Federal Reserve Bulletin, 1999-02

Volume 85 • Number 2 • February 1999 i ^ 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 81 TRENDS IN HOME PURCHASE LENDING: points during 1998 to a level more than 1 per- CONSOLIDATION AND THE COMMUNITY centage point below its 1967-97 average. REINVESTMENT ACT Consolidation among banking institutions has 106 STATEMENT TO THE CONGRESS substantially changed the structure of the bank- Patrick M. Parkinson, Associate Director, Diviing industry. Between 1975 and 1997, the numsion of Research and Statistics, Board of Goverber of commercial banks and savings associanors, presents a progress report on two studies tions declined more than 40 percent. Over the that are being conducted by the President's same broad period, the market for home mort- Working Group on Financial Markets: one on gage lending has also changed substantially. the implications of the operations of firms such Notably, home mortgage lending is no longer as Long-Term Capital Management (LTCM) and primarily the province of banking institutions their relationships with their creditors and the operating in the communities in which they have other on the oversight of over-the-counter banking offices. In recent decades, mortgage and (OTC) derivatives transactions. Mr. Parkinson finance companies and banking organizations testifies that the regulation of OTC derivatives operating outside their local communities have raises a much wider range of issues, many of gained a significant share of the mortgage marwhich are unrelated to the LTCM episode, and ket. These changes have fueled debate regarding that this episode has no obvious bearing on what their effects on the provision of home mortgage are arguably the central issues in the OTC loans. One particular concern is that, as a conderivatives study—whether or in what circumsequence of these changes, lower-income and stances government oversight is appropriate to minority borrowers and borrowers in lowerdeter fraud or market manipulation and how best income and minority neighborhoods may face to provide legal certainty regarding the enforcereduced access to mortgage credit. ability of OTC derivatives contracts. In brief, This article examines the relationship between the purpose of the study will be to assess the consolidation among banking organizations in need for government oversight to promote publocal markets and changes in home purchase lic policy objectives with respect to financial lending over the 1993-97 period, both in terms markets. (Testimony before the Senate Commitof total lending and lending to lower-income tee on Agriculture, Nutrition, and Forestry, and minority borrowers and neighborhoods. December 16, 1998) Because credit availability is believed to be essential to the economic health and vitality of neighborhoods, the article also examines the 109 ANNOUNCEMENTS relationship between consolidation and changes in home purchase lending by institutions in those Appointments of new members to the Thrift areas where they have responsibilities under the Institutions Advisory Council. Community Reinvestment Act. Adjustment to the dollar amount that triggers additional disclosure requirements under Regu- 103 INDUSTRIAL PRODUCTION AND CAPACITY lation Z. UTILIZATION FOR DECEMBER 1998 Decision on the legal disparities between Fed- Industrial production increased 0.2 percent in eral Reserve Banks and private-sector banks in December, to 132.8 percent of its 1992 average. the presentment and settlement of checks. Production in December was boosted by a 1.6 percent increase in utilities. Capacity utiliza- Continuation of the exemption threshold for tion stood at 80.9 percent in December. The depository institutions required to report data industry operating rate declined 2Vi percentage under the Home Mortgage Disclosure Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Issuance of interim regulatory reporting and AI FINANCIAL AND BUSINESS STATISTICS capital guidance on the Statement of Financial These tables reflect data available as of Accounting Standards No. 133. December 29, 1998. Issuance of a uniform interagency policy statement on intercompany tax allocation agree- A3 GUIDE TO TABULAR PRESENTATION ments for banking organizations and savings A4 Domestic Financial Statistics associations. A42 Domestic Nonfinancial Statistics Proposed actions. A50 International Statistics Enforcement actions. A63 GUIDE TO STATISTICAL RELEASES AND Discontinuation of two statistical tables in the SPECIAL TABLES Federal Reserve Bulletin. A76 INDEX TO STATISTICAL TABLES Publication of the December 1998 update to the Bank Holding Company Supervision Manual. A78 BOARD OF GOVERNORS AND STAFF Changes in Board staff. A80 FEDERAL OPEN MARKET COMMITTEE AND 115 MINUTES OF THE FEDERAL OPEN MARKET STAFF; ADVISORY COUNCILS COMMITTEE MEETING HELD ON NOVEMBER 17, 1998 A82 FEDERAL RESERVE BOARD PUBLICATIONS At its meeting on November 17, 1998, the Com- A84 MAPS OF THE FEDERAL RESERVE SYSTEM mittee adopted a directive that called for conditions in reserve markets that would be consistent A86 FEDERAL RESERVE BANKS, BRANCHES, with a slight decrease in the federal funds rate to AND OFFICES 43/4 percent. The directive did not include a bias with regard to the direction of any adjustments to policy during the intermeeting period. 125 LEGAL DEVELOPMENTS Various bank holding company, bank service corporation, and bank merger orders; and pending cases. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

PUBLICATIONS COMMITTEE Lynn S. Fox, Chairman • S. David Frost • Karen H. Johnson • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Dolores S. Smith • Richard Spillenkothen The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the 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

Trends in Home Purchase Lending: Consolidation and the Community Reinvestment Act Robert B. Avery, Raphael W. Bostic, Paul S. Calem, from lending by institutions with local banking and Glenn B. Canner, of the Board's Division offices and acquisitions of small community-based of Research and Statistics, prepared this article. banking institutions by large regional or national Kelly A. Bryant and John E. Matson provided organizations may result in a transfer of decisionresearch assistance. making authority from those familiar with the needs of local communities to those less knowledgeable Consolidation among banking institutions has sub- about, and thus less responsive to, such needs. This stantially changed the structure of the banking indus- article explores this issue by examining the relationtry. Between 1975 and 1997, the number of commer- ship between consolidation among banking organicial banks and savings associations declined more zations in local markets and changes in home purthan 40 percent. Most of this change was due to chase lending over the 1993-97 period. We examine mergers and acquisitions, though in some years fail- changes in total lending as well as changes in lendures and liquidations were also important. Recent ing to lower-income and minority borrowers and mergers and acquisitions have had particularly siz- neighborhoods.3 able effects on the shape of the industry, as many Previous research has considered the effects of have involved the nation's largest and the most geo- consolidation on various aspects of banking, includgraphically diverse banking institutions. ing small business lending, product pricing, and the Over the same broad period, the market for home geographic distribution of banking offices.4 These mortgage lending has changed substantially. Notably, studies indicate that, in some cases, consolidation home mortgage lending is no longer primarily the may significantly affect the provision of financial province of banking institutions operating in the communities in which they have banking offices.1 In 3. Loans involving borrowers with income below 80 percent of the recent decades, mortgage and finance companies and current-year median family income of their respective metropolitan banking organizations operating outside their local statistical areas (MSAs) were classified as loans to lower-income communities have gained a significant share of the borrowers. Loans to black, Asian, Hispanic, Native American, and mortgage market.2 Today, fewer than half of all home "other race" borrowers were classified as loans to minorities. Information on the census tract location of the property being purchased mortgage loans extended in any given community are was used to determine which loans were originated in lower-income originated by banking organizations with banking or minority neighborhoods. Loans for properties in census tracts whose 1990 median family income was less than 80 percent of the offices in that community. 1990 median family income of their MSA were classified as loans to These changes have fueled debate regarding their lower-income neighborhoods. Similarly, loans for properties in census effects on the provision of home mortgage loans. One tracts with more than 20 percent minority residents in 1990 were classified as loans to minority neighborhoods. particular concern is that, as a consequence of these 4. See, for example, Allen N. Berger, Anthony Saunders, changes, lower-income and minority borrowers and Joseph M. Scalise, and Gregory F. Udell, "The Effects of Bank borrowers in lower-income and minority neighbor- Mergers and Acquisitions on Small Business Lending," Journal of Financial Economics, vol. 50 (February 1999); Joseph Peek and hoods may face reduced access to mortgage credit. In Eric S. Rosengren, "Bank Consolidation and Small Business Lending: part, this concern reflects the belief that a shift away It's Not Just Size That Matters," Journal of Banking and Finance, vol. 22 (August 1998), pp. 799-820; Paul S. Calem and Leonard J. Nakamura, "Bank Branching and the Geography of Bank Pricing," 1. In this article, the term banking institution refers to commercial Review of Economics and Statistics (forthcoming); Timothy H. Hanbanks and savings associations (savings banks and savings and loan nan and Robin A. Prager, "Do Substantial Horizontal Mergers Generassociations). It does not include credit unions and mortgage or ate Significant Price Effects? Evidence from the Banking Industry," finance companies. The term banking office includes all locations Journal of Industrial Economics, vol. 46 (December 1998), pp. 432qualifying as separate deposit-taking offices under federal guidelines. 52; Robert B. Avery, Raphael W. Bostic, Paul S. Calem, and Glenn B. 2. In this article, the term banking organization refers to commonly Canner, "Changes in the Distribution of Banking Offices," Federal owned commercial banks and savings associations and their subsidi- Reserve Bulletin, vol. 83 (September 1997), pp. 707-25; and aries and affiliates, including, for example, mortgage and finance Robert B. Avery, Raphael W. Boslic, Paul S. Calem, and Glenn B. companies. Generally, a banking organization with multiple banking Canner, "Consolidation and Bank Branching Patterns," Journal of institutions is termed a bank or thrift holding company. Banking and Finance, vol. 23 (February 1999). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 Federal Reserve Bulletin I.'.! February 1999 services. This article extends the line of research by zations appears to have had little relationship to exploring the relationship between consolidation and changes in home purchase lending, both overall and lending to purchase homes. to lower-income and minority borrowers and neigh- This article also examines a related issue. Banking borhoods. This finding suggests that, in general, coninstitutions have a legal responsibility to help serve solidation has not had significant anticompetitive the credit needs of their local communities—those effects on home purchase lending and that lending to areas in which they operate banking offices. The lower-income and minority borrowers and neighbor- Community Reinvestment Act (CRA) of 1977 hoods has not been adversely affected by consolidaencourages banking institutions to help meet the tion. This result holds despite the fact that consolicredit needs of their local communities, including dating organizations reduced their home purchase those of lower-income borrowers and of borrowers lending substantially in those areas in which they had residing in lower-income neighborhoods.5 Because banking offices. It appears that this reduction was credit availability is believed to be essential to the more than offset by expanded home purchase lending economic health and vitality of neighborhoods, we by banking organizations in areas where they did not also examine the relationship between consolidation operate banking offices and by independent mortgage and changes in home purchase lending by institutions and finance companies and credit unions. In particuin those areas where they have CRA responsibilities. lar, consolidating banking organizations expanded Little previous research has been done on this nar- their lending dramatically in areas where they did not rower issue. operate banking offices. Thus, the very organizations Until recently, only limited information has been that reduced their lending in markets where they available to systematically assess these issues. The operated offices were the organizations that expanded analysis in this article relies on a new, specially most in other areas. This result suggests that a drivconstructed database that uses information on merg- ing force underlying changes in the home purers, acquisitions, and failures of commercial banks chase lending market has been a desire by banking and savings associations and data on the location organizations to diversify their lending activity of banking offices and neighborhood economic and geographically. demographic characteristics. These data are com- Although banking institutions involved in consolibined with data obtained pursuant to the Home Mort- dation reduced their overall lending in the communigage Disclosure Act (HMDA) for the years 1993 ties where they had banking offices, this reduction through 1997 on home purchase lending.6 did not disproportionately affect their lending to lower-income and minority borrowers and neighborhoods. The analysis shows that the typical consolidat- OVERVIEW OF THE RESULTS ing organization generally increased the proportion of loans it extended to each of these groups within When measured at the market (county) level, the its local communities. These results are consistent level of consolidation activity among banking organi- with the view that the CRA has been effective in encouraging banking organizations, particularly those involved in consolidation, to serve lower-income and 5. The CRA directs the federal banking agencies to evaluate each minority borrowers and neighborhoods. institution's performance in meeting its community's credit needs and A full understanding of these relationships requires to consider this performance when acting on applications for mergers a broader analysis and is beyond the scope of this and acquisitions. For a discussion of the Community Reinvestment Act and the implementing regulation, see the Federal Reserve Press article. For example, loan pricing, the complexity of Release, April 24, 1995. Revisions to the implementing regulation in product offerings, and the varied motivations driving 1995 include performance tests that consider an institution's record of consolidation must all be investigated fully to reach lending both to lower-income neighborhoods and to lower-income borrowers. more definitive conclusions about the effects of con- 6. Although HMDA data on home purchase lending in metropoli- solidation on home purchase lending. It should also tan areas have been collected since 1977, 1993 is selected as the initial be emphasized that the results presented here reflect year for the analysis for two reasons. First, information on the income and race or ethnic origin of borrowers has been included in the aggregate trends and may not apply to any particular HMDA data only since 1990, which precludes the analysis of the market or consolidation. effects of mergers on borrowers arrayed by these characteristics before that year. Second, 1993 is the first year the HMDA data include the lending activity of most of the nation's most active independent TRENDS IN BANKING CONSOLIDATION mortgage companies—firms that extend about one-third of the home purchase loans in metropolitan areas. Analyses that exclude such active mortgage lenders would provide only a partial, and potentially Over the past twenty years, the number of banking distorted, picture of the mortgage market. institutions declined substantially, from 18,679 in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trends in Home Purchase Lending: Consolidation and the Community Reinvestment Act 83 1975 to 11,077 in 1997—a decline of more than 21 percent of all institutions. Over the same period, 40 percent. Just since 1993, the number of institu- only 40 institutions were liquidated, and 431 new tions has dropped about 18 percent. Consolidation institutions were formed. during the 1980s and early 1990s was associated with Consolidation in the banking industry has been a quickening pace of merger and acquisition activity driven in important ways by technological advances, along with substantial numbers of failures and liqui- globalization of financial services markets, and dations. More recently, the decline in the number of efforts to increase efficiency, reduce costs, or gain banking institutions has been overwhelmingly the competitive advantage. Besides the effects of these result of mergers and acquisitions. From 1993 economic factors, the pace of consolidation has through 1997, the number of banking institutions accelerated because of the relaxation of regulatory acquired in a merger or acquisition totaled 2,839, or restrictions on the ability of banking organizations to expand geographically and to establish banking offices, although some legal restrictions, including federal antitrust laws, continue to restrict potential Geographic Restrictions in Banking combinations.7 (See box "Geographic Restrictions in Banking.") Historically, the ability of banking institutions to merge Much of the industry's consolidation has involved or to buy one another and to establish branch offices both mergers and acquisitions among banks that had been within and across local communities has been sharply operating in different local markets within the same curtailed by federal and state laws limiting geographic state, in different states within the same geographic expansion by banks.1 Over the past two decades or so, region, or even in different regions. As a result, many of these laws have been changed or eliminated, consolidation has been accompanied by a substantial resulting in the easing of barriers to consolidation. broadening of the geographic reach of many banking Before 1975 intrastate restrictions on bank branching organizations, so that many of the nation's largest were commonplace. For example, only seventeen states organizations now operate across entire regions or allowed commercial banks to establish offices within their state with few or no geographic restrictions. Since even across multiple regions of the country. Whereas then, mainly in the 1980s, geographic restrictions on before 1980 only a handful of banking organizations intrastate branching have been removed or relaxed sub- operated in more than one state, by mid-1998, more stantially in all states. The easing of these restrictions than one-quarter of banking institution assets were allows banking organizations to expand their geographic owned by banking organizations with headquarters reach by establishing or acquiring branch offices rather in another state. Moreover, a substantial increase has than by merging with, or acquiring, another banking occurred in the share of total banking institution institution. assets controlled by the largest banking organiza- Geographic restrictions on banking extended beyond tions.8 In many cases, mergers have had a significant branching limitations to restrictions on banking institueffect on concentration in local banking markets, tions merging with, or acquiring, organizations in another although, on average across the United States, local state. For example, until the 1970s, no state permitted market concentration has not increased substantially out-of-state commercial banking organizations to operate in-state banking subsidiaries. State barriers began to fall over time. One might expect this broad restructuring in 1978 when Maine relaxed restrictions on entry by of the industry to have potential implications for out-of-state holding companies. During the next fifteen retail banking relationships, such as the provision years or so, every state except Hawaii followed suit by of financial services to lower-income and minority allowing some degree of interstate banking. communities. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 further eased restrictions on interstate banking in two important ways. First, it allowed 7. The two main federal antitrust laws are the Clayton Act of 1914 bank holding companies to acquire a bank in any state and the Sherman Act of 1890. In addition, the Bank Holding Comprovided certain conditions were met, including complipany Act of 1956 and the Bank Merger Act of 1960 include antitrust ance with the CRA. Second, it substantially eased restric- provisions that specifically pertain to the activities of banking tions on interstate branching, although some important organizations. restrictions continue to exist. 8. The proportion of domestic banking assets accounted for by the 100 largest banking organizations rose from just over 50 percent in 1980 to 70 percent in June 1998. Notably, however, small community 1. For a discussion of the various banking laws, see Avery, Bostic, banks have generally been able to retain their market shares and Calem. and Canner, "Changes in the Dislribution of Banking Offices," profitability in competition in banking markets increasingly domipp. 712—13 and Anthony W. Cyrnak, "Bank Merger Policy and the New CRA Data." Federal Reserve Bulletin, vol. 84 (September 1998), nated by the major banks (testimony by Governor Laurence H. Meyer pp. 703-15. before the Committee on Banking and Financial Services, U.S. House of Representatives, April 29, 1998). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

84 Federal Reserve Bulletin • February 1999 INDUSTRY CONSOLIDATION AND LENDING TO public authority provides funds, in the form of either LOWER-INCOME AND MINORITY BORROWERS grants or low-cost loans, to help meet the borrower's AND NEIGHBORHOODS downpayment or closing costs, or sets up a fund to guarantee repayment of the loan. These lenders also Access to home mortgage credit among lower- work with community organizations to identify and income and minority borrowers and borrowers in counsel prospective loan applicants and to monitor lower-income and minority neighborhoods may be borrower repayment performance. sensitive to changes caused by consolidation in the Some believe that mergers and acquisitions may banking industry. This view derives from two general have an adverse effect on lending to lower-income sets of arguments, which have potentially different and minority borrowers and neighborhoods when implications. On the one hand, decentralized (local) they result in a transfer of decisionmaking to those decisionmaking may be especially important to a suc- outside the local community. In this view, centralized cessful lower-income lending program, and consoli- decisionmakers may find it more difficult to accudation may potentially reduce the role of local deci- rately assess nontraditional credit risks. They may sionmaking. On the other hand, because lending to have less knowledge about economic conditions or lower-income and minority borrowers and neighbor- credit-risk factors specific to the local community, or hoods sometimes involves special considerations they may have less flexibility in decisionmaking. of credit risk and often requires increased resources Such concerns tend to be heightened when a large for risk-management activities, such lending may bank acquires a small bank, or when a bank is increase when consolidation improves the ability of acquired by an institution that had not previously institutions to efficiently evaluate, monitor, and man- operated in the local market.10 age credit risk. A related concern is that mergers and acquisitions, These potential effects can vary, depending on a as well as failures, may lead to branch closings and number of factors, such as whether the institutions to the loss of lending personnel who are familiar with be combined operate within the same local communi- the needs of the local community. Real estate agents, ties. Other factors include competitive interactions home builders, and those working for nonprofit among institutions, regulatory considerations, and the groups or community organizations often develop diminished role of savings associations. Ultimately, working relationships with individual mortgage loan the effects of any given consolidation will depend on officers and may find the disruption of such relationhow it is implemented and on the commitment and ships problematical. ability of the management of the surviving institution to helping meet the credit needs of all segments of its community. Opportunities Created by Technology Transfer, Information Sharing, and Risk Management The Role of Local Decisionmaking Although mergers and acquisitions may lead to disruptions and changes in business relationships, some Successful home purchase lending to lower-income contend that consolidation often provides new opporand minority borrowers and neighborhoods often tunities to expand service to lower-income and requires considerable knowledge of the circumminority borrowers and neighborhoods. Beneficial stances prevailing in local neighborhoods and expereffects may arise through a variety of channels. For tise in evaluating the credit risks associated with example, a small lender that becomes part of a larger such lending.9 Institutions active in such lending organization may be able to take advantage of new frequently use flexible credit standards, nontraditechnologies that reduce loan origination costs, such tional measures of credit quality, a variety of credit as automated underwriting, thus potentially improvenhancements (such as private and public subsidies ing access to credit for consumers. More generally, and guarantees), and intensive monitoring of outmergers and acquisitions may result in greater standing loans to expand their lending beyond those efficiencies in underwriting, application processing, borrowers who are eligible for more conventional and loan-servicing activities if scale economies can credit products. These institutions sometimes particibe achieved or if the firm being acquired has been pate in local public agency programs in which the 10. For discussion of the potential advantages of small banks, see 9. See Board of Governors of the Federal Reserve System. Report Leonard 1. Nakamura, "Small Borrowers and the Survival of Ihe to the Congress on Community Development Lending by Depository Small Bank," Federal Reserve Bank of Philadelphia, Business Review Institutions (Board of Governors, October 1993). (November/December 1994), pp. 3-13. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trends in Home Purchase Lending: Consolidation and the Community Reinvestment Act 85 less well managed than the acquirer. The lifting of Market Performance Implications regulatory restrictions on geographic expansion may of Consolidation permit mergers that enhance the efficiency of the combined institutions, with the potential of making Consolidation may affect the competitive interaction available additional resources for lending. Each of among lending institutions in a market, with possible these efficiencies may increase an institution's ability implications for market performance. A reduction in to serve lower-income and minority borrowers and competition brought about by consolidation might neighborhoods. adversely affect the availability of credit or credit- Consolidation may generate a sufficient volume of related services in a community, although such effects activity or allow the pooling of information to enable might not disproportionately affect lower-income and the development of certain types of expertise. For minority borrowers and neighborhoods. One scenario instance, so-called informational returns-to-scale may in which lending to minority borrowers and minority be present by which merging banks gain sufficient neighborhoods might be adversely affected, at least volume to become specialists in lending in lower- in the short run, is a reduction in competitive presincome and minority communities, leading to greater sures that enables some lenders to engage in discrimiefficiencies and reduced costs for such lending." natory practices.14 More generally, if a reduction in Another type of informational advantage may come competition in a given market results in higher prices from a consolidation in which the parties are able or tighter credit standards, lower-income and minorto pool mutually beneficial information that would ity borrowers may be disproportionately affected to otherwise remain private.12 the extent that a larger proportion of such borrowers As noted, effective lending to lower-income bor- are marginally qualified. rowers often involves leveraging private- and public- Consolidation may not only affect the behavior of sector funds. Public programs are frequently complex the parties involved but may also have implications in their administration, and implementing such pro- for other market participants. For instance, if the grams can require expenditures that smaller institu- parties to a merger curtail their lending to lowertions have difficulty absorbing.13 As a consequence, income and minority borrowers and neighborhoods, new credit-related programs and other types of then other banks in the market or new entrants may public-sector resources that broaden access to credit view this as an opportunity to gain customers. This may become available to the customers of an expansion or entry by other institutions may offset acquired bank that previously lacked sufficient some or all of the reduction in lending by the merged resources to fully participate in these programs. institution.15 Such offsets are also possible for failed Diversification of loan portfolios achieved through institutions: Many failed banks and savings assoconsolidation can potentially play an important role ciations are acquired by healthy organizations or are in fostering and sustaining a lending program tar- reopened by investors entering the banking business. geted to lower-income borrowers or communities. Diversifying a portfolio by including loans from dif- The Role of Regulation ferent geographic areas and different customer bases, both within and across communities, can enable a One aspect of government regulation of banking lender to achieve more predictable and stable earn- activity emphasizes encouraging the availability of ings. Portfolio diversification may also enhance opportunities to package loans for resale in the sec- 14. The theory of prejudicial discrimination developed by Becker ondary market, thereby providing new avenues to suggests that lenders who enjoy market power may choose to sacrifice raise funds for additional lending. Moreover, consoli- profits to engage in discriminatory practices. However, the theory also suggL-sK that under competitive conditions, prejudicial discrimination dation may enhance mortgage lending opportunities cannot be sustained in the long run because capital will flow to those if an institution facing capital constraints on addi- firms that forgo discrimination and consequently earn higher profits. tional lending merges with an institution that has a See Gary S. Becker. The Economics of Discrimination (Chicago: University of Chicago Press, 1957). capital surplus. 15. Previous research finds evidence of offsetting responses by other market participants. For example, the closure of branches by merging institutions with overlapping branch networks is partly offset 11. See Robert B. Avery, Patricia E. Beeson, and Mark S. Snider- by the opening of new branches by other institutions. See Avery, man. "Neighborhood Information and Mortgage Lending," Journal of Bostic, Calem, and Canner. "Changes in the Distribution of Banking Urban Economics (forthcoming). Offices." Also, research on the effect of consolidation on small 12. See William W. Lang and Leonard I. Nakumura, "A Model of business lending finds that non-merging banks collectively tend to Redlining," Journal of Urban Economics, vol. 33 (1993), pp. 223-34. increase their supply of small business credit when mergers occur in 13. See Report to the Congress on Community Development Lend- their markets. See Berger, Saunders, Scalise, and Udell, "The Effects ing by Depository Institutions. of Bank Mergers and Acquisitions on Small Business Lending." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 Federal Reserve Bulletin • February 1999 credit to lower-income and minority borrowers and rowers and neighborhoods. The incentives created neighborhoods. This policy is implemented in two by the CRA may contribute to a positive association ways. First, regulators periodically review the record between consolidation activity and lending to lowerof banking institutions in meeting their CRA and fair income borrowers or to lower-income neighborhoods. lending obligations. Second, CRA performance is By statute, regulators must also consider the comalso considered as part of the review of applications petitive implications of proposed mergers and acquifor mergers and acquisitions involving banking sitions along with their potential effects on the "coninstitutions. venience and needs" of the communities involved. All banking institutions are likely to be concerned Proposed consolidations that may have a substantial about their periodic CRA evaluations. Institutions adverse effect on competition in a market generally actively engaged in consolidation activity may be are not approved unless there are countervailing conparticularly concerned because of the role such evalu- venience and needs considerations (such as the acquiations play in the merger and acquisition approval sition of a failing bank by a healthy institution). process. In considering applications for mergers and Often, proposed mergers or acquisitions that initially acquisitions, regulators review the results of CRA raise serious anticompetitive issues are approved only compliance examinations, material submitted by the after the parties agree to sell (divest) banking offices applicant, and comments from the public on the with deposits and assets to limit their increase in institution's performance. Poor CRA performance market share. Thus, regulatory review of proposed records may result in the denial of an application or mergers and acquisitions mitigates the possibility that delay of approval until the institution can demon- consolidation may adversely affect competition and strate a record of satisfactory performance.16 It should credit availability in the local community. be noted that home mortgage lending is only one of many activities that are considered when evaluating i'(>nsii!idalions Involving Savings CRA performance. It is possible for an institution to earn a good CRA rating and make no mortgage loans. Many of the recent consolidations in banking have Institutions with poor CRA track records are more involved the acquisition of savings associations by likely to encounter broad-based substantive objec- commercial banks, a development that may affect tions from the public when applying for approval of home purchase lending. Savings associations are mergers or acquisitions, although even merging insti- encouraged, through tax provisions and other incentutions with strong records of CRA performance tives, to hold the majority of their assets in home sometimes encounter CRA-related protests. Such pro- mortgages and also face restrictions on the amount tests can result in adverse publicity and additional of commercial lending they are permitted. Because costs because the institution must often prepare commercial banks do not have similar incentives extensive material to respond to them. To avoid to extend mortgages and are not similarly restricted CRA-related protests, as well as for other reasons, in their non-mortgage lending, the share of total many banking institutions, particularly those likely to assets devoted to mortgages may decline in the be involved in consolidation, have sought to enhance wake of commercial bank acquisitions of savings associations. their records of serving their local communities by entering into agreements with community organizations. These agreements often include commitments ( V>\S( n.iDMios, i.w> MARKS.T-I.I:\ i:± by the institution to achieve targeted lending volumes Cu,\\<ii:s ix MORHLXCI: l.Lsntxi; in lower-income communities. '7 Thus, for institutions active in mergers and acquisi- Given the variety of possible theoretical effects of tions, the CRA provides incentives to maintain an consolidation on lending to lower-income and minoraggressive program of lending to lower-income bor- ity borrowers and neighborhoods, empirical analysis can help provide a greater understanding of this issue. We use a specially constructed database that combines information on mergers, acquisitions, and 16. See Griffith L. Garwood and Dolores S. Smith, "The Community Reinvestment Acl: Evolution and Current Issues," Federal failures of banking institutions with data on the Reserve Bulletin, vol. 79 (April 1993), pp. 251-67; and remarks by location of banking offices, neighborhood economic Governor Edward M. Gramlich, "Examining Community Reinvestand demographic characteristics, and home purchase ment," at Widener University, Chester, Pennsylvania, November 6, 1998. lending activity in metropolitan areas. (See the appen- 17. See Alex Schwartz, "Bank Lending to Minority and Low- dix for more details on the construction of the data- Income Households and Neighborhoods: Do Community Reinvestbase.) The analysis of these data provides informament Agreements Make a Difference?" Journal of Urban Affairs. Digitizedv ofol.r 2F0R, nAoS. E3(R1 998), pp. 269-301. tion on trends in lending patterns in geographic areas http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trends in Home Purchase Lending: Consolidation and the Community Reinvestment Act 87 with varying levels of consolidation activity. This holding company, however, are not considered information allows us to assess the degree to which consolidations. All structural changes involving a consolidation is associated with changes in home banking organization over each three-year period purchase lending overall, as well as to lower-income are treated as a single consolidation. Thus, a conand minority borrowers and neighborhoods. solidation might involve multiple mergers and acquisitions (see the appendix). To count as a consolidation in a given county, the consolidation must Analytic Framework have involved the acquisition of a banking institution operating banking offices in that county. Counties The unit of analysis for this research is the county. in which only the acquiring institution operated The county represents a compromise between the banking offices are not considered to have had MSA and smaller geographic units, such as a ZIP consolidations. code or census tract. On the one hand, for some small Counties are categorized by their level of consolibanking organizations, the CRA service area may be dation activity. To determine this level, we calculate smaller than a county. In addition, for some consoli- the proportion of all home purchase loans in a county dations a focus of concern may be the effects on an in the first year of each study period that was origiarea smaller than a county. On the other hand, for nated by banking organizations with a consolidation large organizations CRA evaluations may be based in the county. Counties are grouped by this proon their lending throughout an entire MSA. It should portion into three categories: (I) counties in which be noted that more than half of the MS As in the no organizations were involved in a consolida- United States are made up of only one county, and tion; (2) counties in which the proportion of loans thus for these MSAs, the distinction between the extended by organizations involved in consolidation county and the MSA makes no difference. was less than or equal to the median share of loans In a given county, we count the number of home extended by organizations involved in consolidation purchase loans extended overall and those extended for that period (counties with low consolidation activto lower-income and minority borrowers and neigh- ity); and (3) counties in which the proportion of borhoods by all lenders. We compare counties that loans extended by organizations involved in consolihad high levels of consolidation activity with those dation was greater than the median share of loans that had little or no consolidation activity. Data limi- extended by organizations involved in consolidation tations force us to restrict the analysis to lending in for that period (counties with high consolidation counties in metropolitan areas (see the appendix). activity). For the latter two groups, the median share The analysis focuses on trends in home purchase is calculated using only those counties that had lending during two periods, 1993-95 and 1995-97. consolidations. We use three-year study periods because it may take Counties are further divided along a number of some time for the effects of a consolidation to influ- other dimensions. To differentiate the effects of conence home purchase lending. For example, the inte- solidation in markets of different sizes and growth gration of mortgage lending operations, including rates, counties are grouped by the number of resithe retraining of staff and coordination of mortgage dents in the county as of 1995 and by the change in underwriting activities, may require considerable their populations over the 1993-95 period. In addieffort and time. Too long a study period, however, tion, because market structure may influence lendmakes it difficult to separate the effects of consolida- ing strategies, counties are grouped according to the tion from other factors that may influence home market concentration in the MSA in which the county purchase lending. Three-year study periods seem a is located, which was measured by a Herfindahlreasonable compromise between these two concerns. Hirschman index (HHI) based on banking deposits in Further, two periods are used because significant the MSA.18 A threshold HHI value of 1800 is used variation occurred in the overall patterns of home purchase lending between 1993-95 and 1995-97. Comparing and contrasting the observed relation- 18. A Herfindahl-Hirschman index (HHI) based on banking deposships in the two periods allow us to draw more its is a standard measure used to assess the competitiveness of banking definitive conclusions about how consolidation influ- markets. The Federal Reserve Board includes thrift deposits at 50 percent in calculating market HHI values for its bank merger analysis. ences home purchase lending patterns. (For more details, see Anthony W. Cyrnak, "Bank Merger Policy and Consolidations are defined at the level of the the New CRA Data," Federal Reserve Bulletin, vol. 84 (September banking organization. Both institutional mergers and 1998), pp. 703-15.) In this analysis, we include deposits by savings associations at 100 percent in calculating HHI values for each MSA holding company acquisitions are treated as consolibecause savings associations are active competitors in the home Digitized d f a o t r i o F n R s A . SE M R e rgers among subsidiaries of the same mortgage lending market. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Bulletin • February 1999 because regulators consider a post-consolidation HHI (those with incomes greater than 120 percent of value of more than 1800 as one signal that the con- the median family income of the MSA where they solidation may have anticompetitive effects in the purchased a home) rose 18 percent (table 2, memo market. item). Similarly, lending to minority borrowers increased about 53 percent, while lending to nonminority borrowers increased 13 percent. General Patterns of Home Purchase Lending The substantial growth in lending to lower-income Over the 1993-97 period, home purchase lending in and minority borrowers and neighborhoods in recent metropolitan areas expanded robustly, as a strong years is the consequence of many factors. Besides the economy and job market and relatively low interest bolstering of demand by the strong economy and job rates encouraged additional home buying (table 1). market, relatively low interest rates on home loans Although lower-income and minority borrowers and and relatively modest changes in home prices have neighborhoods accounted for a moderate proportion combined to improve the affordability of homebuyof home purchase loans each year, the amount of ing. Moreover, since the early 1990s, originators of lending to such groups increased at a faster rate than conventional home purchase loans have initiated a that to other groups.19 For example, over 1993-97, wide variety of affordable home purchase lending lending to lower-income borrowers increased about programs intended to benefit lower-income and 31 percent (measured by the change in the number of minority borrowers and neighborhoods.20 Significant loans), while lending to higher-income borrowers 20. For more information see Robert B. Avery, Raphael W. Bostic, 19. For additional informalion about these patterns, see the Federal Paul S. Calem, and Glenn B. Canner, "Credit Risk, Credit Scoring, Financial Institutions Examination Council press release, August 6, and the Performance of Home Mortgages," Federal Reserve Bulletin, 1998. vol. 82 (July 1996), pp. 621-48. Distribution of home nunjh;i\L' loans, by L'haritcti'risiic of borrower and neighborhood, 1993-97 1993 1994 1995 1996 1997 Borrower or census tracl characteristic Number Percent Number Percent Number Percent Number Percent Number Percenl BORROWER Racial or ethnic group' Minority 380,002 16.1 483.781 19.0 495,815 20.3 556.229 20.0 582.816 20.7 Nonminority 1,974.386 83.9 2.065,434 81.0 1.950,183 79.7 2.231.494 80.0 2.234,608 79.3 Total 2,354,388 100.0 2,549,215 100.0 2.445.998 100.0 2.787.723 100.0 2.817,424 100.0 Income (percentage of MSA median)2 Less than 50 156,639 6.6 190.523 7.4 159,126 6.4 200.401 7.1 213,763 7.4 50-79 488.4S6 20.5 532.891 10 6 516,317 20.8 608.596 21.5 629,636 21.8 80-119 722.877 30.3 77.1.162 30.0 744.231 30.0 838.997 29.7 836,960 29.0 120 or more 1,020.915 42.7 1,084,337 42.0 1.058,458 42.7 1,178.732 41.7 1.205.063 41.8 Tola! 2,388,917 100.0 2,580,913 100.0 2.478.132 100.0 2.826.726 100.0 2.885,422 100.0 NEIGHBORHOOD (CENSUS TRACT) Racial or ethnic composition {minorities as a percentage of population)' Less than 5 772.595 31.8 801.662 30.8 775,968 30.9 885.891 30.8 877.244 29.8 5-9 530.333 21.9 556,054 2i.3 528,118 21.0 609,897 21.2 625.635 21.2 10-19 526,196 21.7 572,154 2I.9 547,444 21.8 635,674 22.1 661.654 22.4 20-49 414,706 17.1 463.051 17.8 447,381 17.8 515.328 17.9 536,525 18.2 50 or more 183.119 7.5 213.886 8.2 214.635 8.5 233.508 8.1 247,469 8.4 Total 2.426.949 100.0 2.606.807 100.0 2.513,546 100.0 2.880,298 100.0 2.948,527 100.0 Income (median family) (percentage of MSA median)' Less than 50 26.689 1.1 30.592 LI 32.179 1.3 35.777 1.2 38,034 1.3 50-79 227,706 9.4 255.575 9.8 266,002 10.6 294.069 10.2 301.398 10.2 80-119 1,202,522 49.5 1.301.267 49.9 1.279.304 50.9 1.455,975 50.5 1,476.450 50.1 120 or more 970,032 4O.0 1.019,373 39.1 936,061 37.2 1,094.477 40.0 1.132,645 38.4 Total 2.426,949 100.0 2.606.807 100.0 2.513.546 100.0 2.880,298 1O0.0 2.948.527 100.0 All 2,430,844 2,609.469 2.515,906 2,882,921 2,951,583 NOTE. Includes only owner-occupied one- to four-family home purchase 1. Loans to black, Asian, Hispanic, Native American and "other race" bor loans extended for properties in metropolitan statistical areas (MSAs). The rowers are classified as minority loans. counties included are those that were in MSAs throughout the period. Thus, loan 2. MSA median family income is estimated for each year by the Departcounts will differ from figures published by the Federal Financial Institutions ment of Housing and Urban Development. Examination Council (FF1EC). Totals for the four borrower and neighborhood 3. Median family income and racial composition are derived from the 1990 categories differ because information regarding borrower race or ethnic status Census of Population and Housing. and income or property location was not reported for all loans. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trends in Home Purchase Lending: Consolidation and the Community Reinvestment Act 2. Change in home purchase lending, by characteristic in the number of home purchase loans originated of borrower and neighborhood, 1993-97 in counties sorted by their degree of consolidation Percent activity for each of the two study periods. In each 1993 1994 1995 1996 period nearly all home purchase loans were extended Borrower or census Memo tract characteristic 1 t 99 o 4 19 t 9 o 5 19 t 9 o 6 19 t 9 o 7 1993-97 in counties that had some consolidation activity (table 3). Only about 5 percent of loans were origi- BORROWER nated in MSA counties with no consolidation activity Racial or ethnic group1 during the two study periods. Loan volumes were Minority 27.3 2.5 12.2 4.8 53.4 Nonminority 4.6 -5.6 14.4 .1 13.2 similar in counties with low levels of consolidation Total 8.3 -4.0 14.0 1.1 19.7 activity and in those with high levels. Because nearly Income all home purchase loans in MSAs were originated in (percentage of MSA median)2 counties with some level of consolidation, the most Less than 50 21.6 -16.5 25.9 6.7 36.5 useful comparison is between counties with relatively 50-79 9.1 -3.1 17.9 3.5 28.9 80-119 7.0 -3.7 12.7 -.2 15.8 low levels of consolidation activity and those with 120 or more 6.2 -2.4 11.4 2.2 18.0 Total 8.0 -4.0 14.1 2.1 20.8 relatively high levels. The noteworthy relationships between consolidation and changes in lending are NEIGHBORHOOD (CENSUS TRACT) those that are consistent across time periods and Racial or ethnic contposition robust when controls for other factors are considered. (minorities as a We use multivariate regressions to help identify percentage of population)' such relationships, although these regressions are not Less than 5 3.8 -3.2 14.2 -1.0 13.5 5-9 4.8 -5.0 15.5 2.6 18.0 shown in this article. 10-19 8.7 -4.3 16.1 4.1 25.7 20-49 11.7 -3.4 15.2 4.1 29.4 Percentage changes in the number of home pur- 50 or more 16.8 .4 8.8 6.0 35.1 chase loans extended in a county are not significantly Total 7.4 -3.6 14.6 2.4 21.5 different in areas with high and those with low con- Income (median family) (percentage of MSA solidation activity for both overall lending and across median)' the four borrower and neighborhood lending catego- Less than 50 14.6 5.2 11.2 6.3 42.5 50-79 12.2 4.1 10.6 2.5 32.4 ries (table 3). There are only minor exceptions to this 80-119 ..-. 8.2 -1.7 13.8 1.4 22.8 120 or More 5.1 -8.2 16.9 3.5 16.8 result. In particular, for the 1993-95 period smaller Total 7.4 -3.6 14.6 2.4 21.5 counties with high levels of consolidation have a 7.3 -3.6 14.6 2.4 21.4 lower growth rate of home purchase loans—both NOTE. Includes only owner-occupied one- lo four-family home purchase overall and for lower-income applicants—than loans extended for properties in MSAs. The counties included are those that smaller counties with low levels of consolidation were in MSAs throughout the period. Thus, loan counts will differ from figures published by the FF1EC. Totals for the four borrower and neighborhood cate- activity. gories differ because information regarding borrower race or ethnic status and income or properly location was not reported for all loans. Although growth rates do not generally differ by 1. Loans to black, Asian, Hispanic, Native American and "other race" bor- the level of consolidation activity in a county, they rowers are classified as minority loans. do differ between periods and across the lending 2. MSA median family income is estimated for each year by the Department of Housing and Urban Development. categories. For example, the growth in the number of 3. Median family income and racial composition are derived from the 1990 loans to minority borrowers is generally greater Census of Population and Housing. than the growth in the number of loans to lowerincome borrowers. However, within any given borchanges in government-backed lending programs in rower or neighborhood category, there is little differrecent years have also improved opportunities for ence in the loan growth rate between counties with lower-income borrowers. For example, the Federal low consolidation activity and those with high con- Housing Administration (FHA) has reduced the solidation activity. This result also holds when counup-front mortgage insurance premium for FHA- ties are grouped by population, population growth insured loans, raised the maximum loan amount rate, and market concentration. eligible for FHA backing, and increased underwriting The failure to find a consistent and robust relationflexibility. ship between the level of banking consolidation and changes in home purchase lending has two possible explanations. Consolidating organizations may not The Effects of Consolidation change their home purchase lending behavior. Alternatively, any changes in home purchase lending To analyze the effects of consolidation activity on activity by consolidating organizations may be offset home purchase lending patterns, we track changes by other market participants. Home purchase lending Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

90 Federal Reserve Bulletin • February 1999 3. Home purchase loans, by level of consolidation activity in a county, county characteristic, and market concentration level. 1993-95 and 1995-97 Level of Type of borrower' consolidation All borrowers activity Minority Lower-income by county characteristic 1993-95 1995-97 1993-95 1995-97 1993-95 1995-97 and market concentration Initial Percentage Initial Percentage Initial Percentage Initial Percentage Inilial Percentage Inilial Percentage level number change number change number change number change number change number change LEVEL OF CONSOLIDATION ACTIVITY2 Overall 2.430,844 3 2.515,906 17 380,002 30 495,815 18 645,125 5 675,443 25 None 116,023 15 155,886 10 9.744 44 15.203 3 33.425 16 44.909 21 Low 1.120,439 4 1,030,464 17 193.798 27 172,853 18 285,155 5 285.285 25 High .. 1.194,382 2 1,329.465 19 176,460 33 307,759 18 326.545 3 345,249 25 By cotinrv size3 500,000 or less .. 1,204,576 3 1,243.745 14 111,916 35 150.557 16 334,858 3 343,915 23 None 108,945 14 145,480 11 8,854 43 10,088 12 31,381 16 42.446 21 Low 526.331 5 587,619 15 55,682 33 74,501 17 140,076 3 162,441 25 High 569.300 0 510,646 13 47.380 34 65.968 15 163.401 0 139,028 22 More than 500.000 .... 1,226.268 4 1,272,161 21 268.086 29 345,258 18 310,267 7 331.528 27 None 7,078 16 10,506 0 890 57 5,115 -16 2,044 19 2.463 22 Low 594.108 3 442,845 19 138,116 25 98,352 18 145.079 7 122,844 26 High 625,082 5 818.810 22 129,080 33 241.791 19 163,144 7 206,221 27 By county growth rate4 Low growth 1,287,804 2 1,314,868 16 226,156 26 285.737 14 350,217 5 366.449 21 None 55.055 10 89.039 7 5.377 39 11.474 -3 15.605 13 25,857 18 Low 529,018 2 402,281 15 107.442 22 74.072 13 135,730 5 121.810 21 High 703.731 2 823,548 17 113,337 29 200,191 15 198,882 4 218.782 22 High growth .... 1,143,040 5 1,201,038 19 153,846 37 210.078 22 294,908 5 308.994 29 None 6,098 19 66,947 15 4,307 51 3,729 19 17.820 19 19,052 25 Low 591,421 5 628,183 18 86,356 33 98.781 21 149.425 5 163,475 29 High 490,651 3 505,908 21 63,123 40 107,568 24 127,663 2 126,467 31 By market concentration5 Less than 1800 2.122,710 4 2.166,613 18 344.785 30 445,233 18 552.825 5 579.286 25 None 93.065 16 109.407 12 7.851 46 7,631 11 27.276 17 32,584 23 Low 1.028,222 3 845,191 17 179.838 28 143.724 17 260,159 5 234.545 25 High 1,001,423 3 1.212,015 20 157,0% 32 293,878 19 265,390 5 312,157 26 1800 and more .. 308,134 2 349,293 12 35.217 31 50.582 13 92,300 1 96.157 23 None 22,958 8 46,579 7 1,893 36 7.572 -6 6,149 12 12.325 17 Low 92,217 5 185,273 16 13,960 16 29.129 20 24,996 5 50.740 27 High 192,959 1 117,441 8 19,364 42 13,881 8 61,155 -2 33,092 19 is an intensely competitive business.21 Entry by firms growth of lending to any of the four borrower and is relatively easy, a typical market has many lenders, neighborhood categories. and a mature secondary market allows institutions to readily sell loans they originate and to extend additional credit. CONSOLIDATION AND MORTGAGE LENDING The analysis presented here does not provide a AT THE BANKING ORGANIZATION LEVEL complete picture of the effect of consolidation on home purchase lending. For example, it does not The results presented in the last section showed little identify changes in prices or product offerings. Fur- relationship between consolidation activity and ther, it does not provide information about the behav- changes in home purchase lending in a county. The ior of any individual lender or lender type. However, two potential explanations offered characterized the results strongly suggest that over the entire study changes in the behavior of consolidating organizaperiod the level of consolidation activity among tions differently. In this section, we focus on these banking organizations in a county had little effect on differences by examining changes in the behavior the growth of total home purchase lending or on the of consolidating banking organizations. Because the CRA mandates a special responsibility for banking organizations to serve the credit needs of residents of 21. The competitive nature of the market becomes apparent when those areas where they operate banking offices, we comparing HHI measures based on home purchase loans with HHI distinguish between changes in their behavior in measures based on deposits. The former are consistently lower than the latter, and often by a substantial amount. counties where they had banking offices before the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trends in Home Purchase Lending: Consolidation and the Community Reinvestment Act 91 3.—Continued Level of Type of neighborhood' consolidation activity Minority Lower-income by county h hk 1993-95 1995-97 1.99:3-95 1995-9.7 apt) market concentration Initial Percentage Percentage Initial Percentage Initial number h puniher change' number ehonge-" LEVEL OK CONSOLIDATION ACTIVITY- Overall 662.016 18 254.395 17 298.181 14 None 19.014 23 22.629 5 f 1,635 30 18,017 7 Low 335.192 7 247.737 15 115,026 12 116.831 n High 245.619 15 391.650 21 127,734 21 163.333 15 Bv tYJHH/V Silt * 5i)0.000 or less . 185.540 207.501 12 114,231 IS 131.010 10 None 18,175 16.112 II 10.944 30 16,402 9 Low 104.422 112,192 13 47.164 12 61,840 II High 62.943 M 79.197 10 56,123 14 52,768 8 More than 500,000 ... 412,285 10 454.515 22 140,164 19 167,171 17 None 839 33 6.517 -To 691 35 1,615 -14 Low 230.770 6 135.545 18 67,862 12 54,991 15 High 180.676 16 312.453 24 71,611 110.565 19 By cvunry gn-nvlh rate* Low growth 335,403 9 366.124 18 154.804 17 LSI.657 12 None 9.172 25 17.527 2 5,482 16 11,617 -I Low 177.090 5 99,726 13 61,569 13 54.93.1 10 High 149,141 13 248.S71 22 87,753 19 M5.109 14 High growth 262.422 J3 295.892 19 99,591 17 116.524 17 None 7.842 21 5.102 15 6.153 33 6.400 22 Low 158.102 9 148,011 17 53,457 11 61,900 15 High 94.478 19 142,779 20 39,98! 23 48,224 20 By matk& Less than 1800 .. S40.U07 10 591,086 225.264 17 259.284 14 None 15.-474 •£) 11.137 9.S61 31 12,571 12 Low 312.379 "l 203,546 15 106,089 11 95.015 II High 212,154 14 376.403 109,314 20 151,698 16 1800 and more .. 57.B18 J5 70.930 II 29,131 22 38.897 10 None 3540 •27 11,492 -I 1,774 26 5.446 _2 Low 72.81.3 3 44,191 16 8,937 22 21,816 18 High 3l.4n5 23 15,247 4 18.420 22 11,635 2 1. Loans for which Ihe borrowers' income was below 80 percent of the cur- low -counties in which the share of loans extended by organizations involved rent year median family income of their MSA wore classified as loans to lower- in consolidations was less than or equal to the median share of loans extended income borrowers. Loans to black, Asian. Hispanic, Native American, and in all counties by organizations involved in consolidations lor that period: and "other race" borrowers were classifed as loans to minorities. high—counties in which the share of loans extended by organizations involved Information on the census tract location of the property being purchased was in consolidations was greater than ihe median share of loans extended in all used to determine which loans were originated in lower-income or minority counties by organizations involved in consolidations for that period. neighborhoods. Loans for properties in census tracts whose 1990 median fam- 3. Population. ily income was less than 80 percent of the 1990 median income of their MSA 4. Counties with low growth rates are those where ihe 1993—95 growth in were classified as loans to lower-income neighborhoods. Similarly, loans for population was less than the median for all counties in the study. Counties with properties in census tracts with more than 20 percent minority residents in 1990 high growth rates are those where the growth in population was equal to or were classified as loans to minority neighborhoods. greater than the median. 2. The three •categories of consolidation are defined as the following: 5. Herllndahl-Hirschman index (HH1) level based on deposits at the begin- None—counties in which no organizations were involved in a consolidation; ning of each period. consolidation and changes in their behavior in coun- The pattern of lending by banking organizations ties where they did not. Many banking organizations in counties where they operated banking offices is do considerable lending in areas where they do not different from that of banking organizations in areas have banking offices, often through affiliated mort- where they did not operate banking offices and from gage and finance companies. In addition, institutions that of lending by other institutions (table 4). For that are not affiliated with banking organizations and example, over the 1993-97 period, banking organiare not subject to the CRA—such as credit unions zations increased their overall lending 69 percent in and mortgage and finance companies—extend many areas where they did not have banking offices at the home purchase loans. Indeed, loans made by banking beginning of the period but only 8 percent in those organizations in counties in which they had banking counties where they did operate banking offices. offices accounted for only 38 percent of overall home There are similar differences in growth rates for the purchase lending in 1993 (derived from table 4). four borrower and neighborhood lending categories. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

92 Federal Reserve Bulletin • February 1999 4. Home purchase loans, hy type and location of organization and by characteristic of borrower and neighborhood. 1993-97 Type of borrower1 Type of neighborhood' Type and locution All Minority Lower-income Minority Lower-income of organization Initial Percentage Initial Percentage Initial Percentage Initial Percentage Initial Percentage number change number change number change number change number change Banking organizations" 1.459,878 31 208.178 63 402.724 n 315,803 40 151.768 32 In counties with branch offices2 925.236 8 131.739 29 259.676 4 193.251 15 104.356 A In other counties 534,642 69 76.439 122 143.048 68 122.552 74) 47.322 93 Oiher institutions' 970,966 8 171.824 42 242,401 37 282,022 21 102.717 36 AU lenders 2,430.844 21 380,002 53 645,125 31 597,825 31 254^95 33 NOTE. Includes only owner-occupied one- to four-family home purchase lions are considered 10 have a branch office in a county only where the comloans extended in MSAs. mercial bank or savings association componeni of the organization has a branch 1. See nole 1 to table 3. office in lhat county. 2. Category includes loans by all commercial banks, savings associa- 3. Category includes independent mortgage and finance companies and credit tions, and their mortgage and finance company affiliates. Banking organiza- unions. Measuring the Effects of Consolidation office in the county was acquired during the study period. Those combinations involved in consolida- The unit of observation in measuring the effects of tion are further subdivided according to the type consolidation in the analysis in this section is the of consolidation. These decompositions allow for banking organization-county combination. Each an assessment of whether and how consolidation in banking organization is linked with each county banking has been associated with changes in overall in every metropolitan area—a total of 726 counties. lending and lending to lower-income and minority Thus, each banking organization potentially has borrowers and neighborhoods. Because economic 726 distinct observations. However, a banking theory suggests that the geographic proximity of the organization-county combination is included in the acquiring and acquired organizations may influence sample only if the organization had a CRA obligation subsequent lending patterns, we divide organizationin the county. Such an obligation is considered to county combinations involved in consolidation into exist if any banking-institution component (commer- three types according to the location of the offices of cial bank or savings association) of a banking organi- the acquiring component: (1) consolidations in which zation operated a banking office in the county at the the acquiring as well as the acquired components beginning of the study period. A single organization of the organizations operated offices in the county may appear in the sample several times if it had (within-county consolidations), (2) consolidations in offices in more than one county, as was true in 1993, which the acquiring component operated an office for instance, for nearly 30 percent of the banking in the MSA containing the county but not in the organizations (appendix table A.I). The sample was county (within-MSA-not-in-county consolidations), further restricted to include only those combinations and (3) consolidations in which the acquiring compoin which the organization extended ten loans or more nent did not operate offices in either the county or its in the county in the first year of the analytical MSA (out-of-MSA consolidations). period.22 Economic theory further suggests that the size of To assess the effects of consolidation on home the organizations involved in a consolidation may purchase lending by banking organizations, we affect lending activity. Thus, for the current analysis, compare the behavior of organizations that were we group consolidations according to the size (in involved in consolidation in a county with that of assets) of the acquiring and the acquired organization organizations that were not. As before, an organiza- (see the appendix): (1) a small organization (assets of tion is considered to have undergone a consolidation less than $250 million) acquiring another small orgain a county only if a banking-institution component nization, (2) a medium-sized organization (assets of the organization that was operating a banking between $250 million and $10 billion) acquiring a small organization, (3) a medium-sized organization acquiring another medium-sized organization, (4) a large organization (assets greater than $10 billion) acquiring a small organization, (5) a large organi- 22. This restriction removes only about 1 percent of the home purchase loans from the sample. zation acquiring a medium-sized organization, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trends in Home Purchase Lending: Consolidation and the Community Reinvestment Act 93 (6) a large organization acquiring another large median values, we exclude all cases in which a organization. banking organization extended no loans in a particu- The approach taken here employs performance lar borrower or neighborhood category in a county. standards often used in previous research on home For example, if a bank extended no loans to lowermortgage lending issues.23 They are also used in evaluating the CRA record of banking organizations. These measures are (1) the change in the number of loans an organization makes in a county overall and Performance Standards Used to Measure to lower-income and minority borrowers and neigh- the Effects of Consolidation borhoods, (2) changes in an organization's share of at the Organization Level the total number of loans in a county overall and to lower-income and minority borrowers and neighbor- Three performance standards are used to measure the hoods in each of the organization's local communi- effects of consolidation: the number of home purchase ties (market share), and (3) changes in the share of an loans, market share, and portfolio share. Three measures are used because, while each may provide insight into organization's own loan activity in a county that home purchase lending in a market, each also has some is composed of such lending (portfolio share). (See shortcomings. In combination, they provide a more combox "Performance Standards Used to Measure the plete picture of trends in lending. Effects of Consolidation at the Organization Level.") The number of home purchase loans an organization All three measures are based on numbers of loans, makes is one indicator of the level of service it provides although CRA examiners also consider the dollar to a local area. Changes in this measure show whether amount of lending in using these measures. Changes lending is increasing or decreasing. However, exclusive in the lending activity of consolidating organizations consideration of this measure may lead to misleading are computed by comparing lending by the merged inferences. The number of loans does not provide an organization at the end of the period with the com- indication of how well an organization is performing bined lending activity of the component parts of the relative to other organizations in a given market. It also merged organization (called a "pro forma" organiza- fails to show an organization's own relative commitment tion) at the beginning of the period.24 to certain types of lending. The second measure, market share, addresses the first Because we want to characterize the behavior of of these limitations. Changes in an organization's market the "typical" banking organization, we focus on share of home purchase loans provide a measure of how median values in the market share and portfolio share its activity is changing relative to the market as a whole. analyses. The median is preferred because the Increases (decreases) in market share indicate that an mean may be greatly influenced by extreme values, organization has a greater (lesser) presence in a given either positive or negative. Median values are type of lending. Trends in market share do not necessarsensitive, however, to the number of banking ily mirror trends in the number of loans. For example, an organization-county combinations that had no lend- organization's market share can decline even while the ing in a particular borrower or neighborhood cate- number of its loans increases if other organizations increase their levels of lending more rapidly. The market gory over the analytical period. For some categories, share measure, however, is not without its own limitathe number of such combinations is relatively large, tions as a measure of performance. Most prominently, an which can give a misleading indication of the effects organization's market share may be greatly influenced of consolidation on organizations active in certain by the actions of other competitors in the market and types of lending (table 5).25 Thus, in calculating changes in the demand for home purchase loans, both of which are largely outside its control. The portfolio share measure provides another gauge of an organization's relative experience with a given type of lending. Like the market share measure, trends in port- 23. See. for example, Glenn B. Canner, Wayne Passmore, and folio share can be different from trends in the number Brian 1. Surene, "Distribution of Credit Risk among Providers of of loans. However, unlike the market share measure, the Mortgages to Lower-Income and Minority Homebuyers." Federal portfolio share measure tends not to be overly sensitive to Reserve Bulletin, vol. 82 (December 1996). pp. 1077-1102. the activities of market competitors. The limitation of 24. The sum includes all lending in the county by all component parts of the organization in the first period, including those compo- this measure is that an organization may have a growing nents that did not have banking offices or CRA obligations. portfolio share of lending to a given population yet a 25. For example, in each of the sample periods about 27 percent shrinking presence overall in lending to that population, of the banking organization-county combinalions had no lending to measured either in terms of absolute numbers of loans or minority neighborhoods. This result likely reflects a relatively large number of smaller banks located in counties with small numbers of market share. minority neighborhoods. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

94 Federal Reserve Bulletin • February 1999 5. Percentage of banking organization-county combinations with no lending to minority and lower-income borrowers and neisihborhouds, 1993-95 and 1995-97 Type of borrower1 Type of neighborhood' Category Minority Lower-income Minority Lower-income i993-95 I 1995-97 1993-95 1995-97 1993-95 1995-97 1993-95 1995-97 No lending 10.6 9.7 .4 .5 27.1 27.5 14.8 15.6 No lending and involved in consolidations 1.0 .8 .1 .1 4.2 '3.4 2.1 2.0 Memo Number of banking cirganizationcounly combinations 7.143 7,100 7.143 7.100 7.143 7.100 7.143 7,100 I. See nole I to lable 3. income applicants over 1993-95, it is not consid- the 1995-97 period were involved in a consolidation ered in calculating the median change in market share (table 6). However, these tended to include organizaof lending to lower-income borrowers during that tions with relatively large numbers of home purchase period (that is, it is not considered to have had a loans, as they accounted for almost 30 percent of all 0 percent change in its market share).26 lending in counties by banking organizations with It is important to emphasize that the patterns found CRA obligations in those counties (derived from in this analysis may differ from those in the previous table 7). section. In this analysis, we track changes in home Most banking organization-county combinations purchase lending for banking organizations only in involved in consolidation were involved in the counties in which they operated offices at the either within-county consolidations or out-of-MSA beginning of each analytical period. These changes consolidations—90 percent over 1993-95 (derived do not necessarily reflect total changes in an orga- from table 6). In addition, a majority of the banking nization's lending, as an organization may have organization-county combinations involved in mergexpanded both its CRA obligations and its lending ers involved large acquiring institutions—54 percent into new markets over time. As with the preceding over 1993-95 (derived from table 6). These organizaanalysis, the discussion emphasizes only those rela- tions extended most of the home purchase loans— tionships that are robust after considering other factors that may have influenced home purchase lending patterns. 6. Distribution of banking organization-county combinations, by level of consolidation activity and size and location of banking organization, Consolidation and Lending 1993 95 and 1995-97 by Banking Organizations Consolidation calenory for in Counties Where They Operate Offices bankiim organizalion- 1993-95 1995-97 county combinations A simple count of the number of banking 5.850 5 800 B\ size of banking organization' organization-county combinations involved in con- Small 2 047 1 KI3 solidation provides a perspective on the extent 2 237 2 I6S 1 566 1 819 of consolidation in the banking industry over our 1 293 1 300 periods of analysis. Over each time period we Rv location analyze, a relatively small percentage of banking Within county 603 60S Within MSA, not in county 125 96 organization-county combinations were involved in Out of MSA 565 =i% consolidation—for example, only 18 percent of the /?v size of btlnkiftg twganizutiou' organization-county combinations in the sample over Small acquiring small 78 69 Medium acquiring small 211 184 Medium acquiring medium 300 197 Large acquiring small 71 51 26. While this procedure reduces the sample, it does not result in a Larce acquiring medium 314 318 Large acquiring large 319 481 significant decline in the number of banking organization-county combinations involved in consolidation that were included in ihe All banking orgaiiizattonsample. Very few organizations that had no lending in either period countv combinations 7,143 7,100 were involved in a consolidation. For example, over 1995-97. less I. Sii-t categories arc ihe following: A small organization has assets of than 1 percent of all banking organization-county combinations in the less than S250 million; a medium-sized organization has assets between sample that were involved in consolidation made no loans to minority $250 million and $10 billion; and a large organization has assets of more than borrowers or to lower-income borrowers. $10 billion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trends in Home Purchase Lending: Consolidation and the Community Reinvestment Act 95 about 68 percent over 1993-95—originated by bank- few consistent patterns appear, with two notable ing organization-county combinations involved in exceptions. Grouping banking organization-county consolidation (derived from table 7). combinations according to the location of offices of the acquiring firm, we find that within-county consolidations are associated with larger growth (or Changes in the Level and Market Share smaller declines) in the number of loans extended of Home Purchase Lending overall and to the four borrower and neighborhood categories compared with other types of consoli- In stark contrast to the analysis of the effects of dation (table 7). For example, although the overall consolidation on home purchase lending at the mar- amount of lending by banking organization-county ket level, which found no consistent relationships combinations involved in out-of-MSA consolidations between consolidation and changes in home purchase declined 27 percent over 1993-95, the decline was lending, consolidation does appear to be related to only 9 percent among those combinations involved in changes in home purchase lending when the effects within-county consolidations. are examined at the organizational level. Again Banking organization-county combinations are the focus is on lending by banking organizations also grouped according to the size of the acquiring in those counties in which they operated banking and acquired organizations. The most consistent offices. results occur among those consolidations in which Banking organization-county combinations that the acquirer was large, although the differences were were involved in consolidation consistently showed not always statistically significant. Acquisitions of less growth (or more decline) in the number of small organizations by large organizations generally home purchase loans they originated than banking are associated with the largest increases in the numorganization-county combinations that were not ber of loans extended overall and to the four borinvolved in consolidation. Moreover, the growth in rower and neighborhood groups. Acquisitions of home purchase lending by both groups was generally large organizations by other large organizations genless than the growth in total lending in metropolitan erally are associated with relatively large declines in areas. Although the growth rates of total lending for lending. all mortgage lending organizations were 3 percent The finding that consolidation is consistently assoand 17 percent in 1993-95 and 1995-97 respectively ciated with declines in lending—both overall and (derived from table 1), the number of loans extended across the four borrower and neighborhood groups— by the banking organization-county combinations in appears to support the view that consolidation our sample that were involved in consolidation results in a reduction in home purchase lending, declined about 14 percent in each period while the possibly because of a shift away from local decisionnumber of loans extended by those combinations in making, anticompetitive effects, or the acquisition our sample not involved in consolidation increased of savings associations by banking organizations. 3 percent in both periods (table 7). However, some results are inconsistent with these These relative relationships generally hold for explanations. overall lending and for lending to the four borrower A reduction of the influence of local decisionmakand neighborhood categories and in both time ing would suggest that consolidations in which a periods, although not all differences are statistically large organization acquires a small organization significant. The market share of home purchase loans might be associated with larger declines (or less in a county extended by the typical consolidating growth) in lending than consolidations in which both organization with an office in that county (that is, the the acquirer and acquired organization are large. median banking organization-county combination However the reverse is true—consolidations in involved in a consolidation) declined substantially which large organizations acquired other large in both years, and by more than that of the typical organizations are generally associated with larger non-consolidating organization with an office in that declines (or less growth) than consolidations in which county (table 8). This result indicates that the patterns large organizations acquired small organizations. Antishown in table 7 are not driven by the behavior of competitive effects would most likely be observed just a few large organizations but rather reflect the in within-county consolidations; yet these are not experiences of the typical organization. associated with a disproportionate decline in lending. When banking organization-county combinations It should be noted, however, that the finding that outinvolved in a consolidation are distributed accord- of-MSA consolidations show the largest declines ing to the type of consolidation that took place, in lending is consistent with a shift away from local Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 Federal Reserve Bulletin • February 1999 7. Home purchase loans by banking organization-county combinations, by level of consolidation activity and size and location of banking oraanization. 1993-95 and 1995- 97 Type of borrower' Consolidation All borrowers category Minirity Lower-income for banking organizalion- 1993-95 1995-97 1993-95 1995-97 1993-95 1995-97 counly combinations Initial Percentage Initial Percentage Initial Percentage Initial Percentage Initial Percentage Initial Percentage number change number change number change number change number change number change No consolidation . 653.665 3 692.296 3 92.299 26 115.623 -2 181.881 _2 I90.3Z3 i Bvsize* Small 114,177 -7 90.406 7 12.151 11.383 11 30.923 -6 24.961 14 Medium 264.289 2 244,983 9 32.O3S 28 33.624 4 71.006 -1 62,541 11 Large 275,199 7 356.907 -2 48.110 29 70.616 -8 79.952 -2 102,821 -9 Any consolidation . 278,519 -15 289.948 -13 39.072 12 58,430 -II 78.589 -13 73,963 -6 Within county . 182,301 -9 188.107 -8 27.898 15 43,315 50.613 -8 46,706 0 Within MSA. not in county ... 10,949 -17 8.295 -23 926 66 1.358 -34 3.591 -8 2.221 -20 Out of MSA . 85.269 -27 93.546 -23 10.248 0 13.757 -20 24,385 -24 25.036 -18 Bv size2 Small small 4.717 -19 5.206 -17 882 -43 729 _•>! 1.215 -20 1.472 -10 Medium small 24.513 -1 19.983 -7 3.119 31 3.509 -I 6.351 7 5.268 6 Medium medium .. 59.931 1 35.870 -17 6.543 20 5.268 -21 15.092 -1 9.389 -9 Large small .... 22.769 22 14.149 5 4,770 45 2,442 -3 6.549 8 4.424 7 UlFgC medium .. 93.172 -27 84.569 -8 14,370 -5 16,873 -6 26.366 -26 22.321 -1 Large large 73,417 -29 130.171 -18 9.388 17 29,609 -14 23.016 -17 31.089 -13 decisionmaking. Finally, those consolidations involv- overall trend toward geographic diversification. This ing the acquisition of savings associations by banking diversification may have been fueled by the acquisiorganizations, which, as noted earlier, could poten- tion of large, previously independent mortgage banktially reduce home purchase lending, show virtually ing organizations and an expansion of activity by the same lending patterns as other consolidations. previously affiliated mortgage and finance compa- Also, these results cannot readily be explained by nies. Also, increased standardization in the home a reduction in overaJl lending by organizations that purchase loan market, facilitated in part by developwere involved in consolidation. Overall home pur- ments in the secondary market and the growing use chase lending by these organizations grew 16 percent of automated underwriting, may have reduced the in 1993-95 and 22 percent during 1995-97 (not need for banking organizations to maintain a local shown in tables). Virtually all of this growth was in presence to originate home purchase loans. counties in which the organizations did not have banking offices. The growth in these institutions' Changes in Portfolio Shares home purchase lending in these out-of-market areas was 57 percent over 1993-95 and 69 percent over Results using the portfolio share measure provide a 1995-97 (not shown in tables). Moreover, the growth different picture of the effect of consolidation on in out-of-market lending by these consolidating bank- home purchase lending than those using either maring organizations substantially exceeded the growth ket share measures or counts of loans (table 9). Using in home purchase lending by other groups of market market share measures or counts of loans showed that participants. organizations involved in consolidation typically The reduction of home purchase lending by con- reduced their overall lending and lending to the four solidating banking organizations in those counties in borrower and neighborhood groups in those counties which they operated offices appears to be part of an in which they had banking offices. The portfolio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trends in Home Purchase Lending: Consolidation and the Community Reinvestment Act 97 7.—Continued Type of neighborhood' Consolidalion category Minority Lower-income for banking organization- 1993-95 1995-97 1993-95 1995-97 county combinations Initial Percentage Initial Percentage Initial Percentage Initial Percenter number change number change number change. number change No consolidation . 137,940 9 148.093 0 73.411 9 84,082 -10 By size1 Small 20,995 -6 16.260 8 12,985 0 11,237 2 Medium 46.076 9 41^92 4 26,081 14 26.162 -3 Lsr°e 70,869 14 89.941 -3 34,345 9 46,683 -17 ""B^ Any consolidation . 54.650 —4 74,072 -9 30.379 0 33,626 -13 By location Within counly . 36,945 2 54,771 -6 19.902 5 22,961 Within MSA, not in county ... 1,220 26 1,766 -27 1,319 20 999 -27 Out of MSA .. 16,485 -18 17,535 -16 9,158 -12 9,666 -25 B\ site2 Small acquiring small 1,305 -49 1.237 -35 617 -19 652 -29 Medium acquiring small 4.307 8 5,373 -10 2,524 10 2.319 -7 Medium a m c e q d u i i u ri m ng .. 9,840 6,045 -23 5.736 2 3.826 -15 Large acquiring small 6.994 29 2,845 3 3.149 16 1.903 7 Large acquiring medium .. 20,685 -13 20.872 -8 9.562 -9 8,977 -10 Lafgs iirfiiairino large 11,519 -6 37.700 -7 8.791 1 15.949 -18 1. See note 1 to table 3. 2. See note 1 to table 6. share measure shows that this reduction did not dis- tion, to serve lower-income and minority borrowers proportionately affect lending to lower-income and and neighborhoods. The data, however, are not suffiminority borrowers and neighborhoods. Indeed, the cient to provide a complete evaluation of the effects portfolio share measure shows that the typical con- of the CRA in this regard. For example, no informasolidating organization generally increased the pro- tion is available on the prices charged for loans or on portion of loans extended to each of the four bor- whether they were underwritten using special guiderower and neighborhood groups. These changes are lines for affordable lending programs. Loans to generally larger (or less negative) than the changes lower-income and minority borrowers and neighborobserved among banking organization-county com- hoods may be more difficult to underwrite and thus binations not involved in consolidation. For example, benefit more from a local office presence than from the change in the portfolio share for lending to minor- any particular pressures due to the CRA. Moreover, ity borrowers for the typical organization involved banking organizations have also increased their lendin a consolidation was 31 percent compared with ing to lower-income and minority borrowers in counties where they have no banking offices. only 21 percent for the typical organization not involved in a consolidation during 1993-95. When banking organization-county combinations involved in consolidation are distributed according to the type APPENDIX: CONSTRUCTION OF THE DATABASE of consolidation (by either location or size of the acquiring and acquired organization), few consistent The data used in this article combine information on patterns emerge over the two periods. branch office location, home purchase loan origina- These results are consistent with the view that the tions, and records of bank structure, failures, merg- CRA has been effective in encouraging banking orga- ers, and acquisitions from several sources. (See nizations, particularly those involved in consolida- table A. 1 for a description of the study sample.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 Federal Reserve Bulletin • February 1999 8. Market share ot" home purchase lending by banking organization-county combinations, by level of consolidation activity and size and location of banking organization, 1993-95 and 1995-97 Percent Type of borrower' Consolidaiion All borrower* category Minority Lower-income oreanizal ion- 1993-95 1995-97 1993-95 1995-97 1993-95 1995-97 county combinations Initial Percentage Initial Percentage Initial Percentage Initial Percentage Initial Percentage Initial Percentage share change share change share change share change share change share change No consolidaiion . 2.0 -7 2.2 -13 1.1 -9 1.3 -17 1.9 -13 2.0 -16 Small 1 2 -16 I.I -11 ,3 -21 .3 -16 1.2 -19 1.1 -12 Medium 2.0 -4 1.9 -5 1.2 -3 1.2 -7 1.9 -8 1.7 -9 3.0 -1 3.6 -22 2.7 33 -26 3.3 -10 3.5 -28 Any consolidation . 3.5 -24 3.6 -27 2.6 -19 3.0 -30 3.5 -24 3.4 -28 By location Within county . 4.4 -17 4.3 -27 3.6 -13 3.8 -28 4.1 -14 4.1 -26 not in county ... 2.5 -34 2.8 -36 .7 -16 2.Q -48 2.9 -33 2.6 -36 Out of MSA .. 3.1 -31 3.1 -28 2.2 -27 2.6 -30 2.9 -32 2.8 -28 B\-sizr- Small acquiring small .... .7 -21 .9 -33 -24 0.5 -36 .8 -21 .9 -37 Medium acquiring small .... 2.1 - 15 1.7 -21 1.3 -12 .8 -18 2.1 -7 1.4 -15 Medium medium .. 3.4 -13 3.0 -30 -7 2.1 -31 3.1 -6 2.6 -28 Large acquiring small .... 3.8 -4 2.5 -18 4.3 -3 1.7 -20 4.1 -14 1.9 Large medium .. 4.4 -30 5.1 -20 3.3 -29 4.4 -20 4.1 -33 5.0 -19 Large large 4.9 -37 4.1 -32 4.0 -29 4.0 -37 4.5 -31 3.9 -34 9. Portfolio share of home purchase lending by banking organization-county combinations to minority and lower-income borrowers and neighborhoods, by level of consolidation activity and size and location of banking organization, 1993-95 and 1995-97 Percent Type of borrower' Minority Lower-income Consolidation category for hanking orgnni/.ationcounly combinations 1993-95 1995-97 1993-95 1995-97 Initial Percentage Initial Percentage Initial Percentage Initial Percentage share change •share change share change share change No consolidation 6.3 21 7.5 -6 26.2 -5 26.2 5 fiv si:e - Small 3.4 20 4.3 -6 27.4 -3 28.0 5 Medium 6.3 25 7.5 -6 24.8 -5 24.2 6 9.7 19 10.6 -6 26.7 -6 26.7 2 Any consolidation 7.2 31 11.1 -5 26.1 3 25.0 8 By I oval ion 8.3 28 13.9 -3 26.7 4 23.5 8 Wiihin MSA, not in county 4.4 45 8.8 -33 26.1 4 Z5.0 9 Out or MSA 6.9 31 9.2 -6 25.4 1 26.0 8 By size * Small acquiring small 4.6 24 8.1 7 25.5 0 27.8 4 Medium acquiring .small 6.7 26 9.1 0 26.0 6 24.6 11 Medium acquiring medium 7.3 28 7.8 -2 23.1 -1 24.1 10 Large acquiring small 9.5 28 13.3 -7 24.2 -17 26.7 -7 Large acquiring medium 8.1 31 11.7 -3 27.9 1 24.6 10 Large acquiring large 7.2 38 13.8 -10 28.1 10 25.0 7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trends in Home Purchase Lending: Consolidation and the Community Reinvestment Act 99 8.—Continued Type of neighborhood' Consolidation category Minority Lower-income for banking organizatjon- 1993-95 1995-9.7 1.993-95 1995-97 etmnly combinations Initial Percentage Initial Percentage Initial Percentage Initial Percentage share change share change share change share change No consolidation . 1.0 -10 1.1 -14 1.5 -11 1.5 -17 BY size1 Small 0.3 -21 .3 -14 .7 -23 6 -12 Medium I.I -5 .9 -5 1.4 -5 1.3 -8 Large 2.5 -A 2,9 -22 2.8 _-j 3.3 -26 Any consolidation . 2.1 -20 3.0 -27 2.9 -24 3.0 -32 By location Within county . 3.1 -11 3.4 -27 3.7 -11 3.8 -30 Within MSA, not in county ... .7 -15 2.0 -38 1.5 -20 2.L -37 Out of MSA .. 1.9 -29 2.6 -26 2.3 -32 2.7 -33 By size - Small acquiring small 2 -37 .6 -56 .4 -40 .8 -50 Medium acquiring smal 1 1.2 -18 .9 -19 1.9 -16 1.3 -16 Medium acquiring medium .. 2.0 -13 1.6 -36 2.4 -16 2.5 -36 Large acquiring small 2.1 1 1.7 -17 3.6 5 2.1 -25 Large acquiring medium .. 2.9 -25 4.1 -19 3.8 -28 4.4 -22 Large acquiring large 3.5 -24 3.8 -31 3.9 -29 3.6 -37 NOTE. Data are the initial median market share for each category of banking 1. See note I to table 3. organization-county combination and the median change in market share for each 2. See note I to table 6. period. 9.—Continued Type of neighborhood' Consolidation category Minority Lower-income For banking organization- 1993-95 I993-^7 1993-95 1995-97 com Inflations Initial Percentage Initial Percentage Initial Percentage Initial Percentage share change share change share change share change .No consolidation 7.3 2 6.7 -5 7.1 4 7.7 -8 Small 2.6 0 2.0 -6 6.4 1 6.7 -8 Medium , 7,-9 4 6.7 -4 6.8 6 7.0 -9 Large s s 12.1 2 10.7 -5 8.7 6 9.0 -7 A'hy -consolidation 7.9 7 12.2 -2 7.5 11 8.5 -7 % IbmiiM Within county 9.2 9 17.7 -3 7.4 12 9.5 -6 Within MSA, not in counly 2.3 22 8.9 -9 6.3 21 6.7 -9 Out of MSA 8.1 3 9,8 0 7.9 8 7.5 -7 By sine'2 Smtill acquiring ismall 5.7 -1 9.1 -21 6.8 -6 8.0 -10 Medium acquiring Small 10.4 9 13.5 G 6.9 9 7.2 -6 Medium srcqiHrfng medium 8.8 3 7.3 <» 6.8 2 8.0 -2 Large acquiring SHfirtl 16.1 0 1-6.0 1 8.7 -1 9.1 19 Large acquiring medium 8.8 10 14.5 -3 8.0 18 9.1 -9 Laree acquiring Uargt: 6.2 14 13.6 -J 8.3 25 8.6 -9 NOTE. Data are the initial median portfolio share for each category of banking 1. See note I to table 3 Digitized for FRASER organization-county combination and the median change in share for each period. 2. See note 1 to table 6. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

100 Federal Reserve Bulletin D February 1999 A.I. Distribution of MSA counties per banking organization and depository offices and home purchase loans per organiaition-county combination, 1993. 1995. and 1997 1993 1995 1997 Item Number Percent Number Percent Number Percent Number of MSA counties with br(irt<~h offices per urbanization 3.923 71.4 3 423 69.4 3.124 67.2 843 15.3 832 16.9 836 IS.fi 3 20) 5.3 264 5.4 26S 5.S 4-5 194 3.5 187 3.S 197 4.2 6-9 100 1.8 93 1.9 96 2 1 10-19 79 1.4 69 1.4 54 1.2 20-49 55 1.0 47 1.0 49 J.D 50 or more 13 17 .3 .5 Total .. 5.498 100.0 4.932 100.0 4,646 IOO.O Depoxitory t/ffk'L's per organization- LYfmT/v combination 1 . . ." 4.216 35.9 3.781 34.1 3.764 34.0 2 2.124 18.1 1.980 17.9 1.962 17.7 1.316 1.296 11.7 1,235 II.I 4-5 1.472 1.426 12.9 1.441 1X0 6-9 1.273 10.8 1.258 11.4 1.277 11.5 10 or more. 1.33S 11.4 1.339 12.1 1.394 iZ.b Total 11.739 100.0 11.080 100.0 11.073 11)0.0 Home purchase Itmnx per or^unizMt t:ounl\ cainliinueion 0 1.336 11.4 1.026 5.3 1.476 13.3 2.894 24.7 2.494 22.5 2277 2£U> KM9 1.471 12.5 ! .430 12.0 1.292 11.7 20-49 2 142 18.2 2,091 IS.9 2.065 IS.7 1.531 13.0 1.581 14.3 i.507 13.6 100-499 2.064 17.6 2.144 19.4 2.102 19.0 500 or Mure 301 2.6 314 2.8 354 3.2 Total 11.739 100.0 11,080 100.0 11.073 The location (county) of banking institution to the Home Mortgage Disclosure Act (HMDA). depository offices (banking offices) was extracted Each year, nearly all commercial banks, savings and from the annual Summary of Deposits filings for loan associations, credit unions, and other mortgage commercial banks and Branch Office Survey System lending institutions (primarily mortgage banks) with filings for savings associations for the years 1993 assets of more than $10 million (raised to $29 million through 1997. The office list includes all locations in 1997) and an office in an MSA are required to qualifying as separate institution deposit-taking report on each mortgage loan purchased and on each offices under federal guidelines as of June 30 of each loan application related to a one- to four-unit resiyear. It does not necessarily include all "drive-ins," dence acted upon during the calendar year. Lenders ATMs, or loan production offices; however, virtually must report the loan amount, state, county, and cenall offices whose presence implies a CRA obligation sus tract of the property, whether the property would are reported. Reporting banking institutions include be owner occupied, purpose of the loan, type of loan all federally insured commercial banks, savings and (conventional, FHA, or VA), application disposition loan associations, cooperative banks, and mutual sav- (loan originated, application withdrawn, or application denied), race and gender of the loan applicant, ings banks, as defined by the Federal Reserve Board's and the applicant income relied on by the lending National Information Center (NIC) database. The institution in making the loan decision.27 For this locations used for this study may differ slightly from those used elsewhere because of some limited data cleaning required for the analysis. For example, some 27. See Glenn B. Canner and Dolores S. Smith, "Home Mortgage offices were added for a few institutions that did Disclosure Act: Expanded Data on Residential Lending," Federal not submit a Summary of Deposits or Branch Office Reserve Bulletin, vol. 77 (November 1991), pp. 859-81, fora compre- Survey System filing, and some addresses were hensive discussion of the HMDA data. It is estimated that 80 percent to 87 percent of all home purchase loans were reported under HMDA corrected for a limited number of offices for which for the 1993-97 period. The FFIEC makes the HMDA data available incorrect county location was reported. in various formats, including paper summaries, magnetic tape, Information on home purchase loan originations PC diskette, CD-ROM, and at the FFIEC web site (www.ffiec.gov). An order form for the HMDA data may be obtained by calling the used in the analysis was obtained from individual FFIEC at (202) 634-6526 or by downloading the form from the FFIEC mortgage loan data filed under the 1989 amendments web site. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Trends in Home Purchase Lending: Consolidation and the Community Reinvestment Act 101 study, the sample was restricted to loans originated determine those counties where in our construct they for the purchase of owner-occupied units. The sample had a CRA obligation. These numbers may differ includes both conventional loans and loans backed by from the actual location of offices at the end of the government guarantees. year to the extent that banking institutions may have Information on the census tract location of the opened or closed offices in the six-month period property being purchased was used to determine between June 30 and December 31. which loans were originated in lower-income or The final information needed for the study was to minority neighborhoods. Loans for properties in cen- determine the appropriate structure to use in classifysus tracts whose 1990 median family income was less ing banking institutions and to determine which instithan 80 percent of the 1990 median family income of tutions were involved in consolidation during the their MSA were classified as loans to lower-income 1993-95 and 1995-97 study periods. Transactions neighborhoods. Similarly, loans for properties in cen- and structure information recorded in the Federal sus tracts with more than 20 percent minority resi- Reserve Board's NIC database was used for this dents in 1990 were classified as loans to minority purpose. For each of the three-year study periods (black, Asian, Hispanic, Native American, and "other used in the analysis, institutions were initially classirace") neighborhoods. The race of the primary appli- fied by their membership in banking organizations as cant was used to determine minority borrower loans, of December 31 of the first year of the study period and loans to borrowers whose income was below (1993 or 1995). These organizations included bank 80 percent of the current-year median family income and thrift holding companies and foreign bank of their MSA were classified as loans to lower- payment groups (commercial banks chartered in the income borrowers. United States that are subsidiaries of a common for- Under current law, most institutions with offices in eign bank). Both lending and office data were con- MSAs are required to report all their mortgage lend- solidated at the organization level. Thus, for examing regardless of location but to provide geographic ple, if any banking institution member of a bank detail only for loans originated in metropolitan areas. holding company had an office in a county, the orga- Thus, the information needed to determine lending nization was deemed to have a CRA obligation there. to lower-income and minority neighborhoods was Similarly, all home purchase lending in the county, available only for counties in MSAs. Consequently including lending by mortgage bank or finance comwe restricted the dataset to these counties. Further, pany subsidiaries of the holding company and by all because the number and boundaries of MSAs its member banks and their subsidiaries, was included changed slightly from 1993 to 1997, the dataset was in determining the organization's total home purlimited to the 726 counties that were part of MSAs in chase lending in the county. The size of an organiboth 1993 and 1997.28 These counties represent about zation was computed as the sum of the assets of its 20 percent of all counties in the United States but member banking institutions.29 Banking institutions contain 78 percent of the total population and 70 per- that were not members of a larger organization were cent of the banking offices. treated as independent organizations. A further step had to be taken to align the banking A similar method was used to reclassify banking office and lending data. Banking institutions report institutions by their membership in organizations at their offices as of June 30 of each year but file the end of each of the three-year study periods. A HMDA reports on a calender-year basis. The institu- banking institution that merged into another instition's current structure is used for each filing. Thus, tution would be reclassified as part of the acquiring for example, if two banking institutions merged on institution, for example, and members of a holding December 15, they would file a consolidated HMDA company acquired by another holding company filing on December 31 showing their combined lend- would similarly be reclassified as part of the acquiring for the whole year. However, their branch office ing holding company. filing, done as of the previous June 30, would show All organizations (or institutions) with different them as separate institutions. To reconcile these dif- membership at the beginning and end of each study ferences, the institution's structure as of the end of period were deemed to have undergone a "consolidathe year was used to classify bank branches and to 29. This amount may differ somewhat from the total assets reported 28. To correspond to the taxonomy used by the Bureau of the by bank and thrift holding companies for their combined operations. Census in constructing county-level economic data, information for However, consolidated information was not available for foreign bank some counties was combined. Primarily this involved consolidating payment groups; consequently we decided to use a common basis in some independent cities in Virginia with their surrounding counties. estimating an organization's size. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

102 Federal Reserve Bulletin D February 1999 tion" during the period.30 This includes both banking period would be deemed to have acquired the other institutions and holding companies that acquired or three. merged with previously independent banking institu- Consolidations were measured at the county level. tions or holding companies. It does not include, how- A consolidation was deemed to have occurred in the ever, mergers among subsidiaries of the same holding county only if a banking institution (or organization) company, because they were already members of with an office in the county at the beginning of the the same organization at the beginning of the period. period was acquired by another institution (or organi- Nor does it include acquisitions of nonbank affiliates, zation) during the period. If the acquiring organizasuch as mortgage or finance companies. tion also had offices in the county at the beginning of For some of the analysis it was necessary to differ- the period it was treated as a within-county consolidaentiate between the "acquirer" and "acquired" com- tion; if the acquiring organization had offices within ponents of a consolidation. These determinations the MSA, but not the county, it was treated as a were not always apparent from the record. Conse- within-MSA-but-not-county consolidation. Otherwise quently, we decided to designate the largest compo- the merger was treated as an out-of-MSA consolidanent of an organization (as measured by its asset size tion. Note that under this definition, an organization at the beginning of the period) as the "acquirer." All was considered to have undergone a consolidation in other components were treated as "acquired." Thus if a county in which only the acquiring component of four banking institutions merged into a common the organization had offices at the beginning of the holding company over the study period, the institu- period. tion with the most assets in the beginning of the Finally, the change in lending for those counties where organizations underwent consolidation was computed by comparing the sum of the lending in a county by all components of the organization in the first year of the study period (1993 or 1995) with the 30. A few institutions were liquidated in each of the study periods. Similarly, a number of new (de novo) institutions were formed. Cases lending reported by the overall organization in the of both types were excluded from the analysis. Moreover, an organiza- county in the final year (1995 or 1997). Again, only tion acquiring a de novo bank is not treated as having undergone a those counties with acquired components were conmerger because the de novo institution did not exist at the beginning of the period. sidered in making this calculation. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

103 Industrial Production and Capacity Utilization for December 1998 Released for publication January 15 December was boosted by a 1.6 percent increase in utilities. Manufacturing output increased for the third Industrial production increased 0.2 percent in Decem- consecutive month, gaining 0.2 percent. At 132.8 perber. Based on more complete information for a num- cent of its 1992 average, industrial production in ber of manufacturing industries and utilities, indus- December was 1.9 percent higher than it was in trial production is now shown to have posted a larger December 1997. Capacity utilization stood at gain in October than previously estimated and to 80.9 percent in December. The industry operating have declined less in November. Production in rate declined 2!/2 percentage points during 1998 to a Industrial production andcapacity utilization Ratio scale, 1992= 100 Percent of capacity Industrialproduction Capacity utilization 130 - Manufacturing ^r 120 A/"* Total industry - 85 y <"^ Total industry // v^ - 110 - 80 100 Manufacturing V 1 1 i i i I II 1 1 1 1 i i 1 1 1 1 1 1 1990 1992 1994 1996 1998 1988 1990 1992 1994 1996 1998 Industrial production, market groups Ratio scale,1992= 100 Ratio scale, 1992 = 100 _ Consumer goods Av _ 135 _ Intermediate products - 135 — Durable _ 125 125 115 Construction supplies i^\yJ^ ~r~f~*> ' - 115 105 105 Nondurable - 95 Vy^w7 Business supplies _ 95 1 V 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 I Ratio scale,1992 =100 Ratio scale, 1992 =100 Equipment 175 Materials — 175 160 160 145 145 Business - 130 130 115 - Durable goods - 115 ^~r ' " 100 100 Nondurable goods and energy _ Defense and space 85 85 V ^-v I II 1 1 1 1 1~^l 1 1 1 1 1 1 1 1 1990 1992 1994 1996 1998 1990 1992 1994 1996 1998 All series are seasonally adjusted. Latest series. December. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 Federal Reserve Bulletin • February 1999 Industrial production and capacity utilization, December 1998 Industrial production, index, 1992=100 Percentage change Category 1998 1998' Dec. 1997 to Sept.' Oct.' Nov.' Dec.f Sept.' Oct.' Nov.' Dec. P Dec. 1998 Total 131.9 132.6 132.5 132.8 -.4 .5 .2 1.9 Previous estimate 131.9 132.2 131.8 -.4 .2 -.3 Major market groups Products total2 124.1 125.2 124.9 125.0 -.6 .8 -.2 .1 -> 2 114.8 115.6 115.8 115.8 -1.2 .8 .2 .0 .4 Business equipment 167.4 169.5 168.2 168.1 .5 1.3 -.8 .0 7.4 Construction supplies 126.9 128.2 129.6 130.4 -.9 1.0 1.1 .6 5.0 1444 1445 144 6 145 3 0 0 5 1.4 Major industry groups 135.2 136.3 136.5 136.7 -.4 .8 2 2.3 159.6 161.1 160.9 161.5 -.1 1.0 -.1 3 4.8 Nondurable 110.6 111.2 111.8 111.8 -.7 .6 .5 .0 -.8 Mining 102.4 101.8 101.4 100.8 -1.3 -.6 -.4 -.6 -5.3 Utilities 120.3 117.4 113.9 115.7 .0 -2.4 -2.9 1.6 2.4 Capacity utilization, percen MEMO Capacity, per- 1997 1998 centage Average, Low, High, change, Dec. 1997 1967-97 1982 1988-89 to Dec. Sept.' Oct.' Nov.' Dec.P Dec. 1998 Total 82.1 71.1 85.4 83.4 81.3 81.4 81.0 80.9 5.0 Previous estimate 81.3 81.2 80.6 81.1 69.0 85.7 82.5 80.1 80.4 80.1 79.9 5.6 Advanced processing 80.5 70.4 84.2 81.4 79.5. 79.8 79.5 79.2 6.6 Primary processing 82.4 66.2 88.9 85.4 82.1 82.4 82.3 82.4 2.9 87.5 80.3 88.0 89.0 85.2 84.6 84.2 83.6 .9 Utilities .... 87.5 75.9 92.6 89.9 95.0 92.7 89.9 91.3 .8 NOTE. Data seasonally adjusted or calculated from seasonally adjusted 2. Contains components in addition to those shown, monthly data. r Revised, 1. Change from preceding month. p Preliminary. level more than 1 percentage point below its 1967-97 was also unchanged, but the output of other durable average. consumer goods rose 0.8 percent. The production of Industrial production rose at an annual rate of nondurable consumer goods slipped 0.1 percent, 3.2 percent in the fourth quarter after having pulled down by decreases in clothing and paper prodincreased at a 0.9 percent rate in the third quarter. ucts. Residential sales of both electricity and gas The gain was notable in manufacturing, where the increased. pace picked up from a 0.4 percent annual rate in the The production of business equipment was unthird quarter to 5.1 percent in the fourth quarter. Part changed after a 0.8 percent drop in November. of the acceleration reflected a rebound in motor vehi- December declines in the output of industrial equipcle assemblies after strikes had limited output in both ment (notably mining and oil and gas field equipthe second and third quarters; nonetheless, the output ment), transit equipment, and farm machinery (a of other manufacturing industries increased at an component of the "other equipment" group) were annual rate of 3.3 percent in the fourth quarter after offset by a gain in information processing equipment. having been little changed in the third quarter. Utility The output of construction supplies rose 0.6 peroutput fell 12.5 percent at an annual rate in the fourth cent after gains of about 1 percent in both October quarter as a result of unusually mild temperatures. and November. The production of business supplies increased 1.0 percent in December, more than reversing its loss in November. MARKET GROUPS The production of materials grew 0.5 percent after The output of consumer goods was unchanged in having been nearly flat in the preceding three months. December. The production of automotive products The production of durable goods materials increased Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization 105 0.6 percent as continued strength in the production of twelve months, computer output has expanded more semiconductors and computer parts offset weakness than 50 percent. The production of nondurable goods in other categories. The output of basic metals slipped was flat in December after having posted gains of 0.1 percent and is now 5 percent below the level of about Vi percent in the preceding two months. Gains December 1997. The production of nondurable mate- in petroleum and chemical products in December rials also edged down 0.1 percent because of weak- were offset by losses in printing, textiles, apparel, and ness in the production of paper and textiles. food; the decline in food production follows two consecutive monthly gains of about 1 Vi percent. Mining production continued to fall, being pulled down INDUSTRY GROUPS by the continued contraction in oil and gas extraction. The factory operating rate dropped 0.2 percentage Manufacturing output increased 0.2 percent, with point to 79.9 percent—more than 2Vi percentage gains in the production of durable goods and with no points below the level in December 1997. The averchange in the production of nondurable goods. The age rate in the fourth quarter, 80.2 percent, was output for most major durable goods industries unchanged from the third quarter. The utilization rate increased; the biggest advances came in electrical for advanced-processing industries remains below machinery, miscellaneous manufactures, and furni- its 1967-97 average, while the utilization rate for ture. The production of computers increased 2.2 per- primary-processing industries is at its long-term avercent, while the output of other industrial machinery age. The utilization rate for mines fell 0.6 percentage fell, leaving the combined industrial machinery and point in December and has fallen more than 5 percomputer industry up only 0.4 percent. In the past centage points during the past twelve months. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 Statement to the Congress Statement by Patrick M. Parkinson, Associate Direc- largely broken down. The key questions that must be tor, Division of Research and Statistics, Board of addressed by the Working Group are how to improve Governors of the Federal Reserve System, before the and ensure the effectiveness of private market disci- Committee on Agriculture, Nutrition, and Forestry, pline and whether it needs to be supplemented by U.S. Senate, December 16, 1998 additional government oversight. The Working Group has made considerable I appreciate this opportunity to present a progress progress toward developing a common understanding report on the studies that are being conducted by the of LTCM's relationships with its counterparties and President's Working Group on Financial Markets. As of the weaknesses in those counterparties' riskyou know, two separate studies are under way—one management practices that allowed LTCM to achieve on the implications of the operations of firms such as such an extraordinary degree of leverage. The most Long-Term Capital Management (LTCM) and their important counterparties were banks and securities relationships with their creditors and the other on firms subject to prudential oversight by banking reguthe oversight of over-the-counter (OTC) derivatives lators or by the Securities and Exchange Commission transactions. The studies are separate because the (SEC). The Federal Reserve, the Comptroller of the issues are, in fact, quite distinct. The central public Currency, and the SEC all have carefully reviewed policy issue raised by the LTCM episode is how the practices that entities they oversee have employed financial leverage can be constrained most effectively to manage counterparty risks vis-a-vis LTCM and in our market-based economy. To be sure, in some other highly leveraged firms. They have shared their cases LTCM achieved substantial leverage through findings with the other agencies that participate in the use of OTC derivatives, but in other cases it relied on Working Group's discussions. exchange-traded derivatives, securities loans, and Although the Working Group has not completed its securities repurchase agreements. The regulation of analysis of the creditors' risk-management practices, OTC derivatives raises a much wider range of issues, some tentative conclusions can be identified. LTCM many of which are unrelated to the LTCM episode. appears to have received very generous credit terms, Indeed, the LTCM episode has no obvious bearing even though it took an exceptional degree of risk. on what are arguably the central issues in the OTC Moreover, the weaknesses in risk-management pracderivatives study—whether or in what circumstances tices that were evident in the counterparties' relationgovernment oversight is appropriate to deter fraud or ship with LTCM were also evident, albeit to a lesser market manipulation and how best to provide legal degree, in their dealings with other highly leveraged certainty regarding the enforceability of OTC deriva- firms. In LTCM's case, counterparties obtained infortive contracts. mation from LTCM that indicated that it had securities and derivatives positions that were very large relative to its capital. However, few, if any, seem to LEVERAGED INSTITUTIONS AND THEIR have really understood LTCM's risk profile, espe- RELATIONSHIPS WITH THEIR CREDITORS cially its very large positions in certain illiquid markets. Instead, they appear to have made credit In our market-based economy, the primary mecha- decisions primarily on the basis of LTCM's past nism that regulates firms' risk-taking is the discipline performance and the reputation of its partners. provided by creditors and counterparties. If a firm LTCM's counterparties also appear to have placed seeks to achieve greater leverage, its creditors and too much reliance on their collateral agreements with counterparties will ordinarily respond by increasing LTCM. Those agreements generally provided for the the cost or reducing the availability of credit to the timely collateralization of credit exposures at the firm. The rising cost or reduced availability of funds current market values of the collateral and, in the provides a powerful economic incentive for firms case of derivatives, the current market values of the to restrain their risk-taking. In the case of LTCM, derivatives. However, they required little or no collathowever, private market discipline seems to have eral to cover the potential for future increases in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

107 exposures from changes in market values. More volatile and illiquid markets; (3) approaches to setimportant, LTCM's counterparties appear to have ting limits on counterparty credit exposures; and significantly underestimated those potential future (4) policies regarding the use of collateral to mitigate exposures. Their estimates simply did not make ade- counterparty credit risks. The Federal Reserve is also quate allowance for the extreme volatility and illi- reviewing its own examination procedures, particuquidity of financial markets that surfaced in August larly those relating to the assessment of the risks and September. Furthermore, they failed to take into posed by potential future credit exposures. account the potential for credit exposures to increase Improvements in creditors' risk-management capadramatically if LTCM had defaulted and they and bilities, developed at their own initiative and reinother counterparties had attempted to liquidate collat- forced by the actions of prudential supervisors, eral and replace derivatives contracts in amounts that should significantly strengthen the effectiveness of in some instances would have been very large rela- market discipline and thereby place more effective tive to the liquidity of the markets in which the constraints on leverage and risk-taking. The Working transactions would have been executed. Because the Group has also begun discussing whether additional counterparties did not take these risks into account, government oversight could effectively supplement they granted LTCM huge trading lines in a variety of private market discipline. The types of oversight products, and LTCM took advantage of those lines to under discussion include proposals intended to proachieve its exceptional degree of leverage. vide creditors, investors, or the general public with These weaknesses in risk-management practices additional information on risk-taking by highly leverclearly need to be addressed. The counterparties aged institutions. Also under discussion are proposthemselves should bear primary responsibility for als for more direct regulation of leverage through designing and implementing the necessary improve- broader application of capital requirements or margin ments. It is in their clear self-interest, as their experi- requirements. These discussions are still at an early ence with LTCM has demonstrated. Furthermore, not- stage, and at this point it is not yet clear whether the withstanding deficiencies in their current practices, Working Group's members will support additional these firms are the world leaders in risk management. government oversight or, if so, what specific forms of Their combination of technical expertise and of their oversight will be supported. understanding of financial markets is unsurpassed in the private sector and unmatched in government. Nonetheless, prudential overseers have a responsi- OVERSIGHT OF OTC DERIVATIVES bility to ensure that the processes that banks and securities firms utilize to manage risk are commensu- The Working Group's study of the appropriate overrate with the size and complexity of their portfolios sight of OTC derivatives is at an earlier stage than and responsive to changes in financial market con- its study of the implications of the LTCM episode. ditions. Moreover, prudential overseers can, and Nonetheless, the Working Group's staff have reached should, promote the adoption of sound practices agreement on the organization of the study and the throughout the financial sector through issuance of analytical approach that will be employed. supervisory guidance. In the case of U.S. banks, the In brief, the purpose of the study will be to assess Federal Reserve and the other banking regulators the need for government oversight to promote public have already made considerable progress in identify- policy objectives with respect to financial markets. ing sound practices for dealing with highly leveraged The policy objectives that seem relevant and that will firms and, more generally, in distilling the lessons be addressed in the study include (1) deterring market learned during the recent episodes of market volatil- manipulation; (2) deterring fraud and protecting cerity and incorporating those lessons in supervisory tain counterparties to financial transactions; (3) prostandards and procedures. moting the financial integrity of markets by limiting For its part, the Federal Reserve is well along potential losses from counterparty defaults; (4) proin developing supervisory guidance to promote the viding legal certainty with respect to the enforceabilneeded improvements in risk management. Among ity of contracts; (5) regulatory parity, that is, avoiding the areas to be addressed are (1) the credit approval significant competitive disparities across financial process and ongoing monitoring of credit quality, markets and institutions; (6) appropriately limiting including the availability of information on counter- systemic risk; and (7) harmonizing regulations interparties and its use in making credit decisions; (2) pro- nationally. cedures for estimating potential future credit expo- Whether government oversight of a particular sures, including stress testing to gauge exposures in financial market is necessary to achieve those objec- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 Federal Reserve Bulletin • February 1999 tives depends critically on the characteristics of the Even with a common understanding of the public market and the participants in the market. The Work- policy objectives and the characteristics of OTC ing Group's staff is developing a common under- derivatives, the Working Group may encounter diffistanding of OTC derivatives and the markets in which culty reaching consensus on the need for government they are traded, drawing on the existing knowledge oversight. Ultimately, judgments about the need for and expertise of its constituent agencies. Information oversight will be determined to an important degree is being developed on the instruments traded and by the views of the principals as to the most effective the size of their markets, the types of participants and role government can play in our market economy, the roles that they play, the market infrastructure and those views may well differ. Nonetheless, the (trading and settlement arrangements), and the exist- Working Group's study of OTC derivatives will ing forms of government oversight of participants prove of considerable value to the Congress if, as and instruments. anticipated, it lays out clearly the reasons for any differences of opinion. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

109 Announcements APPOINTMENTS OF NEW MEMBERS TO THE David A. Bochnowski, Chairman, President, and CEO, Peoples Bank, SB, Munster, Ind. THRIFT INSTITUTIONS ADVISORY COUNCIL Richard P. Coughlin, President and CEO, Stoneham Co-operative Bank, Stoneham, Mass. The Federal Reserve Board on December 23, 1998, announced the names of seven new members of its Thrift Institutions Advisory Council (TIAC) and designated a new president and vice president of the ADJUSTMENT TO THE DOLLAR AMOUNT THAT council for 1999. TRIGGERS ADDITIONAL DISCLOSURE The council is an advisory group made up of REQUIREMENTS UNDER REGULATION Z twelve representatives from thrift institutions. The panel was established by the Board in 1980 and The Federal Reserve Board on December 2, 1998, includes savings and loan, savings bank, and credit published its annual adjustment of the dollar amount union representatives. The council meets at least three that triggers additional disclosure requirements under times each year with the Board of Governors to Regulation Z (Truth in Lending) for mortgage loans discuss developments relating to thrift institutions, that bear fees above a certain amount. The Home the housing industry, mortgage finance, and certain Ownership and Equity Protection Act of 1994 bars regulatory issues. credit terms such as balloon payments and requires The new council president for 1999 is William A. additional disclosures when total points and fees pay- Fitzgerald, Chairman and CEO, Commercial Federal able by the consumer exceed $400 (to be adjusted Bank, Omaha, Nebraska. The new vice president is annually) or 8 percent of the total loan amount, F. Weller Meyer, President and CEO, Acacia Federal whichever is larger. Savings Bank, Falls Church, Virginia. The Board has adjusted the dollar amount from The seven new members, named for two-year $435 for 1998 to $441 for 1999 based on the annual terms that began January 1, are the following: percentage change reflected in the consumer price index that is in effect on June 1. James C. Blaine, President, State Employees' Credit Union, Raleigh, N.C. Lawrence L. Boudreaux III, President and CEO, Fidelity Homestead Association, New Orleans, La. DECISION ON THE LEGAL DISPARITIES BETWEEN FEDERAL RESERVE BANKS AND Babette E. Heimbuch, President and CEO, First Federal Bank of California, FSB, Santa Monica, Calif. PRIVATE-SECTOR BANKS IN THE PRESENTMENT AND SETTLEMENT OF CHECKS Thomas S. Johnson, Chairman, President, and CEO, GreenPoint Bank, Manhattan, N.Y. The Federal Reserve Board on December 9, 1998, William A. Longbrake, Executive Vice President and announced that it had decided not to make regulatory Chief Financial Officer, Washington Mutual Bank, Seattle, Wash. changes with respect to the remaining legal disparities that exist between Federal Reserve Banks and Kathleen E. Marinangel, Chairman, President, and CEO, private-sector banks in the presentment and settle- McHenry Savings Bank, McHenry, 111. ment of checks. The Board has concluded that the Anthony J. Popp, President and CEO, Marietta Savings costs associated with further reducing these legal Bank, Marietta, Ohio disparities would outweigh any efficiency gains in the payments system. Other TIAC members whose terms continue The decision is based on the Board's analysis of through 1999 are the following: comments received on the effects of its 1994 same- Garold R. Base, President and CEO, Community Credit day settlement rule and on whether further changes in Union, Piano, Tex. this area are warranted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

110 Federal Reserve Bulletin • February 1999 EXEMPTION THRESHOLD FOR DEPOSITORY of a banking organization's recorded assets, liabili- INSTITUTIONS REQUIRED TO REPORT DATA ties, and equity, and corresponding regulatory capital UNDER THE HMD A levels. The agencies are issuing the interim guidance to The Federal Reserve Board on December 18, 1998, explain how derivatives should be reported in the announced that the exemption threshold for deposi- bank Reports of Condition and Income (Call Report), tory institutions that are required to report data under the Consolidated Financial Statements for Bank the Home Mortgage Disclosure Act (HMDA) will Holding Companies (FR Y-9C), and the Thrift Finanremain at $29 million. cial Report (TFR), and treated under the agencies' Under the revision to the Board's staff commen- existing capital standards after a banking organizatary to Regulation C (Home Mortgage Disclosure), tion adopts FAS 133. depository institutions with assets totaling $29 million or less as of December 31, 1998, are not required to collect HMDA data in 1999. Regulatory Reporting The Board is required to adjust annually the assetsize exemption threshold for depository institutions For purposes of the Call Report, FR Y-9C, and TFR, based on the annual percentage change in the con- changes in the fair value of many derivatives are sumer price index. The adjustment reflects changes to be reflected in net income. However, FAS 133 for the twelve-month period ending in November requires that the effective portion of the change in the 1998. fair value of derivatives used in certain types of hedges (cash flow hedges) be excluded from net income and reflected on the balance sheet in a sepa- INTERIM REGULATORY REPORTING AND rate component of equity (referred to as "accumu- CAPITAL GUIDANCE ON FAS 133 lated other comprehensive income" in FAS 133).' For banks and bank holding companies, until any The Reports Task Force of the Federal Financial revisions are made to the relevant regulatory reports, Institutions Examination Council (FFIEC), acting those accumulated changes in fair value should be under delegated authority, is announcing its decisions reported on the same Call Report and FR Y-9C lines regarding the appropriate regulatory reporting treat- that are used to report net unrealized holding gains ment for derivatives. The Office of Thrift Supervision (losses) on available-for-sale securities. For savings and the Federal Reserve Board have reached similar associations, those accumulated changes in fair value reporting decisions for the savings associations and should be reported on the same TFR line that is used bank holding companies that they supervise. to report other components of equity capital. Additionally, the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Regulatory Capital Supervision (the agencies) are describing the appropriate interim regulatory capital treatment of deriva- Until the agencies determine otherwise, the separate tives for banks, bank holding companies, and savings component of equity resulting from cash flow hedges associations (collectively, banking organizations). should not be included in (that is, should be excluded The agencies are taking these actions in response from) regulatory capital. Additionally, the existing to the June 1998 issuance of Statement of Financial risk-based capital treatment for derivatives remains Accounting Standards No. 133, "Accounting for in effect, pending further review. In other words, Derivative Instruments and Hedging Activities" recording a derivative on the balance sheet under (FAS 133). Although FAS 133 does not become FAS 133 will not change the risk-weighted asset effective until fiscal years beginning after June 15, amount for that derivative. The implementation of 1999, banking organizations may adopt the standard FAS 133, however, may still affect an institution's early. This new accounting standard requires that all regulatory capital. Changes in the fair value of derivatives be recorded on the balance sheet as assets derivatives that are recognized in net income will be or liabilities at their fair value. In addition, it signifi- included in undivided profits (retained earnings for cantly changes the accounting for derivatives used for hedging purposes and for financial instruments 1. In general, the effective portion of a hedge is best described as with certain types of embedded derivatives. These the change in fair value of the derivative that offsets the change in new accounting requirements may affect the amount expected cash flows on the hedged item. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 111 bank holding companies and savings associations), of Regulation M (Consumer Leasing). Comments which is a component of tier 1 capital. Furthermore, were requested by January 22, 1999. the on-balance-sheet reporting of derivatives may The Federal Reserve Board on December 2, 1998, affect the total assets reported by banking organiza- published proposed revisions to the official staff comtions with derivatives, directly affecting the institu- mentary that applies and interprets the requirements tion's leverage ratio. of Regulation Z (Truth in Lending). Comments were The agencies are evaluating the effect of FAS 133 requested by January 22, 1999. on regulatory reporting and capital in conjunction The Federal Reserve Board is requesting comwith other supervisory issues. However, pending the ments on proposed amendments to Regulation CC completion of that analysis, banking organizations (Availability of Funds and Collection of Checks) to should follow the regulatory reporting guidance and temporarily extend one-year merger transition procapital treatment summarized above and more fully visions to facilitate banks' efforts for Year 2000 described in the attachment.2 readiness. The deadline for comments, originally January 4, 1999, was extended to February 1, 1999. The Federal Reserve Board on December 7, 1998, ISSUANCE OF A UNIFORM INTERAGENCY requested comments on a proposed rule that will POLICY STATEMENT ON INTERCOMPANY TAX require the domestic and foreign banking organiza- ALLOCATION AGREEMENTS FOR BANKING tions supervised by the Federal Reserve to develop ORGANIZATIONS AND SAVINGS ASSOCIATIONS and maintain "Know Your Customer" programs. Comments were requested by March 8, 1999. The Federal Reserve Board, along with the Office of The Federal Reserve Board on December 16, 1998, the Comptroller of the Currency, the Federal Deposit requested comments on the benefits and drawbacks Insurance Corporation, and the Office of Thrift of providing settlement finality on the morning of the Supervision (the agencies) issued a uniform intersettlement day for automated clearinghouse credit agency policy statement regarding intercompany tax transactions processed by the Federal Reserve. Comallocation agreements for banking organizations and ments were requested by March 18, 1999. savings associations that file an income tax return as members of a consolidated group. The policy statement was effective November 23, 1998. ENFORCEMENT ACTIONS The statement is intended to provide guidance to institutions regarding the allocation and payment of The Federal Reserve Board on December 4, 1998, taxes among a bank holding company and its deposiannounced the issuance of a combined order to cease tory institution subsidiaries. In general, intercorpoand desist and order of assessment of civil money rate tax settlements between an institution and its penalties against Putra Masagung and P.T. Gunung parent company should be conducted in a manner Agung, Ltd. Corporation, Jakarta, Indonesia, and an that is no less favorable to the institution than if it order of prohibition against Mr. Masagung. were a separate taxpayer. Mr. Masagung and P.T. Gunung Agung, without The policy statement is the result of the agencies' admitting to any allegations, consented to the issuongoing effort to implement section 303 of the Riegle ance of the order in connection with allegations that Community Development and Regulatory Improve- Mr. Masagung and P.T. Gunung Agung violated ment Act of 1994, which requires the agencies to the Bank Holding Company Act as a result of work jointly to make uniform their regulations and P.T. Gunung Agung's acquisition of a beneficial ownguidelines implementing common statutory or superership interest in The San Francisco Company, visory policies. San Francisco, California, a registered bank holding company. The San Francisco Company owns the PROPOSED ACTIONS Bank of San Francisco. The order required Mr. Masagung and P.T. Gunung The Federal Reserve Board on December 1, 1998, Agung to sell their interests in The San Francisco published proposed revisions to the official staff com- Company through a voting trust. The order also mentary that applies and interprets the requirements requires Mr. Masagung to pay a civil money penalty of $250,000 and P.T. Gunung Agung to pay a civil 2. The attachment is available on request from Publications Ser- money penalty of $200,000. vices, Mail Stop 127, Board of Governors of the Federal Reserve The issuance of the order by the Board does not System, Washington, DC 20551 and on the Board's web site (http:// www.federalreserve.gov) under "Press Releases—General." relate in any manner to the condition or activities Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

112 Federal Reserve Bulletin • February 1999 of the Bank of San Francisco, and the sale by Bank of New York and the Superintendent of Banks Mr. Masagung and P.T. Gunung Agung of their inter- of the State of New York. ests in The San Francisco Company should not affect P.T. Ekspor Impor Bank Indonesia (Persero) and the bank's operations. the agency paid a $50,000 penalty to the Federal Reserve Board and paid $50,000 to New York State. The Federal Reserve Board on December 7, 1998, announced the execution of a written agreement by The Federal Reserve Board on December 16, 1998, and among the Southern Security Bank, Hollywood, announced the issuance of an order of prohibition Florida, the Federal Reserve Bank of Atlanta, and the against Fred J. Smilek, a former officer of the Chemi- State Comptroller and Banking Commissioner of the cal Bank, New York, New York, a former state mem- State of Florida. ber bank. Mr. Smilek, without admitting to any allegations, The Federal Reserve Board on December 14, consented to the issuance of the order because of his 1998, announced the issuance of a cease and desist alleged misappropriation of approximately $275,000 order against the Zia New Mexico Bank, Tucum- during the period when he was an officer of the bank. cari, New Mexico. The order addresses the bank's Year 2000 readiness. The Federal Reserve Board on December 22, 1998, announced the execution of a written agreement by The Federal Reserve Board on December 16, 1998, and among Adairsville Bancshares, Inc., Adairsville, announced the issuance of a final decision and order Georgia; the Bank of Adairsville, Adairsville, Georof prohibition and restitution against Ricardo gia; the Federal Reserve Bank of Atlanta; and the Carrasco, a former employee of the New York Branch Banking Commissioner of the State of Georgia. The of BankBoston International, Coral Gables, Florida. written agreement includes provisions addressing The order prohibits Mr. Carrasco from participating Year 2000 readiness. in the conduct of the affairs of any financial institution or holding company and requires him to make restitution of $73 million to reimburse BankBoston DISCONTINUATION OF TWO STATISTICAL International for losses he caused in connection with TABLES IN THE FEDERAL RESERVE BULLETIN certain overdraft accounts. Publication of table 3.26, "Discount Rates of Foreign The Federal Reserve Board on December 16, 1998, Central Banks," and table 3.27, "Foreign Short-Term announced the issuance of an order of assessment of Interest Rates," in the statistical appendix of the a civil money penalty against Kassahum Kebede, a Federal Reserve Bulletin will be discontinued as former employee and institution-affiliated party of of the March 1999 issue. This change has been the Bankers Trust Company, New York, New York, a prompted by the effects of the introduction of the state member bank. euro on the structure of markets. Data for December Mr. Kebede, without admitting to any allegations, 1998 appear in these tables on page A61 of this issue. consented to the issuance of the order in connection with his involvement in the recording of leveraged derivative transactions on the books and records of PUBLICATION OF THE DECEMBER 1998 UPDATE the Bankers Trust Company. Mr. Kebede paid a fine TO THE BANK HOLDING COMPANY of $15,000. SUPERVISION MANUAL The Federal Reserve Board on December 16, 1998, The December 1998 update to the Bank Holding announced the issuance of an order of assessment of Company Supervision Manual, Supplement No. 15, a civil money penalty against the P.T. Ekspor Impor has been published and is now available. The Manual Bank Indonesia (Persero), Jakarta, Indonesia, and the comprises the Federal Reserve System's bank holdbank's New York Agency. ing company supervisory and inspection guidance. P.T. Ekspor Impor Bank Indonesia (Persero) and The new supplement includes the following. the agency, without admitting to any allegations, consented to the issuance of the order in connection 1. New or supplemental examiner supervisory with allegations that they failed to comply with the guidance for identifying and evaluating the adequacy terms of the written agreement that they entered into and extent of risk management and its associated on December 29, 1994, with the Federal Reserve systems, including the needed policies, procedures, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 113 and internal controls. Such supervisory guidance is entered into as principal, including derivatives provided for commercial lending standards, private contracts relating to a commodity that is traded banking activities, internal credit-rating systems (that on an exchange is, at large, sound institutions), information tech- • Investment transactions as principal including nology utilization, internal audit function and its such transactions as underwriting and dealing in outsourcing, and involvement in secondary market bank-eligible government obligations and money activities. Each section includes the bank hold- market instruments; investing and trading activiing company inspection policies, objectives, and ties involving foreign exchange; swaps and cerprocedures. tain derivative and similar contracts based on 2. The Board's 1998 adoption of changes to the a rate, price, financial asset, nonfmancial asset, capital adequacy standards for state member banks or group of assets, other than a bank-ineligible and bank holding companies. The changes consist of security the following: • Other examples of nonbanking activities that • Amendment effective August 25, 1998, to the were previously approved only by Board order risk-based measure that applies to holding equity before April 1997, such as the issuance and sale securities, whereby up to 45 percent of pretax at retail of consumer payment instruments; supnet unrealized holding gains on certain available- port services, such as printing and selling MICRfor-sale securities can be included in tier 2 encoded items; and the buying and selling of capital bullion and related activities. • Increase adopted August 4, 1998 (for the riskbased capital and leverage measures), from A more detailed summary of changes is included 50 percent to 100 percent of tier 1 capital for the with the update package. The Manual's new or amount of intangible servicing assets (mortgage revised sections include inspection guidance and servicing assets and nonmortgage servicing inspection objectives and procedures. The Manual assets) and purchased credit-card relationships and updates, including pricing information, are availthat may be included in regulatory capital1 able from Publications Services, Mail Stop 127, • Adoption on May 29, 1998, of the tier 1 leverage Board of Governors of the Federal Reserve Syscapital standard that provides for a minimum tem, Washington, DC 20551 (or charge by facsimile: ratio of tier 1 capital to total assets of 3 percent if 202-728-5886). The Manual is also available on the a bank holding company has been rated either a Board's public web site (www.federalreserve.gov/ composite "1" under the Federal Reserve's bank boarddocs/SupManual/). holding company rating system (BOPEC), or if it has implemented the Board's risk-based capital market risk measure. CHANGES IN BOARD STAFF 3. Changes emanating from the Federal Financial Institutions Examination Council's (FFIEC's) April The Board of Governors announced the following 1998 Statement on Investment Securities and End- officer actions, effective January 4, 1999: User Derivatives Activities that replaced the 1992 FFIEC Supervisory Policy Statement on Securities In the Office of Board Members, the promotion of Activities. Winthrop P. Hambley, from Special Assistant to 4. Changes to several sections involving the "laun- the Board to Deputy Congressional Liaison. dry list" of nonbanking activities for Regulation Y In the Division of Research and Statistics, a change (Bank Holding Companies and Change in Bank Con- in title of David S. Jones, from Assistant Directrol), effective in April 1997. The new or revised tor and Chief to Senior Adviser. sections include such activities as the following: In the Division of Reserve Bank Operations and • Providing to customers as agent certain other Payment Systems, the appointments of Jeff transactional services with respect to swaps and Stehm and Kenneth D. Buckley as Assistant similar transactions, bank-eligible transactions, Directors. certain permissible investment transactions Mr. Stehm joined the Boards's staff in 1983. He 1. A further sublimit of 25 percent of tier 1 capital applies to the will assume responsibility for the newly formed aggregate amount of nonmortgage servicing assets and purchased Retail Payments Section and the expanded Wholesale credit-card relationships. The valuation of mortgage servicing assets, Payments Section. He received a B.S. and an M.A. nonmortgage servicing assets, and purchased credit-card relationships is also subject to a 10 percent discount. from Iowa State University. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

114 Federal Reserve Bulletin • February 1999 Mr. Buckley joined the Board's staff in 1988. He Also in the Division of Reserve Bank Operations will assume responsibility for the Information Tech- and Payment Systems, David L. Robinson, Deputy nology and Systems Section, the Building Planning Director for Finance and Control, and Earl G. Hamil- Section, and the Protection Function. He received a ton, Assistant Director, retired, effective January 1, B.A. from William Paterson College, an M.S. from 1999. • the Medical College of Virginia, and an M.S. from Virginia Polytechnic Institute. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

115 Minutes of the Federal Open Market Committee Meeting Held on November 17, 1998 A meeting of the Federal Open Market Committee Messrs. Madigan and Slifman, Associate Directors, was held in the offices of the Board of Governors of Divisions of Monetary Affairs and Research and Statistics respectively, Board of Governors the Federal Reserve System in Washington, D.C., on Tuesday, November 17, 1998, at 9:00 a.m. Mr. Reinhart, Deputy Associate Director, Division of Monetary Affairs, Board of Governors Present: Mr. Greenspan, Chairman Mr. Whitesell, Assistant Director, Division of Mr. McDonough, Vice Chairman Monetary Affairs, Board of Governors Mr. Ferguson Mr. Gramlich Ms. Garrett, Economist, Division of Monetary Affairs, Mr. Hoenig Board of Governors Mr. Jordan Mr. Kelley Mr. Kumasaka, Assistant Economist, Division of Mr. Meyer Monetary Affairs, Board of Governors Ms. Minehan Mr. Poole Ms. Low, Open Market Secretariat Assistant, Ms. Rivlin Division of Monetary Affairs, Board of Governors Messrs. Boehne, McTeer, Moskow, and Stern, Alternate Members of the Federal Open Market Mr. Moore, First Vice President, Federal Reserve Committee Bank of San Francisco Messrs. Broaddus, Guynn, and Parry, Presidents of Messrs. Beebe, Eisenbeis, Ms. Krieger, Messrs. Lang, the Federal Reserve Banks of Richmond, and Rosenblum, Senior Vice Presidents, Federal Atlanta, and San Francisco respectively Reserve Banks of San Francisco, Atlanta, New York, Philadelphia, and Dallas respectively Mr. Bernard, Deputy Secretary Messrs. Evans, Fuhrer, Hetzel, Miller, and Sellon, Ms. Fox, Assistant Secretary Vice Presidents, Federal Reserve Banks of Mr. Mattingly, General Counsel Chicago, Boston, Richmond, Minneapolis, and Mr. Prell, Economist Kansas City respectively Messrs. Cecchetti, Dewald, Lindsey, Simpson, By unanimous vote, the minutes of the meeting of Sniderman, and Stockton, Associate Economists the Federal Open Market Committee held on September 29, 1998, were approved. The Manager of the Mr. Fisher, Manager, System Open Market Account System Open Market Account reported on recent Mr. Winn, Assistant to the Board, Office of Board developments in foreign exchange markets. There Members, Board of Governors were no open market operations in foreign currencies for the System's account in the period since the Ms. Johnson, Director, Division of International previous meeting, and thus no vote was required of Finance, Board of Governors the Committee. The Manager also reported on developments in Mr. Ettin, Deputy Director, Division of Research and domestic financial markets and on System open mar- Statistics, Board of Governors ket transactions in government securities and federal agency obligations during the period September 29, Messrs. Alexander and Hooper, Deputy Directors, Division of International Finance, Board of 1998, through November 16, 1998. By unanimous Governors vote, the Committee ratified these transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

116 Federal Reserve Bulletin • February 1999 The Manager informed the Committee that he net exports had declined further, although at a planned to initiate outright purchases in the second- reduced pace. Growth in employment had slowed ary market of inflation-indexed Treasury securities. appreciably on balance during the summer and early In the past, the System had been acquiring holdings fall months, but tight conditions had persisted in most of such securities in Treasury auctions in exchange labor markets. Recent wage and price developments for maturing nominal obligations. In the Manager's had been mixed. opinion, secondary market transactions would pro- Growth in nonfarm payroll employment slowed vide a helpful addition to the current range of assets appreciably in September and October. The slowing that the System normally purchased, especially in a partly reflected sizable job losses in manufacturing, period of little or no increase in Treasury debt. Some which has been substantially affected since earlier members expressed concern that sizable purchases of in the year by rising foreign competition stemming indexed securities by the central bank might impair from the crisis in Asia. Outside of manufacturing, the liquidity of the market and limit the usefulness of increases in employment in the service-producing these obligations as indicators of inflationary expecta- industries moderated somewhat over the two months, tions. It was noted, however, that relatively limited although gains in finance, insurance, and real estate System purchases of such securities were contem- were relatively robust. The civilian unemployment plated so that the market was not likely to be signifi- rate remained near 4'/2 percent during the two cantly affected. Moreover, the System's participation months. could contribute to a more active and liquid second- Industrial output had declined slightly in recent ary market. months after having rebounded in August when pro- In further discussion of the wording of the operat- duction resumed at General Motors following settleing paragraph of its directive, the Committee at this ment of the labor strike. Outside the motor vehicle meeting focused on proposals by members to sim- sector, manufacturing output edged lower in recent plify and clarify the sentence relating to the symme- months after having decelerated markedly earlier in try or asymmetry of the directive as it applied to the year. Weakness in the manufacturing and mining possible future policy changes. Time constraints did sectors was associated in large measure with the not permit the Committee to complete its delibera- fallout from the turmoil in Asia, its repercussions on tions, and it agreed to continue its discussion at a a number of U.S. trading partners, and the related later meeting. softness in world oil markets. The downward trend in The Committee then turned to the economic and the utilization of capacity in manufacturing left the financial outlook and the implementation of mone- factory operating rate appreciably below its level of tary policy over the intermeeting period ahead. A late last year. summary of the economic and financial information Personal consumption expenditures rose consideravailable at the time of the meeting and of the Com- ably further during the third quarter, though at a mittee's discussion is provided below, followed by much slower pace than that recorded earlier in the the domestic policy directive that was approved by year. Retail sales were down slightly on balance the Committee and issued to the Federal Reserve during the quarter, reflecting a sharp drop in sales of Bank of New York. Committee decisions to amend motor vehicles associated with the work stoppage the Authorization for Domestic Open Market Opera- at General Motors. However, the settlement of that tions and to renew certain swap line agreements also strike and the resumption of production led to an are summarized below. upturn in motor vehicle sales in August and a sizable The information reviewed at this meeting sug- advance in September. A large further gain in such gested some moderation in the expansion of eco- sales contributed to a sharp rise in overall retail sales nomic activity from a brisk pace during the summer in October. Consumer confidence retreated further in months. Although growth of economic activity in the October, but according to a major survey it turned up third quarter apparently about matched the pace in in early November, albeit to a level still somewhat the first half of the year, a large buildup of nonfarm below its peak earlier in the year. inventories had accounted for a significant portion of Available indicators pointed to a pickup in busithe persisting strength of the expansion during the ness capital spending after a third-quarter lull, owing quarter. Growth in consumer spending had been well to some extent to a recovery from the General Motors maintained during the summer months, and housing strike. Business investment expenditures during the activity had remained at a high level. In other major summer were held down in part by the strike-related sectors of the economy, business fixed investment decline in fleet sales of new motor vehicles. In addihad softened after having surged in the first half, and tion, spending for other types of business equipment Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 117 grew somewhat more slowly in the third quarter after plies and reduced service transactions. Decreases in having expanded at an extraordinary pace earlier in exports partly reflected weakness in foreign econothe year. Orders received by U.S. equipment makers mies. In the third quarter, growth in economic activcontinued to trend up through September. In contrast, ity slowed on average in the major industrial counnonresidential building activity apparently fell some- tries, other than Japan, from the average pace in the what further in the third quarter. While the construc- first half of the year and contracted for a fourth tion of lodging facilities surged and the construction consecutive quarter in Japan. There were widespread of office space persisted at a high level, there was a indications in the industrial nations, particularly from decline in other commercial building, which includes surveys of business and consumer confidence, that retail stores and warehouses, industrial structures, some slowing was persisting into the fourth quarter. and institutional buildings. The availability of financ- Elsewhere, the available evidence pointed to some ing for various types of construction appeared to improvement in economic trends in a number of lessen substantially in late summer, and financing Asian nations, but the economies of several sizable costs rose for many borrowers. South American countries appeared to have weak- In the residential sector, housing sales and starts ened. Recent economic indicators for Mexico were remained quite strong, though below early summer mixed. highs. Housing activity showed signs of dropping off The performance of various measures of wages from peak levels during the latter part of the summer, and prices was uneven in recent months. The most but the decline in mortgage rates this fall produced recently available employment cost index indicated an upturn in several indicators of demand for single- that hourly compensation of private industry workers family housing, including a rebound in a survey posted a sizable increase in the third quarter. Howindex of homebuying conditions. Multifamily hous- ever, gains in average hourly earnings moderated ing starts increased considerably in the third quarter, considerably in September and October. The increase but since late summer the availability of financing for in the employment cost index over the past year was multifamily building projects has tended to diminish appreciably larger than in the previous year, while and interest costs to rise. the advance in average hourly earnings moderated Business inventory accumulation was sizable in somewhat. the third quarter, and stocks-sales ratios rose to Consumer energy prices rose appreciably in Octouncomfortable levels in some industries that were ber, but they were still down sharply from a year being adversely affected by the nation's growing earlier and on balance limited the increase of overall trade deficit. In manufacturing, however, stockbuild- consumer prices over the past year. Core consumer ing slowed during the summer months and the stock- prices moved up at a faster pace than overall conshipment ratio was unchanged at a level just above sumer prices in recent months and over the past year, its average for the past year. At the wholesale level, reflecting sizable increases in the prices of tobacco, a rapid increase during the third quarter lifted the used cars and trucks, and services. At the producer inventory-sales ratio for this sector to its highest level, prices of finished goods edged up in recent level since 1986; nearly half the rise was the result of months but were down on balance over the past year; a buildup of farm products that was related in part excluding food and energy items, producer prices to an early harvest, but wholesalers of machinery, rose somewhat over the past year. chemicals, and metals and minerals also apparently At its meeting on September 29, 1998, the Comexperienced undesired buildups of stocks. Retail mittee adopted a directive that called for implementinventories excluding motor vehicles accumulated at ing conditions in reserve markets that were consistent a slow pace during the summer, and the inventory- with a one-quarter percentage point decrease in the sales ratio for this category remained well within the federal funds rate to an average of around 514 pernarrow range of the past year. cent. The Committee also decided to adopt an asym- The nominal deficit on U.S. trade in goods and metric directive that was tilted toward ease to highservices widened to some extent in July-August from light its view that the risks to the economic expanits second-quarter average. The value of imports in sion were mainly on the downside and to underscore the July-August period, though rising appreciably in its readiness to respond promptly to developments August, was somewhat below the second-quarter that threatened the sustainability of the expansion. average, with most of the decline involving automo- The reserve conditions associated with this directive tive products and oil. The value of exports fell some- were expected to be consistent with some moderawhat over the two months, largely reflecting declines tion in the growth of M2 and M3 over subsequent in exports of automotive products and industrial sup- months. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 Federal Reserve Bulletin • February 1999 Following the meeting, open market operations an important extent by increased demand for safe and were directed initially toward implementing a slight liquid assets in a period of substantial turmoil in easing in the degree of pressure on reserve positions. financial markets that led to shifts of funds by house- The federal funds rate, responding to quarter-end holds out of investments in equities and lower-rated pressures and uncertainties created by shifting fund- corporate debt. The advance in M2 during October ing patterns in volatile financial markets, tended at probably also was boosted by the decline in its opporfirst to average somewhat above the intended rate of tunity cost resulting from the effects of the System's 5lA percent despite a relatively liberal provision of easing actions on market interest rates and the reserves by the System. Strains in financial markets unusual softness in Treasury bill rates during much of continued to mount, with intermediaries and final the month. The even faster increase in M3 in October investors much more cautious about risks and lever- also reflected both inflows to institution-only money age and much more eager to hold very liquid assets. market mutual funds that were stimulated by declines These developments in turn disrupted flows of funds in short-term market rates and bank efforts to fund in a number of financial markets. On October 15, the heavy demand for loans arising in part from the Committee discussed these developments and their deflection of demand for funding from securities implications for the domestic economy, and the mem- markets. For the year through October, both aggrebers supported the Chairman's suggestion that, in gates rose at rates well above the Committee's ranges keeping with the directive issued at the September 29 for the year. Expansion of total domestic nonfinancial meeting, he instruct the Federal Reserve Bank of debt moderated slightly in recent months after having New York to reduce the intended federal funds rate picked up earlier in the year. by a further 25 basis points to around 5 percent. On The staff forecast prepared for this meeting continthe same day, the Board of Governors approved a ued to point to considerable slowing in the expansion reduction in the discount rate from 5 percent to of economic activity to a pace appreciably below the 4% percent. These actions were taken in the light estimated growth of the economy's potential, but the of growing indications of caution by lenders and expansion was expected to pick up later to a rate unsettled conditions in financial markets more gener- more in line with that potential. Subdued expansion ally that were deemed likely to restrain aggregate of foreign economic activity and the lagged effects of demand in the future. Subsequently, trading in the the earlier rise in the foreign exchange value of the federal funds market remained relatively volatile but dollar were expected to place considerable, albeit the federal funds rate averaged close to its lower diminishing, restraint on the demand for U.S. exports intended level. In financial markets more generally, for some period ahead and to lead to further substitustrains gradually moderated after mid-October and tion of imports for domestic products. Domestic prosizable issuance of securities resumed in a number of duction would also be held back for a time by the key markets, but uncertainty remained high and rela- efforts of firms to bring inventories into better baltively illiquid conditions persisted. In the stock mar- ance with the anticipated moderation in the trajectory ket, share prices dropped in the weeks following the of final sales. In addition, private final demand would September meeting, but the market rallied strongly be restrained a bit by the tighter terms and conditions after mid-October and key market indexes posted that were now imposed by many types of lenders and sizable gains on balance over the intermeeting period. by the anticipated waning of positive wealth effects In foreign exchange markets, the trade-weighted stemming from earlier increases in equity prices. value of the dollar fell moderately over the period in Pressures on labor resources were likely to ease relation to other major currencies. The largest decline somewhat as the expansion of economic activity occurred in relation to the Japanese yen and appeared moderated, but inflation was projected to rise considto reflect efforts to reduce speculative exposure to erably over the year ahead in association with a that currency; changes in the value of the dollar partial reversal of the decline in energy prices this against other major currencies were mixed, likely year. fostered by disparate interest rate and economic In the Committee's discussion of current and prodevelopments. The dollar also fell somewhat in terms spective economic developments, members observed of a broad index of currencies of other countries that that indications of some moderation in the pace of the are important trading partners of the United States, economic expansion were still quite limited, but they including the developing nations of Latin America generally agreed that the economy appeared to be and Asia. headed toward slower growth. Relatively tight profit M2 and M3 posted very large increases in Septem- margins and less ebullient growth in wealth were ber and October. The gains appeared to be induced to among the factors expected to be damping invest- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 119 ment and consumption. In addition, even apart from also had tightened their credit terms and standards the possibility of further financial contagion in Latin for most new loans and lines of credit. As a result, America, the weakness in foreign economies contin- financing generally had become less available and ued to be seen as a persistent source of restraint on more expensive for higher-risk business borrowers. demand in a number of domestic sectors, notably In light of these developments, members believed manufacturing, agriculture, and some extractive busi- that the continuing fragility of financial markets and nesses. Although the financial markets had improved the increased scrutiny of the credit quality of borrowsubstantially in recent weeks, overall credit condi- ers, though the latter was in some respects a welcome tions were still relatively unsettled and a possible development, posed a considerable downside risk to reintensification of difficulties in credit markets con- the expansion. The very recent behavior of equity stituted an important downside risk to the expansion. prices was difficult to explain satisfactorily, and The members recognized that not all the risks were in potential movements in those prices posed risks on one direction, however. The economy had demon- both sides of the most likely forecast: A future substrated remarkable resilience and strength over recent stantial increase would bolster wealth and spending, years, and in the view of some members the rapid but a sharp decline also could not be ruled out— growth of liquidity and bank credit suggested that especially if, as seemed quite possible, added financial conditions were not excessively tight. With increases in prices were not supported by robust regard to the outlook for inflation, members noted increases in profits. that while statistical and anecdotal information Foreign economic and financial developments were pointed to persistently tight labor markets in much of another important source of downside risk and uncerthe nation, price inflation remained subdued. Indeed, tainty. The economic and financial turmoil in Asia even though the recent evidence relating to prices had spread to numerous other nations around the was somewhat mixed, several broad measures of world and to an extent to the United States. While prices suggested that inflation might be on a declin- economic weakness in many U.S. trading partners ing trend. likely would continue to have adverse effects on net In the course of the Committee's discussion, the U.S. exports, the potential extent of such weakness members gave considerable attention to recent finan- was subject to considerable uncertainty as were the cial developments and their implications for the eco- associated repercussions on financial markets. As nomic outlook. Financial markets clearly had calmed they had at previous meetings, members referred to markedly since the System's easing actions in mid- numerous anecdotal reports of heightened competi- October, though they were still atypically volatile. tion from foreign producers that was curbing the Risk spreads had narrowed substantially and other sales of many domestic manufacturers, notably in the measures of financial market performance also sug- steel industry, and in some other industries and agrigested that risk aversion and the related desire for culture. Moreover, the low level of world oil prices, liquidity had diminished appreciably. Markets for which appeared to be importantly associated with new issues had reopened for many borrowers, and diminished demand from Asian countries, was retardstock market prices had posted large gains. Nonethe- ing production and reducing revenues in the U.S. less, strains and weaknesses in financial markets had energy and related industries. On the positive side, not disappeared—many risk spreads were still at members commented that economic and financial unusually high levels—and the markets remained conditions appeared to have stabilized or improved a quite sensitive to unanticipated developments. Mem- bit in a number of Asian nations, though the recesbers also noted that the improvement in debt markets sion in Japan showed little evidence of coming to an appeared to have come to a halt most recently and end, and the outlook for Brazil seemed a little more that renewed strains had emerged in some short-term promising. However, economic and financial condidebt markets, though the latter probably were related tions in Brazil and a number of other countries in large measure to concerns about year-end pres- remained very fragile. The recent depreciation of the sures in the money markets. Indeed, efforts by lend- dollar, while perhaps putting some upward pressure ers and borrowers to position for year-end financial on prices, would damp the deterioration in net U.S. statements were likely to contribute considerably exports. to keeping market conditions unsettled over coming In their review of recent and prospective developweeks. Lending activity at banks had increased ments across the nation and in key sectors of the sharply in recent months as many borrowers found economy, members referred to scattered indications other sources of funds less receptive or unavailable of some slowing in private domestic final demands. and turned to backup lines for credit, but banks In the important consumer sector, however, evidence Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 Federal Reserve Bulletin • February 1999 of weakening growth in expenditures was quite lim- reinforce business efforts to bring the growth of their ited. The most recent anecdotal reports pointed to inventories into better alignment with that of their solid growth in most though not all regions of the sales, and such a development should contribute to country, and retail sales posted a strong advance in the projected slowing in overall economic activity in October. Moreover, consumer sentiment remained at coming quarters. It was unclear at this point to what a high level, albeit below its peak earlier in the year extent year 2000 concerns might stimulate extra according to a recent survey. Members commented, inventory investment prior to the end of 1999. however, that the more moderate growth in employ- In their review of developments bearing on the ment and incomes experienced recently likely would outlook for inflation, members commented that labor persist and should result in reduced gains in con- markets remained exceptionally tight, though there sumer expenditures next year, but they also noted that was little evidence that they had tightened further in the extent of the deceleration was subject to consider- recent weeks. Employers were continuing to resist able uncertainty. Some members referred to reports pressures to grant unusually large wage increases, from contacts in the retailing industry who expressed and the persistence of vigorous competition, includsome concern about the potential for weaker retail ing that from Asian imports, was preventing most sales after the holiday season. A significant factor business firms from passing cost increases through to bearing on consumer spending would be the perfor- prices. Indeed, the declining trend in profits in recent mance of the stock market. The impetus from the quarters suggested that many firms were absorbing wealth effects of rapidly rising share prices would some of their rising labor costs to the extent that the wane if such prices were to stabilize near current latter were not offset by improvements in productivlevels. ity. Looking ahead, slower growth in economic activ- With regard to business fixed investment, anec- ity would tend to hold down pressures on wages and dotal evidence was accumulating that many business prices during 1999 and imports from Asian and other firms, notably in manufacturing, were scaling back depressed economies would continue to generate their planned capital outlays for the year ahead. Fac- intense competition in many markets; but labor martors contributing to the prospective deceleration in kets remained tight, energy and commodity prices business capital expenditures included a weaker trend could well turn up after substantial declines, and the in profits over the past several quarters, a related recent depreciation of the dollar would lessen presdeterioration in business cash flows, and a large sures from foreign competition. A number of membuildup in capacity over the course of recent years. bers expected that, on balance, inflation might be less Members also referred to indications of curtailed favorable next year, though any deterioration in availability and more costly financing for some busi- underlying trends should be relatively limited; others nesses, notably for relatively speculative construction anticipated little change in and possibly some further projects. A number of members observed that the ebbing of price inflation, extending the subdued latter was a healthy development in that it would tend behavior of a number of comprehensive measures of to hold down overbuilding in some areas. Overall, prices. capital expenditures would undoubtedly recover from In the Committee's discussion of policy for the their slight decline during the summer months, but intermeeting period ahead, nearly all the members the outlook was for growth next year at a pace well indicated that they could accept a proposal to reduce below that experienced for an extended period before the federal funds rate by a further 25 basis points to mid-1998. Housing construction was expected to an average of 43A percent. This policy decision was remain at a high level, buttressed by attractive terms viewed as a close call by several members. While the on new home mortgages, but housing activity growth of the economy was expected to slow appreappeared to have peaked or declined slightly in some ciably over the year ahead, the expansion currently regions. displayed only modest signs of moderating from what The rapid buildup in inventories during the third seemed to be an unsustainable pace. Moreover, many quarter was not likely to continue, but the timing and members saw some risk that an easing move at this extent of the expected moderation were largely point might trigger a strong further advance in stock unpredictable. It was noted in this regard that while market prices that would not be justified on the basis inventories appeared to have risen to uncomfortable of likely future earnings and could therefore lead to levels in some industries, there was no evidence of a a relatively sharp and disruptive market adjustment general inventory overhang. Looking ahead, the pro- later. The members were more concerned, however, jected slowing in the growth of final sales, including about the risks stemming from the still sensitive the effects of weak export markets, likely would state of financial markets, and in that regard many Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 121 believed that a prompt policy easing would help to toward easing that had been adopted at the previous ensure against a resurgence of severe financial strains. meeting. Accordingly, in the context of the Commit- A further easing move would complete the policy tee's long-run objectives for price stability and susadjustment to the changed economic and financial tainable economic growth, and giving careful conclimate that had emerged since midsummer and sideration to economic, financial, and monetary would provide some insurance against any unexpect- developments, the Committee decided that a slightly edly severe weakening of the expansion. Most mem- higher federal funds rate or a slightly lower federal bers saw little risk that a modest easing would ignite funds rate would be acceptable during the the interinflationary pressures in the economy, given the sub- meeting period. A staff analysis prepared for this dued behavior of inflation and their outlook for eco- meeting suggested that the reserve conditions connomic activity. Moreover, the easing could readily be templated by the Committee were likely to be consisreversed if unexpected circumstances should call for tent with some moderation in the growth of M2 and such an action. In this view, the risks of inaction were M3 over the months ahead. greater in terms of the potential financial conse- The Federal Reserve Bank of New York was authoquences and also could materialize much sooner than rized and directed, until instructed otherwise by the the risks of stimulating greater inflation through the Committee, to execute transactions in the System slight easing that was contemplated. Account in accordance with the following domestic Some members indicated that in light of continued policy directive: robust economic growth, tight labor markets, and improving financial conditions they had a preference for awaiting further developments that might provide The information reviewed at this meeting suggests some moderation in the expansion of economic activity from a a stronger basis for an easing action. Some of these brisk pace during the summer months. Growth in nonfarm members expressed concern that easier reserve con- payroll employment slowed appreciably in September and ditions would accommodate a step-up in monetary October; the civilian unemployment rate remained near growth that was already quite rapid, with potentially 4'/2 percent. Industrial production has declined slightly in recent months. Business inventory accumulation was sizinflationary consequences later. Nonetheless, all but able in the third quarter, and stock-sales ratios rose to one of these members could endorse the decision to uncomfortable levels in some sectors strongly affected by ease, given the evident downside risks in the interna- the nation's trade deficit. The nominal deficit on U.S. trade tional situation, financial market uncertainty, the like- in goods and services widened somewhat in July-August lihood that inflation would still be quite low, and from its second-quarter average. Total retail sales rose sharply in October after increasing only moderately in the possibility of reversing the action reasonably August and September. Residential sales and building starts promptly should circumstances warrant. have remained quite strong, but below recent peaks. Avail- Given its decision to ease policy, the Committee able indicators point to a pickup in business capital spendfavored a change to symmetry from the asymmetry ing after a lull in the third quarter, owing in part to a recovery from the summer strike in the motor vehicle toward ease in its recent directives. A symmetrical industry. Trends in various measures of wages and prices directive was now felt to be appropriate in light of the have been mixed in recent months. Committee's expectation that further easing was not Most market interest rates have risen on balance since likely to be needed over the months ahead unless the meeting on September 29, though yields on the bonds ongoing developments pointed to a more substantial of lower-rated firms have declined. The Board of Goverdecline in the growth of economic activity or further nors approved a reduction in the discount rate from 5 to 43/4 percent on October 15. Share prices in U.S. and global ebbing of inflation than was currently anticipated. equity markets have remained volatile but have posted The members recognized that the possible emergence sizable gains on balance over the intermeeting period. In of severe year-end pressures in the money market foreign exchange markets, the trade-weighted value of the might require some temporary easing in reserve con- dollar declined moderately over the period in relation to ditions, but such a development did not seem to have other major currencies; it also fell somewhat in terms of an index of the currencies of other countries that are important a high probability and could in any event be readily trading partners of the United States. and properly accommodated regardless of the bias in M2 and M3 have posted very large gains in recent the directive. months, reflecting the effects of recent System easing At the conclusion of the Committee's discussion, actions on market interest rates and shifts of funds by all except one member supported a directive that households out of investments in equities and lower-rated corporate debt. For the year through October, both aggrecalled for conditions in reserve markets that would be gates rose at rates well above the Committee's ranges for consistent with a slight decrease in the federal funds the year. Expansion of total domestic nonfinancial debt has rate to an average of about 43/4 percent. These mem- moderated slightly in recent months after a pickup earlier bers also accepted a proposal to remove the bias in the year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 Federal Reserve Bulletin • February 1999 The Federal Open Market Committee seeks monetary the associated bilateral reciprocal currency ("swap") and financial conditions that will foster price stability and arrangements with the Bank of Canada and the Bank promote sustainable growth in output. In furtherance of of Mexico. These arrangements, which predated the these objectives, the Committee reaffirmed at its meeting on June 30-July 1 the ranges it had established in Febru- North American Framework Agreement, were linked ary for growth of M2 and M3 of 1 to 5 percent and 2 to into a trilateral facility in connection with the estab- 6 percent respectively, measured from the fourth quarter of lishment of the North American Financial Group in 1997 to the fourth quarter of 1998. The range for growth of 1994 to facilitate consultation and cooperation among total domestic nonfinancial debt was maintained at 3 to the three countries in the area of macroeconomic 7 percent for the year. For 1999, the Committee agreed on policy as an outgrowth of the increasing integration a tentative basis to set the same ranges for growth of the monetary aggregates and debt, measured from the fourth of those economies expected to result from the North quarter of 1998 to the fourth quarter of 1999. The behavior American Free Trade Agreement. of the monetary aggregates will continue to be evaluated in Owing to the formation of the European Central the light of progress toward price level stability, move- Bank and in light of 15 years of disuse, the bilateral ments in their velocities, and developments in the economy and financial markets. swap arrangements of the Federal Reserve with the In the implementation of policy for the immediate future, Austrian National Bank, the National Bank of Belthe Committee seeks conditions in reserve markets consis- gium, the Bank of France, the German Federal Bank, tent with decreasing the federal funds rate to an average of the Bank of Italy, and the Netherlands Bank were around 43A percent. In the context of the Committee's jointly deemed no longer to be necessary in view of long-run objectives for price stability and sustainable economic growth, and giving careful consideration to eco- the well established present-day arrangements for nomic, financial, and monetary developments, a slightly international monetary cooperation. Accordingly, it higher federal funds rate or a slightly lower federal funds was agreed by all the bilateral parties to allow them rate would be acceptable in the intermeeting period. The to lapse. Similarly, it was jointly agreed to allow the contemplated reserve conditions are expected to be consisbilateral swap arrangements between the Federal tent with some moderation in the growth in M2 and M3 over coming months. Reserve and the National Bank of Denmark, the Bank of England, the Bank of Japan, the Bank of Norway, the Bank of Sweden, the Swiss National Votes for this action: Messrs. Greenspan, McDonough, Ferguson, Gramlich, Hoenig, Kelley, Meyer, Ms. Mine- Bank, and the Bank for International Settlements to han, Mr. Poole, and Ms. Rivlin. Vote against this action: lapse in light of their disuse and present day arrange- Mr. Jordan. ments for international monetary cooperation. Mr. Jordan dissented because he believed that the two recent reductions in the federal funds rate were AUTHORIZATION FOR DOMESTIC OPEN sufficient responses to the stresses in financial mar- MARKET OPERATIONS kets that had emerged suddenly in late August. An additional rate reduction risked fueling an unsustain- On the recommendation of the Manager, the Commitably strong growth rate of domestic demand. He tee voted unanimously to amend the authorization for expressed concern that the excessively rapid rates of domestic open market operations to extend the maxigrowth of the monetary and credit aggregates were mum maturity of System repurchase agreements from inconsistent with continued low inflation. Moreover, 15 calendar days to 60 calendar days. The purpose of any further monetary expansion in response to ecothe expanded authority was to enhance the flexibility nomic weakness abroad could ultimately have a disof the Manager in meeting reserve-supplying objecrupting influence on domestic prosperity if policy tives during periods of pronounced seasonal needs, were forced to reverse course at a later date to defend notably those associated with the year-end. Subject to the purchasing power of the dollar. the Committee's approval, the Manager would initiate the System's use of extended-term repurchase agreements ahead of the coming year-end, and he anticipated that such use could prove to be especially RENEWAL OF RECIPROCAL CURRENCY advantageous in late 1999 to the extent that year 2000 ARRANGEMENTS WITH THE BANKS concerns generated accentuated seasonal demand for OF CANADA AND MEXICO currency. In addition, the availability of the extended funding could help to allay concerns in the federal The Committee voted unanimously to reauthorize funds market about the cost of financing during Federal Reserve participation in the North American periods of peak seasonal pressures, with favorable Framework Agreement, established in 1994, and effects on the market's functioning. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 123 Accordingly, effective November 17, 1998, para- term investments for foreign and international accounts graphs l(b) and 3 of the authorization for domestic maintained at the Federal Reserve Bank of New York, the Federal Open Market Committee authorizes and directs the open market operations were amended to read as Federal Reserve Bank of New York (a) for System Open follows: Market Account, to sell U.S. Government securities to such foreign and international accounts on the bases set forth in 1. The Federal Open Market Committee authorizes and paragraph l(a) under agreements providing for the resale directs the Federal Reserve Bank of New York, to the by such accounts of those securities within 60 calendar extent necessary to carry out the most recent domestic days on terms comparable to those available on such policy directive adopted at a meeting of the Committee: transactions in the market; and (b) for New York Bank (b) To buy U.S. Government securities, obligations account, when appropriate, to undertake with dealers, subthat are direct obligations of, or fully guaranteed as to ject to the conditions imposed on purchases and sales of principal and interest by, any agency of the United States, securities in paragraph l(b), repurchase agreements in U.S. from dealers for the account of the Federal Reserve Bank Government and agency securities, and to arrange correof New York under agreements for repurchase of such sponding sale and repurchase agreements between its own securities or obligations in 60 calendar days or less, at rates account and foreign and international accounts maintained that, unless otherwise expressly authorized by the Com- at the Bank. Transactions undertaken with such accounts mittee, shall be determined by competitive bidding, after under the provisions of this paragraph may provide for a applying reasonable limitations on the volume of agree- service fee when appropriate. ments with individual dealers; provided that in the event Government securities or agency issues covered by any It was agreed that the next meeting of the Commitsuch agreement are not repurchased by the dealer pursuant tee would be held on Tuesday, December 22, 1998. to the agreement or a renewal thereof, they shall be sold in The meeting adjourned at 1:25 p.m. the market or transferred to the System Open Market Account. 3. In order to ensure the effective conduct of open Normand Bernard market operations, while assisting in the provision of short- Deputy Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

125 Legal Developments FINAL RULE—AMENDMENT TO REGULATION C ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT The Board of Governors is amending 12 C.F.R. Part 203, its Regulation C (Home Mortgage Disclosure). The Board is required to adjust annually the asset-size exemption Orders Issued Under Section 3 of the Bank Holding threshold for depository institutions based on the annual Company Act percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers. The adjustment re- Cooper Life Sciences, Inc. flects changes for the twelve-month period ending in New York, New York November. During this period, the index increased by 1.3 percent; as a result, the threshold remains at $29 million. Thus, depository institutions with assets of Greater American Finance Group, Inc. $29 million or less as of December 31, 1998, are exempt New York, New York from data collection in 1999. Effective January 1, 1999, 12 C.F.R. Part 203 is amended as follows: Order Approving the Formation of Bank Holding Companies and Acquisition of a Bank Part 203—Home Mortgage Disclosure (Regula- Cooper Life Sciences, Inc. ("CLS") and its wholly owned tion C) subsidiary. Greater American Finance Group, Inc. ("GAFG") (collectively, "Applicants"), have requested 1. The authority citation for Part 203 continues to read as the Board's approval under section (3)(a)(l) of the Bank follows: Holding Company Act ("BHC Act") (12 U.S.C. § 1842(a)(l)) to become bank holding companies by acquiring control of up to 100 percent of the voting shares of Authority: 12 U.S.C. 2801-2810. The Berkshire Bank, New York, New York ("Berkshire"). Notice of the proposal, affording interested persons an 2. In Supplement I to Part 203, under Section 203.3— opportunity to submit comments, has been published (63 Exempt Institutions, under 3(a) Exemption based on Federal Register 43,950 (1998)). The time for filing comlocation, asset size, or number of home-purchase loans, ments has expired, and the Board has considered the proparagraph 2 is revised to read as follows: posal and all comments received in light of the factors set forth in section 3 of the BHC Act. Applicants, although previously engaged directly and Supplement I to Part 203—Staff Commentary indirectly in various activities, have no current business * * * ** operations. CLS has an investment, however, that does not conform to the requirements of section 4 of the BHC Act (12 U.S.C. § 1843), which sets forth the investments and activities that are permissible for bank holding companies. Applicants have committed to conform their current invest- Section 203.3—Exempt Institutions ments to the requirements of the BHC Act within two years of the date of consummation of the proposal, including by divestiture if necessary, in accordance with section 4(a)(2) 3 (a) Exemption based on location, asset size, or number of of the BHC Act (12 U.S.C. § 1843(a)(2)). home-purchase loans. In reviewing the proposal under the BHC Act, the Board has considered the financial and managerial resources and future prospects of the companies and bank involved, the 2. Adjustment of exemption threshold for depository insti- convenience and needs of the communities to be served, tutions. For data collection in 1999, the asset-size ex- and certain supervisory factors. The Board has reviewed emption threshold is $29 million. Depository institu- these factors in light of the facts of record, including tions with assets at or below $29 million are exempt supervisory reports of examination assessing the financial from collecting data for 1999. and managerial resources of Berkshire, discussions with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

126 Federal Reserve Bulletin • February 1999 appropriate federal and state banking supervisors and other Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and appropriate federal agencies, and information provided by Governors Meyer, Ferguson, and Gramlich. Absent and not voting: Governor Kelley. Applicants. The Board notes that Applicants would not incur or assume any debt in connection with the proposal, ROBERT DEV. FRIERSON and that Berkshire would remain well capitalized after Associate Secretary of the Board consummation of the proposal. Based on all the facts of record in this case, the Board concludes that the financial Sulphur Springs Bancshares, Inc. and managerial resources and future prospects of Appli- Sulphur Springs, Texas cants and Berkshire and other supervisory factors are consistent with approval of the proposal. Sulphur Springs Delaware Financial Corporation In considering the convenience and needs factor, the Dover, Delaware Board has reviewed the record of Berkshire under the Community Reinvestment Act ("CRA").1 The Board notes Order Approving the Acquisition of a Bank that Applicants intend to continue the CRA program of Berkshire and do not intend to make any material changes Sulphur Springs Bancshares, Inc. and Sulphur Springs in the products and services provided by Berkshire. The Delaware Financial Corporation (collectively "Sulphur Board has evaluated the convenience and needs factor in Springs"), bank holding companies within the meaning of light of examinations of the CRA performance record of the Bank Holding Company Act ("BHC Act"), have re- Berkshire by the Federal Deposit Insurance Corporation quested approval by the Board under section 3 of the BHC ("FDIC"), the institution's appropriate federal banking Act (12 U.S.C. § 1842) to acquire First National Bank, supervisor, and the New York State Banking Department Sulphur Springs, Texas.1 ("NYSBD"). Berkshire received "satisfactory" ratings Notice of the proposal, affording interested persons an from the FDIC and the NYSBD at the most recent examiopportunity to submit comments, has been published (63 nations of its performance under the CRA. Based on all the Federal Register 63,476 (1998)). The time for filing comfacts of record, the Board concludes that convenience and ments has expired, and the Board has considered the proneeds considerations, including the CRA performance posal and all comments received in light of the factors set record of the relevant institution, are consistent with apforth in section 3 of the BHC Act. proval of the proposal. Sulphur Springs is the 158th largest commercial banking As required under the BHC Act, the Board also considorganization in Texas, controlling approximately ered the competitive effects of the proposal. The proposed $107.7 million in deposits, representing less than 1 percent transaction is a formation of bank holding companies that of total deposits in commercial banking organizations in will control only one bank and, therefore, does not involve the state ("state deposits").2 First National Bank is the competing banking institutions. Accordingly, the Board 534th largest commercial banking organization in Texas, concludes that the proposal would not have a significantly controlling approximately $26.2 million in deposits, repreadverse effect on competition or on the concentration of senting less than 1 percent of state deposits. On consummabanking resources in any relevant banking market. Based tion of the proposal, Sulphur Springs would be the 130th on all the facts of record, the Board concludes that compet- largest commercial banking organization in Texas, controlitive considerations are consistent with approval. ling approximately $133.9 million in deposits in the state, Based on all the facts of record, the Board has deter- representing less than 1 percent of state deposits. mined that this application should be, and hereby is, approved. The Board's approval is specifically conditioned Competitive Considerations on compliance by Applicants with all the commitments made in connection with this proposal. The commitments The BHC Act prohibits the Board from approving an and conditions relied on by the Board in reaching its application under section 3 of the BHC Act if the proposal decision are deemed to be conditions imposed in writing would result in a monopoly or would be in furtherance of by the Board in connection with its findings and decisions any attempt to monopolize the business of banking. The and, as such, may be enforced in proceedings under appli- BHC Act also prohibits the Board from approving a procable law. posed combination that would substantially lessen compe- The proposed acquisition shall not be consummated tition or tend to create a monopoly in any relevant banking before the fifteenth calendar day after the effective date of market, unless the Board finds that the anticompetitive this order, or later than three months after the effective date effects of the proposal are clearly outweighed in the public of this order, unless such period is extended by the Board or by the Federal Reserve Bank of New York, acting pursuant to delegated authority. 1. Sulphur Springs proposes to merge First National Bank with and By order of the Board of Governors, effective Decem- into its subsidiary bank, City National Bank of Sulphur Springs. The ber 14. 1998. Office of the Comptroller of the Currency ("OCC") has approved the proposed merger under section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(c)) (the "Bank Merger Act"). 2. State deposit data are as of June 30, 1997, and market data are as 1. 12 U.S.C. §2901 etseq. of June 30, 1998. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 127 interest by the probable effect of the proposal in meeting The Board also has considered that on consummation of the convenience and needs of the community to be served.3 the proposal, the Hopkins County banking market would Sulphur Springs and First National Bank compete di- continue to be served by four banks and a savings associarectly in the Hopkins County, Texas, banking market tion, including City National Bank. All but one of the ("Hopkins County banking market").4 City National Bank competitors remaining in the market would control more is the second largest of six depository institutions in the than 8 percent of market deposits, and the largest banking market, controlling deposits of $86.8 million, representing competitor would control 41.2 percent of market deposits. 26.1 percent of total deposits in depository institutions in The Department of Justice has conducted a detailed the market ("market deposits").5 First National Bank is the review of the proposal and has advised the Board that fifth largest depository institution in the market, controlling consummation of the proposal would not likely have a deposits of $26.2 million, representing 7.9 percent of mar- significantly adverse effect on competition in any relevant ket deposits. On consummation of the proposal, City banking market. As noted above, the OCC has reviewed National Bank would remain the second largest competitor and approved the proposed merger of City National Bank in the market, controlling deposits of $113 million, repre- and First National Bank under the Bank Merger Act. The senting 34 percent of market deposits. The Herfindahl- Federal Deposit Insurance Corporation has not objected to Hirschman Index ("HHI") for the market would increase consummation of the proposal. by 411 points to 3150.6 After carefully reviewing all the facts of record, and for Although consummation of the proposal would elimi- the reasons discussed in this order, the Board concludes nate some existing competition in a highly concentrated that consummation of the proposal would not likely result market, certain factors mitigate the potential anticompeti- in any significantly adverse effects on competition or on tive effects. The Board has considered as a significant the concentration of resources in the Hopkins County bankfactor First National Bank's financial condition and its ing market or in any other relevant banking market. Acability to function as a viable competitor in the market. cordingly, based on all of the facts of record, the Board has First National Bank recently has suffered financial and determined that competitive factors are consistent with managerial difficulties that have prevented it from being an approval of the proposal. effective competitor. During the past three years, for example, the deposits of First National Bank have declined, and Other Factors Under the BHC Act First National Bank's parent bank holding company filed for bankruptcy in 1997. The Board has considered the fact The BHC Act also requires the Board, in acting on an that First National Bank was offered for sale to numerous application, to consider the financial and managerial repotential purchasers, and that only Sulphur Springs and sources and future prospects of the companies and banks one other party submitted bids. The major creditor of First involved in a proposal, the convenience and needs of the National Bank's holding company has approved this bid. community to be served, and certain other supervisory The acquisition is expected to result in significant public factors. benefits by providing additional financial and managerial The Board has carefully considered the financial and resources to the operations of First National Bank. managerial resources and future prospects of Sulphur Springs, City National Bank and First National Bank; the structure of the proposed transactions; the resources of the combined organization; and other supervisory factors, in 3. 12 U.S.C. § 1842(c). light of all the facts of record. As part of this consideration, 4. The Hopkins County banking market comprises Hopkins County. Texas. the Board has reviewed relevant reports of examination 5. In this context, depository institutions include commercial banks, and other supervisory information prepared by the Federal savings banks and savings associations. Market share data are based Reserve Bank of Dallas and other federal financial supervion calculations that include the deposits of thrift institutions at sory agencies. 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors City National Bank would be well capitalized after its of commercial banks. See, e.g., Midwest Financial Group, 75 Federal merger with First National Bank. In addition, Sulphur Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Springs would be able to provide additional managerial Reserve Bulletin 743 (1984). Thus, the Board has regularly included and financial resources and has sufficient managerial and thrift deposits in the calculation of market share on a 50 percent weighted basis. See, e.g., First Hawaiian Inc., 11 Federal Reserve financial resources to address the condition of First Bulletin 52 (\99\). National Bank. Based on these and other facts of record, 6. Under Department of Justice Merger Guidelines, 49 Federal the Board concludes that considerations relating to the Register 26,823 (1984), a market in which the post-merger HHI is financial and managerial resources and future prospects of more than 1800 is considered highly concentrated. The Department of Sulphur Springs and its respective subsidiaries and the Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors other supervisory factors that the Board must consider indicating anticompetitive effects) unless the post-merger HHI is at under section 3 of the BHC Act weigh in favor of approval least 1800 and the merger increases the HHI by more than 200 points. of the proposal. The Justice Department has stated that the higher than normal HHI The Board also has carefully considered the effects of thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effects of limited-purpose lenders the proposed acquisition on the convenience and needs of and other nondepository financial institutions. the community to be served in light of all the facts of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 Federal Reserve Bulletin • February 1999 record. City National Bank and First National Bank have Akron, Ohio ("Summit Bank").1 FirstMerit also has resatisfactory records of performance under the Community quested the Board's approval under section 4(c)(8) of the Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). The BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.24 of record of this application indicates, moreover, that this the Board's Regulation Y (12 C.F.R. 225.24) to acquire the transaction would provide a substantial public benefit by nonbanking subsidiaries of Signal, including First Federal preventing further deterioration of the financial condition Savings Bank of New Castle, New Castle, Pennsylvania of First National Bank. Based on all the facts of record, ("First Federal").2 including the performance records of City National Bank Notice of the proposal, affording interested persons an and First National Bank under the CRA, the Board con- opportunity to submit comments, has been published (63 cludes that convenience and needs considerations are con- Federal Register 56,033 and 60,346 (1998)). The time for sistent with approval of the proposal. filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in sections 3 and 4 of the BHC Act. Conclusion FirstMerit, with total consolidated assets of $6.2 billion, is the 80th largest commercial banking organization in the Based on the foregoing, and in light of all the facts of United States, controlling less than 1 percent of total bankrecord, the Board has determined that the application ing assets of insured commercial banks in the United States should be, and hereby is, approved. Approval of the appli- ("total banking assets").3 FirstMerit operates a subsidiary cation is specifically conditioned on compliance by bank in Ohio and engages in permissible activities through Sulphur Springs and City National Bank with all the comits nonbanking subsidiaries. mitments made in connection with the proposal and with Signal, with total consolidated assets of $1.9 billion, is the conditions stated or referred to in this order. For purthe 153rd largest commercial banking organization in the poses of this transaction, the commitments and conditions United States, controlling less than 1 percent of total bankreferred to in this order shall be deemed to be conditions ing assets. Signal operates two subsidiary banks in Ohio imposed in writing by the Board in connection with its and engages in permissible activities through its nonbankfindings and decision and, as such, may be enforced in ing subsidiaries. On consummation of the proposal, Firstproceedings under applicable law. Merit would become the 67th largest commercial banking The proposal shall not be consummated before the fifinstitution in the United States, with total consolidated teenth calendar day after the effective date of this order, or assets of approximately $8.1 billion, representing less than later than three months after the effective date of this order, 1 percent of total banking assets. unless such period is extended for good cause by the Board FirstMerit is the seventh largest depository institution in or by the Federal Reserve Bank of Dallas, acting pursuant Ohio, controlling $5.3 billion in deposits, representing to delegated authority. approximately 3.6 percent of total deposits in insured de- By order of the Board of Governors, effective Decem- pository institutions in the state ("state deposits").4 Signal ber 16, 1998. is the 21st largest depository institution in Ohio, controlling $733 million of deposits, representing less than Voting for this action: Chairman Greenspan. Vice Chair Rivlin, and 1 percent of state deposits. On consummation of the pro- Governors Kelley, Meyer, Ferguson and Gramlich. posal, FirstMerit would remain the seventh largest insured depository institution in Ohio, controlling approximately ROBERT DEV. FRIERSON $6 billion in deposits, representing approximately 4.1 per- Associate Secretary of the Board cent of state deposits. Orders Issued Under Sections 3 and 4 of the Bank Holding Company Act FirstMerit Corporation Akron, Ohio 1. FirstMerit proposes to merge Signal Bank and Summit Bank into FirstMerit's wholly owned subsidiary bank, FirstMerit Bank, N.A. Order Approving the Acquisition of a Bank Holding ("FMB"). In addition, FirstMerit and Signal have entered into a stock purchase option that entitles FirstMerit to purchase up to 19.9 percent Company of Signal's capital stock if certain events occur. The option would expire on consummation of the proposal. 2. These nonbanking activities are discussed in Appendix A. First- FirstMerit Corporation ("FirstMerit"), a bank holding Merit also has requested the Board's approval to hold First Federal as company within the meaning of the Bank Holding Coma bank as part of FirstMerit's proposal to merge First Federal into pany Act ("BHC Act"), has requested the Board's ap- FMB. proval under section 3 of the BHC Act (12 U.S.C. § 1842) 3. Asset data and national rankings based on asset size are as of to acquire Signal Corp., Wooster, Ohio ("Signal"), and its June 30, 1998. 4. In this context, depository institutions include commercial banks, wholly owned subsidiary banks, Signal Bank, N.A., savings banks, and savings associations. Deposit data and state rank- Wooster, Ohio ("Signal Bank"), and Summit Bank, N.A., ings are as of June 30, 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 129 Competitive Considerations depository institution in the market, controlling approximately 32.7 percent of market deposits. The HHI would The BHC Act prohibits the Board from approving an increase 374 points to 2029. application under section 3 of the BHC Act if the proposal Consummation of the proposal would exceed the DOJ would result in a monopoly or would be in furtherance of Guidelines in the Wooster banking market. As the Board any attempt to monopolize the business of banking. The has indicated in previous cases, in a market in which the BHC Act also prohibits the Board from approving a pro- competitive effects of a proposal exceed the DOJ Guideposed combination that would substantially lessen compe- lines, the Board will consider whether other factors tend to tition or tend to create a monopoly in any relevant banking mitigate the competitive effects of the proposal. The nummarket, unless the Board finds that the anticompetitive ber and strength of factors necessary to mitigate the comeffects of the proposal are clearly outweighed in the public petitive effects of a proposal depend on the level of market interest by the probable effect of the proposal in meeting concentration and size of the increase in market concentrathe convenience and needs of the community to be served.5 tion.10 FirstMerit and Signal compete in the Akron, Cleveland, Wayne County, most of which is in the Wooster banking and Wooster, Ohio, banking markets.6 The Board has care- market, has characteristics that make it attractive for entry fully reviewed the competitive effects of the proposal in when compared to the other 48 non-Metropolitan Statistieach of these markets in light of all the facts of record, cal Area counties ("non-MSA counties") in Ohio." For including the characteristics of the markets and the pro- example, Wayne County ranks first among Ohio's nonjected increase in the concentration of total deposits in MSA counties in population and total personal income and insured depository institutions in these markets ("market is above the average of other non-MSA Ohio counties with deposits")7 as measured by the Herfindahl-Hirschman In- respect to percentage increases in population and per capita dex ("HHI") under the Department of Justice Merger income. Wayne County also ranks first among non-MSA Guidelines ("DOJ Guidelines").8 The Board also has care- counties in Ohio in total deposits. The attractiveness of the fully examined the number of competitors that would re- market appears to be confirmed by the de now entry of one main in each of the banking markets after consummation commercial bank into the market since June 1997. of the proposal. Consummation of the proposal would be Ten depository institutions, including FirstMerit, would consistent with the DOJ Guidelines and prior Board deci- remain in the Wooster banking market after consummation sions in the Akron and Cleveland banking markets.9 of the proposal. The nine competitors of FirstMerit would Wooster Banking Market. FirstMerit is the fifth largest of include one large multi state banking organization and three 11 depository institutions in the Wooster banking market, regional banking organizations, each of which has a significontroling deposits of $77.8 million, representing approxi- cant market share. The second, third, and fourth largest mately 7.4 percent of market deposits. Signal is the largest institutions in the market would have a combined share of depository institution in the Wooster banking market, con- 46 percent of market deposits. trolling deposits of $266.6 million, representing approxi- Views of Other Agencies and Conclusions. The Departmately 25.3 percent of market deposits. After consumma- ment of Justice has advised the Board that consummation tion of the proposal, FirstMerit would become the largest of the proposal would not likely have a significantly adverse effect on competition in any relevant market. The Office of the Comptroller of the Currency and the Federal 5. 12U.S.C. § 1842(c)(l). Deposit Insurance Corporation have not objected to con- 6. These banking markets are described in Appendix B. summation of the proposal. 7. Market share data are based on calculations that include the deposits of thrift institutions weighted at 50 percent. The Board After carefully reviewing all the facts of record and for previously has indicated that thrift institutions have become, or have the reasons discussed in this order and appendices, the the potential to become, significant competitors of commercial banks. Board concludes that consummation of the proposal would See, e.g., Midwest Financial Group, 75 Federal Reserve Bulletin 386 not likely result in a significantly adverse effect on compe- (1989); National City Corporation, 70 Federal Reserve Bulletin 143 (1984). Thus, the Board regularly has included thrift deposits in the tition or on the concentration of banking resources in any calculation of market share on a 50-percent weighted basis. See, e.g., of the three banking markets in which FirstMerit and First Hawaiian Inc., 11 Federal Reserve Bulletin 52 (1991). Signal both compete or in any other relevant banking 8. Under the DOJ Guidelines, 49 Federal Register 26,823 (1984), a market. Accordingly, based on all the facts of record, the market in which the post-merger HHI is less than 1000 is considered to be unconcentrated, and a market in which the post-merger HHI is Board has determined that competitive factors are consisbetween 1000 and 1800 is considered to be moderately concentrated. tent with approval of the proposal. The Department of Justice ("DOJ") 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 10. See First Union Corporation, 84 Federal Reserve Bulletin 489 post-merger HHI is at least 1800 and the merger or acquisition (1998); NationsBank Corporation, 84 Federal Reserve Bulletin 129 increases the HHI by at least 200 points. The DOJ has stated that the (1998). higher than normal HHI thresholds for screening bank mergers or 11. As noted in Appendix B, the Wooster banking market consists acquisitions for anticompetitive effects implicitly recognize the com- of Wayne County, which is a non-MSA county, excluding two townpetitive effects of limited-purpose lenders and other nondepository ships. Because data regarding population, income, and deposit levels financial institutions. are collected for each non-MSA county in Ohio rather than for each 9. Market data for these banking markets after consummation of the banking market, the market characteristics of Wayne County were proposal are described in Appendix C. compared with other non-MSA counties in Ohio. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 Federal Reserve Bulletin • February 1999 Other Factors Under the BHC Act age activities. The Board has determined by regulation that each of these activities is closely related to banking for The BHC Act also requires the Board, in acting on an purposes of section 4(c)(8) of the BHC Act.13 FirstMerit application, to consider the financial and managerial re- has stated that, following consummation of the proposal, it sources and future prospects of the companies and banks will conduct these activities in accordance with the limitainvolved in a proposal, the convenience and needs of the tions set forth in Regulation Y and the Board's orders and communities to be served, and certain other supervisory interpretations governing each of these activities. factors. In order to approve a proposal under section 4(c)(8) of the BHC Act, the Board also must determine that the A. Financial, Managerial, and Other Supervisory Factors proposed activities are a proper incident to banking, that is, the proposal must "reasonably be expected to produce The Board has carefully considered the financial and man- benefits to the public . . . that outweigh possible adverse agerial resources and future prospects of FirstMerit, Signal, effects, such as undue concentration of resources, deand their respective subsidiary banks and other supervisory creased or unfair competition, conflicts of interests, or factors in light of all the facts of record. As part of its unsound banking practices."14 As part of its evaluation of consideration, the Board has reviewed relevant reports of these factors, the Board considers the financial condition examination and other supervisory information prepared and managerial resources of the notificant and its subsidiarby the Reserve Banks and other federal agencies. The ies, including the companies to be acquired, and the effect Board notes that the bank holding companies and their of the proposed transaction on these resources.15 For the subsidiary banks currently are well capitalized and are reasons noted above and based on all the facts of record, expected to remain so after consummation of the proposal. the Board has concluded that financial and managerial The Board also has considered other aspects of the considerations are consistent with approval. financial condition and resources of the two organizations, The Board also has considered the competitive effects of the structure of the proposed transaction, and the manage- the proposed acquisition by FirstMerit of the nonbanking rial resources of each of the entities and the combined subsidiaries of Signal. The Board notes that the markets in organization. Based on these and other facts of record, the which the nonbanking subsidiaries of FirstMerit and Signal Board concludes that considerations relating to the finan- both compete are national and regional, and numerous cial and managerial resources and future prospects of First- competitors would remain in each of those markets. Based Merit, Signal, and their respective subsidiaries are consis- on all the facts of record, the Board concludes that it is tent with approval of the proposal, as are the other unlikely that significantly adverse competitive effects supervisory factors that the Board must consider under would result from the nonbanking acquisitions proposed in section 3 of the BHC Act. this transaction. FirstMerit has indicated that after consummation of the B. Convenience and Needs Considerations merger proposal, it would be able to provide a greater range of products and services more efficiently through an The Board has carefully considered the effect of the pro- enhanced delivery system to the current and future customposed acquisition on the convenience and needs of the ers of FirstMerit and Signal. In addition, as the Board has communities to be served in light of all the facts of record. previously noted, there are public benefits to be derived All the subsidiary depository institutions of FirstMerit and from permitting capital markets to operate so that bank Signal received "outstanding" or "satisfactory" ratings holding companies can make potentially profitable investfrom their appropriate federal supervisors at the most re- ments in nonbanking companies and from permitting bankcent examinations of their performance under the Commu- ing organizations to allocate their resources in the manner nity Reinvestment Act ("CRA").'2 Based on all the facts they consider to be most efficient when such investments of record, including the CRA performance records of the and actions are consistent, as in this case, with the relevant subsidiary banks of FirstMerit and Signal, the Board con- considerations under the BHC Act.16 cludes that convenience and needs considerations are con- The Board concludes that the conduct of the proposed sistent with approval of the proposal. activities within the framework of Regulation Y and prior Board precedent is not likely to result in adverse effects, Nonbanking Activities such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound bank- FirstMerit also has filed a notice, under section 4(c)(8) of ing practices, that would outweigh the public benefits of the BHC Act to acquire the nonbanking subsidiaries of the proposal, such as increased customer convenience and Signal, including First Federal, and thereby engage in extending credit and servicing loans, activities related to extending credit, operating a savings association, financial 13. See 12 C.F.R. 225.28(b)(l), (2), (4)(ii), (6), (7)(i). and investment advisory activities, and securities broker- 14. 12U.S.C. § 1843(c)(8). 15. See 12 C.F.R. 225.26. 16. See, e.g., Bane One Corporation, 84 Federal Reserve Bulletin 553 (1998); First Union Corporation, 84 Federal Reserve Bulletin 12. 12U.S.C. § 2901 etseq. 489 (1998). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 131 gains in efficiency. Accordingly, based on all the facts of (12 C.F.R. 225.28(b)(4)(ii)) through First Federal Savrecord, the Board has determined that the balance of public ings Bank, New Castle, Pennsylvania. benefits that the Board must consider under the proper (4) Engaging in financial and investment advisory activiincident to banking standard of section 4(c)(8) of the BHC ties in accordance with section 225.28(b)(6) of Regula- Act is favorable and consistent with approval of First tion Y (12 C.F.R. 225.28(b)(6)) through Summit Bane Merit's notice. Investments Corp., Akron, Ohio ("SBI"). (5) Engaging in securities brokerage services in accor- Conclusion dance with section 225.28(b)(7)(i) of Regulation Y (12 C.F.R. 225.28(b)(7)(i)) through SBI. Based on the foregoing, and in light of all the facts of record, the Board has determined that the application and Appendix B notice should be, and hereby are, approved. Approval of the application and notice is specifically conditioned on Banking Markets in Ohio in which FirstMerit and Signal compliance by FirstMerit with all the commitments made Compete in connection with the proposal. The Board's determination on the nonbanking activities also is subject to all the Akron: The southern two-thirds of Summit County; secterms and conditions set forth in Regulation Y, including tions of Medina County, including the townships of Shathose in sections 225.7 and 225.25(c) (12 C.F.R. 225.7 and ron, Homer, Harrisville, Westfield, Guilford, and Wads- 225.25(c)), and to the Board's authority to require such worth; Portage County, excluding the townships of Aurora, modification or termination of the activities of a bank Streetsboro, Mantua, Hiram, Nelson, Shalersville, Freeholding company or any of its subsidiaries as the Board dom, and Windham; and small portions of Wayne and finds necessary to ensure compliance with, and to prevent Stark Counties. evasion of, the provisions of the BHC Act and the Board's Cleveland: Cuyahoga, Lake, Lorain, and Geauga Counties regulations and orders thereunder. For purposes of this and the northern third of Summit County, including the transaction, the commitments and conditions referred to townships of Sagamore Hills, Northfield Center, Twinsabove are conditions imposed in writing by the Board in burg, Richfield, Boston, and Hudson Townships, and the connection with its findings and decision and, as such, may municipalities circumscribed by those townships; all of be enforced in proceedings under applicable law. Medina County, except the townships of Homer, Harris- The acquisition of Signal's subsidiary banks shall not be ville, Westfield, Guilford, Wadsworth, and Sharon; the consummated before the fifteenth calendar day after the townships of Aurora and Streetsboro in Portage County; effective date of this order, and the proposal shall not be and the city of Vermillion in Erie County. consummated later than three months after the effective Wooster: Wayne County excluding the townships of date of this order, unless such period is extended for good Chippewa and Milton. cause by the Board or by the Federal Reserve Bank of Cleveland, acting pursuant to delegated authority. Appendix C By order of the Board of Governors, effective December 7, 1998. Banking Markets in which Consummation of the Proposal Would Not Exceed the DOJ Guidelines Voting for this action: Chairman Greenspan and Governors Kelley. Meyer, and Gramlich. Absent and not voting: Vice Chair Rivlin and Akron: After consummation of the proposal, FirstMerit Governor Ferguson. would control 31.3 percent of market deposits and would remain the largest of 21 depository institutions in the ROBERT DEV. FRIERSON market. The HHI would increase 84 points to 1633. Associate Secretary of the Board Cleveland: After consummation of the proposal, FirstMerit would control 6.5 percent of market deposits and would Appendix A remain the third largest of 37 depository institutions in the market. The HHI would increase 2 points to 1797. Nonbanking Subsidiaries of Signal and Their Activities (1) Extending credit and servicing loans in accordance ORDERS ISSUED UNDER BANK MERGER ACT with section 225.28(b)(l) of the Board's Regulation Y (12 C.F.R. 225.28(b)(l)) through Mobile Consultants, Poteau State Bank Inc., Alliance, Ohio ("MCi"). Poteau, Oklahoma (2) Engaging in activities related to extending credit in Order Approving the Merger of a Bank and accordance with section 225.28(b)(2) of Regulation Y Establishment of a Bank Branch (12 C.F.R. 225.28(b)(2)) through MCi. (3) Conducting savings association activities in accor- Poteau State Bank ("Poteau Bank"), a state member bank, dance with section 225.28(b)(4)(ii) of Regulation Y has applied under section 18(c) of the Federal Deposit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 Federal Reserve Bulletin • February 1999 Insurance Act (12 U.S.C. § 1828(c)) ("Bank Merger Act") tured in this fashion are permissible under Oklahoma law. to merge with Spiro Interim Bank, Spiro, Oklahoma The Oklahoma statutes recognize a difference between ("Interim Bank").1 Poteau Bank also has applied under branching de novo, which is prohibited under certain cirsection 9 of the Federal Reserve Act ("FRA") (12 U.S.C. cumstances, and retaining branches as the result of a § 321) to establish a branch at the location of Interim Bank merger, which is generally permissible.5 The Oklahoma in Spiro. statutes also recognize that state banks may decide to effect Notice of the applications, affording interested persons a merger through an interim bank.6 an opportunity to submit comments, has been given in Based on all the facts of record, and the considerations accordance with the Bank Merger Act and the Board's discussed above, including the approval of the proposal by Rules of Procedure (12 C.F.R. 262.3(b)). As required by the Oklahoma Banking Board, the Board concludes that the Bank Merger Act, reports on the competitive effects of this proposal is consistent with Oklahoma bank branching the merger were requested from the United States Attorney law and the branching requirements of section 9 of the General and the Federal Deposit Insurance Corporation FRA. ("FDIC"). The time for filing comments has expired, and The Board has considered the competitive effects of the the Board has considered the applications and all the facts proposal as required by the Bank Merger Act. Poteau Bank of record in light of the factors set forth in the Bank Merger is the 66th largest commercial banking organization in Act and section 9 of the FRA. Oklahoma, controlling deposits of $84 million, represent- The Board received comments from a bank in Spiro and ing less than 1 percent of the total deposits in commercial the Community Bankers Association of Oklahoma main- banking organizations in the state.7 In light of all the facts taining that the proposal would violate state branching law of record, the Board concludes that consummation of the restrictions on the establishment of a de novo branch. The proposal would not have any significantly adverse effect on commenters in this case presented the same arguments to competition or on the concentration of banking resources the Oklahoma Banking Board during its processing of the in any relevant banking market. state applications filed by FPC and Poteau Bank. The In reviewing this proposal under the Bank Merger Act Oklahoma Banking Board disagreed with the commenters and section 9 of the FRA, the Board also has considered and approved the state applications.2 the financial and managerial resources and future prospects Under the FRA, the Board may approve the retention of of the institutions involved, the convenience and needs of branches of two or more banks involved in a merger only if the communities to be served, and certain supervisory the resulting bank is permitted under state law to operate factors. The Board has reviewed these factors in light of branches at each of the branch locations.3 When the state the facts of record, including supervisory reports of examiauthority charged with interpreting relevant state law has nation assessing the financial and managerial resources of issued an opinion regarding the applicability or scope of Poteau Bank. The Board notes that Poteau Bank would the state law, the Board has given great weight to that remain well capitalized on consummation of the proposal. interpretation as long as it appears to be a reasonable Based on all the facts of record, the Board concludes that construction of state law.4 the financial and managerial resources and future prospects In this case, the Oklahoma Banking Board is responsible of Poteau Bank are consistent with approval, as are the for interpreting and applying the state laws governing other supervisory factors the Board must consider under branching and mergers by state banks. Poteau Bank has the Bank Merger Act and the FRA. structured this transaction as an acquisition and merger of a In considering the convenience and needs factor, the new bank and an existing bank, and the Oklahoma Banking Board has reviewed the record of Poteau Bank under the Board has consistently determined that proposals struc- Community Reinvestment Act ("CRA").8 As provided in the CRA, the Board has evaluated this factor in light of examinations by the appropriate federal banking supervisor 1. First Poteau Corporation, Poteau, Oklahoma ("FPC"), the parent of the relevant institution. Poteau Bank received an "outholding company of Poteau Bank, proposes to form Interim Bank and simultaneously to merge it into Poteau Bank and to convert the location of Interim Bank into a branch of Poteau Bank. On consummation of the proposal, Poteau Bank would operate offices in Poteau and 5. See Oklahoma Stat. Ann. tit. 6, §§ 501.1(A), 501.1(C) (West Spiro. Approval of the acquisition of Interim Bank is required under Supp. 1998). section 3 of the Bank Holding Company Act (12 U.S.C. § 1842) 6. See Banking Board Order. Oklahoma law authorizes a bank ("BHC Act"). However, the Board's Regulation Y provides approval holding company to organize an interim state bank charter and, before for this type of transaction without requiring the filing of an applica- commencing business, to merge the interim state bank with an existtion under the BHC Act, because the proposed transaction also must ing bank. Oklahoma Stat. Ann. tit. 6, §§ 502(H), 502.1 (West Supp. be reviewed by the Board under the Bank Merger Act. See 12 C.F.R. 1998). Oklahoma law requires that the Oklahoma Banking Depart- 225.12(d)(2). ment handle the interim bank charter and merger applications in a 2. See First Poteau Corporation and Poteau State Bank, Docket No. single process. Oklahoma Stat. Ann. tit. 6, § 502.1 (West Supp. 98-065, Oklahoma Banking Board (October 21, 1998) ("Banking 1998). The Oklahoma Banking Board determined that the proposed Board Order"). The FDIC approved the deposit insurance application acquisition and operation of Interim Bank as a branch of Poteau Bank of Interim Bank. qualified for a specific statutory exception to the five-year age require- 3. See 12 U.S.C. § 321; 12 C.F.R. 208.6(a). ment on acquired bank branches. See Banking Board Order; Okla- 4. See Adams Bank & Trust, 82 Federal Reserve Bulletin 275 homa Stat. Ann. tit. 6 § 501.1(E) (West Supp. 1998). (1996); Northwest Kansas Bane Shares, Inc., 69 Federal Reserve 7. Deposit data are as of June 30, 1997. Bulletin 98 (1983). 8. 12 U.S.C. § 2901 etseq. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 133 standing" CRA performance rating at its most recent CRA with the commitments made in connection with this appliperformance examination by the Federal Reserve Bank of cation and on the continued permissibility of this proposal Kansas City. Based on a review of the entire record, the under state law. For purposes of this action, the commit- Board concludes that convenience and needs consider- ments and conditions relied on in reaching this decision are ations, including the CRA performance record of the conditions imposed in writing by the Board and, as such, relevant institution, are consistent with approval of the may be enforced in proceedings under applicable law. proposal. The merger of Poteau Bank and Interim Bank may not Based on the foregoing and all the facts of record, the be consummated before the fifteenth calendar day after the Board has determined that these applications should be, effective date of this order, and this proposal may not be and hereby are, approved.9 The Board's approval of this consummated later than three months after the effective proposal is conditioned on compliance by Poteau Bank date of this order, unless such period is extended by the Board or by the Federal Reserve Bank of Kansas City, acting pursuant to delegated authority. By order of the Board of Governors, effective December 2, 1998. 9. Commenters also request that the Board delay action on this application until final disposition by Oklahoma state courts of pending Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and litigation concerning the legality of the proposed branching method Governors Kelley, Meyer, Ferguson and Gramlich. under Oklahoma law. One of the commenters has appealed the Banking Board Order. However, it is uncertain when the state court litigation will be resolved, and the Board has sufficient information to ROBERT DEV. FRIERSON act on these applications at this time. Associate Secretary of the Board 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 Cullen/Frost Bankers, Inc., Keller State Bank, December 22, 1998 San Antonio, Texas Keller, Texas New Galveston Company, Wilmington, Delaware FirstBank Holding Company of Colorado FirstBank Holding Company of Colorado, December 1, 1998 ESOP, Lakewood, Colorado Lakewood, Colorado Simmons First National Corporation, Lincoln Bankshares, Inc., December 16, 1998 Pine Bluff, Arkansas Lincoln, Arkansas Bank of Lincoln, Lincoln, Arkansas Zions Bancorporation, Centennial Bank, N.A., December 2, 1998 Salt Lake City, Utah Farmington, New Mexico Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 Federal Reserve Bulletin • February 1999 Section 4 Applicant(s) Bank(s) Effective Date Centura Banks, Inc., Capital Advisors of NC, L.L.C., December 16, 1998 Rocky Mount, North Carolina Charlotte, North Carolina Capital Advisors of South Carolina, Inc., Columbia, South Carolina Capital Advisors of Mississippi, Inc., Jackson, Mississippi Selken, Inc., Atlanta, Georgia Capital Advisors, Inc., Raleigh, North Carolina Compass Bancshares, Inc., Albrecht & Associates, Inc., December 4, 1998 Birmingham, Alabama Houston, Texas HSBC Holdings pic, HSBC Finance (Netherlands) Limited, December 7, 1998 London, England London, England HSBC Holdings BV, Amsterdam, The Netherlands Hongkong Bank of Canada, Vancouver, British Columbia, Canada Gordon Capital Corporation, Toronto, Ontario. Canada Gordon Capital Inc., Vancouver, British Columbia, Canada 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 ACNB Corporation, Farmers National Bancorp, Inc., Philadelphia December 4, 1998 Gettysburg, Pennsylvania Newville, Pennsylvania Farmers National Bank of Newville, Newville, Pennsylvania Aliant Financial Corporation, Aliant National Corporation, Atlanta December 9, 1998 Alexander City, Alabama Alexander City, Alabama Aliant Bank, Alexander City, Alabama Anchor Financial Corporation, Bailey Financial Corporation, Richmond December 7, 1998 Myrtle Beach, South Carolina Clinton, South Carolina The Saluda County Bank, Saluda, South Carolina M.S. Bailey & Son, Bankers, Clinton, South Carolina Rock Hill Bank & Trust, Rock Hill, South Carolina AEA Bankshares, Inc., Asia-Europe-Americas Bank, San Francisco December 10, 1998 Seattle, Washington Seattle, Washington Alabama National Bancorporation, Community Bank of Naples, N.A., Atlanta December 14, 1998 Birmingham, Alabama Naples, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 135 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Associated Banc-Corp, Windsor Bancshares, Inc., Chicago December 17, 1998 Green Bay, Wisconsin Minneapolis, Minnesota Bank Windsor, Nerstrand, Minnesota Bryan Family Management Trust, Bryan-Heritage Limited Partnership, Dallas December 10, 1998 Bryan, Texas Bryan, Texas The First National Bank of Bryan, Bryan, Texas Capital Bank Corporation, Capital Bank, Richmond November 30, 1998 Raleigh, North Carolina Raleigh, North Carolina Home Savings Bank of Siler City, Inc., SSB, Siler City, North Carolina CCBT Bancorp, Inc., Cape Cod Bank and Trust Company, Boston December 18, 1998 Hyannis, Massachusetts Hyannis, Massachusetts CDS Bancorp, Inc., First Bank & Trust, Chicago December 3, 1L998 Spirit Lake, Iowa Spirit Lake, Iowa Clarkston Financial Corporation, Clarkston State Bank, Chicago November 23, 1998 Clarkston, Michigan Clarkston, Michigan Commerce Bancorp, Inc., Prestige Financial Corp., Philadelphia December 18, 1998 Cherry Hill, New Jersey Flemington, New Jersey Prestige State Bank, Flemington, New Jersey EBA Bancshares, Inc., Eagle Bank of Alabama, Atlanta December 16, 1998 Opelika, Alabama Opelika, Alabama Eggemeyer Advisory Corp., PNB Financial Group, San Francisco December 10, 1998 Rancho Santa Fe, California Newport Beach, California Castle Creek Capital LLC, Pacific National Bank, Rancho Santa Fe, California Newport Beach, California Castle Creek Capital Partners Fund 1, LP, Rancho Santa Fe, California FBOP Corporation, Pullman Group, Inc., Chicago November 30, 1998 Oak Park, Illinois Chicago, Illinois Pullman Bank, Chicago, Illinois Fifth Third Bancorp, Ashland Bankshares, Inc., Cleveland December 10, 1998 Cincinnati, Ohio Ashland, Kentucky Fifth Third Bank of Southern Ohio, Hillsboro, Ohio First American Bank Group, Ltd., First American Credit Corporation, Chicago December 2, 1998 Fort Dodge, Iowa Jewell, Iowa First American Credit Corporation, Freedom Holdings, L.C.. Chicago December 2, 1998 Jewell, Iowa West Des Moines, Iowa Freedom Financial Bank, West Des Moines, Iowa The First Bancshares, Inc., The First National Bank of the Pine Atlanta December 24, 1998 Hattiesburg, Mississippi Belt, Laurel, Mississippi First Express of Nebraska, Inc.. Wauneta Falls Bancorp, Inc., Kansas City December 10, 1998 Gering, Nebraska Wauneta, Nebraska Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 Federal Reserve Bulletin • February 1999 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date The First National Bank at The First National Agency at St. James, Minneapolis December 3, 1998 St. James ESOP and Trust, Minnesota, Inc., St. James, Minnesota St. James, Minnesota First Perry Bancorp, Inc., The First National Bank of Marysville, Philadelphia December 10, 1998 Marysville, Pennsylvania Marysville, Pennsylvania First Security Bancorp, Baxter County Bancshares, Inc., St. Louis December 14, 1998 Searcy, Arkansas Mountain Home, Arkansas First Union Corporation, United Bancshares, Inc., Richmond December 18, 1998 Charlotte, North Carolina Philadelphia, Pennsylvania F.N.B. Corporation, Guaranty Bank & Trust Company, Cleveland December 21, 1998 Hermitage, Pennsylvania Venice, Florida Frontier Financial Corporation, Washington Banking Corporation, San Francisco December 3, 1998 Everett, Washington Oak Harbor, Washington Gateway American Bancshares, Inc.. Gateway American Bank of Florida, Atlanta November 27, 1998 Ft. Lauderdale, Florida Ft. Lauderdale, Florida Glacier Bancorp, Inc., Big Sky Western Bank, Minneapolis December 2, 1998 Kalispell, Montana Big Sky, Montana Harleysville National Corporation, Northern Lehigh Bancorp, Inc., Philadelphia November 30, 1998 Harleysville, Pennsylvania Slatington, Pennsylvania Henderson Citizens Bancshares, Jefferson National Bank, Dallas November 25, 1998 Inc., Jefferson, Texas Henderson, Texas Henderson Citizens Delaware Bancshares, Inc., Dover, Delaware Citizens National Bank, Henderson, Texas Heritage Financial Corporation, Harbor Bancorp, San Francisco December 17, 1998 Olympia, Washington Aberdeen, Washington The Bank of Grays Harbor, Aberdeen, Washington Heritage Financial Corporation. Washington Independent Bancshares, San Francisco December 17, 1998 Olympia, Washington Toppenish, Washington Central Valley Bank, N.A., Toppenish, Washington Homestead Financial Corporation Homestead Financial Corporation, Kansas City December 7, 1998 Employee Stock Ownership Plan, Beatrice, Nebraska Beatrice, Nebraska Jacksonville Bancorp, Inc., The Jacksonville Bank, Atlanta December 15, 1998 Jacksonville, Florida Jacksonville, Florida Lincoln County Bancorp, Inc., Exchange Bank of Missouri, St. Louis December 11, 1998 Troy, Missouri Fayette, Missouri Madison Financial Corporation, The Madison Bank, Cleveland December 10, 1998 Richmond, Ohio Richmond, Ohio Marquette Bancshares, Inc., C.A.S. Corporation, Minneapolis November 25, 1998 Minneapolis, Minnesota Minneapolis, Minnesota Oelwein Bancorporation, Minneapolis, Minnesota Wisconsin Financial Bancorporation, Inc., Minneapolis, Minnesota The Farmers and Mechanics Bank, Galesburg, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 137 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Mason-Dixon Bancshares, Inc., Sterling Bancorp, Richmond November 30, 1998 Westminster, Maryland Baltimore, Maryland Mason-Dixon Merger Sub, Inc., Westminster, Maryland Sterling Bank & Trust Co., Baltimore, Maryland NBC Capital Corporation, First National Corporation of West St. Louis December 16, 1998 Starkville, Mississippi Point, West Point, Mississippi First National Bank of West Point, West Point, Mississippi National Bank of the South, Tuscaloosa, Alabama Nixon Bancshares, Inc., Nixon Delaware Bancshares, Inc., Dallas November 25, 1998 Nixon, Texas Dover, Delaware Nixon State Bank, Nixon, Texas Northern Star Financial, Inc., Northern Star Bank, Minneapolis December 10, 1998 Mankato, Minnesota Mankato, Minnesota Northpointe Bancshares, Inc., Northpointe Bank, Chicago December 7, 1998 Grand Rapids, Michigan Grand Rapids, Michigan PAB Bankshares, Inc., Eagle Bancorp, Inc., Atlanta November 24, 1998 Valdosta, Georgia Statesboro, Georgia Eagle Bank and Trust Company, Statesboro, Georgia Peotone Bancorp, Inc., Southwest Bancorp, Inc., Chicago December 16, 1998 Peotone, Illinois Worth, Illinois Bank of the San Juans, Durango, Colorado Port William Bancshares, Inc., The First National Bank of Carrollton, St. Louis December 14, 1998 Carrollton, Kentucky Carrollton, Kentucky PSB Corporation, Denver Ban Corporation, Chicago December 2, 1998 Wellsburg, Iowa Denver, Iowa Denver Savings Bank, Denver, Iowa Red River Bancshares, Inc., Red River Bank, Atlanta November 27, 1998 Alexandria, Louisiana Alexandria, Louisiana Richland County Bancshares, Inc., Richland County Bank, Chicago November 19, 1998 Richland Center, Wisconsin Richland Center, Wisconsin Salt Lick Bancorp, Inc., Salt Lick Bank, Cleveland December 7, 1998 Salt Lick, Kentucky Salt Lick, Kentucky SUM Financial Corporation, The Citizens Exchange Bank, Atlanta December 2, 1998 Pearson, Georgia Pearson, Georgia Sun Bancorp, Inc., San National Bank, Delaware, Philadelphia December 1, 1998 Vineland, New Jersey Wilmington, Delaware Susquehanna Bancshares, Inc., First Capitol Bank, Philadelphia November 23, 1998 Lititz, Pennsylvania York, Pennsylvania Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 Federal Reserve Bulletin • February 1999 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date South Plains Financial, Inc., West Texas National Bancshares, Dallas November 19, 1998 Lubbock, Texas Lockney, Texas Lockney Holding Company, Inc., Wilmington, Delaware First National Bank of Lockney, Lockney, Texas First State Bank, Silverton, Texas Texas Country Bancshares, Inc., Knox City Bancshares, Inc., Dallas November 25, 1998 Brady, Texas Knox City, Texas TCB Delaware, Inc., Citizens Bank, Dover, Delaware Knox City, Texas Union Planters Corporation, FSB, Inc., St. Louis December 16, 1998 Memphis, Tennessee Covington, Tennessee Union Planters Holding Corporation, First State Bank of Covington, Memphis, Tennessee Tennessee Covington, Tennessee Union Planters Corporation, Southeast Bancorp, Inc., St. Louis December 16, 1998 Memphis, Tennessee Corbin, Kentucky Union Planters Holding Corporation, The First National Bank and Trust Memphis, Tennessee Company of Corbin, Corbin, Kentucky First Bank of East Tennessee, N.A., LaFollette, Tennessee University National Bancshares, University National Bank, Kansas City November 20, 1998 Pittsburg, Kansas Pittsburg, Kansas Valley Community Bancshares, Inc., Valley Bank, San Francisco December 2, 1998 Puyallup, Washington Auburn, Washington Valley National Corporation, Valle de Oro Bank, N.A., San Francisco November 19, 1998 Spring Valley, California Spring Valley, California Village Bancshares, Inc., State Bank of St. Libory, St. Louis December 16, 1998 St. Libory, Illinois St. Libory, Illinois Warren County Bancshares, Inc., Central Missouri Bancshares, Inc., St. Louis December 4, 1998 Warrenton, Missouri Sedalia, Missouri Central Bank of Missouri, Sedalia, Missouri Wells Fargo & Company, Metropolitan Bancshares, Inc., San Francisco November 25, 1998 San Francisco, California Aurora, Colorado Community Bank of Parker, Parker, Colorado Wells Fargo & Company, Norwest Financial Services, Inc., San Francisco December 9, 1998 San Francisco, California Des Moines, Iowa Norwest Financial Inc., Des Moines, Iowa Dial National Bank, Des Moines, Iowa Western Sierra Bancorp, Lake Community Bank, San Francisco December 11, 1998 Cameron Park, California Lakeport, California Western Bancorp, PNB Financial Group, San Francisco December 10, 1998 Newport Beach, California Newport Beach, California Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 139 Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Bank One Corporation, Paymentech, Inc., Chicago November 10, 1998 Chicago, Illinois Dallas, Texas Mellon Bank, N.A., Pittsburgh, Pennsylvania Banque Nationale de Paris, BNP Capital Markets, LLC, San Francisco December 2, 1998 Paris, France New York, New York BOK Financial Corporation, BOSC, Inc., Kansas City December 2, 1998 Tulsa, Oklahoma Tulsa, Oklahoma Comerica Incorporated, Inc., Comerica Equities, Chicago November 23, 1998 Detroit, Michigan Detroit, Michigan Decatur Bancshares, Inc., Grand Federal Savings Bank, St. Louis November 18, 1998 Decatur, Arkansas Grove, Oklahoma Deutsche Bank AG, German American Capital Corporation, New York November 19, 1998 Frankfurt am Main, Federal New York, New York Republic of Germany Boullioun Aviation Services, Inc., Bellevue, Washington Enterbank Holdings, Inc., Argent Capital Management, LLC, St. Louis December 22, 1998 Clayton, Missouri Clayton, Missouri FBOP Corporation, Inc., Calumet Bancorp, Inc., Chicago December 15, 1998 Oak Park, Illinois Dolton, Illinois Calumet Federal Savings and Loan Association, Dolton, Illinois First National Corporation North Botsford and Rice, Inc., Minneapolis December 10, 1998 Dakota, Grand Forks, North Dakota Grand Forks, North Dakota First Pryor Bancorp, Inc., Stephen L. Smith Corporation, Kansas City December 7, 1998 Pryor, Oklahoma Tulsa, Oklahoma First Western Bancorp, Inc., Coburn Insurance Agency, Inc., Minneapolis December 21, 1998 Huron, South Dakota Deadwood, South Dakota German American Bancorp, 1st Bancorp, St. Louis December 9, 1998 Jasper, Indiana Vincennes, Indiana First Federal Bank, A Federal Savings Bank, Vincennes, Indiana Financial Services of Southern Indiana Corp., Vincennes, Indiana Fleet Financial Group, Inc., Merrill Lynch Specialists, Inc., Boston December 17, 1998 New York, New York New York, New York Marquette Bancshares, Inc., Northland Financial Company, Minneapolis December 10, 1998 Minneapolis, Minnesota Minneapolis, Minnesota Old Point Financial Corporation, Old Point Trust & Financial Services, Richmond November 20, 1998 Hampton, Virginia N.A., Newport News, Virginia PNC Bank Corp., Hilliard-Lyons, Inc., Cleveland November 20, 1998 Pittsburgh, Pennsylvania Louisville, Kentucky Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 Federal Reserve Bulletin • February 1999 Section 4—Continued Applicant^ s) Nonbanking Activity/Company Reserve Bank Effective Date Regions Financial Corporation, EFC Holdings Corporation, Atlanta November 19, 1998 Birmingham, Alabama Charlotte, North Carolina EquiFirst Corporation, Charlotte, North Carolina EquiFirst Mortgage Corporation, Charlotte, North Carolina Money America, Inc., Charlotte, North Carolina USABancShares, Inc., USACredit, Inc., Philadelphia December 9, 1998 Philadelphia, Pennsylvania Philadelphia, Pennsylvania U.S. Bancorp, New Century Financial Corporation, Minneapolis November 12, 1998 Minneapolis, Minnesota Irvine, California Wells Fargo & Company, Mid-Penn Consumer Discount Co., San Francisco November 27, 1998 San Francisco, California Philadelphia, Pennsylvania Norwest Financial Services, Inc., Des Moines, Iowa Norwest Financial, Inc., Des Moines, Iowa Wells Fargo & Company, Mortgage Professionals of Tampa Bay, San Francisco December 11, 1998 San Francisco, California LLC, Norwest Mortgage, Inc., Tampa, Florida Des Moines, Iowa Norwest Ventures LLC, Des Moines, Iowa Wells Fargo & Company, Service Mortgage Group, LLC San Francisco December 9, 1998 San Francisco, California Louisville, Kentucky Norwest Mortgage, Inc., Des Moines, Iowa Norwest Ventures LLC, Des Moines, Iowa Westbank Corporation, Cargill Bancorp, Inc., Boston December 11, 1998 West Springfield, Massachusetts Putnam, Connecticut Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date BB&T Corporation, MainStreet Financial Corporation, Richmond December 16, 1998 Winston-Salem, North Carolina Martinsville, Virginia BB&T Financial Corporation of Virginia, Virginia Beach, Virginia Chickasha Bancshares, Inc., Cement Insurance Agency, Inc., Kansas City December 14, 1998 Chickasha, Oklahoma Cement, Oklahoma FVNB Corp., Citizens Bank of Texas, N.A., Dallas November 5, 1998 Victoria, Texas New Waverly, Texas FVNB Delaware Corp., Wilmington, Delaware CBOT Financial Corporation, New Waverly, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 141 APPLICATIONS APPROVED UNDER BANK MERGER ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board is listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Applicant(s) Bank(s) Effective Date Marine Midland Bank, First Commercial Bank of Philadelphia, December 9, 1998 Buffalo, New York Philadelphia, Pennsylvania By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Applicant(s) Bank(s) Reserve Bank Effective Date Ashland Bank, Fifth Third Bank of Southern Ohio, Cleveland December 10, 1998 Ashland, Kentucky Hillsboro, Ohio Bank of Colorado, Bank of Colorado-Front Range. Kansas City December 2, 1998 Fort Lupton, Colorado Windsor, Colorado Berks County Bank, Heritage National Bank, Philadelphia December 17, 1998 Reading, Pennsylvania Pottsville, Pennsylvania Chickasha Bank & Trust Company, Cement Bank, Kansas City December 14, 1998 Chickasha, Oklahoma Cement, Oklahoma Farmers & Merchants Bank, F&M Interim Bank, St. Louis November 25, 1998 Hannibal, Missouri Hannibal, Missouri The Ohio Bank, Mid American National Bank Trust Cleveland December 10, 1998 Findlay, Ohio Company, Toledo, Ohio Pinnacle Bank, The Citizens National Bank of Chicago November 25. 1998 St. Joseph, Michigan Evansville, Evansville, Indiana Citizens Bank of Western Indiana, Terre Haute, Indiana Citizens Bank of Central Indiana. Greenwood, Indiana Citizens Bank of Southern Indiana, Tell City, Indiana Citizens Bank of Kentucky, Madisonville, Kentucky Citizens Bank of Illinois, N.A., Mount Vernon, Illinois Salin Bank and Trust Company, Bank One Indiana, National Chicago December 7, 1998 Indianapolis, Indiana Association. Indianapolis, Indiana Valley Independent Bank, Fremont Investment and Loan. San Francisco Decembers, 1998 El Centra, California Anaheim, California Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142 Federal Reserve Bulletin • February 1999 PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the alty assessment by the Board. On May 22, 1998, the appel- Federal Reserve Banks in which the Board of Governors is not lee filed a cross-appeal from the partial final judgment. named a party. Fenili v. Davidson, No. C-98-O1568-CW (N.D. California, filed April 17, 1998). Tort and constitutional claim arising Fraternal Order of Police v. Board of Governors, No. out of return of a check. On June 5, 1998, the Board filed its l:98CV03116 (D. D.C., filed December 22, 1998). Declara- motion to dismiss. tory judgment action challenging Board labor practices. Logan v. Greenspan, No. l:98CV00049 (D.D.C., filed Janu- Inner City Press/Community on the Move v. Board of Gover- ary 9, 1998). Employment discrimination complaint. nors, No. 98-9604 (2d Cir., filed December 3, 1998). Ap- Goldman v. Department of the Treasury, No. 1-97-CV-3798 peal of district court order dated October 6, 1998, granting (N.D. Ga., filed December 23. 1997). Declaratory judgment summary judgment for the Board in a Freedom of Informa- action challenging Federal Reserve notes as lawful money. tion Act case. On March 2, 1998, the Board filed a motion to dismiss the Attorneys Against American Apartheid v. Board of Governors, action. No. 98-1483 (D.C. Cir., filed October 21, 1998). Petition Kerr v. Department of the Treasury, No. CV-S-97-01877for review of denial of reconsideration of a Board order DWH (S.D. Nev., filed December 22, 1997). Challenge to dated August 17, 1998, approving the merger of income taxation and Federal Reserve notes. On Septem- NationsBank Corporation, Charlotte, North Carolina, and ber 3, 1998, a motion to dismiss was filed on behalf of all BankAmerica Corporation, San Francisco, California. On federal defendants. December 7, 1998, the Board filed a motion to dismiss the Artis v. Greenspan, No. 97-5235 (D.C. Cir., filed Septempetition. ber 19, 1997). Appeal of district court order dismissing Independent Bankers Association of America v. Board of Gov- employment discrimination class action. On October 20, ernors, No. 98-1482 (D.C. Cir., filed October 21, 1998). 1998, the court of appeals affirmed the dismissal. Petition for review of a Board order dated September 23, To we v. Board of Governors, No. 97-71143 (9th Cir, filed 1998, conditionally approving the applications of Travelers September 15, 1997). Petition for review of a Board order Group, Inc., New York, New York, to become a bank dated August 18, 1997, prohibiting Edward Towe and holding company by acquiring Citicorp, New York, New Thomas E. Towe from further participation in the banking York, and its bank and nonbank subsidiaries. industry. Jones v. Board of Governors, No. 98-30138 (5th Cir., filed Bettersworth v. Board of Governors, No. 97-CA-624 (W.D. October 1, 1998). Appeal of district court dismissal of Tex., filed August 21, 1997). Privacy Act case. complaint alleging violations of the Fair Housing Act. Cunningham v. Board of Governors, No. 98-1459 (D.C. Cir., filed September 30, 1998). Petition for review of a Board FINAL ENFORCEMENT DECISION ISSUED BY THE order dated September 23, 1998, conditionally approving BOARD OF GOVERNORS the applications of Travelers Group, Inc., New York, New York, to become a bank holding company by acquiring In the Matter of Citicorp, New York, New York, and its bank and nonbank subsidiaries. On December 4, 1998, the Court granted the Ricardo Carrasco Board's motion to dismiss the petition. An Institution-Affiliated Party of Clarkson v. Greenspan, No. 98-5349 (D.C. Cir., filed July 29, BankBoston International 1998). Appeal of district court order granting Board's mo- Coral Gables, Florida tion for summary judgment in a Freedom of Information Act case. On September 14, 1998, the Board filed a motion Docket Nos. 98-013-E-I and 98-013-B-I for summary affirmance of the district court dismissal. Board of Governors v. Carrasco, No. 98 Civ. 3474 (LAK) Final Decision (S.D.N.Y., filed May 15, 1998). Action to freeze assets of individual pending administrative adjudication of civil This is an administrative proceeding pursuant to the Fedmoney penalty assessment by the Board. On May 26, 1998, eral Deposit Insurance Act ("FDI Act") stemming from the court issued a preliminary injunction restraining the the actions of respondent Ricardo Carrasco ("Respontransfer or disposition of the individual's assets and appoint- dent") while an employee of the New York branch (the ing the Federal Reserve Bank of New York as receiver for "Branch") of BankBoston International, Coral Gables, those assets. Florida ("BBI"), an Edge corporation subject to the Board of Governors v. Pharaon, No. 98-6101 (2d Cir., filed Board's supervision under section 25(a) of the Federal May 4, 1998). Appeal of partial denial of Board's motion Reserve Act (12 U.S.C. § 611 et seq.). On May 13, 1998, for summary judgment in action to freeze assets of individ- the Board issued a Notice of Intent to Prohibit from Particiual pending administrative adjudication of civil money pen- pation and a Notice of Charges and of Hearing in which it Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 143 alleged that Respondent violated the law, breached his B. Procedural History fiduciary duty, and engaged in unsafe or unsound banking practices in connection with certain overdraft accounts he As noted above, the Notice was issued by the Board on opened in the name of a BBI customer, Oldemar Carlos May 13, 1998. On May 21 and again on June 23, 1998, the Barriero ("Barriero"). Despite a number of efforts at ser- Notice was mailed by first-class mail to Respondent's last vice of the Notice, Respondent failed to file an answer. known address. A copy of the Notice was also taped to the Accordingly, he has waived his right to appear and contest door of his apartment on June 22, 1998. the allegations, and the Board has determined to issue the Respondent was a citizen of Uruguay and a fugitive attached Order of Prohibition and Restitution. from justice, having failed to respond to a criminal complaint and arrest warrant filed against him in the Southern I. Statement of the Case District of New York. The Board therefore took additional steps to restrain dissipation of his property in the United A. Statutory and Regulatory Framework States pending the outcome of this administrative proceeding. In May 1998 the Board filed an action in Federal The Board's regulations governing administrative hearings district court pursuant to section 8(i)(4) of the FDI Act, specify that if a respondent does not file an answer within 12 U.S.C. § 1818(i)(4), to obtain a preliminary injunction 20 days of service of the notice, the respondent is deemed to prevent Respondent from withdrawing or transferring to have waived the right to appear and contest the allega- assets pending the outcome of the administrative action tions in the notice. 12 C.F.R. 263.19(c). The Board's regu- against him. As part of that suit, and pursuant to the lations also identify how service of a notice must be made. direction of the district court judge, the Board published Papers required to be served by the Board, including the notice of a hearing in district court on the Board's motion initial notice, upon an individual who has not yet appeared for a temporary restraining order in the New York Times, in the proceeding must be served by: the Wall Street Journal, the Miami Herald, and the Los (i) personal service; Angeles Times. Respondent failed to appear at the hearing, (ii) delivery to a person "of suitable age and discre- and the district court entered a preliminary injunction retion" at the respondent's residence or place of em- straining Respondent's use of his property on May 26, ployment; 1998. (iii) registered or certified mail addressed to the person's On July 23, 1998, Board Enforcement Counsel filed a last known address; or Motion for Default in this administrative action. The mo- (iv) "any other method reasonably calculated to give tion was sent by certified mail to Respondent's last known actual notice." 12 C.F.R. 263.11(c)(2). address. No opposition was filed. Subsequently, on September 8, 1998, the ALJ issued an Order to Show Cause The FDI Act sets forth the substantive basis upon which requiring Respondent to respond and provide good reason a federal banking agency may issue against a bank official as to why he failed to file a timely answer to the Notice. an order of prohibition from further participation in bank- That Order was sent to Respondent's last known address ing. In order to issue such an order, the Board must make by registered mail, return receipt requested. No response each of three findings: was received. (1) that the respondent engaged in identified conduct, On October 8, 1998, the ALJ granted Enforcement including a violation of law or regulation, an unsafe or Counsel's Motion for Default, finding that Respondent had unsound banking practice, or a breach of fiduciary failed to file a timely answer and that no good cause had duty; been shown. Accordingly, the ALJ issued a recommended (2) that the conduct had a specified effect, including finan- decision that incorporated the findings and relief set out in cial loss to the institution or gain to the respondent; the Notice, including the order of prohibition and the cease and and desist order calling for restitution to BBI in the amount (3) that the respondent's conduct involved either personal of $73 million. dishonesty or a willful or continuing disregard for the safety or soundness of the institution. 12 U.S.C. II. Discussion § 1818(e)(l). The scope of the Board's review in a case where an The FDI Act also provides the substantive basis for a uncontested finding of default has been made by an admincease and desist order requiring restitution. Among other istrative law judge is limited to a determination that the things, a cease and desist order may be entered if the Board record supports a finding of default and that the allegations finds that a respondent has engaged in an unsafe or un- in the notice support the relief sought. sound practice or has violated any law, rule, or regulation. In the circumstances here under review, the Board finds 12 U.S.C. § 1818(b)(l). The cease and desist order may that the allegations contained in the Notice meet the staturequire restitution if the respondent was unjustly enriched tory criteria for the issuance of an order of prohibition and by the violation or practice, or if the violation or practice a cease and desist order including restitution. According to involved reckless disregard for the law or regulations. the Notice, Respondent opened at least 26 accounts for and 12 U.S.C. § 1818(b)(6)(A). in the name of Oldemar Carlos Barriero over a three-year Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

144 Federal Reserve Bulletin • February 1999 period without preparing necessary documentation evi- Order of Prohibition and Restitution dencing Barriero's relationship to and control over the accounts. During this period, Respondent caused the ac- WHEREAS, pursuant to sections 8(b) and 8(e) of the counts to accumulate approximately $73 million in over- Federal Deposit Insurance Act, as amended, (the "Act") drafts. BBI policy required all overdraft lines of credit to (12 U.S.C. §§ 1818(b) and (e)), the Board of Governors of be fully secured, and Respondent obtained his supervisor's the Federal Reserve System ("the Board") is of the opinauthorization for the overdrafts by falsely documenting ion, for the reasons set forth in the accompanying Final that the overdraft lines were fully collateralized by liquid Decision, that a final Order of Prohibition and Restitution assets. The assets identified as security for the Barriero should issue against RICARDO CARRASCO accounts were assets in the accounts of other Branch ("Carrasco"); customers who had not given Respondent authority to NOW, THEREFORE, IT IS HEREBY ORDERED, purpledge those assets as collateral for the Barriero accounts. suant to sections 8(b) and 8(e) of the Federal Deposit Respondent used the proceeds from the overdrafts for his Insurance Act, as amended (12 U.S.C. §§ 1818(b) and own use, and BBI has not been able to collect any of the 1818(e)), that: $73 million in overdrafts. 1. In the absence of prior written approval by the Board, Respondent's conduct alleged in the Notice constituted a and by any other Federal financial institution regulaviolation of law, an unsafe or unsound banking practice, tory agency where necessary pursuant to section and a breach of Respondent's fiduciary duty. He put his 8(e)(7)(B) of the Act (12 U.S.C. § 1818(e)(7)(B)), interests before the Branch's and caused substantial and Carrasco is hereby prohibited: unreimbursed losses to the Branch by creating and using (a) From participating in any manner in the conduct of overdrafts in the Barriero accounts. He obtained approval the affairs of any institution or agency specified for the overdraft accounts by submitting false documenta- in subsection 8(e)(7)(A) of the Act (12 U.S.C. tion indicating that the overdrafts were secured by liquid § 1818(e)(7)(A)), including, but not limited to, any assets. This conduct demonstrated personal dishonesty as depository institution, any bank or savings associawell as a willful disregard for the safety or soundness of tion holding company, or any branch or agency of a the Branch. In addition, his actions constituted violations foreign bank; of several criminal provisions, including misapplication of (b) From soliciting, procuring, transferring, attempting bank funds and making false entries in the books of a bank, to transfer, voting or attempting to vote any proxy, and showed a reckless disregard for the law. Finally, the consent, or authorization with respect to any voting Branch lost $73 million as a result of Respondent's actions, rights in any institution described in subsection and Respondent was unjustly enriched by the use of the 8(e)(7)(A) of the Act (12 U.S.C. § 1818(e)(7)(A)); proceeds of the overdraft accounts. (c) From violating any voting agreement previously Moreover, the Board finds that record establishes the approved by the appropriate Federal banking basis for a default order under the terms of the statute agency; or because Respondent failed to respond either to the Notice (d) From voting for a director, or from serving or or the Order to Show Cause despite service reasonably acting as an institution-affiliated party as defined in calculated to give him notice of the action. In addition to section 3(u) of the Act, (12 U.S.C. § 1813(u)), the copies of the Notice mailed to his last known address such as an officer, director, or employee. and taped to his apartment door, Respondent was also 2. (a) Carrasco shall make restitution in the amount of notified of the charges against him through the notices $73 million to BBI; published in newspapers of wide circulation as required by (b) The restitution shall be remitted in full, payable to the U.S. district court judge. While such extraordinary the "Board of Governors of the Federal Reserve measures are by no means required to establish utilization System" and forwarded to Jennifer J. Johnson, of a "method reasonably calculated to give actual notice," Secretary of the Board, Board of Governors of the 12 C.F.R. 263.1 l(c)(2)(v), they are certainly sufficient to Federal Reserve System, Washington, D.C. 20551, meet that standard. who shall make remittence of the same to BBI. 3. Any violation of this Order shall separately subject Conclusion Carrasco to appropriate criminal or civil penalties or both under section 8 of the Act (12 U.S.C. § 1818). For these reasons, the Board orders the issuance of the 4. This Order, and each provision hereof, is and shall attached Order of Prohibition and Restitution. remain fully effective and enforceable until expressly By Order of the Board of Governors, this 16th day of stayed, modified, terminated, or suspended in writing December, 1998. by the Board. 5. Pursuant to section 263.19(c) of the Board's Rules of Board of Governors of the Practice for Hearings, 12 C.F.R. 263.19(c), this Order Federal Reserve System is deemed to be an order issued upon consent for purposes of sections 8(b)(2), (e)(4), and (h) of the Act JENNIFER J. JOHNSON (12 U.S.C. §§ 1818(b)(2), (e)(4), and (h)). The provi- Secretary of the Board sions of this Order are effective immediately. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 145 By Order of the Board of Governors, this 16th day of Fred J. Smilek December, 1998. New York, New York Board of Governors of the The Federal Reserve Board announced on December 16, Federal Reserve System 1998, the issuance of an Order of Prohibition against Fred J. Smilek, a former officer of the Chemical Bank, JENNIFER J. JOHNSON New York, New York, a former state member bank. Secretary of the Board Zia New Mexico Bank FINAL ENFORCEMENT ORDERS ISSUED BY THE Tucumcari, New Mexico BOARD OF GOVERNORS The Federal Reserve Board announced on December 14, Kassahum Kebede 1998, the issuance of a Cease and Desist Order against the New York, New York Zia New Mexico Bank, Tucumcari, New Mexico. The Federal Reserve Board announced on December 16, 1998, the issuance of an Order of Assessment of a Civil Money Penalty against Kassahum Kebede, a former employee and institution-affiliated party of the Bankers Trust WRITTEN AGREEMENTS APPROVED BY FEDERAL Company, New York, New York, a state member bank. RESERVE BANKS Adairsville Bancshares, Inc. P. T. Ekspor Impor Bank Indonesia (Persero) Adairsville, Georgia Jakarta, Indonesia The Federal Reserve Board announced on December 16, The Federal Reserve Board announced on December 22, 1998, the issuance of an Order of Assessment of a Civil 1998, the execution of a Written Agreement by and among Money Penalty against the P.T. Ekspor Impor Bank Indone- Adairsville Bancshares, Inc., Adairsville, Georgia; the sia (Persero), Jakarta, Indonesia, and the bank's New York Bank of Adairsville, Adairsville, Georgia; the Federal Agency. Reserve Bank of Atlanta; and the Banking Commissioner of the State of Georgia. Putra Masagung and P.T. Gunung Agung, Ltd. Corporation Southern Security Bank Jakarta, Indonesia Hollywood, Florida The Federal Reserve Board announced on December 4, 1998, the issuance of a combined Order to Cease and The Federal Reserve Board announced on December 7, Desist and Order of Assessment of Civil Money Penalties 1998, the execution of a Written Agreement by and among against Putra Masagung and P.T. Gunung Agung, Ltd. the Southern Security Bank, Hollywood, Florida; the Corporation, Jakarta, Indonesia, and an Order of Prohibi- Federal Reserve Bank of Atlanta; and the State Comptroltion against Mr. Masagung. ler and Banking Commissioner of the State of Florida. 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 A27 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 • February 1999 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 TABLES A55 Banks' own claims on foreigners A56 Banks' own and domestic customers' claims on A64 Assets and liabilities of commercial banks, foreigners September 30, 1998 A56 Banks' own claims on unaffiliated foreigners A66 Terms of lending at commercial banks, A57 Claims on foreign countries—Combined November 1998 domestic offices and foreign branches A72 Assets and liabilities of U.S. branches and agencies of foreign banks, September 30, 1998 Reported by Nonbanking Business Enterprises in the United States A76 INDEX TO STATISTICAL TABLES 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 PMI Private mortgage insurance CRA Community Reinvestment Act of 1977 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 Special drawing right FNMA Federal National Mortgage Association SDR 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 • February 1999 1.10 RESERVES, MONEY STOCK. LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted' Monetary or credit aggregate Q4 Ql Q2 Q3 July Aug. Sept. Reserves of depository institutions2 1 Total -2.8 -1.9 -3.8 -7.4 4.9 -11.0 -5.4 5.0 2 Required -5.6 -1.8 -2.5 -9.0 1.0 -16.1 -2.5 3.8 3 Nonborrowed. -.6 -4.3 -8.4 -15.5 4.6 -10.5 -3.3 7.5 4 Monetary base" 6.9 4.1 6.9 5.0 8.9 11.5 9.3 9.1 Concepts of money, liquid assets, and de 5 Ml .9 3.0 .2 -2 5 -3.0 -3.1 3.5 7.2 9.8 6 M2 7.0 8.0 7.4 6.6 4.8 8.5 14.8 12.7 10.8 7 M3 10.0 11.0 10.2 7.4' 1.8' 12.6' 15.2' 13.7' 15.4 8 Debt 6.0 6.2 6.1 6.1 6.3 6.2 6.0 6.5 Nontransaction components 9 In M25 9.3 9.7 9.9 9.8 7.5 12.5 18.6 14.6 11.1 10 In M3 only6 19.5 20.3 18.8 9.7' -6.9' 24.7' 16.4' 16.4' 28.6 Time and savings deposits Commercial banks 11 Savings, including MMDAs 16.3 13.6 14.3 13.8 17.0 15.2 18.7 16.0 17.4 12 Small time7 4.5 1.5 -1.0 .8 .2 5.4 1.9 1.9 2.9 13 Large time8-9 9.9 19.5 18.0 -2.5 -29.8 11.9 -4.5 -6.4 13.5 Thrift institutions 14 Savings, including MMDAs 1.4 7.6 11.6 6.9 8.5 2.7 7.5 11.9 12.1 15 Small time7 -3.1 -.4 -5.6 -5.0 -5.3 -12.8 1.4 .7 -9.7 16 Large time8 5.4 14.4 -4.0 -9.6 -8.3 2.8 8.3 4.1 Money market mutual funds 17 Retail 15.1 19.0 21.0 21.3 5.0 32.9 48.3 31.3 17.0 18 Institution-only 22.0 18.9 36.5 21.6 -5.3 36.5 38.4 60.9 44.4 Repurchase agreements and Eurodollars 19 Repurchase agreements 39.5 34.1 14.5 10.6 18.9 33.4 29.8 -20.3 46.2 20 Eurodollars10 24.3 7.6 -7.7 27.8' 30.9' 40.1' 8.9' 32.9' 11.7 Debt components 21 Federal .4 -1.4 -1.5 -.9 -3.3 -3.1 22 Nonfederal 7.9 8.6 8.5 8.5 8.5 8.9 9.4 1. Unless otherwise noted, rates of change are calculated from average amounts outstand- depository institutions, and (4) Eurodollars (overnight and term) held by U.S. residents at ing during preceding month or quarter. foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom 2. Figures incorporate adjustments for discontinuities, or "breaks," associated with and Canada. Excludes amounts held by depository institutions, the U.S. government, money regulatory changes in reserve requirements. (See also table 1.20.) market funds, and foreign banks and official institutions. Seasonally adjusted M3 is calculated 3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally by summing large time deposits, institutional money fund balances, RP liabilities, adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency and Eurodollars, each seasonally adjusted separately, and adding this result to seasonally component of the money stock, plus (3) (for all quarterly reporters on the "Report of adjusted M2. Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whose Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfmancial vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference sectors—the federal sector (U.S. government, not including government-sponsored enterbetween current vault cash and the amount applied to satisfy current reserve requirements. prises or federally related mortgage pools) and the nonfederal sectors (state and local 4. Composition of the money stock measures and debt is as follows: governments, households and nonprofit organizations, nonfinancial corporate and nonfarm Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, commercial banks other than those owed to depository institutions, the U.S. government, and which are derived from the Federal Reserve Board's flow of funds accounts, are breakforeign banks and official institutions, less cash items in the process of collection and Federal adjusted (that is, discontinuities in the data have been smoothed into the series) and Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of month-averaged (that is, the data have been derived by averaging adjacent month-end levels). withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, 5. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail credit union share draft accounts, and demand deposits at thrift institutions. Seasonally money fund balances, each seasonally adjusted separately. adjusted Ml is computed by summing currency, travelers checks, demand deposits, and 6. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities OCDs, each seasonally adjusted separately. (overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and M2: Ml plus (1) savings (including MMDAs), (2) small-denomination time deposits (time term) of U.S. addressees, each seasonally adjusted separately. deposits—including retail RPs—in amounts of less than $100,000), and (3) balances in retail 7. Small time deposits—including retail RPs—are those issued in amounts of less than money market mutual funds. Excludes individual retirement accounts (IRAs) and Keogh $100,000. All IRA and Keogh account balances at commercial banks and thrift institutions balances at depository institutions and money market funds. Seasonally adjusted M2 is are subtracted from small time deposits. calculated by summing savings deposits, small-denomination time deposits, and retail money 8. Large time deposits are those issued in amounts of $100,000 or more, excluding those fund balances, each seasonally adjusted separately, and adding this result to seasonally booked at international banking facilities. adjusted Ml. 9. Large time deposits at commercial banks less those held by money market funds, M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2) depository institutions, the U.S. government, and foreign banks and official institutions. balances in institutional money funds, (3) RP liabilities (overnight and term) issued by all 10. Includes both overnight and term. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT1 Millions of dollars Average of Average of dally figures for week ending on date indicated daily figures Sept. Oct. 14 Oct. 21 Oct. 28 Nov. 4 Nov. 11 Nov. 18 Nov. 25 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 489,492' 495,325 490,836 493,033 495,211 U.S. government securities 2 Bought outright—System account^. . . 444,223 447,493 451,629 447,673 447,289 447,209 450,128 450,355 450,434 452,826 3 Held under repurchase agreements 6.303 3.235 3,391 2,672 4,096 2,025 3.333 1,903 4.084 .1,004 Federal agency obligations 4 Bought outright 417 394 373 400 388 385 373 372 5 Held under repurchase agreements . . 1,923 3.425 3,864 3,077 4,415 3.457 3,878 4.215 2,691 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 56 86 48 31 4 13 35 13 72 84 8 Seasonal credit 177 104 .15 110 99 91 67 46 33 23 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 622 181' 544 543 -178 266' -118 994 466 628 11 Other Federal Reserve assets 32,918 34,572 35,440 34,117 34,723 34,724 36,134 36,161 35,536 34,534 12 Gold stock 11,045 11,043 11,041 11,044 11,044 11,040 11,041 11,041 11,042 11,041 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 25,990 26,033 26,094 26.023 26,037 26.051 26,065 26.079 26,093 26,107 ABSORBING RESERVE FUNDS 15 Currency in circulation 492,822 496,396 502,660 497,334 497.191 496,617 498,252 500.979 502.563 503,865 16 Treasury cash holdings 93 91 92 92 92 90 87 87 98 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,296 5.407 5.135 5,480 5,322 5,326 5,030 5,256 4.801 5,026 18 Foreign 176 224 188 321 209 206 164 185 178 179 19 Service-related balances and adjustments 6,907 6,947' 6,867 7,055 6,953 6,860' 6,860 6,793 6,772 6,793 20 Other 360 414 403 417 408 424 406 416 410 389 21 Other Federal Reserve liabilities and capital .. 17,160 17,347 17,476 17,078 17,218 17.188 18,049 18.138 17,220 17,042 22 Reserve balances with Federal Reserve Banks4 9.061 8,941' 8.840 7.114 9,725 7.751' 11,301 7,499 9,514 7.118 End of-month figures Wednesday figures Sept. Oct. 21 Oct. 28 Nov. 4 Nov. 11 Nov. 18 Nov. 25 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 496,371 494,886' 504,547 491,277 492,306 489.060' 491,069 494,351 U.S. government securities' 2 Bought outright—System account1 . . 446,047 450 179 453,991 447.687 448,032 447.966 450,388 451.665 451,617 454,525 3 Held under repurchase agreements . . 12,135 4,286 8.970 2.045 4,115 2,279 2,050 940 3,630 3,830 Federal agency obligations 4 Bought outright 403 388 368 388 388 373 373 373 368 5 Held under repurchase agreements 2,099 3.538 6,172 4.570 5,488 3,440 3,234 3,605 4,263 4,662 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 896 1 101 0 1 3 15 126 8 Seasonal credit 159 68 15 109 94 83 59 36 24 19 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float -1,230 -329' 464 2,140 -266 101' -691 2,205 456 525 11 Other Federal Reserve assets 35,862 36.755' 34,567 34.238 34,455 34.802 35,654 36.189 33,973 35.073 12 Gold stock 11.044 11,041 11,041 11,044 11,044 11,041 11,041 11,041 11,041 11,040 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 25,995 26,065 26,121 26,023 26,037 26,051 26,065 26,079 26,093 26,107 ABSORBING RESERVE FUNDS 15 Currency in circulation 494,244 497,402 507,068 498,474 497,594 498,039 499.999 503,375 506,708 16 Treasury cash holdings 92 87 99 92 91 87 87 98 99 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 4,952 4.440 5,219 4.895 4,842 6.382 5,914 5.271 4,720 4.881 18 Foreign 347 154 211 189 177 211 191 157 214 252 19 Service-related balances and adjustments 6,992 6,860' 7,211 7,055 6,953 6,860' 6,860 6,793 6,772 6,793 20 Other 349 380 337 397 398 467 438 390 406 356 21 Other Federal Reserve liabilities and capita] . , 17,654 18,241 16,579 16,878 17,025 16,927 17,861 18.258 16,859 16,852 22 Reserve balances with Federal Reserve Banks4 17,981 13.627' 14,183 9.564 11,506 6,376' 6,026 7,290 8,240 9,534 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 3. Includes compensation that adjusts for the effects of inflation on the principal of 2. Includes securities loaned—fully guaranteed by U.S. government securities pledged inflation-indexed securities. with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back 4. Excludes required clearing balances and adjustments to compensate for float. under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Financial Statistics • February 1999 1.12 RESERVES AND BORROWINGS Depository Institutions' Millions of dollars Prorated monthly averages of biweekly averages Reserve classification 1995 1996 1997 1998 Dec. Dec. Dec. May June July Aug. Sept. Oct.' Nov. 1 Reserve balances with Reserve Banks2 20,440 13,395 10,673 9.646 9,668 9,646 9,682 9,284 9.026 8,855 2 Total vault cash 42,281 44,525 44,707 41,482 42,635 42,035 42,121 42,579 43.348 43,109 37,460 37,848 37,206 35,159 35.427 34,954 35,025 34,909 35,090 35,298 4 Surplus vault cash5 4.821 6,678 7,500 6,323 7,208 7,081 7,095 7,670 8,258 7,811 5 Total reserves6 57,900 51,242 47,880 44,805 45,095 44,600 44,707 44,193 44,115 44,152 56,622 49,819 46,196 43,655 43.475 43,235 43,194 42,509 42,544 42,529 7 Excess reserve balances at Reserve Banks 1,278 1,423 1.683 1,150 1.620 1.365 1,513 1,684 1,572 1,624 8 Total borrowings at Reserve Banks8 257 155 324 153 251 258 271 251 174 84 40 68 79 94 159 215 242 178 107 37 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 Biweekly averages of daily figures for two week periods ending on dates indicated 1998 July 29 Aug. 12 Aug. 26 Sept. 9 Sept. 23 Oct. 7 Oct. 21 Nov. 4' Nov. 18 Dec. 2 8,933 10,428 8,800 10,363 8,439 9,588 8,400 9,509 8,520 9,028 41,984 41,984 42,355 41,793 42,900 42,948 44,084 42,598 43,080 43,313 3 Applied vault cash4 34,770 35,157 35,024 34,712 35,039 34,905 35,321 34,897 34,935 35,855 7,214 6,827 7,330 7,081 7,862 8,043 8,763 7,701 8,145 7,458 43,703 45,585 43,824 45,075 43,477 44,493 43,720 44,405 43,455 44,882 42,341 44,147 42,392 43,153 42,093 42,514 42,520 42,599 41,913 43,224 7 Excess reserve balances at Reserve Banks7 1,362 1,437 1,431 1,922 1,384 1,978 1,200 1,806 1,542 1,658 8 Total borrowings at Reserve Banks 314 271 280 247 190 379 122 103 82 79 233 241 255 209 171 152 105 79 40 20 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) phis applied vault cash 2. Excludes required clearing balances and adjustments to compensate for float and (line 3). includes other off-balance-sheet "as-of' adjustments. 7. Total reserves (line 5) less required reserves (line 6). 3. Vault cash eligible to satisfy reserve requirements. It includes only vault cash held by 8. Also includes adjustment credit. those banks and thrifts that are not exempt from reserve requirements. Dates refer to the 9. Consists of borrowing at the discount window under the terms and conditions estabmaintenance periods in which the vault cash can be used to satisfy reserve requirements. lished for the extended credit program to help depository institutions deal with sustained 4. All vault cash held during the lagged computation period by "bound" institutions (that liquidity pressures. Because there is not the same need to repay such borrowing promptly as is, those whose required reserves exceed their vault cash) plus the amount of vault cash with traditional short-term adjustment credit, the money market effect of extended credit is applied during the maintenance period by "nonbound" institutions (that is, those whose vault similar to that of nonborrowed reserves. 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 credit Seasonal credit Extended credit3 Federal Reserve Bank 1/1 O 5 n /99 Effective date Previous rate 1/1 O 5 n /99 Previous rate 1/1 O 5 n /99 Previous rate Boston 4.50 11/18/98 4.85 5.25 1/14/99 5.35 New York. . . . 11/17/98 Philadelphia .. 11/17/98 Cleveland. . . 11/19/98 Richmond. . .. 11/18/98 Atlanta 11/18/98 Chicago 11/19/98 St. Louis 11/19/98 Minneapolis . 11/19/98 Kansas City 11/18/98 Dallas 11/17/98 San Francisco 11/17/98 4.75 4.75 1/14/99 4.85 5.25 1/14/99 Range of rates for adjustment credit in recent years4 Range (or F.R. Bank Range (or F.R. Bank Range (or F.R. Bank Effective date level)—All of level)—All of level)—All of F.R. Banks N.Y. F.R. Banks N.Y. F.R. Banks N.Y. In effect Dec 1981—Nov. 2 . 13-14 13 1988—Aug. 9 6-6.5 6.5 6 . 13 13 11 6.5 6.5 1978—Jan. 6-6.5 6.5 Dec. 4 . 12 12 6.5 6.5 1989—Feb. 24 6.5-7 May 6.5-7 7 1982—July 20 . 11.5-12 11.5 7 7 7 23 . 11.5 11.5 27 July 7-7.25 7.25 Aug. 2 . 11-11.5 11 6.5 7.25 7.25 3 . 11 11 1990—Dec. 19 Aug. 7.75 7.75 16 . 10.5 10.5 6-6.5 6 Sept. 8 8 27 . 10-10.5 10 1991—Feb. 1 6 6 Oct. 8-8.5 8.5 30. 10 10 4 5.5-6 5.5 8.5 8.5 Oct. 12 . 9.5-10 9.5 Apr. 30 5.5 5.5 8.5-9.5 9.5 13 . 9.5 9.5 May 2 5-5.5 5 9.5 9.5 Nov. 22 . 9-9.5 9 Sep't. 13 5 5 26. 9 9 17 4.5-5 4.5 1979—July 10 10 Dec. 14 . 8.5-9 9 Nov. 6 4.5 4.5 Aug. 10-10.5 10.5 15 . 8.5-9 8.5 7 3.5-4.5 3.5 10.5 10.5 17 . 8.5 8.5 Dec. 20 3.5 3.5 Sept. 10.5-11 11 24 1] 11 1984—Apr. 9 . 8.5-9 9 1992—July 2 3-3.5 3 Oct. 11-12 12 13 . 9 9 7 3 3 12 12 Nov. 21 . 8.5-9 8.5 26. 8.5 8.5 1994—May 17 3-3.5 3.5 1980—Feb. 12-13 13 Dec. 24 . 18 3.5 3.5 13 13 Aug.16 3.5-4 4 May 12-13 13 1985—May 20 . 7.5-8 7.5 18 4 4 12 12 24. 7.5 7.5 Nov.15 4-4.75 4.75 June 11-12 11 17 4.75 4.75 II 11 1986—Mar. 7 . 7-7.5 7 July 10-11 10 10. 7 7 1995—Feb. 1 4.75-5.25 5.25 10 10 Apr. 21 . 6.5-7 6.5 9 5.25 5.25 Sept. 11 11 23 . 6.5 6.5 Nov. 12 12 July 11 . 6 6 1996—Jan. 31 5.00-5.25 5.00 Dec 12-13 13 Aug. 21 . 5.5-6 5.5 Feb. 5 5.00 5.00 13 13 22. 5.5 5.5 1981—May 13-14 14 1998—Oct. 15 4.75-5.00 4.75 14 1987—Sept. 4 . 5S-6 6 Oct. 16 4.75 4.75 11 . 6 6 1998—Nov.17 4.50-4.75 4.50 Nov.19 4.50 4.50 In effect Jan. 15, 1999 . 4.50 4.50 1. Available on a short-term basis to help depository institutions meet temporary needs for of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a funds thai cannot be met through reasonable alternative sources. The highest rate established flexible rate somewhat above rates charged on market sources of funds is charged. The rate for loans to depository institutions may be charged on adjustment credit loans of unusual size ordinarily is reestablished on the first business day of each two-week reserve maintenance that result from a major operating problem at the borrower's facility. penod, but it is never less than the discount rate applicable to adjustment credit plus 50 basis 2. Available to help relatively small depository institutions meet regular seasonal needs for points. funds that arise from a clear pattern of intrayearly movements in their deposits and loans and 4. For earlier data, see the following publications of the Board of Governors: Banking and that cannot be met through special industry lenders. The discount rate on seasonal credit takes Monetary Statistics, 1914-1941, and 1941-1970; and the Annual Statistical Digest, 1970into account rates charged by market sources of funds and ordinarily is reestablished on the 1979. first business day of each two-week reserve maintenance period; however, it is never less than In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment-credit the discount rate applicable to adjustment credit. borrowings by institutions with deposits of $500 million or more that had borrowed in 3. May be made available to depository institutions when similar assistance is not successive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge was reasonably available from other sources, including special industry lenders. Such credit may in effect from Mar. 17, 1980, through May 7. 1980. A surcharge of 2 percent was reimposed be provided when exceptional circumstances (including sustained deposit drains, impaired on Nov. 17, 1980; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to access to money market funds, or sudden deterioration in loan repayment performance) or 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept 22, 1981, practices involve only a particular institution, or to meet the needs of institutions experiencing and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the difficulties adjusting to changing market conditions over a longer period (particularly at times surcharge was changed from a calendar quarter to a moving thirteen-week period. The of deposit distntermediation). 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 • February 1999 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS' Requirement Type of deposit Percentage of Effective date deposits Net transaction accounts 1 $0 million $47 8 million3 3 12/31/98 2 More than $47.8 million4 10 12/31/98 3 Nonpersonal time deposits 0 12/27/90 4 Eurocurrency liabilities 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 the total reservable or vault cash. Nonmember institutions may maintain reserve balances with a Federal liabilities of all depository institutions, measured on an annual basis as of June 30. No Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For corresponding adjustment is made in the event of a decrease. The exemption applies only to previous reserve requirements, see earlier editions of the Annual Report or the Federal accounts that would be subject to a 3 percent reserve requirement. Effective with the reserve Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions maintenance period beginning December 31, 1998, for depository institutions that report include commercial banks, mutual savings banks, savings and loan associations, credit weekly, and with the period beginning January 14, 1999, for institutions that report quarterly, unions, agencies and branches of foreign banks, and Edge Act corporations. the exemption was raised from $4.7 million to $4.9 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 Vz percent for by check, draft, debit card, or similar order payable directly to third parties) are savings the maintenance period that began Dec. 13, 1990, and to zero for the maintenance period that deposits, not transaction accounts. began Dec. 27, 1990. For institutions that report quarterly, the reserve requirement on 3. The Monetary Control Act of 1980 requires that the amount of transaction accounts nonpersonal time deposits with an original maturity of less than 1 Vi years was reduced from 3 against which the 3 percent reserve requirement applies be modified annually by 80 percent of percent to zero on Jan. 17, 1991. the percentage change in transaction accounts held by all depository institutions, determined The reserve requirement on nonpersonal time deposits with an original maturity of \x/2 as of June 30 of each year. Effective with the reserve maintenance period beginning years or more has been zero since Oct. 6, 1983. December 31, 1998, for depository institutions that report weekly, and with the period 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero beginning January 14, 1999. for institutions thai report quarterly, the amount was decreased in the same manner and on the same dates as the reserve requiremen! on nonpersonal time from $47.8 million to $46.5 million. deposits with an original maturity of less than 1 ]/z 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 Type of transaction and maturity Apr. May July Aug. Sept. U.S. TREASURY SECURITIES- Outrighl transactions {excluding matched transactions) Treasury bills 1 Gross purchases 10.932 9,901 9,147 3,550 0 0 0 0 0 0 2 Gross sales 0 0 0 0 0 0 0 0 0 0 3 Exchanges 405.296 426,928 436,257 46,802 35,190 32,830 40,312 34,607 33,140 40.712 4 For new bills 405,296 426,928 435,907 46.802 35,190 32,830 40,312 34,607 33,140 40,712 5 Redemptions 900 0 0 0 0 0 0 0 0 0 Others within one year 6 Gross purchases 390 524 5.549 1,369 0 0 0 1.038 741 7 Gross sales 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts 43,574 30,512 41,716 4,369 6,951 1.520 2,638 6.367 2,301 2,423 9 Exchanges -35,407 -41,394 -27,499 -2.601 -4,990 -5.084 -2,242 -8,964 -2.242 -400 10 Redemptions 1,776 2,015 1,996 0 0 1,311 0 0 602 One to five years 11 Gross purchases 5,366 3.898 19.680 2,993 0 0 0 535 3.989 725 12 Gross sales 0 0 0 0 0 0 0 0 0 0 13 Maturity shifts -34,546 -25,022 -37,987 -4,369 -6,620 -1,520 -2,638 -2,168 -2,301 -2,423 14 Exchanges 26,387 31,459 20,274 2,201 2,270 5,084 1,842 5,828 2.242 0 Five to ten years 15 Gross purchases 1,432 1,116 3,849 495 0 0 0 303 351 0 16 Gross sales 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts -3,093 -5,469 -1,954 0 -331 0 0 -3.411 0 0 18 Exchanges 7,220 6,666 5,215 0 2,720 0 0 1.364 0 400 More than ten years ] 9 Gross purchases 2,529 1,655 5.897 0 0 0 0 1.769 0 1,674 20 Gross sales 0 0 0 0 0 0 0 0 0 0 21 Maturity shifts -2,253 -20 -1,775 0 0 0 0 -789 0 0 22 Exchanges 1,800 3,270 2,360 400 0 0 400 1,772 0 0 All maturities 23 Gross purchases 20,649 17,094 44,122 8,407 0 0 0 3,593 5.377 3.140 24 Gross sales 0 0 0 0 0 0 0 0 0 0 25 Redemptions 2.676 2,015 1,996 286 0 0 1.311 0 0 602 Matched transactions 26 Gross purchases 2,197,736 3.092,399 3,577,954 354,756 367,934 369.358 373,285 346,245 380,594 402,581 27 Gross sales 2,202,030 3.094.769 3,580,274 354.741 368,281 370,569 371,142 348.318 382,063 400,995 Repurchase agreements 28 Gross purchases 331,694 457,568 810,485 59,548 7,722 57,098 52,116 39,078 63,924 40,823 29 Gross sales 328,497 450,359 809,268 50,663 20.456 41,414 63,531 38,402 59,731 48,672 30 Net change in U.S. Treasury securities 19,919 41,022 -13.081 14,473 -10,584 2,196 -3,725 FEDERAL AGENCY OBLIGATIONS Outright transactions 31 Gross purchases 0 0 0 0 0 0 0 0 32 Gross sales 0 0 0 0 0 25 0 0 33 Redemptions 1,003 409 1,540 74 25 50 48 15 Repurchase agreements 34 Gross purchases 36,851 75,354 160,409 13,547 1,575 14,548 11,236 33,431 18,486 51,471 35 Gross sales 36.776 74,842 159,369 13,042 3.300 12,913 12,341 30.625 19.953 50,032 36 Net change in federal agency obligations -928 103 -500 -1.725 1,610 -1,105 2,731 -1,515 1.424 37 Total net change in System Open Market Account . 15,948 20,021 40,522 17,452 -14,806 16,083 -11,689 4.927 6,586 -2,301 I. 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 • February 1999 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 1998 1998 Oct. 28 Nov 4 Nov. 1 1 Nov. 18 Nov. 25 Sept. 30 Oct. 31 Nov. 30 Consolidated coldnion statemei A.SSLTS 1 Gold certificate account 11.041 1 1.041 11.041 11,041 11.040 11,044 11.041 11.041 2 Special drawing rights certificate account . . 9.200 9.200 9.200 9.200 9,200 9.200 9.200 9,200 .1 Coin . . . . . . . 458 409 408 404 399 417 426 391 Loans 4 To depository institutions . . 84 60 39 39 146 1,055 69 17 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 f-i'tlcral wm \ obligations 7 Bought outright 188 173 173 373 368 403 388 168 8 Held under repurchase agreements 1.440 3.234 3.605 4,263 4,662 2,099 1.538 6.172 M Total US. Treasury securities 450.245 452.438 452.605 455.247 458,355 458.182 454,465 462,961 10 Bought ouLriiihr 447.966 450,388 451.665 451,617 454,525 446,047 450,179 453.991 11 Bills .". 196.578 197,659 197.757 196.355 197,167 195.864 197.450 196.631 12 Notes ... 184.33.1 185.034 1 86.206 186.646 187,887 184.186 185.03.1 1K7 888 13 Konds, . 67.055 67.696 67,702 68,617 69.472 65.996 67.696 69.472 14 Held under repurchase agreements 2.279 2.050 940 3,630 3.830 12.135 4.286 8.970 15 Total loans and securities 454,157 456.105 456,622 459,922 463,530 461,738 458.460 469,517 16 Items in process of collection 6,398 7,930 10.370 8.747 7,631 6.454 4.702 2.899 17 Bank premises 1,295 1.294 1.295 1.295 1.295 1.295 1.293 1.294 Other CI.VK-K 18 Denominated in foreign currencies 18.486 19.579 19,587 19.597 19,605 18,448 19.573 18.943 19 All other4 ' 15,114 15.386 15,371 13.146 14,555 15,880 15.976 14.456 20 Total assets 516.148 520,945 523,894 523,352 527,256 524,476 520,672 527,740 I.IABHJ'nf s 21 Federal Rescue notes 472.533 474.430 477.508 477,785 481,100 468.759 471,851 481.418 22 Total deposits 20,448 20,864 20,003 21,031 22,192 31,353 25,568 27,260 23 Depositor} institutions. ... 1 5,385 14.320 14,186 15.691 16.705 25.706 20.592 21,491 24 U.S. Treasurv—General account . 6,182 5,914 5.271 4,720 4.881 4.952 4.440 5,219 25 Fomtin—Oliicial accounts . ... 213 191 157 214 252 147 154 211 26 Other" 467 43K 390 406 356 349 380 337 6 "*40 7 791 8 1 ^6 7 678 7 1 1 ~* 6 711 'SO]"' "* 461 28 Other liabilities and accrued diwdends5 4.477 4J93 4.356 4.471 4,428 4,518 4.456 29 Total liabilities .... 503,697 507,477 509,992 510,965 514,832 511,460 506,948 515,617 CAPJIA1 ACCOUNTS 30 Capital paid in .... 5,919 5.923 5 912 5.935 5,908 5,910 5,920 5 911 31 Surplus 5.220 5.220 5.220 5.220 5.220 5,220 5,220 5,205 32 Other capital accounts . .... 1.311 2.325 2.749 1,232 1.296 1.886 2.583 987 33 Total liabilities and capital accounts . . 516,148 520,945 523.894 523,352 527,256 524.476 520,672 527,740 Mi-MO 34 Marketahle U.S. Treasur} securities held in custody for foreign and international accounts 576.334 575.765 578.930 591.187 591,187 564,692 576,466 596,157 Federal Rcserv note statemen 35 Federal Reserve notes outstanding (issued to Banks! 587.780 591.309 594.511 597.997 600.250 580.575 588,229 601.253 36 I.KSS. Held b\ Federal Reserve Banks 115.247 116.879 1 17.001 120.212 119,150 111.817 116.378 119.815 37 Federal Resenc notes, net 472.533 474.430 477.508 477.785 481,100 468.759 471,851 481,438 Collateral h<ld against ttortw tier }S Gold certificate account , , . 1 1.041 1 1.041 1 1,041 11.041 11.040 11.044 11,041 11.041 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 agencv securities 452,292 454.188 457.266 457,544 460,860 448,515 451,610 461.197 42 Total collateral 472,533 474,430 477,508 477,785 481,100 468,759 471,851 481.438 1. Sumc o( the data in this (able also appear in the Board's H.4 1 (5UM weekly statistical 3. Valued monthly at market exchange rates. release. For ordering address, see inside front eou*r 4. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury 2. includes securities loaned- -t'ulK guaranteed hy US Treasury securities pledged with bills maturing within ninety days. Federal Rcsene Banks—and includes compensation lhat adjusts for the effects of inflation on 5. Includes exchange-translation account reflecting the monthly revaluation at market the principal o( 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 A11 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month Type of holding and maturity Nov. 18 Sept. .10 Oct. 30 39 146 2 Within fifteen (lays' 7b 47 34 37 143 155 51 4 8 13 5 3 78 18 12 3. Sixteen days to ninety days 4 Total U.S. Treasury securities2 450,245 452,438 452,605 455,247 458,355 458,182 454,465 462.961 12,666 15,302 17,639 13,692 14.629 20,310 8,752 16,007 5 Within fifteen days' 92,901 91,727 95,103 96.249 96,504 90,644 100,244 100,695 6 Sixteen days to ninety days 142,266 141,032 134.307 139.064 138,884 145,875 141,715 138,427 7 Ninety-one days to one year 105.384 106,733 107,911 107,327 107,855 105,789 106,109 107.348 8 One year to five years 42,033 42,034 42.035 43.947 44,816 41,628 42.034 44.817 9 Five years to ten years 54.994 55,611 55,611 54.968 55.666 53,936 55.611 55.666 10 More than ten years 11 Total federal agency obligations . 3,828 3,607 3,978 4,636 5,030 2,502 3.926 6,540 12 Within fifteen days' 3.440 3,234 3.610 4,268 2,099 3,538 6.202 13 Sixteen days to ninety days 50 37 32 12 50 52 14 Ninety-one days to one year 85 93 100 100 100 75 93 100 15 One year to five years 58 58 51 51 51 93 58 51 16 Five years to ten years 185 185 185 185 185 185 185 185 17 More than ten years 0 0 0 0 0 0 0 1. Holdings under repurchase agreements are classified as maturing within fifteen days in 2. Includes compensation that adjusts for the eftect- of inllation on the principal of .-cordance with maximum maturity of the agreements. intlation-indexed securities Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Financial Statistics • February 1999 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1994 1995 1996 1997 Dec. Dec. Dec. Dec. Apr. May July Sept. Ocl.r Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 59.41 56.40 50.08 46.67 45.96 45.59 45.39 44.81 45.00 44.59 44.39 44.57 2 Nonborrowed reserves4 59.20 56.14 49.93 46.35 45.89 45.44 45.14 44.56 44.73 44.33 44.21 44.49 3 Nonborrowed reserves plus extended credit5 59.20 56.14 49.93 46.35 45.89 45.44 45.14 44.56 44.73 44.33 44.21 44.49 4 Required reserves 58.24 55.12 48.66 44.99 44.61 44.44 43.77 43.45 43.48 42.90 42.81 42.95 5 Monetary base6 418.12 434.17 452.38 480.15 487.20 489.10 491.63 493.70 497.37 502.14r 506.01 509.85 Not seasonally adjusted 6 Total reserves' 61.13 58.02 51.52 47.97 46.53 44.87 45.17 44.69 44.81 44.31 44.24 44.29 7 Nonborrowed reserves 60.92 57.76 51.37 47.65 46.45 44.71 44.92 44.43 44.54 44.06 44.07 44.21 8 Nonborrowed reserves plus extended credit5 60.92 57.76 51.37 47.65 46.45 44.71 44.92 44.43 44.54 44.06 44.07 44.21 9 Required reserves 59.96 56.74 50.10 46.29 45.18 43.72 43.55 43.32 43.30 42.63 42.67 42.67 10 Monetary base 422.51 439.03 456.72 485.11 487.36 488.28 491.18 495.35 497.56 501.02' 504.50 510.15 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves'' 61.34 57.90 51.24 47.88 46.48 44.81 45.10 44.60 44.71 44.19 44.12 44.15 12 Nonborrowed reserves 61.13 57.64 51.09 47.56 46.40 44.65 44.84 44.34 44.44 43.94 43.94 44.07 13 Nonborrowed reserves plus extended credit5 61.13 57.64 51.09 47.56 46.40 44.65 44.84 44.34 44.44 43.94 43.94 44.07 14 Required reserves 60.17 56.62 49.82 46.20 45.13 43.66 43.48 43.24 43.19 42.51 42.54 42.53 15 Monetary base 427.25 444.45 463.49 491.92 494.11 494.95 497.93 502.20 504.45' 507.83' 511.35 516.92 16 Excess reserves'3 1.17 1.28 1.42 1.68 1.35 1.15 1.62 1.37 1.51 1.68 1.57 1.62 17 Borrowings from the Federal Reserve .21 .26 .16 .32 .07 .15 .25 .26 .27 .25 .17 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly 8. To adjust required reserves for discontinuities that are due to regulatory changes in statistical release. Historical data starting in 1959 and estimates of the effect on required reserve requirements, a multiplicative procedure is used to estimate what required reserves reserves of changes in reserve requirements are available from the Money and Reserves would have been in past periods had current reserve requirements been in effect. Break- Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve adjusted required reserves include required reserves against transactions deposits and nonper- System, Washington, DC 20551. sonal time and savings deposits (but not reservable nondeposit liabilities). 2 Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory 9. The break-adjusted monetary base equals (1) break-adjusted total reserves (line 6). plus changes in reserve requirements. (See also table 1.10.) (2) the (unadjusted) currency component of the money stock, plus (3) (for all quarterly 3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, break- reporters on the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all adjusted required reserves (line 4) plus excess reserves (line 16). those weekly reporters whose vault cash exceeds their required reserves) the break-adjusted 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted, difference between current vault cash and the amount applied to satisfy current reserve break-adjusted total reserves (line 1) less total borrowings of depository institutions from the requirements. Federal Reserve (line 17). 10. Reflects actual reserve requirements, including those on nondeposit liabilities, with no 5. Extended credit consists of borrowing at the discount window under the terms and adjustments to eliminate the effects of discontinuities associated with regulatory changes in conditions established for the extended credit program to help depository institutions deal reserve requirements. with sustained liquidity pressures. Because there is not the same need to repay such 11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve borrowing promptly as with traditional short-term adjustment credit, the money market effect requirements. of extended credit is similar to that of nonborrowed reserves. 12. The monetary base, not break-adjusted and not seasonally adjusted, consists of (1) total 6 The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally reserves (line 11), plus (2) required clearing balances and adjustments to compensate for float adjusted, break-adjusted total reserves (line I), 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 February 1984, currency and vault cash figures have been measured over requirements. the computation periods ending on Mondays. 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess 13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14). reserves (line 16). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1998 1996 1997 Dec. Dec. Aug. Sept. Oct. Seasonally adjusted Measures" 1 Ml 1,150.7 1.128.7 1,082.8 1,076.0 1,069.0 1,072.1 1.078.5 1,087.3 2M2 3,503.0 3,651.2 3,826.1 4.046.4 4,240.7 4,292.9 4,338.5 4.377.4 3 NO 4,333.6 4,595.6 4,931.1 5.376.8 5,711.8 5,784.2 5,850.2 5,925.1 4 Debt 12.998.7 13,695.6 14.424.1 15,167.3 15.793.1 15.871.7 15,957.3 Ml components 5 Currency' 354.3 372.4 394.9 425.5 443.8 449.5 453.3 456.7 6 Travelers checks4 8.5 8.9 8.6 8.2 7.8 7.9 8.0 8.0 7 8 D O e th m e a r n c d h e d c e k p a o b s l i e t s d 5 eposits6 4 3 0 8 3 4 . . 9 0 3 3 9 5 1 6 . .4 0 4 2 0 7 3 5 . . 6 9 3 2 9 4 7 5 . . 1 2 2 3 4 7 3 4. . 2 2 3 24 7 1 3 . .6 2 3 2 7 4 4 3 . . 1 1 3 2 7 4 6 6 . .5 1 Nonlransaclion components 1 9 0 I I n n M M 3 2 7 only8 2, 8 3 3 5 0 2 . . 6 3 2. 9 5 4 2 4 2 . . 4 6 2 1 . . 7 1 4 0 3 5 . . 2 0 2 1 . . 9 3 7 3 0 0 . . 4 4 3 1 , , 1 4 7 7 1 1. .7 2 3 1 , . 2 4 2 9 0 1. . 3 8 3 1 , , 2 5 6 11 0 . . 7 0 3 1 , , 2 5 9 4 0 7. .1 7 Commercial banks 11 Savings deposits, including MMDAs . 752.6 775.0 904.8 1,020.9 1,117.8 1,135.2 1,150.3 1,167.0 12 Small time deposits' 503.2 575.8 594.5 625.7 626.4 627.4 628.4 629.9 13 Large time deposits10- " 298.7 345.4 413.2 487.5 527.9 525.9 523.1 529.0 Thrift institutions 1 1 4 5 S S a m v a in ll g t s i m de e p d o e s p it o s, s i i t n s9 cluding MMDAs 3 31 9 4 7 . . 2 3 3 35 5 7 9 . . 2 7 3 3 6 5 6 4 . . 9 3 3 34 7 3 6 . . 9 6 4 3 0 3 0 3 . . 1 8 4 3 0 3 2 4. . 2 6 4 3 0 3 6 4 . . 6 4 4 3 1 3 0 1 . 7 7 16 Large time deposits*" 64.7 74.2 78.0 85.4 86.2 86.4 87.0 87.3 Monc\ market mutual funds 17 Retail' 385.0 454.9 522.8 603.2 693.6 721.5 740.3 750.8 18 Institution-only 203.1 253.9 310.3 376.2 443.3 457.5 480.7 498.5 Repurchase agreements and Eurodollars 19 Repurchase agreements'2 183.3 194.2 236.1 265.5 272.1 267.5 277.8 20 Eurodollars'2 80.8 109.2 145.3 148.3 149.4 153.5 155.0 Debt components 21 Federal debt 3.492.4 3,638.9 3.780.6 3,798.4 3 770.3 3.760.0 3.750.3 22 Nonfederal debt 9,506.3 10.056.7 10.643.5 11,368.9 12,022.8 12.111.7 12,207.0 Not seasonally adjusted Measures 23 Ml .... 1,174.4 1,152.4 1,104.9 1,097.6 1,067.7 1,068.9 1,074.7 1,092.2 24 M2 3.523.4 3,672.0 3,845.4 4,065.3 4,245.1 4,284.2 4,324.3 4,379.1 25 M3 4.353.2 4,615.2 4.948.9 5,394.0 5,712.9 5.768.5 5,841.0 5,929.7 26 Debt 13,001.3 13,697.0 14.424.4 15,166.8 15,748.3 15,835.6 15,917.8 Ml components 27 Currency 357.5 376.2 397.9 429.0 444.3 448.2 452.5 457.3 28 Travelers checks4 8.1 8.5 8.3 7.9 8.2 8.1 8.1 7.8 29 Demand deposits5 400.3 407.2 419.9 413.0 374.2 372.6 372.9 381.1 30 Other checkable deposits6 408.6 360.5 278.8 247.7 241.0 239.9 241.3 246.0 Nontransaction components 31 InM27 2.349.0 2,519.6 2,740.5 2,967.8 3,177.4 3,215.3 3,249.6 3,286.9 32 In M3 only8 829.7 943.2 1.103.5 1,328.6 1,467.8 1.484.3 1,516.6 1,550.5 Commercial banks 33 Savings deposits, including MMDAs 751.7 774.1 903.3 1.019.0 1,120.1 1.133.5 1,146.1 1.166.2 34 Small lime deposits9 501.5 573.8 592.7 624.1 626.6 627.0 628.4 629.1 35 Large time deposits10' " 298.9 345.8 413.6 488.0 528.0 528.3 531.0 535.1 Thrift institutions 36 Savings deposits, including MMDAs .. 396.8 359.2 366.4 375.9 400.9 402.0 405.2 410.4 37 Small time deposits9 313.2 355.9 353.2 343.0 333.9 333.9 334.4 331.3 38 Large time deposits10 64.8 74.3 78.1 85.4 86.2 86.8 88.3 88.4 Money market mutual funds 39 Retail 385.9 456.4 524.8 605.8 695.9 719.0 735.6 749.9 40 Institulion-only 204.6 255.8 312.7 378.9 441.1 451.3 475.4 497.3 Repute huse agreements and Eurodollars 41 Repurchase agreements12 179.6 178.0 229.4 266.0 270.1 270.0 276.4 42 Eurodollars 81.8 89.4 146.9 146.6 147.7 151.9 153.4 Debt components 43 Federal debt 3,499.0 3,645.9 3,787.9 3,805.8 3,749.6 3,743.4 3,727.8 44 Nonfederal debt 9.502.3 10,051.1 10.636.5 11,361 1 11,998.7 12,092.2 12,190.0 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Financial Statistics • February 1999 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) weekly prises or federally related mortgage pools) and the nonfederal sectors (state and local statistical release. Historical data starling in 1959 are available from the Money and Reserves governments, households and nonprofit organizations, nonfinancial corporate and nonfarm Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and System, Washington, DC 20551. corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, 2. Composition of the money stock measures and debt is as follows: which are derived from the Federal Reserve Board's flow of funds accounts, are break- Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of adjusted (that is, discontinuities in the data have been smoothed into the series) and depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all month-averaged (that is, the data have been derived by averaging adjacent month-end levels). commercial banks other than those owed to depository institutions, the U.S. government, and 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depository foreign banks and official institutions, less cash items in the process of collection and Federal institutions. Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of 4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, Travelers checks issued by depository institutions are included in demand deposits. credit union share draft accounts, and demand deposits at thrift institutions. Seasonally 5. Demand deposits at commercial banks and foreign-related institutions other than those adjusled Ml is computed by summing currency, travelers checks, demand deposits, and owed to depository institutions, the U.S. government, and foreign banks and official institu- OCDs. each seasonally adjusted separately. tions, less cash items in the process of collection and Federal Reserve float. M2: Ml plus (1) savings deposits (including MMDAs), (2) small-denomination time 6. Consists of NOW and ATS account balances at all depository institutions, credit union deposits (lime deposits—including retail RPs—in amounts of less than $100,000), and (3) share draft account balances, and demand deposits at thrift institutions. balances in retail money market mutual funds. Excludes individual retirement accounts 7. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail (IRAs) and Keogh balances at depository institutions and money market funds. Seasonally money fund balances. adjusted M2 is calculated by summing savings deposits, small-denomination time deposits, 8. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities and retail money fund balances, each seasonally adjusted separately, and adding this result to (overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and seasonally adjusted ML term) of U.S. addressees. M3- M2 plus (1) large-denomination time deposits (tn amounts of $100,000 or more) 9. Small time deposits—including retail RPs—are those issued in amounts of less than issued by all depository institutions, (2) balances in institutional money funds, (3) RP $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are liabilities (overnight and term) issued by all depository institutions, and (4) Eurodollars subtracted from small time deposits. (overnight and term) held by U.S. residents at foreign branches of U.S. banks worldwide and 10. Large time deposits are those issued in amounts of $100,000 or more, excluding those at all banking offices in the United Kingdom and Canada. Excludes amounts held by booked at international banking facilities. depository institutions, the U.S. government, money market funds, and foreign banks and 11. Large time deposits at commercial banks less those held by money market funds, official institutions. Seasonally adjusted M3 is calculated by summing large time deposits, depository institutions, the U.S. government, and foreign banks and official institutions. institutional money fund balances, RP liabilities, and Eurodollars, each seasonally adjusted 12. Includes both overnight and term. separately, and adding this result to seasonally adjusted M2. Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial sectors—the federal sector (U.S. government, not including government-sponsored enter- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A15 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities' A. All commercial banks Billions of dollars Monthly averages Wednesday figures Account 1997 1998' 1998 Nov. May June July Aug. Sept. Oct. Nov. Nov. 4 Nov. 11 Nov. 18 Nov. 25 Seasonally adjusted Assets 1 Bank credit 4,073.6' 4,249.8 4,262.9 4,282.5 4.344.2 4,400.2 4,492.6 4,528.3 4,518.0 4,522.6 4,522.2 4,537.0 2 Securities in bank credit 1,075.1 1.126.1 1,121.6 1.130.2 1.155.5 1,175.4 1.216.5 1,225.9 1,225.3 1,220.3 1.221.9 1.230.6 3 U.S. government securities 742.8 772.0 756.9 760.4 770.6 766.4 773.5 788.1 785.7 783.2 786.7 795.5 4 Other securities 332.3 354.0 364.7 369.8 384.9 409.0 443.0 437.8 439.6 437.1 435.2 435.1 5 Loans and leases in bank credit- ... 2,998.5r 3,123.7 3,141.3 3,152.3 3,188.7 3,224.8 3,276.2 3,302.4 3,292.8 3,302.3 3,300.3 3,306.4 6 Commercial and industrial 845.4' 882.6 892.8 899.0 908.4 920.8 942.1 950.4 947.4 949.3 951.4 951.9 7 Real estate 1,226.7' 1,271.3 1,270.8 1,271.9 1,280.2 1.281.2 1,286.3 1,307.2 1,301.6 1,307.1 1,301.4 1,309.0 8 Revolving home equity 96.8 98.0 97.8 97.5 97.5 97.7 96.8 97.0 96.8 96.8 97.1 97.1 9 Other 1,129.? 1,173.3 1,173.1 1,174.4 1.182.8 1,183.5 1,189.5 1,210.3 1,204.7 1.210.2 1,204.3 1 211.9 10 Consumer SObff 504.9 501.3 496.4 495.6 498.8 499.3 501.4 500.7 501.5 502.2 501.5 11 Security' 99.7 123.2 130.3 132.5 139.1 144.5 159.5 154.4 157.2 157.2 156.9 153.1 12 Other loans and leases 319.8' 341.7 346.1 352.6 365.4 379.5 389.0 388.9 385.9 387.3 388.4 390.9 13 Interbank loans 200.7' 203.1 218.4 214.7 209.3 223.3 226.8 227.0 225.8 223.7 232.6 231.4 14 Cash assets4 273.1 250.7 250.3 243.5 251.9 252.8 243.5 250.3 240.7 256.6 242.2 261.7 1 5 Other assets5 295.4 312.5 312.6 309.5 311.9 316.6 311.5 317.4 316.8 318.2 317.1 316.0 16 Total assets6 4.786.1' 4,9583 urns 5,059.9 5,135.2 5.2163 5.264.6 5,242.9 5,262.8 5,255.8 5288.0 Liabilities 17 Deposits 3,105.4 3,205.5 3,223.2 3,196-5 3,228.1 3,249.6 3,273.0 3,315.9 3,297.3 3,309.0 3,301.1 3,343.9 18 Transaction 693.6 687.8 683.2 667.3 668.0 677.5 668.4 668.4 658.9 664.1 657.2 701.8 19 Nontransaction 2,411.8 2,517.6 2,540.1 2,529.2 2,560.1 2,572.0 2,604.6 2,647.5 2.638.4 2,644.9 2,644.0 2,642.1 20 Large time 633.3 674.9 685.4 667.2 678.9 684.2 696.4 707.1 699.4 705.7 709.8 709.5 21 Other 1,778.5 1,842.7 1,854.7 1,862.0 1,881.1 1,887.8 1.908.2 1,940.4 1,939.0 1.939.2 1,934.2 1.932.6 22 Borrowings 814.1 861.9 858.3 859.8 864.0 892.3 942.4 981.0 963.6 968.9 990.3 991.9 23 From banks in the US 300.7 282.1 287.9 290.0 293.9 303.5 319.5 324.5 319.2 318.2 329.6 324.7 ^4 From others 513.4 579.8 570.4 569.8 570.0 588.8 622.9 656.5 644.4 650.7 660.7 667.1 25 Net due to related foreign offices 185.0 174.4 170.6 186.3 201.4 200.3 223.7 216.9 237.9 228.2 216.8 200.4 26 Other liabilities 280.3 299.3 308.0 317.6 326.0 334.6 348.8 327.7 338.1 333.0 323.1 320.9 27 Total liabilities 4.384.8 4,541.0 4,560.2 4,560.2 4.619.4 4,676.7 4,7875 4341.5 4,837.0 4,839.2 43312 4357.O 28 Residual (assets less liabilities)7 401.3' 417.5 426.3 432.2 440.5 458.4 428.4 423.1 405.9 423.6 424.5 431.0 Not seasonslly adjusted Assets 29 Bank credit 4,081.2' 4,244.8 4,264.3 4.276.4 4.330.6 4 387 1 44962 4,536.6 4,544.9 4,529.9 4,529 9 4.534.4 30 Securities in bank credit 1,074.6 1,130.8 1,124.5 1,124.6 1,147.0 1,163.4 1,212.8 1,225.6 1,233.6 1,220.9 1,220.9 1,224.5 31 U.S. government securities 744.3 776.7 759.4 756.6 765.7 761.3 770.9 789.2 788.8 784.5 786.9 794.4 32 Other securities 330.3 354.1 365.1 368.0 381.3 402.1 441.9 436.3 444.8 436.4 434.0 430.1 33 Loans and leases in bank credit2 .. . 3,006.6' 3,114.0 3.139.8 3,151.8 3,183.6 3,223.7 3,283.4 3,311.1 3,311.3 3,309.0 3,309.1 3,309.9 34 Commercial and industrial 844.1' 888.2 895.5 898.6 902.4 915.3 940.0 948.9 949.4 947.1 950.7 949.4 35 Real estate 1,232.9' 1.265.1 12684 1,274.0 1.283.8 1,286.1 1 293.0 1.313.9 1,309.6 1,315.8 1,307.7 1.314.1 36 Revolving home equity 97.5 97.6 97.5 97.5 97.6 98.4 97.6 97.7 97.7 97.6 97.9 97.7 37 Other 1,135.4' 1,167.4 1.170.9 1,176.5 1,186.2 1,187.7 1,195.4 1,216.2 1,212.0 1,218.2 1,209.7 1,216.4 38 Consumer 509.4' 499.6 498.5 494.4 497.2 501.6 501.1 503 9 501.1 503.3 504.6 504.2 39 Security3 100.6' 122.6 130.2 130.3 134.5 141.1 160.0 155.7 161.4 157.0 157.6 154.2 40 Other loans and leases 319.6' 338.5 347.1 354.6 365.7 379.7 389.2 388.6 387.7 385.7 388.5 388.0 41 Interbank loans 2O6.Cf 198.7 215.0 208.3 202.2 217.6 222.9 233.4 233.5 230.0 240.2 230.8 42 Cash assets4 283.0 246.3 245.3 239.1 239.6 250.8 247.3 259.6 243.9 263.8 255.8 263.4 4^ Other assets5 296.5 312.0 311.1 310.8 313.9 317.8 310.7 318.5 319.0 320.3 317.4 315.3 44 Total assets6 4,809.9' 4,944.3 4,978.0 4^»76.8 5,028.6 5,115.3 5,218.9 5,289.7 5,282.7 5,285.5 5,284.8 5285.7 Liabilities 45 Deposits 3.123.6 3,189.0 3,215.3 3,189.0 3,217.9 3,253.7 3.276.7 3,334.5 3,318.5 3,329.0 3,324.2 3,342.4 46 Transaction 704.5 676.0 678.2 662.4 654.6 672.8 6644 679.1 667.2 668.8 673.7 700.8 47 Nontransaction 2,419.1 2,513.0 2,537.1 2,526.6 2,563.3 2,580.9 2.612.3 2,655.4 2,651.3 2,660.2 2,650.5 2,641.6 48 Large time 639.0 675.2 683.1 663 9 678.0 685.9 700.4 7133 704.9 712.5 714.4 716.9 49 Oilier 1,780.1 1,837.8 1,854.0 1,862.7 1,885.3 1.895.0 1,912.0 1.942.1 1,946.4 1,947.7 1.936.1 1.924.6 50 Borrowings 811.6 867.5 868.1 864.4 857.0 895.8 938.7 976.9 963.0 963.7 986.7 981.3 51 From banks in the US 301.0 283.3 290.9 290.2 290.0 302.4 315.4 324.8 317.3 316.9 329.9 324.0 52 From others 510.6 584.2 577.2 574.1 567.0 593.5 623.3 652.1 645.7 646.8 656.8 657.3 53 Net due to related foreign offices .... 181.7 183.0 176.6 188.3 201.8 200.4 220.5 213.7 229.6 223.7 212.7 203.6 54 Other liabilities 281.9 298.8 307.2 317.0 326.0 334.4 348.5 329.1 338.6 334.3 324.6 322.8 55 Total liabilities 43983 4,538.2 43672 4,558.6 4,6017 4,684.2 4,78*5 4.854.1 4349.7 4,850.8 43482 4350.1 56 Residual (assets less liabilities)7 .... 411.2' 406.1 410.8 418.2 425.8 431.1 434.4 435.6 433.1 434.7 436.7 435.6 MEMO 57 Revaluation gains on off-balance-sheet items8 84.2 85.9 92.7 92.7 95.7 110.0 130.1 110.1 118.1 111.5 106.8 103.0 58 Revaluation losses on off-balancesheet items'* 85.4 85.0 90.6 90.6 96.5 110.7 128.1 109.6 117.0 112.6 106.9 102.6 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • February 1999 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities'—Continued B. Domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1997 1998' 1998 Nov. May June July Aug. Sept. Oct. Nov. Nov. 4 Nov. 11 Nov. 18 Nov. 25 Seasonally adjusted Assets 1 Bank credit 3.525.8' 3.685.7 3,694.7 3,709.5 3.753.8 3.793.5 3,864.4 3,904.3 3.891.6 3,897.8 3,897.8 3,910.0 2 Securities in bank credit 883.7 928.9 921.4 929.6 944.2 961.3 996.3 1,002.9 1.000.0 998.8 998.9 1.006.6 3 U.S. government securities 663.3 682.9 668.4 669.8 677.4 685.1 694.7 708.6 703.3 705.1 707.4 715.4 4 Other securities 220.5 246.0 253.0 259.8 266.8 276.2 301.5 294.3 296.7 293.7 291.5 291.2 5 Loans and leases in bank credit2 .... 2,642.1' 2,756.8 2,773.3 2.779.9 2,809.6 2,832.1 2,868.1 2,901.4 2,891.6 2,899.0 2,898.8 2,903.4 6 Commercial and industrial 624.9' 671.9 680.9 684.1 692.5 700.7 715.0 723.5 720.4 722.2 724.4 724.8 7 Real estate 1.200.1' 1,247.0 1,246.7 1.248.0 1,256.6 1,257.9 1.263.4 1,285.6 1,279.1 1.285.0 1,279.5 1,288.0 8 Revolving home equity 96.8 98.0 97.8 97.5 97.5 97.7 96.8 97.0 96.8 96.8 97.1 97.1 9 Other 1.103.3' 1.149.0 1,148.9 1,150.6 1,159.1 1.160.1 1,166.6 1,188.6 1.182.2 1,188.1 1.182.4 1,190.9 10 Consumer 506.9' 504.9 501.3 496.4 495.6 498.8 499.3 501.4 500.7 501.5 502.2 501.5 11 Security1 57.4 62.0 67.7 69.9 73.6 75.4 87.9 87.6 89.7 88.7 90.4 86.0 12 Other loans and leases 252.7' 271.1 276.6 281.6 291.3 299.4 302.5 303.3 301.7 301.6 302.3 303.1 13 Interbank loans 177.1' 181.4 194 4 192.6 186.7 191.9 196.9 195.8 197.2 193.5 196.3 201.9 14 Cash assets4 238.2 216.0 215.5 208.5 217.9 218.7 207.8 216.6 206.6 222.7 208.1 228.8 15 Other assets^ 249.3 278.4 278.8 275.4 276.1 278.6 272.1 280.7 278.9 281.6 278.0 281.5 16 Total assets6 .. 4,134.0' 4^04.1 4,326.0 4,328.4 4,377.5 4,425.2 4,483.4 4,539.3 4,516.3 4,537.5 4,522.2 4,564.3 Liabilities 17 Deposits 2.832.6 2.910.2 2,920.1 2,898.4 2,921.1 2,933.8 2,952.5 2,998.8 2.984.8 2,995.0 2,980.7 3,022.5 18 Transaction 683.4 676.3 672.0 653.7 656.0 662.5 653.7 656.4 645.5 653.2 644.2 690.0 19 Nontransaction 2,149.2 2,233.9 2,248.0 2,244.7 2,265.1 2,271.3 2,298.8 2,342.4 2,339.3 2,341.8 2,336.5 2,332.5 20 Large time 374.1 391.7 393.1 384.1 383.6 382.5 394.7 407.3 403.7 406.6 408.4 407.2 21 Other 1,775.1 1,842.2 1,854.9 1,860.6 1,881.5 1,888.8 1,904.1 1,935.1 1.935.6 1.935.2 1.928.1 1,925.3 22 Borrowings 657.8 698.5 691.2 690.1 694.2 708.2 748.6 787.2 771.9 777.2 792.5 797.9 23 From banks in the US 271.7 259.7 258.4 263.4 270.1 271.2 283.9 287.6 286.3 288.2 291.2 284.3 24 From others 386.1 438.8 432.8 426.7 424.1 436.9 464.7 499.6 485.6 489.0 501.3 513.6 25 Net due to related foreign offices 67.9 73.3 73.4 79.3 92.8 105.1 117.7 117.6 119.5 121.9 115.8 116.9 26 Other liabilities 184.2 211.9 218.1 224.2 226.9 230.8 241.8 225.6 232.6 232.0 221.4 219.4 27 Total liabilities 3,742.5 3,893.8 3,902.7 3,892.0 3,935.0 3,977.9 4.060.6 4,129.2 4,108.8 4,126.1 4,110.5 4,156.7 28 Residual (assets less liabilities)7 .... 391.5' 410.2 423.2 436.5 442.5 447.3 422.8 410.0 407.5 411.4 411.7 407.6 Not seasonally adjusted Assets 29 Bank credit 3.538.7' 3.679.1 3,693.1 3.700.6 3,737.8 3.785.5 3.868.6 3,920.2 3,916.6 3.911.6 3,914.7 3.919.2 30 Securities in bank credit 886.9 929.7 921.2 921.2 931.4 952.5 992.3 1,007.9 1.007.4 1,003.3 1,004.4 1.008.9 31 U.S. government securities 663.7 687.0 670.8 666.3 671.7 680.0 691.6 708.8 704.4 704.7 707.5 714.5 32 Other securities 223.2 242.7 250.4 254.9 259.7 272.5 300.6 299.0 303.0 298.6 297.0 294.4 33 Loans and leases in bank credit2 .... 2.651.8' 2,749.4 2.771.9 2,779.4 2,806.4 2.833.0 2,876.3 2,912.3 2,909.2 2,908.3 2,910.3 2,910.4 34 Commercial and industrial 623.9' 678.0 683.7 683.9 687.6 696.3 713.1 722.4 721.3 720.4 724.0 723.0 35 Real estate 1,206.0' 1,240.8 1,244.4 1,250.4 1.260.2 1,262.8 1,269.9 1,292.0 1,286.8 1,293.5 1,285.5 1,292.9 36 Revolving home equity 97.5 97.6 97.5 97.5 97.6 98.4 97.6 97.7 97.7 97.6 97.9 97.7 37 Other 1.108.5' 1,143.2 1,147.0 1.152.9 1,162.7 1,164.4 1.172.2 1,194.3 1.189.2 1.195.9 1,187.6 1.195.1 38 Consumer 509.4' 499.6 498.5 494.4 497.2 501.6 501.1 503.9 503.1 503.3 504.6 504.2 39 Security3 58.4' 62.0 67.8 68.4 69.9 72.3 88.3 89.1 93.5 89.1 91.8 87.2 40 Other loans and leases 254.0' 268.9 277.4 282.4 291.4 300.0 304.0 304.9 304.5 302.0 304.4 303.0 41 Interbank loans 182.4' 177.0 191.1 186.2 179.6 186.3 193.0 202.3 204 9 199.8 203.9 201.3 42 Cash assets4 247.3 211.9 209.5 204.2 205.6 216.5 211.4 225.0 209.2 229.2 220.8 229.8 43 Other assets5 249.8 277.5 278.1 277.0 277.2 279.8 272.3 281.3 281.0 283.2 278.1 280.1 44 Total assets6 4,161.6' 4,288.2 4,314.3 4,310.5 4,342.8 4,410.4 4,487.4 4,570.5 4.553.4 4,565.7 4,559.3 4,572.5 Liabilities 45 Deposits 2,851.3 2,890.9 2,910.3 2,892.7 2,912.2 2,936.4 2,956.7 3,018.4 3,007.3 3,015.4 3,006.2 3,021.4 46 Transaction 694.2' 664.7 667.0 648.7 642 6 657.1 649.6 667 2 653 6 658.0 660.8 689.2 47 Nontransaction 2,157.0 2,226.2 2,243.3 2,244.0 2,269.6 2,279.3 2,307.1 2,351.2 2,353.6 2,357.4 2,345.4 2,332.2 48 Large time 378.5 389.9 390.7 383.0 386 0 385 9 398.1 412.4 408.8 411.8 413.5 412.4 49 Other 1,778,5 1,836.3 1,852.6 1.861 0 1,883.6 1.893.3 1.909.0 1,938.8 1.944.8 1,945.6 1,931.9 1,919.8 50 Borrowings 655.3 704.1 700.9 694.6 687.2 711.7 744.9 783.1 771.3 772.1 788.9 787.3 51 From banks in the US 272.0 260.9 261.3 263.6 266.2 270.1 279.9 287.9 284.4 286.9 291.6 283.6 52 From others 383.3 443.2 439.6 431.0 421.0 441.6 465.1 495.2 486.9 485.1 497.3 503.8 53 Net due to related foreign offices .... 64.0 80.9 80.1 84.9 96.7 106.8 115.5 113.7 115.1 117.3 112.0 114.6 54 Other liabilities 184.2 211.9 218.1 224.2 226.9 230.8 241.8 225.6 232.6 232.0 221.4 219.4 55 Total liabilities 3,754.7 3,887.8 3,909.4 3,896.4 3,923.0 3,985.7 4,059.0 4,140.7 4,126.2 4,136.7 4,128.5 4,142.7 56 Residual {assets less liabilities)7 406.9' 400.4 404.9 414.1 419.8 424.6 428.4 429.8 427.2 429.0 430.8 429.8 MEMO 57 Revaluation gains on off-balance-sheet items^ 41.2 45.6 50.5 51.0 51.9 61.7 78.7 62.7 69.1 65 2 59 6 56 5 58 Revaluation losses on orf-balanceshect items8 43.3 46.3 50.1 50.4 54.2 65.1 80.5 65.1 72.4 69.5 62.3 58.8 59 Mortgage-backed securities4 275.1 298.0 291.2 294.4 301.9 314.0 337.1 346.4 347.8 346.3 342.0 348.2 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 1998' 1998 Nov.' May June July Aug. Sept. Oct. Nov. Nov. 4 Nov. 11 Nov. 18 Nov. 25 Seasonally adjusted Assets 1 Bank credit 2,157.2 2,276.6 2,274.6 2274 3 2 305 0 2 336 1 2 391 0 2.406.6 24079 2411 7 2,394.9 2405 8 2 Securities in bank credit 485.9 528.2 519.8 521.8 532.5 547.3 572.8 569.3 573.5 570.1 563.0 56M 3 U.S. government securities 350.2 371.2 357.2 355.7 361.6 368.1 372.0 380.0 378.8 379.1 377.7 384.8 4 Trading account 26.7 23.3 2.3.4 20.4 21.3 22.0 20.9 23.4 24.9 24.8 22.6 23.5 5 Investment account 323.5 347.9 333.8 335.3 340.3 346.1 351.1 356.6 353.8 354.4 355.1 361.3 6 Other securities 135.7 157.0 162 7 166 1 170 9 179 2 200.8 1893 194 7 191 0 185.3 1849 7 Trading account 63.4 75.6 79.5 81.1 83.1 89.5 109.1 92.5 98.7 95.0 88.2 88^5 8 Investment account 72.4 81.4 83.2 85.0 87.7 89.8 91.7 96.8 96.0 96.0 97.0 96.5 9 State and local government . 22.3 22.8 22.2 22.4 22.6 23.2 23.9 24.6 24.2 24.3 24.6 25.0 10 Other 50.1 58.6 60.9 62.6 65.1 66.6 67 8 72.2 71.8 71 7 72.4 71.5 11 Loans and leases in bank credit2 . . 1.671.3 1,748.5 1,754.7 1,752.5 1.772.5 1,788.7 1,818.2 1,837.3 1,834.5 1,841.6 1,831.9 1,836.1 12 Commercial and industrial 450.2 488.8 495 9 497.4 502.8 5087 521.2 527.9 525 6 527.7 528.8 528.6 13 Bankers acceptances 1.3 1.3 1.2 1.3 1.3 13 1.2 1.2 1.3 1.4 1.3 13 14 Other 448.9 487.5 494.6 496.1 501.5 507.4 520.0 526.7 526.1 528.2 529.2 529.0 15 Real estate 677.4 697.6 691.0 6862 687.4 685 1 685 7 6978 696.9 702 1 690.0 697.3 16 Revolving home equity 68.8 69.7 69.2 68/7 68.6 68.8 68.0 67J 67.7 67.8 67.7 67.8 17 Other 608.6 627.9 621.8 617.5 618.8 616.2 617.8 630.2 629.2 634.3 622.3 629.5 18 Consumer 304.9 304.5 300 5 2950 296.1 299.2 3002 300.8 301 7 302 3 300.1 3002 19 Security' 52.2 56.3 61.7 63.9 67.4 68.9 81.3 80.8 82.6 ~81.7 83.7 79^6 20 Federal funds sold to and repurchase agreements with broker-dealers 35.9 37.7 42.9 44.9 48.0 50.1 63.3 63.5 643 64.0 65.7 62.8 21 Other 16.4 18.6 18.9 19.0 19.4 18.8 18.0 17.3 183 17.7 17.9 16.8 22 State and local government .... 12.0 11.3 11.3 11.1 11.5 11.6 11.6 11.9 12.1 12.0 11.8 11.7 23 Agricultural 10.0 10.1 10.1 9.9 9.9 9.9 9.9 10.0 9.9 10.1 10.0 10.0 24 Federal funds sold to and repurchase agreements with others 9.2 5.8 5.6 8.9 9.9 12.3 12.9 12.3 12.5 10.8 14.1 10.6 25 All other loans 74.6 79.9 83.6 83.7 88.8 93.0 93.9 92.9 90.8 92.6 90.8 95.0 26 Lease-financing receivables .... 80.7 94.2 95.1 96.3 98.7 100.0 101.4 102.8 102.4 102.4 102.5 103.0 27 Interbank loans 126.1 118.6 128.4 123.6 115.4 in.2 122.3 123.7 120.8 117.3 125.5 132.1 28 Federal funds sold to and repurchase agreements with commercial banks 86.5 67.1 76.8 69.8 62.2 63.9 73.2 74.9 71.6 66.2 78.4 83.9 29 Other 39.6 51.5 51.6 53.8 53.2 53.3 49.2 48.8 49.2 51.1 47.1 48.2 30 Cash assets4 169.8 150.4 149.1 143.6 151.0 151.1 140.8 147.8 139.3 151.9 143.2 156.7 31 Other assets5 190.9 217.8 214.8 212.3 211.4 210.8 202.1 205.7 207.9 207.4 203.5 204.0 32 Total assets6 2,6065 2,7253 2,728.9 2,715.9 2,7454 2,777.7 23183 2345.9 2337.8 23504 2329.2 2361.0 Liabilities 33 Deposits 1,612.6 1,648.7 1.645.8 1,621.6 1,629.3 1,629.7 1.640.9 1,666.1 1,661.0 1,667.3 1,652.0 1,680.2 34 Transaction 396.4 390.0 383.9 368.4 369.9 373.7 367.1 368.3 359.1 364.8 360.6 392.7 35 Nontransaction 1,216.2 1,258.7 1,261.9 1,253.2 1,259.3 1,256.0 1,273.7 1,297.7 1,302.0 1,302.4 1,291.4 1,287.5 36 Large time 214.0 221.6 223.0 216.6 215.4 210.3 221.3 230.3 228.6 230.5 231.1 228.9 37 Other 1,002.2 1,037.1 1,038.9 1,036.6 1,043.9 1,045.7 1,052.4 1,067.4 1,073.3 1,072.0 1,060.3 1,058.6 38 Borrowings 510.1 541.2 531.7 525.4 530.3 543.1 576.7 609.5 598.5 600.2 612 9 621.1 39 From banks in the U.S 203.5 190.9 188.5 190.2 197.1 198.0 2O7.0 208.1 209.1 209.0 211.2 205.2 40 From others 306.5 350.3 343.2 335.2 333 2 345.1 369.7 401.3 389.5 391.2 401.7 415.9 41 Net due to related foreign offices 62.9 69.4 69.5 75.6 89.1 101.3 113.0 114.0 115.2 117.9 112.2 113.5 42 Other liabilities 156.8 182.3 188.8 194.9 196.8 200.5 210.6 193.6 201.1 200.0 189.3 187.2 43 Total liabilities 2342.4 2441.7 2435.9 24174 2,4455 2474.6 2,541.2 2583.2 25753 25854 25663 2,602.0 44 Residual (assets less liabilities)7 . . . 264.1 283.6 293.0 298.4 299.9 303.1 277.1 262.7 262.0 265.0 262.9 259.1 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • February 1999 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities'—Continued C. Large domestically chartered commercial banks—Continued Monthly averages Wednesday figures Account 1997 1998' 1998 Novr May June July Aug. Sept. Oct. Nov. Nov. 4 Nov. 11 Nov. 18 Nov. 25 Not seasonally adjusted Assets 45 Bank credit 2,170.6 2,263.0 2,268.2 2.267.3 2,289.5 2,326.0 2,395.3 2,423.2 2.433.1 2,425.1 2.413.8 2414.7 46 Securities in bank credit 492.2 524.8 516.5 514.8 520.8 539.3 571.8 577.6 584.2 577.3 572.5 574.7 47 U.S. government securities IS 1.3 372.0 356.9 353.4 356.8 363.4 371.1 383.1 382.5 380.9 381.3 386.5 48 Trading account 28.0 22.5 22.5 19.9 21.2 21.9 21.9 24.6 26.8 25.4 24.3 23.5 49 Investment account W.3 349.4 334.4 333.6 335.6 341.5 349.2 358.6 355.7 355.5 357.0 362.9 50 Mortgage-backed securities . 211.7 225.8 217.2 218.6 225.3 235.9 254.6 257.4 261.1 258.9 254.1 259.2 51 Other 111.5 121.4 115.1 112.9 108.2 103.5 92.6 99.1 94.6 96.6 102.9 103.8 52 One year or less 31.0 31.1 31.2 30.0 28.6 27.3 25.7 26.8 26.1 27.5 27.1 27.3 53 One to tive years 56.4 51.8 48.5 51.4 48.2 43.6 36.7 37.4 36.2 35.9 39.6 39.7 54 More than five years 24.1 38.5 15 4 31.5 31.4 32.5 30.2 34.9 32.4 33.1 36.2 36.7 55 Other securities 138.8 152.8 159.6 161.3 164.0 175.9 200.7 194.5 201.7 196.4 191.2 188.2 56 Trading account 65.6 72.1 76.7 77.0 76.8 86.4 108.8 96.4 104.9 99.8 92.9 90.2 57 Investment accounl 73.2 80.7 82.9 84.3 87.2 89.4 91.9 98.0 96.8 96.6 98.4 98.0 58 Slate and local government . . 22.3 22.7 22.4 22.3 22 7 23.2 24.0 24.6 24.2 24.3 24.6 25.0 59 Other 50.9 58.0 60.6 62.1 64.6 66.2 67.9 73.4 72.6 72.4 73.8 73.0 60 Loans and leases in bank credit- . . 1,678.5 1,738.2 1,751.7 1,752.5 1,768.7 1,786.7 1,823.5 1,845.6 1,848.9 1,847.8 1,841.2 1,840.1 61 Commercial and industrial 450.3 492.4 496.9 497.5 499.4 505.8 521.0 528.0 527.8 527.2 529.7 527.9 62 Bankers acceptances 1.4 1.2 1.2 1.2 1.3 1.3 1.3 1.3 1.3 1.4 1.3 1.3 63 Other 448.9 491.2 495.7 496.3 498.1 504.5 519.7 526.7 526.5 525.9 528.3 526.6 64 Real estate 6814 689.8 688.1 688.4 690.7 688.4 689.8 702.1 702.0 707.6 694.3 699.9 65 Revolving home equity .... 694 69.2 69.0 68.9 68.9 69.4 68.6 68.4 68.4 68.4 68.5 68.4 66 Other 372.4 380.4 378.5 379.9 382.2 378.3 380.5 391.4 393.2 398.9 385.6 390.8 67 Commercial 218.2 237.4 235.2 235.9 236.4 237.6 237.8 239.2 240.3 240.4 240.2 240.7 68 Consumer 305.8 300.5 299.3 294.8 297.7 301.1 301.1 301.7 302.8 302.8 300.9 301.0 69 Security1 53.2 56.3 61.9 62.3 63.7 65.8 81.7 82.3 86.4 82.0 85.1 80.8 70 Federal funds sold to and repurchase agreements with broker-dealers !6.7 37.7 42.6 43.9 45.0 47.6 63.7 64.9 68.0 65.0 67.2 63.1 71 Olhcr 16.5 18.7 19.3 18.5 18.6 18.3 18.0 17.3 18.3 17.0 17.9 17.6 72 State and local government . . . 12.1 11.2 11.2 111 11.5 11.6 11.7 12.0 12.2 12.1 11.9 11.9 73 Agricultural 10.1 9.9 10.1 10.3 10.3 10.2 10.1 10.1 10.1 10.2 10.1 10.0 74 Federal funds sold to and repurchase agreements with others 9.2 5.8 5.6 8.9 9.9 12.3 12.9 12.3 12.5 10.8 14.1 10.6 75 All other loans 75.7 78.7 83.8 83.4 88.1 92.5 94.5 94.3 93.0 92.7 92.5 95.0 76 Lcase-tinancing receivables 80.7 93.5 94.7 95 8 97.5 98.9 101.0 102.8 102.2 102.4 102.6 103.0 77 Interbank loans 128.0 118.0 128.8 122.5 112.8 116.0 119.5 125.8 122.6 118.4 128.5 130.8 78 Federal funds sold to and repurchase agreements with commercial banks 88.2 66.8 77.2 69.1 60.4 63.4 70.5 76.5 73.8 67.4 80.4 82.1 79 Other 19.8 51.2 51.7 53.5 52.4 52.7 49.0 49.2 48.8 51.0 48.1 48.8 80 Cash assets4 176.5 146.4 1440 140.0 140.9 149.6 144.4 153.9 141.3 156.7 152.7 156.9 81 Other assets5 190.9 217.8 214.8 212.3 211.4 210.8 202.1 205.7 207.9 207.4 203.5 2O4.0 82 Total assets'1 2,6284 2,707.1 2,717.8 2,704.2 2,716.9 2,764.6 2323.4 2370.6 2,866.8 2,869.5 2,860.5 2368.7 Linbililii'S 83 Deposits 1.624.8 1,628.9 1.639.4 1,621.5 1,626.9 1,635.7 1,647.1 1.679.3 1.676.4 1,679.0 1.670.7 1,679.0 84 Transaction 402.9 380.5 380.4 366.2 360.8 370.6 364.9 374.9 363.2 366.1 372.5 191.8 85 Nontransaclton 1.221.8 1,248.4 1,259.0 1.255.3 1,266.1 1,265.2 1,282.2 1,304.3 1,313.2 1.312.9 1,298.2 1.287.2 86 Large tune 218.5 219.8 220.6 215.4 217.8 213.7 224.7 235.4 233.7 235.7 236.2 234.1 87 Other 1.003.3 1.028.6 1,038.4 1,039.9 1.048.3 1,051.4 1,057.5 1,069.0 1,079.5 1,077.2 1,062.0 1.053.2 88 Borrowings 508.0 546.4 5410 529.9 522.1 543.2 572.4 605.7 598.7 597.0 609.9 609.4 89 From banks in the U.S 204.8 191.5 190.9 190.2 192.4 195.7 203.5 209.5 208.5 209.5 212.7 204.9 90 From nonbanks in the U.S 303.2 355.0 350.1 339.7 329.7 347.5 369.0 396.3 390.3 387.5 397.2 404.5 91 Net due to related foreign offices ... 59.0 77.1 76.2 81.2 92.9 103.0 110.9 110.1 110.8 113.3 108.3 111.2 92 Other labilities 156.8 182.3 188.8 194.9 196.8 200.5 210.6 193.6 201.1 200.0 189.3 187.2 93 Total liabilities 2,348.6 2,434.8 2,445.5 2,427.5 2,438.7 2,4824 2^41.0 Z588.7 2,587.0 2^89.2 2^78.2 2.586.8 94 Residual (assets less liabilities)7 . . . 279.8 272.3 272.3 276.7 278.2 282.1 282.4 281.8 279.8 280.2 282.3 281.9 MEMO 95 Revaluation gains on oft-balancesheet items* 41.2 45.6 50.5 51.0 51.9 61.7 78.7 62.7 69.1 65.2 59.6 56.5 96 Revaluation losses on off-balancesheet items* 43.3 46.3 50.1 50.4 54.2 65.1 80.5 65.1 72.4 69.5 62.3 58.8 97 Mortgage-backed securities" 229.8 247.0 239.0 241.6 248.3 259.1 279.3 286.0 289.8 287.7 282.5 288.4 98 Pass-through securities 155.4 165.4 157.4 157.5 160.8 166.8 189.0 196.3 197.2 196.1 192.6 199.1 99 CMOs. REMICs, and other mortgage-backed securities . . 74.4 81.6 81.5 84.1 87.5 92.3 90.3 89.7 92.6 91.5 89.9 89.3 100 Net unrealized gains (losses) on av;iilab]e-for-sale securities10 . . 2.3 2.8 3.2 3.5 3.) 3.7 4.4 3.1 3.0 3.1 3.3 3.2 101 Offshore credit to U.S. residents" .. 34.4 36.0 36.1 35.3 35.6 36.8 38.5 39.1 38.9 39.2 39.4 39.3 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 Liabilities1—Continued D. Small domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1997 1998' 1998 Nov.' May June July Aug. Sept. Oct. Nov. Nov. 4 Nov. 11 Nov. 18 Nov. 25 Seasonally adjusted Assets 1 Bank credit 1,368.7 1.409.1 1.420.1 1,435.2 1,448.8 1,457.4 1 473 4 1.497 7 1,483.7 1,486.1 1.502.9 1.504.1 2 Securities in bank credit 397.8 400.7 401.6 407.8 411.7 414.0 423.5 433.6 426.6 428.7 4.16.0 436.8 3 U.S. government securities 313.1 311.8 311.2 314.1 315.8 317.0 322.8 328.5 324.6 526.0 329.7 .110.5 4 Other securities 84.7 89.0 90.4 93.6 95.9 97.0 100.7 105.0 102.0 102.7 1061 106.2 5 Loans and leases in bank credit2 .... 970.8 1,008.4 1,018.5 1,027.5 1.037 1 1.043.4 1.050.0 1,064.1 1.057.1 1,057.4 1.066.9 1,067 3 6 Commercial and industrial 174.8 183.1 185.1 186.7 189.8 192.0 1918 195.6 194.8 194.5 195.6 196.1 7 Real estate 522.7 549.4 555.7 561.9 569.2 572.8 577.7 587 7 582.2 582.9 589.5 590.7 8 Revolving home equity 28.0 28.3 28.6 28.8 28.9 28.9 28.8 29.3 29.1 29.0 29.4 29.3 9 Other .... 494.7 521.1 527.1 533.1 540.3 5419 548.8 558.4 553.1 553.9 560.1 561.4 10 Consumer 202.0 200.4 2008 201.3 199.4 199.6 199.1 200 7 198.9 199.2 202.1 201.3 1 1 Security1 5.2 5.7 60 6.0 6.2 6.4 6.6 6.8 7.1 7.0 6.7 6.4 12 Other loans and leases 66.2 69.8 71.1 71.6 72.5 72.5 72.8 73.3 74.1 73.7 7!.() 72.8 13 Interbank loans 51.0 62.7 66.0 69.0 71.3 74.7 74.6 72.1 76.5 76.2 70.8 69.8 14 Cash assets4 68.4 65.6 66.4 64.9 67.0 67.6 67.0 68.8 67.3 70.7 MS 72.1 15 Other assets-^ 58.4 60.7 63.9 63.1 64.8 67.8 70.0 74.9 71.0 74.2 74.5 77.5 16 Total assets6 1,527.5 1,578.8 1^97.1 1,612.5 1,632.1 1,647.5 1,665.1 1,693.4 1,678.4 1,687.1 1,693.1) 1,7033 Liabilities 17 Deposits 1,220.0 1.261.5 1,274.3 1,276.8 1,291.9 1,304.1 1.311.6 1.332.7 1,323.8 1,327.7 1,328.7 1.342.3 18 Transaction . . 287.0 2863 288.1 285 3 286.1 288.8 286.5 288.1 286.4 288.4 2817 297.2 19 Nontransaction 933.0 975.2 986.1 991.5 1,005.8 1,015.3 1.025.1 1.044.6 1,037.4 1.039.4 1.045.1 1.045.0 20 Large time 160.1 170.1 170.1 167.5 168.2 172.2 173.4 177.0 175.1 176.1 177.3 178.3 21 Other 773.0 805.1 816.0 824.0 837.6 843.1 851.6 867.6 862.2 863.2 867.8 866.7 22 Borrowings 147.7 157.3 159.4 164.7 163.8 165.1 172.0 177.8 173.3 177.0 179.6 176.8 23 From banks in the U.S 68.2 68.7 69.9 73.2 73.0 73.3 76 9 79.5 77.2 79.2 80.0 79.1 24 From others .... 79.6 88 6 89.6 91.4 90.8 91.8 95.0 98.3 96 1 97.8 99.6 97.7 25 Net due to related foreign offices 5.0 3.8 3.9 3.7 3.7 17 4.7 1.6 4.3 4.0 .1.6 14 26 Other liabilities 27.4 29.5 29.3 29.4 30.0 30.3 31.2 32.0 31.5 32.0 32.2 32.2 27 Total liabilities 1,400.1 1,452.2 1,466.9 1,474.5 1,489.5 1,503.3 1,519.4 1^146.1 1,532.9 1,540.7 1,544.1 1354.7 28 Residual (assets less liabilities)7 127.4 126.6 130.2 138.0 142.6 144.2 145.7 147.4 145.5 146.4 148.9 148.6 Not seasonslly adjusted Assets 29 Bank credit 1.368.1 1.416.1 1.424.9 1,433.3 1,448.3 1,459.6 1.473.3 1,497.0 1,483.4 1,486.5 1,501.0 1,504.5 30 Securities in bank credit 394.7 404.9 404.7 406.4 410.6 413.3 420 5 430.3 423.1 426.0 411 9 434.2 31 U.S. government securities 310.3 315.0 313.9 312.8 315.0 316.7 320.5 325.7 321.9 323.9 326.2 328.0 32 Other securities 84.4 89.9 90.8 93.6 95.7 96.6 I(»).O 104.6 101.3 102.1 105.8 106.2 33 Loans and leases in bank credit2 973.3 1.011.3 1,020.2 1,026.9 1.037 7 1.046.3 1.052.8 1.066.7 1.060.3 1,060.5 1.069.1 1.070.3 34 Commercial and industrial 173.6 185.6 186.8 186.4 188.2 190.5 192.1 194 4 193.4 193.2 1943 195.1 35 Real estate 524.6 551.0 556.3 561.9 569.6 574.4 580.1 589.9 584.9 585.9 591.2 591.0 36 Revolving home equity ... . 28.1 28.4 28.5 28.6 28.7 29.1 29.0 29.3 ">9 1 29.2 29 5 29.4 37 Other 496.5 522.6 527.8 533.3 540.9 545.4 551.1 560.5 555.6 556.6 561.8 561.6 38 Consumer 203.6 199.1 199.2 199.6 199.6 200.5 200.0 202.3 200.3 200.6 203.7 203.2 39 Security' 5.2 5.7 6.0 6.0 6.2 6.4 6.6 6.8 7.1 7.0 67 6.4 40 Other loans and leases 66.2 69.8 72.0 72.9 74.1 74.4 74.0 73.4 74.5 71.9 73.2 72.6 41 Interbank loans 54.4 59.0 62.2 63.6 66.8 70.2 73.5 76.5 82.3 814 75.3 70.5 42 Cash assets4 70.9 65.5 65.5 64.2 64.7 66.9 66.9 71.1 67.9 72.6 68.1 73.0 43 Other assets5 58.9 59.7 63.2 64.8 65.9 69.0 70.2 75.6 73.0 75.9 74.6 76.1 44 Total assets6 1,533.3 1,581.1 1,596.5 1,606.3 1,625.9 1,645.8 1,663.9 1,700.0 1,686.7 1,696.3 1.698.8 1.703.9 Liabilities 45 Deposits 1,226.5 1,262.0 1.270.9 1,271.2 1,285.3 1,300.7 1,309.6 1.339.1 1,330.9 1,336.4 1.335.5 1,342.4 46 Transaction 291.3 284.2 286.6 282.5 281.8 286.6 284.7 292.2 290.4 291.9 288 4 297.4 47 Nontransaction 935.2 977.8 984.4 988.7 1,003.5 1,014.1 1,024.9 1,046.9 1.IMO.4 1,044.5 1,047.2 1,044.9 48 Large time 160.1 170.1 170.1 167.5 168.2 172.2 173.4 177.0 175.1 176.1 177.3 178.3 49 Other 775.1 807.7 814.2 821.2 835.3 841.9 851.4 869.9 865.3 868.4 869.9 866.6 50 Borrowings 147.3 157.7 159.9 164.7 165.2 168.5 172.5 177.3 172.5 175.1 179.1 177.9 51 From banks in the U S 67.2 69.4 70.4 73.4 73.8 74 4 76.4 78 4 75.9 77.4 78.9 78.7 52 From others 80.0 88.2 89.5 91.3 91.4 94.2 96.1 98.9 96.6 97.7 HX)2 99.2 53 Net due to related foreign offices 5.0 3.8 3.9 3.7 3.7 3.7 47 3.6 4.3 4.0 3.6 1.4 54 Other liabilities 27 4 29.5 29.3 29.4 30.0 30.3 31.2 32.0 31.5 32.0 32.2 32.2 55 Total liabilities 1,406.2 1,453.0 MS3.9 1,468.9 1,484.2 1,503.3 1,517.9 1,552.0 1.539.2 1.547.5 1350.4 1356.0 56 Residual (assets less liabilities)7 .... 127.1 128.1 132.6 137.4 141.7 142.5 146.0 148.0 147.4 148.8 148.5 147.9 MEMO 57 Mortgage-backed securities4 45.4 51.1 52.2 52.7 53.6 54.9 57.8 60.3 58.0 58.6 59.5 59.8 Footnotes appear on p. A2I. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics • February 1999 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities'—Continued E. Foreign-related institutions Billions of dollars Monthly averages Wednesd y figures Account 1997 1998' 1998 Nov. May lune July Aug. Sept. Oct. Nov. Nov. 4 Nov. 11 Nov. 18 Nov. 25 Seasonally adjusted Assets 1 Bank credit 547.7 564.1 568.2 573.0 590.4 606.7 628.2 624.0 626.4 624.8 624.4 627.0 2 Securities in bank credit 191.3 197.1 200.2 200.7 211.3 214.1 220.2 223.0 225.2 221.5 222.9 224.1 3 U.S. government securities 79.5 89.1 88.5 90.6 93.2 81.3 78.7 79.5 82.4 78.1 79.3 80.2 4 Other securities 111.8 108.0 111.6 110.0 118.1 132.8 141.4 143.5 142.8 143.4 143.6 143.9 5 Loans and leases in bank credit' . . 356.4 366.9 368.0 372.4 379.1 392.6 408.0 401.0 401.2 403.3 401.5 403.0 6 Commercial and industrial 220.5r 210.7 211.9 214.9 215.9 220.0 227.0 226.8 227.0 227.1 227.0 227.2 7 Real estate 26.6 24.4 24.2 23.8 23.7 23.3 22.9 21.7 22.5 22.1 21.9 21.0 8 Security3 42.3 61.2 62.5 62.6 65.5 69.1 71.6 66.8 67.5 68.5 66.5 67.0 9 Other loans and leases 67 tf 70.7 69.4 71.0 74.0 80.2 86.4 85.7 84.2 85.6 86.1 87.8 10 Interbank loans .... 23 6 21.8 24.0 22.1 22.6 31.4 29.9 31.2 285 30.2 36.3 29.5 11 Cash assets4 34.9 34.8 34.8 35.0 33.9 34.2 35.6 33.7 34.1 33.9 34.1 32.9 12 Other assets5 46.1 34.1 33.8 34.1 35.8 38.0 39.4 36.7 37.9 36.7 39.1 34.5 13 Total assets6 6511 654.5 660.5 664.1 6824 710.0 732.9 7253 726.6 7253 733.6 723.7 Liabilities 14 Deposits 272.8 295.3 303.2 298.1 307.0 3157 320.5 317.1 312.5 314.0 320.4 321.4 15 Transaction 10.3 115 11.1 13.6 12.0 15.0 14.8 120 13.4 11.0 129 11.8 16 Nontransaction 262.6 283.7 292.0 284.5 295.0 300.7 305.8 305.1 299.1 303.1 307.4 309.6 17 Borrowings 156.3 163.4 167.2 169.8 169.8 184.1 193.8 193.8 191.8 191.7 197.8 194.0 18 From banks in the U S 29.0 22.4 29.6 266 23.8 32.3 35.5 36.9 32.9 30.0 38.1 405 19 From others 127.3 141.0 137.6 143.2 146.0 151.8 158.2 156.9 158.9 161.7 159.4 153.5 20 Net due to related foreign offices 117.1 101.1 97.2 107.0 108.5 95.2 106.0 99.3 118.4 106.3 101.0 83.4 21 Other liabilities 96.1 87.4 89.9 93.4 99.1 103.8 107.0 102.1 105.6 101.0 101.7 101.5 22 Total liabilities 6423 647.2 657.5 6683 684.5 698£ 7273 7123 728.2 713.0 720.8 7004 23 Residua] (assets less liabilities)7 . . . 9.8' 7.3 3.0 -4.2 -2.0 11.1 5.5 13.0 -1.6 12.3 12.8 23.3 Not seasonally adjusted Assets 24 Bank credit 542.5 565.7 571.2 575 8 592.8 601.6 627.6 616.4 628 3 618.3 615 2 615.2 25 Securities in bank credit 187.7 201.1 203.3 203.4 215.6 210.8 220.5 217.7 226.2 217.7 216.4 215.6 26 U.S. government securities 80.6 89.7 88.6 90.3 94.0 81.2 79.3 80.4 84.4 79.8 79.4 79.9 27 Trading account 16.0 20.8 20.0 25.1 307 20.2 16.0 13.8 17 8 129 13 2 132 28 Investment account 64.6 68.9 68.6 65.2 63.3 61.1 63.3 66.6 66.6 665 66.2 66J 29 Other securities 107.1 111.4 114.8 113.1 121.6 129.6 141.3 137.3 141.8 137.9 137.0 135.7 30 Trading account 62.6 66.7 70.1 70.1 75.3 83.4 89.6 82.3 87.2 82.8 82.0 80.1 31 Investment account 44.4 44.7 44.6 43.0 46.3 46.2 51.7 55.0 546 55.1 55 0 55 6 32 Loans and leases in bank credit2 ... 354.8 364.6 367.9 372.4 377.3 390.7 407.0 398.7 402.1 400.6 398.8 399^6 33 Commercial and industrial 220.2' 210.1 211.8 214.7 214.8 218.9 226.9 226.5 228.1 226.7 226.7 226.4 34 Real estate 26.9 24.3 24.0 23.6 23.5 23.3 23.2 21.9 22.8 22.3 22.1 21.2 35 Security3 42.2 60.6 62.4 61.9 64.6 68.8 71.8 66.6 68.0 67.9 65.8 67.0 36 Other loans and leases 65.5' 69.6 69.7 72.2 74 3 79.7 85.2 83.7 83.2 83.7 84.1 85.0 37 Interbank loans 23.6 21.8 24.0 22.1 22.6 31.4 29.9 31.2 28.5 30.2 36.3 29.5 38 Cash assets4 35.7 34.4 35.7 34.9 34.0 34.3 35.9 34.6 34.7 34.6 35.0 33.6 39 Other assets5 46.8 34.5 33.0 33.7 36.6 38.0 38.4 37.2 38.0 37.0 39.3 35.2 40 Total assets6 . . 6483 656.1 663.7 6664 685.8 704.9 731.5 719.1 7293 719.8 725.5 7132 Liabilities 41 Deposits 272.3 298.0 304.9 296.3 305 7 317.3 320.0 316.1 311.2 313.6 318.0 320.9 42 Transaction 102 11.2 11.2 13.7 110 15.7 148 11.9 13.6 10.8 12.9 11 5 43 Nontransaction 262.1 286.8 293.8 282.6 293.7 301.6 305.2 304.2 297.7 302.8 305.1 3094 44 Borrowings 1563 163.4 167 2 169.8 169.8 184.1 193.8 193.8 191.8 191.7 197.8 194.0 45 From banks in the U.S 29.0 22.4 29.6 26.6 23.8 32.3 35.5 36.9 32.9 30.0 38.3 40.5 46 From others 127 3 141.0 137 6 143.2 146.0 151.8 158.2 156.9 158.9 161.7 159.4 153.5 47 Net due to related foreign offices .... 117.7 102.1 96.5 103.5 105.2 93.6 105.0 100.0 114.5 106.4 100.7 89.1 48 Other liabilities 97.7 86.9 89.1 92.7 99.1 103.5 106.7 103.5 106.0 102.3 103.1 103.3 49 Total liabilities 644.1 6504 657.7 662.2 679.8 698.5 725.5 7133 723.4 714.0 719.6 7074 50 Residual (assets less liabilities)7 4.2 5.7 5.9 4.1 6.0 6.4 6.0 5.8 5.9 5.8 5.9 5.9 MEMO 51 Revaluation gains on off-balance-sheet iremss 43.0 40.3 42.2 41.7 43.8 48.3 51.4 47.5 49.0 46.3 47.2 46.4 52 Revaluation losses on off-balancesheet items8 42.1 38.7 40.6 40.2 42.3 45.5 47.7 44.5 44.6 43.0 44.6 43.8 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A21 NOTES TO TABLE 1.26 NOTE. Tables 1.26, 1.27, and 1.28 have been revised to reflect changes in the Board's H.8 group that contained the acquired bank and put into past data for the group containing the statistical release, "Assets and Liabilities of Commercial Banks in the United States." Table acquiring bank. Balance sheet data for acquired banks are obtained from Call Reports, and a 1.27, "Assets and Liabilities of Large Weekly Reporting Commercial Banks," and table 1.28, ratio procedure is used to adjust past levels. "Large Weekly Reporting U.S. Branches and Agencies of Foreign Banks," are no longer 2. Excludes federal funds sold to, reverse RPs with, and loans made to commercial banks being published in the Bulletin. Instead, abbreviated balance sheets for both large and small in the United States, all of which are included in "Interbank loans." domestically chartered banks have been included in table 1.26, parts C and D. Data are both 3. Consists of reverse RPs with brokers and dealers and loans to purchase and carry merger-adjusted and break-adjusted. In addition, data from large weekly reporting U.S. securities. branches and agencies of foreign banks have been replaced by balance sheet estimates of all 4. Includes vault cash, cash items in process of collection, balances due from depository foreign-related institutions and are included in table 1.26, part E. These data are break- institutions, and balances due from Federal Reserve Banks. adjusted. 5. Excludes the due-from position with related foreign offices, which is included in "Net The not-seasonally-adjusted data for all tables now contain additional balance sheet items, due to related foreign offices." which were available as of October 2, 1996. 6. Excludes unearned income, reserves for losses on loans and leases, and reserves for 1. Covers the following types of institutions in the fifty states and the District of transfer risk. Loans are reported gross of these items. Columbia: domestically chartered commercial banks that submit a weekly report of condition 7. This balancing item is not intended as a measure of equity capital for use in capital (large domestic); other domestically chartered commercial banks (small domestic); branches adequacy analysis. On a seasonally adjusted basis this item reflects any differences in the and agencies of foreign banks, and Edge Act and agreement corporations (foreign-related seasonal patterns estimated for total assets and total liabilities. institutions). Excludes International Banking Facilities. Data are Wednesday values or pro 8. Fair value of derivative contracts (interest rate, foreign exchange rate, other commodity and rata averages of Wednesday values. Large domestic banks constitute a universe; data for equity contracts) in a gain/loss position, as determined under FASB Interpretation No. 39. small domestic banks and foreign-related institutions are estimates based on weekly samples 9. Includes mortgage-backed securities issued by U.S. government agencies, U.S. and on quarter-end condition reports. Data are adjusted for breaks caused by reclassifications government-sponsored enterprises, and private entities. of assets and liabilities. 10. Difference between fair value and historical cost for securities classified as available- The data for large and small domestic banks presented on pp. A17-19 are adjusted to for-sale under FASB Statement No. 115. Data are reported net of tax effects. Data shown are remove the estimated effects of mergers between these two groups. The adjustment for restated to include an estimate of these tax effects. mergers changes past levels to make them comparable with current levels. Estimated 11. Mainly commercial and industrial loans but also includes an unknown amount of credit quantities of balance sheet items acquired in mergers are removed from past data for the bank extended to other than nonfinancial businesses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Financial Statistics • February 1999 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING A. Commercial Paper Millions of dollars, seasonally adjusted, end of period Year ending December 1998 Item D 19 e 9 c 3 . D 19 e 9 c 4 . D 19 e 9 c 5 . D 19 e 9 c 6 . D 19 e 9 c 7 . May June July Aug. Sept. Oct. 555,075 595,382 674,904 775,371 966,699 1,053,995 1,091,554 1,10237 1,119,816 1,15237 1,150,213 Financial companies' 2 Dealer-placed paper2, total 218,947 223,038 275,815 361,147 513,307 569,065 597,193 616,382 606,355 639,571 627,170 3 Directly placed paper , total 180,389 207,701 210,829 229,662 252,536 274,469 276,476 266,022 281,927 271,526 289,184 4 Nonfinancial companies 155,739 164,643 188,260 184,563 200,857 210,460 217,885 219,904 231,534 241,239 233,859 1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales, 3. As reported by financial companies that place their paper directly with investors. personal, and mortgage financing; factoring, finance leasing, and other business lending; 4. Includes public utilities and firms engaged primarily in such activities as communicainsurance underwriting; and other investment activities. tions, construction, manufacturing, mining, wholesale and retail trade, transportation, and 2. Includes all financial-company paper sold by dealers in the open market. services. B. Bankers Dollar Acceptances1 Millions of dollars, not seasonally adjusted, year ending September2 Item 1995 1996 1997 1998 1 Total amount of reporting banks' acceptances in existence 29,242 25,832 25,774 14,363 2 Amount of other banks' eligible acceptances held by reporting banks 1,249 709 736 523 3 Amount of own eligible acceptances held by reporting banks (included in item 1) 10,516 7,770 6,862 4,884 4 Amount of eligible acceptances representing goods stored in, or shipped between, foreign countries (included in item 1) 11,373 9,361 10,467 5,413 1. Includes eligible, dollar-denominated bankers acceptances legally payable in the United 2. Data on bankers dollar acceptances are gathered from approximately 65 institutions; States. Eligible acceptances are those that are eligible for discount by Federal Reserve Banks; includes U.S. chartered commerical banks (domestic and foreign offices), U.S. branches and that is, those acceptances that meet the criteria of Paragraph 7 of Section 13 of the Federal agencies of foreign banks, and Edge and agreement corporations. The reporting group is Reserve Act (12 U.S.C. §372). revised every year. 1.33 PRIME RATE CHARGED BY BANKS Short-Term Business Loans1 Percent per year Date of change Rate Period Av r e a r t a e ge Period Av r e a r te age Period Av r e a r t a e ge 1996—Jan. 1 8.50 1996 8.27 1997 Jan 8.25 1998 Jan 8.50 Feb. 1 8.25 1997 8.44 Feb 8.25 Feb 8.50 1998 8.35 Mar. 8.30 Mar 8.50 1997—Mar. 26 8.50 Apr. 8.50 Apr. 8.50 1996—Jan 8.50 May 8.50 May 8.50 1998—Sept. 30 8.25 Feb 8.25 June 8.50 June 8.50 Oct. 16 8.00 Mar. 8.25 July 8.50 July 8.50 Nov. 18 7.75 Apr 8.25 Aug 8.50 Aug 8.50 May 8.25 Sept 8.50 Sept 8.49 June 8.25 Oct 8.50 Oct 8.12 July 8.25 Nov 8.50 Nov 7.89 Aug 8.25 Dec 8.50 Dec 7.75 Sept 8.25 Oct 8.25 Nov. 8.25 Dec 8.25 1. The prime rate is one of several base rates that banks use to price short-term business Report. Data in this table also appear in the Board's H.15 (519) weekly and G.13 (415) loans. The table shows the date on which a new rate came to be the predominant one quoted monthly statistical releases. For ordering address, see inside front cover. by a majority of the twenty-five largest banks by asset size, based on the most recent Call Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.35 INTEREST RATES Money and Capital Markets Percent per year; figures are averages of business day data unless otherwise noted 1998 1998. week ending Item 1995 1996 1997 Aug. Sept. Oct. Nov. Oct. 30 Nov. 6 Nov. 13 Nov. 20 Nov. 27 MONEY MARKET INSTRUMENTS 1 Federal funds123 5.83 5.30 5.46 5.55 5.51 5.07 4.83 4.95 5.22 4.80 4.89 4.54 2 Discount window borrowing2"4 5.21 5.02 5.00 5.00 5.00 4.86 4.63 4.75 4.75 4.75 4.68 4.50 Commercial paper3'5'6 Nonfinancial 3 1-month n.a. n.a. 5.57 5.50 5.44 5.14 5.00 5.05 5.11 5.11 4.95 4.84 4 2-month n.a. n.a. 5.57 5.50 5.37 5.08 5.14 4.99 5.09 5.26 5.14 5.07 5 56 5 48 5 31 5 04 5 06 4 98 5 08 5 13 Financial n.a. n.a. 5.59 5.51 5.45 5.18 5.04 5.09 5.16 5.16 5.01 4.87 7 2-month n.a. n.a. 5.59 5.51 5.38 5.12 5.19 5.03 5.17 5.32 5.17 5.11 560 5 50 5 32 509 5 15 504 5 16 5 24 5 13 5 10 Commercial paper (historical)*'5-1 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. 5 93 5 42 5 62 Finance paper, directly placed (historical)3J'8 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. 5 68 5 21 5 48 Bankers acceptances3'5'9 15 3-month 5.81 5.31 5.54 5.49 5.38 5.12 5.15 5.07 5.13 5.20 5.18 5.10 5 80 5 3! 5 57 5 46 5 27 4 88 4 79 4 85 4 96 Certificates of deposit, secondary market3'10 17 1-month 5.87 5.35 5.54 5.56 5.49 5.24 5.16 5.17 5.22 5.19 5.05 5.09 18 3-month 5.92 5.39 5.62 5.58 5.41 5.21 5.24 5.16 5.27 5.31 5.21 5.18 19 6-month 5.98 5.47 5.73 5.61 5.33 4.99 5.07 4.91 5.08 5.11 5.05 5.06 5 93 5 38 5 61 5 56 5 39 5 17 5 21 5 13 5 21 5 30 US. Treasury bills Secondary market3'5 21 3-month 5.49 5.01 5.06 4.90 4.61 3.96 4.41 4.12 4.43 4.42 4.35 4.47 22 6-month 5.56 5.08 5.18 4.95 4.63 4.05 4.42 4.11 4.43 4.43 4.38 4.45 5.60 5.22 5.32 4.94 4.50 3.95 4.33 3.93 4.27 4.34 4.33 4.38 Auction high3512 24 3-month 5.51 5.02 5.07 4.94 4.74 4.08 4.44 4.07 4.43 4.47 4.40 4.45 5.59 5.09 5.18 4.97 4.75 4.15 4.43 4.16 4.36 4.50 4.43 4.43 5 69 5 23 5 36 5 00 451 4 06 U.S. TREASURY NOTES AND BONDS Constant maturities ' 27 1-year 5 94 5.52 5.63 5.21 4.71 4.12 4.53 4.10 4.46 4.52 4.54 4.59 28 2-year 6.15 5.84 5.99 5.27 4.67 4.09 4.54 4.10 4.40 4.52 4.62 4.64 29 3-year 6.25 5.99 6.10 5.24 4.62 4.18 4.57 4.20 4.50 4.57 4.60 4.64 30 5-year 6.38 6.18 6.22 5.27 4.62 4.18 4.54 4.22 4.45 4.51 4.59 4.62 31 7-year 6.50 6.34 6.33 5.36 4.76 4.46 4.78 4.47 4.75 4.79 4 79 4.80 32 10-year 6.57 6.44 6.35 5.34 4.81 4.53 4.83 4.63 4.83 4.82 4.85 4.83 33 20-year 6.95 6.83 6.69 5.66 5.38 5.30 5.48 5.35 5.54 5.48 5.46 5.46 34 30-year 6.88 6.71 6.61 5.54 5.20 5.01 5.25 5.12 5.29 5.27 5.26 5.21 Composite 35 More than 10 years (long-term) 6.93 6.80 6.67 5.64 5.34 5.24 5.43 5.29 5.48 5.43 5.42 5.40 STATE AND LOCAL NOTES AND BONDS Moody's series 5.80 5.52 5.32 5.01 4.84 4.76 4.87 4.85 4.88 4.86 4.86 4.86 37 Baa 6.10 5.79 5.50 5.15 5.11 5.10 5.15 5.17 5.13 5.14 5.15 5.18 38 Bond Buyer series15 5.95 5.76 5.52 5.10 4.99 4.93 5.03 5.00 5.04 5.04 5.03 5.01 CORPORATE BONDS 39 Seasoned issues, all industries16 7.83 7.66 7.54 6.83 6.75 6.77 6.87 6.85 6.99 6.89 6.86 6.77 Rating group 40 Aaa 7.59 7.37 7.27 6.52 6.40 6.37 6.41 6.44 6.56 6.44 6.39 6.28 41 Aa 7.72 7.55 7.48 6.77 6.68 6.70 6.79 6.76 6.90 6.81 6.77 6.70 42 A 7.83 7.69 7.54 6.89 6.82 6.85 6.95 6.93 7.07 6.98 6.95 6.85 43 Baa 8.20 8.05 7.87 7.14 7.09 7.18 7.34 7.26 7.42 7.34 7.33 7.28 MEMO Dividend-price ratio11 44 Common stocks 2.56 2.19 1.77 1.48 1.59 1.59 1.43 1.53 1.47 1.46 1.42 1.37 1. The daily effective federal funds rate is a weighted average of rates on trades through 11. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time. Data are for New York brokers. indication purposes only. 2. Weekly figures are averages of seven calendar days ending on Wednesday of the 12. Auction date for daily data; weekly and monthly averages computed on an issue-date current week; monthly figures include each calendar day in the month. basis. On or after October 28, 1998, data are stop yields from uniform-price auctions. Before 3. Annualized using a 360-day year or bank interest. that, they are weighted average yields from multiple-price auctions. 4. Rate for the Federal Reserve Bank of New York. 13. Yields on actively traded issues adjusted to constant maturities. Source: U.S. Depart- 5. Quoted on a discount basis. ment of the Treasury. 6. Interest rates interpolated from data on certain commercial paper trades settled by the 14. General obligation bonds based on Thursday figures; Moody's Investors Service. Depository Trust Company. The trades represent sales of commercial paper by dealers or 15. State and local government general obligation bonds maturing in twenty years are used direct issuers to investors (that is, the offer side). See Board's Commercial Paper Web pages in compiling this index. The twenty-bond index has a rating roughly equivalent to Moodys' (http://www.federalreserve.gov/releases/cp) for more information. Al rating. Based on Thursday figures. 7. An average of offering rates on commercial paper for firms whose bond rating is AA or 16. Daily figures from Moody's Investors Service. Based on yields to maturity on selected the equivalent. Series ended August 29, 1997. long-term bonds. 8. An average of offering rates on paper directly placed by finance companies. Series 17. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks in ended August 29, 1997. the price index. Digitized fo9r. FReRprAesSenEtatRiv e closing yields for acceptances of the highest-rated money center banks. NOTE. Some of the data in this table also appear in the Board's H.I5 (519) weekly and http://frase10r.. sAtlno auviesrafgeed o.fo dregal/e r offering rates on nationally traded certificates of deposit. G.13 (415) monthly statistical releases. For ordering address, see inside front cover. Federal Reserve Bank of St. Louis

A24 Domestic Financial Statistics • February 1999 1.36 STOCK MARKET Selected Statistics 1998 Indicator 1995 1996 1997 Mar. Apr. May June July Aug. Sept. Oct. Nov. Prices and trading volume (averages of daily figures)1 Common slock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 - 50) 291.18 357.98 456.99 560.70 578.05 574.46 569.76 586.39 539.16 506.56 511.49 564.26 367.40 453.57 574.97 693.13 711.89 712.39 731.01 718.54 665.66 629.51 636.62 704.46 3 Transportation 270.14 327.30 415.08 508.06 523.73 505.02 492.98 503.89 441.36 408.75 396.61 442.95 110.64 126.36 143.87 191.67 207.32 198.25 188.26 189.95 186.24 186.17 195.09 206.29 238.48 303.94 424.84 539.47 563.07 551.28 548.57 579.67 511.22 454.28 448.12 501.45 6 Standard & Poor's Corporation (1941-43 - 10) 541.72 670.49 873.43 1,076.83 1,112.20 1,108.42 1,108.39 1,156.58 1,074.62 1,020.64 1,032.47 1,144.43 7 American Stock Exchange (Aug. 31, 1973 = 5O)3 498.13 570.86 628.34 722.37 742.33 735.02 704.59 724.83 655.67 621.48 607.16 667.60 Volume of trading (thousands of shares! 8 New York Stock Exchange 345,729 409,740 523,254 619,366 647,110 569,239 605,576 639,744 712,710 790,238 808,816 668,932 9 American Stock Exchange 20,387 22,567 n.a. 28,943 29,544 27,004 25,447 26,473 32,721 33,331 31,946 27,266 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers4 76,680 97,400 126,090 140,340 140,240 143,600 147,700 154,370 147,800 137,540 130,160 139,710 Free credit balances at brokers 16,250 22,540 31,410 27,430 28,160 26,200 29,840 31,820 38,460 41,970 43,500 40,620 12 Cash accounts 34,340 40,430 52,160 51,340 51,050 47,770 51,205 53,780 53,850 54,240 54,610 56,170 Margin requirements (percent of market value and effective date)7 Mar. 11, 1968 June 8. 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. Daily data on prices are available upon request to the Board of Governors. For ordering 6. Series initiated in June 1984. address, see inside front cover. 7. Margin requirements, stated in regulations adopted by the Board of Governors pursuant 2. In July 1976 a financial group, composed of banks and insurance companies, was added to the Securities Exchange Act of 1934, limit the amount of credit that can be used to to the group of stocks on which the index is based. The index is now based on 400 industrial purchase and carry "margin securities" (as defined in the regulations) when such credit is stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and collateralized by securities. Margin requirements on securities are the difference between the 40 financial. market value (100 percent) and the maximum loan value of collateral as prescribed by the 3. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U, effective May 1, previous readings in half. 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective Nov. 1, 1971. 4. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the included credit extended against stocks, convertible bonds, stocks acquired through the initial margin required for writing options on securities, setting it at 30 percent of the current exercise of subscription rights, corporate bonds, and government securities. Separate report- market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the ing of data for margin stocks, convertible bonds, and subscription issues was discontinued in required initial margin, allowing it to be the same as the option maintenance margin required April 1984. by the appropriate exchange or self-regulatory organization; such maintenance margin rules 5. Free credit balances are amounts in accounts with no unfulfilled commitments to must be approved by the Securities and Exchange Commission. brokers and are subject to withdrawal by customers on demand. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A25 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year Type of account or operation 1995 1996 June July Sept. Oct. US. budget' 1 Receipts, total 1,351,830 1,453,062 1,579,292 187,860 119,723 111,741 180,936 119,974 113,978 2 On-budget 1,000,751 1,085,570 1,187,302 144,973 87,820 79,135 149,726 90,064 81,836 3 Off-budget 351,079 367,492 391,990 42,887 31,903 32,606 31,210 29,910 32,142 4 Outlays, total 1,515,729 1,560,512 1,601,235 136,754 143,807 122,907 142,725 152,436 131,095 5 On-budget 1,227,065 1,259,608 1,290,609 125,606 115,714 92,555 107,900 123,687 100,078 6 Off-budget 288,664 300,904 310,626 11,148 28,094 30,352 34,814 28,749 31,017 7 Surplus or deficit (-), total -163,899 -107,450 -21,943 51,106 -24,084 -11,166 38,222 -32,462 -17,117 8 On-budget -226,314 -174,038 -103,307 19,367 -27,894 -13,420 41,826 -33,623 -18,242 9 Off-budget 62,415 66,588 81,364 31,739 3,809 2,254 -3,604 1,161 1,125 Source of financing (total) 10 Borrowing from the public 171,288 129,712 38,171 -12,618 -16,370 33,989 -46,413 15,330 22,364 11 Operating cash (decrease, or increase (—)). . -2,007 -6,276 604 -36,144 36,210 -362 -2,451 2,661 20,335 12 Other2 -5,382 -15,986 -16,832 -2,344 4,244 -22,461 10,642 14,471 -25,582 MEMO 13 Treasury operating balance (level, end of period) 37,949 44,225 43,621 72,275 36,065 36,427 38,878 36,217 15,882 14 Federal Reserve Banks 8,620 7,700 7,692 18,140 4,648 6,704 4,952 4,440 5,219 15 Tax and loan accounts 29,329 36,525 35,930 54,135 31,417 29,722 33,926 31,776 10,663 1. Since 1990, off-budget items have been the social security trust funds (federal old-age net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF loansurvivors insurance and federal disability insurance) and the U.S. Postal Service. valuation adjustment; and profit on sale of gold. 2. Includes special drawing rights (SDRs); reserve position on the U.S. quota in the SOURCE. Monthly totals: U.S. Department of the Treasury, Monthly Treasury Statement of International Monetary Fund (IMF); loans to the IMF; other cash and monetary assets; Receipts and Outlays of the 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 • February 1999 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS' Millions of dollars Fisca year Calendar year Source or type 1996 1997 1998 1998 1997 1998 H2 HI H2 HI Sept. Oct. Nov. RECEIPTS I All sources 1,579,292 1,721,421 707,552 845,527 773,812 922,632 180,936 119,974 113,978 2 Individual income taxes, net 737,466 828,597 123,884 400,436 154,072 447,514 90,479 60,255 51.341 3 Withheld 580,207 646,481 279,988 292,252 106,865 316,309 53,342 54,277 52,530 4 Nonwithheld 250,753 281,527 53,491 191,050 58,069 219,136 39,853 7,098 2,214 5 Refunds 93,560 99.476 9.604 82,926 10,869 87,989 2,729 1,120 3,404 Corporation income taxes 6 Gross receipts 204,493 213,270 95,364 106,451 104,659 109,351 38,928 6,547 4,805 7 Refunds 22.198 24.593 10,053 9,635 10,135 14,220 2,128 4,789 1,364 8 Social insurance taxes and contributions, net . . . 539.371 571,835 240.126 288,251 260,795 312,713 43,079 41,237 45,926 9 Employment taxes and contributions" 506,751 540,016 227,777 268,357 247.794 293,520 42,540 39.690 42,940 10 Unemployment insurance 28,202 27,484 10,102 17,709 10,724 17,080 206 1,142 2,655 11 Other net receipts" 4,418 4,335 2.245 2,184 2.280 2,112 333 405 331 P Excise taxes 56,924 57,669 27,016 28,084 31,133 29.922 2,961 9,630 6,021 13 Customs deposits 17,928 18,297 9,294 8,619 9,679 8,546 1,701 1,776 1,380 19,845 24.076 8,8.15 10,477 10,262 12,971 2,356 2,089 2,132 15 Miscellaneous receipts" 25,465 32,270 12.889 12.866 13,348 15,837 3,572 3,228 3,738 OUTLAYS 16 All types 1,601,235 1,651,383 800,177 797,418 824,370 815,886 142,725 152,436 131,095 17 National defense 270,473 270,407 119,402 132,698 140,873 129,351 24,748 25,730 18,173 18 International affairs 15,228 13,144 8,512 5,740 9,420 4,610 1,123 169 4,924 19 General science, space, and technology 17.174 19,632 8,260 8,938 10,040 9.426 1,824 1,550 1,558 1,483 1,?59 695 803 411 957 892 -135 -218 21 Natural resources and environment 21,369 21,897 10,307 9,628 11,106 10.051 2,115 1,859 2,080 22 Agriculture 9.032 14.306 11.037 1.465 10,590 2.387 2,780 3,287 5,620 23 Commerce and housing credit -14.624 907 -5,899 -7,575 -3,526 -2,481 8.136 1,078 -701 24 Transportation 40,767 36,610 21,512 16,847 20,414 16,196 3,997 3,445 3,447 25 Community and regional development 11,005 10.437 5,498 5.678 5.749 4,863 1,115 1,260 1.405 26 Education, training, employment, and social services 53,008 52,214 27.524 25,080 26,851 25.928 4,455 4,861 4,111 27 Health 121,843 131.015 61.595 61,809 63,552 65,053 11,293 12.572 10,477 555,273 572.046 '69,412 778,861 283,109 286.305 47,555 50,544 43,728 29 Income security 230,886 232.949 107,631 124.034 106.353 125.196 17,109 20,104 14,644 30 Veterans benefits and services 39,313 41.782 21,109 17,697 22,077 19,615 3,432 5,465 1,841 3! Administration of justice 20,197 22,612 9,583 10,670 10,212 11.287 1.675 1.899 2,067 12,768 13.903 6,546 6,623 7,302 6,139 2,199 2,377 1,418 244,011 241,151 122,573 122,655 122,620 122,345 15,976 19,442 19,350 34 Undistributed offsetting receipts6 -49.971 -47,194 -25,142 -24.215 -22,795 -21,340 -7.909 -3,078 -2,828 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 Budge! have not 6. Rents and royalties for the outer continental shelf, U.S. government contributions for been fully distributed across months employee retirement, and certain asset sales. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. SOURCE. Fiscal year totals: U.S. Office of Management and Budget. Budget of the U.S. 3. Federal employee retirement contributions and civil service retirement and Government, Fiscal Year 1999; monthly and half-year totals: U.S. Department of the Treadisability fund. sury, Monthly Treasury Statement of Receipts and Outlays of the U.S. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance All 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1996 1997 1998 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 1 Federal debt outstanding 5,260 5,357 5,415 5,410 5,446 5,536 5,573 5,578 5,556 2 Public debt securities 5,225 5,323 5,381 5,376 5,413 5,502 5,542 5,548 5,526 i Held by public 3,778 3,826 3,874 3,805 3,815 3,847 3,872 3,790 3,761' 4 Held by agencies 1.447 1.497 1.507 1,572 1.599 1,656 1,670 1,758 1,766' 35 34 34 14 33 34 31 30 29 6 Held by public 27 27 26 26 26 27 26 26 26' 7 Held by agencies 8 8 8 7 7 7 5 4 4' & Debt subject to statutory limit 5,137 5,237 5,294 5,290 5,328 5,417 5,457 5.460 5,440 9 Public debt securities 5,137 5,237 5.294 5,290 5,328 5,416 5.456 5.460 5,439 10 Other debt1 0 0 0 0 0 0 0 0 0 MEMO 5,500 5,500 5,500 5,500 5,950 5,950 5,950 5.950 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 parrtti.c.i.pration certificates, notes to international lending organizations, and District of Colum- United States and Treasury Bulletin. bia stadium bond: 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period Type and holder 1994 1996 Q4 Ql Q2 Q3 1 Total gross public debt 4,800.2 4,988.7 5.323.2 5,502.4 5,502.4 5,542.4 5,547.9 5,526.2 By type 2 Interest-bearing 4,769.2 4,964.4 5,317.2 5,494.9 5,494.9 5,535.3 5,540.2 5,518.7 3 Marketable 3,126.0 3.307.2 3,459.7 3,456.8 3,456.8 3.467.1 3,369.5 3,331.0 4 Bills 733.8 760.7 777.4 715.4 715.4 720.1 641.1 637.7 5 Notes 1.867.0 2,010.3 2,112.3 2,106.1 2.106.1 2,091.9 2,064.6 2,009.1 6 Bonds 510.3 521.2 555.0 587.3 587.3 598.7 598.7 610.4 7 Inflation-indexed notes and bonds1 n.a. n.a. n.a 33.0 33.0 41.5 50.1 41.9 8 NonmarketableO2 1,643.1 1.657.2 1.857.5 2.038.1 2,038.1 2,068.2 2.170.7 2.187.7 9 State and local government series 132.6 104.5 101.3 124.1 124.1 139.1 155.0 164.4 10 Foreign issues3 42.5 40.8 37.4 36.2 36.2 35.4 36.0 35.1 Government 42.5 40.8 47 4 36.2 36.2 36.4 36.0 35.1 12 Public .0 .0 .0 .0 .0 .0 .0 .0 13 Savings bonds and notes 177.8 181.9 182.4 181.2 181.2 181.2 180.7 180.8 14 Government account series 1,259.8 1,299.6 1,505.9 1.666.7 1,666.7 1,681.5 1,769.1 1,777.3 15 Non-interest-bearing .. 31.0 24.3 6.0 7.5 7.5 7.2 7.7 7.5 By holder' U.S. Treasury and other federal agencies and t 1,257.1 1,304.5 1,497.2 1,655.7 1,655.7 1,670.4 1.757.6 1,765.6 Federal Reserve Banks 374.1 391.0 410.9 451.9 451.9 400.0 458.4 458.1 Private investors 3,168.0 3,294.9 3.411.2 3,393.4 3,393.4 3,430.7 3,330.6 3,301.0 Commercial banks 290.4 278.7 261.8 269.8 269.8 278.6 263.7 260.0 Money market funds 67.6 71.5 91.6 88.9 88.9 84.8 82.7 84.2 Insurance companies 240.1 241.5 214.1 224.9 224.9 182.2 185.0 188.0 Other companies 224.5 228.8 258.5 265.0 265.0 268.1 267.2 271.4 State and local treasuries6"7 541.0 469.6 482.5 493.0 493.0 444.8 464.7 469.0 Individuals Savings bonds 180.5 185.0 187.0 186.5 186.5 186.3 186.0 186.0 Other securities 150.7 162.7 169.6 168.4 168.4 165.8 165.0 166.4 Foreign and international 688.7 862.2 1,135.6 1,278.0 1,278.0 1,240.3 1,248.6 1,217.2 Other miscellaneous investors7'9 784.6 794.9 610.5 418.8 418.8 579.8 467.7 458.9 The US. Treasury first issued inflation-indexed securities during the first quarter of 7 In March 1996, in a redefinition of series, fully defeased debt backed by nonmarketable 19977.. federal securities was removed from "Other miscellaneous investors" and added to "State and 2 Includes (not shown separately) securities issued to the Rural Electrification Administra- local treasuries." The data shown here have been revised accordingly. tion, depository bonds, retirement plan bonds, and individual retirement bonds. 8. Consists of investments of foreign balances and international accounts in the United 3. Nonmarketable series denominated in dollars, and scries denominated in foreign cur- States. rency held by foreigners. 9. Includes savings and loan associations, nonprofit institutions, credit unions, mutual 4. Held almost entirely by U.S. Treasury and olher federal agencies and trust funds. savings banks, corporate pension trust funds, dealers and brokers, certain U.S. Treasury 5. Data for Federal Reserve Banks and US government agencies and trust funds are actual deposit accounts, and federally sponsored agencies. holdings; data for other groups are Treasury estimates. SOURCE. U.S. Treasury Department, data by type of security, Monthly Statement of the 6. Includes state and local pension funds. Public Debt of the United Slates; data by holder, Treasury Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Financial Statistics • February 1999 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 1998 1998, week ending Item Aug. Sept Oct. Sept. 30 Oct. 7 Oct. 14 Oct. 21 Oct. 28 Nov. 4 Nov. 11 Nov. 18 Nov. 25 OUTRIGHT TRANSACTIONS3 By npe of security 1 U.S. Treasury bills 32,286 35,694 30.362 28,504 32.697 35,896 28.238 23,097 36,927 37,505 37,730 27,247 Coupon securities, by maturity 2 Five years or less 137,256 141,855 131,248 130,825 143,434 151,181 114,620 124,634 119,017 113,914 116,567 106,682 3 More than five years 77.455 85.071 94,390 85.452 118,793 105,846 84,090 77,072 79,512 100,016 66,838 59,214 4 Inflation-indexed 717 1,173 1,497 1,140 2,373 1,269 1.631 949 799 723 566 561 Federal agency 5 Discount notes 37.530 46.151 46,265 50.771 53,568 52,068 44,117 35,723 48,124 44,257 45,013 38,786 Coupon securities, by maturity 6 One year or less 1,095 1.127 700 1,036 551 484 521 1,260 556 1,007 1.089 749 7 More than one year, but less than or equal to five years 4,118 4,853 4,864 4,003 4.308 3,584 6.699 5,164 3,480 3,828 3,695 2.465 8 More than five years 3,583 2,911 4,640 2,769 5.025 6,617 3,610 3,304 5,642 6,525 3,377 1.994 9 Mortgage-backed 72,609 89,908 92.708' 71,093 108,039 128,064 79.636 73,179 65.166 98.205 68,541 47.392 Bv t\pe of counterparty With interdealer broker 10 US Treasury 135,577 146,046 146,311 135,153 168,025 162,670 132,907 129,516 134,810 142,375 119,988 106,181 11 Federal agency 3,012 3,186 3,478 3,264 3,447 3,866 4,178 2,960 2,328 2,325 2,306 1,954 12 Mortgage-backed 22,350 30,665 31,293 26,631 35.696 38,483 28.725 26,810 23,531 29,348 24.085 17,183 With other 13 U.S. Treasury 112,136 117,747 111,185 110,769 129,272 131,521 95,673 96,236 101,445 109,782 101,713 87,522 14 Federal agency 43,314 51,856 52,991 55,315 60.004 58,886 50.769 42,490 55,474 53,292 50,868 42.039 15 Mortgage-backed 50,258 59,243 61,415' 44,462 72,343 89.581 50.912 46,369 41,635 68,857 44,456 30.209 FUTURES TRANSACTIONS' flv t\pe of deliverable security 16 U.S. Treasury bills 95 180 0 0 n.a. 0 n.a. n.a. 0 n.a. n.a. 87 Coupon securities, by maturity 17 Five years or less 5,907 4,378 3,296 2,724 3,238 4,181 2,969 2,932 3,395 3,049 2,659 3,522 18 More than five years 18,177 20,105 19,467 15.948 25,518 23,107 16,867 15,132 14,398 19,134 15,334 16,172 19 Inflation-indexed 0 0 0 0 0 0 0 0 0 0 0 0 Federal agency 20 Discount notes 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 21 One year or less 0 0 0 0 0 0 0 0 0 0 0 0 22 More than one year, but less than or equal to five years 0 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 0 24 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 0 OPTIONS TRANSACTIONS4 /?> type of underlying security 25 U.S.' Treasury bills 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 26 Five years oi less 1,790 1.984 1,685 1.950 2,139 3.083 1,006 1,067 997 1,123 1,567 805 27 More than five years 6,496 6,152 8,125 0 9,520 10,416 8,843 4,910 6,295 6,655 6,364 4,126 28 Inflation-indexed 0 0 0 0 0 0 0 0 0 0 0 0 Federal agency 29 Discount notes 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 30 One year or less 0 0 0 0 0 0 0 0 0 0 0 0 31 More than one year, but less than or equal to five years 0 0 0 0 0 0 n.a n.a. 0 0 0 0 32 More than five years 0 0 0 0 0 0 0 0 0 0 0 0 33 Mortgage-backed 793 745 862 0 1.531 1,005 387 553 861 1,821 682 480 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 US- government securities dealers on its published list of delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt primary dealers. Monthly averages are based on the number of trading days in the month. securities are included when the time to delivery is more dian five business days. Forward Transactions are assumed to be evenly distributed among the trading days of the report week. contracts for mortgage-backed agency securities are included when the time to delivery is Immediate, forward, and futures transactions are reported at principal value, which does not more than thirty business days. include accrued interest; options transactions are reported at the face value of the underlying 3. Futures transactions are standardized agreements arranged on an exchange. All futures securities. transactions are included regardless of time to delivery. Dealers report cumulative transactions for each week ending Wednesday. 4. Options transactions are purchases or sales of put and call options, whether arranged on 2. Outright transactions include immediate and forward transactions. Immediate delivery an organized exchange or in the over-the-counter market, and include options on futures refers to purchases or sales of securities (other than mortgage-backed federal agency securi- contracts on U.S. Treasury and federal agency securities. ties) for which delivery is scheduled in five business days or less and "when-issued" NOTE "n.a." indicates that data are not published because of insufficient activity. securities thai settle on the issue date of offering- Transactions for immediate delivery of mortgagebacked agency securities include purchases and sales for which delivery is scheduled in tliirty business days or less. Stripped securities are reported at market value by maturity of coupon or corpus. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A29 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1998 1998, week ending Aug. Sept. Oct. Sept. 30 Oct. 7 Oct. 14 Oct. 21 Oct. 28 Nov. 4 Nov. 11 Nov. 18 Positions2 NET OUTRIGHT POSITIONS3 fiv type of security 1 U.S. Treasury bills 3,981 853 -9,335 -2,612 -13,643 -6,447 -7,089 -9,841 -10,085 -5,730 -7,128 Coupon securities, by maturity 2 Five years or less -18,708 -5,360 1,196 -981 851 -4,303 1,875 4,652 5,186 2,529 -499 -11,060 -2,004 6,412 -2,708 4,129 5,759 7,872 8,849 4,171 7,601 10.547 4 Inflation-indexed 2,305 1,554 2,705 1,403 3.442 2,895 2,397 2.225 2,381 2,153 1,703 Federal agency 16,408 17,211 18,395 11,696 25.268 19,174 12,984 16,621 17,306 21,745 16,948 Coupon securities, by maturity 2,756 2,668 1,870 1,649 1,692 1,923 1,872 2,037 1.765 1,587 2,473 7 More than one year, but less than 5,821 4,801 5,119 3,678 4,140 4,447 6,601 5,809 3,903 4,172 2,954 8 More than five years 8.784 6,913 6,797 7,320 7,996 7,630 6,904 5,649 4,485 5,391 6,935 61.657 58,415 48,954 48,856 57,363 49,939 52,229 39,854 40,623 41,319 36,771 NET FUTURES POSITIONS4 By type of deliverable security 10 U.S. Treasury bills 1,144 606 0 119 -51 245 Coupon securities, by maturity 11 Five years or less -4,879 -8,716 -9,070 -8,941 -7,958 -10,275 -9,776 -9,949 -5,152 -3,919 -4,721 12 More than five years -32,741 -25,612 -24,562 -22,013 -25,637 -23,512 -23,713 -26,133 -22,823 -26,286 -33,074 0 0 0 0 0 0 0 0 0 0 0 Federal agency 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 15 One year or less 0 0 0 0 0 0 0 0 0 0 0 16 More than one year, but less than or equal to five years 0 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 0 0 0 0 0 0 0 0 0 0 0 0 NET OPTIONS POSITIONS By type of deliverable security 19 US Treasury bills 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity -827 -1,153 -1,301 -2,147 -1,125 -1,377 -1,560 -955 -1,738 -2.316 -1,947 -2,842 -2,553 -3,788 -3,227 -6,126 -3,371 -3,080 -3,045 -2,696 -1,461 -1,502 22 Inflation-indexed 0 0 n.a. 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. Federal agency 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 0 0 0 0 0 0 0 0 0 0 0 25 More than one year, but less than or equal to five years n.a. n.a. 0 0 n.a. n.a. 0 0 0 0 0 26 More than five years n.a. n.a. n.a. 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 27 Mortgage-backed 1,954 1,629 3.160 718 1,477 4,126 3,670 3,423 3,033 2,956 2,229 Financing5 Reverse repurchase agreements 333.413 316,256 278,468 305,281 312.432 294,925 279,853 234,286 260.682 217,473 253.440 29 Term 829 365 784 437 847 663 745 625 840 221 828 127 852 680 857 572 875 786 906,415 683,253 Securities borrowed 221.150 229,685 234,431 231,337 244,842 241,930 234,178 223,142 219,573 209,364 219,514 31 Term 95 383 99 774 109 805 96 405 112 224 109 744 108 871 109 811 106 468 113 261 97 449 Securities received as pledge 32 Overnight and continuing 2,770 3,152 2,851 2,752 2,805 2,772 2,886 2,922 2,900 2,741 3,494 33 Term 60 Repurchase agreements 34 Overnight and continuing 735,478 718,744 666,957 654,319 715,752 694,273 669,662 611,149 613,268 566,780 631,286 35 Term 728,531 704,430 777,445 689,560 764,886 762,433 785,555 788.597 796,830 834,146 598,187 Securities loaned 36 Overnight and continuing 12,518 11,057 8,157 13,432 8,473 8,511 6,495 8,919 8,693 8,483 9,069 37 Term 3,830 4,119 3,947 4,925 4,121 4,186 3,673 3,781 4,011 4,117 4,085 Securities pledged 38 Overnight and continuing 49,094 52,222 53,861 55.811 57,482 52,978 49,743 54,765 54,969 45,686 49,081 39 Term 5,612 5,624 5,112 5,231 5,063 4,797 5,412 5,266 4,904 4,789 489 Collaleralized loans 40 Total 21.580 14,140 21,841 10,311 24,276 19,091 23,000 21,054 21,712 23,009 26,943 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 U.S. 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. All 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 maturity 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. Forward positions reflect agreements made in the over-the-counter market that specify 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 • February 1999 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period Agency 1995 May June July Aug. Sept 1 Federal and federally sponsored agencies 738,928 844,611 925,823 1,022,609 1,044,575 1,061,253 1,117,705 n.a. 1,172,575 2 Federal agencies 39,186 37,347 29,380 27,792 26,995 26.817 26,990 26,668 26,691 3 Defense Department 6 6 6 6 6 6 6 6 4 Export-Import Bank ' 3,455 2,050 1,447 552 542 1,295 n.a. 5 Federal Housing Administration 116 97 84 102 108 144 155 6 Government National Mortgage Association certificates of participation 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 26,989 26,811 26,984 26,507 26,685 9 United States Railway Association n.a. n.a. n.a. n.a. n.a. n.a. 10 Federally sponsored agencies7 699,742 807,264 896,443 994,817 1,017,580 1,034,436 1,090,715 1,103,596 1.145,884 11 Federal Home Loan Banks 205,817 243,194 263,404 313,919 322,155 328,514 328,009 334,494 343.188 12 Federal Home Loan Mortgage Corporation 93,279 119,961 156,980 169,200 204,751 200,314 208.800 213,800 232,994 13 Federal National Mortgage Association 257.230 299,174 331,270 369,774 399,489 406,162 415,229 423,188 430.582 14 Farm Credit Banks8 53,175 57,379 60,053 63,517 63,744 64,717 64,528 57,910 64,332 15 Student Loan Marketing Association9 50,335 47,529 44,763 37,717 35,952 33,231 33,270 33,350 33,760 16 Financing Corporation 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation12 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt" 103,817 78,681 58,172 49,090 44,223 136,892 42,610 42,396 20 L E e x n p d o i r n t- g I m to p o fe r d t e B ra a l n k a 3 nd federally sponsored agencies 3,449 2,044 1.431 552 1,295 t t 21 Postal Service6 8,073 5,765 n.a. n.a. n.a. n.a. 22 Student Loan Marketing Association n.a. n.a. n.a. n.a. n.a, n.a. 23 Tennessee Valley Authority 3,200 n.a. 24 United States Railway Association6 n.a. n.a. \ \ Other lending" 25 Farmers Home Administration 33,719 21,015 18,325 13,530 11,955 13,530 10,900 9,756 9,500 26 Rural Electrification Administration 17,392 17,144 16,702 14,898 14,207 14,819 14,126 14,284 14,166 27 Other 37,984 29,513 21,714 20.110 17,519 107,248 17,584 18,356 22,289 1. Consists of mortgages assumed by Ihe Defense Department between 1957 and 1963 10. The Financing Corporation, established in August 1987 to recapitalize the Federal under family housing and homeowners assistance programs. Savings and Loan Insurance Corporation, undertook its first borrowing in October 1987. 2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. 11. The Farm Credit Financial Assistance Corporation, established in January 1988 to 3. On-budget since Sept. 30, 1976. provide assistance to the Farm Credit System, undertook its first borrowing in July 1988. 4. Consists of debentures issued in payment of Federal Housing Administration insurance 12. The Resolution Funding Corporation, established by the Financial Institutions Reform, claims. Once issued, these securities may be sold privately on the securities market. Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 1989. 5. Certificates of participation issued before fiscal year 1969 by the Government National 13. The FFB, which began operations in 1974, is authorized to purchase or sell obligations Mortgage Association acting as trustee for the Farmers Home Administration, the Department issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt solely for the of Health, Education, and Welfare, the Department of Housing and Urban Development, the purpose of lending to other agencies, its debt is not included in the main portion of the table to Small Business Administration, and the Veterans Administration. avoid double counting. 6. Off-budget. 14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loans 7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Includes guaranteed by numerous agencies, with the amounts guaranteed by any one agency generally Federal Agricultural Mortgage Corporation, therefore details do not sum to total. Some data being small. The Farmers Home Administration entry consists exclusively of agency assets, are estimated. whereas the Rural Electrification Administration entry consists of both agency assets and 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is guaranteed loans. shown on line 17. 9. Before late 1982, the association obtained financing through the Federal Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A31 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars Type of issue or issuer, or use Apr. May July Aug. Sept. Oct. 1 All issues, new and refunding1 145,657 171,222 214,694 20,271 22,862 29,665 22,599 20344 17,526 19,528 19,325 flv type of issue 2 General obligation 56,980 60,409 69,934 8,154 4,827 10,135 6,515 5,812 5,619 6,791 5,433 3 Revenue 88,677 110,813 134,989 12,117 18,035 19,530 16,084 14,532 11,907 12,737 13,892 By type of issuer 4 State 14,665 13,651 18,237 3,548 1,146 2,809 1,972 1,483 1,280 1,865 778 5 Special district or statutory authority2 93,500 113,228 134,919 12,504 16,865 18,099 16,244 14,233 12,490 12,924 13,473 6 Municipality, county, or township 37,492 44,343 70,558 4,219 4,851 7.220 5,673 4,628 3,756 4,739 5,073 7 Issues for new capital 102390 112,298 135,519 12,616 15,281 19,341 15,895 11,258 9,106 12,736 12,452 By use of proceeds 8 Education 23,964 26,851 31,860 4,080 2,819 4,911 2,733 2,435 2,041 2,605 2,353 9 Transportation 11,890 12,324 13,951 1,089 1,043 2,962 3,677 1,982 918 1,598 806 10 Utilities and conservation 9,618 9,791 12,219 749 5,971 2,368 795 1,179 831 2,785 2,225 11 Social welfare 19,566 24,583 27,794 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 12 Industrial aid 6,581 6,287 6,667 678 576 563 1,002 709 315 471 638 13 Other purposes 30,771 32,462 35,095 3,255 2,482 5,279 4.674 2,764 2,726 3,359 3,242 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 o r i s i s s u s e u , e r offering, 1995 1996 1997 Mar. Apr. May June July Aug. Sept. Oct. 1 All issues' 678321 670,928 758,948 108,994 76,799 77,413 102,487 70,305 53,270 783»2 66,336 2 Bonds2 572,998 548,922 641,068 89,723 64329 62,713 85,643 60,533 49,545 73,752 57,681 By type of offering 408,707 465,489 537,880 81,778 55,452 56,965 78,280 54,266 45,745 71,134 49,094 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 76,799 83.433 103,188 7,946 8,878 5,748 7,363 6,267 3,800 2.618 8.587 By industry group 156,763 119,765 130,115 17,301 16,985 12,856 16,844 17,220 12,799 8,962 11,205 7 Financial 416,235 429,157 510,953 72,422 47,345 49,857 68,799 43,313 36,746 64,790 46,476 8 Stocks2 105,323 122,006 117,880 19,271 12,470 14,700 17,111 9,772 3,725 4,640 8,655 flv tvpe of offering 9 Public 73,223 122,006 117,880 19,271 12,470 14,700 17,111 9,772 3,725 4,640 8,655 32 100 By industry group 52.707 80,460 60,386 10,756 5,551 9,271 10,248 6,390 2,560 2,266 5,879 20,516 41,546 57,494 8.515 6.919 5,429 6,863 3,382 1,165 2.374 2,776 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, and Yankee bonds. Stock data include ownership securities the Federal Reserve System. issued by limited partnerships. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Financial Statistics • February 1999 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets' Millions of dollars 1998 Item 1996 1997 Apr. May June July Aug. Sept. Oct.' Nov. 934,595 1,190,900 128,828 113,593 122,288 134,801 111,587 118,478 116,471 113,235 2 Redemptions of own shares 702,711 918,728 97,087 84,421 97,899 107,368 118,812 107,049 108,838 89,532 3 Net sales3 231,885 272,172 31,741 29,172 24,389 11,429 7,633 23,703 27,433 -7,225 4 Assets4 2,624,463 3,409,315 3,909,932 3,882.061 3,986,952 3,625,841 3,804,591 4,012,378 3,957,093 3,479,401 5 Cash5 138,559 174,154 170,045 171,425 199.135 211,253 210,026 208.343 6 Other 2.485,904 3.235,161 3 739,887 3,710,636 3,787.817 3,716915.,192676 3,218944,,946375 3,414,588 3,594,565 3,804,034 1. Data include stock, hybrid, 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 distributions 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 04 Ql Q2 Q3 Q4 Ql Q2 Q3r I Profits with inventory valuation and capital consumption adjustment 672.4 750.4 817.9 762.0 794.3 815.5 840.9 820.8 829.2 820.6 827.0 635.6 680.2 734.4 685.7 712.4 729.8 758.9 716.4 719.1 723.5 720.5 3 Profits-tax liability 211.0 226.1 246.1 224.2 238.8 241.9 254.2 249.3 239.9 241.6 243.2 424.6 454.1 488.3 461.5 473.6 487.8 504.7 487.1 479.2 481.8 477.3 5 Dividends 205.3 261.9 275.1 273.6 274.1 274.7 275.1 276.4 277.3 278.1 279.0 219.3 192.3 213.2 187.9 199.5 213.2 229.5 210.6 201.8 203.7 198.3 7 Inventory valuation -22.6 -1.2 6.9 3.0 8.1 10.3 4.8 4.3 25.3 7.8 11.7 8 Capital consumption adjustment 59.4 71.4 76.6 73.3 73.8 75.5 77.2 80.1 84.9 89.4 94.8 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 1997 1998 Account 1994 1995 1996 Ql Q2 Q3 Q4 Ql Q2 Q3 ASSETS 1 Accounts receivable, gross2 543.7 607.0 637.1 648.0 651.6 660.5 663.3 667.2 676.0 688.9 2 Consumer 201.9 233.0 244.9 249.4 255.1 254.5 256.8 251.7 251.3 255.3 274.9 301.6 309.5 315.2 311.7 319.5 318.5 325.9 334.9 335.1 4 Real estate 66.9 72.4 82.7 83.4 84.8 86.4 87.9 89.6 89.9 98.5 52.9 60.7 55.6 51.3 57.2 54.6 52.7 52.1 53.2 52.4 6 Reserves for losses 11.3 12.8 13.1 12.8 13.3 12.7 13.0 13.1 13.2 13.2 7 Accounts receivable, net 479.5 533.5 568.3 583.9 581.2 593.1 597.6 601.9 609.6 623.3 8 All other 2168 250 9 290 0 289 6 306 8 289 1 3124 329 7 140 1 313 6 9 Total assets. 696 3 784 4 858.3 873 4 887 9 882 3 910 0 931 6 949 7 936 8 LIABILITIES AND CAPITAL 14.8 15.3 19.7 18.4 18.8 20.4 24.1 22.0 22.3 24.9 171 6 168 6 177 6 185 3 193 7 189 6 ">01 5 211 7 2">5 9 226 9 Debt 41.8 51.1 60.3 61.0 60.0 61.6 64.7 64.6 60.0 58.3 247.4 300.0 332.5 324.6 345.3 322.8 328.8 338.2 348.7 337.7 14 All other liabilities 146.2 163.6 174.7 189.2 171.4 190.1 189.6 193.1 188.9 185.4 74 6 85 9 93.5 94 9 98 7 97 9 101 3 102 1 103 9 103 6 16 Total liabilities and capital 696.3 784.4 858.3 873.4 887.9 882.3 910.0 931.6 949.7 936.8 1. Includes finance company subsidiaries of bank holding companies but not of retailers 2. Before deduction for unearned income and losses. and banks. Data are amounts carried on the balance sheets of finance companies; securitized pools are not shown, as they are not on the books. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Market and Corporate Finance A3 3 1.52 DOMESTIC FINANCE COMPANIES Owned and Managed Receivables1 Billions of dollars, amounts outstanding Type of credit Sept. Seasonally adjusted 682.4 840.6 846.4 2 Consumer 283.1 307.7 327.7 330.2 332.5 336.6 339.1 343.9r 351.7 3 Real estate 72.4 111.9 121.1 124.2 120.9 125.2 128.1 128.8 132.3 4 Business 326.8 342.4 361.0 378.6 377.9 378.7 379.2 380.7 383.2 Not seasonally adjusted 5 Ibtal 689.5 769.7 818.1 832.2 836.0 835.2 842.6 850.0' 865.6 6 Consumer 285.8 310.6 330.9 329.4 335.4 338.5 340.5 344.9' 351.3 7 Motor vehicles loans 81.1 86.7 87.0 89.6 89.9 91.7 95.3 96.2 97.6 8 Motor vehicle leases 80.8 92.5 96.8 95.9 97.0 97.3 96.9 94.9 94.6 9 Revolving2 28.5 32.5 38.6 30.5 29.9 29.6 30.2 29.3' 34.6 10 Other' 42.6 33.2 34.4 33.5 34.4 35.0 34.7 34.6 34.6 Securitized assets 11 Motor vehicle loans 34.8 36.8 44.3 45.7 49.3 50.2 49.2 51.8 51.6 12 Motor vehicle leases 3.5 8.7 10.8 10.8 10.9 10.8 10.7 14.2' 14.4 13 Revolving n.a. 0.0 0.0 5.3 5.3 5.3 5.3 5.3 5.3 14 Other 14.7 20.1 19.0 18.1 18.6 18.5 18.2 18.8 18.6 15 Real estate 72.4 111.9 121.1 124.2 120.9 125.2 128.1 128.8 132.3 16 One- to four-family n.a. 52.1 59.0 65.2 62.3 65.9 68.6 68.4 72.2 17 Other n.a. 30.5 28.9 28.1 27.5 28.5 28.7 30.1 30.2 Securitized real estate assets4 18 One- to four-family n.a. 28.9 33.0 30.7 30.9 30.6 30.7 30.2 29.8 19 Other n.a. 0.4 0.2 0.2 0.1 0.1 0.1 0.1 0.1 20 Business 331.2 347.2 366.1 378.6 379.7 371.5 374.0 376.2 382.0 21 Motor vehicles 66.5 67.1 63.5 69.1 68.4 61.1 62.5 65.5 68.5 22 Retail loans 21.8 25.1 25.6 29.3 29.2 29.2 29.6 30.0 30.4 23 Wholesale loans5 36.6 33.0 27.7 29.5 28.2 21.0 22.0 24.2 27.0 24 Leases 8.0 9.0 10.2 10.4 11.0 10.9 10.9 11.3 11.1 25 Equipment 8.0 9.0 10.2 209.3 212.8 212.8 212.0 210.8 211.5 26 Loans 8.0 9.0 10.2 51.3 52.7 51.6 51.8 47.9 47.2 27 Leases 8.0 9.0 10.2 158.0 160.2 161.2 160.2 162.9 164.3 28 Other business receivables6 8.0 9.0 10.2 54.3 53.7 54.5 57.0 58.9 59.6 Securitized assets4 29 Motor vehicles 8.0 9.0 10.2 31.0 29.1 26.3 25.9 24.5 25.0 30 Retail loans 8.0 9.0 10.2 1.9 2.3 2.2 2.1 2.0 1.9 31 Wholesale loans 8.0 9.0 10.2 29.2 26.7 24.1 23.8 22.5 23.2 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 10.2 10.5 11.5 11.4 11.3 12.0 34 Loans 8.0 9.0 10.2 4.0 4.1 5.1 4.9 4.9 5.6 35 Leases 8.0 9.0 10.2 6.2 6.4 6.4 6.4 6.4 6.4 36 Other business receivables6 8.0 9.0 10.2 4.7 5.3 5.4 5.2 5.3 5.2 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, faclored 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 • February 1999 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1998 Item 1995 1996 1997 May June July Aug. Sept. Oct. Nov. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms 1 Purchase price (thousands of dollars). 175.8 182.4 180.1 195.6 193.7 208.7 191.5 192.7 201.4 192.1 2 Amounl of loan (thousands of dollars) 134.5 139.2 140.3 150 2 151.0 160.1 150.4 150.8 155.8 148.1 3 Loan-to-price ratio (percent) 78.6 78.2 80.4 79.1 81.0 78.7 81.3 80.9 79.8 79.5 27 7 27.2 28.2 28.3 28.3 28.5 28.6 28.7 28.6 28.3 5 Fees and charges (percent of loan amount)" 1.21 1.21 1.02 0.85 0.85 0.90 0.87 0.85 0.86 0.76 Yield (percent per year) 6 Contract rate 7.65 7.56 7.57 7.05 7.03 6.99 6.95 6.85 6.72 6.68 7 Effective rate1'3 7.85 111 7.73 7.18 7.16 7.13 7.09 6.98 6.85 6.80 8 Contract rate (HUD series) 8.05 8.03 7.76 7.11 7.08 7.05 6.86 664 6.86 6.84 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203 )5 8.18 8.19 7.89 7.(17 7.07 7.05 7.03 6.53 7.07 7.02 10 GNMA securities6 7.57 7.48 7.26 6.63 6.54 6.48 6.42 6.05 6.10 6.25 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 1 ] Total 253.511 287,052 316,678 343,922 349.249 359,827 366,890 375.665 386,452 399.804 12 FHA/VA insured 28.762 30,592 31,925 32,771 32.896 33,036 32,929 32.903 32.814 33.420 224,749 256,460 284,753 311,151 316.353 326.791 333.961 342,762 353.638 366.384 14 Mortgage transactions purchased (during period) 56,598 68,618 70.465 17,423 11,916 17.326 14.316 15,681 18,967 23,557 Mortgage commitments (during period) 15 Issued7 56,092 65,859 69,965 10.612 16,921 13,217 17,016 16.282 30,551 17.994 16 To sell8 360 130 1,298 0 0 419 233 249 393 0 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings {end of period) 17 Total 107,424 137,755 164,421 192,603 196,634 202,582 206,856 216,521 231,458 242,270 18 FHA/VA insured 267 220 177 158 422 456 489 569 569' 602 19 Conventional 107,157 137,535 164,244 192,445 196,212 202,126 206,367 215,952 230,889' 241.668 Mortgage transactions (during period) 20 Purchases 98,470 125,103 117,401 23,743 22.394 22,605 21,507 25,366 20,629 23,986 21 Sales 85,877 119,702 114,258 23,338 21,133 22,263 20,634 24,294 19.472 22,660 22 Mortgage commitments contracted (during period)9 .... 118,659 128,995 120,089 26,100 20.008 23.528 24,694 23,375 25,025' 28,903 1. Weighted averages based on sample surveys of mortgages originated by major institu- (S Average net yields to investors on fully modified pass-through securities backed by tional lender groups for purchase of newly built homes: compiled b> the Federal Housing mortgages and guaranteed by the Government National Mortgage Association (GNMA). Finance Board in cooperation with (he Federal Depoj.it Insurance Corporation. assuming prepayment in twelve years on pools of thirty-year mortgages insured by the 2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. seller) to obtain a loan. 7. Does not include standby commitments issued, but includes standby commitments 3. Average effective interest rate on loans closed for purchase of newly built homes, convened. assuming prepayment at the end often years 8. Includes participation loans as well as whole loans. 4. Average contract rate on new commitments for conventional first mortgages; from U.S. cl. 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 Q2 1 All holders 4,392,794r 4,602,654' 4,929,422' 5,180,913' 5.279.327' 5,379,351' 5,502,583 5,642,865 By type of property 2 One- lo four-family residences 3,355,485' 3,529,403' 3,761,017' 3,956,813' 4,029,268 4,101,294' 4,192,363 4,297,628 3 Mullifamily residences 271.748' 281,592' 300,559' 308,417' 314,585' 320,229' 326,532 332,922 4 Nonfarm, nonresidential 682.590' 707,098' 780,713' 825,922' 845,057' 866,402' 890,708 918,020 5 Farm 82.971 84,561 87.134 89,760 90,417 91,425 92.980 94,295 By type oj holder 6 Major financial institutions 1,819,806 1,894,420 1.979,114 2,068,002 2,086.764' 2,119,323' 2,124,305 2,144,075 7 Commercial banks 1,012,711 1.090,189 1.145,389 1,227,131 1,244,151' 1,270,076' 1,280,778 1.295,721 8 One- to four-family 615,861 669,434 698,508 752,323 762,556' 779,954' 784,957 784,958 9 Multifamily 39,346 43,837 46,675 49,166 50,642 51,790 52,175 53,049 10 Nonfarm, nonresidential 334,953 353,088 375,322 398,841 403,975' 410,876' 415,329 429,032 11 Farm 22,551 23,830 24,883 26,801 26,978 27,456 28,316 28,682 12 Savings institutions^ 596,191 596,763 628,335 631,444 631,822 637,012 629,882 633,281 13 One- to four-family 477,626 482,353 513,712 519,564 520,672 527,036 520,276 525,174 14 Multifamily 64,343 61,987 61,570 60,348 59,543 59,074 58,704 56,631 15 Nonfarm, nonresidential 53.933 52,135 52,723 51,187 51,252 50.532 50.519 51,078 16 Farm 289 288 331 346 354 369 383 398 17 Life insurance companies 210,904 207,468 205,390 209,426 210,792 212,235 213,645 215,073 18 One- to four-family 7.018 7,316 6,772 7,080 7,186 7,321 7,488 7.629 19 Multifamily 23,902 23.435 23,197 23,615 23,755 23,902 24,038 24,181 20 Nonfarm, nonresidential 170,421 167,095 165,399 168,374 169,377 170,423 171,393 172,411 21 Farm 9,563 9.622 10.022 10,358 10,473 10.589 10.726 10,851 22 Federal and related agencies 315.580 306.774 300.935 291,410 292.581 293.499 294,547 294,307 23 Government National Mortgage Association . . 6 2 7 8 8 7 24 One- to four-family 6 2 2 7 8 8 7 25 Multifamily 0 0 0 0 0 0 0 0 26 Fanners Home Administration4 41,781 41,791 41,596 41,332 41,195 40,972 40,921 40,907 27 One- to four-family 18,098 17,705 17,303 17,458 17,253 17,160 17,059 17,025 28 Multifamily 11,319 11,617 11,685 11.713 11,720 11,714 11,722 11,736 29 Nonfarm. nonresidential 5,670 6,248 6,841 7,246 7,370 7,369 7,497 7,566 30 Farm 6,694 6,221 5,768 4,916 4,852 4,729 4,644 4,579 31 Federal Housing and Veterans' Administration: 10,964 9,809 6.244 3.462 3,821 3,694 3,631 3,448 32 One- to four-family 4,753 5,180 3.524 1,437 1,767 1,641 1,610 1,593 33 Multifamily 6.211 4,629 2,719 2,025 2,054 2,053 2,021 1,855 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, nonrestdentta! 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 1.476 724 786 564 482 40 One- to four-family 1,049 492 365 221 109 118 85 72 41 Multifamily 1,595 428 413 251 123 134 96 82 42 Nonfarm, nonresidential 5,177 3,383 1,653 1.004 492 534 384 328 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 174,312 176,824 174,556 168,458 167,722 166,670 167,202 166,243 45 One- to four-family 158,766 161,665 160.751 156,363 156,245 155,876 156,769 156,208 46 Multifamily ....." 15,546 15,159 13,805 12,095 11,477 10,794 10,433 10,035 47 Federal Land Banks 28,555 28.428 29,602 30,346 30,657 31,005 31,352 32,009 48 One- to four-family 1,671 1,673 1,742 1,786 1,804 1,824 1,845 1,883 49 Farm 26,885 26,755 27,860 28,560 28,853 29,181 29,507 30,126 50 Federal Home Loan Mortgage Corporation . . . 41,712 43,753 46,504 46.329 48,454 50,364 50.869 51,211 51 One- to four-family 38,882 39,901 41,758 40,953 42,629 44,440 44,597 44,254 52 Multifamily 2.830 3,852 4.746 5,376 5,825 5.924 6,272 6,957 53 Mortgage pools or trusts5 1,730,004 1,863,210 2,064,882 2.202,549 2,272,999 2,330,674 2.442,603 2,548,050 54 Government National Mortgage Association . . 450,934 472,283 506,340 529,867 536,810 533,011 537,586 541,431 55 One- to four-family 441,198 461,438 494.158 516,217 523,156 519,152 523,243 526,934 56 Multifamily 9.736 10,845 12,182 13,650 13,654 13,859 14,343 14,497 57 Federal Home Loan Mortgage Corporation . . . 490.851 515,051 554,260 569,920 579.385 583,144 609,791 635,726 58 One- to four-family 487,725 512,238 551,513 567,340 576,846 580,715 607,469 633,124 59 Multifamily 3,126 2,813 2,747 2,580 2,539 2,429 2,322 2,602 60 Federal National Mortgage Association 530,343 582,959 650.780 690,919 709,582 730,832 761,359 798,460 61 One- to four-family 520,763 569,724 633,210 670,677 687,981 708,125 737,631 770,979 62 Multifamily 9,580 13,235 17,570 20,242 21,601 22,707 23.728 27,481 63 Farmers Home Administration4 19 11 3 2 2 64 One- to four-family 2 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 2 2 2 2 68 Private mortgage conduits 257,857 292,906 353,499 411,841 447,219 483,685 533,865 572,431 69 One- to four-family6 208,500 227,800 261,900 299,400 318,000 336,824 364,316 391,736 70 Multifamily 11,744 15,584 21,967 25,655 29,264 33,477 38,144 40,893 71 Nonfarm, nonresidential 37,613 49,522 69,633 86,786 99,955 113.384 131,405 139.802 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others7 527,404' 538,251' 584,491' 618,951' 626,984' 635,855' 641,129 656,433 74 One- to four-family 368,366' 371,789' 375,798' 405,988' 413.057' 421,100' 425,010 436,052 75 Multifamily 69,611' 73,524' 81,282' 81,702 82,387' 82,372' 82,535 82,921 76 Nonfarm, nonresidential 72,445' 75,097' 109,143' 112,485' 112,636' 113,283' 114,182 117,803 77 Farm 16,983 17,841 18.268 18,777 18.904 19,100 19,402 19,657 1. Multifamily debt refers to loans on structures of five or more units. 6. Includes seeuritized 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 • February 1999 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 1998 Holder and type of credit 1995 1996 1997 May June July' Aug.' Sept.' Oct. Seasonally adjusted 1 Total 1,095,711 1,181,913 1,233,099 1,254,302 1,263,683 1,268,884 1,272,957 1,278,130 1,287,752 364.209 392,321 413,369 422,624 425,510 428,121 432,240 434,653 435,926 3 Revolving 443,183 499,486 531,140 541,184 545,339 543,001 544,983 545.990 549,640 4 Other2 288 119 290,105 288,590 290,495 292,834 297,762 295,735 297,486 302,186 Not seasonally adjusted 5 Total 1,122,828 1,211,590 1,264,103 1,243.178 1,256,897 1,262,008 1,273,176 1,281,172 1,290,402 By major holder 6 Commercial banks 501,963 526,769 512,563 497.389 491,509 491,161 497,527 497,860 501,040 7 Finance companies 152,123 152,391 160,022 153.556 154,275 156,366 160,151 160,078 166,861 131,939 144,148 152,362 152,218 152,400 153,735 154,146 155,167 155,930 9 Savings institutions 40,106 44,711 47,172 47,915 48,329 48,989 49,648 50,307 50,966 85,061 77,745 78,927 65,227 65,265 65,478 66,004 65,583 65,506 11 Pools of securitized assets4 211,636 265,826 313,057 326.873 345,119 346,279 345,700 352,177 350,099 By major type of credit 367,069 395,609 416,962 418,244 425,227 429,723 434,924 438,651 441,203 13 Commercial banks 151,437 157,047 155,254 151,677 150,877 153,203 155,508 155,970 156,788 14 Finance companies 81,073 86,690 87,015 89,569 89,948 91,741 95,257 96,183 97,637 15 Pools of securitized assets 44,635 51,719 64,950 65,988 71.615 72,470 70,766 72,149 71,115 16 Revolving 464,134 522,860 555,858 535,576 539,572 536,745 541,821 543.346 548,025 17 Commercial banks 210,298 228,615 219,826 207,318 200.901 197,646 200,424 198,733 199,346 18 Finance companies 28,460 32,493 38,608 30,495 29,893 29,605 30,155 29,312 34,597 19 Nonfinaneial business3 53,525 44,901 44,966 33,412 33.544 33,807 34,009 33,743 33,448 20 Pools of securitized assets4 147,934 188,712 221.465 235,347 245,635 246,031 247.422 251,790 250,903 21 Other 291,625 293,121 291,283 289.358 292,098 295,540 296.431 299,175 301,174 22 Commercial banks 140,228 141,107 137,483 138.394 139,731 140,312 141.595 143,157 144,906 23 Finance companies 42,590 33,208 34,399 33,492 34,434 35,020 34,739 34,583 34,627 24 Nonfinaneial business3 31,536 32,844 33,961 31.815 31,721 31,671 31,995 31,840 32,058 25 Pools of securitized assets4 19,067 25,395 26,642 25.538 27,869 27.778 27,512 28,238 28,081 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. Oulstanding balances of pools upon which securities have been issued; these balances statistical release. For ordering address, see inside front cover. are no longer carried on the balance sheets of the loan originator. 2. Comprises mobile home loans and all other loans that are not included in automobile or 5. Totals include estimates for certain holders for which only consumer credit totals are revolving credit, such as loans for education, boats, trailers, or vacations. These loans may be available. secured or unsecured. 1.56 TERMS OF CONSUMER CREDIT1 Percent per year except as noted 1998 Item 1995 1996 1997 Apr. May June July Aug. Sept. Oct. INTEREST RATES Commercial banks 1 48-month new car 9.57 9.05 9.02 n.a. 8.69 n.a. n.a. 8.71 n.a. n.a. 2 24-month personal 13.94 13.54 13.90 n.a. 13.76 n.a. n.a. 13.45 n.a. n.a. Credit card plan 3 All accounts 15.90 15.63 15.77 n.a. 15.67 n.a. n.a. 15.83 n.a. n.a. 4 Accounts assessed interest 15.64 15.50 15.57 n.a. 15.62 n.a. n.a. 15.85 n.a. n.a. Auto finance companies 5 New car 11 19 9.84 7 12 6 20 6 07 6 02 6 25 6 00 591 6 33 6 Used car 14.48 13.53 13.27 12.76 12.73 12.63 12.51 12.68 12.65 12.58 OTHER TERMS3 Maturity tnumlhs) 54.1 51.6 54.1 50.7 50.8 50.9 51.7 53.0 53.1 53.1 8 Used car 52.2 51.4 51.0 52.9 52.9 54.0 54.1 54.1 54.2 54.2 Loan-to-value ratio 92 91 92 91 93 91 92 93 93 92 10 Used car 99 100 99 98 99 100 100 101 101 100 Amount financed (dollars) 11 New car 16,210 16,987 18,077 18,922 18,793 18,878 19,084 19,068 19,028 19,199 12 Used car 11,590 12,182 12.281 12,716 12,607 12,698 12,733 12,407 12.731 12,914 1. The Board's series on amounts of credit covers most short- and intermediate-term credit 2. Data are available for only the second month of each quarter extended to individuals. Data in this table also appear in the Board's G.19 (421) monthly 3. At auto finance companies. statistical release. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A37 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS' Billions of dollars; quarterly data at seasonally adjusted annual rates Transaction category or sector Ql Q2 Q3 Q4 Ql Q2 Q3 Nonfinancial sectors 1 Total net borrowing by domestic nonflnancial sectors. 588.0 571.5 700.4 726.7 769.6 675.9 617.7 829.6 955.1 922.1 938.0 By sector and instrument 2 Federal government 256.1 155.9 144.4 145.0 23.1 64.9 -43.5 30.3 40.8 -30.0 -70.9 -136.5 3 Treasury securities 248.3 155.7 142.9 146.6 23.2 66.3 -43.8 31.2 39.0 -27.6 -69.4 -136.1 4 Budget agency securities and mortgages 7.8 2 1.5 -1.6 -.1 -1.4 .2 -.9 1.7 -2.4 -1.4 -.4 5 Nonfederal 415.6 555.9 581.7 746.4 611.0 661.2 799.2 914.3 952.1 1,008.9 1,067.0 By instrument 6 Commercial paper 10.0 21.4 18.1 -.9 13.7 7.2 20.3 14.5 12.8 53.9 6.6 88.4 7 Municipal securities and loans 74.8 -35.9 -48.2 2.6 71.4 34.1 59.6 88.9 103.2 116.7 100.1 84.1 8 Corporate bonds 75.2 23.3 73.3 72.5 90.7 79.4 86.1 122.9 74.4 157.2 160.8 88.0 9 Bank loans n.ex 6.4 75.2 102.3 66.2 107.3 140.7 118.1 31.6 138.7 55.8 157.3 142.6 10 Other loans and advances -18.9 34.0 67.2 33.8 68.7 34.2 20.8 78.0 141.6 83.2 37.9 78.0 11 Mortgages 123.7 172.7 204.3 318.8 342.1 253.0 296.7 413.0 405.8 428.1 481.2 497.8 12 Home 156.2 178.2 173.9 265.3 268.3 218.2 211.4 334.2 309.3 324.1 360.5 365.8 13 Multifamily residential -6.8 -1.3 8.0 12.7 11.5 4.1 12.9 6.6 22.3 19.9 22.6 22.9 ] 4 Commercial -26.7 -6.4 20.8 38.3 59.1 28.6 68.4 67.9 71.6 80.0 91.9 103.9 15 Farm 1.0 2.2 1.6 2.6 3.3 2.1 4.1 4.3 2.6 4.0 6.2 5.3 16 Consumer credit 60.7 124.9 138.9 88.8 52.5 62.5 59.5 50.3 37.8 57.3 65.1 88.2 By borrowing sector 17 Household 207.8 311.0 343.7 370.3 355.6 334.9 329.7 362.9 394.9 437.2 469.8 472.7 18 Nonfinancial business 57.9 150.9 263.7 218.2 334.8 259.2 289.1 363.8 427.1 420.6 460.2 521.6 19 Corporate 52.1 143.3 236.8 171.4 265.0 206.4 214.5 291.5 347.5 331.4 354.6 404 7 20 Nonfann noncorporate 3.2 3.3 23.9 42.0 63.5 47.8 68.6 66.8 70.6 81.4 98.2 110.2 21 Farm 2.6 4.4 2.9 4.8 6.4 4.9 6.0 5.5 9.0 7.9 7.4 6.7 22 State and local government 66.2 -46.2 -51.5 -6.8 56.1 16.9 42.5 72.6 92.3 94.3 78.9 72.7 23 Foreign net borrowing in United States 69.8 -14.0 71.1 76.9 56.9 31.2 61.7 92.5 42.3 68.5 86.6 -27.0 24 Commercial paper -9.6 -26.1 13.5 11.3 3.7 15.5 10.4 -11.6 .7 56.0 -24.8 6.9 25 Bonds 82.9 12.2 49.7 55.8 46.7 15.5 38.7 100.3 32.4 14.3 107.5 -34.8 26 Bank loans n.e.c .7 1.4 8.5 9.1 8.5 -.7 11.5 7.3 15.7 5.2 8.4 3 5 27 Other loans and advances -4.2 -1.5 _ c .8 -2.0 .9 1.2 -3.5 -6.5 -7.0 -4.4 -2.6 28 Total domestic plus foreign 657.8 557.5 771.5 803.6 826.5 707.1 679.3 922.1 997.4 990.6 1.024.7 903.5 Financial sectors 29 Total net borrowing by financial sectors ... 294.4 468.4 456.4 556.2 644.3 336.5 657.1 595.5 987.9 839.8 1,012.9 992.8 By instrument 30 Federal government-related 165.3 287 5 204.1 231.5 212.8 105.7 286.2 161.0 298.1 227.3 413.4 561.6 31 Government-sponsored enterprise securities 80.6 176.9 105.9 90.4 98.4 -8.9 198.1 46.4 157.9 142.5 166.4 294.0 32 Mortgage pool securities 84.7 115.4 98.2 141.1 114.4 114.6 88.1 114.6 140.3 84.8 247.0 267.5 33 Loans from US. government .0 -4.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 129.1 180.9 252.3 324.7 431.5 230.9 370.9 434.5 689.8 612.5 599.5 431.2 35 Open market paper -5.5 40.5 42.7 92.2 166.7 176.6 77.0 168.8 244.2 237.4 134.8 141.0 36 Corporate bonds 123.1 121.8 196.7 179.7 207.9 61.7 229.4 194.8 345.8 315.5 373.5 158.8 37 Bank loans n.e.c -14.4 -13.7 3.9 16.9 13.6 6.5 -6.0 23.2 30.7 18.9 7.2 41.1 38 Other loans and advances 22.4 22.6 3.4 27.9 35.6 -20.1 63.0 37.5 61.7 32.7 76.0 82.3 39 Mortgages 3.6 9.8 5.6 7.9 7.8 6.2 7.5 10.1 7.3 8.0 8.0 8.0 By borrowing sector 40 Commercial banking 13.4 20.1 22.5 13.0 46.1 14.4 76.4 32.5 61.0 83.5 80.0 78.2 41 Savings institutions 11.3 12.8 2.6 25.5 19.7 -16.8 31.9 22.3 41.7 10.6 31.2 63.7 42 Credit unions .2 2 -.1 .1 .1 -.2 2 .2 .3 .5 .2 1.0 43 Life insurance companies 2 .3 -.1 1.1 .2 .8 !i 2 -.3 .0 -.6 1.6 44 Government-sponsored enterprises 80.6 172.1 105.9 90.4 98.4 -8.9 198.1 464 157.9 142.5 166.4 294.0 45 Federally related mortgage pools 84.7 115.4 98.2 141 1 114.4 114.6 88.1 114.6 140.3 84.8 247.0 267.5 46 Issuers of asset-backed securities (ABSs) 83.6 72.9 141.1 153.6 204.4 85.8 120.7 226.2 385.1 254.4 367.2 272.4 47 Finance companies -1.4 48.7 50.2 45.9 48.7 5.6 120.5 8.9 59.6 80.1 101.8 -13.6 48 Mortgage companies .0 -11.5 .4 12.4 -1.3 -.7 -12.2 3.6 4.2 5.2 -5.5 3.0 49 Real estate investment trusts (REITs) 3.4 13.7 5.7 11.0 24.8 15.1 19.8 32.0 32.1 36.3 33.9 27.4 50 Brokers and dealers 12.0 .5 -5.0 -2.0 8.1 -2.9 34.9 -6.9 7.0 -1.0 20.0 16.5 51 Funding corporations 6.3 23.1 34.9 64.1 80.7 129.7 -21.5 115.4 99.2 142.8 -28.6 -19.1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A3 8 Domestic Financial Statistics • February 1999 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued 1998 Transaction category or sector 1994 1995 Ql Q2 Q3 Q4 Ql Q2 Q3 52 Total net borrowing, alt sectors . 952.2 1,025.9 1,227.8 1,359.8 1,470.7 1,043.7 1,336.4 1,517.6 1,985.3 1,830.3 2,037.6 1,896.3 53 Open market paper -5.1 35.7 74.3 102.6 184.1 199.3 107.7 171.7 257.7 347.3 116.6 236.2 54 U.S. government securities 421.4 448.1 348.5 376.5 235.9 170.6 242.6 191.3 338.9 197.3 342.5 425.1 55 Municipal securities 74.8 -35.9 -48.2 2.6 71.4 34.1 59.6 88.9 103.2 116.7 100.1 84.1 56 Corporate and foreign bonds 281.2 157.3 319.6 308.0 345.4 156.6 354.2 418.1 452.7 487.0 641.8 212.0 57 Bank loans n.e.c -7.2 62.9 114.7 92.1 129.3 146.5 123.6 62.2 185.1 79.9 172.9 187.2 58 Other loans and advances -.8 50.3 70.2 62.5 102.2 15.0 85.0 112.0 196.8 108.9 109.4 157.6 59 Mortgages 127.3 182.5 209.9 326.8 349.9 259.2 304.2 423.1 413.1 436.1 489.2 505.8 60 Consumer credit 60.7 124.9 138.9 88.8 52.5 62.5 59.5 50.3 37.8 57.3 65.1 88.2 Funds raised through mutual funds and corporate equities 61 Total net issues 429.7 125.2 143.9 234.2 183.3 171.7 175.0 240.8 145.9 209.4 260.3 -118.2 62 Corporate equities 137.7 24.6 -3.5 -3.4 -81.8 -77.9 -75.1 -59.1 -115.1 -112.0 -123.4 -266.7 63 Nonfinancial corporations 21.3 -44.9 -58.3 -64.2 -114.4 -90.4 -100.0 -124.0 -143.3 -139.2 -128.7 -221.8 64 Foreign shares purchased by U.S. residents 63.4 48.1 50.4 60.0 41.3 46.6 54.4 64.3 -.3 13.6 4.0 -33.1 65 Financial corporations 53.0 21.4 4.4 .8 -8.6 -34.1 -29.4 .5 28.5 13.6 1.3 -11.9 66 Mutual fund shares 292.0 100.6 147.4 237.6 265.1 249.6 250.1 299.9 261.0 321.4 383.7 148.5 1. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables F.2 through F.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A39 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates Transaction category or sector 1996 1997 Ql Q2 Q3 Q4 Ql Q2 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 952.2 1,025.9 1,227.8 1,359.8 1,470.7 1,043.7 1,336.4 1,517.6 1,985.3 1,830.3 2,037.6 2 Domestic nonfederal nonfinancial sectors 41.6 238.0 -107.0 -10.7 -108.2 -253.6 -59.8 -160.3 40.7 -232.0 433.9 3 Household 1.0 274.7 -11.5 -11.4 -125.4 -285.4 -75.5 -153.7 12.9 -261.4 321.6 4 Nonfinancial corporate business 9.1 17.7 -8.8 20.0 14.8 58.8 -28.7 31.7 -2.6 33.8 -27.8 5 Nonfarm noncorporate business -1.1 .6 4.7 4.4 2.7 2.5 2.7 2.8 2.9 3.0 3.2 6 State and local governments 32.6 -55.0 -91.4 -23.7 -.3 -29.5 41.8 -41.0 27.5 -7.4 136.9 7 Federal government -18.4 -27.5 -.2 -7.7 4.9 1.7 5.7 3.3 9.0 15.5 12.8 8 Rest of the world 129.3 132.3 273.9 414.7 312.5 330.6 308.6 402.9 208.0 237.4 317.5 9 Financial sectors 799.7 683.0 1,061.1 963.5 1,261.5 964.9 1,081.8 1,271.7 1,727.7 1,809.4 1,273.4 10 Monetary authority 36.2 31.5 12.7 12.3 38.3 34.4 42.9 22.9 52.9 27.4 7.7 11 Commercial banking 142.2 163.4 265.9 187.5 324.3 316.0 290.0 226.2 464.9 292.9 136.1 12 U.S.-chartered banks 149.6 148.1 186.5 119.6 274.9 206.1 286.7 220.7 386.2 260.5 130.5 13 Foreign banking offices in United States -9.8 11.2 75.4 63.3 40.2 101.7 -3.6 4.6 58.2 11.6 18.1 14 Bank holding companies .0 .9 -.3 3.9 5.4 2.2 5.1 -5.0 19.4 15.3 -17.6 15 Banks in U.S.-affiliated areas 2.4 3.3 4.2 .7 3.7 6.1 1.8 5.8 1.1 5.5 5.1 16 Savings institutions -23.3 6.7 -7.6 19.9 -4.7 -5.3 23.8 -35.3 -2.0 10.1 -11.7 17 Credit unions 21.7 28.1 16.2 25.5 16.8 20.5 25.2 13.6 7.7 16.5 22.7 18 Bank personal trusts and estates 9.5 7.1 -8.3 -7.7 7.6 3.4 10.7 7.3 8.8 2.4 3.1 19 Life insurance companies 1O0.9 66.7 99.2 72.5 101.0 88.3 174.4 106.0 35.3 102.9 67.2 20 Other insurance companies 27.7 24.9 21.5 22.5 25.2 6.0 28.0 32.0 34.7 23.4 -1.5 21 Private pension funds 49.5 45.5 61.3 48.3 67.6 55.0 58.5 66.2 90.7 72.6 141.8 22 State and local government retirement funds 22.7 22.3 27.5 45.9 36.6 23.2 34.6 79.1 9.5 81.7 60.6 23 Money market mutual funds 20.4 30.0 86.5 88.8 87.5 58.2 26.1 121.5 144.2 172.0 200.1 24 Mutual funds 159.5 -7.1 52.5 48.9 80.9 63.9 90.0 108.0 61.8 143.6 152.6 25 Closed-end funds 20.0 -3.7 10.5 4.7 -3.4 -3.4 -3.4 -3.4 -3.4 -2.4 -2.4 26 Government-sponsored enterprises 87.8 117.8 84.7 92.0 95.0 44.9 119.9 55.8 159.2 166.0 143.4 27 Federally related mortgage pools 84.7 115.4 98.2 141.1 114.4 114.6 88.1 114.6 140.3 84.8 247.0 28 Asset-backed securities issuers (ABSs) 81.0 65.8 119.3 123.4 166.0 62.3 105.9 163.7 332.2 195.3 336.1 29 Finance companies -20.9 48.3 49.9 18.4 21.9 39.8 .9 68.3 -21.3 28.7 27.1 30 Mortgage companies .0 -24.0 -3.4 8.2 16.4 -1.3 -24.4 82.9 8.3 10.4 -11.0 31 Real estate investment trusts (REITs) .6 4.7 2.2 2.0 -2.0 -2.1 -2.1 -2.1 -1.7 -2.0 -2.0 32 Brokers and dealers 14.8 -44.2 90.1 -15.7 13.7 -14.5 -11.7 15.8 65.3 250.4 -188.6 33 Funding corporations -35.3 -16.2 -17.8 25.2 58.6 60.9 4.7 28.7 140.2 132.6 -54.8 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets 1,025.9 1,227.8 1,359.8 1,470.7 1,043.7 1,336.4 1,517.6 1,985.3 1,830.3 2,037.6 Other financial sources 35 Official foreign exchange -5.8 -6.3 .7 -17.6 .4 2.4 17.5 1.0 8.1 36 Special drawing rights certificates .0 .0 2.2 -.5 -.5 -2.1 .0 .0 .0 .0 .0 37 Treasury currency .4 .7 .6 .1 .0 .4 .2 1.3 -1.9 .3 ii2 38 Foreign deposits -18.5 52.9 35.3 85.9 107.4 186.7 23.9 116.1 103.0 -45.3 89.0 39 Net interbank transactions 50.5 89.8 9.9 -51.6 -19.4 -78.4 -57.0 -21.7 79.6 -107.1 23.3 40 Checkable deposits and currency 117.3 -9.7 -12.7 15.8 41.5 81.8 50.6 -38.4 71.9 65.6 109.3 41 Small time and savings deposits -70.3 -39.9 96.6 97.2 97.1 151.5 34.0 47.0 155.9 154.9 36.2 42 Large time deposits -23.5 19.6 65.6 114.0 122.5 56.3 174.7 188.4 70.7 186.2 -16.5 43 Money market fund shares 20.2 43.3 142.3 145.8 157.6 157.6 98.9 226.2 147.8 248.0 186.4 44 Security repurchase agreements 71.3 78.2 110.4 40.0 115.2 32.7 218.9 111.2 98.1 242.8 -45.4 45 Corporate equities 137.7 24.6 -3.5 -3.4 -81.8 -77.9 -75.1 -59.1 -115.1 -112.0 -123.4 46 Mutual fund shares 292.0 100.6 147.4 237.6 265.1 249.6 250.1 299.9 261.0 321.4 383.7 47 Trade payables 52.2 94.0 101.5 76.9 98.0 59.9 48.8 130.0 153.2 90.6 4.7 48 Security credit 61.4 -.1 26.7 52.4 110.1 110.4 127.5 90.6 111.9 168.9 -110.3 49 Life insurance reserves 36.0 34.5 44.9 43.6 52.9 49.8 62.5 62.8 36.6 47.3 36.8 50 Pension fund reserves 255.7 246.2 233.2 230.8 296.8 256.6 318.9 326.9 284,8 253.8 280.6 51 Taxes payable 11.4 2.6 6.2 16.2 14.6 21.7 14.1 30.2 -7.6 9.4 -6.7 52 Investment in bank personal trusts .9 17.8 4.0 -8.6 75.0 68.8 71.8 80.8 78.4 50.3 57.5 53 Noncorporate proprietors' equity 25.5 55.6 71.5 49.3 40.6 49.6 47.5 48.2 17.2 36.5 9.9 54 Miscellaneous 340.0 252.4 457.3 451.4 593.4 787.2 532.0 636.7 417.7 1,220.1 422.0 55 Total financial sources 2,313.0 2,083.2 2,776.0 2,946.5 3,557.6 3,188.3 3,279.2 3,797.0 3,966.0 4,663.0 3,383.0 Liabilities not identified as assets {—) 56 Treasury currency -.2 -.2 -.5 -.9 -.6 -.3 .7 -2.4 -.2 ~ 3 57 Foreign deposits -5.7 43.0 25.1 59.4 107.4 176.9 10.7 93.8 148.3 -94.7 145.1 58 Net interbank liabilities 4.2 -2.7 -3.1 -3.3 -19.9 30.3 -26.7 -50.0 -33.0 30.7 11.4 59 Security repurchase agreements 46.4 69.4 22.9 -.7 59.5 -107.3 185.3 -10.6 170.5 99.3 -107.3 60 Taxes payable 15.8 16.6 21.1 20.4 17.2 19.3 29.3 15.3 5.2 6.5 .9 61 Miscellaneous -170.8 -150.0 -213.5 -82.0 -254.9 26.9 -414.3 -94.8 -537.4 92.5 -108.2 Floats not included in assets (-) 62 Federal government checkable deposits -1.5 -4.8 -6.0 .5 -2.7 -4.6 -8.3 10.0 -7.9 7.5 -41.7 63 Other checkable deposits -1.3 -2.8 -3.8 -4.0 -3.9 -3.3 -4.3 -3.0 -5.0 -4.0 -3.0 64 Trade credit -4.0 1.5 -11.7 -27.0 15.1 -8.7 -58.7 48.0 79.7 12.6 -97.1 65 Total identified to sectors as assets 2,430.0 2,113.3 2,945.3 2,984.2 3,640.4 3,059.2 3,566.7 3,787.6 4,148.1 4,512.9 3,583.2 1. Data in this 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 • February 1999 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1998 Transaction category or sector 1994 1996 Ql Q2 Q3 Q4 Ql 02 Q3 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 13,013.7 13,714.1 14,440.8 15,208.8 14,608.2 14,727.5 14,931.5 15,208.8 15,440.4 15,636.0 15,865.1 By sector and instrument 2 Federal government 3.492.3 3,636.7 3,781.8 3.804.9 3,829.8 3,760.6 3,771.2 3,804.9 3,830.8 3,749.0 3,720.2 3 Treasury securities 3,465.6 3.608.5 3,755.1 3,778.3 3,803.5 3,734.3 3,745.1 3,778.3 3,804.8 3,723.4 3.694.7 4 Budget agency securities and mortgages .. . 26.7 28.2 26.6 26.5 26.3 26.3 26.1 26.5 25.9 25.6 25.5 5 Nonfederal 9,521.4 10,659.0 11,403.9 10.778.4 10,966.9 11,160.2 11,403.9 11,609.7 11.887.1 12,145.0 By instrument 6 Commercial paper 139.2 157.4 156.4 168.6 168.7 179.3 176.6 168.6 193.1 202.5 216.9 7 Municipal securities and loans 1,341.7 1,293.5 1,296.0 1,367.5 1,305.1 1,326.8 1,340.2 1,367.5 1.397.1 1,429.3 1,440.0 8 Corporate bonds 1,253.0 1,326.3 1,398.8 1,489.5 1,418.7 1,440.2 1,470.9 1,489.5 1,528.8 1,569.0 1,591.0 9 Bank loans n.e.c 759.9 862.1 928.3 1,035.6 964.5 1,000.2 1,000.1 1,035.6 1,051.6 1,097.0 1,123.9 10 Other loans and advances 669.6 736.9 770.6 839.3 784.4 788.5 802.9 839.3 865.6 873.8 887.6 11 Mortgages 4,374.1 4,578.4 4,897.2 5,239.3 4,950.6 5,026.8 5,142.7 5,239.3 5,337.4 5.458.6 5,596.9 12 Home 3,355.5 3,529.4 3,761.0 4,029.3 3,805.7 3,860.6 3,956.8 4,029.3 4,101.3 4,192.4 4,297.6 13 Multifamily residential 265.6 273.6 289.9 301.4 290.9 294.2 295.8 301.4 306.4 312.0 317.7 14 Commercial 670.0 690.8 759.1 818.3 766.3 783.4 800.3 818.3 838.3 861.2 887.2 15 Farm 83.0 84.6 87.1 90.4 87.7 88.7 89.8 90.4 91.4 93.0 94.3 16 Consumer credit 983.9 1,122.8 1,211.6 1,264.1 1.186.4 1,205.0 1,226.7 1,264.1 1,236.1 1,256.9 1,288.7 By borrowing sector 17 Household 4,452.5 4,801.1 5,142.7 5,500.9 5,177.1 5,268.6 5,379.0 5,500.9 5,558.5 5,683.7 5,823.5 18 Nonfinancial business 3.947.3 4,206.0 4,452.9 4,783.5 4,532.3 4,612.2 4,685.7 4,783.5 4,906.9 5,032.5 5,142.7 19 Corporate 2.683.2 2,915.1 3,115.3 3,376.1 3,184.3 3,241.9 3,297.4 3,376.1 3,479.9 3.575.5 3,656.7 20 Nonfarm noncorporate 1.121.8 1.145.8 1,187.7 1,251.2 1,199.7 1,216.8 1,232.9 1,251.2 1,271.6 1,296.1 1,323.0 21 Farm 142.2 145.1 149.9 156.3 148.3 153.4 155.4 156.3 155.4 160.9 163.0 22 State and local government 1.121.7 1,070.2 1,063.4 1,119.5 1.069.0 1.086.1 1,095.5 1,119.5 1.144.3 1,170.8 1,178.8 23 Foreign credit market debt held in United States 370.8 441.9 518.8 569.6 524.3 539.2 569.6 584.1 606.6 600.3 24 Commercial paper 42.7 56.2 67.5 65.1 69.3 71.3 64.3 65.1 76.7 71.4 74.0 25 Bonds 242.3 291.9 347.7 394.4 351.6 361.2 386.3 394.4 398.0 424.9 416.2 26 Bank loans n.e.c 26.1 34.6 43.7 52.1 43.5 46.4 52.1 53.4 55.5 56.4 27 Other loans and advances . 59.8 59.3 60.0 58.0 59.9 60.3 58.0 55.9 54.8 53.8 28 Total credit market debt owed by nonftnandal sectors, domestic and foreign 13,384.5 14,156.0 14,959.6 15,778.4 15,132.5 15,266.7 15,489.2 15,778.4 16,024.5 16,242.6 16,465.5 Financial sectors 29 Total credit market debt owed by financial sectors 3,822.2 4,281.2 4,837.3 5,448.6 4,916.5 5,084.9 5,205.3 5,448.6 5,653.5 5,911.5 6,164.5 By instrument 30 Federal government-related 2,172.7 2.376.8 2,608.3 2,821.0 2,634.7 2.706.2 2,746.5 2,821.0 2,877.9 2.981.2 3,121.6 31 Government-sponsored enterprise securities . 700.6 806.5 896.9 995.3 894.7 944.2 955.8 995.3 1,030.9 1,072.5 1,146.0 32 Mortgage pool securities 1,472.1 1,570.3 1,711.4 1,825.8 1,740.0 1,762.1 1,790.7 1,825.8 1,847.0 1,908.7 1,975.6 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 2,627.5 2,281.8 2,378.6 2,458.8 2,627.5 2,775.6 2,930.3 3,042.9 35 Open market paper 441.6 486.9 579.1 745.7 623.0 642.5 684.7 745.7 804.9 838.9 874.2 36 Corporate bonds 1,008.8 1,205.4 1,385.1 1,560.0 1,396.5 1,457.6 1,478.1 1,560.0 1.634.7 1,732.5 1.777.3 37 Bank loans n.e.c 48.9 52.8 69.7 83.3 70.6 69.2 74.8 83.3 87.3 89.3 99.3 38 Other loans and advances 131.6 135.0 162.9 198.5 157.9 173.7 183.0 198.5 206.6 225.6 246.2 39 Mortgages 18.7 24.3 32.2 40.0 33.8 35.6 38.2 40.0 42.0 44.0 46.0 By borrowing sector 40 Commercial banks 94.5 102.6 113.6 140.6 115.3 125.7 130.0 140.6 148.7 159.6 169.6 41 Bank holding companies 133.6 148.0 150.0 168.6 151 6 160.5 164.0 168.6 181.2 190.5 200.3 42 Savings institutions 112.4 115.0 140.5 160.3 1363 144.3 149.8 160.3 162.9 170.7 186.6 43 Credit unions .5 .4 .4 .6 4 .4 .5 .6 .7 .8 1.0 44 Life insurance companies .6 .5 1.6 1.8 1.8 1.8 1.9 1.8 1.8 1.6 2.0 45 Government-sponsored enterprises 700.6 806.5 896.9 995.3 894.7 944.2 955.8 995.3 1,030.9 1,072.5 1,146.0 46 Federally related mortgage pools 1,472.1 1,570.3 1,711.4 1,825.8 1,740.0 1,762.1 1.790.7 1,825.8 1,847.0 1.908.7 1,975.6 47 Issuers of asset-backed securities (ABSs) 579.0 720.1 873.8 1,089.3 889.9 917.9 989.0 1,089.3 1,147.2 1,236.7 1,308.7 48 Brokers and dealers 34.3 29.3 27.3 35.3 26.6 35.3 33.6 35.3 35.1 40.1 44.2 49 Finance companies 433.7 483.9 529.8 554.5 528.4 557.8 532.7 554.5 571.9 596.9 589.5 50 Mortgage companies 18.7 19.1 31.5 30.3 31.4 28.3 29.2 30.3 31.6 30.2 30.9 51 Real estate investment trusts (REITs) 31.1 36.8 47.8 72.6 51.6 56.6 64.6 72.6 81.7 90.1 97.0 52 Funding corporations 211.0 248.6 312.7 373.8 348.6 350.0 363.4 373.8 412.9 413.0 413.1 All sectors 53 Total credit market debt, domestic and foreign 17,206.8 18,437.2 19,797.0 21,227.0 20,049.0 20,351.5 20,694.5 21,227.0 21,678.0 22,154.1 22,630.0 54 Open market paper 623.5 700.4 803.0 979.4 861.1 893.1 925.7 979.4 1,074.8 1,112.7 1,165.1 55 US. government securities 5,665.0 6,013.6 6,390.0 6,625.9 6.464.5 6,466.8 6,517.7 6,625.9 6,708.6 6,730.2 6,841.8 56 Municipal securities 1.341.7 1,293.5 1,296.0 1,367.5 1,305.1 1,326.8 1,340.2 1,367.5 1,397.1 1,429.3 1,440.0 57 Corporate and foreign bonds 2.504.0 2,823.6 3,131.7 3,444.0 3,166.8 3,259.1 3,335.3 3,444.0 3,561.5 3,726.4 3,784.5 58 Bank loans n.e.c 834.9 949.6 1,041.7 1,171.0 1,078.6 1,115.8 1,123.1 1,171.0 1,192.3 1,241.8 1,279.6 59 Other loans and advances 860.9 931.1 993.6 1,095.8 1,002.3 1,022.5 1,044.9 1,095.8 1,128.2 1,154.3 1,187.5 60 Mortgages 4.392.8 4,602.7 4,929.4 5,279.3 4,984.3 5,062.5 5,180.9 5,279.3 5,379.4 5,502.6 5,642.9 61 Consumer credit 983.9 1,122.8 1,211.6 1,264.1 1,186.4 1,205.0 1,226.7 1,264.1 1,236.1 1,256.9 1,288.7 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 LIABILITIES1 Billions of dollars except as noted, end of period 1997 1998' Transaction category or sector 1994 1995 1996 1997 Ql 02 Q3 Q4 01 Q2 Q3 CREDIT MARKRT DEBT OUTSTANDING2 1 Total credit market assets 17,206.8 18,437.2 19,797.0 21,227.0 20,049.0 20,351.5 20,694.5 21,227.0 21,678.0 22,154.1 22,630.0 2 Domestic nonfederal nonfinancial sectors 3,038.1 2,890.0 2,919.3 2.761.1 2,849.1 2,798.0 2.739.4 2,761.1 2.699.8 2.766.7 2.75S.4 3 Household 1.981.4 1,928.7 1,966.7 1,791.3 1,909.6 1,849.7 1,793.7 1,791.3 1,744.4 1.778.2 1.739.5 4 Nonfinancial corporate business 289.2 280.4 291.0 305.8 286.8 281.4 290.4 305.8 294.7 289.7 291.8 5 Nonfarm noncorporate business 37.6 42.3 46.7 49.4 47.4 48.0 48.7 49.4 50.2 51.0 51.8 6 State and local governments 729 9 638.6 614.8 614.5 605.4 618.9 606.6 614.5 610.5 647.8 675.3 7 Federal government 203.4 203.2 195.5 200.4 195.9 197.3 198.2 200.4 204.3 207.5 210.9 8 Rest of the world 1,2160 1,530.3 1,931.2 2,258.9 2,019.4 2,095.0 2,196.4 2,258.9 2,323.5 2,401.6 2.421.7 9 Financial sectors 12,749 2 13^813.7 14J50.9 16flO6.6 14*984.6 15*26L2 15!560.5 16*006.6 16A5O.3 16J78.3 I7'239^O 10 Monelary authority 368.2 380.8 393.1 431.4 397.1 412.4 412.7 431 4 433.8 440.3 446.5 11 Commercial banking 3 254 3 3,520.1 3,707.7 4,031.9 3,775.7 3,856.8 3,912.9 4,031.9 4.093.3 4,136.4 4 195 6 12 U.S.-chartered banks 2,869^6 3^056.1 3J75.8 .W50.7 3^218.1 1,195.2 335 L9 3!450.7 3!5()5.1 3.616.2 13 Foreign banking offices in United States 337.1 412.6 475.8 516.1 499.5 501.8 501.0 516.1 517.9 525.6 510.0 14 Bank holding companies 18.4 18.0 22.0 27.4 22.5 23.8 22.5 27.4 31.2 26.8 28.3 15 Banks in US.-affiliated areas 29.2 33.4 34.1 37.8 35.6 36.1 37.5 37.8 39.2 40.4 41.1 16 Savings institutions 920.8 913.3 933.2 928.5 931.9 937.8 929.0 928.5 931.0 928.1 937.8 17 Credit unions .. 246.8 263.0 288.5 305.3 291.2 299.9 303.9 305.3 306.7 315.1 320.7 18 Bank personal trusts and estates 248^0 239.7 232.0 239.5 232.8 235^5 237.3 239.5 240.1 240.9 24 L4 19 Life insurance companies 1.482.6 1,581.8 1,654.3 1,755.2 1,680.2 1,724.1 1,750.4 1,755.2 1,784.8 1,801.9 1,823.3 20 Other insurance companies .. 446 4 468.7 491 2 515.3 491 6 498.6 506.6 515.3 521.1 520.8 518.3 21 Private pension funds 6569 718.2 766.5 834.2 780.3 794^9 811.5 834.2 852.3 887.7 9 m 22 Stale and local government retirement funds 455.8 483.3 529.2 565.8 531.6 542.7 562.0 565.8 582.5 600.2 621.4 23 Money market mutual funds 459.0 545.5 634.3 721.9 659.0 656.5 678.7 721.9 775.0 815.9 869.9 24 Mutual funds 718.8 771.3 820.2 901.1 838.5 861.3 890.4 901.1 939.3 977.6 1.007.0 25 Closed-end funds 86.0 96.4 101.1 97.7 100.3 99.4 98,5 97 7 97.1 96.5 95.o 26 Government-sponsored enterprises 661 1 748.0 813.6 908.6 824.3 854.8 868.7 908.6 949.5 985.9 1.048.1 27 Federally related mortgage pools 1.472 1 1,570.3 1,711.4 1,825.8 1,740.0 1.762.1 1,790.7 1.825.8 1,847.0 1.908.7 1,975.6 28 Asset-backed securities issuers (ABSs) 541.7 661.0 784.4 950.4 794.6 818.9 863.3 950.4 993.5 1,075.3 1.138.4 29 Finance companies 476.2 526.2 544.5 566.4 552.4 553.1 564.4 566.4 572.0 579.0 593.7 30 Mortgage companies 36.5 33.0 41.2 57.6 40.9 34.8 55.5 57.6 60.2 57.4 58.9 31 Real estate investment trusts (REITs) 13.3 15.5 17.5 15.5 17.0 16.5 15.9 15.5 15.0 14.5 14.0 32 Brokers and dealers 93 3 183.4 167.7 181.4 164.1 161.2 165.1 181.4 244.0 196.9 227.8 33 Funding corporations 109.3 94.1 119.3 173.2 141.1 139.9 142.9 173.2 212.0 199.2 192.7 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 17,206.8 18,437.2 19,797.0 21,227.0 20,049.0 20,351.5 20,694.5 21,227.0 21,678.0 22,154.1 22,630.0 Other liabilities 35 Official foreign exchange 53.2 63.7 53.7 48.9 46.3 46.7 46.1 48.9 48.2 50.1 54.5 36 Special drawing rights certificates 8.0 10.2 9.7 9.2 9.2 9.2 9.2 9.2 9.2 9.2 9.2 37 Treasury currency 17.6 18.2 18.3 18.3 18.4 18.4 18.7 18.3 18.4 18.4 18.8 38 Foreign deposits 373.9 418.8 516.1 619.4 562.8 568.8 597.8 619.4 608.1 630.4 649.6 39 Net interbank liabilities 280.1 290.7 240.8 219.7 210.9 197.1 189.4 219.7 182.7 192.2 192.8 40 Checkable deposits and currency 1.242 0 1,229.3 1,245.1 1.286.6 1,220.0 1,265.3 1,234.2 1,286.6 1.259.4 1,321.0 1.282.8 41 Small time and savings deposits 2.183.2 2,279.7 2,377.0 2,474.1 2,427.1 2,432.3 2,438.8 2.474.1 2.525.2 2.530.8 2.553.4 42 Large time deposits 411.2 476.9 590.9 713.4 606.0 646.7 696.1 713.4 760.9 754.0 776.2 43 Money market fund shares 602 9 745.3 891.1 1,048.7 950.8 952.4 1,005.1 1,048.7 1,130.7 1,153.7 1.249.7 44 Security repurchase agreements 549.5 659.9 699.9 815.1 713.8 766.7 795.4 815.1 879.5 867.0 913.6 45 Mutual tund shares . • 1,477.3 1,852.8 2 342 4 2 989 4 2,410.6 2,717.5 2 973 6 2,989.4 3,340.2 3.439.0 3,117.3 46 Security credit 279 0 '305.7 358.1 468.2 380.0 414.8 432.2 468.2 505.3 481.0 491.8 47 Life insurance reserves 505.3 550.2 593.8 646.7 606.2 621.9 637.6 646.7 658.6 667.8 674.3 48 Pension fund reserves 4,870.5 5,589.4 6,315.4 7,399.0 6,402.3 6,907.5 7,290.6 7,399.0 7,957.6 8,052.7 7.528.6 49 Trade payables 1,140.6 1,242.2 1,319.0 1,417.0 1,301.8 1,319.8 1,352.0 1.417.0 1.407.0 1,413.9 1.422.8 50 Taxes payable 101.4 107.6 123.8 138.4 137 3 133.9 143.2 138.4 149.4 140.4 150.8 51 Investment in bank personal trusts 6994 803.0 871.7 1.082.8 888.7 982.9 1,058.9 1,082.8 1.179.3 1,207.2 1.112.4 52 Miscellaneous 5,331.6 5,705.9 6,028.5 6.504.4 6.302.8 6,276.1 6,488.9 6,504.4 6.789.6 6,874.4 7.210.9 5} Total liabilities 37,333.7 40,786.5 44,392.1 49,126.2 45,244.2 46,629.6 48,102.1 49,126.2 51,087.1 51,957.0 52,039.5 Financial assets not included in liabilities ( + ) 54 Gold and special drawing rights 21.1 22.1 21.4 21.1 20.9 21.1 21.0 21 1 21.2 21.0 21.2 55 Corporate equities .. 6,237 9 8 331 3 10,062.4 12,776.0 10,063.5 11,627 0 12,649.4 12,776.0 14,397.6 14,556.1 12,758.4 56 Household equity in noncorporate business 3.380.4 3*598.7 3,806.7 4,129.6 3,903.4 3.992^9 4.059.6 4,129.6 4,140.2 4,169.2 4,151.0 Liabilities not identified as assets f - ) 57 Treasury currency -5.4 -5.8 -6.7 -7.3 -6.8 -6.9 -6.7 -7.3 -7.4 -7.4 -7 1 58 Foreign deposits 325.4 360.2 431.2 534.5 475.4 478.1 501.5 534.5 510.8 547.1 558.1 59 Net inlerbank transactions -6.5 -9.0 -10.6 -32.2 -1.6 -8.1 -22.1 -32.2 -21.2 -17 1 -15.5 60 Security repurchase agreements 67.8 90.7 90.0 149.5 68.1 108.6 116.4 149.5 177.8 145.7 170.4 61 Taxes payable 48.8 62.4 76.9 91.5 74.8 77.6 88.0 91.5 87.3 91.6 97.9 62 Miscellaneous -1.039.2 -1,324.3 -1,698.4 -2,106.4 -1.576.9 -1.675.4 -1,656.8 -2.106.4 -2,017.5 -2,022.3 -1,990.9 Floats not included in assets ( —) 63 Federal government checkable deposits 3.4 3.1 -1.6 -8.1 -9.7 -6.8 -7.8 -8.1 -10.4 -16.1 -12.0 64 Other checkable deposits 38.0 34.2 30.1 26.2 25.6 27.9 19.5 26.2 21.4 24.2 15.7 65 Trade credit -245.9 -257.6 -284.5 -280.5 -339.5 -366.6 -372.3 -280.5 -330.0 -365.9 -390.4 66 Total identified to sectors as assets 47,786.6 53,784.7 59,656.3 67,685.8 60,522.6 63,642.1 66,172.6 67,685.8 71,235.2 72,323.7 70.543.7 1. Data in this table also appear in the Board's Z.I (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 • February 1999 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1992 = 100, except as noted 1998 Measure 1995 1996 1997 Mar. Apr. May June July Aug.' Sept.' Oct.' Nov. 114 4 119.S 126.8 no 7 131 3 131 9 130.6 130 5 132 4 1319 132.2 131.8 Market groupings 110.7 114.4 119.6 123.2 124.0 124.5 123.6 123.3 124.9 124.2 124.8 124.4 3 Final, total 111.5 115.5 121.1 I25..1 126.2 126.6 125.5 124.7 126.8 126.0 126.7 126.3 4 Consumer goods 109.5 111.3 114.1 115.8 116.4 116.8 115.1 114.0 116.1 114.8 115.3 115.4 5 Equipment 114.9 122.7 133.9 142.4 143.6 144.2 144.1 143.9 146.0 146.1 147.? 146.1 108.1 110.9 115.2 116.9 117.3 118.2 118.0 119.1 119.1 118.4 118.9 118.5 7 Materials 120.4 127.8 138.2 142.7 143.1 143.6 141.8 141.9 144.4 144.4 144.1 143.7 Industry groupings 1159 121.4 129 7 134 1 134 9 135 4 1337 1336 135 7 135 2 136 0 135 9 9 Capacity utilization, manufacturing (percent) .. 82.7 814 82.0 81.6 81.7 81.6 80.2 79.8 80.7 80.1 80.2 79.8 10 Construction contracts3 122.1 131.0 142.4 145.0 150.0 151.0 150.0 152.0 152.0 145.0 139.0 143.0 11 Nonagnculturai employment, total4 114.9 117.2 119.9 122.5 122.8 123.2 123.3 123.5 123.8 123.9 124.1 124.3 12 Goods-producing, total 98.3 99.0 100.3 102.4 102.7 102.5 102.6 101.9 102.4 102.3 102.2 102.2 13 Manufacturing, total 97.5 97.2 97.6 99,1 99,1 99.0 98.9 97.9 98.4 98.4 98.1 97.8 14 Manufacturing, production workers 99.0 98.4 98.9 100.5 100.4 100.1 99.9 98.4 99.1 99.3 99.0 98.6 15 Service-producing 120.2 123.0 126.2 128.9 129.3 129.7 130.0 130.4 130.6 130.9 131.1 131.4 156.1 165.2 174.5 180.9 181.4 182.2 182.7 183.4 184.2 184.8 185.6 186.4 17 Wages and salary disbursements 150.9 159.8 171.2 179.5 180.3 181.5 181.8 182.8 184.1 184.6 185.5 186.6 18 Manufacturing 130.3 135.7 144.7 151.2 151.0 151.5 150.5 149.6 151.3 152.1 151.7 151.7 19 Disposable persona! income5 156.4 164.0 171.7 176.7 177.0 177.5 177.9 178.7 179.4 179.9 180.8 181.5 20 Retail sales5 151.5 159.6 166.9 172.4 173.7 175.8 176.0 174.8 174.9 175.6 177.7 178.9 Prices" 21 Consumer (1982-84=100) 152.4 156.9 160.5 162.2 162.5 162.8 163.0 163.2 163.4 163.6 164.0 164.0 22 Producer finished goods (1982= 100) 127.9 131.3 131.8 130.1 130.4 130.6 130.7 131.0 130.6 130.6 131.4 130.8 1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The data X Index of dollar value of total construction contracts, including residential, nonresidenare also available on the Board's web site. http://www.federalreserve.gov/releases/gI7, The tial. and heavy engineering, from McGraw-Hill Information Systems Company, F.W. Dodge latest historical revision of the industrial production index and the capacity utilization rates Division. was released in November 1998. The recent annual revision is described in an article in the 4. Based on data from U.S. Department of Labor, Employment and Earnings. Series covers January 1999 issue of the Bulletin. For a description of the methods of estimating industrial employees only, excluding personnel in the armed forces production and capacity utilization, see "Industrial Production and Capacity Utilization: 5. Based on data from US Department of Commerce, Survey of Current Business. Historical Revision and Recent Developments," Federal Reseire Bulletin, vol 83 (February f>. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the price 1997). pp. 67-92, and the references cited therein. For details about the construction of indexes can be obtained from the U.S. Department of Labor, Bureau of Labor Statistics, individual industrial production series, sec "Industrial Production: 1989 Developments and Monthly Labor Review. Historical Revision," Federal Reserxe Bulletin, vol. 76 (April 1990). pp. 187-204. NOTE. Basic data (nol indexes) for series mentioned in notes 4 and 5, and indexes for series 2. Ratio of index of production to index of capacity. Based on data from the Federal mentioned in notes 3 and 6, can also be found in the Sitn'ey of Current Business. Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other sources. 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons: monthly data seasonally adjusted 1998 Category 1995 1996 1997 Apr May June July Aug. Sept.' Oct.' Nov. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 132.304 133,943 136.297' 137,242 137,364 137,447 137,296 137,415 138,075 137.976 138,253 Employment 2 Nonagricultural industries3 121,460 123,264 126,159 128,033 128,118 127.867 127,626 127,640 128,247 128,075 128,810 3,440 3,443 3,399 3,350 3,335 3,343 3,441 3,529 3,518 3,603 3,344 Unemployment 4 Number 7,404 7,236 6.739 5.859 5,910 6,237 6,230 6,247 6,310 6,299 6.099 5 Rate (percent of civilian labor force) 5.6 5.4 4.9 4.3 4.3 4.5 4.5 4.5 4.6 4.6 4.4 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 117.191 119,523 122,257 125,234 125,562 125,751 125,869 126,191 126,363 126.508 126,775 7 Manufacturing 18,524 18,457 18,538 18,827 18,805 18.780 18,594 18,693 18,692 18,631 18,584 8 Mining 581 574 573 582 579 578 571 571 568 564 561 5,160 5.400 5,627 5,930 5,917 5.946 5,970 5,989 5,981 6,013 6,060 10 Transportation and public utilities 6,132 6,261 6,426 6,513 6,534 6,538 6,550 6,570 6,579 6,593 6,600 11 Trade 27,565 28,108 28,788 29,133 29,238 29,269 29,374 29,383 29,454 29,459 29,531 6,806 6,899 7,053 7,289 7,311 7,333 7,370 7,372 7,393 7,415 7,438 13 Service 33,117 34,377 35,597 37,196 37,350 37,494 37,614 37,691 37,768 37,892 38,042 14 Government 19,305 19,447 19,655 19.764 19.828 19,813 19,826 19,922 19.928 19,941 19.959 1 Beginning January 1994, reflects redesign of current population survey and population 4. Includes all full- and part-time employees who worked dunng, 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 1997 1998 1997 1998 1997 1998 Series Q4 Ql Q2 Q3< Q4 Ql Q2 03 Q4 Ql Q2 03' Output (1992=100) Capacity (percen of 1992 output) Capacity utilizati•>n rate (percent)2 1 Total industry 129.8 130.4 I3I.3 131.6 155.7 157.6 159.6 161.5 83.4 82.7 82.3 81.5 2 Manufacturing 133.1 133.8 134.7 134.8 161.3 163.5 165.8 168.1 82.5 81.8 81.2 80.2 3 Primary processing 121.0 121 2 121.1 120.2 141.8 143.0 144.0 145.1 85.3 84.8 84.1 82.8 4 Advanced processing4 139.0 140.1 141.4 142.1 170.7 173.5 176.4 179.2 81.4 80.8 80.2 79.3 5 Durable goods 153.0 154 4 156.1 157.9 186.5 190.2 193.9 197.5 82.1 81.2 80 5 79.9 6 Lumber and products 114.5 115.6 116.4 117.6 140.8 142.0 143.0 143.9 81.3 81.4 81.4 81.7 7 Primary metals 128.5 128.2 125.3 122.3 139.7 140.8 142.0 143.2 92.0 91.0 88.3 85.4 H Iron and steel 127.9 128.3 124.0 118.6 139.4 140.9 142.8 144.6 91 8 91.0 86.9 82.0 9 Nonferrous 129.1 128.0 127.0 126.6 139.8 140.4 140.8 141.3 92.! 91.2 90.1 89.6 10 Industrial machinery and equipment 187.5 194.1 203.0 208.0 219.5 226.5 234.7 242.9 85.4 85.7 86.5 85.6 1 ] Electrical machinery 273.7 278.2 282.8 292.5 335.1 351.2 366.6 381.6 81.7 79.2 77.1 76.6 12 Motor vehicles and parts 147.5 140.8 135.3 137.2 181.4 182.8 183.9 184.9 81.3 77.0 73.6 74.2 13 Aerospace and miscellaneous transportation equipment 99.3 102.7 106.1 106.6 126.7 127.0 127.5 128.0 78.4 80.8 83.2 83.3 14 Nondurable goods 112.4 112.7 112.7 111.3 135.0 135.8 136.6 137.5 83.3 83.1 82.5 81.0 15 Textile mill products 113.5 113.6 113.2 112.1 131.9 134.8 134.9 135.1 84.7 84.3 83.9 83.0 16 Paper and products 115.8 115.5 115.0 115.0 129.6 130.6 131.6 132.5 89 < 88.5 87.4 86.8 17 Chemicals and products 116.6 116.8 116.9 114.4 146.1 147.1 148.0 148.9 79.8 79.4 79.0 76.8 18 Plastics materials 128.2 127.3 127.5 128.4 138.2 139.4 140.7 141.9 92.8 91.3 90.6 90.5 19 Petroleum products 110.3 111.6 112.0 112.7 115.8 116.2 116.5 116.8 95.2 96.1 96.1 96.5 20 Mining 105.9 107.0 105.3 103.7 119.4 119.7 1199 120.1 88 6 89 4 87.8 86.3 21 Utilities 114.2 110.9 115.6 119.7 125.8 125.9 126.2 126.5 90.8 88.1 91.6 94.6 22 Electric 115.1 112.8 118.3 121.2 123.5 123.5 123.8 124.0 93.2 91.3 95.6 97.7 1973 1975 Previous cycle5 Latest cycle6 1997 1998 High Low High Low High Low Nov. June July Aug.r Sept.' Oct. Nov.p Capacity utilization rate (percent): I Total industry 89.2 72.6 87.3 71.1 85.4 78.1 83.4 81.5 81.1 82.0 81.3 81.2 80.6 ^ Manufacturing 88.5 70.5 86.9 69.0 85 7 76.6 82.6 80.2 79.8 80.7 80.1 80.2 79.8 3 Primary processing3 91.2 68.2 88.1 66.2 88.9 77.7 85.4 83.3 83.4 83.1 82.0 82.1 81.7 4 Advanced processing4 87.2 71.8 86.7 70.4 84.2 76.1 81.6 79.2 78.5 79.9 79.5 79.6 79.3 5 Durable goods 89.2 68.9 87.7 63.9 84.6 73.1 82.2 79.1 78.6 80.9 80.2 80.4 79.8 6 Lumber and products 88.7 61.2 87 9 60.8 936 75.5 81.5 81.5 81.8 S2.3 80.9 81.5 82.3 7 Primary metals 100.2 65.9 94.2 45.1 92.7 73.7 92.6 85.8 85.9 86 9 83.4 83.4 81.0 8 Iron and steel 105.8 66.6 95.8 37.0 95.2 71.8 91.9 83.5 83.5 84.7 77.9 78.4 74.1 9 Nonferrous 90.8 59.8 91.1 60.1 89.3 74.2 93.6 88.6 88.9 89.7 90.3 89.8 89.5 10 Industrial machinery and equipment 96.0 74.3 93.2 64.0 85.4 72.3 85.3 86.6 87.0 85.2 84.7 84.8 83.7 11 Electrical machinery 89.2 64.7 89.4 71.6 84.0 75.0 82.0 76.8 76.8 76.2 76.9 76.9 76.7 12 Motor vehicles and parts 93.4 51.3 95.0 45.5 89.1 55.9 82.2 65.7 58.3 83.4 80.9 80.6 80.6 13 Aerospace and miscellaneous transportation equipment 78.4 67.6 81.9 66.6 87.3 79.2 78.1 83.2 83.8 83.5 82.5 83.2 81.7 14 Nondurable goods 87.8 71.7 87.5 76.4 87.3 80.7 83.4 81.8 81.7 80 9 80.2 80.4 80.3 15 Textile mill products 91.4 60.0 91.2 72.3 90.4 77.7 85.2 83.0 83.9 828 82.3 83.3 82.6 16 Paper and products 97.1 69.2 96.1 80.6 93.5 85.0 89.6 87 1 87 7 87 0 85.7 86.7 85.3 17 Chemicals and products 87.6 69.7 84.6 69.9 86.2 79.3 79.5 78.3 77.9 76.7 75.9 76.2 76.2 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 93.1 89.7 91.6 92.9 87.1 87.8 88.7 19 Petroleum products 96.7 81.1 90.0 66.8 88.5 85.1 94.2 95.7 97.2 97 7 94.6 91.9 95.4 20 Mining 94.3 88.2 96.0 80.3 88.0 87.0 87.9 87.3 87.2 86.? 85.4 84.7 83.5 21 Utilities 96.2 82.9 89.1 75.9 92.6 83.4 90.3 94.0 93.7 95.1 95.2 91.6 88.5 22 Electric 99.0 82.7 88.2 78.9 95.0 87.1 92.4 97.7 96.7 97.8 98.8 94.6 91.7 1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The data 3. Primary processing includes textiles; lumber; paper; industrial chemicals; synthetic are also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. The materials; fertilizer materials; petroleum products; rubber and plastics; stone, clay, and glass; latest historical revision of the industrial production index and the capacity utilization rates primary metals; and fabricated metals. was released in November 1998. The recent annual revision is described in an article in the 4. Advanced processing includes foods; tobacco; apparel; furniture and fixtures; printing January 1999 issue of the Bulletin. For a description of the methods of estimating industrial and publishing; chemical producis such as drugs and toiletries; agricultural chemicals; leather production and capacily utilization, see "Industrial Production and Capacity Utilization. and products; machinery; transportation equipment, instruments; and miscellaneous manufac- Historical Revision and Recent Developments," Federal Reserve Bulletin, vol. 83 (February tures. 1997), pp. 67-92, and the references cited therein. For details about the construction of 5. Monthly highs, 1978-80; monthly lows, 1982 individual industrial production series, see "Industrial Production: 1989 Developments and 6. Monthly highs, 1988-89; monthly lows, 1990-91. Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 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 • February 1999 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1997 Group pro- 1997 por- avg. tion Apr. May June July Aug.r Sept/ Oct. Nov.c Index (1992 = 100) MAJOR MARKETS 1 Total index 100.0 126.8 129.9 130.3 130.3 130.2 130.7 131.3 131.9 130.6 130.5 132.4 131.9 132.2 131.8 2 Products 60.5 119.6 122.2 122.3 122.6 122.5 123.2 124.0 124.5 123.6 123.3 124.9 124.2 124.8 124.4 3 Final products 46.3 121.1 124.1 124.0 124.5 124.2 125.3 126.2 126.6 125.5 124.7 126.8 126.0 126.7 126.3 4 Consumer goods, total 29.1 114.1 115.9 115.4 116.0 115.2 115.8 116.4 116.8 115.1 114.0 116.1 114.8 115.3 115.4 5 Durable consumer goods 6.1 129.6 135.1 133.3 135.1 134.5 135.9 136.9 138.3 130.7 124.6 140.1 137.4 140.3 140.4 6 Aulomotive products 2.6 129,1 138.4 134.5 133.0 131.5 132.7 134.6 136.8 121.7 107.3 141.7 135.9 141.1 140.0 7 Autos and trucks 1.7 135.7 149.1 144.1 141.0 138.6 138.9 141.3 143.5 118.2 92.8 151.4 143.4 150.6 149 7 8 Autos, consumer .9 114.9 119.4 113.1 115.1 104.8 106.5 107.4 108.4 93.8 75.8 124.4 128.3 119.9 113.6 9 Trucks, consumer .7 157.1 177.3 173.5 166.1 170.5 169.8 173.8 177.1 142.2 110.0 178.9 161.1 181.0 184.3 10 Auto parts and allied goods .... .9 118.5 122.1 119.8 120.5 120.3 122.7 123.7 126.0 125.4 125.6 127.6 124.9 127.4 126.0 11 Other 3.5 130.1 132.4 132.3 136.7 136.9 138.5 138.8 139.4 137.8 138.7 138.5 138.3 139.4 140.4 12 Appliances, televisions, and air conditioners 1.0 176,1 186.5 187.4 195.5 197.9 203.8 201.4 202.7 199.9 207.8 209.4 209.7 211.3 216.5 13 Carpeting and furniture .8 112.8 116.8 112.6 119.2 115.8 114.3 115.9 119.1 117.0 117.3 116.7 116.3 120.0 120.0 14 Miscellaneous home goods 1.6 114.2 112.4 114.1 115.6 116.8 118.3 118.2 117.9 117.1 115.9 115.3 115.2 114.6 114.5 15 Nondurable consumer goods 23.0 110.2 111.2 110.9 111.3 110.5 110.8 111.4 111.5 111.2 111.2 110.3 109.4 109.2 109.3 16 Foods and tobacco 10.3 108.2 109.2 108.4 110.4 110.1 109.1 110.2 110.8 108.5 108.5 107.5 106.9 107.8 108.4 17 Clothing 2.4 101.1 100.0 100.6 100,7 99.3 100.4 99.9 98.8 98.8 98.4 97.7 97.1 95.8 94.6 18 Chemical products 4.5 119.5 120.9 121.8 121.3 121.2 121.3 123.2 122.5 122.8 122.2 119.0 117.7 119.0 119.9 19 Paper products 2.9 108.0 110.8 109.5 109.2 107 7 106.3 106.2 105.7 105.3 106.3 106.6 105.9 105.3 104.7 20 Energy 2.9 111.6 112.0 112.5 109.1 106.5 113.2 111.5 112.5 118.2 118.4 120.1 118.0 113.5 112.2 21 Fuels .8 109.3 107.4 110.2 111.0 110.4 111.2 111.6 110.9 111.4 112.9 112.1 108.3 104.5 110.0 22 Residential utilities 2.1 112.3 113.9 113.2 107.6 104.0 113J 111.0 112.9 121.2 120.7 123.7 122.5 117.7 112.8 23 Equipment 17.2 133.9 138.6 139.4 139.5 140.3 142.4 143.6 144.2 144.1 143.9 146.0 146.1 147.3 146.1 24 Business equipment 13.2 148.7 155.4 156.5 156.3 157.0 160.1 162.2 163.1 163.6 163.5 166.6 167.2 168.7 167.7 25 Information processing and related 5.4 181.6 191.8 194.5 195.3 199.2 202.3 206.0 209.2 210.3 211.8 213.1 217.2 219.7 220.6 26 Computer and office equipment .... I.I 415.8 474.3 496.8 520.3 547.4 584.9 601.5 620.6 638.6 654.6 671.6 698.3 720.8 742.8 27 Industrial 4.0 136.1 138.0 139.8 138.4 136.6 139.4 139.4 138.1 142.9 144.2 142.3 139.4 141.2 139.5 28 Transit 2.5 116.7 127 0 125.6 126.0 126.8 130.3 133.6 135.5 128.2 121.9 141.6 139.8 140 4 138.7 29 Autos and trucks 1.2 124.0 133.4 127.4 126.2 120.9 121.6 123.4 125.1 108.6 91.7 136.9 135.6 133.8 133.2 30 Other 1.3 136.0 138.8 138.7 137.7 136.9 139.8 140.8 139.6 141.7 146.6 132.6 140.9 140.5 137.7 31 Defense and space equipment 3.3 76.2 75.7 75.8 76.2 76.3 75.9 75.9 76.0 75.8 76.1 76.5 75.6 76.4 75.6 32 Oil and gas well drilling .6 149.3 151.6 149.6 153.9 157.4 155.7 147.6 147.1 136.7 131.9 127.7 123.4 119.4 114.1 33 Manufactured homes 141.4 141.5 142.3 147.1 149.6 148.0 148.0 149.0 146.1 151.1 145.7 147.8 150.9 151.0 34 Intermediate products, total 14.2 115.2 116.3 117.0 117.0 117.1 116.9 117.3 118.2 118.0 119.1 119.1 118.4 118.9 118.5 35 Construction supplies 5.3 122.4 123.6 124.2 125.5 125.7 124.7 125.4 126.6 126.1 128.5 128.0 126.7 128.1 129.0 36 Business supplies 8.9 111.0 112.0 112.6 112.0 112.1 112.2 112.5 113.3 113.2 113.6 113.8 113.4 113.4 112.4 37 Materials 39.5 138.2 142.4 143.4 142.6 142.5 142.7 143.1 143.6 141.8 141.9 144.4 144.4 144.1 143.7 38 Durable goods materials 20.8 165.0 173.2 174.1 173.6 173.5 173.7 174.5 175.4 171.7 171.8 177.4 177.7 178.2 178.5 39 Durable consumer parts 4.0 143.1 147.0 150.0 143.1 144.2 143.7 144.4 147.9 131.9 129.7 149.6 147.6 145.9 145.9 40 Equipment parts 7.6 238.5 259.2 261 1 263.4 264.5 265.8 266.9 268.6 271.0 274.1 278.0 282.7 285.5 288.5 41 Other 9.2 127.2 130.5 130.0 130.7 129.7 129.7 130.3 129.6 128.3 128.1 128.3 127.7 128.1 127.5 42 Basic metal materials 3.1 121.9 125.8 123.5 126.1 125.9 123.7 123.5 123.0 120.1 120.2 121.9 117.9 117.9 115.3 43 Nondurable goods materials 8.9 113.4 115.5 116.1 114.8 114.9 114.2 114.4 114.1 113.9 114.1 113.1 111.9 111.4 110.9 44 Textile materials 1.1 111.2 112.4 113.5 109.9 111.1 110.6 110.5 111.0 110.2 110.1 107.7 107.6 108.7 108.1 45 Paper materials 1.8 115.9 116.8 117.9 117.2 117.0 116.3 116.3 115.5 117.3 117.3 116.4 115.0 115.8 114.5 46 Chemical materials 3.9 114.4 116.9 117.6 117.2 116.5 115.6 116.2 115.6 114.8 114.6 113.6 111.7 110.5 110.2 47 Other 2.1 110.0 113.0 112.3 110.0 111.4 111.0 110.9 111.2 110.6 111.7 111.6 111.5 110.2 110.3 48 Energy materials 9.7 103.7 102.2 103.8 103.0 102.8 103.7 103.8 104.3 104.8 104.8 104.4 105.3 103.8 101.9 49 Primary energy 6.3 101.4 99.7 101.1 101.6 101.4 101.0 101.3 101.0 101.8 102.9 101.2 102.6 100.9 99.3 50 Converted fuel materials 3.3 108.0 107.1 109.1 105.8 105.6 109.0 108.6 110.8 110.7 108.6 110.7 110.7 109.4 107.0 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.1 126.6 129.6 130.2 130.2 130.2 130.7 131.3 131.8 131.2 131.6 132.1 131.7 131.9 131.6 52 Total excluding motor vehicles and pans 95.1 126.1 129.0 129.5 129.7 129.7 130.3 130.9 131.3 131.2 131.7 131.3 131.0 1314 130.9 53 Total excluding computer and office equipment 98.2 123.8 126.6 126.9 126.7 126.4 126.7 127.3 127.7 126.4 126.2 128.0 127.4 127.6 127.1 54 Consumer goods excluding autos and trucks 27.4 112.9 114.2 113.8 114.7 113.9 114.5 115.1 115.3 114.8 114.9 114.3 113.3 113.4 113.6 55 Consumer goods excluding energy 26.2 114.4 116.4 115.7 116.8 116.2 116.1 117.0 117.3 114.7 113.5 115.7 114.5 115.5 115.7 56 Business equipment excluding autos and trucks 151.5 157.9 159.9 159.7 161.1 164.6 166.7 167.4 170.0 171.8 169.9 170.8 172.7 57 Business equipment excluding computer and office equipment 12.1 134.4 139.2 139.7 138.8 138.7 140.8 142.3 142.6 142.7 142.2 144.8 144.8 145.8 144.3 58 Materials excluding energy 29.8 149.0 155.1 155.8 155.0 155.0 154.9 155.5 156.0 153.4 153.6 156.9 156.6 156.8 156.8 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 1998 SIC pro- 1997 Group code por- avg. tion Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug.' Sept.' Oct. Nov.P Index (1992 =100) MAJOR INDUSTRIES 59 Ibtal index 100.0 126.8 129.9 130.3 130.3 130.2 130.7 131.3 131.9 130.6 130.5 132.4 131.9 132.2 131.8 60 Manufacturing 85.4 129.7 133.3 133.7 133.8 133.7 134.1 134.9 135.4 133.7 133.6 135.7 135.2 136.0 135.9 61 Primary processing 26.5 119.1 121.1 121.5 121.6 121.1 121.0 121.5 121.4 120.2 120.7 120.6 119.3 119.7 119.4 62 Advanced processing 58.9 134.7 139.3 139.7 139.8 140.0 140.6 141.6 142.3 140.4 139.9 143.3 143.2 144.2 144.3 63 Durable goods 45.0 147.1 153.3 154.0 153.9 154.0 155.2 156.2 157.2 154.8 154.4 159.8 159.5 160.7 160.4 64 Lumber and products 24 2.0 114.2 114.8 115.0 115.2 116.2 115.3 116.1 116.4 116.7 117.5 118.5 116.7 117.8 119.2 65 Furniture and fixtures 25 1.4 117.7 119.7 120.4 119.4 118.6 121.5 121.0 120.6 122.0 120.8 120.1 121.6 123.9 123.5 66 Stone, clay, and glass products 32 2.1 122.3 123.7 125.0 124.6 124.0 124.5 124.0 124.5 123.5 125.4 127.0 126.4 127.3 127.4 67 Primary metals 13 3.1 1953 129.3 127 8 129.2 128.1 127.1 127.5 126 5 122.1 122.6 124 4 119.8 120.1 116.9 68 Iron and steel 331.2 1.7 24.2 128.0 127.6 128.9 128.2 127.7 126.7 125.5 119.8 120.2 122.5 113.2 114.4 108.6 69 Raw steel 331PT .1 115.9 120.2 119.6 122.5 123.3 120.0 122.4 121.9 116.0 118.3 120.3 112.6 109.7 101.8 70 Nonferrous 133-6 9 1.4 126.7 130.9 128 1 129.7 128.0 126.4 128.4 127 6 124.9 125.4 126 7 127.7 127.0 126.9 71 Fabricated metal products... 34 5.0 124.7 126.8 128.2 127.6 126.6 127.2 127.8 128/7 128.0 127.8 126.3 126.2 126.7 126.5 72 Industrial machinery and equipment 35 8.0 179.4 187.3 189.0 191.8 192.3 198.4 200.6 202.5 205.8 209.0 207.0 208.1 210.8 210.7 73 Computer and office equipment 357 1.8 423.7 481.3 502.2 526.3 552.6 589.6 605.4 623.9 641.4 657.0 673.6 700.2 722.7 744.7 74 Electrical machinery 36 7.3 253.4 274.9 276.5 277.7 278.5 278.2 280.8 282.0 285.5 289.4 290.8 297.1 300.9 304.2 75 Transportation equipment. .. 37 9.5 117.1 123.8 124.1 121.3 121.5 122.3 123.3 125.2 114.2 108.2 130.3 127.6 128.0 127.2 76 Motor vehicles and parts . 371 4.9 139.9 149.0 148.6 141.9 140.4 140.0 140.8 144.1 121.1 107.6 154.2 149.9 149.6 149.9 77 Autos and light trucks . 371PT 2.6 27.8 139.2 134.1 132.0 128.2 128.8 130.9 132.7 110.1 86.9 142.0 136.5 140.4 138.5 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.6 94.7 99.0 100.0 100.9 102.6 104.5 105.7 106.3 106.3 107.1 106.9 105.7 106.7 105.0 79 Instruments 38 5.4 110.3 111.8 112.0 111.5 112.5 112.8 113.0 113.8 112.4 112.6 113.0 113.9 114.6 114.2 80 Miscellaneous 39 1.3 119.1 118.5 119.9 119.7 119.9 120.0 120.1 119.1 118.5 118.5 117.7 117.0 116.1 114.5 81 Nondurable goods 40.4 111.3 112.6 112.7 113.1 112.8 112.4 113.0 113.0 112.0 112.1 111.3 110.6 111.0 111.2 82 Foods 20 9.4 108.0 109.1 109.0 110.5 109.9 109.7 110.3 110.7 109.2 109.0 107.9 107.7 108.9 109.9 83 Tobacco products 21 1.6 110.9 112 1 106 4 110.1 112.7 105.3 109.8 111.5 104.7 106.0 107.0 104.2 101.9 99.7 84 Textile mill products 22 1.8 112.2 114.1 113.1 115.0 113.2 112.6 113.3 114.5 112.0 113.2 111.8 111.2 112.6 111.7 85 Apparel products 23 2.2 102.8 101.8 102.3 102.5 101.1 101.6 101.0 100.4 100.5 100.1 99.2 98.3 97.3 96.1 86 Paper and product. 26 3.6 114.4 116.1 116.2 115.7 115.9 115.0 115.2 115.0 114.9 115.9 115.3 113.9 115.5 113.9 87 Printing and publishing 27 6.7 105.2 107.1 107.0 106.4 106.4 105.4 105.5 105.6 105.5 105.4 104.9 104.9 104.8 104.6 88 Chemicals and products .... 28 9.9 114.9 116 2 117.3 117.0 116.7 116.6 117.7 116.9 116.2 115.7 114.3 113.2 113.8 114.1 89 Petroleum products 29 1.4 109.8 109 1 110.6 111.2 110.5 113.0 112.8 111.5 111.6 113.4 114.1 110.6 107.5 111.7 90 Rubber and plastic products . 30 3.5 128.2 130.9 130.9 131.0 131.1 131.4 133.2 133.1 132.4 132.7 132.2 132.8 133.4 134.1 91 Leather and products 31 .3 81.9 78.7 78.8 77.3 78.3 77.9 76.3 75.8 74.5 75.3 74.0 73.4 73.0 73.1 92 Mining 6.9 105.8 1049 106.4 107.6 107.5 105.8 105.7 105.4 104.7 104.6 103.7 102.7 101.9 100.7 93 Metal " 10 .5 110.0 115.9 107.5 110.9 123.2 109.3 106.9 108.5 108.0 105.7 109.0 106.4 110.5 110.2 94 Coal 12 1.0 107.8 100.3 116.1 112.4 104.3 103.4 107.2 106.0 110.4 112.8 109.7 115.8 110.8 108.6 95 Oil and gas extraction 13 4.8 103.1 102.6 102.2 103.6 104.6 104.0 102.9 102.4 100.4 100.0 99.2 97.2 96.8 95.4 96 Stone and earth minerals 14 .6 120.3 122.0 121.9 127.5 123.1 120.0 123.3 124.4 125.6 125.4 124.3 120.5 120.3 120.8 97 Utilities 7.7 112.8 113.6 113.1 109.8 109.0 114.0 112.8 115.2 118.7 118.3 120.2 120.5 116.1 112.2 98 Electric 491,493PT 6.2 113.2 114.1 113.8 111.4 1112 115.7 115.2 118.9 121.0 119.8 121.2 122.6 117.5 114.0 99 Gas 492.493PT 1.6 111.2 111.0 109.9 102.2 99J 106.3 102.0 98.3 108.4 111.7 115.7 110.8 109.3 103.9 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.5 129.1 132.4 132.8 133.4 133.4 133.8 134.6 134.9 134.5 135.1 134.6 134.3 135.2 135.1 101 Manufacturing excluding computer and office equipment 83.6 126.3 129.4 129.7 129.6 129.4 129.5 130.2 130.6 128.8 128.6 130.6 129.9 130.6 130.4 102 Computers, communications equipment, and semiconductors 5.7 395.9 443.9 451.5 459.3 467.6 473.4 482.7 490.7 502.9 511.8 522.5 539.3 551.5 563.0 103 Manufacturing excluding computers and semiconductors 81.3 118.0 120.2 120.4 120.3 120.1 120.2 120.9 121.1 119.2 118.9 120.6 119.8 120.3 120.0 104 Manufacturing excluding computers, communications equipment, and semiconductors 79.8 116.6 118.7 118.9 118.8 118.5 118.7 119.3 119.5 117.5 117.2 119.0 118.1 118.6 118.3 Gross value (billions of 1992 dollar, annual rates) Major Markets 105 Products, total 2,001.9 2,406.1 2,456.3 2,455.0 2,462.9 2,456.2 2,474.5 2,489.8 2,498.5 2,470.3 2,454.6 2,525.1 2,501.8 2,514.9 2,513.0 106 Final 1.552.1 1,886.0 1,931.2 1.927.4 1,935.8 1,928.6 1,948.1 1,961.6 1,966.1 1,938.2 1,915.6 1,985.9 1.967.7 1,979.3 1,978.2 107 Consumer goods 1,049.6 1,198.0 1,218.8 1,212.7 1,220.1 1,210.8 1,218.7 1,224.8 1,225.2 1,201.8 1,185.0 1,227.4 1,209.8 1,216.0 1,220.7 108 Equipment 502.5 687.3 714.8 717.3 718.2 720.6 732.5 739.9 744.2 740.1 734.3 762.5 762.4 767.8 761.6 109 Intermediate 449.9 521.1 526.0 528.2 528.0 528.3 527.6 529.7 533.6 532.6 538.4 540.3 535.2 536.9 536.1 1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The data Historical Revision and Recent Developments," Federal Reserve Bulletin, vol. 83 (February are also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. The 1997), pp. 67-92, and the references cited therein. For details about the construction of latest historical revision of the industrial production index and the capacity utilization rates individual industrial production series, see "Industrial Production: 1989 Developments and was released in November 1998. The recent annual revision is described in an article in the Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. January 1999 issue of the Bulletin. For a description of the methods of estimating industrial 2. Standard industrial classification. production and capacity utilization, see "Industrial Production and Capacity Utilization: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • February 1999 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1998 Jan. Feb. Mar. Apr. May June July Aug.' Sept.' Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,333 1,426 1,442 1,553 1,635 1,569 1,517 1,543 1,517 1,581 1,618 1,544 1,690 2 One-family 997 1,070 1,056 1,142 1,176 1,136 1,145 1,152 1.128 1,173 1,180 1,164 1,198 3 Two-family or more 335 356 387 411 459 433 372 391 389 408 438 380 492 4 Started 1,354 1,477 1,474 1,545 1,616 1,585 1,546 1,538 1,620 1,704 1,621 1,569 1,694 5 One-family 1,076 1,161 1,134 1,225 1,263 1,239 1,237 1,224 1,269 1,300 1,261 1,250 1,289 6 Two-family or more 278 316 340 320 353 346 309 314 351 404 360 319 405 7 Under construction at end of period 776 820 834 888 907 911 911 917 930 937 940 948 970 8 One-family 554 584 570 593 609 616 619 627 639 643 645 649 659 9 Two-family or more 222 235 264 295 298 295 292 290 291 294 295 299 311 10 Completed 1,319 1,405 1,407 1,314 1,461 1,486 1,509 1,458 1,484 1,549 1,515 1,464 1,445 11 One-family 1,073 1,123 1,122 1,007 1,142 1,130 1,198 1,112 1,166 1,225 1,178 1,185 1,154 12 Two-family or more 247 283 285 307 319 356 311 346 318 324 337 279 291 13 Mobile homes shipped 341 361 354 362 377 374 370 374 362 380 368 369 375 Merchant builder activity in one-family units 14 Number sold 667 757 803 853 878 836 892 892 919 877' 837 844 851 15 Number for sale at end of period1 374 326 287 281 281 285 286 287 287 284' 285 289 296 Price of units sold (thousands of dollars)2 16 Median 133.9 140.0 145.9 148.0 156.0 152.0 148.0 153.2 148.0 149.9' 150.0 150.5 150.0 17 Average 158.7 166.4 175.8 178.6 181.6 178.9 176.7 183.5 175.9 179.8' 182.8 179.5 184.9 EXISTING UNITS (one-family) 18 Number sold 3,812 4,087 4,215 4,370 4,770 4,890 4,770 4,830 4,740 4,910 4,730 4,690 4,790 Price of units sold (thousands of dollars)1 19 Median 113.1 118.2 124.1 126.1 124.5 127.1 128.2 130.5 134.0 133.8 132.9 131.2 130.9 20 Average 139.1 145.5 154.2 156.8 153.9 157.2 159.7 162.3 169.2 168.4 165.9 162.9 162.1 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 538,158 581,813 618,051 633,714 638,180 639,913 645,974 635,396 650,341 657,710 661,927 663,883 665,811 22 Private 408,012 444,743 470,969 487,807 490,896 494,333 500,078 496,495 503,592 510,650 515,221 514,430 518,475 23 Residential 231,191 255,570 265,536 278,956 282,496 286,045 289,666 288,003 291,907 299,196 300,221 304,512 306,818 24 Nonresidential 176,821 189,173 205,433 208,851 208,400 208,288 210,412 208,492 211,685 211,454 215,000 209,918 211,657 25 Industrial buildings 32,535 32,563 31,417 31,055 30,936 31,474 31,457 29,642 30,067 28,588 32,398 29,702 28,343 26 Commercial buildings 68,245 75,722 83,727 85,807 84,152 83,981 86,064 86,321 88,480 87,999 85,902 83.255 86,279 27 Other buildings 27,084 30,637 37,382 37,694 39,151 37,812 39,168 37,678 37,334 37,436 38,343 38,041 38,041 28 Public utilities and other.. . 48,957 50,252 52,906 54,295 54,161 55,021 53,723 54,851 55,804 57,431 58,357 58,920 58,994 29 Public 130,147 137,070 147,082 145,907 147,284 145,580 145,896 138,901 146,749 147,060 146,706 149,453 147,336 30 Military 2,983 2,639 2,625 2,474 2,916 2,818 2,850 2,471 2,659 3,309 3,138 2,435 2,548 31 Highway 38,126 41,326 45.246 46,067 45,561 45,559 46,175 42,030 44,541 43,776 44.261 45,270 45,252 32 Conservation and development 6,371 5,926 5,628 5,281 6,305 5.488 4,985 5,146 5,989 5,445 5,382 5,970 4,934 33 Other 82,667 87,179 93,583 92,085 92,502 91,715 91,886 89,254 93,560 94,530 93,925 95,778 94,602 1. Not at annual rates. SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, which are 2. Not seasonally adjusted. private, domestic shipments as reported by the Manufactured Housing Institute and season- 3. Recent data on value of new construction may not be strictly comparable with data for ally adjusted by the Census Bureau, and (2) sales and prices of existing units, which are previous periods because of changes by the Bureau of the Census in its estimating techniques. published by the National Association of Realtors. All back and current figures are available For a description of these changes, see Construction Reports (C-30-76-5), issued by the from the originating agency. Permit authorizations are those reported to the Census Bureau Census Bureau in July 1976. from 19,000 jurisdictions beginning in 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data except as noted Change from 12 Change from 3 months earlier Change from I month earlier months earlier (annual rate) Index level, Item 1997 1998' 1998 Nov. 1997 1998 1998' Nov. Nov. Dec. Mar. June Sept. July Aug. Sept. Oct. Nov. CONSUMER PRICES2 (1982-84=100) 1 All items 1.8 1.5 1.5 .2 2.5 1.5 .2 .2 .0 .2 .2 164.0 2 Food . 1.7 23 1.5 1.3 3.0 2.0 .2 .0 .6 .1 162.1 - 4 -9 2 -7 7 -21.1 -1.9 -8.7 0 -1.0 -1.3 .9 .0 100.5 4 All items less food and energy 2.2 2.3 2.4 2.4 2.6 2.3 .2 .2 .2 .2 .2 174.8 5 Commodities .4 .7 .6 .8 1.1 1.1 .1 .2 -.1 .0 -.1 143.8 29 3 1 3 3 3.0 3.2 3.0 .2 .3 .3 .2 .3 192.4 PRODUCER PRICES (1982=100) -.7 -1.2 -3.0 .3 .3 .2 -.4 .3 2 130.8 -1.1 1 1.5 -1.8 .9 1.8 .4 -.4 4 .4 134.7 -3.5 -11.0 -5.7 -27.0 -1.1 -10.2 -2.4' -.1 1.2 -1.2 72.9 10 Other consumer goods .6 2.2 -.3 3.9 1.4 3.3 .3 .0 .5 .0 .1 149.0 -.3 -.1 -2.0 .0 -1.2 .9 .1 -.2' .4 .0 .1 138.1 Intermediate materials 12 Excluding foods and feeds -.1 -2.7 -.6 -4.4 -1.3 -1.9 .0' -.3' -.2 -.2 -.2 122.2 .5 -1.5 .0 -.9 -1.2 -1.5 -.1' .0' -.3 -.3 -.2 132.4 Crude materials 14 Foods.. -6.2 -7.2 4.1 -14.3 -.7 -22.6 -3.5' -1.0' -1.9 4.0 -1.9 102.4 57 -32 6 5.4 -53.5 -14.6 -15.2 6.0' -7.9' -1.7 1.9 .0 65.4 16 Other . . . . . .. 1.7 -15.7 -8.2 -13.6 -5.6 -18.3 -1.4' -2.3r -1.3 -2.7 -2.5 130.0 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 • February 1999 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1995 1996 1997 Q3 Q4 Ql Q2 Q3r GROSS DOMESTIC PRODUCT 1 Total 7,269.6 7,661.6 8,170.8 8,254.5 8,384.2 8,440.6 8,537.9 By source 2 Personal consumption expenditures 4,953.9 5,215.7 5,493.7 5,540.3 5,593.2 5,676.5 5,773.7 5,846.7 3 Durable goods 611.0 643.3 673.0 681.2 682.2 705.1 720.1 718.9 4 Nondurable goods 1,473.6 1,539.2 1,600.6 1.611.3 1,613.2 1,633.1 1,655.2 1,670.0 5 Services 2.869.2 3.033.2 3.220.1 3.247.9 3.297.8 3.338.2 3,398.4 3,457.7 6 Gross private domestic investment 1,043.2 1,131.9 1,256.0 1,265.7 1,292.0 1,366.6 1,345.0 1,364.4 7 Fixed investment 1,012.5 1,099.8 1,188.6 1.211.1 1,220.1 1,271.1 1,305.8 1,307.5 8 Nonresidential inn 787.9 860.7 882.3 882.8 921.3 941.9 931.6 1 1 9 0 1 Re S P si t r d r o u e d c n u t t u c ia r e e l r s s s ' tr d u u c r t a u b r l e e s equipment 2 2 5 8 0 2 4 1 6 . . . 8 3 4 2 5 3 1 1 7 6 1 1 . . . 9 8 0 2 6 3 2 4 2 0 0 7 . . . 5 2 9 2 6 3 4 2 3 3 8 8 . . . 8 8 5 2 6 3 4 3 3 6 6 7 . . . 4 4 4 6 2 3 7 4 4 6 5 9 . . . 0 3 8 2 6 3 4 6 9 5 3 6 . . . 4 8 6 6 3 2 7 8 4 5 5 6 . . . 8 2 4 12 Change in business inventories 30.7 32.1 67.4 54.6 71.9 95.5 39.2 57.0 13 Nonfarm 40.1 24.5 63.1 47.3 66.9 90.5 31.5 49.3 14 Net exports of goods and services -83.9 -91.2 -93.4 -94.7 -123.7 -159.3 -165.5 15 Exports 819.4 873.8 965.4 981.7 973.3 949.6 936.2 16 Imports 903.3 965.0 1,058.8 1,076.4 1,087.4 1,097.1 1,108.9 1,101.7 17 Government consumption expenditures and gross investment 1,356.4 1,405.2 1,454.6 1,459.5 1,468.1 1,464.9 1,481.2 1,492.3 18 Federal 509.1 518.4 520.2 521.0 520.1 511.6 520.7 519.4 19 State and local 847.3 934.4 938.5 947.9 953.3 960.4 972.9 By major type of product 20 Final sales, total 7,238.9 7.629.5 8,043.5 8,116.2 8,182.6 8,288.7 8,401.3 8,480.9 21 Goods 2,644.9 2,780.3 2.911.2 2,944.3 2.948.7 3,005.8 3,025.3 3,029.0 22 Durable 1,143.4 1,228.8 1,310.1 1,337.1 1,334.3 1,376.9 1,380.8 1,373.0 23 Nondurable 1,501.5 1,551.6 1,601.0 1,607.2 1,614.4 1.628.8 1,644.4 1,655.9 24 Services 3,974.9 4,179.5 4,414.1 4,448.0 4,501.2 4,538.4 4,619.5 4,678.5 25 Structures 619.1 669.7 718.3 723.9 732.7 744.6 756.6 773.5 26 Change in business inventories 30.7 32.1 67.4 54.6 71.9 95.5 39.2 57.0 27 Durable goods 32.4 20.8 33.6 19.9 34.0 49.9 4.5 19.5 28 Nondurable goods -1.7 11.4 33.8 34.7 37.9 45.6 34.7 37.5 MEMO 6,761.7 6,994.8 7,269.8 7,311.2 7,364.6 7,464.7 7,498.6 7,566.5 29 Total GDP in chained 1992 dollars NATIONAL INCOME 30 Total 5,923.7 6,256.0 6,646.5 6,704.8 6,767.9 6,875.0 6,945.5 7,032.3 31 Compensation of employees 4 3 . , 2 4 0 4 8 1 . . 9 9 4 3 . . 4 6 0 4 9 0 . . 0 4 4 3 , . 6 8 8 9 7 3 . . 2 6 4 3 , , 7 9 1 1 5 9 . . 5 3 4 3 , , 7 9 9 9 8 3 . . 0 6 4 4. . 0 8 6 8 5 2 . . 9 8 4 4 , , 9 1 4 2 5 1 . . 2 6 4 5 , . 1 0 8 11 1 . . 6 1 32 Wages and salaries 622.7 640.9 664.2 666.7 671.4 679.5 685.8 692.7 33 Government and government enterprises 2,819.2 2,999.5 3,229.4 3,252.6 3,322.2 3,386.4 3,435.8 3,488.4 34 Other 767.0 768.6 793.7 796.2 804.4 816.8 823.5 830.5 35 Supplement to wages and salaries 365.3 3817 400.7 402.7 407.4 414.1 417.9 422.1 36 Employer contributions for social insurance 401.6 387.0 392.9 393.6 397.0 402.8 405.7 408.4 37 Other labor income 38 Proprietors' income1 488.1 527.7 551.2 556.5 558.0 564.2 571.7 576.1 39 Business and professional1 465.6 488.8 515.8 520.2 526.6 536.8 544.0 550.9 40 Farm' 22.4 38.9 35.5 36.3 31.4 27.4 27.7 25.2 41 Rental income of persons2 133.7 150.2 158.2 158.6 158.8 158.3 161.0 163.6 42 Corporate profits' 672.4 750.4 817.9 840.9 820.8 829.2 820.6 827.0 43 Profits before tax3 635.6 680.2 734.4 758.9 736.4 719.1 723.5 720.5 44 Inventory valuation adjustment -22.6 -1.2 6.9 4.8 4.3 25.3 7.8 11.7 45 Capital consumption adjustment 59.4 71.4 76.6 77.2 80.1 84.9 89.4 94.8 46 Net interest 420.6 418.6 432.0 433.3 432.4 440.5 447.1 454.0 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 1998 Q3 04 Ql Q2 Q3r PERSONAL INCOME AND SAVING Total persona] income 6,072.1 6,425.2 6,784.0 6,820.9 6,904.9 7,003.9 7,081.9 7,160.8 Wage and salary disbursements 3.428.5 3.631.1 3,889.8 3.915.5 3,989.9 4,061.9 4.117.6 4,177.1 Commodity-producing industries 863.9 909.0 975.0 979.4 1,003.7 1,019.0 1,023.2 1,028.0 Manufacturing 647.9 674.6 719.5 722.3 741.3 750.4 750.8 750.9 Distributive industries 782.9 823.3 879.8 886.3 904.5 918.9 932.2 945.8 Service industries 1,158.9 1,257.9 1,370.8 1,383.2 1,410.2 1,444.5 1,476.4 1,510.6 Government and government enterprises 622.7 640.9 664.2 666.7 671.4 679.5 685.8 692.7 Other labor income 401.6 387.0 392.9 393.6 397.0 402.8 405.7 408.4 Proprietors' income' 488.1 527.7 551.2 556.5 558.0 564.2 571.7 576.1 Business and professional 465.6 488.8 515.8 520.2 526.6 536.8 544.0 550.9 Farm1 22.4 38.9 35.5 36.3 31.4 27.4 27.7 25.2 Rental income of persons2 133.7 150.2 158.2 158.6 158.8 158.3 161.0 163.6 Dividends 192.8 248.2 260.3 260.4 261.3 261.6 262.1 263.0 Personal interest income 704.9 719.4 747.3 750.5 753.0 757.0 763.0 769.2 Transfer payments 1,015.9 1,068.0 1,110.4 1.114.0 1,120.5 1,139.0 1,145.8 1,152.9 Old-age survivors, disability, and health insurance benefits . 507.8 538.0 565.9 568.3 572.2 581.6 585.0 589.0 LESS: Personal contributions for social insurance 293.6 306.3 326.2 328.2 333.6 340.9 345.1 349.5 EQUALS: Personal income 6,072.1 6,425.2 6,784.0 6,820.9 6.904.9 7,003.9 7.081.9 7,160.8 LESS Personal tax and nontax payments 795.0 890.5 989.0 999.0 1,025.5 1,066.8 1,092.9 1,108.4 EQUALS: Disposable personal income 5,277.0 5,534.7 5,795.1 5,821.8 5,879.4 5,937.1 5,988.9 6,052.4 LESS. Personal outlays 5,097.2 5,376.2 5,674.1 5,723.3 5,781.2 5,864.0 5,963.3 6,039.8 EQUALS: Personal saving 179.8 158.5 121.0 98.5 98.2 73 0 25.6 12.6 MEMO Per capita (chained 1992 dollars) Gross domestic product 25,690.5 26,335.7 27,136.2 27,260.4 27,398.2 27,718.8 27,783.0 27,972.1 Personal consumption expenditures 17,498.4 17,893.0 18,340.9 18,445.2 18,530.5 18,771.1 19,007.8 19,156.3 Disposable personal income 18,640.0 18,989.0 19,349.0 19,385.0 19,478.0 19.632.0 19,719.0 19,829.0 Saving rate (percent) GROSS SAVING Gross saving 1,187.4 1,274.5 1,406.3 1,427.0 1.428.0 1,482.5 1,448.5 1,474.5 Gross private saving 1,106.2 1,114.5 1,141.6 1,139.0 1,131.6 1,130.1 1,079.0 1,078.7 Personal saving 179.8 158.5 121.0 98.5 98.2 73.0 25.6 12.6 Undistributed corporate profits 256.1 262.4 296.7 311.5 295.0 312.0 300.9 304.8 Corporate inventory valuation adjustment -22.6 -1.2 6.9 4.8 4.3 25.3 7.8 11 7 Capital consumption allowances Corporate 431.1 452.0 477.3 480.8 487.7 492.5 497.8 503.1 Noncorporate 225.9 232.3 242.8 244.4 247.0 248.6 250.7 254.2 Gross government saving 81.2 160.0 264.7 288.0 296.4 352.4 369.4 395.7 Federal -103.7 -39.6 49.5 70.0 72.3 128.7 143.9 161.6 Consumption of fixed capital 70.7 70.6 70.6 70.3 70.2 69.9 69.5 69.6 Current surplus or deficit (-), national accounts -174.4 -110.3 -21.1 -.3 2.2 58.8 74.4 92.0 State and local 184.8 199.7 215.2 218.0 224.1 223.7 225.6 234.2 Consumption of fixed capital 73.2 77.1 81.1 81.4 82.7 83.5 84.3 85.4 Current surplus or deficit ( —), national accounts 111.7 122.6 134.1 136.6 141.4 140.2 141.3 148.7 Gross investment 1,160.9 1,242.3 1,350.5 1,361.9 1,360.7 1,428.4 1,362.7 1,372.5 : Gross private domestic investment 1,043.2 1.131.9 1,256.0 1,265.7 1,292.0 1,366.6 1,345.0 1,364.4 Gross government investment 218.4 229.7 235.4 237.3 236.5 237.4 232.5 239.7 Net foreign investment -100.6 -119.2 -140.9 -141.0 -167.8 -175.6 -214.8 -231.6 > Statistical discrepancy -67.3 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 • February 1999 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 [tern credits or debits 1995 1996 Q4 02 Q3P 1 Balance on current account -115,254 -134,915 -155,215 -38,094 -45,043 -46,735 56,690 -61,299 2 Merchandise trade balance -173,729 -191,337 -197,954 -49,296 -49,839 -55.698 -64,443 -64,360 3 Merchandise exports 575.845 611.983 679.325 172,302 174,284 171,469 164,821 163,560 4 Merchandise imports -749,574 -803,320 -877,279 -221,598 -224,123 -227,167 -229,264 -227,920 5 Military transactions, net 4,769 4,684 6,781 1,945 1.103 1,527 1,043 1,101 6 Other service transactions, net 69,069 78,079 80,967 20,246 20,277 19,164 19,529 17,504 7 Investment income, net 19,275 14,236 -5.318 -1.544 -4,247 -2,248 -3,377 -5,460 8 U.S. government grants -11.170 -15.023 -12.090 -2,362 -5,213 -2.266 -2.063 -2,582 9 U.S. government pensions and other transfers -3.433 -4.442 -4,193 -1,056 -1,069 -1,126 -1,126 -1.132 10 Private remittances and other transfers -20.035 -21,112 -23.408 -6,027 -6,055 -6,088 -6.253 -6,370 11 Change in U.S. government assets other than official reserve assets, net (increase, -) -589 -708 174 436 29 -388 -433 194 12 Change in US. official reserve assets (increase, -) -9,742 6.668 -1.010 -730 -4,524 -444 -1,945 -2,026 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -808 370 -350 -139 -150 -182 72 188 15 Reserve position in International Monetary Fund -2.466 -1,280 -3,575 -463 -4,221 -85 -1,031 -2,078 16 Foreign currencies -6,468 7,578 2.915 -128 -153 -177 -986 -136 17 Change in U.S. private assets abroad (increase, —) -317,122 -374.761 -477 666 -121,023 -118,946 -44,816 -107,409 -46,220 18 Bank-reported claims' -75,108 -91,555 -147,439 -29,577 -27,539 3,074 -24,615 -28,335 19 Nonbank-reported claims -45,286 -86,333 -120,403 -24.791 -47,907 -6,596 -14,327 2(1 U.S. purchases of foreign securities, net -100.074 -115,801 -87,981 -41.167 -8.030 -6.973 -27,878 16,970 21 U.S. direct investments abroad, net -96.654 -81,072 -121.843 -27,488 -35,470 -34,321 -40,589 -21,24.3 22 Change in foreign official assets in United States (increase, ^) .. . 109,768 127,344 15,817 21,258 -26,979 11,324 -10,274 -46,370 23 U.S. Treasury securities 68,977 115,671 -7,270 6,686 -24.578 11,336 -20,318 -32,811 24 Other U.S. government obligations 3,735 5,008 4,334 2,667 86 2,610 254 1,906 25 Other U.S. government liabilities4 -217 -362 -2,521 -1,167 -244 -1,059 -422 -414 26 Other U.S. liabilities reported by US banks' 34.008 5.704 21.928 12,439 -3,250 -607 9,380 -12,607 27 Other foreign official assets5 3.265 1.323 -654 633 1,007 -956 832 -2,444 28 Change in foreign private assets in United States (increase, +) . . . 355.6S1 436,013 717,624 160,180 247,470 84,205 175,133 159,232 29 U.S. bank-reported liabilities' 30,176 16.478 148,059 12.606 89.643 -50,497 37,670 82.680 30 U.S. nonbank-reported liabilities 59,637 39,404 107,779 26.275 47,390 32,707 18,040 31 Foreign private purchases of U.S. Treasury securities, net 99,548 154,996 146.710 35,432 35,301 -1,701 26,916 -257 3322 FFoorreeiiggnn ppuurrcchhaasseess ooff ootthheerr UU..SS.. sseeccuurriittiieess,, nneett 96,367 130.151 196.845 60,327 36,783 77,019 71,017 22,938 33 FFoorreeiiggnn ddiirreecctt iinnvveessttmmeennttss iinn UUnniitteedd SSttaatteess , nneett 57,653 77,622 93.449 18.964 28,45.3 25,931 19,141 27,065 34 Allocation of special drawing rights 0 0 0 0 0 0 0 0 35 Discrepancy -22.742 -59,641 -99,724 -20,027 -52.007 -3,146 1.618 -3.511 36 Due to seasonal adjustment -10,018 3,528 6,217 1,474 -10,760 37 Before seasonal adjustment -22,742 -99.724 -10,009 -55,535 -9,36.3 144 7,249 MEMO Changes in official assets 38 U.S. oflicial reserve assets (increase, -) -9.742 6.668 -1,010 -730 -4,524 -1,945 -2,026 39 Foreign official assets in United States, excluding line 25 (increase, -(-) 109,985 127,706 18.338 22,425 -26.735 12,383 -9,852 -45,956 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 10,822 -968 -12,013 1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34. and 38^tO. 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 tabk 3.11, for reasons of coverage and timing. Military exports are excluded from 5. Consists of investments in U.S. corporate stocks and in debt securities of private merchandise trade data and are included tn line 5. corporations and state and local governments. 3. Reporting banks include all types of depository institutions as well as some brokers and SOURCE. US. 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 1998 Item 1995 1996 1997 Apr.' May' June' July' Aug.' Sept. Oct.1" 1 Goods and services, balance -101,857 -111.040 -113,684 -14,018 -15,641 -14,213 -14,917 -16,674 -14,369 -14,194 2 Merchandise -173,560 -191,170 -198,975 -21,335 -22,578 -20,530 -21,029 -22,735 -20,801 -20,629 71.703 80,130 85,291 7,317 6,937 6,317 6,112 6,061 6,432 6,435 4 Goods and services, exports 794,610 848,833 931,370 77,707 76,650 76,225 74,994 74,988 77,467 79,618 5 Merchandise 575,871 612,069 678,150 55,335 54,719 54,767 53,825 53,862 56,005 57,921 218,739 236,764 253.220 22.372 21.931 21,458 21,169 21,126 21.462 21,697 7 Goods and services, imports -896,467 -959,873 -1,045,054 -91,725 -92,291 -90,438 -89,911 -91,662 -91,836 -93,812 -749,431 -803,239 -877,125 -76,670 -77,297 -75,297 -74,854 -76,597 -76,806 -78,550 9 Services -147,036 -156,634 -167,929 -15,055 -14,994 -15,141 -15.057 -15,065 -15,030 -15.262 1. Dala 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 US. RESERVE ASSETS Millions of dollars, end of period 1998 Asset 1995 1996 1997 Apr. May June July Aug. Sept. Oct. Nov.p 1 Total 85,832 75,090 69,954 70,328 70,723 71,161 72,264 73,544 75,66 79,183 77.683 2 Gold stock, including Exchange Stabilization Fund' 11,050 11,049 11,050 11,048 11,049 11,047 11,046 11,046 11,044 11,041 11,041 3 Special drawing rights2'1 11,037 10,312 10,027 10,188 10,296 10,001 9,586 9,891 10,106 10,379 10,393 4 Reserve position in International Monetary Fund2 14.649 15,435 18,071 18,218 18,957 18,945 20,780 21,161 21,644 22,278 22,049 5 Foreign currencies4 49.096 38,294 30,809 30,874 30,421 31.168 30,852 31.446 32,882 35,485 34,200 1. Gold held "under earmark" at Federal Reserve Banks for foreign and international SDR holdings and reserve positions in the IMF also have been valued on this basis since July accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold 1974. stock is valued at $42.22 per fine troy ounce. 3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the year 2. Special drawing rights (SDRs) are valued according to a technique adopted by the indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—$710 million; 1979— International Monetary Fund (IMF) in July 1974. Values are based on a weighted average of $1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net transactions in SDRs. exchange rates for the currencies of member countries. From July 1974 through December 4. Valued at current market exchange rates. 1980, sixteen currencies were used; since January 1981, five currencies have been used. U.S. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS' Millions of dollars, end of period 1998 Asset 1995 1996 1997 Apr. May June July Aug. Sept. Oct. Nov.P 1 Deposits 386 167 457 162 156 200 161 161 347 154 211 Held in custody 2 U.S. Treasury securities2 522,170 638,049 620,885 622,220 622,557 616,569 613,893 588,337 578,403 588,768 608.060 3 Earmarked gold1 11,702 11.197 10,763 10,651 10,641 10,617 10,586 10,510 10,457 10,403 10,355 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 US. 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 • February 1999 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1998 Hem 1996 1997 Apr. May June July Aug. Sept. Oct.p 1 Total1 . . 758,624 778,538 788,310 786,184 781,069 775,137 760,789r 735,071' 747,708 By type 2 Liabilities reported by banks in the United States' 113,098 135,326 144,929 142,658 144,099 142,140 144,045' 131,501' 135,287 3 U.S. Treasury bills and certificates3 198,921 148,301 138,418 137,652 134,324 131,089 130,398 128,146 128,598 U.S. Treasury bonds and notes 4 Marketable 379,497 423,456 430,804 431,702 428,216 428,685 411,765 401,461 410,462 5 Nonmarketable4 5,968 5,994 6,149 6,189 6,229 6,269 6,311 6,350 5,997 6 U.S. securities other than US Treasury securities 61,140 65,461 68,010 67,983 68.201 66,954 68,270 67,613' 67,364 By area 7 Europe 257,915 263,103 268,848 269,178 264,657 270,195 266,600' 258,234 270,632 8 Canada 21,295 18,749 20,254 20,122 19,396 19,963 16.387 16,170 17,216 9 Latin America and Caribbean 80,623 97,616 101,191 101.792 100,849 100,826 98,405 79,788' 78,045 10 Asia 385,484 382,423 382,027 379,188 378,113 367,687 363,902 365,631' 368,346 11 Africa 7,379 10,118 11,281 10,574 11,555 11,904 11.501 11,721 11,112 12 Other countries 5,926 6,527 4.707 5,328 6,497 4,560 3,992 3,525 2,355 1. Includes the Bank for International Settlements. Venezuela, beginning December 1990, 30-year maturity issue; Argentina, beginning April 2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, 1993, 30-year maturity issue. negotiable time certificates of deposit, and borrowings under repurchase agreements. 5. Debt securities of U.S. government corporations and federally sponsored agencies, and 3. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official U.S. corporate stocks and bonds. institutions of foreign countries. SOURCE. Based on U.S. Department of the Treasury data and on data reported to the 4. Excludes notes issued to foreign official nonrescrve agencies. Includes current value of department by banks (including Federal Reserve Banks) and securities dealers in the United 2ero-coupon Treasury bond issues to foreign governments as follows: Mexico, beginning States, and on the 1989 benchmark survey of foreign portfolio investment in the United March 1988, 20-year maturity issue and beginning March 1990, 30-year maturity issue; States, 3.16 LIABILITIES TO, AND CLAIMS ON, FOREIGNERS Reported by Banks in the United States1 Payable in Foreign Currencies Millions of dollars, end of period 1997 1998 Item 1994 1995 1996 Dec. Mar. June Sept. 89,258 109,713 103,383 117,524 100,342 90,119 93,815 2 Banks' claims 60,711 74,016 66,018 83,038 81,977 68,095 67,794 19,661 22,696 22,467 28,661 27,934 27,213 27,293 4 Other claims 41,050 51,320 43,551 54,377 54,043 40,882 40,501 5 Claims of banks' domestic customers2 10,878 6,145 10,978 8,191 7,926 7,354 8,453 I. Data on claims exclude foreign currencies held by U.S. monetary authorities. 2, Assets owned by customers of the reporting bank located in the United States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A53 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period Apr. May July Aug. Sept. Oct.p BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 1,099,549 1,162,148 1.283,686 1,270,626 1,260,273 1,288,032 1,306,488 l,341,667r 1,349,102 1,370,232 2 Banks' own liabilities 753,461 758,998 883,639 861,727 852,052 884,734 896,972 928,182' 915,818 909,157 3 Demand deposits 24,448 27,034 32,104 32,107 31,201 36,246 30,928 33,038 33,547 32,050 4 Time deposits2 192,558 186,910 198,470 185,948 185,160 186,686 188,056 183,906' 170,888 158.776 5 Other3 140,165 143,510 168,013 204,294 192,167 183,451 192,536 190,192' 168,490 152,559 6 Own foreign offices 396,290 401,544 485,052 439,378 443,524 478,351 485,452 521,046' 542,893 565,772 7 Banks' custodial liabilities 346,088 403,150 400,047 408,899 408,221 403,298 409,516 413,485 433,284 461,075 8 U.S. Treasury bills and certificates' 197,355 236,874 193,239 174,256 173,873 169,225 164,274 162,235 160,598 168,764 9 Other negotiable and readily transferable iinnsotlrnuitmnaennltis1 52,200 72,011 93,641 111,398 107,797 112,598 117,433 123,378 142,169 151,260 10 Other 96,533 94,265 113,167 123,245 126,551 121,475 127,809 127,872 130,517 141,051 11 Nonmonetary international and regional organizations 11,039 13,972 11,690 14,894 14,186 14,103 14,314 15,188 15,215 12,639 12 Banks' own liabilities 10,347 13,355 11,486 14,478 13,559 13,441 12,188 13,684 13,862 11,473 13 Demand deposits 21 29 16 365 229 226 19 59 408 97 14 Time deposits" 4,656 5,784 5,466 6,646 7,029 6,784 6,354 6,252 5,763 5,418 15 Other3 5,670 7,542 6,004 7,467 6,301 6.431 5,815 7,373 7,691 5,958 16 Banks' custodial liabilities5 692 617 204 416 627 662 2,126 1,504 1,353 1,166 17 U.S. Treasury bills and certificates6 350 352 69 344 359 338 349 490 435 509 18 Other negotiable and readily transferable instruments 341 265 133 72 268 322 1,777 1,012 818 657 19 Other 1 0 2 0 0 2 0 100 0 20 Official institutions* 275,928 312,019 283,627 283,347 280,310 278,423 273,229 274,443' 259,647 263,885 21 Banks' own liabilities 83,447 79,406 101,910 105,731 104,358 102,256 102,040 101,533' 85,260 85,291 22 Demand deposits . . 2,098 1,511 2,314 2,532 2,052 2,582 3,560 3,456 3,607 3,325 23 Time deposits ... 30,717 33,336 41,420 38,865 36,060 36,068 36,358 35,928' 28,326 26,742 24 Other3 50,632 44,559 58,176 64,334 66,246 63,606 62,122 62,149' 53,327 55,224 25 Banks' custodial liabilities5 192,481 232,613 181,717 177,616 175,952 176,167 171,189 172,910 174,387 178,594 26 U.S. Treasury bills and certificates 168,534 198,921 148,301 138,418 137,652 134,324 131,089 130,398 128,146 128,598 27 Other negotiable and readily transferable instruments 23,603 33,266 33,211 38,745 38,010 41,180 39,792 41,759 45,684 49,691 28 Other 344 426 205 453 290 663 308 753 557 305 29 Banks10 691,412 694,835 816,064 776,269 782,828 809,251 825,245 853,337' 875,323 896,752 30 Banks' own liabilities 567,834 562,898 642,324 596,509 601,967 633,032 643,982 673,202' 686,684 688,401 31 Unaffiliated foreign banks .. 171,544 161,354 157,272 157,131 158,443 154,681 158,530 152,156' 143,791 122,629 32 Demand deposits 11,758 13,692 17,527 17,152 16,111 20,772 15,097 16,063 15,799 15,799 33 Time deposits2 103,471 89,765 83,433 72,703 74,018 75,231 78,252 74,201' 67,724 55,828 34 Other3 56,315 57,897 56,312 67,276 68,314 58,678 65,181 61,892 60,268 51,002 35 Own foreign offices 396,290 401,544 485,052 439,378 443,524 478,351 485,452 521,046' 542,893 565,772 36 Banks' custodial liabilities 123,578 131,937 173,740 179,760 180,861 176,219 181,263 180,135 188,639 208,351 37 US. Treasury bills and certificates6 15,872 23,106 31,915 26,650 26,920 25,337 22,929 20,696 21,563 27,556 38 Other negotiable and readily transferable instruments7 13,035 17,027 35,333 37,942 38,186 38,122 39,203 40,180 44,807 48,230 39 Other 94,671 91,804 106,492 115,168 115,755 112,760 119,131 119,259 122,269 132,565 40 Other foreigners 121,170 141,322 172,305 196,116 182,949 186,255 193,700 198,699' 198,917 196,956 41 Banks' own liabilities 91,833 103,339 127,919 145,009 132,168 136,005 138,762 139,763' 130,012 123,992 42 Demand deposits 10,571 11,802 12,247 12,058 12,809 12,666 12,252 13,460 13,733 12,829 43 Time deposits2 53,714 58,025 68,151 67,734 68,053 68,603 67,092 67,525' 69,075 70,788 44 Other3 27,548 33,512 47,521 65,217 51,306 54,736 59,418 58,778 47,204 40,375 45 Banks' custodial liabilities 29,337 37,983 44,386 51,107 50,781 50,250 54,938 58,936 68,905 72,964 46 U.S. Treasury bills and certificates6 12,599 14,495 12,954 8,844 8,942 9,226 9,907 10,651 10,454 12,101 47 Other negotiable and readily transferable inclmmanlr 15,221 21,453 24,964 34,639 31,333 32,974 36,661 40,427 50,860 52,682 Other 1.517 2,035 6,468 7,624 10,506 8,050 8,370 7,858 7,591 8,181 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 9,103 14,573 16,083 22,503 23,440 21,229 22,847 25,867 27,391 29,905 1. Reporting banks include all types of depository institutions as well as some brokers and 6. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official dealers. Excludes bonds and notes of maturities longer than one year. institutions of foreign countries. 2. Excludes negotiable time certificates of deposit, which are included in "Other negotia- 7. Principally bankers acceptances, commercial paper, and negotiable time certificates of ble and readily transferable instruments." deposit. 3. Includes borrowing under repurchase agreements. 8. Principally the International Bank for Reconstruction and Development, the Inter- 4. For U.S. banks, includes amounts owed to own foreign branches and foreign subsidiar- American Development Bank, and the Asian Development Bank. Excludes "holdings of ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory dollars" of the International Monetary Fund. agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists 9. Foreign centra] 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 • February 1999 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1—Continued 1998 1995 1996 1997 Apr. May July Sept. Oct.p 50 Total, all foreigners 1,099,549 1,162,148 1,383,686 1,270,626 1,260,273 1.288,032 1,306,488 l,341,667r l,349,102r 1,370,232 51 Foreign countries ... 1,088,510 1,148,176 1,271,996 1,255,732 1,246,087 1,273,929 1,292,174 1,326,479' U33,887r 1,357,593 52 Europe 362,819 376,590 420,438 406,391 405,348 402,103 431,783 457,537' 450,824' 451,277 53 Austria 3,537 5,128 2,717 2,957 3,012 2,268 2,602 2,671 3,157' 2,843 54 Belgium and Luxembourg 24,792 24,084 41,007 38,530 35,518 35,454 33,845 35,086 34,028' 39,911 55 Denmark 2,921 2,565 1,514 2,588 1,443 1,989 2,013 2,128 1,578 1,813 56 Finland 2,831 1,958 2,246 1,768 1,365 1,438 1,211 1,350 1,181 1,193 57 France 39,218 35,078 46,607 48,468 47,869 46,162 47,140 48,328 50,505' 47,349 58 Germany 24,035 24,660 23,737 24,895 26,452 25,470 23,730 28,751 25,811' 22,013 59 Greece 2,014 1,835 1,552 2,383 2,610 2,429 2,784 2,941 2,544 2,901 60 Italy 10,868 10,946 11,378 10,600 11,127 11,509 11,114 10,625 9,183' 6,981 61 Netherlands 13,745 11,110 7,385 8,051 7.265 6,845 7,097 9,239 8,066 7,306 62 Norway 1,394 1,288 317 514 774 607 1,179 1,469 688 1,149 63 Portugal 2,761 3,562 2,262 2,279 2,160 2,334 2,823 2,424 2,292 2,376 64 Russia 7,948 7,623 7,968 5,381 3,952 4,654 6,398 2,718 3,085 3,733 65 Spain 10,011 17,707 18,989 18,071 15,520 11,649 12,079 14,283 20,493' 26,578 66 Sweden 3,246 1,623 1,628 1,785 2,197 3,148 2,198 1,769 3,285 3,282 67 Switzerland 43,625 44,538 39,172 32,341 33,893 39,071 44,861 39,362 48,414' 47,306 68 Turkey 4,124 6,738 4,054 4,340 4,467 4,894 5,077 4,317 4,264 4,061 69 United Kingdom 139,183 153,420 181.904 172,829 178,185 176,703 196,859 219,197' 204,915' 202,486 70 Yugoslavia11 177 206 239 246 270 234 322 242 253 290 71 Other Europe and other former U.S.S.R.12 26,389 22,521 25,762 28,365 27,269 25,245 28,451 30,637 27,082' 27,706 72 Canada 30,468 38,920 28,341 27,398 26,021 28,864 29,526 27,844 28,701' 31,273 73 Latin America and Caribbean 440,213 467,529 536,365 552,896 550,714 568,228 564,388 557,071 560,069' 574,665 74 Argentina 12,235 13,877 20,199 17,766 16,938 18,502 21,010 21,655 18,384 17,707 75 Bahamas 94,991 88,895 112,217 112,510 114,222 116,435 115,309 113,543 122,806 127,404 76 Bermuda 4,897 5,527 6,911 6,657 7,142 7,769 7,216 7,332 7,920 7,247 77 Brazil 23,797 27,701 31,037 36,777 38,463 35,345 34,292 27,824 18,453' 17,423 78 British West Indies 239,083 251,465 276,389 273,565 277,929 295,321 290,342 291,470 298,707' 310,232 79 Chile 2,826 2,915 4,072 4,330 4,230 4,356 4,987 4,726 5,725 5,592 80 Colombia 3,659 3,256 3,652 4,212 4,383 4,805 4,023 4,102 4,475' 4,888 81 Cuba 8 21 66 57 59 63 63 62 62 50 82 Ecuador 1,314 1,767 2,078 1,737 1,783 1,616 1,772 1,608 1,540 1,680 83 Guatemala 1,276 1,282 1,494 1,478 1,353 1,363 1,273 1,237 1,241 1,249 84 Jamaica 481 628 450 449 438 522 519 550 541 576 85 Mexico 24,560 31,240 33,972 37,623 37,682 38,044 38,554 38,087 35,681 38,060 86 Netherlands Antilles 4,673 6,099 5,085 17,569 7,447 6,861 8,922 8,340 8,588 6,199 87 Panama 4,264 4,099 4,241 4,211 4,106 3,723 3,596 3,675 3,826 3,838 88 Peru 974 834 893 878 964 925 984 900 843 800 89 Uruguay 1,836 1,890 2,382 2,097 1,991 1,982 2,097 2,091 2,276' 2,223 90 Venezuela 11,808 17,363 21,601 20,696 21,600 20,442 19,492 20,125 19,180' 19,675 91 Other 7,531 8.670 9,626 10,284 9,984 10,154 9,937 9,744 9,821' 9,822 92 Asia . . 240,595 249,083 269,299 251,423 244,779 254,412 247,952 266,480' 275,751' 284,184 China 93 Mainland 33,750 30,438 18,252 20,122 20,209 21,558 18,919 18,506 18,523 15,802 94 Taiwan 11,714 15,995 11,760 13,776 12,648 11,619 11,333 11,290 12,080 12,693 95 Hong Kong 20,197 18,789 17,722 19,762 18,106 19,720 15,826 18,349 16,627 16,507 96 India 3,373 3,930 4,567 4,813 4,882 4,821 4,678 6,437 5,144 5,336 97 Indonesia 2,708 2,298 3,554 4,266 3,197 3,848 3,938 5,651 5,470 5,670 98 Israel 4,041 6,051 6,281 7,348 6,251 6,095 5,969 5,296 5,984 4,764 99 Japan 109,193 117,316 143,401 113,283 111,623 118,669 123,167 131,376 142,767' 156,214 100 Korea (South) 5,749 5,949 13,060 13,711 14,010 13,269 12,713 12,493' 12,971' 12,597 101 Philippines 3,092 3,378 3,250 2,870 2,802 3,418 2,609 2,777 2,712 2,523 102 Thailand 12,279 10,912 6,501 7,928 8,876 7,148 6,780 7,869 6,664 7,134 103 Middle Eastern oil-exporting countries13 15,582 16,285 14,959 17,095 15,296 13,829 13,902 14,532 16,627' 14,665 104 Other 18,917 17,742 25.992 26,449 26,879 30,418 28,118 31,904 30,182' 30,279 105 Africa 7,641 8,116 10,347 11,160 10,965 10,735 10,788 10,562 11,098 9,662 106 Egypt 2.136 2,012 1.663 1,236 1,460 1,523 1,319 1,459 1,616 1,288 107 Morocco 104 112 138 131 115 84 74 76 88 78 108 South Africa 739 458 2.158 2,556 2,465 2,642 2,446 2,428 2,658 2,358 110099 ZZaaiirree 10 10 10 3 5 5 7 35 6 7 110 Oil-exporting countries14 1,797 2,626 3,060 4,332 4,079 3,552 3,893 3,684 3,727 3.205 111 Oh 2,855 2,898 3,318 2,902 2,841 2,929 3,049 2,880 3.003 2,726 112 Other 6,774 7,938 7,206 6,464 8,260 9,587 7,737 6,985 7,444 6,532 113 Australia . . 5,647 6,479 6,304 5,450 7,416 8,510 6,490 5,931 6,427 5,371 114 Other . . . . 1,127 1,459 902 1,014 844 1,077 1,247 1,054 1,017 1,161 115 Nonmonetary international and regional organizations 11,039 13,972 11,690 14,894 14,186 14,103 14,314 15,188 15,215' 12,639 116 International15 9,300 12,099 10,517 13,431 12,509 12,548 11,220 12,825 12,782' 10,300 117 Latin American regional 893 1,339 424 762 830 694 750 721 803' 1,056 118 Other regional17 846 534 749 701 847 861 2,344 1,642 1,630 1,283 11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 15. Principally the International Bank for Reconstruction and Development. Excludes 12. Includes the Bank for International Settlements. Since December 1992, has "holdings of dollars" of the International Monetary Fund. included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. 16. Principally the Inter-American Development Bank. 13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 17. Asian, African, Middle Eastern, and European regional organizations, except the Bank Emirates (Trucial States). for International Settlements, which is included in "Other Europe." 14. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A55 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1998 Area or country Apr. May July Aug. Sept. Oct.p 1 Total, all foreigners 532,444 599,925 708,272 700,035 703,532 727,942 74036 764,878' 757374 735,772 2 Foreign countries 530413 597,321 705,809 696,742 701,140 725,027 735,826 760,488' 752,052 730335 3 Europe 132,150 165,769 199,880 207,154 208,567 223,277 229,928 227,688' 234,856 224,739 4 Austria 565 1,662 1,354 1,827 2,130 1,259 1,892 1,856 1,849 2,373 5 Belgium and Luxembourg 7,624 6,727 6,641 5,482 6,115 7,782 8,459 6,779 8,200 9,230 6 Denmark 403 492 980 968 1,286 1.198 933 1,374 1,059 1,768 7 Finland 1,055 971 1,233 1,018 931 1,146 1,032 1,161 1,073 1,149 8 France 15,033 15,246 16,239 17,383 16,276 15,474 14,421 17,314 17,142 16,307 9 Germany 9,263 8,472 12,676 16,931 15,301 15,751 11,327 12,029 15,210 15,121 10 Greece 469 568 402 442 428 364 450 530 373 415 11 Italy 5,370 6,457 6,230 6,938 6,533 6,435 6,345 8,617 6,510 7,168 12 Netherlands 5,346 7,117 6,141 5,851 3,980 5,763 5,642 4,321 4,803 5,225 13 Norway 665 808 555 662 736 680 553 1,110 629 651 14 Portugal 888 418 777 935 1,496 888 1,156 725 975 885 15 Russia 660 1,669 1,248 1,133 1,117 1,057 1,345 1,209 920 883 16 Spain 2,166 3,211 2,942 7,458 6,218 5,560 6,424 5,225 7,980 6,051 17 Sweden 2,080 1,739 1,854 2,975 3,181 3,069 4,553 4,456 4,319 4,592 18 Switzerland 7,474 19,798 28,846 25,069 29,317 34,970 49,359 49,258 55,798 43,337 19 Turkey 803 1,109 1,558 2,324 2,386 2,414 2,010 1,990 1,900 1,848 20 United Kingdom 67,784 85,234 103,143 101,772 102,889 109,755 104,397 99,174' 97,436 98,741 21 Yugoslavia2 147 115 52 59 19 53 79 53 53 53 22 Other Europe and other former U.S.S.R.3 4,355 3,956 7,009 7,927 8,228 9,659 9,551 10,507 8,627 8,942 23 Canada 20,874 26,436 27,176 25,785 24,961 32,703 36,007 41,402 41,165 37,331 24 Latin America and Caribbean 256,944 274,153 343,820 354,302 361,082 365,814 359,277 379,383 362,312 354,779 25 Argentina 6,439 7,400 8,924 8,540 8,207 8,518 8,421 8,724 8,777 9,087 26 Bahamas 58,818 71,871 89,379 82,711 78,083 77,595 78,770 77,875 75,974 75,374 27 Bermuda 5,741 4,129 8,782 9,462 8,890 9,452 10,622 9,629 10,610 6,585 28 Brazil 13,297 17,259 21,696 26,033 25,354 24,552 24,187 23,530 19,073 17,644 29 British West Indies 124,037 105,510 145,471 159,649 168,124 176,825 166,203 192,334 182,733 183,108 30 Chile 4,864 5,136 7,913 8,444 8,482 8,497 8,434 8,307 8,345 8,549 31 Colombia 4,550 6,247 6,945 6,772 7,208 7,102 6,914 6,905 6,813 6,764 32 Cuba 0 0 0 0 0 0 0 0 0 0 33 Ecuador 825 1,031 1,311 1,522 1,498 1,430 1,649 1,518 1,458 1.444 34 Guatemala 457 620 886 955 955 932 911 950 1,166 904 35 Jamaica 323 345 424 373 385 320 335 318 305 330 36 Mexico 18,024 18,425 19,518 20,913 21,215 20,371 20,062 20,078 20,669 22,031 37 Netherlands Antilles 9,229 25,209 17,838 14,073 17,352 14,294 16,278 12,939 10,294 7,323 38 Panama 3,008 2,786 4,364 4,422 4,393 4,233 4,308 4,157 4,226 4,011 39 Peru 1,829 2,720 3,491 3,644 3,792 3,965 4,009 4,061 3,829 3,706 40 Uruguay 466 589 629 773 807 959 1,154 1,055 955 958 41 Venezuela 1,661 1,702 2,129 2,194 2,381 2,495 2,436 2,649 2,638 2,688 42 Other 3,376 3,174 4,120 3,822 3,956 4,274 4,584 4,354 4,447 4.273 43 Asia 115,336 122,478 125,063 99,183 96,813 94,804 100,196 102,382' 104,597 104,685 China 44 Mainland 1,023 1,401 1,579 2,921 2,934 1,989 1,679 2,703 1,363 2,258 45 Taiwan 1,713 1,894 921 939 723 835 595 651' 1,031 1,054 46 Hong Kong 12,821 12,802 13,990 10,162 12,884 12,871 11,045 13,821 10,548 8,241 47 India 1,846 1,946 2,200 1,807 1,913 1,972 1,822 1,878 1,823 1,582 48 Indonesia 1,696 1,762 2,634 2,210 2,099 2,098 2,010 2,031 2,108 1,990 49 Israel 739 633 768 874 893 954 1,116 898 941 1,497 50 Japan 61,468 59,967 59,540 44,970 42,071 43,010 45,566 44,822 52,213 52,907 51 Korea (South) 13,975 18,901 18,162 10,852 11,936 11,001 12,863 11,508 9,823 9,733 52 Philippines 1,318 1,697 1,689 1,561 1,614 1,541 1,243 1,259' 1,280 1,128 53 Thailand 2,612 2,679 2,259 1,971 1,906 1,889 1,820 1,883 2,129 1,953 54 Middle Eastern oil-exporting countries4 9,639 10,424 10,790 11,028 9,338 8,448 11,207 12,136 12,681 13,538 55 Other 6,486 8,372 10,531 8,502 8,196 9,230 8,792 8,657 56 Africa 2,742 2,776 3,530 3,337 3,693 2,484 3,497 3,262 3,012 2,785 57 Egypt 210 247 247 294 281 283 294 279 272 322 58 Morocco 514 524 511 483 490 430 471 426 390 405 59 South Africa 465 584 805 490 859 653 630 653 694 665 60 Zaire 1 0 0 0 0 0 0 0 0 0 61 Oil-exporting countries5 552 420 1.212 1,194 1,078 308 1,331 1,046 787 533 62 Other 1,000 1,001 755 876 985 810 771 858 869 63 Other 2,467 5,709 6,340 6,981 6,024 5,945 6,921 6,371 6,110 6,216 64 Australia 1,622 4,577 5,299 6,513 5,704 5,439 6,067 5,999 5,783 5,809 65 Other 845 1,132 1,041 468 320 506 854 372 327 407 66 Nonmonetary international and regional organizations6. 1,931 2,604 2,463 3,293 2,392 2,915 4,410 4,390 5,322 5,237 1. Reporting banks include all types of depository institutions as well as some brokers and 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab dealers. Emirates (Trucial States). 2. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 5. Comprises Algeria, Gabon, Libya, and Nigeria. 3. Includes the Bank for International Settlements. Since December 1992, has included all 6. Excludes the Bank for International Settlements, which is included in "Other Europe." parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • February 1999 3.19 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1998 Type of claim 1995 1996 1997 Apr. May June July Aug. Sept. Oct.p 1 Total 655,211 743,919 852,899 881,218 915,425 532,444 599,925 708,272 700,035 703,532 727,942 740,236 764,878r 757,374 735,772 3 Foreign public borrowers 22,518 22,216 20,660 32,465 28,986 27,780 35,634 29,758' 26,377 28,313 307,427 341,574 431,685 409,955 415,175 435,201 446,536 466,019' 475,449 463,472 5 Unaffiliated foreign banks 101,595 113,682 109,224 104,622 105,501 107,525 101,777 105,852' 108,426 108,413 37,771 33,826 31,042 24,324 21,282 22,843 23,283 24,593 30,426 26,718 7 Other 63,824 79,856 78,182 80,298 84,219 84,682 78,494 81,259' 78,000 81,695 8 All other foreigners 100,904 122,453 146,703 152,993 153,870 157,436 156,289 163,249 147,122 135,574 9 Claims of banks' domestic customers 122,767 143,994 144,627 153,276 158,051 10 Deposits 58,519 77,657 73,110 86,408 89,602 11 Negotiable and readily transferable 44,161 51,207 53,967 52,171 53,512 12 Outstanding collections and other 20,087 15,130 17,550 14,697 14,937 MEMO 13 Customer liability on acceptances 8,410 10,388 9,624 6,604 6,068 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States 30,717 39,661 34,046 31.633 32,172 25,287 32,347 28,217' 25,512 35,786 1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are principally of amounts due from the head office or parent foreign bank, and from foreign for quarter ending with month indicated. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. Reporting banks include all types of depository institution as well as some brokers and 3. Assets held by reporting banks in the accounts of their domestic customers. dealers. 4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiar- paper. ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory 5. Includes demand and time deposits and negotiable and nonnegotiable certificates of agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists deposit denominated in U.S. dollars issued by banks abroad. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period Maturity, by borrower and area 1995 Sept.p 1 Total 202,282 224,932 258,106 276,597 285,518 292,324 281,035 By borrower 2 Maturity of one year or less . .. 170,411 178,857 211,859 205,859 214,822 211,029 208,385 3 Foreign public borrowers 15,435 14,995 15,411 12,069 16,952 17,023 14,613 4 All other foreigners 154,976 163,862 196,448 193,790 197,870 194,006 193,772 5 Maturity of more than one year 31,871 46,075 46,247 70,738 70,696 81,295 72,650 6 Foreign public borrowers 7,838 7,522 6,790 8,525 11,310 10,651 10,875 7 All other foreigners 24,033 38,553 39,457 62,213 59,386 70.644 61,775 By area Maturity of one year or less Europe 56,381 55,622 55,690 58,294 69,245 73,787 69,003 Canada 6,690 6,751 8,339 9,917 9,304 8,766 8,953 Latin America and Caribbean 59,583 72,504 103,254 97,277 101,013 99,294 99,650 Asia 40,567 40,296 38,078 33,972 28,748 23,569 22,330 Africa 1,379 1,295 1,316 2,211 2,228 1,116 1,762 All other3 5,811 2,389 5,182 4,188 4,284 4,497 6,687 Maturity of more than one year Europe 4,358 4,995 6,965 13,240 15,118 15,606 15,377 Canada 3,505 2,751 2,645 2,512 2,752 2,573 2,982 Latin America and Caribbean 15,717 27,681 24,943 42,069 39,337 47,881 39,112 Asia 5,323 7,941 9,392 10,198 10,731 12,569 12,105 Africa . , 1,583 1,421 1,361 1,236 1,254 1,259 1,170 All other1 1,385 1,286 941 1,483 1,504 1,407 1,904 1. Reporting banks include all types of depository institutions as well as some brokers and 2. Maturity is time remaining until maturity. dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A57 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks1 Billions of dollars, end of period Area or country Sept. Sept. 1 Total 499.5 551.9 586.2 645.3 647.5 678.8 711.0 725.9 739.2 746.7 2 G-IO countries and Switzerland 191.2 206.0 220.0 228.3 231.4 250.0 247.7 242.8 249.1 275.0 3 Belgium and Luxembourg 7.2 13.6 11.3 11.7 14.1 9.4 11.4 11.0 11.2 13.1 4 France 19.1 19.4 17.4 16.6 19.7 17.9 20.2 15.4 15.6 20.5 5 Germany 24.7 27.3 33.9 29.8 32.1 34.1 34.7 28.6 25.5 28.7 6 Italy . . I 11.8 11.5 15.2 16.0 14.4 20.2 19.3 15.5 19.7 19.5 7 Netherlands 3.6 3.7 5.9 4.0 4.5 6.4 7.2 6.2 7.3 8.3 8 Sweden 2.7 2.7 3.0 2.6 3.4 3.6 4.1 3.3 4.8 3.1 9 Switzerland 5.1 6.7 6.3 5.3 6.0 5.4 4.8 7.2 5.6 6.9 10 United Kingdom 85.8 82.4 90.5 104.7 99.2 110.6 108.3 113.4 120.1 134.8 1 1 Canada 10.0 10.3 14.8 14.0 16.3 15.7 15.1 13.7 13.5 16.5 12 Japan 21.1 28.5 21.7 23.7 21.7 26.8 22.6 28.6 25.8 23.7 13 Other industrialized countries 45.7 50.2 62.1 65.7 66.4 71.7 73.8 64.5 74.3 72.0 14 Austria 1.1 .9 1.0 I.I 1.9 1.5 1.7 1.5 1.7 1.9 15 Denmark 1.3 2.6 1.7 1.5 1.7 2.8 3.7 2.4 2.0 2.1 16 Finland .9 .8 .6 .8 .7 1.4 1.9 1.3 1.5 1.4 17 Greece 4.5 5.7 6.1 6.7 6.3 6.1 6.2 5.1 6.1 5.8 IS Norway 2.0 3.2 3.0 8.0 5.3 4.7 4.6 3.6 4.0 3.4 19 Portugal 1.2 1.3 1.4 .9 1.0 1.1 1.4 .9 .7 1.3 20 Spain 13.6 11.6 16.1 13.2 14.4 15.4 13.9 11.7 16.5 15.1 21 Turkey 1.6 1.9 2.8 2.7 2.8 3.4 4.4 4.5 4.9 6.5 22 Other Western Europe 3.2 4.7 4.8 4.7 6.3 5.5 6.1 8.2 9.9 9.6 23 South Africa 1.0 1.2 1.7 2.0 1.9 1.9 1.9 2.2 3.7 5.0 24 Australia 15.4 16.4 22.8 24.0 24.4 27.8 28.1 23.1 23.2 20.0 25 OPEC: 24.1 22.1 19.2 19.7 22.3 22.9 26.0 25.7 25.3 26 Ecuador 5 .7 .9 1 I 1 I .9 1.2 1.3 1.3 1.2 27 Venezuela 3.7 2.7 2.3 2.4 1.9 2.1 2.5 3.3 3.2 28 Indonesia 3.8 4.8 5.4 5.2 49 5.6 6.7 5.5 5.1 29 Middle East countries 15.3 13.3 10.2 10.7 132 12.5 14.4 14.3 15.5 30 African countries 6 4 .4 7 1.2 1.1 12 1.4 .3 31 Non-OPEC developing countries 112.6 128.1 137.0 138.7 147.4 Ullin America 32 Argentina 11.2 12.9 15.0 14.3 14.3 16.4 17.1 18.4 19.3 20.2 33 Brazil 8.4 13.7 17.8 20.7 22.0 27.3 26.1 28.6 32.4 29.9 34 Chile 6.1 6.8 6.6 7.0 6.8 7.6 8.0 8.7 9.0 9.1 35 Colombia 2.6 2.9 3.1 4.1 3.7 3.3 3.4 3.4 3.3 3.6 36 Mexico 18.4 17.3 16.3 16.2 17.2 16.6 16.4 17.4 17.7 179 37 Peru .5 1.3 1.6 1.6 1.4 1.8 2.0 2.1 2.2 38 Other 2.7 3.0 3.3 3.4 3.4 3.6 4.1 4.0 4.4 Asia China 39 Mainland 1.1 1.8 2.6 2.5 2.7 3.6 4.3 3.2 4.2 3.9 40 Taiwan 9.2 9.4 10.4 10.3 10.5 10.6 9.7 9.0 11.7 11.3 41 India 4.2 4.4 3.8 4.3 4.9 5.3 4.9 4.9 5.0 4.9 42 Israel .4 .5 .5 .5 .6 .8 1.0 .7 7 .9 43 Korea (South) 16.2 19.1 21.9 21.5 14.6 16.3 16.2 15.6 16.2 14.5 44 Malaysia 3.1 4.4 5.5 6.0 6.5 6.4 5.6 5.1 4.5 4.7 45 Philippines 3.3 4.1 5.4 5.8 6.0 7.0 5.7 5.7 5.0 5.4 46 Thailand 4.9 4.8 5.7 6.8 7.3 6.2 5.4 5.5 4.9 47 Other Asia 4.5 4.1 4.1 4.3 4.7 4.5 4.3 4.2 3.7 Africa 48 Egypt .4 .6 .7 .9 1.1 .9 1.0 1.5 49 Morocco 7 .7 .7 .6 .7 .7 .6 .6 50 Zaire .0 .0 .1 .0 .0 .0 .0 .0 51 Other Africa' .9 1.0 .9 .9 .9 .9 1.1 52 Eastern Europe 2.7 4.2 5.3 6.9 8.9 7.1 9.8 9.1 12.0 10.9 53 Russia4 .8 1.0 1.8 3 7 3.5 4.2 5.1 5.1 7.5 6.8 54 Other 1.9 3.2 3.5 3.2 5.4 2.9 4.7 4.0 4.6 4.1 55 Offshore banking centers 72.9 99.2 105.2 134.7 131.3 129.6 138.9 145.7 129.3 123.5 56 Bahamas 10.2 11.0 14.2 20.3 20.9 16.1 19.8 29 9 29.2 22.7 57 Bermuda 8.4 6.3 4.0 4.5 6.7 7.9 9.8 9.8 9.0 9.3 58 Cayman Islands and other British West Indies 21.4 32.4 32.0 37.2 32.8 35.1 45.7 43.4 24.9 33.9 59 Netherlands Antilles 1.6 10.3 11.7 26.1 19.9 15.8 21.7 14.6 14.0 10.5 60 Panama5 1.3 1.4 1.7 2.0 2.0 2.6 2.1 3.1 3.2 3.3 61 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 62 Hong Kong. China 20.0 25.0 26.0 27.9 30.8 35.2 27.2 32.2 33.8 30.0 63 Singapore 10.1 13.1 15.5 16.7 17.9 16.7 12.7 12.7 15.0 13.5 64 Other* .1 .1 .1 .1 .1 .3 .1 .1 .1 .2 65 Miscellaneous and unallocated7 66.9 57.6 50.0 59.6 59.6 57.6 99.1 101.3 95.6 I. The banking offices covered by these data include US. 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 • February 1999 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1998 Type of liability, and area or country 1995 Sept. 46,448 54,798 58,667 56,501 55,891 59,618 58,040r 56,822 2 Payable in dollars 38,298 33,903 38,956 39,861 38,651 39,746 41,888 42,258r 45,210 3 Payable in foreign currencies 16,011 12,545 15,842 18.806 17,850 16,145 17,730 15.782' 11,612 By type 4 Financial liabilities 32,954 24,241 26,065 29,633 28,263 26,461 29,113 28,050' 22,322 5 Payable in dollars 18.818 12,903 11,327 11,847 11,442 11,487 12,975 13,568' 11,988 6 Payable in foreign currencies 14.136 11,338 14,738 17.786 16,821 14,974 16,138 14.482' 10,334 7 Commercial liabilities 21,355 22,207 28,733 29,034 28,238 29,430 30,505 29,990 34,500 8 Trade payables 10,005 11,013 12,720 11,432 11,040 10,885 10,904 10,107 14,989 9 Advance receipts and other liabilities 11,350 11,194 16,013 17,602 17,198 18,545 19,601 19,883 19,511 10 Payable in dollars 19,480 21,000 27,629 28,014 27,209 28,259 28,913 28,690 33,222 11 Payable in foreign currencies 1,875 1.207 1,104 1,020 1,029 1,171 1,592 1,300 1,278 By area or country Financial liabilities Europe 21.703 15,622 16,195 20,081 18,530 18.019 19,238 20,307' 15,468 Belgium and Luxembourg 495 369 632 769 238 89 186 127 75 France 1,727 999 1,091 1,205 1,280 1,334 1,684 1,795 1,699 Germany 1,961 1.974 1,834 1,589 1,765 1,730 2,018 2,578 2,441 Netherlands 552 466 556 507 466 507 494 472 484 Switzerland 688 895 699 694 591 645 776 345 189 United Kingdom 15,543 10.138 10,177 13,863 12,968 12,165 12,318 13,145' 8,765 629 632 1.401 602 1,616 651 2,392 1,045 539 20 Latin America and Caribbean 2.034 1,783 1,668 1,876 1,285 1,067 1,386 965 1,320 21 Bahamas 101 59 236 293 124 10 141 17 6 22 Bermuda 147 50 27 55 64 229 86 49 23 Brazil 57 78 75 97 52 143 91 76 24 British West Indies 866 1,030 965 775 669 604 517 845 25 Mexico 0 12 17 16 15 76 26 21 51 26 Venezuela 5 2 1 1 1 1 1 1 1 27 Asia 8.403 5,988 6,423 6,370 6,248 6,239 5,394 5,024 4,315 28 Japan 7,314 5,436 5,869 5,794 5,668 5,725 5,085 4,767 3,869 29 Middle Eastern oil-exporting countries 35 27 25 72 39 23 32 23 0 30 Africa ^ 135 150 38 29 29 33 60 33 29 31 Oil-exporting countries" 123 122 0 0 0 0 0 0 0 All other1 340 676 Commercial liabilities 33 Europe 6,773 7,700 9,767 9.524 8,683 9,343 10,228 9.951 15.327 34 Belgium and Luxembourg 241 331 479 639 736 703 666 565 557 35 France 728 481 680 679 708 782 764 840 613 36 Germany 604 767 1.002 1,043 845 945 1,274 1,068 1,222 37 Netherlands 722 500 766 551 288 452 439 443 502 38 Switzerland 327 413 624 480 429 400 375 407 355 39 United Kingdom 2,444 3,568 4,303 4,158 3,818 3,829 4,086 4,041 9,119 40 Canada 1,037 1,040 1,090 1,068 1,136 1,150 1,175 1.347 1,206 41 Latin America and Caribbean 1,857 1,740 2.574 2,562 2,500 2,224 2,176 2.051 2,290 42 Bahamas 19 1 63 43 33 38 16 27 14 43 Bermuda 345 205 297 479 397 180 203 174 209 44 Brazil 161 98 196 200 225 233 220 249 246 45 British West Indies 23 56 14 14 26 23 12 5 27 46 Mexico 574 416 665 633 594 562 565 520 557 47 Venezuela 276 221 328 318 304 322 261 219 196 48 Asia 10,741 10,421 13,422 13,915 13,875 14,628 14,966 14,672 13,655 49 Japan 4,555 3,315 4,614 4,465 4,430 4,553 4,500 4,372 4,039 50 Middle Eastern oil-exporting countries1. . 1,576 1,912 2,168 2.495 2.420 2,984 3.111 3,138 3,194 51 Africa 428 619 1,040 1,037 941 929 874 833 921 52 Oil-exporting countries2 256 254 532 479 423 504 408 376 354 53 Other3 519 928 1,103 1,156 1,086 1,136 1,101 I. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon, Libya, and Nigeria. Emirates (Trucial States). 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1997 Type of claim, and area or country Sept. 57,888 52,509 63,642 68,102 68.266 70,760 71,004r 74,165 2 Payable in dollars 53.805 48,711 58,630 62,126 62.082 64,144 62,173 65,359 68,329 3 Payable in foreign currencies 4,083 3,798 5,012 5.976 6.184 6,616 7,904 5,645' 5,836 B\ Type 4 Financial claims 33,897 27,398 35,268 40,547 40.717 42.059 38,908 40.301' 32.341 5 Deposits 18,507 15,133 21,404 22.150 24.308 24,125 23,139 20,863' 14,762 6 Payable in dollars 18,026 14,654 20,631 20,499 22.817 22.566 21,290 19.155' 13.084 7 Payable in foreign currencies 481 479 773 1.651 1.491 1,559 1.849 1.708 1,678 8 Other financial claims 15.390 12,265 13,864 18.397 16,409 17.934 15.769 19.438' 17,579 9 Payable in dollars 14,306 10,976 12.069 15.381 13,152 14.621 11.576 16.981' 14,904 10 Payable in foreign currencies 1,289 1.795 3.016 3,257 3,313 4,193 2.457' 2.675 11 Commercial claims 23,991 25,111 28,374 27.555 27,549 28,701 31,169 30.703 41,824 12 Trade receivables 21,158 22,998 25,751 24.801 24,858 25.110 27,536 26.888 37,741 13 Advance payments and other claims 2,833 2,113 2,623 2.754 2,691 3,591 3,633 3.815 4.083 14 Payable in dollars 21,473 23,081 25,930 26.246 26,113 26,957 29,307 29,223 40.341 15 Payable in foreign currencies 2,518 2,030 2,444 1,309 1,436 1,744 1,862 1,480 1,483 By area or country Financial claims 16 Europe 7,936 7.609 9.282 13.076 12.904 15.862 16,948 14.187' 14.091 17 Belgium and Luxembourg 86 193 185 119 203 360 406 378 518 18 France 800 803 694 760 680 1,112 1,015 902 796 19 Germany 540 436 276 324 281 352 427 393 290 20 Netherlands 429 517 493 567 519 764 677 911 975 21 Switzerland 523 498 474 570 447 448 434 401 403 22 United Kingdom 4,649 4,303 6.119 9,837 9.814 11,254 12,286 9.289' 9.639 23 Canada 3,581 2,851 3.445 4.917 6,422 4.279 3.313 4.688 3.020 24 Latin America and Caribbean 19,536 14,500 19.577 19.742 18,725 19,176 15.543 18.207 11.967 25 Bahamas 2,424 1.965 1,452 1.894 2,064 2.442 2.459 1.316 1.306 26 Bermuda 27 81 140 157 188 190 108 66 48 27 Brazil 520 830 1,468 1.404 1,617 1,501 1,313 1.408 1,394 28 British West Indies 15,228 10,393 15.182 15.176 13,553 12,957 10.311 13.551 7.349 29 Mexico 723 554 457 517 497 508 537 967 1,089 30 Venezuela 35 32 31 22 15 36 47 57 31 Asia 1.871 1,579 2,221 2.068 1.934 2.015 2.133 2.174 2.376 32 Japan 953 871 1,035 831 766 999 823 791 886 33 Middle Eastern oil-exporting countries 141 3 22 12 20 15 9 12 34 Africa 373 276 174 182 179 174 319 325 155 0 5 14 14 15 16 15 16 15 3? Oil-exporting countries 553 732 36 All other3 Commercial claims 9,540 9,824 10.443 9.863 9,603 10,486 12.120 12.854 23,473 37 Europe 213 231 226 364 327 331 328 232 522 38 Belgium and Luxembourg 1,881 1,830 1,644 1.514 1,377 1.642 1.796 1.939 2 273 39 France 1,027 1,070 1.337 1.364 1,229 1.395 1.614 1.670 1.82S 40 Germany 311 452 562 582 613 573 597 534 610 41 Netherlands 557 520 642 418 389 381 554 476 420 42 Switzerland 2,556 2,656 2.946 2.626 2,836 2.904 3,660 4.828 14,376 43 United Kingdom 44 Canada 1,988 1,951 2,165 2,381 2,464 2.649 2,660 2.882 2,779 45 Latin America and Caribbean 4,117 4,364 5,276 5.067 5,241 5,028 5,750 5.481 6,212 46 Bahamas 9 30 35 40 29 22 27 13 12 47 Bermuda 234 272 275 159 197 128 244 238 483 48 Brazil 612 898 1,303 1.216 1,136 1,101 1.162 1,128 1,183 49 British West Indies 83 79 190 127 98 98 109 88 110 50 Mexico 1,243 993 1.128 1,102 1.140 1,219 1,392 1.302 1.462 51 Venezuela 348 285 357 310 451 418 576 441 585 52 Asia 6,982 7,312 8,376 8,348 8,460 8,576 8,71.3 7,638 7,623 53 Japan 2,655 1,870 2,003 2 065 2,079 2,048 1,976 1.713 2,012 54 Middle Eastern oil-exporting countries' 708 974 971 1,078 1,014 987 1,107 987 1,127 55 Africa 454 654 746 718 618 764 680 613 657 56 Oil-exporting countries 67 87 166 100 81 207 119 122 I 16 57 Other' 1,178 1,198 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 nonmonelary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • February 1999 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars Transaction, and area or country 1996 1997 Ja O n c .— t. Apr. May July Sept. U.S. corporate securities STOCKS 1 Foreign purchases 590,714 1,097,958 1,330,700 134,177 129,528 146,147 152,833 141,566 137,418 145,577 578,203 1,028,361 1,288,760 130,628 121,355 142,591 150,308 147,891 142,839 2 Foreign sales 139,722 12,511 69,597 41,940 3,549 8,173 3,556 2,525 -10,473 2,738 3 Net purchases, or sales (-) 1,844 12,585 69,754 42,305 3,570 8,193 3,581 2,739 -10,430 2,735 4 Foreign countries 1,843 5,367 62,688 65,505 5,511 10,670 7,227 6,983 2.182 -246 5 Europe -2,402 6,641 6,650 -260 650 1,734 199 5,459 85 347 6 France 1,104 9,059 10,427 1,453 1,834 1,020 1,503 988 1,281 69 7 Germany 1,415 3,831 6,178 161 564 830 1,265 1.326 876 1,009 8 Netherlands 2,715 7,848 7,007 974 2,234 1,490 1,092 163 -307 -1,970 9 Switzerland 4,478 22,478 19,284 595 2,968 695 1,154 -277 700 636 10 United Kingdom 2,226 -1,406 -3,644 55 -506 -1,600 -443 1,740 -195 -530 11 Canada 5,816 5,203 -5,997 -3,689 -1,333 1,798 -614 -276 -11,766 2,059 1 1 2 3 L M a i t d in d le A m Ea e s r t i 1 ca and Caribbean -1, 9 6 1 0 8 0 2, 3 0 8 7 3 2 -12 - , 5 7 2 0 9 1 1, 3 5 4 6 6 3 - -6 2 1 3 1 4 -3, 2 94 8 9 6 -2 - , 1 9 3 0 4 5 -1 6 5 1 7 0 -6 1 7 4 8 8 - 1 1 ,8 7 2 7 3 14 Other Asia -372 4,787 -2,370 555 -208 -540 -306 -4,112 519 597 15 Japan -85 472 567 128 275 204 -14 214 -217 16 Africa -57 342 -896 -344 -68 -385 -134 159 -23 23 17 Other countries 160 18 Nonmonetary international and -365 -25 -214 -43 regional organizations BONDS2 393,953 610,116 763,395 76,452 65,495 74,100 73,772 67,529' 100,186 110,814 19 Foreign purchases 268,487 475,958 621,578 52,225 52,584 53,167 62.213 58,678 92.663 105,455 20 Foreign sales 125,466 134,158 141,817 24,227 12,911 20,933 11,559 8,851r 7,523 5,359 21 Net purchases, or sales (—) 125,295 133,595 141,268 24,097 12,853 20,834 11,636 8,813r 7,473 5,348 22 Foreign countries 77,570 71,631 104,770 19,024 5,555 12,117 9,411 5,813' 12,323 14,180 23 Europe 4 4, , 4 4 3 6 9 0 2 3 , , 7 3 4 0 2 0 3 3 , , 3 9 2 3 5 7 1,7 3 2 3 7 - - 1 1 3 7 3 6 3 6 0 7 2 4 8 5 1 1 2 2 1 3 3 3 9 2 1 6 8 8 4 -1 7 3 0 5 1 24 France 2,107 3,576 2,648 523 532 344 32 275 704 25 Germany 1,170 187 4,641 772 794 404 234 100 1,003 -50 26 Netherlands 60,509 54,134 79,103 14,346 4,585 8.696 5,411 3,924' 9,760 12,182 27 Switzerland 4,486 6,264 5,335 363 628 607 640 439 443 292 2 2 9 8 Ca U na n d it a ed Kingdom 17 1 , , 7 67 3 9 7 34 2 , , 7 15 3 5 3 20 1 , , 5 6 7 8 7 7 2,2 6 5 9 6 6, 1 7 0 0 9 3 6,3 1 7 6 1 2 2, 1 0 7 2 1 9 - 1. 1 5 8 9 8 2 -2, - 9 5 2 8 7 -11,135 2 3 3 0 1 M La i t d in d le A m Ea e s r t i 1 ca and Caribbean 2 1 3 4 , , 7 1 6 7 2 3 1 9 6 , , 3 9 5 96 7 7 4, , 9 7 5 7 1 6 2 2 , , 0 9 7 0 8 4 -1 4 0 6 6 0 1, 5 2 2 6 7 6 - -5 5 1 8 1 8 1, - 7 1 0 0 9 -1 - , 7 8 1 4 3 7 1 1 , , 1 6 8 2 5 4 32 Other Asia 624 1,005 131 45 -31 82 -48 -17 -61 55 33 Japan -563 811 992 262 -5 229 21 -535 -400 769 34 Africa 35 Other countries 36 Nonmonetary international and 58 50 regional organizations Foreign securities 37 Stocks, net purchases, or sales (-) -59,268 -40,942 12,422 -137 -3,393 2,535 -3,516 5,552 6,107 38 Foreign purchases 450,365 756,015 800,330 80,736 80,941 88,508 82,130 74,358 89,460 90,373 39 Foreign sales 509,633 796,957 787,908 80,873 84,334 85,973 85,646 68,806 83,353 82,289 40 Bonds, net purchases, or sales (-) -51,369 -48,171 -13,438 -12,158 -1,882 -12.355 3,065 1,013' 3,325 15,215 41 Foreign purchases 1,114,035 1,451,704 1,220,537 118,296 110,403 151,477 118,890 139,341 152,762 100,217 42 Foreign sales 1,165,404 1,499,875 1,233,975 130,454 112,285 163,832 115,825 138,328' 149,437 85,002 43 Net purchases, or sales (-), of stocks and bonds -110,637 -89,113 -1,016 -12,295 -5,275 -9,820 -451 6,565' 9,432 23,299 44 Foreign countries -109,766 -88,921 -853 -12331 -5,443 -9,794 -380 6,582' 9,433 23,392 45 Europe -57,139 -29,874 5,388 -1,457 -2,035 -7,240 2,328 l,206r 6,008 10,336 46 Canada -7,685 -3,085 2,929 -475 -1,335 214 2,195 2,631 -1,177 887 47 Latin America and Caribbean -11,507 -25,258 -8,211 -6,108 -1,092 -2,548 -4,864 -1,205 1,213 4,373 48 Asia -27,831 -25,123 216 -3,520 -779 516 -64 4,227 3,550 6,699 49 Japan -5,887 -10,001 2,603 1,265 -681 -38 -316 1,741 2,239 6,134 50 Africa -1,517 -3,293 -1,360 -302 -79 -32 -269 -122 -163 4 51 Other countries -4,087 -2,288 185 -469 -123 -704 294 -155 2 1,093 52 Nonmonetary international and regional organizations -871 36 168 -26 -71 -17 -1 -93 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, 2. Includes state and local government securities and securities of U.S. government Saudi Arabia, and United Arab Emirates (Trucial States). agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. corporations organized to finance direct investments abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Holdings and Transactions/Interest and Exchange Rates A61 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions1 Millions of dollars; net purchases, or sales (—) during period 1998 Area or country 1997 Ja O n c .— t. Apr. May June July Aug. Sept. Oct.p 1 Total estimated 232,241 184,171 13,440 6,078 21,267 1,674 -3,578 -15,776 -5,282 -2,323 2 Foreign countries 234,083 183,688 11,994 6,769 21,116 1,978 -3,631 -15,776 -5,273 -2,985 3 Europe 118,781 144,921 10,700 6.530 788 715 -5,903 -2,804 -2,783 -9,999 4 Belgium and Luxembourg 1,429 3,427 1,147 -165 176 -513 215 667 113 -606 5 Germany 17,980 22 AT I 25 -829 -143 -1,181 82 -1,799 855 1,132 6 Netherlands -582 1,746 -3,302 130 341 731 -265 -3,081 -579 1,543 7 Sweden 2,242 -465 319 -202 184 335 239 -152 -330 193 8 Switzerland 328 6,028 4,534 -483 44 -973 -827 -680 363 2,811 9 United Kingdom 65,658 98,253 7,041 5,785 -2,720 -1,426 -5,769 8,019 2,244 -13,141 10 Other Europe and former U.S.S.R 31,726 13,461 936 2,294 2,906 3,742 422 -5,778 -5,449 -1,931 11 Canada 2,331 -811 -3,592 1,457 -223 -66 -569 -2,088 -663 -1,188 12 Latin America and Caribbean 20,785 -2,554 -1,962 -7,981 20,033 2,578 949 -5,940 -1,233 -491 13 Venezuela -69 655 -544 14 -339 693 450 -1,308 6 -35 14 Other Latin America and Caribbean 8,439 -549 15,108 -632 -335 3,513 2,305 3,914 2,982 -1,288 15 Netherlands Antilles 12,415 -2,660 -16,526 -7,363 20,707 -1,628 -1,806 -8,546 -4,221 832 16 Asia 89,735 39,567 9,401 7,966 1,455 -1,153 1,327 -3,856 -207 7,756 17 Japan 41,366 20,360 1,987 6,301 1,582 -2,442 774 299 128 1,233 18 Africa 1,083 1,524 634 -18 13 145 -23 62 81 87 19 Other 1,368 1,041 -3,187 -1,185 -950 -241 588 -1,150 -468 850 20 Nonmonetary international and regional organizations -1,842 483 1,446 -691 151 -304 53 0 -9 662 21 International -1,390 621 529 -715 136 -226 -135 -10 -288 645 22 Latin American regional -779 170 203 -4 0 192 -5 0 MEMO 23 Foreign countries 234,083 183,688 11,994 6,769 21,116 1,978 -3,631 -15,776 -5,273 -2,985 24 Official institutions 85,807 43,959 -12,994 1,162 898 -3,486 469 -16,920 -10,304 9,001 25 Other foreign 148,276 139,729 24,988 5,607 20,218 5,464 -4,100 1,144 5,031 -11,986 Oil-exporting countries 26 Middle East2 10,232 7.636 -14,345 -380 951 -1,388 -2,578 -4,160 -5,837 -276 27 Africa3 1 -12 2 0 0 0 0 1 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 Dec. 31, 1998 Rate on Dec. 31, 1998 Country Country Month Percent Month effective effective Austria .. 2.5 Apr. 1996 Germany ... 2.5 Apr. 1996 Belgium 2.0 Dec. 1998 Italy 3.5 Dec. 1998 Canada .. 5.25 Nov. 1998 Japan .5 Sept. 1995 Denmark . 3.5 Dec. 1998 Netherlands 2.5 Apr. 1996 France2 .. 3.0 Dec. 1998 Switzerland 1.0 Sept. 1996 1. Rates shown are mainly those at which the central bank either discounts or makes 2. Since February 1981, the rate has been that at which the Bank of France discounts advances against eligible commercial paper or government securities for commercial banks or Treasury bills for seven to ten days. brokers. For countries with more than one rate applicable to such discounts or advances, the rate shown is the one at which it is understood that the central bank transacts the largest proportion of its credit operations. 3.27 FOREIGN SHORT-TERM INTEREST RATES1 Percent per year, averages of daily figures 1998 Type or country 1996 1997 1998 June July Aug. Sept. Oct. Nov. Dec. 5 38 5 61 5 45 5.57 5.57 5.56 5.39 5.17 5.21 5.13 2 United Kingdom 5.99 6.81 7.31 7.61 7.67 7.61 7.35 7.11 6.84 6.38 3 Canada 4.49 3.59 5.17 5.10 5.10 5.35 5.66 5.43 5.42 5.24 3.21 3.24 3.47 3.49 3.46 3.42 3.40 3.50 3.56 3.28 1 92 1 58 143 1.81 1.98 1.68 1.43 1.20 1.44 1.40 6 Netherlands 2.91 3.25 3.42 3.51 3.46 3.43 3.33 3.28 3.48 3.26 7 France 3.81 3.35 3.45 3.47 3.44 3.44 3.43 3.45 3.49 3.24 8 Italy 8.79 6.86 4.87 4.99 4.75 4.78 4.86 4.40 3.82 3.23 9 Belgium 3.19 3.40 3.52 3.62 3.59 3.48 3.42 3.41 3.47 3.23 10 Japan .58 .58 .62 .57 .67 .69 .45 .49 .52 .55 1. Rates are for three-month interbank loans, with the following exceptions: Cana< finance company paper; Belgium, three-month Treasury bills; and Japan, CD rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • February 1999 3.28 FOREIGN EXCHANGE RATES AND INDEXES OF THE FOREIGN EXCHANGE VALUE OF THE U.S. DOLLAR1 Currency units per dollar except as noted Item 1996 1997 1998 July Aug. Sept. Oct. Nov. Dec' Exchange Rates COUNTRY/CURRENCY UNIT 1 Australia/dollar2 78.28 74.37 62.91 61.80 58.88 58.89 61.79 63.49 61.82 2 Austria/schilling 10.589 12.206 12.379 12.650 12.574 11.955 11.524 11.840 11.746 3 Belgium/franc 30.97 35.81 36.31 37.07 36.85 35.05 33.81 34.71 34.44 4 Brazil/real 1.0051 1.0779 1.1605 1.1614 1.1717 1.1805 1.1889 1.1932 1.2052 5 Canada/dollar 1.3638 1.3849 1.4836 1.4869 1.5346 1.5218 1.5452 1.5404 1.5433 6 China, P.R./yuan 8.3389 8.3193 8.3008 8.3100 8.3100 8.3055 8.2778 8.2778 8.2780 7 Denmark/krone 5.8003 6.6092 6.7030 6.8499 6.8067 6.4717 6.2294 6.3960 6.3531 8 Finland/markka 4.5948 5.1956 5.3473 5.4653 5.4340 5.1734 4.9845 5.1163 5.0769 9 France/franc 5.1158 5.8393 5.8995 6.0280 5.9912 5.6969 5.4925 5.6422 5.5981 10 Germany/deutsche mark 1.5049 1.7348 1.7597 1.7976 1.7869 1.6990 1.6381 1.6827 1.6698 11 Greece/drachma 240.82 273.28 295.70 299.35 301.21 292.47 281.64 282.64 280.43 12 Hong Kong/dollar 7.7345 7.7431 7.7467 7.7483 7.7494 7.7480 7.7483 7.7432 7.7471 13 India/rupee. 35.51 36.36 41.36 42.61 42.84 42.58 42.39 42.43 42.59 14 Ireland/pound 159.95 151.63 142.48 139.88 140.37 147.24 152.21 147.77 148.76 15 Italy/lira 1,542.76 1,703.81 1,736.85 1,772.42 1,763.01 1,678.92 1,620.96 1,664.91 1,653.23 16 Japan/yen 108.78 121.06 130.99 140.79 144.68 134.48 121.05 120.29 117.07 17 Malaysia/ringgit 2.5154 2.8173 3.9254 4.1591 4.2036 3.8050 3.8000 3.8000 3.8014 18 Mexico/peso 7.600 7.918 9.152 8.899 9.371 10.219 10.159 9.969 9.907 19 Netherlands/guilder, 1.6863 1.9525 1.9837 2.0267 2.0148 1.9169 1.8479 1.8969 1.8816 20 New Zealand/dolla? 68.77 66.25 53.61 51.85 50.11 50.44 52.13 53.40 52.23 21 Norway/krone 6.4594 7.0857 7.5521 7.6246 7.7248 7.5564 7.4294 7.4562 7.6050 22 Portugal/escudo 154.28 175.44 180.25 183.93 182.99 174.19 168.01 172.52 171.19 23 Singapore/dollar 1.4100 1.4857 1.6722 1.7085 1.7571 1.7226 1.6378 1.6378 1.6515 24 South Africa/rand 4.3011 4.6072 5.5417 6.2285 6.3198 6.0966 5.7991 5.6511 5.9030 25 South Korea/won 805.00 950.77 1,400.40 1,295.76 1,314.29 1,375.54 1,344.14 1,294.01 1,213.22 26 Spain/peseta 126.68 146.53 149.41 152.58 151.72 144.33 139.23 143.05 142.08 27 Sri Lanka/rupee 55.289 59.026 65.006 65.908 66.642 66.260 66.345 67.578 68.117 28 Sweden/krona 6.7082 7.6446 7.9522 7.9942 8.1282 7.8816 7.8395 8.0140 8.0716 29 Switzerland/franc 1.2361 1.4514 1.4506 1.5136 1.4933 1.4000 1.3373 1.3852 1.3604 30 Taiwan/dollar 27.468 28.775 33.547 34.387 34.731 34.646 33.121 32.603 32.337 31 Thailand/baht 25.359 31.072 41.262 41.300 41.720 40.402 38.118 36.527 36.276 32 United Kingdom/pound2 156.07 163.76 165.73 164.37 163.42 168.23 169.44 166.11 167.08 33 Venezuela/bolivar 417.19 488.39 548.39 558.47 571.88 583.85 570.68 569.66 565.89 Indexes3 NOMINAL 34 G-10 (March 1973 = 100)" 87.34 96.38 98.85 101.38 101.80 97.17 93.69 95.46 94.61 35 Broad (January 1997=100)' 97.43 104.47 116.25 118.17 120.14 118.85 115.46 115.34 114.56 36 Major currencies (March 1973=100)' 85.23 91.85 96.52 99.31 100.96 96.99 93.46 94.23 93.40 37 Other important trading partners (January 1997=100)' 98.25 104.67 125.70 125.64 127.77 131.38 129.02 127.31 126.80 REAL 38 Broad (March 1973 = 100)5 85.89 90.49 98.37 100.29' 101.82' 100.08' 97.07' 96.63 95.83 39 Major currencies (March 1973 = 100)6 85.83 93.20 98.33 101.41 103.21 99.05 95.47' 96.22 95.48 40 Other important trading partners (March 1973 = 100)' 106.57 94.55 105.60 106.09' 107.37' 108.91' 106.53' 104.31' 103.37 1. Averages of certified noon buying rates in New York for cable transfers. Data in this average of U.S. bilateral import shares from and export shares to the issuing country and of a table also appear in the Board's G.5 (405) monthly statistical release. For ordering address, measure of the importance to U.S. exporters of that country's trade in third country markets. see inside front cover. 6. Weighted average of the foreign exchange value of the U.S. dollar against a subset of 2. Value in U.S. cents. broad index currencies that circulate widely outside the country of issue. The weight for each 3. For more information on the indexes of the foreign exchange value of the dollar, see currency is its broad index weight scaled so that the weights of the subset of currencies in the Federal Reserve Bulletin, vol. 84 (October 1998), pp. 811-18. index sum to one. 4. Weighted average of the foreign exchange value of the U.S. dollar against the currencies 7. Weighted average of the foreign exchange value of the U.S. dollar against a subset of of the other G-10 countries. The weight for each of the ten countries is the 1972-76 average broad index currencies that do not circulate widely outside the country of issue. The weight world trade of that country divided by the average world trade of all ten countries combined. for each currency is its broad index weight scaled so that the weights of the subset of Series revised as of August 1978 (see Federal Reserve Bulletin, vol. 64 (August 1978), currencies in the index sum to one. p. 700). 5. Weighted average of the foreign exchange value of the U.S. dollar against the currencies of a broad group of U.S. trading partners. The weight for each currency is computed as an Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A63 Guide to Statistical Releases and Special Tables STATISTICAL RELEASES—List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases December 1998 A72 SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks December 31, 1997 May 1998 A64 March 31, 1998 August 1998 A64 June 30, 1998 November 1998 A64 September 30, 1998 February 1999 A64 Terms of lending at commercial banks February 1998 May 1998 A66 May 1998 August 1998 A67 August 1998 November 1998 A66 November 1998 February 1999 A66 Assets and liabilities of U.S. branches and agencies of foreign banks December 31, 1997 May 1998 A70 March 31, 1998 August 1998 A72 June 30, 1998 November 1998 A72 September 30, 1998 February 1999 A72 Pro forma balance sheet and income statements for priced service operations March 31, 1998 July 1998 A64 June 30, 1998 October 1998 A64 September 30, 1998 January 1999 A64 Residential lending reported under the Home Mortgage Disclosure Act 1995 September 1996 A68 1996 September 1997 A68 1997 September 1998 A68 Disposition of applications for private mortgage insurance 1996 September 1997 A76 1997 September 1998 A72 Small loans to businesses and farms 1997 September 1998 A76 Community development lending reported under the Community Reinvestment Act 1997 September 1998 A79 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 Special Tables • February 1999 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities Consolidated Report of Condition, September 30, 1998 Millions of dollars except as noted Banks with foreign offices1 Bank o s f fi w ce it s h o d n o ly mestic Domestic Item Total total Domestic Over 100 Under 100 1 Total assets3.. 5,209,176 4,4863*5 3,540,913 2,818,132 1,376,909 291,354 2 Cash and balances due from depository institutions 303,407 225,098 230,639 152,331 58,791 13,977 3 Cash items in process of collection, unposted debits, and currency and coin 107,387 104,435 31,574 4 Cash items in process of collection and unposted debits n.a. 78,759 19,584 5 Currency and coin n.a. 25,676 11,989 6 Balances due from depository institutions in the United States n.a. 28,704 19,956 19,613 7 Balances due from banks in foreign countries and foreign central banks 75,159 8,645 656 8 Balances due from Federal Reserve Banks 19,390 19,295 6,948 MEMO 9 Non-interest-bearing balances due from commercial banks in the United States (included in balances due from depository institutions in the United States) 30,557 11,593 14,016 4,947 10 Total securities, held-to-maturity (amortized cost) and available-for-sale (fair value) ... 910,136 506,270 328,760 75,106 11 U.S. Treasury securities . 121,293 59,191 48,379 13,723 12 U.S. government agency and corporation obligations (excludes mortgage-backed securities) 157,044 45,423 82,046 29,575 13 Issued by U.S. government agencies 5,906 2,666 2,409 831 14 Issued by U.S. government-sponsored agencies 151,137 42,758 79,637 28,743 15 Securities issued by states and political subdivisions in the United States 83,424 24,558 44,694 14,172 16 General obligations 61,781 17,321 34,177 10,282 17 Revenue obligations 20,893 6,734 10,322 3,837 18 Industrial development and similar obligations 751 504 195 53 19 Mortgage-backed securities (MBS) 429,435 280,675 133,888 14,871 20 Pass-through securities 274,614 183,466 81,506 9,641 21 Guaranteed by GNMA 75,163 49,160 22,733 3,270 22 Issued by FNMA and FHLMC 197,309 133,025 57,938 6,345 23 Privately issued 2,142 1,281 835 26 24 Other mortgage-backed securities (includes CMOs, REMICs, and stripped MBS) . 154,821 97,209 52,382 5.230 25 Issued or guaranteed by FNMA, FHLMC or GNMA 117,810 71,597 41,284 4,929 26 Collateralized by MBS issued or guaranteed by FNMA, FHLMC, or GNMA .. 2,290 1,101 1,053 136 27 All other mortgage-backed securities 34,721 24,511 10,045 165 28 Other debt securities 89,943 77,731 10,784 1,428 29 Other domestic debt securities n.a. 25,215 10,574 n.a. 30 Foreign debt securities n.a. 52,516 210 n.a. 31 Equity securities 28,997 18,692 8,969 1,336 32 Investments in mutual funds and other equity securities with readily determinable fair value 9,166 5,991 2,759 415 33 AH other equity securities 19,831 12,701 6,210 921 34 Federal funds sold and securities purchased under agreements to resell 287,543 212,727 216,814 141,999 53,631 17,098 35 Total loans and lease-financing receivables, gross 3,112,045 2,807,897 2,056,675 1,752,526 879,538 175,832 36 LESS: Unearned income on loans 3,772 2,965 1,709 902 1,457 605 37 Total loans and leases (net of unearned income) 3,108,274 2,804,932 2,054,966 1,751,624 878,081 175,227 38 LESS: Allowance for loan and lease losses 55,726 36,866 16,345 2,515 39 LESS: Allocated transfer risk reserves 12 12 0 0 40 EQUALS: Total loans and leases, net 3,052,535 2,018,087 861,735 172,712 Total loans and leases, gross, by category 41 Loans secured by real estate 1,290,245 1,260,385 719,816 689,956 471,875 98,554 42 Construction and land development 101,623 50,776 43,021 7,826 43 Farmland 28,682 4,421 12,578 11,683 44 One- to four-family residential properties 732,635 438,061 244,729 49,846 45 Revolving, open-end loans, extended under lines of credit 96,850 67,759 26,638 2,452 46 All other loans 635,786 370,301 218,090 47,394 47 Multifamily (five or more) residential properties 42,279 22,678 17,476 2,125 48 Nonfarm nonresidential properties 355,165 174,020 154,070 27,074 49 Loans to depository institutions 100,969 75,616 97,337 71,984 3,519 113 50 Commercial banks in the United States n.a. n.a. 49,911 49,369 3,227 n.a. 51 Other depository institutions in the United States n.a. n.a. 17,237 17,174 50 n.a. 52 Banks in foreign countries n.a. n.a. 30,190 5,442 243 n.a. 53 Loans to finance agricultural production and other loans to farmers 48,019 46,996 10,902 9,880 17,376 19,740 54 Commercial and industrial loans 868,675 699,896 517,729 152,593 29,575 55 U.S. addressees (domicile) n.a. n.a. 541,315 510,447 151,900 n.a. 56 Non-U.S. addressees (domicile) n.a. n,a 145,193 7,281 693 n.a. 57 Acceptances of other banks 1,571 698 1,453 580 83 35 58 U.S. banks n.a. 362 361 n.a. 59 Foreign banks n.a. 1,091 219 n.a. 60 Loans to individuals for household, family, and other personal expenditures (includes purchased paper) 534,521 494,601 300,356 260,437 208,698 25,467 61 Credit cards and related plans 200,593 n.a. 106,748 92,099 1,746 62 Other (includes single payment and installment) 333,927 193,608 116,599 23,721 63 Obligations (other than securities) of states and political subdivisions in the United States (includes nonrated industrial development obligations) 18.383 18,378 11,026 11,021 6,498 859 64 All other loans 133.997 99,476 124,926 90,405 8,204 867 65 Loans to foreign governments and official institutions 8,078 750 30 n.a. 66 Other loans 116,848 89,654 8,174 n.a. 67 Loans for purchasing and carrying securities n.a. 17,431 1,682 n.a. 68 All other loans (excludes consumer loans) n.a. n.a. n.a. 72,224 6,492 n.a. 69 Lease-financing receivables 115,664 111,849 104,351 100,536 10,691 622 70 Assets held in trading accounts 305,980 305,160 781 1 71 Premises and fixed assets (including capitalized leases) 69,156 42,310 21,266 5,580 72 Other real estate owned 3,914 2,292 1,274 348 73 Investments in unconsolidated subsidiaries and associated companies 6.249 5,852 347 50 74 Customers' liability on acceptances outstanding 13,672 13,442 224 6 75 Net due from own foreign offices, Edge Act and agreement subsidiaries, and IBFs n.a. 29,613 n.a. 29,613 n.a. n.a. 76 Intangible assets 73,246 58,922 n.a. 13,430 894 77 All other assets 183,338 141,126 n.a. 36,669 5.543 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A65 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities—Continued Consolidated Report of Condition, September 30, 1998 Millions of dollars except as noted Banks with domestic Banks with foreign offices' Domestic offices only total 78 Total liabilities, limited-life preferred stock, and equity capital.. 5,209,176 3,540,913 1,376,909 291,354 79 Total liabilities 4,760,963 4,038,181 3,259,022 2,536,241 1,242,503 259,438 80 Total deposits ... 3,482,373 2,927,823 2,204,165 1,649,615 1,029,857 248,351 81 Individuals, partnerships, and corporations 3,106,524 2,727,002 1,924,741 1,545,219 956,601 225,182 82 US. government n.a. 5.099 n.a 4,149 791 159 83 States and political subdivisions in the United States. . n.a. 129.858 n.a. 55.118 55.727 19,013 84 Commercial banks in the United States 63.816 32,055 55,992 24.231 6.844 980 85 Other depository institutions in the United States n.a. 8.229 n.a. 3,516 3.255 1,459 86 Foreign banks, governments, and official institutions. . 144.188 9.831 143,697 9,341 477 14 87 Banks n.a. n.a. 101,563 7,723 452 n.a. Governments and official institutions n.a. n.a. 42,135 1,617 25 n.a. Certified and official checks 16.696 15.749 8,989 8,042 6.164 1,543 90 Total transaction accounts 688,870 390,449 229,107 69,313 91 Individuals, partnerships, and corporations 594,956 333,955 200,562 60,440 92 U.S. government 1,549 1,010 466 73 93 States and political subdivisions in the United States. 39,925 17,168 15,961 6,796 94 Commercial banks in the United States 24,767 19,521 4.876 370 95 Other depository institutions in the United States. . .. 3,096 2,321 691 84 96 Foreign banks, governments, and official institutions. 8,827 8,433 387 7 97 Banks n.a. 7,215 384 n.a. 98 Governments and official institutions n.a. 1,218 2 n.a. 99 Certified and official checks 15,749 8.042 6,164 1,543 100 Demand deposits (included in total transaction accounts) . 538,238 346,967 155,266 36.006 101 Individuals, partnerships, and corporations 468,969 298,457 137,887 32,625 102 U.S. government 1,435 955 418 62 103 States and political subdivisions in the United States. . . 15,420 9,240 4,854 1,326 104 Commercial banks in the United States 24,760 19,521 4.874 365 105 Other depository institutions in the United States. . .. 3,084 2,320 682 81 106 Foreign banks, governments, and official institutions. .. 8,821 8,431 387 4 107 Banks n.a. 7,215 384 n.a. 108 Governments and official institutions 1,216 n.a. 109 Certified and official checks 15,749 8,042 6.164 1,543 110 Total nontransaction accounts 2,238,953 1,259,166 800.751 179,037 111 Individuals, partnerships, and corporations , 2,132,046 1,211,265 756,039 164,742 1)2 U.S. government 3,550 3,139 325 86 113 States and political subdivisions in the United States. , 89,932 37,950 39,766 12.217 114 Commercial banks in the United States , 7,288 4,710 1,968 610 115 Other depository institutions in the United States 5,133 1,195 2,564 1,375 116 Foreign banks, governments, and official institutions.. 1,004 908 90 7 117 Banks 509 68 n.a. 118 Governments and official institutions 399 22 n.a. 119 Federal funds purchased and securities sold under agreements to repurchase 414,337 369,365 334,423 289,450 77,163 2,751 120 Demand notes issued to the U.S. Treasury 28,487 28,487 25,076 25,076 3,328 83 121 Trading liabilities 235,172 234,879 n.a. 293 0 122 Other borrowed money 372,726 328.778 264,574 220,627 102,847 5,305 123 Banks' liability on acceptances executed and outstanding 13,768 10.716 13,537 10,486 224 6 124 Notes and debentures subordinated to deposits 68,222 63.823 n.a. 4,381 18 125 Net due to own foreign offices. Edge Act and agreement subsidiaries, and IBFs n.a. 118,122 n.a. 118.122 n.a. n.a. 126 All other liabilities 145,878 n.a. 118,545 n.a 24.410 2,923 127 Total equity capital 448.213 281,891 134,406 31,917 MEMO 128 Tradingg assets at largge banks4 305,716 115,826 305t,083 115,193 112299 UUS.S . TT reasury securiitiie s ((ddomestic offices) t 11,841 11,794 130 U.S. government agency corporation obligations 2,331 2,230 101 131 Securities issued by states and political subdivisions in the United States 1,057 980 77 132 Mortgage-backed securities n.a. 13,747 13,444 303 133 Other debt securities 10,902 10,842 59 134 Other trading assets 10,464 10,435 30 135 Trading assets in foreign banks 189,890 0 189,890 0 0 136 Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity contracts 65,484 65,484 65,468 65,468 16 137 Total individual retirement (IRA) and Keogh plan accounts 151,531 79,349 58,882 13,300 138 Total brokered deposits 58,447 34,980 21,829 1.638 139 Fully insured brokered deposits 46.198 25,094 19,566 1,537 140 Issued in denominations of less than $100,000 10.206 4.853 4,186 1,168 141 Issued in denominations of $100,000, or in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less 35,992 20.241 15,381 370 142 Money market deposit accounts (MMDAs) 732.298 506.104 199,501 26,693 143 Other savings deposits (excluding MMDAs) 366,004 197.449 144.199 24,355 144 Total time deposits of less than $100,000 748,128 335,987 317.568 94,573 145 Total time deposits of $100,000 or more 392,524 219,625 139.482 33,416 146 All negotiable order of withdrawal (NOW) accounts 147,891 42,966 72,442 32,483 147 Number of banks 163 n.a. 2,875 5,850 NOTE. Table 4.20 has been revised; it now includes data that was previously reported in 2. "Over 100" refers to banks whose assets, on June 30 of the preceding calendar year, table 4.22, which has been discontinued. were $100 million or more. (These banks file the FFIEC 032 or FFTEC 033 Call Report.) The notation "n.a." indicates the lesser detail available from banks that don't have foreign "Under 100" refers to banks whose assets, on June 30 of the preceding calendar year, were offices, the inapplicability of certain items to banks that have only domestic offices or the less than $100 million. (These banks file the FFIEC 034 Call Report.) absence of detail on a fully consolidated basis for banks that have foreign offices. 3. Because the domestic portion of allowances for loan and lease losses and allocated 1. All transactions between domestic and foreign offices of a bank are reported in "net due transfer risk reserves are not reported for banks with foreign offices, the components of total from" and "net due to" lines. All other lines represent transactions with parties other than the assets (domestic) do not sum to the actual total (domestic). domestic and foreign offices of each bank. Because these intraoffice transactions are nullified 4. Components of "Trading assets at large banks" are reported only by banks with either by consolidation, total assets and total liabilities for the entire bank may not equal the sum of total assets of $ 1 billion or more or with $2 billion or more in the par/notional amount of their assets and liabilities respectively of the domestic and foreign offices. off-balance-sheet derivative contracts. Foreign offices include branches in foreign countries, Puerto Rico, and U.S. territories and possessions; subsidiaries in foreign countries; all offices of Edge Act and agreement corpora- Digitizedti ofnos rw FheRreAveSr lEocRate d; and IBFs. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 Special Tables III February 1999 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 2-6, 1998 A. Commercial and industrial loans made by all commercial banks1 Weighted- Amount of loans (percent) weignted- Amount of Average loan Most average loans size maturity common Item ( l e p o f e a fe r n c c e t r i n v a t t e ) e 2 o ( f m d il o l l i l o a n r s s} (tho d u o s l a la n r d s s ) of Days S c e o c l u la re te d r a b l y Callable p S re u p p b e a n je y a c m l t t y e t n o t c M om ad m e i u tm nd e e n r t base r a p te ri " cing LOAN RISKS t Ail commercial and industrial loans . . . 6.63 122,252 757 149 38.6 11.2 35.9 74.1 Foreign 2 Minimal risk 5.91 8,444 1,296 201 45.9 2.0 65.8 95.0 Foreign 3 Low risk 6.07 26,472 1,640 211 23.5 7.7 56.7 75.7 Foreign 4 Moderate risk 6.63 42.438 626 398 37.2 14.8 21.6 79.7 Foreign 5 Other 7.09 29.493 762 447 50.9 9.9 38.3 70.1 Fed funds Bv maturity/repricing interval*1 6 Zero interval 7.84 20,304 306 534 49.7 12.6 6.7 67.3 Prime 7 Minimal risk 7.89 427 205 815 42.1 11.5 34 4 88.9 Prime 8 Low risk 6.85 2,902 624 271 34.9 15.6 21.1 77.5 Prime 9 Moderate risk 7.84 7.563 242 631 59.8 18.0 3.6 90.7 Prime 10 Other 8.54 3.968 182 646 66.1 14.7 8.3 90.9 Prime 11 Daily 6.18 49,558 1,558 84 37.6 11.0 46.0 62.6 Fed funds 12 Minimal risk 5.81 4,386 13,633 60 55.8 .5 88.3 96.9 Domestic 13 Low risk 5.93 12,090 5,505 51 21.2 4.6 73.4 60.1 Fed funds 14 Moderate risk 6.19 14,842 1,263 123 31.8 17.2 14.5 63.1 Fed funds 15 Other 6.33 11.848 2.262 39 54.3 5.4 49.3 44.2 Fed funds 16 2 to 30 days 6.39 30,458 1,853 369 33.2 11.6 39.4 89.9 Foreign 17 Minimal risk 5.69 2,712 3,038 143 34.0 2.9 49.3 96.1 Foreign 18 Low risk 6.02 6.463 2,991 261 21.2 9.5 44.9 90.2 Foreign 19 Moderate risk 6.37 11.666 1,596 315 28.0 14.8 35.5 91.7 Foreign 20 Other 6.96 7.901 1,725 660 46.8 13.1 38.7 88.7 Foreign 21 M to 365 days 6.67 18,059 588 550 31.8 7.4 41.0 87.9 Foreign 22 Minimal risk 6.16 704 254 585 37.2 1.2 27.4 88.9 Other 23 Low risk 5.91 4,451 801 416 23.2 8.1 56.2 93.9 Foreign 24 Moderate risk 6.42 6,529 584 530 29.5 4.9 36 1 90.3 Foreign 25 Other 7.66 5,032 1,112 749 3.3.7 10.8 39.1 85.0 Foreign Months 26 More than 365 days 7.71 3.076 279 62 66.3 7.2 14.3 59.0 Prime 27 Minimal risk 5.90 209 496 53 28.2 1.6 3.0 72.9 Other 28 Low risk 6.87 502 351 40 40.1 3.7 21 7 89.5 Other 29 Moderate risk 7.80 1,548 309 62 73.1 9.6 14.9 48.4 Prime 30 Other 8.49 560 288 62 71.7 5.3 14.5 63.9 Other Weighted- Weighted average average risk maturity/ rating5 repricing interval Days SIZE OF LOAN (thousands of dollars) 31 1-99 9.13 2.711 3.2 165 83.1 30.7 4.7 78.3 Pnme 32 100-999 8.12 11.270 3.2 174 71.0 21.0 13.5 83.8 Prime 33 1.000-9,999 6.95 34.124 3.0 73 39.9 13.1 29.3 81.4 Foreign 34 10.000 or more 6.16 74,148 19 36 31.5 8.0 43.6 69.1 Fed funds Average size (thousands of dollars) BASE RATE OF LOAN4 35 Prime7 8.58 18.944 3.2 116 68.7 22.8 5.9 79.1 183 36 Fed funds 6.09 30.650 .1.3 18 33.7 5.0 41.9 42.2 8,483 37 Other domestic 6.10 18,821 2.5 30 22.0 21.8 49.9 75.4 3,120 38 Foreign 6.34 38,472 2.8 50 40.2 7.2 49.8 93.7 3,558 39 Other 6.67 15,365 2.7 148 27 9 5.4 9.7 80.7 414 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A67 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made. November 2-6, 1998 B. Commercial and industrial loans made by all domestic banks1 Weighted- Weighted- Amount of loans (percent) average Amount of Average loan average Most Item ( l e p o f e a f r e n c c e t r i n a v t le e * ^ 2 o ( f m l d o il o a l l i n l o s a n r s s) (tho d u o s s l i a l z a n e r d s) s of Days S c e o c l u la re te d r a b l y p S re p u p b e a n je y a c m l t t y e t n o t c M om ad m e it u m nd en er t ba c s o e r m a p t m e ri 4 o ci n ng LOAN RISK3 1 All commercial and industrial loans 6.90 68,304 452 488 35.8 13.3 12.4 76.8 Prime 2 Minima] risk 6.04 4.630 728 345 14.7 3.1 50.6 91.7 Domestic 3 Low risk 6.26 11,821 839 372 19.3 14.8 21.0 86.4 Domestic 4 Moderate risk . . 6.84 28.314 443 496 39.2 H.8 7.3 78.4 Foreign 5 Other 7.76 11.173 318 700 52.9 10.4 10.0 80.0 Prime By tncitunly/repricitig interval*' 6 Zero interval 7.86 19.065 295 542 50.7 11.9 4.3 67.2 Prime 7 Minimal risk 7.87 406 195 815 39.0 6.8 36.2 88.3 Prime 8 Low risk 6.98 2,410 543 311 40.8 18.1 6.9 85.2 Prime 9 Moderate risk 7.86 7,161 235 632 60.4 16.2 3.8 90.2 Prime 10 Other 8.58 3.645 172 641 67.1 14.3 92.4 Prime 11 Daily 6.44 20,073 689 202 22.7 21.8 13.1 70.0 Domestic 12 Minima] risk 5.91 1,924 7,008 135 1.2 1.0 75.1 94.9 Domestic 13 Low risk 6.02 2,797 1,986 224 4.9 18.6 15.4 72.8 Domestic 14 Moderate risk 6.39 8,352 764 197 26.0 21.1 3.7 55.5 Domestic 15 Other 6.93 2,315 524 128 23.3 11.3 1.8 48.3 Fed funds 16 2 to 30 days . . 6.42 16.930 1,251 410 28.7 8.1 19.1 92.6 Foreign 17 Minimal risk . 5.68 1,433 1,740 231 14.6 5.5 41.8 92.6 Other 18 Low risk ... . 6.03 4.239 2,672 344 16.2 13.4 34.5 93.2 Domestic 19 Moderate risk 6.34 7.042 1,136 343 28.1 6.5 9.3 92.9 Foreign 20 Other . . . 7.44 3.155 887 784 53.2 5.8 15.4 90.3 Foreign 21 31 |o 365 days 6.53 8.760 311 634 6.3 17.2 88.5 Foreign 22 Minimal risk 6.17 652 2)8 549 34.7 1.3 22.1 88.1 Other 23 Low risk . . . 6.05 1,902 368 541 12.4 8.1 20.5 92.0 Foreign 24 Moderate risk 6.38 3,925 383 545 32.3 5.0 15.4 90.4 Foreign 25 Other 7.53 1,457 418 1124 54.0 6.3 21.6 82.8 Foreign 26 More than 365 days . 7.65 2,840 215 62 68.0 7.2 11.0 55.6 Other 27 Minimal risk .. . 5.90 209 496 53 28.2 1.6 3.0 72.9 Other 28 Low risk 6.91 410 309 37 49.0 4.5 4.2 87.1 Other 29 Moderate risk 7.80 1,543 308 62 73.3 9.4 14.9 48.3 Prime 30 Other 8.19 421 230 63 69.9 4.0 11.0 51.9 Other Weighted- Weighied- average average risk maturity/ rating5 repneing interval6 Davs SIZE OF LOAN (thousands of dollars) 31 1-99 9.16 2,636 32 167 84.1 30.7 4.1 77 9 Prime J2 100-999 8.26 9,608 3.2 194 74.5 20.6 8.1 82.2 Prime 33 1,000-9,999 7.16 22,131 2.9 83 43.2 13.1 13.8 79.7 Prime 34 10,000 or more 6.18 33.929 2.7 58 16.2 9.9 13.5 73.4 Domestic Average size (thousands of dollars) BASE RATE OF LOAN4 35 Prime' 8.52 17.541 3.2 121 69.2 20.5 5.3 77.5 174 36 Fed funds . . . 5.96 7.976 2.9 27 15.2 12.2 1.5 56.4 5,650 37 Other domestic . 6.11 12.028 2.5 42 16.8 20.2 23.2 73.7 2,243 38 Foreign 6.40 15,937 2.9 66 32.4 8.2 19.5 85.6 2.508 39 Other 6.68 14,822 2.7 26.2 5.0 9.2 80.3 401 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Special Tables • February 1999 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 2-6, 1998 C. Commercial and industrial loans made by large domestic banks1 W ( l e p a o f e e v a f i r e e n g c c r h e a t r i l n g a v e t t e e d ) e 2 - A o ( f m m l d o o il o a u l l i n n l o a s t n r o s s) f ( A th v o d e u r o a s s l i g l a z a n e e r d s l ) s o a o n f W m a e v a D i t e g u a r h y r a i t g s t e y e d 3 - S c e o c l u la re te d r a b l y Amount of loan p s S r e u p ( p p b e a n e je y r a c c m l t t e y e n t n o t) t c M om ad m e it u m nd en er t ba c s o e M r m a p t o m e r s i 4 o t ci n ng LOAN RISK5 1 All commercial and industrial loans 6.72 57,300 415 29.4 12.0 12.4 76.8 Foreign 2 Minimal risk 5.81 3,656 4,737 298 6.4 1.0 61.8 97.5 Domestic 3 Low risk 6.06 10,010 2.464 347 13.2 13.6 24.0 87.5 Domestic 4 Moderate risk 6.66 24,217 918 444 33.1 12.2 6.6 79.2 Foreign 5 Other 7.53 459 487 44.4 9.9 6.5 81.4 Prime By mutunly/repncing mwnvl 6 Zero interval 7.76 14,793 519 518 43.5 9.2 3.3 62.8 Prime 7 Minimal risk 8.07 196 833 583 9.3 5.1 70.4 99.7 Prime 8 Low risk 6.68 1,544 1,117 288 32.4 14.5 6.0 86.9 Other 9 Moderate risk 7.76 5,270 427 609 52.9 12.8 3.9 94.1 Prime 10 Other 8.42 2,764 223 593 60.7 15.8 1.9 95.0 Prime 11 Daily 6.35 18,816 852 185 20.5 21.5 12.5 69.3 Domestic 12 Minimal risk . 5.90 1,915 8,730 134 .8 1.0 75.5 95.3 Domestic 13 Low risk 5.99 2,681 2,544 218 4.2 18.5 16.1 73.5 Domestic 14 Moderate risk 6.33 7,940 994 185 23.6 21.2 3.4 55.2 Domestic 15 Other 6.91 2,220 600 115 22.4 11.4 .9 46.2 Fed funds 16 2 to 30 days . . . 6.30 14,740 2,698 376 24.7 5.7 18.7 93.4 Foreign 17 Minimal risk 5.36 1.078 7,202 221 3.6 51.8 00.0 Other 18 Low risk 5.98 3,949 5,622 351 13.9 12.6 37.0 93.0 Domestic 19 Moderate risk 6.25 6,281 2,697 350 25.3 3.2 6.3 92.8 Foreign 20 Other 7.26 2,741 1,607 547 47.0 3.1 11.5 92.4 Foreign 21 31 to 365 days . 6.20 6,878 1,674 569 26.1 4.9 18.2 93.5 Foreign 22 Minimal risk . 5.92 313 3,069 796 50.2 35.5 00.0 Foreign 23 Low risk . . . 5.72 1,530 2,249 530 4.6 5.9 25.2 96.6 Foreign 24 Moderate risk 6 16 3,463 1.807 550 27.0 4.3 16.2 93.9 Foreign 25 Other 7.09 1,056 1.157 641 40.5 6.6 15.7 90.7 Foreign 26 More than 365 days . . . 7.15 1,766 987 47 12.9 67.4 Prime 27 Minimal risk 4.84 148 3,695 52 3.6 00.0 Other 28 Low risk 6.17 257 2,069 26 25.3 3.6 6.7 97.6 Fed funds 29 Moderate risk 7.52 1,123 1,316 50 65.3 11.0 14.7 53.7 Prime 30 Other 7.96 188 371 47 36.8 7.6 18.3 81.0 Prime Weighted- Weighted- average average risk maturity/ rating5 repricing interval* Days SlZF OF LOAN (thousands of dollars) 31 1-99 8.84 1,132 3.4 53 81.2 40.1 4.8 92.5 Prime 32 100-999 8.09 6,054 3.3 67 68.5 21.9 7.4 89.3 Prime 33 1,000-9,999 7.10 17,691 3.0 64 38.5 11.9 13.1 78.5 Prime 34 10,000 or more 6.18 32,423 2.7 60 15.3 9.2 13.3 73.0 Domestic Average size (thousands of dollars) BASE RATE OF LOAN4 35 Prime7 8.45 12,864 3.3 90 65.7 17.4 3.1 76.7 263 36 Fed funds 5.94 7,629 2.9 20 13.5 12.5 1.0 56.3 7,896 37 Other domestic 5.93 10,921 2.4 15 9.2 21.9 25.2 75.7 5,000 38 Foreign 6.38 13,874 2.9 64 30.7 6.2 17.3 84.8 2,882 39 Other 6.46 12,011 2.8 98 17.6 3.9 10.8 81.7 1.691 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A69 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 2-6, 1998 D. Commercial and industrial loans made by small domestic banks' Weighted- Weighted- Amount of loans (percent) Item ( l e p o f e a fe r n c c e t r i n a v t t e e )2 o ( f m l d o il o a l l i n l o a s n r s s) (tho d u o s s l i a l z a n e r d s s ) of ma D tu ay ri s ty3 S c e o c l u la re te d r a b l y Callable p S re u p p b e a n je y a c m l t t y e t n o t c M om ad m e i u tm nd e e n r t ba c s o e r m a p t m r e i 4 o ci n ng LOAN RISK5 ] All commercial and industrial loans 7.88 11,004 126 872 68.8 19.6 12.8 77.0 Prime 6.91 974 174 530 45.7 11.2 8.6 69.8 7.35 1,811 181 521 52.5 21.4 4.4 80.0 Prim 4 Moderate risk 7.89 4.097 109 812 75.1 23.4 11.5 73.9 Prim 5 Other 8.73 2,164 140 1599 88.6 12.6 24.4 74.1 Prim By maturity/repricing interval6 6 Zero interval 8.21 4,272 118 627 75.5 21.1 7.6 82.4 Prim 7 Minimal risk 7.68 210 114 1085 66.7 8.4 4.2 77.7 Prim 8 Low risk .. ., .... 7.51 866 283 351 55.7 24.4 8.4 82.1 Prim 9 Moderate risk 8.14 1,891 105 697 81.2 25.7 3.3 79.2 Prim 10 Other 9.07 880 100 783 87 3 95 19 6 84,2 11 Daily 7.70 1,257 179 435 56.3 26.4 20.1 81.1 Prime 8.73 9 156 280 96.7 6.7 18.7 Prime 13 Low risk 6.69 115 326 540 20.2 22.1 * 56.8 Foreign 14 Moderate risk 7.46 412 140 416 71.8 18.8 9.1 59.7 Prime 15 Other . 7.39 95 132 428 444 95 23 3 96.6 16 2 to 30 days 7.17 2,189 271 653 55.6 24.5 21.8 87.2 Foreign 6.63 355 527 262 48.0 22.1 11.6 70.4 Other 18 Low risk 6.68 291 329 236 47.3 24.2 .6 96.6 Foreign 19 Moderate risk 7.09 762 197 282 50 7 34 5 33 5 93.1 20 Other 8.65 414 224 2282 94.2 24.0 41.6 76.2 Foreign 21 M to 365 days . 7.73 1.882 78 874 59 2 11 1 136 70 1 Other 6.40 339 128 320 20.4 2.6 9.7 77.0 Other 23 Low risk 7.39 371 83 587 44.5 17.2 1.2 72.7 Other 8.07 462 55 508 72.5 10.5 9.3 64.1 Foreign 25 Other 8.70 401 156 2405 89.4 5.5 37.2 62.2 Foreign Months 26 More than 365 days 8.49 1,073 94 86 94.6 5.2 8.0 36.1 Other 27 Minimal risk 8.44 62 161 57 94.0 5.4 1.7 7.8 Other 8.15 154 127 55 88 8 6 1 .0 69,6 Other 29 Moderate risk 8.53 421 101 94 94.5 5.0 15.6 33.8 Prime 30 Other 8.37 233 176 77 96.8 1.1 5.1 28.3 Domestic Weighted- Weighted- average average risk maturity/ rating5 repricing interval5 Days SIZE OF LOAN (thousands of dollars) 31 1 99 9.40 1,505 3.0 250 86.3 23.7 3.6 67.0 Prime 12 100-999 ... 8.55 3,554 3.0 409 84.7 18.5 9.4 70.0 Prime 33 1 000-9,999 .... 7.38 4,439 2.8 162 62.0 17.7 16.9 84.4 Other 34 10,000 or more 6.26 1,506 2.4 27 33.9 23.9 17.6 81.3 Foreign Average size (thousands of dollars) BASE RATE OF LOAN4 35 Prime7 8.73 4,677 3.0 207 79.0 28.8 11.6 79.5 90 36 Fed funds 6.48 347 3.0 179 53.6 8.0 10.3 59.5 780 7.98 1,106 3.2 313 91.8 4.0 4.3 53.7 348 38 Foreign 6.55 2.063 3.0 76 44.0 22.3 34.5 90.4 1,340 39 Other . .... 7.59 2.811 2.4 390 62.8 9.9 2.4 74.2 94 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • February 1999 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 2-6, 1998 E. Commercial and industrial loans made by U.S. branches and agencies of foreign banks' Weighted- Amount of loans (percent) W ( l e p a o f e e v a f i r e e n g c c r h e a t r i n t g a v e t t e e d ) e - A o ( f m m l d o o il o a u l l i n n l o s a t n r o s s) f ( A th v o d e u r o s a s l i g a l z a n e e r d s l s ) o a o n f m av at e u r r a i g ty e S c e o c l u la re te d r a b l y p S re u p b a je y c m t e t n o t c M om ad m e i u tm nd e e n r t ba c s o e M r m a p o t m e r s i 4 o t c n ing Days penalty LOAN RISK5 1 All commercial and industrial loans 6.28 53,948 5,281 187 42.3 8.6 64.9 70.6 Fed funds 2 Minimal risk 5.74 3,814 24,406 30 83.8 .6 84,2 99.0 Foreign 3 Low risk 5.92 14,652 7,108 26.9 2.0 85.6 67.1 Foreign 4 Moderate risk 6.23 14,124 3,737 217 33.2 16.9 50.2 82.5 Fed funds 5 Other 6.68 18,320 5,078 303 49.7 9.6 55.5 64.0 Fed funds fly maturity/repricing intervalb 6 Zero interval 7.48 1,240 721 33.8 24.3 44.5 69.5 Prime 7 Minimal risk * # 8 Low risk 6.20 492 2,358 100 6.1 3.4 90.9 39.9 Fed funds 9 Moderate risk 7.51 402 448 609 48.1 49.1 .3 99.7 Prime 10 Other 9.33 323 533 709 53.9 20.1 31.9 75.0 Prime 11 Daily 6.00 29,485 11,042 4.1 67.0 57.6 Fed funds 12 Minimal risk * * * * 13 Low risk 5.90 9,294 11,792 2 26.1 .3 90.9 56.2 Fed funds 14 Moderate risk 5.93 6,490 7,923 39 39.2 12.2 28.4 72.9 Fed funds 15 Other 6.18 9,533 11,599 19 61.8 4.0 60.9 43.2 Fed funds 16 2 to 30 days 6.35 13,528 4,662 319 38.8 16.0 64.6 86.5 Foreign 17 Minimal risk 5.69 1,279 18,607 46 55.7 57.6 00.0 Foreign 18 Low risk 6.01 2,224 3,875 107 30.8 2.1 64.8 84.4 Foreign 19 Moderate risk 6.40 4,623 4,170 273 27.9 27.3 75.5 90.1 Foreign 20 Other 6.64 4,746 4,647 581 42.5 18.0 54.2 87.6 Foreign 21 31 to 365 days 6.81 9,299 3,699 470 30.4 8.4 63.1 87.4 Foreign 22 Minimal risk * 23 Low risk 5.81 2,550 6,548 323 31.3 82.8 95.4 Foreign 24 Moderate risk 6.48 2,604 2,765 508 25.1 4.8 67.3 90.1 Foreign 25 Other 7.71 3,575 3.433 595 25.4 12.7 46.2 85.9 Foreign 26 More than 365 days . 8.35 236 1,043 57 45.8 7.2 53.8 100.0 Fed funds 27 Minimal risk I* * * 28 Low risk 6.72 92 54 100.0 100.0 Foreign 29 Moderate risk * 910 * 30 Other 9.42 140 59 76.9 9.0 100.0 Fed funds 1,233 Weighted- Weighted- average average risk maturity/ rating5 repricing interval' Days SIZE OP LOAN (thousands of dollars) 31 1-99 7.99 75 3.1 85 46.7 29.0 24.4 92.9 Prime 32 100-999 7.35 1,662 3.2 54 51.0 23.2 44.3 93.3 Foreign 33 1,000-9,999 6.58 11,993 3.2 53 33.8 13.1 57.6 84.6 Foreign 34 10,000 or more 6.14 40,219 3.0 17 44.5 6.6 68.0 65.4 Fed funds Average size (thousands of dollars) BASE RATE OF LOAN4 35 Prime7 9.28 1,403 3.6 45 62.3 52.4 12.6 99.3 509 36 Fed funds 6.14 22,674 3.5 15 40.3 2.9 53.3 37.2 10,299 37 Other domestic 6.07 6,794 2.5 31.3 24.7 97.2 78.3 10,126 38 Foreign 6,29 22,535 2.8 40 45.6 6.5 71.2 99.5 5,055 39 Other 6.32 543 2.3 87 76.0 15.4 24.0 92.9 4,195 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A71 NOTE. The Survey of Terms of Business Lending collects data on gross loan extensions 5. A complete description of these risk categories is available from the Banking and made during the first full business week in the mid-month of each quarter. The authorized Money Market Statistics Section, Mail Stop 81, Board of Governors of the Federal Reserve panel size for the survey is 348 domestically chartered commercial banks and fifty U.S. System, Washington, DC 20551. The category "Moderate risk" includes the average loan, branches and agencies of foreign banks. The sample data are used to estimate the terms of under average economic conditions, at the typical lender. The category "Other" includes loans loans extended during that week at all domestic commercial banks and all U.S. branches and rated "acceptable" as well as special mention or classified loans. The weighted-average risk agencies of foreign banks. Note that the terms on loans extended during the survey week may ratings published for loans in rows 31-39 are calculated by assigning a value of "1" to differ from those extended during other weeks of the quarter. The estimates reported here are minimal risk loans; "2" to low risk loans; "3" to moderate risk loans, "4" to acceptable risk not intended to measure the average terms on all business loans in bank portfolios. loans; and "5" to special mention and classified loans. These values are weighted by loan 1. As of December 31, 1996, assets of most of the large banks were at least $7.0 billion. amount and exclude loans with no risk rating. Some of the loans in lines 1,6, 11, 16, 21, 26, Median total assets for all insured banks were roughly $62 million. Assets at all U.S. branches and 31-39 are not rated for risk. and agencies averaged 1.3 billion. 6. The maturity/repricing interval measures the period from the date the loan is made until it 2. Effective (compounded) annual interest rates are calculated from the stated rate and first may reprice or it matures. For floating-rate loans that are subject to rtpricing at any other terms of the loans and weighted by loan amount. The standard error of the loan rate for time—such as many prime-based loans—the maturity/repricing interval is zero. For floating-rate all commercial and industrial loans in the current survey (line 1, column 1) is 0.09 percentage loans that have a scheduled repricing interval, the maturity/repricing interval measures the number points. The chances are about two out of three that the average rate shown would differ by less of days between the date the loan is made and the date on which it is next scheduled to reprice. For than this amount from the average rate that would be found by a complete survey of the loans having rates that remain fixed until the loan matures (fixed-rate loans), the maturity/repricing universe of all banks. interval measures the number of days between the date the loan is made and the date on which it 3. Average maturities are weighted by loan amount and exclude loans with no stated matures. Loans that reprice daily mature or reprice on the business day after they are made. Owing maturities. to weekends and holidays, such loans may have maturity/repricing intervals in excess of one day; 4. The most common base pricing rate is that used to price the largest dollar volume of such loans are not included in the "2 to 30 day" category. loans. Base pricing rates include the prime rate (sometimes referred to as a bank's "base" or 7. For the current survey, the average reported prime rate, weighted by the amount of "reference" rate); the federal funds rate; domestic money market rates other than the prime loans priced relative to a prime base rate, was 8.04 percent for all banks; 8.02 percent for rate and the federal funds rate; foreign money market rates; and other base rates not included large domestic banks, 8.09 percent for small domestic banks; and 8.01 percent for U.S. in the foregoing classifications. branches and agencies of foreign banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • February 1999 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, Septemter 30, 19981 Millions of dollars except as noted All states2 New York California in I c B lu F d s i 3 ng o IB nl F y s 5 inc T I l B o u F t d a s i l ng I o B n F ly s inc T I l B o u t F d a i s l ng I o B n F ly s inc T I l B o u F t d a s i l ng I o B n F ly s 1 Total assets4 . 954,578 206,049 764,465 173,495 43,384 7,899 59,192 5,272 2 Claims on nonrelated parties 779,497 99,478 617,795 85,702 40,607 3,395 59,099 2,201 3 Cash and balances due from depository institutions 81,437 45,518 76,650 43,931 976 416 1,157 554 4 Cash items in process of collection and unposted debits 3,545 0 3,412 0 12 0 34 0 5 Currency and coin (U.S. and foreign) 18 n.a. 12 n.a. 1 0 n.a. 6 Balances with depository institutions in United States 46,283 17,073 42,874 16,379 773 752 193 7 U.S. branches and agencies of other foreign banks (including IBFs) 40,959 16,498 38.199 15,809 500 285 582 193 8 Other depository institutions in United States (including IBFs)... 5,324 574 4,675 570 273 0 169 0 9 Balances with banks in foreign countries and with foreign central banks 30,941 28,446 29,773 27,552 168 131 365 361 10 Foreign branches of U.S. banks 1,020 946 979 908 0 0 26 26 11 Banks in home country and home-country centra] banks ........ 5.291 4,722 5,251 4,682 11 11 25 25 12 All other banks in foreign countries and foreign central banks ... 24,630 22,777 23,543 21,962 157 121 314 309 13 Balances with Federal Reserve Banks 651 n.a. 578 22 6 n.a. 14 Total securities and loans 480,199 45,598 360,217 34,776 37,611 2,756 41^33 862 15 Total securities, book value 114,886 5,700 106,153 4,954 1,320 557 6,630 145 16 U.S. Treasury 22,309 n.a. 20,994 n.a. 86 n.a. 1,000 n.a. 17 Obligations of U.S. government agencies and corporations 44,496 n.a. 43,227 n.a. 125 926 18 Other bonds, notes, debentures, and corporate stock (including state and local securities) 48,080 5,700 41,932 4,954 1,109 557 4,704 145 19 Securities of foreign governmental units 14,019 3,180 13,460 2,983 344 118 144 65 20 All Other 34.061 2,520 28,472 1,971 765 438 4,561 80 21 Federal funds sold and securities purchased under agreements to resell 94,150 6,404 83,424 5,268 819 159 7,769 750 22 U.S. branches and agencies of other foreign banks 17,177 2,529 14,666 2,122 669 148 1,550 200 23 Commercial banks in United States 12,018 42 11,155 40 111 2 325 0 24 Other 64,955 3,833 57,604 3,106 40 9 5,894 550 25 Total loans, gross 365,551 39.922 254,226 29,843 36,325 2.200 34,911 718 26 LESS: Unearned income on loans... 238 25 162 20 34 1 8 1 27 EQUALS: Loans, net 365,313 39,898 254,064 29,823 36,291 2,199 34,903 717 Total loans, gross, by category 28 Real estate loans 21,852 195 14,316 123 4,748 65 674 0 29 Loans to depository institutions 32,931 20,664 20,891 13,544 1,932 1,455 979 551 30 Commercial banks in United States (including IBFs) 8,746 3,946 6,631 2,735 1,301 862 198 98 U.S. branches and agencies of other foreign banks 6,414 3,737 4,474 2,539 1,160 862 186 88 Other commercial banks in United States 2,332 210 2,157 196 140 0 12 10 Other depository institutions in United States (including IBFs). 45 5 23 0 0 0 0 0 Banks in foreign countries 24,140 16,713 14,237 10,809 632 593 782 454 Foreign branches of U.S. banks 1,353 560 1,273 493 0 0 0 0 Other banks in foreign countries 22,787 16,152 12,964 10,316 631 592 782 454 37 Loans to other financial institutions 56,981 1,027 46,507 903 1,631 0 5,346 13 38 Commercial and industrial loans 228,025 15,654 150,179 13,074 27,537 643 26,257 151 39 U.S. addressees (domicile) 188,253 105 121,461 105 25,224 0 23,763 0 40 Non-U.S. addressees (domicile) 39,772 15,549 28,718 12,969 2,314 643 2,494 151 41 Acceptances of other banks 286 39 153 39 19 0 102 0 42 U.S. banks 26 0 12 0 3 0 0 0 43 Foreign banks 261 39 141 39 15 0 102 0 44 Loans to foreign governments and official institutions (including foreign central banks) 3,463 2,225 2.857 2,076 237 38 78 3 45 Loans for purchasing or carrying securities (secured and unsecured) . 12,962 31 12,711 21 45 0 40 0 46 All other loans 8,385 86 6,278 62 175 0 1,103 0 47 Lease financing receivables (net of unearned income) 667 0 332 0 0 0 333 0 48 U.S. addressees (domicile) 667 0 332 0 0 0 333 0 49 Non-U.S. addressees (domicile) 0 0 0 0 0 0 0 0 50 Trading assets 85,531 227 66,281 227 119 0 6,569 0 51 All other assets 38,179 1,731 31,223 1,500 1,082 64 2,071 35 52 Customers' liabilities on acceptances outstanding 3,213 n.a. 2,317 n.a. 543 n.a. 175 n.a. 53 U.S. addressees (domicile) 1,902 n.a. 1.318 n.a. 496 n.a. 77 n.a. 54 Non-U.S. addressees (domicile) 1,311 n.a. 1,000 n.a. 47 n.a. 98 n.a. 55 Other assets including other claims on nonrelated parties 34,966 1,731 28,906 1,500 539 64 1,895 35 56 Net due from related depository institutions 175,081 106,572 146,670 87,793 2,776 4,504 93 3,071 57 Net due from head office and other related depository institutions5. 93 n.a. 58 Net due from establishing entity, head office, and other related 175,081 n.a. 146,670 2,776 depository institutions 87.793 4.504 n.a. 3,071 n.a. 106,572 n.a. n.a. 59 Total liabilities4 173,495 7,899 59,192 5,272 954,578 206,049 764,465 43,384 60 Liabilities to nonrelated parties 155,809 7,529 36,974 4.507 771,660 183,995 650,711 18,096 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A73 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 19981— Continued Millions of dollars except as noted Total Total Total Total ex I c B lu F d s i 3 ng o IB nl F y s 3 exc IB lu F d s ing I o B n F ly s exc IB lu F d s ing I o B n F ly s exc IB lu F d s ing I o B n F ly s 61 Total deposits and credit balances 303,645 133,542 260,635 117,888 5,701 1,463 12.973 1,902 62 Individuals, partnerships, and corporations 242,024 13,138 204,022 7,810 5,453 239 11,363 88 63 U.S. addressees (domicile) 225,591 461 194.440 434 3,748 0 10.805 28 64 Non-U.S. addressees (domicile) 16,434 12,676 9,582 7,376 1,705 239 559 60 65 Commercial banks in United States (including IBFs) 32,630 17,342 29,377 16,570 203 233 1.233 184 66 U.S. branches and agencies of other foreign banks 19,486 15.554 17,082 15,010 0 203 663 184 67 Other commercial banks in United States 13,143 1.788 12,295 1,560 203 30 570 (I 68 Banks in foreign countries 7,305 75,556 6,843 70,055 15 2S0 82 1,329 69 Foreign branches of U.S. banks 1,534 2,413 1,529 2,388 0 25 0 0 70 Other banks in foreign countries 5,771 73,142 5.314 67,666 15 255 82 1,329 71 Foreign governments and official institutions (including foreign central banks) 8,065 27,387 7,206 23,349 5 696 253 300 72 All other deposits and credit balances 13,460 120 13,048 103 18 15 40 73 Certified and official checks 161 138 7 74 Transaction accounts and credit balances (excluding IBFs) . . . 9,945 7,525 385 382 75 Individuals, partnerships, and corporations 7,707 5,719 357 376 76 US. addressees (domicile) 5,424 4,496 172 374 77 Non-U.S. addressees (domicile) 2,283 1,222 185 78 Commercial banks in United States (including IBFs) 508 504 0 0 79 U.S. branches and agencies of other foreign banks 469 467 0 0 80 Other commercial banks in United States 39 37 0 0 81 Banks in foreign countries 888 572 15 82 Foreign branches of U.S. banks 10 5 0 83 Other banks in foreign countries 879 567 2 84 Foreign governments and official institutions (including foreign central banks) 517 447 3 85 All other deposits and credit balances 164 146 0 86 Certified and official checks 161 138 87 Demand deposits (included in transaction accounts and credit balances) 9,392 7,267 274 380 88 Individuals, partnerships, and corporations 7,268 5,560 250 173 89 U.S addressees (domicile) 5,313 4,418 155 371 90 Non-U.S. addressees (domicile) 1,955 1,143 95 2 9! Commercial banks in United States (including IBFs) 456 452 0 0 92 U.S. branches and agencies of other foreign banks 419 417 0 0 93 Other commercial banks in United States 37 35 0 0 94 Banks in foreign countries 869 555 15 95 Foreign branches of U.S. banks 7 3 0 96 Other banks in foreign countries 862 553 15 97 Foreign governments and official institutions (including foreign central banks) 504 442 98 All other deposits and credit balances 134 120 1 99 Certified and official checks 161 138 7 100 Nontransaction accounts (including MMDAs. excluding IBFs) 293,700 253,110 5,316 12,591 101 Individuals, partnerships, and corporations 234,317 198.304 5,097 10.988 102 U.S. addressees (domicile) 220,167 189,944 3,576 10.431 103 Non-U.S. addressees (domicile) 14,150 8,360 1.520 556 104 Commercial banks in United States (including IBFs) 32,121 28,873 202 1,233 105 U.S. branches and agencies of other foreign banks 19,017 16,615 0 663 106 Other commercial banks in United States 13,104 12,258 202 570 107 Banks in foreign countries 6,416 6,271 0 80 108 Foreign branches of U.S. banks 1,524 1,524 0 0 109 Olher banks in foreign countries 4,892 4,747 0 80 110 Foreign governments and official institutions (including foreign central banks) 7,548 6,759 4 250 111 All other deposits and credit balances 13,296 12,903 13 40 112 IBF deposit liabilities 133,542 117,888 1,463 1.902 113 Individuals, partnerships, and corporations 13.138 7,810 239 88 114 U.S. addressees (domicile) 461 434 0 28 115 Non-U.S. addressees (domicile) 12,676 7,376 239 60 116 Commercial banks in United Slates (including IBFs) 17,342 16,570 213 184 117 U.S. branches and agencies of other foreign banks 15,554 15,010 203 184 118 Other commercial banks in United States 1,788 1,560 30 1) 119 Banks in foreign countries 75,556 70,055 280 1.329 120 Foreign branches of U.S. banks 2,413 2,388 25 0 121 Other banks in foreign countries 73,142 67,666 255 1,329 122 Foreign governments and official institutions (including foreign central banks) 27,387 23,349 696 300 123 All other deposits and credit balances 120 103 15 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • February 1999 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 19981— Continued Millions of dollars except as noted All states2 New York California Illinois Item in I c T B l o u F t d a s i l 3 ng o IB nl F y s 3 inc T I l B o u t F d a i s l ng I o B n F ly s inc T I l B o u t F d a s i l ng I o B n F ly s inc T I l B o u t F d a i s l ng I o B n F ly s 124 Federal funds purchased and securities sold under agreements to repurchase 163,379 15,690 142,899 11,740 2,468 521 8,691 1,461 1 25 U.S. branches and agencies of other foreign banks 19.712 3,793 13.25.1 2,565 1.008 233 1,957 437 1 26 Other commercial banks in United States 19,333 186 16,235 74 999 101 391 10 127 Other 124,334 11,712 113,411 9,101 462 187 6.343 1,014 128 Other borrowed monej 82,623 32,888 61.094 24,475 7,511 5.484 6.333 1.115 124 Owed to nonrelated commercial banks in United States (including IBFs) 13,273 5.871 10,513 4.588 1,363 644 575 173 4.371 569 3.S96 399 195 122 77 20 131 Owed to U.S. branches and agencies of nonreiaied foreign banks 8,903 5.302 6,617 4,188 1.167 522 498 153 32 Owed to nonrelated banks in foreign countries 23.736 20.859 16,216 14,266 4.810 4.695 831 826 33 Owed to foreign branches of nonrelated U.S. banks 904 832 648 587 190 190 5 5 134 Owed to foreign offices of nonreiaied foreign banks 22,833 20,027 15,568 13,679 4,620 4,505 826 821 135 Owed to others 45.614 6, 58 34,365 5,622 1,339 146 4.927 116 136 All other liabilities 88,469 1,874 68,195 1.706 953 61 7,076 29 137 Branch or agency liability on accepiances executed and outstanding 3,390 n.a. 2,486 n.a. 544 n.a. 153 n.a. 38 Trading liabilities 58,932 78 43,470 78 113 0 5,636 0 39 Other liabilities to nonrelated parties 26,148 1.796 22.239 1,628 296 61 1,287 29 140 Net due to related depository institutions" 182,919 22,054 113,754 17,686 25,288 370 22.217 766 141 Net due to head office and other related depository institutions .... 182,919 n.a. 113,754 n.a. 25,288 n.a. 22.217 n.a. 142 Net due to establishing entity, head office, and other related depository institutions" n.a. 22.054 n.a. 17.686 n.a. 370 n.a. 766 MKMO 143 Non-iiiterest-bearing balances with commercial banks in United States 1,604 0 1,419 0 47 0 42 0 144 Holding of own acceptances included in commercial and t t t f industrial loans 3.620 2,172 1.053 298 145 Commercial and industrial loans with remaining maturily of one year or less (excluding those in nonaccmal status) 127.432 78,443 15,088 18,233 146 Predetermined interest rates 80.767 n.a. 49,284 n.a. 7,435 n.a. 15,751 n.a. 147 Floating interest rales 46,666 29.159 7,653 2,482 148 Commercial and industrial loans with remaining maturity of more than one year (excluding those in nonaccmal status) 99,169 70.478 12,412 7,939 149 Predetermined interest rates 24,554 19,261 2,057 1,892 150 Floating interest rates 74,616 51,216 10,355 6,047 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A75 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 1998'—Continued Millions of dollars except as noted All states2 New York California Illinois Item ex I T c B l o u F t d a s i l ' ng o IB nl F y s ' ex T c IB l o u t F d a s i l ng I o B n F ly s exc T IB l o u F t d a s i l ng I o B n F ly s exc T IB l o u F t d a s i l ng I o B n F ly s 151 Components of tola! nontransaction accounts, included in total deposits and credit balances (excluding IBFs) 294,637 n.a. 254,912 n.a. 5,169 n.a. 12.562 n.a. 152 Time deposits of $100,000 or more 287,251 n.a. 248,789 n.a. 5,073 n.a. 11,949 n.a. 153 Time CDs in denominations of $100,000 or more with remaining maturity of more than 12 months 7,386 n.a. 6,123 n.a. 96 n.a 613 n.a. All states- Neu York California Illinois inc T l o u t d a i l ng IBFs inc T l o u t d a i l ng IBFs inc T l o u t d a i l ng IBFs inc T l o u t d a i l ng IBFs IBFs only IBFs only IBFs only IBFs only 154 Immediately available funds with a maturity greater than one day included in other borrowed money 33.658 n.a. 26.577 n.a. 4,539 n.a. 1,841 n.a. 155 Number of reports filed6 439 0 220 0 92 0 36 0 1. Dala are aggregates of categories reported on the quarterly form FFIEC 002, ''Report of either because the item is not an eligible IBF asset or liability or because that level of detail is Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks." The form was first not reported for IBFs. From December 1981 through September 1985. IBF data were used for reporting data as of June 30, 1980, and was revised as of December 31,1985. From included in all applicable items reported. November 1972 through May 1980, U.S. branches and agencies of foreign banks had filed a 4. Toial assets and total liabilities include net balances, if any, due from or owed to related monthly FR 886a report. Aggregate data from thai report were available through the Federal banking institutions in the United States and in foreign countries (see note 5). On the former Reserve monthly statistical release G.I 1, last issued on July 10, 1980. Data in this table and in monthly branch and agency report, available through the G.11 monthly slatislical release. the G.I I tables are not strictly comparable because of differences in reporting panels and in gross balances were included in total assets and total liabilities. Therefore, total asset and total definitions of balance sheet items. liability figures in this table are not comparable to those in the G.l 1 tables. 2. Includes the District of Columbia 5. Related depository institutions includes the foreign head office and other U.S. and 3. Effective December 1981, the Federal Reserve Board amended Regulations D and Q to foreign branches and agencies of a bank, a bank's parent holding company, and majoritypermit banking offices located in the United States to operate international banking facilities owned banking subsidiaries of the bank and of its parent holding company (including (IBFs). Since December 31. 1985. data for IBFs have been reported in a separate column. subsidiaries owned both directly and indirectly). The^e data are either included in or excluded from the total columns as indicated in the 6. In some cases two or more offices of a foreign bank within the same metropolitan area headings The notation "n.a." indicates that no IBF data have been reported for that item. file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Federal Reserve Bulletin • February 1999 Index to Statistical Tables References are to pages A3—A75 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) FARM mortgage loans, 35 Assets and liabilities (See also Foreigners) Federal agency obligations, 5, 9, 10, 11, 28, 29 Commercial banks, 15-21, 64. 65 Federal credit agencies, 30 Domestic finance companies, 32, 33 Federal finance Federal Reserve Banks, 10 Debt subject to statutory limitation, and types and ownership Foreign banks, U.S. branches and agencies, 72-75 of gross debt, 27 Foreign-related institutions, 20 Receipts and outlays, 25, 26 Automobiles Treasury financing of surplus, or deficit, 25 Consumer credit, 36 Treasury operating balance, 25 Production, 44, 45 Federal Financing Bank, 30 Federal funds, 23, 25 BANKERS acceptances, 5, 10, 22, 23 Federal Home Loan Banks, 30 Bankers balances, 15-21, 72-75. (See also Foreigners) Federal Home Loan Mortgage Corporation, 30, 34, 35 Bonds (See also U.S. government securities) Federal Housing Administration, 30, 34, 35 New issues, 31 Federal Land Banks, 35 Rates, 23 Federal National Mortgage Association, 30, 34, 35 Business activity, nonfinancial, 42 Federal Reserve Banks Business loans (See Commercial and industrial loans) Condition statement, 10 Discount rates (See Interest rates) U.S. government securities held, 5, 10, 11, 27 CAPACITY utilization, 43 Federal Reserve credit, 5, 6, 10, 12 Capital accounts Federal Reserve notes, 10 Commercial banks, 15-21, 64, 65 Federally sponsored credit agencies, 30 Federal Reserve Banks, 10 Finance companies Central banks, discount rates, 61 Assets and liabilities, 32 Certificates of deposit, 23 Business credit, 33 Commercial and industrial loans Loans, 36 Commercial banks, 15-21, 64, 65, 66-71 Paper. 22, 23 Weekly reporting banks, 17, 18 Float, 5 Commercial banks Flow of funds, 37-41 Assets and liabilities, 15-21, 64, 65 Foreign banks, U.S. branches and agencies, 70, 72-75 Commercial and industrial loans, 15-21, 64, 65, 66-71 Foreign currency operations, 10 Consumer loans held, by type and terms, 36, 66-71 Foreign deposits in U.S. banks, 5 Number, by classes, 64, 65 Foreign exchange rates, 62 Real estate mortgages held, by holder and property, 35 Foreign-related institutions, 20 Terms of lending, 66-71 Foreign trade, 51 Time and savings deposits, 4 Foreigners Commercial paper, 22, 23, 32 Claims on, 52, 55, 56, 57, 59 Condition statements (See Assets and liabilities) Liabilities to, 51, 52, 53, 58, 60, 61 Construction, 42, 46 Consumer credit. 36 Consumer prices, 42 GOLD Consumption expenditures, 48, 49 Certificate account, 10 Corporations Stock, 5, 51 Profits and their distribution, 32 Government National Mortgage Association, 30, 34, 35 Security issues, 31,61 Gross domestic product, 48, 49 Cost of living (See Consumer prices) Credit unions, 36 HOUSING, new and existing units, 46 Currency in circulation, 5,13 Customer credit, stock market, 24 INCOME, personal and national, 42, 48, 49 Industrial production, 42, 44 DEBT (See specific types of debt or securities) Insurance companies, 27, 35 Demand deposits, 15-21 Interest rates Depository institutions Bonds, 23 Reserve requirements. 8 Commercial banks, 66-71 Reserves and related items, 4, 5, 6. 12, 64, 65 Consumer credit, 36 Deposits (See also specific types) Federal Reserve Banks, 7 Commercial banks, 4, 15-21, 64, 65 Foreign banks, U.S. branches and agencies, 70 Federal Reserve Banks, 5, 10 Foreign central banks and foreign countries, 61 Discount rates at Reserve Banks and at foreign central banks and Money and capital markets, 23 foreign countries (See Interest rates) Mortgages, 34 Discounts and advances by Reserve Banks (See Loans) Prime rate, 22 Dividends, corporate, 32 International capital transactions of United States, 50-61 International organizations, 52. 53, 55, 58, 59 EMPLOYMENT, 42 Inventories, 48 Eurodollars, 23, 61 Investment companies, issues and assets, 32 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 Investments (See also specific types) SAVING Commercial banks, 4, 15-21, 64, 65 Flow of funds, 37-41 Federal Reserve Banks, 10, 11 National income accounts, 48 Financial institutions, 35 Savings institutions, 35, 36, 37-41 Savings deposits (See Time and savings deposits) LABOR force, 42 Securities (See also specific types) Life insurance companies (See Insurance companies) Federal and federally sponsored credit agencies, 30 Loans (See also specific types) Foreign transactions, 60 Commercial banks, 15-21, 64,65, 66-71 New issues, 31 Federal Reserve Banks, 5, 6, 7, 10, 11 Prices, 24 Financial institutions, 35 Special drawing rights, 5, 10, 50, 51 Foreign banks, U.S. branches and agencies, 70 State and local governments Insured or guaranteed by United States, 34, 35 Holdings of U.S. government securities, 27 New security issues, 31 MANUFACTURING Rates on securities, 23 Capacity utilization, 43 Stock market, selected statistics, 24 Production, 43, 45 Stocks (See also Securities) Margin requirements, 24 New issues, 31 Member banks, reserve requirements, 8 (See also Prices, 24 Depository institutions) Student Loan Marketing Association, 30 Mining production, 45 Mobile homes shipped, 46 Monetary and credit aggregates, 4, 12 TAX receipts, federal, 26 Money and capital market rates, 23 Thrift institutions, 4. (See also Credit unions and Savings Money stock measures and components, 4, 13 institutions) Mortgages (See Real estate loans) Time and savings deposits, 4, 13, 15-21, 64, 65 Mutual funds, 13, 32 Trade, foreign, 51 Mutual savings banks (See Thrift institutions) Treasury cash, Treasury currency, 5 Treasury deposits, 5, 10, 25 NATIONAL defense outlays, 26 Treasury operating balance, 25 National income, 48 UNEMPLOYMENT, 42 OPEN market transactions, 9 U.S. government balances Commercial bank holdings, 15-21 PERSONAL income, 49 Treasury deposits at Reserve Banks, 5, 10, 25 Prices U.S. government securities Consumer and producer, 42. 47 Bank holdings, 15-21,27 Stock market, 24 Dealer transactions, positions, and financing, 29 Prime rate, 22 Federal Reserve Bank holdings, 5, 10, 11, 27 Producer prices, 42, 47 Foreign and international holdings and Production, 42, 44 transactions, 10, 27, 61 Profits, corporate, 32 Open market transactions, 9 Outstanding, by type and holder, 27, 28 REAL estate loans Rates, 23 Banks, 15-21,35 U.S. international transactions, 50-62 Terms, yields, and activity, 34 Utilities, production. 45 Type of holder and property mortgaged, 35 Reserve requirements, 8 Reserves VETERANS Administration, 34, 35 Commercial banks, 15-21 Depository institutions, 4, 5, 6, 12 WEEKLY reporting banks, 17, 18 Federal Reserve Banks, 10 Wholesale (producer) prices, 42, 47 U.S. reserve assets. 51 Residential mortgage loans, 34, 35 Retail credit and retail sales, 36, 42 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Federal Reserve Bulletin • February 1999 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 KAREN H. JOHNSON, Director DONALD J. WINN, Assistant to the Board LEWIS S. ALEXANDER, Deputy Director THEODORE E. ALLISON, Assistant to the Board for Federal PETER HOOPER III, Deputy Director Reserve System Affairs DALE W. HENDERSON, Associate Director WINTHROP P. HAMBLEY, Deputy Congressional Liaison DAVID H. HOWARD, Senior Adviser BOB STAHLY MOORE, Special Assistant to the Board DONALD B. ADAMS, Assistant Director DIANE E. WERNEKE, Special Assistant to the Board THOMAS A. CONNORS, Assistant Director DIVISION OF RESEARCH AND STATISTICS LEGAL DIVISION MICHAEL J. PRELL, Director J. VIRGIL MATTINGLY, JR., General Counsel EDWARD C. ETTIN, Deputy Director SCOTT G. ALVAREZ, Associate General Counsel DAVID J. STOCKTON, Deputy Director RICHARD M. ASHTON, Associate General Counsel WILLIAM R. JONES, Associate Director OLIVER IRELAND, Associate General Counsel MYRON L. KWAST, Associate Director KATHLEEN M. O'DAY, Associate General Counsel PATRICK M. PARKINSON, Associate Director KATHERINE H. WHEATLEY, Assistant General Counsel THOMAS D. SIMPSON, Associate Director LAWRENCE SLIFMAN, Associate Director MARTHA S. SCANLON, Deputy Associate Director OFFICE OF THE SECRETARY STEPHEN D. OLINER, Assistant Director JENNIFER J. JOHNSON, Secretary STEPHEN A. RHOADES, Assistant Director ROBERT DEV. FRIERSON, Associate Secretary JANICE SHACK-MARQUEZ, Assistant Director BARBARA R. LOWREY, Associate Secretary and Ombudsman CHARLES S. STRUCKMEYER, Assistant Director ALICE PATRICIA WHITE, Assistant Director JOYCE K. ZICKLER, Assistant Director DIVISION OF BANKING GLENN B. CANNER, Senior Adviser SUPERVISION AND REGULATION DAVID S. JONES, Senior Adviser RICHARD SPILLENKOTHEN, Director JOHN J. MINGO, Senior Adviser STEPHEN C. SCHEMERING, Deputy Director HERBERT A. BIERN, Associate Director DIVISION OF MONETARY AFFAIRS ROGER T. COLE, Associate Director WILLIAM A. RYBACK, Associate Director DONALD L. KOHN, Director GERALD A. EDWARDS, JR., Deputy Associate Director DAVID E. LINDSEY, Deputy Director STEPHEN M. HOFFMAN, JR., Deputy Associate Director BRIAN F. MADIGAN, Associate Director JAMES V. HOUPT, Deputy Associate Director RICHARD D. PORTER, Deputy Associate Director JACK P. JENNINGS, Deputy Associate Director VINCENT R. REINHART, Deputy Associate Director MICHAEL G. MARTINSON, Deputy Associate Director WILLIAM C. WHITESELL, Assistant Director SIDNEY M. SUSSAN, Deputy Associate Director NORMAND R.V. BERNARD, Special Assistant to the Board MOLLY S. WASSOM, Deputy Associate Director HOWARD A. AMER, Assistant Director DIVISION OF CONSUMER NORAH M. BARGER, Assistant Director AND COMMUNITY AFFAIRS BETSY CROSS, Assistant Director DOLORES S. SMITH, Director RICHARD A. SMALL, Assistant Director GLENN E. LONEY, Deputy Director WILLIAM SCHNEIDER, Project Director, SANDRA F. BRAUNSTEIN, Assistant Director National Information Center 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

A79 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 JOHN R. WEIS, Adviser LOUISE L. ROSEMAN, Associate Director PAUL W. BETTGE, Assistant Director MANAGEMENT DIVISION KENNETH D. BUCKLEY, Assistant Director JACK DENNIS, JR., Assistant Director S. DAVID FROST, Director JOSEPH H. HAYES, JR., Assistant Director STEPHEN J. CLARK, Associate Director, Finance Function JEFFREY C. MARQUARDT, Assistant Director DARRELL R. PAULEY, Associate Director, Human Resources MARSHA REIDHILL, Assistant Director Function JEFF STEHM, Assistant Director SHEILA CLARK, EEO Programs 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 RICHARD C. STEVENS, Deputy Director MARIANNE M. EMERSON, Assistant Director MAUREEN HANNAN, 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 Federal Reserve B ulletin • February 1999 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman EDWARD G. BOEHNE EDWARD W. KELLEY, JR. MICHAEL H. MOSKOW ROGER W. FERGUSON, JR. LAURENCE H. MEYER GARY H. STERN EDWARD M. GRAMLICH ROBERT D. MCTEER, JR. ALICE M. RIVLIN ALTERNATE MEMBERS J. ALFRED BROADDUS, JR. JERRY L. JORDAN ROBERT T. PARRY JACK GUYNN STAFF DONALD L. KOHN, Secretary and Economist LYNN E. BROWNE, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary STEPHEN G. CECCHETTI, Associate Economist LYNN S. FOX, Assistant Secretary CRAIG S. HAKKIO, Associate Economist GARY P. GILLUM, Assistant Secretary DAVID E. LINDSEY, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel MARK S. SNIDERMAN, Associate Economist THOMAS C. BAXTER, JR., Deputy General Counsel THOMAS D. SIMPSON, Associate Economist MICHAEL J. PRELL, Economist DAVID J. STOCKTON, Associate Economist PETER R. FISHER, Manager, System Open Market Account FEDERAL ADVISORY COUNCIL LAWRENCE K. FISH, First District NORMAN R. BOBINS, Seventh District DOUGLAS A. WARNER III, Second District KATIE S. WINCHESTER, Eighth District RONALD L. HANKEY, Third District RICHARD A. ZONA, Ninth District ROBERT W. GILLESPIE, Fourth District C. Q. CHANDLER, Tenth District KENNETH D. LEWIS, Fifth District RICHARD W. EVANS, JR., Eleventh District STEPHEN A. HANSEL, Sixth District WALTER A. DODS, JR., Twelfth District JAMES ANNABLE, Co-Secretary WILLIAM J. KORSVIK, Co-Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A81 CONSUMER ADVISORY COUNCIL YVONNE S. SPARKS, St. Louis, Missouri, Chairman DWIGHT GOLANN, Boston, Massachusetts, Vice Chairman LAUREN ANDERSON, New Orleans, Louisiana ANNE S. LI, Trenton, New Jersey WALTER J. BOYER, Garland, Texas MARTHA W. MILLER, Greensboro, North Carolina WAYNE-KENT A. BRADSHAW, LOS Angeles, California DANIEL W. MORTON, Columbus, Ohio MALCOLM M. BUSH, Chicago, Illinois CHARLOTTE NEWTON, Springfield, Virginia JEREMY D. EISLER, Biloxi, Mississippi CAROL J. PARRY, New York, New York ROBERT F. ELLIOT, Prospect Heights, Illinois PHILIP PRICE, JR., Philadelphia, Pennsylvania JOHN C. GAMBOA, San Francisco, California MARTA RAMOS, San Juan, Puerto Rico ROSE M. GARCIA, El Paso, Texas DAVID L. RAMP, Minneapolis, Minnesota VINCENT J. GIBLIN, West Caldwell, New Jersey MARILYN ROSS, Omaha, Nebraska KARLA S. IRVINE, Cincinnati, Ohio ROBERT G. SCHWEMM, Lexington, Kentucky WILLIE M. JONES, Boston, Massachusetts DAVID J. SHIRK, Eugene, Oregon JANET C. KOEHLER, Jacksonville, Florida GAIL M. SMALL, Lame Deer, Montana GWENN S. KYZER, Allen, Texas GARY S. WASHINGTON, Chicago, Illinois JOHN C. LAMB, Sacramento, California ROBERT L. WYNN, II, Madison, Wisconsin THRIFT INSTITUTIONS ADVISORY COUNCIL WILLIAM A. FITZGERALD, Omaha, Nebraska, President F. WELLER MEYER, Falls Church, Virginia, Vice President GAROLD R. BASE, Piano, Texas BABETTE E. HEIMBUCH, Santa Monica, California JAMES C. BLAINE, Raleigh, North Carolina THOMAS S. JOHNSON, Manhattan, New York DAVID A. BOCHNOWSKI, Munster, Indiana WILLIAM A. LONGBRAKE, Seattle, Washington LAWRENCE L. BOUDREAUX III, New Orleans, Louisiana KATHLEEN E. MARINANGEL, McHenry, Illinois RICHARD P. COUGHLIN, Stoneham, Massachusetts ANTHONY J. POPP, Marietta, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 Federal Reserve Bulletin • February 1999 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, The Payment System Handbook. $75.00 per year. MS-127, Board of Governors of the Federal Reserve System, Federal Reserve Regulatory Service. Four vols. (Contains all Washington, DC 20551. or telephone (202) 452-3244, or FAX four Handbooks plus substantial additional material.) $200.00 (202) 728-5886. You may also use the publications order- per year. form available on the Board's World Wide Web site Rates for subscribers outside the United States are as follows (http://www.federalreserve.gov). When a charge is indicated, pay- and include additional air mail costs: ment should accompany request and be made payable to the Federal Reserve Regulatory Service, $250.00 per year. Board of Governors of the Federal Reserve System or may be Each Handbook, $90.00 per year. ordered via Mastercard, Visa, or American Express. Payment from FEDERAL RESERVE REGULATORY SERVICE FOR PERSONAL foreign residents should be drawn on a U.S. bank. COMPUTERS. CD-ROM; updated monthly. Standalone PC. $300 per year. Network, maximum 1 concurrent user. $300 per year. BOOKS AND MISCELLANEOUS PUBLICATIONS Network, maximum 10 concurrent users. $750 per year. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. Network, maximum 50 concurrent users. $2,000 per year. 1994. 157 pp. Network, maximum 100 concurrent users. $3,000 per year. ANNUAL REPORT, 1997. Subscribers outside the United States should add $50 to cover ANNUAL REPORT: BUDGET REVIEW, 1998-99. additional airmail costs. FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or $2.50 THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTIeach in the United States, its possessions. Canada, and COUNTRY MODEL, May 1984. 590 pp. $14.50 each. Mexico. Elsewhere, $35.00 per year or $3.00 each. INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. ANNUAL STATISTICAL DIGEST: period covered, release date, num- 440 pp. $9.00 each. ber of pages, and price. FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. 1981 October 1982 239 pp. $ 6.50 December 1986. 264 pp. $10.00 each. 1982 December 1983 266 pp. $ 7.50 FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- 1983 October 1984 264 pp. $11.50 SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1984 October 1985 254 pp. $12.50 RISK MEASUREMENT AND SYSTEMIC RISK: PROCEEDINGS OF A 1985 October 1986 231 pp. $15.00 JOINT CENTRAL BANK RESEARCH CONFERENCE. 1996. 1986 November 1987 288 pp. $15.00 578 pp. $25.00 each. 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, The Federal Open Market Committee $35.00 per year or $.80 each. 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 Sense of Savings monthly. (Requests must be prepaid.) SHOP: The Card You Pick Can Save You Money Consumer and Community Affairs Handbook. $75.00 per year. Welcome to the Federal Reserve Monetary Policy and Reserve Requirements Handbook. $75.00 When Your Home is on the Line: What You Should Know per year. About Home Equity Lines of Credit Securities Credit Transactions Handbook. $75.00 per year. Keys to Vehicle Leasing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A83 STAFF STUDIES: Only Summaries Printed in the 163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR- BULLETIN KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary Studies and papers on economic and financial subjects that are of Ann Taylor. March 1992. 37 pp. general interest. Requests to obtain single copies of the full text or to be added to the mailing list for the series may be sent to 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by James T. Fergus and John L. Goodman, Jr. July 1993. Publications Services. 20 pp. 165. THE DEMAND FOR TRADE CREDIT: AN INVESTIGATION OF Staff Studies 1-157, 161, and 168-169 are out of print. MOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES, by Gregory E. Elliehausen and John D. Wolken. September 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- 1993. 18 pp. MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE 166. THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET, by PRODUCTS, by Mark J. Warshawsky with the assistance of Mark Carey, Stephen Prowse, John Rea, and Gregory Udell. Dietrich Earnhart. September 1989. 23 pp. January 1994. Ill pp. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI- 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANK- ARIES OF BANK HOLDING COMPANIES, by Nellie Liang and ING, 1980-93, AND AN ASSESSMENT OF THE "OPERATING Donald Savage. February 1990. 12 pp. PERFORMANCE" AND "EVENT STUDY" METHODOLOGIES, 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- by Stephen A. Rhoades. July 1994. 37 pp. VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by 170. THE COST OF IMPLEMENTING CONSUMER FINANCIAL REGU- Gregory E. Elliehausen and John D. Wolken. September LATIONS: AN ANALYSIS OF EXPERIENCE WITH THE TRUTH 1990. 35 pp. IN SAVINGS ACT, by Gregory Elliehausen and Barbara R. 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- Lowrey, December 1997. 17 pp. GAGE LOAN RATES IN TWENTY CITIES, by Stephen A. 171. THE COST OF BANK REGULATION: A REVIEW OF THE EVI- Rhoades. February 1992. 11 pp. DENCE, by Gregory Elliehausen, April 1998. 35 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A84 Federal Reserve Bulletin • February 1999 Maps of the Federal Reserve System ON EW YORK ADELPHIA •.'. ; • ,•. CA HAWAII LEGEND Both pages Facing page • Federal Reserve Bank city * Federal Reserve Branch city • Board of Governors of the Federal — Branch boundary Reserve System, Washington, D.C. NOTE The Federal Reserve officially identifies Districts by num- of Puerto Rico and the U.S. Virgin Islands; the San Franber and Reserve Bank city (shown on both pages) and by cisco Bank serves American Samoa, Guam, and the Comletter (shown on the facing page). monwealth of the Northern Mariana Islands. The Board of In the 12th District, the Seattle Branch serves Alaska, Governors revised the branch boundaries of the System and the San Francisco Bank serves Hawaii. most recently in February 1996. The System serves commonwealths and territories as follows: the New York Bank serves the Commonwealth Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A85 1-A 2-B 3-C 4-D 5-E Pittsburgh BaltimQie MD . NJ —wv icmnati BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 7-G 8-H KY sville ATLANTA CHICAGO ST. LOUIS 9-1 MINNEAPOLIS 10-J 12-L if 01 KANSAS CITY 11-K HAWAII DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 Federal Reserve Bulletin • February 1999 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 Peter G. Peterson Jamie B. Stewart, Jr. 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. Jeremiah J, Sheehan Walter A. Varvel Baltimore 21203 Daniel R. Baker William J. Tignanelli1 Charlotte 28230 Joan H. Zimmerman DanM. Bechter1 ATLANTA 30303 John F. Wieland Jack Guynn Paula Lovell Patrick K. Barron James M. Mckee Birmingham 35283 V. Larkin Martin FredR. Herr1 Jacksonville 32231 Marsha G. Rydberg James D. Hawkins1 Miami 33152 Mark T. Sodders James T. Curry III Nashville 37203 N, Whitney Johns Melvyn K. Purcell New Orleans 70161 R. Glenn Pumpelly Robert J. Musso CHICAGO* 60690 Lester H. McKeever, Jr. Michael H. Moskow Arthur C. Martinez William C. Conrad Detroit 48231 Florine Mark David R. Allardice1 ST. LOUIS 63166 Susan S. Elliott William Poole Charles W. Mueller W. LeGrande Rives Little Rock 72203 To be announced Robert A. Hopkins Louisville 40232 To be announced Thomas A. Boone Memphis 38101 To be announced Martha L. Perine MINNEAPOLIS 55480 David A. Koch Gary H. Stern James J. Howard Colleen K. Strand Helena 59601 Thomas O. Markle Samuel H. Gane KANSAS CITY 64198 Jo Marie Dancik Thomas M. Hoenig Terrence P. Dunn Richard K. Rasdall Denver 80217 Kathryn A. Paul Carl M. Gambs • Oklahoma City 73125 Larry W. Brummett Kelly J. Dubbert Omaha 68102 Gladys Styles Johnston Steven D. Evans DALLAS 75201 Roger R. Hemminghaus Robert D. McTeer, Jr. James A. Martin Helen E. Holcomb El Paso 79999 To be announced Sammie C. Clay Houston 77252 To be announced Robert Smith, III' San Antonio 78295 To be announced James L. Stall' SAN FRANCISCO 94120 Gary G. Michael Robert T. Parry Nelson C. Rising John F. Moore Los Angeles 90051 Lonnie Kane Mark L. Mullinix' Portland 97208 Nancy Wilgenbusch Raymond H. Laurence' Salt Lake City 84125 Barbara L. Wilson 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