 Deputy Secretary of the Board Disputes between shareholders and management regard- Pontotoc BancShares Corp. ing the value of shares, the adequacy of dividends paid to Pontotoc, Mississippi shareholders, and the sufficiency of disclosures to shareholders are matters of state and federal securities law and Order Approving Formation of a Bank Holding Company state corporate law. Many of these issues already have been raised in a pending legal action by Protestants before Pontotoc BancShares Corp. ("Pontotoc"), has requested a court with the authority to provide them with adequate the Board's approval under section 3 of the Bank Holding relief. As previously noted, moreover, the supervisory Company Act ("BHC Act") to become a bank holding record of First New Mexico and its subsidiary banks indicompany by acquiring up to 100 percent of the voting cates that managerial operations have been and are satisfacshares of First National Bank of Pontotoc ("Bank"), both tory. of Pontotoc, Mississippi.1 In this light, and based on all the facts of record, the Notice of the proposal, affording interested persons the Board concludes that the managerial resources and future opportunity to submit comments, has been published prospects of the institutions involved, and other supervi- (61 Federal Register 69,096 (1996)). The time for filing sory factors, are consistent with approval. The Board also comments has expired, and the Board has considered the concludes that considerations relating to the convenience proposal and all comments received in light of the factors and needs of the community are consistent with approval. set forth in section 3 of the BHC Act. Based on the foregoing and all the facts of record, the Pontotoc is a nonoperating corporation established to Board has determined that the application should be, and acquire Bank. Bank is the 30th largest commercial banking hereby is, approved. The Board's approval is expressly organization in Mississippi, controlling deposits of $115.2 conditioned on compliance with all the commitments made million, representing less than 1 percent of total deposits in by First Nevada in connection with this application and the commercial banking organizations in the state.2 On conconditions referenced in this order. The commitments and summation of the proposal, Pontotoc would become the conditions relied on by the Board in reaching this decision 30th largest commercial banking organization in Missisare deemed to be conditions imposed in writing by the sippi. Pontotoc and Bank do not compete with each other Board in connection with its findings and decision, and, as in any relevant market. Based on all the facts of record, such, may be enforced in proceedings under applicable including the fact that the transaction represents a corpolaw. rate reorganization of Bank into a holding company structure, the Board concludes that consummation of the proposal would not result in any significantly adverse effect on 9. Western Bancshares, Inc. v. Board of Governors, 480 F.2d 749 (10th Cir. 1973). competition or on the concentration of banking resources 10. Protestants argue that the Board has adopted a requirement that in any relevant banking market. the management of a bank holding company deal fairly with its The Board has carefully considered the financial and shareholders. Benson Bancshares, Inc., 63 Federal Reserve Bulletin managerial resources of Pontotoc and Bank, and the effect 1009 (1977) ("Benson"). In Benson, the Board did not find that the of the proposed acquisition on the future prospects of these BHC Act imposed any duties on the management in its relations with shareholders. In that case, the Board considered the manner is which organizations in light of the facts of record, including the management priced the shares of minority shareholders, and, although the stock purchases by management were for significantly less than the book value of the stock, the Board found managerial 1. Pontotoc would acquire Bank by merging Pontotoc's wholly resources to be satisfactory and approved the application. Unlike the owned subsidiary, First Interim National Bank of Pontotoc ("Interim minority shareholders in Benson, who appeared to have no means of Bank"), with Bank. Interim Bank would survive the merger and protecting their interests, Protestants in this case have obtained their shareholders of Bank would receive shares of Pontotoc in exchange own professional valuation for their shares and have the right and the for their Bank shares. The merger requires the approval of the Office ability under state law to adjudicate the fair value of their shares. In of the Comptroller of the Currency ("OCC") under the Bank Merger addition, the offering price in this case is supported by two indepen- Act(12U.S.C. § 1828(c)). dent appraisals and a prior transaction. 2. All banking data are as of June 30, 1995. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 435 comments submitted by Union Planters Corporation, Mem- nience and needs of the community are also consistent with phis, Tennessee ("Union Planters").1 This proposal in- approval,5 as are the other supervisory factors that the volves part of a contested attempt by Pontotoc and Union Board must consider under section 3 of the BHC Act.6 Planters to acquire control of the same bank. In light of the foregoing and all the facts of record, the Union Planters contends that the proposed formation of Board has determined that the application should be, and Pontotoc, employment agreements negotiated by Pontotoc hereby is, approved. The Board's approval of the proposal with two senior Bank officials, and Bank's efforts to obtain is conditioned on compliance by Pontotoc with all commitright of first refusal agreements reflect attempts by Bank's ments made in connection with the application. The commanagement to thwart the efforts of Union Planters to mitments and conditions relied on by the Board in reaching make a tender offer for all of Bank's voting shares. Union this decision shall be deemed to be conditions imposed in Planters maintains that the proposal would not provide writing by the Board in connection with its findings and Bank with a competitive advantage and that the pro forma decision, and, as such, may be enforced in proceedings financial information in the application is insufficient to under applicable law. analyze the proposal because it does not account for the The acquisition shall not be consummated before the potential financial effects if a large percentage of share- fifteenth calendar day following the effective date of this holders dissent from the Pontotoc offer. order, or later than three months after the effective date of The BHC Act requires the Board to consider each pro- this order, unless such period is extended for good cause by posal presented. The Board, therefore, has a long-standing the Board or the Federal Reserve Bank of St. Louis, acting policy of considering competing proposals individually, pursuant to delegated authority. and of approving each proposal that meets the statutory By order of the Board of Governors, effective March 3, criteria.4 1997. Bank currently exceeds the "well capitalized" thresh- This action was taken pursuant to the Board's Rules Regarding olds under applicable law, and Pontotoc would be "well Delegation of Authority (12 C.F.R. 265.4(b)(l)) by a committee of Board members. capitalized" after the acquisition of Bank. Pontotoc pro- Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and poses to exchange its shares for outstanding shares of Bank Governor Phillips. Absent and not voting: Governors Kelley and and expects to acquire a portion of the shares for cash. The Meyer. Board has considered Pontotoc's proposal in light of the financial resources of Bank and Pontotoc's expectations JENNIFER J. JOHNSON regarding the number of Bank shareholders who may ten- Deputy Secretary of the Board der their shares for cash. Based on all the facts of record, including commitments and representations made by Pon- Westamerica Bancorporation totoc, the Board concludes that considerations relating to San Rafael, California the financial and managerial resources of Pontotoc and Bank and the anticipated effect of the proposed acquisition Order Approving the Acquisition of a Bank Holding on the future prospects of these organizations are consis- Company tent with approval. Considerations relating to the conve- Westamerica Bancorporation, San Rafael, California ("Westamerica"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), 3. Union Planters has agreements to acquire approximately 19.8 has requested the Board's approval under section 3 of the percent of Bank's voting shares, and has received Board approval to BHC Act (12 U.S.C. § 1842) to acquire Vallicorp Holdacquire up lo 100 percent of the outstanding voting shares of Bank. See Union Planters Corporation, 83 Federal Reserve Bulletin 320 ings, Inc. ("Vallicorp"), and indirectly acquire Vallicorp's (1997). 4. Union Planters also maintains that registration materials filed by Pontotoc with the Securities and Exchange Commission ('"SEC") do not give shareholders a complete and accurate description of the financial impact of the proposal on Bank or adequately disclose the potential adverse financial effect on shareholders entering into right of first refusal agreements with Bank if they are precluded from accepting Union Planters's offer. Pontotoc states that it has provided Bank's shareholders, including shareholders entering into right of first refusal 5. Union Planters asserts that this proposal would not be in the best agreements, with all relevant information required by law. The Board interest of the community served by Bank, but provides no facts to previously has stated that its limited jurisdiction to review applica- support its assertion. Pontotoc states that the formation of the holding tions under the BHC Act does not authorize the Board to adjudicate company would enable Pontotoc to offer new services in the commudisputes between a commenter and an applicant that arise under a nity Bank serves. The Board notes that Bank received a "satisfactory" statute administered and enforced by another federal regulatory rating from its primary federal supervisor, the OCC, at its most recent agency like the SEC. See, e.g., Norwest Corporation, 82 Federal examination for CRA performance. Reserve Bulletin 580 (1996); see also Western Bancshares v. Board of 6. Union Planters also questions whether Bank's management is Governors, 480 F.2d 749 (10th Cir. 1973). The SEC is reviewing the acting in concert with, or has entered into agreements with, unaffiliregistration statement of Pontotoc and has the statutory authority to ated third parties to acquire voting shares of Bank. Bank denies that address the disclosure issues raised by Union Planters. The Board has there are any arrangements, understandings or agreements for Bank to provided the SEC with a copy of the comments for review and assign any rights to acquire shares to a third party, and Union Planters consideration. has provided no facts to support its concerns. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

436 Federal Reserve Bulletin • May 1997 wholly owned subsidiary bank, Valliwide Bank ("Valli- each market. The United States Attorney General has adwide Bank"), both of Fresno, California.1 vised the Board that consummation of the proposal is not Notice of the proposal, affording interested persons an likely to have a significantly adverse effect on competition opportunity to submit comments, has been published in any relevant banking market. Based on all the facts of (61 Federal Register 67,833 (1996)). The time for riling record, the Board concludes that consummation of this comments has expired, and the Board has considered the proposal would not have a significantly adverse effect on proposal and all comments received in light of the factors competition or on the concentration of banking resources set forth in section 3 of the BHC Act. in the Grass Valley, Modesto, and Sacramento banking Westamerica, with total consolidated assets of $2.5 bil- markets or any other relevant banking market. lion, operates two subsidiary banks in California, Westamerica Bank, in San Rafael ("Westamerica Bank"), Other Factors Under the BHC Act and Bank of Lake County, in Lakeport ("Lake County Bank").2 Westamerica is the 12th largest commercial bank- The BHC Act also requires the Board to consider the ing organization in California, controlling $2 billion in financial and managerial resources and future prospects of deposits, representing less than 1 percent of the total depos- the companies and banks involved, the convenience and its in commercial banking organizations in the state. needs of the community to be served, and certain other Vallicorp is the 17th largest commercial banking organiza- supervisory factors. tion in the state, controlling deposits of $1.2 billion, representing less than 1 percent of the total deposits in commer- A. Financial, Managerial and other Supervisory cial banking organizations in the state. On consummation Factors of the proposal, Westamerica would become the 10th largest commercial banking organization in California, control- The Board has carefully considered the financial and manling deposits of $3.2 billion, representing 1.4 percent of agerial resources and future prospects of Westamerica, total deposits in commercial banking organizations in the Vallicorp, and their respective subsidiaries, and other sustate. pervisory factors in light of all the facts of record. The facts of record include supervisory reports of examination Competitive Considerations assessing the financial and managerial resources of the organizations and confidential financial information pro- Section 3 of the BHC Act prohibits the Board from approv- vided by Westamerica. Based on these and all other facts of ing any proposal that would result in a monopoly, or that record, the Board concludes that all the supervisory factors would substantially lessen competition for banking ser- under the BHC Act, including financial and managerial vices in any relevant banking market unless the Board resources, weigh in favor of approval of the proposal. finds that the anticompetitive effects are clearly outweighed in the public interest by the effect of the proposal on the B. Convenience and Needs Factor convenience and needs of the community to be served. Westamerica and Vallicorp compete directly in the Grass The Board also has carefully considered the effect of the Valley, Modesto, and Sacramento banking markets, all in proposal on the convenience and needs of the communities California.3 After consummation of this proposal, none of to be served in light of all the facts of record. As part of these banking markets would be highly concentrated as that review, the Board has considered submissions from measured by the Herfindahl-Hirschman Index ("HHI") several commenters contending that Vallicorp's plans to under the Department of Justice Merger Guidelines ("DOJ close five branches, which were announced before this Guidelines"),4 and numerous competitors would remain in proposal, would have an adverse effect on the communities served by the branches.5 One commenter also maintained that Westamerica's and Vallicorp's 1995 Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.) ("HMDA") data 1. Westamerica also has requested the Board's approval for an option to purchase up to 19.9 percent of the voting shares of Vallicorp indicate that Westamerica and Vallicorp made few loans to if certain events occur. The option would expire on consummation of minorities and that the outreach and marketing efforts of the proposal. 2. Asset data are as of September 30, 1996. Deposit data are as of June 30, 1996, and incorporate structural changes through January 1997. formed the Board that a bank merger or acquisition generally will not 3. The Grass Valley banking market includes the cities of Glen- be challenged (in the absence of other factors indicating anticompetibrook, Grass Valley. Nevada City, and Penn Valley: the Modesto tive effects) unless the post-merger HHI is at least 1800 and the banking market includes the Modesto RMA, and the following cities, merger increases the HHI by more than 200 points. The Justice Escalon, Hughson. Oakdale, and Ripon, and the Sacramento banking Department has stated that the higher than normal threshold for an market includes the Sacramento RMA and Lincoln City. increase in the HHI when screening bank mergers and acquisitions for 4. The HHI would increase by 113 points to 1643 in the Grass anticompetitive effects implicitly recognizes the competitive effects of Valley banking market. 10 points to 1183 in the Modesto banking limited- purpose lenders and other non-depository financial entities. market, and 1 point to 1419 in the Sacramento banking market. Under 5. Commenters included a California state senator, the California the DOJ Guidelines. 49 Federal Register 26,823 (June 29, 1984), a Reinvestment Committee, Amador-Tuolumne Community Action market in which the post-merger HHI is between 1000 and 1800 is Agency, and six small businesses in areas where Vallicorp would considered moderately concentrated. The Justice Department has in- close branches. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 437 the institutions were ineffective. In addition, a commenter of that Vallicorp branch. In addition, Vallicorp has reprenoted that some individuals had expressed concern that the sented that prior to determining to close that branch, it proposal would have an adverse effect on communities in would consider whether closing the branch would have an the San Joaquin and Sacramento Valleys, both in Califor- adverse impact on the community served and the actions nia. that should be taken to minimize any adverse impact. In the The Board has long held that consideration of the conve- Valliwide Examination, examiners noted that in the past nience and needs factor includes a review of the records of Vallicorp had assessed the potential impact of branch closthe relevant depository institutions under the Community ings on its continued ability to offer services throughout the Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). As communities served. provided in the CRA, the Board evaluates this factor in The Board also has reviewed Westamerica's branch closlight of examinations by the primary federal supervisor of ing policy. Under this policy, before making a decision to the CRA performance records of the relevant institutions. close a branch, Westamerica considers whether the closing An institution's most recent CRA performance evaluation would have an adverse impact on the community served is a particularly important consideration in the applications and the alternatives for banking services in the area afprocess because it represents a detailed on-site evaluation fected by closing the branch. Examiners reviewed this of the institution's overall record of performance under the policy and found it to be effective. In addition, any pro- CRA by its primary federal supervisor.6 posed closings also would be reviewed by the Superinten- Westamerica Bank, Westamerica's lead subsidiary bank, dent and subject to prior notice under section 42 of the received an "outstanding" rating at the most recent exami- Federal Deposit Insurance Act. The Westamerica Examinanation of its CRA performance by the Federal Reserve tion noted that Westamerica branches were accessible to all Bank of San Francisco ("Reserve Bank"), as of May 13, segments of the community and that the bank had a strong 1996 ("Westamerica Examination"). The other bank con- record of offering services that helped meet the banking trolled by Westamerica, Lake County Bank, received a needs of its delineated community, including low- to "satisfactory" rating at the most recent examination of its moderate-income ("LMI") neighborhoods. CRA performance by the Federal Deposit Insurance Corporation, as of January 12, 1994. Valliwide Bank received an Lending Performance "outstanding" rating for CRA performance at its most recent examination by the Reserve Bank, as of January 22, Westamerica Bank and Valliwide Bank are primarily small 1996 ("Valliwide Examination"). business lenders with a secondary focus on mortgage lend- Branches. Vallicorp provided notice to the California ing. According to the Westamerica Examination, as of State Banking Department from September 1996 to Janu- March 31, 1996, commercial lending represented 48 perary 1997, before this merger proposal, that it might close or cent and residential lending represented 19.3 percent of divest a number of branches. The California Superinten- Westamerica Bank's loan portfolio. In 1996, Westamerica dent of Banks ("Superintendent") approved those possible Bank originated 1,386 small business loans for a total of closures after reviewing the potential effect on the public approximately $196 million. According to the Valliwide convenience in the areas served by the branches.7 The Examination, 46 percent of Valliwide Bank's loan portfo- Superintendent specifically approved Vallicorp's proposal lio consists of commercial loans and 40 percent consists of to close five branches identified by commenters.8 After real estate loans. In 1996, Valliwide Bank originated 5,044 receipt of the comments, however, Vallicorp entered into small business loans for a total of approximately agreements to sell four of the five branches to another $509 million. depository institution. Bank branches would, therefore, Lending Activities. Commenters maintain that the lendcontinue to be operated at these locations. If Vallicorp ing levels exhibited in the 1995 HMDA data of Westclosed the fifth branch, in Twain Harte, alternative banking america Bank and Valliwide Bank raise concerns about the services would remain available nearby because two other lending, marketing and outreach efforts to minorities by depository institutions maintain branches within two miles those banks. The Board notes, however, that the CRA does not require a bank to extend any particular type of credit, such as loans secured by residential housing that are re- 6. See Statement of the Federal Financial Supervisory Agencies ported under HMDA. Westamerica asserts that the pro- Regarding the Community Reinvestment Act. 54 Federal Register posal would improve the variety of affordable housing, 13,742, 13,745 (1989). 7. Vallicorp also provided notice of the branch closures to the public business development and community development loans and to the Reserve Bank pursuant to section 42 of the Federal Deposit that would be available, because Westamerica plans to Insurance Corporation Act ("section 42"), as implemented by the introduce many of its Community Access Loan ("CAL") Joint Policy Statement Regarding Branch Closings. See 12 U.S.C. products in the communities currently served by Valliwide. § 1831r-l; 58 Federal Register 49.083 (1993). Section 42 requires Those programs are designed for low-income borrowers that a bank provide the public with at least 30 days notice and the primary federal supervisor with at least 90 days notice before the date and include the Community Access Loan Program, ("CAL of the proposed branch closing. The bank is also required to provide Program") which provides home equity loans, automobile reasons and other supporting data for the closure, consistent with the loans, and home improvement loans with lower monthly institution's written policy for branch closings. payments; the CAL PAL Loan program, which provides 8. Those towns are Altaville, Arnold, Columbia, Groveland, and residential mortgage loans with flexible underwriting crite- Twain Harte in Tuolumne and Calaveras Counties, California. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

438 Federal Reserve Bulletin • May 1997 ria, lower down payments, and no private mortgage insur- with fair lending laws. The examinations of Westamerica ance; and the CAL Business Loan Program, which offers Bank and Valliwide Bank found no evidence of prohibited "microenterprise" or "incubator" business loans to minor- discrimination or other illegal credit practices at the instituities and women through local agencies, that also provide tions. Examiners also found no evidence at either of the technical support to the borrowers. In 1996, Westamerica institutions of any practices to discourage applications for Bank originated 33 CAL PAL loans for a total of approxi- the types of credit listed in the CRA statements of the mately $4.2 million, and 60 CAL Business Loans for banks. In addition, the Westamerica and Valliwide Examinearly $1 million. Westamerica also plans to offer commu- nations noted that both banks solicited credit from all nity development loans within Valliwide Bank's delineated segments of their community, including LMI neighborcommunity and to continue offering Small Business Ad- hoods. ministration ("SBA") loans in the community served by The Westamerica Examination noted the bank's strong Valliwide Bank. Valliwide Bank is a preferred SBA lender. performance in ascertaining community credit needs. West- Westamerica Bank currently finances several affordable america Bank primarily relied on a call program to contact housing and community development projects within its an extensive network of governmental, business, and community. From October 31, 1994, through May 13, community-based organizations throughout its community. 1996, Westamerica Bank extended a $6 million commit- Credit needs were documented in Community Needs Asment to finance the construction of 80 units of low-income sessment Reports that were reviewed by senior managers. housing for senior citizens and low-income families; ap- Those efforts resulted in more funding for small busiproximately $1 million to localities to finance the construc- nesses, affordable housing, and neighborhood improvetion of a fire and police station; approximately $1.2 million ment projects. Westamerica also engaged in a print media to local school districts for the purchase of equipment, advertising campaign in local newspapers, newsletters, and construction of permanent and portable classrooms, and minority papers and directories. school buses; and a total of approximately $1.5 million to Westamerica has stated that it would continue to assist in one organization that provides food, shelter, clothing, and meeting the credit needs of communities in the San Joaliteracy classes for the homeless and another that provides quin and Sacramento Valleys after consummation of the services to the disabled. proposal. Westamerica has indicated, for example, that it The record in the Valliwide Examination demonstrates would continue the community development activities of that Valliwide Bank provides funding for affordable hous- Vallicorp in these areas, and expand outreach efforts ing projects, community development projects, and the throughout the San Joaquin Valley. In addition, Westcredit needs of LMI individuals in its community. Accord- america would continue its representation on the Greater ing to the Valliwide Examination, in 1995, Valliwide Bank Sacramento Community Lending Consortium, which procommitted $26 million for the construction of 17 afford- vides affordable housing loans in Sacramento County. able housing projects and, between November 28, 1994, Westamerica also participates with the Valley Sierra Small and January 22, 1996, the bank extended 2,644 community Business Development Center and the Greater Sacramento development loans for a total of approximately $84 million Certified Development Corporation, which provide technifor the purposes of start-up business and business expan- cal support to applicants under Westamerica's Women and sion financing. In addition, Valliwide Bank's Community Minority Microenterprise Loan Program. Loan Program originated 335 consumer loans to LMI Conclusion on Convenience and Needs Factor. In conindividuals or in LMI areas for a total of approximately sidering the convenience and needs factor, the Board has $1.2 million in 1995. carefully reviewed all the facts of record including infor- Other aspects of CRA performance. The Board has re- mation provided by commenters on the proposal, responses viewed HMDA data for 1994 and 1995, and preliminary by Westamerica and Vallicorp, and the results of the reledata for 1996, filed by Westamerica and Vallicorp in light vant CRA performance evaluations. Based on this review, of the comments received on the proposal. In reviewing and for the reasons discussed above, the Board concludes HMDA data, the Board considered that Westamerica is that considerations relating to the convenience and needs primarily a small business lender and that Valliwide Bank of the communities served, including the CRA perfordid not offer home mortgage-related loans before 1994. mance records of the institutions involved, are consistent In the Westamerica Examination, examiners found that with approval. in 1995, 353 people applied for HMDA loans and 251 HMDA loans were originated for an origination rate of Conclusion 71 percent. Fifty-four of these applications were from individuals in LMI census tracts. The 1995 HMDA origi- Based on the foregoing and all other facts of record, nation rates of Westamerica for LMI census tracts was including all the commitments made in connection with 70 percent, which exceeded the average origination rate for this proposal, the Board has determined that the application other lenders in the market in LMI tracts in 1995, which should be, and hereby is, approved. The Board's approval was 54.3 percent. is expressly conditioned on compliance by Westamerica The Board has reviewed carefully other information, and Vallicorp with all the commitments made in connecparticularly examination reports that provide an on-site tion with this proposal and with the conditions referred to evaluation of compliance by Westamerica and Vallicorp in this order. For purposes of this action, the commitments Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 439 and conditions relied on by the Board in reaching this permitted under section 20 of the Glass-Steagall Act decision are deemed to be conditions imposed in writing (12 U.S.C. § 377).3 Company is, and will continue to be, a and, as such, may be enforced in proceedings under appli- broker-dealer registered with the Securities and Exchange cable law. Commission ("SEC") under the Securities Exchange Act This proposal shall not be consummated before the fif- of 1934 (15 U.S.C. § 78a et seq.) and a member of the teenth calendar day following the effective date of this National Association of Securities Dealers, Inc. order or later than three months following the effective date ("NASD"). Accordingly, Company is, and will continue to of this order, unless such period is extended for good cause be, subject to the record-keeping and reporting obligations, by the Board or by the Reserve Bank, acting pursuant to fiduciary standards, and other requirements of the Securidelegated authority. ties Exchange Act of 1934, the SEC, and the NASD. By order of the Board of Governors, effective March 19, The Board previously has determined that, subject to the 1997. prudential framework of limitations established in previous decisions to address the potential for conflicts of interests, Voting for this action: Vice Chair Rivlin and Governors Kelley, unsound banking practices, or other adverse effects ("sec- Phillips and Meyer. Absent and not voting: Chairman Greenspan. tion 20 firewalls"), the proposed activities of underwriting and dealing in bank-ineligible securities are so closely JENNIFER J. JOHNSON related to banking as to be proper incidents thereto within Deputy Secretary of the Board the meaning of section 4(c)(8) of the BHC Act.4 Applicant has committed that Company will conduct the proposed Orders Issued Under Section 4 of the Bank Holding underwriting and dealing activities using the same methods Company Act and procedures, and subject to the same prudential limitations that were established by the Board in the Section 20 Bane One Corporation Orders. Columbus, Ohio The Board also has determined that the conduct of these securities underwriting and dealing activities is consistent Order Approving a Notice to Engage in Underwriting with section 20 of the Glass-Steagall Act (12 U.S.C. and Dealing in All Types of Debt and Equity Securities § 377), provided that the company engaged in the underon a Limited Basis writing and dealing activities derives no more than 25 percent of its total gross revenue from underwriting and Bane One Corporation, Columbus, Ohio ("Applicant"), a dealing in bank-ineligible securities over any two-year bank holding company within the meaning of the Bank period.5 Applicant has committed that Company will con- Holding Company Act ("BHC Act"), has requested 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 the Board's Regulation Y (12 C.F.R. 225.23) to engage de now in 3. Company has authority to underwrite and deal in, to a limited underwriting and dealing in, to a limited extent, all types of extent, certain municipal revenue bonds, 1-4 family mortgage-related securities, commercial paper, and consumer-receivable-related securidebt and equity securities (other than ownership interests ties. See Bane One Corporation, 76 Federal Reserve Bulletin 756 in open-end investment companies) through its subsidiary, (1990). Company also is authorized to engage in a variety of other Bane One Capital Corporation, Columbus, Ohio ("Com- nonbanking activities. See id.; Bane One Corporation, 77 Federal pany"). Reserve Bulletin 61 (1991). 4. See Canadian Imperial Bank of Commerce, 76 Federal Reserve Notice of the proposal, affording interested persons an Bulletin 158 (1990); J.P. Morgan & Co. Ineorporated, et a/., opportunity to submit comments, has been published 75 Federal Reserve Bulletin 192 (1989), aff'd sub nom. Securities (62 Federal Register 5008 (1997)). The time for filing Industries Ass'n v. Board of Governors of the Federal Reserve System, comments has expired, and the Board has considered the 900 F.2d 360 (D.C. Cir. 1990); Citicorp, et al. 73 Federal Reserve Bulletin 473 (1987), aff'd sub nom. Securities Industry Ass'n v. Board notice and all comments received in light of the factors set of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir.), forth in section 4(c)(8) of the BHC Act. cert, denied, 486 U.S. 1059 (1988): as modified by Review of Restric- Applicant, with total consolidated assets of approxi- tions on Director, Officer and Employee Interlocks, Cross-Marketing mately $98.6 billion, is the 10th largest banking organiza- Activities, and the Purchase, and Sale of Financial Assets Between a tion in the United States.' Applicant operates subsidiary Section 20 Subsidiary and an Affiliated Bank or Thrift, 82 Federal Reserve Bulletin 1113 (1996) (collectively, "Section 20 Orders"). banks in Ohio, Arizona, Colorado, Illinois, Indiana, Ken- 5. See Section 20 Orders. Effective March 6, 1997, the Board tucky, Louisiana, Oklahoma, Texas, Utah, West Virginia, increased from 10 percent to 25 percent the amount of total revenue and Wisconsin. Company currently is engaged in limited that a section 20 subsidiary may derive from underwriting and dealing underwriting and dealing in bank-ineligible securities2 as in bank-ineligible securities. See Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securities, 61 Federal Register 68,750 (1996). Compliance with the revenue limitation shall be calculated in 1. Asset and ranking data are as of September 30, 1996. accordance with the method stated in the Section 20 Orders, as 2. As used in this order, "bank-ineligible securities" refers to all modified by the Order Approving Modifications to the Section 20 types of debt and equity securities that a bank may not underwrite or Orders, 75 Federal Reserve Bulletin 751 (1989); and 10 Percent Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank deal in directly under section 16 of the Glass-Steagall Act (12 U.S.C. Holding Companies Engaged in Underwriting and Dealing in Securi- § 24(7)). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

440 Federal Reserve Bulletin • May 1997 duct its underwriting and dealing activities in bank- ers of these services. Accordingly, the Board has deterineligible securities subject to the Board's revenue test.6 mined that the performance of the proposed activities by In order to approve this notice, the Board also must Applicant can reasonably be expected to produce public determine that the proposed activities "can reasonably be benefits that outweigh possible adverse effects under the expected to produce benefits to the public, such as greater proper incident to banking standard of section 4(c)(8) of convenience, increased competition, or gains in efficiency, the BHC Act. that outweigh possible adverse effects, such as undue con- On the basis of all the facts of record, the Board has centration of resources, decreased or unfair competition, determined to, and hereby does, approve this notice subject conflicts of interests, or unsound banking practices."7 As to all the terms and conditions discussed in this order and part of its review of these factors, the Board considers the in the Section 20 Orders, as modified by the Modification financial and managerial resources of the notificant and its Orders. The Board's approval of the proposal extends only subsidiaries and the effect the transaction would have on to activities conducted within the limitations of those orsuch resources.8 The Board has reviewed the capitalization ders and this order, including the Board's reservation of of Applicant and Company in accordance with the stan- authority to establish additional limitations to ensure that dards set forth in the Section 20 Orders and finds the Company's activities are consistent with safety and soundcapitalization of each to be consistent with approval. With ness, avoidance of conflicts of interests, and other relevant respect to Company, this determination is based on all the considerations under the BHC Act. Underwriting and dealfacts of record, including Applicant's projections of the ing in any manner other than as approved in this order and volume of Company's underwriting and dealing activities the Section 20 Orders (as modified by the Modification in bank-ineligible securities. In connection with the pro- Orders) is not authorized for Company. posal, the Federal Reserve Bank of Cleveland ("Reserve The Board's approval of the proposed underwriting and Bank") has reviewed the operational and managerial infra- dealing activities with respect to equity securities is condistructure of Company, including its computer, audit, and tioned on a future determination by the Board that Appliaccounting systems and internal risk management proce- cant and Company have established policies and procedures and controls, with respect to the proposed underwrit- dures to ensure compliance with the conditions and ing and dealing in debt securities. Based on the Reserve restrictions previously relied on by the Board in approving Bank's review and all other facts of record, the Board has these activities and the other requirements of this order and determined that Company has established an adequate op- the Section 20 Orders, including computer, audit and acerational and managerial infrastructure with respect to debt counting systems, internal risk management controls and securities to ensure compliance with the requirements of the necessary operational and managerial infrastructure. the Section 20 Orders. On the basis of all the facts of On notification by the Board that this condition has been record, and subject to the completion of a satisfactory satisfied. Company may commence the proposed underinfrastructure review with respect to Company's proposed writing and dealing activities in equity securities, subject to underwriting and dealing in all types of equity securities, the other conditions discussed in this order and the Section the Board has concluded that financial and managerial 20 Orders. considerations are consistent with approval of the notice. The Board's determination also is subject to all the terms In order to approve the proposal, the Board also must and conditions set forth in Regulation Y. including those in find that the performance of the proposed activities by sections 225.7 and 225.23(g) (12 C.F.R. 225.7 and Applicant can reasonably be expected to produce benefits 225.23(g)), and to the Board's authority to require modifithat would outweigh possible adverse effects under the cation or termination of the activities of a bank holding proper incident to banking standard of section 4(c)(8) of company or any of its subsidiaries as the Board finds the BHC Act. Under the framework established in this and necessary to ensure compliance with, or to prevent evasion prior decisions, consummation of the proposal is not likely of, the provisions and purposes of the BHC Act and the to result in any significantly adverse effects, such as undue Board's regulations and orders issued thereunder. The concentration of resources, decreased or unfair competi- Board's decision is specifically conditioned on compliance tion, conflicts of interests, or unsound banking practices. with all the commitments made in connection with this The Board expects that consummation of the proposal notice, including the commitments discussed in this order would provide added convenience to the customers of and the conditions set forth in the Board regulations and Applicant and would increase competition among provid- orders noted above. The commitments and conditions shall be deemed to be conditions imposed in writing by the Board in connection with its findings and decision, and, as ties, 61 Federal Register 48,953 (1996) (collectively, "Modification such, may be enforced in proceedings under applicable Orders"). law. 6. Company also may engage in activities that are necessary incidents to the proposed underwriting and dealing activities. Unless This proposal shall not be consummated later than three Company receives specific approval under section 4(c)(8) of the BHC months after the effective date of this order, unless such Act to conduct the activities independently, any revenues from the period is extended for good cause by the Board or the incidental activities must be counted as ineligible revenues subject to Reserve Bank, acting pursuant to delegated authority. the Board's revenue limitation. By order of the Board of Governors, effective March 24, 7. 12 U.S.C. § 1843(c)(8). 8. See 12 C.F.R. 225.24. 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 441 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Stichting Prioriteit ABN AMRO Holding, with total Governors Kelley, Phillips, and Meyer. consolidated assets of $339.4 billion, is the largest commercial banking organization in the Netherlands.1 Notifi- JENNIFER J. JOHNSON cants control seven depository institutions in Illinois and Deputy Secretary of the Board one commercial bank in New York. ABN AMRO Bank N.V. also operates branches in Boston, Massachusetts; Chicago, Illinois; New York, New York; Pittsburgh, Penn- Stichting Prioriteit ABN AMRO Holding sylvania; and Seattle. Washington; and agencies in Atlanta, Stichting Administratiekantoor ABN AMRO Georgia; Miami. Florida; Houston, Texas; and Los Angeles Holding and San Francisco. California. ABN AMRO Holding N.V. CitiFutures. CFL London, and CFL Singapore are ABN AMRO Bank N.V. wholly owned indirect subsidiaries of Citicorp, New York, all of Amsterdam, The Netherlands New York, and engage in a variety of futures-related activities pursuant to specific Board orders, including pro- Order Approving Notice to Engage in Certain viding execution and clearing, execution-only and clearing- Nonhanking Activities only services with respect to futures and options on futures on financial and nonfinancial commodities.2 Notificants Stichting Prioriteit ABN AMRO Holding, Stichting Ad- propose that ABN AMRO Chicago Corporation, Chicago, ministratiekantoor ABN AMRO Holding, ABN AMRO Illinois, Notificants' existing section 20 subsidiary, succeed Holding N.V., and ABN AMRO Bank N.V., all of Amster- to certain clearing businesses currently conducted by Citidam, The Netherlands (collectively, "Notificants"), bank Futures and acquire CFL Singapore. Notificants also proholding companies within the meaning of the Bank Hold- pose that ABN AMRO Chicago Corporation (UK) Liming Company Act ("BHC Act"), have requested the ited, London, England, succeed to the clearing businesses Board's approval under section 4(c)(8) of the BHC Act of CFL London. (12 U.S.C. § 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 C.F.R. 225.23) to acquire indirectly Activities Previously Approved by the Board rights, interests, and obligations in clearing contracts held by Citicorp Futures Corporation. New York. New York The Board previously has determined by regulation and ("CitiFutures"), and CitiFutures Limited, London, order that Notificants' proposed futures-related execution, England ("CFL London"), and to acquire indirectly all the clearing and advisory activities are so closely related to outstanding common shares of Citicorp Futures Limited, banking as to be proper incidents thereto, provided that the Singapore ("CFL Singapore"). Notificants would thereby activities are conducted in conformity with certain limitaindirectly engage in the following activities: tions and conditions designed to, inter alia, ensure that the (1) Acting as a futures commission merchant ("FCM") activities are consistent with safe and sound banking pracfor nonaffiliated persons in the execution and clearing on tices and mitigate potential conflicts of interests.3 Notifimajor commodities exchanges of financial futures and cants have committed to conduct the activities in accoroptions on futures contracts, and providing investment dance with the limitations set forth in Regulation Y, the advice on these contracts as an FCM or as a commodity Board's orders, and interpretations relating to each of the trading advisor ("CTA"), pursuant to sections activities, including the limitations noted in the ASA' 225.25(b)(18) and (19) of Regulation Y (12 C.F.R. AMRO Order. Notificants also have specifically committed 225.25(b)(17)and(b)(18)); to apply the risk management policies, procedures and (2) Acting as an FCM for nonaffiliated persons in the internal control systems that were subject to the Board's execution and clearing on major commodity exchanges scrutiny in connection with the ABN AMRO Order. of futures and options on futures contracts based on bonds or other debt instruments, certain commodities, Proper Incident to Banking Standard and stock, bond, or commodity indices, and providing investment advice, including discretionary management In order to approve this notice, the Board must determine services, with respect to such contracts; and that the activities are a proper incident to banking, that is, (3) Providing execution-only, clearing-only and omni- that performance of the proposed activities "can reasonbus account services with respect to futures and options ably be expected to produce benefits to the public . . . that on futures based on certain financial and nontinancial outweigh possible adverse effects, such as undue concencommodities. tration of resources, decreased or unfair competition, con- Notice of the proposal, affording interested persons an opportunity to submit comments, has been published 1. Asset and ranking data are as of December 31, 1995, and use (62 Federal Register 9432 (1997)). The time for filing exchange rates then in effect. 2. See, en.. Citicorp. XI Federal Reserve Bulletin 164(1995). comments has expired, and the Board has considered the 3. See 12 C.F.R. 225.25(b)(18), (b)(19); Stichting Prioriteit ABN notice and all comments received in light of the factors set AMRO Holding, 83 Federal Reserve Bulletin 138 (1997) ("ABN forth in section 4(c)(8) of the BHC Act. AMRO Order"). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

442 Federal Reserve Bulletin • May 1997 flicts of interests, or unsound banking practices."4 As part Voting for this action: Vice Chair Rivlin and Governors Kelley, of its review of these factors, the Board considers the Phillips, and Meyer. Absent and not voting: Chairman Greenspan. financial and managerial resources of the notificant and its JENNIFER J. JOHNSON subsidiaries and the effect the transaction would have on Deputy Secretary of the Board such resources.5 Based on all the facts of record, the Board concludes that financial and managerial considerations are consistent with approval of the proposal. ORDERS ISSUED UNDER INTERNATIONAL BANKING ACT The Board expects that the proposed transaction can reasonably be expected to provide added convenience and Royal Bank of Canada services to Notificants' customers by offering them an Montreal, Canada expanded range of futures-related products and services. There are numerous providers of the proposed futures- Order Approving Establishment of a Representative related services and, therefore, consummation of the pro- Office posal would not significantly decrease competition in any relevant market. The Board also believes that the conduct Royal Bank of Canada ("Bank"), Montreal, Canada, a of the proposed activities within the framework established foreign bank within the meaning of the International Bankin this order, prior orders, and Regulation Y is not likely to ing Act ("IBA"), has applied under section 10(a) of the result in significantly adverse effects, such as undue con- IB A (12 U.S.C. § 3107(a)) to establish a representative centration of resources, decreased or unfair competition, or office in Houston, Texas. The Foreign Bank Supervision unsound banking practices. In addition, to address any Enhancement Act of 1991 ("FBSEA"), which amended potential adverse impact from the performance of the prothe IBA, provides that a foreign bank must obtain the posed activities, Notificants have committed to conduct the approval of the Board to establish a representative office in activities pursuant to conditions the Board previously has the United States. found satisfactory to mitigate potential adverse effects. Notice of the application, affording interested persons an Accordingly, the Board has concluded that the perforopportunity to submit comments, has been published in a mance of the proposed activities by Notificants can reasonnewspaper of general circulation in Houston, Texas (Housably be expected to produce public benefits that outweigh ton Chronicle, November 27, 1996). The time for filing possible adverse effects under the proper incident to bankcomments has expired, and all comments have been coning standard of section 4(c)(8) of the BHC Act. sidered. Based on the foregoing and all the facts of record, the Bank, with total consolidated assets of approximately Board has determined that the notice should be, and hereby $162.0 billion,1 is the largest bank in Canada. Bank's is, approved. Approval of this notice is specifically condishares are publicly traded and widely held, and no sharetioned on compliance by Notificants with the commitments holder owns more than 10 percent of Bank. made in connection with this notice. The Board's determi- Bank provides a wide range of consumer, commercial, nation also is subject to all the terms and conditions set and corporate banking services through its network of forth in Regulation Y, including those in sections 225.7 and more than 1500 offices in Canada. Foreign operations are 225.23(b) (12 C.F.R. 225.27 and 225.23(b)), and to the conducted in 35 countries. In the United States, Bank Board's authority to require such modification or terminacurrently operates a federally licensed branch in New York, tion of the activities of a bank holding company or any of New York, state-licensed agencies in Los Angeles, Califorits subsidiaries as the Board finds necessary to ensure nia, and Miami, Florida, and a representative office in compliance with, and to prevent evasion of, the provisions Chicago, Illinois. Bank also engages in securities activities of the BHC Act and the Board's regulations and orders in the United States through its subsidiary, RBC Dominion thereunder. For purposes of this transaction, the commit- Securities Corporation, New York, New York. ments and conditions agreed to by Notificants shall be The purposes for establishing the proposed representadeemed to be conditions imposed in writing by the Board tive office are to market Bank's products and services and in connection with its findings and decision, and as such solicit loan business for Bank. may be enforced in proceedings under applicable law. In acting on an application to establish a representative This transaction shall not be consummated later than office, the IBA and Regulation K provide that the Board three months after the effective date of this order unless shall take into account whether the foreign bank engages such period is extended for good cause by the Board or the directly in the business of banking outside of the United Federal Reserve Bank of Chicago, acting pursuant to dele- States and has furnished to the Board the information it gated authority. needs to assess the application adequately. The Board also By order of the Board of Governors, effective March 19, shall take into account whether the foreign bank and any 1997. foreign bank parent is subject to comprehensive supervision or regulation on a consolidated basis by its home 4. 12U.S.C. § 1843(c)(8). country supervisor (12 U.S.C. § 3105(d)(2); 12 C.F.R. 5. See 12 C.F.R. 225.24; see also The Fuji Bank, Limited, 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AC 73 Federal Reserve Bulletin 155(1987). 1. Asset data are as of October 31,1996. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 443 211.24).2 The Board may also take into account additional operations, the Board has reviewed the restrictions on standards as set forth in the IB A and Regulation K disclosure in relevant jurisdictions in which Bank operates (12U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)). and has communicated with relevant government authori- In this case, with respect to supervision by home country ties about access to information. Bank has committed to authorities, the Board has considered the following infor- make available to the Board such information on the opermation. Bank is supervised and regulated by the Office of ations of Bank and any affiliate of Bank that the Board the Superintendent of Financial Institutions ("OSFI"). The deems necessary to determine and enforce compliance with OSFI is responsible for the prudential supervision and the IBA, the Bank Holding Company Act of 1956, as regulation of federally regulated financial institutions. The amended, and other applicable federal law. To the extent Board has previously determined, in connection with appli- that the provision of such information may be prohibited cations involving other Canadian banks, that these banks by law, Bank has committed to cooperate with the Board to were subject to home country supervision on a consoli- obtain any necessary consents or waivers that might be dated basis.3 Bank is supervised by the OSFI on substan- required from third parties for disclosure. In addition, tially the same terms and conditions as these other banks. subject to certain conditions, the OSFI may share informa- Based on all the facts of record, the Board has determined tion on Bank's operations with other supervisors, including that Bank is subject to comprehensive supervision and the Board. In light of these commitments and other facts of regulation on a consolidated basis by its home country record, and subject to the condition described below, the supervisor. Board concludes that Bank has provided adequate assur- The Board also has taken into account the additional ances of access to any necessary information the Board standards set forth in section 7 of the IB A (See 12 U.S.C. may request. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). The OSFI has On the basis of all the facts of record, and subject to the no objection to establishment of the proposed representa- commitments made by Bank, as well as the terms and tive office. conditions set forth in this order, the Board has determined With respect to the financial and managerial resources of that Bank's application to establish the representative of- Bank, taking into consideration Bank's record of opera- fice should be, and hereby is, approved. Should any restrictions in its home country, its overall financial resources, tions on access to information on the operations or activiand its standing with its home country supervisors, the ties of Bank and its affiliates subsequently interfere with Board also has determined that financial and managerial the Board's ability to obtain information to determine and factors are consistent with approval of the proposed repre- enforce compliance by Bank or its affiliates with applicable sentative office. Bank appears to have the experience and federal statutes, the Board may require termination of any capacity to support the proposed representative office and of the Bank's direct or indirect activities in the United also has established controls and procedures for the pro- States. Approval of this application is also specifically posed representative office to ensure compliance with U.S. conditioned on Bank's compliance with the commitments law. made in connection with the application, and with the With respect to access to information about Bank's conditions in this order.4 The commitments and conditions referred to above are conditions imposed in writing by the Board in connection with its decision, and may be enforced in proceedings under 12 U.S.C. § 1818 or 12 U.S.C. § 1847 against Bank, its offices, and its affiliates. 2. In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors: By order of the Board of Governors, effective March 31, (i) Ensure that the bank has adequate procedures for monitoring and 1997. controlling its activities worldwide; (ii) Obtain information on the condition of the bank and its subsid- Voting for this action: Chairman Greenspan. Vice Chair Rivlin. and iaries and offices through regular examination reports, audit reports, Governors Kelley, and Meyer. Absent and not voting: Governor or otherwise; Phillips. (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 JENNIFER J. JOHNSON a worldwide basis, or comparable information that permits analysis Deputy Secretary of the Board ot the bank's financial condition on a worldwide consolidated basis; and (v) Evaluate prudential standards, such as capital adequacy and risk 4. The Board's authority to approve the establishment of the proasset exposure, on a worldwide basis. posed office parallels the continuing authority of the Texas State These are indicia of comprehensive, consolidated supervision. No Banking Department ("Department") to license offices of foreign single factor is essential and other elements may inform the Board's banks. The Board's approval of this application does not supplant the determination. authority of Texas and the Department to license the proposed office 3. See Bank of Montreal. 80 Federal Reserve Bulletin 925 (1994); of Bank in accordance with any terms or conditions that the Depart- National Bank of Canada, 82 Federal Reserve Bulletin 769 (1996). ment may impose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

444 Federal Reserve Bulletin • May 1997 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 1st United Bancorp, Island National Bank and Trust Company, March 19, 1997 Boca Raton, Florida Palm Beach, Florida Whitney Holding Corporation, Whitney National Bank of Mississippi, March 26. 1997 New Orleans, Louisiana Gulfport, Mississippi Merchants Bancshares, Inc.. Gulfport, Mississippi Merchants Bank & Trust Company, Gulfport, Mississippi Section 4 Applicant(s) Bank(s) Effective Date First Citizens Bancshares, Inc., SecurAmerica Holding Corporation, March 25, 1997 Dyersburg, Tennessee Memphis, Tennessee SecurAmerica Business Credit, Memphis, Tennessee 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 Affiliated Community Bancorp, Inc.. Middlesex Bank & Trust Company, Boston March 14, 1997 Waltham. Massachusetts Newton, Massachusetts AliKat Investments, Inc.. NorthSide Community Bank, Chicago March 5, 1997 Gurnee, Illinois Gurnee, Illinois AmeriBancShares, Inc., AmeriBancShares of Delaware, Inc., Dallas March 26, 1997 Wichita Falls, Texas Wilmington, Delaware American National Bank, Wichita Falls, Texas AmeriBancShares of Delaware, Inc.. American National Bank, Dallas March 26, 1997 Wilmington, Delaware Wichita Falls, Texas ANB Bancshares, Inc., ANB Nevada Group, Inc., Dallas March 24, 1997 Gonzales, Texas Carson City, Nevada American National Bank, Gonzales, Texas ANB Nevada Group, Inc., American National Bank, Dallas March 24, 1997 Carson City, Nevada Gonzales, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 445 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Arrowhead Capital Corporation, Sunniland Bank, Atlanta March 11, 1997 West Palm Beach, Florida Fort Lauderdale, Florida BancFirst Corporation, First Ada Bancshares, Inc., Kansas City March 3, 1997 Oklahoma City, Oklahoma Ada, Oklahoma Bank of Boston Corporation, BankBoston, National Association, Boston March 11, 1997 Boston, Massachusetts Nashua, New Hampshire BayBanks, Inc., Boston, Massachusetts Blackhawk Bancorp, Inc., Rochelle Bancorp, Inc., Chicago March 11, 1997 Beloit, Wisconsin Rochelle, Illinois Rochelle Savings Bank, S.B., Rochelle, Illinois Bolivar Bancshares, Inc., Bank of Bolivar, St. Louis March 21, 1997 Bolivar, Missouri Bolivar, Missouri Cumberland Bancorp, Inc., First Federal Bancshares, Inc., Atlanta March 14. 1997 Carthage, Tennessee Memphis, Tennessee Community Bancorp of Louisiana, American Security Bancshares, Inc., Atlanta March 5, 1997 Inc., Welsh, Louisiana Raceland, Louisiana American Bank, Welsh, Louisiana The Connor Trusts, Pioneer Bancorp, Inc., Chicago March 4, 1997 Auburndale, Wisconsin Auburndale, Wisconsin Eagle Bancshares, Inc., Fairfield Holdings, Inc., Dallas March 19, 1997 Fairfield, Texas Fairfield, Texas First National Bank of Fairfield, Fairfield, Texas Emerald Coast Bancshares, Inc.. Emerald Coast Bank. Atlanta February 25, 1997 Panama City Beach, Florida Panama City Beach, Florida FCFT, Inc., Blue Ridge Bank, Richmond March 12, 1997 Princeton, West Virginia Sparta, North Carolina FGH Bancorp, Inc., Bank of Herrin, St. Louis February 21, 1997 Herrin, Illinois Herrin, Illinois Carterville State & Savings Bank, Carterville, Illinois Firstbank of Illinois Co., BankCentral Corporation, Chicago March 7, 1997 Springfield, Illinois Mattoon, Illinois FBIC Subsidiary, Inc., Central National Bank of Mattoon, Springfield, Illinois Mattoon, Illinois First Citizens Corporation, Tara Bankshares Corporation, Atlanta March 25, 1997 Newnan, Georgia Riverdale, Georgia Tara State Bank, Riverdale, Georgia First Equity Corp., 1st Equity Bank, Chicago March 20, 1997 Skokie, Illinois Skokie. Illinois First Financial Bancorporation, West Branch Bancorp, Inc., Chicago February 20, 1997 Iowa City, Iowa West Branch, Iowa West Branch State Bank, West Branch, Iowa First Union Corporation, Boca Raton First National Bank, Richmond March 27, 1997 Charlotte, North Carolina Boca Raton, Florida F.N.B. Corporation, West Coast Bancorp, Inc., Cleveland March 21, 1997 Hermitage, Pennsylvania Cape Coral, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

446 Federal Reserve Bulletin • May 1997 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Fremont Bank Corporation, Fremont of Albuquerque, Inc., Kansas City March 17, 1997 Canon City, Colorado Canon City, Colorado Fremont of Albuquerque, Inc., Interamerica Bank, Kansas City March 17, 1997 Canon City. Colorado Albuquerque. New Mexico Marshneld Investment Company, Metropolitan Bancshares, Inc., St. Louis March 4, 1997 Springfield, Missouri Springfield, Missouri Metropolitan National Bank, Springfield, Missouri Mid-America Bankshares, Inc., State Bank of Esbon, Kansas City March 21, 1997 Baldwin City, Kansas Esbon, Kansas New London Bancshares. Inc., Behrens Bancshares, Inc., St. Louis February 25, 1997 New London, Missouri New London, Missouri Rails County State Bank, New London, Missouri NewSouth Bancorp, Inc., NewSouth Bank, Richmond March 10, 1997 Washington, North Carolina Washington, North Carolina Norwest Corporation, Farmers National Bancorp, Inc., Minneapolis March 5, 1997 Minneapolis, Minnesota Geneseo, Illinois Farmers National Bank of Geneseo, Geneseo, Illinois Peoples Bancorp, Inc., Peoples Bank of Kent County, Richmond March 5, 1997 Chestertown, Maryland Maryland, Chestertown, Maryland Pioneer Bancorp, Inc., Pioneer Bank. Chicago March 4, 1997 Auburndale, Wisconsin Auburndale, Wisconsin Regions Financial Corporation, Gulf South Bancshares, Inc., Atlanta March 24, 1997 Birmingham, Alabama Gretna. Louisiana Gulf South Bank, Gretna, Louisiana Regions Financial Corporation. West Carroll Bancshares, Inc., Atlanta February 26, 1997 Birmingham, Alabama Oak Grove, Louisiana West Carroll National Bank of Oak Grove, Oak Grove, Louisiana Santa Barbara Bancorp, First Valley Bank, San Francisco February 26, 1997 Santa Barbara, California Lompoc, California Security Bancorp of Tennessee, Inc.. The Bank of Jackson, St. Louis March 18, 1997 Halls, Tennessee Jackson, Tennessee TCF Colorado Corporation, TCF National Bank Colorado, Minneapolis March 21, 1997 Englewood, Colorado Englewood. Colorado TCF Financial Corporation, TCF National Bank Minnesota, Minneapolis March 21, 1997 Minneapolis, Minnesota Minneapolis, Minnesota TCF National Bank Illinois, Chicago, Illinois TCF National Bank Wisconsin, Milwaukee. Wisconsin Great Lakes National Bank Michigan, Ann Arbor, Michigan Great Lakes National Bank Ohio, Hamilton, Ohio TCF Colorado Corporation, Englewood, Colorado TCF National Bank Colorado, Englewood, Colorado Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 447 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Tri-County Financial Corporation, Community Bank of Tri-County, Richmond March 7, 1997 Waldorf, Maryland Waldorf, Maryland Trimont Bancorporation, Inc., Financial Services of Winger, Inc., Minneapolis March 11, 1997 Trimont, Minnesota Winger, Minnesota U.S. Trust Corporation, U.S. Trust Bank of Connecticut, Inc., New York March 10, 1997 New York, New York Greenwich, Connecticut Vanderbilt Holding Company, Inc., Fairfax State Savings Bank, Chicago March 5, 1997 Fairfax. Iowa Fairfax, Iowa Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Barnett Banks, Inc., Oxford Resources Corp., Atlanta March 4, 1997 Jacksonville, Florida Melville, New York Community First Bankshares, Inc.. To engage de novo in the nonbank Minneapolis March 24, 1997 Fargo, North Dakota activities of making and servicing loans and leasing personal property and acting as agent, broker, or adviser in leasing personal property Creditanstalt-Bankverein, To engage in making equity investments New York March 3, 1997 Vienna, Austria in corporations or projects designed primarily to promote community welfare Farmers State Financial Corp., Farmers State Bank, fsb, Minneapolis February 28, 1997 Victor, Montana Stevensville, Montana HPK Financial Corporation, Mortgage Service America, Inc., Chicago March 12, 1997 Chicago, Illinois Lombard, Illinois Norwest Corporation, UDC Mortgage. Minneapolis March 6, 1997 Minneapolis, Minnesota Tempe, Arizona Otto Bremer Foundation and Bremer Paul E. Hedlund Insurance Agency, Minneapolis February 25, 1997 Financial Corporation, Boyceville, Wisconsin St. Paul, Minnesota Pioneer Bankcorp, Inc., Development Investments, Inc., Atlanta March 7, 1997 Clewiston, Florida Clewiston, Florida Regency Bancorp, Regency Investment Advisors, Inc., San Francisco February 25, 1997 Fresno, California Fresno, California Republic Bancshares, Inc., Firstate Financial, F.A., Atlanta March 7, 1997 St. Petersburg, Florida Orlando, Florida TCF Financial Corporation, TCF Securities, Inc., Minneapolis March 21, 1997 Minneapolis, Minnesota St. Paul, Minnesota TCF Minnesota Financial Services, Inc., Minneapolis, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

448 Federal Reserve Bulletin U May 1997 Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Keystone Financial, Inc., Financial Trust Corp, Philadelphia March 19, 1997 Harrisburg, Pennsylvania Carlisle, Pennsylvania Vermilion Bancorp, Inc., American Savings Bank of Danville, Chicago February 27, 1997 Danville, Illinois Danville, Illinois Zions Bancorporation, Aspen Bancshares, Inc., San Francisco February 26, 1997 Salt Lake City, Utah Aspen, Colorado Pitkin County Bank & Trust Company, Aspen, Colorado Valley National Bank of Cortez, Cortez, Colorado Centennial Savings Bank, F.S.B., Durango, Colorado 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 1st United Bank, Island National Bank and Trust Company, March 19, 1997 Boca Raton, Florida Palm Beach, Florida 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 Blue Ridge Bank, Blue Ridge Acquisition Bank, Inc., Richmond March 12, 1997 Sparta, North Carolina Sparta, North Carolina Community Bank & Trust Diamond Bank, Kansas City March 14, 1997 Company, Diamond, Missouri Neosho, Missouri First Bank of Arkansas, First Bank of Arkansas, St. Louis March 27, 1997 Jonesboro, Arkansas Wynne, Arkansas Santa Barbara Bank & Trust, First Valley Bank, San Francisco February 26, 1997 Santa Barbara, California Lompoc, California PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Research Triangle Institute v. Board of Governors, No. 97- Federal Reserve Banks in which the Board of Governors is not 1282 (4th Cir., filed February 24, 1997). Appeal of district named a party. court's dismissal of contract claim. Pharaon v. Board of Governors, No. 97-1114 (D.C. Cir., filed February 28, 1997). Petition for review of a Board order dated The New Mexico Alliance v. Board of Governors, No. 96- January 31, 1997, imposing civil money penalties and an order 9552 (10th Cir., filed December 24, 1996). Petition for review of prohibition for violations of the Bank Holding Company of a Board order dated December 16, 1996, approving the Act. acquisition by NationsBank Corporation and NB Holdings Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 449 Corporation, both of Charlotte, North Carolina, of Boatmen's Court of Appeals. Oral argument was held on February 4, Bancshares, Inc., St. Louis, Missouri. Also on December 24, 1997. 1996, petitioners moved for an emergency stay of the Board's order. The motion for a stay was denied by the 10th Circuit on Kuntz v. Board of Governors, No. 96-1079 (D.C. Cir., filed January 3, 1997; on January 6, 1997, petitioners' application March 7, 1996). Petition for review of a Board order dated for emergency stay was denied by the Supreme Court. February 7, 1996, approving applications by The Fifth Third Bank, Cincinnati, Ohio, and The Firth Third Bank of Colum- Artis v. Greenspan, No. l:96CV02619 (D.D.C.. filed Novem- bus, Columbus, Ohio, to acquire certain assets and assume ber 19, 1996). Employment discrimination action. On Decem- certain liabilities of 25 branches of NBD Bank, Columbus, ber 20, 1996, the Board moved to dismiss the action. Ohio. On February 13, 1997, the court granted the Board's motion to dismiss the action. Snyder v. Board of Governors, No. 96-1403 (D.C. Cir., filed October 23, 1996). Petition for review of Board order dated Inner City Press/Community on the Move v. Board of Gover- September 11, 1996, prohibiting John K. Snyder and Donald nors, No. 96-4008 (2nd Cir., filed January 19, 1996). Petition E. Hedrick from further participation in the banking industry. for review of a Board order dated January 5, 1996, approving On November 21, 1996, the Board moved to dismiss the the applications and notices by Chemical Banking Corporapetition. tion to merge with The Chase Manhattan Corporation, both of New York, New York, and by Chemical Bank to merge with American Bankers Insurance Group, Inc. v. Board of Gover- The Chase Manhattan Bank, N.A., both of New York, New nors, No. 96-CV-2383-EGS (D.D.C., filed October 16, 1996). York. Petitioners' motion for an emergency stay of the transac- Action seeking declaratory and injunctive relief invalidating a tion was denied following oral argument on March 26, 1996. new regulation issued by the Board under the Truth in Lend- The Board's brief on the merits was filed July 8, 1996. The ing Act relating to treatment of fees for debt cancellation case was consolidated for oral argument and decision with Lee agreements. On October 18, 1996, the district court denied v. Board of Governors, No. 95^4134 (2d Cir.); oral argument plaintiffs' motion for a temporary restraining order. On Janu- was held on January 13, 1997. ary 17, 1997. the parties filed cross-motions for summary judgment. Kuntz v. Board of Governors, No. 95-1485 (D.C. Cir., filed September 21, 1995). Petition for review of Board order dated Clifford v. Board of Governors, No. 96-1342 (D.C. Cir., filed August 23, 1995, approving the applications of The Fifth September 17, 1996). Petition for review of Board order dated Third Bank, Cincinnati, Ohio, to acquire certain assets and August 21, 1996, denying petitioners' motion to dismiss en- assume certain liabilities of 12 branches of PNC Bank, Ohio, forcement action against them. On November 4, 1996, the N.A., Cincinnati, Ohio, and to establish certain branches. On Board filed a motion to dismiss the petition. February 13, 1997, the court granted the Board's motion to dismiss the action. Artis v. Greenspan, No. 96-CV-02105 (D. D.C, filed September 11, 1996). Class complaint alleging race discrimination in Lee v. Board of Governors, No. 95-4134 (2nd Cir., filed employment. On December 20, 1996, the Board moved to August 22, 1995). Petition for review of Board orders dated dismiss the action. July 24, 1995, approving certain steps of a corporate reorganization of U.S. Trust Corporation, New York, New York, and Leuthe v. Board of Governors, No. 96-5725 (E.D. Pa., filed the acquisition of U.S. Trust by Chase Manhattan Corporation, August 16, 1996). Action against the Board and other Federal New York, New York. On September 12, 1995, the court banking agencies challenging the constitutionality of the Of- denied petitioners' motion for an emergency stay of the fice of Financial Institution Adjudication. On January 24, Board's orders. The Board's brief was filed on April 16, 1996. 1997, the agencies filed a motion to dismiss the action. Oral argument, consolidated with Inner City Press/Community on the Move v. Board of Governors, took place on January 13, 1997. Long v. Board of Governors, No. 96-9526 (10th Cir., filed July 31, 1996). Petition for review of Board order dated July 2, 1996, assessing a civil money penalty and cease and Beckman v. Greenspan, No. 95-35473 (9th Cir., filed May 4, desist order for violations of the Bank Holding Company Act. 1995). Appeal of dismissal of action against Board and others Oral argument is scheduled for May 12, 1997. seeking damages for alleged violations of constitutional and common law rights. The appellants' brief was filed on Interamericas Investments, Ltd. v. Board of Governors, No. June 23, 1995; the Board's brief was filed on July 12, 1995. 96-60326 (5th Cir., filed May 8, 1996). Petition for review of order imposing civil money penalties and cease and desist In re Subpoena Duces Tecum, Misc. No. 95-06 (D.D.C., filed order in enforcement case. Petitioners' brief was filed on January 6, 1995). Action to enforce subpoena seeking pre- July 26, 1996, and the Board's brief was filed on Septem- decisional supervisory documents sought in connection with ber 27, 1996. On August 20, petitioners' motion for a stay of an action by Bank of New England Corporation's trustee in the Board's orders pending judicial review was denied by the bankruptcy against the Federal Deposit Insurance Corpora- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

450 Federal Reserve Bulletin • May 1997 tion. The Board filed its opposition on January 20, 1995. Oral TERMINATION OF ENFORCEMENT ACTIONS argument on the motion was held July 14, 1995. The Federal Reserve Board announced on March 14, 1997, the termination of the following Board of Governors v. Pharaon, No. 91-CIV-6250 (S.D. New enforcement actions: York, filed September 17, 1991). Action to freeze assets of individual pending administrative adjudication of civil money Perry County Bancorp, Inc. and penalty assessment by the Board. On September 17, 1991, the DuQuoin State Bank court issued an order temporarily restraining the transfer or DuQuoin, Illinois disposition of the individual's assets. Written Agreement dated April 12, 1993—terminated February 7, 1997. FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD First Independence Bank of Florida OF GOVERNORS Ft. Myers, Florida Damian Cope Written Agreement dated May 1, 1992—terminated Febru- London, England ary 25, 1997. The Federal Reserve Board announced on March 3, 1997, Garfield Bank the issuance of an Order of Prohibition against Damian Montebello, California Cope, a former trader and institution-affiliated party of the New York Branch of the Midland Bank, pic, London, Written Agreement dated April 26, 1994—terminated England. March 5, 1997. John Gillogly Bank of New York Corning, Ohio New York, New York The Federal Reserve Board announced on March 7, 1997, Order dated January 16, 1992—terminated March 5, 1997. the issuance of a combined Order to Cease and Desist, Order of Restitution, and Order of Assessment of a Civil Crestar Bank Money Penalty against John Gillogly, a former officer and Richmond, Virginia institution-affiliated party of The Bank of Corning, Corning, Ohio. Order dated January 16, 1992—terminated March 3, 1997. The International Commercial Bank of China Trust Company Bank Taipei, Taiwan Atlanta, Georgia The Federal Reserve Board announced on March 28, 1997, Order dated January 16, 1992—terminated March 14, the issuance of an Order against The International Com- 1997. mercial Bank of China, Taipei, Taiwan. Central Bank of the South Oliver Lu Birmingham, Alabama Tokyo,Japan Order dated January 16, 1992—terminated March 5, 1997. The Federal Reserve Board announced on March 7, 1997, the issuance of a combined Order to Cease and Desist and American Bank and Trust of Polk County Order of Assessment of a Civil Money Penalty against Lake Wales, Florida Oliver Lu, a former employee of BT Co., Tokyo, Japan, a subsidiary of Bankers Trust New York Corporation, New Written Agreement dated June 10, 1992—terminated York. March 7, 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

451 Directors of Federal Reserve Banks and Branches Regional decentralization and a combination of govern- Directors are chosen without discrimination as to race, mental and private characteristics are important hallmarks creed, color, sex, or national origin. of the uniqueness of the Federal Reserve System. Under Class A directors of each Reserve Bank represent the the Federal Reserve Act. decentralization was achieved by stockholding member banks of the Federal Reserve Disdivision of the country into twelve regions called Federal trict. Class B and Class C directors represent the public and Reserve Districts, and the establishment in each District of are chosen with due, but not exclusive, consideration to the a separately incorporated Federal Reserve Bank with its interests of agriculture, commerce, industry, services, labor, own board of directors. The blending of governmental and and consumers; they may not be officers, directors, or private characteristics is provided through ownership of the employees of any bank. In addition, Class C directors may stock of the Reserve Bank by member banks in its District, not be stockholders of any bank. The Board of Governors which also elect the majority of the board of directors, and designates annually one Class C director as chairman of by the general supervision of the Reserve Banks by the the board of directors of each District Bank and designates Board of Governors, an agency of the federal government. another Class C director as deputy chairman. The Board also appoints a minority of each board of Each of the twenty-five Branches of the Federal Reserve directors. Thus, there are essential elements of regional Banks has a board of either seven or five directors, a participation and counsel in the conduct of the System's majority of whom are appointed by the parent Federal affairs for which the Federal Reserve relies importantly on Reserve Bank; the others are appointed by the Board of the contributions of the directors of the Federal Reserve Governors. One of the Board's appointees is designated Banks and Branches. annually as chairman of the board of that Branch in a The following list of directors of Federal Reserve Banks manner prescribed by the parent Federal Reserve Bank. and Branches shows for each director the class of director- The names of the chairman and deputy chairman of the ship, the principal business affiliation, and the date the board of directors of each Reserve Bank and of the chaircurrent term expires. Each Federal Reserve Bank has nine man of each Branch are published monthly in the Federal members on its board of directors: The member banks elect Reserve Bulletin.' the three Class A and three Class B directors, and the Board of Governors appoints the three directors in Class C. 1. The current list appears on page A86 of this Bulletin. Term expires DISTRICT 1—BOSTON December 31 Class A Jane C. Walsh President, Northmark Bank, North Andover, Massachusetts 1997 Marshall N. Carter Chairman and Chief Executive Officer, State Street Bank and Trust 1998 Company. Boston. Massachusetts G. Kenneth Perine President and Chief Executive Officer, National Bank of Middlebury, 1999 Middlebury, Vermont Class B Edward Dugger III President and Chief Executive Officer. UNC Ventures, Inc., Boston, 1997 Massachusetts Robert R. Glauber Adjunct Lecturer, John F. Kennedy School of Government, Harvard 1998 University, Cambridge, Massachusetts Stephen L. Brown Chairman and Chief Executive Officer, John Hancock Mutual Life 1999 Insurance Company, Boston, Massachusetts Class C Frederick J. Mancheski Chairman Emeritus, Echlin Inc., Branford, Connecticut 1997 William C. Brainard Chairman, Department of Economics, Yale University, New Haven, 1998 Connecticut William O. Taylor Chairman and Chief Executive Office, The Boston Globe, Boston, 1999 Digitized for FRASER Massachusetts http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

452 Federal Reserve Bulletin • May 1997 Term expires DISTRICT 2—NEW YORK December 31 Class A Chairman and Chief Executive Officer, The Bank of New York, New York, 1997 J. Carter Bacot New York Chairman, President, and Chief Executive Officer, Manufacturers and 1998 Robert G. Wilmers Traders Trust Company, Buffalo, New York President and Chief Executive Officer, The Canandaigua National Bank 1999 George W. Hamlin IV and Trust Company, Canandaigua, New York Class B Eugene R. McGrath Chief Executive Officer, Consolidated Edison Company of New York, Inc., 1997 New York, New York William C. Steere, Jr. Chairman and Chief Executive Officer, Pfizer Inc., New York, New York 1998 Ann Marie Fudge President, Maxwell House Coffee Co., White Plains, New York 1999 Class C Thomas W. Jones Vice Chairman, President, and Chief Operating Officer, Teachers Insurance 1997 and Annuity Association-College Retirement Equities Fund, New York, New York Peter G. Peterson Chairman, The Blackstone Group, New York, New York 1998 John C. Whitehead Chairman, AEA Investors Inc., New York, New York 1999 BUFFALO BRANCH Appointed by the Federal Reserve Bank William E. Swan President and Chief Executive Officer, Lockport Savings Bank, Lockport, 1997 New York Mark W. Adams Owner and Operator, Adams Poultry Farm, Naples, New York 1997 Kathleen R. Whelehan Regional President, Marine Midland Bank, Rochester, New York 1998 Louise C. Woerner Chairman and Chief Executive Officer, HCR, Rochester, New York 1999 Appointed by the Board of Governors Louis J. Thomas Director, District 4, United Steelworkers of America, Buffalo, New York 1997 Bal Dixit President and Chief Executive Officer, Newtex Industries. Inc., 1998 Victor, New York Patrick P. Lee Chairman and Chief Executive Officer, International Motion Control, Inc., 1999 Orchard Park, New York DISTRICT 3—PHILADELPHIA Class A President and Chief Executive Officer, Minotola National Bank, Vineland, 1997 Dennis W. DiLazzero New Jersey President and Chief Executive Officer, Lebanon Valley National Bank, 1998 Albert B. Murry Lebanon. Pennsylvania President and Chief Executive Officer, Omega Bank, N.A., State College, 1999 David B. Lee Pennsylvania Class B President and Chief Executive Officer, Burris Foods, Inc., Milford, 1997 Robert D. Burris Delaware Chairman, President, and Chief Executive Officer, Delmarva Power and 1998 Howard E. Cosgrove Light Company, Wilmington, Delaware President and Chief Executive Officer, Jackson-Cross Company, 1999 J. Richard Jones Philadelphia, Pennsylvania Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 453 Term expires DISTRICT 3—PHILADELPHIA—Continued December 31 Class C Donald J. Kennedy Business Manager, International Brotherhood of Electrical Workers, 1997 Local Union No. 269, Trenton, New Jersey Charisse R. Lillie Partner, Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania 1998 Joan Carter President and Chief Operating Officer, UM Holdings Ltd., Haddonfield, 1999 New Jersey DISTRICT 4—CLEVELAND Class A President and Chief Executive Officer, Southwest National Corporation, 1997 David S. Dahlmann Greensburg, Pennsylvania Chairman and Chief Executive Officer, National City Corporation, 1998 David A. Daberko Cleveland, Ohio Chairman and President, Heartland BancCorp, Gahanna, Ohio 1999 Tiney M. McComb Class B President, Denison University, Granville, Ohio 1997 Michele Tolela Myers I.N. Rendall Harper, Jr. President and Chief Executive Officer, American Micrographics Company, 1998 Inc., Monroeville, Pennsylvania David L. Nichols Chief Executive Officer and Chairman, Mercantile Stores Inc., Fairfield, 1999 Ohio Class C G. Watts Humphrey, Jr. President, GWH Holdings, Inc., Pittsburgh, Pennsylvania 1997 David H. Hoag Chairman and Chief Executive Officer, The LTV Corporation, Cleveland, 1998 Ohio Executive Secretary-Treasurer, Ohio State Building and Construction 1999 Robert Y. Farrington Trades Council, Columbus, Ohio CINCINNATI BRANCH Appointed by the Federal Reserve Bank Jerry A. Grundhofer Chairman, President, and Chief Executive Officer, Star Bane Corporation, 1997 Cincinnati, Ohio Jean R. Hale President and Chief Executive Officer, Community Trust Bank, N.A., 1998 Pikeville, Kentucky Judith G. Clabes President and Chief Executive Officer, Scripps Howard, Cincinnati, Ohio 1999 Phillip R. Cox President, Cox Financial Corporation, Cincinnati, Ohio 1999 Appointed by the Board of Governors C. Wayne Shumate Chairman and Chief Executive Officer, Kentucky Textiles, Inc., Paris, 1997 Kentucky Thomas Revely III President and Chief Executive Officer, Cincinnati Bell Supply Co., 1998 Cincinnati, Ohio George C. Juilfs President and Chief Executive Officer, SENCORP, Newport, Kentucky 1999 PITTSBURGH BRANCH Appointed by the Federal Reserve Bank Thomas J. O'Shane Chairman, President, and Chief Executive Officer, First Western Bancorp, 1997 Inc., New Castle, Pennsylvania Edward V. Randall, Jr. President and CEO/Pittsburgh, PNC Bank, N.A., Pittsburgh, Pennsylvania 1998 Christine J. Toretti President, S.W. Jack Drilling Co., Indiana, Pennsylvania 1999 Peter N. Stephans President, Dynamet Incorporated, Washington, Pennsylvania 1999 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

454 Federal Reserve Bulletin • May 1997 Term expires DISTRICT 4—CLEVELAND—Continued December 31 PITTSBURGH BRANCH—Continued Appointed by the Board of Governors John T. Ryan III Chairman, President, and Chief Executive Officer, Mine Safety Appliances 1997 Company, Pittsburgh, Pennsylvania Gretchen R. Haggerty Vice President and Treasurer, USX Corporation, Pittsburgh, Pennsylvania 1998 Charles E. Bunch Vice President, Fiber Glass, PPG Industries, Inc., Pittsburgh, Pennsylvania 1999 DISTRICT 5—RICHMOND Class A Philip L. McLaughlin President, Horizon Bancorp, Inc., Greenbrier Valley National Bank, 1997 Lewisburg, West Virginia George A. Didden III Chairman and Chief Executive Officer, The National Capital Bank of 1998 Washington, Washington, D.C. J. Walter McDowell President, Wachovia Bank of North Carolina, N.A., Winston-Salem, North 1999 Carolina Class B L. Newton Thomas, Jr. Senior Vice President (Retired), ITT/Carbon Industries, Inc., Charleston, 1997 West Virginia Craig A. Ruppert President and Owner, The Ruppert Companies, Ashton, Maryland 1998 Wesley S. Williams, Jr. Partner, Covington & Burling, Washington, D.C. 1999 Class C Claudine B. Malone President, Financial & Management Consulting, Inc., McLean, Virginia 1997 Robert L. Strickland Chairman, Lowe's Companies, Inc., Winston-Salem, North Carolina 1998 Jeremiah J. Sheehan Chairman and Chief Executive Officer, Reynolds Metals Company, 1999 Richmond, Virginia BALTIMORE BRANCH Appointed by the Federal Reserve Bank Thomas J. Hughes Second Vice Chairman, Navy Federal Credit Union, Merrifield, Virginia 1997 F. Levi Ruark Chairman, President, and Chief Executive Officer, The National Bank of 1997 Cambridge, Cambridge, Maryland Jeremiah E. Casey Chairman, First Maryland Bancorp, Baltimore, Maryland 1998 Morton I. Rapoport President and Chief Executive Officer, University of Maryland Medical 1999 System, Baltimore, Maryland Appointed by the Board of Governors Rebecca Hahn Windsor Chairman and Chief Executive Officer, Hahn Transportation, Inc., 1997 New Market, Maryland Daniel R. Baker President and Chief Executive Officer, Tate Access Floors, Inc., Jessup, 1998 Maryland George L. Russell, Jr. Partner, Piper & Marbury L.L.P., Baltimore, Maryland 1999 CHARLOTTE BRANCH Appointed by the Federal Reserve Bank Dorothy H. Aranda President, Dohara Associates, Inc., Hilton Head Island, South Carolina 1997 Cecil W. Sewell, Jr. Chairman and Chief Executive Officer, Centura Banks, Inc., Rocky Mount, 1997 North Carolina William G. Stevens President and Chief Executive Officer, Greenwood Bank & Trust, 1998 Greenwood, South Carolina Laura M. Fleming President and Chief Executive Officer, Founders Federal Credit Union, 1999 Lancaster, South Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 455 Term expires DISTRICT 5—RICHMOND—Continued December 31 CHARLOTTE BRANCH—Continued Appointed by the Board of Governors Joan H. Zimmerman President, Southern Shows, Inc., Charlotte, North Carolina 1997 James O. Roberson President, Research Triangle Foundation of North Carolina, Research 1998 Triangle Park, North Carolina Dennis D. Lowery Chief Executive Officer and Chairman, Continental Industrial 1999 Chemicals, Inc., Charlotte, North Carolina DISTRICT 6—ATLANTA Class A D. Paul Jones, Jr. Chairman and Chief Executive Officer, Compass Bancshares, Inc., 1997 Birmingham, Alabama Waymon L. Hickman Chairman and Chief Executive Officer, First Farmers and Merchants 1998 National Bank, Columbia, Tennessee Howard L. McMillan, Jr. President and Chief Operating Officer, Deposit Guaranty National Bank, 1999 Jackson, Mississippi Class B Maria Camila Leiva Executive Vice President, Miami Free Zone Corporation, Miami, Florida 1997 Vacancy 1998 Juanita P. Baranco Executive Vice President, Baranco Automotive Group, Atlanta, Georgia 1999 Class C Hugh M. Brown President and Chief Executive Officer, BAMSI, Inc., Titusville, Florida 1997 David R. Jones President and Chief Executive Officer, AGL Resources Inc., Atlanta, 1998 Georgia John Wieland President, John Wieland Homes, Inc., Atlanta, Georgia 1999 BIRMINGHAM BRANCH Appointed by the Federal Reserve Bank Marlin D. Moore, Jr. Chairman, Pritchett-Moore, Inc., Tuscaloosa, Alabama 1997 Columbus Sanders President, Consolidated Industries, Inc., Huntsville, Alabama 1997 J. Stephen Nelson Chairman and Chief Executive Officer, First National Bank of Brewton, 1998 Brewton, Alabama W. Charles Mayer III Senior Executive Vice President, Alabama Banking Group Head, AmSouth 1999 Bank of Alabama, Birmingham, Alabama Appointed by the Board of Governors D. Bruce Carr International Representative, Laborers' International Union of North 1997 America, Gadsden, Alabama Patricia B. Compton President, Patco, Inc., Georgiana, Alabama 1998 V. Larkin Martin Managing Partner, Martin Farm, Courtland, Alabama 1999 JACKSONVILLE BRANCH Appointed by the Federal Reserve Bank Terry R. West President and Chief Executive Officer, Jax Navy Federal Credit Union, 1997 Jacksonville, Florida Arnold A. Heggestad Professor of Finance and Associate Vice President of Research and 1997 Technology, College of Business Administration, University of Florida, Gainesville, Florida, Royce B. Walden Vice President, SouthTrust Securities, Orlando, Florida 1998 William G. Smith, Jr. President and Chief Executive Officer, Capital City Bank Group, 1999 Tallahassee, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

456 Federal Reserve Bulletin • May 1997 Term expires DISTRICT 6—ATLANTA—Continued December 31 JACKSONVILLE BRANCH—Continued Appointed by the Board of Governors Patrick C. Kelly Chairman and Chief Executive Officer, Physician Sales & Service, Inc., 1997 Jacksonville, Florida Judy Jones President, J.R. Jones and Associates, Tallahassee, Florida 1998 Marsha G. Rydberg President, Rydberg & Goldstein, P.A., Tampa, Florida 1999 MIAMI BRANCH Appointed by the Federal Reserve Bank Carlos A. Migoya President, Dade/Monroe Counties, First Union National Bank of Florida, 1997 Miami, Florida E. Anthony Newton President and Chief Executive Officer, Island National Bank and Trust 1998 Company, Palm Beach, Florida D. Keith Cobb Vice Chairman and Chief Executive Officer. Alamo Rent-A-Car, Inc., 1999 Ft. Lauderdale, Florida James W. Moore President, Gulf Utility Company, Fort Myers, Florida 1999 Appointed by the Board of Governors Kaaren Johnson-Street Vice President of Minority Business Development, Enterprise Florida, 1997 Miami, Florida R. Kirk Landon Chairman, American Bankers Insurance Group, Miami, Florida 1998 Mark T. Sodders President, Lakeview Farms, Inc., Pahokee, Florida 1999 NASHVILLE BRANCH Appointed by the Federal Reserve Bank Jack J. Vaughn President, Hospitality & Attractions Group, Gaylord Entertainment 1997 Company, Nashville, Tennessee John E. Seward, Jr. President and Chief Executive Officer, Paty Lumber Company, Inc., 1997 Piney Flats, Tennessee Dale W. Polley President, First American National Bank, Nashville, Tennessee 1998 L.A. Walker, Jr. Chairman and Chief Executive Officer, First National Bank and Trust 1999 Company, Athens, Tennessee Appointed by the Board of Governors James E. Dalton, Jr. President and Chief Executive Officer, Quorum Health Group, Inc., 1997 Brentwood, Tennessee Frances F. Marcum Chairman and Chief Executive Officer, Micro Craft, Inc., Tullahoma, 1998 Tennessee Paula Lovell President, Lovell Communications, Inc., Nashville. Tennessee 1999 NEW ORLEANS BRANCH Appointed by the Federal Reserve Bank Angus R. Cooper II Chairman and Chief Executive Officer, Cooper/T. Smith Corporation, 1997 Mobile, Alabama Kay L. Nelson President, Nelson Capital Corporation, New Orleans, Louisiana 1997 Howell N. Gage Chairman and Chief Executive Officer, Merchants Bank, Vicksburg, 1998 Mississippi Howard C. Gaines Chairman, First National Bank of Commerce, New Orleans, Louisiana 1999 Appointed by the Board of Governors Jo Ann Slaydon President, Slaydon Consultants and Insight Productions and Advertising, 1997 Baton Rouge, Louisiana Lucimarian Roberts President, Mississippi Coast Coliseum Commission, Biloxi, Mississippi 1998 Glenn Pumpelly President and Chief Executive Officer, Pumpelly Oil Inc., Westlake, 1999 Digitized for FRASER Louisiana http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 457 Term expires DISTRICT 7—CHICAGO December 31 Class A Chairman, President, and Chief Executive Officer, First Merchants 1997 Stefan S. Anderson Corporation, Muncie, Indiana Chairman, President, and Chief Executive Officer, Grundy National Bank, 1998 Arnold C. Schultz Grundy Center, Iowa Chairman, President, and Chief Executive Officer, First Chicago NBD 1999 Verne G. Istock Corporation, Chicago, Illinois Class B Thomas C. Don- President and Chief Executive Officer, Dorr's Pine Grove Farm Co., 1997 Marcus, Iowa Donald J. Schneider President, Schneider National, Inc., Green Bay, Wisconsin 1998 Migdalia Rivera Executive Director, Latino Institute, Chicago, Illinois 1999 Class C Lester H. McKeever, Jr. Managing Partner, Washington, Pittman & McKeever, Chicago, Illinois 1997 Arthur C. Martinez Chairman and Chief Executive Officer, Sears, Roebuck & Co., 1998 Hoffman Estates, Illinois Robert J. Darnall Chairman, President, and Chief Executive Officer, Inland Steel Industries, 1999 Inc., Chicago, Illinois DETROIT BRANCH Appointed by the Federal Reserve Bank Charles R. Weeks Chairman and Chief Executive Officer, Citizens Banking Corporation, 1997 Flint, Michigan Richard M. Bell President and Chief Executive Officer, The First National Bank of Three 1998 Rivers, Three Rivers, Michigan Denise Hitch Lites President, Olympia Development, Inc., Detroit, Michigan 1999 Irma B. Elder President, Troy Ford, Troy, Michigan 1999 Appointed by the Board of Governors Timothy D. Leuliette President and Chief Operating Officer, Penske Corporation, Detroit, 1997 Michigan Stephen R. Polk Chairman and Chief Executive Officer, R.L. Polk & Co., Detroit, Michigan 1998 Florine Mark President and Chief Executive Officer, The WW Group, Inc., Farmington 1999 Hills, Michigan DISTRICT 8—ST. LOUIS Class A Chairman and President, The First National Bank of Mount Vernon, 1997 Michael A. Alexander Mount Vernon, Illinois Chairman and Chief Executive Officer, Sea Change Corp., N.A., Bowling 1998 Douglas M. Lester Green, Kentucky Chairman, Chief Executive Officer, and Director, First National Bank of 1999 W.D. Glover Eastern Arkansas, Forrest City, Arkansas Class B President and Chief Executive Officer, Sanderson Plumbing Products, Inc., 1997 Sandra B. Sanderson Columbus, Mississippi President and Chief Executive Officer, Riceland Foods, Inc., Stuttgart, 1998 Richard E. Bell Arkansas Digitized for FRASER Executive Director, New Directions Housing Corp., Louisville, Kentucky 1999 Joe Gliessner http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

458 Federal Reserve Bulletin • May 1997 Term expires DISTRICT 8—ST. LOUIS—Continued December 31 Class C Susan S. Elliott President and Chief Executive Officer, Systems Service Enterprises, Inc., 1997 St. Louis, Missouri John F. McDonnell Chairman, McDonnell Douglas Corporation, St. Louis, Missouri 1998 Veo Peoples, Jr. Partner, Peoples & Hale, St. Louis, Missouri 1999 LITTLE ROCK BRANCH Appointed by the Federal Reserve Bank Lunsford W. Bridges President and Chief Executive Officer, Metropolitan National Bank, 1997 Little Rock, Arkansas Mark A. Shelton III President, M.A. Shelton Farming Company, Wabbaseka, Arkansas 1998 Lee Frazier President, Trinity Healthcare, Little Rock, Arkansas 1999 Ross M. Whipple Chairman and Chief Executive Officer, Horizon Bancorp, Inc., 1999 Arkadelphia, Arkansas Appointed by the Board of Governors Robert D. Nabholz, Jr.. Chief Executive Officer, Nabholz Construction Corporation, Conway, 1997 Arkansas Betta M. Carney Chief Executive Officer and Chairman, World Wide Travel Service, Inc., 1998 Little Rock, Arkansas Janet M. Jones President, The Janet Jones Company, Little Rock, Arkansas 1999 LOUISVILLE BRANCH Appointed by the Federal Reserve Bank Thomas E. Spragens, Jr. President, Farmers National Bank, Lebanon, Kentucky 1997 Orson Oliver President, Mid-America Bank of Louisville, Louisville, Kentucky 1998 Larry E. Dunigan Chief Executive Officer, Holiday Management Corp., Evansville, Indiana 1999 Ronald R. Cyrus Executive Secretary and Treasurer, Kentucky State AFL-CIO, Frankfort, 1999 Kentucky Appointed by the Board of Governors Debbie Scoppechio Chairman and Chief Executive Officer, Creative Alliance, Inc., Louisville, 1997 Kentucky Roger Reynolds President and Chief Executive Officer, Material Resource Planners, Inc. 1998 and Interlink Inc., Louisville, Kentucky John A. Williams Chairman and Chief Executive Officer, Computer Services, Inc., Paducah, 1999 Kentucky MEMPHIS BRANCH Appointed by the Federal Reserve Bank Lewis F. Mallory, Jr. Chairman and Chief Executive Officer, National Bank of Commerce of 1997 Mississippi, Starkville, Mississippi Anthony M. Rampley President and Chief Executive Officer, Arkansas Glass Container 1998 Corporation, Jonesboro, Arkansas Katie S. Winchester President and Chief Executive Office, First Citizens National Bank, 1999 Dyersburg, Tennessee John C. Kelley, Jr. President, Memphis Banking Group, First Tennessee Bank, Memphis, 1999 Tennessee Appointed by the Board of Governors Carol G. Crawley President, Mid-South Minority Business Council, Memphis, Tennessee 1997 John V. Myers President, Better Business Bureau, Memphis, Tennessee 1998 Mike P. Sturdivant, Jr. Partner, Due West, Glendora, Mississippi 1999 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 459 Term expires DISTRICT 9—MINNEAPOLIS December 31 Class A William S. Pickerign President, The Northwestern Bank of Chippewa Falls, Chippewa Falls, 1997 Wisconsin Dale J. Emmel President, First National Bank of Sauk Centre, Sauk Centre, Minnesota 1998 Lynn M. Hoghaug President, Ramsey National Bank and Trust Co., Devils Lake, 1999 North Dakota Class B Kathryn L. Ogren Owner, Bitterroot Motors, Missoula, Montana 1997 Dennis W. Johnson President, TMI Systems Design Corporation, Dickinson, North Dakota 1998 Rob L. Wheeler Vice President, Wheeler Mfg. Co., Inc., Lemmon, South Dakota 1999 Class C Jean D. Kinsey Professor, Consumption Economics, and Director, Retail Food Industry 1997 Center, University of Minnesota, St. Paul, Minnesota James J. Howard Chairman, President, and Chief Executive Officer, Northern States Power 1998 Company, Minneapolis, Minnesota David A. Koch Chairman, Graco, Inc., Golden Valley, Minnesota 1999 HELENA BRANCH Appointed by the Federal Reserve Bank Ronald D. Scott President and Chief Executive Officer, The First State Bank of Malta, 1997 Malta, Montana Emil W. Erhardt Chairman and President, Citizens State Bank, Hamilton, Montana 1998 Sandra M. Stash Manager, Montana Facilities, Atlantic Richfield Company (ARCO), 1998 Anaconda, Montana Appointed by the Board of Governors Matthew J. Quinn President, Carroll College, Helena, Montana 1997 William P. Underriner General Manager, Selover Buick Inc., Billings, Montana 1998 DISTRICT 10—KANSAS CITY Class A Samuel P. Baird President, Farmers State Bank & Trust Co., Superior, Nebraska 1997 William L. McQuillan President, Chief Executive Officer, and Director, City National Bank, 1998 Greeley, Nebraska Dennis E. Barrett President, FirstBank Holding Company of Colorado, Lakewood, Colorado 1999 Class B Hans Helmerich President and Chief Executive Officer, Helmerich & Payne, Inc., Tulsa, 1997 Oklahoma Frank A. Potenziani M & T Trust, Albuquerque, New Mexico 1998 Charles W. Nichols Managing Partner, Davison & Sons Cattle Company, Arnett, Oklahoma 1999 Class C A. Drue Jennings Chairman, President, and Chief Executive Officer, Kansas City Power & 1997 Light Company, Kansas City, Missouri Jo Marie Dancik Office Managing Partner, Ernst & Young LLP, Denver, Colorado 1998 Colleen D. Hernandez Executive Director, Kansas City Neighborhood Alliance, Kansas City, 1999 Missouri Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

460 Federal Reserve Bulletin • May 1997 Term expires DISTRICT 10—KANSAS CITY—Continued December 31 DENVER BRANCH Appointed by the Federal Reserve Bank Richard I. Ledbetter President and Chief Executive Officer, First National Bank of Farmington, 1997 Farmington, New Mexico Clifford E. Kirk President and Chief Executive Officer, First National Bank of Gillette, 1997 Gillette, Wyoming Albert C. Yates President, Colorado State University, Ft. Collins, Colorado 1998 C.G. Mammel President and Chief Executive Officer, The Bank of Cherry Creek, N.A., 1999 Denver, Colorado Appointed by the Board of Governors Kathryn A. Paul President, Kaiser Permanente, Denver, Colorado 1997 Peter I. Wold Partner, Wold Oil & Gas Company, Casper, Wyoming 1998 Teresa N. McBride President and Chief Executive Officer, McBride and Associates, Inc., 1999 Albuquerque, New Mexico OKLAHOMA CITY BRANCH Appointed by the Federal Reserve Bank Michael S. Samis President and Chief Executive Officer, Macklanburg-Duncan Co., 1997 Oklahoma City, Oklahoma Betty Bryant Shaull President-Elect and Director, Bank of Cushing and Trust Company, 1998 Cushing, Oklahoma Dennis M. Mitchell President, Citizens Bank of Ardmore, Ardmore, Oklahoma 1998 William H. Braum President, Braum Ice Cream Co., Oklahoma City, Oklahoma 1999 Appointed by the Board of Governors Victor R. Schock President and Chief Executive Officer, Credit Counseling Centers, Tulsa, 1997 Oklahoma Barry L. Eller Senior Vice President and General Manager, MerCruiser, Stillwater, 1998 Oklahoma Larry W. Brummett Chairman, President, and Chief Executive Officer, ONEOK, Inc., Tulsa, 1999 Oklahoma OMAHA BRANCH Appointed by the Federal Reserve Bank Donald A. Leu President and Chief Executive Officer, Consumer Credit Counseling 1997 Service, Omaha, Nebraska Thomas H. Olson Chairman, First National Bank, Sidney, Nebraska 1997 Robert L. Peterson Chairman, President, and Chief Executive Officer, IBP, Inc., Dakota City, 1998 Nebraska Bruce R. Lauritzen President, First National Bank of Omaha, Omaha, Nebraska 1999 Appointed by the Board of Governors Arthur L. Shoener Executive Vice President-Operations, Union Pacific Railroad, Omaha, 1997 Nebraska Gladys Styles Johnston Chancellor, University of Nebraska at Kearney, Kearney, Nebraska 1998 Bob L. Gottsch Vice President, Gottsch Feeding Corporation, Hastings, Nebraska 1999 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 461 Term expires DISTRICT 11—DALLAS December 31 Class A Kirk A. McLaughlin President and Chief Executive Officer, Security Bank, Rails, Texas 1997 Dudley K. Montgomery President and Chief Executive Officer, The Security State Bank of Pecos, 1998 Pecos, Texas Gayle M. Earls President and Chief Executive Officer, Texas Independent Bank, Dallas, 1999 Texas Class B Robert C. McNair Chairman and Chief Executive Officer, Cogen Technologies Energy Group, 1997 Houston, Texas Milton Carroll Chairman and Chief Executive Officer, Instrument Products, Inc., Houston, 1998 Texas Dan Angel President, Stephen F. Austin State University, Nacogdoches, Texas 1999 Class C Cece Smith General Partner, Phillips-Smith Specialty Retail Group, Dallas, Texas 1997 Roger R. Hemminghaus Chairman and Chief Executive Officer, Ultramar Diamond Shamrock 1998 Corp., San Antonio, Texas James A. Martin Second General Vice President, International Association of Bridge, 1999 Structural & Ornamental Iron Workers, Horseshoe Bay, Texas EL PASO BRANCH Appointed by the Federal Reserve Bank Hugo Bustamante, Jr. Owner and Chief Executive Officer, CarLube, Inc., ProntoLube, Inc., 1997 El Paso, Texas Lester L. Parker President and Chief Operating Officer, Bank of the West, El Paso, Texas 1998 James D. Renfrew President and Chief Executive Officer, The Carlsbad National Bank, 1999 Carlsbad, New Mexico Melissa W. O'Rourke President, Charlotte's Inc. & Ethan Allen, El Paso, El Paso, Texas 1999 Appointed by the Board of Governors Alvin T. Johnson President, Management Assistance Corporation of America, El Paso, Texas 1997 Beauregard Brite White Rancher, J.E. White, Jr. & Sons, Marfa, Texas 1998 Patricia Z. Holland-Branch President and Chief Executive Officer, PZH Contract Design, Inc., El Paso, 1999 Texas HOUSTON BRANCH Appointed by the Federal Reserve Bank Tieman H. Dippel, Jr. Chairman and President, Brenham Bancshares, Inc., Brenham, Texas 1997 J. Michael Solar Principal Attorney, Solar & Fernandes L.L.P. Houston, Texas 1998 Judith B. Craven President, United Way of the Texas Gulf Coast, Houston, Texas 1999 Ray Nesbitt President, Exxon Chemical Company, Houston, Texas 1999 Appointed by the Board of Governors Isaac H. Kempner III Chairman, Imperial Holly Corporation, Sugar Land, Texas 1997 Edward O. Gaylord Chairman, EOTT Energy Corp. and General Partner, EOTT Energy 1998 Partners L.P., Houston, Texas Peggy Pearce Caskey Chief Executive Officer, Laboratories for Genetic Services, Inc., Houston, 1999 Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

462 Federal Reserve Bulletin • May 1997 Term expires DISTRICT 11—DALLAS—Continued December 31 SAN ANTONIO BRANCH Appointed by the Federal Reserve Bank Calvin R. Weinheimer President and Chief Operating Officer, Kerrville Communications 1997 Corporation, Kerrville, Texas Richard W. Evans, Jr. Chairman and Chief Executive Officer, Frost National Bank, San Antonio, 1998 Texas Juliet V. Garcia President, The University of Texas at Brownsville, Brownsville, Texas 1999 Douglas G. Macdonald President, South Texas National Bank, Laredo, Texas 1999 Appointed by the Board of Governors H.B. Zachry, Jr. Chairman and Chief Executive Officer, H.B. Zachry Company, 1997 San Antonio, Texas Carol L. Thompson President, The Thompson Group, Austin, Texas 1998 Patty Puig Mueller Vice President/Finance, Mueller Engineering Corp., Corpus Christi, Texas 1999 DISTRICT 12—SAN FRANCISCO Class A Gerry B. Cameron Chairman and Chief Executive Officer, U.S. Bancorp, Portland, Oregon 1997 Warren K.K. Luke Vice Chairman, President, and Chief Executive Officer, Hawaii National 1998 Bank, Honolulu, Hawaii E. Lynn Caswell Vice Chairman, Monarch Bancorp, Laguna Hills, California 1999 Class B Krestine Corbin President and Chief Executive Officer, Sierra Machinery, Inc., Sparks, 1997 Nevada Stanley T. Skinner Chairman and Chief Executive Officer, Pacific Gas and Electric Co., 1998 San Francisco, California Robert S. Attiyeh Senior Vice President and Chief Financial Officer, Amgen, Inc., 1999 Thousand Oaks, California Class C Judith M. Runstad Partner, Foster Pepper & Shefelman, Seattle, Washington 1997 Cynthia A. Parker Executive Director, Anchorage Neighborhood Housing Services, Inc., 1998 Anchorage, Alaska Gary G. Michael Chairman and Chief Executive Officer, Albertson's, Inc., Boise, Idaho 1999 Los ANGELES BRANCH Appointed by the Federal Reserve Bank Liam E. McGee Group Executive Vice President, Bank of America, Los Angeles, 1997 California Antonia Hernandez President and General Counsel, Mexican American Legal Defense and 1997 Educational Fund (MALDEF), Los Angeles, California Stephen G. Carpenter Chairman and Chief Executive Officer, California United Bank, Encino, 1998 California John H. Gleason Senior Vice President, Project Planning & Development, Del Webb 1999 Corporation, Phoenix, Arizona Appointed by the Board of Governors David L. Moore President, Western Growers Association, Irvine, California 1997 Anne L. Evans Chairman, Evans Hotels, San Diego, California 1998 Lori R. Gay President, Los Angeles Neighborhood Housing, Los Angeles, California 1999 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 463 Term expires DISTRICT 12—SAN FRANCISCO—Continued December 31 PORTLAND BRANCH Appointed by the Federal Reserve Bank Thomas C. Young President, Chairman, and Chief Executive Officer, Northwest National 1997 Bank, Vancouver, Washington John D. Eskildsen President and Chief Executive Officer, U.S. Bank of Oregon, Portland, 1998 Oregon Phyllis A. Bell President, Oregon Coast Aquarium, Newport, Oregon 1999 Martin Brantley President and General Manager, KPTV-12, Oregon Television, Inc., 1999 Portland, Oregon Appointed by the Board of Governors Patrick Borunda Executive Director, Oregon Native American Business Network, Portland, 1997 Oregon Carol A. Whipple Proprietor, Rocking C Ranch, Elkton, Oregon 1998 Nancy Wilgenbusch President, Marylhurst College, Marylhurst, Oregon 1999 SALT LAKE CITY BRANCH Appointed by the Federal Reserve Bank R.D. Cash Chairman, President, and Chief Executive Officer, Questar Corporation, 1997 Salt Lake City, Utah Roy C. Nelson President, Bank of Utah, Ogden, Utah 1998 Maria Garciaz Executive Director, SL Neighborhood Housing Services, Salt Lake City, 1999 Utah J. Pat McMurray President, First Security Bank of Idaho, Boise, Idaho 1999 Appointed by the Board of Governors Gerald R. Sherratt President, Southern Utah University, Cedar City, Utah 1997 Richard E. Davis President and Chief Executive Officer, Salt Lake Convention & Visitors 1998 Bureau, Salt Lake City, Utah Nancy S. Mortensen Vice President-Marketing Services, ZCMI, Salt Lake City, Utah 1999 SEATTLE BRANCH Appointed by the Federal Reserve Bank Betsy Lawer Vice Chair and Chief Operating Officer, First National Bank of Anchorage, 1997 Anchorage, Alaska Constance L. Proctor Partner, Alston, Courtnage, MacAulay & Proctor, Seattle, Washington 1998 Tomio Moriguchi Chairman and Chief Executive Officer, Uwajimaya, Inc., Seattle, 1999 Washington John V. Rindlaub Chairman, Seafirst Bank, Seattle, Washington 1999 Appointed by the Board of Governors Richard R. Sonstelie Chairman, Puget Sound Energy, Inc., Bellevue, Washington 1997 Helen M. Rockey President and Chief Executive Officer, Brooks Sports, Inc., Bothell, 1998 Washington Boyd E. Givan Senior Vice President and Chief Financial Officer, The Boeing Company, 1999 Seattle, Washington Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Al 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 A31 New security issues—Tax-exempt state and local Policy Instruments 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 A33 Domestic finance companies—Assets and Federal Reserve Banks liabilities, and consumer, real estate, and business credit A10 Condition and Federal Reserve note statements All Maturity distribution of loan and security Real Estate holdings A34 Mortgage markets A35 Mortgage debt outstanding Monetary and Credit Aggregates A12 Aggregate reserves of depository institutions Consumer Credit and monetary base A13 Money stock, liquid assets, and debt measures A36 Total outstanding A15 Deposit interest rates and amounts outstanding— A36 Terms commercial and BIF-insured banks Flow of Funds Commercial Banking Institutions— A37 Funds raised in U.S. credit markets Assets and Liabilities A39 Summary of financial transactions A40 Summary of credit market debt outstanding A16 All commercial banks A41 Summary of financiala ssets and liabilities A17 Domestically chartered commercial banks A18 Large domestically chartered commercial banks A19 Small domestically chartered commercial banks DOMESTIC NONFINANCIAL STATISTICS A20 Foreign-related institutions 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

A2 Federal Reserve Bulletin • May 1997 DOMESTIC NONFINANCIAL STATISTICS- Reported by Nonbanking Business CONTINUED Enterprises in the United States A58 Liabilities to unaffiliated foreigners Selected Measures—Continued A59 Claims on unaffiliated foreigners A48 Gross domestic product and income A49 Personal income and saving Securities Holdings and Transactions A60 Foreign transactions in securities INTERNATIONAL STATISTICS A61 Marketable U.S. Treasury bonds and notes—Foreign transactions Summary Statistics Interest and Exchange Rates A50 U.S. international transactions—Summary A51 U.S. foreign trade A61 Discount rates of foreign central banks A51 U.S. reserve assets A61 Foreign short-term interest rates A51 Foreign official assets held at Federal Reserve A62 Foreign exchange rates Banks A52 Selected U.S. liabilities to foreign official A63 GUIDE TO STATISTICAL RELEASES AND institutions SPECIAL TABLES Reported by Banks in the United States SPECIAL TABLES A52 Liabilities to and claims on foreigners A64 Assets and liabilities of commercial banks, A53 Liabilities to foreigners December 31, 1996 A55 Banks' own claims on foreigners A68 Terms of lending at commercial banks, A56 Banks' own and domestic customers' claims on February 1997 foreigners A72 Assets and liabilities of U.S. branches and A56 Banks' own claims on unaffiliated foreigners agencies of foreign banks, December 31, 1996 A57 Claims on foreign countries— Combined domestic offices and foreign branches A76 INDEX TO STATISTICAL TABLES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

A4 Domestic Financial Statistics • May 1997 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 Monetary or credit aggregate Ql Q2 Q3 Q4' Oct.' Nov. Dec. Jan. Feb. Reserves of depository institutions* 1 Total .' -7.9 -6.4 -16.4 -16.9 -28.4 -6.2 7.0 -18.3 -8.1 2 Required -8.5 -5.7 -16.6 -18.3 -27.9 -7.4 -2.4 -13.9 -3.6 3 Nonborrowed. -6.5 -7.6 -17.6 -16.0 -26.7 -4.5 8.5 -15.7 -8.1 4 Monetary base 1.5 3,0 5.4 5.1 3.1 6.3 9.2 3.0 5.9 Concepts of money, liquid assets, and debt4 5 Ml ' -3.5 -1.4 -6.5 -7.3 -14.3 -.2 1.1 -1.4 .8 6 M2 5.3 4.5 3.4 5.0 4.0 6.8 7.5 5.2 5.1 7 M3 6.6 6.4 5.4 7.8 8.7 6.5' 10.1' 6.7' 10.4 8 L 4.9' 6.3 5.5' 6.5 4.5 7.4' 7.0' 4.5 9 Debt 5.0 5.8 5.3 5.0 5.3 5.6' 4.0' 3.3 Nontransaclion components 10 In M25 9.3 7.0 7.7 10.2 11.4 9.6 10.0 7.9' 6.8 11 In M3 only6 11.6' 13.9 12.7' 18.0 25.7 5.6' 19.7' 29.3 Time and savings deposits Commercial banks 12 Savings, including MMDAs 21.6 12 1 12.0 17.0 18.9 18.2 15.2' 13 4' 8.9 13 Small time7 3.3 -1.0 3.8 4.8 4.1 5.3 3.9' 1.4' 2.0 14 Large time*"4 10.3 18.6 18.0 22.3 37.1 5.7' 24.5' 17.5' 34.6 Thrift institutions 15 Savings, including MMDAs -2.5 6.5 .2 .8 4.3 -2.6 2.6 4 9' 2.9 16 Small time7 -2.4 -3.0 - 3 2.1 4.4 -.7 -2.7 .3' 1.7 17 Large time8 7.8 -3.0 9.6 9.1 6.1 9.1 -3.0' 28.8' 11.8 Money market mutual funds 18 Retail 14.6 16.3 16.3 17.2 17.1 15.2 21.6 13.0 13.9 19 Institution-only 21.4 12.0 20.7 19.8 12.2 16.2 30.0 -12.0 36.9 Repurchase agreements and Eurodollars 20 Repurchase agreements'' 2.8' 16.2 -4.7' 2.0 10.5 -5.5' -13.6' 16.8' 21.5 21 Eurodollars10 11.9 10.9 8.5' 35.0 64.0 -3.4' 48.5' 34.7r 14.8 Debt components* 22 Federal 3.0 4.7 3.8 3.2 3.8 4.2 2.9 -.6 23 Nonfederal 5.7 6.2 5.8 5.6 5.9 6 1' 4.5' 4.6 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 nonfinancia! 4. Composition of the money stock measures and debl 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, nonflnancial 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 inslitutions. 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 deposils, 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 (31 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 Ml. 8. Large time deposits are those issued in amounts of $100,000 or more, excluding those M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2) booked at international banking facilities. balances in institutional money funds (money funds with minimum initial investments of 9 Large time deposits at commercial banks less those held by money market funds, $50,000 or more). (3) RP liabilities (overnight and term) issued by all depository institutions, depository institutions, the U.S. government, and foreign banks and official inslitutions. 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 CREDIT' Millions of dollars Average of daily figures Average of daily figures for week ending on dateindicated Factor 1996 1997 1997 Dec. Jan. Feb. Jan. 15 Jan. 22 Jan. 29 Feb. 5 Feb. 12 Feb. 19 Feb. 26 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 440,343 437,954' 433,962 439,565 434,119' 436,183' 432,346 432,529 434,441 436.003 U.S. government securities2 2 Bought outright—System account 392,674 391.762 392,105 391,642 391.658 391,955 391,869 391,666 391,882 392,966 3 Held under repurchase agreements 11.332 9.214 6,772 10,447 5.660 7,421 5,482 4.677 7.011 9.431 Federal agency obligations 4 Bought outright 2,228 2,098 2 034 2,079 2,050 2,038 2,038 2.038 2,038 2 030 5 Held under repurchase agreements 1,031 1,785 1/726 2342 L808 1,248 2.570 IJ87 1,153 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 114 25 23 26 15 15 13 19 17 36 8 Seasonal credit 67 18 21 17 17 18 17 18 22 24 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 1,238 1 149r 527 845 1.367' 803' 506 285 455 490 11 Other Federal Reserve assets 31,659 3L903 30,753 32,166 3U545 32,252 31,173 31,255 31,229 29,872 12 Gold stock 11,048 11,048 11,050 11 048 11 048 11,048 11,048 11,049 11 051 11,051 13 Special drawing rights certificate account 9/718 9^636 9/100 9/718 9/718 9^445 9,400 9/tOO 9!400 9^400 14 Treasury currency outstanding 24,957 25.017 25,076 25,009 25.023 25,037 25,051 25,065 25,079 25,093 ABSORBING RESERVE FUNDS 15 Currency in circulation 444,554 443,340 441,045 443,904 441,700 439,732 439,056 440,142 442,177 441,907 16 Treasury cash holdings 257 248 262 247 247 249 250 261 262 266 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,749 6.186 4,998 5,512 6.524 7,896 6.207 4,829 5,002 4,425 18 Foreign 178 185 182 182 214 177 166 167 165 210 19 Service-related balances and adjustments . ... 6.975 7,173 7,138 7,205 7,571 7.080 7,172 7,272 7.040 7,078 20 Other 335 331 360 316 349 331 367 391 357 329 21 Other Federal Reserve liabilities and capital .... 14,412 14,318 14,069 14,495 14,449 14,524 13,521 13,973 14,273 14,393 22 Reserve balances with Federal Reserve Banks . . . 13,607 11,875' 11,434 13,480 8,855' 11,725' 11,106 11,009 10,695 12,941 End-of-month figures Wednesday hgures Dec. Jan. Feb. Jan. 15 Jan. 22 Jan. 29 Feb. 5 Feb. 12 Feb. 19 Feb. 26 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 451 339 433 767' 435,303 441,705 434.666' 444,553' 430,030 437.112 435,324 443,389 U.S. government securities2 2 Bought outright—System account 390,907 391 728 390,797 389,379 391,872 391.933 391,928 392,223 393.208 393,415 3 Held under repurchase agreements 19.971 7,720 10,778 14,648 4,246 13.926 2,364 8.365 8,390 14,816 Federal agency obligations 4 Bought outright 2,225 2,038 2,011 2,055 2,038 2,038 2,038 2,038 2.038 2,011 5 Held under repurchase agreements 1,612 1.285 1,626 2,910 1,550 2,530 1.749 3,099 564 2.328 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 57 16 8 131 7 65 3 13 8 6 8 Seasonal credit 29 14 I'l 14 17 15 17 18 23 23 0 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 4,296 29' 716 401 3,378' 784' 951 -278 1,525 125 11 Other Federal Reserve assets 32,243 30,937 29,339 32,168 31,558 33,262 30,979 31,635 29.569 30,665 12 Gold slock 11,048 11.048 11.051 11,048 11.048 1 1,048 11.048 11,050 11.051 11,051 13 Special drawing rights certificate account 9,718 9.40(1 9,400 9,718 9,718 9,400 9.400 9,400 9,400 9,400 14 Treasury curtency outstanding 24,981 25,051 25.107 25 009 25,023 25,037 25,051 25,065 25.079 25,093 ABSORBING RESERVE FUNDS 15 Currency in circulation 450,663 438.399 441,651 443,070 441,497 439,735 440,090 441,627 442,721 442,666 16 Treasury cash holdings 249 249 280 247 249 249 260 262 264 275 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 7,742 6,770 5,258 7,521 8,578 9.874 5,350 5.135 5,571 5,229 18 Foreign 167 167 229 171 169 199 162 181 164 188 19 Service-related balances and adjustments 6,887 7,172 7,134 7 205 7,571 7.080 7,172 7,272 7,040 7,078 20 Other 892 359 345 352 339 341 378 383 329 336 21 Other Federal Reserve liabilities and capital 13,829 13,384 14,135 14,432 14,310 14,373 13,347 14,128 14,171 14,263 22 Reserve balances with Federal Reserve Banks 16,656 12.767' 11,830 14,481 7.742' 18,189' 8,768 13,639 10.595 18,898 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 3. Excludes required clearing balances and adjustments to compensate for float. 2. Includes securities loaned—fully guaranteed by U.S. government securities pledged wifh Federal Reserve Banks—and excludes securities sold and scheduled to be bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Financial Statistics • May 1997 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages Reserve classification 1994 1995 1996 1996 1997 Dec. Dec. Dec. Aug. Sept Oct. Nov. Dec. Jan.' Feb. I Reserve balances with Reserve Banks2 24,658 20,440 13,395 14,761 13,688 12,800 12,895 13,395 11,710 11,459 2 Total vault cash" 40,378 42,094 44.426 42,511 43.652 42,925 42.745 44,426 47,172 43,375 3 Applied vault cash4 36,682 37,460 37,848 36,880 37,309 36,749 36,862 37.848 38,932 36,590 4 Surplus vault cash5 3,696 4,634 6,578 5,631 6,343 6,175 5,883 6,578 8,240 6,785 5 Total reserves 61,340 57,900 51,243 51,642 50,997 49.550 49,756 51,243 50,642 48,049 6 Required reserves 60,172 56,622 49,819 50,681 49.959 48,556 48,721 49,819 49,419 47,016 7 Excess reserve balances at Reserve Banks 1,168 1,278 1 424 961 1,038 994 1,035 1,424 1,223 1,033 8 Total borrowings at Reserve Banks8 209 257 155 334 368 287 214 155 45 42 9 Seasonal borrowings 100 40 68 309 306 212 109 68 19 21 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 Bweekly averages of daily figures for two week periods ending on dates indicated 1996 1997 Nov. 6 Nov. 20 Dec. 4 Dec. 18 Jan. 1 Jan. 15 Jan. 29r Feb. 12' Feb. 26 Mar. 12 I Reserve balances with Reserve Banks 12,371 12,914 13,182 12,837 14,063 13,060 10,285 11,052 11,820 11,378 2 Total vault cash3 43,032 42,506 42,908 44,684 44,615 46,140 48,679 45,130 41,948 42,836 3 Applied vault cash4 37,021 36,768 36,898 37,913 38,070 39,029 39,078 37,673 35,676 36,492 4 Surplus vault cash 6,011 5,738 6,010 6,771 6,545 7,112 9,601 7,458 6,272 6.344 5 Total reserves6 49,392 49,682 50,080 50,750 52,132 52,089 49,363 48,724 47,496 47,870 6 Required reserves 48,388 48,678 48,983 49,338 50,595 50,859 48,142 47,688 46,497 46,618 7 Excess reserve balances at Reserve Banks7 1,004 1,004 1,097 1,411 1,537 1,230 1,221 1,036 999 1,252 8 Total borrowings at Reserve Banks 161 143 346 112 143 53 32 34 50 35 9 Seasonal borrowings 154 108 86 67 64 18 18 18 23 27 10 Extended credit4 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 1997 Source and maturity Dec. 30 Jan. 6' Jan. 13 Jan. 20 Jan. 27 Feb. 3 Feb. 10 Feb. 17 Feb. 24 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States 1 For one day or under continuing contract 79,414 81,371 77,086 74,812 76,167 78,507 79,164 77,348 77.260 2 For all other maturities 14,794 13,228 14,492 15,048 13.680 13,731 13.701 14,982 14.220 From other depository institutions, foreign banks and official institutions, and U.S. government agencies 3 For one day or under continuing contract 17.621 20,231 22,186 19,394 18.971 19.884 20.217 18,013 20.629 4 For all other maturities 17,396 15,807 16,252 16,446 17.374 20,299 19.010 18.861 18,902 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities 5 For one day or under continuing contract 11,918 14,304 11,905 9,531 11,512 12,326 11,504 11,148 11,569 6 For all other maturities 33,095 31,265 36,294 38,712 39.099 41,008 43,389 43,426 36,813 All other customers 7 For one day or under continuing contract 40,870 42,718 44,455 44,339 43,943 44,386 42.938 42,126 42,181 8 For all other maturities 14.510 13,404 13,421 13,687 14,260 13,601 13,673 13,914 14,237 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 69.786 79,359 71,093 67,421 74.581 71,516 70,211 69,859 69,893 10 To all other specified customers2 22.237 23,412 24,138 21,634 20,929 21,777 21,884 20,069 23,489 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 A 7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjuslmenl credil1 Seasonal credir Extended crcdir Federal Reserve On On (in 4/4/97 4/4/97 4/4/97 Boston 2/1/96 3/27/97 5.95 3/27/97 New York 1/31/96 Philadelphia . 1/31/% 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. 1/31/96 3/27/97 3/27/97 Range of rates for atljustnicnl credit in recent ycarsJ Range (or F.R. Bank Range (or F.R. Bank Range (or F.R. Bank Effective date level l—All of Effective dale level)—All of Effective date level)—All of F.R Banks N.Y. F.R. Banks N Y FR. Banks N.Y. In effect Dec. 31, 1977 6 6 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 Julv 3 7-7.25 7.25 AUB. 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 X-8.5 8.5 30 10 10 Apr 30 5.5-6 5.5 20 8.5 8.5 Ocl. 12 9.5-10 9.5 Mav 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—Julv 20 10 10 Dec. 14 8.5-9 9 7 4.5 4.5 Aug 17 10-1(1.5 1(1.5 15 8.5-9 8.5 Dec. 20 3.5—(.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 1 ] II 1984—Apr 9 8.5-9 9 1992—July 2 3-3.5 3 Ocl 8 11-12 12 13 9 9 7 3 3 10 12 12 Nov 21 8.5-9 8.5 26 8.5 8.5 1994—May 17 3-3.5 3.5 1980—Feb. 15 12-13 13 Dec. 24 ... 8 8 18 3.5 3.5 19 13 13 Aug 16 3.5-4 4 May 29 12-13 13 19X5—May 20 7 5-K 7.5 18 4 4 30 12 12 24 7.5 7.5 Nov 15 4-4 75 4.75 June 13 11-12 11 17 4.75 4.75 16 1 ] 11 1986—Mar 7 7-7.5 7 Julv 28 10-11 10 10 7 7 1995—Fcb 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 1 | 23 6.5 6.5 Nov. 17 12 12 Julv 11 ... 6 6 1996—Jan ^1 5 00-5 25 5.00 Dec. 5 12-13 13 Aup 21 5.5-6 5.5 Feb 5 5.00 5.00 •S 13 13 22 5.5 5.5 1981—Mav 5 13-14 14 In effect Apr 4. 1997 5.00 5.00 8 14 14 1987—Sept. 4 5.5-6 6 " 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 rale somcwhai above rales 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 lirst business day ol each two-week reserve maintenance that result from a major operating problem at the borrower's facility period, bul it is never (ess than the discount rate applicable to ad|usunent 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 intniyearly movements in iheir deposits and loans and 4. For earlier data, see ihe following publications of the Board of Governors: Banking and that cannot be met through special industry lenders. The discount rate on seasonal credil takes Monetar\ Statistics. 1914-1941, and 1941-1970; and the Annual Statistical Du-i'si, 1970into account rates charged by market sources of funds and ordinarily is reestablished on ihe 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 dcposiiory 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 drams, 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 in changing market conditions over a longer period (particularly at times surcharge was changed from a calcndai quarter to a moving thirteen-week period The of deposit disintenncdia(ion). The discount rale applicable to adjustment credit ordinarily is surcharge was eliminated on Nov 17, iWl. 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 Financial Statistics • May 1997 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS' Requirement Type of deposit Percentage of Effective date deposits Net transaction accounts' 1 $0 million $49 3 million3 1/2/97 2 More than $49.3 million4 10 1/2/97 3 Nonpersonal time deposits^ 0 12/27/90 0 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve Banks succeeding calendar year by 80 percent of the percentage incre or vault cash. Nonmember institutions may maintain reserve balances with a Federal liabilities of all depository institutions, measured on an annual Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For I.. I -.....' ___•_ .!.___... C . .1. ___ T"1! previous reserve requirements, see earlier editions of the Annual Report or the Federal Reserve Bulletin Under the Monetary Control Act of 1980, depository institutions include commercial banks, mutual savings banks, savings and loan associations, credit unions, agencies and branches of foreign banks, and Edge Act corporations. e*ciiipiiun was laiseu 110111 jit.j million IU .BH.H imiiiuii. 2. Transaction accounts include all deposits against which the account holder i.s permitted 4. The reserve requirement was reduced from 12 percent to 10 percent on to make withdrawals by negotiable or transferable instruments, payment orders of with- Apr. 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions that drawal, or telephone or preauthonzed transiers for the purpose of making payments to third report quarterly. persons or others. However, accounts subject to the rules that permit no more than si>. preauthorized, automatic, or other transfers per month (of which no more than three may be by check, draft, debit card, or similar order payable directly to third parties! are savings deposits, not transaction accounts. 3. The Monetary Control Act of 1980 requires that the amount of transaction accounts against which the 3 percent reserve requirement applies be modified annually by 80 percent of percent to zero on Jan 17. 1991 the percentage change in transaction accounts held by all depository institutions, determined The reserve requirement on nonpersonal lime deposits witli an original maturity of 1 [/2 as of June 30 of each year. Effective with the reserve maintenance period beginning January 2, years or more has been zero since Oct. 6, 1983. 1997, for depository institutions that report weekly, and with the period beginning January 16, 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero 1997, for institutions that report quarterly, the amount was decreased from $52.0 million to in the same manner and on the same dates as the reserve requirement on nonpersonal time $49.3 million. deposits with an original maturity of less than 1 '/5 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 1997 Type of transaction 1994 1995 1996 and maturity July Aug. Sept. Oct. Nov. Dec. Jan. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 17.484 10.932 9.901 0 0 0 0 6,502 0 0 2 Gross sales 0 0 0 0 0 0 0 0 0 0 3 Exchanges 376.277 398.487 400,152 32.368 34,271 32,791 38,661 29.037 27,247 40,346 4 Redemptions 0 900 0 0 0 0 0 0 0 0 Others within one year 5 Gross purchases 1,238 390 1.275 0 1,240 0 0 0 0 0 6 Gross sales 0 0 0 0 0 0 0 0 0 0 7 Maturity shifts 0 0 29.070 2,807 2,780 2,371 1.623 3,818 2,259 2,481 8 Exchanges -21,444 0 -41,394 -4,415 -3.580 -2,890 -1,770 -5,655 -1,950 -550 9 Redemptions 0 0 2,015 0 0 0 0 0 0 607 One to five years 10 Gross purchases 9.168 4.966 3.177 0 1,279 0 0 0 0 0 11 Gross sales 0 0 0 0 0 0 0 0 0 0 12 Maturity shifts -6,004 0 -24,087 -2,807 -1.409 -2.371 -1,623 -2,102 -2.259 -2,481 13 Exchanges 17,801 0 31,458 3.694 1,780 2.890 1,395 2,715 1,950 550 Five to ten years 14 Gross purchases 3.818 1.239 776 0 297 o 0 o 0 15 Gross sales 0 0 0 0 0 0 0 0 0 0 16 Maturity shifts -3,145 0 - 1,531 0 -1.371 0 0 1,716 0 0 17 Exchanges 2.903 0 6.666 721 900 0 375 1,470 0 0 More than ten years 18 Gross purchases 3,606 3.122 1,965 0 900 0 0 0 0 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shifts -918 0 -20 0 0 0 0 0 0 0 21 Exchanges 775 0 3.270 0 900 0 0 1,470 0 0 All maturities 22 Gross purchases 35.314 20.649 17,094 0 3.716 0 0 6.502 0 0 23 Gross sales 0 0 0 0 0 0 0 0 o 0 24 Redemptions 2,337 2.376 787 0 0 0 0 0 0 607 Matched transactions 25 Gross purchases 1,700,836 2,197,736 3,083,315 267,438 265,397 234,992 268,304 227,577 272,117 285.667 26 Gross sales 1.701,309 2,202,030 3,085,685 268,975 264.536 238,036 267,128 226,505 273,872 283,240 Repurchase agreements 27 Gross purchases 309 276 331,694 457,568 46,151 45,202 36.014 33,836 36,383 85.924 74,422 28 Gross sales 311,898 328.497 450,359 37,779 56,286 33,374 33.020 36,665 73,501 86,673 29 Net change in U.S. Treasury securities 29,882 17,175 21.147 6,836 -6.508 -404 1,993 7,293 10,669 -10,430 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 0 0 0 0 0 0 0 3 i Gross sales 0 0 0 0 0 0 0 0 0 0 32 Redemptions 1,002 1,303 1,637 ^1 0 27 63 10 12 187 Repurchase agreements 33 Gross purchases 52,696 36,851 75,354 3,145 8,500 4,536 12,683 9,264 7,796 17,668 34 Gross sales 52^696 36J76 74^842 2^863 7'544 4*436 niosi 9,471 li',941 17,995 35 Net change in federal agency obligations -1.002 -1.228 -1.125 231 956 73 1,569 -217 -1.163 -514 36 Total net change in System Open Market Account .. . 28,880 15,948 20,021 7,066 -5,552 -331 3.562 7,076 9,506 -10,944 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market Account; ail other figures increase such holdings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Financial Statistics • May 1997 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End ol month Account 1997 1996 1997 Jan 29 Feb. 5 Feb. 12 Feb. 19 Feb. 26 Dec. 31 Jan. 3 1 Feb. 28 Consolidated condition statement ASSETS 1 Gold certificate account 11.048 11,048 11.050 1 1.051 1 1.051 1 1,048 11,048 11.051 2 Special drawme rights certificate account 9.400 9.400 9.400 9.400 9,400 9718 9.400 9,400 3 Coin 676 704 723 730 720 591 703 740 Loans 4 To depository institutions 80 20 30 31 30 85 30 36 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 1 Bought outright 2.018 2,038 2,038 2,038 2,011 2,225 2,038 2,011 8 Held under repurchase agreements 2.530 1.749 3.099 564 2,328 1,612 1,285 1,626 9 Total U.S. Treasury securities 405,859 394,292 400,588 401,598 408,231 410.878 399,448 401,575 10 Bought outright2 391,913 391,928 392.223 .393,208 393.415 390.907 391 728 .390,797 11 Bills 192.279 192,274 192,218 192.079 191,468 190.647 192.074 188,850 1"" Notes 150 115 150,315 150,665 151,340 151,665 150,922 150,315 151,665 13 Bonds. . . ... 49,339 49,339 49 339 49,789 50,282 49,339 49,339 50,282 14 Held under repurchase agreements 13.926 2,364 8.365 8,390 14,816 19,971 7.720 10.778 410,507 398,099 405,755 404,230 412,600 414,800 402,801 405,249 16 Items in process of collection 6,276 7,737 6.112 10,970 6,272 12.761 4 341 4.404 1 ">36 1 235 1 243 1 '43 1.245 1,233 1.235 1.244 Other assets 18 Denominated in foreign currencies3 19,294 18,246 18,253 18.260 18,266 19,264 18.241 17,917 19 All other" 12,801 11,587 12,195 10,109 11,187 11.725 11.494 10,203 20 Total assets 471,2.18 458,057 464,729 465,993 470,742 481.140 459,267 460,209 LIABILITIES 415.621 416.004 417.546 418,636 418.569 426.522 414.299 417,564 22 Total deposits 35,702 22,130 27,489 24,199 32,428 33,325 27,603 24,707 23 Depository institutions 25,288 16.239 21.790 18,135 26.675 24.524 20,307 18,876 24 U.S. Treasury—General account 9.874 5,350 5,135 5.571 5,229 7.742 6.770 5,258 25 Foreign—Official accounts 199 162 181 164 188 167 167 229 26 Other 341 378 383 329 336 892 359 345 27 Deferred credit Hems 5,542 6,576 5.566 8,987 5,483 7,464 3.981 3,803 4,654 4,393 4.722 4,601 4,576 4,732 4,618 4,691 29 Total liabilities 461.519 449.103 455,323 456.423 461,055 472,043 450,501 450,765 CAPITAL ACCOLNTS 30 Capital paid in 4.692 4,696 4,702 4.704 4.721 4.602 4.676 4.725 31 Surplus 4,496 4,223 4.373 4,445 4,474 4.496 4.083 4.414 32 Other capital accounts 531 35 331 421 492 0 8 305 33 Total liabilities and capital accounts 471.238 458,057 464,729 465,993 470,742 481,140 459,267 460,209 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 619,362 626,392 625.850 630.961 632,992 618,074 625,260 644.307 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) .... 523,096 523,178 523,699 523,596 5M.600 526,826 523.455 525,220 36 LESS: Held by Federal Reserve Banks 107,475 107,174 106,153 104,961 106.032 100,304 109,156 107,657 37 Federal Reserve notes, net 415,621 416,004 417,546 418,636 418.569 426.522 414,299 417.564 Collateral held against news, net 38 Gold certificate account 11,048 11.048 11,050 11,051 11,051 11,048 11,048 11,051 39 Special drawing rights certificate account 9,400 9,400 9.400 9,400 9,400 9,718 9,400 9.400 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 395.174 395.556 397.096 398.185 398, II8 405.756 393.851 397.112 42 Total collateral 415.621 416,004 417,546 418,636 418,569 426.522 414,299 417,564 1 Some of the data in this table also appear in the Board's HA I (503) weekly stali-mcal 3. Valued monthly at market exchange rales. 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 Bank1*—ami excludes securities sold and scheduled to be bought back under 5. Includes exchange-translation account rcrlecling the monthly revaluation al 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 Type of holding and maturity Jan. 29 Feb. 12 Dec. 31 Jan. 31 1 Total loans 30 85 30 2 Within fifteen days' 8 0 0 1 1 0 0 1 1 8 3 3 0 1 29 1 7 I 5 I 25 5 2 1 5 1 3. Sixteen days to ninety days 405,859 394,292 400.588 401,598 408,231 410,878 399,448 390,797 4 Total U.S. Treasury securities.. . . 28,394 17,943 18,165 22,495 28.428 27,846 16,270 5,442 5 Within fifteen days' 84,017 89,962 90,630 88,839 88,836 89,036 96,790 98,725 6 Sixteen days to ninety days 123,110 117,103 122,158 122,057 121,942 122,780 117,103 117,893 7 Ninety-one days to one year 94,730 93,677 93,677 91,419 91,419 95,607 93,677 91,130 8 One year to five years 33,782 33,782 34,132 35,909 36,607 3,782 33,782 36,607 9 Five years to ten years 41,826 41,826 41,826 40,880 41,000 41.826 41,826 41,000 10 More than ten years 1 ] Total federal agency obligations . 4,568 3,787 5,137 2,602 4,339 3,837 3,323 2,011 12 Within fifteen days' 2,691 1.749 3,126 911 2,648 2,062 1,446 320 13 Sixteen days to ninety days 650 802 775 455 455 541 679 455 14 Ninety-one days to one year 226 235 245 245 245 232 197 245 15 One year to five years 520 520 510 510 510 520 520 510 16 Five years to ten years 457 457 457 457 457 457 457 457 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 i NOTE. Total acceptances data have been deleted from this table because data are no longer accordance with maximum maturity of the agreements. vailable. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Financial Statistics • May 1997 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1996 1993 1994 1995 1996 Dec. Dec. Dec. Dec. July Sept. Oct. Nov. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves1 60.52 59.36 56.36 50.17 53.20 52.27 51.35 50.14 49.88 50.17 49.40 49.07 2 Nonborrowed reserves4 60.44 59.16 56.11 50.01 52.83 51.94 50.98 49.85 49.66 50.01 49.36 49.03 3 Nonborrowed reserves plus extended credit' 60.44 59.16 56.11 50.01 52.83 51.94 50.98 49.85 49.66 50.01 49.36 49 03 4 Required reserves 59.46 58.20 55.09 48.74 52.13 51.31 50.31 49 14 48.84 48 74 48.18 48.04 5 Monetary base6 386.93 418.53 434.61 452.92 442.24 444.16 445.99 447 12 449 47 452.92 454.05 456.28 Not seasonally adjusted 6 Total reserves 62.37 61.13 58.02 51.61 53.05 51.88 51.27 49.85 50.08 51.61 50.67 48.14 7 Nonborrowed reserves 62.29 60.92 57.76 51.45 52.69 51.55 50.90 49.56 49.87 51 45 50.63 48.10 8 Nonborrowed reserves plus extended credit .... 62.29 60.92 57.76 51.45 52.69 51.55 50.90 49.56 49.87 51.45 50.6.1 48.(0 9 Required reserves 61.31 59.96 56.74 50.18 51.99 50.92 50.23 48.85 49.05 50.18 49.45 47.11 10 Monetary base9 390.59 422.51 439.03 456.80 443.22 444.58 445.55 445.44 449.27 456.80 455.56' 452.58 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves" 62.86 61.34 57.90 51.24 52.84 51.64 51.00 49.55 49.76 51.24 50.64 48.05 12 Nonborrowed reserves 62.78 61 13 57.64 51.09 52.48 51.31 50.63 49.26 49.54 51.09 50.60 48.01 13 Nonborrowed reserves plus extended credit5 62.78 61.13 57.64 51.09 52.48 51.31 50.63 49.26 49 54 51 09 50.60 48.01 14 Required reserves 61.80 60.17 56.62 49.82 51.78 50.68 49.96 48.56 48.72 49.82 49 42 47.02 15 Monetary base " 397.62 427.25 444.45 463 49 449.29 450.77 451.72 451.91 455 90 463 49 462.7 lr 459.65 16 Excess reserves1^ 1.06 1 17 1.28 1 42 1.07 .96 1.04 .99 1.04 1.42 1.22' 1.03 17 Borrowings from the Federal Reserve .08 .21 .26 .16 .37 .33 .37 .29 .21 .16 ,05 .04 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly 8. To adjust required reserves for discontinuities that are due to regulatory changes in statistical release. Historical data starting in 1959 and estimates of ihe 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 (he "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) [he 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 Ihe 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 MEASURES' Billions of dollars, averages of daily figures 1995 1996 Dec. Dec. Dec.1 Dec. Seasonally adjusted Measures' 1 Ml 1,129.8 1,150.7 1,129.0 1,081.0 1,080.0 1,081.0 1,079 7 1,080.4 2 M2 3,486.6 3,502.1 3,655.0 3,833.1 3,809.4 3.833.1 3,849.8 3,866.1 3 M3 4,254.4 4,328.7 4,594.8 4,925.2 4,883.9 4,925.2 4,952.7 4,995.8 4 L 5,167.8' 5,309.8' 5,700.3' 6,055.1 6,020.0 6,055.1 6,078 0 n.a. 5 Debt 12,514.6' 13,156.4' 13,875.3' 14,626.3 14,577.3 14.626.3 14,666.4 n.a. Ml components 6 Currency 322.2 354.4 372.6 395.2 392.5 395.2 397.0 400.5 7 Travelers checks4 7.9 8.5 8.9 8.6 8.6 8.6 8.6 8.6 8 Demand deposits5 385.2 384.1 391.1 402.5 402.1 402.5 401.7 404.3 9 Other checkable deposits6 414.5 403.8 356.5 274.8 276.8 274.8 272.4 267.0 Nontransaclion components 10 In M27 2.356.8 2.351.4 2.526.0 2,752.1 2.729.4 2,752.1 2,770.2 2.785.8 11 In M3 only8 767.8 826.6 939.8 1.092.1 1,074.5 1,092.1 1,102.8 1,129.7 Commercial banks 12 Savings deposits, including MMDAs .. . 785.2 752.4 776.0 903.9 892.6 903.9 914.0 920.8 13 Small time deposits9 468.3 503.2 576.0 592.0 590.1 592.0 592.7 593.7 14 Large time deposits'"' " 271.9 298.4 344.7 410.5 402.3 410.5 416.5 428.5 Thrift institutions 15 Savings deposits, including MMDAs. .. 434.0 397.2 361 I 367.1 366.3 367.1 368.6 369.5 16 Small time deposits9 314.3 314.3 357.7 352.4 353.2 352.4 352.5 353.0 17 Large time deposits10 61.5 64.7 75.1 79.2 79.4 79.2 81.1 81.9 Money market mutual funds 18 Retail 354.9 384.3 455.2 536.6 527.1 536.6 542 4 548.7 19 Institution-only 209.5 198.5 246.9 299.3 292.0 299.3 296.3 305.4 Repurchase agreements and Eurodollars 20 Repurchase agreements' 158.6 182.9 182.1 192.5 194.7 192.5 195.2 198.7 21 Eurodollars'2 66.4 82.1 91.0 110.6 106.3 110.6 113.8 115.2 Debt components 22 Federal debt 3,323.3 3,492.2 3,638.8 3,780.4 3,771.4 3,780.4 3,778.6 23 Nonfederal debt 9,191.2' 9,664.2' 10,236.6' 10.846.0 10,805.9 10,846.0 10,887.8 Not seasonally adjusted Measures 24 Ml 1,153.7 1,174.4 1,152.8 1.103.0 1.085.2 1.103.0 1,085 9 1,066.2 25 M2 3,506.6 3,522.5 3,675.3 3,851.5 3,812.3 3,851.5 3,851.5 3,850.4 26 M3 4.274.8 4,348.8 4,614.3 4,942.2 4,892.0 4,942.2 4,958.3 4,986.9 27 L 5.197.7 5,340.2 5,732.2 6,083.4 6,030.2 6.083.4 6,090.7 n.a. 28 Debt 12,516.6' 13,158.0' 13,875.8' 14,625.7 14.558.9 14,625.7 14,646.4 Ml components 29 Currency3 324.8 357.5 376.2 397 9 392.9 397.9 395.6 397.7 30 Travelers checks4 7.6 8.1 8.5 8.3 8.4 8.3 82 8.3 31 Demand deposits'1 401.8 400.3 407.3 418.8 407.6 418.8 405.6 394.7 32 Other checkable deposits6 419.4 408.6 360.8 278.0 276.3 278.0 276.4 265.5 Nontransaction components 33 In M27 2,352.9 2.348.1 2,522.6 2,748.5 2,727.1 2,748.5 2,765 6 2.784.2 34 In M3 only8 768.2 826.3 939.0 1,090.7 1.079.7 1.090.7 1,106.7 1,136.5 Commercial banks 35 Savings deposits, including MMDAs.. . 784.3 751.7 775.3 902.9 894.5 902.9 908.9 915.1 36 Small time deposits9 466.8 501.5 573.8 589.8 588.6 589.8 592.0 594.2 37 Large time deposits 272.0 298.9 345.7 412.0 406.9 412.0 412.9 426.8 Thrift institutions 38 Savings deposits, including MMDAs . .. 433.4 396.8 360.8 366.7 367.1 366.7 366.5 367.2 39 Small lime deposits9 313.3 313.2 356.3 351.1 352.3 351.1 352.1 353.2 40 Large time deposits'" 61.5 64.8 75.4 79.5 80.3 79.5 80.4 81.6 Money market mutual funds 41 Retail 355.0 385.0 456.3 538.1 524.6 538.1 546.2 554.6 42 Institution-only 210.6 199.8 248.2 300.5 292.6 300.5 304.8 315.5 Repurchase agreements and Eurodollars 43 Repurchase agreements' 156.6 179.6 178.0 187.4 193.5 187.4 193 2 196.1 44 Eurodollars - 67.6 83 2 91.8 111.4 106.5 111.4 115.5 116.5 Debt components 45 Federal debt 3,329.5 3.499.0 3,645.9 3,787.9 3,771.4 3,787.9 3,773.4 46 Nonfederal debt 9,187.1' 9,659.0' 10,229.8' 10,837.8 10,787.6 10.837.8 10,873.1 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

AL4 Domestic Financial Statistics • May 1997 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: (I) 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 nonbaiik 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) olher 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 balance, each seasonally adjusted separately, and adding this result to seasonally share draft account balances, and demand deposits ai 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 lime 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 1997 1995 1996 Dec Dec June July Aug. Sept Ocl Nov. Dec. Jan.r Feb. Interest rales annual effective yields INSURED COMMERCIAL BANKS 1 Negotiable order of withdrawal account*' 1.91 n.a. 1.89 1.90 1.91 1.90 1.91 1.98 n.a. n.a. n.a. 2 Savings deposits2-1 3.10 n.a. 2.87 2.88 2.86 2.84 2.85 2.85 n.a. n.a. n.a. Interest-bearing time deposits with balances of less than $100,000, by maturity 3 7 to 91 days " 4.10 4 03 4.08 4.13 4.17 4.11 4.11 4.08 4.03 4.03 4.04 4 92 to 182 days 4.68 4.63 4.55 4.59 4.60 4.61 4.60 4.60 4.63 4.63 4.62 5 183 days to 1 year 5.02 5.00 4.95 5.00 5.00 5.04 5.02 4.99 5.00 5.01 5.02 6 More than 1 year to 1^/2 years 5.17 5.22 5.18 5.25 5.25 5.29 5.27 5.23 5.22 5.25 5.27 7 More than 2[/l years 5.40 5.46 5.46 5.50 5.50 5.54 5.52 5.48 5.46 5.49 5.51 BIF-INSURED SAVINGS BANKS" 8 Negotiable order^of withdrawal accounts2 1.91 n.a. 1.80 1.81 1.81 1.84 1.90 1.92 n.a. n.a. n.a. 9 Savings deposits2' 2.98 n.a. 2.86 2.88 2.86 2.84 2.80 2.82 n.a. n.a n.a. Interest-bearing time deposits with balances of less than $100,000.f ry maturity 10 7 to 91 days ' '. 4 43 4.66 4.54 4.64 4.64 4.59 4.64 4.67 4.66 4.75 4.73 4.95 5.02 4.91 5.01 5.06 5.11 5.08 5.03 5.02 5.05 5.04 12 183 days to 1 year 5.18 5.28 5.02 5.09 5.26 5.33 5.32 5.29 5.28 5.31 5.31 13 More than 1 year to 2]/2 years 5.33 5.53 5.35 5.41 5.59 5.61 5.60 5.56 5.53 5.58 5.59 14 More than 2'/^ years 5.46 5.72 5.51 5.60 5.80 5.82 5.79 5.76 5 72 5.77 5.78 Amounts outstanding (millons ot dollars) INSURED COMMERCIAL BANKS 15 Negotiable order of withdrawal accounts2 ... 248,417 n.a. 201,037 204.981) 190,696 190,033 188,803 167.503 n.a. n.a. n.a. 776 466 838 385 835 033 860,719 852 336 859.524 896.820 17 Personal 615.113 n.a. 667,802 662.465 683,081 675.576 680,596 713,672 n.a. n.a. n.a. 18 Nonpersonal 161,353 n.a. 170,583 172,568 177,638 176.759 178.928 183.148 n.a. n.a. n.a. Interest-bearing time deposits with balances of less than $100,000. by maturity 19 7 to 91 days 32.170 32,929 31,483 31.690 32,907 32,695 32.428 32,044 32,929 32.776 32,904 20 92 to 182 days 93.941 92,296 94,654 93,941 91.235 91,167 91.195 92,503 92,296 94,915 95.201 21 183 days to 1 year 183.834 201.441 194.900 197.108 200,038 200,008 199.397 201,281 201,441 201,398 202,185 22 More than 1 year to 2x/l years 208,601 213,198 209,390 208.906 209.618 211,234 213,012 214,405 213,198 213,771 213,128 23 More than 2'/3 years 199,002 199,911 198,935 198,224 199.755 198,324 199,126 198,539 199,911 197.998 197,736 24 IRA and Keogh plan deposits 150 067 151 364 151 690 150 873 151,048 151 309 151.276 151,389 151,364 150,717 150,819 BIF-INSURED SAVINGS BANKS4 25 Negotiable order of withdrawal accounts2 11,918 n.a. 11,255 10,889 10,682 9,838 9,938 9,710 n.a. n.a n.a. 26 Savings deposits ^ 68,643 n.a. 66,938 66,854 67,431 67,980 67,975 68,102 n.a. n.a. n.a. 27 Personal 65,366 n.a. 63,642 63.557 63,927 64,425 64.326 64,369 n.a. n.a. n.a. 3 277 3 296 3 296 3,504 3 555 3.649 3.733 Interest-bearing lime deposits with balances of less than $100,000, b\ maturin 29 7 to 91 days ' * 2,001 2.426 2.229 2,368 2,316 2,540 2.503 2,405 2,426 2,539 2,532 30 92 to 182 davs 12.140 13,008 13 725 13,587 13,440 13 474 13,300 13,074 13,008 13,100 13,073 31 183 days to 1 year 25,686 28.800 27,950 28,506 29,339 29,383 29,659 29,329 28,800 29,479 29,446 32 More than 1 year to 2[/l years 27,482 29,098 25,513 26.132 26,199 27,192 28,063 28,573 29,098 29,151 29,688 33 More than 2 V? vears 22,866 22,253 22,593 22,563 22,477 22.348 22.156 21,823 22,253 21.814 21,855 34 IRA and Keogh plan accounts "M 408 ">1 I 16 21 051 21 052 21 002 20 983 20 627 20,469 20.223 20.242 1. BIF, Bank Insurance Fund. Data in this table also appear in the Board's H.6 (508) 2. Owing to statistical difficulties associated in part with the implemenlation of sweep Special Supplementary Table monthly statistical release. For ordering address, see inside accounts, estimates for NOW and savings accounts are not available beginning December front cover. Estimates are based on data collected by the Federal Reserve System from a 1996. stratified random sample of about 425 commercial banks and 15 savings banks on the last day 3. Includes personal and nonpersonal money market deposits. of each month. Data are not seasonally adjusted ant) include IRA and Keogh deposits and 4. Includes both mutual and federal savings banks. 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 • May 1997 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities' A. All commercial banks Billions of dollars Monthlyaverages Wednesday figures Account 1996 1996' 1997 1997 Feb. Aug. Sept. Oct. Nov. Dec. Jan.r Feb. Feb. 5 Feb. 12 Feb. 19 Feb. 26 Seasonally adjusted Assets 1 Bank credit 3,645.6 3,674.4 3.693.0 3,718.9 3,743.3 3,770.6 3,806.1 3,845.7 1,834.1 3,841.8 3,852.1 3,849.5 2 Securities in bank credit 1,000.1 972.1 968.9 970.3 982.2 992.4 1,005.8 1,022.5 1,019.8 1,024.3 1,027.7 1,019.9 3 U.S. government securities 710.9 702.2 703.3 703.8 707.8 707.3 706.1 703.2 705.6 705.2 700.7 702.2 4 Other securities 289.2 269.9 265.5 266.5 274.3 285.1 299.7 319.3 314.2 319.1 327.0 317.8 5 Loans and leases in bank credit2 . .. 2,645.5 2,702.3 2.724.1 2,748.5 2,761.2 2.778.2 2,800.3 2,823.2 2.814.4 2,817.5 2,824.4 2,829.6 6 Commercial and industrial 724.2 746.8 761.0 770.8 776.4 787.2 791.1 800.8 795.1 797.3 803.2 804.9 7 Real estate 1,090.9 1,109.4 1,112.2 1,116.1 1,120.7 1,125.8 1,131.7 1,137.5 1,135.6 1,137.6 1,136.8 1,137.5 8 Revolving home equity 79.7 80.5 81.2 83.2 84.1 85.3 85.8 86.4 86.2 86.2 86.4 86.6 9 Other 1,011.2 1,028.9 1,031.0 1,032.8 1,036.6 1.040.6 1,045.9 1,051.1 1,049.4 1,051.4 1,050.5 1,050.9 10 Consumer 497.4 5128 5157 518.2 518.8 519.0 521.2 520.7 520.1 520.1 521.6 521.7 11 Security-1 87.6 72.3 73.8 766 77.4 79.0 82.5 83.8 86.4 84.3 81.3 82.9 12 Other loans and leases 245.4 261.0 261.4 266.9 267.8 267.1 273.8 280.4 277.2 278.2 281.5 282.6 13 Interbank loans 191.9 197.6 205.3 203.9 212.4 204.6 1981 204.1 204.9 2018 201.8 206.0 14 Cash assets4 219.2 223.3 224.2 226.2 232.9 232.3 232.0 231.6 226.8 228.9 239.0 229.3 15 Other assets5 233.7 257.8 260.0 254.2 261.9 271.4 266.3 278.6 268.6 275.1 280.9 283.7 16 Total assets6 4,233.8 4J95.7 4323.7 4338.2 4385.7 4,414.4 4,438.6 4,498.6 4,470.7 4,484.0 43093 43123 Liabilities 17 Deposits 2,678.6 2,751.0 2.772.3 2,782.4 2,822.9 2,859.2 2,876.4 2,901.5 2.901.5 2,885.5 2,920.9 2.886.5 18 Transaction 764.7 733.3 725.4 715.3 719.8 719.1 715.2 706.3 711.8 696.3 725.4 693.9 19 Nontransaction 1,913.9 2,017.6 2,046.9 2.067.0 2.103.1 2,140.1 2,161.2 2,195.2 2,189.7 2,189.2 2,195.5 2,192.6 20 Large time 427.3 458.8 471.8 480.1 490.6 509.4 520.1 535.6 531.4 532.9 537.6 537.4 21 Other 1,486.7 1,558.8 1,575.1 1,586.9 1,612.6 1.630.6 1,641.1 1,659.5 1,658.3 1,656.3 1,657.9 1,655.2 22 Borrowings 694.3 701.5 706.4 688.3 708.6 707 3 728.0 744.3 742 5 7561 740.1 736.7 23 From banks in the U.S 295.2 290.1 295.4 290.3 303.1 308.3 305.1 311.4 315.1 325.2 306.5 295.6 24 From others 399.1 411.4 411.0 398.0 405.5 399.1 422.8 432.9 427.3 430.8 433.6 441.1 25 Net due to related foreign offices 270.6 247.7 251.0 244.3 238.1 231.2 222.1 218.0 221.3 226.0 211.2 217.6 26 Other liabilities 233.4 222.2 221.8 243.8 253.2 260.7 269.3 287.7 280.1 290.0 294.3 283.7 27 Total liabilities 3,876.9 3,922.4 3.9S13 3,958.7 4,022.8 4,0583 4,095.7 4,151.6 4,1453 4,1573 4,1663 4,1243 28 Residual (assets less liabilities)7 356.8 373.3 372.3 379.5 362.9 355.9 342.9 347.0 325.4 326.5 343.0 387.8 Not seasonally adjusted Assets 29 Bank credit 3,638.5 3,675.6 3 695.4 3,720.6 3,747.6 3,769.4 3,804.4 3,838.5 3,833.1 3,839.9 3,840.6 3,834.9 30 Securities in bank credit 996.3 976.5 969.5 970.2 980.8 978.4 997.0 1,019.1 1,016.1 1,023.2 1,022.0 1,013.9 31 US. government securities 708.7 704.5 704.4 704.4 708.3 703.1 700.1 701.9 702.7 704.5 699.5 700.4 32 Other securities 287.6 271.9 265.1 265.8 272.6 275.2 296.9 317.2 313.4 318.8 322.5 313.6 33 Loans and leases in bank credit2 .. . 2,642.2 2,699.1 2,725.8 2,750.4 2,766.8 2,791.0 2,807.5 2,819.4 2,817.0 2,816.7 2,818.5 2,820.9 34 Commercial and industrial 723.8 743.0 755.9 767.1 774.5 784.2 788.8 800.4 794.9 796.9 801.9 804.8 35 Real estate 1,087.8 1,110.9 1 1152 1,1192 1,125.0 1 130.7 1,133.7 1,134.4 1.135.1 1,136.7 1,132.6 1,132.1 36 Revolving home equity 79.3 80.8 81.8 83.7 84.6 85.4 85.8 86.0 85.9 86.0 86.0 86.1 37 Other 1,008.6 1,030.1 1,033.4 1,035.4 1,040.4 1,045.3 1,047.9 1,048.4 1.049.2 1,050.8 1,046.7 1,046.1 38 Consumer 498.1 513.1 517.9 518.4 519.2 523.8 526.8 521.4 523.0 521.9 522.3 520.8 39 Security' 88.9 70.8 73.0 76.5 78.8 80.3 81.7 84.9 86.5 85.1 82.7 84.4 40 Other loans and leases 243.6 261.3 263.8 269.2 269.2 272.1 276.4 278.3 277.6 276.0 279.0 278.8 41 Interbank loans 196.1 192.9 199.6 198.6 216.7 213.9 207.9 208.5 215.4 208.9 205.4 203.7 42 Cash assets4 220.1 212.3 221.5 227.1 239.9 248.6 242.4 232.8 223.5 220.7 252.1 232.9 43 Other assets* 234.1 260.8 262.5 251.7 260.6 271.3 266.9 278.4 272.6 274.8 279.0 282.2 44 Total assets6 4,232.2 4,284.1 4319.9 4333.1 4399.8 4,438.4 4,457.7 4,496.7 4,480.9 4,480.6 4312.6 4,497.6 Liabilities 45 Deposits 2,664.3 2,740.4 2,772.8 2,787.1 2,840.0 2,891.4 2,880.2 2,886.4 2,890.6 2,866.0 2,909.1 2,865.9 46 Transaction 757.0 720.4 723.9 713.0 730.0 752.2 726.6 699.3 708.2 684.1 723.8 682.9 47 Nontransaction 1,907.3 2,020.0 2,048.9 2.074.1 2,110.0 2,139.2 2,153.6 2,187.1 2,182.4 2,181.9 2,185.3 2,183.0 48 Large time 426.4 459.1 469.8 485.6 495.1 509.6 516.8 533.5 528.0 531.2 533.9 537.0 49 Other 1,480.9 1,560.9 1,579.2 1,588.5 1,615.0 1,629.6 1,636.9 1,653.6 1,654.4 1,650.7 1,651.4 1,646.0 50 Borrowings 684.4 707.2 710.7 680.6 698.4 699.7 722.2 728.0 729.1 726.1 727.8 729.5 51 From banks in the US 289.6 295.4 297.9 283.7 296.8 303.0 299.3 299.0 301.2 298.9 297.6 296.4 52 From others 394.7 411.8 412.8 397.0 401.5 396.7 422.8 429.0 427.9 427.2 430.3 433.0 53 Net due to related foreign offices 278.1 243.4 245.2 245.9 235.3 230.1 232.5 228.8 223.8 232.2 225.2 238.7 54 Other liabilities 235.0 221.6 222.3 242.9 257.0 256.7 266.5 289.6 281.3 293.2 294.7 286.0 55 Total liabilities 3,861.8 3,912.6 3,951.0 3,956.5 4,030.6 4,077.8 4,101.4 4,132.8 4,124.8 4,117.4 4,156.9 4,120.0 56 Residual (assets less liabilities)7 370.5 371.5 368.9 376.6 369.2 360.6 356.3 363.9 356.0 363.1 355.8 377.6 MEMO 57 Revaluation gains on off-balance-sheet items* n.a. n.a n.a. 62.3 65.5 69.5 88.5 103.0 99.0 104.7 107.6 100.2 58 Revaluation losses on off-balancesheet items8 n.a n.a. n.a. 58.3 60.5 64.3 84.2 98.3 93.8 100.7 102.9 94.8 Footnotes appear on page A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A17 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities'—Continued B. Domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures 1996' Aug. Sept. Dec. Jan.1 Feb. 12 Feb. 19 Seasonally adjustei Assets 1 Bank credit 3,194.2 3.210.0 3,225.4 3,237.0 3,246.2 3.260.3 3,283.9 3,306.5 3,300.8 3 301.9 3,310.8 3,308.6 2 Securities in bank credit 853.4 824.6 822.4 820.9 822.5 825.1 834.1 843.1 843.0 842.9 846.4 841.1 3 U.S. government securities . . 640.0 621.3 620.4 620.7 619.8 618.1 623.1 616.7 621.3 618.5 614.0 614.4 4 Other securities 213.5 203.3 201.9 200.2 202.7 207.0 211.0 226.4 221.8 224.4 232.4 226.7 5 Loans and leases in bank credit2. . 2,340.7 2,385.5' 2,403.1 2,416.0 2,423.7 2,435.2 2,449.9 2,463.4 2.457.8 2,459.0 2,464.4 2,467.5 6 Commercial and industrial . . 540.1 552.6 560.3 563.6 565.4 569.7 571.1 577.4 574.3 575.2 578.3 580.2 7 Real estate 1,056.5 1,076.4 1,079.4 1.083.2 1,088.0 1.093.3 1,099.1 1.104.5 1,102.7 1,104.6 1,103.9 1,104.5 8 Revolving home equity. .. 79.7 80.5 81.2 83.2 84.1 85.3 85.8 86.4 86.2 86.2 86.4 86.6 9 Other 976.8 995.8 998.2 1.000.0 1,003.8 1,008.1 1.013.4 1.018.1 1,016.5 1.018.5 1,017.5 1.017.9 10 Consumer 497.4 512.8 515.7 518.2 518.8 519.0 521.2 520.7 520.1 520.1 521.6 521.7 11 Security' 52.1 42.5 44.7 44.0 42.9 43.6 45.4 45.2 46.6 45.1 44.2 44.8 12 Other loans and leases 194.6 201.3 203.0 207.1 208.6 209.5 213.0 215.5 214.0 214.1 216.5 216.3 13 Interbank loans 173.0 181.2 185.0 182.9 191.5 181.8 174.3 181.5 182.8 179.4 180.0 181.0 14 Cash assets4 190.1 194.8 194.7 196.3 201.8 200.9 200.1 197.7 194.2 195.3 204.8 195.1 15 Other assets5 184.7 214.1 219.0 220.4 225.3 234.0 227.0 235.8 226.6 232.6 238.1 241.2 16 Tolal assets* 3,685.4 3,742.8 3,765.4 3,771.8 3,800.2 3.812.6 3,821.6 3,860.3 3,840.9 3,845.8 3,869.6 3,869.8 Liabilities 17 Deposits 2,510.2 2,570.7 2,586.3 2.584.5 2,617.9 2,638.1 2.645.9 2,656.9 2,663.0 2,643.3 2,673.8 2,640.7 18 Transaction 754.3 722.9 715.7 704.8 709.2 708.4 704.3 695.9 701.7 686.3 714.0 684.0 19 Nontransaction 1,756.0 1,847.9 1,870.6 1,879.7 1.908.7 1,929.7 1,941.6 1.961.0 1.961.3 1,957.0 1,959.7 1,956.7 20 Large lime 273.1 292.2 298.9 295.4 299.7 303.0 303.0 307.1 306.1 306.4 308.1 307 1 21 Other 1,482.8 1,555.7 1,571.7 1,584.3 1,609.0 1,626.7 1,638.6 1,653.9 1,655.1 1.650.6 1,651.7 1,649.6 22 Borrowings 575.7 572.9 583.6 569.6 580.4 581.7 594.5 596.9 597 I 612.2 589 8 587.8 23 From banks in the US 265.0 255.6 261.4 256.9 267.6 272.0 273.3 272.9 275.8 289.6 267.0 257.6 24 From others 310.7 317.3 322.1 312.7 312.8 309.6 321.1 324.0 321.3 322.6 322.8 330.3 25 Net due to related foreign offices . 90.5 74.5 74.7 76.6 70.9 68.9 72.0 78.4 76.4 85.0 76.4 77.8 26 Other liabilities 155.7 152.8 153.1 169.1 173.0 177 7 179.8 187.8 183.9 185.0 192.6 187.8 27 Total liabilities 3,332.1 3,370.9 3,397.7 3,399.7 3,442.2 3,466.3 3,492.2 3,520.1 3,520.4 3,525.6 3,532.6 3,494.1 28 Residual (assets less liabilities)7. . 353.3 371.9 367.8 372.2 358.1 346.3 329.4 340.2 320.5 320.2 337.1 375.7 Not seasonally adjusted Assets 29 Bank credit 3,187.2 3,207.8 3.229.2 3,240.0 3,250.9 3,263.3 3,285.2 3,298.7 3,298.9 3,297.0 3.300.2 3,295.5 30 Securities in bank credit 849.5 825.8 824.1 820.9 821.5 817.6 829.4 838.8 839.4 839.6 840.1 835.6 31 U.S. government securities . 637.0 622.1 622.5 621.8 620.3 616.4 616.2 613.7 616.4 615.6 611.0 611.8 32 Other securities 212.5 203.6 201.6 199.1 201.2 201.2 213.2 225.1 223.0 224.0 229.1 223.8 33 Loans and leases in bank credit2 2,337.7 2,382.0 2,405.0 2,419.0 2,429.5 2,445.7 2,455.9 2,460.0 2,459.5 2,457.4 2,460.1 2,460.0 34 Commercial and industrial 539.8 548.6 556.5 561.2 563.7 566.3 568.9 577.1 574.0 574.1 577.7 580.3 35 Real estate 1,053.4 1,077.8 1,082.3 1,086.1 1.091.8 1,098.0 1,101.1 1.101.4 1,102.1 1,103.7 1,099.8 1,099.2 36 Revolving home equity 79.3 80.8 81.8 83.7 84.6 85.4 85.8 86.0 85.9 86.0 86.0 86.1 37 Other 974.1 997.0 1,000.5 1,002.4 1,007.2 1.012.6 1.015.4 1,015.4 1,016.2 1,017.7 1.013.8 1,013.1 38 Consumer 498.1 513.1 517.9 518.4 519.2 523.8 526.8 521.4 523.0 521.9 522.3 520.8 39 Security1 53.3 41.0 43.9 43.8 44.3 44.9 44.7 46.3 46.8 45.8 45.5 46.3 40 Other loans and leases 193.0 201.5 204.4 209.5 210.4 212.7 214.3 213.7 213.7 211.9 214.8 213.4 41 Interbank loans 177.2 176.6 179.3 177.7 195.8 191.0 184.1 185.9 193.3 186.4 183.5 178.7 42 Cash assets4 191.6 183.8 192.6 196.9 208.6 216.1 210.1 199.7 191 1 187.8 219.1 199.6 43 Other assets5 184.2 216.3 221.0 218.1 223.8 233.1 228.3 234.7 229.9 230.9 235.9 238.8 44 Total assets6 3,683.8 3,726.9 3,763.2 3,768.0 3,814.3 3,838.9 3,844.1 3,857.8 3,849.6 3,838.6 3,874.6 3,856.7 Liabilities 45 Deposits 2,497.7 2,561.6 2.587.3 2.583.9 2,632.4 2,667.5 2.649.7 2,645.1 2,654.2 2,626.8 2,667.4 2,622.3 46 Transaction 746.3 710.2 713.7 702.4 719.4 740.8 715.7 688.7 697.8 673.9 712.1 672.9 47 Nontransaction 1,751.4 1,851.5 1,873.5 1,881.5 1.913.0 1,926.7 1,934.0 1.956.3 1,956.4 1,952.9 1,955.3 1,949.5 48 Large time 275.3 292.9 296.6 295.2 300.3 299.7 301.7 309.9 308.0 309.8 311.2 309.8 49 Other 1,476.1 1,558.6 1,576.9 1,586.3 1,612.7 1,627.0 1,632.3 1,646.5 1.648 4 1,643.1 1,644.1 1,639.7 50 Borrowings 571.1 573.6 586.7 565.3 573.5 575.0 591.7 587.3 586.4 586.4 587.5 590.7 51 From banks in the US 261.2 260.3 264.6 252.8 261.3 266.0 266.3 262.9 262.0 264.3 262.1 262.4 52 From others 309.9 313.3 322.2 312.5 312.2 309.1 325.4 324.4 324.4 322.1 325.4 328.3 53 Net due to related foreign offices .... 92.4 72.2 70.9 78.2 68.4 66.2 73.6 80.1 74.7 83.4 78.3 84.9 54 Other liabilities 155.4 151.8 153.7 169.8 176.2 175.0 177.9 187.2 183.1 184.9 191.7 187.0 55 Total liabilities 3,316.6 3,359.3' 3,398.6 3,397.1 3,450.5 3.483.7 3.492.9 3,499.7 3,498.4 3.481.5 3,524.9 3,484.9 56 Residual (assets less liabilities)7 367.1 367.7 364.6 370.9 363.7 355.3 351.2 358.1 351.2 357.1 349.7 371.8 MEMO 57 Revaluation gains on off-balance-sheet items8 32.4 33.1 36.2 47.5 55.8 54.0 55.5 58.8 54 7 58 Revaluation losses on off-balancesheet items8 n.a. 28.9 28.9 31.8 44.0 50.9 48.6 51.0 53.9 49.3 59 Mortgage-backed securities9 n.a. 236.8 238.8 242.3 245.7 244.4 245.8 245.9 242.1 244.4 Footnotes appear on page A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • May 1997 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued C. Large domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1996 1996 1997 1997 Feb. Aug. Sept. Oct. Nov. Dec Jan.1 Feb. Feb 5 Feb. 12 Feb. 19 Feb. 26 Seasonal 1I adjusted Assets 1 Bank credit 1,825.5' 1,788.5' 1,797.4' 1,806.5' 1,809.8' 1.817.8' 1.831.6 1,850.4 1,847.0 1,847.7 1.854.0 1.850.0 2 Securities in bank credit 445.7' 407.1' 405.5' 405.9' 408.8' 411.3' 416.6 427.1 426.1 426.8 430.2 425.9 3 U.S government securities 311.3' 284.O1 283.7' 286.0 286.6' 284.9 287.5 281.9 285.8 283.6 279.0 280.4 4 Trading account 22.1 20.2 20.9 21.2 21.5 19.4 17.2 16.1 16.6 17.2 15.7 15.1 5 Investment account 289.1' 263.8' 262.8' 264.8' 265.1' 265.5' 270.3 265.8 269.1 266.4 263.3 265.3 6 Other securities 134.4 123.2 121.8' 119.9 122.2 126.4 129.2 145.2 140.4 143.2 151.2 145.5 7 Trading account 6.3.4 56.9 56.4 55.1 57.8 00.9 64.6 79.9 75.6 78.1 85.5 80.3 8 Investment account 71.0 66.2 65.5 64.8 64.4 65.5 64.5 65.3 64.S 65.1 65.7 65.2 9 State and local government . 21.5 20.5 20.3 20.2 20.2 20.3 20.5 21.0 21.1 21.1 21.0 20.9 10 Other 49.6 45.8 45.1 44.5 44.2 45.2 44.1 44.3 43.7 44.0 44.7 44.3 11 Loans and leases in bank credit' . . 1.379.8 1.381.4 1,391.9' 1,400.7' 1.401.0' 1.406.6' 1.415.0 1,423.4 1,420.8 1,420.9 1,423.8 1,424.1 12 Commercial and industrial 367.9 372.7 378.9 381.6' 381.9' 384.5 385.2 389.4 387.2 387.5 390.1 391.5 13 Real estate 563.0 556.6 556.1 558.4 559.2 561.1 561.2 562.0 562.4 563.2 561.1 560.2 14 Revolving home equity 53.1 53 2 53 5 53 7 54 2 54.9 55.(1 55.3 55.1 55.2 55.4 55.4 15 Other 509.9 503.4' 502.6 504.7 505.0 506.2 506.3 506.7 507.3 508.0 505.7 504.9 16 Consumer 271.4 277.9 279.4 279.2 278.8' 279.1 282.1 284.0 283.8 284.1 284.8 283.6 17 Security' 46.4 37.3 39.5 39.0 37.8 38.5 40.3 39.9 41.3 39.9 38.8 39.5 18 State and local government 11.3 11.1 10.8 10.9 11.1 11.3 11.1 11.0 11.0 11.0 11.1 11.0 19 All other 119.8 125.7 127.1' 131.6' 132.1' 132.1' 135.0 137.0 135.1 135.2 137.9 1.38.3 20 Interbank loans 112.4 131.9 133.8 132.0 137.9 126.8 119.9 123.9 125.8 123.1 121.8 123.5 21 Cash assets4 125.9 129.4 128.1' 128.2 132.5' 110.5 130.5 127.6 124.8 126.1 131.0 127.1 22 Other assets' 134.4 158.0 161.6 16,3.5 167.6' 175.5' 168.6 175.2 168.3 172.5 178.1 179.8 23 Total assets6 2.161.7' 2,171.2' 2,183.1' 2,186.2' 234.1' 2,207 Jr 237.9 2,236.9 2.223.6 2327.2 2.241.9 1245.4 Liabilities 24 Deposits 1.311.3 1,339.1 1,345.6 1.355.1 1.366.5' 1 373.6 1.166.0 1,364.2 1,371.8 1.355.7 1,373.2 1.355.0 25 Transaction 420.0 400.3 392.7 387.0 387.3 385.6' 382.4 373.3 379.6 367.1 386.1 363.5 26 Nontransaction 891.3 938.8 952.9 968.1 979.1 987.9 983.6 991.0 992.2 988.5 987.1 991.5 27 Large time 125.7 139.8 146.5 151.8 153.4 155.1 153.4 156.2 155.6 156.0 157.1 156.0 28 Other 765.6 799.0 806.4 8163 825.7 832.8 830.2 834.7 836.6 832.6 830.0 835.5 29 Borrowings 436.4 411.9 420.5 404.3 414.4 415.8' 426.1 427.1 427.0 439.2 419.4 422.7 3(1 From banks in the U.S 188.7 172.9 177.7 170.6' 181.4' 188.2' 187.1 186.3 188.5 199.6 180.1 175.8 31 From others 247.7 239.0 242.8' 233.7' 233.0' 227.6' 239.0 240.7 238 4 239.5 239.3 246.9 32 Net due to related foreign offices 84.3 70.1 68.9 73.2 68.7 66.1 68.0 74.4 72.2 80.9 72.8 73.7 33 Other liabilities 123.7 125.7 126.3 141.2 146.2 151.9 155.5 163.6 160.1 160.5 169.0 162.5 34 Total liabilities 1,955.8 1,946.8 1.961.2' 1,973.8 1,995.8' 2,007.5 2,015.7 2,029.3 2,031.0 2,036.3 2,034.4 2,013.9 35 Residual (assets less liabilities)7 205.9' 224.3' 221.9' 212.4' 208.3' 199.7' 192.2 207.6 192.5 190.8 207.5 231.5 Not seasonally adjusted Assets 36 Bank credit 1,824.2' 1.786.7' 1.797.1' l,807.0r 1.812.9' 1,818.1' 1,834.8 1,848.2 1,849.7 1.847.4 1,849.8 1,842.8 37 Securities in bank credit 443.4' 410.2' 406.9' 406.9 409.4' 404.2' 413.3 424.4 424.8 424.6 426.0 421.6 38 U.S. government securities 309.7' 286.5' 285.3' 288.2' 288.8' 283.6 281.8 280.2 282.8 281.5 mi 278.9 39 Trading account 22.5 20.9 21.0 22.0 22.7 18.1 16.3 16.3 16.1 17.3 16.4 15 0 40 Investment account 287.2' 265.6' 264.3' 266.2' 266.0 265.5 265.5 263.9 266.7 264.2 261.3 263.9 41 Other securities 133.7 123.7 121.6' 118.8 120.6 120.5 131.6 1442 141.9 143.2 148.3 142.8 42 Trading account 62.6 57.8 56.1' 53.5 55.4 54.4 66.5 78.8 76.8 77.9 82.6 77.5 43 Investment account 71.1 65.9 65.5 65.3 65.3 66.1 65.0 65.4 65.2 65.3 65.7 65.2 44 State and local government. . 21.4 20.3 20.3 20.2 20.3 20.4 20.5 21.0 21.0 21.1 21.0 20.9 45 Other 49.7 45.6 45.2 45.0 44.9 45.7 44.6 44.4 44.1 44.2 44.7 44.3 46 Loans and leases in bank credit2 1,380.8 1.376.5' 1,390.2' 1.400.1' 1,403.5' 1.413.9' 1.421.5 1,423.8 1,425.0 1.422.8 1.423.8 1.421.2 47 Commercial and industrial 367.9 369.9 376.0 379.8' 380.9' 381.6 383.0 389.4 387.1 386.9 389.9 391.7 48 Real estate 562.6' 556.9 556.9 159 1 560.8 563.9 563.6 561.5 563.8 564.6 559.9 557.6 49 Revolving home equity 53.0 53.4 53.7 54.0 54.5 54.9 55.1 55.1 55.1 55.1 55.2 55.1 50 Other 509.6 503.5 503.1 505.0' 506.3 508.9 508.6 506.4 508 7 509 5 504 7 502.5 51 Consumer 271.4 278.3 280.6 278.7 278.6 283.0 286.8 283.9 285.3 284.4 284.6 282.4 52 Security ^ 47.5 35.9 38.9 38.9 39.0 39.5 39.4 409 41.3 40.4 40.1 41.1 53 State and local government 11.2 11.2 10.9 10.9 11.2 11.2 11.0 11.0 10.9 10.9 11.1 11.0 54 All other 120.2 124.3 126.9' 132.6' 133.1' 134.8' 137.7 137.2 136.7 135.6 138.3 137.4 55 Interbank loans 114.3 128.2 129.8 126.4 137.4 133.0 128.3 126.2 132.0 127.0 124.5 121.6 56 Cash assets4 128.1 120.8 127.5 127 7' 136.5' 141.8 138.3 130.3 122.9 121.9 143.9 131.5 57 Other assetss 132.6 160.0 163.1 161.4' 165.5' 174.1 169.0 172.7 168.7 170.3 174.2 176.5 58 Total assets6 2,162.7' 2,158.9' 2,179.5' 2,178.7' 2.208.5' 1223.4r 2,227.9 2,237.2 1230.7 2224.2 2,2493 2,237.4 Liabilities 59 Deposits 1.308.7 1.332.9 1,344.5 1,352.2 1.373.3 1.389.6' 1.372.3 1.362.2 1.368.9 1,352.2 1,376.8 1,348.1 60 Transaction 416.4 391.1 391.5 384.1 393.9' 406.9 390.1 369.9 375.3 360.3 388.2 358.5 61 Nonlransaction 892.3 941.8 953.0 968.1 979.5 982.8 982.2 992.3 993.6 991.9 988.6 989.5 62 Large time 127.3 140.7 144.5 151.2 153.7 152.7 153.4 158.4 157.4 158.8 159.6 157.6 63 Other 765.0 801.1 808.5 816.9 825.7' 830.0 828.8 833.9 836.2 833.2 829.0 832.0 64 Borrowings 432.2 414.5 424.0 399 9 409.0 409.6' 421.7 418.7 419.4 418.7 416.2 421.9 65 From banks in the U.S 185.6 177.8 180.1 167.0' 176.8' 182.6' 180.3 178.2 178.0 180.0 175.7 177.8 66 From nonbanks in the U.S 246.6 236.7 244.0' 232.8 232.2 '27.0' 241.4 240.5 241.4 238.7 240.5 244.1 67 Net due to related foreign offices 86.2 67.8 65.0 74.8 66.2 63.4 69.7 76.1 70.5 79.3 74.7 80.8 68 Other liabilities 122.8 124.6 127.2 141.9 149.5 149.7' 153.3 162.6 158.8 159.8 167.9 161.5 69 Total liabilities 1.939.8 1,960.7 1,968.8 1,998.1' 2,012.4 2,016.9 2,019.7 2,017.6 2,010.0 2,035.6 2,0123 70 Residual (assets less liabilities)7.... 212.8' 219.1' 218.8' 209.9' 210.3' 211.1' 211.0 217.5 213.1 214.2 213.7 225.1 MEMO 71 Revaluation gains on off-balance-sheet items* n.a. n.a ti.a. 32.4 33.1 36.2 47.5 55.8 54.0 55.5 58.8 54.7 Digitized72 f oRre vFalRuaAtioSn EloRsse s on off-balancesheet Hems* n.a. n.a. n.a. 28.9 28.9 31.8 44.0 50.9 48.6 51.0 53.9 49.3 http://fra7s3 eMr.osrttgloague-ibsafcekded. osercgu/r ities'1 n.a. n.a. n.a. 187.1' 188.5' 1W.9 192.7 191.9 193.3 193.2 189.4 192.3 Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A19 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities'—Continued D. Small domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Sept. Seasonally adjusted Assets 1 Bank credit 1.368.7' 1,421.5 1,428.1 1,430.4 1,436.4 1,442.5 1,452.3 1,456.0 1,453.9 1,454.2 1,456.8 2 Securities in bank credit 407.8' 417.4 416.9 415.1 413.7 413.9 417,5 416.0 416.9 416.1 416.2 3 U.S. government securities . 328.7' 337.3 336.8 3347 333.2 333.2 335.7 334.8 335.5 334.9 335.1 4 Other securities 79.1 80.1 80.1 80.3 80.5 80.6 81.8 81.2 81.4 81.2 81.2 5 Loans and leases in bank credit2. 960.9 1,004.1 1,011.2 1,015.4 1,022.7 1,028.6 1.034.9 1,040.0 1.036.9 1.038.1 1,040.6 6 Commercial and industrial . 172.2 179.9 181.4 182.0 183.5 185.2 185.9 188.0 187.2 187.7 188.2 7 Real estate 493.4 519.8 523.3 524.8 528.8 532.2 537.9 542.5 540.3 541.4 542.9 8 Revolving home equity . . 26.5 27.3 27.8 29.5 29.9 30.4 30.8 31.1 31.1 31.0 31.0 9 Other 466.9 492 5 495.5 495.3 498.8 501.9 507.1 511.4 509.2 510.5 511.8 10 Consumer 226.1 234.8 236.3 239.0 239.9 239.9 239.1 236.7 236.4 236.0 236.8 11 Security-1 5.7 5.1 5.2 5.0 5.1 5,2 5.1 5.3 5.3 5.2 5.3 12 Other loans and leases 63.5 64.5 65.0 64.6 65.4 66.1 66.9 67.5 67.8 67.8 67.4 13 Interbank loans 60.6 49.4 51.2 51.0 53.5 55.0 54.5 57.7 56.9 56.3 58.2 14 Cash assets4 64.2 65.4 66.6 68.1 69.4 70.4 69.6 70.1 69.3 69.2 73.8 15 Other assets5 50.3 56.2 57.4 56.9 57.7 58.5 58.4 60.6 58.3 60.1 60.1 16 Total assets" 1,523.8' 1,571.6 1,582.3 1,585.6 1,596.1 1,605.3 1,613.7 1,623.4 1,6173 1,618.6 1,627.8 Liabilities 17 Deposits 1,198.9 1,231.6 1,240.6 1,229.4 1,251,4 1,264.5 1.279.9 1,292,7 1.291.2 1.287.7 1.300.6 18 Transaction 334.2 322.5 322.9 317.7 321.9 322.7 321.9 322.7 322.1 319.2 327.9 19 Nontransaction 864.7 909.1 917.7 911.6 929.6 941.8 958.0 970.0 969.1 968.5 972.6 20 Large time 147.4 1524 152.3 143.6 146.2 147.9 149.6 150.9 150.5 150.4 151.0 21 Other 717.3 756.7 765.4 768.1 783.4 793.9 808.4 819.2 818.6 818.1 821.7 22 Borrowings 139.3 161.0 163.1 165.2 165.9 165.8 168.3 169.9 170.1 173.0 170.5 23 From banks in the U.S 76.3 82.7 83.7 86.2 86.2 83.8 86.2 86.6 87.2 90.0 86.9 24 From others 63.0 78.3 79.4 79.0 79,8 82.0 82.1 83.3 82.9 83.1 83.6 25 Net due to related foreign offices . 6.1 4.4 5.9 3.4 "> i 2.7 4.0 4.0 4.3 4.1 3.6 26 Other liabilities 32.0 27.1 26.8 27.9 25.8 24.3 24.2 23.7 24.4 23.6 26.8 27 Total liabilities 13763 1,424.1 1,436.4 1,425.9 1,458.8 1.476.5 1,490.8 1,4893 1,489.2 1,498.2 1.446.4 28 Residual (assets less liabilities)7. . 147.5' 147.5 145.9 159.8 146.5 137.2 132.6 128.0 129.4 129.5 149.7 Not seasonally adjusted Assets 29 Bank credit 1,421.1 1.432.1 1,433.0 1,418.0 1,445.2 1,450.4 1,450.5 1,449.1 1.449.5 1,450.4 30 Securities in bank credit .... 406.1' 415.6 417,2 414.0 412.1 413.4 416.0 414.4 414.6 414.9 414.1 31 U.S. government securities . 327.3' 335.6 337.3 333.6 331.5 332.8 334.4 333.4 333.6 334.1 333.3 32 Other securities 78.8 79.9 80.0 8(1.3 80.6 80.7 81.6 80.9 81.0 80.8 80.9 33 Loans and leases in bank credit2. 956.9 1,005.6 1,014,9 1,019.0 1,025.9 1,031.8 1,034.4 1,036.1 1,034.5 1,034,6 1,036.3 34 Commercial and industrial . 171.9 178.6 180.4 181.4 182.8 184.7 185.9 187.7 186.9 187.2 187.8 35 Real estate 490.8 520.9 525.5 527.1 531.0 534.1 537.5 540.0 538.3 539.1 539.9 36 Revolving home equity . . 26.3 27.4 28.1 29.7 30.1 30.4 30.7 30.9 30.8 30.8 30.8 37 Other 464.5 493.5 497.4 497.3 500.9 503.7 506.8 509.1 507.5 508.3 509.1 38 Consumer 226.8 234.9 237.3 239.6 240.7 240.8 240.1 237.5 237.7 237.5 237.7 39 Security3 5.8 5.1 5.1 4.9 5.3 5.4 52 5.4 5.5 5.4 5.4 40 Other loans and leases 61.6 66.0 66.6 66.0 66,2 66.7 65.7 65.6 66.1 65.4 65.5 41 Interbank loans 62.9 48.4 49.5 51.3 58.3 58.0 55.8 59.8 61.4 59.4 59.0 42 Cash assets4 63.5 63 1 65.1 69.2 72.1 74.3 71.8 69.4 68.2 65.9 75.2 43 Other assets5 51.6 56.3 57.9 56.7 58.3 59.0 59.3 62.0 61.2 60.7 61.7 44 Total assets6 1,568.1 1,583.7 1,589.3 1,605.8 1,615.5 1,616.2 1,620.7 1,618.9 1,6143 1,6253 Liabilities 45 Deposits 1.189.0 1,228.8 1,242.8 1,231.7 1,259.1 1,277.9 1,277.4 1.282.9 1,285.3 1,274.6 1,290.6 46 Transaction 329.9 319.1 322.2 318.3 325.5 333.9 325.6 318.8 322.5 313.7 323.9 47 Nontransaction 859.1 909.6 920.6 913.4 933.6 944.0 951.8 964.1 962.8 960.9 966.7 48 Large time 148.0 152.2 152.1 144.0 146.6 147.0 148.3 151.5 150.6 151.0 151.6 49 Other 711.1 757.5 768.5 769.4 787 0 797.0 803.4 812.6 812.2 809.9 815.0 50 Borrowings 138.9 159.1 162.7 165.4 164.5 165.4 170.0 168.6 167.0 167.7 171.3 51 From banks in the U.S 75.6 82.5 84.5 85.7 84,5 83.3 86.0 84.7 84.0 84.3 86.4 52 From others 63.3 76.6 78.2 79.7 80.0 82.1 84.0 83.9 83.1 83.4 84.9 53 Net due to related foreign offices 6.1 4.4 5.9 3.4 2.2 2.7 4.0 4.0 4.3 4.1 3.6 54 Other liabilities 32.6 27.2 26.5 27.9 26.7 25.3 24.5 24.6 24.2 25.0 23.8 55 Total liabilities 1366.7 1,419.5 1,437.9 1,4283 1,452.4 1,4713 1,476.0 1,480.0 1,480.8 1,471.5 1,4893 56 Residual (assets less liabilities)7. 154.4' 148.6 145.8 161.0 144.2 140.3 138.1 143.0 136.0 MEMO 57 Mortgage-backed securitiesy.... 52.5 52.7 Footnotes appear on page A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics • May 1997 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities'—Continued E. Foreign-related institutions Billions of dollars Monthly averages Wednesday figures Account 1996 1996 1997 1997 Feb. Aug. Sept. Oct. Nov. Dec' Jan.' Feb. Feb. 5 Feb. 12 Feb. 19 Feb. 26 Seasonally adjusted Assets 1 Bank credit 451.4 464.4 467.5' 481.9 497.1 510.3 522.2 539.2 533.3 539.9 541.3 541.0 2 Securities in bank credit 146.7 147.5 146.5 149.4 159.7 167.3 171.7 179.4 176.7 181.4 181.3 178.9 3 U.S. government securities 70.9 80.9 82.9 83.1 88.0 89.2 82.9 86.5 84.3 86.8 86.7 87.8 4 Other securities 75.8 66.6 63.6 66.3 71.7 78.1 88.8 92.9 92.4 94.6 94.6 91.1 5 Loans and leases in bank credit- . . . 304.8 316.8' 321.0 332.5' 337.4 343.0 350.5 359.8 356.6 358.5 360.0 362.1 6 Commercial and industrial 184.0 194.2' 20O.7 207.1 211.0 217.5 220.0 223.4 220.8 222.2 224.9 224.7 7 Real estate 34.4 33.1 32.8 32.9 32.8 32.5 32.6 32.9 32.9 32.9 32.9 33.0 8 Security' .... 35 6 29.8 29 1 32.7 34.5 35.4 37.1 38.6 39.7 39.3 37.1 38.0 9 Other loans and leases 50.8 59.7 58.4 59.8 59.2 57.6 60.9 64.8 63.3 64.2 65.1 66.3 10 Interbank loans 18.9 16.4 20.3 20.9 20.9 22.9 23.8 22.6 22.1 22.4 21.8 25.0 11 Cash assets4 29.1 28.5 29.5 29.8 31.1 31.4 31.9 33.9 32.6 33.6 34.2 34.1 12 Other assets5 49.0 43.7 41.1 33.9 36.5 37.4 39.3 42.8 42.0 42.5 42.7 42.5 13 Total assets6 548J 552.9"" 558J 5663 585.4 601.8 617.0 6382 629.8 638.2 639.8 642.4 Liabilities 14 Deposits 168.4 180.3 186.0 197.9' 205.0 221.1 230.4 244.5 238.5 242.1 247.1 245.8 15 Transaction 10.4 10.5 9.7 10.5 10.6 10.8 10.9 10.4 10.1 9.9 11.3 9.9 16 Nontransaction 158.0 169.8 176.2 187.3 194.4 210.4 219.6 234.2 228 4 232.2 235.8 235.9 17 Large time 154.1 166.7 172.9 184.7 190.9 206.4 217.1 228.6 225.2 226.6 229.5 230.3 18 Other 3.8 3.1 3.4 2.6 3.5' 4.0 2.5 5.6 3.2 5.6 6.2 5.7 19 Borrowings 118.7 128.6 122.8 118.7 128.2' 125.7 133.5 147.4 145.3 143.8 150.3 148.8 20 From banks in the US 30.2 34.6 34.0 33.4 35.5 36.2 31.8 38.5 39.4 35.6 39.5 38.0 21 From others 88.4 94.1 88.8 85.3 92.8 89.4 101.7 108.9 106.0 108.2 110.8 110.8 22 Net due to related foreign offices 180.2 173.2 176.3 167.7' 167.2' 162.3 150.1 139.6 144.9 141.0 134.8 139.8 23 Other liabilities 77.7 69.4 68.7 74.7' 80.1 83.0 89.5 99.9 96.2 105.0 101.7 95.9 24 Total liabilities 544.8 551.5 553* 559.0" 580.6r 592.2 603.5 631.5 624.9 631.9 633.9 630.4 25 Residual (assets less liabilities}7 3.5 1.4' 4.5' 7.3' 4.8' 9.7 13.5 6.8 4.9 6.3 5.9 12.1 Not seasonally adjusted Assets 26 Bank credit 451.3 467.8' 466.2 480.6' 496.7 506.1 519.2 539.8 534.3 542.9 540.3 539.3 27 Securities in bank credit 146.8 150.7 145.4 149.3 159.4 160.8 167.6 180.3 176.7 183.7 181.9 178.4 28 U.S. government securities 71.7 82.4 81.9 82.6 88.0 86.7 83.9 88.2 86.3 88.9 88.5 88.6 29 Trading account 5.9 6.3 8.4 18.8 22.0 20.2 16.9 21.3 19.7 21.8 21.3 21.8 30 Investment account 65.8 76.1 73.5 63.7 66.0 66.5 67.0 67.0 66.6 67.1 67.2 66.7 31 Other securities 75.1 68.3 63.5 66.7 71.4 74.1 83.7 92.1 90.5 94.8 93.4 89.8 32 Trading account 39.8 38.8 37.6 48.2 52.3 54.9 61.4 69.1 67.7 71.4 70.5 66.9 33 Investment account 35.3 29.5 25.9 18.5 19.1 19.2 22.3 23.0 22.8 23.3 22.9 23.0 34 Loans and leases in bank credit3 304.5 317.1' 320.8 331.3 337.3 345.3 351.6 359.5 357.5 359.3 358.4 360.9 35 Commercial and industrial 184.0 194.4 199.4' 205.9 210.8 217.9 219.9 223.3 220.9 222.8 224.2 224.6 36 Real estate 34.5 33.1 32.9 33.1 33.2 32.7 32.5 33.0 33.0 33.0 32.9 32.9 37 Security' 35.6 29.8 29.1 32.7 34.5 35.4 37.1 38.6 39.7 39.3 37.1 38.0 38 Other loans and leases 50.5 59.8 59.3 59.7 58.8 59.3 62.1 64.5 63.9 64.1 64.2 65.4 39 Interbank loans 18.9 16.4 20.3 20.9 20.9 22.9 23.8 22.6 22.1 22.4 21.8 25.0 40 Cash assets4 28.4 28.5 28.8 30.1 31.3 32.5 32.3 33.1 32.5 32.9 32.9 33.3 41 Other assets5 49.9 44.5 41.5 33.6 36.8 38.2 38.5 43.6 42.7 43.9 43.1 43.4 42 Total assets6 54&5 557.2r 556£ 565.1r 585.5 599.5 613.6 638.9 631.2 641.9 638.0 640.9 Liabilities 43 Deposits 166.5 178.8 185.6 203.2 207.6 223.9 230.5 241.3 236.5 239.2 241.7 243.6 44 Transaction 10.6 10.3 10.1 10.6 10.6 11.4 10.9 10.6 10.5 10.2 11.7 10.0 45 Nontraisaction 155.9 168.5 175.4 192.6 197.0 212.4 219.7 230.7 226.0 229.1 230.0 233.6 46 Large lime 151.1 166.2 173.2 190.4 194.8 209.9 215.1 223.6 220.0 221.4 222.7 2273 47 Other 4.8 2.3 2.3 2.2 2.3 2.5 4.6 7.1 6.0 7.7 7.3 6.3 48 Borrowings 113.3 133.6 123.9 115.4' 124 9 124.7 130.4 1406 142.6 139.6 140.3 138.8 49 From banks in the US 28.4 35.1 33.3 30.9 35^6 37.0 33.1 36.1 39.1 34.6 35.5 34.1 50 From others 84.8 98.5 90.6 84.5' 89.3 87.6 97.4 104.5 103.5 105.0 104.9 104.8 51 Net due to related foreign offices 185.8 171.2 174.3 167.7' 166.9' 163.9 158.9 148.7 149.0 148.8 146.9 153.7 52 Other liabilities 79.6 69.8 68.6 73.1' 80.8 81.7 88.6 102.4 98.3 108.3 103.0 98.9 53 Total liabilities 545.1 553.3 552.4 559.4r 580.1r 594.1 608.5 633.1 626.4 635.9 631.9 635.1 54 Residual (assets less liabilities)7 3.3 3.8' 4.3' 5.7' 5.4' 5.3 5.1 5.8 4.8 6.0 6.0 5.8 MEMO 55 Revaluation gains on off-balance-sheet items* n.a. n.a. n.a. 29.9 32.4 33.3 41.0 47.2 45.0 49.2 48.8 45.5 56 Revaluation losses on off-balancesheet items8 n.a. n.a. n.a. 29.4 31.6 32.5 40.2 47.4 45.2 49.7 49.0 45.5 Footnotes appear on page A21. 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Commercial Banking Institutions—Assets and Liabilities A21 NOTES TO TABLE 1.26 NOTE. Tables 1.26, 1.27, and 1.28 have been revised to reflect changes in the Board's H.8 quantities of balance sheet items acquired in mergers are removed from past data for the bank statistical release, "Assets and Liabilities of Commercial Banks in the United States." Table group that contained the acquired bank and put into past data for the group containing the 1.27, "Assets and Liabilities of Large Weekly Reporting Commercial Banks," and table 1.28, acquiring bank. Balance sheet data for acquired banks are obtained from Call Reports, and a "Large Weekly Reporting U.S. Branches and Agencies of Foreign Banks." are no longer ratio procedure is used to adjust past levels. being published in the Bulletin. Instead, abbreviated balance sheets for both large and small 2. Excludes federal funds sold to, reverse RPs with, and loans made to commercial banks domestically chartered banks have been included in table 1.26, parts C and D. Data are both in the United States, all of which are included in "Interbank loans." merger-adjusted and break-adjusted. In addition, data from large weekly reporting U.S. 3. Consists of reverse RPs with brokers and dealers and loans to purchase and carry branches and agencies of foreign banks have been replaced by balance sheet estimates of all securities. foreign-related institutions and are included in table 1.26, part E. These data are break- 4. Includes vault cash, cash items in process of collection, balances due from depository adjusted. instilutions, and balances due from Federal Reserve Banks. The not-seasonally-adjusted data for all tables now contain additional balance sheet items, 5. Excludes the due-from position with related foreign offices, which is included in "Net which were available as of October 2, 1996. due to related foreign offices." I. Covers the following types of institutions in the fifty slates and the District of 6. Excludes unearned income, reserves for losses on loans and leases, and reserves for Columbia: domestically chartered commercial banks that submit a weekly report of condition transfer risk. Loans are reported gross of these items. (large domestic); other domestically chartered commercial banks (small domestic); branches 7. This balancing item is not intended as a measure of equity capital for use in capital and agencies of foreign banks, and Edge Act and agreement corporations (foreign-related adequacy analysis. On a seasonally adjusted basis this item reflects any differences in the institutions). Excludes International Banking Facilities. Data are Wednesday values or pro seasonal patterns estimated for total assets and total liabilities. rata averages of Wednesday values. Large domestic banks constitute a universe; data for 8. Fair value of derivative contracts (interest rate, foreign exchange rate, other commodity small domestic banks and foreign-related institutions are estimates based on weekly samples and equity contracts) in a gain/loss position, as determined under FASB Interpretation No. 39. and on quarter-end condition reports. Data are adjusted for breaks caused by rectifications 9. Includes mortgage-backed securities issued by U.S. government agencies. U.S of assets and liabilities government-sponsored enterprises, and private entities The data for large and small domestic banks presented on pp. AI8 and A19 are adjusted IO remove the estimated effects of mergers between these two groups. The adjustment for mergers changes past levels to make them comparable with current levels. Estimated Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Financial Statistics • May 1997 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period Year ending December 1996 1997 Item D 19 e 9 c 2 . 1 D 9 e 9 c 3 . 1 D 9 e 9 c 4 . 1 D 9 e 9 c 5 . 1 D 9 e 9 c 6 . Aug. Sept. Oct. Nov. Dec. Jan. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 545,619 555,075 595,382 674,904 775,371 753,276 757,155 757,718 766,556 775,371 804,644 Financial companies' 2 Dealer-placed paper2, total 226,456 218,947 223,038 275.815 361,147 329.026 336,833 349.288 354,400 361,147 376,908 3 Directly placed paper , total 171,605 180,389 207,701 210,829 229,662 230,318 226,599 225,977 228,553 229,662 238,133 4 Nonnnancial companies4 147,558 155,739 164,643 188,260 184,563 193,932 193,724 182,454 183,603 184,563 189,602 Bankers dollar acceptances (not seasonally adjusted)5 5 Total 38,194 32,348 29,835 29, 25,754 By holder 11 1 6 Accepting banks 10,555 12,421 11,783 7 Own bills 9,097 10,707 10,462 8 Fed B e i r l a ls l b R o e u s g e h rv t e f r B om an k o s t 6 her banks 1,458 1,714 1,321 \ 1 9 0 F O o th re e i r g s n correspondents 26 1 , , 3 27 6 6 4 19. 7 2 2 0 5 2 17, 4 6 1 4 0 2 nA. n a. na. na. nd. na. na. na. By basis 11 Imports into United States 12,209 10,217 10,062 12 Exports from United States 8,096 7,293 6,355 13 All other 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 Loans' Percent per year Date of change Rate Period Av r e a r te age Period Av r e a r t a e ge Period Av r e a r t a e ge 1994—Mar. 24 6.25 1994 7.15 1995—Jan 8.50 1996—Jan 8.50 Apr. 19 6.75 1995 8.83 Feb 9.00 Fcb 8.25 May 17 7.25 1996 8.27 Mar. 9.00 Mar. 8.25 Aug. 16 7.75 Apr. 9.00 Apr 8.25 Nov. 15 8.50 1994—Jan 6.00 May 9.00 May 8.25 Feb 6.00 June 9.00 June 8.25 1995—Feb. 1 9.00 Mar. 6.06 July 8.80 July 8.25 July 7 8.75 Apr. 6.45 Aug 8.75 Aug 8.25 Dec. 20 8.50 May 6.99 Sept 8.75 Sept 8.25 June 7.25 Oct 8.75 Oct 8.25 1996—Feb. 1 8.25 Julv 7.25 Nov 8.75 Nav 8.25 1997—Mar. 26 8.50 Aug 7.51 Dec 8.65 Dec 8.25 Sept 7.75 Oct 7.75 1997—Jan 8.25 Nov 8.15 Feb 8.25 Dec 8.50 Mar. 8.30 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.I3 (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 1997 1997. week ending Item 1994 1995 1996 Nov. Dec. Jan. Feb. Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 MONEY MARKET INSTRUMENTS 1 Federal funds1-3 _. 4.21 5.83 5.30 5.31 5.29 5.25 5.19 5.18 5.30 5.05 5.22 5.16 2 Discount window borrowing2'4 3.60 5.21 5.02 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 Commercial paper 'xf> 3 1 -month 4.43 5.93 5.43 5.39 5.70 5.43 5.39 5.44 5 42 5.38 5.37 5.38 4 Vmonth 4.66 5.93 5.41 5.41 5.51 5.45 5.40 5.45 5.43 5.39 5.38 5.40 5 6-month 4.93 5.93 5.42 5.40 5.44 5.48 5.42 5.48 5.44 5.41 5.39 5.43 Finance paper, directly placed^^1 6 1 -month 4.33 5.81 5.31 5.25 5.41 5.31 5.27 5.30 5.30 5.26 5.25 5.25 7 3-month 4.53 5.78 5.29 5.29 5.33 5.32 5.28 5.32 5.31 5.28 5.26 5.28 8 6-month 4.56 5.68 5.21 5.23 5.25 5.30 5.27 5.31 5.29 5.26 5.24 5.26 Bankers acceptances' "' 9 Vmonth 4.56 5.81 5.31 5.29 5.35 5.34 5.29 5.33 5.32 5.29 5.27 5.28 10 6-month 4.83 5.80 5.31 5.29 5.33 5.35 5.30 5.36 5.32 5.29 5.28 5.30 Certificates of deposit, secondary marker' 11 1 -month 4.38 5.87 5.35 5.30 5.50 5 35 5.31 5.34 5.32 5.31 5.29 5.31 12 3-month 4.63 5.92 5.39 5.38 5.44 5.43 5.37 5.42 5.40 5.36 5.34 5.37 13 6-month 4.96 5.98 5.47 5.43 5.47 5.54 5.47 5.53 5.50 5.46 5.42 5.49 14 Eurodollar deposits. 3-month3JO 4.63 5.93 5.38 5.38 5.43 5.44 5.36 5.44 5.41 5.38 5.32 5.34 U.S Treasury bills Secondary marker " 15 3-month 4.25 5.49 5.01 5.03 4.91 5.03 5.01 5.04 4.99 5.00 4.97 5.05 16 6-month 4.64 5.-56 5.08 5.07 5.04 5.10 5.06 5.10 5.07 5.04 5.02 5.10 17 1-year 5.02 5.60 5.22 5.14 5.18 5.30 5.23 5.30 5.24 5.20 5.18 5.29 Auction average1?1' 18 3 month 4.29 5.51 5.02 5.03 4.87 5.05 5.00 5.06 5.00 5.02 4.98 5.01 19 6-month 4.66 5.59 5.09 5.07 5.02 5.11 5.05 5.12 5.08 5.07 5.03 5.03 20 1 -year 5.02 5.69 5.23 5.20 5.16 5.31 5.34 n.a. 5.34 n.a. n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities " 21 1-year 5.32 5.94 5.52 5.42 5.47 5.61 5.53 5.62 5.53 5.49 5.47 5.60 22 2-year 5.94 6.15 5.84 5.70 5.78 6.01 5.90 6.03 5.89 5.85 5.83 6.01 23 3-year 6.27 6.25 5.99 5.82 5.91 6.16 6.03 6.17 6.03 5.99 5.96 6.15 24 5-year 6.69 6.38 6.18 5.97 6 07 6.33 6.20 6.36 6.20 6.14 6.13 6.31 25 7-year 6.91 6.50 6.34 6.10 6.20 6.47 6.32 6.50 6.34 6.26 6.24 6.42 26 10-year 7.09 6.57 6.44 6.20 6.30 6.58 6.42 6.62 6.46 6.37 6.33 6.50 27 20-vear 7.49 6.95 6.83 6.58 6.65 6.91 6.77 6.95 6.80 6.7.3 6.70 6.85 28 V)-year 7.37 6.88 6.71 6.48 6.55 6.83 6.69 6.89 6.74 6.65 6.60 6.75 Composite 29 More than 10 years (long-term) 7.41 6.93 6.80 6.55 6.63 6.89 6.76 6.93 6.79 6.72 6.69 6.84 STATE AND LOCAL NOTES AND BONDS Moodvs series" 30 Aaa ' 5.77 5.80 5.52 5.43 5.38 5.40 5.36 5.37 5.34 5.40 5.29 5.40 31 Baa 6.17 6.10 5.79 5.69 5.63 5.71 5.60 5.66 5.63 5.60 5.52 5.63 32 Bond Buyer series14 6.18 5.95 5.76 5.59 5.64 5.72 5.63 5.73 5.70 5.62 5.56 5.65 CORPORATE BONDS 33 Seasoned issues, all industries ' 8.26 7.83 7.66 7.41 7.50 7.71 7.59 7.76 7.62 7.55 7.52 7.66 Rating sroitp 34 Aaa 7.97 7.59 7.37 7.10 7.20 7.42 7.31 7.48 7.34 7.26 7.23 7.38 35 Aa 8.15 7.72 7.55 7.31 7.41 7.63 7.54 7.69 7.56 7.50 7.46 7.61 36 A 8.28 7.83 7 69 7.41 7.51 7.71 7.59 7.75 7.61 7.55 7.51 7.65 37 Baa 8.63 8.20 8.05 7.79 7.89 8.09 7.94 8.12 7.98 7.89 7.87 8.01 38 A-rated, recently offered utility bonds 8.29 7.86 7.77 7.54 7.63 7.93 7.81 7.92 7.86 7.69 7.77 7.94 MEMO Dividend-price ratio11 39 Common stocks 2.82 2.56 2.19 2.01 2.01 1.95 1.91 1.95 1.93 1.88 1.86 1.88 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 ihe 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. Al rating. Based on Thursday figures. 5. Quoted on a discount basis. 15. Daily figures from Moody's Investors Service. Based on yields to maturity on 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-ratcd 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. Daia are the price index. for indication purposes only. NOTE. Some of the data in this table also appear in the Board's H.I5 (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 Financial Statistics • May 1997 1.36 STOCK MARKET Selected Statistics 1996 1997 Indicator 1994 1995 1996 June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 254.16 291.18 357.98 358.32 345.06 354.59 360.96 373.54 388.75 391.61 403.58 418.57 2 Industrial 315.32 367.40 453.57 458.30 438.58 444.91 459.69 473.98 490.60 494.38 509.18 524.30 3 Transportation 247.17 270.14 327.30 331.57 316.57 321.61 323.12 332.80 348.32 352.28 359.40 364.15 4 Utility 104.96 110.64 126.36 123.60 122.66 122.37 121.12 130.04 135.88 128.55 131.95 142.88 5 Finance 209.75 238.48 303.94 294.42 287.89 302.95 308.16 324.42 345.30 350.01 361.45 388.75 6 Standard & Poor's Corporation (1941-43 = |0)2 460.42 541.72 670.49 668.50 644.06 662.68 674.88 701.46 735.67 743.25 766.22 798.39 7 American Stock Exchange (Aug 31, 1973 = 50)' 449.49 498.13 570.86 591.99 550.16 554.88 564.87 574.46 583.21 582.96 585.09 593.29 Volume of trading (thousands of shares) 8 New York Stock Exchange 290,652 345,729 409.740 392,413 398.245 133,343 400.951 420,835 443,521 431,538 526,631 508,199 9 American Stock Exchange 17,951 20,387 22,567 23,903 21,281 17,916 19,449 18,780 22,151 23.648 24,019 21,250 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers4 61,160 76,680 97,400 87,160 79,860 82,980 89,300 88,740 91,680 97,400 99,460 100,000 Free credit balances at brokers^ 1 1 Margin accounts6 14.095 16,250 22,540 16,800 17,700 17,520 17,940 19,890 20,020 22,540 22,870 22,200 12 Cash accounts 28,870 34,340 40,430 33,775 32.935 32.680 35,360 36,610 36,650 40,430 41,280 40.090 Margin requirements (percent of market value and effecve 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 6. Series initiated in June 1984. address, see inside front cover. 7. Margin requirements, slated in regulations adopted by the Board of Governors pursuant 2. In July 1976 a financial group, composed of banks and insurance companies, was added to the Securities Exchange Act of 1934, limit the amount of credit that can be used to to the group of stocks on which the index is based. The index is now based on 400 industrial purchase and carry "margin securities" (as defined in the regulations) when such credit is stocks (formerly 425), 20 transportation (formerly 15 rail). 40 public utility (formerly 60), and col lateral i zed by securities. Margin requirements on securities are the difference between the 40 financial. market value (100 percent) and the maximum loan value of collateral as prescribed by the 3. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U. effective May 1, previous readings in half. 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective Nov. 1, 1971. 4. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has On Jan. 1, 1977. the Board of Governors for the first time established in Regulation T the included credit extended against stocks, convertible bonds, stocks acquired through the initial margin required for writing options on securities, setting it at 30 percent of the current exercise of subscription rights, corporate bonds, and government securities. Separate report- market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the ing of data for margin stocks, convertible bonds, and subscription issues was discontinued in required initial margin, allowing it to be the same as the option maintenance margin required April 1984. by the appropriate exchange or self-regulatory organization, such maintenance margin rules 5. Free credit balances are amounts in accounts with no unfulfilled commitments to must be approved by the Securities and Exchange Commission. brokers and are subject to withdrawal by customers on demand. 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 Type of account or operation Oct. US budget 1 Receipts, tola] 1.258,627 1.351.830 1,453,062 99,656 97,849 148.489 150,718 90.293 108,099 2 On-budget 923,601 1,000,751 1,085.570 73,644 70,018 119,528 113,841 59,673 73.869 3 Off-budget 335,026 351,079 367 492 26,012 27.831 28,961 36.877 30,620 34,230 4 Outlays, total 1,461.731 1,515,729 1,560,330 139,915 135,727 129,666 137.354 134,304 129.422 5 On-budget 1,181,469 1.227,065 1,259,872 113,290 106,327 120,429 110,552 104,964 100,427 6 Off-budget 279,372 288,664 300,458 26,625 29,400 9,237 26,802 29,339 28,996 7 Surplus or deficit ( —), total . -203,104 -163,899 -107,268 -40,259 -37,878 18,823 13,364 -44.010 -21,323 8 On-budget -258,758 -226,314 -174,302 -39,646 -36,309 -901 3.289 -45 291 -26,558 9 Off-budget 55,654 62.415 67,034 -613 -1,569 19,724 10,075 1.281 5,234 Source ofpnaming (total) 10 Borrowing from the public 185,344 171.288 129,712 15.588 45,459 -12.321 -16,776 35.968 28,833 11 Operating cash (decrease, or increase (-)J. . . 16,564 -2.007 -6,276 18.592 -673 -6.488 -3,785 21,357 -18.274 12 Other1 1,1% -5.382 -16,168 6,079 -6,908 -14 7,197 -13.315 10.764 MEMO 13 Treasury operating balance (level, end ot period) 35,942 37,949 44,225 25,633 26,306 32,794 36,579 15,222 33,496 14 Federal Reserve Banks 6,848 8,620 7.700 5,897 4,857 7.742 6,770 5,258 5,945 15 Tax and loan accounts 29,094 29,329 36,525 19,736 21.449 25,052 29,809 9,965 27,551 1. Since 1990. off-budget items have been the social security trust tunds (federal old-age net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF loansurvivors insurance and federal disability insurance) and the US Postal Service. valuation adjustment; and profit on sale of gold. 2. Includes special drawing rights (SDRs), reserve position on the U.S. quota in the SOURCE. 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 US 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 Financial Statistics • May 1997 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS' Millions of dollars Fiscal year Source or lype All sources . 1,351,830 1,453,062 711,003 656,865 767,099 707,551 148,489 150,718 90,293 2 Individual income taxes, nel 590.244 656,417 307,498 292.393 347,285 323,884 59,423 87,239 37,400 3 Withheld 499.927 533,080 251.398 256.916 264,177 279,988 52.690 55,426 48.351 4 Nonwithhetd 175.855 212,168 132.001 45.521 162,782 53.491 7,582 33,576 2.948 5 Refunds 85.538 88.897 75.959 10.058 79,735 9,604 850 1,763 13.906 Corporation income taxes 6 Gross receipts 174,422 189,055 92.132 88.302 96,480 95,364 40.436 6,285 4.014 7 Refunds 17.418 17,231 10.399 7.518 9,704 10.053 1.479 1,477 1.777 K Social insurance taxes and contributions, net . 484,471 509,414 261,837 224.269 277,767 240.326 40.687 48.794 41,784 9 Employment taxes and contributions'' . . 451.045 476,361 241.557 211.323 257,446 227.777 40,057 47,302 38,969 10 Unemployment insurance 28,878 28,584 18.001 10.702 18,068 10.302 259 1,137 2,423 1 1 Other net receipts 4,550 4,469 2,279 2.247 2.254 2,245 371 355 391 12 Excise taxes 57.484 54,014 27,452 30,014 25.682 27,016 4,559 4,219 5,106 13 Customs deposits 19,301 18,670 8,848 9.849 8.731 9.294 1,520 1.468 1,379 14 Estate and gift taxes . „ 14,763 17.189 7.425 7,718 8,775 8,835 1,371 1,615 1.180 I.4) Miscellaneous receipts 28.561 25.534 16.211 11,839 12,087 12,888' 1,973 2,574 1,208 16 All types 1,515,729 1,560,330 761,289 752,856 785,368 799.85r 129,666 137,354 134,304 17 National defense 272.066 265,748 135,648 132.887 132.598' 138,350 23,085 22,137 20.897 IS International affairs 16,434 13,496 4,797 6.908 8,074 8,895' 1.371 1,405 898 19 General science, space, and technology 16,724 16,709. 8,611 7.9701 8,897' 9.498 1,590 1,429 1,417 20 Energy 4,936 2,836 2,358 1.992 1.356' 806' 201 -52 211 21 Natural resources and environment 22,078 21,614 10,273 I 1,392' 10.254' 11.642 2.152' 1,884' 1.508 22 Agriculture 9.778 9.159 4.039 3.065' 72' 10,699' 2.240 2,169 -96 23 Commerce and housing credit - 17 808 -10,646 -13.471 -3.947' -6,885' -6,198' - 840' -1.532' - 1.460 24 Transportation 39,350 39.565 18,193 20.725 1 8.290 21,205' 1.209 2,895 2,842 25 Community and regional development . 10,641 10,685 5,073 5.569 5.245 6.192' 758' 1,014' 608 26 Education, training, employment, and social services 26.212' 25,979' 26,032' 3.773' 5,100 27 Health 115,418 119,378 59,057 57.128' 59,989' 61,466 10,567' 10.753' 9,169 28 Social security and Medicare 495,701 523.901 251,975 251.385' 264.649 269,409 44.779 46,641 44,973 29 Income security 220,493 225.989 117,190 104,847' 121.187' 107,181' 17,299' 19,610' 26,346 30 Veterans benelits and services .. . 37,890 36.985 19,269 18,678' 18.140' 21,107' 3,083' 3,283' 3.384 31 Administration of justice 16.216 17,548 8,051 8,091' 9.015' 9.595' 1.563 1.745 2,074 32 General government 13,835 11.892 5,796 7,601' 4,641 6,544' 1.677' 1,108' 119 33 Net interest^ 232.169 241,090 116,169 119.34S 120.576' 122,568' 19.997 21,092 19,362 34 Undistributed offsetting receipts . -44.455 -37,620 -17,631 -26,995 -16.716 -25,140' -6,839 -2.888 -3.049 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, ami railroad retirement accounts. SOUKCL Fiscal year totals: U.S. Office of Management and Budget. Budget of the US. 3 Federal employee retirement contributions and civil service retirement and Gtnernnieiu. Ftsia'l Yeai 199H\ monthly and half-year totals. U.S. Department of the Treadisability fund. sury. Motuhh Treasury Statement of Receipts and Outlays of the US Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A27 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1994 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sepl. 30 Dec. 31 1 Federal debt outstanding 4,827 4.891 4,978 5,001 5,017 5,153 5,197 5,260 5,357 2 Public debt securities 4,800 4,864 4,951 4,974 4,989 5,118 5,161 5,225 5,323 3 Held by public 3,543 3,610 3,635 3,653 3,684 3,764 3,739 3,778 3,826 4 Held by agencies 1.257 1,255 1,317 1,321 1,305 1,354 1,422 1,447 1,497 5 Agency securities 27 27 27 27 28 36 36 35 34 6 Held by public 27 26 27 27 28 28 28 27 27 7 Held by agencies 0 0 0 0 0 8 8 Debt subject to statutory limit. . . 4,711 4,775 4,861 4,885 4,900 5,030 5,073 5,137 5,237 9 Public debt securities 4,711 4,774 4,861 4,885 4,900 5,030 5,073 5,137 5,237 10 Other debt1 0 0 0 0 0 0 0 0 0 MEMO 11 Statutory debt limit 4,900 4,900 4,900 5,500 5,500 5,500 5,500 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 Type and holder 1993 1996 Ql Q2 Q3 Q4 1 Total gross public debt 4,535.7 4,800.2 4,988.7 5,117.8 5,161.1 5,224.8 5,323.2 By type 2 Interest-bearing 4,532.3 4,769.2 4,964.4 5,317.2 5,083.0 5,126.8 5,220.8 5,317.2 3 Marketable... ... 2,989.5 3.126.0 3,307.2 3,459.7 3,375.1 3.348.4 3,418.4 3,459.7 4 Bills 714.6 733.8 760.7 777.4 811.9 773.6 761.2 777.4 5 Notes 1,764.0 1,867.0 2,010.3 2,112.3 2,014.1 2,025.8 2,098.7 2,112.3 6 Bonds 495.9 510.3 521.2 555.0 534.1 534.1 543.5 555.0 7 Nonmarketable' 1,542.9 1,643.1 1,657.2 1,857.5 1,707.9 1,778.3 1,802.4 1,857.5 8 State and local^ government series . 149.5 132.6 104.5 101.3 96.5 97.8 95.7 101.3 9 Foreign issues2 43.5 42.5 40.8 37.4 40.4 37.8 37.5 37.4 10 Government 43.5 42.5 40.8 47.4 40.4 37.8 37.5 47.4 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes 169.4 177.8 181.9 182.4 183.0 183.8 184.2 182.4 13 Government account series' 1,150.0 1,259.8 1,299.6 1,505.9 1,357.7 1.428.5 1,454 7 1.505.9 14 Non-intcrest-bearing ... 3.4 31.0 24.3 6.0 34.8 34.3 4.0 6.0 By holder* 15 U.S. Treasury and other federal agencies and trust funds. 1,153.5 1,257.1 1,304.5 1,497.2 1,353.8 1,422.4 1,447 0 1,497.2 16 Federal Reserve Banks 334.2 374.1 391.0 410.9 381.0 391.0 390.9 410.9 17 Private investors 3,047.4 3,168.0 3,294.9 3,411.2 3,382.8 3,347.3 3,386.2' 3,411.2 18 Commercial banks 322.2 290.4' 278.7' 272.0 284.0' 280.2' 274.8' 272.0 19 Money market funds 80.8 67.6 71.3 92.1 85.7' 82.1' 85.2' 92.1 20 Insurance companies 234.5 240.1 241.5' 234.0 239.41 234 4' 234 5' 234.0 21 Other companies 213.0 226.5 258.5 229.0 230.9 249.1 258.5 22 State and local treasuries^'6 590.8' 468.3' 344.1' 290.0 325.4' 316.8' 298.5' 290.0 Individuals 23 Savings bonds 171.9 180.5 185.0 187.0 185.8 186.5 186.8 187.0 24 Other securities . . 137.9 150.7 162.7 169.6 161.4 161.1 167.0' 169.6 25 Foreign and international7 623.0 688.6 862.2' 1,131.5 931.5' 959.8' 1,030.9' 1,131.5 26 Other miscellaneous investors5- 673.3' 855.3' 920.6' 776.5 940.6' 895.5' 859.4' 776.5 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 Financial Statistics • May 1997 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions' Millions of dollars, daily averages 1996 1997 1997. week ending Nov. Dec. Jan. Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 Feb. 5 Feb. 12 Feb. 19 Feb. 26 OUTRIGHT TRANSACTIONS3 By type of security 1 U.S.'Treasury bills 48,828 48,957 45.941 37,030 51,775 47.443 41.017 41.075 49,615 35,699 39,097 43.780 Coupon securities, by maturity 2 Five years or less 101,712 89,775 110,875 43,851 92.580 120,490 121,511 113,315 105,201 91,500 98.004 128.324 3 More than five years 62,469 50,436 55,797 21,031 51.136 57,872 47,757 58,845 70,722 66.001 70.685 62,384 33,010 34,571 35,624 33,046 37,737 35.055 34.683 34,473 36,519 33,237 41.200 34,222 5 Mortgage-backed 44,279 33,754 45.018 7,422 62,491 50.999 30,001 33,766 44,544 59,466 39,497 36,767 By type of counterparty With interdealer broker 6 U.S. Treasury 120.115 104,432 122,621 54,1 H 112.516 127,881 122,617 124.947 128.922 108.018 114,938 133,367 823 584 1,141 447 1.029 1,192 1,146 1,147 1.266 1.037 2,049 1,136 8 Mortgage-backed 16.511 11,606 14,419 2,784 19.219 15,616 11,648 10,394 15,036 21,133 14,718 11,695 92 894 84,737 89,993 47,799 82,975 97,924 87,668 88.289 96,616 85.182 92,848 101,121 10 Federal agency 32.187 33,987 34,483 32,599 36,709 33,863 33,536 33,325 35,252 32.200 39,151 33,086 1 1 Mortgage-backed 27.767 22,148 30.598 4,638 43,272 35,383 18,353 23,371 29.508 38,3.32 24,779 25,072 FUTURES TRANSACTIONS3 By type of deliverable security 12 US Treasury bills 180 300 206 0 289 221 106 176 237 165 513 297 Coupon securities, by maturity 13 Five years or less 1,423 1,814' 1,489' 626 1,394 1.500 1,267 1,408' 1,359' 1.035' 1,338' 2,583 14 More than five years 14,514 13,178' 14,518' 5,237 13,066 14.732 12.630 14,992' 13,645' 11,887' 13,216' 14,086 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 flv t\pe of underlying security 17 U.S.'Treasury bills 0 0 0 0 0 0 0 0 n.a. 0 0 0 Coupon securities, by malurit\ 18 Five years or less 2.345 1,626 3,288 1,153 4.475 2,435 3,224 2,767 3.879 2.913 2,756 5,084 19 More than five years 4.881 3,559 5,045 1,803 4.135 5,036 4,849 6,008 5,332 4.334 5,920 5.444 20 Federal agency 0 0 0 0 0 0 0 0 0 0 0 0 874 494 455 484 624 463 316 316 640 1.074 527 799 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 US. 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 hve 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 lor which delivery is scheduled in thirty business .scries 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 A29 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 19% 1997 1997, week ending Jan. 8 Ian. 15 Jan. 22 Jan. 29 Feb. 5 Feb. 12 Feb. 19 Positions2 NET OUTRIGHT POSITIONS1 Bv tvpe of security 1 U.S.' Treasury bill's 8,847 14,525 5,582 3,871 10,493 5,963 5,555 826 4.658 6,689 7,306 Coupon securities, by maturity 2 Five years or less 5.631 -7,743 -8,518 -12,607 -6,697 -7,078 -6,300 -12,981 -10,030 -2,756 -9,091 3 More than live years -17,797 -22,372 -24,851 -24,641 -23,761 -25,389 -23,626 -26,379 -25,827 -21,064 -17.434 4 Federal agency 25,228 23,348 25,134 17,424 27,151 25,797 24,014 25,057 23,794 23,320 21,075 5 Mortgage-backed 42,015 43.300 37,786 42,201 37,959 39,337 35,474 37,389 39,019 38,710 40,043 NET FUTURES POSITIONS4 By type of deliverable security 6 TJ.S Treasury bills -1.872 -2,418 -2.074 -2,825 -1,702 -2.116 -2,207 -2.772 -3,318 -3,767 Coupon securities, by maturity 7 Five years or less -1,285 -75 388 -305 -356 569 597 866 301 18 848 8 More than five years -15,889 -13,806 -7.784 -12.705 -8.197 -6,231 -9,072 -7,179 -6,917 -11,766 -15,501 9 Federal agency 0 0 0 0 0 0 0 0 0 10 Mortgage-backed 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 -1,779 -3,036 -3,148 -3.535 -3,807 -3,735 -2,743 -2.483 -2,338 -3,262 -3.309 13 More than five years 423 1,526 -5 1,368 523 529 -172 -1.098 2 1.245 1,204 14 Federal agency 0 0 0 0 0 0 0 0 0 0 0 15 Mortgage-backed 1,585 1,054 1,123 1,244 1,264 967 984 1,110 1.652 1.447 1.433 Financing' Reverse repurchase agreements Overnight and continuing 264,568 255,137 276,107 258,011 269.405 292,423 273.371 267,689 290.542 297,347 315,435 Term 487,521 437,241 486,628 383,490 450,694 484,735 499.494 519,291 511.244 540,915 436,436 Securities borrowed Overnight and continuing 190,478 194.674 199,784 196,807 199,817 200,979 196,784 200,137 206,242 203,285 209.732 Term 69,309 73,195 80,149 70,637 74,331 78,666 82,326 85.576 83,844 86,297 82,724 Securities received as pledge Overnight and continuing 3.617 5,484 6,453 6,897 5,137 3,145 3,206 3,139 3,224 Term 40 5 8 24 23 112 95 5 Repurchase agreements Overnight and continuing 577,005 564,075 578.791 520,796 576,187 600,211 585.752 558,786 587.584 602,531 632,316 Term 447,089 393,364 443.233 349,274 409.830 445,471 446,183 479,169 46.3.182 496,351 408.317 Securities loaned Overnight and continuing 3,646 3,419 4,481 3,937 3,712 3,843 3,443 6,482 6,301 7,083 7.058 Term 3,613 4,117 4.864 4,117 0 3,832 3,844 6,570 6.444 6,826 6.792 Securities pledged Overnight and continuing 49,960 58,532 58,140 69,883 58,433 57,317 57,355 58,592 55.285 55,325 60.841 Term 4.294 1,682 2.391 2,148 1,894 2,387 2.548 2,675 2.729 2,771 1,832 Collaieralized loans Overnight and continuing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Term n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Total 14,254 10.025 9,386 8,353 8.6')6 10.806 9.038 16,808 12.611 MEMO: Matched book* Securities in Overnight and continuing 264,391 254,678 279,556 247,872 277,020 291,332 279,622 270,867 293,236 301,239 304,851 Term 479,031 434,522 485,466 379,829 454,385 486,331 496,235 513.311 508,892 542.375 444,381 Securities out Overnight and continuing 357.386 334,841 351,842 321,596 343.682 368,703 356.229 337,780 370,367 383,443 376,680 Term 394,147 341,796 392.408 295,911 355.706 395,492 397.689 428.627 413.073 447,702 359,655 1. Data tor 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 dala 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 collaleralizadelivered 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 Financial Statistics • May 1997 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1996 Agency 1993 1994 1995 1996 Aug. Sept. Oct. Nov. Dec. 1 Federal and federally sponsored agencies 570,711 738,928 844,611 925,823 892,294 896,670 901,09 912,100 925,823 2 Federal agencies 45,193 39.186 37.347 29,380 30,730 30.599 30.800 29.909 29,380 3 Defense Department^ 6 6 6 6 6 6 6 6 6 4 Exporl-Import Bank:-y 5,315 3.455 2.050 1.447 1.853 1,828 1,828 1.828 1,447 5 Federal Housing Administration 255 116 97 84 78 82 82 84 84 6 Government National Mortgage Association certificates of participation^ n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 7 Postal Service6 9,732 8,073 5,765 n.a. n.a. n.a. n.a. n.a. n.a. 8 Tennessee Valley Authority 29.885 27.536 29,429 27,853 28,793 28,683 28,884 27,991 27.853 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 523.452 699,742 807,264 896.443 861,564 866,071 870,289 882,191 896,443 11 Federal Home Loan Banks 139.512 205.817 243.194 263,404 253.847 254,920 253,836 252,868 263,404 12 Federal Home Loan Mortgage Corporation 49.993 93.279 119,961 156.980 148.729 146.954 148,415 158,158 156,980 13 Federal National Mortgage Association 201,112 257.230 299.174 331,270 312,374 319,153 321,110 324,378 331,270 14 Farm Credit Bankss 53 123 53,175 57,379 60,053 60,219 60,126 59,712 59,797 60,053 15 Student Loan Marketing Association 39*784 50335 47^529 44J63 46A59 44^962 47,225 46^991 44J63 16 Financing Corporation 8 170 8 170 8,170 8 170 8 170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation1' 1761 1761 1761 1761 1761 1761 1761 1761 1761 1H Resolution Funding Corporation " 29.996 29.996 29.996 29.996 29,996 29.996 29,996 29.996 29,996 MEMO 19 Federal Financing Bank debt' 128,187 103,817 78,681 58,172 61,971 62,846 61,051 58,921 58,172 Lending to federal and federally sponsored agencies 20 Expon-lmport Bank1 5.309 3.449 2,044 1,431 1,847 1,822 1,822 1,822 1,431 21 Postal Service* 9/732 8fl73 5/765 n.a. n.a. n.a. n.a. n.a. n.a. 22 Student Loan Marketing Association 4,760 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 23 Tennessee Valley Authority 6,325 3,200 3,200 n.a. n.a. n.a. n.a. n.a. n.a. 24 United States Railway Association n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Other lending 25 Farmers Home Administration 38,619 33.719 21,015 18.325 19,757 18,700 18,700 18,325 18,325 26 Rural Electrification Administration 17,578 17,392 17,144 16,702 16,847 16,751 16,753 16,772 16,702 27 Other 45.864 37.984 29,513 21,714 23,520 25,573 23,776 22.002 21,714 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 reclassiried 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 A.ct 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 noncontingenl 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 Fanners Home Administration entry consists exclusively of agency assets, arc 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 Markets and Corporate Finance A31 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1996 1997 Type of o is r s u u e s e or issuer, 1994 1995 1996 July Aug. Sept. Oct. Nov. Dec. Jan.' Feb. 1 All issues, new and refunding1 153,950 145,657 171,222 11,643 12,493 11,693 16,750 14,520 17,431 10,361 10,925 By type of issue 2 General obligation 54,404 56.980 60,409 4.345 4,074 3,024 5,467 5,134 4.755 4,157 3,774 3 Revenue 99,546 88.677 110,813 7.298 8,419 8,669 11.283 9,386 12.676 6,204 7,151 By type of issuer 19,186 14.665 13,651 671 376 874 1,769 1,351 663 728 562 5 Special district or statutory authority' 95,896 93,500 113,228 7,241 8,433 8,137 10,923 9,091 12.315 6,347 7,698 6 Municipality, county, or township 38,868 37,492 44,343 3,731 3,684 2,682 4,058 4,078 4,453 3,286 2,665 7 Issues for new capital 105,972 102,390 112,298 8,602 7.093 7,837 12,113 8,656 12,311 6,261 7.470 Bv use of proceeds 8 Education 21,267 23,964 26,851 2.206 2.337 1,522 2,693 1,530 2.306 1,992 1,813 9 Transportation 10,836 11.890 12,324 580 622 850 2.907 1,164 736 808 628 10.192 9,618 9,791 716 417 720 1,441 1,102 1,006 756 883 11 Social welfare 20,289 19,566 24,583 2,222 2,348 2,100 1.573 1.974 3,294 578 1,129 12 Industrial aid 8,161 6,581 6,287 396 274 439 556 460 1,081 229 465 35,227 30,771 32,462 2,482 1,095 2,206 2,943 2,426 3,888 1,898 2,552 1. Par amounts of long-term issues based on date of sale. SOURCE. Securities Data Company beginning January 1990; Investment Dealer's 2. Includes school districts. Digest before then. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 1996 1997 Type of o r i s i s s u s e u , e r offering, 1994 1995 1996 June July Aug. Sept. Oct. Nov.' Dec' Jan. 1 All issues' 583,240 n.a. n.a. 66,418' 41,007r 44,447r 60,542' 60,302' 57,623 51,297 55,353 2 Bonds2 498,039 573,206 n.a. 53,378r 33,255' 38,685' 53,875' 47,437' 44,282 39,550 43,199 By type of offering 3 Public, domestic 365,222 408,804 386,280 44,746' 27,368' 32,605' 44,658' 39,843' 38,750 37,073 35,192 76,065 87,492 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 56,755 76,910 74,793 8,632' 5,887' 6.081 9,218 7,594' 5.531 2,477 8,007 By industry' group 6 Manufacturing 43,423 61.070 41,959 6.009 4,166' 3.092' 4,045' 5,969' 2,720 5,096 4.337 7 Commercial and miscellaneous 40,735 50,689 34,076 4,317' 2,712' 2.661' 3,195' 5.010' 4,282 1.727 4,275 6.867 8.430 5,111 906 535 293 620 436 270 341 316 9 Public utility 13,322 13,751 8,161 944' 1,046 174' 279' 1,067' 698 755 849 13,340 22.999 13,320 2,231 647 1,450 829 802' 475 628 1.210 380 352 416 °69 358 446 38 973' 24 149' 31 016' 44 908' 34 154' 35 836 31,003 32,211 12 Stocks2 85 155 13,040 7,752 5,762 6,668' 12,865 13.342 11,747 12,153 By type of offering 13 Public preferred 12,570 10,964 35,884' 3,310' 1,794 1,168 1.890 3,855 5.656 8,128 7,812 14 Common 47,828 57,809 82,860' 9.730' 5.958 4.594 4,778' 9,010 7.686 3,619 4.341 15 Private placement3 24,800 f f n.a n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 16 Manufacturing 17,798 2,670 1,759 1,023 787 1,570 1,530 883 592 17 Commercial and miscellaneous 15,713 n.a. n.a. 6,708 2,628 2,143 3,080 5.700 3,974 2.848 1,864 2,203 197 104 143 0 42 367 54 250 19 Public utility 2,214 569 300 306 212 100 210 203 1,847 494 837 1,097 51 0 480 42 20 0 21 Real estate and financial 46,733 2,102' 1,863 2,098 2,589 4,974 7,219 7,738 7,601 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 Financial Statistics • May 1997 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 1996 1997 Item 1994 1995 June July Aug. Sept. Oct. Nov. Dec. Jan. 1 Sales of own shares2 841,286 871,415 88,115 93,053 86,225 84,171 92,730 87,958 122,792 134,460 2 Redemptions of own shares 699,823 699,497 69.072 76,485 64.993 65,601 72,537 65.949 87.949 96,243 3 Net sales' 141.463 171.918 19,044 16.568 21.232 18,570 20,193 22.009 34,843 38,218 4 Assets4 1,550,490 2,067,337 2,363.024 2,297,216 2,366,030 2,474,339 2,517,049 2,652,884 2,637.398 2,752,273 5 Cash5 121.296 142,572 144,275 148,647 155,129 156,689 149,937 146,044 137,973 152,297 6 Other 1,429,195 1,924,765 2.218.749 2,147.337 2,210,901 2,317,651 2,367,112 2,506,840 2,499,425 2,599,976 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 underwriting^ 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 1995 1996 Account 1994 1995 1996 Qi Q2 Q3 Q4 Ql Q2 Q3 Q4 1 Profits with inventory valuation and capital consumption adjustment 529.5 586.6 n.a. 560.0 562.3 612.5 611.8 645.1 655.8 661.2 n.a. 2 Profits before taxes 531.2 598.9 n.a. 594.5 589.6 607.2 604.2 642.2 644.6 635.6 n.a. 3 Profits-tax liability 195.3 218.7 n.a 217.3 214.2 224.5 218.7 233.4 236.4 233 4 n.a. 4 Profits after taxes 335.9 380.2 n.a. 377.2 375.3 382.8 385.5 408.8 408.1 402.2 n.a. 5 Dividends 211.0 227.4 244.2 221.7 224.6 228.5 234.7 239.9 243.1 245.2 248.7 6 Undistributed profits 124.8 152.8 n.a. 155.5 150.8 154.3 150.8 168.9 165.1 156.9 n.a. 7 Inventory valuation -13.3 -28.1 -8.6r -51.9 -42.3 -9.3 -8.8 -17.4 -11.0 2.0 -8.1r 8 Capital consumption adjustment 11.6 15.9 23.1' 17.4 15.0 14.6 16.5 20.4 22.3 23.6 26.4' 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 Liabilities' Billions of dollars, end of period: not seasonally adjusted 1995 1996 Account 1993 1994 1995 01 02 03 Q4 Ql Q2 03 ASSETS 1 Accounts receivable, gross2 482.8 551.0 614.6 568.5 586.9 594.7 614.6 621.8 631.4 642.0 2 Consumer 116.5 134.8 152.0 135.8 141.7 146.2 152.0 151.9 154.6 154.8 3 Business 294.6 337.6 375.9 351.9 361.8 362.4 375.9 380.9 383.7 387.0 4 Real estate 71.7 78.5 86.6 80.8 83.4 86.1 86.6 89.1 93.1 100.2 5 LESS: Reserves for unearned income 50.7 55.0 63.2 58.9 62.1 61.2 63.2 61.5 59.6 58.9 6 Reserves for losses 11.2 12.4 14.1 12.9 13.7 13.8 14.1 14.2 14.1 14.7 7 Accounts receivable, net 420.9 483.5 537.3 496.7 511.1 519.7 537.3 546.1 557.7 568.4 8 All other 170.9 183.4 210.7 194.6 198.1 198.1 210.7 212.8 216.1 226.8 9 Total assets 591.8 666.9 748.0 691.4 709.2 717.8 748.0 758.9 773.8 795.2 LIABILITIES AND CAPITAL 10 Bank loans 25.3 21.2 23.1 21.0 21.5 21.8 23.1 23.5 26.2 27.5 159 ' 184 6 184 5 181 3 1813 178 0 184 5 184 8 186 9 189 4 Debt 42.7 51.0 62.3 52.5 57.5 59.0 62 3 62.3 68.4 71.9 206.0 235.0 284.7 254.4 264.4 272.1 284.7 291.4 301.3 311.5 14 All other liabilities 87.1 99.5 106.2 102.5 102 1 102.4 106.2 105.7 100.1 102.8 15 Capital, surplus, and undivided profits 71.4 75.7 87.2 79.7 82.5 84.4 87.2 91.1 90.9 92.1 16 Total liabilities and capital 591.8 666.9 748.0 691.4 709.2 717.8 748.0 758.9 773.8 795.2 1. Includes finance company subsidiaries of bank holding companies but not of retailers 2. Before deduction for unearned income and losses. and banks. Data are amounts carried on the balance sheets of finance companies; securitized pools are not shown, as they are not on the books. 1.52 DOMESTIC FINANCE COMPANIES Consumer, Real Estate, and Business Credit' Millions of dollars, amounts outstanding, end of period 1996 1997 Type of credit 1994 1995 I996r Aug. Sept. Oct. Nov. Dec.1 Jan. Seasonally adjusted 1 Total 615,618 691,616 753,682 738,487 7.19,183 749,165 758,266 753,682 758,612 2 Consumer 176,085 198,861 211,488 212,105 212,979 212,511 212.775 211,488 211.688 78,910 87,077 106,300 99,806 100,317 102,933 104 776 106 300 108.406 4 Business 360.624 405,678 435.894 426,576 425,887 433,720 440,715 435.894 438,518 Not seasonally adjusted 5 Total 620,975 697,340 759,578 732,117 735.269 747,970 758,276 759,578 760,010 6 Consumer 178,999 202,101 214.829 211,342 213.827 213,026 214,227 214,829 213.292 7 Motor vehicles 61.609 70,061 73.192 74,433 76.333 75,917 75.304 73,192 73.599 8 Other consumer3 73,221 81,988 80,984 78,928 78,451 77,527 77,868 80,984 80.927 9 Secuntized motor vehicles4 31,897 33,633 35.644 35,830 34.846 34,60.3 34,177 35,644 33.976 10 Securitized other consumer4 12.272 16.419 25,009 22,151 24,197 24.979 26,878 25.009 24,790 78,479 86,606 105,728 100,295 100,182 103.184 104.943 105,728 108,910 12 Business 363,497 408,633 439,021 420,480 421.260 431,760 439,106 439,021 437,808 118,197 133,277 141,888 135,063 138.615 139,966 142.210 141,888 143,934 14 Retail loans5 21.514 25,304 27.747 28,404 28.875 29,088 28 825 27,747 27,656 15 Wholesale loans6 35.037 36,427 32.337 28,188 30.294 30,515 32,262 32,337 33,764 16 Leases 61.646 71.546 81.804 78.471 79.446 80.363 81.123 81,804 82.514 17 Equipment 157,953 177,297 184 942 182,816 181.111 179,997 182.080 184,942 182,915 18 Loans7 49,358 59,109 60,991 55,528 56.132 58,735 60.181 60,991 58.276 19 Leases 108,595 118,188 123,951 127,288 124,979 121,262 121,899 123,951 124,639 20 Other business* 61,495 65,363 71.110 68,367 67,290 74,055 75,345 71 110 70,944 21 Securitized business assets4 25.852 32,696 41,081 34,234 34,244 37,742 39.471 41,081 40.015 4,494 4,723 5,250 4,700 4,600 4,650 5,402 5,250 5,086 14,826 21,327 24,732 23,151 23,170 23,183 23,391 24,732 24,143 6,532 6,646 11,099 6,383 6.474 9.909 10.678 11,099 10,786 24 Leases I Includes finance company subsidiaries of bank holding companies but not of retailers ?. Passenger car fleeis and commercial land vehicles for which licenses are required. and banks. Data are before deductions for unearned income and losses. Data in this lable al.so 6. Credit arising from transactIOIJ.S between manufacturers and dealers, ihat 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 Financial Statistics • May 1997 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1996 1997 Item 1994 1995 1996 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Perms and yelds in primary' and secondary markets PRIMARY MARKETS Terms' 1 Purchase price (thousands of dollars) 170.4 175.8 182.4 184.8 187.1 183.9 188.1 170.8 172.4 166.6 130.8 134.5 139.2 141.1 141.7 139.0 143.3 129.9 133.6 130.9 3 Loan-to-price ratio (percent) 78.8 78.6 78.2 77.7 77.2 77.7 78.0 79.3 79.7 80.9 27 5 27.7 27.2 27.2 27.7 27.4 27.4 27.5 27.9 28.1 5 Fees and charges (percent of loan amount) 1.29 1.21 1.21 1.38 1.28 1.11 1.19 1.01 1.02 1.03 Yield (percent per year) 7.26 7.65 7.56 7.85 7.77 7.76 7.60 7.63 7.65 7.61 7 Effective rate1-3 7.47 7.85 7.77 8.08 7.98 7.95 7.80 7.79 7.81 7.78 8 Contract rate (HUD series)4 8.58 8.05 8.03 8.45 8.23 8.01 7.73 7.91 7.94 7.94 SECONDARY MARKETS Yield (percent per year I 9 FHA mortgages (Section 2O3)5 8.68 8.18 8.19 8 58 8.56 8.00 8.14 8.06 8.06 8.08 10 GNMA securities" 7.96 7.57 7.48 7.68 7.85 7.53 7.19 7.33 7.51 7.37 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 222,057 253,511 287,052 275,133 278,003 279,544 283 835 287 052 288,504 288,951 12 FHA/VA insured 27.558 28,762 30,592 30,803 30,840 30,815 30,744 30,592 30,352 30.119 13 Conventional 194.499 224,749 256,460 244,330 247,163 248,729 253,091 256,460 258,152 258,832 14 Mortgage transactions purchased (during period) 62.389 56,598 68,618 5.360 5,353 4,235 6.805 6.178 4,128 3.029 Mortgage commitments (during period) 15 Issued7 54,038 56,092 65,859 5,673 4,264 5,199 6,533 3,991 4.384 4,407 16 To sell8 1,820 360 130 0 53 0 4 28 71 0 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period) 17 Total 72.693 107,424 137,755 127.345 129,426 132,259 135,270 137,755 138,935 139.925 18 FHA/VA insured 276 267 220 201 197 227 223 220 216' 215 72,416 107,157 137,535 127,144 129.229 132,032 135,047 137,535 138,719' 139 710 Mortgage transactions (during period) 20 Purchases 124,697 98,470 128,566 9,643 8.687 9.538 9,198 9.943 9,507 8,204 21 Sales 117,110 85,877 119,702 8.994 8,167 8,797 8.456 9,220 9,204 10271 22 Mortgage commitments contracted (during period)9 136,067 118,659 128,995 8,992 9,315 8,214 9.032 9,905 9,021' 7.537 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 often 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 ihirty-year, minimum-downpaymenl 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 A35 1.54 MORTGAGE DEBT OUTSTANDING' Millions of dollars, end of period Type of holder and property Q4 01 Q2 Q3 Q4P 1 All holders 4.275,217r 4,481.075r 4,714.346 4,714,346' 4.792,478r 4,889,980' 4.975,730 5,054,447 By type of property 2 One- to tour-family residences 3,233,830' 3.437,781' 3,634,060 3,634,060' 3,699,671' 3.778,471' 3.853.772 3.912.079 3 Multifamily residences 270,824 275,705 287.993 287,993' 291,893 297,223' 301,635 309,266 4 Nonfarm, nonresidential 689.365 684,618 707.673 707,673 715,696 727,743' 732,905 744,994 5 Farm 81.198 82,971 84.620 84,620 85,217 86.544' 87.418 88,108 By type of holder Major financial institutions 1.768,093 1,815,845 1,888,970 1,888,970 1 901,524 1.925.056' 1,953,214 1,977,208 Commercial banks" 940,595 1,004 322 1,080,366 1.080.366 1.087,207 1.099.643' 1,112,961 1,136,139 One- to four-family 556,660 611,391 663,614 663,614 665,935 670,756' 679,254 696.340 Multifamily 38,657 39 360 43,842 43,842 44,700 45,368' 46.530 47,026 Nonfarm, nonresidential 324,413 331,004 349,081 349,081 352,641 358,956' 362,362 367,893 Farm 20,866 22,567 23,829 23,829 23,931 24,563' 24,815 24.880 Savings institutions^ 598,437 596.191 596,789 596,789 602,631 612,849' 628,037 628,719 One- to four-family 470,000 477.626 482,351 482,351 489,634 499.021 513,291 513,644 Mulnfamily 67.367 64,343 61.988 61,988 60.540 60.820' 61,434 61,670 Nonfarm, nonresidennal 60.765 53,933 52.162 52,162 52,155 52,688' 52,991 53,073 Farm 305 289 288 288 302 320 320 331 Life insurance companies 229.061 215,332 211,815 211,815 211,686 212,565 212,216 212,351 One- to four-family 9,458 7,910 7,476 1Mb 7,472 7,503 7,488 7,493 Multifamily 25,814 24.306 23,920 23,920 23,906 24,007 23,959 23.972 Nonfarm, nonresidential 184,305 173,539 170.783 170,783 170,681 171.402 171,059 171,152 Farm 9.484 9.577 9,636 9,636 9.627 9.653 9,710 9,735 Federal and related agencies 327.014 319,327 313,760 313.760 312,950 314,694 311,697 308,708 Government National Mortgage Association 22 6 2 2 2 2 2 2 One- to four-family ." 15 6 2 2 2 2 2 Multifamily 7 0 0 0 0 0 0 0 Farmers Home Administration4 41,386 41.781 41,791 41,791 41,594 41,547 41,575 41,596 One- to four-family 15,303 13.826 12,643 12.643 12,327 11.982 11,630 11,319 Multifamily 10.940 11.319 11,617 11,617 11.636 11.645 11,652 11,685 Nonfarm, nonresidenlial 5,406 5,670 6.248 6,248 6,365 6,552 6,681 6,841 Farm 9,739 10,966 11.282 11.282 11,266 11.369 11,613 11,752 Federal Housing and Veterans' Administrations 12,215 10,964 9,809 9,809 8,439 8,052 6.627 5,977 One- to four-family 5,364 4,753 5,180 5,180 4,228 3.861 3,190 3,258 Multifamily 6,851 6,211 4,629 4,629 4,211 4,191 3,438 2.719 Resolution Trust Corporation 17,284 10,428 1,864 1,864 0 0 0 0 One- to four-family 7.203 5.200 691 691 0 0 0 0 Multifamily 5.327 2,859 647 647 0 0 0 0 Nonfann. nonresidential 4,754 2,369 525 525 0 0 0 0 Farm 0 0 0 0 0 0 0 0 Federal Deposit Insurance Corporation 14,112 7,821 4.303 4.303 5,553 5.016 4.025 1,277 One- to four-family 2,367 1,049 492 492 839 840 675 231 Multifamily 1,426 1,595 428 428 1,099 955 766 194 Nonfarm, nonresidentia! 10 319 5,177 3.383 3.383 3,616 3.221 2,584 853 Farm 0 0 0 0 0 0 0 0 Federal National Mortgage Association 166,642 178.059 183,782 183.782 183,531 186.041 185,221 184.445 One- to four-family 151,310 162,160 168,122 168,122 167,895 170,572 170,083 169,765 Multifamily 15,332 15,899 15,660 15,660 15,636 15,469 15.138 14,680 Federal Land Banks 28.460 28,555 28,428 28,428 28,891 29,362 29.579 29,973 One- to four-family 1,675 1,671 1,673 1,673 1,700 1,728 1,740 1,764 Farm 26,785 26.885 26,755 26,755 27,191 27,634 27,839 28,210 Federal Home Loan Mortgage Corporation 46,892 41.712 43.781 43,781 44,939 44.674 44.668 45.437 One-to four-family 44.345 38.882 39.929 39 929 40.877 40 477 40.304 40.691 Multifamily 2,547 2.830 3.852 3,852 4,062 4,197 4,364 4.746 53 Mortgage pools or trusts" 1.570.666' 1,726 833' 1.861,864 1,861,864' 1,905,515' 1,963,909' 2,008,229 2,055,077 54 Government National Mortgage Association . . . 414,066 450.934 472,292 472,292 475,829 485,441 497,248 505.977 55 One- to four-family 404,864 441,198 461,447 461,447 464.650 473,950 485,303 493,795 56 Multifamily 9,202 9.736 10,845 10,845 11,179 11,491 11,945 12,182 57 Federal Home Loan Mortgage Corporation . . 447.147 490.851 515,051 515,051 524,327 536.671 545,608 554 260 58 One- to four-family 442,612 487,725 512 218 512,238 521,72 534.238 543,341 551,513 59 Multifamily 4,535 3,126 2.813 2,813 2,605 2,43,3 2.267 2.747 60 Federal National Mortgage Association 495,525 530.343 582.959 582.959 599,546 621,285 636.362 650.780 61 One- to four-family 486,804 520,763 569,724 569.724 585,527 606,271 619.869 633.210 62 Mullifamily 8.721 9.580 13,235 13,235 14,019 15.014 16,493 17,570 63 Fanners Home Administration4 28 19 10 9 7 3 64 One- to four-family 5 3 1 1 0 0 65 Multifamily 0 0 0 0 0 0 0 0 66 Nonfarm, nonresidential 13 9 5 5 5 4 4 0 67 Farm 10 7 4 4 4 4 3 3 68 Private mortgage conduits 213,901' 254,686' 291,551 291,551' 305,803' 320,502' 329.003 344.057 69 One- to four-family6 179,730' 202,987' 222,892 222,892' 230,221' 239,153' 244,527 246,904 70 Multifamily 8,701 14,925 21,279 21,279 24.477 26,809 28,141 33,689 71 Nonfarm, nonresidential 25,469 36.774 47,380 47,380 51,104 54,541 56.336 63.464 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others 609,444' 619,069' 649,752 649,752' 672,488' 686,321' 702.590 713.454 74 One- to four-family 456,115' 460,632' 485,584 485,584' 506,641' 518,116' 533,074 542,151 75 Multifamily 65,398 69,615 73,239 73,239 73,823 74,824' 75,510 76,387 76 Nonfarm. nonresidential. . 73,922 76,142 78,105 78,105 79,129 80.379' 80,888 81,718 77 Farm 14,009 12,681 12,824 12.824 12.896 13,002 13.118 13,198 1. Mullifamily debt refers to loans on structures of five or more units. 6. Includes secuntized 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 Financial Statistics • May 1997 1.55 CONS UMER CREDIT' Millions of dollars, amounts outstanding, end of period 1996 1997 Holder and type of credit 1994 1995 1996' Aug. Sept. Ocl. Nov.1 Dec.' Jan. Seasonally adjusted 1 Total 966,457 1,103,296 1.194,577 1,177,482 1,178,600 1,185,910' 1,190,754 1,194,577 1,202,972 317,182 350,848 377,350 373,525 374,476 376 769r 376,652 377,350 378,555 3 Revolving 339,337 413,894 462,380 454,252 453,722 456,366 460,395 462,380 470,333 4 Other2 309,939 338.554 354,847 349,705 350,402 352.775' 353,707 354,847 354,084 Not seasonally adjusted 5 Total 990,247 1,131,881 1,226,257 1,174,309 1,182,632 1,187,665' 1,198,634 1,226,257 1,214,104 By major holder 462 923 507 753 528 206 516719 517,145 519,468' 519,796 528,206 524,609 7 Finance companies 134,830 152,624 154,176 153,361 154,784 153,444' 153,172 154,176 154,526 8 Credit unions 119,594 131,939 146.314 140,635 141,968 144,423 145,055 146,314 146,393 9 Savings institutions 38,468 40,106 47.780 43,986 44,934 45.883 46.831 47,780 47,000 86,621 85,061 79.598 70,996 68,513 67 900 69.708 79,598 75.513 11 Pools of securitized assets4 147,811 214,398 270,183 248,612 255,288 256,547 264,072 270.183 266,063 Bv major type of credit 319715 354 055 380 980 374,974 377,898 381.070' 380,827 380,980 378,144 13 Commercial banks 141,895 149,094 153,158 154.451 153,143 154,566 154,287 153,158 152.741 61,609 70,626 73,192 74,433 76,333 75,917' 75,304 73,192 73,599 15 Pools of securitized assets4 36,376 44,411 51.171 47,465 48,135 48,020 48,242 51.171 48,152 16 Revolving 357,307 435,674 486,606 451,294 453,656 455,854 464,055 486.606 477.942 17 Commercial banks 182,021 210,298 223,079 209,757 211.185 213,150 214,233 223,079 219,061 18 Nonfinancial business"* 56,790 53.525 46.901 41,258 38,816 38.105 39,275 46,901 43,935 19 Pools of securitized assets4 96.130 147.934 188,712 174.640 177.958 178.590 183.987 188,712 187,865 20 Other 313.225 342.152 358,671 348.041 351.078 350.741' 353,752 358,671 358,018 21 Commercial banks 139,007 148,361 151,969 152,511 152,817 151.752' 151,276 151,969 152,807 22 Finance companies 73,221 81,998 80,984 78,928 78,451 77.S27 77,868 80,984 80,927 23 Nonfinancial business' 29,831 31.536 32,697 29,738 29,697 29,795 30,433 32,697 31,578 24 Pools of securitized assets4 15,305 22,053 30,300 26.507 29,195 29,937 31.843 30,300 30,046 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. Data in this table also appear in the Board's G.I9 (421) monthly 4. Outstanding balances of pools upon which securities have been issued; these balances statistical release. For ordering address, see inside front cover. are no longer carried on the balance sheets of the loan originator. 2. Comprises mobile home loans and all other loans that are not included in automobile or 5. Totals include estimates for certain holders for which only consumer credit totals are revolving credit, such as loans for education, boats, trailers, or vacations. These loans may be available. secured or unsecured. 1.56 TERMS OF CONSUMER CREDIT' Percent per year except as noted 1996 1997 July Aug. Sept. Oct. Nov. Dec. Jan. INTEREST RATES Commercial banks" 1 48-momh new car 8.12 9.57 9.05 n.a. 9.11 n.a 9.03 n.a. n.a. 2 24-month personal 13.19 13.94 13.54 n.a. 13.37 n.a n.a. 13.62 n.a. n.a. Credit card plan 3 All accounts 15.69 16.02 15.63 n.a. 15.65 n.a. n.a. 15.62 n.a. n.a 4 Accounts assessed interest 15.77 15.79 15.50 n.a. 15.64 n.a. n.a. 15.52 n.a. n.a. Auto finance companies 5 New car 9.79 11.19 9.89 9.81 10.49 10.52 10.40 10.31 9.25 7.17 6 Used car 13.49 14.48 13.53 13.77 13.92 13.87 13.75 13.56 13.42 12.93 OTHER TERMS3 Maturity (months) 54.0 54.1 51.6 50.5 51.4 51.9 52.5 52.3 52.3 55.1 8 Used car 50.2 52.2 51.4 51.7 51.3 51.0 51.1 50.3 49.9 51.5 Loan-to-value ratio 9 New car 92 92 91 91 92 91 89 90 90 92 10 Used car 99 99 100 100 100 100 101 102 100 99 Amount financed (dollars) 11 New car 15,375 16,210 16,987 16,926 16,927 17.182 17,435 17,719 17.670 17,090 12 Used car 10.709 11,590 11,711 12,242 12,132 12,108 12,326 12,393 6,847 12.362 1. The Board':, .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. Data in this table also appear in the Board's G.I9 (421) monthly 3. At auto finance companies 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 1995 1996' Transaction category or sector 1992 1993 1994 1995 1996 Q2 Q3 Q4 Ql Q2 Q3 Q4 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors.... 544.51" 629.5r 621.3r 719.8' 747.4 868.6r 570.0r 591.3r 883.3 734.3 725.0 647.0 By sector and instrument 2 Federal government 304.0 256.1 155.9 144.4 145.0 184.7 86.0 59.3 239.9 62.4 161.3 116.5 3 Treasury securities 303.8 248.3 155.7 142.9 146.6 183.1 85.6 54.1 242.2 60.2 164.4 119.8 4 Budget agency securities and mortgages 2 7.8 .2 1.5 -1.6 1.6 .4 5.1 -2.3 2.2 -3.1 -3.3 5 Nonfcderal 240.5' 373.4' 465.4 575.4'6 602.4 683.9' 484.0' 532.0' 643.4 671.9 563.7 530.6 By instrument 6 Commercial paper 8.6 10.0 21.4 18.1 -.9 34.3 18.1 14.1 30.3 11.0 -16.1 -29.0 7 Municipal securities 30.5 74.8 -29.3 -44.2 1.9 — 2.2 -107.2 -12.6 -18.9 37.7 -76.2 65.2 8 Corporate bonds 67 6 75 2 23 3 73.3 72.5 98.4 59.8 82.0 60.9 71.5 67.8 89.9 9 Bank loans n.e.c -13.7 3.6 73.2 99.6 65.5 99.1 75.3 78.5 41.2 74.9 118.6 27.3 10 Other loans and advances 10.1 -9.4 54.4 59.0 34.7 57.3 35.2 61.0 32.9 26.8 79.4 -A 11 Mortgages 132.4' 157.7' 196.1' 228.0' 334.3 242.1' 246.4' 191.5' 374.6 359.1 292 3 311 3 12 Home mortgages 189.4' 187.2' 204.0' 196.3' 278 0 193.5' 219.2' 159.0' 330.1 290.0 256.3 235.7 13 Multifamily residential -10.4 -6.0 1.7 10.5 19.4 10.9 11.3 13.3 13.8 19.4 15.7 28.6 14 Commercial -48.1' -24.01 -11.3 19.5 33.5 36.1 13.7 18.2 28.4 44.3 16.8 44.3 15 Farm 1.4 .5 1.8 1.6 3.5 1.7 2.2 1.1 2.4 5.3 3.5 2.7 16 Consumer credit 5.0 61.5 126.3 141.6 94.4 155.0 156.4 117.5 122.4 90.9 98.0 66.2 fiv borrowing sector 17 Household 200.2' 257.3' 372.4 381.1' 395.3 391.5' 414.0' 332.5' 470.2 434.0 375.7 301.1 18 Nonfinancial business 19.2' 53.7' 132.8' 233.8' 193.9 292.4' 171.4' 211.4' 176.8 193.5 249.5 155.5 19 Corporate 33.9' 47.6' 118 !' 197.5' 147.3 260.3' 133 5' 175 3' 130.5 149 2 214.5 95.2 20 Nonfarm noncorporate -16.0 4.2 11.9 34.8 43.4 29.1 34.4 37.1 46.3 37.2 36.2 54.0 21 Farm 1.3 2.0 2.8 1.6 3.1 3.0 3.5 -1.0 .1 7.2 -1.2 6.3 22 State and local government 21 1 62 3 -39.8' -39.6' 13.3 .0' -101.3' -11.9' -3.6 44.4 -61.6 73.9 23 Foreign net borrowing in United States 23.7 70.4 -15.3 69.5 67.4 45.5 88.3 76.9 49.1 36.6 106.0 77.8 24 Open market paper 5.2 -9.0 -27.3 13.6 10.9 -8.7 23.7 -3.9 -8.5 9.5 38.6 3.8 25 Bonds 16.8 82.9 12.2 48.3 46.8 51.2 55.2 72.7 47.9 11.1 59.7 68.4 26 Bank loans n.e.c 2.3 .7 1.4 8.5 9.1 5.6 8.2 11.9 8.7 15.1 4.7 7.8 27 Other loans and advances -.6 -4.2 -1.6 -.8 .7 -2.6 1.3 -3.9 1.1 .7 3.1 -2.2 28 Total domestic plus foreign 568.21" 699.9r 606.0 789.3r 814.8 9i4.r 658.4r 668.2r 932.4 770.9 831.0 724.9 Fmancia sectors 29 Total net borrowing by financial sectors 240.0 291.3r 467.71" 446.6r 531.0 440.0r 507.0 572.0 328.6 687.2 503.1 605.0 fiv instrument 30 U S government-related 155.8 165.3 287.5 204.1' 231.1 196.5 227.7 305.5' 137.8 296 0 240.4 250 0 31 Government-sponsored enterprise securities 40.3 80.6 176.9 105.9' 90.4 127.2 101.5 132. r 31.4 126.9 80.0 123.3 32 Mortgage pool securities 115.6 84.7 115.4 98.2 140.7 69.3 126.2 173.4 106.5 169.1 160.4 126.8 33 Loans from U.S. government .0 .0 -4.8 .0 .0 .0 .0 .0 0 .0 .0 .0 34 Private 84.2 126.0' 180.2' 242.5' 299.9 243.5' 279.3 266.5' 190 8 391 2 262 6 354.9 35 Open market paper -.7 -6.2 41.6 42.6 92.7 33.9 43.7 55.1 17.8 105.7 85.2 162.0 36 Corporate bonds 82.7 119.2' 1 18.4' 185.7' 153.2 182.3 217.6 175.6' 148.1 207.5 118.1 138.9 37 Bank loans n.e.c 2.2 -13.0 -12.3 5.5 21.1 20.7 7.9 -1.8 24.9 23.6 19.6 16.4 38 Other loans and advances -.6 22.4 22.6 3.4 27.2 1.3 4.9 32.0 -5.5 48.6 33.9 11 8 39 Mortgages .6 3.6 9.8 5.3 5.8 5.2 5.2 5.6 5.5 5.8 5.8 6.0 By borrowing sector 40 Commercial hanking 10.0 13.4 20.1 22.5 11.6 39.0 38.9 -9.7 - 32.5 40.1 15.7 23.3 4! Savings institutions -7.0 11.3 12.8 2.6 26.0 -7.2 5.1 31.5 11.0 42.1 26.4 24.6 42 Credit unions .0 .2 .2 - l 1 - l 1 0 -.1 -.2 .3 3 43 Life insurance companies 0 3 -.1 1.1 .1 -.1 -.4 25 .3 -.4 2.0 44 Government-sponsored enterprises 40.2 80.6 172.1 105.91 90.4 127.2 101.5 132.1' 31.4 126.9 80.0 12.3.3 45 Federally related mortgage pools 115.6 84.7 115.4 98.2 140.7 69.3 126.2 173.4 106.5 169.1 160.4 126.8 46 Issuers of asset-backed securities (ABSs) 58.5 82.4' 69.51 133.2' 129.3 113.3' 164.8 187.5' 137.1 133.9 99 7 146.6 47 Finance companies -1.6 .2 50.2 51.6 48.0 52.0 19.8 54.3 47.1 68.4 56.9 19.5 48 Mortgage companies 8.0 .0 -11.5 .4 17.1 14.8 40 -10.0 20.0 16.0 16.6 15.8 49 Real estate investment trusts (REITs) .3 3.4 13.7 5.4 6.6 5.2 5.2 6.0 5.9 6.5 6.7 7 1 50 Brokers and dealers 2.7 12.0 5 -5.0 -2.0 -.1 2.1 77 -31.8 13.2 5.7 4.8 51 Funding corporations 13.2 2.9 24.2 32.0 62.1 26.4 39.4 -.4 31.6 70.9 35.0 110.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Financial Statistics • May 1997 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS' —Continued Transaction category or sector 1994 1995 1996 Q2 Q3 Q4 01 Q2 Q3 Q4 All sectors 52 Total net borrowing, all sectors 808.21" 991.2' l,073.7r 1,235.9' 1,345.8 l,354.1r l,165.4r 1,240.2' 1,261.0 1,458.1 1,33.1 1,329.9 53 Open market paper 13.1 -5.1 35.7 74.3 102.6 59.5 85.5 65.3 39.6 126,3 107.6 136.8 54 U.S. government securities 450.8 421.4 448.1 348.5' 376.1 381.1 313.7 364.8' 377.7 358.4 401.7 366.5 55 Municipal securities 30.5 74.8 -29.3 -44.2 1.9 -2.2 - 107.2 -12.6 -18.9 37.7 -76.2 65.2 56 Corporate and foreign bonds 167.1 277.3' 153.9' 307.3' 272.5 332.0' 332.5 330.3' 256.9 290.2 245.6 297.2 57 Bank ioans n.c.c -9.3 -8.6 62.3 113.5 95.6 125.4 91.4 88.6 74.7 1136 142.8 51.4 58 Other loans and advances 8.9 8.7 70.7 61.6 62.6 56.0 41.3 89.1' 28.6 76.1 116.5 29.2 59 Mortgages 133.O1 161.3' 205.9' 233.3' 340.1 247.3' 251.6' 197.1' 380.2 364.S 298.1 317.3 60 Consumer credit 5.0 61.5 126.3 141.6 94.4 155.0 156.4 117.5 122.4 90.9 98.0 66.2 Funds raised through mutual funds and corporate equities 61 Total net issues 312.5 453.6 152.2 154.9r 253.6 147.2r 196.3' 226.1' 289.1 402.8 85.0 237.6 62 Corporate equities 103.4 129.9 23.3 -19.0' -21.6 -5.7' -18.4' 1.4 51.6 -108.1 -31.2 -31.2 63 Nonfinancial corporations 27.0 21.3 -44.9 -74.2' -82.6 -71.3 -92.8 -72.8' -92 4 -27 2 -138.8 -72.0 64 Financial corporations 44.0 45.2 20.1 4.5 3.3 12.6' -1.1' -3.1' 4.0 9.1 -1.4 1.3 65 Foreign shares purchased by U.S. residents 32.4 63.4 48.1 50.7 57.8 40.8 88.2 57.4 89.8 69.7 32.1 39.5 66 Mutual funds 209.1 323.7 128.9 173.9 275.2 165.0 202.0 244.5 287.6 351.2 193.1 268.7 1. Data in this table also appear in the Board's Z.I (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 TRANSACTIONS' Billions of dollars except as noted: quarterly data at seasonally adjusted annual rates 1995 1996 Transaction category ur scctoi 199^ 1 W4 1996 Q2 Q3 Q4 01 02 03' Q4 NET LENDING IN CREDIT MARKETS2 I Total net lending in credit markets 808.2r 991.2' 1,073.7' 1.235.9' 1,345.8 1.354.1' l,165.4r 1,240.2' 1.261.0' 1,458.1' 1,33.1 1,329.9 2 Domestic nonfederal nonfinaneial sectors 112.0' 83.3' 254.1' -97.0' 4 -149.2' -70.6' -187 1' -64.5' 308.1' -175.7 -65.7 3 Households 82.6' 42.7' 259.4' -13.9' 28.2 -128.3' 110.7' -136.9' -65.2' 270.7' -55.4 -36.8 4 Nonfinaneial corporate business 27.8 9.1 49.6 -6.0 25.5 37.7 -53.1 33.0 -2.1' 57.8' 11.6 34.7 5 Nonfann noncorporate business -.1 -1.1 2 .3 .4 .3 .3 3 .4 .4 .4 .4 6 State and local governments 1.7 32.6 -55D' -77.4 -53.7 -58.8 -128.5 -83.7 2.4 -20.8 -132.4 -64.1 7 Federal government -11.9 -18.4 -24 2 -21.5 -23 3 -24.2 -24 1 -24.4 -20.7 -15.2 -26.4 -30.8 8 Rest of the world 98.4 129.3 132.3 272.7 404.8 322.2 361.0 157.6 341 1 268.2 484.4 525.6 9 Financial sectors 609.7' 797.0' 711.5' 1.081.7' 963.8 1.205.2' 899.3' 1,294.2' 1,005.1' 896.9' 1.051.9 900.8 10 Monetary authority 27.9 36.2 31.5 12.7 12.3 16.7 -4.1 19.7 16.9 9.4 19.3 3.6 11 Commercial banking 95.3 142.2 163.4 265.9 187.9 319.4 244.8 166.2 121.7 190.2' 202.0 237.8 i2 US chartered banks 69.5 149.6 148.1 186.5 119.7 222 4 227.0 118.1 80 5 125 5 123.6 149.3 13 Foreign banking offices in United Slates 16.5 -9.8 11.2 75.4 63.3 86.6 25.6 36.1 44.2 57.5 72.9 78.5 14 Bank holding companies 5.6 .0 .9 -.3 39 5.3 -9.6 4.6 -5.1 5.4' 4.8 10.5 15 Banks in U.S affiliated areas 1.7 2.4 3.3 4.2 1.0 5.2 1.8 7.4 2.1 1.7 .7 -.6 (6 Savings institution.*) -79.0 -23.1 6.7 -7.5 23.3 -11.7 32.2 -68.4 34.1 45.0' 49.1 -34.8 17 Credit unions 17.7 21.7 28.1 16.2 22.1 22.8 11.0 19.5 22.1 34.8 14.2 17.5 18 Bank personal trusts and estates 8.0 9.5 7.1 -18.8 -13.6 -20.6 -2.3.7 -20.2 -18.1 -12.1 -12.5 -11.6 19 Life insurance companies 78.5 100.9 66.4 99.1 55.2 135.5 72.9 53.2 48.7 2.4 135.1 34.5 20 Other insurance companies 6.7 27.7 24.9 21.5 24.4 20.9 21.9 22.3 23.6 23.7 24.9 25.3 21 Private pension funds 41.1 45.9 46.8' 61.3 62.9 57.2 50.5 78.5 82.6 94.0' 46.8 28.1 22 State and local government retirement funds 5.9 21.1 30.7 22.7 34.2 4.9 2.6 20.2 58.7 50.0 22.0 6.0 23 Money market mutual funds 4.7 20.4 30.0 86.5 88.8 134.4 30.0 125.1 175.0 18.4 88.5 73.4 24 Mutual funds 126.2 159.5 -7.1 52.5 57.9 23.4 58.0 141.9 67.5 63.7 35.6 64.9 25 Closed-end funds 18.2 14.4 -3.3 13.3 9.3 15.1 16.7 13.2 10.9 9.8 9.0 7.5 26 Government sponsored enterprises 68.8 88.6 120.6 87.9' 89.3 93.0 50.0 186.5' 33.4' 121.8' 81.9 119.6 27 Federally related mortgage pools 115.6 84.7 115.4 98.2 140.7 69.3 126.2 173 4 106.5 169.1 160.4 126.8 28 Asset-backed securities issuers (ABSs) 53.7 79.9' 62.8' 113.0' 104.4 101.0' 154.4 141.4' 117.3' 123.8' 73.0 103.3 29 Finance companies 7.5 -9.0 68.2 64.2 38.7 67.2 50.8 53.7 40.9 41.3' 55.9 16.6 30 Mortgage companies .1 .0 -24.0' -3.4 14.7 29.9 7.3 -36.4 47.9 -17.3 16.6 11.6 31 Real estate investment trusts (RElT.s) 1.1 .6 4.7 1.8 2.0 1.8 1.8 1,9 1,9 1.7 2,4 2.1 12 Brokers and dealers -1.3 14.8 -44.2 90.1 -17.3 145.2' -5.2' 189.3' -109.0 -72.0 35.5 76.3 33 Funding corporations 13.0' -38.7' -17.2' 4.6' 26.5 -20.2' I.I1 13.2' 122.4' -.7' -7.8 -7.8 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets 808.2' 991.2r 1,073.7' 1,235.9' 1,345.8 l,354.1r 1,165.4' l,240.2r l,261.0r 1,458.1' 1.334.1 1,329.9 Other financial sources 15 Official foreign exchange -1.6 .8 -5.8 8.8 -6.3 10.3 9.0 -1.9 -.9 1.6 -26.6 .7 36 Special drawing rights certificates -2.0 .0 .0 2.2 -.5 .0 8.6 .0 .0 .0 -1.8 .0 37 Treasury currency .2 .4 .7 .6 -.0 .7 .8 0 .0 .0 2.3 -2.3 ^8 Foreign deposits -3.5 -18.5 54.0 33.5 47.7 110.8 -29.5 18.2 85.0 .9 113.2 -8.5 39 Net interbank transactions 49.4 50.5 89.8' 9.8' -53.8 -4.9' - -13.r 80.3' -88.5' -51.5' -118.6 43.5 40 Checkable deposits and currency 113.5 117.3 -9.7 -12.8 19.2 100.2 -113.1 -69.3 43.3 4.5 110,9 -82.1 41 Small time and savings deposits -57.2 -70.3 -40.0 96.5 91.6 95.6 145.6 114.9 212.5 -4.6 76.7 81.8 42 Large time deposits -73.2 -23.5 19.6 65.6 113.5 74.4 80.2 -.9 55.1 83.5 181.0 134 4 43 Money market fund shares 4.5 20.2 43.3 142.3 145.8 221.1 122 9 151.1 244.0 4.1 147.4 187.7 44 Security repurchase agreements 43.1 71.2 78.3 110.7 37.6 115.4' 92.8' 62.3' -19.1 117.7 -29.8 81.5 45 Corporate equities 103.4 129.9 23.3 -19.0' -21.6 -17.9' -5.7' -18 4' 1.4' 51.6' -108.1 -31.2 46 Mutual fund shares 209.1 323.7 128.9 173.9 275.2 165.0 202.0 244.5 287.6 351.2 193.1 268.7 47 Trade payable*. 46.6 52.4 114.0 96.3 76.3 80.6' 129.3 90.1 62.7 126.8 55.6 60.3 48 Security credit 4.6 61.4 - 1 26.7 46.4 25.9' 32.1' 50. V 120.6 -37.7 -4.3 107.2 49 Life insurance reserves 28.0 36.0 34.5 44.9 35.0 57.6 33.1 38.3 19.0' 32.2' 56.8 31.9 50 Pension fund reserves 241.9 250 5 251.8' 240 3 252.1 290.4 211.2 187.8 256.1' 236. V 269.8 246.1 51 Taxes payable 9.7 \2 3.2 l!i 2.6 .8' 3.4' -10.2 5.6 6.6 -1.2 - 7 52 Investment in bank personal trusts -7.1 .9 17.8 -49.7 -25.0 -47.6 -65.8 -39.2 -49.2 -22.1 -15.3 -13.3 53 Noncorporate proprietors' equity 16.7 19.7 25.9 41.3 35.8 39.9 45.3 38.4' 37.9' 24.1' 52.5 28.9 54 Miscellaneous 260.1' 348.6' 266.3' 504.6' 480.0 421.3' 430.4' 842.6' 584.3' 268.7' 487.3 580.4 55 Total financial sources 1.794.2' 2,367.6' 2,169.6' 2,753.7 2,897.4 3,093.8r 2,484.8r 3,018.9r 3,118.6' 2,651.7' 2.774.9 3.044.9 Liabilities not identified as assets ( — ) 56 Treasury currency _ 2 -.2 - 5 - 1.0 -.4 -.3 - 1.0 -1.1 -1.0 1 3 -3 1 57 Foreign deposits -2l -7.0 44.9 27.2 38.1 101.5 -55.7 21.5 61.4 23.6 122.5 -55.1 58 Net interbank liabilities -4.9 4.2 -2.7 -3.1 -3.5 -.9 12.3 -23.6 10.9 -26.9 -9.2 11.2 59 Security repurchase agreements 4.4' 40.2' 59.4' 55.4' 14.2 -2.4' 73.2' 31. r 21.7' 112.5' -100.8 23.3 60 Taxes payable 11.9 II 1 8.6 87 3.0 30.8' 10.3' 2 2 -23.2 24.9 9.9 3 61 Miscellaneous -40.6' -149.9' -107.7' -4.7' -86.6 18.4' -30.8' 244 '.\' -185.5' -243.6' -59.0 141 6 Floats not included in assets (-) 62 Federal government checkable deposits .7 -1.5 -4.8 -6.0 .5 -18.6 3.8 -13.8 8.6 -10.5 28.0 -24.2 63 Other checkable deposits 1.6 -1 3 -2.8 -3 8 -4.0 -3.8 -3.2 -4 7 -3.8 -4.2 -4.0 -4.0 64 Trade credit 11.3 -4.0 -3.1 -23.3 -7.9 29.9' -46.7 -125.5 45.4' 29.5' -64.1 -42.4 65 Total identified to sectors as assets 1,812.9' 2,476.0' 2,178.1' 2,703.8' 2.94-1.6 2,939.2' 2.521.9' 2,888.6' 3,184.1' 2,747.5' 2,850.3 2,997.3 1. Data in this table also appear in the Board's Z. 1 1780) 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 Financial Statistics • May 1997 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1995 1996 Transaction category or sector 1993 1994 1995 1996 Q2 Q3 Q4 Ql 02 Q3' Q4 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 12,544.7' 13,172.2' 13,892.0' 14,639.4 13,557.6' 13,708.3' 13,892.0' 14.089.7' 14,247.2' 14,437.5 14,639,4 By set tor and instrument 2 Federal government 3,336.5 3,492.3 3.636.7 3,781.8 3,583.5 3.603.4 3,636.7 3,717.2 3,693.8 3,733.1 3,781.8 3 Treasury securities 3,309.9 3 465.6 3.608.5 3,755.1 3,556.7 3.576.5 3,608.5 3,689.6 3.665.5 3,705.7 3,755.1 4 Budget agency securities and mortgages .... 26.6 26.7 28.2 26.6 26.8 26.9 28.2 27.6 28.2 27.4 26.6 5 Nonfederal 9,208.2' 9,679.9' 10.255.2' 10,857.6 9,974.1' 10.104.8' 10,255.2' 10,372.5' 10.553.4' 10,704 4 10.857.6 B\ instrument 6 Commercial paper 1 17.8 139.2 157.4 156.4 162.9 163.3 157.4 174.2 181.7 173.0 156.4 7 Municipal securities and loans 1,377.5 1,348.2 1,304.0 1,306.0 1,331.7 1,308.2 1,304.0 1,300.8' 1.306.8' 1,290.6 1,306.0 8 Corporate bonds 1,229.7 1.253.0 1.326.3 1,398.8 1.290.9 1.305.8 1,326.3 1.341.5 1,359.4 1,376.4 1.398.8 9 Bank loans n.e.c 675.9 749.0 848.6 914.0 810.7 824.3 848.6 856.7' 878.7' 902 6 914.0 10 Other loans and advances 677.1 737.8 796.8 831.5 776.9 782.1 796.8 809.3 815.7 831.8 831.5 11 Mortgages 4,266.3' 4.462.3' 4.690.3' 5,024.6 4,570.2' 4.643.0' 4,690.3' 4.767.11 4.863.1' 4,947 4 5,024.6 12 Home mortgages 3 213 8' 3 437 8' 3 634 1' 3912 1 3 5->8 9' 3 594 9' 3 634.1' 3.699.7' 3,778.5' 3,853.7 3912.1 13 Multifamily residential 267.9 269.5 280.1 299.4 273.9 276.7 280.1 283.5 288.4' 292.3 299.4 14 Commercial 683.4 672.1 691.6 725.0 683.6 687.0 691.6 698.7 709.8' 713.9 725.0 15 Farm 81.2 83.0 84.6 88.1 83.8 84.4 84.6 85.2 86.5 87.4 88.1 16 Consumer credit 863.9 990.2 1.131.9 1,226.3 1,030.8 1,078.2 1,131.9 1,123.0' 1,147.9' 1.182.6 1.226.3 By harrowing sector 17 Households 4.288.0' 4,660.1' 5.041.2' 5,436.5 4,811.2' 4.933.0' 5.041.2' 5,102.9' 5.219.3' 5.333.2 5.436.5 18 Nonfinancial business 3,761.9 3,901.3' 4 135.2' 4,329.0 4,058.0' 4,089.1' 4,135.2' 4,190.2' 4,247.0' 4,296.8 4,329.0 19 Corporate 2,496.5 2,621.2' 2.818.7' 2,966.0 2,759.3' 2,780.2' 2,818.7' 2,854.7' 2.907.0' 2,947.4 2,966.0 20 Nonfarm noncorporate 1.127.1 1,139.0 1.173.8 1.217.2 1,155.9 1,164.0 1,173.8 1.185.2 1.194.7 1,203.1 1.217.2 21 Farm 138.3 141.2 142.7 145.8 142.8 144.8 142.7 140.3 145.3 146.2 145.8 22 State and local government 1,158.2 1.118.4' 1.078.8" 1,092.1 1,104.9' 1,082.7' 1.078.8' 1.079.4' 1,087.1' 1,074.5 1.092.1 23 Foreign credit market debt held in United States 385.6 370.4 439.9 507.2 .396.8 419.8 439.9 450.8 459.6 487.1 507.2 24 Commercial paper 68.7 41.4 55.0 65.8 48.1 55.8 55.0 51.5 53.4 64.8 65.8 25 Bonds 230. [ 242.3 290.6 337.3 258.6 272.4 290 6 302.5 305.3 320 2 337.3 26 Bank loans n.e.c 24.6 26.1 34.6 43.7 29.6 31.6 34.6 36.8 40.5 41.7 43.7 27 Other loans and advances 62.1 60.6 59.7 60.4 60.5 60.0 59.7 60.0 60.4 60.4 60.4 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 12,930.2' 13,542.6' 14,331.8' 15,146.6 13,954.4' 14,128.1' 14,331.8' 14,540.5' 14,706.8' 14,924.6 15,146.6 Financial sectors 29 Total credit market debt owed by financial sectors 3,321. T 3.794.6 4,243.9 4,774.8 3,971.9 4,096.3 4,243.9 4.324.3' 4.496.1' 4,619.5 4,774.8 By instrument 30 Federal government-related 1,885.2 2.172.7 2,376.8' 2,607.9 2.247.1 2,300.1 2.376.8' 2.414.1' 2,489.5' 2.545.3 2,607.9 31 Government-sponsored entetprises securities 523.7 700.6 806.5' 896.9 748.1 773.5 806.5' 814.4' 846.1' 866.1 896.9 32 Mortgage pool securities 1 356 8 1 477 1 1 570 3 1.711.9 1,499.0 1.526.6 1.570.3 1.599.7 1.643.4 1,679.2 1711.0 33 Loans from U.S. government 4.8 .0 .0 .0 .0 .0 .0 0 .0 .0 .0 34 Private 1,436.4' 1,621 9 1,867.0' 2,166.9 1,724.8 1,796.2 1.867.0' 1.910.2' 2,006.6' 2,074.2 2,166.9 35 Open market paper 393.5 442.8 488.0 580.7 462.8 473.6 488.0 491.9 518.5 539.6 580.7 36 Cotporate bonds 857.6' 973.5 1,159.2' 1,312.4 1,056.4 1.112.6 1,159.2' 1,192.9' 1.243.4' 1.275.1 1,312.4 37 Bank loans nee ... 67.6 55.3 60.8 81.8 58.4 60 3 60.8 66.4 72.2 76.9 81.8 38 Other loans and advances 108.9 131.6 135.0 162.2 125.7 127^0 135.0 133.6 145.8 154.2 162.7 39 Mortgages 8.9 18.7 24.0 29.8 21.3 22.6 24.0 25.4 26.9 28.3 29.8 By boirowing sector 40 Commercial banks 84.6 94.5 102.6 112.2 99.9 102.0 102.6 100.5 103.6 106.7 [pi 41 Bank holding companies 123.4 133.6 148.0 150.0 142.9 150.3 148.0 141.4' 148.4 149.1 150.0 42 Savings institutions 99.6 112.4 115.0 141.1 105.9 107.2 115.0 117.8 128.3 134.9 141.1 43 Credit unions .2 .5 .4 .4 3 .4 .4 4 .3 .4 .4 44 Life insurance companies 2 .6 .5 1.6 6 .6 .5 I.I 1.2 1.1 1.6 45 Government-sponsored enteiprises 528.5 700.6 806.5' 896.9 748.1 773.5 806.5' 814.4' 846.1' 866.1 896.9 46 Federally related mortgage pools 1.356.8 1,472 1 1,570.3 1,711.0 1,499.0 1,526.6 1,570.3 1,599.7 1,643.4 1,679.2 1,711.0 47 Issuers of asset-backed securities (ABSs) 486.7' 556.2' 689.4' 818.8 596.8 639.8 689.4' 720.3' 752.4' 779.5 818.8 48 Brokers and dealers 33.7 34.3 29.3 27.3 26.8 27.4 29.3 21.4 24.6 26.1 27.3 49 Finance companies 390.5 440.7 492.3 540.3 467.2 471.9 492.3 499.8 514.4 528.4 540.3 50 Mortgage companies 30.2 18.7 19.1 36.2 20.6 21.6 19.1 24.1 28.1 32.3 36.2 51 Real estate investment trusts (RElTs) 17.4 31.1 36.5 43.1 33.7 35.0 36.5 38.0 39.6 41.3 43.1 52 Funding cotporations 169.9 199.3 233.9 296.0 230.0 239 9 233.9 245.6 265.6 274 5 296.0 All sectots 53 Total credit market debt, domestic and foreign. . . . I6,251.9r 17,3.37.2r 18,575.7' 19,921.5 17,926.3' 18,224.4' 18.575.7' 18,864.8' 19,202.9' 19,544.1 19,921.5 54 Open market paper 580.0 623.5 700.4 803.0 673.8 692.7 700.4 717.6 753.6 777.4 803.0 55 US. government securities 5,216.9 5,665.0 6,013.6' 6,389.7 5,830.6 5 903 5 6,013.6' 6,131.3' 6.183.2' 6,278.4 6,389.7 56 Municipal securities 1 377 5 1.348.2 1.304.0 1.306.0 1.331 7 1.308.2 1.304.0 1 300.8' 1,306.8' 1,29(1 6 1,306.0 57 Corporate and foreign bonds 2,317.4' 2,468.8 2.776.1' 3,048.6 2,605.9 2.690.8 2,776.1' 2,837.0' 2.908.1' 2,971.7 3,048.6 58 Bank loans nee ... 768 0 830.4 943 9 1,039.5 898.7 916 2 943.9 959.9' 991 4r 1,021.3 1.039.5 59 Other loans and advances 852^9 929.9 991.5 11054.1 963.2 969! 1 991.5 1.002.9 1.021.8 1X146.5 1054.1 60 Mortgages 4,275.2' 4.481.1' 4.714.3' 5,054.4 4.591.6' 4.665.7' 4,714.3' 4.792.5' 4.890.0' 4,975.7 5.054.4 61 Consumer credit 863.9 990.2 1.131.9 1.226.3 1,030.8 1.078.2 1,131.9 1.123.0' 1.147.9' 1.182.6 1.226.3 I. Data in this table also appear in the Board's Z.I (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 1995 1996 Transaction category or sector 1994 1996 02 Q3 Q4 Ql Q2 Q3' Q4 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 16,251.9r 17.337.2' 18,575.7' 19.921.5 17.926.3' 18,224.4' 18.575.7' 18,864.8' 19,202.9' 19.544.1 19,921.5 2 Domestic nonfederal nonfinancial sectors 2.784.9' 3,069.3' 2.937 lr 2.938.0 2.988.3' 2,990.2' 2.937.1' 2,895,7' 2.945.4' 2.923.2 2,938,0 3 Households 1.691.4' 1,981.1' 1.932.0' 1,960.7 1,940.8' 1,989.3' 1,932.0' i.915,1' 1,950.6' 1,957.9 1,960,7 4 Nonrinancial corporate business 271.5 321.1 315.1 340.6 303.5 290.6 315.1 291.3 307.9 313.1 340 6 5 Nonfarm noncorporate business 37.0 37.2 37.5 37.9 37.3 37.4 37.5 37.6 37.7 37.8 37.9 6 State and local governments 784.9 729.9 652.5 598.8 706.7 672.9 652.5 651.8 649.1 614.4 598.8 7 Federal government 231.7 207.5 186.1 162.8 198.2 192.2 186.1 180.8 177.0 170.5 162.8 K Rest of the world 1,147.8 1.254.7 1.561.8 1,966.6 1.402.1 1 493.4 1.561.8 1,653.6 1,718.2 1,840.6 1.966.6 9 Financial sectors 12.087 5' 12.805.6' 13.890.7' 14.854.0 13.337.7' 13,548.6' 13,890.7' 14,134.7' 14,362.2' 14 609.8 14,854,0 10 Monetary authority 336.7 368.2 380.8 393.1 375.7 370.6 380.8 379.6 386.3 386.2 393.1 11 Commercial banking 3.090 8 3.254.3 3,520.1 3 708.0 3,410.1 1,473.2 3,520.1 3,541.6 3,590.8 3,643.3 3,708 0 12 US. chartered banks 2.721.5 2^869.6 3,056.1 "U75.9 2,963.7 3.023.7 3,056.1 3,068.8 3,101.3 3.135.3 3,175.9 13 Foreign banking offices in United States 326.0 337.1 412.6 475.8 396.0 401.1 412.6 422.2 437.1 454.2 475.8 14 Bank holding companies 17.5 18.4 18.0 22.0 19.3 16.9 18.0 16.8 18.1 19.3 22.0 1S Banks in U S affiliated areas 25 8 29.2 33.4 34.4 M 1 31.5 33.4 33.9 34.3 34.5 34.4 16 Savings institutions 914 1 920.8 9133 936.6 922.4 930.4 913.3 921.8 933.1 945.3 936.6 17 Credit unions 218.7 246.8 263.0 285.1 255.0 258.5 263.0 267.0 276.9 281.0 285.1 18 Bank personal trusts and estates 240 9 248.0 229 2 215.6 240.2 234.2 229.2 224.7 221.6 218.5 215.6 19 Life insurance companies 1,420.6 1,487.1 1,586.2 1,641.4 1.557.1 1,575.5 1,586.2 1.600.5 1.601.0 1,635.1 1,641.4 20 Other insurance companies 422.7 446.4 468.7 492.8 457.3 463.0 468.7 474.5 480.2 486.4 492.8 21 Private pension funds 617.6 664.3' 725.6' 788.5 693.4' 706.0' 725.6' 746.3' 769.8' 781.5 788.5 22 State and local government retirement funds 423 4 454.1 476 8 511.0 470.9 470.6 476.8 491.1 504.0 508.8 511.0 23 Money market mutual funds 429.0 459.0 545. < 634.3 508.0 505.7 545.5 595 6 594.7 606.6 634.3 24 Mutual funds 725.9 718.8 771.3 829 2 724.8 739.2 771.3 792.4 807 9 816.5 829.2 25 Closed-end funds 82.0 78.7 92 0 101.3 84.6 88.7 92.0 94.8 97.2 99.5 101.3 26 Government-sponsored enterprises 546.4 667.0 755.(1' 844.1 695.9 708.4 755.0' 762.7' 793.8' 814.3 844.1 27 Federally related mortgage pools 1,356 8 1,472.1 1,570.3 1,711.0 1,499.0 1,526.6 1,570.3 1,599.7 1,643.4 1,679.2 1,711 0 28 Asset-backed securities issuers (ABSs) 457.9' 520.7 633.7' 738.1 555.2 595.7 633.7' 659.7' 689.2' 709.7 738.1 29 Finance companies 482.8 551.0 615.2 653.9 586.9 594.7 615.2 621.7 633.2' 642.0 653 9 30 Mortgage companies 60 4 36.5' 33.01 47.8 40.3' 42.2' 33.0' 45.0' 40.7' 44.9 47.8 31 Real estate investment trusts (RElTs) 8.6 13.3 15.1 17.2 14,2 14.7 15.i 15.6 16.1 16.6 17.2 32 Brokers and dealers 137.5 93.3 18.3.4 166.1 137.4' 136 1' 183.4 156.2 138.2 147.1 166.1 33 Funding corporations 114.6' 105.2' 112 4' 138.9 109.3' 114.6' 112.4' 144.4' 144.1' 147.4 138.9 RELATION OF LIABILITIES ro FINANCIAL ASSETS 34 Total credit market debt 16,251.9' 17.337.2' 18,575.7r 19,921.5 17.926.3' 18,224.4r 18,575.7' 18,864.8' 19,202.9' 19.544.1 19,921.5 Other liabilities 35 Official foreign exchange 53.4 53.2 63 7 53.7 67.1 65.1 63.7 62.1 61.4 54.3 53.7 36 Special drawing rights ceitificaies 8.0 8.0 10.2 9.7 8.0 10.2 10.2 10.2 10.2 9.7 97 37 Treasury currency 17.0 17.6 18.2 18.2 18.0 18.2 18.2 18.2 18.2 18.8 18.2 38 Foreign deposits 271.8 324.6 361 4 409.1 361.0 353.6 361.4 382.7 382.9 411.2 409.1 39 Net interbank liabilities 189 3 280.1' 290.6' 238.4 265.8' 267.2 290.6' 266.3 250.1' 223.3 238.4 40 Checkable deposits and currency 1.251.7 1.242.0 1,229.3 1,248.4 1.246.2 1.200.3 1.229.3 1,183 3 1,212.3 1.221.8 1.248.4 4t Small time and savings deposits 2 2"M "> 2 183 3 i 179 7 2 371 1 2.222.6 2.255.8 2.279.7 2.342.3 2,340.1 2 355 5 2.371.3 42 Large time deposits 391.7 411.2 476 9 590.3 456.3 477.5 476.9 493.6 511.1 557.2 590.3 43 Money market fund shares 559.6 602.9 745.3 891.1 678.5 702.7 745.3 816.9 809.5 838.1 891.1 44 Security repurchase agreements 471.1 549.4 660.1 697.7 629.3 654.8' 660.1 666.2 692.1 687.6 697.7 45 Mutual fund shares 1.375.4 1,477.3 1.852.8 2.348.8 1.661.0 1,782.0 1,852.8 1,994.3 2.130.6 2.212.7 2.348.8 46 Security credit 279.0 279.0 305 7 352.1 277.8' 286.1' 305.7' 326.9 318.6 317.8 352 1 47 Life insurance reserves 470 8 505.3 550 2 585.2 532.4 540.6 550.2 555.0' 563.0' 577.2 585.2 48 Pension fund reserves 4.638.8' 4.846.8' 5,567.7' 6,318.5 5.224.1' 5.440.1' 5,567.7' 5.751.6' 5,899.9' 6,046.1 6,318.5 49 Trade pavables 1,048.2 1.162.2 1 258 5 1.334.8 1,177.5 1,211 1 1,258.5 1,246.0 1,278.6 1.293.9 1.314 8 50 Taxes payable 84.9 88.0 89.1 91.9 88.9' 91.9 89.3 94.3 90.3 92.1 91.9 51 Investment in bank personal trusts 691.3 699.4 767 4 833.7 739.7 758.6 767.4 781.6 790.9 799.5 833.7 52 Miscellaneous 5,155.1' 5,417.3' 5.823.2' 6,146.7 5.555.1' 5,666.4' 5,823.2' 5.959.8' 5.966.7' 6,089.6 6.146.7 53 Total liabilities 35,432.1' 37.485.1r 40,925.7r 44.461.1 39.135.6' 40,006.7' 40,925.7' 41.816.0' 42,529.6' 43.350.3 44.461.1 Fmaiwuil assets not included in liabilities { + ) 54 Gold and special drawing rights 20.1 21.1 22.1 21.4 21.2 2 1 ,4 55 Corporate equities 6,280.0 6,263.3 8,389.9 10,090.0 7,348.4 7,972.4 8,389.9 8,875.8 9.170.9 9.387.4 10,090.0 56 Household equity in noncorporate business 2.495.5 2,587.5 2.699.6 2,733.6 2,641.1 2,655.0 2.699.6 2.736.6' 2,759.1' 2,782.8 2,733.6 Liabilities no! identified as assets ( —) 57 Treasury currency -5.] -5.4 -5.8 -6.8 -5.5 -5.6 -5.8 -6.1 -6.3 -6.0 -6.8 .SB Foreign deposits' 232.6 278.7 309.(1 347 1 314.5 300.6 309.0 324.4 330.3 360.9 347.1 59 Net interbank transactions -4.7 -6.5 -9 0 -10.9 -2.9 1 -9.0 -2.6 -8.0 -11.6 -10.9 60 Security repurchase agreements -7.7' 51.8' 107.2' 121.4 78.8' 11 1.4' 107.2' 116.7' 135.7' 126.7 121.4 61 Taxes payable 26.8 35.4 44.1 45.1 35.6' 39.1 44.1 23.9 38.0 41.9 45.1 62 Miscellaneous -855 0' -916.1' -949.4' -1,202.4 -869.7' -832.3' -949.4' -1.016.8' -1,094.0' -1,100.7 -1,202.4 Floats not included in assets (- ) 63 Federal government checkable deposits .5.6 .5.4 3.1 -1.6 2.0 .6 3.1 .0 -3.4 -1.7 -1.6 64 Other checkable deposits 40.7 38.0 34.2 30.1 35.7 27.3 34.2 29.6 31.8 23.1 30,1 65 Trade credit -248.0 -252.0 -275.4 -283.3 -306.2 -330.0 -275.4 -326.5 -336.2 -36.3.3 -283.3 66 Total identified to sectors as assets 45,042.5r 47,129.6r 52,779.3r 58,267.3 49,865.7' 51,345.1' 52,779.3' 54,308.0' 55,393.8' 56,472.4 58,267.3 1. Data in this table also appear in the Board's Z.I (7S0) quarterly statistical release, tables 2. Excludes corporate equine^ and mutual fund shares. L.6 and L.7. For ordering address, sec inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • May 1997 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1992=100, except as noted 1996 1997 Measure 1994 1995 1996 June Jul> Aug Sept. Oct Nov. Dec' Ian.' Feh 1 Industrial production1 1(18.6 112.1 115.2 115.5 115.5 115.8 116.0 116.2 U7.2r 117.7 117.6 118.1 Market groupings 106.8 109.3 112.0' 112.3 112.3 112.2 112.7 112.8 114.I1 114.3 114.3 114.8 3 Final, total 107.1 109.9 112.8 113.1 113.4 113.0 113.3 113.6 114.8' 115.3 115.3 115.8 4 Consumer goods 107.4 108.9 110.5' 110.8 1 10.7 110.1 110.5 1 10.8 112.3' 112.7 112.1 112.1 5 Equipment 106.6 111.6 116.8 117.1 118.1 117.9 118.1 118.4 1 19.0' 119.5 120.7 122.2 106.1 107.5 109.4' 109.7 108.9 110.0 110.6 110.2 1119' 111.3 II 1.8 7 Materials 1 11.3 116.6 120.3 120.5 120.5 121.5 121.2 121 7 122.2 I23J 122.7 123.3 Industry groupings 8 Manufacturing 109.4 113.2 116.3' 116.4 117.0 117.2 117.4 117.6 118.5 119.2 118.9 119.8 9 Capacity utilization, manufacturing (percent)2.. 83.1 83.1 82.1 82.3 82.4 82.3 82.1 82.0 82.4 82.5 82.1 82.5 10 Construction contracts3 106.6' 1I6.81 119.8' 120.0' 118.0' 111.0' 122.0' 125.0' 124.0' 125.0 123.0 n.a 11 Nonagncultural employment, total"1 112.0 115.0 117.3 117.2 117.5 117.8 117.8 118.0 118.2 118.4 118.7 119.0 12 Goods-producing, total %.9 98.1 98.3 98.4 98.3 98.5 98.3 98.4 98.6 98.7 98.8 99.3 13 Manufacturing, total 96.4 97.2 96.2 96.3 96.2 96.3 96.0 96 1 96.1 96.2 96.3 96.2 14 Manufacturing, production workers 97.5 98.7 97.5 97.5 97.4 97.5 97.2 97 \ 97.4 97.4 97.5 97.5 15 Service-producing 116.8 120.3 123.3 123.3 123.6 123.9 124.0 124.3 124.4 124.7 125.0 125.3 16 Personal income, total 148.4 157.7 166.4 166.6 166.7 167.7 168.6 168.8 169.8 171.1 171.6 n.a. 17 Wages and salary disbursements 142.6 150.9 159.7 160.3 159.8 161.1 162.2 162.0 163.4' 165.2 165.1 n.a. 124.9 130.4 135.3 135.8 135.8 136.9 136.7 136.7 137.4' 139.4 138.8 n.a. 19 Disposable personal income 149.3 158.2 166.2 166.4 166.5 167.4 168.2 168.4 169.4 170.6 171.7 n.a. 20 Retail sales5 144.8 152.3 159.8 159.4 159.6 159.6 160.7 161.8 161.7 162.5 164.9 166.2 Prices" 21 Consumer (1982-84=100) 148.2 152.4 156.9 156.7 157.0 157 3 157.8 158.3 158.6 158.6 159.1 159.6 22 Producer finished goods (1982= 1(10) 125.5 127.9 131.3 131.7 131.5 131.9 131.8 132.7' 132.5 132.7 132.6 132.2 1. Data in this table also appear in the Board's G.17 {419) monthly statistical release. For 4. Based on data from U.S. Department of Laboi, Employment and Earnings. Series covers the ordering address, see the inside front cover. The latest historical revision of the industrial employees only, excluding personnel in the armed forces. production index and the capacity utilization rates was released in January 1997. Sec 5. Based on data from U.S. Department of Commerce. Survey of Current Business. "Industrial Production and Capacity Utilization: Historical Revision and Recent Develop- 6. Based on data nol seasonally adjusted. Seasonally adjusied data for changes in the price ments," Federal Reserve Bulletin, vol. 83 (February 1997), pp. 67-92. The article contains a indexes can be obtained from the U.S. Department of Labor. Bureau of Labor Statistics. description of the new aggregation system for industrial production and capacity utilization Monthly Labor Review. For a detailed description of the industrial production index, sec "'Industrial Production: 1989 NO1 h. Basic data (nol indexes) for scries mentioned in notes 4 and 5. and indexes for series Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990). pp. mentioned in notes 3 and 6, can also be found in the Survey of Current Business 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,1' 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. 2.11 LABOR FORCE, EMPLOYMENT. AND UNEMPLOYMENT Thousands of persons; monthly data seasonally adjusted 1996 1997 July Aug. Sept. Oct. Nov. Dec.1 Jan.r Feb. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 131,056 132.304 133.943 134,165 133.898 134.291 134,636 134,831 135.022 135,848 135.634 Employment 2 Nonagricultural industries-' 119,651 121,460 123,264 123,419 123,570 123,768 124,167 124,290 124,429 125,112 125.138 3 Agriculture 3,409 3,440 3,443 3,47(1 3.418 3,480 3.450 3,354 3.426 3,468 3,292 Unemployment 7,996 7.404 7,236 7,276 6.910 7,043 7.019 7.187 7.167 7,268 7 205 5 Rate (percent of civilian labor force) 6.1 S.6 5.4 5.4 5.2 5.2 5.2 5.3 5.3 5.4 5.3 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 114,172 117,203 119,549 119,772 120,052 120.050 120,311 120,492 120,723 120,970 121,309 7 Manufacturing 18.321 18.468 18.282 18.267 18.291 18,241 18,254 18.262 18,270 18,286 18,284 8 Mining 601 5 SO 570 570 570 567 566 566 566 568 570 9 Contract construction 4,986 5.158 5,405 5,427 5.437 5,449 5,464 5,491 5,520 5.535 5.644 10 Transportation and public utilities 5,993 6,165 6,318 6,333 6,342 6,337 6,338 6,350 6.340 6,374 6,395 11 Trade 26,670 27.5X5 28.178 28,256 28.275 28,321 28,446 28.508 28.586 28 591 28 661 6,896 6,830 6.977 6,987 6,999 7,009 7,026 7,038 7,052 7.065 7,078 13 Service 31,579 33,107 34,360 34,448 34,532 34,607 34,709 34,780 34,865 35,001 35,(181 14 Government 19,128 19.31(1 19.459 19,484 19,606 19,519 19,508 19,497 19.524 19,550 19.596 1. Beginning January 1994, reflects redesign of current population survey and population controls from the 1990 census. 2. Persons sixteen years of age and older, including Resident Armed Forces. Monthly figures are based on sample data collected during the calendar week that contains the twelfth day; annual data are averages of monthly figures. By definition, seasonally does not exist in lme. population figures. SOURCE. Based on data from U.S. Department uf Labor, tmplovment 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 UTILIZATION' Seasonally adjusted 1996 1996 1996 Series 01 02 Q3 Q41 01 Q2 Q3 04 01 Q2 Q3 Q4r Output (1992=100) Capacity (percen ot 1992 oitpul) Capacty utili/ati"m rate (perccn)2 1Total industry 113.1 114.8 U5.8 117.1 136.7 137.9 139.2 140.5 82.8 83.3 83.2 83.3 2 Manufacturing 114.0 115.8 117.2 1 18.4 139.6 41.0 142.5 143.9 81.7 82.1 82.3 82.3 3 Primary processing' 110.1 111.7 113.2 113.9 129.1 29.9 130.7 131.5 85.3 86.0 86.6 86.6 4 Advanced processing4 1 15.9 117.8 119.1 120.6 144.7 46.5 148.2 150.0 80.1 80.4 80.4 80.4 5 Durable goods 122.3 125.4 127.2 128.1 150.0 52.2 154.5 156.9 S1.6 82.4 82.3 81.7 6 Lumber and products 107.1 111.0 110.5 1 10.5 127.3 28.2 129.1 130.0 84.1 86.6 85.6 85.0 7 Primary metals 114.0 116.5 118.6 119.9 127.6 28.7 129.8 131.0 89.3 90.5 91.4 91.6 8 Iron and steel 113.3 115.8 117.9 118.6 128.8 130.3 131.9 133.5 88.0 88.8 89.4 88.9 g Nonferrous 114.6 117.2 119.4 121.3 125.9 126.5 127.1 127.8 91.0 92.7 93.9 95.0 10 Industrial machinery and equipment. 1507 154.6 158.9 1614 166.9 171.6 176.3 181.3 90.3 90.1 90.1 89.0 11 Electrical machinery 159.0 162.3 164.5 167.2 186.0 193.2 200.6 208.5 85.5 84.0 82.0 80.2 12 Motor vehicles and pans 120.6 130 4 131.3 126.0 173.6 74 9 176.1 177.3 6U.5 74.6 74.5 71.0 13 Aerospace and miscellaneous transportation equipment 81.5 83.8 86.7 90.4 121.0 20.6 120.2 119.8 67 4 69.5 72.2 75.5 14 Nondurable goods 105.1 105.5 106.5 108.1 128.5 29.0 129.6 130.1 81 8 81.8 82.2 83.0 15 Textile mill products 104.5 106.5 107.9 107.4 128.7 129.4 130.1 130.8 81.2 82.3 82.9 82.1 16 Paper and products 105.2 107.9 109.0 109.8 121.9 22.4 122.9 123.3 86.3 88.2 88.7 89.1 17 Chemicals and products 106.8 107.3 109.2 112.2 136.7 37 9 139.2 140.3 78.1 77.8 78.4 80.0 18 Plastics materials 117. j 122.1 125.3 125.3 127.3 129.5 131.8 134.0 92.1 94.3 95.1 9.3.5 19 Petroleum products 105.6 106.0 106.7 107 7 113.4 113.5 113.7 113.8 93.1 93.4 9.3.9 94.7 20 Mining 100.8 103.5 103.7 104.0 113.9 113.7 113.7 11.3.7 88.5 91.0 91.2 91.5 21 Utilities 113.4 114.0 110.5 113.0 123.9 124.5 125.2 125.9 91.6 91.6 88.2 89 8 22 Electric 113.4 114.0 110.8 1124 122.1 122.8 123.6 124.4 92.9 92.8 89.6 90.4 1973 1975 Previous cycle5 Latest cycle6 1996 1996 1997 High Low High Low High Low Feb. Sept. Oct. Nov.' Dec.1 Jan. Feb.11 Capacity ulilization rate {percenl)" 1Total industry 89.2 72.6 87.3 71.1 85.3 78.1 83.2 83.1 83.0 83.4 83.5 83.2 83.3 2 Manufacturing 88.5 70.5 86.9 69.0 85.7 76.6 82.2 82.1 82.0 82.4 82.5 82.1 82.5 3 Primary processing' 91.2 68.2 88.1 66.2 88.9 77.8 85.3 86.6 86.7 86.5 86.6 86.0 86.6 4 Advanced processing4 87.2 71.8 86.7 70.4 84.2 76.1 80 9 80.2 79.9 80.5 80.7 80.3 80.6 ^ Durable goods 89.2 68.9 87.7 63.9 84.5 73.2 82.4 81.4 81.5 81.9 81.7 81.4 82.0 6 Lumber and products 88.7 61.2 87.9 60.8 93.6 75.5 83.5 85.5 84.2 87.0 83.7 83.7 84.8 7 Primary metals 100.2 65.9 94.2 45.1 92.7 73.7 89.8 91.8 93.5 90.5 90.7 89.4 91.2 8 Iron and steel 105.8 66.6 95.8 37.0 95.2 71.8 88.4 88.7 92.6 86.8 87.1 85.3 88.3 9 Nonferrous 90.8 59.8 91 1 60.1 89.3 74.2 91.5 95.7 94.7 95 1 95.2 94.6 95.0 10 industrial machinery and equipment .... 960 74.3 93.2 64.0 85.4 72.4 90.7 89.6 89.1 89.2 88.9 88.8 88.9 11 Electrical machinery 89.2 64.7 89.4 71.6 84.0 75.1 86.5 81.3 80.5 80.2 80.0 78.4 78.9 12 Motor vehicles and parts 93.4 51.3 95.0 45.5 89.1 55.9 73.4 71.9 68.5 72.7 72.0 73.3 73 7 13 Aerospace and miscellaneous transportation equipment .... 78.4 67.6 81.9 66.6 87.3 79.2 67.7 73.3 74.6 75.4 76.4 77.0 77.9 14 Nondurable goods 87.8 71.7 87.5 76.4 87.3 80.7 82.0 82.4 82.7 82.9 83.5 82.9 83.1 15 Textile mill products 91.4 60.0 t,l j 72.3 90.4 77 7 80.8 82.2 82.4 82.7 81.2 81.0 80.8 16 Paper and products 97.1 69,2 96.1 80.6 93.5 85.0 858 88 4 87.4 .89.3 90.5 89.4 89.5 17 Chemicals and products. . ... 87.6 69.7 84.6 69.9 86.2 79.3 78.3 78.6 79.5 79.6 80.7 80.3 80.1 18 Plastics materials 102.0 50.6 90 9 63.4 97.0 74.8 91 9 95.4 94.0 92 4 94.1 19 Petroleum products 96.7 81.1 90.0 66.8 •88.5 85.1 93.5 94.0 95.3 94.4 94.3 93.7 94.3 20Mining 94.3 88.2 96.0 80.3 86.8 86.1 88.5 91.0 91.0 91.1 92.4 91.7 92.9 21Utilities 96.2 82.9 89.1 75.9 92.6 83.4 91.5 88.6 89.0 91.0 89.3 90.4 87.1 22 Electric 99.0 82.7 88.2 78.9 95.0 87 1 93 1 89.6 90.2 90.6 90.3 91.2 88.4 1. Data in this (able 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 January 1997. See primary metals; and fabricated metals. 'industrial Production and Capacity Utilization: Historical Revision and Recent Develop- 4. Advanced processing includes foods; tobacco; apparel; furniture and fixtures; priming ments," Federal Reserve Bulk'lin, vol. 83 (February 1997). pp. 67-92. The article contains a and publishing: chemical products Mich as drugs and toiletries; agricultural chemicals; leaihcr description of the new aggregation system for industrial production and capacity utilization. and producis: machinery; transportation equipment; instruments; and miscellaneous manufac- For a detailed description of the industrial production index, see "Industrial Production: 1989 tures. Developments and Historical Revision." Federal Reserve Bulletin, vol. 76 (April 1990), pp. 5. Monthly highs. 1978-80; monthly lows. 1982. 187-204. 6. Monthly highs, 1988-89; monthly lows. 1990-91. 2. Capacity utilization is calculated as the ratio of the Federal Reserve's seasonally adjusted index of industrial production to the corresponding index ol capacity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • May 1997 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1996 1997 pro- 1996 Group por- •iv g. tion Feb. Mar. Apr Mav June July Aug. Sept. Oct. Nov.1 Dec.1 Jan. Fen.p Index (1992 = 100) MAJOR MARKETS 1 Total index 100.0 115.2 113.8 113.2 114.3 114.8 115.5 115.S 115.8 116.0 116.2 117.2 117.7 117.6 118.1 2 Products 60.5 112.0 110.8 110.4 1110 1114 112.3 112.3 112.2 112.7 112.8 114.1 114.3 114.3 114.8 3 Final products 46.3 112.8 111.7 111.1 112.1 112.2 113.1 113.4 113.0 113.3 113.6 114.8 115.3 115.3 115.8 4 Consumer goods, total 29.1 110.5 109.9 109.4 109.8 110.0 110.8 110.7 110.1 110.5 110.8 112.3 112.7 112.1 112.1 5 Durable consumer goods 6.1 P6 2 124 7 P0 8 P5 7 126 9 129 9 129 7 128 0 P7 1 P4 5 127 1 128 5 127 2 128 8 6 Automotive products 2.6 125.8 125.6 115.1 126.0 126.9 130.0 132.1 128.7 127.7 122.0 127.4 127.3 130.0 130.7 7 Autos and trucks 1.7 132.6 133.0 111.2 135.0 135.0 137.7 145.7 138.7 134.6 125.7 133.8 135.7 138.8 139.4 8 Autos, consumer .9 120.3 121.6 93^5 126.1 129.0 133.3 137.8 132.5 129.9 112.3 123.5 116.2 120.4 123.2 9 Truck*, consumer 7 147.2 150.3 135.4 150.3 147.3 148.7 161.3 152.3 146.6 147.4 152.4 164.9 167 0 165 0 10 Aulo parts and allied goods .9 114.5 113.7 117.7 111.9 114.0 117.4 112.4 113.5 116.2 114.4 116.4 113.9 116.2 117.1 11 Other 3.5 126.3 123.9 124.7 125.3 126.7 129.7 128.0 127.5 126.6 126.2 126.8 129.2 125.2 127.4 12 Appliances, televisions, and air conditioners 1.0 173.0 164.4 165.8 170.2 172.0 180.1 181.1 175.9 174.2 176.5 176.9 181.5 171.1 177.9 13 Carpeting and furniture .S 109.9 108.0 II0.S 109.1 112.4 114.6 107.0 lll.l 110.5 108.6 110.7 109.5 105.4 106.9 14 Miscellaneous home goods 1.6 107.9 108.6 108.0 108.0 108.1 108.7 108.5 108.0 107.6 106.5 106.4 109.6 108.9 109.1 15 Nondurable consumer goods 23.0 106.5 106.2 106.6 105.9 105.8 106.0 106.0 105.6 106.3 107.3 108.5 108.8 108.3 108.0 16 Foods and tobacco 10.3 106.1 105.8 106.8 105.7 105.3 105.8 105.9 105.4 106.1 106.6 107.2 108.5 107.9 108.5 17 Clothing 2.4 95.5 96.5 95.8 96.1 95.9 95.6 95.4 95.4 95.1 95.5 95.0 94.9 94.0 93.1 18 Chemical products 4.5 112.7 11 M 110.5 110.0 110.5 110.6 112.6 111.3 113.5 115.5 117.3 118.4 117.3 117.4 19 Paper products 2.9 101.1 99^8 99.7 100.0 100.7 100.2 101.4 101.8 101.9 102.9 102.9 103.0 101.8 102.3 20 Energy 2.9 112.1 112.8 114.1 112.8 112.8 113.2 109.1 109.4 109.4 110.7 115.3 111.9 113.3 109.3 21 Fuels .8 106.6 106.7 106 9 106 4 106.8 106.7 106.7 107.7 105.4 108.1 107.8 106.0 105.5 106.5 22 Residential utilities 2.1 114.3 115.4 117.1 115.5 115.4 116.0 109.9 110.0 110.9 111 7 11S.5 114.4 116.6 110.3 23 Equipment 17.2 1168 114.8 113.9 115.9 116.0 117.1 118.1 117.9 118.1 118.4 119.0 119.5 120.7 122.2 24 Business equipment 13.2 126.6 124.6 122.6 125.1 125.0 126.6 128.1 127.7 128.3 128.8 129.8 130.5 131.8 133.3 25 Information processing and related 5.4 143.2 139.4 139.8 140.5 140.8 143.9 144.1 144.6 (46.3 147.4 147.1 148.1 149.1 151.1 26 Computer and office equipment 1.1 292.0 258.0 265.4 272.2 279.7 289.4 301.7 306.2 314.3 il8.8 321.5 327.1 332.0 337.6 27 Indusinal 4.0 126.9 127.7 127.1 127.5 126.5 126.3 127.2 126.7 126.3 127.0 127.1 127.4 127.9 128.7 28 Transit 2.5 99.9 96.7 87.4 97.5 97.5 100.6 104.1 103.0 103.8 101 9 106.6 106.9 109.4 111.5 29 Autos and trucks 1.2 115.3 115.6 95.2 118.5 118.0 120.8 126.5 120.9 1177 109 4 115.9 113.9 117.2 118.9 30 Othei L3 1 16.4 114.9 114.7 114.7 115.3 114.3 118.0 116.1 115.5 118.7 119.9 121.0 123.1 123.7 31 Defense and space equipment 3.3 77.0 76.4 77.6 77.4 77.9 77 0 77.7 77.9 77.7 77.0 76.1 76.3 75.4 75.8 32 Oil and gas well drilling .6 120.5 113.2 119.8 123.7 127.0 127.8 122.1 122.6 117.5 120.2 120.7 123.6 130.8 140.7 33 Manufactured homes 162.0 156.4 162.5 164.8 165.7 167.9 163.0 167.4 165.6 165.3 159.8 156.3 34 Intermediate products, total 14.2 109.4 108.1 108.4 107.7 108.9 109.7 108.9 110.0 110.6 110 2 1119 1114 111.3 111.8 35 Construction supplier 5.3 116.8 113.3 115.5 114.2 116.1 118.3 117.5 119.2 119.8 117.7 120.7 118.1 118.1 1197 36 Business supplies 8.9 105.1 105.0 104.3 103.9 104.6 104.6 10.3.9 104.6 105.3 105.8 106.8 107.4 107.3 107.1 37 Materials 39.5 120.3 1IX.5 1 17.7 119.5 P0 1 120 5 120 5 PI 5 121 2 PI 7 12" P3 1 P2 7 P3 3 38 Durable goods materials 20.S 134 0 131.5 129.5 132.6 133.5 134.0 134.5 136.2 135.5 135.8 136.5 137.8 137.2 139.0 39 Durable consumer parts 4.0 128.8 128.3 117.0 130 1 130.6 130.4 131.1 133.9 128.3 126.6 129.7 129.9 129.1 129.9 40 Equipment parts 7.6 159.2 154.0 154.6 155.7 157.2 158.9 159.6 161.7 162.6 163.4 165.3 167.8 168.2 170.7 4] Other 9 2 118 2 116 8 116 8 117 2 117 8 117.9 1 ]$ 2 119.2 119.2 120 0 119 1 120 1 118 9 P0 7 42 Basic metal materials 3.1 113.2 ] 11.3 112.0 112.1 112.2 112.6 112.9 113.6 114.7 117^2 114.4 116.1 115.0 117.5 43 Nondurable goods materials 8.9 106.4 104.5 104.4 105.5 105.9 106.2 107.4 106.5 106.9 108.0 108.4 109.3 109.1 108.8 44 Textile materials 1.1 106 4 103.6 104.6 105.6 106.1 106.3 109 9 107.4 107.1 108.4 108.5 106.1 106.7 106.1 45 Paper materials 1.8 107.3 104.9 104.4 106.9 106.4 105.2 109.1 108.2 107.0 108.0 110.9 111.7 110.7 111.1 46 Chemical materials 1.9 105.4 103.5 103.5 104.1 104.7 105 ( 106.1 106.2 106.8 109.3 107 7 109.8 110.0 109.6 47 Other 2.1 106.1 105.9 105.4 106.5 107.1 108.0 107.1 104.7 106.2 103.9 106.8 107.0 106.2 105.4 48 Energy materials 97 103.9 103.5 104.5 104.2 104.6 104.8 102.4 104.0 103.9 103.9 104.0 104.2 104.1 102.9 49 Primary energy 6.3 102.7 102.6 103.9 104.0 103 5 103.5 101.7 103.2 102.2 102.0 101.6 103.1 102.1 101.2 50 Convened fuel materials 3.3 106.2 105.3 105.7 104.6 106.7 107.2 103.9 105.4 107.0 107.5 108.5 106.5 107.9 106.2 SPECIAL AGGREGATES 5 1 Total excluding autos and trucks 97.1 114.9 113.4 113.4 113 9 114.4 115.0 114.9 115.4 115.7 116.1 116.9 117.5 117.2 117.8 52 Total excluding motor vehicles and parts 95.1 1 14.6 113.1 113.5 113.5 114.0 114.7 114.6 115.0 115 4 115.9 116.6 117.2 116.9 117.5 53 Toial excluding computer and office equipment 98.2 112.9 1119 111.2 112.2 112.6 113.2 113.1 113.4 11.3.5 113.7 114.6 115.1 114.9 115.4 54 Consumer goods excluding autos and trucks 27.4 109.2 108.6 109.2 108.4 108.7 109.3 108.9 108.6 109.2 109.9 111.0 1115 110.7 110.7 55 Consumer goods excluding energy 26.2 110.2 109.5 108.8 109.4 109.6 110.4 110.9 110.2 110.6 110.8 111.8 112.8 111.9 112.5 56 Business equipment excluding autos and trucks 12.0 127.7 125.5 125.3 125 8 125.7 127.2 128.2 128.3 129.3 130.7 131.2 132.2 133.2 134.7 57 Business equipment excluding computer and office equipment 12.1 115.8 115.6 113.1 115.3 114.7 115.8 116.8 116.1 116.3 116.6 117.5 118.0 119.0 120.3 58 Materials excluding energy 29.8 125.4 123.1 121.7 124.2 124.9 125.4 126.1 127.0 126.6 127 1 127.8 129.0 128.5 129.6 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 1996 1997 SIC2 pro- 1996 Group code por- avg. tion Feb. Mar. Apr. May June July Aug Sept. Oct. Nov.r Dec ' Jan. Feb.1' Index (1992 = 100) MAJOR INDUSTRIES 59 Total index 100.0 115.2 1U.8 113.2 114.3 114.8 115.5 115.5 115.8 116.0 116.2 117.2 117.7 117.6 118.1 60 Manufacturing 85.4 116.3 114.8 113.9 115.2 115.7 116.4 117.0 117.2 117.4 117.6 118.5 119.2 118.9 119.8 61 Primary processing 26.5 112.2 110.1 110.8 111.0 111.7 112.6 113.0 113.1 113.5 113.8 113.8 114.1 113.5 114.5 62 Advanced processing 58.9 118.4 117 1 115 4 117.3 117.6 118.3 118 9 119.2 119.3 119.5 120.8 12l.(i 121.5 122.5 63 Durable goods 45.0 125.7 123.fi 121.8 124.6 125.2 126.3 126.9 127.5 127.2 127.1 128.4 128.9 128.9 130.5 64 Lumber and products 24 2.0 109.8 106.3 109.7 110.3 110.4 112.4 109.3 I 1 1.4 110.7 109.2 113.1 109.2 109.4 111.0 65 Furniture and fixtures 25 1.4 108.8 107.9 105.8 108.1 110.3 109.5 108.1 108.8 108.8 110.4 110.5 110.4 109.0 109.4 66 Stone, day, and glass products 32 2.1 111.0 109.1 108.7 108.5 109.8 111.3 114.1 111.8 113.1 111 7 111.8 111.4 111.8 112.5 67 Primary metals 33 3.1 117.2 114.6 115.6 116.1 116.3 117.0 118.0 118.3 119.5 122.1 118.5 119.2 117.8 120.5 68 Iron and stee! 331,2 1.7 116.4 113.9 113.8 114.6 115.7 117.1 118.0 118.2 117.4 123.2 115.9 116.8 114.7 119.1 69 Raw sleel 331PT .1 112.2 111 ? 112.7 112.1 112.9 114.9 113.3 11.3.6 112.6 111.5 108.7 112.5 111.7 116.0 70 NonfeiTous 333-6,9 1.4 118.1 115.3 117.6 117 9 116.9 116.8 117.9 118.5 121.8 120.7 121.4 121.8 121.4 122.1 71 Fabricated metal products. . . 34 5.0 118.6 117.9 117.6 117.8 118.4 118.9 119.1 1194 119.3 119.3 119.1 119.6 118.8 120.3 / z. 11 IVlUL e >U q l u ax i p I m L L e uL n 'l t Jllld V ullU 35 8.0 156.4 151.4 152.5 153.3 154.3 156.1 157.7 159.6 159.4 159.9 161.7 162.6 164.1 165.8 73 Computer and office equipment 357 1.8 296.9 263.6 270.8 277.3 284.7 294.3 306.5 310.8 319.0 323.6 328.3 331.9 336.8 342.6 74 Electrical machinery 36 7.3 163.3 161.0 160.3 161 1 161.8 164.0 163.8 164.6 165.2 165.6 167.2 168.9 167.7 170.7 75 Transportation equipment. . 37 9.5 106.1 104.4 94.9 106.4 106.8 107.1 109.5 109.3 107.3 105.3 109.5 109.6 111.1 112.2 76 Motor vehicles and parts . 371 4.9 126.9 127.4 I06.S 130.3 130.5 130.4 134.1 132.8 127.0 121.2 128.9 127.9 130.4 131.4 77 Autos and light trucks . 371PT 2.6 124.6 124.8 103.0 127 1 127.6 130.4 137.3 131.0 127.4 117.3 125.7 125.7 128.9 129.9 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.6 85.6 81.9 82.8 83.2 83.8 84.3 85.7 86.5 87.9 89.4 90.3 91 4 92.0 93.2 79 Instruments 38 5.4 102.8 102.9 102.9 102.3 102.4 103.3 102.3 103.0 103.0 103.4 103.0 103.8 103.1 103.7 80 Miscellaneous 39 1.3 112.9 112.4 112.5 112.0 112.2 113.1 113.0 112.9 113.0 113.0 114.1 116.6 116.6 117.4 81 Nondurable goods 40.4 106.3 105.3 105.4 105.2 105.5 105.9 106.4 106.2 106.9 107.4 107.9 108 8 108.1 108.5 82 Foods 20 9.4 106.3 105.7 106.2 105.9 105.6 106.1 106.5 105.5 106.2 107.1 107.6 108.6 108.5 109 0 83 Tobacco products 21 1.6 105.6 107.4 111.3 106.3 103.7 105.1 102.5 104.1 104.9 104.0 105.4 107.9 104.7 104.1 84 Textile mill products 22 1.8 106.6 104.0 107.0 105.3 106.1 108.0 108.7 107 7 107.2 107.6 108.2 106.5 106.2 106.0 85 Apparel products 23 2 7 98.2 99 2 98.1 99.0 99.0 99.0 98 3 98.5 98.2 97.8 97.3 97.2 95.9 95.4 86 Paper and products 26 3.6 108.0 104.6 105.8 107.5 107.8 108.5 110.2 108.1 108.8 107.6 110.1 1117 110.5 110.6 87 Printing and publishing 27 6.7 98.4 99.2 97.6 96.9 97.9 97.1 97.6 97.9 99.1 99.7 100.0 99 8 99.1 99.6 88 Gicmieals and products . . . 28 9.9 108.9 107.0 106.6 106 9 107.2 107.9 109.0 108.7 109.7 II 1.3 111.8 113.6 113.3 113.3 89 Petroleum products 29 1.4 106.5 106.0 105.7 1055 106.2 106.3 105.3 107.8 106.9 108.4 107.4 107 3 106.7 107 4 90 Rubber and plastic products 30 3.5 120.5 118.6 119.3 118.0 119.8 120 9 120.7 122.0 122.8 121.4 121.7 122.5 120.9 122.6 91 Leather and products 31 .3 80.0 81.7 81.2 81.1 80.7 81.0 80.0 79.5 79.4 78.4 77.3 80.1 78.2 77.8 92 Mining 6.9 103.0 100 8 102.8 102.9 103.2 104 4 103 1 104.5 103.4 103.4 103.5 105.0 104.3 105.6 93 Metal 10 <; 102.0 97.1 101.7 9-9.4 100.9 101 7 103.1 104.0 105.3 105.6 102.5 106 2 105 9 108.0 94 Coal 12 1.0 105.9 101.2 105.9 105.3 108.0 108.9 102.7 109.6 106.2 107.5 108.8 109.6 104.0 107.1 95 Oil and gas extraction 13 4.8 100 3 98.9 100.2 100.9 100.5 101.5 100.9 101.1 100.5 100 0 100.2 101.3 102.0 102.7 96 Stone and earth minerals 14 6 118.8 117.4 117.9 116.3 117.4 120.6 120.6 121.7 118.5 120.0 120.2 123.4 120.7 123.0 97 Utilities 77 112.8 113.3 114.4 1135 114.6 114.0 109.4 110.8 111.1 1119 114.5 112.7 114.1 110.1 98 Electric 491.493PT 6.2 112.7 113.6 114.0 113.1 114.8 114.2 110.1 111.5 110.9 112.0 112.7 112.6 113.9 110.6 99 Gas 492.493PT 1.6 113.2 112.2 115.8 115.0 113.6 113.6 107.1 108.5 111.8 111.3 120.9 112.8 114.8 108.4 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.5 115.7 114.1 114.3 114.3 114.8 115.6 116.0 116.3 116.8 117.3 117.9 118.6 118.2 119.1 101 Manufactunng excluding office and computing machines . . . 83.6 113.7 112.6 111.6 112.S 113.2 113.8 114.3 114.4 114.5 114.7 115.5 116.1 115.8 116.7 Gross vjlue (billions of 1992 dollars, annual ates) MAJOR MARKETS 102 Products, total 2,001.9 2,258.8 2.240.3 2,220.1 2,249.1 2,255.7 2,274.2 2.276.1 2.272.9 2,273.4 2.270.7 2.303.5 2,302.2 2.305.4 2.318.7 103 Final 1.552.1 1,760.9 1,752.5 1,727.8 1.760 0 1.761.9 1,775 7 1.782.8 1.773.6 1.771.6 1.771.8 1.795.1 1.797 2 1.801.7 1.812.5 104 Consumer goods 1,049.6 1,162.2 1.1632 1.150.9 1.164.3 1,165.5 1,172.5 1,171.6 1,165.5 1.163.0 1.164.7 1,182.2 1,183.1 1.180.3 1.183.1 105 Equipment 502.5 598.0 588.7 576.3 595.0 595.7 602.4 610.5 607 4 607.8 606.3 612.1 613.3 620.7 628.6 106 Intermediate 449.9 498.3 488.5 492.3 489.9 494.4 499.0 494.3 499.7 502.1 499.3 508.6 505.5 504.4 506.9 1. Data in this table also appear in The Board's G.!7 (4)9) monthly statistical release. For ments." Federal Reserve Bullvfin. veil. S3 (February 1997), pp. 67-92. For a detailed the ordering address, see the inside front cover. The latest historical revision of the industrial description of the industrial production index, see "Industrial Production. 19K9 Developproduction index and the capacity utilization rates was released in January 1997. See ments and Historical Revision." Federal Reserve Bulletin, vol. 76, (April 1990). pp. 187-204 "Industrial Production and Capacity Utilization: Historical Revision and Recent Develop- 2. Standard industrial classification. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • May 1997 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1996 1997 Item 1994 1995 1996' Apr. May June July Aug. Sept. Oct.' Nov.' Dec' Jan. Private residential real estate attivitv (thousands of urits except s noted) NF-.W UNITS 1 Permits authorized 1.372 1,333 1,434 1.459 1,452 1.415 1,457 1,423 1.399 1,362 1,418 1,422 1,400 2 One-family 1.069 997 1,073 1,115 1.098 1.085 1,07.3 1.078 1,040 1,011 1,025 1,015 1,051 3 Two-family or more 303 335 360 344 354 3.30 384 345 359 351 393 407 349 4 Starlet) 1,457 1.354 1.477 1.522 1.476 1,488 1,492 1.515 1.470 1.407 1,486 1,^53 1.362 5 One-family 1,198 1,076 1,161 1.215 1,142 1,214 1.164 1.222 1,148 1,104 1,1.33 1,024 1,117 6 Two-family or more 259 278 316 307 334 274 328 293 322 303 35.3 329 245 7 Under construction at end of period1 762 776 792 825' 826 826' 825' 820 825' 825' 828 815 818 8 One-family 558 547 550 590' 590 594' 593' 593 592 588' 584 571 573 9 Two-family or more 204 229 242 2.35 236 232' 232' 227 233' 2.37 244 244 245 10 Completed 1,347 1.313 1.413 1.351' 1,409' 1,426' 1.463' 1.449' 1.356' 1,375' 1,431 1.484 1,358 1 1 One-family 1,160 1.066 1.129 1.074' 1.124' 1,137' 1,161' 1,153' 1,097' 1,129' 1.151 1,177 1,106 12 Tv, o-famii) or more 187 247 284 '77 285' 289' 302 296' 259 246' 280 307 252 13 Mobile homes shipped 304 340 363 373 366 372 366 369 372 364 354 33S 339 Merchant butldei acti\i!\ in imc-fannh' writs 14 Number sold 670 667 757 741' 732' 732' 782' 814' 768' 706' 788 789 817 15 Number for sale at end of period1 340 374 326 368' 362 355' 352' 34.3 331' 330' 327 322 316 Price of units sold (thousands of dollars? 16 Median 130.4 133.4 139.6 140.0 136.4 140.0 144.2 137.0 139.0 143.8' 143.5 142.9 143.8 17 Average 153.7 157.6 165.7 170.0 163.3 166.5 168 4 159.7 167.4 168.4' 172.0 171.5 170.2 EXISTING UNITS (one-lamily) 18 Number sold 3.946 3.801 4.087 4,230' 4,280 4,160 4,150 4,100' 4.020' 4,000 4,060 3,950 3.910 Price of units sold (thousands of dollars)1 19 Median 109.9 113.1 118.2 116.6' 117.6 122.9 121.5 122.3 117.8 116.6 117.4 118.8 120.6 20 Average 136.8 139.1 145.5 142.6' 144.4 150.2 149.6 149.9 144.7 14.3.6 144.1 147.1 149.6 Value if new construction (millions of dollars) CONSTRUCTION 21 Total put in place 527.063 547,079 568,910 564,623 558,481 563,122 559,312 564,715 572,262 582,537 594,043 588,146 590,126 22 Private 400,007 410,197 427,775 424,233 418,120 423,106 419,293 426,703 428,361 437,034 446,059 445.439 447.976 •>3 Residential 238,873 236,598 246,899 248,013 247.486 246,909 244,931 246,019 246,407 246,935 249,167 250,297 250 636 24 Nonresidential T61J34 173^599 180]876 176720 170^634 I76J97 174362 18o!684 181,954 190^099 196^892 195J42 197^340 25 Industrial buildings 28.947 32.301 30 070 30.285 27,310 28.755 28,770 27,082 29.656 33.043 31,583 29,413 30,700 26 Commercial buildings 59,728 67,528 70,157 67,565 65,834 69,280 68,262 72.146 70,672 74,5.30 77,669 75,735 78,051 27 Other buildings 26,961 26,923 29,322 27,457 27,723 28,533 28,514 29,764 29,812 30,469 32,636 32,452 33.329 28 Public utilities and other 45.498 46,847 51.327 50.913 49,767 49,629 48,816 51,692 51,814 52,057 55,004 57,542 55.260 29 Public 127,056 136.884 141,131 140,390 140,361 140,016 140,020 138.012 143,901 145,503 147,983 142,707 142.149 30 Military 2,319 3,005 2,878 3,168 3,020 3.140 2 439 2 307 2,583 2,774 2,350 2,423 2.588 3 1 Highway 37,673 38,161 39.406 39.454 37,715 38,308 39,194 36,507 40.485 39,326 40,160 41,711 41.241 32 Conservation and development . 6,370 6,389 5.752 5,956 5,756 6,004 5.793 5.660 5.473 6,095 5,974 5.708 5.839 33 Other 80,694 89,329 93,095 91.812 93.870 92.564 92,594 93.538 95.360 97,308 99.499 92.865 92,481 I Not al 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 ol 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 minih earlier months earlier (annual rate) Index level. Item 1996 1996 1997 Feb. 1996 1997 1997' Feb. Feb. Mar. June Sept. Dec. Ocl. Nov. Dec. Jan. Feb. CONSUMER PRICES2 (1982-84-100) 2.7 3.0 40 2.9 3.1 3.3 .3 .1 .3 .1 .3 159.6 7 Food 23 38 3 8 43 5 3 34 5 4 .0 - 3 .3 156.5 3 Energy ilemt, 1.2 7.8 13.7 4.9 1.1 16.2 1.1 1.2 1.5 .8 .3 113.1 4 All items less food and energy 2.9 2.5 3.0 2.5 2.7 2.4 .2 2 2 I 168.3 5 Commodities 1.7 1.0 2.3 .0 1.1 .9 .1 .1 A .1 .1 142.2 34 3 1 3 4 34 34 3 1 2 3 .3 .1 .3 183.1 PRODUCER PRICES (1982-100) 7 Finished goods 2.0 2.2 2.5 2.5 2.5 4.3 .4' .1' .6 -.3 -.4 132.2 1.8 2.4 1.5 5.3 4.6 2.4 .8' -.1' -.1 -1.0 -.3 133.8 9 Consumer energy 1.6 9.8 13.8 2.5 7.0 27.3 1.7' 1.1' 3.4 -.2 -1.2 85.4 2.3 .6 .0 2.2 .6 .3 .0' -.!' .1 .0 -.1 144.9 11 Capital equipment 1.7 .3 .3 .6 1.2 -.3 -.1' -.1' .1 .0 -.1 138.8 12 Excluding foods and feeds 6 1.2 -1.0 .6 1.0 .0 .2 .4 2 -.1 126.3 13 Excluding energy .4 -.1 -3.5 .0 .0 .0 _ i .1 I .1 .0 134.2 Crude materials 14 Foods 10.5 -3.7 1.7 47.4 -9 4 -28 2 -3.1' -2.4' -2.7 -1.0 -1.9 110.7 15 Energy 18.8 24.2 52.8 -14.1 18.7 169.7 2.1 7.7 16.5 12.9 -12.4 102.7 16 Other -8.3 -2.5 -8.6 -9.3 -2.6 -1.6 -.1' -.3' .0 2.0 1.0 158.3 1. Not seasonally adjusted. SOURCE. U.S. Department of Labor, Bureau of Labor Statistics. 2. Figures tor 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 • May 1997 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1995 1996 Account 1994 1995 1996' Q4 Ql Q2 Q3 Q4r GROSS DOMESTIC PRODUCT 1 Total . . .. 6 935 7 7 253 8 7 575 9 7 350 6 7 426 8 7 545 1 7 616 3 7 715 4 By source 2 Personal consumption expenditures 4.700.9 4,924.9 5,152.0 4,990.5 5,060.5 5,139.4 5,165.4 5,242.7 580.9 606.4 631.8 612.8 625.2 637.6 630.5 633.8 4 Nondurable goods 1,429.7 1,485.9 1,544.7 1,494.2 1,522.1 1,544.7 1.546.5 1,565.5 5 Services 2,690.3 2,832.6 2.975.5 2,883.5 2,913.2 2,957.1 2.988.5 3.043.4 6 Gross private domestic investment 1,014.4 1,065.3 1,116.4 1,064.0 1,068.9 1,096.0 1,156.2 1,144.3 954.9 1,028.2 1,101.3 1.046.2 1,070.7 1,088.0 1.119.6 1,127.1 8 Nonresidemial 667.2 738.5 790.9 749 7 769.0 773.8 807.0 813.9 180.2 199.7 214.1 204.0 208.4 207.4 213.5 227.0 10 Producers' durable equipment 487.0 538.8 576.8 545.7 560.6 566.3 593.5 586.9 1 1 Residential structures 287.7 289.8 310.4 296.5 301.7 314.2 312.6 313.2 12 Change in business inventories 59.5 37.0 15.0 17.8 -1.7 8.0 36.6 17.2 48 0 39 6 169 2 7 11 3 35 4 18 2 14 Net exports of £oods and services -94.4 -94.7 -99.1 -67.2 -86.3 -99.2 -120.2 -90.8 719.1 807.4 855.1 837.0 839.5 850.0 844.3 886.7 16 Imports 813.5 902.0 954.3 904.2 925.8 949.2 964.5 977.5 17 Government consumption expendilures and gross investment 1.314.7 1,358.3 1.406.6 1,363.4 1.383.7 1,408.8 1,414.8 1,419.3 18 Federal 516.4 516.6 523.0 507.7 518.6 529.6 525.5 518.2 19 State and local 798.4 841.7 883.7 855.7 865.1 879.2 889.3 901.0 By major type oj prodmi 20 Final sales, total 6.876.2 7,216.7 7,560.9 7,332.8 7,428.6 7,537.1 7,579.6 7,698.2 21 Goods 2,514.4 2.662.2 2,784.0 2,698.0 2,749.3 2,782.0 2.785.0 2,819.5 22 Durable 1.0X6.2 1,147.3 1.219.7 1,166.4 1.192.1 1,219.1 1.225.5 1,242.2 23 Nondurable 1,448.3 1,515.0 1,564.2 1,531.7 1.557.1 1,562.9 1,559.5 1,577.2 24 Services 3 746 5 3 926 9 4 105 8 3 992 4 4 027 9 4 087 0 4 122 0 4 186 3 25 Structures 595.3 627.6 671.1 642.3 651.4 668.0 672.6 692.4 26 Change in business inventories 59.5 37.0 15.0 17.8 -1.7 8.0 36.6 17.2 31.9 34.9 13.2 27.3 12.3 9.9 34.7 -4.2 28 Nondurable goods 27 7 2.2 1.9 -9.4 -14.0 -1.9 2.0 21.4 MEMO 29 Total GDP in chained 1992 dollars 6,608.7 6.742.9 6,907.4 6,780.7 6,814.3 6,892.6 6,928.4 6,994.4 NATIONAL INCOME 30 Total . . 5 501 6 5 813 5 5 927 4 6 015 3 6 118 7 6 203 0 31 Compensation of employees 4,009.8 4,222.7 4,448.8 4,301.1 4.344.3 4,420.9 4.482.9 4.547.0 3 257 3 3 433 2 3 630 4 1 501 1 3,540.2 3,606.5 3,659.6 3,715.1 33 Government and government enterprises 602.5 621.7 641.2 626.9 634.0 638.9 644.6 647.3 34 Other 2.654.8 2,811.5 2.989.1 2,874.2 2,906.1 2,967.5 3.015.1 3,067.8 752.4 789.5 818.4 800.1 804.1 814.4 823.3 831.8 36 Employer contributions for social insurance 350.2 365.5 382.2 369.8 375.0 380.4 384.6 388.9 40** 2 436 2 4°9 1 434 0 450.9 478.3 518.3 486.7 499.5 515.2 526.3 532.0 39 Business and professional1 415.9 449.3 471.9 454 9 461.1 469.4 474.6 482.4 40 Farm1 35.0 29.0 46.4 31.8 38.4 45.8 51.8 49.6 41 Rental income of persons" 116.6 122.2 126.8 125.8 126.9 124.5 127.0 128.6 42 Corporate profits' 529.5 586.6 n.a. 611.8 645.1 655.8 661.2 n.a. 43 Profits before lax^ 531.2 598.9 n.a. 604.2 642.2 644.6 635.6 n.a. 44 Inventory valuation adjustment -13.3 -28.1 -8.6 -8.8 -17.4 -11.0 2.0 -8.1 45 Capital consumption adjustment 11.6 15.9 23.1 16.5 20.4 22.3 23.6 26.4 46 Net interest 394.9 403.6 n.a. 401.9 399.5 402.3 405.6 n.a. 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. U.S. Department of Commerce, Survey of Current Business Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted: quarterly data a! seasonally adjusted annual rates Q4 Ql 02 Q3 Q4' PERSONAL INCOME AND SAVINQ 1 Total personal income ,, .. 5,753.1 6,115.1 6,452.4 6^34.5 6,308.5 6,412.4 6,501.4 6,5*7.3 2 Wage and salary disbursements . . 3.241.8 3,430.6 3.630.4 3.500.2 3,538.2 3,606.5 3.659.(1 3,717,1 3 Commodity-producing industries . 824.9 863-5 903.8 S73.9 87S.7 900.3 911.0 921.2 4 Manufacturing 621.1 648.4 672.6 654.7 654.8 671.S 678.5 685.2 5 Distribjtive industries 739.2 783.7 828.0 800.7 810.5 822.3 832.4 846.6 6 Service industries . 1,075.2 1.1*1.6 1.258.4 1.198.6 1.215,1 1.244.9 1,271.6 1.301.9 7 Government and government enterprises 602.5 621.7 641.2 626.9 634.0 638.9 644.6 647.3 8 Other labor income 402.2 424,0 436.2 43112 429,1 434.0 438.6 442.9 9 Proprietors' income' 450.9 4783 518.3 486.7 499.5 515.2 526.3 532.0 10 Business and professional 415.9 449.3 471.9 454.9 461.1 469.4 474.6 4S2.4 11 Farm1 . .. .. 35.0 29.0 46.4 31.8 38.4 45.8 51.8 49.6 12 Rental income of persons3 116.6 122 3 126.8 125.8 126.9 124.5 127.0 128.6 !3 Dividends 199.6 2148 230.6 221.7 226,6 229.3 231,5 234.8 14 Personal interest income ,,.,.,.,,,... 663.7 717.1 738.0 727.2 726,1 733.1 742.9 749.9 15 Transfer payments. 956.3 1.022.6 1.079.8 1.041.4 1,063,0 1.075.6 1,085.1 1.095.3 16 Old-age survivors, disability, and health insurance benefits 472.9 507 4 539,1 516.1 529 9 536.3 541.7 548.2 17 LESS: Personal contributions for social insurance 278.1 294.5 307.5 298.8 301.0 305.8 309.7 313.4 IS EQUALS: Personal income 5,753.1 6.115.1 6,452.4 6.234.5 6.30S.5 6,412.4 6,501.4 6,587.3 19 LESS: Personal tax and nontax payments 731.4 794.3 863 S> 807.2 824.9 870.6 872.5 887.6 20 EQUALS: Disposable personal income 5.021 7 5.330.8 5.5SS.5 5.427.3 5,483.5 S.541.8 5.62S.9 5.699.7 21 LESS: Personal outlays 4,832.3 5,071 5 5,314,5 5.144.7 5,218 1 5,300.7 5.329.8 5.409.5 22 EQUALS: Personal saving 189.4 282.6 249.3 273.9 265.4 241.1 299.1 290.2 MEMO Per tapua (chained 1992 dollars) 23 Gross domestic product 25,349.8 25,628.8 26,016.6 25.684.5 25,753.3 25,990.0 26,066.2 26,255.3 24 Persona! consumption expenditure* ,..,,. 17,558.2 17,399.6 17,668.0 17,459.9 17,570.2 17,675.7 17,657,9 17,767.5 25 Disposable personal income 18.330.0 18,7990 19,166.0 18.986.0 19,041.0 19.063.1) 19,242,0 19,316.0 26 Saving rate <percent) 3.8 47 4,9 5.2 4.3 5.1 GROSS SAVING 27 Gross saving 1,056.3 1,151.8 n.a. 1,220.6" 1,217.9 1,244.5 1,314.0 n.a. 28 Gross private saving 1,006.7 1,1171,8 n,a. 1,138.9 1,133.8 1,121.6 1,196,1 n.a. 29 Personal saving 189.4 249,3 273.9 282.6 265.4 241.1 299.1 290.2 30 Undisiribuled corporate profits1 123.2 1406 n.a. 158.4 171.8 176.3 182,5 n.a. 31 Corporate inventory valuation adjustment - -13.3 -28.1 -8.6 -8.B -17.4 - llll 2.0 -S.I Capita! consumption allowances 32 Corporate 441.0 4540 4739 463.6 465.6 47 It) 477.2 481.9 33 Noncorporate 237.7 225 2 235.1 133.4 229.1 233.2 237,4 240.6 34 Gross gnverament saving 49.6 800 n.a. 81.7 84.1 122.9 117,8 35 Federal -119.6 -87.9 n.a. -80.7 -82.0 -54.1 -48.4 36 Consumption of fixed capital 70.6 73.8 72.5 73.8 73.2 72.6 72.3 71.9 37 Current surplus or deficit (->, national accounts -190.2 — 161.7 n.a. -154.5 -155.2 -126.7 -120.8 n.a. 38 State and local - 169.2 167,9 n.a. 162.4 166.1 177.0 166.3 39 Consumption of fixed capital ...... ........... . 69.4 72.9 76.6 74.3 75.1 76.0 77 1 78.0 40 Current surplus or deficit [-). national arc pun is 99.7 95.0 n.a S8.1 91.0 101.0 89.2 n.a. 41 Gross investment . _ 1,150.9 1,173.9 I,167.9 1,1S7.O 1.Z1S.9 42 Gross private domestic investment 1,014.4 1.063.3 1,116.4 1.064,0 1.068.9 1.096.0 1.1562 1,144.3 43 Gross government investment ... 212.3 221.9 233.7 220.1 228.8 235.1 234,2 236.7 44 Net foreign investment -136.4 -136.3 n.a. -110.2 -129.9 -144.2 -174 6 n.a. 45 Statistical discrepancy. 34.1 -.9 -SCO -S7.S 1. With inventory valuation and capita] consumption adjustments. SOURCE. U.S. Department of Commerce, Suivev itf Cur tent 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 International Statistics • May 1997 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly dala seasonally adjusted except as noted' 1995 1996 Item credits or debits 1994 1995 1996 Q4 Ql Q2 Q3 Q4p -148,405 -148,154 -165.095 -30,435 -35,274' -40,593' -47,853 -41,380 2 Merchandise trade balance2 -166,121 -173,424 -187,674 -38,026 -41,127' -47,370' -51,869 -45.308 50"" 463 575.940 611.669 149.422 150,032' 153,120' 150,144 158,373 4 Merchandise imports -668,584 -749,364 -799.343 -187.448 -193.159' -200,490' -202,013 -203,681 5 Military transactions, net 1,963 3,585 2,809 978 489 725 515 1,080 6 Other service transactions, net 59,779 64,776 70,658 17,657 18,008' 17,687' 17,075 17,883 -4,159 -8,016 -8,416 -1,890 311' -2.215' -4.098 -2,414 8 U.S. government grants -15,816 -10,959 -14,634 -2,799 -4.259 -2.364 -2.580 -5.431 9 U.S. government pensions and other transfers -4.544 -3.420 -4.233 -731 -1,012' -1,081' -1.064 -1,076 10 Private remittances and other transfers -19.506 -20.696 -23.605 -5,624 -5,684' -5.975' -5,832 -6,114 11 Change in U.S. government assets other than official reserve assets, net (increase, -) -341 -280 -665 -199 -152 -353 166 -326 12 Change in US. official reserve assets (increase. -) 5,346 -9.742 6.668 191 17 -523 7,489 -315 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -441 -808 370 -147 -199 -133 848 -146 15 Reserve position in International Monetary Fund 494 -2,466 -1,280 -163 -849 -220 -183 -28 16 Foreign currencies 5,293 -6,468 7,578 501 1,065 -170 6,824 -141 -155,700 -297,834 -312.833 -98,206 -68,588' -49,823' -80,968 -113,454 -8,161 -69,146 -88,219 -7,272 1,714 -74 -33,196 -56,663 19 Nonbank-reported claims -32,804 -34,219 -14,278 -12,707 -3,374 -15,696 -60,270 -98,960 -104,533 -32,539 -34.420 -20,200 -22,933 -26,980 21 U.S. direct investments abroad, net -54,465 -95,509 -88,304 -44,117 -23.175' -26,175' -9.143 -29,811 22 Change in foreign official assets in United States (increase. +) 40,253 109,757 122.778 11.369 52,021 13,566 24,235 32,956 30,745 68,813 111,151 12,984 55,600 -3,384 25,472 33,463 24 Other U.S. government obligations 6,077 3,734 4,331 764 52 1.258 1,217 1,804 2,144 1,082 1,404 1,249 -156 220 1,061 279 26 Other U.S. liabilities reported by U.S. banks3 3,560 32,862 4.614 -1,908 -1.264 14,187 -1,910 -4,179 27 Other foreign official assets5..." -2,473 3.266 1,278 280 -211 1,285 -1,585 1,789 28 Change in foreign private assets in United States (increase. +) 245,123 314,705 402,268 87,860 47.454' 86.987' 118,715 149,092 29 U.S. bank-reported liabilities3 111,842 25,283 -1,558 32,765 -35,571 1,925 -1,151 33.239 30 U.S. nonbank-reported liabilities -7.710 34,578 11,272 6,506 7,296 20.608 31 Foreign private purchases of U.S. Treasury securities, net 34.225 99.340 153.784 1,734 11,832 31,212 43,402 67,338 32 Foreign purchases of other U.S. securities, net 57,006 95,268 131,682 27,321 35,993 29,122 34,820 31,747 33 Foreign direct investments in United States, net 49,760 60.236 83,950 14,768 28,694' 17,432' 21,056 16,768 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy 13,724 31,548 -53,122 29,420 4,522' -9,261' -21.804 -26,573 36 Due to seasonal adjustment 1.153 6,653' -449' -8,318 2,119 37 Before seasonal adjustment 13,724 31,548 -53,121 28,267 -2,131 -8.812 -13,486 -28,692 MEMO Changes in official assets 38 U.S. official reserve assets (increase. —) 5.346 -9.742 6,668 191 17 -523 7,489 -315 39 Foreign official assets in United Stales, excluding line 25 (increase, +t 37,909 108,675 121,374 10.120 52.177 13,346 23,174 32,677 40 Change in Organization of Petroleum Exporting Countries official -1,529 3,959 13,573 -1,435 -992 5,555 5.479 3,531 1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34. and 38^10. 4. Associated primarily with military sales contracts and other transactions arranged with 2. Data are on an international accounts basis. The data differ from the Census basis data, or through foreign official agencies. shown in table 3.11, for reasons of coverage and timing. Military exports are excluded from 5. Consists of investments in U.S. corporate stocks and in debt securities of private merchandise trade data and are included in line 5. corporations and state and local governments. 3. Reporting bunks 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' 1997 Item 1994 1995 1996" July Aug. Sept. Oct. Nov Dec. Jan.r 1 Goods and services, balance -104,381 -105,064 -114,299 -11,964 -10,628 -11.616 -8.066 -7.968 -10,489 -12.707 2 Merchandise -166,123 -173 424 -187,766 -17.614 -16.546 -17.639 -14,211 -14.404 -16,871 -19.019 3 Services 61.742 68.360 73.467 5.650 5,918 6.023 6,145 6.436 6,382 6.312 4 Goods and services, exports 698,301 7S6.529 835,414 67.262 69.705 68.816 71.758 72.566 71.210 70.777 5 Merchandise 502.462 575,939 6)1.507 48.792 51.106 50.317 52,893 53.302 51.924 51 474 6 Services 195.839 210,590 223,907 18.470 18.599 18,499 18,865 19,264 19.286 19.303 7 Goods and services, imports -802,682 -891,593 -949,714 -79.226 -80,333 -80.432 -79.824 -80.534 -81,699 -83,484 8 Merchandise -668,585 -749,363 -799,274 -66.406 -67,652 -67.956 -67,104 -67,706 -68,795 -70.493 9 Services -134,097 -142,230 -150.440 -12,820 -12,681 -12,476 -12,720 -12,828 -12,904 -12.991 I. 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 1997 Asset 1993 1994 1995 July Aug. Sept. Oct. Nov Dec. Jan. Feb.'1 1 Total 73,442 74,335 85,832 85,099 76,781 75,509 75,558 75,444 75,090 68,200 67,479 2 Gold stock, including Exchange Stabilization Fund1 11.053 11,051 11,050 11,050 11,050 11,050 11,049 11,049 11,049 11,048 11,048 9.039 10,039 11,037 11.216 10,307 10,177 10,226 10,386 10,312 9,793 9.866 4 Reserve position in International Monetary Fund: 11,818 12,030 14,649 15,665 15,597 15,421 15,517 15,516 15.435 14,372 14.037 5 Foreign currencies4 41,532 41,215 49,096 47,168 39,827 38,861 38.765 38.493 38.294 32.987 32.528 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 tlm 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. f 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—$710million; 1979— International Monetary Fund (IMF) in July 1974. Values are based on a weighted average of $1,139 million; 1980—Si,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 1997 Asset 1993 1994 1995 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. 1 Deposits 386 250 386 166 171 265 176 170 167 167 915 Held in custody 2 U.S. Treasury securities" 379.394 441.866 522,170 580.277 590.367 609,801 619,987 634.165 638.049 646,130 672.059 3 Earmarked gold'1 12,327 12,033 11.702 11,273 11.217 11,210 11,204 11,198 11,197 11.197' 1 [ .034 1. Excludes deposits and U.S. Treasury securities held for international and regional 3. Held in foreign and international accounts and valued at S42.22 per fine troy ounce; not organizations included in the gold stock of the United States. 2. Marketable U.S. Treasury bills, noies. 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 • May 1997 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1996 1997 Item 1994 1995 Jill) Aug. Sept. Oct. Nov. Dec. Jan.P 1 Total' 520,934 630,867 699,525 703,875 719,557 722,701 737,466 752,489 763,404 B\ type 2 Liabilities reported by banks in the United States' 73,386 107,343 113.445 111.034 116,328 109,937 107,014 112,054 119.669 3 US. Treasury bills and certificates 139,571 168,534 186.061 189.726 182,122 186.180 197,692 193,435 188.076 U.S. Treasury bonds and notes 254 059 293,690 337,450 341,037 358,225 363.063 366,903 380,565 388,935 5 Nonmarketable4 6,109 6,491 5,980 6,018 6,057 5,890 5.928 5,967 6,007 47.809 54.809 56,589 56,060 56,8^5 57,631 59,929 60,468 60,717 By area 7 Europe1 215,374 222,406 245.405 246,760 246,342 246.542 250,873 253,100 262.424 8 Canada 17,235 19,473 20.153 21,662 21,351 21.764 21,360 21,343 21.151 41,492 66,720 68,020 69,076 69,338 70,479 76,976 81,739 77.542 10 Asia 236,824 310,966 350.747 354,266 369,471 371,210 375,253 382,998 390,751 11 Africa 4,180 6,296 6.910 6.722 6.944 6,587 7,034 7,379 6,717 12 Other countries 5,827 5,004 8.288 5.387 6,109 6,117 5.968 5.928 4.817 1. Includes the Bank for International Settlements. Venezuela, beginning December 1990, 30-year maturity issue; Argentina, beginning April 2. Principally demand deposits lime 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 Match 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 1996 [tern 1993 1994 1995 Mar. June Sept. Dec. 1 Banks' liabilities 78,259 89,308 109,763 107,514 111,651 111,140 103,820 2 Banks' elaims 62,017 60.711 74,016 69,159 65,864 68,195 66,451 3 Deposits 20,993 19.661 22,696 22,208 20,876 23,931 22,900 4 5 Cla O im the s r o c l la b i a m n s k s' domestic- customers 12 4 1 1 2 , , 0 8 2 5 4 4 4 1 1 0 . , 0 8 5 7 0 8 51 6 , ,1 3 4 2 5 0 46 6 , , 9 3 5 5 1 3 44 7 . , 9 4 8 6 8 4 44 7 , . 2 1 6 3 4 0 4 1 3 0 , . 5 7 5 3 1 5 1. Dala 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

Bank-Reported Data A53 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States' Payable in U.S. dollars Millions of dollars, end of period July Aug. Sept. Oct. Nov. Dec BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 1,014,996 1,099,548 1,135,821 1,088,244 1,074,289 1,089,888 1,120,227 l,114,840r 1,135,821 1,130,731 2 Banks' own liabilities 718,591 753,460 757.099 718.715 701,959 722,802 753.557 739,063' 757,099 760,219 3 Demand deposits 23.386 24,448 27,087 24.992 23,147 25,504 23,867 27,638' 27,087 26,078 4 Time deposits" 186,512 192,556 188,743 193,491 196,561 192,463 197.386 193,058' 188 743 186,101 5 Other' 113,215 140.115 139.694 144,309 129,039 148,499 146,556 141,344' 139.694 154,667 6 Own foreign offices4 395,478 396.341 401.575 355,923 353,212 356.336 385.748 377,023' 401.575 393.373 7 Banks' custodial liabilities1 296,405 346,088 378,722 369,529 372,330 367.086 366,670 375,777 378,722 370.512 8 U.S. Treasury bills and certificates6 162,938 197,355 220.574 217,548 219,949 212.478 214,609 225,046 220.574 214,727 9 Other negotiable and readily transferable instruments7 42,539 52,200 64,036 56,345 55,552 57,702 54.045 54.568 64.036 62,971 10 Other 90,928 96.533 94,112 95,636 96.829 96.906 98,016 96,163 94.112 92,814 11 Nonmonctary international and regional organizations' 8.606 11,039 13,864 11,742 12,675 14,443 16,115 14,570 13,864 13,739 12 Banks' own liabilities 8.176 10.347 13,355 10.545 12.084 13.843 15,284 13,232 13,355 13,060 13 Demand deposits 29 21 29 22 49 26 67 46 29 55 14 Time deposits2 3,298 4,656 5.785 3.747 4,738 5,441 6,005 4,906 5,785 5,592 15 Other1 4,849 5.670 7,541 6,776 7,297 8,376 9,212 8,280 7,541 7.413 16 Banks' custodial liabilities" 430 692 509 1,197 591 600 831 1,338 509 679 17 U.S. Treasury bills and certificates6 281 350 244 865 345 399 600 1.088 244 494 18 Other negotiable and readily transferable instruments7 149 265 330 246 201 231 226 265 185 19 Other 0 0 2 0 0 0 24 0 0 20 Oificial institutions9 212,957 275,877 305,489 299,506 300.760 298,450 296,117 304,706 305,489 307,745 21 Banks' own liabilities 59,935 83,396 79,281 83,812 81.462 85.969 83,648 82,657 79.281 88,218 22 Demand deposits 1,564 2,098 1,509 2,211 1,459 2.049 1,316 2,181 1.509 1,288 23 Time deposits 23,511 30,716 33,660 37.137 37 708 34,902 35.551 35,292 33,660 32.890 24 Other1 34.860 50,582 44,112 44.464 42,295 49.018 46.781 45,184 44.112 54,040 25 Banks' custodial liabilities5 153.022 192,481 226,208 215.694 219,298 212,481 212.469 222,049 226,208 219,527 26 U.S. Treasury bills and certificates 139,571 168,534 193,435 186,061 189,726 182,122 186,180 197.692 193,435 188,076 27 Other negotiable^ and readily transferable instruments' 13,245 23.603 32,345 29,262 29,281 30.051 25,085 24.000 32.345 31.291 28 Other 206 344 428 371 291 308 1.204 357 428 160 29 Banks1" 678,532 691,464 681.361 646.031 635,007 649,430 678.641 667.985' 681,361 669,556 30 Banks' own liabilities 563.617 567,886 562,966 523.939 510 274 524.645 554,225 547.001' 562,966 553,618 31 Unaffilialed foreign banks 168,139 171,545 161,391 168,016 157,062 168,309 168,477 169,978' 161.391 160.245 32 Demand deposits 10,633 11.758 13,693 11,809 11.116 12,764 11,156 13,304 13,693 12,845 33 Time deposits2 111,171 103,472 91,197 95,128 94,867 91,906 96,223 94,345 91.197 89.563 34 Other1 46,335 56.315 56,501 61,079 51,079 63,639 61,098 62.329' 56.501 57,837 35 Own foreign offices4 395,478 396,341 401,575 355.923 353,212 356.336 385,748 377,023' 401,575 393,373 36 Banks' custodial liabilities5 114,915 123.578 118,395 122,092 124.733 124,785 124,416 120,984 118,395 115,938 37 U.S. Treasury bills and certificates6 11,264 15,872 13.886 18.091 18,670 18,556 16,865 14,227 13,886 13,969 38 Other negotiable and readily transferable instruments7 14.506 13,035 12,322 10.359 10,864 11,298 12,455 13,295 12.322 11,142 39 Other 89,145 94,671 92.187 93,642 95,199 94,931 95.096 93,462 92,187 90.827 40 Other foreigners 114,901 121,168 135.107 130,965 125,847 127,565 129,354 127,579' 135,107 139,691 41 Banks' own liabilities 86.863 91,831 101,497 100,419 98,139 98,345 100,400 96,173' 101,497 105,323 42 Demand deposits 11,160 10.571 11,856 10,950 10,523 10.665 11,328 12,107' 11,856 11.890 43 Time deposits" 48,532 53.712 58,101 57 479 59,248 60.214 59.607 58,515' 58.101 58,056 44 Other1 27,171 27,548 31,540 31,990 28,368 27,466 29,465 25.551 31.540 35,377 45 Banks' custodial liabilities5 28,038 29,337 33,610 30,546 27,708 29.220 28,954 31.406 33,610 34,368 46 U.S. Treasury bills and certificates6 11,822 12.599 13.009 12,531 11.208 11,401 10,964 12,039 13,009 12.188 47 Other negoliable^and readily transferable instruments' 14,639 15.221 19.104 16,394 15,161 16,152 16.274 17,047 19,104 20,353 Other 1,577 1.517 1,497 1,621 1.339 1,667 1,716 2,320 1,497 1,827 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 17.895 7,922 8,276 10,466 11,657 10.540 9,934 9,035 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 centra! banks, which arc included in ''Official institutions." 5. Financial claims on residents of the United States, other than long-term securities, held by or through reporting hanks for foreign customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • May 1997 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued 1996 1997 Item 1994 1995 1996 July Aug. Sept. Oct. Nov. Dec. Jan.11 AREA 5(1 Total, all foreigners 1,014,996 T,099.548 l,135,821r 1,088,244 1.074,289 1,089.888 1,120.227 1,114,840' 1,135,821 1,130.731 51 Foreign countries 1.006,390 1.088.509 1,121,957' 1,076,502 1,061,614 1,075.445 1,104.112 1,100,270' 1.121,957 1,116,992 52 Europe 390,869 362.819 366.412' 355.894 355.380 350.316 371,282 379.554' 166,412 376.461 5.1 Austria 3 588 3,537 5,101 3.002 4.683 6.017 6.816 6.250 5,101 4,832 54 Belgium and Luxembourg 21,877 24,792 23,576' 22.093 25.155 22.4X2 23.232 21,1(15" 23.576 22 802 55 Denmark 2.884 2.921 2.450 2.871 2.501 2.652 1,802 2.790 2.450 2.212 56 Finland 1.436 2.811 1.463 1 200 1,1 13 812 1,509 1.557 1.463 1.746 57 France 44,365 39,218 33,504' 36.342 37,363 37.094 41.069 39,034' 3.1.504 11.087 5S German v 27,109 •>4 035 24 554 ^4 175 ' 1 PS ">3 599 23 527 21 672' ••4 554 •>4 853 54 Greece .' 1,400 2.014 I.S10' 1.811 1,722 1,854 1.666 1.811) 2.079 60 lialy 10,885 10,868 10.701 12.785 12,552 12,509 12.793 10.274' 10,701 10,362 61 Netherlands 15,033 13,745 10.995 11.863 11,460 9,526 12,017 11.183' 10,995 9,753 62 Norway 2.338 1,394 1.288 1.435 1,556 1.622 1,552 1.882 1,288 1,860 63 Portugal 2,846 2,761 1.865 1.784 1,328 1.473 1,388 1.723 1,865 1,740 64 Russia 2,726 7,948 7,571 6.047 4.988 4,761 5,602 8.215 7,571 7,158 65 Spain 14,675 10,011 16,921 19.366 17.505 20,359 17,665 18.228 16,921 20,399 66 Sweden 3,094 3,246 1,291' 2.738 1,591 1,814 1,424 1,656' 1.291 2^268 67 Switzerland 40,724 43~625 44^215 39.626 39,074 42^226 32^541 37^981' 44.215 43^268 68 Turkey 3,341 4,124 6,723' 5.619 7,272 7.992 8.019 7,311 6.723 7,051 69 United Kingdom 163,733 139,183 150,308' 137.668 136.242 132.424 158.018 164,967' 150.308 155 543 70 Yugoslavia" 245 177 206 208 207 214 216 '232 206 ""212 71 Other Europe and other former U.S.S.R.12 27,770 26,389 21,870' 25,061 25,940 20,786 20,431 21.272 21.870 25.236 72 Canada 24,768 30.468 38,014' 28.81 1 30,727 33,199 35.153 33,035' 38.014 34.696 73 Latin Ameriea and Caribbean 423,847 440 212 465,701' 438.641 424,120 433,522 444,440 418.443' 465,701 454,938 74 Argentina 17,203 12,235 13,794 12.501 13,320 11.989 11.701 13.860 13,794 16.402 75 Bahamas 104,014 94.991 87,915 93.362 87,994 86.625 101.007 91,184 87,915 91,116 75 Bermuda 8.424 4,897 5,683' 4 205 4.150 4.880 4.910 6,443 5.683 5.103 77 Brazil 9.145 23.797 27.663 23.183 '4 518 23,817 24.083 26.952' 27.663 22,418 78 British West Indies 229,599 239.083 250.755' 234 205 227.024 233,782 229 493 226.549' 250.755 243 901 79 Chile 3.127 2.826 2.915 2 833 2.462 1,205 2.767 2,728 2.915 2.972 SO Colombia 4,615 3.659 3.256 3.329 3.263 2.889 2.968 2.838 3 256 2 747 81 Cuba 13 8 21 10 14 33 17 18 21 19 82 Ecuador 875 1.314 1.767 1.405 1.433 1.449 1.3S3 1.574 1.767 1,611 83 Guatemala 1.121 1.275 1.282 1.092 1.176 1.181 1.207 1.235 1,282 1,338 84 Jamaica 529 481 628 562 625 623 580 564 628 576 85 Mexico 12,227 24,560 31,230' 26,312 24.399 26.808 27.673 27.981' 31,230 27.087 85 Netherlands Antilles 5,217 4,673 5,977' 5,532 3,615 5,290 5.076 4.417 5.977 6.397 87 Panama 4.551 4,265 4,077 3,852 3,994 3,950 4.056 4.002 4.077 3,827 88 Peru 900 974 834 1.029 1,077 936 1.024 942 834 965 89 Uruguay 1.597 1,836 1.888 1 836 1,799 1,751 1,841 1.753 1,888 1,894 90 Venezuela 13,986 11,808 17,361 1V261 15,029 15,596 16,369 17,377 17,361 18.016 91 Other 6,704 7.530 8.655' 8,132 8,228 8,718 8,285 7,906 8,655 8,549 92 Asia 154,346 240,595 236.714' 236.006 237.624 243,208 239,416 233,852' 236,714 236,356 93 Mainland 10,066 33 750 30 441 28.587 34,224 32,068 26.998 29,41 1 30,441 27.924 94 Taiwan 9,844 11.714 15,990' 16,125 14.775 15,721 15,450 16,613' 15,990 16,666 95 Hong Kong 17.104 20.197 18,742' 17,058 18,609 17.485 17,053 18,762' 18,742 19,870 95 India 2,338 3.373 3.936 3,954 4,012 3,793 3,709 3,832 3,936 4,329 97 Indonesia 1 587 2,708 2 297' 2 561 2,161 2,204 2 436 2.401 2,297 2,159 98 Israel 5J57 41)41 6X142 4 444 4,364 4.134 7,162 5J23 6,042 6*583 99 Japan 62,981 109,193 107,014' 112,737 109,262 112,537 112.600 103,678 107,014 106.407 10(1 Korea (South) 5,124 5.749 5.973' 5.622 5,406 5.908 5.545 5.897 5.973 6 047 101 Philippines 2,714 3,092 3.378' 3.041 2,539 3,429 3.191 1.264 3,378 2.338 102 Thailand 6,466 12,279 10.912 11.713 10,691 11,759 11.972 12.729 10.912 9.857 103 Middle Eastern oil-exporting countries'' . . .. 15,494 15.582 14.303 12.947 13,891 14.715 13,032 13.145 14,303 12,936 104 Olhci 15.471 18,917 17.686 17.217 17,690 19.455 20.268 1 S.397 17,686 21.240 105 Africa 6.524 7.641 8.069' 7.558 7.259 7,440 7.058 7.671 8.069 8,443 106 Egypt 1 879 2,136 2 012 1,920 1 894 1 904 1.901 2,012 1,933 107 Morocco ' 97 104 112 "|33 121 78 74 66 'll2 108 South Africa 433 739 458 648 632 482 435 641 458 610 109 Zaire 9 10 10 13 6 6 10 10 5 1 10 Oil-exporting countries14 1.343 1,797 2.508 1.928 2,075 2,051 1,940 2,384 2.608 3.095 I 1 1 Other 2,763 2,855 2,869' 2.722 2,505 2,929 2.694 2.669 2.869 2,689 1 12 Other 6,036 6,774 7.047' 9 592 6.504 7.760 6.763 7,715 7,047 6.098 113 Australia 5.142 5.647 5,458 8.387 5.465 5,522 4,786 6,196 5.468 4,864 114 Other 894 1.127 1.579' 1.205 1.0.39 2,238 1.977 1,519 1.579 1.234 1 15 Nonmonetary international and regional organizations. . . 8,606 11,0.39 13.864' 11,742 12.675 14,443 16,115 14,570 13.864 13.739 116 International15 7,537 9,300 11.991' 10.303 10.988 12,761 14.336 12.772 11,991 12.120 1 17 Latin American regional16 613 893 1,339 831 1,024 1,193 1,304 1.172 1.119 1,103 118 Other regional17 455 846 534 608 663 489 475 626 534 516 11. Since December 1992. has excluded Bosnia. Croatia, and Slovenia. I? Principally the International Bank for Reconstruct ion 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. Id 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 InkTiiaiinnal 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

Bank-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 Area or country July Aug. Sept. Nov. Jan.p 1 Total, all foreigners 532,539 600,689r 544,126 546,607 544,717 563,488 574,920r 600,689 608,704 2 Foreign countries 478,629 530,608 598,085r 542,012 544.575 543,019 560,410 573,447r 598,085 606,932 3 Europe 123.358 132,150 166,523' 143,424 150,054 155,277 165.634 168,794 166,523 179,472 4 Auslria 692 565 1,662 1,128 849 988 1,197 1,097 1,662 1,643 5 Belgium and Luxembourg 6.738 7,624 6.727 7,021 7.018 6.903 6,828 6,403 6,727 7,611 6 Denmark 1.129 403 492 319 230 408 480 651 492 678 7 Finland 512 1.055 971 1,629 1,296 1,350 1.068 1,228 971 1,150 8 France 12.146 15,033 15,246' 10.570 11,570 12,078 12.792 12,198 15,246 18,105 9 Germany 7,608 9.263 8.475 9.497 7.559 8.670 8.546 7,195 8,475 9,657 10 Greece 604 469 568 527 433 397 426 571 568 636 11 Italy 6,043 5,370 6.457' 6,023 6,625 5.870 5 007 5,957' 6,457 5,410 12 Netherlands 2.959 5.346 7.080 6,360 6,565 6.956 7,386 7,350 7.080 8,119 13 Norway 504 665 808 1,397 1,342 1.199 1,617 1,894 808 1.058 14 Portugal 938 888 418 667 548 484 517 341 418 420 15 Russia 973 660 1.669 514 794 1,135 1,413 1,533 1,669 1.673 16 Spain 3,530 2,166 3,211 3,341 3.073 4.152 3,885 4,181 3,211 6,500 17 Sweden 4.098 2,080 2,673 2,802 2,726 2.976 2.919 2,882 2,673 3,028 18 Switzerland 5,746 7.474 19.798 9.520 9.266 10.930 16,110 18,071 19.798 21,455 19 Turkey 878 803 1.109 1,018 1.044 1.083 962 1,131 1,109 1,029 20 United Kingdom 66,824 67,784 85,057 77,775 85,355 85,732 89,961 92.143' 85,057 86,709 21 Yugoslavia2 265 147 115 159 87 87 118 112 115 108 22 Other Europe and other former U.S.S.R 1,171 4,355 3.987 3.157 3,674 3.879 4,402 3,856 3,987 4.483 23 Canada 18,490 20.874 26,436 23.981 25.132 25,343 23,066 22,013 26,436 26,318 24 Latin America and Caribbean 223.523 256,944 274 116' 253 177 249.693 240,634 243,634 253.761 274,116 272,032 25 Argentina 5.844 6.439 7,400' 6,592 7.062 7,101 7,057 7.212 7,400 6,986 26 Bahamas 66.410 58.818 71,871' 59 300 62,297 61,830 61,991 64,911 71,871 62,662 27 Bermuda 8,481 5.741 4.103 3.579 3.052 3,640 4,438 5,019 4,103 4,444 28 Brazil 9.583 13.297 17,259' 15.197 15,155 15,261 15,417 16,141 17,259 17,618 29 British West Indies 95.74] 124.037 105,502' 101,043 99,363 102,157 105,891 105,234 105,502 109,061 30 Chile 3.820 4.864 5,136' 4.321 4,174 4,388 4,288 4,554 5,136 5,508 31 Colombia 4,004 4.550 6,247' 4.512 4.725 4.723 4.811 4.960 6,247 6,167 32 Cuba 0 0 0 0 0 0 0 0 0 0 33 Ecuador 682 825 1,031 897 932 965 957 952 1,031 1,076 34 Guatemala 366 457 620 463 476 507 546 568 620 612 35 Jamaica 258 323 345 346 335 339 362 365 345 336 36 Mexico 17.749 18.024 18,425' 16,971 17.540 17.715 17,742 17,993 18,425 18.309 37 Netherlands Antilles 1.396 9 229 25.209 29.224 23,713 11.207 9,406 15.074 25,209 27,674 38 Panama 2,198 3,008 2,786 2.211 2 211 2,257 2,354 2,621 2.786 2,799 39 Peru 997 1.829 2.720' 2,568 2/163 2,541 2.563 2,629 2.720 2,866 40 Uruguay 503 466 589 589 562 530 547 551 589 623 41 Venezuela 1,831 1,661 1.702" 1.402 1,728 1,513 1,636 1,626 1,702 1.597 42 Oiher 3.660 3,376 3,171' 3,962 3.905 3.960 3,628 3.351 3,171 3,694 43 Asia 107.079 115,431 122,544' 114.986 113,912 113.702 120.092 120,285' 122,544 121,238 China 44 Mainland 836 1.023 1,401 1.349 2,033 1,700 1,420 1,292 1,401 2,016 45 Taiwan 1.448 1.713 1.894 1.312 1.023 1,700 1.305 1,413 1.894 1,249 46 Hontz Kong 9.161 12,821 12,802 13,412 12.464 13,882 12.975 13,550 12,802 11,764 47 India 994 1,846 1,946 1,785 2,118 1,975 2.190 2,027 1,946 1,824 48 Indonesia 1.470 1,696 1.767' 1,744 1,572 1,653 1.577 1,636 1,767 1,745 49 Israel 688 739 633 659 667 576 1.017 624 633 691 50 Japan 59,151 61,468 59.967' 53,441 54.583 52,326 59.343 59,886 59,967 59,751 51 Korea (South) 10.286 14.070 18.961' 18,624 17,644 17,608 17,032 18,080 18,961 20.198 52 Philippines 662 1,318 1,697 1.265 1.205 1,255 1,335 1,519 1,697 1,492 53 Thailand 2,902 2,612 2,680' 2,824 2,864 2,705 2,699 2,820 2,680 3,003 54 Middle Eastern oil-exporting countries4 13.748 9,639 10,424 9.478 9,489 10.111 11,372 10,311 10,424 8,590 55 Other 5,733 6,486 8,372 9,093 8,250 8.211 7,827 7,127' 8,372 8,915 56 Africa 3.050 2,742 2,776 2.605 2.735 2.757 2,638 2,557 2,776 2,730 57 Egypt 225 210 247 216 221 241 204 212 247 246 58 Morocco 429 514 524 602 577 565 543 587 524 489 59 South Africa 671 465 584 441 512 572 614 551 584 571 60 Zaire 2 1 0 1 II 1 1 0 0 0 61 Oil-exporting countries' 856 552 420' 470 462 429 414 427 420 408 62 Other 867 1,000 1.001' 875 952 949 862 780 1,001 1.016 63 Other 3,129 2 467 5,690 3,839 3 049 5,306 5 U6 6,037 5.690 5.142 64 Australia 2,186 1.622 4,577 1 020 2.439 3.641 3,798 4,336 4,577 3,741 65 Other 943 845 1.113 819 610 1.665 1,548 1,701 1,113 1.401 66 Nonmonetary international and regional organizations6 4,591 1.931 2,604 3,078 1,473 1,772 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 Ihe 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 • May 1997 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 1997 Type of claim 1994 1995 I9961 July Aug. Sept. Oct. Nov. Dec. Jan.? 1 Total 599,499 655,306 744,133 688,310 744,133 2 Banks' claims 483.220 532,539 600.689 544,126 546.607 544,717 563,488 574,920' 600.689 608,704 3 Foreign public borrowers 23,416 22,518 21.963 20,234 18.875 22,719 24 929 20,106 21.963 26,016 4 Own foreign offices2 283.015 307,427 342,508 297.799 299.828 311,588 330,377 135.089 342.508 331,672 5 Unaffiliatccl foreign banks 109,146 101.595 113.582 108.921 111.8X1 109,616 108,778 108,009' 113.582 121.089 6 Deposits 59.368 37.658 33.943 36.145 19,118 35,286 36,239 32,407' 33,943 39.612 7 Other 49.978 61.937 79.639 72.776 72.541 74.330 72,539 75.602 79.639 81.477 8 All other foreigners 67.443 100.999 122.636 117,172 116.023 100.794 99,404 1 11,716 122,636 129.927 9 Claims of banks' domestic customers1 116,279 122,767 143,444 143,593 143,444 10 Deposits 64,829 58,519 80,695 78,543 11 Negotiable and readily transferable 78.543 instruments4 36,008 44.161 46,491 49.677 12 Outstanding collections and other 49,677 claims 15,442 20,087 16.407 15.224 15,224 MEMO 13 Customer liability on acceptances 8,427 8,410 9,625 9,396 9,625 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 32,796 30,717 42,679 32.270 3.1.527 34,125 40.326 41,581 42,679 43,452 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 tiled 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 b> banks abroad. 3.20 BANKS' OWN CLAIMS ON UN AFFILIATED FOREIGNERS Reported by Banks in the United States1 Payable in US. Dollars Millions of dollars, end of period 1996 Maturity, by borrower and area' 1993 1994 1995 Mar. June Sept Dec.p I Total 202,566 200,070 225,027 233,482 228,571 231,389 256,315 Bv b<inc)wer 2 Maturity ot one year or less 172.662 168.359 178.857 193.870 185,881 187.102 210.073 1 Foreign public borrowers 17,828 15,435 14.995 19.544 14 847 15.523 14.897 4 All other foreigners 154,834 152.924 161,862 174,326 171.034 171.77C> 195,176 5 Maturity of more than one year .... 29,904 31.711 46,170 39,612 42.690 44.087 46,242 6 Foreign public borrowers 10,874 7.838 7,522 8.131 8,126 6 922 6,815 7 All other foreigners 19.030 23,873 38.648 31.481 34,564 37.165 39,427 By area Maturity of one year or less 8 Europe 57,413 55.770 55.622 57,979 57,138 57,075 54,131 9 Canada 7,727 6,690 6,751 5,470 6,806 8.811 8,339 10 Latin America and Caribbean 60,490 58,877 72,504 84,385 78,622 79.622 103,229 11 Asia 41,418 39.851 40,296 40,312 38,078 17 199 38,131 12 Africa 1,820 L376 1,295 1,326 1,279 ~L32O 1,316 13 All other1 3,794 5,795 2.389 4,398 3.958 3.275 4,927 Maturity of more than one year 14 Europe 5,310 4,203 4.995 6,835 8,193 7.134 6.963 [5 Canada 2,581 1,505 2.751 2.563 3,689 3.5.3.1 2,645 16 Latin America and Caribbean 14,025 15.717 27.681 19,368 19.511 21,382 24,941 17 Asia 5,606 5,318 8.036 8,466 9.291 9,928 9,391 18 Africa 1,935 1.581 1.421 1,449 1.410 1.349 1.361 19 All other' 447 1.385 1,286 931 596 761 941 I Reporting banks include all types of depository institutions as well s 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

Bank-Reported Data A57 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks' Billions of dollars, end of period Area or country Sept. 1 Total 344.7 407.7 497.3 543.1 528.8 531.2 551.9 574.6 609.2 586.0r 2 G-IO countries and Switzerland . 131.3 161.8 190.6 211.5 204 4 200.0 206.0 203.4 223.3 220.0' 3 Belgium and Luxembourg. . . . .0 7.4 7.0 10.2 9.4 10.7 13.6 11.0 7.9 11.3' 4 France 15.3 12.0 19.1 19.9 19.9 18.0 19.4 17.9 18.0 I7.4r 5 Germany 9.1 12.6 24.7 31.2 30.0 27.5 27.3 31.5 31.4 33 9' 6 Italy 6.5 7.7 11.8 10.6 10.7 12.6 11.5 13.2 14.9 15.2' 7 Netherlands .0 47 3.6 3.5 4.3 44 37 3.0 4.7 5.9r 8 Sweden 2.3 2.7 2.7 3.1 3.1 2.9 2.7 3.3 2.7 3.0 9 Switzerland 4.8 5.9 5.1 5.7 6.2 6.6 6.7 5.2 6.3 6.21 10 United Kingdom 59.7 84.3 85.7 90.1 87.1 80.3 82.4 84.7 101.6 90.5' 11 Canada 6.3 6.9 10.0 10.8 1 I 3 13.0 10.3 10.8 12.2 14.8' 12 Japan 18.8 17.6 20.7 26.2 22.7 24.0 28.5 22.7 23.6 21.7' 13 Other industrialized countries 24.0 25.6 45.2 44.1 43.3 50.2 50.2 61.3 55.5 62.1' 14 Austria 1.2 .4 1.1 .9 .7 1.2 .9 1.3 1.2 1.0 15 Denmark .9 1.0 1.3 1.7 1.1 1.8 2.6 3.4 3.3 1.7' 16 Finland .7 .4 .9 I.I .5 .7 .8 .7 .6 .6 17 Greece 3.0 3.2 4.5 4.9 5.0 5.1 5.7 5.6 5.6 6.1 18 Norway 1.2 1.7 2.0 2.4 1.8 2.3 3.2 2.1 2.3 3.0 19 Portugal .4 .8 1.2 1.0 1.2 1.9 1.3 1.6 1.6 1.4 20 Spain 8.9 9.9 13.6 14.1 13.3 13.3 11.6 17.5 13.6 16.1' 21 Turkey 1.3 2.1 1.6 1.4 1.4 2.0 1.9 2.0 2.3 2.8 22 Other Western Europe.... 1.7 2.6 2.7 2.5 2.6 3.0 4.7 3.8 3.4 4.8 23 South Africa 1.7 1.1 1.0 1.5 1.4 1.3 1.2 1.7 2.0 1.7' 24 Australia 2.9 2.3 15.4 12.6 14.3 17.4 16.4 21.7 19.6 22.8 25 OPEC" 15.8 17.4 23.9 19.5 20.3 22.4 22.1 21.2 20.1 19.2' 26 Ecuador .6 .5 .5 .5 .7 7 .7 .8 .9 9' 27 Venezuela 5.2 5.1 3.7 3.5 3.5 3.0 2.7 2.9 2.3 2.3 28 Indonesia 2.7 3.3 3.8 4.0 4.1 4.4 4.8 4.7 4.9 5.4' 29 Middle East countries .... 6.2 7.4 15.0 10.7 11.4 13.6 13.3 12.3 11.5 10.1 30 African countries .... .9 .7 .6 .6 .6 .6 .4 31 Non-OPEC developing countries 103.6 104.0 118.6 Latin America 32 Argentina 6.6 7.7 11.4 12.3 10.9 12.9 12.7 14.1 15.0' 33 Brazil 10.8 12.0 9.2 10.0 13.6 13.7 18.3 21.7 17.8' 34 Chile 4.4 4.7 6.1 6.4 7.1 6.4 6.8 6.4 6.7 6.6' 35 Colombia 1.8 2.1 2.6 2.6 2.6 2.9 2.9 2.9 2.8 3.1 36 Mexico 16.0 17.8 18.4 17.9 17.6 16.3 17.3 16.1 15.4 16.1' 37 Peru .4 .6 .8 .7 .8 .9 1.2 1.3' 38 Other 3.1 2.4 2.6 2.6 2.8 3.1 3.0 3.0 Asia China 39 Mainland 2.0 1.1 1.4 1.7 1.8 i.3 2.9 2.6 40 Taiwan 7.3 9.2 8.5 9.0 9.0 9.4 9.7 9.8 10.3 41 India 3.2 3.2 4.2 3.8 4.0 4.4 4.4 4.7 4.2 3.8 42 Israel .4 .5 .4 .6 .7 .5 5 .5 .6 .5 43 Korea (South) 6.6 6.7 16.2 16.9 18.7 18.0 19.1 19.3 21.7 21.9 44 Malaysia 3.1 4.4 3.1 3.9 4.1 4.3 4.4 5.2 5.3 5.5 45 Philippines 3.6 3.1 3.3 3.0 3.6 3.3 4.1 3.9 4.7 5.4 46 Thailand 2.2 3.1 2.1 3 3 3.8 3.9 4.9 5.2 5.4 4.8 47 Other Asia 3.1 3.1 4.7 4.9 3.7 4.5 4.3 4.8 4.1 Africa 48 Egypt .4 .4 .5 49 Morocco .6 .6 .6 .9 .7 .8 .7 50 Zaire .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 1.0 .8 .7 .6 .8 .8 1.0 52 Eastern Europe 3.1 2.7 2.3 1.8 4.2 6.2 5.0 5.2' 53 Russia4 1.9 1.6 .8 .7 .4 1.0 1.4 1.0 1.8 54 Yugoslavia^ .6 .6 .5 .4 .1 .3 .3 3 .3 55 Other .6 .9 1.4 1.0 2.3 2.8 4.5 3.7 3.1' 56 Offshore banking centers 58.1 73.0 72.2 84.8 82.8 86.9 99.2 101.3 106.2 105.3' 57 Bahamas 6.9 10.9 10.2 12.5 8.4 12.6 11.0 13.9 17.3 14.2' 58 Bermuda 6.2 8.9 8.4 8.7 8.4 6.1 6.3 5 3 4.1 4.0 59 Cayman Islands and other British West Indies 21.5 18.0 20.8 19.8 24.3 24.4 32.4 28.8 26.1 32.0' 60 Netherlands Antilles 1.1 2.6 1.3 .9 2.4 5.5 9.9 10.7 13.0 11.5 61 Panama6 1.9 2.4 1.3 1.1 1.3 1.3 1.4 1.6 1.7 1.7 62 Lebanon .1 .1 .] .1 .] .1 .1 .1 .1 63 Hong Kong 13.9 18.7 19.9 23.1 23.6 25.0 25.3 27.8 26.2' 64 Singapore 6.5 11.2 10.1 19.2 14.8 13.3 13.1 15.4 15.9 15.4 65 Other' .0 .1 .0 .0 .1 .1 .1 66 Miscellaneous and unallocated* 39.7 43.4 66.7 72.3 57.3 49.6' 1. The banking offices covered by these data include U.S. offices and foreign branches of 2. Organization of Petroleum Exporting Countries, shown individually; other members of U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not covered OPEC (Algeria. Gabon, Iran. Iraq, Kuwait, Libya. Nigeria. Qatar. Saudi Arabia, and United include U.S. agencies and branches of foreign banks. Beginning March 1994. the data include Arab Emirates); and Bahrain and Oman (not formally members of OPEC). large foreign subsidiaries of U.S. banks. The data also include other types of U.S. depository 3. Excludes Liberia. Beginning March 1994 includes Namibia. institutions as well as some types of brokers and dealers. To eliminate duplication, the data 4. As of December 1992. excludes other republics of the former Soviet Union. arc 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 Hercegovmia, 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 • May 1997 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1995 1996 June Sept. Dec. Mar. June Sept. 1 Total 45,511 50,597 54,309 49,973 47,673 46,448 49,907 48,990 51,105 2 Payable in dollars 37,456 38,728 38.298 34.281 33,908 33,903 36,273 35,385 36,402 8 055 11 869 16011 15 692 13 765 12 545 13 634 13,605 14.703 By lypc 4 Financial liabilities 23,841 29,226 32,954 29,282 26,237 24,241 26,570 24.844 25,107 5 Payable in dollars 16,960 18.545 18,818 15,028 13,872 12,903 13,831 12.212 11,256 6 Payable in foreign currencies 6.881 10.681 14,136 14,254 12,365 11,338 12,739 12,632 13,851 7 Commercial liabilities 21,670 21.371 21.355 20,691 21,436 22.207 23.337 24,146 25,998 8 Trade payables 9,566 8,802 10.005 10,527 10,061 11,013 10,815 11,081 11,605 9 Advance receipts and other liabilities 12,104 12.569 11.350 10,164 11,375 11.194 12,522 13,065 14,393 20,496 20,183 19.480 19,253 20,036 21,000 22.442 23,173 25,146 11 Payable in foreign currencies 1,174 1,188 1,875 1,438 1,400 1,207 895 973 852 By area or country Financial liabilities 12 Europe 13.387 18,810 21,703 18,223 16,401 15,622 16,950 16,434 16.054 414 175 495 778 347 369 483 498 547 14 France 1,623 2,539 1,727 1,101 1,365 999 1.679 1,011 1,220 889 975 1,961 1,589 1,670 1,974 2,161 1,850 2,276 606 534 552 530 474 466 479 444 519 17 Switzerland 569 634 688 1,056 948 895 1,260 1,156 830 18 United Kingdom 8,610 13,332 15,543 12,138 10,518 10.138 10,246 10,790 9,821 19 Canada 544 859 629 893 797 632 1,166 951 881 20 Latin America and Caribbean 4.053 3,359 2,034 1,950 1.904 1,783 1,876 969 1,018 21 Bahamas 379 1,148 101 81 79 59 78 31 50 22 Bermuda 114 0 80 138 144 147 126 28 25 23 Brazil 19 18 207 58 57 57 8 9 24 British West Indies 2.850 1,533 998 1,030 930 866 946 826 764 25 Mexico 12 17 0 3 3 12 16 11 4 26 Venezuela 6 5 5 4 3 2 2 1 0 27 Asia 5,818 5,956 8.403 8,023 6,947 5,988 6,390 6,351 6,927 4,750 4.887 7.314 7,141 6,308 5.436 5,980 6,051 6,602 29 Middle Eastern oil-exporting countries' 19 23 35 25 25 27 26 26 25 30 Africa 6 133 135 151 149 150 131 72 132 0 123 123 122 122 122 122 61 121 32 All other1 33 109 50 42 39 66 57 67 95 Commercial liabilities 7,398 6,827 6.773 6,776 7,263 7,700 8,425 7.916 8,654 34 Belgium and Luxembourg 298 239 241 311 349 331 370 326 427 700 655 728 504 528 481 648 678 657 36 Germany 729 684 604 556 660 767 867 839 959 37 Netherlands 535 688 722 448 566 500 659 617 668 38 Switzerland 350 375 327 432 255 413 428 516 409 39 United Kingdom 2,505 2,039 2,444 2,902 3,351 3,568 3,525 3.266 3,664 40 Canada 1,002 879 1.037 1,146 1,219 1.040 959 998 1.094 41 Latin America and Caribbean 1,533 1,658 1.857 1,836 1,607 1,740 2,110 2,301 2,306 42 Bahamas 3 21 19 3 1 1 28 35 33 43 Bermuda 307 350 345 397 219 205 570 509 355 44 Bra/.il 209 214 161 107 143 98 128 119 159 45 British West Indies 33 27 23 12 5 56 10 10 15 46 Mexico 457 481 574 420 357 416 468 475 441 142 123 276 204 175 221 243 283 332 48 Asia 10,594 10,980 10,741 9,978 10,275 10,421 10,474 11,389 12,229 3,612 4,314 4,555 3,531 3,475 3,315 3,725 3.943 4,150 50 Middle Eastern oil-exporting countries' 1,889 1.534 1,576 1,790 1,647 1.912 1,747 1,784 1,951 51 Africa 568 453 428 481 589 619 708 924 1,013 309 167 256 252 241 254 254 462' 490 53 Other1 575 574 519 474 483 687 661 618 702 [. 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 Type of claim, and area or country 1992 1993 Sept. Sept. 1 Total 45,073 49,159 57,888 58,051 53,424 52,509 55,406 58,845 57,230 2 Payable in dollars 42,281 45,161 53,805 54,138 49,696 48,711 51,007 54,000 52,555 3 Payable in foreign currencies 2,792 3.998 4,083 3,913 3,728 3,798 4,399 4,845 4,675 By type 4 Financial claims 26,509 27,771 33,897 34,574 29,891 27,398 30,772 33,994 32,857 5 Deposits 17,695 15,717 18,507 22,046 17,974 15,133 17,595 18,364 18,941 6 Payable in dollars 16,872 15,182 18,026 21,351 17,393 14,654 17,044 17,926 18.317 7 Payable in foreign currencies 823 535 481 695 581 479 551 438 624 8 Other financial claims 8,814 12,054 15,390 12,528 11,917 12,265 13.177 15,630 13,916 9 Payable in dollars 7,890 10,862 14,306 11,370 10,689 10,976 11,290 13,233 11,827 10 Payable in foreign currencies 924 1,192 1.084 1.158 1.228 1.289 1,887 2,397 2,089 11 Commercial claims 18,564 21,388 23,991 23,477 23,533 25,111 24,634 24,851 24,373 12 Trade receivables 16,007 18,425 21,158 21,326 21,409 22,998 22,123 22,276 22,010 13 Advance payments and other claims . 2.557 2,963 2,833 2,151 2,124 2,113 2,511 2,575 2,363 14 Payable in dollars 17,519 19,117 21,473 21,417 21,614 23,081 22,673 22,841 22,411 15 Payable in foreign currencies 1,045 2.271 2.518 2,060 1.919 2,030 1.961 2.010 1,962 Bv area or country Financial claims 16 Europe 9,331 7.299 7,936 7.927 7.840 7,609 8,929 9,241 8,500 17 Belgium and Luxembourg 8 134 86 155 160 193 159 151 126 18 France 764 826 800 730 753 803 1,015 679 733 19 Germany 326 526 540 356 301 436 320 296 272 20 Netherlands 515 502 429 601 522 517 486 488 520 21 Switzerland 490 530 523 514 530 498 470 461 431 22 United Kingdom 6,252 3,585 4.649 4,790 4,924 4,303 5,568 6,169 5,333 1,833 2,032 3.581 3.705 3,526 2,851 5,269 4.773 4.502 24 Latin America and Caribbean . . 13,893 16,224 19,536 21,159 15.345 14,500 13,827 17,644 17,184 25 Bahamas 778 1,336 2,424 2,355 1,552 1,965 1,538 2,168 1.746 26 Bermuda 40 125 27 85 35 81 77 84 113 27 Brazil 686 654 520 502 851 830 1,019 1,242 1,417 28 British West Indies 11,747 12.699 15,228 17,013 11,816 10,393 10,100 13.024 12,809 29 Mexico 445 872 723 635 487 554 461 392 411 30 Venezuela 29 161 35 27 50 32 40 23 17 31 Asia 864 1,657 1,871 1,235 2,160 1,579 1,890 1,571 1,826 32 Japan 668 892 953 471 1,404 871 1,171 852 1,001 33 Middle Eastern oil-exporting countries' 3 3 141 3 4 3 13 9 13 34 Africa , 83 99 373 138 188 276 277 197 176 35 Oil-exporting countries' 9 1 0 9 6 5 5 5 13 36 All other' 568 669 Commercial claims 37 Europe 8,451 9,105 9,540 9.200 8,862 9,824 9,776 9.812 9,162 38 Belgium and Luxembourg 189 184 213 218 224 231 247 239 213 39 France 1,537 1,947 1,881 1,669 1,706 1,830 1,803 1,658 1,525 40 Germany 933 1.018 1,027 1,023 997 1,070 1.410 1,335 1,239 41 Netherlands 552 423 311 341 338 452 442 481 420 42 Switzerland 362 432 557 612 438 520 579 602 588 43 United Kingdom 2.094 2,377 2,556 2,469 2,479 2,656 2,607 2,651 2,514 44 Canada 1,286 1,781 1,988 2,003 1,971 1,951 2,045 2,074 2.032 45 Latin America and Caribbean 3,043 3.274 4,117 4,370 4,359 4,364 4,151 4,340 4,156 46 Bahamas 28 9 21 26 30 30 28 14 47 Bermuda 255 182 234 210 245 272 273 264 290 48 Brazil 357 460 612 777 745 898 809 837 857 49 British West Indies 40 71 83 83 66 79 106 103 119 50 Mexico 924 990 1,243 1,109 1,026 993 870 1,021 901 51 Venezuela 345 293 348 319 325 285 308 313 302 52 Asia 4,866 6.014 6,982 6,516 6,826 7,312 7,100 6,883 7.216 53 Japan 1,903 2,275 2,655 2,011 1,998 1.870 2,010 1,877 1,918 54 Middle Eastern oil-exporting countries1 693 704 708 707 775 974 1.024 879 930 55 Africa 554 493 454 478 544 654 667 688 716 56 Oil-exporting countries" 78 72 67 60 74 87 107 83 142 57 Other' 1,006 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 D May 1997 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1996 Transaction, and area or country 1995 1996' J J a a n n . . - July Sept. Jan.p U.S. corporate securities STOCKS 1 Foreign purchases 462,950 625,595 72,993 49,557 46,136 42,599 57,758 67,406 57,051 72,993 451,710 612,366 70,119 52,211 44,071 42,550 56,751 65,470 56,629 70,119 2 Foreign sales 11,240 13,229 2,874 -2,654 2,065 1,007 1,936 2.874 3 Net purchases, or sales (—) .... 11,445 13,303 2,875 -2,653 2,051 75 1,013 1,939 451 2,875 4 Foreign countries 4,912 6,329 3.232 -386 3,310 200 447 53 -229 3,232 5 Europe -1,099 -2.343 532 -188 -209 -109 -219 -237 -1,064 532 6 France -1,837 1,101 959 363 83 -85 116 -8 -18 959 7 Germany 3,507 1,365 322 124 219 -13 -132 139 -160 322 8 Netherlands -2,283 2,706 294 615 538 -123 144 682 -470 294 9 Switzerland 8,066 3,925 -167 -1.490 2,551 475 909 464 1,487 -167 10 United Kingdom -1,517 2,253 422 31 -250 191 742 736 -9 422 11 Canada 5,814 5,558 1.374 -1.077 1,046 252 -653 959 994 1,374 1 1 2 3 M La i t d in d le A m Ea e s r t i 1 ca and Caribbean .. . - 2 3 ,5 3 0 7 3 -1, 8 6 9 0 8 2 -2,1 - 7 I 6 -1. - 3 1 4 5 7 -1 - , 1 6 7 4 9 2 - - 1 5 5 7 3 5 51 1 1 5 - 2 5 5 7 9 -232 -2,1 - 7 1 6 14 Other Asia -2,725 -318 -1,559 -611 -791 104 313 -525 -343 -1,559 15 Japan 2 -81 -8 33 -33 -6 5 -23 10 -8 16 Africa 68 -52 32 108 -201 166 -54 12 -76 32 17 Other countries 18 Nonmonetary international and regional organizations ... -205 -74 -3 -29 19 Foreign purchases 293.533 422,276 48,777 27.962 32,333 37,407 40,668 47,406 42,907 48,777 206.951 294.958 36.603 17,458 20,901 23,858 30,277 34.667 32.825 36,603 20 Foreign sales 86,582 127,318 12,174 10,504 11.432 13,549 10,391 12,739 10,082 21 Net purchases, or sales (-) . 22 Foreign countries 87,036 127,147 12,178 10,387 11,453 13,551 10,406 12.749 10,082 12,178 23 Europe 70.318 74,975 6,442 6.502 6,184 8,350 6,279 5,710 4,623 6,442 24 France 1,143 5,200 73 345 169 565 713 98 252 73 25 Germany 5.938 5,136 -274 255 626 381 -260 209 -27 -274 26 Netherlands 1,463 2.440 337 442 146 244 93 533 148 337 27 Switzerland 494 882 -58 258 125 403 59 -132 -30 -58 28 United Kingdom 57,591 54,615 6,265 4 790 4,305 6,231 5,316 4,357 4.351 6,265 29 Canada 2,569 4,230 379 514 474 122 181 435 391 379 3 3 0 1 L M a i t d in d le A m Ea e s r t i 1 ca and Caribbean 6 1 , , 1 8 4 6 1 9 22 1 , , 9 63 2 7 2 3, 4 1 8 8 0 9 1, 2 8 0 1 5 1 1. 2 2 0 7 1 2 1,1 6 4 5 4 2, 2 9 1 5 1 4 2. 5 2 1 2 3 2 2, 4 9 1 4 2 0 3, 4 18 8 9 0 32 Other Asia 5,659 23,108 1,661 1,186 3.243 3,681 787 3,727 1,644 1,661 33 Japan 2,250 13,694 1,597 905 2,583 1,963 1,037 2,245 1,395 1,597 34 Africa 234 600 89 31 17 109 45 132 79 89 35 Other countries 246 -325 -62 138 62 80 -51 10 -7 -62 36 Nonmonetary international and regional organizations . . . 117 -15 Foreign securities 37 Stocks, net purchases, or sales (-) -50,291 -58,111 -1,042 -5,139 -1,197 -1,733 -2,329 -1.928' -5,902 -1,042 38 Foreign purchases 345,540 457 442 52,225 37.643 34.016 31,195 40,117 47.554' 41,850 52,225 39 Foreign sales 395,831 515,553 53,267 42.782 35,213 32,928 42,446 49.482' 47,752 53,267 40 Bonds, net purchases, or sales (-) -48,405 -46,271 3,436 - 3.418 -5,189 -4,430 -5,771 -1,972' -10.742 3,436 41 Foreign purchases 889,541 1.118,725 109,527 80.692 84,461 113,087 116,354 105,614" 98,795 109,527 42 Foreign sales 937,946 106,091 84.110 89,650 117,517 122.125 107,586' 109,537 106.091 1,164,996 43 Net purchases, or sales (-), of stocks and bonds -98,696 2,394 -8,557 -6,386 -6,163 -8,100 -3,900r -16,644 2,394 -104,382 44 Foreign countries -97,891 2,346 -8,620 -6,244 -5,637 -8,122 -3,932r -16,633 2,346 -103,511 45 Europe -48,125 -57,209 3,301 -5,960 -5,298 -5,505 -6,093 -2,805' -11,150 3,301 46 Canada -7,812 -6,017 919 807 882 222 -574 -577' -2.177 919 47 Latin America and Caribbean -7,634 -7,420 380 -2,181 -1,470 -1,277 937 3,943 -1.497 380 48 Asia -34,056 -27,684 -1.685 -1,174 -1.016 971 -819 -4,120' -773 -1,685 49 Japan -25,072 -5,928 -333 231 486 2,456 656 -632' 2,218 -333 50 Africa -327 -1,529 34 -53 -25 -49 -468 -115 36 34 51 Other countries 63 -3,652 -603 -59 683 -1.105 -258 -1.072 -603 52 Nonmonetary international and regional organizations -80S 63 -142 -526 22 32 -11 48 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 Stales). 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 Transactions' Millions of dollars; net purchases, or sales (-) during period Area or country J J a a n n . . - July Aug. Sept. Jan.' 1 Total estimated 134,115 244.2731" 22,225 47,960 12,340 14,738 24,321 20,831 47,662 22,225 2 Foreign countries 133.676 246,115' 48,396 12,304 14,895 23,784 22.023 46.519 22,691 3 Europe 49,976 117.511' 4,410 18.471 7,103 13,104 12.992 8,478 14,778 4,410 4 Belgium and Luxembourg 591 1,481 38 -39 73 489 -320 330 370 38 5 Germany 6,136 18.072 556 1,233 467 -264 2,813 3,449 1,499 556 6 Netherlands 1.891 -529 -671 694 -237 116 -423 729 855 -671 7 Sweden 358 2,350 -255 322 -282 431 169 -45 26 -255 8 Switzerland -472 480 241 395 -730 718 -599 -54 -517 241 9 United Kingdom 34,754 64,428 2,914 11,245 7,623 7,977 10,121 -152 7,265 2,914 10 Other Europe and former U.S.S.R. 6,718 31,229' 1,587 4,621 189 3,637 1,231 4,221 5,280' 1,587 Canada 252 2,725 667 1,734 -988 -215 -1,744 313 -780 667 Latin America and Caribbean . . . 48,609 25,540 10,243 23.991 -491 -19,359 1,479 12.906 15,228 10,243 Venezuela _2 -69 -3 16 146 -45 -29 -68 212 -3 Other Latin America and Caribbean 25,152 13,233 6,461 986 3,088 -1,547 926 2,922 5,292 6,461 Netherlands Antilles 23,459 12,376 3,785 22,989 -3.725 -17,767 582 10,052 9,724 3,785 Asia 32,467 97,962 8,540 3,964 6,327 20,713 9,889 1,298 16,744 8,540 Japan 16,979 41,508 4.264 2.384 2,924 4,875 6.629 1,337 7,593 4.264 Africa 1,464 1,085 29 -31 163 30 -13 -12 -2 29 Other 908 1.292 -1,198 267 190 622 1,181 -960 551 -1,198 20 Nonmonetary international and regional organizations 439 -1,842 -466 -436 36 -157 537 -1,192 1,143 -466 21 International 9 -1,390 -484 -395 -287 -52 338 -1.146 773 -484 22 Latin American regional 261 -779 -1 -3 347 -90 -4 -2 252 -1 MEMO 23 Foreign countries 133,676 246,115' 22,691 48,396 12,304 14,895 23.784 22,023 46,519 22,691 24 Official institutions 39,631 86,875' 8,370 9,629 3,587 17,188 4,838 3,840 13,662 8,370 25 Other foreign 94,045 159,240' 14,321 38,767 8.717 -2,293 18,946 18,183 32,857 14,321 Oil-exporting countries 26 Middle East2 3,075 10,232 1,242 -219 323 4,969 -1,876 337 2,279 1,242 27 Africa3 2 1 0 0 -1 1 0 0 0 0 1. Official and private transactions in marketable US. Treasury securities having an 2. Comprises Bahrain, Iran, Iraq, Kuwait. Oman. Qatar. Saudi Arabia, and United Arab original maturity of more than one year. Data are based on monthly transactions reports. Emirates (Trucial States) Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign 3. Comprises Algeria. Gabon, Libya, and Nigeria. countries. 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS' Percent per year, averages of daily figures Rate on Mar.31, 1997 Rate on Mar. 3, 1997 Country Country Percent e M ffe o c n ti t v h e Percent e M ffe o c n ti t v h e Austria 2.5 Apr. 1996 Germany . . . 2.5 Apr. 1996 2.5 Apr. 1995 Italy 6.75 Jan. 1997 Canada. ... 3.25 Nov. 1996 .5 Sept. 1995 3 25 Nov 1996 2.5 Apr. 1996 France" 3.10 Jan 1997 Switzerland . 1.0 Sept. 1996 2. Since February 1981, the rate has been that at which the Bank of France discounts Treasury bills for seven to ten days. 3.27 FOREIGN SHORT-TERM INTEREST RATES' Percent per year, averages of daily figures 1996 1997 Type or country 1994 1995 1996 Sept. Oct. Nov. Dec. Jan. Feb. Mar. 1 Eurodollars 4.63 5.93 5.38 5.49 5.41 5.38 5.43 5.44 5.36 5.50 2 United Kingdom 5.45 6.63 5.99 5.75 5.93 6.27 6.31 6.28 6.16 6.17 5.57 7 14 4.49 4.10 3.54 3.05 3.16 3.18 3.16 3.25 5.25 4 43 3.21 3.02 3.04 3.09 3.13 3.03 3.08 3.16 4.03 2.94 1.92 1.82 1.56 1.80 1.99 1.72 1.61 1.77 5 09 4 30 291 2.70 2.82 2.92 2.99 2.94 2.95 3.12 7 France 5.72 6.43 3.81 3.63 3.39 3.35 3.33 3.23 3.22 3.26 8 Italy 8 45 10 43 8 19 8.42 7.99 7.40 7.22 7.21 7 33 7.40 5.65 4.73 3.19 3.04 3.02 3.03 3.01 3.00 3.10 3.40 10 Japan 2.24 1.20 .58 .53 .52 .51 .51 .53 .54 .55 1. Rates are for three-month interbank loans, with the following exceptions: Canada, finance company paper; Belgium, three-month Treasury biJJs; and Japan, CD rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • May 1997 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar except as noted Country/currency unit 1995 1996 1 Australia/dollar 73.161 74.073 78.283 79.179 79.684 79.661 77.756 76.768 78.747 2 Austria/schilling 11.409 10.076 10.589 10.748 10.640 10.923 11.289 11.785 11.932 3 Belgium/franc 33.426 29.472 30.970 31.471 31.153 31 992 33.087 34.556 34.961 4 Canada/dollar 1.3664 1.3725 1.3638 1.3508 1.3381 1.3622 1.3494 1.3556 1.3725 5 China, P.R./yuan 8.6397 8.3700 8.3389 8.3299 8.3294 8.3290 8.3260 8.3227 8.3258 6 Denmark/krone 6.3561 5.5999 5.8003 5.8576 5.8053 5.9428 6 1199 6.3867 6.4628 7 Finland/markka 5.2340 4.3763 4.5948 4.5694 4.5512 4.6388 4.7766 4.9792 5.0632 8 France/franc 5.5459 4.9864 5.1158 5.1652 5.1156 5.2427 5.4145 5.6536 5.7154 9 Germany/deutsche mark . 1.6216 1.4321 1.5049 1.5277 1.5118 1.5525 1.6047 1.6747 1.6946 10 Greece/drachma 242.50 231.68 240.82 239.76 238.38 245.70 251.54 262.42 266.86 11 Hong Kong/dollar 7.7290 7.7357 7.7345 7.7322 7.7323 7.7355 7 7397 7.7474 7.7460 1 1 3 2 I I r n e d la ia n / d r / u p p o e u e n .. d 2H 1 3 4 1 9. . 6 39 9 4 1 3 6 2 0 . . 4 3 1 5 8 1 3 5 5 9 . .9 50 5 6 1 3 6 5 0 . .8 80 1 4 1 3 6 5 6. . 4 83 5 9 1 3 65 5 . . 9 8 3 82 1 3 63 5 . . 1 9 1 04 1 3 5 5 8 . . 8 6 9 0 1 1 3 5 5 6 . . 8 5 8 7 5 14 Italy/lira 1,611.49 1.629.45 1,542.76 ,523.82 1,513.66 1,528.44 1,567.91 1.655.00 1.691.21 15 Japan/yen 102.18 93.96 108.78 112.41 112.30 113.98 117.91 122.96 122.77 16 Malaysia/ringgit 2.6237 2.5073 2.5154 2.5074 2.5234 2.5251 2.4900 2.4866 2.4773 17 Netherlands/guilder 1.8190 1.6044 1.6863 1.7141 1.6958 1.7420 1.8023 1.8812 1.9071 18 New Zealand/dollar2 59.358 65.625 68.765 70.071 70.975 70.501 70.088 69.084 69.789 19 Norway/krone 7.0553 6.3355 6.4594 6.4810 6.3554 6.4716 6.4589 6.6323 6.7915 20 Portugal/escudo 165.93 149.88 154.28 154.28 152.83 156.54 160.53 168.24 170.35 21 Singapore/dollar 1.5275 1.4171 1.4100 1.4124 1.4025 1.3999 1.4061 1.4193 1.4378 22 South Africa/rand 3.5526 3.6284 4.3011 4.5799 4.6577 4.6873 4.6402 4.4557 4.4319 23 South Korea/won 806.93 772.69 805.00 828.24 830.56 841.92 854.07 868.39 882.62 24 Spain/peseta 133.88 124.64 126.68 128.60 127.28 130.69 134 79 141.85 143.72 25 Sri Lanka/rupee 49.170 51.047 55.289 57.016 56.987 56.730 57.278 57.772 57.873 26 Sweden/krona 7.7161 7.1406 6.7082 6.6006 6.6269 6.8283 7.0692 7.4069 7.6502 27 Switzerland/franc 1.3667 1.1812 1.2361 1.2586 1.2752 1.3290 1.3913 1.4541 1.4634 28 Taiwan/dollar 26.465 26.495 27.468 27.532 27.522 27.516 27.477 27.554 27.551 29 Thailand/bant s . 25.161 24.921 25.359 25.474 25 459 25.600 25.726 25.957 25 959 30 United Kingdom/pound". . 153.19 157.85 156.07 158.63 166.23 166.39 165.85 162.56 160.96 MEMO 31 United States/dollar' 87.99 86.97 88.71 91.01 95.60 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, 1996 November 1996 A96 June 30, 1996 November 1996 A100 September 30, 1996 February 1997 A64 December 31, 1996 May 1997 A64 Terms of lending at commercial banks May 1996 August 1996 A64 August 1996 November 1996 A104 November 1996 February 1997 A68 February 1997 May 1997 A68 Assets and liabilities of U.S. branches and agencies of foreign banks March 31, 1996 September 1996 A64 June 30, 1996 November 1996 A108 September 30, 1996 February 1997 A72 December 31, 1996 May 1997 A72 Pro forma balance sheet and income statements for priced service operations September 30, 1995 January 1996 A68 March 31, 1996 July 1996 A64 June 30, 1996 October 1996 A64 September 30, 1996 January 1997 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 Special Tables O May 1997 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities Consolidated Report of Condition, December 31, 1996 Millions of dollars except as noted Bankswith foreign offices1 Bank o s f fi w ce it s h o d n o l m y1 estic Item Total Total Foreign Domestic Over 100 Under 100 1 Total assets 4,551.336 2,795.769 735,165 2,164,928 1,436,850 318,716 2 Cash and balances due from depository institutions 334,890 238.795 81,501 157,294 79,275 16f,820 3 Cash items in process of collection, unposted debits, and currency and coin 4 115.031 2.536 112,496 44,838 4 Cash items in process of collection and unposted debits T n.a. n.a. 84,414 29.822 5 Currency and coin n.a. n.a. 28,082 15,016 6 Balances due from depository institutions in the United States 1 37612 14,908 22,704 20,750 n.a. 7 Balances due from banks in foreign countries and foreign central banks n.a. 70.135 63,916 6,219 3,617 1 8 Balances due from Federal Reserve Banks .... 1 16,017 141 15 876 10 070 MEMO 9 Non-interest-bearing balances due from commercial banks in the United States (included m balances due from depository institutions in the United States) \ n.a. n.a. 13,791 17.290 6.842 10 Total securities, held-to-malurity (amortized cost) and available-for-sale (fair value) 792.208 368.346 47,562 320,785 331,411 92,451 11 U.S. Treasury securities 165,291 69.266 1,778 67,488 72,264 23.761 12 U.S. government agency and corporation obligations (excludes mortgage-backed securities) 128.756 26.794 96 26.698 69.746 32,216 13 Issued by U.S. government agencies 6.022 2,667 n.a. n.a. 2,274 1.081 14 Issued by U.S. government-sponsored agencies 122,734 24,127 n.a. n.a. 67,472 31,135 15 Securities issued by states and political subdivisions in the United States 74,583 20,733 219 20,514 38,950 14.900 16 General obligations 56,035 14,869 n.a. n.a. 30,221 10,945 17 Revenue obligations 18,054 5.699 n.a. n.a. 8,465 3.890 18 Industrial development and similar obligations 494 165 n.a n.a 264 66 19 Mortga«c-backed securities (MBS) . . 333 390 181.574 4 302 177,273 133 261 18,555 20 Pass-through securities 222,798 125,175 4,283 120,892 86,002 11,621 21 Guaranteed by GNMA 76,534 49,864 n.a. n.a. 23,160 3,510 22 Issued by FNMA and FHLMC 143.674 73 556 n.a. n.a. 62,062 8.056 23 Pnvatelv issued 2,590 1.755 0 1,755 780 55 24 Other mortgage-backed securities (includes CMOs, REMICs, and stripped MBS) 110.592 56.399 19 56,381 47,259 6,934 25 Issued or guaranteed by FNMA, FHLMC or GNMA 88.768 42.655 0 42,655 39,596 6,517 26 Collaleralized by MBS issued or guaranteed by FNMA, FHLMC. or GNMA 2,724 1.058 n.a. n.a. 1,405 260 27 All other mortgage-backed securities. . .... 19,100 12.687 n.a. n.a. 6,257 156 28 Other debt securities 68.437 57.378 39.906 17.472 9,456 1,603 29 Other domestic debt securities n.a. 14.966 539 14.427 8,891 n.a. 30 Foreign debt securities n.a. 42.412 39.366 3,045 566 n.a. 31 Equity securities 21,752 12.601 1,262 11,339 7,734 1,416 32 Investments in mutual funds 2,650 1.149 63 1,086 1,117 384 33 Other equity securities with readily determinable fair value 5.175 3,743 531 3,212 1,332 100 34 All other equity securities 13,927 7.709 668 7,042 5,285 933 35 Federal funds sold and securities purchased under agreements to resell 163.475 107,064 595 106,470 41,461 14,950 36 Federal funds sold 145,373 92,273 n.a. n.a. 38,373 14,727 37 Securities purchased under agreements to resell 18,102 14,791 n.a. n.a. 3.088 223 38 Total loans- and lease-financing receivables, gross 2,800,446 1,679,814 322.110 1 357,704 935,166 185,466 3() LESS: Unearned income on loans 4.754 2,031 1,028 1,003 1,942 781 40 Total loans and leases (net of unearned income) 2,795.693 1,677.783 321,083 1.356,701 933,224 184,685 41 LESS: Allowance for loan and lease losses 53,425 33.460 n.a. n.a. 17,241 2,724 42 LESS' Allocated transfer risk reserves . .... 39 39 n.a. n.a. 0 0 43 EQUALS: Total loans and leases, net 2,742,228 1,644,285 n.a. n.a. 915.982 181,961 Tola} loans and leases, yroxs, by dilatory 44 Loans secured by real estate 1,13t1.946 56t3.018 28t,046 534,972 463,954 104,975 45 Construction and land development 29,672 38,152 8,032 46 Farmland . .... 2,643 10,853 11,383 47 One- to four-family residential properties 346.591 250,292 54,298 4 4 X 9 A R l e l v o o t l h v e in r g l , o a o n p s en-end loans, extended under lines of credit n1.a. n1.a. nI.a. 2 5 9 1 4 , , 6 9 6 2 7 4 2 3 1 0 9 , , 7 5 9 0 2 0 5 2 1 . , 7 5 9 0 2 6 50 Multifamily (five or more) residential properties 18,632 17,127 2,303 51 Nonfarm nonresidential properties 137,435 147,530 28,959 52 Loans to depository institutions 114,079 106,303 43,600 62,704 7,581 195 53 Commercial banks in the United States n.a. 53,949 3,412 50.538 7,000 n.a. 54 Other depository institutions in the United States n.a. 7.4X6 174 7,312 387 n.a. 55 Banks in foreign countries n.a 44.868 40,014 4.854 194 n.a. 56 Loans to finance agricultural production and other loans to farmers 41,131 7.510 30 6,727 15,122 18,499 57 Commercial and industrial loans 705,889 523,612 140,301 383,311 151,288 30,989 58 U.S. addressees (domicile) n.a. 407 888 29,084 378,804 150,734 n.a. 59 Non-U.S. addressees (domicile) n.a. 115,724 111,217 4,507 553 n.a. 60 Acceptances of other banks 1.542 1.267 776 491 203 72 61 US banks . . . n.a. 237 0 237 n.a. n.a. 62 Foreign banks n.a. 1.030 776 253 n.a. n.a. 63 Loans to individuals for household, family, and other personal expenditures (includes purchased paper) . . . 558,476 263 259 33,146 230.113 267.003 28,215 64 Credit cards and related plans 234,291 97^531 n.a. n.a. 134.990 1.770 65 Other (includes single payment and installment) 324.185 165.729 n.a. n.a. 132,012 26,444 66 Obligations (other than securities) of states and political subdivisions in the United States (includes nonrated industrial development obligations) 18,353 9,895 30 9,865 7,530 928 67 All other loans .... 151,284 140,193 70.443 69,751 10,178 913 68 Loans to foreign governments and official institutions n.a. 10,732 9,751 981 35 n.a. 69 Other loans n.a. 129.461 60.691 68,769 10,144 „ ., 70 Loans for purchasing and carrying securities n.a. n.a. n.a. 17,179 1,861 n.a. 71 All other loans (excludes consumer loans) n.a. n.a. n.a. 51,590 8,283 n.a. 72 Lease-financing receivables 77,746 64,756 4,986 59.770 12,307 682 73 Assets held in trading accounts 240.815 239,783 f t 956 1 74 Premises and fixed assets (including capitalized lenses) 64.056 37.131 T 21,235 5,690 75 Other real estate owned 5413 3.181 n.a. 1.743 489 76 Investments in unconsolidated subsidiaries and associated companies 6,153 5,712 1 1 416 26 77 Customers' liability on acceptances outstanding 18,247 17.920 n.a. 312 16 78 Net due from own foreign offices, Edge Act and agreement subsidiaries, and IBFs n.a. n.a. I 40,745 n.a. n.a. 79 Intangible assets 44.510 31.992 n.a. 11,741 776 X0 Other assets 139.340 101.559 n.a. 32.318 5,463 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A65 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities—Continued Consolidated Report of Condition, December 31, 1996 Millions of dollars except as noted Bankswith foreign oliice.s1 Bank o s ff i w ce i s th o d n o l m y2 estic Item Total Total Foreign Domestic Over 100 Under 100 81 Total liabilities. limited-life preferred stuck, and equity capital 4,551,336 2,795.769 n.a. n.a. 1.436,850 318,716 82 Total liabilities 4,177,507 2,584,890 735,165 1,954,048 1,306,951 285.667 83 Total deposits 3 175 019 1,825,641 473,319 1,352.322 1,073,520 275.858 84 Individuals, partnerships, and corporations 2,808! 190 3O7i)17 1,256,081 994,745 25<U4h 85 U.S. government n.a. n.a. n.a. 6,053 2,687 486 86 States and political subdivisions in the United States n.a. 40,357 54.226 20,864 87 Commercial banks in the United States 63,017 53,332 30.262 23^070 8J28 958 88 Other depository institutions in the United States n a. 3,116 3,103 1,215 89 Banks in foreign countries n.a. 98,999 92,098 6^901 '234 n.a. 90 Foreign governments and official institutions n.a. 36,467 34,906 1.561 33 n.a. 91 Certified and official checks 18.422 9,113 855 8,258 7,340 1.969 92 Residual 285.390 64,631 8.182 n.a 21 93 Total transaction accounts 422,026 289,298 82.018 94 Individuals, partnerships, and corporations 361.311 251,902 71.434 95 US government 4,079 2,388 383 96 Slates and political subdivisions in the United States 15,065 17,848 7,705 97 Commercial banks in the United States . ... 23,070 8,728 404 98 Other depository institutions in the United States 2,386 855 106 99 Banks in foreign countries 6.901 234 n.a. 100 Foreign governments and official institutions 956 5 n.a. 101 Certified and official checks 8,258 7,340 1,969 102 Residual4 n.a. n.a. 17 103 Demand deposits (included in total transaction accounts) 362.799 194,101 42,485 104 Individuals, partnerships, and corporations 307,242 168,552 37,994 105 U S government 4,041 2,342 372 106 States and political subdivisions in the United States 9,950 6,052 1,628 107 Commercial banks in the United States 23,070 8.726 403 108 Other depository institutions in the United States 2,385 850 103 109 Banks in foreign countries n.a. n.a. n.a. 6,901 234 n.a. 110 Foreign governments and official institutions 952 5 n.a. 111 Certified and official checks 8,258 7,340 1,969 112 Residual4 n.a. n.a. 17 113 Total nontransaction accounts 930.295 784,222 193.840 114 Individuals, partnerships, and corporations 894,770 742.844 178.912 115 U.S. government 1.974 299 103 116 States and political subdivisions in the United States 25,292 36,378 13,159 117 Commercial banks in the United States 6,655 2,156 554 118 U.S. branches and agencies of foreign banks 0 0 n.a. 119 Other commercial banks in the United States 0 0 n.a. 120 Other depository institutions in the United States 730 2,248 1,108 121 Banks in foreign countries 269 268 n.a. 122 Foreign branches of other U.S. banks 0 0 n.a 123 Other banks in foreign countries 0 0 n.a. 124 Foreign governments and official institutions 605 28 n.a. 125 Residual 1 n.a. n.a. 4 126 Federal funds purchased and securities sold under agreements to repurchase 315,652 225,163 2.485 222,678 87,187 3.303 127 Federal funds purchased 238,029 177,636 n.a. n.a. 58,791 1,602 128 Securities sold under agreements to repurchase 77,623 47,527 n.a. n.a. 28,396 1,700 129 Demand notes issued to the U.S. Treasury 2 ,833 18,393 0 18,393 3,262 178 130 Trading liabilities 150,480 150,374 n.a. n.a. 106 0 131 Other borrowed money 336 604 217,317 81,620 135,697 115,934 3,353 132 Banks' liability on acceptances executed and outstanding ' I H265 17,937 4.317 13,620 312 16 133 Notes and debentures subordinated to deposits 50.948 46,230 n.a. n.a 4,696 21 134 Net due to own foreign offices, Edge Act and agreement subsidiaries, and lBF\s n.a. n.a. n.a. 63,579 n.a n.a. 135 All other liabilities 108,706 83,835 n.a. n.a. 21,933 2,937 136 Total equity capital 373,274 210,329 n.a. n.a. 129,896 33.049 MEMO 137 Holdings of commercial paper included in total loans gross 300 52 248 1,111 n.a. 138 Total individual retirement (IRA) and Keogh plan accounts .... f 70,033 66,051 15,150 139 Total brokered deposits 24 422 20,801 1.119 140 Fully insured brokered deposits 19,808 17,892 1,058 141 Issued in denominations of less than $100 000 2,247 2.882 822 142 Issued in denominations of $100,000. or in denominations greater than $100,000 and 1 participated out by the broker in shares of $100,000 or less n.a. n.a. n.a. 17,560 15.010 236 143 Money market deposit accounts (MMDAs) 347,214 184,771 28.176 144 Other savings deposits (excluding MMDAs) 157.385 134,886 28.910 145 Total time deposits of less than $100 000 268,986 338,157 104.420 146 Time certificates of deposit of $100,000 or more 136,809 123,769 31.486 147 Open-account time deposits of $100,000 or more 19,901 2,638 847 148 All negotiable order of withdrawal (NOW) accounts 58,788 93,480 38,521 149 Number of banks 9.509 182 n.a. n.a 2,814 6,513 Footnotes appear at the end of table 4.22 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 Special Tables • May 1997 4.22 DOMESTIC OFFICES Insured Commercial Bank Assets and Liabilities Consolidated Report of Condition. December 3!, 1996 Millions of dollars except as noted Members Nonmembers Total Stale 1 Total assets 3,920.494 2,233,021 2 Cash and balances due from depository institutions 253.389 208.068 161.091 46.977 45,321 3 Total securities, held-io-maturity (amortized cost) and available-for-sale (fair value) 423,862 230.557 174.947 55,610 193,305 4 U.S. Treasury securities 96.025 49.841 36.121 13,720 46,184 5 U.S. government agency and corporation obligations (excludes mortgage-backed securit 101,962 49,685 37,782 11,903 52,276 6 Securities issued by slates and political subdivisions in ihe United Stales 53,850 28,046 20,299 7,748 25.803 7 Mortgage-backed securities (MBS) 151,815 91,389 71,289 20,101 60,426 Pass-through securities . 97.623 59,953 47,004 12,949 37,670 Issued or guaranteed by FNMA, FHLMC. or GNMA 96.788 59.420 46.657 12.764 37.367 Other pass-through securities 835 533 347 186 303 Other mortgage-backed securities (includes CMOs, REMICs, and stripped MBS), . . 54,192 31.436 24,285 7,151 22,756 Issued or guaranteed by FNMA. FHLMC. or GNMA 46.114 26,967 21,210 5,756 19,147 All other mortgage-backed securities 8.079 4.47(1 3.075 1,395 3,609 Olher debt securities 11.059 6,065 5,075 990 4.995 Equity securities 9.151 5,530 4,382 1,148 3.620 Investments in mutual funds 1.501 752 620 132 748 Other equity securities with readily determinable fair values 1.432 655 529 126 778 All other equity securities 6,218 4,124 3,233 890 2.094 19 Federal funds sold and securities purchased undei agreements to resell . . . 162.880 134.229 91.737 42.492 28,652 20 Total loans- and lease-financing receivables, gross 2,478.336 1,901,763 1.471.821 429,942 576,573 21 LESS: Unearned income on loans 3,726 2,040 1,557 484 1,686 22 Total loans and leases (net of unearned income) 2.474.610 1,899,723 1,470,265 429.458 574,887 Total loans and leases, gross, by category 23 Loans secured by real estate 1,103.901 801,034 622,760 178.273 302.867 24 Construction and land development 75,856 50,364 38.851 11.513 25.492 25 Farmland 24.878 11,722 9,046 2,677 13.156 26 One- to four-family residential properties 651.181 494,357 384,043 110,314 156,824 27 Revolving, open-end loans, extended under lines of credit 85.251 68,450 55,019 13.431 16,801 28 All other loans 565.929 425.906 329,024 96,883 140.023 29 Multifamily (five or more) residential properties 38.062 26,709 20,480 6,229 11.353 30 Nonfarm nonresidential properties 313.923 217,882 170,341 47,541 96,041 31 Loans to depository institutions 70.480 65,968 60.566 5,402 4,512 32 Loans to tinance agricultural production and other loans to fanners 40 348 20.844 16,635 4,210 19,504 33 Commercial and industrial loans 565.588 463,196 340,044 123.152 102,392 34 Acceptances of other banks 766 499 225 274 267 35 Loans to individuals for household, family, and other personal expenditures (includes purchased paper) 525.330 396.214 66,415 129.1 16 36 Obligations (other than securities) of stales and political subdivisions in the United J 18.323 14,849 11.286 3,562 3,474 37 All other loans 80.841 75,208 44,657 30,551 5,634 38 Lease-financing receivables 72.759 63.952 45,849 18.103 8.808 39 Net due from own foreign offices, Edge Act and agreement subsidiaries, and IBFs.. 40,745 38,250 13,216 25,034 2,495 40 Remaining assets 565,008 509.932 321.765 188.167 55.076 41 Total liabilities 3,546.666 2,734,266 2,025,495 708.771 812.400 42 Total deposits 2,701.700 2,013,824 1.525.675 488,149 687.876 43 Individuals, partnerships, and corporations 2,501,173 1,866.379 1,415,177 451,202 634.794 U.S. government . 9.227 7.754 6,621 1,133 1.473 45 States and political subdivisions in the United Stales 115.447 75,589 54,221 21,368 39 858 46 Commercial banks in the United States 32.756 30,513 24,771 5,743 2.242 47 Other depository institutions in the United States 7 43s 4.810 4,001 809 2.623 Certified and official checks 17.567 12,770 9,60! 3,167 4,797 49 Banks in foreign countries, foreign governments, and foreign official institutions .. 8,750 8,219 3.930 4,288 5.31 50 Total Iransacuon accounts 793,343 604.043 457,040 147,003 189.300 51 Individuals, partnerships, and corporations 684.647 517.758 392,694 125,064 166,888 52 U.S. government 6,851 5,629 4,559 1,070 1.222 53 States and political subdivisions in the United States 40.617 27.160 19,934 7.226 13.458 54 Commercial banks in the United Stales 32.202 30,301 24,616 5,685 1.901 55 Other depository institutions in the United Slates 3 347 2,816 2,262 555 530 56 Certified and official checks 17,567 12,770 9,603 3,167 4.797 57 Banks in foreign countries, foreign governments, and foreign official inslitulions . . . 8.113 7,609 3,373 4,236 504 58 Demand deposits (included in total transaction accounts) 599,385 482.741 364.575 118,166 116,644 59 Individuals, partnerships, and corporations 513.788 409,970 310,126 99.844 103,818 60 U.S. government 6.755 5.571 4.510 1,061 1.184 61 Stales and political subdivisions in the United States 17.630 13.712 10,092 3,620 1.918 62 Commercial banks in the United States 32.199 30,299 24,614 5,685 1.900 63 Other depository institutions in the United States 3,339 2,815 2,260 554 524 64 Certified and official checks 17.567 12 770 9,603 3,lft7 4.797 65 Banks in foreign counlries, foreign governments, and foreign official institutions . 8.108 7.605 3,369 4,236 503 66 Total nonlransaction accounts 1,908.357 1,409.780 1,068,634 341,146 498,577 67 Individuals, partnerships, and corporations 1.816.526 1,348.621 1,022.483 326,138 467.905 68 U.S. government 2.376 2,125 2,062 63 251 69 States and political subdivisions in the United States 74,829 48,429 34,288 14.142 26,400 70 Commercial banks in the United States 9.364 7,584 7,235 349 1,780 71 Other depository institutions in the United States 4.087 1,994 1,739 255 2.093 72 Banks in foreign countries, foreign governments, and foreign official inslitutions . . . 637 610 557 52 28 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A67 4.22 DOMESTIC OFFICES Insured Commercial Bank Assets and Liabilities—Continued Consolidated Report of Condition. December 31, 1996 Millions of dollars except as noted Non- Tool members 73 Federal funds purchased and securities sold under agreements to repurchase 313,167 269,063 182,817 86,246 44.105 74 Demand notes issued to the U.S. Treasury 21,833 20,360 10,456 9,904 1,473 75 Other borrowed money 254,984 200,879 157,613 43,266 54,105 76 Banks liability on acceptances executed and outstanding 13,948 13,625 9,428 4.197 323 77 Net due to own foreign offices, Edge Act and agreement subsidiaries, and IBFs 63,579 54.683 40,565 14,118 8,896 78 Remaining liabilities 177.456 161,833 98,941 62,892 15.623 MEMO 79 Trading assets at large banks5 65,170 64.785 29,578 35.207 385 80 U.S Treasury securities (domestic offices) 9,184 9,119 4.262 4.857 65 81 U.S. government agency corporation obligations 2,527 2,482 2.342 140 45 82 Securities issued by states and political subdivisions in the United States 937 922 584 338 14 83 Mortgage-backed securities 3.140 3,106 613 2.493 34 84 Other debt securities 4.493 4,493 2,651 1,841 0 85 Certificates of deposit 1,063 1,063 523 540 (I 86 Commercial paper 343 213 213 0 13(1 87 Bankers acceptances 1,743 1,720 1,014 706 22 88 Other trading assets 4,977 4.919 1,486 3.432 58 89 Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity contracts 36,762 36,746 15,889 20.857 17 90 Total individual retirement (IRA) and Keogh plan accounts 151,234 111,249 86,331 24,918 39.985 91 Total brokered deposits 46.342 31,827 24.214 7,614 14,515 92 Fully insured brokered deposits 38.758 26,999 20,463 6 535 11.759 93 Issued in denominations of less than $100,000 5,952 3,717 2,984 733 2.234 94 Issued in denominations of $100,000, or in denominations greater than $100,000 and participated out by the broker in shares of $ 100,000 or less 32,806 23.281 17,479 5.802 9.525 95 Money market deposit accounts (MMDAs) 560,162 457,308 352.667 104,641 102.853 96 Other savings deposits 321.182 244,493 178,829 65,664 76,688 97 Total time deposits of less than $100,000 711,563 486,008 378,764 107,244 225,555 98 Time certificates of deposit of $100,000 or more 292.065 201,471 152.932 48 539 90.594 99 Open-account time deposits of $100,000 or more 23,386 20,500 5,442 15,058 2,887 100 All negotiable order of withdrawal (NOW) accounts 190.789 119,697 91.134 28,562 71,092 101 Number of banks 9,509 3,744 2,729 1,015 5,765 NOTE. The notation "n.a." indicates the lesser detail available from banks that don't have 2. "'Over 100" refers to banks whose assets, on June 30 of the preceding calendar year, foreign offices, the inapplicability of certain items to banks that have only domestic offices or were $100 million or more. (These banks file the FFIEC 032 or FFIEC 033 Call Report.) the absence of detail on a fully consolidated basis for banks that have foreign offices "Under 100" refers to banks whose assets, on June 30 of the preceding calendar year, were 1. All transactions between domestic and foreign offices of a bank are reported in "net due less than $100 million. (These banks file the FFIEC 034 Call Report.) from" and "net due to" lines. All other lines represent transactions with parties other than the 3. Because the domestic portion of allowances for loan and lease losses and allocated domestic and foreign offices of each bank. Because these intraoffice transactions are nullified transfer risk reserves are not reported for banks with foreign offices, the components of total by consolidation, total assets and total liabilities for the entire bank may not equal the sum of assets (domestic) do not sum to the actual total (domestic). assets and liabilities respectively of the domestic and foreign offices. 4. "Residual" equals the sum of the "n.a." categories listed above it. Foreign offices include branches in foreign countries, Puerto Rico, and U.S. territories and 5. Components of "Trading assets at large banks" are reported only by banks with either possessions; subsidiaries in foreign countries; all offices of Edge Act and agreement corpora- total assets of $ I billion or more or with $2 billion or more in the par/notional amount of their tions wherever located; and IBFs. off-balance-sheet derivative contracts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Special Tables • May 1997 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 3-7, 1997' Commercial and industrial loans Type o an f d l o m an aturity (t A ho d m u l o o o s l a a l u a n n n r d s t s s ) o f of ( A th v o d e u o ra s l a g la n e r d s s s ) i z o e f W m av a e D t e i u g a r r a y h i g s t t e y e d e a ff v e L e c r o t a i a v g n e e 3 rate (pe S rc t e a e r n n ro d t) a r4 rd c ( s p o L e e l c l o r b a u c a y t r e e n e n r s d a t) l Lo ( c p a o u m e n m n r s e c d m n e e m n t i r t a t - ) de pa ( t P p io e a n r r c t i e c lo n i- a t) ns ba c s o e M r m a p l o m e r s i 5 o t c n ing ALL BANKS 1 Overnight6 14,059,455 9,795 10.3 56.0 2 One month or less (excluding overnight) . 12,507,927 1,433 18 6.58 .16 25.7 80.5 5.3 Other 3 Fixed rate 9,735,318 2,423 17 6.56 .16 25.6 86.1 6.2 Other 4 Floating rate 2.772,609 589 19 6.65 .26 25.9 60.7 1.8 Domestic 5 More than one month and less than one year 13,897,547 202 161 7.51 .15 46.5 9.1 Prime 6 Fixed rate 5.249,575 300 148 6.68 .22 38.4 5.9 Foreign 7 Floating rate 8,647,972 169 168 8.01 .20 51.5 90.0 11.0 Prime 8 Demand7 15,579,044 341 7 15 .19 49.5 48.8 4.6 Prime 9 Fixed rate 5,149,169 1,318 6.22 .30 15.1 30.1 11.0 Domestic 10 Floating rate 10,429,875 250 7.61 .19 66.4 58.1 1.5 Prime 11 Total short-term 56,043,973 450 6.81 33.6 67.5 5.1 Other 12 Fixed rate (thousands of dollars) 33,960,193 1,267 34 6.28 .21 19.8 65.1 5.0 Other 13 1-99 308,494 16 158 9.63 .08 81.5 41.9 .9 Other 14 100-499 512,871 220 112 7.83 .14 70.6 74.8 13.2 Other 15 500-999 631,138 683 67 7.20 .09 51.1 90.2 12.2 Foreign 16 1,000-4,999 5,135,464 2,350 45 6.69 .14 38.0 82.9 6.1 Foreign 17 5,000-9,999 4,850,149 6,802 35 6.51 .06 24.6 77.4 8.0 Other 18 10,000 or more 22.522,079 21,450 26 6.02 .05 11.8 57.7 3.8 Other 19 Floating rate (thousands of dollars). .. 22,083,779 226 129 7.62 .19 54.8 71.4 5.3 Prime 20 1-99 1,903,568 26 161 9.57 .05 77.1 88.2 1.0 Prime 21 100-499 3.542.919 196 151 9.08 .06 75.0 90.6 4.8 Prime 22 500-999 1.715,339 677 159 8.63 .08 67.2 91.1 5.7 Prime 23 1,000-4,999 4,479,098 1,995 162 8.13 .19 62.8 84.5 10.9 Prime 24 5,000-9,999 2,165,760 6,513 86 6.85 .32 44.3 73 4 3.1 Other 25 10,000 or more 8,277,095 21,767 6.28 .27 36.8 47.5 3.9 Domestic 26 Total long-term 10,413,252 323 7.95 58.5 87.5 8.0 27 Fixed rate (thousands of dollars) 2,295,540 183 45 7.58 .24 56.3 79.3 5.0 Other 28 1-99 205,530 21 47 9.58 .14 94.1 31.7 23 Other 29 100-499 459,102 230 57 8.79 .15 89.4 50.8 2.2 Other 30 500-999 135,786 701 41 8.07 .31 61.2 80.3 9.5 Other 31 1.000 or more 1.495,121 3,944 42 .20 40.5 94.5 5.8 Domestic 32 Floating rate (thousands of dollars) 8,117,712 413 47 8.05 59.1 8.8 Prime 33 1-99 336,204 29 47 9.58 .06 85.7 76.8 3.5 Prime 34 100-499 1,262,346 234 46 8.99 .07 75.8 83.5 9.0 Prime 35 500-999 812,436 679 39 8.48 64.6 90.8 8.5 Prime 36 1,000 or more 5,706.726 3,809 48 7.69 53.1 91.7 9.2 Prime Loan rate (percent) Days Prime rate9 Effective1 Nominal* LOANS MADE BELOW PRIME 37 Overnight6 13,952,324 11,170 5.91 5.75 9.7 55.7 1.5 8.25 38 One month or less (excluding overnight) 11,659,552 3.214 17 6.37 6.18 23.8 79.9 5.2 8.25 39 More than one month and less than one year 8,662,760 837 154 6.40 6.23 31.3 89.4 8.3 8.29 40 Demand' 10,543,049 2,217 6.18 6.06 34.5 33.5 5.6 8.25 41 Total short-term 44,817,684 2,243 63.3 4.7 8.26 42 Fixed rate 32,649,184 3,388 31 6.15 5.99 18.1 64.4 5.0 8.25 43 Floating rate 12,168,500 1,176 105 6.28 6.10 37.7 60.2 4.0 8.27 44 Total long-term 4,877,869 46 6.46 44.1 89.0 6.4 45 Fixed rate 1,502.996 466 43 6.63 6.48 41.0 89.8 3.2 8.29 46 Floating rate 3,374.873 1,072 47 6.64 6.45 45.5 88.7 7.7 8.27 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A69 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 3-7, 1997'—Continued Commercial and industrial loans—Continued Type o a f n d lo m an aturity (t A ho d m u o lo o s l a l a u a n n n r d s t s s ) o f of ( A th v o d e u o ra s l a l g a n e r d s s ) s i z o e f W m av a D e t e i u g a r y r a h i g s t t e y e d 2 W e a ff v e e e L i c g r o t a h i a v g t n e e e d 3 rate (pe S rc t e a e r n n ro d t) a r4 rd c ( s p o L e e l c l o r b a u c a t y r e n e e n r s d a t) l Lo ( c p a o u m e n m n r s e c d m n e m e n t i r t a t - ) de pa ( t p P io e a r n r c t i e c l n o i- t a ) ns ba c s o e M r m at p o e m r " s i * o t c n ing LARGE BANKS 1 Overnight6 11,580,487 10.154 • 5.99 .20 10.8 57.3 1.8 Othei 2 One month or less (excluding overnight) . 10,951,112 3,224 17 6.53 .14 22.6 80.7 4.7 Other 3 Fixed rate 8,716,397 4,516 17 6.58 .08 23.9 87.3 5.7 Other 4 Floating rate 2,234,715 1,524 18 6.34 .26 17.2 54.7 1.2 Domestic 5 More than one month and less than one year 8.847,833 560 146 6.97 .13 32.8 91.2 8.1 Foreign 6 Fixed rate 3,995,198 2.333 132 6.45 .14 30.3 90.6 5.7 Foreign 7 Floating rate 4,852.634 345 158 7.40 .19 34.9 91 7 10.0 Prime 8 Demand7 13.398,289 565 6.94 .16 46.0 42.2 5.1 Domestic 9 Fixed rate 4,821,836 3,920 * 6.17 .20 11.2 26.5 11.8 Domestic 10 Floating rate 8.576,453 381 7.37 .19 65.5 51.0 1.3 Prime 11 Total short-term 44,777,721 1,016 48 6.60 .13 28.6 65.2 4.7 Other 12 Fixed rate (thousands of dollars) 28,880,594 4,820 29 6.26 .13 17.6 65.5 5.2 Other 13 1-99 37,409 35 148 8.37 .10 79.4 88.7 1.3 Other 14 100-499 232.145 247 62 7.36 .04 58.2 91.4 5.7 Other 15 500-999 427,604 695 54 7.08 .09 38.4 92.1 8.4 Other 16 1,000-4,999 4.249,626 2,361 45 6.76 .15 37.6 85.9 6.1 Foreign 17 5 000-9 999 4,350,022 6,855 33 6.53 .04 21.9 77.6 7.9 Other 18 10.000 or more 19,583.788 21,345 23 6.06 .05 11.3 57.5 4.3 Other 19 Floating rate (thousands of dollars) 15.897,126 418 110 7.21 .18 48.4 64.7 3.9 Prime 20 1-99 769,567 31 159 9.37 .10 72.5 91.9 1.5 Prime 21 100-499 1,937,808 205 154 8.95 .07 69.6 92.4 3.3 Prime 22 500-999 1,023.267 677 154 8.54 .10 61.0 92.8 5.6 Prime 23 1,000-4,999 2.883,909 2,042 141 7.80 .13 55.2 84.5 6.2 Prime 24 5 000 9 999 1,727,852 6,519 90 6.83 35 46.0 68.4 2.4 Other 25 10,000 or more 7,554.724 22,533 85 6.22 .29 36.8 42.5 3.6 Fed funds Months 26 Total long-term 7,508,208 801 45 7.73 .13 52.3 92.2 6.9 Prime 27 Fixed rate (thousands of dollars) 1.331,739 838 41 7.02 .22 43.2 92.7 7.0 Domestic 28 1 99 25,415 32 43 9.26 .30 79.8 63.4 2.9 Other 29 100-499 97,028 227 47 8 29 .21 67.2 71.4 6.1 Other 30 500-999 79.091 688 41 8.05 .28 58.1 88.2 9.5 Other 31 1,000 or more 1.130,205 4,299 41 6.79 .21 39.3 95.5 7.0 Domestic 32 Floating rate (thousands of dollars) 6,176,469 793 46 7.89 .11 54.3 92.1 6.8 Prime 33 1-99 111,202 39 36 9.19 .05 74.3 89.3 3.2 Prime 34 100-499 719,379 242 37 8.83 .09 66.1 96.2 7.8 Pnme 35 500-999 549,679 682 38 8.42 .11 57.2 93.3 7.4 Prime 36 1,000 or more 4,796.210 4,106 49 7.65 .27 51.7 91.4 6.7 Prime Loan rate (percent) Days Prime rate9 Effective' Nominal8 LOANS MADE BELOW PRIME10 37 Overnight* 11.483,048 11,343 5.96 5.79 10.1 56.9 1.8 8.25 38 One month or less (excluding overnight) 10.380,634 4,830 17 6.37 6.18 21.6 79.8 4.6 8.25 39 More than one month and less than one year 6,609,517 2,599 140 6.26 6.10 24.3 89.7 7.6 8.25 9 799 241 3 252 6 14 6 02 33 6 29.0 5 8 8.25 41 Total short-term 38,272,440 4.390 39 6.17 6.01 21.7 61.6 4.6 8.25 27,992,121 5,987 28 6.17 6.02 16.4 64.5 5.1 8.25 43 Floating rate 10.280,318 2,543 90 6.16 5.99 36.1 53.9 3.2 8.25 Months 44 Total long-term 3,820,651 1,968 47 6.54 6.36 41.6 90.3 2.7 8.25 45 Fixed rate 1,025,482 1,809 40 6.39 6.27 34.6 95.7 3.0 8.25 46 Floating rate 2,795,169 2,033 49 6.59 6.40 44.2 88.3 2.6 8.25 Footnotes appear at the end of the table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • May 1997 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made. February 3-7, 1997'—Continued Commercial and industrial loans—Continued Type o an f d l o m an aturity (t A ho d m u l o o o s l a l u a a n n n r s d t s ) s o f of ( A th v o d e u o r s a l a l g a n e r d s s s ) i z o e f W m av a D e t e i u a g r r y a h i g s t t e y e d 2 W e a ff v e e L e i c g r o t a h i a v g t n e e e d 3 rate(pe S rc t e a e r n n ro d t) r ard c ( s p o L e e l c l o b r a u c a y t r e e n e n r s d a t) l Lo ( c p a o u e m n m n r s c e d m n e e m n t i r t a t - ) de pa ( t p P io e a n r r c t i e c l n o i- t a ) ns ba c s o e M r m a p l o m e r s i o t c n ing OTHER BANKS 1 Overnight6 2,478,968 8,405 * 5.70 .38 8.0 50.0 .0 Fed funds 2 One month or less (excluding overnight) 1,556,815 292 21 6.91 .20 47.7 79.0 8.9 Foreign 3 Fixed rate 1,018.921 488 19 6.36 .25 40.1 75.6 11.3 Fed funds 4 Floating rate 537,894 166 24 7.95 .31 62.2 85.4 44 Prime 5 More than one month and less than one year 5,049.714 96 186 8.45 .18 70.5 83.8 10.9 Prime 6 Fixed rate 1,254,377 80 199 7.40 .25 64.0 71.6 6.7 Other 7 Floating rale 3,795,338 102 181 8.80 .23 72.7 87.8 12.3 Prime 8 Demand7 2,180.754 99 * 8.45 .23 70.7 89.7 2.1 Prime 9 Fixed rale 327,333 122 6.97 .46 71.6 82.3 .0 Other 10 Floating rate 1,853,421 96 8.71 .23 70.6 91.1 2.5 Prime 11 Total short-term 11,266,252 140 107 7.6.1 .17 53.7 76.9 6.5 Prime 12 Fixed rate (thousands of dollars} 5,079,599 244 57 6.33 .24 32.4 62.6 3.9 Fed funds 13 1-99 271.084 15 159 9.80 .11 81.8 35.4 .8 Other 14 100-499 280,726 202 144 8.21 .25 80.9 61.1 19.5 Other 15 500-999 201,534 659 96 7.46 .26 77.8 86.3 20.3 Foreign 16 1,000-4,999 885,837 2,300 44 6.32 .18 39.9 68.7 6.4 Fed funds 17 5,000-9,999 500,127 6,371 60 6.40 .22 48.4 75.2 S.7 Fed funds 18 10,000 or more 2,938,291 22.172 42 5.75 47 15.1 59.5 .0 Fed funds 19 Floating rate (thousands of dollars) 6,186,653 104 162 8.70 .22 71.1 88.6 8.7 Prim 20 1-99 1,134,001 23 161 9.71 !02 80.3 85.7 .7 Prim 21 100-499 1,605,111 1S7 149 9.25 .09 81.5 88.3 6.5 Prim 22 500-999 692,072 678 166 8.75 .11 76.4 88.6 5.7 Prim 23 1,000-4,999 1,595,189 1,914 181 8.72 .32 76.4 84.6 19.4 Prim 24 5 000-9 999 437,908 6,491 67 6.96 .52 37.8 92.8 5.6 Prim 25 10.000 or more 722,371 16,061 175 6.85 .45 37.1 100.0 7.1 Foreitn Months 26 Total long-term 2,905,043 127 49 8.50 .14 74.6 75.2 10.9 Prime 27 Fixed rate (thousands of dollars) 963,800 88 51 8.35 .23 74.3 60.8 2.3 Other 28 1-99 180,115 20 48 9.63 .16 96.1 27.3 -> 2 Other 29 100-499 362.074 231 60 8.93 .13 95.3 45.3 1.1 Other 30 500-999 56.695 720 42 8.11 .40 65.5 69.2 9.6 Other 31 1,000 or more 364.915 3,139 44 7.19 .15 44.0 91.4 2.3 Domeslic 32 Floating rate (thousands of dollars) 1.941.243 164 48 8.58 .15 74.7 82.4 15.2 Prime 33 1-99 225,003 26 52 9.77 .09 91.4 70.6 3.7 Prime 34 100-499 542,967 226 59 9.21 .08 88.6 66.7 10.6 Prime 35 500-999 262,758 673 43 8.59 .15 80.1 85.7 10.9 Prime 36 1,000 or more 910.516 2.758 42 7.90 .31 60.8 93.6 22.0 Prime Loan rate (percent) Days Prime rate" Effective3 Nominal* LOANS MADE BELOW PRIME'" 37 Overnight6 2,469,276 10,433 5.68 5.53 7.9 49.9 .0 8.25 38 One month or less (excluding overnight) 1,278.917 865 20 6.30 6.11 41.4 80.0 10.2 8.26 39 More than one month and less than one year 2,053.243 263 199 6.85 6.65 53.9 88.5 10.3 8.41 40 Demand 743,808 427 6.70 6.53 46.4 93.5 2 2 8.31 41 Total short-term 6,545,245 581 76 6.29 6.11 33.2 72.8 5.5 8.31 42 Fixed rate 4.657,063 939 48 6.02 5.86 28.1 64.1 4.3 8.27 43 Floating rate 1.888.182 300 158 6.94 6.73 46.0 94,4 8.5 8.39 Months 44 Total long-term 1,057,218 238 42 7.00 6.81 53.3 84.3 19.6 8.36 45 Fixed rate 477 514 180 52 7 13 6.93 54.8 77.0 3.9 8.37 46 Floating rate 579,704 327 34 6.89 6.70 52.0 90.3 32.5 8.35 Footnote?, appear at the end of the lable. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A71 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 3-7, 1997'—Continued NOTES 1. The survey of terms of bank lending to business collects data on gross loan extensions 4. The chances are about two out of three that the average rate shown would differ by less made during the first full business week in the mid-month of each quarter by a sample of 340 than the amount of the standard error from the average rate that would be found by a complete commercial banks of all sizes. A sample of 250 banks reports loans to farmers. The sample survey of lending at all banks. data are blown up to estimate the lending terms at all insured commercial banks during that 5. The rate used to price the largest dollar volume of loans. Base pricing rates include the week. The estimated terms of bank lending are not intended for use in collecting the terms of prime rate (sometimes referred to as a bank's "basic" or "reference" rate); the federal funds loans extended over the entire quarter or residing in the portfolios of ihose banks. Construc- rale; domestic money market rates other than the federal funds rait; foreign money markei tion and land development loans include both unsecured loans and loans secured by real rates; and other base rates not included in the foregoing classifications. estate. Thus, some of the construction and land development loans would be reported on the 6. Overnight loans mature on the following business day. statement of condition as real estate loans and the remainder as business loans. Mortgage 7. Demand loans have no stated date of maturity. loans, purchased loans, foreign loans, and loans of less that $1,000 are excluded from the 8. Nominal (not compounded) annual interest rate calculated from the stated rate and other survey. As of December 31, 1995, assets of most of the large banks were at least $7.0 billion. terms of the loans and weighted by loan size. Median total assets for all insured banks were roughly $62.0 million. 9. Calculated by weighting the prime rale reported by each bank by the volume of loans 2. Average maturities are weighted by loan size; excludes demand loans. reported by that bank, summing the results, and then averaging over all reporting banks. 3. Effective (compounded) annual interest rate calculated from the stated rate and other 10. The proportion of loans made at rates below the prime may vary substantially from the terms of the loans and weighted by loan size. proportion of such loans outstanding in banks' portfolios. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • May 1997 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 1996 Millions of dollars except as noted All sates- New York Califoma IllllOs Item inc T l o u t d a i l ng IBKs inc T l o u t d a i l ng IBFs inc T l o u t d a i l ng IBFs inc T l o u t d a i l ng IBFs IBFs3 only" IBFs only IBFs * only IBFs only 1Total assets 820,838 280,627 637,692 230.821 68,109 24,121 67,418 15,376 2Claims on nonrelaled parties 725.194 135.246 559.935 110.476 6.3,048 9,368 61.235 9,059 3 Cash and balances due from depository institutions 109,440 77,814 96,345 67,036 2,897 2.322 8,323 7,359 4 Cash items in process of collection and unposted debits 2,656 0 2,541 0 15 0 60 0 5 Currency and coin (L'.S. and foreign) 21 n.a. 14 n.a 2 n.a 1 n.a. 6 Balances with depository institutions in Uniled Stales 63,138 40,011 56,3.36 35,043 2,195 1,688 3,819 3,004 7 U.S. branches and agencies of other foreign banks (including IBFs) 58.794 38.899 52.572 33,963 2,001 1,688 3.668 2.978 8 Other depository institutions in United Stales (including IBFs). 4.344 1.111 3,765 1,080 194 0 150 26 9 Balances with banks in foreign countries and with foreign central banks ' 42.660 37.803 36.624 31,993 6.37 634 4,426 4.355 10 Foreign branches of U.S. banks 1 1.36 918 812 609 0 0 301 301 11 Other banks in foreign countries and foreign central banks 41,524 36 885 15,812 31,384 637 634 4.125 4,054 12 Balances with Federal Reserve Banks 964 n.a. 830 n.a. 48 n.a. 18 n.a. 13 Total securities and loans 462,759 48,257 327,963 36,043 55,054 6,144 42,521 1,409 14 Total securities, book value 110,670 8.945 101.641 7,828 3.438 692 4.901 398 15 U.S. Treasury 31,901 n.a 30,432 n.a. 588 n.a. 751 n.a. 16 Obligations of U.S. government agencies and corporations 33.634 n.a. 32,733 n.a. 362 n.a. 403 n.a. 17 Other bonds, notes, debentures, and corporate stock (including state and local securities) 45,135 8 945 38,47b 7,828 2,489 692 3,748 398 18 Securities of foreign governmental units 1.3,127 4^360 11,860 3,886 647 229 494 217 19 All Other 32.008 4.585 26,616 3.942 1.841 46.3 3.254 181 20 Federal funds sold and securities purchased under agreements to resell 53.867 6.475 48,299 5,186 1,226 636 3,269 138 21 U.S. branches and agencies of other foreign banks 11,392 4.326 10.293 3,986 612 257 202 76 22 Commercial banks in Uniled Stales 11,943 277 10.862 269 145 0 686 8 23 Other 30.532 1.872 27,144 931 469 379 2,381 55 24 Total loans, gross 152,287 39.330 226,451 28.229 51,666 5,454 37,627 1,011 25 LESS: Unearned income on loans 199 18 130 14 51 2 7 0 26 EQl Al.s: Loans, net 352,089 39.312 226,322 28,215 51,616 .5,452 37.620 i.OH Tola! loans, grass, bv cutegorv 28 Loans lo depository institutions 3 3 1 6 . ,0 5 2 2 1 9 22 2 3 1 7 1 4 2 2 0 3 , . 1 3 0 0 4 2 14,23 6 4 5 8 5 . , 2 6 6 4 8 4 3,9 1 6 4 7 5 1. 9 55 9 6 3 622 29 Commercial banks in Uniled States (including IBFs) 12.379 6.927 7,350 4.203 4.035 2,550 399 1 12 30 U.S. branches and agencies of other foreign banks 11,138 6,706 6,406 .1,992 3.979 2,540 171 112 31 Other commercial banks in Uniled Slates 1,241 221 941 211 56 10 228 0 32 Other depository institutions in Uniled States (including IBFs) 153 138 152 138 0 0 0 0 33 Banks in foreign countries 23,490 15.309 15.800 9,893 1.609 1.416 594 510 34 Foreign branches of U.S banks . . . . 584 395 430 337 0 0 0 0 35 Olher banks in foreign countries 22,906 14,915 15.369 9.557 1,609 1.416 594 510 36 Loans to other financial institutions 40.954 874 33.911 622 2,542 59 3,617 65 37 Commercial and induslnal loans 221,482 13.529 129,669 11.128 34,424 1.244 30,408 319 38 U.S. addressees (domicile) 190.173 209 106,774 163 11,522 46 29,032 0 39 Non-U.S. addressees (domicile) 31.309 13.320 22 895 10.965 2,903 1.198 1.376 319 40 Acceptances of other banks 657 64 313 63 117 0 204 0 41 U.S. banks 49 0 27 0 5 0 6 0 42 Foreign banks 608 64 286 63 112 0 198 0 43 Loans to foreign government and official instilulions (including foreign cenlral banks) 3.879 2 027 3,291 1,880 263 39 18 5 44 Loans for purchasing or carrying securities (secured and unsecured) . . 11,963 66 11,528 66 58 0 57 0 45 All other loans 5,484 186 4.029 171 349 0 760 0 46 Lease financing receivables (net of unearned income) 318 0 303 0 0 0 15 0 47 U.S. addressees (domicile) 312 0 297 0 0 0 15 0 48 Non-U.S. addressees (domicile) .... 5 0 5 0 0 0 0 0 49 Trading assets 64.266 246 58,870 235 213 7 5,176 5 50 All other assets 14.862 2.454 28,458 1,977 3.658 260 1,945 148 5| Customers' liabilities on acceptances outstanding 9.023 n.a 6,114 n.a. 2,180 n.a. 461 n.a. 52 U.S. addressees (domicile) 6.604 n.a. 4,173 n.a. 1,942 n.a. 161 n.a. 53 Non-U.S. addressees (domicile) 2,419 n.a. 1.941 n.a. 239 n.a. 100 n.a. 54 Other assets including other claims on nonrelated parties 25.839 2.454 22,344 1,977 1.478 260 1,484 148 55 Net due from related depository institutions5 95 645 145,381 77,757 120,345 5,061 14.753 6,183 6,317 56 Net due from head office and other related depository institutions5. . 95,645 n.a. 77,757 n.a. 5.061 n.a. 6,183 n.a. 57 Net due from establishing entitv. head offices, and olher related depository institutions* n.a. 145,381 n.a. 120,345 n.a. 14,753 n.a. 6,317 58 Total liabilities4 820,838 280,627 637,692 230,821 68,109 24,121 67,418 15,376 59 Liabilities lo nonrelated parties 678.757 260.779 575,385 217,386 42,359 23,053 40,921 11,613 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A73 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks. December 31. 1996'—Continued Millions of dollars except as noted All satcs- Ne» York California Illinois Item exc I T E u I F K d s l i 1 l ng o 13 I F y s exc T IB l o u F t d a s i l ng I o B n F ly s ex T c I l B u u F a d l s ing I o B n F ly s exc T I l B o u t F d a s l i ng ' I o B n F ly s 60 Total deposits and credit balances 216.970 197.507 184,825 180.926 6.657 3.9 2 16,847 5.953 61 individuals, partnerships, and corporations 158,416 13.908 130,953 9.187 4,761 633 14.582 73 62 U.S. addressees (domicile) . . . 144.757 475 123,719 469 3,079 0 13.855 0 63 Non-US, addressees (domieilei 13.659 13.432 7,234 8,717 1,682 633 727 73 64 Commercial hanks m United Stales (including IBFs) 27,274 4 687 25,236 39.550 528 735 1.353 1,290 65 U.S. branches and agencies ot other foreign banks 16,730 36,786 15.631 35.264 173 630 836 Sll 66 Other commercial banks in United Stales 10.544 4.901 9,605 4.286 355 105 517 479 67 Banks in foreign countries 12.729 108.496 10,947 101.222 1.135 1.828 468 3.541 68 Foreign branches of U.S. banks . . 5.229 4.824 4.000 4,252 1,004 104 225 468 69 Other banks in foreign countries 7,50(1 1(13.673 6.948 96.97(1 131 1,723 243 3.073 70 Foreign governments and official institutions (including foreign central banks) 5.420 33,298 4.672 30.851 219 716 195 1,048 71 Ail other deposits and credit balances ... 12.754 118 12.682 117 4 0 42 1 72 Certified .ind official checks . ... 377 335 19 8 73 Transaction accounts and credit balances (excluding IBFs) 8,406 6.778 364 311 74 Individuals, partnerships, and corporations 6.560 5,206 305 294 75 US addressees (domicile) . 4,518 3.915 218 287 76 Non-US, addressee-, (domicile) 2.042 1.291 87 7 77 Commercial banks in United States (including IBFs) 39 34 1 0 78 U.S. branches and agencies of other foreign hanks 24 23 0 0 79 Other commercial banks in United States 14 11 1 0 80 Banks in lorei'jn countries X60 694 30 6 81 Foreign branches ot US. banks 8 8 0 0 82 Other banks in foreign countries 851 687 30 6 83 horeign governments and official institutions (including foreign central banks) ... 432 395 4 -> 84 All othei deposits and credit balances 39 113 4 1 85 Cerldied and official checks 377 335 19 8 86 Demand deposits i included in transaction accounts itnd credit balances) . .... 7,956 6.591 299 ">98 87 Individuals, partnerships., and corporations 6.182 5,081 244 281 88 U.S. addressees (domicile) 4,374 3.852 171 275 89 Non-U.S. addressees (domicile; 1,808 229 73 6 90 Commercial banks in United Slates (including IBFs) 36 ' 33 (1 0 "M 2^ o Q 92 Other commercial banks in United Slates 10 0 0 93 Banks in foreign countries 834 671 28 6 94 Foreign branches ol U.S. banks s 8 0 0 95 Other banks in foreign coumnes . . 82ft 664 2K 6 96 Foreign governments and official institutions (including foreign central banks! 423 391 4 2 97 All other deposits and credit balances 1113 80 3 1 98 Certified and official checks 377 135 u 8 99 Nontransaetiun accounts (including MMDAs, excluding IBFs) 208.564 178.047 6,293 16.535 !()() Individuals, partnerships, and corporations 151,856 125.747 4.456 14,288 101 U.S. addressees (domicile) 140,23') 119.804 2.K6I 13,567 102 Non-U.S. addressees (domicile) 11,617 5,943 1.595 720 103 Commercial banks in United States (including IBFs) 27.235 25.202 527 1 351 104 U.S. branches and agencies of other foreign banks 16.7(16 15.608 173 836 105 Other commercial banks in United States 10.529 9.594 354 517 106 Banks in foreign countries 1 1,870 10.253 1.106 462 107 Foreign branches of US. banks 5.221 3,992 1.0(14 108 Other banks in foreign countries 6.649 6.261 102 237 109 Foreign governments and official institutions (including foreign central banks) 4.988 4.276 204 393 110 All other deposits and credit balances . .... 12.615 12.568 0 41 11 1 IBF deposit liabilities 1 197.507 L 180.926 i 3.912 5,953 112 Individuals, partnerships, and corporations 13,908 9 87 633 73 i 13 U.S. addressees (domicile > 475 469 0 0 114 Non-U.S. addressees (domtctlei .... H432 8,717 633 73 115 Commercial banks in United States (including IBFs) 41,687 39,550 735 1,290 116 U.S. branches and agencies of other foreign banks 36.786 35,264 630 811 117 Other commercial banks in United States n.a. 4.901 n.d. 4,286 n.a. 105 n.a. 479 118 Banks in foreign countries . . 108.496 10 222 1 828 3,541 1 19 Foreign branches of U.S. banks .... 4 824 4.252 104 468 120 Other banks in foreign countries 103.673 96,970 1.723 3,073 121 Foreign governments and official institutions (including foreign central banks) 33.298 30,85 1 716 1,048 i22 All other deposits and eredil balance.*. . . 118 117 0 1 1 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • May 1997 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 1996'—Continued Millions of dollars except as noted AH stated in I c T B l o u F t d a s i l 1 ng o IB nl F y S 3 inc T I l B o u F t d a . i s l ng I o B n F ly s inc T I l B o u t F d a s i l ng I o B n F ly s inc T I l B o u t F d a s i l ng I o B n F ly s 123 Federal funds purchased and securities sold under agreements to repurchase 92.091 19.259 78,072 12,138 8.013 4 455 5 420 2,502 124 U.S. branches and agencies of other foreign banks 14,999 5,771 9,400 2,220 4.138 2.786 1.147 691 125 Other commercial banks in United States 9 753 1,277 5,909 208 2,055 120 1,711 949 126 Other 67.339 12,211 62,764 9,710 1.820 1,549 2,563 862 127 Other borrowed money 89,617 +1.123 57.393 21.800 20,537 14.470 8.171 3,064 128 Owed to nonrelated commercial banks in United States (including IBFs) 25,855 11,326 13,601 4,718 9,324 5,401 1,508 664 129 Owed to U.S. offices of nonrelated U.S. banks 9.815 1.859 5,641 400 3,300 1.279 396 62 130 Owed to U.S. branches and agencies of nonrelated foreign banks 16,040 9,467 7.960 4,318 6,024 4,122 1,111 601 131 Owed to nonrelated banks in foreign countries 31.891 27,122 19,415 14,862 8.941 8.848 2,297 2,286 132 Owed to foreign branches of nonrelated U.S banks 1.927 1,766 768 623 1,000 1.000 108 108 133 Owed to foreign offices of nonrelated foreign banks 29,964 25.357 18,647 14,239 7,941 7,848 2,189 2,178 134 Owed to others 31,872 2.674 24,377 2,220 2.271 221 4,367 115 135 All other liabilities 82.572 2,890 74,169 2.521 3,240 216 4,529 94 136 Branch or agency liability on acceptances executed and outstanding , 9.273 6,319 n.a. 2.189 465 137 Trading liabilities 51,188 113 47,884 112 167 0 3,127 1 13H Other liabilities to nonrelated parties 22,110 2,777 19.966 2,409 884 216 937 92 139 Net due to related depository institutions^ 142.081 19.848 62,308 13,436 25,750 1.068 26.497 140 Net owed to head office and other related depository institutions". . 142,081 n.a. 62,308 n.a. 25,750 n.a. 26,497 141 Net owed to establishing entity, head office, and other related depository institutions' . 19,848 13.436 1.068 MEMO 142 Non-inleresl-bearing balances with commercial banks in United States 765 534 80 52 143 Holding of commercial paper included in total loans 1.660 1.474 21 150 144 Holding of own acceptances included in commercial anil industrial loans 1.099 162 145 Commercial and industrial loans with remaining maturity of one year or le^s 127.630 74,165 19,639 19.660 146 Predetermined interest rates 76.488 46,411 11,041 13,563 147 Floating interest rates 51.142 27,755 8.598 6.097 14S Commercial and industrial loans with remaining maturity of more than one year , 92.854 54,833 14,536 10,707 149 Predetermined interest rates 20,356 12,906 2,448 3,352 150 Floating interest rates 72.499 41,927 12,088 7,354 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A75 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 1996'—Continued Millions of dollars except as noted All states2 New York California Illinois Item ex I T c B l o u F t d a s i - l ng o IB nl F y s 1 ex T c IB l o u t F d a s i l ng I o B n F ly s ex T c IB l o u t F d a s i l ng I o B n F ly s exc T I l B o u t F d a s i l ng I o B n F ly s 151 Components of total nontransaction accounts, included in total deposits and credit balances of t t t t nontransaction accounts, including IBFs 210,094 181,009 5,962 16.477 152 Time CDs in denominations of $100,000 nr more 170,214 146.656 4,411 13,032 153 Other o ti r m m e o d re eposits in denominations of $100,000 33,406 n1.a. 28,259 n.a. 1.449 n 1 .a. 3,244 n 1 .a. 154 Time CDs in denominations of $100,000 or more with remaining maturity of more than 12 months 6,474 6.094 102 201 All slates2 New York California Illinois inc T l o u t d a i l ng IBFs inc T l o u t d a i l ng IBFs inc T l o u t d a i l ng IBFs inc T l o u t d a i l ng [RFs IBFs only IBFs only IBFs only IBFs only 155 Immediately available funds with a maturity greater than one day included m other borrowed money 46,802 n.a. 25,947 n.a. 15,396 n.a. 3,301 n.a. 156 Number of reports filed6 485 0 242 0 106 0 40 0 1. Data are aggregates of categories reported on the quarterly form FF1EC 002, "Report of cither because the item is not an eligible IBF asset or liability or because that level of detail is Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks." The form was first not reported for IBFs. From December 1981 through September 1985, IBF data were used for reporting data as of June 30, 1980. and was revised as of December 31.1985. From included in all applicable items reported November 1972 through May 1980, U.S. branches and agencies of foreign banks had tiled a 4. Total assets and total liabilities include net balances, if an\. due from or owed to related monthly FR 886a report. Aggregate data from that report were available through the Federal banking institutions in the United States and in foreign countries {see note 5). On the former Reserve monthly statistical release G. 11, last issued on July 10, 1980. Data in this table and in monthly branch and agency report, available through the G.ll monthly statistical release, the G.I 1 tables arc not strictly comparable because of differences in reporting panels and in gross balances were included in total assets and total liabilities. Therefore, total asset and total definitions of balance sheet items. liability figures in this table are not comparable to those in the 0.11 tables. 2. Includes the District of Columbia. 5. Related depository institutions includes the foreign head office and other U.S and 3. Effective December 1981, the Federal Reserve Board amended Regulations D and Q to foreign branches and agencies of a bank, a bank's parent holding company, and majoritypermit banking offices located in the United States to operate international banking facilities owned banking subsidiaries of the bank and of its parent holding company (including (IBFs) Since December 31, 1985. data for IBFs have been reported in a separate column. subsidiaries owned boih directly and indirectly), These data are either included in or excluded from the total columns as indicated in the 6. In some cases two or more offices of a foreign bank within the same metropolitan area headings. The notation "n.a." indicates [hat no IBF data have been reported for that item, file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Index to Statistical Tables References are to pages A3—A75 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) EMPLOYMENT, 42 Assets and liabilities (See also Foreigners) Eurodollars, 23, 61 Commercial banks, 16—21 Domestic finance companies, 33 FARM mortgage loans, 35 Federal Reserve Banks, 10 Federal agency obligations, 5, 9, 10, 11, 28, 29 Foreign banks, U.S. branches and agencies, 72-75 Federal credit agencies, 30 Foreign-related institutions, 20 Federal finance Automobiles Debt subject to statutory limitation, and types and ownership Consumer credit, 36 of gross debt, 27 Production, 44, 45 Receipts and outlays, 25, 26 Treasury financing of surplus, or deficit, 25 Treasury operating balance, 25 BANKERS acceptances, 5, 10, 22, 23 Federal Financing Bank, 30 Bankers balances, 16-21, 72-75. (See also Foreigners) Federal funds, 6, 23, 25 Bonds (See also U.S. government securities) Federal Home Loan Banks, 30 New issues, 31 Federal Home Loan Mortgage Corporation, 30, 34, 35 Rates, 23 Federal Housing Administration, 30, 34, 35 Business activity, nonfinancial, 42 Federal Land Banks, 35 Business loans (See Commercial and industrial loans) Federal National Mortgage Association, 30, 34, 35 Federal Reserve Banks CAPACITY utilization, 43 Condition statement, 10 Capital accounts Discount rates (See Interest rates) Commercial banks, 16-21, 64-67 U.S. government securities held, 5, 10, 11, 27 Federal Reserve Banks, 10 Federal Reserve credit, 5, 6, 10, 11 Central banks, discount rates, 61 Federal Reserve notes, 10 Certificates of deposit, 23 Federally sponsored credit agencies, 30 Commercial and industrial loans Finance companies Commercial banks, 16-21, 64-67, 68-71 Assets and liabilities, 33 Weekly reporting banks, 18 Business credit, 33 Commercial banks Loans, 36 Assets and liabilities, 16-21, 64-67 Paper, 22, 23 Commercial and industrial loans, 16-21, 64-67, 68-71 Float, 5 Consumer loans held, by type and terms, 36, 68-71 Flow of funds, 37-41 Deposit interest rates of insured, 15 Foreign banks, assets and liabilities of U.S. branches and agencies, Number, by classes, 64-67 72-75 Real estate mortgages held, by holder and property, 35 Foreign currency operations, 10 Terms of lending, 68-71 Foreign deposits in U.S. banks, 5 Time and savings deposits, 4 Foreign exchange rates, 62 Commercial paper, 22, 23, 33 Foreign-related institutions, 20 Condition statements (See Assets and liabilities) Foreign trade, 51 Construction, 42, 46 Foreigners Consumer credit, 36 Claims on, 52, 55, 56, 57, 59 Consumer prices, 42 Liabilities to, 5), 52, 53, 58, 60, 61 Consumption expenditures, 48, 49 Corporations GOLD Profits and their distribution, 32 Certificate account, 10 Security issues, 31, 61 Stock, 5, 51 Cost of living (See Consumer prices) Government National Mortgage Association, 30. 34, 35 Credit unions, 36 Gross domestic product, 48, 49 Currency in circulation, 5, 13 Customer credit, stock market, 24 HOUSING, new and existing units, 46 DEBT (See specific types of debt or securities) INCOME, personal and national, 42, 48, 49 Demand deposits, 16-21,64-67 Industrial production, 42, 44 Depository institutions Insurance companies, 27, 35 Reserve requirements, 8 Interest rates Reserves and related items, 4, 5, 6, 12, 64-67 Bonds, 23 Deposits (See also specific types) Consumer credit, 36 Commercial banks, 4, 16-21, 64-67 Deposits, 15 Federal Reserve Banks, 5, 10 Federal Reserve Banks, 7 Interest rates, 15 Foreign central banks and foreign countries, 61 Discount rates at Reserve Banks and at foreign central banks and Money and capital markets, 23 foreign countries (See Interest rates) Mortgages, 34 Discounts and advances by Reserve Banks (See Loans) Prime rate, 22 Dividends, corporate, 32 International capital transactions of United States, 50-61 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All International organizations, 52, 53, 55, 58, 59 Residential mortgage loans, 34, 35 Inventories, 48 Retail credit and retail sales, 36, 42 Investment companies, issues and assets, 32 Investments (See also specific types) SAVING Commercial banks, 4, 16-21, 64-67 Flow of funds, 37^tl Federal Reserve Banks, 10, 11 National income accounts, 48 Financial institutions, 35 Savings institutions, 35, 36, 37-41 Savings deposits (See Time and savings deposits) LABOR force, 42 Securities (See also specific types) Life insurance companies (See Insurance companies) Federal and federally sponsored credit agencies, 30 Loans (See also specific types) Foreign transactions, 60 Commercial banks, 16-21, 64-67 New issues, 31 Federal Reserve Banks, 5, 6, 7, 10, 11 Prices, 24 Financial institutions, 35 Special drawing rights, 5, 10, 50, 51 Insured or guaranteed by United States, 34, 35 State and local governments Holdings of U.S. government securities, 27 MANUFACTURING New security issues, 31 Capacity utilization, 43 Rates on securities, 23 Production, 43, 45 Stock market, selected statistics, 24 Margin requirements, 24 Stocks (See also Securities) Member banks (See also Depository institutions) New issues. 31 Federal funds and repurchase agreements, 6 Prices, 24 Reserve requirements, 8 Student Loan Marketing Association, 30 Mining production, 45 Mobile homes shipped, 46 Monetary and credit aggregates, 4, 12 TAX receipts, federal, 26 Money and capital market rates, 23 Thrift institutions, 4. (See also Credit unions and Savings Money stock measures and components, 4, 13 institutions) Mortgages (See Real estate loans) Time and savings deposits, 4, 13, 15, 16-21, 64-67 Mutual funds, 13,32 Trade, foreign, 51 Mutual savings banks (See Thrift institutions) Treasury cash. Treasury currency, 5 Treasury deposits, 5, 10, 25 Treasury operating balance, 25 NATIONAL defense outlays, 26 National income, 48 UNEMPLOYMENT, 42 OPEN market transactions, 9 U.S. government balances Commercial bank holdings, 16-21 PERSONAL income. 49 Treasury deposits at Reserve Banks, 5, 10, 25 Prices U.S. government securities Consumer and producer, 42, 47 Bank holdings, 16-21,27 Stock market, 24 Dealer transactions, positions, and financing, 29 Prime rate, 22 Federal Reserve Bank holdings, 5, 10, 11, 27 Producer prices, 42, 47 Foreign and international holdings and Production, 42, 44 transactions, 10, 27, 61 Profits, corporate, 32 Open market transactions, 9 Outstanding, by type and holder, 27, 28 REAL estate loans Rates, 23 Banks, 16-21,35 U.S. international transactions, 50-62 Terms, yields, and activity, 34 Utilities, production, 45 Type of holder and property mortgaged, 35 Repurchase agreements, 6 VETERANS Administration, 34, 35 Reserve requirements, 8 Reserves Commercial banks. 16-21 WEEKLY reporting banks, 18 Depository institutions, 4, 5, 6, 12 Wholesale (producer) prices, 42, 47 Federal Reserve Banks, 10 U.S. reserve assets, 51 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman EDWARD W. KELLEY, JR. ALICE M. RIVLIN, Vice Chair SUSAN M. PHILLIPS OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE JOSEPH R. COYNE, Assistant to the Board EDWIN M. TRUMAN, Staff Director LARRY J. PROMISEL, Senior Associate Director DONALD J. WINN, Assistant to the Board THEODORE E. ALLISON, Assistant to the Board for Federal CHARLES J. SIEGMAN, Senior Associate Director Reserve System Affairs DALE W. HENDERSON, Associate Director LYNN S. FOX, Deputy Congressional Liaison DAVID H. HOWARD, Senior Adviser WINTHROP P. HAMBLEY, Special Assistant to the Board DONALD B. ADAMS, Assistant Director BOB STAHLY MOORE, Special Assistant to the Board THOMAS A. CONNORS, Assistant Director DIANE E. WERNEKE, Special Assistant to the Board PETER HOOPER III, Assistant Director PORTIA W. THOMPSON, Equal Employment Opportunity KAREN H. JOHNSON, Assistant Director Programs Adviser CATHERINE L. MANN, Assistant Director RALPH W. SMITH, JR., Assistant Director LEGAL DIVISION DIVISION OF RESEARCH AND STATISTICS i. 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 GLENN B. CANNER, Senior Adviser RICHARD SPILLENKOTHEN, Director JOHN J. MINGO, Senior 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 RICHARD D. PORTER, Deputy Associate Director GERALD A. EDWARDS, JR., Assistant 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

A79 LAURENCE H. MEYER 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, £"£0 Programs Director DAVID L. ROBINSON, Deputy Director (Finance and Control) LOUISE L. ROSEMAN, Associate Director DIVISION OF HUMAN RESOURCES JACK DENNIS, JR., Assistant Director MANAGEMENT EARL G. HAMILTON, Assistant Director JEFFREY C. MARQUARDT, Assistant Director DAVID L. SHANNON, Director FLORENCE M. YOUNG, Assistant Director JOHN R. WEIS, Associate Director JOSEPH H. HAYES, JR., Assistant Director OFFICE OF THE INSPECTOR GENERAL FRED HOROWITZ, Assistant Director BRENT L. BOWEN, Inspector General OFFICE OF THE CONTROLLER DONALD L. ROBINSON, Assistant Inspector General BARRY R. SNYDER, Assistant Inspector General GEORGE E. LIVINGSTON, Controller STEPHEN J. CLARK, Assistant Controller (Programs and Budgets) DARRELL R. PAULEY, Assistant Controller (Finance) DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director DAVID L. WILLIAMS, Assistant Director DIVISION OF INFORMATION RESOURCES MANAGEMENT STEPHEN R. MALPHRUS, Director MARIANNE M. EMERSON, Assistant Director Po KYUNG KIM, Assistant Director RAYMOND H. MASSEY, Assistant Director EDWARD T. MULRENIN, Assistant Director DAY W. RADEBAUGH, JR., Assistant Director ELIZABETH B. RIGGS, Assistant Director RICHARD C. STEVENS, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 Federal Reserve Bulletin • May 1997 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman J. ALFRED BROADDUS, JR. LAURENCE H. MEYER SUSAN M. PHILLIPS JACK GUYNN MICHAEL H. MOSKOW ALICE M. RIVLIN EDWARD W. KELLEY, JR. ROBERT T. PARRY ALTERNATE MEMBERS THOMAS M. HOENIG THOMAS C. MELZER ERNEST T. PATRIKIS JERRY L. JORDAN CATHY E. MINEHAN STAFF DONALD L. KOHN, Secretary and Economist ROBERT A. EISENBEIS, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary MARVIN S. GOODFRIEND, Associate Economist JOSEPH R. COYNE, Assistant Secretary WILLIAM C. HUNTER, Associate Economist GARY P. GILLUM, Assistant Secretary DAVID E. LINDSEY, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel FREDERIC S. MISHKIN, Associate Economist THOMAS C. BAXTER, JR., Deputy General Counsel LARRY J. PROMISEL, Associate Economist MICHAEL J. PRELL, Economist CHARLES J. SIEGMAN, Associate Economist EDWIN M. TRUMAN, Economist LAWRENCE SLIFMAN, Associate Economist JACK BEEBE, Associate Economist DAVID J. STOCKTON, Associate Economist PETER R. FISHER, Manager, System Open Market Account FEDERAL ADVISORY COUNCIL WALTER V. SHIPLEY, President CHARLES E. NELSON, 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 ROBERT W. GILLESPIE, Fourth District CHARLES E. NELSON, Tenth District KENNETH D. LEWIS, Fifth District CHARLES T. DOYLE, Eleventh District STEPHEN A. HANSEL, 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

A81 CONSUMER ADVISORY COUNCIL JULIA W. SEWARD, Richmond, Virginia WILLIAM N. LUND, Augusta, Maine RICHARD S. AMADOR, LOS Angeles, California ERROL T. LOUIS, Brooklyn, New York WAYNE-KENT A. BRADSHAW, LOS Angeles, California PAUL E. MULLINGS, McLean, Virginia THOMAS R. BUTLER, Riverwoods, Illinois CAROL PARRY, New York, New York ROBERT A. COOK, Crofton, Maryland PHILIP PRICE, JR., Philadelphia, Pennsylvania HERIBERTO FLORES, Springfield, Massachusetts RONALD A. PRILL, Minneapolis, Minnesota EMANUEL FREEMAN, Philadelphia, Pennsylvania LISA RICE, Toledo, Ohio DAVID C. FYNN, Cleveland, Ohio JOHN R. RINES, Detroit, Michigan ROBERT G. GREER, Houston, Texas SISTER MARILYN ROSS, Omaha, Nebraska KENNETH R. HARNEY, Chevy Chase, Maryland MARGOT SAUNDERS, Washington, D.C. GAIL K. HILLEBRAND, San Francisco, California GAIL SMALL, Lame Deer, Montana TERRY JORDE, Cando, North Dakota YVONNE S. SPARKS, St. Louis, Missouri FRANCINE C. JUST A, New York, New York GREGORY D. SQUIRES, Milwaukee, Wisconsin JANET C. KOEHLER, Jacksonville, Florida GEORGE P. SURGEON, Chicago, Illinois EUGENF I. LEHRMANN, Madison, Wisconsin THEODORE J. WYSOCKI, JR., Chicago, Illinois THRIFT INSTITUTIONS ADVISORY COUNCIL DAVID F. HOLLAND, Burlington, Massachusetts, President CHARLES R. RINEHART, Irwindale, California, Vice President BARRY C. BURKHOLDER, Houston, Texas STEPHEN D. HAILER, Akron, Ohio DAVID E. A. CARSON, Bridgeport, Connecticut EDWARD J. MOLNAR, Harleysville, Pennsylvania MICHAEL T. CROWLEY, JR., Milwaukee, Wisconsin GUY C. PINKERTON, Seattle, Washington DOUGLAS A. FERRARO, Englewood, Colorado TERRY R. WEST, Jacksonville, Florida WILLIAM A. FITZGERALD, Omaha, Nebraska FREDERICK WILLETTS, III, Wilmington, North Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, The Payment System Handbook. $75.00 per year. MS-127, Board of Governors of the Federal Reserve System, Federal Reserve Regulatory Service. Four vols. (Contains all Washington, DC 20551 or telephone (202) 452-3244 or FAX four Handbooks plus substantial additional material.) $200.00 (202) 728-5886. You may also use the publications order per year. form available on the Board's World Wide Web site Rates for subscribers outside the United States are as follows (http://www.bog.frb.fed.us). When a charge is indicated, payment and include additional air mail costs: should accompany request and be made payable to the Board of Federal Reserve Regulatory Service, $250.00 per year. Governors of the Federal Reserve System or may be ordered via Each Handbook, $90.00 per year. Mastercard or Visa. Payment from foreign residents should be FEDERAL RESERVE REGULATORY SERVICE FOR PERSONAL drawn on a U.S. bank. COMPUTERS. Diskettes; updated monthly. Standalone PC. $300 per year. Network, maximum 1 concurrent user. $300 per year. Network, maximum 10 concurrent users. $750 per year. BOOKS AND MISCELLANEOUS PUBLICATIONS Network, maximum 50 concurrent users. $2,000 per year. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. Network, maximum 100 concurrent users. $3,000 per year. 1994. 157 pp. Subscribers outside the United States should add $50 to cover ANNUAL REPORT. additional airmail costs. ANNUAL REPORT: BUDGET REVIEW, 1995-96. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or $2.50 COUNTRY MODEL, May 1984. 590 pp. $14.50 each. each in the United States, its possessions, Canada, and INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. Mexico. Elsewhere, $35.00 per year or $3.00 each. 440 pp. $9.00 each. ANNUAL STATISTICAL DIGEST: period covered, release date, num- FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. ber of pages, and price. December 1986. 264 pp. $10.00 each. 1981 October 1982 239 pp. $ 6.50 FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- 1982 December 1983 266 pp. $ 7.50 SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1983 October 1984 264 pp. $11.50 RISK MEASUREMENT AND SYSTEMIC RISK: PROCEEDINGS OF A 1984 October 1985 254 pp. $12.50 JOINT CENTRAL BANK RESEARCH CONFERENCE. 1996. 1985 October 1986 231 pp. $15.00 578 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 EDUCATION PAMPHLETS 1980-89 March 1991 712 pp. $25.00 Short pamphlets suitable for classroom use. Multiple copies are 1990 November 1991 185 pp. $25.00 available without charge. 1991 November 1992 215 pp. $25.00 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 CHARTS. Weekly. $30.00 per year or $.70 each in the United The Board of Governors of the Federal Reserve System States, its possessions, Canada, and Mexico. Elsewhere, The Federal Open Market Committee Federal Reserve Bank Board of Directors $35.00 per year or $.80 each. Federal Reserve Banks REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL Organization and Advisory Committees RESERVE SYSTEM. A Consumer's Guide to Mortgage Lock-Ins A Consumer's Guide to Mortgage Settlement Costs ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— A Consumer's Guide to Mortgage Refinancings Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Home Mortgages: Understanding the Process and Your Right Vol. II (Irregular Transactions). 1969. 116 pp. Each volume $5.00. to Fair Lending How to File a Consumer Complaint GUIDE TO THE FLOW OF FUNDS ACCOUNTS. 672 pp. $8.50 each. Making Deposits: When Will Your Money Be Available? FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated monthly. (Requests must be prepaid.) Making Sense of Savings Consumer and Community Affairs Handbook. $75.00 per year. SHOP: The Card You Pick Can Save You Money Welcome to the Federal Reserve Monetary Policy and Reserve Requirements Handbook. $75.00 When Your Home is on the Line: What You Should Know per year. Securities Credit Transactions Handbook. $75.00 per year. About Home Equity Lines of Credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A83 STAFF STUDIES: Only Summaries Printed in the 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by BULLETIN James T. Fergus and John L. Goodman. Jr. July 1993. 20 pp. Studies and papers on economic and financial subjects that are of 165. THE DEMAND FOR TRADE CREDIT: AN INVESTIGATION OF general interest. Requests to obtain single copies of the full text or MOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES, by to be added to the mailing list for the series may be sent to Gregory E. Elliehausen and John D. Wolken. September Publications Services. 1993. 18 pp. 166. THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET, by Staff Studies 1-157 are out of print. Mark Carey, Stephen Prowse, John Rea, and Gregory Udell. January 1994. Ill pp. 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANK- MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE ING, 1980-93, AND AN ASSESSMENT OF THE "OPERATING PRODUCTS, by Mark J. Warshawsky with the assistance of PERFORMANCE" AND "EVENT STUDY" METHODOLOGIES, Dietrich Earnhart. September 1989. 23 pp. by Stephen A. Rhoades. July 1994. 37 pp. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI- 168. THE ECONOMICS OF THE PRIVATE EQUITY MARKET, by ARIES OF BANK HOLDING COMPANIES, by Nellie Liang and George W. Fenn, Nellie Liang, and Stephen Prowse. Novem- Donald Savage. February 1990. 12 pp. ber 1995. 69 pp. 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- 169. BANK MERGERS AND INDUSTRYWIDE STRUCTURE, 1980-94, VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by by Stephen A. Rhoades. February 1996. 32 pp. Gregory E. Elliehausen and John D. Wolken. September 1990. 35 pp. 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, 1980-90, by Margaret Hastings Pickering. May 1991. REPRINTS OF SELECTED Bulletin ARTICLES 21pp. Some Bulletin articles are reprinted. The articles listed below are 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- those for which reprints are available. GAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Rhoades. February 1992. 11 pp. Limit of ten copies 163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR- KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, FAMILY FINANCES IN THE U.S.: RECENT EVIDENCE FROM THE Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary SURVEY OF CONSUMER FINANCES. January 1996 Ann Taylor. March 1992. 37 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A84 Maps of the Federal Reserve System 1 9 • 2 BOSTON MINNEAPOLIS • 7 Jbatt 12 _ -2 • NEW YORK CHICAGO • CLEVELAND PHILADELPHIA 10 4 5 • SAN FRANCISCO « • KANSAS CITY |1 _ RICHMOND> ST. LOUIS 5 8 6 11 • ATLANTA DALLAS ALASKA HAWAII LEGEND Both pages Facing page • Federal Reserve Bank city • Federal Reserve Branch city n 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 February 1996. The System serves commonwealths and territories as follows: the New York Bank serves the Commonwealth Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A85 1-A 2-B 3-C 4-D 5-E Baltimore VAl NC Buffalo Bi •Cincinnati •Charlotte / T / NY BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H •Nashville TN — KY Birmingham _ • Detroit* J Louisville MS MO Jacksonville •Memphis New Orleans y Little) Rock ( Miami ATLANTA CHICAGO ST. Louis 9-1 • Helena MINNEAPOLIS 10-J 12-L Omaha* Denver Seattle Oklahoma City Portland KANSAS CITY 11-K Salt Lake City El Paso •Los Angeles S;m Antonio DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02106 William C. Brainard Cathy E. Minehan Frederick J. Mancheski Paul M. Connolly NEW YORK* 10045 John C. Whitehead William J. McDonough Thomas W. Jones Ernest T. Patrikis Buffalo 14240 Bal Dixit Carl W. Turnipseed' PHILADELPHIA 19105 Donald J. Kennedy Edward G. Boehne Joan Carter William H. Stone, Jr. CLEVELAND* 44101 G. Watts Humphrey, Jr. Jerry L. Jordan David H. Hoag Sandra Pianalto Cincinnati 45201 George C. Juilfs Charles A. Cerino' Pittsburgh 15230 John T. Ryan, III Harold J. Swart1 RICHMOND* 23219 Claudine B. Malone J. Alfred Broaddus, Jr. Robert L. Strickland Walter A. Varvel Baltimore 21203 Rebecca Hahn Windsor William J. Tignanelli1 Charlotte 28230 Dennis D. Lowery Dan M. Bechter' ATLANTA 30303 Hugh M. Brown Jack Guynn David R. Jones Patrick K. Barron James M. Mckee Birmingham 35283 D. Bruce Can- FredR. Herr1 Jacksonville 32231 Patrick C. Kelly James D. Hawkins1 Miami 33152 Kaaren Johnson-Street James T. Curry III Nashville 37203 James E. Dalton, Jr. Melvyn K. Purcell New Orleans 70161 JoAnnSlaydon Robert J. Musso CHICAGO* 60690 Lester H. McKeever, Jr. Michael H. Moskow Arthur C. Martinez William C. Conrad Detroit 48231 Florine Mark David R. Allardice1 ST. LOUIS 63166 John F. McDonnell Thomas C. Melzer Susan S. Elliott W. LeGrande Rives Little Rock 72203 Robert D. Nabholz, Jr. Robert A. Hopkins Louisville 40232 John A. Williams Thomas A. Boone Memphis « 38101 John V. Myers Martha L. Perine MINNEAPOLIS 55480 Jean D. Kinsey Gary H. Stern David A. Koch Colleen K. Strand Helena 59601 Matthew J. Quinn John D.Johnson KANSAS CITY 64198 A. Drue Jennings Thomas M. Hoenig Jo Marie Dancik Richard K. Rasdall Denver 80217 Peter I. Wold Carl M. Gambs' Oklahoma City 73125 Barry L. Eller Kelly J. Dubbert Omaha 68102 Arthur L. Shoener Bradley C. Cloverdyke DALLAS 75201 Roger R. Hemminghaus Robert D. McTeer, Jr. Cece Smith Helen E. Holcomb El Paso 79999 Alvin T. Johnson Sammie C. Clay Houston 77252 I. H. Kempner, III Robert Smith, III' San Antonio 78295 H. B. Zachry, Jr. James L. Stull' SAN FRANCISCO 94120 Judith M. Runstad Robert T. Parry Gary G. Michael John F. Moore Los Angeles 90051 Anne L. Evans MarkL. Mullinix1 Portland 97208 Carol A. Whipple Raymond H. Laurence1 Salt Lake City 84125 Gerald R. Sherratt Andrea P. Wolcott Seattle 98124 Richard R. Sonstelie Gordon R. G. Werkema2 *Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks. Connecticut 06096; East Rutherford, New Jersey 07016; 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. Digitized for FRASER 2. Executive Vice President http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis