Federal Reserve Bulletin, 1997-12

VOLUME 83 • NUMBER 12 • DECEMBER 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 official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 947 TREASURY AND FEDERAL RESERVE OPEN formance can improve investor and counterparty MARKET OPERATIONS decisions, thus improving market discipline on banking organizations and other companies, During the third quarter of 1997, the dollar before the Subcommittee on Capital Markets, appreciated 5.0 percent against the Japanese yen Securities and Government Sponsored Enterand 0.8 percent against the German mark. On a prises of the House Committee on Banking and trade-weighted basis against other Group of Ten Financial Services, October 1, 1997. currencies, the dollar appreciated 1.4 percent. The U.S. monetary authorities did not undertake 96\ Theodore E. Allison, Assistant to the Board of any intervention in the foreign exchange mar- Governors for Federal Reserve System Affairs, kets during the quarter. reports on the Federal Reserve's plans for dealing with some new-design $50 notes that 953 STAFF STUDY SUMMARY were imperfectly printed, including the Federal Reserve's view of the quality and quantity of In The Cost of Implementing Consumer Finan- $50 notes currently being produced by the cial Regulations, the authors present results for Bureau of Engraving and Printing, the options U.S. commercial banks from a 1992-93 Federal the Federal Reserve is looking into for handling Reserve survey of the costs of complying with the imperfect notes, and the steps it is taking the Truth in Savings Act. Besides reporting jointly with the Bureau of Engraving and Printdescriptive data, they discuss the factors shown ing to better ensure satisfaction with notes proby statistical analysis to affect costs and look at duced by the Bureau in the future, before the the implications of the findings for policies on Subcommittee on Domestic and International regulatory change. Monetary Policy of the House Committee on Banking and Financial Services, October 1, 954 INDUSTRIAL PRODUCTION AND CAPACITY 1997. UTILIZATION FOR OCTOBER 1997 Industrial production rose 0.5 percent in Octo- 963 Alan Greenspan, Chairman, Board of Goverber, to 122.7 percent of its 1992 average, after a nors, discusses the improvement in our fiscal downward revised gain of 0.5 percent in Sep- position, after decades-long deterioration, and tember. The rate of industrial capacity utilization says that if our goals are economic growth and rose to 84.3 percent—its highest rate since rising living standards, fostered by investment March 1995. and price stability, fiscal policy in his judgment will need to be biased toward surpluses in the years immediately ahead, especially given the 957 STATEMENTS TO THE CONGRESS inexorable demographic trends that threaten Susan M. Phillips, member, Board of Gover- huge increases in outlays beyond 2010; he also nors, discusses the Federal Reserve Board's says that we must not squander years of efforts views on proposed accounting standards for de- to balance the budget and the benefits of ideal rivatives and risk-management activities issued economic conditions by failing to address our by the Financial Accounting Standards Board long-term imbalances such as the critical (FASB) and says that the Federal Reserve shares imbalance faced by social security and that the several objectives with the FASB for improving changes that will be required to restore fiscal financial reporting, including the fundamental balance to our social security accounts are sigobjectives of promoting clear and understand- nificant but manageable, before the House Comable financial reports that increase the transpar- mittee on the Budget, October 8, 1997. ency of companies' activities, and also the view that accounting and disclosure standards that 968 Governor Phillips discusses the Federal Refaithfully represent financial condition and per- serve's efforts in recent years to strengthen its Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

supervisory processes and also the Board's thrift institutions, with regard to the treatment views about what challenges lie ahead, for both of certain unrealized revaluation gains on the banking system and the supervisory process, equity securities. and says that progress made in recent years to Availability of a report on the payments system focus examinations on the areas of highest risk forums held by the Federal Reserve earlier this at banking organizations places the Federal year. Reserve in a better position to identify problems early, control systemic risk, and maintain finan- Availability of revised lists of over-the-counter cial stability, although implementing the risk- stocks and of foreign stocks subject to margin focused approach has not been an easy task, regulations. before the Subcommittee on Financial Institutions and Consumer Credit of the House Com- 981 MINUTES OF THE FEDERAL OPEN mittee on Banking and Financial Services, Octo- MARKET COMMITTEE MEETING ber 8, 1997. HELD ON AUGUST 19, 1997 974 Theodore E. Allison comments on H.R.2637, At its meeting on August 19, 1997, the Comthe United States $1 Coin Act of 1997, which mittee adopted a directive that called for mainproposes that the dollar coin be made gold in taining conditions in reserve markets that were color and given a distinctive rim, that it retain consistent with an unchanged federal funds the dimension of the Susan B. Anthony dollar rate of about 5V2 percent. The Committee coin, and that the dollar note remain in circuladecided that a somewhat higher federal funds tion, and says that the Federal Reserve believes rate would be acceptable or a slightly lower that the proposed bill achieves a good balance federal funds rate might be acceptable during among the issues involved in the dollar-cointhe intermeeting period. versus-dollar-note debate and supports its passage, before the Subcommittee on Domestic and International Monetary Policy of the House 987 LEGAL DEVELOPMENTS Committee on Banking and Financial Services, Various bank holding company, bank service October 21, 1997. corporation, and bank merger orders; and pend- 975 Chairman Greenspan addresses the turbulence ing cases. in world financial markets and says that the financial disturbances that have afflicted a num- 1037 MEMBERSHIP OF THE BOARD OF ber of currencies in Asia do not at this point GOVERNORS OF THE FEDERAL RESERVE threaten prosperity in this country but that we SYSTEM, 1913-97 need to work closely with their leaders and the List of appointive and ex officio members. international financial community to ensure that their situations stabilize, before the Joint Economic Committee of the U.S. Congress, Octo- A1 FINANCIAL AND BUSINESS STATISTICS ber 29, 1997. These tables reflect data available as of October 29, 1997. 978 ANNOUNCEMENTS A3 GUIDE TO TABULAR PRESENTATION Appointment of Edward M. Gramlich as a mem- A4 Domestic Financial Statistics ber of the Board of Governors. A42 Domestic Nonfinancial Statistics Appointment of Roger W. Ferguson, Jr., as a A50 International Statistics member of the Board of Governors. Meeting of the Consumer Advisory Council. A63 GUIDE TO STATISTICAL RELEASES AND SPECIAL TABLES Amendments to Regulation D. Proposal by the banking supervisory agencies to A64 INDEX TO STATISTICAL TABLES amend their respective risk-based capital standards for banks, bank holding companies, and A66 BOARD OF GOVERNORS AND STAFF Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 FEDERAL OPEN MARKET COMMITTEE AND A74 MAPS OF THE FEDERAL RESERVE SYSTEM STAFF; ADVISORY COUNCILS A76 FEDERAL RESERVE BANKS, BRANCHES, A70 FEDERAL RESERVE BOARD PUBLICATIONS AND OFFICES A72 SCHEDULE OF RELEASE DATES FOR A77 INDEX TO VOLUME 83 PERIODIC RELEASES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations This quarterly report describes U.S. Treasury and 0.6 percent in the third quarter of 1996. Implied System foreign exchange operations for the period volatility on one-month dollar-mark options rose to from July through September 1997. It was presented its highest levels this year, peaking in late August by Peter R. Fisher, Executive Vice President, Federal after the dollar reached eight-year highs against Reserve Bank of New York, and Manager, System the mark. One-month dollar-yen implied volatility Open Market Account. Andrew Jewell was primarily moved higher over the quarter, but fell short of this responsible for preparation of the report. year's peak levels established in May. During the third quarter of 1997, the dollar appreciated 5.0 percent against the Japanese yen and 0.8 per- 1. Spot exchange rate of the dollar against the German mark cent against the German mark. On a trade-weighted and volatility implied by option prices, 1997:Q2-Q3 basis against other Group of Ten (G-10) currencies, the dollar appreciated 1.4 percent.1 The dollar German marks per U.S. dollar Percent per year reached eight-year highs against the mark in early August, driven by market perceptions that the Euro- 1 on M rl/ 115 One-month volatilities hi W1 10 pean Economic and Monetary Union (EMU) would 1.85 — | i i\ Nr vi a 105 include a broad group of countries and result in a I fl JV/v VV k — IO.O "weak" single currency. Those gains were later i.8o j-M l\r\f\ U V M jT- 9.5 reversed amid growing perceptions that the Bundes- Y\ 9.0 bank might tighten monetary policy. The dollar rose 11..7755 —— KKiiTT^^II Spot exchange rate — 8.5 against the yen as a series of Japanese economic data 1.70 ( Y ftlLjJ ** — 8.0 releases dampened earlier optimism for a near-term J » — 7.5 improvement in Japan's economic prospects and re- " i ll 1 1 1 Apr. May June July Aug. Sept. duced expectations for a rise in Japanese interest 1997 rates. However, the dollar's rise was restrained by NOTE. Data are daily. renewed concerns over U.S.-Japan trade relations. SOURCE. Federal Reserve Bank of New York; Reuters. The U.S. monetary authorities did not undertake any intervention in the foreign exchange markets during the quarter. 2. Spot exchange rate of the dollar against the Japanese yen and volatility implied by option prices, 1997:Q2-Q3 Japanese yen per U.S. dollar Percent per year RISES IN INTRADAY VOLATILITY OF THE 112266 ^^ VV yyAA 11 ii One-month volatilities DOLLAR » — 14 122 t~ 1 II The dollar's intraday volatility continued to rebound In ft Xkl\tf\T ^ 12 from the unusually low levels recorded in 1996. The 118 n y> average daily trading range against the mark and the Li — 10 yen rose to 1.1 percent, compared with average daily ranges of 1.0 percent in the previous quarter and U4 — **\v |J 1 V ¥ \f spot exchange rate 8 1 i i 1 1 1 1 Apr. May June July Aug. Sept. 1997 1. The dollar's movements on a trade-weighted basis against ten major currencies are measured using an index developed by staff NOTE. Data are daily. members of the Board of Governors of the Federal Reserve System. SOURCE. Federal Reserve Bank of New York; Reuters. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

948 Federal Reserve Bulletin • December 1997 EXPECTATIONS OF STEADY MONETARY POLICY year. Against the background of relatively stable U.S. ENCOURAGED BY A BENIGN U.S. INFLATIONARY monetary policy expectations, the dollar responded ENVIRONMENT primarily to developments elsewhere. Developments in the dollar occurred amid continued signs of moderate growth and expectations of stable RETREAT OF THE DOLLAR FROM EIGHT-YEAR monetary policy in the United States. In July, the HIGHS AGAINST THE MARK yield on the benchmark thirty-year U.S. Treasury bond fell to a seventeen-month low of 6.30 percent, The dollar began the period by extending its gains and the yield curve reached its flattest level in twenty- against the mark from the previous quarter, reaching nine months. The rally in Treasury prices was sup- an eight-year high of DM 1.8913 on August 6. Early ported by a perceived decline in inflationary risk, in the period, the German mark was pressured lower expectations of moderating economic growth in the against a wide range of currencies by growing market third quarter, and anticipation of reduced future bor- expectations that the EMU would proceed with a rowing needs given the improving U.S. fiscal situa- broad group of countries and result in a "weak" tion. In his Humphrey-Hawkins testimony on July 22 single currency. On July 21, in response to a public and 23, Federal Reserve Board Chairman Alan audit forecasting a 1997 budget deficit of 3.5 to Greenspan noted that measured inflation was "lower 3.7 percent of gross domestic product (GDP), the now than when the [U.S.] expansion began" and newly elected French government reassured market showed "little tendency to rebound of late." participants of its commitment to the EMU by In August, a stronger-than-expected report from announcing deficit-reduction measures designed to the National Association of Purchasing Managers lower the deficit to levels modestly above the Maascoupled with larger-than-expected employment gains tricht reference value. Subsequent remarks by Gerprompted some market participants to express con- man officials suggesting that France's situation was cern that third-quarter growth might be stronger than not inconsistent with a timely start to the EMU anticipated. However, in mid-September, weak con- reinforced market perceptions that the Maastricht crisumer price index (CPI) data were viewed as once teria could be interpreted flexibly. Continued high again confirming the low inflation environment, push- German unemployment and the government's failure ing down the benchmark U.S. Treasury bond yield 18 to agree on tax reform supported the view that Gerbasis points, to 6.40 percent, in one day. Reflecting many itself might fail to strictly meet the 3.0 percent market sentiment that the Federal Open Market Com- deficit criterion, suggesting, in turn, that Germany mittee (FOMC) would not change current policy in would not block broad EMU participation. Expectathe benign inflationary environment, federal funds tions for a broad EMU supported declines in longfutures contracts continued to suggest only a modest term interest rates in Spain and Italy, where ten-year chance for a hike in interest rates by the end of the government bond yields converged to record low spreads over comparable German yields. 3. U.S. interest rates, 1997:Q3 4. German government benchmark two-year bond yield, Percent 1997:Q3 6.1 Percent U.S. 3x6 forward rate agreement — 6.0 4.0 3.8 3.6 3.4 July Aug. Sept. 1997 NOTE. A 3x6 forward rate agreement (FRA) refers to the yield on a threemonth deposit with a value date three months hence and a maturity date six months hence. Data are daily. NOTE. Data are daily. SOURCE. Reuters. SOURCE. Bloomberg L.P. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 949 The dollar's retreat from its highs in August was September reduced expectations for an immediate triggered by comments from Bundesbank officials Bundesbank tightening, market participants increasthat were viewed as suggesting that the German ingly accepted the notion that German official rates central bank might raise interest rates to stem further would need to rise before the announcement of final depreciation of the mark. At its final council meeting EMU bilateral conversion rates in the spring of 1998. before the summer recess, the Bundesbank left its Three-month interest rates three months hence, as key repurchase rate unchanged for only the first two implied by forward rate agreements, ended the period weeks of the four-week intermeeting period, prompt- at 3.59 percent, 42 basis points above June 30 levels. ing discussion that the central bank was preserving flexibility to raise rates. In August, the Bundesbank announced that it was returning to its previous prac- RENEWED PESSIMISM IN JAPAN WEIGHS tice of setting the repurchase rate each week, instead ON THE YEN of setting the rate for two weeks. Heightened discussion of a rate hike weighed on the short end of the After falling sharply in May, the dollar resumed its German yield curve, with yields on two-year govern- upward trend against the yen through the third quarment bonds ending the quarter 60 basis points above ter as market participants reassessed earlier expectheir trough in early July. Interest rates implied by tations of tighter monetary conditions in Japan. Optiforward rate agreements rose to reflect increased mar- mism for a near-term acceleration in economic ket expectations for tighter monetary policy. growth, fueled in part by official comments in May, Market participants also focused on comments gave way to renewed pessimism after a series of data from Bundesbank officials for signals of a shift in releases that were weaker than expected revealed policy. Although Bundesbank President Tietmeyer signs of a buildup in inventories and persistent weakindicated in August that more economic data were ness in consumer demand. In the summer issue of needed before the Bundesbank could decide to its Quarterly Economic Outlook, the Bank of Japan change policy, and that M3 growth remained "at the acknowledged that the economic recovery was top of the hierarchy" of policy inputs, Bundesbank "unlikely to gather significant momentum, as a result Chief Economist Issing later remarked that the "turn- of fragility in some sectors, as well as the continued ing point" in German inflation had been reached and balance-sheet adjustment pressure." Data released on warned that all indicators were "moving in the wrong September 11 showed that in the second quarter, the direction." Meanwhile, regional CPI data, second- Japanese economy contracted 2.9 percent from the quarter GDP data, business confidence, and import previous quarter and 11.2 percent annually, confirmprice data appeared to some market participants to ing the lingering effects of the April consumption tax corroborate claims that the German economy was hike. As the dollar moved back above the ¥120 level, picking up speed and inflationary risks were grow- market participants focused increasingly on trade ing. While the recovery of the mark in August and issues. Comments by U.S. officials expressing concern over Japan's trade surplus and its commitment to demand-led growth were perceived by market 5. German interest rates, 1997:Q3 participants as reflecting ongoing bilateral trade fric- Percent tions and prompted greater caution about extending long dollar-yen positions. Official statements from German 3x6 forward rate agreement A A 3.6 the September Group of Seven (G-7) meeting in Hong Kong were interpreted as strengthening the — 3.5 language of the April G-7 meeting and, in particular, _ — 3.4 cautioning against yen depreciation. — A J 4- 3.3 Developments in Southeast Asian financial markets exacerbated the negative sentiment in Japan. In 3.2 the previous quarter, expectations of rising Japanese Three-month Euromark deposit yield — 3.1 interest rates contributed to mounting pressure on t t sift 1 _J Southeast Asian currencies as investors covered yen- July Aug. Sept. financed positions, while perceptions of weakening 1997 economic fundamentals in Southeast Asia further NOTE. A 3x6 forward rate agreement (FRA) refers to the yield on a three- pressured financial markets. In early July, the Bank of month deposit with a value date three months hence and a maturity date six months hence. Thailand abandoned its basket currency peg regime, Data are daily. allowing the Thai baht to depreciate sharply against SOURCE. Reuters. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

950 Federal Reserve Bulletin • December 1997 6. Japanese government benchmark two-year bond yield, 8. Dollar-yen one-month risk reversals, 1997:Q3 1997:Q3 Percent Percent — 2.3 — — 2.2 — 2.1 — 2.0 "Vv- 1.9 1 ! 1 July Aug. Sept. 1997 NOTE. Risk reversals are option positions consisting of a short (written) put NOTE. Data are daily. and a long (purchased) call that mature on the same date and are equally out-of-the-money. The price of a risk reversal indicates whether the call or the SOURCE. Bloomberg L.P. put is more valuable. If the price is positive, the call is at a premium, indicating that the market is willing to pay more to insure against the risk that the dollar will rise. If the price is negative, the put is at a premium, indicating that the market is willing to pay more to insure against the risk that the dollar will fall. the dollar. The crisis in Thailand spread to other Data are daily. countries in the region, with the Indonesian rupiah, SOURCE. Reuters. the Malaysian ringgit, and the Philippine peso weakening significantly against the dollar after decisions to move to more flexible exchange rate regimes. mark ten-year Japanese government bond fell to Despite diminishing expectations of higher rates in record lows, dropping below 2.00 percent in late Japan over the course of the period, Southeast Asian August and ending the quarter at 1.87 percent. The currencies remained under pressure and regional spread between ten-year U.S. and Japanese governequity markets weakened. The perceived loss of com- ment bond yields widened as much as 55 basis points petitiveness of Japanese exports to other Asian from an intra-period low of 358 basis points set on markets given the effective devaluation of several July 22. Equity market sentiment was dampened by regional currencies was seen as another factor weigh- concerns over the health of the construction sector ing on the yen. and by racketeering scandals in the financial sector. Japanese bonds gained and equities weakened, In a reversal of the gains achieved in the previous reflecting the view that renewed growth was farther quarter, the Nikkei-225 index fell 13.2 percent. Maroff than had been expected. The yield on the bench- ket participants scaled back expectations for an end to the Bank of Japan's accommodative monetary policy, with forward rate agreements suggesting 7. Japanese interest rates, 1997:Q3 expectations for virtually no change in policy through the end of 1997. Prices of one-month risk reversals for dollar-yen, which had been skewed since May to favor yen call options, flipped to favor dollar call options in late July, reflecting a higher cost for insurance against further dollar gains against the yen. TREASURY AND FEDERAL RESERVE FOREIGN EXCHANGE RESERVES The U.S. monetary authorities did not undertake any July Aug. Sept. intervention operations this quarter. At the end of the 1997 quarter, the current values of the German mark and NOTE. A 3x6 forward rate agreement (FRA) refers to the yield on a threemonth deposit with a value date three months hence and a maturity date six Japanese yen reserve holdings totaled $17.5 billion months hence. for the Federal Reserve System and $14.6 billion for Data are daily. SOURCE. Reuters, Bloomberg L.R the Exchange Stabilization Fund. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 951 The U.S. monetary authorities invest all of their Japanese and German government securities held foreign currency balances in a variety of instruments under repurchase agreement are arranged either that yield market-related rates of return and have a through transactions executed directly in the market high degree of liquidity and credit quality. A signifi- or through agreements with official institutions. Govcant portion of these balances is invested in German ernment securities held under repurchase agreements and Japanese government securities held directly or by the U.S. monetary authorities totaled $11.2 billion under repurchase agreement. As of September 30, at the end of the quarter. Foreign currency reserves outright holdings of government securities by U.S. are also invested in deposits at the Bank for Internamonetary authorities totaled $6.9 billion. tional Settlements and in facilities at other official institutions. • 1. Foreign exchange holdings of U.S. monetary authorities based on current exchange rates, 1997:Q3 Millions of dollars Quarterly changes in balances by source BBaallaannccee,, BBaallaannccee,, IItteemm JJuunnee 3300,, 11999977 Net purchases Impact of Investment Currency Interest accrual SSeepptt.. 3300,, 11999977 and sales' sales2 income ad v j a u l s u t a m ti e o n n t s3 (net) and other FEDERAL RESERVE 11,671.7 .0 .0 89.9 -152.1 .0 11,609.5 Japanese yen 6,222.1 .0 .0 4.5 -311.4 .0 5,915.2 Interest receivables4 73.2 .3 73.5 Other cash flow from investments5 ... 2.9 . . . -9.0 -6.1 Total 17,969.9 94.4 -463.5 -8.7 17,592.1 U.S. TREASURY EXCHANGE STABILIZATION FUND Deutsche marks 5,908.4 .0 .0 45.9 -77.0 .0 5,877.3 Japanese yen 9,119.4 .0 .0 6.0 -450.4 .0 8,675.0 Interest receivables4 39.0 6 -3.0 36.0 Other cash flow from investments5 ... 10.4 -22.4 -12.0 Total 15,077.2 51.9 -527.4 -25.4 14,576.3 NOTE. Figures may not sum to totals because of rounding. 3. Foreign currency balances are marked to market monthly at month-end 1. Purchases and sales include foreign currency sales and purchases related to exchange rates. official activity, swap drawings and repayments, and warehousing. 4. Interest receivables for the ESF are revalued at month-end exchange rates. 2. Calculated using marked-to-market exchange rates; represents the differ- Interest receivables for the Federal Reserve System are carried at average cost ence between the sale exchange rate and the most recent revaluation exchange of acquisition and are not marked to market until interest is paid. rate. Realized profits and losses on sales of foreign currencies computed as the 5. Cash flow differences from payment and collection of funds between difference between the historic cost-of-acquisition exchange rate and the sale quarters. exchange rate are shown in table 2. 6. As of May 31, 1997. Tables 2 and 3 appear on page 952. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

952 Federal Reserve Bulletin • December 1997 2. Net profits or losses (-) on U.S. Treasury 3. Currency arrangements, September 30, 1997 and Federal Reserve foreign exchange operations Millions of dollars based on historical cost-of-acquisition exchange rates, 1997:Q3 — R~ Millions of dollars U.S. Treasury Austrian National Bank 250 0 National Bank of Belgium 1000 i Valuation profits and losses on Bank of Canada 2,000 outstanding assets and liabilities, National Bank of Denmark 250 June 30. 1997 Bank of England 3 000 426.9 -192.8 2,000 1,047.2 1,542.7 6,000 Total 1,474.1 1349.9 Bank of Italy ... 3,000 Bank of Japan 5,000 Realized profits and losses Bank of Mexico 3,000 f J r u o n m e f 3 o 0 re -S ig e n p t. cu 3 r 0 r , e n 1 c 9 y 9 7 s ales, N Ba e n th k e r o l f a n N d o s rw Ba a n y k S°o Deutsche marks .0 .0 Bank of Sweden 300 Japanese yen Swiss National Bank 4,000 .0 600 Valuation profits and losses on outstanding assets and liabilities, Sept. 30, 1997 marks 32,400 ° Myen tflfilHiM U.S. igeS Total Currency Arrangements NOTE. Figures may not sum to totals because of rounding. 1,000 0 3,000 0 0 — I I II! Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

953 Staff Studies The staff members of the Board of Governors of the necessarily indicate concurrence by the Board of Federal Reserve System and of the Federal Reserve Governors, by the Federal Reserve Banks, or by Banks undertake studies that cover a wide range of members of their staffs. economic and financial subjects. From time to time Single copies of the full text of each study are the studies that are of general interest are published available without charge. The titles available are in the Staff Studies series and summarized in the shown under "Staff Studies" in the list of Federal Federal Reserve Bulletin. The analyses and con- Reserve Board publications at the back of each clusions set forth are those of the authors and do not Bulletin. STUDY SUMMARY THE COST OF IMPLEMENTING CONSUMER FINANCIAL REGULATIONS: AN ANALYSIS OF EXPERIENCE WITH THE TRUTH IN SAVINGS ACT Gregory Elliehausen and Barbara R. Lowrey The Truth in Savings Act mandates that financial Responses to the survey indicate that most banks institutions disclose certain information about the provided extensive written disclosures to consumers terms of consumer deposit accounts in specific forms before Truth in Savings but that most banks, if not all, and at specific times. Although many depository had to change some policies and practices for coninstitutions provided disclosures of account terms sumer deposit accounts to comply with the law. The before the act was passed in 1991, most did not cost to banks of implementing the changes was satisfy completely all the requirements of the regula- $337 million in total, or $29,390 per bank. Statistical tion (Regulation DD) adopted by the Federal Reserve analysis using a cost function reveals that there were Board to implement the law. Thus, the Truth in economies of scale in complying with Truth in Sav- Savings law likely caused every depository institu- ings, a result that gives further credence to the findtion to change its practices for consumer deposit ings of earlier studies involving other regulations. The accounts, and thereby to incur costs. implication of the finding is that small firms have a To improve understanding of the process and costs cost disadvantage in complying with new regulations. of implementing regulatory changes, the Federal This study breaks new ground in examining the Reserve Board conducted the Survey of Compliance relationship between amount of change and compli- Costs for Truth in Savings in 1992-93, during the ance costs. Statistical analysis indicates that start-up implementation period for the regulation. Presented costs for complying with Truth in Savings were in this study are survey findings on the changes in insensitive to the extensiveness of necessary changes: consumer deposit account practices and the costs of Banks incurred implementation costs regardless of compliance at U.S. commercial banks. One of the key how much they had to change their practices. This questions addressed in the study is how sensitive result suggests that requiring banks to alter an infrestart-up costs for a regulation are to the extent of quent practice may impose costs on all banks, not just required changes in banks' policies and practices: Do on those that must make substantive changes. It also banks that must make extensive changes incur greater argues against a policy of making frequent minor costs in proportion to the amount of change? Evi- revisions in regulations. An alternative policy of dence on this question, which was not previously accumulating adjustments and making infrequent available, has implications for regulatory agency poli- major revisions may reduce implementation costs by cies on the frequency and magnitude of changes in allowing banks to exploit economies of changing regulations. practices. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

954 Industrial Production and Capacity Utilization for October 1997 Released for publication November 17 increased sharply in September, was little changed in October, as was the production of construction sup- Industrial production rose 0.5 percent in October plies. At 122.7 percent of its 1992 average, industrial after a downward revised gain of 0.5 percent in production in October was 5.6 percent higher than in September. The output of consumer goods, business October 1996. The rate of industrial capacity utilizaequipment, and durable materials registered solid tion rose to 84.3 percent—its highest rate since gains. The production of energy materials, which had March 1995. Industrial production indexes Twelve-month percent change Twelve-month percent change Manufacturing 5 + 0 — / — 5 1 1 1 1 1 1 Materials Durable 1100 — manufacturing A / 5 + V vV 0 Products Y/ Nondurable 5 V manufacturing — J L i i 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 Production Production _ 80 1 1 1 1 1 1 1 1 1 1 1 1 Percent of capacity Percent of capacity Total industry Manufacturing 90 Utilization 90 Utilization 70 70 1983 1985 1987 1989 1991 1993 1995 1997 1983 1985 1987 1989 1991 1993 1995 1997 All series are seasonally adjusted. Latest series, October. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

955 Industrial production and capacity utilization, October 1997 Industrial production, index, 1992=100 Percentage change Category 1997 19971 Oct. 1996 to Julyr Aug.1" Sept.r Oct. Julyr Aug.r Sept.r Oct.p Oct. 1997 Total 120.8 121.5 122.1 122.7 .8 .6 .5 5.6 Previous estimate 120.9 121.5 122.4 .8 .5 .7 Major market groups Products, total2 116.4 117.4 117.6 118.2 .3 .8 .2 .5 4.8 Consumer goods ... 112.5 113.3 113.5 114.2 .2 .7 .2 .7 3.1 Business equipment 139.2 142.1 142.0 143.2 1.3 2.1 -.1 .8 11.2 Construction supplies 119.8 121.1 121.0 120.7 -.7 1.1 -.1 -.2 2.6 Materials 127.9 128.2 129.3 129.9 1.5 .2 .9 .5 6.7 Major industry groups Manufacturing 122.6 123.5 123.8 124.6 .8 .8 .2 .6 5.9 Durable 135.4 137.5 137.8 138.7 1.0 1.5 .2 .7 9.1 Nondurable 109.1 108.8 109.2 109.7 .6 -.2 .3 .5 2.1 Mining 107.4 106.7 105.9 104.8 -.3 -.7 -.7 -1.1 1.4 Utilities 113.2 112.6 116.5 116.8 1.3 -.5 3.5 .3 4.4 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1996 1997 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, OOOcccttt... 111999999666 11996677--9966 11998822 11998888--8899 Oct. Julyr Aug.1" Sept.r Oct.P tttooo OOOcccttt... 111999999777 Total 82.1 71.1 85.3 83.0 83.9 84.1 84.2 84.3 3.9 Previous estimate 83.9 84.1 84.4 Manufacturing 81.2 69.0 85.7 82.0 82.9 83.2 83.1 83.3 4.3 Advanced processing 80.6 70.4 84.2 79.9 81.0 81.5 81.3 81.6 5.2 Primary processing . 82.3 66.2 88.9 86.7 87.2 87.1 87.1 87.2 2.3 Mining 87.5 80.3 86.8 91.0 93.7 92.9 92.2 91.1 1.3 Utilities 87.2 75.9 92.6 89.0 88.9 88.3 91.3 91.4 1.6 NOTE. Data seasonally adjusted or calculated from seasonally adjusted 2. Contains components in addition to those shown, monthly data. r Revised, 1. Change from preceding month. p Preliminary. MARKET GROUPS strong gain. The production of parts for hightechnology equipment continues to lead the advance The output of consumer goods rose 0.7 percent after in the output of durable materials. The output of only a slight gain in September. Durable consumer nondurable materials, which posted another small goods rebounded from September's drop as most gain in the third quarter, advanced a little further last major sectors posted gains. The pickup in the growth month. The production of energy materials eased off of output of nondurable consumer goods reflected a a bit, as electricity generation was nearly unchanged notable increase in the non-energy sector, which and the production of crude oil and coal declined. includes food, paper, and chemical products for home use. The production of consumer energy products rose again. The output of business equipment, which INDUSTRY GROUPS increased nearly 15 percent at an annual rate in the third quarter, rose 0.8 percent. Continued strength in Manufacturing output rose 0.6 percent with widethe production of information processing equipment, spread gains in both the durables and nondurables which includes computers, along with a rebound in industries. The growth of output in the durable goods industrial equipment accounted for much of the gain. industries, 0.7 percent, was led by increases in indus- The output of transit equipment, which has been trial machinery and computers, electrical machinery, growing rapidly, on balance, for more than a year, and instruments. Output changes among the remainslipped a bit; a decrease in the production of aircraft ing durable goods industries were relatively small. contributed to the decline. The output of materials The production of nondurable goods rose 0.5 percent, rose 0.5 percent as durable materials posted another with gains in most major industries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

956 Federal Reserve Bulletin • December 1997 The factory operating rate rose 0.2 percentage Annual data from the Department of the Interior on point, to 83.3 percent, about the same as the August metallic and nonmetallic minerals (except fuels) for level. The utilization rate for advanced-processing 1995 and 1996 will also be introduced. Revisions to industries increased 0.3 percentage point, to 81.6 per- the monthly indicators for each industry (physical cent, a level well below the recent high of 84.2 per- product data, production-worker hours, or electric cent, in January 1989. The rate for primary process- power usage) and revised seasonal factors will be ing edged up 0.1 percentage point, to 87.2 percent, incorporated. Capacity and capacity utilization will but has changed little, on balance, since last March. be revised to incorporate preliminary data from the 1995-96 Survey of Plant Capacity from the Bureau REVISION OF INDUSTRIAL PRODUCTION AND of the Census. The statistics on the industrial use CAPACITY UTILIZATION of electric power will incorporate more complete reports received from utilities for the past few years The Federal Reserve will publish revisions of its as well as data from the 1995 Annual Survey of measures of industrial production (IP), capacity, Manufactures. capacity utilization, and industrial use of electric The revised data will be available on the Board's power on December 9, 1997. The revisions will begin World Wide Web site, http://www.bog.frb.fed.us, on with data for 1992 and will incorporate updated diskettes from the Board's Publications Services, source data for recent years. 202-452-3245, and through the Economic Bulletin The regular updating of source data for IP will Board of the Department of Commerce. For informainclude annual data from the 1995 Annual Survey of tion about the Bulletin Board, call 202-482-1986. Manufactures and from selected 1996 Current Indus- For information on these revisions, call the Federal trial Reports, both from the Bureau of the Census. Reserve's Industrial Output Section, 202-452-3197. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

957 Statements to the Congress Statement by Susan M. Phillips, Member, Board of ments or other products to profit from short-term Governors of the Federal Reserve System, before the price movements, such as a securities firm, reporting Subcommittee on Capital Markets, Securities and trading positions at fair values appropriately mea- Government Sponsored Enterprises of the Committee sures the success or failure of that business strategy, on Banking and Financial Services, U.S. House of and market participants expect this reporting treat- Representatives, October 1, 1997 ment. However, for many other types of businesses, such as a manufacturer or a lender that funds loans I welcome this opportunity to discuss the Federal with liabilities of equal maturity, market value Reserve Board's views on proposed accounting stan- accounting in the primary financial statements may dards for derivatives and risk-management activities not accurately reflect business strategies or appropriissued by the Financial Accounting Standards Board ately measure the firm's underlying performance and (FASB). condition. In these cases, although information about In approaching this complex matter, it should be fair value can be useful in supplemental disclosures, acknowledged up front that most responsible observ- it is questionable whether there is widespread ers and market participants share an interest in demand for market value accounting to become the improved accounting standards and disclosure of basis for the preparation of the primary financial information that is useful and relevant to the broad statements. range of users of financial statements. Thus, the desir- Although the needs of financial statement users ability of meaningful disclosure is not the issue. All may vary, a critical function of financial statements is would agree, I think, that enhanced financial dis- to reflect in a meaningful way underlying trends in closure and market transparency can lead to more the financial performance and condition of the firm. efficient financial markets, more accurate pricing of The application of market value accounting to busirisks, and more effective market discipline. ness strategies when it is not appropriate, and particu- With respect to financial disclosures, the interests larly when applied on a piecemeal basis, may lead to of most firm managers, investors, and other market increased volatility or fluctuation in reported results participants are essentially the same. Market partici- and actually obscure underlying trends or developpants can benefit from enhanced disclosure by being ments affecting a firm's condition and performance. in a better position to understand the financial condi- Requiring companies to adopt market value accounttion of their counterparties and competitors. Investors ing when it is not consistent with their business have an obvious interest in being able to make mean- strategies can cause them to incur significant costs to ingful assessments of a firm's performance, under- provide information that may not reflect in a meanlying trends, and income-producing potential. Sound, ingful way their underlying circumstances or trends well-managed firms can benefit if better disclosure in their performance. Moreover, from the standpoint enables them to obtain funds at risk premiums that of financial statement analysts and other users, havaccurately reflect their lower risk profiles. Inadequate ing to make adjustments to remove the effects of this financial disclosures, on the other hand, could penal- accounting volatility from income statements and ize well-managed firms if market participants are balance sheets—volatility that is not consistent with unable to assess their fundamental financial strength. firm's risk positions—can also impose significant While most market participants favor sound costs without offsetting benefits. accounting standards and meaningful disclosure, a These problems can be minimized by placing markey question is how to ensure that accounting prac- ket values in meaningful supplemental disclosures tices and techniques reflect, and are consistent with, rather than by forcing their use in the primary finanhow a business is run, that is, its overall business cial statements. Such an approach would give anastrategy. Indeed, accounting methodology should lysts the information they need, without imposing the measure the results of a business purpose or strategy broader costs of having to reverse or back out the and not be an end in itself. For example, in the case effects of artificial volatility from the primary finanof a company that actively trades financial instru- cial statements. Of course, financial statements and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

958 Federal Reserve Bulletin • December 1997 supplemental disclosures must be accurate and not than manage specific instruments. A focus on indimisrepresent a firm's financial circumstances—a vidual transactions can ignore the interaction of the problem that can be minimized when financial re- specified instrument with other instruments. Although ports are subject to thorough review by management portfolio theory is widely appreciated by bankers and and external auditors. regulators, putting its principles into practice in banking has not been easy. For example, past banking crises have, in part, reflected a failure by some insti- FEDERAL RESERVE'S EXPERIENCE tutions to recognize and limit concentrations of risk within their portfolios. The Federal Reserve Board has a long-standing inter- The Federal Reserve is increasingly recognizing est in the quality of financial reporting. This arises the need for supervisory and regulatory policies to be from our role as the nation's central bank and as the more "incentive-compatible," in that they encourage supervisor of bank holding companies, state member sound risk management within an institution. Furtherbanks, and the U.S. operations of foreign banking more, supervisory and regulatory policies are placing organizations. The Federal Reserve and other bank increasing emphasis on minimizing burden by using supervisors are responsible for assessing the safety internal risk-measurement systems and by reinforcand soundness of the institutions they regulate. In this ing supervisory objectives through market forces. We regard, the Federal Reserve relies on off-site monitor- believe that market discipline—supported by approing, on-site supervision, capital and other regulatory priate accounting standards and public disclosure— requirements, and policies that encourage sound complements our supervisory efforts by fostering risk-management practices. We believe that market strong financial institutions and efficient capital mardiscipline—supported by appropriate accounting kets. We believe this approach is more constructive standards and public disclosure—complements these than rote adherence to rules and regulations that supervisory efforts by fostering healthy financial may not be consistent with the firm's own riskinstitutions and efficient capital markets. management systems. In the course of supervising financial institutions, Consistent with these policies, the Federal Reserve the Federal Reserve has developed considerable and other banking supervisors have explored regfamiliarity with financial instruments, both derivative ulatory approaches that encourage more use of and nonderivative, that are characterized by a wide market-value-based measures in risk-management range of complexity and risk. We have learned that in approaches. For example, beginning next year, intersupervising trading and derivatives activities it is the nationally active banks meeting certain criteria for underlying characteristics of a financial instrument— risk management will calculate the amount of capital and how it contributes to the overall risk profile of necessary to support the market risk of their trading the firm—that are important, not the instrument's activities using their own internal value-at-risk (VaR) name. Two instruments that differ in name only may measures. A significant effort that could increase have entirely different treatment under existing legal supervisory reliance on market discipline in the future and accounting frameworks, even though the eco- is the Federal Reserve's so-called "pre-commitment" nomic risks (including market, credit, liquidity, approach to determining capital for market risk. It operational, and reputational risks) they embody are seeks to provide banks with stronger regulatory and identical. Financial engineering can certainly create market incentives to improve all aspects of market derivative instruments that combine risks in complex risk management. Other initiatives have improved the ways. But the same engineers can create cash instru- focus of our supervision policies and examination ments that appear simple and traditional but may practices on institutions' risk profiles and riskhave greater risk than many instruments labeled management activities in ways that emphasize sound "derivative." Indeed, placing financial instruments in practices and strong internal controls. regulatory or accounting pigeonholes without regard Moreover, the Federal Reserve has called for to their true risks and economic functions can create improved U.S. accounting and disclosure standards disincentives for prudent risk management. and has had a key role in sponsoring major interna- The Federal Reserve is increasingly emphasizing tional initiatives to encourage improved disclosures the need for institutions to manage the aggregate or by the largest banks and securities firms of their portfolio risks of banking and de-emphasizing a focus trading and derivatives activities. For example, our on specific instruments. Risk should be measured and 1995 and 1996 analyses of the derivatives disclosure managed comprehensively. That is, an institution by the top ten U.S. dealer banks were used as models should manage the dynamics of its portfolio rather for the joint reports by the Basle Committee on Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 959 Banking Supervision and the International Organiza- a firm whose credit quality has weakened. Furthertion of Securities Commissions, which covered a more, fair value estimates can be highly subjective, sample of the largest banks and securities firms in the and little guidance is available for measuring fair G-10 countries. These studies revealed major differ- values in the financial statements. Another difficult ences in disclosure among the participating countries issue relates to whether fair value is the most relevant and highlighted the greater level of disclosure by U.S. measurement for commercial banks and other firms dealer banks. In addition, a representative of the that are in the business of holding illiquid loans and Federal Reserve chaired an international working other assets for the long term. The success or failure group of the Euro-currency Standing Committee that of such a strategy is not measured by evaluating such recommended in 1994 improvements to disclosure by loans on the basis of a price that indicates value in the financial intermediaries of the credit and market risks context of immediate delivery. In this regard, an of their trading activities. The Federal Reserve and appropriate value for many bank loans and offthe other federal banking agencies also developed balance-sheet commitments—the one that reflects the improvements in derivatives disclosure standards nature of a bank's business—is the original acquisifor regulatory reports that are similar to disclosure tion price adjusted for the expectation of performance requirements issued at the same time by FASB in at maturity. Statement No. 119, "Disclosure about Derivative Given the many difficulties of FASB's task, it is Financial Instruments and Fair Value of Financial not surprising that their proposal raises a number of Instruments." complex issues. For example, the proposal is likely to lead to increased volatility in income and stockholders equity by companies that manage risk with deriva- SPECIFIC ISSUES RAISED tives. This volatility could be artificial because of the BY THE DERIVATIVES PROPOSAL piecemeal approach of marking certain risk positions to fair value but not all positions contributing to the We share several objectives with the FASB for risk. As a result, there could be accounting volatility improving financial reporting. For example, we both that bears little relation to an institution's overall risk support the fundamental objectives of promoting position. Supervisors and analysts will have to strip clear and understandable financial reports that out the artificially created volatility to assess the true increase the transparency of companies' activities. performance of the firm. On the other hand, compa- We also share the view that accounting and disclo- nies that do not manage their risks, or manage their sure standards that faithfully represent financial con- risks solely through cash instruments that are not dition and performance can improve investor and covered by the standard, would not reflect similar counterparty decisions, thus improving market disci- volatility. pline on banking organizations and other companies. A simple example might illustrate this concern. Further, we also agree that current accounting and Assume a company's activities consist solely of lenddisclosure standards for derivatives—as well as for ing long term at fixed rates and funding these loans other financial instruments—should be improved. with variable-rate deposits. I think we can all agree We recognize the difficult task that FASB has in that this company has a significant exposure to interdeveloping a standard that is acceptable to its many est rate risk. If the company does not manage its risk constituents. In this regard, we understand that FASB with derivatives, it would not be affected by the has considered and rejected a number of approaches derivatives accounting proposal and would not report to hedge accounting for derivatives because particu- any volatility from fair value changes in its financial lar problems were identified with each approach. We statements. If, however, the company has a strategy also believe that the approach of reporting all finan- to use derivatives to reduce its interest rate risk and cial instruments at fair value in the primary set of move it closer to a match-funded position, the comfinancial instruments, while having some theoretical pany may report greater volatility in income and appeal at least for some types of firms, is not an stockholders' equity—a result not consistent with its appropriate solution in the near term. In this regard, reduced risk exposure. For example, if the company fair value estimation techniques are not yet suffi- specified under the framework set forth in the FASB ciently robust for exclusive reliance in financial state- proposal that the derivatives are "cash flow" hedges ments. For example, difficult valuation issues arise of variable rate liabilities, the company would have for highly illiquid instruments for which fair value is volatility in equity or earnings based on the specifibased on models rather than observed prices, core cally linked effectiveness tests set forth by the prodeposits with varying durations, and the liabilities of posal. Thus, the firm in using derivatives reduces Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

960 Federal Reserve Bulletin • December 1997 its economic volatility, yet increases its accounting approaches to accounting and disclosure for derivavolatility. tives and financial instruments. In this regard, we More important, by taking a transaction level have discussed this issue with other banking regulaapproach to hedging, the proposal would not describe tors in this country and overseas, accounting prowell the efforts of more sophisticated market partici- fessionals, and others. We also considered FASB's pants to hedge their risks on a comprehensive, port- long-term objectives of accounting for all financial folio basis. Thus, these firms would effectively be instruments at fair value and recognize the difficult required to keep different sets of books, and their challenge of trying to address derivatives even on an financial reporting may not be consistent with the interim basis. It is unlikely that any one solution will derivatives' intended use. This leads me to conclude please everyone. that the proposal could discourage or constrain pru- While we have heard a number of different views, dent risk-management practices that rely on deriva- several themes emerged from our discussions. One is tives. Furthermore, it may not improve transparency that there is a need for accounting and disclosure of financial information. standards that faithfully represent risk profiles and The proposal also introduces into the financial thus encourage better risk management, result in statements an untested method for reporting loans, transparent financial reports that enhance market disdeposits, and other assets and liabilities being hedged. cipline, and minimize the costs of systems changes These assets and liabilities would be valued at a and reporting burden. Second, derivatives accounting "hybrid" historical cost and fair value amount on the and disclosure standards can be improved to the balance sheet when they are hedged with derivatives extent that they better reflect portfolio hedging stratethat are designated as fair value hedges. For example, gies. Third, many major market participants believe generally, the historical cost values of these assets that existing derivatives accounting practices can be and liabilities would be adjusted for changes in fair improved by focusing on the best of current accountvalue related to the risk being hedged. However, ing practices, rather than developing significantly certain other changes in fair value would not be novel and untested approaches. Lastly, many believe recognized (such as those that arise from other risks, that existing disclosure requirements for fair values that are the results of an ineffective hedge, or that do could be improved. We encourage the FASB to carenot offset a gain or loss on the hedging instrument). fully consider these ideas as they move forward in These hybrid amounts could differ significantly their derivatives accounting project. from—and potentially exceed—fair values. They One approach to accounting and disclosures for may also be difficult to verify by auditors and exam- derivatives and financial instruments that takes into iners, thus reducing the reliability of amounts account these commonly expressed themes has reported in the financial statements. received broad support from banking supervisors The proposed approach is complex, which may both domestically and internationally, as well as from increase related developmental systems costs. In this some other major constituents. The Federal Reserve regard, the proposal may cause significant systems recently offered this idea to the FASB as one possible changes for institutions that hedge with derivatives. approach for addressing financial reporting issues At the same time institutions are making these sys- raised by derivatives. Likewise, the Basle Committee tems changes, they need to upgrade their systems on Banking Supervision suggested this approach to address Year 2000 issues. The cost of systems when commenting to the International Accounting changes arising from the derivatives proposal should Standards Committee (IASC) on its project on finanbe evaluated along with other costs and benefits cial instruments. In addition, the European Commisarising from the proposal. This is particularly impor- sion provided comments to the IASC that offered a tant because the derivatives proposal is intended by substantially similar approach. the FASB to be an interim treatment and its long-term Under this approach, FASB would (1) enhance the goal is to measure all financial instruments at fair current historical cost-based financial reporting value. Indeed, the FASB already has under way a framework by issuing a derivatives accounting stanproject that is evaluating issues related to that goal. dard that is based on the best current accounting practice for derivatives, and (2) supplement the historical cost-based statements with expanded disclosures of financial statements based on fair values, LOOKING FORWARD including the fair values of derivatives and other Because of our concerns about FASB's deriva- financial instruments. Such disclosures should be limited for the time being to larger market participants tives proposal, we have assessed various alternative Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 961 and be coupled with enhanced accounting guidance provide a framework for FASB to explore ways on the estimation of fair values. This framework is to improve these disclosure requirements. Although intended to be a broad template that would be consis- the Federal Reserve has suggested this alternative tent with management and market participant needs approach to the FASB, there may also be other for better information from companies, such as finan- acceptable ways of addressing the many concerns cial firms with extensive trading operations. Addi- expressed by commenters to the FASB proposal. For tional work would be needed by the various groups example, FASB could in the near term focus on that set accounting standards, in consultation with improvements to existing derivatives accounting interested constituents, to provide a basis for imple- practices under the historical cost framework and menting more specific standards. We believe that this leave improvements in fair value information to its framework could more faithfully represent risk pro- longer-term project on financial instruments. Alternafiles and thus encourage better risk management, as tively, FASB could defer the effective date of the well as increase transparency of financial reports to proposed standard to provide more time for instituimprove market discipline. Furthermore, we believe tions to address implementation issues and make the supplemental comprehensive fair value financial systems changes. statement disclosures would be a useful adjunct to the In the end, it is the responsibility of the FASB, accounting paradigm we currently have, and the two SEC, and IASC to find the best practicable solutions bases of accounting could act as a check and balance for accounting and disclosures for derivatives and for each other. other financial instruments. These organizations are In addition, this approach would minimize report- given the difficult charge of determining the best ing burden by utilizing the best of current accounting accounting and disclosure principles, evaluating all practices and existing disclosure standards. In this of the factors, and considering the views of all conregard, companies are now required to disclose in stituents. We look forward to working with these footnotes the fair value of all of their financial instru- organizations in their efforts to improve these stanments and to report "comprehensive income," which dards. We are glad to be able to participate in the takes into account changes in fair value of certain public comment process and look forward to doing so (but not all) financial instruments that are not cur- in the future. rently reflected in net income. The approach could Statement by Theodore E. Allison, Assistant to the ardship of the nation's currency. Our objective is to Board for Federal Reserve System Affairs, Board of issue notes—new and previously circulated—that Governors of the Federal Reserve System, before the meet high standards of quality and security. Indeed, Subcommittee on Domestic and International Mone- we believe that high quality reinforces security. In tary Policy of the Committee on Banking and Finan- general, security features in currency notes are most cial Services, U.S. House of Representatives, Octo- effective in deterring counterfeiting, and therefore in ber 1, 1997 inspiring confidence in genuine notes, when circulating notes are of consistently high quality and when Thank you for the opportunity to report on the Fedthe public is well informed about the characteristics eral Reserve's plans for dealing with some newof genuine notes. In the present circumstances, as a design $50 notes that were imperfectly printed. My new series of notes is being introduced containing statement will address three matters: our view of the security features that are new to the public, and as we quality and quantity of $50 notes currently being seek to inform the public about the new features, produced by the Bureau of Engraving and Printing, new-design notes put into circulation should be held the options we are looking into for handling the to a particularly high standard of quality. imperfect notes, and steps we are taking jointly with Despite an admirable history of producing, and the Bureau of Engraving and Printing to better ensure delivering to the Federal Reserve, notes of consisthat we are both satisfied with notes produced by the tently acceptable visual quality, earlier this year the Bureau in the future. Bureau of Engraving and Printing produced some $50 notes that the Federal Reserve believes fall short BACKGROUND of the required standard of quality for notes contain- Before turning to those matters, I want to emphasize ing new security features. Specifically, a portion of new-design $50 notes produced before September 8, that the Federal Reserve takes very seriously its stew- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

962 Federal Reserve Bulletin • December 1997 1997, have an apparent absence of ink in one or more If all 217 million notes were destroyed and of the concentric fine lines surrounding the portrait of replaced with additional newly printed notes, the cost President Grant. The educational information pre- to the Federal Reserve would be about $7.6 million— pared for the public identifies these concentric fine roughly $360 thousand to destroy the notes now lines as one of several new security features that being held at the Reserve Banks and the Bureau of should be present, in the form intended, in a genuine Engraving and Printing and to ship replacement notes note. Consequently, we do not plan to issue those to the Reserve Banks and $7.2 million to produce notes. replacement notes. If that were to happen, the $7.6 million cost would be reflected in a correspondingly lower payment of Federal Reserve earnings to CURRENT PRODUCTION AT THE BUREAU OF the Treasury. ENGRAVING AND PRINTING Blanket destruction and replacement may not be the only option, however. The Federal Reserve is Since September 8, 1997, the Bureau of Engraving looking into the feasibility of obtaining the equipand Printing has used both improved printing plates ment needed to examine these notes, one by one on and an improved examination system for $50 notes, our high-speed note processing machines and to with good results. Based on an inspection of notes at recover the notes of issuable quality. We believe that all of the thirteen Federal Reserve offices to which it should be possible to do that. Whether it would be new $50 notes of the type produced since September feasible will depend on the costs involved and the 8 had been shipped, the Federal Reserve is satisfied quantity of issuable-quality notes that would be that those notes are suitable for circulation. recovered. At this time, we do not have good esti- Moreover, the Bureau is producing the higher qual- mates of either of those magnitudes but we hope to ity $50s in quantities that will enable all Federal have them before the end of this year. Reserve Banks and branches to have an adequate Consequently, $7.6 million should be viewed as an inventory of those notes by next week. Consequently, upper limit on the cost of this matter, with the possithe production of the imperfectly printed notes has bility that the actual cost will be lower. not materially interfered with the planned introduction of new-design $50 notes. Nor, I might add, has it STEPS TO ENSURE THE PRODUCTION had any significant impact on the Federal Reserve's OF MUTUALLY ACCEPTABLE NOTES note-issuing operations.1 IN THE FUTURE In order to ensure that the Federal Reserve and the DISPOSITION OF THE INVENTORY OF Bureau of Engraving and Printing not find them- IMPERFECTLY PRINTED NOTES selves in the future in the position of having notes produced and shipped that are not of mutually accept- Disposition of the notes that the Federal Reserve able quality, we have taken several important steps. considers unissuable will, of course, entail some cost. The Federal Reserve and the Bureau of Engraving A total of 217.6 million $50 notes was produced and Printing have jointly established print-quality before September 8, some portion of which appear standards for a new electronic examination system not to be of issuable quality. Of these, 59.5 million now being used at the Bureau to inspect all $50 and were shipped to Federal Reserve Banks and branches, $100 notes and to review those standards regularly. and 158.1 million are being held at the Bureau of This examination system promises to provide a more Engraving and Printing. The unissuable notes occur consistent level of printing quality calibrated more more or less randomly throughout the 217 million closely to the Federal Reserve's needs. notes. In addition, the Federal Reserve has agreed to work with the Bureau before and during production of new-design $20 notes, as well as the other lower 1. The impact of the $50-note printing imperfections has been denominations, to establish mutually acceptable qualmoderate mainly because the total volume of $50 notes in circulation ity standards and to monitor production. is relatively low. They account for only about 5 percent of all Federal These steps should help to safeguard the security Reserve notes in circulation and only about 3 percent of Reserve Bank receipts from, and payments to, depository institutions. and efficiency of our currency system. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 963 Statement by Alan Greenspan, Chairman, Board of by the sharp increase in capital investment since early Governors of the Federal Reserve System, before the 1993, especially in high tech equipment, which has Committee on the Budget, U.S. House of Representa- persisted and even accelerated in recent quarters. tives, October 8, 1997 Underlying this apparent bulge in expected profitability and rates of return, as I suggested in my July After decades of budgetary imprudence, there has Humphrey-Hawkins testimony, may be a maturing of been a growing recognition of our fiscal problems in major technologies in recent years. The synergies of recent years and an increased willingness of Presi- lasers and fiber optics have spurred large increases in dents and Congresses to address them. The capping communications investments. The continued extraof discretionary programs and the first steps to deal ordinary spread of computer-related applications as with entitlement programs are encouraging, as, costs of manipulating data and other information fall, unquestionably, is the slower pace at which we are has also been a major factor in increased investment creating new entitlement programs. But it is impor- outlays. The combination of advancing telecommunitant to place this improvement in the context of the cations and computer technologies have induced decades-long deterioration in our fiscal position; we large investment outlays to support the Internet and have stopped the erosion for now, but we have made utilize it to realize efficiencies in purchasing, produconly a downpayment on the longer-range problem tion, and marketing. confronting us. This dramatic change in technology, as I pointed Moreover, much of the fiscal improvement of out in earlier testimony, has markedly shortened the recent years is less the result of a return to the lead times in bringing new production facilities on prudent attitudes and actions of earlier generations line to meet increased demand and has accordingly than the emergence of benevolent forces largely significantly reduced longer-term bottlenecks and external to the fiscal process. The end of the Cold materials shortages, phenomena often leading to War has yielded a substantial peace dividend, and the inflation in the past. best economic performance in decades has aug- Indeed, this faster response of facility capacity, mented tax revenues far beyond expectations while coupled with dramatic declines in transportation restraining countercyclical^ sensitive outlays. costs owing to a downsizing of products, has led to The payout of the peace dividend is coming to an speculation that we are operating with a new "paraend. Defense outlays have fallen from 6.2 percent of digm," where price pressures need rarely ever arise gross domestic product in 1985 to 3.4 percent this because low-cost capacity, both here and abroad, can year. Further cuts may be difficult to achieve, for be brought on sufficiently rapidly when demand even if we are fortunate enough to enjoy a relatively accelerates. tranquil world, spending will tend to be buoyed by Before we go too far in this direction, however, we the need to replace technologically obsolescent need to recall that it was just three years ago that we equipment as well as by the usual political pressures. were confronted with bottlenecks in the industrial The long-term outlook for the U.S. economy pre- sector. Though less extensive than in years past at sents us with, perhaps, even greater uncertainties. similarly high levels of capacity utilization, they were There can be little doubt that the U.S. economy in the nonetheless putting visible upward pressures on past several years has performed far better than the prices at early stages of the production chain. Further history of business expansions would have led us to strides toward greater flexibility of facilities have expect. Labor markets have tightened considerably occurred since 1994, but this is clearly an evolutionwithout inflation emerging as it has in the past. ary, not a revolutionary, process. At least for the Encouraged by these results, financial markets seem foreseeable future, it will still take time to bring to have priced in an optimistic outlook, characterized many types of new facilities into the production by a significant reduction in risk and an increasingly process, and productive capacity will still impose benevolent inflation process. limits on meeting large unexpected increases in For example, in equity markets, continual upward demand in a short period. revisions of longer-term corporate earnings expecta- More relevant, by far, however, is that technology tions have driven price-earnings ratios to levels and management changes have had only a limited not often observed at this stage of an economic effect on the ability of labor supply to respond to expansion. changes in demand. To be sure, individual firms have Contributing to the expected increases in profits is acquired additional flexibility through increased use a perceived marked increase in the prospective rate of of outsourcing and temporary workers. In addition, return on new business ventures. This is evidenced smaller work teams may be able to adapt more Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

964 Federal Reserve Bulletin • December 1997 readily to variations in order flows. While these tech- particular, the large number whose availability is niques put the right workers at the right spots to limited by their enrollment in school and those reduce bottlenecks, they do not increase the aggre- who may lack the necessary skills or may face gate supply of labor. That supply is sensitive to other barriers to taking jobs. The number of people changes in demand but to a far more limited extent saying they would like a job, but have not been than facilities. New plants can almost always be built. engaged in active job search, declined dramatically But labor capacity for an individual country is con- in 1996. But, despite increasingly favorable labor strained by the size of the working-age population, markets, few more of these 5 million individuals which, except for immigration, is basically deter- have been added to payrolls in 1997. This group of mined several decades in the past. Its lead time potential workers, on balance, is at its lowest level reflects biology, not technology. relative to the working-age population since at least Of course, the demand for capital facilities and 1970. As a source of new workers we may have labor are not entirely independent. Within limits, reached about as far as is feasible into this group of labor and capital are substitutes, and slack in one the population. market can offset tightness in another. For example, Presumably, some of the early retirees, students, or additional work shifts often can expand output with- homemakers who do not now profess to want to work out significant addition to facilities. Similarly, more could be lured to the job market. Rewards sufficient labor-saving equipment can permit production to be to make jobs attractive, however, could conceivably increased with the same level of employment, an also engender upward pressures on labor costs that outcome that we would observe as increased labor would trigger renewed price pressures, undermining productivity. As I will be discussing in a moment, we the expansion. are seeing some favorable signs in this regard, but Thus, there would seem to be emerging constraints they are only suggestive, and the potential for on potential labor input. If the recent 2 million plus increased productivity to enhance the effective sup- annual pace of job creation were to continue, the ply of labor is limited. pressures on wages and other costs of hiring large The fact is, that despite large additions to the numbers of such individuals could escalate more capital stock in recent years, the supply of labor has rapidly. To be sure, job growth slowed significantly kept pace with the demand for goods and services in August and September, but it did not slow enough and the labor to produce them only by reducing the to close, from the demand side alone, the gap of the margin of slack in labor markets. demand for labor over the supply from increases in Of the more than 2 million net new hires at an the working-age population. annual rate from early 1994 through the third quarter Thus, the performance of the labor markets this of this year, little more than half came from an year suggests that the economy has been on an unsusexpansion in the population aged sixteen to sixty-four tainable track. That the marked rate of absorption of who wanted a job, and more than a third of those potential workers since 1994 has not induced a more were net new immigrants. The remaining 1 million dramatic increase in employee compensation per hour per year increase in employment was pulled from and price inflation has come as a major surprise to those who had been reported as unemployed (nearly most analysts. 700,000 annually) and those who wanted, but had not The strengthened exchange value of the dollar, actively sought, a job (more than 300,000 annually). which has helped contain price increases, is certainly The latter, of course, are not in the official unemploy- one factor in explaining business reluctance to grant ment count. wage increases. Another explanation I have offered The key point is that continuously digging ever in the past is that the acceleration in technology and deeper into the available working-age population is capital investment, in part by engendering important not a sustainable trajectory for job creation. The changes in the types of facilities with which people unemployment rate has a downside limit, if for no work on a day-by-day basis, has also induced a other reason than unemployment, in part, reflects discernible increase in fear of job skill obsolescence voluntary periods of job search and other frictional and, hence, an increasing willingness to seek job unemployment and includes people whose skills are security in lieu of wage gains. Certainly, the dramatic not well adapted to work today and would be very rise in recent years of on-the-job training and a subcostly to employ. stantial increase in people returning to school— especially those aged twenty-five to thirty-four, In addition, there is a limit on how many of the mainly at the college level—suggests significant conmillions who wanted a job but were not actively cerns about skills. seeking one could be readily absorbed into jobs—in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 965 But the force of insecurity may be fading. Public and services and, hence, labor—or a degree of accelopinion polls, which recorded a marked increase in eration of productivity growth that appears fear of job loss from 1991 to 1995, a period of unlikely—the imbalance between the growth in labor tightening labor markets, now indicate a partial demand and the expansion of potential labor supply reversal of that uptrend. of recent years must eventually erode the current To be sure, there is still little evidence of wage state of inflation quiescence and, with it, the solid acceleration. To believe, however, that wage pres- growth of real activity. sures will not intensify as the group of people who In this context, the economic outlook sketched out are not working, but who would like to, rapidly for the United States by both the Office of Managediminishes strains credibility. The law of supply and ment and Budget (OMB) and the Congressional Buddemand has not been repealed. If labor demand con- get Office (CBO) is realistic, even in some sense tinues to outpace sustainable increases in supply, the conservative. But you should recognize the range of question is surely when, not whether, labor costs will possible long-term outcomes, both significantly betescalate more rapidly. ter or worse, has risen markedly in the past year. Of course, a falloff in the current pace of demand An acceleration of productivity growth, should it for goods and services could close the gap and avoid materialize, would put the economy on a higher trend the emergence of inflationary pressures. So could a growth path than they have projected. The developsharp improvement in productivity growth, which ment of inflationary pressures, on the other hand, would reduce the pace of new hiring required to would doubtless create an environment of slower produce a given rate of growth of real output. growth in real output than that projected by OMB or Productivity growth in manufacturing, as best we CBO. A re-emergence of inflation is, without quescan measure it, apparently did pick up some in the tion, the greatest threat to sustaining what has been a third quarter, and the broader measures of productiv- balanced economic expansion virtually without parality growth have exhibited a modest quickening this lel in recent decades. In this regard, we at the Federal year. Certainly, the persistence, even acceleration, of Reserve recognize that how we handle monetary commitments to invest in new facilities suggests that policy will be a significant factor influencing the path the actual profitability of recent past investments, and of economic growth and, hence, fiscal outcomes. by extension increased productivity, has already been Given the wider range of possible outcomes that achieved to some degree rather than being merely we face for long-term economic growth, the correprospective. sponding ranges of possible budget outcomes However, to reduce the recent 2 million plus annual over the next five to ten years has also widened rate of job gains to the 1 million rate consistent with appreciably. long-term population growth would require, all else In addition to the uncertainties associated with equal, a full percentage point increase in the rate of economic outcomes, questions may be raised about productivity growth. While not inconceivable, such a other assumptions behind both projected receipts and rapid change is rare in the annals of business history, outlays. With regard to the former, it is difficult to especially for a mature industrial society of our believe that our much higher-than-expected income breadth and scope. tax receipts of late are unrelated to the huge increase Clearly, impressive new technologies have in capital gains, which since 1995 have totaled the imparted a sense of change in which previous eco- equivalent of one-third of national income. Aside nomic relationships are seen as being less reliable from the question of whether stock prices will rise or now. Improvements in productivity are possible if fall, it clearly would be unrealistic to look for a worker skills increase, but gains come slowly through continuation of stock market gains of anything like experience, education, and on-the-job training. They the magnitude of those recorded in the past couple of are also possible as capital substitutes for labor, but years. that is limited by the state of current technology. Very On the outlay side, the recently enacted budget significant advances in productivity require techno- agreement relies importantly on significant, but aslogical breakthroughs that alter fundamentally the yet-unspecified, restraints on discretionary spending efficiency with which we use our labor and capital to be made in the years 2001, 2002, and thereafter. resources. But at the cutting edge of technology, Supporters of each program expect the restraints to where the United States finds itself, major improve- fall elsewhere. Inevitably, the eventual publication of ments cannot be produced on demand. New ideas the detail will expose deep political divisions, which that matter are hard won. could make the realization of the budget projections Short of a marked slowing in the demand for goods less likely. In addition, while the budget agreement Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

966 Federal Reserve Bulletin • December 1997 included significant cuts in Medicare spending, past Moreover, it is hoped that targeted surpluses could experience has shown us how difficult Medicare is to help to offset the inbuilt political bias in favor of control, raising the possibility that savings will never budget deficits. I have been in too many budget be realized. More generally, I wonder whether there meetings in the past three decades not to have learned is enough funding slack to accommodate contingen- that the ideal fiscal initiative from a political perspeccies, or the inevitable new, but as yet unidentified, tive is one that creates visible benefits for one group spending programs. of constituents without a perceived cost to anybody Budget forecasts are understandably subject to else, a form of political single-entry bookkeeping. fairly large errors. Seemingly small changes in To be sure, in recent years we have been showing receipts and outlays are magnified in the budget some real restraint in our approach to fiscal policy. deficit. For example, during the 1990s, the average Yet, despite terminating a number of programs, the absolute error in the projections of February for ratio of federal nondefense, noninterest, spending to receipts and outlays in the fiscal years starting the GDP still stands at nearly 14 percent, double what subsequent October has been greater than 4 percent. it was in the 1950s. This may be one reason why A 4 percent error in both outlays and receipts in inflation premiums, embodied in long-term interest opposite directions amounts to more than $125 bil- rates, are still significant. There is, thus, doubtless a lion annually. Indeed, the uncertainty of budget fore- lot of catching up to do. casts is no better illustrated than by an admittedly The current initiatives toward welfare, social secuextreme case. During the past two and a half years rity, and Medicare reform are clearly steps in the the projection of the fiscal balance, excluding new right direction, but far more is required. Let us not initiatives, for the year 2002 has changed by about squander years of efforts to balance the budget and $250 billion. While all this fortunately has been in the benefits of ideal economic conditions by failing to the direction of smaller deficits, the degree of uncer- address our long-term imbalances. tainty suggests that the error could just as easily be A critical imbalance is the one faced by social on the other side. security. Its fund's reported imbalance stems prima- With this high level of uncertainty in projecting rily from the fact that, until very recently, the paybudget totals and associated deficits, the Congress ments into the social security trust accounts by the needs to evaluate the consequences to long-term eco- average employee, plus employer contributions and nomic growth of errors in fiscal policy. A base issue interest earned, were inadequate, at retirement, to in such an evaluation is whether we are better off to fund the total of retirement benefits. This has started be targeting a large deficit, balance, or a chronic to change. Under the most recent revisions to the law, surplus in our unified budget. and presumably conservative economic and demo- There is nothing special about budget balance graphic assumptions, today's younger workers will per se, except that it is far superior to deficits. I have be paying social security taxes over their working always emphasized the value of a budgetary surplus years that appear sufficient to fund their benefits in increasing national savings, especially when U.S. during retirement. However, the huge liability for private domestic savings is low, as it is today. current retirees, as well as for much of the work force Higher national savings lead in the long run to closer to retirement, leaves the system, as a whole, higher investment and living standards. They also badly underfunded. The official unfunded liability for foster low inflation. Low inflation itself may be the Old Age, Survivors and Disability funds, which responsible, in part, for higher productivity growth takes into account expected future tax payments and and larger gains in standards of living. benefits out to the year 2070, has reached a stagger- If economic growth and rising living standards, ing $3 trillion. fostered by investment and price stability, are our This issue of funding underscores the critical elegoal, fiscal policy in my judgment will need to be ments in the forthcoming debate on social security biased toward surpluses in the years immediately reform because it focuses on the core of any retireahead. This is especially so given the inexorable ment system, private or public. Simply put, enough demographic trends that threaten huge increases in must be set aside over a lifetime of work to fund outlays beyond 2010. We should view the recent the excess of consumption over claims on production budget agreement, even if receipts and outlays evolve a retiree may enjoy. At the most rudimentary level, as expected, as only an important downpayment on one could envision households saving by actually the larger steps we need to take to solve the harder storing goods purchased during their working years problem—putting our entitlement programs on a for consumption during retirement. Even better, the sound financial footing for the twenty-first century. resources that would have otherwise gone into the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 967 stored goods could be diverted to the production of There are a number of thoughtful reform initiatives new capital assets, which would, cumulatively, over a that, through the process of privatization, could working lifetime, produce an even greater quantity of increase domestic saving rates. These are clearly goods and services to be consumed in retirement. In worthy of intensive evaluation. Perhaps the strongest the latter case, we would be getting more output per argument for privatization is that replacing the curworker, our traditional measure of productivity, and a rent underfunded system with a fully funded one factor that is central in all calculations of long-term could boost domestic saving. But, we must remember social security trust fund financing. it is because privatization plans might increase sav- Hence, the bottom line in all retirement programs ings that makes them potentially valuable, not their is physical resource availability. The finance of any particular form of financing. As I have argued elsesystem is merely to facilitate the underlying system where, unless national savings is increased, shifting of allocating real resources that fund retirement con- social security trust funds to private securities, while sumption of goods and services. Unless social secu- increasing government retirement system income, rity savings are increased by higher taxes (with nega- will lower retirement incomes in the private sector to tive consequences for growth) or lowered benefits, an offsetting degree. This would not be an improvedomestic savings must be augmented by greater pri- ment to our overall retirement system. vate saving or surpluses in the rest of the government The types of changes that will be required to budget to help ensure that there is enough savings to restore fiscal balance to our social security accounts, finance adequate productive capacity down the road in the broader scheme of things, are significant but to meet the consumption needs of both retirees and manageable. More important, most entail changes active workers. that are less unsettling if they are enacted soon, even The basic premise of our current largely pay-as- if their effects are significantly delayed, rather than you-go social security system is that future productiv- waiting five or ten years or longer for legislation. ity growth will be sufficient to supply promised retire- Minimizing the potential disruptions associated ment benefits for current workers. However, even with the inevitable changes to social security is made supposing some acceleration in long-term productiv- all the more essential because of the pressing finanity growth from recent experience, at existing rates of cial problems in the Medicare system, social securidomestic saving and capital investment this is becom- ty's companion program for retirees. Medicare, as ing increasingly dubious. you are well aware, is in an even more precarious Accordingly, short of a far more general reform of position than social security. The financing of Medithe system, there are a number of initiatives, at a care faces some of the same problems associated with minimum, that should be addressed. As I argued at demographics and productivity as social security but length in the Social Security Commission delibera- faces different, and currently greater, pressures owing tions of 1983, with only marginal effect, some delay- to the behavior of medical costs and utilization rates. ing of the age of eligibility for retirement benefits Reform of the Medicare system will require more will become increasingly pressing. For example, immediate and potentially more dramatic changes adjusting the full-benefits retirement age to keep pace than those necessary to reform social security. with increases in life expectancy in a way that would We owe it to those who will retire after the turn of keep the ratio of retirement years to expected life the century to be given sufficient advance notice to span approximately constant would help to signifi- make what alterations in retirement planning may be cantly narrow the funding gap. Such an initiative will required. The longer we wait to make what are surely become easier to implement as fewer and fewer of inevitable adjustments, the more difficult they will our older citizens retire from physically arduous become. If we procrastinate too long, the adjustments work. Hopefully, other modifications to social secu- could be truly wrenching. Our senior citizens, both rity, such as improved cost-of-living indexing, will be current and future, deserve better. instituted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

968 Federal Reserve Bulletin • December 1997 Statement by Susan M. Phillips, Member, Board banking practices and markets continue to evolve, of Governors of the Federal Reserve System, before our emphasis on risk-focused supervision will be the Subcommittee on Financial Institutions and even more necessary in the years to come. Consumer Credit of the Committee on Banking and Financial Services, U.S. House of Representatives, October 8, 1997 THE FEDERAL RESERVE'S OVERSIGHT ROLE I am pleased to be here today to discuss the Federal Reserve's efforts in recent years to strengthen its As the primary federal supervisor of U.S. bank holdsupervisory processes and also to share with you the ing companies, state member banks, and most U.S. Board's views about what challenges lie ahead, for offices of foreign banks, the Federal Reserve has both the banking system and the supervisory process. sought to apply effective supervision and contain As you know, the U.S. economy and its banking excessive risks to the federal safety net, while also system have enjoyed half a decade of improving ensuring that banks adequately serve their commustrength in which U.S. banks have become better nities and accommodate economic growth. As the capitalized and more profitable than they have been nation's central bank, the Federal Reserve brings a in generations. Moreover, in the past thirteen months different, important perspective to the supervisory not a single insured bank has failed, and the Bank process through its attention to the broad and long- Insurance Fund is now capitalized at a level requiring term consequences of supervisory actions on the most banks to pay only nominal fees for their insur- financial system and the economy. Significantly, the ance. While we can take comfort and, to some degree, practical, hands-on involvement that the Federal satisfaction in these events, experience has dem- Reserve gains through its supervisory function suponstrated that at times like these—if we are not ports and complements our other central bank responvigilant—risks can occur that set the stage for future sibilities, including fostering a safe and efficient payproblems. ment system and ensuring the stability of the financial As I begin my remarks, I would like to point out system. that no system of supervision or regulation can pro- Past studies of bank failures have cited a number of vide total assurance that banking problems will not contributing factors, including, but certainly not limoccur or that banks will not fail. Nor should it. Our ited to, inadequate supervisory staffing and antigoal as regulators is to identify weak banking prac- quated examination procedures. Over the years, as it tices early so that small or emerging problems can be has supervised and regulated banking organizations, addressed before they become large and costly—to the Federal Reserve has emphasized periodic, on-site either the insurance fund or the financial system as a examinations that entail substantive loan portfolio whole. We believe that progress made in recent years reviews and significant transaction testing to identify to focus our examinations on the areas of highest risk emerging problems. In that connection, the Federal at banking organizations places us in a better position Reserve has sought to maintain a sufficient number to identify problems early, control systemic risk, and and quality of supervisory personnel to conduct maintain financial stability. That goal and the need to examinations with appropriate frequency and depth. adapt the supervisory process to the potentially rap- That approach appears to have provided us with some idly changing conditions in banking and financial consistent success. markets underlie our decision to pursue a more risk- As conditions within the industry have substanfocused supervisory approach. tially improved, the Board has been mindful of the We are well under way in implementing this new cost of conducting its supervisory activities and has supervisory framework, and initial indications about worked to contain those costs in the face of increased that process from both the Federal Reserve's supervi- responsibilities. Throughout this period we have recsory staff and the banking industry, itself, have been ognized the need to maintain stability in our work favorable. The risk-focused approach reflects our force and have sought to avoid excessive buildups or supervisory response to the effects that technology periods of disruptive retrenchment. That approach and financial innovation have had on the pace of has enabled us to maintain what we believe has been change in banking organizations, the nature of U.S. an adequate and consistent level of oversight of bankand world financial markets, and the techniques ing organizations under our supervision during both employed for managing and controlling risk. As good times and bad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 969 DEVELOPMENTS DRIVING CHANGE improvements in capital positions and in overall riskmanagement practices. During the past decade, the U.S. banking system has In many ways, U.S. banks have been in the vanexperienced a great deal of turmoil, stress, and guard in applying technological advances to their change. Ten years ago, many of the country's largest products, distribution systems, and management probanks announced huge loan-loss provisions, begin- cesses, with such applications and innovations as ning the process of reducing the industry's overhang automated teller machines, home banking, securitizaof doubtful developing country loans. At the same tions, and credit derivatives. Such efforts, combined time, many of these institutions and smaller regional with greater attention to pricing their services and banks were struggling with oil and agriculture sector measuring their risks, have had material effects on difficulties or accumulating commercial real estate the increased strength and profitability that our banks problems. These and other difficulties took a heavy have seen. toll. By the end of the 1980s, more than 200 banks Within the United States, our banking system has were failing annually, and there were more than also experienced a dramatic consolidation in the num- 1,000 other problem banks. ber of banking institutions, with the number of inde- This experience provided important lessons and pendent commercial banking organizations declining forced supervisors and bankers, alike, to reconsider from 12,400 in 1980 to 7,400 in June of this year.1 the way they approached their jobs. For their part, That structural change has also contributed to indusbankers recognized the need to build their capital and try earnings by providing banks with greater opportureserves, strengthen their internal controls, and nities to reduce costs. improve practices for identifying, underwriting, and The challenge going forward for many of these managing risk. Supervisors were also reminded of institutions may be in managing the growth and the the need to remain vigilant and of the high costs that continuing process of industry consolidation. This bank failures can bring, not only to the insurance challenge may be greatest as banking organizations fund but to local communities as well. The FDIC expand, particularly through acquisitions, into more Improvement Act of 1991 emphasized that point, diverse or nontraditional banking activities. That requiring frequent examinations and prompt regula- growth into a wider array of activities is especially tory actions when serious problems emerge. important if banks are to meet the wide-ranging needs Beyond these largely domestic, institutional events, of their business and household customers while banks and businesses throughout the world were deal- competing effectively with other regulated and ing in the 1980s and 1990s with new technologies unregulated firms. However, the managerial implicathat were leading to a multitude of new and increas- tions of rapid growth and growth into new activities ingly complex financial products that changed the should not be overlooked, by either the institutions or nature of banking and financial markets. These tech- their supervisors. nologies have brought many benefits that facilitate more efficient markets and, in turn, greater international trade and economic growth. SUPERVISORY CHALLENGES AHEAD They may also, however, have raised macrostability concerns by concentrating the growing volume There is also no shortage of tasks facing the Federal and complexity of certain activities within a small Reserve as a bank supervisor, despite the virtually number of truly global institutions. It is essential that unprecedented strong condition of the U.S. banking these largest firms adequately manage the related system today. We, too, must deal with the evolving risks of these activities and that they remain ade- financial markets and advances in technology. At the quately supervised. For it is these institutions that same time, we must ensure that our own supervisory have the potential to disrupt worldwide payment sys- practices, tools, and standards take advantage of tems and contribute most to systemic risk. In addition technological improvements and financial techniques to the formal supervisory oversight exerted by regula- so that our oversight is not only effective but also tors, concerns may be eased somewhat by the strong counterparty discipline being brought to bear worldwide on banks and other financial institutions dealing 1. "Independent commercial banking organizations" is defined as in these new products. The scrutiny among counter- the sum of all bank holding companies and independent banks. Multibank holding companies are, therefore, considered as a single parties in the global market place has contributed to organization. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

970 Federal Reserve Bulletin • December 1997 as unobtrusive and appropriate as possible. These about the accuracy of a bank's internal loan review tasks are wide ranging, extending from our own process. To the extent we can validate the integrity of re-engineering of the supervisory process to the way a bank's internal controls more efficiently, we can supervisors approach issues such as measuring capi- place more confidence in them at an earlier stage and tal adequacy and how we seek convergence on bank can also take greater comfort that management is supervisory standards worldwide. getting an accurate indication of the bank's condition. Toward that end, Board staff is working to refine loan-sampling procedures that should further boost examiner productivity and accomplish other super- Risk-Focused Examinations visory goals. Moreover, as examiners are able to complete loan reviews more quickly, they will have Constructing a sound supervisory process while mini- more time to review other high-priority aspects of the mizing regulatory burden has been a long-standing institution's operations. and ongoing effort at the Federal Reserve and an A significant benefit of the risk-focused approach objective we have sought to advance with our empha- is its emphasis on ensuring that the bank's internal sis on risk-focused examinations. Particularly in the oversight processes are sound and that communicapast decade, we have found that the increased range tion between the bank and senior examiners is ongoof products and the greater depth and liquidity of ing between examinations. That approach is generfinancial markets permit banking organizations to ally supported by institutions we supervise and change their risk profiles more rapidly than ever provides a more comprehensive oversight process before. That possibility requires that we strike an that complements our annual or eighteen-month appropriate balance between evaluating the condition examinations. Such an approach strengthens our abilof an institution at a point in time and evaluating the ity to respond promptly if conditions deteriorate. soundness of the bank's processes for managing risk. Another benefit of the risk-focused approach has Recognition of the need for that balance is at the been a greater amount of planning, analysis, and heart of the risk-focused examination approach. information gathering at Reserve Banks before the The risk-focused approach, by definition, entails a on-site portion of the examination. Far from reducmore formal risk assessment planning phase that ing our hands-on knowledge of the institution, this identifies those areas and activities that warrant the approach has ensured that when we are on site, we most extensive review. This preplanning process is are reviewing and analyzing the right areas, talking to supported by technology, for example, to download the right people, and making better use of our time certain information about a bank's loan portfolio to and that of the bank's management and employees. our own computer systems and target areas of the In addition to improving productivity, it has also portfolio for review. reduced our travel costs and improved employee Once on site, examiners analyze the bank's loans morale. and other assets to ascertain the organization's cur- Examination staff at the Reserve Banks indicate rent condition, and also to evaluate its internal con- that this process may be reducing on-site examination trol process and its own ability to identify and resolve time 15 percent to 30 percent in many cases and problems. As a result, the Federal Reserve is plac- overall examination time of Federal Reserve personing greater reliance than before on a bank's internal nel perhaps 10 percent. While those results are tenauditors and on the accuracy and adequacy of its tative, partial, and unscientific, they are certainly information systems. The review of the information encouraging in terms of resource implications. flow extends from top to bottom, and with the expec- Complementing the risk-focused approach to supertation that bank senior management and boards of vision are enhancements to the tools we use to grade directors are actively involved in monitoring the a bank's condition and management. Since 1995, bank's activities and providing sufficient guidance we have asked Federal Reserve examiners to provide regarding risk assumption. a specific supervisory rating for a bank's risk- As in the past, performance of substantive checks management process. More recently, the CAMEL on the reliability of a bank's controls remains today a rating system, too, has been revised by the banking cornerstone of the examination process, albeit in a agencies to place more emphasis on the adequacy more automated and advanced form. For example, of a bank's risk-management practices and was automated loan sampling is performed for the pur- expanded to include a specific "S" rating for an pose of generating statistically valid conclusions institution's sensitivity to market risk. As you may Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 971 know, the Federal Reserve has also, for some time, audit systems, the foreign branch rating system was used a rating scheme that focuses heavily on manage- revised in 1994. Furthermore, in 1996 additional rial procedures and controls in its oversight of U.S. steps were taken to ensure that internal control weakbranches and agencies of foreign banks. nesses are corrected and will not cause financial harm How effective is the risk-focused process? Because by adopting requirements for audit procedures in economic and industry conditions have been gener- situations where significant control weaknesses are ally favorable for the past several years, there has not detected. been a sufficiently stressful economic downturn to These efforts to detect problems at their early test fully bank risk-management systems or super- stages and resolve them appear to be having positive visory practices. The market volatility beginning in effects. After having peaked in 1993, there has been a 1994 did, however, provide some tests for the risk- steady decline in the number of U.S. branches and management systems of the larger banks with active agencies with an overall examination rating of fair or trading desks. Nevertheless, there are many indica- lower and a rating of fair or lower in an examination tions that bank and supervisory practices are materi- component substantively affected by internal control ally better than they were in the 1980s and early and audit weaknesses. We believe that our continued 1990s. efforts in this area will lead to further improvements For example, the risk-focused approach is helping in the internal control and audit practices of foreign to identify certain deficiencies before they show up in banking organizations a bank's financial condition. These are evidenced by Implementing the risk-focused approach has not instances where ratings for the quality of bank man- been an easy task. It has required a significant reviagement are lower than those for capital, asset qual- sion of our broad and specialized training programs, ity, or earnings. Because managerial weaknesses including expansion of capital markets, information eventually show up in a bank's financial condition, it technology, and global trading activities as well as is important to identify and resolve those weaknesses courses devoted exclusively to internal controls. early. In that regard, the risk-focused approach These education programs will, of course, need to be endeavors to prevent problems from developing to continually updated as industry activities and condithe point that they cause unnecessary losses that tions evolve. impair the institution's capital and require resolution With the greater discretion provided to examiners under the Prompt Corrective Action mandate. to focus on areas of highest risk, ensuring the consis- One example of how the risk-focused approach tency and quality of examinations has increased in is helping to identify and address deficiencies is importance. Fortunately, new training courses and our supervisory experience with the U.S. branches of improved examination platforms, tools, and programs foreign banks. Subsequent to the enactment of the that guide examiners through the appropriate selec- Foreign Bank Supervision Enhancement Act of 1991, tion of examination procedures will help. In addition, which gave the Federal Reserve greater supervisory our ability to evaluate more thoroughly the quality of authority over foreign branches, our examinations an examination has improved with the greater depth uncovered a number of entities with internal control of analysis provided in supporting examination mateand audit weaknesses. This result was not completely rials such as the written risk assessments and analysis unexpected, as these foreign banking organizations of exam findings. Those materials are allowing us to were not previously subject to the same level of perform comparative reviews of examinations across oversight as our domestic organizations. institutions of similar size, risk profile, and complex- Recognizing the seriousness of these weaknesses ity to ensure quality and consistency. and their potential for causing problems in the future, So far we have been able to evaluate the effectivethe Federal Reserve has taken a number of steps to ness of our examination programs by identifying ensure that practices are materially upgraded at for- whether problems are identified early and resolved eign branches and that any weaknesses continue to be in a timely fashion, by evaluating whether examinauncovered. In addition to identifying and addressing tion reports and findings provide clear feedback to internal control and audit weaknesses through exami- management and identify areas of highest risk, and nations and supervisory follow-up, these efforts by monitoring the extent to which our examinations include ensuring that the foreign bank provides the are complying with statutory mandates for the frenecessary managerial support to its U.S. branches, quency of examinations. Based on those criteria, I including adequate systems of controls and audit. To believe our examination program has been generally place even more emphasis on internal controls and successful. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

972 Federal Reserve Bulletin • December 1997 Application of Technology progress on this issue is being made. This process to Supervisory Process should be complete by the middle of next year so that any detected deficiencies may be addressed in time. The Federal Reserve has also done much to increase Meeting the demands of this review and ensuring its own use of technology in an effort to improve proper remedies both before and after the year 2000 examiner productivity, enhance analyses, and reduce will be a significant and costly task to both the burden on banks. Much of this effort has been con- industry and the banking agencies. ducted on an interagency basis, particularly in coop- However, even within the context of banking, the eration with the Federal Deposit Insurance Corpora- scope of the Year 2000 problem extends far beyond tion (FDIC) and state banking departments with U.S. banks to foreign banks, bank borrowers, deposiwhom we share supervision of state-chartered banks. tors, vendors, and other counterparties. Through the Specific results include the development of a per- Bank for International Settlements and other internasonal computer, laptop workstation that provides tional forums, the Federal Reserve and other U.S. examiners with a decision tree framework to assist banking agencies have emphasized the need for all them through the necessary procedures. The worksta- institutions to recognize this issue and to address it tion also helps them document their work and prepare actively. Importantly, century date compliance is exam reports more efficiently. In addition, a software gaining more attention internationally, and the Basle program has also been developed for receiving and Supervisors Committee is taking steps to address this analyzing loan portfolio data transmitted electroni- matter. cally from financial institutions. This process not Banks and others need to address year 2000 system only saves time but also improves the examiner's alterations, not only because of the potential effects understanding of the risks presented by individual on overall markets but also as a threat to individual portfolios. firm viability. At a minimum, banks should be con- The Federal Reserve is also developing an elec- cerned about their ability to provide uninterrupted tronic examination tool for large domestic and for- service to their customers into the next millennium. If eign banking organizations that enhances our ability nothing else, it is simply good business. to share examination analysis and findings and other pertinent supervisory information among our Reserve Efforts to Accommodate Industry Growth Banks and with other supervisory authorities. This and Innovation platform should substantively improve our ability to provide comprehensive oversight to those firms that Another goal of the Federal Reserve's supervisory are most prominent in the payment system and global approach is to remove unnecessary barriers that might financial markets. hinder the industry's ability to grow, innovate, and In addition to examination tools, the Federal remain competitive. Recently, the Board refined Reserve has for many years maintained a compreits application process to ensure that well-run, wellhensive source of banking structure, financial, and capitalized banking organizations may apply to examination data in its National Information Center. acquire banks and nonbanks in a more streamlined By year-end, we will have completed significant enfashion and commence certain types of new activities hancements to the tools that provide examiners and without prior approval. The Board also significantly analysts at the federal and state banking agencies revised various rules for section 20 companies and access to those data. scaled back or removed many redundant firewalls. While these refinements require some changes to the supervisory process, we firmly believe that removing The Year 2000 barriers to these lower-risk activities is essential to maintaining the industry's health and competitive- One of the clearest reminders that managing technolness and its ability to serve its customers and the ogy is a challenge of its own is the need for banks to community. resolve the "Year 2000" problem. U.S. banks appear to be taking this matter seriously and are generally well under way toward identifying their individual Supervising Nationwide needs and developing action plans. The Federal and International Institutions Reserve and the other federal bank supervisors are reviewing the relevant efforts of every insured The consolidation and transformation of the U.S. depository institution to determine whether adequate banking system resulting from evolving market, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 973 statutory, and regulatory changes are also requiring Successful groundwork from this effort could also the Federal Reserve to adapt to new conditions. As have implications for moving forward domestically previously noted, we are working closely with the in an era of financial reform. FDIC and state banking agencies to deal with the Guidance as well as supervisory and regulatory challenges presented by interstate banking and standards such as these—whether developed in a branching to ensure that the dual banking system domestic or international context—are soon incorporemains viable in future years. rated into examination procedures and help examin- To address that goal, the FDIC, the Federal ers in their reviews of many of the more complex Reserve, and the state banking departments began on activities of global banking organizations. These October 1 a common risk-focused process for the global institutions are perhaps the most challenging examination of state-chartered community banks. to supervise. Because it is not feasible for supervisors Another initiative has been the State/Federal Supervi- to review all locations of a global banking organizasory Protocol, which commits the various banking tion, emphasis is placed on the integrity of risk managencies to work toward a "seamless" and minimally agement and internal control systems, coordination burdensome oversight process. In short, it sets forth a with international supervisors, strong capital stanprocess in which state banking supervisors will dards, and improved disclosures. accept the supervisory reports of other agencies for banks operating in their states through branches but headquartered elsewhere. The fact that the plan has Staffing the Supervisory Process been accepted by all involved parties is encouraging. We now need to ensure that it is implemented as A final supervisory challenge relates to the Federal intended as banks make use of their broader branch- Reserve's need to continue attracting, training, and ing powers. retaining expert staff. Retaining sufficient numbers of Similar coordination efforts are necessary and individuals with the expertise to evaluate fully the under way in an international context. Through the risks in a rapidly changing banking industry is a Bank for International Settlements, for example, the major priority for the Federal Reserve and figures Federal Reserve and the other U.S. banking agencies prominently in the bank supervision function's strateparticipate with supervisors from other G-10 coun- gic plan. Particularly challenging is attracting and tries to develop not only prudential capital and other retaining specialists in the areas of capital markets regulatory standards but also to promote sound prac- and information technology in which we have experitices over a broad range of banking issues. enced increased turnover. We will continue efforts to In this regard, the Basle Committee on Banking attract and retain both specialists and generalists who Supervision, with the approval of the central bank are qualified to address issues as the industry evolves. Governors of the G-10 countries, recently issued As I have outlined in my testimony, the Federal three documents: one dealing with the management Reserve's supervisory strategy is to maintain staff of interest rate risk by banks, one dealing with the members that can adequately evaluate the general Year 2000 problems, and another identifying twenty- soundness of banking activities by placing strong five "core principles" of effective supervision that is emphasis on the bank's management processes, sysdirected at bank supervisors worldwide. The Basle tems, and controls. I believe such an approach will Committee is also working to improve international serve us well as the industry continues to evolve risk-disclosure practices of banks and has created the either by expanding the scope of its activities or new market risk capital standard that is based on through broader structural changes from financial banks' internal value-at-risk models. That standard modernization legislation. Nevertheless, developing goes into effect in January of next year. the supervisory techniques and attracting and training Beyond the work of the Basle Committee and the the personnel to do the job will pose a continuing banking agencies, we are also meeting with the Secu- challenge in the years ahead. rities and Exchange Commission and international securities and insurance regulators to identify common issues and to bring about greater convergence in CONCLUSION our respective regulatory frameworks. That effort also has links to the committee's efforts and should The history of banking and of bank supervision prove helpful in strengthening the oversight and regu- shows a long and rather close relationship between lation of financial institutions throughout the world the health of the banking system and the economy, a that provide a broad range of financial products. connection reflecting the role of banks in the credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

974 Federal Reserve Bulletin • December 1997 intermediation process. We can expect that rela- the risk-focused approach will be continually chaltionship to continue and for bank earnings and lenged to anticipate and avoid new kinds of asset quality to fluctuate as economic conditions problems. We must recognize that a risk-focused change. As supervisors, we must prepare for such approach to supervision is a developing process and developments. however successful it may be, there will again be In many ways, however, the banking and financial bank failures. Indeed, having no bank failures may system have changed dramatically in the past decade suggest inadequate risk-taking by banks and less in terms of both structure and diversity of activities. economic growth. Through our supervisory process, Risk-management practices have also advanced, the Federal Reserve seeks to maintain the proper helped by technological and financial innovations. I balance—permitting banks maximum freedom, while believe that both bank supervisors and the banking still protecting the safety net and maintaining finanindustry have learned important lessons from the cial stability. Devoting adequate attention to banking experience of the past ten years specifically about the practices and conditions and responding promptly as need to actively monitor, manage, and control risks. events unfold is the key. We intend to do that now Nevertheless, conditions can always change, and and in the years ahead. Statement by Theodore E. Allison, Assistant to the ter (important for small retailers), or they work more Board for Federal Reserve System Affairs, Board of efficiently in vending machines. Governors of the Federal Reserve System, before the Subcommittee on Domestic and International Mone- In the meantime, there has been an ongoing tary Policy of the Committee on Banking and Finan- demand for Susan B. Anthony coins, with the result cial Services, U.S. House of Representatives, Octo- that the combined inventory at the Mint and the ber 21, 1997 Federal Reserve, which now stands at about 133 million coins, will be depleted during the first half of the year 2000 assuming continuation of the current rate Thank you for the opportunity to comment on of withdrawals from Federal Reserve Banks, which is H.R.2637, the United States $1 Coin Act of 1997. averaging about 4.2 million coins per month. Thus, it Under H.R.2637, the dollar coin would be made gold is likely that the Treasury Department will need to in color and would be given a distinctive rim; it produce more dollar coins of some kind within the would retain the dimensions of the Susan B. Anthony next several years. Even if the rate of withdrawals dollar coin; and the dollar note would remain in were to decline moderately in the next few years, as it circulation. The Federal Reserve believes that has over the past several, the existing stock of dollar H.R.2637 achieves a good balance among the issues coins would likely be exhausted within a period that involved in the dollar-coin-versus-dollar-note debate makes it advisable to plan now for that event.1 and supports its passage. Public reaction to the design of the Susan B. For most of this decade, there has been a public Anthony dollar has been negative from the begindiscussion of the merits of replacing the dollar note ning. In 1978, even before the coin was issued, with a dollar coin, with no consensus having develresearch conducted for the Federal Reserve by the oped in favor of doing so. Out of this discussion, University of Michigan School of Business Adminishowever, a few conclusions can be drawn: tration, using focus group interviews with both consumers and retailers, revealed considerable reserva- • The design of the Susan B. Anthony coin is tions in both groups about the Anthony design. The widely disliked on grounds that it is easily confused main concern was the perceived similarity to the with the quarter. quarter and, as a consequence, the risk of making a • The public appears to prefer to use dollar notes mistake in handling change. Through the years since, for most purposes because dollar coins can be con- potential confusion with the quarter has dominated fused with the quarter and also because they are the public's perception of the dollar coin. Thus, it would not seem considerate—either of the public thought to be too heavy. • Many firms prefer dollar coins for certain kinds of transactions because coins are easier to handle in large quantities (especially important for transit sys- 1. The attachment to this statement is available from Publications Services, Stop 127, Board of Governors of the Federal Reserve tems), they reduce transaction time at the cash regis- System, Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 975 who dislike the Anthony dollar or of the merchants the Anthony dollar's dimensions in the new coin who need a viable dollar coin—if the impending should minimize the introduction costs that vending depletion of Anthony dollars were addressed by machine operators would face. And retention of the manufacturing more of those coins. dollar note would be consistent with the apparent Nor would it seem appropriate to introduce a new wishes of most individuals at this time. dollar coin with dimensions markedly different from Finally, I should observe that the Treasury of the those of the Anthony dollar because that would United States—and thereby taxpayers—would benerequire that nearly all vending machines be mechani- fit financially if, and to the extent that, the availability cally refitted at considerable cost to the vending of a more acceptable dollar coin either caused dollar machine industry and its customers. coins to substitute for dollar notes in circulation more Moreover, a decision to withdraw the dollar note in than would be the case without it or caused the total connection with issuance of a redesigned dollar coin circulation of dollar notes and dollar coins to increase would be contrary to the preference of most Ameri- further than would have been the case otherwise.2 cans, who apparently do not wish at this time to give Although this effect may not be large, it should be up the note. positive. Enactment of H.R.2637 would address all of these issues in a way that should be consistent with the needs of most of the affected public: The gold color 2. The impact of substituting dollar coins for dollar notes on the Treasury's financial position has been outlined in previous Board and distinctive rim of the newly designed coin should statements to the Congress. See, for example, "Statement by make the public more approving than it now is of the Edward W. Kelley, Jr., Member, Board of Governors of the Federal Susan B. Anthony dollar. That, in turn, should benefit Reserve System, to the Subcommittee on Domestic and International Monetary Policy of the Committee on Banking and Financial Servending machine operators and other merchants who vices, U.S. House of Representatives, May 3, 1995," Federal Reser\'e wish to see greater use of a dollar coin. Maintaining Bulletin, vol. 81 (July 1995), pp. 676-78. Statement by Alan Greenspan, Chairman, Board of the 1987 crash, as a salutary event in terms of its Governors of the Federal Reserve System, before implications for the macroeconomy. the Joint Economic Committee, U.S. Congress, Octo- The 1987 crash occurred at a time when the Ameriber 29, 1997 can economy was operating with a significant degree of inflationary excess that the fall in market values We meet against the background of considerable arguably neutralized. Today's economy, as I have turbulence in world financial markets, and I shall been suggesting of late, has been drawing down address the bulk of my remarks to those circumstances. unused labor resources at an unsustainable pace, We need to assess these developments against the spurred, in part, by a substantial wealth effect on backdrop of a continuing impressive performance of demand. The market's net retrenchment of recent the American economy in recent months. Growth days will tend to damp that impetus, a development appears to have remained robust and inflation low, that should help to prolong our six-and-a-half-year and even falling, despite an ever-tightening labor business expansion. market. Our economy has enjoyed a lengthy period As I have testified previously, much of the stock of good economic growth, linked, not coincidentally, price gain since early 1995 seems to have reflected to damped inflation. The Federal Reserve is dedi- upward revisions of long-term earnings expectations, cated to contributing as best it can to prolonging this which were implying a continuing indefinite rise in performance, and we will be watching economic and profit margins from already high levels. I suspect we financial market developments closely and evaluating are experiencing some scaling back of the projected their implications. gains in foreign affiliate earnings, and investors Even after the sharp rebound around the world in probably are also revisiting expectations of domestic the past twenty-four hours, declines in stock markets earnings growth. Still, the foundation for good busiin the United States and elsewhere have left investors ness performance remains solid. Indeed, data on our less wealthy than they were a week ago and busi- national economy in recent months are beginning to nesses facing higher equity cost of capital. Yet, pro- support the notion that productivity growth, the basis vided the decline in financial markets does not cumu- for increases in earnings, is beginning to pick up. late, it is quite conceivable that a few years hence we I also suspect that earnings expectations and equity will look back at this episode, as we now look back at prices in the United States were primed to adjust. The Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

976 Federal Reserve Bulletin • December 1997 currency crises in Southeast Asia and the declines in region were expanding vigorously. Foreign net capiequity prices there and elsewhere do have some direct tal inflows grew but until recent years were relatively effects on U.S. corporate earnings, but not enough to modest. The World Bank estimates that net inflows of explain the recent behavior of our financial markets. long-term debt, foreign direct investment, and equity If it was not developments in Southeast Asia, some- purchases to the Asia Pacific region were only about thing else would have been the proximate cause for a $25 billion in 1990 but exploded to more than re-evaluation. $110 billion by 1996. While productivity growth does appear to have A major impetus behind this rapid expansion was picked up in the past six months, as I have pointed the global stock market boom of the 1990s. As that out in the past, it likely is overly optimistic to assume boom progressed, investors in many industrial counthat the dimension of any acceleration in productivity tries found themselves more heavily concentrated in will be great enough and persistent enough to close, the recently higher valued securities of companies in by itself, the gap between an excess of long-term the developed world, whose rates of return, in many demand for labor and its supply. It will take some instances, had fallen to levels perceived as uncomtime to judge the extent of a lasting improvement. petitive with the earnings potential in emerging Regrettably, over the past year the argument for the economies, especially in Asia. The resultant diversifiso-called new paradigm has slowly shifted from the cation induced a sharp increase of capital flows into not unreasonable notion that productivity is in the those economies. To a large extent, they came from process of accelerating, to a less than credible view, investors in the United States and Western Europe. A often implied rather than stated, that we need no substantial amount came from Japan, as well, owing longer be concerned about the risk that inflation can more to a search for higher yields than to rising stock rise again. The Federal Reserve cannot afford to take prices and capital gains in that country. The rising such a complacent view of our price prospects. There yen through mid-1995 also encouraged a substantial is much that is encouraging in the recent performance increase in direct investment inflows from Japan. In of the American economy, but, as I have often men- retrospect, it is clear that more investment monies tioned before, fundamental change comes slowly, and flowed into these economies than could be profitably we need to evaluate the prospective balance of supply employed at modest risk. and demand for various productive resources in I suspect that it was inevitable in those conditions deciding policy. of low inflation, rapid growth, and ample liquidity Recent developments in equity markets have high- that much investment moved into the real estate lighted growing interactions among national financial sector, with an emphasis by both the public and markets. The underlying technology-based structure private sectors on conspicuous construction projects. of the international financial system has enabled us This is an experience, of course, not unknown in the to improve materially the efficiency of the flows of United States on occasion. These real estate assets, in capital and payment systems. That improvement, turn, ended up as collateral for a significant proporhowever, has also enhanced the ability of the finan- tion of the assets of domestic financial systems. In cial system to transmit problems in one part of the many instances, those financial systems were less globe to another quite rapidly. The recent turmoil is a than robust, beset with problems of lax lending stancase in point. I believe there is much to be learned dards, weak supervisory regimes, and inadequate from the recent experience in Asia that can be applied capital. to better the workings of the international financial Moreover, in most cases, the currencies of these system and its support of international trade that has economies were closely tied to the U.S. dollar, and done so much to enhance living standards worldwide. the dollar's substantial recovery since mid-1995, While each of the Asian economies differs in many especially relative to the yen, made their exports less important respects, the sources of their spectacular competitive. In addition, in some cases, the glut of growth in recent years, in some cases decades, and semiconductors in 1996 suppressed export growth, the problems that have recently emerged are relevant exerting further pressures on highly leveraged to a greater or lesser extent to nearly all of them. businesses. After the early post-World War II period, policies However, overall GDP growth rates generally generally fostering low levels of inflation and open- edged off only slightly, and imports, fostered by ness of their economies coupled with high savings rising real exchange rates, continued to expand, and investment rates contributed to a sustained period contributing to what became unsustainable current of rapid growth, in some cases starting in the 1960s account deficits in a number of these economies. and 1970s. By the 1980s most economies in the Moreover, with exchange rates seeming to be solidly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 977 tied to the dollar, and with dollar and yen interest Perhaps it was inevitable that the impressive and rates lower than domestic currency rates, a significant rapid growth experienced by the economies in the part of the enlarged capital inflows, into these econo- Asian region would run into a temporary slowdown mies, in particular short-term flows, was denomi- or pause. But there is no reason that above-average nated by the ultimate borrowers in foreign currencies. growth in countries that are still in a position to gain This put additional pressure on companies to earn from catching up with the prevailing technology canforeign exchange through exports. not persist for a very long time. Nevertheless, rapidly The pressures on fixed exchange rate regimes developing, free market economies periodically can mounted, as foreign investors slowed the pace of be expected to run into difficulties because investnew capital inflows and domestic businesses sought ment mistakes are inevitable in any dynamic econincreasingly to convert domestic currencies into for- omy. Private capital flows may temporarily turn eign currencies or, equivalently, slowed the conver- adverse. In these circumstances, companies should be sion of export earnings into domestic currencies. The allowed to default, private investors should take their shifts in perceived future investment risks led to losses, and government policies should be directed sharp declines in stock markets across Asia, often on toward laying the macroeconomic and structural top of earlier declines or lackluster performances. foundations for renewed expansion; new growth To date, the direct impact of these developments opportunities must be allowed to emerge. Similarly, on the American economy has been modest, but it in providing any international financial assistance, can be expected not to be negligible. U.S. exports to we need to be mindful of the desirability of minimiz- Thailand, the Philippines, Indonesia, and Malaysia ing the impression that international authorities stand (the four countries initially affected) were about ready to guarantee the liabilities of failed domestic 4 percent of total U.S. exports in 1996. However, an businesses. To do otherwise could lead to distorted additional 12 percent went to Hong Kong, Korea, investments and could ultimately unbalance the world Singapore, and Taiwan (economies that have been financial system. affected more recently). Thus, depending on the The recent experience in Asia underscores the extent of the inevitable slowdown in growth in this importance of financially sound domestic banking area of the world, the growth of our exports will tend and other associated financial institutions. While the to be muted. Our direct foreign investment in, and current turmoil has significant interaction with the foreign affiliate earnings reported from, the econo- international financial system, the recent crises would mies in this region as a whole have been a smaller arguably have been better contained if long-maturity share of the respective totals than their share of our property loans had not accentuated the usual misexports. The share is, nonetheless, large enough to match between maturities of assets and liabilities of expect some drop-off in those earnings in the period domestic financial systems that were far from robust ahead. In addition, there may be indirect effects on to begin with. Our unlamented savings and loan the U.S. real economy from countries such as Japan crises come to mind. that compete even more extensively with the econo- These are trying days for economic policymakers mies in the Asian region. in Asia. They must fend off domestic pressures that Particularly troublesome over the past several seek disengagement from the world trading and months has been the so-called contagion effect of financial system. The authorities in these countries weakness in one economy spreading to others as are working hard, in some cases with substantial investors perceive, rightly or wrongly, similar vulner- assistance from the International Monetary Fund, the abilities. Even economies, such as Hong Kong, with World Bank, and the Asian Development Bank, to formidable stocks of international reserves, balanced stabilize their financial systems and economies. external accounts, and relatively robust financial sys- The financial disturbances that have afflicted a tems, have experienced severe pressures in recent number of currencies in Asia do not at this point, as I days. One can debate whether the recent turbulence indicated earlier, threaten prosperity in this country, in Latin American asset values reflects contagion but we need to work closely with their leaders and effects from Asia, the influence of developments in the international financial community to ensure that U.S. financial markets, or homegrown causes. What- their situations stabilize. It is in the interest of the ever the answer, and the answer may be all of the United States and other nations around the world to above, this phenomenon illustrates the interdependen- encourage appropriate policy adjustments, and where ces in today's world economy and financial system. required, provide temporary financial assistance. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

978 Announcements EDWARD M. GRAMLICH: APPOINTMENT AS A broad supervisory and regulatory responsibilities over the activities of various banking institutions and the operations MEMBER OF THE BOARD OF GOVERNORS of the Federal Reserve Banks. The Board also has respon- ROGER W. FERGUSON, JR.- APPOINTMENT AS A sibilities in monitoring the nation's payments mechanism and federal consumer credit regulations. The Board con- MEMBER OF THE BOARD OF GOVERNORS sists of seven members appointed by the President and confirmed by the Senate. On July 10, 1997, President Clinton announced his intention to appoint Edward M. Gramlich and Roger W. Ferguson, Jr., as members of the Board of MEETING OF THE CONSUMER ADVISORY Governors. The appointments were confirmed by the COUNCIL Senate on October 30, and the oaths of office were administered on November 5 by Chairman Alan The Federal Reserve Board announced on Octo- Greenspan. The text of President Clinton's announce- ber 10, 1997, that the Consumer Advisory Council ment follows: would hold its next meeting on Thursday, October 30. The Council's function is to advise the Board The White House on the exercise of the Board's responsibilities under Office of the Press Secretary the Consumer Credit Protection Act and on other (Warsaw, Poland) matters on which the Board seeks its advice. July 10, 1997 President Nominates Gramlich and Ferguson to Federal Reserve Board REGULATION D: AMENDMENTS Today, the President announced his intent to nominate The Federal Reserve Board announced on Octo- Edward M. Gramlich and Roger W. Ferguson, Jr., to the ber 31, 1997, amendments to its Regulation D Board of Governors of the Federal Reserve System. Dr. Gramlich is an economics professor and Dean of the (Reserve Requirements of Depository Institutions) to School of Public Policy at the University of Michigan. He allow U.S. branches and agencies of foreign banks holds a B.A. from Williams College, and an M.A. and and Edge and Agreement corporations to choose Ph.D. in economics from Yale University. He has written whether to aggregate reserve balances on a nationnine books and numerous journal articles. He has previwide basis with a single pass-through correspondent ously worked at the Federal Reserve, the Office of Economic Opportunity, and the Brookings Institution. He or to continue to maintain reserve balances on a served as the Deputy Director and then the Acting Director same-state/same-District basis as they do today. The of the Congressional Budget Office in 1986 and 1987. He amendments are effective January 1, 1998. was also the Chair of the Quadrennial Advisory Council on The amendments also update and clarify the pass- Social Security from 1994 until 1996. through rules in Regulation D for all institutions. Dr. Ferguson is a partner and Director of Research and Information Systems at McKinsey & Company in New These amendments will facilitate interstate banking York. He holds a B.A., a J.D., and a Ph.D. in economics, and branching and eliminate certain restrictions appliall from Harvard University. After completing his formal cable to pass-through arrangements. education, Dr. Ferguson spent three years as a securities and banking lawyer at Davis Polk & Wardwell before joining McKinsey. At McKinsey, he has specialized in PROPOSED ACTION financial issues. His consulting experiences have included designing a super-regional bank strategy for a money center bank; a post-acquisition strategy and consolidation for a The Federal Reserve Board on October 23, 1997, California thrift; and an information technology strategy requested public comment on a joint interagency for a full-line brokerage house. As Director of Research proposal by the banking supervisory agencies to and Information Systems at McKinsey, Dr. Ferguson has amend their respective risk-based capital standards first-hand experience applying information technology to improve productivity in a service organization. for banks, bank holding companies, and thrift institu- The Federal Reserve Board's primary function is the tions with regard to the treatment of certain unrealformulation of monetary policy. In addition, the Board has ized revaluation gains on equity securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

979 These gains are reported as a component of equity tem and in leading the industry toward the more capital under generally accepted accounting princi- advanced electronic systems of the future. "Many pals (GAAP) but are not currently included in regu- participants urged the Federal Reserve to collaborate latory capital under the federal banking agencies' with diverse participants in the retail payments syscapital standards. Comments were requested by tem to share ideas and identify impediments to the December 26, 1997. transition to a more efficient retail payments system," the summary said. Input from the forums is being used by the Com- REPORT ON PAYMENT SYSTEM FORUMS NOW mittee in preparing its final report and recommenda- AVAILABLE tions, which are expected by the end of the year. The Federal Reserve issued on October 7, 1997, a report that summarizes opinions and views it received from a series of payments system forums held around AVAILABILITY OF REVISED LISTS OF the country earlier this year. The forums were part of OVER-THE-COUNTER STOCKS AND OF FOREIGN the work of the Committee on the Federal Reserve in STOCKS SUBJECT TO MARGIN REGULATIONS the Payments Mechanism. The Committee is currently examining the Federal The Federal Reserve Board published on October 24, Reserve's future role in the nation's payments system 1997, a revised list of over-the-counter (OTC) stocks in light of the rapid and significant changes occurring that are subject to its margin regulations. Also pubin the financial services and technology sectors. It lished was a revised list of foreign equity securities was established late last year by Federal Reserve that meet the margin criteria in Regulation T (Credit Chairman Alan Greenspan and is composed of Vice by Brokers and Dealers). Chair Alice M. Rivlin as Committee Chair, Governor The lists were effective November 10, 1997, and Edward W. Kelley, Jr., President William J. McDon- supersede the previous lists that were effective ough of the Federal Reserve Bank of New York, and August 11, 1997. The next revision of these lists is President Thomas C. Melzer of the Federal Reserve scheduled to be effective February 1998. These lists Bank of St. Louis. are published for the information of lenders and the In May and June of this year, the Committee and general public. the Reserve Banks met with representatives from The changes that have been made to the revised more than 450 institutions, including depository insti- OTC List, which now contains 4,880 OTC stocks, are tutions of all sizes, clearinghouses and other third- as follows: party service providers, consumers, retailers, and academics. Discussions at these meetings focused on • One hundred sixty-five stocks have been five hypothetical scenarios depicting alternative roles included for the first time, 143 under National Market for the Federal Reserve, ranging from exiting the System (NMS) designation retail payments system to adopting a leadership role • Fifty-two stocks previously on the list have been in the industry. The report summarizes the views removed for substantially failing to meet the requireexpressed by the forum participants on how the alter- ments for continued listing native roles of the Federal Reserve would affect the • One hundred fifteen stocks have been removed price and accessibility of services as well as the for reasons such as listing on a national securities efficiency and integrity of the retail payments system. exchange or involvement in an acquisition. A large majority of forum participants opposed withdrawal of the Federal Reserve from check and The OTC list is composed of OTC stocks that have automated clearinghouse (ACH) services. "While a been determined by the Board to be subject to margin few large banks and clearing houses thought the requirements in Regulations G (Securities Credit by Federal Reserve should exit the check collection and Persons other than Banks, Brokers, or Dealers), T, ACH business, the overwhelming majority of forum and U (Credit by Banks for Purchasing or Carrying participants opposed Federal Reserve withdrawal, Margin Stocks). It includes OTC stocks qualifying primarily because of concern about payments system under Board criteria and also includes all OTC stocks disruptions," the summary said. designated as NMS securities. Additional NMS secu- There was also a general consensus that the Fed- rities may be added in the interim between quarterly eral Reserve should play a stronger leadership role in Board publications; these securities are immediately improving the efficiency of the check collection sys- marginable upon designation as NMS securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

980 Federal Reserve Bulletin • December 1997 The foreign list is composed of foreign equity Financial Times/Standard & Poor's Actuaries World securities that are eligible for margin treatment at Indices (FT/S&P-AW Indices) as having a "ready broker-dealers. Effective July 1, 1996, foreign stocks market" for capital purposes. The Board is adding that have a "ready market" for purposes of the 10 foreign stocks and deleting 30, based on changes Securities and Exchange Commission's (SEC) net to the FT/S&P-AW Indices. The revised foreign list capital rule may be included on the foreign list. The now contains 1,956 securities displayed in order of SEC effectively treats all stocks included on the country. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

981 Minutes of the Federal Open Market Committee Meeting Held on August 19, 1997 A meeting of the Federal Open Market Committee Ms. Strand, First Vice President, Federal Reserve was held in the offices of the Board of Governors of Bank of Minneapolis the Federal Reserve System in Washington, D.C., on Messrs. Lang, Rolnick, Rosenblum, and Sniderman, Tuesday, August 19, 1997, at 9:00 a.m. Senior Vice Presidents, Federal Reserve Banks of Philadelphia, Minneapolis, Dallas, and Present: Cleveland respectively Mr. Greenspan, Chairman Mr. McDonough, Vice Chairman Messrs. Gavin, Kahn, and Ms. Perelmuter, Vice Mr. Broaddus Presidents, Federal Reserve Banks of St. Louis, Mr. Guynn Kansas City, and New York respectively Mr. Kelley Mr. Moskow Ms. Little and Mr. Sullivan, Assistant Vice Presidents, Mr. Meyer Federal Reserve Banks of Boston and Chicago Mr. Parry respectively Ms. Phillips Ms. Rivlin By unanimous vote, the minutes of the meeting Messrs. Hoenig, Jordan, Melzer, and Ms. Minehan, of the Federal Open Market Committee held on Alternate Members of the Federal Open Market July 1-2, 1997, were approved. Committee By unanimous vote, the Committee elected Mr. Stephen G. Cecchetti of the Federal Reserve Bank of Messrs. Boehne, McTeer, and Stern, Presidents of the New York as Associate Economist to serve until the Federal Reserve Banks of Philadelphia, Dallas, election of his successor at the first meeting of the and Minneapolis respectively Committee after December 31, 1997. It was under- Mr. Kohn, Secretary and Economist stood that in the event of the discontinuance of his Mr. Bernard, Deputy Secretary official connection with the Federal Reserve Bank of Mr. Coyne, Assistant Secretary New York, he would cease to have any official con- Mr. Gillum, Assistant Secretary nection with the Federal Open Market Committee. Mr. Mattingly, General Counsel Mr. Prell, Economist The Manager of the System Open Market Account Mr. Truman, Economist reported on developments in foreign exchange markets since the meeting in early July. There were no Messrs. Beebe, Cecchetti, Goodfriend, Eisenbeis, System open market transactions in foreign curren- Lindsey, Promisel, Siegman, Slifman, and cies during this period, and thus no vote was required Stockton, Associate Economists of the Committee. The Manager also reported on developments in Mr. Fisher, Manager, System Open Market Account domestic financial markets and on System open market transactions in government securities and federal Mr. Ettin, Deputy Director, Division of Research and Statistics, Board of Governors agency obligations during the period July 2, 1997, through August 18, 1997. By unanimous vote, the Messrs. Madigan and Simpson, Associate Directors, Committee ratified these transactions. Divisions of Monetary Affairs and Research and The Committee then turned to a discussion of the Statistics respectively, Board of Governors economic outlook and the implementation of monetary policy over the intermeeting period ahead. A Ms. Low, Open Market Secretariat Assistant, summary of the economic and financial information Division of Monetary Affairs, Board of Governors available at the time of the meeting and of the Com- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

982 Federal Reserve Bulletin • December 1997 mittee's discussion is provided below, followed by decline. Data on home sales in recent months continthe domestic policy directive that was approved by ued to suggest that demand for single-family housing the Committee and issued to the Federal Reserve was still relatively buoyant. Bank of New York. Real business fixed investment increased sub- The information reviewed at this meeting sug- stantially further in the second quarter, reflecting a gested that economic activity was expanding moder- broad-based surge in spending on producers' durable ately. Growth in consumer spending had picked up equipment. Real outlays for office and computing after having slowed sharply in early spring, business equipment continued to grow rapidly as prices of purchases of durable equipment were still on a strong personal computers and networking equipment upward trend, and housing demand seemed to have remained on a steep downtrend. Spending for combeen well maintained. The overall rise in production munications equipment grew at a slower pace in the had been held down recently by supply disruptions in second quarter, but recent orders for such equipment the motor vehicles industry, but employment had pointed to larger increases in the current quarter. continued to expand at a strong pace and the unem- Nonresidential construction activity was sluggish in ployment rate was at a low level. Increases in labor the second quarter. While available information on compensation had remained moderate even though construction contracts suggested little improvement labor markets were tight, and price inflation was still in building activity in coming months, prices for subdued. commercial real estate had risen slightly and vacancy Private nonfarm payroll employment rose sharply rates had declined. in July after a June increase that was below the Nonfarm business inventories increased rapidly in average for earlier months of the year. The step-up the second quarter, but there were few signs of invenin job growth in July reflected substantially larger tory imbalances. In June, the pace of inventory job gains in business services, retail trade, and the investment in manufacturing slowed from the rapid finance, insurance, and real estate industries. A small average rate for April and May, and the inventorydecline in manufacturing jobs roughly offset slightly shipments ratio for the sector was at a very low higher employment in construction. The civilian level. In wholesale trade, stocks rose sharply in June unemployment rate, at 4.8 percent in July, matched after little net change over the two previous months. its low for the current economic expansion. Despite the June increase, the stock-sales ratio was at Industrial production increased relatively slowly in the middle of its relatively narrow range of the past July after having advanced at a fairly brisk pace over year. At the retail level, the rise in inventories in June the first half of the year. The July slowdown reflected retraced only part of the May decline; the inventorya temporary drop in motor vehicle assemblies partly sales ratio for the sector also was near the middle of associated with work stoppages at a major automo- its range for the last year. tive manufacturer. Outside the motor vehicles sector, The nominal deficit on U.S. trade in goods and the output of business equipment and consumer dura- services was slightly smaller on balance over April ble goods rose strongly while the production of con- and May than the downward-revised average rate in sumer nondurables weakened further. Factory capac- the first quarter. Measured against their first-quarter ity increased a little more than production in July, and levels, the value of exported goods and services grew the utilization of total manufacturing capacity slipped more than the value of imports over the April-May to its lowest level since last autumn. period. The largest increases in exports were in Retail sales rose briskly in June and July after machinery and aircraft and parts, while the biggest having changed little over the preceding three gains in imports were in consumer goods, computers, months. Sales at automotive dealers rebounded in and capital goods other than computers. The avail- June and July following substantial weakness in ear- able information suggested that in recent months lier months, and expenditures at nondurable goods economic activity had expanded further in all the stores also strengthened. By contrast, sales at non- major foreign industrial countries except Japan. automotive durable goods outlets were unchanged Growth continued to be robust in Canada and the over June and July. The pickup in consumer spending United Kingdom and apparently remained moderate occurred against a backdrop of further strong gains in in France and Germany. Economic activity in Japan incomes and household net worth. In addition, credit had slowed after a rise in that country's consumption was readily available to most consumers, although tax in April. lenders continued to tighten terms for marginal bor- Consumer price inflation picked up slightly in July rowers. Total private housing starts were unchanged from the slow pace in each of the previous four in July after having rebounded in June from a May months; a small decline in energy prices offset a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 983 further increase in food prices. The index for items developments in the U.S. economy and persisting other than food and energy rose in July at the same market concerns that difficulties faced by the major low rate recorded for both the first six months of European countries would lead to policies that might 1997 and the twelve months ended in July. At the detract from strength in the euro. The dollar rose only producer level, prices of finished goods edged down slightly against the yen. That currency came under for a seventh consecutive month, reflecting a further downward pressure in reaction to incoming data sugdrop in food prices. Prices of finished goods other gesting a somewhat-greater-than-expected fallolf than food and energy were unchanged over the twelve in demand following the recent increase in the months ended in July. At earlier stages of production, consumption tax, but the release of the June current producer prices for core intermediate materials rose account surplus late in the intermeeting period slightly over the year ended in July and prices of core rekindled market concerns about Japanese external crude materials increased by a larger amount over the balances and led to some appreciation of the yen. same period. Growth in hourly compensation of pri- M2 expanded at a moderate pace over June and vate industry workers picked up somewhat in the July after having fluctuated sharply in April and May second quarter, but the rise in compensation over the as a result of tax-related flows. Data for early August year ended in June matched the advance over the suggested a somewhat faster rate of M2 growth in comparable year-earlier period. Average hourly earn- association with heavier inflows to retail money ings of production and nonsupervisory workers were funds; the latter might have been related to heightunchanged in July, and the rise in such earnings over ened demand for liquidity as a result of recently the twelve months ended in July also was the same as higher volatility in bond and equity markets. For the in the year-earlier period. year through July, M2 expanded at a rate near the At its meeting on July 1-2, 1997, the Committee upper bound of its range. M3 also fluctuated sharply adopted a directive that called for maintaining the over April and May and grew at a relatively moderate existing degree of pressure on reserve positions. rate in June. M3 surged in July, however, as heavy Because the Committee continued to see a potential volumes of large time deposits were issued by U.S. need for some tightening of monetary policy to branches of foreign banks to pay down borrowings counter rising inflationary pressures, the directive from their overseas offices and by domestic banks to included a bias toward a possible firming of reserve counter the runoff of government deposit accounts; conditions during the intermeeting period. The the latter two sources of funds are not included in reserve market conditions associated with this direc- M3. For the year through July, M3 expanded at a rate tive were expected to be consistent with moderate appreciably above the upper bound of its range. Total growth of M2 and M3 over coming months. domestic nonfinancial debt had continued to expand Open market operations were directed throughout in recent months at a rate near the middle of its range. the intermeeting period toward maintaining the exist- The staff forecast prepared for this meeting suging degree of pressure on reserve positions, and gested that the expansion of the economy would be the average federal funds rate for the period was damped in the second half of the year by a slowing of at the Committee's intended level of 5Vi percent. inventory accumulation from the unsustainably brisk Most other market interest rates declined further on pace in the first half of the year. In 1998, the econbalance over the period in an atmosphere of greater omy would expand at a pace in line with the growth volatility in financial markets. The net decline in of its estimated potential. Growth of consumer spendmarket rates seemed to have reflected a judgment by ing, supported by high levels of household wealth market participants that the outlook for inflation had and projected further gains in employment and improved slightly on balance and that the likelihood income, was expected to be relatively brisk over the of any tightening of monetary policy in coming forecast horizon. Business spending on equipment months had receded a little further. Share prices in and structures was anticipated to continue to outpace equity markets increased on balance over the period. the overall expansion of the economy, though the In foreign exchange markets, the trade-weighted differential would tend to narrow over time in assovalue of the dollar in terms of the other G-10 curren- ciation with the gradual diminution of increases in cies rose significantly on balance over the intermeet- sales and profits that was expected in conjunction ing period. The appreciation of the dollar was uneven with moderating economic growth. Housing conagainst the currencies of the major foreign industrial struction was projected to drift lower over the forecountries. The dollar's substantial increase against cast horizon. The staff anticipated that the external the German mark and other continental European sector would exert some mild restraint on the expancountries reflected both the continuing favorable sion of economic activity. With labor compensation Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

984 Federal Reserve Bulletin • December 1997 gradually accelerating in the context of higher resources and heighten the risks of accelerating resource utilization, core consumer price inflation inflation. was forecast to drift slightly higher. With regard to the prospects for final demand in The Committee's discussion of current and pro- key sectors of the economy, members noted that the spective economic developments highlighted statisti- appreciable rebound in consumer spending followed cal and anecdotal evidence of a solid economic per- a weak second quarter, and some moderation in the formance, including indications of a rebound in final growth of such spending was likely later this year and demand after a lull during the spring and the persis- in 1998. Even so, favorable prospects for employtence of relatively subdued, and by some measures ment and incomes and the large gains that had declining, inflation. Growth in consumer spending occurred in financial wealth suggested that consumer had slowed sharply, and a surge in inventory accumu- expenditures were likely to be well maintained over lation had accounted for much of the expansion of the projection horizon. The high level of consumer economic activity in the second quarter. Looking confidence reported by consumer surveys was ahead, the members did not believe that recent devel- another supporting factor in this favorable outlook, opments had altered the prospect that the economy In the area of business fixed investment, a strong would settle into a pattern of moderate growth upward trend in outlays for new equipment was approximating its potential. Such a forecast was thought likely to persist, notably in the computersubject to considerable uncertainty, and several related and the telecommunications industries. Anecmembers observed that the risks appeared to be dotal reports also pointed to appreciable strength in mostly in the direction of stronger growth in demand. commercial construction activity, including office With regard to the outlook for inflation, widespread structures, hotels, and warehouses in various parts of evidence of very tight labor markets was associated the country. Indeed, in some areas construction activwith scattered indications that the rise in labor com- ity was said to be limited only by shortages of qualipensation might be accelerating, but overall labor fied labor. Positive factors in the outlook for business costs had remained relatively damped and price infla- investment included the persistence of a high level of tion restrained. Gains in productivity and muted profits, an accommodative financial climate, and the increases in nonlabor costs probably also were con- rapid obsolescence of high-tech equipment. There tributing to holding producer costs under good con- were, nonetheless, indications of some moderation trol. Nonetheless, the members remained concerned in commercial construction activity in a number of about the risks of rising inflation, especially if areas, including reports of developing overcapacity somewhat-faster-than-projected growth in economic of retail space in shopping centers. Spending for activity were to occur and add to pressures on basic industrial equipment also was likely to soften, resources in an economy that already seemed to be given moderating growth in overall final demand in operating close to, or perhaps even above, its sustain- line with current forecasts. able potential. Housing activity continued to display considerable The uncertain prospects for inventory investment vigor in many parts of the nation as evidenced by were a dominant factor in the outlook for economic available statistics and anecdotal reports. The affordactivity over the nearer term. The accumulation of ability of housing and the very large increases that inventories had been unusually high in the second had occurred in stock market wealth clearly were quarter according to the available evidence. There supportive factors. Concurrently, however, there were was no broad sense of an undesired buildup, but the indications of slowing in residential building activity rate of inventory investment would have to be reined in several areas. On balance, some moderation in in if an overhang were to be averted. A concern in housing construction appeared likely over the projecthis regard was that the apparent upturn in final tion horizon in keeping with longer-term population demand, particularly if it proved to be somewhat and other trends affecting such construction. stronger than currently expected, and related business In the Committee's discussion of the prospects for optimism about sales prospects might well result in a inflation, members commented that a number of further buildup of inventories at a relatively rapid factors could be cited to explain the persistence of rate. While such a development was not viewed as relatively subdued inflation this year despite high the most likely outcome and, indeed, less-than- levels of resource use. Among those factors were the projected strength in the inventory sector could not appreciation of the dollar and its effects on prices of be ruled out, relatively rapid inventory accumulation imports and competing domestic products, a signifiin the context of persisting above-trend growth in cant decline in world oil prices, the relatively slugfinal demand would generate additional pressure on gish performance of many foreign economies that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 985 had tended to moderate prices of products traded in sures. Nonetheless, the members remained concerned world markets, and relatively large grain harvests in about the outlook for inflation. Although some the United States that had curbed pressures on food decline in inflation could not be ruled out, persistence prices. However, the underlying reasons for the favor- of the current degree of tightness in labor markets, able price trends were not entirely clear. Labor costs consistent with the economy growing at a pace near were still rising appreciably less than would have its potential, could at some point begin to put more been expected on the basis of past experience under pressure on costs and prices, and growth somewhat similarly tight labor market conditions. Explana- above potential, which some members saw as a distions tended to focus on the concerns about job tinct possibility, would be even more likely to prosecurity felt by many workers, the muted rise in the duce that result. While there were no current indicacosts of worker benefits, notably for health care, and tions that inflation might be accelerating and no the increased use of innovative and highly targeted policy move was called for at this time, the members methods of compensation. With regard to the market saw a need for continuing vigilance. As at earlier pricing of goods, businesses tended to cite highly meetings, a number of them expressed the view that competitive conditions across the nation that made an anticipatory policy move to counter intensifying it very difficult to raise prices and gave impetus to inflationary pressures likely would be needed at some efforts to improve productivity. Indeed, the available point. evidence suggested that the profits of business con- In the Committee's discussion of possible adjustcerns generally had continued to increase in the sec- ments to policy during the intermeeting period, memond quarter, implying that productivity had been ris- bers agreed that the retention of an asymmetric direcing at a pace that exceeded published estimates by a tive toward tightening was consistent with their view significant margin. that the risks remained biased toward a rise in infla- Even though inflation had not accelerated, some tion. Accordingly, while they did not attach a high signs were beginning to emerge that wages and other probability to the prospect that the incoming informalabor costs might be experiencing increasing pres- tion would warrant a tightening move during the sure. These included some limited evidence that job intermeeting period, they continued to view the next security concerns might be diminishing and multiply- policy move as more likely to be in the direction of ing anecdotal reports of a less benign outlook for some firming than toward easing. health care costs. Some members commented that The members reviewed proposals for rewording the outcome of the recent labor negotiations involv- the operational paragraph of the directive for the ing a very large package delivery firm might well be purpose of updating and clarifying the description of a harbinger of more militant labor negotiating atti- the Committee's instructions to the Manager of the tudes. Against this background, members expressed System Open Market Account and to conform the concern that a further increase in labor utilization directive wording with current public announcement rates could put substantial upward pressures on wages practices regarding the Committee's policy decisions. that eventually would work their way through to In particular, the directive would in the future include prices. specific reference to the federal funds rate that the In the Committee's discussion of policy for the Committee judged to be consistent with the stance of intermeeting period ahead, all the members endorsed monetary policy. The Committee also modified the a proposal to maintain an unchanged policy stance. present sentence relating to the intermeeting bias in Underlying economic conditions and the outlook for the directive to recognize that changes in the stance economic activity and inflation had changed little in of policy are now expressed in terms of the federal recent months. The most likely outcome of the cur- funds rate. These changes were not intended to alter rent policy stance was growth near potential and the substance of the directive or the Committee's some pickup in inflation as the effects of special operating procedures. factors holding it down abated. For the present, At the conclusion of the Committee's discussion, monetary policy appeared to be appropriately posi- all the members expressed their support of a directive tioned to foster the Committee's objectives of resist- that called for maintaining conditions in reserve maring an intensification of inflationary pressures while kets that were consistent with an unchanged federal supporting a fully employed economy. The level of funds rate of about 5V2 percent. All the members also real short-term interest rates was relatively high by agreed on the desirability of retaining a bias in the historical standards and provided some assurance that directive toward the possible firming of reserve conthe current stance of policy would not accommodate ditions and a higher federal funds rate during the a significant increase in underlying inflationary pres- intermeeting period. Accordingly, in the context of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

986 Federal Reserve Bulletin • December 1997 the Committee's long-run objectives for price sta- respectively, measured from the fourth quarter of 1996 to bility and sustainable economic growth, and giving the fourth quarter of 1997. The range for growth of total domestic nonfinancial debt was maintained at 3 to 7 percareful consideration to economic, financial, and cent for the year. For 1998, the Committee agreed on a monetary developments, the Committee decided that tentative basis to set the same ranges as in 1997 for growth a somewhat higher federal funds rate would be of the monetary aggregates and debt, measured from the acceptable or a slightly lower federal funds rate might fourth quarter of 1997 to the fourth quarter of 1998. The be acceptable during the intermeeting period. The behavior of the monetary aggregates will continue to be evaluated in the light of progress toward price level stabilreserve conditions contemplated at this meeting were ity, movements in their velocities, and developments in the expected to be consistent with moderate expansion in economy and financial markets. M2 and M3 over coming months. In the implementation of policy for the immediate future, The Federal Reserve Bank of New York was autho- the Committee seeks conditions in reserve markets consisrized and directed, until instructed otherwise by the tent with maintaining the federal funds rate at an average of around 5V2 percent. In the context of the Committee's Committee, to execute transactions in the System long-run objectives for price stability and sustainable eco- Account in accordance with the following domestic nomic growth, and giving careful consideration to ecopolicy directive: nomic, financial, and monetary developments, a somewhat higher federal funds rate would or a slightly lower federal The information reviewed at this meeting suggests that funds rate might be acceptable in the intermeeting period. economic activity is expanding at a moderate pace. In labor The contemplated reserve conditions are expected to be markets, hiring remained robust at midyear, and the civil- consistent with moderate growth in M2 and M3 over ian unemployment rate, at 4.8 percent in July, matched its coming months. low for the current economic expansion. Industrial production increased relatively slowly in July, owing in part to a Votes for this action: Messrs. Greenspan, McDonough, temporary drop in motor vehicle assemblies. Retail sales Broaddus, Guynn, Kelley, Meyer, Moskow, Parry, Mses. rose briskly in June and July after having changed little Phillips and Rivlin. Votes against this action: None. over the preceding three months. Housing starts rebounded in June and July after having weakened in May. Business fixed investment increased substantially further in the second quarter and available indicators point to further sizable RULES REGARDING AVAILABILITY OF gains in the current quarter. The nominal deficit on U.S. trade in goods and services narrowed slightly on balance INFORMATION over April and May from its downward-revised average rate in the first quarter. Price inflation has remained By notation vote completed on August 20, 1997, the subdued and increases in labor compensation have been Committee approved for public comment a revision moderate. of its Rules Regarding the Availability of Informa- Market interest rates generally have declined somewhat tion. The purpose of the revision is to bring the rules further since the start of the Committee meeting on into conformance with the Electronic Freedom of July 1-2, 1997. Share prices in equity markets have increased on balance. In foreign exchange markets, the Information Act of 1996 (EFOIA), which amends the trade-weighted value of the dollar in terms of the other Freedom of Information Act (FOIA). The revision G-10 currencies rose significantly on balance over the does not incorporate any substantive changes in the intermeeting period. rules other than to conform them to the requirements After fluctuating sharply from April to May, growth of of EFOIA and to update and clarify the Committee's M2 was at a moderate pace over June and July and that of M3 picked up to a relatively rapid rate. For the year procedures for processing FOIA requests. After through July, M2 expanded at a rate near the upper bound review of the comments that are received from the of its range for the year and M3 at a rate appreciably above public, the Committee will issue the rules in final the upper bound of its range. Total domestic nonfinancial form on or before October 2, 1997. debt has continued to expand in recent months at a rate near the middle of its range. It was agreed that the next meeting of the Commit- The Federal Open Market Committee seeks monetary tee would be held on Tuesday, September 30, 1997. and financial conditions that will foster price stability and The meeting adjourned at 12:40 p.m. promote sustainable growth in output. In furtherance of these objectives, the Committee at its meeting in July reaffirmed the ranges it had established in February for Donald L. Kohn growth of M2 and M3 of 1 to 5 percent and 2 to 6 percent Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

987 Legal Developments FINAL RULE—AMENDMENT TO REGULATION D the manner in which it chooses to maintain required reserve balances. A foreign bank's U.S. branches and The Board of Governors is amending 12 C.F.R. Part 204, agencies and an Edge or Agreement corporation's its Regulation D (Reserve Requirements of Depository offices operating within the same state and the same Institutions), to allow U.S. branches and agencies of for- Federal Reserve District shall prepare and file a report eign banks and Edge and Agreement corporations to of deposits on an aggregated basis. choose whether to aggregate reserve balances on a nation- (ii) A Federal Reserve Bank shall notify the reporting wide basis with a single pass-through correspondent or to institution of its reserve requirements. Where a passcontinue to maintain reserve balances on a same-state/ through arrangement exists, the Reserve Bank will same-District basis as they do today. The amendments will also notify the pass-through correspondent of its realso update and clarify the pass-through rules in Regula- spondent's required reserve balances. tion D for all institutions. These amendments will facilitate (iii) The Board and the Federal Reserve Banks will interstate banking and branching and eliminate certain not hold a pass-through correspondent responsible for restrictions applicable to pass-through arrangements. guaranteeing the accuracy of the reports of deposits Effective January 1, 1998, 12 C.F.R. Part 204 is amended submitted by its respondents. as follows: (3) Allocation of low reserve tranche and exemption from reserve requirements. A depository institution, a Part 204—Reserve Requirements of Depository foreign bank, or an Edge or Agreement corporation Institutions (Regulation D) shall, if possible, assign the low reserve tranche and reserve requirement exemption prescribed in section 204.9(a) to only one office or to a group of offices 1. The authority citation for Part 204 continues to read as filing a single aggregated report of deposits. The follows: amount of the reserve requirement exemption allocated to an office or group of offices may not exceed Authority. 12U.S.C. 248(a), 248(c), 371a, 461, 601, 611, the amount of the low reserve tranche allocated to and 3105. such office or offices. If the low reserve tranche or reserve requirement exemption cannot be fully uti- 2. In section 204.3, paragraphs (a), (b)(1), (b)(2)(i), and (i) lized by a single office or by a group of offices filing a are revised to read as follows: single report of deposits, the unused portion of the tranche or exemption may be assigned to other offices Section 204.3—Computation and maintenance. or groups of offices of the same institution until the amount of the tranche (or net transaction acounts) or (a) Maintenance and reporting of required reserves. exemption (or reservable liabilities) is exhausted. The (1) Maintenance. A depository institution, a U.S. branch tranche or exemption may be reallocated each year or agency of a foreign bank, and an Edge or Agreement concurrent with implementation of the indexed corporation shall maintain reserves against its deposits tranche and exemption, or, if necessary during the and Eurocurrency liabilities in accordance with the pro- course of the year to avoid underutilization of the cedures prescribed in this section and section 204.4 and tranche or exemption, at the beginning of a reserve the ratios prescribed in section 204.9. Reserve- computation period, deficiency charges shall be assessed for deficiencies in (b) Form and location of reserves. (1) A depository institurequired reserves in accordance with the provisions of tion, a U.S. branch or agency of a foreign bank, and an section 204.7. For purposes of this part, the obligations Edge or Agreement corporation shall hold reserves in of a majority-owned (50 percent or more) U.S. subsid- the form of vault cash, a balance maintained directly iary (except an Edge or Agreement corporation) of a with the Federal Reserve Bank in the Federal Reserve depository institution shall be regarded as obligations of District in which it is located, or, in the case of nonmemthe parent depository institution. ber institutions, with a pass-through correspondent in (2) Reporting, (i) Every depository institution, U.S. accordance with section 204.3(i). branch or agency of a foreign bank, and Edge or (2) (i) For purposes of this section, a depository institu- Agreement corporation shall file a report of deposits tion, a U.S. branch or agency of a foreign bank, or an (or any other required form or statement) directly with Edge or Agreement corporation is located in the Fedthe Federal Reserve Bank of its District, regardless of eral Reserve District that contains the location speci- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

988 Federal Reserve Bulletin • December 1997 fied in the institution's charter, organizing certificate, for assuring the maintenance of the appropriate aggreor license or, if no such location is specified, the gate level of its respondents' required reserve ballocation of its head office, unless otherwise deter- ances. A Federal Reserve Bank will compare the total mined by the Board under paragraph (b)(2)(ii) of this reserve balance required to be maintained in each section. account with the total actual reserve balance held in such account for purposes of determining required reserve deficiencies, imposing or waiving charges for (i) Pass-through rules. (1) Procedure, (i) A nonmember deficiencies in required reserves, and for other reserve depository institution, a U.S. branch or agency of a maintenance purposes. A charge for a deficiency in foreign bank, or an Edge or Agreement corporation the aggregate level of the required reserve balance required to maintain reserve balances (respondent) will be imposed by the Reserve Bank on the corremay select only one institution to pass through its spondent maintaining the account. required reserve balances, unless otherwise permitted (iii) Each correspondent is required to maintain deby Federal Reserve Bank in whose District the respon- tailed records for each of its respondents in a manner dent is located. Eligible institutions through which that permits Federal Reserve Banks to determine respondent required reserve balances may be passed whether the respondent has provided a sufficient re- (correspondents) are Federal Home Loan Banks, the quired reserve balance to the correspondent. A corre- National Credit Union Administration Central Liquid- spondent passing through a respondent's reserve bality Facility, and depository institutions, U.S. branches ance shall maintain records and make such reports as or agencies of foreign banks, and Edge and Agree- the Board or Reserve Bank requires in order to insure ment corporations that maintain required reserve bal- the correspondent's compliance with its responsibiliances at a Federal Reserve office. In addition, the ties for the maintenance of a respondent's reserve Board reserves the right to permit other institutions, balance. Such records shall be available to the Reon a case-by-case basis, to serve as pass-through serve Banks as required. correspondents. The correspondent chosen must sub- (iv) The Federal Reserve Bank may terminate any sequently pass through the required reserve balances pass-through relationship in which the correspondent of its respondents directly to a Federal Reserve Bank. is deficient in its recordkeeping or other responsibili- The correspondent placing funds with a Federal Re- ties. serve Bank on behalf of respondents will be responsi- (v) Interest paid on supplemental reserves (if such ble for account maintenance as described in para- reserves are required under section 204.6) held by a graphs (i)(2) and (i)(3) of this section, respondent will be credited to the account maintained (ii) Respondents or correspondents may institute, ter- by the correspondent. minate, or change pass-through arrangements for the maintenance of required reserve balances by providing all documentation required for the establishment FINAL RULE—AMENDMENTS TO REGULATIONS G,T,U of the new arrangement or termination of the existing AND X arrangement to the Federal Reserve Banks involved within the time period provided for such a change by The Board of Governors is amending 12 C.F.R. Parts 207, those Reserve Banks. 220, 221, and 224, its Regulations G, T, U and X (Securi- (2) Account maintenance. A correspondent that passes ties Credit Transactions; List of Marginable OTC Stocks; through required reserve balances of respondents shall List of Foreign Margin Stocks). The List of Marginable maintain such balances, along with the correspondent's OTC Stocks (OTC List) is composed of stocks traded own required reserve balances (if any), in a single com- over-the-counter (OTC) in the United States that have been mingled account at the Federal Reserve Bank in whose determined by the Board of Governors of the Federal District the correspondent is located, unless otherwise Reserve System to be subject to the margin requirements permitted by the Reserve Bank. The balances held by the under certain Federal Reserve regulations. The List of correspondent in an account at a Reserve Bank are the Foreign Margin Stocks (Foreign List) is composed of forproperty of the correspondent and represent a liability of eign equity securities that have met the Board's eligibility the Reserve Bank solely to the correspondent, regardless criteria under Regulation T. The OTC List and the Foreign of whether the funds represent the reserve balances of List are published four times a year by the Board. This another institution that have been passed through the document sets forth additions to and deletions from the correspondent. previous OTC List and the previous Foreign List. (3) Responsibilities of parties, (i) Each individual depos- Effective November 10, 1997, 12 C.F.R. Parts 207, 220, itory institution, U.S. branch or agency of a foreign 221, and 224 are amended as follows. Accordingly, pursubank, or Edge or Agreement corporation is responsi- ant to the authority of sections 7 and 23 of the Securities ble for maintaining its required reserve balance either Exchange Act of 1934, as amended (15 U.S.C. 78g and directly with a Federal Reserve Bank or through a 78w), and in accordance with 12 C.F.R. 207.2(k) and 207.6 pass-through correspondent. (Regulation G), 12 C.F.R. 220.2 and 220.17 (Regula- (ii) A pass-through correspondent shall be responsible tion T), and 12 C.F.R. 221.2(j) and 221.7 (Regulation U), Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 989 there is set forth below a listing of deletions from and Rattlesnake Holding Company, Inc.: $.001 par common additions to the OTC List and the Foreign List. Renaissance Entertainment Corp.: Class A, Warrants (expire 01-27-2000) Class B, Warrants expire 01-27-2000) Deletions From The List Of Marginable OTC River Oaks Furniture, Inc.: $.01 par common Stocks Score Board, Inc., The: $.01 par common Stocks Removed For Failing Continued Listing Seragen, Inc.: $.01 par common Requirements Solv-Ex Corporation: No par common Spec's Music, Inc.: $.01 par common Accumed International, Inc.: Warrants (expire 10-14-97) Standard Financial, Inc.: $.01 par common Alliance Gaming Corporation: Series B, 15% non-voting Sterling Financial Corporation: Series A, $1.00 par cumulasenior specialty shares American Sensors, Inc.: No par common tive convertible preferred Applied Science & Technology, Inc.: Warrants (expire Strawbridge & Clothier: Class A, $1.00 par common 11-10-98) Superior Energy Services, Inc.: Class B, Warrants (expire 12-08-2000) Barry's Jewelers, Inc.: No par common; Warrants (expire 07-01-2002) Total World Telecommunications, Inc.: $.00001 par common Track Data Corporation: Warrants (expire 08-10-97) Cambex Corporation: $.10 par common Carnegie Bancorp (New Jersey): Warrants (expire 08-18-97) UnionBancal Corporation: Depository Shares Chromavision Medical Systems, Inc.: Rights (expire 08-05-97) Vectra Technologies, Inc.: $.01 par common Com/Tech Communications Technologies: $.0001 par common Wave Systems Corporation: Class A, $.01 par common Community Medical Transport, Inc.: Warrants (expire 10-03-99) Stocks Removed For Listing On A National Consolidated Eco-Systems, Inc.: $.001 par common Securities Exchange Or Being Involved In An Control Data Systems, Inc.: $.01 par common Acquisition Craig Consumer Electronics, Inc.: $.01 par common Advanced Logic Research, Inc.: $.01 par common Diversinet Corporation: No par common American Federal Bank, FSB (South Carolina): $1.00 par Dorsey Trailers, Inc.: $.01 par common common American Filtrona Corporation: $1.00 par common First Merchants Acceptance Corp.: $.01 par common American Medserve Corporation: $.01 par common Amrion Inc.: $.0011 par common Gandalf Technologies, Inc.: No par common Apogee, Inc.: $.01 par common Gardner Denver Machinery, Inc.: $.01 par common Arden Industrial Products, Inc.: $.01 par common Grossman's Inc.: $.01 par common Argyle Television, Inc.: Class A, $.01 par common Health Management, Inc.: $.03 par common AST Research, Inc.: $.01 par common Hollywood Park, Inc.: Depositary shares Atwood Oceanics, Inc.: $1.00 par common Home State Holdings, Inc.: $.01 par common Aurum Software, Inc.: $.001 par common Homeowners Group, Inc.: $.01 par common Bankatlantic Bancorp, Inc. (Florida): Class A, $.01 par com- Ibis Technology Corporation: Warrants (expire 05-20-99) mon Innodata Corporation: Warrants (expire 08-09-97) Bankers Corporation (New Jersey): $.01 par common Basic Petroleum International Limit: Ordinary Shares (BAH Koll Real Estate Group, Inc.: Series A, $.01 par convertible $3.00) preferred Biopsys Medical, Inc.: $.001 par common Blyvooruitzicht Gold Mining Company: American Depositary Macheezmo Mouse Restaurants, Inc.: No par common Receipts Mid-States PLC: American Depositary Receipts BNH Bancshares, Inc. (Connecticut): $1.00 par common Midisoft Corporation: No par common Bucyrus International, Inc.: $.01 par common Buifelsfontein Gold Mines, Ltd.: American Depositary Old America Stores, Inc.: $.01 par common Receipts Omega Environmental, Inc.: $.0025 par common Paradign Technology, Inc.: $.01 par common Cardinal Bancshares, Inc.: No par common People's Choice TV Corp.: $.01 par common Cardiometrics, Inc.: $.01 par common Playnet Technologies, Inc.: $.001 par common CB Bancorp, Inc. (Indiana): $.01 par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

990 Federal Reserve Bulletin • December 1997 Chancellor Broadcasting Company: Class A, $.01 par com- Nellcor Puritan Bennett, Inc.: $.001 par common mon Netframe Systems Incorporated: $.001 par common Collective Bancorp, Inc.: $.01 par common Numar Corporation: $.01 par common Colonial Gas Company: $5.00 par common Community Bankshares, Inc.: $1.00 par common Octel Communications Corporation: $.01 par common CRA Managed Care, Inc.: $.01 par common Ocwen Financial Coproration: $.01 par common Crop Growers Corporation: $.01 par common Ontrak Systems, Inc.: No par common Cryenco Sciences, Inc.: Class A, $1.00 par common Outdoor Systems, Inc.: $.01 par common Cryolife, Inc.: $.01 par common Cullen/Frost Bankers, Inc.: $5.00 par common Palmer Wireless, Inc.: Class A, $.01 par common Penn Virginia Corporation: $6.25 par common Daka International, Inc.: $.01 par common People's Savings Financial Corp.: $1.00 par common Darling International Inc.: $.01 par common Peoples Holding Company, The: $5.00 par common DBT Online, Inc.: $.10 par common Physician Corporation of America: $.01 par common Delaware Otsego Corporation: $.125 par common Planet Hollywood International, Inc.: Class A, $.01 par com- Digex, Incorporated: $.01 par common mon Dreco Energy Services, Ltd.: Class A, No par common Drilex Corporation: $.01 par common Portsmouth Bankshares, Inc.: $.10 par common Durco International, Inc.: $1.25 par common Pride International, Inc.: No par common Prime Retail, Inc.: $.01 par common; Series B, Cumulative Emcare Holdings, Inc.: $.01 par common convertible preferred Envirotest Systems, Inc.: Class A, $.01 par common Pure Atria Corporation: $.0001 par common First Citizens Financial Corp.: $.01 par common Raymond Corporation, The: $1.50 par common First Michigan Bank Corporation: $1.00 par common RCSB Financial, Inc.: $1.00 par common First Ptrioit Bankshares Corp.: $2.50 par common Renaissance Solutions, Inc.: $.001 par common Fort Howard Corporation: $.01 par common Riverview Savings Bank, F.S.B.: $1.00 par common Royal Grip, Inc.: $.001 par common Giddings & Lewis, Inc.: $.10 par common Golden Poultry Company, Inc.: $1.00 par common Security Capital Coproration: $1.00 par common Greater New York Savings Bank: $1.00 par common Seda Specialty Packaging Corp.: No par common Greenwich Air Services, Inc.: Class A, $.01 par common; Serv-Tech, Inc.: $.50 par common Class B, $.01 par common Shared Medical Systems Corp.: $.01 par common Simpson Manufacturing Co., Inc.: No par common Haverfield Corporation: $.01 par common Hechinger Company: Class A, $.10 par common; Class B, SMT Health Services, Inc.: $.01 par common $.10 par common; 5!/2% convertible subordinated deben- Southwest Securities Group, Inc.: $.10 par common tures Stryker Corporation: $.10 par common Hospitality Worldwide Services, Inc: $.01 par common Suburban Bancorporation, Inc.: $.01 par common Hudson Chartered Bancorp, Inc.: $.80 par common Talbert Medical Management Holdings: $.01 par common Imagyn Medical, Inc.: $.01 par common Telco Communications Group, Inc.: No par common Inbrand Corporation: $.10 par common Tetra Technologies, Inc.: $.01 par common Indiana Federal Corporation: $.01 par common Therapeutic Discovery Corporation: Class A, $.01 par com- Indus Group, Inc., The: $.001 par common mon Interactive Group, Inc.: $.001 par common Tuboscope Inc.: $.01 par common JSB Financial, Inc.: $.01 par common U.S. Bancorp (Oregon): $5.00 par common; Series A, 8c par cumulative preferred Krystal Company, The: No par common United Cities Gas Company: No par common United Waste Systems, Inc.: $.001 par common Maxis, Inc.: $.0001 par common McFarland Energy, Inc.: $1.00 par common Varsity Spirit Corporation: $.01 par common Memtec Limited: American Depositary Shares Micro Bio-Medics, Inc.: $.03 par common Versa Technologies, Inc.: $.01 par common Motivepower Industries, Inc.: $.01 par common MS Financial, Inc.: $.001 par common Watson Pharmaceuticals, Inc.: $.0033 par common Winston Hotels, Inc.: $.01 par common National Sanitary Supply Company: $1.00 par common Winton Financial Corporation: No par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 991 Additions to The List of Marginable OTC Stocks Execustay Corporation: $.01 par common @Entertainment, Inc.: $.01 par common Faro Technologies, Inc.: $.001 par common Fine Air Services, Inc.: $.01 par common A.C. Moore Arts & Crafts, Inc.: No par common First Carnegie Deposit: $.10 par common Advanced Electronic Support Products, Inc.: $.001 par com- First International Bancorp, Inc. (Connecticut): $.01 par common mon Advantage Learning Systems, Inc.: $.01 par common Firstcity Financial Corporation: Special preferred stock AEHR Test Systems: $.01 par common Freshstart Venture Capital: $.01 par common American Business Information, Inc.: Class A, $.0025 par Friede Goldman International, Inc.: $.01 par common common American Capital Strategies, Ltd.: $.01 par common Galileo Technology, Ltd.: Ordinary shares (NIS .01) American Dental Technologies, Inc.: $.001 par common General Bearing Corporation: $.01 par common Apple South, Inc.: Apple South Financing I Globecomm Systems, Inc.: $.001 par common Asia Electronics Holding Co., Inc.: $.01 par common Authentic Specialty Foods, Inc.: $1.00 par common Hach Company: Class A, $1.00 par common Autocyte, Inc.: $.01 par common Hall, Kinion & Associates, Inc.: $.001 par common Harvest Restaurant Group, Inc.: $.01 par common BEI Technologies, Inc.: $.001 par common Hearst-Argyle Television, Inc.: Class A, $.01 par common Bell Canada International, Inc.: No par common Hysec, Inc.: $.001 par common Best Software, Inc.: No par common Big Dog Holding, Inc.: $.01 par common IFS International, Inc.: $.001 par common; Series A, preferred Bioreliance Corporation: $.01 par common Series A, Warrants (expire 01-31-2002) Boron, LePore & Associates, Inc.: $.01 par common II Fornaio (America) Corporation: $.001 par common Indus International, Inc.: $.001 par common Cable Michigan, Inc.: $1.00 par common Information Management Associates, Inc.: No par common Carrizo Oil & Gas, Inc.: $.01 par common Innova Corporation: No par common Casmyn Corporation: $.04 par common Inspire Insurance Solutions, Inc.: $.01 par common Castle Dental Centers, Inc.: $.001 par common Integral Systems, Inc.: $.01 par common Catalytica, Inc.: Warrants International Total Services, Inc.: No par common Children's Place Retail Stores, Inc., The: $.10 par common Ionica Group PLC: American Depositary Receipts Citizens National Bank of Texas: $2.03 par common CMP Media, Inc.: $.01 par common J.D. Edwards & Company: $.001 par common Cognicase, Inc.: No par common Jevic Transportation, Inc.: No par common Compass Plastics & Technologies, Inc.: $.0001 par common JLM Industries, Inc.: $.01 par common Computer Motion, Inc.: $.001 par common Concentric Network Corporation: $.001 par common Kendle International, Inc.: No par common Continental Natural Gas, Inc.: $.01 par common Kofax Image Products, Inc.: $.001 par common Corixa Corporation: $.001 par common CorporateFamily Solutions, Inc.: No par common Lakeland Financial Coproration: $.50 par common; No par Corsair Communication, Inc.: $.001 par common cumulative trust preferred Crescendo Pharmaceuticals Corporation: Class A, $.01 par Logility, Inc.: No par common common Crescent Operating, Inc.: $.01 par common Macheezmo Mouse Restaurants, Inc.: No par common CTB International Corporation: $.01 par common Marcam Solutions, Inc.: $.01 par common Mason-Dixon Bancshares, Inc.: Preferred securities liquida- D&N Financial Corporation: Series A, non-cumulative ex- tion amount $25 changeable preferred McMoran Oil & Gas Company: Rights (expire 11-13-97) Denison International PLC: American Depositary Shares Megabios Corporation: $.001 par common Digital Transmission Systems, Inc.: $.01 par common Microcell Telecommunications, Inc.: Class B, No par common Misonix, Inc.: $.01 par common Eagle Geophysical, Inc.: $.01 par common Modern Times Group MTG AB: American Depositary Shares Eastbrokers International Incorporated: $.05 par common Monarch Dental Corporation: $.01 par common EDAP TMS S.A.: American Depositary Receipts Eeutrek International, Inc.: Class A, No par common National Research Corporation: $.001 par common Engel General Developers Ltd.: Class A, ordinary shares Network Solutions, Inc.: Class A, $.001 par common (.1 LIS) Newcom, Inc.: $.001 par common; Warrants (expire Excelsior-Henderson Motorcycle Manufacturing: $.01 par 09-16-2002) common Newstar Resources, Inc.: $.01 par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

992 Federal Reserve Bulletin • December 1997 Nextlink Communications, Inc.: Class A, $.02 par common Take-Two Interactive Soft, Inc.: $.01 par common Northway Financial, Inc.: $1.00 par common Tele-Communications, Inc.: TCI Ventures Group, Class A, Novel Denim Holdings, Ltd.: Ordinary shares ($1.00 par $1.00 par common value) TCI Ventures Group, Class B, $1.00 par common The A Consulting Team, Inc.: $.01 par common Objective Communications, Inc.: $.01 par common Thinking Tools, Inc.: $.001 par common Ocular Sciences, Inc.: $.001 par common Total Entertainment Restaurant Corporation: $.01 par com- Omega Research, Inc.: $.01 par common mon Omtool, Ltd.: $.01 par common Track 'N Trail: $.01 par common Oregon Trail Financial Corporation: $.01 par common Trailer Bridge, Inc.: $.01 par common Orthalliance, Inc.: Class A, $.001 par common Travel Services International, Inc.: $.01 par common OSI Systems, Inc.: No par common Trendwest Resorts, Inc.: No par common Trimeris, Inc.: $.001 par common Pacific Crest Capital, Inc.: Trust preferred security Turbodyne Technologies, Inc.: No par common Pegasus Systems, Inc.: $.01 par common U.S. Bancorp (Minnesota): Series A, preferred stock People's Preferred Capital Corporation: Series A, noncumula- U.S.A. Floral Products, Inc.: $.001 par common tive exchangeable preferred Unifab International, Inc.: $.01 par common Pervasive Software, Inc.: $.001 par common Unique Casual Restaurants, Inc.: $.01 par common Positron Fiber Systems Corporation: No par common Power-One, Inc.: $.001 par common Valley Independent Bank: No par common Pricesmart, Inc.: $.0001 par common Vestcom International, Inc.: No par common Prime Bancshares, Inc.: $.25 par common Vimrx Pharmaceuticals, Inc.: Warrants (expire 06-20-2006) Primeenergy Corporation: $.10 par common Virginia Commerce Bank: $5.00 par common Probusiness Services, Inc.: $.001 par common Profile Technologies, Inc.: $.001 par common Vision Twenty-One, Inc.: $.001 par common Progenitor, Inc.: $.001 par common; Warrants (expire 08-07-2002) Warner Chilcott, PLC: American Depositary Shares Prosoft I-Net Solutions, Inc.: $.001 par common Pulaski Savings Bank (New Jersey): $.01 par common Deletions From the Foreign Margin List QAD, Inc.: $.001 par common Austria Questran Technology, Inc.: Series B, Convertible preferred Perlmooser Zementwerke AG: Ordinary shares, par 100 Austrian schillings Radcom Ltd.: Ordinary share ($.05 NIS) Belgium RCN Corporation: $1.00 par common Almanij-Kredietbank Group Renex Corporation: $.001 par common VVPR Republic Bancshares, Inc.: Cumulative Trust Preferred Securities Liquidation $10 Canada Retrospectiva, Inc.: No par common; Warrants (expire Brascan Limited: No par Class A common 09-23-2002) Coca-Cola Beverages Ltd.: No par common Rit Technologies, Ltd.: Ordinary shares (.1 NIS) Edper Group Limited: Class A, no par common Riverview Savings Bank, F.S.B.: $.01 par common National Trustco Inc.: No par common Royal Precision, Inc.: $.001 par common Total Petroleum (North America) Ltd.: No par common RSL Communications, Ltd.: Class A, $.0045 par common Finland Scheid Vineyards, Inc.: Class A, $.001 par common Merita Ltd.: B Shares, par 5 Finnish marks SCM Microsystems, Inc.: $.001 par common Raison Tehtaat Vaih Os Oy Ab: K Series common, par Shore Bank (Virginia): $.33 par common 10 Finnish marks Signature Eyewear, Inc.: $.001 par common Sinclair Broadcast Group, Inc.: Series D, convertible ex- France changeable preferred GTM-Entrepose SA: Ordinary shares, par 50 French francs SLH Corporation: $.01 par common Union Francaise de Banques Locabail SA: Ordinary shares, SPR, Inc.: $.01 par common par 100 French francs Star Bulfet, Inc.: $.001 par common Startec Global Communications Corporation: $.01 par com- Italy mon Sasib SPA: Non-convertible savings shares, par 1000 lira Sterigenics International, Inc.: $.001 par common Stet Soc. Finanziaria Telefonica PA: Non-convertible savings Syntel, Inc.: No par common shares, par 1000 lira Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 993 Stet Soc. Finanziaria Telefonica PA: Ordinary shares, par 1000 United Kingdom lira Billiton PLC: Ordinary shares, par 50 p Henderson Smaller Companies Investment Trust: Ordinary Japan shares, par 25 p Calpis Food Industry Co., Ltd.: ¥50 par common Nycomed Amersham International PLC: Ordinary shares, par Morinaga and Company, Ltd.: ¥50 par common Nippon Beet Sugar Manufacturing Co., Ltd.: ¥50 par 25 p common Showa Line, Ltd.: ¥50 par common Yuasa Trading Co., Ltd.: ¥50 par common FINAL RULE—AMENDMENT TO RULES REGARDING AVAILABILITY OF INFORMATION Malaysia Berjaya Industrial Berhad: Ordinary shares, par 1 Malaysian The Board of Governors is amending 12 C.F.R. Part 261 ringgit (its Rules Regarding Availability of Information) to reflect recent changes in the Freedom of Information Act (FOIA) Norway as a result of the Electronic Freedom of Information Act Nycomed ASA: A Ordinary Common, par 4 Norwegian krone Amendments (EFOIA). In order to account for future Nycomed ASA: B ordinary common, par 4 Norwegian krone amendments to the Rules, the sections have been renum- Storebrand AS: A ordinary common, par 5 Norwegian krone bered. The review of the Board's Rules that produced this final South Africa rule was conducted in accordance with section 303 of the Amplats Ltd.: Ordinary shares, par 1 South African rand Riegle Community Development and Regulatory Improve- Rustenburg Platinum Holdings Limited: Ordinary shares, par ment Act of 1994. In this regard, the amendments to the 0.10 South African rand Rules clarify certain provisions and simplify the processing of requests for access to information in certain circum- Thailand stances. CMIC Finance & Securities Public Co. Ltd.: Ordinary shares, Effective November 19, 1997, 12 C.F.R. Part 261 is par 10 Thai baht amended as follows: General Finance & Securities Public Co. Ltd.: Ordinary shares, par 10 Thai baht Part 261—Rules Regarding Availability of Wattachak Co. Ltd.: Ordinary shares, par 10 Thai baht Information United Kingdom Amstrad PLC: Ordinary shares, par 25 p 1. The authority citation for Part 261 is revised to read as TR Smaller Companies Investment Trust: Ordinary shares, par follows: 25 p Authority: 5 U.S.C. 552; 12 U.S.C. 248(i) and (k), 321 Additions to the Foreign Margin List et seq., 611 et seq., 1442, 1817(a)(2)(A), 1817(a)(8), 1818(u) and (v), 1821(o), 1821(t), 1830, 1844, 1951 Canada et seq., 2601, 2801 et seq., 2901 et seq., 3101 et seq., 3401 et seq.- 15 U.S.C. 77uu(b), 78q(c)(3); 29 U.S.C. 1204; Edper Brascan Corporation: Class A, No par common 31 U.S.C. 5301 et seq.- 42 U.S.C. 3601; 44 U.S.C. 3510. Finland 2. Subpart D, consisting of section 261.15 through 261.17, Merita Ltd.: A shares, par 5 Finnish marks is removed. Raison Tehtaat Vaih Os Oy AB: K shares common, par 10 Finnish marks 3. Sections 261.11 through 261.14 in Subpart C are redes- France ignated as sections 261.20 through 261.23, respectively, in Subpart C. Groupe GTM SA: Ordinary shares, par 50 French francs 4. Subparts A and B are revised to read as follows: Japan Subpart A—General Provisions Calpis Co., Ltd.: ¥50 par common Malaysia Section 261.1—Authority, purpose, and scope. Section 261.2—Definitions. Rekapacific Berhad: Ordinary shares, par 1 Malaysian ringgit Section 261.3—Custodian of records; certification; service; alternative authority. South Africa Anglo American Platinum Corporation Limited: Ordinary Digitized for FRASER shares, par 10 South African rand http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

994 Federal Reserve Bulletin • December 1997 Subpart B—Published Information and Records (3) The Board has also determined that it is authorized Available to Public; Procedures for Requests by law to disclose information to a law enforcement or other federal or state government agency that has the Section 261.10—Published information. authority to request and receive such information in Section 261.11—Records available for public inspection and carrying out its own statutory responsibilities, or in copying. response to a valid order of a court of competent jurisdiction or of a duly constituted administrative tribunal. Section 261.12—Records available to public upon request. (b) Purpose. This part sets forth the categories of informa- Section 261.13—Processing requests. tion made available to the public, the procedures for obtain- Section 261.14—Exemptions from disclosure. ing documents and records, the procedures for limited Section 261.15—Request for confidential treatment. release of exempt and confidential supervisory informa- Section 261.16—Request for access to confidential commer- tion, and the procedures for protecting confidential busicial or financial information. ness information. Section 261.17—Fee schedules; waiver of fees. (c) Scope. (1) This Subpart A contains general provisions and definitions of terms used in this part. Subpart A—General Provisions (2) Subpart B of this part implements the Freedom of Information Act (FOIA) (5 U.S.C. 552). Section 261.1—Authority, purpose, and scope. (3) Subpart C of this part sets forth: (i) The kinds of exempt information made available to supervised institutions, supervisory agencies, law en- (a) Authority. (1) This part is issued by the Board of forcement agencies, and others in certain circum- Governors of the Federal Reserve System (the Board) stances; pursuant to the Freedom of Information Act, 5 U.S.C. (ii) The procedures for disclosure; and 552; Sections 9, 11, and 25A of the Federal Reserve Act, (iii) The procedures with respect to subpoenas, orders 12 U.S.C. 248(i) and (k), 321 et seq., (including 326), compelling production, and other process. 611 et seq.] Section 22 of the Federal Home Loan Bank Act, 12 U.S.C 1442; the Federal Deposit Insurance Act, Section 261.2—Definitions. 12 U.S.C. 1817(a)(2)(A), 1817(a)(8), 1818(u) and (v), 1821(o); section 5 of the Bank Holding Company Act, 12 U.S.C. 1844; the Bank Secrecy Act, 12 U.S.C. 1951 For purposes of this part: et seq., and Chapter 53 of Title 31; the Home Mortgage (a) Board's official files means the Board's central records. Disclosure Act, 12 U.S.C. 2801 et seq.\ the Community (b) Commercial use request refers to a request from or on Reinvestment Act, 12 U.S.C. 2901 et seq.; the Interna- behalf of one who seeks information for a use or purpose tional Banking Act, 12 U.S.C. 3101 et seq.-, the Right to that furthers the commercial, trade, or profit interests of the Financial Privacy Act, 12 U.S.C. 3401 et seq. \ the Secu- requester or the person on whose behalf the request is rities and Exchange Act, 15 U.S.C. 77uuu(b), 78q(c)(3); made. the Employee Retirement Income Security Act, (c)(1) Confidential supervisory information means: 29 U.S.C. 1204; the Money Laundering Suppression Act, (i) Exempt information consisting of reports of exam- 31 U.S.C. 5301, the Fair Housing Act, 42 U.S.C. 3601; ination, inspection and visitation, confidential operatthe Paperwork Reduction Act, 44 U.S.C. 3510; and any ing and condition reports, and any information deother applicable law that establishes a basis for the rived from, related to, or contained in such reports; exercise of governmental authority by the Board. (ii) Information gathered by the Board in the course of (2) This part establishes mechanisms for carrying out the any investigation, suspicious activity report, cease- Board's statutory responsibilities under statutes in para- and-desist orders, civil money penalty enforcement graph (a)(1) of this section to the extent those responsi- orders, suspension, removal or prohibition orders, or bilities require the disclosure, production, or withhold- other orders or actions under the Financial Institutions ing of information. In this regard, the Board has Supervisory Act of 1966, Pub.L. 89-695, 80 Stat. determined that the Board, or its delegees, may disclose 1028 (codified as amended in scattered sections of exempt information of the Board, in accordance with the 12 U.S.C.), the Bank Holding Company Act of 1956, procedures set forth in this part, whenever it is necessary 12 U.S.C. 1841 et seq., the Federal Reserve Act, or appropriate to do so in the exercise of any of the 12 U.S.C. 221 et seq., the International Banking Act Board's supervisory or regulatory authorities, including of 1978, Pub.L. 95-369, 92 Stat. 607 (codified as but not limited to, authority granted to the Board in the amended in scattered sections of 12 U.S.C.), and the Federal Reserve Act, 12 U.S.C. 221 et seq., the Bank International Lending Supervision Act of 1983, Holding Company Act, 12 U.S.C. 1841 et seq., and the 12 U.S.C. 3901 et seq.\ except— International Banking Act, 12 U.S.C. 3101 et seq. The (A) Such final orders, amendments, or modifica- Board has determined that all such disclosures, made in tions of final orders, or other actions or documents accordance with the rules and procedures specified in that are specifically required to be published or this part, are authorized by law. made available to the public pursuant to 12 U.S.C. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 995 1818(u), or other applicable law, including the the public in Board publications, libraries, or established record of litigated proceedings; and distribution systems, (B) The public section of Community Reinvest- (j) Report of examination means the report prepared by the ment Act examination reports, pursuant to Board, or other federal or state financial institution supervi- 12 U.S.C. 2906(b); and sory agency, concerning the examination of a financial (iii) Any documents prepared by, on behalf of, or for institution, and includes reports of inspection and reports the use of the Board, a Federal Reserve Bank, a of examination of U.S. branches or agencies of foreign federal or state financial institutions supervisory banks and representative offices of foreign organizations, agency, or a bank or bank holding company or other and other institutions examined by the Federal Reserve supervised financial institution. System. (2) Confidential supervisory information does not in- (k) Report of inspection means the report prepared by the clude documents prepared by a supervised financial in- Board concerning its inspection of a bank holding comstitution for its own business purposes and that are in its pany and its bank and nonbank subsidiaries. possession. (1) Representative of the news media refers to any person (d) Direct costs mean those expenditures that the Board actively gathering news for an entity that is organized and actually incurs in searching for, reviewing, and duplicating operated to publish or broadcast news to the public. documents in response to a request made under sec- (1) The term "news" means information that is about tion 261.12. current events or that would be of current interest to the (e) Duplication refers to the process of making a copy of a public. document in response to a request for disclosure of records (2) Examples of news media entities include, but are not or for inspection of original records that contain exempt limited to, television or radio stations broadcasting to the material or that otherwise cannot be inspected directly. public at large, and publishers of periodicals (but only in Among others, such copies may take the form of paper, those instances when they can qualify as disseminators microform, audiovisual materials, or machine-readable of "news") who make their products available for purdocumentation {e.g., magnetic tape or disk). chase or subscription by the general public. (f) Educational institution refers to a preschool, a public or (3) "Freelance" journalists may be regarded as working private elementary or secondary school, or an institution of for a news organization if they can demonstrate a solid undergraduate higher education, graduate higher educa- basis for expecting publication through that organization, professional education, or an institution of vocational tion, even though they are not actually employed by it. education, which operates a program of scholarly research. (m)(l) Review refers to the process of examining docu- (g) Exempt information means information that is exempt ments, located in response to a request for access, to from disclosure under section 261.14. determine whether any portion of a document is exempt (h) Noncommercial scientific institution refers to an institu- information. It includes doing all that is necessary to tion that is not operated on a "commercial" basis (as that excise the documents and otherwise to prepare them for term is used in this section) and that is operated solely for release. the purpose of conducting scientific research, the results of (2) Review does not include time spent resolving general which are not intended to promote any particular product legal or policy issues regarding the application of exor industry. emptions. (i)(l) Records of the Board include: (n)(l) Search means a reasonable search, by manual or (i) In written form, or in nonwritten or machine- automated means, of the Board's official files and any readable form; all information coming into the posses- other files containing Board records as seem reasonably sion and under the control of the Board, any Board likely in the particular circumstances to contain informamember, any Federal Reserve Bank, or any officer, tion of the kind requested. For purposes of computing employee, or agent of the Board or of any Federal fees under section 261.17, search time includes all time Reserve Bank, in the performance of functions for or spent looking for material that is responsive to a request, on behalf of the Board that constitute part of the including line-by-line identification of material within Board's official files; or documents. Such activity is distinct from "review" of (ii) That are maintained for administrative reasons in material to determine whether the material is exempt the regular course of business in official files in any from disclosure. division or office of the Board or any Federal Reserve (2) Search does not mean or include research, creation Bank in connection with the transaction of any official of any document, or extensive modification of an existbusiness. ing program or system that would significantly interfere (2) Records of the Board does not include personal files with the operation of the Board's automated information of Board members and employees; tangible exhibits, systems. formulas, designs, or other items of valuable intellectual (o) Supervised financial institution includes a bank, bank property; extra copies of documents and library and holding company (including subsidiaries), U.S. branch or museum materials kept solely for reference or exhibition agency of a foreign bank, or any other institution that is purposes; unaltered publications otherwise available to supervised by the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

996 Federal Reserve Bulletin • December 1997 Section 261.3—Custodian of records; certification; (10) Notices of agency data collection forms being reservice; alternative authority. viewed under the Paperwork Reduction Act (5 U.S.C. 3501 et seq.). (b) Board's Reports to Congress. The Board's annual (a) Custodian of records. The Secretary of the Board report to Congress pursuant to the Federal Reserve Act (Secretary) is the official custodian of all Board records, (12 U.S.C. 247), which is made public upon its submission including records that are in the possession or control of to Congress, contains a full account of the Board's operathe Board, any Federal Reserve Bank, or any Board or tions during the year, the policy actions by the Federal Reserve Bank employee. Open Market Committee, an economic review of the year, (b) Certification of record. The Secretary may certify the and legislative recommendations to Congress. The Board authenticity of any Board record, or any copy of such also makes periodic reports to Congress under certain record, for any purpose, and for or before any duly constistatutes, including but not limited to the Freedom of Infortuted federal or state court, tribunal, or agency. mation Act (5 U.S.C. 552); the Government in the Sun- (c) Service of subpoenas or other process. Subpoenas or shine Act (5 U.S.C. 552b); the Full Employment and Balother judicial or administrative process, demanding access anced Growth Act of 1978 (12 U.S.C. 225a); and the to any Board records or making any claim against the Privacy Act (5 U.S.C. 552a). Board, shall be addressed to and served upon the Secretary (c) Federal Reserve Bulletin. This publication is issued of the Board at the Board's office at 20th and C Streets, monthly and contains economic and statistical information, N.W., Washington, D.C. 20551. Neither the Board nor the articles relating to the economy or Board activities, and Secretary are agents for service of process on behalf of any descriptions of recent actions by the Board. employee in respect of purely private legal disputes, except (d) Other published information. Among other things, the as specifically provided by law. Board publishes the following information: (d) Alternative authority. Any action or determination re- (1) Weekly publications. The Board issues the following quired or permitted by this part to be done by the Secretary, publications weekly: the General Counsel, or the Director of any Division may (i) A statement showing the condition of each Federal be done by any employee who has been duly designated Reserve Bank and a consolidated statement of the for this purpose by the Secretary, General Counsel, or the condition of all Federal Reserve Banks, pursuant to appropriate Director. 12 U.S.C. 248(a); (ii) An index of applications received and the actions Subpart B—Published Information and Records taken on the applications, as well as other matters Available to Public; Procedures for Requests issued, adopted, or promulgated by the Board; and (iii) A statement showing changes in the structure of the banking industry resulting from mergers and the Section 261.10—Published information. establishment of branches. (2) Press releases. The Board frequently issues state- (a) Federal Register. The Board publishes in the Federal ments to the press and public regarding monetary and Register for the guidance of the public: credit actions, regulatory actions, actions taken on cer- (1) Descriptions of the Board's central and field organi- tain types of applications, and other matters. zation; (3) Call Report and other data. Certain data from Re- (2) Statements of the general course and method by ports of Condition and Income submitted to the Board which the Board's functions are channeled and deter- are available through the National Technical Information mined, including the nature and requirements of proce- Service and may be obtained by the procedure described dures; in section 261.11(c)(2). (3) Rules of procedure, descriptions of forms available (4) Federal Reserve Regulatory Service. This is a muland the place where they may be obtained, and instruc- tivolume looseleaf service published by the Board, contions on the scope and contents of all papers, reports, taining statutes, regulations, interpretations, rulings, staff and examinations; opinions, and procedural rules under which the Board (4) Substantive rules, interpretations of general applica- operates. Portions of the service are also published as bility, and statements of general policy; separate looseleaf handbooks relating to consumer and (5) Every amendment, revision, or repeal of the forego- community affairs, monetary policy and reserve requireing in paragraphs (a)(l)-(a)(4) of this section; ments, payments systems, and securities credit transac- (6) Notices of proposed rulemaking; tions. The service and each handbook contain subject (7) Notices of applications received under the Bank and citation indexes, are updated monthly, and may be Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) subscribed to on a yearly basis. and the Change in Bank Control Act (12 U.S.C. 1817); (e) Index to Board actions. The Board's Freedom of Infor- (8) Notices of all Board meetings, pursuant to the Gov- mation Office maintains an index to Board actions, which ernment in the Sunshine Act (5 U.S.C. 552b); is updated weekly and provides identifying information (9) Notices identifying the Board's systems of records, about any matters issued, adopted, and promulgated by the pursuant to the Privacy Act of 1974 (5 U.S.C. 552a); and Board since July 4, 1967. Copies of the index may be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 997 obtained upon request to the Freedom of Information Office Sales Office, National Technical Information Service, subject to the current schedule of fees in sec- U.S. Department of Commerce, 5285 Port Royal Road, tion 261.17. Springfield, Virginia 22161, (703) 487-4650. (f) Obtaining Board publications. The Publications Ser- (3) Privacy protection. The Board may delete identifyvices Section maintains a list of Board publications that are ing details from any record to prevent a clearly unwaravailable to the public. In addition, a partial list of publica- ranted invasion of personal privacy. tions is published in the Federal Reserve Bulletin. All publications issued by the Board, including available back Section 261.12—Records available to public upon issues, may be obtained from Publications Services, Board request. of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551 (a) Types of records made available. All records of the (pedestrian entrance is on C Street, N.W.). Subscription or Board that are not available under sections 261.10 and other charges may apply to some publications. 261.11 shall be made available upon request, pursuant to the procedures and exceptions in this Subpart B. Section 261.11—Records available for public (b) Procedures for requesting records. (1) A request for inspection and copying. identifiable records shall reasonably describe the records in a way that enables the Board's staff to identify and (a) Types of records made available. Unless they were produce the records with reasonable effort and without published promptly and made available for sale or without unduly burdening or significantly interfering with any of charge, the following records shall be made available for the Board's operations. inspection and copying at the Freedom of Information (2) The request shall be submitted in writing to the Office: Freedom of Information Office, Board of Governors of (1) Final opinions, including concurring and dissenting the Federal Reserve System, 20th & C Street, N.W., opinions, as well as final orders and written agreements, Washington, D.C. 20551; or sent by facsimile to the made in the adjudication of cases; Freedom of Information Office, (202)872-7562 or 7565. (2) Statements of policy and interpretations adopted by The request shall be clearly marked FREEDOM OF the Board that are not published in the Federal Register, INFORMATION ACT REQUEST. (3) Administrative staff manuals and instructions to staff (3) A request may not be combined with any other that affect the public; request to the Board except for a request under 12 C.F.R. (4) Copies of all records released to any person under 26la.3(a) (Rules Regarding Access to and Review of section 261.12 that, because of the nature of their subject Personal Information under the Privacy Act of 1974) matter, the Board has determined are likely to be re- and a request made under section 261.23(b)(l)(ii). quested again; (c) Contents of request. The request shall contain the (5) A general index of the records referred to in para- following information: graph (a)(4) of this section; and (1) The name and address of the requester, and the (6) The public section of Community Reinvestment Act telephone number at which the requester can be reached examination reports. during normal business hours; (b) Reading room procedures. (1) Information available (2) Whether the requested information is intended for under this section is available for inspection and copy- commercial use, and whether the requester is an educaing, from 9:00 a.m. to 5:00 p.m. weekdays, at the Free- tional or noncommercial scientific institution, or news dom of Information Office of the Board of Governors of media representative; the Federal Reserve System, 20th Street and Constitu- (3) A statement agreeing to pay the applicable fees, or a tion Avenue, N.W., Washington, D.C. 20551 (the pedes- statement identifying any desired fee limitation, or a trian entrance is on C Street, N.W.). request for a waiver or reduction of fees that satisfies (2) The Board may determine that certain classes of section 261.17(h); and publicly available filings shall be made available for (4) If the request is being made in connection with inspection and copying only at the Federal Reserve on-going litigation, a statement indicating whether the Bank where those records are filed. requester will seek discretionary release of exempt infor- (c) Electronic records. (1) Except as set forth in para- mation from the General Counsel upon denial of the graph (c)(2) of this section, information available request by the Secretary. A requester who intends to under this section that was created by the Board make such a request to the General Counsel may also on or after November 1, 1996, shall also be available address the factors set forth in section 261.23(b). on the Board's internet site (which can be found at (d) Defective requests. The Board need not accept or http://www.bog.frb.fed.us). process a request that does not reasonably describe the (2) NTIS. The publicly available portions of Reports of records requested or that does not otherwise comply with Condition and Income of individual banks and certain the requirements of this section. The Board may return a other data files produced by the Board are distributed by defective request, specifying the deficiency. The requester the National Technical Information Service. Requests may submit a corrected request, which will be treated as a for these public reports should be addressed to: new request. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

998 Federal Reserve Bulletin • December 1997 (e) Oral requests. The Freedom of Information Office may requester may file an appeal pursuant to the procedures honor an oral request for records, but if the requester is set forth in paragraph (i) of this section, and the Board dissatisfied with the Board's response and wishes to seek shall respond to the appeal within ten working days after review, the requester must submit a written request, which the appeal was received by the Board. shall be treated as an initial request. (d) Priority of responses. The Secretary will assign responsible staff to process particular requests. The Freedom of Information Office will normally process requests in the Section 261.13—Processing requests. order they are received in the separate processing tracks, except when expedited processing is granted. However, in (a) Receipt of requests. Upon receipt of any request that the Secretary's discretion, or upon a court order in a matter satisfies section 261.12(b), the Freedom of Information to which the Board is a party, a particular request may be Office shall assign the request to the appropriate processing processed out of turn. schedule, pursuant to paragraph (b) of this section. The (e) Time limits. The time for response to requests shall be date of receipt for any request, including one that is ad- 20 working days, except: dressed incorrectly or that is referred to the Board by (1) In the case of expedited treatment under paragraph another agency or by a Federal Reserve Bank, is the date (c) of this section; the Freedom of Information Office actually receives the (2) Where the running of such time is suspended for request. payment of fees pursuant to section 261.17(b)(2); (b) Multitrack processing. (1) The Board provides different (3) In unusual circumstances, as defined in 5 U.S.C. levels of processing for categories of requests under this 552(a)(6)(B). In such circumstances, the time limit may section. Requests for records that are readily identifiable be extended for a period of time not to exceed: by the Freedom of Information Office and that have (i) Ten working days as provided by written notice to already been cleared for public release may qualify for the requester, setting forth the reasons for the extenfast-track processing. All other requests shall be handled sion and the date on which a determination is exunder normal processing procedures, unless expedited pected to be dispatched; or processing has been granted pursuant to paragraph (c)(2) (ii) Such alternative time period as mutually agreed to of this section. by the Freedom of Information Office and the re- (2) The Freedom of Information Office will make the quester when the Freedom of Information Office notidetermination whether a request qualifies for fast-track fies the requester that the request cannot be processed processing. A requester may contact the Freedom of in the specified time fimit. Information Office to learn whether a particular request (f) Response to request. In response to a request that has been assigned to fast-track processing. If the request satisfies section 261.12(b), an appropriate search shall be has not qualified for fast-track processing, the requester conducted of records of the Board in existence on the date will be given an opportunity to limit the request in order of receipt of the request, and a review made of any responto qualify for fast-track processing. Limitations of re- sive information located. The Secretary shall notify the quests must be in writing. requester of: (c) Expedited processing. When a person requesting expe- (1) The Board's determination of the request; dited access to records has demonstrated a compelling (2) The reasons for the determination; need for the records, or when the Board has determined to (3) The amount of information withheld; expedite the response, the Board shall process the request (4) The right of the requester to appeal to the Board any as soon as practicable. denial or partial denial, as specified in paragraph (i) of (1) To demonstrate a compelling need for expedited this section; and processing, the requester shall provide a certified state- (5) In the case of a denial of a request, the name and title ment, a sample of which may be obtained from the or position of the person responsible for the denial. Freedom of Information Office. The statement, which (g) Referral to another agency. To the extent a request must be certified to be true and correct to the best of the covers documents that were created by, obtained from, or requester's knowledge and belief, shall demonstrate that: classified by another agency, the Board may refer the (i) The failure to obtain the records on an expedited request to that agency for a response and inform the basis could reasonably be expected to pose an immi- requester promptly of the referral. nent threat to the life or physical safety of an individ- (h) Providing responsive records. (1) Copies of requested ual; or records shall be sent to the requester by regular U.S. mail (ii) The requester is a representative of the news to the address indicated in the request, unless the remedia, as defined in section 261.2, and there is ur- quester elects to take delivery of the documents at the gency to inform the public concerning actual or al- Freedom of Information Office or makes other acceptleged Board activity. able arrangements, or the Board deems it appropriate to (2) In response to a request for expedited processing, the send the documents by another means. Secretary shall notify a requester of the determination (2) The Board shall provide a copy of the record in any within ten calendar days of receipt of the request. If the form or format requested if the record is readily repro- Secretary denies a request for expedited processing, the ducible by the Board in that form or format, but the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 999 Board need not provide more than one copy of any (5) Inter- or intra-agency memorandums. Information record to a requester, contained in inter- or intra-agency memorandums or (i) Appeal of denial of request. Any person denied access letters that would not be available by law to a party to Board records requested under section 261.12 may file a (other than an agency) in litigation with an agency, written appeal with the Board, as follows: including, but not limited to: (1) The appeal shall prominently display the phrase (i) Memorandums; FREEDOM OF INFORMATION ACT APPEAL on the (ii) Reports; first page, and shall be addressed to the Freedom of (iii) Other documents prepared by the stalfs of the Information Office, Board of Governors of the Federal Board or Federal Reserve Banks; and Reserve System, 20th & C Street, N.W., Washington, (iv) Records of deliberations of the Board and of D.C. 20551; or sent by facsimile to the Freedom of discussions at meetings of the Board, any Board com- Information Office, (202)872-7562 or 7565. mittee, or Board staff, that are not subject to 5 U.S.C. (2) An initial request for records may not be combined 552b (the Government in the Sunshine Act). in the same letter with an appeal. (6) Personnel and medical files. Any information con- (3) The appeal shall be filed within 10 working days of tained in personnel and medical files and similar files the the date on which the denial was issued, or the date on disclosure of which would constitute a clearly unwarwhich documents in partial response to the request were ranted invasion of personal privacy. transmitted to the requester, whichever is later. The (7) Information compiled for law enforcement purposes. Board may consider an untimely appeal if: Any records or information compiled for law enforce- (i) It is accompanied by a written request for leave to ment purposes, to the extent permitted under 5 U.S.C. file an untimely appeal; and 552(b)(7); including information relating to administra- (ii) The Board determines, in its discretion and for tive enforcement proceedings of the Board. good and substantial cause shown, that the appeal (8) Examination, inspection, operating, or condition reshould be considered. ports, and confidential supervisory information. Any (4) The Board shall make a determination regarding any matter that is contained in or related to examination, appeal within 20 working days of actual receipt of the operating, or condition reports prepared by, on behalf of, appeal by the Freedom of Information Office, and the or for the use of an agency responsible for the regulation determination letter shall notify the appealing party of or supervision of financial institutions, including a state the right to seek judicial review. financial institution supervisory agency. (5) The Secretary may reconsider a denial being ap- (b) Segregation ofnonexempt information. The Board shall pealed if intervening circumstances or additional facts provide any reasonably segregable portion of a record that not known at the time of the denial come to the attention is requested after deleting those portions that are exempt of the Secretary while an appeal is pending. under this section. (c) Discretionary release. (1) Except where disclosure is Section 261.14—Exemptions from disclosure. expressly prohibited by statute, regulation, or order, the Board may release records that are exempt from manda- (a) Types of records exempt from disclosure. Pursuant to tory disclosure whenever the Board or designated Board 5 U.S.C. 552(b), the following records of the Board are members, the Secretary of the Board, the General Counexempt from disclosure under this part: sel of the Board, the Director of the Division of Banking (1) National defense. Any information that is specifi- Supervision and Regulation, or the appropriate Federal cally authorized under criteria established by an Execu- Reserve Bank, acting pursuant to this part or 12 C.F.R. tive Order to be kept secret in the interest of national Part 265, determines that such disclosure would be in the defense or foreign policy and is in fact properly classi- public interest. fied pursuant to the Executive Order. (2) The Board may make any exempt information fur- (2) Internal personnel rules and practices. Any informa- nished in connection with an application for Board aption related solely to the internal personnel rules and proval of a transaction available to the public in accorpractices of the Board. dance with section 261.12, and without prior notice and (3) Statutory exemption. Any information specifically to the extent it deems necessary, may comment on such exempted from disclosure by statute (other than 5 U.S.C. information in any opinion or statement issued to the 552b), if the statute: public in connection with a Board action to which such (i) Requires that the matters be withheld from the information pertains. public in such a manner as to leave no discretion on (d) Delayed release. Publication in the Federal Register or the issue; or availability to the public of certain information may be (ii) Establishes particular criteria for withholding or delayed if immediate disclosure would likely: refers to particular types of matters to be withheld. (1) Interfere with accomplishing the objectives of the (4) Trade secrets; commercial or financial information. Board in the discharge of its statutory functions; Any matter that is a trade secret or that constitutes (2) Interfere with the orderly conduct of the foreign commercial or financial information obtained from a affairs of the United States; person and that is privileged or confidential. (3) Permit speculators or others to gain unfair profits or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1000 Federal Reserve Bulletin • December 1997 other unfair advantages by speculative trading in securi- (e) Special procedures. The Board may establish special ties or otherwise; procedures for particular documents, filings, or types of (4) Result in unnecessary or unwarranted disturbances in information by express provisions in this part or by instructhe securities markets; tions on particular forms that are approved by the Board. (5) Interfere with the orderly execution of the objectives These special procedures shall take precedence over this or policies of other government agencies; or section. (6) Impair the ability to negotiate any contract or otherwise harm the commercial or financial interest of the Section 261.16—Request for access to confidential United States, the Board, any Federal Reserve Bank, or commercial or financial information. any department or agency of the United States. (e) Prohibition against disclosure. Except as provided in this part, no officer, employee, or agent of the Board or any (a) Request for confidential information. A request by a Federal Reserve Bank shall disclose or permit the disclo- submitter for confidential treatment of any information sure of any unpublished information of the Board to any shall be considered in connection with a request for access person (other than Board or Reserve Bank officers, employ- to that information. At their discretion, appropriate Board ees, or agents properly entitled to such information for the or staff members (including Federal Reserve Bank staff) performance of official duties). may act on the request for confidentiality prior to any request for access to the documents. (b) Notice to the submitter. When a request for access is Section 261.15—Request for confidential treatment. received pursuant to the Freedom of Information Act (5 U.S.C. 552): (a) Submission of request. Any submitter of information to (1) The Secretary shall notify a submitter of the request, the Board who desires confidential treatment pursuant to if: 5 U.S.C. 552(b)(4) and section 261.14 (a)(4) shall file a (i) The submitter requested confidential treatment of request for confidential treatment with the Board (or in the the information pursuant to 5 U.S.C. 552(b)(4); and case of documents filed with a Federal Reserve Bank, with (ii) The request by the submitter for confidential treatthat Federal Reserve Bank) at the time the information is ment was made within 10 years preceding the date of submitted or a reasonable time after submission. the request for access. (b) Form of request. Each request for confidential treat- (2) Absent a request for confidential treatment, the Secment shall state in reasonable detail the facts supporting retary may notify a submitter of a request for access to the request and its legal justification. Conclusory state- information provided by the submitter if the Secretary ments that release of the information would cause compet- reasonably believes that disclosure of the information itive harm generally will not be considered sufficient to may cause substantial competitive harm to the submitter. justify confidential treatment. (3) The notice given to the submitter shall: (c) Designation and separation of confidential material. (i) Be given as soon as practicable after receipt of the All information considered confidential by a submitter request for access; shall be clearly designated CONFIDENTIAL in the submis- (ii) Describe the request; and sion and separated from information for which confidential (iii) Give the submitter a reasonable opportunity, not treatment is not requested. Failure to segregate confidential to exceed ten working days from the date of notice, to information from other material may result in release of the submit written objections to disclosure of the informanonsegregated material to the public without notice to the tion. submitter. (c) Exceptions to notice to submitter. Notice to the submit- (d) Exceptions. This section does not apply to: ter need not be given if: (1) Data collected on forms that are approved pursuant (1) The Secretary determines that the request for access to the Paperwork Reduction Act (44 U.S.C. 3501 et seq.) should be denied; and are deemed confidential by the Board. Any such (2) The requested information lawfully has been made form deemed confidential by the Board shall so indicate available to the public; on the face of the form or in its instructions. The data (3) Disclosure of the information is required by law may, however, be disclosed in aggregate form in such a (other than 5 U.S.C. 552); or manner that individual company data is not disclosed or (4) The submitter's claim of confidentiality under derivable. 5 U.S.C. 552(b)(4) appears obviously frivolous or has (2) Any comments submitted by a member of the public already been denied by the Secretary, except that in this on applications and regulatory proposals being consid- last instance the Secretary shall give the submitter writered by the Board, unless the Board or the Secretary ten notice of the determination to disclose the informadetermines that confidential treatment is warranted. tion at least five working days prior to disclosure. (3) A determination by the Board to comment upon (d) Notice to requester. At the same time the Secretary information submitted to the Board in any opinion or notifies the submitter, the Secretary also shall notify the statement issued to the public as described in sec- requester that the request is subject to the provisions of this tion 261.14(c). section. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1001 (e) Written objections by submitter. Upon receipt of notice under section 261.13(e), and the processing of the reof a request for access to its information, the submitter may quest will be suspended until the requester agrees to pay provide written objections to release of the information. the applicable fees. Such objections shall state whether the information was (2) Advance payment. The Secretary may require adprovided voluntarily or involuntarily to the Board. vance payment of any fee estimated to exceed $250. The (1) If the information was voluntarily provided to the Secretary may also require full payment in advance Board, the submitter shall provide detailed facts show- where a requester has previously failed to pay a fee in a ing that the information is customarily withheld from the timely fashion. The time period for responding to republic. quests under section 261.13(e), and the processing of the (2) If the information was not provided voluntarily to the request will be suspended until the Freedom of Informa- Board, the submitter shall provide detailed facts and tion Office receives the required payment. arguments showing: (3) Late charges. The Secretary may assess interest (i) The likelihood of substantial harm that would be charges when fee payment is not made within 30 days of caused to the submitter's competitive position; or the date on which the billing was sent. Interest is at the (ii) That release of the information would impair the rate prescribed in 31 U.S.C. 3717 and accrues from the Board's ability to obtain necessary information in the date of the billing. future. (c) Categories of uses. The fees assessed depend upon the (f) Determination by Secretary. The Secretary's determina- intended use for the records requested. In determining tion whether or not to disclose any information for which which category is appropriate, the Secretary shall look to confidential treatment has been requested pursuant to this the intended use set forth in the request for records. Where section shall be communicated to the submitter and the a requester's description of the use is insufficient to make a requester immediately. If the Secretary determines to dis- determination, the Secretary may seek additional clarificaclose the information and the submitter has objected to tion before categorizing the request. such disclosure pursuant to paragraph (e) of this section, (1) Commercial use. The fees for search, duplication, the Secretary shall provide the submitter with the reasons and review apply when records are requested for comfor disclosure, and shall delay disclosure for ten working mercial use. days from the date of the determination. (2) Educational, research, or media use. The fees for (g) Notice of lawsuit. (1) The Secretary shall promptly duplication apply when records are not sought for comnotify any submitter of information covered by this mercial use, and the requester is a representative of the section of the filing of any suit against the Board to news media or an educational or noncommercial sciencompel disclosure of such information. tific institution, whose purpose is scholarly or scientific (2) The Secretary shall promptly notify the requester of research. The first 100 pages of duplication, however, any suit filed against the Board to enjoin the disclosure will be provided free. of any documents requested by the requester. (3) All other uses. For all other requests, the fees for document search and duplication apply. The first two hours of search time and the first 100 pages of duplication, however, will be provided free. Section 261.17—Fee schedules; waiver of fees. (d) Nonproductive search. Fees for search and review may be charged even if no responsive documents are located or (a) Fee schedules. The fees applicable to a request for if the request is denied. records pursuant to sections 261.11 and 261.12 are set (e) Aggregated requests. A requester may not file multiple forth in Appendix A to this section. These fees cover only requests at the same time, solely in order to avoid payment the full allowable direct costs of search, duplication, and of fees. If the Secretary reasonably believes that a requester review. No fees will be charged where the average cost of is separating a request into a series of requests for the collecting the fee (calculated at $5.00) exceeds the amount purpose of evading the assessment of fees, the Secretary of the fee. may aggregate any such requests and charge accordingly. It (b) Payment procedures. The Secretary may assume that a is considered reasonable for the Secretary to presume that person requesting records pursuant to section 261.12 will multiple requests of this type made within a 30-day period pay the applicable fees, unless the request includes a limi- have been made to avoid fees. tation on fees to be paid or seeks a waiver or reduction of (f) Waiver or reduction of fees. A request for a waiver or fees pursuant to paragraph (f) of this section. reduction of the fees, and the justification for the waiver, (1) Advance notification of fees. If the estimated charges shall be included with the request for records to which it are likely to exceed $100, the Freedom of Information pertains. If a waiver is requested and the requester has not Office shall notify the requester of the estimated amount, indicated in writing an agreement to pay the applicable unless the requester has indicated a willingness to pay fees if the waiver request is denied, the time for response to fees as high as those anticipated. Upon receipt of such the request for documents, as set forth in section 261.13(e), notice, the requester may confer with the Freedom of shall not begin until a waiver has been granted; or if the Information Office to reformulate the request to lower waiver is denied, until the requester has agreed to pay the the costs. The time period for responding to requests applicable fees. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1002 Federal Reserve Bulletin • December 1997 (1) Standards for determining waiver or reduction. The fying records or information and sending records by spe- Secretary shall grant a waiver or reduction of fees where cial methods such as express mail or overnight delivery. it is determined both that disclosure of the information is in the public interest because it is likely to contribute significantly to public understanding of the operation or activities of the government, and that the disclosure of Appendix A to Section 261.17—Freedom of information is not primarily in the commercial interest Information Fee Schedule of the requester. In making this determination, the following factors shall be considered: (i) Whether the subject of the records concerns the Duplication: operations or activities of the government; Photocopy, per standard page $ .10 (ii) Whether disclosure of the information is likely to Paper copies of microfiche, per frame $ .10 contribute significantly to public understanding of government operations or activities; Duplicate microfiche, per microfiche $ .35 (iii) Whether the requester has the intention and abil- Search and review: ity to disseminate the information to the public; (iv) Whether the information is already in the public Clerical/Technical, hourly rate $20.00 domain; Professional/Supervisory, hourly rate $38.00 (v) Whether the requester has a commercial interest that would be furthered by the disclosure; and, if so, Manager/Senior Professional, hourly rate $65.00 (vi) Whether the magnitude of the identified commer- Computer search and production: cial interest of the requester is sufficiently large, in Computer operator search, hourly rate $32.00 comparison with the public interest in disclosure, that disclosure is primarily in the commercial interest of Tapes (cassette) per tape $ 6.00 the requester. Tapes (cartridge), per tape $ 9.00 (2) Contents of request for waiver. A request for a waiver or reduction of fees shall include: Tapes (reel), per tape $18.00 (i) A clear statement of the requester's interest in the Diskettes (3'/2"), per diskette $ 4.00 documents; (ii) The use proposed for the documents and whether Diskettes (SW), per diskette $ 5.00 the requester will derive income or other benefit for Computer Output (PC), per minute $ .10 such use; actual (iii) A statement of how the public will benefit from Computer Output (mainframe) cost such use and from the Board's release of the documents; (iv) A description of the method by which the information will be disseminated to the public; and (v) If specialized use of the information is contem- ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT plated, a statement of the requester's qualifications that are relevant to that use. Orders Issued Under Section 3 of the Bank Holding (3) Burden of proof. The burden shall be on the requester Company Act to present evidence or information in support of a request for a waiver or reduction of fees. (4) Determination by Secretary. The Secretary shall make a determination on the request for a waiver or California Community Financial Institutions Fund reduction of fees and shall notify the requester accord- Limited Partnership ingly. A denial may be appealed to the Board in accor- San Francisco, California dance with section 261.13(j). (g) Employee requests. In connection with any request by an employee, former employee, or applicant for employ- Belvedere Bancorp ment, for records for use in prosecuting a grievance or San Francisco, California complaint of discrimination against the Board, fees shall be waived where the total charges (including charges for information provided under the Privacy Act of 1974 Belvedere Capital Partners, Inc. (5 U.S.C. 552a) are $50 or less; but the Secretary may San Francisco, California waive fees in excess of that amount. (h) Special services. The Secretary may agree to provide, and set fees to recover the costs of, special services not National Bancorp of Alaska, Inc. covered by the Freedom of Information Act, such as certi- Anchorage, Alaska Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 1003 Order Approving the Formation of a Bank Holding Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Company and the Acquisition of an Interest in a Bank Governors Kelley, and Meyer. Absent and not voting: Governor Holding Company Phillips. JENNIFER J. JOHNSON Deputy Secretary of the Board Orders Issued Under Section 4 of the Bank Holding Company Act California Community Financial Institutions Fund Limited Partnership ("Fund"), a limited partnership, Fund's wholly Barnett Banks, Inc. owned subsidiary, Belvedere Bancorp and Fund's general Jacksonville, Florida partner, Belvedere Capital Partners, Inc. (collectively, "Applicants"), all in San Francisco, California, have requested BB&T Corporation the Board's approval under section 3(a)(1) of the Bank Winston-Salem, North Carolina Holding Company Act (12 U.S.C. § 1842(a)(1)) ("BHC Central Fidelity Banks, Inc. Act") to become bank holding companies by acquiring Richmond, Virginia approximately 63 percent of the voting shares of Security First Bank, Fullerton, California ("Bank"). National Ban- Crestar Financial Corporation corp of Alaska, Inc., Anchorage, Alaska ("NBA"), also has Richmond, Virginia requested the Board's approval to acquire a 9.9 percent First American Corporation limited partnership interest in Fund pursuant to section Nashville, Tennessee 3(a)(3) of the BHC Act (12 U.S.C. § 1842(a)(3)). Notice of the applications, alfording interested persons First Citizens BancShares, Inc. an opportunity to submit comments, has been published Raleigh, North Carolina (62 Federal Register 46,741 (1997)). The time for filing First Union Corporation comments has expired, and the Board has considered the Charlotte, North Carolina application and all comments received in light of the factors set forth in section 3(c) of the BHC Act. First Virginia Banks, Inc. Applicants are nonoperating organizations formed to Falls Church, Virginia acquire Bank, and NBA and Bank do not compete in any Jefferson Bankshares, Inc. relevant banking market. Accordingly, the Board con- Charlottesville, Virginia cludes that consummation of this proposal would not have a significantly adverse effect on competition or on the NationsBank Corporation concentration of banking resources in any relevant banking Charlotte, North Carolina market. The Board also concludes that the financial and Riggs National Corporation managerial resources and future prospects of the Appli- Washington, D.C. cants, NBA, and Bank are consistent with approval, as are the convenience and needs and other supervisory factors Signet Banking Corporation the Board is required to consider under section 3 of the Richmond, Virginia BHC Act. Based on the foregoing and all the facts of record, the SunTrust Banks, Inc. Board has determined that the applications should be, and Atlanta, Georgia hereby are, approved. The Board's approval is expressly Synovus Financial Corporation conditioned on compliance with all the commitments made Columbus, Georgia by Applicants, including those made by the limited partners of Fund and NBA in connection with the applications. Wachovia Corporation The commitments and conditions relied on by the Board in Winston-Salem, North Carolina reaching this decision are deemed to be conditions imposed in writing by the Board in connection with its Order Approving Notices to Conduct Certain Data findings and decision, and, as such, may be enforced in Processing and Other Nonbanking Activities proceedings under applicable law. This transaction shall not be consummated before the Barnett Banks, Inc., Jacksonville, Florida; BB&T Corpora- 30th calendar day following the effective date of this order, tion, Winston-Salem, North Carolina; Central Fidelity or later than three months following the effective date of Banks, Inc., Richmond, Virginia; Crestar Financial Corpothis order, unless such period is extended for good cause by ration, Richmond, Virginia; First Citizens Bancshares, Rathe Board or the Federal Reserve Bank of San Francisco, leigh, North Carolina; First American Corporation, Nashacting pursuant to delegated authority. ville, Tennessee; First Union Corporation, Charlotte, North By order of the Board of Governors, effective Octo- Carolina; First Virginia Banks, Inc., Falls Church, Virber 27, 1997. ginia; Jefferson Bancshares, Charlottesville, Virginia; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1004 Federal Reserve Bulletin • December 1997 NationsBank Corporation, Charlotte, North Carolina; comments has expired, and the Board has considered the Riggs National Corporation, Washington, D.C.; Signet notice and all comments received in light of the factors set Banking Corporation, Richmond, Virginia; SunTrust forth in section 4(c)(8) of the BHC Act. As in other cases, Banks, Inc., Atlanta, Georgia; Synovus Financial Corp., the Board also sought comments from the Department of Columbus, Georgia; and Wachovia Corporation, Winston- Justice on the competitive effects of this proposal. The Salem, North Carolina (collectively, "Notificants"), bank Department of Justice indicated that it had no objection to holding companies within the meaning of the Bank Hold- consummation of the proposed transaction. ing Company Act ("BHC Act"), have requested the Notificants are large commercial banking organizations Board's approval under section 4(c)(8) of the BHC Act with headquarters in Georgia, Florida, North Carolina, (12 U.S.C. § 1843(c)(8)) and section 225.24 of the Board's Tennessee, Virginia, and Washington, D.C. Notificants Regulation Y (12 C.F.R. 225.24) to acquire indirectly Mon- each engage directly and through subsidiaries in a broad etary Transfer System, L.L.C., St. Louis, Missouri range of banking and permissible nonbanking activities in ("MTS"), through Honor Technologies, Inc., Maitland, the United States.3 Florida ("HTI"), and thereby engage in providing data Section 4(c)(8) of the BHC Act provides that a bank processing services pursuant to section 225.28(b)(14) of holding company may, with Board approval, engage in any Regulation Y (12 C.F.R. 225.28(b)(14)). Notificants are activity that the Board determines to be "so closely related bank holding companies that would control more than to banking or managing and controlling banks as to be a 5 percent of any class of voting shares of HTI following proper incident thereto." The Board previously has deterconsummation of the proposed transaction.1 mined that all the activities proposed in these notices are Currently, HTI operates an electronic funds transfer closely related to banking within the meaning of sec- ("EFT") network under the tradenames HONOR and tion 4(c)(8) of the BHC Act.4 Notificants would conduct MOST, and MTS operates an EFT network under the the proposed activities in accordance with Regulation Y tradename BANKMATE. These EFT networks provide and previous Board decisions.5 data processing and data transmission services to banks The Board also must consider whether the performance and retail merchants who are members of their branded of the proposed activities by Notificants through MTS automated teller machine ("ATM") and point of sale "can reasonably be expected to produce benefits to the ("POS") networks.2 HTI would engage through MTS in public . . . that outweigh possible adverse effects, such as certain nonbanking activities related to the operation of undue concentration of resources, decreased or unfair com- ATM and POS networks, including various data processing petition, conflicts of interests, or unsound banking practicservices, pursuant to section 225.28(b)(14) of Regulation Y es."6 As part of this review under section 4(c)(8) of the (12 C.F.R. 225.28(b)(14)). BHC Act, the Board considers the financial and managerial Notice of the proposal, affording interested persons an resources of Notificants and their subsidiaries, and any opportunity to submit comments, has been published company to be acquired, and the effect of the proposal on (62 Federal Register 44,130 (1997)). The time for filing those resources.7 Based on all the facts of record, including reports of examination and other supervisory information, the Board concludes that financial and managerial consid- 1. As a result of recently proposed mergers and acquisitions involv- erations are consistent with approval of the proposal. In ing HTI shareholders, the interests of Central Fidelity Banks, Inc.; addition, there is no evidence in the record that the pro- First American Corporation; First Citizens Bancshares; First Virginia posal would result in conflicts of interests or unsound Banks, Inc.; Jefferson Bancshares; Riggs National Corporation; Signet banking practices. Banking Corporation; SunTrust Banks, Inc.; and Synovus Financial Corp., each will increase to more than 5 percent of HTI's Class A voting shares. Accordingly, each of these bank holding companies has Competitive Considerations requested the Board's approval to acquire more than 5 percent of any class of HTI's voting shares, and thereby engage through HTI in This proposal would result in the acquisition by HTI of a providing certain data processing and management consulting sernetwork operating primarily in Arkansas, Illinois, Kansas, vices, pursuant to sections 225.28(b)(14) and 225.28(b)(9) of Regulation Y. The Board previously has determined that the activities con- Kentucky, Missouri, Oklahoma, and Tennessee (the "Midducted by HTI are closely related to banking within the meaning of west Region"). HTI currently operates a large EFT netsection 4(c)(8) of the BHC Act. See Barnett Banks, Inc., et al., 83 work in a multistate area in the northeastern and southeast- Federal Reserve Bulletin 131 (1996) ("Honor/Most Order"), 12 C.F.R. 225.28(b)(14), and 12 C.F.R. 225.28(b)(9). These bank holding companies would conduct the proposed activities in accordance with Regulation Y and previous Board decisions. 3. Asset and deposit information for each of the Notificants is set 2. In general, an ATM network is an arrangement whereby more forth in the Appendix. than one ATM and more than one depository institution (or the 4. See 12 C.F.R. 225.28(b)(14); Bank of New York Company, Inc.. depository records of such institutions) are connected by electronic or et al, 80 Federal Reserve Bulletin 1107 (1994) ("Bank of New York telecommunications means to one or more computers, processors, or Order")', Banc One Corporation, et al., 81 Federal Reserve Bulletin switches for the purposes of providing ATM services to retail custom- 492 (1995) ("EPS Order"); and Honor/Most Order. ers of the institutions. POS terminals are generally located in the 5. The Board notes that ATM activities must be conducted in establishments of merchants. They accept ATM or similar cards and, accordance with applicable federal and state laws, including applicausing the ATM network or a parallel POS-only network, provide ble branching laws. access to the cardholder's account to transfer funds to the merchant's 6. See 12 U.S.C. § 1843(c)(8). account. 7. See 12 C.F.R. 225.26. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1005 ern United States (the "Southeast Region").8 A number of gate any decrease in existing or potential competition reother large networks would continue to operate in the sulting from this proposal. Changes in market concentra- Southeast Region and the Midwest Region and elsewhere tion, for example, would not be significant. Specifically, in throughout the United States. those states where HONOR and BANKMATE overlap, The area of effective competition has been defined by either one or both of the networks has only limited operareference to the line of commerce, or product market, and a tions in terms of the number of ATMs and financial institugeographic market. The Board has carefully considered the tion members participating in the network. In addition, in relevant product and geographic markets in which to ana- Missouri, where BANKMATE is the leading network and lyze the competitive effects of this proposal in light of all where HONOR has limited operations, a number of other the facts of record, including information provided by networks are represented and offer alternatives to BANK- Notificants, the geographic scope of and services provided MATE, including several large regional networks.13 Simiby existing ATM networks, and other providers of EFT larly, in Tennessee, where HONOR is a leading network services. and where BANKMATE has a presence, several other The Board previously has identified three distinct prod- regional networks are represented.14 ucts that may be offered by ATM networks: In addition, several other large regional networks oper- (1) Network access (access to an ATM network identi- ate in areas adjacent to BANKMATE's network. The Board fied by a common trademark or logo displayed on ATMs believes that these regional networks would provide comand ATM cards); petitive constraints on the BANKMATE network, and that (2) Network services (the switching and gateway func- their existence may become increasingly significant as tions for the network); and multistate banking organizations continue to expand geo- (3) ATM processing (the data processing and telecom- graphically.15 Moreover, smaller networks and third-party munications facilities used to operate, monitor, and sup- processors will continue to operate EFT networks within port a bank's ATMs).9 the Midwest Region, and to provide both direct and potential competition for the BANKMATE network. Finally, HONOR provides all three services to its network mem- national networks offer an alternative to regional networks bers. BANKMATE provides only network access directly; for some financial institutions in the Midwest Region, and network services and ATM processing are provided to national networks appear to be increasing their competitive members of BANKMATE through the current owner of pressure on regional networks.16 MTS, MasterCard International.10 HTI is not acquiring In addition, the Board has considered HONOR'S operatfrom the network services or processing services that sup- ing rules, as well as the plans of Notificants to implement port the BANKMATE network. Accordingly, the relevant these rules for the member institutions in the BANKMATE product market in which to examine the competitive effects network. HONOR'S operating rules permit all depository of this proposal is the network access market.11 institutions to participate in the HONOR network on a The Board previously has determined that the geo- nondiscriminatory basis, to join other regional networks graphic market for network access is an area significantly and to co-brand their cards and ATM terminals.17 The larger than local banking markets and has considered the Board also notes that national network transactions initimarket area of an ATM network to consist of regions ated at a terminal in the HONOR network are not required comprising several states.12 The HONOR network operates to be routed through HTI's switch. HONOR'S rules, moreprimarily in Florida, Virginia, and Maryland, with opera- over, permit the use of third-party processors and untions in 30 other states. The BANKMATE network operates primarily in the Midwest Region, and is the predominate regional EFT network in Kansas and Missouri. 13. HONOR has five members in Missouri, and HONOR ATM HONOR and BANKMATE ATM service areas overlap terminals in Missouri account for less than 1 percent of the total ATMs in the state. in Arkansas, Illinois, Kentucky, Missouri, and Tennessee. 14. BANKMATE has one member in Tennessee, and BANKMATE There are a number of considerations, however, that miti- ATM terminals account for less than 1 percent of the total ATMs in the state. 15. The record indicates that banking organizations tend to transport regional ATM networks as they expand into new geographic areas. 8. HTI operates the second largest EFT network in the United See Honor/Most Order. States, and MTS operates the tenth largest EFT network. 16. See Honor/Most Order at p. 133. 9. See EPS Order. 17. The Board previously has determined that ATM network operat- 10. MasterCard International would continue to provide network ing rules are an important consideration is assessing the competitive and processing services to BANKMATE members during a transi- impact of a proposal under the section 4(c)(8) factors. See Bank of tional period, not to exceed one year. The record indicates that New York Order, EPS Order. In addition, HTI's corporate structure MasterCard International would continue to provide these services to ensures that its board of directors will represent a wide range of its affiliates and their members, but does not intend to enter the market interest and that HTI policy will not be dominated by the organizato provide these services to nonaffiliated entities. tions with the largest shareholdings. The members of the Company's 11. In considering network access for POS transactions, the Board board of directors will be appointed by HTI's Class A shareholders, notes that there are a number of competitors in the market, including which are all financial institutions. The Class A shareholders consist two large national networks that have grown substantially in recent of both net issuers and net acquirers of network transactions, vary in years nationwide (VisaCheck and MasterMoney). asset size of the organization, and are geographically diverse. See 12. See EPS Order. Honor/Most Order. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1006 Federal Reserve Bulletin • December 1997 branded subswitching of transactions subject only to a their deposit accounts. In this case, the geographic markets royalty fee established to compensate HONOR for the use served by HONOR would expand to include the Midwest of its brand.18 Region, and, accordingly, the benefits to consumers in The proposal, therefore, would provide services to de- these areas would be enhanced, particularly as consumers pository affiliates of the Notificants and of other sharehold- travel increasingly and business activity continues to ers of HTI, as well as to unaffiliated financial institutions, grow.21 under operating rules that promote open access to the In addition, HTI would offer services through MTS to all network.19 Smaller financial institutions would have the financial institutions, and smaller financial institutions opportunity to provide their customers with greater access would have the opportunity to provide their customers with to their deposit accounts and thereby could compete with greater access to their deposit accounts. Membership in the larger, multistate organizations for retail deposit funds BANKMATE network would thereby enable smaller finanwithout substantial investments in their own proprietary cial institutions to compete with larger, multistate organiza- ATM networks. In addition, the HONOR operating rules tions to retain deposit funds without the necessity of makwould promote competition between the HTI networks and ing substantial investments in branch systems or their own alternative providers of EFT-related services, including proprietary ATM networks. national ATM and POS networks, other regional networks, Consummation of this proposal would also result in and third-party providers of EFT switching and processing other public benefits. The proposal is expected to produce services, thereby encouraging price and other competition economies of scale, for example, and to reduce average for the services provided by HTI. costs for the combined networks.22 In addition, the Board Moreover, there is no evidence in the record that this expects that a portion of these cost savings would be proposal would reduce competition among Notificants, the passed on to member financial institutions, and to consumother shareholders of HTI, and other banking organizations ers, in the form of lower fees.23 The record also indicates as providers of banking products and services. In particu- that BANKMATE members would benefit from the exlar, HTI's operating rules do not set prices that a member panded research and development programs of the institution must charge its retail customers for ATM or HONOR network, and resulting new products. In addition, POS transactions.20 In this light, and based on all the facts BANKMATE members would have access to a broader of record, the Board concludes that the proposal would not array of products and services that are currently being result in adverse effects such as undue concentration of offered by HONOR, or that will be in the future, including resources or unfair competition. mini-statement and prepaid phone card dispensing services For those reasons, and based on all the facts of record, and home banking services. the Board concludes that consummation of the proposal Additionally, there are public benefits to be derived from would not have a significantly adverse effect on competi- permitting capital markets to operate so that bank holding tion in any relevant market. companies can make potentially profitable investments in nonbanking companies when those investments are consis- Public Benefits tent, as in this case, with the relevant considerations under the BHC Act, and from permitting banking organizations Section 4(c)(8) of the BHC Act requires that, in order to to allocate their resources in the manner they believe is approve a proposal, the Board must determine that the most efficient. For the foregoing reasons, and after careful public benefits that could reasonably be expected from the consideration of all the facts of record, the Board has proposal would outweigh potential adverse effects. This is determined that consummation of this proposal can reasona balancing process that takes into account the extent of the ably be expected to produce public benefits that would potential for adverse effects, which, for the reasons indi- outweigh any possible adverse effects under the proper cated above, the Board does not believe to be significant in incident to banking standard of section 4(c)(8) of the BHC this case. Act. Consumers would benefit from the added account availability and convenience resulting from consummation of Conclusion this proposal. In particular, an ATM network with a larger number of financial institution members and available Based on all the facts of record, the Board has determined ATMs has greater value to network cardholders, because that the notices should be, and hereby are, approved. The they would have broader and more convenient access to 21. See Honor/Most Order at p. 134. 22. Notificants expect that any BANKMATE processing that is 18. "Subswitching" refers to the switching of transactions between transferred to HTI facilities would result in economies of scale with members of the same regional network without accessing that net- respect to computer facilities, operations personnel, programming work, and, therefore, without paying the network's switch fee. Gener- staff, and other support services, and is likely to reduce costs of ally, this is accomplished by routing the transaction through a third- operation of the BANKMATE network. party processor that provides ATM processing services for both 23. See McAndrews, "Retail Pricing of ATM Network Services," network members. Working Paper No. 96-4, April 96-4, April 1996, Federal Reserve 19. See Honor/Most Order at pp. 132-133. Bank of Philadelphia (indicating that network fees and consumer 20. See Honor/Most Order at p. 132. prices are lower in larger EFT networks). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1007 Board's approval is specifically conditioned on Notifi- banking organization in the United States, controlling cants' compliance with the commitments made in connec- $7.4 billion in deposits. First American Corporation opertion with these notices and the conditions referred to in this ates subsidiary banks in Tennessee, and Kentucky. order. The Board's determination also is subject to all the First Citizens BancShares, Inc., with approximately $8.4 bilterms and conditions set forth in Regulation Y, including lion in total consolidated assets, is the 65th largest commerthose in sections 225.7 and 225.25(g) (12 C.F.R. 225.7 and cial banking organization in the United States, controlling 225.25(g)), and to the Board's authority to require modifi- $7.1 billion in deposits. First Citizens BancShares operates cation or termination of the activities of a bank holding subsidiary banks in North Carolina, West Virginia, and company or any of its subsidiaries the Board finds neces- Virginia. sary to assure compliance with, or to prevent evasion of, First Union Corporation, with approximately $142.9 billion the provisions and purposes of the BHC Act and the in total consolidated assets, is the sixth largest commercial Board's regulations and orders issued thereunder. For pur- banking organization in the United States, controlling poses of this action, the commitments and conditions shall $91.7 billion in deposits. First Union operates subsidiary be deemed to be conditions imposed in writing by the banks in North Carolina, Florida, Georgia, South Carolina, Board in connection with its findings and decision, and, as Tennessee, Virginia, Maryland, Delaware, Pennsylvania, such, may be enforced in proceedings under applicable New Jersey, New York, Connecticut, and Washington, D.C. law. First Virginia Banks, Inc., with approximately $9.1 billion in This proposal shall not be consummated later than three total consolidated assets, is the 64th largest commercial months after the effective date of this order, unless such banking organization in the United States, controlling period is extended for good cause by the Board or the $7.7 billion in deposits. First Virginia Bank operates subsid- Federal Reserve Bank of Atlanta or the Federal Reserve iary banks in Virginia, Maryland, and Tennessee. Bank of Richmond, acting pursuant to delegated authority. Jefferson Bankshares, Inc., with approximately $2.2 billion in By order of the Board of Governors, effective October 6, total consolidated assets, is the 145th largest commercial 1997. banking organization in the United States, controlling $1.9 billion in deposits. Jefferson Bankshares operates sub- Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and sidiary banks in Virginia. Governors Kelley, and Phillips. Absent and not voting: Governor NationsBank Corporation, with approximately $240.4 billion Meyer. in total consolidated assets, is the fifth largest commercial BARBARA R. LOWREY banking organization in the United States, controlling Associate Secretary of the Board $126.3 billion in deposits. NationsBank Corporation operates subsidiary banks in North Carolina, Texas, Tennessee, Oklahoma, New Mexico, Arkansas, Missouri, Iowa, Ken- Appendix tucky, and Delaware. Riggs National Corporation, with approximately $5.4 billion Asset and Deposit Data as of June 30, 1997 in total consolidated assets, is the 90th largest commercial banking organization in the United States, controlling Barnett Banks, Inc., with approximately $44.7 billion in total $3.6 billion in deposits. Riggs National Corporation operconsolidated assets, is the 23d largest commercial banking ates subsidiary banks in Virginia and Washington, D.C. organization in the United States, controlling $33.8 billion Signet Banking Corporation, with approximately $11.9 billion in deposits. Barnett Banks operates subsidiary banks in in total consolidated assets, is the 56th largest commercial Florida and Georgia. banking organization in the United States, controlling BB&T Corporation, with approximately $23.0 billion in total $8.2 billion in deposits. Signet Banking Corporation operconsolidated assets, is the 35th largest commercial banking ates subsidiary banks in Maryland, Virginia, and Washingorganization in the United States, controlling $15.4 billion ton, D.C. in deposits. BB&T Corporation operates subsidiary banks SunTrust Banks, Inc., with approximately $55.4 billion in total in North Carolina, South Carolina, and Virginia. consolidated assets, is the 18th largest commercial banking Central Fidelity Banks, Inc., with approximately $10.7 billion organization in the United States, controlling $34.6 billion in total consolidated assets, is the 59th largest commercial in deposits. SunTrust Banks operates subsidiary banks in banking organization in the United States, controlling Georgia, Florida, Tennessee, and Alabama. $8.1 billion in deposits. Central Fidelity Banks operates Synovus Financial Corporation, with approximately $9.2 bilsubsidiary banks in Virginia. lion in total consolidated assets, is the 62nd largest commer- Crestar Financial Corporation, with approximately $22.9 bilcial banking organization in the United States, controlling lion in total consolidated assets, is the 36th largest commer- $7.5 billion in deposits. Synovus Financial Corporation cial banking organization in the United States, controlling operates subsidiary banks in Georgia, South Carolina, Ala- $15.9 billion in deposits. Crestar Financial Corporation bama, and Florida. operates subsidiary banks in Virginia. Wachovia Corporation, with approximately $48.5 billion in First American Corporation, with approximately $10.4 billion total consolidated assets, is the 21st largest commercial in total consolidated assets, is the 60th largest commercial banking organization in the United States, controlling Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1008 Federal Reserve Bulletin • December 1997 $27.8 billion in deposits. Wachovia Corporation operates Canadian Imperial, with total consolidated assets of apsubsidiary banks in North Carolina and Delaware. proximately $165 billion,1 is the second largest banking organization in Canada.2 In the United States, Canadian Imperial operates a branch in Chicago, Illinois; agencies in New York, New York, Los Angeles and San Francisco, Canadian Imperial Bank of Commerce California, and Atlanta, Georgia; and a representative of- Toronto, Canada fice in Houston, Texas. Canadian Imperial also engages through Wood Gundy in a broad range of permissible nonbanking activities in the United States and worldwide, Order Approving Notice to Engage in Nonbanking including underwriting and dealing to a limited extent in Activities bank-ineligible securities. Oppenheimer, with total consolidated assets of $5.2 billion, engages through its affiliates Canadian Imperial Bank of Commerce, Toronto, Canada in a broad range of securities underwriting, brokerage, ("Canadian Imperial"), a bank holding company within investment advisory, and other activities.3 Canadian Impethe meaning of the Bank Holding Company Act ("BHC rial proposes to merge Oppenheimer's broker-dealer sub- Act"), and its wholly owned subsidiary, CIBC Wood sidiary, Oppenheimer & Co., Inc., New York, New York Gundy Securities Corp., New York, New York ("Wood ("OpCo"), with Wood Gundy. Gundy"), have requested the Board's approval under sec- Wood Gundy is and, following the proposed merger with tion 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and OpCo, will continue to be a broker-dealer registered with section 225.24 of the Board's Regulation Y (12 C.F.R. the Securities and Exchange Commission ("SEC") under 225.24) to acquire all the voting shares of Oppenheimer the Securities and Exchange Act of 1934 ("1934 Act") Holdings, Inc., New York, New York. ("Oppenheimer"). (15 U.S.C. § 78a et seq.) and a member of the National Canadian Imperial would thereby engage in the following Association of Securities Dealers ("NASD"). Accordingly, activities: Wood Gundy is and will remain subject to the recordkeep- (1) Underwriting and dealing, to a limited extent, in all ing and reporting obligations, fiduciary standards, and other types of debt and equity securities, other than ownership requirements of the 1934 Act, the SEC, and the NASD. interests in open-end investment companies ("bank- Following the proposed merger, Wood Gundy also would ineligible securities"); be registered as a CPO with the Commodity Futures Trad- (2) Extending credit, pursuant to section 225.28(b)(1) of ing Commission ("CFTC") and would be subject to the Regulation Y (12 C.F.R. 225.28(b)(1)); recordkeeping and reporting obligations, fiduciary stan- (3) Providing services related to extending credit, pursu- dards, and other requirements of the Commodity Exchange ant to section 225.28(b)(2) of Regulation Y (12 C.F.R. Act (7 U.S.C. §2 et seq.) and the CFTC. 225.28(b)(2)); (4) Providing financial and investment advisory ser- Underwriting and Dealing Activities vices, pursuant to section 225.28(b)(6) of Regulation Y (12 C.F.R. 225.28(b)(6)); The Board has determined—subject to the framework of (5) Providing securities brokerage, private placement, prudential limitations to address the potential for conflicts riskless principal, futures commission merchant, and of interests, unsound banking practices, or other adverse other transactional services pursuant to section effects—that the proposed activities of underwriting and 225.28(b)(7) of Regulation Y (12 C.F.R. 225.28(b)(7)); dealing in bank-ineligible securities are so closely related (6) Underwriting and dealing in government obligations to banking as to be a proper incident thereto within the and money market instruments in which state member meaning of section 4(c)(8) of the BHC Act.4 banks may underwrite and deal under 12 U.S.C. §§ 335 and 24(7) ("bank-eligible securities"), engaging in investing and trading activities, and buying and selling 1. Asset data are as of April 30, 1997, and are based on the bullion and related activities, pursuant to section exchange rate applicable on that date. 225.28(b)(8) of Regulation Y (12 C.F.R. 225.28(b)(8)); 2. Ranking data are as of December 31, 1995. 3. Oppenheimer currently engages in certain insurance and real and estate activities, and controls, either by itself or through certain joint (7) Acting as the commodity pool operator ("CPO") of venture relationships, several limited partnerships that invest in debt certain investment funds engaged in purchasing and and equity securities beyond the levels permissible for bank holding selling futures and options on futures on certain com- companies. Canadian Imperial has committed to conform the activimodities. ties, investments, and relationships of Oppenheimer and its subsidiaries to those permissible for bank holding companies under section 4 of the BHC Act within two years of acquiring Oppenheimer. Canadian Notice of the proposal, affording interested persons an Imperial also has committed to cease selling new insurance policies opportunity to submit comments, has been published and annuities and to cease making new real estate investments that would be impermissible for bank holding companies under the BHC (62 Federal Register 43,532 (1997)). The time for filing Act within one year and six months, respectively, of consummation of comments has expired, and the Board has considered the the proposed acquisition. notice and all comments received in light of the factors set 4. See J.P. Morgan & Co. Incorporated, et ai, 75 Federal Reserve forth in section 4(c)(8) of the BHC Act. Bulletin 192 (1989), aff'd sub nom. Securities Industries Ass'n v. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1009 The Board also has determined that conduct of the reasonably be expected to produce benefits to the public proposed activities is consistent with section 20 of the . . . that outweigh possible adverse effects, such as undue Glass-Steagall Act (12 U.S.C. § 377), provided that the concentration of resources, decreased or unfair competicompany engaged in underwriting and dealing activities tion, conflicts of interests, or unsound banking practices."9 derives no more than 25 percent of its gross revenues from As part of its evaluation of these factors, the Board considunderwriting and dealing in bank-ineligible securities over ers the financial condition and managerial resources of the a two-year period.5 CIBC has committed that Wood Gundy notificant and its subsidiaries and the effect the transaction will conduct its bank-ineligible securities underwriting and would have on such resources.10 dealing activities subject to the Board's 25-percent revenue In considering the financial resources of the notificant, limit.6 Other Activities Approved by Regulation or Order the Board has reviewed the capitalization of Canadian The Board previously has determined by regulation that Imperial and Wood Gundy in accordance with the stanthe proposed credit and credit-related activities; financial dards set forth in the Section 20 Orders. The Board finds and investment advisory services; securities brokerage, the capitalization of each to be consistent with approval of riskless principal, private placement, futures commission the proposal. The Board's determination is based on all the merchant, and other transactional activities; bank-eligible facts of record, including Canadian Imperial's projections underwriting and dealing, investment and trading, and buy- of the volume of Wood Gundy's underwriting and dealing ing and selling of bullion and related activities to be activities in bank-ineligible securities. conducted by Canadian Imperial after its acquisition of The Board also has reviewed the managerial resources Oppenheimer are closely related to banking within the of each of the entities involved in this proposal. The Board meaning of section 4(c)(8) of the BHC Act.7 In addition, has reviewed these resources in light of examination rethe Board previously has determined by order that a bank ports and the Board's supervisory experience with Canaholding company may serve as the CPO of private invest- dian Imperial and Wood Gundy. The Board also has conment funds.8 Canadian Imperial has committed to conduct sidered that Canadian Imperial has established policies and each of these activities in accordance with the BHC Act, procedures to ensure compliance with this order and the Regulation Y, and the relevant Board interpretations and Section 20 Orders, including computer, audit, and account orders. systems, internal risk management controls, and the necessary operational and managerial infrastructure. On the ba- Proper Incident to Banking Standard sis of these and all the facts of record, including the commitments provided in this case and the proposed man- In order to approve the proposal, the Board also must agerial structure and risk management systems of Wood determine that the proposed activities are a proper incident Gundy, the Board has concluded that financial and manageto banking, that is, that the proposed transaction "can rial considerations are consistent with approval of the notice. The Board has carefully considered the competitive effects of the proposed acquisition. Canadian Imperial repre- Board of Governors of the Federal Reserve System, 900 F.2d 360 (D.C. Cir. 1990); Citicorp, et al., 73 Federal Reserve Bulletin 473 sents that there are few overlaps in the services provided (1987), aff'd sub nom. Securities Industry Ass'n v. Board of Gover- by Wood Gundy and Oppenheimer: Wood Gundy specialnors of the Federal Reserve System, 839 F.2d 47 (2d Cir. 1988), cert, izes in offering and underwriting and dealing in debt proddenied, 486 U.S. 1059 (1988); as modified by Review of Restrictions ucts, while OpCo's business has been focused primarily on on Director, Officer and Employee Interlocks, Cross-Marketing Activiequity research and underwriting. To the extent that Wood ties, and the Purchase and Sale of Financial Assets Between a Section 20 Subsidiary and an Affiliated Bank or Thrift, 61 Federal Register Gundy and Oppenheimer offer different types of products, 57,679 (1996), and Amendments to Restrictions in the Board's Sec- the proposed acquisition would result in no loss of competion 20 Orders, 62 Federal Register 45,295 (1997) (collectively, tition. In those markets in which Wood Gundy's and Op- "Section 20 Orders"). penheimer' s product offerings do overlap, there are numer- 5. Compliance with the revenue limitation shall be calculated in accordance with the method stated in the Section 20 Orders, as ous existing and potential competitors. Consummation of modified by the Order Approving Modifications to the Section 20 the proposal, therefore, would have a de minimis effect on Orders, 75 Federal Reserve Bulletin 751 (1989), and 10 Percent competition in the market for these services, and the Board Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank has concluded that the proposal would not result in any Holding Companies Engaged in Underwriting and Dealing in Securisignificantly adverse competitive effects in any relevant ties, 61 Federal Register 48,953 (1996), and Revenue Limit on Bank- Ineligible Activities of Subsidiaries of Bank Holding Companies En- market. gaged in Underwriting and Dealing in Securities, 61 Federal Register As noted above, Canadian Imperial has committed that, 68,750 (1996) (collectively, "Modification Orders"). following the proposed acquisition, Wood Gundy will con- 6. Wood Gundy may provide services that are necessary incidents to duct its bank-ineligible securities underwriting and dealing the proposed underwriting and dealing activities. Unless Canadian activities in accordance with the prudential framework Imperial receives specific approval under section 4(c)(8) of the BHC Act to conduct the activities independently, Wood Gundy must treat any revenues from the incidental activities as ineligible revenues subject to the Board's revenue limitation. 9. See 12 U.S.C. § 1843(c)(8). 7. See 12 C.F.R. 225.28(b)(1), (2), (6), (7), and (8). 10. See 12 C.F.R. 225.26; see also The Fuji Bank, Limited, 75 8. See The Bessemer Group, Inc., 82 Federal Reserve Bulletin 569 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 (1996). Federal Reserve Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1010 Federal Reserve Bulletin • December 1997 established by the Board's Section 20 Orders. Under the and the conditions set forth in this order and the aboveframework and conditions established in this order and the noted Board regulations and orders. These commitments Section 20 Orders, and based on all the facts of record, the and conditions are deemed to be conditions imposed in Board concludes that Wood Gundy's proposed underwrit- writing by the Board in connection with its findings and ing and dealing activities in bank-ineligible securities are decision, and, as such, may be enforced in proceedings not likely to result in significantly adverse effects that under applicable law. would outweigh the public benefits. Similarly, the Board The proposal shall not be consummated later than three finds no evidence that Wood Gundy's proposed riskless months after the effective date of this order, unless such principal, private placement, and other nonbanking period is extended for good cause by the Board or by the activities—conducted under the framework and conditions Federal Reserve Bank of New York, acting pursuant to established in this order and Regulation Y—would likely delegated authority. result in any significantly adverse effects that would out- By order of the Board of Governors, effective Octoweigh the public benefits of the proposal. ber 27, 1997. The Board expects that the proposed acquisition would provide added convenience to customers of both Canadian Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Imperial and Oppenheimer. Canadian Imperial has indi- Governors Kelley, and Meyer. Absent and not voting: Governor Phillips. cated that the acquisition would expand the range of products and services available to its customers and those of JENNIFER J. JOHNSON Oppenheimer. Canadian Imperial also has stated that the Deputy Secretary of the Board proposed transaction would result in operational efficiencies that would allow it to become a more effective compet- First State Bancshares, Inc. itor. Farmington, Missouri Based on all the facts of record, the Board has determined that performance of the proposed activities by Cana- Order Approving the Acquisition of a Savings dian Imperial can reasonably be expected to produce pub- Association lic benefits. Accordingly, the Board has determined that performance of the proposed activities by Canadian Impe- First State Bancshares, Inc., Farmington, Missouri ("First rial is a proper incident to banking for purposes of sec- State"), a bank holding company within the meaning of the tion 4(c)(8) of the BHC Act. Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 4(c)(8) of the BHC Act Conclusion (12 U.S.C. § 1843(c)(8)) and section 225.24 of the Board's Regulation Y (12 CFR 225.24) to acquire up to 10 percent On the basis of all the facts of record, the Board has of the voting shares of Perry County Financial Corporation determined that the notice should be, and hereby is, ap- ("Perry County"), and thereby acquire Perry County's proved, subject to all the terms and conditions in this order wholly owned savings association subsidiary, Perry County and the Section 20 Orders, as modified by the Modification Savings Bank, FSB, a federal savings bank ("Perry County Orders. The Board's approval of the proposal extends only FSB"), both in Perryville, Missouri.1 to activities conducted within the limitations of those or- Notice of the proposal, affording interested persons an ders and this order, including the Board's reservation of opportunity to submit comments, has been published authority to establish additional limitations to ensure that (62 Federal Register 37,057 (1997)). The time for filing Wood Gundy's activities are consistent with safety and comments has expired, and the Board has considered the soundness,, avoidance of conflicts of interests, and other notice and all comments received in light of the factors set relevant considerations under the BHC Act. Underwriting forth in section 4 of the BHC Act. and dealing in any manner other than as approved in this First State is the 40th largest depository institution in order and the Section 20 Orders (as modified by the Modi- Missouri, controlling deposits of $174.4 million, representfication Orders) is not within the scope of the Board's ing less than 1 percent of the total deposits in depository approval and is not authorized for Wood Gundy. institutions in the state.2 Perry County controls one thrift in The Board's determination is subject to all the terms and Missouri with deposits of $62.5 million. conditions set forth in Regulation Y, including those in The Board previously has determined by regulation that sections 225.7 and 225.25(c) of Regulation Y (12 C.F.R. operating a savings association is closely related to bank- 225.7 and 225.25(c)), and to the Board's authority to ing for purposes of section 4(c)(8) of the BHC Act.3 The require such modification or termination of the activities of Board requires savings associations acquired by bank holda bank holding company or any of its subsidiaries as the Board finds necessary to ensure compliance with, and to prevent evasion of, the provisions of the BHC Act and the 1. First State currently owns approximately 5 percent of the voting Board's regulations and orders issued thereunder. The shares of Perry County. Board's decision is specifically conditioned on compliance 2. State and market data are as of June 30, 1996. In this context, depository institutions include commercial banks, savings banks, and with all the commitments made in connection with this savings associations. notice, including the commitments discussed in this order, 3. 12 C.F.R. 225.28(b)(4)(ii). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1011 ing companies to conform their direct and indirect activi- effect on competition or on the concentration of banking ties to those permissible for bank holding companies under resources in the Perryville banking market or in any relesection 4 of the BHC Act and Regulation Y. First State has vant banking market. committed that it will conduct this activity in accordance with the Board's regulations. Other Considerations In order to approve the proposal, the Board also must determine that the performance of the proposed activities As part of its evaluation of the public interest factors, the are a proper incident to banking, that is, that the proposed Board has carefully considered the financial and managetransaction "can reasonably be expected to produce bene- rial resources of First State, Perry County, and their subsidfits to the pubfic .. . that outweigh possible adverse effects, iaries, and the effect the transaction would have on such such as undue concentration of resources, decreased or resources in light of all the facts of record. These facts of unfair competition, conflicts of interests, or unsound bank- record include supervisory reports of examination assessing practices." As part of the Board's evaluation of these ing the financial and managerial resources of the organizafactors, the Board has carefully considered the competitive tions, including management's record of compliance with effects of the proposed transaction in light of all the facts of applicable laws and regulations. Based on all the facts of record. record, the Board has concluded that the financial and First State and Perry County compete directly in the managerial resources of the organizations involved in the Perryville banking market in Missouri.4 The Board has proposal are consistent with approval.8 noted previously that the acquisition of a substantial own- The record also indicates that consummation of the ership interest in a competitor or a potential competitor of proposal would result in public benefits. There are public the acquiring firm may alter the market behavior of both benefits to be derived from permitting capital markets to firms in such a way as to weaken or eliminate indepen- operate so that bank holding companies may make potendence of action between the organizations and increase the tially profitable investments in nonbanking companies likelihood of cooperative operations.5 If First State were when those investments are consistent, as in this case, with considered to control Perry County, after consummation of the relevant considerations under the BHC Act, and from the proposal, First State would become the second largest permitting banking organizations to allocate their resources depository organization in the Perryville banking market in the manner they believe is most efficient. Based on all controlling deposits of approximately $75.5 million, repre- the facts or record, the Board has determined that the First senting 16.9 percent of total deposits in depository institu- State proposal can reasonably be expected to produce tions in the market.6 Market concentration as measured by public benefits that outweigh possible adverse effects under the Herfindahf-Hirschman Index ("HHI"), would increase the proper incident to banking standard of section 4(c)(8) 81 points to 2219.7 Based on all the facts of record, of the BHC Act. Accordingly, the Board has determined including the number of competitors that would remain in that the balance of public interest factors it must consider the market and the resulting market concentration as mea- under section 4(c)(8) of the BHC Act is favorable and sured by the HHI, the Board concludes that consummation consistent with approval. of the proposal would not have a significantly adverse Based on the foregoing, and all the facts of record, the Board has determined that the notice should be, and hereby is, approved. The Board's approval is specifically conditioned on compliance by First State with all the commit- 4. The Perryville, Missouri, banking market is approximated by ments made in connection with this notice. The Board's Perry County, Missouri, plus the area surrounding the town of St. Mary in Ste. Genevieve County, Missouri. determination also is subject to all the conditions in Regu- 5. First Banks, Inc., 80 Federal Reserve Bulletin 34 (1994). First lation Y, including those in sections 225.7 and 225.23(g) State proposes to acquire up to 10 percent of Perry County's voting (12 C.F.R. 225.7 and 225.23(g)) and to the Board's authorsecurities, which are registered under the Securities Exchange Act of 1934 and publicly traded. 6. Market share data before consummation are based on calculations in which the deposits of thrift institutions are included at 50 percent. 8. The Board notes that First State's interest in Perry County The Board previously has indicated that thrift institutions have be- exceeded 5 percent of the outstanding voting shares of Perry County come, or have the potential to become, significant competitors of as the result of a stock redemption, and that First State promptly commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin requested the Board's approval to retain its interest. The Board also 788 (1990). Because the deposits of Perry County FSB would be has carefully considered, in light of supervisory information provided owned by a commercial banking organization after consummation of by the Office of Thrift Supervision ("OTS"), Perry County FSB's the proposal, those deposits are included at 100 percent in the calcula- primary federal supervisor, comments from Perry County contending tion of First State's pro forma market share. See Norwest Corporation, that First State has not complied with the regulatory filing require- 78 Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal ments of the OTS. In addition, the Board has provided Perry County's Reserve Bulletin 669, 670 n. 9 (1990). comments on First State's compliance with the federal securities laws 7. Under the revised DOJ Guidelines, 49 Federal Register 26,823 to the Securities and Exchange Commission for consideration. The (June 29, 1984), a market in which the post-merger HHI is above 1800 Board previously has determined that its limited jurisdiction to review is considered highly concentrated. The Justice Department has in- applications and notices under the specific statutory factors in the formed the Board that a bank merger or acquisition generally will not BHC Act does not authorize the Board to adjudicate disputes between be challenged (in the absence of other factors indicating anticompeti- a commenter and an applicant that arise under statutes, like federal tive effects) unless the post-merger HHI is at least 1800 and the securities laws, that are administered and enforced by another federal merger increases the HHI by more than 200 points. agency. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1012 Federal Reserve Bulletin • December 1997 ity to require such modification or termination of the Federal Register 45,421 (1997)). The time for filing comactivities of a holding company or any of its subsidiaries as ments has expired, and the Board has considered the notice the Board finds necessary to assure compliance with, or to and all comments received in light of the factors set forth prevent evasion of, the provisions and purposes of the in sections 3 and 4(c)(8) of the BHC Act.2 BHC Act and the Board's regulations and order issued First Union, with total consolidated assets of approxithereunder. For the purpose of this action, the commit- mately $136.7 billion, is the sixth largest commercial bankments and conditions relied on by the Board in reaching its ing organization in the United States, controlling 3.6 perdecision are deemed to be conditions imposed in writing cent of the total banking assets of insured commercial by the Board in connection with its findings and decision, banks in the nation ("total banking assets").3 The subsidand, as such, may be enforced in proceedings under appli- iary banks of First Union operate in North Carolina, Florcable law. ida, Georgia, South Carolina, Tennessee, Virginia, Mary- The proposal shall not be consummated later than three land, Delaware, Pennsylvania, New Jersey, New York, months after the effective date of this order, unless such Connecticut, and Washington, D.C. First Union also enperiod is extended for good cause by the Board, or by the gages through other subsidiaries in a number of permissi- Federal Reserve Bank of St. Louis, acting pursuant to ble nonbanking activities. Signet, with total consolidated delegated authority. assets of approximately $11.7 billion, is the 56th largest By order of the Board of Governors, effective Octo- commercial banking organization in the United States, ber 29, 1997. controlling less than 1 percent of total banking assets in the nation. Signet Bank operates in Virginia, Maryland, and Voting for this action: Vice Chair Rivlin and Governors Kelley, Washington, D.C., and Signet engages through subsidiaries Phillips, and Meyer. Absent and not voting: Chairman Greenspan. in permissible nonbanking activities. On consummation of the proposal, First Union would JENNIFER J. JOHNSON remain the sixth largest commercial banking organization Deputy Secretary of the Board in the United States, with total consolidated assets of approximately $148.4 billion, representing 3.9 percent of Orders Issued Under Sections 3 and 4 of the Bank total banking assets in the United States. First Union would Holding Company Act control 17.3 percent, 18.5 percent, and 9.1 percent of the total deposits held by insured depository institutions in First Union Corporation Virginia, Maryland, and Washington, D.C., respectively. Charlotte, North Carolina Interstate Banking Analysis Order Approving the Acquisition of a Bank Holding Company Section 3(d) of the BHC Act, as amended by Section 101 of the Reigle-Neal Interstate Banking and Branching Effi- First Union Corporation, Charlotte, North Carolina ("First ciency Act of 1994, allows the Board to approve an appli- Union"), a bank holding company within the meaning of cation by a bank holding company to acquire a bank the Bank Holding Company Act ("BHC Act"), has relocated in a state other than the home state of such bank quested the Board's approval under section 3 of the BHC holding company if certain conditions are met.4 For pur- Act (12 U.S.C. § 1842) to acquire Signet Banking Corpo- poses of the BHC Act, the home state of First Union is ration ("Signet") and thereby acquire its subsidiary bank, North Carolina, and First Union proposes to acquire Signet Signet Bank, both of Richmond, Virginia.1 First Union also Bank, which has operations in Virginia, Maryland, and has requested approval under section 4(c)(8) of the BHC Washington, D.C. The conditions for an interstate acquisi- Act (12 U.S.C. § 1843(c)(8)) and section 225.24 of the Board's Regulation Y (12 C.F.R. 225.24) to acquire the nonbanking subsidiaries of Signet and thereby engage in 2. A commenter objected that notice of the proposal was not the nonbanking activities listed in Appendix A. published in the Washington, D.C., area. Notice of the proposal was Notice of the proposal, affording interested persons an published in accordance with the Board's Regulation Y and Rules of opportunity to submit comments, has been published (62 Procedure in the Federal Register and in newspapers of general circulation in Charlotte, North Carolina, and in Richmond, Virginia, the location of the head offices of First Union National Bank, Charlotte, North Carolina, and Signet Bank. See 12 C.F.R. 225.16(b) and 1. First Union proposes to exchange its shares for all the outstanding 262.3(b). Notice also was provided in the Board's H.2A publication, shares of Signet. On consummation of the proposal, Signet would be which is available by mail, fax-on-demand, and on the Board's merged with and into First Union. First Union also has requested the Internet Home Page. The commenter, moreover, submitted timely Board's approval to exercise an option to purchase up to 19.9 percent comments that were considered by the Board. of the voting shares of Signet. The option would become moot on 3. Asset and ranking data are as of March 31, 1997; deposit data are consummation of the proposal. as of June 30, 1996. First Union also proposes to merge Signet Bank into its lead 4. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding subsidiary bank, First Union National Bank, Charlotte, North Caro- company's home state is the state in which the operations of the bank lina, and has requested the approval of the Office of the Comptroller of holding company's banking subsidiaries were principally conducted the Currency ("OCC"), the bank's primary federal supervisor, under on July 1, 1966, or the date on which the company became a bank section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. § 1828). holding company, whichever is later. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1013 tion under section 3(d) of the BHC Act are met in this Justice Merger Guidelines ("DOJ Guidelines"), and comcase.5 mitments made by First Union to divest certain branches.10 Consummation of the proposal, without divestitures, would Competitive Considerations be consistent with DOJ Guidelines in ten of the banking markets in which First Union and Signet compete.11 The BHC Act prohibits the Board from approving an In order to mitigate the potential anticompetitive effects application under section 3 of the BHC Act if the proposal of the proposal in other markets, First Union has commitwould result in a monopoly or if the effect of the proposal ted to divest a total of four branches in three Virginia may be substantially to lessen competition in any relevant banking markets to an out-of-market competitor.12 With market, unless the Board finds that the anticompetitive the proposed divestitures, the concentration levels in the effects of the proposal are clearly outweighed in the public remaining banking markets would be consistent with DOJ interest by the probable effect of the proposal in meeting Guidelines following consummation of the proposal.13 the convenience and needs of the community to be served.6 As part of the Board's evaluation of these factors, the Board has carefully considered the competitive effects of Bulletin 386 (1989); National City Corporation, 70 Federal Reserve the proposed transaction in light of comments received Bulletin 743 (1984). Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50-percent weighted from interested persons on the potential effects of the basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 proposal on competition in various markets.7 (1991). First Union and Signet compete directly in 13 banking 10. Under the revised DOJ Guidelines, 49 Federal Register 26,823 markets in Virginia, Maryland, and Washington, D.C.8 The (June 29, 1984), a market in which the post-merger HHI is more than 1800 is considered highly concentrated. The Department of Justice Board has carefully reviewed the competitive effects of the has informed the Board that a bank merger or acquisition generally proposal in these banking markets in light of all the facts of will not be challenged (in the absence of other factors indicating record, including the number of competitors that would anticompetitive effects) unless the post-merger HHI is at least 1800 remain in the markets, the characteristics of the markets, and the merger increases the HHI by more than 200 points. The the projected increase in the concentration of total deposits Department of Justice has stated that the higher than normal threshold for an increase in the HHI when screening bank mergers and acquisiin depository institutions in the markets ("market depostions for anticompetitive effects implicitly recognizes the competitive its"),9 as measured by the HHI, under the Department of effects of limited-purpose lenders and other nondepository financial entities. 11. A commenter contends that the proposal would have an anticompetitive effect on small business lending in the Roanoke, Virginia, 5. 12 U.S.C. §§ 1842(c)(1)(A) and (B) and 1842(d)(2)(A) and (B). Metropolitan Statistical Area ("MSA"). The Board and the courts First Union is adequately capitalized and adequately managed. On traditionally have recognized that the appropriate product market for consummation of the proposal, First Union would control less than evaluating the competitive effects of bank mergers and acquisitions is 10 percent of the total amount of deposits of insured depository the cluster of products (various kinds of credit) and services (such as institutions in the United States, and less than 30 percent of the total checking accounts and trust administration) offered by banking instituamount of deposits of insured depository institutions in Virginia, tions. See Chemical Banking Corporation, 83 Federal Reserve Bulle- Maryland, and Washington, D.C., respectively. See Md. Code Ann., tin 239 (1997), and the discussion of the relevant case law and (Financial Institutions) § 5-1013. In addition, Signet Bank has been in economic studies therein. Commenter presents no facts to support a existence for the minimum period of time necessary to satisfy age separate product market for small business lending, and the Board requirements established by applicable state law. All other require- finds none in this case. ments of section 3(d) of the BHC Act also would be met on consum- 12. First Union has committed to execute sales agreements for each mation of the proposal. of the proposed divestitures prior to consummation of this transaction, 6. 12 U.S.C. § 1842(c)(1). and to complete the divesture within 180 days of consummation. First 7. Commenters maintain that consummation of the proposal would Union also has committed that, in the event it is unsuccessful in have anticompetitive effects in the Roanoke, Galax, and Russell, completing the divestitures within 180 days of consummation, it will Virginia, banking markets, notwithstanding the proposed divestitures. transfer the unsold branches to an independent trustee that is accept- One commenter also maintains that the proposal would be anticom- able to the Board and that will be instructed to sell the branches petitive because three banking organizations in Virginia would control promptly. First Union also has committed to submit to the Board, approximately 40 percent of the insured deposits in that state. The before consummation of this proposal, an executed trust agreement Board and the courts have concluded that the commercial realities in acceptable to the Board stating the terms of these divestitures. the banking industry require consideration of the effects of a proposed 13. A commenter maintains, without providing any facts, that the acquisition in the local geographic banking markets where the acquir- Roanoke, Virginia, banking market ("Roanoke banking market") is ing and acquired institutions compete, as previously discussed. See smaller than the banking market defined by the Board (see Appenalso United States v. Phillipsburg Nat'I Bank, 399 U.S. 350, 362. The dix B). The Board and the courts have found that the relevant Board notes, moreover, that, even if the state and Washington, D.C., geographic market for analyzing the competitive effect of a proposal borders delineated an appropriate banking market, each would be must reflect commercial and banking realities and should consist of unconcentrated as measured by the Herfindahl-Hirschman Index the local area where the banks involved offer their services and where ("HHI"), the effects would not be significant, and numerous competi- local customers can practicably turn for alternatives. See St. Joseph tors would remain in each area. Valley Bank, 68 Federal Reserve Bulletin 673 (1982); United States v. 8. The banking markets and market data are discussed in Appen- Philadelphia Nat'l Bank, 374 U.S. 321, 357 (1963); and United States dix B. v. Phillipsburg Nat'l Bank, supra (1969). In making a determination 9. Market share data before consummation are based on calculations on the geographic market in this case, the Board has considered in which the deposits of thrift institutions are included at 50 percent. worker commuting patterns (as indicated by census data) and other The Board previously has indicated that thrift institutions have be- indicia of economic integration and transmission of competitive forces come, or have the potential to become, significant competitors of among depository institutions. These data indicate that the Roanoke commercial banks. See Midwest Financial Group, 75 Federal Reserve banking market includes the city of Roanoke, the rest of Botetourt and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1014 Federal Reserve Bulletin • December 1997 Based on all the facts of record, including the proposed supervisory factors that the Board must consider under divestitures, the Board concludes that consummation of the section 3 of the BHC Act.15 proposal would not have a significantly adverse effect on competition or on the concentration of banking resources B. Convenience and Needs Considerations in any relevant banking market. The Board has carefully considered the effect of the pro- Other Factors Under the BHC Act posal on the convenience and needs of the communities to be served in light of all the facts of record. The Board notes The BHC Act also requires the Board, in acting on an that First Union and Signet assist in meeting the conveapplication, to consider the financial and managerial re- nience and needs of their communities by providing a full sources of the companies and banks involved, the conve- range of financial services, including commercial and retail nience and needs of the communities to be served, and banking services, trust and investment management sercertain other supervisory factors. vices, through various bank and nonbank subsidiaries. After consummation of the transaction, First Union A. Financial, Managerial, and Other Supervisory would meet the needs of its communities and the communi- Factors ties formerly served by Signet through the First Union CRA program under the Community Reinvestment Act The Board has carefully considered the financial and man- (12 U.S.C. § 2901 et seq.) ("CRA"). First Union's CRA agerial resources and future prospects of First Union, Sig- program requires local management to develop community net, and their respective subsidiary banks, and other super- reinvestment plans for delineated communities. The comvisory factors in light of all the facts of record. The Board bined organization would continue to have a CRA state notes that the bank holding companies and their subsidiary community reinvestment coordinator who would review banks are currently well capitalized and are expected to annual plans and quarterly progress reports developed by remain so after consummation of the proposal. The Board local management to meet the needs of its communities. In also has considered other aspects of the financial condition addition, senior management and the board of directors of and resources of the two organizations, the structure of the the combined organization would continue to oversee CRA proposed transactions, and the managerial resources of policy through First Union's State Self-Assessment Comeach of the entities and the combined organization, the mittee and Audit Committee. First Union also states that Board's supervisory experience with First Union and Sig- the combined organization would enhance the products and net, and examinations by the OCC and other banking services available to customers, including products for authorities assessing the financial and managerial resources low- to moderate-income ("LMI") households, small busiof the entities.14 Based on all the facts of record, including nesses and small farms. In this light, the Board has given all comments received and relevant reports of examination substantial consideration to the existing record of First of the companies and banks involved in this proposal, the Union, as reflected in its programs and in the supervisory Board has concluded that considerations relating to the assessments of its performance, of helping to meet the financial and managerial resources and future prospects of convenience and needs of all its communities, including First Union, Signet, and their respective subsidiaries are LMI communities.16 consistent with approval of the proposal, as are the other 15. Commenters cite, as indications of concern regarding the mana- Roanoke Counties, and the northern portion of Franklin County. gerial resources of First Union, one lawsuit alleging age discrimina- Roanoke is the largest metropolitan area in Virginia west of Rich- tion and another lawsuit alleging racial discrimination in decisions by mond, and is the center of a Ranally Metropolitan Area. A major First Union to terminate the employment of certain employees. The highway travels through Botetourt County and south through portions Board previously has stated that its limited jurisdiction to review of Roanoke County. More than 78 percent of the workers living in applications under the BHC Act does not authorize the Board to Roanoke County work either in Roanoke County or the city of adjudicate disputes involving an applicant that arise under statutes Roanoke, and 14.5 percent commute to the city of Salem, which is administered and enforced by another agency in areas such as employalso within the Roanoke banking market. Based on all the facts of ment discrimination. See, e.g., Norwest Corporation, 82 Federal record, the Board concludes that the relevant banking market for Reserve Bulletin 580 (1996); see also Western Bancshares v. Board of assessing the competitive effects of the proposal is the Roanoke Governors, 480 F.2d 749 (10th Cir. 1973). One commenter also states banking market as defined above. that the board of directors and employees of the First Union National 14. One commenter contends that guidance provided by the Federal Bank of Virginia lack racial diversity. Under the Department of Trade Commission and by the Federal Financial Institutions Examina- Labor's regulations, First Union is required to file an annual report tion Council under the Fair Credit Reporting Act (15 U.S.C. § 1861 with the Equal Employment Opportunity Commission ("EEOC") et seq.) on access to consumer credit information in connection with covering all employees in its corporate structure. See 41 C.F.R. pre-approved credit offers is illegal, and that First Union and Signet, 60-1.7(a) and 60-1.40. The Department of Labor, and the EEOC in relying on this agency guidance, acted illegally. The commenter also particular, have the statutory authority to address disputes regarding contends that the Board should consider the financial impact on First illegal discriminatory labor practices. Union and its shareholders that could result if that commenter or 16. Commenters maintain that Signet has a better record of making another consumer succeeded in challenging the agency interpreta- housing-related and community development loans, and that First tions. The Board notes that this guidance by the agencies was pro- Union has an insufficient record of improving the housing-related vided pursuant to their interpretive authority. lending record of acquired institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1015 CRA Performance Record of First Union Union's notice to acquire Society First Federal Savings Bank, Fort Myers, Florida (order dated February 26, 1996), The Board has long held that consideration of the conve- and again in connection with approving First Union's nience and needs factor includes a review of the records of notice to acquire Home Financial Corporation and its the relevant depository institutions under the CRA. As wholly owned subsidiary, Home Savings Bank, FSB, both provided in the CRA, the Board has evaluated this factor in of Hollywood, Florida (order dated October 15, 1996).20 In light of examinations by the primary federal supervisors of the First Union/HFC Order and First Union/Society First the CRA performance records of the relevant institutions. Order, the Board considered a number of aspects of the An institution's most recent CRA performance evaluation CRA performance of First Union, including First Union's is a particularly important consideration in the applications lending, marketing, and outreach activities, the services process because it represents a detailed on-site evaluation provided through branches, branch closing policies, and of the institution's overall record of performance under the initiatives to increase lending in LMI areas. In the First CRA by its primary federal supervisor.17 Union/HFC Order, furthermore, the Board carefully re- In evaluating this proposal, the Board has carefully viewed the policies and procedures of First Union's subsidconsidered First Union's CRA performance record, and, in iary banks for assuring compliance with the fair lending particular, the record of its lead subsidiary bank, First laws, and the community development activities of First Union National Bank, formerly, First Union National Bank Union. of North Carolina ("FUNB").18 The predecessor institu- The Board also has considered supervisory information tion to FUNB received an "outstanding" rating from its concerning First Union's record of CRA performance, primary federal supervisor, the OCC, at its most recent which includes public and confidential examination inforpublicly available examination for CRA performance in mation that assesses the following aspects of First Union's April 1994; and First Union's other subsidiary banks re- lead bank's CRA performance: ceived "satisfactory" ratings from the OCC or the Federal (1) Lending record and geographic distribution of loans Deposit Insurance Corporation ("FDIC").19 Signet Bank throughout the bank's communities, including LMI received a "satisfactory" rating at its most recent CRA areas; performance evaluation by its primary federal supervisor. (2) Efforts designed to assist in meeting the credit needs The Board recently reviewed First Union's record of of the bank's communities, including affordable mort- CRA performance in connection with its approval of First gage, government-sponsored and small business lending programs; (3) Community development activities; (4) Record of compliance with fair lending laws, and fair 17. The Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act ("Agency CRA State- lending law policies and programs; and ment") provides that a CRA examination is an important and often (5) Branch closing policies and procedures, and record controlling factor in the consideration of an institution's CRA record of closing branches since the 1994 performance evaluaand that reports of these examinations will be given great weight in tions.21 the applications process. See 54 Federal Register 13,742 and 13,745 (1989). 18. As of July 31, 1997, First Union merged FUNB with First Comments on the Proposal Union National Bank of Florida, Jacksonville, Florida; First Union National Bank of Georgia, Atlanta, Georgia; First Union National Bank of Maryland, Rockville, Maryland; First Union National Bank The Board has carefully considered comments received on of South Carolina, Greenville, South Carolina; First Union National Bank of Tennessee, Nashville, Tennessee; First Union National Bank the proposal, the performance records of First Union and of Virginia, Roanoke, Virginia; First Union National Bank of Wash- Signet under the CRA, and the effect of the proposal on the ington, D.C., District of Columbia; and First Union Bank of Connect- convenience and needs of the community. Commenters icut, Stamford, Connecticut. contend that branch closings that would result from the 19. The OCC conducted a joint CRA examination of eight of First Union's subsidiary banks in April 1994. In addition to FUNB, First proposal would disproportionately disadvantage communi- Union's remaining seven subsidiary banks, First Union National Bank ties with predominately LMI and minority residents. Comof Florida, First Union National Bank of Georgia, First Union Na- menters also criticize First Union's record of compliance tional Bank of Maryland, First Union National Bank of South Carowith fair lending laws and of making CRA-related loans on lina, First Union National Bank of Tennessee, First Union National the basis of data filed by First Union's affiliates under the Bank of Virginia, and First Union National Bank of Washington, D.C., each received a "satisfactory" rating from the OCC in the joint Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.) performance examination as of April 1994. First Union Bank of Connecticut and First Union Bank of Delaware, Wilmington, Delaware, each formerly a First Fidelity bank, each received a "satisfactory" rating from their primary federal supervisor, the FDIC, at their most recent examinations for CRA performance, as of January 1997 20. See First Union Corporation, 82 Federal Reserve Bulletin 353 and April 1995, respectively. In addition, First Union National Bank, (1996) ("First Union/Society First Order"), and 82 Federal Reserve Avondale, Pennsylvania, and Boca Raton First National Bank, Boca Bulletin 1123 (1996) ("First Union/HFC Order"). Raton, Florida, each received a "satisfactory" rating from the OCC 21. This supervisory information includes information developed by for CRA performance, as of July 1994 and September 1995, respec- the OCC during its regularly scheduled examination of the CRA tively. First Union Direct, Augusta, Georgia, a newly-chartered credit performance of First Union's subsidiary banks, which commenced in card bank, has not been examined for CRA performance. January 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1016 Federal Reserve Bulletin • December 1997 ("HMDA"), particularly in Delaware, Virginia, and Wash- sured depository institution to provide notice to the approington, D.C.22 priate regulatory agency prior to closing a branch, but does First Union has indicated that it has not developed final not authorize federal regulators to prevent the closing of plans for branches after acquiring Signet. First Union has any branch.25 preliminarily and confidentially identified branches under The Board also has reviewed First Union's HMDA data review.23 The Board has carefully reviewed First Union's for 1995 and 1996 in light of commenters' contentions that branch closing policy. The policy provides for an objective these data indicate noncompliance with fair lending laws determination of branches to be closed, consideration of and an inadequate record of CRA-related lending.26 The alternative solutions, examination of options to minimize HMDA data for First Union reflect some disparities in the potential adverse effects on and inconvenience to the com- rate of loan originations, denials and applications by racial munities, and sufficient notice to the communities. The group and income level. The Board is concerned when the policy also requires additional analyses, community con- record of an institution indicates such disparities in lendtacts and/or review of need ascertainment calls when any ing, and believes that all banks are obligated to ensure that branch closing affects a LMI community. their lending practices are based on criteria that ensure not In connection with its examination of the First Union's only safe and sound lending but also equal access to credit subsidiary banks, the OCC has considered the effect of by creditworthy applicants regardless of race. The Board branch closings under the policy on the communities recognizes, however, that HMDA data alone provide an served by the banks. The OCC's most recent publicly incomplete measure of an institution's lending in its comavailable CRA performance examinations concluded that munity because these data cover only a few categories of First Union's subsidiary banks have satisfactory records of housing-related lending. HMDA data, moreover, provide opening and closing branches and that First Union's sub- only limited information about the covered loans.27 HMDA sidiary banks provide reasonable access to services for all data, therefore, have limitations that make the data an segments of the banks' communities.24 The most recent inadequate basis, absent other information, for concluding publicly available CRA performance evaluations also noted that an institution has engaged in illegal lending discrimino materially adverse effects on LMI neighborhoods from nation. branch closings by First Union. The Board also has care- Because of the limitations of HMDA data,28 the Board fully reviewed supervisory information from the OCC regarding branch closings by First Union's subsidiary banks since the 1994 public CRA performance evaluations. 25. Section 42 of the Federal Deposit Insurance Act (12 U.S.C. § 183 lr-1), as implemented by the Joint Policy Statement Regarding The Board notes, moreover, that federal banking law Branch Closing (58 Federal Register 49,083 (1993)), requires that a addresses branch closings by specifically requiring an inbank provide the public with at least 30 days notice and the primary federal supervisor with at least 90 days notice before the date of the proposed branch closing. The bank also is required to provide reasons 22. One commenter contends that First Union Home Equity Bank, and other supporting data for the closure, consistent with the institu- N.A., Charlotte, North Carolina ("FUHE"), does not comply with tion's written policy for branch closing. HMDA reporting requirements because a substantial percentage of its 26. Commenters also contend that First Union's subsidiary banks loans does not indicate the race or national origin of the borrower. charge excessive fees that disproportionately disadvantage low- First Union responds that it is unable to report race information income individuals. The Board previously has noted that First Union because the mortgage applications are received from brokers who provides a full range of credit products and banking services to assist submit loan applications by facsimile or telephone. Under regulations in meeting the credit and banking needs of its communities; and First implementing the HMDA and the Equal Credit Opportunity Act Union recently introduced new products to lower the cost of maintain- (15 U.S.C. § 1691 et seq.), a HMDA reporter is not required to report ing banking relationships with First Union subsidiary banks. Comthe race or gender of an applicant if the information is not provided by menters present no evidence that the fees and practices are illegally the applicant in a written application form received by mail, if an discriminatory, and there is no evidence in the record that the fees are application is taken by telephone, or if an application is received by based on any factor that would be prohibited by law. While the Board other means that do not involve face-to-face communication. See, e.g., has recognized that banks help serve the needs of their community by 12 C.F.R. 203, Appendix A, § V(D)(2), and Appendix B § 1(B)(4). offering basic services at nominal or no charge, the CRA does not Commenter has provided the information to the OCC, and the OCC impose any limitation on the fees or surcharges that can be assessed has sufficient supervisory authority as FUHE's primary federal super- for services. Commenters also object to First Union's policy of visor to address compliance deficiencies, if any, in the HMDA data. requiring a thumbprint from noncustomers on any check cashed at a 23. One commenter asserts that branch closings should be disclosed First Union subsidiary bank. First Union explains that the policy is under the Board's rules governing ex parte communications. The designed to reduce fraud in check cashing, and commenters have not Board notes that its rules regarding access to information, which are provided evidence that the policy is based on factors or applied in a governed by the Freedom of Information Act ("FOIA"), provide the manner that would be prohibited by law. appropriate framework for considering a commenter's challenge to 27. The data, for example, do not provide a basis for an independent confidential treatment accorded an applicant's submissions, and that assessment of whether an applicant who was denied credit was, in commenter's challenge here was reviewed under those rules and fact, creditworthy. Credit history problems and excessive debt levels denied. The Board's rules do not provide a commenter access to relative to income (reasons most frequently cited by a credit denial) information that is otherwise exempt from disclosure under FOIA. are not available from HMDA data. 24. One commenter alleges, without providing specific facts, that 28. Commenters provide no facts to show violations of fair lending inferior services are provided at branches located in communities with laws or other practices that discourage applications for credit on a predominately LMI and minority residents. As noted, the general prohibited basis. Commenters, however, argue that First Union's allegation is not supported by the supervisory record for First Union's HMDA data raise sufficient "red flags" to warrant a closer scrutiny of subsidiary banks. Commenter has provided the OCC a copy of the fair lending law compliance by First Union's banking and nonbanking contentions for its consideration. subsidiaries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1017 has carefully considered that data in light of other informa- and no origination fee. In addition to lending products, the tion, particularly examination reports and other supervi- record indicates that, in 1996, First Union invested more sory information that provide an on-site evaluation of than $3.5 million in minority-owned banks, credit unions, compliance within the fair lending laws by First Union. As community development financial institutions, and commudiscussed in the First Union/HFC Order, examiners found nity development corporations. no evidence of prohibited discrimination or other illegal First Union also has established a Small Business Bankcredit practices at the institutions.29 Moreover, the 1994 ing Division that can guarantee conditional approval or examinations of First Union's subsidiary banks found that denial of a credit application within 24 hours. The record the banks' delineations of their local communities were indicates that First Union originated $4.7 billion in small reasonable and did not arbitrarily exclude LMI communi- business lending, in 1996, and that two-thirds of the loans ties, and that the banks solicited and accepted credit appli- were for amounts less than $100,000. First Union also has cations from all segments of their delineated communities. played a major role in initiating micro-lending programs in First Union also has taken a number of steps to increase the District of Columbia and Virginia. These programs are lending by its subsidiary banks to LMI and minority bor- designed to assist start-up business owners and individuals rowers. First Union, for example, has a second review of who need small loans. First Union also has invested over denied loans for mortgages and consumer loans to ensure $2.8 million in small business investment corporations. that consistent decisions are made. Other corporate fair lending programs include semi-annual reviews of files to Conclusion on Convenience and Needs Considerations assess the level of assistance to applicants and the basis for lending decisions, regression modeling to test for variances The Board has carefully considered all the facts of record, in rates charged to borrowers, matched-pair shopping to including the comments received, responses to those comgauge the quality and level of assistance provided to loan ments, and the CRA performance records of the subsidiary applicants, and annual policy reviews to ensure that poli- depository institutions of First Union and Signet, including cies are nondiscriminatory. Examiners noted in First relevant reports of examination and other supervisory in- Union's 1994 examinations that management of all the formation.31 Based on a review of the entire record and for subsidiary banks had implemented comprehensive training the reasons discussed above and in the First Union/HFC and compliance programs to support equal treatment in Order and the First Union/Society First Order, the Board lending and to ensure that all applicants were treated fairly. concludes that convenience and needs considerations, in- The Board also has reviewed supervisory information as- cluding the CRA records of performance of each organizasessing First Union's record of fair lending law compliance tion's subsidiary depository institutions, are consistent with since the 1994 examinations. approval of this proposal.32 In addition, the Board has considered supervisory information assessing First Union's record of helping to meet the credit needs of all its communities, including areas with 31. Commenters contend that consummation of the proposal could result in significant job losses. The convenience and needs factor has predominately LMI and minority residents, in Delaware, been consistently interpreted by the federal banking agencies, the Virginia, and Washington, D.C.30 First Union's programs courts, and Congress to relate to the effect of a proposal on the include outreach and marketing efforts that focus on LMI availability and quality of banking services in the community, and areas and specialized lending programs such as the Afford- does not extend to the effect of a proposed acquisition on employment in a community. See Wells Fargo & Company, 82 Federal Reserve able Home Mortgage Loan, which offers flexible debt-to- Bulletin 445, 457 (1996). income requirements and lower down payments. First 32. The Board has considered commenters' requests to delay con- Union's Special Home Improvement Loan Program offers sideration of the proposal until they have had an opportunity to rebates for timely payments, flexible debt-to-income ratios, receive and comment on the 1997 CRA performance evaluations of First Union's subsidiary banks by the OCC and the report of First Union's small business lending data for 1996. The Board also has considered one commenter's contentions that the record contains 29. One commenter contends that FUHE focuses on minority com- insufficient information regarding litigation involving First Union. munities in making higher-than-normal interest rate loans. Another To allow interested persons to provide information, analyses, and commenter contends that FUNB has entered into a three-year, $800 arguments regarding the record of an applicant and other relevant million revolving credit facility as a co-agent with an unscrupulous companies, the Board provides a public comment period for all bank consumer and commercial finance company. The commenter does not acquisition proposals. In this case, the Board has provided interested provide facts to show illegal discriminatory or other illegal credit persons a period of approximately 47 days to submit their views, and practices. These comments have been submitted to the OCC for any relevant information and analyses regarding the proposal. Delay consideration. of consideration of this proposal to permit commenters to obtain and 30. A commenter contends that anecdotal evidence from the organi- comment on information that may become available in the future is zation's credit counsellors shows that First Union makes mortgages unwarranted in this case and would prevent consideration of this on property in Prince Georges County, Maryland, but rejects compara- proposal at any time because new information and reports are continble mortgages on property in Washington, D.C. The commenter also uously available. Commenters have provided substantial submissions describes a case in which a husband and wife were denied a loan by that have been considered by the Board as discussed above. Based on First Union because the husband had no credit history, and several all the facts available to the Board, including supervisory information, commenters cite a complaint of substandard service to an ac- and for all the reasons discussed in the order, the Board concludes that countholder of Home Savings Bank after the savings association was the record of the proposal contains sufficient facts to warrant action at acquired by First Union. These matters have been considered in light this time, and that delay or denial of the proposal on the basis that the of the overall record of First Union. record is factually incomplete is not warranted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1018 Federal Reserve Bulletin • December 1997 Nonbanking Activities banking organizations to allocate their resources in the manner they consider most efficient. First Union also has filed notice, pursuant to section 4(c)(8) Based on the foregoing and all the other facts of record, of the BHC Act, to acquire the nonbanking subsidiary of the Board has concluded that consummation of the pro- Signet and thereby engage in providing lending, trust and posal would not result in adverse effects, such as undue fiduciary, investment advisory, discount brokerage, insur- concentration of resources, decreased or unfair competiance, futures commission merchant, foreign exchange advi- tion, conflicts of interests, or unsound banking practices, sory, and transactional services. The Board previously has that would not be outweighed by the public benefits of the determined by regulation that each of these activities is proposal. Accordingly, based on all the facts of record, the closely related to banking within the meaning of sec- Board has determined that the balance of public benefits tion 4(c)(8) of the BHC Act.33 First Union proposes to that the Board must consider under the proper incident to conduct the activities in accordance with Regulation Y and banking standard of section 4(c)(8) of the BHC Act is relevant Board interpretations and orders. favorable and consistent with approval of the proposal. In order to approve this proposal, the Board also must determine that the performance of the proposed activities is Conclusion a proper incident to banking, that is, that the proposed transaction "can reasonably be expected to produce bene- The Board has carefully considered all the facts of record, fits to the public .. . that outweigh possible adverse effects, including all comments received on the proposal and resuch as undue concentration of resources, decreased or sponses from First Union. Based on all these facts, includunfair competition, conflicts of interests, or unsound bank- ing all the commitments and representations made by First ing practices."34 As part of its evaluation of these factors, Union, and subject to all of the terms and conditions set the Board considers the financial and managerial resources forth in this order, the Board has determined that the of the notificant, its subsidiaries, and any company to be application and notice should be, and hereby are, apacquired; the effect the transaction would have on such proved.36 This determination is subject to all the conditions resources; and the management expertise, internal control set forth in the Board's Regulation Y, including those in and risk-management systems, and capital of the entity sections 225.7 and 225.25(c), and to the Board's authority conducting the activity.35 For the reasons discussed above, to require modification or termination of the activities of a and based on all the facts of record, the Board has con- bank holding company or any of its subsidiaries as the cluded that financial and managerial considerations are Board finds necessary to assure compliance with, or to consistent with approval of these notices. prevent evasion of, the provisions and purposes of the The Board also has carefully considered the competitive BHC Act and the Board's regulations and orders issued effects of the proposed acquisition of Signet's nonbanking thereunder. The Board's decision is specifically condisubsidiaries. The Board notes that each of the markets for the nonbanking services is unconcentrated, and that there are numerous providers of the services. Consummation of 36. Several commenters have requested a hearing on the proposal. the proposal, therefore, would have a de minimis effect on Section 3(b) of the BHC Act does not require the Board to hold a competition, and the Board has determined that the pro- public hearing on an application unless the appropriate supervisory posal would not have a significantly adverse effect on authority for the bank to be acquired makes a timely written recomcompetition in any relevant market. mendation of denial. In this case, the Board has not received such a recommendation from any state supervisory authority. The BHC Act, First Union has indicated that the proposed transaction furthermore, and the Board's rules thereunder, provide for a hearing would result in an increased ability to serve the needs of its on a notice under section 4 of the BHC Act only if the proposal customers, and would allow the combined organization to involves the acquisition of a savings association. See provide both existing and new customers with a broader 12 U.S.C. § 1843(c)(8). This case does not involve the acquisition of a savings association. range of products and services through an expanded deliv- Under its rules, the Board may, in its discretion, hold a public ery system and enhanced technology. First Union also has hearing or meeting on an application to clarify factual issues related to indicated that the proposed acquisition would create a the application and to provide an opportunity for testimony, if approstronger organization and result in operational efficiencies, priate. 12 C.F.R. 225.16(e) and 225.25(a)(2). The Board has carefully allowing the combined organization to be a more effective considered commenters' requests for a hearing in light of all the facts of record. In the Board's view, the commenters had ample opportunity competitor. Additionally, there are public benefits to be to submit their views, and have submitted written comments that have derived from both permitting capital markets to operate so been carefully considered by the Board in acting on the application. that bank holding companies can make potentially profit- The requests of the commenters fail to demonstrate why their written able investments in nonbanking companies when those presentations do not adequately present their evidence, allegations, and views. After a careful review of all the facts of record, moreover, investments are consistent, as in this case, with the relevant the Board has concluded that commenters dispute the weight that considerations under the BHC Act, and from permitting should be accorded to, and the conclusions that the Board should draw from, the facts of record, but do not identify disputed issues of fact that are material to the Board's decision. For these reasons, and based 33. See 12 C.F.R. 225.28(h)(1), (b)(5), (b)(6), (b)(7), (b)(8) and on all the facts of record, the Board has determined that a public (b)(ll)(iv). hearing or meeting is not required or warranted to clarify the factual 34. See 12 U.S.C. § 1843(c)(8). record in the application, or otherwise warranted in this case. Accord- 35. See 12 C.F.R. 225.26. ingly, the request for a hearing on the proposal is hereby denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1019 tioned on compliance with all the commitments and repre- (f) Virtus Capital Management, Inc., Baltimore, Maryland, sentations made in the notice, including the commitments and thereby engage in providing investment advisory serand conditions discussed in this order. The commitments, vices, pursuant to section 225.28(b)(6) of Regulation Y. representations, and conditions relied on in reaching this decision shall be deemed to be conditions imposed in writing by the Board in connection with its findings and Appendix B decision, and, as such, may be enforced in proceedings under applicable law. (1) Banking markets in which consummation of the proposal The acquisition of Signet Bank may not be consum- would not exceed DOJ Guidelines without divestitures. mated before the fifteenth calendar day after the effective date of this order, and the proposal may not be consum- Annapolis: Approximated by the Annapolis, Maryland, Ramated later than three months after the effective date of this nally Metropolitan Area ("RMA"). After consummation of order, unless such period is extended for good cause by the the proposal, First Union would control 2.3 percent of the Board or the Federal Reserve Bank of Richmond, acting market deposits and would become the third largest deposipursuant to delegated authority. tory institution in the market. The HHI would increase By order of the Board of Governors, effective Octo- 3 points to 1112. ber 14, 1997. Baltimore: Approximated by the Baltimore, Maryland, RMA and the rest of Harford County. After consummation of the This action was taken pursuant to the Board's Rules Regarding proposal, First Union would control 14.5 percent of the Delegation of Authority (12 C.F.R. 265.4(b)(1)) by a committee of market deposits and would become the third largest deposi- Board members. Voting for this action: Vice Chair Rivlin and Governors Phillips, and Meyer. Absent and not voting: Chairman Greenspan tory institution in the market. The HHI would increase and Governor Kelley. 101 points to 1185. Fredericksburg: Approximated by Fredericksburg, Virginia, JENNIFER J. JOHNSON and the counties of Caroline, King George, Spotsylvania, Deputy Secretary of the Board and Stafford, excluding the Washington, D.C.-Maryland- Virginia RMA portion. After consummation of the pro- Appendix A posal, First Union would control 7.8 percent of the market deposits and would become the third largest depository Nonbanking Subsidiaries and Activities of Signet institution in the market. The HHI would increase 25 points to 1302. First Union proposes to acquire all the voting shares of the Johnson City/Kingsport/Bristol: Approximated by the Johnson following nonbanking subsidiaries of Signet:1 City-Kingsport-Bristol, Tennessee-Virginia, RMA and Unicoi County, Tennessee, and the rest of the Tennessee coun- (a) Signet Commercial Credit Corporation, Richmond, Virties of Carter and Washington and Scott County, Virginia. ginia, and thereby engage in making revolving extensions After consummation of the proposal, First Union would of credit secured by inventory, accounts receivable and control 8.2 percent of the market deposits and would besimilar security interests, pursuant to section 225.28(b)(1) come the third largest depository institution in the market. of Regulation Y. The HHI would increase 32 points to 1332. (b) Signet Financial Services, Inc., Richmond, Virginia, and Newport News/Hampton: Approximated by the Newport thereby engage in providing discount brokerage services, News-Hampton, Virginia, RMA and the rest of James City pursuant to section 225.28(b)(7) of Regulation Y. County. After consummation of the proposal, First Union (c) Signet Insurance Services, Inc., Richmond, Virginia, a would control 11.7 percent of the market deposits and grandfathered insurance subsidiary, and thereby engage in would become the third largest depository institution in the providing life and property/casualty insurance, as agent, market. The HHI would increase 68 points to 1477. pursuant to section 225.28(b)(l l)(iv) of Regulation Y. Norfolk/Portsmouth: Approximated by the Norfolk- (d) Signet Strategic Capital Corporation, Richmond, Virginia, Portsmouth, Virginia, RMA and Currituck County, North and thereby engage in providing futures commission mer- Carolina. After consummation of the proposal, First Union chant services and foreign exchange advisory and transac- would control 12.0 percent of the market deposits and tional services, pursuant to sections 225.28(b)(7) and (8) of would become the third largest depository institution in the Regulation Y. market. The HHI would increase 68 points to 1174. (e) Signet Trust Company, Richmond, Virginia, and thereby Norton: Approximated by Norton, Virginia, and Wise County, engage in providing trust services, pursuant to section Virginia. After consummation of the proposal, First Union 225.28(b)(5) of Regulation Y. would control 33.7 percent of the market deposits and would become the third largest depository institution in the market. The HHI would increase 135 points to 2058. Pulaski/Radford: Approximated by Pulaski-Radford, Virginia, 1. First Union also proposes to acquire Signet Nequity Corporation, and the counties of Montgomery and Pulaski. After consuman inactive subsidiary of Signet. First Union has no present plans to conduct any activities through this company. mation of the proposal, First Union would control Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1020 Federal Reserve Bulletin • December 1997 11.1 percent of the market deposits and would become the Banks, Inc. ("CFB"), and thereby acquire CFB's subsidthird largest depository institution in the market. The HHI iary bank, Central Fidelity National Bank ("CFB Bank"), would increase 62 points to 1408. both in Richmond, Virginia.1 Wachovia also has requested the Board's approval under section 4(c)(8) of the BHC Richmond/Petersburg: Approximated by the Richmond- Act (12 U.S.C. § 1843(c)(8)) and section 225.24 of the Petersburg, Virginia, RMA and the rest of the counties Board's Regulation Y (12 C.F.R. 225.24) to acquire CFB's Chesterfield, Dinwiddie, Goochland, Hanover, Henrico, nonbank subsidiary, CFB Insurance Agency, Inc., Rich- Powhatan, and Prince George, and the counties of Charles mond, Virginia ("Insurance Agency"), and thereby engage City, King William, and New Kent, Virginia. After consumin credit life insurance activities pursuant to secmation of the proposal, First Union would control tion 225.28(b)(l l)(i) of Regulation Y (12 C.F.R. 25.7 percent of the market deposits and would become the 225.28(b)(ll)(i)). third largest depository institution in the market. The HHI Notice of the applications, affording interested persons would increase 125 points to 1606. an opportunity to submit comments, has been published Washington, D.C.: Approximated by the Washington, D.C.- (62 Federal Register 44,130 (1997)). The time for filing Maryland-Virginia RMA and the rest of Loudoun County, comments has expired, and the Board has considered the Virginia. After consummation of the proposal, First Union proposals and all comments received in light of the factors would control 15.1 percent of the market deposits and set forth in sections 3 and 4 of the BHC Act. would become the third largest depository institution in the Wachovia, with total consolidated assets of $47.6 bilmarket. The HHI would increase 61 points to 1103. lion, is the 21st largest banking organization in the United States, controlling approximately 1.2 percent of the total (2) Banking markets in which consummation of the proposal banking assets of insured commercial banks in the nation would not exceed DOJ Guidelines with divestitures, all in ("total banking assets").2 The subsidiary banks of Wacho- Virginia. via operate in North Carolina, South Carolina, and Virginia. Wachovia also engages through other subsidiaries in Roanoke: Approximated by the Roanoke RMA and the rest of a number of permissible nonbanking activities. CFB, with the counties of Botetourt and Roanoke, and Boones Mill in total consolidated assets of $10.6 billion, is the 58th largest Franklin County. After consummation of the proposal and banking organization in the United States, controlling less the proposed divestitures to an out-of-market competitor, than 1 percent of total banking assets in the nation. CFB First Union would control 38.9 percent of the market depos- operates one subsidiary bank, which is located in Virginia, its and would become the largest depository institution in and engages through a subsidiary in permissible nonbankthe market. The HHI would increase 175 points to 1968. ing activities. On consummation of the proposal, Wachovia would become the 16th largest banking organization in the Galax: Approximated by Galax and the counties of Carroll United States, with consolidated assets of $58.2 billion, and Grayson, excluding the portion that is within the Mount representing approximately 1.4 percent of the total banking Airy, North Carolina, banking market. After consummation assets in the United States. of the proposal and the proposed divestitures to an out-of- Wachovia is the seventh largest depository institution in market competitor, First Union would control 22.5 percent Virginia, controlling $1.8 billion in deposits, representing of the market deposits and would become the largest deposapproximately 2.5 percent of total deposits in depository itory institution in the market. The HHI would increase institutions in Virginia.3 CFB is the third largest depository 186 points to 1759. institution in Virginia, controlling approximately $8 billion Russell: Approximated by Russell County. After consumma- in deposits, representing approximately 11.1 percent of tion of the proposal and the proposed divestitures to an total deposits in depository institutions in the state. On out-of-market competitor, First Union would control consummation of the proposal, and taking into account all 30.3 percent of the market deposits and would become the proposed divestitures, Wachovia would become the second largest depository institution in the market. The HHI would largest depository institution in Virginia, controlling increase 175 points to 2916. $9.6 billion in deposits, representing approximately 13.2 percent of total deposits in depository institutions in Virginia. Wachovia Corporation Winston-Salem, North Carolina Order Approving the Merger of Bank Holding Companies 1. Wachovia also has requested the Board's approval to exercise an option to purchase up to 19.9 percent of the voting shares of CFB. The Wachovia Corporation, Winston-Salem, North Carolina option would terminate on consummation of the proposal. ("Wachovia"), a bank holding company within the mean- 2. Asset data are as of June 30, 1997. State and market data are as of June 30, 1996, adjusted to reflect Wachovia's acquisition of Jeiferson ing of the Bank Holding Company Act ("BHC Act"), has Bancshares, Inc., Charlottesville, Virginia. requested the Board's approval under section 3 of the BHC 3. In this context, depository institutions include commercial banks, Act (12 U.S.C. § 1842) to merge with Central Fidelity savings banks, and savings associations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1021 Interstate Banking Analysis by Wachovia to divest certain branches.8 Consummation of the proposal would be consistent with the DOJ Guidelines Section 3(d) of the BHC Act, as amended by section 101 of in seven banking markets without divestitures and in two the Riegle-Neal Interstate Banking and Branching Effi- additional banking markets with divestitures.9 ciency Act of 1994, allows the Board to approve an appli- Consummation of the proposal in the remaining banking cation by a bank holding company to acquire a bank market—the Charlottesville, Virginia, banking market located in a state other than the home state of such bank ("Charlottesville banking market")10—would exceed the holding company if certain conditions are met.4 For pur- DOJ guidelines with the proposed divestiture. The HHI poses of the BHC Act, the home state of Wachovia is would increase 277 points to 2237, and Wachovia would North Carolina, and Wachovia proposes to acquire a bank become the largest depository institution in the market, located in Virginia. The conditions for an interstate acqui- controlling approximately 36.8 percent of market deposits. sition under section 3(d) are met in this case.5 In view of all In evaluating the competitive effects of the proposal in the facts of record, the Board is permitted to approve the the Charlottesville banking market, the Board has considproposal under section 3(d) of the BHC Act. ered that, following consummation of the proposal, seven competitors, in addition to Wachovia, would remain in the Competitive Considerations market, including a large bank holding company competitor with a substantial share of market deposits. In addition, The BHC Act prohibits the Board from approving an the proposed transaction would not decrease the number of application under section 3 of the BHC Act if the proposal competitors in the Charlottesville banking market because would result in a monopoly or if the effect of the proposal Wachovia would divest nine branches to an out-of-market may be substantially to lessen competition in any relevant competitor. market, unless the Board finds that the anticompetitive The Board also has considered that the Charlottesville effects of the proposal are clearly outweighed in the public banking market is attractive for entry. The Charlottesville interest by the probable effect of the proposal in meeting Metropolitan Statistical Area ("MSA"), for example, the convenience and needs of the community to be served. which closely approximates the Charlottesville banking Wachovia and CFB compete directly in ten banking market, substantially exceeds all MSAs in the southeastern markets. The Board has carefully reviewed the competitive United States with respect to median household income, effects of the proposal in these banking markets in light of per capita income, and percentage of households with all the facts of record, including the number of competitors income over $50,000. In addition, two commercial banks that would remain in the markets, the characteristics of the recently announced plans to enter the banking market markets, the projected increase in the concentration of total de novo. deposits in depository institutions in the markets ("market The Board sought comments from the office of the deposits"),6 as measured by the Herfindahl-Hirschman United States Attorney General ("Attorney General") and Index ("HHI") under the Department of Justice Merger the Office of the Comptroller of the Currency ("OCC") on Guidelines ("DOJ Guidelines"),7 and commitments made the competitive effects of the proposal. The Attorney Gen- 4. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding challenged (in the absence of other factors indicating anticompetitive company's home state is the state in which the operations of the bank effects) unless the post-merger HHI is at least 1800 and the merger holding company's banking subsidiaries were principally conducted increases the HHI by more than 200 points. The Justice Department on July 1, 1966, or the date on which the company became a bank has stated that the higher than normal threshold for an increase in the holding company, whichever is later. HHI when screening bank mergers and acquisitions for anticompeti- 5. See 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) tive effects implicitly recognizes the competitive effects of limitedand (B). Wachovia is adequately capitalized and adequately managed. purpose lenders and other non-depository financial entities. In addition, on consummation of the proposal, Wachovia would 8. In each market in which Wachovia has committed to divest control less than 10 percent of the total amount of deposits of insured offices to mitigate the anticompetitive effects of the proposal, Wachodepository institutions in the United States and less than 30 percent of via has committed to execute sales agreements with a competitively the total amount of deposits of insured depository institutions in suitable purchaser prior to consummation of the acquisition of CFB Virginia. CFB Bank also has been in existence and continuously and to complete the divestitures within 180 days of consummation of operated for at least the minimum period required under Virginia law. the acquisition. Wachovia also has committed that, in the event it is All other requirements of section 3(d) of the BHC Act also would be unsuccessful in completing any divestiture within 180 days of conmet on consummation of the proposal. summation of the proposal, Wachovia will transfer the unsold 6. Market share data before consummation are based on calculations branch(es) to an independent trustee that is acceptable to the Board in which the deposits of thrift institutions are included at 50 percent. and that will be instructed to sell the branches promptly. BankAmerica The Board previously has indicated that thrift institutions have be- Corporation, 78 Federal Reserve Bulletin 338 (1992); United New come, or have the potential to become, significant competitors of Mexico Financial Corporation, 11 Federal Reserve Bulletin 484 commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin (1991). Wachovia has further committed that, prior to consummation, 743 (1984). Thus, the Board has regularly included thrift deposits in it will submit to the Board an executed trust agreement acceptable to the calculation of market share on a 50-percent weighted basis. See, the Board stating the terms of these divestitures. e.g., First Hawaiian, Inc., 11 Federal Reserve Bulletin 52 (1991). 9. These banking markets are discussed in the Appendix. 7. Under the DOJ Guidelines, 49 Federal Register 26,823 (June 29, 10. The Charlottesville banking market is approximated by the 1984), a market in which the post-merger HHI is more than 1800 is Charlottesville Ranally Metropolitan Area ("RMA"), the remainder considered highly concentrated. The Justice Department has informed of Albemarle County, plus Fluvanna, Greene, and Nelson Counties, the Board that a bank merger or acquisition generally will not be all in Virginia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1022 Federal Reserve Bulletin • December 1997 eral has advised the Board that, in light of the proposed not result in a significantly adverse effect on competition in divestitures, it does not object to consummation of the any relevant market. In addition, the Board expects that the proposal. The OCC also has not objected to consummation acquisition would provide added convenience to CFB's of the proposal. Based on all the facts of record, including customers and the public. Accordingly, based on all the the proposed divestitures, the Board concludes that con- facts of record, the Board has determined that the balance summation of the proposal would not have a significantly of public benefits that the Board must consider under the adverse effect on competition or on the concentration of proper incident to banking standard of section 4(c)(8) of banking resources in the Charlottesville banking market or the BHC Act is favorable and consistent with approval of in any relevant banking market. the proposal. Other Considerations Conclusion The BHC Act also requires the Board to consider the Based on the foregoing and all the other facts of record, the financial and managerial resources and future prospects of Board has determined that the application and notice the companies and banks involved in the proposal, the should be, and hereby are, approved. The Board's approval convenience and needs of the communities to be served, is specifically conditioned on compliance by Wachovia and certain supervisory factors. Based on all the facts of with all the commitments made in connection with the record, the Board concludes that the financial and manage- proposal, including the divestiture commitments discussed rial resources and the future prospects of Wachovia, CFB, in this order. and their respective subsidiaries are consistent with ap- The Board's determination on the nonbanking activities proval, as are the other supervisory factors that the Board also is subject to all the terms and conditions set forth in must consider under section 3 of the BHC Act. In addition, Regulation Y, including those in sections 225.7 and considerations relating to the convenience and needs of the 225.25(c) of Regulation Y (12 C.F.R. 225.7 and 225.25(c)), communities to be served are consistent with approval of and to the Board's authority to require such modification or the proposal.11 termination of the activities of a bank holding company or Wachovia also has filed notice, under section 4(c)(8) of any of its subsidiaries as the Board finds necessary to the BHC Act to acquire Insurance Agency and thereby ensure compliance with, and to prevent evasion of, the engage in credit life insurance activities. The Board has provisions of the BHC Act and the Board's regulations and determined by regulation that credit life insurance activi- orders issued thereunder. The commitments and conditions ties are closely related to banking, and Wachovia has relied on by the Board in reaching this decision are deemed committed to conduct these activities in accordance with to be conditions imposed in writing by the Board in con- Regulation Y.12 In order to approve the proposal, the Board nection with its findings and decision, and, as such, may be also must determine that the proposed activities are a enforced in proceedings under applicable law. proper incident to banking, that is, that the proposed trans- The acquisition of CFB Bank shall not be consummated action "can reasonably be expected to produce benefits to before the fifteenth calendar day following the effective the public . . . that outweigh possible adverse effects, such date of this order, and the proposal shall not be consumas undue concentration of resources, decreased or unfair mated later than three months after the effective date of this competition, conflicts of interests, or unsound banking order, unless such period is extended for good cause by the practices."13 As part of the Board's evaluation of these Board or by the Federal Reserve Bank of Richmond, acting factors, the Board considers the financial and managerial pursuant to delegated authority. resources of the notificant and its subsidiaries, including By order of the Board of Governors, effective Octoany company to be acquired, and the effect the transaction ber 20, 1997. would have on such resources.14 For the reasons noted above, and based on all the facts of record, the Board has Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and concluded that financial and managerial considerations are Governors Kelley, Phillips, and Meyer. consistent with approval of the proposal. The Board also has considered the competitive effects of JENNIFER J. JOHNSON Deputy Secretary of the Board the proposed acquisition of Insurance Agency. Wachovia operates a nonbanking subsidiary that engages in credit life Appendix insurance activities. This subsidiary, however, does not compete with Insurance Agency in any relevant market. As A. Banking markets in which consummation of the proposal a result, the Board has concluded that the proposal would would not exceed the DOJ Guidelines: 11. The Board received a comment from the Piedmont Housing (1) Fredericksburg Banking Market: The Fredericksburg Alliance stating that the proposal would broaden the financial services banking market is approximated by Caroline, King George, and assets available to the region. Spotsylvania, and Stafford Counties, and the City of Fred- 12. See 12 C.F.R. 225.28(b)(l l)(i). ericksburg, all in Virginia, except for the portions of these 13. See 12 U.S.C. § 1843(c)(8). 14. See 12 C.F.R. 225.26. counties that are included in the Washington DC-MD-VA Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1023 RMA. After consummation of the proposal, Wachovia and would become the largest depository institution in the would control 11.5 percent of market deposits and would market. The HHI would increase 135 points to 3772. become the fifth largest depository institution in the market. (2) Farmville Banking Market. The Farmville banking market The HHI would increase by 63 points to 1280. is approximated by Cumberland and Prince Edward Coun- (2) Harrisonburg Banking Market: The Harrisonburg banking ties and the City of Farmville, all in Virginia. After divestimarket is approximated by Rockingham County and the ture of one branch and consummation of the proposal, City of Harrisonburg, both in Virginia. After consummation Wachovia would control 26.2 percent of market deposits of the proposal, Wachovia would control 10.4 percent of and would become the largest depository institution in the market deposits and would become the fifth largest deposi- market. The HHI would not increase. tory institution in the market. The HHI would increase by 37 points to 1391. (3) Newport News/Hampton Banking Market: The Newport ORDERS ISSUED UNDER BANK MERGER ACT News/Hampton banking market is approximated by the Newport News-Hampton, Virginia RMA plus the remain- Centura Bank der of James City County. After consummation of the Rocky Mount, North Carolina proposal, Wachovia would control 15.8 percent of market deposits and would become the third largest depository Order Approving Acquisition and Establishment of Bank institution in the market. The HHI would increase by Branches 39 points to 1414. (4) Norfolk/Portsmouth Banking Market: The Norfolk/ Centura Bank, a state member bank in Rocky Mount, Portsmouth banking market is approximately by the North Carolina ("Centura"), has requested the Board's Norfolk-Portsmouth, Virginia RMA plus Currituck County, approval under section 18(c) of the Federal Deposit Insur- North Carolina. After consummation of the proposal, ance Act (12 U.S.C. § 1828(c)) (the "Bank Merger Act") Wachovia would control 18.6 percent of market deposits to acquire five branches of NationsBank, N.A., Charlotte, and would become the largest depository institution in the North Carolina ("NationsBank NC"). Centura also has market. The HHI would increase by 47 points to 1070. applied under section 9 of the Federal Reserve Act (5) Richmond/Petersburg Banking Market: The Richmond/ (12 U.S.C. § 321) to establish branches at the locations of Petersburg banking market is approximated by the the NationsBank NC branches to be acquired.1 Richmond-Petersburg, Virginia RMA, the remainder of Notice of the applications, affording interested persons Chesterfield, Dinwiddie, Goochland, Hanover, Henrico, an opportunity to submit comments, has been given in Powhatan, and Prince George Counties, and Charles City, accordance with the Bank Merger Act and the Board's King William, and New Kent Counties, all in Virginia. Rules of Procedure (12 C.F.R. 262.3(b)). As required by After consummation of the proposal, Wachovia would con- the Bank Merger Act, reports on the competitive effects of trol 16.5 percent of market deposits and would become the the merger were requested from the United States Attorney third largest depository institution in the market. The HHI General, the Office of the Comptroller of the Currency would increase by 78 points to 1469. ("OCC"), and the Federal Deposit Insurance Corporation (6) Washington, D.C. Market: The Washington, D.C. banking ("FDIC"). The time for filing comments has expired, and market is approximated by the Washington DC-MD-VA the Board has considered the applications and all com- RMA and the remainder of Loudon County, Virginia. After ments received in light of the factors set forth in the Bank consummation of the proposal, Wachovia would control Merger Act and section 9 of the Federal Reserve Act. 3 percent of market deposits and would become the eighth Centura is a subsidiary of Centura Banks, Inc., Rocky largest depository institution in the market. The HHI would Mount, North Carolina, which is the sixth largest commerincrease by 1 point to 1038. cial banking organization in North Carolina, controlling (7) Winchester Banking Market: The Winchester banking mar- $4.6 billion of deposits, representing 6 percent of total ket is approximated by Clark and Frederick Counties, the deposits in commercial banking organizations in the state.2 City of Winchester, and the town of Strasburg, all in Vir- The five branches of NationsBank NC to be acquired ginia, and Hampshire County, West Virginia. After consum- control deposits of $98.7 million, representing less than mation of the proposal, Wachovia would control 12.1 per- 1 percent of deposits in the state. On consummation of the cent of market deposits and would become the third largest proposal, Centura Banks, Inc., would remain the sixth depository institution in the market. The HHI would in- largest commercial banking organization in North Carocrease by 61 points to 1718. lina, controlling $4.7 billion of deposits, representing 6 percent of total deposits in commercial banking organiza- B. Banking markets in which consummation of the proposal tions in the state. would not exceed the DOJ Guidelines with divestitures: (1) Culpeper Banking Market: The Culpeper banking market is approximated by Culpeper County, Virginia. After dives- 1. The branches are listed in Appendix A. titure of one branch and consummation of the proposal, 2. State data are as of June 30, 1996, and have been updated to Wachovia would control 44.6 percent of market deposits reflect transactions as of June 30, 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1024 Federal Reserve Bulletin • December 1997 Competitive Considerations imately $89 million, representing approximately 19 percent of the total deposits in depository institutions in the The Bank Merger Act provides that the Board may not market ("market deposits").6 The NationsBank NC branch approve an application if the effect of the acquisition is to to be acquired is the seventh largest depository institution create a monopoly or substantially to lessen competition in in the banking market, controlling deposits of approxiany section of the country unless the Board finds that the mately $17 million, representing approximately 4 percent anticompetitive effects of the proposal are clearly out- of market deposits. On consummation of the proposal, weighed in the public interest by the probable effect of the Centura would remain the second largest depository instituproposal in meeting the convenience and needs of the tion in the Tri-County banking market, controlling deposits community.3 In evaluating the competitive factors in this of approximately $106 million, representing approximately case, the Board has carefully considered the comments of 23 percent of market deposits. The market, as measured by individuals ("commenters") who maintain that the pro- the Herfindahl-Hirschman Index ("HHI"), would remain posal would create a monopoly for banking services in the moderately concentrated after consummation of the transtown of Hertford in Perquimans County, North Carolina. action, and the HHI would increase 145 points to 1765.7 The Board and the courts have found that the relevant Eight other depository institutions would remain as comgeographic market for analyzing the competitive effect of a petitors in the Tri-County banking market. proposal must reflect commercial and banking realities and Centura and NationsBank NC also compete in the Jackshould consist of the local area where the banks involved sonville, Raleigh, Statesville and Wilmington banking maroffer their services and where local customers can practica- kets, all in North Carolina. See Appendix B. Numerous bly turn for alternatives.4 In making a determination on the competitors would remain in each market; in each market, geographic market in this case, the Board has considered the branch to be acquired is small in relation to the total worker commuting patterns (as indicated by census data) market deposits; and consummation of the transaction and other indicia of economic integration and transmission would not alter relevant measures of market concentration. of competitive forces among depository institutions. The Department of Justice has reviewed the proposal and Perquimans County is a small county in the northeast advised the Board that consummation of the proposal corner of North Carolina.5 Census Bureau data for 1990 would not likely have any significantly adverse competiindicate that 58 percent of the workers who reside in tive effects in these banking markets or any relevant bank- Perquimans County work outside the county and that ing market.8 27 percent of Perquimans County residents commute to In light of all the facts of record, the Board concludes Elizabeth City in the adjacent county of Pasquotank that consummation of the proposal would not result in any County, North Carolina. Elizabeth City is approximately significantly adverse effects on competition or the concen- 15 miles from Hertford and has a population of approxi- tration of banking resources in the Tri-County banking mately 19,700. Hertford, which has a population of approx- market or any other relevant banking market.9 imately 2244, is connected to Elizabeth City by U.S. Highway 17. In addition to having the area's major employers, Eliza- 6. Market data are as of June 30, 1996. In this context, depository beth City has a shopping mall, hospital, and movie the- institutions include commercial banks, savings banks, and savings aters. Perquimans County has none of these facilities. associations. Market share data before consummation are based on calculations in which the deposits of thrift institutions are included at Elizabeth City also has the area's only daily newspaper and 50 percent. The Board previously has indicated that thrift institutions radio station, thereby providing the primary advertisement have become, or have the potential to become, significant competitors media for Perquimans County residents. of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin Based on all the facts of record, and for the reasons 788 (1990); National City Corporation, 70 Federal Reserve Bulletinh discussed above, the Board concludes that the relevant 7. As discussed in Appendix B, the HHI for the Jacksonville, Raleigh, Statesville and Wilmington banking markets would not inbanking market for assessing the competitive effects of this crease as a result of the proposal. Under the revised Department of proposal includes Perquimans and Pasquotank Counties, in Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, addition to Camden County ("Tri-County banking mar- 1984), a market in which the post-merger HHI is between 1000 and ket"). 1800 is considered moderately concentrated. The Justice Department has informed the Board that a bank merger or acquisition generally Centura is the second largest depository institution in the will not be challenged (in the absence of other factors indicating Tri-County banking market, controlling deposits of approx- anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Justice Department has stated that the higher than normal HHI thresh- 3. 12 U.S.C. § 1828(c)(5). olds for screening bank mergers for anticompetitive effects implicitly 4. See St. Joseph Valley Bank, 68 Federal Reserve Bulletin 673 recognize the competitive effect of limited-purpose lenders and other (1982). The key question to be considered in making this selection "is non-depository financial entities. not where the parties to the merger do business or even where they 8. The OCC and the FDIC also have not objected to the proposal. compete, but where, within the area of competitive overlap, the effect 9. Some commenters contend that no alternative provider of bankof the merger on competition will be direct and immediate." United ing services would remain in Hertford if the acquisition was made. States v. Philadelphia Nat'l Bank, 374 U.S. 321, 374 (1963); United Another commenter maintains that the loss of a banking organization States v. Phillipsburg Nat'l Bank, 399 U.S. 350 (1969). would adversely aifect economic development in Perquimans County. 5. The county has an area of approximately 247 square miles and a As discussed, eight depository institution competitors would remain in population of approximately 10,900. the relevant banking market, including a savings association in Hert- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1025 Other Considerations Appendix A The Board has carefully considered the financial and man- Branch offices of NationsBank NC to be established by agerial resources and future prospects of Centura and Centura, all in North Carolina: NationsBank NC in light of all the facts of record. The facts of record include supervisory reports of examination Address City State Zip assessing the financial and managerial resources of the 1. 10267 Beach Drive, SW Calabash 28467 organizations and financial information provided by Cen- 2. 100 East Cumberland Street Dunn 28334 tura. The Board notes that Centura is in satisfactory finan- 3. 3364 Harmany Highway Harmony 28634 cial condition and would remain so after consummation of 4. 8800 Richland Highway Richlands 28574 the proposal. In addition, reports of examination assessing 5. 400 West Grubb Street1 Hertford 27944 the managerial resources of Centura indicate this factor is consistent with approval. Appendix B Based on all the facts of record, the Board concludes that considerations related to the financial and managerial re- Other local banking markets where Centura and sources and future prospects of the institutions involved NationsBank NC compete, all in North Carolina: are consistent with approval. Considerations relating to the convenience and needs of the communities to be served (1) Jacksonville—approximated by the Jacksonville RMA and also are consistent with approval of this application, as are the rest of Onslow County. After consummation of the the factors required to be considered under the Federal proposal, Centura would control 17.6 percent of the market Reserve Act. deposits and would remain the fourth largest depository institution in the market. The HHI would not increase and Conclusion would be 2484 points. (2) Raleigh—approximated by the Raleigh RMA and the rest Based on the foregoing and all the facts of record, the of Franklin, Harnett, Johnston, and Wake Counties. After Board has determined that this application should be, and consummation of the proposal, Centura would control hereby is, approved. The Board's approval of the proposal 6.5 percent of the market deposits and would remain the is specifically conditioned on compliance by Centura with seventh largest depository institution in the market. The all the commitments made in connection with this applica- HHI would not increase and would be 1390 points. tion. For purposes of this action, the commitments and (3) Statesville—approximated by Iredell County, excluding conditions relied on in reaching this decision are both the portion of Iredell County that is in the Charlotte-Rock conditions imposed in writing by the Board and, as such, Hill banking market. After consummation of the proposal, may be enforced in proceedings under applicable law. Centura would control 6.6 percent of the market deposits The proposed acquisition of the NationsBank NC and would become the fourth largest depository institution branches shall not be consummated before the fifteenth in the market. The HHI would not increase and would be calendar day following the effective date of this order, or 2110 points. later than three months after the effective date of this order, (4) Wilmington—approximated by the Wilmington RMA and unless such period is extended for good cause by the Board the rest of Brunswick and Pender Counties. After consumor by the Federal Reserve Bank of Richmond, acting mation of the proposal, Centura would control 8.5 percent pursuant to delegated authority. of the market deposits and would remain the fifth largest By order of the Board of Governors, effective October 6, depository institution in the market. The HHI would not 1997. increase and would be 1679 points. Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, and Phillips. Absent and not voting: Governor ORDERS ISSUED UNDER INTERNATIONAL BANKING ACT Meyer. Credit Agricole Indosuez BARBARA R. LOWREY Paris, France Associate Secretary of the Board Order Approving Establishment of Branches and Representative Offices ford. In addition, Centura received a "satisfactory" rating under the Credit Agricole Indosuez, Paris, France ("Bank"), a for- Community Reinvestment Act at its most recent performance rating eign bank within the meaning of the International Banking and offers a wide range of services and products to help in meeting the credit needs of all its communities. Examiners noted that Centura Act ("IBA"), has applied under sections 7(d) and 10(a) of offered a variety of products, including residential mortgages, residential construction, home improvement, small business, commercial, consumer, agricultural, and community development loans and that 1. The loans and deposits of the NationsBank NC Hertford branch these products were considered responsive to the significant credit will be transferred to the existing Centura branch, which is less than needs in the various communities. one mile away. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1026 Federal Reserve Bulletin • December 1997 the IBA (12 U.S.C. §§ 3105(d) and 3107(a)) to establish Board and the relevant state banking authorities, CNCA state-licensed branches in Chicago, Illinois, and New York, would change its home state to New York.5 New York; and representative offices in Houston, Texas, Bank proposes to establish a branch in Illinois, which is and San Francisco, California. The Foreign Bank Supervi- outside of Bank's home state.6 Under section 5(a)(2) of the sion Enhancement Act of 1991 ("FBSEA"), which IBA,7 a foreign bank, with the approval of the Board and amended the IBA, provides that a foreign bank must obtain the appropriate state banking supervisor, may establish and the approval of the Board to establish a branch or represen- operate a state-licensed branch outside the home state of tative office in the United States. the foreign bank to the extent a state bank with the same Notice of the application, affording interested persons an home state as the foreign bank could do so under section opportunity to submit comments, has been published in a 44 of the Federal Deposit Insurance Act (FDI Act).8 Bank newspaper of general circulation in Chicago (Chicago Tri- proposes to acquire through the proposed merger all of the bune, July 3, 1997); New York {The New York Times, U.S. banking operations of CNCA, a transaction that would July 10, 1997); Houston (Houston Chronicle, July 2, 1997); constitute an interstate merger transaction as defined in the and San Francisco (San Francisco Chronicle, July 2, 1997). FDI Act.9 Section 44(a) of the FDI Act permits the Board The time for filing comments has expired, and the Board to approve a merger transaction under the Bank Merger has considered the application and all comments received. Act between state banks with different home states pro- Bank has total assets equivalent to approximately vided neither of the states has elected to prohibit interstate $88 billion.1 Caisse Nationale de Credit Agricole, Paris, merger transactions pursuant to section 44(a)(2) of the FDI France ("CNCA"), a foreign bank, holds 100 percent of Act. New York and Illinois both permit interstate merger the shares of Bank.2 transactions.10 Accordingly, the proposed interstate merger Bank engages in a wide range of banking and capital transaction would be permitted under section 44 of the FDI market activities worldwide directly and through subsidiar- Act and the Board is permitted to approve the establishies. Bank currently operates a state-licensed branch in ment by Bank of the branch outside its home state of New York, New York. In addition, Bank operates a number New York provided the remaining criteria of section 5(a) of U.S. subsidiaries engaged in, among other activities, of the IBA are met, including the criteria for establishment securities and futures trading, leasing, financing, broker- of a branch or agency. age, and financial consulting activities. In order to approve an application by a foreign bank to In the United States, CNCA operates branches in Chi- establish a branch or agency in the United States, the IBA cago, Illinois, and New York, New York; and representa- and Regulation K require the Board to determine that the tive offices in Houston, Texas, and San Francisco, Califor- foreign bank applicant engages directly in the business of nia. Bank proposes to acquire through merger the U.S. banking outside of the United States, and has furnished to banking operations of CNCA as part of a restructuring of the Board the information it needs to assess the application the worldwide operations of CNCA and Bank. After the adequately. The Board also generally must determine that restructuring and the establishment of the proposed offices the foreign bank is subject to comprehensive superviby Bank, CNCA and Bank would remain qualifying for- sion or regulation on a consolidated basis by its home eign banking organizations within the meaning of Regula- country supervisor (12 U.S.C. § 3105(d)(2); 12 C.F.R. tion K. (12 C.F.R. 211.23(b)). 211.24(c)(1)).11 The Board may also take into account CNCA acquired 53 percent of Bank on July 1, 1996.3 additional standards as set forth in the IBA and Regula- CNCA's home state under the IBA and Regulation K is tion K (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). Illinois and Bank's home state is New York. Collectively, CNCA and Bank are entitled to only one home state under Regulation K.4 On approval of the proposed offices by the 5. Under Regulation K, a foreign bank may change its home state once. 12 C.F.R. 211.22(b). 6. Upon consummation of this proposal, CNCA would continue to operate its Illinois branch for a limited period of time in order to wind down its business in accordance with applicable law. Bank would 1. Financial data are as of December 31, 1996. limit temporarily the deposit-taking of its Illinois branch to that 2. CNCA is a cooperative bank organized under the laws of France. authorized for an Edge corporation operating under section 25A of the CNCA coordinates the operations of 57 regional and 2,775 local credit Federal Reserve Act until the Illinois branch of CNCA surrenders its cooperatives. CNCA, together with its affiliated regional and local license. credit cooperatives, comprise the Credit Agricole Group ("CA 7. 12 U.S.C. §3103(a)(2). Group"). The CA Group has total consolidated assets equivalent to 8. 12 U.S.C. § 1831u. approximately $477 billion. The CA Group is the largest retail bank- 9. See 12 U.S.C. § 1831u(f)(6)&(7); 12 U.S.C. § 1828(c). ing organization in France and the eighth largest banking organization 10. N.Y. [Banking] Law § 223 (McKinney Supp. 1997); 205 111. in the world. Comp. Stat. 5/21(c) (West 1997). 3. CNCA acquired the remainder of Bank's shares on December 23, 11. In acting on an application to establish a representative office, 1996. the Board must take into account the standards applicable to the 4. See 12 C.F.R. 211.22(c)(1). However, in connection with the establishment of a branch, agency, or commercial lending company. acquisition of Bank's shares by CNCA the Board gave CNCA and 12 U.S.C. § 3107(a)(2); 12 C.F.R. 211.24(d)(2). Because Bank has Bank a limited period of time within which to conform to the home applied to establish branches and representative offices, the Board has state requirements of Regulation K. See letter dated June 26, 1996, made its findings with respect to the proposed representative offices in from Jennifer J. Johnson, Deputy Secretary of the Board, to Michael accordance with the stricter standards applicable to branch applica- Bradfield, Esq. tions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1027 Section 5(a)(3) of the IBA also establishes additional crite- that would be required of a U.S. banking organization. ria that must be met in order for the Board to approve the Managerial and other financial resources of Bank also are establishment of branches outside a foreign bank's home considered consistent with approval, and Bank appears to state under section 5(a)(2) of the IBA. have the experience and capacity to support the proposed As noted above, CNCA and Bank engage directly in the offices. business of banking outside the United States through The Board has reviewed the restrictions on disclosure in banking operations in France and elsewhere. Bank also has certain jurisdictions where Bank and CNCA operate and provided the Board with the information necessary to as- has communicated with appropriate governmental authorisess the application through submissions that address the ties regarding access to information. Bank and CNCA have relevant issues. committed to make available to the Board such informa- Regulation K provides that a foreign bank will be con- tion on their operations and the operations of their affiliates sidered to be subject to comprehensive supervision or that the Board deems necessary to determine and enforce regulation on a consolidated basis if the Board determines compliance with the IBA, the Bank Holding Company Act that the bank is supervised and regulated in such a manner of 1956, as amended, and other applicable Federal law. To that its home country supervisor receives sufficient infor- the extent that the provision of such information may be mation on the foreign bank's worldwide operations, includ- prohibited by law, Bank and CNCA have committed to ing the relationship of the foreign bank to any affiliate, to cooperate with the Board in obtaining any consents or assess the overall financial condition of the foreign bank waivers that might be required from third parties for discloand its compliance with law and regulation (12 C.F.R. sure. In addition, subject to certain conditions, the Com- 211.24(c)(1)).12 mission Bancaire may share information on Bank's and With respect to supervision by home country authorities, CNCA's operations with other supervisors, including the the Board has considered the following information. The Board. In light of these commitments and other facts of Board previously has determined that CNCA is subject to record, and subject to the condition described below, the comprehensive, consolidated home country supervision.13 Board concludes that Bank has provided adequate assur- No material changes have occurred in the manner of ances of access to any necessary information the Board CNCA's supervision since that time that would alter the may request. Board's previous determination. In this case, Bank is super- Finally, with respect to the proposed establishment by vised on the same terms and conditions as CNCA. Based Bank of a branch outside its home state pursuant to secon all facts of record, the Board has determined that CNCA tion 5(a)(2) of the IBA, the Board has determined that the and Bank are subject to comprehensive supervision on a additional conditions specified in section 5(a)(3) of the consolidated basis by their home country supervisors. IBA are satisfied. The Board finds, pursuant to section The Board also has taken into account the additional 5(a)(3)(B) of the IBA, that the financial resources of Bank standards set forth in section 7 of the IBA and Regula- are equivalent to those required for a domestic bank to tion K (see 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. receive approval for interstate branching under section 44 211.24(c)(2)). In this regard, the Banque de France has of the FDI Act. The Board has consulted with the Departapproved the establishment of the proposed offices. ment of the Treasury concerning capital equivalency. Addi- France is a signatory to the Basle risk-based capital tionally, the Board finds that all applicable requirements standards, and French risk-based capital standards meet under section 5(a)(3)(C) of the IBA have been met. those established by the Basle Capital Accord ("Accord"). On the basis of all the facts of record, and subject to the Bank's capital is in excess of the minimum levels required commitments made by Bank and CNCA, as well as the by the Accord and can be considered equivalent to capital terms and conditions set forth in this order, the Board has determined that Bank's application to establish branches and representative offices should be, and hereby is, ap- 12. In assessing this standard, the Board considers, among other proved. Should any restrictions on access to information on factors, the extent to which the home country supervisors: (i) Ensure that the bank has adequate procedures for monitoring the operations or activities of Bank or any of its affiliates and controlling its activities worldwide; subsequently interfere with the Board's ability to deter- (ii) Obtain information on the condition of the bank and its mine the compliance by Bank or its affiliates with applicasubsidiaries and offices through regular examination reports, ble federal statutes, the Board may require termination of audit reports, or otherwise; any of Bank's direct or indirect activities in the United (iii) Obtain information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic; States. Approval of this application is also specifically (iv) Receive from the bank financial reports that are consolidated conditioned on compliance by Bank and CNCA with the on a worldwide basis, or comparable information that permits commitments made in connection with this application, analysis of the bank's financial condition on a worldwide consol- and with the conditions in this order.14 The commitments idated basis; (v) Evaluate prudential standards, such as capital adequacy and risk asset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No 14. The Board's authority to approve the establishment of the single factor is essential, and other elements may inform the Board's proposed offices parallels the continuing authority of the states of determination. California, Illinois, New York, and Texas to license offices of a 13. Caisse National de Credit Agricole, 81 Federal Reserve Bulletin foreign bank. The Board's approval of this application does not 1055 (1995). supplant the authority of those states to license the proposed offices of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1028 Federal Reserve Bulletin • December 1997 and conditions referred to above are conditions imposed in engage, directly or indirectly, in any activities in the United writing by the Board in connection with its decision, and States. The proposed representative office would provide may be enforced in proceedings under 12 U.S.C. § 1818 market research, advisory, solicitation, and customer relaagainst Bank, its offices, and its affiliates. tions services on behalf of Bank. By order of the Board of Governors, effective Octo- In acting on an application to establish a representative ber 27, 1997. office, the IBA and Regulation K provide that the Board shall take into account whether the foreign bank engages Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and directly in the business of banking outside of the United Governors Kelley, and Meyer. Absent and not voting: Governor States, has furnished to the Board the information it needs Phillips. to assess adequately the application, is subject to comprehensive supervision or regulation on a consolidated basis JENNIFER J. JOHNSON by its home country supervisor, and has provided adequate Deputy Secretary of the Board assurances of access to information on the operations of the bank and its affiliates to determine compliance with The Cyprus Popular Bank, Ltd. U.S. laws. (12 U.S.C. § 3107(a); 12 C.F.R. 211.24(d)). The Nicosia, Cyprus Board also may take into account additional standards as set forth in the IBA (12 U.S.C. § 3105(d)(3),(4)) and Reg- Order Approving Establishment of a Representative ulation K (12 C.F.R. 211.24(c)). Office The Board previously has stated that the standards that apply to the establishment of a branch or agency need not The Cyprus Popular Bank, Ltd. ("Bank"), Nicosia, in every case apply to the establishment of a representative Cyprus, a foreign bank within the meaning of the Internaoffice, because representative offices do not engage in a tional Banking Act ("IBA"), has applied under secbanking business and cannot take deposits or make loans.3 tion 10(a) of the IBA (12 U.S.C. § 3107(a)) to establish a In evaluating an application to establish a representative representative office in New York, New York. The Foreign office under the IBA and Regulation K, the Board will take Bank Supervision Enhancement Act of 1991, which into account the standards that apply to the establishment amended the IBA, provides that a foreign bank must obtain of branches and agencies, subject generally to the followthe approval of the Board to establish a representative ing considerations. With respect to supervision by home office in the United States. country authorities, a foreign bank that proposes to estab- Notice of the application, affording interested persons an lish a representative office should be subject to a significant opportunity to submit comments, has been published in a degree of supervision by its home country supervisor.4 A newspaper of general circulation in New York, New York foreign bank's financial and managerial resources will be (The Wall Street Journal, July 13, 1992). The time for reviewed to determine whether its financial condition and filing comments has expired, and the Board has considered performance demonstrate that it is capable of complying the application and all comments received. with applicable laws and has an operating record that Bank, with $5 billion in consolidated assets,1 is a comwould be consistent with the establishment of a representamercial bank chartered in Cyprus. The Hongkong and tive office in the United States. Finally, all foreign banks, Shanghai Banking Corporation ("HSBC"), a commercial whether operating through branches, agencies or represenbanking organization, and Lanitis EC Estates Ltd., a Cyptative offices, will be required to provide adequate assurriot property development company, each own more than ances of access to information on the operations of the 10 percent but less than 25 percent of the shares of Bank. bank and its affiliates necessary to determine compliance Bank's remaining shares are widely held. with U.S. laws. Bank is principally engaged in commercial and retail With respect to home country supervision of Bank, the lending, trade finance, foreign exchange, and money Board has considered the following information. Bank is market transactions. Bank operates approximately subject to the supervisory authority of the Central Bank of 140 branches in Cyprus, six branches in the United King- Cyprus ("Central Bank"). The Central Bank is the supervidom, five representative offices in Australia, and represensory authority for all banks licensed in Cyprus, including tative offices in Canada and South Africa.2 Bank does not Bank. The Central Bank obtains information on Bank's financial condition and compliance with law through direct on-site examinations, which generally are conducted every Bank in accordance with any terms or conditions that the states may one to two years. The examiners assess Bank's operations impose. through the review of management, lending procedures, asset quality, liquidity management, capital adequacy, prof- 1. Data are as of December 31, 1996. itability, internal controls, and compliance with regulations 2. Bank also holds a 57 percent ownership interest in European Popular Bank S.A., a commercial bank in Greece established as a joint venture among Bank, HSBC and other Cypriot corporations and individuals. In addition, Bank has six wholly owned nonbanking subsidiaries, all of which are registered in Cyprus, engaged in install- 3. See 58 Federal Register 6348, 6351 (1993). ment finance, insurance, investment banking, factoring, and property 4. See Citizens National Bank, 79 Federal Reserve Bulletin 805 development. (1993). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1029 and guidelines. Examination findings are reviewed with provisions of law in relevant jurisdictions, and has commu- Bank management. The Central Bank also meets with nicated with appropriate government authorities regarding representatives of Bank and its external auditors each year access to information. Bank has committed to make availto discuss any significant supervisory issues that may have able to the Board such information on the operations of arisen during examinations. Bank and any of its affiliates that the Board deems neces- In addition to oversight through direct examinations, the sary to determine and enforce compliance with the IBA, Central Bank receives periodic financial reports from Bank. the Bank Holding Company Act of 1956, as amended, and These include weekly liquidity returns as well as monthly other applicable Federal law. To the extent that the provibalance sheets. Foreign exchange position reports are sub- sion of such information to the Board may be prohibited or mitted quarterly, and income statements, capital adequacy impeded by law, Bank has committed to cooperate with the reports, credit card operations reports, and reports on credit Board to obtain any necessary consents or waivers that facilities to customers and directors are submitted semi- might be required from third parties in connection with annually. The Central Bank uses these reports to identify disclosure of certain information. In light of these commitproblems and to verify regulatory compliance. Bank's fi- ments and other facts of record, and subject to the condinancial statements are audited annually by an independent tion described below, the Board concludes that Bank has external auditor. provided adequate assurances of access to any necessary The Central Bank requires Bank to establish a system of information the Board may request. internal monitoring and control that permits Bank to prop- On the basis of all the facts of record, and subject to the erly administer its operations. Bank monitors its domestic commitments made by Bank, as well as the terms and and overseas operations through periodic reports and on- conditions set forth in this order, the Board has determined site reviews by its internal audit staff. The proposed repre- that Bank's application to establish a representative office sentative office would submit periodic reports to Bank's should be, and hereby is, approved. Should any restrictions head office. Bank's internal auditors would conduct on-site on access to information on the operations or activities of examinations of the proposed representative office at least Bank and any of its affiliates subsequently interfere with biannually, and senior Bank officers would visit the office the Board's ability to determine the compliance by Bank or periodically to ensure that the office is complying with its affiliates with applicable federal statutes, the Board may applicable laws and regulations and with Bank policies and require termination of any of Bank's direct or indirect procedures. activities in the United States. Approval of this application Based on all the facts of record, the Board has deter- is also specifically conditioned on Bank's compliance with mined that factors relating to the supervision of Bank by its the commitments made in connection with this application, home country supervisors are consistent with approval of and with the conditions in this order.5 The commitments the proposed representative office. The Board also has and conditions referred to above are conditions imposed in determined that, for purposes of the IBA and Regulation K, writing by the Board in connection with its decision, and Bank engages directly in the business of banking outside of may be enforced in proceedings under 12 U.S.C. § 1818 the United States through its operations in Cyprus. Bank against Bank and its affiliates. has provided the Board with the information necessary to By order of the Board of Governors, effective Octoassess the application through submissions that address ber 27, 1997. relevant issues. The Board also has taken into account the additional Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and standards set forth in section 7 of the IBA and Regulation Governors Kelley, and Meyer. Absent and not voting: Governor Phillips. K (see 12 U.S.C. § 3105(d)(3),(4); 12 C.F.R. 211.24(c)(2)). As noted above, the Central Bank does not object to JENNIFER J. JOHNSON Bank's establishing the proposed representative office. Deputy Secretary of the Board The Board also has determined that the financial and managerial factors are consistent with approval of the proposed representative office. Bank appears to have the 5. The Board's authority to approve the establishment of the proexperience and capacity to support the proposed office and posed representative office parallels the continuing authority of the also has established controls and procedures for the pro- State of New York to license offices of a foreign bank. The Board's posed representative office to ensure compliance with U.S. approval of this application does not supplant the authority of the State of New York and its agent, the New York State Banking law. Department, to license the proposed representative office of Bank in Finally, with respect to access to information about accordance with any terms or conditions that the New York State Bank's operations, the Board has reviewed the applicable Banking Department may impose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1030 Federal Reserve Bulletin • December 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 Compass Bancshares, Inc., GSB Investments, Inc., October 10, 1997 Birmingham, Alabama Gainesville, Florida Gainesville State Bank, Gainesville, Florida Horizon Bancorp of South Arkansas, Inc. Horizon Bank of Columbia County, October 29, 1997 Magnolia, Arkansas Magnolia, Arkansas Section 4 Applicant(s) Bank(s) Effective Date The Bank of New York Company, Inc., ESI Securities Company, October 27, 1997 New York, New York New York, New York B-Trade Services LLC, New York, New York By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Applicant(s) Bank(s) Reserve Bank Effective Date Albrecht Financial Services, Inc. Heartland Bankshares, Inc., Chicago October 15, 1997 Norwalk, Iowa Madrid, Iowa City State Bank, Grimes, Iowa Bank Capital Corporation, Guaranty Corporation, Kansas City October 1, 1997 Strasburg, Colorado Denver, Colorado BEO Bancorp, Bank of Eastern Oregon, San Francisco October 22, 1997 Heppner, Oregon Heppner, Oregon Centre 1 Bancorp, Inc., First Winnebago Corporation, Chicago October 1, 1997 Beloit, Wisconsin Winnebago, Illinois First National Bank of Winnebago, Winnebago, Illinois Citizens Financial Corp., U.S. National Bank, Kansas City October 21, 1997 Midwest City, Oklahoma Midwest City, Oklahoma Community First Bankshares, Inc. First National Summit Bankshares, Inc. Minneapolis October 16, 1997 Fargo, North Dakota Gunnison, Colorado First National Summit Bank, Gunnison, Colorado Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1031 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Community First Bankshares, Inc., Republic National Bancorp, Inc., Minneapolis October 16, 1997 Fargo, North Dakota Phoenix, Arizona Republic National Bank of Arizona, N.A., Phoenix, Arizona Community National Corporation, Community National Bank of St. Louis October 22, 1997 Lexington, Tennessee Tennessee, Lexington, Tennessee Cortez Investment Co., The Cortez State Bank, Kansas City October 15, 1997 Cortez, Colorado Cortez, Colorado Exchange National Bancshares, Inc. Union State Bancshares, Inc., St. Louis October 7, 1997 Jelferson City, Missouri Clinton, Missouri Union State Bank and Trust Company of Clinton, Clinton, Missouri FBOP Corporation, First Capital Bank of Arizona, Chicago October 7, 1997 Oak Park, Illinois Phoenix, Arizona First Commercial Corporation, First Charter Bancshares, Inc., St. Louis September 26, 1997 Little Rock, Arkansas North Little Rock, Arkansas Charter State Bank, Beebe, Arkansas First National Bank of Las Animas First Bankshares of Las Animas, Inc., Kansas City October 9, 1997 ESOP, Las Animas, Colorado Las Animas, Colorado First United Bancshares, Inc., City Bank & Trust of Shreveport, St. Louis October 14, 1997 El Dorado, Arkansas Louisiana, Shreveport, Louisiana F.N.B. Corporation, Mercantile Bank of Southwest Florida, Cleveland October 16, 1997 Hermitage, Pennsylvania Naples, Florida Griffin Investments, L.P., Griffin Bancshares, Inc., Cameron, Kansas City October 22, 1997 Cameron, Missouri Missouri Griffin General Partner, Inc., Cameron, Missouri Iron Bancshares, Inc., The National Iron Bank, Boston October 10, 1997 Salisbury, Connecticut Salisbury, Connecticut Mahaska Investment Company, Pella State Bank, Chicago October 10, 1997 Oskaloosa, Iowa Pella, Iowa MainStreet BankGroup Commerce Bank Corporation, Richmond October 14, 1997 Incorporated, College Park, Maryland Martinsville, Virginia Marengo Bancshares, Inc., Prairie State Bank, Chicago October 20, 1997 Marengo, Illinois Marengo, Illinois The Marine BanCorp, Inc., The Marine Bank, Richmond October 9, 1997 Chincoteague, Virginia Chincoteague, Virginia Medford Bancorp, Inc., Medford Savings Bank, Boston October 17, 1997 Medford, Massachusetts Medford, Massachusetts Mercantile Bank Corporation, Mercantile Bank of West Michigan, Chicago October 15, 1997 Grand Rapids, Michigan Grand Rapids, Michigan National City Bancshares, Inc., Fourth First Bancorp, St. Louis October 9, 1997 Evansville, Indiana Huntingburg, Indiana First Bank of Huntingburg, Huntingburg, Indiana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1032 Federal Reserve Bulletin • December 1997 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date New Amboy, Inc., Amboy National Bank, New York October 1, 1997 Old Bridge, New Jersey Old Bridge, New Jersey Amboy Bancorporation, Old Bridge, New Jersey Olympian New York Corporation, Olympian Bank, New York October 15, 1997 Brooklyn, New York Brooklyn, New York Olympic Bancorp, Inc., Kitsap Bank, San Francisco September 25, 1997 Port Orchard, Washington Port Orchard, Washington One Valley Bancorp, Inc., One Valley Bank-Central Virginia, Richmond October 16, 1997 Charleston, West Virginia National Association, Lynchburg, Virginia Peoples Commercial Bancorp, Bank of Commerce, Kansas City October 3, 1997 Stilwell, Oklahoma Stilwell, Oklahoma Peoples Bank, Westville, Oklahoma Popular, Inc., Houston Bancorporation, Inc., New York October 22, 1997 Hato Rey, Puerto Rico Houston, Texas Popular International Bank, Inc., Citizens National Bank, Hato Rey, Puerto Rico Houston, Texas Popular North America, Inc., Wilmington, Delaware Queenstown Bancorp of Maryland, Queenstown Bank of Maryland, Richmond October 8, 1997 Inc., Queenstown, Maryland Queenstown, Maryland Republic Security Financial County National Corporation, Atlanta September 30, 1997 Corporation, North Miami Beach, Florida West Palm Beach, Florida County National Bank of South Florida, North Miami Beach, Florida Rice Lake Bancorp, Inc., First Bank and Trust, Minneapolis October 20, 1997 Rice Lake, Wisconsin Menomonie, Wisconsin Trustbank Financial Corporation, Trust Bank of Colorado, Kansas City October 17, 1997 Denver, Colorado Denver, Colorado Union Planters Corporation, Capital Bancorp, St. Louis October 8, 1997 Memphis, Tennessee Miami, Florida Capital Bank, Miami, Florida United Security Bancorporation, Community Ban Corporation, San Francisco October 2, 1997 Spokane, Washington Pullman, Washington Bank of Pullman, Pullman, Washington Vail Banks, Inc., Cedaredge Financial Services, Inc., Kansas City October 9, 1997 Vail, Colorado Cedaredge, Colorado Zions Bancorporation, GB Bancoiporation, San Francisco September 30, 1997 Salt Lake City, Utah San Diego, California Grossmont Bank, San Diego, California Rancho Vista National Bank, Vista, California Pacific Commerce Bank, Chula Vista, California Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1033 Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date KeyCorp, Electronic Payment Services, Inc., Cleveland September 29, 1997 Cleveland, Ohio Wilmington, Delaware Banc One Corporation, Columbus, Ohio PNC Bank Corp., Pittsburgh, Pennsylvania Norwest Corporation, Cityside Financial Services of Minneapolis October 22, 1997 Minneapolis, Minnesota Wisconsin, Inc., Norwest Financial Services, Inc. Eden Prairie, Minnesota Des Moines, Iowa Cityside Savings & Financial Norwest Financial, Inc., Services Co., Des Moines, Iowa Eden Prairie, Minnesota Cityside Insurance Company, Ltd., Eden Prairie, Minnesota Premier Bancshares, Inc., Traditional Mortgage Corporation, Atlanta October 16, 1997 Atlanta, Georgia Atlanta, Georgia Spectrum Bancorporation, Inc., First Savings & Loan Association of Minneapolis October 16, 1997 Omaha, Nebraska South Dakota, Inc., Aberdeen, South Dakota Suez Lyonnaise des Eaux, Harbor Capital Management, Inc., New York September 26, 1997 Paris, France Boston, Massachusetts Societe Generale de Belgique, Brussels, Belgium Generale de Banque, Brussels, Belgium Triangle Bancorp, Inc., Coastal Leasing Corporation, Richmond October 20, 1997 Raleigh, North Carolina Greenville, North Carolina Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Mutual Bancorp of the Berkshires, City Savings Bank of Pittsfield, Boston October 17, 1997 Inc., Pittsfield, Massachusetts Pittsfield, Massachusetts First National Bank of the Berkshires, Lee, Massachusetts Lee National Banc Corp., Lee, Massachusetts Trust Company of the Berkshires, N.A., Pittsfield, Massachusetts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1034 Federal Reserve Bulletin • December 1997 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 Compass Bank, Gainesville State Bank, October 10, 1997 Birmingham, Alabama Gainesville, 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 Citizens Bank, First Commercial Bank, ssb, Kansas City October 22, 1997 Lawton, Oklahoma Lawton, Oklahoma The Citizens Banking Company, The Metropolitan Savings Bank of Cleveland October 10, 1997 Salineville, Ohio Ohio, Youngstown, Ohio Community Bank & Trust Citizens Bank of Missouri, Kansas City October 3, 1997 Company, Carl Junction, Missouri Neosho, Missouri First Farmers Bank & Trust NBD Bank, N.A., Chicago September 29, 1997 Company, Indianapolis, Indiana Converse, Indiana Republic Security Bank, County National Bank of South Florida, Atlanta September 30, 1997 West Palm Beach, Florida North Miami Beach, Florida WestStar Bank, Western Community Bank, Kansas City October 9, 1997 Vail, Colorado Cedaredge, Colorado Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments ' 1035 PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the motion was denied on June 27, 1997. On August 11, 1997, Federal Reserve Banks in which the Board of Governors is not the Board filed a motion to dismiss the petition. named a party. Vickery v. Board of Governors, No. 97-1344 (D.C. Cir., filed May 9, 1997). Petition for review of a Board order dated Patrick v. United States, No. 97-75017 (E.D. Mich., filed April 14, 1997, prohibiting Charles R. Vickery, Jr., from September 30, 1997). Action for damages arising out of tax further participation in the banking industry. dispute. Pharaon v. Board of Governors, No. 97-1114 (D.C. Cir., filed Artis v. Greenspan, No. 97-5234 (D.C. Cir., filed Septem- February 28, 1997). Petition for review of a Board order ber 19, 1997). Appeal of district court order dismissing dated January 31, 1997, imposing civil money penalties and employment discrimination action. an order of prohibition for violations of the Bank Holding Artis v. Greenspan, No. 97-5235 (D.C. Cir., filed Septem- Company Act. Oral argument is scheduled for December 8, ber 19, 1997). Appeal of district court order dismissing 1997. class complaint alleging race discrimination in employ- Research Triangle Institute v. Board of Governors, No. 97ment. 1282 (4th Cir., filed February 24, 1997). Appeal of district Branch v. Board of Governors, No. 97-5229 (D.C. Cir., filed court's dismissal of contract claim. Oral argument was held September 12, 1997). Appeal of district court order denying on October 30, 1997. motion to compel production of pre-decisional supervisory Jones v. Board of Governors, No. CV97-0198 (W.D. Louisidocuments and testimony sought in connection with an ana, filed January 30, 1997). Complaint alleging violations action by Bank of New England Corporation's trustee in of the Fair Housing Act. On October 6, 1997, the Board bankruptcy against the Federal Deposit Insurance Corpora- filed a motion to dismiss the action. tion. The New Mexico Alliance v. Board of Governors, No. 96- Wilkins v. Reno, No. 97-2275 (4th Cir., filed September 12, 9552 (10th Cir., filed December 24, 1996). Petition for 1997). Appeal of district court dismissal of complaint con- review of a Board order dated December 16, 1996, approvcerning customer dispute with bank. ing the acquisition by NationsBank Corporation and NB Clarkson v. Greenspan, No. 97-CV-2035 (D.D.C., filed Sep- Holdings Corporation, both of Charlotte, North Carolina, of tember 5, 1997). Freedom of Information Act case. Boatmen's Bancshares, Inc., St. Louis, Missouri. Also on Banking Consultants of America v. Board of Governors, No. December 24, 1996, petitioners moved for an emergency 97-2791 (W.D. Tenn., filed September 2, 1997). Action to stay of the Board's order. The motion for a stay was denied enjoin investigation by the Board, the Office of the Comp- by the 10th Circuit on January 3, 1997; on January 6, 1997, troller of the Currency, and the Department of Labor. petitioners' application for emergency stay was denied by Bettersworth v. Board of Governors, No. 97-CA-624 (W.D. the Supreme Court. Tex., filed August 21, 1997). Privacy Act case. American Bankers Insurance Group, Inc. v. Board of Gover- Wilkins v. Warren, No. 97-CV-590 (E.D. Va., filed August 4, nors, No. 96-CV-2383-EGS (D.D.C., filed October 16, 1997). Customer dispute with a bank. 1996). Action seeking declaratory and injunctive relief in- Eliopulos v. Board of Governors, No. 97-1442 (D.C. Cir., validating a new regulation issued by the Board under the filed July 17, 1997). Petition for review of a Board order Truth in Lending Act relating to treatment of fees for debt dated June 23, 1997, approving the application of First cancellation agreements. On October 18, 1996, the district Bank System, Inc., Minneapolis, Minnesota, to acquire U.S. court denied plaintiffs' motion for a temporary restraining Bancorp, Portland, Oregon, and thereby acquire U.S. Ban- order. On January 17, 1997, the parties filed cross-motions corp's banking and nonbanking subsidiaries. On Septem- for summary judgment. ber 12, 1997, the Board filed a motion to dismiss the Leuthe v. Office of Financial Institution Adjudication, No. petition. 97-1826 (3d Cir., filed October 22, 1997). Appeal of district Greeff v. Board of Governors, No. 97-1976 (4th Cir., filed court dismissal of action against the Board and other Fed- June 17, 1997). Petition for review of a Board order dated eral banking agencies challenging the constitutionality of May 19, 1997, approving the application of by Allied Irish the Office of Financial Institution Adjudication. Banks, pic, Dublin, Ireland, and First Maryland Bancorp, Inner City Press/Community on the Move v. Board of Gover- Baltimore, Maryland, to acquire Dauphin Deposit Corpora- nors, No. 96-4008 (2nd Cir., filed January 19, 1996). Petition, Harrisburg, Pennsylvania, and thereby acquire Dau- tion for review of a Board order dated January 5, 1996, phin's banking and nonbanking subsidiaries. approving the applications and notices by Chemical Bank- Inner City Press/Community on the Move v. Board of Gover- ing Corporation to merge with The Chase Manhattan Cornors, No. 97-1394 (D.C. Cir., filed June 12, 1997). Petition poration, both of New York, New York, and by Chemical to review a Board order dated May 14, 1997, approving the Bank to merge with The Chase Manhattan Bank, N.A., both application of Banc One Corporation, Inc., Columbus, Ohio, of New York, New York. Petitioners' motion for an emerto merge with First USA, Inc., Dallas, Texas. On June 16, gency stay of the transaction was denied following oral 1997, petitioners moved for a stay pending appeal. The argument on March 26, 1996. The Board's brief on the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1036 Federal Reserve Bulletin • December 1997 merits was filed July 8, 1996. The case was consolidated for FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD oral argument and decision with Lee v. Board of Governors, OF GOVERNORS No. 95-4134 (2d Cir.); oral argument was held on January 13, 1997. On July 2, 1997, the court of appeals dis- Gregory D. Cannon missed the petition for review. Ann Arbor, Michigan Lee v. Board of Governors, No. 95^134 (2nd Cir., filed August 22, 1995). Petition for review of Board orders dated The Federal Reserve Board announced on October 10, July 24, 1995, approving certain steps of a corporate reorga- 1997, the issuance of an Order of Removal and of Prohibinization of U.S. Trust Corporation, New York, New York, tion against Gregory D. Cannon, a current officer and and the acquisition of U.S. Trust by Chase Manhattan institution-affiliated party of the University Bank, Ann Corporation, New York, New York. On September 12, Arbor, Michigan, a state nonmember bank, and a former 1995, the court denied petitioners' motion for an emergency officer and institution-affiliated party of the Bank of Lenastay of the Board's orders. The Board's brief was filed on wee, Adrian, Michigan, a state member bank. April 16, 1996. Oral argument, consolidated with Inner City Press/Community on the Move v. Board of Governors, took Kang Soo Lee place on January 13, 1997. On July 2, 1997, the court of Flushing, New York appeals dismissed the petition for review. Board of Governors v. Pharaon, No. 91-CIV-6250 (S.D. New The Federal Reserve Board announced on October 21, York, filed September 17, 1991). Action to freeze assets of 1997, the issuance of an Order of Prohibition against Kang individual pending administrative adjudication of civil Soo Lee, a former officer and institution-affiliated party of money penalty assessment by the Board. On September 17, the Flushing branch of the Korea Exchange Bank, Flush- 1991, the court issued an order temporarily restraining the ing, New York, a state licensed insured branch of the transfer or disposition of the individual's assets. Korea Exchange Bank, Seoul, South Korea. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1037 Membership of the Board of Governors of the Federal Reserve System, 1913-97 APPOINTIVE MEMBERS1 Federal Reserve Date of initial Other dates and information relating Name District oath of office to membership2 Charles S. Hamlin ....Boston AAuugg.. 1100,, 11991144 Reappointed in 1916 and 1926. Served until Feb. 3, 1936.3 Paul M. Warburg ... .New York ...Aug. 10, 1914 Term expired Aug. 9, 1918. Frederic A. Delano ....Chicago ...Aug. 10, 1914 Resigned July 21, 1918. W.P.G. Harding ....Atlanta ...Aug. 10, 1914 Term expired Aug. 9, 1922. Adolph C. Miller ....San Francisco ...Aug. 10, 1914 Reappointed in 1924. Reappointed in 1934 from the Richmond District. Served until Feb. 3, 1936.3 Albert Strauss ... .New York ...Oct. 26, 1918 Resigned Mar. 15, 1920. Henry A. Moehlenpah ....Chicago ...Nov. 10, 1919 Term expired Aug. 9, 1920. Edmund Piatt ... .New York ...June 8, 1920 Reappointed in 1928. Resigned Sept. 14, 1930. David C. Wills ....Cleveland ...Sept. 29, 1920 Term expired Mar. 4, 1921. John R. Mitchell ....Minneapolis ...May 12, 1921 Resigned May 12, 1923. Milo D. Campbell ....Chicago ...Mar. 14, 1923 Died Mar. 22, 1923. Daniel R. Crissinger ...Cleveland ...May 1, 1923 Resigned Sept. 15, 1927. George R. James ....St. Louis ...May 14, 1923 Reappointed in 1931. Served until Feb. 3, 1936.4 Edward H. Cunningham . ....Chicago ...May 14, 1923 Died Nov. 28, 1930. Roy A. Young ....Minneapolis ...Oct. 4, 1927 Resigned Aug. 31, 1930. Eugene Meyer ... .New York ...Sept. 16, 1930 Resigned May 10, 1933. Wayland W. Magee ....Kansas City ...May 18, 1931 Term expired Jan. 24, 1933. Eugene R. Black ...Atlanta ...May 19, 1933 Resigned Aug. 15, 1934. M.S. Szymczak ....Chicago ...June 14, 1933 Reappointed in 1936 and 1948. Resigned May 31, 1961. J.J. Thomas ....Kansas City ...June 14, 1933 Served until Feb. 10, 1936.3 Marriner S. Eccles ...San Francisco ...Nov. 15, 1934 Reappointed in 1936, 1940, and 1944. Resigned July 14, 1951. Joseph A. Broderick ... .New York ...Feb. 3, 1936 Resigned Sept. 30, 1937. John K. McKee ...Cleveland ...Feb. 3, 1936 Served until Apr. 4, 1946.3 Ronald Ransom ...Atlanta ...Feb. 3, 1936 Reappointed in 1942. Died Dec. 2, 1947. Ralph W. Morrison ...Dallas ...Feb. 10, 1936 Resigned July 9, 1936. Chester C. Davis ...Richmond ...June 25, 1936 Reappointed in 1940. Resigned Apr. 15, 1941. Ernest G. Draper ... .New York ...Mar. 30, 1938 Served until Sept. 1, 1950.3 Rudolph M. Evans .. .Richmond ...Mar. 14, 1942 Served until Aug. 13, 1954.3 James K. Vardaman, Jr. ...St. Louis ...Apr. 4, 1946 Resigned Nov. 30, 1958. Lawrence Clayton .. .Boston ...Feb. 14, 1947 Died Dec. 4, 1949. Thomas B. McCabe ...Philadelphia ...Apr. 15, 1948 Resigned Mar. 31, 1951. Edward L. Norton ...Atlanta ...Sept. 1, 1950 Resigned Jan. 31, 1952. Oliver S. Powell ...Minneapolis ...Sept. 1, 1950 Resigned June 30, 1952. Wm. McC. Martin, Jr. .... ...New York ...April 2, 1951 Reappointed in 1956. Term expired Jan. 31, 1970. A.L. Mills, Jr ...San Francisco ...Feb. 18, 1952 Reappointed in 1958. Resigned Feb. 28, 1965. J.L. Robertson ...Kansas City ...Feb. 18, 1952 Reappointed in 1964. Resigned Apr. 30, 1973. C. Canby Balderston ...Philadelphia ...Aug. 12, 1954 Served through Feb. 28, 1966. Paul E. Miller ...Minneapolis ...Aug. 13, 1954 Died Oct. 21, 1954. Chas. N. Shepardson ...Dallas ...Mar. 17, 1955 Retired Apr. 30, 1967. G.H. King, Jr ...Atlanta ...Mar. 25, 1959 Reappointed in 1960. Resigned Sept. 18, 1963. George W. Mitchell ...Chicago ...Aug. 31, 1961 Reappointed in 1962. Served until Feb. 13, 1976.3 J. Dewey Daane ...Richmond ...Nov. 29, 1963 Served until Mar. 8, 1974.3 Sherman J. Maisel .. .San Francisco ...Apr. 30, 1965 Served through May 31, 1972. Andrew F. Brimmer ...Philadelphia ...Mar. 9, 1966 Resigned Aug. 31, 1974. William W. Sherrill ...Dallas ...May 1, 1967 Reappointed in 1968. Resigned Nov. 15, 1971. Arthur F. Burns ...New York ...Jan. 31, 1970 Term began Feb. 1, 1970. Resigned Mar. 31, 1978. John E. Sheehan ...St. Louis ...Jan. 4, 1972 Resigned June 1, 1975. Jeffrey M. Bucher ...San Francisco ...June 5, 1972 Resigned Jan. 2, 1976. Robert C. Holland ...Kansas City ...June 11, 1973 Resigned May 15, 1976. Henry C. Wallich ...Boston ...Mar. 8, 1974 Resigned Dec. 15, 1986. Philip E. Coldwell ...Dallas ...Oct. 29, 1974 Served through Feb. 29, 1980. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1038 Federal Reserve Bulletin • December 1997 Federal Reserve Date of initial Other dates and information relating Name District oath of office to membership2 Philip C. Jackson, Jr. . Atlanta July 14, 1975 Resigned Nov. 17, 1978. J. Charles Partee Richmond Jan. 5, 1976 Served until Feb. 7, 1986.3 Stephen S. Gardner ... Philadelphia Feb. 13, 1976 Died Nov. 19, 1978. David M. Lilly Minneapolis June 1, 1976 Resigned Feb. 24, 1978. G. William Miller .... San Francisco Mar. 8, 1978 Resigned Aug. 6, 1979. Nancy H. Teeters Chicago Sept. 18, 1978 Served through June 27, 1984. Emmett J. Rice New York June 20, 1979 Resigned Dec. 31, 1986. Frederick H. Schultz . Atlanta July 27, 1979 Served through Feb. 11, 1982. Paul A. Yolcker Philadelphia Aug. 6, 1979 Resigned August 11, 1987. Lyle E. Gramley Kansas City May 28, 1980 Resigned Sept. 1, 1985. Preston Martin San Francisco Mar. 31, 1982 Resigned April 30, 1986. Martha R. Seger Chicago July 2, 1984 Resigned March 11, 1991. Wayne D. Angell Kansas City Feb. 7, 1986 Served through Feb. 9, 1994. Manuel H. Johnson .. Richmond Feb. 7, 1986 Resigned August 3, 1990. H. Robert Heller San Francisco Aug. 19, 1986 Resigned July 31, 1989. Edward W. Kelley, Jr. Dallas May 26, 1987 Reappointed in 1990. Alan Greenspan New York Aug. 11, 1987 Reappointed in 1992. John P. LaWare Boston Aug. 15, 1988 Resigned April 30, 1995. David W. Mullins, Jr. St. Louis May 21, 1990 Resigned Feb. 14, 1994. Lawrence B. Lindsey Richmond Nov. 26, 1991 Resigned Feb. 5, 1997. Susan M. Phillips Chicago Dec. 2, 1991 Alan S. Blinder Philadelphia June 27, 1994 Term expired Jan. 31, 1996. Janet L. Yellen San Francisco Aug. 12, 1994 Resigned Feb. 17, 1997. Laurence H. Meyer .. St. Louis June 24, 1996 Alice M. Rivlin Philadelphia June 25, 1996 Roger W. Ferguson, Jr. Boston Nov. 5, 1997 Edward M. Gramlich Richmond Nov. 5, 1997 Chairmen4 Vice Chairmen4 Charles S. Hamlin .Aug. 10, 1914-Aug. 9, 1916 Frederic A. Delano Aug. 10, 1914-Aug. 9, 1916 W.P.G. Harding Aug. 10, 1916-Aug. 9, 1922 Paul M. Warburg Aug. 10, 1916-Aug. 9, 1918 Daniel R. Crissinger May 1, 1923-Sept. 15, 1927 Albert Strauss Oct. 26, 1918-Mar. 15, 1920 Roy A. Young Oct. 4, 1927-Aug. 31, 1930 Edmund Piatt July 23, 1920-Sept. 14, 1930 Eugene Meyer Sept. 16, 1930-May 10, 1933 J.J. Thomas Aug. 21, 1934-Feb. 10, 1936 Eugene R. Black May 19, 1933-Aug. 15, 1934 Ronald Ransom Aug. 6, 1936-Dec. 2, 1947 Marriner S. Eccles Nov. 15, 1934-Jan. 31, 19485 C. Canby Balderston Mar. 11, 1955-Feb. 28, 1966 Thomas B. McCabe Apr. 15, 1948-Mar. 31, 1951 J.L. Robertson Mar. 1, 1966-Apr. 30, 1973 Wm. McC. Martin, Jr Apr. 2, 1951-Jan. 31, 1970 George W. Mitchell May 1, 1973-Feb. 13, 1976 Arthur F. Burns Feb. 1, 1970-Jan. 31, 1978 Stephen S. Gardner Feb. 13, 1976-Nov. 19, 1978 G. William Miller Mar. 8, 1978-Aug. 6, 1979 Frederick H. Schultz July 27, 1979-Feb. 11, 1982 Paul A. Volcker Aug. 6, 1979-Aug. 11, 1987 Preston Martin Mar. 31, 1982-Apr. 30, 1986 Alan Greenspan Aug. 11, 1987-6 Manuel H. Johnson Aug. 4, 1986-Aug. 3, 1990 David W. Mullins, Jr. July 24, 1991-Feb. 14, 1994 Alan S. Blinder June 27, 1994-Jan. 31, 1996 Alice M. Rivlin June 25, 1996- EX-OFFICIO MEMBERS 1 Secretaries of the Treasury Comptrollers of the Currency W.G. McAdoo Dec. 23, 1913-Dec. 15, 1918 John Skelton Williams Feb. 2, 1914-Mar. 2, 1921 Carter Glass Dec. 16, 1918-Feb. 1, 1920 Daniel R. Crissinger Mar. 17, 1921-Apr. 30, 1923 David F. Houston Feb. 2, 1920-Mar. 3, 1921 Henry M. Dawes May 1, 1923-Dec. 17, 1924 Andrew W. Mellon Mar. 4, 1921-Feb. 12, 1932 Joseph W. Mcintosh Dec. 20, 1924-Nov. 20, 1928 OgdenL. Mills Feb. 12, 1932-Mar. 4, 1933 J.W. Pole Nov. 21, 1928-Sept. 20, 1932 William H. Woodin Mar. 4, 1933-Dec. 31, 1933 J.F.T. O'Connor May 11, 1933-Feb. 1, 1936 Henry Morgenthau Jr Jan. 1, 1934-Feb. 1, 1936 1. Under the provisions of the original Federal Reserve Act, the Federal ive members in office on the date of that act should continue to serve until Feb. 1, Reserve Board was composed of seven members, including five appointive 1936, or until their successors were appointed and had qualified; and that members, the Secretary of the Treasury, who was ex-officio chairman of the thereafter the terms of members should be fourteen years and that the Board, and the Comptroller of the Currency. The original term of office was ten designation of Chairman and Vice Chairman of the Board should be for a term of years, and the five original appointive members had terms of two, four, six, four years. eight, and ten years respectively. In 1922 the number of appointive members was 2. Date after words "Resigned" and "Retired" denotes final day of service. increased to six, and in 1933 the term of office was increased to twelve years. 3. Successor took office on this date. The Banking Act of 1935, approved Aug. 23, 1935, changed the name of the 4. Chairman and Vice Chairman were designated Governor and Vice Federal Reserve Board to the Board of Governors of the Federal Reserve System Governor before Aug. 23, 1935. and provided that the Board should be composed of seven appointive members; 5. Served as Chairman Pro Tempore from February 3, 1948, to April 15, that the Secretary of the Treasury and the Comptroller of the Currency should 1948. continue to serve as members until Feb. 1, 1936; that the appoint- 6. Served as Chairman Pro Tempore from March 3, 1996, to June 20, 1996. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics A3 GUIDE TO TABULAR PRESENTATION Federal Finance—Continued All Federal debt subject to statutory limitation DOMESTIC FINANCIAL STATISTICS A27 Gross public debt of U.S. Treasury— Types and ownership Money Stock and Bank Credit A28 U.S. government securities A4 Reserves, money stock, liquid assets, and debt dealers—Transactions measures A29 U.S. government securities dealers— A5 Reserves of depository institutions, Reserve Bank Positions and financing credit A30 Federal and federally sponsored credit A6 Reserves and borrowings—Depository agencies—Debt outstanding institutions Securities Markets and Corporate Finance Policy Instruments A31 New security issues—Tax-exempt state and local A7 Federal Reserve Bank interest rates governments and corporations A8 Reserve requirements of depository institutions A32 Open-end investment companies—Net sales A9 Federal Reserve open market transactions and assets A32 Corporate profits and their distribution Federal Reserve Banks A32 Domestic finance companies—Assets and liabilities A10 Condition and Federal Reserve note statements A33 Domestic finance companies—Consumer, real estate, All Maturity distribution of loan and security and business credit holdings Monetary and Credit Aggregates Real Estate All Aggregate reserves of depository institutions A34 Mortgage markets and monetary base A3 5 Mortgage debt outstanding A12 Money stock, liquid assets, and debt measures A14 Deposit interest rates and amounts outstanding— Consumer Credit commercial and BIF-insured banks A3 6 Total outstanding A3 6 Terms Commercial Banking Institutions— Assets and Liabilities Flow of Funds A15 All commercial banks A37 Funds raised in U.S. credit markets A16 Domestically chartered commercial banks A39 Summary of financial transactions A17 Large domestically chartered commercial banks A40 Summary of credit market debt outstanding A19 Small domestically chartered commercial banks A41 Summary of financial assets and liabilities A20 Foreign-related institutions DOMESTIC NONFINANCIAL STATISTICS Financial Markets All Commercial paper and bankers dollar Selected Measures acceptances outstanding A42 Nonfinancial business activity— All Prime rate charged by banks on short-term Selected measures business loans A42 Labor force, employment, and unemployment A23 Interest rates—money and capital markets A43 Output, capacity, and capacity utilization A24 Stock market—Selected statistics A44 Industrial production—Indexes and gross value A46 Housing and construction Federal Finance A47 Consumer and producer prices A25 Federal fiscal and financing operations A48 Gross domestic product and income A26 U.S. budget receipts and outlays A49 Personal income and saving Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected G-10 Group of Ten e Estimated GNMA Government National Mortgage Association n.a. Not available GDP Gross domestic product P Preliminary HUD Department of Housing and Urban r Revised (Notation appears on column heading Development when about half of the figures in that column IMF International Monetary Fund are changed.) IO Interest only * Amounts insignificant in terms of the last decimal IPCs Individuals, partnerships, and corporations place shown in the table (for example, less than IRA Individual retirement account 500,000 when the smallest unit given is millions) MMDA Money market deposit account 0 Calculated to be zero MSA Metropolitan statistical area Cell not applicable NOW Negotiable order of withdrawal ATS Automatic transfer service OCD Other checkable deposit BIF Bank insurance fund OPEC Organization of Petroleum Exporting Countries CD Certificate of deposit OTS Office of Thrift Supervision CMO Collateralized mortgage obligation PO Principal only FFB Federal Financing Bank REIT Real estate investment trust FHA Federal Housing Administration REMIC Real estate mortgage investment conduit FHLBB Federal Home Loan Bank Board RP Repurchase agreement FHLMC Federal Home Loan Mortgage Corporation RTC Resolution Trust Corporation FmHA Farmers Home Administration SCO Securitized credit obligation FNMA Federal National Mortgage Association SDR Special drawing right FSLIC Federal Savings and Loan Insurance Corporation SIC Standard Industrial Classification G-7 Group of Seven VA Department of Veterans Affairs GENERAL INFORMATION In many of the tables, components do not sum to totals because of include not fully guaranteed issues) as well as direct obligarounding. tions of the Treasury. Minus signs are used to indicate (1) a decrease, (2) a negative "State and local government" also includes municipalities, figure, or (3) an outflow. special districts, and other political 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 NonfinancialS tatistics • December 1997 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1996 1997 1997r MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q4 Ql Q2r Q3 May June July Aug. Sept. Reserves of depository institutions2 1 Total -17.2 -8.3 -14.3 -1.8 -9.7 1.5 -5.7 13.5 -19.0 2 Required -18.5 -8.4 -15.0 -2.5 -15.8 .5 -3.8 12.6 -20.7 3 Nonborrowed -16.2 -7.2 -16.0 -3.4 -9.3 -1.6 -6.8 8.8 -15.1 4 Monetary base3 5.1 5.6 3.3 6.0 3.6 4.7 7.3 5.8 7.5 Concepts of money, liquid assets, and debt4 5 Ml -7.3 -.7 -5.5 .0 -2.8 .3 -1.2 8.1 -10.0 6 M2 4.2r 5.5r 4.2 5.4 -.3 4.6 3.7 11.1 6.6 7 M3 1.5' 7.8r 7.1 8.6 1.9 5.0 10.5 12.2 9.2 8 L 6.2' 6.3r 8.1 n.a. 3.8 4.5 6.7 14.2 n.a. 9 Debt 4.7r 4.3r 4.6 n.a. 3.6 2.1 4.0 4.2 n.a. Nontransaction components 10 In M25 9.0r 8.0r 8.0 7.5 .7 6.2 5.5 12.2 12.8 11 In M3 only6 19.6 15.9r 16.7 19.2 9.1 6.1 33.2 15.6 17.8 Time and savings deposits Commercial banks 12 Savings, including MMDAs 17.0 14.0 10.7 8.6 -3.2 5.7 6.7 14.3 20.1 13 Small time7 4.7 2.9 5.9 9.0 6.2 11.6 12.6 3.3 6.2 14 Large time8,9 22.9 12.8 23.2 27.3 4.1 23.1 44.0 14.4 29.5 Thrift institutions 15 Savings, including MMDAs .8 2.7 5.8 .1 7.7 .0 -2.6 .6 -.6 16 Small time7 3.0 -.r -3.4 -6.2 3.4 -4.4 -13.4 -1.7 -6.6 17 Large time8 9.1 12.8 5.6 11.6 -2.9 14.6 20.1 5.7 5.6 Money market mutual funds 18 Retail 10.5r 12.9r 14.9 17.5 -5.2 12.4 13.2 34.4 27.4 19 Institution-only 19.8 15.5 12.5 21.3 .0 28.1 19.6 18.9 35.4 Repurchase agreements and Eurodollars 20 Repurchase agreements'0 3.0 10.7r 4.3 13.0 2.9 -34.0 55.5 17.3 -15.9 21 Eurodollars10 48.2 40.2r 33.4 .5 65.4 -42.2 .0 16.8 -5.5 Debt components4 22 Federal 3.4r 1.8 .4 n.a. -4.3 -4.2 .9 1.6 n.a. 23 Nonfederal 5.2r 5.1r 6.1 n.a. 6.3 4.3 5.1 5.1 n.a. 1. Unless otherwise noted, rates of change are calculated from average amounts outstand- amounts held by depository institutions, the U.S. government, money market funds, and ing during preceding month or quarter. foreign banks and official institutions. Seasonally adjusted M3 is calculated by summing large 2. Figures incorporate adjustments for discontinuities, or "breaks," associated with time deposits, institutional money fund balances, RP liabilities, and Eurodollars, each regulatory changes in reserve requirements. (See also table 1.20.) seasonally adjusted separately, and adding this result to seasonally adjusted M2. 3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency securities, commercial paper, and bankers acceptances, net of money market fund holdings of component of the money stock, plus (3) (for all quarterly reporters on the "Report of these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whose Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference separately, and then adding this result to M3. between current vault cash and the amount applied to satisfy current reserve requirements. Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial 4. Composition of the money stock measures and debt is as follows: sectors—the federal sector (U.S. government, not including government-sponsored enter- Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of prises or federally related mortgage pools) and the nonfederal sectors (state and local depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all governments, households and nonprofit organizations, nonfinancial corporate and nonfarm commercial banks other than those owed to depository institutions, the U.S. government, and noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and foreign banks and official institutions, less cash items in the process of collection and Federal corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of which are derived from the Federal Reserve Board's flow of funds accounts, are breakwithdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, adjusted (that is, discontinuities in the data have been smoothed into the series) and credit union share draft accounts, and demand deposits at thrift institutions. Seasonally month-averaged (that is, the data have been derived by averaging adjacent month-end levels). adjusted Ml is computed by summing currency, travelers checks, demand deposits, and 5. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail OCDs, each seasonally adjusted separately. money fund balances, each seasonally adjusted separately. M2: Ml plus (1) savings (including MMDAs), (2) small-denomination time deposits (time 6. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities deposits—including retail RPs—in amounts of less than $100,000), and (3) balances in retail (overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and money market mutual funds (money funds with minimum initial investments of less than term) of U.S. addressees, each seasonally adjusted separately. $50,000). Excludes individual retirement accounts (IRAs) and Keogh balances at depository 7. Small time deposits—including retail RPs—are those issued in amounts of less than institutions and money market funds. Seasonally adjusted M2 is calculated by summing $100,000. All IRA and Keogh account balances at commercial banks and thrift institutions savings deposits, small-denomination time deposits, and retail money fund balances, each are subtracted from small time deposits. seasonally adjusted separately, and adding this result to seasonally adjusted 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 institutions. and (4) Eurodollars (overnight and term) held by U.S. residents at foreign branches of U.S. 10. Includes both overnight and term. banks worldwide and at all banking offices in the United Kingdom and Canada. Excludes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT1 Millions of dollars Average of Average of daily figures for week ending on date indicated daily figures July Aug. Sept. Aug. 13 Aug. 20 Aug. 27 Sept. 3 Sept. 10 Sept. 17 Sept. 24 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 452,943 449,586 449,017 450,750 451,553 U.S. government securities2 2 Bought outright—System account3 410,681 409,254 410,759 410,183 408,976 408,991 409,585 409,868 410,918 3 Held under repurchase agreements 3,618 6,571 8,724 4,795 5,774 8,692 10,482 9,679 7,608 Federal agency obligations 4 Bought outright 1,220 1,035 938 1,039 1,030 1,030 1,010 955 925 5 Held under repurchase agreements 8140 1,3330 1,1020 8090 1,9810 1,3690 2,1640 1,8190 5600 6 Acceptances Loans to depository institutions 7 Adjustment credit 105 205 71 704 74 162 62 84 8 Seasonal credit 3300 3870 3720 3650 3850 4070 4110 3720 3740 9 Extended credit 10 Float 497 398 486 617 430 278 310 554 698 11 Other Federal Reserve assets 31,534 30,559 30,490 31,770 29,736 29,909 29,763 29,783 30,387 12 Gold stock 11,050 11,051 11,050 11,051 11,051 11,051 11,050 11,051 11,051 13 Special drawing rights certificate account 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 14 Treasury currency outstanding 25,355r 25,403r 25,463 25,390r 25,404r 25,418r 25,432 25,446 25,460 ABSORBING RESERVE FUNDS 15 Currency in circulation 456,100' 456,71 lr 458,558 456,662r 456,634r 456,449r 459,797 460,069 458.625 16 Treasury cash holdings 336 296 260 305 301 283 275 260 260 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 4,750 4,855 6,303 4,965 4,444 4,866 5,131 4,712 6,807 18 Foreign 175 201 173 170 226 197 208 174 167 19 Service-related balances and adjustments .. 7,309 7,073 7,024 7,090 7,005 7,080 7,054 6,997 6,999 20 Other 319 357 360 352 372 365 344 338 362 21 Other Federal Reserve liabilities and capital . 15,354 15,437 16,072 15,063 15,455 15,952 16,076 16,055 15,904 22 Reserve balances with Federal Reserve Banks' 10,063 10,465r 9,906 10,620 10,235 11,226 10,683 10,184 8,140 End-of-month figures Wednesday figures July Aug. Sept. Aug. 13 Aug. 20 Aug. 27 Sept. 3 Sept. 10 Sept. 17 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 448,944r 458,404 457,796 451,262 454,843 456,310 452,741 U.S. government securities2 2 Bought outright—System account3 407,839 409,409 411,822 411,365 408,893 408,873 409,981 409,814 411,268 3 Held under repurchase agreements 6,326 10,547 12,696 10,943 4,750 16,113 10,930 12,518 8,925 Federal agency obligations 4 Bought outright 1,209 1,030 925 1,030 1,030 1,030 960 925 925 5 Held under repurchase agreements 7430 2,6220 1,2220 2,0050 1,6810 2,3500 1,3460 2,5080 9160 6 Acceptances 7 Lo A an d s j u to s tm de e p n o t s c it r o e r d y i t institutions 14 55 3 0 4,863 26 0 29 8 Seasonal credit 3980 4120 3100 3750 3990 4120 3990 3680 3840 9 Extended credit 10 Float 957r —91r -262 -174 244 276 1,646 -42 -299 11 Other Federal Reserve assets 31,459 29,823r 31,689 32,251 29,401 30,475 29,572 30,219 30.593 12 Gold stock 11,051 11,050 11,050 11,051 11,051 11,051 11,050 11,051 11,050 13 Special drawing rights certificate account 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 14 Treasury currency outstanding 25,376r 25,432r 25,488 25,390r 25,404r 25,418r 25,432 25,446 25.460 ABSORBING RESERVE FUNDS 15 Currency in circulation 455,074 459,497r 458,288 457,57 lr 457,141r 458,358r 461,293 460,260 458,707 16 Treasury cash holdings 311 278 255 304 284 278 260 259 263 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,014 4,700 7,692 4,678 4,863 5,200 5,01061 6 5,558 10,987 18 Foreign 175 169 188 191 512 162 156 159 19 Service-related balances and adjustments .. 7,135r 7,054r 7,013 7,090 7,005 7.080 7.054 6,997 6,999 20 Other 325 327 386 359 363 375 357 343 373 21 Other Federal Reserve liabilities and capital . 14,785 16,144 16,536 15,299 15,365 15,816 15,792 15,829 15,643 22 Reserve balances with Federal Reserve Banks' 1 l,753r 1 l,323r 13,784 17,945 11,385 17,955 10,604 12,605 5,321 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 3. Includes compensation that adjusts for the effects of inflation on the principal of 2. Includes securities loaned—fully guaranteed by U.S. government securities pledged inflation-indexed securities. with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back 4. Excludes required clearing balances and adjustments to compensate for float. under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • December 1997 1.12 RESERVES AND BORROWINGS Depository Institutions' Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1994 1995 1996 1997 Dec. Dec. Dec. Mar. Apr. May June July Aug.1" Sept. 1 Reserve balances with Reserve Banks" 24,658 20,440 13,395 11,515 12,308 10,916 10,291 9,851 10,489 9,742 2 Total vault cash3 40,378 42,094 44,426 42,116 41,381 41,111 42,398 43,129 42,363 43,052 3 Applied vault cash4 36,682 37,460 37,848 36,029 35,571 35,081 36,319 36,529 36,156 36,313 4 Surplus vault cash5 3,696 4,634 6,578 6,087 5,810 6,030 6,079 6,600 6,208 6,739 5 Total reserves6 61,340 57,900 51,243 47,543 47,879 45,997 46,610 46,380 46,645 46,056 6 Required reserves 60,172 56,622 49,819 46,383 46,869 44,757 45,330 45,179 45,392 44,754 7 Excess reserve balances at Reserve Banks7 1,168 1,278 1,424 1,160 1,010 1,240 1,280 1,201 1,253 1,302 8 Total borrowings at Reserve Banks8 209 257 155 156 261 243 367 409 598 438 9 Seasonal borrowings 100 40 68 37 88 173 243 330 385 368 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 Biweekly averages of daily figures for two week periods ending on dates indicated 1997 June 4 June 18 July 2 July 16 July 30 Aug. 13 Aug. 27 Sept. 10r Sept. 24 Oct. 8 1 Reserve balances with Reserve Banks* 11,030 9,782 10,639 10,560 9.003r 10,226 10,754 10,417 9,201 9,883 2 Total vault cash3 40,929 43,447 41,664 42,756 43,703 43,250 41,480 42,573 43,588 42,603 3 Applied vault cash4 35,176 36.911 36,009 36,565 36,559 36,650 35,596 36,507 36,170 36,325 4 Surplus vault cash5 5,753 6,536 5,655 6,191 7,144 6,600 5,884 6,066 7,418 6,279 5 Total reserves6 46,205 46,693 46,648 47,125 45,562r 46,876 46,350 46,924 45,371 46,208 6 Required reserves 44,821 45,417 45,398 45,739 44,561 45,562 45,153 45,679 44,101 44,736 7 Excess reserve balances at Reserve Banks7 1,384 1,276 1,250 1,386 l,001r 1,314 1,197 1,245 1,269 1,472 8 Total borrowings at Reserve Banks8 336 222 547 314 484 426 785 503 427 356 9 Seasonal borrowings 210 205 300 299 363 371 396 392 377 308 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 1. Data in this table also appear in the Board's H.3 (502) weekly statistical release. For 5. Total vault cash (line 2) less applied vault cash (line 3). ordering address, see inside front cover. Data are not break-adjusted or seasonally adjusted. 6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash 2. Excludes required clearing balances and adjustments to compensate for float and (line 3). includes other off-balance-sheet "as-of' adjustments. 7. Total reserves (line 5) less required reserves (line 6). 3. Total "lagged" vault cash held by depository institutions subject to reserve 8. Also includes adjustment credit. requirements. Dates refer to the maintenance periods during which the vault cash may be used 9. Consists of borrowing at the discount window under the terms and conditions estabto satisfy reserve requirements. The maintenance period for weekly reporters ends sixteen lished for the extended credit program to help depository institutions deal with sustained days after the lagged computation period during which the vault cash is held. Before Nov. 25, liquidity pressures. Because there is not the same need to repay such borrowing promptly as 1992, the maintenance period ended thirty days after the lagged computation period. with traditional short-term adjustment credit, the money market effect of extended credit is 4. All vault cash held during the lagged computation period by "bound" institutions (that similar to that of nonborrowed reserves. is, those whose required reserves exceed their vault cash) plus the amount of vault cash applied during the maintenance period by "nonbound" institutions (that is, those whose vault cash exceeds their required reserves) to satisfy current reserve requirements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk On On On 11/7/97 Effective date Previous rate 11/7/97 Effective date Previous rate 11/7/97 Effective date Previous rate Boston 5.00 2/1/96 5.25 5.60 11/6/97 5.60 6.10 11/6/97 6.10 New York 1/31/96 Philadelphia 1/31/96 Cleveland 1/31/96 Richmond 2/1/96 Atlanta 1/31/96 Chicago 2/1/96 St. Louis 2/5/96 Minneapolis 1/31/96 Kansas City 2/1/96 Dallas 1/31/96 San Francisco 5.00 1/31/96 5.25 5.60 11/6/97 5.60 6.10 11/6/97 6.10 Range of rates for adjustment credit in recent years4 Range (or F.R. Bank Range (or F.R. Bank Range (or F.R. Bank Effective date level)—All of Effective date evel)—All of Effective date level)—All of F.R. Banks N.Y. F.R. Banks N.Y. F.R. Banks N.Y. In effect Dec. 31, 1977 1981—Nov. 2 13-14 13 1988—Aug. 9 6-6.5 6.5 6 13 13 11 6.5 6.5 1978—Jan. 9 6-6.5 6.5 Dec. 4 12 12 20 6.5 6.5 1989—Feb. 24 6.5-7 7 May 11 6.5-7 7 1982—July 20 11.5-12 11.5 27 7 7 12 7 7 23 11.5 11.5 July 3 7-7.25 7.25 Aug. 2 11-11.5 11 1990—Dec. 19 6.5 6.5 10 7.25 7.25 3 11 11 Aug. 21 7.75 7.75 16 10.5 10.5 1991—Feb. 1 6-6.5 6 Sept. 22 8 8 27 10-10.5 10 4 6 6 Oct. 16 8-8.5 8.5 30 10 10 Apr. 30 5.5-6 5.5 20 8.5 8.5 Oct. 12 9.5-10 9.5 May 2 5.5 5.5 Nov. 1 8.5-9.5 9.5 13 9.5 9.5 Sept. 13 5-5.5 5 3 9.5 9.5 Nov. 22 9-9.5 9 17 5 5 26 9 9 Nov. 6 4.5-5 4.5 1979—July 20 10 10 Dec. 1145 8.5-9 9 7 4.5 4.5 Aug. 17 10-10.5 10.5 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 11 11 1984—Apr. 9 8.5-9 9 1992—July 2 3-3.5 3 Oct. 8 11-12 12 13 9 9 7 3 3 10 12 12 Nov. 21 8.5-9 8.5 26 8.5 8.5 1994—May 17 3-3.5 3.5 1980—Feb. 15 12-13 13 Dec. 24 8 8 18 3.5 3.5 19 13 13 Aug. 16 3.5^1 4 May 29 12-13 13 1985—May 20 7.5-8 7.5 18 4 4 30 12 12 24 7.5 7.5 Nov. 15 4^1.75 4.75 June 13 11-12 11 17 4.75 4.75 16 11 11 1986—Mar. 7 7-7.5 7 July 28 10-11 10 10 7 7 1995—Feb. 1 4.75-5.25 5.25 29 10 10 Apr. 21 6.5-7 6.5 9 5.25 5.25 Sept. 26 11 11 23. 6.5 6.5 Nov. 17 12 12 July 11 6 6 1996—Jan. 31 5.00-5.25 5.00 Dec. 5 12-13 13 Aug. 21 5.5-6 5.5 Feb. 5 5.00 5.00 8 13 13 22 5.5 5.5 1981—May 5 13-14 14 In effect Nov. 7, 1997 5.00 5.00 14 14 1987—Sept. 4 5.5-6 6 11 6 6 1. Available on a short-term basis to help depository institutions meet temporary needs for of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a funds that cannot be met through reasonable alternative sources. The highest rate established flexible rate somewhat above rates charged on market sources of funds is charged. The rate for loans to depository institutions may be charged on adjustment credit loans of unusual size ordinarily is reestablished on the first business day of each two-week reserve maintenance that result from a major operating problem at the borrower's facility. period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis 2. Available to help relatively small depository institutions meet regular seasonal needs for points. funds that arise from a clear pattern of intrayearly movements in their deposits and loans and 4. For earlier data, see the following publications of the Board of Governors: Banking and that cannot be met through special industry lenders. The discount rate on seasonal credit takes Monetary Statistics, 1914-1941, and 1941-1970; and the Annual Statistical Digest, 1970into account rates charged by market sources of funds and ordinarily is reestablished on the 1979. first business day of each two-week reserve maintenance period; however, it is never less than In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment-credit the discount rate applicable to adjustment credit. borrowings by institutions with deposits of $500 million or more that had borrowed in 3. May be made available to depository institutions when similar assistance is not successive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge was reasonably available from other sources, including special industry lenders. Such credit may in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 percent was reimposed be provided when exceptional circumstances (including sustained deposit drains, impaired on Nov. 17, 1980; the surcharge was subsequently raised to 3 percent on Dec. 5. 1980, and to access to money market funds, or sudden deterioration in loan repayment performance) or 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, practices involve only a particular institution, or to meet the needs of institutions experiencing and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the difficulties adjusting to changing market conditions over a longer period (particularly at times surcharge was changed from a calendar quarter to a moving thirteen-week period. The of deposit disintermediation). The discount rate applicable to adjustment credit ordinarily is surcharge was eliminated on Nov. 17, 1981. charged on extended-credit loans outstanding less than thirty days; however, at the discretion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • December 1997 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Type of deposit Net transaction accounts2 1 $0 million-$49.3 million3. 1/2/97 2 More than $49.3 million4 . 1/2/97 3 Nonpersonal time deposits5 12/27/90 4 Eurocurrency liabilities6. . . 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve Banks succeeding calendar year by 80 percent of the percentage increase in the total reservable or vault cash. Nonmember institutions may maintain reserve balances with a Federal liabilities of all depository institutions, measured on an annual basis as of June 30. No Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For corresponding adjustment is made in the event of a decrease. The exemption applies only to previous reserve requirements, see earlier editions of the Annual Report or the Federal accounts that would be subject to a 3 percent reserve requirement. Effective with the reserve Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions maintenance period beginning January 2, 1997, for depository institutions that report weekly, include commercial banks, mutual savings banks, savings and loan associations, credit and with the period beginning January 16, 1997, for institutions that report quarterly, the unions, agencies and branches of foreign banks, and Edge Act corporations. exemption was raised from $4.3 million to $4.4 million. 2. Transaction accounts include all deposits against which the account holder is 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 preauthorized transfers for the purpose of making payments to third report quarterly. persons or others. However, accounts subject to the rules that permit no more than six 5. For institutions that report weekly, the reserve requirement on nonpersonal time deposits preauthorized, automatic, or other transfers per month (of which no more than three may be with an original maturity of less than 1 '/2 years was reduced from 3 percent to 1 percent for by check, draft, debit card, or similar order payable directly to third parties) are savings the maintenance period that began Dec. 13, 1990, and to zero for the maintenance period that deposits, not transaction accounts. began Dec. 27, 1990. For institutions that report quarterly, the reserve requirement on 3. The Monetary Control Act of 1980 requires that the amount of transaction accounts nonpersonal time deposits with an original maturity of less than 1 Vi years was reduced from 3 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 time deposits with an original maturity of I'A 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 1V5 years (see note 5). Under the Garn-St Germain Depository Institutions Act of 1982, the Board adjusts the amount of reservable liabilities subject to a zero percent reserve requirement each year for the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1997 TTyyppee ooff ttrraannssaaccttiioonn aanndd mmaattuurriittyy 11999944 11999955 11999966 Feb. Mar. Apr. May June July Aug. U.S. TREASURY SECURITIES2 Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 17,484 10,932 9,901 0 0 4,006 0 596 0 0 2 Gross sales 0 0 0 0 0 0 0 0 0 0 3 Exchanges 380,327 405,296 426,928 33,997 31,720 33,160 47,456 33,022 41,643 35,666 4 For new bills 380,327 405,296 426,928 33,647 31,720 33,160 47,456 33,022 41,643 35,666 5 Redemptions 0 900 0 0 0 0 0 0 0 0 Others within one year 6 Gross purchases 733 390 524 818 0 0 383 494 0 0 7 Gross sales 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts 0 43,574 30,512 5,086 3,143 2,006 5,666 1,476 4,359 7,487 9 Exchanges -31,949 -35,407 -41,394 -2,864 -1,534 -2,100 -4,229 -2,250 -1,087 -2,780 10 Redemptions 2,337 1,776 2,015 0 0 376 0 0 598 0 One to five years 11 Gross purchases 9,916 5,366 3,898 1,125 2,861 1,924 1,102 2,797 0 0 12 Gross sales 0 0 0 0 0 0 0 0 0 0 13 Maturity shifts -6,004 -34,646 -25,022 -4,926 -3,143 -2,006 -4,685 -1,476 -4,359 -5,247 14 Exchanges 26,458 26,387 31,459 1,874 1,534 1,700 2,479 2,250 1,087 1,170 Five to ten years 15 Gross purchases 3,575 1,432 1,116 0 0 0 734 499 0 0 16 Gross sales 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts -3,145 -3,093 -5,469 1,236 0 0 -981 0 0 -2,240 18 Exchanges 4,717 7,220 6,666 890 0 400 1,750 0 0 880 More than ten years 19 Gross purchases 3,606 2,529 1,655 0 1,117 0 988 906 0 0 20 Gross sales 0 0 0 0 0 0 0 0 0 0 21 Maturity shifts -918 -2,253 -20 -1,396 0 0 0 0 0 0 22 Exchanges 775 1,800 3,270 450 0 0 0 0 0 730 All maturities 23 Gross purchases 35,314 20,649 17,094 1,943 3,978 5,930 3,206 5,292 0 0 24 Gross sales 0 0 0 0 0 0 0 0 0 0 25 Redemptions 2,337 2,676 2,015 0 0 376 0 0 598 0 Matched transactions 26 Gross purchases 1,700,836 2,197,736 3,092,399 250,867 288,373 303,056 287,229 293,506 307,101 317,028 27 Gross sales 1,701,309 2,202,030 3,094,769 254,741 288,073 301,177 287,826 293,008 309,578 315,418 Repurchase agreements 28 Gross purchases 309,276 331,694 457,568 48,805 60,425 102,578 46,552 60,286 44,503 54,561 29 Gross sales 311,898 328,497 450,359 45,747 60,718 62,685 89,477 47,070 53,217 27,204 30 Net change in U.S. Treasury securities 29,882 16,875 19,919 1,127 3,984 47,326 -40,316 19,006 -11,789 28,967 FEDERAL AGENCY OBLIGATIONS Outright transactions 31 Gross purchases 0 0 0 0 0 0 0 0 0 0 32 Gross sales 0 0 0 0 0 0 0 0 0 0 33 Redemptions 942 1,003 409 27 17 24 0 474 287 179 Repurchase agreements 34 Gross purchases 52,696 36,851 75,354 9,795 14,300 10,178 7,954 8,40 lr 10,437 13,131 35 Gross sales 52,696 36,776 74,842 9,454 14,830 10,285 7,096 9,131 10,811 11,252 36 Net change in federal agency obligations -942 -928 103 314 -547 -131 858 — 1,204R -661 1,700 37 Total net change in System Open Market Account... 28,940 15,948 20,021 1,441 3,437 47,195 -39,458 17,802r -12,450 30,667 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market 2. Transactions exclude changes in compensation for the effects of inflation on the principal Account; all other figures increase such holdings. of inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic NonfinancialS tatistics • December 1997 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 1997 1997 Aug. 27 Sept. 3 Sept. 10 Sept. 17 Sept. 24 July 31 Aug. 31 Sept. 30 Consolidated condition statement ASSETS 1 Gold certificate account 11,051 11,050 11,051 11,050 11,050 11,051 11,050 11,050 2 Special drawing rights certificate account 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 3 Coin 492 475 487 506 524 484 485 526 Loans 4 To depository institutions 438 407 368 413 383 411 468 313 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 1,030 960 925 925 925 1,209 1,030 992255 8 Held under repurchase agreements 2,350 1,346 2,508 916 1,056 743 2,622 1,222 9 Total U.S. Treasury securities 424,986 420,911 422,332 420,193 423,549 414,165 419,956 424,518 10 Bought outright2 408,873 409,981 409,814 411,268 411,030 407,839 409,409 411,822 11 Bills 194,086 195,194 195,027 194,794 194,556 193,053 194,623 193,693 12 Notes 159,795 159,795 159,796 161,482 161,483 160,524 159,795 163,138 13 Bonds 54,991 54,991 54,991 54,991 54,991 54,261 54,991 54,991 14 Held under repurchase agreements 16,113 10,930 12,518 8,925 12,519 6,326 10,547 12,696 15 Total loans and securities 428,804 423,624 426,133 422,447 425,913 416,529 424,076 426,978 16 Items in process of collection 6,543 10,660 6,924 6,801 6,425 4,833 4,252 8,652 17 Bank premises 1,266 1,264 1,265 1,267 1,269 1,257 1,265 1,268 Other assets 18 Denominated in foreign currencies3 17,229 17,324 17,332 17,339 17,346 17,204 17,320 17,592 19 All other4 11,946 11,105 11,687 11,966 12,467 12,976 11,302 12,822 20 Total assets 486,529 484,704 484,078 480,576 484,194 473,534 478,950 488,088 LIABILITIES 21 Federal Reserve notes 433,709 436,595 435,560 434,015 433,322 430,492 434,827 433,581 22 Total deposits 30,903 23,095 26,386 24,496 29,042 23,646 23,693 30,057 23 Depository institutions 25,169 17,571 20,329 12,978 21,185 18,132 18,497 21,791 24 U.S. Treasury—General account 5,200 5,001 5,558 10,987 7,328 5,014 4,700 7,692 25 Foreign—Official accounts 162 166 156 159 162 175 169 188 26 Other 375 357 343 373 366 325 327 386 27 Deferred credit items 6,101 9,221 6,304 6,422 5,869 4,611 4,286 7,914 28 Other liabilities and accrued dividends5 5,037 4,903 4,928 4,715 4,991 4,919 5,005 4,947 29 Total liabilities 475,750 473,815 473,178 469,647 473,223 463,667 467,811 476,499 CAPITAL ACCOUNTS 30 Capital paid in 5,150 5,163 5,213 5,212 5,225 5,087 5,150 5,227 31 Surplus 4,496 4,496 4,496 4,496 4,496 4,317 4,496 4,496 32 Other capital accounts 1,133 1.230 1,191 1,220 1,251 462 1,493 1,866 33 Total liabilities and capital accounts 486,529 484,704 484,078 480,576 484,194 473,534 478,950 488,088 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 643,568 647,076 644,140 641,530 637,243 634,814 642,699 637,992 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 544,930 546,205 546,727 547,679 549,104 541,783 546,295 549,745 36 LESS: Held by Federal Reserve Banks 111,221 109,609 111,167 113,664 115,782 111,291 111,467 116,164 37 Federal Reserve notes, net 433,709 436,595 435,560 434,015 433,322 430,492 434,827 433,581 Collateral held against notes, net 38 Gold certificate account 11,051 11,050 11,051 11,050 11,050 11,051 11,050 11,050 39 Special drawing rights certificate account 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 413,458 416,345 415,309 413,765 413,072 410,241 414,577 413,331 42 Total collateral 433,709 436,595 435,560 434,015 433,322 430,492 434,827 433,581 1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly statistical 3. Valued monthly at market exchange rates. release. For ordering address, see inside front cover. 4. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with bills maturing within ninety days. Federal Reserve Banks—and includes compensation that adjusts for the effects of inflation on 5. Includes exchange-translation account reflecting the monthly revaluation at market the principal of inflation-indexed securities. Excludes securities sold and scheduled to be exchange rates of foreign exchange commitments. bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks/Monetary and Credit Aggregates All 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month TTTyyypppeee ooofff hhhooollldddiiinnnggg aaannnddd mmmaaatttuuurrriiitttyyy 1997 1997 Aug. 27 Sept. 3 Sept. 10 Sept. 17 Sept. 24 July 31 Aug. 31 Sept. 30 1 Total loans 438 407 368 412 383 412 468 313 2 Within fifteen days' 417 139 41 344 357 193 294 174 3. Sixteen days to ninety days 21 267 328 69 26 218 174 139 4 Total U.S. Treasury securities2 424,986 420,9X1 422,332 420,193 423,549 414,165 419,956 420,473 5 Within fifteen days' 25,050 23,983 24,078 23,047 20,441 9,419 12,146 16,403 6 Sixteen days to ninety days 90,752 87,042 87,123 90,361 90,302 88,758 91,288 88,467 7 Ninety-one days to one year 136,171 137,114 138,359 132,971 138,991 139,787 143,510 141,248 8 One year to five years 90,614 90,373 90,373 91,415 91,415 93,174 90,614 91,956 9 Five years to ten years 37,657 37,657 37,657 37,657 37,657 39,016 37,657 37,658 10 More than ten years 44,741 44,741 44,741 44,741 44,741 44,011 44,741 44,741 11 Total federal agency obligations 3,380 2,306 3,433 1,841 1,981 2,130 3,757 1,929 12 Within fifteen days' 2,455 1,381 2,508 976 1,116 922 2,727 1,004 13 Sixteen days to ninety days 106 106 106 46 46 185 106 76 14 Ninety-one days to one year 154 154 202 202 202 130 154 202 15 One year to five years 351 351 338 338 338 401 351 303 16 Five years to ten years 290 290 255 255 255 290 290 255 17 More than ten years 25 25 25 25 25 25 25 25 1. Holdings under repurchase agreements are classified as maturing within fifteen days in 2. Includes compensation that adjusts for the effects of inflation on the principal of accordance with maximum maturity of the agreements. inflation-indexed securities. 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1997 IItteemm 1993 1994 1995 1996 Dec. Dec. Dec. Dec. Feb. Mar. Apr. May June July Aug. Sept. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 60.55 59.40 56.39 50.06 49.01 48.31 47.43 47.05 47.11 46.89 47.41 46.67 2 Nonborrowed reserves4 60.46 59.20 56.13 49.91 48.97 48.16 47.17 46.81 46.74 46.48 46.82 46.23 3 Nonborrowed reserves plus extended credit5 60.46 59.20 56.13 49.91 48.97 48.16 47.17 46.81 46.74 46.48 46.82 46.23 4 Required reserves 59.48 58.24 55.11 48.64 47.98 47.15 46.42 45.81 45.83 45.68 46.16 45.36 5 Monetary base6 386.88 418.48 434.52 452.67 456.28 457.62 458.24 459.60 461.40 464.2 lr 466.46 469.38 Not seasonally adjusted 6 Total reserves7 62.37 61.13 58.02 51.52 48.12 47.69 48.09 46.26 46.93 46.76 47.09 46.55 7 Nonborrowed reserves 62.29 60.92 57.76 51.37 48.08 47.53 47.83 46.02 46.56 46.35 46.49 46.11 8 Nonborrowed reserves plus extended credit5 62.29 60.92 57.76 51.37 48.08 47.53 47.83 46.02 46.56 46.35 46.49 46.11 9 Required reserves8 61.31 59.96 56.74 50.10 47.09 46.53 47.08 45.02 45.65 45.56 45.83 45.25 10 Monetary base9 390.59 422.51 439.03 456.72 452.56 455.26 458.17 458.29 461.81 465.55r 467.25 468.66 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves" 62.86 61.34 57.90 51.24 48.04 47.54 47.88 46.00 46.61 46.38 46.65 46.06 12 Nonborrowed reserves 62.78 61.13 57.64 51.09 48.00 47.39 47.62 45.75 46.24 45.97 46.05 45.62 13 Nonborrowed reserves plus extended credit5 62.78 61.13 57.64 51.09 48.00 47.39 47.62 45.75 46.24 45.97 46.05 45.62 14 Required reserves 61.80 60.17 56.62 49.82 47.01 46.38 46.87 44.76 45.33 45.18 45.39 44.75 15 Monetary base12 397.62 427.25 444.45 463.49 459.64 462.22 465.06 465.22 468.78 472.58r 474.01 475.34 16 Excess reserves'3 1.06 1.17 1.28 1.42 1.03 1.16 1.01 1.24 1.28 1.20 1.25 1.30 17 Borrowings from the Federal Reserve .08 .21 .26 .16 .04 .16 .26 .24 .37 .41 .60 .44 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly 8. To adjust required reserves for discontinuities that are due to regulatory changes in statistical release. Historical data starting in 1959 and estimates of the effect on required reserve requirements, a multiplicative procedure is used to estimate what required reserves reserves of changes in reserve requirements are available from the Money and Reserves would have been in past periods had current reserve requirements been in effect. Break- Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve adjusted required reserves include required reserves against transactions deposits and nonper- System, Washington, DC 20551. sonal time and savings deposits (but not reservable nondeposit liabilities). 2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory 9. The break-adjusted monetary base equals (1) break-adjusted total reserves (line 6), plus changes in reserve requirements. (See also table 1.10.) (2) the (unadjusted) currency component of the money stock, plus (3) (for all quarterly 3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, break- reporters on the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all adjusted required reserves (line 4) plus excess reserves (line 16). those weekly reporters whose vault cash exceeds their required reserves) the break-adjusted 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted, difference between current vault cash and the amount applied to satisfy current reserve break-adjusted total reserves (line 1) less total borrowings of depository institutions from the requirements. Federal Reserve (line 17). 10. Reflects actual reserve requirements, including those on nondeposit liabilities, with no 5. Extended credit consists of borrowing at the discount window under the terms and adjustments to eliminate the effects of discontinuities associated with regulatory changes in conditions established for the extended credit program to help depository institutions deal reserve requirements. with sustained liquidity pressures. Because there is not the same need to repay such 11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve borrowing promptly as with traditional short-term adjustment credit, the money market effect requirements. of extended credit is similar to that of nonborrowed reserves. 12. The monetary base, not break-adjusted and not seasonally adjusted, consists of (1) total 6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally reserves (line 11), plus (2) required clearing balances and adjustments to compensate for float adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency at Federal Reserve Banks, plus (3) the currency component of the money stock, plus (4) (for component of the money stock, plus (3) (for all quarterly reporters on the "Report of all quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters Cash" and for all those weekly reporters whose vault cash exceeds their required reserves) the whose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference between current vault cash and the amount applied to satisfy current reserve difference between current vault cash and the amount applied to satisfy current reserve requirements. Since the introduction of contemporaneous reserve requirements in February requirements. 1984, currency and vault cash figures have been measured over the computation periods 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess ending on Mondays. reserves (line 16). 13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Nonfinancial Statistics • December 1997 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1997r Item 1993 1994 1995 1996 Dec. Dec. Dec. Dec. June July Aug. Sept. Seasonally adjusted Measures' 1 Ml 1,129.8 1,150.7 1,129.0 1,081.1 1,063.1 1,062.0 1,069.2 1,060.3 2 M2 3,486.6 3,502.1 3,655.0 3,819.3r 3,902.2 3,914.1 3,950.3 3,972.0 3 M3 4,254.4 4,327.3 4,592.5 4,918.0r 5,081.5 5,126.0 5,178.0 5,217.9 4 1. 5,167.8 5,308.4 5,697.6 6,069.3r 6,279.3 6,314.5 6,389.2 n.a. 5 Debt 12,457.3 13,072.1 13,768.1 14,485.7 14,785.8 14,835.5 14,887.3 n.a. Ml components 6 Currency3 322.2 354.4 372.6 395.2 407.7 410.2 412.1 415.4 7 Travelers checks4 7.9 8.5 8.9 8.6 8.0 8.2 8.3 8.1 8 Demand deposits5 385.2 384.1 391.1 402.6 397.2 396.2 401.5 389.9 9 Other checkable deposits6 414.5 403.8 356.5 274.8 250.1 247.3 247.3 246.9 Nontransaction components 10 In M27 2,356.8 2,351.4 2,526.0 2,738.2r 2,839.1 2,852.1 2,881.0 2,911.7 11 In M3 only8 767.8 825.3 937.5 1,098.7 1,179.3 1,211.9 1,227.7 1,245.9 Commercial banks 12 Savings deposits, including MMDAs 785.2 752.4 776.0 903.9 949.9 955.2 966.6 982.8 13 Small time deposits9 468.3 503.2 576.0 592.0 607.8 614.2 615.9 619.1 14 Large time deposits10, 11 271.9 298.4 344.7 412.3 449.6 466.1 471.7 483.3 Thrift institutions 15 Savings deposits, including MMDAs 434.0 397.2 361.1 367.1 375.5 374.7 374.9 374.7 16 Small time deposits9 314.3 314.3 357.7 353.7 350.2 346.3 345.8 343.9 17 Large time deposits10 61.5 64.7 75.1 79.2 83.4 84.8 85.2 85.6 Money market mutual funds 18 Retail 354.9 384.3 455.2 521.5r 555.7 561.8 577.9 591.1 19 Institution-only 209.5 198.5 246.9 299.3 318.9 324.1 329.2 338.9 Repurchase agreements and Eurodollars 20 Repurchase agreements'" 158.6 182.9 182.1 194.1r 198.8 208.0 211.0 208.2 21 Eurodollars12 66.4 80.8 88.7 113.9 128.8 128.8 130.6 130.0 Debt components 22 Federal debt 3,322.9 3,491.9 3,638.5 3,780.0 3,776.5 3,779.4 3,784.5 n.a. 23 Nonfederal debt 9,134.4 9,580.2 10,129.6 10,705.7 11,009.3 11,056.1 11,102.8 n.a. Not seasonally adjusted Measures2 24 Ml 1,153.7 1,174.4 1,152.8 1,103.1 1,062.4 1,063.5 1,067.2 1,057.2 25 M2 3.506.6 3,522.5 3,675.3 3,837.7r 3,899.8 3,919.0 3,953.8 3,964.2 26 M3 4,274.8 4,347.4 4,612.0 4,935.0r 5,077.8 5,123.8 5,180.0 5,205.0 27 L 5,197.7 5,338.8 5,729.5 6,098. lr 6,264.0 6,304.4 6,389.3 n.a. 28 Debt 12,459.4 13,073.9 13,768.5 14,485.1 14,748.3 14,786.1 14,843.4 n.a. Ml components 29 Currency3 324.8 357.5 376.2 397.9 408.4 411.3 413.4 414.3 30 Travelers checks4 7.6 8.1 8.5 8.3 8.2 8.7 8.8 8.4 31 Demand deposits5 401.8 400.3 407.3 418.9 396.2 398.0 400.1 388.9 32 Other checkable deposits6 419.4 408.6 360.8 278.0 249.6 245.6 244.8 245.6 Nontransaction components 33 In M27 2,352.9 2,348.1 2,522.6 2,734.6r 2,837.4 2,855.5 2,886.6 2,907.0 34 In M3 only8 768.2 824.9 936.6 l,097.3r 1,178.0 1,204.8 1,226.2 1,240.8 Commercial banks 35 Savings deposits, including MMDAs 784.3 751.7 775.3 902.9 952.7 958.5 969.9 983.9 36 Small time deposits9 466.8 501.5 573.8 589.8 608.2 614.8 615.8 618.3 37 Large time deposits10, 11 272.0 298.9 345.7 413.7 449.8 463.6 470.4 482.4 Thrift institutions 38 Savings deposits, including MMDAs 433.4 396.8 360.8 366.7 376.6 376.0 376.1 375.1 39 Small time deposits9 313.3 313.2 356.3 352.4 350.5 346.7 345.8 343.5 40 Large time deposits10 61.5 64.8 75.4 79.5 83.4 84.4 84.9 85.5 Money market mutual funds 41 Retail 355.0 385.0 456.3 522.9 549.5 559.5 579.0 586.3 42 Institution-only 210.6 199.8 248.2 300.5 313.1 321.0 328.3 333.1 Repurchase agreements and Eurodollars 43 Repurchase agreements12 156.6 179.6 178.0 188.8 203.9 208.7 213.0 210.6 44 Eurodollars12 67.6 81.8 89.4 114.7 127.8 127.2 129.5 129.1 Debt components 45 Federal debt 3,329.5 3,499.0 3,645.9 3,787.9 3,766.2 3,759.9 3,774.4 n.a. 46 Nonfederal debt 9,129.9 9,574.9 10,122.6 10,697.1 10,982.1 11,026.2 11,069.0 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) weekly these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term statistical release. Historical data starting in 1959 are available from the Money and Reserves Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve separately, and then adding this result to M3. System, Washington, DC 20551. Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial 2. Composition of the money stock measures and debt is as follows: sectors—the federal sector (U.S. government, not including government-sponsored enter- Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of prises or federally related mortgage pools) and the nonfederal sectors (state and local depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all governments, households and nonprofit organizations, nonfinancial corporate and nonfarm commercial banks other than those owed to depository institutions, the U.S. government, and noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and foreign banks and official institutions, less cash items in the process of collection and Federal corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of which are derived from the Federal Reserve Board's flow of funds accounts, are breakwithdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, adjusted (that is, discontinuities in the data have been smoothed into the series) and credit union share draft accounts, and demand deposits at thrift institutions. Seasonally month-averaged (that is, the data have been derived by averaging adjacent month-end levels). adjusted Ml is computed by summing currency, travelers checks, demand deposits, and 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depository OCDs, each seasonally adjusted separately. institutions. M2: Ml plus (1) savings deposits (including MMDAs), (2) small-denomination time 4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. deposits (time deposits—including retail RPs—in amounts of less than $100,000), and (3) Travelers checks issued by depository institutions are included in demand deposits. balances in retail money market mutual funds (money funds with minimum initial invest- 5. Demand deposits at commercial banks and foreign-related institutions other than those ments of less than $50,000). Excludes individual retirement accounts (IRAs) and Keogh owed to depository institutions, the U.S. government, and foreign banks and official institubalances at depository institutions and money market funds. Seasonally adjusted M2 is tions, less cash items in the process of collection and Federal Reserve float. calculated by summing savings deposits, small-denomination time deposits, and retail money 6. Consists of NOW and ATS account balances at all depository institutions, credit union fund balances, each seasonally adjusted separately, and adding this result to seasonally share draft account balances, and demand deposits at thrift institutions. adjusted M1. 7. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more) money fund balances. issued by all depository institutions, (2) balances in institutional money funds (money funds 8. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities with minimum initial investments of $50,000 or more), (3) RP liabilities (overnight and term) (overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and issued by all depository institutions, and (4) Eurodollars (overnight and term) held by U.S. term) of U.S. addressees. residents at foreign branches of U.S. banks worldwide and at all banking offices in the United 9. Small time deposits—including retail RPs—are those issued in amounts of less than Kingdom and Canada. Excludes amounts held by depository institutions, the U.S. govern- $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are ment, money market funds, and foreign banks and official institutions. Seasonally adjusted subtracted from small time deposits. M3 is calculated by summing large time deposits, institutional money fund balances, RP 10. Large time deposits are those issued in amounts of $100,000 or more, excluding those liabilities, and Eurodollars, each seasonally adjusted separately, and adding this result to booked at international banking facilities. seasonally adjusted M2. 11. Large time deposits at commercial banks less those held by money market funds, L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury depository institutions, the U.S. government, and foreign banks and official institutions. securities, commercial paper, and bankers acceptances, net of money market fund holdings of 12. Includes both overnight and term. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • December 1997 1.22 DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING Commercial and BIF-insured saving banks' 1997 1995 1996 Dec. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. Interest rates (annual effective yields) INSURED COMMERCIAL BANKS 1 Negotiable order of withdrawal accounts2 1.91 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 2 Savings deposits2'3 3.10 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 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 4.03 4.05 4.02 4.01 4.07 4.09 4.08 4.10 4.10 4 92 to 182 days 4.68 4.63 4.63 4.62 4.67 4.72 4.77 4.79 4.76 4.79 4.79 5 183 days to 1 year 5.02 5.00 5.01 5.02 5.08 5.13 5.15 5.16 5.15 5.14 5.14 6 More than 1 year to 2'/2 years 5.17 5.22 5.25 5.27 5.36 5.46 5.45 5.44 5.41 5.41 5.41 7 More than 2Vi years 5.40 5.46 5.49 5.51 5.60 5.69 5.68 5.69 5.63 5.67 5.65 BIF-INSURED SAVINGS BANKS4 8 Negotiable order of withdrawal accounts* 1.91 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 9 Savings deposits2'3 2.98 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Interest-bearing time deposits with balances of less than $100,000, by maturity 10 7 to 91 days 4.43 4.66 4.75 4.73 4.80 4.83 4.81 4.82 4.87 4.78 4.76 11 92 to 182 days 4.95 5.02 5.05 5.04 5.06 5.13 5.15 5.13 5.13 5.09 5.07 12 183 days to 1 year 5.18 5.28 5.31 5.31 5.37 5.43 5.45 5.47 5.44 5.44 5.43 13 More than 1 year to 2'/2 years 5.33 5.53 5.58 5.59 5.69 5.75 5.77 5.72 5.74 5.69 5.69 14 More than 2 x/2 years 5.46 5.72 5.77 5.78 5.84 5.91 5.91 5.90 5.89 5.85 5.85 Amounts outstanding (millions of dollars) INSURED COMMERCIAL BANKS 15 Negotiable order of withdrawal accounts" 248,417 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 16 Savings deposits2,3 776,466 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 1/ Personal 615,113 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 18 Nonpersonal 161,353 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 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 32.931 32.799 32,796 34,853 34,485 32,561 31,369 30,106 30,406 30,434 20 92 to 182 days 93,941 92,301 94.955 95,235 93,804 92,432 91,234 91,246 90,480 90,231 89,771 21 183 days to 1 year 183,834 201,449 201,491 202,329 203,336 207,006 209,296 211,256 211,331 212,011 210,816 22 More than 1 year to 2 Vi years 208,601 213,198 213,875 212,970 214,066 226,159 220,795 228,065 231,836 234,349 236.493 23 More than 2w years 199,002 199,906 198,077 197.958 200,282 199,147 198,694 197,163 195,713 195,511 194,075 24 IRA and Keogh plan deposits 150,067 151,275 150,442 150.356 151,931 151,105 151,192 151,938 151,380 150,561 152,656 BIF-INSURED SAVINGS BANKS4 25 Negotiable order of withdrawal accounts* 11,918 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 26 Savings deposits2'3 68,643 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 2/ Personal 65,366 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 28 Nonpersonal 3,277 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Interest-bearing time deposits with balances of less than $100,000, by maturity 29 7 to 91 days 2,001 2,428 2,542 2,535 2,656 2,698 2,738 2,679 2,591 2,538 2,407 30 92 to 182 days 12,140 13,013 13,112 13,099 13,377 13,463 13,731 13,721 13,603 13,470 13,568 31 183 days to 1 year 25,686 28,792 29.503 29,510 30,002 30,076 29,661 29,752 29,796 29,287 29,329 32 More than 1 year to 2'/2 years 27,482 29,095 29.163 29,699 31,028 31,616 31,664 32,101 32,702 33,178 33,426 33 More than 2 V2 years 22,866 22,254 21,828 21,877 21,731 21,640 21,391 21,439 21,137 20,893 20,519 34 IRA and Keogh plan accounts 21,408 21,365 20.405 20.423 20,860 20,860 20,683 20,654 20,616 20,649 20,667 NOTE. Effective October 2, 1997, the Federal Reserve Board has discontinued the Monthly foreign currency-denominated deposits. Data exclude retail repurchase agreements and depos- Survey of Selected Deposits (FR 2042); accordingly, this table will be discontinued after this its held in U.S. branches and agencies of foreign banks. issue. 2. Owing to statistical difficulties associated in part with the implementation of sweep 1. BIF, Bank Insurance Fund. Data in this table also appear in the Board's H.6 (508) accounts, estimates for NOW and savings accounts are not available beginning December Special Supplementary Table monthly statistical release. For ordering address, see inside 1996. front cover. Estimates are based on data collected by the Federal Reserve System from a 3. Includes personal and nonpersonal money market deposits. stratified random sample of about 425 commercial banks and 75 savings banks on the last day 4. Includes both mutual and federal savings banks. of each month. Data are not seasonally adjusted and include IRA and Keogh deposits and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A15 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1 A. All commercial banks Billions of dollars Monthly averages Wednesday figures Account 1996 1997r 1997 Sept. Mar. Apr. May June July Aug. Sept. Sept. 3 Sept. 10 Sept. 17 Sept. 24 Seasonally adjusted Assets 1 Bank credit 3,697.4 3,858.5 3,897.9 3,902.0 3,920.8 3,950.1 3,959.9 3,978.9 3,969.4 3,981.3 3,980.4 3,982.0 2 Securities in bank credit 972.3 1,013.9 1,033.4 1,014.4 1,010.3 1,029.6 1,022.9 1,028.3 1,027.1 1,026.2 1,021.7 1,036.2 3 U.S. government securities 705.0 709.0 724.1 723.8 726.9 727.9 715.3 723.7 723.2 720.6 715.1 727.2 4 Other securities 267.3 304.9 309.4 290.6 283.3 301.7 307.6 304.6 303.9 305.6 306.6 309.0 5 Loans and leases in bank credit2 . . . 2,725.1 2,844.6 2,864.5 2,887.7 2,910.5 2,920.5 2,937.0 2,950.6 2,942.3 2,955.1 2,958.6 2,945.8 6 Commercial and industrial 760.7 798.2 803.6 807.9 812.7 816.9 824.7 836.0 829.4 835.0 836.7 837.2 7 Real estate 1,112.3 1,154.0 1,167.5 1,178.5 1,188.0 1,192.6 1,198.2 1,204.9 1,202.8 1,207.1 1,205.6 1,202.2 8 Revolving home equity 81.9 87.8 89.7 90.9 92.5 93.4 94.2 95.5 95.0 95.2 95.2 95.6 9 Other 1,030.4 1,066.2 1,077.8 1,087.5 1,095.6 1,099.2 1,104.0 1,109.5 1,107.8 1,112.0 1,110.4 1,106.6 10 Consumer 517.3 517.9 515.0 516.5 517.7 516.9 517.4 513.1 516.7 516.3 516.6 509.9 11 Security3 73.3 87.3 89.4 88.3 92.7 94.0 93.8 94.1 91.8 96.8 95.2 91.4 12 Other loans and leases 261.5 287.1 289.1 296.5 299.3 300.2 302.9 302.4 301.7 299.9 304.5 305.1 13 Interbank loans 206.0 219.7 215.5 217.7 190.3 184.4 191.2 199.6 193.6 194.8 196.8 198.5 14 Cash assets4 226.8 239.8 246.4 243.7 247.8 244.4 261.4 256.6 269.2 247.9 249.0 249.9 15 Other assets5 256.3 276.4 278.5 280.7 286.9 282.4 285.3 285.2 284.6 283.5 282.9 286.8 16 Total assets6 4329.2 4,538.2 4,581.8 4,587.6 4,589.1 4,604.5 4,640.9 4,663.6 4,660.1 4,650.9 4,652.4 4,660.5 Liabilities 17 Deposits 2,771.5 2,916.3 2,948.5 2,934.3 2,967.0 2,988.2 3,011.6 3,024.9 3,040.0 3,004.8 3,019.5 3,015.9 18 Transaction 724.4 699.6 701.6 689.4 693.1 688.1 694.4 679.2 696.8 656.1 671.7 683.4 19 Nontransaction 2,047.2 2,216.8 2,246.9 2,244.9 2,273.9 2,300.1 2,317.2 2,345.7 2,343.2 2,348.6 2,347.7 2,332.4 20 Large time 469.0 549.0 567.2 561.4 577.6 596.4 602.5 616.5 615.1 618.4 620.2 615.0 21 Other 1,578.1 1,667.8 1,679.7 1,683.5 1,696.2 1,703.7 1,714.7 1,729.2 1,728.1 1,730.3 1,727.5 1,717.4 22 Borrowings 711.2 749.2 761.3 760.7 727.7 726.6 740.2 759.6 741.1 757.2 749.0 760.8 23 From banks in the U.S 295.8 311.2 310.8 299.0 266.2 262.0 273.7 281.1 279.0 287.1 271.5 273.9 24 From others 415.4 438.0 450.5 461.7 461.5 464.6 466.4 478.5 462.1 470.1 477.5 486.9 25 Net due to related foreign offices 250.8 209.8 211.6 234.1 229.5 215.0 206.7 205.8 206.7 221.8 218.5 197.5 26 Other liabilities 222.6 276.7 271.4 265.1 267.1 280.5 286.6 275.3 285.7 277.1 272.7 272.5 27 Total liabilities 3,956.0 4,152.1 4,192.8 4,194.1 4,1913 4,2103 4,245.0 4,265.6 4,273.6 4,260.9 4,259.7 4,246.6 28 Residual (assets less liabilities)7 373.2 386.1 389.0 393.5 397.8 394.2 395.9 398.0 386.5 390.0 392.7 413.8 Not seasonally adjusted Assets 29 Bank credit 3,699.8 3,848.8 3,897.4 3,906.6 3,924.6 3,945.9 3,961.1 3,980.4 3,979.1 3,980.2 3,986.9 3,975.4 30 Securities in bank credit 972.9 1,016.5 1,035.9 1,023.4 1,016.8 1,026.9 1,028.1 1,028.5 1,035.7 1,029.1 1,021.7 1,031.3 31 U.S. government securities 706.0 713.6 726.8 726.2 726.8 723.8 718.0 724.8 727.5 723.4 717.2 725.7 32 Other securities 266.9 302.9 309.1 297.2 290.0 303.0 310.1 303.7 308.2 305.7 304.6 305.6 33 Loans and leases in bank credit2 . . . 2,726.9 2,832.4 2,861.5 2,883.2 2,907.8 2,919.0 2,933.0 2,951.9 2,943.5 2,951.1 2,965.2 2,944.1 34 Commercial and industrial 755.6 800.8 810.9 814.7 816.2 818.2 820.4 830.2 823.3 826.0 832.4 831.6 35 Real estate 1,115.4 1,148.0 1,163.0 1,174.1 1,186.3 1,192.6 1,199.9 1,208.2 1,205.1 1,210.9 1,209.6 1,204.3 36 Revolving home equity 82.5 87.0 89.0 90.7 92.5 93.4 94.5 96.1 95.6 95.8 96.0 96.3 37 Other 1,032.9 1,061.0 1,074.0 1,083.4 1,093.9 1,099.2 1,105.4 1,112.1 1,109.6 1,115.1 1,113.6 1,108.0 38 Consumer 519.5 513.3 512.6 514.4 514.9 514.6 517.8 515.3 518.8 517.9 519.3 512.6 39 Security3 72.5 87.0 89.9 88.7 92.3 92.5 91.9 93.2 90.7 94.5 97.1 90.0 40 Other loans and leases 263.9 283.2 285.2 291.4 298.0 301.2 302.9 304.9 305.5 301.8 306.9 305.6 41 Interbank loans 200.4 216.2 213.9 213.2 187.8 182.2 186.8 194.0 195.5 193.4 191.6 185.9 42 Cash assets4 224.0 230.6 241.6 241.5 244.4 240.8 247.8 253.3 283.0 249.0 244.9 238.4 43 Other assets5 258.7 271.8 276.2 283.0 287.1 284.5 288.7 287.8 294.1 289.6 283.9 285.5 44 Total assets6 4325.3 4,5113 4,572.6 4,587.7 4,587.1 4,596.7 4,6273 4,658.6 4,694.7 4,655.1 4,650.2 4,628.4 Liabilities 45 Deposits 2,772.1 2,905.1 2,945.9 2,925.6 2,962.2 2,979.5 3,001.5 3,025.0 3,069.2 3,023.7 3,018.8 2,983.3 46 Transaction 722.8 687.4 704.8 679.5 687.5 681.8 681.8 677.8 720.3 666.1 671.9 657.5 47 Nontransaction 2,049.3 2.217.7 2,241.1 2,246.1 2,274.8 2,297.7 2,319.7 2,347.2 2,348.9 2,357.6 2,346.9 2,325.8 48 Large time 465.9 549.1 562.8 566.2 577.4 592.1 601.6 611.7 610.4 612.8 613.2 610.7 49 Other 1,583.3 1.668.7 1,678.3 1,679.9 1,697.3 1,705.6 1,718.1 1,735.5 1,738.5 1,744.8 1,733.7 1,715.1 50 Borrowings 715.5 729.7 762.1 770.9 748.2 741.3 745.4 763.4 748.5 746.0 759.2 777.6 51 From banks in the U.S 298.3 299.6 309.5 307.5 279.9 270.9 278.9 282.8 286.0 283.7 276.4 280.3 52 From others 417.3 430.2 452.6 463.4 468.2 470.3 466.5 480.6 462.5 462.4 482.8 497.2 53 Net due to related foreign offices 245.0 219.0 210.0 236.5 219.8 211.4 202.4 198.4 197.5 208.6 203.3 201.1 54 Other liabilities 223.1 275.0 271.7 268.7 269.4 278.9 285.6 275.9 286.9 279.5 271.9 270.9 55 Total liabilities 3,955.7 4,128.8 4,189.7 4,201.8 4,199.6 4,211.1 4,235.0 4,262.6 4302.1 4,257.9 4,253.2 4,232.9 56 Residual (assets less liabilities)7 369.6 382.5 382.9 385.9 387.5 385.5 392.4 395.9 392.6 397.2 397.0 395.5 MEMO 57 Revaluation gains on off-balance-sheet items8 n.a. 90.4 90.1 81.4 76.1 84.3 86.1 78.0 82.2 79.7 78.7 77.7 58 Revaluation losses on off-balancesheet items8 n.a. 86.9 87.8 85.2 79.9 87.5 89.3 81.2 86.3 82.5 81.6 80.4 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • December 1997 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued B. Domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1996 1997r 1997 Sept. Mar. Apr. May June July Aug. Sept. Sept. 3 Sept. 10 Sept. 17 Sept. 24 Seasonally adjusted Assets 1 Bank credit 3,227.5 3,333.1 3,366.7 3,367.8 3,387.0 3,414.0 3,427.9 3,445.5 3,428.1 3,444.6 3,446.7 3,448.4 2 Securities in bank credit 822.5 841.0 856.5 841.3 836.8 849.2 844.6 847.1 837.2 844.1 841.7 854.9 3 U.S. government securities 621.3 625.0 636.3 634.7 636.2 636.1 628.4 635.2 627.7 632.2 629.5 641.4 4 Other securities 201.2 216.0 220.1 206.6 200.5 213.1 216.2 211.9 209.5 211.8 212.2 213.5 5 Loans and leases in bank credit2 2,405.0 2,492.2 2,510.2 2,526.5 2.550.3 2,564.9 2,583.3 2,598.4 2,590.9 2,600.5 2,605.0 2,593.5 6 Commercial and industrial 560.6 582.3 587.9 590.0 595.1 599.5 605.9 615.0 610.1 614.2 614.9 615.8 7 Real estate 1,079.7 1,122.5 1,136.1 1,148.0 1,158.6 1,164.2 1,170.2 1,177.6 1,175.2 1,179.5 1,178.2 1,175.0 8 Revolving home equity 81.9 87.8 89.7 90.9 92.5 93.4 94.2 95.5 95.0 95.2 95.2 95.6 9 Other 997.8 1,034.7 1,046.4 1,057.0 1,066.1 1,070.8 1,076.0 1,082.1 1,080.2 1,084.4 1,083.0 1,079.4 10 Consumer 517.3 517.9 515.0 516.5 517.7 516.9 517.4 513.1 516.7 516.3 516.6 509.9 11 Security3 44.4 47.6 46.5 45.6 47.9 50.3 51.3 51.1 50.1 53.4 52.0 48.7 12 Other loans and leases 203.1 221.8 224.7 226.5 231.0 233.9 238.5 241.6 238.8 237.0 243.4 244.2 13 Interbank loans 185.0 197.0 196.9 197.9 171.7 166.2 173.8 182.7 179.1 176.8 180.9 181.2 14 Cash assets4 196.6 207.4 213.8 210.1 212.7 211.1 227.5 222.1 234.8 211.6 214.2 216.8 15 Other assets5 219.2 235.4 239.5 242.1 246.1 239.9 242.7 244.0 239.7 238.9 243.6 247.0 16 Total assets6 3,771.0 3,917.1 3,960.7 3,961.7 3,961.1 3,974.5 4,015.3 4,038.0 4,025.1 4,015.4 4,028.8 4,036.9 Liabilities 17 Deposits 2,586.3 2,673.7 2,691.8 2,685.0 2,712.9 2,721.7 2,744.7 2,755.7 2,766.9 2,732.2 2,746.6 2,749.0 18 Transaction 714.8 689.1 690.9 678.5 682.5 677.3 682.9 668.0 685.3 645.1 661.1 672.6 19 Nontransaction 1,871.5 1,984.5 2,000.9 2,006.5 2,030.4 2,044.4 2,061.8 2,087.7 2,081.6 2,087.1 2,085.5 2,076.4 20 Large time 295.5 320.3 323.8 325.5 336.7 343.3 349.6 361.3 356.0 359.4 360.5 361.5 21 Other 1,576.0 1,664.3 1,677.1 1,681.0 1,693.7 1,701.1 1,712.2 1,726.4 1,725.5 1,727.7 1,724.9 1,714.9 22 Borrowings 587.1 609.4 622.7 620.0 591.1 593.3 604.7 620.4 607.4 620.7 619.2 617.6 23 From banks in the U.S 262.5 276.8 278.9 267.7 238.1 233.8 244.6 247.9 249.1 256.8 244.1 237.8 24 From others 324.6 332.6 343.7 352.3 353.0 359.6 360.1 372.5 358.4 364.0 375.1 379.8 25 Net due to related foreign offices 74.6 68.0 77.3 85.7 81.1 85.6 79.5 83.2 76.2 89.8 88.3 85.3 26 Other liabilities 156.2 182.8 179.7 176.4 177.9 185.2 190.2 182.4 183.7 179.6 181.0 181.4 27 Total liabilities 3,404.2 3,533.8 3,571.4 3,567.0 3,563.1 3,585.8 3,619.1 3,641.8 3,634.1 3,622.2 3,635.0 3,633.3 28 Residual (assets less liabilities)7 366.8 383.3 389.3 394.7 398.1 388.7 396.2 396.2 391.0 393.1 393.8 403.6 Not seasonally adjusted Assets 29 Bank credit 3,231.2 3,323.8 3,366.1 3,369.8 3,390.4 3,409.4 3,425.2 3,449.1 3,434.1 3,444.5 3,455.5 3,447.2 30 Securities in bank credit 824.2 843.0 858.5 845.5 842.6 847.6 846.2 849.0 842.3 846.9 843.8 854.6 31 U.S. government securities 623.4 626.7 639.6 636.6 637.4 634.7 629.6 637.4 630.7 635.2 632.4 642.3 32 Other securities 200.9 216.3 218.9 208.8 205.3 212.9 216.6 211.6 211.6 211.7 211.4 212.3 33 Loans and leases in bank credit2 2,407.0 2,480.9 2,507.6 2,524.3 2,547.8 2,561.8 2,578.9 2,600.1 2,591.8 2,597.6 2,611.7 2,592.6 34 Commercial and industrial 556.7 585.3 594.4 596.6 597.8 599.6 601.5 610.7 604.9 607.2 611.8 611.8 35 Real estate 1,082.6 1,116.5 1,132.1 1,143.8 1,157.0 1,164.4 1,171.9 1,180.8 1,177.4 1,183.2 1,182.1 1,177.0 36 Revolving home equity 82.5 87.0 89.0 90.7 92.5 93.4 94.5 96.1 95.6 95.8 96.0 96.3 37 Other 1,000.1 1,029.5 1,043.1 1,053.1 1,064.5 1,070.9 1,077.4 1,084.7 1,081.9 1,087.4 1,086.1 1,080.7 38 Consumer 519.5 513.3 512.6 514.4 514.9 514.6 517.8 515.3 518.8 517.9 519.3 512.6 39 Security1 43.6 47.3 47.0 46.0 47.5 48.8 49.4 50.2 49.0 51.2 53.8 47.3 40 Other loans and leases 204.6 218.4 221.5 223.6 230.6 234.4 238.3 243.2 241.7 238.2 244.7 244.0 41 Interbank loans 179.3 193.5 195.3 193.4 169.2 163.9 169.4 177.2 181.0 175.3 175.6 168.6 42 Cash assets4 194.4 198.8 209.9 207.8 208.6 207.2 214.0 219.7 249.1 214.0 211.3 205.8 43 Other assets5 221.2 231.4 238.6 243.4 246.4 242.8 245.3 246.2 248.1 243.3 244.6 246.2 44 Total assets6 3,768.7 3,891.6 3,953.8 3,958.2 3,958.0 3,966.8 3,997.1 4,035.4 4,055.5 4,020.3 4,030.1 4,011.1 Liabilities 45 Deposits 2,587.3 2,662.6 2,695.6 2,675.8 2,707.7 2,716.0 2,736.8 2,756.8 2,799.7 2,755.4 2,750.0 2,715.6 46 Transaction 712.9 677.1 694.6 669.1 676.9 671.0 670.7 666.1 708.7 654.9 660.9 646.0 47 Nontransaction 1,874.4 1,985.4 2,001.0 2,006.7 2,030.8 2,045.0 2,066.1 2,090.7 2,091.0 2,100.5 2,089.1 2,069.7 48 Large time 293.2 320.3 325.3 329.4 336.0 341.9 350.6 358.0 355.0 358.2 358.0 357.1 49 Other 1,581.2 1,665.1 1,675.8 1,677.3 1,694.8 1,703.1 1,715.5 1,732.7 1,736.0 1,742.2 1,731.1 1,712.6 50 BoiTowings 590.2 595.8 621.0 630.5 606.5 599.1 604.8 623.1 610.9 605.9 624.3 635.6 51 From banks in the U.S 265.7 266.7 277.4 276.7 250.2 241.1 249.2 250.4 254.7 252.1 248.5 247.5 52 From others 324.6 329.1 343.6 353.8 356.4 358.0 355.6 372.7 356.2 353.8 375.8 388.1 53 Net due to related foreign offices 70.8 72.5 78.8 92.3 79.6 83.2 77.1 79.0 71.6 84.1 80.4 85.8 54 Other liabilities 156.9 181.2 180.2 177.3 179.3 185.6 188.7 183.1 183.8 180.4 180.8 181.0 55 Total liabilities 3,405.1 3,512.0 3,575.6 3,576.0 3,573.2 3,583.9 3,607.4 3,642.1 3,666.0 3,625.7 3,635.5 3,618.1 56 Residual (assets less liabilities)7 363.6 379.6 378.2 382.2 384.9 382.9 389.7 393.3 389.5 394.6 394.6 393.0 MEMO 57 Revaluation gains on off-balance-sheet items8 n.a. 49.0 49.5 42.0 38.5 44.3 45.1 37.5 39.5 38.3 38.2 37.4 58 Revaluation losses on off-balancesheet items8 n.a. 43.2 44.6 43.4 40.2 45.7 46.5 40.0 41.7 40.0 40.6 39.8 59 Mortgage-backed securities9 n.a. 245.1 248.7 248.8 249.9 251.4 253.2 255.7 253.7 252.5 251.6 258.8 Footnotes appear on p. 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 Liabilities1—Continued C. Large domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures AAAccccccooouuunnnttt 1996 1997r 1997 Sept. Mar. Apr. May June July Aug. Sept. Sept. 3 Sept. 10 Sept. 17 Sept. 24 Seasonally adjusted Assets 1 Bank credit 1,896.3 1,960.4 1,979.7 1,971.0 1,981.7 2,001.8 2,004.3 2,015.8 1,999.5 2,015.4 2,016.6 2,017.7 2. Securities in bank credit 424.3 439.2 450.6 434.0 430.0 442.8 438.3 442.0 431.7 437.7 436.8 451.1 3 U.S. government securities 302.5 304.3 313.6 310.5 311.9 311.1 303.5 311.3 303.6 307.3 305.8 319.0 4 Trading account 21.0 18.3 20.3 19.4 23.1 24.9 21.8 25.6 23.6 26.4 22.1 27.9 5 Investment account 281.5 286.1 293.3 291.1 288.8 286.2 281.7 285.7 280.0 280.8 283.7 291.1 6 Other securities 121.8 134.8 137.0 123.5 118.1 131.7 134.8 130.6 128.1 130.5 131.0 132.1 7 Trading account 56.3 69.4 72.0 58.4 51.8 64.2 63.7 59.5 57.8 60.2 60.1 60.2 8 Investment account 65.5 65.4 65.0 65.1 66.3 67.5 71.2 71.1 70.3 70.3 70.9 71.9 9 State and local government. . 20.3 20.7 20.8 21.1 21.7 22.1 22.3 22.1 22.1 22.0 22.0 22.1 10 Other 45.2 44.8 44.2 44.0 44.6 45.3 48.9 49.0 48.2 48.3 48.8 49.9 11 Loans and leases in bank credit2 . .. 1,472.0 1,521.2 1,529.2 1,537.1 1,551.7 1,559.0 1,566.1 1,573.9 1,567.8 1,577.6 1,579.8 1,566.6 12 Commercial and industrial 393.8 408.1 412.4 412.7 416.0 418.5 423.1 430.7 426.5 430.5 430.9 431.1 13 Bankers acceptances 1.8 1.7 1.6 1.6 1.6 1.6 1.5 1.5 1.5 1.5 1.5 1.5 14 Other 392.0 406.4 410.8 411.2 414.4 416.9 421.7 429.2 425.0 429.0 429.4 429.6 15 Real estate 598.3 610.7 614.1 620.7 625.6 624.9 625.2 626.6 627.4 629.4 627.3 623.1 16 Revolving home equity 57.8 60.6 61.3 62.2 63.5 64.2 64.8 65.7 65.6 65.7 65.6 65.8 17 Other 540.6 550.2 552.8 558.5 562.1 560.7 560.4 560.9 561.8 563.7 561.7 557.3 18 Consumer 298.4 301.5 300.2 301.5 301.9 302.3 300.1 297.9 299.4 300.3 299.7 295.5 19 Security3 39.8 42.7 41.9 41.0 43.3 45.7 46.5 46.2 45.2 48.8 47.0 43.7 20 Federal funds sold to and repurchase agreements with broker-dealers 25.3 26.3 23.8 23.4 26.5 28.6 30.0 29.0 30.2 31.2 28.7 27.0 21 Other 14.5 16.5 18.1 17.6 16.9 17.2 16.6 17.2 15.0 17.6 18.3 16.7 22 State and local government 11.5 11.6 11.3 11.1 11.2 11.2 11.3 11.4 11.3 11.4 11.5 11.3 23 Agricultural 8.9 8.8 8.8 8.9 8.8 8.7 8.7 8.9 8.7 8.9 8.9 8.9 24 Federal funds sold to and repurchase agreements with others 4.2 6.3 7.4 5.8 6.3 7.3 6.3 6.5 4.8 5.8 6.6 6.8 25 All other loans 61.4 64.0 64.0 64.7 66.2 66.0 68.6 68.7 67.7 65.9 71.1 68.8 26 Lease-financing receivables 55.5 67.5 69.1 70.5 72.2 74.3 76.1 77.0 76.7 76.7 76.8 77.2 27 Interbank loans 142.2 142.2 148.8 149.5 121.4 115.2 121.2 128.3 125.3 126.2 126.5 125.5 28 Federal funds sold to and repurchase agreements with commercial banks 93.4 92.0 96.7 93.2 69.7 69.5 73.8 81.3 78.0 78.3 79.8 79.3 29 Other 48.8 50.2 52.1 56.3 51.7 45.7 47.3 47.0 47.3 47.9 46.6 46.1 30 Cash assets4 136.4 140.7 145.9 143.7 143.5 142.8 156.1 150.6 159.9 143.6 144.4 144.9 31 Other assets5 172.2 178.3 181.3 185.2 184.6 178.3 180.0 184.2 182.1 179.6 183.9 186.2 32 Total assets6 2,309.1 2J85.0 2,418.9 2,412.8 2,394.6 2,4013 2,425.0 2,442.6 2,430.6 2,4285 2,435.1 2,438.0 Liabilities 33 Deposits 1,431.6 1,459.3 1,472.0 1,461.8 1,477.6 1,472.3 1,486.2 1,494.1 1,504.5 1,481.1 1,487.8 1,486.2 34 Transaction 415.1 387.3 387.5 376.9 380.0 374.2 378.4 367.0 381.8 352.6 361.9 367.4 35 Nontransaction 1,016.5 1,072.0 1,084.4 1,084.9 1,097.6 1,098.1 1,107.8 1,127.1 1,122.7 1,128.6 1,125.9 1,118.8 36 Large time 153.6 164.9 169.3 169.4 177.7 182.3 187.7 197.8 193.1 196.3 197.2 198.4 37 Other 862.9 907.1 915.2 915.5 920.0 915.8 920.1 929.3 929.6 932.3 928.7 920.4 38 Borrowings 436.7 455.1 467.0 466.3 436.9 436.4 445.4 463.1 448.0 462.0 460.4 460.4 39 From banks in the U.S 178.0 192.1 193.7 181.7 157.7 157.6 167.2 174.1 172.5 181.2 170.9 164.3 40 From others 258.8 263.0 273.2 284.5 279.2 278.8 278.1 289.0 275.5 280.9 289.5 296.1 41 Net due to related foreign offices 68.7 64.1 72.9 81.5 77.3 80.8 75.0 78.4 71.7 84.8 83.4 80.2 42 Other liabilities 130.1 157.1 154.3 150.2 151.1 159.0 163.1 154.6 156.0 151.4 152.7 153.8 43 Total liabilities 2,067.2 2,135.6 2,166.1 2,159.8 2,143.0 2,1485 2,169.7 2,190.1 2,180.2 2,179.4 2,184.3 2,180.7 44 Residual (assets less liabilities)7 241.9 249.4 252.9 253.0 251.6 252.8 255.3 252.5 250.4 249.1 250.8 257.3 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic NonfinancialS tatistics • December 1997 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued C. Large domestically chartered commercial banks—Continued Monthly averages Wednesday figures AAAccccccooouuunnnttt 1996 1997r 1997 Sept. Mar. Apr. May June July Aug. Sept. Sept. 3 Sept. 10 Sept. 17 Sept. 24 Not seasonally adjusted Assets 45 Bank credit 1,896.0 1,955.6 1,978.7 1,973.2 1,984.1 1,996.7 2,001.9 2,015.5 2,005.3 2,013.1 2,020.5 2,011.4 46 Securities in bank credit 425.8 439.8 449.1 436.3 434.1 442.0 441.7 443.4 438.6 441.2 437.9 448.7 47 U.S. government securities 304.1 304.9 313.7 310.9 311.1 310.5 306.2 313.0 308.1 310.5 307.7 317.7 48 Trading account 21.1 19.4 20.5 19.6 21.6 23.8 22.5 25.6 24.9 27.1 23.0 26.5 49 Investment account 283.0 285.5 293.1 291.2 289.5 286.7 283.7 287.4 283.2 283.4 284.7 291.2 50 Mortgage-backed securities. < 184.9 187.1 187.0 187.4 188.7 188.0 189.7 188.0 186.8 185.9 192.7 51 Other 100.7 106.0 104.2 102.0 98.0 95.8 97.7 95.3 96.5 98.8 98.5 52 One year or less n.a. 26.9 29.5 27.9 27.8 26.2 26.2 27.0 25.9 26.6 28.0 27.3 53 Between one and five years 57.2 58.4 57.6 55.1 51.1 48.7 48.6 48.0 48.5 49.3 48.6 54 More than five years .... 16.6 18.2 18.7 19.1 20.6 20.9 22.1 21.4 21.4 21.5 22.6 55 Other securities 121.6 135.0 135.4 125.4 122.9 131.5 135.5 130.5 130.5 130.7 130.2 131.0 56 Trading account 56.1 69.8 70.8 60.6 57.0 64.9 64.8 59.4 60.2 60.4 59.2 59.4 57 Investment account 65.6 65.1 64.6 64.8 65.9 66.6 70.7 71.1 70.2 70.3 71.0 71.6 58 State and local government . . 20.3 20.7 20.9 21.2 21.8 21.7 22.0 22.0 22.0 22.0 22.0 22.1 59 Other 45.2 44.4 43.7 43.7 44.2 44.8 48.7 49.1 48.2 48.3 48.9 49.5 60 Loans and leases in bank credit2 . . 1,470.3 1,515.7 1,529.6 1,536.9 1,550.1 1,554.7 1,560.2 1,572.1 1,566.7 1,571.9 1,582.6 1,562.7 61 Commercial and industrial 391.0 410.5 417.7 417.9 417.5 418.6 419.9 427.4 422.7 424.9 428.6 427.9 62 Bankers acceptances 1.8 1.6 1.5 1.5 1.6 1.5 1.5 1.5 1.5 1.5 1.5 1.5 63 Other 389.2 408.9 416.2 416.3 416.0 417.1 418.4 425.9 421.2 423.4 427.1 426.3 64 Real estate 599.1 607.8 612.8 618.1 624.2 624.6 625.7 627.6 628.3 631.4 628.8 622.9 65 Revolving home equity 58.0 60.1 60.9 62.1 63.5 64.2 65.0 66.1 65.9 65.9 66.0 66.1 66 Other n.a. 337.4 341.2 343.7 346.8 346.8 347.8 347.7 349.3 351.8 348.8 342.5 67 Commercial n.a. 210.4 210.7 212.3 213.9 213.6 212.9 214.1 213.1 213.6 214.1 214.2 68 Consumer 299.5 298.8 298.1 299.9 300.9 300.1 300.6 299.3 301.3 301.4 301.3 297.2 69 Security-1 39.2 42.4 42.4 41.6 43.1 44.4 44.7 45.3 44.0 46.3 49.1 4422..77 70 Federal funds sold to and repurchase agreements with broker-dealers 25.1 26.0 24.8 24.1 26.0 27.9 28.5 28.6 29.1 29.8 30.7 26.4 71 Other 14.1 16.4 17.6 17.4 17.0 16.5 16.2 16.7 15.0 16.5 18.4 16.3 72 State and local government 11.6 11.5 11.2 11.1 11.3 11.3 11.4 11.4 11.4 11.5 11.5 11.4 73 Agricultural 9.1 8.5 8.6 8.9 8.9 9.0 9.0 9.1 9.0 9.1 9.2 99..11 74 Federal funds sold to and repurchase agreements with others 4.6 6.2 7.1 5.9 6.5 7.5 6.2 7.2 5.1 6.5 7.9 7.5 75 All other loans 61.1 62.2 62.7 63.2 65.7 65.4 67.5 68.4 68.9 65.0 70.2 67.7 76 Lease-financing receivables .... 55.1 67.8 69.0 70.4 72.0 73.8 75.1 76.3 75.8 75.9 76.1 76.4 77 Interbank loans 138.2 138.7 146.8 148.5 121.8 115.6 117.7 124.5 112255..44 120.7 112233..99 112200..11 78 Federal funds sold to and repurchase agreements with commercial banks 90.1 90.0 96.8 94.2 71.1 68.9 70.8 78.0 78.2 73.4 78.3 74.6 7799 Other 18.1 48.7 50.0 54.3 50.6 46.7 47.0 46.4 47.2 47.3 45.6 45.4 8 8 8 8 0 1 0 1 C O a th sh er a a s s s s e e t t s s 4 5 1 17 3 3 5 . . 8 7 1 1 3 7 4 5 . . 3 3 1 1 4 8 3 1 . . 4 4 1 1 4 8 1 7 . . 7 0 1 1 4 8 0 6 . . 8 9 1 1 3 8 9 1 . . 4 2 1 18 4 2 4 . . 4 9 1 18 4 5 9 . . 9 7 1 18 6 6 9 . . 7 7 1 18 4 2 4 . . 2 9 1 1 4 8 4 5 . . 4 0 1 18 3 6 9 . . 7 1 82 Total assets6 2305.5 2367.2 2,413.7 2,413.8 2396.9 2396.2 2,410.3 2,439.1 2,450.5 2,424.2 2,4373 2,421.0 Liabilities 83 Deposits 1,430.5 1,453.2 1,473.5 1,455.2 1,474.3 1,470.0 1,481.0 1,493.0 1,524.0 1,490.6 1,490.7 1,462.3 84 Transaction 413.9 379.6 390.9 370.9 376.0 370.1 369.4 365.7 396.1 355.0 363.4 351.1 85 Nontransaction 1,016.6 1,073.6 1,082.7 1,084.4 1,098.3 1,099.9 1,111.6 1,127.2 1,127.9 1,135.7 1,127.4 1,111.2 86 Large time 151.6 164.1 169.7 172.4 177.5 181.7 189.0 194.9 192.9 195.6 195.1 193.5 87 Other 865.0 909.5 912.9 912.0 920.8 918.2 922.6 932.3 935.0 940.0 932.3 917.7 88 Borrowings 440.3 447.0 467.7 472.8 448.7 442.2 446.9 466.4 453.8 452.4 468.4 474.0 89 From banks in the U.S 1 50.3 185.8 193.0 188.2 166.6 163.3 171.9 175.9 178.3 178.4 175.0 170.6 90 From nonbanks in the U.S 260.0 261.2 274.7 284.6 282.0 279.0 275.0 290.4 275.5 274.0 293.4 303.4 91 Net due to related foreign offices .... 64.9 68.6 74.4 88.1 75.8 78.4 72.6 74.2 67.1 79.1 75.5 80.8 92 Other liabilities 131.1 155.1 154.5 151.5 153.0 159.3 161.5 155.6 156.6 152.5 152.9 153.7 93 Total liabilities 2,066.7 2,123.9 2,170.2 2,167.6 2,151.8 2,149.9 2,162.0 2,189.1 2,201.6 2,174.7 2,187.5 2,170.8 94 Residual (assets less liabilities)7 238.8 243.3 243.5 246.1 245.1 246.3 248.3 250.0 248.9 249.5 249.8 250.2 MEMO 95 Revaluation gains on off-balancesheet items8 49.0 49.5 42.0 38.5 44.3 45.1 37.5 39.5 38.3 38.2 37.4 96 Revaluation losses on off-balancesheet items8 43.2 44.6 43.4 40.2 45.7 46.5 40.0 41.7 40.0 40.6 39.8 97 Mortgage-backed securities' n.a. 203.0 205.0 204.5 204.4 204.8 204.3 206.1 204.1 203.0 202.2 209.1 98 Pass-through securities 139.3 140.7 141.2 142.1 142.7 141.7 143.1 141.2 140.1 139.7 146.6 99 CMOs, REMICs, and other mortgage-backed securities . . . 63.7 64.3 63.3 62.4 62.1 62.6 63.0 63.0 62.9 62.5 62.5 100 Net unrealized gains (losses) on available-for-sale securities10 . . . 2.6 1.8 2.1 2.6 3.1 3.7 3.3 3.4 3.1 3.3 3.3 101 Offshore credit to U.S. residents" . . . 29.5 32.9 33.3 33.6 33.4 33.7 34.0 34.1 34.6 34.0 34.1 34.0 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ 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 AAAccccccooouuunnnttt 1996 1997r 1997 Sept. Mar. Apr. May June July Aug. Sept. Sept. 3 Sept. 10 Sept. 17 Sept. 24 Seasonally adjusted Assets 1 Bank credit 1,331.2 1,372.8 1,387.0 1,396.8 1,405.3 1,412.2 1,423.6 1,429.7 1,428.5 1,429.2 1,430.0 1,430.7 7 Securities in bank credit 398.1 401.8 405.9 407.3 406.8 406.4 406.3 405.1 405.5 406.3 404.9 403.8 3 U.S. government securities 318.8 320.7 322.7 324.2 324.4 325.0 324.9 323.9 324.1 325.0 323.7 322.4 4 Other securities 79.4 81.1 83.2 83.1 82.4 81.4 81.4 81.3 81.4 81.4 81.2 81.4 Loans and leases in bank credit2 933.1 971.0 981.1 989.4 998.5 1,005.8 1,017.3 1,024.6 1,023.1 1,022.9 1,025.1 1,026.9 6 Commercial and industrial 166.7 174.3 175.5 177.3 179.0 181.0 182.7 184.3 183.6 183.7 183.9 184.7 7 Real estate 481.3 511.7 522.0 527.3 533.0 539.3 545.0 551.0 547.8 550.2 550.9 551.8 8 Revolving home equity 24.1 27.2 28.4 28.7 29.0 29.2 29.4 29.7 29.5 29.5 29.6 29.8 9 Other 457.2 484.5 493.6 498.5 504.0 510.1 515.6 521.3 518.4 520.6 521.2 522.1 in Consumer 219.0 216.4 214.9 215.0 215.8 214.6 217.3 215.2 217.2 216.0 216.9 214.3 ii Security3 4.5 4.9 4.6 4.6 4.6 4.6 4.8 4.9 4.9 4.7 4.9 5.0 17 Other loans and leases 61.5 63.7 64.1 65.3 66.2 66.3 67.5 69.1 69.5 68.3 68.5 71.1 13 Interbank loans 42.8 54.8 48.1 48.4 50.3 50.9 52.6 54.5 53.7 50.6 54.4 55.7 14 Cash assets4 60.2 66.7 67.9 66.4 69.1 68.3 71.5 71.5 74.9 68.0 69.8 71.9 15 Other assets' 46.9 57.1 58.2 56.9 61.5 61.6 62.8 59.9 57.6 59.3 59.7 60.8 16 Total assets6 1,462.0 1,532.1 1,541.8 1,548.8 1,566.6 1,573.2 1,5903 1,5953 1,594.5 1,586.9 1,593.7 1,598.9 Liabilities 17 Deposits 1.154.7 1,214.3 1,219.8 1,223.1 1,235.3 1,249.4 1,258.5 1,261.7 1,262.4 1,251.0 1,258.8 1,262.8 18 Transaction 299.8 301.9 303.4 301.6 302.5 303.1 304.5 301.0 303.6 292.5 299.2 305.2 19 Nontransaction 855.0 912.5 916.4 921.6 932.8 946.3 954.0 960.6 958.8 958.5 959.5 957.6 20 Large time 141.9 155.3 154.5 156.1 159.1 161.0 161.9 163.5 163.0 163.1 163.3 163.1 71 Other 713.1 757.2 761.9 765.4 773.7 785.2 792.1 797.2 795.9 795.4 796.3 794.5 22 Borrowings 150.4 154.3 155.7 153.7 154.2 156.9 159.4 157.3 159.4 158.7 158.8 157.2 23 From banks in the U.S 84.6 84.7 85.2 86.0 80.4 76.2 77.4 73.8 76.6 75.6 73.2 73.5 24 From others 65.8 69.6 70.5 67.7 73.7 80.7 82.0 83.5 82.9 83.1 85.6 83.7 25 Net due to related foreign offices 5.9 3.9 4.4 4.2 3.8 4.8 4.5 4.8 4.5 4.9 4.9 5.0 26 Other liabilities 26.1 25.7 25.4 26.1 26.8 26.1 27.1 27.8 27.6 28.2 28.3 27.6 27 Total liabilities 1337.0 1398.2 1,405.4 1,407.2 1,420.1 1,437.2 1,449.4 1,451.7 1,453.9 1,442.9 1,450.7 1,452.7 28 Residual (assets less liabilities)7 124.9 133.9 136.4 141.6 146.5 136.0 140.9 143.7 140.6 144.0 143.0 146.3 Not seasonally adjusted Assets 79 Bank credit 1,335.2 1,368.3 1,387.4 1,396.6 1,406.2 1,412.7 1,423.3 1,433.6 1,428.8 1.431.4 1,435.0 1,435.8 30 Securities in bank credit 398.5 403.1 409.4 409.1 408.6 405.6 404.5 405.5 403.7 405.7 405.9 405.9 31 U.S. government securities 319.3 321.8 325.9 325.8 326.2 324.2 323.4 324.4 322.6 324.7 324.7 324.6 37 Other securities 79.2 81.4 83.4 83.4 82.3 81.4 81.2 81.1 81.1 81.0 81.2 81.3 33 Loans and leases in bank credit2 936.7 965.1 978.0 987.4 997.7 1,007.1 1,018.8 1,028.1 1,025.2 1,025.7 1,029.1 1,029.9 34 Commercial and industrial 165.7 174.8 176.7 178.7 180.3 181.1 181.6 183.3 182.2 182.3 183.2 183.9 35 Real estate 483.5 508.7 519.3 525.8 532.8 539.7 546.2 553.2 549.1 551.9 553.2 554.1 36 Revolving home equity 24.5 27.0 28.1 28.6 29.0 29.2 29.5 30.0 29.7 29.8 30.0 30.2 37 Other 459.1 481.7 491.2 497.2 503.8 510.5 516.6 523.1 519.5 522.0 523.2 523.9 38 Consumer 220.0 214.6 214.5 214.5 214.0 214.4 217.2 216.0 217.5 216.4 218.0 215.4 39 Security3 4.4 4.9 4.6 4.4 4.5 4.5 4.7 4.8 5.0 4.9 4.8 4.6 40 Other loans and leases 63.1 62.2 62.9 64.1 66.2 67.4 69.1 70.7 71.4 70.3 70.0 71.9 41 Interbank loans 41.1 54.8 48.5 44.9 47.4 48.3 51.7 52.7 55.6 54.6 51.7 48.5 42 Cash assets4 58.7 64.5 66.5 66.1 67.7 67.9 69.1 69.9 79.4 69.1 66.8 66.7 43 Other assets5 47.4 56.1 57.2 56.4 59.5 61.6 62.9 60.3 61.4 61.1 59.6 59.4 44 Total assets6 1,4633 1,524.4 1,540.1 1,544.4 1,561.2 1,570.6 1,586.8 1,5963 1,605.1 1,596.1 1,592.8 1,590.2 Liabilities 45 Deposits 1,156.8 1,209.4 1.222.1 1,220.6 1,233.4 1,246.0 1,255.8 1,263.9 1,275.7 1,264.7 1,259.2 1,253.3 46 Transaction 299.0 297.5 303.7 298.3 300.9 301.0 301.3 300.4 312.5 300.0 297.5 294.9 47 Nontransaction 857.8 911.8 918.4 922.3 932.5 945.1 954.6 963.5 963.1 964.8 961.7 958.5 48 Large time 141.7 156.2 155.6 156.9 158.6 160.2 161.6 163.1 162.1 162.6 162.9 163.6 49 Other 716.1 755.6 762.8 765.4 773.9 784.9 792.9 800.4 801.0 802.2 798.9 794.9 50 Borrowings 150.0 148.8 153.2 157.6 157.9 156.9 157.8 156.7 157.1 153.5 155.9 161.6 51 From banks in the U.S 85.4 80.9 84.4 88.5 83.5 77.8 77.3 74.4 76.4 73.8 73.6 76.9 57 From others 64.6 67.9 68.9 69.2 74.3 79.1 80.5 82.3 80.6 79.8 82.4 84.7 53 Net due to related foreign offices 5.9 3.9 4.4 4.2 3.8 4.8 4.5 4.8 4.5 4.9 4.9 5.0 54 Other liabilities 25.8 26.0 25.7 25.8 26.3 26.3 27.2 27.5 27.2 27.8 27.9 27.3 55 Total liabilities 1338.4 1388.2 1,405.4 1,4083 1,421.4 1,434.0 1,445.4 1,453.0 1,464.5 1,451.0 1,448.0 1,4473 56 Residual (assets less liabilities)7 124.9 136.2 134.7 136.1 139.8 136.6 141.4 143.3 140.6 145.1 144.9 142.8 MEMO 57 Mortgage-backed securities9 n.a. 42.1 43.7 44.3 45.5 46.6 48.9 49.5 49.6 49.5 49.4 49.7 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics • December 1997 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued E. Foreign-related institutions Billions of dollars Monthly averages Wednesday figures Account 1996 1997r 1997 Sept. Mar. Apr. May June July Aug. Sept. Sept. 3 Sept. 10 Sept. 17 Sept. 24 Seasonally adjusted Assets 1 Bank credit 469.9 525.3 531.2 534.2 533.8 536.1 532.0 533.4 541.4 536.8 533.7 533.6 2 Securities in bank credit 149.8 172.9 176.9 173.1 173.5 180.4 178.3 181.2 189.9 182.2 180.1 181.3 3 U.S. government securities 83.7 84.0 87.7 89.1 90.7 91.8 86.9 88.6 95.5 88.4 85.6 85.8 4 Other securities 66.1 88.9 89.2 84.0 82.8 88.6 91.4 92.7 94.4 93.8 94.4 95.5 5 Loans and leases in bank credit2 . . . 320.1 352.4 354.3 361.1 360.3 355.7 353.7 352.1 351.5 354.6 353.6 352.2 6 Commercial and industrial 200.1 215.9 215.8 217.9 217.7 217.4 218.8 220.9 219.3 220.7 221.8 221.4 7 Real estate 32.6 31.5 31.3 30.5 29.5 28.4 28.0 27.3 27.6 27.6 27.4 27.2 8 Security3 28.9 39.7 42.8 42.7 44.8 43.6 42.5 43.0 41.7 43.4 43.3 42.7 9 Other loans and leases 58.4 65.2 64.4 70.0 68.3 66.3 64.4 60.8 62.9 62.9 61.1 60.9 10 Interbank loans 21.1 22.7 18.6 19.8 18.6 18.3 17.4 16.8 14.5 18.0 16.0 17.4 11 Cash assets4 30.2 32.4 32.5 33.6 35.1 33.4 33.9 34.5 34.5 36.3 34.8 33.1 12 Other assets5 37.1 41.0 39.0 38.6 40.8 42.5 42.5 41.2 44.9 44.6 39.3 39.8 13 Total assets6 558.2 621.1 621.1 625.9 628.0 630.0 625.6 625.6 635.0 635.5 623.5 623.5 Liabilities 14 Deposits 185.2 242.7 256.7 249.3 254.1 266.5 266.9 269.1 273.1 272.6 272.9 266.9 15 Transaction 9.5 10.4 10.6 10.9 10.6 10.8 11.5 11.2 11.5 11.1 10.6 10.8 16 Nontransaction 175.7 232.2 246.0 238.4 243.5 255.7 255.5 258.0 261.7 261.6 262.3 256.0 17 Large time 173.5 228.7 243.4 235.9 240.9 253.2 252.9 255.2 259.1 259.0 259.7 253.5 18 Other 2.2 3.5 2.6 2.5 2.5 2.6 2.6 2.7 2.6 2.6 2.6 2.5 19 Borrowings 124.1 139.8 138.6 140.7 136.6 133.3 135.4 139.2 133.7 136.4 129.8 143.1 20 From banks in the U.S 33.2 34.5 31.8 31.3 28.1 28.2 29.1 33.2 30.0 30.4 27.4 36.1 21 From others 90.9 105.4 106.8 109.4 108.6 105.1 106.3 106.0 103.7 106.1 102.4 107.0 22 Net due to related foreign offices 176.2 141.8 134.4 148.4 148.4 129.4 127.2 122.6 130.6 132.0 130.1 112.2 23 Other liabilities 66.3 93.9 91.7 88.7 89.1 95.4 96.4 92.9 102.1 97.6 91.8 91.1 24 Total liabilities 551.8 6183 621J 627.1 628.2 624.6 625.9 623.8 639.4 638.7 624.6 6133 25 Residual (assets less liabilities)7 6.4 2.8 -0.3 -1.2 -0.3 5.4 -0.4 1.8 -4.5 -3.2 -1.1 10.2 Not seasonally adjusted Assets 26 Bank credit 468.6 525.0 531.3 536.8 534.2 536.5 536.0 531.3 545.0 535.6 531.4 528.2 27 Securities in bank credit 148.7 173.5 177.4 177.9 174.2 179.3 181.9 179.6 193.4 182.2 177.9 176.7 28 U.S. government securities 82.6 87.0 87.2 89.6 89.4 89.1 88.4 87.5 96.8 88.2 84.8 83.5 29 Trading account n.a. 19.9 18.5 18.6 18.3 17.8 18.7 17.5 25.9 17.0 16.5 14.7 30 Investment account n.a. 66.6 68.3 70.6 70.6 70.9 69.3 69.5 70.9 71.2 68.3 68.8 31 Other securities 66.0 86.5 90.2 88.3 84.8 90.2 93.5 92.1 96.6 94.0 93.2 93.3 32 Trading account n.a. 57.9 60.8 58.8 56.9 59.4 60.8 59.1 63.7 60.8 59.7 60.3 33 Investment account n.a. 29.1 29.9 29.9 28.2 31.2 33.2 33.4 33.0 33.2 33.4 33.0 34 Loans and leases in bank credit2 . . . 319.9 351.5 353.9 358.9 360.0 357.2 354.1 351.7 351.6 353.5 353.5 351.5 35 Commercial and industrial 198.9 215.5 216.5 218.1 218.4 218.5 218.9 219.5 218.4 218.8 220.5 219.8 36 Real estate 32.7 31.5 30.9 30.2 29.3 28.3 28.0 27.4 27.7 27.7 27.5 27.3 37 Security3 28.9 39.7 42.8 42.7 44.8 43.6 42.5 43.0 41.7 43.4 43.3 42.7 38 Other loans and leases 59.3 64.8 63.7 67.8 67.4 66.8 64.6 61.8 63.8 63.6 62.2 61.6 39 Interbank loans 21.1 22.7 18.6 19.8 18.6 18.3 17.4 16.8 14.5 18.0 16.0 17.4 40 Cash assets4 29.5 31.8 31.7 33.6 35.9 33.6 33.8 33.7 33.9 35.0 33.6 32.6 41 Other assets5 37.5 40.4 37.6 39.6 40.7 41.7 43.4 41.6 46.0 46.3 39.4 39.3 42 Total assets6 556.6 619.7 618.8 629.5 629.0 629.8 630.3 623.1 639.1 634.8 620.1 617.2 Liabilities 43 Deposits 184.8 242.5 250.3 249.8 254.5 263.5 264.8 268.1 269.5 268.3 268.8 267.7 44 Transaction 9.9 10.2 10.2 10.4 10.5 10.8 11.2 11.7 11.6 11.2 11.0 11.6 45 Nontransaction 174.9 232.3 240.1 239.4 244.0 252.8 253.6 256.5 257.9 257.2 257.8 256.1 46 Large time 172.7 228.8 237.5 236.9 241.4 250.2 251.0 253.7 255.3 254.6 255.3 253.6 47 Other 2.1 3.5 2.6 2.6 2.5 2.5 2.5 2.7 2.5 2.5 2.5 2.5 48 Borrowings 125.3 134.0 141.1 140.5 141.6 142.2 140.7 140.3 137.6 140.2 134.9 141.9 49 From banks in the U.S 32.6 32.9 32.1 30.8 29.8 29.9 29.7 32.5 31.3 31.6 27.9 32.8 50 From others 92.7 101.1 109.0 109.6 111.9 112.3 111.0 107.8 106.3 108.6 107.0 109.1 51 Net due to related foreign offices 174.3 146.5 131.2 144.2 140.2 128.2 125.3 119.4 125.9 124.6 122.9 115.3 52 Other liabilities 66.2 93.8 91.5 91.4 90.1 93.3 96.9 92.7 103.1 99.1 91.1 89.9 53 Total liabilities 550.6 616.7 614.2 625.9 626.4 (,112 627.6 620.5 636.0 632.2 617.7 614.7 54 Residual (assets less liabilities)7 6.0 2.9 4.7 3.7 2.6 2.7 2.6 2.6 3.1 2.6 2.4 2.5 MEMO 55 Revaluation gains on olf-balance-sheet items8 n.a. 41.4 40.5 39.4 37.6 40.0 41.1 40.6 42.7 41.4 40.5 40.3 56 Revaluation losses on olf-balancesheet items8 n.a. 43.7 43.2 41.8 39.8 41.8 42.7 41.2 44.6 42.5 41.0 40.7 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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 group that contained the acquired bank and put into past data for the group containing the statistical release, "Assets and Liabilities of Commercial Banks in the United States." Table acquiring bank. Balance sheet data for acquired banks are obtained from Call Reports, and a 1.27, "Assets and Liabilities of Large Weekly Reporting Commercial Banks," and table 1.28, ratio procedure is used to adjust past levels. "Large Weekly Reporting U.S. Branches and Agencies of Foreign Banks," are no longer 2. Excludes federal funds sold to, reverse RPs with, and loans made to commercial banks being published in the Bulletin. Instead, abbreviated balance sheets for both large and small in the United States, all of which are included in "Interbank loans." domestically chartered banks have been included in table 1.26, parts C and D. Data are both 3. Consists of reverse RPs with brokers and dealers and loans to purchase and carry merger-adjusted and break-adjusted. In addition, data from large weekly reporting U.S. securities. branches and agencies of foreign banks have been replaced by balance sheet estimates of all 4. Includes vault cash, cash items in process of collection, balances due from depository foreign-related institutions and are included in table 1.26, part E. These data are break- institutions, and balances due from Federal Reserve Banks. adjusted. 5. Excludes the due-from position with related foreign offices, which is included in "Net The not-seasonally-adjusted data for all tables now contain additional balance sheet items, due to related foreign offices." which were available as of October 2, 1996. 6. Excludes unearned income, reserves for losses on loans and leases, and reserves for 1. Covers the following types of institutions in the fifty states and the District of transfer risk. Loans are reported gross of these items. Columbia: domestically chartered commercial banks that submit a weekly report of condition 7. This balancing item is not intended as a measure of equity capital for use in capital (large domestic); other domestically chartered commercial banks (small domestic); branches adequacy analysis. On a seasonally adjusted basis this item reflects any differences in the and agencies of foreign banks, and Edge Act and agreement corporations (foreign-related seasonal patterns estimated for total assets and total liabilities. institutions). Excludes International Banking Facilities. Data are Wednesday values or pro 8. Fair value of derivative contracts (interest rate, foreign exchange rate, other commodity and rata averages of Wednesday values. Large domestic banks constitute a universe; data for equity contracts) in a gain/loss position, as determined under FASB Interpretation No. 39. small domestic banks and foreign-related institutions are estimates based on weekly samples 9. Includes mortgage-backed securities issued by U.S. government agencies, U.S. and on quarter-end condition reports. Data are adjusted for breaks caused by reclassifications government-sponsored enterprises, and private entities. of assets and liabilities. 10. Difference between fair value and historical cost for securities classified as available- The data for large and small domestic banks presented on pp. A17-19 are adjusted to for-sale under FASB Statement No. 115. Data are reported net of tax effects. Data shown are remove the estimated effects of mergers between these two groups. The adjustment for restated to include an estimate of these tax effects. mergers changes past levels to make them comparable with current levels. Estimated 11. Mainly commercial and industrial loans but also includes an unknown amount of credit quantities of balance sheet items acquired in mergers are removed from past data for the bank extended to other than nonfinancial businesses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • December 1997 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period Year ending December 1997 Item D 19 e 9 c 2 . D 19 e 9 c 3 . D 19 e 9 c 4 . D 19 e 9 c 5 . D 19 e 9 c 6 . Mar. Apr. May June July Aug. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 545,619 555,075 595,382 674,904 775,371 836,979 838,366 855,178 864,758 889,494 885,601 Financial companies' 2 Dealer-placed paper2, total . 226,456 218,947 223,038 275,815 361,147 402,291 404,727 413,776 414,475 440,262 437,340 3 Directly placed paper3, total 171,605 180,389 207,701 210,829 229,662 246,215 248,920 252,856 256,165 253,971 253,934 4 Nonfinancial companies4 147,558 155,739 164,643 188,260 184,563 188,473 184,719 188,546 194,119 195,260 194,327 Bankers dollar acceptances (not seasonally adjusted)5 5 Total 38,194 32,348 29,835 29,242 25,754 By holder 6 Accepting banks 10,555 12,421 11,783 7 Own bills 9,097 10,707 10,462 8 Bills bought from other banks 1,458 1,714 1,321 Federal Reserve Banks6 9 Foreign correspondents 1,276 725 410 n.a. n.a. 10 Others 26,364 19,202 17,642 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 Average Average Date of change rate rate 1994—Mar. 24 6.25 1994 7.15 1995—Jan. . 8.50 1996—Jan. .. Apr. 19 6.75 1995 8.83 Feb. 9.00 Feb. May 17 7.25 1996 8.27 Mar. 9.00 Mar. Aug. 16 7.75 Apr. 9.00 Apr. Nov. 15 8.50 1994—Jan. . 6.00 May 9.00 May Feb. 6.00 June 9.00 June 1995—Feb. 1 9.00 Mar. 6.06 July . 8.80 July . July 7 8.75 Apr. 6.45 Aug. 8.75 Aug. Dec. 20 8.50 May 6.99 Sept. 8.75 Sept. June 7.25 Oct. . 8.75 Oct. . 1996—Feb. 1 8.25 July . 7.25 Nov. 8.75 Nov. 1997—Mar. 26 8.50 Aug. 7.51 Dec. 8.65 Dec. Sept. 7.75 Oct. . 7.75 1997—Jan. . Nov. 8.15 Feb. Dec. 8.50 Mar. Apr. May June July . Aug. Sept. Oct. . 1. The prime rate is one of several base rates that banks use to price short-term business Report. Data in this table also appear in the Board's H.15 (519) weekly and G.13 (415) loans. The table shows the date on which a new rate came to be the predominant one quoted monthly statistical releases. For ordering address, see inside front cover. by a majority of the twenty-five largest banks by asset size, based on the most recent Call Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.35 INTEREST RATES Money and Capital Markets Percent per year; figures are averages of business day data unless otherwise noted 1997 1997, week ending IItteemm 11999944 11999955 11999966 June July Aug. Sept. Aug. 29 Sept. 5 Sept. 12 Sept. 19 Sept. 26 MONEY MARKET INSTRUMENTS 1 Federal funds1,2'3 4.21 5.83 5.30 5.56 5.52 5.54 5.54 5.56 5.64 5.48 5.58 5.45 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 paper3-4-5,6 Nonfinancial 3 1-month n.a. n.a. n.a. n.a. n.a. n.a. 5.49 n.a. 5.49 5.48 5.49 5.49 4 2-month n.a. n.a. n.a. n.a. n.a. n.a. 5.48 n.a. 5.48 5.48 5.48 5.48 5 3-month n.a. n.a. n.a. n.a. n.a. n.a. 5.48 n.a. 5.49 5.48 5.48 5.47 Financial 6 1-month n.a. n.a. n.a. n.a. n.a. n.a. 5.51 n.a. 5.51 5.50 5.50 5.51 7 2-month n.a. n.a. n.a. n.a. n.a. n.a. 5.51 n.a. 5.51 5.51 5.50 5.50 8 3-month n.a. n.a. n.a. n.a. n.a. n.a. 5.51 n.a. 5.51 5.51 5.50 5.50 Commercial paper (historicalJ3-5-6'7 9 1-month 4.43 5.93 5.43 5.60 5.56 5.55 n.a. 5.55 n.a. n.a. n.a. n.a. 10 3-month 4.66 5.93 5.41 5.65 5.57 5.56 n.a. 5.55 n.a. n.a. n.a. n.a. 11 6-month 4.93 5.93 5.42 5.69 5.60 5.59 n.a. 5.58 n.a. n.a. n.a. n.a. Finance paper, directly placed (historicalJ 3-5-7'8 12 1-month 4.33 5.81 5.31 5.53 5.49 5.49 n.a. 5.49 n.a. n.a. n.a. n.a. 13 3-month 4.53 5.78 5.29 5.57 5.50 5.49 n.a. 5.49 n.a. n.a. n.a. n.a. 14 6-month 4.56 5.68 5.21 5.57 5.50 5.50 n.a. 5.51 n.a. n.a. n.a. n.a. Bankers acceptances3,5,9 15 3-month 4.56 5.81 5.31 5.59 5.53 5.53 5.54 5.53 5.53 5.58 5.53 5.52 16 6-month 4.83 5.80 5.31 5.63 5.54 5.56 5.58 5.55 5.57 5.67 5.55 5.55 Certificates of deposit, secondary market1,10 17 1-month 4.38 5.87 5.35 5.57 5.54 5.54 5.56 5.55 5.55 5.56 5.56 5.57 18 3-month 4.63 5.92 5.39 5.66 5.60 5.60 5.60 5.60 5.60 5.60 5.59 5.59 19 6-month 4.96 5.98 5.47 5.78 5.70 5.71 5.71 5.72 5.72 5.73 5.69 5.69 20 Eurodollar deposits, 3-month3,1' 4.63 5.93 5.38 5.66 5.61 5.58 5.59 5.56 5.59 5.60 5.59 5.59 U.S. Treasury bills Secondary market3,5 21 3-month 4.25 5.49 5.01 4.93 5.05 5.14 4.95 5.13 5.03 5.00 4.97 4.85 22 6-month 4.64 5.56 5.08 5.13 5.12 5.19 5.09 5.18 5.17 5.14 5.09 4.99 23 1-year 5.02 5.60 5.22 5.38 5.24 5.27 5.23 5.29 5.28 5.29 5.19 5.18 Auction average3,5,12 24 3-month 4.29 5.51 5.02 4.92 5.07 5.13 4.97 5.12 5.07 5.01 4.91 4.90 25 6-month 4.66 5.59 5.09 5.14 5.12 5.17 5.11 5.14 5.19 5.14 5.08 5.04 26 1-year 5.02 5.69 5.23 5.35 5.26 5.28 5.30 n.a. n.a. n.a. 5.30 n.a. U.S. TREASURY NOTES AND BONDS Constant maturities13 27 1-year 5.32 5.94 5.52 5.69 5.54 5.56 5.52 5.59 5.58 5.59 5.48 5.47 28 2-year 5.94 6.15 5.84 6.09 5.89 5.94 5.88 5.98 5.97 5.98 5.83 5.80 29 3-year 6.27 6.25 5.99 6.24 6.00 6.06 5.98 6.11 6.08 6.08 5.91 5.89 30 5-year 6.69 6.38 6.18 6.38 6.12 6.16 6.11 6.22 6.22 6.23 6.04 6.00 31 7-year 6.91 6.50 6.34 6.46 6.20 6.29 6.20 6.35 6.33 6.34 6.13 6.08 32 10-year 7.09 6.57 6.44 6.49 6.22 6.30 6.21 6.36 6.34 6.34 6.14 6.08 33 20-year 7.49 6.95 6.83 6.84 6.56 6.65 6.56 6.71 6.68 6.70 6.49 6.43 34 30-year 7.37 6.88 6.71 6.77 6.51 6.58 6.50 6.63 6.61 6.64 6.43 6.36 Composite 35 More than 10 years (long-term) 7.41 6.93 6.80 6.82 6.55 6.64 6.54 6.69 6.66 6.68 6.47 6.41 STATE AND LOCAL NOTES AND BONDS Moody's series]4 36 5.77 5.80 5.52 5.33 5.24 5.25 5.19 5.25 5.20 5.25 5.17 5.15 37 Baa 6.17 6.10 5.79 5.53 5.39 5.37 5.33 5.37 5.32 5.37 5.33 5.29 38 Bond Buyer series15 6.18 5.95 5.76 5.53 5.35 5.41 5.39 5.45 5.42 5.44 5.33 5.36 CORPORATE BONDS 39 Seasoned issues, all industries16 8.26 7.83 7.66 7.68 7.42 7.48 7.40 7.52 7.49 7.52 7.35 7.29 Rating group 40 7.97 7.59 7.37 7.41 7.14 7.22 7.15 7.28 7.25 7.28 7.09 7.02 41 Aa 8.15 7.72 7.55 7.62 7.36 7.40 7.34 7.46 7.44 7.46 7.29 7.23 42 A 8.28 7.83 7.69 7.68 7.42 7.46 7.39 7.52 7.49 7.52 7.34 7.28 43 BBaaaa 8.63 8.20 8.05 8.02 7.75 7.82 7.70 7.82 7.79 7.81 7.67 7.63 44 AA--rraatteedd,, rreecceennttllyy ooffffeerreedd uuttiilliittyy bboonnddss1177 8.29 7.86 7.77 7.85 7.62 7.67 7.58 7.68 7.72 7.66 7.45 7.44 MEMO Dividend-price ratio]i 45 Common stocks 2.82 2.56 2.19 1.77 1.66 1.65 1.65 1.69 1.66 1.68 1.63 1.63 1. The daily effective federal funds rate is a weighted average of rates on trades through 13. 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 14. General obligation bonds based on Thursday figures; Moody's Investors Service. current week; monthly figures include each calendar day in the month. 15. State and local government general obligation bonds maturing in twenty years are used 3. Annualized using a 360-day year for bank interest. in compiling this index. The twenty-bond index has a rating roughly equivalent to Moodys' 4. Rate for the Federal Reserve Bank of New York. A1 rating. Based on Thursday figures. 5. Quoted on a discount basis. 16. 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. 17. Compilation of the Federal Reserve. This series is an estimate of the yield on recently 7. Series ended August 29, 1997. offered, A-rated utility bonds with a thirty-year maturity and five years of call protection. 8. An average of offering rates on paper directly placed by finance companies. Weekly data are based on Friday quotations. 9. Representative closing yields for acceptances of the highest-rated money center banks. 18. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks in 10. An average of dealer offering rates on nationally traded certificates of deposit. the price index. 11. Bid rates for Eurodollar deposits at approximately 11:00 a.m. London time. Data are NOTE. Some of the data in this table also appear in the Board's H.15 (519) weekly and for indication purposes only. G.13 (415) monthly statistical releases. For ordering address, see inside front cover. 12. Auction date for daily data; weekly and monthly averages computed on an issue-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic NonfinancialS tatistics • December 1997 1.36 STOCK MARKET Selected Statistics 1997 IInnddiiccaattoorr 11999944 11999955 11999966 Jan. Feb. Mar. Apr. May June July Aug. Sept. Prices and trading volume (averages of daily figures)' Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 254.16 291.18 357.98 403.58 418.57 416.72 401.00 433.36 457.07 480.94 482.39 489.74 2 Industrial 315.32 367.40 453.57 509.18 524.30 523.08 506.69 549.65 578.57 610.42 609.54 617.94 3 Transportation 247.17 270.14 327.30 359.40 364.15 372.37 366.67 395.50 410.93 433.75 439.71 451.63 4 Utility 104.96 110.64 126.36 131.95 142.88 132.38 126.66 140.52 140.24 144.25 143.82 145.96 5 Finance 209.75 238.48 303.94 361.45 388.75 387.19 364.25 392.32 419.12 441.59 446.93 459.86 6 Standard & Poor's Corporation (1941-43 = 10)2 460.42 541.72 670.49 766.22 798.39 792.16 763.93 833.09 876.29 925.29 927.74 937.02 7 American Stock Exchange (Aug. 31, 1973 = 50)3 449.49 498.13 570.86 585.09 593.29 593.64 554.13 584.06 619.94 635.28 645.59 678.05 Volume of trading (thousands of shares) 8 New York Stock Exchange 290,652 345,729 409,740 526,631 508,199 496,241 473,094 479,907 516,241 543,006 506,205 541,204 9 American Stock Exchange 17,951 20,387 22,567 24,019 21,250 19,232 19,122 19,634 23,277 25,562 24,095 28,252 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers4 . 61,160 76,680 97,400 99,460 100,000 100,160 98,870 106,010 113,440 116,190 119,810 126,050 Free credit balances at brokers5 11 Margin accounts6 14,095 16,250 22,540 22,870 22,200 22,930 22,700 22,050 23,860 24,290 23,375 23,630 12 Cash accounts 28,870 34,340 40,430 41,280 40,090 41,050 37,560 39,400 41,840 43,985 42,960r 43,770 Margin requirements (percent of market value and effective 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, stated 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 collateralized 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, eifective 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 Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1997 11999944 11999955 11999966 Apr. May June July Aug. Sept. U.S. budget1 1 Receipts, total 1,258,627 1,351,830 1,453,062 228,588 94,493 173,361 109,178 103,483 174,770 2 On-budget 923,601 1,000,751 1,085,570 187,997 63,146 135,922 79,599 70,902 138,847 3 Off-budget 335,026 351,079 367,492 40,591 31,347 37,439 29,579 32,581 35,923 4 Outlays, total 1,461,731 1,515,729 1,560,330 134,650 142,988 118,726 134,802 138,672 125,484 5 On-budget 1,181,469 1,227,065 1,259,872 107,842 112,625 105,267 107,049 109,810 91,678 6 Off-budget 279,372 288,664 300,458 26,807 30,362 13,459 27,753 28,862 33,805 7 Surplus or deficit (-), total -203,104 -163,899 -107,268 93,939 -48,494 54,635 -25,624 -35,189 49,286 8 On-budget -258,758 -226,314 -174,302 80,155 -49,479 30,655 -27,450 -38,908 47,169 9 Off-budget 55,654 62,415 67,034 13,784 985 23,980 1,826 3,719 2,118 Source of financing (total) 10 Borrowing from the public 185,344 171,288 129,712 -39,001 -19,054 -11,147 -1,408 30,348 -18,318 11 Operating cash (decrease, or increase (—)) 16,564 -2,007 -6,276 -55,908 72,532 -34,387 23,748 15,435 -31,545 12 Other 2 1,196 -5,382 -16,168 970 -4,984 -9,101 3,284 -10,594 577 MEMO 13 Treasury operating balance (level, end of period) 35,942 37,949 44,225 89,404 16,872 51,259 27,511 12,076 43,621 14 Federal Reserve Banks 6,848 8,620 7,700 52,215 5,174 16,368 5,014 4,700 7,692 15 Tax and loan accounts 29,094 29,329 36,525 37,189 11,698 34,891 22,496 7,376 35,930 1. Since 1990, off-budget items have been the social security trust funds (federal old-age net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF loansurvivors insurance and federal disability insurance) and the U.S. Postal Service. valuation adjustment; and profit on sale of gold. 2. Includes special drawing rights (SDRs); reserve position on the U.S. quota in the SOURCE. Monthly totals: U.S. Department of the Treasury, Monthly Treasury Statement of International Monetary Fund (IMF); loans to the IMF; other cash and monetary assets; Receipts and Outlays of the U.S. Government; fiscal year totals: U.S. Office of Management accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous and Budget, Budget of the U.S. Government. liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • December 1997 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year SSSooouuurrrccceee ooorrr tttyyypppeee 1995 1996 1997 1997 11999955 11999966 H2 HI H2r HI July Aug. Sept. RECEIPTS 1 All sources 1,351,830 1,453,062 656,865 767,099 707,551 845,552 109,178 103,483 174,770 2 Individual income taxes, net 590,244 656,417 292,393 347,285 323,884 400,435 53,868 45,669 78,199 3 Withheld 499,927 533,080 256,916 264,177 279,988 292,252 51,812 43,156 44,442 4 Nonwithheld 175.855 212,168 45,521 162,782 53,491 191,050 4,003 4.244 36.230 5 Refunds 85,538 88,897 10,058 79,735 9,604 82,926 1,950 11,,773322 2,474 Corporation income taxes 6 Gross receipts 174,422 189,055 88,302 96,480 95,364 106,451 5,442 3,854 39,133 7 Refunds 17,418 17,231 7,518 9,704 10,053 9,635 1,739 1,575 1,795 8 Social insurance taxes and contributions, net . . . 484,473 509,414 224,269 277,767 240,326 288,251 40,572 46,201 47,601 9 Employment taxes and contributions2 451,045 476,361 211,323 257,446 227,777 268,357 38,066 41,861 47,013 10 Unemployment insurance 28,878 28,584 10,702 18,068 10,302 17,709 2,081 4,002 247 11 Other net receipts3 4,550 4,469 2,247 2.254 2,245 2,184 425 338 342 12 Excise taxes 57,484 54,014 30,014 25,682 27,016 28,084 5,369 4,593 5,719 13 Customs deposits 19,301 18,670 9,849 8,731 9,294 8,619 1,799 1,749 1.590 14 Estate and gift taxes 14,763 17,189 7,718 8,775 8,835 10,477 1,552 1.655 1,849 15 Miscellaneous receipts4 28,561 25,534 11,839 12,087 12,888 12,866 2,315 1,338 2,474 OUTLAYS 16 All types 1,515,729 1,560,330 752,856 785,368 800,184 797,443 134,802 138,672r 125,484 17 National defense 272,066 265,748 132,887 132,599 138,702 131,525 22,944 24,259 21,076 18 International affairs 16,434 13,496 6,908 8,076 8,596 5,779 1,541 494 1,312 19 General science, space, and technology 16,724 16,709 7,970 8,897 8,260 8,939 1,763 1,643 1,543 20 Energy 4,936 2,836 1,992 1,356 704 801 238 48 598 21 Natural resources and environment 22,078 21,614 11,392 10,254 10,309 9,688 1,909 1,555 2,071 22 Agriculture 9,778 9,159 3,065 73 10,977 1,433 -35 121 3,152 23 Commerce and housing credit -17,808 -10,646 -3,947 -6,885 -5,899 -7,575 -415 -1,917 1,601 24 Transportation 39,350 39,565 20,725 18,290 22,211 18.046 3,667 3.730 3,818 25 Community and regional development 10,641 10,685 5,569 5,245 5,497 5,699 958 865 1,115 26 Education, training, employment, and social services 54,263 52,001 26,212 25,979 27,548 25,227 3,542 4,055 5,804 27 Health 115,418 119,378 57,128 59,989 61,596 61,808 9,821 10,024 10,771 28 Social security and Medicare 495,701 523,901 251,388 264,647 269,411 278,817 47,860 48,683 43,731 29 Income security 220,493 225,989 104,847 121.186 107,602 123,874 17,921 19,702 13.718 30 Veterans benefits and services 37,890 36,985 18,678 18,140 21,109 17,697 3,409 4,806 1,833 31 Administration of justice 16,216 17,548 8,091 9,015 9,584 10,643 1,863 1,484 1,470 32 General government 13,835 11,892 7,601 4,641 6,547 6,574 366 747 1,440 33 Net interest5 232,169 241,090 119,348 120.576 122,571 122,701 21,046 21,636' 17,061 34 Undistributed offsetting receipts6 -44,455 -37,620 -26,995 -16,716 -25,142 -24,234 -3,594 -3.262 -6.630 1. Functional details do not sum to total outlays for calendar year data because revisions to 4. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts. monthly totals have not been distributed among functions. Fiscal year total for receipts and 5. Includes interest received by trust funds. outlays do not correspond to calendar year data because revisions from the Budget have not 6. Rents and royalties for the outer continental shelf, U.S. government contributions for been fully distributed across months. employee retirement, and certain asset sales. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. SOURCE. Fiscal year totals: U.S. Office of Management and Budget. Budget of the U.S. 3. Federal employee retirement contributions and civil service retirement and Government, Fiscal Year 1998-, monthly and half-year totals: U.S. Department of the Treadisability fund. sury. Monthly Treasury Statement of Receipts and Outlays of the U.S. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A25 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1995 1996 1997 IItteemm Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 1 Federal debt outstanding 5,001 5,017 5,153 5,197 5,260 5,357 5,415 5,410 n.a. 2 Public debt securities 4,974 4,989 5,118 5,161 5,225 5,323 5,381 5,376 5,4I13 3 Held by public 3,653 3,684 3,764 3,739 3,778 3,826 3,874 3,805 4 4 Held by agencies 1,321 1,305 1,354 1,422 1,447 1,497 1,507 1,572 5 Agency securities 27 28 36 36 35 34 34 34 n.a. 6 Held by public 27 28 28 28 27 27 26 26 I V Held by agencies 0 0 8 8 8 8 8 7 I 8 Debt subject to statutory limit 4,885 4,900 5,030 5,073 5,137 5,237 5,294 5,290 5,328 9 Public debt securities 4,885 4,900 5,030 5,073 5,137 5,237 5,294 5,290 5,328 10 Other debt1 0 0 0 0 0 0 0 0 0 MEMO U Statutory debt limit 4,900 4,900 5,500 5,500 5,500 5,500 5,500 5,500 5,950 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 1996 1997 TTyyppee aanndd hhoollddeerr 11999933 11999944 11999955 11999966 Q4 Ql Q2 Q3 1 Total gross public debt 4,535.7 4,800.2 4,988.7 5,323.2 5,323.2 5,380.9 5,376.2 5,413.2 By type 2 Interest-bearing 4,532.3 4,769.2 4,964.4 5,317.2 5,317.2 5,375.1 5,370.5 5,407.5 3 Marketable 2,989.5 3,126.0 3,307.2 3,459.7 3,459.7 3,504.4 3,433.1 3,439.6 4 Bills 714.6 733.8 760.7 777.4 777.4 785.6 704.1 701.9 5 Notes 1,764.0 1,867.0 2,010.3 2,112.3 2,112.3 2,131.0 2,132.6 2,122.2 6 Bonds 495.9 510.3 521.2 555.0 555.0 565.4 565.4 576.2 7 Inflation-indexed notes' n.a. n.a. n.a. n.a. n.a. 7.4 15.9 24.4 8 Nonmarketable2 1,542.9 1,643.1 1,657.2 1,857.5 1,857.5 1,870.8 1,937.4 1,967.9 9 State and local government series 149.5 132.6 104.5 101.3 101.3 104.8 107.9 111.9 10 Foreign issues3 43.5 42.5 40.8 37.4 37.4 36.8 35.4 34.9 11 Government 43.5 42.5 40.8 47.4 47.4 36.8 35.4 34.9 12 Public .0 .0 .0 .0 .0 .0 .0 .0 13 Savings bonds and notes 169.4 177.8 181.9 182.4 182.4 182.6 182.7 182.7 14 Government account series4 1,150.0 1,259.8 1,299.6 1,505.9 1,505.9 1,516.6 1,581.5 1,6() 8.5 15 Non-interest-bearing 3.4 31.0 24.3 6.0 6.0 5.8 5.7 5.6 By holder 5 16 U.S. Treasury and other federal agencies and trust funds 1,153.5 1,257.1 1,304.5 1,497.2 1,497.2 1,506.8 1,571.6 17 Federal Reserve Banks • 334.2 374.1 391.0 410.9 410.9 405.6 426.4 18 Private investors 3,047.4 3,168.0 3,294.9 3,411.2 3,411.2 3,451.7 3,361.7 19 Commercial banks 322.2 290.4 278.7 261.7r 261.7' 282.3 290.0 20 Money market funds 80.8 67.6 71.5r 91.6r 91.6' 84.0 76.3 21 Insurance companies 234.5 240.1 241.5 235.9' 235.9' 238.2 239.0 22 Other companies 213.0 224.5r 228.8 258.5 258.5 262.5 261.0 n.a. 23 State and local treasuries6,7 609.2r 540.2r 421.5r 358.0r 358.0' 360.7 358.0 Individuals 24 Savings bonds 171.9 180.5 185.0 187.0 187.0 186.5 186.3 25 Other securities 137.9 150.7 162.7 169.6 169.6 168.9 169.1 26 Foreign and international8 623.0 688.6 862.2 1,131.8' 1,131.8' 1,204.1 1,240.2 27 Other miscellaneous investors7'9 655.0r 785.5r 843.0r 717.1' 717.1' 664.5 541.8 1. The U.S. Treasury first issued inflation-indexed notes during the first quarter of 1997. 8. Consists of investments of foreign balances and international accounts in the United 2. Includes (not shown separately) securities issued to the Rural Electrification Administra- States. tion, depository bonds, retirement plan bonds, and individual retirement bonds. 9. Includes savings and loan associations, nonprofit institutions, credit unions, mutual 3. Nonmarketable series denominated in dollars, and series denominated in foreign cur- savings banks, corporate pension trust funds, dealers and brokers, certain U.S. Treasury rency held by foreigners. deposit accounts, and federally sponsored agencies. 4. Held almost entirely by U.S. Treasury and other federal agencies and trust funds. SOURCE. U.S. Treasury Department, data by type of security, Monthly Statement of the 5. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual Public Debt of the United States; data by holder, Treasury Bulletin. holdings; data for other groups are Treasury estimates. 6. Includes state and local pension funds. 7. 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 NonfinancialS tatistics • December 1997 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions' Millions of dollars, daily averages 1997 1997, week ending IItteemm June July Aug. July 30 Aug. 6 Aug. 13 Aug. 20 Aug. 27 Sept. 3 Sept. 10 Sept. 17 Sept. 24 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 40,559 34,285 38,732 33,065 37.984 36,968 42,911 35,643 41,910 41,856 48,625 34,415 Coupon securities, by maturity 2 Five years or less 112,860 102,092 117,232 95,979 128,597 126,523 104,348 113,125 113,755 101,097 118,731 108,945 3 More than five years 56,041 61,251 67,685 70,380 89,426 83,774 58,763 49,205 52,488 54,177 64,616 56,952 4 Federal agency 39,498 39,871 42,563 43,617 40,633 36,008 51,925 40,040 45,712 35,021 41,857 38,997 5 Mortgage-backed 48,439 50,317 47,848 45,711 57,973 63,852 41,189 34,619 37,308 65,574 47,327 37,121 By type of counterparty With interdealer broker 6 U.S. Treasury 118,504 110,830 127,179 113,020 142.913 141,650 117,316 115,088 114,415 112,560 132,755 118,644 7 Federal agency 1,378 1,460 1,299 1,710 1,006 909 1,234 1,859 1,627 1,712 1,851 909 8 Mortgage-backed 15,552 15,503 15,481 15,535 20.322 18,527 13,321 11,840 12,688 18,202 17,024 13,644 With other 9 U.S. Treasury 90,956 86,798 96,471 86,404 113,095 105,615 88,705 82,886 93,737 84,571 99,216 81,668 10 Federal agency 38,120 38,411 41,264 41,907 39,628 35,098 50,692 38,181 44,085 33,309 40,006 38,089 11 Mortgage-backed 32,887 34,815 32,367 30,176 37,651 45,325 27,868 22,778 24,620 47,372 30,303 23,476 FUTURES TRANSACTIONS3 By type of deliverable security 12 U.S. Treasury bills 352 188 202 135 125 197 254 166 327 578 165 114 Coupon securities, by maturity 13 Five years or less 2,430 1,399 2,220 1,425 1,700 2,322 1,550 2,812 3,200 2,077 3,514 1,789 14 More than five years 15,048 14,693 18,859 15,123 19,607 22,420 15,800 17,445 19,641 13,610 20,346 15,485 15 Federal agency 0 0 0 0 0 0 0 0 0 0 0 0 16 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 0 OPTIONS TRANSACTIONS4 By type of underlying security 17 U.S. Treasury bills 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 18 Five years or less 3,103 2,231 2,150 1,725 2,352 2,482 1,514 2,436 1,791 2,598 1,999 922 19 More than five years 4,018 6,038 6,122 5,726 6,224 6,146 4,922 7,981 4,209 3,940 6,103 5,963 20 Federal agency 0 0 0 0 0 0 0 0 0 0 n.a. n.a. 21 Mortgage-backed 408 576 548 711 715 473 634 555 171 390 935 1,128 1. Transactions are market purchases and sales of securities as reported to the Federal Forward transactions are agreements made in the over-the-counter market that specify Reserve Bank of New York by the U.S. government securities dealers on its published list of delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt primary dealers. Monthly averages are based on the number of trading days in the month. securities are included when the time to delivery is more than five business days. Forward Transactions are assumed to be evenly distributed among the trading days of the report week. contracts for mortgage-backed agency securities are included when the time to delivery is Immediate, forward, and futures transactions are reported at principal value, which does not more than thirty business days. include accrued interest; options transactions are reported at the face value of the underlying 3. Futures transactions are standardized agreements arranged on an exchange. All futures securities. transactions are included regardless of time to delivery. Dealers report cumulative transactions for each week ending Wednesday. 4. Options transactions are purchases or sales of put and call options, whether arranged on 2. Outright transactions include immediate and forward transactions. Immediate delivery an organized exchange or in the over-the-counter market, and include options on futures refers to purchases or sales of securities (other than mortgage-backed federal agency securi- contracts on U.S. Treasury and federal agency securities. ties) for which delivery is scheduled in five business days or less and "when-issued" NOTE, "n.a." indicates that data are not published because of insufficient activity. securities that settle on the issue date of offering. Transactions for immediate delivery of mortgage- Major changes in the report form filed by primary dealers induced a break: in the dealer data backed agency securities include purchases and sales for which delivery is scheduled in thirty business series as of the week ending July 6, 1994. days or less. Stripped securities are reported at market value by maturity of coupon or corpus. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A25 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1997 1997, week ending IItteemm June July Aug. July 30 Aug. 6 Aug. 13 Aug. 20 Aug. 27 Sept. 3 Sept. 10 Sept. 17 Positions2 NET OUTRIGHT POSITIONS3 By type of security 1 U.S. Treasury bills -1,305 -2,696 4,548 -1,960 10,935 5,179 2,701 -2,291 9,063 2,601 5,882 Coupon securities, by maturity 2 Five years or less -20,661 -15,429 -27,559 -10,780 -16,112 -28,997 -35,270 -26,777 -30,087 -35,368 -38,435 3 More than five years -20,191 -21,652 -16,447 -20,958 -13,167 -14,483 -18,062 -20,047 -15,681 -18,089 -17,565 4 Federal agency 31,556 36,617 31,886 38,716 34,147 32,110 33,278 29,487 29,868 29,156 31,229 5 Mortgage-backed 35,836 33,661 32,497 32,553 29,220 35,890 36,928 29,324 29,275 35,783 38,762 NET FUTURES POSITIONS4 By type of deliverable security 6 U.S. Treasury bills 633 303 -841 -1,461 -1,236 -669 -544 -1,158 -511 -717 n.a. Coupon securities, by maturity 7 Five years or less 2,705 3,187 7,431 2,751 4,797 7,946 7,678 8,377 8,390 9,447 5,173 8 More than five years -13,430 -17,588 -16,452 -19,708 -20,172 -17,848 -15,650 -14,034 -14,064 -15,048 -19,183 9 Federal agency 0 0 0 0 0 0 0 0 0 0 0 10 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 NET OPTIONS POSITIONS By type of deliverable security 11 U.S. Treasury bills 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 12 Five years or less 2,660 2,361 -433 2,572 1,344 -904 -137 -1,805 -392 797 3,018 13 More than five years 2,466 4,960 5,444 7,709 6,198 6,003 6,814 3,806 3,805 3,606 5,335 14 Federal agency 0 0 0 0 0 0 0 0 0 0 n.a. 15 Mortgage-backed 240 470 1,000 955 1,325 636 1,565 613 835 63 -64 Financing5 Reverse repurchase agreements 16 Overnight and continuing 290,312 296,334 298,973 296,772 311,349 283,101 318,142 280,410 307,125 299,000 296,749 17 Term 592,367 601,067 622,314 630,423 639,511 677,434 606,312 606,633 555,503 600,818 618,882 Securities borrowed 18 Overnight and continuing 213,510 213,183 210,814 207,173 217,146 209,796 213,882 205,254 207,461 206,281 203,010 19 Term 87,422 91,863 93,092 89,853 96,254 95,296 94,625 93,753 80,651 89,112 94,908 Securities received as pledge 20 Overnight and continuing 8,826 8,712 7,865 7,940 7,730 8,374 8,217 7,629 6,976 7,082 7,227 21 Term 163 121 102 104 107 99 89 118 95 77 79 Repurchase agreements 22 Overnight and continuing 626,329 642,431 651,055 645,874 672,600 646,334 672,755 614,906 652,288 634,565 644,996 23 Term 538,571 550,542 569,029 581,231 589,607 635,022 554,278 553,300 476,014 526,804 542,843 Securities loaned 24 Overnight and continuing 6,774 7,843 8,020 7,692 7,954 7,752 8,580 7,930 7,768 7,116 6,771 25 Term 4,574 4,688 5,014 4,980 5,750 6,150 4,979 3,975 3,800 3,114 3,186 Securities pledged 26 Overnight and continuing 61,239 54,921 53,321 52,033 53,696 52,199 53,276 53,890 53,803 53,704 54,135 27 Term 1,736 1,904 2,332 1,646 1,943 2,554 2,242 2,530 2,340 5,039 6,682 Collateralized loans 28 Overnight and continuing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 29 Term n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 30 Total 13,374 14,547 16,343 17,811 17,590 16,535 17,595 15,176 13,984 15,994 13,175 MEMO: Matched book6 Securities in 31 Overnight and continuing 290,345 291,783 281,860 282,362 304,460 276,360 293,653 257,684 279,257 276,218 273,443 32 Term 575,636 587,039 602,540 613,564 620,921 656,596 590,223 587,298 528,602 582,161 598,536 Securities out 33 Overnight and continuing 380,179 381,031 383,828 379,418 407,652 377,356 396,674 359,593 379,346 380,443 377,293 34 Term 461,838 474,771 483,264 507,676 507,726 549,360 461,382 465,147 400,905 447,452 464,253 1. Data for positions and financing are obtained from reports submitted to the Federal 4. Futures positions reflect standardized agreements arranged on an exchange. All futures Reserve Bank of New York by the U.S. government securities dealers on its published list of positions are included regardless of time to delivery. primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar 5. Overnight financing refers to agreements made on one business day that mature on the days of the report week are assumed to be constant. Monthly averages are based on the next business day; continuing contracts are agreements that remain in effect for more than one number of calendar days in the month. business day but have no specific maturity and can be terminated without advance notice by 2. Securities positions are reported at market value. either party; term agreements have a fixed maturity of more than one business day. Financing 3. Net outright positions include immediate and forward positions. Net immediate posi- data are reported in terms of actual funds paid or received, including accrued interest. tions include securities purchased or sold (other than mortgage-backed agency securities) that 6. Matched-book data reflect financial intermediation activity in which the borrowing and have been delivered or are scheduled to be delivered in five business days or less and lending transactions are matched. Matched-book data are included in the financing break- "when-issued" securities that settle on the issue date of offering. Net immediate positions for downs given above. The reverse repurchase and repurchase numbers are not always equal mortgage-backed agency securities include securities purchased or sold that have been because of the "matching" of securities of different values or different types of collateralizadelivered or are scheduled to be delivered in thirty business days or less. tion. Forward positions reflect agreements made in the over-the-counter market that specify NOTE, "n.a." indicates that data are not published because of insufficient activity. delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt Major changes in the report form filed by primary dealers induced a break in the dealer data securities are included when the time to delivery is more than five business days. Forward series as of the week ending July 6, 1994. contracts for mortgage-backed agency securities are included when the time to delivery is more than thirty business days. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic NonfinancialS tatistics • December 1997 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1997 AAggeennccyy 11999933 11999944 11999955 11999966 Mar. Apr. May June July 1 Federal and federally sponsored agencies 570,711 738,928 844,611 925,823 929,809 960,491 974,331 972,731 977,877 2 Federal agencies 45,193 39.186 37,347 29,380 28,989 27,762 28,011 27,646 27.738 3 Defense Department' 6 6 6 6 6 6 6 6 6 4 Export-Import Bank"3 5,315 3,455 2.050 1,447 1,363 1,357 1,357 1,357 1,326 5 Federal Housing Administration4 255 116 97 84 26 31 32 37 43 6 Government National Mortgage Association certificates of participation5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. / 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 27,594 27,756 28.005 27.640 27,732 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 523,452 699,742 807,264 896,443 900,820 932,729 946.320 945,085 950.139 11 Federal Home Loan Banks 139.512 205.817 243.194 263,404 266,456 277,880 284,861 290,028 291,931 12 Federal Home Loan Mortgage Corporation 49.993 93.279 119,961 156,980 153,621 162,872 167,407 161,900 161,476 13 Federal National Mortgage Association 201,112 257,230 299.174 331.270 336.174 341,789 344.350 345,462 348,599 14 Farm Credit Banks8 53,123 53,175 57,379 60.053 60.884 60.945 61,384 62,075 61,874 15 Student Loan Marketing Association9 39,784 50,335 47.529 44,763 43,105 48,515 47,620 44,841 45,536 16 Financing Corporation10 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation" 1,261 1.261 1,261 1.261 1,261 1,261 1,261 1.261 1,261 18 Resolution Funding Corporation12 29,996 29,996 29.996 29,996 29,996 29.9961" 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt13 128,187 103,817 78,681 58,172 53,688 n.a. 51,866 50,962 50,119 landing to federal and federally sponsored agencies 20 Export-Import Bank3 5,309 3,449 2.044 1,431 1,357 1,357 1,357 1,357 1,326 21 Postal Service6 9,732 8.073 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 Association6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Other lending14 25 Farmers Home Administration 38.619 33,719 21.015 18,325 16,675 16,675 16,505 15,455 18,700 26 Rural Electrification Administration 17.578 17.392 17,144 16,702 15,696 15,696 15,674 15,679 15,564 27 Other 45.864 37.984 29,513 21,714 21,317 23,919 18,330 18,471 14,529 1. Consists of mortgages assumed by the Defense Department between 1957 and 1963 10. The Financing Corporation, established in August 1987 to recapitalize the Federal under family housing and homeowners assistance programs. Savings and Loan Insurance Corporation, undertook its first borrowing in October 1987. 2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. 11. The Farm Credit Financial Assistance Corporation, established in January 1988 to 3. On-budget since Sept. 30, 1976. provide assistance to the Farm Credit System, undertook its first borrowing in July 1988. 4. Consists of debentures issued in payment of Federal Housing Administration insurance 12. The Resolution Funding Corporation, established by the Financial Institutions Reform, claims. Once issued, these securities may be sold privately on the securities market. Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 1989. 5. Certificates of participation issued before fiscal year 1969 by the Government National 13. The FFB. which began operations in 1974, is authorized to purchase or sell obligations Mortgage Association acting as trustee for the Farmers Home Administration, the Department issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt solely for the of Health, Education, and Welfare, the Department of Housing and Urban Development, the purpose of lending to other agencies, its debt is not included in the main portion of the table to Small Business Administration, and the Veterans Administration. avoid double counting. 6. Off-budget. 14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loans 7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Includes guaranteed by numerous agencies, with the amounts guaranteed by any one agency generally Federal Agricultural Mortgage Corporation: therefore details do not sum to total. Some data being small. The Farmers Home Administration entry consists exclusively of agency assets, are estimated. whereas the Rural Electrification Administration entry consists of both agency assets and 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is guaranteed loans. shown on line 17. 9. Before late 1982, the association obtained financing through the Federal Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A31 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1997 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11999944 11999955 11999966 oorr uussee Feb. Mar. Apr. May June July1 Aug. Sept. 1 All issues, new and refunding1 153,950 145,657 171,222 12,052 13,701 15,741 15,447 19,376 16,740 16,635 19,797 By type of issue 2 General obligation 54,404 56,980 60,409 4,287 5,491 6,224 5,741 6,145 7,679 5,083 3,526 3 Revenue 99,546 88,677 110,813 7,765 8,210 9,517 9,706 13,231 9,061 11,552 16,271 By type of issuer 4 State 19,186 14,665 13,651 713 4,037 1,126 1,219 1,197 1,984 1,352 1,278 5 Special district or statutory authority2 95,896 93,500 113,228 8,341 7,206 11,124 9,666 13,810 10,7 i 5 10,480 14,890 6 Municipality, county, or township 38,868 37,492 44,343 2,998 2,458 3,491 4,562 4,369 4,041 4,803 3,629 7 Issues for new capital 105,972 102,390 112,298 8,409 8,736 ll,835r 10,507 14,536 9,279 9,038 11,003 By use of proceeds 8 Education 21,267 23,964 26,851 1,924 2,330 3,264 2,844 3,498 2,701 2,741 1,976 9 Transportation 10,836 11,890 12,324 639 393 1,873 1,225 638 666 1,276 2,651 10 Utilities and conservation 10,192 9,618 9,791 901 954 425 1,608 1,615 1,182 583 1,168 11 Social welfare 20,289 19,566 24,583 1,281 2,644 1,929 1,291 4,438 1,789 1,654 3,062 12 Industrial aid 8,161 6,581 6,287 481 317 765 462 637 334 793 423 13 Other purposes 35,227 30,771 32,462 3,183 2,098 3,220 3,077 3,710 2,607 2,024 1,723 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 1997 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, 11999944 11999955 11999966 oorr iissssuueerr Jan. Feb. Mar. Apr. May Juner Julyr Aug. 1 All issues' 583,240 n.a. n.a. 57,186 53,027 62,411 43,956 54,750 83,932 67,807 50,499 2 Bonds2 498,039 573,206 n.a. 44,027 44,980 54,632 37,672 46,738 72,962 58,419 44,935 By type of offering 3 Public, domestic 365,222 408,804 386,280 35,449 35,245 45,886 29,797 38,594 60,804 45,829 40,045 4 Private placement, domestic3 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 8,577 9,735 8,746 7,875 8,144 12,158 12,590 4,890 By industry group 6 Manufacturing 43,423 61,070 41,959 4,088 4,791 3,060 2,276 2,355 3,748 7,780 5,175 7 Commercial and miscellaneous 40,735 50,689 34,076 4,926 2,004 1,641 6,201 2,104 2,597 4,429 3,354 8 Transportation 6,867 8,430 5,111 366 100 324 257 6,566 424 544 406 9 Public utility 13,322 13,751 8,161 858 1,476 1,185 47 653 1,377 3,674 1,407 10 Communication 13,340 22,999 13,320 1,210 405 2,802 500 300 576 1,304 278 11 Real estate and financial 380,352 416,269 358,446 32,578 36,204 45,619 28,391 34,761 64,241 40,689 34,316 12 Stocks 85,155 100,573 n.a. 13,159 8,047 7,779 6,284 8,012 11,252 9,388 5,564 By type of offering 13 Public preferred 12,570 10,917 33,208 8,048 1,510 2,740 1,952 2,055 3,846 678 645 14 Common 47,828 57,556 83,052 5,111 6,537 5,039 4,332 5,957 7,406 8,710 4,919 15 Private placement' 24,800 32,100 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 16 Manufacturing 17,798 21,545 608 2,008 1,136 847 1,594 1,627 1,056 836 17 Commercial and miscellaneous 15,713 27,844 n.a. 1,827 3,041 1.923 1,181 1,912 2,938 2,804 1,673 18 Transportation 2,203 804 250 258 0 0 35 272 563 139 19 Public utility 2,214 1,936 1,847 96 841 570 200 1,046 483 48 20 Communication 494 1,077 0 28 0 25 0 374 120 52 21 Real estate and financial 46,733 47,367 8,292 2,575 3,879 3,661 4,219 5,384 3,875 2,438 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 NonfinancialS tatistics • December 1997 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets' Millions of dollars 1997 IItteemm 11999955 11999966 Feb. Mar. Apr. May June July Aug.r Sept. 1 Sales of own shares2 871,415 1,149,918 102,169 101,390 110,721 103,470 112,318 125,710 114,358 115,900 2 Redemptions of own shares 699,497 853,460 73,871 79,976 100,188 76,337 86,759 90,095 84,366 86,469 3 Net sales3 171,918 296,458 28,298 21,413 10,532 27,133 25,559 35,615 29,992 29,431 4 Assets4 2,067,337 2,637,398 2,772,715 2,700,474 2,782,077 2,952,609 3,067,565 3,279,535 3,199,534 3,386,754 5 Cash5 142,572 139,396 153,525 160,570 177,979 182,004 180,552 182,122 180,152 184,630 6 Other 1,924,765 2,498,002 2,619,189 2,539,906 2,604,098 2,770,606 2,887,013 3,097,413 3,019,382 3,202,124 1. Data on sales and redemptions exclude money market mutual funds but include 4. Market value at end of period, less current liabilities. limited-maturity municipal bond funds. Data on asset positions exclude both money market 5. Includes all U.S. Treasury securities and other short-term debt securities. mutual funds and limited-maturity municipal bond funds. SOURCE. Investment Company Institute. Data based on reports of membership, which 2. Includes reinvestment of net income dividends. Excludes reinvestment of capital gains comprises substantially all open-end investment companies registered with the Securities and distributions and share issue of conversions from one fund to another in the same group. Exchange Commission. Data reflect underwritings of newly formed companies after their 3. Excludes sales and redemptions resulting from transfers of shares into or out of money initial offering of securities. market mutual funds within the same fund family. 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data at seasonally adjusted annual rates 1995 1996 1997 AAccccoouunntt 11999944 11999955 11999966 Q4 Q1 Q2 Q3 Q4 QL Q2 Q3 1 Profits with inventory valuation and capital consumption adjustment 570.5 650.0 735.9 685.7 717.7 738.5 739.6 747.8 779.6 795.1 n.a. 2 Profits before taxes 535.1 622.6 676.6 634.1 664.9 682.2 679.1 680.0 708.4 719.8 n.a. 3 Profits-tax liability 186.6 213.2 229.0 215.3 226.2 232.2 231.6 226.0 241.2 244.5 n.a. 4 Profits after taxes 348.5 409.4 447.6 418.8 438.7 450.0 447.5 454.0 467.2 475.3 n.a. 5 Dividends 216.2 264.4 304.8 274.4 300.7 303.7 305.7 309.1 326.8 333.0 339.1 6 Undistributed profits 132.3 145.0 142.8 144.5 138.0 146.4 141.8 144.9 140.3 142.3 n.a. 7 Inventory valuation -16.1 -24.3 -2.5 .4 -5.1 -5.4 -2.7 3.3 3.5 5.9 7.8 8 Capital consumption adjustment 51.4 51.6 61.8 51.1 57.9 61.6 63.2 64.4 67.7 69.4 70.4 SOURCE. U.S. Department of Commerce, Survey of Current Business. 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities' Billions of dollars, end of period; not seasonally adjusted 1996 1997 AAccccoouunntt 11999944 11999955 11999966 QL Q2 Q3 Q4 QL Q2 Q3 ASSETS 1 Accounts receivable, gross2 543.7 607.0 637.1 613.7 626.7 628.1 637.1 647.2 650.7 656.8 2 Consumer 201.9 233.0 244.9 235.9 240.6 244.4 244.9 248.6 254.3 255.0 3 Business 274.9 301.6 309.5 303.5 305.7 301.4 309.5 315.2 311.7 313.1 4 Real estate 66.9 72.4 82.7 74.3 80.4 82.2 82.7 83.4 84.8 88.7 5 LESS: Reserves for unearned income 52.9 60.7 55.6 58.9 57.2 54.8 55.6 51.3 57.0 58.0 6 Reserves for losses 11.3 12.8 13.1 12.8 12.7 12.9 13.1 12.8 13.3 13.7 7 Accounts receivable, net 479.5 533.5 568.3 542.0 556.7 560.5 568.3 583.1 580.4 585.1 8 All other 216.8 250.9 290.0 255.0 258.7 268.7 290.0 289.9 308.1 310.5 9 Total assets 696.3 784.4 858.3 796.9 815.4 829.2 858.3 873.0 888.6 895.6 LIABILITIES AND CAPITAL 10 Bank loans 14.8 15.3 19.7 15.4 17.7 18.3 19.7 18.4 18.9 19.3 11 Commercial paper 171.6 168.6 177.6 168.2 169.6 173.1 177.6 185.3 193.8 190.2 Debt 12 Owed to parent 41.8 51.1 60.3 50.5 56.3 57.9 60.3 61.0 61.4 61.7 13 Not elsewhere classified 247.4 300.0 332.5 307.5 319.0 322.3 332.5 324.4 344.6 348.5 14 All other liabilities 146.2 163.6 174.7 165.6 163.2 164.8 174.7 189.1 170.9 177.2 15 Capital, surplus, and undivided profits 74.6 85.9 93.5 89.7 89.7 92.8 93.5 94.8 98.8 98.7 16 Total liabilities and capital 696.3 784.4 858.3 796.9 815.4 829.2 858.3 873.0 888.6 895.6 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Market and Corporate Finance A33 1.52 DOMESTIC FINANCE COMPANIES Owned and Managed Receivables' Billions of dollars, amounts outstanding 1997 TTyyppee ooff ccrreeddiitt Mar. Apr. May June July Aug. Seasonally adjusted 1 Total 607.3 682.4 762.4 773.8 775.6 775.9 782.9 786.0r 791.3 2 Consumer 244.4 281.9 306.6 312.5 318.2 318.5 320.8 323.lr 323.3 3 Real estate 66.9 72.4 111.9 115.5 116.9 118.0 120.1 121.8 123.5 4 Business 295.9 328.1 343.8 345.8 340.5 339.3 342.0 341.lr 344.4 Not seasonally adjusted 5 Total 613.5 689.5 769.7 775.0 776.6 777.8 786.9 780.3r 785.9 6 Consumer 248.0 285.8 310.6 311.0 315.6 317.5 320.9 322. lr 323.1 7 Motor vehicles loans 70.2 81.1 86.7 85.8 83.2 85.1 87.0 88.3r 88.4 8 Motor vehicle leases 67.5 80.8 92.5 95.6 96.7 97.3 98.5 99.4r 98.8 9 Revolving2 25.9 28.5 32.5 33.2 34.3 34.4 34.0 33.1 33.6 10 Other3 38.4 42.6 33.2 34.0 34.3 34.7 34.8 34.7 35.4 Securitized assets4 11 Motor vehicle loans 32.8 34.8 36.8 34.5 38.3 36.8 37.8 38.0 38.2 12 Motor vehicle leases 2.2 3.5 8.7 8.4 9.4 9.3 9.2 9.0 8.9 13 Revolving n.a. n.a. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14 Other 11.2 14.7 20.1 19.6 19.3 19.9 19.7 19.5 19.7 15 Real estate 66.9 72.4 111.9 115.5 116.9 118.0 120.1 121.8 123.5 16 One- to four-family n.a. n.a. 52.1 53.3 55.0 54.9 54.5 56.8 58.9 17 Other n.a. n.a. 30.5 30.1 30.3 30.3 30.3 30.3 30.4 Securitized real estate assets4 18 One- to four-family n.a. n.a. 28.9 31.8 31.3 32.5 35.0 34.4 33.9 19 Other n.a. n.a. 0.4 0.4 0.3 0.3 0.3 0.3 0.3 20 Business 298.6 331.2 347.2 348.5 344.1 342.2 345.9 336.4r 339.3 21 Motor vehicles 62.0 66.5 67.1 73.8 71.7 70.4 70.7 63.6 65.2 22 Retail loans 18.5 21.8 25.1 25.1 24.6 24.4 25.2 24.4 25.3 23 Wholesale loans5 35.2 36.6 33.0 39.6 37.9 36.6 36.3 29.8r 30.5 24 Leases 8.3 8.0 9.0 9.1 9.2 9.3 9.3 9.3 9.4 25 Equipment 8.3 8.0 9.0 192.1 189.9 188.0 188.8 188.3 189.0 26 Loans 8.3 8.0 9.0 55.0 53.8 52.3 52.6 51.7 51.3 27 Leases 8.3 8.0 9.0 137.1 136.1 135.6 136.2 136.6 137.6 28 Other business receivables6 8.3 8.0 9.0 49.3 49.6 50.3 52.2 51.6 52.5 Securitized assets4 29 Motor vehicles 8.3 8.0 9.0 20.5 20.3 21.1 21.3 19.9 19.8 30 Retail loans 8.3 8.0 9.0 2.2 2.1 2.6 2.5 2.4 2.3 31 Wholesale loans 8.3 8.0 9.0 18.2 18.2 18.5 18.7 17.4 17.5 32 Leases 8.3 8.0 9.0 0.0 0.0 0.0 0.0 0.0 0.0 33 Equipment 8.3 8.0 9.0 10.3 9.9 9.9 10.4 10.6r 10.3 34 Loans 8.3 8.0 9.0 4.0 3.8 4.0 3.9 4.2 4.1 35 Leases 8.3 8.0 9.0 6.3 6.2 5.9 6.5 6.4r 6.2 36 Other business receivables6 8.3 8.0 9.0 2.5 2.6 2.5 2.5 2.5 2.4 NOTE. This table has been revised to incorporate several changes resulting from the before deductions for unearned income and losses. Components may not sum to totals benchmarking of finance company receivables to the June 1996 Survey of Finance Compa- because of rounding. nies. In that benchmark survey, and in the monthly surveys that have followed, more detailed 2. Excludes revolving credit reported as held by depository institutions that are subsidiarbreakdowns have been obtained for some components. In addition, previously unavailable ies of finance companies. data on securitized real estate loans are now included in this table. The new information has 3. Includes personal cash loans, mobile home loans, and loans to purchase other types of resulted in some reclassification of receivables among the three major categories (consumer, consumer goods such as appliances, apparel, boats, and recreation vehicles. real estate, and business) and in discontinuities in some component series between May and 4. Outstanding balances of pools upon which securities have been issued; these balances June 1996. are no longer carried on the balance sheets of the loan originator. Includes finance company subsidiaries of bank holding companies but not of retailers and 5. Credit arising from transactions between manufacturers and dealers, that is, floor plan banks. Data in this table also appear in the Board's G.20 (422) monthly statistical release. For financing. ordering address, see inside front cover. 6. Includes loans on commercial accounts receivable, factored commercial accounts, and 1. Owned receivables are those carried on the balance sheet of the institution. Managed receivable dealer capital; small loans used primarily for business or farm purposes; and receivables are outstanding balances of pools upon which securities have been issued; these wholesale and lease paper for mobile homes, campers, and travel trailers. balances are no longer carried on the balance sheets of the loan originator. Data are shown Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • December 1997 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1997 IItteemm 11999944 11999955 11999966 Mar. Apr. May June July Aug. Sept. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms' 1 Purchase price (thousands of dollars) 170.4 175.8 182.4 169.2 172.5 177.6 181.4 181.4 191.2 190.6 2 Amount of loan (thousands of dollars) 130.8 134.5 139.2 132.1 134.8 137.7 140.6 142.7 148.2 147.0 3 Loan-to-price ratio (percent) 78.8 78.6 78.2 80.8 81.1 80.0 79.9 81.2 79.8 79.3 4 Maturity (years) 27.5 27.7 27.2 28.0 27.8 28.2 28.0 28.7 28.2 28.3 5 Fees and charges (percent of loan amount)2 1.29 1.21 1.21 0.99 1.04 1.00 1.04 1.05 1.06 1.12 Yield (percent per year) 6 Contract rate1 7.26 7.65 7.56 7.72 7.86 7.85 7.79 7.62 7.42 7.43 7 Effective rate1,3 7.47 7.85 7.77 7.88 8.03 8.01 7.95 7.78 7.59 7.61 8 Contract rate (HUD series)4 8.58 8.05 8.03 8.25 8.19 8.08 7.82 7.62 7.67 7.51 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 8.68 8.18 8.19 8.55 8.56 8.05 8.02 7.61 8.02 7.52 10 GNMA securities6... 7.96 7.57 7.48 7.69 7.80 7.59 7.37 7.04 7.16 7.10 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 222,057 253,511 287,052 292,115 295,804 297,023 297,471 300,439 304,528 307,256 12 FHA/VA insured 27,558 28,762 30,592 30,100 30,839 31,437 31,198 31,065 31,193 31,847 13 Conventional 194,499 224,749 256,460 262,015 264,965 265,586 266,273 269,374 273,335 275,409 14 Mortgage transactions purchased (during period) 62,389 56,598 68,618 5,839 6,683 4,148 3,594 6,417 7,606 6,544 Mortgage commitments (during period) 15 Issued7 54,038 56,092 65,859 8.299 3,898 1.704 6,196 6,956 5,960 7,573 16 To sell8 1,820 360 130 1 0 23 115 75 219 215 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)8 17 Total 72,693 107.424 137,755 144,558 147,190 148,698 149,250 151,582 155,169 157,165 18 FHA/VA insured 276 267 220 208 205 210 210 210 210 210 19 Conventional 72,416 107,157 137,535 144,350 146,985 148,488 149,040 151,372 154,959 156,955 Mortgage transactions (during period) 20 Purchases 124,697 98,470 128,566 7,403 8,981 8,195 8,884 8,374 9,917 10,496 21 Sales 117,110 85,877 119,702 6,796 8,269 7,596 8,321 1.151' 9,187 9,727 22 Mortgage commitments contracted (during period)9 136,067 118,659 128,995 7,595 9,746 7,408 9,099 9,054 9,913 10,877 1. Weighted averages based on sample surveys of mortgages originated by major institu- 6. Average net yields to investors on fully modified pass-through securities backed by tional lender groups for purchase of newly built homes; compiled by the Federal Housing mortgages and guaranteed by the Government National Mortgage Association (GNMA), Finance Board in cooperation with the Federal Deposit Insurance Corporation. assuming prepayment in twelve years on pools of thirty-year mortgages insured by the 2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. seller) to obtain a loan. 7. Does not include standby commitments issued, but includes standby commitments 3. Average effective interest rate on loans closed for purchase of newly built homes, converted. assuming prepayment at the end of ten years. 8. Includes participation loans as well as whole loans. 4. Average contract rate on new commitments for conventional first mortgages; from U.S. 9. Includes conventional and government-underwritten loans. The Federal Home Loan Department of Housing and Urban Development (HUD). Based on transactions on the first Mortgage Corporation's mortgage commitments and mortgage transactions include activity day of the subsequent month. under mortgage securities swap programs, whereas the corresponding data for FNMA 5. Average gross yield on thirty-year, minimum-downpayment first mortgages insured exclude swap activity. by the Federal Housing Administration (FHA) for immediate delivery in the private secondary market. Based on transactions on first day of subsequent month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A3 5 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1996 1997 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999933 11999944 11999955 Q2 Q3 Q4 Q1 Q2P 1 All holders 4,261,151 4,462,816 4,691,812 4,861,363 4,940,700 5,022,445 5,080,199 5,162,447 By type of property 2 One- to four-family residences 3,225,011 3,424,018 3,616,440 3,719,650 3,792,425 3,850,579 3,898,042 3,955,964 3 Multifamily residences 270,380 275,287 287,593 301,063 305,081 312,984 315,578 321,955 4 Nonfarm, nonresidential 685,021 680,540 703,218 754,457 756,462 771,749 778,940 795.708 5 Farm 80,739 82,971 84,561 86,193 86,732 87,134 87,639 88,821 By type of holder 6 Major financial institutions 1,763,410 1,811,018 1,884,714 1,919,622 1,945,088 1.968,859 1,983.813 2.021,318 7 Commercial banks" 940,603 1,003,923 1,080,483 1,099,643 1,112,914 1,135,133 1,149.721 1,186,255 8 One- to four-family 556,660 611,092 663,715 670,756 678,565 692,180 702,553 727,211 9 Multifamily 38,657 39,346 43,837 45,368 46,410 46,676 47,620 48,752 10 Nonfarm, nonresidential 324,420 330,934 349,101 358,956 363,124 371,394 374,317 384,232 11 Farm 20,866 22,551 23,830 24,563 24,815 24,883 25,231 26,060 12 Savings institutions3 598,435 596,191 596,763 611,735 628.037 628,335 627,564 629,045 13 One- to four-family 470,000 477,626 482.353 498,219 513,794 513,712 514,575 516,699 14 Multifamily 67,366 64,343 61,987 60,680 61,308 61,570 60,645 60.102 15 Nonfarm, nonresidential 60,764 53,933 52,135 52,522 52,614 52,723 52,007 51,906 16 Farm 305 289 288 315 320 331 336 338 17 Life insurance companies 224,372 210,904 207,468 208,244 204,138 205,390 206,529 206.018 18 One- to four-family 8,593 7,018 7,316 7,270 6,190 6,772 6,799 6.684 19 Multifamily 25,376 23,902 23,435 23,534 23,155 23,197 23,320 23.251 20 Nonfarm. nonresidential 180,934 170,421 167,095 167,800 165,096 165,399 166,277 165,779 21 Farm 9,469 9,563 9,622 9,640 9,697 10,022 10,133 10,304 22 Federal and related agencies 326,040 315,580 306,774 305,963 302,793 300,935 295,203 292,966 23 Government National Mortgage Association 22 6 2 2 2 2 6 7 24 One- to four-family 15 6 2 2 ~> 2 6 7 25 Multifamily 7 0 0 0 0 0 0 0 26 Farmers Home Administration4 41,386 41,781 41,791 41,547 41,575 41,596 41,485 41,400 27 One- to four-family 18,030 18,098 17,705 17,396 17,374 17,303 17,175 17,239 28 Multifamily 10,940 11,319 11,617 11,645 11,652 11,685 11,692 11.706 29 Nonfarm, nonresidential 5,406 5,670 6,248 6,552 6,681 6,841 6,969 7,135 30 Farm 7,012 6,694 6,221 5.954 5,869 5.768 5,649 5,321 31 Federal Housing and Veterans' Administrations 12,215 10,964 9,809 8,052 6,627 6,244 4,330 4.200 32 One- to four-family 5,364 4,753 5,180 3,861 3,190 3,524 2,335 2,299 33 Multifamily 6,851 6,211 4,629 4,191 3,438 2,719 1,995 1.900 34 Resolution Trust Corporation 17,284 10,428 1,864 0 0 0 0 0 35 One- to four-family 7,203 5,200 691 0 0 0 0 0 36 Multifamily 5,327 2.859 647 0 0 0 0 0 37 Nonfarm, nonresidential 4,754 2,369 525 0 0 0 0 0 38 Farm 0 0 0 0 0 0 0 0 39 Federal Deposit Insurance Corporation 14,112 7,821 4,303 5,016 4,025 2,431 2,217 1,816 40 One- to four-family 2,367 1,049 492 840 675 365 333 272 41 Multifamily 1,426 1,595 428 955 766 413 377 309 42 Nonfarm. nonresidential 10,319 5,177 3,383 3,221 2,584 1,653 1,508 1,235 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 165.668 174,312 176,824 176,692 175,472 174,556 172,829 170,386 45 One- to four-family 150,336 158,413 161,322 161,407 160,541 160,205 159,056 157,167 46 Multilamily 15,332 15,899 15,502 15,285 14,931 14,351 13,773 13.219 47 Federal Land Banks 28,460 28,555 28,428 29,362 29,579 29,602 29,668 29,963 48 One- to four-family 1,675 1,671 1,673 1,728 1,740 1,742 1,746 1,763 49 Farm 26,785 26,885 26,755 27,634 27,839 27,860 27,922 28,200 50 Federal Home Loan Mortgage Corporation 46,892 41,712 43,753 45,292 45,513 46,504 44,668 45,194 51 One- to four-family 44,345 38,882 39.901 41,095 41,149 41,758 39,640 40,092 52 Multifamily 2,547 2,830 3,852 4,197 4,364 4,746 5,028 5,102 53 Mortgage pools or trusts5 1,570.691 1,726,365 1,861,489 1,963,345 2,008,356 2,056,276 2,099,448 2,134,311 54 Government National Mortgage Association 414,066 450,934 472,283 485,316 497,018 506,340 513,471 520,938 55 One- to four-family 404,864 441,198 461,438 473,825 485,073 494,158 500,591 507,618 56 Multifamily 9,202 9,736 10,845 11,491 11,945 12,182 12,880 13,320 57 Federal Home Loan Mortgage Corporation 447,147 490,851 515,051 536.671 545,608 554,260 562.894 567,187 58 One- to four-family 442,612 487,725 512,238 534,238 543,341 551,513 560,369 564,445 59 Multifamily 4,535 3,126 2,813 2,433 2,267 2,747 2,525 2,742 60 Federal National Mortgage Association 495,525 530,343 582,959 621,285 636,362 650,780 663,668 673,931 61 One- to four-family 486,804 520,763 569,724 606,271 619,869 633.210 645,324 654,826 62 Multifamily 8,721 9,580 13,235 15,014 16,493 17.570 18,344 19,105 63 Farmers Home Administration4 28 19 11 9 7 3 3 i 64 One- to four-family 5 3 T 1 0 0 0 0 65 Multifamily 0 0 0 0 0 0 0 0 66 Nonfarm, nonresidential 13 9 5 4 4 0 0 0 67 Farm 10 7 4 4 3 3 3 2 68 Private mortgage conduits 213,925 254,218 291,185 320,064 329,360 344,894 359,413 372,253 69 One- to four-family6 179,755 202,519 222,526 238,715 244,884 247,740 256,834 259,950 70 Multifamily 8,701 14,925 21,279 26,809 28,141 33,689 35,498 39.461 71 Nonfarm, nonresidential 25,469 36,774 47,380 54,541 56,336 63,464 67,081 72.842 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others7 601,010 609,853 638,836 672,433 684,462 696,375 701.735 713,853 74 One- to four-family 446.383 448,002 470,163 464,027 476,038 486,395 490,708 499,692 75 Multifamily 65,393 69,615 73,486 79,462 80.212 81,438 81,880 82,987 76 Nonfarm. nonresidential 72,943 75,253 77,345 110,862 110,023 110,275 110,781 112,579 77 Farm 16,292 16.983 17,841 18,083 18,190 18,268 18,366 18,595 1. Multifamily debt refers to loans on structures of five or more units. 6. Includes securitized home equity loans. 2. Includes loans held by nondeposit trust companies but not loans held by bank trust 7. Other holders include mortgage companies, real estate investment trusts, state and local departments. credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and 3. Includes savings banks and savings and loan associations. finance companies. 4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from SOURCE. Based on data from various institutional and government sources. Separation of FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 because of accounting nonfarm mortgage debt by type of property, if not reported directly, and interpolations and changes by the Farmers Home Administration. extrapolations, when required for some quarters, are estimated in part by the Federal Reserve. 5. Outstanding principal balances of mortgage-backed securities insured or guaranteed by Line 69 from Inside Mortgage Securities and other sources. the agency indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic NonfinancialS tatistics • December 1997 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 1997 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999944 11999955 11999966 Mar. Apr. May Juner July1 Aug. Seasonally adjusted 11 TToottaall 964,568 1,100,712 1,184,022 1,205,508 1,215,133 l,217,847r 1,218,431 1,224,395 1,228,712 22 AAuuttoommoobbiillee 326,356 362,097 390,308 390,450 394,260 395,043r 398,810 400,672 400,092 33 RReevvoollvviinngg 364,616 441,862 497,977 509,476 512,381 514,126 514,307 520,766 523,827 44 OOtthheerr22 273,596 296,753 295,738 305,583 308,492 308,678r 305,315 302,957 304,792 Not seasonally adjusted 5 Total 988,079 1,128,618 1,214,882 1,193,945 1,203,255 1,207,669 1,212,811 1,217,367 1,228,960 By major holder 6 Commercial banks 462,923 507,753 529,417 511,535 517,261 518,762 517,096 521,357 523,029 / Finance companies 134,421 152,123 152,391 152,995 151,897 154,177 155,805 156,137 157,466 8 Credit unions 119,594 131,939 144,148 144,415 146,265 147,558 148,667 150,011 151,252 9 Savings institutions 38,468 40,106 44,711 45,860 46,243 46,626 47,009 47,392 47,400 10 Nonfinancial business3 86,621 85,061 77,745 69,954 69,346 67,744 67,987 67,600 68,556 11 Pools of securitized assets4 146,052 211,636 266,470 269,186 272,243 272,802 276,247 274,870 281,257 By major type of credit5 12 Automobile 328,576 364,726 393,189 386,713 389,844 391,898 397,916 400,756 402,426 13 Commercial banks 141,895 149,094 153,983 150,458 150,937 151,842 152,535 154,299 154,971 14 Finance companies 70,157 81,073 86,690 85,754 83,230 85,106 86,979 88,323 88,428 15 Pools of securitized assets4 36,689 44,635 52,363 49,334 53,504 51,505 53,731 52,823 52,592 16 Revolving 383,187 464,134 522,860 502,850 504,916 509,207 511,070 515,630 521,953 1/ Commercial banks 182,021 210,298 228,615 207,251 209,031 212,796 213,318 218,992 217,466 18 Finance companies 25,880 28,460 32,493 33,225 34,345 34,411 34,011 33,076 33,626 19 Nonfinancial business3 56,790 53,525 44,901 39,433 38,953 37,078 37,283 36,791 37,578 20 Pools of securitized assets4 96,130 147,934 188,712 194,549 193,798 195,800 196,746 196,618 202,528 21 Other 276,316 299,758 298,833 304,382 308,495 306,564 303,825 300,981 304,581 22 Commercial banks 139,007 148,361 146,819 153,826 157,293 154,124 151,243 148,066 150,592 23 Finance companies 38,384 42,590 33,208 34,016 34,322 34,660 34,815 34,738 35,412 24 Nonfinancial business3 29,831 31,536 32,844 30,521 30,393 30,666 30,704 30,809 30,978 25 Pools of securitized assets4 13,233 19,067 25,395 25,303 24,941 25,497 25,770 25,429 26,137 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.19 (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 CREDIT1 Percent per year except as noted 1997 IItteemm 11999944 11999955 11999966 Feb. Mar. Apr. May June July Aug. INTEREST RATES Commercial banks2 I 48-month new car 8.12 9.57 9.05 8.92 n.a. n.a. 9.20 n.a. n.a. 8.99 2 24-month personal 13.19 13.94 13.54 13.46 n.a. n.a. 13.81 n.a. n.a. 13.84 Credit card plan 3 All accounts 15.69 16.02 15.63 15.88 n.a. n.a. 15.75 n.a. n.a. 15.78 4 Accounts assessed interest 15.77 15.79 15.50 15.13 n.a. n.a. 15.72 n.a. n.a. 15.79 Auto finance companies 5 New car 9.79 11.19 9.84 7.44 8.08 8.56 7.80 7.64 6.71 5.93 6 Used car 13.49 14.48 13.53 13.08 13.18 13.29 13.48 13.55 13.51 13.38 OTHER TERMS3 Maturity (months) 1 New car 54.0 54.1 51.6 54.6 53.5 52.8 53.2 53.3 54.6 55.5 8 Used car 50.2 52.2 51.4 51.1 51.1 51.2 51.3 51.3 51.4 51.2 Loan-to-value ratio 9 New car 92 92 91 92 90 91 93 93 94 93 10 Used car 99 99 100 99 99 99 99 99 99 99 Amount financed (dollars) 11 New car 15,375 16,210 16,987 16,837 17,198 17,620 18,060 18,171 18,281 18,329 12 Used car 10,709 11,590 12,182 12,202 12,194 12,195 12,261 12,239 12,307 12,204 1. The Board's series on amounts of credit covers most short- and intermediate-term credit 2. Data are available for only the second month of each quarter, extended to individuals. Data in this table also appear in the Board's G.19 (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 A3 9 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS' Billions of dollars; quarterly data at seasonally adjusted annual rates 1995 1996 1997 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr Q4 Q1 Q2 Q3 Q4 Ql Q2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors.... 539.9 619.6 594.0 698.2 715.3 586.6 855.1 694.0 680.8 631.2 686.2 544.7 By sector and instrument ? Federal government 304.0 256.1 155.9 144.4 145.0 64.9 227.3 62.7 163.2 126.9 81.2 -97.1 Treasury securities 303.8 248.3 155.7 142.9 146.6 59.7 229.6 60.5 166.3 130.2 82.6 -97.3 4 Budget agency securities and mortgages .2 7.8 .2 1.5 -1.6 5.1 -2.3 2.2 -3.1 -3.3 -1.4 .2 5 Nonfederal 235.9 363.4 438.1 553.7 570.3 521.7 627.8 631.3 517.6 504.4 605.0 641.7 By instrument 6 Commercial paper 8.6 10.0 21.4 18.1 -.9 14.1 25.7 9.1 -14.2 -24.4 7.8 21.4 7 Municipal securities and loans 30.5 74.8 -35.9 -48.2 1.3 -38.9 -4.1 30.2 -65.2 44.2 23.2 76.5 8 Corporate bonds 67.6 75.2 23.3 73.3 72.5 82.0 60.9 71.5 67.8 89.9 79.4 86.1 9 Bank loans n.e.c —12.3 5.1 75.0 100.4 69.9 89.6 41.5 69.7 132.2 36.3 142.0 125.2 10 Other loans and advances 5.7 -18.9 37.3 46.5 22.0 53.5 20.4 38.0 45.6 -15.8 1.2 -7.1 11 Mortgages 131.5 155.3 191.9 223.1 319.2 201.3 359.9 323.7 261.6 331.6 265.4 287.2 1? Home 189.1 184.1 199.0 192.4 267.8 171.6 316.1 255.4 248.3 251.6 240.3 203.9 n Multifamily residential -10.7 -6.0 1.7 10.4 17.9 13.3 14.7 18.3 11.8 26.9 5.1 20.9 14 Commercial -47.4 -23.9 -11.0 18.8 30.9 15.2 27.5 45.1 -.6 51.5 18.0 57.7 15 Farm .5 1.0 2.2 1.6 2.6 1.0 1.6 4.9 2.2 1.6 2.0 4.7 16 Consumer credit 4.2 62.0 125.1 140.5 86.3 120.1 123.5 89.0 89.9 42.6 85.9 52.4 By borrowing sector 17 Household 191.2 246.3 343.7 354.9 363.8 329.7 443.0 376.5 348.8 286.8 335.5 291.1 18 Nonfinancial business 23.6 54.9 140.8 241.8 193.9 226.3 177.2 216.8 219.7 161.8 234.5 266.4 19 Corporate 39.6 49.1 135.3 213.7 148.1 200.8 132.9 172.1 192.9 94.4 179.3 190.9 20 Nonfarm noncorporate -16.4 3.2 2.2 26.6 43.4 26.4 44.2 38.5 29.2 61.5 54.4 72.0 21 Farm .5 2.6 3.3 1.5 2.4 -.9 .1 6.2 -2.5 6.0 .8 3.6 22 State and local government 21.1 62.3 -46.4 -42.9 12.7 -34.2 7.7 38.0 -50.8 55.8 35.0 84.2 23 Foreign net borrowing in United States 23.7 70.4 -15.2 71.2 70.1 81.3 53.2 35.4 106.0 85.7 27.2 50.7 74 Commercial paper 5.2 -9.0 -27.3 13.6 10.9 -3.9 -5.4 8.9 37.8 2.2 16.2 10.0 75 Bonds 16.8 82.9 12.2 49.7 49.4 76.1 47.7 11.2 60.2 78.5 11.0 29.7 ?6 Bank loans n.e.c 2.3 .7 1.4 8.5 9.1 11.9 8.7 15.1 4.7 7.8 -.6 11.0 27 Other loans and advances -.6 -4.2 -1.5 -.5 .8 -2.8 2.3 .1 3.4 -2.7 .7 .1 28 Total domestic plus foreign 563.6 690.0 578.7 769.3 785.4 667.9 908.3 729.4 786.8 716.9 713.4 595.4 Financial sectors 29 Total net borrowing by financial sectors 241.4 293.4 465.9 449.0 530.6 598.4 341.2 707.1 432.7 641.4 281.9 629.4 By instrument 30 Federal government-related 155.8 165.3 287.5 204.1 231.5 306.8 148.8 301.4 222.9 252.8 105.7 286.2 31 Government-sponsored enterprise securities 40.3 80.6 176.9 105.9 90.4 132.1 31.4 126.9 80.0 123.3 -8.9 198.1 32 Mortgage pool securities 115.6 84.7 115.4 98.2 141.1 174.7 117.4 174.5 142.9 129.6 114.6 88.1 33 Loans from U.S. government .0 .0 -4.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 85.6 128.2 178.4 244.9 299.2 291.6 192.4 405.7 209.9 388.6 176.2 343.2 35 Open market paper -.7 -6.2 41.6 42.6 92.7 57.0 16.1 106.1 84.2 164.3 175.4 78.1 36 Corporate bonds 85.6 122.8 118.1 188.8 151.1 196.3 150.6 219.6 76.3 157.8 -6.1 173.9 37 Bank loans n.e.c .7 -14.4 -13.7 4.2 16.8 -1.5 23.4 20.6 2.6 20.4 7.0 10.4 38 Other loans and advances -.6 22.4 22.6 3.4 27.2 32.0 -5.5 48.6 33.9 31.8 -16.1 66.8 39 Mortgages .6 3.6 9.8 5.9 11.4 7.7 7.7 10.8 12.9 14.3 16.0 14.0 By borrowing sector 40 Commercial banking 10.0 13.4 20.1 22.5 11.7 -7.9 -34.2 40.5 14.7 25.7 16.1 83.0 41 Savings institutions -7.0 11.3 12.8 2.6 26.0 31.5 11.0 42.1 26.4 24.7 -14.6 33.9 4? Credit unions .0 .2 .2 -.1 .1 .0 -.1 — .2 .3 .3 -.2 .2 43 Life insurance companies .0 .2 .3 -.1 1.1 -.4 2.5 .3 -.4 2.0 .8 .1 44 Government-sponsored enterprises 40.2 80.6 172.1 105.9 90.4 132.1 31.4 126.9 80.0 123.3 -8.9 198.1 45 Federally related mortgage pools 115.6 84.7 115.4 98.2 141.1 174.7 117.4 174.5 142.9 129.6 114.6 88.1 46 Issuers of asset-backed securities (ABSs) 57.3 82.8 68.8 132.9 132.4 186.7 138.9 162.8 88.2 139.6 58.1 86.3 47 Finance companies -2.3 -.8 49.1 50.8 43.2 61.7 41.5 56.8 30.7 43.8 6.4 124.3 48 Mortgage companies 8.0 .0 -11.5 .4 12.4 -10.0 20.0 16.0 1.7 12.1 5.9 10.0 49 Real estate investment trusts (REITs) .3 3.4 13.7 6.0 12.8 8.3 8.2 11.5 13.7 17.7 19.1 18.6 50 Brokers and dealers 2.7 12.0 .5 -5.0 -2.0 7.7 -31.8 13.2 5.7 4.9 -2.9 42.4 51 Funding corporations 16.6 5.7 24.2 34.9 61.5 13.9 36.3 62.9 28.8 118.0 87.5 -55.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic NonfinancialS tatistics • December 1997 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued 1995 1996 1997 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999922 11999933 11999944 11999955 Q4 QL Q2 Q3 Q4 QL Q2 All sectors 52 Total net borrowing, all sectors 805.0 983.4 1,044.7 1,218.3 1,316.0 1,266.3 1,249.5 1,436.5 1,219.6 1,358.4 995.3 1,224.7 53 Open market paper 13.1 -5.1 35.7 74.3 102.6 67.2 36.4 124.2 107.7 142.1 199.4 109.4 54 U.S. government securities 459.8 421.4 448.1 348.5 376.5 371.7 376.1 364.1 386.1 379.7 186.9 189.1 55 Municipal securities 30.5 74.8 -35.9 -48.2 1.3 -38.9 -4.1 30.2 -65.2 44.2 23.2 76.5 56 Corporate and foreign bonds 169.9 280.8 153.6 311.8 273.0 354.4 259.3 302.4 204.2 326.2 84.3 289.7 57 Bank loans n.e.c -9.3 -8.6 62.8 113.0 95.7 100.1 73.5 105.4 139.5 64.5 148.3 146.6 58 Other loans and advances 4.6 -.8 53.6 49.3 50.0 82.7 17.2 86.7 82.9 13.2 -14.2 59.8 59 Mortgages 132.1 158.9 201.7 229.0 330.6 209.0 367.6 334.5 274.5 346.0 281.4 301.2 60 Consumer credit 4.2 62.0 125.1 140.5 86.3 120.1 123.5 89.0 89.9 42.6 85.9 52.4 Funds raised through mutual funds and corporate equities 61 Total net issues 293.9 422.1 124.8 145.1 241.3 223.4 319.1 386.6 78.4 181.2 194.4 205.7 62 Corporate equities 103.4 130.1 24.1 -2.3 3.8 -4.7 21.5 82.1 -93.5 4.9 -59.0 -36.1 63 Nonfinancial corporations 27.0 21.3 -44.9 -58.3 -64.2 -58.4 -73.6 .4 -127.6 -56.0 -86.2 -83.6 64 Foreign shares purchased by U.S. residents 32.4 63.4 48.1 50.4 58.8 55.9 90.1 70.1 32.7 42.3 47.0 55.6 65 Financial corporations 44.0 45.4 20.9 5.6 9.2 -2.2 5.1 11.6 1.5 18.6 -19.8 -8.1 66 Mutual fund shares 190.5 292.0 100.6 147.4 237.6 228.1 297.6 304.5 171.9 176.3 253.4 241.8 1. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables F.2 through F.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A3 9 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1995 1996 1997 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999922 11999933 11999944 11999955 11999966 Q4 QL Q2 Q3 Q4 QL Q2 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 805.0 983.4 1,044.7 1,218.3 1,316.0 1,266.3 1,249.5 1,436.5 1,219.6 1,358.4 995.3 1,224.7 -> Domestic nonfederal nonfinancial sectors 117.2 80.0 257.1 -86.5 -8.9 -167.4 -40.9 305.7 -183.8 -116.7 -300.7 -90.2 3 Household 87.8 39.3 293.9 -2.1 31.7 -79.4 -76.5 277.9 -43.3 -31.5 -241.2 -63.8 4 Nonfinancial corporate business 27.8 9.1 17.7 -2.4 15.3 -5.2 29.2 31.7 9.5 -9.4 42.3 -14.4 5 Nonfarm noncorporate business -.1 -1.1 .6 .3 .4 .3 .4 .4 .4 .4 .5 .5 A State and local governments 1.7 32.6 -55.0 -82.4 -56.2 -83.1 6.0 -4.4 -150.4 -76.2 -102.2 -12.5 7 Federal government -10.4 -17.2 -22.6 -20.4 -20.9 -22.7 -19.9 -14.3 -25.0 -24.3 -18.7 -12.9 8 Rest of the world 98.4 129.3 132.3 273.9 409.1 160.2 350.0 268.9 485.4 532.2 366.3 306.3 9 Financial sectors 599.8 791.3 677.9 1,051.3 936.7 1,296.2 960.3 876.2 943.0 967.1 948.4 1,021.6 10 Monetary authority 27.9 36.2 31.5 12.7 12.3 23.2 17.5 11.7 11.5 8.4 37.4 47.2 11 Commercial banking 95.3 142.2 163.4 265.9 187.8 176.5 126.0 179.7 196.1 249.4 319.6 330.1 12 U.S.-chartered banks 69.5 149.6 148.1 186.5 119.6 126.0 78.3 121.9 119.5 158.9 212.3 321.9 13 Foreign banking offices in United States 16.5 -9.8 11.2 75.4 63.3 38.5 50.8 50.7 71.1 80.5 97.3 1.1 14 Bank holding companies 5.6 .0 .9 -.3 3.9 4.6 -5.1 5.4 4.8 10.5 2.2 5.1 15 Banks in U.S.-affiliated areas 3.7 2.4 3.3 4.2 1.0 7.4 2.1 1.7 .7 -.6 7.8 2.0 16 Savings institutions -79.0 -23.3 6.7 -7.6 19.9 -68.4 34.1 44.7 49.7 -48.8 -3.0 21.1 17 Credit unions 17.7 21.7 28.1 16.2 25.5 19.0 23.6 33.0 21.1 24.3 14.0 18.9 18 Bank personal trusts and estates 8.0 9.5 7.1 -18.8 3.9 -20.2 -3.5 4.2 7.8 7.2 8.2 8.9 19 Life insurance companies 79.5 100.9 66.7 99.2 72.5 51.7 47.6 .9 123.2 118.1 94.3 84.4 20 Other insurance companies 6.7 27.7 24.9 21.5 21.5 22.3 13.6 30.5 14.2 27.7 3.9 11.4 21 Private pension funds 37.5 49.5 47.7 63.1 46.6 81.3 69.5 45.4 41.9 29.5 57.5 57.8 22 State and local government retirement funds 5.9 21.1 30.7 22.7 34.5 20.1 54.9 47.9 19.0 16.1 38.7 21.1 23 Money market mutual funds 4.7 20.4 30.0 86.5 88.8 130.4 164.1 27.0 83.0 81.3 65.2 19.7 24 Mutual funds 126.2 159.5 -7.1 52.5 48.9 146.0 88.5 54.3 27.5 25.3 61.9 108.1 25 Closed-end funds 18.2 14.4 -3.3 13.3 9.3 13.2 10.9 9.8 9.0 7.5 6.7 5.3 26 Government-sponsored enterprises 68.8 87.8 117.8 84.7 92.0 185.1 33.9 114.7 81.2 138.1 45.1 119.0 27 Federally related mortgage pools 115.6 84.7 115.4 98.2 141.1 174.7 117.4 174.5 142.9 129.6 114.6 88.1 28 Asset-backed securities issuers (ABSs) 53.1 80.2 61.7 111.1 102.1 137.1 119.7 135.7 62.0 91.1 34.5 71.3 29 Finance companies .4 -20.9 48.3 49.9 18.4 45.1 30.4 36.3 13.1 -6.3 41.4 1.8 30 Mortgage companies .1 .0 -24.0 -3.4 8.2 -36.4 51.8 -26.8 3.4 4.1 -8.2 .0 31 Real estate investment trusts (REITs) 1.1 .6 4.7 2.2 3.0 3.4 3.4 3.4 3.4 2.0 2.0 3.4 3? Brokers and dealers -1.3 14.8 -44.2 90.1 -17.1 189.3 -109.0 -72.0 35.5 77.0 -12.8 23.0 33 Funding corporations 13.3 -35.6 -28.4 -8.6 17.5 3.0 65.9 21.1 -2.4 -14.5 27.2 -19.1 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets 805.0 983.4 1,044.7 1,218.3 1,316.0 1,266.3 1,249.5 1,436.5 1,219.6 1,358.4 995.3 1,224.7 Other financial sources 35 Official foreign exchange -1.6 .8 -5.8 8.8 -6.3 -1.9 -.9 1.6 -26.6 .7 -17.6 .4 36 Special drawing rights certificates -2.0 .0 .0 2.2 -.5 .0 .0 .0 -1.8 .0 -2.1 .0 37 Treasury currency .2 .4 .7 .6 .0 .0 .0 .0 2.3 -2.3 .4 .2 38 Foreign deposits -3.4 -18.5 52.9 35.3 82.0 21.1 100.8 3.0 119.7 104.5 188.6 79.0 39 Net interbank transactions 49.4 50.5 89.8 9.9 -52.6 57.0 -78.6 -51.8 -102.5 22.3 -85.2 -33.9 40 Checkable deposits and currency 113.5 117.3 -9.7 -12.8 15.8 -40.4 6.8 3.9 105.9 -53.4 81.3 54.0 41 Small time and savings deposits -57.2 -70.3 -40.0 96.5 97.1 110.2 207.7 -3.2 92.7 91.2 165.0 30.2 42 Large time deposits -73.2 -23.5 19.6 65.6 113.9 -1.5 57.4 83.1 181.8 133.2 48.1 177.4 43 Money market fund shares 4.5 20.2 43.3 142.3 145.8 148.9 227.6 23.1 145.1 187.5 182.4 58.5 44 Security repurchase agreements 43.1 71.2 78.3 110.7 38.7 56.7 -4.7 98.5 -15.9 77.0 51.8 217.3 45 Corporate equities 103.4 130.1 24.1 -2.3 3.8 -4.7 21.5 82.1 -93.5 4.9 -59.0 -36.1 46 Mutual fund shares 190.5 292.0 100.6 147.4 237.6 228.1 297.6 304.5 171.9 176.3 253.4 241.8 47 Trade payables 46.6 52.0 93.7 105.2 75.4 93.6 77.7 120.4 -4.3 107.6 90.3 66.3 48 Security credit 4.6 61.4 -.1 26.7 52.4 42.8 114.0 -34.8 5.3 125.1 117.6 114.4 49 Life insurance reserves 28.0 36.0 34.5 44.9 43.6 38.3 19.0 32.5 56.6 66.3 44.0 66.4 50 Pension fund reserves 230.3 254.7 253.2 241.2 235.7 189.5 236.1 196.2 231.9 278.5 287.0 278.9 51 Taxes payable 9.7 5.2 1.5 1.6 3.2 -7.2 4.5 4.7 -.1 3.5 -9.3 -11.4 52 Investment in bank personal trusts -7.1 .9 17.8 -49.7 12.5 -39.2 -.6 11.8 19.2 19.8 23.5 26.3 53 Noncorporate proprietors' equity 37.7 14.2 43.7 28.0 5.7 26.9 2.2 6.4 27.5 -15.6 -12.3 -6.7 54 Miscellaneous 246.3 336.6 243.1 466.0 454.8 765.1 506.5 431.0 348.0 533.7 604.8 631.1 55 Total financial sources 1,768.0 2,314.6 2,086.0 2,686.4 2,874.4 2,949.4 3,044.1 2,749.4 2,482.8 3,219.1 2,948.0 3,179.0 Liabilities not identified as assets ( —) 56 Treasury currency -.2 -.2 -.2 -.5 -1.0 -1.0 -1.1 -1.0 1.3 -3.1 -.3 -.6 57 Foreign deposits -2.7 -5.7 43.0 25.7 58.1 18.0 73.2 26.6 91.3 41.3 179.0 54.5 58 Net interbank liabilities -4.9 4.2 -2.7 -3.1 -3.3 -32.5 9.3 -22.5 -4.4 4.2 26.5 -24.9 59 Security repurchase agreements 4.7 46.1 57.3 55.1 24.2 29.9 27.7 124.8 -133.3 77.6 -102.1 166.7 60 Taxes payable 11.9 9.6 15.6 14.8 5.5 9.4 -14.6 20.4 7.7 8.5 -27.5 15.1 61 Miscellaneous -68.8 -201.7 -178.8 -98.2 -99.2 104.4 -149.4 -134.8 -156.2 43.6 -112.4 -378.1 Floats not included in assets (—) 62 Federal government checkable deposits .7 -1.5 -4.8 -6.0 .5 -13.9 2.7 -6.6 27.1 -21.4 -9.4 16.1 63 Other checkable deposits 1.6 -1.3 -2.8 -3.8 -4.0 -4.7 -2.8 -5.0 -4.7 -3.7 -2.6 -4.8 64 Trade credit 11.8 -4.1 .7 -30.5 -32.0 -114.4 6.5 -9.8 -101.5 -23.4 28.4 -57.4 65 Total identified to sectors as assets 1,814.1 2,469.1 2,158.2 2,732.4 2,925.3 2,954.2 3,092.6 2,757.3 2,755.7 3,095.5 2,968.5 3,392.3 1. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. El and F.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • December 1997 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1995 1996 1997 iyy4 Q4 Ql Q2 Q3 Q4 Ql Q2 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 12,486.9 13,087.1 13,785.2 14,500.5 13,785.2 13,980.9 14,134.3 14,308.4 14,500.5 14,658.4 14,769.2 By sector and instrument 2 Federal government 3,336.5 3,492.3 3,636.7 3,781.8 3,636.7 3,717.2 3,693.8 3,733.1 3,781.8 3,829.8 3,760.6 3 Treasury securities 3,3oy.y 3,465.6 3,608.5 3.755.1 3,608.5 3,689.6 3,665.5 3,705.7 3,755.1 3,803.5 3,734.3 4 Budget agency securities and mortgages 26.6 26.7 28.2 26.6 28.2 27.6 28.2 27.4 26.6 26.3 26.3 5 Nonfederal 9,150.4 9,594.8 10,148.5 10,718.8 10,148.5 10,263.7 10,440.6 10,575.3 10,718.8 10,828.6 11,008.6 By instrument 6 Commercial paper 117.8 139.2 157.4 156.4 157.4 174.2 181.7 173.0 156.4 168.7 179.3 / Municipal securities and loans 1,377.5 1,341.7 1,293.5 1,294.8 1,293.5 1,290.3 1,296.1 1,279.8 1,294.8 1,298.8 1,315.5 8 Corporate bonds 1,229.7 1,253.0 1,326.3 1,398.8 1,326.3 1,341.5 1,359.4 1,376.4 1,398.8 1,418.7 1,440.2 y Bank loans n.e.c 680.8 755.7 856.1 926.0 856.1 864.4 887.0 915.5 926.0 962.1 998.4 10 Other loans and advances 629.3 673.0 719.4 741.4 719.4 728.8 737.4 745.1 741.4 746.2 743.3 n Mortgages 4,252.2 4,444.1 4,667.2 4.986.4 4,667.2 4,744.0 4,832.2 4,908.3 4,986.4 5,040.2 5,118.9 12 Home 3,225.0 3,424.0 3,616.4 3,850.6 3,616.4 3,682.3 3,719.7 3,792.4 3,850.6 3,898.0 3,956.0 13 Multifamily residential 267.4 269.1 279.5 301.1 279.5 283.2 291.4 294.4 301.1 302.4 307.6 14 Commercial 679.0 668.0 686.8 747.6 686.8 693.6 734.9 734.7 747.6 752.1 766.6 lb Farm 80.7 83.0 84.6 87.1 84.6 85.0 86.2 86.7 87.1 87.6 88.8 16 Consumer credit 863.0 988.1 1,128.6 1,214.9 1,128.6 1,120.5 1,146.9 1,177.3 1,214.9 1,193.9 1,213.0 By borrowing sector 17 Household 4,203.5 4,550.0 4,910.1 5,244.7 4,910.1 4,969.5 5,043.5 5,148.5 5,244.7 5,275.0 5,362.8 18 Nonfinancial business 3,785.0 3,y29.4 4,165.9 4,388.9 4,165.9 4,221.2 4,316.5 4,358.9 4,388.9 4,460.7 4,534.5 iy Corporate 2,528.6 2,667.5 2,875.9 3,053.1 2,875.9 2,922.9 3,003.6 3,038.7 3,053.1 3,113.8 3,165.3 20 Nonfarm noncorporate 1,118.5 1,120.7 1,147.3 1,190.7 1,147.3 1,158.3 1,167.9 1,174.6 1,190.7 1,204.2 1,222.2 21 Farm 137.9 141.2 142.7 145.1 142.7 140.0 145.0 145.5 145.1 142.7 147.0 22 State and local government 1,161.8 1,115.4 1,072.5 1,085.1 1,072.5 1,073.1 1,080.6 1,068.0 1,085.1 1,093.0 1,111.3 23 Foreign credit market debt held in United States 385.7 370.6 441.7 511.8 441.7 452.7 461.5 489.1 511.8 516.4 528.8 24 Commercial paper 68.7 41.4 55.0 65.8 55.0 51.5 53.4 64.8 65.8 67.9 69.8 25 Bonds 230.1 242.3 291.9 341.3 291.9 303.8 306.7 321.7 341.3 344.1 351.5 26 Bank loans n.e.c 24.6 26.1 34.6 43.7 34.6 36.8 40.5 41.7 43.7 43.5 46.2 27 Other loans and advances 62.3 60.8 60.2 61.0 60.2 60.6 60.9 61.0 61.0 61.0 61.2 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 12,872.6 13,457.6 14,227.0 15,012.3 14,227.0 14,433.6 14,595.9 14,797.5 15,012.3 15,174.8 15,298.0 Financial sectors 29 Total credit market debt owed by financial sectors 3,327.0 3,800.7 4,252.3 4,782.9 4,252.3 4,333.0 4,511.9 4,623.1 4,782.9 4,848.5 5,008.7 By instrument 30 Federal government-related 1.885.2 2,172.7 2,376.8 2,608.3 2,376.8 2,414.0 2,489.4 2,545.1 2,608.3 2,634.7 2,706.2 31 Government-sponsored enterprise securities 523.7 700.6 806.5 896.9 806.5 814.4 846.1 866.1 896.9 894.7 944.2 32 Mortgage pool securities 1,356.8 1,472.1 1,570.3 1,711.4 1,570.3 1,599.7 1,643.3 1,679.0 1,711.4 1,740.0 1,762.1 33 Loans from U.S. government 4.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 1,441.8 1,627.9 1,875.4 2.174.6 1,875.4 1,919.0 2,022.5 2,078.1 2,174.6 2,213.8 2,302.5 35 Open market paper 393.5 442.8 488.0 580.7 488.0 491.9 518.5 539.6 580.7 624.5 644.0 36 Corporate bonds 867.9 985.9 1,174.7 1.325.8 1,174.7 1,208.5 1,265.2 1,287.6 1,325.8 1,319.9 1,365.8 37 Bank loans n.e.c 62.6 48.9 53.1 69.8 53.1 58.6 63.9 64.2 69.8 71.3 74.3 38 Other loans and advances 108.9 131.6 135.0 162.2 135.0 133.6 145.8 154.2 162.2 158.2 174.9 3y Mortgages 8.9 18.7 24.6 36.0 24.6 26.5 29.2 32.4 36.0 40.0 43.5 By borrowing sector 40 Commercial banks 84.6 94.5 102.6 112.3 102.6 100.5 103.6 106.7 112.3 114.5 125.2 41 Bank holding companies 123.4 133.6 148.0 150.0 148.0 141.4 148.4 149.1 150.0 151.7 161.7 42 Savings institutions 99.6 112.4 115.0 141.1 115.0 117.8 128.3 134.9 141.1 137.4 145.9 43 Credit unions .2 .5 .4 .4 .4 .4 .3 .4 .4 .4 .4 44 Life insurance companies .2 .6 .5 1.6 .5 1.1 1.2 1.1 1.6 1.8 1.8 45 Government-sponsored enterprises 528.5 700.6 806.5 896.9 806.5 814.4 846.1 866.1 896.9 894.7 944.2 46 Federally related mortgage pools 1,356.8 1,472.1 1,570.3 1,711.4 1,570.3 1,599.7 1,643.3 1,679.0 1,711.4 1,740.0 1,762.1 47 Issuers of asset-backed securities (ABSs) 485.3 554.1 687.0 819.5 687.0 717.3 756.7 781.3 819.5 829.0 849.5 48 Brokers and dealers 33.7 34.3 29.3 27.3 29.3 21.4 24.6 26.1 27.3 26.6 37.2 4y Finance companies 386.7 435.8 486.6 529.8 486.6 493.8 506.3 513.7 529.8 528.2 557.7 50 Mortgage companies 30.2 18.7 19.1 31.5 19.1 24.1 28.1 28.5 31.5 33.0 35.5 51 Real estate investment trusts (REITs) 17.4 31.1 37.1 49.9 37.1 39.1 42.0 45.4 49.9 54.6 59.3 52 Funding corporations 180.3 212.3 249.8 311.3 249.8 262.2 283.0 290.7 311.3 336.7 328.2 All sectors 53 Total credit market debt, domestic and foreign.... 16,199.6 17,258.3 18,479.2 19,795.2 18,479.2 18,766.6 19,107.8 19,420.7 19,795.2 20,023.4 20,306.7 54 Open market paper 580.0 623.5 700.4 803.0 700.4 717.6 753.6 777.4 803.0 861.1 893.1 55 U.S. government securities 5,216.9 5,665.0 6,013.6 6,390.0 6,013.6 6,131.2 6,183.1 6,: ^8.2 6,390.0 6,464.5 6,466.8 56 Municipal securities 1,377.5 1,341.7 1,293.5 1,294.8 1,293.5 1,290.3 1,296.1 1,279.8 1,294.8 1,298.8 1,315.5 5/ Corporate and foreign bonds 2,327.6 2,481.2 2,793.0 3,066.0 2,793.0 2,853.8 2,931.3 2,985.7 3,066.0 3,082.6 3,157.5 58 Bank loans n.e.c 768.0 830.8 943.8 1.039.5 943.8 959.7 991.4 1,021.3 1,039.5 1,076.9 1,118.9 sy Other loans and advances 805.3 865.3 914.6 964.6 914.6 923.0 944.1 960.3 964.6 965.3 979.4 60 Mortgages 4,261.2 4,462.8 4,691.8 5,022.4 4,691.8 4,770.5 4,861.4 4,940.7 5,022.4 5,080.2 5,162.4 61 Consumer credit 863.0 988.1 1,128.6 1,214.9 1,128.6 1,120.5 1,146.9 1,177.3 1,214.9 1,193.9 1,213.0 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables L.2 through L.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A3 9 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 1995 1996 1997 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999933 11999944 11999955 11999966 Q4 QL Q2 Q3 Q4 QL Q2 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 16,199.6 17,258.3 18,479.2 19,795.2 18,479.2 18,766.6 19,107.8 19,420.7 19,795.2 20,023.4 20,306.7 2 Domestic nonfederal nonfinancial sectors 2,795.8 3,085.7 2,964.1 3,000.3 2,964.1 2,928.4 3,013.5 2,982.4 3,000.3 2,899.1 2,855.3 3 Household 1,702.4 2,029.1 1,991.8 2,068.6 1,991.8 1,970.0 2,040.5 2,047.5 2,068.6 2,007.8 1,961.4 4 Nonfinancial corporate business 271.5 289.2 286.8 302.1 286.8 273.6 285.7 286.8 302.1 289.6 291.6 5 Nonfarm noncorporate business 37.0 37.6 37.9 38.3 37.9 38.0 38.1 38.2 38.3 38.4 38.6 6 State and local governments 784.9 729.9 647.5 591.3 647.5 646.8 649.1 609.9 591.3 563.3 563.7 7 Federal government 234.7 212.0 191.6 170.7 191.6 186.6 183.0 176.8 170.7 166.0 162.8 8 Rest of the world 1,147.8 1,254.8 1,563.1 1,953.5 1,563.1 1,656.5 1,722.0 1,844.6 1,953.5 2,050.7 2,125.8 9 Financial sectors 12,021.3 12,705.7 13,760.4 14,670.7 13,760.4 13,995.1 14,189.3 14,416.8 14,670.7 14,907.5 15,162.9 10 Monetary authority 336.7 368.2 380.8 393.1 380.8 379.6 386.3 386.2 393.1 397.1 412.4 11 Commercial banking 3,090.8 3,254.3 3,520.1 3,707.9 3,520.1 3,541.6 3,590.8 3,643.3 3,707.9 3,780.5 3,866.8 12 U.S. chartered banks 2,721.5 2,869.6 3,056.1 3,175.8 3,056.1 3,068.8 3,101.3 3,135.3 3,175.8 3,222.2 3,304.5 13 Foreign banking offices in United States 326.0 337.1 412.6 475.8 412.6 422.2 437.1 454.2 475.8 499.5 501.8 14 Bank holding companies 17.5 18.4 18.0 22.0 18.0 16.8 18.1 19.3 22.0 22.5 23.8 15 Banks in U.S.-affiliated areas 25.8 29.2 33.4 34.4 33.4 33.9 34.3 34.5 34.4 36.3 36.8 16 Savings institutions 914.1 920.8 913.3 933.2 913.3 921.8 933.0 945.4 933.2 932.4 937.7 17 Credit unions 218.7 246.8 263.0 288.5 263.0 267.0 276.9 282.6 288.5 290.1 296.4 18 Bank personal trusts and estates 240.9 248.0 229.2 233.1 229.2 228.3 229.4 231.3 233.1 235.2 237.4 19 Life insurance companies 1,416.0 1,482.6 1,581.8 1,654.3 1,581.8 1,596.2 1,596.7 1,627.0 1,654.3 1,680.2 1,701.5 20 Other insurance companies 422.7 446.4 468.7 490.2 468.7 472.1 479.7 483.2 490.2 491.2 494.0 21 Private pension funds 611.4 659.2 722.3 768.8 722.3 739.6 751.0 761.4 768.8 783.2 797.7 22 State and local government retirement funds 423.4 454.1 476.8 511.3 476.8 491.9 505.0 506.3 511.3 522.5 529.1 23 Money market mutual funds 429.0 459.0 545.5 634.3 545.5 595.6 594.7 606.6 634.3 659.0 656.5 24 Mutual funds 725.9 718.8 771.3 820.2 771.3 795.9 809.0 818.3 820.2 838.3 864.7 25 Closed-end funds 82.0 78.7 92.0 101.3 92.0 94.8 97.2 99.5 101.3 103.0 104.3 26 Government-sponsored enterprises 545.5 663.3 748.0 813.6 748.0 755.8 758.9 779.3 813.6 824.3 854.8 27 Federally related mortgage pools 1,356.8 1,472.1 1,570.3 1,711.4 1,570.3 1,599.7 1,643.3 1,679.0 1,711.4 1,740.0 1,762.1 28 Asset-backed securities issuers (ABSs) 455.1 516.8 627.9 730.0 627.9 653.3 686.0 704.1 730.0 733.7 750.5 29 Finance companies 427.9 476.2 526.2 544.5 526.2 530.3 539.9 538.3 544.5 551.6 552.3 30 Mortgage companies 60.4 36.5 33.0 41.2 33.0 46.0 39.3 40.2 41.2 39.2 39.2 31 Real estate investment trusts (REITs) 8.6 13.3 15.5 18.5 15.5 16.3 17.2 18.0 18.5 19.0 19.9 .32 Brokers and dealers 137.5 93.3 183.4 166.3 183.4 156.2 138.2 147.1 166.3 163.1 168.9 33 Funding corporations 117.9 97.3 91.3 108.8 91.3 113.2 116.8 119.8 108.8 124.1 116.9 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 16,199.6 17,258.3 18,479.2 19,795.2 18,479.2 18,766.6 19,107.8 19,420.7 19,795.2 20,023.4 20,306.7 Other liabilities 35 Official foreign exchange 53.4 53.2 63.7 53.7 63.7 62.1 61.4 54.3 53.7 46.3 46.7 36 Special drawing rights certificates 8.0 8.0 10.2 9.7 10.2 10.2 10.2 9.7 9.7 9.2 9.2 37 Treasury currency 17.0 17.6 18.2 18.2 18.2 18.2 18.2 18.8 18.2 18.3 18.3 38 Foreign deposits 271.8 324.6 359.2 438.1 359.2 384.4 385.2 415.1 438.1 485.2 505.0 39 Net interbank liabilities 189.3 280.1 290.7 239.7 290.7 266.0 249.1 223.6 239.7 210.1 199.4 40 Checkable deposits and currency 1,251.7 1,242.0 1,229.3 1,245.1 1,229.3 1,183.3 1,212.3 1,220.8 1,245.1 1,219.0 1,261.8 41 Small time and savings deposits 2,223.2 2,183.3 2,279.7 2,376.8 2,279.7 2,342.3 2,340.1 2,357.4 2,376.8 2,428.7 2,435.3 42 Large time deposits 391.7 411.2 476.9 590.7 476.9 493.6 511.1 557.6 590.7 605.4 646.4 4.3 Money market fund shares 559.6 602.9 745.3 891.1 745.3 816.9 809.5 838.1 891.1 950.8 952.4 44 Security repurchase agreements 471.1 549.4 660.1 698.8 660.1 666.1 692.1 687.6 698.8 716.6 774.3 45 Mutual fund shares 1,375.4 1,477.3 1,852.8 2,342.4 1,852.8 1,997.0 2,129.9 2,211.6 2,342.4 2,411.5 2,731.1 46 Security credit 279.0 279.0 305.7 358.0 305.7 326.9 318.6 317.8 358.0 380.0 409.1 47 Life insurance reserves 470.8 505.3 550.2 593.8 550.2 555.0 563.1 577.2 593.8 604.8 621.4 48 Pension fund reserves 4,663.3 4,871.8 5.597.3 6,257.7 5,597.3 5,753.0 5,874.0 5,989.4 6,257.7 6,339.9 6,789.1 49 Trade payables 1,047.8 1,141.5 1,246.7 1,322.1 1,246.7 1,235.5 1,271.5 1,267.7 1,322.1 1,313.8 1,336.1 50 Taxes payable 84.8 86.3 88.0 91.1 88.0 93.0 89.2 91.1 91.1 93.0 85.0 51 Investment in bank personal trusts 691.3 699.4 767.4 872.0 767.4 793.7 811.7 829.0 872.0 890.4 969.7 52 Miscellaneous 5,109.8 5,379.1 5,783.0 6,135.1 5,783.0 5,951.7 5,948.9 6,027.7 6,135.1 6,327.6 6,267.5 53 Total liabilities 35,358.5 37,370.5 40,803.4 44,329.3 40,803.4 41,715.4 42,403.7 43,115.3 44,329.3 45,074.0 46,364.4 Financial assets not included in liabilities ( + ) 54 Gold and special drawing rights 20.1 21.1 22.1 21.4 22.1 22.1 22.0 21.2 21.4 20.9 21.1 55 Corporate equities 6,257.6 6,237.9 8,331.3 10,061.1 8,331.3 8,809.7 9,105.0 9,340.5 10,061.1 10,072.3 11,719.8 56 Household equity in noncorporate business 3,219.2 3,416.3 3,620.8 3,850.3 3,620.8 3,664.6 3,731.0 3,797.3 3,850.3 3,908.2 3,901.6 Liabilities not identified as assets (-) 57 Treasury currency -5.1 -5.4 -5.8 -6.8 -5.8 -6.1 -6.3 -6.0 -6.8 -6.9 -7.0 58 Foreign deposits 233.2 276.2 301.2 356.4 301.2 319.5 326.1 348.9 356.4 401.1 414.7 59 Net interbank transactions -4.7 -6.5 -9.0 -10.6 -9.0 -2.6 -8.0 -11.6 -10.6 -1.7 -8.3 60 Security repurchase agreements -1.6 55.7 110.9 135.1 110.9 121.7 149.2 126.5 135.1 110.8 150.3 61 Taxes payable 26.8 33.7 42.8 44.3 42.8 22.6 36.9 40.9 44.3 30.5 28.6 62 Miscellaneous -887.6 -988.6 -1,081.0 -1,354.7 -1,081.0 -1,098.4 -1,213.2 -1,246.8 -1,354.7 -1,295.8 -1,364.8 Floats not included in assets (—) 63 Federal government checkable deposits 5.6 3.4 3.1 -1.6 3.1 .0 -3.4 -1.7 -1.6 -9.7 -6.8 64 Other checkable deposits 40.7 38.0 34.2 30.1 34.2 29.6 31.8 23.1 30.1 25.6 27.9 65 Trade credit -247.5 -247.7 -278.2 -310.2 -278.2 -332.0 -343.4 -383.6 -310.2 -361.2 -381.5 66 Total identified to sectors as assets 45,695.7 47,887.0 53,659.6 59,380.2 53,659.6 55,157.5 56,292.1 57,384.6 59,380.2 60,182.7 63,153.8 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. L.l and L.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • December 1997 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1992=100, except as noted 1997 MMeeaassuurree 11999944 11999955 11999966 Jan. Feb. Mar. Apr. May June' July' Aug. Sept. 1 Industrial production1 108.6 112.1 115.2 117.8 118.4 118.8 119.3 119.5r 119.9 120.9 121.5 122.4 Market groupings 2 Products, total 106.8 109.3 112.0 114.2 114.8 115.3 115.4 115.9' 116.0 116.5 117.3 117.9 3 Final, total 107.1 109.9 112.8 115.1 115.6 116.3 116.6 117.1' 117.4 117.8 119.0 119.4 4 Consumer goods 107.4 108.9 110.5 111.7 111.6 112.1 112.1 112.6' 112.3 112.6 113.2 114.0 5 Equipment 106.6 111.6 116.8 120.8 122.6 123.5 124.3 124.9' 126.2 126.7 129.1 128.8 6 Intermediate 106.1 107.5 109.4 111.6 112.0 112.1 112.0 112.2' 112.0 112.3 112.3 113.1 7 Materials 111.3 116.6 120.3 123.4 124.1 124.5 125.5 125.2 126.0 128.0 128.2 129.6 Industry groupings 8 Manufacturing 109.4 113.2 116.3 119.3 120.1 120.6 120.9 121.0 121.6 122.7 123.6 124.2 9 Capacity utilization, manufacturing (percent)". . 83.1 83.1 82.1 82.4 82.6 82.7 82.6 82.4 82.5 82.9 83.3 83.4 10 Construction contracts3 117.6' 121.9r 130.5' 131.0r 132.0' 135.0' 138.0' 140.0' 139.0 134.0 134.0 131.0 11 Nonagricultural employment, total4 112.0 115.0 117.3 118.6 118.8 119.0 119.3 119.5 119.7 120.1 120.1 120.3 12 Goods-producing, total 96.9 98.1 98.3 99.6 99.9 100.0 100.0 100.1 100.2 100.2 100.4 100.3 13 Manufacturing, total 96.4 97.2 96.2 97.2 97.2 97.3 97.4 97.4 97.5 97.5 97.7 97.6 14 Manufacturing, production workers 97.5 98.7 97.5 98.5 98.5 98.6 98.6 98.7 98.8 98.8 99.0 98.9 15 Service-producing 116.8 120.3 123.3 124.6 124.9 125.1 125.5 125.7 126.0 126.5 126.4 126.7 16 Personal income, total 148.9 158.2 167.0 172.3 173.6 174.6 174.9 175.5 176.5 176.9 177.9 n.a. 17 Wages and salary disbursements 142.6 150.9 159.8 165.2 167.2 168.1 168.2 168.7 170.2 170.3 171.7 n.a. 18 Manufacturing 124.9 130.4 135.7 138.9 139.5 140.5 140.7 140.9 141.0 141.1 142.3 n.a. 19 Disposable personal income5 149.7 158.7 166.2 170.6 171.7 172.5 172.8' 173.2' 174.1 174.5 175.4 n.a. 20 Retail sales5 144.6 151.2 158.6' 163.9 166.1 165.6 163.7 163.3 164.5 166.5 167.6 168.1 Prices6 21 Consumer (1982-84=100) 148.2 152.4 156.9 159.1 159.6 160.0 160.2 160.1 160.3 160.5 160.8 161.2 22 Producer finished goods (1982=100) 125.5 127.9 131.3 132.6 132.2 132.1 131.6 131.6' 131.6 131.3 131.7 131.8 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 Labor, 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. See 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 not seasonally adjusted. Seasonally adjusted 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, see "Industrial Production: 1989 NOTE. Basic data (not indexes) for series 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," 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 1997 CCaatteeggoorryy 11999944 11999955 11999966 Feb. Mar. Apr. May June July' Aug.' Sept. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 131,056 132,304 133.943 135,634 136,319 136,098 136,173 136,200 136,290 136,480 136.467 Employment 2 Nonagricultural industries3 119,651 121,460 123,264 125,138 125,789 125,887 126,209 125,973 126,226 126,421 126,265 3 Agriculture 3,409 3,440 3.443 3,292 3,386 3,497 3,430 3,391 3,482 3,383 3,450 Unemployment 4 Number 7,996 7,404 7,236 7.205 7,144 6,714 6,534 6,836 6,583 6,677 6,752 5 Rate (percent of civilian labor force) 6.1 5.6 5.4 5.3 5.2 4.9 4.8 5.0 4.8 4.9 4.9 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 114,172 117,203 119,549 121,162 121,344 121,671 121,834 122,056 122,440 122,480 122,695 7 Manufacturing 18,321 18,468 18.282 18,475 18,489 18,495 18.498 18,518 18,514 18,562 18,546 8 Mining 601 580 570 574 572 573 576 574 574 572 575 9 Contract construction 4,986 5,158 5,405 5.604 5,609 5,599 5,628 5,622 5,625 5,637 5,636 10 Transportation and public utilities 5,993 6,165 6,318 6,376 6,405 6,421 6,431 6,434 6,443 6,284 6,451 11 Trade 26,670 27,585 28,178 28,515 28,556 28,651 28,656 28,713 28,823 28,865 28,898 12 Finance 6,896 6,830 6.977 6,980 6,992 7,019 7,029 7,034 7,058 7,066 7,075 13 Service 31,579 33,107 34,360 35,091 35,176 35,334 35,451 35,522 35,684 35,699 35,797 14 Government 19,128 19.310 19.459 19,547 19,545 19,579 19,565 19,639 19,719 19,795 19,717 1. Beginning January 1994, reflects redesign of current population survey and population 4. Includes all full- and part-time employees who worked during, or received pay for, the controls from the 1990 census. pay period that includes the twelfth day of the month; excludes proprietors, self-employed 2. Persons sixteen years of age and older, including Resident Armed Forces. Monthly persons, household and unpaid family workers, and members of the armed forces. Data are figures are based on sample data collected during the calendar week that contains the twelfth adjusted to the March 1992 benchmark, and only seasonally adjusted data are available at this day; annual data are averages of monthly figures. By definition, seasonality does not exist in time. population figures. SOURCE. Based on data from U.S. Department of Labor, Employment and Earnings. 3. Includes self-employed, unpaid family, and domestic service workers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A43 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1996 1997 1996 1997 1996 1997 SSeerriieess Q4 Ql Q2r Q3 Q4 Ql Q2 Q3 Q4 Ql Q2r Q3 Output (1992=100) Capacity (percent of 1992 output) Capacity utilization rate (percent)2 1 Total industry 117.0 118.3 119.6 121.6 140.5 141.8 143.2 144.6 83.3 83.5 83.5 84.1 2 Manufacturing 118.4 120.0 121.2 123.5 143.9 145.3 146.9 148.5 82.3 82.5 82.5 83.2 3 Primary processing3 113.9 114.7 115.7 116.9 131.5 132.2 132.9 133.7 86.6 86.8 87.0 87.4 4 Advanced processing4 120.7 122.6 123.9 126.7 150.0 151.9 153.8 155.8 80.4 80.7 80.5 81.3 5 Durable goods 128.1 130.7 133.0 137.0 156.9 159.3 161.8 164.5 81.7 82.0 82.2 83.3 6 Lumber and products 110.1 111.3 114.0 113.0 130.0 131.0 132.0 133.1 84.7 84.9 86.4 84.9 7 Primary metals 119.8 119.7 122.2 124.7 131.0 132.1 133.3 134.5 91.5 90.6 91.7 92.7 8 Iron and steel 118.6 118.3 121.1 122.2 133.5 134.9 136.0 137.2 88.9 87.7 89.0 89.0 9 Nonferrous 121.1 121.3 123.5 127.5 127.8 128.6 129.8 130.9 94.8 94.3 95.2 97.4 10 Industrial machinery and equipment 161.5 166.2 171.3 179.7 181.3 186.5 192.3 198.2 89.1 89.1 89.1 90.7 11 Electrical machinery 167.2 172.1 178.9 187.8 208.5 216.3 224.2 232.4 80.2 79.6 79.8 80.8 12 Motor vehicles and parts 126.0 130.2 125.4 131.8 177.3 178.2 178.7 179.3 71.0 73.0 70.1 73.5 13 Aerospace and miscellaneous transportation equipment 90.4 93.5 96.4 98.9 119.8 119.7 120.5 121.4 75.5 78.1 80.0 81.5 14 Nondurable goods 108.1 108.6 108.6 109.3 130.1 130.6 131.1 131.6 83.0 83.1 82.8 83.0 15 Textile mill products 107.4 107.1 108.3 111.2 130.8 131.3 131.4 131.6 82.1 81.6 82.4 84.5 16 Paper and products 109.8 111.2 112.2 114.7 123.3 123.6 123.9 124.2 89.0 89.9 90.6 92.4 17 Chemicals and products 112.4 112.8 112.7 112.8 140.3 141.5 142.6 143.7 80.1 79.8 79.1 78.5 18 Plastics materials 125.3 127.0 127.8 134.0 136.2 138.1 93.5 93.3 92.6 19 Petroleum products 107.7 108.1 111.4 110.4 113.8 113.9 114.2 114.5 94.6 94.9 97.5 96.4 20 Mining 103.8 105.8 107.3 106.6 113.7 113.8 114.3 114.8 91.3 93.0 93.9 92.8 21 Utilities 113.0 110.9 112.5 113.5 125.9 126.5 127.0 127.4 89.8 87.7 88.7 89.1 22 Electric 112.4 111.5 111.8 114.2 124.4 125.1 125.6 126.1 90.4 89.1 89.0 90.5 1973 1975 Previous cycle5 Latest cycle6 1996 1997 High Low High Low High Low Sept. Apr. May Juner Julyr Aug. Sept.p Capacity utilization rate (percent)2 1 Total industry 89.2 72.6 87.3 71.1 85.3 78.1 83.1 83.6 83.5r 83.5 83.9 84.1 84.4 2 Manufacturing 88.5 70.5 86.9 69.0 85.7 76.6 82.1 82.6 82.4 82.5 82.9 83.3 83.4 3 Primary processing3 91.2 68.2 88.1 66.2 88.9 77.8 86.6 87.1 87.1r 86.9 87.3 87.3 87.7 4 Advanced processing4 87.2 71.8 86.7 70.4 84.2 76.1 80.2 80.6 80.3 80.6 81.0 81.5 81.4 5 Durable goods 89.2 68.9 87.7 63.9 84.5 73.2 81.9 82.2 82.0 82.4 82.8 83.6 83.5 6 Lumber and products 88.7 61.2 87.9 60.8 93.6 75.5 85.5 86.3 86.3r 86.5 85.4 84.7 84.5 7 Primary metals 100.2 65.9 94.2 45.1 92.7 73.7 91.8 90.5 92.5r 92.1 92.3 91.8 94.0 8 Iron and steel 105.8 66.6 95.8 37.0 95.2 71.8 88.7 87.9 90.8 88.2 88.2 87.2 91.7 9 Nonferrous 90.8 59.8 91.1 60.1 89.3 74.2 95.7 93.7 94.8r 97.0 97.4 97.5 97.1 10 Industrial machinery and equipment 96.0 74.3 93.2 64.0 85.4 72.4 89.6 90.0 88.7 88.6 90.0 91.5 90.5 II Electrical machinery 89.2 64.7 89.4 71.6 84.0 75.1 81.3 79.8 79.4 80.1 81.0 80.9 80.5 12 Motor vehicles and parts 93.4 51.3 95.0 45.5 89.1 55.9 71.9 70.2 69.2 71.0 70.7 74.9 74.8 13 Aerospace and miscellaneous transportation equipment 78.4 67.6 81.9 66.6 87.3 79.2 73.3 79.5 80.0 80.6 81.2 81.5 81.8 14 Nondurable goods 87.8 71.7 87.5 76.4 87.3 80.7 82.4 83.0 82.9r 82.6 83.1 82.8 83.2 15 Textile mill products 91.4 60.0 91.2 72.3 90.4 77.7 82.2 82.7 81.7r 82.8 84.7 84.3 84.5 16 Paper and products 97.1 69.2 96.1 80.6 93.5 85.0 88.4 90.6 91.lr 90.1 92.5 91.7 92.8 17 Chemicals and products 87.6 69.7 84.6 69.9 86.2 79.3 78.6 79.6 79.0r 78.5 78.9 77.9 78.6 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 95.4 93.3 92.5 92.0 94.4 19 Petroleum products 96.7 81.1 90.0 66.8 88.5 85.1 94.0 97.0 98.2r 97.4 95.2 96.8 97.3 20 Mining 94.3 88.2 96.0 80.3 86.8 86.1 91.0 92.9 94.6r 94.2 93.8 92.6 92.0 ?\ Utilities 96.2 82.9 89.1 75.9 92.6 83.4 88.6 89.6 88.5r 87.9 88.5 87.4 91.2 22 Electric 99.0 82.7 88.2 78.9 95.0 87.1 89.6 90.6 88.0 88.4 90.0 88.6 93.0 1. Data in this table also appear in the Board's G. 17 (419) monthly statistical release. For 3. Primary processing includes textiles; lumber; paper; industrial chemicals; synthetic the ordering address, see the inside front cover. The latest historical revision of the industrial materials; fertilizer materials; petroleum products; rubber and plastics; stone, clay, and glass; production index and the capacity utilization rates was released in 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; printing ments," Federal Reserve Bulletin, vol. 83 (February 1997), pp. 67-92. The article contains a and publishing; chemical products such as drugs and toiletries; agricultural chemicals; leather description of the new aggregation system for industrial production and capacity utilization. and products; 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 of capacity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • December 1997 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1996 1997 pro- 1996 por- avg. tion Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Juner July1" Aug. Sept.p Index (1992 = 100) MAJOR MARKETS 1 Total index 100.0 115.2 116.0 116.2 117.2 117.7 117.8 118.4 118.8 119.3 119.5 119.9 120.9 121.5 122.4 2 Products 60.5 112.0 112.7 112.8 114.1 114.3 114.2 114.8 115.3 115.4 115.9 116.0 116.5 117.3 117.9 3 Final products 46.3 112.8 113.3 113.6 114.8 115.3 115.1 115.6 116.3 116.6 117.1 117.4 117.8 119.0 119.4 4 Consumer goods, total 29.1 110.5 110.5 110.8 112.3 112.7 111.7 111.6 112.1 112.1 112.6 112.3 112.6 113.2 114.0 3 Durable consumer goods 6.1 126.2 127.1 124.5 127.1 128.4 127.3 129.2 131.0 126.9 128.4 130.6 129.3 133.0 132.8 6 Automotive products 2.6 125.8 127.7 122.0 127.4 127.2 129.6 131.0 131.7 124.4 126.4 128.4 123.1 133.0 134.8 / Autos and trucks 1.7 132.6 134.6 125.7 133.8 135.5 138.7 138.9 138.9 127.1 130.0 132.6 123.5 140.2 143.4 8 Autos, consumer .9 120.2 129.9 112.3 123.5 115.9 120.1 122.3 123.3 116.0 117.7 114.9 118.0 124.3 125.1 y Trucks, consumer .7 147.2 146.6 147.4 152.4 164.9 167.0 165.0 163.8 146.1 150.5 159.5 135.8 165.4 171.7 10 Auto parts and allied goods .9 114.5 116.2 114.4 116.4 114.0 115.5 118.1 119.7 118.0 118.8 120.1 119.2 121.3 121.4 II Other 3.5 126.3 126.6 126.2 126.8 129.1 125.5 127.8 130.4 128.6 129.7 132.0 133.6 132.8 131.3 12 Appliances, televisions, and air conditioners 1.0 173.0 174.2 176.5 176.9 181.1 171.2 179.5 183.6 179.0 181.1 187.3 193.9 192.9 187.2 13 Carpeting and furniture .8 109.9 110.5 108.6 110.7 109.3 106.0 106.9 111.6 108.6 111.7 114.2 110.3 112.6 112.3 14 Miscellaneous home good; 1.6 107.9 107.6 106.5 106.4 109.6 109.2 109.2 109.9 110.0 109.6 109.7 111.9 109.6 109.5 15 Nondurable consumer goods 23.0 106.5 106.3 107.3 108.5 108.7 107.8 107.2 107.4 108.3 108.6 107.8 108.5 108.3 109.4 10 Foods and tobacco 10.3 106.1 106.1 106.6 107.2 108.2 107.7 108.0 108.7 107.8 107.6 106.9 108.0 108.3 108.5 1/ Clothing 2.4 95.5 95.1 95.5 95.0 94.9 94.0 93.8 94.2 94.4 94.8 94.1 93.7 93.2 93.6 18 Chemical products 4.5 112.7 113.5 115.5 117.3 118.8 117.9 116.2 114.9 117.2 118.0 117.3 117.1 116.1 117.9 19 Paper products 2.9 101.1 101.9 102.9 102.9 103.0 101.1 101.5 102.3 102.6 103.4 104.5 105.4 104.4 105.0 20 Energy 2.9 112.0 109.4 110.7 115.3 111.8 110.4 107.6 107.5 113.0 113.5 110.4 111.3 112.1 115.3 21 Fuels .8 106.6 105.4 108.1 107.8 106.0 105.1 106.2 108.5 110.1 111.9 111.8 108.9 112.2 111.8 22 Residential utilities 2.1 114.3 110.9 111.7 118.5 114.2 112.6 108.0 106.8 114.1 114.0 109.5 112.1 111.8 116.6 23 Equipment 17.2 116.8 118.1 118.4 119.0 119.6 120.8 122.6 123.5 124.3 124.9 126.2 126.7 129.1 128.8 24 Business equipment 13.2 126.6 128.3 128.8 129.8 130.7 132.1 133.8 134.3 135.5 136.1 137.4 139.0 142.1 142.1 25 Information processing and related 5.4 143.2 146.3 147.4 147.1 148.5 149.6 152.4 153.6 155.1 156.5 159.9 162.0 164.3 166.2 26 Computer and office equipment 1.1 292.0 314.3 318.8 323.5 327.1 335.7 343.0 349.9 358.6 366.5 378.4 395.5 409.3 421.6 27 Industrial 4.0 126.9 126.3 127.0 127.1 127.3 127.9 128.2 127.5 130.3 129.3 129.2 131.6 134.7 132.8 28 Transit 2.5 100.0 103.8 101.9 106.6 107.2 109.8 111.8 113.1 110.1 112.1 112.1 112.3 117.6 118.4 29 Autos and trucks 1.2 115.3 117.7 109.4 115.9 113.7 117.2 118.7 118.3 110.0 111.7 110.1 108.9 117.7 118.1 30 Other 1.3 116.4 115.5 118.7 119.9 121.4 123.4 124.4 125.1 128.8 128.2 129.2 129.6 130.7 128.4 31 Defense and space equipment 3.3 77.0 77.7 77.0 76.1 76.2 74.7 75.4 75.6 75.2 75.6 76.1 75.0 75.6 75.2 32 Oil and gas well drilling .6 120.5 117.5 120.2 120.7 123.6 130.8 140.7 153.4 152.5 154.2 161.4 149.6 147.1 141.3 33 Manufactured homes .2 162.0 165.6 165.3 159.8 156.3 163.5 160.9 168.0 166.4 163.1 166.3 164.4 34 Intermediate products, total 14.2 109.4 110.6 110.2 111.9 111.3 111.6 112.0 112.1 112.0 112.2 112.0 112.3 112.3 113.1 33 Construction supplies 5.3 116.8 119.8 117.7 120.7 117.8 117.0 120.0 121.8 120.1 120.6 120.6 119.8 120.9 121.0 36 Business supplies 8.9 105.1 105.3 105.8 106.8 107.4 108.4 107.3 106.5 107.2 107.3 106.9 107.9 107.3 108.5 37 Materials 39.5 120.3 121.2 121.7 122.2 123.1 123.4 124.1 124.5 125.5 125.2 126.0 128.0 128.2 129.6 38 Durable goods materials 20.8 134.0 135.5 135.8 136.5 137.8 138.4 139.2 140.2 141.7 141.7 143.3 145.9 147.4 148.6 39 Durable consumer parts 4.0 128.8 128.3 126.6 129.7 130.3 132.1 129.7 129.8 130.5 127.2 130.1 134.9 135.3 134.8 40 Equipment parts 7.6 159.2 162.6 163.4 165.3 167.9 169.4 172.6 175.6 178.1 180.4 183.2 187.2 190.4 193.3 41 Other 9.2 118.2 119.2 120.0 119.1 119.9 119.3 119.8 120.0 121.0 121.0 121.2 122.2 123.0 123.7 42 Basic metal materials 3.1 113.1 114.7 117.2 114.4 115.7 114.9 116.4 116.4 116.7 118.4 118.7 118.5 118.8 121.3 43 Nondurable goods materials 8.9 106.4 106.9 108.0 108.4 109.5 109.6 110.5 110.6 111.3 109.8 109.9 111.7 110.7 111.5 44 Textile materials 1.1 106.3 107.1 108.4 108.5 105.9 106.8 107.7 104.9 109.5 105.4 107.8 113.7 111.3 112.0 45 Paper materials 1.8 107.4 107.0 108.0 110.9 112.5 111.5 113.2 113.8 114.4 114.8 111.7 116.4 115.6 116.9 4b Chemical materials 3.9 105.9 106.8 109.3 107.7 110.2 111.1 111.2 111.2 111.7 109.7 109.4 110.8 109.9 110.8 4/ Other 2.1 106.1 106.2 103.9 106.8 106.3 105.3 107.5 108.4 107.8 107.4 109.7 108.3 107.7 108.0 48 Energy materials 9.7 103.9 103.9 103.9 104.0 103.9 103.8 104.0 103.5 103.8 104.1 103.9 104.6 103.1 105.7 4y Primary energy 6.3 102.6 102.2 102.0 101.6 102.6 101.6 102.8 102.3 101.7 102.5 101.9 103.2 101.4 103.2 30 Converted fuel materials 3.3 106.2 107.0 107.5 108.5 106.3 108.0 106.2 105.9 107.6 107.0 107.6 107.4 106.5 110.4 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.1 114.9 115.7 116.1 116.9 117.4 117.4 118.0 118.5 119.3 119.4 119.8 120.9 121.3 122.1 52 Total excluding motor vehicles and parts 95.1 114.6 115.4 115.9 116.6 117.2 117.1 117.8 118.3 119.0 119.3 119.5 120.6 120.9 121.8 53 Total excluding computer and office equipment 98.2 112.9 113.5 113.7 114.6 115.1 115.1 115.6 116.0 116.4 116.5 116.8 117.7 118.2 118.9 54 Consumer goods excluding autos and trucks . 27.4 109.2 109.2 109.9 111.0 111.4 110.3 110.1 110.7 111.1 111.5 111.1 111.9 111.7 112.5 55 Consumer goods excluding energy 26.2 110.2 110.6 110.8 111.8 112.8 111.9 112.1 112.7 111.9 112.4 112.6 112.8 113.3 113.8 56 Business equipment excluding autos and trucks 12.0 127.7 129.3 130.7 131.2 132.4 133.6 135.3 135.9 138.0 138.5 140.1 142.0 144.5 144.5 57 Business equipment excluding computer and office equipment 12.1 115.8 116.3 116.6 117.5 118.2 119.2 120.5 120.7 121.5 121.7 122.4 123.3 125.9 125.4 58 Materials excluding energy 29.8 125.4 126.6 127.1 127.8 129.0 129.4 130.3 131.0 132.2 131.8 132.8 135.2 135.9 136.9 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 GGrroouupp SIC2 pro- 1996 code por- avg. tion Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June' July' Aug. Sept.p Index (1992 = 100) MAJOR INDUSTRIES 59 Total index 100.0 115.2 116.0 116.2 117.2 117.7 117.8 118.4 118.8 119.3 119.5 119.9 120.9 121.5 122.4 60 Manufacturing 85.4 116.3 117.4 117.6 118.5 119.2 119.3 120.1 120.6 120.9 121.0 121.6 122.7 123.6 124.2 61 Primary processing 26.5 112.2 113.5 113.8 113.8 114.0 113.8 114.8 115.6 115.6 115.8 115.7 116.5 116.7 117.5 62 Advanced processing 58.9 118.4 119.3 119.5 120.8 121.7 122.0 122.6 123.0 123.5 123.6 124.5 125.7 127.0 127.5 63 Durable goods 45.0 125.7 127.2 127.1 128.4 128.8 129.5 130.8 131.7 132.3 132.7 134.1 135.5 137.5 138.0 64 Lumber and products " ' 24 2.0 109.7 110.7 109.2 113.1 108.0 108.6 112.0 113.3 113.6 114.0 114.6 113.4 112.7 112.8 65 Furniture and fixtures 25 1.4 108.9 108.8 110.4 110.5 110.5 109.7 110.3 111.0 112.7 113.9 114.5 113.6 112.6 113.4 66 Stone, clay, and glass products 32 2.1 111.0 113.1 111.7 111.8 111.3 112.7 112.5 113.5 113.8 112.8 113.5 114.1 114.3 114.2 67 Primary metals 33 3.1 117.2 119.5 122.1 118.5 118.8 117.8 120.0 121.3 120.2 123.4 123.1 123.8 123.4 126.8 68 Iron and steel 331,2 1.7 116.4 117.4 123.2 115.9 116.7 118.0 118.2 118.7 119.3 123.6 120.3 120.7 119.7 126.2 69 Raw steel 331PT .1 112.2 112.6 111.5 108.7 112.5 111.7 112.3 114.2 115.5 115.8 115.1 115.4 116.3 123.6 70 Nonferrous 333-6,9 1.4 118.0 121.8 120.7 121.4 121.2 117.6 122.1 124.2 121.3 123.1 126.2 127.2 127.7 127.5 71 Fabricated metal products. . . 34 5.0 118.6 119.3 119.3 119.1 119.5 119.2 119.5 120.4 120.8 121.1 120.8 121.5 122.1 122.4 72 Industrial machinery and equipment 35 8.0 156.4 159.4 159.9 161.7 162.9 164.7 166.6 167.4 171.3 170.5 172.2 176.6 181.4 181.0 73 Computer and office equipment 357 1.8 296.9 319.0 323.6 328.3 332.5 340.3 347.8 354.7 363.8 371.8 383.9 401.1 415.2 427.6 74 Electrical machinery 36 7.3 163.3 165.2 165.6 167.2 168.8 168.6 172.5 175.2 176.7 178.1 181.7 186.0 188.0 189.4 75 Transportation equipment. . . 37 9.5 106.1 107.3 105.3 109.5 109.6 111.9 111.5 111.9 110.6 110.2 112.4 112.7 116.7 116.9 76 Motor vehicles and parts . 371 4.9 126.9 127.0 121.2 128.9 127.9 132.0 129.6 128.9 125.3 123.7 127.1 126.7 134.4 134.3 77 Autos and light trucks . 371PT 2.6 124.6 127.4 117.3 125.7 125.6 128.8 129.4 129.5 119.1 121.6 123.1 116.9 130.8 133.3 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.6 85.6 87.9 89.4 90.3 91.5 92.2 93.5 94.8 95.5 96.4 97.4 98.3 98.9 99.5 79 Instruments 38 5.4 102.8 103.0 103.4 103.0 104.1 103.3 104.6 104.7 104.4 105.2 105.9 105.4 106.8 106.5 80 Miscellaneous 39 1.3 112.9 113.0 113.0 114.1 116.6 116.3 117.1 116.3 116.9 117.0 117.5 118.9 118.3 118.1 81 Nondurable goods 40.4 106.3 106.9 107.4 107.9 108.8 108.5 108.6 108.7 108.7 108.7 108.4 109.2 109.0 109.6 82 Foods " ' 20 9.4 106.3 106.2 107.1 107.6 108.2 108.2 108.4 109.2 108.3 108.1 107.9 108.7 108.5 108.9 83 Tobacco products 21 1.6 105.6 104.9 104.0 105.4 108.9 104.6 105.7 106.9 105.5 104.2 101.8 103.3 104.9 104.4 84 Textile mill products 22 1.8 106.6 107.2 107.6 108.2 106.3 106.3 106.9 108.2 108.6 107.3 108.9 111.3 111.0 111.2 85 Apparel products 23 2.2 98.2 98.2 97.8 97.3 97.2 96.2 95.8 96.3 96.1 96.4 96.4 96.1 95.5 95.7 86 Paper and products 26 3.6 108.0 108.8 107.6 110.1 111.6 110.3 111.1 112.1 112.2 112.8 111.7 114.8 113.9 115.3 87 Printing and publishing 27 6.7 98.4 99.1 99.7 100.0 99.8 100.5 100.6 99.7 99.6 99.8 99.7 100.1 99.8 100.1 88 Chemicals and products .... 28 9.9 108.9 109.7 111.3 111.8 114.0 113.7 112.8 112.0 113.3 112.7 112.3 113.1 112.0 113.3 89 Petroleum products 29 1.4 106.5 106.9 108.4 107.4 107.3 107.4 108.6 108.1 110.7 112.1 111.3 108.9 110.8 111.5 90 Rubber and plastic products . 30 3.5 120.5 122.8 121.4 121.7 122.6 121.1 123.1 124.0 122.3 123.4 124.0 124.2 126.8 126.6 91 Leather and products 31 .3 80.0 79.4 78.4 77.3 80.1 78.3 77.6 78.4 78.8 77.0 75.6 75.4 73.8 73.5 92 Mining 6.9 102.9 103.4 103.4 103.5 104.5 103.6 106.3 107.5 106.0 108.1 107.8 107.6 106.3 105.8 93 Metal 10 .5 102.0 105.3 105.6 102.5 106.3 105.7 105.7 104.8 103.5 104.2 107.4 104.0 103.9 105.4 94 Coal 12 1.0 105.9 106.2 107.5 108.8 109.5 106.4 109.6 105.2 104.1 115.9 107.4 114.1 109.8 109.3 95 Oil and gas extraction 13 4.8 100.3 100.5 100.0 100.2 100.7 100.8 103.1 105.4 104.5 105.0 105.8 104.9 103.5 102.6 96 Stone and earth minerals 14 .6 118.7 118.5 120.0 120.2 122.9 117.2 125.0 128.8 122.3 121.3 123.7 119.7 123.1 123.3 97 Utilities 7.7 112.8 111.1 111.9 114.5 112.6 112.7 110.2 109.9 113.6 112.4 111.7 112.7 111.4 116.3 98 Electric 491.493PT 6.2 112.7 110.9 112.0 112.7 112.6 113.2 110.9 110.3 113.6 110.5 111.1 113.4 111.8 117.4 99 Gas 492.493PT 1.6 113.2 111.8 111.3 120.9 112.7 110.9 107.6 108.7 113.2 119.0 113.5 110.3 110.1 112.5 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.5 115.7 116.8 117.3 117.9 118.6 118.6 119.5 120.0 120.6 120.8 121.2 122.4 123.0 123.6 101 Manufacturing excluding office and computing machines... 83.6 113.7 114.5 114.7 115.5 116.1 116.2 116.9 117.3 117.5 117.6 118.0 118.9 119.7 120.2 Gross value (billions of 1992 dollars, annual rates) MAJOR MARKETS 102 Products, total 2,001.9 2,258.7 2,273.4 2,270.7 2,303.5 2,301.1 2,302.9 2,315.3 2,327.5 2,324.7 2,337.5 2,338.5 2,341.2 2,370.6 2,380.9 103 Final 1,552.1 1,760.9 1,771.6 1,771.8 1,795.1 1,796.8 1,798.4 1,808.8 1.819.6 1,816.4 1,827.8 1,830.4 1,832.5 1,862.5 1,868.6 104 Consumer goods 1,049.6 1,162.2 1,163.0 1,164.7 1,182.2 1,182.3 1,176.3 1,177.7 1.184.7 1,179.4 1,187.3 1,184.6 1,183.2 1,197.4 1.204.3 105 Equipment 502.5 598.0 607.8 606.3 612.1 613.7 621.4 630.4 634.2 636.4 639.9 645.1 648.8 664.7 663.8 106 Intermediate 449.9 498.2 502.1 499.3 508.6 504.9 505.1 507.2 508.7 508.9 510.5 509.1 509.7 509.8 513.8 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For ments," Federal Reserve Bulletin, vol. 83 (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: 1989 Developproduction index and the capacity utilization rates was released in January 1997. See ments and Historical Revision," Federal Reser\>e 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 • December 1997 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1996 1997 IItteemm 11999944 11999955 11999966 Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,372 1,333 1,426 1,391 1,405 1,395 1,438 1,457 1,442 1,432 1,402 1,414 1,397 2 One-family 1,069 997 1,070 1,016 999 1,052 1,069 1,034 1,060 1,053 1,049 1,030 1,027 3 Two-family or more 303 335 356 375 406 343 369 423 382 379 353 384 370 4 Started 1,457 1,354 1,477 1,486 1,353 1,375 1,554 1,479 1,483 1,402 1,503 1,465 1,390 5 One-family 1,198 1,076 1,161 1,133 1,024 1,125 1,237 1,142 1,133 1,098 1,134 1,149 1,094 6 Two-family or more 259 278 316 353 329 250 317 337 350 304 369 316 296 7 Under construction at end of period1 755 775 819 828 815 818 821 814 812 815 829 834 830 8 One-family 584 554 584 584 571 573 574 566 563 564 566 569 566 9 Two-family or more 171 221 235 244 244 245 247 248 249 251 263 265 264 10 Completed 1,346 1,319 1,407 1,431 1,484 1,362 1,572 1,471 1,460 1,388 1,318 1,318 1,321 11 One-family 1,161 1,073 1,124 1,151 1,177 1,109 1,267 1,156 1,158 1,101 1,096 1,066 1,049 12 Two-family or more 185 246 283 280 307 253 305 315 302 287 222 252 272 13 Mobile homes shipped 305 341 362 354 338 339 353 353 372 356 356 358 357 Merchant builder activity in one-family units 14 Number sold 670 667 757 788 794 822 826 825 765 764 815 818 800 15 Number for sale at end of period1 340 374 326 327 322 308 300 287 291 288 287 287 284 Price of units sold (thousands of dollars)2 16 Median 130.0 133.9 140.0 143.5 144.9 145.0 143.0 148.0 150.0 141.0 144.9 145.9 145.0 17 Average 154.5 158.7 166.4 172.0 171.8 171.9 171.1 172.7 179.5 170.7 177.6 175.3 172.3 EXISTING UNITS (one-family) 18 Number sold 3,967 3,812 4,087 4,060 3,950 3,910 4,230 4,160 4,060 4,250 4,150 4,180 4,310 Price of units sold (thousands of dollars)2 19 Median 109.9 113.1 118.2 117.4 118.8 120.6 117.5 120.0 120.7 123.1 127.2 126.5 127.5 20 Average 136.8 139.1 145.5 144.1 147.1 149.6 144.7 147.5 150.4 153.1 158.4 157.6 159.1 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 518,644 534,463 567,179 586,226 579,109 577,116 592,365 593,908 596,907r 595,763 594,195 603,653 601,775 22 Private 398,646 407,370 435,929 448,907 447,045 444,391 452,037 452,728 457,604r 459,882 456,927 464,691 464,150 23 Residential 238,423 231,230 246,659 248,259 247,899 246,661 251,402 253,974 259,917r 259,662 257,277 259,431 259,969 24 Nonresidential 160,223 176,140 189,271 200,648 199,146 197,730 200,635 198,754 197,687r 200,220 199,650 205,260 204,181 25 Industrial buildings 28,893 32,505 31,997 33,244 30,752 31,871 32,161 30,520 29,33 lr 30,501 31,046 33,236 33,002 26 Commercial buildings 59,480 68,223 74,593 80,144 78,395 81,979 83,107 81,015 76,545r 78,670 79,009 81,218 78,976 2/ Other buildings 26,988 27,089 30,525 33,454 34,409 34,257 35,561 36,012 38,229r 37,738 35,775 36,312 36,893 28 Public utilities and other 44,862 48,323 52,156 53,806 55,590 49,623 49,806 51,207 53,582r 53,311 53,820 54,494 55,310 29 Public 119,998 127,092 131,250 137,319 132,064 132,725 140,328 141,180 139,304r 135,882 137,268 138,962 137.625 30 Military 2,310 2,983 2,541 2,365 2,241 2,542 2,564 2,232 2,408r 2,548 2,580 2,738 2,770 31 Highway 36,933 36,319 37,898 38,610 39,585 37,869 41,060 41,473 42,356r 40,694 41,531 41,289 40,730 32 Conservation and development 6,459 6,391 5,807 5,710 5.223 5.807 5,727 6,114 5,134r 5,242 4,952 4,941 5,288 33 Other 74,297 81,399 85,005 90,634 85,015 86,507 90,977 91,361 89,406r 87,398 88,205 89,994 88,837 1. Not at annual rates. SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, which are 2. Not seasonally adjusted. private, domestic shipments as reported by the Manufactured Housing Institute and season- 3. Recent data on value of new construction may not be strictly comparable with data for ally adjusted by the Census Bureau, and (2) sales and prices of existing units, which are previous periods because of changes by the Bureau of the Census in its estimating techniques. published by the National Association of Realtors. All back and current figures are available For a description of these changes, see Construction Reports (C-30-76-5), issued by the from the originating agency. Permit authorizations are those reported to the Census Bureau Census Bureau in July 1976. from 19,000 jurisdictions beginning in 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data except as noted Change from 12 Change from 3 months earlier Change from 1 month earlier months earlier (annual rate) Index level, Item 1996 1997 1997 Sept. 1996 1997 1997 1 Sept. Sept. Sept. Mar. June Sept. May June July Aug. Sept. CONSUMER PRICES2 (1982-84=100) 1 3.0 2.2 3.3 1.8 1.0 2.5 .1 .1 .2 .2 .2 161.2 1 3.8 2.1 3.4 .3 1.5 3.4 .4 .2 .3 .4 .1 157.9 3 5.2 2.0 16.2 -2.8 -14.7 11.9 -2.4 .0 -.1 1.7 1.3 113.9 4 2.7 2.2 2.4 2.4 2.4 1.7 .2 .1 .2 .1 .2 170.0 1.2 .4 .9 1.1 .6 -.6 .1 -.2 -.1 -.3 .2 142.0 33..33 22..99 33..11 22..77 3.5 2.4 .3 .3 .3 .2 .2 186.0 PRODUCER PRICES (1982=100) 7 3.0 .0 4.3 -3.3 -3.6 2.8 — ,2r -,2r -.1 .3 .5 131.8 4.2 -.6 2.4 -2.0 -3.5 .6 .4 -1.0r -.2 .3 .1 134.8 q 88..00 -.1 26.2 -16.9 -15.1 12.4 - 1.3r ,5r .1 1.4 1.5 85.2 in 11..66 .6 .6 .6 -.6 1.7 -,2r .1 -.1 .1 .5 144.4 iiii 11..22 -.1 --..66 ..00 -1.2 .9 -.2 ,0r -.1 .0 .3 137.1 Intermediate materials p -.1 -.2 2.2 -1.9 -1.9 1.0 -.2 .R -.2 .2 .2 126.0 1133 --11..66 .3 --..33 ..66 .3 .3 .R ,OR .0 .1 .0 134.3 Crude materials 14 14.8 -11.0 -28.5 -2.8 -10.1 -.4 -.2 -5.4 .3 -.1 -.3 111.1 15 20.2 1.4 235.2 -75.5 10.2 16.6 5.8r —2.2r -.4 1.7 2.6 82.1 1166 Other --1100..11 1.7 --11..33 1155..77 -3.5 -3.0 1.3r .R -.5 .8 -1.0 156.1 1. Not seasonally adjusted. SOURCE. U.S. Department of Labor, Bureau of Labor Statistics. 2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence measure of homeownership. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • December 1997 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1996 1997 AAccccoouunntt 11999944 11999955 11999966 Q2 Q3 Q4 Ql Q2 GROSS DOMESTIC PRODUCT 1 Total 6,947.0 7,265.4 7,636.0 7,607.7 7,676.0 7,792.9 7,933.6 8,034.3 By source 2 Personal consumption expenditures 4,717.0 4,957.7 5,207.6 5,189.1 5,227.4 5,308.1 5,405.7 5,432.1 3 Durable goods 579.5 608.5 634.5 638.6 634.5 638.2 658.4 644.5 4 Nondurable goods 1,428.4 1,475.8 1,534.7 1,532.3 1,538.3 1,560.1 1,587.4 1,578.9 b Services 2,709.1 2,873.4 3,038.4 3,018.2 3,054.6 3,109.8 3,159.9 3,208.7 6 Gross private domestic investment 1,007.9 1,038.2 1,116.5 1,105.4 1,149.2 1,151.1 1,193.6 1,242.0 / Fixed investment 946.6 1,008.1 1,090.7 1,082.0 1,112.0 1,119.2 1,127.5 1,160.8 8 Nonresidential 660.6 723.0 781.4 769.3 798.6 807.2 811.3 836.3 9 Structures 184.5 200.6 215.2 210.6 217.7 227.0 227.4 226.8 10 Producers' durable equipment 476.1 522.4 566.2 558.7 580.9 580.2 583.9 609.5 11 Residential structures 286.0 285.1 309.2 312.7 313.5 312.0 316.2 324.6 12 Change in business inventories 61.2 30.1 25.9 23.4 37.1 31.9 66.1 81.1 13 Nonfarm 50.5 38.1 23.0 17.2 31.3 28.7 62.2 74.9 14 Net exports of goods and services -90.9 -86.0 -94.8 -93.8 -114.0 -88.6 -98.8 -88.7 lb Exports 721.2 818.4 870.9 865.0 863.7 904.6 922.2 960.3 16 Imports 812.1 904.5 965.7 958.7 977.6 993.2 1,021.0 1,049.0 17 Government consumption expenditures and gross investment 1,313.0 1.355.5 1,406.7 1,407.0 1,413.5 1,422.3 1,433.1 1,449.0 18 Federal 510.2 509.6 520.0 524.6 521.6 517.6 516.1 526.1 19 State and local 802.8 846.0 886.7 882.4 891.9 904.7 917.0 923.0 By major type of product 20 Final sales, total 6,885.7 7,235.3 7,610.2 7,584.3 7,638.9 7,761.0 7,867.4 7,953.2 21 Goods 2,520.2 2,637.9 2,759.3 2,759.3 2,760.7 2,795.0 2,838.4 2,854.9 22 Durable 1,072.5 1,133.9 1,212.0 1,214.8 1,216.3 1,233.5 1,248.0 1,275.3 23 Nondurable 1,447.6 1,503.9 1,547.3 1,544.5 1,544.4 1,561.5 1,590.4 1,579.6 24 Services 3,772.4 3,980.7 4,187.3 4,162.2 4,208.1 4,282.7 4,338.2 4,400.1 2b Structures 593.2 616.8 663.6 662.8 670.1 683.3 690.8 698.2 26 Change in business inventories 61.2 30.1 25.9 23.4 37.1 31.9 66.1 81.1 27 Durable goods 33.6 29.1 16.9 18.1 33.3 -1.1 31.8 46.8 28 Nondurable goods 27.7 1.1 9.0 5.3 3.9 33.0 34.3 34.4 MEMO 29 Total GDP in chained 1992 dollars 6,610.7 6,742.1 6,928.4 6,926.0 6,943.8 7,017.4 7,101.6 7,159.6 NATIONAL INCOME 30 Total 5,590.7 5,912.3 6,254.5 6,229.4 6,303.3 6,376.5 6,510.0 6,599.0 31 Compensation of employees 4,012.0 4,215.4 4,426.9 4,403.9 4,461.0 4,520.7 4,606.3 4,663.4 32 Wages and salaries 3,254.0 3,442.6 3,633.6 3,612.3 3,664.0 3,718.0 3,792.7 3,842.7 33 Government and government enterprises 602.2 623.0 642.6 640.3 645.5 648.9 657.8 662.0 34 Other 2,651.8 2,819.6 2,991.0 2,972.0 3,018.4 3,069.0 3,134.9 3,180.8 3b Supplement to wages and salaries 758.0 772.9 793.3 791.5 797.0 802.7 813.6 820.7 36 Employer contributions for social insurance 353.0 366.0 385.7 383.6 388.6 393.6 401.3 405.6 37 Other labor income 405.0 406.8 407.6 407.9 408.4 409.1 412.3 415.1 38 Proprietors' income1 471.6 489.0 520.3 520.0 523.8 528.3 534.6 543.6 39 Business and professional' 434.7 465.5 483.1 483.5 483.7 487.9 494.4 500.0 40 Farm1 36.9 23.4 37.2 36.5 40.1 40.4 40.2 43.6 41 Rental income of persons2 124.4 132.8 146.3 144.6 148.0 149.2 149.0 148.7 42 Corporate profits' 570.5 650.0 735.9 738.5 739.6 747.8 779.6 795.1 43 Profits before tax3 535.1 622.6 676.6 682.2 679.1 680.0 708.4 719.8 44 Inventory valuation adjustment -16.1 -24.3 -2.5 -5.4 -2.7 3.3 3.5 5.9 4b Capital consumption adjustment 51.4 51.6 61.8 61.6 63.2 64.4 67.7 69.4 46 Net interest 412.3 425.1 425.1 422.5 430.9 430.6 440.5 448.1 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. U.S. Department of Commerce, Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1996 1997 AAccccoouunntt 11999944 11999955 11999966 Q2 Q3 Q4 Ql Q2 PERSONAL INCOME AND SAVING 1 Total personal income 5,791.8 6,150.8 6,495.2 6,461.3 6,541.9 6,618.4 6,746.2 6,829.1 2 Wage and salary disbursements 3,240.7 3,429.5 3.632.5 3,611.2 3,662.8 3,716.9 3,791.5 3,841.6 3 Commodity-producing industries 824.4 864.4 909.1 906.3 917.2 927.8 942.9 952.8 4 Manufacturing 620.8 648.4 674.7 674.1 680.1 685.6 694.1 700.3 5 Distributive industries 741.4 783.1 823.3 819.2 829.0 840.6 856.8 867.0 6 Service industries 1,072.7 1,159.0 1,257.5 1,245.3 1,271.1 1,299.5 1,334.1 1,359.8 7 Government and government enterprises 602.2 623.0 642.6 640.3 645.5 648.9 657.8 662.0 Other labor income 405.0 406.8 407.6 407.9 408.4 409.1 412.3 415.1 9 Proprietors' income1 471.6 489.0 520.3 520.0 523.8 528.3 534.6 543.6 10 Business and professional1 434.7 465.5 483.1 483.5 483.7 487.9 494.4 500.0 11 Farm1 36.9 23.4 37.2 36.5 40.1 40.4 40.2 43.6 12 Rental income of persons2 124.4 132.8 146.3 144.6 148.0 149.2 149.0 148.7 13 Dividends 204.8 251.9 291.2 290.0 292.0 295.2 312.5 318.3 14 Personal interest income 668.1 718.9 735.7 727.8 742.7 749.8 757.2 766.1 15 Transfer payments 954.7 1,015.0 1,068.0 1,064.8 1,072.4 1,081.5 1,107.2 1,117.0 16 Old-age survivors, disability, and health insurance benefits 473.0 507.8 537.6 535.4 540.0 545.6 558.9 564.4 17 LESS: Personal contributions for social insurance 277.5 293.1 306.3 305.0 308.2 311.5 318.2 321.3 18 EQUALS: Personal income 5,791.8 6,150.8 6,495.2 6,461.3 6,541.9 6,618.4 6,746.2 6,829.1 19 LESS: Personal tax and nontax payments 739.1 795.1 886.9 887.8 897.3 922.6 955.7 979.2 20 EQUALS: Disposable personal income 5,052.7 5,355.7 5,608.3 5,573.5 5,644.6 5,695.8 5,790.5 5,849.9 21 LESS: Personal outlays 4,842.1 5,101.1 5,368.8 5,347.8 5,390.6 5,475.4 5,574.6 5,602.8 22 EQUALS: Personal saving 210.6 254.6 239.6 225.7 254.0 220.4 215.9 247.0 MEMO Per capita (chained 1992 dollars) 23 Gross domestic product 25,357.0 25,615.9 26,085.8 26,106.4 26,114.4 26,331.6 26,597.8 2266,,776655..00 24 Personal consumption expenditures 17,207.2 17,459.3 17,748.9 17,761.8 17,744.2 17,847.8 18,045.2 18,053.9 25 Disposable personal income 18,431.0 18,861.0 19,116.0 19,081.0 19,161.0 19,152.0 19,331.0 19,439.0 26 Saving rate (percent) 4.2 4.8 4.3 4.1 4.5 3.9 3.7 4.2 GROSS SAVING 27 Gross saving 1,079.2 1,165.5 1,267.8 1,256.3 1,295.9 1,303.0 1,332.9 1,396.9 28 Gross private saving 1,030.2 1,093.1 1,125.5 1,106.3 1,145.1 1,131.4 1,134.0 1,178.1 29 Personal saving 210.6 254.6 239.6 225.7 254.0 220.4 215.9 247.0 30 Undistributed corporate profits' 167.6 172.4 202.1 202.6 202.3 212.6 211.5 217.6 31 Corporate inventory valuation adjustment -16.1 -24.3 -2.5 -5.4 -2.7 3.3 3.5 5.9 Capital consumption allowances 32 Corporate 412.3 428.9 452.3 448.5 455.5 462.0 446677..44 447722..66 33 Noncorporate 226.3 224.1 230.5 228.3 232.2 235.2 238.0 239.7 34 Gross government saving 49.0 72.4 142.3 150.0 150.8 171.6 198.9 218.8 35 Federal -117.2 -103.6 -39.3 -40.2 -28.3 -5.9 15.9 34.7 36 Consumption of fixed capital 69.5 70.9 71.2 71.4 71.2 71.3 71.4 71.5 37 Current surplus or deficit (—), national accounts -186.7 -174.4 -110.5 -111.6 -99.5 -77.1 -55.5 -36.8 38 State and local 166.2 176.0 181.5 190.2 179.1 177.5 182.9 184.1 39 Consumption of fixed capital 69.4 72.9 76.2 75.8 76.5 77.2 78.2 79.2 40 Current surplus or deficit (—), national accounts 96.8 103.1 105.3 114.4 102.6 100.4 104.7 104.9 41 Gross investment 1,093.8 1,137.2 1,207.9 1,206.0 1,216.4 1,243.5 1,268.6 1,323.4 42 Gross private domestic investment 1,007.9 1,038.2 1,116.5 1,105.4 1,149.2 1,151.1 1,193.6 1.242.0 43 Gross government investment 206.0 213.4 224.3 226.3 223.6 225.3 223.3 227.4 44 Net foreign investment -120.0 -114.4 -132.9 -125.6 -156.4 -132.9 -148.4 -146.0 45 Statistical discrepancy 14.6 -28.2 -59.9 -50.2 -79.5 -59.5 -64.3 -73.5 1. With inventory valuation and capital consumption adjustments. SOURCE. U.S. Department of Commerce, Survey of Current Business. 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 International Statistics • December 1997 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 1996 1997 IItteemm ccrreeddiittss oorr ddeebbiittss 11999944 11999955 11999966 Q2 Q3 Q4 Ql Q2P I Balance on current account -133,538 -129,095 -148,184 -35,585 -42,833 -36,874 -39,972 -39,030 2 Merchandise trade balance2 -166,192 -173,560 -191,170 -47,562 -52,493 -48,190 -49,787 -46,903 3 Merchandise exports 502,398 575,871 612,069 153,411 150,764 157,846 162,527 171,489 4 Merchandise imports -668,590 -749,431 -803,239 -200,973 -203,257 -206,036 -212,314 -218,392 5 Military transactions, net 1,874 3,866 3,786 1,214 792 1,295 437 782 6 Other service transactions, net 59,902 67,837 76,344 18,569 19,185 20,697 20,050 19,708 / Investment income, net 9,723 6,808 2,824 883 -1,370 1,250 -1,990 -3,554 8 U.S. government grants -15,671 -11,096 -14,933 -2,423 -2,690 -5,499 -2,109 -2,255 y U.S. government pensions and other transfers -4,544 -3,420 -4,331 -1,081 -1,064 -1,050 -1,083 -1,128 10 Private remittances and other transfers -18,630 -19,530 -20,704 -5,185 -5,193 -5,377 -5,490 -5,680 ii Change in U.S. government assets other than official reserve assets, net (increase, —) -352 -549 -690 -358 162 -284 -21 -238 12 Change in U.S. official reserve assets (increase, -) 5,346 -9,742 6,668 -523 7,489 -315 4,480 -236 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -441 -808 370 -133 848 -146 72 -133 15 Reserve position in International Monetary Fund 494 -2,466 -1.280 -220 -183 -28 1,055 54 16 Foreign currencies 5,293 -6,468 7,578 -170 6,824 -141 3,353 -157 17 Change in U.S. private assets abroad (increase, —) -165,510 -296,916 -358,422 -48,817 -85,193 -153,837 -132,428 -95,018 18 Bank-reported claims3 -4,200 -75.108 -98,186 192 -33,589 -66,657 -62,026 --2299,,661122 iy Nonbank-reported claims -31,739 -34,997 -64,234 -5,047 -17,294 -26,115 -29,466 20 U.S. purchases of foreign securities, net -60,309 -100,074 -108,189 -20,328 -23,206 -30,200 -14,510 -21,325 21 U.S. direct investments abroad, net -69,262 -86,737 -87,813 -23,634 -11,104 -30,865 -26,426 -29,081 22 Change in foreign official assets in United States (increase, +) 40,385 110,729 122,354 13,154 24,089 33.097 28,891 -3,719 23 U.S. Treasury securities 30,750 68,977 111,253 -3,383 25,472 33,564 23,289 -8,444 24 Other U.S. government obligations 6,077 3,735 4,381 1,258 1,217 1,854 651 644 23 Other U.S. government liabilities4 2,366 744 720 -204 907 160 478 804 26 Other U.S. liabilities reported by U.S. banks3 3,665 34,008 4,722 14,198 -1,922 -4,270 7,698 2,346 27 Other foreign official assets5 -2,473 3.265 1,278 1,285 -1,585 1,789 -3,225 931 28 Change in foreign private assets in United States (increase, +) 256,952 340,505 425.201 92,960 134,540 161,482 153,347 155,368 29 U.S. bank-reported liabilities3 104,338 30,176 9,784 2,319 2,040 38,960 17,387 2277,,114433 30 U.S. nonbank-reported liabilities -7,710 34,588 31,786 7,288 20,610 -2,912 15,210 31 Foreign private purchases of U.S. Treasury securities, net 57,674r 11 l,848r 172,878r 36,152r 50,798r 75,326r 51,289 50,816 32 Foreign purchases of other U.S. securities, net 56,971 96,367 133,798 29,761 35,115 32,447 38,820 51,537 33 Foreign direct investments in United States, net 45,679 67,526 76,955 17,440 25,977 17,661 30,641 28,872 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy -3,283 -14,931 -46,927 -20,831 -38,254 -3,269 -14,297 -17,127 36 Due to seasonal adjustment -1,076 -7,830 2.669 7,059 -1,768 3/ Before seasonal adjustment -3,284 -14,931 -46,926 -19,755 -30,424 -5,938 -21,356 -15,359 MEMO Changes in official assets 38 U.S. official reserve assets (increase, —) 55,,334466 -9,742 66,,666688 -523 77,,448899 -315 44,,448800 -236 3y Foreign official assets in United States, excluding line 25 (increase, +) 38,019 109,985 121,634 13,358 23,182 32,937 28,413 -4,523 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) -1,529 4.239 12,278 5,239 5,263 3,315 9,272 2,563 1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 38-40. 4. Associated primarily with military sales contracts and other transactions arranged with 2. Data are on an international accounts basis. The data differ from the Census basis data, or through foreign official agencies. shown in table 3.11, for reasons of coverage and timing. Military exports are excluded from 5. Consists of investments in U.S. corporate stocks and in debt securities of private merchandise trade data and are included in line 5. corporations and state and local governments. 3. Reporting banks include all types of depository institutions as well as some brokers and SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current dealers. Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A51 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1997 IItteemm 11999944 11999955 11999966 Feb. Mar. Apr. May June July Aug.p 1 Goods and services, balance -104,416 -101,857 -111,040 -9,856 -7,831 -8,794 -9,557 -8,293 -10,018 -10,358 2 Merchandise -166,192 -173,560 -191,170 -16,761 -14,877 -15,527 -16,363 -15,244 -16,848 -17,375 3 Services 61,776 71,703 80,130 6,905 7,046 6,733 6,806 6,951 6,830 7,017 4 Goods and services, exports 699,646 794,610 848,833 74,282 78,124 77,791 77,742 78,515 77,787 77,957 5 Merchandise 502,398 575,871 612,069 53,687 57,155 57,162 56,871 57,378 56,745 56,819 6 Services 197,248 218,739 236,764 20,595 20,969 20,629 20,871 21,137 21,042 21,138 7 Goods and services, imports -804,062 -896,467 -959,873 -84,138 -85,955 -86,585 -87,299 -86,808 -87,805 -88,315 8 Merchandise -668,590 -749,431 -803,239 -70,448 -72,032 -72,689 -73,234 -72,622 -73,593 -74,194 9 Services -135,472 -147,036 -156,634 -13,690 -13,923 -13,896 -14,065 -14,186 -14,212 -14,121 1. Data show monthly values consistent with quarterly figures in the U.S. balance of SOURCE. FT900, U.S. Department of Commerce, Bureau of the Census and Bureau of payments accounts. Economic Analysis. 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1997 AAsssseett 11999944 11999955 11999966 Feb. Mar. Apr. May June July Aug. Sept.p 1 Total 74,335 85,832 75,090 67,482 67,222 65,873 68,054 67,813 66,120 66,640 67,148 2 Gold stock, including Exchange Stabilization Fund' 11,051 11,050 11,049 11,051 11,050 11,051 11,051 11,050 11,051 11,050 11,050 3 Special drawing rights"3 10,039 11,037 10,312 9,866 9,879 9,726 10,050 10,023 9,810 9,985 9,997 4 Reserve position in International Monetary Fund' 12,030 14,649 15,435 14,037 13,846 13,660 13,805 13,805 13,677 13,959 14,042 5 Foreign currencies4 41,215 49,096 38,294 32,528 32,447 31,436 32,935 32,935 31,582 31,646 32,059 1. Gold held "under earmark" at Federal Reserve Banks for foreign and international SDR holdings and reserve positions in the IMF also have been valued on this basis since July accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold 1974. stock is valued at $42.22 per fine troy ounce. 3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the year 2. Special drawing rights (SDRs) are valued according to a technique adopted by the indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—$710 million; 1979— International Monetary Fund (IMF) in July 1974. Values are based on a weighted average of $1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net transactions in SDRs. exchange rates for the currencies of member countries. From July 1974 through December 4. Valued at current market exchange rates. 1980, sixteen currencies were used; since January 1981, five currencies have been used. U.S. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS' Millions of dollars, end of period 1997 AAsssseett 11999944 11999955 11999966 Feb. Mar. Apr. May June July Aug. Sept.p 1 Deposits 250 386 167 229 16 169 176 178 175 169 188 Held in custody 2 U.S. Treasury securities" 441,866 522,170 638,049 662,375 672,059 668,536 662,747 652,077 653,157 660,461 655,406 3 Earmarked gold3 12,033 11,702 11,197 11,175 11,034 10,944 10,868 10,794 10,793 10,793 10,793 1. Excludes deposits and U.S. Treasury securities held for international and regional 3. Held in foreign and international accounts and valued at $42.22 per fine troy ounce; not organizations. included in the gold stock of the United States. 2. Marketable U.S. Treasury bills, notes, and bonds and nonmarketable U.S. Treasury securities, in each case measured at face (not market) value. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 International Statistics • December 1997 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1997 IItteemm 11999955 11999966 Feb.1" Mar.r Apr/ Mayr Juner July Aug." 1 Total1 630,918 758,35lr 777,899 785,877 780,795 784,977 779,904 780,210 791,826 By type 2 Liabilities reported by banks in the United States2 107,394 113.098 118,019 120,594 118,838 127,073 125,129 129,388 127,464 3 U.S. Treasury bills and certificates3 168,534 198,921 196,555 196,219 186,432 178,366 163,950 161,270 165,453 U.S. Treasury bonds and notes 4 Marketable 293,690 379,85 lr 397,654 405,041 412,143 415,520 425,575 423,076 431,532 5 Nonmarketable4 6,491 5.968 6,043 6,084 5,692 5,730 5,767 5,804 5,841 6 U.S. securities other than U.S. Treasury securities5 54,809 60,513 59,628 57,939 57,690 58,288 59,483 60,672 61,536 By area 7 Europe1 222,406 257,480 265,438 269,214 268,337 268,536 272,973 270,794 270,599 8 Canada 19,473 21,343 21,237 21,997 19,677 20,196 20,577 21,009 20,681 9 Latin America and Caribbean 66,721 81,173r 78,885 80,631 76,632 81,926 89,185 93,765 95,104 10 Asia 311,016 385,048 401,419 401,331 403,814 402,475 382,281 380,318 390,265 11 Africa 6,296 7,379 7,411 7,908 7,765 8,643 8,890 8,882 8,934 12 Other countries 5,004 5,926 3,507 4,794 4,568 3,199 5,996 5,440 6,241 1. Includes the Bank for International Settlements. Venezuela, beginning December 1990, 30-year maturity issue; Argentina, beginning April 2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, 1993. 30-year maturity issue. negotiable time certificates of deposit, and borrowings under repurchase agreements. 5. Debt securities of U.S. government corporations and federally sponsored agencies, and 3. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official U.S. corporate stocks and bonds. institutions of foreign countries. SOURCE. Based on U.S. Department of the Treasury data and on data reported to the 4. Excludes notes issued to foreign official nonreserve agencies. Includes current value of department by banks (including Federal Reserve Banks) and securities dealers in the United zero-coupon Treasury bond issues to foreign governments as follows: Mexico, beginning States, and on the 1989 benchmark survey of foreign portfolio investment in the United March 1988, 20-year maturity issue and beginning March 1990, 30-year maturity issue; States. 3.16 LIABILITIES TO, AND CLAIMS ON, FOREIGNERS Reported by Banks in the United States1 Payable in Foreign Currencies Millions of dollars, end of period 1996 1997 IItteemm 11999933 11999944 11999955 Sept. Dec. Mar. June 1 Banks' liabilities 78,259 89.258 109,713 111,140 103,383 109,238 109,433 2 Banks' claims 62,017 60.711 74,016 68,120 66,018 72,589 84,665 3 Deposits 20,993 19,661 22,696 24,026 22,467 24,542 26,503 4 Other claims 41,024 41,050 51,320 44,094 43,551 48,047 58,162 5 Claims of banks' domestic customers' 12,854 10,878 6,145 7,390 10,978 9,357 11,292 1. Data on claims exclude foreign currencies held by U.S. monetary authorities. 2. Assets owned by customers of the reporting bank located in the United States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A53 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States' Payable in U.S. dollars Millions of dollars, end of period 1997 IItteemm 11999944 11999955 11999966 Feb.r Mar.r Apr.r Mayr Juner July Aug.p BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 1,014,996 1,099,549 1,161,993 1,179,209 1,173,099 1,181,419 1,193,134 1,185,139 1,202,281 1,191,858 2 Banks' own liabilities 718,591 753,461 758,998 782,639 782,633 796,344 812.513 802,640 809,366 788,048 3 Demand deposits 23,386 24,448 27,034 24,921 27,675 29,252 26,204 29,538 27,658 27,103 4 Time deposits2 186,512 192,558 187,956 190,257 189,873 183,860 184,347 187,765 190,144 190,674 5 Other3 113,215 140,165 142.464 161,374 151,545 161,607 162.470 166,747 178,767 161,552 6 Own foreign offices4 395,478 396,290 401,544 406,087 413,540 421,625 439,492 418,590 412,797 408,719 7 Banks' custodial liabilities5 296,405 346,088 402,995 396,570 390,466 385,075 380,621 382,499 392,915 403,810 8 U.S. Treasury bills and certificates6 116622,,993388 119977,,335555 236,874 223311,,228800 230,074 222211,,338877 207,894 220055,,779922 202,630 209,121 9 Other negotiable and readily transferable instruments7 42,539 52,200 72,011 66,809 63,102 67,074 72,716 75,235 88,057 89,375 10 Other 90,928 96,533 94,110 98,481 97,290 96,614 100,011 101,472 102,228 105,314 1 1 1 2 N o B n a m n o k n s e ' ta o r w y n in li t a e b rn il a it t i i e o s n al and regional organizations8. . . 8 8 , , 1 6 7 0 6 6 1 1 1 0 , , 0 34 3 7 9 1 1 3 3 , , 3 9 5 7 5 2 1 1 4 4 , , 2 7 9 1 7 4 1 12 1 , , 2 8 2 0 7 8 1 1 3 2 , , 0 7 5 8 9 7 1 1 2 2 , , 5 3 4 3 7 2 1 1 3 3 , , 9 4 5 9 2 6 1 1 1 1 , , 7 3 9 8 6 4 1 9 0 , , 5 0 6 6 3 4 13 Demand deposits 29 21 29 51 49 30 16 775 86 217 14 Time deposits2 3.298 4,656 5,784 5,035 6,952 5.238 4,857 6.669 4,726 4,519 15 Other3 4,849 5,670 7,542 9,211 4,807 7,519 7,459 6.052 6,572 4,827 16 Banks' custodial liabilities5 430 692 617 417 419 272 215 456 412 501 17 U.S. Treasury bills and certificates6 281 350 352 307 246 174 122 65 47 166 18 Other negotiable and readily transferable instruments7 149 341 265 110 158 98 88 383 365 314 19 Other 0 1 0 0 15 0 5 8 0 21 20 Official institutions9 212,957 275,928 312,019 314,574 316,813 305,270 305,439 289,079 290,658 292,917 21 Banks' own liabilities 59,935 83,447 79,406 87,310 90,679 86,808 92,845 97,024 101,957 97,947 22 Demand deposits 1,564 2,098 1,511 1,371 2,368 2,341 1,855 1,481 1,711 2,184 23 Time deposits2 23,511 30,717 33,336 34,457 32,691 33.428 36,627 39,694 41,936 40,125 24 Other3 34,860 50,632 44,559 51,482 55,620 51,039 54,363 55,849 58,310 55,638 25 Banks' custodial liabilities5 153,022 192.481 232.613 227,264 226,134 218,462 212,594 192,055 188,701 194,970 26 U.S. Treasury bills and certificates6 139,571 168,534 198.921 196,555 196,219 186,432 178,366 163,950 161.270 165.453 27 Other negotiable and readily transferable instruments7 13,245 23,603 33,266 30,362 29.532 31,883 33,976 27,676 26,878 29,349 28 Other 206 344 426 347 383 147 252 429 553 168 29 Banks10 678,532 691,412 694,835 693,131 696,864 710,231 718,282 728,415 736,039 731,292 30 Banks' own liabilities 563,617 567,834 562,898 562,578 567,501 579,775 591,027 576,577 575,399 567.433 31 Unaffiliated foreign banks 168,139 171,544 161,354 156,491 153,961 158,150 151,535 157,987 162,602 158,714 32 Demand deposits 10,633 11,758 13,692 11,561 13,014 14,451 12,686 14,792 13,700 13,337 33 Time deposits2 111,171 103,471 90,811 89,725 88,786 83,542 81,587 80,291 81,126 82,651 34 Other3 46,335 56,315 56,851 55,205 52,161 60,157 57,262 62,904 67,776 62,726 35 Own foreign offices4 395,478 396,290 401,544 406,087 413,540 421,625 439,492 418,590 412,797 408,719 36 Banks' custodial liabilities5 114.915 123.578 131,937 130,553 129,363 130,456 127.255 151,838 160,640 163,859 37 U.S. Treasury bills and certificates6 11,264 15,872 23,106 19,499 19,088 19,567 14,127 27,115 28.642 30,532 38 Other negotiable and readily transferable instruments7 14,506 13,035 17,027 15,063 15,318 16,693 18,918 28,866 35.522 33.960 39 Other 89,145 94,671 91,804 95,991 94,957 94,196 94,210 95,857 96,476 99,367 40 Other foreigners 114,901 121,170 141,167 156,790 147,195 152,859 156,866 153,693 163,788 157,585 41 Banks' own liabilities 86,863 91,833 103,339 118,454 112,645 116,974 116,309 115,543 120,626 113,105 42 Demand deposits 11,160 10,571 11,802 11,938 12,244 12,430 11.647 12,490 12,161 11,365 43 Time deposits2 48,532 53.714 58,025 61,040 61,444 61,652 61,276 61,111 62,356 63,379 44 Other3 27,171 27,548 33,512 45,476 38,957 42,892 43,386 41,942 46,109 38,361 45 Banks' custodial liabilities5 28,038 29,337 37,828 38.336 34,550 35,885 40,557 38,150 43,162 44,480 46 U.S. Treasury bills and certificates6 11,822 12,599 14,495 14,919 14,521 15.214 15,279 1144,,666622 1122,,667711 12,970 47 Other negotiable and readily transferable instruments7 14,639 15,221 21,453 21,274 18,094 18,400 19,734 18,310 25,292 25,752 48 Other 1,577 1,517 1,880 2,143 1,935 2,271 5,544 5.178 5,199 5.758 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 17,895 9,103 14,573 12,904 13,927 15,130 15,030 15,771 16,453 16,040 1. Reporting banks include all types of depository institutions as well as some brokers and 6. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official dealers. Excludes bonds and notes of maturities longer than one year. institutions of foreign countries. 2. Excludes negotiable time certificates of deposit, which are included in "Other negotia- 7. Principally bankers acceptances, commercial paper, and negotiable time certificates of ble and readily transferable instruments." deposit. 3. Includes borrowing under repurchase agreements. 8. Principally the International Bank for Reconstruction and Development, the Inter- 4. For U.S. banks, includes amounts owed to own foreign branches and foreign subsidiar- American Development Bank, and the Asian Development Bank. Excludes "holdings of ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory dollars" of the International Monetary Fund. agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists 9. Foreign central banks, foreign central governments, and the Bank for International principally of amounts owed to the head office or parent foreign bank, and to foreign Settlements. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. 10. Excludes central banks, which are included in "Official institutions." 5. Financial claims on residents of the United States, other than long-term securities, held by or through reporting banks for foreign customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • December 1997 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued 1997 IItteemm 11999944 11999955 11999966 Feb.r Mar.r Apr/ May' June' July Aug.P AREA 50 Total, all foreigners 1,014,996 1,099,549 1,161,993 1,179,209 1,173,099 1,181,419 1,193,134 1,185,139 1,202,281 1,191,858 51 Foreign countries 1,006,390 1,088,510 1,148,021 1,164,495 1,160,872 1,168,360 1,180,587 1,171,187 1,190,485 1,181,794 52 Europe 390,869 362,819 376,590 386,867 381,716 380,617 382,253 397,129 414,360 407,960 53 Austria 3,588 3,537 5,128 4,017 4,606 3,003 3,231 3,252 3,257 3,404 54 Belgium and Luxembourg 21,877 24,792 24,084 24,111 22,318 19,243 21,256 41,286 45,291 46,063 55 Denmark 2,884 2,921 2,565 1,594 1,827 1,782 2,112 2,098 2,289 1,736 56 Finland 1,436 2,831 1,958 2,663 2,422 3,149 1,868 1,851 1,814 1,751 5/ France 44,365 39,218 35,078 35,764 35,337 40,702 38,742 41,211 43,464 41,213 58 Germany 27,109 24,035 24,660 24,227 25,458 25,793 26,081 26,683 26,063 22,626 59 Greece 1,400 2,014 1,835 1,951 2,419 1,740 2,296 1,701 1,726 1,591 60 Italy 10,885 10,868 10,946 10,807 8,844 9,499 9,691 10,191 9,490 9,182 61 Netherlands 16,033 13,745 11,110 11,005 11,076 11,758 8,702 8,292 8,440 7,820 62 Norway 2,338 1,394 1,288 1,538 1,896 1,357 1,121 841 846 604 63 Portugal 2,846 2,761 3,562 3,493 3,022 3,010 2,712 2,582 2,075 1,931 64 Russia 2,726 7,948 7,623 6,991 7,859 7,863 9,582 12,302 13,604 13,216 65 Spain 14,675 10,011 17,707 18,238 18,847 17,697 15,027 16,274 15,158 15,202 66 Sweden 3,094 3,246 1,623 1,529 2,113 2,216 1,658 1,514 1,925 2,317 67 Switzerland 40,724 43,625 44,538 47,009 43,614 42,128 44,028 39,124 44,283 40,252 68 Turkey 3,341 4,124 6,738 6,763 7,191 6,585 6,757 6,545 6,594 5,945 69 United Kingdom 163,733 139,183 153,420 158,543 155,843 158,258 163,227 156,944 163,267 168,988 /0 Yugoslavia" 245 177 206 384 248 266 324 228 267 244 /I Other Europe and other former U.S.S.R.12 27,770 26,389 22,521 26,240 26,776 24,568 23,838 24,210 24,507 23,875 72 24,768 30,468 38,920 34,557 38,053 40,331 38,441 37,970 30,444 27,510 73 Latin America and Caribbean 423,847 440,213 467,374 474,624 467,352 479,595 494,607 495,708 500,309 496,346 74 Argentina 17,203 12,235 13,877 17,232 16,907 14,224 16,486 18,229 17,100 18,044 /B Bahamas 104,014 94,991 88,895 98,859 90,075 105,465 100,935 90,166 92,136 86,269 76 Bermuda 8,424 4,897 5,527 9,184 8,417 7,450 6,358 5,358 5,919 7,786 77 Brazil 9,145 23,797 27,701 23,888 23,822 23,408 25,452 26,058 28,340 31,569 78 British West Indies 229,599 239,083 251,310 249,067 254,809 251,752 268,284 272.142 264,986 268,183 79 Chile 3,127 2,826 2,915 3,484 3,309 3,117 3,239 3,371 3,440 3,352 80 Colombia 4,615 3,659 3,256 2,855 2,807 3,165 2,776 2,836 2,652 2,585 81 Cuba 13 8 21 18 18 52 54 55 54 64 82 Ecuador 875 1,314 1,767 1,633 1,484 1,469 1,608 1,466 1,640 1,511 83 Guatemala 1,121 1,276 1,282 1,410 1,378 1,514 1,457 1,497 1,455 1,390 84 Jamaica 529 481 628 576 585 525 472 465 532 534 85 Mexico 12,227 24,560 31,240 27,455 27,299 27,855 28,223 32,611 34,579 30,797 86 Netherlands Antilles 5,217 4,673 6,099 6,176 3,590 5,486 3,755 6,134 10,986 8,285 8/ Panama 4,551 4,264 4,099 4,156 3,868 3,711 4,026 3,976 4,424 3,803 88 Peru 900 974 834 917 926 881 1,117 919 958 1,007 89 Uruguay 1,597 1,836 1,890 1,859 1,842 1,753 2,062 2,153 2,392 2,070 90 Venezuela 13,986 11,808 17,363 18,128 18,456 18,968 18,899 19,187 19,114 20,159 91 Other 6,704 7.531 8,670 7,727 7,760 8,800 9,404 9,085 9,602 8,938 92 154,346 240,595 249,083 253,895 257,779 250,070 224499,,113311 222222,,669955 222277,,555555 223311,,110099 China 93 Mainland 10,066 33,750 30,438 31,631 31,366 28,575 29,429 7,283 9,480 10,450 94 Taiwan 9,844 11,714 15,995 15,623 15,803 14,664 12,442 12,363 13,464 11,803 95 Hong Kong 17,104 20,197 18,789 20,064 20,107 18,941 19,397 20,236 18,737 17,647 96 India 2,338 3.373 3,930 4,746 5,428 4,755 4,367 4,241 4,555 4,474 9/ Indonesia 1,587 2,708 2,298 2,474 2,679 2,430 2,770 2,531 2,817 3,736 98 Israel 5,157 4,041 6,051 6,210 5,963 6,097 6,416 5,751 5,180 5,202 99 Japan 62,981 109,193 117,316 115,854 122,760 122.194 118,921 118,413 118,410 119,549 100 Korea (South) 5,124 5,749 5,949 6,259 6,555 7,158 7,866 7,657 8,928 9,646 101 Philippines 2,714 3,092 3,378 2,437 2,389 2,340 2,387 2,469 2,908 2,541 102 Thailand 6,466 12,279 10,912 10,752 9,394 10,361 7,808 6,159 5,262 4,956 103 Middle Eastern oil-exporting countries13 15,494 15.582 16,285 14,916 13,671 14,214 14,425 12,946 14,112 15,480 104 Other 15,471 18,917 17,742 22,929 21,664 18,341 22,903 22,646 23,702 25,625 105 6,524 7,641 8,116 8,158 8,564 8,986 9,821 9,967 9,734 9,730 106 Egypt 1,879 2,136 2,012 2,043 2,010 2,056 2,257 1,986 1,921 1,973 10/ Morocco 97 104 112 97 107 130 91 65 112 94 108 South Africa 433 739 458 718 819 780 1,985 1,758 11,,669977 1,693 109 Zaire 9 10 10 7 9 4 9 17 88 7 110 Oil-exporting countries14 1,343 1,797 2,626 2,481 2,945 3,344 2,731 3,153 2,981 3,211 111 Other 2,763 2,855 2,898 2,812 2,674 2,672 2,748 2,988 3,015 2,752 112 Other 6,036 6,774 7,938 6,394 7,408 8,761 6,334 7,718 8,083 9,139 113 Australia 5,142 5,647 6,479 5,170 6,066 7,546 4,991 6,433 6,782 7,917 114 Other 894 1,127 1,459 1,224 1,342 1,215 1,343 1,285 1,301 1,222 115 Nonmonetary international and regional organizations. .. 8,606 11,039 13,972 14,714 12,227 13,059 12,547 13,952 11,796 10,064 116 International15 7,537 9,300 12,099 13,088 10,307 11,691 10,873 12,297 10,341 8,929 117 Latin American regional16 613 893 1,339 1,220 1,459 1,050 1,435 1,071 794 579 118 Other regional17 456 846 534 406 461 318 239 584 661 556 11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 15. Principally the International Bank for Reconstruction and Development. Excludes 12. Includes the Bank for International Settlements. Since December 1992, has "holdings of dollars" of the International Monetary Fund. included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. 16. Principally the Inter-American Development Bank. 13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 17. Asian, African, Middle Eastern, and European regional organizations, except the Bank Emirates (Trucial States). for International Settlements, which is included in "Other Europe." 14. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A55 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 1997 AArreeaa oorr ccoouunnttrryy 11999944 11999955 11999966 Feb. Mar. Apr.' May' June' July Aug." 1 Total, all foreigners 485,432 532,444 599,685r 633,414" 636,478" 640,974 632,547 651,460 646,724 650,322 2 Foreign countries 480,841 530,513 597,081r 631,159" 634,972" 638,686 630,215 649,530 645,571 647,905 3 Europe 124,124 132,150 165,555' 193,048' 204,661' 183,035 196,157 192,443 186,518 189,679 4 Austria 692 565 1,662 1,284 1,911 1.541 1.440 1,394 1,690 1,739 5 Belgium and Luxembourg 6,923 7,624 6,727 6.855 8,439 8,054 8,017 8,159 8,089 8,117 6 Denmark 1,129 403 492 571 546 888 924 981 806 811 7 Finland 512 1,055 971 976 1,684 1,194 1,121 1,414 1,247 1,773 8 France 12,149 15,033 15,246 20,354' 24,780' 14,933 17,296 16,764 18,694 16,239 9 Germany 7,623 9,263 8,472 9,077 11,971 9,532 9,054 10,075 8,403 8,685 10 Greece 604 469 568 530 755 453 477 630 461 481 11 Italy 6,044 5,370 6,457 5,587 6,427 6,166 6,478 7,865 7,443 8,015 12 Netherlands 2,960 5,346 77,,008800 8,658 7,612' 8,866 8,190 10,687 12.050 11,074 13 Norway 504 665 880088 766 1,226 846 1,199 750 745 849 14 Portugal 938 888 418 310 421 326 306 468 439 732 15 Russia 973 660 1,669 1,704 2,028 1,799 1,881 2,020 2,098 2,194 16 Spain 3,536 2,166 3,211 5,407 6,633 6,301 5,854 6,811 6,583 6,176 17 Sweden 4,098 2,080 1,739' 2,314 2,311 1.942 1,870 2,539 1,740 1,639 18 Switzerland 5,747 7,474 19,798 25,258 20.851' 21,301 24,574 22,523 24,883 24,338 19 Turkey 878 803 1,109 1,221 1,240' 1,216 1,306 1,392 1,362 1,305 20 United Kingdom 66,863 67,784 85,057 97,031' 99,153' 91,217 101.629 94,070 84,176 90,172 21 Yugoslavia2 265 147 115 107 87 78 79 75 75 76 22 Other Europe and other former U.S.S.R.1 1,686 4,355 3,956 5,038 6,586 6,382 4.462 3,826 5,534 5,264 23 Canada 18,490 20,874 26,436 27,807' 35,782 33,727 31,613 35,916 26,289 24,441 24 Latin America and Caribbean 224,229 256,944 274,127 275,255 261,159' 282,478 264,378 281,227 300,423 298,757 25 Argentina 5,854 6,439 7,400 6,952 6,995 6,884 7,251 7,293 7,088 7,283 26 Bahamas 66,410 58,818 71,871 66,780' 67,728 68,219 65,546 66,804 69,819 70,041 27 Bermuda 8,533 5,741 4,103 5,980 6,216 8,132 6,603 7,086 8,226 9,803 28 Brazil 9,583 13,297 17,259 17,758 17,752 17,590 18,588 18,757 18,882 19,248 29 British West Indies 96,373 124,037 105,510 110,134' 98,778 111,276 106,898 122,088 134,435 128,370 30 Chile 3,820 4,864 5,136 5,602 5,784 5,636 5,745 5,599 5,801 5,919 31 Colombia 4,004 4,550 6,247 6,033 6,099 6,026 6,041 6,324 6,419 6,609 32 Cuba 0 0 0 0 0 0 0 0 0 0 33 Ecuador 682 825 1,031 1,134 1,155 995 1,092 1,132 1.165 1,195 34 Guatemala 366 457 620 634 629 633 619 651 679 693 35 Jamaica 258 323 345 336 366 325 328 336 359 373 36 Mexico 17,749 18,024 18,425 18,297 19,516 20,292 19,168 19,201 19,585 18,681 37 Netherlands Antilles 1,404 9,229 25,209 24,250 18,926 25,235 14,759 14,016 15,759 18,408 38 Panama 2,198 3,008 2,786 2,911 3,110 3,243 3,347 3,183 3,272 3,487 39 Peru 997 1.829 2,720 2,944 2,510 2,473 2,580 2,597 2,697 2,846 40 Uruguay 503 466 589 766 741 682 735 705 778 702 41 Venezuela 1,832 1,661 1,702 1,452 1,520' 1,561 1,710 1,801 1,734 1,750 42 Other 3,663 3,376 3,174 3,292 3,334 3,276 3.368 3,654 3,725 3,349 43 Asia 107,800 115,336 122,478' 127,085' 124,292' 129,326 128,708 129,744 122,500 124,907 China 44 Mainland 836 1,023 1,401 1,766 1,456 2,201 2,168 2,023 2,370 2,588 45 Taiwan 1,448 1,713 1,894 1,201 1,709 1,532 1,500 1,851 1,523 1,521 46 Hong Kong 9,222 12,821 12,802 11,877 14,143 13,389 14,969 16,014 12,247 13,188 47 India 994 1,846 1,946 1,957 2,194 2,147 2,257 2,342 2,184 2,110 48 Indonesia 1,472 1,696 1,762 1,896 2,081 2,206 2,435 2,536 2,521 2,576 49 Israel 688 739 633 617 612 586 909 631 855 749 50 Japan 59,569 61,468 59,967 64,242' 56,483 58,872 56,484 59,679 55,592 54,427 51 Korea (South) 10,286 13,975 18,901' 19,993' 19,901' 20,802 20,864 20,606 21,274 21,690 52 Philippines 663 1,318 1,697 1,794 1,600 1,746 1,937 2,119 1,723 1,834 53 Thailand 2,902 2,612 2,679 3,092 3,429 3,233 3,069 3,187 2,825 2,641 54 Middle Eastern oil-exporting countries4 13,982 9,639 10,424 8,889 10,078 11,315 10,590 9,115 9,750 9,470 55 Other 5,738 6,486 8,372 9,761 10,606 11,297 11,526 9,641 9,636 12,113 56 Africa 3,053 2,742 2,776 2,772 2,735 3,282 2,847 3.273 3,125 3,280 57 Egypt 225 210 247 245 244 231 270 312 267 288 58 Morocco 429 514 524 522 473 478 463 465 463 554 59 South Africa 674 465 584 564 470 452 569 602 493 489 60 Zaire 2 1 0 0 0 1 0 0 0 0 61 Oil-exporting countries1 856 552 420 474 605 1,177 679 1,129 1,134 1,178 62 Other 867 1,000 1,001 967 943 943 866 765 768 771 63 Other 3.145 2,467 5,709 5,192 6,343 6,838 6,512 6,927 6,716 6,841 64 Australia 2,192 1,622 4,577 3,176 4,101 4,918 4,088 5,042 4,934 5,265 65 Other 953 845 1,132 2,016 2,242 1,920 2,424 1,885 1,782 1,576 66 Nonmonetary international and regional organizations6 .. . 4,591 1,931 2,604 2,255 1,506 2,288 2.332 1,930 1.153 2,417 1. Reporting banks include all types of depository institutions as well as some brokers and 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab dealers. Emirates (Trucial States). 2. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 5. Comprises Algeria, Gabon, Libya, and Nigeria. 3. Includes the Bank for International Settlements. Since December 1992. has included all 6. Excludes the Bank for International Settlements, which is included in "Other Europe." parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • December 1997 3.19 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 1997 TTyyppee ooff ccllaaiimm 11999944 11999955 11999966 Feb. Mar.r Apr.r Mayr June1 July Aug.P 1 Total 601,8X4 655,211 743,700r 798,450 813,697 2 Banks' claims 485,432 532,444 599,685R 633,414R 636,478 640,974 632,547 651,460 646,724 650,322 3 Foreign public borrowers 23,416 22,518 22,241 24,755 28,864 29,176 27,264 29,394 26,918 28,250 4 Own foreign offices2 283,015 307,427 341,574R 360,541 360,340 362,790 367,977 379,421 370,502 370,690 5 Unaffiliated foreign banks 110,410 101,595 113,505 118,113R 118,444 116,071 113,013 119,527 117,761 115,204 6 Deposits 59,368 37,771 33,826 38,155 37,284 34,592 34,581 35,789 36,001 35,433 7 Other 51,042 63,824 79,679 79,95 8R 81,160 81,479 78,432 83,738 81,760 79,771 8 All other foreigners 68,591 100,904 122,365R 130,005R 128,830 132,937 124,293 123,118 131,543 136,178 9 Claims of banks' domestic customers3 116,382 122,767 144,015 161,972 162,237 10 Deposits 64,829 58,519 77,673 95,147 94,591 11 Negotiable and readily transferable instruments4 36,111 44,161 51,207 49,518 50,301 12 Outstanding collections and other claims 15,442 20,087 15,135 17,307 17,345 MEMO 13 Customer liability on acceptances 8,427 8,410 10,372R 11,202 11,442 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 32,796 30,717 42,679 47,270 38,815 42,719 44,870 38,358 41,604 47,552 1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are principally of amounts due from the head office or parent foreign bank, and from foreign for quarter ending with month indicated. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. Reporting banks include all types of depository institution as well as some brokers and 3. Assets held by reporting banks in the accounts of their domestic customers. dealers. 4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiar- paper. ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory 5. Includes demand and time deposits and negotiable and nonnegotiable certificates of agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists deposit denominated in U.S. dollars issued by banks abroad. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1996 1997 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999933 11999944 11999955 Sept. Dec. Mar. Junep 1 Total 202,566 202,282 224,932 232,945r 257,866r 275,945 271,882 By borrower 2 Maturity of one year or less 172,662 170,411 178.857 188,995r 21 l,682r 223,686 211.175 3 Foreign public borrowers 17,828 15,435 14,995 15,983r 15,411 19,876 17,978 4 All other foreigners 154,834 154,976 163,862 173,012r 196,27 lr 203,810 193,197 5 Maturity of more than one year 29,904 31,871 46,075 43,950 46,184 52,259 60,707 6 Foreign public borrowers 10,874 7,838 7,522 6,922 6,815 8,861 11,216 7 All other foreigners 19,030 24,033 38,553 37,028 39,369 43,398 49,491 By area Maturity of one year or less 8 Europe 57,413 56,381 55,622 58,527r 55,513 74,886 69,286 9 Canada 7,727 6,690 6,751 8,811 8,339 10,404 10,322 10 Latin America and Caribbean 60,490 59,583 72,504 79,622 103.254 96,891 87,056 11 41,418 40,567 40,296 37,165r 38,078r 36,465 38,417 12 Africa 1,820 1,379 1,295 1,320 1,316 1,451 1,899 13 All other3 3,794 5.811 2,389 3,550 5,182r 3,589 4,195 Maturity of more than one year 14 Europe 5,310 4,358 4,995 7,117 6,928 9,474 11,828 15 Canada 2,581 3,505 2,751 3,533 2,645 2,953 3,152 16 Latin America and Caribbean 14,025 15,717 27,681 21,382 24,917 26,771 30,973 17 5,606 5,323 7,941 9,808 9,392 10,773 12,510 18 Africa 1,935 1,583 1,421 1,349 1,361 1,204 1,264 19 All other3 447 1,385 1,286 761 941 1,084 980 1. Reporting banks include all types of depository institutions as well as some brokers and 2. Maturity is time remaining until maturity. dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A57 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks' Billions of dollars, end of period 1995 1996 1997 AArreeaa oorr ccoouunnttrryy 11999933 11999944 June Sept. Dec. Mar. June Sept. Dec. Mar. Junep 1 Total. 409.5 499.5 531.9 535.3 551.9 574.6 612.7 586.0 645.0 647.7 678.7 2 G-10 countries and Switzerland 161.9 191.2 206.5 203.0 206.0 203.4 226.9 220.0 228.1 231.5 249.9 3 Belgium and Luxembourg 7.4 7.2 9.7 11.0 13.6 11.0 11.4 11.3 11.7 14.1 9.3 4 France 12.0 19.1 19.9 18.0 19.4 17.9 18.0 17.4 16.6 19.9 17.9 5 Germany 12.6 24.7 30.0 27.5 27.3 31.5 31.4 33.9 29.8 32.1 34.1 6 Italy 7.7 11.8 10.7 12.6 11.5 13.2 14.9 15.2 16.0 14.4 20.2 7 Netherlands 4.7 3.6 4.3 4.5 3.7 3.0 4.7 5.9 3.9 4.5 6.4 8 Sweden 2.7 2.7 3.1 2.9 2.7 3.3 2.7 3.0 2.6 3.4 3.6 9 Switzerland 5.9 5.1 6.2 6.6 6.7 5.2 6.3 6.3 5.3 6.0 5.4 10 United Kingdom 84.4 85.8 87.1 80.4 82.4 84.7 101.6 90.5 104.6 99.2 109.7 11 Canada 6.9 10.0 11.3 12.9 10.3 10.8 12.2 14.8 14.0 16.3 15.8 12 Japan 17.6 21.1 24.4 26.6 28.5 22.7 23.6 21.7 23.6 21.7 27.4 13 Other industrialized countries 26.5 45.7 43.3 50.5 50.2 61.3 55.5 62.1 65.7 66.4 71.8 14 Austria .7 1.1 .7 1.2 .9 1.3 1.2 1.0 1.1 1.9 1.5 15 Denmark 1.0 1.3 1.1 1.8 2.6 3.4 3.3 1.7 1.5 1.7 2.8 16 Finland .4 .9 .5 .7 .8 .7 .6 .6 .8 .7 1.4 17 Greece 3.2 4.5 5.0 5.1 5.7 5.6 5.6 6.1 6.7 6.3 6.1 18 Norway 1.7 2.0 1.8 2.3 3.2 2.1 2.3 3.0 8.0 5.3 4.7 19 Portugal .8 1.2 1.2 1.9 1.3 1.6 1.6 1.4 .9 1.0 1.1 20 Spain 9.9 13.6 13.0 13.3 11.6 17.5 13.6 16.1 13.2 14.4 15.4 21 Turkey 2.1 1.6 1.4 2.0 1.9 2.0 2.3 2.8 2.7 2.7 3.5 22 Other Western Europe 3.2 3.2 2.9 3.3 4.7 3.8 3.4 4.8 4.7 6.3 5.5 23 South Africa 1.1 1.0 1.4 1.3 1.2 1.7 2.0 1.7 2.0 1.9 1.9 24 Australia 2.3 15.4 14.3 17.4 16.4 21.7 19.6 22.8 24.0 24.4 27.8 25 OPEC2 17.6 24.1 20.3 22.7 22.1 21.2 20.1 19.2 19.7 21.8 22.2 26 Ecuador .5 .5 .7 .7 .7 .8 .9 .9 1.1 1.1 .9 27 Venezuela 5.1 3.7 3.5 3.0 2.7 2.9 2.3 2.3 2.4 1.9 2.1 28 Indonesia 3.3 3.8 4.1 4.4 4.8 4.7 4.9 5.4 5.2 4.9 5.6 29 Middle East countries 7.6 15.3 11.5 13.9 13.3 12.3 11.5 10.1 10.6 13.2 12.4 30 African countries 1.2 .9 .6 .6 .6 .6 .5 .4 .4 .7 1.2 31 Non-OPEC developing countries 83.2 96.0 103.7 104.1 112.6 118.6 126.4 124.1 130.1 128.1 140.7 Latin America 32 Argentina 7.7 11.2 12.3 10.9 12.9 12.7 14.1 15.0 14.3 14.3 16.4 33 Brazil 12.0 8.4 10.0 13.6 13.7 18.3 21.7 17.8 20.7 22.0 27.6 34 Chile 4.7 6.1 7.1 6.4 6.8 6.4 6.7 6.6 7.0 6.8 7.6 35 Colombia 2.1 2.6 2.6 2.9 2.9 2.9 2.8 3.1 4.1 3.7 3.3 36 Mexico 17.9 18.4 17.6 16.3 17.3 16.1 15.4 16.1 16.2 17.2 16.6 37 Peru .4 .5 .8 .7 .8 .9 1.2 1.3 1.6 1.6 1.4 38 Other 3.1 2.7 2.6 2.6 2.8 3.1 3.0 3.0 3.3 3.4 3.4 Asia China 39 Mainland 2.0 1.1 1.4 1.7 1.8 3.3 2.9 2.6 2.5 2.7 3.6 40 Taiwan 7.3 9.2 9.0 9.0 9.4 9.7 9.8 10.3 10.2 10.5 10.6 41 3.2 4.2 4.0 4.4 4.4 4.7 4.2 3.8 4.3 4.9 5.3 42 .5 .4 .7 .5 .5 .5 .6 .5 .5 .6 .8 43 Korea (South) 6.7 16.2 18.7 18.0 19.1 19.3 21.7 21.9 21.5 14.6 16.3 44 Malaysia 4.4 3.1 4.1 4.3 4.4 5.2 5.3 5.5 5.9 6.5 6.2 45 Philippines 3.1 3.3 3.6 3.3 4.1 3.9 4.7 5.4 5.8 6.0 7.0 46 Thailand 3.1 2.1 3.8 3.9 4.9 5.2 5.4 4.8 5.7 6.8 7.3 47 Other Asia 3.1 4.7 3.5 3.7 4.5 4.3 4.8 4.1 4.1 4.3 4.7 Africa 48 Egypt .4 .3 .4 .4 .4 .5 .5 .6 .7 .9 1.1 49 Morocco .7 .6 .9 .9 .7 .7 .8 .7 .7 .6 .6 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .1 .0 .0 51 Other Africa3 .8 .8 .6 .8 .9 .8 .8 1.0 .9 .9 .9 52 Eastern Europe 3.2 2.7 1.8 3.4 4.2 6.3 5.1 5.3 6.9 8.9 7.1 53 Russia4 1.6 .8 .4 .6 1.0 1.4 1.0 1.8 3.7 3.5 4.2 54 Other 1.6 1.9 1.3 2.8 3.2 4.9 4.1 3.5 3.2 5.4 2.9 55 Offshore banking centers 73.5 72.9 83.8 87.5 99.2 101.3 106.2 105.3 134.9 131.3 128.9 56 Bahamas 10.9 10.2 8.4 12.6 11.0 13.9 17.3 14.2 20.3 20.9 16.0 57 Bermuda 8.9 8.4 8.4 6.1 6.3 5.3 4.1 4.0 4.5 6.7 7.7 58 Cayman Islands and other British West Indies 18.4 21.4 25.3 25.1 32.4 28.8 26.1 32.0 37.2 32.8 35.2 59 Netherlands Antilles 2.8 1.6 2.8 5.7 10.3 11.1 13.2 11.7 26.1 19.9 15.8 60 Panama5 2.4 1.3 1.2 1.3 1.4 1.6 1.7 1.7 2.0 2.0 2.6 61 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 62 Hong Kong, China 18.8 20.0 23.1 23.7 25.0 25.3 27.8 26.2 28.1 30.8 35.3 63 Singapore 11.2 10.1 14.8 13.3 13.1 15.4 15.9 15.4 16.7 17.9 16.1 64 Other .1 .1 .0 .1 .1 .1 .1 .1 .1 .1 .3 65 Miscellaneous and unallocated7 43.6 66.9 72.6 64.2 57.6 62.6 72.7 50.0 59.5 59.6 58.1 1. The banking offices covered by these data include U.S. offices and foreign branches of 2. Organization of Petroleum Exporting Countries, shown individually; other members of U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not covered OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United include U.S. agencies and branches of foreign banks. Beginning March 1994, the data include Arab Emirates); and Bahrain and Oman (not formally members of OPEC). large foreign subsidiaries of U.S. banks. The data also include other types of U.S. depository 3. Excludes Liberia. Beginning March 1994 includes Namibia. institutions as well as some types of brokers and dealers. To eliminate duplication, the data 4. As of December 1992, excludes other republics of the former Soviet Union. are adjusted to exclude the claims on foreign branches held by a U.S. office or another foreign 5. Includes Canal Zone. branch of the same banking institution. 6. Foreign branch claims only. These data are on a gross claims basis and do not necessarily reflect the ultimate country 7. Includes New Zealand, Liberia, and international and regional organizations. risk or exposure of U.S. banks. More complete data on the country risk exposure of U.S. banks are available in the quarterly Country Exposure Lending Survey published by the Federal Financial Institutions Examination Council. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • December 1997 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1996 1997 TTyyppee ooff lliiaabbiilliittyy,, aanndd aarreeaa oorr ccoouunnttrryy 11999933 11999944 11999955 Mar. June Sept. Dec. Mar. Junep 1 Total 50,597 54,309 46,448 49,907 48,990 51,651 54,822 54,616 52,699 2 Payable in dollars 38,728 38,298 33,903 36,273 35,385 36,421 39,003 39,361 37,842 3 Payable in foreign currencies 11,869 16,011 12,545 13,634 13,605 15,230 15,819 15,255 14,857 By type 4 Financial liabilities 29,226 32,954 24,241 26,570 24,844 25,492 26,089 25,499 24,379 5 Payable in dollars 18,545 18,818 12,903 13,831 12,212 11,319 11,374 11,264 10,551 6 Payable in foreign currencies 10,681 14,136 11,338 12,739 12,632 14,173 14,715 14,235 13,828 1 Commercial liabilities 21,371 21,355 22,207 23.337 24,146 26,159 28,733 29,117 28,320 8 Trade payables 8,802 10,005 11,013 10,815 11,081 11,791 12,720 11,515 11,122 9 Advance receipts and other liabilities 12,569 11,350 11,194 12,522 13,065 14,368 16,013 17,602 17,198 10 Payable in dollars 20.183 19,480 21,000 22,442 23,173 25,102 27,629 28,097 27,291 11 Payable in foreign currencies 1,188 1,875 1,207 895 973 1,057 1,104 1,020 1,029 By area or country Financial liabilities 12 Europe 18,810 21,703 15,622 16,950 16,434 16,133 16,242 15,970 16,099 13 Belgium and Luxembourg 175 495 369 483 498 547 632 769 238 14 France 2,539 1,727 999 1,679 1,011 1,220 1,091 1,205 1,280 13 Germany 975 1,961 1,974 2,161 1,850 2,276 1,834 1,589 1,765 16 Netherlands 534 552 466 479 444 519 556 507 466 17 Switzerland 634 688 895 1,260 1,156 830 699 694 591 18 United Kingdom 13,332 15,543 10,138 10,246 10,790 9,884 10,224 9,752 10,537 19 Canada 859 629 632 1,166 951 973 1,401 602 456 20 Latin America and Caribbean 3,359 2,034 1,783 1,876 969 1,169 1,668 1,876 1,279 21 Bahamas 1,148 101 59 78 31 50 236 293 124 22 Bermuda 0 80 147 126 28 25 50 27 55 23 Brazil 18 207 57 57 8 52 78 75 97 24 British West Indies 1,533 998 866 946 826 764 1,030 965 769 2b Mexico 17 0 12 16 11 13 17 16 15 26 Venezuela 5 5 2 2 I 1 1 1 1 27 5,956 8,403 5,988 6.390 6,351 6,969 6,400 6,347 5,961 28 Japan 4,887 7,314 5,436 5,980 6,051 6,602 5,846 5,771 5,412 29 Middle Eastern oil-exporting countries1 23 35 27 26 26 25 25 72 39 30 Africa 133 135 150 131 72 153 38 29 29 31 Oil-exporting countries2 123 123 122 122 61 121 0 0 0 32 All other3 109 50 66 57 67 95 340 675 555 Commercial liabilities 33 Europe 6,827 6,773 7,700 8,425 7,916 8,680 9,767 9,551 8,711 34 Belgium and Luxembourg 239 241 331 370 326 427 479 643 738 35 France 655 728 481 648 678 657 680 680 709 36 Germany 684 604 767 867 839 949 1,002 1,047 852 37 Netherlands 688 722 500 659 617 668 766 553 290 38 Switzerland 375 327 413 428 516 405 624 481 430 39 United Kingdom 2,039 2,444 3,568 3,525 3,266 3,663 4,303 4,165 3,827 40 Canada 879 1,037 1,040 959 998 1,144 1,090 1,068 1,136 41 Latin America and Caribbean 1,658 1.857 1,740 2,110 2,301 2,386 2,574 2,563 2,501 42 Bahamas 21 19 1 28 35 33 63 43 33 43 Bermuda 350 345 205 570 509 355 297 479 397 44 Brazil 214 161 98 128 119 198 196 201 225 45 British West Indies 27 23 56 10 10 15 14 14 26 46 Mexico 481 574 416 468 475 446 665 633 594 47 Venezuela 123 276 221 243 283 341 328 318 304 48 Asia 10,980 10.741 10,421 10,474 11,389 12,227 13,422 13,968 13,926 49 Japan 4,314 4,555 3,315 3,725 3,943 4,149 4,614 4,502 4,440 50 Middle Eastern oil-exporting countries' 1,534 1,576 1,912 1,747 1,784 1,951 2,168 2,495 2,420 51 Africa 453 428 619 708 924 1,020 1,040 1,037 941 52 Oil-exporting countries2 167 256 254 254 462 490 532 479 423 53 Other3 574 519 687 661 618 702 840 930 1,105 1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon, Libya, and Nigeria. Emirates (Trucial States). 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1996 1997 TTyyppee ooff ccllaaiimm,, aanndd aarreeaa oorr ccoouunnttrryy 11999933 11999944 11999955 Mar. June Sept. Dec. Mar. Junep 1 Total 49,159 57,888 52,509 55,406 60,195 59,092 63,642 64,343 65,542 2 Payable in dollars 45,161 53,805 48,711 51,007 55,350 55,014 58.630 60,177 60,817 3 Payable in foreign currencies 3,998 4,083 3,798 4,399 4,845 4,078 5,012 4,166 4,725 By type 4 Financial claims 27,771 33,897 27,398 30,772 35,251 34,200 35,268 36,788 38,006 5 Deposits 15,717 18,507 15,133 17,595 19,507 19,877 21,404 19,628 22,385 6 Payable in dollars 15,182 18,026 14,654 17,044 19,069 19,182 20,631 18,548 21,474 7 Payable in foreign currencies 535 481 479 551 438 695 773 1,080 911 8 Other financial claims 12,054 15,390 12,265 13,177 15,744 14,323 13,864 17,160 15,621 9 Payable in dollars 10,862 14,306 10,976 11,290 13,347 12,234 12,069 15,383 13,243 10 Payable in foreign currencies 1,192 1,084 1,289 1,887 2,397 2,089 1,795 1,777 2,378 11 Commercial claims 21,388 23,991 25.111 24,634 24,944 24,892 28,374 27,555 27,536 12 Trade receivables 18,425 21,158 22,998 22,123 22,353 22,454 25,751 24,801 24,853 13 Advance payments and other claims 2,963 2,833 2,113 2,511 2,591 2,438 2,623 2,754 2,683 14 Payable in dollars 19,117 21,473 23,081 22,673 22.934 23,598 25,930 26,246 26,100 15 Payable in foreign currencies 2,271 2,518 2,030 1,961 2,010 1,294 2,444 1,309 1,436 By area or country Financial claims 16 Europe 7,299 7,936 7,609 8,929 10,498 9,777 9,282 9,317 10,189 17 Belgium and Luxembourg 134 86 193 159 151 126 185 119 203 18 France 826 800 803 1,015 679 733 694 761 681 19 Germany 526 540 436 320 296 272 276 324 281 20 Netherlands 502 429 517 486 488 520 493 567 519 21 Switzerland 530 523 498 470 461 432 474 570 447 22 United Kingdom 3,585 4,649 4,303 5,568 7,426 6,603 6.119 6,075 7,112 23 Canada 2,032 3,581 2,851 5,269 4,773 4,502 3,445 4,917 6,422 24 Latin America and Caribbean 16,224 19,536 14,500 13,827 17,644 17,241 19,577 19,742 18,725 25 Bahamas 1,336 2,424 1,965 1,538 2,168 1,746 1,452 1,894 2,064 26 Bermuda 125 27 81 77 84 113 140 157 188 27 Brazil 654 520 830 1,019 1,242 1,438 1,468 1,404 1,617 28 British West Indies 12,699 15,228 10,393 10,100 13,024 12,809 15,182 15.166 13,442 29 Mexico 872 723 554 461 392 413 457 517 498 30 Venezuela 161 35 32 40 23 20 31 22 21 31 Asia 1,657 1,871 1,579 1,890 1,571 1,834 2,221 2,068 1,938 32 Japan 892 953 871 1,171 852 1,001 1,035 831 770 33 Middle Eastern oil exporting countries1 3 141 3 13 9 13 22 12 20 34 Africa 99 373 276 277 197 177 174 182 179 35 Oil exporting countries' 1 0 5 5 5 13 14 14 15 36 All other3 460 600 583 580 568 669 569 562 553 Commercial claims 37 Europe 9,105 9,540 9,824 9,776 9,842 9,288 10,443 9,863 9,601 38 Belgium and Luxembourg 184 213 231 247 239 213 226 364 327 39 France 1,947 1,881 1,830 1,803 1,659 1,532 1,644 1,514 1,377 40 Germany 1,018 1,027 1,070 1,410 1,335 1,250 1,337 1,364 1,234 41 Netherlands 423 311 452 442 481 424 562 582 613 42 Switzerland 432 557 520 579 602 594 642 418 385 43 United Kingdom 2,377 2,556 2,656 2,607 2.658 2,516 2,946 2,626 2,836 44 Canada 1,781 1,988 1,951 2,045 2,074 2,083 2,165 2,381 2,464 45 Latin America and Caribbean 3,274 4,117 4,364 4,151 4,347 4,409 5,276 5,067 5,230 46 Bahamas 11 9 30 30 28 14 35 40 28 47 Bermuda 182 234 272 273 264 290 275 159 197 48 Brazil 460 612 898 809 838 968 1,303 1,216 1,134 49 British West Indies 71 83 79 106 103 119 190 127 97 50 Mexico 990 1,243 993 870 1,021 936 1,128 1,102 1,138 51 Venezuela 293 348 285 308 313 316 357 330 450 52 Asia 6,014 6,982 7,312 7,100 6,939 7,289 8,376 8,348 8,456 53 Japan 2,275 2,655 1,870 2,010 1,877 1,919 2,003 2,065 2,059 54 Middle Eastern oil-exporting countries 704 708 974 1,024 903 945 971 1,078 1,014 55 Africa 493 454 654 667 688 731 746 718 618 56 Oil exporting countries2 72 67 87 107 83 142 166 100 81 57 Other3 721 910 1,006 895 1,054 1,092 1,368 1,178 1,167 1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon, Libya, and Nigeria. Emirates (Trucial States). 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • December 1997 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1997 1997 Transaction, and area or country 1995 1996 J A a u n g .- . Feb. Mar.1" Apr. May June July Aug.? U.S. corporate securities STOCKS 11 Foreign purchases 462,950 623,760 635,257 73,088R 68,468 70,267 82,604 87,060 89,271 91,463 22 Foreign sales 451,710 611,832 586,261 69,208R 68,166 64,454R 75,674 76,826 78,435 83,366 3 Net purchases, or sales (—) 11,240 11,928 48,996 3,880r 302 5,813r 6,930 10,234 10,836 8,097 4 Foreign countries 11,445 12,002 49,071 3,880r 294 5,833r 6,949 10,245 10,825 8,140 5 Europe 4,912 5,046 36,117 5,506R 2,120 6,686 2,440 5,571 6,121 4,402 6 France -1,099 -2,354 2,619 427 -308 679 238 -602 1,188 465 / Germany -1.837 1,104 6,513 1,086 699 648 601 857 11,,008800 583 8 Netherlands 3,507 1,389 1,224 -334 378 378 382 126 8800 -108 9 Switzerland -2,283 2,710 4,893 798R 310 810 184 1,036 920 546 10 United Kingdom 8,066 4,119 12,703 2,954R 488 3,274 218 2,565 1,180 2,158 11 Canada -1,517 2,221 535 309R 374 141 27 35 -482 -291 1 1 2 3 L M a i t d in d le A m Ea e s r t i 1 c a and Caribbean 5 - , 3 8 3 1 7 4 -1 5 , , 5 5 9 6 8 3 10,4 4 0 4 4 40 2 5 6 -1,43 1 3 0 -L,9 2 8 0 7 3 R 2 - , 2 9 4 1 6 2 2,3 1 8 6 0 4 4 - ,3 5 6 1 3 2, - 4 6 0 1 0 14 Other Asia 2,503 906 1,121 -2,550R -894 713R 1,541 2,246 684 1,556 15 Japan -2,725 -372 3,619 -500 -253 1,294 1,763 1,121 849 904 16 Africa 2 -81 325 58 96 -7 4 81 99 i 1/ Other countries 68 -55 525 126 21 84 271 -232 91 132 18 Nonmonetary international and regional organizations -205 -74 -75 0 8 -20 -19 -11 11 -43 BONDS2 19 Foreign purchases 293,533 423,149R 415,128 48,929R 43,649 42,663 44,749R 58,904 63,319 63,833 20 Foreign sales 206,951 294,636 324,472 36,425R 38,104 31,741R 36,358 47,673 46,761 50,275 21 Net purchases, or sales (—) 86,582 128,513r 90,656 12,504r 5,545 10,922r 8,391r 11,231 16,558 13,558 22 Foreign countries 87,036 128,342r 90,515 12,491r 5,531 10,926r 8,483r 11,099 16,544 13,490 23 Europe 70,318 76,767R 55,137 9,122' 4,766 5,362 5,601R 7,117 9,874 6,480 24 France 1,143 5,124 2,822 290 511 602 -4 90 520 740 25 Germany 5,938 5,164 2,047 184 493 30 145 -250 1,842 -123 26 Netherlands 1,463 2,470R 2,328 125 105 67 978 154 -140 702 27 Switzerland 494 1.063R -806 -189 98 189 -54 4 -378 -418 28 United Kingdom 57,591 58,595R 44,736 9,339R 2,872 4,298R 3,888R 6,522 6,618 5,161 29 Canada 2,569 4.197 3,535 1,055 390 512 446 -98 303 548 3 3 1 0 M La i t d in d le A m Ea e s r t i 1 c a and Caribbean 6 1 , , 1 8 4 6 1 9 22 1 , , 9 6 0 3 1 7 12 1, , 4 1 5 5 1 0 -6 6 2 9 7 1 -2,4 4 3 8 4 0 2,55 1 0 6 - 1 1 ,5 7 6 9 9 1,96 1 4 6 3,4 - 7 9 1 2, - 4 4 6 4 8 32 Other Asia 5,659 22,570R 16,522 1,231 2,165 2,185 874 1,800 2,699 3,907 33 Japan 2,250 13,499R 11,467 535 1,213 1,229 399 1,618 1,884 2,992 34 Africa 234 600 883 243 47 190 44 61 104 105 35 Other countries 246 -330 837 176 117 111 128 239 102 26 36 Nonmonetary international and regional organizations -454 171 141 13 14 -4 -92 132 14 68 Foreign securities 37 Stocks, net purchases, or sales (-) -50,291 -57,122 -40,811 -4,353 -3,827 -4,089 -3,684R -5,529 -7,576 -8,107 J8 Foreign purchases 345,540 456,826 448,584 50,139 47,780 49,725 57,647 64,388 69,677 62,144 39 Foreign sales 395,831 513,948 489,395 54,492 51,607 53,814 61,331R 69,917 77,253 70,251 40 Bonds, net purchases, or sales (—) -48,405 -48,793 -29.659 -1,626 -2,978 5,720 -1,328 -13,006 -11,203 -4,528 41 Foreign purchases 889,541 1,118,678 990,622 110,510 131,454 117,761 127,985 123,406 139,907 130,032 42 Foreign sales 937,946 1,167,471 1,020,281 112,136 134,432 112,041 129,313 136,412 151,110 134,560 43 Net purchases, or sales (—), of stocks and bonds .... -98,696 -105,915 -70,470 -5,979 -6,805 1,631 —5,012r -18,535 -18,779 -12,635 44 Foreign countries -97,891 -105,044 -70,807 -6,061 -6,871 1,617 —5,069r -18,551 -18,816 -12,652 45 Europe -48,125 -55,948 -16,150 -2,030 -3,004 5,732 377 -2,001 -10,385 -5,579 46 Canada -7,812 -6,279 -3,428 1,855 -110 -239 -841 -1,356 -1,814 -1,448 47 Latin America and Caribbean -7,634 -9,503 -19,620 -3,417 -1,574 -1,240 -1,286 -8,473 -2,382 1,016 48 -34,056 -27,745 -28,612 -2,284 -1,517 -3,650 -3,549 -5,865 -3,910 -5,007 49 Japan -25,072 -5,888 -15,829 -2,269 -674 -2,349 -2,878 -4,945 -2,350 -32 50 Africa -327 -1,529 -1,530 -7 -74 -121 15 -588 -79 -710 51 Other countries 63 -4,040 -1,467 -178 -592 1,135 215 -268 -246 -924 52 Nonmonetary international and regional organizations -805 -871 337 82 66 14 57 16 37 17 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar. 2. Includes state and local government securities and securities of U.S. government Saudi Arabia, and United Arab Emirates (Trucial States). agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. corporations organized to finance direct investments abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Holdings and Transactions/Interest and Exchange Rates A61 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions' Millions of dollars; net purchases, or sales (—) during period 1997 1997 AArreeaa oorr ccoouunnttrryy 11999955 11999966 J A an u .— g. Feb. Mar. Apr.' May' June' July Aug." 1 Total estimated 134,115 244,0101" 159,002 30,595r 22,357r 25,307 7,752 24,795 5,195 22,319 2 Foreign countries 133,676 245,852R 157,441 29,687' 22,667' 24,847 7,909 23,845 4,824 22,514 3 Europe 49,976 118,345 96,296 17,117 13,473 10,625 9,688 10,393 12,238 19,359 4 Belgium and Luxembourg 591 1,486 2,502 657 83 944 309 -37 406 92 5 Germany 6,136 17,647 7,475 -1,227 -3,124 -1,480 721 1,417 6,527 4,085 6 Netherlands 1,891 -582 2,666 546 343 1,412 194 -408 368 882 7 Sweden 358 2,343 -452 -346 -581 -86 90 141 2 583 8 Switzerland -472 327 1,090 992 -1,431 1,029 -223 329 141 12 9 United Kingdom 34,754 65,381 64,186 13,423 14,242 6,482 6,951 4,922 3,038 13,192 10 Other Europe and former U.S.S.R 6,718 31,743 18,829 3,072 3,941 2,324 1,646 4,029 1,756 513 11 Canada 252 2,389 988 -402 -317 17 348 1,278 776 -1,379 12 Latin America and Caribbean 48,609 24,664F -5,203 -762 -3,135' 1,101 -9,494 1,266 -3,558 -491 13 Venezuela -2 -69 878 69 10 -8 93 635 57 25 14 Other Latin America and Caribbean 25,152 12,31 lr 9,198 1,577 3,964' -2,937 2,005 2,787 524 -4,810 15 Netherlands Antilles 23,459 12,422 -15,279 -2,408 -7,109 4,046 -11,592 -2,156 -4,139 4,294 16 32,467 98,001 65,879 14,217 12,227 13,200 7,536 8,406 -3,266 4,966 17 Japan 16,979 41,390 31,825 6,326 1,747 6,604 7,657 5,972 2,612 -3,357 18 Africa 1,464 1,085 826 57 -22 -16 27 340 193 218 19 Other 908 1,368 -1,345 -540' 441' -80 -196 2,162 -1,559 -159 20 Nonmonetary international and regional organizations 439 -1,842 1,561 908 -310 460 -157 950 371 -195 21 International 9 -1,390 952 530 -384 467 -172 1,068 117 -190 22 Latin American regional 261 -779 271 362 80 24 -2 -145 70 -117 MEMO 23 Foreign countries 133,676 245,852' 157,441 29,687' 22,667' 24,847 7,909 23,845 4,824 22,514 24 Official institutions 39,631 86,161' 51,681 10,081' 7,387' 7,102 3,377 10,055 -2,499 8,456 25 Other foreign 94,045 159,691' 105,760 19,606' 15,280 17,745 4,532 13,790 7,323 14,058 Oil-exporting countries 26 Middle East2 3,075 10,227 9,333 2,604 2,533 2,879 541 -1,735 -2,251 3,455 27 2 1 -13 -1 0 1 -6 0 0 -7 1. Official and private transactions in marketable U.S. Treasury securities having an 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab original maturity of more than one year. Data are based on monthly transactions reports. Emirates (Trucial States). Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign 3. Comprises Algeria, Gabon, Libya, and Nigeria. countries. 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS1 Percent per year, averages of daily figures Rate on Oct. 31, 1997 Rate on Oct. 31, 1997 Country Country Month effective Austria. . 2.5 Apr. 1996 Germany .. . 2.5 Belgium. 2.75 Oct. 1997 Italy 6.25 Canada.. 3.75 Oct. 1997 Japan .5 Denmark 3.25 Nov. 1996 Netherlands . 2.5 France2 .. 3.3 Oct. 1997 Switzerland . 1.0 1. Rates shown are mainly those at which the central bank either discounts or makes 2. Since February 1981, the rate has been that at which the Bank of France discounts advances against eligible commercial paper or government securities for commercial banks or Treasury bills for seven to ten days, brokers. For countries with more than one rate applicable to such discounts or advances, the rate shown is the one at which it is understood that the central bank transacts the largest proportion of its credit operations. 3.27 FOREIGN SHORT-TERM INTEREST RATES1 Percent per year, averages of daily figures 1997 TTyyppee oorr ccoouunnttrryy 11999944 11999955 11999966 Apr. May June July Aug. Sept. Oct. 1 Eurodollars 4.63 5.93 5.38 5.70 5.69 5.66 5.61 5.58 5.59 5.63 2 United Kingdom 5.45 6.63 5.99 6.35 6.41 6.63 6.93 7.12 7.19 7.24 3 Canada 5.57 7.14 4.49 3.49 3.35 3.30 3.57 3.67 3.66 3.83 4 Germany 5.25 4.43 3.21 3.14 3.09 3.05 3.06 3.19 3.24 3.51 5 Switzerland 4.03 2.94 1.92 1.76 1.51 1.25 1.43 1.39 1.36 1.73 6 Netherlands 5.09 4.30 2.91 3.15 3.15 3.14 3.17 3.33' 3.35 3.50 7 France 5.72 6.43 3.81 3.28 3.37 3.30 3.27 3.31 3.29 3.47 8 Italy 8.45 10.43 8.79 7.09 6.82 6.85 6.87 6.85 6.65 6.63 9 Belgium 5.65 4.73 3.19 3.22 3.22 3.23 3.39 3.55 3.55 3.76 10 Japan 2.24 1.20 .58 .55 .58 .60 .67 .58 .55 .52 1. Rates are for three-month interbank loans, with the following exceptions: Canada, finance company paper; Belgium, three-month Treasury bills; and Japan, CD rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • December 1997 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar except as noted 1997 CCoouunnttrryy//ccuurrrreennccyy uunniitt 11999944 11999955 11999966 May June July Aug. Sept. Oct. 1 Australia/dollar2 73.161 74.073 78.283 77.510 75.422 74.199 74.036 72.310 71.971 2 Austria/schilling 11.409 10.076 10.589 11.998 12.158 12.620 12.946 12.568 12.360 3 Belgium/franc 33.426 29.472 30.970 35.188 35.651 37.040 38.011 36.876 36.266 4 Canada/dollar 1.3664 1.3725 1.3638 1.3804 1.3843 1.3775 1.3905 1.3872 1.3869 5 China, P.R./yuan 8.6397 8.3700 8.3389 8.3229 8.3224 8.3162 8.3187 8.3171 8.3135 6 Denmark/krone 6.3561 5.5999 5.8003 6.4926 6.5804 6.8317 7.0109 6.8001 6.6922 7 Finland/markka 5.2340 4.3763 4.5948 5.1444 5.1794 5.3164 5.5046 5.3455 5.2674 8 France/franc 5.5459 4.9864 5.1158 5.7482 5.8293 6.0511 6.2010 6.0031 5.8954 9 Germany/deutsche mark 1.6216 1.4321 1.5049 1.7048 1.7277 1.7939 1.8400 1.7862 1.7575 10 Greece/drachma 242.50 231.68 240.82 271.95 273.83 281.43 288.41 281.69 276.84 11 Hong Kong/dollar 7.7290 7.7357 7.7345 7.7431 7.7445 7.7454 7.7436 7.7440 7.7373 12 India/rupee 31.394 32.418 35.506 35.825 35.820 35.747 36.009 36.476 36.302 13 Ireland/pound" 149.69 160.35 159.95 151.11 150.60 149.45 145.34 148.06 146.92 14 Italy/lira 1,611.49 1,629.45 1,542.76 1,684.33 1,694.54 1,745.91 1,797.12 1,743.22 1,721.09 15 Japan/yen 102.18 93.96 108.78 119.19 114.29 115.38 117.93 120.89 121.06 16 Malaysia/ringgit 2.6237 2.5073 2.5154 2.5070 2.5167 2.5815 2.7589 3.0254 3.2972 17 Netherlands/guilder 1.8190 1.6044 1.6863 1.9173 1.9438 2.0201 2.0709 2.0116 1.9800 18 New Zealand/dollar" 59.358 65.625 68.765 69.097 68.713 66.097 64.211 63.604 63.556 19 Norway/krone 7.0553 6.3355 6.4594 7.0797 7.2240 7.4545 7.6224 7.3008 7.0807 20 Portugal/escudo 165.93 149.88 154.28 171.72 174.56 181.20 186.50 181.49 179.07 21 Singapore/dollar 1.5275 1.4171 1.4100 1.4368 1.4271 1.4521 1.4977 1.5164 1.5597 22 South Africa/rand 3.5526 3.6284 4.3011 4.4668 4.5005 4.5611 4.6856 4.6890 4.7145 23 South Korea/won 806.93 772.69 805.00 894.67 891.40 893.09 898.71 912.50 929.42 24 Spain/peseta 133.88 124.64 126.68 143.93 145.98 151.33 155.51 150.75 148.32 25 Sri Lanka/rupee 49.170 51.047 55.289 58.862 58.531 58.732 59.189 59.713 59.723 26 Sweden/krona 7.7161 7.1406 6.7082 7.6856 7.7506 7.8188 7.9886 7.6887 7.5765 27 Switzerland/franc 1.3667 1.1812 1.2361 1.4331 1.4424 1.4824 1.5128 1.4702 1.4516 28 Taiwan/dollar 26.465 26.495 27.468 27.791 27.903 28.032 28.824 28.731 29.696 29 Thailand/baht 25.161 24.921 25.359 25.751 24.534 30.274 32.399 35.256 37.543 30 United Kingdom/pound" 153.19 157.85 156.07 163.22 164.49 166.94 160.35 160.13 163.30 MEMO 31 United States/dollar3 91.32 84.25 87.34 95.29 95.42 97.48 99.96 98.29 97.07 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

63 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 1997 A72 SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks September 30, 1996 .'. February 1997 A64 December 31, 1996 May 1997 A64 March 31, 1997 September 1997 A64 June 30, 1997 November 1997 A64 Terms of lending at commercial banks November 1996 February 1997 A68 February 1997 May 1997 A68 May 1997 October 1997 A64 August 1997 November 1997 A68 Assets and liabilities of U.S. branches and agencies of foreign banks September 30, 1996 February 1997 A72 December 31, 1996 May 1997 A72 March 31, 1997 August 1997 A64 June 30, 1997 November 1997 A72 Pro forma balance sheet and income statements for priced service operations June 30, 1996 October 1996 A64 September 30, 1996 January 1997 A64 March 31, 1997 July 1997 A64 June 30, 1997 October 1997 A68 Assets and liabilities of life insurance companies June 30, 1991 December 1991 A79 September 30, 1991 May 1992 A81 December 31, 1991 August 1992 A83 September 30, 1992 March 1993 A71 Residential lending reported under the Home Mortgage Disclosure Act 1994 September 1995 A68 1995 September 1996 A68 1996 September 1997 A68 Disposition of applications for private mortgage insurance 1996 September 1997 A76 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

64 Index to Statistical Tables References are to pages A3-A62 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) FARM mortgage loans, 35 Assets and liabilities (See also Foreigners) Federal agency obligations, 5, 9, 10, 11, 28, 29 Commercial banks, 15-21 Federal credit agencies, 30 Domestic finance companies, 32, 33 Federal finance Federal Reserve Banks, 10 Debt subject to statutory limitation, and types and ownership Foreign-related institutions, 20 of gross debt, 27 Automobiles Receipts and outlays, 25, 26 Consumer credit, 36 Treasury financing of surplus, or deficit, 25 Production, 44, 45 Treasury operating balance, 25 Federal Financing Bank, 30 BANKERS acceptances, 5, 10, 22, 23 Federal funds, 23, 25 Bankers balances, 15-21. (See also Foreigners) Federal Home Loan Banks, 30 Bonds (See also U.S. government securities) Federal Home Loan Mortgage Corporation, 30, 34, 35 New issues, 31 Federal Housing Administration, 30, 34, 35 Rates, 23 Federal Land Banks, 35 Business activity, nonfinancial, 42 Federal National Mortgage Association, 30, 34, 35 Business loans (See Commercial and industrial loans) Federal Reserve Banks Condition statement, 10 CAPACITY utilization, 43 Discount rates (See Interest rates) Capital accounts U.S. government securities held, 5, 10, 11, 27 Commercial banks, 15-21 Federal Reserve credit, 5, 6, 10, 11 Federal Reserve Banks, 10 Federal Reserve notes, 10 Central banks, discount rates, 61 Federally sponsored credit agencies, 30 Certificates of deposit, 23 Finance companies Commercial and industrial loans Assets and liabilities, 32 Commercial banks, 15-21 Business credit, 33 Weekly reporting banks, 17, 18 Loans, 36 Commercial banks Paper, 22, 23 Assets and liabilities, 15-21 Float, 5 Commercial and industrial loans, 15-21 Flow of funds, 37-41 Consumer loans held, by type and terms, 36 Foreign currency operations, 10 Deposit interest rates of insured, 14 Foreign deposits in U.S. banks, 5 Real estate mortgages held, by holder and property, 35 Foreign exchange rates, 62 Time and savings deposits, 4 Foreign-related institutions, 20 Commercial paper, 22, 23, 32 Foreign trade, 51 Condition statements (See Assets and liabilities) Foreigners Construction, 42, 46 Claims on, 52, 55, 56, 57, 59 Consumer credit, 36 Liabilities to, 51, 52, 53, 58, 60, 61 Consumer prices, 42 Consumption expenditures, 48, 49 GOLD Corporations Certificate account, 10 Profits and their distribution, 32 Stock, 5, 51 Security issues, 31, 61 Government National Mortgage Association, 30, 34, 35 Cost of living (See Consumer prices) Gross domestic product, 48, 49 Credit unions, 36 Currency in circulation, 5, 12 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, 15-21 Industrial production, 42, 44 Depository institutions Insurance companies, 27, 35 Reserve requirements, 8 Interest rates Reserves and related items, 4, 5, 6, 11 Bonds, 23 Deposits (See also specific types) Consumer credit, 36 Commercial banks, 4, 15-21 Deposits, 14 Federal Reserve Banks, 5, 10 Federal Reserve Batiks, 7 Interest rates, 14 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 International organizations, 52, 53, 55, 58, 59 EMPLOYMENT, 42 Inventories, 48 Eurodollars, 23, 61 Investment companies, issues and assets, 32 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Investments (See also specific types) SAVING Commercial banks, 4, 15-21 Flow of funds, 37-41 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, 15-21 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 Reserve requirements, 8 Prices, 24 Mining production, 45 Mobile homes shipped, 46 Student Loan Marketing Association, 30 Monetary and credit aggregates, 4, 11 Money and capital market rates, 23 TAX receipts, federal, 26 Money stock measures and components, 4, 12 Mortgages (See Real estate loans) Thrift institutions, 4. (See also Credit unions and Savings Mutual funds, 12, 32 institutions) Mutual savings banks (See Thrift institutions) Time and savings deposits, 4, 12, 14, 15-21 Trade, foreign, 51 NATIONAL defense outlays, 26 Treasury cash, Treasury currency, 5 Treasury deposits, 5, 10, 25 National income, 48 Treasury operating balance, 25 OPEN market transactions, 9 UNEMPLOYMENT, 42 U.S. government balances PERSONAL income, 49 Commercial bank holdings, 15-21 Prices Treasury deposits at Reserve Banks, 5, 10, 25 Consumer and producer, 42, 47 U.S. government securities Stock market, 24 Bank holdings, 15-21, 27 Prime rate, 22 Dealer transactions, positions, and financing, 29 Producer prices, 42, 47 Federal Reserve Bank holdings, 5, 10, 11, 27 Production, 42, 44 Foreign and international holdings and Profits, corporate, 32 transactions, 10, 27, 61 Open market transactions, 9 REAL estate loans Outstanding, by type and holder, 27, 28 Banks, 15-21, 35 Rates, 23 Terms, yields, and activity, 34 U.S. international transactions, 50-62 Type of holder and property mortgaged, 35 Utilities, production, 45 Reserve requirements, 8 Reserves VETERANS Administration, 34, 35 Commercial banks, 15-21 Depository institutions, 4, 5, 6, 11 Federal Reserve Banks, 10 WEEKLY reporting banks, 17, 18 U.S. reserve assets, 51 Wholesale (producer) prices, 42, 47 Residential mortgage loans, 34, 35 Retail credit and retail sales, 36, 42 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

66 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 DONALD J. WINN, Assistant to the Board LARRY J. PROMISEL, Senior Adviser THEODORE E. ALLISON, Assistant to the Board for Federal CHARLES J. SIEGMAN, Senior Adviser Reserve System Affairs LEWIS S. ALEXANDER, Associate Director LYNN S. FOX, Deputy Congressional Liaison DALE W. HENDERSON, Associate Director WINTHROP P. HAMBLEY, Special Assistant to the Board PETER HOOPER III, Associate Director BOB STAHLY MOORE, Special Assistant to the Board KAREN H. JOHNSON, Associate Director DIANE E. WERNEKE, Special Assistant to the Board DAVID H. HOWARD, Senior Adviser PORTIA W. THOMPSON, Equal Employment Opportunity DONALD B. ADAMS, Assistant Director Programs Adviser THOMAS A. CONNORS, Assistant Director CATHERINE L. MANN, Assistant Director LEGAL DIVISION DIVISION OF RESEARCH AND STATISTICS J. VIRGIL MATTINGLY, JR., General Counsel MICHAEL J. PRELL, Director SCOTT G. ALVAREZ, Associate General Counsel EDWARD C. ETTIN, Deputy Director RICHARD M. ASHTON, Associate General Counsel DAVID J. STOCKTON, Deputy Director OLIVER IRELAND, Associate General Counsel MARTHA BETHEA, Associate Director KATHLEEN M. O'DAY, Associate General Counsel WILLIAM R. JONES, Associate Director ROBERT DEV. FRIERSON, Assistant General Counsel MYRON L. KWAST, Associate Director KATHERINE H. WHEATLEY, Assistant General Counsel PATRICK M. PARKINSON, Associate Director THOMAS D. SIMPSON, Associate Director LAWRENCE SLIFMAN, Associate Director OFFICE OF THE SECRETARY MARTHA S. SCANLON, Deputy Associate Director WILLIAM W. WILES, Secretary PETER A. TINSLEY, Deputy Associate Director JENNIFER J. JOHNSON, Deputy Secretary DAVID S. JONES, Assistant Director BARBARA R. LOWREY, Associate Secretary and Ombudsman STEPHEN A. RHOADES, Assistant Director CHARLES S. STRUCKMEYER, Assistant Director DIVISION OF BANKING ALICE PATRICIA WHITE, Assistant Director JOYCE K. ZICKLER, Assistant Director SUPERVISION AND REGULATION GLENN B. CANNER, Senior Adviser RICHARD SPILLENKOTHEN, Director JOHN J. MINGO, Senior Adviser STEPHEN C. SCHEMERING, Deputy Director HERBERT A. BIERN, Associate Director DIVISION OF MONETARY AFFAIRS ROGER T. COLE, Associate Director WILLIAM A. RYBACK, Associate Director DONALD L. KOHN, Director GERALD A. EDWARDS, JR., Deputy Associate Director DAVID E. LINDSEY, Deputy Director STEPHEN M. HOFFMAN, JR., Deputy Associate Director BRIAN F. MADIGAN, Associate Director JAMES V. HOUPT, Deputy Associate Director RICHARD D. PORTER, Deputy Associate Director JACK P. JENNINGS, Deputy Associate Director VINCENT R. REINHART, Assistant Director MICHAEL G. MARTINSON, Deputy Associate Director NORMAND R.V. BERNARD, Special Assistant to the Board SIDNEY M. SUSSAN, Deputy Associate Director MOLLY S. WASSOM, Deputy Associate Director DIVISION OF CONSUMER HOWARD A. AMER, Assistant Director AND COMMUNITY AFFAIRS NORAH M. BARGER, Assistant Director GRIFFITH L. GARWOOD, Director BETSY CROSS, Assistant Director GLENN E. LONEY, Associate Director RICHARD A. SMALL, Assistant Director DOLORES S. SMITH, Associate Director WILLIAM SCHNEIDER, Project Director, MAUREEN P. ENGLISH, Assistant Director National Information Center IRENE SHAWN MCNULTY, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

67 LAURENCE H. MEYER EDWARD M. GRAMLICH ROGER W. FERGUSON, JR. OFFICE OF DIVISION OF RESERVE BANK OPERATIONS STAFF DIRECTOR FOR MANAGEMENT AND PAYMENT SYSTEMS S. DAVID FROST, Staff Director CLYDE H. FARNSWORTH, JR., Director SHEILA CLARK, EEO Programs Director DAVID L. ROBINSON, Deputy Director (Finance and Control) LOUISE L. ROSEMAN, Associate Director DIVISION OF HUMAN RESOURCES PAUL W. BETTGE, Assistant Director MANAGEMENT JACK DENNIS, JR., Assistant Director EARL G. HAMILTON, Assistant Director DAVID L. SHANNON, Director JEFFREY C. MARQUARDT, Assistant Director JOHN R. WEIS, Associate Director FLORENCE M. YOUNG, Assistant Director JOSEPH H. HAYES, JR., Assistant Director FRED HOROWITZ, Assistant Director OFFICE OF THE INSPECTOR GENERAL OFFICE OF THE CONTROLLER BRENT L. BOWEN, Inspector General DONALD L. ROBINSON, Assistant Inspector General GEORGE E. LIVINGSTON, Controller BARRY R. SNYDER, Assistant Inspector General STEPHEN J. CLARK, Assistant Controller (Programs and Budgets) DARRELL R. PAULEY, Assistant Controller (Finance) DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director DAVID L. WILLIAMS, Assistant Director DIVISION OF INFORMATION RESOURCES MANAGEMENT STEPHEN R. MALPHRUS, Director MARIANNE M. EMERSON, Assistant Director Po KYUNG KIM, Assistant Director RAYMOND H. MASSEY, Assistant Director EDWARD T. MULRENIN, Assistant Director DAY W. 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

68 Federal Reserve Bulletin • December 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. JACK GUYNN ROBERT T. PARRY ROGER W. FERGUSON, JR. EDWARD W. KELLEY, JR. SUSAN M. PHILLIPS EDWARD M. GRAMLICH LAURENCE H. MEYER ALICE M. RIVLIN MICHAEL H. MOSKOW 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 STEPHEN G. CECCHETTI, 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 Vacancy, Twelfth District HERBERT V. PROCHNOW, Secretary Emeritus JAMES ANNABLE, Co-Secretary WILLIAM J. KORSVIK, Co-Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

69 CONSUMER ADVISORY COUNCIL JULIA W. SEWARD, Richmond, Virginia, Chairman WILLIAM N. LUND, Augusta, Maine, Vice Chairman 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 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. JUSTA, New York, New York GREGORY D. SQUIRES, Milwaukee, Wisconsin JANET C. KOEHLER, Jacksonville, Florida GEORGE P. SURGEON, Chicago, Illinois EUGENE 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

70 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, 1996. 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 The Board of Governors of the Federal Reserve System CHARTS. Weekly. $30.00 per year or $.70 each in the United States, its possessions, Canada, and Mexico. Elsewhere, The Federal Open Market Committee $35.00 per year or $.80 each. Federal Reserve Bank Board of Directors 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 ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— A Consumer's Guide to Mortgage Settlement Costs Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. A Consumer's Guide to Mortgage Refinancings Vol. II (Irregular Transactions). 1969. 116 pp. Each volume Home Mortgages: Understanding the Process and Your Right $5.00. to Fair Lending GUIDE TO THE FLOW OF FUNDS ACCOUNTS. 672 pp. $8.50 each. How to File a Consumer Complaint FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated Making Deposits: When Will Your Money Be Available? 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 Monetary Policy and Reserve Requirements Handbook. $75.00 Welcome to the Federal Reserve per year. When Your Home is on the Line: What You Should Know 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

71 STAFF STUDIES: Only Summaries Printed in the 165. THE DEMAND FOR TRADE CREDIT: AN INVESTIGATION OF BULLETIN MOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES, by Gregory E. Elliehausen and John D. Wolken. September Studies and papers on economic and financial subjects that are of general interest. Requests to obtain single copies of the full text or 1993. 18 pp. to be added to the mailing list for the series may be sent to 166. THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET, by Mark Carey, Stephen Prowse, John Rea, and Gregory Udell. Publications Services. January 1994. Ill pp. 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANK- Staff Studies 1-157 are out of print. ING, 1980-93, AND AN ASSESSMENT OF THE "OPERATING PERFORMANCE" AND "EVENT STUDY" METHODOLOGIES, 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- by Stephen A. Rhoades. July 1994. 37 pp. MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE 168. THE ECONOMICS OF THE PRIVATE EQUITY MARKET, by PRODUCTS, by Mark J. Warshawsky with the assistance of George W. Fenn, Nellie Liang, and Stephen Prowse. Novem- Dietrich Earnhart. September 1989. 23 pp. ber 1995. 69 pp. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI- 169. BANK MERGERS AND INDUSTRYWIDE STRUCTURE, 1980-94, ARIES OF BANK HOLDING COMPANIES, by Nellie Liang and by Stephen A. Rhoades. February 1996. 32 pp. Donald Savage. February 1990. 12 pp. 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by Gregory E. Elliehausen and John D. Wolken. September REPRINTS OF SELECTED Bulletin ARTICLES 1990. 35 pp. Some Bulletin articles are reprinted. The articles listed below are 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, those for which reprints are available. Beginning with the Janu- 1980-90, by Margaret Hastings Pickering. May 1991. ary 1997 issue, articles are available on the Board's World Wide 21 pp. Web site (http://www.bog.frb.fed.us) under Publications, Federal 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- Reserve Bulletin articles. 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 1997. Ann Taylor. March 1992. 37 pp. 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by James T. Fergus and John L. Goodman, Jr. July 1993. 20 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72 ANTICIPATED SCHEDULE OF RELEASE DATES FOR PERIODIC RELEASES OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (PAYMENT MUST ACCOMPANY REQUESTS) Annual Annual Approximate Corresponding Release number and title USPS fax release Period or date to Bulletin which data refer rate rate days1 table numbers2 Weekly Releases H.2. Actions of the Board: $55.00 n.a. Friday Week ended Applications and Reports previous Received Saturday H.3. Aggregate Reserves of $20.00 n.a. Thursday Week ended 1.20 Depository Institutions and previous the Monetary Base3 Wednesday H.4.1. Factors Affecting Reserve Balances $20.00 n.a. Thursday Week ended 1.11, 1.18 of Depository Institutions and previous Condition Statement of Wednesday Federal Reserve Banks3 H.6. Money Stock, Liquid Assets, $35.00 n.a. Thursday Week ended 1.21 and Debt Measures3 Monday of previous week H.8. Assets and Liabilities of $30.00 n.a. Friday Week ended 1.26 Commercial Banks in the previous United States3 Wednesday H.10. Foreign Exchange Rates3 $20.00 $20.00 Monday Week ended 3.28 previous Friday H.15. Selected Interest Rates3 $20.00 $20.00 Monday Week ended 1.35 previous Friday Monthly Releases G.5. Foreign Exchange Rates3 $ 5.00 $ 5.00 First of month Previous month 3.28 G.13. Selected Interest Rates $ 5.00 $ 5.00 First Tuesday of Previous month 1.35 month G.15. Research Library—Recent No charge n.a. First of month Previous month Acquisitions G.17. Industrial Production and $15.00 n.a. Midmonth Previous month 2.12, 2.13 Capacity Utilization3 G.19. Consumer Credit3 $ 5.00 $ 5.00 Fifth working day Second month 1.55, 1.56 of month previous G.20. Finance Companies $ 5.00 $ 5.00 Fifth working day Second month 1.51, 1-52 of month previous Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

73 Annual Annual Approximate Corresponding Period or date to Release number and title USPS fax release Bulletin which data refer rate rate days1 table numbers2 Quarterly Releases E.2. Survey of Terms of Bank $ 5.00 n.a. Midmonth of February, May, 4.23 Lending to Business March, June, August, and September, and November December E.7. List of OTC Margin Stocks No charge n.a. January, April, February, May, July, and August, and October November E. 11. Geographical Distribution of $ 5.00 n.a. 15th of March, Previous quarter Assets and Liabilities of June, Major Foreign Branches of September, and U.S. Banks December E. 15. Agricultural Finance Databook $ 5.00 n.a. End of March, January, April, June, July, and September, and October December E.16. Country Exposure Lending $ 5.00 n.a. January, April, Previous quarter Survey July, and October Z. 1. Flow of Funds Accounts $25.00 n.a. Second week of Previous quarter 1.57, 1.58, of the United States: March, June, 1.59, 1.60 Flows and Outstandings3 September, and December Annual Release C.2. Aggregate Summaries of Annual $ 5.00 n.a. February End of previous Surveys of Securities Credit June Extension 1. Please note that for some releases there is normally a certain variability in the release date because of reporting or processing procedures. Moreover, for all series unusual circumstances may, from time to time, result in a release date being later than anticipated. 2. The data in some releases are also reported in the Bulletin statistical appendix. 3. These releases are also available on the Board's World Wide Web site (http://www.bog.frb.fed.us) under Domestic and International Research, Statistical releases. n.a. Not available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

74 Maps of the Federal Reserve System LEGEND Both pages Facing page • Federal Reserve Bank city • Federal Reserve Branch city • Board of Governors of the Federal — Branch boundary Reserve System, Washington, D.C. NOTE The Federal Reserve officially identifies Districts by num- of Puerto Rico and the U.S. Virgin Islands; the San Franber and Reserve Bank city (shown on both pages) and by cisco Bank serves American Samoa, Guam, and the Comletter (shown on the facing page). monwealth of the Northern Mariana Islands. The Board of In the 12th District, the Seattle Branch serves Alaska, Governors revised the branch boundaries of the System and the San Francisco Bank serves Hawaii. most recently in 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

75 1-A 2-B 3-C 4-D 5-E Pittsburgh VT A / WWKcinnati Buffali MA /' 1 cr NJ NY • K1 BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H KY AL Birmingham^! ' ' • JfiSftsville ^••A'ille emphis rleans I''L ATLANTA CHICAGO ST. LOUIS 9-1 MT MINNEAPOLIS 10-J 12-L (Jklahoma City • • l l ll KANSAS CITY 11-K SafclJjOelity Sun Antonio AZ DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 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. Turnipseed1 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. Cerino1 Pittsburgh 15230 John T. Ryan, III Robert B. Schaub 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. Bechter1 ATLANTA 30303 Hugh M. Brown Jack Guynn David R. Jones Patrick K. Barron James M. Mckee Birmingham 35283 D. Bruce Carr Fred R. Herr1 Jacksonville 32231 Patrick C. Kelly James D. Hawkins' Miami 33152 Kaaren Johnson-Street James T. Curry III Nashville 37203 James E. Dalton, Jr. Melvyn K. Purcell New Orleans 70161 Jo Ann Slay don 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, III1 San Antonio 78295 H. B. Zachry, Jr. James L. Stull1 SAN FRANCISCO 94120 Judith M. Runstad Robert T. Parry Gary G. Michael John F. Moore Los Angeles 90051 Anne L. Evans Mark L. 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 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. 2. Executive Vice President Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

77 Index to Volume 83 GUIDE TO PAGE REFERENCES IN MONTHLY ISSUES Issue Text 'A" Pages Issue Text 'A" pages Index to Index to tables tables January 1- 66 1-76 66 July 543- 640 1-76 66 February 67-172 1-86 76 August 641- 706 1-78 68 March 173-226 1-74 64 September 707- 796 1-90 80 April 227-356 1-74 64 October 797- 858 1-80 70 May 357-464 1-86 76 November 859- 946 1-86 76 June 465-542 1-76 64 December 947-1038 1-88 64 The "A" pages consist of statistical tables and reference information. Statistical tables are indexed separately (see p. A64 of this issue). Pages Pages ACH service 879, 880 Bank holding companies—Continued Adaptive expectations 228, 229 Capital requirement for section 20 subsidiaries 384 Alexander, Lewis S., appointed Associate Director, Index of orders and actions taken by the Board .. 55-58, 337-39, Division of International Finance 891 619, 840-42 Allison, Theodore E., article and statements 557-64, 961, 974 Processing of applications 388 Amendment to the Capital Accord, by Basle Committee 890 Section 20 subsidiaries 205, 381-86, 821 Annual Report, 83rd, 1996 584 Bank Holding Companies and Change in Annual Report: Budget Review, 1996-97 584 Bank Control Act (Reg. Y) 260, 275-308, 501-34 Annual Statistical Digest, 1990-95 31 Bank Holding Company Act of 1956 Annuities 11 Applications approved under Articles 1867 Western Financial Corporation 943 Changes in distribution of banking offices 707-25 1st Floyd Bankshares, Inc 163 Evaluating international economic policy with the 1st United Bancorp 4^4, 704 Federal Reserve's global model 797-817 ABC Bancorp 163, 791 Family finances in the U.S.: Recent evidence from the ABC Employee Stock Ownership Plan 532 Survey of Consumer Finances 1-24 ABN AMRO Bank N.V., Amsterdam, Industrial production and capacity utilization: The Netherlands 63, 846 Historical revision and recent developments 67-92 ABN AMRO Holding, N.V., Amsterdam, Issuance of Series-1996 $100 Federal Reserve notes: The Netherlands 63, 846 Goals, strategy, and likely results 557-64 ABN AMRO North America, Inc 63, 846 Monetary policy reports to the Congress 173-87, 641-56 Adams Bancshares, Inc., Employee Stock Ownership Open Market Operations during 1996 565-74 Plan with 401 (k) Provision 621 Open Market Operations in the 1990s 859-74 ADBANC, Inc 59 Profits and balance sheet developments at U.S. Affiliated Community Bancorp, Inc 444 commercial banks in 1996 465-89 Affiliates Employee Stock Ownership Plan 793 Role of expections in the FRB/US macroeconomic ALBANK Financial Corporation 944 model 227-45 Albrecht Financial Services, Inc 1030 Survey of finance companies, 1996 543-56 AliKat Investments, Inc 444 Treasury and Federal Reserve foreign Allegiant Bancorp, Inc 702 exchange operations 188-91, 490-93, Amboy Bancorporation 1032 726-31, 947-52 Ameribanc, Inc 217 U.S. international transactions in 1996 357-67 AmeriBancShares Inc 444 Asia, currency crisis 975-77 AmeriBancShares of Delaware, Inc 444 Asset holdings of families 6-14 AmeriMark Financial Corporation 221 Assets and liabilities of banks, revision announcement 31 AMFED Financial, Inc 843 ATMs 711, 884 ANB Bancshares, Inc 444 August, James D., article 543 ANB Nevada Group, Inc 444 Automated clearinghouse transactions 879, 880, 979 Anderson Financial Group, Inc 941 Automated teller machines 711, 884 Anita Bancorporation 62 Automobile leasing 888 Anteilsverwaltung-Zentralsparkasse, Vienna, Austria 794 Availability of Funds and Collection Antelope Bancshares, Inc 217 of Checks (Reg. CC) 388, 414-27 APT Holdings, Inc 845 Avery, Robert B., article 707 Area Bancshares Corporation 846 Arkansas National Bancshares, Inc 344 BALANCE sheet developments, U.S. commercial banks 465 Armstrong Financial Co 532 Bank for International Settlements 767, 973 Arrowhead Capital Corporation 445 Bank holding companies (See also Commercial banks) Associated Banc-Corp 217 Amendment to the Capital Accord 890 Banc One Capital Corporation 942 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 Federal Reserve Bulletin • December 1997 Pages Pages Bank Holding Company Act of 1956—Continued Bank Holding Company Act of 1956—Continued Applications approved under—Continued Applications approved under—Continued Banc One Corporation 702, 942, 1033 CBC Holding Company 342 BancFirst Corporation 59, 445 CBI-Kansas, Inc 532, 843 Bancommunity Service Corporation 62 CCB Financial Corporation 62, 703 Bancorp Hawaii, Inc 621 Central Bancompany, Inc 622, 791 Bancorp of New Glarus, Inc 700 Central Bancshares, Inc 845 Bancshares, Inc 342 Central Illinois Bancorp, Inc 791 Bank Austria AG, Vienna, Austria 62 Central Texas Bankshare Holdings, Inc 164 Bank Austria Aktiengesellschaft, Vienna, Austria 794 Centre 1 Bancorp, Inc 1030 Bank Capital Corporation 1030 Century Acquisition Corp 791 Bank of Boston Corporation 58, 216, 445 Century Bancorp, Inc 59, 940 Bank of Elmwood Employee Stock Ownership Century Bancorp, MHC 940 Plan and Trust 843 Century South Banks, Inc 791 Bank of Granite Corporation 942 CH and JD Byrum, L.L.C 622 Bank of Idaho Holding Company 700 Charter Oak Community Bank Corp 218 Bank of Montreal, Montreal, Canada 942 Chase Manhattan Corporation 59, 217 Bank of Montreal, Toronto, Ontario, Canada 344 ChaseMellon, L.L.C 625 Bank of Mulberry Employee Stock Ownership Trust .... 791 Citicorp 59, 217 Bank of New York Company, Inc 59, 217, 341, 1030 Citizens Bancorp 622 Bank of Whitman Employee Stock Ownership Plan 342 Citizens Bancorp, Inc 164 Bank West Financial, Inc 342 Citizens Bancshares Company 845 Bankmont Financial Corp 942 Citizens Bancshares of Woodville, Inc 940 BanPonce Corporation 532, 622 Citizens Banking Corporation 621 BanPonce Financial Corp 532, 622 Citizens Financial Corp 1030 Banterra Corp 843 Citizens Financial Group, Inc 59, 168, 217 Barker Brothers, Inc 218 Citizens National Corporation 940 Barnett Banks, Inc 447, 532 City Bancorp 791 Bay Bankcorp, Inc 700 City Holding Company 60, 221 BayBanks, Inc 445 City National Corporation 164 Bayerische Vereinsbank AG, Munich, Germany 221 CN Bancorp, Inc 164 BB&T Corporation 702, 845 CNB Bancshares, Inc 164 BB&T Financial Corporation of Virginia 168, 845 Coal City Corporation 532 BCB Bancorp, Inc 845 Coastal Bend Bancshares, Inc 342 Beaman Bancshares, Inc 218 CoBancorp, Inc 221 Bedford Bancshares, Inc 700 Colonial BancGroup, Inc 62, 164, 218, 342, Bedford Delaware Bancshares, Inc 700 532, 622, 940, 943 Bedford Loan and Deposit Bancorp, Inc 218 Colorado County Investment Holdings, Inc 164 BEO Bancorp 1030 Columbus Bancorp, Inc 164 Berco, Inc 59 Comerica Incorporated 62 Berthoud Bancorp Employee Stock Ownership Plan 163 Commerce Bancorp, Inc 218 Big Lake Financial Corporation 843 Commerce Bancshares, Inc 532, 843 Binger Agency, Inc 700 Commercial Bancorp, Inc 843 Blackhawk Bancorp, Inc 445 Commercial Bancshares of Ozark, Inc 791 Bloomer Bancshares, Inc 940 Commercial Bancshares Savings and Employee Stock Bluestem Bank Holding Company, L.L.C 163 Ownership Plan 622 Bluestem Development Corporation 59 Commercial BancShares, Inc 794 BNB Bancorp, Inc 622 Commercial Bancshares, Inc 622, 940 BNY Western Trust Company 341 Commercial Guaranty Bancshares, Inc 703 Boatmen's Bank of Southern Missouri 793 Commerzbank Aktiengesellschaft, Frankfurt am Main, BOK Financial Corporation 163, 342 Germany 703 Bolivar Bancshares, Inc 445 Commonwealth Commercial Corporation 62 Bonham Financial Services, Inc 622 Community Bancorp of Louisiana, Inc 445 BonState Bancshares, Inc 622 Community Bankshares, Inc 533, 700, 843 BostonFed Bancorp, Inc 345 Community Capital Corporation 341, 699 Bremen Bancorp, Inc 221 Community Financial Corp 533, 700, 940 Bremer Financial Corporation 219, 447, 844 Community First Bancshares, Inc 843 Brickyard Bancorp, Inc 342 Community First Bankshares, Inc. .. 344, 447, 533, 1030, 1031 Bridge View Bancorp 59 Community Holding Company 943 Bryan Family Management Trust 843 Community National Bancorporation 843 Bryan-Heritage Limited Partnership 843 Community National Corporation 1031 BSM Bancorp 342 Community State Bancshares, Inc 218 Buckeye Bancshares, Inc 342 Community Trust Financial Services Corporation 625 Buffalo Bancorp, Inc 940 Compass Bancorporation of Texas, Inc 163, 217, 621 Buffalo Corp 940 Compass Bancshares, Inc 163, 217, 531, 621, 1030 Cabot Bankshares, Inc 940 Compass Banks of Texas, Inc 163, 217, 621 Caisse Nationale de Credit Agricole, Paris, France ... 703, 845 Concord EFS, Inc 703 Calvin B. Taylor Bankshares, Inc 940 Concordia Capital Corporation 622 Campello Bancorp 167 Connor Trusts 445 Capitol Bancorp, Limited 163, 700 Conrad Company 622 Capitol Bancorporation, Inc 62 Cortez Investment Co 1031 Carlinville National Bank Shares, Inc 59 Country Bancorporation 622 Carolina Financial Corporation 163 County Bancorp, Inc 342 Carolina First Corporation 625, 942 Covenant Bancorp, Inc 623 Castle Creek Capital Partners Fund-I, L.P. 622, 790 CoVest Bancshares, Inc 791 Castle Creek Capital, L.L.C 621, 790 CPB, Inc 943 Castle Creek Partners Fund - I, L.P. 621 Credit Agricole Group, Paris, France 845 Cattail Bancshares, Inc 167 Credit Agricole Indosuez, Paris, France 703 CB&T, Inc 943 Creditanstalt-Bankverein, Vienna, Austria 447 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 83 A79 Pages Pages Bank Holding Company Act of 1956—Continued Bank Holding Company Act of 1956—Continued Applications approved under—Continued Applications approved under—Continued Crestar Financial Corporation 60, 532, 943 First Marshall Delaware Bancshares, Inc 792 Cullen/Frost Bankers, Inc 164 First Midwest Bancorp, Inc 843 Cumberland Bancorp, Inc 445, 623 First Mineola, Inc 165 Damen Financial Corporation 342 First National Bancorp of River Falls, Inc 792 Davis BanCorporation, Inc 791 First National Bancshares of Gallatin 792 Dean Financial Services, Inc 940 First National Bancshares, Inc 845 Decatur First Bank Group, Inc 533 First National Bank of Julesburg ESOP 793 Deerwood Bancshares, Inc 164 First National Bank of Las Animas ESOP 1031 Delaware Financial, Inc 533 First National Bank Shares, Ltd 843 Dent Bancshares, Inc 60 First National Community Bancorp, Inc 701 Destin Bancshares, Inc 60 First National of Colorado, Inc 59 Deutsche Bank AG, Frankfurt, Germany 344, 625 First National of Nebraska, Inc 59 Diboll State Bancshares of Delaware, Inc 164 First National Security Company 623 Diboll State Bancshares, Inc 164 First Pecos Bancshares, Inc 218 Dresdner Bank, AG, Frankfurt, Germany 703 First Robinson Financial Corporation 623 Dunn Investment Co 700 First SCK Financial Corporation 165 Eagle Bancshares, Inc 445 First Security Bancorp 218 Eagle Investment Company, Inc 700 First Security Corporation 621 East Coast Bank Corporation Employee Stock First Security Corporation Employee Stock Ownership Plan Trust 218 Ownership Plan 623 ECSB Holding Company, Inc 791 First State Bancorp of Monticello, Inc. Eden Financial Corporation 623 Employee Stock Ownership Plan 940 Edgar County Banc Shares, Inc 791 First State Bancorp, Inc 60 Edison Bancshares, Inc 843 First State Bancshares of Blakely, Inc 792 Eggemeyer Advisory Corp 621, 790 First State Bancshares, Inc 940 Emerald Coast Bancshares, Inc 445 First Team Resources Corporation 219 Emprise Financial Corporation 943 First Union Corporation 59, 217, 445, 532 Enterbank Holdings, Inc 791 First United Bancshares, Inc 792, 1031 Ewen Bancshares, Inc 791 First Virginia Banks, Inc 625 Exchange National Bancshares, Inc 1031 First Weatherford Bancshares, Inc 60 F.N.B. Corporation 445, 847, 941, 1031 Firstbank Corporation 700 F&M Bancorporation 164 FirstBank Holding Company of Colorado 341, 939 F&M Bancorporation, Inc 623, 792 FirstBank Holding Company of Colorado F&M Merger Corporation 164, 792 Employee Stock Ownership Plan 60, 939 F&M Merger, Inc 623 Firstbank of Illinois Co 445, 943 Fannin Bancorp, Inc. Employee Stock Ownership FirstFederal Financial Services Corp 704 Plan and Trust 700 Firstrust Corporation 625 Farmers State Bank of Fort Morgan, Colorado ESOP .... 700 Fishback Financial Corporation 625 Farmers State Financial Corporation 447 FJSB Bancshares, Inc 342 Farmers State Holding Company 700 Fleet Financial Group, Inc 58, 216 FBA Bancorp, Inc 792 Florida Bancshares, Inc 623 FBIC Subsidiary, Inc 445 FMB Acquisition Corporation 843 FBOP Corporation 164,1031 FNB Company 165 FCFT, Inc 445 FNB Company of Delaware 165 FGBI Acquisition Corp 844 Forrest City Financial Corporation 165 FGH Bancorp, Inc 445 Forsyth Bancshares, Inc 165 Fifth Third Bancorp 703 Frandsen Financial Corporation 165 Fifth Third Bank 703 Fredonia State Bankshares, Inc 165 Financial Services of St. Croix Falls 700 Fremont Bank Corporation 446 First & Farmers Bancshares, Inc 218 Fremont of Albuquerque, Inc 446 First American Corporation 165 Front Range Bancshares, Inc 219 First Baird Bancshares of Delaware, Inc 60, 218 FSB Bancorp 941 First Baird Bancshares, Inc 60, 218 FSB Bancorp, MHC 941 First Bank Holding Company 218 Fuji Bank, Limited, Tokyo, Japan 167 First Bank System, Inc 625 Fulda Bancorporation, Inc 62 First Centralia Bancshares, Inc 792 Fulton Financial Corp 792 First Citizens Bancorp 625 Fulton Financial Corporation 62, 342 First Citizens BancShares, Inc 700 FW Financial Inc./First Western Bancorp, Inc 167 First Citizens Bancshares, Inc., Dyersburg, Tennessee ... 444 G.R. Bancorp, Ltd 60 First Citizens BancShares, Inc., Raleigh, North Carolina . 167 Gateway Delaware Holding Company, Inc 219 First Citizens Corporation 445 Gateway Holding Company, Inc 219 First Coastal Bancshares 623 GBC Bancorp, Inc 623 First Commercial Corporation 342, 533, 623, 1031 Generale de Banque, Brussels, Belgium 1033 First Commerce Bancorp, Inc 60 Gideon Bancshares Company 792 First Eldorado Bancshares, Inc 792 Glacier Bancorp, Inc 60 First Equity Corp 445 GLB Bancorp, Inc 701 First Fairland Bancshares, Inc 843 Gold Banc Corporation, Inc 701, 941 First Federal Savings Bank of Southwest Georgia 792 Governor and Company of the Bank of Ireland, First Financial Bancorp 60 Dublin, Ireland 58, 168, 216 First Financial Bancorporation 445 Great Basin Financial Corporation 165 First Financial Caribbean Corporation 944 Griffin General Partner, Inc 1031 First Georgia Community Corp 218 Griffin Investments, L.P. 1031 First Interstate BancSystems of Montana 167 Guaranty Bancshares Corporation 701 First Live Oak Bancshares, Inc 218 Guaranty Financial Corporation 533 First Live Oak Delaware Bancshares, Inc 218 Halpain Financial, Ltd 219 First Manistique Corporation 60 Hardin County Bancshares, Inc 943 First Marshall Bancshares, Inc 792 Harris Bankcorp, Inc 942 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 Federal Reserve Bulletin • December 1997 Pages Pages Bank Holding Company Act of 1956—Continued Bank Holding Company Act of 1956—Continued Applications approved under—Continued Applications approved under—Continued Harris Bankmont, Inc 942 Medina Financial, Inc 623 Harris Financial, Inc 843 Mellon Bank Corporation 625, 701, 845 Harris Financial, MHC 843 Mercantile Bancorporation, Inc 219 Harris Trust and Savings Bank 942 Mercantile Bank Corporation 1031 Haviland Bancshares, Inc 165 Metro Bank Financial Services, Inc 219 Hawkins Delaware Financial Corporation 623 Metrocorp, Inc 166 Hawkins Financial Corporation 623 Michigan Heritage Bancorp, Inc 343 HBC Acquisition Sub, Inc 168 Mid Am, Inc 168, 703 Heartland Bancshares, Inc 941 Mid-America Bankshares, Inc 446 Heartland Financial USA, Inc 167, 342 Mid-Missouri Bancshares, Inc 343 Hibernia Corporation 792, 844 Mid America Bancshares, Inc 167 Hickory Hill Bancshares, Inc 219 MidCity Financial Corporation 941 Hickory Hill Delaware Financial Corporation 219 Middleburg Bancorp, Inc 845 Hoeme Family Partnership 165 Midwest Bancorporation, Inc 793 Hohl Financial, Inc 701 Midwest Bancshares, Inc 793 Hometown Independent Bancorp, Inc 844 Midwest Community Bancshares, Inc 941 HONOR Technologies, Inc 532 Mitsubishi Trust and Banking Corporation, Horizon Bancorp of South Arkansas, Inc 1030 Tokyo, Japan 168 HPK Financial Corporation 447 MNB Bancshares, Inc 60 HSBC Americas, Inc 59, 217 Monarch Bancorp 621 HSBC Holdings, BV, Amsterdam, The Netherlands .... 59, 217 Monitor Bancorp, Inc 703 HSBC Holdings, PLC, London, England 59 Morrill Bancshares, Inc 793 IFB Holdings, Inc 219 Mound City Financial Services, Inc 219 Illinois Community Bancorp, Inc 534 MSB Financial, Inc 793 Imperial Bancorp 701 MSB Mutual Holding Company 793 Independence Bancshares, Inc 60 Murfreesboro Bancorp, Inc 941 Independent Bancorp, Limited 165 Mutual Bancorp of the Berkshire, Inc 1033 Independent Community Bankshares, Inc 794 National City Bancshares, Inc 344, 701, 1031 International Bancorporation 219, 941 National City Corporation 699 Intra Financial Corp 342, 792 National Commerce Bancorporation 168 InvestorsBancorp, Inc 701 National Processing, Inc 699 Iron Bancshares, Inc 1031 National Westminster Bank, PLC, London, England ... 59, 217 Iron Horse Bancshares, Inc 342 NationsBank Corporation 344, 532, 793, 941 Iroquois Bancorp, Inc 60 NB Holdings Corporation 793 J.M. Nichols, Inc 941 Nbar5, Limited Partnership 167 J&L Holdings Limited Partnership 793 NCF Financial Corporation 343 Jefferson County Bancshares, Inc 219 NEB Corporation 701 JS Investments, Limited Partnership 167 New Amboy, Inc 1032 Keene Bancorp, Inc. 401(k) Employee Stock New Asia Bancorp, Inc 166 Ownership Plan and Trust 219 New Broadway, Inc 941 KeyCorp 1033 New Galveston Company 164 Keystone Financial, Inc 448 New London Bancshares, Inc 446 Klein Bancorporation, Inc 62 New Woodson Bancshares, Inc 793 Kremlin Bancshares, Inc 623 NewSouth Bancorp, Inc 446 Laguna Bancshares of Delaware, Inc 343 Nichols Bancshares, Inc 941 Laguna Bancshares, Inc 343 North Fork Bancorporation, Inc 941 Laguna Madre Bancshares, Inc 343 Northeast Kansas Bancshares, Inc 623 Laguna Madre Delaware Bancshares, Inc 343 Northern Plains Investment, Inc 60 Landmark Bancorp, Inc 941 Northway Financial, Inc 793 LeasePlan North America, Inc 63 Northwest Suburban Bancorp, Inc 844 Lexington B&L Financial Corp 844 Northwest Wisconsin Bancorp, Inc 845 Liberty Financial Corporation 165, 166 Norwest Corporation 61, 63, 168, 344, Linn Holding Company, Inc 166 345, 446, 447, 624, Louisiana Bancshares, Inc 701 625, 793, 794, 844, Louisville Development Bancorp, Inc 168 846, 941, 943, 1033 Magna Group, Inc 168 Norwest Financial Services, Inc 344, 345, 794, 846, 1033 Mahaska Investment Company 1031 Norwest Financial, Inc 794, 846, 1033 MainBancorp Intermediate Holding Company, Inc. 166 NSB Holding Corp 943 MainBancorp, Inc 166 O.A.K. Financial Corporation 941 MainStreet BankGroup Incorporated 62, 1031 Oak Park Bancshares, Inc 61 Mancos Bancorporation, Inc 166 Old Kent Financial Corporation 61, 343 Mansfield Bancshares, Inc 701 Old Second Bancorp, Inc 534 Manufacturers National Corporation 532 Olympian New York Corporation 1032 Marengo Bancshares, Inc 1031 Olympic Bancorp, Inc 1032 Maries County Bancorp., Inc 941 Onaga Bancshares, Inc 793 Marine BanCorp, Inc 1031 One Valley Bancorp, Inc 1032 Mark Twain Bancshares, Inc 166 Oskey Limited Partnership 166 Marquette Bancshares, Inc 703, 844 Otto Bremer Foundation 219, 447, 844 Marshfield Investment Company 446 Owenton Bancorp, Inc. Employee Stock MarTex Bancshares, Inc 60 Ownership Trust 61 MASSBANK Corp 701 P.C.B. Bancorp, Inc 846 MAXLOU Bancshares, Inc 533 Pacific Capital Bancorp 61 Maypearl Bancshares, Inc 844 Panhandle Aviation, Inc 166 Maypearl Holdings, Inc 844 Paradigm Bancorporation, Inc 61 Meade Bancorp, Inc 701 Paradigm Delaware Bancorporation, Inc 61 Medford Bancorp, Inc 1031 Park National Corporation 343 Medina Bancshares, Inc 623 Parkway Bancorp, Inc 624 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 83 A81 Pages Pages Bank Holding Company Act of 1956—Continued Bank Holding Company Act of 1956—Continued Applications approved under—Continued Applications approved under—Continued Patapsco Valley Bancshares, Inc 794 Security Bancorp of Tennessee, Inc 446 Pathfinder Bancorp 942 Security Bancshares, Inc 166, 793 Pathfinder Bancorp, MHC 942 Security National Corporation 343 PBT Bancshares, Inc 701 Security State Corporation 702 Penns Woods Bancorp, Inc 624 Shorebank Corporation 702 Pennwood Bancorp, Inc 166 Shorebank Pacific Corporation 702 People's Commercial Bancorp 1032 Smoky Mountain Bancorp, Inc 61 People's Community Capital Corporation 844 Societe Generale, Paris, France 63 Peoples Bancorp, Inc 168, 219, 446, 846 Societe Generale de Belgique, Brussels, Belgium 1033 Peoples Bank Employee Stock Ownership Trust 701 South Branch Valley Bancorp, Inc 702 Peoples Community Bancshares, Inc 844 South Central Bancshares, Inc 167 Peoples Financial Corp., Inc 942 South Coast Bancorp, Inc 167 Peoples-Marion Bancorp, Inc 701 South Platte Bancorp 793 Perry Banking Company 220 Southeast Arkansas Bank Corporation 533 Pierce County Bancorp 624 Southeast Bancorp, Inc 624 Pineries Bankshares, Inc 166 Southern National Corporation 168, 532, 625 Pinnacle Bancorp, Inc 624 Southern Security Financial Corporation 702 Pinnacle Bancshares, Inc., Jasper, Alabama 220 Southwestern Bancshares, Inc 844 Pinnacle Bancshares, Inc., Little Rock, Arkansas 220 Spectrum Bancorporation, Inc 1033 Pinnacle Bancshares, Inc., Thomson, Georgia 624 State Bank of Hawley Employee Stock Ownership Pinnacle Financial Services, Inc 703, 794 Plan and Trust 793 Pioneer Bancorp, Inc 446 State Financial Services, Inc 167 Pioneer Bancshares, Inc 846 Sterling Bancshares, Inc 844 Pioneer Bancshares, Inc. Employee Stock Sterns Financial Services, Inc 702 Ownership Plan 793 Sterns Financial Services, Inc. Employee Stock Pioneer Bankcorp, Inc 63, 447, 943 Ownership Plan 702 Plainview Holding Company 793 Stichting Administratiekantoor ABN AMRO Holding, Platte Valley Financial Services Companies, Inc 343 Amsterdam, The Netherlands 63, 846 PN Holdings, Inc 701 Stichting Prioriteit ABN AMRO Holding, PNC Bank Corporation 532, 1033 Amsterdam, The Netherlands 63, 846 Pocahontas Bancstock, Inc 533 Stockmens Financial Corporation 845 Pontiac Bancorp, Inc 166 Suez Lyonnaise des Eaux, Paris, France 1033 Popular, Inc 1032 Summit Bancorp 167, 703 Popular International Bank, Inc 532, 622, 1032 Summit Bank 167 Popular North America, Inc 1032 Summit Financial Corporation 344 Poteau Bancshares, Inc 624 Sun Community Bancorp Limited 700 PNC Bank Corp 1033 Susquehanna Bancshares, Inc 702 Preferred Bancshares, Inc 943 SW&KM Holdings, LLC 220 Premier Bancshares, Inc 626, 701, 1033 SW&KM Limited Partnership 220 Premier Financial Bancorp, Inc 942 Synovus Financial Corp 345 Prestige Financial Corporation 943 TB&C Bancshares, Inc 345 Prime Newco, Inc 63 TCB Delaware, Inc 61, 62 Progress Bancshares, Inc 844 TCF Colorado Corporation 446 Progressive Bancorp, Inc 844 TCF Financial Corporation 446, 447, 703 Provident Bancorp, Inc 166, 168, 844 TDI Financial Corporation 61 Provident Bankshares Corporation 794 TeamBanc Acquisition Subsidiary, Inc 62 Queenstown Bancorp of Maryland, Inc 1032 TeamBanc, Inc. 62 RBC, Inc 343 TeamBanc, Inc. Employees Stock Ownership Plan 62 RCB Holding Company, Inc 844 Tehama Bancorp 626 Ready Bank of Fort Walton Beach Holding Texas Country Bancshares, Inc 62 Company, Inc 844 Texas Financial Bancorporation, Inc 533 Regency Bancorp 447 TNB Bancorporation of Delaware, Inc 845 Regions Financial Corporation 220, 221, 446, 624, 943 TNB Bancorporation, Inc 845 Republic Bancshares, Inc 447, 703 Total System Services, Inc 345 Republic Security Financial Corporation 1032 Tri-County Financial Corporation 447 Rice Lake Bancorp, Inc 1032 Triangle Bancorp, Inc 845, 1033 River Cities Bancshares, Inc 343 Trimont Bancorporation, Inc 447 TRP Acquisition Corporation 344 River Falls Bancshares, Inc 343 Trustbank Financial Corporation 1032 Rockdale National Bancshares, Inc 942 Trustcorp Financial, Inc 702 Rotan Bancshares, Inc 220 Two Rivers Bank Holding Company 167 Rotan Delaware Bancshares, Inc 220 U.S. Bancorp 58 Royal Bank of Canada, Montreal, Quebec, Canada ... 168, 846 U.S. Trust Corporation 167, 447 Royal Bank of Scotland Group, pic, Edinburgh, Union Bancshares, Inc 942 Scotland, United Kingdom 58, 168, 216 Union Illinois 1995 Investment Limited Partnership .. 624, 794 Royal Bank of Scotland, pic, Edinburgh, Scotland, United Kingdom 58, 168, 216 Union Illinois Company 703 Saehan Bancorp 942 Union Planters Community Bancorp, Inc 344 Salin Bancshares, Inc 166 Union Planters Corporation 220, 344, 942, 943, 1032 Sanger Bancshares, Inc 61 United Bancshares, Inc 702 Sanger Intermediate Holding Company, Inc 61 United Community Bancshares, Inc 62 Sankovitz Family Limited Partnership 61, 624 United Community Banks, Inc 533, 625, 845 Santa Barbara Bancorp 446 United Roosevelt Bancorp, Inc 794 Santander Holding Internacional, S.A., Madrid, Spain ... 942 United Roosevelt, MHC 794 Santusa Holding, S.L., Madrid, Spain 942 United Security Bancorporation 1032 SBT Bankshares, Inc 846 Upson Bankshares, Inc 62 Schonath Family Partnership, a Limited Partnership 702 USA BancShares, Inc 533 Seacoast Banking Corporation of Florida 626 UST Corp 167, 943 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 Federal Reserve Bulletin • December 1997 Pages Pages Bank Holding Company Act of 1956—Continued Bank Holding Company Act of 1956—Continued Applications approved under—Continued Orders issued under—Continued Vail Banks, Inc 1032 First Commercial Corporation 41 Valley National Corporation 942 First Maryland Bancorp 607-12 Vanderbilt Holding Company, Inc 447 First State Bancshares, Inc 1010-12 Vermilion Bancorp, Inc 448 First State Bancshares of Blakely, Inc 46 Vermont Financial Services Corp 625 First Union Corporation 131-35, 1003-8, 1012-20 Vernon Bancshares, Inc 344 First Virginia Banks, Inc 1003-8 Village Bancshares, Inc 702 G.B. Financial Services, Inc 509 Vital Processing Services, L.L.C 345 GB Bancorporation 115, 117 Wachovia Corporation 532, 699 HSBC Americas, Inc 326-35 Waggoner National Bancshares, Inc 344 HSBC Holdings, BV, Amsterdam, The Netherlands .... 326-35 Walker Ban Co 167 HSBC Holdings, PLC, London, England 326-35 Waseca Bancshares, Inc 794 Huntington Bancshares Incorporated 930-33 Waterfield Bank Corp 344 Ida Grove Bancshares, Inc 119 Wauneta Falls Bancorp, Inc 533 Jefferson Bankshares, Inc 1003-8 Weatherford Bancshares, Inc 60, 218 JDOB Inc 121 West Point Bancorp, Inc 624 KeyCorp 921-24 Western Bancorp 790 Marine Midland Bank 326-35 Western Bancshares, Albuquerque, New Mexico, Marshall & Ilsley Bank 672-76 ESOP & Trust 942 Marshall & Ilsley Corporation 672-76 Whipple Family Limited Partnership 621 Mellon Bank Corporation 681-83 Whitney Holding Corporation 444 Mercantile Bancorporation Inc 683-89 Wilson Bank Holding Company 62 National Bancorp of Alaska, Inc 1002 Wintrust Financial Corporation 167 National Bank of Canada, Montreal, Canada 127-30 Zions Bancorporation 448, 702, 1032 National Canton Bancshares, Inc 676 Orders issued under NationsBank Corporation 131-35, 148-62, ABN AMRO Bank, N.V., Amsterdam, 593-96, 924-27, 1003-8 NB Holdings Corporation 148-62, 593-96 The Netherlands 135-16, 441, 518 Neighborhood Bancorp 780 ABN AMRO Holding, N.V., Amsterdam, New Prague Bancshares, Inc 909 The Netherlands 135-46, 441, 518 Northwest Bancorp, Inc 831-33 ABN AMRO North America, Inc 135-38, 518 Northwest Bancorp, MHC 831-33 Allied Irish Banks, pic 607-12 Norwest Corporation 135-38, 209-12 Amboy Bancorporation 507-9 Pontotoc BancShares Corp 434 AMCORE Financial, Inc 429-32, 666-68 Riggs National Corporation 1003-8 Ameribanc, Inc 683-89 Royal Bank of Canada, Montreal, Canada .... 127-30, 135-38 American Bancshares, Inc 119 Santa Barbara Bancorp 833-37 ANB Corporation 902-5 Shoreline Financial Corporation 515 ANB Holding Company, Ltd 902-5 Signet Banking Corporation 1003-8 Arvest Bank Group, Inc 41 SinoPac Bancorp 669 Associated Banc-Corp 910-13 South Central Texas Bancshares, Inc 47 Banc One Corporation 439, 520-28 Southern National Corporation 131-35, 596-602 Banc One Corporation, Inc 602-7 Stichting Administratiekantoor ABN AMRO Holding, Banc One Oklahoma Corporation 520-28 Amsterdam, The Netherlands 135-46, 441, 518 BancSecurity Corporation 122-26 Stichting Prioriteit ABN AMRO Holding, Bank of Boston Corporation 42 Amsterdam, The Netherlands 135-46, 441, 518 Bank of Montreal, Montreal, Canada 127-30 SunTrust Banks, Inc 1003-8 Bank of New York Company, Inc 323 Susquehanna Bancshares, Inc 317-20 Bank of Nova Scotia, Toronto, Canada 127-30 Swiss Bank Corporation, Basel, Switzerland 786 Bank of Taiwan, Taipei, Taiwan 314 Synovus Financial Corporation 1003-8 Bank SinoPac, Taipei, Taiwan 669 Toronto Dominion Bank, Toronto, Canada 127-30, 335 BankAmerica Corporation 913-16 TRH Bank Group, Inc 41 Bankers Trust New York Corporation 780-84 TRH Oklahoma, Inc 41 Barnett Banks, Inc 131-35, 916-18, 1003-8 Unibank A/S, Copenhagen, Denmark 146 BB&T Corporation 919-21, 1003-8 Unidanmark A/S, Copenhagen, Denmark 146 Belvedere Bancorp, Inc 1002 Union Planters Corporation 320, 928-30 Belvedere Capital Partners, Inc 1002 Wachovia Corporation 131-35, 1003-8, 1020-23 BOK Financial Corporation 510 Waterhouse Investor Services, Inc 335 California Community Financial Institutions Fund Westamerica Bancorporation 435-38 Limited Partnership 1002 Weekly list of applications, announcement 501 Canadian Imperial Bank of Commerce, Bank Holding Company Supervision Manual 207, 662 Toronto, Canada 127-30, 324, 1008-10 Bank Merger Act Central Fidelity Banks, Inc 1003-8 Applications approved under Chase Holding Delaware, Inc 905-9 1st United Bank 448 Chase Manhattan Corporation 127-30, 905-9 Adams Bank and Trust 345 Commerzbank AG, Frankfurt am Main, Federal Aliant Bank 63 Republic of Germany 678-81 Community First Bankshares, Inc 110-13 Ambassador Bank of the Commonwealth 847 CoreStates Financial Corporation 838—40 Bank of Mecklenburg 847 Country Bank Shares Corporation 112-15 Bank of the West 345 Crestar Financial Corporation 131-35, 512-14, 1003-8 Bank of White Sulphur Springs 627 Exchange Bankshares Corporation of Kansas 671 Blue Ridge Bank 448 First Alamogordo Bancorp of Nevada, Inc 432 Citizens Bank 626, 1034 First American Corporation 1003-8 Citizens Banking Company 169, 1034 First Bank System, Inc 689-99 Citizens Commercial Bank & Trust Company 944 First Chicago Capital Markets, Inc 784 Colonial Bank 627, 847 First Chicago NBD Corporation 127-30, 784 Community Bank & Trust Company 448, 847, 1034 First Citizens BancShares, Inc 1003-8 Compass Bank 1034 First Commercial Bank, Taipei, Taiwan 315 Consolidated Bank and Trust Company 627 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 83 A83 Pages Pages Bank Merger Act—Continued Bettge, Paul W., appointed Assistant Director, Division Applications approved under—Continued of Reserve Bank Operations and Payment Systems 771 Crestar Bank 346, 944 Biern, Herbert A., Associate Director, Division of Dacotah Bank 627 Supervision and Regulation, promotion 891 F&M Bank-Fennimore 944 BIS Committee on Payment and Settlement Systems 767 F&M Bank-Portage County 944 BIS Group of Computer Experts, meeting 767 Farmers Bank of Maryland 221 BIS Supervisors Committee 767 FCNB Bank 169 Board of Governors (See also Federal Reserve System) Fifth Third Bank Cincinnati 847 Audit contract with Coopers & Lybrand 98 Fifth Third Bank Columbus 847 Committee on Federal Reserve in Payments Mechanism ... 979 Fifth Third Bank of Kentucky, Inc 63 Consumer Advisory Council 202, 387, 662, 978 Fifth Third Bank of Northeastern Ohio 63 Index of orders and actions taken 55-58, 337-39, Fifth Third Bank of Northern Kentucky, Inc 63 619, 840-42 First Bank of Arkansas 448 Members First Bank of Hennessey 944 Ferguson, Roger W., Jr., appointed 978 First Community Bank of Southwest Virginia, Inc 795 Gramlich, Edward M., appointed 978 First Community Bank, Inc 944 Lindsey, Lawrence B., resignation 97 First Farmers Bank & Trust 1034 Lists, 1913-97 224, 1037 First Interstate Bank of Commerce 627 Yellen, Janet L., resignation 202 First Security Bank of Nevada 626 Planning and budgeting strategy 762 First Sterling Bank 944 Staff changes First Third Bank of Western Ohio 704 Alexander, Lewis S 891 Barger, Norah M 891 First Virginia Bank-Clinch Valley 944 Bennett, Charles W. 389 First Virginia Bank-Mountain Empire 944 Bettge, Paul W. 771 First Virginia Bank-Southwest 627, 847 Biern, Herbert A 891 George Mason Bank 627 Canner, Glenn 208 Guaranty Bank 534 Cole, Roger T 891 Gulf Bank 704 Connors, Thomas A 891 Humboldt Bank 346 Cross, Betsy 891 Huron Community Bank 627 Edwards, Gerald A., Jr 891 Johnstown Bank and Trust Company 627, 944 Garner, James 1 584 Kent City State Bank 64 Hoffman, Stephen, Jr 891 La Salle State Bank 346 Hooper, Peter 891 LeSueur State Bank 944 Houpt, James V., Jr 891 M&I Bank of Janesville 627 Jennings, Jack P. 891 M&I Madison Bank 627 Johnson, Karen 891 Manufacturers and Traders Trust Company 345 Martinson, Michael G 891 Mercantile Bank 704, 944 Parrish, John H 389 Mercantile Bank of Lawrence 169 Promisel, Larry J 891 Minden Bank & Trust Company 627 Pugh, Rhoger 772 Old Kent Bank 628, 704 Ryback, William A 891 Omni Bank 847 Siegman, Charles J 891 Pointe Bank 534 Small, Richard A 891 Provident Bank 847 Smith, Ralph W„ Jr. 772 Provident Bank of Florida 847 Sussan, Sidney M 891 Pullman Bank and Trust Company 221 Wassom, Molly S 891 Republic Security Bank 534, 1034 Thrift Institutions Advisory Council, new members 98 Resource Bank 847 Bonds, U.S. Treasury, in System Open Market Account 573 Santa Barbara Bank & Trust 448 Borrowing, family 16-21 Security Savings Bank 628 Boskin Commission 199, 371, 372 Summit Bank 169 Bostic, Raphael W., article 707 Tehama County Bank 169 Brayton, Flint, article 227 Texas Bank 64 Bureau of Economic Analysis 364 Tiskilwa State Bank 847 Bureau of Engraving and Printing 962 Tri-City Bank & Trust Company 346 Business sector Triangle Bank 795 Assets 13 UnionBank 847 Debt 183 United Bank 704 Economic developments 177, 647 Vectra Bank 795 Macroeconomic model 237 WestStar Bank 1034 Receivables 554 Orders issued under AmSouth Bank of Alabama 528 Banco Popular de Puerto Rico 612 CALEM, Paul S„ article 707 Centura Bank 1023-25 CAMEL rating system 98, 970 Citizens Commercial Bank & Trust Company 933-35 Canner, Glenn B. Westamerica Bank 614-17 Article 707 Bank supervision 251, 373-78 Promotion to Senior Adviser 208 Banking and commerce 253 Capital Banking industry, consolidation chart 473 Banking offices, distribution of, article 707-25 Commercial banks 470 Banks, credit card 476 Federal Reserve Banks' stock of, proposed action 388 Barger, Norah M., Assistant Director, Division of International account transactions 366 Supervision and Regulation, appointment 891 Nonfinancial, of families 11 Barrett bill 886 Century Date Change (CDC) project Barrett, Thomas M 884, 886, 887 (See also Year 2000) 764, 766 Basle Committee 30, 890, 973 Certificates of deposit held by families 7 Bennett, Charles W., Assistant Director, Division Chairpersons, Federal Reserve Banks, appointed 29 of Reserve Bank Operations and Payments Systems, Change in Bank Control Act, Weekly list of applications, retirement 389 announcement 501 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 Federal Reserve Bulletin • December 1997 Pages Check clearing and collection 388, 414-27, 584, Electronic Fund Transfers (Reg. E) 205, 821, 831 880, 888, 896 Elliehausen, Gregory, staff study announcement 953 Checks and tha automated clearinghouse 879 ELVIS (See Examiner Laptop Visual Information System) CHIPS (See Clearing House Interbank Engraving and Printing, Bureau of 961 Payments System) Equal Credit Opportunity Act (Reg. B) 99, 770 Civil money penalty, FRB final decision and order 260 Equation, ten-year Treasury bond 232 Clearing House Interbank Payments System (CHIPS) 374, 878 Equations, FRB/US model 235 Cohen, Gerald D„ article 565-74 Equipment, finance for 545 Cole, Roger T., Associate Director, Division of Equity prices 186 Supervision and Regulation, promotion 891 Euro-currency Standing Committee 30 Commerce and banking 253 Examination Manual for U.S. Branches and Agencies Commerce, U.S. Department of 199 of Foreign Banking Organizations 891 Commercial banks (See also Bank holding companies) Examinations of member banks 970 Assets and liabilities, revision announcement 31 Examiner Laptop Visual Information System 890 Balance sheet developments 465-89 Exchange rate articles 188-91, 490-93, 726-29, 947-52 Capital 470 Exchange rates 186, 189 Earnings tables 477-87 Exemption threshold 205 Income and expenses, tables 477-87 Expenses and income, Federal Reserve Banks 204 Liabilities 469 Export trade developments 360 Loans 466, 467 External sector, economic developments 650 Revenue and income 471 Securities holdings 469 FAMILY finances in the U.S.: Recent evidence Committee on the Federal Reserve in the Payments from the Survey of Consumer Finances, article 1-24 Mechanism 979 Family income 2-4 Commodity Exchange Act 497, 498 Federal Farm Credit Bank securities 574 Community Reinvestment Act of 1977 206, 713 Federal Financial Institutions Examination Council 766 Condition statement, combined Federal Reserve Banks 631 Federal Land Bank securities 574 Congressional Budget Office 755 Federal National Mortgage Association securities 574 Connors, Thomas A., Assistant Director, Division of Federal Open Market Committee International Finance, reassignment 891 Meeting minutes Consumer Advisory Council 202, 387, 662, 978 1991 transcripts, available 205 Consumer Debit Card Protection Act 886 Sept. 24, 1996 32-38 Consumer Finances, 1995, Survey of 1 Nov. 13, 1996 10O-6 Consumer financial regulations 953 Dec. 17, 1996 265-70 Consumer Leasing Act (Reg. M) 99, 260, 387, 407, 888, 893 Feb. 4-5, 1997 390-400 Consumer price index, statements 198-201, 371-73 Mar. 25, 1997 585-90 Consumer receivables 553 May 20, 1997 773-79 "Core Principles for Effective Banking Supervision," July 1-2, 1997 823-30 Basle Committee 890 Aug. 19, 1997 981-86 Corrado, Carol, article 67 Open market operations during 1996, article 565-74 Counterfeit notes, threat of with U.S. currency 562 Open market operations in the 1990s, article 859-74 Credit Federal Reserve Act, Sections 23A and B 384, 770, 822 By brokers and dealers (Reg. T.) 503 Federal Reserve and Government Performance and Card borrowing 17 Results Act, statement 760-62 Card, banks 476 Federal Reserve Banks Financial developments 654 Capital stock 388, 662, 665 Revolving, financing of 547, 553 Chairs and deputy chairs, appointed 29 Cross, Betsy, Assistant Director, Division of Daylight overdrafts 206 Supervision and Regulation, appointment 891 Directors, list 451-63 Current Population Survey, Bureau of the Census 3 Fees for services to depository institutions 387 Financial statements, combined 631-40 DAYLIGHT overdrafts at Federal Reserve Banks 206 Income and expenses 204 Debit cards, statement 884-89 San Francisco, Los Angeles Branch, GAO audit of 888 Debt holdings, family 16 Security devices, proposed action 388 Depository credit 183 Federal Reserve notes Depository institutions, net settlement service 662 $100 series 557-64 Deregulation of banks, effects on distribution 711 $50 series 961 Derivatives 30, 497-500, 957-61 $1 Coin Act of 1997 974 Directors, Federal Reserve Banks and Branches, list 451-63 Federal Reserve System (See also Board of Governors) Directory of community development investments Audit contract with Coopers & Lybrand 98 by banking organizations 100 Bank holding company applications, processing of 388 Discussion Paper on Public Disclosure of Market Examinations and supervision of banking and Credit Risks 30 organizations 373-78, 889 Domestic open market operations, authorization 391, 570 Fees, changes in prices and operating hours 821 Dual-Use Debit Cardholder Protection Act 886 Monetary Control Act of 1980 879 Dzina, Richard, article 188 Payments system 762, 878-84 Supervisory process, statement 968-74 EARNINGS, Federal Reserve Banks 204 Year 2000 computer systems 764 Economy, U.S. Fedwire 374 Growth in 358 Fees (for Federal Reserve services to depository Labor markets 746 institutions) 387, 821, 881 Monetary policy, statements 742^5, 749-52, Ferguson, Roger W., Jr., appointed Member, 753-57, 758-60 Board of Governors 978 Outlook, statements 195-98, 378-81 Finance Performance, monetary policy reports 175, 641, 643 Assets of families 7 Edwards, Cheryl L., article 859 Banking institutions, frequency of examinations 205 Edwards, Gerald A., Jr., Deputy Associate Director, Companies 549, 552 Division of Supervision and Regulation, promotion 891 Survey of Finance Companies 543 Electric power data, revision 89-92 System modernization 249-54, 373, 578-83 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 83 A85 Pages Pages Financial Accounting Standards Board 957, 959-61 IMPORT trade developments 361 Financial markets, worldwide, statement 975-77 Income Financial Services Competition Act of 1997 578, 738-42 Family 2-A Financial statements, Federal Reserve Banks 631-40 Federal Reserve Banks 204 Firewalls, Section 20 subsidiaries 381-86 Interest at commercial banks 471 Fisher, Peter R., Executive Vice President. Federal Investments, portfolio and direct 363 Reserve Bank of New York, articles 188, 490, 726, 947 Noninterest, at commercial banks 472 Floods, financial stress in affected areas 501 Income statement, combined Federal Reserve Banks 631 Foreign banking institutions, consumer compliance Independence Bank, Encino, California 260 supervision program 889 Index, orders and actions taken by the Board on Foreign currency bank holding companies 55-58, 337-39, 619, 840^12 Directives 393 Individual retirement accounts 10 Operations 37, 392, 393 Industrial production and capacity utilization Foreign exchange Annual revision, announcement 27 Economic developments 178 Historical revision and recent developments, article 67-92 Monetary developments 186, 657 Releases 25-28, 93-96, 192-94, Reserves 493 246-18, 368-70, 494-96, Foreign stocks, lists of marginable, 575-77, 659-61, 732-34, and amendments 206, 502, 503-7, 818-20, 875-77, 954-56 771, 979, 988-93 Installment credit 17 Foreign transactions in 1996, article 357-67 Interagency Statement on Retail Sales of Nondeposit Framework for Supervisory Information About the Investment Products 382 Derivatives Activities of Banks and Securities Firms 30 Interest income, commercial banks 471 FRB/Global macroeconomic model 797-817 Interest rates 1, 185, 656 FRB/Global model, structure 799 Interim rules 205 Fund transfers 888, 896 International, U.S. transactions in 1996, article 357-67 International Banking Act of 1978, orders issued under GARNER, James I., Deputy Associate Director, Division of ABSA Bank Limited, Johannesburg, Banking Supervision and Regulation, retirement 584 Republic of South Africa 788 Gilbert, Charles, article 67 Agricultural Bank of China, Beijing, Global economic model People's Republic of China 617 Business inventory investments 801 Credit Agricole Indosuez, Paris, France 1025-28 Exchange rates 804 Cyprus Popular Bank, Ltd., Nicosia, Cyprus 1028 Export volume 802 Hongkong Bank of Canada, Vancouver, Private consumption expenditures 800 British Columbia, Canada 51 Gonzalez, Henry B 884, 886, 887 Housing & Commercial Bank, Seoul, Korea 935-37 Gordon, Professor Robert, Northwestern University 755 Industrial and Commercial Bank of China, Government Beijing, People's Republic of China 212 Debt 183 Land Bank of Taiwan, Taipei, Taiwan 336 Economic developments 178, 648 Royal Bank of Canada, Montreal, Canada 442 Macroeconomic model 240 Sudwestdeutsche Landesbank Girozentrale Stuttgart and Gramlich, Edward M., appointed Member, Mannheim, Federal Republic of Germany 937-39 Board of Governors 978 Sumitomo Bank, Limited, Osaka, Japan 54 Greenspan, Chairman Alan, statements Swiss Bank Corporation, Basle, Switzerland 214 Bank supervision 373-78 International economics, FRB/Global model 797-817 Consumer price index 198-201, 371 International Organisation of Securities Commissions 30 Financial Services Competition Act of 1997 738—42 Intrastate branching laws 712, 715 Financial system, modernization 249-54, 578-83 Investments Monetary policy, semiannual report Business 647 to the Congress 254-59, 742-19 Income from, portfolio and direct 364 U.S. economy 195-98, 378-81 Residential and nonresidential 177 U.S. fiscal position 963-67 U.S. position with foreign countries 359 World financial markets and Asia currency crisis 975-77 It's Your Money, videotape 208 Grupe, Michael R., article 543 JENNINGS, Jack P., Deputy Associate Director, Division of HINCHEY, Maurice D 884, 887 Supervision and Regulation, promotion 891 Hoffman, Stephen, Jr., Deputy Associate Director, Jewell, Andrew, article 947 Division of Supervision and Regulation, promotion 891 Johnson, Karen, Associate Director, Division of Holdings 14, 863 International Finance, promotion 891 Home equity borrowing 16 Home Mortgage Disclosure (Reg. C) 99, 205, 584, 591-93 KELLY, Governor Edward W., Jr., Home sales 177 Year 2000 computer systems, statement 763-69 Hooper, Peter, Associate Director, Division of Kennickell, Arthur B., article 1 International Finance, promotion 891 Keogh accounts 10 Houpt, James V., Jr., Deputy Associate Director, Division of Supervision and Regulation, promotion 891 LABOR markets, economic developments 179, 651, 746 House of Representatives, bills Leach, Congressman James A 578-83 H.R.10 578-83, 738-12 Leases, motor vehicle and nonmotor vehicle 555 H.R.2053 887 Levin, Andrew, article 797 H.R.2234 886 Liabilities, family 13-21 H.R.2319 886 Life insurance 11 H.R.2637 974 Lindsey, Lawrence B., resignation as Board member 97 Household finances Litigation Debt 182, 646 Final enforcement decisions issued by Board of Governors Economic developments 176, 645 Bank of Credit and Commerce International S.A., Macroeconomic model 236 Luxembourg 347-56 Housing and Urban Development, Department of 735 First National Bank and Trust 849-58 Humphrey-Hawkins reports (Monetary policy First National Bank of Bellaire 535-42 reports to the Congress) 173-87, 641-58 Pharaon, Ghaith R 347-56 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 Federal Reserve Bulletin • December 1997 Pages Pages Litigation—Continued Loans Final enforcement decisions—Continued Household 467 Towe, Edward 849-58 Officers of member banks 30, 39, 387, 409 Towe, Thomas E 849-58 Loans to Executive Officers, Directors, and Principal Vickery, Charles R., Jr. 535^12 Shareholders of Member Banks (Reg. O) 30, 39, 387, 409 Final enforcement orders issued by Board of Governors Lowrey, Barbara R., staff study announcement 953 Araki, Toshihiko, Yokohama, Japan 629 Lucas Critique 228 Asahi Bank, Ltd., New York, New York 356 Lucas, Robert, critique 228 Asahi Bank, Ltd., Tokyo, Japan 356 Luckett, Charles, article 543 Austin, Donald G 705 Averett, John 629 MACROECONOMIC model, article 227-45 Banco Latino C.A., S.A.C.A., Caracas, Venezuela 170 Margin stock regulation 30, 100, 503 Cannon, Gregory D 1036 Markets Improvement Act 30 Cope, Damian 450 Martinson, Michael G., Deputy Associate Director, Ducote, T. Stuart 629 Division of Supervision and Regulation, promotion 891 Echeverri, Juan, Bogota, Colombia 542 Mauskopf, Eileen, article 227 Gillogly, John 450 McDonough, William J., President, Federal Reserve International Commercial Bank of China, Bank of New York, statement 758-60 Taipei, Taiwan 450 MCM (See Multicountry model) Jones, Park 629 Members, Board of Governors, lists 224, 1037 Kantor, Nir 170 Membership of State Banking Institutions in the Federal Reserve System (Reg. H) 271, 388 King, Steven, Jakarta, Indonesia 542 Meyer, Governor Laurence H., statements Kuhn, David A 705 Debit cards 884-89 Lee, Kang Soo 1036 Home mortgage loan disclosure requirements 735-37 Lu, Oliver 450 U.S. economy, monetary policy 753-57 McCook, Robert L 706 Monetary aggregates 655 Moncaleano, Francesco, Bogota, Colombia 629 Monetary policy Postipankki Ltd., Helsinki, Finland 796 Business sector 177, 647 Quinn, Michael 706 Economic projections 173, 174 Riddle, Michael L 629 External sector 650 Roberts, Roberto, A.F. 223 Financial developments 184, 654 Rogers, Thomas P. 65 Foreign exchange 178, 186 Skandinaviska Enskilda Banken, Stockholm, Sweden .... 946 Government sector 178, 648 Stempniewicz, Edward F. 66 Household sector 176, 645 Wittman, George T. 171 Labor markets 179, 651 Yale, Mark 223 Price developments 180, 653 Zia New Mexico Bank, Tucumcari, New Mexico 706 Reports to the Congress (semiannual) 173-87, 641-58 Index of orders and actions taken 55-58, 337-39, Presentation, statements 254-59, 742^19 619, 840-42 Statements 749-52, 753-57, 758-60 Pending cases, list of, involving the Money stock data, revision 261-64 Board of Governors 64, 169, 221, 346, Mortgages 16, 99, 468 448, 534, 628, 704, Motor vehicle leases 555 795, 848, 945, 1035 Motor vehicles, finance for 545, 546, 553 Termination of enforcement actions MPS model 227 American Bank and Trust of Polk County 450 Multicountry model (MCM) 798 American Express Bank International 223 Mutual funds 10, 205 Bank of New York 450 Bankers Trust Company 171 Bankers Trust New York Corporation 171 NAIRU 238, 754 Bond, Ronald E 171 National Commission on Electronic Fund Transfers 885 BT Securities Corporation 171 National Securities Markets Improvement Act of 1996 30 Central Bank of the South 450 National Survey of Small Business Finances, 1993 502, 544 Crestar Bank 450 Nelson, William R., article 465 DuQuoin State Bank 450 Net worth of families 5 First Independence Bank of Florida 450 New York Clearing House 878 First State Bank of Maple Park 706 Nonfinancial asset holdings 14 Garfield Bank 450 Noninterest income, commercial banks 472 Garrett, Glen 706 Nonresidential investments 177 Ikerd, Brenda 706 Notes, Federal Reserve Ikerd, Jerry 706 $100, article 557-64 Maple Park Bancshares 706 $50, statement 961 Mawn, James J 171 $1 Coin Act of 1997 974 McCrensky, Robert L 171 Circulation of 560, 961 Mount Vernon Bancshares, Inc 706 Northern Bancorp, Inc 171 Nova Ljubljanska Banka d.d 706 OFFICIAL staff commentary on Reg. Z, update 260 Perry County Bancorp, Inc 450 Oil importation 361 Purdy Bancshares, Inc 706 State Bank of India, Bombay, India 706 Open market operations, articles 565-74, 859-74 Trust Company Bank 450 Over-the-counter margin stocks Union Texas Bancorporation, Inc 223 Amendments 988-93 United Mizrahi Bank, Ltd., Tel Aviv, Israel 223 Lists of marginable 206, 502, 503-7, 771, 979 Written agreements approved by Federal Reserve Banks Owen, Ann L., article 465 Arab American Bank 66 Cuyamaca Bank 356 Marin National Bancorp 629 PARRISH, John H., Assistant Director, Division of Reserve OmniBanc Corporation 356 Bank Operations and Payments Systems, resignation 389 Pan American Bank 223 Payments system, Federal Reserve's role .... 374, 762, 878-84, 979 Widmer, John 706 Pharaon, Ghaith R., civil money penalty decision 260 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Index to Volume 83 A87 Pages Pages Phillips, Governor Susan M., statements Regulations (Board of Governors)—Continued Derivatives contracts 497-500, 957-61 J, Collection of Checks and Other Items by Federal Reserve supervisory process 968-74 Federal Reserve Banks and Funds Transfers Section 20 firewalls 381-86 through Fedwire 584, 888, 896 Pianalto, Rosanna S., article 557-64 M, Consumer Leasing Act 99, 260, 387, 407, 888, 893 PIN protection 885 O, Loans to Executive Officers, Directors, and Principal President's Council of Economic Advisers 755 Shareholders of Member Banks 30, 39, 387, 409 Priced services 881 P, Minimum Security Devices for Federal Reserve Prices Banks and State Member Banks 388 Competitiveness with foreign countries 358 R, Relationships with Dealers in Securities under Economic developments 180, 653 Section 32, Banking Act of 1933 40 Macroeconomic model 239 S, Reimbursement for Providing Financial Records; "Principles for the Management of Interest Rate Risk," Recordkeeping Requirements for Certain Basle Committee 890 Financial Records 41 Private banking activities, risk management 770 T, Credit by Brokers and Dealers 100, 503, 988-93 Private mortgage insurance, new statistical tables 771 U, Credit by Banks for Purchasing or Carrying Profits and balance sheet developments at U.S. Margin Stocks 100, 503, 988-93 commercial banks in 1996, article 465-89 X, Borrowers of Securities Credit 100, 503, 988-93 Promisel, Larry J., Senior Adviser, Division of Y, Bank Holding Companies and Change in Bank International Finance, change in title 891 Control Act 260, 275-308, 501 Proposed actions Z, Truth in Lending Act 99, 205, 260, 309-14, 735, 770 Collection of checks (Reg. J) 584 CC, Availability of Funds and Collection Consumer Leasing Act (Reg. M) 99, 260 of Checks 388, 414-27 Electronic Fund Transfers (Reg. E) 205 Reifschneider, David, article 227 Equal Credit Opportunity Act (Reg. B) 99, 770 Reserve requirements of depository institutions Federal Reserve Act, Sections 23A and B 770, 822 Amendments 662, 665, 978, 987 Federal Reserve Banks, capital stock 388 Final rule 99, 109 Home Mortgage Disclosure (Reg. C) 99 Proposed actions 388, 822 Margin regulations 100 Required balances 869-72 Membership of state banking institutions 388 Reserves Net settlement service 662 Foreign holdings 190 Regulation of mutual fund sales by bank employees 205 Patterns and forecasts 568, 860 Reserve requirements (Reg. D) 388, 822 Receivables from 555 Risk-based capital guidelines 822, 978 Residential assets and investments 12, 177 Securities underwriting, firewalls to bank holding RESPA (See Real Estate Settlement Procedures Act) companies 205 Retirement accounts 10 Security devices, regulation 388 Revolving credit 547, 553 Truth in Lending (Reg. Z) 31, 205 Riegle-Neal Interstate Banking and Branching Publications (See also Videotapes) Efficiency Act of 1994 713, 888, 892 Annual Report, 83rd, 1996 584 Risk Measurement and Systemic Risk: Proceedings Annual Report: Budget Review, 1996-97 584 of a Joint Central Bank Research Conference 207 Annual Statistical Digest, 1990-95 31 Risk-based capital guidelines 822, 978 Bank Holding Company Supervision Manual 207, 662 Risk-management practices, private banking activities 770 Directory of Community Development Investments Rivlin, Vice Chair Alice M., statements by Banking Organizations 100 Federal Reserve and Government Performance Examination Manual for U.S. Branches and Agencies and Results Act 760-63 of Foreign Banking Organizations 891 Payments system 878-84 Risk Measurement and Systemic Risk: Proceedings U.S. economy, monetary policy 749-52 of a Joint Central Bank Research Conference 207 Rogers, John, article 797 Pugh, Rhoger, Assistant Director, Division of Banking Role of expectations in the FRB/US macroeconomic Supervision and Regulation, retirement 772 model, article 227^15 Rules RADDOCK, Richard, article 67 Financial institutions, frequency of examinations 205 Rational expectations 228, 229 Home mortgage disclosure 205 Real estate (See also Mortgages) Rules Regarding Availability of Information 986, 993-1002 Financing receivables 548 Rules Regarding Delegation of Authority, Holdings 11 amendment 429, 666, 831 Investment 13 Ryback, William A., Associate Director for Supervision Loans 553 Operations, Division of Supervision and Real Estate Settlement Procedures Act (RESPA) 735, 770 Regulation, transfer 891 Receivables Business 554 SAVING rate 177 Consumer 553 Savings bonds 10 Finance companies 543—49 Savings deposit, definition 99 Recordkeeping requirements, amendment to Regulation S .... 41 Schumer, Charles E 884, 886 Regulations (Board of Governors, See also Rules) Schumer-Gonzalez bill 886 Section 20 subsidiaries B, Equal Credit Opportunity Act 99, 770 Firewalls, statement 381-86 C, Home Mortgage Disclosure 99, 205, 584, 591-93 D, Reserve Requirements of Prudential limits on underwriting 821 Depository Institutions 31, 39, Revenue from securities and underwriting 98 99, 109, 388, 662, Securities 665, 822, 978, 987 Dealers, rescission of regulation 40 E, Electronic Fund Transfers 205, 821, 831 Government, transactions 388, 401-7 G, Securities Credit by Persons other than Banks, Holdings, commercial banks 469 Brokers, or Dealers 100, 503, 988-93 Margin requirements 503 H, Membership of State Banking Institutions in the Section 20 98 Federal Reserve System 271, 388 System Open Market Account 572, 574 I, Issue and Cancellation of Capital Stock of U.S. Treasury and federal agency 863 Federal Reserve Banks 388, 662, 665 Underwriting, firewalls 205 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 Federal Reserve Bulletin • December 1997 Pages Pages Securities and Exchange Commission 384, 973 Survey of finance companies, article 543-56 Securities Exchange Act of 1934 384 Survey of Terms of Bank Lending to Business 466 Senior Loan Officer Opinion Survey on Bank Lending Surveys Practices 466 Consumer Finances, 1995 1 Siegman, Charles J., Senior Adviser, Division of Current Population Survey, Bureau of the Census 3 International Finance, change in title 891 Finance companies, article 543-56 Slowinski, Samuel M„ article 543 National Survey of Small Business Finances, 1993 502 Small, Richard A., Assistant Director, Division of Senior Loan Officer Opinion Survey on Bank Supervision and Regulation, promotion 891 Lending Practices 466 Smith, Ralph W. Jr., Assistant Director, Division of Terms of Bank Lending to Business 466 International Finance, retires 772 Sussan, Sidney M., Deputy Associate Director, Division of SOMA (System Open Market Account) 568 Supervision and Regulation, promotion 891 Sone, Grace, articles 490, 726 System Open Market Account portfolio management 38 Sovereign credit 249, 376 System Strategic Planning Coordinating Group 761 Staff study, Truth in Savings Act, announcement 953 Starr-McCluer, Martha, article 1 TEN-YEAR Treasury bond yield, equation 232 State member banks Thrift Institutions Advisory Council, new members 98 Amendment to the Capital Accord 890 Tinsley, Peter, article 227 Consumer compliance supervision program 889 Trading activities, public disclosure announcement 30 Security devices, proposed action 388 Transaction accounts, family 7 Uniform Financial Institutions Rating System 98 Treasury and Federal Reserve foreign exchange State-chartered community banks, examinations of 889 operations, articles 188-91, 490-93, Statements to the Congress (including reports and letters) 726-31, 947-52 $50 notes (Allison, Theodore E., Assistant to the Treasury bills and notes, U.S. in System Open Board for Federal Reserve System Affairs) 961 Market Account 572 Bank supervision (Chairman Greenspan) 373-78 Treasury bond, ten-year yield, equation 232 Consumer price index (Chairman Greenspan) 198-201, 371 Trusts 11 Debit cards (Governor Meyer) 884-89 Truth in Lending Act (Reg. Z) Derivatives contracts, regulation Economic Growth and Regulatory Paperwork (Governor Phillips) 497-500, 957-61 Reduction Act of 1996 205 Federal Reserve and Government Performance Home mortgage loan disclosure requirements 99, 735 and Results Act (Vice Chair Rivlin) 760-63 Official staff commentary, update 260, 309-14 Federal Reserve supervisory process Public forum 770 (Governor Phillips) 968-74 Truth in Savings Act, staff study announcement 953 Financial markets and Asia currency crisis Tryon, Ralph, article 797 (Chairman Greenspan) 975-77 Financial Services Competition Act of 1997 U.S. current account deficit 357 (Chairman Greenspan) 738-—1-2 U.S. fiscal position, statement 963-67 Financial system, modernization U.S. international transactions in 1996, article 357-67 (Chairman Greenspan) 249-54, 578-83 Uniform Financial Institutions Rating System 98 Home mortgage loans, streamlining disclosure Unsolicited Loan Consumer Protection Act 887 requirements (Governor Meyer) 735-37 H.R.2637, $1 Coin Act of 1997 (Allison, Theodore E„ VAR expectations (vector autoregression) 228, 229, 231 Assistant to the Board for Federal Reserve Vehicle assets 12 System Affairs) 961 Videotapes, instructional tools Monetary policy, semiannual report to the Congress It's Your Money 208 (Chairman Greenspan) 254-59 Year 2000 Executive Awareness 767 Payments system (Vice Chair Rivlin) 878-84 Section 20 firewalls (Governor Phillips) 381-86 WAGES, macroeconomic model 239 U.S. economy, monetary policy Wassom, Molly S., Deputy Associate Director, Division of Greenspan, Chairman Alan 195-98, 378-81, 742-19 Supervision and Regulation, promotion 891 McDonough, William J., President, Federal Web sites Reserve Bank of New York 758-60 CDC project 766 Meyer, Governor Laurence H 753-57 Year 2000 767 Rivlin, Vice Chair Alice M 749-52 Williams, John, article 227 U.S. fiscal position (Chairman Greenspan) 963-67 World financial markets, statement 975-77 Year 2000 computer systems (Governor Kelley) 763-69 Statistical tables, private mortgage insurance, new 771 YEAR 2000 Stevens, Guy, V.G., article 357 Computer systems, statements 763-69, 890, 972 Stock holdings 1, 10, 11 Executive Awareness, video 767 Stock prices 657 Website 767 Sunden, Annika E., article 1 "Year 2000 Project Management Awareness," Supervision, banking industry 251, 373-78, 968-74 policy statement 766 Survey of Consumer Finances, 1995 1 Yellen, Janet L., Member, Board of Governors, resignation ... 202 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis