Federal Reserve Bulletin, 1998-04

VOLUME 84 J NUMBER 4 J APRIL 1998 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 241 RECENT DEVELOPMENTS IN HOME EQUITY accordingly, he fully backs the Administration's LENDING request to augment the financial resources of the International Monetary Fund, before the Senate The equity that has accumulated in homes is one Committee on Foreign Relations, February 12, of the largest components of U.S. household 1998. wealth. In recent years, many homeowners have borrowed large amounts against that equity, 262 Chairman Greenspan presents the Federal Refrequently to finance new consumption expen- serve's semiannual report on economic condiditures or pay down outstanding consumer debt. tions and the conduct of monetary policy and In view of the growing importance of home says that the U.S. economy delivered another equity credit in household finances, the Federal exemplary performance in 1997, with expansion Reserve has for a number of years participated of real gross domestic product at close to 4 perin nationwide surveys of the use of home equity cent and a reduction in the unemployment rate loans. This article presents findings from a 1997 to 4% percent, its lowest sustained level since survey and from other sources of information on the late 1960s; with regard to the outlook for home equity lending. 1998, a key question going forward is whether the restraint building from the turmoil in Asia 252 STAFF STUDY SUMMARY will be sufficient to check inflationary tendencies that might otherwise result from the strength The cost of government regulation for banks has of domestic spending and tightening labor marbeen widely discussed, but relatively few studies kets and that the range of intelligence gathering of those costs have been conducted—and those for the Federal Open Market Committee in the few differ widely in quality and content. In The weeks ahead must be wide and especially inclu- Cost of Bank Regulation: A Review of the Evisive of international developments, before the dence, the author evaluates the evidence from Subcommittee on Domestic and International available empirical studies and suggests what Monetary Policy of the House Committee on can reasonably be concluded about the effects of Banking and Financial Services, February 24, regulation on banks' costs. 1998. (Chairman Greenspan presented identical testimony before the Senate Committee on 254 INDUSTRIAL PRODUCTION AND CAPACITY Banking, Housing, and Urban Affairs, Febru- UTILIZATION FOR FEBRUARY 1998 ary 25, 1998.) Industrial production was unchanged in February, at 128.1 percent of its 1992 average, after a 268 ANNOUNCEMENTS revised 0.1 percent rise in January. The rate of industrial capacity utilization decreased 0.3 per- Meeting of the Consumer Advisory Council. centage point, to 82.7 percent. Adjustment of the amount of mortgage loans that triggers additional disclosure requirements. 257 STATEMENTS TO THE CONGRESS Proposal to amend Regulation C to modify the Alan Greenspan, Chairman, Board of Gover- Loan Application Register to prepare for the nors, discusses the recent Asian financial crisis Year 2000 data systems conversion; proposal for and says that we do not fully understand the new possible streamlining and reform of the Truth high tech international financial system and that in Lending Act and the Real Estate Settlement we need to update and modify our institutions Procedures Act for home-secured loans. and practices to reduce the risks inherent in the new regime while confronting the current crisis Publication by the Basle Committee of a paper with the institutions and techniques we have; on internal control systems. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Issuance for public comment of documents on A3 GUIDE TO TABULAR PRESENTATION the supervision of financial conglomerates by A4 Domestic Financial Statistics the Basle Committee. A42 Domestic Nonfinancial Statistics Revisions to the money stock data. A50 International Statistics 273 MINUTES OF THE FEDERAL OPEN MARKET COMMITTEE MEETING HELD ON A63 GUIDE TO STATISTICAL RELEASES AND DECEMBER 16, 1997 SPECIAL TABLES At its meeting on December 16, 1997, the Committee adopted a directive that called for main- A64 INDEX TO STATISTICAL TABLES taining conditions in reserve markets consistent with an unchanged federal funds rate of about 5!/2 percent. The members also agreed that a A66 BOARD OF GOVERNORS AND STAFF slightly higher or a slightly lower federal funds rate might be acceptable during the intermeeting period. A68 FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY COUNCILS 279 LEGAL DEVELOPMENTS Various bank holding company, bank service A70 FEDERAL RESERVE BOARD PUBLICATIONS corporation, and bank merger orders; and pending cases. A72 MAPS OF THE FEDERAL RESERVE SYSTEM Al FINANCIAL AND BUSINESS STATISTICS These tables reflect data available as of A74 FEDERAL RESERVE BANKS, BRANCHES, February 25, 1998 AND OFFICES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Richard Spillenkothen U Edwin M. Truman The Federal Resen1? Bulletin is issued monthly under the direction of the staff publications committee. This commiuce is responsible for opinions expressed except in official statements and signed articles. Il is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Multimedia Technologies Center under the direction ol Christine S. Griffith, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Home Equity Lending Glenn B. Canner, Thomas A. Durkin, and Charles A. Most recently, to learn more about the current Luckett, of the Board's Division of Research and status of home equity lending, the Federal Reserve Statistics, prepared this article. participated in the May through October 1997 Surveys of Consumers, a monthly canvass conducted by The equity that has accumulated in homes is one of the Survey Research Center of the University of the largest components of U.S. household wealth. But Michigan (for further details on the surveys, see the unlike many other types of assets, home equity is not appendix). This article presents findings from those highly liquid—it cannot, for instance, be readily used surveys and from other sources of information on to purchase goods or services or to repay debt. Home home equity lending. equity is, however, a widely accepted form of collateral for credit, and in recent years, homeowners have borrowed large amounts against the equity in their homes. Home equity borrowing is frequently used as a Home equity credit is only one way homeowners can substitute for consumer credit, either to finance new convert their home equity (which is the difference consumption expenditures or pay down outstanding between the home's market value and its outstanding consumer debt. This substitution generally lowers the mortgage debt) into spendable funds. Homeowners interest expense of carrying debt and may further may sell their homes and purchase less expensive reduce monthly debt service payments in the short property or become renters. Alternatively, a homerun by lengthening Joan maturities. Of course, by owner may refinance an existing mortgage and borreplacing what is often unsecured debt with home- row more than is required to pay off the old loan plus secured debt, borrowers become exposed to the risk closing costs.2 The availability of these alternatives of more severe consequences in the event of some greatly influences the home equity credit market. financial setback that might impair their ability to Refinancings, which are apt to occur in large volume service their debts. when interest rates fall, particularly affect home equity lending because homeowners often pay off In view of the growing importance of home equity other debts, including home equity loans, when they credit in household finances, the Federal Reserve has refinance an existing purchase-money mortgage.3 for a number of years closely followed developments in the home equity lending market. The Federal Home equity credit typically takes either of two Reserve obtains information from monthly and quar- forms. One, referred to here as a "traditional home terly reports from banks and other lending institu- equity loan," is a closed-end loan extended for a tions, and it has participated in several nationwide specified length of time and generally requires repaysurveys of household finances, including some that ment of interest and principal in equal monthly focus on the use of home equity loans.1 installments. Such loans typically are second mortgages. Interest rates on these loans are ordinarily fixed for the life of the loan. The second form, a 1. See Thomas A. Durkin and Gregory E. Elliehausen, 1977 Consumer Credit Survey (Board of Governors of the Federal Reserve System, 1978); Robert B. Avery, Gregory E. Elliehausen, Glenn B. 2. In recent years, another option, the so-called reverse mortgage, Canner, and Thomas A. Guslafson, "Survey of Consumer Finances, has become available. These mortgages allow homeowners with 1983," Federal Reserve Bulletin, vol. 70 (September 1984), pp. 679- equity in their homes to take out mortgages that pay the homeowner, 92; Glenn B. Canner, James T. Fergus, and Charles A. Luckett, typically a retired person, a monthly amount without requiring imme- "Home Equity Lines of Credit," Federal Reserve Bulletin, vol. 74 diate repayment. Repayment occurs at a specified time in the future, (June 1988), pp. 361-72; Glenn B. Canner, Charles A. Luckett, and ordinarily when the house is sold. Thomas A. Durkin. "Home Equity Lending," Federal Reserve Bulle- 3. See Glenn B. Canner, Thomas A. Durkin, and Charles A. tin, vol. 75 (May 1989), pp. 333^44; Glenn B. Canner, Thomas A. Luckett, "Mortgage Refinancing," Federal Reserve Bulletin, vol. 76 Durkin, and Charles A. Luckett, "Home Equity Lending: Evidence (August 1990), pp. 604-12; and Joseph Asher, "TJie Push is on from Recent Surveys," Federal Reserve Bulletin, vol. 80 (July 1994), for Home Equity Business," ABA Banking Journal (April 1995), pp. 571-83. pp. 56-59. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

242 Federal Reserve Bulletin 1 I April 1998 "home equity line of credit," is a revolving account ••[' 111'Mil.1 a|lli!\ I'lL'llii )1-.,'!'-. Olill!1 that permits borrowing from time to time at the . ol Midi •virilil O UT cllu'i i>|>>'> account holder's discretion up to the amount of the )1 LlL'l \ l\[K" I'l 111:1 [ I ._* i.'ljllil1, L'lVtill, I'1'1.1 credit line. Home equity lines of credit typically have Line ol Traditional Advantage credit loan more flexible repayment schedules than traditional home equity loans, and the interest rates on most of Low interest rale .15 49 Easy In get 20 12 these loans vary with changes in an index rate, such Tax advantage 38 40 as the prime rate.4 The majority of credit lines are Convenient to use' 4.1 1 Can defer repayment of principal .. 4 also of second-mortgage status, but they would be OtherJ 14 22 first liens for homeowners who had no other mort- NOTE. Data have been weighted to ensure the representativeness of the sample. Percentages sum to more than !00 percent because respondents were gage debt outstanding when the lines were estaballowed to cite up to two advantages lor each type of credit. lished. The survey results indicate that the users of * Less than 0.5 percent. 1. Immediate access lo funds and other responses indicating that convenience these two distinct types of home equity products was an advantage. themselves differ in measurable ways. 2. Ability to borrow a large amount, absence of closing costs, ability to consolidate debts, and miscellaneous other responses At the end of 1997, the outstanding home equity SOURCE. Surveys of Consumers, 1997. Here and in the following tables, debt of U.S. homeowners was an estimated $420 bil- Sun'eys of Consumers refers to the monthly series by thai name conducted by the Survey Research Center ol the University of Michigan See text appendix lion, an amount that is fully one-third the size of for details of the survey. nonmortgage consumer debt. Home equity lenders have been expanding their product offerings and changing underwriting standards as they have gained example, job loss) or large and perhaps unexpected experience with the market. Lenders have continued claims on their income (for example, large medical to promote this product aggressively by waiving clos- expenses), drawing upon the equity in their homes ing costs and other fees, offering low introductory may be the only means available to obtain needed interest rates, and increasing the acceptable limits on funds. Access to a home equity loan (a secured debt) loan-to-value ratios. may be particularly important for such households if they have had difficulty meeting loan obligations in the past, because their ability to obtain other (unsecured) types of credit is likely to be severely limited. Hi >! I'l.Vi'iS > >l < ': ' ] \ ' /••, ,; v/y / , ,_; \ •: Before the mid-1980s, nearly all home equity bor- Although households have used home equity loans rowing was of the traditional type. Since then, home for many years, their appeal for homeowners was equity lines of credit have grown substantially in heightened by the Tax Reform Act of 1986, which popularity. Although relatively attractive interest mandated the phaseout of federal income tax deduc- rales and tax advantages characterize both types of tions for interest paid on nonmortgage consumer loan, the ability to draw money as needed has proved debt. With this change in tax law, mortgage debt (on to be a particularly attractive feature of home equity which the interest remained tax deductible) became lines of credit. more attractive to consumers for funding expendi- Surveys of households provide an opportunity to tures that previously were financed through auto trace the extent of home equity borrowing over time. loans, credit cards, or personal cash loans. Surveys sponsored by the Federal Reserve and others The favorable tax treatment of debt secured by indicate that about 5 percent of homeowners had homes, however, is only one reason for the popularity home equity debt in 1977 (table 2). By 1983, the of home equity loans (table 1). Consumers also fre- proportion had risen to 7 percent. Following the 1986 quently cite the relatively low interest rates on home tax changes, lenders began to promote home equity equity loans compared with most other forms of lending aggressively and greatly expanded the availconsumer credit as another important advantage. ability of such credit. By the second half of 1988, the For some homeowners, particularly those who proportion of homeowners with home equity loans encounter significant disruptions in income (for had risen substantially, to 11 percent, and was about equally divided between home equity lines of credit and traditional home equity loans. The proportion of homeowners with home equity 4. Industry surveys tind that well over 90 percent of home equity lines of credit have variable rates, while the rates on only a small loans continued to grow after 1988, reaching 1.3 perproportion of traditional home equity loans are variable. See Rich- cent in 1993-94. The 1997 survey indicated little ard F. Demong and John H. Lindgren, Jr., "Home Equity Lending: further change in this proportion, but because of Survey Reveals Bright Picture," Journal of Retail. Bunking, vol. 17 (Spring 1995). pp. 37^)8. increases in both the rate of homeownership and the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Home Equity Lending 243 •j c• 11!)I\ L [\-i. property. Between 1989 and 1996, the proportion of conventional mortgages with high LTVs more than tripled, from 7 percent to 25 percent.5 An increasing Type 1977 1983 1988 1993-94 1997 incidence of home purchase loans with high LTVs 5 7 11 13 13 means relatively more homeowners have little home n.a. n.a. 6 8 8 equity available to support home equity borrowing. Traditional loan n.a. n.a. 5 5 5 NOTE. Data have been weighted to ensure the representativeness of the sample. Between 1988 (the first year for which the data are available) and 1997, fewer than '/; percent of homeowners had both types of home equity credit. n.a. Not available. Soi:Rci.s or HOML EQ( IIY LOANS SOURCE. 1977 Consumer Credit Survey; 1983 Survey of Consumer Finances; Surveys of Consumers, 1988, 1993-94, and 1997. Many types of financial institutions extend home equity loans. Before the mid-1970s, home equity number of households, the number of households loans were most frequently supplied by consumer with a home equity loan increased about 10 percent finance companies, second mortgage companies, and from 1993-94 to 1997. individuals. Depository institutions—commercial In contrast to the pattern of account holding banks, savings banks, savings and loan associations, observed in 1988, both the 1993-94 and 1997 sur- and credit unions—were the source of only about veys found that home equity lines of credit were two-fifths of these loans.6 Today, commercial banks more prevalent (8 percent of homeowners had them are the primary source of home equity loans, although in 1997) than traditional home equity loans (5 percent the other types of depositories as well as finance of homeowners). Taken together, roughly 9 million companies have significant market shares (table 3). households had home equity loans in 1997. Household surveys indicate some specialization The 1990s have seen several periods of extensive among lenders in the type of home equity credit they refinancing activity, particularly in 1992 and 1993. supply. Consumer finance companies continue to be During those years, when interest rates on home a significant source of traditional home equity loans mortgages fell substantially, millions of homeowners while playing a much smaller role in the market for took advantage of the lower rates; in the process of home equity lines of credit. Survey evidence indirefinancing their first mortgage, some rolled the out- cates that finance companies account for about standing balances on their home equity loans into 25 percent of traditional home equity loans but only the new loan. As a consequence, the proportions of about 7 percent of the home equity line of credit homeowners with home equity loans found in the market. More than 90 percent of homeowners with 1993-94 and 1997 surveys were likely smaller than home equity lines of credit obtained them from they would have been otherwise. depository institutions, most frequently commercial A second factor that has likely held down the banks. proportion of households with home equity loans in recent years has been an increase in the share of home purchase loans with high loan-to-value ratios 5. Terms on Conventional Home Mortgages, monthly release, table 1 (Federal Housing Finance Board). (LTVs)—loans in which the amount borrowed is 6. See Durkin and Elliehausen, "1977 Consumer Credit Survey," more than 90 percent of the appraised value of the p. 92. llullu- WS 97 Percent 1988 1993-94 1997 Source Lines or credit Traditional lotuis Lines of credit Traditional loans Lines of credit Traditional loans Commercial banks 54 33 60 29 61 44 Savings institutions' 31 27 21 30 16 20 Credit unions 11 8 13 11 16 13 Other creditors! 4 32 7 29 7 24 Total 100 100 100 100 100 100 NOIE. Percentages are based on numbers of loans or lines of credit. Data 2. Finance and loan companies, brokerage firms, mortgage companies, and have been weighted to ensure the representativeness of ihe sample. In this and individuals. subsequent tables, components may not sum to totals because of rounding. SOURCE. Surveys of Consumers, 1988, 1993-94, and 1997. I. Savings banks and savings and loan associations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

244 Federal Reserve Bulletin • April 1998 Several factors help explain the specialization for traditional home equity loans, with most banks at among lending institutions. The larger role of finance all asset levels offering such loans. companies in the traditional home equity loan market may in part reflect long-time customer relationships as well as limits on the services they provide. Si \ Because finance companies typically do not offer deposit services (except, in some cases, through affili- As a group, homeowners with home equity credit ated depository institutions), they are less well suited have economic and demographic characteristics that to offering credit accounts that the borrower can draw set them apart from other homeowners. In general, down by check, a feature of virtually all home equity home equity borrowers are relatively sophisticated lines of credit. Also, finance companies tend to serve and financially well off, although considerable divera somewhat younger clientele with relatively lower sity is found among them (see box "Consumer incomes and substantially smaller amounts of home Knowledge and Satisfaction Regarding Home Equity equity.7 Lenders often prefer to exercise tighter con- Credit"). Moreover, important differences exist trol over the credit use of such customers by granting between holders of credit lines and users of tradithem loans of specified amounts with predetermined tional home equity loans. Differences among holders payment schedules. of each product—in their financial and demographic Although commercial banks are the predominant characteristics, in their uses of borrowed funds, and source of home equity lines of credit, not all banks in their perceptions of the advantages of the two offer this type of loan. As of September 1997, 53 per- products—suggest that borrowers may not consider cent of all U.S. commercial banks held outstanding them to be close substitutes. balances on home equity lines of credit (table 4). A much larger proportion, 81 percent, held traditional home equity loans. Home equity lines of credit are more complex to administer than are traditional home equity loans; consequently, large banks are more likely than Homeowners, who account for nearly two-thirds of smaller banks to offer lines of credit. The vast major- all households, vary widely in their demographic ity of commercial banks with assets exceeding characteristics and financial circumstances. Home- $250 million offered home equity lines of credit in owners with no mortgage debt tend to be older indi- 1997, whereas only 28 percent of those with assets of viduals, in many cases retired; and, although they less than $50 million did so. The pattern is different typically have relatively large amounts of home equity, they also tend to have lower incomes (table 5). 7. According to the 1997 survey, the median family income of Households who have a home equity line of credit home equity borrowers at finance companies was $51,000, compared typically own relatively expensive homes, have with $55,000 at depository institutions. The median home equity of finance company borrowers was $36,000, compared with $68,000 for higher incomes, and have substantially more equity borrowers from depository institutions (data not shown in tables). in their homes than most other homeowners, including those who have a traditional home equity loan. In 1997, median household income was $60,000 for homeowners with home equity credit lines, $50,000 for those with traditional home equity loans, and Assets of banks (millions of dollars) Lines nf credit Traditional loans $47,500 for those with first mortgages only.8 The median amount of home equity among credit line Less lhan SO 28 66 50-99 55 8S holders was $76,000, compared with only $35,000 100-249 74 94 250-499 S.I 93 for those with traditional home equity loans and S00-999 89 97 $43,000 for those with only a first mortgage. Those 1 0(10 nr more 85 All banks 53 81 MfiMo 8. Surveys of lending institutions also reveal substantial differences Lines of credit in use (percrail)1 ... 51 between the income profiles of homeowners with home equity credit lines and those with traditional home equity loans. John H. Lind- 1 Calculated by summing Ihe outstanding balances under home equity lines gren, Jr., and Richard F. Demong, Home Equity Loan Study: An of credit and dividing by that sum plus the amount of unused lines of credit available to account holders. Analysis of Ihe Year-End 1996 Survey (Consumer Bankers Associa- Not applicable. tion, 1997); and Demong and Lindgren, "Home Equity Lending," SOURCE. Reports of Condition and Income, September 30, 1997. pp. 42^43. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Home Equity Lending 245 Consumer Knowledge and Satisfaction Regarding Home Equity Credit The 1997 survey repeated a series of questions from earlier disclosure statement, and more than 90 percent of lhai surveys to update available information about consumers' group had saved the statement^ The proportion that recalled understanding of their home equity loans, their searches for having received a Truth in Lending statement was slighlly information, and their views of some associated consumer lower for users of traditional home equity loans, although protections. For comparison, the survey also asked similar the proportion of this group that had saved the statement, at questions of users of other forms of consumer installment (J7 percent, was slighlly higher. About 70 percent of those credit. who recalled having received a TIL statement reported that Initial questions focused on the homeowner's understand- it had been helpful to them in some way, but only a small ing of the creditor's security interest in the home. As in the proportion said that the TIL statement had affected their 1993-94 survey, almost all users of home equity credit decision to use credit. surveyed in 1997 indicated that the lender explained, or that A final set of questions concerned consumer satisfaction they already had known, that their home served as security with their home equity or installment credit. Satisfaction for the loan (table). Most consumers also said they knew of, levels exceeded 90 percent for each of the types of credit. or recalled the lender's having informed them of, their right Among the small percentage of respondents who were to cancel the transaction up to three days after the closing dissatisfied, most complaints concerned the interest nile on date (a right that is a provision of the Truth in Lending Act). the loan. Survey respondents cited many actions that a lender might take if they missed payments, including sending late-payment notices, assessing late-payment fees, working 2. Under ihe Trulh in Lending AcJ, Imilcis mi^t i:ivc tliM.k>suri.' stateout a revised payment schedule, contacting a collection ments to potential borrowers. l*hc siatcincnts include ir]l~oiih:iii<>n alxmt key agency, and foreclosing on their home. When asked what terms related to the lunsaction. int hiding (he annual pcrtenugc rale. they thought the worst thing a lender could do if they missed several payments, most respondents (85 percent, not Consumer knowledge and satisfaction regarding shown in the table) said that the lender could foreclose on home equity credit and installment credit, the loan. Thus, although virtually all home equity account by type of credit, 1997 holders recognized that a lien had been placed on their Percent property, not all believed that foreclosure and loss of the property was the most severe possible outcome, perhaps Consumer knowledge Home equitv Traditional Installment indicating that some borrowers have substantial other or sui]<il<H"tui[] line nl credit home eqtnls credit loan resources available to meet obligations. Knew (ii learned there w» Another group of questions updated survey evidence lien on home about efforts of home equity credit account holders to Knew or learned inert \ui.s riylii to cancel 94 95 gather information before opening an account: About half Searched lor information' 44 54 33 Obtained ihe intorniiiiion searched for information about home equity credit before sou t* hiJ Vn *>h 8K opening the account, somewhat more than the proportion of Recalled receiving Trulh in I.cndmy statement 86 79 7lJ installment credit users. Most of the information searches S.ived Trulh in Lending involved calling or visiting one or more institutions to ask sttitcmcnl' «M 97 I-ouml Truth in Lending about interest rates. Some information searchers consulted statement helplul -1 M 70 73 friends, relatives, and financial advisers, and some con- Snid Truth in Lending statement affected credit sulted published sources. Most of the searchers said they decision ' \2 2 h Indicated sausliL.itioii with were able to get all the information they were looking for. account * •>3 and a few more said they were able to obtain at least some of the information they sought.1 N'HK. Fcicciiid^eA ate for holders oJ the indicated lype. ol ciedil. LXit.t have been weighted to ensure ihe rq>iesenlah\eness ol ihe sample. Most surveyed holders of home equity credit accounts I Seal died lot mfiinnatuw jfrmu oilier creditors or credit terms be I ore specifically recalled receiving a Truth in Lending (TIL) obtaining credit. 2. Proportion ot those who "searched lor inlonniilinn." 3. Proportion o| ihose who "recalled receiving Truth in Lending 1. These questions were asked only of those who had obtained home statement." equity credit or installment credit. The survey did not address the experience 4. Respondents who siiid ihey were "very satisfied" or "somewhat satisof any potential borrowers who sought home equity credit but did not obtain lied" wilh account. it or who chose not to apply alter receiving information. Sot.-RfE. Surveys o| Consumers, 1997. with home equity lines of credit also tend to be better be seen when homeowners with different debt status educated than other homeowners. are grouped by level of income, home equity, and Further evidence of differences in demographic other characteristics (table 6). The relative affluence and financial circumstances among homeowners can of those with home equity lines of credit is apparent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

246 Federal Reserve Bulletin • April 1998 5. CluiracUTistic nl homeowners, bv debt statiiv Homeowner P o r r o p h o o r m tio e- n M ho a m rk e e t ( d v o a l l l u a e r s o ) f Ho ( m do e l l e a q r u s) ity' 1997 ( fa d m ol i l l a y r s i ) ncome (m A e g d e ia 2 n E ( d m u e c d at ia io n n3 Non an w d h ite . debt status owners years) grade Hispanic' (percent) Mean Median Mean Median Mean Median completed) (percent) No mortgage debt 38 104,746 80,000 104,746 80.000 38.364 27,500 67 12 10 Ht« mortgage only4 .. 50 126392 100,000 57,749 43.000 54,282 47,500 42 14 14 Home equity line or credit 8 171.113 140,000 111.475 76,000 65.613 60.000 49 16 4 Traditional tame equity loan 5 . 166.508 110.000 53.909 35,000 65.284 50,000 43 14 8 MEMO All homeowners 100 124.324 98,000 79,837 60,000 49.896 40,000 49 13 12 NOTE. Data have been weighted to ensure the representativeness of the 2. Characteristic of head of household. sample. 3. Characteristic of respondent. I. Market value of home less all debts secured by home, including bal- 4. Excludes those who have only a home equity line of credit. ances outstanding on home equity credit lines and traditional home equity loans. SOURCE. Surveys of Consumers, 1997. from these groupings. The proportion of credit line markedly higher than they are for holders of tradiholders with incomes of $75,000 or more was sub- tional home equity loans. Only 19 percent of borrowstantially higher than that of any other group. A ers with traditional home equity loans have incomes similar pattern holds for accumulated home equity, of $75,000 or more, compared with 32 percent for although, not surprisingly, many homeowners with holders of home equity lines; and only 10 percent of no mortgage debt have also built up significant traditional home equity borrowers have $100,000 or amounts of home equity. Levels of household income more in home equity, compared with nearly 40 perand home equity for holders of home equity lines are cent for holders of home equity lines. (). lltiiik-imiiiT'., ;:n>ii|v<l In ilebl siaiiK .IIKI i ihul.'U l\\ ami linaiiti.il !'.'V / Percent Homeowners Homeowner characteristic Traditional Either type No mortgage First mortgage Home equity line All debt only1 of credit home equity of home loan equity loan Age of head (ytart) \t-U '. 16 7 24 6 23 12 35-44 23 9 31 28 32 30 45-54 ... 20 12 24 34 27 31 55-64 16 18 13 20 11 17 65 or older 26 55 8 12 6 10 Total • IOO ino ioo IOO ioo 100 Family income (dollars) Less than 15.000 10 20 4 2 2 2 15,000-24.999 16 26 11 3 6 4 25.000-49,999 34 32 38 25 32 27 JO.ObO-74,999 23 12 26 38 42 39 75,000-99.999 10 5 13 16 8 14 100,000 or more 8 5 8 16 11 14 Total 100 100 100 100 100 100 Home equits1 (dollars) Less than 50.000 41 24 55 21 69 38 50.000-99.999 33 38 29 40 21 34 100,000 or more 26 37 16 39 10 28 Total ... 100 100 100 100 100 100 Census region West 17 14 18 18 27 21 North Central 30 29 30 33 30 32 Northeast 17 16 17 24 24 24 South 36 42 35 25 19 23 Total 100 100 100 100 100 100 MEMO Percent of all homeowners IOO 38 50 8 5 13 NOTE. Data have been weighted to ensure the representativeness of the 2. Home equity consists of the market value of the home less all debts sample. secured by ihe home, including balances outstanding on equity lines of credit I. Excludes (hose who have only a home equity line of credit. and traditional home equity loans. SOURCE. Surveys of Consumers, 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Home Equity1 Lending 247 The relatively strong financial positions of house- The median balances on home equity loans are holds having home equity debt and especially lines of much larger than those on other forms of household credit is reflected in banking industry statistics on debt.10 Nevertheless, most holders of home equity loan delinquency rates (data not shown in tables). lines of credit owe an amount much smaller than their According to the American Bankers Association, available credit line—for example, about 47 percent fewer than 1 percent of home equity lines of credit at of those with a balance have less than 50 percent of banks are typically in delinquent status, the lowest their credit line in use." Among credit line holders rate for any category of loan, and the delinquency with an outstanding balance, the mean and median rate on traditional home equity loans has averaged proportions of the lines in use were around 55 peraround 1 V* percent recently, the second lowest figure cent, a level somewhat lower than in 1993-94. The of any loan category. By comparison, about 3!/?. per- lowering may be a reflection of refinancing activity in cent of credit card accounts and personal loans were recent years, as some long-time users of home equity past due. When delinquency rates are based on dollar lines refinanced their outstanding balances on both amounts rather than number of loans, the rates on their first and second mortgages into a single new home equity lines of credit and traditional home loan. equity loans are both around I 'A percent, still lower than for any other type of loan. In recent ABA reports, a bit more than 5 percent of bank credit card debt was delinquent. The survey data show some regional differences in Historically, surveys have found that the principal the use of home equity products: Homeowners resid- uses for both types of home equity credit are ing in the North Central region are the most likely to have a home equity loan, particularly a home equity line of credit.9 This geographic distribution differs 10. Median amounts owed on home equity loans are two to three times as large as those owed on installment debls and perhaps ten from that in the 1993-94 survey, which found home- times as large as Ihe median amount owed on credit cards. See Arthur owners in the Northeast to be the most frequent B. Kennickell. Martha Starr-McCluer, and Annika E. Sunden, "Family Finances in the U.S.. Recent Evidence from the Survey of Conholders of home equity loans. Change in the regional sumer Finances," Federal Reserve Bulletin, vol. 83 (January 1997), pattern may reflect the relatively strong growth in pp. 1-24. home prices (and hence, equity) in the North Central 11 In addition, industry surveys indicate that for most home equity lines of credit the credit limit available may be increased with the region during the period. approval of the lender. See Demong and Lindgren, "Home Equity Lending," p. 41. 7. Skltll'. i>i 'I.T.IL .-•:.,U One important attraction of home-secured financing Percent except as noted is that it allows homeowners to borrow relatively 1903-94 1997 large amounts. In addition, as described below, many Item homeowners with lines of credit have substantial Lines Tnuiilional Traditional of credit loans uf credil loans amounts available in the unused portions of their lines. Outstwuling balance 1 dollar*} Users of home equity lines of credit and traditional 1-9999 34 42 35 29 10 000- "M 999 38 40 35 4K home equity loans differ little in the amounts they 25.000 ur more 28 19 30 23 have borrowed (table 7). On average, credit line users Total 100 100 100 100 (that is, those who have an outstanding balance on MEMO: Dollar balance 18,459 16.199 20.155 17.956 their line of credit) owe only a bit more than users 15.000 11.000 15,000 15.000 of traditional home equity loans, and the median Percentage of credit amounts outstanding are the same. line in use 12 14 20-49 . . . 33 50-74 36 23 9. The proportion of homeowners in the South with home equity 75-1 (XI . 33 30 loans may grow appreciably with recent amendments to the Texas Mum: In use (percent) State Constitution that significantly broaden the opportunities to offer 58 53 traditional home equity loans in Texas. Home equity lines of credit, 62 55 however, will still be prohibited in Texas. See John Trullinger, "Texas NOTE.. Measures for lines of credit exclude accounts wiih no outstanding baland Home Equity," Origination News (November 1997), pp. 4-5; and ance. Data have been weighted lo ensure the representativeness of the sample. Heather Timmons, "Wary Lenders Brace for Texas Home Equity Not applicable. Flood," American Booker (January 14, 1998), p. 1. SOURCE. Surveys of Consumers, 1993-94 and 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

248 Federal Reserve Bulletin L71 April 1998 ILL SL'ICCICU use-, lot' home then, climbing to an estimated 16 percent for 1996 iiKIII tllllJ'- il !'\ t\|V '.if LTL'Jil. and to just over 20 percent for 1997, lifting total home equity debt to an estimated $420 billion at 1993-94 1997 year-end (table 9). Use- Lines Traditional Lines Traditional of credit loans of credit loans 1iijhtci\ct's on (Imwih Home improvement 64 38 69 45 Repayment of olhcf dehls. 45 68 49 61 Eduauion 21 4 19 2 Real estate 12 8 9 10 Several factors suppressed the growth of home equity Auto or truck 3(1 3 37 6 credit from 1991 through 1993.l3 Stagnant real estate Medical expenses 5 1 10 2 values in many localities were curbing the growth of Business expenses 28 1 IS 4 Vacation 6 I 13 1 equity in homes. As a result, fewer homeowners were Other1 13 11 becoming qualified for home equity credit, and those NuTh. Data have been weighted to ensure the representativeness of the who did qualify may have been reluctant to increase sample. Percentages sum to more than 100 percent because respondents were their mortgage debt because of lowered expectations allowed to cite multiple uses for a single loan or drawdown and more than one draw for one line of credit. about future increases in home values. The 1990-91 I. Includes purchase of furniture or appliance, purchase of boat or other recession no doubt also had a damping effect on recreational vehicle, payment of taxes, and personal financial investments. SOURCE. Surveys of Consumers. 1993-94 and 1997. home equity borrowing, indirectly by contributing to the sluggishness of home values and directly by affecting both the propensity of households to spend to finance home improvements and to repay other and their ability to qualify for credit. debts.12 The results of the 1997 survey show a similar pattern (table 8); but credit lines were found to have Perhaps the greatest constraint on the growth of home equity loans, however, was the unprecedented additional uses not often found for most traditional surges in refinancings of first mortgage debt in the loans, including vehicle purchases, education, and early 1990s, the first in 1992 and the second, even vacations. Both types of loan appear to be substitutes larger, in 1993, when mortgage interest rates fell to for various types of new or outstanding consumer their lowest level in more than twenty years. As credit. noted earlier, homeowners who refinanced while holding outstanding second-mortgage debt often folded that debt into the new first mortgage to lock in A<;c,Rr.i;.-Yii-: /four 1.01 uv Dun a low rate. After a period of anemic growth in the early 1990s, The moderation or reversal of these factors beginhome equity debt began to expand again in 1994, ning in 1994 helps account for the recent resurgence with an increase in aggregate outstandings of about of home equity borrowing. The economy's post- 6 percent. The pace has quickened substantially since recession recovery was relatively listless in its early stages in 1992 and 1993, but it gained strength and 12. See Canner, Durkin, and Luckett, "Home Equity Lending: Evidence from Recent Surveys," p. 577; Lindgren and Demong, 13. For a more detailed discussion of these influences, see Canner, "Home Equity Loan Study,'" p. 15-16; and 1996 Home Equity Lines Durkin, and Luckett, "Home Equity Lending: Evidence from Recent of Credit Survey Report (American Bankers Association, 1997), p. 88. Surveys," pp. 580-82. ^ nius!;imiinj. LTUII|VI! by u \n am] «li.-,u ilmu-ij l<\ t\|v arid Billions of dollars Lines of credit Traditional loans Year Total Commercial Commercial Other sources All lenders Other sources All lenders banks banks 1993 73 37 110 49 102 151 261 1994 76 40 116 54 104 158 274 1995 79 44 123 61 115 176 299 1996 85 47 132 69 146 215 347 1997 98 55 153 76 191 267 420 SouRCt Reports of Condition and Income, various years; Credit Union National Association; Federal Reserve; Moody's Investors Service; and Bloombero L.R Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Home Equity Lending 249 endurance over the four subsequent years. From the Most subprime lenders place heavy reliance on end of 1993 through last year, disposable personal securitization of their loans to fund their operations. income on average grew 5 percent per year, while the Through such means as third-party insurance guarannational unemployment rate dropped from 6.5 per- tees or senior/subordinate debt structures, investors in cent to 4.7 percent. the securities are largely insulated from credit losses; Home prices have also been on the rise again in and the securities receive triple-A ratings, yielding most parts of the country. Although increases have returns of only 50 to 150 basis points above Treasury been moderate compared with those in some earlier securities of comparable maturity. Ultimately, the boom periods, they have helped boost the total value home equity lenders bear the bulk of the credit risk, of the household sector's real estate holdings roughly designed to be covered by the sizable margin between 20 percent over the past four years. Refinancings of the interest rates paid by the subprime borrowers and home mortgages have ebbed and surged during the the yield to the security holders. period in tandem with fluctuations in mortgage interest rates, but the peaks in activity have fallen considerably short of the 1993 volume.14 Lower Prepayment Risk One characteristic that has attracted investors to secuh.incritcnci' <>/ lh<- Suhprimc Mtirkei rities backed by home equity loans (generally subprime loans) is that, when interest rates drop On the whole, then, recent macroeconomic develop- significantly, the risk of accelerated prepayments of ments have led to robust consumer spending, and the loans underlying the securities has been considstrength in the real estate market has encouraged the ered to be less than for other mortgage-backed securiuse of home equity credit to finance part of that ties.16 When rates fall, borrowers in the subprime spending. Moreover, a new element has given a sharp category are not expected to refinance so readily as boost to overall growth in home equity lending over other mortgagees precisely because their marginal the past couple of years, and that is the vigorous credit status usually bars them from doing so at marketing by nonbank lenders to the "subprime" attractive interest rates. segment of the market—homeowners with relatively low incomes, limited equity, or tarnished credit histories. Loans in this higher-risk segment carry interest rates several percentage points higher than those on 16. When market interest rates fall significantly, many homeowners with existing mortgages will refinance, paying off the original "A-quality" home equity loans and typically lift a loans. Under the typical "pass-through" security format, a large borrower's total mortgage debt to a high level rela- volume of mortgage prepayments means that principal is returned to tive to the value of the home. Some subprime special- investors sooner than anticipated, forcing them not only to reinvest earlier than planned but also in a low-rate environment. ists offer to lend amounts that would raise that ratio to 125 percent, and in a few instances, even higher.15 Subprime home equity loans are commonly mar- 1. 1 )iiliiii|iiL-n..\ laic-. •>! inu.hl;.>!:;il keted as bill-consolidation loans, particularly as a means to pay off credit card debt. Given their pricing, collateral, and performance characteristics— relatively high rates of charge-off and delinquency (chart 1)—these real-estate secured loans are more akin to unsecured personal loans than to mainstream home equity loans. In sccurin/L' 14. The decline in mortgage interest rates in the opening weeks of 1998, to jus! below 7 percenl for conventional thirty-year fixed-rate loans, has spurred a surge in refinancing that may approach the earlier At commercial banks peak volume. 15. Generally speaking, however, industry sources indicate that most lenders who make so-called "125 loans" grant them only to borrowers of strong credit standing rather than to subprime borrowers. 1W2 I TO I'TO IWft Such loans are higher in risk than A-quality mortgages because of the NOTE. Closed-end loans, typically second mortgages. The data are monthly. absence of equity, but borrower characteristics are typically well SOURCE. For pools, Moody's Investors Service; for banks. American Bankabove average. ers Association. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

250 Federal Reserve Bulletin • April 1998 Borrower reaction to the interest rate declines during the past year seems to support this expectation. A recent report from Standard & Poor's observed that Percentage points prepayments of securitized home equity loans have Survey Size of sample risen only slightly when interest rates have dropped results (percent) 100 300 1,000 2,000 3,000 sharply, while prepayments of other securitized mortgages have soared.17 Indeed, the principal factor 50 10.5 6.2 3.6 2.8 2.5 30 or 70 .... 9.6 5.7 3.3 2.5 2.3 behind home equity loan prepayments was found to 20 or 80 .... 8.4 4.9 2.9 2.2 2.0 be improvements in the financial positions of the 10 or 90 .... 6.3 3.7 2.2 1.7 1.5 5 or 95 4.6 2.7 1.6 1.2 1.1 borrowers that enable them to qualify for more attractively priced loans.18 NOTE. Ninety-five percent confidence level, 1.96 standard errors. Yulmni.- in llu- Subpnnii: MarL.-f Federal Reserve Board helped develop questions for inclusion in the Surveys of Consumers, conducted The volume of subprime home equity credit can- by the Survey Research Center of the University of not be estimated with much precision, in large part Michigan, for the period May through October 1997. because definitional distinctions among different Interviewees were chosen from a cluster sample types of loans are not clear. With much of subprime of residential listings, and the interviews were conhome equity credit funded by securitization, an ap- ducted by telephone. The sample was chosen to be proximate measure of the volume of subprime credit broadly representative of the four major regions— can be derived from securitization volumes. But the Northeast, North Central, South, and West—in proloan pools designated as "home equity" pools fre- portion to their populations (residents of Alaska and quently contain subprime purchase-money mortgages Hawaii were not included). For each telephone numor refinanced loans as well; they may also mix some ber drawn, an adult from the household was ranhigher-quality home equity loans with the subprime domly selected as the respondent. paper. Conversely, not all subprime home equity The survey defined a household as persons living loans are securitized. These imprecisions notwithtogether, whether or not related by marriage, blood, standing, however, data from industry sources sugor adoption, or any individual living alone. The head gest that the amount of home equity credit in securiof the household was defined as an individual living tized pools was about $90 billion at the end of 1997, alone, the male of a married couple, or the adult (age much of it believed to be subprime in quality (see eighteen or older) in a household composed of more box "Estimation of Aggregate Home Equity Debt"). than one person and only one adult. In the case of This level represents about one-fifth of the estimated more than one adult but no married couple, the head $420 billion of aggregate home equity credit at yearof household generally was designated to be the end 1997. person most familiar with the household's finances or the one closest to age 45. The survey included 3,000 households. Among A,"i'i:M)ix: 'I'm-: SI;RYI':) V or ('oxsrui i<\ the 2,098 respondents who were homeowners, 181 reported having a home equity line of credit, 102 To obtain information on the prevalence of home reported having a traditional home equity loan, and equity accounts and their use by homeowners, the 7 reported having both types. The survey data have been weighted to be representative of the population, thereby correcting for differences among households 17. "Standard Prepayment Model Doesn't Fit Home Equity Securi- in the probability of their being selected as survey ties," National Mortgage News (November 24, 1997), p. 20. respondents. Estimates of population characteristics 18. Lately, however, prepayments for some pools of subprime derived from samples are subject to error based home equity loans have been more rapid than anticipated in underwriting assumptions. These accelerated prepayments may imply that on the degree to which the sample differs from the improvements in borrowers' financial positions have exceeded expec- general population. Table A.I indicates the sampling tations or that intensified competition among lenders has enabled errors for proportions derived from samples of differsome lower-quality borrowers to refinance at rales below those they ent sizes. • had originally obtained. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Recent Developments in Home Equity Lending 25 I Estimation of Aggregate Home Equity Debt As banks and finance companies have reported more estate credit at the end of 1997, and (3) industry members detailed information on their home equity loans in recent confirm that most of these receivables are closed-end loans. years, estimates of aggregate debt of this type have become more accurate. Other factors, however, have introduced new sources of imprecision into the estimates: the rapid develop- Debt Under Traditional Home Equity Loans ment of securitization of home equity loans and the expanding role of mortgage companies and specialized home Estimating the amount of traditional home equity debt equity lenders, for whom data reporting is fragmentary. outstanding is somewhat more difficult: Fewer institutions Since 1987, commercial banks have reported receivables provide specific data on this type of credit, and much of the under home equity lines of credit on quarterly Call Reports, recent growth has been among holders for whom the data and since 1991 they have reported their holdings of tradi- are the least precise. tional home equity loans. Mutual savings banks also report The Call Reports show the levels for commercial banks these data on Call Reports. Savings and loan associations and credit unions. and federal savings banks report credit line receivables on Savings and loan associations and federal savings banks Call Reports but do not separate traditional home equity do not break out traditional home equity loans from their loans from first mortgages in these reports. Finance compa- other residential mortgage debt. The household survey nies report each month to the Federal Reserve on their real indicated that savings institutions (including mutual savestate loans, and since June 1996 they have reported resi- ings banks) held about half as much of this type of debt dential and commercial mortgages separately. Finance com- as commercial banks, which in 1997 would be about panies do not distinguish between loans under lines of $38 billion. credit and traditional loans, but the bulk of their home The estimate of $48 billion for finance companies is equity receivables consists of traditional closed-end loans. derived from their report of $58 billion in residential mort- Estimates of both types of home equity debt outstanding at gage debt and the estimate that $10 billion of it is in credit credit unions are available from the Credit Union National lines. The estimate for pools is from the rating agencies. Association. An estimate of $ 10 billion is used here for miscellaneous sources of traditional loans, including mortgage companies. Although mortgage companies have become quite active in Debt Under Home Equity Lines of Credit this market, most of the loans they originate are securitized According to Call Reports, commercial banks held about and would be reflected in the estimate for pools. $98 billion in receivables under home equity lines at the end The estimated $420 billion of total home equity debt of 1997 (table); savings institutions held about $18 billion, represents a 60 percent increase from the 1993 total, comand credit unions about $15 billion. The data for the other pared with an approximately 15 percent to 30 percent holders are less precise. Information from the securities increase implied by responses to the household survey. Half rating firms indicates that about $12 billion of credit line the gain in the aggregate is accounted for by securitized receivables resided in pools of securiiized assets (the data loans, a category which, as noted, contains some unknown on these receivables usually do not show the type of origi- amount of loans that would otherwise be considered originating institution). nal or refinanced purchase-money mortgages. In the house- The estimate of $10 billion for finance companies is hold survey, these loans were excluded from the detailed based on the fact that the household survey indicates that questions that focused on traditional home equity loans (1) they supplied only about 6 percent of the credit lines (typically second mortgages) and home equity lines of surveyed, (2) they reported $58 billion of residential real credit. Estimates of aggregate home equity debt outstanding, by source, 1997 Billions of dollars Type of home equity debt Commercial Savings Credit Finance Setiiriti/.ed Ulhcr- All sources hanks institutions' unions companies pmils 98 18 15 10 12 151 76 18 15 48 80 10 267 Total 174 56 30 58 92 10 420 1. Savings and loan associations, federal savings banks, and mutual SOURCE. Surveys of Consumers, 1W7, Reports of Condition and tncmtie. savings banks. December 31, 1997; Credit Union National Association; Moral Reserve; 2. Mortgage bankers, individuals, and any other source mentioned by Moody's Investors Service; and Bloomberg L.P. respondents. * Amount is negligible. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

252 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 BANK REGULATION: A REVIEW OF THE EVIDENCE Gregory Elliehausen The cost of government regulation has become a regulations, account for a large portion of labor political issue in recent years, and the cost is no less costs. controversial for banks than for other types of busi- Statistical analyses have detected, for several regunesses. The controversy has prompted several studies lations, scale economies in compliance costs. This of regulatory costs in banking. This paper evaluates finding suggests that smaller banks, relative to larger the evidence from those studies, which vary widely banks, have a cost disadvantage that may discourage in quality and content, and suggests what can reason- the entry of new firms into banking, may stimulate ably be concluded about the effects of regulation consolidation of the industry into larger banks, and on banks' costs. It begins with a discussion of the may inhibit competition among institutions in marsources and types of regulatory costs. It then dis- kets for specific financial products. It also suggests cusses the requirements of the various methods of the possibility that regulation in the early stages of determining costs and evaluates published empirical the product life cycle—when output is low and averstudies in light of those requirements. The paper ends age regulatory cost would be high—will discourage with a review of the studies' substantive findings. the introduction of new financial services. Regulation appears to account for a small but not One survey found that the start-up costs of complyinconsiderable share of banks' costs. The best avail- ing with a new regulation were insensitive to the able evidence, most of which is not very precise, number of changes required to bring a bank's pracsuggests that the total cost of all bank regulations tices and policies into compliance with the regulain 1991 (the year for which most of the studies were tion. If this finding is generally true, then applying conducted) may have been about 12 percent to regulations generally to address the practices of a few 13 percent of banks' noninterest expenses. Incremen- institutions would impose costs on all institutions, tal costs—the costs of those required activities that not just on the few that must change their practices. are undertaken only because they are required—may This finding also suggests that a regulatory policy of have been about half of the total cost. making frequent minor revisions to regulations might Labor costs apparently are the major component of be more costly to banks than one of making infreboth the start-up costs and the ongoing costs of quent major revisions. complying with regulations. Some studies suggest The paper concludes that surveys can produce reathat the time spent by bank officers and managers on sonably good data on regulatory costs if good survey compliance activities, especially activities related methods are followed. Carefully designed studies can to new regulations or to major revisions of existing increase knowledge of the effects of regulation on Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

253 banks' costs. However, exercises that measure only is based on analysis of a small number of regulations costs and do not attempt to explain the determinants by a few researchers. Further research covering more of cost are likely to have limited value. Our current and different types of regulations and regulatory understanding of the determinants of regulatory costs requirements is clearly needed. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

254 Industrial Production and Capacity Utilization for February 1998 Released for publication March 17 unseasonably warm weather continuing to dampen demand, the output of utilities bounced back only 0.9 percent after having dropped 3.1 percent in Janu- Industrial production was unchanged in February ary. At 128.1 percent of its 1992 average, total indusafter a revised 0.1 percent rise in January. Manufac- trial production in February was 4.9 percent higher turing output was also flat in February. Motor vehicle than it was in February 1997. The rate of industrial production declined for a third consecutive month, capacity utilization decreased 0.3 percentage point, to although it remained at a relatively high level. With 82.7 percent. Industrial production indexes Ratio scale, 1992= 100 Ratio scale, 1992 = 100 _ Consumer goods 130 _ Intermediate products 130 120 120 Durable ^T Construction supplies 110 110 Nondurable - 100 Business supplies — 100 - \J 90 90 1 J I I I I i i i i _ Equipment Materials 150 150 Business - 130 130 110 110 Nondurable goods - - 90 and energy 90 v—^.^ Defense and space ^v 1 1 1 1 1 1 I I I I I I I 1990 1992 1994 1996 1998 1990 1992 1994 1996 1998 Capacity utilization Percent of capacity Percent of capacity - 85 85 - 80 80 Manufacturing - 75 75 I I I I I I I 1984 1986 1988 1990 1992 1994 1996 1998 1984 1986 1988 1990 1992 1994 1996 1998 All series are seasonally adjusted. Latest series, February. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

255 Industrial production and capacity utilization, February 1998 Industrial production, index, 1992=100 Percentage change Category 1997 1998 1997' 1998' Feb. 1997 to Nov.' Dec.' Jan.' Feb.P Nov.' Dec' Jan.' Feb.? Feb. 1998 Total . 127.5 127.9 128.0 128.1 .8 .3 .1 .0 4.9 Previous estimate 127.4 127.9 127.9 .7 .4 .0 Major market groups Products, total1 121.2 121.1 121.3 121.3 .8 -.1 .2 .0 4.2 Consumer goods 116.7 116.2 116.8 116.5 .6 — 4 .5 -.2 3.1 Business equipment 147.5 148.4 147.5 147.3 1.3 .6 -.6 -.2 7.9 Construction supplies 123.6 122.8 123.8 124.3 1.9 -.6 .8 .4 2.1 137.7 138.7 138.9 139.0 .7 .8 .1 .1 6.1 Major industry groups 130.4 130.9 131.3 131.3 1.0 .4 .3 .0 5.5 Durable 147.7 148.4 148.8 148.9 1.5 .5 .3 .1 8.1 Nondurable 112.6 112.9 113.4 113.2 .4 .2 .4 -.1 2.6 106.1 105.5 107.1 106.8 .2 -.5 1.6 -.3 .7 Utilities 115.3 114.9 111.3 112.3 -1.3 -.4 -3.1 .9 1.8 Capacity utilization, percent MEMO Capacity, percentage 1997 1997 1998 change, Average, Low, High, Feb. 1997 1967-97 1982 1988-89 Feb. Nov.' Dec' Jan.1 Feb.P to Feb. 1998 Total 82.1 71.1 85.4 82.6 83.3 83.2 83.0 82.7 4.7 Previous estimate 83.2 83.3 83.0 Manufacturing 81.1 69.0 85.7 81.7 82.3 82.3 82.2 81.8 5.4 Advanced processing 80.5 70.4 84.2 79.7 80.6 80.6 80.5 80.1 6.3 Primary processing .. 82.4 66.2 88.9 86.1 86.2 86.1 86.0 85.6 3.4 Mining 87.5 80.3 88.0 90.1 89.7 89.2 90.6 90.2 .6 Utilities 87.3 75.9 92.6 87.7 90.7 90.3 87.4 88.1 1.3 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 The production of construction supplies increased further after a healthy gain in January. The output of materials edged up 0.1 percent for the second con- The 0.2 percent decline in the production of consecutive month, well off the pace set last year. Small sumer goods in February reflected reductions in both increases in durable and nondurable goods materials the durable and nondurable components. Within duraslightly outweighed a further retraction in energy bles, the drop in the output of automotive products materials; a reduction in the output of coal outwas tempered a bit by a 0.2 percent increase in other weighed increases in utility output. Among durable consumer durables, which has been a volatile series goods materials, the output of parts for highof late. The production of nondurable consumer technology equipment continued to increase rapidly; goods slipped 0.2 percent and has been little changed the output of parts for consumer goods, particularly since November; losses in food and paper products for motor vehicles, declined. outweighed gains in the output of consumer chemicals and in the residential use of utilities. The output of business equipment, which had expanded nearly 11 percent last year, contracted INDUSTRY GROUPS 0.2 percent after having fallen 0.6 percent in January. Weakness in the production of industrial, telephone, The output at factories was flat in February. The and photographic equipment, along with slowdowns output of durables ticked up just 0.1 percent; strong in motor vehicle and aircraft assembly, have con- increases in computer and office equipment and in strained the production of business equipment so far semiconductors were mostly offset by a decrease this year. in motor vehicles and parts. The production of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

256 Federal Reserve Bulletin • April 1998 nondurables edged down 0.1 percent, with decreased decreased 0.4 percentage point. Capacity utilization production in many industries nearly matched by a in advanced-processing industries fell to a level a sizable gain in chemicals production. little below its long-run average, while the operating The operating rate in manufacturing declined, to rate in primary-processing industries was 3.2 percent- 81.8 percent. Utilization in advanced-processing age points above its long-run average. • industries and in primary-processing industries both Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

257 Statements to the Congress Statement by Alan Greenspan, Chairman, Board of negative effects on Japan, Latin America, and eastern Governors of the Federal Reserve System, before the and central Europe that, in turn, could have repercus- Committee on Foreign Relations, U.S. Senate, Febru- sions elsewhere, including the United States. Thus, ary 12, 1998 while the probability of such an outcome may be small, its consequences, in my judgment, should not The global financial system has been evolving rap- be left solely to chance. We have observed that global idly in recent years. New technology has radically financial markets, as currently organized, do not reduced the costs of borrowing and lending across always achieve an appropriate equilibrium, or at least traditional national borders, facilitating the develop- require time to stabilize. ment of new instruments and drawing in new players. Opponents of IMF support also argue that the One result has been a massive increase in capital substantial financial backing, by cushioning the losses flows. Information is transmitted instantaneously of imprudent investors, could exacerbate moral hazaround the world, and huge shifts in the supply and ard. Moral hazard arises when someone can reap the demand for funds naturally follow. rewards from his or her actions when events go well This burgeoning global system has been demon- but does not suffer the full consequences when they strated to be a highly efficient structure that has go badly. Such a reward structure, obviously, could significantly facilitated cross-border trade in goods encourage excessive risk-taking. There has doubtless and services and, accordingly, has made a substantial been some of that type of inappropriate risk-taking contribution to standards of living worldwide. Its attributable to expectations of IMF bailouts, though efficiency exposes and punishes underlying economic arguably it has been the expectation of governments' weakness swiftly and decisively. Regrettably, it also support of their financial systems that has been the appears to have facilitated the transmission of finan- more obvious culprit. In any event, the expectation of cial disturbances far more effectively than ever broad bailouts, at least in the Asian case, has turned before. out to have been an illusion. Many investors in Asian As I testified three years ago, the then-emerging economies have to date suffered substantial losses. Mexican crisis was the first such episode associated Asian equity losses, excluding Japanese companies, with our new high tech international financial system. since June 1997, worldwide, are estimated to have The current Asian crisis is the second. exceeded $700 billion at the end of January, of which We do not as yet fully understand the new system's more than $30 billion has been lost by U.S. investors. dynamics. We are learning fast and need to update Substantial further losses have been recorded in and modify our institutions and practices to reduce bonds and real estate. the risks inherent in the new regime. Meanwhile, we Moreover, the policy conditionality, associated have to confront the current crisis with the institu- principally with IMF lending, which dictates ecotions and techniques we have. nomic and financial discipline and structural change, Many argue that the current crisis should be helps to mitigate some of the moral hazard concerns. allowed to run its course without support from the Such conditionality is also critical to the success of International Monetary Fund (IMF) or the bilateral the overall stabilization effort. As I will be discussing financial backing of other nations. They assert that in a moment, at the root of the problems is poor allowing this crisis to play out, while doubtless public policy that has resulted in misguided investhaving additional negative effects on growth in Asia ments and very weak financial sectors. Convincing a and engendering greater spillovers onto the rest sovereign nation to alter destructive policies that of the world, is not likely to have a large or last- impair its own performance and threaten contagion to ing impact on the United States and the world its neighbors is best handled by an international economy. financial institution, such as the IMF. What we have They may well be correct in their judgment. There in place today to respond to crises should be supis, however, a small but not negligible probability ported even as we work to improve those mechathat the upset in East Asia could have unexpectedly nisms and institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

258 Federal Reserve Bulletin • April 1998 Accordingly, I fully back the Administration's inevitable. In addition, losses in competitiveness as a request to augment the financial resources of the result of exchange rates that were pegged to the IMF—U.S. participation in the New Arrangements to dollar, which has appreciated against the yen since Borrow and an increase in the U.S. quota in the IMF. early 1995, slowed aggregate economic growth some- Hopefully, neither will turn out not to be needed, and what, even before the current crisis developed. no funds will be drawn. But it is better to have it For years, domestic savings and rapidly increasing available if that turns out not to be the case and quick capital inflows had been directed by governments response to a pending crisis is essential. I also believe into investments that banks were required to finance. it is important to have mechanisms, such as the As I pointed out in previous testimony, lacking a true Treasury Department's Exchange Stabilization Fund, market test, much of that investment was unprofitthat permit the United States in exceptional circum- able. So long as growth was vigorous, the adverse stances to provide temporary bilateral financial sup- consequences of this type of non-market allocation of port, often on short notice, under appropriate condi- resources were masked. Moreover, in the context of tions and on occasion in cooperation with other pegged exchange rates that were presumed to concountries. tinue, if not indefinitely, at least beyond the term of In testimony in mid-November, I endeavored to the loan, banks and nonbanks were willing to take the outline the roots of the current crisis. This morning I risk to borrow dollars (unhedged) to obtain the dollarshould like to carry the analysis a bit further. denominated interest rates that were invariably lower Companies in Korea and many other Asian coun- than those available in domestic currency. Western, tries have become formidable world class producers especially American, investors diversified some of in a number of manufacturing sectors using advanced their huge capital gains of the 1990s into East Asian technologies, but in a number of cases they permitted investments. In hindsight, it is evident that those leverage to rise to levels that could be sustained only economies could not provide adequate profitable with continued very rapid growth. Growth, however, opportunities at reasonable risk to absorb such a was destined to slow. surge in funds. This surge, together with distortions Asian economies to varying degrees over the past caused by government planning, has resulted in huge half century have tried to combine rapid growth with losses. a much higher mix of government-directed produc- With the inevitable slowdown, business losses and tion than has been evident in the essentially market nonperforming bank loans surged. Banks' capital driven economies of the West. Through government eroded rapidly, and, as a consequence, funding inducements, a number of select, more sophisticated sources have dried up, as fears of defaults have risen manufacturing technologies borrowed from the dramatically. In an environment of weak financial advanced market economies were applied to these systems, lax supervisory regimes, and vague guarangenerally low-productivity and, hence, low-wage tees about depositor or creditor protections, bank economies.1 Thus, for selected products, exports runs have occurred in several countries and reached became competitive with those of the market econo- crisis proportions in Indonesia. Uncertainty and mies. This engendered overall economic growth at a retrenchment have escalated. The state of confidence rate far exceeding that of economies at the cutting so necessary to the functioning of any economy has edge of technology, whose growth has been bound by been torn asunder. Vicious cycles of ever-rising and hard-fought, but slow, accretions to knowledge. reinforcing fears have become contagious. Some There was, however, an upper limit to emerging exchange rates have fallen to levels that are undercountry growth defined by that cutting edge as to how standable only in the context of a veritable collapse far this specialized Asian economic regime could of confidence in the functioning of an economy. It is develop. As the process broadened beyond a few clear, for example, that neither changes in the relative select applications of advanced technologies, overall purchasing power of the Indonesian rupiah relative to productivity continued to increase and the associated the U.S. dollar nor their relevant interest rates can rise in the average real wage in these economies explain the more than four-fifths decline in the rupiah blunted somewhat the competitive advantage enjoyed by early 1998. initially. Slackening of export expansion growth was The sharp exchange rate changes in East Asia in recent months, as have similar instances elsewhere, do not appear to have resulted wholly from a measured judgment that fundamental forces have turned 1. Wage levels in an industry are largely driven by the average appreciably more adverse. More likely, its root is a wage level of all workers in an economy against whom the industry's workers compete. process that is neither measured nor rational, one Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 259 based on a visceral, engulfing fear. The exchange rate greater the proportion of current output (mainly capichanges appear the consequence not of the accumula- tal goods) driven by perceived future needs. Hence tion of new knowledge of a deterioration in funda- under such conditions the more vulnerable are marmentals but its opposite: the onset of uncertainties kets to a shock that abruptly triggers a revision in that destroy previous understandings of the way the expectations of future needs and sets off a vicious world works. That has induced massive disengage- cycle of contraction of financial and product markets. ments of investors and declines in Asian currencies Episodes of vicious cycles cannot be easily forethat have no tie to reality. cast, as our recent experience with Asia has demon- A similar breakdown was also evident in Mexico strated. Certainly, there were indications that Thaithree years ago, albeit to a somewhat lesser degree. In land's large current account deficits were unsuslate 1994, the government was rapidly losing reserves tainable. Once the recent crisis was triggered in early in a vain effort to support a currency that had come July with Thailand's eventual forced abandonment of under attack when the authorities failed to act expedi- its exchange rate peg, it was apparently the lethal tiously and convincingly to contain a burgeoning combination of pegged exchange rates, high levercurrent account deficit financed in large part by sub- age, weak banking and financial systems, and declinstantial short-term flows denominated in dollars. ing demand in both Thailand and elsewhere that These two recent crisis episodes have afforded us transformed a correction into a collapse. increasing insights into the dynamics of the evolving Normally the presence of these factors would have international financial system, though there is much produced a modest retrenchment, not the kind of we do not yet understand. discontinuous fall in confidence that leads to a vicious With the new, more sophisticated financial markets cycle of decline. But with a significant part of shortpunishing errant government policy behavior far term liabilities, bank and nonbank, denominated in more profoundly than in the past, vicious cycles are foreign currencies (predominantly dollars), unhedged, evidently emerging more often. For, once they are the initial pressure on domestic currencies was appartriggered, damage control is difficult. Once the web ently too much to bear, leading to a sharp crack in the of confidence, which supports the financial system, is fixed exchange-rate structure of many East Asian breached, it is difficult to restore quickly. The loss of economies. The belief that local currencies could, confidence that one understands the dynamics of the virtually without risk of loss, be converted into dolsystems with which we are engaged can trigger rapid lars at any time was shattered. Investors, both domesand disruptive changes in the pattern of finance, tic and foreign, endeavored en masse to convert to which, in turn, feed back on exchange rates and asset dollars, as confidence in the ability of the local econprices. Moreover, investor concerns that weaknesses omy to earn dollars to meet their fixed obligations revealed in one economy may be present in others diminished. Local exchange rates fell against the that are similarly situated means that the loss of dollar, inducing still further declines. confidence can quickly spread to other countries. The weakening of growth also led to lowered profit At one point the economic system appears stable, expectations and contracting net capital inflows of the next it behaves as though a dam has reached a dollars. This was an abrupt change from the probreaking point, and water (read, confidence) evacu- nounced acceleration through 1996 and the first half ates its reservoir. The United States experienced such of 1997. The combination of continued strong a sudden change with the decline in stock prices of demand for dollars to meet debt-service obligations more than 20 percent on October 19, 1987. There is and the slowed new supply destabilized the previno credible scenario that can readily explain so abrupt ously fixed exchange-rate regime. This created a a change in the fundamentals of long-term valuation marked increase in uncertainty and retrenchment, on that one day. Such market panic does not appear to further reducing capital inflows, still further weakenreflect a simple continuum from the immediately ing local currency exchange rates. Such vicious previous period. The abrupt onset of such implosions cycles continue until either defaults or restructuring suggests the possibility that there is a marked divid- lowers debt-service obligations or the low local ing line for confidence. When crossed, prices slip exchange rates finally induce a pickup in the supply into free fall—perhaps overshooting the long-term of dollars. equilibrium—before markets will stabilize. These virulent episodes appear to be at the root of But why do these events seem to erupt without our most recent breakdowns in Mexico and Asia. some readily evident precursor? Certainly, the more Their increased prevalence may, in fact, be a defining extended the risk-taking, or more generally, the lower characteristic of the new high tech international the discount factors applied to future outcomes, the financial system. We shall never be able to alter the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

260 Federal Reserve Bulletin • April 1998 human response to shocks of uncertainty and with- funding, the dangers of depositor runs, after a fall in drawal; we can only endeavor to reduce the imbal- the domestic currency, escalate. ances that exacerbate them. Although, as indicated earlier, I do not believe we 3. Weak Banking Systems. Banks play a crucial are as yet sufficiently knowledgeable of the full com- role in the financial market infrastructure. When they plex dynamics of our increasingly developing high are undercapitalized, have lax lending standards, and tech financial system, enough insights have been are subjected to weak supervision and regulation, gleaned from the crises in Mexico and Asia (and they become a source of systemic risk both domestiprevious experiences) to enable us to list a few of the cally and internationally. Lack of a cadre of loan critical tendencies toward disequilibrium and vicious officers who have experience in judging lending risk cycles that will have to be addressed if our new can produce debilitating losses even when lending is global economy is to limit the scope for disruptions not directed by government inducement or the need in the future. These elements have all, in times past, to support members of an associated group of compabeen factors in international and domestic economic nies. Experienced bank supervision and regulation disruptions, but they appear more stark in today's cannot fully substitute for poor lending procedures, market. but presumably it could encourage better practice. But apparently even that has been lacking in many emerging economies. 1. Leverage. Certainly in Korea, probably in Thailand and Indonesia, and possibly elsewhere, a high degree of leverage (the ratio of debt to equity) 4. Interbank Funding, Especially in Foreign Curappears to be a place to start. Exceptionally high rencies. Despite its importance for distributing savleverage often is a symptom of excessive risk-taking ings to their most valued use, short-term interbank that leaves financial systems and economies vulner- funding, especially cross-border, may turn out to be able to loss of confidence. It is not easy to imagine the Achilles' heel of an international financial system the cumulative cascading of debt instruments seeking that is subject to wide variations in financial confisafety in a crisis when assets are heavily funded with dence. This phenomenon, which is all too common in equity. The concern is particularly relevant to banks our domestic experience, may be particularly dangerand many other financial intermediaries, whose assets ous in an international setting. typically are less liquid than their liabilities and so depend on confidence in the payment of liabilities for 5. Moral Hazard. The expectation that monetary their continued viability. Moreover, both financial authorities or international financial institutions will and nonfinancial businesses can employ high lever- come to the rescue of failing financial systems and age to mask inadequate underlying profitability and unsound investments has clearly engendered a sigotherwise have inadequate capital cushions to match nificant element of moral hazard and excessive risktheir volatile environments. taking. The dividing line between public and private Excess leverage in nonfinancial business can create liabilities, too often, becomes blurred. problems for lenders including their banks; these problems can, in turn, spread to other borrowers that 6. Weak Central Banks. To effectively support a rely on these lenders. Fortunately, since lending by stable currency, central banks need to be indepennonfinancial firms to other businesses is less prevadent, meaning that their monetary policy decisions lent than bank lending to other banks, direct contaare not subject to the dictates of political authorities. gion is less likely. But the leverage of South Korea's In East Asia, as in many other areas, the central bank chaebols, because of their size and the pervasive was not in a position to resist political pressures distress, has clearly been an important cause of bank focused on the short run. problems with their systemic implications. 7. Securities Markets. Recent adverse banking 2. Interest Rate and Currency Risk. Banks, when experiences have emphasized the problems that can confronted with a generally rising yield curve, have a arise if banks are almost the sole source of intermetendency to incur interest rate or liquidity risk by diation. Their breakdown induces a sharp weakening lending long and funding short. This exposes them to in economic growth. A wider range of nonbank instishocks, especially those institutions that have low tutions, including viable debt and equity markets, are capital-asset ratios. When financial intermediaries, in important safeguards of economic activity when addition, seek low-cost, unhedged, foreign currency banking fails. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 261 8. Inadequate Legal Structures. Finally, an effec- enterprises. Blinded by faulty signals, a competitive tive competitive market system requires a rule of law free market system cannot reach a firm balance that severely delimits government's arbitrary intru- except by chance. In today's rapidly changing marsion into commercial disputes. ketplace, producers need sophisticated signals to hone Defaults and restructuring will not always be production schedules and investment programs to avoidable. Indeed, "creative destruction," as Joseph respond to consumer demand. Schumpeter put it, is often an important element of There is sufficient bias in political systems of all renewal in a dynamic market economy. But an effi- varieties to substitute hope (read, wishful thinking) cient bankruptcy statute is required to aid in this for possibly difficult preemptive policy moves, both process, especially in the case of cross-border with respect to financial systems and economic poldefaults. icy. There is often denial and delay in instituting proper adjustments. Recent propensities to obscure Interest and currency risk-taking, excess leverage, the need for change have been evidenced by unreweak financial systems, and interbank funding are all ported declines in official reserves, issuance by govencouraged by the existence of a safety net. In a ernments of the equivalent to foreign currency oblidomestic context, it is difficult to achieve financial gations, or unreported large forward short positions balance without a regulatory structure that seeks to against foreign currencies. It is very difficult for simulate the market incentives that would tend to political leaders to incur what they perceive as large control these financial elements if there were not immediate political costs to contain problems that broad safety nets. It is even more difficult to achieve they see (often dimly) as only prospective. such a balance internationally among sovereign gov- Reality eventually replaces hope, but the cost of ernments operating out of different cultures. Thus, delay is a more abrupt and disruptive adjustment than governments have developed a patchwork of arrange- would have been required if action had been more ments and conventions governing the functioning of preemptive. Increased transparency for businesses, the international financial system that I believe will financial institutions, and governments is a key ingreneed to be thoroughly reviewed and altered as neces- dient in fostering more discipline on private transsary to fit the needs of the new global environment. A actors and on government policymakers. Increased review of supervision and regulation of private finan- transparency can counter political bias in part by cial institutions, especially those that are supported exposing for all to see the risks to stability of current by a safety net, is particularly pressing because those policies as they develop. Under such conditions, failinstitutions have played so prominent a role in the ure to act would also be perceived as having political emergence of recent crises. costs. I suspect that recent political foot dragging by As I have testified previously, I believe that, in this governments in both developed and developing counrapidly expanding international financial system, the tries on the issue of greater transparency is credible primary protection from adverse financial distur- evidence of its power and significance. bances is effective counterparty surveillance, and, Transparency, which is so important to foster safe hence, government regulation and supervision should and sound lending practices, is, of course, less relseek to produce an environment in which counterpar- evant for local currency lending if banks are guaranties can most effectively oversee the credit risks of teed with sovereign credits. Moreover, transparency potential transactions. becomes especially difficult to create for organiza- Here a major improvement in transparency, includ- tions and corporations with large interlocking ownering both accounting and public disclosure, is essen- ships. Cross holdings of stock lead too often to lendtial. To be sure, counterparties often exchange other- ing on the basis of association, not economic value. wise confidential information as a condition of a The list of problems that must be addressed to transaction. But broader dissemination of detailed achieve balance in our future global financial system disclosures of governments, financial institutions, and could be significantly extended, but let me end with firms is required if the risks inherent in our global a notion that is relevant also to today's crisis. It is financial structure are to be contained. A market becoming increasingly evident that supervision and system can approach an appropriate equilibrium only regulation should address excess nonperforming if the signals to which individual market participants loans expeditiously. The expected values of the losses respond are accurate and adequate to the needs of the on these loans are, of course, a subtraction from adjustment process. Among the important signals are capital. But because these estimates are uncertain, product and asset prices, interest rates, debt by matu- they embody an additional risk premium that reduces rity, detailed accounts of central banks, and private the markets' best estimate of the size of effective Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

262 Federal Reserve Bulletin • April 1998 equity capital even if capital is replenished. It is, cial support provided only with agreed conditions to hence, far better to remove these dubious assets and address underlying problems, the task assigned to the their associated risk premium from bank balance IMF, can play an essential stabilizing role. The availsheets and dispose of them separately, preferably ability of such support must be limited because its promptly. size cannot be expected to expand at the pace of the international financial system. I doubt if there will be As a consequence of the unwinding of market worldwide political support for that. restrictions and regulations, and the rapid increase in In closing, I should like to stress that the significant technology, the international financial system has degree of volatility that continues to exist in Asian expanded at a pace far faster than either domestic markets indicates exceptionally high levels of uncergross domestic product or cross-border trade. To tainty, bordering on panic. It is not reasonable to reduce the risk of systemic crises in such an environ- expect that the substantial investments needed ment, an enhanced regime of market incentives, to implement meaningful structural reforms can involving greater sensitivity to market signals, more proceed very far until we observe a simmering down information to make those signals more robust, and of frenetic changes in asset prices and exchange broader securities markets—coupled with better rates. supervision—is essential. Obviously appropriate That is likely to result only when stability of bankmacropolicies, as ever, are assumed. But attention to ing and financial systems generally is achieved. The microdetails is becoming increasingly pressing. failure of the fragile banking systems of East Asia to Nonetheless, it is reasonable to expect that despite hold steady as financial pressures increased was a endeavors at risk containment and prevention the defining element in the developing crisis. The stabilisystem may fail in some instances, triggering vicious zation of those banking systems is crucial, if conficycles and all the associated contagion for innocent dence, which has been so thoroughly undercut in this bystanders. A backup source of international finan- most debilitating crisis, is to be restored. Statement by Alan Greenspan, Chairman, Board of sively too: Industrial production increased 5% per- Governors of the Federal Reserve System, before the cent last year, exceeding robust additions to capacity. Subcommittee on Domestic and International Mone- Those gains were shared widely. The hourly wage tary Policy of the Committee on Banking and Finan- and salary structure rose about 4 percent, fueling cial Services, U.S. House of Representatives, Febru- impressive increases in personal incomes. Unlike ary 24, 1998 some prior episodes when faster wage rate increases mainly reflected attempts to make up for more rap- I welcome this opportunity to present the Federal idly rising prices of goods and services, the fatter Reserve's semiannual report on economic conditions paychecks that workers brought home represented and the conduct of monetary policy. ' real increments to purchasing power. Measured consumer price inflation came in at 13A percent over the twelve months of 1997, down about 1 Vi percentage points from the pace of the prior year. While swings THE U.S. ECONOMY IN 1997 in the prices of food and fuel contributed to this decline, both narrower price indexes excluding those items and broader ones including all goods and ser- The U.S. economy delivered another exemplary pervices produced in the United States also paint a formance in 1997. Over the four quarters of last year, portrait of continued progress toward price stability. real gross domestic product expanded close to 4 per- Businesses, for the most part, were able to pay these cent, its fastest annual increase in ten years. To higher real wages while still increasing their earnproduce that higher output, about 3 million Ameriings. Although aggregate data on profits for all of cans joined the nation's payrolls, in the process con- 1997 are not yet available, corporate profit margins tributing to a reduction in the unemployment rate to 43/4 percent, its lowest sustained level since the late most likely remained in an elevated range not seen consistently since the 1960s. These healthy gains in 1960s. And our factories were working more intenearnings and the expectations of more to come provided important support to the equity market, with most major stock price indexes gaining more than I. See "Monetary Policy Report to the Congress," Federal Reserve 20 percent over the year. Bulletin, vol. 84 (March 1998), pp. 155-73. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 263 The strong growth of the real income of workers Critical to this process has been the rapidly increasand corporations is not unrelated to the economy's ing efficiency of our financial markets—itself a prodcontinued good performance on inflation. Taken uct of the new technologies and of significant market together, recent evidence supports the view that such deregulation over the years. Capital now flows with low inflation, as closely approaching price stability as relatively little friction to projects embodying new we have known in the United States in three decades, ideas. Silicon Valley is a tribute both to American engenders many benefits. When changes in the gen- ingenuity and to the financial system's evereral price level are small and predictable, households increasing ability to supply venture capital to the and firms can plan more securely for the future. The entrepreneurs who are such a dynamic force in our perception of reduced risk encourages investment. economy. Low inflation also exerts a discipline on costs, foster- With new high tech tools, American businesses ing efforts to enhance productivity. Productivity is have shaved transportation costs, managed their prothe ultimate source of rising standards of living, and duction and use of inventories more efficiently, and we witnessed a notable pickup in this measure in the broadened market opportunities. The threat of rising past two years. costs in tight labor markets has imparted a substantial The robust economy has facilitated the efforts of impetus to efforts to take advantage of possible effithe Congress and the Administration to restore bal- ciencies. In my Humphrey-Hawkins testimony last ance in the unified federal budget. As I have indi- July, I discussed the likelihood that the sharp accelcated to the Congress on numerous occasions, mov- eration in capital investment in advanced technoloing beyond this point and putting the budget in gies beginning in 1993 reflected synergies of new significant surplus would be the surest and most ideas, embodied in increasingly inexpensive new direct way of increasing national saving. In turn, equipment, that have elevated expected returns and higher national saving, by promoting lower real long- have broadened investment opportunities. term interest rates, helps spur spending to outfit More recent evidence remains consistent with the American firms and their workers with the modern view that this capital spending has contributed to a equipment they need to compete successfully on noticeable pickup in productivity—and probably by world markets. We have seen a partial down payment more than can be explained by usual business cycle of the benefits of better budget balance already: It forces. For one, the combination of continued low seems reasonable to assume that the decline in inflation and stable to rising domestic profit margins longer-term Treasury yields last year owed, in part, to implies quite subdued growth in total consolidated reduced competition—current and prospective—from unit business costs. With labor costs constituting the federal government for scarce private saving. more than two-thirds of those costs and labor com- However, additional effort remains to be exerted to pensation per hour accelerating, productivity must be address the effects on federal entitlement spending of growing faster, and that stepup must be roughly in the looming shift within the next decade in the line with the increase in compensation growth. For nation's retirement demographics. another, our more direct observations on output per As I noted earlier, our nation has been experienc- hour roughly tend to confirm that productivity has ing a higher growth rate of productivity—output per picked up significantly in recent years, although how hour worked—in recent years. The dramatic improve- much the ongoing trend of productivity has risen ments in computing power and communication and remains an open question. information technology appear to have been a major The acceleration in productivity, however, has been force behind this beneficial trend. Those innovations, exceeded by the strengthening of demand for goods together with fierce competitive pressures in our high and services. As a consequence, employers had to tech industries to make them available to as many expand payrolls at a pace well in excess of the homes, offices, stores, and shop floors as possible, growth of the working age population that profess a have produced double-digit annual reductions in desire for a job, including new immigrants. As I prices of capital goods embodying new technologies. pointed out last year in testimony before the Con- Indeed, many products considered to be at the cutting gress, that gap has been accommodated by declines edge of technology as recently as two to three years in both the officially unemployed and those not ago have become so standardized and inexpensive actively seeking work but desirous of working. The that they have achieved near "commodity" status, a number of people in those two categories decreased development that has allowed businesses to at a rate of about 1 million per year on average over accelerate their accumulation of more and better the last four years. By December 1997, the sum had capital. declined to a seasonally adjusted 10'/2 million, or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

264 Federal Reserve Bulletin • April 1998 6 percent of the working age population, the lowest late to fend off at least some persistent price acceleraratio since detailed information on this series first tion and attendant economic instabilities. Preemptive became available in 1970. Anecdotal information policymaking is keyed to judging how widespread from surveys of our twelve Reserve Banks attests to are emerging inflationary forces, and when, and to our ever tightening labor markets. what degree, those forces will be reflected in actual Rapidly rising demand for labor has had enormous inflation. For most of last year, the evident strains on beneficial effects on our work force. Previously low- resources were sufficiently severe to steer the Federal or unskilled workers have been drawn into the job Open Market Committee (FOMC) toward being more market and have obtained training and experience inclined to tighten than to ease monetary policy. that will help them even if they later change jobs. Indeed, in March, when it became apparent that Large numbers of underemployed have been moved strains on resources seemed to be intensifying, the up the career ladder to match their underlying skills, FOMC imposed modest incremental restraint, raising and many welfare recipients have been added to its intended federal funds rate VA percentage point, to payrolls as well, to the benefit of their long-term job 5V-i percent. prospects. We did not increase the federal funds rate again The recent acceleration of wages likely has owed during the summer and fall, despite further tightening in part to the ever-tightening labor market and in part of the labor market. Even though the labor market to rising productivity growth, which, through com- heated up and labor compensation rose, measured petition, induces firms to grant higher wages. It is inflation fell, owing to the appreciation of the dollar, difficult at this time, however, to disentangle the weakness in international commodity prices, and relative contributions of these factors. What is clear faster productivity growth. Those restraining forces is that, unless demand growth softens or productivity were more evident in goods-price inflation, which in growth accelerates even more, we will gradually run the consumer price index (CPI) slowed substantially out of new workers who can be profitably employed. to only about Vi percent in 1997, than on service- It is not possible to tell how many more of the price inflation, which moderated much less—to 6 percent of the working-age population who want to around 3 percent. Providers of services appeared to work but do not have jobs can be added to payrolls. A be more pressed by mounting strains in labor marsignificant number are so-called frictionally unem- kets. Hourly wages and salaries in service-producing ployed, as they have left one job but not yet chosen to sectors rose 4'/2 percent last year, up considerably accept another. Still others have chosen to work in from the prior year and almost 1V2 percentage points only a limited geographic area where their skills may faster than in goods-producing sectors. However, a not be needed. significant portion of that differential, but by no Should demand for new workers continue to means all, traced to commissions in the financial and exceed new supply, we would expect wage gains real estate services sector related to one-off increases increasingly to exceed productivity growth, squeez- in transactions prices and in volumes of activity, ing profit margins and eventually leading to a pickup rather than to increases in the underlying wage in inflation. Were a substantial pickup in inflation to structure. occur, it could, by stunting economic growth, reverse Although the nominal federal funds rate was mainmuch of the remarkable labor market progress of tained after March, the apparent drop in inflation recent years. I will be discussing our assessment of expectations over the balance of 1997 induced some these and other possibilities and their bearing on the firming in the stance of monetary policy by one outlook for 1998 shortly. important measure—the real federal funds rate, or the nominal federal funds rate less a proxy for inflation expectations. Some analysts have dubbed the contribution of the reduction in inflation expectations to raising the real federal funds rate a "passive" tighten- MONETARY POLICY IN 1997 ing, in that it increased the amount of monetary policy restraint in place without an explicit vote by History teaches us that monetary policy has been its the FOMC. While the tightening may have been most effective when it has been preemptive. The passive in that sense, it was by no means inadvertent. lagging relationship between the Federal Reserve's Members of the FOMC took some comfort in the policy instrument and spending, and, even further upward trend of the real federal funds rate over the removed, inflation, implies that if policy actions are year and the rise in the foreign exchange value of the delayed until prices begin to pick up, they will be too dollar because such additional restraint was viewed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 265 as appropriate given the strength of spending and impulses arising domestically in the United States. In building strains on labor resources. They also recog- the wake of weakness in Asian economies and of nized that in virtually all other respects financial lagged effects of the appreciation of the dollar more markets remained quite accommodative and, indeed, generally, the dollar prices of our non-oil imports are judging by the rise in equity prices, were providing likely to decline further in the months ahead. These additional impetus to domestic spending. lower import prices are apparently already making domestic producers hesitant to raise their own prices for fear of losing market share, further contributing to THE OUTLOOK TOR 1998 the restraint on overall prices. Lesser demands for raw materials on the part of Asian economies as their There can be no doubt that domestic demand retained activity slows should help to keep world commodity considerable momentum at the outset of this year. prices denominated in dollars in check. Import and Production and employment have been on a strong commodity prices, however, will restrain U.S. inflauptrend in recent months. Confident households, tion only as long as they continue to fall, or to rise at enjoying gains in income and wealth and benefiting a slower rate than the pace of overall domestic prodfrom the reductions in intermediate- and longer-term uct prices. interest rates to date, should continue to increase their The key question going forward is whether the spending. Firms should find financing available on restraint building from the turmoil in Asia will relatively attractive terms to fund profitable opportu- be sufficient to check inflationary tendencies that nities to enhance efficiency by investing in new capi- might otherwise result from the strength of domestic tal equipment. By itself, this strength in spending spending and tightening labor markets. The depth of would seem to presage intensifying pressures in labor the adjustment abroad will depend on the extent of markets and on prices. Yet, the outlook for total weakness in the financial sectors of Asian economies spending on goods and services produced in the and the speed with which structural inefficiencies in United States is less assured of late because of storm the financial and nonfinancial sectors of those clouds massing over the Western Pacific and heading economies are corrected. If, as we suspect, the our way. restraint coming from Asia is sufficient to bring the This is not the place to examine in detail what demand for American labor back into line with the triggered the initial problems in Asian financial mar- growth of the working-age population desirous of kets and why the subsequent deterioration has been working, labor markets will remain unusually tight, so extreme. I covered that subject recently before but any intensification of inflation should be delayed, several committees of the Congress. Rather, I shall very gradual, and readily reversible. However, we confine my discussion this morning to the likely cannot rule out two other, more worrisome possibiliconsequences of the Asian crisis for demand and ties. On the one hand, should the momentum to inflation in the United States. domestic spending not be offset significantly by With the crisis curtailing the financing available in Asian or other developments, the U.S. economy foreign currencies, many Asian economies have had would be on a track along which spending could no choice but to cut back their imports sharply. press too strongly against available resources to be Disruptions to their financial systems and economies consistent with contained inflation. On the other, we more generally will further damp demands for our also need to be alert to the possibility that the forces exports of goods and services. American exports from Asia might damp activity and prices by more should be held down as well by the appreciation of than is desirable by exerting a particularly forceful the dollar, which will make the prices of competing drag on the volume of net exports and the prices of goods produced abroad more attractive, just as imports. foreign-produced goods will be relatively more When confronted at the beginning of this month attractive to buyers here at home. As a result, we can with these, for the moment, finely balanced, though expect a worsening net export position to exert a powerful forces, the members of the Federal Open discernible drag on total output in the United States. Market Committee decided that monetary policy For a time, such restraint might be reinforced should most appropriately be kept on hold. With the by a reduced willingness of U.S. firms to accu- continuation of a remarkable seven-year expansion at mulate inventories as they foresee weaker demand stake and so little precedent to go by, the range of ahead. our intelligence gathering in the weeks ahead must The forces of Asian restraint could well be pro- be wide and especially inclusive of international viding another, more direct offset to inflationary developments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

266 Federal Reserve Bulletin • April 1998 THE FORECASTS OF THE GOVERNORS OF THE debt should come in around the middle portion of its FEDERAL RESERVE BOARD AND THE range. PRESIDENTS OF THE FEDERAL RESERVE BANKS In the first part of the 1990s, money growth diverged from historical relationships with income In these circumstances, the forecasts of the governors and interest rates, in part as savers diversified into of the Federal Reserve Board and presidents of the bond and stock mutual funds, which had become Federal Reserve Banks for the performance of the more readily available and whose returns were con- U.S economy over this year are more tentative than siderably more attractive than those on deposits. This usual. Based on information available through the anomalous behavior of velocity severely set back first week of February, monetary policymakers were most analysts' confidence in the usefulness of M2 as generally of the view that moderate economic growth an indicator of economic developments. In recent is likely in store. The growth rate of real GDP is most years, there have been tentative signs that the hiscommonly seen as between 2 percent and 2% percent torical relationship linking the velocity of M2— over the four quarters of 1998. Given the strong measured as the ratio of nominal GDP to the money performance of real GDP, these projections envisage stock—to the cost of holding M2 assets was reassertthe unemployment rate remaining in the low range of ing itself. However, a persistent residual upward drift the past half year. Inflation, as measured by the in velocity over the past few years and its apparent fourth-quarter percentage change in the consumer cessation very recently underscores our ongoing price index, is expected to be 13A percent to 2lA per- uncertainty about the stability of this relationship. cent in 1998—near the low rate recorded in 1997. The FOMC will continue to observe the evolution of This outlook embodies the expectation that the effects the monetary and credit aggregates carefully, integratof continuing tightness in labor markets will be ing information about these variables with a wide largely offset by technical adjustments shaving a variety of other information in determining its policy couple tenths from the published CPI, healthy pro- stance. ductivity growth, flat or declining import prices, and little pressure in commodity markets. But the policymakers' forecasts also reflect their determination to UNCERTAINTY ABOUT THE OUTLOOK hold the line on inflation. With the current situation reflecting a balance of strong countervailing forces, events in the months ahead are not likely to unfold smoothly. In that THE RANGES FOR THE DEBT AND MONETARY regard, I would like to flag a few areas of concern AGGREGATES about the economy beyond those mentioned already regarding Asian developments. The FOMC affirmed the provisional ranges for the Without doubt, lenders have provided important monetary aggregates in 1998 that it had selected last support to spending in the past few years by their July, which, once again, encompass the growth rates willingness to transact at historically small margins associated with conditions of approximate price sta- and in large volumes. Equity investors have contribbility, provided that these aggregates act in accord uted as well by apparently pricing in the expectation with their pre-1990s historical relationships with of substantial earnings gains and requiring modest nominal income and interest rates. These ranges are compensation for the risk that those expectations identical to those that had prevailed for 1997— could be mistaken. Approaching the eighth year of 1 percent to 5 percent for M2 and 2 percent to the economic expansion, this is understandable in an 6 percent for M3. The FOMC also reaffirmed its economic environment that, contrary to historical range of 3 percent to 7 percent for the debt of the experience, has become increasingly benign. Busidomestic nonfinancial sectors for this year. I should nesses have been meeting obligations readily and caution, though, that the expectations of the gover- generating high profits, putting them in outstanding nors and Reserve Bank presidents for the expansion financial health. of nominal GDP in 1998 suggest that growth of M2 But we must be concerned about becoming too in the upper half of its benchmark range is a distinct complacent about evaluating repayment risks. All too possibility this year. Given the continuing strength of often at this stage of the business cycle, the loans that bank credit, M3 might even be above its range as banks extend later make up a disproportionate share depositories use liabilities in this aggregate to fund of total nonperforming loans. In addition, quite possiloan growth and securities acquisitions. Nonfinancial bly, twelve or eighteen months hence, some of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 267 securities purchased on the market could be looked count on any string of good fortune to continue upon with some regret by investors. As one of the indefinitely. At the same time, though, it is also nation's bank supervisors, the Federal Reserve will instructive to remember the words of an old sage that make every effort to encourage banks to apply sound "luck is the residue of design." He meant that to underwriting standards in their lending. Prudent lend- some degree we can deliberately put ourselves in ers should consider a wide range of economic situa- position to experience good fortune and be better tions in evaluating credit; to do otherwise would risk prepared when misfortune strikes. For example, the contributing to potentially disruptive financial prob- 1970s were marked by two major oil-price shocks lems down the road. and a significant depreciation in the exchange value A second area of concern involves our nation's of the dollar. But those misfortunes were, in part, the continuing role in the new high tech international result of allowing imbalances to build over the decade financial system. By joining with our major trading as policymakers lost hold of the anchor provided by partners and international financial institutions in price stability. Some of what we now see helping rein helping to stabilize the economies of Asia and pro- in inflation pressures is more likely to occur in an moting needed structural changes, we are also environment of stable prices and price expectations encouraging the continued expansion of world trade that thwarts producers from indiscriminately passing and global economic and financial stability on which on higher costs, puts a premium on productivity the ongoing increase of our own standards of living enhancement, and more effectively rewards investdepends. If we were to cede our role as a world ment in physical and human capital. leader, or backslide into protectionist policies, we Simply put, while the pursuit of price stability does would threaten the source of much of our own sus- not rule out misfortune, it lowers its probability. If tained economic growth. firms are convinced that the general price level will A third risk is complacency about inflation pros- remain stable, they will reserve increases in their pects. The combination and interaction of significant sales prices of goods and services as a last resort, for increases in productivity-improving technologies, fear that such increases could mean loss of market sharp declines in budget deficits, and disciplined share. Similarly, if households are convinced of price monetary policy has damped product price changes, stability, they will not see variations in relative prices bringing them to near stability. While part of this as reasons to change their long-run inflation expectaresult owes to good policy, part is the product of the tions. Thus, continuing to make progress toward this fortuitous emergence of new technologies and of legislated objective will make future supply shocks some favorable price developments in imported less likely and our nation's economy less vulnerable goods. However, as history counsels, it is unwise to to those that occur. • Chairman Greenspan presented identical testimony before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, February 25, 1998. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

268 Announcements MEETING OF THE CONSUMER ADVISORY PUBLICATION BY THE BASLE COMMITTEE COUNCIL OF A PAPER ON INTERNAL CONTROL SYSTEMS The Federal Reserve Board announced on Febru- The Basle Committee on Banking Supervision has ary 26, 1998, that the Consumer Advisory Council issued a paper entitled Framework for the Evaluation would meet on Thursday, March 19 in a meeting of Internal Control Systems as part of its ongoing open to the public. The council's function is to advise work to improve risk-management standards in the Board on the exercise of the Board's responsibili- banks. ties under the Consumer Credit Protection Act and on The paper describes elements that are essential to a other matters on which the Board seeks its advice. sound internal control system and lists fourteen principles for use by supervisory authorities when evaluating banks' internal controls. The internal control ADJUSTMENT OF THE AMOUNT OF MORTGAGE framework described in the paper is in the context of LOANS THAT TRIGGERS ADDITIONAL international banking organizations, and it is consis- DISCLOSURE REQUIREMENTS tent with the Committee of Sponsoring Organizations of the Treadway Commission document Internal The Federal Reserve Board on February 6, 1998, Control-Integrated Framework. published its annual adjustment of the dollar amount The paper is being distributed to supervisory that triggers additional disclosure requirements under authorities around the world, to banks, and to other Truth in Lending for mortgage loans that bear fees interested parties. Comments to the Basle Committee above a certain amount. The Board has adjusted the were invited by March 30, 1998. The Basle Commitdollar amount from $424 for 1997 to $435 for 1998. tee's press release and paper may also be obtained The Home Ownership and Equity Protection Act from the Internet (http://www.bis.org) or from the of 1994 bars credit terms such as balloon payments Basle Committee Secretariat at the Bank for Internaand requires additional disclosures when total points tional Settlements. and fees payable by the consumer exceed $400, or 8 percent of the total loan amount, whichever is larger. The Board must adjust this amount each year ISSUANCE FOR PUBLIC COMMENT based on the annual percentage change in the con- OF DOCUMENTS ON THE SUPERVISION sumer price index in effect on June 1. OF FINANCIAL CONGLOMERATES BY THE BASLE COMMITTEE PROPOSED ACTIONS The Basle Committee on Banking Supervision has issued for public comment documents on the supervi- The Federal Reserve Board on February 19, 1998, sion of financial conglomerates that have been prepublished for comment proposed amendments to its pared by the Joint Forum on Financial Conglomer- Regulation C (Home Mortgage Disclosure). Com- ates. Comments are requested by July 31, 1998, and ments were requested by April 27. The proposed should be directed to the Basle Committee at FAX: amendments would modify the Loan Application 011-41-61-280-9100. Register to prepare for the Year 2000 data systems The Joint Forum prepared the documents along conversion. with the International Association of Securities Com- The Federal Reserve Board on February 5, 1998, missions and the International Association of Insurrequested additional comments on possible stream- ance Advisors, and the documents are accessible on lining and reform of the Truth in Lending Act and the Internet at the Bank for International Settlements' the Real Estate Settlement Procedures Act for Web site (http://www.bis.org). home-secured loans. Comments were requested by The emergence of financial conglomerates and the March 9. blurring of distinctions among the activities of firms Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

269 in the banking, securities, and insurance sectors have reports, and it takes account of deposit data from call raised important supervisory issues that are addressed reports for banks and thrift institutions that are not in these documents. The documents include discus- weekly or quarterly deposit reporters. These revisions sion of such topics as capital adequacy and sound, to deposit data start in 1994. The benchmark also prudential management principles and describe pos- incorporates historical data for a number of money sible frameworks for facilitating the exchange of market mutual funds that began reporting for the first information and for enhancing cooperation among time during 1997, raising the level of M3 over the supervisors. years by amounts that cumulate to $18 billion by The documents, which are in the form of working mid-1997. papers, are being distributed to supervisory agencies Seasonal factors for the monetary aggregates have and industry representatives in each sector world- been revised, using the benchmarked data through wide. Input from industry and supervisory sources December 1997. As in the past few years, the X-ll will play an important role in the ongoing work of the ARIMA procedure was used to derive monthly sea- Joint Forum as it addresses supervisory issues related sonal factors. Overall, the revisions due to seasonal to financial conglomerates. factors slightly lowered the growth rates of Ml and M3 in the first half of 1997 and raised the growth rates of M3 in the second half of the year. REVISIONS TO THE MONEY STOCK DATA Completed historical data are available in printed form from the Money and Reserves Projection Sec- Measures of the money stock were revised in Febru- tion, Mail Stop 72, Board of Governors of the Fedary of this year to incorporate the results of the eral Reserve System, Washington, D.C. 20551; or annual benchmark and seasonal factor review. Data phone (202) 452-3062. Historical data for the monein tables 1.10 and 1.21 in the statistical appendix to tary aggregates and their components are available the Bulletin reflect these changes beginning with this each week in the Board's weekly H.6 statistical issue. release on its Web site (http://www.bog.frb.fed.us) The revisions had no effect on the annual growth under Domestic and International Research, Statisrates of M2 and M3 over 1997, but they raised the tics: Releases and historical data and also from annual growth rate of Ml by 0.1 percentage point the Economic Bulletin Board of the U.S. Department over the past year. of Commerce. Call (202) 482-1986 or toll-free The benchmark incorporates minor revisions to (800) 782-8872 for information on how to access the data reported on the weekly and quarterly deposit Commerce Department bulletin board. 1. Monthly seasonal factors used to construct Ml, January 1997-March 1999 Other checkable deposits' Nonbank travelers Year and month Currency Demand deposits checks Total At banks 1997—January .9963 .9636 1.0096 1.0139 1.0219 February .9945 .9645 .9771 .9946 1.0013 March .9980 .9778 .9841 1.0015 1.0029 April .9994 .9820 1.0005 1.0213 1.0207 May .0001 .9915 .9795 .9913 .9892 June .0009 1.0261 .9977 .9981 .9951 July .0018 1.0589 1.0025 .9931 .9891 August .0017 1.0549 .9994 .9906 .9884 September .9966 1.0322 .9975 .9950 .9936 October .9975 1.0040 .9978 .9925 .9907 November .0013 .9770 1.0134 .9980 .9964 December .0081 .9658 1.0400 1.0101 1.0112 1998—January .9973 .9655 1.0090 1.0134 1.0213 February .9951 .9672 .9773 .9945 1.0012 March .9979 .9782 .9851 1.0017 1.0029 April .0000 .9816 1.0004 1.0214 1.0207 May .0012 .9910 .9801 .9915 .9893 June .0002 1.0258 .9984 .9983 .9951 July .0032 1.0577 1.0022 .9929 .9890 August .0013 1.0529 1.0000 .9907 .9885 September .9971 1.0310 .9974 .9948 .9935 October .9982 1.0044 .9968 .9927 .9911 November 0013 .9774 1.0132 .9980 .9964 December .0086 .9661 1.0399 1.0098 1.0110 1999—January .9986 .9665 1.0087 1.0132 1.0211 February .9957 .9689 .9776 .9947 1.0012 March .9979 .9786 .9856 1.0020 1.0030 1. Seasonally adjusted other checkable deposits at thrift institutions are Ijusted. and seasonally adjusted other checkable deposits at commercial banks. Digitizedd efroivre Fd RaAs SthEe Rdi fference between total other checkable deposits, seasonally http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

270 Federal Reserve Bulletin • April 1998 2. Monthly seasonal factors used to construct M2 and M3, January 1997-March 1999 Savings and Small- Large- Money market mutual funds Year and month MMDA denomination denomination RPs Eurodollars deposits' time deposits1 time deposits' InM2 In M3 only .9956 .9990 .9851 1.0051 1.0251 .9952 1.0210 February .9950 1.0003 .9939 1.0074 1.0307 .9975 1.0156 0040 1 0010 .9975 1.0149 1.0187 .9945 1.0118 0045 1 0014 .9930 1.0111 .9929 1.0017 1.0017 .9985 1.0012 1.0027 .9860 .9818 1.0149 1.0057 June .0028 1.0008 .9984 .9868 .9825 1.0205 .9889 July 0023 1 0013 .9979 .9936 .9894 1.0019 .9786 August .0023 1.0002 1.0003 1.0034 .9956 1.0027 .9900 9Q89 .9992 1.0045 .9960 .9857 .9950 .9897 October 9969 9998 1.0147 .9932 .9896 1.0088 .9916 November .9996 .9986 1.0117 .9986 .9988 .9935 .9908 December .9981 .9974 1.0010 1.0042 1.0073 .9717 1.0112 1998—January .9959 .9993 .9850 1.0048 1.0235 .9951 1.0215 .9957 1.0004 .9933 1.0080 1.0336 .9998 1.0159 March 1.0048 1.0006 .9974 1.0160 1.0211 .9957 1.0139 April 1 0049 1 0012 .9933 1.0109 .9927 1.0016 1.0035 .9986 1.0010 1.0024 .9846 .9813 1.0155 1.0071 June 1.0029 1.0006 .9981 .9865 .9826 1.0199 .9891 July 1.0022 1.0011 .9983 .9928 .9887 1.0015 .9782 August 1.0021 1.0002 1.0002 1.0033 .9949 1.0018 .9884 .9985 .9993 1.0046 .9965 .9864 .9928 .9890 October .9964 .9999 1.0153 .9937 .9890 1.0094 .9898 November .9993 .9987 1.0116 .9989 .9977 .9947 .9893 December .9980 .9977 1.0009 1.0043 1.0081 .9719 1.0135 1999—January .9960 .9996 .9849 1.0046 1.0227 .9951 1.0210 February .9961 1.0004 .9930 1.0080 1.0347 1.0001 1.0167 March 1.0052 1.0002 .9972 1.0165 1.0222 .9964 1.0156 1. Seasonal factors are applied to deposits data at both commercial banks and thrift institutions. 3. Weekly seasonal factors used to construct Ml, December 1, 1997-April 5, 1999 Other checkable deposits' Nonbank travelers Week ending Demand deposits checks Total At banks 1997—December 1 1.0025 .9620 .0364 1.0077 1.0081 8 1.0051 .9616 .0208 1.0016 .9961 15 1.0056 .9622 .0297 .9981 .9936 22 1.0125 .9628 .0400 1.0120 1.0160 29 1.0140 .9634 .0566 1.0247 1.0350 1998—January 5 1.0055 .9630 .0883 1.0398 1.0409 12 1.0011 .9611 .0343 1.0174 1.0215 19 .9963 .9592 .0006 1.0078 1.0150 26 .9907 .9573 .9617 .9989 1.0137 February 2 .9910 .9554 .9670 1.0054 1.0187 9 .9975 .9567 .9775 .9964 1.0003 16 .9971 .9580 .9823 .9843 .9905 23 .9935 .9593 .9705 .9897 1.0006 March 2 .9932 .9607 .9838 1.0089 1.0111 9 1.0003 .9662 .9879 1.0014 .9946 16 .9981 .9718 .9921 .9901 .9925 23 .9972 .9774 .9673 .9972 1.0014 30 .9968 .9830 .9895 1.0139 1.0197 April 6 1.0025 .9844 1.0116 1.0177 1.0105 13 1.0033 .9827 1.0213 1.0170 1.0168 20 .9997 .9810 1.0060 1.0394 1.0353 27 .9970 .9793 .9711 1.0155 1.0243 May 4 1.0000 .9798 .9847 1.0108 1.0077 11 1.0041 .9859 .9787 .9955 .9861 18 1.0010 .9920 .9851 .9874 .9828 25 1.0003 .9980 .9594 .9803 .9808 June 1 .9972 1.0041 .9969 .9920 .9985 8 1.0028 1.0138 1.0037 .9960 .9876 15 1.0010 1.0241 1.0097 .9970 .9896 22 .9991 1.0344 .9815 .9954 .9965 29 .9979 1.0446 .9939 1.0054 1.0072 July 6 1.0076 1.0518 .0334 1.0004 .9899 13 1.0056 1.0567 1.0155 .9876 .9823 20 1.0024 1.0616 .9941 .9884 .9860 27 .9995 1.0664 .9690 .9905 .9935 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 271 3. Weekly seasonal factors used to construct Ml, December 1, 1997-April 5, 1999—Continued Other checkable deposits' Nonbank travelers Week ending Currency Demand deposits checks Total At banks 998—August 3 1.0013 1.0700 1.0040 1.0032 .9972 1.0061 1.0664 1.0084 .9880 .9822 17 ... . 1.0021 1.0628 1.0147 .9829 .9811 24 .9981 1.0591 .9894 .9848 .9866 31 .9977 1.0555 .9859 1.0019 1.0001 September 7 1.0027 1.0497 1.0073 .9953 .9895 14 . .9992 1.0430 1.0155 .9914 .9884 21 .9954 1.0364 .9868 .9944 .9949 28 .9926 1.0297 .9774 .9957 1.0008 October 5 .9980 1.0224 1.0073 1.0040 .9946 12 1.0019 1.0142 .9968 .9880 .9784 19 .9980 1.0061 1.0015 .9896 .9881 26 .9953 .9979 .9771 .9841 .9913 November 2 .9956 .9897 1.0071 1.0046 1.0093 9 1.0029 .9831 .9993 .9976 .9892 16 1.0014 .9765 .0188 .9932 .9921 24 .9994 .9698 .0034 .9931 .9972 30 1.0028 .9632 .0329 1.0062 1.0034 December 7 1.0052 .9617 .0137 1.0045 .9934 14 1.0059 .9623 .0303 .9974 .9942 21 . 1.0105 .9629 .0441 1.0082 1.0140 28 1.0142 .9636 .0549 1.0186 1.0304 999—January 4 1.0084 .9635 .0789 1.0337 1.0393 11 1.0032 .9616 .0345 1.0217 1.0210 18 .9987 .9598 .0088 1.0126 1.0155 25 .9935 .9580 .9723 1.0015 1.0161 February 1 .9913 .9562 .9741 1.0039 1.0213 8 .9973 .9570 .9801 1.0015 ] .0034 15 .9977 .9584 .9804 .9869 .9917 22 .9947 .9597 .9686 .9882 .9988 March 1 .9937 .9611 .9824 1.0018 1.0094 8 .9998 .9659 .9917 1.0021 .9949 15 .9987 .9713 .9936 .9952 .9934 22 .9975 .9768 .9696 .9976 1.0018 29 .9969 .9823 .9818 1.0093 1.0185 April 5 1.0013 .9844 1.0065 1.0149 1.0118 1. Seasonally adjusted other checkable deposits at thrift institutions are adjusted, and seasonally adjusted other checkable deposits at commercial banks. derived as the difference between total other checkable deposits, seasonally 4. Weekly seasonal factors used to construct M2 and M3, December 1, 1997-April 5, 1999 Savings and Small- Large- Money market mutual funds Week ending MMDA denomination denomination RPs Eurodollars depositsJ time deposits' time deposits' lnM2 In M3 only 1997—December 1 .9918 .9983 1.0093 1.0022 1.0051 .9865 1.0063 8 1.0121 .9982 1.0085 1.0051 .0048 .9784 .9990 15 1 0059 9974 1.0071 10096 .0222 .9795 1.0088 22 .9937 .9968 1.0010 1.0065 .0085 .9665 1.0110 29 .9802 .9969 .9915 1.0005 .0060 .9622 1.0257 [998—January 5 1.0032 .9988 .9816 .9884 .9653 .9648 1.0156 12 1.0055 .9994 .9857 1.0067 .0260 .9883 1.0190 19 .9989 .9995 .9855 1.0099 .0384 .9996 .0253 26 .9837 .9993 .9856 1.0085 .0480 1.0079 .0271 February 2 .9841 .9998 .9857 1.0065 1.0223 1.0106 .0177 9 1.0018 1.0004 .9907 1.0083 1.0305 1.0076 .0108 16 1.0006 .0005 .9937 1.0069 1.0319 1.0046 .0141 23 .9899 .0004 .9945 1.0077 1.0420 .9921 .0195 March 2 .9929 .0006 .9975 1.0099 1.0332 .9887 .0201 9 1.0137 .0007 .9999 1.0168 1.0330 .9873 .0100 16 1.0124 .0005 .9987 1.0181 1.0260 .9950 .0096 23 1.0015 .0003 .9984 1.0174 1.0238 1.0008 .0137 30 .9930 .0008 .9938 1.0131 1.0020 1.0016 .0214 April 6 1.0184 .0016 .9903 1.0175 .9971 .9972 .0096 13 . . . . 1.0228 .0013 .9923 1.0238 1.0040 .9980 .9972 20 1.0034 .0012 .9920 1.0154 .9910 1.0013 .9947 27 .9817 .0009 .9959 .9992 .9862 1.0060 1.0109 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

272 Federal Reserve Bulletin • April 1998 4. Weekly seasonal factors used to construct M2 and M3, December 1, 1997-April 5, 1999—Continued Savings and Small- Large- Money market mutual funds Week ending MMDA denomination denomination RPs Eurodollars deposits' time deposits' time deposits' InM2 In M3 only 1998—May 4 .9939 1.0012 .9984 .9842 .9767 1.0097 1.0096 11 1.0027 1.0012 1.0024 .9829 .9821 1.0130 1.0000 18 1.0002 1.0010 1.0008 .9832 .9838 1.0149 1.0031 25 .9974 1.0009 1.0039 .9874 .9801 1.0155 1.0136 June 1 .9966 1.0006 1.0051 .9852 .9816 1.0232 1.0107 8 1.0187 1.0009 1.0021 .9888 .9857 1.0228 .9953 15 1.0106 1.0006 .9996 .9902 .9868 1.0249 .9893 22 .9962 1.0002 .9967 .9858 .9792 1.0226 .9857 29 ............ .9861 1.0007 .9937 .9816 .9784 1.0109 .9851 July 6 1.0105 1.0018 .9925 .9853 .9861 1.0076 .9762 13 1.0084 1.0014 .9970 .9944 .9954 .9994 .9724 20 1.0003 1.0011 1.0007 .9962 .9911 .9984 .9739 27 .9921 1.0005 1.0009 .9952 .9902 1.0022 .9838 August 3 1.0003 1.0008 1.0005 .9912 .9743 1.0000 .9893 10 1.0120 1.0007 .9986 .9999 .9915 1.0059 .9837 17 1.0067 1.0004 .9982 1.0055 .9955 1.0067 .9831 24 .9975 .9999 .0023 1.0077 1.0069 .9986 .9886 31 .9931 .9994 .0017 1.0054 .9946 .9970 .9978 September 7 1.0141 .9995 .0017 1.0023 .9874 .9911 .9854 14 1.0102 .9993 .0050 1.0019 .9963 .9897 .9832 21 .9918 .9990 .0054 .9952 .9897 .9929 .9875 28 .9773 .9991 .0047 .9895 .9753 .9963 .9991 October 5 1.0007 1.0009 1.0105 .9869 .9754 .9968 .9920 12 1.0072 1.0010 1.0179 .9948 .9909 1.0040 .9914 19 .9992 .9997 1.0144 .9954 .9933 1.0129 .9839 26 .9843 .9990 1.0168 .9953 .9894 1.0180 .9911 November 2 .9900 .9989 1.0153 .9942 .9931 1.0125 .9918 9 1.0096 .9989 .0140 .9948 .9929 1.0043 .9820 16 1.0049 .9988 .0112 .9967 .9966 .9969 .9829 23 .9918 .9986 .0103 1.0044 1.0030 .9894 .9891 30 .9938 .9986 .0099 1.0008 .9995 .9833 1.0027 December 7 1.0128 .9984 .0083 1.0079 1.0072 .9793 1.0081 14 1.0037 .9978 .0078 1.0088 1.0289 .9760 1.0112 21 .9924 .9972 .0019 1.0055 1.0080 .9675 1.0122 28 .9818 .9973 .9936 1.0007 1.0029 .9647 1.0204 1999—January 4 1.0012 .9986 .9825 .9909 .9744 .9725 1.0192 11 1.0066 .9996 .9858 1.0043 1.0144 .9891 1.0194 18 1.0008 .9997 .9857 1.0093 1.0363 .9963 1.0232 25 .9877 .9996 .9847 1.0074 1.0425 1.0020 1.0249 February 1 .9845 .9999 .9849 1.0053 1.0254 1.0077 1.0171 8 1.0010 1.0005 .9894 1.0076 1.0321 1.0050 1.0091 15 1.0016 1.0005 .9929 1.0073 1.0340 1.0056 1.0146 22 .9910 1.0003 .9946 1.0077 1.0412 .9953 1.0194 March 1 .9920 1.0002 .9966 1.0101 1.0324 .9924 1.0246 8 1.0118 1.0007 .9993 1.0148 1.0340 .9915 1.0127 15 1.0099 1.0005 .9991 1.0176 1.0293 .9970 1.0141 22 1.0009 .9998 .9983 1.0188 1.0271 .9993 1.0151 29 .9963 .9999 .9946 1.0171 1.0036 1.0000 1.0214 April 5 1.0189 1.0002 .9897 1.0113 .9994 .9915 1.0076 1. Seasonal factors are applied to deposits data at both commercial banks and thrift institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

273 Minutes of the Federal Open Market Committee Meeting Held on December 16, 1997 A meeting of the Federal Open Market Committee Messrs. Alexander, Hooper, and Ms. Johnson, was held in the offices of the Board of Governors of Associate Directors, Division of International Finance, Board of Governors the Federal Reserve System in Washington, D.C., on Wednesday, December 16, 1997, at 9:00 a.m. Ms. Low, Open Market Secretariat Assistant, Division of Monetary Affairs, Board of Present: Governors Mr. Greenspan, Chairman Mr. McDonough, Vice Chairman Messrs. Connolly and Rives, First Vice Presidents, Mr. Broaddus Federal Reserve Banks of Boston and St. Louis respectively Mr. Ferguson Mr. Gramlich Mr. Guynn Mses. Browne, Krieger, Messrs. Dewald, Hakkio, Mr. Kelley Lang, and Rosenblum, Senior Vice Presidents, Federal Reserve Banks of Boston, New York, Mr. Moskow St. Louis, Kansas City, Philadelphia, and Dallas Mr. Meyer respectively Mr. Parry Ms. Phillips Ms. Rivlin Mr. Miller, Vice President, Federal Reserve Bank of Minneapolis Messrs. Hoenig, Jordan, and Ms. Minehan, Alternate Members of the Federal Open Market Messrs. Bryan and Evans, Assistant Vice Presidents, Committee Federal Reserve Banks of Cleveland and Chicago respectively Messrs. Boehne, McTeer, and Stern, Presidents of the Federal Reserve Banks of Philadelphia, Dallas, By unanimous vote, the minutes of the meeting of and Minneapolis respectively the Federal Open Market Committee held on November 12, 1997, were approved. Mr. Kohn, Secretary and Economist Mr. Bernard, Deputy Secretary The Manager of the System Open Market Account Mr. Coyne, Assistant Secretary reported on developments in foreign exchange and Mr. Gillum, Assistant Secretary international financial markets in the period since the Mr. Mattingly, General Counsel previous meeting on November 12, 1997. There were Mr. Baxter, Deputy General Counsel Mr. Prell, Economist no open market transactions in foreign currencies for Mr. Truman, Economist System Account during this period, and thus no vote was required of the Committee. Messrs. Beebe, Cecchetti, Eisenbeis, Goodfriend, The Manager also reported on developments in Lindsey, Promisel, Siegman, Slifman, and domestic financial markets and on System open mar- Stockton, Associate Economists ket transactions in government securities and federal Mr. Fisher, Manager, System Open Market Account agency obligations during the period November 12, 1997, through December 15, 1997. By unanimous Mr. Winn, Assistant to the Board, Office of Board vote, the Committee ratified these transactions. Members, Board of Governors The Committee then turned to a discussion of the Mr. Ettin, Deputy Director, Division of Research and economic outlook and the conduct of monetary pol- Statistics, Board of Governors icy over the intermeeting period ahead. The information reviewed at this meeting sug- Messrs. Madigan and Simpson, Associate Directors, Divisions of Monetary Affairs and Research and gested that economic activity had continued to grow Statistics respectively, Board of Governors at a rapid pace in recent months. The further advance Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

274 Federal Reserve Bulletin • April 1998 reflected moderating but still sizable increases in shipments of communications equipment were about business fixed investment and consumer spending unchanged after having posted strong gains earlier in and an upturn in business inventory accumulation. the year. Shipments of nondefense capital goods other Housing demand remained at a high level, and deep- than aircraft and high tech equipment also declined in ening trade deficits provided only a partial offset to October. Spending on nonresidential structures had the strength in domestic spending. Against this back- softened a bit in recent months. ground, employment and production posted further In the housing sector, demand had continued to large gains. Price inflation remained subdued despite display appreciable strength in recent months in assotight labor markets and some pickup in the rate of ciation with relatively moderate mortgage rates and wage increases. very positive consumer assessments of homebuying Nonfarm payroll employment rose sharply further conditions. In October, the latest month for which in October and November. The increases in payrolls data were available, sales of new homes were well were widespread across sectors, and in November maintained, and sales of existing homes rose. Housthey included notably large gains in the service- ing starts increased somewhat in October and producing industries. Manufacturing employment November from the already high level reached earlier also rose considerably further in November, and in the year. aggregate weekly hours of production or nonsuper- After having picked up considerably in September, visory workers registered a particularly large advance the pace of business inventory investment in October in that month. The civilian unemployment rate fell to remained above that recorded earlier in the summer. 4.6 percent in November, its low for the current The rise in stocks at the manufacturing level was at a expansion. somewhat faster pace in October than in September, Industrial production continued to advance at a but the buildup in inventories at the wholesale level, brisk pace in October and November. The November and especially at the retail level, moderated in Octoincrease was widespread across market groups. It ber. On balance, inventories remained at quite low featured particularly strong growth in the production levels in relation to shipments and sales. of durable goods, including a surge in the output of The nominal deficit on U.S. trade in goods and motor vehicles and parts. Partly offsetting the strength services was significantly larger in the third quarter in the manufacturing sector in November was a than in the second. Exports of goods and services decline in mining activity and in utilities output after rose only marginally in the third quarter, as increases two months of robust expansion. The large rise in in machinery, industrial supplies, and service receipts production boosted the rate of utilization of manufac- were nearly offset by sharp declines in exports of turing capacity to its highest level in more than two aircraft and gold. Imports of goods and services rose years. appreciably in the third quarter; the increases were Growth in consumer spending had moderated in in most major trade categories and included strong recent months from a very brisk pace during the further advances in the quantity of oil imports. Ecosummer. Retail sales were unchanged on balance nomic growth in most major foreign industrial counover October and November after having increased tries was relatively vigorous in the third quarter, and rapidly in the third quarter. The flat sales for the two preliminary indicators for the fourth quarter sugmonths reflected some softening in the durable goods gested continued above-trend expansion. However, category, notably at automotive dealers, and rela- growth since midyear appeared to have recovered tively slow growth in the nondurable goods sector. only modestly in Japan from a sharp second-quarter Consumer spending on services appeared to have decline. The ongoing financial turmoil affecting a remained relatively robust in October. According number of Asian economies had led to a significant to recent surveys, consumer sentiment continued at slowdown in economic activity in the region. Availan extraordinarily ebullient level in the context of able data also suggested a favorable economic perfurther strong gains in jobs and incomes, the cumu- formance in major Latin American countries in the lative effect of large increases in household net third quarter. worth, and the ready availability of financing for Consumer price inflation had remained at a low most consumers. level in recent months, reflecting a variety of influ- Available information suggested that business capi- ences including a favorable labor cost environment, tal expenditures had moderated in recent months falling import prices, small increases in energy prices, from the exceptionally strong increases of the second and declining inflation expectations. For the twelve and third quarters. Shipments of office and comput- months ended in November, overall consumer prices ing equipment fell in nominal terms in October, while and consumer prices excluding food and energy items Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 275 increased appreciably less than in the year-earlier yen appeared to reflect rising concerns about the period. At the producer level, prices for finished Japanese economy in the wake of continuing finangoods edged lower in November and the index was cial difficulties in Japan and spillover effects from down somewhat on balance over the past year, re- events elsewhere in Asia. The dollar strengthened flecting declines in the food and energy components. further in this period against most of the other East The rate of increase in average hourly earnings had Asian currencies, notably against the Korean won. picked up in recent months, apparently reflecting the Growth in the broad monetary aggregates picked effects of an increase in the federal minimum wage up to relatively rapid rates in November. Strength in and some bidding up of wages in a tight labor market. currency and a surge in liquid deposits boosted the At its meeting on November 12, 1997, the Com- expansion of M2, while that of M3 was amplified by mittee adopted a directive that called for maintaining a step-up in RP borrowing to help finance more rapid conditions in reserve markets that were consistent growth in bank credit. For the year through Novemwith an unchanged federal funds rate averaging ber, M2 expanded at a rate that was slightly above around 5Vi percent. In the directive the Committee the upper bound of the Committee's annual range and retained a tilt toward a possible firming of reserve M3 at a rate substantially above the upper bound of conditions during the intermeeting period. Such a its range. The increase in total domestic nonfinancial bias was seen as consistent with the members' views debt for the year to date was at a pace somewhat that the risks continued to be skewed toward rising below the middle of the Committee's range. inflation and that the next policy move was more The staff forecast prepared for this meeting suglikely to be in the direction of some finning than gested somewhat greater moderation in economic toward easing. Reserve market conditions associated expansion than had been projected earlier and slightly with this directive were expected to be consistent less pressure on wages and prices. A number of with some moderation in the growth of M2 and M3 factors were expected to contribute to the slowing of over coming months. aggregate demand and reduced pressure on resources. Open market operations throughout the intermeet- These included: a slackening in world economic ing period were directed toward maintaining reserve expansion that, in conjunction with the appreciaconditions consistent with the intended average of tion of the dollar, would substantially restrain U.S. around 5l/i percent for the federal funds rate, and the exports; some moderation of the growth in household average effective rate over the period was close to and business investment; and a diminution in the that rate level. In other domestic financial markets, desired rate of inventory accumulation. short-term interest rates registered small mixed In the Committee's discussion of current and prochanges since the day before the Committee meeting spective economic developments, members comon November 12, 1997, while bond yields fell some- mented on indications that growth in economic activwhat. Share prices in U.S. equity markets recorded ity had remained solid and that inflation had mixed changes over the period. Domestic financial continued to be surprisingly low. While wages markets became somewhat less volatile over the appeared to be increasingly subject to upward presperiod, though further turmoil in a number of foreign sure, productivity had picked up in recent quarters, markets fostered a sense of unease that was reflected and the persisting strength in profits suggested that in relatively wide yield spreads and, on occasion, in unit labor costs were not accelerating noticeably. The trading activity and price movements. Equity markets evidently higher pace of productivity growth was in other countries, notably in Asia, remained volatile. very encouraging, though it was still difficult to In foreign exchange markets, the value of the dol- assess how long this favorable performance might lar rose over the intermeeting period in terms of both last and the extent to which it might ease the price the trade-weighted index of the other G-10 currencies pressures that could emerge if the economic expanand the currencies of a number of Asian countries. sion did not moderate as members anticipated. The dollar's appreciation against the German mark Domestic demand for goods and services had been and other Western European currencies appeared quite strong and was likely to remain reasonably to reflect market perceptions that the prospects for robust. However, the effects of the persisting turmoil monetary tightening had ebbed in those countries in in Asian financial markets were likely to moderate light of the persistence of subdued inflation and indi- the pace of expansion, though the extent of this effect cations that the continuing financial turmoil in Asian was difficult to judge. The ongoing turbulence since and other emerging economies was likely to have a the last Committee meeting, which included further retarding effect on the economies of the industrial noticeable increases in the dollar against the currencountries. The dollar's appreciation relative to the cies of affected countries, likely would have a some- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

276 Federal Reserve Bulletin • April 1998 what greater damping effect on output and prices in rapid increase in the number of large commercial the United States than previously had been antici- building projects, notably office buildings, that were pated. Exports to many Asian countries, and possibly planned or under way in many areas of the country. to other U.S. trading partners whose economies might Even so, the growth of business capital spending was be adversely affected by the spillover effects of devel- expected to slow from the unusually rapid pace of opments in Asia, would be reduced, and declines in recent quarters in response to the projected smaller import prices would ease inflation pressures. How- increases in sales and profits arising from moderating ever, the ultimate extent of the adjustment in Asian economic growth. In addition, business firms were economies remained unknown, and more substantial expected to trim the pace of their inventory accumudownward pressure on the economies of the United lation to keep stocks at desired levels relative to States and its trading partners could not be ruled out. sales. With regard to the prospects for final demand in In their comments on recent developments in labor key sectors, the members noted that the appreciation markets, the members emphasized the very limited of the dollar against a wide range of currencies, along supply of new workers and the extraordinary tightwith the prospective slackening in world economic ness prevailing in markets throughout the nation. expansion associated with the Asian turmoil, could Several reported that the scarcity of available workbe expected to exert a considerable damping effect on ers was limiting the growth of economic activity in U.S. exports over the next several quarters. In addi- some parts of the country and that some employers tion, increased uncertainty about financial asset val- were trying out novel approaches aimed at enticing ues, possibly related in part to further difficulties in people not currently seeking a job to enter the work Asia, could lead to greater caution in spending, while force. While wage increases remained moderate on a substantial decline in equity values, should it occur, balance, larger increases were gradually becoming would have a more pronounced effect by reducing more pervasive as labor markets tightened. Morehousehold wealth and raising the cost of equity capi- over, employers were continuing their efforts to tal. However, a number of members suggested that attract or retain workers that were in particularly consumer spending might hold up relatively well if scarce supply by means of a variety of bonus paythe effects of the Asian crisis on the U.S. economy ments and other incentives that were not included in were not markedly deeper or more prolonged than standard measures of labor compensation. There also currently expected. To date, anecdotal reports indi- were reports of offers of expanded benefits and, in cated only scattered signs of weaker export demand, some instances, the granting of very large wage primarily some slackening in orders for and ship- increases to highly skilled technical personnel. ments of selected commodities such as agricultural In the course of their discussion, many members goods and lumber and wood products, and there were remarked on the absence of inflationary price presfew indications of reduced demand for manufactured sures during a period when economic activity had goods. At the same time, business contacts were risen briskly and labor markets had grown steadily optimistic about holiday sales, tourism was booming tighter. The muted effect of higher labor compensain some parts of the country, and spending for ser- tion on unit labor costs and prices reflected sharp vices had been brisk. In the circumstances, continu- advances in productivity partly associated with the ing gains in wages and employment, the prevailing rapid expansion of the stock of capital; the latter had high levels of confidence, the cumulative effects of been stimulated, most probably, by the desire to very large increases in household wealth in recent enhance efficiency and thus hold down costs. In years, and the intense competition among retailers for addition, the earlier appreciation of the dollar and the the consumer's attention could promote substantial unusually damped increases in the cost of health further growth in consumer expenditures. The same benefits in recent years had helped to limit the rise in factors, along with the favorable cash flow affordabil- compensation. ity of home ownership, were maintaining housing As members had noted at previous meetings, these demand at a relatively high level. favorable influences were likely to erode over time. The outlook for business fixed investment Anecdotal reports indicated that health insurance preremained favorable. In the near term, the low cost of miums were beginning to trend higher, and the dollar capital, the ready availability of finance on attractive would not rise indefinitely. More fundamentally, perterms, and the potential for reducing production costs sistent tightness in labor markets risked a continuing in highly competitive markets were providing strong uptrend in labor compensation increases that, at some support for capital spending. Moreover, shrinking point, could not be fully offset by productivity gains. vacancy rates and rising lease rates were fostering a Under those circumstances, competitive market con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 277 ditions would allow firms to raise prices to compen- money was expected to moderate over coming sate for increases in their costs. However, for some months after a period of robust expansion. The memperiod ahead, developments associated with the tur- bers agreed that the crosscurrents that were generatmoil in Asia along with the partly related apprecia- ing the present uncertainties in the outlook for ecotion of the dollar would tend to intensify import nomic activity and inflation made a flexible approach competition and damp the prices of goods. to monetary policy particularly desirable at this In the Committee's discussion of policy for the juncture. intermeeting period ahead, nearly all the members Views were somewhat more divided with regard to favored a proposal to maintain an unchanged policy the instruction in the directive relating to the possible stance. In their discussion, members emphasized that adjustment of policy during the intermeeting period. price inflation had remained subdued, indeed with A majority of the members indicated a preference for some key price measures indicating declining infla- a shift to a symmetrical directive even though many tion, despite the persistence of robust economic continued to anticipate that the next policy move was growth and high levels of resource use, notably in likely to be in a tightening direction. They noted that labor markets. They expressed concern, however, while the probability of any policy change in the near that multiplying indications of faster wage increases term was very low, uncertainties in the outlook had might presage rising price inflation at some point. increased, and they could not rule out the possibility Weighing against the risks of higher inflation was the that the next change might be in the direction of some financial turmoil that had intensified in Southeast easing if, contrary to current expectations, the turmoil Asia during October and more recently in Korea. The in Asia were to intensify to the extent that it seemed effects of those developments on the U.S. economy likely to exert very substantial effects on the U.S. were quite limited thus far, but the members expected economy. A symmetric directive would position the some damping of economic expansion and price Committee to respond flexibly in either direction increases in the quarters ahead, and they did not rule to unanticipated developments in the period ahead. out a potentially strong impact in the event of an even Other members expressed a slight preference for deeper crisis in Asia or one that spread to other retaining a directive that was tilted toward tightening. countries. Nonetheless, many members commented In their view, such a directive would continue to that, with domestic demand still quite strong and the underscore their concern that, at current and proeconomy possibly producing beyond its potential, spective levels of resource utilization, rising inflation they viewed the risks on balance as pointing to rising was the most serious risk to the economy and that the price inflation and the next policy move as likely Committee remained committed to fostering progress to be in the direction of some tightening. However, toward a stable price environment that in turn would most members agreed that the need for such a policy heighten the prospects for sustained economic expanadjustment did not appear to be imminent and that sion and full employment. prevailing near-term uncertainties warranted a cau- At the conclusion of the Committee's discussion, tious wait-and-see policy posture. One member, while all but one member endorsed a directive that called acknowledging the downside risks to the expansion for maintaining conditions in reserve markets that associated with potential developments in Asia, still were consistent with an unchanged federal funds rate was persuaded that the economy probably would of about 5'/2 percent and that did not include a continue to expand at an unsustainable pace and that presumption about the likely direction of any adjustmonetary policy should be tightened promptly to ment to policy during the intermeeting period. avert a further buildup of pressures in already strained Accordingly, in the context of the Committee's longlabor markets, associated increases in labor costs, and run objectives for price stability and sustainable ecoat some point an inevitable rise in price inflation. nomic growth, and giving careful consideration to Other considerations cited by some members in economic, financial, and monetary developments, the favor of an unchanged policy included the possibility Committee decided that a slightly higher or a slightly that, because a policy tightening move was not lower federal funds rate might be acceptable during expected at this juncture, even a modest firming the intermeeting period. The reserve conditions conaction might well have outsized effects in financial templated at this meeting were expected to be consismarkets, especially the foreign exchange markets. tent with some moderation in the growth of M2 and Current conditions in domestic financial markets M3 over coming months. clearly remained supportive of spending, but it also The Federal Reserve Bank of New York was authowas noted that the real federal funds rate was rela- rized and directed, until instructed otherwise by the tively high and that growth in the broad measures of Committee, to execute transactions in the System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

278 Federal Reserve Bulletin • April 1998 Account in accordance with the following domestic In the implementation of policy for the immediate future, the Committee seeks conditions in reserve markets consispolicy directive: tent with maintaining the federal funds rate at an average of around 5'/2 percent. In the context of the Committee's The information reviewed at this meeting suggests that long-run objectives for price stability and sustainable economic activity continued to grow rapidly in recent economic growth, and giving careful consideration to ecomonths. Nonfarm payroll employment increased sharply in nomic, financial, and monetary developments, a slightly October and November; the civilian unemployment rate higher federal funds rate or a slightly lower federal funds fell to 4.6 percent in November, its low for the current rate might be acceptable in the intermeeting period. The economic expansion. Industrial production continued to contemplated reserve conditions are expected to be consisadvance at a brisk pace in October and November. Retail tent with some moderation in the growth in M2 and M3 sales were unchanged on balance over the two months after over coming months. rising sharply in the third quarter. Housing starts increased slightly further in October and November. Available information suggests on balance that business fixed investment Votes for this action: Messrs. Greenspan, McDonough, will slow from the exceptionally strong increases of the Ferguson, Gramlich, Guynn, Kelley, Meyer, Moskow, second and third quarters. The nominal deficit on U.S. trade Parry, Mses. Phillips and Rivlin. Vote against this action: in goods and services widened significantly in the third Mr. Broaddus. quarter from its rate in the second quarter. Price inflation has remained subdued, despite some increase in the pace of Mr. Broaddus dissented because he continued to advance in wages. believe that a modest tightening of policy would be Short-term interest rates have registered small mixed prudent in light of the apparent persisting strength in changes since the day before the Committee meeting on aggregate demand for goods and services. He recog- November 12, 1997, while bond yields have fallen somenized the case for holding policy steady given recent what. Share prices in U.S. equity markets recorded mixed changes over the period; equity markets in other countries, developments in East Asian economies and financial notably in Asia, have remained volatile. In foreign markets; he believed, however, that a slight firming exchange markets, the value of the dollar has risen over the at this meeting would provide valuable insurance intermeeting period in terms of both the trade-weighted against the risk that demand growth might remain index of the other G-10 countries and the currencies of a above a sustainable trend and require a sharper policy number of Asian countries. response later. He thought further that the potential M2 and M3 grew rapidly in November. For the year dirough November, M2 expanded at a rate slightly above benefits of this insurance outweighed the risk that the upper bound of its range for the year and M3 at a rate such an action would have a significant negative substantially above the upper bound of its range. Total impact on U.S. economic activity. He also believed domestic nonfinancial debt has expanded in recent months that signaling a greater willingness to tolerate modest at a pace somewhat below the middle of its range. policy adjustments in response to emerging devel- The Federal Open Market Committee seeks monetary opments would foster more flexible movements in and financial conditions that will foster price stability and promote sustainable growth in output. In furtherance of longer-term financial markets and specifically enable these objectives, the Committee at its meeting in July longer-term interest rates to play their traditional reaffirmed the ranges it had established in February for role as automatic stabilizers for the economy more growth of M2 and M3 of 1 to 5 percent and 2 to 6 percent effectively. respectively, measured from the fourth quarter of 1996 to the fourth quarter of 1997. The range for growth of total It was agreed that the next meeting of the Comdomestic nonfinancial debt was maintained at 3 to 7 per- mittee would be held on Tuesday-Wednesday, Februcent for the year. For 1998, the Committee agreed on a ary 3-4, 1998. tentative basis to set the same ranges as in 1997 for growth The meeting adjourned at 12:45 p.m. of the monetary aggregates and debt, measured from the fourth quarter of 1997 to the fourth quarter of 1998. The behavior of the monetary aggregates will continue to be evaluated in the light of progress toward price level stability, movements in their velocities, and developments in the Donald L. Kohn economy and financial markets. Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

279 Legal Developments ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT meeting the convenience and needs of the community to be served. FFC and MPC compete directly in the Terre Haute, Orders Issued Under Section 3 of the Bank Holding Indiana, banking market.3 FFC is the largest depository Company Act institution in the banking market, controlling deposits of approximately $872 million, representing 47.4 percent of First Financial Corporation the total deposits in depository institutions in the market Terre Haute, Indiana ("market deposits").4 MPC is the eighth largest depository institution in the market, controlling deposits of approxi- Order Approving the Acquisition of a Bank mately $16.5 million, representing 0.9 percent of market deposits. On consummation of this proposal, FFC would First Financial Corporation ("FFC"), a bank holding com- control deposits of approximately $905 million, representpany within the meaning of the Bank Holding Company ing 48.8 percent of market deposits. Concentration in the Act ("BHC Act"), has requested the Board's approval market, as measured by the Herfindahl-Hirschman Index under section 3 of the BHC Act (12 U.S.C. § 1842) to ("HHI") would increase by 115 points to 3186.5 acquire The Morris Plan Company of Terre Haute, Inc. In evaluating the competitive effects of the proposal in ("MPC"), an insured bank organized as an industrial de- the Terre Haute banking market, the Board has considered velopment and investment company operating in Terre several factors that tend to mitigate the competitive effects Haute, Indiana. of the proposal. On consummation of the proposal, eight Notice of the proposal, affording interested persons an competitors would remain in the market, including two of opportunity to submit comments, has been published the largest bank holding companies based in Indiana. Four (63 Federal Register 228 (1998)). The time for filing of these competitors, not including MPC, would each have comments has expired, and the Board has considered the a market share of more than 5 percent, and the second and proposal and all comments received in light of the factors third largest competitors in the market would have market set forth in section 3 of the BHC Act. shares of 24.4 and 10.7 percent, respectively. Since 1995, FFC is the 14th largest depository institution in Indiana,1 two banks have entered the market, one through the estaband controls eight subsidiary banks with approximately lishment of a de novo branch and one through the acquisi- $1.2 billion in deposits, representing approximately tion of a bank operating only in the Terre Haute banking 1.6 percent of total deposits in commercial banking organi- market. zations in the state ("state deposits").2 MPC is the 185th largest depository institution in Indiana, controlling approximately $33 million in deposits. On consummation of the proposal, FFC would become the 13th largest depository institution in Indiana, controlling deposits of approxi- 3. The Terre Haute banking market consists of Clay and Vigo Counties; Clinton and Helt Townships in Vermillion County; Florida, mately $1.2 billion, representing 1.7 percent of state depos- Raccoon and Jackson Townships in Parke County; and Fairbanks. its. Curry and Jackson Townships in Sullivan County, all in Indiana. 4. Market share data are as of June 30, 1997. These data are based Competitive Considerations on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant The BHC Act prohibits the Board from approving a procompetitors of commercial banks. See Midwest Financial Group, posal under section 3 of the BHC Act if the proposal would 75 Federal Reserve Bulletin 386 (1989); National City Corporation, result in a monopoly or if the effect of the proposal may be 70 Federal Reserve Bulletin 743 (1984). substantially to lessen competition in any relevant market 5. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26.823 (June 29, 1984). a market in which the unless the Board finds that the anticompetitive effects of post-merger HHI is above 1800 is considered highly concentrated. the proposed transaction are clearly outweighed in the The Department of Justice has informed the Board that a bank merger public interest by the probable effect of the transaction in or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Department of Justice has stated that the higher than 1. In this context, depository institutions include commercial banks, normal HHI thresholds for screening bank mergers for anticompetisavings banks, and savings associations. tive effects implicitly recognize the competitive effect of limitedpurpose lenders and other non-depository financial entities. 2. State deposits are as of September 30, 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

280 Federal Reserve Bulletin • April 1998 As in other cases, the Board sought comments from Voting for this action: Vice Chair Rivlin and Governors Kelley, the Department of Justice on the competitive eifects of the Phillips, Meyer, Ferguson, and Gramlich. Absent and not voting: Chairman Greenspan. proposal. The Department of Justice has reviewed the proposal and advised the Board that consummation of JENNIFER J. JOHNSON the proposal would not likely have any significantly ad- Deputy Secretary of the Board verse competitive eifects in the Terre Haute banking market or any other relevant banking market. Indiana United Bancorp Based on all the facts of record, and for the reasons Greensburg, Indiana discussed in this order, the Board concludes that consummation of the proposal is not likely to result in any signifi- Order Approving the Acquisition of a Bank Holding cantly adverse effects on competition or on the concentra- Company tion of banking resources in the Terre Haute banking market or any other relevant banking market. Indiana United Bancorp ("Indiana United"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12U.S.C. Other Factors § 1842) to acquire by merger P.T.C. Bancorp ("FTC"), and thereby indirectly acquire its subsidiary bank, Peoples The BHC Act also requires the Board to consider the Trust Company, Brookville, Indiana. financial and managerial resources and future prospects of Notice of the proposal, affording interested persons the companies and banks involved in the proposal, the an opportunity to submit comments, has been published convenience and needs of the communities to be served, (63 Federal Register 228 (1998)). The time for filing and certain supervisory factors. The Board has reviewed comments has expired, and the Board has considered the these factors in light of the record, including supervisory proposal and all comments received in light of the factors reports of examination assessing the financial and manage- set forth in section 3 of the BHC Act. rial resources of the organizations and the Community Indiana United is the 43d largest commercial banking Reinvestment Act performance records of the institutions organization in Indiana, and controls one subsidiary bank involved, and financial information provided by FFC. with approximately $273 million in deposits, representing Based on all the facts of record, the Board concludes that less than 1 percent of total deposits in commercial banking the financial and managerial resources and the future pros- organizations in the state ("state deposits").1 PTC is the pects of FFC, its subsidiary banks, and MPC are consistent 48th largest commercial banking organization in Indiana, with approval, as are the other supervisory factors the controlling approximately $251 million in deposits. On Board must consider under section 3 of the BHC Act. In consummation of the proposal, Indiana United would beaddition, considerations related to the convenience and come the 27th largest commercial banking organization in needs of the communities to be served are consistent with Indiana, controlling deposits of approximately $524 milapproval of the proposal. lion, representing less than 1 percent of state deposits. Competitive Considerations Conclusion The BHC Act prohibits the Board from approving a proposal submitted under section 3 of the BHC Act if the proposal would result in a monopoly or if the effect of the Based on the foregoing, and in light of all the facts of proposal may be substantially to lessen competition in any record, the Board has determined that the application relevant market unless the Board findst hat the anticompetishould be, and hereby is, approved. The Board's approval tive eifects of the proposed transaction are clearly outis specifically conditioned on compliance by FFC with all weighed in the public interest by the probable effect of the the commitments made in connection with this application. transaction in meeting the convenience and needs of the For the purpose of this action, the commitments and condicommunity to be served. tions relied on by the Board in reaching its decisions are Indiana United and PTC compete directly in the Greensdeemed to be conditions imposed in writing by the Board burg, Indiana, banking market.2 Indiana United is the in connection with its findings and decision and, as such, largest depository institution in the market,3 controlling may be enforced in proceedings under applicable law. deposits of approximately $105 million, representing The acquisition of MPC shall not be consummated be- 42.5 percent of the total deposits in depository institutions fore the fifteenth calendar day following the effective date of this order, or later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of 1. State deposit data are as of June 30, 1997. Chicago, acting pursuant to delegated authority. 2. The Greensburg banking market consists of Adams, Clinton, Fugit, Clay, and Washington townships in Decatur County, Indiana. By order of the Board of Governors, effective Febru- 3. In this context, depository institutions include commercial banks, ary 23, 1998. savings banks, and savings associations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 281 in the market ("market deposits").4 PTC is the fifth largest Other Factors depository institution in the market, controlling deposits of approximately $2 million, representing less than 1 percent The BHC Act also requires the Board to consider the of market deposits. On consummation of the proposal, financial and managerial resources and future prospects of Indiana United would control deposits of approximately the companies and banks involved in the proposal, the $107 million, representing 43.4 percent of market deposits. convenience and needs of the communities to be served, Concentration in the market, as measured by the and certain supervisory factors. The Board has reviewed Herfindahl-Hirschman Index ("HHI"), would increase by these factors in light of the record, including supervisory 74 points to 3627.5 reports of examination assessing the financial and manage- In evaluating the competitive effects of the proposal in rial resources of the organizations and financial informathe Greensburg banking market, the Board has considered tion provided by Indiana United. Based on all the facts of several factors that tend to mitigate the concentration of record, the Board concludes that the financial and managebanking resources in the market. The Greensburg banking rial resources and the future prospects of Indiana United, market is a relatively small rural market in central Indiana PTC, and their respective subsidiary banks are consistent that, upon consummation of the proposal, would continue with approval, as are the other supervisory factors the to be served by four bank holding companies and a thrift Board must consider under section 3 of the BHC Act. In organization, including a large multistate bank holding addition, considerations related to the convenience and company with more than $20 billion of assets. In addition, needs of the communities to be served are consistent with the market appears to be relatively attractive for entry by approval of this proposal. new competitors. Since 1995, two banks and one thrift institution have entered the market by each establishing a Conclusion de novo branch, and the population and deposits per banking office in the market continue to exceed the average for Based on the foregoing, and in light of all the facts of rural Indiana banking markets. record, the Board has determined that the application As in other cases, the Board has sought comments from should be, and hereby is, approved. The Board's approval the Department of Justice and the Federal Deposit Insur- is specifically conditioned on compliance by Indiana ance Corporation ("FDIC") on the competitive effects of United with all the commitments made in connection with the proposal. The Department of Justice has reviewed the this application. For the purpose of this action, the commitproposal and advised the Board that consummation of the ments and conditions relied on by the Board in reaching its proposal would not likely have any significantly adverse decisions are deemed to be conditions imposed in writing competitive effects in the Greensburg banking market or by the Board in connection with its findings and decision any other relevant banking market. The FDIC did not and, as such, may be enforced in proceedings under appliobject to consummation of the proposal or indicate it cable law. would have any significantly adverse competitive effects in The acquisition of PTC shall not be consummated before the Greensburg banking market or any other relevant bankthe thirtieth calendar day following the effective date of ing market. this order, or later than three months after the effective date Based on all the facts of record, and for the reasons of this order, unless such period is extended for good cause discussed in this order, the Board concludes that consum- by the Board or by the Federal Reserve Bank of Chicago, mation of the proposal is not likely to result in any signifi- acting pursuant to delegated authority. cantly adverse effects on competition or on the concentra- By order of the Board of Governors, effective Febrution of banking resources in the Greensburg banking ary 17, 1998. market or any other relevant banking market. Voting for this action: Chairman Greenspan and Governors Kelley, Phillips, Meyer, Ferguson, and Gramlich. Absent and not voting: Vice Chair Rivlin. 4. Market share data are as of June 30, 1997. These data are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institu- JENNIFER J. JOHNSON tions have become, or have the potential to become, significant Deputy Secretary of the Board competitors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). National City Corporation 5. Under the revised Department of Justice Merger Guidelines, 49 Cleveland, Ohio Federal Register 26,823 (June 29, 1984), a market in which the post-merger is above 1800 is considered highly concentrated. The Order Approving the Merger of Bank Holding Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other Companies factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 National City Corporation, Cleveland, Ohio ("National points. The Department of Justice has stated that the higher than City"), a bank holding company within the meaning of the normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited- Bank Holding Company Act ("BHC Act"), has requested purpose lenders and other non-depository financial entities. the Board's approval under section 3 of the BHC Act Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

282 Federal Reserve Bulletin • April 1998 (12 U.S.C. § 1842) to merge with First of America Bank proposed divestitures, National City would remain the third Corporation, Kalamazoo, Michigan ("First of America"), largest depository organization in Indiana, controlling $5.2 and thereby acquire First of America's subsidiary banks. billion in deposits, representing approximately 7.9 percent First of America Bank, N.A., Kalamazoo, Michigan of total deposits in depository institutions in Indiana. ("FOA-Michigan"), and First of America Bank - Illinois, N.A., Bannockburn, Illinois ("FOA-Illinois").1 National Interstate Analysis City also has requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and Section 3(d) of the BHC Act, as amended by Section 101 section 225.24 of the Board's Regulation Y (12 C.F.R. of the Riegle-Neal Interstate Banking and Branching Effi- 225.24) to acquire the nonbanking subsidiaries of First of ciency Act of 1994 ("Riegle-Neal Act"),4 allows the Board America and thereby engage in the nonbanking activities to approve an application by a bank holding company to listed in Appendix A. acquire control of a bank located in a state other than the Notice of the proposal, aifording interested persons an home state of such bank holding company, if certain condiopportunity to submit comments, has been published tions are met. For purposes of the BHC Act, the home state (62 Federal Register 65,428 (1997)). The time for filing of National City is Ohio, and First of America operates in comments has expired, and the Board has considered the Indiana, Illinois, and Michigan.5 All of the conditions for proposal and all comments received in light of the factors an interstate acquisition enumerated in section 3(d) are met set forth in sections 3 and 4 of the BHC Act. in this case.6 In view of all the facts of record, the Board is National City, with total consolidated assets of approxi- permitted to approve the proposal under section 3(d) of the mately $52.7 billion, is the 20th largest commercial bank- BHC Act. ing organization in the United States, controlling approximately 1.1 percent of total banking assets of insured Competitive Considerations commercial banks in the United States ("total banking assets").2 The subsidiary banks of National City operate in The BHC Act prohibits the Board from approving an Indiana, Kentucky, Ohio, and Pennsylvania. National City application under section 3 of the BHC Act if the proposal also engages through other subsidiaries in a number of would result in a monopoly, or if the proposal would permissible nonbanking activities. First of America, with substantially lessen competition in any relevant banking total consolidated assets of approximately $21.7 billion, is market and the Board has not found that the anticompetithe 39th largest commercial banking organization in the tive effects of the proposal are clearly outweighed in the United States, controlling less than 1 percent of total bank- public interest by the probable effect of the proposal in ing assets in the United States. First of America owns two meeting the convenience and needs of the community to be subsidiary banks that operate in Indiana, Illinois, and Mich- served. igan, and engages in a variety of permissible nonbanking National City and First of America compete directly in activities. On consummation of the proposal, and taking the Toledo, Ohio, banking market and in the Indiana bankinto account all proposed divestitures, National City would ing markets of Anderson, Fort Wayne, Gary, Indianapolis, become the 13th largest commercial banking organization Kokomo, and Peru.7 Consummation of the proposal would in the United States, with total consolidated assets of be consistent with the Department of Justice Merger Guideapproximately $74.4 billion, representing approximately 1.5 percent of total banking assets in the United States. As noted, National City and First of America both operate subsidiary banks in Indiana. National City is the third 4. Pub. L. No. 103-328, 108 Stat. 2338 (1994). largest depository organization in Indiana, controlling 5. A bank holding company's home state is that state in which the $4.3 billion in deposits, representing approximately operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the 6.5 percent of total deposits in insured depository institucompany became a bank holding company, whichever is later. tions in the state.3 First of America is the 13th largest 12 U.S.C. § 1841(o)(4)(C). depository organization in Indiana, controlling $1 billion in 6. See 12 U.S.C. §§ 1842(d)(l)(A) and (B) and 1842(d)(2)(A) and deposits, representing approximately 1.5 percent of total (B). National City is adequately capitalized and adequately managed, deposits in insured depository institutions in the state. On as defined by the Riegle-Neal Act. FOA-Illinois has been in existence and continuously operated for at least the minimum period required consummation of the proposal, and taking into account all under Illinois law. See 205 111. Comp. Stat. 10/3.071 and 3.09 (Lexis through 1997 Reg. Sess.). Indiana and Michigan have no minimum age requirement. On consummation of the proposal, National City 1. National City and First of America also have requested approval would control less than 10 percent of the total amount of deposits of of options to purchase up to 19.9 percent of the voting stock of the insured depository institutions in the United States and less than other institution if certain events occur. The options would expire on 30 percent of the total amount of deposits of insured depository consummation of the proposal. institutions in Indiana, Illinois, and Michigan. All other requirements 2. Asset and ranking data are as of September 30, 1997. State of section 3(d) of the BHC Act also would be met on consummation deposit and ranking data are as of June 30, 1997, and, as discussed in of the proposal. the order, take into account National City's commitment to divest 7. National City has entered into a binding contract to sell its only certain deposits. Market data are as of June 30, 1996. branch in the Peru, Indiana, banking market ("Peru banking market") 3. In this context, depository institutions include commercial banks, to an out-of-market banking organization. In this light, concentration savings banks, and savings associations. in this banking market would not increase as a result of the proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 283 lines8 and prior Board precedent as discussed in Appen- 323 points to 1853, and the effect of the proposal on market dix B in all of those banking markets except the Anderson, concentration as measured by the HHI would be relatively Indiana, banking market ("Anderson banking market")-9 small. In addition, some mitigating considerations offset In order to mitigate the potential anticompetitive effects the proposal's limited effect on competition. In addition to of the proposal in the Anderson banking market, National National City, eight commercial bank competitors would City has committed to divest two First of America branches remain in the market after consummation. One large multicontrolling total deposits of approximately $33.9 million.10 state bank holding company competitor would control After accounting for the proposed divestitures, National more than 18 percent of market deposits. The proposal also City would remain the largest depository institution in the would not decrease the number of competitors in the Anderson banking market, controlling deposits of approxi- Anderson banking market because National City has promately $402.6 million, representing approximately posed to divest its branches to an out-of-market commer- 34.3 percent of total deposits controlled by depository cial banking organization. Although measures of the attracinstitutions in the banking market ("market deposits").11 tiveness of the Anderson banking market for entry are Concentration in the market, as measured by the HHI, mixed, the Board notes that there recently has been de novo entry by a banking organization and entry by acquisition would increase 357 points to 2004. by a large multi-state banking organization. In considering the competitive effects of the proposal, the Board has evaluated the competition provided by two As in other cases, the Board sought comments from the savings associations and has concluded that deposits con- Justice Department and the Office of the Comptroller of the trolled by those institutions should be weighted at Currency ("OCC") on the likely competitive effects of this 100 percent.12 In this light, the HHI would increase case. The Justice Department has advised the Board of the Department's view that, in light of the proposed divestitures, consummation of the proposal would not be likely to 8. Under the Department of Justice Merger Guidelines, 49 Federal have a significantly adverse competitive effect in the Register 26,823 (June 29, 1984), a market in which the post-merger Anderson banking market or in any other relevant banking Herfindahl-Hirschman Index ("HHI") is above 1800 is considered market. The OCC did not object to consummation of the highly concentrated. The U.S. Department of Justice ("Justice Departproposal or indicate that the proposal would have any ment") has informed the Board that a bank merger or acquisition significantly adverse competitive effects in any banking generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at market. least 1800 and the merger increases the HHI by more than 200 points. Based on these and all other facts of record, and for the The Justice Department has stated that the higher than normal HHI reasons discussed in this order, the Board concludes that thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders consummation of the proposal would not result in any and other non-depository financial entities. significantly adverse effects on competition or on concen- 9. The Anderson banking market is an area in Indiana that is tration of banking resources in the Anderson banking marapproximated by Madison County except for Greene Township; ket or in any other relevant banking market. Salem Township in Delaware County; Falls Creek Township in Henry County; and Madison Township in Tipton County. 10. National City has committed to execute sales agreements with Other Factors under the BHC Act an out-of-market commercial banking organization prior to consummation of the acquisition of First of America and to complete the The BHC Act also requires the Board, in acting on an divestitures within 180 days of consummation of the acquisition. application, to consider the financial and managerial re- National City also has committed that, in the event it is unsuccessful in completing any divestiture within 180 days of consummation of the sources and future prospects of the companies and banks proposal, including the sale of National City's branch in the Peru involved in a proposal, the convenience and needs of the banking market, National City will transfer the unsold branch(es) to community to be served, and certain other supervisory an independent trustee that is acceptable to the Board and that will be factors. instructed to sell the branches promptly. BankAmerica Corporation, 78 Federal Reserve Bulletin 338 (1992); United New Mexico Financial Corporation, 77 Federal Reserve Bulletin 484 (1991). National A. Financial, Managerial, and Other Supervisory City has further committed that, prior to consummation, it will submit Factors to the Board an executed trust agreement acceptable to the Board stating the terms of these divestitures. The Board has carefully considered the financial and man- 11. Market share data before consummation are based on calculations in which the deposits of thrift institutions are included at agerial resources and future prospects of National City, 50 percent. The Board previously has indicated that thrift institutions First of America, and their respective subsidiary banks, have become, or have the potential to become, significant competitors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 743 (1984). Thus, the Board has regularly included thrift deposits in the calcula- market, the two savings associations maintain 5.9 percent and 6.3 tion of market share on a 50-percent weighted basis. See, e.g., First percent, respectively, of their assets in commercial loans, compared to Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991). the national average for thrifts of 1.7 percent. In addition, informal 12. The Board previously has indicated that, when analyzing the interviews with employees of the savings associations showed that competitive effects of a proposal, it may consider the competitiveness each savings association maintained separate commercial lending of savings associations at a level greater than 50 percent of the savings departments with at least eight commercial lending officers and each associations's deposits if appropriate. See Banknorth Group, Inc., planned to increase its staff. The institutions also offered customers a 75 Federal Reserve Bulletin 703 (1989). In the Anderson banking variety of business products and services. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

284 Federal Reserve Bulletin • April 1998 and other supervisory factors. The Board notes that the businesses. National City also has indicated that the probank holding companies and their subsidiary banks are posed transaction would provide First of America's cuswell capitalized and are expected to remain so after con- tomers with access to specialized products, including a summation of the proposal. The Board also has considered Lifeline checking product for LMI customers and 24-hour other aspects of the financial condition and resources of the telephone banking and bill-paying services. two organizations, the structure of the proposed transac- CRA Performance Examinations. As provided in the tion, the managerial resources of each of the entities and CRA, the Board evaluates the convenience and needs the proposed combined organization, the Board's supervi- factor in light of examinations of the CRA performance sory experience with National City and First of America, records of the relevant institutions by their primary federal and examinations by relevant federal supervisors assessing supervisors. An institution's most recent CRA perforthe financial and managerial resources of the entities. mance evaluation is a particularly important consideration Based on all the facts of record, including relevant reports in the applications process because it represents a detailed, of examinations of the companies and the banks involved on-site evaluation of the institution's overall record of in this proposal, the Board has concluded that consider- performance under the CRA by its primary federal superviations relating to the financial and managerial resources sor.13 and future prospects of National City, First of America, National City's lead bank, National City Bank, Cleveand their respective subsidiaries are consistent with ap- land, Ohio, received an "outstanding" rating from the proval of the proposal, as are the other supervisory factors OCC at its most recent examination, as of December 31, that the Board must consider under section 3 of the BHC 1996 ("1996 Examination"). All of National City's other Act. subsidiary banks also received "outstanding" ratings from their primary federal supervisors at their most recent exam- B. Convenience and Needs Considerations inations for CRA performance. In addition. First of America's subsidiary banks, FOA-Illinois and FOA-Michigan, The Board also has carefully considered the effect of the received "outstanding" ratings from the OCC as of proposal on the convenience and needs of the communities March 31, 1996. to be served in light of all the facts of record, including Lending Record of National City. National City has comments on the effects the proposal would have on the several lending programs designed to assist in meeting the communities to be served by the combined organizations. housing-related credit needs of LMI and minority borrow- The Board received several comments in favor of the ers. For example, National City offers a RIGHT affordable proposal. One community organization commended Na- home mortgage product that provides flexible underwriting tional City's efforts in ascertaining and assisting to meet guidelines to first-time home buyers with limited incomes the credit needs of low- and moderate-income ("LMI") and to those purchasing homes within LMI areas. In 1996, neighborhoods in Pittsburgh, Pennsylvania, after it ac- National City Bank originated 367 loans totalling quired a Pennsylvania bank in 1995. The commenter noted $19.9 million under the program. National City also offers that National City had improved the bank's good record of the "At Home Loan" to provide unsecured small home lending in LMI communities and communities with pre- improvement loans to qualified borrowers with annual dominately African-American residents ("minority com- household incomes of $25,000 or less. munities") and expressed confidence that National City National City also intends to expand the activities of the would continue this trend in the communities served by National City Community Development Corporation First of America. ("NCCDC") to include the communities served by First of The Board also received comments from the Woodstock America's subsidiary banks. NCCDC currently offers the Institute ("Commenter") opposing the proposal and con- CHAMP affordable home mortgage product, which protending that First of America has an inadequate record in vides low interest mortgages to purchasers of homes in the the Chicago area of making housing-related loans in minor- City of Cleveland that have been built or renovated. In ity communities and small business loans in LMI census 1996, National City Bank originated 22 loans totalling tracts. Commenter also challenged First of America's de- $2.4 million under the program. lineated community because it does not include inner city National City actively engages in small business lend- LMI communities in Chicago. ing. National City Bank originated 1,548 small business The Board has long held that consideration of the conve- loans totalling $172.7 million in 1996. Small business nience and needs factor includes a review of the records of lending activities included programs sponsored by federal, the relevant depository institutions under the Community state, and local government agencies. In 1996, National Reinvestment Act (12U.S.C. §2901 et seq.) ("CRA"). National City has indicated that it would implement its CRA policies and programs in communities currently 13. The Statement of the Federal Financial Supervisory Agencies served by First of America. In this light, the Board has Regarding the Community Reinvestment Act ("Agency CRA Stategiven substantial consideration to National City's record. ment") provides that a CRA examination is an important and often In general, the Board notes that National City's subsidiary controlling factor in the consideration of an institution's CRA record banks provide a range of financial services including loans and that reports of these examinations will be given great weight in the applications process. See 54 Federal Register 13,742 and 13,745 for 1-4 family dwellings, affordable housing, and small (1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 285 City Bank originated 16 loans totalling $2.2 million under lected those counties for its delineated community using a programs sponsored by the Small Business Administra- methodology permitted by regulations in effect at the tion.14 In addition, the bank participates in the State of time.16 Examiners concluded that FOA-Illinois's delinea- Ohio Linked Deposit Program ("Linked Deposit Pro- tion was reasonable and did not arbitrarily exclude LMI gram"), which links state treasury deposits to small busi- areas.17 The Board also has considered confidential superness loans. In 1996, National City Bank originated visory information from the OCC regarding Commenter's 15 loans totalling $5 million under the Linked Deposit contentions that FOA-Illinois's delineated community Program. should include all of Chicago. Moreover, the Board notes The Board also has considered National City's record of that National City intends to reevaluate FOA-Illinois's lending to African-American borrowers. For example, delineated communities after consummation of the pro- 1996 data provided under the Home Mortgage Disclosure posal. Act (12U.S.C. §2801 et seq.) ("HMDA") by National Conclusion on Convenience and Needs Considerations. City Bank and National City Mortgage Company, Miamis- The Board has carefully considered all the facts of record, burg, Ohio, for the bank's assessment area indicate that including the public comments received, responses to those National City's percentage of originations to African- comments, and the CRA performance records of the sub- American applicants was higher than that for the aggregate sidiary banks of National City and First of America, includof all HMDA reporters the assessment area. National City ing relevant reports of examination. Based on a review of originated 12.7 percent of its home mortgage purchase the entire record, and for the reasons discussed in this loans to African Americans compared to 11.1 percent for order, the Board has concluded that convenience and needs all lenders in the aggregate. considerations, including the CRA records of performance Moreover, examiners did not find any evidence of pro- of the subsidiary banks of National City and First of hibited discrimination or illegal credit practices at any of America, are consistent with approval. the subsidiary banks of National City or First of America in their most recent CRA performance examinations. In Nonbanking Activities addition, examiners noted that National City's subsidiary banks provided training in fair lending laws and principles A. Activities Approved by Regulation to all applicable employees, and had implemented steps such as a second review program to ensure compliance The Board previously has determined by regulation that with fair lending laws. the proposed lending, trust company, financial and invest- FOA-Illinois's Delineated Communities. Commenter ment advisory, securities brokerage, other transactional, challenged the community delineation used by FOA- credit insurance, and community development activities Illinois in the Chicago area. The reasonableness of an are closely related to banking within the meaning of secinstitution's local delineated community depends on a tion 4(c)(8) of the BHC Act.18 National City proposes to number of factors, including a careful review of the areas conduct these activities in accordance with Regulation Y surrounding the locations of an institution's main office, and relevant Board interpretations and orders. branches and deposit-taking automated teller machines. The review of an institution's delineated community also B. Underwriting and Dealing in Bank-Ineligible requires consideration of whether the institution has arbi- Securities trarily excluded LMI areas, taking into account the institution's size and financial condition. The Board believes that National City also has proposed to acquire First of Ameran assessment of an institution's delineated community can ica Securities, Inc., Kalamazoo, Michigan ("FOA Securibe most effectively considered in an on-site examination by ties"), and merge it with NatCity Investments, Cleveland, the institution's primary federal supervisor. The Board also Ohio ("Company"). FOA Securities currently is engaged, believes that an on-site examination provides a better op- among other things, in underwriting and dealing in, to a portunity to consider whether an institution's delineated limited extent, municipal revenue bonds, 1-4 family community reflects illegal discrimination in light of all the institution's lending activities. At the time of its most recent CRA performance exami- 16. When FOA-Illinois delineated its service communities, a bank nation in March 1996, FOA-Illinois operated 129 branches could use any one of the following methods for delineation: in 29 counties in Illinois, and the bank's delineated com- (1) The existing boundaries, such as those of standard metropolitan munities consisted of those counties.15 FOA-llIinois se- statistical areas or counties in which the bank's office or offices are located, and adjacent areas, if appropriate; (2) The local areas around each office or group of offices where it makes a substantial portion of its loans and all other areas equidis- 14. National City Bank also participates in the City of Cleveland tant from its offices; or Microloan program which offers "start-up" assistance for small busi- (3) Any other reasonable delineation that meets the purpose of the nesses. CRA and does not exclude LMI neighborhoods. See. e.g., 12 C.F.R. 15. FOA-Illinois divided its service communities into five regions: 228.3(b) (1996). Metro-Chicago, Northern, Eastern, Southern and Western. The Metro- 17. Examiners also noted that in 1995. FOA-Illinois originated Chicago and Northern regions include the majority of the counties of 33 percent of its loans in its Metro-Chicago region in LMI areas. the Chicago Metropolitan Statistical Area. 18. See 12 C.F.R. 225.28(b)(l), (5), (6), (7)(i), (8), (11), and (12). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

286 Federal Reserve Bulletin • April 1998 mortgage-related securities, consumer receivable-related effect the transaction would have on such resources.25 The securities, and commercial paper.19 Company engages in Board has reviewed the capitalization of National City and securities-related activities, including underwriting and Company in accordance with the standards set forth in the dealing in, to a limited extent, all types of debt and equity Section 20 Orders and finds the capitalization of each to be securities ("bank-ineligible securities").20 The Board has consistent with approval. The determination of the capitaldetermined—subject to the framework of prudential limita- ization of Company is based on all the facts of record, tions to address the potential for conflicts of interests, including National City's projections of the volume of unsound banking practices, or other adverse effects—that Company's underwriting and dealing activities in bankthe proposed underwriting and dealing activities are so ineligible securities. Based on all the facts of record, the closely related to banking as to be a proper incident thereto Board has concluded that financial and managerial considwithin the meaning of section 4(c)(8) of the BHC Act.21 erations are consistent with approval. National City has committed that Company will conduct The Board also has carefully considered the competitive its bank-ineligible securities underwriting and dealing ac- effects of the proposed acquisition of First of America's tivities subject to the Board's 25 percent revenue limit.22 nonbanking subsidiaries. National City operates nonbank- As a condition of this order, National City is required to ing subsidiaries that compete with certain nonbanking subconduct its bank-ineligible securities activities subject to sidiaries of First of America. In each case, the markets for the Operating Standards for section 20 subsidiaries ("Oper- the nonbanking services are unconcentrated, and there are ating Standards") and the conditions in the Board's orders numerous providers of the services. As a result, consummapermitting National City to engage in limited bank- tion of this proposal would have a de minimis effect on ineligible securities activities through Company.21 competition for these services, and the Board has concluded that the proposal would not result in a significantly C. Other Nonbanking Considerations adverse effect on competition in any relevant market. The Board expects, moreover, that the acquisition of In order to approve this proposal, the Board also must First of America by National City would provide added determine that the proposed activities are a proper incident convenience to First of America customers, to National to banking, that is, that the proposed transaction "can City's customers, and to other members of the public. reasonably be expected to produce benefits to the public ... Consummation of the proposal also is likely to result in that outweigh possible adverse effects, such as undue con- increased operating efficiencies and expanded services to centration of resources, decreased or unfair competition, customers of both National City and First of America. conflicts of interests, or unsound banking practices."24 As Under the framework established in this order and the part of its evaluation of these factors, the Board considers Section 20 Orders, and based on all the facts of record, the the financial and managerial resources of the notificant, its Board concludes that Company's proposed underwriting subsidiaries, and any company to be acquired, and the and dealing activities are not likely to result in significantly adverse effects that would outweigh the public benefits expected in this case. Similarly, the Board finds no evidence that National City's proposed lending, trust company, financial and investment advisory, securities broker- 19. See First of America Corporation, 80 Federal Reserve Bulletin age, other transactional, credit insurance, and community 1120(1994). development activities—conducted under the framework 20. See National City Corporation, 81 Federal Reserve Bulletin 807 established in this order and Regulation Y—would likely (1995); National City Corporation, 80 Federal Reserve Bulletin 346 (1994), (together, "National City Orders"). result in any significantly adverse effects that would out- 21. See Citicorp, 73 Federal Reserve Bulletin 473 (1987), aff'd sub weigh the public benefits of the proposal. Accordingly, the nom. Securities Industry Ass 'n v. Board of Governors of the Federal Board has determined that the performance of the proposed Reserve System, 839 F.2d 47 (2d Cir. 1988), cert, denied, 486 U.S. activities by National City is a proper incident to banking 1059 (1988); as modified by Review of Restrictions on Director, Officer and Employee Interlocks, Cross-Marketing Activities, and the for purposes of section 4(c)(8) of the BHC Act. Purchase and Sale of Financial Assets Between a Section 20 Subsidiary and an Affiliated Bank or Thrift, 61 Federal Register 57,679 Conclusion (1996). and Amendments to Restrictions in the Board's Section 20 Orders, 62 Federal Register 45,295 (1997), (collectively, the "Section 20 Orders"). Based on the foregoing and all the other facts of record, the 22. Compliance with the revenue limitation shall be calculated in Board has determined that the application and notice accordance with the method stated in the Section 20 Orders, as should be, and hereby are, approved subject to all the terms modified by the Order Approving Modifications to the Section and conditions in this order and the Section 20 Orders as 20 Orders, 75 Federal Reserve Bulletin 751 (1989). and 10 Percent modified by the Modification Orders. The Board's ap- Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securi- proval is specifically conditioned on compliance by ties, 61 Federal Register 48,953 (1996), and Revenue Limit on Bank- Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securities, 61 Federal Register 68,750 (1996), (collectively, "Modification Orders"). 25. See 12 C.F.R. 225.26; see also The Fuji Bank, Limited, 23. See 12 C.F.R. 225.200; National City Orders. 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 24. See 12U.S.C. § 1843(c)(8). 73 Federal Reserve Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 287 National City with all the commitments made in connec- (6) First of America Securities, Inc., Kalamazoo, Michition with the proposal, including the divestiture commit- gan, and thereby engage in lending, investment advisory, ments discussed in this order. securities brokerage, and other transactional activities pur- The Board's determination on the nonbanking activities suant to sections 225.28(b)(l), (6), (7i), and (8) of Regulaalso is subject to all the terms and conditions set forth in tion Y (12 C.F.R. 225.28(b)(l), (6), (7i), and (8)), and Regulation Y, including those in sections 225.7 and underwriting and dealing in, to a limited extent, municipal 225.25(c) of Regulation Y (12 C.F.R. 225.7 and 225.25(c)), revenue bonds, 1-4 family mortgage-related securities, and to the Board's authority to require such modification or consumer receivable-related securities, and commercial termination of the activities of a bank holding company or paper. any of its subsidiaries as the Board finds necessary to ensure compliance with, and to prevent evasion of, the Appendix B provisions of the BHC Act and the Board's regulations and orders issued thereunder. The commitments and conditions Banking markets in which consummation of the relied on by the Board in reaching this decision are deemed proposal would not exceed the DOJ Guidelines: to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be (1) Fort Wayne Banking Market: The Fort Wayne banking enforced in proceedings under applicable law. market is approximated by Allen, De Kalb and Whitley The acquisition of First of America's subsidiary banks Counties; Preble, Root, and Union Townships in Adams shall not be consummated before the fifteenth calendar day County; Union and Jefferson Townships in Wells County; following the effective date of this order, and the proposal Jackson and Union Townships in Huntington County; shall not be consummated later than three months after the Noble, Green, and Swan Townships in Noble County, all in effective date of this order, unless such period is extended Indiana, and Carryall Township in Paulding County and for good cause by the Board or by the Federal Reserve Hicksville Township in Defiance County, both in Ohio. Bank of Cleveland, acting pursuant to delegated authority. After consummation of the proposal, National City would By order of the Board of Governors, effective Febru- control less than 1 percent of market deposits and would ary 11, 1998. remain the 20th largest depository institution in the market. The HHI would not increase. Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and (2) Gary-Hammond Banking Market: The Gary-Hammond Governors Kelley, Phillips, Meyer, Ferguson, and Gramlich. banking market is approximated by Lake County; Porter County, except for Pine Township; and New Durham, JENNIFER J. JOHNSON Clinton, Cass, Dewey, and Prairie Townships in La Porte Deputy Secretary of the Board County, all in Indiana. After consummation of the proposal, National City would control approximately 2.9 per- Appendix A cent of market deposits and would remain the tenth largest depository institution in the market. The HHI would not Nonbank subsidiaries of First of America to be increase. acquired by National City: (3) Indianapolis Banking Market: The Indianapolis banking market is approximated by Boone, Hamilton, Hancock, (1) First of America Community Development Corpora- Hendricks, Johnson, Marion, Morgan, and Shelby Countion, Kalamazoo, Michigan, and thereby engage in commu- ties, and Green Township in Madison County, all in Indinity development activities pursuant to section ana. After consummation of the proposal, National City 225.28(b)(12) of Regulation Y (12 C.F.R. 225.28(b)(12)); would control approximately 21.8 percent of market depos- (2) SunAmerica Affordable Housing Partners, Carson City, its and would become the second largest depository institu- Nevada, and engage in thereby engage in community de- tion in the market. The HHI would increase by 133 points velopment activities pursuant to section 225.28(b)(12) of to 1685. Regulation Y (12 C.F.R. 225.28(b)(12)); (4) Kokomo Banking Market: The Kokomo banking market (3) First of America Insurance Company, Kalamazoo, is approximated by Howard County; Prairie and Liberty Michigan, and thereby engage in credit insurance activities Townships in Tipton County; Tipton, Deer Creek, and pursuant to section 225.28(b)(ll) of Regulation Y Jackson Townships in Cass County; and Deer Creek and (12 C.F.R. 225.28(b)(ll); Clay Townships in Miami County, all in Indiana. After (4) First of America Trust Company, Oak Brook, Illinois, consummation of the proposal, National City would conand thereby engage in trust company functions and invest- trol approximately 19.7 percent of market deposits and ment advisory activities pursuant to sections 225.28(b)(5) would remain the third largest depository institution in the and (6) of Regulation Y (12 C.F.R. 225.28(b)(5) and (6)); market. The HHI would increase by 57 points to 2000. (5) New England Trust Company, Providence, Rhode (5) Toledo Banking Market: The Toledo banking market is Island, and thereby engage in trust company functions and approximated by Lucas County, Wood County, excluding investment advisory activities pursuant to sections the City of Fostoria; the eastern half of Swan Creek Town- 225.28(b)(5) and (6) of Regulation Y (12 C.F.R. ship and the southeastern quadrant of Fulton Township in 225.28(b)(5) and (6)); and Fulton County; Clay, Allen, Harris, Benton Townships in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

288 Federal Reserve Bulletin • April 1998 Ottawa County; and Woodfield Township in Sandusky the proposal would not have a significantly adverse effect County, all in Ohio; and Whiteford, Bedford, and Erie on competition in any relevant banking market. Townships in Monroe County, Michigan. After consumma- The Board also has considered the financial and managetion of the proposal, National City would control approxi- rial resources and future prospects of Shore Financial and mately 14.1 percent of market deposits and would become Bank in light of all the facts of record, including supervithe 21st largest depository institution in the market. The sory reports of examination assessing the financial and HH1 would increase by 5 points to 1202. managerial resources of the organization and financial information provided by Shore Financial. The Board notes Shore Financial Corporation that Shore Financial is in satisfactory financial condition Onley, Virginia and would remain so after consummation of the proposal. Reports of examination assessing the managerial resources Order Approving Formation of a Bank Holding of Shore Financial and its subsidiaries indicate this factor Company, Merger of a Savings Association into a Bank, is consistent with approval. Based on all the facts of and Membership in the Federal Reserve System record, the Board concludes that considerations related to the financial and managerial resources and future prospects Shore Financial Corporation ("Shore Financial") has ap- of Shore Financial and Bank are consistent with approval plied under section 3 of the Bank Holding Company Act under the BHC Act. ("BHC Act") (12 U.S.C. § 1842) for the Board's approval to become a bank holding company by acquiring all the Convenience and Needs Considerations voting shares of Shore Bank, Onley, Virginia ("Bank"), a de novo state chartered bank.1 Bank also has applied under The Board has carefully considered the effect of the prosection 9 of the Federal Reserve Act (12 U.S.C. § 321) to posal on the convenience and needs of the community to become a state member bank and to continue to operate be served in light of all the facts of record, including branches in Virginia and Maryland at locations at which comments maintaining that Thrift does not adequately Bank's predecessor currently operates branches.2 serve the credit needs of commercial farmers in its assess- Notice of the proposal, affording interested persons an ment area and requesting the Board to require Bank to opportunity to submit comments, has been published increase its agricultural lending. The Board has long held (62 Federal Register 66,371 (1997)). The time for filing that consideration of the convenience and needs factor comments has expired, and the Board has considered the includes a review of the records of the relevant depository application and all comments received in light of the institutions under the Community Reinvestment Act factors set forth in the BHC Act, the Bank Merger Act, and (12 U.S.C. §2901 el seq.) ("CRA"). As provided in the the Federal Reserve Act. CRA, the Board has evaluated the convenience and needs factor in light of examinations of the CRA performance Shore Financial, with total consolidated assets of approxrecords of the relevant institutions by their primary federal imately $111 million, operates Thrift, which has branches in Virginia and Maryland.3 Shore is the 95th largest in- supervisors. An institution's most recent CRA performance evaluation is a particularly important consideration sured depository institution in Virginia, controlling deposin the application process because it represents a detailed, its of approximately $79 million, representing less than on-site evaluation of the institution's overall record of 1 percent of total deposits in insured depository institutions performance under the CRA by its primary federal superviin the state ("state deposits"), and is the 142d largest sor.5 insured depository institution in Maryland, controlling deposits of approximately $8 million, representing less than Thrift is a small saving association that is primarily 1 percent of Maryland state deposits.4 engaged in residential mortgage lending. Thrift received an As noted, the proposal represents a reorganization of "outstanding" rating from the Office of Thrift Supervision subsidiaries owned by Shore Financial, and Bank would at its most recent CRA performance examination as of continue the current operations of Thrift. Based on all the February 1996 (the "1996 Examination"). Examiners charfacts of record, the Board concludes that consummation of acterized Thrift as having a strong record of lending within its assessment area (approximately 98 percent of its loans), a high loan-to-deposit ratio (92.5 percent), and an excellent dispersion of loans throughout all the communities within its assessment area. The 1996 Examination found Thrift's t. Shore Financial's wholly owned subsidiary federal savings bank, Shore Bank, Onley, Virginia ("Thrift"), would merge with and into overall lending program to be particularly noteworthy be- Bank, with Bank as the surviving institution. Bank has requested the cause its assessment area was one of the poorest areas in Board's approval for the merger under section 18(c) of the Federal Deposit Insurance Act ("FDI Act") (12 U.S.C. § 1828(c)) ("Bank Merger Act") and section 5(d)(3) of the FDI Act (12 U.S.C. § 1815(d)(3)). 5. The Statement of the Federal Financial Supervisory Agencies 2. The locations of the branches are described in the Appendix. Regarding the Community Reinvestment Act provides that a CRA 3. Asset data are as of September 30, 1997, and deposit data are as examination is an important and often controlling factor in the considof June 30, 1996. eration of an institution's CRA record and that reports of these 4. In this context, insured depository institutions include commer- examinations will be given great weight in the applications process. cial banks, savings banks, and savings institutions. See 54 Federal Register 13.742 and 13,745 (1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 289 Virginia in terms of average family income and had re- posal is specifically conditioned on compliance by Shore cently experienced little population increase. The examina- Financial with all the commitments made in connection tion also included a review of selected loan files and found with this application. For purposes of this action, the no evidence of illegal discrimination. commitments and conditions relied on in reaching this Although residential mortgage lending constituted decision are deemed to be conditions imposed in writing Thrift's primary lending activity, examiners also com- by the Board and, as such, may be enforced in proceedings mended Thrift's additional emphasis on small business under applicable law. lending. In 1995, Thrift originated 61 small business loans The proposal shall not be consummated before the fiftotalling approximately $1.7 million. In evaluating the teenth calendar day following the effective date of this commenter's allegations that Thrift has not engaged in order, or later than three months after the effective date of sufficient agricultural lending, the Board notes that the this order, unless such period is extended for good cause by CRA provides banks with substantial flexibility in develop- the Board or by the Federal Reserve Bank of Richmond, ing specific CRA-related policies and programs and does acting pursuant to delegated authority. not require a bank to engage in any particular type of By order of the Board of Governors, effective Februlending. Shore Financial states, moreover, that Thrift had ary 9, 1998. more than $3 million in agricultural loans outstanding as of December 1997, and maintains that the service of two Voting for this action: Vice Chair Rivlin and Governors Kelley, farmers on its eight-member board of directors reflects its Phillips, Meyer, Ferguson, and Gramlich. Absent and not voting: commitment to helping meet the credit needs of all its Chairman Greenspan. communities, including the fanning community. JENNIFER J. JOHNSON The Board has carefully considered the entire record in its review of the convenience and needs factor under the Deputy Secretary of the Board BHC Act. Based on all the facts of record, including information provided by the commenter, the response of Appendix Shore Financial, and the relevant reports of examination, the Board concludes that considerations relating to conve- Branches to Be Established by Shore Bank in Virginia nience and needs, including the CRA performance records 21220 North Bayside Drive, Cheriton of the relevant institutions, are consistent with approval. 6350 Maddox Boulevard, Chincoteague The Board also has considered the other supervisory 4071 Lankford Highway, Exmore factors it is required to consider under section 3 of the BHC Act as well as the factors it is required to consider Branches to Be Established by Shore Bank in Maryland under section 9 of the Federal Reserve Act for Bank to become a member of the Federal Reserve System and to 100 West Main Street, Salisbury operate branches and under other provisions of law.6 The 1503 South Salisbury Boulevard, Salisbury Board finds these factors to be consistent with approval.7 Conclusion public hearing on an application unless the appropriate supervisory authority for the bank to be acquired makes a timely written recommendation of denial. The Board has not received such a recommenda- Based on the foregoing and all the facts of record, the tion from the Office of Thrift Supervision or any state supervisory Board has determined that the applications should be, and authority. In addition, neither the Federal Reserve Act nor the Bank hereby are, approved.8 The Board's approval of the pro- Merger Act requires a public hearing on an application. Under its rules, the Board also may, in its discretion, hold a public hearing or meeting on an application to acquire a bank if a hearing is necessary or appropriate to clarify factual issues related to the applica- 6. Bank is authorized to operate its branches under the laws of tion and to provide an opportunity for testimony, if appropriate. Virginia and Maryland, and under section 9 of the Federal Reserve 12 C.F.R. 225.16(e). The Board has carefully considered the com- Act. See Va. Code Ann. §§ 6.1-39.3 and 6.1-44.3 (Michie 1996); Md. menter's request for a hearing in light of all the facts of record. In the Code Ann., Fin. Inst. § 5-1003 (1996). Board's view, the commenter has had ample opportunity to submit his 7. The Board has reviewed the merger of Bank and Thrift under the views, and has submitted written comments that have been carefully Bank Merger Act and section 5(d)(3) of the FDI Act. With respect to considered by the Board in action on the application. The commentthe specific factors the Board must review under section 5(d)(3), the er's request fails to demonstrate why his written presentation does not record in this case shows that: adequately present his evidence, allegations, or views. The commenter (1) The transaction would not result in the transfer of any federally also fails to indicate the matters that may be presented by others and insured deposits from one federal deposit insurance fund to the why a public meeting or hearing is necessary for the proper presentaother; tion or consideration of their views. After careful review of all the (2) Bank, on consummation of the proposal, will meet all applicable facts of record, moreover, the Board has concluded that commenter capital standards; and disputes the weight that should be accorded to, and the conclusions that the Board should draw from, the facts of record, but does not (3) The proposal would comply with the interstate banking proviidentify disputed issues of fact that are material to the Board's sions of the BHC Act if Thrift were a state bank that Bank was decision. For these reasons, and based on all the facts of record, the applying to acquire directly. See 12 U.S.C. § 1815(d)(3). Board has determined that a public hearing or meeting is not required 8. The commenter has requested that the Board hold a public or warranted in this case. Accordingly, the request for a hearing or hearing on the application to consider the views of other fanners. meeting on the proposal is hereby denied. Section 3(b) of the BHC Act does not require the Board to hold a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

290 Federal Reserve Bulletin • April 1998 Orders Issued Under Section 4 of the Bank Holding nies under section 4 of the BHC Act. North Fork has Company Act committed to conform all of Savings Bank's activities to those permissible under section 4(c)(8) of the BHC Act North Fork Bancorporation, Inc. and Regulation Y.5 Melville, New York Competitive Considerations Order Approving the Acquisition of a Savings Association In order to approve the proposal, the Board also must determine that performance of the proposed activities is a North Fork Bancorporation, Inc., Melville, New York proper incident to banking, that is, that the proposed trans- ("North Fork"), a bank holding company within the mean- action "can reasonably be expected to produce benefits to ing of the Bank Holding Company Act ("BHC Act"), has the public . . . that outweigh possible adverse effects, such requested the Board's approval under section 4(c)(8) of the as undue concentration of resources, decreased or unfair BHC Act (12U.S.C. § 1843(c)(8)) and section 225.24 of competition, conflicts of interests, or unsound banking the Board's Regulation Y (12 C.F.R. 225.24) to acquire all practices."6 As part of its evaluation of these factors, the the voting shares of New York Bancorp, Inc., Douglaston Board has carefully considered the competitive effects of ("Bancorp"), and thereby acquire Home Federal Savings the proposal in light of all the facts of record.7 Bank, Ridgewood ("Savings Bank"), both in New York.1 North Fork and Bancorp compete directly in the Metro- Notice of the proposal, affording interested persons an politan New York-New Jersey banking market ("New opportunity to submit comments, has been published York banking market").8 On consummation of the pro- (62 Federal Register 63,344 (1997)). The time for filing posal, North Fork would become the 15th largest deposicomments has expired, and the Board has considered the tory institution in the market, controlling deposits of approposal and all comments received in light of the factors proximately $6.6 billion, representing approximately set forth in section 4 of the BHC Act. 1.5 percent of total deposits in depository institutions in the North Fork, with total consolidated assets of approxi- market.9 Concentration in the New York banking market, mately $6 billion, operates North Fork Bank, which has as measured by the Herfindahl—Hirschman Index branches in New York.2 North Fork is the 16th largest ("HHI") under the Department of Justice Merger Guidedepository institution in New York, controlling deposits of lines ("DOJ Guidelines") would remain unchanged and approximately $4.4 billion, representing approximately unconcentrated at 627 points.10 In addition, numerous com- 1 percent of total deposits in depository institutions in the state ("state deposits").3 Bancorp is the 35th largest depository institution in New York, controlling deposits of ap- 5. Savings Bank engages in the sale of savings bank life insurance proximately $1.5 billion, representing less than 1 percent ("SBLI") and annuities. North Fork has committed to terminate SBLI of state deposits. On consummation of the proposal, North activities within two years after consummation of the proposal. North Fork would become the 14th largest depository institution Fork Bank would continue to sell annuities pursuant to state law. See Merchants National Corporation, 75 Federal Reserve Bulletin 388 in New York, controlling deposits of approximately (1989). aff'd sub nom. Independent Ins. Agents Ass'n v. Board of $6 billion, representing approximately 1.5 percent of state Governors, 890 F.2d 1275 (7th Cir. 1989), cert, denied. 111 S. Ct. 44 deposits. (1990). 6. 12 U.S.C. § 1843(c)(8). The Board previously has determined by regulation that 7. See First Hawaiian. Inc., 79 Federal Resen<e Bulletin 966, the operation of a savings association by a bank holding 966-68 (1993). company is closely related to banking for purposes of 8. The New York banking market includes New York City; Nassau, section 4(c)(8) of the BHC Act.4 In making this determina- Orange, Putnam. Rockland, Suffolk, Sullivan, and Westchester Countion, the Board requires that savings associations acquired ties in New York: Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, Warby bank holding companies conform their direct and indiren, and a portion of Mercer Counties in New Jersey; Pike County in rect activities to those permissible for bank holding compa- Pennsylvania; and portions of Fairfield and Litchfield Counties in Connecticut. 9. Market share data are as of June 30, 1997. Market share data 1. North Fork's wholly owned subsidiary bank, North Fork Bank, before consummation are based on calculations in which the deposits Mattituck, New York ("North Fork Bank"), would merge with Sav- of thrift institutions are included at 50 percent. The Board previously ings Bank and North Fork Bank would be the surviving institution. has indicated that thrift institutions have become, or have the potential The merger is subject to approval by the Federal Deposit Insurance to become, significant competitors of commercial banks. See WM Corporation ("FDIC") under section 18(c) of the Federal Deposit Bancorp, 76 Federal Reserve Bulletin 788 (1990); National City Insurance Act (12 U.S.C. § I828(c)) ("Bank Merger Act") and by the Corporation, 70 Federal Reserve Bulletin 743 (1984). Because the New York State Banking Department ("NYSBD"). North Fork also deposits of Savings Bank would be acquired by a commercial banking has requested the Board's approval of an option to purchase up to 19.9 organization under the proposal, Savings Bank's deposits are included percent of the voting shares of Bancorp under certain circumstances. at 100 percent in the calculation of the pro forma market share. See The option would expire on consummation of the proposal. Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992); First 2. Asset data are as of September 30, 1997, and deposit data are as Banks, Inc.. 76 Federal Resen-e Bulletin 669 (1990). of June 30, 1997. 10. Under the revised DOJ Guidelines (49 Federal Register 26,823 3. In this context, depository institutions include commercial banks, (June 29, 1984)), a market in which the post-merger HHI is less than savings banks, and savings associations. 1000 points is considered to be unconcentrated. The Department of 4. 12 C.F.R. 225.28(b)(4). Justice has informed the Board that a bank merger or acquisition Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 291 petitors would remain in the New York banking market. light, the Board has given substantial consideration to the Based on these and all other facts of record, the Board existing record of North Fork Bank, as reflected in its CRA concludes that the consummation of the proposal would and supervisory examinations, and the current programs not result in any significantly adverse effects on competi- and policies of North Fork Bank that help meet the credit tion or on the concentration of banking resources in the needs of all its service communities, including LMI neigh- New York banking market or any other relevant banking borhoods. market. A. CRA Performance Examinations Record of Performance under the Community Reinvestment Act The Board has reviewed the examinations by the primary In acting on a proposal to acquire a savings association, the federal supervisors of the CRA performance records of the Board has traditionally considered the records of perfor- relevant institutions. An institution's most recent CRA mance under the Community Reinvestment Act (12 U.S.C. performance evaluation is a particularly important consid- § 2901 et seq.) ("CRA") of the institutions involved in the eration in the applications process because it represents a proposal." The Board has reviewed the records of perfor- detailed on-site evaluation of the institution's overall mance of North Fork Bank and Savings Bank in light of all record of performance under the CRA by its primary the facts of record, including comments received on the federal supervisor.13 proposal. Commenter contends, on the basis of 1996 and North Fork Bank received an overall rating of "satisfacpreliminary 1997 data submitted under the Home Mort- tory" from its primary federal supervisor, the FDIC, at its gage Disclosure Act (12 U.S.C. § 2801 etseq.) ("HMDA"), most recent evaluation for CRA performance, as of March that the lending records of North Fork Bank and Savings 1997 ("1997 Examination"). In addition, as of the same Bank show inadequate marketing and lending to low- and date, the NYSBD rated North Fork Bank's CRA performoderate-income ("LMI") communities and communities mance "satisfactory" pursuant to section 28-b of with predominately minority residents ("minority commu- New York Banking law. Savings Bank also received an nities"). In particular, Commenter argues that North Fork overall rating of "satisfactory" from its primary federal Bank's record of lending in Queens, Manhattan, and the supervisor, the Office of Thrift Supervision, at its most Bronx, and Savings Bank's record of lending in Brooklyn, recent evaluation for CRA performance, as of October are insufficient in light of the amount of deposits that the 1995. institutions accept from these communities.12 North Fork indicates that it intends to implement the B. Lending Record of North Fork Bank CRA programs and policies of North Fork Bank in the communities formerly served by Savings Bank after Sav- The 1997 Examination found that North Fork Bank's ings Bank is merged with North Fork Bank. North Fork record of lending within LMI census tracts and to LMI also intends to retain Savings Bank's programs that North individuals was very good and that the bank's performance Fork believes best assist in meeting the community devel- trends over 1995 and 1996 were highlighted by noteworthy opment needs of the thrift's service community. In this increases in loans within LMI census tracts and to LMI individuals. In 1995, North Fork Bank made 33 percent of its HMDA loans within LMI census tracts in its assessment generally will not be challenged (in the absence of other factors area, compared to 10 percent by lenders in the aggregate, indicating anticompetitive effects) unless the post-merger HHI is at and made 17 percent of its HMDA loans to LMI individuleast 1800 and the merger increases the HHI by more than 200 points. The Department of Justice has stated that the higher than normal HHI als residing in its assessment area, compared to 14 percent thresholds for screening bank mergers for anticompetitive effects by lenders in the aggregate. In 1996, North Fork Bank implicitly recognize the competitive effect of limited-purpose lenders increased its HMDA loans in LMI census tracts to and other non-depository financial entities. 35 percent and to LMI individuals to 21 percent.14 11. See Bane One Corporation, 83 Federal Resen'e Bulletin 602 (1997). Inner City Press/Community on the Move ("Commenter") Mortgage loans on multi-family rental dwellings alleges that materials filed by North Fork with the Securities and ("multi-family housing loans") are the predominate credit Exchange Commission ('"SEC") do not state that the Board was product offered by North Fork Bank in its service commurequired to review the proposal under the CRA. Commenter contends nity.15 HMDA data for multi-family housing loans in 1995 that the failure of North Fork to acknowledge the Board's review of the proposal under the CRA is a material misstatement. A copy of Commenter's contentions were provided to the SEC for consideration. The adequacy of materials filed with the SEC is a matter within the 13. The Statement of the Federal Financial Supervisory Agencies special expertise of the SEC, and the Board is not authorized under the Regarding the Community Reinvestment Act provides that a CRA BHC Act to adjudicate disputes that arise under the federal securities examination is an important and often controlling factor in the considlaws. eration of an institution's CRA record and that reports of these 12. Commenter contends that North Fork has a record of not examinations will be given great weight in the applications process. improving the CRA performance records of institutions it acquires, 54 Federal Register 13.742 and 13,745 (1989). and in fact diminishes acquired institutions' overall assistance in 14. LMI census tracts comprise approximately 24 percent of North helping meet the credit needs of communities. The Board has re- Fork Bank's current service community. viewed this contention in light of all the facts of record, including 15. Multi-family housing loans accounted for 77 percent in 1995, satisfactory CRA performance evaluations that accounted for North and 71 percent in 1996. of the total dollar amount of North Fork Fork's recent acquisitions. Bank's loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

292 Federal Reserve Bulletin • April 1998 show that North Fork Bank originated 51 percent of its that make the data an inadequate basis, absent other informulti-family housing loans by dollar volume in LMI cen- mation, for concluding that an institution has engaged in sus tracts within its service community, compared to illegal discrimination in making lending decisions.19 29 percent of such loans originated by lenders in the Because of the limitations of HMDA data, the Board has aggregate. Multi-family housing loans in LMI census tracts carefully reviewed other information, particularly examinadecreased by 3 percent to 48 percent in 1996. tion reports that provide an on-site evaluation of compli- In Manhattan, North Fork Bank made 93 multi-family ance by the bank with fair lending laws. FDIC examiners housing loans totalling $115.7 million in 1996, and approx- found no evidence of prohibited discriminatory practices or imately 38 percent of the dollar amount of these loans were of any practices intended to discourage applications for the in LMI census tracts. In the Bronx, the bank made types of credit set forth in the bank's CRA statement in the 51 multi-family housing loans totalling $63 million in 1997 Examination.20 NYSBD examiners also found no 1996 and approximately 74 percent of these loans were evidence of practices that were intended to discourage made in LMI census tracts.'6 In Queens County, the bank applicants from the types of credit that North Fork Bank made 11 multi-family housing loans in 1996 totalling offers and no evidence of any prohibited discriminatory or $23.2 million. Four of the loans were made in LMI census other illegal credit practices in their 1997 CRA evaluation. tracts.17 Moreover, FDIC examiners concluded that North Fork HMDA data for North Fork Bank generally indicate, Bank's management had demonstrated a commitment to however, some disparities in the rate of loan originations, making loans in LMI census tracts and to LMI individuals denials, and applications by racial group and income lev- and favorably noted that the bank had a formal review el.18 The Board is concerned when an institution's record process for all denied loan applications. indicates such disparities and believes that all banks are North Fork Bank also has a number of programs to assist obligated to ensure that their lending practices are based on in meeting the housing-related credit needs of LMI individcriteria that assure not only safe and sound banking, but uals. For example, North Fork Bank participates in governalso equal access to credit by creditworthy applicants re- mentally sponsored lending programs that offer affordable gardless of race. The Board recognizes, however, that mortgage financing. The bank originates Federal Housing HMDA data alone provide an incomplete measure of an Administration ("FHA") loans on referrals from mortgage institution's lending in its community and have limitations bankers. In 1995 and 1996, the bank made 323 FHA loans totalling $37 million.21 In addition. FDIC examiners noted that North Fork Bank had developed an in-house portfolio 16. North Fork Bank had no branches in Brooklyn, but it made mortgage program for qualified LMI borrowers in 1996 50 loans totalling $64.2 million in Brooklyn in 1996 and approxithat featured reduced closing costs and no mortgage insurmately 70 percent of these loans were made in LMI census tracts. Brooklyn is not currently part of North Fork Bank's assessment area, ance requirement for mortgages with a loan-to-value ratio but it would be added to the assessment area after consummation of less than 90 percent. North Fork made 66 loans under this the proposal. program in 1996 totalling $6.6 million.22 The bank also 17. Commenier maintains that North Fork Bank has not complied participates in programs sponsored by the Federal National with a commitment to make a total of $20 million in loans in LMI census tracts in Nassau, Westchester and Rockland Counties over a Mortgage Association Community Home Buyers ("Comthree-year period ending in 1998. North Fork Bank has substantially munity Home Buyers") programs23 and the State of New met or significantly exceeded its annual interim lending goals in 1996 York Mortgage Agency Affordable Housing Program.-4 and 1997 for total amounts, loaned and amounts loaned for multifamily housing and owner-occupied housing in Nassau and Westchester Counties. However, North Fork Bank has been unable to meet its interim annual lending goals for owner-occupied housing loans in 19. The data, for example, do not provide a basis for an independent Rockland County. The NYSBD considered North Fork Bank's efforts assessment of whether an applicant who was denied credit was, in to meet this commitment in connection with its 1997 CRA evaluation fact, creditworthy. Credit history problems and excessive debt levels of the bank and determined that the bank's record of performance was relative to income (reasons most frequently cited for a credit denial) satisfactory. are not available from HMDA data. 18. Commenter contends that North Fork Bank only offers multi- 20. FDIC examiners noted apparent technical violations of fair family housing loans in the bank's LMI urban communities and does lending laws and HMDA reporting requirements during the 1997 not make mortgage loans on 1-4 family dwellings ("'owner-occupied Examination, but stated that these matters were addressed by the housing loans") in those areas. North Fork Bank does make owner- bank's management during the examination. The Board has considoccupied housing loans in suburban communities. Commenter alleges ered supervisory information from the FDIC on the nature of the that North Fork Bank's geographic distribution of multi-family and apparent violations and the steps taken by North Fork Bank to address owner-occupied housing loans shows illegal lending practices. The these matters. CRA provides banks with substantial flexibility in developing specific 21. The 1997 Examination noted that, as of March 31, 1997, North CRA-related policies and programs and does not require a bank to Fork Bank had originated 64 loans totalling $7.8 million. engage in any particular type of lending. As discussed in this order, 22. Examiners noted that 31 loans were made under the program in moreover, FDIC and NYSBD examiners found no evidence of prohib- January and February 1997 totalling $3.2 million. ited discriminatory practices or of any practices intended to discour- 23. The Community Home Buyers program offers flexible underage applications for any type of credit set forth in the bank's CRA writing criteria for conforming fixed-rate purchase mortgages on statement in their most recent evaluations. The Board notes, however, I -4 family residential properties. that NYSBD examiners encouraged North Fork Bank to increase the 24. Under this program, a bank makes fixed rate loans to qualified number of owner-occupied loans to LMI borrowers, particularly in LMI borrowers with reduced down payment requirements (as low as Rockland and Westchester Counties and a portion of Manhattan. The 3 percent) and at below-market rates. The loans are purchased by the Board expects the bank to address these matters. State of New York. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 293 North Fork Bank also engages in small business lending. addressing branch closings. Federal law requires an in- In 1996, the bank originated approximately 2200 small sured depository institution to provide notice to the public business loans, totalling approximately $260 million. More and to the appropriate regulatory agency at least 30 days than 23 percent of the small business loans were made to prior to closing a branch. The law does not authorize businesses in LMI census tracts within North Fork Bank's federal regulators to prevent the closing of any branch.26 service community. These include loans that were made in Queens, the Bronx, Brooklyn, and Manhattan. D. Conclusion on CRA Performance Records The 1997 Examination also concluded that North Fork Bank had a satisfactory record of ascertaining and helping The Board has carefully considered all the facts of record, to meet the credit needs of its entire service community, including Commenter's comments, in reviewing the CRA including LMI neighborhoods, in a manner consistent with performance records of the institutions involved. Based on its resources and capabilities. FDIC examiners found that a review of the entire record, and for the reasons discussed the bank employed a number of methods to ascertain above, the Board concludes that the CRA performance community credit needs, including personal contact with records of North Fork Bank and Savings Bank are consiscommunity organizations, non-profit development organi- tent with approval of the proposal. The Board notes that, zations and mortgage originators, officer call programs, although the 1997 CRA evaluation by the NYSBD found and first-time home buyer seminars.25 The 1997 Examina- the bank's overall CRA performance record to be satisfaction also commended the bank's advertising and promo- tory, NYSBD's examiners encouraged the bank to improve tional plan as designed to reach, as directly as possible, its overall lending performance in Queens. The Board LMI individuals who would benefit from the bank's prodexpects North Fork to address the areas for improvement in ucts and services and as focused on a wide audience in its lending performance discussed in the order and will LMI census tracts. consider North Fork's progress in this regard in connection with future applications by North Fork to acquire deposit- C. Branch Closings taking facilities. To permit the Board to monitor North Fork's progress, North Fork must file with the Federal Savings Bank operates 31 branches in five New York Reserve Bank of New York quarterly reports on its lending counties. North Fork indicates that seven branches would activities in LMI and minority census tracts and to LMI be closed as a result of the proposal. The Board has and minority borrowers for one year from the date of this considered the effect of the proposal on branches currently order. operated by Savings Bank in light of Commenter's objections to North Fork's proposed branch closings and confi- Other Considerations dential information regarding these closings provided by North Fork. In connection with its review of the public interest factors Each of the seven branches proposed to be closed would under section 4 of the BHC Act, the Board also has be merged into existing branches of North Fork Bank or carefully reviewed the financial and managerial resources Savings Bank. North Fork indicates that three of these of North Fork and Bancorp and their respective subsidiarbranches are in LMI census tracts, and each is located less ies and the effect the transaction would have on such than one mile from another branch in the same LMI census resources in light of all the facts of record.27 The Board has tract that North Fork would continue to operate after the reviewed, among other things, confidential reports of exproposal. Thus, North Fork proposes to continue to operate amination and other supervisory information received from branches in each of the LMI census tracts affected by the the primary federal supervisors of the organizations. Based proposal. North Fork Bank currently operates approximately 20 percent of its branches in LMI areas and, following consummation of the proposal, would continue to 26. Section 42 of the Federal Deposit Insurance Act (12U.S.C. operate approximately 20 percent of its branches in LMI § 1831r-l, as implemented by the Joint Policy Statement Regarding census tracts. All branches would be closed pursuant to Branch Closings (see 58 Federal Register 49,083 (1993)) ("Sec- North Fork Bank's branch closing policy, moreover, which tion 42"). Commenter contends that North Fork's reasons for closing requires consideration of the community's needs and the Savings Bank's branches are inadequate and that North Fork has mischaracterized the closings as consolidations. As noted, the Board impact of the closing on the neighborhood. The Board considered confidential information from North Fork regarding the notes that the branch closing policy has been reviewed by branch closings, and the number and locations of branches to be FDIC examiners as part of their evaluations of CRA perfor- closed in LMI census tracts. Moreover, Section 42 requires that a bank mance and found to be satisfactory. provide the public at large with at least 30 days notice and the primary federal supervisor and branch customers with at least 90 days notice In addition to these factors, the Board has considered before the date of the proposed branch closing. The bank also is that federal banking law provides a specific mechanism for required to provide reasons and other supporting data for the closure, consistent with the institution's written policy for branch closings. The notice requirements of Section 42 apply to all closings, however characterized, that are not relocations involving short distances (gener- 25. The 1997 Examination noted that community contacts included ally less than 1.000 feet) unless occurring in less densely populated areas. a community preservation corporation, local development corporations, and a local housing alliance and partnership. 27. See 12 C.F.R. 225.26. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

294 Federal Reserve Bulletin • April 1998 on all the facts of record, the Board concludes that the in Regulation Y, including those in sections 225.7 and financial and managerial resources of the organizations 225.25(c) (12 C.F.R. 225.7 and 225.25(c)) and to the involved in the proposal are consistent with approval. Board's authority to require such modification or termina- The record indicates that consummation of the proposal tion of the activities of a holding company or any of its would result in benefits to consumers and businesses. The subsidiaries as the Board finds necessary to assure compliproposal would enable North Fork to provide Savings ance with, or to prevent evasion of, the provisions and Bank customers with access to a broad array of products purposes of the BHC Act and the Board's regulations and and services, including commercial bank products, orders issued thereunder. The commitments and conditions throughout an expanded service area. Additionally, there relied on by the Board in reaching this decision shall be are public benefits to be derived from permitting capital deemed to be conditions imposed in writing by the Board markets to operate so that bank holding companies may in connection with its findings and decision, and, as such, make potentially profitable investments in nonbanking may be enforced in proceedings under applicable law. companies when, as in this case, those investments are This transaction shall not be consummated later than consistent with the relevant considerations under the BHC three months after the effective date of this order, unless Act, and from permitting banking organizations to allocate such period is extended for good cause by the Board or the their resources in the manner they believe is most efficient. Federal Reserve Bank of New York, acting pursuant to Based on all the facts of record, the Board has determined delegated authority. that consummation of this proposal can reasonably be By order of the Board of Governors, effective Februexpected to produce public benefits that would outweigh ary 9, 1998. any likely adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. Voting for this action: Vice Chair Rivlin and Governors Kelley, Phillips, Meyer, Ferguson, and Gramlich. Absent and not voting: Chairman Greenspan. Conclusion JENNIFER J. JOHNSON Based on the foregoing and all the facts of record, the Deputy Secretary of the Board Board has determined that the notice should be, and hereby is, approved.28 The Board's approval of the proposal is specifically conditioned on compliance by North Fork with ORDERS ISSUED UNDER BANK MERGER ACT the commitments made in connection with the notice. The Board's determination also is subject to all the conditions WestStar Bank Bartlesville, Oklahoma 28. Commenter has requested the Board to arrange an informal Order Approving the Merger of a Bank and meeting between Commenter and North Fork. The Board's Rules of Procedure allow a Reserve Bank to hold a private meeting to provide a Establishment of a Branch forum for narrowing issues and resolving differences between an applicant and commenter, if appropriate. See 12 C.F.R. 262.25(c). WestStar Bank, Bartlesville, Oklahoma ("WestStar"), a North Fork has indicated that it does not want to meet with Comstate member bank, has requested the Board's approval menter. under section 18(c) of the Federal Deposit Insurance Act Commenter also has requested that the Board hold a public hearing or meeting on the notice, including Commenter's contentions that (12U.S.C. § 1828(c)) (the "Bank Merger Act") to merge both institutions have disparate lending records, that North Fork's with Victory Bank of Nowata, Nowata, Oklahoma ("Victomanagerial record raises adverse considerations, and that North Fork's ry Bank"). WestStar also has applied under section 9 of the justifications for few owner-occupied loans in LMI urban census Federal Reserve Act (12 U.S.C. § 321) to establish a branch tracts are inadequate. The Board's rules provide for a hearing on notices under section 4 of the BHC Act if there are disputed issues of at the main office of Victory Bank, which is located at material fact that cannot be resolved in some other manner. See 108 North Maple, Nowata, Oklahoma.1 12 C.F.R. 225.25(a)(2). The Board also may, in its discretion, hold a Notice of the applications, affording interested persons public hearing or meeting if a hearing is necessary to clarify factual an opportunity to submit comments, has been given in issues related to the proposal and to provide an opportunity for testimony, if appropriate. See 12 C.F.R. 225.16(e). In the Board's view, Commenter had ample opportunity to submit its views, and has submitted substantial written comments that have 1. Victory Bank is owned indirectly by Victory Bancorp ("Banbeen carefully considered by the Board in acting on the notice. corp") through an intermediate bank holding company, Victory Bane- Commenter's request fails to demonstrate why its written presentation shares ("Bancshares"). In connection with the bank merger, WestStar does not adequately present its evidence, allegations, and views. After would acquire all the voting shares of Bancorp; Bancshares would a careful review of all the facts of record, moreover, the Board has merge with and into Bancorp; and Bancorp would merge with and into concluded that Commenter disputes the weight that should be ac- WestStar. Because this transaction is in substance a merger of banks corded to and the conclusions that the Board should draw from the that is subject to Board review under the Bank Merger Act, the steps facts of record, but does not identify disputed issues of fact that are of the transaction would occur in immediate succession, Victory Bank material to the Board's decision. For these reasons, and based on all would never be operated by WestStar as a separate bank, and the the facts of record, the Board has determined that a public hearing or transaction does not raise issues that would bar Board approval under meeting is not required or warranted in this case. Accordingly, the the Bank Holding Company Act ("BHC Act"), the Board has waived requests for a public hearing or meeting on the proposal are hereby the applications required under section 3 of the BHC Act for the denied. intermediate steps for this transaction. 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Legal Developments 295 accordance with the Bank Merger Act and the Board's data, an on-site investigation of the banking market con- Rules of Procedure (12 C.F.R. 262.3(b)). As required by ducted by the Reserve Bank in January 1998, and other the Bank Merger Act, reports on the competitive effects of facts of record that indicate that there is substantial comthe merger were requested from the United States Attorney muting, travel, and interaction between Bartlesville and General, the Office of the Comptroller of the Currency Nowata.6 In light of these, and all facts of record, the ("OCC"), and the Federal Deposit Insurance Corporation Board concludes that the Bartlesville banking market re- ("FDIC"). The time for filing comments has expired, and flects commercial and banking realities and represents an the Board has considered the applications and all com- area where local customers can practicably turn for alternaments received in light of the factors set forth in the Bank tives. Accordingly, the relevant banking market for consid- Merger Act and the Federal Reserve Act. ering the competitive effects of the proposal is the Bartles- WestStar is a wholly owned subsidiary of Arvest Bank ville banking market as defined above.7 Group, Bentonville, Arkansas, which is the sixth largest WestStar is the largest depository institution in the commercial banking organization in Oklahoma, control- Bartlesville banking market, controlling deposits of apling $775.5 million of deposits, representing 2.6 percent of proximately $349 million, representing approximately total deposits in commercial banking organizations in the 47 percent of the total deposits in depository institutions in state.2 Victory Bank controls deposits of $19.7 million, the market ("market deposits").8 Victory Bank is the tenth representing less than 1 percent of deposits in the state. On largest depository institution in the market, controlling consummation of the proposal, Arvest Bank Group would deposits of $19.7 million, representing approximately remain the sixth largest commercial banking organization 3 percent of market deposits. On consummation of the in Oklahoma. proposal, WestStar would remain the largest depository institution in the Bartlesville banking market, controlling Competitive Considerations deposits of approximately $358.7 million, representing approximately 50 percent of market deposits. Concentration The Bank Merger Act provides that the Board may not approve an application if the effect of the acquisition is to create a monopoly or substantially to lessen competition in 6. Bartlesville is the center of economic activity for a commercially any section of the country unless the Board finds the integrated area generally encompassed by Washington, Nowata, and anticompetitive effects of the proposal are clearly out- the northeastern portion of Osage Counties. Bartlesville is in Washingweighed in the public interest by the probable effect of the ton County, which is between Osage County to the west and Nowata County to the east, and has a population of 33,000 residents making it proposal in meeting the convenience and needs of the the largest town in the banking market. The area's largest employers, community.3 including a petroleum company with approximately 3100 employees WestStar asserts that WestStar and Victory Bank operate and a medical center and school district office with more than 800 in separate banking markets. Alternatively, WestStar con- employees each, are in Bartlesville. Commuting data from the Census Bureau for 1990 show that approximately 27 percent of the residents tends that the appropriate banking market should include in the Nowata community, where Victory Bank is located, commute to the Bartlesville banking market as previously defined by work in the Bartlesville area. Area residents also may obtain a variety the Federal Reserve Bank of Kansas City ("Reserve of goods and services from large retail stores in an enclosed mall, Bank") plus the town of Coffeyville, Kansas.4 The Board restaurants, automobile dealerships, entertainment complexes, and a medical center that are unavailable in the smaller communities within believes, however, that the appropriate market for analyza 40 mile radius of Bartlesville. Data from the Oklahoma Transportaing the competitive effects of the proposal is the Bartles- tion Department indicate that in 1995, the average daily traffic count ville banking market as previously defined.5 The Board between Nowata and Bartlesville on State Highway 60 was 3,400 bases its conclusion on an analysis of employment opportu- vehicles, which was more than twice the number of vehicles that used the highway to travel from Nowata in the opposite direction. In nities, commuting data, shopping patterns, loan and deposit addition, loan and deposit data indicated that residents of Nowata obtain products and services from banking organizations in Bartlesville. 2. State data are as of June 30, 1997, and market data are as of 7. The facts of record do not support including Coffeyville within June 30, 1996. the Bartlesville banking market. Coffeyville, a mid-size town in Kan- 3. 12US.C. § 1828(c)(5). sas with a population of approximately 13,000 residents, is approxi- 4. The Reserve Bank defines the Bartlesville banking market as an mately 40 miles northeast of Bartlesville. No highway directly conarea approximated by Nowata and Washington Counties and the nects the town with Bartlesville. In addition. Census Bureau northeastern quadrant of Osage County in Oklahoma: and the town of commuting data for 1990 show that almost all the people who com- Caney, Kansas. mute from Nowata County to Coffeyville reside in South Coffeyville, 5. The Board and the courts have found that the relevant banking which is a small town in Nowata County approximately five miles market for analyzing the competitive effects of a proposal must reflect from Coffeyville. Coffeyville also has a hospital and a full complecommercial and banking realities and should consist of the local area ment of retail stores. where local customers can practicably turn for alternatives. See 8. In this context, depository institutions include commercial banks, St. Joseph Valley Bank, 68 Federal Reserve Bulletin 673, 674 (1982). savings banks, and savings associations. Market share data before The key question to be considered in making this selection "is not consummation are based on calculations in which the deposits of thrift where the parties to the merger do business or even where they institutions are included at 50 percent. The Board previously has compete, but where, within the area of competitive overlap, the effect indicated that thrift institutions have become, or have the potential to of the merger on competition will be direct and immediate." United become, significant competitors of commercial banks. See WM Ban- States v. Philadelphia Nafl Bank, 374 U.S. 321, 374 (1963); United corp, 76 Federal Reserve Bulletin 788 (1990); National City Corpora- States v. Phillipsburg Nat'l Bank, 399 U.S. 350 (1969). tion, 70 Federal Reserve Bulletin 743 (1984). 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296 Federal Reserve Bulletin • April 1998 in the market, as measured by the Herfindahl-Hirschman gerial resources of the organizations and financial informa- Index ("HHI"), would increase 262 points to 2892.9 tion provided by WestStar. Based on these and all other The Board has taken into account considerations that facts of record, the Board concludes that financial and materially mitigate the competitive effect of the proposal. managerial resources and future prospects of the institu- The Bartlesville banking market, for example, is a rural tions involved are consistent with approval, as are other banking market with a significant number of competing supervisory factors. depository institutions relative to its total market deposits WestStar intends to increase Victory Bank's hours of of $715 million. After consummation of the proposal, operation and would offer its expanded products and ser- 11 depository institution competitors, in addition to West- vices to the bank's customers and residents in the Nowata Star, would remain in the banking market. The remaining area, including access to ATMs, cash management sercompetitors include two of Oklahoma's largest commercial vices, trust services, and a greater array of retail and banking organizations that operate throughout the state. commercial checking accounts. WestStar also has a satis- The Board also notes that a large credit union has a factory record of performance under the Community Reinsubstantial effect on competition in the banking market.10 vestment Act of helping to meet the credit needs of all its The credit union controls a substantial amount of deposits communities, including low- and moderate-income areas.12 in the banking market, and actively engages in home Based on all the facts of record, the Board concludes that mortgage and consumer lending.11 The Board believes that considerations relating to convenience and needs are conthese factors mitigate the potentially adverse effects of the sistent with approval. The Board also concludes that all the proposal. factors that must be considered under section 9 of the The Department of Justice has reviewed the proposal Federal Reserve Act are consistent with approval.13 and advised the Board that consummation of the proposal would not likely have any significantly adverse competi- Conclusion tive effects in the Bartlesville banking market or any relevant banking market. The OCC and the FDIC also have not Based on the foregoing and all the facts of record, the objected to the proposal. Board has determined that the applications should be, and Based on all the facts of record, and for the reasons hereby are, approved. The Board's approval of the prodiscussed above, the Board concludes that consummation posal is specifically conditioned on compliance by Westof the proposal would not have a significantly adverse Star with all the commitments made in connection with effect on competition or on the concentration of banking this application. For purposes of this action, the commitresources in the Bartlesville banking market or any other ments and conditions relied on in reaching this decision are relevant banking market. both conditions imposed in writing by the Board, and as such, may be enforced in proceedings under applicable Other Considerations law. The proposed acquisition shall not be consummated The Bank Merger Act also requires the Board to consider before the fifteenth calendar day following the effective the financial and managerial resources and future prospects date of this order, or later than three months after the of the existing and proposed institutions and the conve- effective date of this order, unless such period is extending nience and needs of the community to be served. The for good cause by the Board or by the Reserve Bank, Board has carefully considered these factors in light of all acting pursuant to delegated authority. the facts of record. The facts of record include supervisory By order of the Board of Governors, effective Februreports of examination that assess the financial and mana- ary 18, 1998. Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and 9. Under the revised Department of Justice Merger Guidelines, Governors Kelley, Phillips, Ferguson, and Gramlich. Absent and not 49 Federal Register 26,823 (June 29, 1984) ("DOJ Guidelines"), a voting: Governor Meyer. market in which the post-merger HHI is above 1800 is considered highly concentrated. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in JENNIFER J. JOHNSON the absence of other factors indicating anticompetitive effects) unless Deputy Secretary of the Board 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 thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities. 10. The credit union was originally established for the employees of 12. 12 U.S.C. § 2901 et seq. ("CRA"). WestStar and Victory Bank the petroleum company in Bartlesville but has broadened its member- received a satisfactory rating under the CRA at their most recent ship criteria to include employees of other companies. Approximately performance examinations. 26,900 residents in the Bartlesville banking market, representing 13. Under Oklahoma law, a bank is permitted to branch into another approximately 39 percent of the market's total population, are credit county by acquisition if the bank to be acquired has operated for at union members. least five years. See Okla. Stat. Tit. 6 §501.1. Victory Bank has 11. If deposits for the credit union were weighted at 50 percent, operated for at least five years, and Oklahoma banking officials have WestStar would control 44.5 percent of market deposits, and the HHI confirmed that the proposal would be consistent with state branching would increase by 206 points to 2405. law. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 297 INDEX OF ORDERS ISSUED OR ACTIONS TAKEN BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (OCTOBER 1, 1997-DECEMBER 31, 1997) Bulletin Volume Applicant Merged or Acquired Bank or Activity Date of Approval and Page Bank of Cyprus, Ltd., To establish a representative office in November 24, 1997 84, 67 Nicosia, Cyprus New York, New York Barnett Banks, Inc., Monetary Transfer System, L.L.C., October 6, 1997 83, 1003 Jacksonville, Florida St. Louis, Missouri BB&T Corporation, Honor Technologies, Inc., Winston-Salem, North Carolina Maitland, Florida Central Fidelity Banks, Inc., Richmond, Virginia Crestar Financial Corporation, Richmond, Virginia First American Corporation, Nashville, Tennessee First Citizens BancShares, Inc., Raleigh, North Carolina First Union Corporation, Charlotte, North Carolina First Virginia Banks, Inc., Falls Church, Virginia Jefferson Bankshares, Inc., Charlottesville, Virginia NationsBank Corporation, Charlotte, North Carolina Riggs National Corporation, Washington, D.C. Signet Banking Corporation, Richmond, Virginia SunTrust Banks, Inc., Atlanta, Georgia Synovus Financial Corporation, Columbus, Georgia Wachovia Corporation, Winston-Salem, North Carolina California Community Financial Security First Bank, October 27, 1997 83, 1002 Institutions Fund Limited Partnership, Fullerton, California San Francisco, California Belvedere Bancorp, San Francisco, California Belvedere Capital Partners, Inc., San Francisco, California Canadian Imperial Bank of Commerce, Oppenheimer Holdings, Inc.. October 27, 1997 83, 1008 Toronto, Canada New York, New York CIBC Wood Gundy Securities Corp., New York, New York Centura Bank, First Union National Bank, November 10, 1997 84, 64 Rocky Mount, North Carolina Charlotte, North Carolina Centura Bank, NationsBank, N.A., October 6, 1997 83, 1023 Rocky Mount, North Carolina Charlotte, North Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

298 Federal Reserve Bulletin • April 1998 Index of Orders Issued—Continued Bulletin Volume Applicant Merged or Acquired Bank or Activity Date of Approval and Page Credit Agricole Indosuez, To establish state-licensed branches in October 27, 1997 83, 1025 Paris, France Chicago, Illinois; and New York, New York; and representative offices in Houston, Texas; and San Francisco, California The Cyprus Popular Bank, Ltd., To establish a representative office in October 27, 1997 83, 1028 Nicosia, Cyprus New York, New York First of Waverly Corporation, Schrage, Ltd., Waverly, Iowa Plainfield, Iowa December 15, 1997 84,111 Farmers State Bank, Plainfield, Iowa First National Security Company, First Financial Corporation of Idabel, DeQueen, Arkansas Idabel, Oklahoma November 24, 1997 84, 58 First State Bank of Idabel, Idabel, Oklahoma First State Bancshares, Inc., Perry County Financial Corporation, Farmington, Missouri Perryville, Missouri October 29, 1997 83, 1010 Perry County Savings Bank, FSB, Perryville, Missouri First Union Corporation, Signet Banking Corporation, Charlotte, North Carolina Richmond, Virginia October 14, 1997 83, 1012 Signet Bank, Richmond, Virginia First Union Corporation, Wheat First Butcher Singers, Inc., Charlotte, North Carolina Richmond, Virginia November 26, 1997 84, 59 Wheat, First Securities, Inc., Richmond, Virginia J.P. Morgan & Co., Inc., American Century Companies, Inc., New York, New York Kansas City, Missouri December 8, 1997 84, 113 Lloyds TSB Group pic, IAI Holdings, Inc., London, England Minneapolis, Minnesota December 18, 1997 84, 116 Lloyds Bank Pic, London, England National Bancorp of Alaska, Inc.. California Community Financial October 27, 1998 83, 1002 Anchorage, Alaska Institutions Fund Limited Partnership, San Francisco, California NationsBank Corporation, Barnett Banks, Inc., December 10, 1997 84, 129 Charlotte, North Carolina Jacksonville, Florida NB Holdings Corporation, Barnett Bank, National Association, Charlotte, North Carolina Jacksonville, Florida Community Bank of the Islands, Sanibel, Florida EquiCredit Corporation, Jacksonville, Florida First of America Bank-Florida, FSB, Tampa, Florida Honor Technologies, Inc., Maitland, Florida Barnett Community Development Corporation, Jacksonville. Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 299 Index of Orders Issued—Continued Bulletin Volume Applicant Merged or Acquired Bank or Activity Date of Approval and Page The Sanwa Bank Limited, Morcroft Capital Corporation, December 1, 1997 84, 120 Osaka, Japan Fairfield, New Jersey Sanwa Business Credit Corporation, Chicago, Illinois Star Bane Corporation, Great Financial Corporation, December 18, 1997 84, 121 Cincinnati, Ohio Louisville, Kentucky Great Financial Bank, F.S.B., Louisville, Kentucky SunTrust Banks, Inc., Equitable Securities Corporation, December 18, 1997 84, 126 Atlanta, Georgia Nashville, Tennessee Equitable Trust Company, Nashville, Tennessee Equitable Asset Management, Inc., Nashville, Tennessee U.S. Bancorp, U.S. Bancorp Investments, Inc., November 26, 1997 84, 62 Minneapolis, Minnesota Minneapolis, Minnesota Wachovia Corporation, Central Fidelity Banks, Inc., October 20, 1997 83,1020 Winston-Salem, North Carolina Richmond, Virginia Central Fidelity National Bank, Richmond, Virginia CFB Insurance Agency, Inc., Richmond, Virginia 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 Centura Banks, Inc., Pee Dee Bankshares, Inc., February 24, 1998 Rocky Mount, North Carolina Timmonsville, South Carolina Pee Dee State Bank, Timmonsville, South Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

300 Federal Reserve Bulletin • April 1998 Applications Approved—Continued Applicant(s) Bank(s) Effective Date National City Corporation, Fort Wayne National Corporation, February 23, 1998 Cleveland, Ohio Fort Wayne, Indiana The Auburn State Bank, Auburn, Indiana Churubusco State Bank, Churubusco, Indiana First National Bank of Huntington, Huntington, Indiana First National Bank of Warsaw, Warsaw, Indiana Fort Wayne National Bank, Fort Wayne, Indiana Old-First National Bank in Bluffton, Bluffton, Indiana Valley American Bank, South Bend, Indiana Niagara Bancorp, MHC, Niagara Bancorp, Inc., February 20, 1998 Lockport, New York Lockport, New York Lockport Savings Bank, Lockport, New York Section 4 Applicant(s) Bank(s) Effective Date National City Corporation, American Mortgage Source, Inc., February 19, 1998 Cleveland, Ohio Nashville, Tennessee National City Corporation, Eastern Mortgage Services, February 6, 1998 Cleveland, Ohio Trevose, Pennsylvania National City Mortgage Co., First National Mortgage Corporation, Miamisburg, Ohio Glen Burnie, Maryland Sections 3 and 4 Applicant(s) Bank(s) Effective Date First American Corporation, Deposit Guaranty Corp., February 3, 1998 Nashville, Tennessee Jackson, Mississippi Deposit Guaranty National Bank, Jackson, Mississippi G&W Life Insurance Company, Jackson, Mississippi Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 301 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 Alliance Bancorporation, Inc., Alliance Bank of Hot Springs, St. Louis January 27, 1998 Hot Springs, Arkansas Hot Springs, Arkansas Bolivar Banking Corporation, Bank of Bolivar County, St. Louis February 6, 1998 Shelby, Mississippi Shelby, Mississippi Brookline Bancorp, M.H.C., Brookline Savings Bank, Boston January 28, 1998 Brookline, Massachusetts Brookline, Massachusetts Brookline Bancorp, Inc., Brookline, Massachusetts Capital Community Bancorporation, Orem Community Bank, San Francisco February 4, 1998 Inc., Orem, Utah Orem, Utah Carrollton Bancorp, Baltimore, Patapsco Valley Bancshares, Inc., Richmond February 4, 1998 Maryland Ellicott City, Maryland Community Bancshares of Community Bancshares of Mississippi, Atlanta February 5, 1998 Mississippi, Inc., Employee Stock Inc., Ownership Plan, Forest, Mississippi Forest, Mississippi Community Bank Shares of Indiana, NCF Financial Corporation, St. Louis February 12, 1998 Inc., Bardstown, Kentucky New Albany, Indiana NCF Bank and Trust Company, Bardstown, Kentucky Community National Bank Community National Bank Corporation, Atlanta January 22, 1998 Corporation Employee Stock Venice, Florida Ownership Plan, Venice, Florida CSB Bancshares, Inc., Canadian State Bank, Kansas City February 4, 1998 Yukon, Oklahoma Yukon, Oklahoma Fidelity Company, Iowa Bank, Chicago February 3, 1998 Dyersville, Iowa Bellevue, Iowa First National Corporation, Florence County National Bank, Richmond February 19, 1998 Orangeburg, South Carolina Florence, South Carolina First Nebraska Banes, Inc., South Platte Bancorp, Kansas City February 11, 1998 Sidney, Nebraska Julesburg, Colorado First National Bank, Julesburg, Colorado FNB Financial Services, Inc. FNB Financial Services, Inc., Kansas City January 23, 1998 Employee Stock Ownership Plan, Durant, Oklahoma Durant, Oklahoma The First National Bank in Durant, Durant, Oklahoma Gold Bane Acquisition Corp., Farmers Bancshares of Oberlin, Inc., Kansas City January 29, 1998 Inc. II, Oberlin, Kansas Leawood, Kansas Gold Bane Corporation, Inc., First Alma Bancshares, Inc., Kansas City February 4, 1998 Leawood, Kansas Alma, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

302 Federal Reserve Bulletin • April 1998 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Harlingen Bancshares, Inc., Lower Rio Grande Valley Bancshares, Dallas February 10, 1998 Harlingen, Texas Inc., La Feria, Texas First National Bank, La Feria, Texas Hoosac Financial Services, Inc., Hoosac Bank, Boston January 15, 1998 North Adams, Massachusetts North Adams, Massachusetts The Independent Mutual Holding Laconia Savings Bank, Boston January 30, 1998 Company, Laconia, New Hampshire Laconia, New Hampshire Inver Grove Bancshares, Inc., Key Community Bank, Minneapolis February 5, 1998 Inver Grove Heights, Minnesota Inver Grove Heights, Minnesota Lincoln Interim Corporation, Lincoln Bancshares, Inc., Atlanta February 19, 1998 Lincolnton, Georgia Lincolnton, Georgia Farmers State Bank, Lincolnton, Georgia MainStreet BankGroup Regency Financial Shares, Inc., Richmond February 18, 1998 Incorporated, Richmond, Virginia Martinsville, Virginia Regency Bank, Richmond, Virginia MainStreet BankGroup Tysons Financial Corporation, Richmond February 4, 1998 Incorporated, McLean, Virginia Martinsville, Virginia McCurtain County Bancshares, Inc., McCurtain County National Bank, Kansas City February 9, 1998 Idabel, Oklahoma Idabel, Oklahoma New McCurtain County National Bank, Broken Bow, Oklahoma Paramount Bancorp, Inc., Paramount Bank, Chicago January 26, 1998 Bingham Farms, Michigan Bingham Farms, Michigan Regions Financial Corporation, Key Florida Bancorp, Inc., Atlanta February 12, 1998 Birmingham, Alabama Bradenton, Florida Liberty National Bank, Bradenton, Florida Security Bancshares, Inc., Farmers & Merchants Bank of Colby, Kansas City February 5, 1998 Scott City, Kansas Colby, Kansas South Valley Bancorp, Inc., South Valley Bank & Trust, San Francisco January 30, 1998 Klamath Falls, Oregon Klamath Falls, Oregon Standard Mutual Holding Company, Standard Bank, PaSB, Cleveland February 6, 1998 Monroeville, Pennsylvania Murrysville, Pennsylvania State National Bancshares, Inc., First Sierra Bancshares, Inc., Dallas February 4, 1998 Lubbock, Texas Truth or Consequences, New Mexico Sierra Bank, Truth or Consequences, New Mexico State National Bancshares of Delaware, Dover, Delaware First National Bank of Denver City, Denver City, Texas Tarpon Coast Bancorp, Inc., Tarpon Coast National Bank, Atlanta February 10, 1998 Port Charlotte, Florida Port Charlotte, Florida Tippins Bankshares, Inc., Tippins Bank and Trust Company, Atlanta January 22, 1998 Claxton, Georgia Claxton, Georgia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 303 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Union Planters Corporation, Security Bancshares, Inc., St. Louis February 12, 1998 Memphis, Tennessee Des Arc, Arkansas Farmers and Merchants Bank, Des Arc, Arkansas Merchants and Farmers Bank, West Helena, Arkansas United Bankshares, Inc., George Mason Bankshares, Inc., Richmond January 28, 1998 Charleston, West Virginia Fairfax, Virginia Wayne Bancorp, Inc., Chippewa Valley Bancshares, Inc., Cleveland February 12, 1998 Wooster, Ohio Rittman, Ohio Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Ambank Company, Inc., Amlend Mortgage Services, Inc., Chicago February 2, 1998 Sioux Center, Iowa Sioux Center, Iowa Area Bancshares Corporation, SecureWare, Inc., St. Louis January 23, 1998 Owensboro, Kentucky Atlanta, Georgia The Bank of New York Company, Mendham Capital Group, Inc., New York February 9, 1998 Inc., Rosedale, New Jersey New York, New York BNY Capital Markets, Inc., New York, New York Banque Nationale de Paris, Paris, BNP Securities (U.S.A.), Inc., San Francisco February 3, 1998 France Radnor, Pennsylvania BB&T Corporation, BB&T Financial Corporation of Winston-Salem, North Carolina Virginia, Winston-Salem, North Carolina Richmond January 22, 1998 Life Bancorp, Inc., Norfolk, Virginia Deutsche Bank AG, National Westminister Bank PLC, Frankfurt am Main, Federal London, England Republic of Germany NatWest Securities Corporation, New York February 13, 1998 Deutsche Morgan Grenfell, Inc., New York, New York New York, New York HUBCO, Inc., Poughkeepsie Financial Corp., Mahwah, New Jersey Poughkeepsie, New York Bank of the Hudson, New York January 29, 1998 Poughkeepsie, New York Huntington Bancshares SecureWare, Inc., Cleveland January 23, 1998 Incorporated, Atlanta, Georgia Columbus, Ohio Security First Network Bank, Atlanta, Georgia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

304 Federal Reserve Bulletin • April 1998 Section 4—Continued Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Mason-Dixon Bancshares, Inc.. Bay Finance, LLC, Richmond January 23, 1998 Westminster, Maryland Baltimore, Maryland Bay Insurance, LLC, Baltimore, Maryland Rose Shanis & Co., Inc., Baltimore, Maryland Rose Shanis Sons, Inc., Baltimore, Maryland Rose Shanis & Co., Baltimore, Maryland Stephen Corp., Baltimore, Maryland National Australia Bank Limited, Homeside, Inc., Chicago January 30, 1998 Melbourne, Australia Jacksonville, Florida Homeside Lending, Inc., Jacksonville, Florida Swiss Bank Corporation, Brunswick Warburg, Inc., New York January 22, 1998 Basel, Switzerland New York, New York Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date CNB Bancshares, Inc., Pinnacle Financial Services, Inc., St. Louis February 6, 1998 Evansville, Indiana St. Joseph, Michigan Pinnacle Bank, St. Joseph, Michigan Pinnacle Financial Consultants, Inc., Valparaiso, Indiana IndFed Mortgage Company, Valparaiso, Indiana Forrest Holdings Inc., Lisle, Illinois Forrest Financial Corporation, Lisle, Illinois First Commercial Corporation, Kemmons Wilson, Inc., St. Louis February 12, 1998 Little Rock, Arkansas Memphis, Tennessee KW Bancshares, Inc., Little Rock, Arkansas Federal Savings Bank, Rogers, Arkansas First Commercial Bank, N.A. of West Memphis, West Memphis, Arkansas Lenox Financial Services Corp., Lenox Savings Bank, Boston January 23, 1998 Lenox, Massachusetts Lenox, Massachusetts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 305 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 Centura Bank, Pee Dee State Bank, February 24, 1998 Rocky Mount, North Carolina Timmonsville, South Carolina Farmers Trust Bank, Lebanon Valley National Bank, February 6, 1998 Lebanon, Pennsylvania Lebanon, Pennsylvania 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 1 st United Bank, American Bank of Hollywood, Atlanta January 30, 1998 Boca Raton, Florida Hollywood, Florida Farmers State Bank, Farmers State Bank, fsb, Minneapolis January 23, 1998 Victor, Montana Stevensville, Montana The George Mason Bank, United Bank, Richmond January 28, 1998 Fairfax, Virginia Arlington, Virginia PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Patrick v. United States, No. 97-75017 (E.D. Mich., filed Federal Reserve Banks in which the Board of Governors is not September 30, 1997). Action for damages arising out of tax named a party. dispute. Artis v. Greenspan, No. 97-5234 (D.C. Cir., filed Septem- Logan v. Greenspan, No. l:98CV00049 (D.D.C., filed Janu- ber 19, 1997). Appeal of district court order dismissing ary 9, 1998). Employment discrimination complaint. employment discrimination action. On January 29, 1998, Department of the Treasury, No. 1-97-CV-3798 (N.D. Ga., the Court of Appeals granted the Board's motion for sumfiled December 23, 1997). Declaratory judgment action mary affirmance of the District Court's dismissal of the challenging Federal Reserve notes as lawful money. complaint. Ken v. Department of the Treasury, No. CV-S-97-01877- Artis v. Greenspan, No. 97-5235 (D.C. Cir., filed Septem- DWH (S.D. Nev., filed December 22, 1997). Challenge to ber 19, 1997). Appeal of district court order dismissing income taxation and Federal Reserve notes. employment discrimination class action. Allen v. Indiana Western Mortgage Corp., No. 97-7744 RJK Towe v. Board of Governors, No. 97-71143 (9th Cir., filed (CD. Cal., filed November 12, 1997). Customer dispute September 15, 1997). Petition for review of a Board order with a bank. dated August 18, 1997, prohibiting Edward Towe and Patrick v. United States, No. 97-75564 (E.D. Mich., filed Thomas E. Towe from further participation in the banking November 7, 1997). Action for damages arising out of tax industry. dispute. Branch v. Board of Governors, No. 97-5229 (D.C. Cir., filed Leuthe v. Office of Financial Institution Adjudication, September 12, 1997). Appeal of district court order denying No. 97-1826 (3d Cir., filed October 22, 1997). Appeal of motion to compel production of pre-decisional supervisory district court dismissal of action against the Board and other documents and testimony sought in connection with an Federal banking agencies challenging the constitutionality action by Bank of New England Corporation's trustee in of the Office of Financial Institution Adjudication. bankruptcy against the Federal Deposit Insurance Corpora- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

306 Federal Reserve Bulletin D April 1998 tion. On November 10, 1997, the court denied appellant's order. On January 17, 1997, the parties filed cross-motions request for expedited consideration of the appeal. Oral for summary judgment. argument is scheduled for May 4, 1998. Board of Governors v. Pharaon, No. 91-CIV-6250 (S.D. New Clarkson v. Greenspan, No. 97-CV-2035 (D.D.C., filed Sep- York, filed September 17, 1991). Action to freeze assets of tember 5, 1997). Freedom of Information Act case. On individual pending administrative adjudication of civil January 20, 1998, the Board filed a motion to dismiss the money penalty assessment by the Board. On September 17, action. 1991, the court issued an order temporarily restraining the Banking Consultants of America v. Board of Governors, transfer or disposition of the individual's assets. No. 97-2791 (W.D. Tenn., filed September 2, 1997). Action to enjoin investigation by the Board, the Office of the Comptroller of the Currency, and the Department of Labor. On January 23, 1998, the court granted the Board's motion to dismiss the action. FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD Betters-worth v. Board of Governors, No. 97-CA-624 (W.D. OF GOVERNORS Tex., filed August 21, 1997). Privacy Act case. Wilkins v. Warren, No. 97-CV-590 (E.D. Va., filed August 4, Clark M. Clifford 1997). Customer dispute with a bank. On February 13, Robert A. Altman 1998, the court granted the Board's motion to dismiss the Washington, D.C. action. Greeff v. Board of Governors, No. 97-1976 (4th Cir., filed The Federal Reserve Board announced on February 3, June 17, 1997). Petition for review of a Board order dated 1998, the consent settlement of administrative enforcement May 19, 1997, approving the application of by Allied Irish proceedings against Clark M. Clifford and Robert A. Alt- Banks, pic, Dublin, Ireland, and First Maryland Bancorp, man, former directors of Credit and Commerce American Baltimore, Maryland, to acquire Dauphin Deposit Corpora- Holdings, N.V., Netherlands Antilles, formerly a bank tion, Harrisburg, Pennsylvania, and thereby acquire Dau- holding company. Under the settlement, Clifford and Altphin's banking and nonbanking subsidiaries. man agreed to pay approximately $5 million in compensa- Maunsell v. Greenspan, No. 97-6131 (2d Cir., filed May 22, tion and Altman agreed not to participate in the banking 1997). Appeal of district court dismissal of action for com- industry without the prior approval of the Board. pensatory and punitive damages for alleged violations of civil rights by federal savings bank. Vickery v. Board of Governors, No. 97-1344 (D.C. Cir., filed John E. Colley May 9, 1997). Petition for review of a Board order dated Schenectady, New York April 14, 1997, prohibiting Charles R. Vickery, Jr., from further participation in the banking industry. Oral argument The Federal Reserve Board announced on February 13, was heard on February 24, 1998. 1998, the issuance of a Combined Order of Prohibition and Pharaon v. Board of Governors, No. 97-1114 (D.C. Cir., filed Assessment of a Civil Money Penalty against John E. February 28, 1997). Petition for review of a Board order Colley, a former employee and institution-affiliated party dated January 31, 1997, imposing civil money penalties and of the Trustco Bank New York, Schenectady, New York, an order of prohibition for violations of the Bank Holding formerly a state-chartered bank that was a member of the Company Act. Oral argument was held on December 8, Federal Reserve System. 1997, and on February 10, 1998, the court of appeals affirmed the Board's order. The New Mexico Alliance v. Board of Governors, No. 98- Stephen R. Koury 1049 (D.C. Cir., transferred as of January 21, 1998). Peti- New Castle, Pennsylvania tion for review of a Board order dated December 16, 1996, approving the acquisition by NationsBank Corporation and The Federal Reserve Board announced on February 6, NB Holdings Corporation, both of Charlotte, North Caro- 1998, the issuance of an Order of Prohibition against lina, of Boatmen's Bancshares, Inc., St. Louis, Missouri. On Stephen R. Koury, a former employee and institution- January 21, 1998, the United States Court of Appeals for affiliated party of First Western Trust Services Company, the Tenth Circuit ordered the petition transferred to the New Castle, Pennsylvania, a registered bank holding com- United States Court of Appeals for the District of Columbia pany. Circuit. American Bankers Insurance Group, Inc. v. Board of Governors, No. 96-CV-2383-EGS (D.D.C., filed October 16, Michael A. Lindahl 1996). Action seeking declaratory and injunctive relief in- Croton, Ohio validating a new regulation issued by the Board under the Truth in Lending Act relating to treatment of fees for debt The Federal Reserve Board announced on February 6, cancellation agreements. On October 18, 1996, the district 1998, the issuance of an Order of Prohibition against court denied plaintiffs' motion for a temporary restraining Michael A. Lindahl, a former officer and institution- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 307 affiliated party of the Heartland Bank, Croton, Ohio, a state Michael Wachs member bank. New York, New York Towne Bank The Federal Reserve Board announced on February 6, Perrysburg, Ohio 1998, the issuance of an Order of Prohibition against Michael Wachs, a former Managing Director and The Federal Reserve Board announced on February 6, institution-affiliated party of the Chase Manhattan Corpora- 1998, the issuance of a Cease and Desist Order against the tion, New York, New York, a registered bank holding Towne Bank, Perrysburg, Ohio. The Order was issued company, and Chase Securities, Inc., a nonbank subsidiary jointly with the Ohio Division of Financial Institutions. of Chase Manhattan Corporation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

308 Federal Reserve Bulletin • April 1998 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Al Financial and Business Statistics A3 GUIDE TO TABULAR PRESENTATION Federal Finance—Continued ATI Gross public debt of U.S. Treasury— DOMESTIC FINANCIAL STATISTICS Types and ownership A28 U.S. government securities Money Stock and Bank Credit dealers—Transactions A4 Reserves, money stock, liquid assets, and debt A29 U.S. government securities dealers— measures Positions and financing A5 Reserves of depository institutions and Reserve Bank A30 Federal and federally sponsored credit credit agencies—Debt outstanding A6 Reserves and borrowings—Depository institutions Securities Markets and Corporate Finance Policy Instruments A31 New security issues—Tax-exempt state and local governments and corporations A7 Federal Reserve Bank interest rates A32 Open-end investment companies—Net sales A8 Reserve requirements of depository institutions and assets A9 Federal Reserve open market transactions A32 Corporate profits and their distribution A32 Domestic finance companies—Assets and Federal Reserve Banks liabilities A33 Domestic finance companies—Owned and managed A10 Condition and Federal Reserve note statements receivables All Maturity distribution of loan and security holding Real Estate Monetary and Credit Aggregates A34 Mortgage markets—New homes A12 Aggregate reserves of depository institutions A35 Mortgage debt outstanding and monetary base A13 Money stock, liquid assets, and debt measures Consumer Credit A36 Total outstanding Commercial Banking Institutions— A3 6 Terms Assets and Liabilities A15 All commercial banks in the United States Flow of Funds A16 Domestically chartered commercial banks A17 Large domestically chartered commercial banks A37 Funds raised in U.S. credit markets A19 Small domestically chartered commercial banks A39 Summary of financial transactions A20 Foreign-related institutions A40 Summary of credit market debt outstanding A41 Summary of financial assets and liabilities Financial Markets A22 Commercial paper and bankers dollar DOMESTIC NONFINANCIAL STATISTICS acceptances outstanding A22 Prime rate charged by banks on short-term Selected Measures business loans A42 Nonfinancial business activity A23 Interest rates—Money and capital markets A42 Labor force, employment, and unemployment A24 Stock market—Selected statistics A43 Output, capacity, and capacity utilization A44 Industrial production—Indexes and gross value Federal Finance A46 Housing and construction A25 Federal fiscal and financing operations A47 Consumer and producer prices A26 U.S. budget receipts and outlays A48 Gross domestic product and income A27 Federal debt subject to statutory limitation A49 Personal income and saving Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A2 Federal Reserve Bulletin • April 1998 INTERNATIONAL STATISTICS Reported by Nonbanking Business Enterprises in the United States Summary Statistics A58 Liabilities to unaffiliated foreigners A50 U.S. international transactions 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

A3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected G-10 Group of Ten e Estimated GNMA Government National Mortgage Association n.a. Not available GDP Gross domestic product 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 Standard Industrial Classification FSLIC Federal Savings and Loan Insurance Corporation SIC Department of Veterans Affairs G-7 Group of Seven VA GENERAL INFORMATION In many of the tables, components do not sum to totals because of include not fully guaranteed issues) as well as direct obligarounding. tions of the Treasury. 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 Financial Statistics • April 1998 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted' Monetary or credit aggregate Ql Q2 Q3 Q4 Sept. Oct. Reserves of depository institutions 1 Total -8.3 -14.3 -1.8 -1.3 -18.9 -5.5 10.6 8.5 -20.9 2 Required -8.4 -15.0 -2.4 -4.1 -20.5 -8.3 5.1 7.0 -24.4 3 Nonborrowed -7.2 -16.0 -3.4 .7 -15.0 -1.2 13.7 4.1 -18.2 4 Monetary base3 5.3 3.7 6.3 8.1 6.8 6.8 10.9 9.9 5.9 Concepts of money, liquid assets, and debt* 5 Ml -1.4 -4.5 .3 -8.4 -1.9 8.2 7.6 -3.0 6 M2 5.1 4.4 5.4 6.8 6.3 5.9 7.3 6.8 6.9 7 M3 8.0 7.7 8.1 9.8 8.7 8.5 11.5 11.0 10.6 8 L 7.0 8.4 7.1 9.3 7.2 6.9 12.9 11 7 n.a. 9 Debt 4.3 4.7 4.1 5.2 4.9 5.5 5.3 4.8 n.a. Nontransaction components 10 In M25 7.7 7.9 7.3 9.0 11.8 8.6 7.0 6.5 10.5 11 In M3 only6 18.0 18.9 16.9 19.2 16.6 16.7 24.4 23.8 21.9 Time and savings deposits Commercial banks 12 Savings, including MMDAs 12.8 11.0 9.5 16.3 20.4 17.4 11.9 13.6 13.4 13 Small time7 2.9 5.6 7.1 3.1 3.7 2.5 5.6 1.0 .0 14 Large time8-9 19.4 24.1 17.2 14.0 18.2 6.6 22.6 19.9 5.1 Thrift institutions 15 Savings, including MMDAs 7 6.0 1.0 1.3 .3 2.2 -.6 5.1 6.4 16 Small time7 .0 -2.9 -5.2 -3.6 -5.5 -1.0 -9.4 .3 4.2 17 Large time8 13.5 4.3 9.8 5.3 1.4 1.4 11.5 11.4 29.6 Money market mutual funds 18 Retail 14.7 13.5 16.0 15.6 23.3 10.2 14.4 4.8 22.9 19 Institution-only 18.4 18.0 19.7 22.0 28.2 22.9 7.6 34.5 14.7 Repurchase agreements and Eurodollars 2 2 0 1 R Eu ep ro u d rc o h ll a a s r e s 1 a 0 greements10 3 6 5 . . 2 8 3 6 2 . . 8 2 1 19 3 . . 5 4 39 7 . . 3 0 - 2 4 1 .6 .3 -1 5 3 6 . . 9 2 - 7 4 9 . . 4 5 3 1 8 0 . . 0 8 6 1 8 8 . . 8 0 Debt components* 22 Federal 1.8 .4 -.6 .9 1.1 .5 .3 2.2 23 Nonfederal 5.2 6.3 5.8 6.7 6.2 7.2 7.0 5.7 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 (OCI>s), consisting of negotiable order of which are derived from the Federal Reserve Board's flow of funds accounts, are breakwithdrawal (NOW) and aulomaljc transfer service (ATS) accounts al depository institutions, adjusted (that is, discontinuities in the data have been smoothed into the series) and credit union share draft accounts, and demand deposits al 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 lime 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 daily figures Average of daily figures for week ending on date indicated 1997 1998 1998 Nov. Dec. 17 Dec. 24 Dec. 31 Jan. 7 Jan. 14 Jan. 21 Jan. 28 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 460,675 469,563' 468,726 466,689 476,255' 476,928 468,283 466,446 465,389 U.S. government securities2 2 Bought outright—System account3 416,535 427,860 429,845 430,419 429,198 430,866 430,973 430,981 429,718 428,462 3 Held under repurchase agreements 8,910 7,197 4,155 2,900 7,270 9,917 9,827 3,433 1,920 2,896 Federal agency obligations 4 Bought outright 686 685 685 685 685 685 685 685 685 685 5 Held under repurchase agreements 1,698 1,156 833 798 1,483 1,502 1,523 826 403 422 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 49 252 188 92 673 352 22 364 87 8 Seasonal credit 110 79 18 78 64 23 20 16 16 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 585 931 1,234 486 905' 766' 1,989 690 1,798 594 11 Other Federal Reserve assets 32.102 31,404 31,769 31,040 31,936 31,782 31,556 31,626 31.543 32,228 12 Gold stock 11.050 11.049 11,046 11,049 11,049 11,048 11,047 11,046 11.046 11.044 13 Special drawing rights certificate account 9,200 9,200 9.200 9,200 9,200 9,200 9,200 9,200 9,200 9.200 14 Treasury currency outstanding 25.595r 25.602' 25,644 25,602' 25,604' 25.606' 25,620 25.634 25,648 25,662 ABSORBING RESERVE FUNDS 15 Currency in circulation 466,939' 475,661' 474,085 473.081' 477,120' 481,545' 480,719 475,243 472,553 470,160 16 Treasury cash holdings 2+4 230 224 231 229 229 225 228 227 219 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,126 5,107 6.507 6,330 5.001 4,758 5,031 5,253 9,148 6,976 18 Foreign 213 177 188 170 156 213 244 177 161 166 19 Service-related balances and adjustments . 6,950 6.922 7,198 6,803 6,986' 6,954' 6,792 7,007 7,377 7.584 20 Other 364 354 421 379 333 365 796 252 329 343 21 Other Federal Reserve liabilities and capital . 16,140 16.025 16,016 16,192 16,343 16,223 15,636 16,240 16,127 16.083 22 Reserve balances with Federal Reserve Banks' 10,544 10.938' 9,976 9.354 11,330 11,821' 13,353 9,762 6,417 9,765 End-of-month figures Wednesday figures Dec. Dec. 24 Dec. 31 Jan. 7 Jan. 14 Jan. 21 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 465,930 463,591 476.015 475,607' 490.034' 472,413 472,870 473.661 U.S. government securities2 2 Bought outright—System account' . . . 419,882 430.736 428,043 430.546 432,059 430,736 430,039 431,714 429,553 427,975 3 Held under repurchase agreements 10,416 21,188 9.415 7,123 21,188 4,275 5,465 6,271 8,978 Federal agency obligations 4 Bought outrighl 685 685 685 685 685 685 685 685 685 5 Held under repurchase agreements 3.782 2,652 1,268 1,902 2,652 747 2,216 1,356 760 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 3 2,001 894 21 2,001 7 20 367 14 8 Seasonal credit 87 35 84 75 35 19 20 15 13 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 74 719' 700 400 2,136' 719' 5,291 -245 2,453 2,222 11 Other Federal Reserve assets 31,001 32,020 32.072 32.111 31,606 32,020 31,352 32.377 32,171 33.014 12 Gold stock 11,051 11,047 11.046 11,049 11,048 11,047 11,047 11,046 11,046 11,044 13 Special drawing rights certificate account 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 14 Treasury currency outstanding 25,598' 25,606' 25,676 25,602' 25,604' 25,606' 25,620 25,634 25,648 25,662 ABSORBING RESERVE FUNDS 15 Currency in circulation 471,226' 482,390' 468,337 475,343' 480,521' 482,390' 478,691 473,960 472,384 470,034 16 Treasury cash holdings 234 225 220 229 229 225 228 229 219 220 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,127 5,444 5.552 7.493 4,949 5,444 5,580 4,644 15,430 6,846 18 Foreign 167 457 215 154 157 457 159 157 161 158 19 Service-related balances and adjustments . 7,178 6,954 7,278 6,803 6.986 6,954 6,792 7,007 7,377 7,584 20 Other 509 900 343 381 296 900 199 337 330 334 21 Other Federal Reserve liabilities and capital . 15,559 15,500 15,969 16,021 16,141 15,500 15,735 15,971 15,929 15,853 22 Reserve balances with Federal Reserve Banks' 11,780 24,017' 11,598 15,442 12,179' 24,017' 10,896 15,826 6,933 18,538 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 Financial Statistics • April 1998 1.12 RESERVES AND BORROWINGS Depository Institutions' Millions of dollars Prorated monthly averages of biweekly averages Reserve classification 1995 1996 1997 1997 1998 Dec. Dec. Dec. July Aug. Sept. Oct. Nov. Dec. Jan. 1 Reserve balances with Reserve Banks" 20,440 13.395 10,673' 9,851 10,489 9,742 9,990 10,559 10,673' 9,736 2 Total vault cash' 42,094 44,379' 43,970 43,145' 42,379' 43,056' 41.730 42,114 43,970 46,672 37.460 37,848 37,206 36,529 36,156 36,314 35,631 35,892 37,206 37,767 4 Surplus vault cash5 4,634 6,532' 6.763 6,616' 6,224' 6,742' 6,099' 6,222 6,763 8,905 57.900 51,243 47,880 46,380 46,645 46,056 45,621 46,451 47,880 47,503 56.622 49,819 46,196' 45,179 45,392 44,761 44,225 44,834 46,196' 45,719 7 Excess reserve balances at Reserve Banks7 1.278 1,424 1,683 1,201 1,253 1,295 1,396 1,617 1,683 1,784 8 Total borrowings at Reserve Banks8 257 155 324 409 598 438 270 153 324 210 40 68 79 330 385 368 227 115 79 18 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 1998 Oct. 8 Oct. 22 Nov. 5 Nov. 19 Dec. 3 Dec. 17 Dec. 31' Jan. 14 Jan. 28 Feb. 11 1 Reserve balances with Reserve Banks2 9,883 9,756 10,451 10,234 11,022 9,678 11,595 11,500 8,177 8,783 2 Total vault cash3 42,603 41,097' 41,941' 42,129 42,175 44,267 44,058 44,958 48,839 44.560 36.329 35,177 35,718 35,817 36,068 36,965 37,692 37,976 37,841 36,447 4 Surplus vault cash5 6.274' 5,920' 6.224' 6.312 6,108 7,302 6,366 6,982 10,998 8,113 46.211 44,932 46.168 46.051 47,090 46,643 49,286 49,476 46,018 45,230 6 Required reserves 44,772 43,731 44,507 44,540 45,357 45,170 47,403 47,659 44,228 43,628 7 Excess reserve balances at Reserve Banks 1,439 1,201 1,661 1,510 1,733 1,473 1,883 1,817 1,790 1,602 8 Total borrowings at Reserve Banks8 356 241 238 149 119 240 454 209 242 67 308 220 167 112 95 85 71 22 16 9 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 compensaie 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 meir 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 credit Seasonal credit Extended credit Federal Reserve Bank On Effective date Previous rate On Effective date Previous rate On Previous rate 3/6/98 3/6/98 3/6/98 Boston 2/1/96 5.25 5.55 2/26/98 6.05 2/26/98 6.00 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. 1/31/96 5.50 Range of rates for adjustment credit in recentyears Range (or F.R. Bank Range (or F.R. Bank Range (or F.R. Bank Effective date level)—All of Effective date level)—All of Effective date level)—All of F.R. Banks NT. F.R. Banks N.Y. F.R. Banks N.Y. In effect Dec. 31, 1977 6 6 198i_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 11 11 Aug 21 7.75 7.75 16 10.5 10.5 1991—Feb. 1 6-o\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 85 85 Oct 12 9 5-10 95 May 2 55 5.5 Nov 1 8.5-9.5 9.5 13 9.5 9.5 Sept. 13 5-5.5 5 3 95 95 Nov. 22 9-9.5 9 17 5 5 26 9 9 Nov 6 4.5-5 4.5 1979 July 20 10 10 Dec. 14 8.5-9 9 7 4.5 4.5 Aug. 17 10-10.5 10.5 15 8.5-9 8.5 Dec. 20 3.5-4.5 3.5 20 105 10.5 17 .. 8.5 85 24 35 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 75 Nov. 15 4-4.75 4 75 June 13 11-12 11 17 4.75 4.75 16 11 11 1986—Mar. 7 7-7.5 7 July 28 10-11 10 10 . 7 7 1995—Feb. 1 4.75-5.25 5.25 29 10 10 Apr 21 65 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 Mav 5 13 14 14 In effect Mar 6 1998 500 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 thai 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 subsequendy 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 Financial Statistics • April 1998 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Type of deposit Net transaction accounts 1 $0 million-$47.8 million3. . 1/1/98 2 More than $47.8 million4 . . 1/1/98 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 1, 1998, for depository institutions that report weekly, include commercial banks, mutual savings banks, savings and loan associations, credit and with the period beginning January 15, 1998, for institutions that report quarterly, the unions, agencies and branches of foreign banks, and Edge Act corporations, exemption was raised from $4.4 million to $4.7 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 1XA years was reduced from 3 percent to 11/2 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 lA 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 1 l/z as of June 30 of each year. Effective with the reserve maintenance period beginning January 1, years or more has been zero since Oct. 6, 1983. 1998, for depository institutions that report weekly, and with the period beginning January 15, 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero 1998, for institutions that report quarterly, the amount was decreased from $49.3 million to in the same manner and on the same dates as the reserve requirement on nonpersonal time $47.8 million. deposits with an original maturity of less than I l/i 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 Type of transaction and maturity July Aug. Sept. U.S. TREASURY SECURITIES2 Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 10,932 9,901 9,147 596 0 0 0 0 0 4,545 2 Gross sales 0 0 0 0 0 0 0 0 0 0 3 Exchanges 405,296 426,928 419,347 33,022 35,948 35,666 28,328 39,313 33,485 26,905 4 For new bills 405,296 426,928 418.997 33,022 35,948 35,666 28,328 39,313 33,485 26,905 5 Redemptions 900 0 0 0 0 0 0 0 0 0 Others within one year 6 Gross purchases 390 524 5,748 494 0 0 644 0 1,462 1.947 7 Gross sales 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts 43,574 30,512 43,473 1,476 4,359 7,487 1,596 3,193 5,231 1,748 9 Exchanges -35,407 -41.394 -27,499 -2,250 -1,087 -2,780 -2,382 -1,267 -4.126 -2,329 10 Redemptions 1.776 2,015 0 0 598 0 0 416 0 0 One to five years 11 Gross purchases 5,366 3,898 20.299 2,797 0 0 2,697 0 3,323 4.471 12 Gross sales 0 0 0 0 0 0 0 0 0 0 13 Maturity shifts -34,646 -25,022 -39,744 -1,476 -4,359 -5,247 -1,596 -3,193 -4,883 -1,748 14 Exchanges 26,387 31.459 20,274 2,250 1,087 1.170 2,382 1.267 1,651 2,329 Five to ten years 15 Gross purchases 1,432 1,116 3,101 499 0 0 0 770 485 613 16 Gross sales 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts -3,093 -5,469 -1,954 0 0 -2,240 0 0 31 0 18 Exchanges 7,220 6,666 5,215 0 0 0 0 1.295 0 More than ten years 19 Gross purchases 2,529 1,655 5,827 906 0 0 0 648 954 1,214 20 Gross sales 0 0 0 0 0 0 0 0 0 0 21 Maturity shifts -2,253 -20 -1,775 0 0 0 0 0 -379 0 22 Exchanges 1,800 3,270 2,360 0 0 730 0 0 1.180 0 All maturities 23 Gross purchases 20,649 17,094 44.122 5,292 0 0 3,341 1,418 6,224 12,790 24 Gross sales 0 0 0 0 0 0 0 0 0 0 25 Redemptions 2,676 2.015 1,996 0 0 0 416 0 0 Matched transactions 26 Gross purchases 2,197,736 3,092,399 3,586,584 293,506 307,101 317,008 311,153 316,425 272,474 353,726 27 Gross sales 2,202,030 3,094,769 3,588,905 293.008 309,578 315,439 312,083 318,485 269,586 355,668 Repurchase agreements 28 Gross purchases 331,694 457,568 810,485 55,073 44,087 54,561 77,109 75,323 73,618 97.932 29 Gross sales 328,497 450,359 809,268 47,070 53,217 50,340 74,960 78,157 73,064 87,160 30 Net change in U.S. Treasury securities 19,919 41.022 13,793 5,790 4,560 -3,893 9,666 21,620 FEDERAL AGENCY OBLIGATIONS Outright transactions 31 Gross purchases 0 0 0 0 0 0 0 0 32 Gross sales 0 0 0 0 0 0 0 0 33 Redemptions 1,003 409 1,540 474 287 179 105 215 Repurchase agreements 34 Gross purchases 36,851 75,354 160,409 8,401 10,437 13,131 9,796 15,639 23,054 20.056 35 Gross sales 36,776 74,842 159,369 9,131 10,811 11,252 11,196 15,157 20,976 21,186 36 Net change in federal agency obligations -928 103 -500 -1,204 -661 1.700 -1,505 267 2,052 -1,130 37 Total net change in System Open Market Account. 15,948 20,021 40,522 12389 -12,866 7,490 3,055 -3,626 11,718 20,490 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 Financial Statistics • April 1998 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 1997 1998 1997 1998 Dec. 31 Jan. 7 Jan. 14 Jan. 21 Jan. 28 Nov. 30 Dec. 31 Jan. 31 Consolidated condition statemen ASSETS 11,047 11,047 11,046 11,046 11,044 11,051 11,047 11,046 2 Special drawing rights certificate account 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 460 448 476 510 532 495 460 556 Loans 2,035 26 40 382 27 90 2,035 24 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 685 685 685 685 685 685 685 685 2,652 747 2,216 1,356 760 3,782 2,652 1,268 9 Total US. Treasury securities 451,924 434,314 437,179 435,824 436,953 430,298 451,924 428,843 10 Bought outright2 430,736 430,039 431,714 429,553 427,975 419,882 430,736 428,043 11 Bills 197,123 196,426 198,101 196,418 194,841 194,519 197,123 194,909 12 Notes 174,206 174,206 174,206 173,728 173,727 167,170 174,206 173,727 13 Bonds 59,407 59,407 59,407 59,407 59,407 58,193 59,407 59,407 14 Held under repurchase agreements 21,188 4,275 5,465 6,271 8,978 10,416 21,188 800 15 Total loans and securities 457,295 435,771 440,119 438,246 438,425 434,855 457,295 430,820 7,800 12,562 7,684 11,980 8,180 3,262 7,800 5.185 17 Bank premises 1,272 1,272 1,274 1,275 1,274 1,264 1,272 1,273 Other assets 18 Denominated in foreign currencies' 17,046 17,053 17,061 17,068 17,076 17,345 17,046 17,019 19 All other4 13 726 13015 14 035 13 894 15 084 12 384 13 726 13,693 20 Total assets 517,847 500,367 500,895 503,219 500,816 489,856 517,847 488,792 LIABILITIES 21 Federal Reserve notes 457,469 453,747 449.031 447,464 445,125 446,357 457,469 443,438 22 Total deposits 37,639 23,570 29,286 29,845 33,767 25,073 37,639 24,937 23 Depository institutions 30,838 17,632 24,148 13,923 26,426 19,271 30,838 18,826 24 US. Treasury—General account 5,444 5,580 4,644 15,430 6,846 5,127 5,444 5,552 457 159 157 161 158 167 457 215 26 Other 900 199 337 330 334 509 900 343 27 Deferred credit items 7,239 7,314 6,606 9,980 6,071 2,866 7,239 4,449 4,846 4,581 4,775 4,718 4,635 4,908 4,846 4,635 29 Total liabilities 507,193 489,213 489,698 492 008 489,598 479,204 507,193 477,458 CAPITAL ACCOUNTS 5,433 5,439 5,473 5,471 5.476 5.314 5,433 5,477 31 Surplus 5,220 5,220 5,220 5,220 5,220 4,348 5,220 5,220 0 494 503 519 522 990 0 636 33 Total liabilities and capital accounts 517,847 500,367 500,895 503,219 500,816 489,856 517,847 488,792 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 602,834 600,196 602,290 603,293 605,315 618,612 602,834 607,873 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 549,600 549,231 548,053 548,437 548,150 547,796 549,600 547,998 36 LESS: Held by Federal Reserve Banks 92,131 95.484 99,022 100,972 103,025 101,440 92,131 104,561 37 Federal Reserve notes, net 457,469 453,747 449,031 447.464 445,125 446,357 457,469 443,438 Collateral held against notes, net 11,047 11,047 11,046 11,046 11,044 11,051 11,047 11,046 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 437.222 433,500 428,786 427,219 424,881 426,106 437,222 423,192 42 Total collateral 457,469 453,747 449,031 447,464 445,125 446357 457,469 443,438 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 ai 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 All 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month Type of holding and maturity 1998 Jan. 31 1 Total loans 2,035 26 40 382 27 90 2 Within fifteen days1 2,014 10 22 380 25 35 734 21 21 16 18 2 55 3 2 3. Sixteen days to ninety days 451,924 434314 437,179 435,824 436,953 431,903 451,924 428,843 4 Total U.S. Treasury securities2 34,147 19.254 14,953 20,312 21,566 17,366 34,147 9,133 5 Within fifteen days1 95,648 98,686 99,878 93,324 92,750 97,369 95,648 104,808 6 Sixteen days to ninety days 137,886 132,130 138,105 138,437 138,887 137,454 137,886 131,151 7 Ninety-one days to one year 95,028 95,028 95,028 94,136 94,136 92,328 95,028 94,136 8 One year to five years 40,906 40.907 40,907 41,306 41,306 40,292 40,906 41,306 9 Five years to ten years 48,308 48,308 48,308 48,308 48,308 47,094 48,308 48,308 10 More than ten years 11 Total federal agency obligations 3,337 1,432 2,901 2,041 1,445 1,547 3337 1,953 12 Within fifteen days' 2.652 747 2,216 1,356 770 862 2,652 1,278 13 Sixteen days to ninety days 60 60 90 90 94 10 60 94 14 Ninety-one days to one year 192 192 162 162 150 197 192 150 15 One year to five years 153 153 153 153 151 198 153 151 16 Five years to ten years 255 255 255 255 255 255 255 255 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Financial Statistics • April 1998 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1994 1995 1996 1997 Dec. Dec. Dec. Dec. July Aug. Sept. Dec. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS' 1 Total reserves3 59.40 56.39 50.06 47.20 47.11 46.89 47.41 46.67 46.45 46.87 47.20 46.37 2 Nonborrowed reserves4 59.20 56.13 49.91 46.87 46.74 46.48 46.82 46.23 46.18 46.71 46.87 46.16 3 Nonborrowed reserves plus extended credit5 59.20 56.13 49.91 46.87 46.74 46.48 46.82 46.23 46.18 46.71 46,87 46.16 4 Required reserves 58.24 55.11 48.64 45.51 45.83 45.68 46.16 45.37 45.06 45.25 45.51 44.59 5 Monetary base6 418.18' 434.23' 452.47' 480.58' 461.72' 464.46' 467.02' 469.68' 472.35' 476.64' 480.58' 482.92 Nol seasonally adjusted 6 Total reserves7 61.13 58.02 51.52 48.56 46.93 46.76 47.09 46.55 46.16 47.05 48.56 47.50 7 Nonborrowed reserves 60.92 57.76 51.37 48.23 46.56 46.35 46.49 46.11 45.89 46.90 48.23 47.29 8 Nonborrowed reserves plus extended credit'' 60.92 57.76 51.37 48.23 46.56 46.35 46.49 46.11 45.89 46.90 48.23 47.29 9 Required reserves8 59.96 56.74 50.10 46.87 45.65 45.56 45.83 45.25 44.77 45.44 46.87 45.72 10 Monetary base9 422.51 439.03 456.72 485.47' 461.81 465.55 467.24 468.63 470.70' 476.94' 485.47' 484.43 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS 11 Total reserves" 61.34 57.90 51.24 47.88 46.61 46.38 46.65 46.06 45.62 46.45 47.88 47.50 12 Nonborrowed reserves 61.13 57.64 51.09 47.56 46.24 45.97 46.05 45.62 45.35 46.30 47.56 47.29 13 Nonborrowed reserves plus extended credit5 61.13 57.64 51.09 47.56 46.24 45.97 46.05 45.62 45.35 46.30 47.56 47.29 14 Required reserves 60.17 56.62 49.82 46.20 45.33 45.18 45.39 44.76 44.23 44.83 46.20 45.72 15 Monetary base12 427.25 444.45 463.49 491.92' 468.78 472.58 474.01 475.32 477.28' 483.50' 491.92' 491.62 16 Excess reserves1' 1.17 1.28 1.42 1.68 1.28 1.20 1.25 1.30 1.40 1.62 1.68 1.78 17 Borrowings from the Federal Reserve .21 .26 .16 .32 .37 .41 .60 .44 .27 .15 .32 .21 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 or' 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 I) less total borrowings of depository institutions from the requirements. Federal Reserve (line 17). 10. Reflects actual reserve requirements, including those on nondeposit liabilities, with no 5. Extended credit consists of borrowing at the discount window under the terms and adjustments to eliminate the effects of discontinuities associated with regulatory changes in conditions established for the extended credit program to help depository institutions deal reserve requirements. with sustained liquidity pressures. Because there is not the same need to repay such 11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve borrowing promptly as with traditional short-term adjustment credit, the money market effect requirements. of extended credit is similar to that of nonborrowed reserves. 12. The monetary base, not break-adjusted and not seasonally adjusted, consists of (1) total 6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally reserves (line 11), plus (2) required clearing balances and adjustments to compensate for float adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency at Federal Reserve Banks, plus (3) the currency component of the money stock, plus (4) (for component of the money stock, plus (3) (for all quarterly reporters on the "Report of all quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters Cash and for all those weekly reporters whose vault cash exceeds their required reserves) the whose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference between current vault cash and the amount applied to satisfy current reserve difference between current vault cash and the amount applied to satisfy current reserve requirements. Since the introduction of contemporaneous reserve requirements in February requirements. 1984, currency and vault cash figures have been measured over the computation periods 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess ending on Mondays. reserves (line 16). 13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES' Billions of dollars, averages of daily figures 1997' 1998 1996 1997 Dec.' Dec.' Dec.' Oct. Nov. Dec. Jan. Seasonally adjusted Measures 1 Ml 1,150.7 1,128.7 1,082.8 1,076.0 1,061.9 1,069.2 1,076.0 1,073.3 2 M2 3,503.0 3,651.2 3,826.1 4,040 2 3,993.2 4,017.5 4,040.2 4,063.5 3 M3 4,333.6 4,595.6 4,935.5 5,373.2 5,274.1 5,324.6 5,373.2 5,420.8 4 L 5,315.8 5,702.2 6,088.4 6,615.4 6,482.0 6,551.6 6,615.4 n.a. 5 Deb! 13,078.0 13,773.3 14,496.6 15,180.2 15,052.7 15,119.1 15,180.2 n.a. Ml components 6 Currency3 354.3 372.4 394.9 425.5 418.3 421.9 425.5 427.5 7 Travelers checks4 8.5 8.9 8.6 8.2 8.2 8.1 82 8.2 8 Demand deposits 384.0 391.0 403.6 397.1 389.6 394.5 397.1 392.7 9 Other checkable deposits6... 403.9 356.4 275.9 245.1 245.8 244.6 245.1 244.9 Nontransaction components 10 InM27 2,352.3 2,522.6 2,743.2 2,964.2 2,931.2 2,948.3 2,9642 2,990.2 11 In M3 only8 830.6 944.4 1,109.4 1,333.0 1,281.0 1,307.1 1,333.0 1,357.3 Commercial banks 12 Savings deposits, including MMDAs. 752.6 775.0 904.8 1,020.9 999.6 1.009.5 1.020.9 1,032.3 13 Small time deposits 503.2 575.8 594.5 621.6 618.2 621.1 621.6 621.6 14 Large time deposits10' u 298.7 345.4 413.2 495.8 478.7 487.7 495.8 497.9 Thrift institutions 15 Savings deposits, including MMDAs 397.3 359.7 366.9 376.5 375.1 374.9 376.5 378.5 16 Small time deposits 314.2 357.2 354.3 343.6 346.2 143.5 343.6 344.8 17 Large time deposits10 64.7 74.2 78.0 85.2 83.6 84.4 85 2 87.3 Money market mutual funds 18 Retail 385.0 454.9 522.8 601.6 592.1 599.2 601.6 613.1 19 Institution-only 203.1 253.9 310.3 376.2 363.4 365.7 376.2 380.8 Repurchase agreements and Eurodollars 20 Repurchase agreements 183.3 182.4 194.2 235.6 219.0 233.5 235.6 249.1 21 Eurodollars'2 80.8 88.6 113.7 140.1 136.3 135.8 140.1 142.2 Debt components 22 Federal debt 3,491.9 3,638.5 3,780.0 3,797.3 3,789.6 3,790.4 3.797.3 n.a. 23 Nonfederal debt.. 9,586.0 10,134.8 10,716.7 11,382.9 11.263.1 11,328.7 11.382.9 n.a. Not seasonally adjusted Measures2 24 Ml 1,174.4 1,152.4 1,104.9 1,097.5 1,058.2 1,074.3 1,097.5 1,078.6 25 M2 3,523.4 3,672.0 3,845.4 4,059.1 3,980.9 4,019.9 4,059.1 4,065.4 26 M3 4,353.2 4,615.2 4,953.4 5,390.3 5,267.2 5,330.5 5,390.3 5.424.6 27 L 5,344.6 5,732.7 6.116.5 6,641.1 6,470.8 6,562.7 6,641.1 28 Debt 13.079.9 13,773.9 14,496.0 15,179.3 15,016.2 15,099.9 15,179.3 Ml components 29 Currency3 357.5 376.2 397.9 429.0 417.3 422.4 429.0 426.4 30 Travelers checks" 8.1 8.5 8.3 7.9 8.2 8.0 7.9 7.9 31 Demand deposits5 400.3 407.2 419.9 412.9 399.8 412.9 396.2 32 Other checkable deposits'. .. 408.6 360.5 278.8 247.6 244.2 247.6 248.2 Nontransaction components 33 In M27 2,349.0 2,519.6 2,740.5 2,961.6 2,922.7 2,945.5 2,961.6 2,986.7 34 In M3 only8 829.7 943.2 1.108.0 1.331.2 1,286.2 1,310.6 1,331.2 1,359.3 Commercial banks 35 Savings deposits, including MMDAs. . . 751.7 774.1 903.3 1,019.0 996.5 1,009.2 1,019.0 1.028.0 36 Small time deposits 501.5 573.8 592.7 620.0 618.0 620.2 620.0 621.2 37 Large lime deposits'0' " 298.9 345.8 413.6 496.3 485.7 493.4 496.3 490.4 Thrift institutions 38 Savings deposits, including MMDAs. .. 396.8 359.2 366.4 375.8 374.0 374.8 375.8 376.9 39 Small time deposits9 313.2 355.9 353.2 342 7 346.1 343.1 342.7 344.6 40 Large time deposits10 64.8 74.3 78.1 85.3 85.3 85.3 86.0 Money market mutual funds 41 Retail 385.9 456.4 524.8 604.1 588.1 598.3 604.1 616.0 42 Institution-only 204.6 255.8 312.7 378.9 359.6 365.2 378.9 389.8 Repurchase agreements and Eurodollars 43 Repurchase agreements'2 179.6 178.0 188.8 228.9 221.0 232.0 228.9 247.8 44 Eurodollars'2 81.8 89.4 114.7 141.7 135.1 134.6 141.7 145.3 Debt components 45 Federal debt 3,499.0 3,645.9 3.787.9 3,805.8 3,774.4 3,792.1 3,805.8 46 Nonfederal debt.. 9,580.9 10,128.0 10.708.1 11,373.5 11,241.9 11,307.8 11.373.5 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Financial Statistics • April 1998 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) weekly these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term statistical release. Historical data starting in 1959 are available from the Money and Reserves Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve separately, and then adding this result to M3. System, Washington, DC 20551. Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial 2. Composition of the money stock measures and debt is as follows: sectors—the federal sector (U.S. government, not including government-sponsored enter- Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of prises or federally related mortgage pools) and the nonfederal sectors (state and local depository institutions, (2/ travelers checks of nonbank issuers, (3) demand deposits at all governments, households and nonprofit organizations, nonfinancial corporate and nonfarm commercial banks other than those owed to depository institutions, the U.S. government, and noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and foreign banks and official institutions, less cash items in the process of collection and Federal corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of which are derived from the Federal Reserve Board's flow of funds accounts, are breakwithdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, adjusted (that is, discontinuities in the data have been smoothed into the series) and credit union share draft accounts, and demand deposits at thrift institutions. Seasonally month-averaged (that is, the data have been derived by averaging adjacent month-end levels). adjusted Ml is computed by summing currency, travelers checks, demand deposits, and 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depository OCDs, each seasonally adjusted separately. institutions. M2: Ml plus (1) savings deposits (including MMDAs), (2) small-denomination time 4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. deposits (time deposits—including retail RPs—in amounts of less than $100,000), and (3) Travelers checks issued by depository institutions are included in demand deposits. balances in retail money market mutual funds (money funds with minimum initial invest- 5. Demand deposits at commercial banks and foreign-related institutions other than those ments of less than $50,000). Excludes individual retirement accounts (IRAs) and Keogh owed to depository institutions, the U.S. government, and foreign banks and official institubalances at depository institutions and money market funds. Seasonally adjusted M2 is tions, less cash items in the process of collection and Federal Reserve float. calculated by summing savings deposits, small-denomination time deposits, and retail money 6. Consists of NOW and ATS account balances at all depository institutions, credit union fund balances, each seasonally adjusted separately, and adding this result to seasonally share draft account balances, and demand deposits at thrift institutions. adjusted Ml. 7. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more) money fund balances. issued by all depository institutions, (2) balances in institutional money funds (money funds 8. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities with minimum initial investments of $50,000 or more), (3) RP liabilities (overnight and term) (overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and issued by all depository institutions, and (4) Eurodollars (overnight and term) held by U.S. term) of U.S. addressees. residents at foreign branches of U.S. banks worldwide and at all banking offices in the United 9. Small time deposits—including retail RPs—are those issued in amounts of less than Kingdom and Canada. Excludes amounts held by depository institutions, the U.S. govern- $100,000. All [RAs 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

Commercial Banking Institutions—Assets and Liabilities A15 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities' A. All commercial banks Billions of dollars Monthly averages Wednesday figures 1997' July Aug. Sept. Nov. Dec. Seasonally adjusted Assets 1 Bank credit 3,803.5' 3,957.4 3,970.9 3,995.8 4,030.9 4,076.8 4,111.3 4,158.9 4,148.6 4.146.5 4,172.3 4,162,4 2 Securities in bank credit 1,005.1' 1,031.4 1,025.2 1.031.9 1.046.6 1,081.4 1,101.9 1,118.8 1,120.2 1.118.5 1,123.7 1.110.2 3 U.S. government securities . .. 706.3 726.7 715.5 724.5 732.3 746.1 752.2 762.2 764.9 758.3 761.1 760.3 4 Other securities 298.7' 304.7 309.6 307.4 314.3 335.3 349.7 356.6 355.4 360.2 362.6 349.9 5 Loans and leases in bank credit2 2.798.4 2,926.0 2,945.7 2,963.9 2,984.3 2,995.4 3,009.4 3,040.0 3,028.4 3.028.0 3.048.6 3.052.2 6 Commercial and industrial . .. 784.5 817.0 825.6 837.6 843.6 846.8 857.0 865.3 864.2 862.9 867.3 865.1 7 Real estate 1.135.6 1,198.2 1,205.5 1,214.1 1,220.1 1,227.6 1,227.6 1,230.5 1,229.5 1.228.1 1.232.0 1,230.0 8 Revolving home equity 85.2 93.2 94.3 95.5 96.4 97.3 98.3 98.8 98.5 98.6 98.8 99.1 9 Other 1.050.5 1,105.1 1,111.2 1,118.6 1,123.7 1.130.3 1,129.3 1,131.6 1,130.9 1,129.5 1.133.2 1.130.9 10 Consumer 521.8 517.6 518.8 515.1 509.3 509.3 508.6 505.2 505.0 505.1 505.7 506.6 11 Security1 81.3 93.5 93.3 94.5 104.1 97.5 96.9 117.2 109.0 110.6 120.6 129.2 12 Other loans and leases 275.2 299.7 302.6 302.6 307.2 314.1 319.3 321.9 320.7 321.3 323.0 321.4 13 Interbank loans 197.8 184.6 191.5 199.6 201.5 206.4 214.3 201.4 209.6 200.5 202.7 197.2 14 Cash assets4 227.6' 241.8 259.0 255.1 264.9 274.9 263.8 262.7 265.5 252.4 270.0 264.7 15 Other assets5 252.7' 277.0 278.8 278.8 289.0 298.9 301.7 303.8 304.3 298.5 306.3 306.4 16 Total assets6 •M25.4' 4,603.9 4,6433 4,672.7 4,729.6 4,800.1 4*342 4.869.8 4,871.1 4*11.0 4.894.6 4,874.1 Liabilities 17 Deposits 2,870.7 3,005.2 3,029.8 3,045.8 3,061.0 3,107.1 3.117.3 3,119.9 3,121.1 3,111.6 3.127.5 3.111:4 18 Transaction 714.2 690.1 697.2 683.0 682.5 692.5 687.6 677.1 669.5 667.2 693.7 679.9 19 Nontransaction 2.156.4 2,315.0 2,332.6 2,362.9 2,378.5 2,414.6 2,429.8 2,442.8 2,451.6 2,444.4 2,433.8 2,431.5 20 Large time 527.0 597.5 603.1 618.4 617.1 636.3 646.2 645.6 647.0 642.7 643.6 647.1 21 Other 1,629.4 1,717.5 1,729.5 1.744.5 1,761.4 1,778.3 t,783.6 1,797.2 1,804.6 1,801.7 1,790.2 1.784.4 22 Borrowings 725.9 730.3 744.9 767.2 806.6 826.3 829.9 840.8 831.5 831.9 846.0 855.3 23 From banks in the U.S 302.0 266.1 277.8 285.5 293.8 304.3 311.5 296.8 301.2 299.2 293.0 294.7 24 From others 424.0 464.1 467.1 481.7 512.8 522.0 518.4 544.0 530.3 532.7 553.0 560.6 25 Net due to related foreign offices 222.7 216.6 210.5 212.0 193.0 193.7 203.5 219.2 234.7 212.5 213.6 217.7 26 Other liabilities 259.3' 269.6 273.2 261.2 277.3 287.3 299.1 310.0 310.9 313.8 314.8 302.6 27 Tola! liabilities 4,078.6' 4021.6 4,2583 4337.9 4,4144 4,449.9 4,489.8 4,498.1 4,469.8 4.501.8 4,487.0 28 Residual (assets less liabilities)7.. . 346.8' 382.3 384.9 386.5 391.7 385.7 384.3 380.0 373.0 371.2 392.8 387.1 Not seasonally adjusted Assets 29 Bank credit 3,802.4r 3.953.3 3.972.1 3,997.3 4,032.3 4,080.2 4.106.2 4,155.4 4,150.1 4,148.3 4,164.3 4,151.9 30 Securities in bank credit 996.7' 1.028.9 1,030.3 1,032.1 1,046.5 1,079.9 1,083.7 1,108.1 1,107.0 1,108.2 1,112.0 1,099.8 31 U.S. government securities 700.4 722.7 718.2 725.6 733.0 746.6 746.9 754.8 754.7 751.2 754.8 752.5 32 Other securities 296.3' 306.1 312.1 306.5 313.5 333.3 336.9 353.3 352.3 357.0 357.2 347.3 33 Loans and leases in bank credit2 .. . 2,805.7 2,924.5 2,941.8 2,965.2 2,985.9 3,000.4 3,022.4 3,047.3 3.043.1 3,040.2 3,052.3 3,052.2 34 Commercial and industrial 782.3 818.2 821.4 831.8 839.6 844.6 853.4 862.7 861.6 859.3 864.2 862.7 35 Real estate 1,137.6 1,198.3 1,207.2 1,217.5 1223.5 1,232.0 1,233.0 1.232.8 1,233.5 1.232.7 1,233.7 1,230.0 36 Revolving home equity 85.1 93.2 94.6 96.2 97.0 97.9 98.5 98.8 98.6 98.8 98.8 99.1 37 Other 1.052.5 1,105.1 1,112.6 1.121.3 1,126.5 1,134.2 1,134.6 1,133.9 1,134.9 1.134.0 1,134.9 1,130.9 38 Consumer 527.4 515.2 519.2 517.2 509.4 509.7 513.4 510.9 512.6 511.8 510.9 511.1 39 Security' 80.6 92.0 91.4 93.6 103.9 99.5 98.4 115.8 107.2 110.5 118.0 127.3 40 Other loans and leases 277.8 300.7 302.6 305.1 309.6 314.6 324.3 325.2 328.3 325.8 325.5 321.0 41 Interbank loans 207.6 182.3 187.1 194.1 196.3 211.0 223.6 210.9 223.4 215.4 210.0 199.2 42 Cash assets4 237.7' 238.2 245.6 251.8 265.9 282.9 281.9 275.0 275.6 274.8 293.8 262.9 43 Other assets5 253.3' 279.1 282.0 281.3 285.9 297.4 301.8 304.4 304.9 299.3 303.7 44 Total assets6 4,445.0r 4,596\2 4,629.8 4.667.6 4,723.9 4.814.7 4^56.4 43*73 4,881.2 4,9153 43653 Liabilities 45 Deposits 2,874.5 2,996.5 3,019.7 3,046.0 3,068.6 3,125.0 3,147.6 3,122.6 3,149.4 3,135.9 3,124.5 3,077.4 46 Transaction 725.6 683.8 684.7 681.5 680.4 702.0 719.2 687.9 700.1 694.3 700.3 663.4 47 Nontransaction 2,148.9 2.312.7 2,335.0 2,364.5 2,388.2 2.423.0 2.428.4 2.434.7 2,449.4 2,441.6 2,424.2 2,414.0 48 Large time 525.7 593.2 602.2 613.7 624.5 640.8 644.4 644.2 642.0 641.1 643.7 647.6 49 Other 1,623.2 1,719.5 1,732.8 1,750.8 1.763.7 1.782.2 1,784.0 1.790.5 1.807.4 1,800.4 1,780.5 1,766.4 50 Borrowings 720.4 744.7 749.7 770.5 796.7 813.3 820.1 835.3 816.6 824.6 854.6 848.1 51 From banks in the U.S 296.2 274.9 282.6 286.8 286.1 297.6 305.3 290.3 294.1 292.1 291.6 286.5 52 From others 424.1 469.8 467.2 483.6 510.6 515.7 514.7 545.0 522.5 532.5 5630 561.6 53 Net due to related foreign offices 233.1 212.9 206.2 204.3 193.6 188.3 200.0 230.9 237.5 221.1 231.6 238.4 54 Other liabilities 256.7 268.0 272.3 261.6 275.9 291.4 294.3 306.6 304.5 309.1 309.0 303.9 55 Total liabilities 4,084.7' 4,222.1 4,248.0 4J823 43343 4,417.9 4.46Z0 4,4953 4.508.0 4^90.7 4.519.7 4,467.9 56 Residual (assets less liabilities)7 360.3' 374.1 381.9 385.3 389.1 396.7 394.4 393.8 389.3 390.5 395.6 397.9 MEMO 57 Revaluation gains on off-balance-sheet items8 89.1' 84.6 86.5 78.7 78.0 83.3 82.2 92.2 93.5 94.6 94.7 87.0 58 Revaluation losses on off-balancesheet items8 85.4' 87.9 89.6 81.8 81.4 85.5 85.8 95.4 97.3 97.5 97.6 90.2 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • April 1998 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities'—Continued B. Domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures 1997' 1998 July Aug. Sept. Oct. Nov Jan. 7 Jan. 21 Jan. 28 Seasonally adjusted Assets 1 Bank credit 3,287.6 3,421.2 3,438.3 3,458.4 3,487.0 3,524.7 3,551.5 3,580.9 3,570.3 3,571.1 3.593.2 3.584.4 2 Securities in bank credit 834.8' 851.2 847.3 849.5 865.3 885.6 902.0 919.3 917.5 920.4 924.6 913.3 3 U.S. government securities . 625.3 636.4 629.8 636.7 645.9 660.0 668.0 681.7 681.1 681.6 684.5 678.8 4 Other securities 209.5' 214.9 217.5 212.8 219.4 225.6 234.0 237.6 236.4 238.8 240.2 234.5 5 Loans and leases in bank credit-. 2.452.8 2,569.9 2,591.0 2,608.9 2,621.7 2,639.1 2,649.5 2,661.6 2,652.8 2,650.7 2,668.6 2,671.1 6 Commercial and industrial . 570.1 598.9 605.9 615.4 620.1 624.2 633.0 639.0 637.9 636.1 639.6 640.3 7 Real estate 1,103.8 1,169.7 1,177.1 1,186.3 1,192.4 1,200.6 1,201.1 1,203.4 1,202.4 1,201.0 1,205.2 1,203.0 8 Revolving home equity .. 85.2 93.2 94.3 95.5 96.4 97.3 98.3 98.8 98.5 98.6 98.8 99.1 9 Other 1,018.6 1,076.6 1,082.9 1,090.7 1,096.0 1,103.3 1,102.8 1,104.6 1.103.9 1,102.3 1,106.4 1.103.8 10 Consumer 521.8 517.6 518.8 515.1 509.3 509.3 508.6 505.2 505.0 505.1 505.7 506.6 11 Security3 43.2 50.0 51.0 51.5 57.7 56.4 52.5 62.6 55.7 57.9 65.9 70.7 12 Other loans and leases 213.8 233.7 238.2 240.6 242.1 248.5 254.2 251.4 251.7 250.6 252.2 250.5 13 Interbank loans 175.1 166.0 173.5 181.7 181.5 183.3 183.8 174.1 173.0 174.1 178.8 173.5 14 Cash assets4 196.5' 208.2 224.6 219.5 230.1 238.7 229.1 229.8 232.7 219.9 236.6 231.5 15 Other assets5 214.6' 234.5 236.2 236.8 247.6 254.0 259.7 259.7 263.3 254.4 261.0 259.5 16 Total assets6 3,817.9r 3,973.3 4,015.9 4,040.0 4,089.7 4,144.1 4,167.3 4,187.9 4,182.6 4,162.9 4.213.2 4,192.5 Liabilities 17 Deposits 2,645.0 2,740.6 2,766.4 2,780.3 2,800.1 2.835.0 2,839.4 2,843.9 2,845.2 2,837.1 2,853.7 2,832.9 18 Transaction 703.9 679.5 686.0 672.2 672.1 681.8 677.0 666.3 658.4 656.2 683.1 669.1 19 Nontransaction 1,941.1 2,061.1 2,080.4 2,108.1 2,128.0 2.153.2 2.162.4 2,177.6 2,186.8 2,180.9 2,170.6 2.163.8 20 Large time 313.9 346.2 353.4 366.1 369.0 377.3 381.2 382.9 384.6 381.7 382.9 381.8 21 Other 1,627.2 1.714.9 1.727.0 1,742.0 1,759.0 1,775.8 1,781.1 1.794.7 1,802.1 1,799.2 1.787.7 1,781.9 22 Borrowings 595.4 595.2 607.4 623.9 644.8 661.3 672.6 681.7 678.0 672.3 689.5 690.3 23 From banks in the U.S 273.8 235.9 246.6 249.6 256.1 273.8 283.8 271.6 278.5 274.8 266.0 270.0 24 From others 321.6 359.4 360.8 374.2 388.6 387.5 388.7 410.0 399.6 397.5 423.5 420.4 25 Net due to related foreign offices 72.1 85.6 79.8 84.7 74.4 74.3 77.7 84.1 87.1 80.7 81.5 88.3 26 Other liabilities 169.0' 174.3 177.3 167.0 183.9 190.3 200.6 212.0 211.3 212.7 216.1 208.8 27 Total liabilities 3,481.4r 3,595.8 3,630.9 3,655.9 3,703.2 3,761.0 3,790.2 3,821.6 3,821.7 3,802.8 3,840.9 3,820.3 28 Residual (assets less liabilities)7. 336.4' 377.5 384.9 384.0 386.5 383.1 377.1 366.3 360.9 360.1 372.4 372.2 Not seasonally adjusted Assets 29 Bank credit 3,289.0' 3,416.6 3,435.5 3,462.0 3,489.9 3,529.1 3,551.6 3.581.0 3,576.8 3,577.0 3.590.5 3,576.0 30 Securities in bank credit 830.1 849.7 848.9 851.4 865.3 884.8 891.8 913.4 912.1 915.3 918.9 905.6 31 U.S. government securities 618.3 635.0 630.9 638.9 647.4 660.9 665.2 673.2 672.5 673.3 676.3 669.0 32 Other securities 211.7' 214.7 218.0 212.5 217.9 223.8 226.6 240.2 239.6 242.0 242.6 236.6 33 Loans and leases in bank credit2 2,458.9 2.566.9 2,586.7 2,610.5 2,624.6 2.644.3 2,659.9 2,667.6 2,664.7 2,661.6 2.671.6 2,670.4 34 Commercial and industrial 567.9 599.0 601.5 611.1 617.3 622,2 628.9 636.4 635.2 632.7 636.9 638.1 35 Real estate 1,105.8 1,169.9 1,178.8 1,189.5 1,195.6 1,204.7 1.206.4 1,205.8 1,206.4 1,205.6 1,206.9 1.203.1 36 Revolving home equity 85.1 93.2 94.6 96.2 97.0 97.9 98.5 98.8 98.6 98.8 98.8 99.1 37 Other 1.020.6 1,076.7 1,084.2 1,093.3 1,098.6 1,106.8 1,107.9 1,106.9 1.107.7 1.106.8 1.108.0 1.104.0 38 Consumer 527.4 515.2 519.2 517.2 509.4 509.7 513.4 510.9 512.6 511.8 510.9 511.1 39 Security3 42.5 48.5 49.1 50.6 57.5 58.4 54.0 61.2 53.9 57.8 63.4 68.8 40 Other loans and leases 215.3 234.2 238.0 242.1 244.7 249.4 257.2 253.3 256.7 253.8 253.5 249.2 41 Interbank loans 184.9 163.8 169.1 176.1 176.3 187.9 193.0 183.6 186.8 189.0 186.1 175.4 42 Cash assets4 206.2' 204.4 211.3 217.1 230.8 246.4 245.8 241.7 242.4 241.6 260.0 229.4 43 Other assets5 215.9' 237.3 238.6 238.9 244.8 252.2 258.9 261.2 264.2 256.4 260.2 262.1 44 Total assets6 3,840.3r 3,965.6 3,997.7 4,037.4 4,085.5 4,159.0 4,192.6 4,211.2 4,213.7 4,207.d 4,240.6 4,186.7 Liabilities 45 Deposits 2,648.7 2,734.9 2,758.5 2,781.4 2,799.8 2.849.3 2,866.6 2,846.4 2,874.1 2,861.1 2.849.5 2,798.1 46 Transaction 715.3 673.2 673.8 670.2 670.0 691.3 708.0 677.0 688.8 683.3 689.8 652.7 47 Nontransaction 1,933.4 2,061.7 2,084.7 2,111.2 2,129.9 2.158.0 2,158.6 2,169.4 2,185.3 2,177.8 2,159.8 2,145.4 48 Large time 312.4 344.8 354.4 362.8 368.6 378.2 377.1 381.3 380.3 379.8 381.8 381.4 49 Other 1.621.0 1,716.9 1,730.3 1,748.3 1,761.3 1.779.7 1,781.6 1,788.0 1,805.0 1,798.0 1.778.0 1,764.0 50 Borrowings 593.0 600.8 607.1 626.2 639.7 653.5 664.8 679.6 664.7 667.9 700.1 691.0 51 From banks in the U.S 267.0 242.9 250.9 251.9 251.6 267.1 277.2 264.2 269.6 265.2 265.1 261.3 52 From others 326.0 357.9 356.2 374.4 388.0 386.4 387.7 415.5 395.1 402.6 435.1 429.7 53 Net due to related foreign offices 73.8 83.2 77.4 80.1 76.0 70.6 73.8 86.1 81.8 81.5 87.5 96.5 54 Other liabilities 167.2' 174.8 175.9 167.7 184.5 193.7 197.3 209.6 207.2 210.3 212.2 209.0 55 Total liabilities 3,482.6' 3,593.7 3,618.9 3,655.5 3,700.1 3,767.1 3,802.5 3,821.7 3,827.8 3,820.7 3,849.4 3,794.6 56 Residual (assets less liabilities)7 357.7' 372.0 378.8 381.9 385.4 391.8 390.1 389.5 385.9 386.9 391.3 392.1 MEMO 57 Revaluation gains on off-balance-sheet items8 47.5 44.3 45.1 41.5 41.3 50.1 49.6 51.4 58 Revaluation losses on off-balancesheet items8 44.0 45.9 46.5 40.0 41.3 43.6 44.2 52.9 52.6 54.0 55.9 49.6 59 Mortgage-backed securities9 244.3 254.7 256.4 259.3 265.0 273.8 279.1 287.5 285.5 287.2 286.5 288.9 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 Liabilities'—Continued C. Large domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1997 1997' 1998 1998 Jan.1 July Aug. Sept. Oct. Nov. Dec. Jan. Jan. 7 Jan. 14 Jan 21 Jan. 28 Seasonally ad|usted Assets 1 Bank credit 1,965.2 2.036.0 2.038.6 2.049.9 2,075.0 2.096.0 2.111.8 2.139.3 2,128.6 2,130.2 2,152.0 2.142.0 2 Securities in bank credit 440.0 446.4 441.7 444.4 460.3 477.7 491.8 510.9 505.3 510.5 518.3 506.7 3 U.S. government securities 310.6 314.5 306.7 313.5 323.1 336.4 343.2 358.8 354.8 !57.3 363.5 357.7 4 Trading account 17.3 23.7 20.6 23.3 25.2 26.5 29.4 29.6 31.5 29.1 31.3 27.2 5 Investment account 293.3 290.8 286.0 290.2 297 9 310.0 313.9 329.2 323.2 328.2 332.3 330.5 6 Other securities 129.4 132.0 135.0 130.9 137.2 141.3 148.6 152.0 150.6 153.2 154.7 149.0 7 Trading account 64.6 64.2 63.7 59.6 65.4 68.8 72.2 74.3 71.9 76.1 77.5 71.7 8 Investment account 64.8 67.8 71.4 71.3 71.8 72.5 76.5 111 78.6 77.1 77.2 77.4 9 State and local government. . 20.7 22.3 22.4 22.3 22.4 22.2 22.1 22.5 22.5 22.5 22.4 22.4 10 Other 44.1 45.4 48.9 49.0 49.4 50.3 54.4 55.2 56.1 54.6 54.9 54.9 11 Loans and leases in bank credit3 1,525.2 1,589.6 1,596.9 1,605.5 1,614.7 1,618.3 1,620.0 1,628.4 1,623.3 1,619.7 1.633.7 1,635.3 12 Commercial and industrial 402.8 421.8 426.7 434.4 438.3 439.9 446.9 451.5 451.5 449.6 451.9 451.9 13 Bankers acceptances 2.0 1.6 1.5 1.5 1.3 1.3 1.3 1 2 1.3 1.2 1.1 1.2 14 Other 400.9 420.2 425.1 432.9 437.0 438.7 445.6 4503 450.1 449.5 451.8 451.8 15 Real estate 625.0 646.3 646.8 648.4 649.2 649.8 646.1 644.5 645.5 642.7 645.8 643.1 16 Revolving home equity 60.6 65.5 66.1 67.1 67.6 68.0 68.8 69.2 69.0 69.1 69.2 69.5 17 Other 564.3 580.8 580.7 581.4 581.6 581.7 577.3 575.3 576.5 573.7 576.6 573.6 18 Consumer 306.0 307.1 304.9 302.7 299.5 297.0 2944 293.2 292 8 293.1 293.3 294.6 19 Security' 38.8 45.5 46.3 46.6 52.5 51.3 47.3 57.5 50.7 52.9 60.8 65.5 20 Federal funds sold to and repurchase agreements with broker-dealers 22.8 28.6 30.0 29.7 35.4 35.1 31.1 41.2 35.0 35.4 44.9 48.7 21 Other 16.0 16.9 16.3 16.9 17.1 16.2 16.3 16.3 15.7 17.4 15.9 16.8 22 State and local government 11.7 11 ^ 11.3 11.3 11.2 III 11.1 11.0 11.3 111 11.0 10.8 23 Agricultural 9.0 9f> 9.1 9.2 9.3 9.6 9.6 9.3 9.3 9.3 9.4 94 24 Federal funds sold to and repurchase agreements with others 6.3 7.5 6.4 6.6 9.0 10.8 12.4 7.5 9.6 9.0 6.5 6.0 25 All other loans 61.5 66.6 69.2 68.9 67.5 69.5 70.9 70.8 70.0 69.2 72.2 70.7 26 Lease-financing receivables M.I 74.6 76.3 77.3 78.2 79.3 81.2 83.0 82.6 82.7 83.0 83.5 ^7 Interbank loans 129.3 116.4 122.3 128.8 125.3 127.9 125.5 116.2 116.7 117.0 120.6 114.9 28 Federal funds sold to and repurchase agreements with commercial banks 81.5 70.4 74.7 81.5 78.7 82.1 81.4 74.4 72.6 75.2 80.3 74.5 ">9 Other 47.8 46.0 47.6 47.3 46.6 45.8 44.1 41.8 44.1 419 40.2 40.4 30 Cash assets4 135.6 140.4 153.4 147.9 160.2 166.3 158.1 159.5 164.1 152.1 162.4 161.1 ! 1 Other assets' 167.9 173.1 172.8 175.4 183.8 187.3 194.7 195.3 200.4 191.2 195.3 194.0 32 Total assets' 2,360.8 2,428.7 2,450.1 2.465.4 2,507.6 2,540.8 2,553.5 2,573.8 2373.0 2^53.9 2394.0 2375.6 Liabilities 33 Deposits 1,481.7 1,502.0 1,516.2 1,524.2 1.533.1 1,553.2 1.556.0 1,550.1 1,556.9 1,546.8 1.556.8 1,536.2 34 Transaction 410.7 380.7 384.9 373.4 374.5 380.6 379.0 371.0 368.3 365.2 383.2 368.8 35 Nontransaction 1,071.0 1,121.3 1.131.3 1,150.8 1.158.6 1,172.6 1.177.0 1,179.1 1,188.6 1,181.6 1,173.7 1.167.4 36 Large time 164.5 186.1 191.7 201.9 203.3 209.7 211.7 212.0 213.5 210.3 212.2 211.6 37 Other 906.5 935.2 939.6 948.9 955.3 963.0 965.4 967.1 975.1 971.3 961.5 955.8 38 Borrowings 444.8 441.6 450.7 468.1 490.8 506.1 514.1 525.3 523.1 518.3 532.0 531.9 39 From banks in the US 187.3 158.7 168.7 175.5 182.6 200.7 209.7 199.8 207.3 203.1 194.2 197.3 41) From others 257.5 282.9 282.0 292.6 308.2 305.4 304.4 325.5 315.8 315.3 337.8 334.5 41 Net due to related foreign offices 68.1 80.8 75.3 79.9 69.2 69.3 73.4 79.8 82.5 76.4 77.4 84.4 42 Other liabilities 145.8 148.5 150.2 139.0 156.2 161.9 171.7 184.4 183.6 185.4 188.5 181.2 43 Total liabilities 2,1403 2.172.8 2,1923 2^112 22492 2.290.5 2315.2 2339.6 2346.0 2326.9 2354.7 2333.7 44 Residual (assets less liabilities)7 220.5 255.9 257.8 254.1 258.4 250.3 238.3 234.2 227.0 227.0 239.3 241.9 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • April 1998 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities'—Continued C. Large domestically chartered commercial banks—Continued Monthly averages Wednesdiy figures Account 1997 1997' 1998 1998 Jan.r July Aug. Sept. Oct. Nov. Dec. Jan. Jan. 7 Jan. 14 Jan. 21 Jan. 28 Not seasonally adjusted Assets 45 Bank credit 1,968.5 2,030.9 2,036.1 2,049.6 2,075.2 2,098.8 2,109.1 2,141.5 2,134.5 2,136.3 2,151.8 2,138.4 46 Securities in bank credit 436.7 445.7 445.0 445.9 461.2 478.4 482.0 506.4 501.7 506.3 513.3 500.8 47 U.S. government securities 304.9 314.0 309.4 315.2 325.5 339.0 340.8 351.5 347.6 349.8 355.9 349.5 48 Trading account 16.4 22.6 21.3 23.4 26.1 28.0 26.9 28.2 27.9 27.9 31.3 25.8 49 Investment account 288.5 291.4 288.1 291.8 299.5 311.0 313.9 323.3 319.6 321.8 324.6 323.7 50 Mortgage-backed securities. 185.1 191.0 190.0 191.8 197.4 205.9 210.7 218.5 216.6 218.2 217.6 220.4 51 Other 103.4 100.4 98.1 100.0 102.1 105.1 103.2 104.8 103.0 103.6 107.0 103.3 52 One year or less 28.5 26.8 26.8 27.6 26.3 28.9 27.5 26.4 24.7 25.2 28.0 26.7 53 Between one and five years 60.6 52.4 49 9 49.8 52.7 53.5 53.2 52.2 52.6 52.6 53.5 49.5 54 More than five years .... 14.2 21.2 21.4 22.7 23.1 22.7 22.5 26.2 25.7 25.8 25.5 27.1 55 Other securities 131.8 131.7 135.7 130.7 135.7 139.4 141.2 154.9 154.1 156.6 157.4 151.2 56 Trading account 66.5 64.9 64.8 59.4 63.3 65.9 63.9 76.6 74.9 78.7 79.5 73.4 57 Investment account 65.3 66.9 70.9 71.3 72.3 73.5 77.2 78.3 79.3 77.9 77 9 77.8 58 State and local government .. 20.7 21.9 22.2 22.3 22.4 22.3 22.2 22.5 22.5 22.5 22.4 22.5 59 Other 44.6 44.9 48.7 49.0 50.0 512 55 1 55.8 56.7 55.4 55.4 55.3 60 Loans and leases in bank credit- 1.531.8 1,585.2 1,591.1 1,603.6 1,614.0 1,620.3 1,627.1 1,635.1 1.632.8 1,630.0 1,638.5 1,637.7 61 Commercial and industrial 400.6 421.9 423.4 431.1 436.2 438.6 443.4 449.0 448.3 446.1 449.2 449.9 62 Bankers acceptances 1.9 1.5 1.5 1.5 1.4 1.4 1.3 1.2 1.3 1.2 1.1 1.2 63 Other 398.8 420.4 421.9 429.6 434.8 437.3 442.0 447.8 447.0 444.9 448.1 448.7 64 Real estate 627.4 646.1 647.3 649.4 650.0 651.6 649.2 647.2 649.0 647.4 648.0 644.1 65 Revolving home equity 60.7 65.5 66.3 67.4 68.0 68.4 68.8 69.3 69.1 69.2 69.3 69.5 66 Other 349.4 360.3 361.1 360.8 359.1 359.1 356.3 356.0 358.3 356.6 356.5 352.6 67 Commercial 217.3 220.3 219.8 221.2 223.0 224.0 224.0 221.9 221.6 221.5 222.2 222.0 68 Consumer 310.6 304.9 305.4 304.1 299.0 296.7 298.4 298.0 299.6 298.9 297.8 298.1 69 Security-1. . . . 38.0 44.1 44.5 45.8 52.4 53.0 48.5 56.0 48.4 52.5 58.2 63.8 70 Federal funds sold to and repurchase agreements with broker-dealers 21.9 27.9 28.5 29.3 35.5 36.5 31.3 39.5 33.2 34.7 42.3 46.7 71 Other 16.0 16.2 16.0 16.5 16.9 16.5 17.3 16.4 15.2 17.8 15.9 17.2 72 State and local government 11.5 11.2 11.3 11.4 11.3 11.1 11.1 10.9 11.1 11.0 10.8 10.6 73 Agricultural 9.0 9.3 9.3 9.4 9.4 9.5 9.5 9.3 9.4 9.3 9.2 9.2 74 Federal funds sold to and repurchase agreements with others 64 7.7 6.3 7.3 8.8 8.7 11.0 7.6 9.5 9.0 6.4 6.2 75 All other loans 63.3 66.0 68.1 68.5 68.6 71.7 74.6 72.8 73.4 72.0 74.4 71.1 76 Lease-financing receivables 65.1 74.1 75.4 76.6 78.2 79.3 81.4 84.3 84.1 84.1 84.4 84.6 77 Interbank loans 137.8 116.7 118.9 125.0 119.9 127.6 131.4 124.5 124.2 129.0 128.9 121.0 78 Federal funds sold to and repurchase agreements with commercial banks 86.4 69.7 71.6 78.4 73.5 82.3 85.1 79.5 76.9 83.4 84.8 78.0 79 Other 51.4 47.0 47.3 46.7 46.4 45.3 46.4 45.0 47.4 45.5 44.1 429 80 Cash assets4 143 2 137.1 142.5 147.1 159.7 171.2 171.0 169.3 168.6 170.3 182.8 16U8 81 Other assets5 168.2 176.0 175.2 177.1 181.4 184.9 193.2 195.7 198.9 192.7 194.6 196.1 82 Total assets6 2J80.7 2,423.7 2,435.6 2,461.8 2,499.6 2345.6 2368.0 2^943 2^89* 2391.9 2,621.8 2380.0 Liabilities 83 Deposits 1.487.9 1,499.7 1,510.9 1,523.1 1.530.5 1,559.8 1,570.2 1,555.8 1,572.7 1,568.3 1,560.2 1,520.9 84 Transaction 418.3 376.6 375.9 372.2 371.9 386.7 399.4 378.4 383.9 384.8 389.2 360.7 85 Nontransaction 1,069.6 1,123.1 1,135.0 1,150.9 1,158.6 1,173.0 1,170.8 1,177.4 1,188.8 1,183.6 1,171.0 1,160.2 86 Large time 164.4 185.5 192.9 199.0 202.5 210.1 208.5 211.9 211.2 210.4 212.7 212.0 87 Other 905.2 937.6 942.1 951.9 956.1 962.9 962.3 965.5 977.6 973.2 958.3 948.2 88 Borrowings 440.7 447.2 451.9 471.2 485.6 500.0 506.9 521.6 510.1 511.0 538.4 530.8 89 From banks in the US 180.7 164.2 173.0 177.1 178.8 195.8 203.7 192.7 198.8 194.3 191.8 189.3 90 From nonbanks in the U.S 259.9 282.9 278.9 294 1 306.9 3042 3032 328.9 311.2 316.7 346.6 341.4 91 Net due to related foreign offices .... 69.8 78.4 72.9 75.3 70.8 65.6 69.5 81.8 77.1 77.2 83.4 92.6 92 Other liabilities 143.8 148.8 148.6 139.9 156.8 165.4 169.0 181.8 179.4 182.8 184.4 180.9 93 Total liabilities 2,142.1 2,173.9 2.184J 2^43.7 2^90.8 2315.6 234O.9 2339.4 23393 2366.2 2325.1 94 Residual (assets less liabilities)7 238.6 249.8 251.2 252.3 255.8 254.8 252.4 253.6 250.4 252.6 255.5 254.9 MEMO 95 Revaluation gains on off-balancesheet items8 47.5 44.3 45.1 37.5 38.2 41.5 41.3 50.1 49.6 51.4 53.4 46.7 96 Revaluation losses on off-balancesheet items8 44.0 45.9 46.5 40.0 41.3 43.6 44.2 52.9 52.6 54.0 55.9 49.6 97 Mortgage-backed securities9 207.0 209.0 208.2 210.0 215.7 224.1 228.9 237.1 234.8 236.6 236.3 238.9 98 Pass-through securities 139.5 144.4 143.1 144.6 149.3 154.2 157.2 162.0 159.8 161.3 161.6 164.3 99 CMOs, REMICs, and other mortgage-backed securities. .. 67.5 64.6 65.1 65.4 66.4 70.0 71.7 75.1 75.0 75.4 74.7 74.6 100 Net unrealized gains (losses) on available-for-sale securities10 . . . 2.0 2.5 3.0 2.5 2.5 2.4 2.2 3.0 2.6 2.6 3.3 3.2 101 Offshore credit to U.S. residents" .. 30.9 33.7 34.0 34.1 34.2 34.4 34.2 35.5 35.5 35.6 35.1 34.7 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities 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 1998 Jan.r July Aug. Sept. Oct. Jan. 7 Jan. 14 Jan. 21 Jan. 2: Seasonally adjusted Assets 1 Bank credit 1,322.4 1.385.2 1.399.7 1.408.5 1.412.0 1,428.7 1.439.6 1,441.6 1,441.7 1,440.9 1.441.2 1,442.4 2 Securities in bank credit . . 394.8 404.8 405.6 405 I 405.0 407 9 410.1 408.4 412.2 409.9 406.4 406.6 3 U.S. governmeni securities 314.7 321.9 323.1 323.2 322.8 323.5 324.7 322.9 326.4 324.3 320.9 321.1 4 Other securities 80.1 82 9 82.5 81.9 R2.2 84.4 85.4 85.5 85.8 85.6 85.4 85.5 5 Loans and leases in bank credit2. 927 5 9804 994.1 1 003.4 l.(X)6.9 1.020.8 1,029.5 1,033.2 1,029.5 1.031.1 1,034.8 1.035.8 6 Commercial and industrial . 167 3 177.1 179.3 181.0 181.8 184.3 186.1 187.4 186.5 186.5 187.7 188.4 7 Real estate 478.8 523.4 530.3 537.8 543.3 550.9 555.1 558.9 556.9 558.2 559.4 559.9 8 Revolving home equity. . 24.5 27.7 28.1 28.4 28.8 29.3 29.6 29.7 29.6 29.6 29.7 29.7 9 Other 454.3 495.7 502.2 509.4 514.4 521.6 525.5 529.3 527.4 528.7 529.8 530.2 10 Consumer 215.8 210.5 213.8 212.3 209.8 212.3 214.2 212.0 212.2 212.0 212.4 212.1 11 Security-' 4.4 4.6 4.7 4.9 5.2 5.1 5.2 5.1 5.0 5.0 5.2 5.2 12 Other loans and leases. . . . 61.2 64.9 65.9 67.3 66.9 68.2 69.0 69.7 68.9 69.3 70.1 70.3 13 Interbank loans 45.8 49.7 51.1 52.8 56.2 55.4 58.3 57.9 56.3 57.1 58.3 58.6 14 Cash assets4 60.9 67.7 71.2 71.6 69.9 72.4 71.0 70.3 68.6 67.8 74.2 70.4 15 Other assets5 46.7 61.4 63.4 61.4 63.7 66.7 65.0 64.4 63.0 63.2 65.7 65.6 16 Total assets6 1,457.0 1,544.5 1,565.7 1,574.6 1,5811 1,603.2 1,613.8 1,614.1 1.609.6 1,609.0 1,619.3 1,616.9 Liabilities 17 Deposits 1.163.3 1.238.7 1,250.2 1.256.1 1,267.1 1.281.8 1.283.4 1,293.8 1,288.3 1,290.3 1,296.9 1.296.7 18 Transaction 293.2 298.8 301.1 298.8 297.6 301.3 298.1 295.3 290.2 291.0 299.9 300.3 19 Nontransaction 870.1 939.8 949.1 957.3 969.4 980.5 985.3 998.5 998.2 999.3 997.0 996.4 20 Large time 149.4 160.1 161.7 164.2 165.7 167.7 169.6 170.9 171.1 171.4 170.7 170.3 21 Other 720.7 779.7 787.4 793.1 803.7 812.9 815.8 827.7 827.1 827.9 826.3 826.1 22 Borrowings 150.6 153.7 156.8 155.7 154.0 155.2 158.5 156.3 155.0 154.0 157.5 158.5 23 From banks in the U.S 86.6 77.2 78.0 74.1 73.5 73.1 74.2 71:8 71.2 71.7 71.7 72.6 24 From others 64.1 76.5 78.8 81.6 82.1 84.4 84.5 83.8 82.3 85.8 85.8 25 Net due to related foreign offices . 4.0 4.8 4.5 4.8 5.0 4.3 4.2 4.7 4.3 4.1 3.9 26 Other liabilities 23.2 25.8 27.1 28.1 28.5 28.9 27.6 27.7 27.4 Til 27.6 27 Total liabilities 1341.1 1,422.9 1,438.6 1,444.7 1,454.0 1470.4 1,475.0 1.482.0 1,475.7 1,475.9 1486.2 1486.7 28 Residual (assets less liabilities)7. 115.9 121.6 127.2 129.9 128.1 132.8 138.8 132.1 133.9 133.1 133.1 130.3 Not seasonally adjusted Assets 29 Bank credit 1.320.5 1.385.6 1,399.4 1.412.4 1.414.7 1.430.3 1,442.5 1,439.5 1,442.3 1,440.6 1,438.7 1,437.6 30 Securities in bank credit 393.4 404.0 403.8 405.5 404.1 406.3 409.8 407.0 410.4 409.0 405.6 404.9 31 U.S. government securities . 313.5 321.1 321.5 323.7 321.8 321.9 324.3 321.7 324.9 323.5 320.4 319.5 32 Other securities 79.9 82.9 82.3 81.8 82.2 84.4 85.4 85.3 85.5 85.5 85.2 85.3 33 Loans and leases m bank credit2 927 I 981.6 995.6 1.006.9 1.010.7 1,024.0 1.032.8 1,032.5 1,031.9 1.031.6 1,033.1 1,032.7 34 Commercial and industrial 167.3 n I 178.1 180.0 181.2 18.3.6 185.5 187.4 186.8 186.6 187.7 188.2 35 Real estate 478.4 523.8 531.5 540.1 545.6 55.3.2 557.2 558.5 557.4 558.2 558.9 559.0 36 Revolving home equity 24 4 27 7 28.3 28.8 290 29.4 29.7 29.6 29.5 29.5 29.6 29.6 37 Other 454.0 496.1 503.3 511.3 516.6 523.7 527.5 529.0 527.9 528.7 529.3 529.4 38 Consumer 216.8 210.3 213.8 213.1 210.4 212.9 215.0 212.8 213.0 212.9 213.1 213.1 39 Security' 4.6 4.4 4.7 4.8 5.1 S.3 5.4 5.3 5.5 5.3 5.2 5.0 40 Other loans and leases. . . . 60.0 660 67.5 68.9 68.4 69.0 69.6 68.4 69.2 68.6 68.3 67.5 41 Interbank loans 47.1 47.1 50.2 51.1 56.4 60.3 61.6 59.2 62.6 60.0 57.2 54.4 42 Cash assets4 63.1 67 3 68.8 70.0 71.0 75.2 74.8 72.4 73.7 71.2 77.2 68.6 43 Other assets5 47 7 61.3 63.4 61.9 63.4 67 4 65.7 65.5 65.3 63.7 65.6 66.0 44 Total assets" 1459.6 1.541.9 1,562.2 1,575.6 1,585.9 1,624.6 1,616.7 1,623.9 1,615.7 1.618.8 1,606.7 Liabilities 45 Deposits 1,160.8 1,235.3 1,247.6 1.258.4 1.269.4 1,289.5 1,296.4 1,290.7 1,301.4 1,292.8 1,289.4 1,277.2 46 Transaction 297.0 296.6 297.9 298.1 298.1 304.6 308.6 298.7 304.9 298.5 300.5 292.1 47 Nontransaction 863.8 938.6 949.7 960.3 971.3 984.9 987.8 992.0 996.5 994.3 988.8 985.2 48 Large time 148.0 159.2 161.4 163.9 166.1 168.1 168.6 169.4 169.1 169.5 169.1 169.4 49 Other 715.8 779.4 788.3 796.4 805.1 816.8 819.2 822.6 827.3 824.8 819.7 815.8 50 Borrowings 152.3 153.7 155.3 155.1 154.0 153.5 157.9 158.1 154.6 156.9 161.8 160.3 51 From banks in the U.S 863 78.7 77.9 74.8 72.9 71.3 73.5 71.5 70.7 70.9 73.3 720 52 From others 66,0 74.9 77.4 80.1 81.2 82.2 84.4 86.6 83.9 86.0 88.5 88.3 53 Net due to related foreign offices . 4.0 4.8 4.5 4.8 5.2 50 4.3 4.2 4.7 4.3 4.1 3.9 54 Other liabilities 23 4 260 27.7 28.3 28.3 27.8 27.8 27.5 27.9 28.1 55 Total liabilities 1340.5 1,419.7 1,434.6 1,446.0 1456.3 14763 1.486.9 1,480.8 1488.4 14814 1,483.1 1469.5 56 Residual (assets less liabilities)7. . 119.1 122.2 127.6 129.6 129.6 137.7 135.8 135.5 134.3 135.7 137.2 MEMO 57 Mortgage-backed securities" 50.4 50.7 50.5 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics • April 1998 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued E. Foreign-related institutions Billions of dollars Monthlyaverages Wednesday figures Account 1997 1997 1998 1998 Jan. July Aug. Sept. Oct. Nov. Dec. Jan. Jan. 7 Jan. 14 Jan. 21 Jan. 28 Seasonall adjusted Assets 1 Bank credit 515.9 536.2 532.6 537.4' 543.9' 552.1' 559.9' 578.0 578.3 575.4 579.1 578.0 2 Securities in bank credit 170.3 180.2 177.9 182.4 181.3' 195.8' 199.9' 199.6 202.7 198.1 199.0 196.9 3 U.S. government securities 81.0 90.3 85.8 87.8 86.4 86.1 84.3 80.6 83.7 76.6 76.6 81.5 4 Other securities 89.2 89.9 92.1 94.6 94 9' 109.7' 115.6' 119.0 119.0 121.4 122.4 115.4 5 Loans and leases in hank credit- . • 345.7 356.1 154.7 155.0 362.6' 356.3 360.0 378.4 375.6 377.3 380.1 381.1 6 Commercial and industrial 214.4 218.0 219.7 222 2 223.6 222.6 224.1 226.4 226.3 226.8 227.7 224.8 7 Real estate 31.8 28.5 28.3 27.9 27.7 26 9' 26.5 27.0 27.1 27.2 26.8 27.0 8 Security' 38.1 43.5 42.2 43.0 46.3' 41.1 44.4 54.5 53.3 52.7 54.7 58.5 9 Other loans and leases 61.3 66 0 64.4 62 0 65.0 65.6 65 0" 70.5 69.0 70.7 70.8 70.8 10 Interbank loans 22.7 18.5 18.0 18.0 201) 23.1 30.6 27.2 36.6 26.4 23.8 23.8 11 Cash assets4 31.1 33.6 34.4 35.5 34.8 36.2 14 7 32.9 32.8 32.5 33.4 33.2 12 Other assets5 38.1 42.5 42.6 42.0 41.4' 44.9' 42.0' 44.1 41.0 44.1 45.3 46.9 13 Total assets6 607.5 630.6 627.4 632.7' 639.9' 656.1r 666.9 681.9 688.5 678.1 681.4 681.6 Liabilities 14 Deposits 225.7 264.6 263.4 265.6 260.9 272.1 278.0 276.0 275.9 274.5 273.8 278.5 15 Transaction . . 10 3 10.6 11 "* 10.8 10.4 10.7 10 5 10 8 11.1 11.0 10.6 10.8 16 Nontransaction 21.5.4 253.9 252.2 254.8 250.5 261.4 267.4 265.2 264.8 263.5 263.2 267.7 17 Larsze time 213.2 251.4 249.7 252.3 248.1 259.0 265.0 262.7 262.4 261.1 260.8 265.3 18 Other 2.6 2.5 25 2.4 2.4 2.4 2.4 2.5 2.4 2.4 2.4 19 Borrowings 13ft5 135.0 137.4 143.3 161.8 165.1 157.3 159.1 153.4 159.6 156.5 164.9 20 From banks in the US 28 2 30.3 31.2 35.9 37.7 30.5 27.7 25.2 22.7 24.5 27.1 24.7 21 From others 102.4 104.7 106.3 107.4 124.1' 134.5 129.6 134.0 130.7 135.1 129.4 140.2 22 Net due to related foreign offices 150.6 130.9 130.6 127.3 118.6 119.4 125.9 135.1 147.6 131.9 132.0 129.4 23 Other liabilities 90.4 95.3 96.0 94.1 93.4 97.* 98.6' 98.0 99.5 101.0 98.6 93.8 24 Total liabilities 597.2 625.9 627.4 630.2' 634.71" 653.5' 659.7 668.2 676.4 667.0 661.0 666.7 25 Kesuiual ("assets less liabilities)7 10.4 4.8 (1.0 2.5 5.2 2.6 7.2 13.7 12.1 11.1 20.4 14.9 Not seasonally adjusted Assets 26 Bank credit 513.4 536.8 536.5 5.35.4 542.5' 551.1' 554.5' 574.4 573.4 571.4 573.8 575.9 27 Securities in bank credit 166.6 179.1 181.5 180.7 181.2' 195.1' 192.C 194.7 194.9 192.8 193.1 194.1 28 U.S. government securities 82.0 87.7 87.3 86.7 856 85.7 81.7 81.6 82.3 77.9 78.5 83.4 29 Trading account 16.2 17.0 18.3 17.2 15.1 17.6 15.8' 15.5 16.2 111 12.8 18.7 30 Investment account 65.8 70.7 68.9 69.5 70.5 68.1 65.9r 66.0 66.0 66.8 65.7 64.8 31 Other securities 84.6 91.4 94.2 94.0 95.6' 109.4' ! 10.3' 113.1 112.7 114.9 114.6 110.7 3^ Trading account 56.4' 60.3' 61.4' 61.4' 62.5' 69.6r 70.3' 72.3 74.0 72.8 70.5 70.8 33 Investment account 28.1 31.1 32.8 32.6 33.1' 39.8' 40.01 40.8 38.6 42.1 44.1 40.0 34 Loans and leases in bank credit2 . . . 346.8 357.6 355.1 354.6 361.3' 356.O1 362.6 379.7 378.4 378.6 380.7 381.8 35 Commercial and industrial 214.3 219.2 219.9 220.7 222.2 "'22 4 224.5 226.3 226.4 226.7 227.3 224.7 i6 Real estate 31.8 28.4 28.4 28.0 27.8' 27.3' 26.6' 27.0 27.1 27.2 26.8 26.9 37 Security3 38.1 43.5 42.2 43.0 46.3' 41 1 44.4 54.5 53.3 52.7 54.7 58.5 38 Other loans and teases 62.6 66.5 64.6 63.0 64.9 65.2' 67.01 71.9 71.6 72.0 72.0 71.7 39 Interbank loans 22 7 18.5 180 ISO 20.(1 23.1 30.6 27.2 36.6 26.4 238 23.8 40 Cash assets4 31.5 33.8 34.3 34.7 35.2 36.5 36.0 33.3 33.2 33.3 33.8 334 41 Other assets5 37.3 41.7 43.4 42.4 41.1' 45.2' 42.9" 43.2 40.7 42.8 43.5 46.2 42 Total assets6 M4.fi 630.6 632.1 630.2 638.5' 655.7' 663.8 677.9 683.6 673.6 674.7 679.0 Liabilities 43 Deposits 225.8 261.6 261.2 264.6 268.8 275.7 281.0 276.1 275.3 274.8 275.0 279.3 44 Transaction 10.4 10.6 10.9 11.2 10.5 10.7 11.2 10.8 11.2 11.0 10.5 10.7 45 Nontransaction 215.5 251.0 250.3 253.3 258.3 265.0 269.8 265.3 264.1 263.8 264.4 268.6 46 Large time 213.3 248.5 247.8 250.8' 255.9 262.6 267.3 262.8 261.6 261.3 262.0 266.2 47 Other 22 2.5 2.5 2.5 25 2.5 2.5 2.4 2.5 2.4 2.4 2.4 48 Borrowings 127.4 143.9 142.6 144.2 157.1 159.8 155.2 155.6 151.9 156.7 154.4 157.1 49 From banks in the US 29.2 31.9 31.7 34.9 34.5 30.5 28.2 26.1 24.5 26.9 26.5 25.2 50 From others 112.0 110.9 109.3 122.6 129.3 127.1' 129.5 127.4 129.8 127.9 131.9 5 1 Net due to related foreign offices 159.3 129.7 128.7 124.1 117.6 117.6 126.3 144.8 155.7 139.7 144.2 141.9 52 Other liabilities 89.5 93.2 96.4 93.91' 91.3' 97.7' 97.0 96.9 97.3 98.8 96.7 94.9 53 Total liabilities 602.1 628.4 629.0 626.8r 634.8r 650.8' 659.5 673.5 680.2 670.0 670.3 673.3 54 Residual (assets less liabilities)' 2.6 2.2 3.0 3.4 3.7 4.9 4.3 4.3 3.5 3.6 4.4 5.8 MEMO 55 Revaluation gains on off-balance-sheet items* 41.5' 40.3' 41.5' 41.2' 39.8' 41.8' 40.9' 42.0 43.9 43.1 41.3 40.3 56 Revaluation losses on off-balancesheet items* 41.4' 42.1' 43.1' 41.8' 40.1' 4I.91 41.fi' 42.4 44.7 43.5 41.6 40.6 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 US. 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 Financial Statistics • April 1998 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period Year ending December D 19 e 9 c 3 . D 19 e 9 c 4 . D 19 e 9 c 5 . D 19 e 9 c 6 . D 19 e 9 c 7 . July Sept. Oct. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 555,075 595,382 674,904 775,371 966,699 889,494 885,601 908,640 921,769 940^24 966,699 Financial companies1 2 Dealer-placed paper , total 218,947 223,038 275,815 361,147 513,307 440,262 437,340 475,792 483,489 483,475 513,307 3 Directly placed paper3, total 180,389 207,701 210,829 229,662 252,536 253,971 253,934 235,030 237,544 249,781 252,536 4 Nonfinancial companies4 155,739 164,643 188,260 200,857 195,260 194,327 197,818 200,736 207,268 200,857 Bankers dollar acceptances (not seasonally adjusted) 5 Total 32,348 29,835 29,242 25,754 By holder 6 Accepting banks 12,421 11,783 7 Own bills 10,707 10,462 8 Bills bought from other banks 1,714 1,321 Federal Reserve Banks6 9 Foreign correspondents , 725 410 10 Others 19,202 17,642 fly basis 11 Imports into United States 10,217 10.062 12 Exports from United States 7,293 6,355 13 All other 14,838 13.417 1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales, 5. Data on bcaannkers dollar acceptances are gathered from approximately 100 institutions, personal, and mortgage financing; factoring, finance leasing, and other business lending; The reporting ggrroouupp iisa rne.v-uisie.ud e^v»evriyj jJaannuuaoriy;,. Bue^gninuning January 1995, data for Bankers insurance underwriting; and other investment activities. dollar acceptances are reporled annually in September. 2. Includes all financial-company paper sold by dealers in the open market. 6. In 1977 the Federal Reserve discontinued operations in bankers dollar acceptances for 3. As reported by financial companies that place their paper directly with investors. its own account. 4. Includes public utilities and firms engaged primarily in such activities as communications, construction, manufacturing, mining, wholesale and retail trade, transportation, and services. 1.33 PRIME RATE CHARGED BY BANKS Short-Term Business Loans1 Percent per year Date of change Rate Period Av r e a r t a e ge Period Av r e a r t a e ge Period Av r e a r t a e ge 1995—Jan. 1 8.50 1995 8.83 1996—Jan 8.50 1997—Jan 8.25 Feb. 1 9.00 1996 8.27 Feb 8.25 Feb 8.25 July 7 8.75 1997 8.44 Mar 8.25 Mar. 8.30 Dec. 20 8.50 Apr. 8.25 Apr 8.50 1995—Jan 8.50 May 8.25 May 8.50 1996—Feb. 1 8.25 Feb 9.00 June 8.25 June 8.50 Mar 9.00 July 8.25 July 8.50 1997—Mar. 26 8.50 Apr. 9.00 Aug 8.25 Aug 8.50 May 9.00 Sept 8.25 Sept 8.50 June 9.00 Oct 8.25 Oct 8.50 July 8.80 Nov 8.25 Nov 8.50 Aug 8.75 Dec 8.25 Dec 8.50 Sept 8.75 Oct 8.75 1998—Jan 8.50 Nov 8.75 Feb 8.50 Dec 8.65 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 1998, weekending Oct. Nov. Dec. Jan. Jan. 2 Jan. 9 Jan. 16 Jan. 23 Jan. 30 MONEY MARKET INSTRUMENTS 1 Federal funds1-2-3 5.83 5.30 5.46 5.50 5.52 5.50 5.56 5.45 5.74 5.45 5.53 5.53 2 Discount window borrowing24 5.21 5.02 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 Commercial paper3'456 Nonfinancial 3 1-month n.a. 5.57 5.49 5.53 5.78 5.46 5.71 5.48 5.44 5.44 5.47 4 2-month n.a. 5.57 5.48 5.59 5.71 5.44 5.65 5.47 5.40 5.43 5.43 5 3-month n.a. 5.56 5.51 5.60 5.67 5.42 5.60 5.47 5.38 5.40 5.40 Financial 6 1-month n.a. 5.59 5.50 5.55 5.80 5.48 5.67 5.49 5.45 5.46 5.48 7 2-month n.a. 5.59 5.50 5.65 5.72 5.46 5.63 5.49 5.43 5.44 5.44 8 3-month 5.60 5.55 5.64 5.70 5.44 5.62 5.48 5.40 5.42 5.44 Commercial paper (historical)3'5-67 9 1-month 5.93 5.43 5.54 n.a. n.a. n.a. n.a. n.a. 10 3-month 5.93 5.41 5.58 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 11 6-month 5.93 5.42 5.62 n.a. n.a. n.a. n.a. n.a. n.a. n.a. Finance paper, directly placed (historical) '£•'• 12 1-month 5.81 5.31 5.44 n.a. n.a. n.a. 13 3-month 5.78 5.29 5.48 n.a. n.a. n.a. 14 6-month 5.68 5.21 5.48 n.a. n.a. n.a. Bankers acceptances 5 15 3-month 5.81 5.31 5.54 5.57 5.66 5.75 5.48 5.62 5.52 5.47 5.45 5.47 16 6-month 5.80 5.31 5.57 5.56 5.63 5.68 5.45 5.59 5.51 5.37 5.44 5.44 Certificates of deposit, secondary market*' 17 1-month 5.87 5.35 5.54 5.55 5.61 5.88 5.53 5.72 5.55 5.50 5.51 5.53 18 3-month 5.92 5.39 5.62 5.65 5.74 5.80 5.54 5.74 5.58 5.50 5.51 5.53 19 6-month 5.98 5.47 5.73 5.72 5.78 5.82 5.56 5.76 5.61 5.51 5.52 5.54 20 Eurodollar deposits, 3-month3'1' 5.63 5.56 5.48 US. Treasury bills Secondary market3-5 21 3-month 5.49 5.01 5.06 4.97 5.14 5.16 5.04 5.24 5.04 5.00 5.02 5.06 22 6-month 5.56 5.08 5.18 5.09 5.17 5.24 5.03 5.24 5.04 4.97 5.02 5.06 23 1-year 5.60 5.22 5.32 5.17 5.17 5.24 4.98 5.23 4.99 4.92 4.96 5.01 Auction average3'5-12 24 3-month 5.51 5.02 5.07 4.95 5.15 5.16 5.09 5.29 5.12 4.97 4.98 5.07 25 6-month 5.59 5.09 5.18 5.09 5.17 5.24 5.07 5.29 5.13 4.91 5.00 5.03 26 1-year 5.69 5.23 5.36 5.20 5.14 5.18 5.07 n.a. 5.07 n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities 27 1-year 5.94 5.52 5.63 5.46 5.46 5.53 5.24 5.52 5.25 5.18 5.22 5.28 28 2-year 6.15 5.84 5.99 5.77 5.71 5.72 5.36 5.66 5.35 5.28 5.36 5.40 29 3-year 6.25 5.99 6.10 5.84 5.76 5.74 5.38 5.70 5.37 5.28 5.36 5.43 30 5-year 6.38 6.18 6.22 5.93 5.80 5.77 5.42 5.71 5.38 5.32 5.45 5.48 31 7-year 6.50 6.34 6.33 6.05 5.90 5.83 5.53 5.76 5.48 5.45 5.57 5.60 32 10-year 6.57 6.44 6.35 6.03 5.88 5.81 5.54 5.75 5.49 5.45 5.59 5.63 33 20-year 6.95 6.83 6.69 6.38 6.20 6.07 5.88 6.01 5.82 5.80 5.93 5.96 34 30-year 6.88 6.71 6.61 6.33 6.11 5.99 5.81 5.93 5.75 5.74 5.87 5.89 Composite 6.93 6.80 6.67 5.79 5.92 5.95 35 More than 10 years (long-term) STATE AND LOCAL NOTES AND BONDS Moody's series14 5.80 5.52 5.32 5.19 5.19 5.03 4.88 4.98 4.93 4.77 4.78 4.92 36 Aaa 6.10 5.79 5.50 5.32 5.32 5.17 5.04 5.12 5.08 4.94 4.96 5.08 37 Baa 5.95 5.76 5.52 5.38 5.33 5.19 5.06 5.15 5.07 4.96 5.03 5.11 38 Bond Buyer series CORPORATE BONDS 39 Seasoned issues, all industries16 7.83 7.66 7.54 6.83 6.83 6.94 Rating group 7.59 7.37 7.27 7.00 6.87 6.76 6.61 6.70 6.55 6.55 6.67 6.70 40 Aaa 7.72 7.55 7.48 7.20 7.07 6.99 6.82 6.94 6.77 6.77 6.87 6.89 41 Aa 7.83 7.69 7.54 7.27 7.15 7.05 6.93 7.00 6.86 6.87 6.98 7.02 42 A 8.20 8.05 7.87 7.57 7.42 7.32 7.19 6.91 7.13 7.14 7.24 7.28 43 Baa 7.86 7.77 7.71 7.44 7.24 7.10 6.97 6.96 6.86 6.96 7.11 6.96 44 A-rated, recently offered utility bonds17 MEMO Dividend-price ratio18 45 Common stocks 2.56 2.19 1.77 1.61 1.65 1.62 1.62 1.61 1.62 1.63 1.62 1.61 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. Al 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.I5 (519) weekly and Digitizedf ofro inr dFicRatiAonS pEurpRo ses 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 http://frabsaesirs..stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Financial Statistics • April 1998 1.36 STOCK MARKET Selected Statistics 1996 May June July Aug. Sept. Oct. Nov. Dec Prices and trading volume (averages of daily figures)1 Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31. 1965 - 50) 291.18 357.98 456.99 433.36 457.07 480.94 482.39 489.74 499.25 492.14 504.66 504.13 2 Industrial 367.40 453.57 574.97 549.65 578.57 610.42 609.54 617.94 625.22 615.65 623.57 624.61 3 Transportation 270.14 327.30 415.08 395.50 410.93 433.75 439.71 451.63 466.04 453.56 461.04 458.49 4 Utility 110.64 126.36 143.87 140.52 140.24 144.25 143.82 145.96 157.83 153.53 165.74 146.25 5 Finance 238.48 303.94 424.84 392.32 419.12 441.59 446.93 459.86 476.70 465.35 490.30 479.81 6 Standard & Poor's Corporation (194L-43 - 10)2 541.72 670.49 873.43 833.09 876.29 925.29 927.74 937.02 951.16 938.92 962.37 963.36 7 American Stock Exchange (Aug. 31, 1973 - 5O)3 498.13 570.86 628.34 584.06 619.94 635.28 645.59 678.05 702.43 674.37 667.89 665.72 Volume of trading (thousands of shares) 8 New York Stock Exchange 345,729 409,740 523.254 479,907 516,241 543,006 506,205 541,204 606,513 531,449 541,134 632,895 9 American Stock Exchange 20,387 22,567 n.a. 19,634 23,277 25,562 24,095 28,252 32,873 27.741 27,624 28.199 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers4 76,680 97,400 126,090 106,010 113,440 116,190 119,810 126,050 128,190 127,330 126,090 127,790 Free credit balances at brokers' 11 Margin accounts6 .. 16,250 22,540 31,410 22,050 23,860 24.290 23,375 23,630 26,950 26,735 31,410 29,480 12 Cash accounts 34,340 40.430 52,160 39,400 41,840 43,985 42,960 43,770 47,465 45,470 52.160 48,620 Margin requirements (percent of market value and effective date) Mar. II, 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, effective Mar. 11, 1968; and Regulation X. effective Nov. 1, 1971. 4. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the included credit extended against stocks, convertible bonds, stocks acquired through the initial margin required for writing options on securities, setting it at 30 percent of the current exercise of subscription rights, corporate bonds, and government securities. Separate report- market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the ing of data for margin stocks, convertible bonds, and subscription issues was discontinued in required initial margin, allowing it to be the same as the option maintenance margin required April 1984. by the appropriate exchange or self-regulatory organization; such maintenance margin rules 5. Free credit balances are amounts in accounts with no unfulfilled commitments to must be approved by the Securities and Exchange Commission. brokers and are subject to withdrawal by customers on demand. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A25 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year Type of account or operation Aug. Sept. US. budget' 1 Receipts, total 1,351,830 1.453,062 1.579.292 103,483 174,772 114.898 103,481 167,998 162,610 2 On-budget 1,000,751 1,085.570 1.187.302 70,902 138.849 87.083 73,690 135,340 123,367 3 Off-budget 351,079 367.492 391.990 32,581 35,923 27.815 29,791 32,658 39,243 4 Outlays, total 1,515,729 1,560,512 1,601,235 138,672 124,831 150,866 120,830 154,359 137,231 5 On-budget 1,227,065 1,259,608 1,290,609 109.810 91,406 123,863 91,327 146,647 108,843 6 Off-budget 288,664 300,904 310.626 28,862 33,429 26,999 29,504 7,712 28,388 7 Surplus or deficit (-), total -163,899 -107,450 -21.943 -35,189 49,937 -35,964 -17,349 13,639 25,379 8 On-budget -226,314 -174,038 -103,307 -38,908 47.443 -36,780 -17.637 -11,307 14,524 9 Off-budget 62.415 66.588 81.364 3.719 2,494 816 287 24,946 10,855 Source of financing {total) 10 Borrowing from the public 171,288 129,712 38,171 30.348 -18,318 6,315 29,108 -1,771 -24,807 11 Operating cash (decrease, or increase (—)). . -2,007 -6,276 604 15,435 -31,545 23,360 483 -12,107 -8,422 12 Other2 -5,382 -15,986 -16,832 -10,594 -74 6,289 -12,242 239 7,850 MEMO 13 Treasury operating balance (level, end of period) 37,949 44,225 43,621 12,076 43,621 20,261 19,778 31,885 40,307 14 Federal Reserve Banks 8,620 7,700 7,692 4,700 7,692 4,616 5,127 5,444 5,552 15 Tax and loan accounts 29,329 36,525 35,930 7,376 35,930 15,645 14,651 26,441 34,756 1. Since 1990. off-budget items have been the social security trust funds (federal old-age net gain or loss for US. 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 US. Government; fiscal year totals; U.S. Office of Management accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous and Budget, Budget of the U.S. Government. liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Financial Statistics • April 1998 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS' Millions of dollars Fiscal year Calendar year Source or type 1996 1997 RECEIPTS 1 All sources 1,453,062 1,579,292 767,099 707,551 845,527' 773,810' 103,481 1«7,998 162,610 2 Individual income taxes, net 656,417 737,466 347.285 323,884 400,435 354,072 46,596 69,060 95.798 3 Withheld 533,080 580,207 264.177 279.988 292,252 306,865 47,581 64,604 56,628 4 Nonwithheld 212,168 250.753 162.782 53,491 191,050 58,069 2,053 5,240 40,039 5 Refunds 88,897 93,560 79,735 9,604 82,926 10,869 3.040 784 870 Corporation income taxes 6 Gross receipts 189,055 204,493 96.480 95.364 106,451 104,659 4.900 44,973 6,888 7 Refunds 17.231 22,198 9.704 10.053 9,635 10,135 987 936 2,481 8 Social insurance taxes and contributions, net 509,414 539,371 277,767 240.326 288,251 260,795 42,488 45,149 51,765 9 Employment taxes and contributions2 476.361 506,751 257.446 227,777 268,357 247,794 39,629 44,297 50,395 10 Unemployment insurance 28,584 28,202 18.068 10,302 17.709 10,724 2,526 425 1,036 11 Other net receipts3 4,469 4,418 2,254 2,245 2,184 2,280 334 427 333 12 Excise taxes 54,014 56,924 25,682 27,016 28,084 31,132 5,202 5.167 4,679 13 Customs deposits 18,670 17,928 8,731 9,294 8,619 9,679 1,323 1.416 1,387 14 Estate and gift taxes 17,189 19,845 8,775 8,835 10,477 10,262 1,510 1.498 1,808 15 Miscellaneous receipts4 25,534 25,465 12,087 12.888 12,866 13,347' 2,450 1.671 2,768 OUTLAYS 16 All types 1,560,512' 1,601,235 785,368 800,176r 797,418 824,360r 120,830 154,359 137,231 17 National defense 265.748 270,473 132,599 138,702 131.500 139,480 17,883 26,944 20,738 18 International affairs 13.496 15,228 8,076 8,596 5.779 9,518 955 4,534 750 19 General science, space, and technology, . . 16,709 17,174 8.897 8,260 8,939 10,040 1,606 1,899 1,498 20 Energy 2.844' 1,483 1.356 703 793' 386 -68 -267 291 21 Natural resources and environment 21,614 21,369 10,254 10.310 9,688 11,199 1,566 2,388 \,638 22 Agriculture 9,159 9,032 73 10.977 1,433 10,542 1,425 2,846 1,958 23 Commerce and housing credit -10,472' -14,624 -6.885 -5,899 -7,575 -3,526 -714 -1,144 -403 24 Transportation 39,565 40,767 18,290 22,211 18,046 21,823 3,014 3,681 2,762 25 Community and regional development 10,685 11,005 5,245 5,498 5,699 5,712 916 843 783 26 Education, training, employment, and social services 52,001 53,008 25,979 25,227 26,895 4,517 4,688 5,081 27 Health 119,378 123,843 59,989 61,595 61,808 63,552 9,870 11.159 11,162 28 Social security and Medicare 523.901 555,273 264,647 269,412 278,817 283,109 42,864 50,500 46,929 29 Income security 225,989 230,886 121,186 107,602 123,875' 106,295 14,694 19,951 20,093 30 Veterans benefits and services 36.985 39,313 18,140 21,109 17,696' 22,077 1,864 4,931 3,331 31 Administration of justice 17.548 20,197 9,015 9,583 10,643 10,196 1,747 2,051 1,718 32 General government 11,892 12,768 4,641 6,546 6,575' 7,230 713 2.504 836 33 Net interest5 241,090 244,013 120,576 122,573 122,701 122,620 20,592 20,480 20,570 34 Undistributed offsetting receipts6 -37,620 -49,973 -16,716 -25,142 -24,234 -22,795 -2,613 -3,629 -2.504 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 US. 3. Federal employee retirement contributions and civil service retirement and Government, Fiscal Year 1999; monthly and half-year totals: US. 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 A27 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1995 1996 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding 5,017 5,153 5,197 5,260 5^57 5,415 5,410 5,446 5,536 2 Public debt securities 4,989 5,118 5.161 5,225 5,323 5,381 5,376 5,413 5,502 3 Held by public 3,684 3,764 3,739 3,778 3,826 3,874 3,805 3,815 n.a. 4 Held by agencies 1,305 1,354 1,422 1,447 1,497 1,507 1,572 1,599 n.a. 5 Agency securities 28 36 36 35 34 34 34 33 34 6 Held by public 28 28 28 27 27 26 26 26 n.a. 7 Held by agencies 0 7 7 n.a. 8 Debt subject to statutory limit 4,900 5,030 5,073 5,137 5,237 5,294 5,290 5,328 5,417 9 Public debt securities 4,900 5,030 5,073 5,137 5,237 5,294 5,290 5,328 5,416 10 Other debt' 0 0 0 0 0 0 0 0 0 MEMO 11 Statutory debt limit 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 US. TREASURY Types and Ownership Billions of dollars, end of period Type and holder Qi Q2 Q3 Q4 1 Total gross public debt 4,800.2 4,988.7 5,323.2 5,502.4 5,380.9 5,376.2 5,413.2 5,502.4 By type 2 Interest-bearing 4,769.2 4,964.4 5,317.2 5,494.9 5,375.1 5,370.5 5,407.5 5,494.9 3 Marketable 3,126.0 3,307.2 3,459.7 3,456.8 3,504.4 3,433.1 3,439.6 3,456.8 4 Bills 733.8 760.7 777.4 715.4 785.6 704.1 701.9 715.4 5 Notes 1,867.0 2,010.3 2,112.3 2,106.1 2,131.0 2,132.6 2,122.2 2.106.1 6 Bonds 510.3 521.2 555.0 587.3 565.4 565.4 576.2 587.3 7 Inflation-indexed notes' n.a. n.a. n.a. 33.0 7.4 15.9 24.4 33.0 8 Nonmarketable2 1,643.1 1,657.2 1,857.5 2,038.1 1.870.8 1,937.4 1,967.9 2,038.1 9 State and local government series 132.6 104.5 101.3 124.1 104.8 107.9 111.9 124.1 10 Foreign issues 42.5 40.8 37.4 36.2 36.8 35.4 34.9 36.2 11 Government 42.5 40.8 47.4 36.2 36.8 35.4 34.9 36.2 12 Public .0 .0 .0 .0 .0 .0 .0 .0 13 Savings bonds and notes 177.8 181.9 182.4 181.2 182.6 182.7 182.7 181.2 14 Government account series4 1,259.8 1,299.6 1,505.9 1,666.7 1,516.6 1.581.5 1,608.5 1,666.7 15 Non-interest-bearing 31.0 24.3 6.0 7.5 5.8 5.7 5.6 7.5 By holder* 16 U.S. Treasury and other federal agencies and trust funds . 1,257.1 1,304.5 1,497.2 1,506.8 1,571.6 1.598.5 17 Federal Reserve Banks 374.1 391.0 410.9 405.6 426.4 436.5 18 Private investors 3.168.0 3,294.9 3,411.2 3,451.7 3,361.7 3,388.9 19 Commercial banks 290.4 278.7 261.7 282.3 265.7 260.0 20 Money market funds 67.6 71.5 91.6 84.0 77.4 76.4 21 Insurance companies 240.1 241.5 214.1 214.3 203.4 192.0 22 Other companies 224.5 228.8 258.5 262.5 261.0 266.5 23 State and local treasuries67 540.2 421.5 363.7 348.0 337.4 333.5 Individuals 24 Savings bonds 180.5 185.0 187.0 186.5 186.3 186.2 25 Other securities 150.7 162.7 169.6 168.9 169.1 168.6 26 Foreign and international 688.6 862.2 1,131.8 1,215.4 1,246.9 1,292.4 27 Other miscellaneous investors7'9 785.5 843.0 733.2 689.8 614.5 613.3 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 Financial Statistics • April 1998 1.42 US. GOVERNMENT SECURITIES DEALERS Transactions' Millions of dollars, daily averages 1997 1997, week ending 1998, week ending Oct. Nov. Dec. Nov. 26 Dec. 3 Dec. 10 Dec. 17 Dec. 24 Dec. 31 Ian. 7 Jan. 14 Jan. 21 OUTRIGHT TRANSACTIONS' By type of security 1 U.S. Treasury bill's 41,086 43,506 38,244 42,517 35,218 51,698 38,376 33,558 29,390 42,416 40,994 37,381 Coupon securities, by maturity 2 Five years or less 132,174 118,847 95,901 125,279 92,007 118,669 110,937 89,852 59,127 128,295 153,884 124,469 3 More than five years 76,423 68,164 54,749 61,156 50,120 66,089 70,503 49,970 30,326 79,357 92,992 64,302 4 Federal agency 43,579 48,097 43,015 44,605 44,065 44,867 44,552 42,630 38,475 46,582 48,175 50,166 5 Mortgage-backed 58,174 63,657 45,285 48,623 56,118 75,721 42,624 33,167 17,590 61,292 94,472 68,029 By type of counterparty With interdealer broker 6 U.S. Treasury 145,596 132,153 107,366 133,112 96,334 137,469 129,162 100,678 59,126 137,234 161,913 130,689 7 Federal agency 1,377 1,250 1,143 1,258 934 1,775 1,245 995 567 1,572 2,521 1,398 8 Mortgage-backed 18,087 19,089 13,748 14,180 16,743 20,960 13.815 10,781 6,110 19,908 28,462 26,718 W.th other 9 U.S. Treasury 104.088 98,365 81,528 95,841 81,011 98,986 90,654 72,701 59,717 112,834 125,957 95,462 10 Federal agency 42.202 46,847 41,873 43,347 43,131 43,092 43,307 41,635 37,908 45.010 45,654 48,768 11 Mortgage-backed 40,088 44,569 31,538 34,443 39,375 54,761 28.809 22,386 11,480 41,384 66,010 41,311 FUTURES TRANSACTIONS' Bx type of deliverable security 12 U.S.'Treasury bills 228 262 404 90 390 314 380 570 352 226 367 138 Coupon securities, by maturity 13 Five years or less 1,848 2,041' 2,534 3,012 1,995 4,056 2,792 1,929 1,465 4.304 3,201 2,229 14 More than five years 21,358 16,939' 13,394 17,300 10,718 16,278 18,919 12,655 5,783 17,724 20,089 13,888 15 Federal agency 0 0 0 0 0 0 0 0 0 0 0 0 16 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 0 OPTIONS TRANSACTIONS4 By type of underlying security 17 U.S. Treasury bills 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 18 Five years or less 2,274 1,674 1,831 1,673 1,955 2,077 2,663 1,631 640 1,807 4,799 3,061 19 More than five years 6,825 6.353' 4,487 4,596 3.974 6,020 4,646 4,714 2,470 7,903 5,460 3,983 20 Federal agency 0 0 0 0 0 0 0 0 0 0 0 0 21 Mortgage-backed 614 549 632 364 233 1,450 847 270 90 515 737 706 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 US. 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 A29 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing' Millions of dollars 1997 1997, week ending 1998, week endng Item Oct. Nov. Dec. Dec. 3 Dec. 10 Dec. 17 Dec. 24 Dec. 31 Jan. 7 Jan. 14 Jan 21 Positions2 NET OUTRIGHT POSITIONS3 5v type of secunt\ 1 U.S." Treasury bills 6,161 18,776 18,205 22.644 24,485 19,132 18.900 8.400 19.343 14,900 12.871 Coupon securities, bv maturity 2 Five years or less -31,681 -17,008 -21,352 -16.446 -26.456 -26,116 -15.154 -19.785 -12,528 -13,393 -14.543 3 More than live years -21,634 -18,763 -16,759 -14,649 -18,580 -16,942 -15 934 -16.484 -15,515 -15,037 -19,897 4 Federal agency 14,843 28,049 26,328 27,660 30.840 28,165 28.239 17.499 29.434 38.266 39,389 5 Mortgage backed 37,762 37,409 44,132 36,210 46,019 48,908 42.492 42.503 46.366 48.880 49,783 NET FUTURES POSITIONS4 By type of deliverable security' 6 U.S. Treasury bills ' -1,334 -3,141 -2.635 -1,965 -2,625 -2.291 -2,708 -3.201 -3,182 -3,367 -3,448 Coupon secunties, by maturity 7 Five years or less 5,079 2.355 3,578 2,448 6.764 5,049 1,225 1,768 -4,216 -1.879 -253 8 More than five years -22,760 -20,652 -27.144 -22,670 -20,736 -28,707 -31,858 - 29,041 -29,805 -27.645 -27,138 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 ot deliverable security 11 U.S.'Treasury bills ' n.ii. n.a. n.a. 0 0 0 0 n.a nj. n.a. n.a. Coupon secunties, by maturity 12 Five years or less 2.573 2.234 -757 1,087 215 -1.193 -1.289 -1,551 -652 -1.117 78 13 More than rive years 4.444 3.845 3.226 4.004 2.188 4,064 3,486 2,831 3.163 3,515 3,200 14 Federal agency n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 15 Mortgage-backed 369 74 869 782 811 725 976 1.001 1.222 841 203 Financing' Reverse repurchase agreements 16 Overnighl and continuing 325.078 328,976 304.385 339,159 313.568 322.159 260.415 306,496 322.402 337.041 324,835 17 Term 713,746 688,464 654,600 618,503 670,168 672.927 719,458 571,315 670,529 738,725 770.417 Securities borrowed 18 Overnight and continuing 209,087 201,701 200,401 199.239 200.910 198,031 193,859 209,303 217.021 2N,985 212.852 19 Term 96 609 94 469 92 672 88,500 92 201 94 742 100 459 85 073 87 774 S9O83 89 364 Securities received as pledge 20 Overnight and continuing 7.407 6.306 5,939 6.487 5.954 5.941 5.797 5.827 5,511 5.396 5,665 21 Term 88 99 286 n.a. n.a. 286 n.a. n.a. 137 n.a. n.a. Repurchase agreements 22 Overnight and continuing 685,099 679,506 648,786 6W.819 68K.769 704,310 579,768 600,427 700.774 733 257 728.141 23 Term 642,512 629,143 586,741 538,525 578.842 581.607 678,507 528,672 579,576 650.443 677.327 Securities loaned 24 Overnight and continuing 7,546 7,759 7,927 8,240 8.128 8.197 7,612 7,435 8 136 8,594 7.905 25 Term 3,365 3,828 4,591 4,069 3,939 3,667 4,736 6.244 4,745 4,871 4,493 Securities pledged 26 Overnight and continuing 51,116 50,941 53.643 50.174 48,791 50.042 51,718 65.507 54 835 51,136 51,851 27 Tenn 4,190 2,741 3,566 2,230 2.759 3.649 3.473 4.956 4.694 4,682 4,642 Collaterahzed loans 28 Overnight and continuing n.a. n.a. n.a. n.a n.a n A !Ul n.a. n.a n.a. n.a. 29 Term ii.a. n.a. n.a n.a n.a. 30 Total 15.354 14.645 13,891 20,350 13,573 12.117 16,544 10,563 is'o77 15*341 12.957 MEMO: Matched book6 Securities in 31 Overnighl and continuing 303,512 300,635 284,089 311,754 292 408 297.079 247.980 287,031 306,066 324,775 313,439 32 Term 686.424 662,654 623,240 598,418 640,338 647.472 685.181 530,605 643.071 697,823 717.775 Securities out 33 Overnight and continuing 196 064 386,203 374.312 401,962 398,670 397.406 v<1.50'> 357.812 4IR32I 421.397 41S,707 34 Term " 552.735 544,801 495.105 465,730 497.699 501.630 557.276 436.403 5l)(»,290 N.a n.a. 1. Data tor positions and financing are obtained from reports submitted to the Federal 4 Futures positions reHeci standard] agreements arranged on an exchange. All tutures Reserve Bank of New York by the U.S. government securities dealers on its published list of positions are included regardless of lime delivery, primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar 5. Overnight financing refers lo agreeunits made on one business day that mature on the days ot the report week are assumed to be constant. Monthly averages are based on the next business day; continuing contracts aie agreements thai ici mi m effect for more than one number of calendar days in the month. business day but have no specific \ and can be temun; :d without advance notice by 2. Securities positions are reported at market value. either ppayr ty; term aggreements hav a fixed maturity ut more ilia one business day. Financing 3. Net oulnght positions include immediate and forward position1; Net immediate posi- data are reportedd iin terms ot actual funds paid or received, incliJing accrued interest tions include securities purchased or sold (other than mortgage-backed agencv secunties) that 6. Matched-book dala refflle cdt financial intermediation activuv m whichh thhe borrobwiing and have been delivered or are scheduled to be delivered in five business days or less and lending transactions are matched Malched-book daia are included in the financing break- "when-issued" securities that settle on the issue date of offering. Net immediate positions for downs tjiv^n above The ie\erse repurchase and leuuichasc numbers arc not always equal mortgage-backed agency securities include securities purchased or sold that have been because of the ''matching' ut •.eeunUes of different values 01 different types o( collaterali^adelivered or are scheduled to be delivered in thirty business days or le^s. Iion Forward positions reflect agreements made in the over-the-counter markci that specif) NOTE, "n.a." indicates that data ate not published became af insufficient activity. delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt Major changes in the report form filed by primary dealeis induced a break in the dealer data securities are included when the time to delivery is more than five business days. Forward series as of the week ending July 6, 1994. contracts for mortgage-backed agency securities are included when the time to delivery is more than thirty business days. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Financial Statistics • April 1998 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1997 Agency July Sept. 1 Federal and federally sponsored agencies 570,711 738,928 844,611 925,823 "77,877 980,501 9833*9 1,003,177 1,014,907 2 Federal agencies 45.191! 39.186 37,347 29,380 27,738 27,484 27,392 27,356 27,500 3 Defense Department^ 6 6 6 6 6 6 6 6 6 4 Export-Import Bank2'3 5,315 3.455 2,050 1,447 1,326 1,326 1,326 1,295 1,295 5 Federal Housing Administration 255 116 97 84 43 46 93 6 Government National Mortgage Association certificates of participation n.a. Postal Service6 9,732 8,073 5,765 n.a. n.a. Tennessee Valley Authority 29,885 27,536 29,429 27,853 27,478 27,386 27,494 United States Railway Association n.a n.a. n.a. 10 Federally sponsored agencies7 523,452 699 742 807.264 896.443 950.139 953.017 956.207 975.821 987,407 ] 1 Federal Home Loan Banks 139,512 205,817 243.194 263.404 291.931 292.174 295.212 302,310 308.745 12 Federal Home Loan Mortgage Corporation 49,993 93 279 119.961 156,980 161.476 165.690 160,050 172.433 174,900 13 Federal National Mortgage Association 201,112 257,230 299,174 331,270 W8.599 348,115 358,003 356,149 361,602 14 Farm Credit Banks8 53,123 53,175 57.379 60,053 61.874 61,091 61,612 61.093 61.093 15 Student Loan Marketing Association*1 39,784 50.335 47.529 44,763 45.536 45.211 40,531 43,000 40,321 l<i 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 Corporation1" 29.996 29.996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt" 128,187 103,817 78,681 58,172 50,119 48,625 49,944 48,698 32,523 Lending lo federal and federally sponsored agencies 20 Export-Import Bank3 5,309 3,449 2.044 1,431 1,326 1,326 1,326 1,295 1,295 21 Postal Service6 9,732 8,073 5,765 n.a. n.a. n.a. n.a. 22 Student Loan Marketing Association 4,760 n.a. n.a. n.a. 23 Tennessee Valley Authority 6,325 3,200 n.a. 24 United States Railway Association6 n.a n.a. n.a. Other lending™ 25 Farmers Home Administration 38,619 33,719 21,015 18,325 18,700 14,300 13,895 13,530 13,530 26 Rural Electrification Administration 17.578 17 392 17,144 16.702 15.564 15,568 14,917 14.819 14,819 27 Other 45.8b4 17.984 29.511 21,714 14.529 17,431 19,716 19,054 2,879 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 Retorm, 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. Us debt is not included in the main portion of the table lo 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 Adminisiration 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 Type of o is r s u u e s e or issuer, 1995 1996 1997 July Aug. Sept. 1 All issues, new and refunding1 145,657 171,222 214,693 22,901' 17,786r 17,40lr 21,499 21,898 20,207 21342 16,770 By type of issue 2 General obligation . 56.980 60,409 69,934 6.145 7,679 5.062 3.590 7.837 5.713 8,005 5.608 3 Revenue 88,677 110,813 134,989 13,231 9,061 11.518 17,909 14.061 14.494 13,337 11,162 By type of issuer 4 State . 14.665 13,651 18,237 1,197 1,984 1,352 1,278 2.392 509 1,702 1.268 5 Special district or statutory authority 93.500 113,228 134,919 13,810 10,715 10,480 14,890 13,195 13,586 15,600 11.794 6 Municipality, county, or township .. 37.492 44,343 70,558 4,369 4,041 4,803 16,592 13.920 5.920 4,098 3,706 7 Issues for new capital 102390 112,298 127,928 14,536 9,279 8,915 10,158 12,981 12,979 13,487 9,696 By use of proceeds 8 Education 23,964 26,851 31,860 3,498 2,701 2.781 1,943 2,647 2.973 2.981 2 338 9 Transportation 11.890 12,324 13,951 638 666 1,276 2,654 1.215 1.420 1,144 1,521 10 Utilities and conservation .. 9,618 9,791 12.219 1,615 1,182 576 907 1.402 1.217 683 598 11 Social welfare 19,566 24,583 27.794 4,438 1.789 1,481 2,305 2.341 4,090 2,940 1.540 12 Industrial aid 6,581 6,287 6,667 637 334 799 441 729 574 897 448 13 Other purposes 30,771 32,462 35.095 3.710 2.607 2.024 1.908 4,642 2.705 4,842 3.251 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 US. Corporations Millions of dollars 1997 Type of issue, offering, 1995 1996 1997 or issuer May June July Aug. Sepl. Oct. Nov. Dec. 1 All issues' 673,779 n.a. n.a. 54,750 83.890 67,305 52,117 84,731r 71,289' 58,350' 63,890 2 Bonds2 573,206 n.a. n.a. 46,738 72,638 57,886 46.576 75,166r 58,236' 46,543' 55,871 By type of offering 3 Public, domestic 408,804 386.280 537,778 38.594 60,979 46,415 40.840 6(1.226' 47.037' 42,969 54.341 4 Private placement, domestic 87,492 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 76,910 74.793 103.188 8,144 11,660 11,471 5.736 14.941 11.199 3,574 1.530 By industry group 61,070 41,959 47,064 2 355 3,748 8,480 5,087 3.534 4,668 2,152 2.827 7 Commercial and miscellaneous 50,689 34,076 42,480 2.104 2,771 4,466 3,196 4,330 7,982 1,166 1,693 8 Transportation 8,430 5,111 11,352 6,566 424 544 406 296 1.322 299 448 9 Public utility 13,751 8,161 16,660 653 1,377 3.674 1.407 1,357 1.664 1,590 1.372 22 999 13 320 12 055 300 576 1 304 278 1 829 342 1 586 9'3 11 Real estate and financial 416,269 358,446 511,285 34,761 63.743 39.419 36,202 63,820' 42,258' 39,750 48.608 12 Stocks' 100,573 8,012 11,252 9.419 5,541 9,565 13,053 11,807 8,019 By type of offering 13 Public preferred 10,917 33,208 29.959 2,055 3,846 678 645 2.155 1.824 1.060 3,578 14 Common 57,556 83,052 85,765 5,957 7,406 8.741 4,895 7,410 11,229 10,747 4.441 15 Private placement1 32,100 t n.a. n.a n.a. By industry group 21,545 1,594 1,627 1.056 836 1,294 2,068 2,176 471 11 Commercial and miscellaneous 27,844 n.a. n.a. 1,912 2,938 2,804 1,673 3.218 3,438 3,404 1,221 18 Transportation 804 35 272 563 139 472 197 84 241 19 Public utility 1,936 200 1,046 483 48 235 280 592 350 20 Communication 1,077 0 374 120 52 238 487 102 479 21 Real estate and financial 47.367 4,219 5,384 3.875 2.371 4,108 6.583 5,449 5.257 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 Governor-, of end, intracorporate transactions, equities sold abroad, and Yankee bonds. Stock data include the Federal Reserve System. ownership securities issued by limited partnerships. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Financial Statistics • April 1998 1.47 OPEN-END INVESTMENT COMPANIES Nel Sales and Assets1 Millions of dollars 1997 1998 Item 1995 1996 June July Aug. Sept. Oct. Nov. Dec.' Jan. 1 Sales of own shares2 87M15 1,149,918 112,318 125,710 114,358 116,021 126,824 110,231 150,133 147,994 2 Redemptions ot own shares 699,497 853,460 86,759 90.095 84,366 86.449 98,109 76.115 113.359 109.395 3 Net sales' 171.918 296,458 25.559 35,615 29.992 29,572 28.715 34,117 36.774 38,598 4 Assets4 2,067,337 2,637,398 3,067,565 3,279,535 3,199,534 3,386,547 3,300,248 3.375,197 3,430,795 3,479,784 5 Cash5 142,572 139,396 180.552 182,122 180,152 180,159 181,314 188.192 176,231 186.301 6 Other 1.924.765 2,498.002 2.887.011 3,097.413 3,019,382 3,206,388 3,118,934 3.187,005 3,254,564 3,293.483 1. Data on sales, and redemption:, exclude money market mutual funds but include 4. Market value at end of period, less current liabilities. limited-maturity municipal bond funtb Data on asset positions exclude both money market 5. Includes all US, 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 underwntings 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 mulual funds within the same fund family. 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data al seasonally adjusted annual rates 1996 1997 Account 1995 1996 1997 01 Q2 Q3 04 Ql Q2 Q3 Q4 I Profits with inventory valuation and capital consumption adjustment 650.0 735.9 n.a. 717.7 738.5 739.6 747.8 779.6 795.1 827.3 n.a. 2 Profits before taxes 622.6 676.6 n.d. 664.9 682.2 679 1 680.0 708.4 719.8 753.4 n.a. 3 Profits-tax liability 213.2 229.0 n.a 226.2 2322 231 6 226.0 241.2 244.5 258.2 n.;t. 4 Profits after taxes 409.4 447.6 n.a 418 7 450.0 447.5 454.0 467.2 475.3 495.2 n a. 5 Dividends 264.4 304.8 336.1 300.7 303.7 305.7 309.1 326.8 333.0 339.1 345.6 6 Undistributed profits 145.0 142.8 n.a. 138.0 146.4 141.8 144.9 140.3 142.3 156.1 n.a. 7 Inventory valuation -24.3 -2.5 5.7 -5.1 -5.4 -2.7 3.3 3.5 5.9 3.6 9.6 8 Capital consumption adjustment 51.6 61.8 69.8 57.9 61.6 63.2 64.4 67.7 69.4 70.3 71.6 SOURCE. U.S. Department of Commerce, Sun-ex of Current Business 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period; not seasonally adjusted 1996 1997' 02 Q3 Q4 01 Q2 Q3 04 ASSETS 607 0 637.1 663.7 626.7 628.1 637.1 648.0 651.6 660.5 663.5 2 Consumer 233.0 244.9 257.0 240.6 244.4 244 9 249.4 255.1 254.5 256.8 3 Business 301.6 309.5 318.8 305.7 301.4 309.5 315.2 311.7 319.5 118.8 4 Real estate 72.4 82.7 87.9 80.4 82.2 82.7 83.4 84.8 86.4 87.9 5 LESS: Reserves for unearned income 60.7 55.6 52.7 57.2 54.8 55.6 51.3 57.2 54.6 52.7 6 Reserves for losses I2.S 13.1 13.0 12.7 12.9 13.1 12.8 13.3 12.7 13.0 7 Accounts receivable, net 53.1.5 568.3 597.9 556.7 560.5 568.3 583.9 581.2 593.1 597.8 8 All other 250.9 290.0 312.3 258.7 268.7 290.0 289.6 306.8 289.1 312.4 9 Total assets 784.4 858.3 910.2 815.4 829.2 858.3 873.4 887.9 882.3 910.2 LIABILITIES AND CAPITAL 15.3 19.7 24.1 17.7 18.3 19.7 18.4 188 20.4 24.1 11 Commercial paper 168.6 177.6 116.2 169.6 173.1 177.6 185.3 193.7 189.6 201.5 Debl 12 Owed to parent 51.1 60.3 72.7 56.3 57.9 60.3 61.0 60.0 61.6 647 13 Not elsewhere classified 300.0 332.5 369.9 3190 322.3 332.5 324.6 345.3 322.8 328.9 14 All other liabilities 16V6 174.7 213.3 163.2 164.8 174.7 189.2 171.4 190.1 189.6 15 Capital, surplus, and undivided profits 85.9 93.5 113.9 89.7 92.8 93.5 94.9 98.7 97.9 101.3 784.4 858.3 910.2 815.4 829.2 858.3 873.4 887.9 882.3 910.1 1. Includes finance company subsidiaries of bank holding companies but not of retailers 2. Before deduction for unearned income and losses. and banks. Data are amounts carried on the balance sheets of finance companies; sccuritized 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 Type of credit 1995 1996 1997 July Aug. Sept. Oct.' Nov.' Dec. Sesonally adjused 1 Total 682.4 762.4 811.0 789.5 796.9 799.5r 803.2 806.2 811.0 2 Consumer 281.9 306.6 327.0 323.3 322.7 322.6r 324.4 323.8 327.0 3 Real estate 72.4 111.9 121.1 121.9 123.4 120.7 121.5 121.7 121.1 4 Business 328.1 343.8 362.9 344.3 350.8 356.2' 357.2 360.7 362.9 Not seasonally adjusted 5 Total 689.5 769.7 818.7 783.7 791.4 795.8r 801.3 807.4 818.7 6 Consumer 285.8 310.6 331.1 322.2 322.4 323.3' 324.3 325.5 331.1 7 Motor vehicles loans 81.1 86.7 87.0 88.3 88.4 88.5 86.8 86.0 87.0 8 Motor vehicle leases 80.8 92.5 96 8 99.3 98.3 96.1 95 9 96 4 96.8 9 Revolving 28.5 32.5 38 7 33.5 33.5 34.9 34 8 34 9 38.7 10 Other' 42.6 33.2 34.4 34.7 35.2 35.0 35.3 35.5 34.4 Securitized assets4 11 Motor vehicle loans 34.8 36.8 44.3 38.1 38.3 39.7 42.6 42.5 44.3 ] 2 Motor vehicle leases 3.5 8.7 10.8 9.0 8.9 10.0' 9.9 11.0 10.8 13 Revolving n.a. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14 Other 14.7 20.1 19.0 19.4 19.7 19.0 18.9 19.2 19.0 15 Real estate 72.4 111.9 121.1 121.9 123.4 120.7 121.5 121.7 121.1 16 One- to four-family n.a. 52.1 59.0 57.0 59.1 56.6 58.5 59.4 59.0 17 Other n.a. 30.5 289 30.1 30.1 29.8 29.3 29.0 28.9 Securitized real estate assets^ 18 One- to four-family n.a. 28.9 33.0 34.4 33.9 34.0 33.5 33.0 33.0 19 Other n.a. 0.4 0.2 0.3 0.3 0.3 0.3 0.2 0.2 20 Business 331.2 347.2 366.6 339.6 345 6 351.8' 355.5 360.2 366.6 21 Motor vehicles 66.5 67.1 63.7 63.6 65.2 67.4 61.2 62.0 63.7 22 Retail loans 21.8 25.1 25.6 24.4 25.4 26.0 26.5 26.3 25.6 23 Wholesale loans1 36.6 33.0 27 7 29.9 30.4 31.8 25.0 25.8 27.7 24 Leases 8.0 9.0 10.1 9.3 9.4 9.6 9.7 9.8 10.3 25 Equipment 8.0 9.0 10.3 191.3 194.9 199.0 198.5 198.9 204.0 26 Loans 8.0 9.0 10.3 51.7 51.3 51.9 50.3 49.6 51.7 27 Leases 8.0 9.0 10.3 139.6 143.6 147.1 148.2 149.4 152.3 28 Oilier business receivables6 8.0 9.0 10.3 518 53.0 53.1' 54.7 54.0 51.1 Securitized assets4 29 Motor vehicles 8.0 9.0 10.3 19.9 19.8 19.6 28.4 32.4 33.0 30 Retail loans 8.0 9.0 10.3 2.4 2.3 2 2 2.1 2.5 2.4 ^1 Wholesale loans 8.0 9.0 10.3 17.4 17.5 174 26.3 29 8 30.5 M Leases 8.0 9.0 10.3 0.0 0.0 0.0 0.0 0.0 0.0 33 Equipment SO 9.0 10.3 10.6 10.3 10.1 10.1 10.3 11.0 34 Loans 8.0 9.0 10.3 4.2 4.1 4.0 4.2 4.5 4.6 35 Leases 8.0 9.0 10.3 6.4 6.2 6.0 5.8 5.8 6.5 36 Other business receivables6 8.0 9.0 10.3 2.5 2.4 2.6 2.7 2.6 3.8 NOTE. This table has been revised lo incorporate several changes resulting from the before deductions for unearned income and losses. Components may noi sum to totals benchmarking of finance company receivables lo 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 thai are subsidiarbreakdowns have been obtained for some components. In addition, previously unavailable ies of finance companievS. 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 ^classification 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 tr is table also appear in the Board'1; G.20 (422) monthly statistical release. For financing. ordering address, see inside front cover. 6. Includes loan.s on commercial accounts receivable, factored commercial accounts, and I. 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 Financial Statistics • April 1998 ] .53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1997 1998 July Aug. Sept. Oct. Nov. Dec. Jan. Perms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 175.8 182.4 180.1 181.4 191.2 190.6 183.4 184.0 190.7 184.1 2 Amount of loan (thousands of dollars) 134.5 139.2 140.3 142.7 148.2 147.0 142.4 143.5 149.8 142.3 3 Loan-to-price ratio (percent) , 78.6 78.2 80.4 81.2 79.8 79.3 80.1 80.8 81.0 80.5 4 Maturity (years) 27.7 27.2 28.2 28.7 28.2 28.3 28.1 28.6 282 28.5 5 Fees and charges (percent of loan amount)2 1.21 1.21 1.02 1.05 1.06 1.12 0.94 0.95 0.96 0.91 Yield (percent per year) 6 Contract rate1 7.65 7.56 7.57 7.62 7.42 7.43 7.39 7.26 7.25 7.13 7 Effective rate'-3 7.85 7.77 7.73 7.78 7.59 7.61 7.54 7.40 7.40 7.27 8 Contract rate (HUD series)4 8.05 8.03 7.76 7.62 7.67 7.51 7.48 7.38 7.25 7.16 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203) 8.18 8.19 7.89 7.61 8.02 7.52 7.53 7.51 7.17 7.08 10 ONMA securities6 7.57 7.48 7.26 7.04 7.16 7.10 6.90 6.84 6.74 6.56 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 253,511 287,052 316,678' 300,439 304,528 307,256 310,421 314,627 316,678' 320,062 12 FHA/VA insured 28.762 30,592 31,925 31,065 31,193 31,847 32,080 31,878 31,925 31,621 13 Conventional 224,749 256,460 284,753 269,374 273.335 275,409 278,341 282,749 284,753 288,441 14 Mortgage transactions purchased (during period) 56,598 68,618 70.465 6,417 7,606 6.544 7,619 8,166 6.692 7,647 Mortgage commitments (during period) 15 Issued7 56,092 65,859 69,965 6,956 5,960 7,573 9,190 5,123 6,275 12,199 16 To sell8 360 130 1,298 75 219 215 300 139 140 60 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period f 17 Total 107,424 137,755 164,421 151.582 155,169 157,165 159,801 160,974 164,421 169,142 18 FHA/VA insured 267 220 180 194 190 186 183 180 180 180 107,157 137,535 164,241 151,388 154,979 156,979 159,618 160,794 164,241 168,962 Mortgage transactions (during period) 20 Purchases 98,470 125,103' 117,397' 8,265' 9,808' 10,362' 12,175' 11,152' 15,975' 13,120 21 Sales 85,877 119,702 114,260 7,757 9,187 9,727 11,713 10,832 14,587 12,702 22 Mortgage commitments contracted (during period)9 118,659 128,995 120,089' 9,054' 9,913' 10,877 11,986' 12,047 15,805 15,638 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 A35 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1996 1997 Type of holder and property 1993 1994 1995 Q3 Q4 Ql Q2 Q3P 1 All holders 4,261,163 4,462,828 4,691,824 4,940,719 5,022,464 5,080,733 5,168,350 5,259,875 By type of property 2 One- to four-family residences . 3.225,399 3,424,395 3.616,807 3,792,994 3,851,163 3,899,042 3,960,438 4,027,379 3 Multifarnily residences 270,005 274,922 287,238 304,532 312,418 315,091 321,145 327,203 4 Nonfarm, nonresidential 685,021 680.540 703,218 756,462 771,749 778,947 798,089 815,534 5 Farm 80,739 82,971 84,561 86,732 87,134 87,653 88,679 89,759 fiv type of holder 6 Major financial institutions .. 1,763,410 1,811,018 1,884,714 1,945,088 1,968,859 1,982,764 2,023,400 2,055,789 7 Commercial banks2 940,603 1,003,923 1,080,483 1,112,914 1,135,133 1,149,854 1,186,264 1.216,606 One- to four-family .... 556,660 611,092 663,715 678,565 692,180 702,616 727,217 745,458 Multifamily 38,657 39,346 43,837 46,410 46,676 47,618 48,752 49,231 Nonfarm, nonresidential. 324,420 330,934 349,101 363,124 371,394 374,377 384,234 395,116 Farm 20,866 22,551 23,830 24,815 24,883 25,242 26,061 26.800 Savings institutions' 598,435 596,191 596,763 628,037 628,335 626,381 629,059 629,757 One- to four-family .... 470,000 477,626 482,353 513,794 513,712 513,393 516,713 518,409 Multifamily 67,366 64,343 61,987 61,308 61,570 60.645 60,102 60,370 Nonfarm, nonresidential. 60,764 53,933 52,135 52,614 52,723 52,007 51,906 50,634 305 289 288 320 331 336 338 344 Life insurance companies 224,372 210,904 207,468 204,138 205,390 206,529 208,077 209,426 One- to four-family 8,593 7,018 7,316 6,190 6,772 6,799 6,842 7,080 Multifamily 25,376 23,902 23,435 23,155 23,197 23,320 23,499 23,615 Nonfarm, nonresidential 180,934 170,421 167,095 165,096 165,399 166,277 167,548 168,374 Farm 9,469 9,563 9,622 9,697 10,022 10,133 10,188 10,358 22 Federal and related agencies . 326,040 315,580 306,774 302,793 300,935 295,203 2W.966 290,786 23 Government National Mortgage Association . . . 22 6 2 2 6 7 7 24 O' ne- to f-o ur-f-a mil-y .... 15 6 2 2 2 6 7 7 25 Multifamily 7 0 0 0 0 0 0 0 26 Farmers Home Administration4 41,386 41,781 41,791 41,575 41,596 41,485 41,400 41,332 27 One- to four-family 18.030 18,098 17,705 17,374 17,303 17,175 17,239 17,458 28 Multifamity 10,940 11,319 11,617 11,652 11,685 11,692 11,706 11,713 29 Nonfarm, nonresidential 5,406 5.670 6,248 6,681 6,841 6,969 7,135 7,246 30 Farm 7,012 6,694 6,221 5,869 5,768 5,649 5,321 4,916 31 Federal Housing and Veterans' Administrations 12,215 10.964 9,809 6,627 6,244 4,330 4,200 2,839 32 One- to four-family 5.364 4.753 5,180 3,190 3,524 2,335 2,299 843 33 Multifamily 6,851 6,211 4,629 3,438 2,719 1,995 1.900 1,996 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, nonresidentia] 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 4,025 2.431 2,217 1,816 1,476 40 One- to four-family 2,367 1,049 492 675 365 333 272 221 41 Multifamily 1,426 1,595 428 766 413 377 309 251 42 Nonfarm. nonresidential 10.319 5,177 3,383 2,584 1,653 1,508 1,235 1,004 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 165.668 174,312 176,824 175,472 174,556 172,829 170,386 168,457 45 One- to four-family 150,698 158.766 161,665 161,072 160,751 159,634 157,729 156,362 46 Multifamily 14,970 15,546 15,159 14.400 13,805 13,195 12,657 12.095 47 Federal Land Banks 28,460 28.555 28,428 29,579 29,602 29,668 29,963 30,346 48 One- to four-family 1,675 1.671 1,673 1,740 1,742 1,746 1,763 1,786 49 Farm 26,785 26,885 26,755 27,839 27,860 27,922 28,200 28,560 50 Federal Home Loan Mortgage Corporation 46,892 41,712 43,753 45,513 46,504 44,668 45,194 46,329 51 One- to four-family 44,345 38,882 39,901 41,149 41,758 39,640 40,092 40,953 52 Multifamily 2,547 2,830 3,852 4,364 4,746 5,028 5,102 5,376 53 Mortgage pools or trusts5 1,570,691 1,726,365 1,861,489 2,008,356 2,056,276 2,099,504 2,134,312 2,178,530 54 Governmenl National Mortgage Association .. 414,066 450,934 472,283 497,018 506,340 513,471 520,938 529,867 One- to four-family 404,864 441.198 461.438 485,073 494.158 500.591 507,618 516,217 Muliifamily 9,202 9,736 10,845 11,945 12,182 12,880 13,320 13,650 Federal Home Loan Mortgage Corporation . . . 447,147 490,851 515,051 545,608 554,260 562,894 567,187 569,920 One- to four-family 442,612 487,725 512,238 543,341 551,513 560,369 564,445 567,340 Multifamily 4,535 3,126 2,813 2,267 2,747 2.525 2,742 2,580 Federal National Mortgage Association 495,525 530,343 582,959 636,362 650,780 663,668 673,931 690,919 One- to four-family 486,804 520,763 569,724 619,869 633,210 645,324 654,826 670,677 Multifamily 8.721 9,580 13,235 16,493 17,570 18,344 19,105 20,242 Farmers Home Administration4 28 19 11 7 3 3 2 One- to four-family 5 3 2 0 0 0 0 0 Multifamily 0 0 0 0 0 0 0 0 Nonfarm, nonresidentia] 13 9 5 4 0 0 0 0 Farm . 10 7 4 3 3 3 2 2 68 Private mortgage conduits 213,925 254.218 291,185 329,360 344,894 359,468 372,253 387,822 69 One- to four-family6 179,755 202,519 222,526 244,884 247,740 256,834 259,950 267,000 70 Multifamily. . 8.701 14,925 21,279 28,141 33,689 35,607 38,992 41,973 71 Nonfarm, nonresidential 25,469 36,774 47,380 56,336 63,464 67.027 73,312 78,849 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others7 601,023 609,865 638,848 684,481 696,395 703,262 717,672 734,769 74 One- to four-family 446,408 448,027 470,187 476,075 486,433 492,248 503,426 517.568 75 Multifamily 65,380 69,602 73,474 80,193 81,419 81,864 82,959 84,111 76 Nonfarm, nonresidential.. 72,943 75,253 77,345 110,023 110,275 110.782 112,720 114,312 77 Farm 16,292 16,983 17,841 18.190 18.268 18,368 18,568 18,778 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 Financial Statistics • April 1998 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 1997 July Aug. Sept. Oct.' Nov.' Dec. Seasonally adjusted 1 Total 1,094,197 1,179,892 1,235,844 1,216,066 l,222,234r l,223,909r 1,235,543 1,231,871 1,235,844 364.231 392,370 414,601 403,239 403.154 405,665 410,356 409,060 414,601 3 Revolving 442,994 499,209 528,862 520,221 523.686 526,377 530,181 528,689 528,862 4 Other 286,972 288,313 292,381 292,607 295,394' 291,867' 295,006 294,121 292,381 Not seasonally adjusted 5 Total 1,122,828 1,211,590 1,269,271 1,209,179 1,220,589' l,226,752r 1,235,032 1.239,420 1,269,271 By major holder 6 Commercial banks 501,963 526,769 514,860 514,482 516,176 507,528 507.334 508,603 514,860 152,123 152,391 160,134 156.435 157,152 158,428 156,904 156,450 160,134 8 Credit unions 131,939 144,148 153,704 148,973 149,791 150,669 151,486 151,770 153,704 9 Savings institutions 40,106 44,711 50,492 47.152 47,820 48,487 49,156 49,824 50,492 85,061 77,745 78,891 67,580 68,639' 68,658' 68,514 70,438 78,891 11 Pools of securitized assets 211,636 265,826 311,190 274,557 281,011 292,982 301,618 302.335 311,190 By major type of credit5 367,069 395,609 418,119 403,694 405,740 409,253 414,874 4H.288 418,119 13 Commercial banks 151,437 157,047 155,254 157,784 158,516 157,234 158,140 156.798 155.254 L4 Finance companies 81,073 86,690 87,015 88,323 88,428 88,545 86,805 86.046 87.015 15 Pools of securitized assets4 44,635 51,719 64,401 52,672 52,427 55,432 60,079 59.812 64.401 16 Revolving 464.134 522,860 553,828 515,086 520,777 524,281 526,915 531.779 553,828 17 Commercial banks 210,298 228,615 217,548 218,992 217,466 209,269 208.785 211,207 217.548 18 Finance companies 28.460 32.493 38,720 33,461 33.543 34.925 34,754 34,864 38.720 19 Nonfinancial business3 53,525 44.901 44,966 36.791 37,578 37.685 37.479 38,865 44.966 20 Pools of securitized assets4 147,934 188,712 220,976 196.456 202,444 212,403 215,674 216,411 220,976 21 Other 291,625 293,121 297,324 290.399 294,072' 293,218' 293,243 294,353 297,324 22 Commercial banks 140,228 141,107 142,058 137,706 140,194 141,025 140,409 140,598 142,058 23 Finance companies 42,590 33,208 34,399 34,651 35,181 34,958 35,345 35,540 34,399 24 Nonfinancial business3 31,536 32,844 33,925 30,789 31,061' 30,973' 31,055 31,573 33,925 25 Pools of securitized assets 19,067 25.395 25,813 25,429 26,140 25.147 25,865 26,112 25,813 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 thai are not included in automobile or 5. Totals include estimates for certain holders for which only consumer credit totals are revolving credit, such as loans for education, boats, trailers, or vacations. These loans may be available. secured or unsecured. 1.56 TERMS OF CONSUMER CREDIT' Percent per year except as noted 1997 Item 1995 1996 1997 June July Aug. Sept. Oct. Nov Dec. INTEREST RATES Commercial banks2 1 48-month new car 9.57 9.05 9.02 n.a. n.a. 8.99 n.a. n.a. 8.96 n.a. 2 24-month personal 13.94 13.54 13.90 n.a. n.a. 13.84 n.a. n.a. 14.50 n.a. Credit card plan 3 All accounts 16.02 15.63 15.77 n.a. n.a. 15.78 n.a. n.a. 15.65 n.a. 15 79 15 50 15 55 15 79 15 57 Auto finance companies 5 New car 11.19 9.84 7.12 7.64 6.71 5.93 6.12 727 6.85 5.93 14 48 13 53 13 27 n 55 11 51 13 38 13 29 n 72 11 14 13 16 OTHER TERMS3 Maturity (months) 7 New car 54.1 51.6 54.1 533 54.6 55.5 55.4 54.4 53.7 53.5 8 Used car S2.2 51.4 51.0 51.3 51.4 51.2 50.8 50.6 50.5 50.5 Loan-to-value ratio 92 91 92 93 94 93 93 92 91 92 10 Used car 99 100 99 99 99 99 99 101 99 99 Amount financed (dollars) 11 New car 16,210 16,987 18,077 18,171 18,281 18,329 18,520 18,779 18,923 19,121 11,590 12,182 12.281 12,239 12,307 12,204 12,190 12,287 12,389 12,547 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 A37 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS' Billions of dollars; quarterly data at seasonally adjusted annual rates 1997 Transaction category or sector Q2 Q4 Ql Q2 Q3 Q4 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors 589.4' 575.2' 704.2' 694.9' 686.8' 638.7r 724.2 612.6 722.3 976.1 By sector and instrument 2 Federal government 256.1 155.9 144.4 145.0 23.1 62.7 163.2 126.9 81.2 -97.1 40.9 67.4 3 Treasury securities 248.3 155.7 142.9 146.6 23.2 60.5 166.3 130.2 82.6 -97.3 41.9 65.6 4 Budget agency securities and mortgages 7.8 .2 1.5 -1.6 -.1 2.2 -3.1 -3.3 -1.4 .2 -.9 1.7 5 Nonfederal 333.3r 419.4' 559.7' 574.6' 632.2' 511.8r 643.0 681.4 908.8 By instrument 6 Commercial paper 10.0 21.4 18.1 -.9 13.7 9.2 -14.2 -24.1 7.2 20.3 14.5 12.8 7 Municipal securities and loans 74.8 -35.9 -48.2 2.6' 70.2 32.8' -64.7' 41.6' 43.7 95.9 51.8 89.3 8 Corporate bonds 75.2 23.3 73.3 72.5 90.7 71.5 67.8 89.9 79.4 86.1 122.9 74.4 9 Bank loans n.e.c 6.4 75.2 102.0 66.3' 107.7 49.8' 136.6' 31.9' 147.5 110.5 24.7 147.9 10 Other loans and advances -18.9 34.0' 67.2' 33.8' 65.9 47.3' 63.0' 3.9' 31.2 20.3 73.5 138.3 11 Mortgages 125.1' 176.5' 208.4' 311.7' 333.8 306.9' 253.3' 330.0' 263.1 316.6 340.9 414.4 12 Home 156.6' 179.0' 175.8' 262.1' 257.5 248.5' 238.5' 249.6' 229.9 226.5 261.5 312.2 13 Multifamily residential -6.6' Iff 10.7' 17.8' 21.0 17.6' 12.0' 27.6' 10.8 21.3 15.1 36.6 14 Commercial -25.9' -6.8' 20.2' 29.2' 52.1 35.9' .7' 51.2' 20.4 64.6 60.0 63.2 15 Farm 1.0 2.2 1.6 2.6 3.2 4.9 2.2 1.6 2.1 4.1 4.3 2.4 16 Consumer credit 60.7 124.9 138.9 53.8 114.7 81.9 38.6 70.8 60.0 53.0 31.5 By borrowing sector 17 Household 218.7' 322.8' 363.0' 383.0' 364.1 406.0' 363.5' 312.1' 357.9 350.4 322.2 425.8 18 Nonfinancial business 52.3' 141.9' 245.7' 190.3' 311.7 204.9' 220.4' 159.9' 244.5 279.1 317.3 405.9 19 Corporate 46.5' 134.3' 216.7' 144.1' 244.7 159.9' 192.0' 92.6' 193.6 205.7 250.2 329.3 20 Nonfarm noncorporate 3.2 3.3' 26.0' 41.5' 60.7 37.1' 27.9' 58.2' 46.6 66.8 640 65.5 21 Farm 2.6 4.4' 2.9' 4.8' 6.3 7.9' .6' 9.2' 4.3 6.7 3.1 11.1 22 State and local government 62.3 -45.3' -49.0' 1.3' 59.9 21.2' -60.3' 39.8' 40.6 41.8 77.0 23 Foreign net borrowing in United States 69.8 -14.0 71.1 70.5 51.5 36.1 105.7 87.9 26.3 56.4 87.8 35.5 24 Commercial paper -9.6 -26.1 13.5 11.3 3.7 9.6 37.5 4.4 15.5 10.4 -11.6 7 25 Bonds 82.9 12.2 49.7 49.4 41.3 11.2 60.2 78.5 11.0 34.3 94.6 25.3 26 Bank loans n.e.c .7 1.4 8.5 9.1 8.5 15.1 4.7 7.8 -.7 11.5 7.3 15.7 27 Other loans and advances -4.2 -1.5 -.5 -2.0 .1 3.4 -2.7 .5 -2.5 -6.1 28 Total domestic plus foreign 659.2' 561.2' 775.2' 790.2' 810.3 731.0r 792.5' 726.6r 810.1 1,011.7 Financial sectors 29 Total net borrowing by financial sectors 464.3 448.4 536.3 614.3 721.7 436.8 644.8 325.9 661.0 536.7 933.8 By instrument 30 Federal government-related 165.3 287.5 204.1 231.5 213.4 301.4 222.9 252.8 105.7 286.2 161.0 300.6 31 Government-sponsored enterprise securities . 80.6 176.9 105.9 90.4 99.0 126.9 80.0 123.3 -8.9 198.1 46.4 160.4 32 Mortgage pool securities 84.7 115.4 98.2 141.1 114.4 174.5 142.9 129.6 114.6 88.1 114.6 140.3 33 Loans from U.S. government .0 -4.8 .0 .0 0 .0 .0 .0 .0 .0 .0 .0 34 Private 128.3 176.8 244.3 304.9 400.9 420.3 213.9 392.0 220.2 374.8 375.6 633.1 35 Open market paper -5.5 40.5 42.7 92.2 166.7 105.4 84.4 162.0 175.9 77.8 168.2 244.6 36 Corporate bonds 122.2 117.6 188.2 156.5 170.8 230.9 80.7 164.0 41.4 215.1 139.3 287.4 37 Bank loans n.e.c -14.4 -13.7 4.2 16.8 13.6 20.6 2.6 20.4 7.0 4.9 16.7 25.7 38 Other loans and advances 22.4 22.6 3.4 27.9 36.0 52.7 33.3 31.2 -20.1 63.0 37.5 63.3 39 Mortgages 3.6 9.8 5.9 11.4 14.0 10.8 12.9 14.3 16.0 14.0 14.0 12.0 By borrowing sector 40 Commercial banking 13.4 20.1 22.5 13.0 46.5 44.5 14.7 26.8 13.7 79.7 32.0 60.7 41 Savings institutions 11.3 12.8 2.6 25.5 198 42.1 25.8 23.0 -16.8 31.9 22.3 41.7 42 Credit unions .2 .2 -.1 .1 .1 -.2 .3 .3 -.2 .2 2 .3 43 Life insurance companies 2 .3 -.1 1.1 2 .3 -.4 2.0 .8 .1 2 -.3 44 Government-sponsored enterprises 80^6 172.1 105.9 90.4 99^0 126.9 80.0 123.3 -8.9 198.1 46.4 160.4 45 Federally related mortgage pools 84.7 115.4 98.2 141.1 114.4 174.5 142.9 129.6 114.6 88.1 114.6 140.3 46 Issuers of asset-backed securities (ABSs) 82.8 68.8 132.9 132.0 168.2 162.5 88.0 138.6 62.9 95.0 169.6 345.5 47 Finance companies -1.4 48.7 50.2 45.9 48.7 67.8 30.7 43.8 7.2 123.8 -2.9 66.6 48 Mortgage companies .0 -11.5 .4 12.4 4.8 16.0 1.7 12.1 5.9 5.0 3.6 4.9 49 Real estate investment trusts (REITs) 3.4 13.7 6.0 12.8 23.8 11.5 13.7 17.7 20.2 20.3 26.9 27.9 50 Brokers and dealers 12.0 .5 -5.0 -2.0 8.0 13.2 5.7 4.9 -2.9 34.9 -6.9 7.0 51 Funding corporations 6.3 23.1 34.9 64.1 80.7 62.7 33.7 123.0 129.4 -16.1 130.7 78.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Financial Statistics D April 1998 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued 1996 1997 Transaction category or sector 1993 1994 1995 1996 1997 Q2 Q3 Q4 Ql Q2 Q3 Q4 All sectors 52 Total net borrowing, all sectors 952.7' 1,025.5' 1,223.7' 1,326.5' 1,424.6 1,452.7' 1,229.3' 1,371.5' 1,076.4 1,329.9 1,346.7 1,945.5 53 Open market paper -5.1 35.7 74.3 102.6 184.1 124.2 107.7 142.3 198.6 108.5 171.1 258.1 54 U.S. government securities 421.4 448.1 348.5 376,5 236.5 364.1 386.1 379.7 186.9 189.1 201.9 368.0 55 Municipal securities 74.8 -35.9 -48.2 2,6' 70.2 32.8' -64.7' 41.6' 43.7 95.9 51.8 89.3 56 Corporate and foreign bonds 280.3 153.2 311,1 278,4 302.8 313.6 208.7 332.4 131.8 335.5 356.8 387.1 57 Bank loans n.e.c -7.2 62.9 114.7 92,1' 129.7 85.5 143.8' 60.1' 153.8 126.8 48.7 189.4 58 Other loans and advances -8 50.3' 70.1' 62.5' 99.8 100.1' 99.7' 32.4r 11.7 83.6 108.5 195.6 59 Mortgages 128.7' 186.2' 214,2' 323,11 347.8 317.7' 266.1' 344.4' 279.1 330.6 354.9 426.4 60 Consumer credil 60.7 124.9 138,9 88,8 53.8 114.7 81.9 38.6 70.8 60.0 53.0 31.5 Funds raised through mutua funds and corporate equities 61 Total net issues 429.7' 125.2' 143.9' 230.5' 217.8 380.4' 71.9' 156.0' 197.7 183.0 313.9 176.6 62 Corporate equities 137.7' 24.6' -3.5' -7.0' -41.2 75.9' -100.1' -20.3' -55.7 -57.9 10.2 -61.5 63 Nonfinancial corporations 21.3 -44.9 -58.3 -64.2 -79.9 .4 -127.6 -56.0 -78.8 -90.4 -60.4 -90.0 64 Foreign shares purchased by U.S. residents 63.4 48.1 50.4 58.8 38.0 70.1 32.7 42.3 47.0 53.0 62.2 -10.4 65 Financial corporations 53.0' 21.4' 4.4' -1.6' .7 5.4' -5.1' -6.7' -23.9 -20.6 8.4 38.8 66 Mutual fund shares 292.0 100,6 147,4 237.6 259.0 304.5 171.9 176.3 253.4 240.9 303.7 238,2 1. Data in this table also appear in the Board's Z.I (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 A39 1.58 SUMMARY OF FINANCIAL TRANSACTIONS' Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates Transaction category or sector 1993 1994 1995 1996 1997 02 Q3 Q4 Ql Q2 Q3 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 952.7r l,025.5r 1,223.7' 1326.5' 1,424.6 1,452.7' 1,229.3' 1,371.5' 1,076.4 1,329.9 1346.7 2 Domestic nonfederal nonnnancial sectors 43.01 241.8' -85.7' -17.9' -115.2 311.1' -222.3' -158.5' -205.8 -66.3 -175.8 3 Household 2.4r 278.5' -1.8' 5.1' — 101.7 274.9' -81.9' -22.8' -204.2 -30.0 -121.5 4 Nonnnancial corporate business 9.1 17.7 -2.4 13.5' 5.3 37.4 -9.1' -5.91 58.0 -51.5 20.0 5 Nonfarm noncorporate business -1.1 .6 .3 .4 .7 .4 .4 .4 .5 7 .8 6 State and local governments 32.6 -55.0 -sir -37.0' -19.6 -1.7' -131.7' -130.2' -60.2 14.5 -75.1 7 Federal government -18.4 -27.5' -7.7' 4.9 -.r -7.1' -4.1' 1.9 5.6 3.0 8 Rest of the world 129.3 132.3 273.9 409.3' 316.4 485.3' 532.2 367.3 303.0 402.7 9 Financial sectors 798.8' 678.9' 1.035.7' 942.9' 1,218.5 268.9 973.4' 1,001.9' 913.0 1.087.5 1,116.8 10 Monetary authority 36.2 31.5 12.7 12.3 38.3 872.8' 11.5 8.4 37.4 47.2 14.3 11 Commercial banking 142.2 163.4 265.9 187.5' 324.3 11.7 196.1 248.3' 308.1 309.2 209.8 12 U.S.-chartered banks 149.6 148.1 186.5 119.6 275.0 179.7 119.5 158.9 195.9 301.1 209.5 13 Foreign banking offices in United States . . -9.8 11.2 75.4 63.3 39.6 121.9 71.1 80.5 104.0 LI -.6 14 Bank holding companies .0 .9 -.3 3.9 5.4 50.7 4.8 10.5 2.2 5.1 -5.0 15 Banks in U.S.-affiliated areas 2.4 3.3 4.2 .7' 4.2 5.4 .7 -1.6' 6.1 1.8 5.8 16 Savings institutions -23.3 6.7 -7.6 19.9 -7.7 1.7 49.7 -47.9' -5.3 23.8 -42.1 17 Credit unions 21.7 28.1 16.2 25.5 15.7 43.8' 21.1 24.3 18.5 25.7 15.7 18 Bank personal trusts and estates 9.5 7.1 -18.8 3.9 9.2 33.0 7.8 7.2 8.2 8.9 9.4 19 Life insurance companies 100.9 66.7 99.2 72.5 121.1 4.2 123.2 118.1 94.3 175.0 107.0 20 Other insurance companies 27.7 24.9 21.5 22.5 23.3 .9 14.2 27.7 -.1 27.9 32.4 21 Private pension funds 49.5 45.5' 61.4' 46.5' 66.9 30.5 41.3' 3i.ff 52.4 58.5 66.2 22 State and local government retirement funds 22.7' 22.3' 27.5' 45.9' 48.3 46.9' 45.5' 41.9' 3.6 39.2 90.6 23 Money market mutual funds 20.4 30.0 86.5 88.8 84.5 60.4' 83.0 81.3 65.2 19.7 123.6 24 Mutual funds 159.5 -7.1 52.5 48.9 74.7 27.0 27.5 25.3 61.9 91.6 103.6 25 Closed-end funds 20.0' -3.7' 10.5' 2.2' .8 54.3 2.2' 2.2' 2.7 1.3 .3 26 Government-sponsored enterprises 87.8 117.8 84.7 92.0 95.0 2.2' 81.4 137.9 45.1 119.2 55.5 27 Federally related mortgage pools 84.7 115.4 98.2 141.1 114.4 114.7 142.9 129.6 114.6 88.1 114.6 28 Asset-backed securities issuers (ABSs) 80.2 61.7 111.1 101.8 129.8 174.5 62.0 89.6 39.3 80.2 107.0 29 Finance companies -20.9 48.3 49.9 18.4 22.2 135.7 13.2 -6.2 44.9 1.9 65.2 30 Mortgage companies .0 -24.0 -3.4 8.2 6.7 36.3 3.4 4.1 -.3 10.0 7.2 31 Real estate investment trusts (REITs) .6 4.7 2.2 3.5' 5.0 -26.8 3.4 3.9" 5.0 5.0 5.0 32 Brokers and dealers 14.8 -44.2 90.1 -15.7 15.9 3.4 35.5 82.7 -14.5 -11.7 15.8 33 Funding corporations -35.3' -16.2' -24.6' 17.2' 30.4 -72.0 8.6' -7.6' 31.9 -33.1 15.6 12.3' RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets 952.7' 1,025.5' 1,223.7' 1,326.5' 1,424.6 1,452.7' 1,229.3' 1,371.5' 1,076.4 1,329.9 1,346.7 Other financial sources 35 Official foreign exchange -5.8 -6.3 .7 1.6 -26.6 .7 -17.6 .4 2.4 36 Special drawing rights certificates .... .0 .0 2.2 -.5 -.5 .0 -1.8 .0 -2.1 .0 .0 37 Treasury currency .4 .7 .6 .0 .0 .0 2.3 -2.3 .4 .2 1.3 38 Foreign deposits -18.5 52.9 35.3 82.0 89.0 3.0 119.7 104.5 188.6 18.8 105.4 39 Net interbank transactions 50.5 89.8 9.9 -51.6 -40.2 -50.8 -97.2 17.6 -88.8 -43.7 -42.7 40 Checkable deposits and currency 117.3 -9.7 -12.7 15.8 41.1 3.9 105.9 -53.3' 85.3 64.2 -49.2 41 Small time and savings deposits -70.3 -39.9 96.6 97.2' 98.5 -3.2 94.2 90.1' 157.9 24.5 46.6 42 Large time deposits -23.5 19.6 65.6 114.0' 120.5 83.1 180.2 135.4' 49.9 176.3 194.1 43 Money market fund shares 20.2 43.3 142.3 145.8 157.6 23.1 145.1 187.5 182.4 58.5 243.6 44 Security repurchase agreements 71.3 78.2 110.5 40.3 114.0 98.4 -15.9 83.3 32.8 193.7 115.9 45 Corporate equities 137.7' 24.6' -3.5' -7.0' -41.2 75.9' -100.1' -20.3' -55.7 -57.9 10.2 46 Mutual fund shares 292.0 100.6 147 4 237.6 259.0 304.5 171.9 176.3 253.4 240.9 303.7 47 Trade payables 52.0 93.7 105.2 68.1' 75.7 116 9 -15.9' 97.2' 66.8 63.4 131.9 48 Security credit 61.4 -.1 26.7 52.4 103 8 -34.8 5.3 125.2 117.1 137.4 79.7 49 Life insurance reserves 36.0 34.5 44.9 43.6 57.0 31.4' 59.2' 66.7' 39.8 77.5 62.8 50 Pension fund reserves 255.6' 246.1' 233.9' 227.2' 298.6 195.6' 221.6' 277.0' 243.3 337.3 311.8 51 Taxes payable 11.4 2.6 4.6 14.0' 20.1 7.6 12.5' 16.6' 30.4 1.8 29.9 52 Investment in bank personal trusts . .. .9 17.8 -49.7 12.5 26.4 11.8 19.2 19.8 23.5 26.3 28.9 53 Noncorporate proprietors' equity 24.6' 59.0' 39.5' 22.6' 15.8 19.6' 44.5' 5.9' 22.6 19.7 19.7 54 Miscellaneous 345.6' 250.8' 462.9' 490.7' 544.1 415.3' 413.4' 656.5' 587.8 633.3 406.6 55 Total financial sources 2,318.0' 2,084.3' 2,694.7' 2,925.1' 33*4.6 2,755.4' 2,566.9' 3.355.8' 2,994.4 3302.3 3349.2 Liabilities not identified as assets (—) 56 Treasury currency -.5 -1.0 -6 -1.0 1.3 -3.1 -.3 -.5 57 Foreign deposits -5.7 43.0 25.7 55.8' 68.3 26.6 86.3' 37.3 178.0 -10.2 78.1 58 Net interbank liabilities 4.2 -2.7 -3.1 -3.3 -16.0 -22.5 -4.4 4.2 26.9 -24.4 -51.6 59 Security repurchase agreements 46.4' 69.4' 36.1' 31.9' 52.1 loo.r -90.6' 132.6' -104.6 178.6 6.2 6 6 0 1 T M a i x s e c s e l p la a n y e a o b u le s -19 1 0 5 . . 1 8 ' -14 1 5 6 . . 6 6 ' -11 1 0 7 . . 6 8 ' -12 1 0 6 . . 7 3 ' ' -28 2 3 0 . . 0 5 -12 2 3 3 . . 2 2 ' -24 2 0 0 . . 1 3 ' ' 2 1 1 9 . . 6 0 ' ' -18 1 9 2 . . 3 2 -32 2 1 8 .4 .3 -28 1 1 1 . . 7 2 Floats not included in assets ( —) 62 Federal government checkable deposits -1.5 -4.8 -6.0 .5 -27 -6.6 27.1 -21.4 -9.4 16.1 2.1 63 Other checkable deposits -1.3 -2.8 -3.8 -4.0 -3.9 -5.0 -4.7 -3.7 -2.6 -4.8 -3.4 64 Trade credit -4.3 .3 -29.1 -33.9' -33.4 -103.5' -42.7' 15.2 -73.1 -17.2 65 Total identified to sectors as assets .. 2,454.5' 2,m.r 2,768.2' 2,983.«' 3,563.4 2,763.6' 2,875.4' 3,212.0' 3,068.4 3,513.7 3,604.6 I Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. F. 1 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 Financial Statistics • April 1998 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING' Billions of dollars, end of period 1996 1997 Transaction category or sector 1994 1995 1996 1997 Q2 Q3 Q4 Ql Q2 Q3 Q4 Nonfnancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 13,013.0' 13,717.2' 14,436.9' 15,194.1 14,065.4' 14,241.9' 14,436.9' 14,602.1' 14,727,9' 14,913.9 15,194.1 fiv sector and instrument 2 Federal government 3.492.3 3,636.7 3,781.8 3.804.9 3,691.8 3.733.1 3,781.8 3,829.8 3,760.6 3.771.2 3,804.9 3 Treasury securities 3.465.6 3,608.5 3,755.1 3.778.3 3,665.5 3.705.7 3,755.1 3,803.5 3,734.3 3,745.1 3,778.3 4 Budget agency securities and mortgages .... 26.7 28.2 26.6 26.5 28.2 27.4 26.6 26.3 26.3 26.1 26.5 5 Nonfederal 9,520.7' 10,080.4' 10,655.1' 11.389.2 10,371.6' 10,508.8' 10,655.1' 10,772.3' 10,967.3' 11,142.7 11,389.2 fiv instrument 6 Commercial paper 139.2 157.4 156.4 168.6 181.7 17.3.0 156.4 168.7 179.3 176.6 168.6 7 Municipal securities and loans 1,341.7 1,293.5 1,296.0' 1,366.2 1,297.9' 1.281.7' 1 296.0' 1,305.2' 1,326.7' 1,338.9 1.366.2 K Corporate bonds 1,253.0 1,326.3 1.398.8 1,489.5 1.359.4 1,376.4 1,398.8 1,418.7 1,440.2 1,470.9 1,489.5 9 Bank loans n.e.c 759.9 861.9 928.2' 1,035.8 889.2' 919.2 928.2' 963.8' 996.5' 998.5 1,035.8 10 Other loans and advances 669.6' 736.9' 770.6' 836.5 757.3' 769.4' 770.6' 782.9' 786.9' 801.3 836.5 ! 1 Mortgages 4,373.4' 4.581.7' 4,893.4' 5,227.2 4.741.6' 4,815.7' 4,893.4' 4,946.6' 5,032.7' 5,129.1 5,227.2 12 Home 3,357.5' 3.533.3' 3,761.7' 4,019.2 3,633.7' 3,704.!' 3 761.7' 3.806.6' 3,870.1' 3 946.7 4019 2 13 Multifamily residential '268.4' 279.2' '300.7' 321.6 290.8' 293.8 '300.7' 303.4' '308.7' '312.5 321.6 14 Commercial 664.5' 684.7' 743.9' 796.0 731.0' 731.1' 743.9' 749.0' 765.2' 780.2 796.0 15 Farm 83.0 84.6 87.1 90.3 86.2 86.7 87.1 87.7 88.7 89.8 90 3 16 Consumer credit 983.9 1,122.8 1.211.6 1,265.4 1,144.5 1,173.5 ,,211.6 1,186.4 1.205.0 1,227.3 1,2654 fiv borrowing sector 17 Household 4 482 5' 4,850.7' 5,204.6' 5.571.5 4.991.3' 5,101.0' 5,204.6' 5,240.0' 5.340.5' 5,439.4 5,571.5 18 Nonfinancial business 3.921.7' 4,162.2" 4,381.7' 4.689.0 4,309.6' 4.352.1' 4,381.7' 4,454.2' 4.531.4' 4.598.0 4,689.0 19 Corporate 2,657.7' 2,869.2' 3,042.4' 3,282.8 2,993.7' 3.028.4' 3,042.4' 3,104.9' 3,160.4' 3.209.7 3.282.8 20 Nonfarm noncorporate 1,121 8' 1,147.9' 1,189.3' 1,250.1 1.167.8' 1,174.1' 1,189.3' 1,200.9' 1,217.6' 1.233.0 1.250.1 21 Farm 142.2' 145 I' 149.9' 156.2 148.2' 149.5' 149.9' 148.3' 153.4' 155.4 156.2 22 State and local government 1.116.5' 1,067.6' 1,068.9' 1.128.7 1.070 7' 1,055.7' 1,068.9' 1.078.1' 1.095.4' 1,105.2 1.128.7 23 Foreign credit market debt held in United States 371.8 442.9 513.4 558.8 462.6 490.2 513.4 517.8 531.6 548.7 558.8 24 Commercial paper 42.7 56.2 67.5 65.1 54.5 65.8 67.5 69.3 71.3 64.3 65.1 25 Bonds 242.3 291.9 341.3 382.6 306.7 321.7 341.3 344.1 352.7 376.3 382.6 26 Bank loans n c c ... 26 1 34.6 43.7 52.1 40 5 41.7 43.7 43.5 46 4 48.2 52.1 27 Other loans and advances 60.8 60.2 61.0 59.0 60.9 61.0 61.0 60.9 61.2 59.9 59.0 28 Total credit market debt owed bv nonfinancial sectors, domestic and foreign 13,384.9' 14,160.1' 14,950.3' 15,752.9 14,528.0' 14,732.1' 14,950.3' 15,119.8' 15,259.5' 15,462.6 15,752.9 Financial sectors 29 Total credit market debt owed by financial sectors 3,797.3 4,248.4 4,784.7 5,366.0 4.511.9 4,624.1 4,784.7 4,861.4' 5,029.4' 5,133.7 5,366.0 fiv insmtrtient 30 Federal government-related 2.172.7 2,376.8 2,608.3 2,821.7 2 4X9.4 2.545.1 2,608.3 2,634.7 2,706.2 2,746.5 2,821.7 31 Government -sponsored enterprise securities 700.6 806.5 896.9 995.9 846.1 866.1 896.9 894.7 944.2 955.8 995.9 32 Mortgage pool securities . . 1.472.1 1.570.3 1,711.4 1.825.8 1.643.3 1.679.0 1,7)1.4 1 740 0 1.762.1 1,790.7 1,825.8 33 Loans from U.S. government .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 0 34 Private 1,624.6 1 871 5 2 176 4 2.544.3 2 022.5 2 079 0 2 176.4 2 226 7' 2,323 2' 2,387.2 2 544 3 35 Open market paper 441.6 486.9 '579! 1 745.7 '517.3 '538^6 579.1 623.0 642.5 684.7 '745.7 36 Corpoiate bonds 983 9 1 172 0 1 328 5 1 466 3 1 ^65 2 1 288 8 1 3^8 ^ 1 334 4' 1 390 T 1 396 0 1,466.3 37 Bank loans n.e.c 48.9 53.1 69.8 83.4 63.9 64.2 69.8 71.3 72.9' 76.5 83.4 38 Other loans and advances 131.6 135.0 162.9 198.9 146.8 155.1 162.9 157.9 173.7 183.0 198.9 39 Mortgages 18.7 24.6 36.0 50.0 29.2 32.4 36.0 40.0 43.5 47.0 50.0 By borrowing sector 40 Commercial banks 94.5 102.6 113.6 141.0 104.6 107.7 113.6 115.3 125.7 130.0 141.0 41 Bank holding companies 133.6 148.0 150.0 168.6 148.4 149.1 150.0 151.6 161.1' 164.6 168.6 42 Savings institutions 112.4 115.0 140.5 160.3 128.3 134.8 140.5 136.3 144.3 149.8 160.3 43 Credit unions .5 .4 .4 .6 .3 .4 .4 .4 .4 .5 .6 44 Life insurance companies .6 .5 1.6 1.8 1.2 1.1 1.6 1.8 1.8 1.9 1.8 45 Government-sponsored enterprises 700.6 806.5 896.9 995.9 846.1 866.1 896.9 894.7 944.2 955.8 995.9 46 Federally related mortgage pools 1,472.1 1,570.3 1,711.4 1,825.8 1,643.3 1,679.0 1.711.4 1,740.0 1,762.1 1.790.7 1.825.8 47 Issuers of asset-backed securities (ABSs) 554.1 687.0 819.1 998.4 756.6 781.2 819.1 829.8' 852.5' 908.8 998.4 48 Brokers and dealers 34.3 29.3 27.3 35.3 24.6 26.1 27.3 26.6 35.3 3.3.6 35.3 49 Finance companies 41U 483.9 529.8 554.5 506.3 513.7 529.8 528.4' 557.8 532.7 554.5 50 Mortgage companies 18.7 19.1 31.5 36.4 28.1 285 31.5 33.0 34.3' 35.2 36.4 51 Real estate investment trusts (REITsJ 31.1 37.1 49.9 73.7 42.0 45.4 49.9 54.9' 60.0' 66.7 73.7 52 Funding corporations 211.0 248.6 312.7 373.8 282.0 291.0 312.7 348.6 3500 363.4 373.8 All sectors 53 Total credit market debt, domestic and foreign 17,182.2' 18,408.5' 19,735.0' 21,118.9 19,039.9' 19,356.2' 19,735.0' 19,981.2' 20,288.9' 20,596.3 21,118.9 54 Open market paper 623.5 700.4 803.0 979.4 753.6 777.4 803.0 861.1 893.1 925.7 979.4 55 U.S. government securities 5,665.0 6,013.6 6,390.0 6,626.5 6.183.1 6,278.2 6,390.0 6,464.5 6,466.8 6,517.7 6.626.5 56 Municipal securities 1,341.7 1,293.5 1,296.0' 1,366.2 1,297.9' 1,281.7' 1,296.0' 1,305.2' 1,326.7' 1,338.9 1,366.2 57 Corporate and foreign bonds 2,479.1 2.790.3 3,068.7 3,338.4 2,931.3 2,986.8 3,068.7 3,097.2' 3,183.6' 3,243.2 3,338.4 58 Bank loans n.e.c 834.9 949.6 1,041.7' 1,171.3 993.7' 1,025.0' 1,041.7' 1,078.6' 1,115.7' 1,123.1 1,171.3 59 Other loans and advances 862.0' 932.1' 994.5' 1 094 4 965.0' 985 4' 994.5' 1,001.7' 1 021 81 1 044 2 1 094 4 60 Mortgages 4,392.1' 4,6063' 4.929.4' 5^277^2 4,77(18' 4,848.1' 4,929.4' 5^076.2' 5J76.1 5^277.2 61 Consumer credit 983.9 1.122.8 1,211.6 1,265.4 1,144.5 1.173.5 1,211.6 LI 86.4 1,205.0 1.227.3 1,265.4 1, Data in this table also appear in the Board's Z, 1 (780) quarterly statistical release, tables L.2 through L.4. For ordering address, sec inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 1996 1997 Transaction category or sector 1994 1995 1996 1997 Q2 03 Q4 Ql Q2 03 Q4 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 17,182.2r 18,408.5r 19,735.0' 21.118.9 19,039.9r 19,356.2r 19,735.0r 19,981.2 20,2?'t.9 20,596.3 21,118.9 2 Domestic nonfederal nonfinancial sectors 2.998.6' 2,877.8' 2.905.0' 2,753.7 2.936.2' 2.896.5' 2,905.0' 2,825.6 2,785.6 2.725.9 2,753.7 3 Household 1.941.9' 1,904.9' 1,964.5' 1,826.9 1,934.5' 1,941.3' 1,964.5' 1.911.7 1.873.7 1.829.4 1,826.9 4 Nonfinancial cotporate business 289.2 286.8 291.0' 296.3 285.7 273.8' 291.0' 281.8 272.3 277.1 296.3 5 Nonfarm noncorporate business 37.6 37.9 38.3 39,0 18.1 38.2 38.3 38.5 38.6 38.8 39.0 6 State and local governments 729.9 648. lr 611 r 591.5 677.8' 643.2' 611.1' 593.6 600.9 580.5 591.5 7 Federal government 204.4' 204.2' 196.5' 201.4 199.2' 197.5' 196.5' 196.9 198.3 199.1 201.4 8 Rest of the world 1.254.8 1,563.1 1.953.6' 2,270.0 1.722.2' 1.844.8' 1,953.6' 2.051 1 2.125.3 2.227.3 2.270.0 9 Financial sectors 12 724 3' 13,763.4' 14,679.9' 15.893.8 14.182.3' 14.417.4' 14,679.9' 14,907.6 15.179 7 1 5.443.9 15.893.8 10 Monetary authority '368.2 380.8 393.1 431.4 386.3 386.2 393.1 397.1 4124 ' 412.7 431.4 11 Commercial banking 3.254.3 3,520.1 3,707.7' 4.031.9 3,590.8 3.643.3 3,707.7' 3,775.7 3.8568 3.912.9 4.031.9 ] 2 U.S.-chartered banks 2.869.6 3,056.1 3,175.8 3,450.8 3,101.3 3.135.3 3,175.8 3,218.1 3.2952 3.351.9 3.450.8 13 Foreign banking offices in United States 337.1 412.6 475.8 515.4 437.1 454.2 475.8 499.5 501.8 501.0 515.4 14 Bank holding companies 18.4 18.0 22.0 27.4 18.1 19.3 22.0 22.5 23.8 22 5 27.4 15 Banks in U.S.-affilialed areas 29.2 33.4 34.1' 38.3 34.3 34.5 34.1' 35.6 36.1 37.5 38.3 16 Savings institutions 920.8 913.3 933.2 925.5 932.7' 945.2' 933.2 931.9 937.8 927.3 925.5 ] 7 Credit unio.is 246.8 263.0 288.5 304.2 276.9 282.6 288.5 291.2 299.2 303.6 304 2 ] 8 Bank personal trusts and estates 248.0 229.2 233.1 242.3 229.4 231.3 233.1 235.2 237.4 239.7 2423 19 Life insurance companies 1.482.6 1.581.8 1.654.3 1,775.4 1,596.7 1,627.0 1,651.3 1,680.2 1,724.1 1.750.4 1.775.4 20 Other insurance companies 446.4 468.7 491.2 514.4 480.7 484.2 491.2 491.2 498.1 506.2 514.4 21 Private pension funds 656.9' 718.3' 764.8' 831.7 746.7' 757.1' 764.8' 777.9 792.5 809.1 831.7 22 State and local government retirement funds 455.8' 483.3' 529.2' 577.5 509.8' 517.7' 529.2' 531.6 542.7 562.0 577.5 23 Money market mutual funds 459.0 545.5 634.3 718.8 594.7 606.6 634.3 659.0 656.5 678.7 718.8 24 Mutual funds 718.8 771.3 820.2 894.8 809.0 818.3 820.2 838.3 860.6 889.2 894.8 25 Closed-end funds 86.0' 96.4' 98.7' 99.5 97.6' 98.1' 98.7' 99.3 99.7 99.7 99.5 26 Government-sponsored enterprises 663.3 748.0 813.6 908.6 758.9 779.3 813.6 824.3 854.8 868.7 908.6 27 Federally related mortgage pools 1.472.1 1.570.3 1,711.4 1,825.8 1,643.3 1.679.0 1,711.4 1.740.0 1.762.1 1.790.7 1.825.8 28 Asset-backed securities issuers (ABSs) 516.8 627.9 729.7 859.5 686.0 704.1 729.7 734.5 753.5 783.1 859.5 29 Finance companies 476.2 526.2 544.5 566.7 539.9 518.3 544.5 552.4 55.3 1 564.4 566.7 30 Mortgage companies 36.5 33.0 41.2 47.9 19.3 40.2 41.2 41.1 43.6 45.4 47.9 31 Real estate investment trusts (REITs) 13.3 15.5 19.0' 24.0 17.2 18.0 19.0' 20.3 21.5 22.8 24.0 32 Brokers and dealers 93.3 183.4 167.7 183.6 ] *8.2 147.1 167.7 164.1 161.2 165.1 183.6 33 Funding corporations 1093' 87.3' 104.5' 130.3 108 I' 113.9' 104.5' 122.5 112.5 112.3 130.3 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 17,182.2' 18,408.5' 19,735.0r 21,118.9 19,039.9' 19,356.2' 19,735.0r 19,981.2 20.288.9 20,596.3 21,118.9 Other liabilities 35 Official foreign exchange 53 2 63.7 53.7 48.9 61.4 54.3 53.7 46.3 46 7 46 1 48 9 36 Special drawing rights certificates 8.0 10.2 9.7 9.2 10.2 9.7 9.7 9.2 9.2 9.2 9.2 37 Treasury currency 17 6 182 18.2 18.2 18.2 18.8 18.2 18.3 18.3 18.7 18.2 38 Foreign deposits 324.6 359.2 438 1 527.0 385.2 415.1 438 1 485.2 489.9 516.2 527.0 39 Net interbank liabilities 280.1 290.7 240.8 198.9 250.0 225.8 240.8 210.2 197.1 186.9 198.9 40 Checkable deposits and currency 1,242.0 1,229.3 1,245.1 1,286.2 1,212.3 1,220.8 1,245.1 1,220.0 1,265.3 1.234.2 1,286.2 41 Small time and savings deposits 2 183 2 "\279.7 2 377 0' 2 475 5 2 340.2 ~> 357.9 2,377.0' 2.427.1 2,432.3 2.437.0 2,475.5 42 Large time deposits 411.2 476.9 590.9' 711.4 511.1 557.2 590.9' 606.0 646.7 696.1 711.4 43 Money market fund shares 602.9 745.3 891.1 1.048.7 809.5 838.1 891.1 950.8 952.4 1.005.1 1.048.7 44 Security repurchase agreements .149.5 660.0 700.3 814.3 692.0 687 6 700.3 713.3 765.1 792.5 814.3 45 Mutual fund shares 1.477.3 1.852.8 2,342.4 3,013.5 2.129.9 2.211.6 2.342.4 2.41 '.5 2,719.6 2,977.0 3.013.5 46 Security credit 279.0 305.7 358.1 461.9 318.6 317.8 358.1 380.0 414.8 432.2 461.9 47 Life insurance reserves 505.3 550 2 593.8 650.8 562.3' 577.1' 59.1.8 603.7 623.1 638.8 650.8 48 Pension fund reserves 4,880.1' 5,600.5' 6,313.8' 7,453 9 5.90) 1' 6,030.9' 6,313.8' 6.414.7 6.940.1 7.325.1 7.453.9 49 Trade payables 1,141.5 1,246.7 1,314.8' 1,390.5 1.269.7 1,263.0' 1.314.8' l,300.f> 1.322.2 1,351.3 1,390.5 50 Taxes payable 101.4 106.0 120.0' 140.1 113.4 117.9' 120.0' 133.2 12K 9 137.5 140.1 51 Investment in bank personal trusts 699.4 767.4 872.0 1,050.7 811.7 K29.0 872.0 890.4 %?.7 1.035.2 1,050.7 52 Miscellaneous 5,402.7' 5,792.0' 6,163.8' 6,441.0 5.9J3.3' 6,031.6' 6.163.8' 6.344.1 6.276.2 6.394.0 6,441.0 53 Total liabilities 37,341.4' 40,762.9r 44,378.5' 48,859.7 42.379.7r 43,120.4r 44.378.5r .•5,146.0 46.506.6 47,829.3 48,859.7 Financial assets not included in liabilities ( + ) 54 Gold and special drawing rights 21.1 22.1 21.4 21.1 22.0 21.2 21.4 20.9 21.1 21.0 21.1 55 Corporate equities 6,237 9 8.311.1 10.061.1 12,958.6 9 105 0 9.340.5 10,061.1 10,072.3 11.719.8 12.804.6 12 958 6 56 Household equity in noncorporate business 3,419.1' 3.625.4' 3,836.5' 4,087.6 3,727.1' 3.792.1' 3.836.5' 3.914.9 4,052.3 4.111.8 4,087.6 Liabilities iwt identified as assets ( —) 57 Treasury currency -5.4 -5.8 -6.8 -7.4 -6.3 -6.0 -6.8 -6.9 -7.0 -6.8 -7.4 58 Foreign deposits 276.2 301.2 354.1' 422.4 326.1 347.7' 354.1' 398.6 396.0 415.6 422.4 59 Net interbank transactions -6.5 -9.0 -10.6 -28.3 -8.0 -11.6 -10 6 -1.6 -8.1 -22.1 -28.3 60 Security repurchase agreements 67.8' 103.9' 135.8' 187 9 125.5' 113.4' 135.8' 110.9 153.4 164.8 187.9 (i\ Taxes payable 48 8 60 8 73.2' 93.2 61 0 67.7' 73.2' 70 6 72 5 82.3 93.2 62 Miscellaneous -tn'.v -1.092.2' -1.414.2' -1,631.2 -1,222.4' -1.300 4' -1,414.2' -1.382.7 -1.439.6 -1.448.0 -1.631.2 Floats not included in assets (—) 63 Federal government checkable deposits 1.4 3.1 -1.6 -8 1 -3 4 -1.7 -1.6 -9.7 -6.8 -7.8 -S.I 64 Other checkable deposits 38.0 34.2 30.1 26.2 31.8 23.1 30.1 25.6 27.9 19.5 26.2 65 Trade credit -245.8 - 274.9 -308.7' -353.2 -338.5 -377.8' -308.7' -363.8 - 390.0 -419.9 -353.2 66 Total identified to sectors as assets 47,820.7' 53,620.4' 59,446.2' 67.225.5 56,268.0' 57,419.8' 59,446.2' 60,313.1 63.501.4 65,989.1 67,225.5 1. Data in this table also appear in the Board's L, 1 (780) quarterly statistical release, t 2. Excludes corporate equities and mutual fund shares. L. I 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 • April 1998 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1992=100, except as noted 1997 1998 Measure May July Sept. Jan. 1 Industrial production1 125.6 126.5 127.9 Market groupings 2 Products, total 110.6 113.7 118.5r 117.7 117.6 118.1 119.2 119.1 120.2' 121.2 121.3 121.3 3 Final, total 111.3 114.6 119.6 118.6 118.6 119.2 120.5 120.3 121.5' 122.5 122.4 122.6 4 Consumer goods 109.9 111.8 114.4 113.9 113.5 113.9 114.6 114.5 115.9' 116.6 116.5 116.4 5 Equipment 113.8 119.6 128.7 126.8 127.7 128.6 130.9 130.6 131.3 132.9 132.8 133.6 6 Intermediate 108.3 110.8 115.1' 114.9 114.7 114.6 115.3 115.2 116.3' 117.2 117.9 117.3 7 Materials 120.8 126.2 134.0' 132.4 133.0 134.9 134.9 136.1 136.7' 137.3 138.5 138.6 Industry groupings 127.9 8 Manufacturing 82.8 81.7 81.4 81.3 81.9' 82.3 82.1 9 Capacity utilization, manufacturing (percent)2 122.0' 130.8 139.0' 145.0' 143.0' 140.0 139.0 139.0 137.CC 138.0 135.0 131.0 10 Construction contracts3 114.9 117.2 119.9 119.5 119.7 120.1 120.1 120.4 120.7 121.1 121.5 121.8 11 Nonagricultural employment, total4 98.3 99.0 100.3 100.1 100.2 100.2 100.4 100.4 100.6 100.9 101.3 101.8 12 Goods-producing, total 97.5 97.2 97.6 97.4 97.5 97.5 97.7 97.7 97.9 98.1 98.3 98.5 13 Manufacturing, total 99.0 98.4 98.9 98.7 98.8 98.8 98.9 99.0 99.2 99.5 99.7 99.9 14 Manufacturing, production workers 120.2 123.0 126.2 125.7 126.0 126.5 126.5 126.8 127.2 127.6 127.9 128.2 15 Service-producing 158.2 167.0 176.8 175.5 176.5 176.7 177.8 178.3 179.3' 180.6 181.4 n.a. 16 Personal income, total 150.9 159.8 170.6 168.7 170.2 170.3 171.7 172.3 173.5 175.5 176.3 17 Wages and salary disbursements 130.4 135.7 142.0 140.9 141.0 141.1 142.1 142.8 144.4 145.7 146.3 18 Manufacturing 158.7 166.2 174.4 173.2 174.1 174.3 175.2 175.8 176.6' 177.8 178.7 19 Disposable personal income5 151.2 158.6 165.6' 163.3 164.5 166.5 167.2 166.7 166.5 166.8 167.3 20 Retail sales5 Prices6 21 Consumer (1982-84=100) 152.4 156.9 160.5 160.1 160.3 160.5 160.8 161.2 161.6 161.5 161.3 161.6 22 Producer finished goods (1982=100) 127.9 131.3 131.8 131.6 131.6 131.3 131.7 131.8 132.4 131.8 131.1 130.2 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For 4. Based on data from U.S. Department of 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 December 1997. The recent 5. Based on data from U.S. Department of Commerce, Survey of Current Business. annual revision is described in an article in the February 1998 issue of the Bulletin. For a 6. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the price description of the aggregation methods for industrial production and capacity utilization, see indexes can be obtained from the U.S. Department of Labor, Bureau of Labor Statistics, "Industrial Production and Capacity Utilization: Historical Revision and Recent Develop- Monthly Labor Review. ments," Federal Reserve Bulletin, vol. 83 (February 1997), pp. 67-92. For details about the NOTE. Basic data (not indexes) for series mentioned in notes 4 and 5, and indexes for series construction of individual industrial production series, see "Industrial Production: 1989 mentioned in notes 3 and 6, can also be found in the Survey of Current Business. Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. Figures for industrial production for the latest month are preliminary, and many figures for 187-204. the three months preceding the latest month have been revised. See "Recent Developments in 2. Ratio of index of production to index of capacity. Based on data from the Federal Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 1990), pp. Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other sources. 411-35. See also "Industrial Production Capacity and Capacity Utilization since 1987," 3. Index of dollar value of total construction contracts, including residential, nonresiden- Federal Reserve Bulletin, vol. 79 (June 1993), pp. 590-605. tial, and heavy engineering, from McGraw-Hill Information Systems Company, F. W. Dodge Division. 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data seasonally adjusted 1997 Category June July Aug. Sept. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 132,304 126,297 136,206 136,404 136,439 136,406 136,864 137,169 137,493 Employment 1 Nonagricultural industries3 121,460 123.264 126,159 126,003 126,209 126,368 126,339 126,583 127,191 127,392 127,764 3 Agriculture 3,440 3,443 3,399 3,389 3,452 3,379 3,422 3,327 3,384 3,385 3,319 Unemployment 4 Number 7,404 7,236 6,739 6,814 6,633 6,657 6,678 6,496 6,289 6,392 6.409 5 Rate (percent of civilian labor force) 5.6 5.4 4.9 5.0 4.9 4.9 4.9 4.8 4.6 4.7 4.7 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 117,191 119,523 122,257 122,056 122,440 122,492 122,792 123,083 123,512 123,867 124,225 7 Manufacturing 18,524 18,457 18,538 18.518 18,514 18,555 18,553 18,590 18,634 18,672 18,715 8 Mining 581 574 573 574 574 573 576 574 572 574 574 9 Contract construction 5,160 5,400 5,627 5,622 5,625 5,637 5,642 5,650 5,682 5,742 5,834 10 Transportation and public utilities 6,132 6,261 6,426 6,434 6,443 6,289 6,473 6,497 6,495 6,470 6,519 11 Trade 27,565 28,108 28,788 28,713 28,823 28,864 28,902 28.970 29,132 29,218 29,272 12 Finance 6,806 6,899 7,053 7,034 7,058 7,068 7,082 7,108 7,132 7,154 7,176 13 Service 33,117 34,377 35,597 35,522 35,684 35,702 35.850 35,945 36,102 36,265 36,354 14 Government 19.305 19,447 19,655 19,639 19,719 19,804 19.714 19.749 19,763 19,772 19,781 1. Beginning January 1994, reflects redesign of current population survey and population 4. Includes all full- and part-lime 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 Ql Q2 Q3 Q4r Ql Q2 Q3 Q4 Ql Q2 Q3 Q4' Output (1992=100) Capacity (percent of 1992 output) Capacity utilization rate (percent) 1 Total industry 82.4 82.7 2 Manufacturing 152.3 81.5 81.6 3 Primary processing 116.7 117.7 118.5 119.6 135.8 136.9 138.0 139.2 85.9 86.0 85.8 85.9 4 Advanced processing4 128.0 129.7 132.1 135.3 160.6 163.2 165.7 168.1 79.7 79.5 79.8 80.5 5 Durable goods 137.5 140.2 143.7 147.1 170.4 173.8 177.2 180.6 80.7 80.7 81.1 81.5 6 Lumber and products 113.5 116.4 114.9 115.0 137.3 138.6 140.0 141.3 82.7 84.0 82.1 81.4 7 Primary metals 120.9 123.8 125.5 127.9 134.7 136.0 137.2 138.5 89.8 91.0 91.5 92.4 8 Iron and steel 119.4 122.6 122.8 126.1 134.1 135.4 136.6 137.9 89.1 90.6 89.9 91.5 9 Nonferrous 122.7 125.3 128.8 130.0 135.2 136.4 137.7 138.9 90.8 91.8 93.5 93.6 10 Industrial machinery and equipment 163.9 168.2 173.9 177.5 193.3 199.0 204.4 210.0 84.8 84.5 85.1 84.5 11 Electrical machinery 216.4 226.6 236.6 245.8 264.4 276.7 289.1 301.9 81.9 81.9 81.9 81.4 12 Motor vehicles and parts 133.6 130.5 136.7 143.1 180.6 182.6 184.7 186.7 74.0 71.4 74.0 76.6 13 Aerospace and miscellaneous transportation equipment 89.9 92.8 95.6 98.7 122.7 123.4 124.1 124.8 73.3 75.2 77.1 79.1 14 Nondurable goods 110.3 110.7 111.1 112.6 133.6 134.3 135.0 135.7 82.6 82.4 82.3 83.0 15 Textile mill products 107.3 108.5 110.9 111.8 130.5 131.1 131.7 132.3 82.3 82.8 84.3 84.5 16 Paper and products 111.7 112.2 114.1 113.5 124.9 125.5 126.0 126.7 89.4 89.4 90.5 89.6 17 Chemicals and products 114.5 114.8 114.8 116.7 143.9 145.1 146.3 147.5 79.5 79.1 78.5 79.1 18 Plastics materials 126.8 127.6 130.6 136.3 138.1 140.0 93.0 92.4 93.3 19 Petroleum products 107.7 111.0 109.5 114.1 114.7 115.2 1157 94.4 96.8 95.1 95.2 20 Mining 105.4 106.0 106.4 105.3 117.6 117.9 118.1 118.2 89.6 89.9 90.1 89.1 21 Utilities 110.8 111.7 114.0 115.7 125.8 126.3 126.7 127.1 88.1 88.5 90.0 91.0 22 Electric 111.5 111.3 114.2 116.4 124.2 124.6 125.0 125.4 89.8 89.3 91.4 92.8 Previous cycle5 Latest cycle High Low High Low High Low Jan. Aug. Sept. Oct.' Nov.r Dec. Jan.p Capacity utilization rate (percent) 1 Total industry 72.6 87.3 71.1 85.4 78.1 82.4 82.8 82.7 83.0 83.2 83.3 2 Manufacturing 70.5 86.9 69.0 85.7 76.6 81.4 81.8 81.6 81.9 82.3 82.3 3 Primary processing3 91.2 68.2 88.1 66.2 88.9 77.7 85.5 85.8 85.7 85.7 86.0 86.1 86.1 4 Advanced processing4 87.2 71.8 86.7 70.4 84.2 76.1 79.6 80.0 79.7 80.2 80.7 80.6 80.4 5 Durable goods 68.9 87.7 63.9 84.6 73.1 80.4 81.4 81.0 81.1 81.8 81.6 81.3 6 Lumber and products 88.7 61.2 87.9 60.8 93.6 75.5 81.4 82.5 80.7 80.1 82.7 81.4 80.7 7 Primary metals 100.2 65.9 94.2 45.1 92.7 73.7 88.9 91.4 91.5 92.3 93.0 91.9 91.9 8 Iron and steel 105.8 66.6 95.8 37.0 95.2 71.8 88.9 89.1 90.8 91.9 92.1 90.4 90.5 9 Nonferrous 90.8 59.8 91.1 60.1 89.3 74.2 89.1 94.3 92.5 92.8 94.1 93.8 93.8 10 Industrial machinery and equipment 96.0 74.3 93.2 64.0 85.4 72.3 85.0 86.1 84.2 84.8 84.2 84.5 83.8 11 Electrical machinery 89.2 64.7 89.4 71.6 84.0 75.0 81.1 81.9 81.0 80.9 82.0 81.4 81.1 12 Motor vehicles and parts.... 93.4 51.3 95.0 45.5 89.1 55.9 74.2 75.2 76.2 75.0 78.1 76.7 75.7 13 Aerospace and miscellaneous transportation equipment 78.4 67.6 81.9 66.6 87.3 79.2 72.6 76.9 77.9 78.2 78.6 80.6 81.2 14 Nondurable goods 87.8 71.7 87.5 76.4 87.3 80.7 82.6 82.2 82.3 82.8 83.0 83.1 83.1 15 Textile mill products 91.4 60.0 91.2 72.3 90.4 77.7 82.1 84.1 84.5 84.5 85.3 83.9 84.6 16 Paper and products 97.1 69.2 96.1 80.6 93.5 85.0 88.8 90.8 90.1 89.2 89.7 90.0 89.9 17 Chemicals and products 87.6 69.7 84.6 69.9 86.2 79.3 80.2 78.3 78.8 79.3 78.9 79.1 79.1 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 93.2 92.0 93.6 91.2 93.0 19 Petroleum products 96.7 81.1 90.0 66.8 88.5 85.1 93.9 95.2 95.4 96.2 93.9 95.5 96.0 20 Mining 94.3 88.2 96.0 80.3 88.0 87.0 88.2 90.0 90.1 89.6 89.1 88.6 21 Utilities 96.2 82.9 89.1 75.9 92.6 83.4 89.5 89.2 90.8 92.0 89.9 91.1 22 Electric 99.0 82.7 88.2 78.9 95.0 87.1 91.0 90.5 92.5 94.3 91.5 92.6 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 December 1997. The recent primary metals, and fabricated metals. annual revision is described in an article in the February 1998 issue of the Bulletin. For a 4. Advanced processing includes foods; tobacco; apparel; furniture and fixtures; printing description of the aggregation methods for industrial production and capacity utilization, see and publishing; chemical products such as drugs and toiletries; agricultural chemicals; leather "Industrial Production and Capacity Utilization: Historical Revision and Recent Develop- and products; machinery; transportation equipment; instruments; and miscellaneous manufacments," Federal Reserve Bulletin, vol. 83 (February 1997). pp. 67-92. For details about the tures. construction of individual industrial production series, see "Industrial Production: 1989 5. Monthly highs, 1978-80; monthly lows, 1982. Developments and Historical Revision," Federal Reserve Bulletin, vol 76 (April 1990), pp. 6. Monthly highs, 1988-89; monthly lows, 1990-91. 187-204. 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 • April 1998 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value' Monthly data seasonally adjusted 1992 1998 Group p po ro r- - 1 a 9 v 9 g 7 . tion Apr. May July Aug. Sept. Oct.' Nov.' Dec Index (1992 = 100) MAJOR MARKETS 1 Total index 100.0 124.5 121.3 122.1 122.5 123.1 123.3 123.5 124.5 125.2 125.6 126.5 127.4 127.9 127.9 2 Products 60.5 118.5 116.0 116.5 116.9 117.2 117.7 117.6 118.1 119.2 119.1 120.2 121.2 121.3 121.3 3 Final products 46.3 119.6 116.8 117.2 117.9 118.0 118.6 118.6 119.2 120.5 120.3 121.5 122.5 122.4 122.6 4 Consumer goods, total 29.1 114.4 113.2 113.1 113.4 113.4 113.9 113.5 113.9 114.6 114.5 115.9 116.6 116.5 116.4 5 Durable consumer goods 6.1 131.3 128.0 129.4 130.7 127.4 128.8 129.8 128.1 132.1 131.9 131.4 136.6 134.8 135.4 6 Automotive products 2.6 129.9 127.4 128.5 129.0 122.3 124.6 126.7 120.3 131.6 132.8 131.2 138.4 134.0 132.8 7 Autos and trucks 1.7 136.5 134.8 135.1 135.6 124.4 127.6 130.3 120.2 137.6 140.9 139.7 147.8 142.8 139.6 8 Autos, consumer .9 115.2 114.5 116.5 117.6 110.7 112.4 110.8 113.0 118.6 119.9 115.2 120.3 113.9 116.0 9 Trucks, consumer .7 159.1 160.0 158.6 158.5 142.7 147.3 154.2 131.9 161.2 166.5 168.6 179.8 176.0 167.7 10 Auto parts and allied goods .9 119.3 115.5 117.9 118.4 118.2 119.1 120.3 119.3 121.8 120.1 117.9 123.8 120.2 122.0 11 Other 3.5 132.4 128.5 130.1 132.0 131.4 132.1 132.3 134.4 132.5 131.1 131.5 135.2 135.5 137.4 12 Appliances, televisions, and air conditioners 1.0 168.5 157.3 164.1 166.9 164.2 166.5 165.4 174.8 169.8 166.0 169.4 176.9 177.3 183.6 13 Carpeting and furniture .8 117.2 114.1 114.3 116.7 116.7 117.7 119.0 116.4 117.7 116.2 116.5 122.9 117.8 121.2 14 Miscellaneous home goods 1.6 120.0 119.0 119.1 1201 1201 120 2 120 3 122 1 1198 1194 1186 119 2 122 3 121.7 15 Nondurable consumer goods 23.0 110.2 109.4 109.0 109.1 109.9 110.1 109.4 110.3 110.3 110.2 112.1 111.7 112.0 111.7 16 Foods and tobacco 10.3 109.4 109.1 109.2 110.0 109.1 108.9 108.1 109.6 108.9 108.6 109.7 110.7 111.1 112.0 17 Clothing 2.4 95.9 96.5 95.6 96.1 96.5 95.8 95.4 95.8 96.0 96.0 96.4 95.1 95.4 94.7 18 Chemical products 4.5 119.2 118.0 117.3 115.9 118.4 119.3 119.1 117.3 119.4 119.4 123.0 122.3 121.9 122.8 19 Paper products 2.9 109.4 106.5 107.1 107.8 108.2 108.9 109.8 110.8 109.8 110.1 111.3 111.6 110.1 109.1 20 Energy 2.9 111.2 110.5 108.3 107.3 111.9 112.8 109.7 112.4 112.8 112.4 116.2 112.1 114.4 110.5 21 Fuels .8 109.4 105.7 106.6 108.2 109.6 111.3 111.5 108.8 111.0 110.8 112.0 106.5 110.4 112.2 22 Residential utilities 2.1 112.5 108.7 106.4 112.6 113.0 108.3 113.7 113.2 112.8 117.8 114.4 116.0 109.2 23 Equipment 17.2 128.7 123.1 124.6 125.8 126.0 126.8 127.7 128.6 130.9 130.6 131.3 132.9 132.8 133.6 24 Business equipment 13.2 141.8 134.9 136.5 137.5 137.9 139.0 140.2 141.6 144.6 144.4 145.5 147.5 147.9 148.2 25 Information processing and related 5.4 168.1 157.8 160.9 161.0 163.0 164.4 166.8 169.3 171.1 172.9 174.3 175.3 175.5 175.7 26 Computer and office equipment 1.1 385.2 333.8 341.5 348.8 358.4 365.3 375.8 391.6 407.1 414.6 420.3 426.9 435.4 442.5 27 Industrial 4.0 133.2 130.0 129.8 130.6 131.6 131.5 131.7 133.7 135.8 133.8 135.9 135.7 137.4 136.6 28 Transit 2.5 111.I 103.3 105.2 107.7 104.6 106.7 107.3 106.9 113.3 114.2 113.0 119.9 119.1 121.2 29 Autos and trucks 1.2 119.4 116.4 118.2 121.4 112.5 114.6 113.6 111.5 120.3 120.2 117.0 128.2 120.1 122.6 30 Other 1.3 135.0 129.7 130.8 132.6 134.4 135.2 136.3 136.3 137.9 135.1 137.5 137.7 136.6 136.5 31 Defense and space equipment 3.3 75.3 75.5 75.6 75.7 75.4 75.6 76.0 74.9 75.0 74.7 74.7 74.7 74.6 75.0 32 Oil and gas well drilling .6 149.7 138.4 143.5 154.8 151.4 150.7 150.9 152.1 153.2 153.1 149.1 150.0 145.9 155.0 33 Manufactured homes .2 139.1 137.7 140.7 139.4 142.9 141.9 139.1 143.5 139.5 137.2 136.9 138.1 132.4 34 Intermediate products, total 14.2 115.1 113.5 114.1 114.1 114.7 114.9 114.7 114.6 115.3 115.2 116.3 117.2 117.9 117.3 35 Construction supplies 5.3 121.8 119.1 121.7 122.3 121.8 122.2 122.2 121.2 122.7 120.4 121.3 123.4 123.8 124.2 36 Business supplies 8.9 111.1 110.2 109.6 109.2 110.6 110.6 110.2 110.6 111.0 112.2 113.4 113.5 114.4 113.2 37 Materials 39.5 134.0 129.7 131.0 131.3 132.5 132.4 133.0 134.9 134.9 136.1 136.7 137.3 138.5 138.6 38 Durable goods materials 20.8 158.1 150.2 152.2 153.0 155.1 155.4 156.9 159.3 160.3 161.3 163.2 164.9 166.2 166.7 39 Durable consumer parts 4.0 139.1 136.2 136.3 135.9 137.1 134.7 136.2 139.2 140.3 140.7 141.8 142.3 145.6 143.4 40 Equipment parts 7.6 221.8 201.1 206.1 210.0 IMA 216.7 220.0 224.6 227.6 229.6 233.3 238.0 240.2 243.5 41 Other 9.2 125.5 122.6 123.5 123.2 124.7 124.5 125.0 125.9 126.0 126.6 127.8 128.5 128.5 128.8 42 Basic metal materials 3.1 120.6 116.7 118.3 118.2 118.8 119.9 121.2 121.1 121.8 121.7 122.5 124.8 122.5 122.9 43 Nondurable goods materials 8.9 112.9 111.6 112.6 112.5 113.0 111.8 111.9 113.5 112.3 113.3 113.1 113.8 114.8 115.0 44 Textile materials 1.1 109.3 107.0 108.0 106.3 109.4 106.1 108.1 112.3 108.4 111.4 111.9 111.0 112.7 112.8 45 Paper materials 1.8 112.6 110.4 112.0 112.5 112.6 112.6 110.9 113.8 114.3 112.7 113.4 112.3 113.9 114.7 46 Chemical materials 3.9 114.9 114.9 115.0 114.8 115.4 113.8 113.8 115.1 113.9 115.6 115.0 115.2 116.1 116.3 47 Other 2.1 110.3 107.7 110.1 110.4 109.7 109.5 110.8 110.1 108.6 109.5 109.0 113.7 113.6 113.4 48 Energy materials 9.7 103.9 103.6 103.8 103.4 103.7 103.7 103.2 104.6 103.9 105.5 104.7 103.4 104.5 103.5 4 5 9 0 C Pr o i n m v a e r r y te e d n e fu rg el y materials 6 3 . . 3 3 1 10 0 8 1 . . 2 7 1 10 0 8 1 . . 0 2 1 10 0 6 2 . . 2 5 1 10 0 6 1 . . 2 9 1 1 0 0 1 7 . . 7 6 1 1 0 0 2 6 . . 1 8 1 1 0 0 1 7 . . 0 3 1 10 0 9 2 . . 0 3 1 1 0 0 2 6 . . 4 8 1 1 0 1 2 1 . . 2 8 1 1 0 1 1 0 . . 7 6 1 1 0 0 0 8 . . 8 3 1 1 0 1 1 0 . . 4 4 1 1 0 0 1 7 . . 4 7 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.1 124.3 121.1 121.9 122.3 123.2 123.4 123.6 124.8 125.1 125.4 126.5 127.1 127.8 127.8 52 Total excluding motor vehicles and parts 95.1 123.8 120.7 121.5 121.9 122.7 123.0 123.1 124.3 124.6 124.8 125.9 126.5 127.1 127.2 53 Total excluding computer and office equipment 98.2 121.9 119.1 119.8 120.2 120.7 120.9 121.1 122.0 122.6 122.9 123.8 124.6 125.1 125.1 54 Consumer goods excluding autos and trucks 27.4 113.2 112.0 111.8 112.1 112.8 113.1 112.5 113.5 113.4 113.0 114.6 114.9 115.1 115.1 55 Consumer goods excluding energy 26.2 114.8 113.5 113.7 114.2 113.6 114.0 114.0 114.1 114.9 114.7 115.9 117.2 116.8 117.2 56 Business equipment excluding autos and trucks 137.1 138.6 139.5 141.0 141.9 143.4 145.2 147.5 147.3 149.0 149.8 151.2 57 Business equipment excluding computer and office equipment 12.1 129.0 123.8 125.1 126.0 126.0 126.9 127.7 128.6 131.2 130.8 131.8 133.6 133.7 133.8 58 Materials excluding energy 29.8 143.6 137.9 139.6 140.1 141.6 141.4 142.5 144.6 144.8 145.8 147.0 148.3 149.5 150.0 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 Group SIC2 procode portion Apr. May July Sept. Oct.r Nov' Dec. Index (1992 = 100) MAJOR INDUSTRIES 59 Total index 100.0 122.1 122.5 123.1 123.3 123.5 124.5 125.2 125.6 126.5 127.4 127.9 60 Manufacturing 85.4 127.0 123.5 124.4 124.9 125.4 125.7 126.1 126.9 127.9 128.0 129.1 130.4 130.9 131.2 61 Primary processing 26.5 118.1 115.8 116.9 in.2 117.7 117.7 117.7 118.3 118.5 118.6 118.9 119.8 120.2 120.5 62 Advanced processing 58.9 131.4 127.2 128.1 128.6 129.2 129.6 130.2 131.2 132.5 132.7 134.1 135.7 136.2 136.6 63 Durable goods 45.0 142.3 136.1 137.8 138.7 139.5 140.1 141.2 142.4 144.3 144 4 145.5 147.6 148.3 148.8 64 Lumber and products 20 115.0 111.4 114.2 114.9 115.9 116.4 117.0 116.1 115.4 113.3 112.9 116.9 115.3 114.8 65 Furniture and fixtures 1.4 122.7 119.7 120.6 120.7 123.5 123.3 123.5 124.2 126.8 66 Stone, clay, and glass products 2.1 120.5 119.2 118.9 119.5 121.1 119.4 120.0 120.9 120.5 121.2 121.0 122.1 123.2 124.2 67 Primary metals 33 3.1 124.5 119.4 121.6 121.8 122 3 124.2 124 9 125.2 125.5 125.9 127.4 128.7 127.6 128.0 68 Iron and steel 331,2 1.7 122.7 118.8 119.9 119.6 121.2 123.9 122.6 122.2 121.8 124.5 126.4 127.0 125.0 125.6 69 Raw steel 331PT .1 115.9 111.9 112.4 114.0 115.1 115.4 114.9 115.5 116.1 119.2 117.7 120.9 119.2 117.8 70 Nonferrous 33.1-6,9 1.4 126.6 120.0 123.5 124.5 123.5 124.6 127.7 128.8 129.9 127.7 128.6 130.7 130.6 131.0 71 Fabricated metal products. . 34 5.0 122.9 120.6 121.7 122.1 122.5 122.7 121.9 122.4 122.8 122.7 124.4 124.7 125.9 126.1 72 Industrial machinery and equipment 35 171.3 162.8 164.0 165.1 167.8 168.0 168.8 172.2 175.9 173.7 176.5 176.8 179.1 179.2 73 Computer and office equipment 357 1.8 381.9 328.6 336.6 344.2 354.1 361.4 372.3 388.5 403.9 412.0 418.0 425.0 434.1 441.6 74 Electrical machinery 36 7.3 231.5 211.1 217.4 220.8 223.7 226.3 229.7 235.5 236.8 237.5 240.8 247.5 249.2 252.0 75 Transportation equipment. . 37 9.5 115.5 110.9 111.4 112.3 110.7 110.8 113.0 112.2 117.0 118.8 118.3 121.7 122.1 121.9 76 Motor vehicles and parts 371 4.9 137.0 133.4 133.3 134.0 129.7 129.2 132.5 130.0 138.9 141.2 139.6 145.9 143.8 142.5 77 Autos and light trucks 37IPT 2.6 128.3 126.7 127.2 127.8 117.8 120.6 122.4 115.0 129.5 132.3 130.4 137.7 1326 130.6 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.6 94.4 88.9 89.9 91.0 92.0 92.7 93.8 94.6 95.5 96.8 97.3 98.1 100.7 1016 79 Instruments 38 5.4 108.0 105.9 107.2 106.5 106.6 107.6 107.9 108.0 109.2 108.9 109.7 110.0 108.9 109.6 SO Miscellaneous 39 1.3 125.9 124.0 125.0 124 7 125.1 125.5 126.0 127.0 126.7 126.1 126.5 126.2 128.7 128.5 81 Nondurable goods 40.4 111.2 110.2 110.4 110.5 110.8 110.7 110.5 110.9 111.0 111.3 112.2 112.6 113.0 113.3 82 Foods 9.4 109.6 109.3 109.4 110.0 109.2 109.2 108.8 110.0 108.9 108.6 109.2 110.8 111.2 112.7 83 Tobacco products 1.6 113.2 112.0 113.0 114.2 113.0 111.5 109.0 110.5 112.5 112.0 118.8 116.1 117.3 113.6 84 Textile mill products 1.8 109.6 107.0 107.0 108.0 109.2 107.2 109.1 110.7 110.7 111.4 111.6 112.8 111.1 112.2 85 Apparel products 2.2 99.6 IO0.5 99.5 100.1 99.8 99.8 99.6 99.7 99.1 99.1 99.3 98.4 99.2 98.9 86 Paper and products 3.6 112.9 110.8 111.9 112.4 112.4 112.6 111.7 114.2 114.4 113.7 112.8 113.6 114.1 114.3 87 Printing and publishing. .. . 6.7 104.9 103.2 103.3 103.6 104.4 104.5 104.1 104.1 104.4 105.1 106.7 107.5 107.2 106.2 8& Chemicals and products .. . 9.9 115.2 115.2 114.6 113.6 115.2 114.5 114.6 114.3 114.5 115.6 116.7 116.4 117.0 117.4 89 Petroleum products 1.4 109.5 107.0 108.0 108.0 110.1 111.4 111.3 108.9 109.7 110.1 111.2 108.7 110.6 111.5 90 Rubber and plastic products 3.5 126.5 123.3 125.0 125.5 124.4 125.4 125.6 126.0 127.9 127.6 127.4 129.5 129.9 130.0 91 Leather and products .3 73.7 76.5 76.0 76.6 75.9 75.3 74.0 74.0 71.2 70.9 72.4 70.9 71.4 70.8 92 Mining 6.9 105.8 103.7 106.0 106.7 105.5 106.7 105.7 106.5 106.3 106.5 105.9 105.3 104.8 106.3 93 Metal .5 107.0 105.5 106.2 106.4 105.3 105.9 109.9 105.2 106.0 105.3 111.1 113.6 104.5 105.0 94 Coal 1.0 109.9 107.4 110.4 107.0 105.4 115.9 107.4 112.1 107.7 109.5 109.6 111.2 116.8 116.2 95 Oil and gas extraction 103.1 101.1 102.8 104.3 103.8 103 4 102.9 103.9 104.1 104.3 103.1 101.9 100.9 102.9 96 Stone and earth minerals .... 118.3 115.0 123.5 123.6 116.8 1182 120.9 117.8 119.9 117.7 116.2 116.3 117.0 118.4 97 Utilines 7.7 112.6 112.5 110.3 109.6 112.5 1118 110.9 113.8 113.0 115.1 116.9 114.2 115.9 111.3 98 Electric 491.493PT 6.2 113.3 112.9 111.0 110.6 112.7 110.4 110.7 113.8 113.1 115.7 118.1 114.7 116.3 112.9 99 Gas 492.493PT 1.6 110.5 111.2 107.9 105.4 111.5 117.1 111.9 113.5 112.5 112.7 111.9 112.5 114.5 105.1 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.5 126.4 122.9 123.9 124.3 125.2 125.5 125.7 126.7 127.2 127.3 128.4 129.4 130.1 130.5 101 Manufacturing excluding office and computing machines . . 83.6 124.1 120.9 121.8 122.2 122.7 122.9 123.2 123.9 124.8 124.9 125.9 127.1 127.6 127.9 Gross value (billions of 1992 dollars, annual rates) MAJOR MARKETS 102 Products, total 2,001.9 2,373.4 2332.0 2,344.1 2.355.4 2,353.4 2,365.8 2365.3 2,368.4 2,402.0 2,396.9 2.416.1 2,440.6 2,439.6 2,444.1 103 Final 1,552.1 1.855.8 1.818.2 1,827.3 1,838.7 1,832.9 1,844.4 1,844.6 1,849.1 1,879.3 1,875.6 1.890.6 1,909.7 1.906.2 1,913.8 104 Consumer goods 1.049.6 1,195.9 1,185.8 1,187.6 1,191.4 1,187.7 1,194.1 1,190.2 1,191.0 1,205.2 1.203.3 1,215.9 1,222.7 1,221.4 1,224.4 105 Equipment. ..,,,,.,., 502.5 659.7 631.8 639.2 646.8 644.8 649.8 654.1 657.8 674.0 672.3 674.5 687.1 684.8 689.5 106 Intermediate 449.9 518.3 514.2 517.0 517.2 520.6 521.7 521.0 519.9 523.7 522.2 526.5 531.9 534.2 531.4 I. 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 details about the the ordering address, see the inside front cover The latest historical revision of the industrial construction of individual industrial production series, see "Industrial Production: 1989 production index and the capacity utilization rates was released in December 1997. The recent Developments and Historical Revision,"' Federal Rcsene Bulletin, vol. 76, (April 1990), pp annual revision is described in an article in the February 1998 issue of the Bulletin. For a 187-204. description of the aggregation methods for industrial production and capacity utilization, see 2. Standard industrial classification. "Industrial Production and Capacity Utilization: Historical Revision and Recent Develop- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • April 1998 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1997 Item 1995 1996 1997 Mar. Apr. May June July Aug. Sept. Oct.' Nov.' Dec. Private residential real estate activity (thousands of units except is noted) NEW UNITS I Permits authorized 1,333 1,426 1,442 1 457 1.442 1,432 1,402 1.414 1.397 1,460 1,487 1,440 1,482 2 One-family 997 1,070 1,056 1,034 1,060 1,053 1,049 1,030 1,027 1.065 1,087 1,061 1,071 3 Two-family or more 335 356 387 423 382 379 353 384 370 395 400 379 411 4 Started 1,354 1.477 1,474 1,477' 1.480' 1,404' 1.502' 1,461' 1,383' 1.501' 1,529 1,523 1.538 5 One-family 1.076 1,161 1,133 1,139' 1.134' 1,095' 1,132' 1,144' 1,076' 1.174' 1,124 1,167 1,118 6 Two-family or more 278 316 341 338' 346' 309' 370' 317' 307' 327' 405 356 420 7 Under construction at end of period 775 819 831 814 812 815 829 837 836 842 854 860 8 One-family 554 584 570 566 563 564 566 571 569 571 576 576 1 9 0 Co T m w p o le - t f e a d mily or more 1, 2 31 2 9 1 1, 2 40 3 7 5 1. 2 40 6 3 1 1, 2 47 4 1 8 1. 2 46 4 0 9 1, 2 38 5 8 1 1, 2 31 6 8 3 1. 2 32 6 0 6 1, 2 32 6 5 7 1, 2 43 7 1 1 1. 2 37 7 5 8 1, 2 40 8 9 4 n.a. 11 One-family 1,073 1,124 1,123 1,156 1.158 1,101 1,096 1.069 1,053 1,142 1,058 1,140 12 Two-family or more 246 283 280 315 302 287 222 251 272 289 317 269 13 Mobile homes shipped 341 361 354 354' 366' 354' 353' 356' 354' 351' 349 352 353 Merchant builder activity in one-family units 14 Number sold 667 757 800 825 765 764 802 812 798 816' 785 857 777 15 Number for sale at end of period1 374 326 291 287 291 288 288 288 286 285' 285 283 284 Price of units sold {thousands of dollars) 16 Median 133.9 140.0 145.5 148.0 150.0 141.0 145.0 145.9 144.0 146.3' 142.0 144.0 142.6 158 7 166 4 175 7 172 7 179 5 170 7 179 4 175 5 170 7 177 5' 173 6 174 8 177 8 EXISTING UNITS (one-family) 3 812 4 087 4 040' 4 190' 4 120' 4 180 4 280' 4 300' 4 380 4 390 4 370 Price of units sold (thousands of dollars)2 19 Median 113.1 118.2 124.1 120.0 120.7 123.1 127.2 126.5 127.5 125.8 124.4 124.3 125.9 20 Average 139.1 145.5 154.2 147.5 150.4 153.1 158.4 157.6 159.1 155.4 154.7 155.0 157.5 Value of new construction (millions of dollars)^ CONSTRUCTION 21 Total put in place 534,463 567,179 599,795 593,908 596,907 595,763 594,195 603,002 603,684 605,748 611,805 611,294 611,753 22 Private 407,370 435,929 461,146 452,728 457,604 459,882 456,927 464,326 465,236 468,822 469,567 469,369 472,860 23 Residential 231,230 246,659 259,765 253,974 259.917 259,662 257,277 258,803 259,958 263,799 265,717 268,074 271,936 24 Nonresidential 176,140 189,271 201,381 198,754 197.687 200,220 199,650 205.523 205,278 205.023 203,850 201,295 200,924 25 Industrial buildings 32,505 31,997 30,574 30,520 29.331 30,501 31,046 31,796 31,480 30,675 29.964 29,449 28,092 26 Commercial buildings 68,223 74,593 80,587 81.015 76,545 78.670 79,009 82,346 81.552 80.551 81.424 79,597 81,253 27 Other buildings 27,089 30,525 36,926 36,012 38.229 37,738 35,775 36.672 37,274 38.729 37,694 37,956 37,210 28 Public utilities and other 48,323 52,156 53,294 51,207 53,582 53,311 53,820 54.709 54,972 55,068 54,768 54,293 54,369 29 Public 127,092 131,250 138,649 141,180 139,304 135,882 137,268 138.676 138,448 136,926 142,238 141,925 138,893 30 Military 2,983 2,541 2,550 2,232 2,408 2,548 2,580 2.738 2,767 2,451 2,794 2,696 2,283 31 Highway 36.319 37.898 41,177 41,473 42,356 40,694 41,531 41.087 41,715 40,126 39,400 44,413 42,404 32 Conservation and development 6.391 5.807 5,475 6,114 5,134 5,242 4,952 5.002 5.469 6,177 4,899 5,312 5,870 33 Other 81.399 85.005 8°,446 91.361 • 89.406 87,398 88,205 89.849 88.497 88,172 95,145 89,504 88,336 1. Not a! 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 pnces 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. AH 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 months earlier (annual rate) Change from 1 month earlier Index level, Item 1997' Jan. 1997 1998 1998' Jan. Jan. June Sept. Sept. Oct. Nov. Dec. CONSUMER PRICES' (1982-84=100) 1 All items 3.0 1.5 1.5 2.3 .1 161.6 2 3 F E o n o e d rgy items 7 3 . . 9 6 -6 2 . . 5 2 - - 1 . . 3 4 -11 2 . . 8 1 2 8. . 3 8 -7 1 . . 7 5 . . 1 9' -. . 2 3 ' ' .s1r' -1. . 8 0 ' ' -2. . 4 3 1 1 5 0 9 5 . . 9 9 4 All items less food and energy. 2.5 2.2 2.2 2.6 1.7 2.4 .2 .2 .1r .2 .2 171.2 5 Commodities .9 .4 .8 .6 -.3 .6 .r .1 .ff .1 142.0 6 Services 3.3 3.0 3.1 3.1 2.6 3.3 .3 .2' .3' 187.9 .2 PRODUCER PRICES (1982=100) 7 Finished goods 2.5 -1.8 -1.8 -3.0 1.2 -1.2 .4' .1 -.2 -.7 130.2 8 Consumer foods 2.6 -1.0 .0 -3.5 -1.5 .9 .0' .6' -.3' -.4 132.8 9 Consumer energy 10.2 -10.5 -11.8 -13.0 6.0 -6.1 -.1' -.6' -3.7 77.4 10 Other consumer goods .3 .6 -.6 1.7 .0 .1 -.1 .0' -.1 145.6 11 Capital equipment -.7 .0 -.9 .6 -1.7 -.1 -.1 -.2 -.1 138.0 Intermediate materials 12 Excluding foods and feeds -1.5 -1.3 -1.6 .6 -.6 .2' -.3' -.5 124.5 13 Excluding energy -.5 .] .6 .3 .6 .0 .If -.1 -.1 1343 Crude materials 14 Foods -2.2 -6.1 -4.1 -10.8 -5.0 3.3 -.3' .5' .3' Xf -3.3 105.4 15 Energy 52.9 -35.3 -75.5 11.3 21.8 1.0 4.4' 9.3r 5.0 -12.6 -7.3 77.3 16 Other -3.4 -4.2 12.5 -3.7 .3 -7.9 -.7' .2' -1.4' -2.2 150.1 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 • April 1998 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1996 1997 Account 1995 1996 1997 Q4 Ql Q2 Q3 Q4 GROSS DOMESTIC PRODUCT 1 Total 7 265 4 7 636 0 8 083.4 7 792 9 7 933 6 8 034 3 8 124.3 8 241 5 Bv source 2 Personal consumption expenditures 4,957.7 5,207.6 5,488.6 5.308.1 5.405.7 5,432.1 5,527.4 5,589.3 608.5 634.5 659.4 638.2 658.4 644.5 667.3 667.6 4 Nondurable goods 1,475.8 1,534.7 1.592.7 1,560.1 1,587.4 1,578.9 1.600.8 1,603.9 2 873 4 3 038 4 3 216 5 3 109 8 3 159.9 3 208 7 3 259 3 3 3179 6 Gross private domestic investment 1,038.2 1,116.5 1,237.6 1,151.1 1,193.6 1,242.0 1.250.2 1,264.5 7 Fixed investment 1,008.1 1,090.7 1,173.0 1,119.2 1.127.5 1,160.8 1,201.3 1,202.4 723.0 781.4 845.4 807.2 811.3 836.3 872.0 862.3 200.6 215.2 230.2 227.0 227.4 226.8 232.9 233.7 10 Producers' durable equipment 522.4 566.2 615.2 580.2 583.9 609.5 639.1 628.5 11 Residential structures 285.1 309.2 327.5 312.0 3! 6.2 324.6 329.3 340.1 12 Change in business inventories 30.1 25.9 64.6 31 9 66.1 81.1 48.9 62.1 13 Nonfarm 38.1 23.0 57.8 28.7 62.2 74.9 40.9 53.0 -86.0 -94.8 -96.7 -88.6 -98.8 -88.7 -111.3 -87.9 818.4 870.9 958.8 904.6 922.2 960.3 965.8 986.9 904 5 965 7 1 055 5 993 ? 1 021 0 1 049 0 1 077 1 1 074 8 17 Government consumption expenditures and gross investment 1.355.5 1.406.7 1,453.9 1.422.3 1,433.1 1 449 0 1,457.9 1.475.6 18 Federal 509.6 520.0 524.8 517.6 516.1 526.1 525.7 531.1 19 State and local 846.0 886.7 929.1 904.7 917.0 923.0 932.3 944.4 Bv major type of product 20 Final sales, total 7,235 1 7 610 2 8,018.8 7,761.0 7,867.4 7,953.2 8,075.3 8,179 3 21 Goods 2,637.9 2.759.3 2,880.6 2,795.0 2,838.4 2,854.9 2,903.2 2,925.7 22 Durable 1,133.9 1.212.0 1,284.9 1,233.5 1,248.0 1,275.3 1,305.3 1.310.9 23 Nondurable 1,503.9 1,547.3 1,595.7 1,561.5 1,590.4 1,579.6 1,597.9 1,614.8 24 Services 3,980.7 4.187.3 4,432.8 4,282.7 4,338.2 4,400.1 4,462.3 4,530.4 616 8 663 6 705 5 683 3 690 8 698 ** 709 8 723 2 30.1 25.9 64.6 31.9 66.1 81.1 48.9 62.1 27 Durable goods 29.1 16.9 30.8 -1.1 31.8 46.8 18.6 25.9 2S Nondurable goods 1.1 9.0 33.8 33.0 34.3 34.4 30.3 36.2 MEMO 29 Total GDP in chained 1992 dollars 6 742 1 6 928 4 7 191 4 7 017 4 7 101 6 7 159 6 7 214 0 7 290 3 NATIONAL INCOME 30 Total 5,912.3 6,254.5 n.a. 6.376.5 6,510.0 6,599.0 6,699.6 n.a. 31 Compensation of employees 4,215.4 4,426.9 4,703.4 4.520.7 4,606.3 4.663.4 4,725.2 4.818.6 3,442.6 3,633.6 3,878.4 3.718.0 3,792.7 3.842.7 3,897.3 3 980 8 623.0 642.6 665.4 648.9 657.8 662.0 667 7 674.2 34 Other 2,819.6 2,991.0 3,213.0 3,069.0 3.134.9 3,180.8 3.229.6 3,306.7 772.9 793.3 825.0 802.7 813.6 820.7 827.9 837.7 36 Employer contributions for social insurance 366.0 385.7 408.4 393.6 401.3 405.6 410.2 416.4 406 8 407 6 416 6 409 1 412 3 415 1 417 7 4^1 4 38 Proprietors' income' 489.0 520.3 544.7 528.3 534.6 543.6 547.2 553.3 465.5 483.1 503.8 487.9 494.4 500.0 506.3 514.4 40 Farm' 03 4 37 2 40 9 40 4 40 ^ 43 6 40 9 39 0 41 Rental income of persons2 132.8 146.3 148.1 149.2 149.0 148.7 148.0 146.6 42 Corporate profits' 6S0.0 735.9 n.a 747.8 779 6 795.1 827.3 n.a 622.6 676.6 n.a. 680.0 708.4 719.8 753.4 n.a. 44 Inventory valuation adjustment -24.3 -2.5 4.9 3.3 3.5 5.9 3.6 6.5 45 Capital consumption adjustment 51.6 61.8 69.7 64.4 67.7 69.4 70.3 71.3 46 Net interest 425.1 425.1 n.a. 430.6 440.5 448.1 451.8 n.a. !. 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 Q4 Q2 Q3 Q4 PERSONAL INCOME AND SAVING Total persona] income 6,150.8 6,495.2 6,874.4 6,618.4 6,746.2 6,829.1 6,906.9 7,015.4 Wage and salary disbursements 3,429.5 3,632.5 3,877.2 3,716.9 3,791.5 3,841.6 3.896.1 3,979.7 Commodity-producing industries 864.4 909.1 960.1 927.8 942.9 952.8 961.4 983.5 Manufacturing 648.4 674.7 705.9 685.6 694.1 700.3 706.0 723.1 Distributive industries 783.1 823.3 876.0 840.6 856.8 867.0 880.8 899.6 Service industries 1,159.0 1,257.5 1,375.6 1,299.5 1,334.1 1,359.8 1.386.3 1,422.4 Government and government enterprises 623.0 642.6 665.4 648.9 657.8 662.0 667 7 674.2 Other labor income 406.8 407.6 416.6 409.1 412.3 415 I 417.7 421.4 Proprietors' income1 489.0 520.3 544.7 528.3 534.6 543.6 547.2 553.3 Business and professional1 465.5 483.1 503.8 487.9 494.4 500.0 506.3 514.4 Farm1 23.4 37.2 40.9 40.4 40.2 43.6 40.9 39.0 Rental income of persons 132.8 146.3 148.1 149.2 149.0 148.7 148.0 146.6 Dividends 251.9 291.2 321.5 295.2 312.5 318.3 324.5 330.7 Personal interest income 718.9 735.7 768.8 749.8 757.2 766.1 772.6 779.1 Transfer payments 1,015.0 1,068.0 1,121.1 1,081.5 1,107 2 1,117.0 1,125.7 1,134.8 Old-age survivors, disability, and health insurance benefits 566.7 545.6 507.8 537.6 558.9 564.4 569.4 574.1 LESS: Personal contributions for social insurance 323.6 311.5 293.1 306.3 318.2 321.3 324.8 330.2 EQUALS: Personal income 6.874.4 6,618.4 6,150.8 6,495.2 6,746.2 6,829.1 6,906.9 7,015.4 LESS: Personal tax and nontax payments 987.9 922.6 795.1 886.9 955.7 979.2 998.0 1,018.5 EQUALS: Disposable personal income 5,886.6 5,695.8 5,355.7 5,608.3 5,790.5 5,849.9 5,908.9 5,996.9 LESS: Personal outlays 5,661.0 5,475.4 5,101.1 5,368.8 5,574.6 5,602.8 5,700.8 5,765.8 EQUALS: Personal saving 225.6 220.4 254.6 239.6 215.9 247.0 208.2 231.1 MEMO Per capita (chained 1992 dollars) Gross domestic product 25,615.7' 26,085.8 26,843.5 26.331.6 26.597.8 26,765.0 26,897.9 27,121.5 Personal consumption expenditures 17,459.2' 17,748.7' 18,177.2 17,847.8 18.045.2 18,053.9 18.255.7 18,359.3 Disposable personal income 18,861.0 19,116.0 19,497.0 19,152.0 19,331.0 19,439.0 19,518.0 19,700.0 26 Saving rate (percent) 4.2 3.5 3.9 GROSS SAVING 27 Gross saving 1,165.5 1,267.8 n.a. 1303.0 1,332.9 1,396.9 1,411.6 28 Gross private saving . 1,093.1 n.a. 1,131.4 1,134.0 1,178.1 1,159.6 29 Personal saving 254.6 239.6 225.6 220.4 215.9 247.0 231.1 30 Undistributed corporate profits' 172 4 202.1 n.a. 212.6 211.5 217.6 230.0 n.a. 31 Corporate inventory valuation adjustment -24.3 -2.5 4.9 3.3 3.5 5.9 3.6 6.5 Capital consumption allowances 32 Corporate 428.9 452.3 475.7 462.0 467.4 472.6 478.0 484.8 33 Noncorporate 224.1 230.5 241.3 235.2 238.0 239.7 242.4 245.1 34 Gross government saving 72.4 142.3 n.a. 171.6 198.9 218.8 251.9 35 Federal -103.6 -39.3 n.a. -5.9 15.9 34.7 60.8 36 Consumption of fixed capital 70.9 71.2 71.6 71.3 71.4 71.5 71.6 71.9 37 Current surplus or deficit (-), national accounts. . . -174.4 -110.5 n.a. -77.1 -55.5 -36.8 -10.8 n.a. 38 Stale and local 176.0 181.5 n.a. 177.5 182.9 184.1 191.1 n.a. 39 Consumption of fixed capital 72.9 76.2 79.5 772 78.2 79.2 79.7 80.8 40 Current surplus or deficit (—), national accounts. . . 103.1 105.3 n.a. 100.4 104.7 104.9 111.4 n.a. 41 Gross investment 1,137.2 1,207.9 1,243.5 1,268.6 1,323.4 1,308.4 42 Gross private domestic investment 1,038.2 1.116.5 1,237.6 1,151.1 1,193.6 1,242.0 1,250.2 1,264.5 43 Gross government investment 213.4 224.3 226.9 225.3 223.3 227 4 227.1 229.7 44 Net foreign investment -114.4 -132.9 n.a. -132.9 -148.4 -146.0 -168.9 45 Statistical discrepancy -28.2 -59.5 -64.3 -73.5 -103.2 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 • April 1998 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 1997 Item credits or debits Q3 Ql Q2 Q3P 1 Balance on current account -133,538 -129.095 -148,184 -42,833 -36,874 -39,972 -37,852 -42,156 2 Merchandise trade balance -166,192 -173.560 -191,170 -52,493 -48,190 -49,787 -47,134 -51,549 Merchandise exports 502,398 575.871 612,069 150.764 157,846 162,527 171,411 170,579 Merchandise imports -668,590 -749,431 -803,239 -203,257 -206,036 -212,314 -218.545 -222,128 Military transactions, net 1,874 3,866 3,786 792 1,295 437 1,048 1,040 Other service transactions, net 59,902 67,837 76,344 19.185 20,697 20,050 20,441 20,878 Investment income, net 9,723 6,808 2,824 -1,370 1,250 -1,990 -3,247 -3,321 U.S. government grants -15,671 -11,096 -14,933 -2,690 -5,499 -2,109 -2,245 -2,252 U.S. government pensions and other transfers -4,544 -3,420 -4,331 -1,064 -1,050 -1,083 -1,128 -1,099 Private remittances and other transfers -18,630 -19,530 -20,704 -5,193 -5,377 -5,490 -5,587 -5,853 11 Change in U.S. government assets other than official reserve assets, net (increase, —) -352 -549 -690 162 -284 -21 -268 482 12 Change in U.S. official reserve assets (increase, -) . 5,346 -9,742 6,668 7,489 -315 4,480 -236 -730 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -441 -808 370 848 -146 72 -133 -139 15 Reserve position in International Monetary Fund . 494 -2,466 -1,280 -183 -28 1,055 54 -463 16 Foreign currencies 5,293 -6,468 7,578 6,824 -141 3.353 -157 -128 17 Change in U.S. private assets abroad (increase, -).. -165,510 -296,916 -358,422 -85,193 -153,837 -132,428 -90,431 -101,316 18 Bank-reported claims3 -4,200 -75,108 -98,186 -33,589 -66,657 -62,026 -27,947 -22,760 19 Nonbank-reported claims -31,739 -34,997 -64,234 -17,294 -26,115 -29,466 -3,984 20 U.S. purchases of foreign securities, net -60,309 -100.074 -108,189 -23,206 -30,200 -14,510 -21,841 -37,995 21 U.S. direct investments abroad, net -69,262 -86,737 -87,813 -11,104 -30,865 -26,426 -36,659 -24,661 22 Change in foreign official assets in United States (increase, +) 40,385 110,729 122,354 24.089 33,097 28.891 -5,374 22,498 23 US. Treasury securities 30,750 68,977 111.253 25.472 33,564 23.289 -12,108 6,485 24 Other U.S. government obligations 6,077 3,735 4,381 1,217 1,854 651 644 2,663 25 Other U.S. government liabilities" 2,366 744 720 907 160 478 654 16 26 Other U.S. liabilities reported by U.S. banks3 3,665 34,008 4,722 -1,922 -4,270 7,698 4,536 12,705 27 Other foreign official assets5 -2,473 3,265 1,278 -1,585 1,789 -3,225 900 629 28 Change in foreign private assets in United States (increase, +) 256,952 340,505 425,201 134,540 161,482 153,347 148,389 147,042 29 U.S. bank-reported liabilities3 104,338 30,176 9,784 2,040 38,960 17,387 28,100 14,102 30 U.S. nonbank-reported liabilities -7,710 34,588 31,786 20,610 -2,912 15,210 -7,916 31 Foreign private purchases of U.S. Treasury securities, net 57,674 111,848 172,878 50,798 75,326 51,289 49,915 43,494 32 Foreign purchases of other U.S. securities, net 56,971 96,367 133,798 35,115 32,447 38,820 51,682 60,770 33 Foreign direct investments in United States, net 45,679 67,526 76,955 25,977 17,661 30,641 26,608 21,076 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy -3,283 -14,931 -46,927 -38,254 -3,269 -14,297 -14,228 -25,820 36 Due to seasonal adjustment -7,830 2,669 7,059 -1,713 -8,560 37 Before seasonal adjustment -3,284 -14,931 -30,424 -5,938 -21,356 -12,515 -17,260 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) 5,346 -9,742 6,668 7,489 -315 4,480 -236 -730 39 Foreign official assets in United Stales, excluding line 25 (increase, +) 38,019 109,985 121,634 23,182 32,937 28,413 -6,028 22,482 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) -1,529 4,239 12,278 5,263 3,315 9,272 2,287 3,170 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 Item 1995 1996 1997 June July Aug. Sept. Oct. Nov. Dec.1" 1 Goods and services, balance -101,857 -111,040 -113,747 -8,337 -9.744 -9,055 -11,228 -9,091 -8,676 -10,785 2 Merchandise -173.560 -191,170 -198,935 -15,244 -16.848 -16,559 -18,538 -16,479 -15,722 -17.643 3 Services 71,703 80,130 85,188 6,907 7.104 7,504 7,310 7,388 7,046 6,858 4 Goods and services, exports 794.610 848,833 932,322 78,365 77,845 78,890 78,116 80,230 78.971 80,019 5 Merchandise 575.871 612,069 678,348 57,378 56.745 57,326 56,370 58,450 57.586 58,674 6 Services 218,739 236,764 253,974 20,987 21.100 21,564 21,746 21,780 21.385 21,345 7 Goods and services, imports -896.467 -959,873 -1,046.068 -86,702 -87.589 -87,945 -89,344 -89,321 -87.647 -90,804 8 Merchandise -749,431 -803,239 -877,282 -72,622 -73.593 -73.885 -74,908 -74.929 -73.308 -76,317 9 Services -147,036 -156,634 -168.786 -14,080 -13,996 -14.060 -14.436 -14.392 -14,339 -14,487 1. Data show monthly values consistent with quarterly figures in the U.S. balance of SOURCE. FT900, U.S. Department of Commerce. Bureau of ihe Census and Bureau of payments accounts. Economic Analysis. 3.12 US. RESERVE ASSETS Millions of dollars, end of period 1997 1998 Asset 1994 1995 1996 June July Aug. Sept. Oct. Nov. Dec. Jan.p 1 Total 74,335 85,832 75,090 67,813 66,120 66,640 67,148 68,036 67,112 69,954 70,004 2 Gold stock, including Exchange Stabilization Fund1 11.051 11,050 11,049 11.050 11.051 11,050 11.050 11.050 11.050 11,050 11,047 3 Special drawing rights2'3 10,039 11,037 10,312 10.023 9,810 9,985 9.997 10,132 10.120 10.027 9,998 4 Reserve position in International Monelary Fund2 12,030 14,649 15,435 13,805 13.677 13,959 14,042 14,243 14,571 18.071 18.039 5 Foreign currencies4 41,215 49.096 38,294 32,935 31.582 31.646 32,059 32,611 31,371 30.809 30,920 1. Gold held "under earmark" at Federal Reserve Banks for foreign and international SDR holdings and reserve positions in the IMF also have been valued on this basis since July accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold 1974, stock is valued at $42.22 per fine troy ounce. 3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the year 2. Special drawing rights (SDRs) are valued according to a technique adopted by the indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—$710 million; 1979— International Monetary Fund (IMF) in July 1974. Values are based on a weighted average of $1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net transactions in SDRs. exchange rates for the currencies of member countries. From July 1974 through December 4, Valued at current market exchange rates. 1980, sixteen currencies were used; since January 1981, five currencies have been used. U.S. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1997 1998 Asset 1994 1995 1996 June July Aug. Sept. Oct. Nov. Dec. Jan.p 1 Deposits 250 386 167 178 175 169 188 190 167 457 215 Held in custody 2 U.S. Treasury securities2 441.866 522,170 638,049 652,077 653,157 660.461 655,406 638,100 635,092 620,885 625,219 3 Earmarked gold3 12.033 11,702 11,197 10,794 10,793 10.793 10,793 10,793 10,793 10.763 10,709 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 tine 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 • April 1998 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period July Aug. Sept. 1 Tola]1. 630,918 758,624 781,245 781,414 793,548 803,621 798,596 791,253 By type 2 Liabilities reported by banks in the United States'. . 107,394 113.098 125,785 129,797 128,628 138,176 153,704 147,745 134,825 3 U.S. Treasury bills and certificates3 168,534 198 921 163,950 161,270 165,453 161,610 153,283 150,102 148,301 U.S. Treasury bonds and notes 4 Marketable 293,690 379,497 425,347 422,934 431,169 434,260 421,412 422,879 422,568 5 Nonmarketable4 6,491 5,968 5,767 5,804 5,841 5,879 5,919 5,955 5,994 6 U.S. securities other than U.S. Treasury securities5 54,809 61,140 60,396 61,609 62,457 63,696 64,278 64,572 64,789 By area 1 Europe 222,406 257,915 274,026 272.159 272,566 276,594 280,489 272,630 262,928 8 Canada 19,473 21,295 20,582 21.112 20,959 21,233 19,418 19,275 18,749 9 Latin America and Caribbean 66,721 80,623 88,838 93,117 94,262 94,754 90,190 94,134 97,310 10 Asia 311,016 385,484 382,911 380,702 390,584 394,551 391.541 389,839 380,787 11 Africa 6,296 7.379 8.890 8.882 8,934 10,218 9,812 9,542 10,118 12 Other countries 5,004 5,926 5,996 5,440 6,241 6,269 7,144 5.831 6,583 1. Includes the Bank for International Settlements. Venezuela, beginning December 1990, 30-year maturity issue; Argentina, beginning April 2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, 1993, 30-year maturity issue. negotiable time certificates of deposit, and borrowings under repurchase agreements. 5. Debt securities of U.S. government corporations and federally sponsored agencies, and 3. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official U.S. corporate stocks and bonds. institutions of foreign countries. SOURCE. Based on U.S. Department of the Treasury data and on data reported to the 4. Excludes notes issued to foreign official nonreserve agencies. Includes current value of department by banks (including Federal Reserve Banks) and securities dealers in the United zero-coupon Treasury bond issues to foreign governments as follows: Mexico, beginning States, and on the 1989 benchmark survey of foreign portfolio investment in the United March 1988, 20-year maturity issue and beginning March 1990, 30-year maturity issue; States. 3.16 LIABILITIES TO, AND CLAIMS ON, FOREIGNERS Reported by Banks in the United States' Payable in Foreign Currencies Millions of dollars, end of period 1996 1997 Item 1993 1994 1995 Dec. Mar. June Sept. 1 Banks' liabilities 78,259 89,258 109,713 103,383 109,238 109,433 118,477 62,017 60,711 74,016 66,018 72,589 84,623 89,568 20,993 19,661 22.696 22,467 24,542 26,461 28,961 41,024 41,050 51,320 43,551 48,047 58,162 60,607 5 Claims of banks' domestic customers 12,854 10,878 6,145 10,978 10,196 10,265 10,210 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

Bank-Reported Data A53 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period June July Aug. Sept. Nov. Dec. BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 1,099,549 1,162,148 1,277,200 1,184,712 1,200,323 1,192,443 1,198,563 1,225,798' 1,240,322 1,277,200 2 Banks' own liabilities 753,461 758,998 877,082 801,908 807.103 788,607 797,480 824,419' 834,048 877,082 3 Demand deposits 24,448 27,034 32,079 29,545 27,655 27,107 28,332 33,551 35,742 32,079 4 Time deposits2 192,558 186,910 193,243 186,904 189,352 190,465 187,475 193,424 191,691 193,243 5 Other' 140,165 143,510 167,704 166,849 177,279 162,026 171,113 193,960' 181,006 167,704 6 Own foreign offices4 396,290 401,544 484,056 418.610 412,817 409,009 410,560 403,484' 425,609 484.056 7 Banks" custodial liabilities5 346,088 403,150 400,118 382,804 393,220 403,836 401,083 401.379 406.274 400,118 8 U.S. Treasury bills and certificates6 197,355 236,874 193,446 205.792 202.630 209,121 205,946 200.215 196.476 193,446 9 Other negotiable and readily transferable instruments 52,200 72,011 93,483 75,235 88,057 89,096 90,686 95,108 99,882 93,483 10 Other 96,533 94,265 113,189 101,777 102,533 105,619 104,451 106,056 109,916 113,189 11 Nonmonetary international and regional organizations* 11,039 13,972 11,528 13,952 11,796 10,569 11,806 13,914 12.469 11,528 12 Banks' own liabilities 10,347 13,355 11,324 13,496 11,384 10,068 11,524 13,509 12.205 11,324 13 Demand deposits 21 29 16 775 86 217 771 36 43 16 14 Time deposits 4,656 5,784 5,254 6,669 4,726 4,879 5,967 5,161 6.310 5,254 15 Other3 5,670 7,542 6,054 6,052 6,572 4,972 4,786 8,312 5.852 6,054 16 Banks' custodial liabilities5 692 617 204 456 412 501 282 405 264 204 17 U.S. Treasury bills and certificates6 350 352 69 65 47 166 53 148 46 69 18 Other negotiable and readily transferable instruments 341 265 133 383 365 314 229 257 133 19 Other 1 0 2 0 21 0 0 2 20 Official institutions9 275,928 312,019 283,126 289,735 291,067 294,081 299,786 306,987 297,847 283,126 21 Banks' own liabilities 83,447 79,406 101,409 97,680 102.366 99,111 105,354 118,054 109.937 101,409 22 Demand deposits 2,098 1,511 2.311 1,482 1.711 2,198 1,745 2,034 1.891 2.311 23 Time deposits" 30,717 33,336 41.222 39,849 42,145 40,301 39,884 41,670 39.666 41,222 24 Other3 50,632 44,559 57,876 56,349 58,510 56,612 63,725 74,350 68.380 57,876 25 Banks' custodial liabilities5 192.481 232,613 181,717 192,055 188,701 194,970 194,432 188,933 187,910 181,717 26 U.S. Treasury bills and certificates 168.534 198,921 148,301 163,950 161,270 165,453 161,610 153,283 150,102 148,301 27 Other negotiable and readily transferable instruments7 23,603 33,266 33,211 27.676 26,878 29,349 32,315 35,236 37.374 33,211 28 Other 344 426 205 429 553 168 507 414 434 205 29 Banks10 691,412 694,835 815,388 727,626 734,459 730,322 723,002 733,017' 765,607 815,388 30 Banks' own liabilities 567,834 562,898 641,626 575,788 573,819 566,366 562,218 568,398' 595,677 641,626 31 Unaffiliated foreign banks 171,544 161,354 157,570 157,178 161,002 157,357 151,658 164,914 170,068 157,570 32 Demand deposits 11,758 13,692 17,515 14,800 13,700 13,323 13,852 18,354 21,317 17,515 33 Time deposits2 103,471 89,765 83,804 79,281 80,131 81,890 76,443 83,172 84,591 83,804 34 Other1 56,315 57,897 56,251 63,097 67.171 62,144 61,363 63,388 64,160 56,251 35 Own foreign offices4 396.290 401,544 484,056 418,610 412.817 409,009 410,560 403.484' 425,609 484,056 36 Banks' custodial liabilities5 123,578 131,937 173,762 151,838 160.640 163,956 160,784 164,619 169,930 173,762 37 U.S. Treasury bills and certificates6 15,872 23,106 31,915 27,115 28.642 30,629 30.012 33.085 32.995 31,915 38 Other negotiable and readily transferable instruments 13,035 17,027 35,333 28,866 35.522 33.960 32,886 32,065 33.826 35,333 39 Other 94,671 91,804 106,514 95,857 96.476 99.367 97,886 99,469 103.109 106.514 40 Other foreigners 121,170 141,322 167,158 153,399 163.001 157,471 163,969 171,880' 164,399 167,158 41 Banks' own liabilities 91,833 103,339 122,723 114.944 119.534 113.062 118,384 124,458' 116.229 122,723 42 Demand deposits 10,571 11,802 12,237 12,488 12.158 11,369 11,964 13,127 12.491 12,237 43 Time deposits2 53,714 58,025 62,963 61,105 62.350 63,395 65,181 63,421 61.124 62,963 44 Other3 27,548 33,512 47,523 41.351 45.026 38,298 41,239 47,910' 42.614 47,523 45 Banks' custodial liabilities5 29,337 37,983 44,435 38,455 43.467 44,409 45,585 47.422 48.170 44,435 46 U.S. Treasury bills and certificates6 12,599 14,495 13,161 14,662 12.671 12,873 14,271 13,699 13,333 13,161 47 Other negotiable and readily transferable instruments 15,221 21,453 24,806 18,310 25,292 25,473 25,256 27,550 28,465 24,806 48 Other 1,517 2,035 6,468 5,483 5.504 6,063 6,058 6,173 6,372 6,468 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 9,103 14,573 16,046 15,771 16,453 16,040 15,872 15.485 16,553 16.046 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 10 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 Stales. Dlher lhan 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 • April 1998 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1—Continued June July Aug. Sept. Oct. Nov. Dec 50 Tola), all foreigners 1,099,549 1,162,148 1,277,200 1,184,712 1,200323 1,192,443 1,198,563 U25.798' 1,240,322 1,277,200 51 Foreign countries 1,088310 1,148,176 1,265,672 1,170,760 1,188,527 1,181,874 1,186,757 1.211,884' 1,227,853 1,265,672 52 Europe 362.819 376,590 420.291 395,718 411.680 407,700 402,063 418.988 425.619 420.291 53 Austria 3,537 5.128 2,721 3,252 3,257 3,404 2,691 2.679 2,319 2,721 54 Belgium and Luxembourg 24.792 24,084 41,003 41,286 45,291 46,063 43,436 46.067 46.258 41.003 55 Denmark 2.921 2,565 1,514 2,098 2.289 1,736 2,867 2,359 2.157 1,514 56 Finland 2,831 1,958 2,246 1,851 1,814 1,751 2,163 1,997 1.969 2,246 57 France 39,218 35,078 46,607 41,211 43,464 41,213 43,065 45.057 45,688 46,607 58 Germany 24,035 24.660 23,737 26,086 24,978 22,626 25,201 22,117 23,040 23,737 59 Greece 2,014 1,835 1,515 1,701 1,726 1,592 2,086 2.075 1,229 1,515 60 Italy 10,868 10,946 11.378 10,191 9.490 9,179 9,852 11.449 10,713 11,378 61 Netherlands 13,745 11,110 7,385 8.292 8.440 7,823 8,388 8,119 7,010 7,385 62 Norway 1,394 1.288 317 841 846 604 1.321 1,022 1.793 317 63 Portugal 2,761 3 562 2,262 2,582 2.075 1,931 1,958 1.888 1.987 2.262 64 Russia 7,948 7,623 7,968 12,302 13.604 13,216 12.784 11.722 6,938 7.968 65 Spain 10,011 17,707 18,989 16,274 15,158 15,203 17,796 21,934 20,921 18,989 66 Sweden 3,246 1,623 1,628 1,514 1.925 2,317 2,024 1,348 1,614 1,628 67 Switzerland 43,625 44.538 39,258 39,124 44,283 41,076 36,862 37,075' 39,665 39,258 68 Turkey 4,124 6,738 4,054 6,545 6,594 5,933 4,736 4,661 4,218 4,054 69 United Kingdom 139,183 153,420 181,824 156,127 161,672 167,914 158,849 165,199 177,781 181,824 70 Yugoslavia" 177 206 239 228 267 244 243 233 234 239 71 Other Europe and other former USSR. 26.389 22,521 25.646 24,213 24.507 23,875 25,741 31,987' 30,085 25,646 72 Canada 30,468 38,920 28,341 37,976 30,445 27.629 29,592 30,282 30,921 28.341 73 Latin America and Caribbean 440,213 467,529 530.332 496.530 500.824 496.658 502.648 501.854 499.265 530,332 74 Argentina 12,235 13,877 20,193 18.229 17.100 18.033 16.643 17,557 18.214 20,193 75 Bahamas 94,991 88,895 113,016 90,166 92,136 86,271 86.914 89,630 92,389 113,016 76 Bermuda 4,897 5,527 7,036 5.358 5,919 7,786 6.084 6,209 6,012 7,036 77 Brazil 23,797 27,701 30,107 26.058 28,340 31,567 33,575 31,675 32,609 30,107 78 British West Indies .. . 239,083 251,465 270,407 272,447 265,291 268,485 273,570 270.004 263,770 270,407 79 Chile 2,826 2,915 4,072 3,371 3.440 3,353 3,327 3,579 3,283 4,072 80 Colombia 3,659 3,256 3,630 2,836 2,652 2,587 2,657 3,395 3,266 3,630 81 Cuba 8 21 66 55 54 60 55 71 57 66 82 Ecuador 1,314 1,767 2,078 1,466 1.640 1,512 1,508 1.671 1,704 2,078 83 Guatemala 1,276 1,282 1,494 1,497 1 455 1,389 1,449 1.399 1,361 1.494 84 Jamaica 481 628 450 465 532 534 523 481 445 450 85 Mexico 24,560 31,240 33,971 33.111 34 779 30,804 32,640 32.748 32,668 33,971 86 Netherlands Antilles . . 4,673 6,099 5,078 6.134 10,986 8,286 7,566 6.059 4.987 5,078 87 Panama 4,264 4,099 4,239 3,976 4,424 3,805 3,835 4,107 4,291 4,239 88 Peru 974 834 893 919 958 1,006 904 917 907 893 89 Uruguay 1,836 1,890 2,382 2,153 2,392 2,070 1,997 2.184 2,247 2,382 90 Venezuela 11,808 17,363 21,539 19.197 19,124 20,159 20,580 20,639 22.050 21,539 91 Other 7,531 8,670 9,681 9.092 9,602 8,951 8,821 9,529 9,005 9,681 92 Asia 240,595 249,083 269.157 222,848 227.759 231,017 234,560 242,074' 255,047 269,157 China 93 Mainland 33.750 30,438 18,238 7,283 9,480 10,450 12.664 16.244 17,443 18.238 94 Taiwan 11,714 15,995 11,700 12,363 13,464 11,803 13.460 15.207 13,586 11.700 95 Hong Kong 20,197 18,789 17,759 20,236 18.737 17,647 18,533 19,755' 18.886 17,759 96 India 3,373 3,930 4,567 4,241 4,555 4,474 4,451 5,131 4,913 4.567 97 Indonesia 2,708 2,298 3,554 2,531 2,817 3,737 2,810 4,568 3,092 3,554 98 Israel 4,041 6,051 6,283 5,751 5,180 5,202 4,534 4,200 3,745 6,283 99 Japan 109,193 117,316 143,404 118,413 118,410 119,581 118,536 116,852 133,697 143.404 100 Korea (South) 5,749 5,949 12,955 7,657 8,928 9,646 9,327 8,597' 9,982 12.955 101 Philippines 3,092 3,378 3,250 2,469 2.908 2,541 2,409 2,505 2,558 3.250 102 Thailand 12,279 10.912 6.501 6,159 5,262 4,956 6,545 6,988 5,854 6,501 103 Middle Eastern oil-exporting countries'" 15.582 16,285 14.959 13,086 14.306 15,325 14,279 14,436 14,017 14.959 104 Other 18.917 17,742 25,987 22,659 23,712 25,655 27,012 27.591 27,274 25.987 7,641 8,116 10,343 9,970 9,734 9,731 10,380 10,310 9,520 10.343 106 Egypt 2,136 2.012 1,663 1,986 1.921 1,973 2.050 1,742 1,836 1.663 107 Morocco 104 112 138 65 112 94 99 105 69 138 108 South Africa 739 458 2,158 1,758 1,697 1.694 2,047 2,028 1,615 2,158 109 Zaire 10 10 10 17 8 7 14 3 5 10 110 Oil-exporting countries14 . 1.797 2,626 3,060 3,153 2.981 3,211 3,280 3,194 2,948 3,060 111 Other 2.855 2,898 3,314 2,991 3.015 2,752 2,890 3,238 3,047 3,314 112 Other 6,774 7,938 7,208 7,718 8,085 9,139 7,514 8,376 7,481 7,208 113 Australia 5.647 6,479 6,304 6,433 6,782 7,917 6,391 7,284 6,283 6.304 114 Other 1.127 1,459 904 1,285 1,303 1,222 1,123 1,092 1,198 904 115 Nonmonetary international and regional organization: 11,039 13,972 11,528 13,952 11,796 10,569 11,806 13,914 12,469 11,528 116 International 9,300 12,099 10,255 12,297 10,341 9,434 10,634 11,943 10,926 10,255 117 Latin American regional16 893 1,339 524 1,071 794 579 708 1,277 1,053 524 118 Other regional17 846 534 749 584 661 556 464 694 490 749 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 iTrucial States). for Internationa] Settlements, which is included in "Other Europe." 14. Comprises Algeria. Gabon. Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A55 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1997 Area or country 1997 June July Aug. Sept. Nov. Dec.11 1 Total, all foreigners 532,444 599,925 704,762 651,457 646,504 650,453 656,676 681,634' 699,515 704,762 2 Foreign countries 530,513 597,321 702,525 649427 645351 648,036 654,633 679,886' 697,029 702,525 3 Europe 132,150 165,769 199,881 192,392 186,365 189,759 199,261 213,886 215,397 199.881 4 Austria 565 1,662 1,385 1,394 1,690 1,739 1,371 1.913 2,034 1,385 5 Belgium and Luxembourg 7,624 6,727 6,739 8,164 8,094 8,124 7,847 8.347 7,461 6,739 6 Denmark 403 492 980 981 806 811 1,082 896 844 980 7 Finland 1,055 971 1.233 1,414 1,247 1,773 1,889 1,808 1,259 1,233 8 France 15,033 15,246 16,235 16,759 18,689 16,232 17,531 17,043 19,893 16,235 9 Germany 9,263 8,472 12,666 10,024 8,351 8,685 11,724 11,617 13,305 12.666 10 Greece 469 568 402 630 461 481 499 463 401 402 11 Italy 5,370 6,457 6,327 7,865 7,443 8,015 7,670 7,146 6,870 6,327 12 Netherlands 5,346 7,117 6,154 10,687 12,050 11,083 11,548 11,504 11,496 6.154 13 Norway 665 808 591 750 745 849 1.713 1,419 2,080 591 14 Portugal 888 418 777 468 439 732 563 615 695 777 15 Russia 660 1.669 1,248 2,020 2,098 2,192 1.927 2,054 2,207 1.248 16 Spain 2,166 3,211 2,941 6,811 6,496 6,175 5,431 6,624 6,338 2.941 17 Sweden 2,080 1,739 1,854 2,539 1,740 1,639 1,659 1,838 1,804 1,854 18 Switzerland 7,474 19,798 28,841 22,523 24,883 24,338 25,393 29.980 29,599 28,841 19 Turkey 803 1,109 1,571 1,392 1,362 1,305 1,410 1.424 1,572 1,571 20 United Kingdom 67,784 85,234 102,876 94,070 84,162 90,226 93,825 102,405 100.870 102,876 21 Yugoslavia^ 147 115 52 75 75 76 75 75 74 52 22 Other Europe and other former U.S.S.R.1 4,355 3,956 7,009 3,826 5,534 5,284 6,104 6,715 6,595 7,009 23 Canada 20,874 26,436 27,168 35,916 26,289 24,442 23,513 22.824' 24.765 27,168 24 Latin America and Caribbean 256,944 274,153 342,812 281,258 300,339 298,786 302,528 303,877' 317,478 342,812 25 Argentina 6,439 7,400 8,914 7,293 7,088 7,277 7,243 8,138 8,757 8,914 26 Bahamas 58,818 71,871 88,372 66,804 69,819 70,031 66,074 73,837 72.739 88,372 27 Bermuda 5,741 4,129 8,782 7,112 8,252 9,829 9,342 8,097 6.552 8,782 28 Brazil 13,297 17,259 20,919 18,757 18,879 19,249 19,422 20,127' 20,382 20,919 29 British West Indies 124,037 105,510 146,353 122,088 134,438 128,373 133,778 133,310' 141,801 146,353 30 Chile 4.864 5,136 7,913 5,599 5,686 5,919 6,235 7.189 7.783 7.913 31 Colombia 4,550 6,247 6,936 6,324 6,419 6,608 6,543 6,862 6,968 6,936 32 Cuba 0 0 0 0 0 0 0 0 3 0 33 Ecuador 825 1,031 1,311 1,132 1,165 1,199 1,218 1,307 1,292 1,311 34 Guatemala 457 620 886 651 679 689 764 760 787 886 35 Jamaica 323 345 674 336 359 375 374 364 405 674 36 Mexico 18,024 18,425 19,144 19,201 19,585 18,680 18,770 18,584 18,904 19,144 37 Netherlands Antilles 9,229 25.209 17,874 14,016 15,759 18,399 20,325 12,274 17,064 17,874 38 Panama 3,008 2,786 4,336 3,183 3,272 3,482 3,566 3,957 4,089 4,336 39 Peru 1,829 2,720 3,490 2,597 2,697 2,850 3,060 3,184 3,456 3,490 40 Uruguay 466 589 626 705 778 702 728 709 651 626 41 Venezuela 1,661 1.702 2,157 1,801 1,734 1,750 1,716 1,636 1,915 2.157 42 Other 3,376 3,174 4,125 3,659 3,730 3,374 3,370 3.542 3,930 4,125 43 Asia 115,336 122,478 122,802 129,761 122,517 124,927 120,807 129,589 129,890 122,802 China 44 Mainland 1,023 1,401 1,566 2,036 2,385 2,574 2,798 2,345 2,102 1.566 45 Taiwan. 1,713 1,894 921 1,851 1,523 1.521 1,250 1,271 1,000 921 46 Hong Kong 12,821 12,802 13,995 16,014 12,247 13,188 13,573 15.343 15,156 13,995 47 India 1,846 1,946 2,205 2,342 2,184 2,110 2,086 2,360 2,501 2,205 48 Indonesia 1,696 1,762 2,564 2,539 2,524 2.579 2,713 2,698 2,746 2,564 49 Israel 739 633 768 631 855 749 907 1,539 1,201 768 50 Japan 61,468 59,967 59,547 59,679 55,592 54,427 52,480 59,437 60,195 59,547 51 Korea (South) 13,975 18.901 16,005 20,606 21,274 21,690 19,978 19,922 19,253 16,005 52 Philippines 1,318 1,697 1,689 2,119 1,723 1,834 1,670 1,455 1,533 1,689 53 Thailand 2,612 2,679 2,260 3,187 2,825 2,641 2,479 2,317 2,180 2,260 54 Middle Eastern oil-exporting countries4 9,639 10,424 10,805 9,115 9,751 9,503 7,988 8,490 8,909 10,805 55 Other 6,486 8,372 10,477 9,642 9.634 12,111 12,885 12,412 13,114 10,477 56 Afric; 2,742 2,776 3,523 3,273 3,125 3,281 3,464 3.342 3.332 3.523 57 Egypt 210 247 247 312 267 288 251 245 282 247 Morocco 514 524 511 465 463 554 547 599 412 511 59 South Africa 465 584 808 602 493 489 655 557 743 808 60 Zaire 1 0 0 0 0 0 0 0 0 0 61 Oil-exporting countries5 552 420 1,204 1,129 1,134 1,178 1,123 I 111 1,091 1,204 62 Other 1,000 1,001 753 765 768 772 830 804 753 63 Other 2,467 5,709 6,339 6,927 6,716 6,841 5,060 6,368 6,167 6,339 64 Australia . 1,622 4,577 5,299 5,042 4,938 5.266 4,314 5,296 4,962 5,299 65 Other 845 1,132 1,040 1,885 1,778 1,575 746 1,072 1.205 1,040 66 Nonmonetary international and regional organizations6 1.931 2,604 2,237 1,930 1,153 2,417 2,043 1,748 2.486 2,237 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 • April 1998 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 Type of claim 1995 1996 1997 June July Aug. Sept. Oct. Nov. Dee.p 1 Total 655,211 743.919 813,714 826,669 2 Banks' claims 532,444 599,925 704.762 651,457 646.504 650,453 656.676 682.894 698.937 704,762 3 Foreign public borrowers 22,518 22,216 20,771 29,399 26,923 28,263 30,287 29,795 28,112 20.771 4 Own foreign offices 307,427 341,574 428,616 379,426 370,506 370,599 374,443 401,467 408,509 428,616 5 Unaffiliated foreign banks 101,595 113,682 109,139 119,545 117.694 115.343 104,749 115,298 122,813 109,139 37,771 33,826 29,635 35,794 36.006 35,436 29,509 30,358 32,373 29,635 7 Other 63,824 79,856 79,504 83,751 81.688 79,907 75,240 84,940 90,440 79,504 8 All other foreigners 100,904 122,453 146,236 123,087 131,381 136,248 147,197 136.334 139,503 146,236 9 Claims of banks' domestic customers3 122,767 143,994 162,257 169,993 58,519 94.591 101.683 11 Negotiable and readily transferable 77,657 instruments4 44,161 50.301 50,291 12 Outstanding collections and other 51.207 20,087 17,365 18,019 15,130 MEMO 13 Customer liability on acceptances 8,410 10,388 11,437 10,854 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 30,717 39,661 n.a. 36,210 38,213 45.342 38,181 39.076 37.395 n.a. 1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are principally of amounts due from the head office or parent foreign bank, and from foreign for quarter ending with month indicated. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. Reporting banks include all types of depository institution as well as some brokers and 3. Assets held by reporting banks in the accounts of their domestic customers. dealers. 4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiar- paper. ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory 5. Includes demand and time deposits and negotiable and nonnegotiable certificates of agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists deposit denominated in U.S. dollars issued by banks abroad. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period Maturity, by borrower and area" June Sept. 1 Total 202,566 202,282 224,932 258,106 276,025 271,894 282,234 By borrower 2 Maturity of one year or less 172,662 170,411 178,857 211,859 223,721 211,140 219,343 3 Foreign public borrowers 17,828 15,435 14,995 15.411 19,876 17,979 21.535 4 All other foreigners 154,834 154,976 163,862 196,448 203,845 193,161 197,808 5 Maturity of more than one year ... 29,904 31.871 46,075 46,247 52,304 60,754 62.891 6 Foreign public borrowers 10,874 7,838 7,522 6,790 8,835 11,220 8,752 7 All other foreigners 19,030 24,033 38,553 39,457 43,469 49,534 54,139 fiv area Maturity of one year or less 8 Europe 57,413 56,381 55,622 55.690 74,888 69,233 69,213 9 Canada 7,727 6,690 6,751 8,339 10,423 10,320 8,460 10 Latin America and Caribbean. .. 60,490 59.583 72,504 103,254 96,892 87,059 99,902 11 Asia 41,418 40,567 40,296 38,078 36,478 38,434 36,030 12 Africa 1,820 1,379 1,295 1,316 1,451 1,899 2,157 13 All other3 3,794 5,811 2,389 5,182 3,589 4.195 3,581 Maturity of more than one year 14 Europe 5,310 4,358 4,995 6,965 9,512 11.835 11,198 15 Canada 2,581 3,505 2,751 2,645 2,934 3,164 3.832 16 Latin America and Caribbean. . . 14,025 15,717 27,681 24,943 26,797 31.001 34,873 17 Asia 5,606 5,323 7,941 9,392 10,773 12.510 10 394 18 Africa 1,935 1,583 1,421 1,361 1,204 1.264 1,236 19 All other3 447 1,385 1.286 941 1,084 980 1.358 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

Bank-Reported Data A57 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks' Billions of dollars, end of period 1996 Area or country 1993 1994 Sept. Mar. Sept. June 1 Total 409.5 499.5 535.3 551.9 574.7 614.9 587.9 646.9 649.2 680.6' 2 G-10 countries and Switzerland . 161.9 191.2 203.0 206.0 203.4 229.0 221.7 229.9 233.0 251.8 3 Belgium and Luxembourg. 7.4 7.2 11.0 13.6 11.0 11.4 11.3 11.7 14.1 9.4' 4 France 12.0 19.1 18.0 19.4 17.9 18.0 17.4 16.6 19.7 17.9 5 Germany 12.6 24.7 27.5 27.3 31.5 33.5 35.5 31.4 J3.7 35.8 6 Italy 7.7 11.8 12.6 11.5 13.2 14.9 15.2 16.0 14.4 20.2 7 Netherlands 4.7 3.6 4.5 3.7 3.1 4.7 5.9 4.0 4.5 6.4 8 Sweden 2.7 2.7 2.9 2.7 3.3 2.7 3.0 2.6 3.4 3.6 9 Switzerland 5.9 5.1 6.6 6.7 5.2 6.3 6.3 5.3 6.0 5.4 10 United Kingdom . 84.4 85.8 80.4 82.4 84.7 101.6 90.5 104.7 99.2 110.6 11 Canada 6.9 10.0 12.9 10.3 10.8 12.2 14.8 14.0 16.3 15.7 12 Japan 17.6 21.1 26.6 28.5 22.7 23.6 21.7 23.7 21.7 26 8 13 Other industrialized countries . . . 26.5 45.7 50.5 50.2 61.3 55.5 62.1 65.7 66.4 71.7 14 Austria .7 1.1 1.2 .9 1.3 1.2 1.0 1.1 1.9 1.5 15 Denmark 1.0 1.3 1.8 2.6 3.4 3.3 1.7 1.5 1.7 2.8 16 Finland .4 .9 .7 .8 .7 .6 .6 .8 7 1.4 17 Greece 3.2 4.5 5.1 5.7 5.6 5.6 6.1 6.7 6.3 6.1 18 Norway 1.7 2,0 2.3 3.2 2.1 2.3 3.0 8.0 5.3 4.7 19 Portugal .8 1.2 1.9 1.3 1.6 1.6 1.4 .9 1.0 1.1 20 Spain 9.9 13.6 13.3 11.6 17.5 13.6 16.1 13.2 14.4 15.4 21 Turkey 2.1 1.6 2.0 1.9 2.0 2.3 2.8 2.7 2.8 3.4 22 Other Western Europe 3.2 3.2 3.3 4.7 3.8 3.4 4.8 47 6.3 5.5 23 South Africa 1.1 1.0 1.3 1.2 1.7 2.0 1.7 2.0 1.9 1.9 24 Australia 2.3 15.4 17.4 16.4 21.7 19.6 22.8 24.0 24.4 27.8 25 OPEC2 17.6 24.1 22.7 22.1 21.2 20.1 19.2 19.7 21.8 22.3' 26 Ecuador .5 .5 7 .7 .8 .9 .9 1.1 1.1 .9 27 Venezuela 5.1 3.7 3.0 2.7 2.9 2.3 2.3 2.4 1.9 2.1 28 Indonesia 3.3 3.8 4.4 4.8 4.7 4.9 5.4 5.2 4.9 5.6 29 Middle East countries . 7.6 15.3 13.9 13.3 12.3 11.5 10.2 10.7 13.2 12.5' 30 African countries 1.2 .9 .6 .6 .6 .5 .4 .4 .7 1.2 31 Non-OPEC developing countries . . 96.0 104.1 118.6 126.5 124.4 140.6' Latin America Argentina 7.7 11.2 10.9 12.9 12.7 14.1 15.0 14.3 14.3 16.4 Brazil 12.0 8.4 13.6 13.7 18.3 21.7 17.8 20.7 22.0 27.3 Chile 47 6.1 6.4 6.8 6.4 6.7 6.6 7.0 6.8 7.6 Colombia 2.1 2.6 2.9 2.9 2.9 2.8 3.1 4.1 3.7 3.3 Mexico 17.9 18.4 16.3 17.3 16.1 15.4 16.3 16.2 17.2 16.6 Peru .4 .5 .7 .9 1.2 1.3 1.6 1.6 1.4 Other 3.1 2.7 2.6 3.1 3.0 3.0 3.3 3.4 3.4 Asia China 39 Mainland . . . 2.0 1.1 1.7 1.8 3.3 2.9 2.6 2.5 2.7 3.6 40 Taiwan 7.3 9.2 9.0 9.4 9.7 9.8 10.4 10.3 10.5 10.6 41 India 3.2 4.2 4.4 4.4 4.7 4.2 3.8 4.3 4.9 5.3 42 Israel .5 .4 .5 .5 .5 .6 .5 .5 .6 .8 43 Korea (South) . 6.7 16.2 18.0 19.1 19.3 21.7 21.9 21.5 14.6 16.3 44 Malaysia 4.4 3.1 4.3 4.4 5.2 5.3 5.5 6.0 6.5 6.4 45 Philippines .. .. 3.1 3.3 3.3 4.1 3.9 4.7 5.4 5.8 6.0 7.0 46 Thailand . . . 3.1 2.1 3.9 4.9 5.2 5.4 4.8 5.7 6.8 7.3 47 Other Asia 3.1 4.7 3.7 4.5 4.3 4.8 4.1 4.1 4.3 4.7 Africa Egypt 4 .6 .9 I.I 49 Morocco .7 .7 .6 .7' 50 Zaire .0 .0 .0 .0 .0 51 Other Africa'.. .9 .8 1.0 .9 .9 52 Eastern Europe. . 3.2 2.7 3.4 4.2 6.3 5.1 5.3 6.9 8.9 7.1 53 Russia^ . 1.6 .8 .6 1.0 1.4 1.0 1.8 3.7 3.5 4.2 54 Other 1.6 1.9 2.8 3.2 4.9 4.1 3.5 3.2 5.4 2.9 55 Offshore banking centers 73.5 72.9 87.5 992 101.3 106.1 105.2 134.7 131.3 129.6 56 Bahamas 10.9 10.2 12.6 11.0 13.9 17.3 14.2 20.3 20.9 16.1 57 Bermuda 8.9 8.4 6.1 6.3 5.3 4.1 4.0 4.5 6.7 7.9 58 Cayman Islands and other British West I 18.4 21.4 25.1 32.4 28.8 26.1 32.0 37.2 32.8 35.1 59 Netherlands Antilles 2.8 1.6 5.7 10.3 ill 13.2 11.7 26.1 19.9 15.8 60 Panamas 2.4 1.3 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 62 Hong Kong. China 18.8 20.0 23.7 25.0 25 3 27.6 26.0 27.9 30.8 35.2 63 Singapore 11.2 10.1 13.3 13.1 15.4 15.9 15.5 16.7 17.9 167 64 Other* .1 .1 I .1 .1 .1 .1 .1 .1 .3 65 Miscellaneous and unallocated7 43.6 669 64.2 57.6 62.6 72.7 50.0 59.6 59.6 57.6 1. The banking offices covered by these data include U.S. offices and foreign branches of 2. Organization of Petroleum Exporting Countries, shown individually, other members of U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not covered OPEC (Algeria, Gabon, Iran, Iraq, Kuwait. Libya, Nigeria. Qatar. Saudi Arabia, and United include U.S. agencies and branches of foreign banks. Beginning March 1994, the data include Arab Emirates); and Bahrain and Oman (not formally members of OPEC). large foreign subsidiaries of U.S. banks. The data also include other types of U.S. depository 3. Excludes Liberia. Beginning March 1994 includes Namibia. inslitutions 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 nol 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 • April 1998 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period Type of liability, and area or country 1995 June Sept. Sept.p 1 Total 50,597 54,309 46,448 48,943 51,604 54,798 55,068 52,950 52,445 2 Payable in dollars 38,728 38,298 33,903 35,338 36,374 38,956 39,114 37,398 37,485 3 Payable in foreign currencies 11,869 16,011 12.545 13,605 15,230 15,842 15,954 15,552 14,960 By type 4 Financial liabilities 29,226 32,954 24.241 24,797 25,445 26,065 25,951 24,630 22,946 5 Payable in dollars 18,545 18,818 12,903 12,165 11,272 11,327 11,017 10,107 9,157 6 Payable in foreign currencies 10,681 14,136 11.338 12,632 14,173 14,738 14,934 14.523 13,789 7 Commercial liabilities 21,371 21,355 22.207 24,146 26,159 28,733 29.117 28.320 29,499 8 Trade payables 8.802 10,005 11.013 11,081 11,791 12,720 11,515 11,122 10,954 9 Advance receipts and other liabilities ... 12,569 11,350 11,194 13.065 14,368 16,013 17,602 17,198 18,545 10 Payable in dollars 20,183 19,480 21,000 23.173 25,102 27,629 28,097 27,291 28,328 11 Payable in foreign currencies 1,188 1,875 1,207 973 1,057 1,104 1,020 1.029 1,171 By area or country Financial liabilities 12 Europe 18,810 21,703 15,622 16,387 16,086 16,195 16,399 16,327 15,026 13 Belgium and Luxembourg 175 495 369 498 547 632 769 238 89 14 France 2,539 1,727 999 1,011 1,220 1,091 1,205 1,280 1,334 15 Germany 975 1,961 1,974 1,850 2,276 1.834 1,589 1,765 1,730 16 Netherlands 534 552 466 444 519 556 507 466 507 17 Switzerland 634 688 895 1,156 830 699 694 591 645 18 United Kingdom 13,332 15,543 10,138 10,743 9,837 10,177 10,181 10,765 9,172 19 Canada 859 629 632 951 973 1,401 602 456 399 20 Latin America and Caribbean 3,359 2,034 1,783 969 1,169 1,668 1.876 1,279 1,061 21 Bahamas 1,148 101 59 31 50 236 293 124 10 22 Bermuda 0 80 147 25 50 27 55 64 23 Brazil 18 207 57 52 78 75 97 52 24 British West Indies 1,533 998 866 826 764 1,030 965 769 663 25 Mexico 17 0 12 11 13 17 16 15 76 26 Venezuela 5 5 1 1 1 1 1 1 27 Asia 5,956 8,403 5,988 6,351 6,969 6,423 6,370 5,984 5,975 28 Japan 4,887 7,314 5,436 6.051 6,602 5,869 5,794 5,435 5,492 29 Middle Eastern oil-exporting countries 23 35 27 26 25 25 72 39 23 30 Africa 133 135 150 72 153 38 29 29 33 31 Oil-exporting countries2 123 123 122 61 121 0 0 0 0 32 All other3 555 Commercial liabilities 33 Europe 6,827 6,773 7,700 7,916 8,680 9,767 9,551 8,711 9,364 34 Belgium and Luxembourg 239 241 331 326 427 479 643 738 705 35 France 655 728 481 678 657 680 680 709 783 36 Germany 684 604 767 839 949 1,002 1.047 852 951 37 Netherlands 688 722 500 617 668 766 553 290 453 38 Switzerland 375 327 413 516 405 624 481 430 401 39 United Kingdom 2,039 2,444 3.568 3,266 3,663 4.303 4,165 3,827 3,834 40 Canada 879 1,037 1.040 998 1.144 1,090 1.068 1.136 1,151 41 Latin America and Caribbean 1,658 1,857 1.740 2,301 2,386 2,574 2,563 2.501 2,226 42 Bahamas 21 19 1 35 33 63 43 33 38 43 Bermuda 350 345 205 509 355 297 479 397 180 44 Brazil 214 161 98 119 198 196 201 225 233 45 British West Indies 27 23 56 10 15 14 14 26 23 46 Mexico 481 574 416 475 446 665 633 594 562 47 Venezuela 123 276 221 283 341 328 318 304 322 48 Asia 10,980 10,741 10,421 11,389 12,227 13,422 13,968 13,926 14,686 49 Japan 4,314 4,555 3,315 3,943 4,149 4,614 4,502 4.460 4,587 50 Middle Eastern oil-exporting countries 1,534 1,576 1,912 1,784 1,951 2,168 2,495 2.420 2,984 51 Africa ^ 453 428 619 924 1,020 1,040 1,037 941 907 52 Oil-exporting countries2 167 256 254 462 490 532 479 423 504 53 Other3 687 618 930 1,105 1,165 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 Type of claim, and area or country 1993 1994 1995 June Sept. Dec. Mar. June Sept.p 1 Total 49.159 57,888 52,509 60,195 59,092 63,642 64,911 66,127 67,266 2 Payable in dollars . . . . 45.161 53,805 48,711 55,350 55,014 58,630 60,747 61,404 62,665 3 Payable in foreign currencies 3,998 4.083 3,798 4,845 4,078 5,012 4,164 4,723 4,601 Bv lype 4 Financial claims 27,771 33,897 27,398 35.251 34.200 35,268 37,356 38,578 38,513 5 Deposits 15,717 18,507 15,133 19.507 19,877 21,404 19,625 22,282 21,233 6 Payable in dollars . . . 15,182 18.026 14.654 19.069 19.182 20,631 18,547 21,373 20,271 7 Payable in foreign currencies 535 481 479 438 695 773 1,078 909 962 8 Other financial claims 12,054 15,390 12,265 15.744 14.323 13,864 17.731 16.296 17,280 9 Payable in dollars 10,862 14,306 10,976 13.347 12,234 12,069 15,954 13.918 15,383 ] 0 Payable in foreign currencies . . . . 1,192 1,084 1,289 2,397 2,089 1,795 1.777 2,378 1,897 11 Commercial claims 21,388 23,991 25.111 24.944 24,892 28,374 27,555 27 549 28,753 ] 2 Trade receivables 18,425 21,158 22,998 22,353 22,454 25,751 24,801 24.858 25,148 13 Advance payments and olher claims 2,963 2,833 2,11.3 2.591 2,438 2,623 2,754 2,691 3.605 14 Payable in dollars 19,117 21,473 23,081 22,934 23,598 25,930 26.246 26,113 27,011 15 Payable in foreign currencies 2,271 2,518 2,030 2,010 1,294 2.444 1.309 1,436 1,742 By urea or country Financial claims 16 Europe 7,299 7.936 7,609 10,498 9.777 9,282 9,885 10,765 12,325 17 Belgium and Luxembourg 134 86 193 151 126 185 119 203 360 18 France 826 800 803 679 733 694 760 680 1,112 19 Germany 526 540 436 296 272 276 324 281 352 20 Netherlands 502 429 517 488 520 493 567 519 764 21 Swit2erland 530 523 498 461 432 474 570 447 448 22 United Kingdom 3,585 4,649 4,303 7.426 6.603 6.119 6,646 7,692 7,727 23 Canada 2,032 3,581 2.851 4,773 4,502 3,445 4,917 6.422 4,278 24 Latin Amenca and Caribbean 16,224 19,536 14.500 17.644 17,241 19,577 19.742 18.725 19,168 25 Bahamas 1,336 2,424 1.965 2.168 1,746 1,452 1,894 2.064 2,477 26 Bermuda 125 27 81 84 113 140 157 )88 189 27 Brazil 654 520 830 1.242 1,438 1,468 1,404 1,617 1,501 28 British West Indies 12.699 15.228 10,393 13.024 12,819 15,182 15,176 13,552 12,912 29 Mexico 872 723 554 392 413 457 517 498 508 30 Venezuela 161 35 32 23 20 31 22 21 15 31 Asia 1,657 1,871 1,579 1.571 1,834 2,221 2,068 1,934 2,015 32 Japan 892 953 871 852 1,001 1,035 831 766 999 33 Middle Eastern oil-exporting countries 3 141 3 9 13 22 12 20 15 34 Africa . . . 99 373 276 197 177 174 182 179 174 35 Oil-exporting countries 1 0 5 5 13 14 14 15 16 36 All other1 460 600 583 568 669 569 562 553 553 Commercial claims 37 Europe 9,105 9,540 9,824 9,842 9,288 10,443 9,863 9,603 10.478 38 Belgium and Luxembourg 184 213 2.31 219 213 226 364 327 331 39 France 1.947 1,881 1.830 1,659 1,532 1,644 1,514 1.377 1.640 40 Germany 1,018 1,027 1.070 1,335 1,250 1,337 1,364 1.229 1,393 41 Netherlands 423 311 452 481 424 562 582 613 573 42 Switzerland 432 557 520 602 594 642 418 389 381 43 United Kingdom 2,377 2,556 2.656 2.658 2.516 2,946 2,626 2,836 2,903 44 Canada 1,781 1.988 1,951 2.074 2.083 2.165 2,381 2.464 2,643 45 Latin America and Caribbean 3,274 4,117 4,364 4.347 4.409 5.276 5.067 5.241 5,012 46 Bahamas 11 9 30 28 14 35 40 29 22 47 Bermuda 182 234 272 264 290 275 159 197 128 48 Brazil 460 612 898 838 968 1,303 1,216 1,136 1,100 49 British West Indies 71 83 79 103 119 190 127 98 98 50 Mexico 990 1.243 993 1.021 936 1,128 1,102 1.140 1.222 51 Venezuela 293 348 285 313 316 357 330 451 418 52 Asia 6,014 6,982 7,312 6,939 7,289 8.376 8,348 8,460 8.572 51 Japan 2,275 2,655 1.870 1,877 1,919 2,003 2,065 2,079 2,046 54 Middle Eastern oil-exporting countries 704 708 974 903 945 971 1,078 1,014 989 55 Africa 493 454 654 688 731 746 718 618 764 56 Oil-exporting countries" . . 72 67 87 83 142 166 100 81 207 57 Other' 721 910 1,006 1.054 1,092 1,368 1.178 1.163 1,284 1. Compmc* Bahrain, Iran. Iraq, Kuwait, Oman. Qatar, Saudi Arabia, and United Arab 1. Comprises Algeria, Gabon, Libya, and Nigeria. Emirates (Tnicial States), 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • April 1998 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars Transaction, and area or country 1996 1997 J D an e .— c. July Aug. Sept. Oct.' Nov. Dec.P U.S. corporate securities STOCKS 1 Foreign purchases 590,714 963,888 963.888 82.289 85.138 84,953 80,546 106,674 85,150 90,995 578.203 897,864 897,864 72.211 74,715 76,820 75,428 105,668 80,133 85.684 2 Foreign sales 12,511 66,024 66,024 10,078 10,423 8,133 5,118 1,006 5,017 5,311 3 Net purchases, or sales (—) 12,585 66,164 66,164 10,089 10,412 8,176 5,123 1,024 5,025 5,345 4 Foreign countries 5,367 59,041 59,041 5,659 6,108 4,391 5,296 5,910 5,318 5,832 5 Europe -2,402 3,134 3,134 -605 1,187 461 241 -80 -65 299 6 France 1,104 9,075 9,075 858 1,080 584 374 538 857 788 7 Germany 1,415 3,833 3,833 117 88 -118 820 757 579 409 8 Netherlands 2,715 7,845 7,845 1,043 922 557 -405 848 1,043 1,474 9 Switzerland 4,478 22,215 22,215 2.669 1,167 2.170 3,559 2.444 1,875 1,232 10 United Kingdom 2,226 -1,174 -1,174 32 -489 -286 -560 -520 -344 -304 11 Canada 5,816 5,251 5,251 2,140 3,968 2,456 813 -4,091 -627 -1,237 1 1 2 3 M La i t d in d le A m Ea e s r t i 1 ca and Caribbean ... -1,6 9 0 1 0 8 2, 1 0 7 6 3 1 2, 1 0 7 6 3 1 2, 1 2 6 4 3 7 - 6 5 8 1 6 1 - ,5 6 4 4 5 -51 3 9 2 -50 7 8 9 88 1 8 6 1,0 2 7 1 1 14 Other Asia -372 4,780 4,780 1,121 849 888 -313 229 709 551 15 Japan -85 471 471 81 99 2 94 80 -36 7 16 Africa -57 341 341 -233 91 132 -33 74 -190 -45 17 Other countries 18 Nonmonetary international and -74 -140 regional organizations BONDS2 393,953 613,748 613,748 56,305 62,627 62.605 50,762 57,972 53,046 52,002 19 Foreign purchases 268,487 477,745 477,745 46,045 41,297 44,446 48,783 42,996 44,245 48,283 20 Foreign sales 125,466 136,003 136,003 16,582 9,465 13,526 4.263 9,006 12,060 14,322 21 Net purchases, or sales (—) 125,295 135,411 135,411 16,568 9,464 12,999 4,351 8,995 11,928 14,254 22 Foreign countries 77,570 73,877 73,877 10,182 5,843 3,098 2,799 4,263 23 Europe 4 4 , , 4 4 6 3 0 9 2 3 , ,3 7 0 4 1 2 3 2 , , 3 7 0 4 1 2 8, 1 18 02 1 1, 5 6 2 0 2 6 7, 2 5 7 8 5 6 3 63 0 8 0 1 1 4 2 2 0 5 1 4 6 6 5 - - 4 6 7 7 4 24 France 2,107 3,576 3,576 -94 -79 34 135 369 185 425 25 Germany 1,170 547 547 203 -378 602 -501 -109 1,212 593 26 Netherlands 60,509 56,019 56,019 176 7,284 -304 4,109 2,111 -200 2,897 27 Switzerland 4.486 6,264 6,264 6,982 281 6,577 624 866 459 677 28 United Kingdom 17,737 34,821 34,821 -89 3,283 557 1,265 3,712 3,884 7,220 29 Canada 1,679 1.656 1.656 1,757 -9 2,110 -1 -183 199 142 30 Latin America and Caribbean . .. 23,762 17,023 17,023 16 2,700 -44 1,591 5.634 -3.193 -3,520 31 Middle East' 14,173 9,360 9,360 1.901 1,885 3,916 -613 5,207 -2.883 -3,758 32 Other Asia 624 1.005 1.005 1,683 104 2,996 8 11 88 49 33 Japan -563 765 765 56 27 103 134 -139 115 164 34 Africa 106 26 35 Other countries 36 Nonmonetary international and 171 592 132 14 68 527 regional organizations Foreign securities 37 Stocks, net purchases, or sales (-) -59,268 -38.567 -38,567 -5.746 -7,532 -7,892 -170 -1,981 2,400 1,975 38 Foreign purchases 450,365 719,196 719,196 63,401 68,868 60,740 62,687 79,535 70,271 64,387 39 Foreign sales 509,633 757,763 757,763 69,147 76,400 68,632 62,857 81,516 67,871 62,412 40 Bonds, net purchases, or sales (-) -51,369 -45,759 -45.759 -12.910 -11,337 -4,852 -7,963 -739 -4,261 -2,672 41 Foreign purchases 1,114,035 1,471,877 1,471.877 117.928 133,992 123,558 122,266 163,626 110,999 115,304 42 Foreign sales 1,165,404 130.838 145,329 128,410 130,229 164,365 115.260 117.976 1,517,636 1,517.636 43 Net purchases, or sales (-), of stocks and bonds -110,637 -18,656 -18,869 -12,744 -8,133 -2,720 -1,861 -697 -84,326 -84,326 44 Foreign countries -109,766 -18,672 -18,906 -12,673 -8,127 -2^55 -1,813 -611 -84,270 -84,270 45 Europe -57,139 -26,295 -2,133 -10.412 -4,590 -5,501 -4,388 -2,212 1,544 46 Canada -7,685 -3,715 -26,295 -1,353 -1.815 -1,451 -1,153 409 557 -78 47 Latin America and Caribbean -11,507 -24,485 -3,715 -8,544 -2.421 -207 -112 1,899 -2,123 -2,916 48 Asia -27,831 -24,763 -24,485 -5,779 -3.938 -4.802 -707 892 1.683 1,123 49 Japan -5.887 -9,997 -24,763 -4,944 -2,370 95 -183 1.828 2,260 1,861 50 Africa -1,517 -3,090 -9,997 -596 -72 -703 -273 -1,027 -174 -74 51 Other countries -4,087 -1,922 -3,090 -267 -248 -920 -381 -340 456 -210 -1,922 52 Nonmonetary international and regional organizations -871 -56 16 37 -71 -6 -165 -48 -86 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, 2. Includes state and local government securities and securities of U.S. government Saudi Arabia, and United Arab Emirates (Trucial States). agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. corporations organized to finance direct investments abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Holdings and Transactions/Interest and Exchange Rates A61 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions1 Millions of dollars; net purchases, or sales ( —J during period Area or country 1996 J D an e .— c. July Aug. Sept. Dec.p 1 Total estimated 232,241 183.644 183,644 22,844 2,949 23,966 16,045 16,530r 15,644 -9^89 2 Foreign countries .. . 234,083 183.196 183,196 21,894 2,681 24,161 15,659 16,766' 15,224 -7,999 3 Europe 118,781 146,154 146,154 8,163 12,032 19,029 20,022 22,916' 10,363 352 4 Belgium and Luxembourg 1,429 3,427 3,427 -37 298 92 138 357 384 161 5 Germany 17,980 22,471 22,471 1,096 6,428 4,050 2,714 4,847 5,255 3.052 6 Netherlands -582 2,146 2,146 -408 378 882 -3 334 375 -1,125 7 Sweden 2,242 -464 -464 135 2 583 16 302 -67 -124 8 Switzerland 328 6,028 6,028 346 344 -291 109 690' 1,395 2,847 9 United Kingdom 65,658 98,989 3,048 2,745 13,130 13,874 18,593 5,845 -1,896 10 Other Europe and former US.S.R. 31,726 13,557 13,557 3,983 1,837 583 3,174 -2,207 -2.824 -2,563 11 Canada 2,331 -855 -855 1,373 719 -839 -414 -730 730 -2,182 12 Latin America and Caribbean 20,785 -2,687 -2,687 1,381 -5,358 1,063 -769 -1,580' 6,512 3,737 13 Venezuela -69 559 559 635 57 25 -691 11 397 -36 14 Other Latin America and Caribbean 8,439 -586 -586 2,902 -1,266 -3,245 -2,880 -3,773' -723 2,485 15 Netherlands Antilles 12,415 -2,660 -2,660 -2,156 -4,149 4,283 2.802 2,182' 6,838 1,288 16 Asia 89,735 38,065 38,065 8,474 -3,347 4,849 -4,614 -5,394' -1.472 -10,859 17 Japan 41,366 20,359 20,359 5,972 2,612 -3,458 -2,782 4,160 -4.784 -7,860 18 Africa 1,083 1,523 1,523 341 194 218 461 45 -82 268 19 Other 1,368 996 996 2,162 -1.559 -159 973 1,509 -827 685 20 Nonmonetary international and regional organizations -1,842 448 448 950 268 -195 386 -236' 420 -1,590 21 International -1,390 552 552 1,068 14 -190 341 -74 451 -1,025 22 Latin American regional -779 173 173 -145 70 -117 -21 78 -24 -131 MEMO 23 Foreign countries 234,083 183,196 183,196 21,894 2.681 24,161 15,659 16,766' 15,224 -7,999 24 Official institutions 85.807 43,071 43,071 10,391 -2,413 8,235 3,091 -12,848 1,467 -311 25 Other foreign 148,276 140,125 140,125 11,503 5,094 15,926 12,568 29,614' 13,757 -7,688 Oil-exporting countries 26 Middle East2 7,116 7,116 -1.735 -2,251 3,455 -3,877 3,175 -1,506 27 Africa3 -13 -13 0 0 -7 0 0 0 1. Official and private transactions in marketable U.S. Treasury securities having an 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab original maturity of more than one year. Data are based on monthly transactions reports. Emirates (Trucial States). Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign 3. Comprises Algeria, Gabon, Libya, and Nigeria. countries. 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS1 Percent per year, averages of daily figures Rate on Jan. 30, 1998 Rate on Jan. 30, 1998 Country Country Month Month effective effective Austria 2.5 Apr. 1996 Germany 2.5 Apr. 1996 Belgium. . . 2.75 Oct. 1997 Italy 5.5 Dec. 1997 Canada. . . . 5.0 Jan. 1998 Japan .5 Sept. 1995 Denmark . . 3.5 Oct. 1997 Netherlands 2.5 Apr. 1996 France .. . 3.3 Oct. 1997 Switzerland 1.0 Sept. 1996 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 1998 Type or country 1995 1996 1997 Aug. Sept. Oct. Nov. Dec. Jan. Feb. 5.93 5.38 5.61 5.58 5.59 5.63 5.71 5.79 5.53 5.53 2 United Kingdom 6.63 5.99 6.81 7.12 7.19 7.24 7.52 7.60 7.49 7.46 3 Canada 7.14 4.49 3.59 3.67 3.66 3.83 4.02 4.61 4.68 5.02 4.43 3.21 124 3.19 3.24 3.51 3.68 3.67 3.51 3.45 2.94 1.92 1.58 1.39 1.36 1.73 1.91 1.56 1.27 .98 6 Netherlands 4.30 2.91 3.25 3.33 3.35 3.50 3.65 3.61 3.42 3.36 6.43 3.81 3.35 3.31 3.29 3.47 3.57 3.57 3.50 3.45 8 Italy 10.43 8.79 6.86 6.85 6.65 6.63 6.49 6.07 6.05 6.12 4.73 1.19 3.40 3.55 3.55 3.76 3.72 3.61 3.47 3.53 10 Japan 1.20 .58 .58 .58 .55 .52 .53 .78 .77 .84 1, Rates are for three-month interbank loans, with the following exceptions: Cana< 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 • April 1998 3.28 FOREIGN EXCHANGE RATES' Currency units per dollar except as noted Country/currency unit 1995 1996 1997 Sept. 1 Australia/dollar 74.073 78.283 74.368 72.310 71.971 69.526 66.187 65.659 67.436 2 Austria/schilling 10.076 10.589 12.206 12.568 12.360 12.182 12.510 12.765 12.735 3 Belgium/franc 29.472 30.970 35.807 36.876 36.266 35.737 36.748 37.536 37.417 4 Canada/dollar 1.3725 1.3638 1.3849 1.3872 1.3869 1.4128 1.4271 1.4409 1.4334 5 China, P.R./yuan 8.3700 8.3389 8.3193 8.3171 8.3135 8.3109 8.3099 8.3094 8.3072 6 Denmark/krone 5.5999 5.8003 6.6092 6.8001 6.6922 6.5937 6.7752 6.9190 6.9089 7 Finland/markka 4.3763 4.5948 5.1956 5.3455 5.2674 5.2217 5.3789 5.5006 5.4999 8 France/franc 4.9864 5.1158 5.8393 6.0031 5.8954 5.8001 5.9542 6.0832 6.0744 9 Germany/deutsche mark 1.4321 1.5049 1.7348 1.7862 1.7575 1.7323 1.7788 1.8165 1.8123 10 Greece/drachma 231.68 240.82 273.28 281.69 276.84 271.87 279.93 287.24 286.70 11 Hong Kong/dollar 7.7357 7.7345 7.7431 7.7440 7.7373 7.7314 7.7456 7.7425 7.7412 12 India/rupee 32.418 35.506 36.365 36.476 36.302 37.289 39.400 39.391 39.008 13 Ireland/pound" 160.35 159.95 151.63 148.06 146.92 150.30 145.33 138.19 137.71 14 Italy/lira 1.629.45 1,542.76 1,703.81 1.743.22 1,721.09 1,697.08 1,743.86 1.787.87 1,788.28 15 Japan/yen 93.96 108.78 121.06 120.89 121.06 125.38 129.73 129.55 125.85 16 Malaysia/ringgit 2.5073 2.5154 2.8173 3.0254 3.2972 3.3791 3.7907 4.4093 3.8148 17 Netherlands/guilder 1.6044 1.6863 1.9525 2.0116 1.9800 1.9524 2.0051 2.0472 2.0432 18 New Zealand/dollar2 65.625 68.765 66.247 63.604 63.556 62.420 59.137 57.925 58.286 19 Norway/krone 6.3355 6.4594 7.0857 7.3008 7.0807 7.0588 7.2630 7.5007 7.5530 20 Portugal/escudo 149.88 154.28 175.44 181.49 179.07 176.84 181.91 185.80 185.54 21 Singapore/dollar 1.4171 1.4100 1.4857 1.5164 1.5597 1.5820 1.6518 1.7477 1.6509 22 South Africa/rand 3.6284 4.3011 4.6072 4.6890 4.7145 4.8394 4.8706 4.9417 4.9337 23 South Korea/won 772.69 805.00 950.77 912.50 929.42 1,035.22 1,494.04 1,707.30 1,628.42 24 Spain/peseta 124.64 126.68 146.53 150.75 148.32 146.30 150.46 153.93 153.61 25 Sri Lanka/rupee 51.047 55.289 59.026 59.713 59.723 60.132 61.591 62.281 62.363 26 Sweden/krona 7.1406 6.7082 7.6446 7.6887 7.5765 7.5589 7.7977 8.0193 8.0723 27 Switzerland/franc 1.1812 1.2361 1.4514 1.4702 1.4516 1.4069 1.4393 1.4748 1.4631 28 Taiwan/dollar 26.495 27.468 28.775 28.731 29.696 31.794 32.502 34.117 32.948 29 Thailand/baht 24.921 25.359 31.072 35.256 37.543 39.092 44.309 52.983 45.987 30 United Kingdom/pound 157.85 156.07 163.76 160.13 163.30 168.89 165.97 163.50 164.08 MEMO 31 United States/dollar3 98.29 97.07 96.37 98.82 100.52 99.93 1. Averages of certified noon buying rates in New York for cable transfers. Data in this 3 Index of weighted-average exchange value of U.S. dollar against the currencies of ten table also appear in the Board's G.5 (405) monthly statistical release. For ordering address, industrial countries. The weight for each of the ten countries is the 1972-76 average world see inside front cover. trade of that country divided by the average world trade of all ten countries combined. Series 2. Value in U.S. cents. revised as of August 1978 (see Federal Reserve Bulletin, vol. 64 (August 1978), p. 700). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A63 Guide to Statistical Releases and Special Tables STATISTICAL RELEASES—List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases December 1997 A72 SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks December 31, 1996 May 1997 A64 March 31, 1997 September 1997 A64 June 30, 1997 November 1997 A64 September 30, 1997 February 1998 A64 Terms of lending at commercial banks February 1997 May 1997 A68 May 1997 October 1997 A64 August 1997 November 1997 A68 November 1997 February 1998 A68 Assets and liabilities of U.S. branches and agencies of foreign banks December31, 1996 May 1997 A72 March 31, 1997 August 1997 A64 June 30, 1997 November 1997 A72 September 30, 1997 February 1998 A72 Pro forma balance sheet and income statements for priced service operations September 30, 1996 January 1997 A64 March 31, 1997 July 1997 A64 June 30, 1997 October 1997 A68 September 30, 1997 January 1998 A64 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

A64 Federal Reserve Bulletin • April 1998 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 Federal funds, 23, 25 BANKERS acceptances, 5, 10, 22, 23 Federal Home Loan Banks, 30 Bankers balances, 15-21. (See also Foreigners) Federal Home Loan Mortgage Corporation, 30, 34, 35 Bonds (See also U.S. government securities) Federal Housing Administration, 30, 34, 35 New issues, 31 Federal Land Banks, 35 Rates, 23 Federal National Mortgage Association, 30, 34, 35 Business activity, nonfinancial, 42 Federal Reserve Banks Business loans (See Commercial and industrial loans) Condition statement, 10 Discount rates (See Interest rates) U.S. government securities held, 5, 10, 11, 27 CAPACITY utilization, 43 Federal Reserve credit, 5, 6, 10, 11 Capital accounts Federal Reserve notes, 10 Commercial banks, 15-21 Federally sponsored credit agencies, 30 Federal Reserve Banks, 10 Finance companies Central banks, discount rates, 61 Assets and liabilities, 32 Certificates of deposit, 23 Business credit, 33 Commercial and industrial loans Loans, 36 Commercial banks. 15-21 Paper, 22, 23 Weekly reporting banks, 17, 18 Float, 5 Commercial banks Flow of funds, 37^1 Assets and liabilities, 15-21 Foreign currency operations, 10 Commercial and industrial loans, 15-21 Foreign deposits in U.S. banks, 5 Consumer loans held, by type and terms, 36 Foreign exchange rates, 62 Real estate mortgages held, by holder and property, 35 Foreign-related institutions, 20 Time and savings deposits, 4 Foreign trade, 51 Commercial paper, 22, 23, 32 Foreigners Condition statements (See Assets and liabilities) Claims on, 52, 55, 56, 57, 59 Construction, 42, 46 Liabilities to, 51, 52, 53, 58, 60, 61 Consumer credit, 36 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, 13 Customer credit, stock market, 24 HOUSING, new and existing units, 46 DEBT (See specific types of debt or securities) Demand deposits, 15-21 INCOME, personal and national, 42, 48, 49 Depository institutions Industrial production, 42, 44 Reserve requirements, 8 Insurance companies, 27, 35 Reserves and related items, 4, 5, 6, 12 Interest rates Deposits (See also specific types) Bonds, 23 Commercial banks, 4, 15-21 Consumer credit, 36 Federal Reserve Banks, 5, 10 Federal Reserve Banks, 7 Discount rates at Reserve Banks and at foreign central banks and Foreign central banks and foreign countries, 61 foreign countries (See Interest rates) Money and capital markets, 23 Discounts and advances by Reserve Banks (See Loans) Mortgages, 34 Dividends, corporate, 32 Prime rate, 22 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

A65 Investments (See also specific types) SAVING Commercial banks, 4, 15-21 Flow of funds, 37^1 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 US. 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 Student Loan Marketing Association, 30 Mobile homes shipped, 46 Monetary and credit aggregates, 4,12 TAX receipts, federal, 26 Money and capital market rates, 23 Thrift institutions, 4. (See also Credit unions and Savings Money stock measures and components, 4, 13 institutions) Mortgages (See Real estate loans) Time and savings deposits, 4, 13, 15-21 Mutual funds, 13,32 Trade, foreign, 51 Mutual savings banks (See Thrift institutions) Treasury cash, Treasury currency, 5 Treasury deposits, 5, 10, 25 NATIONAL defense outlays, 26 Treasury operating balance, 25 National income, 48 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, 12 WEEKLY reporting banks, 17, 18 Federal Reserve Banks, 10 Wholesale (producer) prices, 42, 47 U.S. reserve assets, 51 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

A66 Federal Reserve B ulletin • April 1998 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 DONALD B. ADAMS, Assistant Director THOMAS A. CONNORS, Assistant Director LEGAL DIVISION J. VIRGIL MATTINGLY, JR., General Counsel DIVISION OF RESEARCH AND STATISTICS SCOTT G. ALVAREZ, Associate General Counsel MICHAEL J. PRELL, Director RICHARD M. ASHTON, Associate General Counsel EDWARD C. ETTIN, Deputy Director OLIVER IRELAND, Associate General Counsel DAVID J. STOCKTON, Deputy Director KATHLEEN M. O'DAY, Associate General Counsel MARTHA BETHEA, Associate Director ROBERT DEV. FRIERSON, Assistant General Counsel WILLIAM R. JONES, Associate Director KATHERINE H. WHEATLEY, Assistant General Counsel MYRON L. KWAST, Associate Director PATRICK M. PARKINSON, Associate Director THOMAS D. SIMPSON, Associate Director OFFICE OF THE SECRETARY LAWRENCE SLIFMAN, Associate Director WILLIAM W. WILES, Secretary MARTHA S. SCANLON, Deputy Associate Director JENNIFER J. JOHNSON, Deputy Secretary PETER A. TINSLEY, Deputy Associate Director BARBARA R. LOWREY, Associate Secretary and Ombudsman DAVID S. JONES, Assistant Director STEPHEN D. OLINER, Assistant Director STEPHEN A. RHOADES, Assistant Director DIVISION OF BANKING JANICE SHACK-MARQUEZ, Assistant Director SUPERVISION AND REGULATION CHARLES S. STRUCKMEYER, Assistant Director RICHARD SPILLENKOTHEN, Director ALICE PATRICIA WHITE, Assistant Director STEPHEN C. SCHEMERING, Deputy Director JOYCE K. ZICKLER, Assistant Director HERBERT A. BIERN, Associate Director GLENN B. CANNER, Senior Adviser ROGER T. COLE, Associate Director JOHN J. MINGO, Senior Adviser WILLIAM A. RYBACK, Associate Director GERALD A. EDWARDS, JR., Deputy Associate Director DIVISION OF MONETARY AFFAIRS STEPHEN M. HOFFMAN, JR., Deputy Associate Director JAMES V. HOUPT, Deputy Associate Director DONALD L. KOHN, Director JACK P. JENNINGS, Deputy Associate Director DAVID E. LINDSEY, Deputy Director MICHAEL G. MARTINSON, Deputy Associate Director BRIAN F. MADIGAN, Associate Director SIDNEY M. SUSSAN, Deputy Associate Director RICHARD D. PORTER, Deputy Associate Director MOLLY S. WASSOM, Deputy Associate Director VINCENT R. REINHART, Assistant Director HOWARD A. AMER, Assistant Director NORMAND R.V. BERNARD, Special Assistant to the Board NORAH M. BARGER, Assistant Director BETSY CROSS, Assistant Director DIVISION OF CONSUMER RICHARD A. SMALL, Assistant Director AND COMMUNITY AFFAIRS WILLIAM SCHNEIDER, Project Director, GRIFFITH L. GARWOOD, Director National Information Center GLENN E. LONEY, Associate Director DOLORES S. SMITH, Associate Director MAUREEN P. ENGLISH, Assistant Director IRENE SHAWN MCNULTY, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A67 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 GEORGE E. LIVINGSTON, Senior Adviser to the Board DAVID L. ROBINSON, Deputy Director (Finance and Control) DAVID L. SHANNON, Senior Adviser to the Board LOUISE L. ROSEMAN, Associate Director JOHN R. WEIS, Adviser PAUL W. BETTGE, Assistant Director JACK DENNIS, JR., Assistant Director MANAGEMENT DIVISION EARL G. HAMILTON, Assistant Director JOSEPH H. HAYES, JR., Assistant Director S. DAVID FROST, Director SHEILA CLARK, EEO Programs Director JEFFREY C. MARQUARDT, Assistant Director STEPHEN J. CLARK, Associate Director, Finance Function FLORENCE M. YOUNG, Assistant Director DARRELL R. PAULEY, Associate Director, Human Resources Function OFFICE OF THE INSPECTOR GENERAL BRENT L. BOWEN, Inspector General DIVISION OF SUPPORT SERVICES DONALD L. ROBINSON, Assistant Inspector General BARRY R. SNYDER, Assistant Inspector General 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

A68 Federal Reserve Bulletin • April 1998 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman ROGER W. FERGUSON, JR. JERRY L. JORDAN CATHY E. MINEHAN EDWARD M. GRAMLICH EDWARD W. KELLEY, JR. SUSAN M. PHILLIPS THOMAS M. HOENIG LAURENCE H. MEYER ALICE M. RIVLIN ALTERNATE MEMBERS EDWARD G. BOEHNE MICHAEL H. MOSKOW GARY H. STERN ROBERT D. MCTEER, JR. ERNEST T. PATRIKIS STAFF DONALD L. KOHN, Secretary and Economist STEPHEN G. CECCHETTI, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary WILLIAM G. DEWALD, Associate Economist JOSEPH R. COYNE, Assistant Secretary CRAIG S. HAKKIO, Associate Economist GARY P. GILLUM, Assistant Secretary DAVID E. LINDSEY, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel LARRY J. PROMISEL, Associate Economist THOMAS C. BAXTER, JR., Deputy General Counsel MARK S. SNIDERMAN, Associate Economist MICHAEL J. PRELL, Economist THOMAS D. SIMPSON, Associate Economist EDWIN M. TRUMAN, Economist DAVID J. STOCKTON, Associate Economist LYNN E. BROWNE, Associate Economist PETER R. FISHER, Manager, System Open Market Account FEDERAL ADVISORY COUNCIL THOMAS H. JACOBSEN, President CHARLES T. DOYLE, Vice President WILLIAM M. CROZIER, JR., First District NORMAN R. BOBINS, Seventh District DOUGLAS A. WARNER III, Second District THOMAS H. JACOBSEN, Eighth District WALTER E. DALLER, JR., Third District RICHARD A. ZONA, Ninth District ROBERT W. GILLESPIE, Fourth District C. Q. CHANDLER, Tenth District KENNETH D. LEWIS, Fifth District CHARLES T. DOYLE, Eleventh District STEPHEN A. HANSEL, Sixth District DAVID A. COULTER, Twelfth District HERBERT V. PROCHNOW, Secretary Emeritus JAMES ANNABLE, Co-Secretary WILLIAM J. KORSVIK, Co-Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A69 CONSUMER ADVISORY COUNCIL WILLIAM N. LUND, Augusta, Maine, Chairman YVONNE S. SPARKS, St. Louis, Missouri, Vice Chairman RICHARD S. AMADOR, LOS Angeles, California MARTHA W. MILLER, Greensboro, North Carolina WALTER J. BOYER, Garland, Texas DANIEL W. MORTON, Columbus, Ohio WAYNE-KENT A. BRADSHAW, LOS Angeles, California CHARLOTTE NEWTON, Springfield, Virginia JEREMY EISLER, Ocean Springs, Mississippi CAROL PARRY, New York, New York ROBERT F. ELLIOT, Prospect Heights, Illinois PHILIP PRICE, JR., Philadelphia, Pennsylvania HERIBERTO FLORES, Springfield, Massachusetts DAVID L. RAMP, Minneapolis, Minnesota DWIGHT GOLANN, Boston, Massachusetts MARILYN ROSS, Omaha, Nebraska MARVA H. HARRIS, Pittsburgh, Pennsylvania MARGOT SAUNDERS, Washington, D.C. KARLA IRVINE, Cincinnati, Ohio ROBERT G. SCHWEMM, Lexington, Kentucky FRANCINE C. JUSTA, New York, New York DAVID J. SHIRK, Eugene, Oregon JANET C. KOEHLER, Jacksonville, Florida GAIL SMALL, Lame Deer, Montana GWENN KYZER, Allen, Texas GREGORY D. SQUIRES, Milwaukee, Wisconsin JOHN C. LAMB, Sacramento, California GEORGE P. SURGEON, Chicago, Illinois ERROL T. LOUIS, Brooklyn, New York THEODORE J. WYSOCKI, JR., Chicago, Illinois THRIFT INSTITUTIONS ADVISORY COUNCIL CHARLES R. RINEHART, Irwindale, California, President WILLIAM A. FITZGERALD, Omaha, Nebraska, Vice President GAROLD R. BASE, Piano, Texas F. WELLER MEYER, Falls Church, Virginia DAVID A. BOCHNOWSKI, Munster, Indiana EDWARD J. MOLNAR, Harleysville, Pennsylvania DAVID E. A. CARSON, Bridgeport, Connecticut GUY C. PINKERTON, Seattle, Washington RICHARD P. COUGHLIN, Stoneham, Massachusetts TERRY R. WEST, Jacksonville, Florida STEPHEN D. HAILER, Akron, Ohio FREDERICK WILLETTS, III, Wilmington, North Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Bulletin • April 1998 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, Federal Reserve Regulatory Service. Four vols. (Contains all MS-127, Board of Governors of the Federal Reserve System, four Handbooks plus substantial additional material.) $200.00 Washington, DC 20551, or telephone (202) 452-3244, or FAX per year. (202) 728-5886. You may also use the publications order Rates for subscribers outside the United States are as follows form available on the Board's World Wide Web site and include additional air mail costs: (http://www.bog.frb.fed.us). When a charge is indicated, payment Federal Reserve Regulatory Service, $250.00 per year. should accompany request and be made payable to the Board of Each Handbook, $90.00 per year. Governors of the Federal Reserve System or may be ordered via FEDERAL RESERVE REGULATORY SERVICE FOR PERSONAL Mastercard, Visa, or American Express. Payment from foreign COMPUTERS. Diskettes; updated monthly. residents should be drawn on a U.S. bank. 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 ANEi FUNCTIONS. Network, maximum 100 concurrent users. $3,000 per year. 1994. 157pp. 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 1980-89 March 1991 712 pp. $25.00 EDUCATION PAMPHLETS 1990 November 1991 185 pp. $25.00 Short pamphlets suitable for classroom use. Multiple copies are 1991 November 1992 215 pp. $25.00 available without charge. 1992 December 1993 215 pp. $25.00 1993 December 1994 281 pp. $25.00 1994 December 1995 190 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages 1990-95 November 1996 404 pp. $25.00 Consumer Handbook to Credit Protection Laws A Guide to Business Credit for Women, Minorities, and Small Businesses SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF Series on the Structure 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 Board of Governors of the Federal Reserve System $35.00 per year or $.80 each. The Federal Open Market Committee Federal Reserve Bank Board of Directors REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL Federal Reserve Banks 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 The Payment System Handbook. $75.00 per year. Keys to Vehicle Leasing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 STAFF STUDIES: Only Summaries Printed in the 166. THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET, by Mark Carey, Stephen Prowse, John Rea, and Gregory Udell. BULLETIN January 1994. 111pp. Studies and papers on economic and financial subjects that are of general interest. Requests to obtain single copies of the full text or 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANKto be added to the mailing list for the series may be sent to ING, 1980-93, AND AN ASSESSMENT OF THE "OPERATING Publications Services. PERFORMANCE" AND "EVENT STUDY" METHODOLOGIES, by Stephen A. Rhoades. July 1994. 37 pp. 168. THE ECONOMICS OF THE PRIVATE EQUITY MARKET, by Staff Studies 1-157 are out of print. George W. Fenn, Nellie Liang, and Stephen Prowse. November 1995. 69 pp. 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- 169. BANK MERGERS AND INDUSTRYWIDE STRUCTURE, 1980-94, MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE by Stephen A. Rhoades. February 1996. 29 pp. PRODUCTS, by Mark J. Warshawsky with the assistance of 170. THE COST OF IMPLEMENTING CONSUMER FINANCIAL REGU- Dietrich Earnhart. September 1989. 23 pp. LATIONS: AN ANALYSIS OF EXPERIENCE WITH THE TRUTH 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI- IN SAVINGS ACT, by Gregory Elliehausen and Barbara R. ARIES OF BANK HOLDING COMPANIES, by Nellie Liang and Lowery, December 1997. 17 pp. Donald Savage. February 1990. 12 pp. 171. THE COST OF BANKING REGULATION: A REVIEW OF THE 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- EVIDENCE, by Gregory Elliehausen, April 1998. 35 pp. VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by Gregory E. Elliehausen and John D. Wolken. September 1990. 35 pp. REPRINTS OF SELECTED Bulletin ARTICLES 161. A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, 1980-90, by Margaret Hastings Pickering. May 1991. Some Bulletin articles are reprinted. The articles listed below are 21pp. those for which reprints are available. Beginning with the January 1997 issue, articles are available on the Board's World Wide 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- Web site (http://www.bog.frb.fed.us) under Publications, Federal GAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Rhoades. February 1992. 11 pp. Reserve Bulletin articles. 163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR- KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, Limit of ten copies Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary Ann Taylor. March 1992. 37 pp. FAMILY FINANCES IN THE U.S.: RECENT EVIDENCE FROM THE 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by SURVEY OF CONSUMER FINANCES. January 1997. James T. Fergus and John L. Goodman, Jr. July 1993. 20 pp. 165. THE DEMAND FOR TRADE CREDIT: AN INVESTIGATION OF MOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES, by Gregory E. Elliehausen and John D. Wolken. September 1993. 18 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Federal Reserve Bulletin • April 1998 Maps of the Federal Reserve System EW YORK ADELPHIA HAWAII LEGEND Both pages Facing page • Federal Reserve Bank city • Federal Reserve Branch city • Board of Governors of the Federal — Branch boundary Reserve System, Washington, D.C. NOTE The Federal Reserve officially identifies Districts by num- of Puerto Rico and the U.S. Virgin Islands; the San Franber and Reserve Bank city (shown on both pages) and by cisco Bank serves American Samoa, Guam, and the Comletter (shown on the facing page). monwealth of the Northern Mariana Islands. The Board of In the 12th District, the Seattle Branch serves Alaska, Governors revised the branch boundaries of the System and the San Francisco Bank serves Hawaii. most recently in 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

A73 1-A 2-B 3-C 4-D 5-E Pittsburgh Baltimore MD icinnati DE' % BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H MI Birminghai sville •>- • ;- Jalilville 1 i •-••:•••!•; • NewTR-leans "•- -^1 ATLANTA CHICAGO ST. LOUIS 9-1 MINNEAPOLIS 10-J 12-L KANSAS CITY 11-K DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Federal Reserve Bulletin • April 1998 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 William O. Taylor Paul M. Connolly NEW YORK* 10045 John C. Whitehead William J. McDonough Thomas W. Jones Ernest T. Patrikis Buffalo 14240 Bal Dixit Carl W. Turnipseed' PHILADELPHIA 19105 Joan Carter Edward G. Boehne Charisse R. Lillie William H. Stone, Jr. CLEVELAND* 44101 G. Watts Humphrey, Jr. Jerry L. Jordan David H. Hoag Sandra Pianalto Cincinnati 45201 George C. Juilfs Charles A. Cerino' Pittsburgh 15230 John T. Ryan III Robert B. Schaub RICHMOND* 23219 Claudine B. Malone J. Alfred Broaddus, Jr. Robert L. Strickland Walter A. Varvel Baltimore 21203 Daniel R. Baker William J. Tignanelli' Charlotte 28230 Dennis D. Lowery Dan M. Bechteri ATLANTA 30303 David R. Jones Jack Guynn John F. Wieland Patrick K. Barron James M. Mckee Birmingham 35283 Patricia B. Compton FredR. Herr1 Jacksonville 32231 Judy Jones James D. Hawkins1 Miami 33152 R.KirkLandon James T. Curry III Nashville 37203 Frances F. Marcum Melvyn K. Purcell New Orleans 70161 Lucimarian Roberts 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 William H. Poole Susan S. Elliott W. LeGrande Rives Little Rock 72203 Betta M. Carney Robert A. Hopkins Louisville 40232 Roger Reynolds Thomas A. Boone Memphis 38101 Carol G. Crawley Martha L. Perine MINNEAPOLIS 55480 David A. Koch Gary H. Stern James J. Howard Colleen K. Strand Helena 59601 William P. Underriner John D.Johnson KANSAS CITY 64198 Jo Marie Dancik Thomas M. Hoenig Terrence P. Dunn 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 Steven D. Evans DALLAS 75201 Roger R. Hemminghaus Robert D. McTeer, Jr. James A. Martin Helen E. Holcomb El Paso 79999 Patricia Z. Holland-Branch Sammie C. Clay Houston 77252 Edward O. Gaylord Robert Smith, III' San Antonio 78295 H. B. Zachry, Jr. James L. Stull' SAN FRANCISCO 94120 Gary G. Michael Robert T. Parry Cynthia A. Parker John F. Moore Los Angeles 90051 Anne L. Evans MarkL. Mullinix1 Portland 97208 Carol A. Whipple Raymond H. Laurence' Salt Lake City 84125 Richard E. Davis 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