Federal Reserve Bulletin, 1998-07

VOLUME 84 n NUMBER 7 H JULY 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 517 OPEN MARKET OPERATIONS DURING 1997 quick response to a pending crisis is required, before the House Committee on Agriculture, In 1997 the Trading Desk at the Federal Reserve May 21, 1998. Bank of New York managed reserve conditions with the objective of maintaining the federal funds rate around the level desired by the Fed- 538 ANNOUNCEMENTS eral Open Market Committee. In 1997 the port- Procedure for submitting nominations for new folio of domestic securities in the System Open members to the Consumer Advisory Council Market Account expanded by a record $41 biland notice of a council meeting. lion (excluding all temporary operations), ending the year at $448 billion. Outright purchases Amendment to the tier 1 leverage capital of Treasury securities totaled $44 billion, offset standard. to a small degree by redemptions of some Trea- Issuance of a final report by the System Task sury and federal agency issues. The growth in Force on Internal Credit Risk Models. the portfolio during 1997 was significantly higher than the $15 billion increase recorded in Issuance of enforcement actions. the preceding year. The Desk closely observed Availability of the Federal Reserve Regulatory the behavior of the federal funds rate for any Service on CD-ROM. indication that the decline in operating balances associated with the spread of retail sweep pro- Change in Board staff. grams or any other development was impeding its ability to control the funds rate or contribut- 541 MINUTES OF THE FEDERAL OPEN MARKET ing to volatility in the rate. Volatility in the COMMITTEE MEETING HELD ON federal funds rate did not increase from the MARCH 31, 1998 previous year, but it remained above the levels At its meeting held on March 31, 1998, the that had characterized earlier years. Committee adopted a directive that called for maintaining conditions in reserve markets that 533 INDUSTRIAL PRODUCTION AND CAPACITY were consistent with an unchanged federal funds UTILIZATION FOR MAY 1998 rate of about 5l/i percent and that contained a Industrial production rose 0.5 percent in May, to bias toward the possible firming of reserve con- 128.8 percent of its 1992 average, after revised ditions and a higher federal funds rate. increases of 0.3 percent in April and 0.4 percent in March. The rate of industrial capacity utiliza- 547 LEGAL DEVELOPMENTS tion edged up 0.1 percentage point in May, to 82.2 percent. Various bank holding company, bank service corporation, and bank merger orders; and pending cases. 536 STATEMENT TO THE CONGRESS Alan Greenspan, Chairman, Board of Gover- 575 COMBINED FINANCIAL STATEMENTS OF nors, discusses the Asian financial crisis and THE FEDERAL RESERVE BANKS says that he continues fully to back the Administration's request to augment the financial These financial statements were prepared by an resources of the International Monetary Fund by independent accounting firm and certify the approving as quickly as possible U.S. participa- combined statement of condition of the Federal tion in the New Arrangements to Borrow and an Reserve Banks as of the end of 1997 together increase in the U.S. quota in the IMF. He said it with related statements of income and changes is better to have the IMF fully equipped if a in capital. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Al FINANCIAL AND BUSINESS STATISTICS A68 BOARD OF GOVERNORS AND STAFF These tables reflect data available as of MAY 27, 1998 FEDERAL OPEN MARKET COMMITTEE AND A70 STAFF; ADVISORY COUNCILS A3 GUIDE TO TABULAR PRESENTATION A4 Domestic Financial Statistics l0NS y£ BQARD puBUCAT A42 Domestic Nonnnancial Statistics A50 International Statistics A74 MAPS OF THE FEDERAL RESERVE SYSTEM A63 GUIDE TO STATISTICAL RELEASES AND SPECIAL TABLES A76 FEDERAL RESERVE BANKS, BRANCHES, A66 INDEX TO STATISTICAL TABLES AND OFFICES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

PUBLICATIONS COMMITTEE Lynn S. Fox, Chairman H S. David Frost • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Dolores S. Smith • Richard Spillenkothen • Edwin M. Truman The Federal Reserve Bulletin is issued monlhly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official stalements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Multimedia Technologies Center under the direction of Christine S. Griffith, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Open Market Operations during 1997 This article is adapted from a report to the Federal The Committee's directives instruct the Desk to Open Market Committee by Peter R. Fisher, Execu- maintain the federal funds rate on average around a tive Vice President of the Federal Reserve Bank of specified level. Open market operations are used to New York and Manager of the System Open Market provide a level of nonborrowed reserves that will Account. Virginia Cheng, Spence Hilton, and Ted allow the federal funds market to clear at the indi- Tulpan were primarily responsible for the prepara- cated rate. Each day, the Desk aims to keep the rate tion of this report. Many other members of the Mar- as close as possible to the targeted level with a kets Group assisted in the preparation; Annemarie minimum of volatility. But in deciding each day's Gemma and David Parseghian provided invaluable operations, the Desk also considers how its flexibility research support. for arranging operations in upcoming days might be affected by that day's course of action as well as how the behavior of the funds rate that day might influence rates in subsequent days. i.I:M/:M:\TIO.\ OI: Most FAR) I'OI At the start of each two-week maintenance period, IX a strategy for meeting reserve needs is developed that is consistent with the estimated demand for excess reserves and the expected reserve supply arising from discount window borrowing. These estimates are cap- In 1997 the Trading Desk (Desk) at the Federal tured in the Desk's allowances for excess and bor- Reserve Bank of New York managed reserve condirowed reserves made each period.1 The reserve mantions with the objective of maintaining the federal agement strategy also depends on the estimated daily funds rate around the level desired by the Federal pattern of reserve supply and demand. The approach Open Market Committee. The FOMC tightened must be flexible enough to allow for the inevitable monetary policy at its March meeting, raising the revisions to the reserve estimates, and as a period intended federal funds rate from 5VA percent to unfolds, the Desk will also respond to the observed 5!/2 percent, the level at which it was held over the behavior of the federal funds rate, which may prompt remainder of the year (table 1). There was no associsome reassessment of daily or period needs. Each ated change in the discount rate. morning, this process of developing a strategy both for the day and for the remainder of the maintenance period is repeated. In deciding on open market operations each day, I. 1 L-iivT.i! i i]vr, Murkul (. ninuiiikv ineciinc (1a:i.pi: ami the Desk takes account of the estimates of reserve nui^v r;n.^, IVLVIVIIV:- 17, IW(> IVccmha I(>, 1097 supply; any special factors that may raise or lower the need for excess reserves, such as high or uncertain Hxpcaed Duleof meeling federal funds Di.scmini rate payment flows; cumulative excess holdings to that rue (percent) (perccn!) 12/17/% 5.25 5.00 2/410 2/5/97 5.25 5.00 1. Tn the December 3 maintenance period, the allowance for excess reserves was lifted from $1 billion, where it had been set for many 3/25/97 5.50 500 years, to $1.4 billion and held there for the balance of the year. The change was made in recognition of a rising trend in excess reserve 5/20/97 5.50 5.00 holdings. As had been the case for several years, adjustment and 7/1 m7/2/97 5.50 5.00 seasonal borrowing was expected to meet just a fraction of total reserve demand in all periods, although average levels of adjustment H/iy/y7 5.50 5.00 borrowing were somewhat higher in 1997 than in earlier years. Actual WMUVI 5.50 5.CX) levels of excess and borrowed reserves sometimes differed substantially from the formal allowances as a result of errors in the reserve 11/12/97 5.50 5.00 projections or temporary disruptions to the efficient distribution of reserves. The Desk made informal adjustments to these allowances as 12/10/97 5.50 5.00 needed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

518 Federal Reserve Bulletin • July 1998 ••.,n-.;ii.-i'on .':q-o:.i: i_/.ic•-._ i \. \[ liilln.!.. ..! <li!lt.us i-:; H \nv\\ m ».\ i I.SO 1110 50 . - • I II I'M? NOTE. Cumulative monthly value of initial sweeps. point in the period; the number of days remaining Federal Reserve Banks. In 1997, deposits initially until the settlement day; and the risks seen in the affected by new or expanded sweep programs totaled reserve estimates. If the federal funds rate is trading $85 billion, bringing the cumulative value of these away from its desired level at the time of the opera- programs since their inception in 1994 to $252 billion tion, the Desk may adjust the daily level of excess (chart I).3 The increase in 1997 was less than the reserves it aims to provide to contain pressures in the previous year's rise, which reflected a slowing in the financing markets and to steer the rate back toward spread of sweeps on NOW accounts. A larger proporits desired level in later trading. Responding inade- tion of the new programs implemented in 1997 was quately to current rate pressures increases the applied to retail demand deposits. New sweeps in likelihood that these pressures will become self- 1997 more than explain the total drop of $3.2 billion reinforcing and influence rates in upcoming days. in reserve requirements over the year (chart 2). The Desk also attempts to anticipate how the rate Required operating balances—which include the would trade over the entire day and recognizes that balances that banks must hold to meet clearing balproviding high or low levels of excess reserves could ance requirements and reserve requirements but lead to elevated volatility. Several changes were made to the Desk's usual 3. All estimates refer to deposits initially swept by depository operating practices during 1997. At the start of the institutions at the start of a program or when the coverage of a year, the normal entry time for temporary operations program is expanded. These figures are not updated to include any was advanced one hour, to shortly after 10:30 a.m., later changes in the underlying deposit balances affected by a sweep program. and the par value of all accepted propositions on each market operation began being announced shortly after selections were completed. Over the year, the differ- 2. ;• ent tranches comprising a coupon pass were spread over longer periods of time. In November, the Desk also began making public each morning the standard deviation measuring the volatility of the federal funds rate on all trades arranged the previous day by the brokers surveyed by the Markets Group.2 The value of retail deposits affected by sweep programs continued to grow in 1997, further reducing the level of reserve balances maintained at the 2. The daily standard deviation measures in basis points the disper- NOTE. All figures an maintenance period averages calculated at two-week sion of the federal funds rate around the daily effective or average intervals. Required reserves are the sum of required reserve balances and rate. This measure of volatility accounts for the volume of trades applied vault cash. Required operating balances are the sum of required reserve arranged at different rates. balances and required clearing balances. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Open Market Operations during 1997 519 N •. --.lei 11 ; u ?i i i • * :o ->\ hv.r.im :IIK' [oici.il ':\'S:\'J:\' a record $41 billion (excluding all temporary opera- :-,.:vuiiL;._--, \i\iv cm; IMU:.I;; ., l°S!)-(>7 tions), ending the year at $448 billion (chart 3). Outright purchases of Treasury securities totaled Billions of dollar* $44 billion, offset to a small degree by redemptions Levels of some Treasury and federal agency issues. The ntl i*m*no' sivuritic* — 400 growth in the portfolio during 1997 was significantly Min coupon* higher than the $15 billion increase recorded in the Mir\ hilK — 300 preceding year. Movements in operating factors and reserve demands were important determinants of — 200 the size of the portfolio's expansion, but the shifts in strategies used by the Desk to address seasonal —• 100 reserve shortages before year-end in each of the past two years also contributed to the increased level of ! I I I I purchases in 1997. Net changes /•wwvnv t'in.\ Currency in circulation rose $31 billion from yearend to year-end and was the reserve factor that created the greatest need for a permanent expansion of the portfolio in 1997 (table 2).6 Apart from the 1990 1995 6. In percentage terms, currency grew 7 percent from year-end to year-end, modestly faster than in each of the preceding two years. exclude applied vault cash—fell somewhat less than Available data suggest that shipments abroad accounted for at least half of the increase in 1997, which was similar in proportion to other required reserves, about $2.7 billion, reflecting a recent vears. slight increase in the level of required clearing balances and a small drop in applied vault cash.4 The rise in clearing balances was minor because many banks had already increased these balances to the maximum level warranted by their use of Federal Billions of dollars Reserve priced services.5 The decrease in applied Levels in maintenance vault cash was accompanied by an even greater drop Changes' period ending Item in total vault cash, which includes surplus vault cash. 1/3/96 1/1/97 12/31/97 19% 1997 Many banks that now have no required reserve balances have explored ways to economize on their Required reserves 57.3 50.6 47.4 -6.7 -3.2 vault cash holdings to minimize the opportunity cost Factors affecting associated with their surplus vault cash. nonbttrmwed restarts Currency in circulalicin 423.4 448.1 479.4 -24.7 -31.3 Foreign currency 16.4 16.2 16.6 -.2 .4 Foreign repurchase /'/•A'.w \ \L\ r Aruvn Y /-: ,• //; .v;v/ .1/ (>ri\ agreement pool . 12.5 14.0 17.0 -1.5 -3.0 Gold and foreign W W>.'A7. ' .-\< 'COi X! deposits 21.0 20.6 20.1 -.4 -.5 Float and float-related, as- In 1997 the portfolio of domestic securities in the of adjustments .. 1.0 2.0 .9 1.0 -1.2 Treasury balance 6.7 6.0 4.9 .7 1.1 System Open Market Account (SOMA) expanded by Applied vuult cash ... 37.4 38.1 37.7 .7 -.4 Required clearing balances 5.2 6.6 6.7 -1.4 -.1 All other item* 25.5 24.3 23.2 -12 -1.1 4. This measure of required operating balances does not include the Net changes in effect of as-of adjustments or carryins on the need to hold balances to nonborrowed factors -27.0 -36.3 meet all requirements. 5. Nonbound banks, which meet all their reserve requirements with Ouistundins RPs vault cash, earn only 90 percent of the federal funds rate on any Par value 11.4 16 3 10.1 4.9 -6.2 Premium .7 1.4 .5 .6 -.8 required clearing balances, and some nonbound institutions have indicated that this has made them less willing to increase their 1. Changes in factors affecting nonborrowed reserves are exprcsMid in terms required clearing balances. of the effect on reserve supply. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

520 Federal Reserve Bulletin • July 1998 foreign repurchase agreement (RP) pool, which rose $3 billion, other factors affecting nonborrowed Rlllrnm til dollars reserve supply did not change significantly on balance over the year. The decline in reserve require- Puncha.sw from foreign act'ou Purchase* in the murkel ments brought on by the further expansion of sweep Rrricmplfam — 30 accounts moderated the need for a permanent expansion of the portfolio. Currency growth was greater in 1997 than in 1996, although the absolute decline — 20 in reserve requirements was less. Altogether, movements in nonborrowed reserve factors and required — 10 reserves deepened underlying reserve shortages about $13 billion more in 1997 than in the previous year. IWft 19% I«W7 IW7 TO7 i>t )/'n>'-f ad AVvrnv rrcasury Treasury Federal Treasury Treasury Federal bills coupons agencies bills coupons agencies NOTE. Purchases are positive values; redemptions are negative values. Shifts in the Desk's year-end reserve management strategies also help explain why the total increase in 'Iru the portfolio last year was so much larger than in the preceding year. As explained in last year's annual Most of the expansion of the portfolio was achieved report, the Desk conducted relatively few outright by arranging outright purchases in the market purchases late in 1996 in order to place itself in a (chart 4). However, nearly $3.6 billion of bills were position of needing to add, rather than drain, reserves purchased directly from foreign accounts, compared on a temporary basis when required reserve balances with only $88 million in 1996. The Desk bought most reached their seasonal low in early 1997. A relatively of these—$3 billion—on two separate occasions in modest level of outright purchases made in late 1996 December. The second of these purchases, totaling left a reserve shortage of nearly $16 billion in the $2 billion, was made late in the month. This purchase maintenance period covering the 1996 year-end that further reduced temporary reserve shortages around was addressed with temporary RPs—about $5 billion the year-end, but the reserve effect was not long more than was used to address shortages over the lasting because the Desk chose to purchase Treasury preceding year-end period.7 After the seasonal low bills that matured in January and to redeem them at passed in early 1997 and as reserve needs began to maturity. grow again, the Desk bought nearly $6 billion of The Desk continued to break out its purchases of coupons outright in the market in the first quarter, coupon securities into separate tranches covering difadding relatively more on a permanent basis than is ferent portions of the yield curve. In late 1996, the usually the case at this time of year and returning the SOMA Manager informed the FOMC and the priunderlying needs to more typical levels. mary dealers that coupon purchases might be spread In planning for the lows in operating balances in over several weeks. Previously the tranches making early 1998, the Desk felt that this interval could be up a pass had been more concentrated, generally addressed with either moderate add or drain needs, falling within the span of a few days. The sets of given the banking system's successful management tranches that made the passes in 1997 spanned interwith declining reserve balances over the past year. vals that ranged from five to twenty-four business Thus, its approach to the year-end buildup in reserve days. The intention was to reduce the effect of the needs in 1997 was more typical to that of earlier Desk's market entries on market prices; over the years: The reserve shortage over the year-end mainyear, prices showed little reaction to open market tenance period was reduced to about $10 billion coupon purchases. through purchases of $19 billion of Treasury coupons and bills in the final two months of the year. S(K\IA Portfolio Manti^oiirrt The overall expansion of the portfolio was more 7. These amounts represent the par values of the RPs arranged in concentrated in holdings of Treasury coupon securithe year-end maintenance periods. The cash values including premiums were modestly higher in each year. ties than in the preceding year, largely because Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Open Market Operations during 1997 521 reduced Treasury issuance of bills deflected some of 5. Oitcu nunkv'i ' t|\-ialii liiv ikvik'd tu hii palh. h\ the Desk's outright purchases into the coupon sector. TTUimUTi.iikv jvriiivl, January ?, I'-lVd Do^-mlx-i U. \i>'r-' Altogether, the Desk bought $35 billion of coupon Billions nf dollar; securities in 1997 in six passes in the market, compared with $7 billion purchased in two passes in Final rstiinatt- 1996. Bill purchases totaled $9 billion, with about S5'/2 billion bought in two passes in the market. These purchases were down a bit from the $10 billion purchased in 1996, almost all of which was acquired in two passes in the market. Given the relatively greater total of outright purchases needed in 1997, the Desk's preference would have been to purchase bills and coupon securities in more equal proportions. However, the Desk felt that the reduced bill issuance over much of 1997 would have made it difficult to purchase much supply in the secondary market with- Jan. 3 July 3 Jan. I July 2 Dec. 31 out sharply affecting market prices. Thus, the Desk 1996 1996 1997 1997 1997 Maintenance period settlement duys did not buy any bills in the market between April and NOTE. Initial estimates are as of the first day of each period; final estimates November. In December, after a period of somewhat reflect all revisions to nonborrowed reserve factors and required reserves availlarger bill auctions and more liquid market condi- able as of the day after the period ended. Data are daily. tions, the Desk bought bills in the market again but in relatively modest quantities; prices did not respond operations. These temporary operations must be much to these purchases. structured to allow for day-to-day variations in Because outright purchases were concentrated in reserve supply and demand and for the possibility of the coupon sector, the average maturity of the SOMA revisions to reserve estimates within a maintenance holdings of Treasury securities increased to period. 42.6 months at the end of the year from 41.2 months The initial reserve shortages estimated at the start one year earlier. As of the end of 1997, 13.0 percent of each period were somewhat larger in 1997 than in of total marketable Treasury debt outstanding was the preceding year (chart 5). When the Desk began held in the SOMA, up from 11.7 percent one year to operate at an earlier time, it was more comfortable earlier. This increase reflected the high level of out- arranging larger temporary RPs. But large shortages right purchases made in an environment of shrinking were not viewed as a necessity for managing the federal government deficits. funds market since the banking system successfully At midyear, the Desk picked up the pace of its adapted to lower operating balances with a variety of gradual runoff of federal agency securities that began underlying reserve needs. The larger reserve shortin 1982 by redeeming all agency securities rather ages help to explain the absence of matched salethan exchanging them for new eligible issues as they purchase transactions in 1997. matured. Holdings of these issues dropped $1.2 bil- On balance, net revisions to nonborrowed reserve lion over the year. About $2 billion of Treasury factors and required reserves made after a period had coupon securities, a portion of the maturing original begun were somewhat greater in 1997 than in 1996— issue seven-year notes held by the SOMA, were also about $1.3 billion in absolute value per period comredeemed during 1997. The remaining seven-year pared with $900 million the previous year.8 All of the notes that matured were rolled into the Treasury's increase reflected the unexpected inflow of tax inflation-indexed securities, and the Desk held receipts following the April 15 tax date. On the eve $1.65 billion of these securities, about 5 percent of of this date, tax inflows were not expected to cause the total issuance, at the end of the year. the Treasury balance to rise above its targeted level of $7 billion. During the May 7 period, the Treasury balance averaged $28 billion and peaked at $52 bil- TLW'ORAKY ACTIVITY FOR THE SYSTEM Oh'L.V M:\RKLT .\CCOt.::\f liinpti)Lirv AV.uTiv \ccii.\ mu! IJit>ic^tum< 8. This calculation compares the actual effect of factors and required reserves on reserve needs during a maintenance period with The Desk arranges temporary operations to meet their estimated effect at the start of a period, ll does not measure net or reserve needs that are not addressed by its outright gross daily forecast misses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

522 Federal Reserve Bulletin • July 1998 lion on one day. Even apart from this episode, how- f>. S UMUporan, operations. lW5-(>7 ever, the Treasury balance proved to be one of the Number more difficult factors to predict, as it had often been in preceding years. Period-average revisions to the foreign RP investment pool rose from about $350 million in 1996 to about $500 million in 1997, reflecting a few instances when accounts placed a substantial amount of funds in the investment pool on relatively short notice. The need to complete daily projections sooner each morning to accommodate the Desk's earlier entry into the market may also have contributed to some of the decreased predictability of this factor. On the other Volume NIIKHB of dotUn hand, revisions to currency were generally smaller in 1997. Revisions to applied vault cash made within a maintenance period averaged $230 million, similar in magnitude to the revisions in 1996 but considerably greater than the revisions in years before 1996. Sweep accounts have compounded the difficulties of estimating the amount of vault cash that could be used to meet reserve requirements. Required reserves proved to be modestly more difficult to forecast in Fbied-wnn Withdrawable Overnight Tarn Overnight syiicin lAfti tytiicDB icfxucb&to nmched mulched 1997. Revisions to applied vault cash were often h rcpurehise ajreemests' sale- saleagreements purchase purchase positively correlated with revisions to required uanjociioos transactions reserves, thereby reducing their net effect on overall 1. Includes all System and customer-related repurchase agreements arranged period need; but revisions to these two measures for one business day. were not always made on the same day within a period. Another source of uncertainty for reserve opera- day when managing their accounts because of their tions was the premium on RPs—measured by the reduced operating balances. In this environment, the difference between the par and the cash values of Desk intervened more frequently to maintain a stable collateral on accepted propositions. The drop in Trea- balance between daily reserve supply and demand. sury coupon yields over the second half of the year Relatedly, in structuring its temporary operations, was associated with an increase in the average premi- the Desk was careful not to let the estimated level ums on RPs as market prices on many outstanding of operating balances fall too low on any day, a coupon issues rose further above their par values. consideration that sometimes argued for overnight The premium on RPs during the final quarter of the operations. year averaged 8 percent, twice as high in percentage The Desk still frequently arranged term RPs to terms as during the first half of the year. Although help meet large underlying reserve shortages that had changes in the underlying trend of the premium were to be addressed with temporary operations, although readily recognized, the premium often varied signifi- these operations were often supplemented by overcantly from one operation to the next and was diffi- night RPs to smooth uneven daily excess patterns. cult to anticipate for any single operation. The number of days that two operations—one term RP and one overnight RP—were announced simultaneously increased from five in 1996 to seventeen Temporary Open Market Operations in 1997, most often occurring at the start of a maintenance period. The risk that subsequent reserve In 1997 the Desk greatly increased its use of over- revisions would unexpectedly create a surplus was night (one business day) RPs (chart 6). A trend reduced because term RPs were used less frequently toward increased use of overnight operations began to meet an estimated reserve shortage in its entirety; in 1996 and largely reflected the Desk's perception for this reason the Desk did not find it necessary to that banks had less flexibility to absorb sizable imbal- make withdrawable any of the term RPs it arranged ances between reserve supply and demand on any in 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Open Market Operations during 1997 523 The Desk continued to adhere to its normal prac- Treasury balances ami outstanding rcpuichasi? tice of arranging its temporary operations at a preset aL'rccm<.-iils (RPsl. April 15 May 14, W97 time each day—shortly after 10:30 a.m. On some occasions when large anticipated reserve shortages Treasury balance at the Federal Reserve were estimated, the Desk conducted its operations before the normal entry time, usually around 10:00 a.m., after a full set of reserve estimates became available. But the number of instances when the Desk entered the market before the normal entry time was down from the preceding year—eleven compared with nineteen in 1996—largely because the usual entry time had been moved forward. The — 10 need to enter the market early was most pressing during the April tax season, when upward revisions 1 i i i i i i l to the estimated Treasury balance left large deficien- Daily «nd cumulative ouisiandiag RPs cies at the same time that the pool of available • Arrange* that fey collateral was dwindling because of the sizable amounts already held on outstanding RPs. uatstaixUng On three occasions in 1997 the Desk reentered the market shortly after having made its selections on a previously announced temporary operation. In all three cases, propositions on the earlier operations fell short of the amount needed to address the estimated reserve shortage on the day. is is n ira a»24;J5«»s> i i s* 7 s.•> a ftw Reserve Management during the April May April Tax Season During the second half of April, the Desk's activity tive business days starting on April 23 in an attempt was significantly influenced by unexpectedly large to garner sufficient propositions for its operations. On reserve shortages that resulted from tax receipts to two occasions, propositions on an initial RP fell short the Treasury that far exceeded anticipated inflows. of the Desk's desired amount, and a second operation Most of the unexpected strength came from indi- was arranged. Collateral became increasingly scarce vidual nonwithheld tax receipts. These receipts as the value of securities already held by the Desk on totaled $123 billion in April, about $30 billion more outstanding RPs grew, and the spread on RP rates to than expected and more than 20 percent higher than the federal funds rate dropped well below normal the corresponding flows in 1996. It was initially levels. The total par amount of RPs outstanding believed that the Treasury balance at the Federal reached a record peak of about $51 billion on Reserve could be maintained around a target level of April 30, coincident with the peak in the Treasury $7 billion. However, tax receipts by April 22 left no balance. Reserve shortages and RPs quickly receded further capacity in Treasury Tax and Loan accounts when regular government outlays and principal and at commercial banks to absorb additional inflows, interest payments were made in early May. which consequently had to be maintained at the Treasury's account at the Federal Reserve. The Treasury's balance with the Federal Reserve peaked at a record EXCESS RESERVES AND high of $52 billion on April 30 (chart 7). THE FEDERAL FUNDS RATE The rapid progression of daily upward revisions to tax flows, the Treasury balance, daily reserve defi- The Desk closely observed the behavior of the fedciencies, and period-average reserve needs led the eral funds rate for any indication that the decline in Desk to address huge daily reserve shortages with operating balances associated with the spread of retail both sizable overnight and term RPs. Given the size sweep programs or any other development was of the daily needs, the Desk entered the market impeding its ability to control the funds rate or conearlier than its normal operating time on six consecu- tributing to volatility in the rate. Excess reserve pat- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

524 Federal Reserve Bulletin • July 1998 terns were also examined to see whether banks were 9. Maintenance perioil averages of eiiHiiilaiive excess holding more excess reserves—either because they iwsene lioli'liiiiis by laree banks anJ tit her institutions, wished to protect themselves against end-of-day IW4-97 overdrafts or because they were less able to reduce Million* of dollars large positive daily excess positions accumulated dur- Other institutions ing a period. In general, excess reserve levels did 1.500 rise over 1997, but the increase was concentrated at smaller institutions that have implemented sweep programs. Volatility in the federal funds rate did not increase from the previous year, but it remained above the levels that had characterized earlier years. Excess Reserves 1994 1995 1996 1997 The period-average level of excess reserves rose NOTE. The category "Olher institutions" includes small banks, thrift institugradually through much of the year and then jumped tions, foreign institutions, and nonreporting institutions. Maintenance period significantly higher in the final quarter, reflecting the averages are calculated at two-week intervals. Desk's accommodation of heightened bank demand (chart 8). Among the group of large institutions, tions that have implemented sweep programs, even which includes about 120 banks and thrift institutions though accumulated initial values of sweep programs having relatively large deposit liabilities, increases at all depositories categorized as other than large were concentrated at a small number of banks that accounted for less than one-third of the total.9 The had adopted sweep programs. extent to which the smaller institutions have deliber- Sweep programs, however, have had some effect ately increased their excess reserves to cover clearing on the interperiod pattern of excess holdings at large needs remains unclear. At least some of the increase institutions in general. Usable carryover levels of in excess holdings at these smaller institutions could these banks fell sharply in 1997 because of lower prove temporary: Among a small sample of institulevels of required reserve balances. This decline has tions examined in this category, the level of excess dampened period-to-period volatility in excess hold- reserves always rose sharply for a few maintenance ings at the large banks, and aggregate excess levels periods immediately after a sweep program was for these institutions are now rarely negative launched but then fell back to a much lower level (chart 9). after the institution adapted to its new reserve require- Much of the increase in excess reserves seen over ment environment.10 After this initial adjustment, the past year has been concentrated at smaller banks about half of the banks examined showed levels and thrift institutions, and specifically at those institu- of excess reserves remaining modestly above levels that were typical before the sweep program was implemented. In arranging its open market operations, the Desk S. Maintenance period averages of touil excess IVM'IM' gauges the pace at which banks prefer to accumulate holdings, I'W4 M7 reserves during the maintenance period to meet Millions of dollars period-average requirements. Because of averaging, there can be considerable variability in the intraperiod pattern of excess reserves that banks can comfortably hold, and actual intraperiod excess does vary from period to period. But historical patterns suggest that for several years banks have had a preference for accumulating more excess balances over the sec- 9. At year-end, sweeps at institutions other than large banks totaled $77 billion. 10. In general, a similar pattern of sharply higher excess holdings 1994 1995 1996 1997 after a new sweep program was implemented was not found among NOTE. Maintenance period averages are calculated at two-week intervals. larger institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Open Market Operations during 1997 525 [(). Averse lewis ot CXCL'SS iVNeive. hoMinvs. 11. I lie IIKMII etkv(i\e lederal tinuls rale in a inahuenaisee by ilnv in a miiinlenancc period. I*-)0S 97 peril ill versus the taavt r.iic, 1 Q')4—L>7 Million j of *)llw> Bnta point* D MM • Avenge of ab«ohUr dUTcrrnco • 1W6 • Avenge of difference — 6.000 rniann — 4.000 — 2.000 • , I I I HUB. FH Mon. TUO. Wed. Thus. Fri. Mon. Tact. Wed. Week one Week two 1994 1995 1996 1997 NOTE. The average effective funds rale in a mainienance period includes weekends and holidays. Differences are of period effective rates from target. ond week of a maintenance period, which the Desk attempts to accommodate in its reserve-supplying average deviations because of some tendency for firm operations to stabilize the federal funds rate and soft daily effective funds rates to be partly offset- (chart 10). Within the second week, however, banks ting within a maintenance period.12 accumulated somewhat more excess reserves in the Intraday volatility as measured by the daily standays leading to the settlement day and somewhat less dard deviation of the funds rate on all trades arranged on the settlement day itself in 1997 than in the during the day increased in 1996 and remained at a preceding year. similar level in 1997. The median standard deviation for all business days increased from 5 basis points to 10 basis points in 1996 and declined only slightly, to Federal Funds Rate 9 basis points, in 1997 (chart 13). The number of days when intraday volatility was especially high, The federal funds rate averaged over two-week main- defined as days marked by a standard deviation in tenance periods was generally as close to the intended excess of 50 basis points, jumped from eighteen in funds rate in 1997 as it had been in earlier years." 1995 to twenty-eight in 1996 and then declined to The absolute values of the differences between the twenty-five in 1997.13 On most days, volatility is mean effective funds rate and the target rate for each greatest in late trading, when the extremes on the maintenance period have averaged 4 or 5 basis points daily trading range for the funds rate are typically in each of the past four years (chart 11). The period- reached. The lower operating balance environment of average effective funds rates showed a slight upward the past two years is seen as a principal cause of this bias of slightly more than 1 Vi basis points relative increased volatility. It does appear, however, that the to the intended rate in 1997. But although period- modifications that the Desk has made to its selection average levels of the funds rate have been as close to of operations and the provision of more excess the target as before, deviations of the daily effective reserves in 1997 prevented intraday volatility from funds rate from target have increased modestly, coin- worsening in 1997 despite the further decline in ciding with the large drop in operating balances operating balance levels. beginning in 1996. The mean and median absolute values of deviations of the daily effective funds rate from target for all business days rose 5 and 3 basis points, respectively, in 1996 and did not fully return 12. In addition, the mean values of the period-average deviations capture the effects of weekends and holidays, but the mean values of to the earlier levels in 1997 (chart 12). Daily deviathe daily deviations consider only business days. tions from target are generally greater than period- 13. The daily data plotted in charts 12 and 13 include days when the targeted federal funds rate was changed. There were six such days in 1994, three in 1995, and one in both 1996 and 1997. Excluding these days reduces the mean value of the absolute difference between the effective and targeted funds rates 1 basis point in 1994, to 11 basis 11. The calculation of the average or mean effective federal funds points (chart 12); other summary statistics for the mean and median rate for a maintenance period includes weekends and holidays. values presented in charts 12 and 13 are unchanged. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

526 Federal Reserve Bulletin • July 1998 12. livi|uerk"\ of n \aluo i>l Uc\ialiuns ol J;ul\ cflc'liw k'tL'nil liinih nile from l.uivl, in [VIVL'IH.IL:C poinK, 1994—L<7 1994 — 30 — 25 — 20 J — IS — 10 — 5 I-I-I 111-I I-I-I IM 1-1 1 I I I-I I II I !•! I I I-I I 1995 30 23 20 15 10 t 5 I ill It lIl-lMlMlllllll-l-lllMIM fl-l-lil !•!-! I I-I IM I I I I I I IM-I-I I-I I ill I 19% 30 25 ml 20 I 15 10 5 iftllllllll-lllllW-IBI I ill-I lll««-lI-IM I-I I I-I-I I I I-I I-I I i ll I 1997 30 25 20 IS t 10 IIIIJJI- 3 I •! •! ll-I •! •!-I-I _l I HJ l_l I I I I I I !•! I II—I—I I I I .05 .10 .15 .20 .25 .30 .35 .40 .45 >SQ NOTE. The means and medians are the following: for 1994, mean, 0.12, median, 0.05; for 1995, mean, 0.10, median, 0.05; for 1996, mean, 0.15, median, 0.08; for 1997, mean, 0.12, median, 0.07. Another factor that may have hdped cap volatility although the changes do not appear to be directly in the funds rate was an increase in adjustment credit linked to the level of operating balances (chart 14). borrowing in 1997. Although absolute levels of this The firm financing conditions that have long been borrowing remained relatively low, adjustment credit associated with maintenance period settlement days on nonsettlement business days averaged about were much less pronounced in 1997 than in the $120 million in 1997 compared with slightly more preceding two years. The higher period-average levthan $50 million the preceding year. This increase in els of excess and the provision of a greater portion of borrowing may have resulted from efforts to encour- total excess holdings ahead of the settlement day in age banks to use the window when reserve markets 1997 may have been contributing factors. Somewhat tighten, although it could also reflect in part the soft market conditions continued to prevail on Fribanking system's reduced flexibility in adjusting to days, especially the second Friday of each period. unanticipated shortfalls in reserves given the lower The firm conditions that have characterized the marlevel of required operating balances. ket on many Mondays over the past two years to a Finally, intraperiod deviations of the daily effective large degree reflected a shift in calendar dates: Many funds rate from target showed some changes in 1997, more days characterized by high payment flows and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Open Market Operations during 1997 527 l.i. 1 •'ivquunL) ot standard dcwalmns ut dail\ dlei'li1. L- federal IinuK i.ile, ill peKvni.(;:e [nunls. Il'c)4-lJ7 Number of tarinett dap 1994 — TO — 60 — SO — 40 ill I— 30 li — 20 — 10 I ) llillllllllllllllMiBIBIBI-l I-IBI-I I I_I.I-I»IMI_I-I_I IJ—] I 1 _. I I 1 1 _l_l-l_ .1. I—i. I -I I—t_l_l. ill 1995 — 70 — 60 -™ SO — 40 — 30 I— 20 — 10 I IMlMl II1I1I«I1I1IM»IMI-I-I-I«I I —I I— I—!•! —I I—I I—I..I—I I I l_i l_] I I I 1—l-l I I I I l_l !•! 1996 —* 70 — 60 — 50 — 40 I— 30 — 20 _ — 10 llllllll I I .. 1-1 1-l-IBI-IBIal-l-l I l-l I 1-1-1 l-l-l-l l-l-l I I l-lll 1 1997 _ 70 — 60 — 50 — 40 1— 30 — 20 ill I I l^lllItllllllllllltlllll|Bll|Mf|llIl-l I !•! I_IMI_,I | l | | 1-1-1 t_l-|_,l I l-l I 1 I I l-l I ill I w .02 .05 .10 AS .20 .25 .30 .35 .AO .4$ >;50 NOTfc. The medians are the following: for 1994, 0.07; for 1995, 0.05; for 1996,0.10; for 1997,0.09. the associated firm market conditions fell on a Mon- 14. btkvli\c k'tk'tal tuniK rate lev. the Un'LVt r.stc e\pn.'\sc<l day in 1996 and 1997 than did so in 1995.14 as (he average ol ditierL'ni'c- hy day <>i mamlerumce period. IW5 l>7 AFP1-:.\1)1.\ A: AL THORI/ATIOA H)R DOMESTIC 1995 OPEN MARKET OPERATIONS 1996 — 30 J997 Open market operations during 1997 were conducted — 20 under the Authorization for Domestic Open Market Operations. The standard authorized limit on inter- I Ji — 10 14. Many financial payments and Treasury auction settlements that otherwise would fall on a weekend, according to calendar rules, are I I I I I I I I I I I deferred to the next business day, increasing the likelihood that these Thurs. Fn. Mon. Tues. Wed. Thuis Pri. Man Tuo. Wed payment flows would fall on a Monday. Week one Week two Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

528 Federal Reserve Bulletin • July 1998 APPENDIX A: AUTHORIZATION FOR DOMESTIC to move into the channels of trade within a reasonable time and that are secured throughout their life by a warehouse OPEN MARKET OPERATIONS—CONTINUED receipt or similar document conveying title to the underlying goods; provided that the aggregate amount of bankmeeting period changes in System Account holdings ers acceptances held at any one time shall not exceed of U.S. government and federal agency securities was $100 million; $8 billion. Four temporary changes were made to this (c) To buy U.S. Government securities, obligations leeway during 1997. The Committee raised the autho- that are direct obligations of, or fully guaranteed as to principal and interest by, any agency of the United States, rized limit on intermeeting period changes in System and prime bankers acceptances of the types authorized for holdings to $12 billion at its February, March, and purchase under l(b) above, from dealers for the account of November meetings. The leeway was increased a the Federal Reserve Bank of New York under agreements second time during the November intermeeting for repurchase of such securities, obligations, or acceptances in 15 calendar days or less, at rates that, unless period to $17 billion on December 8. The Authorizaotherwise expressly authorized by the Committee, shall be tion for Domestic Open Market Operations in effect determined by competitive bidding, after applying reasonfor 1997, except when amended as above, is reprinted able limitations on the volume of agreements with indibelow. vidual dealers; provided that in the event Government securities or agency issues covered by any such agreement Authorization for Domestic Open Market Operations are not repurchased by the dealer pursuant to the agreement or a renewal thereof, they shall be sold in the market or transferred to the System Open Market Account; and 1. The Federal Open Market Committee authorizes and provided further that in the event bankers acceptances directs the Federal Reserve Bank of New York, to the covered by any such agreement are not repurchased by the extent necessary to carry out the most recent domestic seller, they shall continue to be held by the Federal Reserve policy directive adopted at a meeting of the Committee: Bank or shall be sold in the open market. (a) To buy or sell U.S. Government securities, including securities of the Federal Financing Bank, and securities 2. In order to ensure the effective conduct of open that are direct obligations of, or fully guaranteed as to market operations, the Federal Open Market Committee principal and interest by, any agency of the United States authorizes and directs the Federal Reserve Banks to lend in the open market, from or to securities dealers and U.S. Government securities held in the System Open Marforeign and international accounts maintained at the Fed- ket Account to Government securities dealers and to banks eral Reserve Bank of New York, on a cash, regular, or participating in Government securities clearing arrangedeferred delivery basis, for the System Open Market ments conducted through a Federal Reserve Bank, under Account at market prices, and, for such Account, to such instructions as the Committee may specify from time exchange maturing U.S. Government and Federal agency to time. securities with the Treasury or the individual agencies or to 3. In order to ensure the effective conduct of open allow them to mature without replacement; provided that market operations, while assisting in the provision of shortthe aggregate amount of U.S. Government and Federal term investments for foreign and international accounts agency securities held in such Account (including forward maintained at the Federal Reserve Bank of New York, the commitments) at the close of business on the day of a Federal Open Market Committee authorizes and directs the meeting of the Committee at which action is taken with Federal Reserve Bank of New York (a) for System Open respect to a domestic policy directive shall not be increased Market Account, to sell U.S. Government securities to such or decreased by more than $8.0 billion during the period foreign and international accounts on the bases set forth in commencing with the opening of business on the day paragraph I (a) under agreements providing for the resale following such meeting and ending with the close of busi- by such accounts of those securities within 15 calendar ness on the day of the next such meeting; days on terms comparable to those available on such (b) When appropriate, to buy or sell in the open transactions in the market; and (b) for New York Bank market, from or to acceptance dealers and foreign accounts account, when appropriate, to undertake with dealers, submaintained at the Federal Reserve Bank of New York, on a ject to the conditions imposed on purchases and sales of cash, regular, or deferred delivery basis, for the account of securities in paragraph l(c), repurchase agreements in U.S. the Federal Reserve Bank of New York at market discount Government and agency securities, and to arrange correrates, prime bankers acceptances with maturities of up to sponding sale and repurchase agreements between its own nine months at the time of acceptance that (1) arise out of account and foreign and international accounts maintained the current shipment of goods between countries or within at the Bank. Transactions undertaken with such accounts the United States, or (2) arise out of the storage within the under the provisions of this paragraph may provide for a United States of goods under contract of sale or expected service fee when appropriate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Open Market Operations during 1997 529 Al'l'lNDIX Jl B.l Operations in L.-S. ^nwrimiaK ..uul fiAloiai ajciR'. :-.i_^ -i b) the KC\CJ\L' lijuk of .\cv. Voik !'o \CIU omioil I.Vivmlvr 31. 1 <-J>L>7 Thousands of dollars except as noied and T m y a p tu e r o it f y i s c s a u te e gory Purchases Sales Redemptions Exchanges ch N a e n t ge H 12 o / l 3 d 1 in / g 9 s 7 , H 12 o / l 3 d 1 in / g 9 s 6 . Government sreuriricx Treasury bill* 443.486.509 Outright 0 -443,836.509' 8.796.900 214,149.444 205.352,544 Matched transactions 3.577.951.533 -3.580.272,240 0 0 -2.32O.707 -17.026.746 -14.706.039 Totalbllls 3.587.098.433 -3.58OJ272.24O 0 -350,000 6,476.193 197.122,698 190,646.505 Treasury mites and bands g Within 1 yew SJ49.000 -1.995,910 -27,498 Jll -23,945.221 > 49.369.485 29,045 221 1 to 5 yean 19.688,246- 0 20.273.311 39.961.557> 95,028.355 95.607,624 5to lOycars 3.863.B181 0 5.2I5.O0O 9,078,818' 40,906.736 33,781,913 More than 10 years 5,897.100 0 2,360,000 8JS7.1001 4830833 41,825,857 Total notes and bonds 34,998,164 -1,995.910 350,000 33.352,254 233,612.869 200.260,615 Tout government securities Including mulched transactions 3.622,096,597 -3J>RO.272,24O -1.995.910 39,828.447 430,735.567 390.907,120 E&cttuung matched tft&sactionfi ... 44.145.064 0 -1.995.910 42,149,154 447,762.313 405,613,159 Federal agency issues Maturing: -1.185.OIX) Withfnlyenr -1.540.150 1.185.000 -l,540,150J 252,000 1.223.050 1 to 5 yean 0 0 0* 152.900 519,900 5to 10years ....... 0 0 0' 254,650 456,750 More than 10 years 0 0 0* 25,000 25.000 TotaJsgWcyteue* ... -1,540,150 0 -1.540.150 684.550 2,224,700 Total System Account Including matched transactions 3.622,096,597 -3,580.272,240 -3.536.060 (1 38.288,297 431.420.117 393,131,820 ISIdi matched transactions 44,145,064 0 -3j.16.060 0 40,609.004 448.446,863 407,837.859 Federal Reserve Bonk or New York repurchase agreements 970,894,000 -968,637.000 0 0 2.257,000 23.840.000 21,583,000 NOTE. Data arc on a settlement-date basis. Theie were no customer related sale-purchase transaction was $17,026,746,000 and .$14,706,039,000 respecrepurchase agreements passed through to the market foe the year ended Decem- tively. Loans of Treasury securities by the Federal Resei~ve Bank of New York to ber 31, 1997. On December 31. 1997, and December 31. 1996, the matched primary dealers for the year ended December 31, 1997, were as follows: Ujans outstanding entities loans Maturities Net change Dec. 31, 1997 Dec. 31, 1996 Loan agreements (thousands of dollars) 25,456,165 25,058,165 398,000 887,200 489,200 I Bills in the amount of $350,000,000 were exchanged for Inflation Index Notes on February 6, 1997. 2. Includes inflation compensation on Inflation Index Notes of $22,963,500. 3. For Treasury notes and bonds, figures do not include the following maturity shifts (thousands of dollars): Within 1 yea i' / to 5 years 5 to 10 years More than 10 years Treasury notes and bonds . 44,269,485 -40,540,826 -1,953,995 -1,774,664 4. For federal agency issues, figures do not include the following maturity shifts (thousands of dollars): Within 1 year 1 to 5 years J to 10 years More than 10 years Federal agency issues 569,100 -367.000 -202,100 0 Appendix C begins on page 530. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

530 Federal Reserve Bulletin • July 1998 Al'P/.XDIX C I.'. I. Total U.S. Treasury and laterally sponsored a^etuy < .3. I. S. l'iv:isur\ miles .mij Jntjaliuu Index .Viles in the seeuiities hold us ihe System Open \!:irkei Xccuuni. Iv.le UkYi.-ml.KTjl. 1007 Deei-inher " 1. 1997 Thousands of dollars Thousands of dollars, except as noted Item Holdings. Nel s i c n h c a e nge Issue outstanding Holdings, Percentage Net change 12/31/97 12/31/96 Coupon Maturity 12/31/97 o o f u t t o s t t a an l d is in su g e 12 s / i 3 n 1 ce /96 date Tola] agency issues 684350 -1340,150 7.875 1/15/98 877,800 9.6 0 US. Tnmuly securities 5.000 1/31/98 1,094.730 5.7 138.000 Bills 197.122.698' 6,476.193 5.625 1/31/98 756,000 6.1 110.000 Notes 172333.011 21,611,290 8.125 2/15/98 440,000 4.8 0 Bonds .. 59,406.894 10,068,000 7.250 2/15/98 3.837360 18.4 549,000 Inflation Index Notts 1,650.000' 1.650.000 5.125 2/28/98 2392320 8.4 1,235.000 5.125 3/3 W98 1.295,000 9.9 0 Total US. Treasury and 6.125 3/31/98 1,848,220 8.5 250,000 agency issues 431397.153' 38.265333' 7.B75 4/15/98 634300 7.2 30,000 5.125 4/30/98 610.000 5.0 115,000 1. Holdings were reduced $13,600,000 of January 8, Treasury bills and 5.875 4/30/98 951,000 4.5 25,000 S3,426,746 of January 15, Treasury bills that were sold under matched sale- 9.000 5/15/98 863,000 9.4 385,000 purchase agreements, which are returned the following day. 6.125 5/15/98 4,092.117 19.3 640.600 2. Does not reflect inflation compensation on Inflation Index Notes of 6.000 5/31/98 1,106,000 5.2 435.000 $22,963,500. 5.375 5/31/98 855.000 6.9 50.000 5.125 6/30/98 1,471.000 11.7 0 6.250 6/30/98 1,177,000 5.4 0 8.250 7/15/98 1,711.140 17.7 436.000 6.250 7/31/98 1.156.750 5.4 290.000 C.2. I'.S. Treasury hills in the S>siem Open 5.250 7/31/98 685.000 5.9 213.000 Ace* Mini. IXvcmlvf 3 I. N<-'7 5.875 8/15/98 4,489,808 20.1 0 9.250 8/15/98 1.480,000 13.0 469.000 Thousands of dollars, except as noted 6.125 8/31/98 1.970300 9.0 1,186,000 4.750 8/31/98 648,000 5.0 57.000 Percentage 4.750 9/30/98 972300 7.7 28300 Maturity date or Holdings or tool Net change 6.000 9/30/98 1.219.000 5.7 288,000 issue outstanding 12/31/97 Issue since 7.125 10/15/98 1,001393 9.8 33,000 ou Winding 12/31/96 5.875 10/31/98 995.000 4.7 170,000 4.750 10/31/98 937.900 7.2 80,000 4 4 4 4 4 2 2 2 2 3 3 3 3 1 1 1 1 1 ^ / / / / / / / / / / / / / / / / / 0 1 3 0 1 0 1 2 1 2 0 1 0 0 1 2 2 2 2 6 0 9 9 9 6 5 2 6 5 2 2 8 5 2 3 9 / / / / / / / / / / / / / / / / / 9 9 9 9 9 9 9 9 9 9 9 9 9 / 9 9 9 9 9 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8..:.... 1 1 4 6 9 6 7 7 6 7 6 6 9 3 3 3 3 7 3 4 . . , , , . , , . . . 3 3 . , , . . 9 9 2 1 7 8 2 0 6 1 4 2 8 6 4 1 1 7 2 2 6 2 2 9 1 3 1 0 6 4 6 1 5 5 5 9 1 4 6 9 0 0 3 5 2 1 5 5 5 4 8 9 9 0 4 . . . . . . . , . . . . , , . 3 3 7 4 3 3 2 4 1 8 0 0 1 9 0 0 0 0 0 6 1 8 8 3 0 2 3 8 0 5 1 0 0 0 0 1 0 1 4 0 5 0 5 0 0 0 5 0 0 5 4 0 0 0 0 0 0 ' ' 3 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 2 1 1 1 0 8 0 0 0 2 0 9 0 1 0 1 7 1 2 9 A . . . . . . . . . . . . . . , 3 3 3 8 4 1 1 6 0 9 7 1 0 3 0 6 9 4 1 1 3 6 6 4 7 6 6 7 3 3 7 9 6 7 3 9 4 3 , , . . . . , . 3 . . , , , , , . , 6 1 9 8 9 3 1 4 8 4 2 1 7 2 2 0 1 6 7 0 2 1 2 2 6 6 4 9 5 2 9 3 5 5 6 1 ) 1 5 9 1 2 4 0 6 4 5 5 0 0 3 5 4 8 9 9 . , , . . , . . , . , , , . . . , 3 3 2 7 0 8 4 3 4 1 0 0 0 9 5 0 0 0 1 1 3 6 1 8 0 2 8 3 1 5 0 0 1 0 0 0 0 8 0 5 4 5 5 0 0 0 0 4 5 0 0 0 0 0 0 0 0 5 8 5 6 6 6 6 5 5 5 5 6 5 5 5 7 8 5 5 . . . . . . . . . . . . . . . , 3 3 3 3 8 8 2 5 6 1 1 8 0 7 0 0 8 8 5 7 0 7 7 7 7 2 2 2 7 5 0 7 7 0 5 0 0 0 5 0 5 5 5 5 5 5 5 5 0 0 5 5 0 0 0 0 0 1 1 1 1 1 1 2 2 2 3 3 4 4 4 5 2 1 1 1 1 1 1 1 2 2 / / / / / / / / / / / / / / / / / / / 2 1 1 3 3 1 2 3 3 1 1 3 1 3 3 3 3 3 1 S 5 5 0 0 1 1 5 8 5 5 5 0 0 1 1 1 1 5 / / / / / / / / / / / / / / / / / / / 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 9 9 9 2 2 3 1 1 1 1 1 1 1 , , , . . . . , . , 7 5 8 9 7 9 6 8 8 8 7 7 1 2 4 0 8 2 6 2 4 6 5 2 4 4 1 9 1 7 5 9 7 2 2 7 1 7 1 6 1 9 9 5 5 4 2 9 9 5 7 5 5 0 3 9 9 . . , . , . . , . . , , , , , . , , . 6 0 6 1 0 0 0 1 0 0 0 2 0 0 0 0 7 6 6 3 0 0 0 0 2 4 4 0 0 0 0 2 0 0 0 0 0 6 0 0 0 5 0 4 0 5 0 0 0 0 0 0 0 0 0 0 2 1 1 1 1 I 1 5 4 7 4 5 9 6 6 7 9 6 3 Z 8 3 4 6 0 3 . . . . . . . 3 3 5 . . . . . . . . 3 4 7 9 8 2 0 0 8 0 2 5 5 7 6 6 1 1 1 , . , 2 2 2 5 7 3 4 2 1 1 1 1 0 6 8 3 4 2 8 2 1 7 0 9 0 2 7 0 4 5 5 0 0 1 2 6 9 0 , , , , . . , , . . , , , 0 0 0 0 2 0 0 0 0 0 0 6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5/07/98 3,360,000 30.9 3360.000 9.125 5/15/99 1.637300 16.3 510,000 5/14/98 3,425.000 31.7 3,425,000 6.250 5/31/99 738.000 4.0 738.000 5/21/98 9,985,000 31.1 9.985,000 6.750 5/31/99 686.990 5.6 100.000 5/28/98 3.090,000 28.2 3,090.000 6.750 6/30/99 1.644.820 116 0 T 1 1 1 6 6 6 6 7 9 8 o 0 1 2 / / / / / / l / / / / a 0 1 1 2 1 2 2 1 1 1 ] 4 1 7 8 5 3 i 0 5 2 0 n t / / / / / / / / / / h 9 9 9 9 9 9 9 9 9 9 1 a 8 8 8 8 8 8 8 8 8 8 9 t 9 m 7 anired 3 6 3 8 5 5 5 5 5 . . , , , . , 3 3 4 0 6 7 4 6 7 4 6 2 1 9 9 7 6 5 5 0 5 0 5 7 5 0 0 . , , . , , . , , 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3 3 3 2 3 3 3 2 2 2 0 9 9 9 0 0 0 1 . . . 3 . 3 3 . . 7 0 9 8 3 3 -19 8 0 3 3 5 5 5 5 6 5 . . 7 , , , 3 , , . , 6 3 4 6 6 7 0 5 4 4 4 6 2 6 O 9 1 9 7 5 6 0 5 0 5 0 7 5 . . 0 , , . . , . . . 0 5 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 0 O 5 0 0 0 0 0 0 0 6 6 6 5 6 8 5 6 7 5 6 7 . . . . . . . . . . . 3 0 3 0 8 8 1 7 8 8 0 0 0 0 7 0 7 7 2 5 7 7 0 0 0 0 5 0 5 5 5 0 5 5 0 0 1 1 6 7 7 7 8 8 8 8 9 9 0 0 / / 7 / / / / / / / / / 3 1 3 3 1 3 1 3 3 1 3 3 5 0 1 1 5 0 5 1 1 5 1 0 / / / / / / / / / / / / 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 2 1 1 1 1 . , , , . 6 9 6 4 5 2 3 8 3 0 0 5 0 4 5 5 3 4 4 5 0 7 9 3 6 4 1 2 9 8 8 4 2 8 6 1 , , , , , , , . 3 , . 3 1 4 4 1 0 6 6 7 9 4 1 8 1 3 8 1 0 0 3 7 5 0 5 5 0 5 0 0 0 0 0 2 0 0 1 4 3 3 6 9 8 7 7 7 3 3 2 . . . . . . . . . . . . 5 5 6 6 7 7 4 6 8 4 9 4 1 1 . , 6 4 2 6 3 0 3 4 5 5 5 6 8 9 4 0 4 2 0 0 1 5 6 4 2 . , . . . . , , 3 4 0 0 0 0 9 0 6 3 8 7 0 0 0 0 0 3 0 5 0 0 0 0 0 0 0 0 0 0 Total 197,122,698' . . . 6,476,193 5 7. . 8 6 7 2 5 5 1 1 1 0 / / 1 3 5 1 / / 9 9 9 9 5 8 0 1 2 4 . . 0 0 0 0 0 0 3 7. . 6 0 5 1 0 2 2 7 . , 0 0 0 0 0 0 5.875 11/15/99 2,790.968 12.2 75.000 NOTE. Data are on a statement-date basis. 7.750 11/30/99 1.176.145 10.0 764.000 I. Holdings were reduced $13,600,000 of January 8, Treasury' bills and 5.625 11/30/99 548,175 3.2 548.175 $3,426,746 of January 15, Treasury bills that were sold under matched sale- 5.625 12/31/99 795.780 4.8 795.780 purchase agreements, which are returned the following day. 7.750 12/31/99 1,379,665 11.1 25.000 6.375 1/IS/00 689,545 6.8 0 7,750 1/31/00 864.440 7.1 252.000 K.SO0 2/15/00 986.000 9.2 154,000 5.875 2/15/00 846.796 4.2 846,796 7.125 2/29/00 1.322,290 10.7 387.000 6.875 3/31/00 1341,510 10.2 136.000 5300 4/15/00 360.000 3.4 0 Digitized for FRASER 6.750 4/30/00 1.024,250 8.3 256,500 http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Open Market Operations during 1997 53 I C.3.- f '.4. I..S. Tiwisurv bunds held in the System Open Market AccnunL Decembei 3 1, l')(-(7 Thousands of dollars, except as noted Thousands of dollars, except as noted Issue outstanding Percentage Net change Holdings, of loud issue since Coupon Maturity 12/31/97 outstanding 12/31/96 date 3300 11/15/98 6375 5/15/00 2,807,000 13.5 2,807,000 11.750 3/15/dl 8.875 5/15/00 480,000 4.6 0 13.125 5/15/01 6250 5/31/00 843,460 6.6 201,000 13375 8/15/01 5.875 6/30/00 740,100 5.9 0 15.750 11/15/01 6.125 7/31/OQ 455,000 3.7 70.000 14.250 2/15/02 6.000...... 8/15/00 1,309.945 7.3 1.309,945 11.625 11/15/02 6 7 6 8 6 6 5 5 5 5 5 6 6 6 6 6 6 7 8 5 7 8 , . . . . . . . . . . . . , . . . . 3 3 3 . 2 3 8 6 6 2 6 6 3 2 1 7 7 5 0 5 7 5 7 7 0 0 2 2 5 7 7 2 5 2 0 0 5 5 5 2 5 5 0 0 5 5 0 0 5 5 0 5 5 5 0 5 0 0 0 0 0 5 0 0 0 0 0 ; . . , . . . . . . . . . . . . . ...... 1 1 1 1 1 1 1 9 3 5 5 8 8 8 4 6 7 8 9 2 2 1 1 1 2 0 1 0 1 / / / / / / / / / / / / / / / / / / / / / / 3 1 3 1 3 1 3 3 3 3 3 3 1 3 2 3 1 3 3 1 3 1 1 0 5 W 5 1 5 1 0 0 0 1 5 1 1 8 5 0 1 5 1 5 / / / / / / / / / / / / / / / / / / / / 0 0 / 0 Q 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 1 0 1 ! 2 U 1 1 1 1 1 1 1 , . . , 3 , , . 9 9 6 6 5 9 8 8 8 9 8 8 8 4 7 1 6 1 0 6 0 7 1 4 5 3 2 3 0 8 8 7 9 0 4 6 5 0 5 0 5 5 3 5 1 6 0 7 1 3 1 3 1 0 8 9 1 8 0 7 9 1 0 7 . . 0 . . , . . . . . . , , . . . 3 3 . . . 3 0 0 2 0 4 4 0 0 9 0 0 0 0 0 0 0 2 0 O 0 0 0 0 0 0 0 0 0 0 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 4 6 6 6 7 6 5 S 7 5 7 6 7 6 9 8 8 0 0 1 1 0 . . . . . . . . . . . . . . . . . . . . . . 5 7 7 5 2 2 2 2 2 8 0 0 4 0 2 2 1 4 1 5 3 3 1. 2 3 3 3 3 2 2 2 2 2 8 6 1 1 1 1 4 9 7 1 8 6 1 7 8 6 5 5 6 3 9 5 7 0 0 3 0 1 4 7 5 5 3 5 6 1 6 2 0 3 8 5 3 1 0 5 . . . , , . , , . . , . . . . . . . 3 3 2 0 0 0 2 0 0 0 0 0 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 8 9 8 9 7 7 8 0 0 0 2 2 4 3 1 1 0 0 3 0 1 2 . . . . . . . . . . . . . . . . . . . . 4 1 3 . 0 6 8 3 7 3 7 3 7 0 8 1 7 0 7 7 7 2 0 2 2 1 7 2 7 7 7 7 5 5 0 7 2 5 5 0 5 5 5 5 0 5 5 3 5 5 5 5 5 5 0 0 5 5 0 0 0 0 0 0 0 0 0 . . . . . . ........ . 1 H 1 1 1 1 1 5 5 8 5 S S 2 2 5 2 5 2 8 8 1 1 1 1 1 1 V / / / 7 / / / / / / / / / / / 7 / / / / 1 1 1 1 1 I 1 1 1 1 I 1 1 l 1 1 1 1 1 1 1 S S 5 3 3 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 7 / / / 7 / / / / / / / / / m / / / / / / 0 0 0 0 0 0 1 C 1 / M 1 0 0 0 0 0 0 0 1 1 4 3 p 4 3 1 5 1 5 ? 0 8 ? 7 6 9 0 8 0 3 5.875 11/30/01 476.000 3.4 286.000 10.375 11/13/12 6.125 12/31/01 625,000 43 25.000 IZOOO 8/15/13 6,250 1/31/02 777,000 5.8 777.000 13.250. ......... 5/IS/M 6.2S0 2/28/02 803.000 5.8 803.000 12300 :.. 8/15/W 6.625 3/31/02 980.900 6.9 980.900 11.750 11/15/14 6.625 4/30/02 t .035.000 IX 1,035,000 11.250 2/15/15 7300 ........... 5/15/02 14)16.009 8.7 35.000 10.625 8/15/15 6300 .. .... 5/31/02 949,000 7.0 949.000 9.875 ... 11/15/13 6.250 6/30/02 786.000 6.0 786,000 9.250 2/15/16 6.000 ... 7/31/02 295.000 2» 295.000 7.250 5/15/16 6.375 8/15/02 2^47.000 9.4 57.000 7300 1U15/16 6.7S0 8/31/02 701.000 S3 701,000 8.750 5/15/17 5i875 9/30/02 460,000 3.6 460,000 8.B75 8/15/17 5.750 10/31/02 390,000 3.3 390,000 9.125 5/15/18 5.750 11/30/02 400.000 3.3 400.000 9.000 11/15/18 5.625 ........... 12/31/02 585,000 4.9 585.000 8.875 2/15/19 6J50 2/15/03 2.145.000 9.1 50.000 8.125 8/15/19 5,750 8/15/03 3.685.000 13.2 65.000 8300 2/15/20 5.875 2/15/04 650.000 S.0 100.000 8.750 5/15/20 7.250 5/15/04 1.905350 13.2 25.000 8.750 ... 8/15/20 7J50 8/15/04 810.000 6.1 0 7.875 2/15/iI 7.875 11/15/04 1.753.040 12.3 140.000 8.125 ......... 5/15/21 7.500... 2/15/05 1,150,000 8.3 0 8.12S 8/15/21 6,500 5/15/05 2,000.000 13.6 0 8.000 11/15/21 I.ISOJOOO 5 5 7 6 6 & . . . . 3 8 8 6 0 5 0 7 7 2 0 0 S 0 5 5 0 0 1 1 8 7 2 5 1 0 / / / / / / 1 1 1 1 1 1 5 5 5 5 5 5 / / / / / / 0 0 0 0 0 0 6 5 6 5 6 6 2 2 2 1 1 1 . . . . , 3 4 2 0 8 7 0 6 3 7 0 0 0 5 5 2 0 0 . . . . . . 7 0 0 8 0 0 5 0 0 0 0 0 2 0 0 0 0 0 1 1 1 L L 9 0 1 O 2 3 . . . . . . 7 O 8 2 0 0 3 6 5 7 8 4 5 8 5 . . , 0 0 0 0 0 0 0 0 0 0 0 0 7 7 7 7 6 7 . . . . . 3 6 1 6 2 2 0 2 2 2 5 5 0 5 5 5 0 0 I 1 8 2 8 2 I 1 / / / / / / 1 1 1 1 1 1 S 5 5 5 5 5 / / / / / / 2 2 2 2 2 2 5 3 2 2 3 4 1 1 . , 4 6 5 8 4 0 O 6 6 1 1 3 0 0 5 3 5 5 . . . , , . 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4 m 31.0 m 00 6.250 .......... 2/15/07 540,000 4.1 540,000 6.875 8/15/25 6.625 5/15/07 1.750.000 12.5 1,750,000 6.000 2/15/26 6.125 8/15/07 2,175.000 8.5 2.175.000 6 6 . 3 7 0 5 0 0 B/15/26 • d Toul that matured 11/15/26 in 1997 -29.045.221 6.625 2/15/27 480,000 6.375 8/15/27 Total Treasury 6.125 11/15/27 nates....... 21,611,290 Total thai matured in 1997..... Inflation Index Nms(Otf) Total Treasury bonds 5»,406*>4 3.635 7/15/02 900.000 5.4 900.000 3375 1/15/07 750.000 4.8 730,000 total tint matured NOTE. Data are on a statement-date basis. in 1997 0 Total UN 1,650,000' 1,650,000 NOTE. Data are on a statement-date basis. 1. Does not reflect inflation compensation on Inflation Index Noie.s of $22,963,500. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

532 Federal Reserve Bulletin • July 1998 L.S. k'denil agency tinkling in ihc Sysk-in Open Murkt'i Acornm. D^L'L'uiliL-r'} 1, 1097 Thousands of dollars, except as noted Issue outstanding Percentage Net change Holdings, of iota] since Coupon Maturity 12/31/97 issue 12/31/96 dole outstanding Federal Home Loan Bank 5.260 4/27/98 14,000 4.7 0 9.250 11/25/98 5,000 1.0 0 9.300 1/25/99 2.000 .4 0 8.600 6/25/99 3,900 1.2 0 8450 7/26/99 5,000 1.4 0 8.600 8/25/99 11.000 19 0 8.375 10/25/99 1OO00 2.7 0 8.600 1/25/00 6,000 2.0 0 Total thai matured in 1997 -57,700 Total 56^00 -57,700 Federal National Mortgage Association 8.650 2/10/98 10.000 0 5.300 3/11/98 50,000 6.3 0 9.150 4/10/98 30.000 5.0 0 9.400 8/10/98 50,000 10.0 0 7.850 9/10/98 48400 7,4 0 5.300 12/10/98 15.000 IJ 0 7.050 12/10/98 30,000 4.1 0 9.550 3/10/99 25,000 3.6 0 8.700 •6/10/99 23,000 2.7 0 8.450 7/12/99 5.000 .7 0 7.000 8/11/99 0 .0 -15.0001 6.450 10/14/99 0 .0 -100.000' 8.350 11/10/99 7,000 .4 0 6.I0O 2/10/00 25,000 5.0 0 9.050 4/10/00 10.000 U 0 9.200 9/11/00 10.000 2.5 0 7.200 1/10/02 0 .0 -10.000' 7.900 4/10/02 0 .0 -10,000* 7.800 6/10/02 0 .0 -40,100' 7.300 7/10/02 0 ,0 -12,000' 6.950 9/10/02 0 .0 -35,000' 6.625 4/10/03 30,000 A3 0 6.450 6/10/03 25,000 5.0 0 6.200 7/10/03 15,000 3.0 0 5.800 12/10/03 10,000 1.3 0 7.600 4/14/04 0 .0 -100.000' 7.550 6/10/O4 24.650 3.1 0 8.050 7/14/04 0 .0 -5,000* 8.250 10/12/04 30,000 7JI 0 6.850 9/12/05 20,000 5.0 0 6.700 11/10/05 100.000 25,0 0 10.350 12/10/15 10,000 4.0 0 8.200 3/10/16 15,000 3.8 0 TOM) that matured in 1997...... -236,700 Total 617,650 -563,800 Farm Credit Svnemwlde Bonds S.650 10/01/99 10.000 2-3 0 Total thai matured in 1997 -902,000 Total 10,000 -902,006 Federal Land Bank Total that matured in 1997 -16.650 Total 0 -16,650 Total agency 684JS0 -1340,150 Total Treasury and agency issuea 38^65,333= NOTL. Data are on a statement-date basis. 1. Called issue. 2. Holdings were reduced $13,600,000 of January 8, Treasury bills and $3,426,746 of January 15, Treasury bills that were sold under matched salepurchase agreements, which are returned the next day. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

533 Industrial Production and Capacity Utilization for May 1998 Released for publication June 16 cent of its 1992 average, total industrial production in May was 4.4 percent higher than it was in May 1997. Industrial production rose 0.5 percent in May after The rate of industrial capacity utilization edged up revised increases of 0.3 percent in April and 0.4 per- 0.1 percentage point in May, to 82.2 percent. cent in March. Some of the increase in total industrial production in May resulted from a 2.8 percent surge in the output of utilities and a 1.2 percent jump in the MARKET GROUPS output of mines. After having eased earlier in the year, manufacturing output picked up, rising 0.2 per- The production of consumer goods increased substancent in May and 0.5 percent in April. At 128.8 per- tially for the third consecutive month, led by a jump Industrial production indexes Ratio scale, 1992= 100 Ratio scale, 1992= 100 _ Consumer goods 130 _ Intermediate products 130 V 120 120 Durable / Construction supplies 110 s ' 110 Nondurable -- 100 100 Business supplies - 90 - 90 i i i i 1 1 1 1 1 1 I II _ Equipment _ Materials 150 150 Business - - 130 130 - 110 _ Durable goods s^ 110 ^x^ ^^ Nondurable goods -- 90 - and energy —- 90 Defense and space I II 1 1 1 1 1 1 1 1 1 1 1 1 1990 1992 1994 1996 1998 1990 1992 1994 1996 1998 Capacity utilization Percent of capacity Percent of capacity - 85 - 85 - 80 - 80 - 75 - 75 1984 1986 1988 1990 1992 1994 1996 1998 1984 1986 1988 1990 1992 1994 1996 1998 DigitizedA flol rs eFriResA aSreE sRea sonally adjusted. Latest series. May. Capacity is an index of potential industrial production. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

534 Federal Reserve Bulletin • July 1998 Industrial production and capacity utilization, May 1998 Industrial production, index, 1992=100 Percentage change Category 1998 1998' May 1997 to Feb.' Mar.' Apr.' May P Feb.' Mar.' Apr.' May May 1998 Total 127.3 127.8 128.2 128.8 -.4 .4 .3 4.4 Previous estimate 127.4 127.7 127.8 ... -.3 .3 .1 Major market groups Products, total2 120.6 121.2 121.7 122.2 -.6 .4 3.9 Consumer goods 115.1 116.0 116.5 117.0 -1.3 .4 2.8 Business equipment 146.8 147.8 149.9 150.5 -.4 .7 1.4 8.2 Construction supplies 126.2 124.9 124.7 125.4 .8 -1.0 -.2 27 Materials 138.2 138.5 138.5 139.2 -.1 .2 .0 5.2 Major industry groups Manufacturing 130.6 130.6 131.2 131.5 -.4 .0 .5 4.7 Durable 147.8 148.1 148.9 149.6 -.3 .2 .6 6.8 Nondurable 113.0 112.6 113.2 113.1 -.6 -.3 .5 2.1 Mining 108.8 107.8 107.6 108.9 .4 -.9 -.2 i.2 2.1 Utilities 108.2 115.0 112.5 115.7 6.3 -2.2 2.8 3.5 Capacity utilization, percent MEMO Capacity, percentage 1997 1998 change, Average, Low, High, May 1997 1967-97 1982 1988-89 to May Feb.' Mar.' Apr' May' May 1998 Total 82.1 71.1 85.4 82.4 82.2 82.2 82.1 82.2 4.8 Previous estimate 82.3 82.2 81.9 Manufacturing 81.1 69.0 85.7 81.4 81.4 81.0 81.1 80.9 5.4 Advanced processing 80.5 70.4 84.2 79.4 79.6 79.2 79.4 79.2 6.3 Primary processing .. 82.4 66.2 88.9 86.0 85.5 85.0 84.9 84.6 3.4 Mining 87.5 80.3 88.0 90.5 91.9 91.0 90.8 91.9 .5 Utilities 87.3 75.9 92.6 88.5 84.9 90.2 88.1 90.5 1.2 NOTE. Data seasonally adjusted or calculated from seasonally adjusted 2. Contains components in addition 1o those shown, monthly data. r Revised, I. Change from preceding month. p Preliminary. in the output of durable goods and of energy prod- The production of construction supplies increased ucts; the production of non-energy nondurable prod- after two months of decline, but it was still below the ucts remained flat. Increases within the durable con- high attained in February. The output of materials sumer goods category were widespread. The output increased 0.5 percent after some sluggishness in of automotive products rose 1.7 percent and was just recent months; most of the gain can be explained by a below the high average level of production attained surge in energy materials. In particular, coal producin the last quarter of 1997. The production of home tion increased sharply and was a bit higher than the computing equipment and appliances also posted sig- record level achieved last December; continuing its nificant gains. Within the non-energy nondurable volatile behavior of recent months, electricity generaconsumer goods category, a moderate increase in the tion also shot up. Among durable goods materials, output of food and tobacco products was offset by a the output of parts for consumer goods, which had decrease in the production of clothing; the output of spiked upward in the fourth quarter, decreased 1.2 consumer chemicals remained flat. percent in May after a substantial decline in the first The output of business equipment increased 0.4 quarter and a moderate increase in April. The output percent, its third straight monthly gain after having of equipment parts advanced once more; semiconducslowed earlier in the year. The output of computers tors and parts for computers and electronic communiand transit equipment increased sharply again. The cation equipment posted the most significant gains. production of other types of equipment decreased; in Within nondurable goods materials, the production of particular, the output of industrial equipment retreated textile and paper materials increased after two months to a level somewhat below the high at the end of of declines, while the production of chemical materi- 1997. als decreased for the fourth consecutive month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization 535 INDUSTRY GROUPS production of apparel, chemicals, petroleum, rubber and plastic products, and leather products were The increase in manufacturing output reflected a third almost offset by increases in the production of food, consecutive monthly increase in the production of tobacco, textiles, and paper. durable goods, which had declined earlier in the The operating rate in manufacturing declined year. Increases among durables were widespread and 0.2 percentage point, to 80.9 percent. The utilization were led once more by strong growth in the produc- rate in advanced-processing industries fell back to its tion of computer and office equipment and semicon- March level. The rate for primary-processing indusductors. The production of nondurable goods tries fell for the fifth consecutive month to its lowest declined 0.1 percent and was virtually unchanged level since October 1993, but it remained above its from its February level. Significant declines in the long-run average. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

536 Statement to the Congress Statement by Alan Greenspan, Chairman, Board of not negligible probability that the upset in East Asia Governors of the Federal Reserve System, before the could have unexpectedly large negative effects on Committee on Agriculture, U.S. House of Representa- Japan, Latin America, and eastern and central Europe tives, May 21, 1998 that, in turn, could have repercussions elsewhere, including the United States. Thus, while the probabil- The global financial system has been evolving rap- ity of such an outcome may be small, its conseidly in recent years. New technology has radically quences, in my judgment, should not have been left reduced the costs of borrowing and lending across solely to chance. We have observed that global finantraditional national borders, facilitating the develop- cial markets, as currently organized, do not always ment of new instruments and drawing in new players. achieve an appropriate equilibrium or at least require Information is transmitted instantaneously around the time to stabilize. Moreover, the effects of the Asian world, and huge shifts in the supply and demand for crisis on the real economies of the immediately funds naturally follow, resulting in a massive increase affected countries, as well as on our own economy, in capital flows. This burgeoning global system has are only now just being felt. been demonstrated to be a highly efficient structure Opponents of IMF support for member countries that has significantly facilitated cross-border trade in facing international financial difficulties also argued goods and services and, accordingly, has made a that such substantial financial backing, by cushioning substantial contribution to standards of living world- the losses of imprudent investors, encourages exceswide. Its efficiency exposes and punishes underlying sive risk-taking. There doubtless is some truth in that, economic imprudence swiftly and decisively. Regret- though arguably it has been the expectation of govtably, it also appears to have facilitated the transmis- ernments' support of their financial systems that has sion of financial disturbances far more effectively been the more obvious culprit, at least in the Asian than ever before. case. In any event, any expectations of broad bailouts Three years ago, the Mexican crisis was the first have turned out to have been disappointed. Many, if episode associated with our new high tech interna- not most, investors in Asian economies have to date tional financial system. The current Asian crisis is the suffered substantial losses. second. Moreover, the policy conditionality, associated We do not as yet fully understand the new system's principally with IMF lending, which dictates ecodynamics. We are learning fast and need to update nomic and financial discipline and structural change, and modify our institutions and practices to reduce helps to mitigate some of the inappropriate riskthe risks inherent in the new regime. Meanwhile, we taking on the part of governmental authorities. At the have had to confront the current crisis with the insti- root of the problems has been poor public policy that tutions and techniques we have. has resulted in misguided investments and very weak Many argued that the Asian crisis should be financial sectors. Convincing a sovereign nation to allowed to run its course without support from the alter destructive policies that impair its own perfor- International Monetary Fund (IMF) or the bilateral mance and threaten contagion to its neighbors is best financial backing of other nations. They asserted that handled by an international financial institution, such allowing this crisis to play out, while doubtless hav- as the IMF. What we have in place today to respond ing additional negative effects on growth in Asia and to crises should be supported even as we work to engendering greater spillovers onto the rest of the improve those mechanisms and institutions. world, would not likely have a large or lasting impact Some observers have also expressed concern about on the United States and on the world economy. whether we can be confident that IMF programs for They may well have been correct in their judg- countries, in particular the countries of East Asia, are ment, and some would argue that events over the past likely to alter their economies significantly and persix months have proved them right; we have so far manently. My sense is that one consequence of this avoided the type of continuing downward spiral that Asian crisis is an increasing awareness in the region some feared. There was, and is, however, a small but that market capitalism, as practiced in the West, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

537 especially in the United States, is the superior model; its details will last in countries once temporary IMF that is, it provides greater promise of producing ris- financial support has come to an end. We are, after ing standards of living and continuous growth. all, dealing with sovereign nations with long tradi- Although East Asian economies have exhibited tions, not always consonant with market capitalism. considerable adherence to many aspects of free- But my sense is that there is a growing understanding market capitalism, there has, nonetheless, been a and appreciation of the benefits of market capitalism pronounced tendency toward government-directed as we practice it and that what is being prescribed in investment, using the banking system to finance that IMF-supported programs fosters their own interests. investment. Given a record of real growth rates of Similarly, it is a reasonable question to ask whether close to 10 percent per annum over an extended the U.S. authorities should not seek greater assurance period of time, it is not surprising that it has been that the ongoing process of reform in the IMF's difficult to convince anyone that the economic system policies and operations will produce additional conpracticed in East Asia could not continue to produce crete results before we agree to augment the IMF's positive results indefinitely. Following the break- resources. I have reason to believe that the managedown, an increasing awareness, bordering in some ment and staff of the IMF are committed to a process cases on shock, that their economic model was of change. We face a somewhat more difficult task in incomplete, or worse, has arguably emerged in the convincing the IMF's membership as a whole of the region. need for change. However, I am confident that our As a consequence, many of the leaders of these leverage in this regard would be reduced if the United countries and their economic advisers are endeavor- States failed to agree promptly to the proposed ing to move their economies much more rapidly increases in the IMF's resources. toward the type of economic system that we have in Accordingly, I continue fully to back the Administhe United States. The IMF, whatever one might say tration's request to augment the financial resources of about its policy advice in the past, has played an the IMF by approving as quickly as possible U.S. important role in this process, providing advice and participation in the New Arrangements to Borrow incentives that promote sound money and long-term and an increase in the U.S. quota in the IMF. Hopestability. The IMF's current approach in Asia is fully fully, neither will turn out to be needed, and no funds supportive of the views of those in the West who will be drawn. Although the tendency in recent understand the importance of greater reliance on mar- months toward stabilization in the East Asian econoket forces, reduced government controls, scaling back mies is encouraging, clearly those economies are not of government-directed investment, and embracing out of the woods as recent events attest. Moreover, greater transparency—the publication of all the data we have not yet put in place the strengthening of the that are relevant to the activities of the central bank, international financial architecture that would enable the government, financial institutions, and private us in the future to place less reliance on the IMF to companies. deal with potential systemic crises. Thus it is better to It is a reasonable question to ask how long this have the IMF fully equipped if a quick response to a conversion to embracing market capitalism in all pending crisis is essential. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

538 Announcements PROCEDURE FOR SUBMITTING NOMINATIONS BOPEC rating system or have implemented the TO THE CONSUMER ADVISORY COUNCIL AND Board's risk-based capital market risk measure. The NOTICE OF MEETING minimum leverage ratio for all other bank holding companies is 4.0 percent. Bank holding companies The Federal Reserve Board on June 3, 1998, are expected to maintain higher-than-minimum capiannounced that it is seeking nominations for nine tal ratios if they have supervisory, financial, operaappointments to its Consumer Advisory Council. The tional, or managerial weaknesses, or if they are anticicouncil, which consists of thirty members, advises pating or experiencing significant growth. the Board on the exercise of its responsibilities under the Consumer Credit Protection Act and on other matters on which the Board seeks advice. The group ISSUANCE OF A FINAL REPORT BY THE meets in Washington, D.C., three times a year. SYSTEM TASK FORCE ON INTERNAL CREDIT The nine new members will be appointed to serve RISK MODELS three-year terms beginning in January 1999. Nominations should include the following information about nominees: The Federal Reserve Board on May 29, 1998, issued a final report prepared by the System Task Force on • Past and present positions held Internal Credit Risk Models. The Task Force was • Knowledge, interests, or experience related to created to assess potential uses of internal credit risk community reinvestment, consumer credit, or other models within the supervisory and regulatory proconsumer financial services cesses. The report describes current uses of internal • Complete address with telephone and fax models by major U.S. banking organizations and numbers. outlines possible uses of the models for assessing bank capital adequacy. Letters of nomination must be received by July 31, The report concludes that significant difficulties 1998, and should be mailed (not sent by facsimile) to exist with respect to model construction, data avail- Sandra F. Braunstein, Assistant Director, Division of ability, and model validation procedures so that near- Consumer and Community Affairs, Board of Gover- term uses of the models within the regulatory process nors of the Federal Reserve System, Washington, DC are limited. However, the report also concludes that 20551. models may, over the somewhat longer term, become The Board also announced on June 3 that the useful in at least the following two roles: Consumer Advisory Council would hold its next meeting on Thursday, June 25. 1. The development of specific and practical examination guidance for assessing the capital adequacy of large, complex banking organizations FINAL RULE: AMENDMENT TO THE TIER 1 2. The setting of regulatory capital requirements LEVERAGE CAPITAL STANDARD against selected instruments that have largely evolved subsequent to adoption of the Basle Accord on risk- The Federal Reserve Board on June 1, 1998, issued a based capital, such as credit enhancements supportfinal rule amending the tier 1 leverage capital stan- ing securitization programs. dard for bank holding companies. The rule became effective June 30, 1998. The report is available on request from Publica- The amendment to Regulation Y (Bank Holding tions Services, Mail Stop 127, Board of Governors of Companies and Change in Bank Control) establishes the Federal Reserve System, Washington, DC 20551. a minimum ratio of tier 1 capital to total assets It is also available on the Board's Internet site (leverage ratio) of 3.0 percent for bank holding com- (http://www.bog.frb.fed.us) under "Regulation and panies that either are rated composite "1" under the Supervision." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

539 ISSUANCE OF ENFORCEMENT ACTIONS Banco Industrial de Venezuela, among other things, to implement new anti-money-laundering policies The Federal Reserve Board announced on May 18, and procedures designed to correct the deficiencies in 1998, the issuance of enforcement actions against its current program. five foreign banking organizations with banking Federal Reserve examiners will continue to monioffices in the United States to address serious defi- tor the activities of the bank in the United States to ciencies in their anti-money-laundering programs. ensure full compliance with all applicable money- Temporary Cease and Desist Orders were issued laundering-related laws and regulations. against Banco Nacional de Mexico (Banamex), Mexico; Banca Serfin, S.A., Mexico; Banco Internacional, S.A. (Bital), Mexico; Bancomer, S.A., AVAILABILITY OF THE FEDERAL RESERVE Mexico; and Banco Santander, Spain. Each of these REGULATORY SERVICE ON CD-ROM foreign banks operates one or more branches or agencies in the United States. The Federal Reserve Board announced on May 26, The enforcement actions resulted from an exten- 1998, that a Windows version of the Federal Reserve sive undercover "sting" operation conducted by the Regulatory Service (FRRS) is now available on U.S. Department of Justice and the U.S. Department CD-ROM for use on personal computers. of the Treasury. The Federal Reserve assisted these This service, which uses Folio Views® 4.11 searchlaw enforcement agencies. and-retrieval software, will be updated each month, In connection with the undercover operation, the the same as the printed version of the service. The Departments of Justice and Treasury announced on software will permit users to do the following: May 18 the indictment and arrest of several bankers charged with laundering approximately $70 million • Search for any word, phrase, or combination of in the United States and abroad. They also announced words and phrases in the Regulatory Service the indictment of two of the Mexican banks subject • Search the complete text or the major headings to the Board's enforcement actions (Bancomer, S.A. • Limit searches to a specific portion of the service and Banca Serfin, S.A.). such as a statute, a regulation, or one section of a The Board's Temporary Cease and Desist Orders statute or regulation require the banks, among other things, to implement • Review search results through a condensed hit new anti-money-laundering policies and procedures list. designed to correct the deficiencies in their current programs. Single-user subscriptions to the new electronic ser- Federal Reserve examiners will continue to moni- vice are available for $300 annually ($350 for subtor the activities of the banks subject to the enforce- scriptions outside the United States). The cost of ment actions to ensure full compliance with all the printed version of the service remains at $200 applicable anti-money-laundering-related laws and annually. regulations. Besides an on-screen user's manual, a printed The Federal Reserve Board announced on May 20, user's guide explains the basic features of the soft- 1998, the issuance of a Temporary Cease and Desist ware and how best to use them in researching the Order against Banco Industrial de Venezuela, Cara- FRRS. A telephone number will also be provided for cas, Venezuela, to address serious deficiencies in the technical assistance. bank's anti-money-laundering program. Other features of the service include the following: The Board's order is identical to the ones issued on May 18 against four Mexican banks and one Spanish • Summaries of monthly changes with links to bank and results from the extensive undercover amended text "sting" operation conducted by the U.S. Departments 4 Cross-references and indexes with links to referof Justice and Treasury. enced text within the FRRS In connection with the undercover operation, a • Pop-up footnotes Banco Industrial de Venezuela official has been • Print and save capability charged with violations of U.S. criminal moneylaundering statutes, and she was arrested on May 19. The new Windows version can be used on both This arrest was done in conjunction with the arrests 32-bit and 16-bit systems. of several Mexican bankers over the weekend. The Board's Temporary Cease and Desist Order requires The system requirements are the following: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

540 Federal Reserve Bulletin • July 1998 Hard drive space maximum of one hundred concurrent users. Subscrib- 10 MB for minimum installation (software only) ers outside the United States should add $50 to cover 28 MB for full installation (software and infobase) additional air mail costs. Each network subscriber will receive a single CD and a corresponding number of user's guides. Additional user's guides may be Monitor purchased for $5 each. VGA or higher-resolution video adapter Orders should be sent to Publications Services, SVGA 256-color recommended Mail Stop 127, Board of Governors of the Federal Reserve System, Washington, DC 20551. All sub- 32-bit version scription requests must be accompanied by a check 486 or higher processor (Pentium® recommended) or money order payable to the Board of Governors Microsoft Windows 95® with 8 MB of memory or of the Federal Reserve System or charged to VISA, Microsoft Windows NT® 3.51 or later with MasterCard, or American Express. Charge customers 12 MB of memory only may fax their orders to 202-728-5886. 16-bit version 486 or higher processor CHANGE IN BOARD STAFF Microsoft Windows®, lx with 8MB of memory or Windows for Workgroups® The Federal Reserve Board announced on May 28, 1998, the appointment of Barry R. Snyder as Inspec- For a standalone PC, the annual subscription fee is tor General to succeed Brent L. Bowen, who retired $300. For network subscriptions, the annual fee is on June 1, 1998. $300 for a maximum of one concurrent user, $750 for Mr. Snyder joined the Board's staff in 1987 and a maximum of ten concurrent users, $2,000 for a was promoted to Assistant Inspector General in maximum of fifty concurrent users, and $3,000 for a 1989. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

541 Minutes of the Federal Open Market Committee Meeting Held on March 31, 1998 A meeting of the Federal Open Market Committee Mr. Reinhart, Assistant Director, Division of was held in the offices of the Board of Governors of Monetary Affairs, Board of Governors the Federal Reserve System in Washington, D.C., on Ms. Low, Open Market Secretariat Assistant, Tuesday, March 31, 1998, at 9:00 a.m. Division of Monetary Affairs, Board of Governors Present: Mr. Greenspan, Chairman Mr. Rasdall, First Vice President, Federal Reserve Mr. McDonough, Vice Chairman Bank of Kansas City Mr. Ferguson Mr. Gramlich Messrs. Goodfriend, Hunter, Kos, Lang, Rolnick, and Mr. Hoenig Rosenblum, Senior Vice Presidents, Federal Mr. Jordan Reserve Banks of Richmond, Chicago, Mr. Kelley New York, Philadelphia, Minneapolis, and Mr. Meyer Dallas respectively Ms. Minehan Ms. Phillips Ms. Rosenbaum, Vice President, Federal Reserve Mr. Poole Bank of Atlanta Ms. Rivlin Mr. Rudebusch, Research Officer, Federal Reserve Messrs. Boehne, McTeer, Moskow, and Stern, Bank of San Francisco Alternate Members of the Federal Open Market Committee By unanimous vote, the minutes of the meeting of the Federal Open Market Committee held on Febru- Messrs. Broaddus, Guynn, and Parry, Presidents of ary 3-4, 1998, were approved. the Federal Reserve Banks of Richmond, The Report of Examination of the System Open Atlanta, and San Francisco respectively Market Account, conducted by the Board's Division Mr. Kohn, Secretary and Economist of Reserve Bank Operations and Payment Systems as Mr. Bernard, Deputy Secretary of the close of business on November 6, 1997, was Mr. Coyne, Assistant Secretary accepted. Mr. Gillum, Assistant Secretary Mr. Mattingly, General Counsel The Manager of the System Open Market Account Mr. Baxter, Deputy General Counsel reported on developments in foreign exchange and Mr. Prell, Economist international financial markets in the period since the Mr. Truman, Economist previous meeting on February 3-4, 1998. There were no System open market transactions in foreign cur- Ms. Browne, Messrs. Cecchetti, Dewald, Hakkio, Lindsey, Promisel, Simpson, Sniderman, and rencies during this period, and thus no vote was Stockton, Associate Economists required of the Committee. The Manager also reported on developments in Mr. Fisher, Manager, System Open Market Account domestic financial markets and on System open market transactions in government securities and federal Mr. Ettin, Deputy Director, Division of Research and Statistics, Board of Governors agency obligations during the period from February 4, 1998, through March 30, 1998. By unanimous Mr. Slifman, Associate Director, Division of Research vote, the Committee ratified these transactions. and Statistics, Board of Governors The information reviewed at this meeting suggested that the economy continued to expand rapidly Messrs. Alexander, Hooper, and Ms. Johnson, Associate Directors, Division of International during the early months of 1998. Apparently, strong Finance, Board of Governors growth in private domestic spending for consump- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

542 Federal Reserve Bulletin • July 1998 tion, housing, and business equipment more than spending on nonresidential construction also seemed offset weakness in net exports and a slight mod- to have been lackluster, with such activity not having eration in inventory investment. Total employment changed much since last summer. continued to rise rapidly, but industrial production The pace of business inventory accumulation increased at a considerably slower pace. Despite indi- slowed sharply in January from the fourth-quarter cations of persisting pressures on employment costs rate. Some of the slowdown reflected a reduction in associated with tight labor markets, price inflation motor vehicle stocks; the remainder was largely assoabated further, primarily as a consequence of large ciated with a drop in inventories of nondurable goods declines in energy prices. at the wholesale level. Inventory-sales ratios for most Nonfarm payroll employment rose sharply further manufacturing and trade categories were within the in January and February. Growth in construction jobs ranges experienced over the past year. was particularly strong, apparently reflecting in part The nominal deficit on U.S. trade in goods and the unseasonably warm weather across much of the services widened substantially in January from its country and the need to repair damage caused by ice average monthly level for the fourth quarter. The storms and heavy rains. In addition, service industries value of exports declined considerably, partly as a continued to post very large employment gains. By result of reduced exports to Asia, but the value of contrast, manufacturing payrolls contracted slightly imports changed little. The decrease in exports was in February after a sizable increase in January. The mainly in civilian aircraft and other capital goods. civilian unemployment rate edged down to 4.6 per- The available information indicated that the pace of cent in February, equaling its low for the current economic expansion picked up in Europe after haveconomic expansion. ing slowed somewhat in the fourth quarter and was Industrial production edged up on balance in Janu- still strong on balance in Canada. Economic activity ary and February after having increased rapidly in the remained weak in Japan and decelerated sharply in second half of 1997. Part of the deceleration stemmed Asian countries that had been the focus of financial from the depressing effect of unusually warm winter turmoil. weather on the provision of heating services by utili- Consumer prices were little changed on balance in ties. The growth of manufacturing production also January and February, as substantial declines in slowed considerably as a result of downward adjust- energy prices largely offset increases elsewhere. ments to assemblies of motor vehicles and, more Excluding food and energy items, consumer price generally, weakness in the output of business equip- inflation picked up somewhat in the first two months ment. With investment in new manufacturing facili- of the year from the pace of the second half of 1997; ties still brisk and manufacturing output posting only on a year-over-year basis, however, the increase in a small advance in the January-February period, the consumer prices during the twelve months ended in factory operating rate eased a little. February was slightly smaller than that in the year- Consumers stepped up their spending in the early earlier period. At the producer level, falling prices for months of the year; sentiment remained buoyant in finished energy goods in January and February pulled the context of continued strong growth in disposable down the index of prices for all finished items; income and further gains in household wealth. Par- excluding food and energy, prices were unchanged ticularly large increases were recorded in expendi- on balance over the two months. Over the twelve tures on durable goods, apparel, and general mer- months ended in February, producer price inflation chandise. Housing demand also strengthened, with was negligible. Tight labor markets appeared to be sales of existing homes reaching a record high in putting some upward pressure on labor compensa- February and sales of new homes in January (latest tion, but the pickup was limited. The change in data) almost equaling the previous record. Both hous- average hourly earnings over the twelve months ing starts and building permits remained on an ended in February was only slightly larger than the upward trend. increase over the year-earlier period. Business fixed investment seemed to have re- With economic growth still solid and inflation subbounded from a small decline in the fourth quarter. dued, the Committee at its meeting on February 3-4, Shipments of nondefense capital goods, notably of 1998, had adopted a directive that called for maincomputing equipment whose prices continued to fall taining conditions in reserve markets that would be sharply, strengthened substantially in January and consistent with an unchanged federal funds rate of February. By contrast, expenditures on transportation about 5Vi percent. The substantial uncertainties about equipment were sluggish. Despite further declines in the future strength of economic activity and inflation vacancy rates and rising real estate prices, business suggested that the next change in policy could be in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 543 either direction, and the Committee also had agreed The staff forecast prepared for this meeting indithat the directive should not contain a presumption cated that the expansion of economic activity would about the direction of any change in the stance of slow appreciably during the next few quarters and policy during the intermeeting period. The reserve remain moderate in 1999. The staff analysis sugmarket conditions associated with this directive had gested that the surge in household net worth over the been expected to be consistent with some moderation past several years would help to support sizable, in the growth of M2 and M3 over coming months. though gradually diminishing, gains in consumer Open market operations throughout the intermeet- spending; favorable cash flow affordability would ing period were directed toward maintaining reserve underpin housing demand at a relatively high level; conditions consistent with the intended average for and substantial increases in capital spending would the federal funds rate of around 5Vi percent, and the persist until slower growth in business sales and rate fluctuated in a narrow range around that level. weaker profits began to have a restraining effect in By contrast, interest rates in other domestic financial 1999. Reduced growth of foreign economic activity markets generally rose somewhat on balance over and the lagged effects of the considerable rise that the period in response to incoming information that had occurred in the foreign exchange value of the suggested aggregate private demand remained robust. dollar were expected to exert substantial restraint on Despite the rise in rates and some erosion in the the demand for U.S. exports over the projection outlook for near-term corporate profits, share prices period and to increase the pressures on domestic in U.S. equity markets moved up substantially further. producers that face import competition. An antici- In foreign exchange markets, the dollar appreciated pated slowdown in the pace of inventory accumusomewhat on balance over the intermeeting period lation also would restrain domestic production as in relation to the currencies of the other major indus- stocks were brought into balance with the expected trial countries. Against a background of weakening lower trajectory for sales. Although pressures on growth in Japan and continued uncertainty about the production resources would abate to a degree as prospects for fiscal stimulus in that country, the dollar output growth slowed, inflation was expected to rose considerably against the yen. The dollar changed increase somewhat in response to persisting tightness little against the mark and other continental European in labor markets and a diminishing drag from non-oil currencies but declined against the Canadian dollar import prices. and the British pound. The dollar also depreciated In the Committee's discussion of current and prosignificantly relative to the currencies of several spective developments, members commented on the emerging market economies in Asia, reflecting mar- persistence of unusually favorable economic condiket assessments that progress had been made in tions, characterized by strong growth and low inflareforming economic policies and financial and com- tion, but a number questioned how long these conmercial practices in most of those countries. ditions might last without a policy adjustment. The available information for February and part of Domestic demand was exceeding expectations and March indicated that M2 and M3 expanded more was likely to continue to increase rapidly for some rapidly than the Committee had anticipated at the time, supported by accommodative conditions in key time of its February meeting. On a quarterly average segments of financial markets. Developments in forbasis, growth of both monetary aggregates picked up eign trade were moderating demands on domestic somewhat in the first quarter from already robust resources; but with domestic spending strong, memrates in the fourth quarter. The increased demand for bers were becoming more concerned that those devel- M2 was perhaps associated in part with the reduced opments might not exert enough restraint on aggreattractiveness of longer-term fixed rate market assets, gate demand to slow the expansion to a sustainable whose yields had declined significantly relative to the pace in line with the growth of the economy's potenreturns on liquid investment components of M2. In tial. Despite tightening labor markets, inflation prosaddition, households might have been trying to rebal- pects remained quite favorable for a while as a numance asset portfolios that had become more heavily ber of factors—some temporary—helped to damp weighted in equities as a result of the run-up in stock near-term pressures on prices. Nonetheless, in the prices. The pickup in M3 growth reflected a surge in absence of some slowing in the expansion, labor bank issuance of large time deposits to finance strong compensation probably would continue to accelerate demands for loans by businesses and households. and increasingly outpace productivity, adding to pres- The expansion of total domestic nonfinancial debt sures on prices. also strengthened over recent months in response to In their review of the outlook for spending in key heavy private demands for credit. sectors of the domestic economy, members saw little Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

544 Federal Reserve Bulletin • July 1998 reason to anticipate substantial slowing in the growth economy. While the lagged effects of the dollar's of consumer or business expenditures in coming appreciation and economic conditions in key U.S. quarters, and they also expected housing activity to trading partners around the world were important be maintained at a relatively high level. The recent factors in this assessment, members focused in this further increases in equity prices from already high discussion on the effects of weakness in several Asian levels played an important role in the assessments of economies. Conditions in Japan and in key emerging several members. The stock market's rise was viewed market economies in Asia were still quite fragile, as somewhat puzzling, given indications of some adjustments on the real side of the economy were just slowing in the growth of profits and the potential for beginning to be felt in some cases, and outcomes for earnings disappointments as the expansion in spend- economic growth and exchange rates were still very ing moderated and profit margins narrowed in the much in doubt. Nonetheless, some progress had been context of more rapid labor cost increases. So long as made in putting recovery programs together, and a high degree of optimism in the stock market per- financial markets had seemed to stabilize in several sisted, however, the elevated level of financial wealth countries. Anecdotal reports of adverse repercussions and the low cost of capital should continue to boost on individual U.S. firms from the Asian financial spending. Consumer expenditures, especially for turmoil had increased somewhat since the Commitdurable goods, had risen sharply thus far this year, tee's previous meeting, but the direct overall impact and the factors that had fueled that expansion were on the U.S. economy was still limited. Indeed, develstill unusually positive. They included large increases opments in Asia also appeared to have had positive, in employment and personal incomes, the continuing albeit indirect, effects on domestic demand and prices uptrend in financial wealth relative to disposable in the near term by exerting some downward pressure income, and, in these circumstances, the persistence on U.S. interest rates and world oil prices. Prices in of a very high level of consumer confidence. Attrac- the United States of a number of Asian goods and of tive financing conditions and favorable business con- domestic products competing with those goods had fidence also were expected to support substantial been lowered. Over time, conditions in key Asian further growth in business investment, especially economies were thought likely to have a more proin high tech equipment that was characterized by nounced retarding effect on the U.S. economy. While rapid product improvement and falling prices. Invest- the eventual dimensions of that effect remained ment in nonresidential structures, notably in office uncertain, a number of members commented that, on and other commercial markets, seemed likely to the basis of developments to date, they might turn out strengthen somewhat in response to reduced vacancy to be less negative than had been expected earlier, or rates and sizable increases in rents in many areas; at least that some "worst case" outcomes seemed less indeed, several members again reported indications likely. of speculative nonresidential construction in some With regard to the outlook for inflation, members parts of the country. Residential construction was observed that price inflation remained quite low—in expected to be maintained at a high level, though fact, it was still declining by some measures—and single-family starts might soften over the next few there was little evidence of any potential acceleration months after a surge that appeared to have been in current price data or in anecdotal reports from related to relatively favorable weather conditions dur- around the country. Nonetheless, as they had at previing the winter. With mortgage rates at their recent ous meetings, members expressed particular concern reduced levels and incomes continuing to rise, the about the outlook for prices in the absence of apprecash flow affordability of home ownership was ciable slowing in the growth of aggregate demand, exceptionally favorable. which appeared to be adding to pressures on labor Developments in two areas of expenditures were resources. Anecdotal reports from across the nation thought likely to exert some restraining effect on the continued to suggest exceptionally tight labor maroverall expansion in economic activity over coming kets and growing indications of somewhat faster quarters. One was business inventory accumulation, increases in labor compensation. To date, unit labor which had exceeded the robust growth in final sales costs had been contained by large capital investments in 1997 and probably would moderate this year as and other initiatives that had raised the productivity business firms sought to restrain the buildup in their of labor. But additional improvements in productivity inventories to keep them in better alignment with the growth could not be counted on to offset further expected moderation of gains in sales. increases in the rate of growth of labor compensation, The second, foreign trade developments, also was which were more likely to occur especially if labor likely to have a damping influence on the domestic markets were to tighten further. Moreover, the effects Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 545 of a number of special factors that had tended to limit inflation for a time, the Committee could await furcost pressures and price inflation in recent years were ther developments bearing on the strength of inflanot likely to persist; these included the declines in tionary pressures without incurring a significant risk world oil prices, the subdued increases in the costs of that disruptive policy actions would be needed later health benefits, and the lagged effects of the appreci- in response to an upturn in inflation and inflation ation of the dollar. To be sure, the factors that had expectations. produced the favorable inflation results of recent One member indicated a strong preference for an years were not all well understood, and consequently immediate policy tightening move, largely on the expectations of greater price pressures had to be grounds that under current conditions relatively rapid tentative. On balance, though any upsurge in inflation growth in money and credit was not consistent with seemed unlikely in the nearer term, the risk that continued progress toward reducing inflation. A numinflation might move higher over the longer run ber of other members also commented that the seemed to have increased. strength of the monetary aggregates, especially if it Despite perceptions of a greater risk of rising infla- should persist, was suggesting ample liquidity and tion over time, all but one of the members indicated accommodative financial conditions. In addition, in the Committee's policy discussion that they pre- some cited ebullient equity markets and narrow ferred, or could accept, a proposal to maintain an risk spreads in credit markets as additional evidence unchanged policy stance that also included a shift that financial conditions were not restraining final from the current symmetrical directive to an asym- demands very much. These were factors that they metrical directive tilted toward restraint. The mem- would weigh in their evaluation of the need for, and bers agreed that should the strength of the economic timing of, a policy tightening move. expansion and the firming of labor markets persist, The members agreed that they should be particupolicy tightening likely would be needed at some larly sensitive to developments that might signal rispoint to head off imbalances that over time would ing inflation pressures, and in that regard a shift to an undermine the expansion in economic activity. Most asymmetric directive seemed desirable. Such a direcsaw little urgency to tighten policy at this meet- tive would be consistent with the Committee's judging, however. The economy might well continue to ment that the information that had become available accommodate relatively robust economic growth since a symmetric directive was last adopted in Feband a high level of resource use for an extended ruary had altered the inflation risks enough to make period without a rise in inflation. Some members some tightening a likely prospect in the not too noted that price increases would be held down for a distant future. In that regard several suggested that while by the effects of the higher dollar, which had the need for some policy tightening could well matenot worked their way fully through domestic prices. rialize in the near future. Moreover, inflation continued to fall by some mea- At the conclusion of the Committee's discussion, sures and inflation expectations still seemed to be all but one member supported a directive that called adjusting downward toward actual inflation; further for maintaining conditions in reserve markets that declines in these expectations would restrain were consistent with an unchanged federal funds rate increases in compensation and prices. Members also of about 5V2 percent and that contained a bias toward noted that the ultimate extent of retarding effects the possible firming of reserve conditions and a from the financial turmoil in Asia was still uncertain, higher federal funds rate. Accordingly, in the context and several cited the possibility of a downward of the Committee's long-run objectives for price staadjustment in the stock market, perhaps in response bility and sustainable economic growth, and giving to disappointing growth in business profits, that could careful consideration to economic, financial, and have an adverse impact on business and consumer monetary developments, the Committee decided that confidence. In these circumstances, a preemptive pol- a somewhat higher federal funds rate would be icy move to head off rising inflation could prove acceptable or a slightly lower federal funds rate might premature or perhaps even unwarranted; indeed, in be acceptable during the intermeeting period. The the view of some, a tightening move was not inevi- reserve conditions contemplated at this meeting were table. Moreover, because a policy action was not expected to be consistent with considerable moderacurrently anticipated, some commented that a tighten- tion in the growth in M2 and M3 over the months ing could produce an outsized and undesirable ahead. response in financial markets. On balance, in light The Federal Reserve Bank of New York was authoof the uncertainties in the outlook and given that a rized and directed, until instructed otherwise by the variety of special factors would continue to contain Committee, to execute transactions in the System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

546 Federal Reserve Bulletin D July 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 ecoeconomic activity continued to grow rapidly during the nomic growth, and giving careful consideration to ecoearly months of 1998. Nonfarm payroll employment nomic, financial, and monetary developments, a somewhat increased sharply further in January and February, and the civilian unemployment rate, at 4.6 percent in February, higher federal funds rate would or a slightly lower federal equaled its low for the current economic expansion. How- funds rate might be acceptable in the intermeeting period. ever, growth in manufacturing payroll employment was The contemplated reserve conditions are expected to be down over the first two months of the year, and factory consistent with considerable moderation in the growth in output decelerated appreciably. Consumer spending has M2 and M3 over coming months. risen considerably further since year-end, and housing activity also has strengthened in recent months. Available Votes for this action: Messrs. Greenspan, McDonough, indicators point to a sharp rebound in business fixed invest- Ferguson, Gramlich, Hoenig, Kelley, Meyer, Mses. ment following a small decline in the fourth quarter. Frag- Minehan, Phillips, Mr. Poole, and Ms. Rivlin. Vote mentary data on nonfarm inventories suggest a slower rate against this action: Mr. Jordan. of accumulation early in the year. The nominal deficit on U.S. trade in goods and services widened substantially in Mr. Jordan dissented because growth rates of vari- January from its average monthly rate in the fourth quarter. ous measures of money and credit in the second half Despite indications of persisting pressures on employment of 1997 and the first quarter of this year were not costs associated with tight labor markets, price inflation has abated further, primarily as a consequence of large consistent in his view with continued progress in declines in energy prices. reducing inflation. Recent price statistics understated Interest rates generally have risen somewhat on balance the trend rates of inflation. The one-time effects of over the intermeeting period. Share prices in U.S. equity falling oil prices, lower food prices, and recent appremarkets have moved up substantially further over the ciation of the dollar on foreign exchange markets period. In foreign exchange markets, the value of the dollar provided only a temporary reduction of inflation. has increased somewhat over the period in relation to the While some reacceleration of reported rates of inflacurrencies of other major industrial nations, but it has depreciated relative to the currencies of most emerging tion was probably unavoidable, sustained rapid market economies in Asia. money growth would risk even higher inflation in Growth of M2 and M3 picked up somewhat in the first future years. The durability of the economic expanquarter from already robust rates in the fourth quarter. sion would be jeopardized by price and wage deci- Expansion of total domestic nonfinancial debt also has sions reflecting expectations that the purchasing strengthened over recent months. The Federal Open Market Committee seeks monetary power of the dollar would decline at faster rates in and financial conditions that will foster price stability and the future. Once such expectations became imbedded promote sustainable growth in output. In furtherance of in the economy, even stronger policy actions would these objectives, the Committee at its meeting in February be required in order to reestablish a downward trend established ranges for growth of M2 and M3 of 1 to of inflation. 5 percent and 2 to 6 percent respectively, measured from the fourth quarter of 1997 to the fourth quarter of 1998. It was agreed that the next meeting of the Commit- The range for growth of total domestic nonfinancial debt tee would be held on Tuesday, May 19, 1998. was set at 3 to 7 percent for the year. The behavior of the The meeting adjourned at 1:05 p.m. monetary aggregates will continue to be evaluated in the light of progress toward price level stability, movements in their velocities, and developments in the economy and Donald L. Kohn financial markets. Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

547 Legal Developments ORDERS ISSUED UNDER BANK HOLDING COMPANY would become the 38th largest depository institution in ACT New York, controlling deposits of approximately $1.3 billion, representing less than 1 percent of state deposits. Orders Issued Under Section 4 of the Bank Holding The Board previously has determined by regulation that Company Act the operation of a savings association by a bank holding company is closely related to banking for purposes of HUBCO, Inc. section 4(c)(8) of the BHC Act.4 In making this determina- Mahwah, New Jersey tion, the Board requires that savings associations acquired by bank holding companies conform their direct and indi- Order Approving the Acquisition of a Savings rect activities to those permissible for bank holding compa- Association nies under section 4 of the BHC Act. HUBCO has committed to conform all of MSB Bank's activities to those HUBCO, Inc. ("HUBCO"), a bank holding company permissible under section 4(c)(8) of the BHC Act and within the meaning of the Bank Holding Company Act Regulation Y.5 ("BHC Act"), has requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) Competitive Considerations and section 225.24 of the Board's Regulation Y (12 C.F.R. 225.24) to acquire MSB Bancorp, Inc. ("MSB"), and In order to approve the proposal, the Board also must thereby acquire its savings bank subsidiary, MSB Bank, determine that performance of the proposed activities is a both in Goshen, New York.' proper incident to banking, that is, that the proposed trans- Notice of the proposal, affording interested persons an action "can reasonably be expected to produce benefits to opportunity to submit comments, has been published the public . . . that outweigh possible adverse effects, such (63 Federal Register 11,446 (1998)). The time for filing as undue concentration of resources, decreased or unfair comments has expired, and the Board has considered the competition, conflicts of interests, or unsound banking proposal and all comments received in light of the factors practices."6 HUBCO and MSB compete directly in the set forth in section 4 of the BHC Act. Metropolitan New York/New Jersey banking market HUBCO, with total consolidated assets of approximately ("New York banking market").7 $3.0 billion, currently operates Hudson United Bank, On consummation of the proposal, HUBCO would be- Union City, New Jersey ("Lead Bank"), Lafayette Ameri- come the 18th largest depository institution in the market, can Bank, Bridgeport, Connecticut ("Lafayette Bank"), controlling deposits of approximately $3.3 billion, repreand Bank of the Hudson, Poughkeepsie, New York ("Bank senting less than one percent of total deposits in depository of the Hudson").2 HUBCO is the 64th largest depository institutions in the market.8 Concentration in the New York institution in New York, controlling deposits of approximately $603 million, representing less than 1 percent of total deposits in depository institutions in the state ("state 4. 12 C.F.R. 225.28(b)(4). deposits").3 MSB is the 58th largest depository institution 5. MSB Bank currently engages in certain insurance and travel agency activities that are impermissible for bank holding companies. in New York, controlling deposits of approximately HUBCO has committed to cease MSB Bank's sale or renewal of $736 million, representing less than 1 percent of state insurance policies on consummation of the proposal, and to terminate deposits. On consummation of the proposal, HUBCO all impermissible insurance and travel agency activities within two years of consummation of the proposal. 6. 12 U.S.C. § 1843(c)(8). 7. The New York banking market includes New York City; Nassau, 1. HUBCO proposes to merge MSB Bank with and into its savings Orange, Putnam, Rockland, Suffolk, Sullivan, and Westchester Counbank subsidiary, Bank of the Hudson, Poughkeepsie, New York. ties in New York; Bergen, Essex, Hudson, Hunterdon, Middlesex, HUBCO has requested approval of the proposed merger from the Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, War- Office of Thrift Supervision ("OTS") under section 18(c) of the ren, and a portion of Mercer Counties in New Jersey; Pike County in Federal Deposit Insurance Act (12 U.S.C. § 1828(c)) ("Bank Merger Pennsylvania; and portions of Fairfield and Litchfield Counties in Act"). MSB also has granted HUBCO an option to acquire approxi- Connecticut. mately 21 percent of MSB's outstanding common stock. The option 8. Market share data are as of June 30, 1996. Market share data would expire on consummation of the proposal. before consummation are based on calculations in which the deposits 2. Asset data are as of December 31, 1997, and deposit data are as of thrift institutions are included at 50 percent. The Board previously of June 30, 1997. has indicated that thrift institutions have become, or have the potential 3. In this context, depository institutions include commercial banks, to become, significant competitors of commercial banks. See WM savings banks, and savings associations. Bancorp, 76 Federal Reserve Bulletin 788 (1990); National dry Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

548 Federal Reserve Bulletin • July 1998 banking market, as measured by the Herfindahl-Hirschman A. CRA Performance Examinations Index ("HHI") under the Department of Justice Merger Guidelines ("DOJ Guidelines") would not increase, and As provided in the CRA, the Board evaluates the record of the market would remain unconcentrated.9 In addition, performance of an institution in light of examinations by numerous competitors would remain in the New York the appropriate federal supervisors of the CRA perforbanking market. Based on these and all other facts of mance records of the relevant institutions. An institution's record, the Board concludes that consummation of the most recent CRA performance evaluation is a particularly proposal would not result in any significantly adverse important consideration in the applications process because effects on competition or on the concentration of banking it represents a detailed on-site evaluation of the instituresources in the New York banking market or any other tion's overall record of performance under the CRA by its relevant banking market. appropriate federal supervisor.13 Lead Bank received an overall rating of "satisfactory" Record of Performance under the Community from its appropriate federal supervisor, the Federal Deposit Reinvestment Act Insurance Corporation ("FDIC"), at its most recent evaluation for CRA performance, as of February 1997 ("1997 In acting on applications to acquire a savings association, Examination"). Lafayette Bank received an "outstanding" the Board considers the records of performance of the CRA performance rating from the FDIC at its most recent relevant depository institutions under the Community Rein- evaluation for CRA performance, as of March 1996 vestment Act (12 U.S.C. § 2901 et seq.) ("CRA").10 The ("Lafayette Examination").14 In addition, as of May 1997, Board has reviewed the CRA performance records of Lead the State of Connecticut Department of Banking Bank, Lafayette Bank, Bank of the Hudson, and MSB ("SCDB") rated Lafayette Bank's CRA performance "sat- Bank in light of all the facts of record, including comments isfactory" pursuant to Connecticut law.15 received on the proposal from Inner City Press/Community Bank of the Hudson received an "outstanding" CRA on the Move ("Commenter")." Commenter contends that performance rating from its appropriate federal supervisor, data submitted under the Home Mortgage Disclosure Act the OTS, at its most recent CRA examination, as of Febru- (12 U.S.C. § 2801 etseq.) ("HMDA") for 1996 show that ary 1998. MSB Bank also received an overall rating of the marketing and lending activities of Lead Bank, Lafay- "satisfactory" from the OTS at its most recent evaluation ette Bank, and MSB Bank are inadequate and illegally for CRA performance, as of September 1997. discriminatory with respect to minorities. Commenter also Examiners found no evidence of prohibited discriminamaintains that HUBCO's subsidiary banks and MSB Bank tion or other illegal credit practices at HUBCO's subsiddo not adequately serve the credit needs of low- and iary depository institutions or MSB Bank. The examinamoderate-income ("LMI") communities, and that HUBCO tions also reviewed the delineations of the local funds its acquisitions of banking organizations through communities served by the depository institutions and branch closings.12 found that such delineations were consistent with applicable law and did not arbitrarily exclude LMI communities, and that the depository institutions solicited and accepted Corporation, 70 Federal Reserve Bulletin 743 (1984). Because the credit applications from all segments of their delineated deposits of MSB Bank would be acquired by a commercial banking communities. Examiners also determined that loans made organization under the proposal, MSB Bank's deposits are included at by the depository institutions were reasonably distributed 100 percent in the calculation of the pro forma market share. See throughout the local communities they served, including Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal Reserve Bulletin 669 (1990). LMI communities, and served all members of the commu- 9. Under the revised DOJ Guidelines (49 Federal Register 26,823 nities, including LMI individuals. (June 29, 1984)), a market in which the post-merger HHI is less than 1000 points is considered to be unconcentrated. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at on in other cases to determine that an investing bank holding company least 1800 and the merger increases the HHI by more than 200 points. would not be able to exercise a controlling influence over another The Department of Justice has stated that the higher than normal HHI depository institution. There is no evidence in the record that HUBCO thresholds for screening bank mergers for anticompetitive effects has taken actions inconsistent with the commitments. For the reasons implicitly recognize the competitive effect of limited-purpose lenders discussed in this order, moreover, MSB Bank's record of performance and other non-depository financial entities. The HHI in the New York under the CRA does not present adverse considerations. banking market would decrease by one point to 794 as a result of the 13. The Statement of the Federal Financial Supervisory Agencies proposal. Regarding the Community Reinvestment Act provides that a CRA 10. See Bane One Corporation, 83 Federal Reserve Bulletin 602 examination is an important and often controlling factor in the consid- (1997). eration of an institution's CRA record and that reports of these 11. HUBCO proposes to merge MSB Bank with and into Bank of examinations will be given great weight in the applications process. the Hudson and to implement the CRA programs and policies of Bank 54 Federal Register 13,742 and 13,745 (1989). of the Hudson at MSB Bank after consummation of the merger. 14. In reviewing the CRA performance record of Lafayette Bank, 12. Commenter argues that HUBCO's ownership of MSB preferred the Board also has considered confidential supervisory information stock since 1996 requires that the Board attribute MSB Bank's record collected by the FDIC during the course of an ongoing CRA examinaof CRA performance to HUBCO. In connection with that investment, tion of the bank. HUBCO provided a number of commitments that the Board has relied 15. See Conn. Gen. Stat. § 36a-32 (1997). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 549 B. Lending Record of the Relevant Depository ing to meet the credit needs of its entire service commu- Institutions nity, including LMI neighborhoods. Examiners found that the bank actively ascertained community needs and em- Lead Bank in New Jersey. The 1997 Examination found ployed a number of methods to ascertain those needs, that Lead Bank developed or participated in a number of including surveys of local citizens and bank directors, programs designed to assist in meeting the housing-related officers, and employees, and meetings with community credit needs of LMI individuals. Examiners noted that the leaders, social service agencies, and bank customers.19 bank offered a proprietary affordable mortgage program for Examiners also found Lafayette Bank to be receptive to qualified LMI borrowers that featured below-market inter- participation in, and marketing of, loan programs sponest rates, reduced application fees, and no mortgage insur- sored by federal, state, and local government organizaance requirement for mortgages with a loan-to-value ratio tions. During 1995, the bank originated 24 SBA loans, of less than 90 percent. Examiners also noted that the bank totalling $6.2 million; the bank's current SBA portfolio offered an affordable home equity and home improvement consists of 132 loans, totalling $30.3 million. In February loan program for LMI borrowers that featured below- 1996, the bank was recognized as one of its service area's market interest rates and no maximum or minimum loan leading certified SBA lenders. Lafayette Bank also has amounts. In addition, the examination favorably com- participated in the Connecticut Small Business Reserve mented on Lead Bank's participation in programs spon- Fund, which facilitates bank lending to small businesses in sored by the New Jersey Housing and Mortgage Finance urban areas. Through September 30, 1995, the bank had Agency ("NJHMFA").16 The 1997 Examination also re- extended 24 loans, totalling $1.5 million, through this viewed 1995 and 1996 HMDA data filed by Lead Bank program. Lafayette Bank also offers the Federal Housing and found the bank's originations in 1995 and 1996 re- Administration Insured Residential Mortgage Program, flected a good penetration among retail customers of differ- which provides insured residential mortgages to qualified ent income levels and that the geographic distribution of LMI applicants at below-market interest rates and with the bank's applications, originations, and denials was rea- reduced down payment requirements. In conjunction with sonable.17 the Connecticut Department of Housing, the bank has Examiners also found that Lead Bank engaged in small developed the First-Time Homebuyers Mortgage Program, business lending throughout its assessment area. In 1996, which enables LMI applicants to qualify to purchase homes the bank originated approximately 214 small business with no down payment. loans, totalling approximately $34.7 million, and more Lafayette Bank also provides financial support to a numthan 24 percent of these loans were made to businesses in ber of community development programs in its assessment LMI census tracts within Lead Bank's service community. area. For example, examiners noted that the bank provided Lead Bank made 39 Small Business Administration a line of credit to Neighborhood Housing ServiceS~bf New ("SBA") loans in 1995, totalling $3.7 million, and 35 SBA Haven, which rehabilitates real estate and resells the proploans in 1996, totalling $3.4 million.18 The Board notes erties to LMI individuals, and to the New Haven Loan that HUBCO entered into an agreement with a community Fund, which provides construction financing for the develorganization in New Jersey after the 1997 Examination to opment of LMI housing units in the Greater New Haven provide $75 million over the next five years to programs area. The bank also provided financing to qualified borrowthat seek to provide affordable housing and economic ers in connection with the Bridgeport Neighborhood Fund, opportunities to LMI individuals in New Jersey. Neighborhood Housing Services of Norwalk, and the City Lafayette Bank in Connecticut. Examiners found that of Meridian's Block Grant Program, each of which are Lafayette Bank's record of lending within LMI census organizations that rehabilitate property for resale to LMI tracts and to LMI individuals was good and reflected borrowers. management's commitment to community development. Bank of the Hudson in New York. The 1998 examination The Lafayette Examination also concluded that Lafayette of Bank of the Hudson concluded that the institution had Bank had an outstanding record of ascertaining and help- shown a commitment to provide affordable housing loans to LMI individuals in its community by offering several innovative and flexible affordable home loan programs 16. Lead Bank is a participating lender in NJHMFA's First-Time designed to assist LMI borrowers.20 Examiners noted that Homebuyers Program, which offers LMI first-time homebuyers low- Bank of the Hudson made 318 loans in its assessment area cost, fixed-rate, 30-year mortgage loans with a maximum 97 percent loan-to-value ratio, and NJHMFA's Buy and Fix-It Program. under these affordable mortgage programs, representing 28 17. Examiners noted that Lead Bank could improve its record of lending in LMI areas in several New Jersey counties and encouraged the bank to improve its lending record in these areas, particularly in Middlesex and Somerset Counties. The Board also expects Lead Bank 19. The Lafayette Examination noted that the bank's ongoing comto address these matters. As discussed in this order, however, Lead munity contacts have resulted in the bank's participation in several Bank's overall CRA performance rating is satisfactory and the bank community development projects and loan programs sponsored by engages in a number of lending activities designed to help meet the local governments. credit needs of its communities, including LMI neighborhoods. 20. These programs include the City of Poughkeepsie First Time 18. The SBA awarded the bank a Bronze Award in 1995 and 1996 Homebuyers Program, the Dutchess Housing Partnership First Time for its performance in the SBA Guaranteed Loan Program and has Homebuyers Program, the Hudson Valley First Time Homebuyers accorded the bank preferred lender status. Program, and the First Home Club Savings Program. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

550 Federal Reserve Bulletin • July 1998 percent of the number and dollar volume of the bank's 1-4 D. HMDA Data family mortgage lending in the assessment area. With respect to community development, examiners The Board has carefully reviewed HMDA data filed by found that the number and dollar volume of Bank of the Lead Bank, Lafayette Bank, and MSB Bank in light of Hudson's community development loans and activities Commenter's contentions. HMDA data for Lead Bank and demonstrated an outstanding response to the economic Lafayette Bank indicate some disparities in the rate of loan development needs of its community. Examiners noted that originations, denials, and applications by racial group and the institution had made seven community development income level. The data also indicate, however, that, in 1995 loans, totalling $8.2 million, during the assessment period and 1996, Lead Bank received a higher percentage of its (August 1995 to December 1997) and had established a credit applications from LMI census tracts in the Bergendepartment dedicated to community development lend- Passaic Metropolitan Statistical Area ("MSA"), and had a ing.21 Examiners also noted that the institution made higher origination rate with respect to such applications, 42 small business loans, totalling $6.75 million, in its than lenders in the aggregate. The data also indicate that assessment area, and that the geographic distribution of the Lead Bank's ratio of denials of African-American credit bank's residential mortgage, consumer, and small business applicants to white credit applicants in the combined area loans compared favorably to lenders in the aggregate. of the Bergen-Passaic and Newark MSAs was lower than that of lenders in the aggregate in 1995 and 1996. C. Branch Closings The Board is concerned when an institution's record indicates disparities in lending to minorities and believes HUBCO does not intend to close any branches as a result that all banks are obligated to ensure that their lending of the proposal. The Board has reviewed Commenter's practices are based on criteria that assure not only safe and contentions regarding HUBCO's branch closings in the sound banking, but also equal access to credit by creditworpast or in other proposed transactions in that light. The thy applicants regardless of race. The Board recognizes, Board also has reviewed the most recent CRA examination however, that HMDA data alone provide an incomplete reports and other confidential supervisory information from measure of an institution's lending in its community and the appropriate federal supervisors of HUBCO's subsidiary have limitations that make the data an inadequate basis, depository institutions and MSB Bank assessing the banks' absent other information, for concluding that an institution records of branch closings and branch closing policies. The has engaged in illegal discrimination in making lending Board notes that the appropriate federal supervisors of decisions.23 HUBCO's subsidiary depository institutions and MSB Because of the limitations of HMDA data, the Board has Bank concluded that the branching networks of these decarefully reviewed other information, particularly examinapository institutions provided reasonable access to services tion reports that provide an on-site evaluation of compliof the institutions to all segments of their delineated comance by the banks with fair lending laws. As discussed munities. Examiners also concluded that the branch closabove, examiners noted no evidence of prohibited discrimings of Lead Bank and Lafayette Bank had not adversely ination or other illegal credit practices at HUBCO's subsidaffected LMI communities or LMI individuals.22 Examiniary depository institutions or MSB Bank at their most ers also reviewed the branch closing policy of Lafayette recent examinations. In addition, examiners commented Bank and concluded that the policy was consistent with favorably that HUBCO's subsidiary banks had a formal applicable law. review process for all denied mortgage loan applications. The Board also has considered the HMDA data in light of the lending record of the institutions, which shows that the banks are assisting in meeting the credit needs of their 21. Bank of the Hudson provided a $480,000 construction loan to entire communities, including LMI neighborhoods.24 the Village Housing Project for the construction of rental housing units for LMI senior citizens, and a $120,000 subsidy under the Federal Home Loan Bank Affordable Housing Program to the Garden Street Revitalization project to renovate 72 homes in a low-income 23. The data, for example, do not provide a basis for an independent area of Poughkeepsie. assessment of whether an applicant who was denied credit was, in 22. In addition to these factors, the Board has considered that fact, creditworthy. Credit history problems and excessive debt levels federal banking law permits the closing of branches and provides a relative to income (reasons most frequently cited for a credit denial) specific mechanism for addressing branch closings. Section 42 of the are not available from HMDA data. Federal Deposit Insurance Act (12 U.S.C. § 1831 r-1), as implemented 24. Commenter alleges that HUBCO has violated the fair lending by the Joint Policy Statement Regarding Branch Closings laws by expanding its branch presence, particularly into Connecticut (58 Federal Register 49,083 (1993)), requires that an insured deposi- and New York, in a manner that avoids LMI and minority communitory institution provide the public with at least 30 days' notice and the ties. The Board notes that HUBCO acquired its branches in Connectiappropriate federal supervisor with at least 90 days' notice before the cut and New York through the acquisition of entire banking organizadate of the proposed branch closing. The insured depository institution tions, not by opening new branches in selected communities. also is required to provide reasons and other supporting data for the Furthermore, as discussed in this order, FDIC and OTS examiners closure, consistent with the institution's written branch closing policy. noted no evidence of prohibited discrimination by Lead Bank, Lafay- The requirement applies any time a branch is closed, whether in ette Bank, Bank of the Hudson, or MSB Bank in their most recent connection with an acquisition or at any time after completion of an examinations of these institutions, and concluded that the branches of acquisition. The law does not authorize federal regulators to prevent these institutions were reasonably accessible to the communities the closing of any branch. served by the institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 551 E. Conclusion on CRA Performance Records Conclusion The Board has carefully considered all the facts of record, Based on the foregoing and all the facts of record, the including Commenter's comments and confidential exami- Board has determined that the notice should be, and hereby nation reports and other supervisory information from the is, approved.27 The Board's approval of the proposal is appropriate federal supervisors, in reviewing the CRA per- specifically conditioned on compliance by HUBCO with formance records of the institutions involved in the transac- the commitments made in connection with the notice. The tion. Based on a review of the entire record, and for the Board's determination also is subject to all the conditions reasons discussed above, the Board concludes that the in Regulation Y, including those in sections 225.7 and CRA performance records of HUBCO's subsidiary deposi- 225.25(c) (12 C.F.R. 225.7 and 225.25(c)), and to the tory institutions and MSB Bank are consistent with ap- Board's authority to require such modification or terminaproval of the proposal.25 tion of the activities of a holding company or any of its subsidiaries as the Board finds necessary to assure compli- Other Considerations ance with, or to prevent evasion of, the provisions and purposes of the BHC Act and the Board's regulations and In connection with its review of the public interest factors orders issued thereunder. The commitments and conditions under section 4 of the BHC Act, the Board has carefully relied on by the Board in reaching this decision shall be reviewed the financial and managerial resources of deemed to be conditions imposed in writing by the Board HUBCO and MSB and their respective subsidiaries and the in connection with its findings and decision and, as such, effect the transaction would have on such resources in light may be enforced in proceedings under applicable law. of all the facts of record.26 These facts include confidential This transaction shall not be consummated later than financial information from HUBCO and confidential re- three months after the effective date of this order, unless ports of examination and other supervisory information such period is extended for good cause by the Board or the received from the appropriate federal supervisors of the Federal Reserve Bank of New York, acting pursuant to affected organizations assessing the financial and manage- delegated authority. rial resources of the organizations. Based on all the facts of By order of the Board of Governors, effective May 13, record, the Board concludes that the financial and manage- 1998. rial resources of the organizations involved in the proposal are consistent with approval. Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Additionally, there are public benefits to be derived from Governors Kelley, Phillips, Meyer, Ferguson, and Gramlich. permitting capital markets to operate so that bank holding JENNIFER J. JOHNSON companies may make potentially profitable investments in Deputy Secretary of the Board nonbanking companies when, as in this case, those investments are consistent with the relevant considerations under the BHC Act, and from permitting banking organizations to allocate their resources in the manner they believe is most efficient. Based on all the facts of record, the Board 27. Commenter also requests that the Board hold a public hearing or has determined that consummation of this proposal can meeting on the notice to receive evidence concerning HUBCO's record of lending and expansion into predominately non-minority reasonably be expected to produce public benefits that communities, and the efficacy of the passivity commitments provided would outweigh any likely adverse effects under the proper by HUBCO in connection with its January 1996 acquisition of MSB incident to banking standard of section 4(c)(8) of the BHC preferred stock. The Board's rules provide for a hearing on notices Act. under section 4 of the BHC Act if there are disputed issues of material fact that cannot be resolved in some other manner. See 12 C.F.R. 225.25(a)(2). Under its rules, the Board also may, in its discretion, hold a public hearing or meeting on a notice to acquire a savings association if a hearing is necessary or appropriate to clarify factual issues related to the notice and to provide an opportunity for testimony, if appropriate. After a careful review of all the facts of record, the Board has 25. Commenter requests that the Board conduct a fair lending concluded that Commenter disputes the weight that should be acexamination of Lead Bank and Lafayette Bank and refer the banks to corded to and the conclusions that the Board should draw from the the Department of Justice for possible enforcement action under the facts of record, but does not identify disputed issues of fact that are fair lending laws. The FDIC, the appropriate federal supervisor of material to the Board's decision. The Board also notes that interested Lead Bank and Lafayette Bank, is charged with primary responsibility parties have had ample opportunity to submit their views, and Comfor examining the compliance of such banks with the fair lending menter has submitted written comments that have been carefully laws. As discussed above, the FDIC found no evidence of prohibited considered by the Board in acting on the notice. Commenter's request discrimination by Lead Bank and Lafayette Bank at the most recent fails to demonstrate why its written presentation does not adequately CRA examination of these institutions. Based on these and all other present its evidence, allegations, and views and to summarize the facts of record, the Board concludes that neither a special on-site evidence that would be presented at a hearing or meeting. For these examination of HUBCO's subsidiary depository institutions for fair reasons, and based on all the facts of record, the Board has determined lending law compliance nor referral of the institutions to the Depart- that a public hearing or meeting is not required or warranted in this ment of Justice is warranted. case. Accordingly, the request for a public hearing or meeting on the proposal is hereby denied. 26. See 12 C.F.R. 225.26. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

552 Federal Reserve Bulletin • July 1998 Norwest Corporation be proper incidents thereto within the meaning of sec- Minneapolis, Minnesota tion 4(c)(8) of the BHC Act.4 The Board also has determined that conduct of the proposed activities is consistent Norwest Investment Services, Inc. with section 20 of the Glass-Steagall Act, provided that the Minneapolis, Minnesota company engaged in the underwriting and dealing activities derives no more than 25 percent of its gross revenues Order Approving Notice to Engage in Underwriting and from underwriting and dealing in bank-ineligible securi- Dealing in All Types of Debt Securities on a Limited ties.5 Basis Norwest has committed that Company will conduct the proposed underwriting and dealing activities using the Norwest Corporation ("Norwest"), a bank holding com- same methods and procedures, and subject to the same pany within the meaning of the Bank Holding Company prudential limitations, as established by the Board in the Act ("BHC Act"), and its wholly owned subsidiary, Nor- Section 20 Orders. Norwest also has committed that Comwest Investment Services, Inc. ("Company"), have re- pany will conduct its bank-ineligible underwriting and quested the Board's approval under section 4(c)(8) of the dealing activities subject to the Board's revenue restriction. BHC Act (12U.S.C. § 1843(c)(8)) and section 225.24 of As a condition of this order, Norwest is required to conduct the Board's Regulation Y (12 C.F.R. 225.24) to engage its bank-ineligible securities underwriting and dealing acde novo in underwriting and dealing, to a limited extent, in tivities subject to the revenue restrictions and the Operatall types of debt securities. ing Standards established for section 20 subsidiaries Notice of the proposal, affording interested persons an ("Operating Standards").6 opportunity to submit comments, has been published In order to approve this notice, the Board also must (63 Federal Register 17,874 (1998)). The time for filing consider whether performance of the proposed activities is comments has expired, and the Board has considered the a proper incident to banking, that is, whether the activities notice and all comments received in light of the factors set proposed "can reasonably be expected to produce benefits forth in section 4(c)(8) of the BHC Act. to the public . . . that outweigh possible adverse effects, Norwest, with total consolidated assets of $88.5 billion, such as undue concentration of resources, decreased or is the Uth largest commercial banking organization in the unfair competition, conflicts of interests, or unsound bank- United States.1 Norwest operates subsidiary banks in ing practices."7 As part of its evaluation of these factors, 16 states and engages through its subsidiaries in a broad the Board considers the financial condition and managerial range of permissible nonbanking activities. Company cur- resources of the notificant and its subsidiaries and the effect rently engages in limited underwriting and dealing in bank- the transaction would have on such resources.8 The Board ineligible securities,2 as permitted under section 20 of the Glass-Steagall Act (12U.S.C. § 377).3 Company is, and will continue to be, a broker-dealer registered with the 4. See Canadian Imperial Bank of Commerce, et ai, 76 Federal Reserve Bulletin 158 (1990); J.P. Morgan & Co. Incorporated, et al, Securities and Exchange Commission ("SEC") and a 75 Federal Reserve Bulletin 192 (1989), aff'd sub mm. Securities member of the National Association of Securities Dealers, Industries Ass'n v. Board of Governors of the Federal Reserve System, Inc. ("NASD"). Accordingly, Company is subject to the 900 F.2d 360 (D.C. Cir. 1990); Citicorp, et al., 73 Federal Reserve recordkeeping and reporting obligations, fiduciary stan- Bulletin 473 (1987), aff'd sub nom. Securities Industry Ass 'n v. Board of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir.), dards, and other requirements of the Securities Exchange cert, den., 486 U.S. 1059 (1988); as modified by Review of Restric- Act of 1934 (15 U.S.C. § 78a et seq.), the SEC, and the tions on Director, Officer and Employee Interlocks, Cross-Marketing NASD. Activities, and the Purchase and Sale of Financial Assets Between a The Board has determined that—subject to the pruden- Section 20 Subsidiary and an Affiliated Bank or Thrift, 61 Federal Register 57,679 (1996), and Amendments to Restrictions in the tial framework of limitations established in previous deci- Board's Section 20 Orders, 62 Federal Register 45,,295 (1997) (collecsions to address the potential for conflicts of interests, tively, "Section 20 Orders"). unsound banking practices, or other adverse effects—the 5. See Section 20 Orders. Compliance with the revenue limitation proposed activities of underwriting and dealing in bank- shall be calculated in accordance with the method stated in the Secineligible securities are so closely related to banking as to tion 20 Orders, as modified by Order Approving Modifications to the Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989), 10 Percent Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in 1. Asset and ranking data are as of December 31,1997. Securities, 61 Federal Register 48,953 (1996), and Revenue Limit on 2. As used in this order, the term "bank-ineligible securities" refers Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies to securities that a member bank may not underwrite or deal in Engaged in Underwriting and Dealing in Securities, 61 Federal directly under section 16 of the Glass-Steagall Act (12 U.S.C. Register 68,7'50 (1996) (collectively, "Modification Orders"). § 24 (Seventh)). 6. 12 C.F.R. 225.200. Company may provide services that are 3. Company has authority to underwrite and deal in, to a limited necessary incidents to the proposed underwriting and dealing activiextent, certain municipal revenue bonds, 1—4 family mortgage-related ties. Unless Company receives specific approval under section 4(c)(8) securities, commercial paper, and consumer receivable related securi- of the BHC Act to conduct the activities independently, any revenues ties. Company also is authorized to engage in a variety of other from the incidental activities must be treated as ineligible revenues nonbanking activities. See Norwest Corporation, 76 Federal Reserve subject to the Board's revenue limitations. Bulletin 79 (1990); see also Letter Interpreting Section 20 Orders, 7. 12 U.S.C. § 1843(c)(8). 81 Federal Reserve Bulletin 198 (1995). 8. See 12 C.F.R. 225.24. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 553 has reviewed the capitalization of Norwest and Company Accordingly, Company may commence underwriting and in accordance with the standards set forth in the Section 20 dealing in all types of debt securities as permitted by, and Orders and finds the capitalization of each to be consistent subject to the other conditions of, this order and the Secwith approval of the proposal. With respect to Company, tion 20 Orders. this determination is based on all the facts of record, The Board's determination also is subject to all the terms including Norwest's projections of the volume of Compa- and conditions set forth in Regulation Y, including those in ny's underwriting and dealing activities in bank-ineligible sections 225.7 and 225.25(c) of Regulation Y (12 C.F.R. securities. The Board also has reviewed the managerial 225.7 and 225.25(c)), and to the Board's authority to resources of Norwest and its subsidiaries in light of exami- require such modification or termination of the activities of nation reports and other supervisory information. Based on a bank holding company or any of its subsidiaries as the all other facts of record, including the commitments pro- Board finds necessary to ensure compliance with, and to vided in this case and the proposed managerial and risk prevent evasion of, the provisions of the BHC Act and the systems of Company, the Board has concluded that finan- Board's regulations and orders issued thereunder. The cial and managerial considerations are consistent with ap- Board's decision is specifically conditioned on compliance proval of the notice. with all the commitments made in connection with this In addition, the Board has carefully considered the com- notice and the conditions set forth in this order and the petitive effects of the proposal. The Board expects that the above-noted Board regulations and orders. These commitde novo entry of Company into the market for the proposed ments and conditions are deemed to be conditions imposed services would provide added convenience to Norwest's in writing by the Board in connection with its findings and customers, lead to improved methods of meeting customer decision and, as such, may be enforced in proceedings financing needs, and increase the level of competition under applicable law. among existing providers of these services. For the reasons The proposal shall not be commenced later than three set forth, and based on all the facts of record, the Board has months after the effective date of this order, unless such determined that performance of the proposed activities by period is extended for good cause by the Board or by the Company can reasonably be expected to produce public Reserve Bank, acting pursuant to delegated authority. benefits that outweigh possible adverse effects under the By order of the Board of Governors, eifective May 26, proper incident to banking standard of section 4(c)(8) of 1998. the BHC Act. On the basis of all the facts of record, the Board has Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and determined that the notice should be, and hereby is, ap- Governors Ferguson and Gramlich. Absent and not voting: Governors Kelley, Phillips, and Meyer. proved, subject to all the terms and conditions in this order. The Board's approval of this proposal extends only to JENNIFER J. JOHNSON activities conducted within the limitations of this order, Deputy Secretary of the Board including the Board's reservation of authority to establish additional limitations to ensure that Company's activities Orders Issued Under Sections 3 and 4 of the Bank are consistent with safety and soundness, avoidance of Holding Company Act conflicts of interests, and other relevant considerations under the BHC Act. Underwriting and dealing in any Bane One Corporation manner other than as approved in this order and the Section Columbus, Ohio 20 Orders (as modified by the Modification Orders) is not within the scope of the Board's approval and is not autho- Order Approving the Acquisition of a Bank Holding rized for Company. Company Included among the conditions set forth in the Section 20 Orders is a condition that Company not commence the Bane One Corporation ("Bane One"), a bank holding proposed underwriting and dealing activities until the company within the meaning of the Bank Holding Com- Board has determined that Norwest and Company have pany Act ("BHC Act"), has requested the Board's apestablished policies and procedures to ensure compliance proval under section 3 of the BHC Act (12 U.S.C. § 1842) with this order and the Section 20 Orders, including comto acquire First Commerce Corporation, New Orleans, puter, audit, and accounting systems, internal risk manage- Louisiana ("First Commerce"), and its wholly owned subment procedures and controls, and the necessary operasidiary banks: First National Bank of Commerce, New tional and managerial infrastructure for underwriting and Orleans; City National Bank of Baton Rouge, Baton dealing in all types of debt securities. On the basis of a Rouge; Rapides Bank & Trust Company in Alexandria, recent review by the Federal Reserve Bank of Minneapolis Alexandria; The First National Bank of Lafayette, Lafay- ("Reserve Bank"), and based on all the facts of record, the ette; The First National Bank of Lake Charles, Lake Board has determined that Norwest and Company have Charles; and Central Bank, Monroe, all in Louisiana.1 established the managerial and operational infrastructure and other policies and procedures necessary to comply with the requirements of this order and the Section 20 1. Bane One intends to merge First Commerce with a wholly owned Orders for underwriting and dealing in debt securities. non-operating subsidiary of Bane One. First Commerce would be the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

554 Federal Reserve Bulletin • July 1998 Bane One also has requested the Board's approval under $7.7 billion of deposits, representing approximately section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) 18 percent of total deposits in the state. On consummation and section 225.24 of the Board's Regulation Y (12 C.F.R. of the proposal, and accounting for the proposed divesti- 225.24) to acquire First Commerce Service Corporation, tures, Bane One would become the largest commercial New Orleans, Louisiana, and thereby engage in data pro- banking organization in Louisiana, controlling approxicessing activities that are permissible for bank holding mately $11.2 billion in deposits, representing approxicompanies under section 225.28(b)(14) of Regulation Y mately 26.3 percent of the total deposits in the state. (12 C.F.R. 225.28(b)(14)).2 Notice of the proposal, affording interested persons an Interstate Analysis opportunity to submit comments, has been published in accordance with the Board's rules (63 Federal Register Section 3(d) of the BHC Act allows the Board to approve 3896 (1998)). The time for filing comments has expired, an application by a bank holding company to acquire and the Board has considered the proposal and all com- control of a bank located in a state other than the home ments received in light of the factors set forth in sections state of such bank holding company if certain conditions 3 and 4 of the BHC Act. are met.5 For purposes of the BHC Act, the home state of Bane One, with total consolidated assets of $116.2 bil- Bane One is Ohio, and Bane One proposes to acquire lion, is the eighth largest commercial banking organization banks in Louisiana. All of the conditions for an interstate in the United States, controlling approximately 2.3 percent acquisition enumerated in section 3(d) are met in this case.6 of total banking assets of insured commercial banks ("total In view of the facts of record, the Board is permitted to banking assets") in the United States.3 Bane One operates approve this proposal under section 3(d) of the BHC Act. subsidiary banks in Arizona, Colorado, Illinois, Indiana, Kentucky, Louisiana, Ohio, Oklahoma, Texas, Utah, West Competitive Considerations Virginia, and Wisconsin. Bane One also engages in a broad range of permissible nonbanking activities in the United The BHC Act prohibits the Board from approving an States through subsidiaries. application under section 3 of the BHC Act if the proposal First Commerce, with total consolidated assets of would result in a monopoly, or would substantially lessen $9.5 billion, is the 62d largest commercial banking organi- competition in any relevant banking market, unless the zation in the United States, controlling less than 1 percent Board finds that the anticompetitive effects of the proposal of the total banking assets in the United States. First are clearly outweighed in the public interest by the proba- Commerce operates six banks in Louisiana and engages in ble effect of the proposal in meeting the convenience and permissible nonbanking activities. On consummation of needs of the community to be served.7 the proposal, and after accounting for the proposed divesti- Bane One and First Commerce compete in the following tures, Bane One would remain the eighth largest commer- banking markets in Louisiana: Baton Rouge, Iberia, Lafaycial banking organization in the United States, with total ette, Lake Charles, Lincoln, Monroe, Morehouse, consolidated assets of approximately $125.7 billion, repre- Shreveport-Bossier City, and New Orleans.8 The Board has senting approximately 2.5 percent of total nationwide carefully reviewed the competitive effects of the proposal banking assets. in each of the Louisiana banking markets in which Bane Bane One is the third largest depository institution in One and First Commerce compete in light of all the facts of Louisiana, controlling $4.2 billion in deposits, representing record, including the characteristics of the markets and the approximately 9.8 percent of total deposits in insured de- projected increase in the concentration of total deposits in pository institutions in the state.4 First Commerce is the depository institutions in these markets ("market deposlargest depository institution in Louisiana, controlling surviving corporation and a wholly owned subsidiary of Bane One 5. A bank holding company's home state is that state in which the that would be renamed Louisiana Bane One Corporation. In addition, operations of the bank holding company's banking subsidiaries were Bane One has requested the Board's approval to hold and exercise principally conducted on July 1, 1996, or the date on which the options to purchase up to 19.9 percent of the voting shares of First company became a bank holding company, whichever is later. Commerce if certain events occur. The options would expire on 12 U.S.C. § 1841(o)(4)(C). consummation of the proposal. 6. 12 U.S.C. §§ 1842(d)(l)(A) & (B) and 1842(d)(2)(A) & (B). 2. Bane One also would acquire 9.9 percent of the voting shares of Bane One is adequately capitalized and adequately managed, as First United Bank of Farmerville, Farmerville, Louisiana ("First Unit- defined by applicable law. On consummation of the proposal, Bane ed") from First Commerce. Bane One has agreed to abide by certain One and its affiliates would control less than 10 percent of the total commitments made by First Commerce that were relied on by the amount of deposits of insured depository institutions in the United Board to ensure that First Commerce would not exercise a controlling States, and less than 30 percent of the total amount of deposits in influence over the management and policies of First United and to Louisiana. In addition, First Commerce's subsidiary banks have been divest the shares of First United within six months after consummat- in existence and have continuously operated for at least five years, as ing (he acquisition of First Commerce. required by Louisiana law. La. Rev. Stat. § 6:538 (1997). All other 3. Asset data are as of December 31. 1997, and deposit data are as requirements of section 3(d) of the BHC Act also would be met on of June 30. 1997. consummation of the proposal. 4. In this context, depository institutions include commercial banks, 7. 12 U.S.C. § 1842(c)(l)(B). savings banks, and savings associations. 8. These banking markets are described in Appendix A. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 555 its"),9 as measured by the Herfindahl-Hirschman Index Baton Rouge Banking Market. Bane One is the third ("HHI") under the Department of Justice Merger Guide- largest of 25 depository institutions in the Baton Rouge lines ("DOJ Guidelines").10 The Board also has carefully banking market, and controls deposits of $895.9 million, examined the number of competitors that would remain in representing 15.4 percent of market deposits. First Comeach of the banking markets following consummation of merce is the second largest depository institution in the the proposal. Consummation of the proposal, without di- market, and controls deposits of $971.7 million, representvestitures, would be consistent with the DOJ Guidelines in ing 16.7 percent of market deposits. After consummation the Iberia, Morehouse, and Shreveport-Bossier City bank- of the proposal, Bane One would become the largest deposing markets." itory institution in the market, controlling 32.1 percent of To mitigate the anticompetitive effects of the proposal in the market deposits, and the HHI would increase the Lafayette, Lake Charles, Lincoln, and Monroe banking 515 points to 1895. markets, Bane One has committed to divest 25 branches Twenty-four depository institutions, including several that control approximately $614.5 million in deposits.12 large multi-state banking organizations other than Bane With the proposed divestitures, the concentration levels in One, would remain in the Baton Rouge banking market each of the markets would be consistent with the DOJ after consummation of the proposal. In addition, one of Guidelines after consummation of the proposal.13 Louisiana's largest banking organization would be the Consummation of the proposal would exceed the DOJ second largest depository institution in the market and Guidelines, as measured by the HHI, in the Baton Rouge would control more than 25 percent of market deposits. and New Orleans banking markets. As the Board has The Baton Rouge banking market also has characterisindicated in previous cases, in a market in which the tics that make it attractive for entry. Baton Rouge is Louisicompetitive effects of a proposal as measured by market ana's second largest city. The rate of growth in population indexes and market share exceed the DOJ Guidelines, the and market deposits and the level of per capita income in Board will consider whether other factors tend to mitigate this market exceed, on average, those of other Louisiana the competitive effects of the proposal. The number and Metropolitan Statistical Areas ("MSAs"). Recent entries strength of factors necessary to mitigate the competitive by depository institutions also indicate that the market is effects of a proposal depend on the level of market concen- attractive. Since 1994, four commercial banks have entered tration and size of the increase in market concentration.14 the market de novo, and four have entered by acquisition. In addition, another commercial bank has received regulatory approval and plans to enter the market de novo in June 1998. 9. Market share data are based on calculations that include the New Orleans Banking Market. Bane One is the fifth deposits of thrift institutions at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to largest of 41 depository institutions in the New Orleans become, significant competitors of commercial banks. See, e.g., Mid- banking market and controls deposits of $627.3 million, west Financial Group, 75 Federal Reserve Bulletin 386 (1989); representing 4.4 percent of market deposits. First Com- National City Corporation, 70 Federal Reserve Bulletin 743 (1984). merce is the largest depository institution in the market and Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50 percent weighted basis. See, e.g.. First controls deposits of $4.4 billion, representing 30.8 percent Hawaiian Inc., 11 Federal Reserve Bulletin 52 (1991). of market deposits. After consummation of the proposal, 10. Under the DOJ Merger Guidelines, 49 Federal Register 26,823 Bane One would become the largest depository institution (1984), a market in which the post-merger HHI is more than 1800 is in the market, controlling 35.2 percent of market deposits, considered highly concentrated. The DOJ has informed the Board that a bank merger or acquisition generally will not be challenged (in the and the HHI would increase 272 points to 2099. absence of other factors indicating anticompetitive effects) unless the The New Orleans banking market is the largest banking post-merger HHI is at least 1800 and the merger increases the HHI by market in Louisiana. Approximately 39 competitors other more than 200 points. The DOJ has stated that the higher than normal than Bane One would remain in the market after consum- HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders mation of the proposal, including all of the state's largest and other non-depository financial institutions. depository institutions. Three of these competitors would 11. Market data for these banking markets after consummation of each have market shares of over 15 percent of market the proposal are described in Appendix B. deposits, and the second largest depository institution in 12. Bane One has committed to execute sales agreements with an the market would have over 23 percent of market deposits. out-of-market competitor in the Lincoln banking market and a competitively suitable purchaser in the Lafayette, Lake Charles and Monroe In addition, per capita income, deposits per branch, populabanking markets and to complete divestitures within 180 days of tion per branch, and deposit growth in the market are above consummation of the acquisition. Bane One also has committed that, the averages in other Louisiana MSAs. Since 1994, three in the event it is unsuccessful in completing any divestiture within depository institutions have entered the market de novo, 180 days of consummation, it will transfer the unsold branch(es) to an independent trustee that is acceptable to the Board and that will be and six have entered by acquisition, which indicates that instructed to sell the branches promptly. See, e.g., First Union Corpo- the market is attractive for entry. ration, 84 Federal Reserve Bulletin 489 (1998). Views of Other Agencies and Conclusion. The Depart- 13. Market data for these banking markets after consummation of ment of Justice conducted a detailed review of the proposal the proposal are also described in Appendix B. and advised the Board that, in light of the proposed divesti- 14. See First Union Corporation, 84 Federal Reserve Bulletin 489 (1998); NationsBank Corporation, 84 Federal Reserve Bulletin tures, consummation of the proposal would not likely have 129 (1998). a significantly adverse effect on competition in any rele- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

556 Federal Reserve Bulletin • July 1998 vant market. The Office of the Comptroller of the Currency federal supervisor of the CRA performance records of the and the Federal Deposit Insurance Corporation also have relevant institutions.15 not objected to consummation of the proposal. All of Bane One's subsidiary banks have received "out- Based on all the facts of record, and for the reasons standing" or "satisfactory" ratings for their appropriate discussed above, the Board has determined that consumma- federal supervisors at the most recent examinations of their tion of the proposal would not be likely to result in a CRA performance. Bane One's lead bank, Bank One, significantly adverse effect on competition or on the con- N.A., Columbus, Ohio, received an "outstanding" perforcentration of banking resources in any relevant banking mance rating and Bane One's largest bank in terms of market. Accordingly, subject to completion of the proposed assets, Bank One, Texas, N.A., Dallas, Texas, received a divestitures, the Board has determined that competitive "satisfactory" performance ratings from their appropriate factors are consistent with approval of the proposal. federal supervisor, the Office of the Comptroller of Currency ("OCC"). In addition, Bane One, Louisiana, N.A., New Orleans, Louisiana, received a "satisfactory" perfor- Other Factors Under the BHC Act mance rating from the OCC. All of First Commerce's subsidiary banks also have received "outstanding" or "sat- The BHC Act also requires the Board, in acting on an isfactory" ratings for CRA performance from their approapplication, to consider the financial and managerial re- priate federal supervisors. sources and future prospects of the companies and banks The Board also has carefully reviewed Bane One's lendinvolved in a proposal, the convenience and needs of the ing activities and its compliance with fair lending laws. As community to be served, and certain other supervisory part of that review, the Board has considered information factors. developed in the course of its supervision of Bane One regarding the institution's fair lending oversight, procedures, and practices and, in light of all the facts of record, A. Financial, Managerial, and Other Supervisory Factors the Board has concluded that Bane One's record of fair lending is consistent with approval of this proposal. The Board has carefully considered the financial and man- The Board has considered all the facts of record, includagerial resources and future prospects of Bane One, First ing the CRA performance records of the subsidiary banks Commerce, and their respective subsidiary banks, and other of Bane One and First Commerce, relevant reports of supervisory factors in light of all the facts of record. As examination, and the comments received.16 Based on all part of this consideration, the Board has reviewed relevant the facts of record, and for the reasons discussed above, the reports of examination and other supervisory information Board concludes that convenience and needs considerprepared by the Reserve Banks and other federal agencies. ations are consistent with approval of the proposal. The Board notes that the bank holding companies and their subsidiary banks are currently well capitalized and are Nonbanking Activities expected to remain so after consummation of the proposal. The Board also has considered other aspects of the Bane One also has filed a notice, under section 4(c)(8) of financial condition and resources of the two organizations, the BHC Act, to acquire First Commerce Service Corporathe structure of the proposed transaction, and the manage- tion and thereby to engage in data processing activities. rial resources of each of the entities and the combined The Board has determined by regulation that the provision organization. Based on these and other facts of record, the of certain data processing services is closely related to Board concludes that considerations relating to the finan- banking for purposes of section 4(c)(8) of the BHC Act.17 cial and managerial resources and future prospects of Bane Bane One has stated that, following consummation of the One, First Commerce, and their respective subsidiaries are proposal, it will conduct its data processing activities in consistent with approval of the proposal, as are the other accordance with the limitations set forth in Regulation Y supervisory factors that the Board must consider under and the Board's orders and interpretations. section 3 of the BHC Act. B. Convenience and Needs Considerations 15. The Board notes that the Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act The Board has carefully considered the effect of the pro- ("Agency CRA Statement") provides that a CRA examination is an important and often controlling factor in the consideration of an posed acquisition on the convenience and needs of the institution's CRA record and that reports of these examinations will community to be served in light of all the facts of record. be given great weight in the applications process. See 54 Federal The Board has long held that consideration of the conve- Register 13,742 and 13,745 (1989). nience and needs factor includes a review of the records of 16. A commenter contends that he has had unsatisfactory experithe relevant depository institutions under the Community ences with a Bane One subsidiary bank in business and personal banking transactions. The Board has carefully reviewed the comment Reinvestment Act ("CRA") (12 U.S.C. § 2901 et seq.). As in light of all the facts of record, and has provided the comment to the provided in the CRA, the Board evaluates the convenience OCC, which is the appropriate federal supervisor of the bank. and needs factor in light of examinations by the primary 17. See 12 C.F.R. 225.28(b)(14). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 557 In order to approve the proposal under section 4(c)(8) of notice is specifically conditioned on compliance by Bane the BHC Act, the Board also must determine that the One with all the commitments made in connection with the proposed activities are a proper incident to banking, that is, proposal and with the conditions stated or referred to in that the proposal "can reasonably be expected to produce this order, including Bane One's divestiture commitment. benefits to the public, such as greater convenience, in- The Board's determination on the nonbanking activities creased competition, or gains in efficiency that outweigh also is subject to all the terms and conditions set forth in possible adverse effects, such as undue concentration of Regulation Y, including those in sections 225.7 and resources, decreased or unfair competition, conflicts of 225.25(c) (12 C.F.R. 225.7 and 225.25(c)), and to the interests, or unsound banking practices."18 As part of its Board's authority to require such modification or terminaevaluation of these factors, the Board considers the finan- tion of the activities of a bank holding company or any of cial condition and managerial resources of the notificant its subsidiaries as the Board finds necessary to ensure and its subsidiaries, including the companies to be ac- compliance with, and to prevent evasion of, the provisions quired, and the effect of the proposed transaction on those of the BHC Act and the Board's regulations and orders resources.19 For the reasons noted above, and based on all thereunder. For purposes of this transaction, the committhe facts of record, the Board has concluded that financial ments and conditions referred to above shall be deemed to and managerial considerations are consistent with approval be conditions imposed in writing by the Board in connecof the notice. tion with its findings and decision, and, as such, may be The Board also has considered the competitive effects of enforced in proceedings under applicable law. the proposed acquisition by Bane One of First Commerce The acquisition of First Commerce's subsidiary banks Service Corporation. The market for data processing ser- shall not be consummated before the fifteenth calendar day vices is unconcentrated and that there are numerous provid- following the effective date of this order, and the proposal ers of the services. As a result, consummation of the shall not be consummated later than three months after the proposal would have a de minimis effect on competition. effective date of this order, unless such period is extended The Board also expects that the acquisition would provide for good cause by the Board or by the Federal Reserve added convenience to First Commerce's customers and to Bank of Cleveland, acting pursuant to delegated authority. other members of the public by increasing operating effi- By order of the Board of Governors, effective May 26, ciencies and providing expanded services to customers of 1998. First Commerce and Bane One. Additionally, there are public benefits to be derived from permitting capital mar- Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and kets to operate so that bank holding companies may make Governors Ferguson and Gramlich. Absent and not voting: Governors Kelley, Phillips, and Meyer. potentially profitable investments in nonbanking companies where these investments are consistent, as in this case, JENNIFER J. JOHNSON with the relevant considerations of the BHC Act and from Deputy Secretary of the Board permitting banking organizations to allocate their resources in a manner they believe most efficient. Appendix A Accordingly, based on all the facts of record, the Board has determined that the balance of public benefits that the Banking Markets in which Bane One and First Board must consider under the proper incident to banking Commerce Compete standard of section 4(c)(8) of the BHC Act is favorable and consistent with approval of the proposal. Baton Rouge: Ascension, East Baton Rouge, Iberville, Livingston, and West Baton Rouge Parishes plus the north- Conclusion ern half of Assumption Parish, and the town of Union in St. James Parish. Based on the foregoing, and in light of all the facts of Iberia: Iberia Parish. record, including the comments received, the Board has Lake Charles: Calcasieu and Cameron Parishes, plus the determined that the application and notice should be, and southern half of Beauregard Parish. hereby are, approved.20 Approval of the application and Lafayette: Lafayette, Acadia, St. Landry, St. Martin, and Vermillion Parishes, excluding the town of Mermentau in Acadia Parish and the town of Gueydan in Vermillion 18. 12 U.S.C. § 1843(c)(8). Parish. 19. See 12 C.F.R. 225.26. 20. One commenter requests that the Board not act on the Bane Lincoln: Lincoln Parish. One/First Commerce proposal until his employment discrimination Monroe: Monroe and Ouachita Parishes lawsuit against Bane One and one of its subsidiary banks is settled and until the Board investigates pending employment discrimination complaints filed against Bane One with the Equal Employment Opportunity Commission. Commenter's lawsuit was dismissed by a federal statutory factors in the BHC Act. Based on a review of all the facts of district court and the dismissal was upheld on appeal. The Board record, the Board concludes that the record in this case is sufficient to previously has noted, moreover, that disputes that arise under a statute warrant Board consideration and action on the proposal at this time, administered and enforced by another agency in areas such as employ- and that further delay of consideration of the proposal or denial of the ment discrimination are beyond the Board's jurisdiction under the proposal on the basis of informational insufficiency is not warranted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

558 Federal Reserve Bulletin • July 1998 Morehouse: Morehouse Parish. 39.3 percent of market deposits and become the largest of New Orleans: Jefferson, Orleans, Plaquemines, St. Ber- eleven competitors. The HHI would increase not more than nard, St. Charles, St. John the Baptist, St. Tammany, and 181 points to 2227. St. James Parishes, less the town of Union in St. James Parish. Regions Financial Corporation Shreveport-Bossier City: Bossier, Cado, DeSoto and Birmingham, Alabama Webster Parishes. Order Approving Merger of Bank Holding Companies Appendix B Regions Financial Corporation ("Regions"), a bank hold- A. Banking Markets In Which Consummation of the ing company within the meaning of the Bank Holding Proposal Would Not Exceed the DOJ Guidelines Without Company Act ("BHC Act"), has requested the Board's Divestitures. approval under sections 3 and 4 of the BHC Act (12 U.S.C. §§ 1842(a)(5) and 1843(c)(8)) to merge with Iberia: After consummation of the proposal, Bane One First Commercial Corporation, Little Rock, Arkansas would control 18.4 percent of the market deposits and ("First Commercial"), and thereby acquire First Commerwould become the third largest of nine depository institu- cial's subsidiary banks and nonbanking subsidiaries listed tions in the market. The HHI would increase 166 points to in the Appendix.1 2515. Notice of the proposal, affording interested persons an Morehouse: After consummation of the proposal, Bane opportunity to submit comments, has been published One would control 23.0 percent of the market deposits and (63 Federal Register 14,464 (1998)). The time for filing would become the second largest of six depository institu- comments has expired, and the Board has considered the tions in the market. The HHI would increase 129 points to application and all comments received in light of the 2349. factors set forth in sections 3 and 4 of the BHC Act. Shreveport-Bossier City: After consummation of the pro- Regions, with total consolidated assets of approximately posal, Bane One would control 25.4 percent of the market $24.4 billion, operates banks in Alabama, Florida, Georgia, deposits and would become the largest of 18 depository South Carolina, Louisiana, and Tennessee, and engages in institutions in the market. The HHI would increase a number of permissible nonbanking activities.2 Regions is 17 points to 1813. the largest commercial banking organization in Alabama, controlling deposits of approximately $9 billion, represent- B. Banking Markets In Which Consummation of the ing 19.4 percent of total deposits in commercial banking Proposal Would Not Exceed the DOJ Guidelines With organizations in the state ("state deposits"). First Commer- Proposed Divestitures. cial, with total consolidated assets of approximately $7.4 billion, operates banks in Arkansas, Texas, Tennessee, Lafayette: Bane One proposes to divest seven branches, Louisiana, and Oklahoma and engages in mortgage and controlling deposits of $195.0 million, to a competitor trust company activities through its nonbanking subsidiarsuitable to the Board. Following such divestiture, and after ies. First Commercial is the largest commercial banking consummation of the proposal, Bane One would control organization in Arkansas, controlling deposits of approxi- 24.5 percent of the market deposits and would become the mately $4.7 billion, representing 17.3 percent of Arkansas largest of 40 depository institutions in the market. The HHI state deposits. would increase not more than 276 to 896. Regions is the fifth largest commercial banking organiza- Lake Charles: Bane One proposes to divest eight branches, tion in Louisiana, controlling deposits of approximately controlling deposits of $154.8 million, to a competitor $2.2 billion, representing 5.8 percent of Louisiana state suitable to the Board. Following such divestiture, and after deposits. First Commercial is the 85th largest commercial consummation of the proposal, Bane One would control banking organization in the state, controlling deposits of 33.4 percent of market deposits and become the largest of approximately $49 million, representing less than 1 percent eight competitors. The HHI would increase not more than of state deposits. On consummation of the proposal, Re- 127 points to 2414. gions would remain the fifth largest commercial banking Lincoln: Bane One proposes to divest two branches, con- organization in Louisiana, controlling deposits of approxitrolling deposits of $73.6 million, to a competitor suitable mately $2.3 billion, representing 6 percent of Louisiana to the Board. Following such divestiture, and after consum- state deposits. mation of the proposal, Bane One would control 34.4 percent of market deposits and become the largest of seven competitors. The HHI would increase 64 points to 1. Regions also has requested the Board's approval to hold and 2116. exercise an option to purchase up to 19.9 percent of the voting shares Monroe: Bane One proposes to divest eight branches, of First Commercial if certain events occur. The option would expire on consummation of the proposal. controlling deposits of $191.1 million, to a competitor 2. All banking data are as of June 30, 1997, and include acquisitions suitable to the Board. Following such divestiture, and after by Regions and First Commercial that have been approved by the consummation of the proposal, Bane One would control appropriate federal supervisors after that date. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 559 Regions is the 12th largest commercial banking organi- Regions and First Commercial compete directly in the zation in Tennessee, controlling deposits of approximately Shreveport-Bossier City, Louisiana, banking market $471 million, representing less than 1 percent of Tennessee ("Shreveport banking market").6 After consummation of state deposits. First Commercial is the 17th largest com- the proposal, Regions would remain the fifth largest deposmercial banking organization in the state, controlling de- itory institution in the market, controlling deposits of apposits of approximately $351 million, also representing proximately $236 million, representing 6.9 percent of total less than 1 percent of state deposits. On consummation of deposits in depository institutions in the market.7 The the proposal, Regions would become the ninth largest Herfindahl-Hirschman Index ("HHI") for the banking commercial banking organization in Tennessee, controlling market would increase by 15 points to 1885.8 Based on all deposits of approximately $822 million, representing the facts of record, including the small increase in market 1.4 percent of Tennessee state deposits. concentration as measured by the HHI, the presence of 15 other competitors that would remain in the banking Interstate Analysis market, and entry into the market by four regional bank holding companies since 1994, the Board concludes that Section 3(d) of the BHC Act allows the Board to approve consummation of the proposal would not have a signifian application by a bank holding company to acquire cantly adverse effect on competition or on the concentracontrol of a bank located in a state other than the home tion of banking resources in the Shreveport banking market state of such bank holding company, if certain conditions or any other relevant banking market. are met. For purposes of the BHC Act, the home state of Regions is Alabama, and First Commercial controls banks Financial, Managerial, and Other Supervisory Factors in Arkansas, Texas, Tennessee, Louisiana, and Oklahoma.3 All the conditions for an interstate acquisition enumerated The Board has carefully considered the financial and manin section 3(d) are met in this case.4 In view of all the facts agerial resources and future prospects of Regions, First of record, the Board is permitted to approve the proposal Commercial, and their respective subsidiary banks in light under section 3(d) of the BHC Act. of all the facts of record, including supervisory reports of examination assessing the financial and managerial re- Competitive Considerations sources of the organizations and financial information provided by Regions. Based on all the facts of record, includ- The BHC Act prohibits the Board from approving an ing relevant reports of examination of the companies and application under section 3 of the BHC Act if the proposal banks involved in the proposal, the Board concludes that would result in a monopoly or if the proposal would the financial and managerial resources and future prospects substantially lessen competition in any relevant banking of Regions, First Commercial, and their subsidiary banks market and the Board has not found that the anticompeti- are consistent with approval, as are the other supervisory tive effects of the proposal are clearly outweighed in the factors the Board must consider under section 3 of the public interest by the probable effect of the proposal in BHC Act. meeting the convenience and needs of the community to be served.5 6. The Shreveport-Bossier City banking market comprises Bossier, 3. A bank holding company's home state is that state in which the Caddo, DeSoto, and Webster Parishes in Louisiana. operation of the bank holding company's banking subsidiaries were 7. Market share data are as of June 30, 1997. In this context, principally conducted on July 1, 1996, or the date on which the depository institutions include commercial banks, savings banks, and company became a bank holding company, whichever is later. savings associations. Market share data are based on calculations in 12U.S.C. § 1841(o)(4)(C). which the deposits of thrift institutions are included at 50 percent. The 4. See 12 U.S.C. §§ 1842(d)( 1 )(A) and (B) and 1842(d)(2)(A) and Board previously has indicated that thrift institutions have become, or (B). Regions is adequately capitalized and adequately managed, as have the potential to become, significant competitors of commercial defined by applicable law. First Commercial's subsidiary banks have banks. See WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); been in existence and continuously operated for the minimum period National City Corporation, 70 Federal Reserve Bulletin 743 (1984). of five years required under the respective state laws. See Ark. Code Thus, the Board has regularly included thrift deposits in the calcula- Ann. § 23-48-405 (Michie 1997); Tex. Finance Code Ann. tion of market share on a 50-percent weighted basis. See First Hawai- § 38.003(a) (West 1997); La. Rev. Stat. Ann. §§ 6:535(C) and 6:538 ian, Inc., 11 Federal Reserve Bulletin 52 (1991). (West 1997); Tenn. Code Ann. § 45-2-1403(a)(l) (Michie 1997); 8. Under the revised Department of Justice Merger Guidelines, Okla. Stat. Ann. tit. 6, § 502(F) (West 1998). On consummation of 49 Federal Register 26,823 (1984), a market in which the post-merger the proposal, Regions would control less than 10 percent of the total HHI is more than 1800 is considered to be highly concentrated. The amount of deposits of insured depository institutions in the United Department of Justice has informed the Board that a bank merger or States. Regions also would not exceed applicable state law deposit acquisition generally will not be challenged (in the absence of other limitations, as calculated under state law, in each state in which First factors indicating anticompetitive effects) unless the post-merger HHI Commercial operates. See Ark. Code Ann. § 23^18-406 (25 percent); is at least 1800 and the merger increases the HHI by more than Tex. Finance Code Ann. § 38.002(a) (20 percent); Tenn. Code Ann. 200 points. The Department of Justice has stated that the higher than § 45-2-1404 (30 percent): Okla. Stat. Ann. tit. 6, § 502(C) normal threshold for an increase in HHI when screening bank mergers (15 percent). All other requirements of section 3(d) of the BHC Act and acquisitions for anticompetitive effects implicitly recognizes the would be met on consummation of the proposal. competitive effects of limited-purpose and other nondepository finan- 5. 12 U.S.C. § !842(c)(l)(B). cial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

560 Federal Reserve Bulletin • July 1998 Convenience and Needs Factor The reports of these examinations indicate that Regions's subsidiary banks are helping to meet the conve- The Board also has carefully considered the effect of the nience and needs of the communities they serve. Regions proposal on the convenience and needs of the communities Bank, which accounts for approximately 65 percent of to be served in light of all the facts of record. The Board Regions' consolidated assets, received an "outstanding" notes that all of Regions's subsidiary banks, which operate rating from the appropriate federal regulator, the Federal in six states, received ratings of "satisfactory" or better Deposit Insurance Corporation ("FDIC"), at its most refrom the appropriate federal regulator at their most recent cent examination for CRA performance, as of September examinations for performance under the Community Rein- 1996 ("the 1996 Examination").10 Examiners of Regions vestment Act (12U.S.C. §2901 et seq.) ("CRA"). Re- Bank found no evidence of prohibited discrimination or gions's subsidiary banks provide a full range of financial other illegal credit practices and found no violations of fair services, including many products designed to meet the lending laws. Examiners also found that Regions Bank's credit needs of low- to moderate-income ("LMI") commu- delineation of its local community was reasonable and that nities. Regions has stated that the proposal would enable it it did not arbitrarily exclude LMI areas. to enhance and expand the delivery of banking services to The 1996 Examination stated that the activities of the all of its and First Commercial's customers, including LMI bank were effective in ascertaining the credit needs of its households. Regions also has indicated that it will establish entire community, including LMI neighborhoods, and in a charitable foundation, initially funded in the amount of informing all members of the community of available $7.5 million, that will be dedicated to improving communi- credit services. In its marketing efforts, the bank used a ties currently served by First Commercial, and a small variety of media, such as newspapers, radio, and television, business investment corporation, initially funded in the including 12 newspapers and 7 radio stations that predomiamount of $5 million, that will invest primarily in compa- nately served minority communities in Alabama. Examinnies located in the communities currently served by First ers found that Regions Bank's branch network was accessi- Commercial. ble to all segments of the communities it served and that The Board has carefully considered comments from an Regions Bank offered a broad array of products and ser- African-American small business owner who maintains vices through its branches. that Regions Bank has an inadequate record of lending to Lending Record of Regions Bank. The 1996 Examinabusinesses owned by African Americans in Sumter County, tion concluded that Regions Bank's lending record, includ- Alabama, and of advertising in African-American owned ing its small business lending, addressed a significant pornewspapers and other media in Alabama. In addition, two tion of the credit needs of the communities it served, and community associations contend, based primarily on Home that the bank's geographical penetration of all segments of Mortgage Disclosure Act ("HMDA") data, that Regions's its assessment area was exceptional. Examiners particulead subsidiary bank, Regions Bank, Montgomery, Ala- larly noted that Regions Bank has several specialized loan bama ("Regions Bank"), has an inadequate record of products and experienced loan officers to help to meet the helping to meet the needs of LMI and minority customers credit needs of small businesses in the state. According to in Alabama. the 1996 Examination, as of June 30, 1996, the bank had CRA Performance Examinations. The Board has long 19,247 small business loans outstanding throughout Alaheld that consideration of the convenience and needs factor bama, totalling $995 million. More than 80 percent of includes a review of the records of the relevant depository these loans, totalling $304 million, were in amounts of less institutions under the CRA. As provided in the CRA, the than $100,000. Board evaluates the convenience and needs factor in light Preliminary 1997 data indicate that Regions Bank conof examinations of the CRA performance records of the tinues to be an active small business lender in Alabama. relevant institutions by their appropriate federal supervi- During 1997, Regions Bank originated 13,841 small busisors. An institution's most recent CRA performance exam- ness loans in Alabama, totalling $880 million. Twenty-one ination is a particularly important consideration in the percent of these loans were made to borrowers located in applications process because it represents a detailed, on- LMI census tracts, and 75 percent of the loans to borrowers site evaluation of the institution's overall record of perfor- located in LMI census tracts were made to businesses with mance under the CRA by its appropriate federal supervi- annual gross revenues under $1 million. The percentage of sor.9 The Board has reviewed the records of performance small business loans that Regions Bank made in LMI of the subsidiary banks of Regions and First Commercial census tracts and to businesses with gross revenues under in light of their most recent CRA performance examina- $1 million closely matched the percentages of such lending tions and all other facts of record. by all insured depository institutions in Alabama in the aggregate. 9. The Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act provides that a CRA examination is an important and often controlling factor in the consideration of an institution's CRA record and that reports of these 10. Each of First Commercial's subsidiary banks also received a examinations will be given great weight in the applications process. rating of "satisfactory" or better from the appropriate federal regula- See 54 Federal Register 13,742 and 13,745 (1989). tor at its most recent examination for CRA performance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 561 The bank also helps to address small business credit tion, and other government-sponsored loans programs.16 needs in Alabama through government sponsored lending Examiners also noted that, during 1995 and the first seven programs. In 1996, Regions Bank's small business loans months of 1996, Regions Mortgage originated more than included $13.6 million of loans made under programs 4,100 loans, totalling $290 million, under loan programs sponsored by the Small Business Administration and sponsored by the Veterans Administration, Federal Hous- 143 loans, totalling $15 million, made at below market ing Authority, and Farm Housing Administration. Regions interest rates under the State of Alabama's Wallace Linked has stated that 23 percent of all home mortgage loans made Deposit Plan for economic development." by Regions Bank and Regions Mortgage in Alabama dur- The Board also has considered Regions Bank's record of ing 1996 and 1997 were made to LMI applicants. small business lending in Sumter County, Alabama, in Regions also supported efforts to provide affordable light of all the facts of record, including data relevant to housing through its community development activities. As analyzing the lending opportunities for small business lend- of June 30, 1996, Regions Bank had outstanding loans and ers in the county. Sumter County is rural, with a population loan commitments of approximately $45.6 million and of 16,390 and no major commercial center.12 The popula- investment commitments of approximately $38.7 million tion has declined since 1980, and per capita income, per to support the development of 2,569 affordable housing capita retail sales, and per capita insured deposits are units throughout Alabama. Regions has stated that, since significantly below the averages for Alabama.13 The most the 1996 Examination, the bank has made loans to or recent data from the U.S. Bureau of the Census indicate invested in an additional 15 projects in the aggregate that 255 nonfarm businesses were in Sumter County, which amount of approximately $29 million to provide more than accounted for less than one-half of one percent of Ala- 900 units of affordable housing.17 bama's small businesses as of 1993. HMDA Data. The Board also has considered Regions's In 1996, Regions Bank made 47 small business loans in lending record in light of comments regarding the HMDA Sumter County, totalling $2.7 million, which is more than data of Regions Bank in Alabama. The 1996 data generally 70 percent of the total number, and more than 50 percent of indicate that Regions Bank and Regions Mortgage denied a the total amount, of small business loans made by all significantly smaller percentage of housing-related loan insured depository institutions in the county.14 Regions applications from African Americans than did lenders in Bank made nine of its small business loans, totalling the state in the aggregate. The 1996 data also indicate that $159,000, in LMI census tracts in Sumter County, which is Regions Bank and Regions Mortgage originated loans for a more than 60 percent of the total number, and more than significantly larger percentage of applications received 70 percent of the total amount, of small business loans from African Americans, LMI individuals, and residents of made by all insured depository institutions in LMI census LMI census tracts than did lenders in the aggregate. tracts in the county.15 The data reflect, however, certain disparities in the rates Regions also actively participates in meeting other types of loan denials by racial group. The Board is concerned of credit needs in its communities. The 1996 Examination when the record of an institution indicates disparities in found that Regions Bank and its mortgage lending subsid- lending, and believes that all banks are obligated to ensure iary, Regions Mortgage Incorporated, Birmingham, Ala- that their lending practices are based on criteria that ensure bama ("Regions Mortgage"), assisted LMI borrowers to not only safe and sound lending but also equal access to obtain affordable housing through a variety of programs credit by creditworthy applicants regardless of their race or that featured reduced down payment and closing cost re- income level. The Board recognizes that HMDA data alone quirements and flexible underwriting standards. In addition provide an incomplete measure of an institution's lending to its proprietary programs, Regions Bank offered afford- in its community because these data cover only a few able housing loans through programs sponsored by the categories of housing-related lending. HMDA data, more- State of Alabama, the Federal National Mortgage Associa- 16. Examiners noted that Regions Mortgage also developed the Wallace Mortgage Program with the State Treasurer of Alabama to 11. An additional 3,430 agricultural loans, totalling $81 million, fund up to $2,000 of the down payment for first time LMI home were outstanding as of June 30, 1996. Over 92 percent of these loans, buyers through a second mortgage loan to be forgiven after 10 years totalling $41.2 million, were in amounts of less than $100,000. of continuous ownership of the home. Regions Mortgage received 12. Population data are as of 1995. All statistical data for Sumter 40 percent of all funds allotted to the program prior to its termination County and for Alabama are from the U.S. Bureau of the Census. by the state in 1995. In addition, according to Regions, Regions 13. Per capita income in 1993 in Sumter County was $12,120, Mortgage is the largest originator of state-funded loans to LMI borcompared to $17,129 in all of Alabama. Per capita retail sales in 1992 rowers under the Alabama Housing Finance Authority bond program. were $3,582 in Sumter County, compared to $6,983 in all of Alabama. 17. These projects include construction and permanent financing in Per capita deposits, based on FDIC data as of June 30. 1994. were the amount of approximately $3.9 million to construct 136 low- $5,325 in Sumter County, compared to $8,861 in all of Alabama. income housing units in Millbrook, Alabama; approximately $3 mil- 14. Twenty-nine of Regions Bank's small business loans in Sumter lion to construct Virginia Meadows II, a 112 unit low-income housing County, totalling $669,000, were made to businesses with gross project in Montgomery, Alabama; and approximately $1.2 million to annual revenues of less than $1 million. help to purchase and rehabilitate 147 low-income homes in the 15. Seven of these loans, totalling $79,000, were made to businesses Meadow Hills neighborhood of Huntsville, Alabama. In Sumter with gross incomes of less than $1 million. Sumter County has a total County, Alabama, Regions Bank invested $849,000 in a limited of six census tracts, of which two are designated as LMI census tracts. partnership to rehabilitate low-income housing. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

562 Federal Reserve Bulletin • July 1998 over, provide only limited information about the covered Nonbanking Activities loans.18 HMD A data, therefore, have limitations that make them an inadequate basis, absent other information, for Regions also has filed notice under section 4(c)(8) of the concluding that an institution has not adequately assisted in BHC Act to acquire the nonbanking subsidiaries of First meeting its community's credit needs or has engaged in Commercial and thereby engage in mortgage lending and illegal lending discrimination. Because of the limitations of trust company functions. The Board previously has deter- HMDA data, the Board has considered these data carefully mined by regulation that these activities are closely related in light of other information. to banking for purposes of section 4(c)(8) of the BHC FDIC examiners conducted a fair lending review of Act.20 Regions proposes to conduct these activities in ac- Regions Bank as part of the 1996 Examination, with a cordance with Regulation Y and all relevant Board interparticular focus on conducting comparative file analyses of pretations and orders. denied applications from minorities and approved applica- In order to approve the proposal, the Board also must tions from non-minorities for conventional home mortgage determine that the performance of the proposed activities is purchase loans during 1996. This fair lending review did a proper incident to banking, that is, that the proposed not disclose any evidence of disparate treatment of or transaction "can reasonably be expected to produce benediscriminatory practices against minority applicants.19 fits to the public . . . that outweigh adverse effects, such as Regions Bank and Regions Mortgage also have a second undue concentration of resources, decreased or unfair comreview program for all housing-related loan applications petition, conflicts of interests, or unsound banking practhat are preliminarily declined by the original loan officer. tices."21 As part of its evaluation of these factors, the Under the program, a second and more senior loan officer Board considers the financial and managerial resources of must concur in the denial of a housing-related loan applica- the notificant, its subsidiaries, and any company to be tion. The files for denied loans also are reviewed for acquired and the effect the transaction would have on such sufficient documentation, and are subject to random inter- resources.22 For the reasons discussed above, and based on nal audit. In addition, the bank provides comprehensive all the facts of record, the Board has concluded that finanand ongoing training to its lending staff concerning compli- cial and managerial considerations are consistent with apance with fair lending, disclosure, and record keeping proval of the notice. requirements. The Board also has considered the HMDA The Board also has carefully considered the competitive data in light of Regions's lending record, which shows that effects of the proposed acquisition of First Commercial's Regions Bank and Regions Mortgage assist significantly in mortgage lending and trust company subsidiaries. The helping to meet the credit needs of its community, includ- Board notes that the market for these nonbanking services ing LMI areas. is unconcentrated, that there are numerous providers of the Conclusion on Convenience and Needs Considerations. services, and that there is minimal geographic overlap in The Board has carefully considered all the facts of record, the areas in which Regions and First Commercial primarily including the public comments received, responses to the offer these services. As a result, the Board has concluded comments, and the CRA performance records of the sub- that the proposal would not have a significantly adverse sidiary banks of Regions and First Commercial, including effect on competition for mortgage lending services or trust relevant reports of examination. Based on a review of the company functions. entire record, including the efforts of Regions Bank to meet The Board expects, moreover, that the acquisition of the credit needs of the communities it serves throughout First Commercial by Regions would provide added conve- Alabama, and for the reasons discussed in this order, the nience to customers of both institutions and is likely to Board has concluded that convenience and needs consider- result in increased operating efficiencies for the combined ations, including the CRA performance records of the organization. Additionally, there are public benefits to be subsidiary banks of Regions and First Commercial, are derived from permitting capital markets to operate so that consistent with approval. bank holding companies may make potentially profitable investments in nonbanking companies when those investments are consistent, as in this case, with the relevant considerations under the BHC Act, and from permitting banking organizations to allocate their resources in the manner they consider to be most efficient. The Board also 18. The data, for example, do not account for the possibility that an believes that the conduct of the proposed activities within institution's outreach efforts may attract a larger proportion of margin- the framework established under Regulation Y is not likely ally qualified applicants than other institutions attract and do not to result in adverse effects, such as undue concentration of provide a basis for an independent assessment of whether an applicant resources, decreased or unfair competition, conflicts of who was denied credit was, in fact, creditworthy. Credit history problems and excessive debt levels relative to income (reasons most interests, or unsound banking practices, that would not be frequently cited for a credit denial) are not available from HMDA data. 19. Examiners also compared loan files of approved applications from minorities and non-minorities to ensure that there was no dispar- 20. See 12 C.F.R. 225.28 (b)(l) and (5). ate treatment in the credit terms offered. The comparison showed no 21. 12 U.S.C. § 1843(c)(8). evidence of discrimination or disparate treatment. 22. See 12 C.F.R. 225.26. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 563 outweighed by the public benefits of the proposal, such as cause by the Board or by the Federal Reserve Bank of increased convenience and gains in efficiency. Accord- Atlanta, acting pursuant to delegated authority. ingly, based on all the facts of record, the Board has By order of the Board of Governors, effective May 13, determined that the balance of public benefits that the 1998. Board must consider under the proper incident to banking standard of section 4(c)(8) of the BHC Act is favorable and Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and consistent with approval of the proposal. Governors Kelley, Phillips, Meyer, Ferguson, and Gramlich. JENNIFER J. JOHNSON Conclusion Deputy Secretary of the Board Based on the foregoing and all the other facts of record, the Appendix Board has determined that the applications should be, and hereby are, approved.23 The Board's approval is specifi- First Commercial Corporation's Subsidiary Banks and cally conditioned on compliance by Regions with all the Nonbanking Subsidiaries commitments made in connection with the proposal and all the conditions in this order. A. Subsidiary Banks The Board's determination on the nonbanking activities also is subject to all the terms and conditions set forth in Arkansas Regulation Y, including those in sections 225.7 and 1. First Commercial Bank, N.A., Little Rock. 225.25(c) of Regulation Y (12 C.F.R. 225.7 and 225.25(c)), 2. Arkansas Bank and Trust Company, Hot Springs. and to the Board's authority to require such modification or 3. Arkansas State Bank, Clarksville. termination of the activities of a bank holding company or 4. Benton State Bank, Benton. any of its subsidiaries as the Board finds necessary to 5. Citizens First Bank, Arkadelphia. ensure compliance with, and to prevent evasion of, the 6. Citizens First Bank, El Dorado. provisions of the BHC Act and the Board's regulations and 7. Citizens First Bank, Fordyce. orders issued thereunder. For purposes of this order, the 8. Clinton State Bank, Clinton. commitments and conditions relied on by the Board in 9. Fanners & Merchants Bank, Rogers. reaching this decision are deemed to be conditions im- 10. First Bank of Arkansas, Jonesboro. posed in writing by the Board in connection with its 11. First National Bank of Conway, Conway. findings and decisions, and, as such, may be enforced in 12. First National Bank of Nashville, Nashville. proceedings under applicable law. 13. First National Bank of Russellville, Russellville. The acquisition of First Commercial's banks may not be 14. First National Bank of Searcy, Searcy. consummated before the fifteenth calendar day following 15. Morrilton Security Bank, N.A., Morrilton. the effective date of this order, and the proposal may not be 16. State First National Bank, Texarkana. consummated later that three months after the effective 17. The Security Bank, Harrison. date of this order, unless such period is extended for good Texas 18. First National Bank of Palestine, Palestine. 23. Two commenters requested that the Board hold a public meeting 19. Kilgore First National Bank, Kilgore. or hearing on the proposal to obtain additional factual evidence 20. Longview National Bank, Longview. concerning the lending record of Regions. Section 3(b) of the BHC 21. Lufkin National Bank, Lufkin. Act does not require the Board to hold a public hearing on an application unless the appropriate supervisory authority for the bank 22. State First National Bank, Texarkana. to be acquired makes a timely written recommendation of denial. The 23. Stone Fort National Bank of Nacogdoches, Nacogdo- Board has not received such a recommendation from the appropriate ches. supervisory authorities. 24. Tyler Bank and Trust, N.A., Tyler. Under its rules, the Board also may, in its discretion, hold a public meeting or hearing on an application to acquire a bank if a meeting or hearing is necessary or appropriate to clarify factual issues related to Oklahoma' the application and to provide an opportunity for testimony, if appro- 25. Oklahoma National Bank of Duncan, Duncan. priate. 12 C.F.R. 225.16(e). The Board has carefully considered the 26. Security National Bank & Trust Company, Norman. commenters' request in light of all the facts of record. In the Board's view, commenters have had ample opportunity to submit their views, and have submitted substantial written comments that have been Louisiana carefully considered by the Board in acting on the proposal. The 27. Springhill Bank & Trust Company, Springhill. commenters' request fails to identify disputed issues of fact that are material to the Board's decision that may be clarified by a public meeting or hearing. The commenters also fail to indicate the matters that may be presented by others and why a public meeting or hearing is necessary for the proper presentation or consideration of their views. For these reasons, and based on all the facts of record, the 1. The Oklahoma banking subsidiaries of First Commercial are Board has determined that a public meeting or hearing is not required wholly owned by TRH Bank Group. Inc., Norman, Oklahoma, of or warranted in this case. Accordingly, the request is hereby denied. which First Commercial owns 50 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

564 Federal Reserve Bulletin • July 1998 Tennessee Bank's international operations consist of six representa- 28. First Commercial Bank of Memphis, N.A., Memphis. tive offices in various African countries, and several leasing company subsidiaries organized in Nassau, Bahamas, B. Nonbanking Subsidiaries and the Turks and Caicos Islands. In the United States, Bank's immediate parent, EHL, operates an export trading 1. First Commercial Mortgage Company, Little Rock, Ar- company and several other nonbanking companies.2 In kansas, which engages in making and servicing loans, addition, Bank's sister bank, EBL, operates a representapursuant to section 225.28(b)(l) of Regulation Y tive office in Washington, D.C. Bank is proposing that the (12 C.F.R. 225.28(b)(l)). current EBL representative also would serve as Bank's representative. 2. First Commercial Trust Company, N.A., Little Rock, The proposed representative office in Washington, D.C. Arkansas, which engages in trust company functions, would conduct market research, develop new business, pursuant to section 225.28(b)(5) of Regulation Y prepare loan applications, and maintain contacts with (12 C.F.R. 225.28(b)(5)). Bank's customers and U.S. government and international development agencies with interests in Africa. The proposed representative office would report to Bank's head ORDERS ISSUED UNDER INTERNATIONAL BANKING office in London and also would be monitored and super- ACT vised by Equator USA, Inc., EHL's Connecticut servicing subsidiary. No funds would be solicited, received, or dis- HSBC Equator Bank pic bursed at or through the representative office. London, England In acting on an application to establish a representative office, the IBA and Regulation K provide that the Board Order Approving Establishment of a Representative shall take into account whether the foreign bank engages Office directly in the business of banking outside of the United States and has furnished to the Board the information it HSBC Equator Bank pic ("Bank"), London, England, a needs to assess the application adequately. The Board also foreign bank within the meaning of the International Bankshall take into account whether the foreign bank and any ing Act ("IBA"), has applied under section 10(a) of the foreign bank parent is subject to comprehensive supervi- IBA (12U.S.C. §3107(a)) to establish a representative sion or regulation on a consolidated basis by its home office in Washington, D.C. The Foreign Bank Supervision country supervisor (12U.S.C. § 31O7(a)(2); 12 C.F.R. Enhancement Act of 1991 ("FBSEA"), which amended 211.24).3 The Board may also take into account additional the IBA, provides that a foreign bank must obtain the standards as set forth in the IBA and Regulation K approval of the Board to establish a representative office in (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)). the United States. As noted above, Bank engages directly in the business of Notice of the application, affording interested persons an banking outside the United States. Bank also has provided opportunity to submit comments, has been published in a the Board with information necessary to assess the applicanewspaper of general circulation in Washington, D.C. tion through submissions that address the relevant issues. {The Washington Post, June 1, 1997). The time for filing With respect to supervision by home country authorities, comments has expired, and the Board has considered the the Board previously has determined, in connection with application and all comments received. Bank, with approximately $202 million in assets,1 is applications involving other banks in the United Kingdom, incorporated in London, England, and provides commercial and merchant banking services to sub-Saharan Africa. 2. These companies engage in aircraft leasing, consulting, venture Bank began its operations in 1996, as part of a reorganiza- capital activities and the provision of services for a fee to affiliated tion of the holdings of its parent, Equator Holdings Limited companies within the Equator group, including Bank. ("EHL"). In the reorganization, Bank acquired the major- 3. In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors: ity of the business and staff of its sister affiliate, Equator (i) Ensure that the bank has adequate procedures for monitoring and Bank Limited ("EBL"), a commercial bank incorporated controlling its activities worldwide; in Nassau, the Bahamas, and formerly EHL's principal (ii) Obtain information on the condition of the bank and its subsidiaroperating subsidiary. HSBC Holdings pic ("HSBC"), Lon- ies and offices through regular examination reports, audit reports, don, England, indirectly owns 60 percent of EHL's shares. or otherwise: NedEurope S.A., a Luxembourg subsidiary of a South (iii) Obtain information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic; African financial services group, and Equator Management (iv) Receive from the bank financial reports that are consolidated on a Services, a Connecticut partnership consisting of members worldwide basis, or comparable information that permits analysis of the management of Bank's affiliates, each own 20 per- of the bank's financial condition on a worldwide consolidated cent of EHL's shares. basis; and (v) Evaluate prudential standards, such as capital adequacy and risk asset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No single factor is essential and other elements may inform the Board's ]. Asset data are as of December 31, 1997. determination. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 565 that those banks were subject to home country supervision may be prohibited by law, Bank and HSBC have commiton a consolidated basis.4 Bank is supervised by the Bank of ted to cooperate with the Board to obtain any necessary England on substantially the same terms and conditions as consents or waivers that might be required from third those other banks.5 Based on all the facts of record, the parties for disclosure of such information. In addition, Board has determined that Bank is subject to comprehen- subject to certain conditions, the Bank of England may sive supervision and regulation on a consolidated basis by share information on the operations of Bank and the HSBC its home country supervisor. Group with other supervisors, including the Board. In light The Board also has taken into account the additional of these commitments and other facts of record, and substandards set forth in section 7 of the IBA and Regula- ject to the condition described below, the Board concludes tion K(12 U.S.C. § 3105(d)(3),(4); 12 C.F.R. 211.24(c)(2)). that Bank has provided adequate assurances of access to The Bank of England has no objection to Bank's establish- any necessary information the Board may request. ment of the proposed representative office. On the basis of all the facts of record, and subject to the With respect to the financial and managerial resources of commitments made by Bank and HSBC, as well as the Bank, taking into consideration Bank's record of opera- terms and conditions set forth in this order, the Board has tions in its home country, its overall financial resources, determined that Bank's application to establish a represenand its standing with its home country supervisors, the tative office should be, and hereby is, approved. Should Board also has determined that financial and managerial any restrictions on access to information on the operations factors are consistent with approval of the proposed repre- or activities of Bank and its affiliates subsequently interfere sentative office. Bank appears to have the experience and with the Board's ability to obtain information to determine capacity to support the proposed representative office and and enforce compliance by Bank or its affiliates with has established controls and procedures for the proposed applicable federal statutes, the Board may require terminarepresentative office to ensure compliance with U.S. law. tion of any of Bank's or its affiliates' direct or indirect With respect to access to information about Bank's activities in the United States. Approval of this application operations, the Board has reviewed the restrictions on is also specifically conditioned on compliance by Bank and disclosure in relevant jurisdictions in which Bank operates HSBC with the commitments made in connection with this and has communicated with relevant government authori- application, and with the conditions in this order.6 The ties regarding access to information. Bank and HSBC have commitments and conditions referred to above are condicommitted to make available to the Board such informa- tions imposed in writing by the Board in connection with tion on the operations of Bank and any of its affiliates that its decision, and may be enforced in proceedings under the Board deems necessary to determine and enforce com- 12 U.S.C. § 1818 against Bank and its affiliates. pliance with the IBA, the Bank Holding Company Act of By order of the Board of Governors, effective May 4, 1956, as amended, and other applicable federal law. To the 1998. extent that the provision of such information to the Board Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Phillips, Meyer, and Gramlich. Absent and not voting: 4. See Coutts & Co. AG, 79 Federal Reserve Bulletin 636 (1993); Governors Kelley and Ferguson. Singer & Friedlander, 79 Federal Reserve Bulletin 809 (1993); West Merchant Bank Limited, 81 Federal Reserve Bulletin 519(1995). JENNIFER J. JOHNSON 5. In addition, although HSBC, Bank's ultimate parent, is not itself Deputy Secretary of the Board an authorized institution in the United Kingdom, the Board has previously determined that HSBC and its various banking and nonbanking companies ("HSBC Group") are supervised on substantially the same terms and conditions as those United Kingdom banks. Wells Fargo & Co., HSBC Holdings, pk, HSBC Holdings BV, Marine 6. The Board's authority to approve the establishment of the pro- Midland Banks, Inc., 81 Federal Reserve Bulletin 1037 (1995); see posed office parallels the authority of the Washington, D.C. Office of also Hongkong Bank of Canada, 83 Federal Reserve Bulletin 51 Banking and Financial Institutions ("Office") to license or otherwise (1997). The Bank of England has confirmed that its consolidated permit the establishment of offices of a foreign bank. The Board's supervision of the HSBC Group extends to Bank and that there have approval of this application does not supplant the authority of Office been no material changes in its supervision of the HSBC Group since to license or otherwise permit the proposed office of Bank in accorthe Board's previous determination. dance with any terms or conditions that Office may impose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

566 Federal Reserve Bulletin • July 1998 INDEX OF ORDERS ISSUED OR ACTIONS TAKEN BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (JANUARY 1, 1998-MARCH 31, 1998) Bulletin Volume Applicant Merged or Acquired Bank or Activity Date of Approval and Page Banco Bilbao Vizcaya, S.A., BBV Latlnvest Securities Inc., March 23, 1998 84, 356 Bilbao, Spain New York, New York Bank of Scotland, To establish a representative office in January 14, 1998 84, 230 Edinburgh, Scotland Seattle, Washington Caja de Ahorros de Valencia, To establish an agency in Miami, Florida January 21, 1998 84, 231 Castellon y Alicante, Bancaja, Valencia Spain Commerce Bancorp, Inc., A.H. Williams & Co., Inc., March 23, 1998 84, 358 Cherry Hill, New Jersey Philadelphia, Pennsylvania Dresdner Bank AG, Oechsle International Advisors, L.P., March 11, 1998 84, 361 Frankfurt, Germany Boston, Massachusetts RCM Capital Management, L.L.C., San Francisco, California First Financial Corporation, The Morris Plan Company of Terre February 23, 1998 84, 279 Terre Haute, Indiana Haute, Inc., Terre Haute, Indiana FirstMerit Corporation, CoBancorp, Inc., March 11, 1998 84, 363 Akron, Ohio Elyria, Ohio PremierBank & Trust, Elyria, Ohio Jefferson Savings Bank, West Jefferson, Ohio Fleet Financial Group, Inc., The Quick & Reilly Group, Inc., January 14, 1998 84, 227 Boston, Massachusetts Palm Beach, Florida Indiana United Bancorp, P.T.C. Bancorp, February 17, 1998 84, 280 Greensburg, Indiana Brookville, Indiana Peoples Trust Company, Brookville, Indiana National City Corporation, First of American Bank Corporation, February 11, 1998 84, 281 Cleveland, Ohio Kalamazoo, Michigan First of America Bank, N.A., Kalamazoo, Michigan First of America Bank—Illinois, N.A., Bannockburn, Illinois North Fork Bancorporation, Inc., New York Bancorp, Inc., February 9, 1998 84, 290 Melville, New York Douglaston, New York Home Federal Savings Bank, Ridgewood, New York Peoples Heritage Financial Group, Inc., CFX Corporation, March 18, 1998 84, 351 Portland, Maine Keene, New Hampshire CFX Bank, Keene, New Hampshire Orange Savings Bank, Orange, Massachusetts Safety Fund National Bank, Fitchburg, Massachusetts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 567 Bulletin Volume Applicant Merged or Acquired Bank or Activity Date of Approval and Page Regions Financial Corporation, First State Corporation, March 11, 1998 84, 354 Birmingham, Alabama Albany, Georgia First Bank & Trust Company, Albany, Georgia First Bank & Trust Company, Cordele, Georgia Shore Financial Corporation, Shore Bank, February 9, 1998 84, 288 Onley, Virginia Onley, Virginia WesBanco Bank Wheeling, The Bank of Paden City, March 2, 1998 84, 366 Wheeling, West Virginia Paden City, West Virginia Bank of McMechen, McMechen, West Virginia WesBanco, Inc., Commercial BancShares, Inc., March 2, 1998 84, 366 Wheeling, West Virginia Parkersburg, West Virginia Gateway Bancshares, Inc., McMechen, West Virginia WestStar Bank, Victory Bank of Nowata, February 18, 1998 84, 294 Bartlesville, Oklahoma Nowata, Oklahoma APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Applicant(s) Bank(s) Effective Date First Security Corporation, California State Bank, May 6, 1998 Salt Lake City, Utah West Covina, California Section 4 Applicant(s) Bank(s) Effective Date Allied Irish Banks, p.l.c, To engage de novo, through certain of its May 11, 1998 Dublin, Ireland nonbanking subsidiaries, in serving as the general partner of private investment limited partnerships now existing or to be established in the future National City Corporation, INFITEQ, LLC, May 11, 1998 Cleveland, Ohio Dallas, Texas National Processing, Inc., Louisville, Kentucky Norwest Corporation, Edward Jones Mortgage, LLC, May 7, 1998 Minneapolis, Minnesota Minneapolis, Minnesota E.J. Mortgage, LLC, St. Louis, Missouri Norwest Corporation, MidAmerica Insurance Agency South, Inc., May 28, 1998 Minneapolis, Minnesota Blue Earth, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

568 Federal Reserve Bulletin • July 1998 Section 4—Continued Applicant(s) Bank(s) Effective Date Norwest Corporation, Norwest Mortgage of Hawaii, LLC, May 7, 1998 Minneapolis, Minnesota Honolulu, Hawaii Home Financial Services, Inc., Honolulu, Hawaii Wachovia Corporation, Wachovia Capital Markets, Inc., May 29, 1998 Winston-Salem, North Carolina Winston-Salem, North Carolina 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 Alabama National Bancorporation, Public Bank Corporation, Atlanta April 23, 1998 Birmingham, Alabama St. Cloud, Florida Public Bank, St. Cloud, Florida AmTrust, Inc., Cuba City State Bank, Chicago May 13, 1998 Dubuque, Iowa Cuba City, Wisconsin Anson Bancorp, Inc., Anson Savings Bank, SSB, Richmond May 12, 1998 Wadesboro, North Carolina Wadesboro, North Carolina The 1855 Bancorp, Sandwich Bancorp, Inc., Boston April 27, 1998 New Bedford, Massachusetts Sandwich, Massachusetts The Baraboo Bancorporation, State Bank of Wonewoc, Chicago April 24, 1998 Baraboo, Wisconsin Wonewoc, Wisconsin Belvedere Capital Partners, Inc., California Community Financial San Francisco May 1, 1998 San Francisco, California Institutions Fund Limited Partnership, San Francisco, California Belvedere Bancorp, San Francisco, California National Business Bank, Torrance, California Buena Vista Bancorp, Inc., Bank of Evansville, St. Louis May 7, 1998 Chester, Illinois Evansville, Illinois Cardinal Financial Corporation, Cardinal Bank, N.A., Richmond May 1, 1998 Fairfax, Virginia Fairfax, Virginia Citizens Bancorp, Inc., Citizens' Bank of Charleston, St. Louis May 7, 1998 Charleston, Missouri Charleston, Missouri Citizens National Bancshares, Inc.. Citizens National Bank of Jessamine, Cleveland May 1, 1998 Nicholasville, Kentucky Jessamine, Kentucky Clover Community Bankshares, Clover Community Bank, Richmond April 28, 1998 Inc., Clover, South Carolina Clover, South Carolina CNB Bancshares, Inc., National Bancorp, St. Louis April 29, 1998 Evansville, Indiana Tell City, Indiana TCB Bank, Tell City, Indiana CountryBanc Holding Company, Home State Bank, Kansas City April 22, 1998 Edmond, Oklahoma Hobart, Oklahoma Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 569 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date ECB Bancorp, Inc., The East Carolina Bank, Richmond May 20, 1998 Engelhard, North Carolina Engelhard, North Carolina The Employee Stock Ownership Upper Cumberland Bancshares, Inc., Atlanta April 29, 1998 Trust of People's Bank and Trust Byrdstown, Tennessee Company of Pickett County, Byrdstown, Tennessee F.N.B. Corporation, Southwest Interim Bank, No. 4, Cleveland May 5, 1998 Hermitage, Pennsylvania National Association, Seminole, Florida First Gilmer Bancshares, Inc., Wood County National Bank, Dallas April 20, 1998 Gilmer, Texas Quitman, Texas First Gilmer Delaware Holdings, Inc., Wilmington, Delaware Fryburg Banking Company, Inc., First United National Bank, Cleveland May 20, 1998 Fryburg, Pennsylvania Fryburg, Pennsylvania Halbur Bancshares, Inc., Westside Banco, Chicago May 13, 1998 Halbur, Iowa Westside, Iowa Hall Properties, LP, Perry Bancshares, Inc., Kansas City May 1, 1998 Perry, Oklahoma Perry, Oklahoma Hibernia Corporation, Peoples Holding Corporation, Atlanta April 29, 1998 New Orleans, Louisiana Minden, Louisiana Peoples Bank and Trust Company, Minden, Louisiana Home Valley Bancorp, Home Valley Bank, San Francisco April 24, 1998 Cave Junction, Oregon Cave Junction, Oregon LCNB Bancorporation, Inc., Langham Creek National Bank, Dallas April 30, 1998 Houston, Texas Houston, Texas LCNB Bancorporation of Delaware, Inc., Wilmington, Delaware Mainline Bancorp, Inc., The First National Bank of Spangler, Philadelphia April 24, 1998 Ebensburg, Pennsylvania Spangler, Pennsylvania Lino Lakes Bane Shares, Inc., Lino Lakes State Bank, Minneapolis May 5, 1998 Forest Lake, Minnesota Lino Lakes, Missouri MainStreet BankGroup Ballston Bancorp, Inc., Richmond May 11, 1998 Incorporated, Washington, D.C. Martinsville, Virginia The Bank of Northern Virginia, Arlington, Virginia Mid Penn Bancorp, Inc., Miners Bank of Lykens, Philadelphia May 13, 1998 Millersburg, Pennsylvania Lykens, Pennsylvania New England Community Bancorp, Olde Port Bank & Trust Company, Boston May 21, 1998 Inc., Portsmouth, New Hampshire Windsor, Connecticut Osceola Bancorporation, Huxley Bancorp, Chicago May 7, 1998 Osceola, Iowa Huxley, Iowa The Peoples Holding Company, The Peoples Bank Company, Cleveland May 8, 1998 Inc., Coldwater, Ohio Coldwater, Ohio Premier Bancorp, Inc., Premier Bank of Brentwood, Atlanta May 1, 1998 Brentwood, Tennessee Brentwood, Tennessee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

570 Federal Reserve Bulletin • July 1998 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Premier Bancshares, Inc., The Bank Holding Company, Atlanta May 21, 1998 Atlanta, Georgia Griffin, Georgia First Community Bank of Henry County, McDonough, Georgia The Bank of Spalding County, Griffin, Georgia Premier Bancshares, Inc., Button Gwinnett Financial Corporation, Atlanta May 14, 1998 Atlanta, Georgia Snellville, Georgia The Bank of Gwinnett County, Lawrenceville, Georgia Security State Bancshares, Inc., Bank of Atkins, St. Louis May 13, 1998 Charleston, Missouri Atkins, Arkansas Signature Bancshares, Inc., Signature Bank, St. Louis May 7, 1998 Springfield, Missouri Springfield, Missouri Southern Development First Delta Corporation, St. Louis May 13, 1998 Bancorporation, Inc., Helena, Arkansas Arkadelphia, Arkansas First National Bank of Phillips County, Helena, Arkansas The Delta State Bank, Elaine, Arkansas Southern Heritage Bancorp, Inc., Southern Heritage Bank, Atlanta April 30, 1998 Oakwood, Georgia Oakwood, Georgia United Bancorp, Inc., Southern Ohio Community Cleveland May 12, 1998 Martins Ferry, Ohio Bancorporation, Inc., Glouster, Ohio United Community Bancshares, United Community Bank, Atlanta May 20, 1998 Gonzales, Louisiana Gonzales, Louisiana Unity Holdings, Inc., Unity National Bank, Atlanta April 29, 1998 Cartersville, Georgia Cartersville, Georgia USAL Bancorp, Inc., AmeriFirst Bank, N.A., Atlanta April 27, 1998 Union Springs, Alabama Union Springs, Alabama Valley National Corporation, First National Sylacauga Corporation, Atlanta May 7, 1998 Lanett, Alabama Sylacauga, Alabama First National-America's Bank, Sylacauga, Alabama Wilber Company, NebraskaLand National Bank, Kansas City April 29, 1998 Wilber, Nebraska North Platte, Nebraska Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Bank Capital Corporation, Bank Capital Mortgage LLC, Kansas City May 4, 1998 Strasburg, Colorado Strasburg, Colorado Bank of Montreal, Harris Bankcorp, Inc., Chicago May 15, 1998 Toronto, Ontario, Canada Chicago, Illinois Bankmont Financial Corp., Harris Investment Management, Inc., Chicago, Illinois Chicago, Illinois Harris Investment Management Market Neutral Fund, LLC, Chicago, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 571 Section 4—Continued Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Bayerische Vereinsbank AG, VB Risk Management Products Inc., New York April 24, 1998 Munich, Federal Republic of New York, New York Germany Bayerische Vereinsbank AG, VB Structured Finance Inc., New York May 18, 1998 Munich, Federal Republic of New York, New York Germany Community Financial Services, Inc.. Community Bank Marketing, Inc., Atlanta May 6, 1998 Atlanta, Georgia Atlanta, Georgia Fifth Third Bancorp, State Savings Company, Cleveland April 23, 1998 Cincinnati, Ohio Columbus, Ohio Fifth Third Bancorp, CitFed Bancorp, Inc., Cleveland April 23, 1998 Cincinnati, Ohio Dayton, Ohio FirstFederal Financial Services First Shenango Bancorp, Inc., Cleveland May 6, 1998 Corp., New Castle, Pennsylvania Wooster, Ohio First Union Corporation, Bowles Hollowell Conner & Co., Richmond April 23, 1998 Charlotte, North Carolina Charlotte, North Carolina National Australia Bank Limited, Bane One Mortgage Corporation, Chicago May 15, 1998 Melbourne, Australia Indianapolis, Indiana Homeside Lending, Inc., Jacksonville, Florida SJNB Financial Corporation, Epic Funding Corporation, San Francisco May 14, 1998 San Jose, California Lafayette, California Southeast Capital Corporation, To engage de novo in community Kansas City May 1, 1998 Idabel, Oklahoma development activities Southeast Capital Corporation ESOP, Idabel, Oklahoma Summit Bankshares, Inc., Valley Security Insurance Company, Richmond April 29, 1998 Raphine, Virginia Raphine, Virginia The Toronto-Dominion Bank, Waterhouse Securities Inc., New York April 24, 1998 Toronto, Ontario, Canada New York, New York Waterhouse Investors Services, Inc., Jack White & Company, New York, New York San Diego, California Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Giltner Investment Partnership II, Avoca Company, Kansas City April 29, 1998 Ltd., Avoca, Nebraska Omaha, Nebraska Union Planters Corporation, Magna Group, Inc., St. Louis May 21, 1998 Memphis, Tennessee St. Louis, Missouri Union Planters Holding Corporation, HBC Acquisition Sub, Inc., Memphis, Tennessee St. Louis, Missouri Magna Bank, National Association, St. Louis, Missouri Charter Bank, S.B., Sparta, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

572 Federal Reserve Bulletin • July 1998 APPLICATIONS APPROVED UNDER BANK MERGER ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Applicant(s) Bank(s) Reserve Bank Effective Date Atlantic Bank, Bank of Maryland, Richmond May 13, 1998 Ocean City, Maryland Towson, Maryland Colonial Bank, Commercial Bank of Nevada, Atlanta May 12, 1998 Montgomery, Alabama Las Vegas, Nevada Farmers State Bank, Security National Bank, Kansas City May 15, 1998 Mankato, Kansas Manhattan, Kansas FCNB Bank, Farmers Bank of Maryland, Richmond April 27, 1998 Frederick, Maryland Annapolis, Maryland First Virginia Bank-Maryland, Upper Marlboro, Maryland Fifth Third Bank of Cincinnati, Century Savings Bank, Cleveland April 23. 1998 Cincinnati, Ohio Columbus, Ohio Fifth Third Bank, The Fifth Third Bank of Western Ohio, Cleveland April 23, 1998 Cincinnati, Ohio Dayton, Ohio Fifth Third Bank of Columbus, State Savings Bank, Cleveland April 23, 1998 Columbus, Ohio Columbus, Ohio Fifth Third Bank of Columbus, Upper Arlington Branch of Fifth Third Cleveland April 23, 1998 Columbus, Ohio Cincinnati, Upper Arlington, Ohio The Fifth Third Bank of Southern The Fifth Third Bank of Western Ohio, Cleveland April 23, 1998 Ohio, Dayton, Ohio Hillsboro, Ohio The Fifth Third Bank of Western Citizens Federal Savings Bank, FSB, Cleveland April 23, 1998 Ohio, Dayton, Ohio Dayton, Ohio Johnson Bank, Bank of Fort Atkinson, Chicago May 14, 1998 Racine, Wisconsin Fort Atkinson, Wisconsin Mercantile Bank, Mercantile Bank of Northern Missouri, Kansas City April 29, 1998 Overland Park, Kansas Macon, Missouri Mercantile Bank of St. Joseph, St. Joseph, Missouri Mercantile Bank of Northwest Missouri, Maryville, Missouri PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Research Triangle Institute v. Board of Governors, No. Federal Reserve Banks in which the Board of Governors is not 97-1719 (U.S. Supreme Court, filed April 28, 1998). Petinamed a party. tion for writ of certiorari to review dismissal by the United States Court of Appeals for the Fourth Circuit of a contract claim against the Board. Board of Governors v. Carrasco, No. 98 Civ. 3474 (LAK) (S.D.N.Y., filed May 15, 1998). Action to freeze assets of Inner City Press/Community on the Move v. Board of Goverindividual pending administrative adjudication of civil nors, No. 97-1514 (U.S. Supreme Court, filed March 12, money penalty assessment by the Board. On May 26, 1998, 1998). Petition for writ of certiorari to review dismissal by the court issued a preliminary injunction restraining the the United States Court of Appeals for the District of transfer or disposition of the individual's assets and appoint- Columbia Circuit of a petition for review of a Board order ing the Federal Reserve Bank of New York as receiver for dated May 14, 1997, approving the application of Bane One those assets. Corporation, Inc., Columbus, Ohio, to merge with First Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 573 USA, Inc., Dallas, Texas. The Board's opposition to the Maunsell v. Greenspan, No. 97-6131 (2d Cir., filed May 22, writ was filed on May 29, 1998. 1997). Appeal of district court dismissal of action for com- Logan v. Greenspan, No. 1:98CV00049 (D.D.C., filed Janu- pensatory and punitive damages for alleged violations of ary 9, 1998). Employment discrimination complaint. civil rights by federal savings bank. On May 12, 1998, the Goldman v. Department of the Treasury, No. 1-97-CV-3798 court of appeals affirmed the district court's dismissal. (N.D. Ga., filed December 23, 1997). Declaratory judgment Pharaon v. Board of Governors, No. 97-1114 (D.C. Cir., filed action challenging Federal Reserve notes as lawful money. February 28, 1997). Petition for review of a Board order On March 2, 1998, the Board filed a motion to dismiss the dated January 31, 1997, imposing civil money penalties and action. an order of prohibition for violations of the Bank Holding Kerr v. Department of the Treasury, No. CV-S-97-01877- Company Act. Oral argument was held on December 8, DWH (S.D. Nev., filed December 22, 1997). Challenge to 1997, and on February 10, 1998, the court of appeals income taxation and Federal Reserve notes. affirmed the Board's order. On March 26, 1998, petitioner Allen v. Indiana Western Mortgage Corp., No. 97-7744 RJK filed a motion for rehearing and rehearing en bane. The (CD. Cal., filed November 12, 1997). Customer dispute motions were denied on April 17, 1998. with a bank. The New Mexico Alliance v. Board of Governors, No. Patrick v. United States, No. 97-75564 (E.D. Mich., filed 98-1049 (D.C. Cir., transferred as of January 21, 1998). November 7, 1997). Action for damages arising out of tax Petition for review of a Board order dated December 16, dispute. 1996, approving the acquisition by NationsBank Corpora- Leuthe v. Office of Financial Institution Adjudication, No. tion and NB Holdings Corporation, both of Charlotte, North 97-1826 (3d Cir., filed October 22, 1997). Appeal of district Carolina, of Boatmen's Bancshares, Inc., St. Louis, Miscourt dismissal of action against the Board and other Fed- souri. On January 21, 1998, the United States Court of eral banking agencies challenging the constitutionality of Appeals for the Tenth Circuit ordered the petition transthe Office of Financial Institution Adjudication. ferred to the United States Court of Appeals for the District Patrick v. United States, No. 97-75017 (E.D. Mich., filed of Columbia Circuit. On May 27, 1998, the court of appeals September 30, 1997). Action for damages arising out of tax granted the Board's motion to dismiss the petition. dispute. American Bankers Insurance Group, Inc. v. Board of Gover- Artis v. Greenspan, No. 97-5235 (D.C. Cir., filed Septem- nors, No. 96-CV-2383-EGS (D.D.C., filed October 16, ber 19, 1997). Appeal of district court order dismissing 1996). Action seeking declaratory and injunctive relief inemployment discrimination class action. validating a new regulation issued by the Board under the Towe v. Board of Governors, No. 97-71143 (9th Cir., filed Truth in Lending Act relating to treatment of fees for debt September 15, 1997). Petition for review of a Board order cancellation agreements. On October 18, 1996, the district dated August 18, 1997, prohibiting Edward Towe and court denied plaintiffs' motion for a temporary restraining Thomas E. Towe from further participation in the banking order. On April 13, 1998, the district court granted the industry. Board's motion for summary judgment. Branch v. Board of Governors, No. 97-5229 (D.C. Cir., filed Board of Governors v. Pharaon, No. 98-6101 (2d Cir., filed September 12, 1997). Appeal of district court order denying May 4, 1998). Appeal of partial denial of Board's motion motion to compel production of pre-decisional supervisory for summary judgment in action to freeze assets of individdocuments and testimony sought in connection with an ual pending administrative adjudication of civil money penaction by Bank of New England Corporation's trustee in alty assessment by the Board. On May 22, 1998, the appelbankruptcy against the Federal Deposit Insurance Corpora- lee filed a cross-appeal from the partial final judgment. tion. On November 10, 1997, the court denied appellant's request for expedited consideration of the appeal. Oral argument was heard on May 4, 1998. FINAL ENFORCEMENT ORDERS ISSUED BY THE Clarkson v. Greenspan, No. 97-CV-2035 (D.D.C., filed Sep- BOARD OF GOVERNORS tember 5, 1997). Freedom of Information Act case. On January 20, 1998, the Board filed a motion to dismiss the Banco Industrial de Venezuela action. Caracas, Venezuela Bettersworth v. Board of Governors, No. 97-CA-624 (W.D. Tex., filed August 21, 1997). Privacy Act case. The Federal Reserve Board announced on May 20, 1998, Wilkins v. Warren, No. 98-1320 (4th Cir. 1998). Appeal of the issuance of a Temporary Cease and Desist Order District Court dismissal of action involving customer dis- against Banco Industrial de Venzuela, Caracas, Venezuela, pute with a bank. to address serious deficiencies in the bank's anti-money Greeff v. Board of Governors, No. 97-1976 (4th Cir., filed laundering program. June 17, 1997). Petition for review of a Board order dated May 19, 1997, approving the application of by Allied Irish Banco Nacional de Mexico, et al. Banks, pic, Dublin, Ireland, and First Maryland Bancorp, Banamex, Mexico Baltimore, Maryland, to acquire Dauphin Deposit Corporation, Harrisburg, Pennsylvania, and thereby acquire Dau- The Federal Reserve Board announced on May 18, 1998, phin's banking and nonbanking subsidiaries. the issuance of Temporary Cease and Desist Orders against Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

574 Federal Reserve Bulletin • July 1998 Banco Nacional de Mexico (Banamex), Mexico; Banca in the United States to address serious deficiencies in their Serfin, S.A., Mexico; Banco Internacional, S.A. (Bital), anti-money laundering programs. Each of these foreign Mexico; Bancomer, S.A., Mexico; and Banco Santander, banks operates one or more branches or agencies in the Spain; foreign banking organizations with banking offices United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

575 Combined Financial Statements of the Federal Reserve Banks The financial statements of the Federal Reserve Banks were audited by Coopers & Lybrand L.L.P., independent public accountants, for the years ended December 31, 1997 and 1996. Coopers Coopers & Lybrand L.L.R &Lybrand a professional services in REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Governors of The Federal Reserve System and the Board of Directors of each of The Federal Reserve Banks: We have audited the accompanying combined statements of condition of The Federal Reserve Banks (the "Reserve Banks") as of December 31, 1997 and 1996, and the related combined statements of income and changes in capital for the years then ended. These financial statements are the responsibility of the Reserve Banks' management. Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As discussed in Note 3, the combined financial statements were prepared in conformity with the accounting principles, policies, and practices established by the Board of Governors of The Federal Reserve System. These principles, policies, and practices, which were designed to meet the specialized accounting and reporting needs of The Federal Reserve System, are set forth in the Financial Accounting Manual for Federal Reserve Banks and constitute a comprehensive basis of accounting other than generally accepted accounting principles. In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of the Reserve Banks as of December 31, 1997 and 1996, and combined results of their operations for the years then ended, on the basis of accounting described in Note 3. Washington, D.C. March 24, 1998 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

576 Federal Reserve Bulletin • July 1998 THE FEDERAL RESERVE BANKS COMBINED STATEMENTS OF CONDITION December 31, 1997 and 1996 (in millions) ASSETS 1997 1996 Gold certificates $ 11,047 $ 11,048 Special drawing rights certificates 9,200 9,718 Coin 460 591 Items in process of collection 7,800 12,761 Loans to depository institutions 2,035 85 U.S. government and federal agency securities, net 458,555 416,875 Investments denominated in foreign currencies 17,046 19,264 Accrued interest receivable 4,386 3,891 Bank premises and equipment, net 1,781 1,757 Otherassets 1,612 1,309 Totalassets $513,922 $477,299 LIABILITIES AND CAPITAL LIABILITIES Federal Reserve notes outstanding, net $457,469 $426,522 Deposits Depository institutions 30,838 24,524 U.S. Treasury, general account 5,444 7,742 Other deposits 681 400 Deferred credit items 7,239 7,464 Statutory surplus transfer due U.S. Treasury 653 660 Accrued benefit cost 747 712 Other liabilities 198 177 Total liabilities 503,269 468,201 CAPITAL Capital paid-in 5,433 4,602 Surplus 5,220 4,496 Totalcapital 10,653 9,098 Total liabilities and capital $513,922 $477,299 The accompanying notes are an integral part of these financial statements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Combined Financial Statements of the Federal Reserve Banks 577 THE FEDERAL RESERVE BANKS COMBINED STATEMENTS OF INCOME for the years ended December 31, 1997 and 1996 (in millions) 1997 1996 Interest income Interest on U.S. government securities $25,699 $23,884 Interest on foreign currencies 375 443 Interest on loans to depository institutions 15 \\ Total interest income 26,089 24,338 Other operating income (loss) Income from services 789 787 Reimbursable services to government agencies 224 216 Foreign currency losses, net (2,593) (1,668) Government securities gains, net 13 32 Other income 6J_ 60 Total other operating loss (1,506) (573) Operating expenses Salaries and other benefits 1,300 1,283 Occupancy expense 184 177 Equipment expense 261 259 Cost of unreimbursed Treasury services 35 38 Assessments by Board of Governors 539 565 Other expenses 474 468 Total operating expenses 2,793 2,790 Net income prior to distribution $21,790 $20,975 Distribution of net income Dividends paid to member banks $ 300 $ 256 Transferred to surplus 831 636 Payments to U.S. Treasury as interest on Federal Reserve notes 14,565 Payments to U.S. Treasury as required by statute 20,659 5,518 Total distribution $21,790 $20,975 The accompanying notes are an integral part of these financial statements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

578 Federal Reserve Bulletin • July 1998 THE FEDERAL RESERVE BANKS COMBINED STATEMENTS OF CHANGES IN CAPITAL for the years ended December 31, 1997 and 1996 (in millions) Capital Total paid-in Surplus capital Balance at December 31, 1995 (79 million shares) $3,966 $3,966 $7,932 Net income transferred to surplus ... 636 636 Statutory surplus transfer to the U.S. Treasury (106) (106) Net change in capital stock (13 million shares issued) 636 636 Balance at December 31, 1996 (92 million shares) $4,602 $4,496 $9,098 Net income transferred to surplus ... 831 831 Statutory surplus transfer to the U.S. Treasury (107) (107) Net change in capital stock (17 million shares issued) 831 831 Balance at December 31, 1997 (109 million shares) $5,433 $5,220 $10,653 The accompanying notes are an integral part of these financial statements. NOTES TO COMBINED FINANCIAL STATEMENTS OF THE FEDERAL RESERVE BANKS, DECEMBER 31, 1997 AND 1996 (1) ORGANIZATION AND BASIS OF PRESENTATION Banks is derived from central bank activities and responsibilities with regard to monetary policy and currency. For this reason, the The twelve Federal Reserve Banks (Reserve Banks) are part of accompanying combined set of financial statements for the twelve the Federal Reserve System (System) created by Congress under independent Reserve Banks is prepared, adjusted to eliminate the Federal Reserve Act of 1913 (Federal Reserve Act), which interdistrict accounts and transactions. established the central bank of the United States. The Reserve Banks are chartered by the federal government and possess a Structure unique set of governmental, corporate, and central bank characteristics. Other major elements of the System are the Board of The Reserve Banks serve twelve Federal Reserve Districts nation- Governors of the Federal Reserve System (Board of Governors), wide. In accordance with the Federal Reserve Act, supervision the Federal Open Market Committee (FOMC), and the Federal and control of each Reserve Bank is exercised by a Board of Advisory Council. The FOMC is composed of members of the Directors. Banks that are members of the System include all Board of Governors, the president of the Federal Reserve Bank of national banks and any state-chartered bank that applies and is New York (FRBNY), and, on a rotating basis, four other Reserve approved for membership in the System. Bank presidents. Although the Reserve Banks are chartered as independent orga- Board of Directors nizations overseen by the Board of Governors, the Reserve Banks work jointly to carry out their statutory responsibilities. The The Federal Reserve Act specifies the composition of the board of majority of the assets, liabilities, and income of the Reserve directors for each of the Reserve Banks. Each board is composed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Combined Financial Statements of the Federal Reserve Banks 579 NOTES TO COMBINED FINANCIAL STATEMENTS OF THE FEDERAL RESERVE BANKS—CONTINUED of nine members serving three-year terms: three directors, includ- separate sales and purchases, rather than secured borrowings with ing those designated as Chairman and Deputy Chairman, are pledged collateral, as is required by GAAP. In addition, the Board appointed by the Board of Governors, and six directors are elected of Governors and the Reserve Banks have elected not to include by member banks. Of the six elected by member banks, three a Statement of Cash Flows, as the liquidity and cash position of represent the public and three represent member banks. Member the Reserve Banks are not of primary concern to users of these banks are divided into three classes according to size. Member financial statements. Other information regarding the Reserve banks in each class elect one director representing member banks Banks' activities is provided in, or may be derived from, the and one representing the public. In any election of directors, each Statements of Condition, Income, and Changes in Capital. Theremember bank receives one vote, regardless of the number of fore, a Statement of Cash Flows would not provide any additional shares of Reserve Bank stock it holds. useful information. There are no other significant differences between the policies outlined in the Financial Accounting Manual and GAAP. (2) OPERATIONS AND SERVICES The preparation of the financial statements in conformity with the Financial Accounting Manual requires management to make The System performs a variety of services and operations. Func- certain estimates and assumptions that affect the reported amounts tions include formulating and conducting monetary policy; partici- of assets and liabilities and disclosure of contingent assets and pating actively in the payments mechanism, including large-dollar liabilities at the date of the financial statements and the reported transfers of funds, automated clearinghouse operations, and check amounts of income and expenses during the reporting period. processing; distribution of coin and currency; fiscal agency func- Actual results could differ from those estimates. Unique accounts tions for the U.S. Treasury and certain federal agencies; serving and significant accounting policies are explained below. as the federal government's bank; providing short-term loans to depository institutions; serving the consumer and the community by providing educational materials and information regarding (A) Gold Certificates consumer laws; supervising bank holding companies and state member banks; and administering other regulations of the Board The Secretary of the Treasury is authorized to issue gold certifiof Governors. The Board of Governors' operating costs are funded cates to the Reserve Banks to monetize gold held by the U.S. through assessments on the Reserve Banks. Treasury. Payment for the gold certificates by the Reserve Banks is made by crediting equivalent amounts in dollars into the The FOMC establishes policy regarding open market operaaccount established for the U.S. Treasury. These gold certificates tions, oversees these operations, and issues authorizations and held by the Reserve Banks are required to be backed by the gold directives to the FRBNY for its execution of transactions. Authoof the U.S. Treasury. The U.S. Treasury may reacquire the gold rized transaction types include direct purchase and sale of U.S. certificates at any time, and the Reserve Banks must deliver them government and federal agency securities, matched sale-purchase to the U.S. Treasury. At such time, the U.S. Treasury's account is transactions, the purchase of securities under agreements to resell, charged, and the Reserve Banks' gold certificate account is lowand the lending of U.S. government securities. Additionally, the ered. The value of gold for purposes of backing the gold certifi- FRBNY is authorized by the FOMC to hold balances of and to cates is set by law at $42% a fine troy ounce. execute spot and forward foreign exchange and securities contracts in fourteen foreign currencies, maintain reciprocal currency arrangements (F/X swaps) with various central banks, and "ware- (B) Special Drawing Rights Certificates house" foreign currencies for the U.S. Treasury and Exchange Stabilization Fund (ESF) through the Reserve Banks. Special drawing rights (SDRs) are issued by the International Monetary Fund (Fund) to its members in proportion to each member's quota in the Fund at the time of issuance. SDRs serve (3) SIGNIFICANT ACCOUNTING POLICIES as a supplement to international monetary reserves and may be transferred from one national monetary authority to another. Accounting principles for entities with the unique powers and Under the law providing for U.S. participation in the SDR system, responsibilities of the nation's central bank have not been formuthe Secretary of the U.S. Treasury is authorized to issue SDR lated by the Financial Accounting Standards Board. The Board of certificates, somewhat like gold certificates, to the Reserve Banks. Governors has developed specialized accounting principles and At such time, equivalent amounts in dollars are credited to the practices that it believes are appropriate for the significantly account established for the U.S. Treasury, and the Reserve Banks' different nature and function of a central bank as compared to the SDR certificate account is increased. The Reserve Banks are private sector. These accounting principles and practices are docurequired to purchase SDRs, at the direction of the U.S. Treasury, mented in the Financial Accounting Manual for Federal Reserve for the purpose of financing SDR certificate acquisitions or for Banks (Financial Accounting Manual), which is issued by the financing exchange stabilization operations. Board of Governors. All Reserve Banks are required to adopt and apply accounting policies and practices that are consistent with the Financial Accounting Manual. (C) Loans to Depository Institutions The financial statements have been prepared in accordance with the Financial Accounting Manual. Differences exist between the The Depository Institutions Deregulation and Monetary Control accounting principles and practices of the System and generally Act of 1980 provides that all depository institutions that maintain accepted accounting principles (GAAP). The primary differences reservable transaction accounts or nonpersonal time deposits, as are the presentation of all security holdings at amortized cost, defined in Regulation D issued by the Board of Governors, have rather than at the fair value presentation requirements of GAAP, borrowing privileges at the discretion of the Reserve Banks. and the accounting for matched sale-purchase transactions as Borrowers execute certain lending agreements and deposit sum- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

580 Federal Reserve Bulletin • July 1998 NOTES TO COMBINED FINANCIAL STATEMENTS OF THE FEDERAL RESERVE BANKS—CONTINUED cient collateral before credit is extended. Loans are evaluated for agreed to by the drawee. The F/X swaps are structured so that the collectibility, and currently all are considered collectible and fully party initiating the transaction (the drawer) bears the exchange collateralized. If any loans were deemed to be uncollectible, an rate risk upon maturity. The Bank will generally invest the forappropriate reserve would be established. Interest is recorded on eign currency received under an F/X swap in interest-bearing the accrual basis and is charged at the applicable discount rate instruments. established at least every fourteen days by the boards of directors Warehousing is an arrangement under which the FOMC agrees of the Reserve Banks, subject to review by the Board of Gov- to exchange, at the request of the Treasury, U.S. dollars for foreign ernors. However, Reserve Banks retain the option to impose a currencies held by the Treasury or ESF over a limited period surcharge above the basic rate in certain circumstances. of time. The purpose of the warehousing facility is to supplement the U.S. dollar resources of the Treasury and ESF for financing purchases of foreign currencies and related international (D) U.S. Government and Federal Agency Securities and operations. Investments Denominated in Foreign Currencies In connection with its foreign currency activities, the FRBNY, on behalf of the Reserve Banks, may enter into contracts that The FOMC has designated the FRBNY to execute open market contain varying degrees of off-balance-sheet market risk because transactions on its behalf and to hold the resulting securities in the they represent contractual commitments involving future settleportfolio known as the System Open Market Account (SOMA). In ment and counter-party credit risk. The FRBNY controls credit addition to authorizing and directing operations in the domestic risk by obtaining credit approvals, establishing transaction limits, securities market, the FOMC authorizes and directs the FRBNY and performing daily monitoring procedures. to execute operations in foreign markets for major currencies in While the application of current market prices to the securities order to counter disorderly conditions in exchange markets or currently held in the SOMA portfolio and investments denomiother needs specified by the FOMC in carrying out the System's nated in foreign currencies may result in values substantially central bank responsibilities. above or below their carrying values, these unrealized changes in Purchases of securities under agreements to resell and matched value would have no direct effect on the quantity of reserves sale-purchase transactions are accounted for as separate sale and available to the banking system or on the prospects for future purchase transactions. Purchases under agreements to resell are Reserve Bank earnings or capital. Both the domestic and foreign transactions in which the FRBNY purchases a security and sells it components of the SOMA portfolio from time to time involve back at the rate specified at the commencement of the transaction. transactions that can result in gains or losses when holdings are Matched sale-purchase transactions are transactions in which the sold prior to maturity. However, decisions regarding the securities FRBNY sells a security and buys it back at the rate specified at the and foreign currencies transactions, including their purchase and commencement of the transaction. sale, are motivated by monetary policy objectives rather than Reserve Banks are authorized by the FOMC to lend U.S. profit. Accordingly, earnings and any gains or losses resulting government securities held in the SOMA to U.S. government from the sale of such currencies and securities are incidental to the securities dealers and to banks participating in U.S. government open market operations and do not motivate its activities or policy securities clearing arrangements in order to facilitate the effective decisions. functioning of the domestic securities market. These securitieslending transactions are fully collateralized by other U.S. govern- U.S. government and federal agency securities and investments ment securities. FOMC policy requires the lending Reserve Bank denominated in foreign currencies comprising the SOMA are to take possession of the collateral in amounts in excess of the recorded at cost, on a settlement-date basis, and adjusted for market values of the securities loaned. The market values of the amortization of premiums or accretion of discounts on a straightcollateral and the securities loaned are monitored by the lending line basis. Interest income is accrued on a straight-line basis and is Reserve Bank on a daily basis, with additional collateral obtained reported as "Interest on U.S. government securities" or "Interest as necessary. The securities loaned continue to be accounted for in on foreign currencies," as appropriate. Income earned on securithe SOMA. ties lending transactions is reported as a component of "Other Foreign exchange contracts are contractual agreements between income." Gains and losses resulting from sales of securities are two parties to exchange specified currencies at a specified price determined by specific issues based on average cost. Gains and on a specified date. Spot foreign contracts normally settle two losses on the sales of U.S. government and federal agency securidays after the trade date, whereas the settlement date on forward ties are reported as "Government securities gains, net." Foreign contracts is negotiated between the contracting parties but will currency denominated assets are revalued monthly at current extend beyond two days from the trade date. The FRBNY gener- market exchange rates in order to report these assets in U.S. ally enters into spot contracts, with any forward contracts gener- dollars. Realized and unrealized gains and losses on investments ally limited to the second leg of a swap/warehousing transaction. denominated in foreign currencies are reported as "Foreign cur- The FRBNY, on behalf of the Reserve Banks, maintains renew- rency (losses), net." Foreign currencies held through F/X swaps, able, short-term F/X swap arrangements with authorized foreign when initiated by the counter party, and warehousing arrangecentral banks. The parties agree to exchange their currencies up to ments are revalued monthly, with the unrealized gain or loss a pre-arranged maximum amount and for an agreed upon period reported as a component of "Other assets" or "Other liabilities," of time (up to twelve months), at an agreed upon interest rate. as appropriate. These arrangements give the FOMC temporary access to foreign currencies that it may need for intervention operations to support the dollar and give the partner foreign central bank temporary (E) Bank Premises and Equipment access to dollars it may need to support its own currency. Drawings under the F/X swap arrangements can be initiated by either Bank premises and equipment are stated at cost less accumulated the FRBNY or the partner foreign central bank, and must be depreciation. Depreciation is calculated on a straight-line basis Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Combined Financial Statements of the Federal Reserve Banks 581 NOTES TO COMBINED FINANCIAL STATEMENTS OF THE FEDERAL RESERVE BANKS—CONTINUED over estimated useful lives of assets ranging from two to fifty member bank is liable for Reserve Bank liabilities up to twice the years. New assets, major alterations, renovations, and improve- par value of stock subscribed by it. ments are capitalized at cost as additions to the asset accounts. Maintenance, repairs, and minor replacements are charged to operations in the year incurred. (H) Surplus The Board of Governors requires Reserve Banks to maintain a (F) Federal Reserve Notes surplus equal to the amount of capital paid-in as of December 31 of the prior year. This amount is intended to provide additional Federal Reserve notes are the circulating currency of the United capital and reduce the possibility that the Reserve Banks would be States. These notes are issued through the various Federal Reserve required to call on member banks for additional capital. Reserve agents to the Reserve Banks upon deposit with such agents of Banks are required by the Board of Governors to transfer to the certain classes of collateral security, typically U.S. government U.S. Treasury excess earnings, after providing for the costs of securities. These notes are identified as issued to a specific operations, payment of dividends, and reservation of an amount Reserve Bank. The Federal Reserve Act provides that the collat- necessary to equate surplus with capital paid-in. Prior to Octoeral security tendered by the Reserve Bank to the Federal Reserve ber 1, 1996, this payment represented payment of interest on agent must be equal to the sum of the notes applied for by such Federal Reserve notes outstanding. Reserve Bank. In accordance with the Federal Reserve Act, gold The Omnibus Budget Reconciliation Act of 1993 (Public Law certificates, special drawing rights certificates, U.S. government 103-66, Section 3002) codified the existing Board surplus policies and agency securities, loans allowed under section 13, and invest- as statutory surplus transfers, rather than as payments of interest ments denominated in foreign currencies are pledged as collateral on Federal Reserve notes, for federal government fiscal years for net Federal Reserve notes outstanding. The collateral value 1998 and 1997 (which began on October 1, 1997 and 1996, is equal to the book value of the collateral tendered, with the respectively). In addition, the legislation directed the Reserve exception of securities, whose collateral value is equal to the par Banks to transfer to the U.S. Treasury additional surplus funds of value of the securities tendered. The Board of Governors may, $107 million and $106 million during fiscal years 1998 and 1997 at any time, call upon a Reserve Bank for additional security to respectively. Reserve Banks are not permitted to replenish surplus adequately collateralize the Federal Reserve notes. To satisfy the for these amounts during this time. These transfers were made on obligation to provide sufficient collateral for outstanding Federal October 1, 1997 and 1996, respectively, and are reported on the Reserve notes, the Reserve Banks have entered into an agreement Statement of Changes in Capital as "Statutory surplus transfer to that provides that certain assets of the Reserve Banks are jointly the U.S. Treasury." pledged as collateral for the Federal Reserve notes of all Reserve In the event of losses, payments to the U.S. Treasury are Banks. In the event that this collateral is insufficient, the Federal suspended until such losses are recovered through subse- Reserve Act provides that Federal Reserve notes become a first quent earnings. Weekly payments to the U.S. Treasury vary and paramount lien on all the assets of the Reserve Banks. Finally, significantly. as obligations of the United States, Federal Reserve notes are backed by the full faith and credit of the U.S. government. The "Federal Reserve notes outstanding, net" account repre- (I) Cost of Unreimbursed Treasury Services sents Federal Reserve notes reduced by cash held in the vaults of the Reserve Banks of $92 billion and $100 billion at Decem- Reserve Banks are required by the Federal Reserve Act to serve as ber 31, 1997 and 1996, respectively. fiscal agents and depositories of the United States. By statute, the At December 31, 1997 and 1996, all gold certificates, all Department of the Treasury is permitted, but not required, to pay special drawing rights certificates, and domestic securities with for these services. The costs of providing fiscal agency and par values of $437 billion and $406 billion, respectively, were depository services to the Treasury Department that have been pledged as collateral. At December 31, 1997 and 1996, no loans billed but will not be paid are reported as the "Cost of unreimor investments denominated in foreign currencies were pledged as bursed Treasury services." collateral. (J) Taxes (G) Capital Paid-in The Reserve Banks are exempt from federal, state, and local The Federal Reserve Act requires that each member bank sub- taxes, except for taxes on real property, which are reported as a scribe to the capital stock of the Reserve Bank in an amount equal component of "Occupancy expense." to 6 percent of the capital and surplus of the member bank. As a member bank's capital and surplus changes, its holdings of the Reserve Bank's stock must be adjusted. Member banks are those state-chartered banks that apply and are approved for membership (4) U.S. GOVERNMENT AND FEDERAL AGENCY in the System and all national banks. Currently, only one-half of SECURITIES the subscription is paid-in and the remainder is subject to call. These shares are nonvoting with a par value of $100. They may Securities bought outright and held under agreements to resell are not be transferred or hypothecated. By law, each member bank is held in the SOMA at the FRBNY. entitled to receive an annual dividend of 6 percent on the paid-in Total securities held in the SOMA at December 31 that were capital stock. This cumulative dividend is paid semiannually. A bought outright were as follows (in millions): Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

582 Federal Reserve Bulletin • July 1998 NOTES TO COMBINED FINANCIAL STATEMENTS OF THE FEDERAL RESERVE BANKS—CONTINUED 1997 1996 ]997 1996 Par value German marks Federal agency $ 685 $ 2,225 Foreign currency deposits $ 8,271 $10,253 U.S. government Government debt instruments, including Bills 197,123 190,646 agreements to resell 3,215 2,777 Notes 174,206 150,922 Bonds 59,407 49,339 Japanese yen Total par value 431,421 393,132 Foreign currency deposits 575 637 Government debt instruments, including Unamortized premiums 6,197 4,677 agreements to resell 4,902 5,515 Unaccreted discounts (3,617) (3,548) Accrued interest 86 87 Total $434,001 $394,261 Total $17.049 $19,269 The maturities of U.S. government and federal agency securities bought outright, which were held in the SOMA at Decem- In addition to the balances reported above, $3 million and ber 31, 1997, were as follows (in millions): $5 million in unearned interest collected on certain foreign currency holdings were also reported as "Investments denomi- Par value nated in foreign currencies" at December 31, 1997 and 1996, U.S. Federal respectively. Maturities of government The maturities of investments denominated in foreign currensecurities held securities Total cies at December 31, 1997, were as follows (in millions): Within 15 days $ 12,959 $ 12,959 16 days to 90 days 95,648 $ 60 95,708 91 days to 1 year 137,886 192 138,078 Maturities of Investments Denominated in Foreign Currencies Over 1 year to 5 years 95,028 153 95,181 Over 5 years to 10 years 40,907 255 41,162 Within 1 year $16,767 Over 10 years 48,308 25 48,333 Over 1 year to 5 years 72 Total $430,736 $685 $431,421 Over 5 years to 10 years 210 Over 10 years Total $17,049 Total securities held under agreements to resell at December 31 (in millions): At December 31, 1997 and 1996, there were no open foreign 1997 1996 exchange contracts. As of December 31, 1997 and 1996, there were no F/X swaps Par value Federal agency $ 2,652 $ 1,612 outstanding. U.S. government 21,188 19,971 At December 31, 1997 and 1996, the warehousing facility was Total par value 23,840 21,583 $20 billion, with nothing outstanding. Unamortized premiums 996 1,327 Unaccreted discounts (282) (296) Total $24,554 $22,614 (6) BANK PREMISES AND EQUIPMENT The resell date for securities purchased under agreements to A summary of bank premises and equipment at December 31 is resell does not exceed fifteen days after the purchase date. as follows (in millions): At December 31, 1997 and 1996, matched sale-purchase transactions involving U.S. government securities with par values of 1997 1996 $17 billion and $15 billion, respectively, were outstanding. Matched sale-purchase transactions are generally overnight Bank premises and equipment Land $ 194 $ 192 arrangements. Buildings 1,100 934 At December 31, 1997 and 1996, U.S. government securities Building machinery and equipment 255 242 with par values of $887 million and $489 million, respectively, Construction in progress 61 195 Furniture and equipment 1,258 1,230 were loaned. 2,868 2,793 Accumulated depreciation (1,087) (1,036) (5) INVESTMENTS DENOMINATED IN FOREIGN Bank premises and equipment, net $1,781 $ 1,757 CURRENCIES Depreciation expense was $194 million and $192 million for The FRBNY, on behalf of the Reserve Banks, holds foreign the years ended December 31, 1997 and 1996, respectively. currency deposits with foreign central banks and the Bank for Bank premises and equipment at December 31 include the International Settlements and invests in foreign government debt following amounts for leases that have been capitalized (in instruments. Foreign government debt instruments held include millions): both securities bought outright and securities held under agreements to resell. These investments are guaranteed as to principal 1997 1996 and interest by the foreign governments. Total investments denominated in foreign currencies, valued Bank premises and equipment $95 $96 at current exchange rates at December 31, were as follows (in Accumulated depreciation (8_1) (56) millions): Capitalized leases, net $14 $40 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Combined Financial Statements of the Federal Reserve Banks 583 NOTES TO COMBINED FINANCIAL STATEMENTS OF THE FEDERAL RESERVE BANKS—CONTINUED Certain of the Reserve Banks lease unused space to outside The System Plan is a multi-employer plan. FRBNY acts as the tenants. Those leases have terms ranging from one to fourteen sponsor of this plan. The prepaid pension cost includes amounts years. Rental income from such leases was $17 million and related to the participation of employees of the twelve Reserve $16 million for the years ended December 31, 1997 and 1996, Banks, the Board of Governors, and the Plan Administrative respectively. Future minimum lease payments under agreements Office in the plan. in existence at December 31. 1997, were (in millions): Contributions to the System Plan are actuarially determined and fully funded by participating employers at amounts prescribed by 1998 $15 the Plan Administrator (with the exception of a mandatory contri- 1999 14 bution of 7 percent of salary by certain employees of the Board of 2000 13 2001 12 Governors that participate in the plan). No separate accounting is 2002 10 maintained of assets contributed by the participating employers. It Thereafter _19 is the System's policy to fund the pension liability as accrued. No Total $83 contributions to the System Plan were required under this policy during 1997 or 1996. (7) COMMITMENTS AND CONTINGENCIES The BEPs are unfunded plans that were established January 1, 1996. Net pension cost for the period is actuarially determined At December 31, 1997, the Reserve Banks were obligated under and is based on the same economic and mortality assumptions noncancelable leases for premises and equipment with terms used for the System Plan. The Reserve Banks' projected benefit ranging from one year to approximately twenty-six years. These obligation and net pension costs for the BEPs at December 31, leases provide for increased rentals based upon increases in real 1997 and 1996, and for the years then ended, are not material. estate taxes, operating costs, or selected price indices. Following is a reconciliation between the funded status of Rental expense under operating leases for certain operating the System Plan and amounts recognized at December 31 (in facilities, warehouses, and data processing and office equipment millions): (including taxes, insurance, and maintenance when included in rent), net of sublease rentals, was $69 million and $68 million for 1997 1996 the years ended December 31, 1997 and 1996, respectively. Certain of the Reserve Banks' leases have options to renew. Accumulated benefit obligation Vested $1,931 $1,758 Future minimum rental payments under noncancelable operat- Nonvested 90 85 ing leases, net of sublease rentals, with terms of one year or more, Total $2,021 $1,843 at December 31, 1997, were (in millions): Plan assets at fair value, primarily listed stocks and bonds $5,031 $4,153 1998 $ 13 Actuarial present value of projected benefit obligation (2,476) (2,270) 1999 11 2000 9 Plan assets in excess of projected benefit obligation 2,555 1,883 2001 8 2002 6 Less: Unrecognized net transition obligation 181 226 Thereafter $124 Unrecognized net gain 1,307 884 Unrecognized prior service cost (135) (144) Total $171 Prepaid pension cost $1,202 $ 917 At December 31, 1997, the Reserve Banks had contractual commitments through the year 2007 totaling $261 million for the Prepaid pension cost is reported as a component of "Other maintenance of currency processing machines, none of which has assets." been recognized. One Reserve Bank contracts for maintenance for The assumptions used in developing the pension benefit obligathese machines on behalf of the System and allocates the costs, tion for the System Plan and BEPs are as follows: annually, to each other Reserve Bank. The Reserve Banks are involved in certain legal actions and 1997 1996 claims arising in the ordinary course of business. Although it is Discount rate 7.00% 7.25% difficult to predict the ultimate outcome of these actions, in Rate of compensation increase 5.00% 5.00% management's opinion, based on discussions with counsel, the Long-term rate of return on plan assets 9.00% 9.00% aforementioned litigation and claims will be resolved without material adverse effect on the financial position or results of The components of the net pension credit for the System Plan operations of the Reserve Banks. for the years ended December 31 are shown below (in millions): (8) RETIREMENT AND THRIFT PLANS 1997 1996 Retirement Plans Service cost—benefits earned $ 71 $ 71 Interest cost on projected benefit obligation 160 152 Actual return on plan assets (904) (634) The Reserve Banks currently offer two defined benefit retirement Net amortization and deferral 468 269 plans to their employees, based on length of service and level of Cost of special termination benefits 4 [ compensation. Substantially all of the Reserve Banks' employees Net pension (credit) $(201) $(141) participate in the Retirement Plan for Employees of the Federal Reserve System (System Plan) and the Benefit Equalization Retirement Plans offered by each individual Reserve Bank The net pension credit is reported as a component of "Other (BEPs). expense." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

584 Federal Reserve Bulletin • July 1998 NOTES TO COMBINED FINANCIAL STATEMENTS OF THE FEDERAL RESERVE BANKS—CONTINUED Thrift Plan The assumptions used in developing the postretirement benefit obligation are as follows: Employees of the Reserve Banks may also participate in the Thrift Plan for Employees of the Federal Reserve System (Thrift Plan). 1997 1996 The Thrift Plan is a defined contribution plan. Under the Thrift Discount rate 7.00% 7.25% Plan, employees may contribute a percentage of their salaries up Rate of increase in health care costs—initial 9.00% 9.50% Rate of increase in health care costs—ultimate 5.00% 5.50% to a maximum 20 percent limit. Matching contributions by the Reserve Banks are based on a fixed percentage of each employee's basic contribution. Currently, the Reserve Banks match The ultimate health care cost rate is expected to be achieved in 80 percent of the first 6 percent of salary contributed by the 2005. employee. The Reserve Banks' Thrift Plan contributions totaled The following is a summary of the components of net periodic $41 million and $40 million for the years ended December 31, postretirement cost for the years ended December 31 (in millions): 1997 and 1996, respectively, and are reported as a component of "Salaries and other benefits." 1997 1996 Service cost $16 $16 (9) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS Interest cost of accumulated benefit obligation 40 40 Net amortization and deferral (6) (5) AND POSTEMPLOYMENT BENEFITS Net periodic postretirement cost $50 $5J Postretirement Benefits Other Than Pensions Net periodic postretirement cost is reported as a component of In addition to the Reserve Banks' defined benefit retirement plans, "Salaries and other benefits." employees who have met certain age and length of service require- Changing the assumed health care cost trend rates by 1 percentments are eligible for both medical benefits and life insurance age point in each year would change the accumulated postcoverage during retirement. The retiree medical plan is contribu- retirement benefit obligation at December 31, 1997 and 1996, by tory and provides benefits to retirees, their covered dependents, approximately $83 million and $118 million, respectively, and and beneficiaries. The life insurance plan is noncontributory and would change the aggregate service and interest cost components covers retirees only. of net periodic postretirement benefit cost for the years ended The Reserve Banks fund benefits payable under the medical December 31, 1997 and 1996, by approximately $12 million and and life insurance plans as due. Net postretirement benefit cost is $18 million respectively. actuarially determined, using a January 1 measurement date. The following is a reconciliation between the plan's funded status and the amounts recognized as of December 31 (in millions): Postemployment Benefits 1997 1996 The Reserve Banks offer benefits to former or inactive employees. Accumulated postretirement benefit obligation Postemployment benefit costs are actuarially determined and Retirees and covered spouses $339 $303 include the cost of medical and dental insurance, survivor income, Actives eligible to retire 41 53 Other actives and disableds 208 226 disability benefits, and those workers' compensation expenses self-insured by individual Reserve Banks. Costs were projected Total accumulated postretirement using the same discount rate and health care trend rates as were benefit obligation 588 582 used for projecting postretirement costs. The accrued postemploy- Unrecognized net gain (loss) (8) (23) ment benefit costs recognized by the Reserve Banks at Decem- Unrecognized prior service cost 92 84 ber 31, 1997 and 1996, were $76 million and $68 million respec- Accrued postretirement benefit cost $672 $643 tively. This cost is included as a component of "Accrued benefit cost." Net periodic postemployment benefit costs included in Accrued postretirement benefit cost is reported as a component 1997 and 1996 operating expenses were $17 million in each of "Accrued benefit cost." year. 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 All 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 Al 1 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— A36 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 • July 1998 INTERNATIONAL STATISTICS Securities Holdings and Transactions A60 Foreign transactions in securities Summary Statistics A61 Marketable U.S. Treasury bonds and A50 U.S. international transactions notes—Foreign transactions A51 U.S. foreign trade A51 U.S. reserve assets Interest and Exchange Rates A51 Foreign official assets held at Federal Reserve A61 Discount rates of foreign central banks Banks A61 Foreign short-term interest rates A52 Selected U.S. liabilities to foreign official A62 Foreign exchange rates institutions A63 GUIDE TO STATISTICAL RELEASES AND Reported by Banks in the United States SPECIAL TABLES A52 Liabilities to, and claims on, foreigners A53 Liabilities to foreigners SPECIAL TABLE A55 Banks' own claims on foreigners A56 Banks' own and domestic customers' claims on A64 Pro forma balance sheet and income statements foreigners for priced service operations, March 31, 1998 A56 Banks' own claims on unaffiliated foreigners A57 Claims on foreign countries—Combined A66 INDEX TO STATISTICAL TABLES domestic offices and foreign branches Reported by Nonbanking Business Enterprises in the United States A58 Liabilities to unaffiliated foreigners A59 Claims on unaffiliated foreigners 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 Securitized credit obligation FmHA Farmers Home Administration SCO 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 • July 1998 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted' Monetary or credit aggregate Q3 Q4 Ql' Apr. Reserves of depository institutions 1 Total -15.2' -3.0' -2.7' -1.9 9.3' -4.3 -20.1 8.5 -3.9 2 Required -15.9' -3.7' -5.6' -1.8 7.9' -7.1 -14.0 14.5 -5.9 3 Nonborrowed -16.9' -4.7' -.7 4.9' -1.4 -16.3 9.0 -4.7 4 Monetary base3 3.8' 6.2' 7.9' 6.9 10.0' 6.7 3.5 4.1 2.1 Concepts of money, liquid assets, and debt 5 Ml -4.5 .3 .9' 3.0 7.6 -2.7 3.1 5.1 -1.6 6 M2 4.4 5.5' 6.9' 7.9 6.8 7.4 9.5 8.2 9.1 7 M3 7.7 8.1 10.2 11.3 12.1' 10.8 8.9 14.3 10.0 8 L 8.4 7.1 9.7' 13.7 12.7 13.6 12.6 16.7 9 Debt 5.0 4.2 5.7 6.5 6.2 6.2 6.9 6.9 Nontransaction components 10 In M25 7.9 7.4' 9.1' 9.7 6.5 11.1 11.8 9.3 12.8 11 In M3 only6 18.9 16.9 20.8 21.9 28.3 20.9 6.9 32.5 12.7 Time and savings deposits Commercial banks 12 Savings, including MMDAs 11.0 9.6 16.3 13.6 13.6 14.6 13.2 12.1 25.9 13 Small time 5.6 7.1 3.1 .7 1.0 .0 -.2 — .6 -.2 14 Large time89 24.1 17.2 14.1' 21.7 20.2' 8.7 31.0 40.5 -10.9 Thrift institutions 15 Savings, including MMDAs 6.0 1.0 1.4 7.6 5.4 6.4 13.6 11.6 10.6 16 Small time -2.9 -5.2 -3.5 -.9 .0 4.2 -2.8 -5.6 -10.9 17 Large time8 4.3 9.8 5.3 14.1 11.4 31.0 2.7 -6.8 13.8 Money market mutual funds 18 Retail 13.5 16.3' 16.0' 19.6 5.0' 23.3 28.7 21.6 18.0 19 [nstitution-only 18.0 19.7 22.0 18.9 34.5 14.7 12.3 22.5 51.7 Repurchase agreements and Eurodollars 20 Repurchase agreements10 6.8 13.4 38.3 32.4 9.3 53.2 -26.4 87.6 -4.2 21 Eurodollars10 32.2 18.6 23.4 17.8 81.0 21.6 -30.6 -33.8 23.2 Debt components 22 Federal .4 -.6 .9 .5 2.2 .0 1.8 23 Nonfederal 6.6 5.9 7.3' 8.5 7.6 8.3 9.5 8.5 1. Unless otherwise noted, rates of change are calculated from average amounts outstand- amounts held by depository institutions, the U.S. government, money market funds, and ing during preceding month or quarter. foreign banks and official institutions. Seasonally adjusted M3 is calculated by summing large 2. Figures incorporate adjustments for discontinuities, or "breaks," associated with time deposits, institutional money fund balances, RP liabilities, and Eurodollars, each regulatory changes in reserve requirements. (See also table 1.20.) seasonally adjusted separately, and adding this result to seasonally adjusted M2. 3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency securities, commercial paper, and bankers acceptances, net of money market fund holdings of component of the money stock, plus (3) (for all quarterly reporters on the "Report of these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whose Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference separately, and then adding this result to M3. between current vault cash and the amount applied to satisfy current reserve requirements. Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial 4. Composition of the money stock measures and debt is as follows: sectors—the federal sector (U.S. government, not including government-sponsored enter- Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of prises or federally related mortgage pools) and the nonfederal sectors (state and local depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all governments, households and nonprofit organizations, nonfinancial corporate and nonfarm commercial banks other than those owed to depository institutions, the U.S. government, and noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and foreign banks and official institutions, less cash items in the process of collection and Federal corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of which are derived from the Federal Reserve Board's flow of funds accounts, arc breakwithdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, adjusted (that is, discontinuities in the data have been smoothed into the series) and credit union share draft accounts, and demand deposits at thrift institutions. Seasonally month-averaged (that is, the data have been derived by averaging adjacent month-end levels). adjusted Ml is computed by summing currency, travelers checks, demand deposits, and 5. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail OCDs, each seasonally adjusted separately. money fund balances, each seasonally adjusted separately. M2: Ml plus (1) savings (including MMDAs), (2) small-denomination time deposits (time 6. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities deposits—including retail RPs—in amounts of less than $100,000), and (3) balances in retail (overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and money market mutual funds (money funds with minimum initial investments of less than term) of U.S. addressees, each seasonally adjusted separately. $50,000). Excludes individual retirement accounts (IRAs) and Keogh balances at depository 7. Small time deposits—including retail RPs—are those issued in amounts of less than institutions and money market funds. Seasonally adjusted M2 is calculated by summing $100,000. All IRA and Keogh account balances at commercial banks and thrift institutions savings deposits, small-denomination time deposits, and retail money fund balances, each are subtracted from small time deposits. seasonally adjusted separately, and adding this result to seasonally adjusted Ml. 8. Large time deposits are those issued in amounts of $100,000 or more, excluding those M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2) booked at international banking facilities. balances in institutional money funds (money funds with minimum initial investments of 9. Large time deposits at commercial banks less those held by money market funds, $50,000 or more), (3) RP liabilities (overnight and term) issued by all depository institutions, depository institutions, the U.S. government, and foreign banks and official institutions. and (4) Eurodollars (overnight and term) held by U.S. residents at foreign branches of US. 10. Includes both overnight and term. banks worldwide and at all banking offices in the United Kingdom and Canada. Excludes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT' Millions of dollars Average of daily figures Average of daily figures for week ending on dateindicated Factor 1998 1998 Feb. Mar. Apr. Mar. 18 Mar. 25 Apr. 1 Apr. 8 Apr. 15 Apr. 22 Apr. 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 463,965 467,483 474,691 468,358 466,500 468.254 467,595 471,693 476,123 481,399 U.S. government securities2 2 Bought outright—System account3 427,988 431,767 437,525 432,541 432,887 433,099 433,534 436,436 440,602 439,580 3 Held under repurchase agreements 2,720 2,313 3,566 2,216 1,113 2.185 868 1,899 2,338 7.459 Federal agency obligations 4 Bought outright 678 641 584 625 625 625 625 586 565 559 5 Held under repurchase agreements 573 1,245 667 1,478 174 425 421 787 687 536 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 51 6 44 2 19 2 139 14 14 15 8 Seasonal credit 11 22 40 20 26 29 30 31 43 53 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 440 464 449 532 455 283 866 316 308 403 11 Other Federal Reserve assets 31,505 31,026 31.817 30,945 31,201 31,606 31,112 31,623 31,566 32,795 12 Gold stock 11,047 11,049 11,049 11,049 11,049 11,049 11,049 11.048 11,049 11,049 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 25,703 25,761 25,823 25,760 25,774 25,788 25,802 25,816 25,830 25,844 ABSORBING RESERVE FUNDS 15 Currency in circulation 471,834 473,771 476,390 474,061 473,754 473,863 475,592 477,195 476.953 475,910 16 Treasury cash holdings 227 254 273 256 260 264 261 276 277 277 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 4,969 5,455 9,708 6,294 5.181 5,033 5,044 6,218 7,894 17,944 18 Foreign 178 174 177 176 164 179 170 183 185 173 19 Service-related balances and adjustments 7,063 6,993 6,800 6,976 7,003 6,845 6,906 6,633 6,859 6.803 20 Other 395 369 375 372 357 363 408 383 349 366 21 Other Federal Reserve liabilities and capital 16,114 16,176 16,177 16,178 16,089 15,894 15,863 16,223 16,328 16.304 22 Reserve balances with Federal Reserve Banks4 9,135 10,303' 10,862 10,055 9,716 11.850 9,402 10,645 13,356 9.715 End-of-month figures Wednesday figures Feb. Mar. Apr. Mar. 18 Mar. 25 Apr. 1 Apr. 8 Apr. 15 Apr. 22 Apr. 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 465,614 475,593 493,052 469,283 472,764 469,995 471,764 476,995 487,623 506,805 U.S. government securities 2 Bought outright—System account3 428.619 433,182 441,322 432.708 434,119 433,361 434,497 440.277 441,824 442,406 3 Held under repurchase agreements 3,645 6,846 15.731 3,001 5,735 3,297 2.025 3,095 10,225 26,047 Federal agency obligations 4 Bought outright 675 625 551 625 625 625 625 565 565 551 5 Held under repurchase agreements 2,107 1,450 1,955 1,220 1.045 1,028 983 1,958 2,617 1,808 6 Acceptances 0 0 0 o o o 0 o 0 0 Loans to depository institutions 7 Adjustment credit 0 2 25 2 g o 939 2 96 4 8 Seasonal credit 27 61 23 30 27 30 37 47 56 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float -202 1,502' -467 539 -532 687 1,213 -296 -344 656 11 Other Federal Reserve assets 30,757 3K959 33,874 31,165 31.735 30,969 3L452 31.358 32,594 35,278 12 Gold stock 11,050 11.049 11.048 11,049 11,049 11,049 11,049 11.048 11,049 11,048 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 25,732 25,788 25,858 25,760 25,774 25,788 25,802 25,816 25,830 25,844 ABSORBING RESERVE FUNDS 15 Currency in circulation 472,029 475.091 476,806 474,719 474,518 475,338 477.247 478,416 477,306 477,038 16 Treasury cash holdings 241 265 275 259 265 259 276 277 278 275 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,037 5,490 28,014 5.745 4,819 3,534 4,382 9.457 12,950 41.801 18 Foreign 243 167 162 156 159 186 162 163 162 199 19 Service-related balances and adjustments 6,990 6,845' 6,751 6,976 7,003 6,845 6,906 6,633 6,859 6,801 20 Other 349 354 360 357 364 353 398 344 350 343 21 Other Federal Reserve liabilities and capital 16,256 15,708 16,894 15.879 15,914 15,394 15,983 16,107 16,156 16.135 22 Reserve balances with Federal Reserve Banks4 . . . 10,449 17,709' 9,896 11.203 15,745 14,123 12,459 11,662 19,641 10,304 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 3. Includes compensation that adjusts for the effecis 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 lo 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 • July 1998 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages Reserve classification 1995 1996 1997 1997 1998 Dec. Dec. Dec. Oct. Nov. Dec. Jan. Feb. Mar.' Apr. 1 Reserve balances with Reserve Banks2 20,440 13,395 10,673 9,990 10,559 10,673 9,733 9,394 10,140 11,055 2 Total vault cash 42,281' 44,525' 44,707' 42,211' 42,851' 44,707' 47,336' 43,167' 41,598 41,216 37,460 37,848 37,206 35,631 35,892 37,206 37,762 35,580 35,370 35,359 4 Surplus vault cash 4,821' 6,678' 7.50O' 6,581' 6,959' 7,500' 9,574' 7,587' 6,228 5,857 5 Total reserves6 57,900 51.243 47,880 45.621 46,451 47,880 47,495 44,974 45,509 46,414 56,622 49,819 46,196 44.225 44,834 46,196 45,714 43,450 44,193 45,025 7 Excess reserve balances at Reserve Banks 1,278 1.424 1,683 1,396 1.617 1,683 1,780 1,524 1,316 1,388 8 Total borrowings at Reserve Banks8 257 155 324 270 153 324 210 58 41 72 40 68 79 227 115 79 18 12 22 41 10 Extended credit' 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 Dec. 31 Jan. 14 Jan. 28 Feb. 11 Feb. 25 Mar. 11 Mar. 25 Apr. 8r Apr. 22 May 6 1 Reserve balances with Reserve Banks2 11,595 11,500 8,176 8.750 9.726 10,210 9,878 10,623 11,991 9,850 2 Total vaull cash" 44,795' 45,695' 49,444' 45,165' 41,804' 42,202' 41,199' 41.420 40,815 41,715 37,692 37,976 37,827 36,462 34,892 35,555 35,154 35,534 35,184 35,489 4 Surplus vault cashs 7,103' 7,719' 11,617' 8,703' 6,912' 6,647' 6,046' 5,886 5,631 6,226 49,286 49,476 46,003 45,212 44,618 45,765 45,031 46,157 47.175 45.339 6 Required reserves 47,403 47,659 44,213 43,648 43,132 44,209 43,893 44,865 45,674 44,052 7 Excess reserve balances at Reserve Banks7 1,883 1,817 1.790 1.563 1,485 1,556 1,138 1,291 1,501 1,287 8 Total borrowings at Reserve Banks8 454 209 242 67 59 19 34 101 51 81 71 22 16 9 13 17 23 30 37 61 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 vaull cash 2. Excludes required clearing balances and adjustments to compensate for float and (line 3). includes other off-balance-sheet "as-of" adjustments. 7. Total reserves (line 5) less required reserves (line 6). 3. Total "lagged" vault cash held by depository institutions subject to reserve 8. Also includes adjustment credit. requirements. Dates refer to the maintenance periods during which the vault cash may be used 9. Consists of borrowing at the discount window under the terms and conditions estabto satisfy reserve requirements- The maintenance period for weekly reporters ends sixteen lished for the extended credit program to help depository institutions deal with sustained days after the lagged computation period during which the vault cash is held. Before Nov. 25, liquidity pressures. Because there is not the same need to repay such borrowing promptly as 1992, the maintenance period ended thirty days after the lagged computation period. with traditional short-term adjustment credit, the money market effect of extended credit is 4. All vault cash held during the lagged computation period by "bound" institutions (that similar to that of nonborrowed reserves. is, those whose required reserves exceed their vault cash) plus the amount of vault cash applied during the maintenance period by "tionbound" institutions (that is, those whose vault cash exceeds their required reserves) to satisfy current reserve requirements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit Extended credit Federal Reserve Bank 6/1 O 5 n /98 Effective date 6/1 O 5 n /98 Hffective date 6/1 O 5 n /98 Effective date Boston 2/1/96 6/4/98 6/4/98 New York 1/31/96 Philadelphia - 1/31/96 Cleveland 1/31/96 Richmond. . . . 2/1/96 Atlanta 1/31/96 Chicago 2/1/96 St. Louis 2/5/96 Minneapolis . . 1/31/96 Kansas City . . 2/1/96 Dallas 1/31/96 San Francisco. 5.00 1/31/96 5.25 5.55 6/4/98 6.05 6/4/98 6.05 Range of rates for adjustment credit in recent years 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 N.Y. F.R. Banks N.Y. F.R. Banks N.Y In effect Dec. 31. 1977 6 6 1981—Nov. 2 13-14 13 1988—Aug. 9 6-6.5 6.5 6 13 13 11 6.5 6.5 1978—Jan 9 6-6.5 6.5 Dec. 4 12 12 20 6.5 6.5 1989—Feb. 24 6.5-7 7 May 11 6.5-7 7 1982—July 20 11.5-12 11.5 27 7 7 12 7 7 23 11.5 11.5 July 1 7-7.25 7.25 Aug. 2 11-11.5 11 1990—Dec. 19 6.5 6.5 10 7.25 7.25 3 11 11 Aue. 21 7.75 7.75 16 10.5 10.5 1991—Feb. 1 6-6.5 6 Sept. 22 8 8 27 10-10.5 10 4 6 6 Oct. 16 8-8.5 8.5 30 10 10 Apr. 30 5.5-6 55 20 8.5 8.5 Oct 12 9.5-10 9.5 May 2 5.5 5.5 Nov 1 8.5-9.5 9.5 13 9.5 9.5 Sept. 13 5-5.5 5 3 9.5 9.5 Nov. 22 9-95 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 1(1-10.5 10.5 15 8.5-9 8.5 Dec. 20 3.5-4.5 3 5 20 10.5 10.5 17 8.5 8.5 24 3.5 3.5 Sept. 19 10.5-11 11 21 11 11 1984— Apr. 9 8.5-9 9 1992—July 2 3-3.5 3 Oct. 8 11-12 12 13 9 9 7 3 3 10 12 12 Nov. 21 8.5-9 8.5 26 8.5 8.5 1994—May 17 3-3.5 3.5 1980—Feb. 15 12-13 13 Dec. 24 8 8 18 3.5 3.5 19 13 13 Aug 16 3 5-4 4 May 29 12-13 13 1985—May 20 7.5-8 7.5 18 4 4 30 12 12 24 7.5 7.5 Nov. 15 4-4.75 4.75 June 13 11-12 ] l 17 4.75 4.75 16 11 11 1986—Mar. 7 7-7.5 7 July 28 10-11 10 10 7 7 1995—Feb. 1 4.75-5.25 5.25 29 10 10 Apr. 21 6.5-7 6.5 9 5.25 5.25 Sept. 26 11 II 23 6.5 6.5 Nov. 17 12 12 July 11 6 6 1996—Jan. 31 5.00-5.25 5.00 Dec. 5 12-13 13 Aug. 21 5.5-6 5.5 Feb. 5 5.00 5.00 8 13 13 22 5.5 5.5 1981—May 5 13-14 14 In effect June 15. 1998 5.00 5.00 8 14 14 1987—Sept. 4 5.5-6 6 II 6 6 1. Available on a short-term basis to help depository institutions meei 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 rale established flexible rate somewhat above rates charged on market sources of funds is charged. The rate for loans to depository institutions may be charged on adjustment credit loans of unusual size ordinarily is reestablished on the first business day of each two-week reserve maintenance that result from a major operating problem at the borrower's facility. period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis 2. Available to help relatively small depository institutions meet regular seasonal needs for points. funds that arise from a clear pattern of intrayearly movements in their deposits and loans and 4. For earlier data, see the following publications of the Board of Governors: Banking and that cannot be met through special industry lenders. The discount rate on seasonal credit takes Monetary Statistics, 19I4-/Q4I, and I94I-/97O; and the Annual Statistical Digest. 1970into account rates charged by market sources of funds and ordinarily is reestablished on the 1979, first business day of each two-week reserve maintenance period; however, it is never less than In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment credit the discount rate applicable to adjustment credit. borrowings by institutions with deposits of $500 million or more that had borrowed in 3. May be made available to depository institutions when similar assistance is not successive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge was reasonably available from other sources, including special industry lenders. Such credit may in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 percent was reimposed be provided when exceptional circumstances (including sustained deposit drains, impaired on Nov. 17. 1980: the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to access to money market funds, or sudden deterioration in loan repayment performance) or 4 percent on May 5, 1981. The surcharge was reduced io 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 Io 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 • July 1998 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Requirement Type of deposit Percentage of Effective date deposits Net transaction accounts 1 $0 miMion-$47.8 million3 3 1/1/98 2 More than $47.8 million4 10 1/1/98 3 Nonpersonal time deposits5 0 12/27/90 4 Eurocurrency liabilities6 0 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve Banks succeeding calendar year by 80 percent of the percentage increase in die 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 Ihe 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 1 ]A years was reduced from 3 percent to 1 '/5 percent for by check, draft, debit card, or similar order payable directly to third parties) are savings the mainlenance 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 ] ]/i 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/i 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 perceni to zero 1998, for institutions that report quarterly, the amount was decreased from $49.3 million to in the same manner and on Ihe same dates as Ihe reserve requirement on nonpersonal time $47.8 million. deposits with an original maturity of less than 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 TRANSACTIONS' Millions of dollars 1998 Type of transaction and maturity Sept. Mar. U.S. TREASURY SECURITIES2 Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 10.932 9,901 9.147 0 0 0 4,545 0 0 0 2 Gross sales 0 0 0 0 0 0 0 0 0 0 3 Exchanges 405.296 426,928 419,347 28,328 39,313 33,485 26,905 41,731 29,290 28,180 4 For new bills 405,296 426,928 418,997 28,328 39,313 33,485 26,905 41,731 29,290 28,180 5 Redemptions 900 0 0 0 0 0 0 2,000 0 0 Others within one year 6 Gross purchases 390 524 5,748 644 0 1,462 1,947 0 0 0 7 Gross sales 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts 43,574 30,512 43,473 1,596 3,193 5.231 1,748 3,447 6,098 1,964 9 Exchanges -35,407 -41,394 -27,499 -2.382 -1,267 -4,126 -2,329 -400 -6,128 -5.736 10 Redemptions 1,776 2.015 1,996 0 416 0 0 478 0 0 One to five years 11 Gross purchases 5,366 3,898 20,299 2.697 0 3,323 4,471 0 0 3,763 12 Gross sales 0 0 0 0 0 0 0 0 0 0 13 Maturity shifts -34,646 -25,022 -39,744 -1,596 -3,193 -4,883 -1,748 -3,447 -3,213 -1.964 14 Exchanges 26.387 31,459 20,274 2,382 1,267 1,651 2.329 0 3,383 5,736 Five to ten years 15 Gross purchases 1,432 1,116 3,101 0 770 485 613 0 0 283 16 Gross sales 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts -3,093 -5,469 -1,954 0 0 31 0 0 -2,884 0 18 Exchanges 7,220 6,666 5,215 0 0 1,295 0 400 1,420 0 More lhan ten years 19 Gross purchases 2.529 1,655 5,827 0 648 954 1,214 0 0 743 20 Gross sales 0 0 0 0 0 0 0 0 0 0 21 Maturity shifts -2,253 -20 -1,775 0 0 -379 0 0 0 0 22 Exchanges 1,800 3.270 2,360 0 0 1,180 0 0 1,325 0 All maturities 23 Gross purchases 20,649 17,094 44,122 3,341 1,418 6,224 12,790 0 0 4,789 24 Gross sales 0 0 0 0 0 0 0 0 0 0 25 Redemptions 2,676 2,015 1,996 0 416 0 0 2,478 0 0 Matched transactions 26 Gross purchases 2,197,736 3,092,399 3,586,584 311.153 316,425 272,474 353,726 332,581 326.812 364,307 27 Gross sales 2,202,030 3,094,769 3.588,905 312.083 318,485 269,586 355,668 332,795 326.245 364,537 Repurchase agreements 28 Gross purchases 331,694 457.568 810.485 77,109 75,323 73,618 97,932 45,544' 33,428 40,211 29 Gross sales 328.497 450,359 809,268 74,960 78,157 73,064 87,160 65,932 30,583 37,010 30 Net change in U.S. Treasury securities 16,875 41,022 4,560 -3,893 9,666 21,620 -23,079' 3,412 7,760 FEDERAL AGENCY OBLIGATIONS Outright transactions 31 Gross purchases 0 0 0 0 0 0 0 32 Gross sales 0 0 0 0 0 0 0 33 Redemptions 1.003 409 1,540 105 215 26 50 Repurchase agreements 34 Gross purchases 36.851 75,354 160,409 9,796 15,639 23,054 20,056 12,488' 9,615 17,685 35 Gross sales 36,776 74,842 159,369 11,196 15,157 20,976 21,186 13,872' 18,342 8,776 36 Net change in federal agency obligations -928 103 -500 -1,505 267 2,052 -1,130 -1,384' -707 829 37 Total net change in System Open Market Account. 15,948 20,021 40,522 3,055 -3,626 11,718 20,490 -24,463r 7,053 4,241 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 • July 1998 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday Apr. 1 Apr. i Apr. 15 Apr. 22 Apr. 29 Apr. 30 Consolidated condition statement 1 Gold certificate account 11,049 11,049 11,048 11,049 11,048 11,050 11,049 11,048 2 Special drawing rights certificate account 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 3 Coin 520 510 483 472 457 588 527 463 Loans 4 To depository institutions 28 969 39 143 60 13 29 86 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 625 565 565 551 675 625 551 8 Held under repurchase agreements 1,028 1,958 2,617 1.808 2,107 1,450 1,955 9 Total U.S. Treasury securities 436,658 436^22 443,372 452,049 468,453 432,264 440,028 457,053 10 Bought outright 433,361 434,497 440,277 441,824 442,406 428,619 433,182 441,322 11 Bills 195,437 195,203 199.660 199,325 199,906 195,488 195,258 198,823 12 Notes 176,436 177,806 178,704 180,585 180,586 172,400 176,436 180,586 13 Bonds 61,488 61,488 61,913 61,913 61,913 60,732 61,488 61,913 14 Held under repurchase agreements 3,297 2,025 3.095 10,225 26,047 3,645 6,846 15,731 15 Total loans and securities 438,339 439,099 445,934 455,373 470,871 435,058 442,131 459,645 16 Items in process of collection. 8,015 8,483 7,629 7,322 7,743 4.488 9,691 4,997 17 Bank premises 1,280 1,283 1,283 1,285 1,284 1,275 1,279 1,284 Other assets 18 Denominated in foreign currencies 16,712 16,720 16,728 16,736 16,744 17,203 16,711 17,132 19 All other" 12,926 13,434 13,327 14,573 17,243 12,327 13,930 15,417 20 Total assets 498,041 499,778 505,633 516,008 534491 491,188 504419 519,187 LIABILITIES 21 Federal Reserve notes 450,329 452,232 453,360 452,225 451,926 450,095 451,687 22 Total deposits 24,800 24,547 28,891 40,525 59,716 23,155 30,456 45,106 23 Depository institutions 20,727 19,604 18,927 27,063 17,372 17,525 24,445 16,570 24 U.S. Treasury—General account 3,534 4,382 9,457 12.950 41,801 5,037 5,490 28,014 25 Foreign—Official accounts 186 162 163 162 199 243 167 162 26 Other 353 344 350 343 349 354 360 27 Deferred credit items 7,517 7,016 7,275 7,101 6,814 4,652 8,260 5,500 28 Other liabilities and accrued dividends5 4,601 4,761 4,794 4,807 4,838 4,696 4,601 5,155 29 Total liabilities . 487,248 488,556 494,320 504,659 523,294 479,628 493,412 507,449 CAPITAL ACCOUNTS 30 Capital paid in 5,471 5,488 5,504 5,473 5,475 5,478 5,471 5,475 31 Surplus 5,202 5,215 5,220 5,220 5.220 5,220 5,202 5,220 32 Other capital accounts 120 519 589 656 602 861 434 1,043 33 Total liabilities and capital accounts 498,041 499,778 505,633 516,008 534^91 491,188 504,519 519,187 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 613,724 617,213 611,049 606,551 604,030 605,360 613,236 604,758 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 553,602 555,850 557,413 558,999 560,370 549,260 553,090 560,384 36 LESS: Held by Federal Reserve Banks 103,272 103,618 104,053 106,773 108,444 102,133 102,995 108,697 37 Federal Reserve notes, net 450,329 452,232 453,360 452,225 451,926 447,126 450,095 451,687 Collateral held against notes, net 38 Gold certificate account 11,049 11,049 11,048 11,049 11,048 11,050 11,049 11,048 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 430,080 431,983 433,112 431,977 431,677 426,876 429,846 431,438 42 Total collateral 450,329 452,232 453,360 452,225 451,926 447,126 450,095 451,687 1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly statistical 3. Valued monthly at market exchange rates. release. For ordering address, see inside front cover. 4. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with bills maturing within ninety days. Federal Reserve Banks—and includes compensation that adjusts for the effects of inflation on 5. Includes exchange-translation account reflecting the monthly revaluation at market the principal of inflation-indexed securities. Excludes securities sold and scheduled to be exchange rates of foreign exchange commitments. bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks 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 Apr. 1 Apr. ! Apr. 15 Apr. 22 Apr. 29 Feb. 28 Apr. 30 1 Total loans 28 969 143 60 62 29 86 2 Within fifteen days' 2 942 18 137 56 56 17 62 26 27 21 6 4 6 12 24 3. Sixteen days to ninety days 436,658 436422 443,372 452,049 468,453 432,264 440,028 457,364 4 Total US. Treasury securities2 16,996 10,052 16,267 23,188 41,303 12,674 20,423 21,350 5 Within fifteen days' 96,876 96,949 91,991 93,096 97,214 103,213 94,170 91,141 6 Sixteen days to ninety days 135,190 141,923 146,582 145,351 139,521 132,599 137,838 154,703 7 Ninety-one days to one year 97,094 97,095 97,135 99,015 99,016 94,305 97,095 98,772 8 One year to five years 40.126 40,126 40.621 40,622 40.622 39,841 40,126 40,622 9 Five years to ten years 50,376 50,376 50,776 50,776 50,776 49,633 50,376 50,777 10 More than ten years 11 Total federal agency obligations 1,653 1,608 2,523 3,182 2,359 2,782 2,075 2409 12 Within fifteen days' 1,088 1,043 1,972 2,631 1,808 2,157 1,510 1,658 13 Sixteen days to ninely days 14 14 0 0 0 44 14 0 14 Ninety-one days to one year 175 175 175 175 175 150 175 175 15 One year to five years 126 126 126 126 126 151 126 126 16 Five years to ten years 225 225 225 225 225 255 225 225 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 • July 1998 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1997' 1998 1994 1995 1996 1997 Dec. Dec. Dec Dec' Sept. Oct. Nov. Dec. Jan.' Feb. Mar.' Apr. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 59.41' 56.40' 50.08' 46.67 46.24 45.96 46.31 46.67 46.50 45.72' 46.05 45.90 59.20 56.14' 49.93' 46.35 45.80 45.69 46.16 46.35 46.29 45.66' 46.01 45.83 3 Nonborrowed reserves plus extended credit5 59.20 56.14' 49.93' 46.35 45.80 45.69 46.16 46.35 46.29 45.66' 46.01 45.83 4 Required reserves 58.24 55.12' 48.66' 44.99 44.94 44.56 44.69 44.99 44.72 44.20' 44.73 44.51 5 Monetary base6 418.12' 434.17' 452.38' 480.15 469.41 471.98 476.19 480.15 482.85 484.24' 485.90 486.74 Not seasonaUy adjusted 6 Total reserves7 61.13 58.02 51.52 47.97 46.13 45.69 46.53 47.97 47.49 44.99' 45.55 46.46 7 Nonborrowed reserves 60.92 57.76 51.37 47.65 45.69 45.42 46.38 47.65 47.28 44.94 45.50 46.39 8 Nonborrowed reserves plus extended credit 60.92 57.76 51.37 47.65 45.69 45.42 46.38 47.65 47.28 44.94 45.50 46.39 59 96 56 74 50.10 46 29 44.83 44 30 44.91 46 29 45.71 43.47 44.23 45.08 10 Monetary base 422.51 439.03 456.72 485.11 468.37 470.41 476.62 485.11 484.42 481.36' 484.04 486.91 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 61 34 57 90 51 24 47 88 46 06 45 62 46.45 47 88 47.50 44 97 45.51 46.41 12 Nonborrowed reserves 61.13 57.64 51.09 47.56 45.62 45.35 46.30 47.56 47.29 44.92 45.47 46.34 13 Nonborrowed reserves plus extended credit5 61.13 57.64 51.09 47.56 45.62 45.35 46.30 47.56 47.29 44.92 45.47 46.34 14 Required reserves 60.17 56.62 49.82 46.20 44.76 44.23 44.83 46.20 45.71 43.45 44.19 45.03 15 Monetary base12 427.25 444.45 463.49 491.92 475.32 477.28 483.50 491.92 491.62 488.43 491.00 493.66 1 17 1 28 1 42 1 68 1 30 1 40 1.62 1 68 1.78 1 52 1 32 1 39 17 Borrowings from the Federal Reserve .21 .26 .16 .32 .44 .27 .15 .32 .21 .06 .04 .07 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly 8. To adjust required reserves for discontinuities that are due to regulatory changes in statistical release. Historical data starting in 1959 and estimates of the effect on required reserve requirements, a multiplicative procedure is used to estimate what required reserves reserves of changes in reserve requirements are available from the Money and Reserves would have been in past periods had current reserve requirements been in effect. Break- Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve adjusted required reserves include required reserves against transactions deposits and nonper- System, Washington, DC 20551. sonal time and savings deposits (but not reservable nondeposit liabilities). 2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory 9. The break-adjusted monetary base equals (1) break-adjusted total reserves (line 6), plus changes in reserve requirements. (See also table 1.10.) (2) the (unadjusted) currency component of the money stock, plus (3) (for all quarterly 3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, break- reporters on the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all adjusted required reserves (line 4) plus excess reserves (line 16). those weekly reporters whose vault cash exceeds their required reserves) the break-adjusted 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted, difference between current vault cash and the amount applied to satisfy current reserve break-adjusled total reserves (line 1) less total borrowings of depository institutions from the requirements. Federal Reserve (line 17). 10. Reflects actual reserve requirements, including those on nondeposit liabilities, with no 5. Extended credit consists of borrowing at the discount window under the terms and adjustments to eliminate the effects of discontinuities associated with regulatory changes in conditions established for the extended credit program to help depository institutions deal reserve requirements. with sustained liquidity pressures. Because there is not the same need to repay such 11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve borrowing promptly as with traditional short-term adjustment credit, the money market effect requirements. of extended credit is similar to that of nonborrowed reserves. 12. The monetary base, not break-adjusted and not seasonally adjusted, consists of (1) total 6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally reserves (line 11), plus (2) required clearing balances and adjustments to compensate for float adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency at Federal Reserve Banks, plus (3) the currency component of the money stock, plus (4) (for component of the money stock, plus (3) (for all quarterly reporters on the "Report of all quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters Cash and for all those weekly reporters whose vault cash exceeds their required reserves) the whose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference between current vault cash and the amount applied to satisfy current reserve difference between current vault cash and the amount applied to satisfy current reserve requirements. Since the introduction of contemporaneous reserve requirements in February requirements. 1984, currency and vault cash figures have been measured over the computation periods 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess ending on Mondays. reserves (line 16). 13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES' Billions of dollars, averages of daily figures 1998' 1994 1995 1996 1997 Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted Measures 1 Mi 1,150.7 1,128.7 1,082.8 1,076.0 1,073.6 1,076.4 1,081.0 1,079.6 2 M2 3,503.0 3,651.2 3.826.1 4,041.3r 4,066.3 4,098.6 4,126.6 4,157.8 3 M3 4,333.6 4,595.6 4,935.5 5,383.7' 5,432.1 5,472.2 5,537.5 5.583.7 4 L 5,315.8 5,702.2 6,088.3 6,626.9' 6,701.9 6 772 4 6,866.6 n.a. 5 Debt 12,998.7 13,699.2 14,419.9 15,151.6' 15,230.0 15,317.9 15,405.6 n.a. Ml components 6 Currency3 354.3 372.4 394.9 425.5 427.5 431.0 432.4 433.7 7 Travelers checks4 8.5 8.9 8.6 8.2 8.2 8.1 8.1 8.0 8 Demand deposits5 384.0 391.0 403.6 397.1 392.7 391.9 391.1 387.3 9 Other checkable deposits6 403.9 356.4 275.9 245.2' 245.2 245.5 249.5 250.5 Nontransaction components 10 In M27 2,352.3 2,522.6 2,743.2 2,965.3' 2,992.7 3,022.1 3.045.6 3,078.2 11 In M3 only8 830.6 944.4 1,109.4 1.342.4 1,365.8 1,373.7 1,410.9 1,425.8 Commercial banks 12 Savings deposits, including MMDAs.. . 752.6 775.0 904.8 1,020.9 1,033.3 1,044.7 1,055.2 1,078.0 13 Small time deposits 503.2 575.8 594.5 621.6 621.6 621.5 621.2 621.1 14 Large time deposits10- ll 298.7 345.4 413.2 495.9' 499.5 512.4 529.7 524.9 Thrift institutions 15 Savings deposits, including MMDAs.. . 397.3 359.7 366.9 376.6 378.6 382.9 386.6 390.0 16 Small time deposits9 314.2 357.2 354.3 343.6 344.8 344.0 342.4 339.3 17 Large time deposits 64.7 74.2 78.0 85.2 87.4 87.6 87.1 88.1 Money market mutual funds 18 Retail 385.0 454.9 522.8 602.6' 614.3 629.0 640.3 649.9 19 Institution-only 203.1 253.9 310.3 376.2 380.8 384.7 391.9 408.8 Repurchase agreements and Eurodollars 20 Repurchase agreements12 183.3 182.4 194.2 234.8 245.2 239.8 257.3 256.4 21 Eurodollars12 80.8 88.6 113.7 150.3 153.0 149.1 144.9 147.7 Debt components 22 Federal debt 3,491.9 3,638.5 3,780.0 3,797.3 3,797.4 3,794.9 3,800.5 n.a. 23 Nonfederal debt 9,506.7 10,060.7 10,639.9 11,354.3' 11,432.5 11,523.0 11,605.1 n.a. Not seasonally adjusted Measures 24 Ml 1,174.4 1,152.4 1,104.9 1,097.5 1.079.0 1,063.9 1.074.5 1,085.0 25 M2 3,523.4 3,672.0 3,845.4 4,060.2' 4,068.1 4,085.2 4,137.8 4,178.6 26 M3 4,353.2 4,615.2 4,953.4 5,401.0' 5,436.2 5,470.1 5,556.3 5,598.2 27 L 5,344.6 5,732.7 6,116.4 6,652.8' 6,703.7 6,764.6 6,889.8 n.a. 28 Debt 13,000.6 13,699.8 14,419.3 15,150.8' 15.210.2 15,279.1 15.379.5 n.a. MJ components 29 Currency" 357.5 376.2 397.9 429.0 426.4 428.9 431.5 433.7 30 Travelers checks4 8.1 8.5 8.3 7.9 7.9 7.8 7.9 7.9 31 Demand deposits5 400.3 407.2 419.9 412.9 396.2 383.0 385.3 387.5 32 Other checkable deposits6 408.6 360.5 278.8 247.7' 248.5 244.1 249.9 255.9 Nontransaction components 33 In M27 2,349.0 2,519.6 2,740.5 2,962.7' 2,989.2 3,021.4 3.063.3 3,093.6 34 In M3 only8 829.7 943.2 1,108.0 1,340.7 1,368.1 1,384.9 1,418.5 1,419.7 Commercial banks 35 Savings deposits, including MMDAs.,. 751.7 774.1 903.3 1,019.0 1,029.0 1,040.2 1,060.2 1,083.3 36 Small time deposits9 501.5 573.8 592.7 620.0 621.2 621.8 621.5 621.8 37 Large time deposits10' '' 298.9 345.8 413.6 496.3 492.0 508.9 528.3 521.4 Thrift institutions 38 Savings deposits, including MMDAs, .. 396.8 359.2 366.4 375.9 377.0 381.2 388.4 391.9 39 Small time deposits9 313.2 355.9 353.2 342.7 344.6 344.2 342.6 339.7 40 Large time deposits10 64.8 74.3 78.1 85.3 86.0 87.0 86.9 87.5 Money market mutual funds 41 Retail 385.9 456.4 524.8 605.1' 617.3 634.0 650.5 656.9 42 Institution-only 204.6 255.8 312.7 378.9 389.8 397.7 400.2 405.8 Repurchase agreements and Eurodollars 43 Repurchase agreements12 179.6 178.0 188.8 228.2 244.0 239.8 256.2 256.8 44 Eurodollars 81.8 89.4 114.7 152.0 156.3 151.4 146.9 148.2 Debt components 45 Federal debt 3,499.0 3,645.9 3,787.9 3,805.8 3,792.5 3.795.3 3,820.7 n.a. 46 Nonfederal debt 9.501.6 10.053.9 10.631.3 11.345.0' 11,417.7 11,483.7 11,558.8 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Financial Statistics • July 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 US. Treasury, Federal Reserve Banks, and vaults of depository OCDs, each seasonally adjusted separately. institutions. M2: Ml plus (I) 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 lhan $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 ilems 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 diis result to seasonally share drafi account balances, and demand deposits at thrift institutions. adjusted Ml. 7. Sum of (1) savings deposits (including MMDAs), (2) small lime 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 inslilutional 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 US. term) of US. addressees. residents at foreign branches of U.S. banks worldwide and at all banking offices in the United 9. Small time deposits—including retail RPs—are those issued in amounts of less than Kingdom and Canada. Excludes amounts held by depository institutions, the U.S. govern- $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are ment, money market funds, and foreign banks and official institutions. Seasonally adjusted subtracted from small time deposits. M3 is calculated by summing large time deposits, institutional money fund balances, RP 10. Large time deposits are those issued in amounts of $100,000 or more, excluding those liabilities, and Eurodollars, each seasonally adjusted separately, and adding this result to booked at international banking facilities. seasonally adjusted M2. 11. Large time deposits at commercial banks less those held by money market funds, L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury depository institutions, the US. government, and foreign banks and official institutions. securities, commercial paper, and bankers acceptances, net of money market fund holdings of 12. Includes both overnight and term. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A15 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1 A. All commercial banks Billions of dollars Monthly averages Wednesday figures Apr. Apr. Apr. 8 Apr. 15 Apr. 22 Apr. 29 Seasonally adjusted Assets 1 Bank credit 3.889.1' 4,025.3 4,067.8 4,145.7 4,176.1 4,218.0 4,204.6 4,213.8 4,201.6 4,187.0 4.205.9 2 Securities in bank credit 1,019.2 1,044.6 1,076.1 1,083.0 1,104.3 1,108.5 1,126.9 1,106.6 1,115.6 1,101.9 1,091.9 1,110.5 3 U.S. government securities .. . 711.8' 731.0 742.1 746.5 759.6 767.2 778.9 762.0 768.9 755.5 750.2 769.3 4 Other securities 307.4' 313.6 334.0 336.5 344.7 341.4 347.9 344.6 346.7 346.4 341.7 Mil 5 Loans and leases in bank credit2 2,869.9 2,980.7 2.991.7 3,005.8 3,041.4 3,067.6 3,091.2 3,098.0 3,098.2 3,099.7 3,095.2 3.095.3 6 Commercial and industrial . . . 806.6' 841.2 844.0 851.8 861.8 869.0 869.8 869.3 865.0 869.8 870.7 871.9 7 Real estate 1,170.0 1,217.5 1,225.7 1,229.3 1,233.1 1,246.8 1,259.7 1,266.9 1,269.0 1,265.2 1,263.4 1,269.6 8 Revolving home equity 89.3 96.4 97.2 98.0 98.3 98.5 98.1 98.5 98.5 98.6 98.6 98.5 9 Other 1,080.7 1,121.1 1,128.5 1,131.3 1,134.8 1,148.3 1,161.6 1,168.4 1,170.5 1,166.7 1,164.8 1,171.1 10 Consumer 514.5 507.7 507.2 507.2 504.3 502.9 502.2 496.7 497.9 496.7 496.9 495.0 11 Security1 89.7 104.2 99.3 96.8 116.3 118.0 116.8 111.9 113.6 111.8 112.8 107.0 12 Other loans and leases 289.2' 310.1 315.5 320.8 325.9 331.0 342.6 353.1 352.7 356.2 351.3 351.8 13 Interbank loans 212.3 200.9 206.1 214.3 204.2 203.3 217.1 212.5 215.1 220.8 212.1 201.7 14 Cash assets4 247.0 265.9 277.4 267.3 269.3 269.4 280.9 274.0 269.8 283.0 281.7 262.3 15 Other assets5 277.0 289.3 294.5 295.0 295.6 297.9 293.7 307.7 305.5 308.7 310.1 307.6 16 Total assels6 4368.9' 4,725.0 4,7893 4,808.7 4,858.2 4,890.0 4,»41Ji 4&V2 4^)57.1 49339 4,920.4 Liabilities 17 Deposits 2.947.2 3.065.7 3,105.3 3,111.6 3,114.7 3,151.3 3,190.6 3,202.7 3,202.2 3,236.0 3,197.2 3,171.1 18 Transaction 700.7 685.5 693.0 678.3 684.8 695.5 693.4 676.9 708.4 694.6 693.7 19 Nontransaction 2,246.5 2,380.2 2,412.3 2,424.8 2,436.4 2.466.5 2.495.0 2,509.4 2,525.3 2427.6 2,502.6 2,477.4 20 Large time 568.5' 620.2 633.5 637.1 644.2 660.4 674.8 671.6 681.6 670.2 666.1 666.4 21 Other 1.678.01 1,760.0 1,778.8 1,787.6 1,792.1 1,806.1 1,820.3 1,837.8 1,843.7 1,857.4 1,836.5 1,811.0 22 Borrowings 763.1' 800.8 814.6 819.4 826.4 827.5 858.3 869.3 875.1 881.9 857.0 862.2 23 From banks in the U.S 316.8' 292.7 300.2 304.0 291.0 292.1 307.0 308.0 317.9 324.3 300.0 289.2 24 From others 446.2' 508.0 514.4 515.4 535.4 535.4 551.2 561.3 557.2 557.6 557.0 573.0 25 Net due to related foreign offices 210.9 196.4 192.3 202.4 230.9 223.1 201.2 174.1 178.3 152.6 180.9 184.3 26 Other liabilities 272.1' 282.1 292.9 293.1 305.5 303.3 295.7 289.4 291.9 286.1 291.5 285.9 27 Total liabilities 4,1933' 4345.0 4,405.1 4,426.5 44773 4,505.1 4,545.7 4335.5 43473 4356.6 4326.7 43033 28 Residual (assets less liabilities)7. .. 375.6' 380.0 384.2 382.1 380.7 385.0 407.2 406.4 399.7 400.6 407.2 416.9 Not seasonally adjusted Assets 29 Bank credit 3,892.9 4,030.2 4.075.5 4,098.4 4,152.9 4,173.5 4,208.4 4,209.2 4,210.2 4,210.7 4,195.6 4,210.6 30 Securities in bank credit 1,029.2 1,042.8 1,075.6 1,078.1 1,104.8 1,112.0 1,128.2 1,117.3 1,126.6 1,114.8 1,102.7 1,118.9 31 U.S. government securities 719.4' 729.6 741.6 744.4 756.3 766.1 782.2 770.4 778.8 765.4 757.7 775.7 32 Other securities 309.8' 313.3 332.1 333.7 348.5 345.9 346.0 346.8 347.8 349.4 344.9 343.2 33 Loans and leases in bank credit2 . .. 2,863.7 2,987.3 2,999.9 3,020.3 3,048.2 3,061.6 3,080.2 3,091.9 3,083.6 3,095.9 3,093.0 3,091.7 34 Commercial and industrial 813.3' 839.1 842.8 850.0 859.4 868.8 873.4 876.8 869.9 877.0 880.0 880.2 35 Real estate 1,164.3 1,223.7 1,231.9 1,232.8 1,233.2 1,241.5 1,253.1 1,260.4 1,262.8 1,259.7 1,256.3 1,262.5 36 Revolving home equity 88.5 97.1 97.9 98.3 98.5 98.1 97.1 97.6 97.0 97.4 97.9 98.1 37 Other 1,075.7 1,126.5 1,134.0 1,134.5 1.134.6 1,143.4 1,156.1 1,162.8 1.165.8 1,162.3 1,158.4 1,164.4 38 Consumer 509.9 509.6 509.8 513.5 511.1 502.5 495.7 491.8 491.1 491.5 493.0 491.7 39 Security3 90.4 104.4 100.1 99.3 116.5 119.4 117.7 113.5 110.7 115.3 116.3 109.5 40 Other loans and leases 285.8' 310.7 315.3 324.7 328.0 329.3 340.4 349.3 349.1 352.5 347.3 347.7 41 Interbank loans 214.3 197.0 211.5 223.8 211.2 206.3 216.7 215.3 224.5 230.1 209.9 196.4 42 Cash assets4 242.4 270.0 287.5 286.8 280.6 269.5 269.3 269.3 258.3 285.0 274.2 260.2 43 Other assets5 275.2 288.6 295.6 295.3 294.1 299.1 293.6 305.7 303.7 306.0 306.5 307.0 44 Total assets6 4,568,5 4,7293 4^134 4347.7 4^824 4391.9 4#51.2 4,942.8 4,940.0 4^*75.2 4J<29.6 4^173 Liabilities 45 Deposits 2,947.6 3.068.6 3,123.4 3,144.0 3,120.8 3.138.5 3,181.4 3,202.1 3,216.6 3.259.8 3.176.7 3,150.7 46 Transaction 705.4 681.8 703.8 721.0 690.3 678.1 683.2 698.5 681.8 734.0 689.3 690.1 47 Nontransaction 2,242.2 2.386.8 2,419.6 2,422.9 2,430.5 2,460.4 2,498.2 2,503.6 2^34.8 2,525.8 2.487.4 2,460.7 48 Large time 564.2' 624.0 639.2 641.7 642.5 659.3 672.2 666.0 673.9 663.4 660.7 663.3 49 Other l,678.ff 1,762.9 1,780.4 1,781.3 1,788.0 1,801.1 1,825.9 1,837.6 1,860.9 1,862.3 1,826.7 1,797.4 50 Borrowings 762.1' 796.9 812.1 817.4 832.9 828.1 850.2 869.3 857.5 874.2 869.8 874.1 51 From banks in the U.S 3\6ff 289.3 300.5 307.8 294.5 293.0 304.6 307.3 311.2 320.5 3O4.0 292.6 52 From others 446.2' 507.6 511.6 509.6 538.4 535.1 545.6 562.0 546.4 553.7 565.9 581.4 53 Net due to related foreign offices 210.0 193.7 188.4 200.3 231.0 221.1 199.5 173.4 167.3 147.4 182.5 195.5 54 Other liabilities 271.3' 281.8 294.5 294.0 305.5 304.5 295.9 288.5 290.9 285.1 290.3 285.5 55 Total liabilities 4,191.0' 4341.0 4,418.4 4455.7 4490.2 4492J 4327.0 43333 43323 4366.4 43193 43053 56 Residual (assets less liabilities)7 377.4' 388.2 395.0 392.0 392.2 399.6 404.2 409.5 407.7 410.3 411.7 MEMO 57 Revaluation gains on off-balance-sheet items8 91.2 79.8 84.3 82.7 93.4 87.7 87.4 83.5 83.9 84.4 82.4 81.7 58 Revaluation losses on off-balancesheet items8 88.1 81.4 85.6 86.0 95.9 90.1 89.6 84.5 87.5 85.4 82.5 81.4 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • July 1998 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued B. Domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1997 1997' 1998' 1998 Apr. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Apr. 8 Apr. 15 Apr. 22 Apr. 29 Seasonally adjusted Assets 1 Bank credit 3.358.9 3,486.8 3,519.3 3,544.8 3.577.0 3,607.5 3.652.2 3,649.9 3,656.1 3,652.3 3,637.7 3.648.0 2 Securities in batik credit 849.2 868.8 883.7 895.8 911.2 915.6 929.6 915.4 918.8 916.0 908.0 915.7 3 U.S. government securities 630.3 650.4 662.8 670.2 678.4 683.4 691.5 674.9 679.2 674.1 667.4 676.6 4 Other securities 218.9 218.4 220.9 225.5 232.8 232.2 238.1 240.6 239.6 241.9 240.6 239.1 5 Loans and leases in bank credit2 2,509.7 2,617.9 2,635.6 2,649.0 2,665.8 2.691.9 2,722.6 2,734.5 2,737.4 2.736.3 2,729.7 2,732.3 6 Commercial and industrial 587.3' 618.7 622.6 630.5 638.5 646.5 649.5 654.7 651.4 655.5 655.9 656.0 7 Real estate 1,138.4 1.190.0 1,199.1 1,203.4 1,206.5 1.220.8 1.235.0 1,242.9 1,245.1 1,241.2 1,239.3 1,245.4 8 Revolving home equity 89.3 96.4 97.2 98.0 98.3 98.5 98.1 98.5 98.5 98.6 98.6 98.5 9 Other 1,049.1 1.093.7 1,101.9 1,105.4 1,108.2 1.122.4 1,136.9 1,144.4 1,146.6 1,142.6 1,140.8 1,146.9 10 Consumer 514.5 507.7 507.2 507.2 504.3 502.9 502.2 496.7 497.9 496.7 496.9 495.0 11 Security3 45.8 57.5 57.6 53.0 61.5 63.2 68.0 63.8 67.0 63.2 62.8 61.1 12 Other loans and leases 223.8' 244.0 249.1 254.9 254.9 258.5 267.9 276.4 276.0 279.6 274.7 274.8 13 Interbank loans 193.6 180.4 182.4 183.0 176.2 178.5 196.3 192.3 198.5 202.9 190.7 177.2 14 Cash assets4 213.6 231.5 242.5 233.8 236.5 2.36.7 246.8 238.8 233.5 248.0 245.9 228.1 15 Other assets5 237.5 246.5 249.3 252.7 255.0 255.5 250.9 265.3 261.2 265.1 268.4 267.5 16 Total assets6 3,947.3 4,089.0 4,137.2 4,157.7 4,188.3 4,221.8 4,289.4 4,289.6 4,292.6 4,311.7 4,285.9 4,264.0 Liabilities 17 Deposits 2.695.4 2,798.0 2,832.4 2,839.1 2.841.2 2,866.4 2.901.7 2,910.9 2,905.8 2,948.2 2,910.3 2.876.5 18 Transaction 690.1 675.0 682.7 677.0 668.2 674.6 684.9 682.3 665.4 696.8 683.6 683.6 19 Nontransaction 2.005.2 2,123.0 2,149.7 2.162.1 2,173.0 2,191.8 2,216.8 2,228.6 2,240.4 2.251.4 2,226.6 2,192.9 20 Large time 329.8' 366.1 374.3 377.3 382.7 387.5 398.2 391.8 397.8 395.3 390.9 382 2 21 Other 1.675.5' 1,756.9 1.775.4 1,784.8 1,790.3 1,804.3 1,818.6 1,836.8 1,842.6 1,856.1 1,835.7 1,810.6 22 Borrowings 621.0' 645.0 658.3 669.9 676.7 682.7 704.3 704.3 709.5 706.1 696.4 705.5 23 From banks in the U.S 28V7' 258.9 271.2 278.1 267.5 269.3 281.1 281.3 289.7 287.3 279.9 268.6 24 From others 337.3' 386.0 387.1 391.8 409.2 413.3 423.2 423.0 419.8 418.9 416.5 436.9 25 Net due to related foreign offices 78.2 77.9 75.2 80.8 91.2 88.4 82.6 75.5 77.1 62.2 78.6 85,0 26 Other liabilities 180.4' 190.5 196.9 197.5 209.0 205.7 201.5 198.8 201.0 197.6 199.5 195.6 27 Total liabilities 3,575.1' 3,711.5 3,762.8 3,787.3 3,818.1 3,843.1 3,890.1 3,889.6 3,893.5 3,914.1 3,884.7 3,862.5 28 Residual (assets less liabilities)' 372.2' 377.5 374.4 370.4 370.1 378.7 399.3 400.0 399.2 397.6 401.2 401.4 Not seasonally adjusted Assets 29 Bank credit 3,363.2' 3,491.8 3,532.2 3,555.3 3,587.3 3,605.5 3,642.9 3,654.8 3,653.5 3,662.0 3,646.0 3,652.8 30 Securities in bank credit 858.0 866.3 886.9 894.7 917.0 922.1 932.9 924.6 927.6 927.9 917.8 922.3 31 U.S. government securities 639.0' 648.5 663.2 668.5 677.0 683,1 694.0 684.6 690.0 685.8 677.6 683.6 32 Other securities 219.0' 217.8 223.7 226.2 240.0 239.0 238.8 240.0 237.6 242.2 240.2 238.7 33 Loans and leases in bank credit2 2,505.2' 2,625.5 2,645.2 2,660.6 2,670.3 2.683.4 2,710.0 2,730.2 2,725.9 2,734.1 2.728.2 2,730.6 34 Commercial and industrial 594.01 616.9 621.6 627.9 635.3 645.2 652.4 662.2 656.6 662.6 664.7 664.7 35 Real estate 1,133.0 1,195.9 1,205.0 1 206.8 1,206.6 1 215.3 1,228.4 1,236.6 1 239 1 1.235.9 1,232.5 1,238.6 36 Revolving home equity 88.5 97.1 97.9 98.3 98.5 98.1 97.1 97.6 97.0 97.4 97.9 98.1 37 Other 1.044.4 1,098.8 1,107.1 1,108.5 1,108.1 I.I 17.3 1,131.4 1,139.0 1.142.1 1,138.5 1,134.6 1,140.5 38 Consumer 509.9 509.6 509.8 513.5 511,1 502.5 495,7 491.8 491.1 491,5 493.0 491.7 39 Security3 47.0 57.6 58.6 54.3 61.6 64.5 68.2 65.9 65.5 67 3 66 8 63 6 40 Other loans and leases 221.4' 245.5 250.3 258.2 255.7 255.9 265.4 273.6 273.6 276.8 271.3 271.8 41 Interbank loans 195.6 176.4 187.7 192.5 183.1 181.5 195.8 195.1 207.9 212.3 188.5 171.9 42 Cash assets* 210.5 235.4 251.8 251.7 247.8 2374 236.3 235.8 224.3 251.6 240 3 227.4 43 Other assets5 237.7 246.7 249.8 252.2 253.0 255.1 250.7 265.7 262.2 265.2 267.5 268.3 44 Total assets6 3,951.0 4,094.1 4,165.0 4,195.3 4,215.2 4,223.3 4,269.2 4,294.8 4,291.5 4,334.8 4,285.9 4,263.8 Liabilities 45 Deposits 2,697.5 2,801.2 2,851.1 2,868.3 2,849.2 2,855.9 2,891.3 2.912.0 2,923.5 2,974.9 2,891.8 2,855.4 46 Transaction 695.2 671.3 693.6 710.7 680.2 668.2 672.7 687.9 670.8 722.9 678.9 680.1 47 Nontransaction 2,002.3 2,129.8 2,157.5 2,157.6 2,169.0 2,187.8 2,218.6 2,224.1 2,252.7 2,252.0 2,212.8 2,175.3 48 Large time 326.9' 369.1 378.8 377.5 382.0 387.9 393.6 387.5 392.8 390.6 387.1 378.9 49 Other l,675.4r 1,760.8 1,778.8 1,780.1 1,787.0 1,799.9 1,825.0 1,836.6 1,859.9 1,861.4 1,825.8 1,796.4 50 Borrowings 620.1' 641.1 655.8 667.9 683.1 683.3 696.3 704.3 691.9 698.4 709.2 717.4 51 From banks in the US 282 8' 255.5 271 5 281.9 270.9 270.3 278.7 280.6 282 9 283.4 283.9 272 0 52 From others 337.3' 385.6 384.3 386.0 412.2 413.0 417.6 423.7 409^0 415.0 425.3 445.3 53 Net due to related foreign offices 78.8 76.0 70.6 73.8 86.5 85.1 81.8 76.3 73.6 61.0 80.8 90.2 54 Other liabilities 180.4' 190.5 196.9 197.5 209.0 205.7 201.5 198.8 201.0 197.6 199.5 195.6 55 Total liabilities 3,576.9' 3,708.8 3,774.4 3,807.5 3,827.9 3,830.0 3,870.8 3,891.4 3,890.0 3,931.9 3,881.2 3,858.6 56 Residual (assets less liabilities)7 374.1 385.3 390.6 387.8 387.3 393.3 398.4 403.4 401.5 402.9 404.7 405.2 MEMO 57 Revaluation gains on off-balance-sheet items8 49.5 38.2 41.5 41.3 50.1 47.3 47.5 44.2 43.6 45.6 43.6 42.7 58 Revaluation losses on off-balancesheet items8 44.6 41.3 43.6 44.2 52.9 49.5 49.8 45.6 46.5 47.2 44.3 43.4 59 Mortgage-backed securities9 252.1' 265.6 275.1 281.0 289.5 293.8 299.5 293.5 301.4 294.1 289.0 288.0 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities 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 Apr.' Oct. Nov. Dec. Jan. Feb. Mar. Apr. Apr. 8 Apr. 15 Apr. 22 Apr. 29 Seasonally adjusted Assets 1 Bank credit 2,021.5 2.077.3 2,092.6 2,106.5 2,135.3 21605 2.200.1 2,193.5 2,201.9 2,195.3 2.181.3 2,190.4 2 Securities in bank credit 451.9 462.7 473.9 482.9 500.9 506.9 518.7 505.9 508.4 506.9 499.3 506.4 3 U.S. government securities 315.8 327.0 337.6 342.9 353.4 360.1 368.4 355.4 359.0 355.0 349.0 356.9 4 Trading account 19.6 25 0 26.7 27.4 29.1 28.0 27.5 23.7 23.3 23.4 21.7 26.3 5 Investment account 296.2 302.1 311.0 315.5 324.3 332.1 340.9 331.7 335.7 331.6 3273 330.6 6 Other securities 136.1 135.7 136.3 140.1 147.5 146.8 150.3 150.5 149.4 151.9 150.3 1493 7 Trading account 70.7 63.6 63.6 63.6 69.8 67.8 71.1 69.6 69.4 71.1 68.6 68.5 8 Investment account 65.4 72.1 72.6 76.5 77.7 79.0 79.2 80.9 800 80.8 81.6 80.9 9 State and local government.. 21.1 22.3 22.3 22.1 22.5 22.7 22.8 23.0 23.0 22.9 23.0 23.1 10 Other 44.2 49.8 503 543 55.2 56.3 56.4 57.9 57.1 57.9 58 6 57.8 11 Loans and leases in bank credit2 .. . 1,569.6 1.614.6 1.618.7 1,623.6 1,634.5 1,653.6 1,681.4 1,687.6 1,693.5 1,688.3 1.682.0 1,684.0 12 Commercial and industrial 418.0 436.8 438.8 445.7 451.9 458.4 461.2 464.6 462.4 465.4 465.5 465.0 13 Bankers acceptances 1.6 1.3 1.3 1.2 1.2 1.2 1.3 1.2 1.2 1.2 1.1 1.2 14 Other 416.4 435.5 437.6 444.5 450.6 457.1 459.9 463.4 462.3 465.5 465.7 465.2 15 Real estate 641.8 649.9 651.1 650.2 647.6 656.9 668.7 672.2 676.5 670.9 668.4 672.6 16 Revolving home equity 63.1 67.6 67.9 68.5 68.8 68.9 68.7 69.2 69.3 69.2 69.2 69.1 17 Other 578.6 582.2 583.2 581.7 578.8 588.0 600.0 603.0 607.2 601.7 599.2 603.5 18 Consumer 306.8 298.6 296.3 294.9 293.6 292.6 294.1 290.6 293.0 291.0 289 7 288.2 19 Security1 41.2 52.4 52.1 47.3 55.9 57.4 61.8 57.4 60.1 56.4 56.8 55.5 20 Federal funds sold to and repurchase agreements with broker-dealers 23.8 35.3 35.7 30.9 39.5 41.2 43 7 39.7 42.5 38.6 38.6 38.1 21 Other 17.5 17.1 16.4 16.4 16.4 16.2 18.1 17.8 17.6 17.7 18.2 17.3 22 State and local government 11.3 11.1 11.0 10.9 10.8 10.8 10.6 10.6 10.6 10.6 10.5 10.6 23 Agricultural 9.3 9.3 9.6 9.6 9.5 9.5 9.6 9.7 9.6 9.7 9.7 9.7 24 Federal funds sold to and repurchase agreements with others 7.3 8.9 8.9 11.1 7.7 6.1 7.1 7.2 6.9 8.3 6.8 6.4 25 AH other loans 64.3 68.6 71.2 72.3 73.2 76.7 81.3 85.1 85.0 86.4 84.1 84.6 26 Lease-financing receivables 69.6 78.8 79.7 81.6 84.3 85.3 87.2 90.2 89.4 89.7 90.5 91.2 27 Interbank loans 148.8 124.0 126.6 127.0 119.8 121.2 131.1 125.8 131.7 132.5 124.3 115.0 28 Federal funds sold to and repurchase agreements with commercial banks 98.1 77.7 81.9 82.2 764 68.9 80.3 74.3 79.4 81.3 72.1 641 29 Other 50.7 46.3 44.7 44.8 43.4 52.3 50.9 51.5 52.3 51.1 52.3 50.8 30 Cash assets4 148.0 161.0 169.9 162.1 164.5 164.0 173.2 164.2 159.8 172.7 171.0 154.0 31 Other assets5 183.4 184.6 184.7 189.7 191.4 190.6 186.5 196.7 194.8 195.2 199.1 198.3 32 Total assets6 2,464.1 2^10.2 2^37.1 1548.6 2^74.4 2,599.4 2,654.0 2,643.2 2,651.1 2,658.7 2,6.38.8 2,620.8 Liabilities 33 Deposits 1,515.1 1,532.4 1,554.8 1,556.1 1,554.6 1,573.7 1.601.4 1,603.4 1,602.9 1,631.2 1.603.2 1,574.5 34 Transaction 397.9 376.2 382.6 378.7 371.1 375 3 382.8 381.2 370.5 393.5 3807 380.2 35 Nontransaction 1,117.1 1,156.2 1,172.2 1,177.4 1,183.6 1,198.3 1,218.6 1,222.2 1,232.4 1,237.7 1,222.5 1,194.2 36 Large time 177.4 200.9 207.0 209.6 214.3 216.9 227.1 219.8 225.2 223.1 219.3 210.8 37 Oilier 939.7 955.2 965.2 967 8 9693 981.4 991 5 1,002.4 10072 1 014.6 10032 983.4 38 Borrowings 473.3 491.4 504.1 512.0 518.5 523.5 542.9 540.9 545.9 542.8 533.8 540.7 39 From banks in the US 207.3 187.9 200.6 205.8 1952 196.9 208.9 208.3 216.3 215.4 206.5 194.7 40 From others 266.0 303.5 303.5 306.2 323.3 326.6 334.0 332.6 329.5 327.4 327.3 346.0 41 Net due to related foreign offices 73.8 72.8 70.2 76.5 87.0 82.2 78.5 72.1 72.9 59.0 75.5 81.7 42 Other liabilities 155.4 162.7 168.1 168.4 180.2 176.3 171.0 167.8 170.5 167.0 168.4 164.1 43 Total liabilities 2J17.5 2,259.2 2J973 2312.9 23403 2355.7 2393.9 2384.2 2392J 2,400.0 2380.9 2361.0 44 Residual (assets less liabilities)7 246.6 251.0 239.9 235.7 234.0 243.7 260.1 259.1 258.9 258.7 257.9 259.8 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • July 1998 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued C. Large domestically chartered commercial banks—Continued Monthly averages Wednesday figures Account 1997 1997' 1998' 1998 Apr/ Oct. Nov. Dec. Ian. Feb. Mar. Apr. Apr. 8 Apr. 15 Apr. 22 Apr. 29 Not seasonally adjusted Assets 45 Bank credit 2,020.0 2,082.3 2,106.0 21164 2,150.9 2,167.0 2,194.6 2,1927 2,197.8 21997 2,181.3 2 187 1 46 Securities in bank credit 455.0 462.9 480.2 483.8 508.3 515.5 520.6 509.6 512.9 513.1 502.7 507.1 47 U.S. government securities 319.4 327.3 340.8 342.7 353.5 361.9 369.8 360.1 365.8 361.4 353.3 358.7 48 Trading account 19.8 26.1 28.0 27.0 28.2 28.4 28.3 23.8 25.0 24.5 21.4 24.5 49 Investment account 299.5 301.2 312.8 315.7 325.3 333.4 341.5 336.2 340.8 336.9 331.9 334.2 50 Mortgage-backed securities. 190.1 198.4 206.9 211.7 219.7 222.6 227.2 220.8 228.7 221.0 216.3 216.3 51 Other 109.5 102.8 105.9 104.0 105.6 110.9 114.2 115.4 112.1 115.9 115.6 117.9 52 One year or less 30.6 26.8 29.4 28.1 27.0 28.9 29.7 30.9 28.9 31.4 31.2 32.2 53 Between one and five years 60.1 52.8 53.5 53.3 52.2 51.2 51.1 50.6 50.8 50.6 50.6 50.0 54 More than five years .... 18.9 23.3 22.9 22.6 26.4 30.7 33.4 33.9 32.4 33.8 33.8 35.7 55 Other securities 135.7 135.6 139.4 141.1 154.9 153.6 150.8 149.5 147.1 151.7 149.4 148.4 56 Trading account 70.8 63.3 65.9 63.9 76.5 74.5 71.6 693 67.3 714 68.9 683 57 Investment account 64.9 72.3 73.5 77.2 78.4 79.1 79.2 80.2 79.8 80.3 80.5 80.1 58 State and local government .. 21.1 22.4 22.3 22.2 22 5 22.7 22.7 23.0 22.9 22.9 23.0 23.1 59 Other 43.8 50.0 51.2 55.1 55^9 56.4 56.5 57.3 56.9 57.4 57.5 57.0 60 Loans and leases in bank credit- .. 1,565.0 1,619.4 1,625.8 1,632.7 1,642.6 1,651.6 1,673.9 1,683.1 1,685.0 1,686.6 1,678.6 1,680.0 61 Commercial and industrial 422.4 436.5 439.0 443.6 449.5 457.5 463.1 469.7 465.9 470.3 471.3 470.9 62 Bankers acceptances 1.6 1.4 1.4 1.3 1.2 1.2 1.2 1.2 1.2 1.2 1.1 1.2 63 Other 420.8 435.1 437.6 4423 4483 456.3 461.9 4685 464.7 4691 470.2 469.7 64 Real estate 636.8 653.5 655.1 652.6 650.7 655.1 664.4 666.3 671.8 666.0 661.4 665.5 65 Revolving home equity 62.3 68.3 68.6 68.8 69.2 68.5 67.7 68.1 67.8 68.0 68.3 68.5 66 Other 356.2 360.9 360.9 358.2 357.9 362.1 371.8 372.7 379.2 373.0 367.4 370.9 67 Commercial 218.3 224.4 225.6 225.6 223.6 224.5 224.9 225.4 224.8 225.0 225.7 226.1 68 Consumer 303.1 299.6 297.2 298.8 298.7 292.2 289.5 286.7 288.0 287.1 286.2 285.2 69 Security3 42.5 52.5 53.1 48.6 56.0 58.7 61.9 59.5 58.6 60.4 50.7 58.1 70 Federal funds sold to and repurchase agreements with broker-dealers 24.9 35.5 36.6 31.3 39.6 42.5 43.9 41.6 42.2 42.1 41.8 40.0 71 Other 17.7 17.0 16.5 17.3 16.4 16.3 18.0 17.9 16.4 18.3 19.0 18.0 72 State and local government 11.2 11.2 11.1 11.0 10.8 10.8 10.6 10.4 10.5 10.4 10.4 10.4 73 Agricultural 9.0 9.5 9.6 9.6 9.4 9.1 9.2 9.3 9.2 9.3 9.4 9.4 74 Federal funds sold to and repurchase agreements with others 7.3 8.9 8.9 11.1 7.7 6.1 7.1 7.2 6.9 8.3 6.8 6.4 75 All other loans 63.4 69.1 72 3 75.5 73 8 75.3 80.3 84.0 84.5 85.1 82.4 83.3 76 Lease-financing receivables .... 69.4 78.5 79.7 81.8 86.0 86.7 87.8 90.0 89.6 89.7 90.0 90.7 77 Interbank loans 149.2 120.8 128.6 132.4 125.3 120.2 126.9 126.5 130.1 135.2 124.8 116.2 78 Federal funds sold to and repurchase agreements with commercial banks 99.2 74.8 83.6 86.3 80.3 68.1 77.0 75.4 78.1 84.6 73.1 65.7 79 Other 50.0 46.1 45.0 46.1 45.0 52.1 49.9 51.1 52.0 50.6 51.7 50.5 80 Cash assets4 145.6 164 8 176.7 176.5 174.7 164.8 164.5 161.8 151.7 175.3 167.6 151.6 81 Other assets5 183.4 184.6 184.7 189.7 191.4 190.6 186.5 196.7 194.8 195.2 199.1 198.3 82 Total assets6 2,461.0 1J51S9 2359.2 2,578.3 2.605.8 2,606.0 2JS3SS 2,641.0 2^37.8 2.66S.7 2,636.2 ifilKS Liabilities 83 Deposits 1,5090 1,537.5 1,567.0 1,577.5 1,564.0 1,5661 1 589.4 1,5961 1,603.4 1,6417 1,582.7 1.555 3 84 Transaction 399.4 374.2 389.1 401.8 380.7 372.2 373.7 383.1 369.1 409.4 376.3 378.7 85 Nontransaction 1,109.6 1,163.3 1,177.8 1,175.7 1,183.3 1,193.9 1,215.7 1,213.0 1,234.4 1,232.3 1,206.4 1,176.6 86 Large time 174.5 203 9 211.5 209.8 213.6 217.3 222.5 215.5 220.2 218.4 215.4 207.4 87 Other 935.1 959.4 966.3 965.9 969.7 976.6 993.2 997.5 1,014.2 1,013.9 991.0 969.1 88 Borrowings 474.2 487.1 5021 509.3 524.1 526.0 538.1 542.7 534.3 540.1 545.7 550.3 89 From banks in the US 206.9 184.9 201.8 209.4 198.2 198.6 207.6 207.9 211.8 213.4 209.6 196.5 90 From nonbanks in the U.S 267.2 302.2 300.2 299.8 325.8 327.3 330.5 334.8 322.5 326.6 336.2 353.8 91 Net due to related foreign offices .... 74.4 70.8 65.6 69.5 82.3 79.0 77.7 72.8 69.3 57.8 77.7 86.9 92 Other liabilities 155.4 162.7 168.1 168.4 180.2 176.3 171.0 167.8 170.5 167.0 168.4 164.1 93 Total liabilities Z212.9 2^58.1 2302.8 2324.6 2350.6 2347.4 23763 2379.5 2377.5 2,406.6 2374.4 2356.6 94 Residual (assets less liabilities)7.... 248.1 257.8 256.4 253.7 255.3 258.5 259.2 261.5 260.3 262.1 261.8 261.9 MEMO 95 Revaluation gains on off-balancesheet items8 ... 49.5 38.2 41.5 41.3 50.1 47.3 47.5 44.2 43.6 45.6 43.6 42.7 96 Revaluation losses on off-balancesheet items8 44.6 41.3 43.6 44.2 52.9 49.5 49.8 45.6 46.5 47.2 44.3 43.4 97 Mortgage-backed securities9 209.9 216.6 225.1 229.9 238.4 242.3 247.4 240.9 248.7 241.S 236.3 235.8 98 Pass-through securities 142.0 149.4 154.2 157.3 162.3 164.7 169.2 164.5 170.7 164.9 160.8 161.0 99 CMOS. REMICs, and other mortgage-backed securities. .. 67.9 67.3 70.9 72.6 76.1 77.6 78.2 76.4 78.0 76.5 75.6 74.8 100 Net unrealized gains (losses) on available-for-sale securities10 . .. -0.5 2.5 2.4 2.2 3.0 3.3 3.0 3.0 3.1 3.2 29 2.8 101 Offshore credit to U.S. residents" . .. 33.3 34.2 34.4 34.2 35.5 36.2 35.2 35.5 35.5 35.6 354 35.3 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 Apr.' Dec. Jan. Apr. Apr. Apr. 15 Apr. 22 Apr. 29 Seasonally adjusted Assets 1 Bank credit 1.337.4 1,409.5 1,426.7 1,438.2 1,441.6 1,447.1 1,452.0 1.456.5 1,454.2 1,457.0 1.456.4 1.457.7 2 Securities in bank credit 397.3 406.1 409.8 412.8 410.3 408.7 410.8 409.5 410.4 409.1 408.7 409.3 3 U.S. government securities . . 314.5 323.3 325.2 327.4 325.0 323.3 323.1 319.5 320.1 3I9.I 318.3 319.6 4 Other securities 82.9 82.7 84.6 85.5 85.2 85.4 87.8 90.0 90.2 90.0 90.3 89.7 5 Loans and leases in bank credit2. . 940.1 1,003.4 1,016.9 1,025.4 1,031.4 1,038.4 1,041.2 1,047.0 1,043.8 1.047.9 1,047.7 1,048.4 6 Commercial and industrial . . 169.3 181.9 183.8 184.8 186.7 188.1 188.3 190.1 189.0 190.1 190.4 191.0 7 Real estate 496.6 540.1 548.0 553.2 558.9 564.0 566.3 570.7 568.6 570.3 571.0 572.8 8 Revolving home equity. . . 26.1 28.7 29.2 29.6 29.5 29.6 29.5 29.3 29.2 29.4 29.4 29.4 9 Other 470.5 511.4 518.8 523.7 529.4 5344 536.9 541.3 539.4 541.0 541.6 543.5 10 Consumer 207.6 209.0 210.9 212.3 210.7 210.4 208.1 206.1 204.8 205.7 207.2 206.8 11 Security1 4.5 5.2 5.5 5.7 5.6 5.8 6.2 6.3 6.9 6.9 6.0 5.6 12 Other loans and leases 62.1 67.1 68.7 69.4 69.5 70.1 72.2 Til 74.4 75.0 73.1 72.2 13 Interbank loans 44.7 56.4 55.8 56.0 56.4 57.3 65.1 66.5 66.9 70.5 66.4 62.2 14 Cash assets4 65.7 70.6 72.6 71.6 71.9 72.8 73.6 74.6 73.7 75.3 74.9 74.1 15 Other assets5 54.1 61.9 64.6 62.9 63.5 64.9 MA 68.6 66.4 70.0 69.3 69.2 16 Total assets6 1,483.2 1,600.1 1,609.1 1,613.9 1,622.4 1,635.5 1,6463 1,6413 1.653.0 1,647.1 1,643.2 Liabilities 17 Deposits 1,180.3 1,265.7 1,277.6 1,283.0 1,286.6 1,292.8 1.300.3 1,307.6 1,302.9 1,317.0 1.307.1 1,302.0 18 Transaction 292.2 298.8 300.1 298.3 297.1 299,3 302.1 301.2 294.9 303.4 303.0 303.4 19 Nontransaction 888.1 966.8 977.5 984.7 989.5 993.5 998.2 1,006.4 1,008.0 1,013.7 1.004.1 998.6 20 Large time 152.4 165.2 167.2 167.7 168.4 170.6 171.1 172.0 172.6 172.2 171.6 171.4 21 Other 735.7 801.6 810.3 817.0 821.1 822.9 827.1 834.4 835.3 841.5 832.5 827.2 22 Borrowings 147.8 153.6 154.2 157.9 158.2 159.2 161.4 163.4 163.6 163.3 162,5 164.7 23 From banks in the US 76.4 71.1 70.6 72.4 72.3 72.4 72.2 73.1 73.3 71.8 73.4 73.9 24 From others 71.4 82.5 83.6 85.5 85.9 86.7 89.2 90.4 90.3 91.5 89.2 90.8 25 Net due to related foreign offices. 4.4 5.2 5.0 4.3 4.2 6.1 4.1 3.5 4.2 3.2 3.1 3.3 26 Other liabilities 25.0 27.8 28.8 29.1 28.8 29.4 30.5 30.9 30.6 30.6 31.1 31.5 27 Total liabilities 13573 1,4522 1,465.6 1,474.4 1,477.8 1,487.4 1,496.2 1305.4 13013 1314.1 1303.8 1301.6 28 Residual (assets less liabilities)7.. 125.6 126.5 134.5 134.7 136.1 135.0 139.2 140.9 140.3 138.8 143.3 141.6 Not seasonally adjusted Assets 29 Bank credit 1,343.2 1,409.5 1,426.1 1,438.9 1,436.4 1,438.5 1,448.3 1,462.1 1,455.7 1,462.4 1,464.7 1,465.8 30 Securities in bank credit 402.9 403.4 406.7 411.0 408.7 406.6 412.2 415.0 414.7 414.8 415.2 415.2 31 U.S. government securities . . 319.6 321.2 322.4 325.8 323.6 321.2 324.2 324.5 324.3 324.4 324.4 324.9 32 Other securities 83.3 82.2 84.3 85.1 85.1 85.4 88.0 90.5 90.5 90.5 90.8 90.3 33 Loans and leases in bank credit2. . 940.3 1.006.2 1,019.4 1,027.9 1,027.7 1,031.9 1,036.1 1,047.1 1,040.9 1,047.5 1,049.6 1.050.6 34 Commercial and industrial . . 171.6 180.4 182.6 184.2 185.9 187.7 189.3 192.5 190.7 192.3 193.4 193.8 35 Real estate 496.2 542.4 549.9 554.1 555.9 560.2 564.0 570.3 567.3 569.9 571.0 573.2 36 Revolving home equity ... 26.3 28.9 29.3 29.5 29.4 29.5 29.4 29.5 29.3 29.4 29.6 29.6 37 Other 469.9 513.5 520.6 524.6 526.5 530.7 534.7 540.8 538.0 540.5 541.4 543.5 38 Consumer 206.8 209.9 212.6 214.7 212.4 210.2 206.2 205.2 203.0 204.4 206.8 206.5 39 Security3 4.5 5.2 5.5 5.7 5.6 5.8 6.2 6.3 6.9 6.9 6.0 5.6 40 Other loans and leases 61.2 68.3 68.8 69.2 68.0 67.9 70.4 72.7 73.0 74.0 72.3 71.6 41 Interbank loans 46.3 55.6 59.2 60.1 57.8 61.3 68.9 68.6 77.8 77.1 63.7 55.7 42 Cash assets4 64.9 70.6 75.1 75.2 73.1 72.6 71.9 74.0 72.5 76.4 72.7 73.8 43 Other assets5 54.3 62.1 65.1 62.5 61.6 64.6 64.3 69.0 67.4 70.1 68.4 70.0 44 Total assets6 1,489.9 1,605.9 1,617.0 1,609.4 1,6173 1,633.7 1,653.8 1,653.7 1,666.1 1,649.7 1,6453 Liabilities 45 Deposits 1,188.5 1,263.7 1,284.1 1,290.8 1,285.2 1,289.8 1,301.8 1,315.9 1,320.1 1,333.2 1,309.1 1300.1 46 Transaction 295.8 297.2 304.4 308.9 299.5 295.9 299.0 304.7 301.7 313.5 302.7 301.4 47 Nontransaction 892.7 966.5 979.7 981.9 985.7 993.8 1,002.8 1,011.1 1,018.4 1,019.7 1,006.4 998.7 48 Large time 152.4 165.2 167.2 167.7 168.4 170.6 171.1 172.0 172.6 172.2 171.6 171.4 49 Other 740.3 801.4 812.4 814.2 817.3 823.2 831.8 839.2 845.7 847.5 834.8 827.3 50 Borrowings 145.9 154.0 153.7 158.6 159.1 157.4 158.2 161.6 157.6 158.3 163.5 167.1 51 From banks in the US 75.9 70.6 69.7 72.5 72.7 71.7 71.1 72.7 71.1 70.0 74.3 75.5 52 From others 70.0 83.4 84.1 86.2 86.4 85.7 87.1 88.9 86.6 88.3 89.1 91.6 53 Nel due to related foreign offices . 4.4 5.2 5.0 4.3 4.2 6.1 4.1 3.5 4.2 3.2 3.1 3.3 54 Other liabilities 25.0 27.8 28.8 29.1 29.4 30.5 30.9 30.6 30.6 31.1 31.5 28.8 55 Total liabilities 1363.9 1,450.7 1,471.6 1,482.9 1,482.6 1,494.6 1311.9 13123 1325.4 1306.8 1302.0 1,4773 56 Residual (assets less liabilities)7. . 126.0 127.5 134.2 134.1 134.7 139.2 141.9 141.2 140.7 142.8 143.3 132.0 MEMO 57 Mortgage-backed securities9 42.2 50.0 52.7 52.6 52.7 52.3 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics • July 1998 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities'—Continued E. Foreign-related institutions Billions of dollars Monthly averages Wednesday figures Account 1997 1997 1998 1998 Apr. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Apr. 8 Apr. 15 Apr. 22 Apr. 29 Seasonally adjusted Assets 1 Bank credit 5302 538.6' 548.5' 544.0' 568.7 568.6 565.9 554.6 557.7 549.3 549.3 557.8 2 Securities in bank credit 170.0 175.8' 192.3' 187.2' 193.1 193.0 197.3 191.2 196.9 185.8 183.9 194.8 3 U.S. government securities 816 80.6 79.2 76.3 81.2 83.8 87.5 87.2 89.8 81.4 82.8 92.7 4 Other securities 88.4 95.2' 113.1' IKW 111.9 109.2 109.8 104.0 107.1 104.4 101.1 102.1 5 Loans and leases in bank credit2 . 360.2 362.8 356.2' 356.8' 375.6 375.6 368.6 363.4 360.9 363.4 365.4 363.0 6 Commercial and industrial 219.3 2225 221.4 221.3 223.2 222.5 220.3 214.6 213.6 214.3 214.8 215.9 7 Real estate 31.6 27.5 26.6 25.9 26.5 25.9 24.7 24.0 23.9 24.0 24.1 24.2 8 Security3 44.0 467 41.7 43.8 54.8 54.8 48.8 48.1 46.6 48.6 50.0 45.9 9 Other loans and leases 65.4 66.1 66.4' 65.8' 71.0 72.4 74.7 76.7 76.8 76.6 76.6 77.0 10 Interbank loans 18.8 20.5 23.7' 31.3' 28.0 24.8 20.9 20.2 16.5 17.8 21.4 24.5 11 Cash assets4 33.4 34.4 34.9 33.5 32.9 32.6 34.1 35.3 36.3 35.0 35.8 34.2 12 Other assets5 39.5 42.8' 45.2' 42.3' 40.6 42.4 42.9 42.4 44.2 43.6 41.7 40.1 13 Total assets6 621.7 636.1' 6511' 650.91 670.0 668.2 663.5 6512 654.6 645.5 648.0 656.4 Liabilities 14 Deposits 251.9 267.7 272.8 272.5 273.5 284.8 288.9 291.8 296.4 287.8 287.0 294.7 15 Transaction 10.6 10.4 10.3 9.8 10.2 10.1 10.6 11.0 11.5 11.6 11.0 10.1 16 Nontransaction 241.3 257.2 262.6 262.7 263.3 274.7 278.3 280.7 284.9 276.2 276.0 284.5 17 Large time 238.8 254.1 259.3 259.9 261.5 272.8 276.6 279.8 283.8 274.9 275.1 284.2 18 Other 2.5 3.1 3.3 2.8 1.8 1.8 1.7 0.9 1.1 1.3 0.8 0.4 19 Borrowings 142.0 155.8 156.3 149.5 149.7 144.8 154.0 165.0 165.6 175.8 160.7 156.7 20 From banks in the U.S 33.1 33.8 29.0 25.9 23.6 22.7 25.9 26.7 28.3 37.0 20.1 20.6 21 From others 108.9 122.0 127.3 123.6 126.2 122.1 128.0 138.3 137.3 138.8 140.6 136.1 22 Net due to related foreign officer 132.6 118.5 117.1 121.7 139.6 134.7 118.5 98.5 101.2 90.4 102.3 99.4 23 Other liabilities 91.7 91.6 96.0 95.5 96.5 97.6 94.2 90.6 90.9 88.5 92.0 90.2 24 Total liabilities 6183 633.5 6412 6392 659.4 661.9 655.6 645.9 654.0 6415 6410 640.9 25 Residual (assets less liabilities)7 3.4 2.5' 9f 11.7' 106 6.3 7.9 6.3 0.5 3.0 6.1 15.5 Not seasonally adjusted Assets 26 Bank credit 529.6 538.4' 543.3' 543.1' 565.6 568.0 565.5 554.4 556.7 548.7 549.6 557.8 27 Securities in bank credit 171.2 176.5' 188.7' 183.4' 187.7 189.9 195.3 192.7 199.0 186.9 184.8 196.6 28 US. government securities 80.4 81.1 80.3 75.9 79.2 83.0 88.2 85.8 88.8 79.7 80.1 92.1 29 Trading account 16.6 14.3 16.0 13.7 14.6 14.1 17.6 18.4 17.1 10.0 18.0 26.9 30 Investment account 63.8 66.7 64.3 62.2 64.6 68.9 70.6 67.4 71.7 mi 62.1 65.2 31 Other securities 90.8 95.4' 108.4' 107.4' 108.5 106.9 107.1 106.8 110.2 107.2 104.7 104.5 32 Trading account 52.6 55.6 60.9 60.0 62.9 61.3 59.7 58.4 59.7 57.3 57.9 58.3 :3 Investment account 38.3 39.9' 47.5' 47.4' 45.6 45.6 474 484 50.5 499 46.8 461 34 Loans and leases in bank credit2 . . 358.4 361.8' 354.6' 359.7' 377 8 378.1 370.2 361.7 357.7 361.8 364.8 361.2 35 Commercial and industrial 219.3 222.2 221.2 222.2 224.1 223.6 221.0 214.6 213.3 214.3 215.3 215.5 ^6 Real estate 31.3 27.8 26.9 26.0 26.6 261 24.7 23.8 23.7 23.8 23.8 23.9 37 Security3 43.4 46.7 41.6 45.0 54.9 54.9 49.5 47.6 45.2 48.0 49.6 45.9 38 Other loans and leases 64.4 65.2 65 C 66 5' 72.3 73.4 75.0 75.7 75.5 75.7 76.0 75.8 39 Interbank loans 18.8 20.5 237' 31.3' 28.0 24.8 20.9 20.2 16.5 17.8 21.4 24.5 40 Cash assets4 31.9 34.6 35.7 35.1 32.8 32.0 33.0 33.6 34.0 33.4 33.9 32.9 41 Other assets'* 37.4 41.91 45.8' 43.1' 41.0 43.9 42.9 40.1 41.5 40.8 39.0 38.7 42 Total assets6 617.5 635.2' 6483' 6514' 667.2 668.6 6610 648.0 648.5 640.4 643.7 653.6 Liabilities 43 Deposits 250.1 267.5 272.3 275.6 271.6 282.6 290.1 290.1 293.1 284.9 285.0 295.3 44 Transaction 102 10.5 102 10.3 10.1 9.9 10.5 10.6 11.0 11.1 10.4 10.0 45 Nontransaction 239.9 257.0 262.1 265.3 261.5 272.6 279.6 279.5 282.1 273.8 274.6 285.3 46 Large time 2373 254.9 260.5 264.2 260.5 271.4 278.6 278.5 281.1 272.8 273.6 284.4 47 Other 2.6 2.1 1.6 1.2 1.0 1.2 1.0 1.0 1.0 1.0 1.0 1.0 48 Borrowings 142.0 155.8 156.3 1495 1497 144.8 1540 165.0 165.6 175.8 160.7 156.7 49 From banks in the U.S 33.1 33.8 29.0 25.9 23.6 22.7 25.9 26.7 28.3 37.0 20.1 20.6 50 From others 108.9 122.0 127.3 123.6 126.2 122.1 128.0 138.3 137.3 138.8 140.6 136.1 51 Nei due to related foreign offices 131.2 117.7 117.8 126.5 144.5 136.0 117.7 97.1 93.7 86.3 101.7 105.3 52 Other liabilities 90.9 91.3 97.6 96.5 96.5 98.8 94.4 89.7 89.8 87.5 90.8 89.8 53 Total liabilities 614.2 6312 644.0 648.2 6623 662.2 656.2 641.9 6423 6345 638.1 647.2 54 Residual (assets less liabilities)7 3.3 If 4.4' 4.2' 4.9 6.4 5.8 6.1 6.2 5.9 5.6 6.5 MEMO 55 Revaluation gains on off-balance-sheet Hems* 41.7 41.6 42.8 41.4 43.2 40.4 40.0 39.3 40.3 38.7 38.9 39.0 56 Revaluation losses on off-balancesheet items* 43.6 40.2 42.0 41.8 42.9 40.6 39.8 38.9 41.0 38.2 38.2 38.1 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A21 NOTES TO TABLE 1.26 NOTE. Tables 1.26, 1.27, and 1.28 have been revised to reflect changes in the Board's H.8 group that contained the acquired bank and put into past data for the group containing the statistical release, "Assets and Liabilities of Commercial Banks in the United States." Table acquiring bank. Balance sheet data for acquired banks are obtained from Call Reports, and a 1.27, "Assets and Liabilities of Large Weekly Reporting Commercial Banks," and table 1.28, ratio procedure is used to adjust past levels. "Large Weekly Reporting U.S. Branches and Agencies of Foreign Banks," are no longer 2. Excludes federal funds sold to, reverse RPs with, and loans made to commercial banks being published in the Bulletin. Instead, abbreviated balance sheets for both large and small in the United States, all of which are included in "Interbank loans." domestically chartered banks have been included in table 1.26, parts C and D. Data are both 3. Consists of reverse RPs with brokers and dealers and loans to purchase and carry merger-adjusted and break-adjusted. In addition, data from large weekly reporting U.S. securities. branches and agencies of foreign banks have been replaced by balance sheet estimates of all 4. Includes vault cash, cash items in process of collection, balances due from depository foreign-related institutions and are included in table 1.26, part E. These data are break- institutions, and balances due from Federal Reserve Banks. adjusted. 5. Excludes the due-from position with related foreign offices, which is included in "Net The not-seasonally -adjusted data for all tables now contain additional balance sheet items, due to related foreign offices." which were available as of October 2, 1996. 6. Excludes unearned income, reserves for losses on loans and leases, and reserves for 1. Covers the following types of institutions in the fifty states and the District of transfer risk. Loans are reported gross of these items. Columbia: domestically chartered commercial banks that submit a weekly report of condition 7. This balancing item is not intended as a measure of equity capital for use in capital (large domestic); other domestically chartered commercial banks (small domestic); branches adequacy analysis. On a seasonally adjusted basis this item reflects any differences in the and agencies of foreign banks, and Edge Act and agreement corporations (foreign-related seasonal patterns estimated for total assets and total liabilities. institutions). Excludes Internationa! 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 • July 1998 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period Year ending December Item 1993 1994 1995 1996 1997 Oct. Feb. Dec. Dec. Dec. Dec. Dec. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 555,075 595,382 674,904 775371 966,699 921,769 940,524 966,699 973,761 1,004,662 1,049,222 Financial companies' 2 Dealer-placed paper', total. . 218,947 223,038 275,815 361,147 513,307 483,489 483,475 513,307 509.950 520,940 550,670 3 Directly placed paper\ total. 180,389 207,701 210,829 229,662 252,536 237,544 249,781 252,536 254.926 268,001 282,083 4 Nontinaneial companies 155,739 154,643 188,260 184.563 200,857 200,736 200,857 208,886 215,721 216,469 Bankers dollar acceptances (not seasonally adjusted)s 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 By basis 11 Imports into United States 10,217 10,062 12 Exports from United States 7.293 6,355 13 Allother 14,838 13,417 1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales, 5. Data on bankers dollar acceptances are gathered from approximately 100 institutions. personal, and mortgage financing; factoring, finance leasing, and other business lending, The reporting group is revised every January. Beginning January 1995, data for Bankers insurance underwriting; and other investment activities. dollar acceptances are reported annually in September. 2. Includes all financial-company paper sold by dealers in the open market. 6. In 1977 the Federal Reserve discontinued operations in bankers dollar acceptances for 3. As reported by financial companies that place their paper directly with investors. its own account. 4. Includes public utilities and firms engaged primarily in such activities as communications, construction, manufacturing, mining, wholesale and retail trade, transportation, and services. 1.33 PRIME RATE CHARGED BY BANKS Short-Term Business Loans1 Percent per year Date of change Rate Period Av r e a r te age Period Av r e a r t a e ge Period Av r e a r te age 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 Juiv 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 Mar. 8.50 Apr. 8.50 May 8.50 I. 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 loans. The table shows the dale 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 recem 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 1998, weekending Item 1995 1996 1997 Jan. Feb. Mar. Apr. Mar. 27 Apr. 3 Apr. 10 Apr. 17 Apr. 24 MONEY MARKET INSTRUMENTS 1 Federal funds1'2'3 5.83 5.30 5.46 5.56 5.51 5.49 5.45 5.43 5.60 5.48 5.47 5.37 2 Discount window borrowing2'4 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 paper**56 Nonfinancial 3 1-month n.a. n.a. 5.57 5.46 5.47 5.51 5.49 5.52 5.52 5.49 5.49 5.48 4 2-month n.a. n.a. 5.57 5.44 5.44 5.49 5.48 5.48 5.50 5.47 5.47 5.47 5 3-month n.a. n.a. 5.56 5.42 5.42 5.46 5.46 5.46 5.46 5.46 5.45 5.45 Financial 6 1-month n.a. n.a. 5.59 5.48 5.49 5.53 5.51 5.53 5.54 5.50 5.51 5.50 7 2-month n.a. n.a. 5.59 5.46 5.47 5.51 5.49 5.51 5.50 5.48 5.49 5.48 8 3-month n.a. n.a. 5.60 5.44 5.45 5.49 5.48 5.49 5.49 5 46 5.48 5.48 Commercial paper (historical) 3'5-6-7 9 l-month 5.93 5.43 5.54 n.a. n.a. n.a. n.a. 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. 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. n.a. n.a. Finance paper, directly placed (historical)3-5'7'8 12 1-month 5.81 5.31 5.44 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13 3-month 5.78 5.29 5.48 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14 6-month 5.68 5.21 5.48 Bankers acceptance^'9 15 3-month 5.81 5.31 5.54 5.48 5.46 5.50 5.48 5.50 5.49 5 48 5.48 5 48 16 6-tnonth 5.80 5.31 5.57 5.45 5.41 5.46 5.44 5.46 5.45 5.45 5.44 5.43 Certificates of deposit, secondary market1*0 17 1 -month 5.87 5.35 5.54 5.53 5.53 5.58 5.56 5.58 5.58 5.55 5.56 5.56 18 3-month 5.92 5.39 5.62 5.54 5.54 5.58 5.58 5.59 5.58 5.56 5.57 5.58 19 6-month 5.98 5.47 5.73 5.56 5.55 5.61 5.63 5.61 5.62 5.58 5.62 5.63 20 Eurodollar deposits, 3-month3'11 5.93 5.38 5.61 5.53 5.53 5.56 5.56 5.56 5.56 5.54 5.56 5.56 U.S. Treasury' bills Secondary market3'5 21 3-month 5.49 5.01 5.06 5.04 5.09 5.03 4.95 5.05 5.00 4.95 4.97 4.94 22 6-month 5.56 5.08 5.18 5.03 5.07 5.04 5.06 5.02 5.03 5.01 5.09 5.06 23 1-year.. 5.60 5.22 5.32 4.98 5.04 5.11 5.10 5.12 5.09 5.03 5.11 5.12 Auction average 24 3-month 5.51 5.02 5.07 5.09 5.11 5.03 5.00 5.03 5.05 4.96 5.04 4.99 25 6-month 5.59 5.09 5.18 5.07 5.07 5.04 5.08 4.99 5.08 5.00 5.13 5.06 26 1-year 5.69 5.23 5.36 5.07 4.97 5.13 5.12 n.a. 5.11 n.a. n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities*3 27 1-year 5.94 5.52 5.63 5.24 531 5.39 5.38 5.39 5.36 5.30 5,39 5.40 28 l-year 6.15 5.84 5.99 5.36 5.42 5.56 5.56 5.57 5.55 5.47 5.56 5.60 29 3-year 6.25 5.99 6.10 5.38 5.43 5.57 5.58 5.59 5.57 5.50 5.56 5.61 30 5-year 6.38 6.18 6.22 5.42 5.49 5.61 5.61 5.62 5.58 5.52 5.59 5.65 31 7-year 6.50 6.34 6.33 5.53 5.60 5.71 5.70 5.69 5.68 5.61 5.67 5.72 32 10-year 6.57 6.44 6.35 5.54 5.57 5.65 5.64 5.63 5.61 5.55 5.61 5.67 33 20-year 6.95 6.83 6.69 5.88 5.96 6.01 6.00 5.99 5.97 5.93 5.97 6.03 34 30-year 6.88 6.71 6.61 5.81 5.89 5.95 5.92 5.92 5.89 5.86 5.90 5.95 Composite 35 More than 10 years (long-term) 6.93 6.80 6.67 5.87 5.94 6.00 5.98 5.97 5.95 5.91 5.95 6.01 STATE AND LOCAL NOTES AND BONDS Moody's series1* 36 Aaa 5.80 5.52 5.32 4.88 4.92 5.03 5.00 4.99 4.97 4.94 5.02 5.01 37 Baa 6.10 5.79 5.50 5.04 5.09 5.25 5.21 5.21 5.18 5.15 5.24 5.23 38 Bond Buyer series15 5.95 5.76 5.52 5.06 5.10 5.21 5.23 5.20 5.19 5.18 5.21 5.25 CORPORATE BONDS 39 Seasoned issues, all industries 6 7.83 7.66 7.54 6.89 6.95 7.00 6.99 6.98 6.96 6.94 6.97 7.01 Rating group 40 Aaa 7.59 7.37 7.27 6.61 6.67 6.72 6.69 6.69 6.67 6.64 6.67 6.73 41 Aa 7.72 7.55 7.48 6.82 6.88 6.93 6.90 6.90 6.88 6.86 6.88 6.93 42 A 7.83 7.69 7.54 6.93 7.01 7.05 7.03 7.03 7.01 6.99 7.02 7.06 43 Baa 8.20 8.05 7.87 7.19 7.25 7.32 7.33 7.30 7.30 7.28 7.31 7.35 44 A-rated, recently offered utility bonds17 7.86 7.77 7.71 6.97 7.02 7.11 7.10 7.14 6.99 7.09 7.09 7.19 MEMO Dividend-price ratio1^ 45 Common stocks 2.56 2.19 1.77 1.62 1.55 1.48 1.43 1.44 1.43 1.44 1.42 1.41 1. The daily effective federal funds rale is a weighted average of rates on trades through 13. Yields on actively traded issues adjusted to constant maturities. Source US 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. S. 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 hanks. 18. Standard & Poor's corporate senes. 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 m the Board's H.I5 (519) weekly and Digitizedfo fro inrd FicaRtioAnS pEurpRos es 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 • July 1998 1.36 STOCK MARKET Selected Statistics 1998 1995 1997 Aug. Sept. Oct. Nov. Dec Jan. Feb. Mar. Apr. Prices and trading volume (averages of daily figures)1 Common stock prices (indexes) 1 New York Stock Exchange (Dec, 31, 1965 - 50) 291.18 357.98 456.99 482.39 489.74 499.25 492.14 504.66 504.13 532.15 560.70 578.05 2 Industrial 367.40 453.57 574.97 609.54 617.94 625.22 615.65 623.57 624.61 660.91 693.13 711.89 3 Transportation 270.14 327.30 415.08 439.71 451.63 466.04 453.56 461.04 458.49 485.73 508.06 523.73 4 Utility 110.64 126.36 143.87 143.82 145.96 157.83 153.53 165.74 146.25 170.96 191.67 207.32 5 Finance 238.48 303.94 424.84 446.93 459.86 476.70 465.35 490.30 479.81 508.97 539.47 563.07 6 Standard & Poor's Corporation (1941-43 = 10)2 541.72 670.49 873.43 927.74 937.02 951.16 938.92 962.37 963.36 1,023.74 1,076.83 7 American Stock Exchange (Aug. 31, 1973 = 5O)3 570.86 628.34 645.59 678.05 702.43 674.37 667.89 665.72 685.73 722.37 742.33 Volume of trading (thousands of shares) 8 New York Stock Exchange 345,729 409,740 523,254 506,205 541,204 606,513 531,449 541,134 632,895 610,958 619,366 647,110 9 American Stock Exchange 20,387 22,567 n.a. 24,095 28,252 32,873 27,741 27,624 28.199 26,808 28,943 29,544 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers4 76,680 97,400 126,090 119,810 126,050 128,190 127,330 126,090 127,790 135,590 140340 140,240 Free credit balances at brokers 11 Margin accounts6 16,250 22,540 31,410 23,375 23,630 26.950 26.735 31,410 29,480 27,450 27,430 28,160 12 Cash accounts 34,340 40,430 52,160 42,960 43,770 47,465 45.470 52,160 48.620 48,640 51,340 51,050 Margin requirements (percent of market value and etfective date)7 Mar. 11, 1968 June 8. 1968 May 6, 1970 Dec. 6. 1971 Nov. 24, 1972 Jan. 3. 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. Daily data on prices are available upon request to the Board of Governors. For ordering 6. Series initiated in June 1984. address, see inside front cover. 7. Margin requirements, stated in regulations adopted by the Board of Governors pursuant 2. In July 1976 a financial group, composed of banks and insurance companies, was added to the Securities Exchange Act of 1934, limit the amount of credit that can be used to to the group of stocks on which the index is based. The index is now based on 400 industrial purchase and carry "margin securities" (as defined in the regulations) when such credit is stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and collateralized by securities. Margin requirements on securities are the difference between the 40 financial. market value (100 percent) and the maximum loan value of collateral as prescribed by the 3. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting Board. Regulation T was adopted etfective 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 J983. 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 wnting 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 1998 Feb. Apr. US. budget' 1 Receipts, total 1,351,830 1,453,062 1,579,292 103,481 167,998 162,610 97,952 117.930 261,002 2 On-budget 1,000,751 1,085,570 1,187,302 73,690 135,340 123,367 65,051 80,647 216,988 3 Off-budget 351,079 367,492 391,990 29,791 32,658 39,243 32,901 37,283 44,014 4 Outlays, total 1,515,729 1,560,512 1,601.235 120,830 154,361 137,231 139,701 131,743 136,400 5 On-budget 1,227,065 1,259,608 1,290,609 91,327 146,647 108,843 109,393 101,967 108,569 6 Off-budget 288.664 300.904 310,626 29,504 7,712 28,388 30,309 29,775 27.830 7 Surplus or deficit (-), total -163.899 -107.450 -21,943 -17,349 13,639 25,379 -41.750 -13.813 124,603 8 On-budget -226,314 -174.038 -103,307 -17,637 -11,307 14,524 -44.342 -21,320 108,419 9 Off-budget 62,415 66,588 81,364 287 24,946 10,855 2,592 7,508 16,184 Source of financing (total) 10 Borrowing from the public 171,288 129,712 38,171 29,108 -1,771 -24,807 30,565 20,137 -60,587 11 Operating cash (decrease, or increase (-))... -2,007 -6,276 604 483 -12,107 -8,422 24.027 -11,352 -60,398 12 Other2 -5,382 -15,986 -16.832 -12,242 239 7,850 -12,842 5,028 -3,618 MEMO 13 Treasury operating balance (level, end of period) 37,949 44,225 43,621 19,778 31,885 40,307 16,280 27,632 88,030 14 Federal Reserve Banks 8,620 7,700 7,692 5,127 5,444 5,552 5,037 5,490 28,014 15 Tax and loan accounts 29,329 36.525 35,930 14,651 26,441 34,756 11,243 22,141 60,016 1. Since 1990, off-budget items have been the social security trust funds (federal old-age net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF loansurvivors insurance and federal disability insurance) and the U.S. Postal Service. valuation adjustment; and profit on sale of gold. 2. Includes special drawing rights (SDRs); reserve position on the US. 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 US 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 • July 1998 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year Source or type 1996 1997 1998 1996 1997 HI H2 HI H2 Feb. Mar Apr. RECEIPTS 1,453,062 1,579.292 767,099 707,551 845,527 773,810 97,952 117,930 261,002 656,417 737,466 347,285 323,884 400,436 354,072 42,209 39,662 158,284 3 Withheld 533,080 580,207 264.177 279,988 292,252 306.865 54,225 55,290 51,811 4 Nonwithheld 212,168 250,753 162,782 53,491 191,050 58,069 2,914 7,332 129,520 5 Refunds 88,897 93,560 79,735 9,604 82,926 10,869 14,941 22,973 23,059 Corporation income taxes 6 Gross receipts 189,055 204,493 96.480 95,364 106,451 104,659 3,598 23,153 29,910 7 Refunds 17,231 22.198 9,704 10,053 9,635 10,135 2,769 3,661 2,549 8 Social insurance taxes and contributions, net . . . 509,414 539,371 277,767 240,326 288,251 260,795 44,749 48,027 61,465 9 Employment taxes and contributions2 476,361 506,751 257,446 227,777 268,357 247,794 41,825 47,389 56,544 10 Unemployment insurance 28,584 28,202 18.068 10,302 17,709 10.724 2,589 301 4,589 11 Other net receipts3 4,469 4,418 2,254 2,245 2,184 2,280 335 337 332 12 Excise taxes 54,014 56,924 25,682 27,016 28,084 31,132 4,791 4,499 5,742 13 Customs deposits 18,670 17.928 8,731 9,294 8,619 9,679 1,454 1,412 1,428 14 Estate and gift taxes 17,189 19.845 8,775 8,835 10,477 10,262 1,500 1,845 4,198 15 Miscellaneous receipts4 25,534 25,465 12,087 12,888 12,866 13,347 2,420 2,994 2,525 OUTLAYS 16 All types 1,560,512 1,601,235 785,368 800,177' 797,418 824362' 139,701 131,743 136,400 17 National defense 265,748 270,473 132,599 139,402 132,698' 140,873 20,492 20.326 22,065 18 International affairs 13,496 15,228 8,076 8,532 5,740 9,420 364 979 1,460 19 General science, space, and technology 16,709 17,174 8,897 8,260 8,938' 10,040 1,404 1,617 1,702 20 Energy 2,844 1,483 1.356 695 803 411 -43 40 -34 21 Natural resources and environment 21,614 21,369 10,254 10,307 9,627 11,106 1,746 1,556 1,575 22 Agriculture 9,159 9,032 73 11.037 1,465 10,590 329 283 119 23 Commerce and housing credit -10,472 -14,624 -6,885 -5,899 -7,575 -3,526 -1,065 -972 -814 39,565 40,767 18,290 21,512 16,847 20,414 2,504 2,734 2,511 25 Community and regional development 10.685 11.005 5,245 5,498 5,675 5,749 669 503 1,121 26 Education, training, employment, and social services S2.001 53,008 25.979 27,524 25,080 26,851 6.535 2.888 4,428 27 Health 119,378 123.843 59,989 61,595 61,809 63,552 9.735 10,876 11,259 28 Social security and Medicare 523,901 555.273 264,647 269,412 278,863 283,109 46,810 45.815 48,351 29 Income security 225,989 230,886 121,186 107,631 124,034 106,353 28,194 22,853 20,757 30 Veterans benefits and services 36,985 39,313 18,140 21,109 17,696 22,077 3,386 1,883 4,056 31 Administration of justice 17,548 20,197 9,015 9,583 10,671' 10,212 2,026 1,764 1,757 32 General government 11,892 12,768 4,641 6,546 6,623 7,302 108 1,012 1,178 241,090 244,013 120,576 122,573 122,654 122,620 19,901 20.651 20,961 34 Undistributed offsetting receipts6 -37,620 -49,973 -16,716 -25,142 -24,235 -22,795 -3,394 -3.064 -6,054 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: US. Office of Management and Budget, Budget of the US. 3. Federal employee retirement contributions and civil service retirement and Government, Fiscal Year I999\ monthly and half-year totals: U.S. Department of the Treadisability fund. sury, Monthly Treasury Statement of Receipts and Outlays of the US. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A27 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1996 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding 5,153 5,197 5,260 5357 5,415 5,410 5,446 5,536 2 Public debt securities S,]18 5,161 5,225 5,323 5,381 5,376 5,413 5.502 5,542 3 Held by public 3,764 3,739 3.778 3,826 3,874 3,805 3,815 3,847 4 Held by agencies 1,354 1,422 1.447 1,497 1,507 1,572 1,599 1,656 5 Agency securities 36 36 35 34 34 34 33 34 6 Held by public 28 28 27 27 26 26 26 27 7 Held by agencies 7 7 7 8 Debt subject to statutory limit. . . 5,030 5,073 5,137 5,237 5,294 5,290 5,328 5,417 5,457 1 9 0 O Pu th b e li r c d d e e b b t t 1 securities 5.03 0 0 5,07 0 3 5,137 0 5,237 0 5,29 0 4 5,29 0 0 5,32 0 8 5,416 0 5,45 0 6 MEMO 11 Statutory debt limit 5,500 5,500 5,500 5,500 5,500 5,950 1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specified SOURCE. U.S. Department of the Treasury, Monthly Statement of the Public Debt of the participation certificates, notes to international lending organizations, and District of Colum- United States and Treasury Bulletin. bia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1998 Type and holder 1994 1997 Q2 Q3 Q4 Ql 1 Total gross public debt.... 4,800.2 4,988.7 5,323.2 5,502.4 5,376.2 5.413.2 5,502.4 5,542.4 By type 2 Interest-bearing .. 4,769.2 4,964.4 5,317.2 5,494.9 5,370.5 5,407.5 5,494.9 5,535.3 Marketable 3,126.0 3,307.2 3,459.7 3,456.8 3,433.1 3,439.6 3,456.8 3,467.1 Bills 733.8 760.7 777.4 715.4 704.1 701.9 715.4 720.1 Notes 1,867.0 2,010.3 2.112.3 2,106.1 2,132.6 2,122.2 2,106.1 2.091.9 Bonds 510.3 521.2 555.0 587.3 565.4 576.2 587.3 598.7 Inflation-indexed notes and bonds n.a. n.a. n.a. 33.0 15.9 24 4 33.0 41 5 Nonmarketable2 1,643.1 1,657.2 1,857.5 2,038.1 1,937.4 1,967.9 2,038.1 2.068.2 State and local government series 132.6 104.5 101.3 124.1 107.9 111.9 124.1 139.1 10 Foreign issues3 42.5 40.8 37.4 36.2 35 4 34.9 36.2 35.4 11 Government 42.5 40.8 47.4 36.2 35.4 34.9 36.2 36.4 12 Public .0 .0 .0 .0 .0 .0 .0 .0 13 Savings bonds and notes 177.8 181.9 182.4 181.2 182.7 182.7 181.2 181.2 14 Government account series4 1,259.8 1,299.6 1,505.9 1,666.7 1,581.5 1.608.5 1.666.7 1,681.5 15 Non-interest-bearing 31.0 24.3 6.0 7.5 5.7 5.6 7.5 7.2 By holder i 16 U.S. Treasury and other federal agencies and trust funds 1,257.1 1,304.5 1,497.2 1,655.7 1,571.6 1,598.5 1,655.7 17 Federal Reserve Banks 374.1 391.0 410.9 451.9 426.4 436.5 451.9 18 Private investors 3,168.0 3,294.9 3,411.2 3,393.4 3,361.7 3,388.9 3,393.4 19 Commercial banks 290.4 278.7 261 7 260.0 265.7 261.6 260.0 20 Money market funds 67.6 71.5 91.6 87.8 77.4 75.8 87.8 21 Insurance companies 240.1 241.5 214.1 214.0 216.0 214.4 214.0 22 Other companies 224.5 228.8 258.5 265.0 261.0 266.5 265.0 23 State and local treasuriess66''7 540.2 421.5 363.7 334.0 345.3 336.4 334.0 Individuals 24 Savings bonds 180.5 185.0 187.0 186.5 186.3 186.2 186.5 25 Other securities 150.7 162.7 169.6 168 4 169.1 168.6 168.4 26 Foreign and international8 688.6 862.2 1,131.8 1.278.2 1,221.7 1.266.8 1,278.2 27 Other miscellaneous investors7" 785.5 843.0 733.2 599.4 619.2 612.6 599.4 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 Stales; 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 • July 1998 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions' Millions of dollars, daily averages 1998 1998, week ending Jan. Feb. Mar. 4 Apr. 1 Apr.) Apr. 15 Apr. 22 Apr. 29 OUTRIGHT TRANSACTIONS^ By type of security 1 U.S. Treasury bills 26,208 39,988' 35,701 50,598' 32,611' 27,647' 31,602' 43.584 36,486 47,926 32.172 38,463 Coupon securities, by maturity 2 Five years or less 89,024 120,542' 119,974 140,638' 110,179' 105,770' 119,612' 134,927 116.132 98,456 93,500 132,337 3 More than five years 51,980 82,796' 64,952 85,940' 62,329' 60,799' 57,352' 67,180 84,844 54,609 52,391 63,256 4 Inflation-indexed 336 3,346 Federal agency 493 412 570 267 312 696 1.316 1,381 1,083 5 Discount notes 36,241 40,084 Coupon securities, by maturity 36,835 38,968 41.752 35,848 36,799 46,898 40,436 38,736 36,834 6 One year or less 3,195 987 7 More than one year, but less than 1,738 2,086 1.559 1,362 1,355 2.913 1,481 1,683 2,141 or equal to five years 5,714 3,531 4,149 3,940 8 More than five years 3,452 4,051 2.556 3,618 3,067 1,593 3,873 5,277 4,512 4,166 3,774 9 Mortgage-backed 2,676 2,425 54.896 1,996 58,456 48,003 3,103 96,057 2,598 1,968 2,354 64,305 62,728 92,600 55,006 70,033 52,683 55,953 By type of counterparty With interdealer broker 10 U.S. Treasury 94,063 138,024' 125,029 153,150' 117,552' 113,762' 119,729' 133,994 135,974 109,897 97,073 129,930 11 Federal agency 1,224 1,987 2,101 2,179 2,227 2.047 1,519 2,681 3,115 2,558 2,070 1,831 12 Mortgage-backed 16,441 21,100 19,793 17.854 27,155 19,820 17,348 15,069 28,495 21,460 20.433 16,318 With other 13 U.S. Treasury 73,148 105,795' 96,010 124,596' 87,834' 80.766' 89,174' 112,392 104,834 92,410 82,372 105,210 14 Federal agency 30,169 42,715 45,429 49,402 40,598 42,704 43,659 54,106 47,173 46,468 44,483 43,272 15 Mortgage-backed 33,042 43,204 42,934 37,041 65,445 38,636 30,655 39,937 67,562 48,572 32,250 39,635 FUTURES TRANSACTIONS3 By type of deliverable security 16 U.S. Treasury bills 165 244' 289 224' 194' 529' Coupon securities, by maturity 17 Five years or less 2,107 2,549' 2,555 4,367' 2,177' 3,071' 1,475' 2,375 2,598 1,844 1,347 2,417 18 More than five years 11,345 16,512' 15,909 21.656' 15,942' 16,711' 13,856r 13,120 17,193 13,302 10,835 14,885 19 Inflation-indexed Federal agency 0 0 0 0 0 0 0 0 0 0 0 20 Discount notes Coupon securities, by maturity 0 0 0 0 0 0 0 0 0 0 0 21 One year or less 22 More than one year, but less than 0 0 0 0 0 0 0 0 0 0 0 or equal to five years 0 0 0 0 0 0 0 0 0 0 0 23 More than five years 0 0 0 0 0 0 0 0 0 0 0 24 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 OPTIONS TRANSACTIONS4 By type of underlying security 25 U.S. Treasury bills Coupon securities, by maturity 26 Five years or less 2.173 2,652 2,305 3,467 2,674 1,703 2,282 1,754 1,856 2,775 2,308 2,828 27 More than five years 3,742 6,080' 5,422 6,231' 6,564' 3.951' 4,801' 6,002 6,382 4,438 4,917 7.365 28 Inflation-indexed 0 0 0 Federal agency 0 0 0 0 0 0 0 100 29 Discount notes Coupon securities, by maturity 0 0 0 0 0 0 0 0 30 One year or less 31 More than one year, but less than 0 0 0 0 0 0 0 0 or equal to five years 0 0 0 0 n.a. 0 32 More than five years 0 0 0 0 0 0 0 0 0 0 0 33 Mortgage-backed 428 0 0 0 754' 417' 0 587 745 914 447 990 636 602 602' 646' 1. Transactions are market purchases and sales of securities as reported to the Federal Forward transactions are agreements made in the over-the-counter market that specify Reserve Bank of New York by the U.S. government securities dealers on its published list of delayed delivery. Forward contracts for US. Treasury securities and federal agency debt primary dealers. Monthly averages are based on the number of trading days in the month. securities are included when the time to delivery is more than five business days. Forward Transactions are assumed to be evenly distributed among the trading days of the report week. contracts for mortgage-backed agency securities are included when the time to delivery is Immediate, forward, and futures transactions are reported at principal value, which does not more than thirty business days. include accrued interest; options transactions are reported at the face value of the underlying 3. Futures transactions are standardized agreements arranged on an exchange. All futures securities. transactions are included regardless of time to delivery. Dealers report cumulative transactions for each week ending Wednesday. 4. Options transactions are purchases or sales of put and call options, whether arranged on 2. Outright transactions include immediate and forward transactions. Immediate delivery an organized exchange or in the over-the-counter market, and include options on futures refers to purchases or sales of securities (other than mortgage-backed federal agency securi- contracts on U.S. Treasury and federal agency securities. ties) for which delivery is scheduled in five business days or less and "when-issued" NOTE, "n.a." indicates that data are not published because of insufficient activity. secunties 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 January 28, 1998. 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 1998, weekending Feb. Mar. 4 Mar. 11 Mar. 18 Mar 25 Apr. I Apr 8 Apr. 15 Apr. 22 NET OUTRIGHT POSITIONS3 By type of security 1 U.S. Treasury bills 12,567 8,517 16,723 14,989 16,613 15.195 21,401 13,518 Coupon securities, by maturity 2 Five years or less 12,119 -7,847 -11,431 -15,232 -16,412 -13,544 -1,981 -11,646 -11,992 -14,310 -20.678 3 More than five years -17,495 -21.431 -23,667 -22,004 - 26,879 -22,672 -24,588 -21,115 -21.661 -25,413 -26,804 4 Inflation-indexed 1.232 1.097 Federal agency 1,422 1.099 1.004 958 1,164 2.536 2,132 1.592 5 Discount notes 14,512 15,215 Coupon securities, by maturity 18,759 16,943 16.681 22,161 15,785 17,680 20,726 18.940 6 One year or less 4.098 2,824 7 More than one year, but less than 3.013 3,593 3.449 3,971 3,453 3,553 3,276 3,580 or equal to five years 7,378 7,118 7,763 6,973 7,372 7,935 8,629 8,556 8 More than five years 5,753 9,095 7,880 9,507 10,037 8,676 8,280 11,530 11,823 12,385 9 Mortgage-backed 46,961 8,898 51,110 8,680 54,641 53.106 46.506 51,988 63,690 58,167 52,983 50,013 48,178 NET FUTURES POSITIONS" fly type of deliverable security 10 U.S. Treasury bills -4,872 -2,503 -4,878 -4,374 -3,218 -103 -1,581 Coupon securities, by maturity 11 Five years or less -1,082 -752 2,023 4,283 3,834 762 1,431 565 -1.069 -696 329 12 More than five years -25,767 -18,954 -15,929 -12,575 -12,165 -18,719 -18.145 -16,718 -21,091 -17,265 -15,953 13 Inflation-indexed 0 0 0 0 Federal agency 0 0 0 0 0 0 14 Discount notes 0 0 0 0 Coupon securities, by maturity 0 0 0 0 0 0 15 One year or [ess 0 0 0 0 16 More than one year, but less than 0 0 0 0 0 0 or equal to five years 0 0 0 0 0 0 0 0 0 0 17 More than five years 0 0 0 0 0 0 0 0 0 0 18 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 NET OPTIONS POSITIONS By type of deliverable security 19 U.S. Treasury bills Coupon secunties, by maturity 20 Five years or less -667 -1,366 1,215 -743 641 2.782 1,433 1,110 1,695 388 495 21 More than five years 3,022 2,729 3,020 2,328 3,500 3,258 3,766 1.771 3,691 1.749 1.011 22 Inflation-indexed n.a. n.a. n.a. n.a. n.a. n.a. Federal agency 0 0 154 23 Discount notes 0 0 0 0 0 0 I) Coupon securities, by maturity 0 0 0 24 One year or less 0 0 0 0 0 0 0 25 More than one year, but less than 0 0 0 or equal to five years 0 0 0 0 0 0 0 n.a. 2 2 6 7 Mo M rt o g r a e g e th -b a a n c f k i e v d e years n.a 9 . 07 n 1 .a ,1 . 19 n 2 . . a 1 . 48 n 1 . , a 2 . 53 n 1 . , a 0 . 98 n 1 .a ,0 . 22 n.a 4 . 15 n.a. 0 n.a. -34 Financing5 Reverse repurchase agreements 28 Overnight and continuing 324,675 352,684 358,975 364,077' 355,155' 334,677 368,925 374,177 357.521 358.878 29 Term 746,499 722,028 758,517 736,348 786.546 802,422 746,266 799.086 801.292 836,706 Securities borrowed 30 Overnight and continuing 214.345 212,345 218,488' 221,361' 211,727' 209,703 206,231 207,284 211.269 205,611 31 Term 80,881 89.654 84,980 86,934 90,597 92,059 92.064 95.425 95,220 104,223 Securities received as pledge 32 Overnight and continuing 5.127 4.208 2,823 2,955' 2,817' 2,652' 2.652 2,749 2,853 3,032 33 Term 152 237 204 221' 247' n.a. n.a. n a. Repurchase agreements 34 Overnight and continuing 715,197 735.160 740,803 747 707 739,482 758,664 712,405 750.037 773,282 808,266 810,360 35 Term 656,432 639,985 671,254 611.323 647,681 698.755 718,590 651.398 708,229 703.484 727,513 Securities loaned 36 Overnight and continuing 8,157 9,819 9,453' 9,349' 9,502 9,987 10,816 11,669 11.533 12,062 37 Term 4,645 4,232 4.396' 4,148' 4,858' 4,698 2,987 2.509 1,917 2,024 Securities pledged 38 Overnight and continuing . 52,182 55,551 53,813 52,338' 53,139' 54,222' 53,543 50,774 49,323 50,241 48,493 39 Term 5,019 3,111 5,336 3,451 3,587 6,311 6,169 6,500 6.242 5,964 6,350 Coltateralized loans 40 Total 14,467 9.536 12,421 11,863 1,895 12,454 12,852 12.865 13.882 14.476 13,481 1. Data for positions and financing are obtained from reports submitted to the Federal securities are included when the time to delivery is more than five business days. Forward Reserve Bank of New York by the US. government securities dealers on its published list of contracts for mortgage-backed agency securities are included when the time to delivery is primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar more than thirty business days. days of the report week are assumed to be constant. Monthly averages are based on the 4. Futures positions reflect standardized agreements arranged on an exchange. AM futures number of calendar days in the month. positions are included regardless of time to delivery. 2. Securities positions are reported at market value. 5. Overnight financing refers to agreements made on one business day that mature on the 3. Net outright positions include immediate and forward positions. Net immediate posi- next business day; continuing contracts are agreements that remain in effect for more than one tions include securities purchased or sold (other than mortgage-backed agency securities) that business day but have no specific maturity and can be terminated without advance notice by have been delivered or are scheduled to be delivered in five business days or less and either party; term agreements have a fixed matunty of more than one business day. Financing "when-issued" securities that settle on the issue date of offering. Net immediate positions for data are reported in terms of actual funds paid or received, including accrued interest. mortgage-backed agency securities include securities purchased or sold that have been NOTE, "n.a " indicates that data are not published because of insufficient activity. delivered or are scheduled to be delivered in thirty business days or less. Major changes in the report form filed by primary dealers induced a break in the dealer data Forward positions reflect agreements made in the over-the-counter market that specify series as of the week ending January 28, 1998. delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Financial Statistics • July 1998 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1 Federal and federally sponsored agencies 738,928 844,611 925,823 1,022,609 1,003,177 1,014,907 1,022,609 1,032,486 1,038,348 2 Federal agencies 39,186 37,347 29,380 27,792 27.356 27,500 27,792 27,110 27,101 3 Defense Department^' 6 6 6 6 6 6 6 6 6 4 Export-Import Bank1'^ 3,455 2,050 1,447 552 1,295 1,295 552 549 5 Federal Housing Administration4 116 97 102 93 102 79 6 Government National Mortgage Association certificates of participation" n.a. n.a. n.a. n.a. n.a. n.a. 7 Postal Service6 8,073 5,765 n.a. n.a. n.a. n.a. n.a. 8 Tennessee Valley Authority 27,536 29,429 27,853 27,786 27,350 27,494 27,786 27,104 27,095 9 United States Railway Association6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 Federally sponsored agencies7 699,742 807,264 896,443 994,817 975,821 987,407 994,817 1,005,376 1,011,247 11 Federal Home Loan Banks 205.817 243,194 263,404 313,919 302,310 308,745 313,919 311,385 312.017 12 Federal Home Loan Mortgage Corporation 93,279 119,961 156,980 169.200 172,433 174,900 169,200 181.948 184,100 13 Federal National Mortgage Association 257,230 299.174 331,270 369.774 356,149 361,602 369,774 370,524 373,574 14 Farm Credit Banks 53,175 57,379 60,053 63.517 61,093 61,093 63,517 61,317 61,177 15 Student Loan Marketing Association 50,335 47,529 44,763 37.717 43.000 40,321 37,717 39.375 39,570 16 Financing Corporation10 8,170 8,170 8,170 8,170 8,170 8,170 8.170 8,170 8,170 17 Farm Credit Financial Assistance Corporation1 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation " 29,996 29.996 29,996 29.996 29.996 29,996 29,996 29.996 29,996 MEMO 19 Federal Financing Bank debt" 103,817 78,681 58,172 49,090 48,698 32,523 49,090 48,321 47,341 Lending w federal and federally sponsored agencies 20 Export-Import Bank3 3,449 2.044 1,431 1.295 21 Postal Service6 8.073 5.765 n.a. n.a. n.a. 22 Student Loan Marketing Association n.a. n.a. n.a. 23 Tennessee Valley Authority 3.200 3.200 n.a. 24 United Slates Railway Association6 n.a. n.a. n.a. Other lending** 25 Farmers Home Administration 33,719 21.015 18,325 13,530 13,530 13,530 13,530 13,530 13,160 26 Rural Electrification Administration 17,392 17.144 16,702 14.898 14,819 14,819 14,898 14,841 14,852 27 Other 37,984 29,513 21,714 20.110 19.054 2,879 20,110 19,401' 18,780 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. 3. On-budget since Sept. 30, 1976. 4. Consists of debentures issued in payment of Federal Housing Administration insurance claims. Once issued, these securities may be sold privately on Ihe securities market. 5. Certificates of participation issued before fiscal year 1969 by the Government National Mortgage Association acting as trustee for the Farmers Home Administration, the Department of Health, Education, and Welfare, the Department of Housing and Urban Development, the purpose of lending to other agencies, its debi is not included in the main portion of the table to Small Business Administration, and the Veterans Administration. avoid double counting. 6. Off-budget. 14. Includes FFB purchases of agency assets and guaranteed loans: the latter are loans 7. Includes outstanding noncontingem liabilities: notes, bonds, and debentures. Includes guaranteed by numerous agencies, with the amounts guaranteed by any one agency generally Federal Agricultural Mortgage Corporation, therefore details do not sum to total. Some data being small. The Farmers Home Administration entry consists exclusively of agency assets, are estimated. whereas the Rural Electrification Administration entry consists of both agency assets and 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is guaranteed loans. shown on line 17. 9. Before late 1982, the association obtained financing through the Federal Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A31 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1997 Type of issue or issuer, or use Sept. Nov. Dec. Apr. 1 All issues, new and refunding1 .... 145,657 171,222 214,693 21,499 21,898 20,207 21342 16,770 21,306 27,858 20,271 By type of issue 2 General obligation 56,980 60,409 69,934 3,590 7,837 5,713 8,005 5,608 9.893 9,597 8.069 3 Revenue 88,677 110,813 134,989 17.909 14,061 14.494 13,337 11,162 11,413 18,261 12,202 Bv type of issuer 4 Stale 14,665 13,651 18,237 1,278 2,392 509 1.702 1,268 2,420 2,375 3,848 5 Special district or statutory authority2 93,500 113,228 134,919 14,890 13,195 13.586 15,600 11.794 14,228 19,629 12.504 6 Municipality, county, or township .. 37,492 44,343 70,558 16,592 13,920 5,920 4,098 3,708 4,658 5,859 4,219 7 Issues for new capital 102,390 112,298 127,928 10,158 12,981 12,979 13,487 9,696 12438 15,134 12,616 By use of proceeds 8 Education 23,964 26,851 31,860 1,943 2,647 2,973 2,981 2,338 3,525 4,297 4.080 9 Transportation 11,890 12,324 13,951 2,654 1.215 1,420 1,144 1,521 1,760 771 1,089 10 Utilities and conservation 9,618 9,791 12,219 907 1,402 1,217 683 598 687 1,866 749 11 Social welfare 19,566 24,583 27,794 2.305 2.341 4,090 2,940 1,540 2,903 3,104 n.a. 12 Industrial aid 6.581 6,287 6,667 441 729 574 897 448 581 1,236 678 13 Other purposes 30,771 32,462 35,095 1.908 4,642 2,705 4,842 3,251 3,082 3,860 3,255 1. Par amounts of long-term issues based on date of sale. SOURCE, Securities Data Company beginning January 1990; Investment Dealer's 2. Includes school districts. Digest before then. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 1998 Type of issue, offering, or issuer Aug. Sept. Oct. Nov. Dec. Jan. 1 All issues' 673,779 52,117 85,001 71,219 58,350 63,992 73,614r 74,976' 111,832 2 Bonds2 573,206 46,576 75,166 58,166 46,543 55,973 66,198r 64.011' 94,323 By type of offering 3 Public, domestic 465,489 537,810' 40,840 60,226 46,967 42,969 54,443 55,647' 51,595' 81,453 4 Private placement, domestic3 87,492 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Sold abroad 76,910 83,433 103.188' 5,736 14,941 11,199 3,574 1,530 10,551' 12,416 12,870 By industry group 6 Manufacturing 61,070 49,476 47,213' 5,087 3,534 4,668 2.152 2,976 10,079' 4.455 7,718 7 Commercial and miscellaneous . 50,689 40,544 42,765' 3,196 4,330 7,982 1,166 1,978 5,397' 3,275' 4,435 8 Transportation 8,430 5,722 11.352 406 296 1,322 299 448 1,533' 1,410 496 9 Public utility 13,751 9,498 16,660 1,407 1,357 1,664 1,590 1,372 1.669' 1,053' 3,735 10 Communication 22,999 14,525 12,055 278 1,829 342 1,586 923 2.362' 2,509 1,345 11 Real estate and financial 416,269 429,157 510,953' 36,202 63,820 42,189 39,750 48.276 45.159' 51.309' 76,594 12 Stocks2 100^73 n.a. 5,541 9,835 13,053 11,807 8,019 7,416 10,965' 18371 By type of offering 13 Public preferred 10,917 33,208 29,814 645 1,878 1,824 1,060 3,578 3,607 3,511' 6.954 14 Common 57,556 83,052 82.392 4,895 7.957 11.229 10.747 4,441 3.809 7,454' 10.562 15 Private placement3 32,100 n.a. By industry group 16 Manufacturing 21,545 836 1,294 17 Commercial and miscellaneous . 27,844 1,673 3,714 18 Transportation 804 139 472 19 Public utility 1.936 48 405 20 Communication 1.077 52 235 21 Real estate and financial 47.367 2,371 3,885 6,583 5,449 5,257 5,675 8,328' 6,580 1. Figures represent gross proceeds of issues maturing in more than one year; they are the 2. Monthly data cover only public offerings. principal amount or number of units calculated by multiplying by the offering price. Figures 3. Monthly data are not available. exclude secondary offerings, employee stock plans, investment companies other than closed- SOURCE. Beginning July 1993, Securities Data Company and the Board of Governors of end, intracorporate transactions, equities sold abroad, and Yankee bonds. Stock data include the Federal Reserve System. ownership securities issued by limited partnerships. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Financial Statistics • July 1998 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets' Millions of dollars 1997 1998 Item 1996 1997 Sept. Oct. Nov. Dec. Ian. Feb Mar1 Apr. 1 Sales of own shares2 934,595 1,190,900 101,503 115.343 94,478 110,452 119,488 114.219 128,348 129,008 702.711 918.728 72,279 91,654 66,135 89,982 92,621 81,688 97,248 97,072 3 Net sales3 231,885 272,172 29,224 23,689 28,343 20,471 26,867 32,532 31,100 31,936 4 Assets4 2,624,463 3,409,315 3,36832 3,284,252 3,356,347 3,409,315 3,459^54 3,675,392 3,843,971 3,910,200 5 Cash5 138,559 174,154 178,786 179,909 186,582 174,154 183,648 180,415 174,058 168,417 2,485,904 3.235,161 3,189,576 3,104.343 3,169,765 3,235.161 3,275,706 3,494,977 3.669,913 3,741.784 1. Data include stock, hybnd, and bond mutual funds and exclude money market mutual 4. Market value at end of period, less current liabilities. funds. 5. Includes all U.S. Treasury securities and other short-term debt securities. 2. Excludes reinvestment of net income dividends and capital gains distribuiions and share SOURCE. Investment Company Institute. Data based on reports of membership, which issue of conversions from one fund to another in the same group. comprises substantially all open-end investment companies registered with the Securities and 3. Excludes sales and redemptions resulting from transfers of shares into or out of money Exchange Commission, Data reflect underwritings of newly formed companies after their market mutual funds within the same fund family. initial offering of securities. 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data at seasonally adjusted annual rates 1996 1997 1998 Account 1995 1996 1997 Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql 1 Profits with inventory valuation and capital consumption adjustment 650.0 735.9 805.0 738.5 739.6 747.8 779.6 795.1 827.3 818.1 822.5 622.6 676.6 729.8 682.2 679.1 680.0 708.4 719.8 753.4 737.3 718.4 3 Profits-tax liability 213.2 229.0 249.4 232.2 231.6 226.0 241.2 244.5 258.2 253.6 245.4 409.4 447.6 480.3 450.0 447.5 454.0 467.2 475.3 495.2 483.7 473.0 5 Dividends 264.4 304.8 336.1 303.7 305.7 309.1 326.8 333.0 339.1 345.6 352.2 6 Undistributed profits 145.0 142.8 144.2 146.4 141.8 144.9 140.3 142.3 156 1 138.1 120.8 -24.3 -2.5 5.5 -5.4 -2.7 3.3 3.5 5.9 3.6 9.2 30.2 8 Capital consumption adjustment 51.6 61.8 69.7 61.6 63.2 64.4 67.7 69.4 70.3 71.6 73.9 SOURCE. U.S. Department of Commerce, Survey of Current Business. 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period; not seasonally adjusted 1996 1997 1998 Q3 Q4 Ql 02 Q3 Q41 Ql ASSETS 1 Accounts receivable, gross* . . 607.0 637.1 663.3 628.1 637.1 648.0 651.6 660.5 663.3 666.8 2 Consumer 233.0 244.9 256.8 244.4 244.9 249.4 255.1 254.5 256.8 251.3 3 Business. 301.6 309.5 318.5 301.4 309.5 315.2 311.7 319.5 318.5 325.9 72.4 82 7 87 9 82 2 82 7 83.4 84.8 86 4 87 9 89 6 5 LESS: Reserves for unearned income 60.7 55.6 52.7 54.8 55.6 51.3 57.2 54.6 52.7 52.1 6 Reserves for losses 12.8 13.1 13.0 12.9 13.1 12.8 13.3 12.7 13.0 13.1 7 Accounts receivable, net 533.5 568.3 597.6 560.5 568.3 583.9 581.2 593.1 597.6 601.6 250 9 290 0 312 4 268 7 290 0 289 6 306 8 289 1 3124 379 9 9 Total assets 784.4 858.3 910.0 829.2 858.3 873.4 887.9 882.3 910.0 931.5 LIABILITIES AND CAPITAL 15.3 19.7 24.1 18.3 19.7 18.4 18.8 20.4 24.1 22.0 11 Commercial paper 168.6 177.6 201.5 173.1 177.6 185.3 193.7 189.6 201.5 211.7 Debt 12 Owed to parent 51.1 60.3 64.7 57.9 60.3 61.0 60.0 61.6 64.7 64.6 13 Not elsewhere classified 300.0 332.5 328.8 322.3 332.5 324.6 345.3 322.8 328.8 338.1 14 All other liabilities 163.6 174.7 189.6 164.8 174.7 189.2 171.4 190.1 189.6 193.0 15 Capital, surplus, and undivided profits 85.9 93.5 101.3 92.8 93.5 94.9 98.7 97.9 101.3 102.0 16 Total liabilities and capital 784.4 858.3 910.0 829.2 858.3 873.4 887.9 882.3 910.0 931.5 J. Includes finance company subsidiaries of bank holding companies but not of retailers 2. Before deduction for unearned income and losses. and banks. Data are amounts carried on the balance sheets of finance companies; securitized pools are not shown, as they are not on the books. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Market and Corporate Finance A33 1.52 DOMESTIC FINANCE COMPANIES Owned and Managed Receivables' Billions of dollars, amounts outstanding Type of credit 1996 Seasonally adjusted 810.4 805.7 810.4 811.0 821.1 818.3 2 Consumer 281.9 306.6 326.9 324.4 323.7 326.9 324.9 326.2 326.7 3 Real estate 72.4 111.9 121.1 121.5 121.7 121.1 121.9 123.7 121.6 4 Business 328.1 343.8 362.4 356.8 360.3 362.4 364.3 371.1 369.9 Not seasonally adjusted 5 Total 689.5 769.7 818.1 800.8 806.9 818.1 812.2 819.6 819.4 6 Consumer 285.8 310.6 330.9 324.2 325.4 330.9 326.2 324.8 325.0 7 Motor vehicles loans 81.1 86.7 87.0 86.8 86.0 87.0 87.4 84.7 86.8 8 Motor vehicle leases 80.8 92.5 96.8 95.9 96.4 96.8 94.5 94.7 95.2 9 Revolving2 28.5 32.5 38.6 34.7 34.8 38.6 37.6 36.9 36.3 10 Other3 42.6 33.2 34.4 35.3 35.5 34.4 34.5 34.1 33.0 Securitized assets4 11 Motor vehicle loans 34.8 36.8 44.3 42.6 42.5 44.3 42.8 45.3 45.0 12 Motor vehicle leases 3.5 8.7 10.8 9.9 11.0 10.8 10.7 10.6 10.5 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 18.9 19.2 19.0 18.7 18.5 18.2 15 Real estate 72.4 111.9 121.1 121.5 121.7 121.1 121.9 123.7 121.6 16 One- to four-family n.a. 52.1 59.0 58.5 59.4 59.0 59.8 62.2 61.5 17 Other n.a. 30.5 28.9 29.3 29.0 28.9 29.1 29.0 28.1 Securitized real estate assets4 18 One- to four-family n.a. 28.9 33.0 33.5 33.0 33.0 32.8 32.3 31.8 19 Other n.a. 0.4 0.2 0.3 0.2 0.2 0.2 0.2 0.2 20 Business 331.2 347.2 366.1 355.1 359.8 366.1 364.0 371.1 372.7 21 Motor vehicles 66.5 67.1 63.5 61.2 62.0 63.5 61.8 64.8 67.8 22 Retail loans 21.8 25.1 25.6 26.5 26.3 25.6 26.1 26.4 27.3 23 Wholesale loans5 36.6 33.0 27.7 25.0 25.8 27.7 25.6 28.2 30.2 24 Leases 8.0 9.0 10.2 9.7 9.8 10.2 10.1 10.2 10.2 25 Equipment 8.0 9.0 10.2 198.5 198.9 203.9 204.2 204.7 206.5 26 Loans 8.0 9.0 10.2 50.3 49.6 51.5 50.7 49.9 50.8 27 Leases 8.0 9.0 10.2 148.2 149.4 152.3 153.5 154.8 155.7 28 Other business receivables6.. .. 8.0 9.0 10.2 54.7 54.0 51.1 52.1 55.6 51.6 Securitized assets4 29 Motor vehicles 8.0 9.0 10.2 28.4 32.4 33.0 31.5 31.2 32.1 30 Retail loans 8.0 9.0 10.2 2.1 2.5 2.4 2.3 2.2 2.0 31 Wholesale loans 8.0 9.0 10.2 26.3 29.8 30.5 29.2 29.0 30.0 32 Leases 8.0 9.0 10.2 0.0 0.0 0.0 0.0 0.0 0.0 33 Equipment 8.0 9.0 10.2 9.7 9.9 10.7 10.4 10.8 10.5 34 Loans 8.0 9.0 10.2 3.8 4.1 4.2 3.9 4.3 4.2 35 Leases 8.0 9.0 10.2 5.8 5.8 6.5 6.5 6.5 6.3 36 Other business receivables6. . 8.0 9.0 10.2 2.7 2.6 4.0 4.0 4.0 4.2 NOTE. This table has been revised to incorporate several changes resulting from the before deductions for unearned income and losses. Components may not sum to totals benchmarking of finance company receivables to the June 1996 Survey of Finance Compa- because of rounding. nies. In that benchmark survey, and in the monthly surveys that have followed, more detailed 2. Excludes revolving credit reported as held by depository institutions that are subsidiarbreakdowns have been obtained for some components. In addition, previously unavailable ies of finance companies. data on securitized real estate loans are now included in this table. The new information has 3. Includes personal cash loans, mobile home loans, and loans to purchase other types of resulted in some reclassification of receivables among the three major categories (consumer, consumer goods such as appliances, apparel, boats, and recreation vehicles. real estate, and business) and in discontinuities in some component series between May and 4 Outstanding balances of pools upon which securities have been issued; these balances June 1996. are no longer carried on the balance sheets of the loan originator. Includes finance company subsidiaries of bank holding companies but not of retailers and 5. Credit arising from transactions between manufacturers and dealers, that is. floor plan banks. Data in this table also appear in the Board's G.20 (422) monthly statistical release. For financing. ordering address, see inside front cover. 6. Includes loans on commercial accounts receivable, factored commercial accounts, and 1. Owned receivables are those carried on the balance sheet of the institution. Managed receivable dealer capital; small loans used primarily for business or farm purposes; and receivables are outstanding balances of pools upon which securities have been issued; these wholesale and lease paper for mobile homes, campers, and travel trailers. balances are no longer carried on the balance sheets of the loan originator. Data are shown Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Financial Statistics • July 1998 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1997 1998 Item 1995 1996 1997 Oct. Nov. Dec. Ian. Feb. Mar. Apr. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms' 175.8 182.4 180.1 183.4 184.0 190.7 184.1 195.3 191.7 189.5 2 Amount of loan (thousands of dollars) 134.5 139.2 140.3 142.4 143.5 149.8 142.3 148.5 149.5 147.1 78.6 78.2 80.4 80.1 80.8 81.0 80.5 78.6 81.0 80.4 4 Maturity (years) 27.7 27.2 28.2 28.1 28.6 28.2 28.5 28.0 28.3 28.4 5 Fees and charges (percent of loan amount)2 1.21 1.21 1.02 0.94 0.95 0.96 0.91 0.99 0.95 0.87 Yield (percent per year) 7.65 7.56 7.57 7.39 7.26 7.25 7.13 7.09 7.03 7.05 7 Effective rate1'3 7.85 7.77 7.73 7.54 7.40 7.40 7.27 7.24 7.17 7.19 8 Contract rate (HUD series)4 8.05 8.03 7.76 7.48 7.38 7.25 7.16 7.22 7.16 7.20 SECONDARY MARKETS Yield (percent per \ear) 9 FHA mortgages (Section 203)5 8.18 8.19 7.89 7.53 7.51 7.17 7.08 7.06 7.09 7.17 10 GNMA securities6 7.57 7.48 7.26 6.90 6.84 6.74 6.56 6.63 6.66 6.63 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 253,511 287,052 316.678 310,421 314,627 316,678 320,062 322,957 327,025 333,571 12 FHA/VA insured 28,762 30,592 31.925 32,080 31,878 31,925 31,621 31.650 31,965 32,734 13 Conventional 224,749 256,460 284,753 278,341 282,749 284,753 288,441 291,307 295,060 300,837 14 Mortgage transactions purchased (during period) 56,598 68,618 70.465 7,619 8,166 6,692 7,647 8,630 12,095 14,668 Mortgage commitments (during period) 15 Issued7 56,092 65,859 69,965 9,190 5,123 6,275 12,199 10,587 14,057 17 556 16 To sell8 360 130 1,298 300 139 140 60 0 92 0 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)^ 17 Total 107,424 137,755 164.421 159,801 160,974 164,421 169,142 175,770 185,928 189,471 18 FHA/VA insured 267 220 177 183 180 177 173 170 170 170 19 Conventional 107,157 137,535 164.244 159,618 160,794 164,244 168,969 175,600 185,758 189,301 Mortgage transactions (during period) 20 Purchases 98,470 125,103 117,401 12,175 11,152 15,979 13,120 13,610 21,011 25,132 21 Sales 85,877 119,702 114,258 11,712 10,812 14,587 12,702 12,481 19,085 24 479 22 Mortgage commitments contracted (during period)9 118,659 128,995 120,089 11,986 12,047 15,805 15,638 17,397 23,060 24,468 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 die 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 Type of holder and property Q4 QI Q4P 1 All holders 4,392,093 4,606,303 4,929,430 4,929,430 4,986,602 5,076,193 5,176.094 5,277,185 By type of property 2 One- to four-family residences 3,357,475 3,533,295 3,761,711 3,761,711 3,806,572 3,870,145 3.946,690 4,019,228 3 Multifamily residences 274.625 287,297 312,558 312.558 316,582 323,069 327,991 338,135 4 Nonfarm, nonresidential 677,022 701,150 768,027 768,027 775,795 794,301 811,657 829,476 5 Farm 82,971 84,561 87,134 87,134 87,653 88,678 89,755 90,346 By type of holder 6 Major financial institutions 1,819,806 1,894,420 1,979,114 1,979,114 1,993,046 2,033,655 2,066,259 2,084,728 7 Commercial banks 1,012,711 1,090,189 1,145,389 1,145,389 1,160,136 1,196,517 1,227,076 1,244,210 8 One- to four-family 615,861 669,434 698,508 698,508 708,802 733.670 752,011 762,421 9 Multifamily 39.346 43,837 46,675 46,675 47,618 49,124 49,648 51,100 10 Nonfarm, nonresidential 334,953 353,088 375,322 375,322 378,474 387,661 398,619 403,712 11 Farm 22,551 23,830 24.883 24,883 25,242 26,061 26,798 26,977 12 Savings institutions3 596,191 596,763 628,335 628,335 626,381 629.062 629.757 629,726 13 One- to four-family 477.626 482,353 513,712 513,712 513,393 516,521 518,199 518,976 14 Multifamily 64,343 61,987 61,570 61,570 60,645 60,070 60,335 59,527 15 Nonfarm, nonresidential 53,933 52,135 52,723 52,723 52,007 52,132 50,878 50,870 16 Farm 289 288 331 331 336 338 344 353 17 Life insurance companies 210,904 207,468 205,390 205,390 206,529 208,077 209,426 210,792 18 One- to four-family 7,018 7,316 6,772 6,772 6,799 6,842 7,080 7,186 19 Multifamily 23,902 23,435 23,197 23,197 23,320 23,499 23,615 23,755 20 Nonfarm, nonresidential 170,421 167,095 165,399 165,399 166,277 167,548 168,374 169,377 21 Farm 9,563 9,622 10,022 10,022 10,133 10,188 10,358 10,473 22 Federal and related agencies 315,580 306,774 300.935 300,935 295,203 292,966 291,410 292,522 23 Government National Mortgage Association . . . 6 2 6 7 7 24 One- to four-family 6 2 2 6 7 7 25 Multifamily 0 0 0 0 0 0 0 0 26 Farmers Home Administration4 41,781 41,791 41.596 41,596 41.485 41.400 41,332 41.195 27 One- to four-family 18.098 17,705 17,303 17,303 17,175 17,239 17,458 17.253 28 Multifamily 11,319 11,617 11,685 11,685 11,692 11,706 11,713 11,720 29 Nonfarm, nonresidential 5,670 6,248 6,841 6,841 6,969 7,135 7,246 7,370 30 Farm 6,694 6,221 5.768 5,768 5,649 5,321 4,916 4,852 31 Federal Housing and Veterans' Administrations 10.964 9,809 6,244 6,244 4,330 4,200 3,462 3,821 32 One- to four-family 4,753 5,180 3,524 3,524 2,335 2,299 2,810 3,091 33 Multifamily 6,211 4,629 2,719 2,719 1,995 1,900 652 730 34 Resolution Trust Corporation 10,428 1.864 0 0 0 0 0 0 35 One- to four-family 5.200 691 0 0 0 0 0 0 36 Multifamily 2,859 647 0 0 0 0 0 0 37 Nonfarm, nonresidential 2,369 525 0 0 0 0 0 0 38 Farm 0 0 0 0 0 0 0 0 39 Federal Deposit Insurance Corporation 7,821 4,303 2,431 2,431 2,217 1,816 1,476 724 40 One- to four-family 1,049 492 365 365 333 272 221 109 41 Multifamily 1,595 428 413 413 377 309 251 123 42 Nonfarm, nonresidential 5,177 3,383 1,653 1.653 1,508 1,235 1.004 492 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 174,312 176,824 174,556 174,556 172,829 170,386 168,458 167,722 45 One- to four-family 158,766 161,665 160.751 160,751 159.634 157,729 156,363 156,245 46 Multifamily 15,546 15,159 13,805 13,805 13,195 12,657 12,095 11,477 47 Federal Land Banks 28,555 28,428 29,602 29,602 29,668 29,963 30,346 30.598 48 One- to four-family 1,671 1,673 1,742 1,742 1,746 1,763 1,786 1,800 49 Farm 26,885 26,755 27,860 27,860 27,922 28,200 28,560 28.798 50 Federal Home Loan Mortgage Corporation 41,712 43,753 46,504 46,504 44,668 45.194 46,329 48,454 51 One- to four-family 38,882 39,901 41,758 41,758 39,640 40,092 40,953 42,629 52 Multifamily 2,830 3,852 4.746 4,746 5,028 5,102 5,376 5,825 53 Mortgage pools or trusts5 1,732,347 1,866,763 2,070,436 2,070,436 2,113,770 2,153,812 2,210,930 2.282.566 54 Government National Mortgage Association .. . 450,934 472,283 506,340 506,340 513,471 520,938 529,867 536,810 55 One- to four-family 441,198 461,438 494,158 494,158 500,591 507,618 516,217 523,156 56 Multifamily 9,736 10,845 12,182 12,182 12,880 13,320 13,650 13,654 57 Federal Home Loan Mortgage Corporation 490,851 515,051 554,260 554,260 562,894 567,187 569,920 579.385 58 One- to tour-family 487,725 512,238 551,513 551,513 560,369 564,445 567,340 576,846 59 Multifamily 3,126 2,813 2,747 2,747 2.525 2,742 2,580 2,539 60 Federal National Mortgage Association 530,343 582,959 650,780 650,780 663,668 673.931 690,919 709,582 61 One- to four-family 520,763 569,724 633,210 633,210 645,324 654,826 670,677 687,981 62 Multifamily 9,580 13,235 17,570 17.570 18,344 19,105 20.242 21,601 63 Farmers Home Administration4 19 II 3 3 3 2 2 2 64 One- to four-family 3 0 0 0 0 0 0 65 Multifamily 0 0 0 0 0 0 0 0 66 Nonfarm. nonresidential 9 5 0 0 0 0 0 0 67 Farm 7 4 3 3 3 2 2 68 Private mortgage conduits 260,200 296,459 359,053 359,053 373,734 391.753 420,222 456.787 69 One- to four-family6 208,500 227,800 261,900 261,900 271,100 279,450 299,400 318,000 70 Multifamily 14,925 21,279 33,689 33,689 35,607 38,992 41,973 48,261 71 Nonfarm, nonresidential 36,774 47.380 63,464 63,464 67,027 73,312 78,849 90,526 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others 524,360 538,347 578,945 578,945 584,583 595,761 607,495 617.369 74 One- to four-family 370,356 375,682 376,493 376,493 379,327 387,372 396,169 403.526 75 Multifamily 69,306 73,533 81,560 81,560 83,354 84,543 85,861 87,823 76 Nonfarm, nonresidential 67,715 71,291 102,625 102,625 103,533 105,279 106,689 107.129 77 Farm 16,983 17,841 18.268 18,268 18,368 18,567 18,776 18.891 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 • July 1998 1.55 CONSUMER CREDIT' Millions of dollars, amounts outstanding, end of period 1997 1998 Holder and type of credit 1995 1996 1997 Oct. Nov. Dec. Jan. Feb' Mar. Seasonally adjusted 1 Total 1,094,197 1,179,892 l,230,671r 1,233,029' 1,226,947' 1,230,671' 1,234,553' 1,240,678 1,241,747 364,231 392.370 413.453' 409,011' 406.892' 413,453' 415,485' 416.755 419,680 3 Revolving 442,994 499.209 530,801' 530,741' 529,800' 530,801' 532,864' 536,592 537,158 4 Other2 286,972 288,313 286,417' 293,277' 290.255' 286,417' 286,204' 287,331 284,909 Not seasonally adjusted 5 Total 1,122,828 1,211,590 1,264,079' 1,232,510' l,234,'l?7r 1,264,079' 1,244,598' 1,235,455 1,230,311 By major holder 501,963 526,769 512,539 506,291 506,497 512,539 500,847 495,572 488,885 7 Finance companies 152,123 152,391 160,022 156,867 156,375 160,022 159,493' 155,675 156,139 131,939 144.148 152,362' 150,588' 150,649' 152,362' 151,024' 149,804 149,405 9 Savings institutions . .^ 40,106 44,711 47,172 48,049 47,611 47,172 46,733 46,295 45,856 85,061 77,745 78,927 68,547 70,464 78,927 75,355 72,772 72,777 11 Pools of securitized assets4 211,636 265,826 313,057 302,168 302,881 313,057 311,146 315,337 317,249 Bv major type of credit 12 Automobile 367,069 395,609 416,962' 413,514' 411,097' 416,962' 413,727' 412,461 415,619 151,437 157,047 155,254 157,857 156,232 155,254 154,413 152,747 153,627 14 Finance companies 81,073 86,690 87,015 86,805 86,046 87,015 87,379 84,685 86,832 15 Pools of securitized assets4 44,635 51,719 64,950 60,648 60,378 64,950 63,066 65.957 65,062 464,134 522,860 555,858' 527,472' 532,897' 555,858' 541,386' 535,936 531,194 210.298 228,615 219,826 209,544 212,726 219,826 208,750 204,564 197,264 18 Finance companies 28,460 32.493 38,608 34,717 34.789 38,608 37,603' 36,851 36,272 19 Nonfinancial business3 53,525 44,901 44,966 37,479 38,865 44,966 42,689 40,976 41,355 20 Pools of securitized assets4 147,934 188,712 221,465 215,674 216,411 221,465 221,805 223,400 226,562 21 Other 291,625 293,121 291,259' 291,524' 290,483' 291,259' 289,485' 287,058 283,498 22 Commercial banks 140,228 141,107 137,459 138,890 137,539 137,459 137,684 138,261 137,994 23 Finance companies 42,590 33,208 34,399 35,345 35,540 34,399 34,511' 34,139 33,035 24 Nonfinancial business3 31,536 32,844 33,961 31,068 31,599 33,961 32,666 31,796 31,422 25 Pools of securilized assets4 19.067 25,395 26,642 25,846 26,092 26,642 26,275 25,980 25,625 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 secunties have been issued; these balances statistical release. For ordering address, see inside front cover. are no longer carried on the balance sheets of the loan originator. 2. Comprises mobile home loans and all other loans that are not included in automobile or 5. Totals include estimates for certain holders for which only consumer credit totals are revolving credit, such as loans for education, boats, trailers, or vacations. These loans may be available. secured or unsecured. 1.56 TERMS OF CONSUMER CREDIT1 Percent per year except as noted 1997 1998 Item 1995 1996 1997 Sept. Oct. Nov. Dec. Jan. Feb. Mar. INTEREST RATES Commercial banks' 1 48-monlh new car 9.57 9.05 9.02 n.a. n.a. 8.96 n.a. n.a. 8.87 n.a. 2 24-monlh personal 13.94 13.54 13.90 n.a. n.a. 14.50 n.a. n.a. 14.01 n.a. Credit card plan 3 All accounts 16.02 15.63 15.77 n.a. n.a. 15.65 n.a. n.a. 15.65 n.a. 4 Accounts assessed interest 15.79 15.50 15.57 n.a. n.a. 15.62 n.a. n.a. 15.33 n.a. Auto finance companies 5 New car 11.19 9.84 7.12 6.12 7.27 6.85 5.93 6.12 6.98 5.94 14.48 13.53 13.27 13.29 13.22 13.14 13.16 12.77 12.87 12.79 OTHER TERMS' Maturity (months) 54,1 51.6 54.1 55.4 54.4 53.7 53.5 52.8 52.6 51.5 8 Used car 52.2 51.4 51.0 50.8 50.6 50.5 50.5 52.2 52.5 52.6 Loan-to-value ratio 9 New car 92 91 92 93 92 91 92 92 92 92 10 Used car 99 100 99 99 101 99 99 98 97 97 Amount financed (dollars) 11 New car 16,210 16,987 18,077 18,520 18.779 18.923 19.121 18.944 18.825 18,932 12 Used car 11,590 12,182 12,281 12,190 12.287 12,389 12,547 12,391 12,356 12,431 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 MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1998 Transaction category or sector Q3 Q4 Ql Q2 Q3 Q4 QI Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors. 588.0r 574.6' 702.8' 727.8' 764.2 685.5' 625.4' 712.3 624.4 786.9 933.4 By sector and instrument 2 Federal government 256.1 155.9 144.4 145.0 23.1 155.3' 112.3' 64.9 -43.5 30.3 40.8 -30.0 3 Treasury securities 248.3 155.7 142.9 146.6 23.2 158.4' 115.6' 66.3 -43.8 31.2 39.0 -27.6 4 Budget agency securities and mortgages 7.8 1.5 - 1.6 -.1 -3.1 -3.3 -1.4 2 -.9 1.7 -2.4 5 Nonfederal 331.91 418.T 558.3' 582.8' 741.1 530.2' 513.1' 647.4 667.9 756.6 892.6 By instrument 6 Commercial paper 10.0 21.4 18.1 _ q 13.7 -14.2 -24.1 7.2 20.3 14.5 12.8 53.9 7 Municipal securities and loans 74.8 -35.9 -48.2 2^6 71.4 -64.7 41.6 43.4 96.7 56.4 89.3 124.3 8 Corporate bonds 75.2 23.3 73.3 72.5 90.7 67.8 89.9 79.4 86.1 122.9 74.4 157.2 9 Bank loans n.e.c 6.4 75.2 102.3' 66.2' 101.5 138.3' 27.2' 143.1 105.0 16.8 141.0 63.7 10 Other loans and advances -18.9 34.0 67.2 33.8 66.8 63.0 3.9 37.5 18.5 76.3 134.9 94.8 11 Mortgages 123.7r 175.8' 206.7' 320.0' 344.5 258.1' 336.O1 266.0 281.4 419.2 411.4 420.5 12 Home 156.2r 178.5' 174.5' 264.9' 268.8 239.7' 249.9' 228.4 191.2 344.5 310.9 315.8 13 Multifamily residential -6.8' 1.9' 10.6' 18.6' 17.2 12.9' 27.1' 9.5 18.8 7.7 33.0 27.7 14 Commercial -26.7r -6.9' 19.9' 33.9' 55.2 3.3' 57.4' 25.9 67.3 62.7 64.9 72.9 15 Farm 1.0 2 2 1.6 2.6 3.3 2.2 1.6 2.1 4.1 4.3 2.6 4.0 16 Consumer credit 60.7 124.9 138.9 88.8 52.5 81.9 38.6 70.8 60.0 50.5 28.8 56.9 flv borrowing sector 17 Household/ 205.9r 309.3' 348.9' 372.7' 350.3 355.2' 298.5' 339.2 292.5 381.4 388.0 426.9 18 Nonfinancial business 51.3r 141.7' 245.5' 195.8' 311.3 224.9' 163.3' 252.9 274.7 311.6 406.0 419.7 19 Corporate 45.51 134.1' 218.6' 146.5' 241.5 193.4' 92.9' 200.3 199.6 242.8 323.4 323.8 20 Nonfarm noncorporate 3.2 3.3 23.9' 44.5' 63.5 30.9' 61.2' 48.3 68.5 65.7 71.3 88.9 21 Farm 2.6 4.4 2.9 4.8 6.4 .6 9.2 4.3 6.7 3.1 11.3 7.0 22 State and local government 74.7r -32.3' -36.0' 14.3' 79.5 -49.9' 51.4' 55.3 100.7 63.6 98.6 124.6 23 Foreign net borrowing in United States 69.8 -14.0 71.1 70.5 51.5 105.7 87.9 26.3 56.4 87.8 35.5 60.3 24 Commercial paper -9.6 -26.1 13.5 11.3 3.7 37.5 4.4 15.5 10.4 -11.6 .7 56.0 25 Bonds 82.9 12.2 49.7 49.4 41.3 60.2 78.5 11.0 34.3 94.6 25.3 8.4 26 Bank loans n.e.c .7 1.4 8.5 9.1 8.5 4.7 7.8 -.7 11.5 7.3 15.7 5.5 27 Other loans and advances -4.2 -1.5 -.5 .8 -2.0 3.4 -2.7 .5 .2 -2.5 -6.1 -9.6 28 Total domestic plus foreign 657.8r 560.5' 773.8' 798.3' 815.7 791.2' 713.3' 738.6 680.8 874.7 968.9 1,001.5 Financial sectors 29 Total net borrowing by financial sectors 468.4' 456.4' 556.2' 649.2 456.5' 664.0' 342.5 679.6 603.1 971.7 828.5 By instrument 30 Federal government-related 165.3 287.5 204.1 231.5 212.8 222.9 252.8 105.7 286.2 161.0 298.1 227.3 31 Government-sponsored enterprise securities . 80.6 176.9 105.9 90.4 98.4 80.0 123.3 -8.9 198.1 46.4 157.9 142.4 32 Mortgage pool securities 84.7 115.4 98.2 141.1 114.4 142.9 129.6 114.6 88.1 114.6 140.3 84.8 33 Loans from U.S. government .0 -4.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 129.1' 180.9' 252.3' 324.7' 436.5 233.6' 411.1' 236.8 393.4 442.1 673.5 601.2 35 Open market paper -5.5 40.5 42.7 92.2 166.7 84.4 162.0 175.9 77.8 168.2 244.6 236.7 36 Corporate bonds 123.1' 121.8' 196.7' 179.7' 206.8 104.0' 187.9' 63.4 234.8 202.0 327.0 304.6 37 Bank loans n.e.c -14.4 -13.7 3.9' 16.9' 19.7 .9' 25.1' 11.4 10.3 24.3 32.8 19.2 38 Other loans and advances .. . 22.4 22.6 3.4 27.9 35.6 33.3 31.2 -20.1 63.0 37.5 61.7 32.7 39 Mortgages 3.6 9.8 5.6' 7.9' 7.8 11.0= 4.9' 6.2 7.5 10.1 7.3 8.0 By borrowing sector 40 Commercial banking 13.4 20.1 22.5 13.0 46.1 14.7 26.8 13.7 77.3 32.0 61.4 83.2 41 Savings institutions 11.3 12.8 2.6 25.5 19.7 25.8 23.0 -16.8 31.9 22.3 41.7 9.8 42 Credit unions .2 .2 -.1 .1 .1 .3 .3 _ 2 .2 .2 .3 .5 43 Life insurance companies .3 -.1 1.1 2 -.4 2.0 ^8 .1 .2 -.3 .0 44 Government-sponsored enterprises 80.6 172.1 105.9 90.4 98^4 80.0 123.3 -8.9 198.1 46.4 157.9 142.4 45 Federally related mortgage pools 84.7 115.4 98.2 141.1 114.4 142.9 129.6 114.6 88.1 114.6 140.3 84.8 46 Issuers of asset-backed securities (AHSs). 83.6' 72.9' 141.1' 153.6' 203.3 109.6' 160.2' 84.5 116.5 231.0 381.2 239.8 47 Finance companies -1.4 48.7 50.2 45.9 48.7 30.7 43.8 7.2 123.8 -2.9 66.5 82.2 48 Mortgage companies .0 -11.5 4 12.4 4.8 1.7 12.1 5.9 5.0 3.6 4.9 8.3 49 Real estate investment trusts (REITs) 3.4 13.7 5.7' 11.0' 24.8 11.8' 15.2' 15.1 19.8 32.0 32.1 36.3 50 Brokers and dealers 12.0 .5 -5.0 -2.0 8.1 5.7 4.9 -2.9 34.9 -6.9 7.0 -1.1 51 Funding corporations 6.3 23.1 34.9 64.1 80.7 33.7 123.0 129.4 -16.1 130.7 78.7 142.1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Financial Statistics D July 1998 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued 1997' Transaction category or sector 1994 1996 1997' Q3 Q4 Ql Q2 Q3 04 Ql 52 Total net borrowing, all sectors 952.2r l,028.9r l,230.2r 1,354.5' 1,464.9 1,247.7' 1,377.3' 1,081.1 1,360.4 1,477.8 1,940.5 1,830.0 53 Open market paper -5.1 35.7 74.3 102.6 184.1 107.7 142.3 198.6 108.5 171.1 258.1 346.6 54 U.S. government securities 421.4 448.1 348.5 376.5 235.9 378.2' 365.1' 170.6 242.6 191.3 338.9 197.2 55 Municipal securities 74.8 -35.9 -48.2 2.6 71.4 -64.7 41.6 43.4 96.7 56.4 89.3 124.3 56 Corporate and foreign bonds 281.2r 157.3' 319.6' 301.7' 338.8 232.0' 356.2' 153.8 355.2 419.5 426.6 470.3 57 Bank loans n.e.c -7.2 62.9 114.7 92.1 129.6 143.8 60.1 153.8 126.8 48.4 189.5 88.4 58 Other loans and advances -.8 50.3 70.1 62.5 100.4 99.7 32.4 17.9 81.7 111.3 190.5 117.8 59 Mortgages 127.3' 185.6' 212.3' 327.9' 352.3 269.1' 340.9' 272.2 288.9 429.3 418.7 428.5 60 Consumer credit 60.7 124.9 138.9 88.8 52.5 81.9 38.6 70.8 60.0 50.5 28.8 56.9 Funds raised through mutual funds and corporate equities 61 Total net issues 429.7 125.2 143.9 230.5 184.5 71.9 156.0 186.1 131.8 291.1 128.8 258.1 62 Corporate equities 137.7 24.6 -3.5 -7.0 -79.0 -100.1 -20.3 -67.3 -109.1 -12.6 -126.9 -78.2 63 Nonfinancial corporations 21.3 -44.9 -58.3 -64.2 -114.8 -127.6 -56.0 -90.4 -141.6 -83.2 -144.1 -109.6 64 Foreign shares purchased by U.S. residents 63.4 48.1 50.4 58.8 38.0 32.7 42.3 47.0 53.0 62.2 -10.4 9.3 65 Financial corporations 53.0 21.4 4.4 -1.6 -2.1 -5.1 -6.7 -23.9 -20.6 8.4 27.6 22.1 66 Mutual fund shares 292.0 100.6 147.4 237.6 263.4 171.9 176.3 253.4 240.9 303.7 255.7 336.2 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 1998 Transaction category or sector 1996 1997r Q3 Q4 QI 02 Q3 Q4' NET LENDING IN CREDIT MARKETS- 1 Total net lending in credit markets 952.2' l,02S.9r l,230.2r 1,354.5' 1,464.9 1,247.7' 1,377.3' 1,081.1' 1,360.4' 1,477.8' 1.940.5 2 Domestic nonfederal nonfinancial sectors 41.6' 241.1' -92.6' 7.2' -97.3 -202.6' -145.2' -193.4' -21.4' -164.4' -9.8 3 Household \.<f 277.8' 2.8' 11.5' -109.5 -106.5' -36.6' -245.9' -10.3' -158.9' -23.0 4 Nonfinancial corporate business 9.1 17.7 -8.8' 15.0' 9.9 -10.0' -33.2' 77.9' -53.3' 34.4' -19.5 5 Nonfarm noncorporate business -l.l .6 4.7' 4.4' 2.7 4.4' 4.4' 2.5' 2.7' 2.8' 2.9 6 Stale and local governments 32.6 -55.0 -91.4' -23.7' -.3 -90.5' -79.9' -27.9' 39.5' -42.7' 29.8 7 Federal government -18.4 -27.5 -.2 -7.7 4.9 -7.1 -4.1 1.9 5.6 3.0 9.1 8 Rest of the world 129.3 132.3 273.9 409.3 320.4 485.3 532.2 373.6' 301.2' 405.4' 201.4 9 Financial sectors 799.7' 683.0' 1,049.1' 945.8' 1,236.9 972.1' 994.5' 898.9' 1 075.0' 1,233.7' 1.739.8 10 Monetary authority 36.2 31.5 12.7 12.3 38.3 11.5 8.4 37.4 47.2 14.3 54.3 11 Commercial banking 142.2 163.4 265.9 187.5 324.8 196.1 248.3 308.1 309.2 209.8 472.2 12 U.S.-chartered banks 149.6 148.1 186.5 119.6 274.9 119.5 158.9 195.9 301.1 209.5 393.1 13 Foreign banking offices in United States . -9.8 11.2 75.4 63.3 40.2 71.1 80.5 104.0 1.1 -.6 56.4 14 Bank holding companies .0 .9 -.3 3.9 5.4 4.8 10.5 2.2 5.1 -5.0 19.4 15 Banks in U.S.-affiliated areas 2.4 3.3 42 .7 4.2 7 -1.6 6.1 1.8 5.8 3.2 16 Savings institutions -23.3 6.7 -7.6 19.9 -4.7 49.7 -47.9 -5.3 23.8 -35.3' -2.0 17 Credit unions 21.7 28.1 16.2 25.5 16.8 21.1 24.3 18.5 28.3' 14.4' 5.8 18 Bank personal trusts and estates 9.5 7.1 -8.3' -7.7' 7.6 -14.8' -2.5' 3.4' 10.7' 7.3' 8.8 19 Life insurance companies 100.9 66.7 99.2 72.5 113.2 123.2 118.1 94.3 175.0 107.0 76.4 20 Other insurance companies 27.7 24.9 21.5 22.5 23.3 14.2 27.7 -.1 27.9 32.4 32.8 21 Private pension funds 49.5 45.5 61.3' 48.3' 67.6 42.7' 34.1' 55.0' 58.5 66.2 90.7 22 State and local government retirement funds 22.7 22.3 27.5 45.9 36.6 45.5 41.9 3.6 39.2 90.6 13.0 23 Money market mutual funds 20.4 30.0 86.5 88.8 84.5 83.0 81.3 65.2 19.7 123.6 129.3 24 Mutual funds 159.5 -7.1 52.5 48.9 79.3 27.5 25.3 61.9 91.6 103.6 60.0 25 Closed-end funds 20.0 -3.7 10.5 2.2 1.2 2.2 2.2 2.7 1.3 .3 .4 26 Government-sponsored enterprises 87.8 117.8 84.7 92.0 95.0 81.4 137.9 45.1 119.2 55.5 160.0 27 Federally related mortgage pools 84.7 115.4 98.2 141.1 114.4 142.9 129.6 114.6 88.1 114.6 140.3 28 Asset-backed securities issuers (ABSs) 81.0' 65.8' 119.3' 123.4' 164.9 83.6' 111.2' 60.9' 101.7' 168.4' 328.4 29 Finance companies -20.9 48.3 49.9 18.4 21.9 13.2 -6.2 44.9 1.9 65.2 -24.3 30 Mortgage companies .0 -24.0 -3.4 8.2 16.4 3.4 4.1 -1.3' -24.4' 82.9' 8.3 31 Real estate investment trusts (REITs) .6 4.7 2.2 2.0' -2.0 3.4 -2.1' -2.1' -2.1' -2.1' -1.7 32 Brokers and dealers 14.8 -44.2 90.1 -15.7 13.7 35.5 82.7 -14.5 -11.7 15.8 65.3 33 Funding corporations -35.3 -16.2 -29.7' 9.8' 24.4 7.0' -24.0' 6.5' -30.0' -.7' 121.7 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets l,028.9r 1,230.2' US4.5' 1,464.9 1,247.7' 1,377.3' 1,081.1' 1,360.4' 1,477.8' 1,940.5 Other financial sources 35 Official foreign exchange -5.8 -6.3 .7 -26.6 .7 -17.6 .4 2.4 17.5 36 Special drawing rights certificates .0 .0 2.2 -.5 -.5 -1.8 .0 -2.1 .0 .0 .0 37 Treasury currency .4 .7 .6 0 .0 2.3 -2.3 .4 1.3 -1.9 38 Foreign deposits -18.5 52.9 35.3 82.0 89.0 119.7 104.5 188.6 18.8 105.4 43.1 39 Net interbank transactions 50.5 89.8 9.9 -51.6 -46.3 -97.2 17.6 -86.1' -46.4' -42.6' -10.0 40 Checkable deposits and currency 117.3 -9.7 -12.7 15.8 41.5 105.9 -53.3 85.3 64.2 -49.2 65.6 41 Small time and savings deposits -70.3 -39.9 96.6 97.2 97.1 94.2 90.1 157.9 24.5 53.8' 152.3 42 Large time deposits -23.5 19.6 65.6 114.0 122.5 180.2 135.4 49.9 176.3 194.1 69.9 43 Money market fund shares 20.2 43.3 142.3 145.8 157.6 145.1 187.5 182.4 58.5 243.6 146.0 44 Security repurchase agreements 71.3 78.2 110.4' 40.0' 115.2 -16.7' 84.3' 36.5' 198.0' 121.1' 105.3 45 Corporate equities 137.7 24.6 -3.5 -7.0 -79.0 -100.1 -20.3 -67..V -109.1' -12.6' -126.9 46 Mutual fund shares 292.0 100.6 147.4 237.6 263.4 171.9 176.3 253.4 240.9 303.7 255.7 47 Trade payables 52.0 93.7 101.9' 72.1' 96.3 -14.7' 109.3' 63.1' 63.1' 135.5' 123.3 48 Security credit 61.4 -.1 26.7 52.4 110.1 5.3 125.2 117.1 137.4 79 7 106.3 49 Life insurance reserves 36.0 34.5 44.9 43.6 56.0 59.2 66.7 39.8 77.5 62.8 43.7 50 Pension fund reserves 255.6 246.1 233.4' 232.1' 290.2 225.0' 283.9' 256.8' 337.3 321.8' 244 7 51 Taxes payable 11.4 2.6 5.1' 15.0' 13.9 13.5' 17.6' 31.0' 2.4' 30.5' -8.4 52 Investment in bank personal trusts .9 17.8 4.0' -8.6' 75.0 -17.4' -4.2' 68.8' 71.8' 80.8' 78.4 53 Noncorporate proprietors' equity 25.5' 57.5' 53.8' 30.8' 22.5 51.3' 17.6' 33.1' 25 7' 28.5' 2.8 54 Miscellaneous 346.6' 251.0' 444.3' 434.9' 584.4 406 1' 572.6' 632.3' 529.8' 531.1' 644.6 55 Total financial sources 2,319.3" 2,086.4' 2,747.2' 2,893.8' 3,474.5 2,552.9' 3,286.6' 3,104.4' 3,231.6' 3,669.4' 3,892.7 Liabilities not identified as assets ( —) 56 Treasury currency -.2 -.2 -.5 -1.0 -.6 1.3 -3.1 -.3 -.5 -2.4 57 Foreign deposits -5.7 43.0 25.1' 55.4' 71.5 86.1' 36.1' 178.7' -10.5' 83.1' 34.7 58 Net interbank liabilities 4.2 -2.7 -3.1 -3.3 -19.8 -4.4 4.2 26.9 -24.4 -51.6 -30.0 59 Security repurchase agreements 46.4 69.4 22.9' - 7' 71.9 -101.2' 114.7' -91.5' 172.1' 27.4' 179.9 60 Taxes payable 15.8 16.6 17.8 16.3 14.1 20.3 21.6 12.2 28.3 11.2 4.9 61 Miscellaneous -164.2' -144.2' -211.7' -89.8' 249.7 -124.5' -8.2' -104.2' -372.5' -2121' -310.0 Floats not included in assets (—) 62 Federal government checkable deposits -1.5 -4.8 -6.0 .5 -2.7 27.1 -21.4 -9.4 16.1 2.1 -19.5 63 Other checkable deposits -1.3 -2.8 -3.8 -4.0 -3.9 -4.7 -3.7 -2.6 -4.8 -3.4 -4.8 64 Trade credit -4.3 .3 -12.2' -32.2' 3.8 -102.5' -41.2' 13.1' -72.0' 68.6' 5.5 65 Total identified to sectors as assets 2,430.0' 2,111.8' 2,918.8' 2,952.6' 3,589.7 2,755.5' 3,187.5' 3,081.5' 3,499.8' 3,743.2' 4,034.6 1. Data in mis table also appear in the Board's Z.I (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. F.I 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 • July 1998 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING' Billions of dollars, end of period 1996 Transaction category or sector 1994 1995 1996 1997' Q3 Q4 Ql Q2 Q3 Q4' Ql Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors. 13,016.8' 13,719.6' 14,447.4' 15,210.1 14,252.1' 14,447.4' 14,613.7' 14,729.1' 14,933.9' 15,210.1 15,435.2 By sector and instrument 2 Federal government 3,492.3 3,636.7 3,781.8 3,804.9 3,733.1 3,781.8 3,829.8 3,760.6 3,771.2 3.804.9 3,830.8 3 Treasury securities 3,465.6 3,608.5 3,755.1 3,778.3 3,705.7 3,755.1 3,803.5 3,734.3 3,745.1 3,778.3 3,804.8 4 Budget agency securities and mortgages .. . 26.7 28.2 26.6 26.5 27.4 26.6 26.3 26.3 26.1 26.5 25.9 5 Nonfederal 9,524.5r 10,082.8' 10,665.6' 11,405.2 10,665.6' 10,783.9' 10,968.5' 11,162.7' 11,405.2 11,604.4 By instrument 6 Commercial paper 139.2 157.4 156.4 168.6 173.0 156.4 168.7 179.3 176.6 168.6 193.) 7 Municipal securities and loans 1,341.7 1,293.5 1,296.0 1,367.5 1,281.7 1,296.0 1,305.1' 1,326.8' 1,340.2' 1,367.5 1,397.1 8 Corporate bonds 1,253.0 1,326.3 1,398.8 1,489.5 1,376.4 1,398.8 1,418.7 1,440.2 1,470.9 1,489.5 1,528.8 9 Bank loans n.e.c 759.9 862.1' 928.3' 1,029.8 920.5' 928.3' 962.9' 994.2' 994.2' 1,029.8 1,045.1 10 Other loans and advances 669.6 736.9 770.6 837.4 769.4 770.6 784.4' 788.01 803.1' 837.4 865.7 11 Mortgages 4,377.2' 4,583.9' 4,903.8' 5,248.3 4,824.6' 4,903.8' 4,957.7' 5,035.0' 5,151.0' 5,248.3 5,341.2 12 Home 3,355.9' 3,530.4' 3,761.6' 4,030.3 3,703.8' 3,761.6' 3,806.1' 3,860.8' 3,958.1' 4,030.3 4,097.0 13 Multifamily residential 268.8' 279.5' 301.7' 319.0 295.0" 301.7' 304.1' 308.8' 310.7' 319.0 325.9 14 Commercial 669.5' 689.4' 753.4' 808.6 739.0' 753.4' 759.9' 776.7' 792.4' 808.6 826.8 15 Farm 83.0 84.6 87.1 90.4 86.7 87.1 87.7 88.7 89.8 90.4 91.4 16 Consumer credit 983.9 1,122.8 1,211.6 1,264.1 1,173.5 1,211.6 1,186.4 1,205.0 1,226.7' 1,264.1 1,233.5 By borrowing sector 17 Household 4,446.2' 4,800.4' 5,143.9' 5,497.0 5,043.7' 5,174.6' 5,260.7' 5,374.4' 5,497.0 5,546.5 18 Nonfinancial business 3,927.1' 4,167.3' 4,392.3' 4,699.3 4,361.9' 4,392.3' 4,466.9' 4,543.0' 4,608.2' 4,699.3 4,818.3 19 Corporate 2,663.1' 2,876.5' 3,052.1' 3,289.3 3,038.1' 3,052.1' 3,116.3' 3.170.2' 3.217.6' 3.289.3 3.387.1 20 Nonfarm noncorporate 1,121.8 1,145.8' 1,190.2' 1,253.7 1.174.3' 1,190.2' 1,202.2' 1,219.3' 1,235.2' 1,253.7 1,275.9 21 Farm 142.2 145.1 149.9 156.3 149.5 149.9 148.3 153.4 155.4 156.3 155.3 22 State and local government 1,151.1' 1,115.1' 1,129.4' 1,209.0 1,113.4' 1,129.4' 1.142.4' 1,164.8' 1,180.1' 1,209.0 1,239.6 23 Foreign credit market debt held in United States 371.8 442.9 513.4 558.8 490.2 513.4 517.8 531.6 548.7 558.8 571.3 24 Commercial paper 42.7 56.2 67.5 65.1 65.8 67.5 69.3 71.3 64.3 65.1 76.7 25 Bonds 242.3 291.9 341.3 382.6 321.7 341.3 344.1 352.7 376.3 382.6 384.7 26 Bank loans n.e.c 26.1 34.6 43.7 52.1 41.7 43.7 43.5 46.4 48.2 52.1 53.5 27 Other loans and advances 60.8 60.2 61.0 59.0 61.0 61.0 60.9 61.2 59.9 59.0 56.4 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 13,388.7r 14,162.5r 14,960.8' 15,768.9 14,960.8' 15,131.5' 15,260.7' 15,482.6' 15,768.9 16,006.5 Financial sectors 29 Total credit market debt owed by financial sectors 3,822.2' 4,281.2' 4,837.3r 5,453.5 4,672.0r 4,837.3' 4,918.2' 5,090.9' 5,211.8' 5,453.5 5,655.7 By instrument 30 Federal government-related 2,172.7 2,376.8 2,608.3 2,821.0 2,545.1 2,608.3 2,634.7 2,706.2 2,746.5 2,821.0 2,877.9 31 Government-sponsored enterprise securities 700.6 806.5 896.9 995.3 866.1 896.9 894.7 944.2 955.8 995.3 1,030.9 32 Mortgage pool securities 1,472.1 1,570.3 1,711.4 1,825.8 1,679.0 1,711.4 1,740.0 1,762.1 1,790.7 1,825.8 1.847.0 33 Loans from U.S. government .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 1,649.5' 1,904.4' 2,229.1' 2,632.5 2,126.9' 2,229.1' 2,283.5' 2,384.7' 2,465.3' 2,632.5 2,777.9 35 Open market paper 441.6 486.9 579.1 745.7 538.6 579.1 623.0 642.5 684.7 745.7 804.9 36 Corporate bonds 1,008.8' 1.205.4' 1,385.1' 1,558.9 1,339.4' 1,385.1' 1,396.5' 1,457.7' 1,478.6' 1,558.9 1,630.3 37 Bank loans n.e.c 48.9 52.8' 69.7' 89.4 62.8' 69.7' 72.2' 75.2' 80.7' 89.4 94.0 38 Other loans and advances 131.6 135.0 162.9 198.5 155.1 162.9 157.9 173.7 183.0 198.5 206.6 39 Mortgages 18.7 24.3' 32.2' 40.0 31.0' 32.2' 33.8' 35.6' 38.2' 40.0 42.0 By borrowing sector 40 Commercial banks 94.5 102.6 113.6 140.6 107.7 113.6 115.3 125.7 130.0 140.6 148.7 41 Bank holding companies 133.6 148.0 150.0 168.6 149.1 150.0 151.6 160.5' 164.0/ 168.6 181.3 42 Savings institutions 112.4 115.0 140.5 160.3 134.8 140.5 136.3 144.3 149.8 160.3 162.7 43 Credit unions .5 .4 .4 .6 .4 .4 .4 .4 .5 .6 .7 44 Life insurance companies .6 .5 1.6 1.8 1.1 1.6 1.8 1.8 1.9 1.8 1.8 45 Government-sponsored enterprises 700.6 806.5 896.9 995.3 866.1 896.9 894.7 944.2 955.8 995.3 1,030.9 46 Federally related mortgage pools 1,472.1 1,570.3 1,711.4 1.825.8 1,679.0 1,711.4 1,740.0 1,762.1 1,790.7 1,825.8 1,847.0 47 Issuers of asset-backed securities (ABSs) 579.0' 720.1' 873.8' 1,088.1 830.5' 873.8' 889.91 918.01 989.6' 1,088.1 1.142.7 48 Brokers and dealers 34.3 29.3 27.3 35.3 26.1 27.3 26.6 35.3 33.6 35.3 35.1 49 Finance companies 433.7 483.9 529.8 554.5 513.7 529.8 528.4 557.8 532.7 554.5 571.8 50 Mortgage companies 18.7 19.1 31.5 36.4 28.5 31.5 33.0 34.3 35.2 36.4 38.5 51 Real estate investment trusts (RETTs) 31.1 36.8' 47.8' 72.6 44^ 47.8' 51.6' 56.6' 64.6' 72.6 81.7 52 Funding corporations 211.0 248.6 312.7 373.8 291.0 312.7 348.6 350.0 363.4 373.8 412.9 All sectors 53 Total credit market debt, domestic and foreign 17,210.9' 18,443.7' 19,798.2' 21,222.4 19,414.3' 19,798.2' 20,049.6' 20^51.6' 20,694.4' 21,222.4 21,662.2 54 Open market paper 623.5 700.4 803.0 979.4 777.4 803.0 861.1 893.1 925.7 979.4 1,074.8 55 U.S. government securities 5,665.0 6,013.6 6,390.0 6,625.9 6,278.2 6,390.0 6,464.5 6,466.8 6,517.7 6,625.9 6,708.6 56 Municipal securities 1,341.7 1,293.5 1,296.0 1,367.5 1.281.7 1,296.0 1,305.1' 1,326.8' 1,340.2' 1,367.5 1,397.1 57 Corporate and foreign bonds 2,504.0' 2,823.6' 3,125.3' 3,431.0 3,037.5' 3,125.3' 3,159.3' 3,250.6' 3,325.9' 3,431.0 3,543.8 58 Bank loans n.e.c 834.9 949.6 1,041.7 1,171.3 1,025.0 1,041.7 1.078.6 1,115.7 1,123.1 1,171.3 1,192.6 59 Other loans and advances 862.0 932.1 994.5 1,094.9 985.4 994.5 1,003.2' 1,022.9' 1,046.0' 1.094.9 1,128.7 60 Mortgages 4,395.9' 4,608.2' 4,936.0' 5,288.3 4,855.6' 4,936.0' 4,991.5' 5,070.6' 5.189.1' 5,288.3 5,383.2 61 Consumer credit 983.9 1,122.8 1,211.6 1,264.1 1,173.5 1,211.6 1,186.4 1,205.0 1,226.7' 1,264.1 1,233.5 1. Data in this table also appear in the Board's Z.I (780) quarterly statistical release, tables L.2 through L.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES' Billions of dollars except as noted, end of period 1996 1997 1998 Transaction category or sector 1997r Q3 04 Ql Q2 Q3 Q4' 01 CREDIT MARKET DEBT OUTSTANDING^ 1 Total credit market assets 17,210.9' 18,443.7' 19,798.2' 21,222.4 19,414.3' 19,798.2' 20,049.6' 20351.6' 20,694.4' 21,222.4 21,662.2 2 Domestic nonfederal nonfinancial sectors 3,002.4' 2,874.6' 2,926.9' 2,793.6 2,911.5' 2,926.9' 2,854.7' 2,812.5' 2,758.3' 2.793.6 2,736.5 3 Household 1,945.7' 1,913.3' 1.979.3' 1,833.8 1,955.9' 1,979.3' 1,920.2' 1,873.7 1,822.7' 1,833.8 1,783.5 4 Nonfinancial corporate business 289.2 280.4' 286.0' 295.9 275.7' 286.0' 281.8 271.9' 280.3' 295.9 292.3 5 Nonfarm noncorporate business 37.6 42.3' 46.7' 49.4 45.6' 46.7' 47.4' 48.0' 48.7' 49.4 50.2 6 State and local governments 729.9 638.6' 614.8' 614.5 634.4' 614.8' 605.4' 618.9' 606.6' 614.5 610.5 7 Federal government 204.4 204.2 196.5 201.4 197.5 196.5 196.9 198.3 199.1 201.4 204.8 8 Rest of Ihe world 1,254.8 1,563.1 1,953.6 2,274.0 1,844.8 1,953.6 2,052.7' 2.126.4' 2,229.1' 2,274.0 2,340.0 9 Financial sectors 12,749.2' 13,801.8' 14,721.2' 15,953.4 14,460.5' 14,721.2' 14,945.4' 15,214.3' 15,507.8' 15,953.4 16,381.0 10 Monetary authority 368.2 380.8 393.1 431.4 386.2 393.1 397.1 412.4 412.7 431.4 433.8 11 Commercial banking 3.254.3 3,520.1 3,707.7 4,032.5 3.643.3 3,707.7 3,775.7 3,856.8 3,912.9 4,032.5 4,095.8 12 U.S.-chartered banks 2,869.6 3,056.1 3,175.8 3,450.7 3.135.3 3,175.8 3,218.1 3,295.2 3,351.9 3,450.7 3.507.1 13 Foreign banking offices in United States 337.1 412.6 475.8 516.1 454.2 475.8 499.5 501.8 501.0 516.1 517.7 14 Bank holding companies 18.4 18.0 22.0 27.4 19.3 22.0 22.5 23.8 22.5 27.4 31.2 15 Banks in U.S.-affiliated areas 29.2 33.4 34.1 38.3 34.5 34.1 35.6 36.1 37.5 38.3 39.7 16 Savings institutions 920.8 913.3 933.2 928.5 945.2 933.2 931.9 937.8 929 0' 928.5 930.5 17 Credit unions 246.8 263.0 288.5 305.3 282.6 288.5 291.2 299.9' 303.9' 305.3 307.5 18 Bank personal trusts and estates 248.0 239.7' 232.0' 239.5 232.6' 232.0' 232.8' 235.5' 237.3' 239.5 240.1 19 Life insurance companies 1,482.6 1,581.8 1,654.3 1,767.4 1,627.0 1,654.3 1,680.2 1,724.1 1,750.4 1,767.4 1,795.7 20 Other insurance companies 446.4 468.7 491.2 514.4 484.2 491.2 491.2 498.1 506.2 514.4 520.8 21 Private pension funds 656.9 718.2' 766.5' 834.2 758.0' 766.5' 780.3' 794.9' 811.5' 834.2 852.3 22 State and local government retirement funds 455.8 483.3 529.2 565.8 517.7 529.2 531.6 542.7 562.0 565.8 577.0 23 Money market mutual funds 459.0 545.5 634.3 718.8 606.6 634.3 659.0 656.5 678.7 718.8 770.1 24 Mutual funds 718.8 771.3 820.2 899.5 818.3 820.2 838.3 860.6 889.2 899.5 931.6 25 Closed-end funds 86.0 96.4 98.7 99.8 98.1 98.7 99.3 99.7 99.7 99.8 100.0 26 Government-sponsored enterprises 663.3 748.0 813.6 908.6 779.3 813.6 824.3 854.8 868.7 908.6 949.5 27 Federally related mortgage pools 1,472.1 1,570.3 1,711.4 1,825.8 1,679.0 1,711.4 1,740.0 1,762.1 1,790.7 1,825.8 1,847.0 28 Asset-backed securities issuers (ABSs) 541.7' 661.0' 784 4' 949.2 753.4' 784.4' 794.6' 819.0' 863.9' 949.2 991.5 29 Finance companies 476.2 526.2 544.5 566.4 538.3 544.5 552.4 553.1 564.4 566.4 571.6 30 Mortgage companies 36.5 33.0 41.2 57.6 40.2 41.2 40.9' 34.8' 55.5' 57.6 60.2 31 Real estate investment trusts (REITs) 13.3 15.5 17.5' 15.5 18.0 17.5' 17.0' 16.5' I5.9r 15.5 15.0 32 Brokers and dealers 93.3 183.4 167.7 181.4 147.1 167.7 164.1 161.2 165.1 181.4 244.8 33 Funding corporations 109.3 82.2' 92.0' 111.7 105.4' 92.0' 103.6' 93.8' 90.1' 111.7 145.9 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 17,210.9' 18,443.7' 19,798.2' 21,222.4 19,414.3' 19,798.2' 20,049.6' 20351.6' 20,694.4' 21,222.4 21,662.2 Other liabilities 35 Official foreign exchange 53.2 63.7 53.7 48.9 54.3 53.7 46.3 46.7 46.1 48.9 48.2 36 Special drawing rights certificates 8.0 10.2 9.7 9.2 9.7 9.7 9.2 9.2 9.2 9.2 9.2 37 Treasury currency 17.6 18.2 18.2 18.2 18.8 18.2 18.3 18 3 18.7 18.2 18.3 38 Foreign deposits 324.6 359.2 438.1 527.0 415.1 438 1 485.2 489.9 516.2 527.0 540.1 39 Net interbank liabilities 280.1 290.7 240.8 192.8 225.8 240.8 210.9' 197.1 186.9 192.8 201.2 40 Checkable deposits and currency 1,242.0 1,229.3 1,245.1 1,286.6 1,220.8 1.245.1 1.220.0 1,265.3 1,234.2 1,286.6 1,259.8 41 Small time and savings deposits 2,183.2 2,279.7 2,377.0 2,474.1 2,357.9 2,377.0 2,427.1 2.432.3 2,438.8' 2.474.1 2,526.0 42 Large time deposits 411.2 476.9 590.9 713.4 557.2 590.9 6O6.0 646.7 696.1 713.4 742.4 43 Money market fund shares 602.9 745.3 891.1 1,048.7 838.1 891.1 950.8 952.4 1,005.1 1,048.7 1,132.9 44 Security repurchase agreements 549.5 659.9' 699.9' 815.1 686.9' 699.9' 713.8' 766.7' 795.4' 815.1 881.1 45 Mutual fund shares 1,477.3 1,852.8 2,342.4 2,994.7 2.211.6 2,342.4 2,411.5 2,719.6 2,977.0 2,994.7 3.348.4 46 Security credit 279.0 305.7 358.1 468.2 317.8 358.1 380.0 414.8 432.2 468.2 498.6 47 Life insurance reserves 505.3 550.2 593.8 649.7 577.1 593.8 603.7 623.1 638.8 649.7 663.0 48 Pension fund reserves 4,880.1 5,599.6' 6,329.5' 7,452.2 6,039.8' 6,329.5' 6,417.1' 6,942.5' 7,331.8' 7,452.2 8.036.2 49 Trade payables 1,141.5 1,243.4' 1,315.5' 1.411.8 1,260.6' 1,315.5' 1,300.4' 1,321.9' 1,351.9' 1,411.8 1,401.7 50 Taxes payable 101.4 106.5' 121.5' 135.4 119.1' 121.5' 134.8' 130.7' 139.5' 135.4 147 I 51 Investment in bank personal trusts 699.4 803.0' 871.7' 1.082.8 843.1' 871.7' 888.7' 982.9' 1,058.9' 1,082.8 1.173.1 52 Miscellaneous 5,397.3' 5,767.7' 6,082.7' 6,489.0 5,972.2' 6,082.7' 6,276.5' 6,224.3' 6.396.9' 6,489.0 6,725.1 53 Total liabilities 37,364.7' 40,805.7' 44377.7' 49,040.3 43,140.3' 44,377.7' 45,150.1' 46336.0' 47,968.1' 49.0403 51,014.5 Financial assets not included in liabilities (+) 54 Gold and special drawing rights 21.1 22.1 21.4 21.1 21.2 21.4 20.9 21.1 21.0 21.1 21.2 55 Corporate equities 6.237.9 8,331.3 10,061.1 12,958.6 9,340.5 10,061.1 10,072.3 11.719.8 12,804.6 12,958.6 14,618.6 56 Household equity in noncorporate business 3.422.6' 3.647.5' 3,863.3' 4,156.7 3,817.7' 3,863.3' 3,947.1' 4.030.7' 4,093.1' 4,156.7 4,203.9 Liabilities not identified as assets (-) 57 Treasury currency -5.4 -5.8 -6.8 -7.4 -6.0 -6.8 -6.9 -7.0 -6.8 -7.4 -7.5 58 Foreign deposits 276.2 300.6' 353.1' 424.6 347.0' 353.1' 397.8' 395.2' 416.0' 424.6 425.2 59 Net interbank transactions -6.5 -9.0 -10.6 -32.1 -11.6 -10.6 -1.6 -8.1 -22.1 -32.1 -2 2 60 Security repurchase agreements 67.8 90.7' 90.0' 162.0 72.1' 90.0' 68.4' 109.2' 126.0' 162.0 203.8 61 Taxes payable 48.8 61.3' 74.7' 88.5 68.9' 74.7' 72.3' 74.3' 84.2' 88.5 84.9 62 Miscellaneous -983.1' -1,260.8' -1,650.8' -1,960.4 -1,492.7' -1,650.8' -1,606.0' -1,745.9' -1,789.5' -1,960.4 -2,070.6 Floats not included in assets (-) 63 Federal government checkable deposits 3.4 3.1 -1.6 -8.1 -1.7 -1.6 -9.7 -6.8 -7.8 -8.1 -10.4 64 Other checkable deposits 38.0 34.2 30.1 26.2 23.1 30.1 25.6 27.9 19.5 26.2 19.9 65 Trade credit -245.8 -258.1' -290.3' -297.5 -359.7' -290.3' -345.8' -371.8' -380.2' -297.5 -364.2 66 Total identified to sectors as assets 47,852.8' 53,850.5' 59,735.7' 67,780.8 57,680.3' 59,735.7' 60,596.4' 63,840.5' 66,447.6' 67,780.8 71,579.2 1. Data in this lable also appear in the Board's Z. 1 (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. L. 1 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 • July 1998 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1992 = 100, except as noted 1997 1998' Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 Industrial production1 114.5 118.5 124.5 125.2 125.6 126.5 127.5 127.9 127.8 127.4 127.7 127.8 Market groupings 2 Products, total 110.6 113.7 118.5 119.2 119.1 120.2 121.2 121.0 121.3 120.6 121.0 121.2 3 Final, total 111.3 114.6 119.6 120.5 120.3 121.5 122.5 122.2 122.6 121.6 122.0 122.3 109.9 111.8 114.4 114.6 114.5 115.9 116.7 115.9 116.6 115.2 115.5 115.5 5 Equipment 113.8 119.6 128.8 130.9 130.6 131.3 132.8 133.4 133.1 133.0 133.7 134.5 6 Intermediate 108.3 110.8 115.1 115.3 115.2 116.3 117.3 117.4 117.4 117.6 117.7 117.5 134 9 136 1 136 7 137 7 138 9 138 2 138 2 138 5 138 5 Industry groupings 8 Manufacturing 116.0 120.2 127.0 127.9 128.0 129.1 130.4 130.9 131.1 130.7 130.5 130.8 9 Capacity utilization, manufacturing (percent)'. . 82.8 81.4 81.7 81.8 81.6 81.9 82.3 82.3 82.1 81.5 81.0 80.8 10 Construction contracts3 122.0 130.7' 140.8' 140.0' Ul.ff 141.0' 141.0' Ul.ff 140.0 141.0 135.0 135.0 11 Nonagricultural employment, total4 114.9 117.2 119.9 120.1 120.4 120.7 121.1 121.5 121.9 122.1 122.1 122.4 12 Goods-producing, total 98.3 99.0 100.3 100.4 100.4 100.6 100.9 101.3 101.9 102.0 101.6 101.7 13 Manufacturing, total 97.5 97.2 97.6 97.1 97.7 97.9 98.1 98.3 98.5 98.6 98.5 98.5 14 Manufacturing, production workers 99.0 98.4 98.9 98.9 99.0 99.2 99.5 99.7 99.9 100.0 99.9 99.8 15 Service-producing 120.2 123.0 126.2 126.5 126.8 127.2 127.6 127.9 128.3 128.6 128.7 129.0 16 Personal income, total 158.2 167.0 176.8 177.8 178.3 179.2 180.5 181.3 182.3 183.4 184.0 184.8 17 Wages and salary disbursements 150.9 159.8 170.6 171.7 172.3 173.5 175.6 176.4 177.7 179.2 179.7 180.5 18 Manufacturing 130.4 135.7 142.0 142.1 142.8 144.4 145.7 146.4 146.6 147.0 147.1 146.7 19 Disposable personal income5 158.7 166.2 174.4 175.2 175.8 176.6 177.7 178.4 179.0 179.9 180.5 181.1 20 Retail sales5 151 5r 159 6' 166 9r 168 5r 168 (f 167 8' 168 4' 169 1' 170 8 172 2 172 2 173 1 Prices6 21 Consumer (1982-84=100) 152.4 156.9 160.5 160.8 161.2 161.6 161.5 161.3 161.6 161.9 162.2 162.5 22 Producer finished goods (1982= 100) 127.9 131.3 131.8 131.7 131.8 132.3 131.7 131.1 130.2 130.1 129.7 130 0 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 pnee 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 Calegory 1997 Sept. Apr. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 126,297 136,439 136,406 136,864 137,169 137,493 137,557 137,523 137,242 Employment 2 Nonagricultural industries' 121.460 123,264 126,159 126,339 126,583 127,191 127,392 127,764 127,829 127,862 128,033 3 Agriculture 3,440 3.443 3,399 3,422 3,327 3,384 3,385 3,319 3,335 3.132 3,350 Unemployment 4 Number 7,404 7.236 6.739 6,678 6,496 6.28 6,392 6,409 6,393 6,529 5,859 5 Rate (percent of civilian labor force) 5.6 5.4 4.9 4.9 4.8 4.7 4.7 4.6 4.7 4.3 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 117,191 119523 122,257 122,792 123,083 123512 123,86* 124,265 124,524' 124,500 124,762 7 Manufacturing 18,524 18.457 18.538 18,553 18,590 18,634 18,674 18,722 18,723 18,716 18,706 8 Mining 581 574 573 576 574 572 574 574 573' 570 566 9 Contract construction 5,160 5,400 5.627 5,642 5,650 5,682 5,747 5,843 5,878' 5,793 5,828 10 Transportation and public utilities 6,132 6,261 6,426 6,473 6.497 6,495 6,478 6,516 6,544' 6.559 6,557 11 Trade 27,565 28,108 26.788 28.902 28.970 29,132 29,196 29,242 29,270' 29,258 29,313 12 Finance 6,806 6,899 7.053 7,082 7,108 7,132 7,151 7,170 7,190 7,218 7,248 13 Service 33,117 34,377 35,597 35,850 35,945 36,102 36,276 36,417 36,534' 36,572 36,711 14 Government 19,305 19,447 19.655 19,714 19,749 19,763 19,770 19,781 19,812 19,814 19,833 1. Beginning January 1994, reflects redesign of current population survey and populalion 4. Includes all full- and pan-time employees who worked during, or received pay for, the controls from the 1990 census. pay period that includes the twelfth day of the month; excludes proprietors, self-employed 2. Persons sixteen years of age and older, including Resident Armed Forces. Monthly persons, household and unpaid family workers, and members of the armed forces. Data are figures are based on sample data collected during the calendar week that contains the twelfth adjusted to the March 1992 benchmark, and only seasonally adjusted data are available at this day; annual data are averages of monthly figures. By definition, seasonally 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 1998 Q2 Q3 Q4 Ql' Q2 Q3 Q4 Ql Q2 Q3 Q4 Qlr Output (1992=100) Capacity (percent of 1992 output) Capacity utilization rate (percent)2 1 Total industry 127.6 151.3 154.8 82.4 82.7 83.2 82.4 2 Manufacturing 130.8 156.3 160.4 81.5 81.6 82.2 81.5 3 Primary processing3 117.7 118.5 119.8 120.2 136.9 138.0 139.2 140.4 86.0 85.8 86.0 85.6 4 Advanced processing4 129.7 132.1 135.3 136.0 163.2 165.7 168.1 170.7 79.5 79.8 80.4 79.7 5 Durable goods 140.2 143.7 147.2 148.1 173.8 177.2 180.6 184.2 80.7 81.1 81.5 80.4 6 Lumber and products 116.4 114.9 114.7 116.0 138.6 140.0 141.3 142.2 84.0 82.1 81.2 81.6 7 Primary metals 123.8 125.5 127.8 127.6 136.0 137.2 138.5 140.1 91.0 91.5 92.3 91.1 8 Iron and steel 122.6 122.8 126.5 126.1 135.4 136.6 137.9 139.4 90.6 89.9 91.8 90.5 9 Nonferrous 125.3 128.8 129.4 129.5 136.4 137.7 138.9 140.7 91.8 93.5 93.2 92.0 10 Industrial machinery and equipment 168.2 173.9 177.6 180.5 199.0 204.4 210.0 215.9 84.5 85.1 84.6 83.6 11 Electrical machinery 226.6 236.6 246.0 253.8 276.7 289.1 301.9 315.6 81.9 81.9 81.5 80.4 12 Motor vehicles and parts 130.5 136.7 144.0 137.3 182.6 184.7 186.7 188.8 71.4 74.0 77.1 72.7 13 Aerospace and miscellaneous transportation equipment 92.8 95.6 98.6 101.6 123.4 124.1 124.8 125.4 75.2 77.1 79.0 81.0 14 Nondurable goods 110.7 111.1 112.6 113.1 134.3 135.0 135.7 136.5 82.4 82.3 82.9 82.9 15 Textile mill products 108.5 110.9 111.5 110.1 131.1 131.7 132.3 132.9 82.8 84.3 84.3 82.9 16 Paper and products 112.2 114.1 113.5 112.8 125.5 126.0 126.7 127.4 89.4 90.5 89.6 88.5 17 Chemicals and products 114.8 114.8 117.1 118.4 145.1 146.3 147.5 148.7 79.1 78.5 79.4 79.6 18 Plastics materials 127.6 130.6 131.4 138.1 140.0 141.9 92.4 93.3 92.6 19 Petroleum products 111.0 109.5 109.8 11L9 114.7 115.2 115.7 116.2 96.8 95.1 94.9 96.3 20 Mining 106.0 106.4 105.9 107.9 117.9 118.1 118.2 118.4 89.9 90.1 89.6 91.1 21 Utilities 111.7 114.0 115.5 110.8 126.3 126.7 127.1 127.4 88.5 90.0 90.9 86.9 22 Electric 111.3 114.2 115.7 112.1 124.6 125.0 125.4 125.7 89.3 91.4 92.3 89.1 1973 1975 Previous cycle Latest cycle6 High • High Low High Apr. Jan.' Apr.p Capacity utilization rate (percent)" 1 Total industry 72.6 87.3 71.1 85.4 78.1 82.6 83.3 83.3 82.9 82.3 82.2 2 Manufacturing 88.5 70.5 86.9 69.0 85.7 76.6 81.6 82.3 82.3 82.1 81.5 81.0 3 Primary processing3. 91.2 68.2 88.1 66.2 88.9 77.7 86.2 86.2 86.3 86.1 85.6 85.1 84.8 4 Advanced processing 87.2 71.8 86.7 70.4 84.2 76.1 79.6 80.6 80.5 80.3 79.6 79.1 79.1 5 Durable goods 89.2 68.9 87.7 63.9 84.6 73.1 80.8 81.8 81.7 81.0 80.3 79.9 79.6 6 Lumber and products 88.7 61.2 87.9 60.8 93.6 75.5 83.9 82.8 80.7 80.8 82.1 81.8 82.1 7 Primary metals 100.2 65.9 94.2 45.1 92.7 73.7 90.2 93.1 91.6 92.7 91.1 89.5 88.5 8 Iron and steel 105.8 66.6 95.8 37.0 95.2 71.8 89.8 92.1 91.2 92.2 90.8 88.4 87.6 9 Nonferrous 90.8 59.8 91.1 60.1 89.3 74.2 90.8 94.4 92.3 93.6 91.6 90.9 89.8 10 Industrial machinery and equipment 96.0 74.3 93.2 64.0 85.4 72.3 85.2 84.6 84.3 84.3 83.0 83.5 83.1 11 Electrical rsxhinery 89.2 64.7 89.4 71.6 84.0 75.0 82.1 82.0 81.6 81.4 80.5 79.5 79.0 12 Motor vehicles and parts 93.4 51.3 95.0 45.5 89.1 55.9 71.3 78.1 78.2 73.5 72.4 72.2 73.0 13 Aerospace and miscellaneous transportation equipment 78.4 67.6 81.9 66.6 87.3 79.2 74.7 78.5 80.5 81.3 81.2 80.6 79.9 14 Nondurable goods 87.8 71.7 87.5 76.4 87.3 80.7 82.7 83.0 83.0 83.4 82.9 82.3 82.3 15 Textile mill products 91.4 60.0 91.2 72.3 90.4 77.7 83.4 85.1 83.4 84.3 82.6 81.7 81.4 16 Paper and products 97.1 69.2 96.1 80.6 93.5 85.0 89.7 89.7 89.9 88.4 89.9 87.3 86.8 17 Chemicals and products 87.6 69.7 84.6 69.9 86.2 79.3 79.6 78.9 79.9 80.1 79.5 79.3 79.0 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 93.0 93.0 93.7 93.9 90.3 19 Petroleum products 96.7 81.1 90.0 66.8 88.5 85.1 96.2 93.8 94.6 96.7 95.7 96.6 97.1 20 Mining 94.3 88.2 96.0 80.3 88.0 87.0 89.5 89.7 89.4 91.6 91.1 90.7 90.5 21 Utilities 96.2 82.9 89.1 75.9 92.6 83.4 89.2 90.7 89.9 85.4 85.2 90.2 88.4 22 Electric 99.0 82.7 88.2 78.9 95.0 87.1 90.6 91.5 91.0 87.7 87.9 91.8 89.6 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 • July 1998 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1997 1998 pro- 1997 Group por- avg. tion Apr. May June July Aug. Sept Oct. Nov. Dec. Jan.' Feb.' Mar. Apr.p Index (1992 =100) MAJOR MARKETS 1 Total index 100.0 124.5 123.1 123.3 123.5 124.5 125.2 125.6 126.5 127.5 127.9 127.8 127.4 127.7 127.8 2 Products 60.5 118.5 117.2 117.7 117.6 118.1 119.2 119.1 120.2 121.2 121.0 121.3 120.6 121.0 121.2 3 Final products 46.3 119.6 118.0 118.6 118.6 119.2 120.5 120.3 121.5 122.5 122.2 122.6 121.6 122.0 122.3 4 Consumer goods, total 29.1 114.4 113.4 113.9 113.5 113.9 114.6 114.5 115.9 116.7 115.9 116.6 115.2 115.5 115.5 5 Durable consumer goods 6.1 131.3 127 4 128.8 129.8 128.1 132.1 131.9 131.4 136.5 134.7 135.6 134.3 134.3 135.5 6 Automotive products 2.6 129.9 122.3 124.6 126.7 120.3 131.6 132.8 131.2 138.4 133.8 132.6 131.0 13L2 132.3 7 Autos and trucks 1.7 136.5 124.4 127.6 130.3 120.2 137.6 140.9 139.7 147.8 142.7 139.9 137.2 135.1 139.3 8 Autos consumer 9 115.2 110 7 112.4 110.8 113 o 118.6 119.9 115.2 120.3 113.9 116.0 105.7 105.2 107.7 9 Trucks, consumer '.1 159.1 142.7 147.3 154.2 I3L9 161.2 166.5 168.6 179.8 175.7 168.2 172.7 168^8 174.8 10 Auio parts and allied goods .9 119.3 118.2 119.1 120.3 119.3 121.8 120.1 117.9 123.8 120.1 120.9 121.0 124.5 121.0 11 Other 3.5 132.3 131.4 132.1 132.3 134.4 132.5 131.1 131.5 135.0 135.3 138.0 136.9 136.8 138.2 12 Appliances, televisions, and air conditioners 1.0 168.6 164.2 166.5 165.4 174.8 169.8 166.0 169.4 177.2 178.7 186.4 188.1 191.1 197.2 13 Carpeting and furniture .8 117.0 116.7 117.7 119.0 116.4 117.7 116.2 116.5 122.1 116.8 122.5 118.1 115.2 117.1 14 Miscellaneous home goods 1.6 120.0 120.3 120.2 120.3 122.1 119.8 119.4 118.6 119.2 122.1 121.0 120.8 120.8 120.2 15 Nondurable consumer goods 23.0 110.2 109.9 110.1 109.4 110.3 110.3 110.2 112.1 111.8 111.3 112.0 110.5 110.9 110.6 16 Foods and tobacco 10.3 109.3 109.1 108.9 108.1 109.6 108.9 108.6 109.7 110.7 110.0 113.0 112.0 111.2 111.6 17 Clothing 24 95.9 96.5 95.8 95.4 95.8 96.0 96.0 96.4 95.1 95 1 95.2 93.5 94 0 93.6 18 Chemical products 4.5 119.1 118.4 119.3 119.1 117.3 119.4 119.4 123.0 121.3 121.8 122.9 121.7 12L5 121.4 19 Paper products 2.9 109.3 108.2 108.9 109.8 110.8 109.8 110.1 111.3 111.7 110.1 110.2 107.9 105.6 105.3 20 Energy 2.9 111.3 111.9 112.8 109.7 112.4 112.8 112.4 116.2 113.9 113.5 107.4 105.1 111.8 109.9 21 Fuels .8 109.3 109.6 111.3 111.5 108.8 111.0 110.8 112.0 106.7 109.3 110.5 110.0 110.1 110.5 22 Residential utilities 2.1 112.0 112.6 113.0 108.3 113.7 113.2 112.8 117.8 117.1 115.1 105.4 102.2 112.2 109.1 23 Equipment 17.2 128.8 126.0 126.8 127.7 128.6 130.9 130.6 131.3 132.8 133.4 133.1 133.0 133.7 134.5 24 Business equipment tt.2 141.9 137.9 139.0 140.2 141.6 144.6 144.4 145.5 147.5 148^6 147.3 146J 14X8 149^2 25 Information processing and related 5.4 168.1 163.0 164.4 166.8 169.3 171.1 172.9 174.3 174.7 176.0 175.4 177.4 177.9 181.4 26 Computer and office equipment 1.1 385.6 358.4 365.3 375.8 391.6 407.1 414.6 420.3 427.3 440.1 457.1 473.1 494.1 509.1 27 Industrial 4.0 133.3 131.6 131.5 131.7 133.7 135.8 133.8 135.9 136.3 137.8 136.4 134.3 135.6 134.7 28 Transit 2.5 111.2 104.6 106.7 107.3 106.9 113.3 114.2 113.0 119.9 121.2 119.8 117.9 119.5 121.2 29 Autos and trucks 1.2 119.7 112.5 114.6 113.6 111.5 120.3 120.2 117.0 128.2 124.6 121.1 116.4 120.6 123.9 30 Other 1.3 135.0 134.4 135.2 136.3 136.3 137.9 135.1 137.5 137.3 136.2 133.6 132.6 133.9 135.8 31 Defense and space equipment 3.3 75.2 75.4 75.6 76.0 74.9 75.0 74.7 74.7 74.5 74.5 75.7 76.0 75.4 75.7 32 Oil and gas well drilling .6 149.7 151.4 150.7 150.9 152.1 153.2 153.1 149.1 150.0 145.9 154.0 158.9 158.6 150.5 33 Manufactured homes .2 139.1 142.9 141.9 139.1 143.5 139.5 137.2 136.9 138.1 132.4 144.0 148.6 34 Intermediate products, total 14.2 115.1 114.7 114.9 114.7 114.6 115.3 115.2 116.3 117.3 117.4 117.4 117.6 117.7 117.5 35 Construction supplies 5.3 121.8 121.8 122.2 122.2 121.2 122.7 120.4 121.3 123.6 123.2 125.2 125.9 125.1 124.9 36 Business supplies 8.9 111.1 110.6 110.6 110.2 110.6 111.0 112.2 113.4 113.5 113.9 112.9 112.7 113.3 113.2 37 Materials 39.5 134.1 132.5 132.4 133.0 134.9 134.9 136.1 136.7 137.7 138.9 138.2 138.2 138.5 138.5 38 Durable goods materials 20.8 158.2 155.1 155.4 156.9 159.3 160.3 161.3 163.2 165.0 166.5 166.2 165.8 165.9 166.1 39 Durable consumer parts 4.0 139.2 137.1 134.7 136.2 139.2 140.3 140.7 141.8 142.3 146.9 138.5 139.4 138.7 138.3 40 Equipment parts 7.6 221.9 213.4 216.7 220.0 224.6 227.6 229.6 233.3 237.9 240.9 245.5 246.3 247.5 248.4 41 Other 9.2 125.5 124.7 124.5 125.0 125.9 126.0 126.6 127.8 128.8 128.3 128.8 127.3 127.2 127.3 42 Basic metal materials 3.1 120.6 118.8 119.9 121.2 121.1 121.8 121.7 122.5 124.9 122.2 125.0 124.5 122.2 121.9 43 Nondurable goods materials 8.9 113.0 113.0 111.8 111.9 113.5 112.3 113.3 113.1 114.4 116.0 114.5 115.5 114.1 113.9 44 Textile materials 1.1 109.3 109.4 106.1 108.1 112.3 108.4 111.4 111.9 111.0 112 5 107 9 108 8 107 9 106 8 45 Paper materials L8 112.6 112.6 112.6 110.9 113.8 114.3 112/7 113.4 1122 1117 1123 113J 110.1 109.8 46 Chemical materials 3.9 115.2 115.4 113.8 113.8 115.1 113.9 115.6 115.0 116.5 119.1 119.2 119.0 118.3 118.2 47 Other 2 1 110.3 109.7 109.5 110.8 1 lo.l 108.6 109.5 109.0 113.7 113.3 109.4 112.5 1115 1117 48 Energy materials 9.7 103^9 103.7 103/7 103.2 104^6 103.9 105 5 104.7 103 9 104 2 103 7 103.5 105.6 105.3 49 Primary energy 6.3 101.7 101.7 102.1 101.0 102.3 102.4 102^2 101.7 10L4 100/7 102.8 102.4 103.2 103.1 50 Converted fuel materials 3.3 108.3 107.6 106.8 107.3 109.0 106.8 111.8 110.6 108.6 110.9 105.5 105.5 110.2 109.7 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.1 124.3 123.2 123.4 123.6 124.8 125.1 125.4 126.5 127.2 127.7 127.7 127.4 127.7 mi 52 Total excluding motor vehicles and parts 95.1 123.8 122.7 123.0 123.1 124.3 124.6 124.8 125.9 126.6 127.0 127.3 126.9 127.2 127.3 53 Total excluding computer and office equipment 98.2 121.9 120.7 120.9 121.1 122.0 122.6 122.9 123.8 124.8 125.1 124.9 124.4 124.6 124.6 54 Consumer goods excluding autos and trucks . 27.4 113.2 112.8 113.1 112.5 113.5 113.4 113.0 114.6 115.0 114.4 115.4 114.0 114.4 114.2 55 Consumer goods excluding energy 26.2 114.8 113.6 114.0 114.0 114.1 114.9 114.7 115.9 117.0 116.2 117.9 116.6 116.0 116.3 56 Business equipment excluding autos and trucks 12.0 144.5 141.0 141.9 143.4 145.2 147.5 147.3 149.0 149.7 151.5 150.5 150.3 151.0 152.3 57 Business equipment excluding computer and office equipment 12.1 129.1 126.0 126.9 127.7 128.6 131.2 130.8 131.8 133.5 134.4 132.7 131.6 132.2 133.2 58 Materials excluding energy 29.8 143.7 141.6 141.4 142.5 144.6 144.8 145.8 147.0 148.6 150.2 149.4 149.5 149.1 149.2 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 1997 Group sic- p p o ro r- code tion Apr. May July Sept. Oct. Jan r Apr.p Index (1992= 100) MAJOR INDUSTRIES 59 Total index... 100.0 124.5 123.1 123.3 123.5 124.5 125.2 125.6 126.5 127.5 127.9 127.8 127.4 127.7 60 Manufacturing 85.4 127.0 125.4 125.7 126.1 126.9 127.9 128.0 129.1 130.4 130.9 131.1 130.7 130.5 130.8 61 Primary processing 26.5 118.1 117.7 117.7 117.7 118.3 118.5 118.6 118,9 120.0 120.5 120.6 120.3 119.8 119.7 62 Advanced processing 58.9 131.4 129.2 129.6 130.2 131.2 132.5 132.7 134,1 135.5 136.1 136.4 135.9 135.8 136.4 63 Durable goods 45.0 142.3 139.5 140.1 141.2 142.4 144.3 144.4 145,5 147.7 148.6 148.3 147.8 148.1 148.7 64 Lumber and products 24 2.0 114.9 115.9 116.4 117.0 116.1 115.4 113.3 112,9 117.0 114.4 114.8 116.8 116.5 117.1 65 Furniture and fixtures 25 1.4 122.5 123.5 123.3 123.5 124.2 121.1 122.0 123,0 124.1 124.4 122.5 120.6 121.1 121.3 66 Stone, clay, and glass products 32 2.1 120.5 121.1 119.4 120.0 120.9 120.5 121.2 121,0 122.1 123.4 122.3 121.5 121.9 121.5 67 Primary metals 33 3.1 124.5 122.3 124.2 124.9 125.2 125.5 125.9 127,4 128.9 127.2 129.3 127.7 126.0 125.3 68 Iron and steel 331,2 1.7 122.8 121.2 123.9 122.6 122.2 121.8 124.5 126.4 127.0 126.1 127.9 126.7 123.8 123.2 69 Raw steel 33IPT .1 115.9 115.1 115.4 114.9 115.5 116.1 119.2 117.7 120.9 119.2 122.8 123.7 119.5 118.7 70 Nonferrous 333-6,9 1.4 126.4 123.5 124.6 127.7 128.8 129.9 127.7 128.6 131.1 128.5 131.0 128.9 128.6 127.9 71 Fabricated metal products. . 34 5.0 122.9 122.5 122.7 121.9 122.4 122.8 122.7 124.4 124.7 126.7 125.6 124.4 124.6 124.0 72 Industrial machinery and equipment 35 171.4 167.8 168.0 168.8 172.2 175.9 173.7 176.5 177.7 178.6 180.3 179.3 181.9 182.8 73 Computer and office equipment 357 1.8 382.3 354.1 361.4 372.3 388.5 403.9 412.0 418.0 425.7 438.3 457.1 473.3 494.8 509.8 74 Electrical machinery 36 7.3 231.5 223.7 226.3 229.7 235.5 236.8 237.5 240,8 247.4 249.9 252.9 254.0 254.5 256.9 75 Transportation equipment. . 37 9.5 115.6 110.7 110.8 113.0 112.2 117.0 118.8 118.3 121.6 123.4 119.9 119.2 118.9 119.6 76 Motor vehicles and parts 371 4.9 137.2 129.7 129.2 132.5 130.0 138.9 141.2 139,6 145.9 146.6 138.3 136.7 136.8 138.9 77 Autos and light trucks 371PT 2.6 128.3 117.8 120.6 122.4 115.0 129.5 132.3 130,4 137.7 132.5 130.8 126.7 124.9 128.7 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.6 94.4 92.0 92.7 93.8 94.6 95.5 96.8 97,3 97.9 100.6 101.8 101.9 101.3 100.5 79 Instruments 38 5.4 108.0 106.6 107.6 107.9 108.0 109.2 108.9 109,7 109.5 109.0 109.0 109.4 109.0 110.1 80 Miscellaneous 39 1.3 125.9 125.1 125.5 126.0 127.0 126.7 126.1 126,5 126.2 128.5 128.0 128.5 128.3 128.9 81 Nondurable goods 40.4 111.1 110.8 110.7 110.5 110.9 111.0 111.3 112.2 112.6 112.9 113.6 113.1 112.4 112.6 82 Foods 9.4 109.6 109.2 109.2 108.8 110.0 108.9 108.6 109.2 110.9 110.9 112.9 112.2 111.4 112.0 83 Tobacco products 1.6 112.7 113.0 111.5 109.0 110.5 112.5 112.0 118.8 115.9 110.1 116.9 115.9 114.9 114.1 84 Textile mill products 1.8 109.6 109.2 107.2 109.1 110.7 110.7 111.4 111.6 112.5 110.4 111.8 109.7 108.8 108.5 85 Apparel products 2.2 99.6 99.8 99.8 99.6 99.7 99.1 99.1 99,3 98.6 99.3 99.3 97.7 97.7 97.5 86 Paper and products 3.6 112.9 112.4 112.6 111.7 114.2 114.4 113.7 112,8 113.6 114.1 112.4 114.5 111.5 II! I 87 Printing and publishing 6.7 104.9 104.4 104.5 104.1 104.1 104.4 105.1 106,7 107.4 107.1 106.5 105.7 104.5 104.6 88 Chemicals and products . .. 9.9 115.3 115.2 114.5 114.6 114.3 114.5 115.6 116 7 116.5 118.2 118.7 118.2 118.1 117.9 89 Petroleum products 1.4 109.4 110.1 111.4 111.3 108.9 109.7 110.1 111,2 108.6 109.7 112.3 111.1 112.4 113.0 90 Rubber and plastic products 3.5 126.4 124.4 125.4 125.6 126.0 127.9 127.6 1274 129.6 129.3 129.3 129.5 129.9 131.3 91 Leather and products .3 73.7 75.9 75.3 74.0 74.0 71.2 70.9 72,4 71.0 71.3 69.4 70.9 68.9 67.4 92 Mining 6.9 106.0 105.5 106.7 105.7 106.5 106.3 106.5 105.9 106.1 105.7 108.4 107.8 107.4 107.2 93 Metal .5 106.9 105.3 105.9 109.9 105.2 106.0 105.3 111.1 113.2 103.8 105.3 113.2 107.0 107.9 94 Coal 1.0 109.9 105.4 115.9 107.4 112.1 107.7 109.5 109,6 111.2 117.4 116.0 108.4 109.4 110.6 95 Oil and gas extraction 4.8 103.2 103.8 103.4 102.9 103.9 104.1 104.3 103.1 102.6 101.7 105.0 105.2 105.4 104.6 % Stone and earth minerals .... .6 118.8 116.8 118.2 120.9 117.8 119.9 117.7 116,2 119.2 120.2 124.3 122.6 118.6 120.0 97 Utilities 7.7 112.5 112.5 111.8 110.9 113.8 113.0 115.1 116,9 115.3 114.3 108.7 108.5 115.1 112.8 98 Electric 491.493PT 6.2 113.1 112.7 110.4 110.7 113.8 113.1 115.7 118.1 114.7 114.2 110.2 110.6 115.5 112.9 99 Gas 492.493PT 1.6 111.0 111.5 117.1 111.9 113.5 112.5 112.7 111.9 117.8 115.0 103.0 100.7 113.4 112.5 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.5 126.4 125.2 125.5 125.7 126.7 127.2 127.3 128.4 129.4 130.0 130.7 130.3 130.1 130.4 101 Manufacturing excluding office and computing machines .. 83.6 124.1 122.7 122.9 123.2 123.9 124.8 124.9 125.9 127.2 127.6 127.8 127.2 126.9 127.2 Gross value (billions of 1992 dollars, annual rates) MAJOR MARKETS 102 Products, total 2,001.9 2,373.2 2,353.4 2,365.8 2,365.3 2,368.4 2,402.0 2,396.9 2,416.1 2,442.2 2,435.3 2,442.8 2,428.0 2,437.0 2.444.5 103 Final 1.552.1 1.855.8 1,832.9 1.844.4 1,844.6 1,849.1 1,879.3 1,875.6 1,890.6 1,911.0 1,904.9 1,911.9 1,895.8 1.903.9 1.911.9 104 Consumer goods . . 1,049.6 1,195.5 1,187.7 1,194.1 1.190. 1,191.0 ,205.2 1,203.3 1,215.9 1,224.1 1,215.7 1,224.6 1,210.9 1,213.0 1,215.3 105 Equipment 502.5 660.0 644.8 649.8 654.1 657.8 674.0 672.3 674.5 686.9 689.4 687.3 685.1 691.2 697.0 106 Intermediate 449.9 518.1 520.6 521.7 521.0 519.9 523.7 522.2 526.5 532.3 531.4 532.0 532.8 533.8 533.5 1. Data in this table also appear in the Board's G.17 (419) ments," Federal Reserve Bulletin, vol. 83 (February 1997), pp. 67-92. For details about the construction of individual industrial production series, see "Industrial Production: 1989 Developments and Historical Revision,1' Federal Reserve Bulletin, vol. 76, (April 1990), pp. 187-204. 2 Standard industrial classification. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • July 1998 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1995 1996 1997 June July Aug. Sept. Oct. Nov. Dec, Feb. Mar. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,333 1,426 1,442 1.398' 1,441' 1,445' 1,475' 1,502' 1,475' 1,467' 1.553 1,635 1,569 2 One-family 997 1,070 1,056 1.051' 1,052' 1,059' 1,084' 1,106' 1,102' 1,094' 1,142 1,176 1,136 3 Two-family or more 335 356 387 347' 389' 386' 391' 396' 373' 373' 411 459 433 4 Started 1,354 1,477 1,474 1,502 1,461 1,383 1,501 1,529 1,523 1,540 1,545 1,616 1,575 5 One-family 1,076 1.101 1,134 1,132 1,144 1,076 1,174 1,124 1,167 1,130 1,225 1,263 1,232 6 Two-family or more 278 316 340 370 317 307 327 405 356 410 320 353 343 7 Under constmction at end of period1 776 820 834 828 836 834 843 853 862 872' 888 908 913 8 One-family 554 584 570 566 570 567 571 574 575 580' 593 609 617 9 Two-family or more 222 235 264 262 266 267 272 279 287 292 295 299 296 10 Completed 1,319 1,405 1,407 1,307 1,331 1.335 1.433 1,384 1,432 1,413' 1.314 1,451 1.488 11 One-family 1.073 1.123 1,122 1,097 1,074 1.062 1,133 1,063 1,145 1,094' 1,007 1,131 1,132 12 Two-family or more 247 283 285 210 257 273 300 321 287 319' 307 320 356 13 Mobile homes shipped 341 361 354 353 356 354 351 349 352 353 362 377 374 Merchant builder activity in one-family units 14 Number sold 667 757 803 810 808 799 809 805 875 805' 847 872 828 15 Number for sale at end of period1. 374 326 287' 288 288 286 284 284 280 282' 283 284 290 Price of units sold (thousands of dollars)2 16 Median 133.9 140.0 145.9 145.0 145.9 144.0 146.3 141.5 145.0 145.9' 148.0 155.0 153.9 17 Average 158.7 166.4 175.8 179.4 175.5 170.7 177.5 172.9 175.4 175.8' 179.3 179.6 183.5 EXISTING UNITS (one-family) 18 Number sold 4,087 4,215 4,120 4,180 4,280 4,300 4,380 4,390 4,370 4,370 4,770 4,890 Price of units sitld (thousands of dollars)' 19 Median 113.1 118.2 124.1 127.2 126.5 127.5 125.8 124 4 124.3 125.9 126.1 124.5 127.1 20 Average 139.1 145.5 154.2 158.4 157.6 159.1 155.4 154.7 155.0 157.5 156.8 153.9 157.2 Value of new construction (millions of dollars) CONSTRUCTION 21 Total put in place 534,463 567,179 600.116 594,195 603,002 603,684 605,748 611,742 610,933 616,027 619,733 624,635 624,995 22 Private 407,370 435,929 461,401 456,927 464,326 465,236 468.822 469,560 470,041 475,262 483,253 486,346 489,255 23 Residential 231,230 246,659 259,575 257,277 258,803 259.958 263,799 265,422 267,207 270,822 275,667 279,229 283,292 24 Nonresidential 176,140 189,271 201,826 199,650 205,523 205,278 205,023 204,138 202,834 204,440 207,586 207,117 205,963 25 Industrial buildings 32,505 31,997 30,707 31,046 31,796 31,480 30,675 30,048 29,352 29,697 29,885 30,850 31,409 26 Commercial buildings 68,223 74,593 80,823 79,009 82,346 81,552 80.551 81.489 81,511 82,104 84,528 80,509 81,176 27 Other buildings 27,089 30,525 36,998 35,775 36,672 37,274 38.729 37.707 37,681 38,345 37,787 38.520 38,060 28 Public utilities and other.. . 48.323 52,156 53,298 53,820 54.709 54,972 55,068 54,894 54,290 54,294 55,386 57,238 55,318 29 Public 127,092 131.250 138,715 137,268 138,676 138,448 136,926 142,182 140,893 140,765 136,480 138.289 135.740 30 Military 2,983 2,541 2,553 2,580 2,738 2,767 2,451 2,827 2,740 2,234 2,483 2,918 2,865 31 Highway 36,319 37,898 41,148 41,531 41,087 41,715 40.126 39,484 44.271 42.114 41,718 42,986 42,012 32 Conservation and development 6.391 5.807 5,467 4,952 5,002 5.469 6.177 4,859 5,209 5.910 5 270 6,193 5,449 33 Other 81.399 85,005 89,547 88,205 89,849 88.497 88,172 95,012 88,673 90.507 87.009 86,192 85,414 1. Not at annual rate. SOURCE. Bureau of the Census estimates for all series except {1) mobile homes, which are 2z.. wNoott sseeaassoonnaallllyy aaddjjuusstteedd.. private, domestic shipments as reported by the Manufactured Housing Institute and season- 3. Recent data on value of new construction may not be strictly comparable with data for ally adjusted by the Census Bureau, and (2) sales and prices of existing units, which are previous periods because of changes by the Bureau of the Census in its estimating techniques. published by the National Association of Realtors. All back and current figures are available For a description of these changes, see Construction Reports (C-30-76-5), issued by the from the originating agency. Permit authorizations are those reported to the Census Bureau Census Bureau in July 1976. from 19,000 jurisdictions beginning in 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data except as noted Change from 12 Change from 3months earlier Change from 1 month earlier months earlier (annua rate) Index level, Item 1997 1998 1997 1998 Apr 1997 1998 1998' Apr. Apr. June Sept. Dec. Mar. Dec. Jan. Feb. Mar. Apr. CONSUMER PRICES2 (1982-84=100) 1 All items 2.5 1.4 1.5 2.3 1.5 .2 .1 .0 .0 .2 162.5 2 Food... 2.8 2.0 2.1 2.8 1.5 1.3 .0 .3 .0 .0 .1 159.8 .0 -7.4 -11.8 8.3 -7.7 -21.1 -1.8 -2.4 -2.2 -1.2 -.1 101.9 4 All items less food and energy 2.7 2.1 2.6 1.7 2.4 2.4 .2 2 .3 .1 .3 173.0 5 Commodities 1.1 .6 -.3 .6 .8 .0 .1 .2 .1 143.8 3.3 3.1 2.6 3.3 3.0 .3 .2 .3 2 .4 189.7 PRODUCER PRICES (1982=100) 7 Finished goods .8 -1.2 -3.0 1.2 -1.2 -4 2 _ 2 -.7 -.1 -.3 2 130.0 8 Consumer foods 2.4 -.5 -3.5 -1.5 1.5 -2.1 <f -.6' .4 -.4 .4 133.6 9 Consumer energy -1.8 -8.7 -13.0 6.0 -5.7 -26.2 -.6' -3.8' -1.8 -1.9 -.1 74.7 10 Other consumer goods 1.0 .7 -.6 1.7 -.3 .6 -.[' -.1 .1 .1 .3 146.2 11 Capital equipment .2 -.6 -.9 .6 -2.0 -.3 -I .0' -.1 .0 .1 137.8 Intermediate materials 12 Excluding foods and feeds -.2 -1.2 -1.6 .6 -.6 -4.4 _ T -.5 _ 2 -.4 .1 123.7 13 Excluding energy .2 .1 .3 .6 .0 -1.2 .0 -.1 -.1 -.1 .0 134.1 Crude materials 14 Foods -2.4 -9.0 -10.8 -5.0 4.1 -13.4 .0' -3.4' -.7 .7 .3 106.2 15 Energy -12.5 -6.3 11.3 21.8 5.4 -54.6 -13.2' -8.3' -6.5 -4.3 3.5 71.6 16 Other -.8 -5.8 -3.7 .3 -8.2 -14.7 -1.6' -2.1' .1 -1.9 -.9 147.4 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 • July 1998 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1998 Ql Q2 Q3 Q4 Ql GROSS DOMESTIC PRODUCT I Total . 7,265.4 7,636.0 8,079.9 7,933.6 8,034.3 8,124.3 8,227.4 8,344.9 By source Personal consumption expenditures 4,957.7 5,207.6 5,485.8 5,405.7 5,432.1 5,527.4 5,577.8 5,666.5 Durable goods 608.5 634.5 659.3 658.4 644.5 667.3 666.8 688.8 Nondurable goods 1,475.8 1,534.7 1,592.0 1,587.4 1,578.9 1,600.8 1,600.9 1.621.2 Services 2,873.4 3,038.4 3,234.5 3,159.9 3,208.7 3,259.3 3,310.0 3,356.5 Gross private domestic investment .. . 1,038.2 1,116.5 1,242.5 1,193.6 1,242.0 1,250.2 1,284.1 1,352.1 Fixed investment 1,008.1 1,090.7 1,174.1 1,127.5 1,160.8 1,201.3 1,206.8 1,248.6 Nonresidential 723.0 781.4 846.9 811.3 836.3 872.0 868.0 896.3 Structures 200.6 215.2 230.2 227.4 226.8 232.9 233.9 230.9 Producers' durable equipment . 522.4 566.2 616.7 583.9 609.5 639.1 634.2 665.4 Residential structures 285.1 309.2 327.2 316.2 324.6 329.3 338.8 352.3 12 Change in business inventories . 30.1 25.9 68.4 66.1 81.1 48.9 77.2 103.5 13 Nonfarm 38.1 23.0 61.7 62.2 74.9 40.9 68.7 96.5 14Net exports of goods and services -86.0 -94.8 -101.1 -98.8 -88.7 -111.3 -105.3 -136.8 15 Exports 818.4 870.9 957.1 92'' ~> 960.3 965.8 980.0 960.4 16 Imports 904.5 965.7 1,058.1 l,02L0 1,049.0 1,077.1 1,085.4 1,097.2 17Government consumption expenditures and gross investment. 1,355.5 1,406.7 1,452.7 1,433.1 1.449.0 1,457.9 1,470.9 1,463.1 18 Federal 509.6 520.0 523.8 516.1 526.1 525.7 527.3 515.3 19 State and local 846.0 886.7 928.9 917.0 923.0 932.3 943.6 947.7 By major type of product Final sales, total 7,235.3 7,610.2 8,011.5 7,867.4 7,953.2 8,075.3 8,150.2 8,241.3 Goods 2,637.9 2,759.3 2,876.7 2,838.4 2,854.9 2,903.2 2,910.4 2,951.5 Durable 1,133.9 1,212.0 1,284.0 1.248.0 1,275.3 1,305.3 1,307.3 1,335.1 Nondurable 1,503.9 1,547.3 1,592.8 1,590.4 1,579.6 1,597.9 1,603.1 1.616.4 Services 3,980.7 4,187.3 4,430.4 4,338.2 4,400.1 4,462.3 4,521.0 4,560.7 Structures 616.8 663.6 704.4 690.8 698.2 709.8 718.8 729.1 Change in business inventories 30.1 25.9 68.4 66.1 81.1 48.9 77.2 103.5 Durable goods 29.1 16.9 33.0 31.8 46.8 18.6 34.8 47.3 Nondurable goods 1.1 9.0 35.4 34.3 34.4 30.3 42.4 56.3 MEMO 29 Total GDP in chained 1992 dollars 6,742.1 6,928.4 7,188.8 7,101.6 7,159.6 7,214.0 7,280.0 7,365.6 NATIONAL INCOME 30 Total .. . 5,912.3 6,254.5 6,649.7 6,510.0 6,599.0 6,699.6 6,790.1 6,902.9 31 Compensation of employees 4,215.4 4,426.9 4,703.6 4,606.3 4,663.4 4.725.2 4,819.6 4.916.7 32 Wages and salaries 3,442.6 3,633.6 3,878.6 3,792.7 3,842.7 3.897.3 3,981.6 4,066.2 33 Government and government enterprises ... 623.0 642.6 665.3 657.8 662.0 667.7 673.7 682.1 34 Other 2,819.6 2,991.0 3,213.3 3,134.9 3,180.8 3,229.6 3,307.9 3,384.1 35 Supplement to wages and salaries 772.9 793 3 825.0 813.6 820.7 827.9 837.9 850.5 36 Employer contributions for social insurance 366.0 385.7 408.4 401.3 405.6 410.2 416.6 425.5 37 Other labor income 406.8 407.6 416.6 412.3 415.1 417.7 421.4 425.1 38 Proprietors' income1 489.0 520.3 544.5 534.6 543.6 547.2 552.5 556.7 39 Business and professional1 . 465.5 483.1 503.8 494.4 500.0 506.3 514.3 524.2 40 Farm1 23.4 37.2 40.7 40.2 43.6 40.9 38.2 32.5 41 Rental income of persons" 132.8 146.3 147.9 149.0 148.7 148.0 145.7 143.6 42 Corporate profits1 650.0 735.9 805.0 779.6 795.1 827.3 818.1 822.5 43 Profits before tax 622.6 676.6 729.8 708.4 719.8 753.4 737.3 718.4 44 Inventory valuation adjustment -24.3 -2.5 5.5 3.5 5.9 3.6 9.2 30.2 45 Capital consumption adjustment 51.6 61.8 69.7 67.7 69.4 70.3 71.6 73.9 46 Net interest 425.1 425.1 448.7 440.5 448.1 451.8 454.2 463.3 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. U.S. Department of Commerce, Survey of Current Business Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1995 QI Q2 Q3 Q4 Ql PERSONAL INCOME AND SAVING I Total personal income 6,150.8 6,495.2 6,873.9 6,746.2 6,829.1 6,906.9 7,013.5 7,125.9 2 Wage and salary disbursements 3,429.5 3,632.5 3,877.4 3,791.5 3,841.6 3,896.1 3,980.4 4,065.0 3 Commodity-producing industries 864.4 909.1 960.3 942.9 952.8 961.4 984.1 997.9 4 Manufacturing 648.4 674.7 706.0 694.1 700.3 706.0 723.4 730.4 5 Distributive industries 783.1 823.3 876.3 856.8 867.0 880.8 900.6 919.0 6 Service industries 1,159.0 1,257.5 1,375.5 1,334.1 1,359.8 1,386.3 1,422.0 1,466.1 7 Government and government enterprises 623.0 642.6 665.3 657.8 662.0 667.7 673.7 682.1 8 Other labor income 406.8 407.6 416.6 412.3 415.1 417.7 421.4 425.1 9 Proprietors' income1 489.0 520.3 544.5 534.6 543.6 547.2 552.5 556.7 10 Business and professional 465.5 483.1 503.8 494.4 500.0 506.3 514.3 524.2 11 Farm1 23.4 37.2 40.7 40.2 43.6 40.9 38.2 32.5 12 Rental income of persons 132.8 146.3 147.9 149.0 148.7 148.0 145.7 143.6 13 Dividends 251.9 291.2 321.5 312.5 318.3 324.5 330.7 336.8 14 Personal interest income 718.9 735.7 768.6 757.2 766.1 772.6 778.4 783.3 15 Transfer payments 1,015.0 1,068.0 1,121.1 1,107.2 1,117.0 1,125.7 1,134.8 1,153.6 16 Old-age survivors, disability, and health insurance benefits .. 566.7 558.9 564.4 569.4 507.8 537.6 574.2 584.9 17 LESS: Personal contributions for social insurance 323.7 318.2 321.3 324.8 293.1 306.3 330.4 338.2 18 EQUALS: Personal income 6,873.9 6,746.2 6,829.1 6,906.9 6,150.8 6,495.2 7,013.5 7,125.9 19 LESS: Personal tax and nontax payments 988.7 955.7 979.2 998.0 795.1 886.9 1,022.1 1,059.7 20 EQUALS: Disposable personal income 5,885.2 5,790.5 5,849.9 5,908.9 5,355.7 5,608.3 5,991.4 6,066.3 21 LESS: Personal outlays 5,658.5 5,574.6 5,602.8 5,700.8 5,101.1 5,368.8 5,755.6 5,844.1 22 EQUALS: Personal saving 226.7 215.9 247.0 208.2 254.6 239.6 235.8 222.1 MEMO Per capita (chained 1992 dollars) 23 Gross domestic product 25,615.7 26,085.8 26,834.0 26,597.8 26,765.0 26,897.9 27,073.3 27,340.9 24 Personal consumption expenditures . 17,459.2 17,748.7 18,168.9 18,045.2 18,053.9 18,255.7 18,319.6 18,558.0 25 Disposable personal income 18,861.0 19,116.0 19,493.0 19,331.0 19,439.0 19,518.0 19,681.0 19,865.0 26 Saving rate (percent) 4.8 4.3 3.9 3.7 4.2 3.5 3.9 3.7 GROSS SAVING 27 Gross saving 1,165.5 1,267.8 1394.3 1332.9 1,411.6 1,435.8 1,493.6 28 Gross private saving 1,093.1 1,125.5 1,164.2 1,134.0 1,178.1 1,159.6 1,185.2 1,184.2 29 Personal saving 254.6 239.6 226.7 215.9 247.0 208.2 235.8 222.1 3 3 0 1 U Co n r d p is o t r r a ib te u t i e n d v e c n o t r o p r o y r a v t a e l u p a r t o io fi n ts adjustment - 1 2 7 4 2 . . 3 4 2 - 0 2 2 . . 5 1 219 5 . . 5 5 211 3 . . 5 5 21 5 7. . 6 9 230 3 . . 0 6 218 9 . . 9 2 22 3 4 0 . . 9 2 Capital consumption allowances 32 Corporate 428.9 452.3 475.6 467.4 472.6 478.0 484.5 489.7 33 Noncorporate 224.1 230.5 241.2 238.0 239.7 242.4 244.9 246.4 34 Gross government saving 72.4 142.3 230.1 198.9 218.8 251.9 250.6 309.3 35 Federal -103.6 -39.3 42.8 15.9 34.7 60.8 59.7 120.4 36 Consumption of fixed capital 70.9 71.2 71.6 71.4 71.5 71.6 71.8 71.5 37 Current surplus or deficit (-), national accounts -174.4 -110.5 -28.8 -55.5 -36.8 -10.8 -12.1 49.0 38 State and local 176.0 181.5 187.3 182.9 184.1 191.1 190.9 188.9 39 Consumption of fixed capital 72.9 76.2 79.5 78.2 79.2 79.7 80.8 81.3 40 Current surplus or deficit (-), national accounts 103.1 105.3 107.8 104.7 104.9 111.4 110.1 107.6 41 Gross investment 1,137.2 1,207.9 1308.3 1,268.6 1323.4 1308.4 1332.7 1379.2 42 Gross private domestic investment 1,038.2 1,116.5 1,242.5 1,193.6 1,242.0 1,250.2 1,284.1 1,352.1 43 Gross government investment 213.4 224.3 226.0 223.3 227.4 227.1 226.1 223.8 44 Net foreign investment -114.4 -132.9 -160.2 -148.4 -146.0 -168.9 -177.4 -196.7 45 Statistical discrepancy -28.2 -59.9 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 • July 1998 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 Item credits or debits Q4 Ql 02 Q3 Q4P 1 Balance on current account. .^ -129.095 -148,184 -166.446 -36.874 -39,916 -37.795 -43,114 -45,619 Merchandise trade balance2 -173,560 -191,170 -198,934 -48.190 -49,844 -47,188 -52,001 -49,901 Merchandise exports 575,871 612.069 678.348 157.846 162,341 171,227 170.255 174,525 Merchandise imports -749,431 -803,239 -877.282 -206,036 -212.185 -218,415 -222.256 -224,426 Military transactions, net 3,866 3,786 3,830 1.295 437 1,048 1,398 947 Other service transactions, net 67,837 76,344 81,462 20,697 20,083 20,470 20,696 20,215 Investment income, net 6,808 2.824 -14,277 1,250 -2,015 -3,270 -4,137 -4,856 U.S. government grants -11.096 -14,933 -11.688 -5,499 -2.109 -2.245 -2,231 -5,103 US. government pensions and other transfers. . . -3.420 -4,331 -4.075 -1,050 -988 -1.033 -1,031 -1,023 Private remittances and other transfers -19.530 -20,704 -22.763 -5,377 -5,480 -5,577 -5,808 -5,898 Change in U.S. government assets other than official reserve assets, net (increase, —) -549 -690 177 -21 -268 461 12 Change in U.S. official reserve assets (increase, -) . -9,742 6.668 -1,010 -315 4,480 -236 -730 -4,524 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -808 370 -350 -146 72 -133 -139 -150 15 Reserve position in International Monetary Fund . -2.466 -1.280 -3.575 -28 1,055 54 -463 -4.221 16 Foreign currencies -6.468 7,578 2,915 -141 3,353 -157 -128 -153 17 Change in U.S. private assets abroad (increase, —). . -296,916 -358,422 -426,105 -153,837 -132,756 -90,760 110,427 -92.159 18 Bank-reported claims^ -75,108 -98,186 -151,076 -66,657 -62,026 -27.947 -30,602 -30,501 19 Nonbank-reported claims -34,997 -64.234 -76,298 -26,115 -29,466 -3,984 -17.848 20 U.S. purchases of foreign securities, net -100,074 -108,189 -79.287 -30,200 -14.510 -21,841 -39,214 -3,722 21 U.S. direct investments abroad, net -86,737 -87.813 -119,444 -30,865 -26.754 -36,988 - 22.763 -32.936 22 Change in foreign official assets in United States (increase, +).... 110,729 122.354 18,157 33,097 28.891 -5,374 21.867 -27,227 23 U.S. Treasury securities 68,977 111,253 -7.019 33.564 23,289 -12,108 6,686 -24.886 24 Other U.S. government obligations 3.735 4,381 4.048 1,854 651 644 2,667 86 25 Other U.S. government liabilities4 744 720 539 160 478 654 -510 -83 26 Other U.S. liabilities reported by U.S. banks 34,008 4,722 21,274 -4.270 7,698 4,536 12,391 -3,351 27 Other foreign official assets5 3,265 1.278 -685 1.789 -3.225 900 633 1.007 28 Change in foreign private assets in United States (increase, +) .. - 340,505 425 201 672,340 161,482 153,391 148,433 161,425 209,090 29 U.S. bank-reported liabilities3 30,176 9.784 142,545 38,960 17,387 28,100 10,102 86,956 30 U.S. nonbank-reported liabilities 34,588 31,786 44,740 -2,912 15,210 -7,916 22,046 31 Foreign private purchases of U.S. Treasury securities, net. 111,848 172,878 75,326 51,289 49,915 42,919 43,731 32 Foreign purchases of other U.S. securities, net 96,367 133,798 189.273 32.447 38,820 51,682 60,409 38,362 33 Foreign direct investments in United States, net 67,526 76,955 107.928 17,661 30,685 26.652 25,949 24.641 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy -14,931 -46,927 -97,113 -3.269 -14,069 -14,000 -29,482 -39.566 36 Due to seasonal adjustment 2,669 7,287 -1,485 -8,489 2.683 37 Before seasonal adjustment -14,931 -46,926 -97,113 -5,938 -21,356 -12,515 -20,993 -42,249 MEMO Changes in official assets 38 U.S. official reserve assets (increase. -) -9,742 6,668 -1.010 -315 4,480 -236 -730 -4,524 39 Foreign official assets in United States, excluding line 25 (increase, +) 109.985 121,634 17,618 32,937 28,413 -6.028 22,377 -27,144 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 4,239 12,278 12,782 3,315 9,272 2,287 2.619 -1,396 1. Seasonal factors are not calculated for lines 12-16. 18-20, 22-34, and 38^10. 4. Associated primarily with military sales contracts and other transactions arranged with 2. Data are on an international accounts basis. The data differ from the Census basis data, or through foreign official agencies. shown in table 3.11, for reasons of coverage and timing. Military exports are excluded from 5. Consists of investments in U.S. corporate stocks and in debt securities of privale 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' 1998 Item 1995' 1996' 1997' Oct. Nov. Dec. Jan.' Feb.' Mar. Apr.p 1 Goods and services, balance -99,891 -108,574 -110,207 -8,650 -9,600 -10,205 -9,936 -11,720 -13,209 -14,458 -173,729 -191,337 -197,955 -16.270 -16,605 -16,962 -17,076 -18,120 -20,504 -21,477 3 Services 73,838 82,763 87,748 7.620 7,005 6,757 7,140 6.400 7,295 7,019 4 Goods and services, exports 795,647 850,775 937,593 80,589 79,088 79,784 79,571 77.684 79,148 77.112 575,845 611,983 679,325 58,467 57,482 58,336 57,902 56,350 57,217 55,280 6 Services 219,802 238,792 258,268 22,122 21,606 21,448 21,669 21,334 21,931 21,832 7 Goods and services, imports -895,538 -959,349 -1,047,799 -89,240 -88,688 -89,989 -89,506 -89,404 -92,356 -91,570 8 Merchandise -749,574 -803,320 -877,279 -74,738 -74,087 -75,087 -74,977 -74,470 -77,720 -76,757 -145,964 -156,029 -170,520 -14,502 -14,601 -14,691 -14,529 -14,934 -14,636 -14,813 t. Data show monthly values consistent with quarterly figures in the U.S. balance of SOURCE. FT900, U.S. Department of Commerce, Bureau of the Census and Bureau of payments accounts. Economic Analysis. 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1997 1998 Asset 1994 1995 1996 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr.p 1 Total 74335 85,832 75,090 67,148 68,036 67,112 69,954 70,003 70,632 69,354 70,328 2 Gold stock, including Exchange 11,051 11,050 11,049 11,050 11,050 11,050 11,050 11,046 11,050 11,050 11,048 10,039 11,037 10,312 9,997 10,132 10,120 10,027 9,998 10,217 10,108 10,188 4 Reserve position in International Monetary Fund2 12,030 14,649 15,435 14,042 14,243 14,571 18,071 18,039 18,135 17,976 18,218 41,215 49,096 38,294 32,059 32,611 31,371 30,809 30,920 31,230 30,220 30,874 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 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr.1" 1 Deposits 250 386 167 188 190 167 457 215 243 167 162 Held in custody 2 U.S. Treasury securities2 441,866 522,170 638,049 655,406 638,100 635,092 620,885 625,219 621.956 630,602 622,220 3 Earmarked gold3 12,033 11,702 11,197 10,793 10,793 10,793 10,763 10.709 10,705 10,664 10,651 1. Excludes deposits and U.S. Treasury securities held for international and regional 3. Held in foreign and international accounts and valued at $42.22 per fine troy ounce; not organizations. included in the gold stock of the United States. 2. Marketable U.S. Treasury bills, notes, and bonds and nonmarketable U.S. Treasury securities, in each case measured at face (not market) value. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 International Statistics • July 1998 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1997 1998 Item 1995 1996 Sept. Oct. Nov. Dec. Jan. Feb. Mar.p 1 Total' 630,918 758,624 803,721 798,696 791,668 776,986 778,915 778,573 788,226 By type 2 Liabilities reported by banks in the United States" 107,394 113,098 138,276 153.804 147,796 135,026 140,511 139.171 133,275 3 U.S. Treasury bills and certificates3 168,534 198,921 161,610 153.283 150,102 148,301 145,609 144.324 153.335 U.S. Treasury bonds and notes 293 690 379,497 434,260 421.412 423.243 422,876 421,687 422.929 429,063 6.491 5.968 5,879 5.919 5,955 5,994 6,033 6.069 6,110 6 U.S. securities other than U.S. Treasury securities5 54,809 61,140 63,696 64.278 64,572 64,789 65,075 66,080 66,443 fiv area 1 Europe1 ... 222,406 257.915 276.694 280,589 272,680 263,078 261.505 260,840 258,484 8 Canada 19,473 21.295 21.233 19.418 19,275 18.749 18.339 19,065 20,280 9 Latin America and Caribbean 66,721 80.623 94 754 90,190 94,135 97,316 96.697 99,081 97,229 10 Asia 311,016 385.484 394.551 391,541 390,203 381,196 386.007 384,151 395,956 11 Africa 6,296 7,379 10.218 9,812 9,542 10,118 10.213 10,518 11,440 12 Other countries 5,004 5,926 6.269 7,144 5,831 6,527 6,152 4,916 4,835 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. instilutions 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 1997 Item 1994 1995 1996 Mar. June Sept. Dec. 1 Banks' liabilities 89.258 109,713 103,383 110,102 110,224 120,105 116,738 2 Banks' claims 60,711 74,016 66,018 72,731 85,305 91,158 82,732' 3 Deposits 19,661 22,696 22,467 26,390 28,900 32,154 28.355 4 Other claims 41.050 51,320 43.551 46,341 56,405 59,004 54,377r 5 Claims of banks' domestic customers2 10,878 6,145 10.978 10,196 10.265 10.210 8,476 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 States' Payable in U.S. dollars Millions of dollars, end of period Sept. Oct. Jan. Feb. BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 1,099,549 1,162,148 1,283334' 1.200,331 1,226,033 1,240,488 1,283334' 1,264,391' 1,280,908 1,254,000 2 Banks' own liabilities 753,461 758,998 883,238' 799,271 824,677 834,237 883,238' 864.362' 877,151 843,063 3 Demand deposits 24,448 27,034 32,104 28,332 33,503 35,690 32.104 29.716' 29,687 32,441 4 Time deposits" 192,558 186,910 198,507' 187,840 193,751 191,970 198,507' 187,719' 183,497 183,361 5 Other' 140,165 143,510 167,676' 171,138 193,950 180,925 167,676' 184,826' 189,318 188,462 6 Own foreign offices4 396,290 401,544 484,951' 411.961 403,473 425,652 484,951' 462,101' 474,649 438,799 7 Banks' custodial liabilities5 346.088 403.150 400,096 401,060 401,356 406,251 400,096 400,029' 403,757 410,937 8 U.S. Treasury bills and certificates6 197.355 236.874 193,325 205,946 200.215 196,476 193,325 184,881' 186.564 191,571 9 Other negotiable and readily transferable instruments7 52,200 72,011 93,604 90,686 95.108 99,882 93.604 96,945 99,370 96.332 10 Other 96.533 94,265 113.167 104,428 106.033 109,893 113,167 118,203 117,823 123.034 11 Nonmonetary international and regional organizations* 11,039 13,972 11,390 11,806 13,914 12,469 11,390 11,240' 16,452 15.815 12 Banks' own liabilities 10,347 13,355 11,186 11,524 13.509 12,205 11,186 11,048' 16.123 15,494 13 Demand deposits 21 29 16 771 36 43 16 175 74 98 14 Time deposits2 4,656 5,784 5,466 5,967 5,161 6,310 5,466 5,023 5,416 5,987 15 Other1 5,670 7,542 5.704 4,786 8,312 5,852 5,704 5,850' 10,633 9.409 16 Banks' custodial liabilities' 692 617 204 282 405 264 204 192 329 321 17 U.S. Treasury bills and certificates6 350 352 69 53 148 46 69 85 149 247 18 Other negotiable and readily transferable instruments 265 133 229 257 217 107 180 19 Other 1 0 2 0 0 1 0 0 20 Official institutions* 275,928 312,019 283,327 299,886 307,087 297,898 283.327 286,120 283,495 286,610 21 Banks' own liabilities 83,447 79,406 101,610 105,454 118.154 109,988 101.610 110,607 109,391 102,562 22 Demand deposits 2.098 1,511 2,314 1,745 2.034 1,891 2,314 1,682 1,910 2,051 23 Time deposits2 30.717 33,336 41,120 39,984 41,770 39,716 41,120 38,306 36,842 39.360 24 Other3 50.632 44,559 58,176 63.725 74,350 68,381 58.176 70,619 70,639 61,151 25 Banks' custodial liabilities5 192,481 232,613 181,717 194,432 188.933 187,910 181,717 175,513 174,104 184,048 26 U.S. Treasury bills and certificates6 168.534 198.921 148,301 161,610 153,283 150.102 148.301 145,609 144,324 153,335 27 Other negotiable and readily transferable instruments7 23,603 33,266 33,211 32,315 35.236 37,374 33,211 29,614 29.643 30,183 28 Other 344 426 205 507 414 434 205 290 137 530 29 Banks10 691,412 694,835 816,263' 724,645 732,963 765,574 816,263' 792,291' 797,734 763,179 30 Banks' own liabilities 567,834 562,898 642,523' 563,884 568,367 595,667 642,523' 618,053' 621,004 584,913 31 Unaffiliated foreign banks 171,544 161,354 157,572 151,923 164,894 170,015 157,572 155,952 146,355 146,114 32 Demand deposits 11,758 13.692 17.527 13,852 18,354 21,316 17,527 15,974 16,084 18,330 33 Time deposits2 103,471 89,765 83,770' 76,683 83,162 84,621 83,770' 79,573' 75,789 71,040 34 Other3 56,315 57,897 56,275' 61,388 63,378 64,078 56,275' 60,405' 54,482 56,744 35 Own foreign offices4 396,290 401,544 484,951' 411,961 403,473 425.652 484.951' 462,101' 474,649 438.799 36 Banks' custodial liabilities5 123,578 131.937 173,740 160,761 164,596 169,907 173,740 174,238 176,730 178.266 37 U.S. Treasury bills and certificates6 15,872 23.106 31,915 30,012 33.085 32,995 31,915 27,607 30,620 28.499 38 Other negotiable and readily transferable instruments 13.035 17,027 35,333 32,886 32,065 33,826 35,333 35,266 35,107 34,962 39 Other 94,671 91,804 106,492 97,863 99,446 103.086 106,492 111,365 111,003 114,805 40 Other foreigners 121,170 141,322 172,354 163,994 172.069 164,547 172,354 174,740' 183,227 188.396 41 Banks' own liabilities 91,833 103,339 127,919 118,409 124,647 116,377 127,919 124,654' 130,633 140.094 42 Demand deposits 10.571 11,802 12,247 11.964 13,079 12,440 12,247 11,885' 11,619 11,962 43 Time deposits 53,714 58,025 68,151 65,206 63,658 61,323 68,151 64,817' 65,450 66,974 44 Other3 27,548 33.512 47,521 41,239 47,910 42,614 47.521 47,952 53,564 61,158 45 Banks' custodial liabilities5 29.337 37,983 44,435 45,585 47,422 48,170 44,435 50,086' 52,594 48,302 46 U.S. Treasury bills and certificates6 12,599 14.495 13,040 14,271 13,699 13,333 13,040 11.580' 11,471 9,490 47 Other negotiable and readily transferable instruments 15,221 21,453 24,927 25,256 27,550 28,465 24,927 31.958 34,440 31,115 48 Other 1,517 2,035 6,468 6.058 6,173 6,372 6,468 6,548 6,683 7,697 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 9,103 14,573 16,046 15.872 15,485 16,553 16.046 17,038 20,791 22,384 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. !he Inter- 4. For U.S. banks, includes amounts owed to own foreign branches and foreign subsidiar- American Development Bank, and the Asian Development Bank. Excludes "holdings of ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory dollars" of the International Monetary Fund. agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists 9. Foreign central banks, foreign central governments, and the Bank for International principally of amounts owed to the head office or parent foreign bank, and to foreign Settlements. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. 10. Excludes central banks, which are included in "Official institutions." 5. Financial claims on residents of the United States, other than long-term securities, held by or through reporting banks for foreign customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • July 1998 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued Sept. Oct. Nov. Feb. Mar.1 AREA 50 Total, all foreigners 1,099,549 1,162,148 l,283334r 1,200,331 1,226,033 1,240,488 l,2S3,334r l,264,391r 1,280,908 1,254,000 51 Foreign countries 1,088,510 1,148,176 l,271,944r 1,188,525 1,212,119 1,228,019 l,271,944r 1,253,151' 1,264,456 1,238,185 52 Europe 362,819 376,590 420,487' 402 428 418,988 425,584 420,487' 401,454' 419.743 390,392 53 Austria 3,537 5,128 2,717 2.691 2.679 2,319 2,717 2,787 2,774 2,370 54 Belgium and Luxembourg 24,792 24,084 41,007 43.436 46,067 46,258 41,007 39,018 38,178 33,249 55 Denmark 2,921 2,565 1,514 2.867 2,359 2,157 1,514 1,625 1,215 1,094 56 Finland 2.831 1,958 2,246 2.163 1.997 1,969 2,246 2,177 2,136 1,549 57 France 39,218 35,078 46,607 43,065 45,057 45,653 46,607 44,773 44,990 44,059 58 Germany 24,035 24,660 23,737 25.201 22,117 23,040 23,737 21,988 23,290 20,820 59 Greece 2,014 1,835 1.515 2,086 2,075 1,229 1.515 1.676 1,663 1.988 60 Italy 10,868 10,946 11,378 9.852 11,449 10,713 11.378 9,854 9.804 9,628 61 Netherlands 13,745 11,110 7,385 8.413 8,119 7,010 7,385 6,287 7,043 8,208 62 Norway 1.394 1,288 317 1,321 1,022 1,793 317 955 845 346 63 Portugal 2.761 3,562 2,262 1,958 1,888 1,987 2,262 1,515 1,437 1,426 64 Russia 7.948 7,623 7,968 12,784 11,722 6,938 7,968 5.573 6,118 6,466 65 Spain 10.011 17.707 18,989 17,796 21,934 20,921 18.989 19,413 20,137 16,319 66 Sweden 3,246 1.623 1.628 2,024 1,348 1,614 1,628 1,415 2,055 1,967 67 Switzerland 43,625 44,538 39,258 36,862 37,075 39,665 39,258 37,340' 37,182 35,736 68 Turkey 4,124 6,738 4.054 4,736 4,661 4,218 4,054 3,659 4,047 4,154 69 United Kingdom 139,183 153,420 181,904' 159.189 165,199 177,781 181,904' 176,457' 191,181 174.148 70 Yugoslavia" 177 206 239 243 233 234 239 292 244 236 71 Other Europe and other former U.S.S.R.12 . 26,389 22,521 25.762 25,741 31,987 30,085 25,762 24,650 25,404 26,629 72 Canada 30.468 38,920 28,341 29,592 30,282 30,921 28,341 29,035 29,470 27.132 73 Latin America and Caribbean 440,213 467,529 536,365' 504.051 502,099 499,513 536,365' 530,589' 531,147 528,121 74 Argentina 12,235 13,877 20,199 16.643 17,700 18.358 20,199 19,215 18,278 18,835 75 Bahamas 94,991 88,895 112,217 86.914 89,631 92.390 112,217 117,457' 110,778 109.042 76 Bermuda 4,897 5,527 6,911 6,084 6.209 6,012 6,911 6.279 8,283 8.273 77 Brazil 23,797 27,701 31,037 33,575 31,680 32,614 31,037 31,857 33,026 34,017 78 British West Indies 2.19,083 251,465 276,389' 274,964 269,997 263.763 276,389' 266,023' 270,860 260,330 79 Chile 2.826 2.915 4.072 3,327 3 579 3,283 4.072 4,514 4,450 3,996 80 Colombia 3,659 3,256 3,652 2.657 3,478 3.341 3.652 3,584' 3,879 4,176 81 Cuba 8 21 66 55 71 57 66 63 58 55 82 Ecuador 1,314 1,767 2,078 1.508 1,671 1,704 2,078 1.867' 1,997 1,755 83 Guatemala 1,276 1,282 1,494 1.449 1,399 1,361 1,494 1,492 1.382 1,437 84 Jamaica 481 628 450 523 481 445 450 449 437 431 85 Mexico 24,560 31,240 33,972 32.640 32,749 32,678 33,972 33.230 33,611 35,647 86 Netherlands Antilles 4,673 6,099 5,085 7,591 6,069 4,995 5,085 5.777 5,417 11,348 87 Panama 4.264 4,099 4,241 3,835 4,109 4,293 4,241 3,921 4,087 3,958 88 Peru 974 834 893 904 917 907 893 876 912 878 89 Uruguay 1,836 1,890 2,382 1,997 2,184 2,247 2,382 2,201 2,247 2,228 90 Venezuela 11,808 17,363 21,601 20.639 20,699 22,111 21,601 22.339' 21,887 21,477 91 Other 7,531 8,670 9.626 8,746 9,476 8,954 9,626 9,445 9,558 10,238 92 Asia 240,595 249.083 269,198' 234,560 242,064 255,000 269,198' 274,301' 267,957 275,201 China 93 Mainland 33,750 30,438 18.252 12.664 16,234 17,433 18,252 20,153 18,575 20,743 94 Taiwan 11,714 15.995 11,760 13,460 15,207 13,586 11,760 12,936 12,942 13,619 95 Hong Kong 20,197 18.789 17,722 18,533 19,755 18,886 17,722 18,002 17,797 17,815 96 India 3,373 3.930 4,567 4,451 5,131 4,913 4.567 5,331 5,265 5,586 97 Indonesia 2,708 2,298 3,554 2,810 4,568 3,092 3,554 2,909 2.989 4,015 98 Israel 4,041 6,051 6,281' 4,534 4,200 3,745 6,281' 7,190' 7,197 7,590 99 Japan 109.193 117,316 143,401 118,536 116,852 133,690 143.401 138.685 140,426 137,700 100 Korea (South) 5,749 5 949 12,959' 9,327 8,597 9,982 12,959' 11.703 12,530 11.233 101 Philippines 3,092 3,378 3 250 2,409 2,505 2.558 3,250 2,530 2.872 3,009 102 Thailand 12,279 10,912 W01 6,545 6,988 5,824 6,501 5,858 4,676 9,073 1 1 0 0 3 4 M Ot i h d e d r le Eastern oil-exporting countries'"^ 1 1 5 8 , , 5 91 8 7 2 1 17 6 , , 7 2 4 8 2 5 2 1 5 4 , , 9 9 9 5 2 9 2 1 7 4 , . 0 2 1 7 2 9 2 1 7 4 , , 5 4 9 3 1 6 2 1 7 4 , , 2 0 7 1 4 7 2 1 5 4 , , 9 9 9 5 2 9 3 1 2 6 . . 9 0 4 5 5 9 2 1 6 4 . , 7 1 3 4 6 6 2 1 8 4 , , 5 6 9 0 8 9 105 Africa 7,641 8,116 10,347 10,380 10,310 9,520 10,347 10.291 9,670 11,385 106 Egypt 2,136 2,012 1,663 2,050 1,742 1,836 1.663 1 949 1,670 1,449 107 Morocco 104 112 138 99 105 69 138 131 73 88 108 South Africa 739 458 2,158 2.047 2,028 1,615 2,158 1.685 1,825 2.547 109 Zaire 10 10 10 14 3 5 10 7 4 10 110 Oil-exporting countries14 . 1,797 2,626 3,060 3.280 3,194 2,948 3,060 3,470 2,959 3.515 111 Other 2,855 2,898 3,318 2,890 3,238 3,047 3,318 3,049 2.619 3.016 112 Olher 6,774 7,938 7,206 7,514 8,376 7,481 7,206 7,481 6,469 5.954 113 Australia . 5,647 6,479 6.304 6,391 7,284 6,283 6,304 6,385 5,466 4,989 114 Other 1,127 1,459 902 1,123 1,092 1,198 902 1,096 1,003 965 115 Nonmonetary international and regional organizations. 11,039 13,972 11,390 13,914 12,469 11,390 11,240' 16,452 15,815 116 International 9.300 12,099 10,217 10,634 11,943 10,926 10,217 10,016' 14,859 14,900 117 Latin American regional16 893 1,339 424 708 1,277 1,053 424 975 1.217 536 118 Other regional17 846 534 749 464 694 490 749 249 376 379 11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 15 Principally ihe International Bank for Reconstruction and Development. Excludes 12. Includes the Bank for International Settlements. Since December 1992, has "holdings of dollars" of the International Monetary Fund. included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. 16. Principally the Inter-American Development Bank. 13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman. Qatar, Saudi Arabia, and United Arab 17. Asian, African, Middle Eastern, and European regional organizations, except the Bank Emirates (Trucial States). for International Settlements, which is included in "Other Europe." 14. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A55 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period Area or country Sept. Oct. Dec. Feb. 1 Total, all foreigners 532,444 599,925 708,233r 655,419 681,287 699,095 708,233r 703,148r 703,671' 687,467 2 Foreign countries 530,513 597,321 705,770r 653376 679,539 696,609 705,770r 700,231' 700,916' 684,521 3 Europe 132,150 165,769 199,880' 199,256 213,472 215,077 199,880' 204,763 212,362' 205,558 4 Austria 565 1,662 1,354 1,371 1,913 2,034 1,354 1,917 1,934 1,600 5 Belgium and Luxembourg 7,624 6,727 6,641 7,847 8,347 7,475 6,641 5,714 6,021 6,111 6 Denmark 403 492 980 1,082 896 844 980 1,531 907 895 7 Finland 1,055 971 1,233 1,889 1,808 1,259 1,233 1,492 1,554 1,686 8 France 15,033 15,246 16,239 17,531 16,831 19,817 16,239 21,474 18,963 18,206 9 Germany 9,263 8,472 12,676 11,724 11,617 13,245 12,676 10,849 10,752 12,930 10 Greece 469 568 402 499 463 401 402 504 504 620 11 Italy 5,370 6,457 6,230 7,670 7,145 6,871 6,230 6,655 5,974 6.621 12 Netherlands 5,346 7,117 6,141 11,543 11,503 11,496 6,141 5.384 5,447 6.628 13 Norway 665 808 555 1.713 1.419 2.080 555 989 1,296 850 14 Portugal 888 418 777 563 615 695 777 655 533 503 15 Russia 660 1,669 1,248 1,927 2.054 2,207 1,248 1,297 1,143 1,195 16 Spain 2,166 3,211 2,942 5,431 6,625 6,339 2,942 6.926 6,255 5,804 17 Sweden 2,080 1,739 1,854 1,659 1,838 1,804 1,854 1,736 2,184' 2.798 18 Switzerland 7,474 19,798 28,846 25,393 29,779 29,399 28,846 28,515 29,119' 31,400 19 Turkey 803 1,109 1,558 1,410 1,424 1,572 1,558 1,648 1,675 1,912 20 United Kingdom 67,784 85,234 103,143 93,825 102,405 100,870 103,143 99,302 110,307 97,478 21 Yugoslavia2 147 115 52 75 75 74 52 53 53 61 22 Other Europe and other former U.S.S.R. 4,355 3,956 7,009' 6,104 6,715 6,595 7,009' 8.122 7,741 8,260 23 Canada 20.874 26,436 27,176' 23,523 22,815 24,765 27,176' 25,155 24,872 29,837 24 Latin America and Caribbean 256.944 274,153 343,820' 302,678 303,917 317,508 343,820' 345,787' 345,389' 338,639 25 Argentina 6,439 7,400 8,924 7,243 8,129 8,761 8,924 9,076 9,402 8,780 26 Bahamas 58,818 71,871 89,379 66,073 73,838 72,739 89,379 90,823 84,982 77,444 27 Bermuda 5,741 4,129 8,782 9,353 8,008 6,552 8,782 9,385 8,917 8,989 28 Brazil 13,297 17,259 21,696 19,429 20,134 20,390 21,696 22,541 23,987' 25,201 29 British West Indies 124,037 105,510 145,471 133,797 133,309 141,801 145,471 145,935 149,266' 147,818 30 Chile 4,864 5,136 7,913 6,350 7,304 7,783 7,913 7,910 8,249 8,170 31 Colombia 4,550 6,247 6,945 6,543 6,869 6,976 6,945 6,733 6,729 6,781 32 Cuba 0 0 0 0 0 3 0 0 0 0 33 Ecuador 825 1,031 1.311 1,218 1,307 1,292 1,311 1,390 1,398 1,475 34 Guatemala 457 620 886 764 761 787 886 863 868 904 35 Jamaica 323 345 424 374 364 405 424 410 401 364 36 Mexico 18,024 18,425 19,518 18,770 18,584 18,904 19,518 20,515' 21,107' 20,681 37 Netherlands Antilles 9,229 25,209 17,838 20,335 12,274 17,064 17,838 16,026' 15,594' 17,619 38 Panama 3,008 2,786 4,364 3,555 3,958 4,089 4,364 4,074 4,232 4,108 39 Peru 1,829 2,720 3,491 3,060 3,185 3,457 3,491 3,413 3,550 3,539 40 Uruguay 466 589 629 728 709 651 629 588 594 919 41 Venezuela 1,661 1,702 2,129 1,716 1,642 1,921 2,129 2,257 2,334 2,171 42 Other 3,376 3,174 4,120' 3,370 3,542 3,933 4,120' 3,848' 3,779' 3,676 43 Asia . 115.336 122,478 125,024' 119,395 129.622 129,760 125,024' 114,415' 108,927' 101,378 China 44 Mainland 1,023 1,401 1,579 2,798 2,345 2,102 1.579 2,534 1,988 2,762 45 Taiwan 1,713 1,894 921 1,250 1.271 1,000 921 847 820 741 46 Hong Kong 12,821 12,802 13,990 13,568 15,338 15,151 13,990 14,548 13,477 12,607 47 India 1,846 1,946 2,200 2,086 2,360 2,501 2,200 2,299 2,172 1,927 48 Indonesia 1,696 1,762 2,634' 2,713 2,731 2,774 2,634' 2,361' 2.266' 2.289 49 Israel 739 633 768 907 1,539 1,201 768 946 987 811 50 Japan 61,468 59,967 59,540' 52,480 59,437 60,195 59,540' 52,904 51,891 46,710 51 Korea (South) 13,975 18,901 18,123 19,983 19,927 19,258 18,123 14.429 12,741 11,522 52 Philippines 1,318 1,697 1,689 1,670 1,455 1,533 1,689 1,794 1,645 1,813 53 Thailand 2,612 2,679 2,259 2,479 2,317 2,180 2,259 2,164 2,138 2,144 54 Middle Eastern oil-exporting countries'1 . 9,639 10,424 10,790 7,988 8,490 8,909 10,790 9,133 9,101 8,919 55 Other 6.486 8,372 10,531 11,473 12,412 12,956 10.531 10,456 9,701 9,133 56 Africa 2,742 2,776 3,530 3,464 3,342 3,332 3,530 3,580 3,403 3.593 57 Egypt 210 247 247 251 245 282 247 279 304 289 58 Morocco 514 524 511 547 599 412 511 498 514 518 59 South Africa 465 584 805 655 557 743 805 694 573 580 60 Zaire .. 1 0 0 0 0 0 0 0 0 0 61 Oil-exporting countries- 552 420 1,212 1,123 1,111 1,091 1,212 1,324 1,219 1,364 62 Other 1,000 1,001 755 830 755 785 793 63 Other 2,467 5,709 6.340 5.060 6,371 6.167 6,340 6.531 5,963 5,516 64 Australia 1,622 4,577 5,299 4.314 5,296 4,962 5,299 5,419 5,139 5,011 65 Other 845 1,132 1,041 746 1.075 1,205 1.041 1,112 824 505 66 Nonmonetary international and regional organizations6. . 1,931 2,604 2,463 2,043 1,748 2,486 2,463 2,917 2,755 2,946 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 • July 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 1998 Type of claim 1995 1996 1997' Sept. Oct. Nov. Dec.' Jan.' Feb. Mar.p 1 Total 655,211 743,919 857,967 825,412 857,967 532,444 599,925 708,233 655,419 681,287 699,095 708,233 703,148 703,671 687,467 3 Foreign public borrowers 22,518 22,216 20,660 28,875 29,795 27.739 20,660 30,184 27,030 28,175 4 Own foreign offices2 307,427 341,574 431,685 374,452 400,207 409.314 431,685 415,690 421,383 402,095 5 Unaffiliated foreign banks 101,595 113,682 109,224 104.744 115,095 122.350 109,224 111,015 106,577 107,843 6 Deposits 37,771 33,826 31,042 31.056 31,711 33.850 31,042 30,768 26,559 25,743 7 Other 63,824 79,856 78,182 73.688 83,384 88.500 78,182 80,247 80.018 82,100 8 All other foreigners 100,904 122,453 146,664 147.348 136,190 139,692 146,664 146,259 148.681 149,354 9 Claims of banks' domestic customers3 122,767 143,994 149,734 169.993 149,734 58,519 73,110 100.460 73,110 11 Negotiable and readily transferable 77,657 44.161 53,967 51,514 53,967 12 Outstanding collections and other 51,207 20,087 22,657 18,019 22,657 15,130 MEMO 13 Customer liability on acceptances 8,410 10,388 9,624 10,881 9,624 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 30,717 39,661 34,148 38,171 39,157 37.527 34,148 36,328 37,119 32,028 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 1997 Maturity, by borrower and area2 1994 1995 1996 Mar. June Sept. Dec. 1 Total 202,282 224,932 258,106 276,217 272,014 280,968 276,558 By borrower 2 Maturity of one year or less 170,411 178,857 211,859 223.836 210,882 217,949 205,859 3 Foreign public borrowers 15.435 14,995 15.411 19,935 17,979 20,123 12,134 4 All other foreigners 154,976 163.862 196,448 203,90\ 192.903 197.826 193.725 5 Maturity of more than one year 31,871 46.075 46,247 52,381 61.132 63.019 70,699 6 Foreign public borrowers 7,838 7,522 6,790 8,903 11.406 8.752 R.525 7 All other foreigners 24,033 38,553 39,457 43,478 49,726 54.267 62,174 By area Maturity of one year or less 8 Europe 56,381 55.622 55,690 74,888 69,233 69.204 58.294 9 Canada 6,690 6,751 8,339 10,423 10,381 8.460 9,917 10 Latin America and Caribbean 59,583 72,504 103,254 96,942 87,059 99.918 97,277 11 Asia 40,567 40.296 38,078 36,484 38,435 34,629 33,972 12 Africa 1,379 1.295 1,316 1,451 1,899 2,157 2,211 13 All other3 5,811 2,389 5,182 3.648 3,875 3,581 4.188 Maturity of more than one year 14 Europe 4.358 4,995 6,965 9.512 11,884 11,202 13,240 15 Canada 3.505 2,751 2,645 2,944 3,174 3,842 2,512 16 Latin America and Caribbean 15,717 27,681 24,943 26,797 31,001 34,988 42.069 17 Asia 5,123 7,941 9,392 10,772 12,509 10,393 10,159 18 Africa 1.583 1,421 1,361 1,204 1,264 1,236 1,236 19 All other3 1.385 1,286 941 1,152 1,300 1,358 1,483 I Reporting banks include all types of depository institutions as welf 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 Area or country Sept. Sept. 1 Total 409.5 499.5 551.9 574.7 612.8 586.2 645.3 688.4 718.7 747.8 ! G-10 countries and Switzerland . 161.9 191.2 206.0 203.4 226.9 220.0 228.3 255.9 274.0 268.4 3 Belgium and Luxembourg. 7.4 7.2 13.6 11.0 11.4 11.3 11.7 15.2 10.8 12 5 4 France 12.0 19.1 19.4 17.9 18.0 17.4 16.6 21.5 19.3 21.6 5 Germany 12.6 24.7 27.3 31.5 31.4 319 29.8 34.0 35.1 37.3 6 Italy 77 11.8 11.5 13.2 14.9 15.2 16.0 16.4 23.1 22.4 7 Netherlands 4.7 3.6 3.7 3.1 4.7 5.9 4.0 4.6 7.1 7.7 8 Sweden 2.7 2.7 2.7 3.3 2.7 3.0 2.6 3.4 3.6 4.1 9 Switzerland 5.9 5.1 6.7 5.2 6.3 6.3 5.3 6.1 5.5 4.9 10 United Kingdom 84.4 85.8 82.4 84.7 101.6 90.5 104.7 112.7 119.9 115.9 11 Canada 6.9 10.0 10.3 10.8 12.2 14.8 14.0 17.0 17.5 15.8 12 Japan 17.6 21.1 28.5 22.7 23.6 21.7 23.7 25.1 32.1 26.2 13 Other industrialized countries 26.5 45.7 50.2 61.3 55.5 62.1 65.7 67.4 72.7 74.7 14 Austria .7 1.1 .9 1.3 1.2 1.0 1.1 2.0 1.6 1.8 15 Denmark 1.0 1.3 2.6 3.4 3.3 1.7 1.5 1.7 2.8 3.7 16 Finland .4 .9 .8 .7 .6 .6 .8 7 1.4 1.9 17 Greece 3.2 4.5 5.7 5.6 5.6 6.1 6.7 6.3 6.1 6.2 18 Norway 1.7 2.0 3.2 2.1 2.3 3.0 8.0 5.3 4.7 4.6 19 Portugal .8 1.2 1.3 1.6 1.6 1.4 .9 1.0 1.2 1.4 20 Spain 9.9 13.6 11.6 17.5 13.6 16.1 13.2 15.0 16.2 14.6 21 Turkey 2.1 1.6 1.9 2.0 2.3 2.8 2.7 2.8 3.4 4.4 22 Other Western Europe.. 3.2 3.2 4.7 3.8 3.4 4.8 4.7 6.3 5.5 6.1 23 South Africa 1.1 1.0 1.2 1.7 2.0 1 7 2.0 1.9 1.9 1.9 24 Australia 2.3 15.4 16.4 21.7 19.6 22.8 24.0 24.5 27.8 28.1 25 OPEC2 17.6 24 1 22.1 21.2 20.1 19.2 19.7 22.1 22.5 23.2 26 Ecuador .5 .5 7 .8 .9 .9 1.1 1.1 1.0 1.3 27 Venezuela 5.1 3.7 2.7 2.9 2.3 2.3 2.4 2.0 2.1 2.3 28 Indonesia 3.3 3.8 4.8 4.7 4.9 5.4 5.2 5.0 5.7 6.6 29 Middle East countries . . . 7.6 15.3 13.3 12.3 11.5 10.2 10.7 13.3 12.6 11.8 30 African countries 1.2 .9 .6 .6 .5 .4 .4 .7 1.2 1.2 31 Non-OPEC developing countries 96.0 112.6 118.6 126.5 131.9 144.8 141.4 Latin America 32 Argentina 7.7 11.2 12.9 12.7 14.1 15.0 14.3 14.9 16.9 17.5 33 Brazil 12.0 8.4 13.7 18.3 21.7 17.8 20.7 22.7 28.3 27.4 34 Chile 4.7 6.1 6.8 6.4 6.7 6.6 7.0 7.1 7.9 8.3 35 Colombia 2.1 2.6 2.9 2.9 2.8 3.1 4.1 3.9 3.6 3.6 36 Mexico 17.9 18.4 17.3 16.1 15.4 16.3 16.2 17.9 17.4 17.1 37 Peru .4 .5 .9 1.2 1.3 1.6 1.7 1.6 2.0 38 Other 3.1 2.7 3.1 3.0 3.0 3.3 3.6 3.7 3.8 Asia China 39 Mainland . . 2.0 1.1 1.8 33 2.9 2.6 2.5 2.7 3.6 4.3 40 Taiwan .... 7.3 9.2 9.4 97 9.8 10.4 10.3 10.5 10.6 9.7 41 India 3.2 4.2 4.4 4.7 4.2 3.8 4.3 4.9 5.3 5.0 42 Israel .5 .4 .5 .5 .6 .5 .5 1.0 1.1 1.5 43 Korea (South) 6.7 16.2 19.1 19.3 21.7 21.9 21.5 14.9 16.6 16.5 44 Malaysia 4.4 3.1 4.4 5.2 5.3 5.5 6.0 6.5 6.4 5.6 45 Philippines 3.1 3.3 4.1 3.9 4.7 5.4 5.8 6.1 7.0 5.7 46 Thailand 3.1 2.1 4.9 5.2 5.4 4.8 5.7 6.8 7.3 6.2 47 Other Asta . . 3.1 4.7 4.5 4.3 4.8 4.1 4.1 4.4 4.8 4.6 Africa Egypt .4 .5 .6 .7 .9 1.1 .9 Morocco .7 .7 .7 .7 .6 .7 .7 Zaire .0 .0 .0 .1 .0 .0 .0 Other Africa1 . .9 .8 1.0 .9 .9 .9 .9 52 Eastern Europe 3.2 4.2 6.3 5.1 5.3 6.9 9.0 7.2 9.9 53 Russia4 1.6 1.0 1.4 1.0 1.8 3.7 3.6 42 5.1 54 Other 1.6 1.9 3.2 4.9 4.1 3.5 3.2 5.4 3.0 4.7 55 Offshore banking centers 73.5 72.9 99.2 101.3 106.1 105.2 134.7 142.5 140.0 149.6 56 Bahamas 10.9 10.2 11.0 13.9 17.3 14.2 20.3 21.1 17.2 20.5 57 Bermuda 8.9 84 6.3 5.3 4.1 4.0 4.5 6.7 7.9 9.8 58 Cayman Islands and other British West Indies 18.4 21.4 32.4 28.8 26.1 32.0 37.2 41.2 43.1 52.1 59 Netherlands Antilles 2.8 1.6 10.3 11.1 13.2 11.7 26.1 20.0 15.9 21 8 60 Panama5 2.4 1.3 1.4 1.6 1.7 1.7 2.0 2.2 2.7 2.3 61 Lebanon .1 I .1 .1 .1 .1 I .1 I .1 62 Hong Kong, China 18.8 20.0 25.0 25.3 27.6 26.0 27.9 30.9 35.2 27.3 63 Singapore 11.2 10.1 13.1 15.4 15.9 15.5 16.7 20.3 17.7 15.9 64 Other5 .1 .1 .1 .1 .1 .1 .1 .1 .3 .1 65 Miscellaneous and unallocated7 43.6 66.9 57.6 62.6 72.7 50.0 59.6 59.6 57.6 80.8 1. The banking offices covered by these data include U.S. offices and foreign branches of 2. Organization of Petroleum Exporting Countries, shown individually; other members of U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not covered OPEC (Algeria, Gabon, Iran, Iraq. Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United include U.S. agencies and branches of foreign banks. Beginning March 1994, the data include Arab Emirates); and Bahrain and Oman (not formally members of OPEC). large foreign subsidiaries of U.S. banks. The data also include other types of U.S. depository 3. Excludes Liberia. Beginning March 1994 includes Namibia. institutions as well as some types of brokers and dealers. To eliminate duplication, the data 4. As of December 1992. excludes other republics of the former Soviet Union. are adjusted to exclude the claims on foreign branches held by a U.S. office or another foreign 5. Includes Canal Zone. branch of the same banking institution. 6. Foreign branch claims only. These data are on a gross claims basis and do not necessarily reflect the ultimate country 7. Includes New Zealand. Liberia, and international and regional organizations. risk or exposure of U.S. banks. More complete data on the country risk exposure of U.S. banks are available in the quarterly Country Exposure Lending Survey published by the Federal Financial Institutions Examination Council. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • July 1998 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1996 Type of liability, and area or country 1994 1996 Sept. Sept. Dec.p 1 Total 54,309 46,448 54,798 51,604 54,798 58,750 55,184 55,476 58,245 2 Payable in dollars 38,298 33,903 38,956 36,374 38,956 39,944 38,494 39,583 41,838 3 Payable in foreign currencies 16,011 12,545 15,842 15,230 15,842 18,806 16.690 15,893 16.407 By type 4 Financial liabilities 32,954 24,241 26,065 25,445 26,065 29,633 26,864 25,970 27.790 5 Payable in dollars 18,818 12,903 11.327 11,272 11,327 11,847 11,203 11,248 12,975 6 Payable in foreign currencies 14,136 11,338 14,738 14,173 14,738 17,786 15,661 14,722 14,815 7 Commercial liabilities 21,355 22,207 28.733 26,159 28,733 29,117 28,320 29,506 30,455 8 Trade payables 10,005 11,013 12.720 11,791 12,720 11,515 11,122 10,961 10.900 9 Advance receipts and other liabilities 11,350 11,194 16.013 14,368 16,013 17,602 17,198 18,545 19,555 10 Payable in dollars 19.480 21,000 27,629 25,102 27.629 28,097 27,291 28,335 28,863 11 Payable in foreign currencies 1,875 1,207 1.104 1,057 1.104 1,020 1.029 1,171 1,592 By area or country Financial liabilities 12 Europe 21,703 15,622 16,195 16,086 16.195 20,081 18.530 18,019 19,121 13 Belgium and Luxembourg 495 369 632 547 632 769 238 89 186 14 France 1.727 999 1,091 1,220 1,091 1.205 1.280 1,334 1,684 15 Germany 1,961 1.974 1,834 2,276 1,834 1,589 1,765 1,730 2,018 16 Netherlands 552 466 556 519 556 507 466 507 494 17 Switzerland 688 895 699 830 699 694 591 645 776 18 United Kingdom 15.543 10,138 10,177 9,837 10,177 13,863 12.968 12,165 12,201 19 Canada 629 632 1,401 973 1,401 602 456 399 1,186 20 Latin America and Caribbean 2,034 1,783 1.668 1,169 1,668 1,876 1,279 1,061 1,386 21 Bahamas 101 59 236 50 236 293 124 10 141 22 Bermuda 80 147 50 25 50 27 55 64 229 23 Brazil 207 57 78 52 78 75 97 52 143 24 British West Indies 998 866 1.030 764 1,030 965 769 663 604 25 Mexico 0 12 17 13 17 16 15 76 26 26 Venezuela 5 1 I 1 1 1 1 1 27 Asia 8,403 5,988 6.423 6,969 6,423 6,370 6,015 6,006 5,394 28 Japan 7,314 5,436 5,869 6,602 5,869 5,794 5,435 5,492 5,085 29 Middle Eastern oil-exporting countries' 35 27 25 25 25 72 39 23 32 30 Africa 135 150 38 153 38 29 29 33 60 31 Oil-exporting countries 123 122 0 121 0 0 0 0 0 32 All other 66 340 555 Commercial liabilities 33 Europe 6,773 7,700 9,767 8,680 9,767 9,551 8,711 9,362 10,212 34 Belgium and Luxembourg 241 331 479 427 479 643 738 705 666 35 France 728 481 680 657 680 680 709 783 763 36 Germany 604 767 1.O02 949 1,002 1,047 852 950 1,271 37 Netherlands 722 500 766 668 766 553 290 453 439 38 Switzerland 327 413 624 405 624 481 430 401 375 39 United Kingdom 2,444 3,568 4,303 3,663 4,303 4,165 3.827 3,834 4,083 40 Canada 1,037 1,040 1,090 1,144 1,090 1,068 1,136 1,150 1,171 41 Latin America and Caribbean 1,857 1,740 2.574 2,386 2.574 2,563 2,501 2,225 2,159 42 Bahamas 19 1 63 33 63 43 33 38 16 43 Bermuda 345 205 297 355 297 479 397 180 203 44 Brazil 161 98 196 198 196 201 225 233 212 45 British West Indies 23 56 14 15 14 14 26 23 11 46 Mexico 574 416 665 446 665 633 594 562 564 47 Venezuela 276 221 328 341 328 318 304 322 259 48 Asia 10,741 10,421 13.422 12.227 13,422 13,968 13,926 14,682 14,958 49 Japan 4,555 3,315 4,614 4,149 4,614 4,502 4,460 4,587 4,499 50 Middle Eastern oil-exporting countries'. 1.576 1,912 2,168 1,951 2,168 2,495 2,420 2,984 3,109 51 Africa 428 619 1,040 1,020 1,040 1,037 941 929 870 52 Oil-exporting countries2 256 254 532 490 532 479 423 504 408 53 Other' 702 840 930 1.105 1,085 1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon, Libya, and Nigeria. Emirates (Trucial Stales). 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period Type of claim, and area or country Sept. Sept. 1 Total 57,888 52,509 63,642 59,092 63,642 66,202 67,039 68,646 65,287 2 Payable in dollars 53,805 48,711 58,630 55,014 58,630 60,226 60.855 62,030 57,383 3 Payable in foreign currencies 4,083 3,798 5,012 4,078 5,012 5,976 6,184 6.616 7,904 By type 4 Financial claims 33,897 27,398 35.268 34,200 35,268 38,647 39,490 39,945 34,200 5 Deposits 18.507 15,133 21,404 19.877 21,404 20,250 22.896 21,837 18,431 6 Payable in dollars 18,026 14,654 20,631 19,182 20,631 18,599 21.405 20,278 16,582 7 Payable in foreign currencies . . . 481 479 773 695 773 1,651 1,491 1,559 1,849 8 Other financial claims 15,390 12,265 13,864 14.323 13,864 18,397 16,594 18.108 15,769 9 Payable in dollars 14,306 10,976 12.069 12,234 12,069 15,381 13,337 14,795 11,576 10 Payable in foreign currencies 1,084 1,289 1,795 2,089 1,795 3,016 3,257 3,313 4,193 11 Commercial claims 23,991 25,111 28,374 24,892 28,374 27,555 27,549 28,701 31.087 12 Trade receivables 21,158 22,998 25,751 22.454 25,751 24,801 24,858 25,110 27 454 13 Advance payments and other claims 2,833 2,113 2,623 2.438 2,623 2,754 2.691 3,591 3,633 14 Payable in dollars 21.473 23.081 25.930 23,598 25,930 26,246 26,113 26.957 29.225 15 Payable in foreign currencies 2,518 2,030 2,444 1,294 2,444 1,309 1,436 1.744 1,862 By area or country Financial claims Europe 7,936 7,609 9,282 9,777 9,282 11.176 11,677 13,758 12,240 Belgium and Luxembourg 86 193 185 126 185 119 203 360 406 France 800 803 694 733 694 760 680 1,112 1,015 Germany 540 436 276 272 276 324 281 352 427 Netherlands 429 517 493 520 493 567 519 764 677 Switzerland 523 498 474 432 474 570 447 448 434 United Kingdom 4,649 4,303 6,119 6,603 6,119 7.937 8,604 9.150 7,578 23 Canada 3,581 2,851 3.445 4.502 3,445 4,917 6.422 4,279 3,313 24 Latin America and Caribbean 19,536 14,500 19,577 17.241 19,577 19,742 18,725 19,166 15,543 25 Bahamas 2.424 1,965 1,452 1,746 1,452 1,894 2,064 2,442 2,459 26 Bermuda 27 81 140 113 140 157 188 190 108 Brazil 520 830 1,468 1,438 1,468 1,404 1,617 1.501 1,313 British West Indies 15,228 10,393 15,182 12,819 15,182 15,176 13,553 12.947 10,311 29 Mexico 723 554 457 413 457 517 497 508 537 30 Venezuela 35 32 31 20 31 22 21 15 36 31 Asia 1.871 1,579 2,221 1,834 2,221 2,068 1,934 2.015 2,133 32 Japan 953 871 1,035 1,001 1,035 831 766 999 823 33 Middle Eastern oil-exporting countries1 141 3 22 13 22 12 20 15 II 34 Africa 373 276 174 177 174 182 179 174 319 35 Oil-exporting countries2 0 5 14 13 14 14 15 16 15 > AH other1 37CoEmumroeprceial claims 9,540 9,824 10.443 9,288 10,443 9,863 9,603 10.486 12,098 38 Belgium and Luxembourg 213 231 226 213 226 364 327 331 328 39 France 1.881 1,830 1,644 1.532 1,644 1,514 1,377 1,642 1.793 40 Germany 1,027 1,070 1,337 1.250 1,337 1.364 1,229 1,395 1,612 41 Netherlands 311 452 562 424 562 582 613 573 597 42 Switzerland 557 520 642 594 642 418 389 381 551 43 United Kingdom 2,556 2,656 2,946 2,516 2,946 2,626 2.836 2.904 3,652 1,951 2.165 2,083 2,165 2,381 2,464 2.649 2,636 45 Latin America and Caribbean 4.117 4,364 5,276 4,409 5,276 5,067 5.241 5,028 5,742 46 Bahamas 9 30 35 14 35 40 29 22 27 47 Bermuda 234 272 275 290 275 159 197 128 244 48 Brazil 612 898 1,303 968 1.303 1,216 1,136 1,101 1,163 49 British West Indies 83 79 190 119 190 127 98 98 109 50 Mexico 1.243 993 1,128 936 1,128 1,102 1,140 1,219 1,385 51 Venezuela 348 285 357 316 357 330 451 418 576 52 Asia 6,982 7,312 8,376 7.289 8,376 8,348 8,460 8,576 8.691 53 Japan 2,655 1,870 2,003 1,919 2.003 2,065 2,079 2.048 1,973 54 Middle Eastern oil-exporting countries1 708 974 971 945 971 1,078 1,014 987 1.104 55 Africa 454 654 746 731 746 718 618 764 677 56 Oil-exporting countries .. 67 87 166 142 166 100 81 207 119 1,006 1,092 1,368 1,163 1,243 1. Comprises Bahrain, Iran. Iraq, Kuwait, Oman. Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon. Libya, and Nigeria. Emirates (Trucial States). 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • July 1998 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars Transaction, and area or country 1996 Jan.- Sept. Mar. U.S. corporate securities STOCKS 1 Foreign purchases 590,714 963,885 314,184 80,546 106,673 85,149 90,994 90,106 99,236 124.842 578,203 897.850 285.151 75,428 105,668 80,133 85,670 83.839 89,228 112.084 2 Foreign .sales 3 Net purchases, or sales (-) 12,511 66,035 29,033 5,118 1.005 5,016 5,324 6,267 10,008 12,758 4 Foreign countries 12,585 66,175 29,079 5,123 1,023 5,024 5,358 6,319 9,998 12,762 5 Europe 5,367 59,041 26,761 5,296 5,910 5,318 5,832 6,637 9.625 10.499 ! 1 1 1 1 1 1 1 0 6 7 8 9 1 2 3 7 4 5 6 C O O M L A a a f t t U G F i S N h h r J t n d i i a r w e e n c a n e d e a p r r d a r i t l i n a t m h e t A a e c c A z n e d o a e e m E r s n u r l i a a l K e a y n a n s r t n i i t d r n c ' d i s g a e s d a o n m d Caribbean - - 2 1 4 2 2 5 - 1 1 , . , , , , , , - - 3 4 9 6 7 4 8 2 4 1 8 5 7 0 1 1 0 1 0 1 7 2 5 7 2 2 8 5 0 5 4 6 6 8 - 2 1 2 9 7 4 3 3 2 5 , , , , . , . . . 4 1 3 0 0 1 2 8 8 7 1 2 6 7 4 3 7 7 1 4 3 7 8 6 1 1 1 4 4 5 5 1 5 3 0 4 - - 1 3 3 3 - 6 - - 0 1 1 1 . , , , , , . , 1 1 6 2 7 8 9 9 1 7 3 9 7 2 1 0 7 4 8 3 1 4 3 4 8 6 0 1 1 1 8 8 0 9 0 0 - 3 - - - , 4 5 3 5 - 2 3 8 8 5 0 1 1 6 3 4 7 2 1 3 9 5 5 9 3 0 3 1 4 0 3 2 4 9 -4 2 - - . , - 5 5 0 5 7 8 2 4 8 0 9 2 3 5 4 7 7 8 2 4 0 8 1 0 8 7 8 4 8 0 9 4 - 1 1 - - - . , - 6 1 3 8 7 5 8 8 0 6 3 2 9 4 5 0 7 8 4 7 1 5 6 7 0 4 7 9 9 8 3 5 5 -1 - 1 1 1 . - , , , 3 7 4 2 5 2 0 2 4 4 0 0 8 5 9 2 2 7 3 7 5 4 9 8 1 9 4 1 1 7 2 4 - - 1 2 2 - 2 - , , , , 2 1 6 6 5 6 1 6 7 1 6 5 6 1 4 6 8 1 9 3 5 1 4 4 6 3 6 5 3 2 3 4 5 5 6 4 - 2 - 1 - - - , , , 4 6 2 1 9 4 7 1 5 1 1 7 6 7 2 6 4 9 3 4 8 8 1 8 7 3 9 8 4 2 2 0 4 8 3 -1 3 2 - 1 - - , 2 , . 1 1 4 . 6 4 8 5 1 9 5 0 7 1 2 2 5 3 5 1 0 5 8 1 1 2 2 7 7 1 6 0 4 6 3 18 Nonmonetary international and -18 regional organizations BONDS2 393,953 614,253 193,389 50,709 58.462 52,632 52,484 57,479 67,414 68.496 19 Foreign purchases 268,487 477,786 143.338 41.201 44,435 48,772 43,171 44.334 49,991 49.013 20 Foreign sales 125,466 136,467 50,051 9,508 14,027 3,860 9.31J 13,145 19.483 21 Net purchases, or sales (-> . . . 125,295 135,875 49,811 9,507 13,500 3,948 9,302 13.113 17,354 19,344 22 Foreign countries 77,570 74,301 26,039 5,843 3.598 2,395 4,575 5.416 8,249 12.374 23 Europe 4 4 , , 4 4 3 6 9 0 3 2, , 7 3 4 0 2 0 1, 9 0 5 7 7 3 6 3 3 0 8 0 1 12 4 0 2 5 1 4 6 6 5 - - 4 6 7 7 4 2 7 8 4 9 4 2 1 7 9 2 7 24 2 9 7 24 France 2,107 3,576 130 135 369 185 425 -433 199 364 25 Germany 1,170 187 1,384 -501 -109 712 733 760 266 358 26 Netherlands 60,509 56,804 19,944 4,109 2.611 -104 3,069 4.163 6.243 9,538 27 Switzerland 4,486 6,264 1,923 624 866 459 677 1,409 114 400 28 United Kingdom 17,737 34,821 15,585 1,265 3.712 3,884 7.220 5,339 5,512 4.734 29 Canada 1,679 1,656 1,420 -1 -183 199 142 78 820 522 3 3 0 1 L M a i t d in d le A m Ea e s r t ic 1 a and Caribbean . 2 1 3 4 , , 7 17 6 3 2 1 9 7 , , 3 01 5 7 4 4, 6 0 7 8 8 7 - 1, 6 5 1 9 3 1 5 5, , 2 6 0 3 7 4 - - 3 2 , , 1 8 9 8 3 3 - -3 3 , , 7 5 6 2 4 6 -9 4 5 8 8 5 2, 8 4 8 2 6 8 1, 7 17 5 4 0 32 Other Asia 624 1.005 106 8 II 88 49 142 36 _7'> 33 Japan -563 811 651 177 -138 116 165 244 195 212 34 Afnca 35 Other countries 36 Nonmdnetary international and 592 139 regional organizations . . . Foreign securities 37 Stocks, net purchases, or sales ( —) -59.268 -40,243 -2,321 -334 -2.820 2,045 1.541 156 -1,098 -1,379 38 Foreign purchases 450,365 719,145 209,919 62,690 79,549 70.286 64.328 62.333 66,652 80,9.14 39 Foreign sales 509,633 759,388 212,240 63,024 82,369 68,241 62,787 62,177 67,750 82.313 40 Bonds, net purchases, or sales (- > -51,369 -47.241 -2,111 -8,006 -739 -4,468 -3.062 -3,725 -2,816 4,430 41 Foreign purchases 1,114,035 1,466,784 326,172 121,636 163,626 111,000 115,302 95.481 100,231 130.460 42 Foreign sales 328,283 129,642 164.365 115,468 118,364 99.206 103,047 126,030 1.165.404 1,514,025 43 Net purchases, or sales (—), of stocks and bonds -4,432 -8,340 -3,559 -2,423 -1,521 -3,569 -3,914 3,051 -110,637 -87,484 44 Foreign countries -4.273 -8,334 -3,394 -2,375 -1,435 -3,480 -3,872 3.079 -109,766 -87,428 45 Europe -774 -5,544 -5,227 -2.528 909 -3,963 -1,811 5,000 46 Canada -57,139 -28,060 1.467 -1.236 412 557 -78 842 452 173 47 Latin America and Caribbean -7,685 -3,794 1,926 -146 1.899 -2,160 -2.918 829 537 560 48 Asia -11,507 -25.043 -6,711 -709 1,684 936 -1,119 -3,009 -2.583 49 Japan -27,831 -24,972 -3.984 -183 2,261 1,862 -413 -1,826 -1.745 50 Africa -5,887 -10,014 -432 -273 -1,027 -380 -74 -114 -147 -171 51 Othet countries - - 1 4 , , 5 0 1 8 7 7 - -2 3 , , 2 2 6 9 3 6 251 -426 -340 452 -210 45 106 100 52 Nonmonetary international and regional organizations -871 -6 -165 -48 -86 -89 -42 -28 I. 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. cotporations organized to finance direct investments abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Holdings and Transactions/Interest and Exchange Rates A61 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions' Millions of dollars; net purchases, or sales ( —) during period Area or country Jan.- Sept. Mar. 1 Total estimated 232,241 183,596 11,779 15,174 16,858 15,909 -9,398 5,512' 9,957 -3,690 2 Foreign countries , 234,083 183,179 10,195 14,788 17,094 15,489 -7.788 4.990' 10.091 -4,886 3 Europe 118,781 144.920 24,556 19,152 23,102 10,158 -37 18,215' 6.798 -457 4 Belgium and Luxembourg 1,429 3,427 1,260 138 357 384 161 304 252 704 5 Germany 17.980 22,471 2,008 2,714 4,847 5,255 3.052 -1,085 1,096 1,997 6 Netherlands -582 1,746 -2,122 -3 334 375 -1.525 403 -792 -1,733 7 Sweden 2,242 -465 52 16 302 -67 -124 82 -430 400 8 Switzerland 328 6,028 4,279 109 690 1.395 2.847 2,419 1.690 170 9 United Kingdom 65,658 98.253 14,349 12,856 18,779 5,640 -1,792 11,879 5,875 -3,405 10 Other Europe and former U.S.S.R. 31,726 13.460 4,730 3,322 -2.207 -2,824 -2,656 4,213' -893 1.410 11 Canada 2,331 -811 -252 -414 -730 730 -2,132 -1 266 -517 12 Latin America and Caribbean 20,785 -2,541 -9,878 -769 - 1.434 6,512 3,737 -3.619 2.123 -8.382 13 Venezuela -69 655 -26 -691 107 397 -36 4 97 -127 14 Other Latin America and Caribbean 8,439 -536 4,649 -2.880 -3.723 -723 2.485 1,711 2.949 15 Netherlands Antilles 12,415 -2.660 -14.501 2,802 2,182 6,838 1,288 -5,334 -923 -8,244 16 Asia 89,735 39.047 -3.887 -4.614 -5.394 -1,002 -10,359 -8,757' 1,348 3,522 17 Japan 41,366 20,360 -5.888 -2,782 4,160 -4.784 -7.860 -6,484' 764 -168 18 Africa 1,083 1,523 287 461 45 -82 268 -43' 176 154 19 Other 1,368 1,041 631 972 1.505 -827 735 -805 -620 794 20 Nonmonetary international and regional organizations -1,842 417 1,584 386 -236 420 -1.610 522 -134 1,196 21 International -1.390 552 1.122 341 -74 451 -1.025 445 -223 900 22 Latin American regional -779 173 13 -21 78 -24 -131 32 -29 10 MEMO 23 Foreign countries 234.083 183,179 10,195 14,788 17.094 15,489 -7,788 4.990' 10,091 -4,886 24 Official institutions 85.807 43,379 6,187 3,091 -12,848 1,831 -367 -1,189 1,242 6.134 25 Other foreign 148.276 139,800 4,008 11,697 29,942 13,658 -7,421 6,179' 8,849 11,020 OU-exponing countries 26 Middle East: 10,232 7.116 -677 -1.877 3.175 -1,506 409 1,325 27 Africa3 1 -13 I 0 0 0 0 0 1. Official and private transactions in marketable U.S. Treasury securities having an 2. Comprises Bahrain, Iran. Iraq. Kuwait, Oman. Qatar, Saudi Arabia, and United Arab original maturity of more than one year. Data are based on monthly transactions reports. Emirates (Trucial States). Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign 3. Comprises Algeria, Gabon, Libya, and Nigeria. countries. 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS1 Percent per year, averages of daily figures Rate on May 31, 1998 Rate on May 31, 1998 Country Country Month Month Percent effective Percent effective Austria 2.5 Apr. 1996 Germany 2.5 Apr. 1996 3elgium 2.75 Oct. 1997 Italy 5.0 Apr. 1998 5.0 Jan. 1998 Japan .5 Sept. 1995 Denmark 3.75 May 1998 Netherlands 2.5 Apr. 1996 France2 3.3 Oct. 1997 Switzerland 1.0 Sept. 1996 ]. Rates shown are mainly those a! which ihe central bank either discounts or makes 2. Since February 1981, the rate has been that at which the Bank ot 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 Nov. Dec. Jan. Feb. Mar. Apr May 5 93 5.38 5.61 5.71 5.79 5.53 5.53 5.56 5.56 5.57 2 United Kingdom 6.63 5.99 6.81 7.52 7.60 7.49 7.46 7.47 7.41 7.37 3 Canada 7.14 4.49 3.59 4.02 4.61 4.68 5.02 4.93 4.94 5.09 4 Germany 4.43 321 3.24 3.68 3.67 3.51 3.45 3.44 3.56 3.55 5 Switzerland 2.94 1.92 1.58 1.91 1.56 1.27 .98 1.06 1,39 1.52 4.30 2.91 3.25 3.65 3.61 1.42 3.36 3.42 3.52 3.53 7 France 6.43 3.81 3.35 3.57 3.57 3.50 3.45 3.45 3.50 3.50 8 Italy 10 43 8 79 6 86 6 49 6 07 6 05 6 12 5 59 5 09 4.98 9 Belgium 4.73 3.19 3.40 3.72 3.61 3.47 3.53 3.61 3.69 3.67 10 Japan 1.20 .58 .58 .53 .78 .77 .84 .74 .66 .56 1. Rates are for three-month interbank loans, with the following exceptions: Canada, finance company paper; Belgium, three-month Treasury bills; and Japan. CD rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics D July 1998 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar except as noted 1997 1998 Country/currency unit 1995 1996 Feb. Mar. Apr. May 1 Australia/dollar 74.073 78.283 74.368 66.187 65.659 67.436 66.963 65.231 63.124 2 Austria/schilling 10.076 10.589 12.206 12.510 12.765 12.735 12.852 12.760 12.491 3 Belgium/franc 29.472 30.970 35.807 36.748 37.536 37.417 37.699 37.424 36.624 4 Canada/dollar 1.3725 1.3638 1.3849 1.4271 1.4409 1.4334 1.4166 1.4298 1.4452 5 China, P.R./yuan 8.3700 8.3389 8.3193 8.3099 8.3094 8.3072 8.3076 8.3058 8.3084 6 Denmark/krone 5.5999 5.8003 6.6092 6.7752 6.9190 6.9089 6.9661 6.9174 6.7662 7 FinlanoVmarkka 4.3763 4.5948 5.1956 5.3789 5.5006 5.4999 5.5467 5.5053 5.3966 8 France/franc 4.9864 5.1158 5.8393 5.9542 6.0832 6.0744 6.1257 6.0782 5.9528 9 Germany/deutsche mark 1.4321 1.5049 1.7348 1.7788 1.8165 1.8123 1.8272 1.8132 1.7753 10 Greece/drachma 231.68 240.82 273.28 279.93 287.24 286.70 306.05 315.82 307.22 11 Hong Kong/dollar 7.7357 7.7345 7.7431 7.7456 7.7425 7.7412 7.7458 7.7497 7.7490 12 India/rupee 32.418 35.506 36.365 39.400 39.391 39.008 39.569 39.703 40.469 13 Ireland/pound2 160.35 159.95 151.63 145.33 138.19 137.71 136.72 138.94 141.74 14 Italy/lira 1,629.45 1,542.76 1,703.81 1,743.86 1,787.87 1,788.28 1,799.07 1,791.24 1,750.79 15 Japan/yen 93.96 108.78 121.06 129.73 129.55 125.85 129.08 131.75 134.90 16 Malaysia/ringgil 2.5073 2.5154 2.8173 3.7907 4.4093 3.8148 3.7456 3.7376 3.8204 17 Netherlands/guilder 1.6044 1.6863 1.9525 2.0051 2.0472 2.0432 2.0598 2.0422 2.0005 18 New Zealand/dollar2 65.625 68.765 66.247 59.137 57.925 58.286 57.261 55.339 53.876 19 Norway/krone 6.3355 6.4594 7.0857 7.2630 7.5007 7.5530 7.5833 7.5315 7.4539 20 Ponugal/escudo 149.88 154.28 175.44 181.91 185.80 185.54 187.03 185.81 181.87 21 Singapore/dollar 1.4171 1.4100 1.4857 1.6518 1.7477 1.6509 1.6188 1.6007 1.6374 22 South Africa/rand 3.6284 4.3011 4.6072 4.8706 4.9417 4.9337 4.9746 5.0459 5.0927 23 South Korea/won 772.69 805.00 950.77 1.494.04 1,707.30 1.628.42 1,489.36 1.391.55 1,399.05 24 Spain/peseta 124.64 126.68 146.53 150.46 153.93 153.61 154.95 153.99 150.81 25 Sri Lanka/rupee 51.047 55.289 59.026 61.591 62.281 62.363 62.083 62.903 64.261 26 SwedenTkrona 7.1406 6.7082 7.6446 7.7977 8.0193 8.0723 7.9677 7.8238 7.7026 27 Switzerland/franc 1.1812 1.2361 1.4514 1.4393 1.4748 1.4631 1.4901 1.5051 1.4790 28 Taiwan/dollar 26.495 27.468 28.775 32.502 34.117 32.948 32.524 33.016 33.466 29 Thailand/baht 24.921 25.359 31.072 44.309 52.983 45.987 41.366 39.654 39.198 30 United Kingdom/pound . . . . 157.85 156.07 163.76 165.97 163.50 164.08 166.19 167.23 163.82 MEMO 31 United States/dollar3 84.25 87.34 100.52 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 June 1998 A72 SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks March31, 1997 September 1997 A64 June 30, 1997 November 1997 A64 September 30, 1997 February 1998 A64 December 31, 1997 May 1998 A64 Terms of lending at commercial banks May 1997 October 1997 A64 August 1997 November 1997 A68 November 1997 February 1998 A68 February 1998 May 1998 A66 Assets and liabilities of U.S. branches and agencies of foreign banks March31, 1997 August 1997 A64 June 30, 1997 November 1997 A72 September 30, 1997 February 1998 A72 December 31, 1997 May 1998 A70 Pro forma balance sheet and income statements for priced service operations June 30, 1997 October 1997 A68 September 30, 1997 January 1998 A64 March 31, 1998 July 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 Special Tables • July 1998 4.31 PRO FORMA FINANCIAL STATEMENTS FOR FEDERAL RESERVE PRICED SERVICES A. Pro forma balance sheet Millions of dollars Item Mar. 31, 1998 Mar. 31, 1997 Short-term assets (Note 1) 610.7 672.9 investment in marketable securities 5,496.3 6.056.1 68.5 65.5 4.6 3.0 Prepaid expenses 24.3 45.4 Items in process of collection 5,892,3 1,089.6 Total short-term assets 12,096.8 7.932.5 fumg-term assets (Note 2) demises 391.8 383.9 130.8 137.3 ^ases and leasehold improvements 25.4 35.2 Prepaid pension costs 366.4 303.0 Total long-term assets 914.4 859.4 13,011.2 8,792.0 Short-term liabilities Clearing balances and balances arising from early credit of uncollected items 7,381.2 6.796.6 4,618.1 1,022.0 Short-term debt 97.4 113.9 12,096,8 7,932.5 Long-term liabilities Obligations under capital leases .0 .7 Long-term debt 191.8 188.2 Postretirement/postemployment benefits obligation 207.7 196.1 Total long-term liabilities 399.5 385.0 12,496.3 8.317.5 514.9 474.4 Total liabilities and equity (Note 3) 13,011.2 8,792.0 NOTE. Components may not sum to totals because of rounding. The priced services financial statements consist of these tables and the accompanying notes. Some of the 1997 data have been revised. B. Pro forma income statement Millions of dollars Quarter ending Mar. 31, 1996 Revenue from services provided to depository institutions (Note 4) . 193.0 Operating expenses (Note 5) 163.3 Income from operations 29.7 Imputed costs (Note 6) Interest on float 4.3 Interest on debt 4.4 Sales taxes 2.7 FDIC insurance .5 n.8 Income from operations after imputed costs 17.9 Other income and expenses (Note 7) Investment income on clearing balances 88.3 Earnings credits 78.2 10.1 Income before income taxes 28.0 Imputed income taxes (Note 8) 9.0 Net income 19.0 MEMO Targeted return on equity (Note 9) 13.7 NOTE. Components may not sum to totals because of rounding. The priced services financial statements consist of these tables and the accompanying notes. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A65 NOTES TO FINANCIAL STATEMENTS FOR FEDERAL RESERVE PRICED SERVICES (1) SHORT TERM ASSETS Governors working directly on the development of priced services The expenses for Board staff' members were $0.7 million in the first quarter of 1998 and $0.7 million in the first The imputed reserve requirement on clearing balances held al Reserve Banks by depository quarter of 1997. The credit to expenses under SFAS 87 (see note 2) is reflected in operating institutions reflects a treatment comparable to that of compensating balances held at corre- expenses. spondent banks by respondent institutions. The reserve requirement imposed on respondent balances must be held as vault cash or as nonearning balances maintained at a Reserve Bank: (6) IMPUTED COSTS thus, a portion of priced services clearing balances held with the Federal Reserve is shown as required reserves on the asset side of the balance sheet. The remainder of clearing balances is Imputed cosis consist of interest on float, interest on debt, sales laxes. and Ihe FD1C assumed to be mvesled in three-month Treasury bills, shown as investment in marketable assessment. Interest on float is derived from the value of float to be recovered, either securities. explicitly or through per-item fees, during the period. Float costs include costs for checks, Receivables are (1) amounts due the Reserve Banks for priced services and (2) the share of book-entry securities, noncash collection, ACH, and funds transfers. suspense-account and difference-account balances related to priced services. Interest is imputed on the debt assumed necessary to finance priced-service assets. The Materials and supplies are the inventory value of short-term assets. sales taxes and FDIC assessment that the Federal Reserve would have paid had it been a Prepaid expenses include salary advances and travel advances for priced-service personnel. private-sector firm are among the components of the PSAF (see note 3). Items in process of collection is gross Federal Reserve cash items in process of collection The following list shows the daily average recovery of float by the Reserve Banks for the (CIPC) stated on a basis comparable to that of a commercial bank. It reflects adjustmenis for first quarter of 1998 and 1997 in millions of dollars: intra-System items that would otherwise be double-counted on a consolidated Federal Reserve balance sheet; adjustments for items associated with non-priced items, such as those 1998 1997 collected for government agencies; and adjustments for items associated with providing fixed availability or credit before items are received and processed. Among the costs to be Total float 758.7 685.0 recovered under the Monetary Control Act is the cost of float, or net CIPC during the period Unrecovered float (10.7) 11.3 (the difference between gross CIPC and deferred-a vail ability items which is the portion of Float subject to recovery 769.4 673.7 gross CIPC that involves a financing cost), valued ai ihe federal funds rate. Sources of float recovery Income on clearing balances 76.6 67.7 As-of adjustments 376.4 346.1 (2) LONG-TERM ASSETS Direct charges 141.4 146.4 Per-item fees 175.0 113.4 Consists of long-term assets used solely in priced services, the priced-services portion of long-term assets shared with nonpnced services, and an estimate of the assets of the Board of Unrecovered float includes float generated by services to government agencies and by other Governors used in the development of priced services. Effective Jan. 1, 1987, the Reserve central bank services. Float recovered through income on clearing balances is the result of the Banks implemented the Financial Accounting Standards Board's Statement of Financial increase in investable clearing balances; the increase is produced by a deduction for float for Accounting Standards No. 87, Employers' Accounting for Pensions (SFAS 87). Accordingly, cash items in process of collection, which reduces imputed reserve requirements. The income the Federal Reserve Banks recognized credits to expenses of $16.2 million in the first quarter on clearing balances reduces the float to be recovered through other means. As-of adjustments of 1998 and $15.6 million in the first quarter of 1997, and corresponding increases in this and direct charges are mid-week closing float and interterritory check float, which may be asset account. recovered from depositing institutions through adjustments to the institution's reserve or clearing balance or by valuing the float at the federal funds rate and billing the institution directly. Float recovered through per-item fees is valued at the federal funds rate and has been (3) LIABILITIES AND EQUITY added to the cost base subjeci lo recovery in the first quarter of 1998. Under the matched-book capital structure for assets that are not "self financing," short-term (7) OTHER INCOME AND EXPENSES assets are financed with short-term debt. Long-term assets are financed with long-term debt Consists of investment income on clearing balances and the cost of earnings credits. and equity in a proportion equal to the ratio of long-term debt to equity for the fifty largest Investment income on clearing balances represents the average coupon-equivalent yield on bank holding companies, which are used in the model for the private-sector adjustment factor three-month Treasury bills applied to the total clearing balance maintained, adjusted for the (PSAF). The PSAF consists of the taxes that would have been paid and the return on capital effect of reserve requirements on clearing balances. Expenses for earnings credits granted to lhat would have been provided had priced services been furnished by a private-sector firm. depository institutions on their clearing balances are derived by applying the average federal Other short-term liabilities include clearing balances maintained at Reserve Banks and funds rate to the required portion of the clearing balances, adjusted for the net effect of deposit balances arising from float. Other long-term liabilities consist of obligations on capital reserve requirements on clearing balances. leases. (8) INCOME TAXES (4) REVENUE Imputed income taxes are calculated at the effective tax rate derived from the PSAF model Revenue represents charges to depository institutions for priced services and is realized from {see note 3). each institution through one of two methods: direct charges to an institution's account or (9) RETURN ON EQUITY charges against its accumulated earnings credits. Represents the after-tax rate of return on equity that the Federal Reserve would have earned had it been a private business firm, as derived from the PSAF model (see note 3). This amount (5) OPERATING EXPENSES is adjusted to reflect the recovery of automation consolidation costs of $2.6 million for first Operating expenses consist of the direct, indirect, and other genera] administrative expenses quarter of 1998 and $2.3 million for the first quarter of 1997. The Reserve Banks plan to of the Reserve Banks for priced services plus the expenses for staff members of the Board of recover these amounts, along with a finance charge, by the end of the year 2001. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 Index to Statistical Tables References are to pages A3—A65 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Federal credit agencies, 30 Assets and liabilities (See also Foreigners) Federal finance Commercial banks, 15-21 Debt subject to statutory limitation, and types and ownership Domestic finance companies, 32, 33 of gross debt, 27 Federal Reserve Banks, 10 Receipts and outlays, 25, 26 Foreign-related institutions, 20 Treasury financing of surplus, or deficit, 25 Automobiles Treasury operating balance, 25 Consumer credit, 36 Federal Financing Bank, 30 Production, 44, 45 Federal funds, 23, 25 Federal Home Loan Banks, 30 BANKERS acceptances, 5, 10, 22, 23 Federal Home Loan Mortgage Corporation, 30, 34, 35 Bankers balances, 15-21. (See also Foreigners) Federal Housing Administration, 30, 34, 35 Bonds (See also U.S. government securities) Federal Land Banks, 35 New issues, 31 Federal National Mortgage Association, 30, 34, 35 Rates, 23 Federal Reserve Banks Business activity, nonfinancial, 42 Condition statement, 10 Business loans (See Commercial and industrial loans) Discount rates (See Interest rates) U.S. government securities held, 5. 10, 11, 27 CAPACITY utilization, 43 Federal Reserve credit, 5, 6, 10, 12 Capital accounts Federal Reserve notes, 10 Commercial banks. 15-21 Federal Reserve System Federal Reserve Banks, 10 Balance sheet for priced services, 64, 65 Central banks, discount rates, 61 Condition statement for priced services, 64, 65 Certificates of deposit, 23 Federally sponsored credit agencies, 30 Commercial and industrial loans Finance companies Commercial banks, 15-21 Assets and liabilities, 32 Weekly reporting banks, 17, 18 Business credit, 33 Commercial banks Loans, 36 Assets and liabilities, 15-21 Paper, 22, 23 Commercial and industrial loans, 15-21 Float, 5 Consumer loans held, by type and terms, 36 Flow of funds, 37^41 Real estate mortgages held, by holder and property, 35 Foreign currency operations, 10 Time and savings deposits, 4 Foreign deposits in U.S. banks, 5 Commercial paper, 22, 23, 32 Foreign exchange rates, 62 Condition statements (See Assets and liabilities) Foreign-related institutions, 20 Construction, 42, 46 Foreign trade, 51 Consumer credit, 36 Foreigners Consumer prices, 42 Claims on, 52, 55, 56, 57, 59 Consumption expenditures. 48, 49 Liabilities to, 51, 52, 53, 58, 60, 61 Corporations Profits and their distribution, 32 GOLD Security issues, 31, 61 Certificate account, 10 Cost of living (See Consumer prices) Stock, 5, 51 Credit unions, 36 Government National Mortgage Association, 30, 34, 35 Currency in circulation, 5, 13 Gross domestic product, 48, 49 Customer credit, stock market, 24 DEBT (See specific types of debt or securities) HOUSING, new and existing units, 46 Demand deposits, 15-21 Depository institutions INCOME and expenses. Federal Reserve System, 64, 65 Reserve requirements, 8 Income, personal and national, 42, 48, 49 Reserves and related items, 4, 5, 6, 12 Industrial production, 42, 44 Deposits (See also specific types) Insurance companies, 27. 35 Commercial banks, 4, 15-21 Interest rates Federal Reserve Banks, 5, 10 Bonds, 23 Discount rates at Reserve Banks and at foreign central banks and Consumer credit, 36 foreign countries (See Interest rates) Federal Reserve Banks, 7 Discounts and advances by Reserve Banks (See Loans) Foreign central banks and foreign countries, 61 Dividends, corporate, 32 Money and capital markets, 23 Mortgages, 34 EMPLOYMENT, 42 Prime rate, 22 Eurodollars. 23, 61 International capital transactions of United States. 50-61 International organizations, 52, 53, 55, 58, 59 FARM mortgage loans, 35 Inventories, 48 Federal agency obligations, 5. 9, 10, 11, 28, 29 Investment companies, issues and assets, 32 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A67 Investments (See also specific types) Retail credit and retail sales, 36, 42 Commercial banks, 4, 15-21 Federal Reserve Banks, 10, 11 SAVING Financial institutions, 35 Flow of funds, 37—41 National income accounts, 48 LABOR force, 42 Savings institutions, 35, 36, 37-41 Life insurance companies (See Insurance companies) Savings deposits (See Time and savings deposits) Loans (See also specific types) Securities (See also specific types) Commercial banks, 15-21 Federal and federally sponsored credit agencies, 30 Federal Reserve Banks, 5, 6, 7, 10, 11 Foreign transactions, 60 Federal Reserve System, 64, 65 New issues, 31 Financial institutions, 35 Prices, 24 Insured or guaranteed by United States, 34, 35 Special drawing rights, 5, 10, 50, 51 State and local governments MANUFACTURING Holdings of U.S. government securities, 27 Capacity utilization, 43 New security issues, 31 Production, 43, 45 Rates on securities, 23 Margin requirements, 24 Stock market, selected statistics, 24 Member banks (See also Depository institutions) Stocks (See also Securities) Reserve requirements, 8 New issues, 31 Mining production, 45 Prices, 24 Mobile homes shipped, 46 Student Loan Marketing Association, 30 Monetary and credit aggregates, 4, 12 Money and capital market rates, 23 TAX receipts, federal, 26 Money stock measures and components, 4, 13 Thrift institutions, 4. (See also Credit unions and Savings Mortgages (See Real estate loans) institutions) Mutual funds, 13, 32 Time and savings deposits, 4, 13, 15-21 Mutual savings banks (See Thrift institutions) Trade, foreign, 51 Treasury cash. Treasury currency, 5 NATIONAL defense outlays, 26 Treasury deposits, 5, 10, 25 National income, 48 Treasury operating balance, 25 OPEN market transactions, 9 UNEMPLOYMENT, 42 U.S. government balances PERSONAL income, 49 Commercial bank holdings, 15-21 Prices Treasury deposits at Reserve Banks, 5, 10, 25 Consumer and producer, 42, 47 U.S. government securities Stock market, 24 Bank holdings, 15-21,27 Prime rate, 22 Dealer transactions, positions, and financing, 29 Producer prices, 42, 47 Federal Reserve Bank holdings, 5, 10, 11, 27 Production, 42, 44 Foreign and international holdings and Profits, corporate, 32 transactions, 10, 27, 61 Open market transactions, 9 REAL estate loans Outstanding, by type and holder, 27, 28 Banks, 15-21,35 Rates, 23 Terms, yields, and activity, 34 U.S. international transactions, 50-62 Type of holder and property mortgaged, 35 Utilities, production, 45 Reserve requirements, 8 Reserves VETERANS Administration, 34, 35 Commercial banks, 15-21 Depository institutions, 4, 5, 6, 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 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Federal Reserve Bulletin • July 1998 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman EDWARD W. KELLEY, JR. ALICE M. RIVLIN, Vice Chair LAURENCE H. MEYER OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE LYNN S. FOX, Assistant to the Board EDWIN M. TRUMAN, Staff Director DONALD J. WINN, Assistant to the Board LEWIS S. ALEXANDER, Associate Director THEODORE E. ALLISON, Assistant to the Board for Federal DALE W. HENDERSON, Associate Director Reserve System Affairs PETER HOOPER III, Associate Director WINTHROP P. HAMBLEY, Special Assistant to the Board KAREN H. JOHNSON, Associate Director BOB STAHLY MOORE, Special Assistant to the Board DAVID H. HOWARD, Senior Adviser DIANE E. WERNEKE, Special Assistant to the Board DONALD B. ADAMS, Assistant Director THOMAS A. CONNORS, Assistant Director LEGAL DIVISION DIVISION OF RESEARCH AND STATISTICS J. VIRGIL MATTINGLY, JR., General Counsel MICHAEL J. PRELL, Director SCOTT G. ALVAREZ, Associate General Counsel EDWARD C. ETTIN, Deputy Director RICHARD M. ASHTON, Associate General Counsel DAVID J. STOCKTON, Deputy Director OLIVER IRELAND, Associate General Counsel WILLIAM R. JONES, Associate Director KATHLEEN M. O'DAY, Associate General Counsel MYRON L. KWAST, Associate Director KATHERINE H. WHEATLEY, Assistant General Counsel PATRICK M. PARKINSON, Associate Director THOMAS D. SIMPSON, Associate Director LAWRENCE SLIFMAN, Associate Director OFFICE OF THE SECRETARY MARTHA S. SCANLON, Deputy Associate Director JENNIFER J. JOHNSON, Secretary PETER A. TINSLEY, Deputy Associate Director ROBERT DEV. FRIERSON, Associate Secretary DAVID S. JONES, Assistant Director BARBARA R. LOWREY, Associate Secretary and Ombudsman STEPHEN D. OLINER, Assistant Director STEPHEN A. RHOADES, Assistant Director JANICE SHACK-MARQUEZ, Assistant Director DIVISION OF BANKING CHARLES S. STRUCKMEYER, Assistant Director SUPERVISION AND REGULATION ALICE PATRICIA WHITE, Assistant Director RICHARD SPILLENKOTHEN, Director JOYCE K. ZICKLER, Assistant Director STEPHEN C. SCHEMERING, Deputy Director GLENN B. CANNER, Senior Adviser HERBERT A. BIERN, Associate Director JOHN J. MINGO, Senior Adviser ROGER T. COLE, Associate Director WILLIAM A. RYBACK, Associate Director DIVISION OF MONETARY AFFAIRS GERALD A. EDWARDS, JR., Deputy Associate Director STEPHEN M. HOFFMAN, JR., Deputy Associate Director DONALD L. KOHN, Director JAMES V. HOUPT, Deputy Associate Director DAVID E. LINDSEY, Deputy Director JACK P. JENNINGS, Deputy Associate Director BRIAN F. MADIGAN, Associate Director MICHAEL G. MARTINSON, Deputy Associate Director RICHARD D. PORTER, Deputy Associate Director SIDNEY M. SUSSAN, Deputy Associate Director VINCENT R. REINHART, Assistant Director MOLLY S. WASSOM, Deputy Associate Director NORMAND R.V. BERNARD, Special Assistant to the Board HOWARD A. AMER, Assistant Director NORAH M. BARGER. Assistant Director DIVISION OF CONSUMER BETSY CROSS, Assistant Director AND COMMUNITY AFFAIRS RICHARD A. SMALL. Assistant Director DOLORES S. SMITH, Director WILLIAM SCHNEIDER, Project Director, GLENN E. LONEY, Deputy Director National Information Center SANDRA F. BRAUNSTEIN, Assistant Director MAUREEN P. ENGLISH. Assistant Director ADRIENNE D. HURT, Assistant Director IRENE SHAWN MCNULTY, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A69 ROGER W. FERGUSON, JR. EDWARD M. GRAMLICH OFFICE OF DIVISION OF RESERVE BANK OPERATIONS STAFF DIRECTOR FOR MANAGEMENT AND PAYMENT SYSTEMS S. DAVID FROST, Staff Director CLYDE H. FARNSWORTH, JR., Director SHEILA CLARK, EEO Programs Director DAVID L. ROBINSON, Deputy Director (Finance and Control) JOHN R. WEIS, Adviser LOUISE L. ROSEMAN, Associate Director PAUL W. BETTGE, Assistant Director MANAGEMENT DIVISION JACK DENNIS. JR.. Assistant Director EARL G. HAMILTON. Assistant Director S. DAVID FROST, Director STEPHEN J. CLARK, Associate Director, Finance Function JOSEPH H. HAYES, JR., Assistant Director DARRELL R. PAULEY, Associate Director, Human Resources JEFFREY C. MARQUARDT, Assistant Director Function MARSHA REIDHILL, Assistant Director DIVISION OF SUPPORT SERVICES OFFICE OF THE INSPECTOR GENERAL BARRY R. SNYDER. Inspector General ROBERT E. FRAZIER, Director DONALD L. ROBINSON, Assistant Inspector General 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

A70 Federal Reserve Bulletin • July 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. EDWARD W. KELLEY, JR. WILLIAM POOLE EDWARD M. GRAMLICH LAURENCE H. MEYER ALICE M. RIVLIN THOMAS M. HOENIG CATHY E. MINEHAN JERRY L. JORDAN 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 GARY P. GILLUM, Assistant Secretary CRAIG S. HAKKIO, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel DAVID E. LINDSEY, 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

A71 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

A72 Federal Reserve Bulletin D July 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 Boards 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. CD ROM; 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 AND FUNCTIONS. Network, maximum 100 concurrent users. $3,000 per year. 1994. 157 pp. Subscribers outside the United States should add $50 to cover ANNUAL REPORT, 1997. additional airmail costs. ANNUAL REPORT: BUDGET REVIEW, 1998-99. 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 The Board of Governors of the Federal Reserve System States, its possessions, Canada, and Mexico. Elsewhere, $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

A73 STAFF STUDIES: Only Summaries Printed in the 166. THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET, by BULLETIN Mark Carey, Stephen Prowse, John Rea. and Gregory Udell. January 1994. Ill pp. 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 Lowrey, December 1997. 17 pp. Donald Savage. February 1990. 12 pp. 171. THE COST OF BANK REGULATION: A REVIEW OF THE EVI- 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- DENCE, 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 Janu- 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- ary 1997 issue, articles are available on the Board's World Wide GAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Web site (http://www.bog.frb.fed.us) under Publications, Federal 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

A74 Federal Reserve Bulletin • July 1998 Maps of the Federal Reserve System EW YORK ADELPHIA HAWAII t* LEGEND Both pages Facing page • Federal Reserve Bank city • Federal Reserve Branch city Q 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

A75 1-A 2-B 3-C 4-D 5-E Pittsburgh "cinnati :te BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 7-G 8-H sville ATLANTA CHICAGO ST. LOUIS 9-1 MINNEAPOLIS 10-J 12-L if Ok KANSAS CITY 11-K DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Federal Reserve Bulletin • July 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. Cerino1 Pittsburgh 15230 John T. Ryan III Robert B. Schaub RICHMOND* 23219 Claudine B. Malone J. Alfred Broaddus, Jr. Robert L. Strickland Walter A. Varvel Baltimore 21203 Daniel R. Baker William J. Tignanelli' Charlotte 28230 Dennis D. Lowery Dan M. Bechter' 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. Allardice' 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 Mark L. Mullinix' 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