Federal Reserve Bulletin, 1999-04

Volume 85 • Number 4 • April 1999 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 217 HIGHLIGHTS OF DOMESTIC OPEN MARKET 239 STATEMENTS TO THE CONGRESS OPERATIONS DURING 1998 Edward M. Gramlich, member. Board of Gover- The Trading Desk at the Federal Reserve Bank nors, discusses social security reform and testiof New York uses open market operations to fies that the broad objective of the Clinton implement the policy directives of the Federal Administration's budget—to preserve most of Open Market Committee (FOMC). The FOMC the projected surpluses—seems responsible and expresses its short-term objective for open marappropriate. However, Governor Gramlich testiket operations as a target level for the federal fies further that the additional proposal by the funds rate—the interest rate at which depository Administration to transfer general revenues to institutions lend balances at the Federal Reserve the social security trust fund undermines the to other depository institutions. To keep the fedfiscal discipline imposed by the need to ensure eral funds rate near the level specified by the that income earmarked for social security is FOMC, the Desk uses open market operations sufficient to meet the entire cost of the program, to bring the supply of balances at the Federal both in the short run and long run. (Testimony Reserve into line with the demand for them. In before the Senate Committee on Finance, Febru- 1998, the level of balances that depository instiary 9, 1999. Governor Gramlich presented identutions were required to hold at the Federal tical testimony before the House Committee on Reserve continued to decline, to historic lows. Ways and Means on February 23, 1999.) The primary reason for this was the ongoing proliferation of retail "sweep" programs, which 240 Alan Greenspan, Chairman, Board of Govertransfer depositors' funds from transaction nors, presents the views of the Federal Reserve accounts that are subject to reserve requirements on the need to enact legislation to modernize the into other deposit accounts that are not. U.S. financial system; he testifies that only the In past years, declines in required balances Congress can establish the ground rules had been associated with greater volatility in the designed to ensure the maximum net public federal funds rate because depository institu- benefits, protect the safety and soundness of our tions have less flexibility in managing their daily financial system, create a fair and level playing balance positions. However, through the first field for all participants, and ensure the continthree quarters of 1998, the funds rate behaved ued primacy of U.S. financial markets. For these much as it had in 1997, even though required reasons, the Federal Reserve supports and urges balances were lower. In the final quarter of prompt enactment of the financial moderniza- 1998, funds rate volatility rose when market tion contained in H.R. 10. (Testimony before the participants evinced greater concerns about the House Committee on Banking and Financial credit quality of their counterparties at a time of Services, February 11, 1999) increased uncertainty in financial markets. 243 Chairman Greenspan presents the Federal Reserve's semiannual report on monetary policy and testifies that over the past year the U.S. 236 INDUSTRIAL PRODUCTION AND CAPACITY economy again performed admirably, despite the UTILIZATION FOR FEBRUARY 1999 challenges presented by severe economic down- Industrial production increased 0.2 percent in turns in a number of foreign countries and epi- February, to 132.6 percent of its 1992 average. sodic financial turmoil abroad and at home. He Overall capacity utilization in February slipped testifies further that a continuation of respon- 0.1 percentage point, to 80.3 percent, a level sible fiscal and monetary policies should afford PA percentage points below its long-term aver- Americans the opportunity to make considerable age and 2'/i percentage points below its Febru- further economic progress over time. (Testiary 1998 level. mony before the Senate Committee on Banking, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Housing, and Urban Affairs, February 23, 1999. Addition of supplementary tables to the Z.I Chairman Greenspan presented identical testi- statistical release on the flow of funds accounts. mony before the House Committee on Banking Publication by an interagency task force of a and Financial Services on February 24, 1999.) consumer brochure Looking for the Best Mort- 250 Chairman Greenspan testifies that in designing gage: Shop, Compare, Negotiate. financial modernization legislation, the Federal Availability of the List of Foreign Margin Reserve believes that the Congress should focus Stocks. on achieving two essential and indivisible objectives: removing outdated, competitively stifling Enforcement actions. restrictions on financial affiliations and, most Revisions to the money stock data. important, adopting a framework for this modernization that promotes the safety and sound- 263 LEGAL DEVELOPMENTS ness of our banking and financial system and prevents the extension of the federal subsidy. Various bank holding company, bank service Further, Chairman Greenspan states that the corporation, and bank merger orders; and pend- Federal Reserve urges prompt enactment of ing cases. financial modernization legislation that achieves these two central and indivisible objectives. A1 FINANCIAL AND BUSINESS STATISTICS (Testimony before the Senate Committee on These tables reflect data available as of Banking, Housing, and Urban Affairs, Febru- February 24, 1999. ary 23, 1999) 252 Edward W. Kelley, Jr., member, Board of Gover- A3 GUIDE TO FABULAR PRESENTATION nors, testifies on behalf of the Board of Gover- A4 Domestic Financial Statistics nors on the Federal Reserve Board Retirement A42 Domestic Nonfinancial Statistics Portability Act and provides information on the A50 International Statistics Federal Reserve retirement system. He further testifies that the Board strongly supports this A63 GUIDE TO STATISTICAL RELEASES AND legislation, which would allow certain employ- SPECIAL FABLES ees who leave the Board to work for other agencies and who then retire under the Federal A64 INDEX TO STATISTICAL FABLES Employees Retirement System to receive pensions reflecting all of their federal service, A66 BOARD OF GOVERNORS AND STAFF including post-1988 service at the Board. (Testimony before the Subcommittee on Civil Service of the House Committee on Government A68 FEDERAL OPEN MARKET COMMITTEE AND Reform and Oversight, February 25, 1999) STAFF; ADVISORY COUNCILS A70 FEDERAL RESERVE BOARD PUBLICATIONS 256 ANNOUNCEMENTS Proposed changes to Regulation CC to provide A72 MAPS OF THE FEDERAL RESERVE SYSTEM more flexibility to depository institutions to experiment with methods to return unpaid A74 FEDERAL RESERVE BANKS, BRANCHES, checks electronically. AND OFFICES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

PUBLICATIONS COMMITTEE Lynn S. Fox, Chair • S. David Frost . ! Karen H. Johnson '. Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell "J Dolores S. Smith J Richard Spillenkothen The Federal Reseme Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible lor opinions expressed except in official statements and signed articles It is assisted by the F.conomic Editing Section headed by S. Ellen Dykes, the Multimedia Technologies Center under Ihe 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

Highlights of Domestic Open Market Operations during 1998 This article is adapted from a report to the Federal flexibility in managing their daily balance positions. Open Market Committee by Peter R. Fisher, Execu- With lower requirements, a depository institution is tive Vice President of the Federal Reserve Bank of less able to substitute balances across days of the New York and Manager of the System Open Market maintenance period to meet its balance requirement, Account. Spence Hilton, Assistant Vice President, which must be met by the average of its holdings Federal Reserve Bank of New York, prepared this over the period, because the risk of overdrawing its article. Angela Goldstein and Wendy Wong provided account at the end of the day is greater.3 However, research assistance. through the first three quarters of 1998, the funds rate behaved much as it had in 1997, even though The Trading Desk at the Federal Reserve Bank of required balances were lower. In the final quarter New York uses open market operations to implement of 1998, funds rate volatility and levels of excess the policy directives of the Federal Open Market reserves rose when funds market participants evinced Committee (FOMC). The FOMC expresses its short- greater concerns about the credit quality of their term objective for open market operations as a target counterparties at a time of increased uncertainty in level for the federal funds rate—the interest rate at financial markets. These heightened credit concerns which depository institutions lend balances at the upset normal trading relationships among institu- Federal Reserve to other depository institutions. To tions in the federal funds market, and market particikeep the federal funds rate near the level specified by pants were more wary of approaching the Federal the FOMC, the Desk uses open market operations to Reserve's discount window to borrow for fear of bring the supply of balances at the Federal Reserve being perceived as being in unsound financial condiinto line with the demand for them. tion, even though the identity of any institution that borrows is strictly confidential. In this environment, In 1998 the level of balances that depository instimany depository institutions bid aggressively for baltutions were required to hold at the Federal Reserve ances at the Federal Reserve, thus lifting the funds continued to slip, to historic lows. The primary rearate, especially early in the day, but often with the son for this decline was the ongoing proliferation of result that the rate fell off in later trading after borretail "sweep" programs, which transfer depositors' rowers became confident that their demand for balfunds from transaction accounts that are subject to ances would be satisfied. The Desk responded to the reserve requirements into other deposit accounts that upward rate pressure it saw on many mornings by are not.1 The decline in required balances encouraged elevating the levels of excess reserves it provided. depository institutions to hold more excess reserves during the year.2 The Desk's selection of open market operations in In past years, declines in required balances had 1998 was influenced by changing market circumbeen associated with greater volatility in the federal stances, such as the ongoing decline in required balfunds rate because depository institutions have less ances. With the backdrop of falling required balances, the Desk in managing reserve supply increased its reliance on very short-term operations. It also 1. Past annual reports on open market operations have discussed adopted a somewhat different approach to addressing the growth of sweep accounts and other developments surrounding the deep seasonal reserve shortages around the end of the Desk's operations, and these remained themes in 1998. The annual report for 1998 and those from other recent years are available on the web site of the Federal Reserve Bank of New York (http://www.ny.frb.org). 3. For further detail on the operating practices and techniques used 2. Depository institutions hold balances at the Federal Reserve to by the Trading Desk, see Cheryl L. Edwards, "Open Market Operasatisfy reserve and other balance requirements. Some institutions also tions in the 1990s," Federal Reserve Bulletin, vol. 83 (November hold additional balances—called excess reserves—to guard against 1997) pp. 859-74; Ann-Marie Meulendyke, US. Monetary Policy and unanticipated debits to their accounts at the Federal Reserve that could Financial Markets (Federal Reserve Bank of New York, 1998); and leave the account overdrawn at the end of the day or short of the level M. A. Akhtar. Understanding Open Market Operations (Federal needed to satisfy their requirements. Reserve Bank of New York, 1997). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

218 Federal Reserve Bulletin • April 1999 year—an approach designed to take advantage of its new authority granted by the FOMC to arrange Maintenance Periods and the Desk's temporary transactions with maturities of up to sixty Nonborrowed Reserve Objective days. Largely as a consequence, fewer reserves were added on a permanent basis in 1998 than in 1997. Each depository institution is required to hold reserves, either in the form of vault cash or balances at the Federal Reserve, in a fixed proportion to certain of its deposit liabilities. Two-week computation periods establish the IMPLEMENTATION OF MONETARY POLICY time frame over which institutions' deposit levels are IN 1998 averaged for the purpose of calculating their reserve requirements. Two-week maintenance periods define the Directives of the Federal Open Market time frame over which institutions can accumulate daily Committee balances at the Federal Reserve to meet the portion of their period-average reserve requirements that is not met In 1998 the Federal Open Market Committee with vault cash. (FOMC) continued to express its operating objective The nonborrowed reserve objective, or "path," that the for monetary policy as a specific level of the over- Desk estimates for each maintenance period is a measure of the level of nonborrowed reserves—vault cash and night federal funds rate—the interest rate on interreserve balances created through sources other than borbank loans of balances held on deposit at the Federal rowing at the Federal Reserve's discount window—that Reserve. After each of its policy meetings, the FOMC is associated with maintaining the federal funds rate issued a written directive to the Trading Desk, around the target. This path captures the average demand instructing it to foster conditions in reserve markets for reserves for that period arising from reserve requireconsistent with maintaining the federal funds rate at ments plus the estimated demand for excess reserves, less an average around the target rate.4 Beginning in an allowance for expected discount window borrowing September 1998, the FOMC lowered its target level associated with the funds rate remaining at its objective. for the federal funds rate on three occasions before Reserve requirements are known at the start of each the end of the year, each time by 25 basis points. On maintenance period based on deposit information that two of these occasions the Board of Governors also banks provide to the Federal Reserve, but demand for excess reserves and borrowing from the discount window approved an equal reduction in the discount rate, the are estimated or anticipated on the basis of experience. interest rate that the Federal Reserve charges deposi- The difference between the path and estimates of average tory institutions for borrowing at its discount window reserve supply for the period provides a general indicafacility (table 1). The reduction in the funds rate in tion of the overall need for open market operations to September was the first time that the FOMC had bring reserve supply in line with demand over the mainchanged its target rate since March 1997. tenance period. The specific operations chosen by the Desk are driven largely by the estimated daily patterns of both demand and supply and the observed behavior of the funds rate. As a maintenance period progresses, the 4. The directive is released along with the minutes of each FOMC meeting shortly after the conclusion of the next regularly scheduled allowances for excess reserves and borrowing are revised FOMC meeting. The minutes, which contain the directives, are when incoming information suggests that they are inconreprinted in the Federal Reserve Bulletin and are available on the sistent with maintaining the funds rate around the Board's web site (http://www.federalreserve.gov). FOMC's target. 1. Changes in the federal funds rate specified in directives of the Federal Open Market Committee, Overview of Operating Procedures March 25, 1997-November 17, 1998 and Practices Percent In attempting to achieve the FOMC's target for the Expected Associated Date of change federal funds discount rate federal funds rate, the New York Trading Desk tries rate to align the supply of reserve balances with the level March 25, 1997 5.50 5.00 of demand believed consistent with maintaining the September 29, 1998 5.25 5.00 funds rate around its target level (see box "Mainte- October 15, (998 5.00' 4.75 nance Periods and the Desk's Nonborrowed Reserve November 17,1998 4.75 4.50 Objective"). The Desk is able to alter reserve balances by engaging in open market operations with I. Firsl change made between regular Federal Open Market Committee primary dealers of government securities. If the open (FOMC) meetings since April 18. 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Highlights of Domestic Open Market Operations during 1998 219 market operation is intended to add reserve balances, The second change involved the maximum length the Desk agrees to buy securities from one or more of repurchase agreements (RPs) permitted by the dealers. When the dealers deliver the agreed-upon FOMC in its authorization for domestic open market securities to the Desk, it credits the dealers' accounts operations. At its November meeting, the FOMC at their clearing banks, a process that creates reserve extended the maximum maturity of RPs that the Desk balances. If the operation is intended to drain may arrange to sixty calendar days from the previous reserves, the Desk sells securities, and reserve bal- fifteen-day limit.5 RPs are agreements that the Desk ances are extinguished. makes with government securities dealers to pur- Each morning the Desk considers whether an open chase securities and then to sell the same securities market operation is needed on the basis of estimates back to the dealers on a specified date at a predeterof the demand for and supply of reserves. Any opera- mined price. These operations are useful for increastion designed to alter reserve balances that same day ing reserves on a temporary basis. The lengthening of is typically arranged shortly thereafter. Reserve needs the maturity limit provides the Desk with additional in upcoming days and weeks are also considered and means for addressing reserve shortages that are temsometimes influence the choice of operations, as does porary but that are certain to exceed in length the an assessment of possible errors in the forecasts of fifteen-day maturity previously set for RPs. The use demand for and supply of reserves. Current trading of long-term RPs in 1998 is discussed later in this conditions in the funds market, which can shed light article. on reserve imbalances, also play a role in determining the structure of open market operations. When selecting open market operations, the Desk views its Sweep Programs and Total. Required Balances objective as keeping the funds rate on current and future days as close to the target as possible, but it Since 1994 depository institutions have used retail does not target an average rate over any preset time sweep programs to reduce the amount of balances frame and thereby try to create high rates to offset they must hold at the Federal Reserve to meet reserve low rates on past days, or vice versa. requirements. Under these programs, depository institutions shift their customers' funds from checking accounts that are reservable into special-purpose New Developments in 1998 money market deposit accounts that are not reservable. Thus, depository institutions can decrease the Two important changes in 1998 affected the Desk's level of their deposits subject to reserve requirements conduct of open market operations. The Board of and, with no change in their vault cash holdings, their Governors approved a return to lagged reserve total required balances, on which they earn no interrequirements (LRR) beginning with the maintenance est. Sweep programs are profitable because deposiperiod ended August 12, J998. LRR replaced con- tory institutions can invest the balances that they are temporaneous reserve requirements (CRR), which no longer required to hold in interest-bearing assets.6 had been in place since 1984. LRR are designed to The adoption of sweep programs over the past few improve the Desk's ability to estimate the demand for years has led to a significant decrease in required reserves to meet requirements and thus help it cali- reserves and required balances.7 brate open market operations. Under LRR, a deposi- In 1998, the spread of sweep programs slowed as tory institution's reserve requirement depends on its the proportion of deposit accounts not already cov~ average reservable deposit liabilities in a two-week computation period that ends seventeen days before the start of the corresponding reserve maintenance 5. The authorization is reprinted in the Federal Reserve Bulletin period. At the same time, the computation period for with the minutes from the first FOMC meeting each year. For the text applied vault cash, which was lagged one period even of the authorization in place at the end of 1998, see "Minutes of under CRR, was shifted back further to coincide with the Federal Open Market Committee Meeting Held on November 17, 1998," Federal Reserve Bulletin, vol. 85 (February 1999), the computation period for reservable deposit liabilipp. 122-23. ties. Thus, under LRR, the Desk knows with virtual 6. For further information on sweep programs, see Edwards, "Open certainty the aggregate level of reserve requirements Market Operations in the 1990s," p. 870. 7. Total required balances consist of required reserve balances and at the outset of each maintenance period, and each required clearing balances. Required reserve balances are the portion depository institution knows the average level of of a depository institution's reserve requirement that is not satisfied required reserve balances it must hold over the with vault cash. Required clearing balances are balances depository institutions agree in advance to hold at the Federal Reserve, usually to period. facilitate payments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

220 Federal Reserve Bulletin • April 1999 Deposits affected by new or expanded sweep programs, 1995-98 Billions of dollars • Demand deposit accounts • NOW accounts — 300 — 250 — 200 — 150 — 100 — 50 I - • •• I I 1995 1996 1997 1998 NOTE. Data are monthly averages. ered by these programs diminished and as the expan- effect, total required balances would have shown a sion of sweep programs became less profitable for much smaller decline in 1998. institutions that began to meet their entire reserve The slowing pace of decline in total required balrequirement with vault cash. The level of deposits ances reflects both the ebbing in the spread of sweep affected by new or expanded sweep programs in 1998 programs and the fact that an increasing number of rose $60 billion, an increase that was nearly $25 bil- new sweep programs were byproducts of efforts to lion less than that of 1997 and about half that of 1996 reduce vault cash holdings and were not intended to (chart I).8 Demand deposits and other checkable reduce required reserve balances." deposits fell moderately, by $34 billion, as the depressing effect of sweeps was partly countered by higher demand for liquid balances arising from the more that typically occurred in the final maintenance period of the year rapid growth of income and declining opportuunder CRR occurs about two maintenance periods later under LRR. nity costs of holding money.9 As a result, required For related reasons, the move to LRR left the level of applied vault reserves fell $3'/2 billion on balance between the cash in the final maintenance period of the year about $% billion higher than it otherwise would have been. final maintenance period of 1997 and that of 1998 11. A bank can profit by reducing its vault cash holdings because it (chart 2). Also during this period, applied vault cash earns no interest on ihese assets. If the eliminated vault cash had been fell $1 billion and required clearing balances were used to meet reserve requirements, the bank can use a sweep program to reduce its reserve requirements simultaneously; without the sweep little changed, so that total required balances dropped program the bank would have to hold more non-interest-bearing $2'/ 2 billion. balances at the Federal Reserve in place of vault cash to meet its reserve requirements. The decline in total required balances in 1998 was similar in size to the $2% billion drop of 1997, but much less than the $6 billion fall in 1996. However, 2. Reserve measures, 1995-9 comparing changes in these reserve measures in 1998 Billions of dollars with changes in earlier years is complicated by the switch to LRR, which altered the lags between move- Required clearing balances ments in required reserves and applied vault cash and the underlying seasonal swings in demand deposits and currency around the year-end.10 Absent this 8. These figures apply to deposits initially swept by banks at the start of a program or when the coverage was expanded. The data are not updated to include any later changes in the underlying deposit balances included in an existing program. 9. The change in deposits is measured using not seasonally adjusted data from December 1997 to November 1998. The decline over this period best correlates with the change in reserve requirements over the year because the switch to LRR created a lag of about 1995 1996 1997 1998 one month between deposit levels and reserve requirements. NOTE. All figures are mainlenance-period averages calculated a( Iwo-week 10. The shift to LRR left the level of reserve requirements in the intervals. Required reserves are Ihe sum of required reserve balances and final maintenance period of 1998 about $2 billion below the level it applied vault cash. Total required balances are ihe sum of required reserve would have been under CRR because the seasonal rise in requirements balances and required clearing balances. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Highlights of Domestic Open Market Operations during 1998 221 OUTRIGHT TRANSACTIONS FOR THE SYSTEM 3. System portfolio of Treasury and federal agency securities, 1980-98 OPEN MARKET ACOVNT Billions of dollars In 1998 the portfolio of domestic securities held Levels in the System Open Market Account (SOMA) grew • Federal agencies $25 billion, to $473 billion at year-end (chart 3).12 — 400 • Treasury coupons Most of the expansion was achieved through outright • Treasury bills (permanent) purchases of securities made by the Desk — 300 in the market, with a small portion obtained through purchases from foreign accounts. — 200 — 100 Changes in the Size of the System Open Market Account Net changes The Desk increased the SOMA portfolio to offset the effect of movements in operating factors on nonborrowed reserve supply. Operating factors (listed in table 2), which are sometimes called technical factors, are items on the Federal Reserve's balance sheet other than loans and holdings of domestic securities that can affect the supply of reserves available to depository institutions. Movements in these factors — 10 typically prompt the Desk to arrange open market I I I I I 1 I. I I I I I I I I 1 t I I I I I operations to negate their effect on reserve supply. 1980 1985 1990 1995 The growth in the SOMA this past year was well NOTE. Values for the portfolio are taken from year-end dales. below the record $41 billion expansion of 1997, largely because of differences in the mix of temporary and permanent operations used to address reserve shortages at year-end.13 2. Required reserves and factors affecting nonborrowed reserves, 1997-98 Billions of dollars 12. All figures on SOMA holdings in this article are par values Effect of unless otherwise stated and exclude any securities held under out- Levels in maintenance change on standing RPs. Reported Treasury bill holdings include the portion Item period ending reserve supply sold to foreign accounts under matched sale-purchase agreements. Jan. 1, Dec. 31, Dee. 30, Reported changes and levels of Treasury coupon securities do not 1997 1997 1998 1997 1998 include the accrual of compensation for the effects of inflation on the principal of inflalion-indexed issues. At the end of 1998, these accruals Requited reserves.... 50.6 47.4 44.0 3.2 3.4 totaled $79 million, $56 million higher than one year earlier. Factors affecting 13. The attribution of changes in the portfolio from year-end to nonborrowed year-end either to factor movements over the year or to year-end reserves' reserve management strategies is based on the accounting identity: Currency in circulation 448.1 479,3 514.0 -31.3 -34.7 Foreign currency 16.2 16.6 17.4 .4 .8 PORT enim - PORT cvi91 = /?/> Md97 - - DFACTORS 9i Foreign RP pool 14.0 17.0 19.4 -3.0 -Z4 Gold and foreign deposits 20.6 20.1 20.1 -J5 0 Float 2.0 .8 2.6 -1.2 1.8 Treasury balance .... 6.0 4.9 63 1.1 -1.4 Applied vault cash ... 38.1 37.7 36.7 -.4 -.9 Required clearing where PORT is the size of the portfolio, RP is the value of RP balances 6.6 6.7 6.6 -.1 0 All other items3 24.3 23.3 25.4 -1.0 2.1 agreements outstanding, ER is the level of excess reserves, BR is Net changes in discount window credit, and RjR is the level of reserve requirements, nonborrowed each for the end of the indicated year. DFACTORS reflects the net factors -36.0 -34.7 effect of changes over 1998 in all operating factors on reserve supply. Outstanding RPs1 Changes in discount window borrowing, which affect reserve supply, Par value 16.3 10.1 15.2 -6.2 5.1 and excess reserve demand were not substantial relative to other Premium 1.4 .5 1.1 -.8 .6 factors during the year and are not considered explicitly in the text. In NOTE. A decline in required reserves is counted as a rise in reserve supply. the tables and charts in this article, values for the portfolio are taken 1. Values for changes in faclors and repurchase agreements (RPs) outstandfrom year-end dates while values for RPs outstanding and changes in ing are based on averages taken from maintenance periods at the year-end. factors are based on averages taken from maintenance periods at the 2. The category "All olher ilems" equals all olher assets minus all oiher year-end. liabilities nol listed in Ihe table and excludes ihe premium on RPs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

222 Federal Reserve Bulletin LJ April 1999 Factors Affecting the Need for a Change Outright Market Activity Affecting the SOMA in the SOMA Portfolio Portfolio Changes in the Supply of and Demand for Virtually all of the expansion of the portfolio in Nonborrowed Reserves 1998 was achieved through $26.4 billion of outright purchases—entirely of Treasury coupon securities— The expansion of the portfolio in 1998 was driven made in the market (chart 4). Because of the relaprimarily by the need to offset the reserve drain tively low level of Treasury bill issuance over the caused by continued strong growth of currency in past two years, the Desk refrained from making purcirculation, which increased nearly $35 billion during chases of bills in the market out of concern that any the year and reduced reserve supply by an equivalent reduction in the supply of bills held by the public amount (table 2). On balance, the other factors affect- might further diminish bill market liquidity. At the ing supply were little changed over the year. The same time, existing bill holdings in the portfolio were $3'/2 billion decline in required reserves reduced the viewed as sufficient for addressing any contingency. demand for reserves and lessened the need to offset In purchasing Treasury coupon securities in the all of the decline in supply with open market operamarket, the Desk continued to segment its purchases tions. Altogether, these movements in operating facinto separate tranches covering different portions of tors and required reserves deepened reserve shortages the yield curve. Beginning in October, the Desk took a little more than $30 billion in 1998, slightly less steps to reduce further the price effect of its operathan their net effect in 1997. tions by narrowing the maturity range of issues considered for any one operation. This step was intended to limit the number of issues and thereby the total The Effect of Year-End Reserve Management number of offerings or propositions by the Desk's Strategies Despite the similarity in net movements in operating 4. System portfolio of Treasury and federal agency factors in 1997 and 1998, the increase in the SOMA securities, year-end holdings, 1995-98 portfolio in 1998 was much smaller than in 1997 because of shifts in year-end reserve management Billions of dollars strategies. Over the year-end period in each of the • Purchases from foreign accounts past three years, the Desk has used very differ- 53 Purchases in the market — 30 ent combinations of outright purchases and RPs to • Redemptions address seasonal reserve shortages, which typically deepen leading up to the year-end and then recede — 20 after the year-end. Over the 1998 year-end, about $6 billion more of — 10 RPs were used to address reserve shortages than were used over year-end 1997 (table 2). Total outstanding RPs over the year-end 1998 period included $8 billion of long-term operations with maturities longer 1995 1996 Treasury Treasury Federal Treasury Treasury Federal than fifteen days. These long-term RPs addressed bills coupons agencies bills coupons agencies some of the deep year-end shortages that were expected to recede early in 1999. In the absence of these long-term RPs, more outright purchases would likely have been undertaken to cover a greater portion of the year-end deficiency. In 1996 the Desk had also made relatively few outright purchases to address year-end reserve shortages, preferring to use more short-term RPs. As a result of this strategy, outright purchases that otherwise would have been made late in 1996 were deferred until early 1997, after the RPs matured. This 1997 1998 postponement of purchases also elevated the total Treasury Treasury Federal Treasury Treasury Federal quantity of outright purchases made in 1997 relative bills coupons agencies bills coupons agencies to the amounts in other recent years. NOTE. Purchases are positive values; redempiions are negative values. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Highlights of Domestic Open Market Operations during 1998 223 counterparties—the primary dealers—that would auction settlement date, but it cannot tender for more. have to be evaluated in the selection process. The Early in 1998, the Desk redeemed $2 billion in total value of purchases made in each operation was Treasury bills by letting them mature without replacereduced accordingly. This modification permitted ment to address seasonal reserve surpluses. It also faster turnaround times, which is a factor in the redeemed a portion of its holdings of original-issue competitiveness of the propositions the Desk re- seven-year notes (which are no longer issued). The ceives, and also helped to reduce further any effect of Desk held $4.3 billion of such notes that matured the Desk's operations on market prices. At the same during the year, all on dates when new Treasury time, in the messages announcing operations that are inflation-indexed securities settled. Altogether, the sent to the primary dealers, the Desk began to specify Desk exchanged $1.6 billion of the maturing seventhose issues within the maturity range that it would year notes for TIISs, equal in value to 5 percent of the not purchase because of portfolio considerations. amount issued to the public, while the remaining Specifying these issues in the announcements simpli- $2.7 billion of the maturing notes was redeemed. fied the submission and selection process further for About $300 million of federal agency securities the Desk's counterparties. was redeemed in 1998 as part of the SOMA's ongo- In November, the Desk limited one of the tranches, ing reduction of its holdings of agency securities. The to Treasury inflation-indexed securities (TIISs) for Desk also sold $25 million of agency debt back to the the first time. The Desk judged that the different asset original issuer as part of that agency's program to characteristics and market trading dynamics of TIISs retire or replace a portion of its outstanding debt. At warranted their separation from the operations in the end of the year, SOMA agency holdings had nominal coupon issues. Previously, the Desk had fallen to a little more than $300 million. considered propositions on TIISs and nominal coupon issues together so long as they were in the SOMA Portfolio Management specified maturity range of a tranche, and it had purchased $100 million of inflation-indexed securi- As in 1997, the overall expansion of the domestic ties in one operation in 1997. But the Desk had found portfolio in 1998 was in holdings of Treasury coupon it difficult to make relative value judgements between securities. The declining share of short-term Treasury inflation-indexed and nominal coupon issues during bills held in the portfolio increased the average matuthe process of selecting propositions. rity of all Treasury issues in the SOMA at year-end to forty-seven months, compared with forty-three months at year-end 1997 (table 3). At the end of Other Activity Affecting the Size of the SOMA 1998, 14 percent of the volume of all outstanding Portfolio marketable Treasury debt was held in the SOMA Besides its market purchases, the Desk acquired secu- portfolio, up a bit from 13 percent one year earlier. rities through transactions with foreign accounts, and it shrank some of its securities holdings through 3. Weighted-average maturity of marketable Treasury debt, redemptions. Many foreign central banks and interselected years, 1960-98 national organizations have custodial accounts at the Monlhs Federal Reserve Bank of New York, and the FOMC authorizes the Desk to transact with these foreign Year-End Holdings ia tbe System Total outslanding debt Open Market Account account holders. When the foreign account holders 1960 19 55 have securities to sell, the Desk may purchase these 1965 16 SO securities if doing so is consistent with reserve needs. 1970 24 40 1975 31 S3 The Desk accquired $3.6 billion of Treasury bills 1980 55 48 1985 49 58 through such purchases in 1998. 1990 41 68 The SOMA portfolio contains publicly offered U.S. 1991 31 6S Treasury securities. When these securities mature, 1992 36 67 1993 1$ 65 the Desk is permitted to exchange them for new 1994 38 66 1995 39 S3 securities that settle on the same day. In 1998, when more than one auction for new securities settled on 1996 41 63 1997 43 US one of these dates, the distribution of issues newly 1998 47 6S acquired by the Desk was proportional to the amounts NOTE. The effects of all outstanding temporary transactions on System Open the Treasury was issuing to the public. The Desk can Market Account (SOMA) holdings are excluded from the calculation. The maturity of total outstanding Treasury debt for 1998 is as of the end of the fiscal also tender for fewer securities than mature on an year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

224 Federal Reserve Bulletin • April 1999 The percentage of all outstanding Treasury bills that period affect the actual size of temporary operations was held in the portfolio increased to 31 percent needed during that maintenance period. Therefore, at the end of 1998 from about 30 percent in 1997, the Desk must allow for the possibility of such revireflecting the decline in the volume of bills outstand- sions in structuring its operations as it goes through a ing. A little more than 9 percent of the total outstand- period. Net revisions to operating factors affecting ing volume of coupon issues, including TIISs, was the supply of reserve balances over an entire period held in the portfolio at the end of 1998, about 1 per- tended to be less in 1998 than in other recent years, centage point more than a year earlier. largely reflecting smaller Treasury balance revisions (table 4). At the same time, revisions to key determinants of the demand for balances at the Federal Reserve—required reserves and applied vault cash— TEMPORARY TRANSACTIONS FOR THE SYSTEM were virtually eliminated with the advent of LRR in OPEN MARKET ACCOUNT August. Before the introduction of LRR, sizable revisions to required reserves and applied vault cash Period-Average Reserve Needs and Revisions sometimes were made relatively late in a period, which was a major source of uncertainty. Thus the The difference between the path and the estimated Desk had to take the uncertainty in these estimates supply of nonborrowed reserves at the outset of each into account when structuring its operations late in a two-week maintenance period, after incorporating the period. effects of any outright operations arranged previously, indicates the need for open market operations during that period. In 1998 the estimates of the period-average reserve needs made at the start of Daily Volatility of and Projection Errors for each maintenance period—in absolute value to allow the Supply of and Demand for Reserves for temporary reserve surpluses—averaged $5.3 billion, down from $8.0 billion in 1997 (chart 5).14 The The decline in total required balances resulting from decline in the average was partly the byproduct of the the implementation of sweep programs over the past higher volume of outright purchases made in 1997, several years has increased depository institutions' which left smaller reserve imbalances early in 1998 exposure to overdrafts arising from unanticipated than had existed early in 1997. shifts in their daily reserve positions. As a result, both Revisions to estimates of operating factors affect- the day-to-day swings in factors affecting the supply ing the supply of or demand for reserves during a 4. Revisions to estimates of open market operations needed 14. Some of these initial estimated reserve needs were reduced by to hit the nonborrowed reserve path, 1997-98 temporary term RPs that were arranged in an curlier maintenance period and extended into later periods. Millions of dollars, maintenance-period averages Item 1997 1998 5. Open market operations needed to hit the nonborrowed reserve path, 1995-98 Factor* affecting the supply oj rexen'e balances at the Federal Reserve Billions of dollars Treasury balance 1.002 506 Currency in circulation 361 500 Foreign RP pool 500 381 Float. . 227 312 Ncl factor revision 1.413 1.034 — 15 Factors affecting the demand for reserve balances at the Federal Reserve' 10 Required reserves Before LRR 443 353 After LRR 22 Applied vault cash Before LRR 231 316 After LRR 12 Requited reserves-applied vault cash Before LRR . 182 After LRR 25 Nor£. Data arc average absolute revisions to initial estimates of maintenance-period-average values. Projection errors are based on estimates by 1995 1996 1997 1998 the staff of the Federal Reserve Bank of New York. 1. All revisions in 1997 were before the introduction of lagged reserve NrOTK Estimates are from [he lirst day of each maintenance period. Positive requirements (LRR); revisions in 1998 through the period ending July 29 were numbers indicate a need to add reserves. before LRR. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Highlights of Domestic Open Market Operations during 1998 225 5. Daily changes and forecast errors in key determinants of reserve balance supply, 1995-98 Millions of dollars, average and maximum of absolute values 1995 1996 1997 1998 Item Average Maximum Average Maximum Average Maximum Average Maximum Daily changes Treasury balance 1.233 12.639 1.002 9.780 1,484 17,393 1,413 22,571 Currency in circulation 655 1.582 646 2,016 679 2,474 709 2,788 Foreign RP pool 486 3,955 369 3,017 542 6,989 500 6,193 Float 515 3,748 790 8,154 548 4,605 791 5,449 Net value , 1,491 11,470 1,413 11.787 1,896 18,366 1,751 23,727 Daily forecast error Treasury balance 642 4,188 732 4.921 726 5,969 620 3,407 Currency in circulation 206 932 213 932 200 980 217 999 Foreign RP pool 124 617 113 617 203 1,433 150 935 Float 284 1,903 371 3,768 312 3,433 383 2,386 Net value 743 4,139 898 5,042 848 5,991 744 3,664 NOTE. Projection errors are based on estimates by the staff of ihe Federal Reserve Bank of New York. of reserve balances and the potential for error in the order of magnitude. The largest daily miss in 1998 projections of these factors have taken on a greater was more than $3'/2 billion. The Treasury balance role in the Desk's daily reserve management delibera- is usually the single most difficult factor to estimate, tions.15 For the same reason, the day-to-day volatility and it, along with float, were the sources of the in the demand for excess reserves and the potential biggest daily errors. for error in the judgment of daily excess demand Comparable measures of changes in the daily have also become more important considerations in demand for excess reserves consistent with the funds the Desk's management of reserves. rate target and of errors in the daily estimation of Recent experience with daily changes and forecast excess demand are not available. Important determierrors of key operating factors that determine the nants of the intraday pattern of the demand for excess supply of balances at the Federal Reserve—the Trea- reserves are discussed later. sury balance at the Federal Reserve, Federal Reserve float, currency in circulation, and the foreign RP pool—is summarized in table 5. The average of the Temporary Open Market Operations Arranged absolute daily net changes in reserve balances arising in 1998 from movements in the four key operating factors approached $2 billion in both 1997 and 1998, high- The Desk typically relies on a mix of term and lighting the importance of the Desk's temporary overnight RPs to meet reserve shortages (chart 6).16 operations for smoothing out daily reserve patterns. With total required balances remaining low in 1998, To some degree, the average was driven by outliers, the Desk continued to use overnight RPs extensively which topped out at about $20 billion in each of the to address reserve shortages to take into account past two years, thus illustrating the potential for huge the daily volatility of operating factors and of excess swings. The biggest swings tended to be associated reserve demand and also potential projection errors. with movements in the Treasury balance around key For the same reasons, a term RP was rarely intended tax dates. to address entirely the reserve shortages estimated Average absolute daily forecast errors underscore beyond the initial date, and frequently an overnight the risks in managing reserve supply. The average of operation was arranged on the same day as a term the absolute daily net forecast error for the sum of operation. Term RPs were usually designed to leave these same four operating factors in 1998 was about reserve shortages of at least moderate size in subse- $750 million, somewhat less than the errors in the quent days to be addressed with additional RPs. This preceding two years but still of the same general approach allowed the Desk to tailor the total amount of all RPs outstanding on any day to fit the most up-to-date estimates of the daily reserve pattern. 15. The reserve supply projections presented in this section are those of the Federal Reserve Bank of New York staff. In making reserve management decisions, the Desk also uses estimates made by the Board for all factors and by the Treasury for the Treasury balance. Differences among the staff estimates underscore the risks inherent in 16. The expression overnight is used to denote any operation that these daily estimates. matures on the next business day. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

226 Federal Reserve Bulletin • April 1999 6. System temporary operations, by type, 1995-9 reserve estimates first becomes available. For the new long-term RPs that were used in 1998, operations Number were arranged earlier in the day, around 8:30 a.m., • 1995 I because the Desk wanted to take advantage of the ~O 1996 — 140 more liquid financing market that an earlier entry _• 1997 — 120 time would offer. Moreover, these RPs were not • 1998 — 100 necessarily intended to meet all of the reserve short- J| age estimated for the day on which they were ~ • — 80 • | arranged, so there was no need to wait for a complete II — 60 set of reserve estimates. For the three long-term operations arranged in 1998, propositions were II — 40 strong—measured in total volume and in rates offered .dl • |— 20 relative to current market quotes. il 1 1 The Desk was always prepared to depart from its Tent) rcpoichase Ovcnsijilw Term matched Overnight usual practices as circumstances warranted. It entered agreements1 repurchase sale-purchusc matched agreements* agreements sale-purchase the market ahead of the usual intervention time on agreements numerous occasions apart from the three long-term 1. Includes fixed and withdrawable repurchase agreements. RPs. These early entries were motivated either by a 2. Includes system and customer repurchase agreements. view that the expected reserve shortage on the day required taking advantage of the greater market The frequency with which term RPs were arranged liquidity that exists earlier in the morning or by a was down a bit from 1997, partly reflecting the belief that the firm financing pressures that existed at smaller reserve shortages that occurred in 1998. the time needed to be addressed promptly. On one Three fixed-term operations with maturities ranging occasion, an early entry was followed up with another from thirty days to forty-five days were arranged in operation at the usual market intervention time. December, using the Desk's new authority for longterm RPs, to address that portion of the year-end reserve shortages that was expected to recede signifi- EXCESS RESERVES cantly in January 1999. These term RPs were among the few such RPs that were set to mature in a main- Period-Average Excess Reserves tenance period beyond the one in which they were arranged. The uptrend in period-average levels of excess The Desk used matched sale-purchase agreements reserves that became evident in 1997 and that has (MSPs) in 1998 for the first time since May 1996. been associated with the decline in total required These agreements, under which the Desk first sells securities and then purchases them at a predeter- 7. Excess reserve holdings, by bank category, 1995-98 mined price from dealers at a later date, are used to address temporary reserve surpluses. The first two of Millions of dollars these operations took place in the January 14 period, All institutions when huge upward revisions were made to weather- Other institutions related float after term RPs had been put in place to 1,800 address what were expected to be reserve shortages. Most of the MSPs were arranged in May, after earlier 1,200 projections of potentially huge reserve shortages during the April-May tax season proved inaccurate (see 600 box "The Management of Reserves around the April 15 Tax Season"). Technique of Intervention 1995 1996 1997 1998 NOTE. Data are maintenance-period averages. Total excess reserves averaged The Desk retained its practice of normally arranging $1,012 million in 1995. $1,120 million in T996, $1,322 million in 1997. and temporary open market operations no more than once $1,548 million in 1998. 1. "Other institutions" include small banks and thrift institutions, foreigna day, shortly after 10:30 a.m. when a complete set of related institutions, and nonreporters. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Highlights of Domestic Open Market Operations during 1998 227 The Management of Reserves around the April 15 Tax Season The Desk's initial reserve management strategy around the After making its outright purchases in April, the Desk April 15 tax date reflected its experience in April-May unexpectedly found itself having to drain reserves as a 1997. Tax receipts in April-May 1997 far exceeded pro- result of the higher TT&L capacity and Treasury's lower jected inflows, and the resulting reserve shortages that total cash position. Large RPs were still needed to add the Desk had to address with temporary operations were reserves in late April when the Treasury balance at the unprecedented. Tax receipts in April-May 1998 were Federal Reserve was at its peak. But for a few days before a expected to exceed their level of the previous year by a brief surge in cash holdings and again starting at the very substantial amount, and the Treasury's balance at the Fed- end of the month when large government outlays and eral Reserve was expected to surge again, even though the paydowns brought Treasury's cash position down, matched Treasury had arranged to have $64 billion in cash manage- sale-purchase agreements were used to drain reserve ment bills mature in mid-April ($14 billion more than in surpluses. 1997) in order to control the buildup in its general cash position. Reserve deficiencies (reserve requirements less reserve To prepare for the expected surge in Treasury receipts, supply) and temporary open market operations the Desk purchased $13.2 billion of securities outright in in April and May March and April, much more than it had acquired during that time in 1997, to limit the reserve shortages that would Billionsdf dollars have to be addressed with RPs. Even so, sizable RPs were B Reserve effect of A still expected to be needed through mid-May to meet t o e p m er p a o t r io a n ry s / / \ 'L E re s s t e im rv a e t e d d eficiencies1 — 50 reserve shortages that, according to the highest estimates, — / — 40 were expected to peak at nearly $60 billion in late April. \ Only after the planned outright operations were completed 1 Actual levels did it become evident that reserve deficiencies would be — / I of deficiencies' — 30 significantly less than initially anticipated. To a large — 20 degree, this projection error reflected the success that the [jr Treasury had in promoting participation in its Treasury Tax V— 10 Is & Loan (TT&L) program after it broadened the types of immui collateral it accepted for this purpose. TT&L capacity was more than $15 billion higher than anticipated, and this 1 1 1 II 1 ! II 1 ! iVrHitiuiL— 1 1 higher capacity reduced the cash balance that had to be held 15 16 17 20 21 22 23 24 27 28 2930 1 4 5 6 7 8 11 12 13 14 15 in the Federal Reserve account by a similar amount once the April May Treasury's total cash position exceeded the holding capac- NOTE. Actual and projected reserve deficiencies include all outright operaity at private banks. At the same time, total corporate and tions arranged through mid-May. A positive value denotes a level or reserve supply below reserve requirements and a need to add reserves; a negative individual taxes fell about $20 billion short of the high end value indicates a level of supply above requirements. of the set of estimates. 1. Reserve deficiencies are estimated as of April 14 by the staff of the Federal Reserve Bank of New York. 2. Levels before temporary open market operations. balances intensified in 1998.17 However, the increase bly small commercial banks and thrift institutions in 1997 was observed broadly across different (chart 7).18 classes of depository institutions, whereas in 1998 The link between excess reserve levels and total the increase in the underlying demand for excess required balances of small commercial banks and reserves occurred away from large institutions thrifts can be seen in chart 8. From 1995 to the and was concentrated among other institutions, nota- middle of 1997, the period of greatest decline in total required balances for small commercial banks and thrifts, only a small fraction of this decline was 17. The Desk attempts to meet depository institutions' demand for reflected in higher excess levels for these institutions. excess reserves both for every maintenance period and for each day in a period. For this reason, absent a true measure of excess demand, actual levels of excess reserves can be taken as an approximation of 18. The "large" bank category for which the Federal Reserve demand, notwithstanding the surprises to reserve supply and misjudg- collects reserve information includes about 130 of the largest deposiments the Desk may make about demand that can cause actual excess tory intilutions. The Federal Reserve also collects reserve information levels to diverge from true demands on any given day. For a discus- separately for small commercial banks, thrift institutions, foreignsion of the uptrend in excess reserves in 1997, see Virginia Cheng, related institutions, and nonreporting banks. In this article, these four Spence Hilton, and Ted Tulpan, "Open Market Operations during categories are sometimes aggregated into a grouping labeled "other 1997," Federal Reserve Bulletin, vol. 84 (July 1998). pp. 523-25. institutions." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

228 Federal Reserve Bulletin • April 1999 i. Total required balances and excess reserves at small sionally have been left with on some days have been banks, thrift institutions, and nonreporters, 1995-98 harder to offset fully with negative excess positions on remaining days within the same maintenance Millions of dollars Millions of dollars period because required balances have been so low. That is, depository institutions in general have been Required balances 5,000 j/L. i^Jj 10,000 more prone to becoming "locked in" inadvertently to holding an undesirably high level of excess reserves under low required balances. 4,000 — ' 9,000 'V In making its allowance for excess reserve demand in a maintenance period, the Desk allows for ele- 3$U0w •"•'"" 8,000 vated precautionary demands, and it takes stock of IVl i any lock-ins that arise as a maintenance period *m - Excess re*™* f V'XJAMU— 7l000 progresses. But the Desk does not provide higher excess reserve levels as it goes through a period in 1,000 M . MJ TV/P^A 6,000 anticipation of undesired lock-ins that have not yet arisen, even if these are now seen as more likely to 1 1 1 1 I develop at some point. Doing so would risk leaving 1995 1996 1997 1998 depository institutions holding undesired reserve sur- NOTE. Data are maintenance-period averages. Total required balances are pluses at the end of the period if they succeed in reserve requirements plus required clearing balances less applied vault cash. Excess reserves at these institutions averaged $810 million in 1995, $847 mil- avoiding lock-ins lion in 1996, $951 million in 1997, and $1,207 million in 1998. The measures of excess reserves and total required balances in this and the charts thai follow are In 1998 in recognition of recent trends, the allowdrawn from internal data sources that reflect only revisions to the data made ances in the nonborrowed reserve objective that the within (he first five weeks after a maintenance period has ended. Desk made at the start of each maintenance period for period-average excess demand rose from about From the middle of 1997 through 1998, even though $1 billion, a level that had prevailed for many years, the pace of decline in required balances slowed, at to levels that were often close to $l'/2 billion. Howthe margin the further decline had a greater effect on ever, the Desk treated any initial allowance very excess reserve levels. flexibly, making more frequent informal modifica- The link between excess reserves and total re- tions as a period unfolded in response to actual quired balances among large depository institutions patterns of excess holdings and to the observed as a group was less clear in 1998. The pace of decline behavior of the funds rate. To aid in its judgment, the in total required balances at these institutions also Desk used daily reports of excess holdings at small slowed around the middle of 1997. Although required balances have fallen a bit since then, the average level of excess reserves at these institutions was 9. Total required balances and excess reserves at large banks, 1995-98 unchanged on balance in 1998, after having risen in 1997 (chart 9). Millions of dollars Millions of dollars Lower levels of total required balances have led to higher excess reserve levels in two ways. Some depository institutions working with lower required 4,000 16,000 balances have consistently chosen to hold a higher level of excess reserves at the end of each day as a 3,000 14,000 precaution against contingencies that could reduce their balances and send them into overdraft. This 2,000 — 12,000 behavior—an increase in precautionary demands for excess reserves—is more characteristic of some insti- 1,000 10,000 tutions, especially smaller entities, that have limited access to funding markets. However, among larger 8,000 banks and even some smaller institutions that have the ability to adjust their balances throughout the day by trading in the federal funds market, higher excess 1995 1996 1997 1998 reserve levels have been the byproduct mostly of NOTE. Data are maintenance-period averages. Total required balances are unanticipated late-day payment inflows. Unintended reserve requirements plus required clearing balances less applied vault cash. high excess levels that individual institutions occa- Excess reserves at these institutions averaged S126 million in 1995, $190 million in 1996, $267 million in 1997, and $247 million in 1998. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Highlights of Domestic Open Market Operations during 1998 229 10. Average levels of daily excess reserve holdings, In 1998, the Desk provided even higher levels of by day in a maintenance period, 1995-98 excess reserves than it had in previous years on days when payment flows were heaviest and most unpre- Millions of dollars dictable (chart 11). These days include the first and last business day of each month, tax dates, and major Treasury auction settlement dates. Most, but not all, of the increase in excess reserves provided by the Desk wound up at larger banks. In providing even higher levels of excess reserves on high payment flow days, the Desk looked for other occasions within the same maintenance period to leave fewer excess reserves, consistent with depository institutions' period-average demands, with the attendant risk that unexpected reserve shortfalls on those days could Thins. Fit Mon. Tues. Wed. Ttara. Fri. Mon. Toes. Wed. leave the actual level of balances for the banking Week One Week Two system precariously low. and large institutions to evaluate their levels of demand. It also used daily reports containing reserve Excess Reserve Developments information for about twenty-five individual large in October-December banks to determine whether any of these banks were locked into holding excess reserves in a maintenance The trends noted in the previous discussion, both for period. higher period-average excess levels and for elevated levels on high payment flow days, were reinforced late in the year by the Desk's reaction to recurring bouts of rate firmness that emerged in overnight Daily Patterns of Excess Reserves funding markets. The background for these pressures is discussed more fully in the following section, The preference that depository institutions have which reviews the behavior of the federal funds shown for years for concentrating reserve balance rate late in 1998. The Desk often responded to any holdings late in a maintenance period was again upward rate pressure in the morning by providing a evident in 1998 (chart 10). This skewed pattern was higher level of excess reserves for that day. These most pronounced at large banks, where cumulative funds market pressures were typically most intense average excess positions were usually negative around high payment flow days, so that the Desk was throughout the period until the final day. particularly careful to leave total balances high on those days. Sometimes suitable opportunities to work off the resulting high excess levels did not arise 11. Excess reserves on high payment flow days, 1995-98 because the funds rate often remained firm even in Millions or dollars the presence of the accumulation of excess reserves. D At other institutions As a result, average excess levels for some periods • At large banks in October and November were particularly elevated. — 4,000 1 1 But the trend toward higher excess levels previously described was evident even before the final quarter of — 3.000 , I 1 the year. _ — 2,000 — 1,000 THE BEHAVIOR OF THE FEDERAL FUNDS RATE Daily behavior of the federal funds rate is measured 1995 1996 1997 1998 by the absolute deviation of the effective (trade- NOTE. Data are annual averages. High payment flow days include the first weighted average) rate from the target rate specified and last business day of each month (excluding quarter-end dales), major tax dates, and midquaiier settlement dates for Treasury refundings. The quarter- in FOMC directives and by the standard deviation of ends are dropped even though payment flows are extremely heavy on these days the rates on each day's transactions around the effecbecause the levels of excess reserves some banks held on these days for balance-sheet-statement purposes was very volatile. tive rate. Through the first three quarters of 1998, the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

230 Federal Reserve Bulletin • April 1999 Absolute values of deviations of the daily effective federal funds rate from target and the standard deviations of the daily effective funds rate, all business days, 1997-98 Standard deviation (basis points) All business days in 1997 • o o o oo o • • •• o o o a — 50 0 •• Median absolute deviation of effective rate from target = 7 basis points' O Jan. 1-Sepi. 28 — 40 • Sept. 29-Dec. 3 i -- 30 — 20 = 10 Median standard deviation = 9 basis points 10 20 30 40 50 60 70 All business days in 1998 a •• • o to • — 50 « 1997 median absolute deviation of i effective rate from target = 7 basis points # — 40 — 30 o ° 8 o -8- a — 20 8 oSl 8 |*8c _— 10 1997 median standard deviation = 9 basis points 10 20 30 40 50 60 70 Absolute value of effective target rate (basis points) NOTE. Daily observations form a discrete rather than a continuous distribu- In 1998 ihe percentage of days on which (lie deviation of the effective funds tion. For this reason, when calculating the percentage of days that fell either rate from the target and the standard deviation were both either above or below above or below a median value, observations having values equal to the median the median values are the following: are apportioned equally above and below the median. All values have been restricted to fit on a reduced scale to provide more detail at the lower values Jan. 1-Sept. 28 Sept. 29-Dec. 31 where most observations arc concentrated. (percent) (percent) In 1997 the percentage of days on which ihe deviation of the effective funds Both below 1997 median 29 10 rate from the target and the standard deviation were both either above or below Both above 1997 median 32 73 ihe median values are the following: 1. Average absolute deviation o( effective rate from target is 12 basis points. Jan. 1-Sept. 28 Sept. 29-Dcc. 31 (percent) (percent) Both below median 35 .11 Both above median 35 32 daily behavior of the federal funds rate was similar to Daily Deviations and Volatility of the Federal that of 1997 (chart 12). But both the deviations from Funds Rate in 1998 target and the intraday standard deviations increased perceptibly during the final quarter of the year when Data needed to calculate the absolute deviations of pressures associated with volatility in other financial the effective funds rate from target and the standard markets began to affect financing flows and the trad- deviation of each day's rates are compiled every ing behavior of participants in the federal funds morning by the Desk from a broad sample of brokers market.19 who arrange transactions between participants in the federal funds market. Each of these statistics captures somewhat different aspects of the behavior of the funds market. For example, the deviation of the daily 19. In this article, the persistence of higher daily volatility in the effective rate from target is often strongly influenced funds market is dated as having begun on Septetnber 29. although its actual emergence was somewhat more gradual. by participants' expectations about whether reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Highlights of Domestic Open Market Operations during 1998 231 6. Deviations of the daily effective federal funds rate from same time, banks' aversion to borrowing at the distarget and the daily standard deviation of the funds rate, count window appears to have intensified out of 1997-98 concern that borrowing might be seen as a sign of Basis points poor financial health. 1998 The intraday trading strategies many market par- Item 1997 199S ticipants adopted often lent a very firm bias to rates Jan. 1- Sept. 29- Sept. 28 Dec. 31 in the morning as highly risk-averse borrowers bid aggressively for funds early in the day. Their actions Median of standard deviations 9 12 10 22 sometimes lifted the entire rate structure paid by all Median of absolute deviations of the effective rate borrowers for much of the day, especially as lenders from target 7 8 6 16 in the market came to recognize this caution. This Average of absolute deviations pattern was most prevalent on days characterized by ol the effective rale from targe! 12 13 10 22 high payment flows, when uncertainties about daily reserve positions are typically greatest. The Desk responded to these conditions by providsupply will prove to be either scarce or plentiful on ing higher excess reserves on days when these financany day. Such expectations, which may be formed ing pressures were most e/ident. This response reinlargely on the basis of past experience, often estab- forced the tendency of the funds rate to fall off late lish the rate at which transactions will be arranged in the day when the level of balances left in place through most of the day. The daily standard deviation proved higher than final demands. Furthermore, the will capture shifts in these expectations during the high period-average levels of excess reserves that day, and it is influenced, as is the effective rate, by resulted also encouraged very soft conditions in the actual reserve conditions as they become apparent in funds rate on several maintenance period settlement late-day trading. Changes in underlying reserve con- days in October and November. The funds market ditions and the behavior of market participants are went through several cycles of firmness sustained often reflected in changes in the behavior of these over several days, often triggered by high payment two daily statistics. flow dates, followed by periods of softness.21 By late November, the Desk's provisions of added reserves From January through late September 1998, the and the adjustments made by some regular borrowers median values for both the standard deviations and in the funds market to reduce their reliance on overdeviations of the effective rate from target were night financing helped ease these upward rate preswithin 1 basis point of their median values for 1997 (table 6),20 This similarity in behavior of the funds sures, but they remained a feature of the funds market through the year-end. rate held despite the further modest decline in the level of total required balances in 1998. Still, volatil- The volatile rate environment created by market ity in these measures remained above the levels that participants' defensive trading strategies and the prevailed before 1996, when the rapid decline in total Desk's response to them was reflected in both larger required balances first began to have a notable effect deviations of the effective daily funds rate from target on the daily behavior of the funds rate. and higher daily standard deviations. The median By late September, heightened aversion to credit value of the daily standard deviations was 22 basis risk and accompanying dislocations in other financial points from late September through December, and markets began to affect the funding needs and behav- the median absolute deviation of the funds rate was ior of key participants in the federal funds market. 16 basis points, both well above the corresponding Some depository institutions encountered reduced levels for all of 1997 and through the first three access to term funding, and their demand for overnight funding rose as a result. Lenders in the overnight federal funds and Eurodollar markets in some cases cut credit lines to certain borrowers. At the 21. Softer rates sometimes emerged after participants began to incorporate expectations, which were often incorrect, that the Desk was going out of its way to make generous reserve provisions. On many days when these expectations were not accurate, the funds rate 20. In making comparisons between different time periods, median nonetheless remained soft as participants at first traded on the expectavalues are used instead of means because of the possible influence of a tion or perception of Desk generosity and then as actual levels of small number of very large outliers on the calculation of the mean. All excess reserves, even if quite low, still proved sufficient to cover calculations are based on business day observations, with no adjust- end-of-day needs. Conversely, market expectations or perceptions of ment for the effect of holidays or weekends on the calculation of low levels of liquidity kept the funds rate firm on some days when effective rates averaged over longer time periods. excess levels were high. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

232 Federal Reserve Bulletin U April 1999 quarters of 1998 (table 6).22 While the degree of 14. Average levels of the daily effective federal funds rate volatility observed in the daily behavior of the funds less the target rate, by day in a maintenance period, 1995-98 rate during the final quarter was likely aggravated by required balance levels, which hovered near historic lows, the immediate cause was the changed market climate. Average Levels of the Federal Funds Rate — 20 Because of these pressures on the funds rate late — 10 in 1998, the Desk was less successful in maintaining the average daily effective rate around the target (chart 13). For the maintenance periods that covered the fourth quarter, the absolute deviations of the period-average effective rates from target averaged Times. Fri. Mon, Tues. 10 basis points.23 The average absolute deviation Week One from target of the period-average effective funds rate was 5 basis points for earlier periods in 1998, and it prevail on many Fridays. The sharpest departure from was 4 basis points in 1997. past patterns appeared on settlement Wednesdays, the last day of a maintenance period. The effective rate on those days in 1998 was, on average, below target. Intraperiod Patterns of the Federal Funds Rate However, the low average for settlement days in 1998 to a large degree reflected developments that Intraperiod patterns of the effective funds rate, meaoccurred late in the year. During the final three sured by the deviation of the effective rate from target months of 1998, the funds rate on settlement Wednesaveraged separately for each day in a maintenance days averaged 27 basis points below the target level. period, were similar to those in preceding years This development reinforces the judgment that the (chart 14). For example, soft conditions continued to period-average levels of excess reserves in these maintenance periods exceeded demands. Over the first three quarters of 1998, the effective rates from 22. Historically, the funds rate has tended to be a bit more volatile in the fourth quarter of a year compared with the preceding three these settlement days averaged 6 basis points above quarters. However, median values of the standard deviations and of target, similar to their average deviation in 1997. the absolute deviations of the effective rate from target in the final quarter were never more than a couple of basis points higher than in the first three quarters in any year from 1995 through 1997. 23. This calculation is based on the seven maintenance periods running from the period ended October 7 through the period ended SUMMARY December 30. The conduct of open market operations throughout 13. Maintenance period averages of the effective federal 1998 was influenced by the continued growth of funds rate versus the target rate, 1995-98 sweep programs, which reduced further the level of Basis, pmnls total required balances, and late in the year by heightened aversion to credit risk in financial markets, • Average of absolute differences between period effective rates and the target which affected the activity of some participants in the H Average of differences between period federal funds market. Both developments contributed effective rates and the target to higher levels of excess reserves in the banking system and reinforced the Desk's growing reliance on very short-term operations to balance daily swings in reserve supply and demand. Through the first three quarters of 1998, intraday volatility in the federal funds rate and deviations in the daily effective rate from target were similar to those of the previous year. But late in the year, funds rate volatility rose with the 1995 1996 1997 I99S Jan.-Sepl. Ocl.-Dei:. growing aversion to credit risk among financial mar- 1998 1998 ket participants. LJ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Highlights of Domestic Open Market Operations during 1998 233 APPENDIX A.I. U.S. Treasury bills in the System Open Market A.2. U.S. Treasury bonds in the System Open Market Account, December 31, 1998 Account, December 31, 1998 Thousands of dollars except as noted Thousands of dollars except as noied Percentage Issue outstanding Percentage Maturity date of Holdings, of total Holdings, of total Net change issue outstanding 12/31/98 outs is ta s n u d e ing Coupon M d at a u t r e ity 12/31/98 outs is ta s n u d e ing 12 s / i 3 n 1 c / e 97 1/07/99' 109,320 .3 11.750 2/15/01 165,803 U.O 5.000 1/14/99' . . 156.860 .7 13.125 5/15/01 166.926 9.5 1.200 1/21/99' 6.533.390 13.8 13.375 8/15/01 256,092 14.6 1/28/99 . . 7,342,815 31.8 15.750 11/15/01 172.904 9.9 2/04/99 14,018,010 26.0 14.250 2/15/02 184,800 10.5 25.000 2/11/99 7.534,485 32.2 11.625 11/15/02 347.850 12.6 2/18/99 7.621,564 32.5 10.750 2/15/03 739.250 24.6 2/25/99 7 688,180 33.5 10.750 5/15/03 380,800 11.7 49.800 3/04/99 13,214,955 32.5 11.125 8/15/03 514,300 14.7 3/U/99 7.591,780 32.6 11.875 11/15/03 870,340 12.0 119,000 3/18/99 7,304,310 32.0 12.375 5/15/04 769,786 20.5 3/25/99 6,954,235 30.9 13.750 8/15/04 528,000 13.2 4/01/99 12,662,430 32.1 11.625 11/15/04 994,600 12.0 4/08/99 3,645.000 31.3 8.230 5/15/05 1.513,660 35.8 47.400 4/15/99 4.105,000 33.7 12.000 5/15/05 728.476 17.1 4/22/99 . .. . . .. 3,695,000 31.6 10.750 8/15/05 1.187.000 12.8 4/29/99 8,440.000 31.7 9.375 2/15/06 133,000 2.8 5/06/99 3,935,000 32.1 7.625 2/15/07 1,396,164 33.0 113.000 5/13/99 3,800,000 32.2 7.875 11/15/07 378,500 25.3 5/20/99 3,855.000 32.5 8.375 8/15/08 788,500 37.5 5/27/99 9.090.000 33.5 8.750 11/15/08 1.588,500 30.4 6/03/99 3,840,000 32.4 9.125 5/15/09 921.205 20.0 6/10/99 3,900,000 30.9 10.375 11/15/09 1.075.939 25.6 6/17/99 3 775.000 31.2 11.750 2/15/10 717.400 28.8 6/24/99 7,925.000 30.9 10.000 5/15/10 1.176.556 39.4 7/01/99 3,540.000 32.0 12.750 11/15/10 1.260,865 26.6 7/22/99 5.305,000 33.7 1.3.875 5/15/11 1.073,542 23.3 8/19/99 5.565.000 35.3 14.000 11/15/11 975,091 19.9 9/16/99 5,390.000 34.9 10.375 11/15/12 1.611.741 14.6 10/14/99 . 5.650.000 3.3.9 12.000 8/15/13 3.040.772 20.6 11/12/99 5 225,000 32.2 13.250 5/15/14 869.450 17.4 12/09/99 5,360.000 32.8 12.500 8/15/14 905.720 17.7 11.750 11/15/14 1.195,000 19.9 Total Treasury bills 194,772334' 11.250 2/15/15 1.335.733 10.5 10.625 8/15/15 1,167,400 16.3 Net change since 9.875 11/15/15 941.500 13.6 12/31/97 -2,350,364 9.250 2/15/16 880,000 12.1 7.250 5/15/16 1.098.000 5.8 103.000 NOTE. Data are on a slalernent-date basis. 7.500 11/15/16 1.378,000 7.3 115,000 1 Holdings of Treasury bills were reduced by the following amounts of 8.750 5/15/17 1.855.000 10.2 405,000 matched snie-purchase agreements, which are returned the next day: 8.875 8/15/17 1.494,000 10.7 585.000 $12,700,000 of Jan. 7 Treasury bills, $7,700,000 of Jan. 14 Treasury bills, and 9.125 5/15/18 728,900 8.4 232,000 $527,110 of Jan. 21 Treasury bills. 9.000 11/15/18 304.000 3.4 48.000 8.875 2/15/19 1,224.000 6.4 291.000 8.125 8/15/19 1.735,900 8.6 45,000 8.500 2/15/20 1.095.879 10.7 135.000 8.750 5/15/20 1.211,600 11.9 145.000 8.750 8/15/20 1,366,600 12.5 7.875 2/15/21 830.500 7.5 55.000 8.125 5/15/21 1.103.000 9.2 165,000 8.125 8/15/21 940,000 7.7 260.000 8.000 11/15/21 1.695.000 5.2 545.000 7.250 8/15/22 605.000 5.8 145,000 7.625 11/15/22 810,000 7.6 150,000 7.125 2/15/23 1,981.000 10.8 568.000 6.250 8/15/23 1.447.000 6.3 412.000 7.500 11/15/24 565.000 4.9 60.000 7.625 2/15/25 875,000 7.5 60.000 6.875 8/15/25 1,345.000 10.7 140,000 6.000 2/15/26 999.000 7.7 65.000 6.750 8/15/26 1.050,000 9.6 85.000 6.500 11/15/26 1.470.000 12.8 6.625 2/15/27 530.000 5.1 50.000 6.375 8/15/27 730.000 6.8 6.125 11/15/27 2,505,000 11.1 I..325.000 5.500 8/15/28 1.771.808 15.0 1.771.808 5.250 11/15/28 945,000 8.6 945.000 Matured in 1998 .. -30,750 Total Treasury bonds 68,642,352 9,235,458 NOT li. Dala arc on a statement-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

234 Federal Reserve Bulletin • April 1999 A.3. U.S. Treasury notes in the System Open Market A.3.—Continued Account, December 31, 1998 Thousands of dollars except as noted Issue outstanding Percentage Net change Issue outstanding Percentage Net change Holdings. of total issue since Holdings, of total issue since Coupon Maturity 12/31/98 outstanding 12/31/97 Coupon Maturity 12/31/98 outstanding 12/31/97 date date 6.375 1/15/99 892,045 8.5 4.625 12/31/00 2,554,662 13.1 2.554,662 5.000 1/31/99 848,000 6.6 91,000 5.500 12/31/00 891.000 7.0 5.875 1/31/99 i,917,000 9.9 1,172.000 5.250 1/31/01 800,000 6.2 5.000 2/15/99 3.644,140 16.6 5.375 2/15/01 1,532,560 10.0 1.53W60 8.875 2/15/99 1.048,600 10.8 97,000 7.750 2/15/01 993.500 8.8 64.000 5.500 2/28/99 915,000 7.7 200,000 5.625 2/28/01 1,061,000 8.3 160.000 5.875 2/28/99 1.656,000 8.3 457,000 6.375 3/31/01 1,630,000 11.5 30,000 5.875 3/31/99 1,875,000 14.7 6.250 4/30/01 1,257,500 9.1 319,000 6.250 3/31/99 1.420,000 7.2 5.625 5/15/01 2,270,117 17.7 2,270,117 7.000 4/15/99 1,073,700 10.6 8.000 5/15/01 1,473.000 11.9 316.000 6.375 4/30/99 1,545,000 8.0 320.000 6.500 5/31/01 1,074,900 7.8 163,000 6.500 4/30/99 1,324,620 10.8 105.000 6.625 6/30/01 1,175.000 8.2 6.375 5/15/99 2.869.124 12.3 6.625 7/31/01 957,000 6.8 '84.000 9.125 5/15/99 1,637,500 16.3 7.875 8/15/01 1,469,400 11.9 94,400 6.250 5/31/99 1,020,900 5.5 282.900 6.500 8/31/01 1,041,300 7.5 181,000 6.750 5/31/99 871.990 7.1 185.000 6.375 9/30/01 1,144,100 7.9 107,100 6.000 6/30/99 839.435 4.7 195,000 6.250 10/31/01 949.000 6.5 66,000 6.750 6/30/99 1,644,820 12.6 7.500 U/15/01 2,824,000 11.7 383.000 6.375 7/15/99 409,000 4.1 60.000 5.875 11/30/01 729,000 5.2 253,000 5.875 7/31/99 1,421,970 8.5 325,000 6.125 12/31/01 900,000 6.4 275.000 6.875 7/31/99 1.531,400 12.4 6.250 1/31/02 1.105,000 8.2 328,000 6.000 8/15/99 2,676,110 11.8 444.000 6.250 2/28/02 944.400 6.9 141,400 8.000 8/15/99 943,600 9.3 85.000 6.625 3/31/02 1.400,900 9.8 420,000 5.875 8/31/99 1,439,630 8.4 135.000 6.625 4/30/02 1.292,500 9.0 257,500 6.875 8/31/99 1,101.480 8.9 150,000 7.500 5/15/02 1341,009 11.5 325.000 5.750 9/30/99 667.380 3.8 25.000 6.500 5/31/02 1,132.000 8.4 183,000 7.125 9/30/99 1,349.752 10.6 271,000 6.250 6/30/02 867.000 6.6 81.000 6.000 10/15/99 406,115 3.9 6.000 7/31/02 442,000 3.6 147.000 5.625 10/31/99 732.000 4.4 230.000 6.37S 8/15/02 2.612,000 11.0 365,000 7.500 10/31/99 1,107315 9.2 549,000 6.250 8/31/02 942.000 7.4 241,000 5.875 11/15/99 2.790,968 12.2 5.875 9/30/02 635.000 5.0 175,000 7.875 11/15/99 814.000 7.6 5.750 10/31/02 710.000 6.1 320,000 5.625 11/30/99 1,131.175 6.7 583,000 5.750 11/30/02 644.000 53 244,000 7.750 11/30/99 1,408,145 11.9 232,000 5.625 12/31/02 700.000 5.8 115,000 5.625 12/31/99 795.780 4.8 5.500 1/31/03 802.000 6.1 802,000 7.750 12/31/99 1,379,665 11.1 6.250 2/15/03 2.160.000 9.2 15,000 6.375 1/15/00 689.545 6.8 5.500 2/28/03 1,199.000 8.8 1.199.000 5.375 1/31/00 1.140,730 6.5 1.140.730 5.500 3/31/03 1.385.000 9.8 1,385.000 7.750 1/31/00 1.125.440 9.3 261,000 5.750 4/30/03 1.010,000 8.0 1,010,000 5.875 2/15/00 1,232,796 6.0 386.000 5.500 5/31/03 1,115,000 8.5 1,115.000 8.500 2/15/00 1,204.000 11.3 218.000 5.375 6/30/03 1309,000 10.0 1309.000 5.500 2/29/00 1,497,320 8.4 1.497,320 5.250 8/15/03 2,834,000 14.3 2,834.000 7.125 2/29/00 1,477,290 11.9 155,000 5.750 8/15/03 3.685,000 13.2 5.500 3/31/00 1,998,220 11.6 1.998.220 4.250 11/15/03 1,518.385 8.2 1,518,385 6.875 3/31/00 1.401.510 10.7 60.000 5.875 2/15/04 650.000 5.0 5.500 4/15/00 368,000 3.5 8.000 7.250 5/15/04 1.940.550 13.5 35.000 5.625 4/30/00 1,321,000 8.5 1,321,000 7.250 8/15/04 835.000 6.3 25,000 6.750 4/30/00 1.524,250 12.3 500,000 7.875 11/15/04 1,753,040 12.3 6.375 5/15/QO 2,807,000 13.5 7.500 2/15/05 1.291.600 9.4 141,600 8.875 5/15/00 480,000 4.6 6.500 5/15/05 2,000.000 13.6 5.500 5/31/00 1,321,000 8.0 1,321,000 6.500 8/15/05 1,800,000 12.0 6.250 5/31/00 911,460 7.2 68.000 5.875 11/15/05 1,700.000 11.2 5.375 6/30/00 1,383.000 9.3 1,383,000 5.625 2/15/06 1,708,000 11.0 208,000 5.875 6/30/00 740,100 5.9 6.875 5/15/06 2,075,000 13.0 5.375 7/31/00 1,976,750 10.6 1,976.750 7.000 7/15/06 2,724,752 12.0 459.000 6.125 7/31/00 698,000 5.7 243.000 6.500 10/15/06 2,577,800 11.5 145.000 6.000 8/15/00 2.147,845 11.9 837,900 6.250 2/15/07 840.000 6.4 300.000 8.750 8/15/00 1.212,400 10.9 54.000 6.625 5/15/07 1,750,000 12.5 5.125 8/31/00 2,994300 15.0 2,994,300 6.125 8/15/07 2,518,000 9.8 343.000 6.250 8/31/00 721,000 6.1 71.000 S.SOO 2/15/08 1,420.000 10.5 1.420,000 4.500 9/30/00 2,241,500 11.6 2,241.500 5.625 5/15/08 4,084.000 15.0 4.084,000 6.125 9/30/00 1,009,000 8.4 4.750 11/15/08 1,135,000 8.4 1.135.000 4.000 10/31/00 2.462,900 12.0 2,462,900 Matured in 1998 . -52,079,735 5.750 10/31/00 729.430 6.0 192,000 5.750 11/15/00 1.888,200 11.8 237.000 Total Treasury 8.500 11/15/00 882,300 7.7 1,300 notes 184,960,020 12,427,009 4.625 lt/30/00 2.032.200 10.1 2,032,200 5.625 U/30/00 878.200 7.1 232.000 NOTL. Data are on a slatement-dale basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Highlights of Domestic Open Market Operations during 1998 235 A.4. U.S. Treasury inflation index bonds and inflation index A.5. U.S. federal agency holdings in the System Open notes in the System Open Market Account, Market Account, December 31. 1998 December 31, 1998 Thousands of dollars except as noted Thousands of dollars except as noted Agency and issue outstanding Percentage Net change Holdings, of total Issue outstanding Maturity H 12 o / l 3 di 1 n / g 9 s 8 , Pe o r i f c s e s to n u t t e a a l ge Net s i c n h c a e nge Coupon Ma d t a u t r e ity 12/31/98 outs is ta s n u d e ing 12 s / i 3 n 1 c / e 97 Coupon date outstanding 12/31/97 Federal National Mortgage Association Treasury inflation (FNMA) index bonds (1IB) 9.550 3/10/99 25.000 3.6 3.625 4/15/28 820.000 4.9 820.000 8.700 6/10/99 23.000 2.8 Matured in 1998 8.450 7/12/99 5.000 1.0 8.350 11/10/99 7,000 .4 Total Treasury IIB 820,000 . . . 820.000 6.100 2/10/00 25,000 5.0 9.050 4/10/00 10.000 1.3 Treasury inflation 9.200 9/li/OO 10.000 2.5 index notes (UN) 6.625 4/10/03 0 -30.000' 3.625 7/15/02 900.000 5.4 3.375 1/15/07 832,000 5.3 82,000 6.450 6/10/03 0 -25,0001 3.625 1/15/08 1,135,000 6.8 1.135.000 5.800 12/10/03 10.000 1.3 Matured in 1998 7.550 6/10/04 24,650 3.1 8.250 10/12/04 30.000 7.5 6.850 9/12/05 20.000 5.0 Total Treasury UN 2,867,000 . . . 1,217,000 6.700 11/10/05 100,000 25.0 10.350 12/10/15 0 -10,000 Total Treasury bonds, 8.200 3/10/16 0 -15,000 notes, UN, and IIB1 257,289,372 Matured in 1998 .... -328.000 NOTE. Data are on a statement-date basis. Total. FNMA . 289.650 -328.000 1. Total amounts of Treasury bonds and notes are from tables A.2 and A.3 respectively. Federal Home Loan Banks (FHLBanks) 9.300 1/25/99 2,000 .6 8.600 6/25/99 3,900 1.2 8.450 7/26/99 5.000 2.0 8.6O0 8/25/99 11,000 4.5 8.375 10/25/99 10.000 3.7 8.6O0 1/25/00 6,000 2.0 Malured in 1998 .... -19.000 Total.FHLBanks ... 37.900 -19,000 Farm Credit Administration (FCA) 8.650 10/01/99 10.000 2.9 Matured in 1998 Total, FCA 10.000 Total agency issues . 337350 -347,000 Total Treasury and agency issues: . 452,399,256 NOTE. Data are on a statemenl-date basis. 1. Called issue. 2. Toutls for Treasury issues are from tables A. I. A.2. A.3. and A.4. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

236 Industrial Production and Capacity Utilization for February 1999 Released for publication March 16 increase in that industry group. At 132.6 percent of its 1992 average, industrial production in February Industrial production increased 0.2 percent in Feb- was 1.9 percent higher than it had been in February ruary. Mining production rose 0.4 percent, the 1998. Overall capacity utilization in February slipped first increase in a year, while production at utili- 0.1 percentage point, to 80.3 percent, a level P/4 perties decreased 0.6 percent. Manufacturing output centage points below its long-term average and increased 0.2 percent, the fifth consecutive month of 2VA percentage points below its February 1998 level. Industrial production and capacity utilization Ratio scale, 1992 =100 Percent ot capacity Industrial production Capacity utilization — 130 ~~ Manufacturing - 120 Total industry - 85 V Total industry f - 110 - 80 " Manufacturing ^> 100 V 11 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1990 1992 1994 1996 1998 1988 i 199i 0 i 19i92 1994 1996 1998 Industrial production, market groups Ratio scale, 1992= 100 Ratio scale, 1992 =100 Consumer goods 135 _ Intermediate products - 135 Durable ,. /\A/^ \ 125 125 /^ 115 Construction supplies y'Sv^' ^~f~^ - 115 105 105 •f^\~\^T\f Nondurable -- 95 Hr^vv^ Business supplies -_ 95 V 1 1 1 1 1 1 1 1 1 1 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 1 1 1 1 1 1 I i I 1 1 1 1 I 1 1 1990 1992 1994 1996 1998 1990 1992 1994 1996 1998 All series are seasonally adjusted. Latest series, February. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

237 Industrial production and capacity utilization, February 1999 Industrial production, index, 1992=100 Percentage change Category 1998 1999 1998 1999' Feb. 1998 Nov.' Dec' Jan.' Feb.? Nov.' Dec' Jan.' Feb.n Feb. 1999 Total 132.2 132.4 132.4 132.6 -.2 .2 .0 .2 1.9 Previous estimate 132.3 132.5 132.5 — 1 .2 .0 Major market groups Products, total2 124.5 124.4 124.5 124.5 -.3 .0 .0 .0 1.7 114.8 115.0 115.1 115.1 -.4 .2 .1 .0 _ 2 168.1 167.5 167.5 ' 167.8 -.6 -.3 .0 .2 6.9 Construction supplies 129.6 131.1 131.6 131.5 .9 1.1 .4 -.1 4.6 Materials 144.6 145.3 145.2 145.7 .1 .4 .0 .3 2.2 Major industry groups Manufacturing 136.4 136.6 136.7 136.9 2 .1 .1 .2 2.4 Durable 161.0 161.2 161.5 162.3 -.1 .2 .2 .5 5.4 Nondurable 111.6 111.7 111.6 111.4 .7 .1 -.1 -.2 -1.2 101.1 100.0 97.0 97.4 -.9 -1.0 -3.0 .4 -9.4 Utilities 110.6 112.5 114.6 114.0 -5.1 1.7 1.9 -.6 4.5 Capacity utilization, percent MEMO Capacity, percentage 1998 1998 1999 change, Average, Low, High, Feb. 1998 1967-98 1982 1988-89 to Feb. Nov.' Dec' Jan.' Feb." Feb. 1999 Total 82.1 71.1 85.4 82.6 80.8 80.7 80.4 80.3 4.8 80.9 80.8 80.5 81.1 69.0 85.7 81.8 80.1 79.9 79.6 79.5 5.3 80.5 70.4 84.2 80.7 79.4 78.9 78.5 78.4 6.4 Primary processing 82.4 66.2 88.9 84.7 82.4 82.8 83.0 82.6 2.7 Mining 87.5 80.3 88.0 89.9 83.8 82.9 80.3 80.5 1.1 Utilities 87.4 75.9 92.6 86.6 87.3 88.7 90.4 89.8 .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. MARKET GROUPS remains below its level in the first half of 1998. The output of construction supplies edged down 0.1 per- The output of durable consumer goods increased cent after four consecutive months of increases. The 0.9 percent, a rise buoyed by large increases in the production of business supplies was flat. production of appliances and home electronics. In A strong increase in the production of semiconduccontrast, the production of automotive products edged tors contributed to the 0.6 percent increase in the down 0.1 percent after a strong gain in January. The production of durable goods materials. The output of output of nondurable consumer goods excluding basic metals fell 0.1 percent, and the level of producenergy decreased for the third consecutive month; tion remained more than 6 percent less than in Febpart of the decline is attributable to softness for ruary 1998. The production of nondurable materials clothing and paper products. The output of consumer slipped 0.3 percent, a decline reflecting weakness energy products, which has been volatile recently, in chemicals and paper materials. The production of fell 1.1 percent, reversing only part of the 2.8 percent energy materials edged up 0.2 percent. gain in January. The production of business equipment increased 0.2 percent after having been flat in January. Declines INDUSTRY GROUPS in the output of industrial equipment and transit equipment were more than offset by gains in informa- Manufacturing output grew 0.2 percent, with a V2 pertion processing equipment and other equipment. The cent gain in the production of durable goods and gain in the other equipment group resulted from a a slight pullback in the production of nondurable jump in farm equipment, although output of the latter goods. Durable goods industries that posted increases Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

238 Federal Reserve Bulletin • April 1999 in production included furniture and fixtures, indus- NOTICE trial machinery, electrical machinery, and instruments. Those in which output fell included lumber; The capacity estimates in this month's release incoraircraft, which continued to edge down from the very porate a small change in the method used to interpohigh level achieved last year; and motor vehicles and late the annual estimates of capacity growth to the parts, which slipped again although remaining at a monthly frequency. The previous monthly capacity high level. The production of nondurable goods figures were computed assuming that capacity growth edged down 0.2 percent after having declined 0.1 per- is constant from the beginning of a year to the end, cent in January. Losses were widespread; gains were with potentially abrupt changes in growth rates posted in tobacco products, chemicals, and rubber between the last months of one year and the first and plastic products. Mining production increased, as months of the next. The new procedure allows capacgains in coal output outweighed losses elsewhere. ity growth rates to change smoothly over time; it has The factory operating rate slid 0.1 percentage been applied to data beginning with October 1998. At point, to 79.5 percent—2 lA percentage points below the most detailed industry level, the new capacity the level of February 1998. The utilization rate for estimates maintain the same fourth quarter over advanced-processing industries inched down just fourth quarter growth rates that were calculated under 0.1 percentage point, while the utilization rate for the previous procedure. Table 4 now shows fourth primary-processing industries fell 0.4 percentage quarter over fourth quarter growth rates instead of point. The utilization rate for mines edged up 0.2 per- December over December rates. • centage point but remained well below its long-term average. Temperatures were relatively warm, as has been the case all winter, and the operating rate for utilities dipped to 89.8 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

239 Statements to the Congress Statement by Edward M. Gramlich, Member, Board the next fifteen years or so, if they are permitted to of Governors of the Federal Reserve System, before materialize, will significantly improve our fiscal and the Committee on Finance, U.S. Senate, February 9, economic position as the baby boom starts to retire. 1999. From the government's perspective, using those surpluses to pay down the federal debt will reduce future (Governor Gramlich presented identical testimony interest payments and free up future tax revenue; before the Committee on Ways and Means, U.S. House from the macroeconomic perspective, the increase in of Representatives, February 23, 1999.) national saving represented by the increase in government saving will lead to a larger capital stock, higher I appreciate the opportunity to appear before you productivity, and an improved standard of living. today to discuss social security reform. I speak for From this standpoint, the broad objective of the myself, as past chair of the 1994-1996 Quadrennial Clinton Administration's budget—that is, to preserve Advisory Council on Social Security, and not in my most of the projected surpluses—seems to me both current status as a member of the Federal Reserve responsible and appropriate. The Administration Board. would devote about $1.4 trillion of the projected As you are all well aware, the U.S. population is $4.9 trillion of current law surpluses over the next aging. Today there are 3.4 workers per retiree; by fifteen years to new spending and use the remainder 2030 it is projected that there will be only two. This to pay down our national debt. According to the fundamental change in the demographics of our Administration's calculations, the ratio of debt held population poses a large challenge: How can we by the public to gross domestic product would fall provide adequate health and retirement benefits to from its current 44 percent to 7 percent by 2014. If our retired population without imposing undue bur- such an outcome were to materialize, it would repredens on tomorrow's workers? sent a dramatic improvement in the fiscal position of Clearly, the answer to this question is that we must the nation. act now to increase the total amount of resources to Under current law, the social security revenues be available in the future. By increasing the size of exceed outlays, creating surpluses that are credited to our economy, we can devote a greater share of output the social security trust fund. Without any legislative to the retired population without reducing the con- changes, the social security trust fund will continue sumption of the working population. The only way to to accumulate funds, reaching a peak in 2020 of achieve this critical objective is for us to build up the $3.8 trillion, or almost 16 percent of GDP. These stock of productive capital by increasing our rate surpluses both reduce the national debt and improve of national saving. Indeed, in the current expansion, the long-run fiscal condition of social security. This investment has expanded at a rapid clip without claim does not stem from any accounting gimmickry: inducing a rise in interest rates. This investment By reducing future interest payments, these surpluses boom, and the accompanying step-up in the growth do indeed free up future revenues. of the capital stock, is partly attributable to an In addition to this accumulation already scheduled increased rate of national saving. Between 1992 and under current law, the Administration is proposing 1998, national saving increased from 3.7 percent to to transfer $2.8 trillion of general revenues to the 7.5 percent of net national product. While private and social security trust fund. While the Administration's state and local government saving actually dipped rationale for these transfers is to ensure that the during this period, this decline was more than offset surpluses actually materialize, the transfer of general by increased saving by the federal government revenues represents a major shift from past practice, through deficit reduction. under which social security has been financed almost The stellar performance of the economy over entirely from dedicated payroll taxes. recent years provides the nation a unique opportunity During the deliberations of the 1994-1996 Quato begin to tackle its long-run problems. In particular, drennial Advisory Council on Social Security, we the large budget surpluses that are projected over considered whether general revenues should be used Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

240 Federal Reserve Bulletin • April 1999 to help shore up the social security program. This share of GDP will more than double—from 2.7 peridea was unanimously rejected, for a number of rea- cent today, to more than 5.8 percent in 2030, and sons. First, using general revenues to fund social Medicaid spending on long-term care likely will face security puts the social security system in competi- similar increases. Because under the current budget tion with other spending programs during the budget system, Medicare Part B and Medicaid are financed cycle. But social security is a long-range program— with general revenues, there is much less pressure to people pay dedicated taxes today toward benefits that take measures now to improve their long-run financmay not be received for thirty or forty years—and ing. But these programs too will put significant many feel that it should not be part of an annual demands on government resources in the future. If budgetary allocation process. we use the projected surpluses as a rationale for not Perhaps more important, using general revenues to making hard choices in social security, finding the fund social security undermines the fiscal discipline resources to provide Medicare and Medicaid to our imposed by the need to ensure that income earmarked aging population will prove that much harder. for social security is sufficient to meet the entire cost Thus, there are serious drawbacks to relaxing of the program, both in the short run and long run. social security's long-run budget constraint through Without a long-range budget constraint on social general revenue transfers. I would prefer social secusecurity, it will be much more difficult to limit future rity reforms that maintain the link between dedicated benefit growth. And, notwithstanding the large sur- taxes and benefits and maintain the value of longpluses being projected, some reductions in benefits range actuarial analysis. This discipline is essential if are almost certain to be necessary as the U.S. popula- we are to limit the impending explosion of entitletion ages. ment spending. The President's budget proposal, by It is important to remember that the aging of the preserving future surpluses and paying down our population will bring pressures to programs other national debt, makes an important contribution to than social security. The trustees of the Medicare raising national saving. But to me the proposal looks trust fund project that Medicare expenditures as a even better without the general revenue transfer. Statement by Alan Greenspan, Chairman, Board of For these reasons, we support, as we have for Governors of the Federal Reserve System, before the many years, major revisions, such as those included Committee on Banking and Financial Services, U.S. in H.R. 10, to the Glass-Steagall Act and the Bank House of Representatives, February 11, 1999 Holding Company Act to remove the legislative barriers against the integration of banking, insurance, It is a pleasure to appear before the committee to and securities activities. There is virtual unanimity present the views of the Federal Reserve on the need among all concerned—private and public alike—that to enact legislation to modernize the U.S. financial these barriers should be removed. The technologisystem. The Federal Reserve continues to support cally driven proliferation of new financial products strongly the enactment of such legislation and that enable risk unbundling have been increasingly believes that H.R. 10 contains the fundamental prin- combining the characteristics of banking, insurance, ciples that should be included in such legislation. and securities products into single financial instru- I commend the committee for taking up this vital ments. These changes, which are occurring all over matter so promptly. the world, have also dramatically altered the way financial services providers operate and the way they deliver their products. THE NEED FOR FINANCIAL REFORM In the United States, our financial institutions have been required to take elaborate steps to develop and U.S. financial institutions are today among the most deliver new financial products and services in a maninnovative and efficient providers of financial ser- ner that is consistent with our outdated laws. The vices in the world. They compete, however, in a costs of these efforts are becoming increasingly burmarketplace that is undergoing major and fundamen- densome and serve no useful public purpose. Unless tal change driven by a revolution in technology, by soon repealed, the archaic statutory barriers to effidramatic innovations in the capital markets, and by ciency could undermine the global dominance of the globalization of the financial markets and the American finance, as well as the continued competifinancial services industry. tiveness of our financial institutions and their ability Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 241 to innovate and to provide the best and broadest ties. Moreover, affiliation with banks need not— possible services to U.S. consumers. indeed, should not—create bank-like regulation of We believe that it is important that the rules for our affiliates of banks. financial services industry be set by the Congress This shift in supervisory mode, which is already rather than, as too often has been the case, by bank- under way, is market driven. It is not the result ing regulators dealing with our outdated laws. Only of some potentially reversible ideology. Such an the Congress has the ability to fashion rules that are approach is captured in H.R. 10 in many of the comprehensive and equitable to all participants and so-called "Fed-light" provisions, and we at the Fed that guard the public interest. strongly support this approach. The market will continue to force change whether H.R. 10 also, in our judgment, has chosen the or not the Congress acts. Without congressional appropriate structure to combine banking, securities, action, changes will occur through exploitation of and insurance firms using financial service holding loopholes and marginal interpretations of the law that companies. While we enthusiastically support the courts feel obliged to sanction. This type of response new powers granted to financial service holding comto market forces leads to inefficiencies and inconsis- panies, we just as strongly believe that they should tencies, expansion of the federal safety net, poten- be financed by the marketplace, not by instruments tially increased risk exposure to the federal deposit backed by the sovereign credit of the United States. insurance funds, and a system that will undermine the The requirement that the new powers be conducted competitiveness and innovative edge of major seg- through holding company affiliates minimizes the ments of our financial services industry. Delay in expansion of the use of the subsidies arising from a acting on financial modernization legislation limits safety net backed by the U.S. taxpayer and serves to the Congress's options as these developments prolif- promote the safety and soundness and stability of our erate and complicate, increases the difficulty of enact- banking and financial system. ing the safeguards included in H.R. 10 to protect The rejection of expanded powers for subsidiaries safety and soundness and the public interest, and of commercial banks, at least those conducted as denies to consumers the benefits that immediate principal, is a decision that will inhibit the widechanges in our outdated banking laws will surely spread employment of federal subsidies over a wide bring. range of activities. These activities, if conducted in H.R. 10 also recognizes another dimension of the bank subsidiaries, would accord banking organizachanging nature of banking and financial markets: tions an unfair competitive advantage over compathat financial modernization means more than autho- rable insurance and securities firms operating inderizing new powers and affiliations. Not only are we pendently or as bank holding company subsidiaries. experiencing a revolution in financial products and Even more important, to inject the substantial new their delivery, but the United States is also at a subsidies that would accrue to operating subsidiaries historic crossroads in financial services regulation. It of banks into the currently mushrooming domestic is becoming increasingly evident that the dramatic and international financial system could distort capiadvances in computer and telecommunications tech- tal markets and the efficient allocation of both finannologies of the past decade have so significantly cial and real resources that has been so central to altered the structure of domestic, indeed, global America's current prosperity. The choice of requiring finance as to render our existing modes of supervi- the new powers to be harbored in affiliates of holdsion and regulation of financial institutions increas- ing companies, not in the so-called op-subs of their ingly obsolescent. banks, will significantly fashion the underlying struc- The volume, sophistication, and rapidity of finan- ture of twenty-first-century finance. cial dealings will inevitably lead to supervisory Another twenty-first-century issue is whether we emphasis on oversight of risk management of finan- should move beyond affiliations among financial sercial institutions and a marked scaling back of out- vice providers and allow the full integration of bankmoded loan file and balance sheet surveillance. As ing and commerce. As technology increasingly blurs we move into the twenty-first century, the remnants the distinction among various financial products, it of nineteenth-century bank examination philosophies is already beginning to blur the distinctions between will fall by the wayside. Banks, of course, will still predominately commercial and banking firms. We need to be supervised and regulated, in no small part cannot rule out whether sometime in our future full because they are subject to the safety net. My point integration may occur, potentially with increased effiis, however, that the nature and extent of that effort ciencies. But how the underlying subsidies of deposit need to become more consistent with market reali- insurance, discount window access, and guaranteed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

242 Federal Reserve Bulletin • April 1999 final settlement through Fedwire are folded into a This choice of the holding company structure is commercial firm, should the latter purchase a bank, is also critical to the way in which the financial services crucially important to the systemic stability of our industry will develop because it provides better profinancial system. tection for, and promotes the safety and soundness of, It seems to us wise to move first toward the integra- our banking and financial system without damaging tion of banking, insurance, and securities as envi- the national or state bank charters or limiting in any sioned in H.R. 10 and employ the lessons we learn way the benefits of financial modernization. The from that important step before we consider whether other route toward full-powered commercial bank and under what conditions it would be desirable to operating subsidiaries and universal banking would, move to the second stage of the full integration of in our judgment, lead to greater risk for the deposit commerce and banking. Nothing is lost, in my judg- insurance funds and the taxpayer. It is for these ment, by making this a two-stage process. Indeed, reasons that the Federal Reserve, Securities and there is much to be gained. The Asian crisis last year Exchange Commission, many state functional regulahighlighted some of the risks that can arise if relation- tors, and many in the affected industries have supships between banks and commercial firms are too ported the holding company framework and have close and make caution at this stage prudent in our opposed the universal bank approach. judgment. In line with these considerations, the Board In virtually every other industry, the Congress continues to support elimination of the unitary thrift would not be asked to address issues such as these, loophole, which currently allows any type of com- which are associated with technological and market mercial firm to control a federally insured depository developments; the market would force the necessary institution. institutional adjustments. Arguably, this difference These principles, which we see as fundamental to reflects the painful experience that has taught us that financial modernization, are embodied in H.R. 10. As developments in our banking system can have proin all such major legislation, there are, and will be, found effects on the stability of our whole economy, numerous provisions only indirectly associated with rather than the limited impact we perceive from diffithe legislation's core principles that often foster dis- culties in most other industries. agreements. These surrounding details are doubtless Moreover, as a society we have made the choice to important, but not so important that they should be create a safety net for depository institutions, not allowed to defeat the consensus that has developed only to protect the public's deposits but also to miniaround the key principles embodied in H.R. 10. It mize the impact of adverse banking developments on would be a disservice to the public and the nation if, our economy. Although we have clearly been sucin the fruitless search for a bill that pleases everyone cessful in doing so, the safety net has predictably in every detail, the benefits of this vital consensus are shielded bank shareholders from the full conselost or further delayed. quences of the risks their banks take. Moreover, since The decision to use the holding company structure, the sovereign credit of the United States fosters the and not the universal bank, as the appropriate struc- stability of the banking system and guarantees the ture to allow new securities and insurance affiliations claims of insured depositors, bank creditors do not is strongly driven by several key principles embodied apply the same self-interest monitoring of banks to in H.R. 10. These principles include that new powers protect their own position as they would without and affiliations should be financed by the market and discount window access and deposit insurance. As a not by the sovereign credit of the United States, and consequence, to redress the balance of risk-taking, that supervision of nonbank affiliates must not use the entities with access to the safety net are required exhaustive bank examination method. to be supervised and regulated. In this way, the Importantly, that decision also prevents the spread U.S. government protects its own—that is, the of the safety net that would inevitably lead to a taxpayers'—interest, which is the cost of making weakening of the competitive strength of large seg- good on the guarantee. ments of our financial services industry because those Put another way, the safety net requires that the securities, insurance, and other financial services pro- government replace with law, regulation, and superviders that do not operate as subsidiaries of banks vision much of the disciplinary role that the market would be at a serious disadvantage to similar firms plays for other businesses. Our experience in the owned by banks. By fostering a level playing field 1980s with insured thrift institutions illustrates the within the financial services industry, we contribute necessity of avoiding expanding risks to the deposit to full, open, and fair competition as we enter the insurance funds and lax supervisory policies and next century. rules. But this necessity has an obvious downside: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 243 These same rules limit innovative responses and the assets were under the supervision of the Comptroller ability to take the risks so necessary for economic of the Currency, up from 55.2 percent at the end of growth. The last thing we should want, therefore, is 1996. Moreover, after controlling for mergers of liketo widen or spread this unintended, but nevertheless chartered banks, the number of national banks has corrosive, dimension of the safety net to other finan- increased over the period 1996-98 and the number of cial and business entities and markets. It is clear that state banks has declined. to do so would not only spread a subsidy to new Furthermore, the Congress for sound public policy forms of risk-taking but would ultimately require the reasons has purposefully apportioned responsibility expansion of bank-like supervision as well. for this nation's financial institutions among the In our judgment, the holding company approach elected executive branch and independent regulatory upon which H.R. 10 is premised avoids this pitfall; agencies. H.R. 10 retains this balance, and the Fedthe universal bank approach cannot. eral Reserve does not believe it would serve any While financial modernization represents much useful purpose to alter it. Such action would be needed reform, we should not forget that this modern- contrary to the deliberate steps that the Congress has ization will, by itself, introduce dramatic changes in taken to ensure a proper balance in the regulation of our financial services industry. We feel confident that this nation's dual banking system. the risks of this type of reform are manageable within the holding company framework set out in H.R. 10. There is a final point I want to make because it CONCLUSION appears to have driven Treasury's opposition to last year's version of H.R. 10. H.R. 10 would not dimin- The markets are demanding that we change outdated ish the ability of the executive branch to continue to statutory limitations that stand in the way of more play its meaningful role in the development of bank- efficiently and effectively delivering financial sering or economic policy. Currently, the executive vices to the public. Many of these changes will occur branch influences such policy primarily through its even if the Congress does not act, but only the supervision of national banks and federal savings Congress can establish the ground rules designed to associations. H.R. 10 would not alter the executive ensure the maximum net public benefits, protect the branch's supervisory authority for national banks or safety and soundness of our financial system, create a federal savings associations, nor would it result in fair and level playing field for all participants, and any reduction in the predominant and growing share ensure the continued primacy of U.S. financial marof this nation's banking assets controlled by national kets. For these reasons, the Federal Reserve supports banks and federal savings associations. Indeed, as of and urges prompt enactment of the financial modern- September 1998, nearly 58 percent of all banking ization contained in H.R. 10. Statement by Alan Greenspan, Chairman, Board of about 4 percent for a third straight year. In 1998, Governors of the Federal Reserve System, before the 2% million jobs were created on net, bringing the Committee on Banking, Housing, and Urban Affairs, total increase in payrolls to more than 18 million U.S. Senate, February 23, 1999. during the current economic expansion, which late last year became the longest in U.S. peacetime history. Unemployment edged down further to a 4 ]A per- (Chairman Greenspan presented identical testimony cent rate, the lowest since 1970. before the Committee on Banking and Financial Ser- And despite taut labor markets, inflation also fell vices, U.S. House of Representatives, February 24, to its lowest rate in many decades by some broad 1999.) measures, although a portion of this decline owed to decreases in oil, commodity, and other import prices I appreciate the opportunity to present the Federal that are unlikely to be repeated. Hourly labor com- Reserve's semiannual report on monetary policy. pensation adjusted for inflation posted further impres- The U.S. economy over the past year again per- sive gains. Real compensation gains have been supformed admirably. Despite the challenges presented ported by robust advances in labor productivity, by severe economic downturns in a number of for- which in turn have partly reflected heavy investment eign countries and episodic financial turmoil abroad in plant and equipment, often embodying innovative and at home, our real gross domestic product grew technologies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

244 Federal Reserve Bulletin • April 1999 Can this favorable performance be sustained? In boosted consumption at the fastest clip in a decade many respects the fundamental underpinnings of the and a half. The gains in income and wealth last year, recent U.S. economic performance are strong. Flex- along with a further decrease in mortgage rates, also ible markets and the shift to surplus on the books of prompted considerable activity in the housing sector. the federal government are facilitating the buildup The impressive performance of the private sector in cutting-edge capital stock. That buildup in turn was reflected in a continued improvement in the is spawning rapid advances in productivity that are federal budget. Burgeoning receipts, along with conhelping to keep inflation well behaved. The new tinuing restraint on federal spending, produced the technologies and the optimism of consumers and first unified budget surplus in thirty years, allowing investors are supporting asset prices and sustaining the Treasury to begin to pay down the federal debt spending. held by the public. This shift in the federal govern- But after eight years of economic expansion, the ment's fiscal position has fostered an increase in economy appears stretched in a number of dimen- overall national saving as a share of GDP to 17'A persions, implying considerable upside and downside cent from the 14'/2 percent low reached in 1993. This risks to the economic outlook. The robust increase of rise in national saving has helped to hold down real production has been using up our nation's spare labor interest rates and to facilitate the financing of the resources, suggesting that recent strong growth in boom in private investment spending. spending cannot continue without a pickup in infla- Foreign savers have provided an additional source tion unless labor productivity growth increases sig- of funds for vigorous domestic investment. The counnificantly further. Equity prices are high enough to terpart of our high and rising current account deficit raise questions about whether shares are overvalued. has been ever-faster increases in the net indebtedness The debt of the household and business sectors has of U.S. residents to foreigners. The rapid widening mounted, as has the external debt of the country as a of the current account deficit has some disquieting whole, reflecting the deepening current account defi- aspects, especially when viewed in a longer-term cit. We remain vulnerable to rapidly changing condi- context. Foreigners presumably will not want to raise tions overseas, which, as we saw last summer, can be indefinitely the share of their portfolios in claims transmitted to U.S. markets quickly and traumati- on the United States. Should the sustainability of cally. I will be commenting on many of these issues the buildup of our foreign indebtedness come into as I review the developments of the past year and the question, the exchange value of the dollar may well prospects going forward. In light of all these risks, decline, imparting pressures on prices in the United monetary policy must be ready to move quickly in States. either direction should we perceive imbalances and In the recent economic environment, however, the distortions developing that could undermine the eco- widening of the trade and current account deficits had nomic expansion. some beneficial aspects. It provided a safety valve for strong U.S. domestic demand, thereby helping to restrain pressures on U.S. resources. It also cushioned, to some extent, economic weakness in our RECENT DEVELOPMENTS trading partners. Moreover, decreasing import prices, which partly A hallmark of our economic performance over the came from the appreciation of the dollar through past year was the continuing sharp expansion of midsummer, contributed to low overall U.S. inflation, business investment spending. Competitive global as did ample manufacturing capacity in the United markets and persisting technological advances both States and lower prices for oil and other commodities spurred the business drive to become more efficient stemming from the weak activity abroad. The marked and induced the price declines for many types of drop in energy prices significantly contributed to new equipment that made capital spending more the subdued, less than 1 percent, increase in the price attractive. index for total personal consumption expenditures Business success in enhancing productivity and the during 1998. In addition, supported by rapid accumuexpectation of still further, perhaps accelerated, lation of more efficient capital, the growth of labor advances buoyed public optimism about profit pros- productivity picked up last year, allowing nominal pects, which contributed to another sizable boost in labor compensation to post another sizable gain withequity prices. Rising household wealth along with out putting added upward pressure on costs and strong growth in real income, related to better pay, prices. I shall return to an analysis of the extraorslower inflation, and expanding job opportunities, dinary performance of inflation later in my remarks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 245 The Federal Open Market Committee (FOMC) economy has weathered the disturbances with conducted monetary policy last year with the aim of remarkable resilience, though some yield and bidsustaining the remarkable combination of economic asked spreads still reflect a hesitancy on the part expansion and low inflation. At its meetings from of market participants to take on risk. The Federal March to July, the inflation risks accompanying the Reserve must continue to evaluate, among other continued strength of domestic demand and the tight- issues, whether the full extent of the policy easings ening of labor markets necessitated that the FOMC undertaken last fall to address the seizing-up of finanplace itself on heightened inflation alert. Although cial markets remains appropriate as those disturthe FOMC kept the nominal federal funds rate bances abate. unchanged, it allowed the real funds rate to rise with To date, domestic demand and hence employment continuing declines in inflation and, presumably, and output have remained vigorous. Real GDP is inflation expectations. In August, the FOMC returned estimated to have risen at an annual rate exceeding to an unbiased policy predilection in response to the 5!/2 percent in the fourth quarter of last year. adverse implications for the U.S. outlook of worsen- Although some slowing from this torrid pace is most ing conditions in foreign economies and in global likely in the first quarter, labor markets remain excepfinancial markets, including our own. tionally tight, and the economy evidently retains a Shortly thereafter, a further deterioration in finan- great deal of underlying momentum despite the cial market conditions began to pose a more seri- global economic problems and the still-visible remous threat to economic stability. In the wake of the nants of the earlier financial turmoil in the United Russian crisis and subsequent difficulties in other States. At the same time, no evidence of any upturn emerging-market economies, investors perceived that in inflation has, as yet, surfaced. the uncertainties in financial markets had broadened Abroad the situation is mixed. In some East Asian appreciably, and as a consequence, they became countries that, in recent years, experienced a loss of decidedly more risk averse. Safe-haven demands for investor confidence, a severe currency depreciation, U.S. Treasury securities intensified at the expense of and a deep recession, early signs of stabilization and private debt securities. As a result, quality spreads economic recovery have appeared. This is particuescalated dramatically, especially for lower-rated larly the case for Korea and Thailand. Authorities in issuers. Many financial markets turned illiquid, with those countries, in the context of International Monewider bid-asked spreads and heightened price volatil- tary Fund (IMF) stabilization programs, early on ity, and issuance was disrupted in some private secu- established appropriate macroeconomic policies and rities markets. Even the liquidity in the market for undertook significant structural reforms to buttress seasoned issues of U.S. Treasury securities dried up, the banking system and repair the finances of the as investors shifted toward the more actively traded, corporate sector. As investor confidence has returned, recently issued securities and dealers pared inven- exchange rates have risen and interest rates have tories, fearing that heightened price volatility posed fallen. With persistence and follow-through on an unacceptable risk to their capital. reforms, the future of those economies has promise. Responding to losses in foreign financial markets The situations in some other emerging market and to pressures from counterparties, highly lever- economies are not as encouraging. The Russian govaged investors began to unwind their positions, which ernment's decision in mid-August to suspend payfurther weighed on market conditions. As credit ments on its domestic debt and devalue the ruble took became less available to business borrowers in capi- markets by surprise. Investor flight exacerbated the tal markets, their demands were redirected to com- collapse of prices in Russian financial markets and mercial banks, which reacted to the enlarged bor- led to a sharp depreciation of the ruble. The earlier rowing and more uncertain business prospects by decline in output gathered momentum, and by late tightening their standards and terms on such lending. in the year, inflation had moved up to a triple-digit To cushion the domestic economy from the impact annual rate. Russia's stabilization program with the of the increasing weakness in foreign economies and IMF has been on hold since the financial crisis hit, the less accommodative conditions in U.S. financial and the economic outlook there remains troubling. markets, the FOMC, beginning in late September, The Russian financial crisis immediately spilled undertook three policy easings. By mid-November, over to some other countries, hitting Latin America the FOMC had reduced the federal funds rate from especially hard. Countering downward pressure on 5V2 percent to 43/4 percent. These actions were taken the exchange values of the affected currencies, interto rebalance the risks to the outlook, and, in the est rates moved sharply higher, especially in Brazil. event, the markets have recovered appreciably. Our As a consequence of the high interest rates and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

246 Federal Reserve Bulletin • April 1999 growing economic uncertainty, Brazil's economic Most governors and Reserve Bank presidents foreactivity took a turn for the worse. Higher interest see that economic growth this year will slow to a rates also had negative consequences for the fiscal 2'/2 percent to 3 percent rate. Such growth would outlook, as much of Brazil's substantial domestic keep the unemployment rate about unchanged. The debt effectively carries floating interest rates. With central tendency of the governors' and presidents' budget reform legislation encountering various set- predictions of consumer price index (CPI) inflation backs, market confidence waned further and capital is 2 percent to IVz percent. This level represents a outflows from Brazil continued, drawing down for- pickup from last year, when energy prices were falleign currency reserves. Ultimately, the decision was ing, but it is in the vicinity of core CPI inflation over taken to allow the real to float, and it subsequently the last couple of years. depreciated sharply. This outlook involves several risks. The continuing Brazilian authorities must walk a very narrow, downside risk posed by possible economic and finandifficult path of restoring confidence and keeping cial instability around the world was highlighted earinflation contained with monetary policy while deal- lier this year by the events in Brazil. Although finaning with serious fiscal imbalances. Although the sit- cial contagion elsewhere has been limited to date, uation in Brazil remains uncertain, there has been more significant knock-on effects in financial markets limited contagion to other countries thus far. Appar- and in the economies of Brazil's important trading ently, the slow onset of the crisis has enabled many partners, including the United States, are still posparties with Brazilian exposures to hedge those posi- sible. Moreover, the economies of several of our key tions or allow them to run off. With the net exposure industrial trading partners have shown evidence of smaller, and increasingly held by those who both weakness, which if it deepens could further depress recognized the heightened risk and were willing to demands for our exports. bear it, some of the elements that might have contrib- Another downside risk is that growth in capital uted to further contagion may have been significantly spending, especially among manufacturers, could reduced. weaken appreciably if pressures on domestic profit margins mount and capacity utilization drops further. And it remains to be seen whether corporate earnings THE ECONOMIC OUTLOOK will disappoint investors, even if the slowing of eco- These recent domestic and international develop- nomic growth is only moderate. Investors appear to ments provide the backdrop for U.S. economic pros- have incorporated into current equity price levels pects. Our economy's performance should remain both robust profit expectations and low compensation solid this year, though likely with a slower pace of for risk. As the economy slows to a more sustainable economic expansion and a slightly higher rate of pace as expected, profit forecasts could be pared overall inflation than last year. The stocks of business back, which together with a greater sense of vulnerequipment, housing, and household durable goods ability in business prospects could damp appetites for have been growing rapidly to quite high levels rela- equities. A downward correction to stock prices and tive to business sales or household incomes during an associated increase in the cost of equity capital the past few years, and some slowing in the growth of could compound a slowdown in the growth of capital spending on these items seems a reasonable prospect. spending. In addition, a stock market decline would Moreover, part of the rapid increase in spending, tend to restrain consumption spending through its especially in the household sector, has resulted from effect on household net worth. the surge in wealth associated with a run-up in equity But on the upside, our economy has proved surprisprices that is unlikely to be repeated. And the pur- ingly robust in recent years. More rapid increases in chasing power of income and wealth has been capital spending, productivity, real wages, and asset enhanced by declines in oil and other import prices, prices have combined to boost economic growth far which also are unlikely to recur this year. Assuming more and far longer than many of us would have that aggregate demand decelerates, underlying infla- anticipated. tion pressures, as captured by core price measures, in This "virtuous cycle" has been able to persist all likelihood will not intensify significantly in the because the behavior of inflation has also been suryear ahead, though the Federal Reserve will need to prisingly favorable, remaining well contained at levmonitor developments carefully. We perceive stable els of utilization of labor that in the past would have prices as optimum for economic growth. Both inflaproduced accelerating prices. That it has not done so tion and deflation raise volatility and risks that thwart in recent years has been the result of a combination maximum economic growth. of special one-time factors holding down prices and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 247 more lasting changes in the processes determining Enhanced opportunities for productive capital inflation. investment to hold down costs also may have helped Among the temporary factors, the sizable declines to damp inflation. Through the 1970s and 1980s, in the prices of oil, other internationally traded com- firms apparently found it easier and more profitable modities, and other imports contributed directly to to seek relief from rising nominal labor costs through holding down inflation last year and also indirectly price increases than through cost-reducing capital by reducing inflation expectations. But these prices investments. Price relief evidently has not been availare not likely to fall further, and they could begin to able in recent years. But relief from cost pressures rise as some Asian economies revive and the effects has. The newer technologies have made capital of the net depreciation of the dollar since midsummer investment distinctly more profitable, enabling firms are felt more strongly. to substitute capital for labor far more productively At the same time, however, recent experience does than they would have a decade or two ago. seem to suggest that the economy has become less Starting in 1993, capital investment, especially in inflation prone than in the past, so that the chances high-tech equipment, rose sharply beyond normal of an inflationary breakout arguably are, at least for cyclical experience, apparently the result of expected now, less than they would have been under similar increases in rates of return on the new investment. conditions in earlier cycles. Had the profit expectations not been realized, one Several years ago 1 suggested that worker inse- would have anticipated outlays to fall back. Instead, curity might be an important reason for unusually their growth accelerated through the remainder of the damped inflation. From the early 1990s through 1996, decade. survey results indicated that workers were becoming More direct evidence confirms improved undermuch more concerned about being laid off. Workers' lying profitability. According to rough estimates, underlying fear of technology-driven job obsoles- labor and capital productivity has risen significantly cence, and hence willingness to stress job security during the past five years. It seems likely that the over wage increases, appeared to have suppressed synergies of advances in laser, fiber optic, satellite, labor cost pressures despite a reduced unemploy- and computer technologies with older technologies ment rate. More recently, that effect seems to have have enlarged the pool of opportunities to achieve a diminished in part. So while job loss fears probably rate of return above the cost of capital. Moreover, the contributed to wage and price suppression through newer technologies have facilitated a dramatic fore- 1996, it does not appear that a further heightening of shortening of the lead times on the delivery of capital worker insecurity about employment prospects can equipment over the past decade, presumably allowing explain the more recent improved behavior of businesses to react more expeditiously to an actual or inflation. expected rise in nominal compensation costs than, Instead, a variety of evidence, anecdotal and other- say, they could have in the 1980s. In addition, the wise, suggests that the source of recent restrained surge in investment not only has restrained costs, but inflation may be emanating more from employers has also increased industrial capacity faster than than from employees. In the current economic set- factory output has risen. The resulting slack in prodting, businesses sense that they have lost pricing uct markets has put greater competitive pressure on power and generally have been unwilling to raise businesses to hold down prices, despite taut labor wages any faster than they can support at current markets. price levels. Firms have evidently concluded that The role of technology in damping inflation is if they try to increase their prices, their competitors manifest not only in its effects on U.S. productivity will not follow, and they will lose market share and and costs but also through international trade, where profits. technological developments have progressively Given the loss of pricing power, it is not surprising broken down barriers to cross-border trade. The that individual employers resist pay increases. But enhanced competition in tradable goods has enabled why has pricing power of late been so delimited? excess capacity previously bottled up in one country Monetary policy certainly has played a role in con- to augment worldwide supply and exert restraint on straining the rise in the general level of prices and prices in all countries' markets. The resulting price damping inflation expectations over the 1980s and discipline also has constrained nominal wage gains 1990s. But our current discretionary monetary policy in internationally tradable goods industries. As workhas difficulty anchoring the price level over time in ers have attempted to shift to other sectors, gains in the same way that the gold standard did in the last nominal wages and increases in prices in nontradecentury. able goods industries have been held down as well. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

248 Federal Reserve Bulletin • April 1999 The process of price containment has potentially ers to fall since the mid-1990s at a rate of a bit less become, to some extent, self-reinforcing. Lower than 1 million annually. We cannot judge with preciinflation in recent years has altered expectations. sion how much further this level can decline without Workers no longer believe that escalating gains sparking ever-greater upward pressures on wages and in nominal wages are needed to reap respectable prices. But, should labor market conditions continue increases in real wages, and their remaining sense of to tighten, there has to be some point at which the rise job insecurity is reinforcing this. Because neither in nominal wages will start increasingly outpacing firms nor their competitors can count any longer on the gains in labor productivity, and prices inevitably a general inflationary tendency to validate decisions will begin to accelerate. to raise their own prices, each company feels compelled to concentrate on efforts to hold down costs. The availability of new technology to each com- RANGES FOR MONEY AND CREDIT pany and its rivals affords both the opportunity and the competitive necessity of taking steps to boost At its February meeting, the Committee elected to productivity. ratify the provisional ranges for all three aggregates It is difficult to judge whether these significant that it had established last July. Specifically, the Comshifts in the market environment in which firms func- mittee again has set growth rate ranges over the four tion are sufficient to account for our benign overall quarters of 1999 of 1 percent to 5 percent for M2, price behavior during the past half decade. Undoubt- 2 percent to 6 percent for M3, and 3 percent to edly, other factors have been at work as well, includ- 7 percent for domestic nonfinancial debt. As in previing those temporary factors I mentioned earlier and ous years, the Committee interpreted the ranges for some more lasting I have not discussed, such as the broader monetary aggregates as benchmarks for worldwide deregulation and privatization, and the what money growth would be under conditions of freeing-up of resources previously employed to pro- price stability and sustainable economic growth, duce military products that was brought about by the assuming historically typical velocity behavior. end of the cold war. There also may be other con- Last year, these monetary aggregates far overshot tributory forces lurking unseen in the wings that will the upper bounds of their annual ranges. Although only become clear in time. Over the longer run, of nominal GDP growth did exceed the rate likely concourse, the actions of the central bank determine the sistent with sustained price stability, the rapid growth degree of overall liquidity and hence rate of inflation. of M2 and M3 also reflected outsized declines in their It is up to us to validate the favorable inflation velocities, that is, the ratio of nominal GDP to money. developments of recent years. M2 velocity dropped about 3 percent, while M3 Although the pace of productivity increase has velocity plunged 5Vi percent. picked up in recent years, the extraordinary strength Part of these velocity declines reflected some reof demand has meant that the substitution of capital duction in the opportunity cost of holding money; for labor has not prevented us from rapidly depleting interest rates on Treasury securities, which represent the pool of available workers. This worker depletion an alternative return on nonmonetary assets, dropped constitutes a critical upside risk to the inflation out- more than did the average of interest rates on deposits look because it presumably cannot continue for very and money market mutual funds in M2, drawing much longer without putting increasing pressure on funds into the aggregate. Even so, much of last year's labor markets and on costs. aberrant behavior of broad money velocity cannot The number of people willing to work can be readily be explained by conventional determinants. usefully defined as the unemployed component of the Although growth of the broad aggregates was strong labor force plus those not actively seeking work, and earlier in the year, it accelerated in the fourth quarter thus not counted in the labor force, but who nonethe- after credit markets became turbulent. Perhaps robust less say they would like a job if they could get one. money growth late in the year partly reflected a This pool of potential workers aged sixteen to sixty- reaction to this turmoil by the public, who began four currently numbers about 10 million, or just scrambling for safer and more liquid financial assets. 53A percent of that group's population—the lowest Monetary expansion has moderated so far this year, such percentage on record, which begins in 1970, and evidently in lagged response to the calming of finan- 2Vi percentage points below its average over that cial markets in the autumn. Layered on top of these period. The rapid increase in aggregate demand has influences, though, the public also may have been generated growth of employment in excess of growth reapportioning their savings flows into money balin population, causing the number of potential work- ances because the huge run-up in stock prices in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 249 recent years has resulted in an uncomfortable portion shifted significantly, though not by enough to change of their net worth in equity. current policy, and in which the absence of an expla- For the coming year, the broad monetary aggre- nation risked misleading markets about the prospects gates could again run high relative to these ranges. To for monetary policy. be sure, the decline in the velocities of the broader aggregates this year should abate to some extent, as money demand behavior returns more to normal, and YEAR 2000 ISSUES growth in nominal GDP should slow as well, as suggested by the governors' and presidents' central Before closing, I'd like to address an issue that has tendency. Both factors would restrain broad money been receiving increasing attention—the century date expansion relative to last year. Still, the growth of M2 change. While no one can say that the rollover to the and M3 could well remain outside their price-stability year 2000 will be trouble free, I am impressed by ranges this year. Obviously, considerable uncertainty the efforts to date to address the problem in the continues to surround the prospective behavior of banking and financial system. For our part, the Fedmonetary velocities and growth rates. eral Reserve System has now completed remediation Domestic nonfinancial debt seems more likely than and testing of 101 of its 103 mission-critical applicathe monetary aggregates to grow within its range for tions, with the remaining two to be replaced by the this year. Indeed, domestic nonfinancial debt also end of March. We opened a test facility in June at could grow more slowly this year than last year's which more than 6,000 depository institutions to date 6Vi percent pace, which was in the upper part of its have conducted tests of their Y2K compliant sys- 3 percent to 7 percent annual range. With the federal tems, and we are well along in our risk mitigation and budget surplus poised to widen further this year, contingency planning activities. As a precautionary federal debt should contract even more quickly than measure, the Federal Reserve has acted to increase last year. And debt in each of the major nonfederal the currency in inventory about one-third to approxisectors in all likelihood will decelerate as well from mately $200 billion in late 1999 and has other continlast year's relatively elevated rates, along with the gency arrangements available if needed. Although we projected slowing of nominal GDP growth. do not expect currency demand to increase dramatically, the Federal Reserve believes it is important for the public to have confidence in the availability of cash in advance of the rollover. As a result of these THE FOMC'S DISCLOSURE POLICY kinds of activities, I can say with assurance that the Federal Reserve will be ready in both its operations The FOMC at recent meetings has discussed not only and planning activities for the millennium rollover. the stance of policy but also when and how it communicates its views of the evolving economic situation The banking industry is also working hard, and to the public. The FOMC's objective is to release as with evident success, to prepare for the event. By the much information about monetary policy decision- end of the first quarter, every institution in the indusmaking, and as promptly, as is consistent with main- try will have been subject to two rounds of on-site taining an effective deliberative process and avoiding Y2K examinations. The Federal Reserve, like the roiling markets unnecessarily. Since early 1994, each other regulators, has found that only a small minority change in the target nominal federal funds rate has of institutions has fallen behind in their preparations, been announced immediately with a brief rationale and those institutions have been targeted for addifor the action. The FOMC resolved at its December tional follow-up and, as necessary, formal enforcemeeting to take advantage of an available, but unused ment actions. The overwhelming majority of the policy, originally stated in early 1995, of releasing, industry has made impressive progress in their remeon an infrequent basis, a statement immediately after diation, testing, and contingency planning efforts. some FOMC meetings at which the stance of monetary policy has not been changed. The Federal Reserve will release such a statement when it wishes CONCLUDING COMMENT to communicate to the public a major shift in its views about the balance of risks or the likely direc- Americans can justifiably feel proud of their recent tion of future policy. Such an announcement need not economic achievements. Competitive markets, with be made after every change in the tilt of the directive. open trade both domestically and internationally, Instead, this option would be reserved for situations have kept our production efficient and on the expandin which the consensus of the Committee clearly had ing frontier of technological innovation. The deter- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

250 Federal Reserve Bulletin • April 1999 mination of Americans to improve their skills and has engendered the welcome advent of a unified knowledge has allowed workers to be even more budget surplus, freeing up funds for capital investproductive, elevating their real earnings. Macroeco- ment. A continuation of responsible fiscal and, we nomic policies have provided a favorable setting for trust, monetary policies should afford Americans the the public to take greatest advantage of opportunities opportunity to make considerable further economic to improve its economic well-being. The restrained progress over time. fiscal policy of the Administration and the Congress Statement by Alan Greenspan, Chairman, Board of Without congressional action to update our laws, Governors of the Federal Reserve System, before the the market will force ad hoc administrative responses Committee on Banking, Housing, and Urban Affairs, that lead to inefficiencies and inconsistencies, expan- U.S. Senate, February 23,1999 sion of the federal safety net, and potentially increased risk exposure to the federal deposit insur- The committee has asked that, in addition to my ance funds. Such developments will undermine the report on the economy, I present today the views competitiveness and innovative edge of major segof the Federal Reserve on the need for legislation ments of our financial services industry. We believe to modernize the U.S. financial system. The Federal that it is important that the rules for our financial Reserve continues to support strongly the enactment services industry be set by the Congress rather than, of such legislation, and I commend the committee for as too often has been the case, by banking regulators taking up this vital matter so promptly. dealing with our outdated laws. Only the Congress has the ability to fashion rules that are comprehensive and equitable to all participants and that guard the NEED FOR FINANCIAL MODERNIZATION public interest. For these reasons, we support removal of the leg- U.S. financial institutions are today among the most islative barriers that prohibit the straightforward innovative and efficient providers of financial ser- integration of banking, insurance, and securities vices in the world. They compete, however, in a activities. There is virtual unanimity among all marketplace that is undergoing major and fundamen- concerned—private and public alike—that these bartal change driven by a revolution in technology, by riers should be removed. dramatic innovations in the capital markets, and by In designing financial modernization legislation, the globalization of the financial markets and the we firmly believe that the Congress should focus on financial services industry. achieving two essential and indivisible objectives: The technologically driven proliferation of new removing outdated, competitively stifling restrictions financial products that enable risk unbundling has on financial affiliations and, most important, adopting created new financial instruments that increasingly a framework for this modernization that promotes the combine the characteristics of banking, insurance, safety and soundness of our banking and financial and securities products. These changes, which are system and prevents the extension of the federal occurring all over the world, have also dramatically subsidy. altered the way financial services providers operate and the way they market and deliver their products. In the United States, our financial institutions have FRAMEWORK FOR FINANCIAL MODERNIZATION been required to take elaborate steps to develop and deliver new financial products and services in a man- The first objective is achieved by amending the ner that is consistent with our outdated laws. The Glass-Steagall Act and the Bank Holding Company costs of these efforts are becoming increasingly bur- Act to permit financial affiliations and broader finandensome and serve no useful public purpose. Unless cial activities. soon repealed, the archaic statutory barriers to effi- In our judgment, the other objective of preserving ciency could undermine the competitiveness of our safety and soundness and preventing the spread of the financial institutions, their ability to innovate and to federal subsidy is best achieved by allowing banks, provide the best and broadest possible services to securities firms, and insurance companies to combine U.S. consumers, and ultimately, the global dominance in the financial service holding company structure. of American finance. While we enthusiastically support the new powers Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 251 granted to financial service holding companies, we emphasis on oversight of risk management of finanjust as strongly believe that they should be financed cial institutions and a marked scaling back of outby the marketplace, not by instruments backed by the moded loan file and balance sheet surveillance. For sovereign credit of the United States. The require- the same reasons, affiliation with banks need not— ment that the new powers, at least those conducted as indeed, should not—create bank-like regulation of principal, be conducted through holding company affiliates of banks. A constructive approach to superaffiliates minimizes the expansion of the use of the vision for the twenty-first century is captured in the subsidies arising from a safety net backed by the U.S. so-called "Fed-light" provisions of various bills, taxpayer. which focus on and enhance the functional regulation The choice of requiring the new powers to be of securities firms, insurance companies, insured harbored in affiliates of holding companies, not in depository institutions, and their affiliates. We at the operating subsidiaries of their banks, will signifi- Fed strongly support this approach. cantly fashion the underlying structure of twenty-first century finance. To inject the substantial new subsidies that would accrue to operating subsidiaries of BANKING AND COMMERCE banks into the currently mushrooming domestic and international financial system could distort capital A twenty-first century issue that has become a part of markets and the efficient allocation of both finan- the financial modernization debate is whether we cial and real resources that has been so central to should move beyond affiliations among financial ser- America's current prosperity. vice providers and allow the full integration of bank- New affiliations, if allowed through bank subsidi- ing and commerce. As technology increasingly blurs aries, would accord banking organizations an unfair the distinction among various financial products, it is competitive advantage over comparable insurance already beginning to blur the distinctions between and securities firms—both those operating indepen- predominately commercial and banking firms. But dently and those that are bank holding company how the underlying subsidies of deposit insurance, subsidiaries. By fostering a level playing field within discount window access, and guaranteed final settlethe financial services industry, we contribute to full, ment through Fed wire are folded into a commercial open, and fair competition. firm, should the latter affiliate with a bank, is crucially important to the systemic stability of our finan- This choice of the holding company structure is cial system. It seems to us wise to move first toward also critical to the way in which the financial services the integration of banking, insurance, and securities industry will develop because it provides better proand employ the lessons we learn from that important tection for and promotes the safety, soundness, and step before we consider whether and under what stability of our banking and financial system. At the conditions it would be desirable to move to the same time, it accomplishes much-needed financial second stage of the full integration of commerce and modernization without damaging the national or state banking. bank charters or limiting in any way the benefits of financial modernization. The other route toward full- Nothing is lost, in my judgment, by making this a powered commercial bank operating subsidiaries and two-stage process. Indeed, there is much to be gained. universal banking would, in our judgment, lead to The Asian crisis highlighted some of the risks that greater risk for the deposit insurance funds and the can arise if relationships between banks and commertaxpayer. cial firms are too close and makes caution at this In addition, the holding company structure pro- stage prudent in our judgment. In line with these motes effective supervision and the functional regula- considerations, the Board continues to support elimition of different activities. The United States is at a nation of the unitary thrift loophole, which currently historic crossroads in financial services regulation. It allows any type of commercial firm to control a is becoming increasingly evident that the dramatic federally insured depository institution. advances in computer and telecommunications technologies of the past decade have so significantly altered the structure of domestic, indeed, global PRESERVATION OF EXECUTIVE BRANCH finance as to render our existing modes of supervi- INFLUENCE sion and regulation of financial institutions increasingly obsolescent. There is a final point I want to make because it The volume, sophistication, and rapidity of finan- appears to have driven the Treasury's opposition to cial dealings should continue to lead to supervisory financial modernization legislation considered last Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

252 Federal Reserve Bulletin • April 1999 year. That legislation would not have altered the are associated with technological and market develexecutive branch's supervisory authority for national opments; the market would force the necessary banks or federal savings associations; nor would it institutional adjustments. Arguably, this difference have resulted in any reduction in the predominant and reflects the painful experience that has taught us that growing share of this nation's banking assets con- developments in our banking system can have protrolled by national banks and federal savings associa- found effects on the stability of our whole economy, tions. Indeed, as of September 1998, nearly 58 per- rather than the limited impact we perceive from difficent of all banking assets were under the supervision culties in most other industries. of the Comptroller of the Currency, up from 55.2 per- Moreover, as in all major legislation, there are, and cent at the end of 1996. Moreover, after having will be, numerous provisions only indirectly associcontrolled for mergers of like-chartered banks, the ated with the legislation's core objectives that often number of national banks has increased over the foster disagreements. These surrounding issues are period 1996-98 and the number of state banks has doubtless important, but not so important that they declined. should be allowed to defeat the consensus that has Furthermore, the Congress for sound public policy developed around these key goals. It would be a reasons has purposefully apportioned responsibility disservice to the public and the nation if, in the for this nation's financial institutions among the fruitless search for a bill that pleases everyone in elected executive branch and independent regulatory every detail, the benefits of this vital consensus are agencies. Action to alter this balance would be con- lost or further delayed. trary to the deliberate steps that the Congress has The markets are demanding that we change outtaken to ensure a proper balance in the regulation of dated statutory limitations that stand in the way of this nation's dual banking system. more efficiently and effectively delivering financial services to the public. The Federal Reserve agrees and urges prompt enactment of financial moderniza- CONCLUSION tion legislation that achieves the two central and indivisible objectives that I have outlined today. In virtually every other industry, the Congress would not be asked to address issues such as these, which Statement by Edward W. Kelley, Jr., Member, Board which has two benefit structures: the Board Plan, of Governors of the Federal Reserve System, before covering Board employees hired pre-1984, which is the Subcommittee on Civil Service of the Committee modeled on the Civil Service Retirement System on Government Reform and Oversight, U.S. House of (CSRS); and the Bank Plan, covering Board employ- Representatives, February 25,1999 ees hired after 1983 and all employees of the Federal Reserve Banks. The Board Plan and the CSRS have historically had reciprocity with regard to service I am pleased to testify on behalf of the Board of credit portability. However, as a result of an oversight Governors on the Federal Reserve Board Retirement that occurred when the FERS statute was first passed, Portability Act and to provide the subcommittee with post-1988 service at the Federal Reserve Board by information on the Federal Reserve retirement sysemployees enrolled in the Bank Plan and, in some tem. The Board strongly supports this legislation. limited situations, those enrolled in the Board Plan, is The bill would allow certain employees who leave not creditable service under the FERS. the Board to work for other agencies and who then retire under the Federal Employees Retirement System (FERS) to receive pensions reflecting all of their SERVICE CREDIT PROBLEM federal service, including post-1988 service at the Federal Reserve Board. On behalf of the Board and The Board gains and loses employees in transfers its employees, let me particularly thank you, Chair- between the Board and other government agencies man Scarborough, and Representatives Cummings, each year. In particular, transfers between the Board Morella, Mica, Waxman, Norton, Davis, Hoyer, and and the other bank regulatory agencies—the Federal Moran for introducing this important legislation. Deposit Insurance Corporation, the Office of the By way of background, the Federal Reserve Sys- Comptroller of the Currency, and the Office of Thrift tem has its own defined benefit retirement plan, Supervision—are common. The Board grants credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 253 under its retirement plan to newly hired employees The service credit problem has festered without with previous CSRS and FERS service if the em- resolution since the FERS statute was enacted in ployee renounces benefits under the previous retire- 1986. Employees at the Board are very aware of it. ment plan (to prevent dual credit). Thus, there is The problem is damaging to employee morale, and, service portability when employees come to the just as important, some Board employees are deterred Board. And, generally, there has been portability from making sound career moves because their penbetween the Board and other government agencies in sions will suffer. And, government agencies' efforts crediting Board Plan service under CSRS. However, to recruit these employees are hampered. because of the oversight mentioned above, post-1988 The bill before the subcommittee would correct the Bank Plan service at the Federal Reserve Board is not unidirectional service credit problem. It would amend creditable under FERS. the FERS statute to make post-1988 Board service As a result, if a Board employee hired after 1983 creditable service under FERS. As a result, when (and participating in the Bank Plan) leaves the Board affected former Board employees retire under FERS, to work for another federal agency and then retires their pensions will reflect all their federal government from that agency under FERS, that employee would service. receive a reduced pension that would not reflect all of To receive credit for post-1988 Board service that employee's federal government service. This under FERS, the bill appropriately requires the problem also affects any employee who participated employee to do two things. First, the employee would in the Board Plan, did not complete five years of have to renounce the entitlement (if any) to receive a service before 1987, and left the Board and reentered pension from the Board. This would prevent receipt federal employment after a break in service of more of credit for post-1988 Board service under both than one year. In this situation, under current law, FERS and the Bank Plan. the employee would be placed under FERS with no Second, the bill requires the employee to make a credit for post-1988 Board service. My testimony contribution to FERS that, in effect, would "buy" will refer to these situations as the "service credit" FERS credit for his or her Board service. This contriproblem. bution would equal the amount the employee would Under current law, an employee affected by the have contributed to FERS if he or she had been service credit problem could receive two pensions: covered by FERS during the service in question, plus the reduced pension from FERS and, if he or she had interest to the date of payment. This contribution worked long enough to be vested, a pension from the is appropriate because all FERS participants are Board. In this case, because of the way the pensions required to contribute toward their pension benefit. are calculated, the sum of those pensions would These two requirements mirror provisions in curusually be less than a single FERS pension that gave rent law that provide service credit for employees credit for all of the individual's federal government with previous service under the Foreign Service penservice. Alternatively, if the employee was not vested sion program. at the Board, he or she would receive only the We believe that virtually all affected employees reduced FERS pension. would be better off with this legislation than under Thus, current law creates a dollars-and-cents prob- current law. This includes the Bank Plan employee lem in retirement security. Depending on the indi- who transfers to another agency and is placed under vidual's final average salary and years of other fed- FERS, as well as the Board Plan employee who has eral service, the lack of portability of post-1988 completed five years service (but not before 1987) Board service can mean the loss of hundreds or and who was placed under FERS after a break in thousands of dollars a year in retirement income. service of more than one year. As FERS employees, We have identified about fifty former employees of they will receive service credit for their post-1988 the Board who have gone to work for other federal Board service. Future government hires in the second agencies and who will have this service credit prob- situation (prior Board Plan) would be placed in CSRS lem when they retire under FERS. In addition, those Offset as a result of the legislation, where their postof the Board's current workforce covered by the 1988 Board service would be creditable. Bank Plan (about two-thirds of the staff) would have To ensure that no one is inadvertently hurt, the bill the same problem if they should go to another federal would, in effect, allow affected employees to choose agency and retire under FERS. Over time, a growing whether or not to get FERS credit for their post-1988 percentage of Board staff could encounter similar Board service. With that option, the employee problems since virtually all new hires will have ser- could make whichever choice would be more vice that is not creditable under FERS. advantageous. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

254 Federal Reserve Bulletin • April 1999 In conclusion, the Board and its employees to 7.25 percent in 1999 as CSRS did). The benefit strongly support this legislation, and we hope that the features of the Board Plan mirror those of CSRS in Congress can approve it quickly. most important respects. The most significant differ- I would now like to respond to the subcommittee's ences are as follows: The Board Plan credits Federal request for an overview of the Federal Reserve Reserve Bank service, while CSRS does not; the Retirement Plan and information on the management Board Plan has adopted a benefit formula for employof pension plan assets. ees with part-time service after April 6, 1986, that is different from the CSRS; and the Board Plan does not allow incorporation of retired military pay into the OVERVIEW OF THE FEDERAL RESERVE Board Plan annuity as allowed by CSRS. A detailed RETIREMENT PLAN listing of the differences between the two plans is found in attachment A.' The Federal Reserve System Retirement Plan is a The Bank Plan covers all eligible employees of the governmental defined benefit plan that is qualified Federal Reserve Banks. When the Congress passed under section 401 (a) of the tax code. The plan pro- legislation requiring that federal employees hired vides retirement benefits for virtually all employees after 1983 be subject to social security tax, the Board of the Federal Reserve Board and Reserve Banks. decided to place all newly hired Board employees in (Exceptions are approximately thirty employees at the Bank Plan as well. Unlike the Board Plan, the the Board who are in FERS or CSRS.) Plan benefits Bank Plan does not require employee contributions, are determined under two separate benefit structures: but all Bank Plan participants are covered under the Board Benefit Structure (Board Plan), which cov- social security and thus are subject to the FICA ers approximately 600 Board employees; or the Bank withholding requirement. The basic annuity formula Plan, which covers all eligible Reserve Bank staff for the Bank Plan is integrated with social security. (about 23,000 employees) and approximately 1,000 The annuity formula is based on years of creditable Board employees. There are approximately 500 annu- service and the average of the five highest earning itants receiving payments from the Board Plan and years of the employee's career. The benefit formula approximately 12,000 annuitants receiving payments provides 1.3 percent of High-5 salary up to the social from the Bank Plan, with another 5,000 who have security integration level times the number of years earned a benefit but have not yet begun drawing of creditable service plus 1.8 percent of High-5 salary payments. above the integration level times years of creditable The Federal Reserve Banks and the Board, as service. employers, are responsible to ensure the funding While the Bank Plan is similar to FERS in that it is required to pay the benefits promised to participants designed to work together with social security, the and have contributed to the plan at varying levels plan design features differ. For example, the Bank throughout the years as determined necessary by the Plan requires no employee contributions as FERS plan actuary. Since 1986, the actuary has determined does; it uses the highest five years of earnings to that no employer contributions are required. Cur- compute the pension benefit rather than the highest rently, the Retirement Plan's assets exceed both the three years under FERS; and it provides for annuity plan's accrued liability as well as total liability as reductions for retirements before age sixty, while calculated by the plan actuary. Plan assets based on a FERS allows unreduced retirement below age sixty if five-year moving average as of January 1, 1998, were the participant has thirty years of service. A detailed $4.0 billion. The total benefit obligation—which comparison of the plan features of FERS and the includes both future service and future salary Bank Plan are provided in attachment B. increases—was $3.5 billion. Accrued benefits— The Federal Reserve Thrift Plan is the System's based on service and salary up to the date of the defined contribution plan comparable to the governvaluation—were valued at $2.8 billion. The value of ment's Thrift Savings Plan (TSP). Both Board Plan plan assets at the end of 1998 was $5.8 billion. and Bank Plan employees are eligible to participate The Board Plan covers Board employees hired and receive employer matching funds. The Federal before 1984; its plan design is nearly identical to that Reserve Thrift Plan differs from TSP in that it offers of the Civil Service Retirement System. Participants both pretax and after-tax savings components and a do not pay social security tax but have contributed to the Board Plan at the same rate as CSRS participants 1. The attachments to this statement are available from Publications Services, Mail Stop 127, Board of Governors of the Federal over the years (except that the Board did not increase Reserve System, Washington, DC 20551. and on the Board's site on the employee contribution rate from 7.0 percent the World Wide Web (http://www.federalreserve.gov). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 255 wider variety of investment options. It also allows ment advisory agreement with each firm and delehigher contribution rates from participants (up to gates to them asset allocation decisions (within broad 20 percent of salary), subject to IRS limitations. parameters set by the committee), securities selection decisions, and the voting of proxies. Currently, eight firms are retained to manage our MANAGEMENT OF PENSION PLAN ASSETS $5.8 billion in pension assets (of which about twothirds were invested in equities as of year-end 1998). The Federal Reserve System, composed of the Board Those balanced accounts range in size from $350 milof Governors and twelve Reserve Banks, vests fidu- lion to $1 billion. Managers are selected by criciary responsibility for the investments of its defined teria that include past performance, desired equity benefit (pension) and defined contribution (savings) and fixed-income investment "styles," trading and plans in a committee of five senior System officers. research capabilities, expense levels, and so on. Man- The System's investment oversight committee is cur- agement expenses for the entire plan are less than rently composed of three Reserve Bank presidents, one-quarter of 1 percent of invested assets. No penone member of the Board, and the first vice president sion assets are managed in-house. The staff in New of the New York Reserve Bank. The pension and York monitors portfolio activity and performance, savings plans had investments valued at $8.1 billion reporting on both to the committee on a monthly as of year-end 1998, with $5.8 billion representing basis. The committee meets with its portfolio managpension plan assets. I represent the Board on this ers at least once a year; the staff meets with most of them quarterly. No consultants are retained for any committee and have done so since 1994. The commitaspect of the investment process, although the staff in tee is chaired by one of the Reserve Bank presidents New York makes extensive use of generally available (currently Gary Stern of the Minneapolis Reserve analytical software to assess returns and various mea- Bank). Day-to-day oversight of the investments is the sures of risk. responsibility of a small staff (three) in New York directed by our Chief Investment Officer, Paul Lip- Performance of invested assets is measured against son, CFA. three benchmarks: versus the expected long-term rate Our oversight committee has long sought to dis- of return for plan investments used in actuarial valuatance itself from asset allocation decisions because tion (currently 9 percent), versus a trailing thirty-sixsuch activity might bring with it the appearance of month composite return (60 percent Standard & a conflict of interest for the System. Instead, the Poor's 500/40 percent Lehman Bros. Aggregate), and committee functions as a manager-of-managers— in comparison to the plan's peer group in the Wilshire selecting independent investment firms and giving Trust Universe Comparison Service, the largest taxthem a common balanced investment mandate. That exempt institutional performance database in the mandate is set forth in our Investment Objectives and United States. I am pleased to report that the plan has Guidelines document, which has been provided to the met or exceeded each of those benchmarks over subcommittee. This document is part of the invest- many years. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

256 Announcements PROPOSED ACTION PUBLICATION BY AN INTERAGENCY TASK FORCE OF A CONSUMER BROCHURE ABOUT The Federal Reserve Board on February 22, 1999, SHOPPING AND NEGOTIATING FOR THE BEST requested comment on proposed changes to its Reg- MORTGAGE ulation CC (Availability of Funds and Collection of Checks) that would provide more flexibility to The federal Interagency Task Force on Fair Lending depository institutions to experiment with methods to has published a brochure for consumers Looking for return unpaid checks electronically. Comments are the Best Mortgage: Shop, Compare, Negotiate. The requested by April 30, 1999. brochure notes that shopping around for a home loan or mortgage is similar to shopping for a car— consumers should obtain information on all costs of the loan and negotiate for the best deal. ADDITION OF SUPPLEMENTARY TABLES TO THE The brochure describes how comparing and negoti- FLOW OF FUNDS ACCOUNTS ating interest rates, fees, and other payment terms on loans may help consumers get the best financing and The Federal Reserve Board on February 17, 1999, possibly save thousands of dollars, whether it is a announced that it will include in future issues of home purchase loan, a refinancing, or a home equity the Flow of Funds Accounts of the United States loan. It advises consumers to do the following: (Z.I statistical release) supplementary tables that combine the assets and liabilities of all government • Obtain information from several lenders entities in the United States. The title of the new • Make sure to obtain all important cost tables is "Consolidated Statement for Federal, State, information and Local Governments," and they will be num- • Negotiate for the best deal. bered F.106.C for financial flows and L.106.C for outstanding amounts of financial assets and liabilities For example, the brochure notes that on any given at the end of the periods shown. The release will day, lenders and brokers may offer different prices for continue to show separately the assets and liabili- the same loan to different consumers, even if consumties of the federal government and state and local ers have the same loan qualifications. These different governments. prices may result because loan officers and brokers The inclusion of table F.106.C and table L. 106.C is are often allowed to keep some or all of the differmotivated by the International Monetary Fund's Spe- ence between the lowest available price and any cial Data Dissemination Standards (SDDS), which higher price that the consumer agrees to pay. This were established in 1996 to provide guidance on the compensation arrangement helps explain why it is dissemination of economic and financial data for important for consumers to ask questions about costs countries that have, or might seek, access to inter- and negotiate for the best deal. The brochure contains national capital markets. The United States is a sub- a worksheet consumers can use to compare costs scriber to the IMF's SDDS. while shopping. The worksheet lists commonly The Z.I statistical release, "Flow of Funds charged fees and closing costs and includes a useful Accounts of the United States," is updated about ten list of questions consumers may wish to ask lenders weeks after the end of a quarter. The release is when they shop for a loan. available from the Board's Publications Services The brochure outlines common sources for home (Mail Stop 127, Board of Governors of the Fed- loans and explains the difference between rates, eral Reserve System, Washington, DC 20551) points, and fees. It highlights some of the laws that and electronically on the Board's web site protect consumers from unfair lending practices. It (http://www.federalreserve.gov/releases/Zl). also emphasizes that even consumers with past credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

257 problems should shop around and negotiate for the which effectively treats these securities as having a best deal. Finally, the brochure includes a mortgage ready market. loan shopping form that consumers can use to record With the Board's December 23, 1997, amendments loan data quoted by two or more lenders or brokers to its margin regulations, all brokers and dealers and then compare that data to help identify or negoti- became able as of January 1, 1999, to offer margin ate the best deal. credit on all stocks trading in the Nasdaq Stock The members of the Interagency Task Force Market. Therefore the Board ceased publication of its include the Department of Housing and Urban Devel- quarterly List of Marginable OTC Stocks with the opment, the Department of Justice, the Department of November 9, 1999, list. the Treasury, the Federal Deposit Insurance Corpora- It is unlawful for any person to cause any represention, the Federal Housing Finance Board, the Federal tation to be made that inclusion of a stock on the List Reserve Board, the Federal Trade Commission, the of Foreign Margin Stocks indicates that the Board or National Credit Union Administration, the Office of the SEC has in any way passed upon the merits of Federal Housing Enterprise Oversight, the Office any such stock or transaction therein. Any references of the Comptroller of the Currency, and the Office of to the Board in connection with the list or any stocks Thrift Supervision. thereon in any advertisement or similar communica- Single copies of the brochure are available free of tion is unlawful. charge from the Board's Publications Services, Mail Stop 127, Board of Governors of the Federal Reserve System, Washington, DC 20551; it is also on the ENFORCEMENT ACTIONS Board's web site (http://www.federalreserve.gov). Single copies are also available free of charge The Federal Reserve Board on February 5, 1999, from other members of the Interagency Task Force. announced the execution of a written agreement by The brochure is available at 50 cents per copy from and among First Utah Bancorporation, the First the Consumer Information Center, Pueblo, CO Utah Bank, and Premier Data Corporation, all of 81009, or from the center's web site (http:// Salt Lake City, Utah, and the Federal Reserve Bank www.pueblo.gsa.gov). of San Francisco. The written agreement includes provisions addressing Year 2000 readiness. On February 11, 1999, the Federal Reserve Board AVAILABILITY OF THE LIST OF FOREIGN announced the issuance of a prompt corrective action MARGIN STOCKS directive against the Zia New Mexico Bank, Tucumcari, New Mexico. The Federal Reserve Board on February 22, 1999, initiated semiannual publication of its List of Foreign Margin Stocks. The list, which was effective March 1 REVISIONS TO THE MONEY STOCK DATA and supersedes the November 9, 1998, list, is the last to be accompanied by a press release. Future lists Measures of the money stock were revised in Feb- (the next is scheduled for September 1999), will ruary of this year to incorporate the results of the be published directly on the Board's Internet site annual benchmark and seasonal factor review. Data (http://www.federalreserve.gov). in tables 1.10 and 1.21 in the statistical appendix to Stocks on the list meet the Board's criteria in the Federal Reserve Bulletin reflect these changes section 220.11 of Regulation T (Credit by Brokers beginning with this issue. and Dealers) and are eligible for margin treatment at The revisions had no effect on the annual growth brokers and dealers on the same basis as domestic rate of M2 over 1998, but they raised the annual margin stocks. Other foreign stocks are also eligible growth rate of Ml by 0.1 percentage point and lowif they are deemed by the Securities and Exchange ered that of M3 by 0.1 percentage point over the past Commission (SEC) to have a "ready market" for year. purposes of the SEC's net capital rule. The foreign The benchmark incorporates minor revisions to stocks on the Financial Times/Standard & Poor's data reported on the weekly and quarterly deposit Actuaries World Indices (FT/S&P list) are not reports, and it takes account of deposit data from call included in the Board's list, but they all qualify for reports for banks and thrift institutions that are not margin treatment under an SEC "no action" letter, weekly or quarterly deposit reporters. These revisions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

258 Federal Reserve Bulletin • April 1999 to deposit data start in 1992. The benchmark also tors. As usual, the revisions due to seasonal factors incorporates historical data for a number of money slightly changed the pattern of quarterly growth rates market mutual funds that began reporting for the first of Ml, M2, and M3 in 1998. The annual growth rates time during 1998, raising the level of M3 over the of Ml and M2 were unchanged, but that of M3 was years by amounts that cumulate to $5 billion by the lowered a bit. end of 1998. Historical revisions have also been Complete historical data are available in printed made to repurchase agreement (RP) and Eurodollar form from the Money and Reserves Projection Secseries to reflect better estimates of the holdings of tion, Mail Stop 72, Board of Governors of the Federal money market mutual funds, which must be netted Reserve System, Washington, DC 20551, or phone from the gross RP and Eurodollar series to avoid (202) 452-3062. Historical data for the monetary double counting in M3. The RP series was revised up aggregates and their components are available each by a maximum of $17.5 billion (in the third quarter of week in statistical release H.6 on the Board's web 1997) and the Eurodollar series by a maximum of site (http://www.federalreserve.gov) under Domestic about $15 billion (in the fourth quarter of 1989). and International Research, Statistical Releases, and Seasonal factors for the monetary aggregates have also from the Economic Bulletin Board of the U.S. been revised, using the benchmarked data through Department of Commerce. Call (202) 482-1986 or December 1998. For the first time, the X-12-ARIMA toll-free (800) 782-8872 for information on how to procedure was used to derive monthly seasonal fac- access the Commerce Department's bulletin board. 1. Monthly seasonal factors used to construct Ml, January 1998-March 2000 Other checkable deposits' Nonbank travelers Year and month Currency Demand deposits checks Total At banks 1998—January .9983 .0265 1.0097 1.0114 1.0186 February .9973 .0262 .9803 .9945 .9996 March .9984 .0166 .9867 1.0034 1.0036 April .9987 .0137 1.0005 1.0223 1.0193 May .9993 .0106 .9843 .9946 .9941 June .9981 .9918 .9950 .9990 .9977 July 1.0010 .9623 .9991 .9935 .9907 August .9991 .9603 .9986 .9905 .9892 September .9974 .9773 .9951 .9933 .9925 October .9986 .9908 .9960 .9919 .9906 November 1.0023 .0145 1.0127 .9974 .9964 December 1.0108 .0209 1.0393 1.0078 1.0080 1999—January .9996 .0229 1.0125 1.0109 1.0178 February .9977 .0237 .9811 .9945 .9992 March .9986 .0159 .9860 1.0039 1.0039 April .9989 .0148 1.0003 1.0225 1.0192 May .9978 .0114 .9843 .9950 .9945 June .9982 .9943 .9957 .9991 .9982 July 1.0009 .9635 1.0000 .9936 .9908 August .9985 .9588 .9961 ,9905 .9893 September .9969 .9777 .9944 .9930 .9922 October .9996 .9902 .9984 .9920 .9908 November 1.0022 .0110 1.0105 .9975 .9966 December 1.0119 .0195 1.0398 1.0076 1.0078 2000—January .9986 .0218 1.0121 1.0107 1.0174 February .9977 .0235 .9809 .9945 .9990 March .9992 .0165 .9859 1.0040 1.0039 1. Seasonally adjusted other checkable deposits at thrift institutions are adjusted, and seasonally adjusted other checkable deposits at commercial banks. derived as the difference between total other checkable deposits, seasonally Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 259 Monthly seasonal factors used to construct M2 and M3, January 1998-March 2000 Savings and Small- Large- Money market mutual funds Year and month MMDA denomination denomination RPs Eurodollars deposits' time deposits' time deposits1 In M2 In M3 only 1998—January ... .9956 1.0009 .9765 1.0027 1.0255 1.0024 1.0337 February .. .9960 1.0020 .9919 1.0080 1.0331 .9988 1.0178 March 1.0071 1.0013 1.0067 1.0170 1.0178 1.0057 .9947 April 1.0116 1.0004 .9999 1.0130 .9960 1.0078 .9884 May 1.0004 .9985 1.0099 .9841 .9862 1.0223 .9952 June 1.0028 .9985 1.0085 .9856 .9863 1.0033 .9831 July 1.0011 .9999 .9996 .9898 .9791 .9915 .9769 August .9999 .9994 1.0006 1.0020 .9866 .9951 .9899 September . .9953 .9993 1.0009 1.0008 .9807 .9968 .9916 October .. .9933 1.0009 1.0063 .9980 .9923 .997'I .0051 November . .9972 1.0003 1.0040 .9990 1.0021 1.0017 .0027 December . .9974 .9990 .9933 .9999 1.0136 .9754 .0251 1999—January ... .9959 1.0011 .9749 1.0023 1.0277 1.0048 .0344 February .. .9968 1.0022 .9915 1.0086 1.0329 .9985 .0180 March 1.0080 1.0014 1.0085 1.0178 1.0165 1.0088 .9934 April 1.0129 1.0002 1.0014 1.0134 .9967 1.0094 .9860 May 1.0010 .9980 1.0110 .9843 .9884 1.0219 .9929 June 1.0028 .9978 1.0103 .9849 .9863 .9994 .9802 July 1.0007 .9997 .9995 .9884 .9769 .9911 .9762 August .9993 .9993 1.0004 1.0011 .9849 .9941 .9914 September . .9946 .9995 1.0008 1.0013 .9788 .9957 .9927 October ... .9927 1.0012 1.0052 .9986 .9926 .9954 1.0051 November . .9968 1.0006 1.0032 .9994 1.0037 1.0029 1.0046 December . .9974 .9991 .9925 .9997 1.0140 .9771 1.0277 2000—January ... .9960 1.0012 .9740 1.0023 1.0288 1.0060 1.0351 February .. .9972 1.0022 .9913 1.0090 1.0333 .9979 1.0175 March 1.0083 1.0014 1.0095 1.0178 1.0157 1.0104 .9927 1. Seasonal factors are applied to deposits data at both commercial banks and thrift institutions. 3. Weekly seasonal factors used to construct Ml, December 7, 1998—April 3, 2000 Other checkable deposits1 Nonbank travelers Week ending Currency Demand deposits checks Total At banks 1998—December 7 1.0054 1.0231 1.0156 1.0036 .9931 14 1.0065 1.0218 .0222 .9912 .9883 21 1 0119 1 0206 .0465 1 0060 1 0087 28 1.0203 1.0193 .0519 1.0133 1.0232 1999—January 4 . . 1.0108 1.0180 .0897 1.0434 1.0449 11 1.0033 1.0203 .0246 1.0143 1.0177 18 .9993 1.0226 .0031 1.0073 1.0131 25 .9942 1.0248 .9830 .9991 1.0108 February 1 .9930 1.0271 .9945 1.0055 1.0156 8 .9994 1.0257 .9804 .9960 .9991 15 1.0000 1.0242 .9812 .9878 .9899 22 '. .9963 1.0228 .9725 .9909 .9988 March 1 .9953 1.0213 .9895 1.0031 1.0080 8 1.0016 1.0192 .9822 1.0013 .9964 15 .9997 1.0171 .9914 .9961 .9944 21 9984 1 0150 9741 9990 1 0016 29 .9967 1.0129 .9825 1.0097 1.0143 April 5 1.0017 1.0108 1.0105 1.0235 1.0133 12 1.0028 1.0129 1.0088 1.0193 1.0134 19 .9981 1.0150 .0167 1.0369 1.0370 76 .9946 1.0170 .9783 1.0193 1.0232 May 3 .9959 1.0191 .9959 1.0166 1.0098 10 1 0006 1 0157 .9761 .9974 .9908 17 .9968 1.0123 .9864 .9880 .9886 24 .9972 1.0089 .9632 .9833 .9894 31 .9954 1.0056 1.0011 1.0007 1.0033 I 0007 I (X)I3 .9894 .9997 .9935 14 .9993 .9971 1.0043 .9961 .9916 21 9975 9929 9783 .9947 .9967 28 .9963 .9887 .9946 .9992 1.0044 July 5 1.0056 .9846 1.0365 1.0088 .9985 12 1.0032 .9739 .9973 .9917 .9860 19 .9993 .9635 .9960 .9880 .9873 26 .9968 .9533 .9786 .9866 .9902 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

260 Federal Reserve Bulletin • April 1999 3. Weekly seasonal factors used to construct Ml, December 7, 1998-April 3, 2000—Continued Other checkable deposits' Nonbank travelers Week ending Currency Demand deposits checks Total At banks 1999—August 2 . .9975 .9434 1.0148 1.0041 1.0024 9 1.0037 .9497 .9884 .9902 .9841 16 .. 1.0002 .9561 .9970 .9850 .9823 23 .9967 .9626 .9846 .9846 .9873 30 .9936 9692 1 0023 9952 .9985 1.0017 .9760 .9938 .9964 .9876 13 .9991 .9769 1.0009 .9916 .9879 20 .9960 .9779 .9926 .9904 .9942 27 9942 9789 9874 9893 .9947 .9975 .9799 1.0159 1.0022 .9956 11 1.0022 .9847 .9834 .9861 .9809 18 .9993 .9896 1.0007 .9884 .9879 25 .9967 .9945 .9865 .9870 .9925 November I .9971 .9995 1.0165 1.0052 1.0057 8 10036 1 0040 9910 9962 .9908 15 .. 1.0019 1.0087 1.0059 .9932 .9904 22 1.0005 1.0133 .9984 .9925 .9969 29 10041 1 0180 1 0386 10039 1.0052 1.0062 1.0228 1.0103 1.0023 .9923 13 .. 1.0076 1.0210 1 0194 9920 .9895 20 1.0126 1.0193 1.0462 1.0045 .0074 27 ... 1.0201 1.0176 1.0554 1.0132 .0209 2000—January 3 1.0110 1.0158 1.0891 1.0427 .0454 10 1.0033 1.0184 1.0160 1.0155 .0166 17 .9991 1.0211 1.0054 1.0082 .0137 24 .9940 1.0238 9911 9995 .0118 31 .9922 1.0264 1.0013 1.0058 .0161 February 7 .9987 1.0253 .9822 .9954 .9989 14 1.0002 1.0242 .9795 .9874 .9890 21 .9972 1.0231 .9702 .9900 .9975 28 9955 1 0219 9882 1 0020 1.0072 1.0017 1.0208 .9846 1.0010 .9971 13 10002 1 0185 9960 9969 .9962 20 .9983 1.0162 .9826 1.0001 1.0035 27 9964 1.0139 9752 1 0103 1.0150 April 3 1.0016 1.0116 1.0092 1.0232 1.0140 1. Seasonally adjusted other checkable deposits at thrift institutions are adjusted, and seasonally adjusted other checkable deposits at commercial banks. derived as the difference between total other checkable deposits, seasonally 4. Weekly seasonal factors used to construct M2 and M3, December 7, 1998-April 3, 2000 Savings and Small- Large- Money market mutual funds Week ending MMDA denomination denomination RPs Eurodollars deposits' time deposits' time deposits' In M2 In M3 only 1998—December 7 1.0137 1.0002 1.0036 1.0017 1.0219 .9910 1.0180 14 1.0068 .9997 1.0025 1.0054 1.0378 .9852 1.0294 21 .9925 .9988 .9925 1.0019 1.0090 .9738 1.0204 28 .9792 .9977 .9834 .9970 1.0054 .9592 1.0307 1999—January 4 .9927 .9982 .9735 .9854 .9685 .9586 1.0292 1.0096 1.0006 .9773 1.0027 1.0319 .9979 1.0202 18 1.0048 1.0016 .9741 1.0076 1.0383 .0096 1.0337 25 .9855 1.0019 .9735 1.0057 1.0440 .0189 1.0434 February 1 .9839 1.0021 .9756 1.0024 1.0242 .0184 1.0372 8 1.0074 1.0024 .9814 1.0058 1.0327 .0115 1.0205 15 1.0012 1.0024 .9922 1.0070 1.0341 .0011 1.0203 22 .9885 1.0022 .9942 1.0113 1.0352 .9892 1.0127 March 1 .9913 1.0019 1.0017 1.0114 1.0305 .9883 1.0156 8 1.0197 1.0020 1.0068 1.0207 1.0262 .9991 .9915 15 1.0164 1.0016 1.0105 1.0194 1.0231 .0100 .9930 22 1.0039 1.0011 1.0086 1.0174 1.0169 .0178 .9908 29 .9958 1.0008 1.0092 1.0149 1.0037 .0120 .9960 April 5 1.0273 1.0013 1.0075 1.0171 .9972 .0058 .9910 12 1.0299 1.0012 1.0035 1.0298 1.0183 .0073 .9829 19 1.0156 1.0002 .9986 1.0196 .9938 .0072 .9763 26 .9886 .9993 .9960 1.0047 .9860 .0097 .9918 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 261 4. Weekly seasonal factors used to construct M2 and M3, December 7, 1998-April 3, 2000—Continued Savings and Small- Large- Money marke mutual funds Week ending MMDA denomination denomination RPs Eurodollars deposits' time deposits' time deposits' In M2 In M3 only 1999—May 3 .9968 .9990 1.0046 .9847 .9826 1.0208 .9918 10 1.0086 .9987 1.0109 .9842 .9921 .0262 .9803 17 1.0036 .9981 1.0116 .9813 .9900 .0224 .9864 24 .9940 .9975 1.0119 .9864 .9881 .0200 1.0020 31 .9947 .9972 1.0121 .9852 .9859 .0194 1.0033 June 7 1.0201 .9976 1.0159 .9889 .9956 .0131 .9884 14 1.0155 .9977 1.0164 .9868 .9936 .0042 .9810 21 .9987 .9975 1.0095 .9844 .9799 .9950 .9737 28 .9825 .9979 1.0043 .9806 .9801 .9887 .9799 July 5 1.0150 .9996 .9938 .9806 .9734 .9889 .9731 12 1.0108 1.0001 .9963 .9909 .9826 .9859 .9734 19 .9995 .9999 1.0004 .9897 .9759 .9906 .9718 26 .9848 .9995 1.0028 .9908 .9796 .9951 .9806 August 2 .9902 .9994 1.0041 .9878 .9702 .9957 .9831 9 1.0164 .9997 1.0037 .9973 .9848 .9979 .9783 16 1.0084 .9994 .9982 1.0022 .9855 .9963 .9831 23 .9907 .9992 1.0002 1.0035 .9890 .9873 .9963 30 .9813 .9990 .9983 1.0045 .9843 .9941 1.0095 September 6 .0170 .9992 1.0002 1.0059 .9869 .9966 .9952 13 ,0107 .9992 1.0020 1.0085 .9859 .9975 .9903 20 .9992 1.0015 1.0030 .9755 .9970 .9890 27 .9674 .9994 .9994 .9946 .9727 .9941 .9950 October 4 .9953 .0012 1.0012 .9867 .9679 .9900 .9961 11 .0058 .0020 1.0106 .9959 .9894 .9898 1.0023 18 .9977 .0013 1.0072 1.0019 .9946 .9917 1.0036 25 .9804 .0010 1.0046 1.0036 .9991 .9994 1.0092 November 1 .9782 .0005 .9997 1.0001 1.0025 1.0051 1.0110 8 .0119 .0008 1.0030 .9999 .9919 1.0062 .9987 15 .0100 .0007 1.0040 .9988 1.0017 1.0056 .9989 22 .9897 1.0005 1.0019 1.0020 1.0069 1.0044 1.0028 29 .9777 1.0003 1.0041 .9965 1.0121 .9973 1.0155 December 6 .0138 1.0003 1.0044 1.0031 1.0194 .9873 1.0152 13 .0086 .9999 1.0043 1.0059 1.0331 .9797 1.0247 20 .9933 .9990 .9930 1.0031 1.0153 .9747 1.0250 27 .9810 .9979 .9827 .9961 1.0110 .9692 1.0351 2000—January 3 .9916 .9985 .9705 .9844 .9758 .9754 1.0433 10 .0073 .0010 .9772 1.0011 1.0286 .9999 .0359 17 .0036 .0016 .9743 1.0080 1.0383 1.0109 .0350 24 .9858 .0015 .9729 1.0055 1.0440 .0129 .0344 31 .9843 .0017 .9731 1.0022 1.0267 1.0134 .0314 February 7 .. .0063 .0024 .9795 1.0057 1.0324 1.0070 .0173 14 .. .0015 .0024 .9903 1.0073 1.0345 1.0015 .0178 21 .. .9900 .0022 .9925 1.0110 1.0356 .9911 .0168 28 .. .9918 .0020 1.0004 1.0105 1.0316 .9916 .0210 March 6 .0162 .0020 1.0071 1.0187 1.0272 1.0007 .9972 13 .0129 .0017 1.0116 1.0205 1.0239 1.0099 .9936 20 .0016 .0013 1.0098 1.0181 1.0184 1.0173 .9879 27 .9952 .0008 1.0099 1.0154 1.0059 1.0148 .9929 April 3 1.0258 1.0013 1.0079 1.0157 .9971 1.0059 .9923 1. Seasonal factors are applied to deposits data at both commercial banks and thrift institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

263 Legal Developments FINAL RULE — AMENDMENTS TO RISK-BASED terns; good earnings; high asset quality; high liquidity; and CAPITAL STANDARDS well managed on- and off-balance sheet activities; and in general be considered a strong banking organization, rated The Office of the Comptroller of the Currency ("OCC"), composite 1 under the Uniform Financial Institutions Ratthe Board of Governors of the Federal Reserve System ing System (CAMELS) rating system of banks. For all but ("Board"), the Federal Deposit Insurance Corporation the most highly-rated banks meeting the conditions set ("FDIC"), and the Office of Thrift Supervision ("OTS") forth in this paragraph (c), the minimum Tier 1 leverage (collectively, "the agencies"), are amending 12 C.F.R. ratio is 4 percent. In all cases, banking institutions should Parts 3, 208, 325, and 567, their respective risk-based and hold capital commensurate with the level and nature of all leverage capital standards for banks and thrifts (institu- risks. tions).1 This final rule represents a significant step in implementing section 303 of the Riegle Community Devel- 3. In Appendix A to part 3, section 3, the second undesigopment and Regulatory Improvement Act of 1994, which nated paragraph and paragraphs (a)(3)(iii) and (a)(3)(iv) requires the agencies to work jointly to make uniform their introductory text are revised to read as follows: regulations and guidelines implementing common statutory or supervisory policies. The intended eifect of this Appendix A to Part 3 — Risk-Based Capital final rule is to make the risk-based capital treatments for Guidelines construction loans on presold residential properties, real estate loans secured by junior liens on 1- to 4-family residential properties, and investments in mutual funds consistent among the agencies. It is also intended to sim- Section 3. Risk Categories/Weights for On-Balance plify and make uniform the agencies' Tier 1 leverage Sheet Assets and Off-Balance Sheet Items capital standards. Effective April 1, 1999, 12 C.F.R. Parts 3, 208, 325, and 567 are amended as follows: Some of the assets on a bank's balance sheet may represent Part 3 — Minimum Capital Ratios; Issuance of an indirect holding of a pool of assets, e.g., mutual funds, Directives that encompasses more than one risk weight within the pool. In those situations, the bank may assign the asset to 1. The authority citation for Part 3 continues to read as the risk category applicable to the highest risk-weighted follows: asset that pool is permitted to hold pursuant to its stated investment objectives in the fund's prospectus. Alterna- Authority: 12U.S.C. 93a, 161, 1818, 1828(n), 1828 note, tively, the bank may assign the asset on a pro rata basis to 183In note, 1835, 3907 and 3909. different risk categories according to the investment limits in the fund's prospectus. In either case, the minimum risk 2. In section 3.6, paragraph (c) is revised to read as weight that may be assigned to such a pool is 20 percent. If follows: a bank assigns the asset on a pro rata basis, and the sum of the investment limits in the fund's prospectus exceeds 100 percent, the bank must assign the highest pro rata amounts of its total investment to the higher risk category. Section 3.6 Minimum capital ratios. If, in order to maintain a necessary degree of liquidity, the * * * ** fund is permitted to hold an insignificant amount of its assets in short-term, highly-liquid securities of superior (c) Additional leverage ratio requirement. An institution credit quality (that do not qualify for a preferential risk operating at or near the level in paragraph (b) of this weight), such securities generally will not be taken into section should have well-diversified risks, including no account in determining the risk category into which the undue interest rate risk exposure; excellent control sysbank's holding in the overall pool should be assigned. The prudent use of hedging instruments by a fund to reduce the 1. An amended risk-based capital standard for bank holding compa- risk of its assets will not increase the risk weighting of the nies is included in a separate Board notice; references to "institu- investment in that fund above the 20 percent category. tions" in this final rule generally do not apply to bank holding However, if a fund engages in any activities that are companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

264 Federal Reserve Bulletin • April 1999 deemed to be speculative in nature or has any other charac- 4(c)(5), 78q, 78q-l, and 78w; 31 U.S.C. 5318; 42 U.S.C. teristics that are inconsistent with the preferential risk 4012a, 4104a, 4104b, 4106, and 4128. weighting assigned to the fund's assets, the bank's investment in the fund will be assigned to the 100 percent risk 2. In Appendix A to Part 208, section III. A., footnote 21 is category. More detail on the treatment of mortgage-backed revised to read as follows: securities is provided in section 3(a)(3)(vi) of this Appendix A. Appendix A to Part 208 - Capital Adequacy Guidelines for State Member Banks: Risk-Based Measure (a)* * * (3)* * * (iii) Loans secured by first mortgages on one-to-four III. * * * family residential properties, either owner- A * * *2I occupied or rented, provided that such loans are not otherwise 90 days or more past due, or on nonaccrual or restructured. It is presumed that such loans will meet prudent underwriting stan- 3. In Appendix A to part 208, section II1.C.3., footnote 34 dards. If a bank holds a first lien and junior lien is revised to read as follows: on a one-to-four family residential property and no other party holds an intervening lien, the transaction is treated as a single loan secured by * * * a first lien for the purposes of both determining Q * * * the loan-to-value ratio and assigning a risk weight to the transaction. Furthermore, residential property loans made for the purpose of con- 3 * * * 34 struction financing are assigned to the 100 percent risk category of section 3(a)(4) of this Appendix A; however, these loans may be in- 4. In Appendix A to Part 208, section III.C.3. is amended cluded in the 50 percent risk category of this by adding a new sentence to the end of the first paragraph section 3(a)(3) of this Appendix A if they are of footnote 35 to read as follows: subject to a legally binding sales contract and satisfy the requirements of section 3(a)(3)(iv) of this Appendix A. (iv) Loans to residential real estate builders for one- 21. An investment in shares of a fund whose portfolio consists to-four family residential property construction, primarily of various securities or money market instruments that, if if the bank obtains sufficient documentation held separately, would be assigned to different risk categories, generally is assigned to the risk category appropriate to the highest riskdemonstrating that the buyer of the home intends weighted asset that the fund is permitted to hold in accordance with to purchase the home (i.e., a legally binding the stated investment objectives set forth in its prospectus. A bank written sales contract) and has the ability to may, at its option, assign a fund investment on a pro rata basis to obtain a mortgage loan sufficient to purchase the different risk categories according to the investment limits in the home (i.e., a firm written commitment for per- fund's prospectus. In no case will an investment in shares in any fund be assigned to a total risk weight less than 20 percent. If a bank manent financing of the home upon completion), chooses to assign a fund investment on a pro rata basis, and the sum of subject to the following additional criteria: the investment limits of assets in the fund's prospectus exceeds 100 percent, the bank must assign risk weights in descending order. If, in order to maintain a necessary degree of short-term liquidity, a fund is permitted to hold an insignificant amount of its assets in short-term, highly liquid securities of superior credit quality that do not qualify for a preferential risk weight, such securities generally will be disregarded when determining the risk category into which the bank's Part 208 — Membership of State Banking holding in the overall fund should be assigned. The prudent use of Institutions in the Federal Reserve System hedging instruments by a fund to reduce the risk of its assets also will (Regulation H) not increase the risk weighting of the fund investment. For example, the use of hedging instruments by a fund to reduce the interest rate risk of its government bond portfolio will not increase the risk weight 1. The authority citation for Part 208 is revised to read as of that fund above the 20 percent category. Nonetheless, if a fund follows: engages in any activities that appear speculative in nature or has any other characteristics that are inconsistent with the preferential risk Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321- weighting assigned to the fund's assets, holdings in the fund will be assigned to the 100 percent risk category. 338a, 371d, 461, 481-186, 601, 611, 1814, 1816, 1818, 34. If a bank holds the first and junior lien(s) on a residential 1820(d), 1823(j), 1828(o), 1831o, 1831p-l, 1831r-l, property and no other party holds an intervening lien, the transaction 1835a, 1882, 2901-2907, 3105, 3310, 3331-3351, and is treated as a single loan secured by a first lien for the purposes of 3906-3909; 15 U.S.C. 78b, 781(b), 781(g), 781(i), 78o- determining the loan-to-value ratio and assigning a risk weight. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 265 III. * * * (2) For all but the most highly-rated institutions C. * * * meeting the conditions set forth in paragraph 2 * * * 35 (b)(l) of this section, the minimum leverage capital requirement for a bank (or for an insured depository institution making an application to 4. In Appendix B to Part 208, section Il.a. is revised to read the FDIC) shall consist of a ratio of Tier 1 as follows: capital to total assets of not less than 4 percent. Appendix B to Part 208 — Capital Adequacy Guidelines for State Member Banks: Tier 1 3. In Appendix A to part 325, section U.S., paragraph 1. is Leverage Measure revised to read as follows: Appendix A to Part 325 — Statement of Policy on Risk-Based Capital a. The minimum ratio of Tier 1 capital to total assets for strong banking institutions (rated composite "1" under the UFIRS rating system of banks) is 3.0 percent. For all other institutions, the minimum ratio * * * B of Tier 1 capital to total assets is 4.0 percent. Bank- 1. Indirect Holdings of Assets. Some of the assets on ing institutions with supervisory, financial, opera- a bank's balance sheet may represent an indirect tional, or managerial weaknesses, as well as institu- holding of a pool of assets; for example, mutual tions that are anticipating or experiencing significant funds. An investment in shares of a mutual fund growth, are expected to maintain capital ratios well whose portfolio consists solely of various securiabove the minimum levels. Moreover, higher capital ties or money market instruments that, if held ratios may be required for any banking institution if separately, would be assigned to diiferent risk warranted by its particular circumstances or risk pro- categories, generally is assigned to the risk catefile. In all cases, institutions should hold capital gory appropriate to the highest risk-weighted ascommensurate with the level and nature of the risks, set that the fund is permitted to hold in accorincluding the volume and severity of problem loans, dance with the stated investment objectives set to which they are exposed. forth in its prospectus. The bank may, at its option, assign the investment on a pro rata basis to different risk categories according to the investment limits in the fund's prospectus, but in no Part 325 — Capital Maintenance case will indirect holdings through shares in any mutual fund be assigned to a risk weight less than 1. The authority citation for Part 325 continues to read as 20 percent. If the bank chooses to assign its infollows: vestment on a pro rata basis, and the sum of the investment limits in the fund's prospectus exceeds Authority: 12U.S.C. 1815(a), 1815(b), 1816, 1818(a), 100 percent, the bank must assign risk weights in 1818(b), 1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), descending order. If, in order to maintain a neces- 1828(i), 1828(n), 1828(o), 1831o, 1835, 3907, 3909, 4808; sary degree of short-term liquidity, a fund is per- Pub. L. 102-233, 105 Stat. 1761, 1789, 1790 (12U.S.C. mitted to hold an insignificant amount of its assets 183 In note); Pub. L. 102-242, 105 Stat. 2236, 2355, 2386 in short- term, highly liquid securities of superior (12U.S.C. 1828 note). credit quality that do not qualify for a preferential risk weight, such securities will generally be dis- 2. Paragraph (b)(2) in 325.3 is revised to read as follows: regarded in determining the risk category to which Section 325.3 Minimum leverage capital requirement. the bank's holdings in the overall fund should be assigned. The prudent use of hedging instruments by a mutual fund to reduce the risk of its assets (b)* will not increase the risk weighting of the mutual fund investment. For example, the use of hedging instruments by a mutual fund to reduce the interest rate risk of its government bond portfolio will 35. * * * Such loans to builders will be considered prudently not increase the risk weight of that fund above the underwritten only if the bank has obtained sufficient documentation 20 percent category. Nonetheless, if the fund enthat the buyer of the home intends to purchase the home (i.e., has a gages in any activities that appear speculative in legally binding written sales contract) and has the ability to obtain a mortgage loan sufficient to purchase the home (i.e., has a firm nature or has any other characteristics that are written commitment for permanent financing of the home upon com- inconsistent with the preferential risk weighting pletion). * * * Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

266 Federal Reserve Bulletin • April 1999 assigned to the fund's assets, holdings in the fund 3. Section 567.2(a)(2)(ii) is revised to read as follows: will be assigned to the 100 percent risk category. Section 567.2 — Minimum regulatory capital 4. In Appendix A to Part 325, section II.C, footnote requirement. number 26 is revised to read as follows: ()* * * a (2) Leverage ratio requirement. * * * II. * * * (ii) A savings association must satisfy this require- Q * * * 26 * * * ment with core capital as defined in section 567.5(a) of this part. Part 567 — Capital * * * ** 1. The authority citation for Part 567 continues to read as 4. Section 567.6(a)(l)(vi) is revised to read as follows: follows: Section 567.6 Risk-based capital credit risk-weight Authority: 12 U.S.C. 1462,1462a, 1463, 1464, 1467a, 1828 categories. (note). 2. Section 567.1 is amended by adding a new sentence (a)* * * following the third sentence in the definition of qualifying (1)*** mortgage loan, revising paragraphs (l)(ii) and (l)(iii) intro- (vi) Indirect ownership interests in pools of assets. ductory text in the definition of qualifying residential con- Assets representing an indirect holding of a pool struction loan and adding the definitions of Tier 1 capital of assets, e.g., mutual funds, are assigned to and Tier 2 capital as follows: risk-weight categories under this section based upon the risk weight that would be assigned to Section 567.1 — Definitions. the assets in the portfolio of the pool. An investment in shares of a mutual fund whose portfolio * * * ** consists primarily of various securities or money Qualifying mortgage loan. * * * If a savings association market instruments that, if held separately, holds the first and junior lien(s) on a residential property would be assigned to different risk-weight cateand no other party holds an intervening lien, the transaction gories, generally is assigned to the risk-weight is treated as a single loan secured by a first lien for the category appropriate to the highest riskpurposes of determining the loan-to-value ratio and the weighted asset that the fund is permitted to hold appropriate risk weight under section 567.6(a). in accordance with the investment objectives set forth in its prospectus. The savings association * * * ** may, at its option, assign the investment on a Qualifying residential construction loan. pro rata basis to different risk-weight categories according to the investment limits in its pro- (1)** * spectus. In no case will an investment in shares (ii) The residence being constructed must be a \-4 in any such fund be assigned to a total risk family residence sold to a home purchaser; weight less than 20 percent. If the savings asso- (iii) The lending savings association must obtain ciation chooses to assign investments on a pro sufficient documentation from a permanent rata basis, and the sum of the investment limits lender (which may be the construction lender) of assets in the fund's prospectus exceeds demonstrating that: 100 percent, the savings association must assign the highest pro rata amounts of its total investment to the higher risk categories. If, in order to Tier 1 capital. The term Tier 1 capital means core capital maintain a necessary degree of short-term lias computed in accordance with section 567.5(a) of this quidity, a fund is permitted to hold an insignifipart. Tier 2 capital. The term Tier 2 capital means supple- cant amount of its assets in short-term, highly mentary capital as computed in accordance with section liquid securities of superior credit quality that 567.5 of this part. do not qualify for a preferential risk weight, such securities will generally be disregarded in determining the risk-weight category into which the savings association's holding in the overall fund should be assigned. The prudent use of 26. If a bank holds the first and junior lien(s) on a residential hedging instruments by a mutual fund to reduce property and no other party holds an intervening lien, the transactions the risk of its assets will not increase the risk are treated as a single loan secured by a first lien for purposes of weighting of the mutual fund investment. For determining the loan-to-value ratio and assigning a risk weight. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 267 example, the use of hedging instruments by a 1. The authority citation for Part 225 continues to read as mutual fund to reduce the interest rate risk of its follows: government bond portfolio will not increase the risk weight of that fund above the 20 percent Authority: 12U.S.C. 1817(j)(13). 1818, 1828(o). 1831i, category. Nonetheless, if the fund engages in 1831p-l, I843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, any activities that appear speculative in nature 3331-3351,3907, and 3909. or has any other characteristics that are inconsistent with the preferential risk-weighting as- 2. In Appendix A to Part 225, section III.A., footnote 24 is signed to the fund's assets, holdings in the fund revised to read as follows: will be assigned to the 100 percent risk-weight category. Appendix A to Part 225 — Capital Adequacy Guidelines for Bank Holding Companies: Risk-Based Measure 5. Section 567.8 is revised to read as follows: * * * ** III. * * * ^ * * * 2* Section 567.8 — Leverage ratio. * * * * (a) The minimum leverage capital requirement for a sav- 3. In Appendix A to Part 225, section ITI.C.3. footnote 37 is ings association assigned a composite rating of 1, as de- revised to read as follows: fined in section 516.3 of this chapter, shall consist of a ratio * * * ** of core capital to adjusted total assets of 3 percent. These generally are strong associations that are not anticipating III. * * * or experiencing significant growth and have well- Q *** diversified risks, including no undue interest rate risk expo- J * * * 37 sure, excellent asset quality, high liquidity, and good earnings. (b) For all savings associations not meeting the conditions 4. In Appendix A to Part 225, section III.C.3. is amended set forth in paragraph (a) of this section, the minimum by adding a new sentence to the end of footnote 38 to read leverage capital requirement shall consist of a ratio of core as follows: capital to adjusted total assets of 4 percent. Higher capital ratios may be required if warranted by the particular circumstances or risk profiles of an individual savings associ- 24. An investment in shares of a fund whose portfolio consists primarily of various securities or money market instruments that, if ation. In all cases, savings associations should hold capital held separately, would be assigned to different risk categories, genercommensurate with the level and nature of all risks, includally is assigned to the risk category appropriate to the highest risking the volume and severity of problem loans, to which weighted asset that the fund is permitted to hold in accordance with they are exposed. the stated investment objectives set forth in the prospectus. An organization may, at its option, assign a fund investment on a pro rata basis to different risk categories according to the investment limits in the fund's prospectus. In no case will an investment in shares in any fund be assigned to a total risk weight of less than 20 percent. If an FINAL RULE—AMENDMENT TO REGULATION Y organization chooses to assign a fund investment on a pro rata basis, and the sum of the investment limits of assets in the fund's prospectus The Board of Governors of the Federal Reserve System exceeds 100 percent, the organization must assign risk weights in (Board) is amending 12C.F.R. Pan 225, its Regulation Y descending order. If. in order to maintain a necessary degree of (Risk-Based Capital Standards; Construction Loans on Pre- short-term liquidity, a fund is permitted to hold an insignificant sold Residential Properties; Junior Liens on 1- to 4-Family amount of its assets in short-term, highly liquid securities of superior credit quality that do not qualify for a preferential risk weight, such Residential Properties; and Investments in Mutual Funds). securities generally will be disregarded when determining the risk The intended effect of this final rule is to keep the Board's category into which the organization's holding in the overall fund bank holding company risk-based capital standards for should be assigned. The prudent use of hedging instruments by a fund construction loans on presold residential properties, real to reduce the risk of its assets will not increase the risk weighting of the fund investment. For example, the use of hedging instruments by a estate loans secured by junior liens on 1- to 4-family fund to reduce the interest rate risk of its government bond portfolio residential properties, and investments in mutual funds will not increase the risk weight of that fund above the 20 percent consistent with the risk-based capital standards for banks category. Nonetheless, if a fund engages in any activities that appear and thrifts. speculative in nature or has any other characteristics that are inconsistent with the preferential risk weighting assigned to the fund's assets, Effective April 1, 1999, 12C.F.R. Part 225 is amended holdings in the fund will be assigned to the 100 percent risk category. as follows: 37. If a banking organization holds the first and junior lien(s) on a residential property and no other party holds an intervening lien, the transaction is treated as a single loan secured by a first lien for the Part 225 — Bank Holding Companies and Change purposes of determining the loan-to-value ratio and assigning a risk in Bank Control (Regluation Y) weight. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

268 Federal Reserve Bulletin • April Interstate Analysis III. * * * C * * * Section 3(d) of the BHC Act allows the Board to approve 3 * * * 38 an application by a bank holding company to acquire control of a bank located in a state other than the home state of such bank holding company if certain conditions are met.2 For purposes of the BHC Act, the home state of ORDERS ISSUED UNDER BANK HOLDING COMPANY First Banks is Missouri, and First Banks proposes to ac- ACT quire a bank in California. All conditions for an interstate Orders Issued Under Section 3 of the Bank Holding acquisition enumerated in section 3(d) are met in this case.3 Company Act In light of all the facts of record, the Board is permitted to approve this proposal under section 3(d) of the BHC Act. First Banks, Inc. Creve Coeur, Missouri Competitive Factor First Banks America, Inc. Section 3 of the BHC Act prohibits the Board from approv- Clayton, Missouri ing a proposal that would result in a monopoly, or would be in furtherance of any attempt to monopolize the busi- Order Approving Acquisition of a Bank Holding ness of banking.4 The BHC Act also prohibits the Board Company from approving a proposal that would substantially lessen competition in any relevant banking market, unless the First Banks, Inc., and First Banks America, Inc. (collective- Board finds that the anticompetitive effects of the proposal ly, "First Banks"), bank holding companies within the in that banking market are clearly outweighed in the public meaning of the Bank Holding Company Act ("BHC Act"), interest by the probable effect of the proposal in meeting have requested the Board's approval under section 3 of the the convenience and needs of the community to be served.5 BHC Act (12 U.S.C. § 1842) to acquire Redwood Bancorp First Banks and Redwood compete directly in the ("Redwood"), and thereby indirectly acquire Redwood's San Francisco-Oakland-San Jose banking market.6 The subsidiary bank, Redwood Bank ("Bank"), both in Board has carefully reviewed the competitive effects of San Francisco, California. the proposal in this banking market in light of all the facts Notice of the proposal, affording interested persons an of record, including the characteristics of the market and opportunity to submit comments, has been published the projected increase in the concentration of total deposits (63 Federal Register 55,389 (1998)). The time for filing in depository institutions7 in the market ("market deposcomments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act. 2. 12 U.S.C. § 1842(d). A bank holding company's home state is First Banks, with total consolidated assets of approxi- that state in which the operations of the bank holding company's mately $4.3 billion, operates subsidiary banks in Missouri, banking subsidiaries were principally conducted on July 1, 1966, or California and Texas.1 First Banks is the 37th largest the date on which the company became a bank holding company, whichever is later. commercial banking organization in California, controlling 3. 12 U.S.C. §§ 1842(d)(l)(A) and (B) and 1842(d)(2)(A) and (B). deposits of $974.4 million, representing less than 1 percent First Banks meets the capital and managerial requirements established of total deposits in commercial banking organizations in by applicable law. On consummation of the proposal, First Banks and the state. Redwood is the 74th largest commercial banking its affiliates would control less than 10 percent of the total amount of deposits of insured depository institutions in the United States, and organization in California, controlling deposits of less than 30 percent of the total amount of deposits in California. See $384 million, representing less than 1 percent of total Cal. Financial Code § 3753 (West 1999). All other requirements of deposits in commercial banking organizations in the state. section 3(d) of the BHC Act also would be met on consummation of On consummation of the proposal. First Banks would the proposal. become the 28th largest commercial banking organization 4. 12 U.S.C. § 1842(c)(l)(A). 5. 12 U.S.C. § 1842(c)(l)(B). in California, controlling deposits of $1.36 billion, repre- 6. The San Francisco-Oakland-San Jose banking market is approxisenting less than 1 percent of total deposits in the state. mated by the San Francisco-Oakland-San Jose Ranally Metropolitan Area, including the city of Pescardero. 7. For this purpose, depository institution includes all insured banks, savings banks, and saving associations. Market share data are based 38. * * * Such loans to builders will be considered prudently on calculations that include the deposits of thrift institutions at underwritten only if the bank holding company has obtained sufficient 50 percent. The Board previously has indicated that thrift institutions documentation that the buyer of the home intends to purchase the have become, or have the potential to become, significant competitors home (i.e., has a legally binding written sales contract) and has the of commercial banks. See, e.g., Midwest Financial Croup, 75 Federal ability to obtain a mortgage loan sufficient to purchase the home (i.e., Resen'e Bulletin 386 (1989); National City Corporation, 70 Federal has a firm written commitment for permanent financing of the home Reserve Bulletin 743 (1984). Thus, the Board has regularly included upon completion). thrift deposits in the calculation of market share on a 50-percent weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve 1. All banking data are as of June 30, 1997. Bulletin 52 (1991). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 269 its") as measured by the Herfindahl-Hirschman Index In considering the convenience and needs factor, the ("HHI") under the Department of Justice Merger Guide- Board has reviewed the records of First Banks's subsidiary lines ("DOJ Guidelines").8 Consummation of the proposal banks and Bank under the Community Reinvestment Act would be consistent with the DOJ Guidelines and prior ("CRA").U The Board notes that First Banks does not Board precedent in the San Francisco-Oakland-San Jose intend to make any material changes in the products and banking market.9 The HHI would remain unchanged at services provided by Bank. The Board has evaluated the 1579. The DOJ has reviewed the proposal and advised the convenience and needs factor in light of examinations of Board that consummation of the proposal would not likely the CRA performance records of First Banks's subsidiary have a significantly adverse competitive effect in the banks and Bank. Each of First Banks's subsidiary banks San Francisco-Oakland-San Jose banking market or any received a rating of "satisfactory" at its most recent examother relevant market. ination for CRA performance in 1998 from its federal Based on these and all the facts of record, the Board supervisory agency. Bank received a rating of "satisfactoconcludes that consummation of the proposal would not ry" at its most recent examination of CRA performance as result in any significantly adverse effects on competition of March 4, 1997, by the Federal Deposit Insurance Corpoor on the concentration of banking resources in the ration. Based on all the facts of record, the Board con- San Francisco-Oakland-San Jose banking market, or in any cludes that convenience and needs considerations, includother relevant banking market, and that competitive factors ing the CRA performance records of the relevant are consistent with approval of the proposal. institutions, are consistent with approval of the proposal. Financial, Managerial and Other Considerations Conclusion The BHC Act also requires the Board to consider the Based on the foregoing, and in light of all the facts of financial and managerial resources and future prospects of record the Board has determined that the applications the companies and banks involved in the proposal, the should be, and hereby, are approved. Approval of the convenience and needs of the communities to be served, applications is specifically conditioned on compliance by and certain supervisory factors. The Board has reviewed First Banks with all the commitments made in connection carefully these factors in light of all the factors of record, with the proposal. For purposes of this order, the commitincluding supervisory reports of examination assessing the ments and conditions referred to above shall be deemed to financial and managerial resources of the organizations and be conditions imposed in writing by the Board in connecconfidential financial information provided by First Banks. tion with its findings and decision and, as such, may be Based on these and all the other facts of record, the Board enforced in proceedings under applicable law. concludes that the financial and managerial resources and The acquisition of Redwood shall not be consummated future prospects of First Banks, Redwood and their subsid- before the fifteenth calendar day after the effective date of iary banks are consistent with approval, as are the other the order, or later than three months after the effective date supervisory factors that the Board must consider under of this order, unless such period is extended for good cause section 3 of the BHC Act.10 by the Board, or by the Federal Reserve Bank of St. Louis acting pursuant to delegated authority. By order of the Board of Governors, effective February 12, 1999. 8. Under the DOJ Guidelines, 49 Federal Register 26,823 (1984), a market in which the post-merger HHI is between 1000 and 1800 is Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and considered to be moderately concentrated. The Department of Justice Governors Kelley, Meyer, Ferguson, and Gramlich. ("DOJ") has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors ROBERT DEV. FRIERSON indicating anticompetitive effects) unless the post-merger HHI is at Associate Secretary of the Board least 1800 and the merger or acquisition increases the HHI by at least 200 points. The DOJ has stated that the higher than normal HHI thresholds for screening bank mergers or acquisitions for anticompeti- The Bane Corporation tive effects implicitly recognize the competitive effects of limitedpurpose lenders and other nondepository financial institutions. Birmingham, Alabama 9. On consummation of the proposal, First Banks would become the 31st largest depository institution in the San Francisco-Oakland- San Jose banking market, controlling deposits of $205 million, repre- Order Approving the Acquisition of a Savings senting less than 1 percent of market deposits. The HHI would remain Association unchanged at 1579. 10. The Board has received a letter from a director of Bank The Bane Corporation ("TBC"), a bank holding company requesting an indefinite suspension of the acquisition. The director states that he was placed on the board of directors of Bank as a within the meaning of the Bank Holding Company Act representative of the Republic of the Philippines (the "Philippines") in accordance with a consent order issued by a United States District Court. The director requested that the processing of the application be authorities in the Philippines and has considered the director's comsuspended until the appropriate authorities in the Philippines have ments in light of information provided by the Philippines government. reviewed the transaction. The Board has contacted the appropriate 11. 12U.S.C. §2901 etseq. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

270 Federal Reserve Bulletin • April ("BHC Act"'), has requested the Board's approval under to a savings association and acquire it pursuant to section 4 section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) of the BHC Act was designed to evade Florida's interstate and section 225.24 of the Board's Regulation Y (12 C.F.R. banking statute, which requires a Florida bank to be in 225.24)) to merge with Emerald Coast Bancshares, Inc. existence and continuously operating for more than three and thereby acquire its wholly owned savings association. years before it can be acquired by an out-of-state holding Emerald Coast Bank, both of Panama City Beach, Florida company.6 ("Emerald") after that institution's conversion from a The Board has reviewed the Director's comments in state-chartered savings bank to a federally chartered sav- light of the factors that the Board must consider under ings association.1 section 4 of the BHC Act. The Board concludes that a Notice of the proposal, affording interested persons an violation of law is a factor it must consider in determining opportunity to submit comments, has been published whether a proposal under section 4(c)(8) would produce (63 Federal Register 68,768 (1998)). The time for filing net public benefits. In this case, however, the Board does comments has expired, and the Board has considered the not believe that the acquisition of Emerald as a savings proposal and all comments received in light of the factors association would result in a violation of law. Unlike set forth in section 4 of the BHC Act. section 3 of the BHC Act, section 4 does not apply a TBC currently operates one subsidiary bank in Alabama, minimum age limitation on the ability of out-of-state bank with total consolidated assets of $104 million. TBC is the holding companies to acquire savings associations.7 In 73rd largest commercial banking organization in Alabama, addition, once Emerald has converted to a savings associacontrolling approximately $93 million in deposits, repre- tion, the minimum operating requirement that applies to senting less than 1 percent of total deposits in commercial the acquisition of banks under Florida state law does not banking organizations in the state ("state deposits").2 Em- apply. Moreover, TBC has stated that it plans to acquire erald is the 173rd largest depository institution in Florida, and operate Emerald as a savings association, and that it controlling $31 million in deposits, representing less than has no plans to convert Emerald back to a bank. TBC may 1 percent of state deposits.3 TCB and Emerald do not not operate Emerald as a bank without prior Board apcompete in any relevant banking markets. proval under section 3 of the BHC Act and without meeting the requirements of section 3(d) of the Act. TBC has The Board previously has determined by regulation that committed that it will maintain Emerald as a savings the operation of a savings association by a bank holding association until August 31, 1999. company is closely related to banking for purposes of section 4(c)(8) of the BHC Act.4 In making this determina- The Board also has considered the financial and managetion, the Board requires that savings associations acquired rial resources of TBC, its subsidiaries, and Emerald and the by bank holding companies conform their direct and indi- effect the transaction would have on such resources in light rect activities to those permissible for bank holding compa- of all the facts of record.8 The Board has reviewed, among nies under section 4 of the BHC Act. TBC has committed other things, confidential reports of examination and other to conform all of Emerald's activities to those permissible supervisory information received from the appropriate suunder section 4(c)(8) of the BHC Act and Regulation Y. pervisory authorities for the organizations. Based on all the In order to approve the proposal, the Board must deter- facts of record, the Board concludes that the financial and mine that the proposed activities are a proper incident to managerial resources of the organizations involved in this banking, that is, that the proposal "can reasonably be proposal are consistent with approval. expected to produce benefits to the public, such as greater The record indicates that consummation of the proposal convenience, increased competition, or gains in efficiency, would produce benefits for consumers. TBC states that the that outweigh possible adverse effects, such as undue con- proposed acquisition of Emerald would allow TBC to offer centration of resources, decreased or unfair competition, a wider range of deposit accounts and loan products and conflicts of interests, or unsound banking practices."5 In would result in improved automated services available to assessing the balance of public benefits and adverse effects Emerald customers. In addition, the Board has recognized of this proposal, the Board has considered comments sub- that there are public benefits to be derived from permitting mitted by the Director of Banking of the Florida Depart- capital markets to operate so that banking organizations ment of Banking and Finance ("Director"). The Director may make potentially profitable investments in nonbanking expressed concern that TBC's proposal to convert Emerald companies and allocate their resources in the manner they believe to be most efficient when such investments are consistent, as in this case, with the relevant considerations 1. The conversion of Emerald from a bank to a savings association would occur before the merger. The Office of Thrift Supervision ("OTS") approved the conversion of Emerald from a bank to a savings association on December 16, 1998. 6. Fla. Stat. Ann. § 658.295(8)(a). Emerald began operations on 2. Asset and deposit data, including rankings, are as of Septem- August 30, 1996. ber 30, 1998. 7. Section 3(d) of the BHC Act specifically authorizes a state to 3. Deposit data and rankings are as of June 30, 1997. In this context, enact laws that limit the ability of an out-of-state bank holding depository institutions include commercial banks, savings banks, and company to acquire a bank in that state by requiring that the bank to savings associations. be acquired be in existence for a minimum period of time, as long as 4. 12 C.F.R. 225.28(b)(4). that period does not exceed five years. 12 U.S.C. § 1842(d). 5. 12 U.S.C. § 1843(cj(8). 8. See 12 C.F.R. 225.26. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 271 under the BHC Act.9 The Board believes that the conduct SunTrust Banks, Inc. of the proposed activities within the framework established Atlanta, Georgia in Regulation Y is not likely to result in significantly adverse effects, such as an undue concentration or re- Wachovia Corporation sources, decreased or unfair competition, conflicts of inter- Winston-Salem, North Carolina ests, or unsound banking practices that would outweigh the public benefits of the proposal, such as increased consumer Zions Bancorporation convenience. Accordingly, the Board has determined that Salt Lake City, Utah the balance of factors considered under the proper incident to banking standards of section 4(c)(8) of the BHC Act is Order Approving Notices to Conduct Certain Data consistent with approval. Processing Activities and Other Nonbanking Activities Conclusion BankAmerica Corporation, BancWest Corporation, BB&T Corporation, First Union Corporation, SunTrust Banks, Inc., Wachovia Corporation, and Zions Bancorporation Based on the foregoing and all the facts of record, the (collectively, "Notificants"), bank holding companies Board has determined that the notice should be, and hereby within the meaning of the Bank Holding Company Act is, approved. The Board's approval of the proposal is ("BHC Act"), have requested the Board's approval under specifically conditioned on compliance by TBC with the section 4(c)(8) of the BHC Act (12 U.S.C. 1843(c)(8)) and commitments made in connection with the notice. The section 225.24 of the Board's Regulation Y (12C.F.R. Board's determination also is subject to all the conditions 225.24) to acquire and merge Honor Technologies, Inc., in Regulation Y, including those in sections 225.7 and Maitland, Florida, and Star Systems, Inc., San Diego, Cali- 225.25(c) (12C.F.R. 225.7 and 225.25(c)), and to the fornia, and to engage in providing data processing services, Board's authority to require such modification or terminapursuant to section 225.28(b)(14) of Regulation Y tion of the activities of a holding company or any of its (12 C.F.R. 225.28(b)(14)).' In addition, Notificants, subsidiaries as the Board finds necessary to ensure complithrough H&S, would engage in providing check verificaance with, or to prevent evasion of, the provisions and tion services, in accordance with section 225.28(b)(2) of purposes of the BHC Act and the Board's regulations and Regulation Y (12 C.F.R. 225.28(b)(2)), and management orders issued thereunder. The commitments and conditions consulting services related to the activities of H&S, in relied on by the Board in reaching this decision are deemed accordance with section 225.28(b)(9) of Regulation Y to be conditions imposed in writing by the Board in con- (12C.F.R. 225.28(b)(9)). nection with its findings and decision, and, as such, may be enforced in proceedings under applicable law. Currently, Honor Technologies, Inc. operates two electronic funds transfer ("EFT") networks under the service The transaction shall not be consummated later than names HONOR and HONOR West (collectively, three months after the effective date of this order, unless "HONOR"), and Star Systems, Inc. operates the Star EFT such period is extended for good cause by the Board or by network ("Star"). These EFT networks provide data prothe Federal Reserve Bank of Atlanta, acting pursuant to cessing and transmission services to financial institutions delegated authority. and merchants that are members of their respective branded By order of the Board of Governors, effective Februautomated teller machine ("ATM") and point of sale ary 1, 1999. ("POS") networks.2 H&S would engage through HONOR and Star in certain nonbanking activities related to the Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich. operation of ATM and POS networks, including various data processing and transmission services, in accordance ROBERT DEV. FRIERSON Associate Secretary of the Board BankAmerica Corporation 1. Notificants would form a de novo company, H&S Holding Charlotte, North Carolina Company, Maitland, Florida ("H&S"), that would indirectly acquire all the voting shares of the two companies to be acquired. Notificants BancWest Corporation are shareholders or members of the companies to be acquired and, Honolulu, Hawaii under the proposal, each would receive, directly or indirectly, more than 5 percent of the voting shares of H&S. BB&T Corporation 2. In general, an ATM network is an arrangement whereby more Winston-Salem, North Carolina than one ATM and more than one depository institution (or the depository records of such institutions) are connected by electronic or First Union Corporation telecommunications means to one or more computers, processors or switches for the purpose of providing ATM services to retail custom- Charlotte, North Carolina ers of the depository institutions. POS terminals are generally located in merchant establishments. POS terminals accept ATM or similar cards from retail customers and, using an ATM network or a parallel 9. See Bane One Corporation, 84 Federal Reserve Bulletin 553 POS-only network, provide access to a retail customer's account to (1998). transfer funds to a merchant's account. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

272 Federal Reserve Bulletin • April with section 225.28(b)(14) of Regulation Y (12C.F.R. Competitive Considerations 225.28(b)(14)). Notice of the proposal, affording interested persons an The proposal would result in the combination of two EFT opportunity to submit comments, has been published networks, one operating primarily in the mid-Atlantic and (63 Federal Register 67,693 and 70,131 (1998)). The time southeastern states and the other operating primarily in the for filing comments has expired, and the Board has consid- western states.8 A number of other large regional networks ered the notice and all comments received in light of the and national networks that link financial institutions and factors set forth in section 4(c)(8) of the BHC Act. As in local and regional networks nationwide would continue to similar cases, the Board also sought comments from the operate in these areas. Department of Justice on the competitive effects of the To determine whether a particular transaction is likely to proposal. The Department of Justice indicated that it had decrease competition, the Board traditionally has considno objection to consummation of the proposed transaction. ered the area of effective competition between parties. The Notificants are large commercial banking organizations area of effective competition has been defined by reference with headquarters in Georgia, Hawaii, North Carolina, and to the line of commerce or product market involved and a Utah. Notificants each engage directly and through subsid- geographic market. In this case, the Board has carefully iaries in a broad range of banking and permissible non- considered the relevant product and geographic markets in banking activities in the United States.3 which to analyze the competitive effects of the proposal in Section 4(c)(8) of the BHC Act provides that a bank light of all the facts of record, including information proholding company may, with Board approval, engage in any vided by Notificants and the geographic scope of and activity that the Board determines to be "so closely related services provided by existing EFT networks and other to banking or managing and controlling banks as to be a providers of EFT services. proper incident thereto." The Board previously has deter- The Board previously has identified three distinct prodmined that all the activities proposed in the notice are ucts that are typically offered by EFT networks: closely related to banking within the meaning of sec- (1) Network access (access to an EFT network identition 4(c)(8) of the BHC Act.4 Notificants would conduct fied by a common trademark or logo displayed on the proposed activities in accordance with Regulation Y ATMs, POS terminals, and access cards); and previous Board decisions.5 (2) Network services (operation of a "network switch" The Board also must consider whether the performance to receive and route electronic messages between of the proposed activities by Notificants through H&S ATMs, POS terminals, and data processing facili- "can reasonably be expected to produce benefits to the ties used by depository institutions to authorize public . . . that outweigh possible adverse effects, such as EFT transactions and the provision of "gateway" undue concentration of resources, decreased or unfair com- access to other networks); and petition, conflicts of interests, or unsound banking prac- (3) ATM/POS processing (data processing and transtices."6 As part of this review under section 4(c)(8) of the mission used to drive ATMs and POS terminals, BHC Act, the Board considers the financial and managerial monitor their activity, authorize ATM and POS resources of Notificants, their subsidiaries, and any com- transactions, and reconcile accounts).9 pany to be acquired and the effect of the proposal on those HONOR provides all three services to its network memresources.7 Based on all the facts of record, including bers. Star directly provides only network access; a third reports of examination and other supervisory information, party provides network services and ATM/POS processing. the Board concludes that financial and managerial consid- Under the proposal, H&S would not acquire the facilities erations are consistent with approval of the proposal. In to provide network services or ATM/POS processing seraddition, there is no evidence in the record that the provices to the Star network or any other network or the right posal would result in conflicts of interests or unsound to provide these services. Accordingly, the relevant product banking practices. market in which to examine the competitive effects of the proposal is the market for network access. The Board previously has determined that the geographic market for network access is an area significantly 3. Asset and deposit data for each Notificant are set forth in the larger than local banking markets and has considered the Appendix. 4. See 12C.F.R. 225.28(b)(2), (9), and (14); 12C.F.R. 225.131 market area of an EFT network to consist of regions (permissible consulting services); Barnett Banks of Florida, Inc., 65 Federal Reserve Bulletin 263 (1979) (check verification services); Compagnie Financiere de Paribas, 82 Federal Reserve Bulletin 348 (1996) (fraud detection services); Bank of New York Company, Inc.. 8. HONOR and Star are among the largest EFT regional networks in 80 Federal Reserve Bulletin 1107 (1994) ("InfiNet Order") (ATM the United States. Star has the largest number of ATMs, POS terminetwork services); Bane One Corporation , 81 Federal Reserve Bulle- nals, and EFT transactions per month, and HONOR has the second tin 492 (1995) ("EPS Order") (ATM network services). largest number of ATMs and EFT transactions per month and the third 5. The Board notes that ATM activities must be conducted in largest number of POS terminals. HONOR has the largest number and accordance with applicable federal and state laws, including applica- Star has the seventh largest number of financial institutions participatble branching laws. ing in a network. Sources: EFT Network Data Book (1999); Bank 6. See 12U.S.C. 1843(c)(8). Network News (September 25, 1998). l.See 12 C.F.R. 225.26. 9. See EPS Order at 493-94. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 273 comprising several states.10 Based on all the facts of record, that its board of directors would represent a wide range of the Board believes that HONOR has a significant competi- interests and that H&S's policymaking would not be domitive presence in the mid-Atlantic and southeastern states nated by the organizations with the largest shareholdings.16 (Alabama, Florida, Georgia, Maryland, North Carolina, The proposal, therefore, would provide services to Noti- South Carolina, Tennessee, Virginia, and the District of ficants' subsidiary banks, other shareholders of H&S, and Columbia) and, to a lesser extent, in Kansas and Missouri. other financial institutions that participate in HONOR or Star's primary service area is located in the western United Star under operating rules that would promote open access States (Arizona, California, Colorado, Hawaii, Idaho, to the network.17 Smaller financial institutions would have Nevada, Oregon, Utah, and Washington). Thus, the pri- the opportunity to provide their customers with greater mary service areas for HONOR and Star do not overlap. access to their deposit accounts and thereby could compete There are a number of areas outside these primary ser- with larger, multistate organizations for retail deposit funds vice areas in which HONOR and Star somewhat overlap in without substantial investments in their own proprietary providing network access. Changes in market concentra- ATM networks. In addition, the operating rules of HONOR tion in these other areas would not be significant, however, and Star would promote competition between the HONOR and Star networks and alternative providers of EFT-related and in each area a number of other networks, including services, including national ATM and POS networks, other other large regional networks, and third party processors regional networks, and third-party providers of EFT will continue to operate and to provide both direct and switching and processing services, and thereby encourage potential competition for HONOR and Star." National price and other competition for the services provided by networks also offer an alternative to regional networks for HONOR and Star. some financial institutions, particularly in the southeast region served by HONOR, where relatively fewer financial In this light, and based on all the facts of record, the institutions are members of any regional EFT network and Board concludes that the proposal would not result in national networks appear to be increasing their competitive adverse effects such as undue concentration of resources or presence.12 unfair competition. For these reasons, and based on all the The Board also has considered the proposed operating facts of record, the Board concludes that consummation of rules for HONOR and Star.13 The rules appear to facilitate the proposal is not likely to have a significantly adverse competition and to ensure access to the network for all effect on competition in any relevant market. depository institutions. For example, all depository institutions would be able to participate in HONOR and Star on a Public Benefits nondiscriminatory basis, to join other regional networks, and to co-brand their cards and ATM terminals. Each Section 4(c)(8) of the BHC Act requires that, in order to member of the network would be able to set for itself the approve a proposal, the Board must determine that the fees it charges its retail customers for ATM or POS transac- public benefits that could reasonably be expected from the tions.14 The operating rules also would permit the use of proposal would outweigh potential adverse effects. This is third-party processors and unbranded subswitching of a balancing process that takes into account the extent of the transactions.15 The Board notes that transactions initiated potential for adverse effects, which, for the reasons indiat an ATM in the HONOR or Star network and routed cated above, the Board does not believe to be significant in through a national network to another network would not this case. be required to pass through the HONOR or Star gateway. Consumers would benefit from the added account avail- In addition, H&S's proposed corporate structure ensures ability and convenience resulting from consummation of the proposal. In particular, an ATM network with a large number of financial institution members and that provides 10. See EPS Order at 494. network access at more locations over a broad geographi- 11. The Board also notes the rapid growth in recent years in the cal area would have greater value to network cardholders volume of POS transactions, which serve as an alternative for certain ATM transactions, and the presence of a number of competitors that because they would have broader and more convenient provide POS network services across regional boundaries. access to their deposit accounts. In this case, the geo- 12. See Bamett Banks, Inc., 83 Federal Resent Bulletin 131, graphic markets served by H&S would include all the 133 n.20 (1997) ("HONOR/Most Order"). In October 1998, Visa southern United States and the Pacific northwest states and, began operations of its Visa Check II card, a debit card offering accordingly, the proposal would enhance benefits to conissuers higher fees for POS transactions but prohibiting co-branding with other networks. 13. The Board previously has determined that ATM network operating rules are an important consideration in assessing the competitive impact of a proposal under the section 4(c)(8) factors. See InfiNet 16. The proposed bylaws of H&S provide that the board of directors Order: EPS Order. would consist of 30 members, and this number may not be changed 14. See HONOR/Most Order at 132. except by the affirmative vote of two-thirds of the directors or share- 15. "Subswitching" refers to the routing of transactions between holders. No more than one director may be an affiliate of or have any members of the same regional network without accessing that net- material business relationship with any one shareholder, and voting work, and, therefore, without paying the network's switch fee. Typi- for directors is cumulative. No shareholder may hold more than cally, this is accomplished by routing the transaction through a third- 19 percent of H&S voting shares. See also HONOR/Most Order at party processor that provides ATM processing services for both 133 n.21. network members. 17. See HONOR/Most Order at 132-33. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

274 Federal Reserve Bulletin • April sumers in these areas, particularly as consumer travel in- This proposal shall not be consummated later than three creases and business activity continues to grow.18 months after the effective date of this order, unless such In addition, H&S would offer services to all financial period is extended for good cause by the Board, or the institutions, and smaller financial institutions would have Federal Reserve Banks of Atlanta, Richmond or San Franthe opportunity to provide their customers with greater cisco, acting pursuant to delegated authority. access to their deposit accounts. As noted, membership in By order of the Board of Governors, effective Februthe H&S networks would enable smaller financial institu- ary 1, 1999. tions to compete with larger, multistate organizations to retain deposit funds without having to make substantial Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and investments in branch systems or their own proprietary Governors Kelley, Meyer, Ferguson, and Gramlich. ATM networks. ROBERT DEV. FRIERSON Consummation of the proposal also would result in other Associate Secretary of the Board public benefits. The proposal is expected to produce economies of scale, for example, and to reduce average costs for the combined networks.19 Members of each network Appendix also would benefit from the technical expertise and the Asset and Deposit Data for Notificants1 expanded research and development programs of the other network. Star network members would have access to a BankAmerica Corporation, with approximately $594.7 bilbroader array of products and services, including card lion in total consolidated assets, is the second largest production and website design and maintenance. HONOR commercial banking organization in the United States, network members would benefit from the introduction of a controlling $287.6 billion in deposits. BankAmerica Corservice provided by Star that permits bill payments by poration operates subsidiary banks in 23 states and the telephone without the use of a personal identification num- District of Columbia. Bane West Corporation, with approxber. imately $8.2 billion in total consolidated assets, is the For the foregoing reasons, and after careful consider- 63rd largest commercial banking organization in the United ation of all the facts of record, the Board has determined States, controlling $5.9 billion in deposits. BancWest Corthat consummation of the proposal can reasonably be exporation operates subsidiary banks in five states. pected to produce public benefits that would outweigh any possible adverse effects under the proper incident to bank- BB&T Corporation, with approximately $33.9 billion in ing standard of section 4(c)(8) of the BHC Act. total consolidated assets, is the 27th largest commercial banking organization in the United States, controlling Conclusion $20.6 billion in deposits. BB&T Corporation operates subsidiary banks in four states and the District of Columbia. Based on all the facts of record, the Board has determined that the notices should be, and hereby are, approved. The First Union Corporation, with approximately $234.6 bil- Board's approval is specifically conditioned on Notifilion in total consolidated assets, is the sixth largest comcants' compliance with the commitments made in connecmercial banking organization in the United States, controltion with these notices and the conditions referred to in this ling $134 billion in deposits. First Union Corporation order. The Board's determination also is subject to all the operates subsidiary banks in 12 states and the District of terms and conditions set forth in Regulation Y, including Columbia. those in sections 225.7 and 225.25(c) (12 C.F.R. 225.7 and 225.25(c)), and to the Board's authority to require modification or termination of the activities of a bank holding SunTrust Banks, Inc., with approximately $86.6 billion company or any of its subsidiaries that the Board finds in total consolidated assets, is the 11th largest commercial necessary to ensure compliance with, or to prevent evasion banking organization in the United States, controlling of, the provisions and purposes of the BHC Act and the $53.3 billion in deposits. SunTrust Banks, Inc., operates Board's regulations and orders issued thereunder. For pur- subsidiary banks in six states and the District of Columbia. poses of this action, the commitments and conditions shall be deemed to be conditions imposed in writing by the Wachovia Corporation, with approximately $65.6 billion Board in connection with its findings and decision and, as in total consolidated assets, is the 17th largest commercial such, may be enforced in proceedings under applicable banking organization in the United States, controlling law. $37 billion in deposits. Wachovia Corporation operates subsidiary banks in six states. 18. See HONOR/Most Order at 134. 19. Notificants expect that any network services and ATM processing that are consolidated in the future would result in economies of scale for computer facilities, operations personnel, programming 1. Asset data are as of September 30, 1998, and deposit data are as staff, and other support services and would likely reduce the cost of of June 30, 1998, and are adjusted to reflect acquisitions consummated operation of the HONOR and Star networks. after that date. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 275 Zions Bancorporation, with approximately $12.4 billion ship interests in open-end investment companies in total consolidated assets, is the 53rd largest commercial ("bank-ineligible securities") through Mabon.3 banking organization in the United States, controlling Notice of the proposal, affording interested persons an $8.1 billion in deposits. Zions Bancorporation operates opportunity to submit comments, has been published subsidiary banks in eight states. (63 Federal Register 67,693 (1998)). The time for filing comments has expired, and the Board has considered the htituto Bancario San Paolo di Torino-Istituto notice and all comments received in light of the factors set Mobiliare Italiano S.p.A. forth in section 4(c)(8) of the BHC Act. Turin, Italy San Paolo-IMI, with total consolidated assets of approximately $200 billion, is the largest banking organization in Order Approving Notice to Engage in Nonbanking Italy.4 In the United States, San Paolo-IMI operates a Activities federally licensed branch in New York, New York, and a representative office in Los Angeles, California.5 Mabon Istituto Bancario San Paolo di Torino-Istituto Mobiliare engages in securities transactions in the United States on Italiano S.p.A. ("San Paolo-IMI"), a foreign banking orga- behalf of San Paolo-IMI's European affiliates and provides nization subject to the provisions of the Bank Holding research and investment management services to both U.S. Company Act ("BHC Act"),1 has requested the Board's and foreign investors. Mabon and Cedar Street are and will approval to engage through Mabon Securities Corp. ("Ma- continue to be broker-dealers registered with the Securities bon") and, in certain cases, through Mabon's wholly and Exchange Commission ("SEC") under the Securities owned subsidiary, Cedar Street Securities Corp. ("Cedar Exchange Act of 1934 (15 U.S.C. § 78a et seq.) and mem- Street"), both of New York, New York,2 in the following bers of the National Association of Securities Dealers. Inc. nonbanking activities: ("NASD"). Accordingly, Mabon and Cedar Street are and (1) Extending credit and servicing loans, in accordance will continue to be subject to the recordkeeping and reportwith section 225.28(b)(l) of Regulation Y ing obligations, fiduciary standards, and other requirements (12 C.F.R. 225.28(b)(l)); of the Securities Exchange Act, the SEC, and the NASD. (2) Engaging in activities related to extending credit, in accordance with section 225.28(b)(2) of Regulation Underwriting and Dealing in Bank-Ineligible Securities Y (12 C.F.R. 225.28(b)(2)); (3) Providing financial and investment advisory ser- The Board previously has determined-subject to the framevices, in accordance with section 225.28(b)(6) of work of prudential limitations established in previous deci- Regulation Y (12 C.F.R. 225.28(b)(6)); sions to address the potential for conflicts of interests, (4) Providing securities brokerage, riskless principal, unsound banking practices, or other adverse effects-that private placement, futures commission merchant, and other agency transactional services, in accordance with section 225.28(b)(7) of Regulation Y 3. Cedar Street currently is an inactive subsidiary of Mabon. San (12 C.F.R 225.28(b)(7)); Paolo-IMl has indicated that in the future Cedar Street may com- (5) Underwriting and dealing in government obliga- mence the activities listed above, except underwriting and dealing in tions and money market instruments in which state bank-ineligible securities. San Paolo-IMI has agreed to consult with the Federal Reserve System before Cedar Street commences any member banks may underwrite and deal under bank-ineligible underwriting and dealing activities so that it can be 12 U.S.C. §§ 335 and 24(7) ('-bank-eligible securi- determined whether an additional notice pursuant to section 4(c)(8) of ties"), engaging in investing and trading activities, the BHC Act would be required. and buying and selling bullion and related activi- 4. Asset and ranking data are as of June 30, 1998. 5. Compagnia di San Paolo (the "Foundation"), an Italian public ties, in accordance with section 225.28(b)(8) of law foundation, previously controlled a majority of the voting shares Regulation Y (12 C.F.R. 225.28(b)(8)); and of San Paolo. See Istituto Bancario San Paolo di Torino, S.p.A.. (6) Underwriting and dealing in, to a limited extent, all 82 FederalResene Bulletin 1147 (1996). The Foundation has signifitypes of debt and equity securities, except owner- cantly reduced its ownership interest in San Paolo over time and currently owns approximately 16 percent of the voting shares of San Paolo-IMI. One director and two other representatives of the Foundation also serve on San Paolo-IMF s current 17-member board of directors. Italian law requires that the Foundation terminate its direc- 1. As a foreign banking organization operating a branch in the tor interlock with San Paolo-IMI by April 15, 1999, and prohibits the United States, San Paolo-IMI is subject to certain provisions of the Foundation from being involved in the management of San Paolo-IMI BHC Act pursuant to section 8(a) of the International Banking Act of after November 18, 1999. The Foundation also has entered into a 1978. 12 U.S.C. § 31O6(a). shareholders' agreement that permits the Foundation to vote only 2. San Paolo-IMI was formed in November 1998 through the 5 percent of San Paolo-IMI's shares al the next election of merger of Istituto San Paolo di Torino S.p.A., Turin, Italy ("San San Paolo-IMI's board of directors. San Paolo-IMI has represented that the Foundation will not have the right or ability to independently Paolo"), and Istituto Mobiliare Italiano S.p.A., Rome, Italy ("IMI"). elect any director to the future boards of directors of San Paolo-IMI. In connection with this merger, San Paolo-IMI received approval Based on these and all other facts of record, including the limited under section 4(c)(9) of the BHC Act to retain temporarily the United nature of the continuing business relationships between the Founda- Stales subsidiaries of IMI. See Letter dated July 27.1998, from Robert tion and San Paolo-IMI, the Board has determined that the Foundation deV. Frierson, Associate Secretary of the Board, to Randal K. Quarles, is not required to join this notice. Esq. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

276 Federal Reserve Bulletin • April underwriting and dealing in bank-ineligible securities is so ment, and other agency transactional activities; closely related to banking as to be a proper incident thereto underwriting and dealing in bank-eligible securities; investwithin the meaning of section 4(c)(8) of the BHC Act.6 ing and trading activities; and buying and selling bullion The Board also has determined that underwriting and deal- and related activities are all closely related to banking ing in bank-ineligible securities is consistent with sec- within the meaning of section 4(c)(8) of the BHC Act.9 tion 20 of the Glass-Steagall Act (12 U.S.C. § 377), pro- San Paolo-IMI has committed that it will conduct these vided that the company engaged in the activity derives no activities in accordance with the limitations set forth in more than 25 percent of its gross revenues from underwrit- Regulation Y and the Board's orders and interpretations ing and dealing in bank-ineligible securities.7 relating to each of these activities. San Paolo-IMI has committed that Mabon will conduct its underwriting and dealing activities using the methods Other Considerations and procedures and subject to the prudential limitations established by the Board in the Section 20 Orders. In order to approve the notice, the Board also must deter- San Paolo-IMI also has committed that Mabon will con- mine that performance of the proposed activities is a proper duct its bank-ineligible securities underwriting and dealing incident to banking, that is, that the proposed activities subject to the Board's revenue restriction. As a condition "can reasonably be expected to produce benefits to the of this order, San Paolo-IMI is required to conduct its public, such as greater convenience, increased competition, bank-ineligible securities activities subject to the revenue or gains in efficiency, that outweigh possible adverse efrestrictions and Operating Standards established for section fects, such as undue concentration of resources, decreased 20 subsidiaries ("Operating Standards").8 or unfair competition, conflicts of interests, or unsound banking practices."10 As part of its evaluation of these Other Activities Approved by Regulation factors, the Board considers the financial condition and managerial resources of the notificant and its subsidiaries The Board previously has determined that credit and credit- and the effect of the proposed transaction on those resourcrelated activities; financial and investment advisory activi- es.11 San Paolo-IMI's capital ratios satisfy applicable riskties; securities brokerage, riskless principal, private place- based standards under the Basle Accord and are considered equivalent to the capital levels that would be required of a United States banking organization. The Board also has 6. See J.P. Morgan & Co., Incorporated, et ai, 75 Federal Reserve reviewed the capitalization of San Paolo-IMI and Mabon in Bulletin 192 (1989), aff'd sub nom. Securities Industry Ass'n v. Board accordance with the standards set forth in the Section 20 of Governors of the Federal Resen'e System, 900 F.2d 360 (D.C. Cir. Orders and finds the capitalization of each to be consistent 1990); Citicorp, et al., 73 Federal Reserve Bulletin 473 (1987), aff'd sub nom. Securities Industry Ass'n v. Board of Governors of the with approval. This determination is based on all the facts Federal Reserve System, 839 F.2d 47 (2d Cir.), cert, denied, 486 U.S. of record, including San Paolo-IMI's projections of the 1059 (1988); as modified by Review of Restrictions on Director, volume of Mabon's bank-ineligible underwriting and deal- Officer and Employee Interlocks, Cross-Marketing Activities, and the ing activities. The Board also has reviewed the managerial Purchase and Sale of Financial Assets Between a Section 20 Subsidiary and an Affiliated Bank or Thrift, 61 Federal Register 57.679 resources of San Paolo-IMI and Mabon in light of relevant (1996); Amendments to Restrictions in the Board's Section 20 Orders, reports of examination and all the facts of record. Based on 62 Federal Register 45,295 (1997); and Clarification to the Board's the foregoing, the Board has concluded that financial and Section 20 Orders, 63 Federal Register 14,803 (1998) (collectively, managerial considerations are consistent with approval of "Section 20 Orders"). the notice. 7. Compliance with the revenue limitation shall be calculated in accordance with the methods stated in the Section 20 Orders, as The Board also has carefully considered the competitive modified by the Order Approving Modifications to the Section effects of the proposal. Prior to its merger with IMI, 20 Orders, 75 Federal Reserve Bulletin 751 (1989); 10 Percent San Paolo did not engage in the United States in the Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank nonbanking activities conducted by Mabon. Furthermore, Holding Companies Engaged in Underwriting and Dealing in Securities, 61 Federal Register 48,953 (1996); and Revenue Limit on Bank- the Board notes that the markets for the proposed activities Ineligible Activities of Subsidiaries of Bank Holding Companies En- are unconcentrated and there are numerous existing and gaged in Underwriting and Dealing in Securities, 61 Federal Register potential competitors. As a result, consummation of the 68,750 (1996) (collectively, "Modification Orders"). In light of the proposal would have a de minimis effect on competition, fact that Mabon was a going concern on the date of the merger of San Paolo and IMI, the Board believes that allowing Mabon to calculate and the Board has concluded that the proposal would not compliance with the revenue limitation on an annualized basis during result in a significantly adverse effect on competition in the first year after the date that the merger of San Paolo and IMI was any relevant market. consummated and thereafter on a rolling quarterly basis is consistent The Board expects that continuation of the proposed with the Section 20 Orders. See, e.g., Dresdner BankAG, 82 Federal Reserve Bulletin 850 (1996): Dauphin Deposit Corporation, 77 Fed- activities would provide added convenience to the exeral Reserve Bulletin 672 (1991). 8. 12C.F.R. 225.200. Mabon may provide services that are necessary incidents to the proposed underwriting and dealing activities. 9. See 12 C.F.R. 225.28(b)(l), (2). (6), (7), and (8). Unless Mabon receives specific approval under section 4(c)(8) of the 10. 12 U.S.C. § 1843(c)(8). BHC Act to conduct the activities independently, any revenues from 11. See 12 C.F.R. 225.26(b); see also The Fuji Bank, Limited, the incidental activities must be treated as ineligible revenues subject 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, to the Board's revenue limitation. 73 Federal Reserve Bulletin 155 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 277 panded customer base of San Paolo-IMI. San Paolo-IMI compliance with the Operating Standards and the other also has indicated that it intends to expand the product and requirements of this order, the Section 20 Orders, and the service offerings of Mabon, thereby increasing competition Modification Orders, including computer, audit, and acin the relevant product markets. The Board also has recog- counting systems, internal risk management controls, and nized the public benefits of permitting capital markets to the necessary operation and managerial infrastructure for operate so that banking organizations may make poten- underwriting and dealing in all types of debt and equity tially profitable investments in nonbanking companies and securities. San Paolo-IMI proposes to expand the existing allocate their resources in the manner they believe is most bank-ineligible securities activities of Mabon, and has reefficient when such investments are consistent, as in this quested a delay in conducting the infrastructure review to case, with the relevant consideration under the BHC Act.12 allow San Paolo-IMI to develop enhanced policies and Under the framework and conditions established in this procedures for the proposed expanded bank-ineligible seorder and the Section 20 Orders, and based on all the facts curities activities of Mabon. As part of the request, of record, the Board concludes that the performance of the San Paolo-IMI has committed not to expand the scope of proposed activities by San Paolo-IMI can reasonably be Mabon's current bank-ineligible securities activities until the Board determines that a satisfactory infrastructure is in expected to produce public benefits that outweigh any place. adverse effects of the proposal. Accordingly, the Board has determined that the performance of the proposed activities The Board's determination also is subject to all terms by San Paolo-IMI is a proper incident to banking for and conditions set forth in Regulation Y, including those in purposes of section 4(c)(8) of the BHC Act. sections 225.7 and 225.25(c) (12C.F.R. 225.7 and 225.25(c)), and to the Board's authority to require modification or termination of the activities of a bank holding Conclusion company or any of its subsidiaries as the Board finds necessary to ensure compliance with, and prevent evasion On the basis of the foregoing and all other facts of record, of, the BHC Act and the Board's regulations and orders the Board has determined that the notice should be, and issued thereunder. The Board's decision is specifically hereby is, approved, subject to all the terms and conditions conditioned on compliance with all the commitments made discussed in this order and in the Section 20 Orders, as in connection with the notice, including the commitments modified by the Modification Orders. The Board's apdiscussed in this order and the conditions set forth in this proval of the proposed underwriting and dealing activities order and the Board's regulations and orders noted above. extends only to activities conducted within the limitations The commitments and conditions are deemed to be condiof those orders and this order, including the Board's resertions imposed in writing by the Board in connection with vation of authority to establish additional limitations to its findings and decision and, as such, may be enforced in ensure that Mabon's activities are consistent with safety proceedings under applicable law. and soundness, avoidance of conflict of interests, and other The proposal shall not be consummated later than three relevant considerations under the BHC Act. Underwriting months after the effective date of this order, unless such and dealing in any manner other than as approved in this period is extended for good cause by the Board or by the order and the Section 20 Orders (as modified by the Modi- Federal Reserve Bank of New York, acting pursuant to fication Orders), is not within the scope of the Board's delegated authority. approval and is not authorized for Mabon. By order of the Board of Governors, effective Febru- The Board's approval of the proposal to underwrite and ary 1, 1999. deal in all types of bank-ineligible securities is conditioned on a determination by the Board that San Paolo-IMI and Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Mabon have established policies and procedures to ensure Governors Kelley, Meyer, Ferguson, and Gramlich. 12. See Bane One Corporation, 84 Federal Reserve Bulletin 553 ROBERT DEV. FRIERSON (1998). Associate Secretary of the Board INDEX OF ORDERS ISSUED OR ACTIONS TAKEN BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (OCTOBER 1, J998-DECEMBER 31, 1998) Bulletin Volume Applicant Merged or Acquired Bank or Activity Date of Approval and Page Bank One Corporation, EquiServe Limited Partnership, November 16, 1998 85, 65 Chicago, Illinois A Delaware limited partnership CAB Holding, LLC, The Chinese American Bank, November 30, 1998 85, 51 Wilmington, Delaware New York, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

278 Federal Reserve Bulletin • April 1999 Index of Orders—Continued Bulletin Volume Applicant Merged or Acquired Bank or Activity Date of Approval and Page CFBanc Holdings, Inc., City First Bank of D.C, November 9, 1998 85,52 Washington, D.C. Washington, D.C. CFBanc Corporation, Washington, D.C. Charter One Financial, Inc., ALBANK Financial Corporation, October 28, 1998 84, 1079 Cleveland, Ohio Albany, New York Charter-Michigan Bancorp, Inc., ALBANK Commercial, Cleveland, Ohio Albany, New York ALBANK, F.S.B., Albany, New York Chinatrust Commercial Bank, Ltd., To establish a state-licensed branch in October 5, 1998 84, 1121 Taipei, Taiwan New York, New York City Holding Company Horizon Bancorp, Inc., November 30, 1998 85,53 Charleston, West Virginia Beckley, West Virginia Bank of Raleigh, Beckley, West Virginia First National Bank in Marlinton, Marlinton, West Virginia Greenbrier Valley National Bank, Lewisburg, West Virginia National Bank of Summers, Hinton, West Virginia The Twentieth Street, Huntington, West Virginia Cooper Life Sciences, The Berkshire Bank, December 14, 1998 85, 125 New York, New York New York, New York Greater American Financial Group, New York, New York Credit Suisse, To establish representative offices in November 23, 1998 85. 68 Zurich, Switzerland Miami, Florida; New York, New York; and Houston, Texas Erste Bank dersterreichischen Sparkassen To establish a federally-licensed branch in October 14. 1998 84, 1123 Aktiengesellschaft, New York, New York Vienna, Austria Firstar Corporation, Star Bane Corporation, October 28, 1998 84, 1083 Milwaukee, Wisconsin Cincinnati, Ohio Star Bank, N.A., Cincinnati, Ohio FirstMerit Corporation, Signal Corp., December 7, 1998 85, 128 Akron, Ohio Wooster, Ohio Signal Bank, N.A., Wooster, Ohio Summit Bank, N.A., Akron, Ohio First Federal Savings Bank of New Castle, New Castle, Pennsylvania KeyCorp, McDonald & Company Investments, Inc., October 21, 1998 84, 1075 Cleveland, Ohio Cleveland, Ohio McDonald & Company Securities, Inc., Cleveland, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 279 Index of Orders—Continued Bulletin Volume Applicant Merged or Acquired Bank or Activity Date of Approval and Page Norwest Corporation, Wells Fargo & Company, October 14, 1998 84, 1088 Minneapolis, Minnesota San Francisco, California WFC Holdings Corporation, Wells Fargo Bank, N.A., San Francisco, California San Francisco, California Peoples Heritage Financial Group, Inc., SIS Bancorp, Inc., November 4, 1998 85. 55 Portland, Maine Springfield, Massachusetts Peoples Heritage Merger Corp., Springfield Institution for Savings, Portland, Maine Springfield, Massachusetts Glastonbury Bank & Trust Company Glastonbury, Connecticut PNC Bank Corp., PNC Capital Markets, Inc., November 16, 1998 85, 66 Pittsburgh, Pennsylvania Pittsburgh, Pennsylvania Popular, Inc., Banco Popular, New York, November 16, 1998 85, 59 Hato Rey, Puerto Rico New York, New York Banco Popular de Puerto Rico, Hato Rey, Puerto Rico Popular Transition Bank, Hato Rey, Puerto Rico Poteau State Bank, Spiro Interim Bank, December 2, 1998 85, 131 Poteau, Oklahoma Spiro, Oklahoma Sulphur Springs Bancshares, Inc., First National Bank, December 16, 1998 85, 126 Sulphur Springs, Texas Sulphur Springs, Texas Sulphur Springs Delaware Financial Corporation, Dover, Delaware SunTrust Banks, Inc., Crestar Financial Corporation, October 28, 1998 84, 1115 Atlanta, Georgia Richmond, Virginia Crestar Bank, Richmond. Virginia Susquehanna Bancshares, Inc., Cardinal Bancorp, Inc., November 23, 1998 85, 61 Lititz, Pennsylvania Everett, Pennsylvania First American National Bank of Pennsylvania, Everett, Pennsylvania U.S. Bancorp, Northwest Bancshares, Inc., October 26, 1998 84, 1073 Minneapolis, Minnesota Vancouver. Washington Northwest National Bank, Vancouver, Washington Valley View Bancshares, Inc.. Paola-Citizens Bancshares, Inc., November 30, 1998 85, 64 Overland Park, Kansas Paola, Kansas Citizens State Bank, Paola, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

280 Federal Reserve Bulletin • April 1999 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 4 Applicant(s) Bank(s) Effective Date Bank One Corporation, Themis Capital Corporation, February 11, 1999 Chicago, Illinois Dallas, Texas Popular, Inc., Valley Check Cashers, Inc., February 9, 1999 Hato Rey, Puerto Rico San Fernando, California Popular International Bank, Inc., Hato Rey, Puerto Rico Popular North America, Mount Laurel, New Jersey Popular Cash Express, Orlando, Florida By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Applicant(s) Bank(s) Reserve Bank Effective Date Atlantic BancGroup, Inc., Oceanside Bank, Atlanta January 29, 1999 Jacksonville Beach, Florida Jacksonville Beach, Florida Avondale Financial Corp., Coal City Corporation, Chicago February 8, 1999 Chicago, Illinois Chicago, Illinois Manufacturers Corporation, Chicago, Illinois Manufacturers Bank, Chicago, Illinois Cameron Bancshares, Inc., First National Bank in Cameron, Dallas February 24, 1999 Cameron, Texas Cameron, Texas Cameron Bancshares of Delaware, Wilmington, Delaware Capital Bancorp, Inc., Commercial Capital Bank, Dallas February 3, 1999 Delhi, Louisiana Delhi, Louisiana Central Bancshares, Inc., Caldwell Bancshares, Incorporated, Dallas February 10, 1999 Houston, Texas Caldwell, Texas Central Bank, Houston, Texas Chelsea Bancshares, Inc., Bank of Chelsea, Kansas City February 16, 1999 Chelsea, Oklahoma Chelsea, Oklahoma Coast Community Bancshares, Inc., Coast Community Bank, Atlanta February 25, 1999 Biloxi, Mississippi Biloxi, Mississippi Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 281 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Community Bancshares of Coast Community Bancshares, Inc., Atlanta February 25, 1999 Mississippi, Forest, Mississippi Biloxi, Mississippi Coast Community Bank, Biloxi, Mississippi Farmers State Bancshares, Inc.. Farmers State Bank, Minneapolis February 18, 1999 Bangor, Wisconsin Bangor, Wisconsin First DuPage Bancorp, Inc., First DuPage Bank, Chicago February 2, 1999 Westmont, Illinois Westmont, Illinois First Merchants Corporation, Jay Financial Corporation, Chicago February 2, 1999 Muncie. Indiana Portland, Indiana The First National Bank of Portland, Portland, Indiana First Personal Financial Corp., First Personal Bank, Chicago February 24, 1999 Orland Park, Illinois Orland Park, Illinois Fountain View Bancorp, Inc., Keokuk County Bankshares, Inc., Chicago February 4, 1999 Sigourney, Iowa Sigourney, Iowa Fox River Valley Bancorp. Inc., First Business Bank of the Fox River Chicago February 3, 1999 Appleton, Wisconsin Valley, Appleton, Wisconsin First Business Bancshares. Inc., Madison, Wisconsin Grand Bancorp, Inc., Grand Bank, N.A., New York February 3, 1999 Kingston, New Jersey Kingston, New Jersey Greenville Community Financial Greenville Community Bank, Chicago January 28, 1999 Corporation, Greenville, Michigan Greenville. Michigan Intervest Bancshares Corporation, Intervest National Bank, Atlanta February 2, 1999 New York, New York New York, New York J.R. Montgomery Bancorporation, The Fort Sill National Bank, Kansas City February 10, 1999 Lawton, Oklahoma Fort Sill, Oklahoma LNCB Coiporation, The Lebanon Citizens National Bank, Cleveland February 11, 1999 Labanon, Ohio Lebanon, Ohio MemphisFirst Corporation. MemphisFirst Community Bank, St. Louis February 25, 1999 Memphis, Tennessee Memphis, Tennessee Nationwide Bankshares. Inc., FNB Insurance Agency, Inc.. Kansas City February 11, 1999 West Point, Nebraska Walthill. Nebraska Pacific Continental Corporation, Pacific Continental Bank, San Francisco February 22, 1999 Eugene, Oregon Eugene, Oregon Regions Financial Corporation, Arkansas Banking Company, Atlanta February 25, 1999 Birmingham, Alabama Jonesboro, Arkansas The Arkansas Bank, Jonesboro, Arkansas The Arkansas Bank, Walnut Ridge, Arkansas The Planters Bank, Osceola, Arkansas The Arkansas Bank, N.A., Batesville, Arkansas Standard Bancshares, Inc., Norton Capital Corporation, Chicago February 2, 1999 Evergreen Park, Illinois Morris, Illinois Exchange Bank. Gardner, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

282 Federal Reserve Bulletin • April 1999 Section 3—Continued Applicant! s) Bank(s) Reserve Bank Effective Date State National Bancshares, Inc.. Valley Bancorp, Inc., Dallas February 9, 1999 Lubbock, Texas El Paso, Texas Montwood National Bank, El Paso, Texas Waukesha Bancshares, Inc., Sunset Bank & Savings, Chicago February 17, 1999 Wauwatosa, Wisconsin Waukesha, Wisconsin Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date The Bank of New York Company, Everen Securities, Inc., New York February 5, 1999 Inc., Chicago, Illinois New York, New York Everen Capital Corporation, BNY Capital Markets, Inc., Chicago, Illinois New York, New York Community Trust Financial Services First Family Financial Services of Atlanta February 17, 1999 Corp., Georgia, Inc., Hiram, Georgia Atlanta, Georgia Community Loan Company, Hiram, Georgia Fortis (B), Fortis SA NV, New York February 22, 1999 Brussels, Belgium Brussels, Belgium Fortis (NL) N.V., Generale de Banque, Utrecht, The Netherlands Brussels, Belgium Generale (USA) Finance LLC, New York, New York Great Southern Bancorp. Inc., Gauranty Federal Bancshares, Inc., St. Louis February 18, 1999 Springfield, Missouri Springfield, Missouri Guaranty Federal Savings Bank, Springfield, Missouri Merit Holding Corporation, Source Capital Group I, Inc., Atlanta January 29, 1999 Tucker, Georgia Atlanta, Georgia National Westminster Bank, Pic, To engage de novo in certain data New York February 12, 1999 London, England processing and related activities State Street Corporation, FutureSource/Bridge LLC, Boston February 25, 1999 Boston, Massachusetts Boston, Massachusetts Wrightsville Bancshares, Inc., WBS Financial Services, Inc., Atlanta February 12, 1999 Wrightsville, Georgia Wrightsville, Georgia Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Bay View Capital Corporation, Regent Financial Corporation, San Francisco February 2, 1999 San Mateo, California San Mateo, California Bay View Bank, Bay Commercial Finance Group, San Mateo, California San Mateo, California Bay View Bank, N.A., San Mateo, California Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 283 Sections 3 and 4—Continued Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date M&T Bank Corporation. FNB Rochester Corp., New York February 22, 1999 Buffalo, new York Rochester, New York Olympia Financial Corporation, First National Bank of Rochester, Buffalo, New York Rochester, New York Troy Financial Corporation, The Troy Savings Bank, New York February 16, 1999 Troy, New York Troy, new York The Family Investment Services Co., Troy, New York T.S. Real Property, Inc., Troy, New York APPLICATIONS APPROVED UNDER BANK MERGER ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Applicant(s) Bank(s) Reserve Bank Effective Date Baylake Bank, Baylake Bank, N.A., Chicago February 5, 1999 Sturgeon Bay, Wisconsin Poy Sippi, Wisconsin F&M Bank-Northern Virginia. Security Bank Corporation, Richmond February 17, 1999 Fairfax, Virginia Manassas. Virginia First Liberty Bank & Trust, NBO National Bank, Philadelphia February 12, 1999 Jermyn, Pennsylvania Olyphant. Pennsylvania First Virginia Bank-Southwest. First Virginia Bank-Clinch Valley, Richmond February 11. 1999 Roanoke, Virginia Tazewell, Virginia First Virginia Bank-Piedmont, Lynchburg, Virginia First Virginia Bank-Franklin county, Rocky Mount, Virginia Manufacturers and Traders Trust First National Bank of Rochester, New York February 22, 1999 Company, Rochester, New York Buffalo, New York PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the of district court order dated October 6, 1998, granting Federal Reserve Banks in which the Board of Governors is not summary judgment for the Board in a Freedom of Informanamed a party. tion Act case. Attorneys Against American Apartheid v. Board of Governors, Folstad v. Board of Governors, No. 1:99 CV 124 (W.D. Mich., No. 98-1483 (D.C. Cir., filed October 21, 1998). Petition for filed February 17, 1999). Freedom of Information Act com- review of denial of reconsideration of a Board order dated plaint. August 17, 1998, approving the merger of NationsBank Nelson v. Greenspan, No. l:99CV00215 (EGS) (D.D.C., filed Corporation, Charlotte, North Carolina, and BankAmerica. January 28, 1999). Employment discrimination complaint. Corporation, San Francisco, California. On December 7, Fraternal Order of Police v. Board of Governors, No. 1998, the Board filed a motion to dismiss the petition. The l:98CV03116 (D.D.C., filed December 22, 1998). Declara- court of appeals granted the motion on January 19, 1999. tory judgment action challenging Board labor practices. Independent Bankers Association of America v. Board of Gov- Inner City Press/Community on the Move v. Board of Gover- ernors, No. 98-1482 (D.C. Cir., filed October 21, 1998). nors, No.98-9604 (2d Cir., filed December 3, 1998). Appeal Petition for review of a Board order dated September 23, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

284 Federal Reserve Bulletin • April 1999 1998, conditionally approving the applications of Travelers Bettersworth v. Board of Governors, No. 97-CA-624 (W.D. Group, Inc., New York, New York, to become a bank Tex., filed August 21, 1997). Privacy Act case. holding company by acquiring Citicorp, New York. New York, and its bank and nonbank subsidiaries. Jones v. Board of Governors, No. 98-30138 (5th Cir., filed FINAL ENFORCEMENT DECISION ISSUED BY THE February 9, 1998). Appeal of district court dismissal of BOARD OF GOVERNORS complaint alleging violations of the Fair Housing Act. On November 19, 1998, the court dismissed the appeal. In the Matter of Cunningham v. Board of Governors, No. 98-1459 (D.C. Cir., Incus Co., Ltd. filed September 30, 1998). Petition for review of a Board Tortola, British Virgil Islands And order dated September 23, 1998, conditionally approving Carlos Hank Rhon the applications of Travelers Group, Inc., New York, New An Institution-Affiliated Party of York, to become a bank holding company by acquiring Incus Co., Ltd., and Citicorp, New York, New York, and its bank and nonbank Laredo National Bancshares subsidiaries. On December 4, 1998, the Court granted the Laredo, Texas Board's motion to dismiss the petition. Clarkson v. Greenspan, No.98-5349 (D.C. Cir., filed July 29, Docket Nos. 98-038-B-FHC, 98-038-B-I, 1998). Appeal of district court order granting Board's mo- 98-038-CMP-FHC, 98-038-CMP-I, 98-038-E-I tion for summary judgment in a Freedom of Information Act case. On September 14, 1998, the Board filed a motion Determination on Request for Private Hearing for summary affirmance of the district court dismissal. Board of Governors v. Carrasco, No. 98 Civ. 3474 (LAIC) Background (S.D.N.Y., filed May 15, 1998). Action to freeze assets of individual pending administrative adjudication of civil This is an enforcement proceeding brought by the Board of money penalty assessment by the Board. On May 26, 1998, Governors of the Federal Reserve System (the "Board") the court issued a preliminary injunction restraining the against Incus Co., Ltd., and Carlos Hank Rhon (the "Retransfer or disposition of the individual's assets and appoint- spondents") pursuant to the Federal Deposit Insurance Act ing the Federal Reserve Bank of New York as receiver for (the '"FDI Act"). Hank Rhon is the registered owner of those assets. Incus, an offshore shell bank holding company that con- Board of Governors v. Pharaon, No. 98-6101 (2d Cir., filed trols Laredo National Bancshares ("LNB"). In a Notice of May 4, 1998). Appeal and cross-appeal of district court Intent to Prohibit and Notice of Charges and of Hearing order granting in part and denying in part the Board's (the "Notice") issued December 16, 1998, the Board almotion for summary judgment seeking prejudgment interest leged that Hank Rhon used nominees to secretly acquire and a statutory surcharge in connection with a civil money additional LNB stock without Board approval, that he penalty assessed by the Board. On February 24, 1999, the transferred significant equity interests in Incus to his father court granted the Board's appeal and denied the cross- and two business associates in violation of commitments appeal, and remanded the matter to the district court for and representations made to the Board, and that he caused Laredo National Bank, LNB"s principal subsidiary, to endetermination of prejudgment interest due to the Board. gage in lending and other transactions with affiliates that Fenili v. Davidson, No. C-98-O1568-CW (N.D. California, violated commitments made to the Board. The Notice filed April 17, 1998). Tort and constitutional claim arising seeks an order of prohibition against Hank Rhon, a cease out of return of a check. On June 5, 1998, the Board filed its and desist order requiring divestiture of Incus's interest in motion to dismiss. LNB, and significant civil money penalties against both Logan v. Greenspan, No. l:98CV00049 (D.D.C., filed Janu- Respondents. ary 9, 1998). Employment discrimination complaint. Goldman v. Department of the Treasury, No. 98-9451 (1 lth In accordance with section 8(u)(2) of the FDI Act, Circuit, filed November 10, 1998). Appeal from a District 12U.S.C. § 1818(u)(2), the Notice advised the Respon- Court order dismissing an action challenging Federal Re- dents that any hearing held in this matter would be public, serve notes as lawful money. unless the Board determines that an open hearing would be Kerr v. Department of the Treasury, No. CV-S-97-01877- contrary to the public interest. The Notice informed Re- DWH (D. Nev., filed December 22, 1997). Challenge to spondents that they could submit a statement detailing any income taxation and Federal Reserve notes. On Septem- reasons why the hearing should not be public. On Januber 3, 1998, a motion to dismiss was filed on behalf of all ary 11, 1999, Respondents duly filed a motion with the Board seeking a private hearing in this matter. Board federal defendants. Enforcement Counsel opposed the motion. Towe v. Board of Governors, No. 97-71143 (9th Cir., filed September 15, 1997). Petition for review of a Board order Respondents make three principal arguments in support dated August 18, 1997, prohibiting Edward Towe and of their request for a closed hearing. First, they assert that Thomas E. Towe from further participation in the banking the safety and soundness of the financial institutions inindustry. On February 23, 1999, the court affirmed the volved could be jeopardized as a result of a public hearing. Board's order. They note that Hank Rhon is currently the chairman of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 285 board of LNB and is active in its management, and express The arguments advanced by Respondents do not meet concern that the allegations lodged against Hank Rhon this standard. Although Respondents speculate that the "could well affect the public's confidence in the involved public's confidence in LNB's subsidiary banks may be institutions." Second, they assert that a public hearing adversely affected by an open proceeding, they provide no would compromise substantial individual privacy and repu- evidence to support their argument and no basis for the tational interests, not only of the Respondents themselves Board to distinguish this case from any other case involvbut also of the other individuals whose private dealings ing an open institution. The Board has previously rejected with Hank Rhon and Incus would be made part of the such conclusory and speculative arguments as a basis for public proceedings. Third, they suggest that Mexican and closing an enforcement hearing. See In the Matter of Na- U.S. cross-border investments could be adversely affected tional Bank of Pakistan, No. 92-065-B-FB (August 20, by a public hearing. Specifically, they argue that publiciz- 1992). Moreover, the Board and other banking agencies ing "private and personal business affairs" could act as a have held public enforcement hearings without a serious disincentive for foreign investors, with unidentified reper- effect on public confidence in open institutions, including cussions in Mexico. enforcement actions involving the ownership and control of the bank involved. E.g., Interamericas Investments, Ltd., v. Board of Governors of the Federal Reserve System, 111 Discussion F.3d 376 (5th Cir. 1997). In 1990, Congress amended the FDI Act to provide that all Similarly, the privacy interests of the Respondents and hearings held on the record in enforcement cases such as third parties do not implicate the "public interest" necesthis "shall be open to the public, unless the agency, in its sary to justify a closed hearing. As the Board observed in discretion, determines that holding an open hearing would In the Matter of Zbinden, "Enforcement proceedings, by be contrary to the public interest." 12 U.S.C. § 1818(u)(2). their nature, involve allegations that, if made public, could Simultaneously, Congress required that a transcript of all adversely affect a respondent's reputation or career. Nevertestimony and documentary evidence be prepared and that theless, in establishing a statutory presumption in favor of the transcripts of all public hearings be made available open hearings, Congress implicitly determined that the through the Freedom of Information Act, 12 U.S.C. public benefit from conducting proceedings in the open § 1818(u)(4), provided that the agency may file a docu- outweighs the privacy interests of the individuals inment under seal in an administrative proceeding "if disclo- volved." In the Matter of Zbinden, 80 Federal Reserve sure of the document would be contrary to the public Bulletin 361 (1994). As in Zbinden, the Board here "does interest," 12 U.S.C. § 1818(u)(6), and required agencies to not believe that the disruptions cited by Respondents], provide Congress with a written report of any determina- which are a normal consequence of such proceedings, are tion to close a hearing, 12 U.S.C. § 1818(u)(3). sufficient to overcome the statutory presumption favoring public hearings." Id. at 361-62.' The same is true for These amendments, which reversed the prior presumpasserted privacy interests of third parties. In the Matter of tion in favor of closed hearings, reveal a congressional Interbank Holding Company, et al, No. 96-018-B-HC belief that the public benefits of open hearings would (August 14, 1996) (rejecting claim that potential harm to generally outweigh the disruptions inherent in them. In the third parties justifies closing enforcement hearing). Matter of Zbinden, 80 Federal Reserve Bulletin 360, 361 (1994). As the Chairman of the Senate Banking Committee Respondents have provided no evidentiary support for observed at the time, publicity is "the greatest disinfec- their final argument, that an open hearing would inhibit tant." 136 Cong. Rec. SI7,599 (daily ed. October 27, Mexican and U.S. cross-border investment. In particular, 1990). they offer no reason why Mexicans who are willing to Accordingly, before the Board exercises its discretion to comply with U.S. laws would be reluctant to do so if their close a hearing, there should be a substantial basis for dealings were made public. Foreign nationals who invest in concluding that the case reflects unusual circumstances that regulated industries in the United States are subject to overcome the presumption in favor of open hearings. In United States laws and are not entitled to special treatment general, in light of the congressional requirement that the reflecting their differing "business customs and practices." proceedings be open unless "contrary to the public inter- As one federal court put it, the argument that nationality est," those circumstances should involve serious safety and can act as a predicate for different standards for BHC Act soundness concerns flowing from a public hearing. Gener- liability is "beyond frivolous." Interamericas Investments, alized claims of a possible loss of confidence or a "run on Ltd., Ill F.3dat384. the bank," or claims of impairment of the privacy or In short, because Respondents have not shown that an reputational interests of respondents and third parties, open hearing is contrary to the public interest, the request should not be sufficient to result in a closed hearing. for a private hearing in this matter must be denied. Rather, a party seeking a closed hearing should be required Respondents' separate request that all documents related to demonstrate how the effects of this proceeding differ so to this proceeding be kept confidential is also denied. As significantly from those involving other banks in terms of noted above, the FDI Act provides that the Board may file the public interest as to warrant special treatment. See In a particular document or part of a document under seal "if the Matter of Citizens Bank of Clovis, FDIC-91-^06b, 2 disclosure of the document would be contrary to the public FDIC Enf. Dec. (P-H) 8012 (March 2, 1992). interest." 12 U.S.C. § 1818(u)(6). Pursuant to the Board's Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

286 Federal Reserve Bulletin • April 1999 Rules of Practice for Hearings, this authority has been Walker, senior vice-president, a director, and an institutiondelegated to Board Enforcement Counsel, who has the affiliated party of the Farmers and Merchants Bank of Long discretion to determine which documents, if any, should be Beach, Long Beach, California, a state member bank. filed under seal. 12 C.F.R. 263.33(b). If Respondents have particular concerns about public disclosure of a specific Kenneth G. Walker document or part of a document, they may address these Long Beach, California concerns to Board Enforcement Counsel. In the Matter of Zbinden, 80 Federal Reserve Bulletin 362-63 (1994). The Federal Reserve Board announced on February 25, By Order of the Board of Governors, this 12th day of 1999, the issuance of a Consent Order against Kenneth G. February, 1999. Walker, president, chairman of the board of directors, chief executive officer, and institution-affiliated party of the BOARD OF GOVERNORS OF THE Farmers and Merchants Bank of Long Beach, Long Beach, FEDERAL RESERVE SYSTEM California, a state member bank. Jennifer J. Johnson Secretary of the Board Zia New Mexico Bank Tucumcari, New Mexico FINAL ENFORCEMENT ORDERS ISSUED BY THE The Federal Reserve Board announced on February 11, BOARD OF GOVERNORS 1999, the issuance of a Prompt Corrective Action Directive against the Zia New Mexico Bank, Tucumcari, New Mex- Hogi Patrick Hyun ico. Former Employee of BT Singapore The Federal Reserve Board announced on February 25, 1999, the issuance of a combined Order to Cease and WRITTEN AGREEMENTS APPROVED BY FEDERAL Desist and of Assessment of a Civil Money Penalty against RESERVE BANKS Hogi Patrick Hyun, a former employee of BT Singapore, a wholly owned nonbank subsidiary of Bankers Trust New First Utah Bancorporation York Corporation, New York, New York. Salt Lake City, Utah Daniel K. Walker The Federal Reserve Board announced on February 5, Long Beach, California 1999, the execution of a Written Agreement by and among First Utah Bancorporation, the First Utah Bank, Premier The Federal Reserve Board announced on February 25, Data Corporation, all of Salt Lake City, Utah, and the 1999, the issuance of a Consent Order against Daniel K. Federal Reserve Bank of San Francisco. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Al Financial and Business Statistics A3 GUIDE TO TABULAR PRESENTATION Federal Finance—Continued All Gross public debt of U.S. Treasury— DOMESTIC FINANCIAL STATISTICS Types and ownership A28 U.S. government securities Monev 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 A 11 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 slock, 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 • April 1999 INTERNATIONAL STATISTICS Reported by Nonbanking Business Enterprises in the United States Summary Statistics A58 Liabilities to unaffiliated foreigners A50 U.S. international transactions A59 Claims on unaffiliated foreigners A51 U.S. foreign trade A51 U.S. reserve assets Securities Holdings and Transactions A51 Foreign official assets held at Federal Reserve A60 Foreign transactions in securities Banks A61 Marketable U.S. Treasury bonds and A52 Selected U.S. liabilities to foreign official notes—Foreign transactions institutions Interest and Exchange Rates Reported by Banks in the United States A62 Foreign exchange rates A52 Liabilities to, and claims on, foreigners A53 Liabilities to foreigners A55 Banks' own claims on foreigners A63 GUIDE TO STATISTICAL RELEASES AND A56 Banks' own and domestic customers' claims on SPECIAL TABLES foreigners A56 Banks' own claims on unaffiliated foreigners A64 INDEX TO STATISTICAL TABLES A57 Claims on foreign countries—Combined domestic offices and foreign branches 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 Coiporation FmHA Farmers Home Administration SCO Securitized credit obligation FNMA Federal National Mortgage Association SDR Special drawing right FSLIC Federal Savings and Loan Insurance Corporation SIC Standard Industrial Classification G-7 Group of Seven VA Department of Veterans Affairs GENERAL INFORMATION In many of the tables, components do not sum to totals because of include not fully guaranteed issues) as well as direct obligarounding. tions of the Treasury. Minus signs are used to indicate (Da decrease, (2) a negative "State and local government" also includes municipalities, figure, or (3) an outflow. special districts, and other political subdivisions. "U.S. government securities" may include guaranteed issues of U.S. government agencies (the flow of funds figures also Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Financial Statistics • April 1999 .10 RESERVES, MONEY STOCK, LIQUID ASSETS. AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 19981 1998' 1999 Monetary or credit aggregate Ql Q3 Q4 Sept. Oct. Nov. Dec. Jan. Rewires <<f depositor mstitutions1 1 Total ' -1.9 -3S -74 -1.6 -11.0 -5.4 5.0 9.0 -.9 2 Required -I.R -2.5 -<P.ll -2.3 -16.1 -2.5 3.8 10.5 .6 3 Nonborrowed -.6 -4.3 -8.4 - 4 -10.5 -3.3 7.5 8.1 -3.2 4 Monetary base" 6.8 5.3 6.8 8.9 9.8 8.4 8.8 8.3 8.4 Concepts of m<me\. liquid assets, and debt* 5 Ml 1.2 1.0 -20 5.0 2.8 6.4 9.1 46 -3.1 6 M2 7.6 7.5 6.9 11.0 12.4 11.6 10.6 10.0 6 1 7 M.I 10.3 10 1 8.6 11.2 n.i 13.2 14.1 12.2 4.4 8 Debt 6.2 6.1 6.0 6.4 6.0 6.6 6.9 6.0 n.a. Nonlransaetion components 9 In M2S 9.1 9.S 9.9 n.o 15.7 13.3 11.0 11.8 9.2 K) In MJ only'1 IS.6 178 1.1.5 19.6 15.1 17.5 23.9 18.5 -.4 Time and savings deposits Connnereial banks 1 1 Savings, including MMDAs 12.8 13.4 15.8 17.6 19 9 15.9 16.4 19.2 11.6 12 Small time' 1.0 .1 .1 .4 .6 -.4 1.5 -4 2 -8.0 1 3 Large lime ' 18.1 16.4 3.5 7.4 .2 1.8 16.1 12.8 21.7 Thrift institutions 14 Savings, including MMDAs 5.7 10.8 9.0 10.1 8.1 12.5 10.9 10.8 14.5 15 Small time7....' -.5 -4.4 -7.2 -6.9 -4.7 — 2.5 -10.9 -6.6 -5 2 16 Large time8 8.6 -4.5 .5 10.4 14.0 15.2 2.7 16.4 26.9 Money market mutual binds 17 Retail 19.2 20.9 19.0 28.4 37.0 29.0 20.5 22.1 23.2 18 Institution-only 20.9 34.7 26.6 41.8 35.1 48.5 42.2 29.5 -2.8 Repurclwse agreement* and Eurodollar* 19 Repurchase agreements111 22.9 14.5 11.7 16.4 15.9 .4 25 4 34.0 -25.0 20 Eurodollars1 ' 12.0 -3.3 21.7 7.1 7.0 12.4 1.5 -24.6 -39.2 Debt components* 21 Federal .0 -1.4 -1.5 -2.0 -3.1 -3.1 -.5 -.4 n.a. 22 Nonfedcral S.3 8.6 8.5 9.1 8.9 96 9.2 7.9 u a. 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 tor discontinuities, or "breaks," associated with and Canada Excludes amounts held by depository institutions, ihe U.S. government, money regulator) changes in reserve requirements. (See also cable 1.20.1 market funds, and foreign banks and official institutions. Seasonally adjusted M3 is calculated 3. The seasonally adjusted, break-adjusted monetary base consists of (h 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 ot 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 nonfinancial vault cash exceeds their required reserves) the seasonally adjusted, break -adjusted difference sectors—the federal sector (U.S. government, not including government-sponsored enterhetweeu 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: (I) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of noncoiporatc 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 arc derived from (he Federal Reserve Board's flow of funds accounts, are breakforeign banks and official institutions, less cash items in the process ot" collection ant! Federal adjusted uhiit 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 (tnat is. the data have been derived by averaging adjacent month-end levels) withdrawal (NOW) and automatic transfer service (ATS) accounts al 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 al thrift institutions. Seasonally money fund balances, each seasonally adjusted separately. adjusled Ml is computed by summing currency, travelers checks, demand deposits, and 6. Sum of (1) large time deposits, (2) institutional money fund halances. (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) sniall-denominaiion time deposit (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 thrill institutions balances al depository institutions and money market funds. Seasonally adjusted M2 is are subtracted from small time deposits. calculated by -dimming 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 separate Iv, .Hid adding (his result to seasonally booked at international banking facilities adjusted Ml 9. Large tune deposits at commercial banks less those held by money market funds, M3: M2 plus (I) large-dcnominalion lime deposits (in amounts of S 100,000 or more). (2) depository institutions, the U.S. government, and foreign banks and official institutions. balances in instituiional money funds. (}) 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 CREDIT' Millions of dollars Average of Average of daily figures for week ending on date indicaled daily figures Factor 1998 1999 1998 1999 Nov. Dec Jan. Dec. 16 Dec. 23 Dee. 30 Jan. 6 Jan. 13 Jan. 20 Jan. 27 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 495.325 504,025' 504,486 503.105 504,231' 510.958' 515,752 500.410 505,981 500,962 U.S. government securities2 2 Bought outright—System account1 •151.629 453,911 453,333 454,019 453.111 454,191 452,321 JM690 452,818 452,725 3 Held under repurchase agreements 3.391 7,685 7,056 6.909 8.098 11,000 14,991 3.820 6,291 6,281 4 Fed B e o r u al g h a t g e o n u c tr y i g o h b t ligations 373 146 337 338 338 338 338 338 138 337 5 Held under repurchase agreements 3,864 5,371 4.670 6,380 5,767 5,570 8,174 3,256 6,046 3.226 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 48 90 201 25 8 345 24 697 22 105 8 Seasonal credit 35 15 6 13 16 20 12 6 4 5 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 544 1,617' 2,313 575 1.747' 3.390' 2.78.1 1,624 4.187 1,381 1 1 Other Federal Reserve assets 35.440 34,989' 36,570 34,846 35.147 36,103 37.109 35,979 36,275 36,903 12 Gold stock 11,041 11,041 11,046 11,041 11,041 11,043 11,046 11,046 11,046 11,046 13 Special drawing rights certificate account 9.200 9.200 9,200 9,200 9.200 9,200 9,200 9,20(1 9,200 9 200 14 Treasury currency outstanding 26.1.18' 26.225' 26.296 26,217' 26.235' 26,252' 26.270 26,284 26,298 26.312 AHSORRINC; RESERVE FUNDS 5 Currency in circulation 502.704' 510,724' 510.104 507.775' 511.453' 516.782' 516,894 511,465 508.957 506.725 16 Treasury cash holdings 92 89 87 87 84 85 85 85 86 88 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5.135 5,923 6.597 6.324 5.434 7.195 5,992 5,423 7,296 6,963 18 Foreign 188 178 186 195 194 174 169 189 181 184 19 Service-related balances and adiustmeuls ... . 6,867 6,850 7,618 6.703 6,977 6,852 7.044 7,892 7,468 7,865 "'O Other 403 322 443 290 231 235 1,400 207 212 237 21 Other Federal Reserve liabilities and capital 17,476 16.935 16,711 17,113 17,197 17,152 16.397 16,874 16.871 16,840 22 Reserve balances with Federal Reserve Banks4 8.839' 9,470' 9,281 11,077' 9,136' 8,978' 14.287 4,803 11.452 8,616 End-of-month ligures Wednesday figures Nov. Dec Jan. Dec. 16 Dec. 23 Dec. 30 Jan. 6 Jan. 13 Jan. 2(1 Jan. 27 SUPPLYING RESERVE FINDS 1 Reserve Bank credit outstanding 504.546 522,252' 498.740 503.843 508.064' 517,601' 504.136 503.126 505,507 506,928 U.S. government securities" 2 Bought outright—System account1 45!,99I 452.141 454.439 455,035 454,657 454,772 455.645 456,411 453,868 454,538 3 Held under repurchase agreements 8,970 19.674 4,485 5.702 7,845 15.549 4.507 3.700 6,140 9,891 Federal agency obligations 4 Bought outright 368 338 336 318 338 33K 338 338 338 336 5 Held under repurchase agreements 6,172 I0 7IP 2,5.35 7,181 5.742 7,388 1.353 4,472 3,958 4.027 6 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 1 1 55 145 21 1.642 101 145 75 7 8 Seasonal credit 15 16 5 14 21 27 6 7 .1 5 9 Extended credit 0 0 0 0 0 0 0 0 0 0 10 Float 462 1,636' 164 729 4.187' 873' 4,320 1,938 4,690 435 11 Other Federal Reserve assets 34.567 37,744' 36.721 34,699 35.254 .37,013 35,864 36,115 36.435 37.689 12 Oold slock 11.041 1 1.046 1 1.048 11.041 11,(Ml 11,046 11,046 11.046 11.046 11.046 13 Special diawttig 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 26,182' 26.270' 26,326 26.217' 26.235' 26.2521 26,270 26,284 26.298 26.312 ABSORBING RESERVE FUNDS 15 Currency in circulation 507,130' 517.484' 505,457 509.911' 515.739' 518,332' 515,176 510.269 508,616 506,824 16 Treasury cash holdings 99 85 98 84 85 85 85 86 86 98 Deposits, other than reserve balances, with Federal Reserve Banks 7 Treasury 5,219 6.086 7.621 8.628 1.817 10,174 4 960 5,006 7.466 7,038 18 Foreign 167 234 170 175 166 170 214 177 168 9 Service-related balances and adjustments 7.211 7,044' 7,830 6,703 6.977 6.852 7.045 7,892 7,468 7.865 20 Other 337 1,605 246 26! 175 164 162 200 206 217 21 Other Federal Reserve liabilities and capital 16,579 16,354 16 269 16,965 16.969 16.957 16.466 16,613 16,626 16.610 22 Reserve balances with Federal Reserve Banks4 14.182 19.941' 7.556 7.578' 10,583' 11,371' 6,588 9.376 11.405 14,666 1. Amounts of cash held as reserve.-* 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 ID compensate for float. under matched sale-purchase lrans;ic!ions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Financial Statistics • April 1999 1.12 RESERVES AND BORROWINGS Depository Institutions' Millions of dollars Prorated monthly averages of biweekly averages Reserve classification 1996 1997 1998 1998 1999 Dec, Dec, Dec. July Aug. Sept. Oct. Nov. Dec. Jan. 1 Reserve balances with Reserve Banks 13.395 10,673 9,022' 9,646 9,682 9,284 9.026 8,855 9,022' 9,659 2 Total vault cash3 44,525 44,740' 44.305 42,030' 42,123' 42,524' 43,268' 43,104' 44,305 45,499 3 Applied vault cash4 37,848 37,206 35,997 34.954 35.025 34,909 35,090 35,297 35,997 36,674 6,678 7,534' 8.308 7,075' 7,098' 7,614' 8,178' 7,807' 8,308 8,825 5 Total reserves6 51,242 47,880 45.019' 44,600 44,707 44,193 44,115 44,152 45,019' 46,333 49,819 46,196 43,435' 43.235 43,194 42,509 42,544 42,527 43,435r 44,801 7 Excess reserve balances at Reserve Banks 1.423 1.683 1,584' 1,365 1,513 1.684 1.572 1,624 1,584' 1,532 8 Total borrowings at Reserve Banks* 155 324 117 258 271 251 174 84 117 206 68 79 15 215 242 178 107 37 15 7 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 Biweekly avertges of daily igures for two week periods ending on dates indicated 1998 1999 Oct. 7 Oct. 21 Nov. 4 Nov. 18 Dec. 2 Dec. 16 Dec. 30' Jan. 13' Jan. 27 Feb. 10 1 Reserve balances with Reserve Banks" 9,588 8.400 9.S09 8,520 9,028 8,949 9.057 9.551 10,025 8,728 2 Total vault cash3 42,821' 43,995' 42.565' 43,080 43,313 43,230 45,470 45.023 44,838 49,364 34,905 35,321 34,897 34,935 35,853 35,273 36,748 35,911 36,845 38,556 4 Surplus vault cash5 7,916' 8,674' 7,668' 8,145 7,460 7,957 8,722 9,113 7.993 10,808 44 493 43 720 44 405 41455 44,880 44 222 45 805 45 462 46,870 47 284 42,514 42,520 42.599 41,913 43,221 42,917 43,999 43.240 45,880 46,099 7 Excess reserve balances at Reserve Banks7 1,978 1.200 1.806 1,542 1,659 1.304 1,806 2.221 990 1,184 379 122 103 82 79 26 195 370 68 158 9 Seasonal borrowings 152 105 79 40 20 13 18 9 5 8 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 1. Data in this table also appear in the Board's H.3 (502) weekly statistical release. For 5. Total vault cash (line 2) less applied vault cash (line 3). ordering address, see inside front cover. Data are not break-adjusted or seasonally adjusted. 6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash 2. Excludes required clearing balances and adjustments to compensate for float and (line 3). includes other off-balance-sheet "as-of' adjustments. 7. Total reserves (line 5) less required reserves (line 6). 3. 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 A 7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit" Extended credit Federal Reserve Bank On On On Effective dale Previous rale 3/12199 3/12/09 3/12/99 Boston 11/18/98 New York. . . . 11/17/98 Philadelphia. . 11/17/98 Cleveland. . 11/19/98 Richmond 11/18/98 Atlanta 11/18/98 Chicapo 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 Range of rates for adjustment credit in recent years'1 Range (or F.R. Bank Range (or F.R. Bank Range (or F.R. Bank Effective date level)—All of Effective date level)—All of Effeclivc date level)—All of F.R. Banks NY F.R Banks NY. F.R. Banks N.Y. In effect Dec. 31, 1977 6 6 1981—Nov. 2 13-14 13 1988—Alii!. 9 6-6.5 6.5 6 13 13 ]| 6.5 6.5 1978—Jan. 9 6-6 5 6.5 Dec 4 12 12 20 6 5 rSS 1989—Feb 24 6.5-7 7 May 11 6.5-7 7 1982—Julv 20 11.5-12 11.5 27 7 7 12 7 7 23 11.5 11.5 Julv 3 7-7.25 7.25 Aug. 2 11-11.5 1 ] 1990—Dec. 19 6.5 6.5 10 7.25 7.25 3 11 11 Aug. 21 7.75 7.75 16 10.5 10.5 1991—Feb. 1 6-6.5 6 Sept. 22 X 8 27 10-10.5 10 4 (i 6 Oct. 16 8-8.5 8.5 30 10 10 Apr. 30 5.5-6 5.5 20 8.5 8.5 Oct. 12 9.5-10 9.5 May 2 5.5 5.5 Nov. 1 8.5-9.5 9.5 13 9.5 9.5 Sept. 13 5-5.5 5 3 9.5 9.5 No% 22 9-9.5 9 17 s 5 26 9 9 Nov. 6 4.5-5 4.5 1979—July 20 1(1 10 Dec. 14 8.5-9 9 7 4 5 4.5 Aim. 17 10-10.5 10.5 15 8.5-9 8.5 Dec. 20 3.5 -4<i 3.5 20 10.5 10.5 17 8.5 8.5 24 3.5 3.5 Sept. 19 10.5-11 11 21 11 II 1984—Apr 9 8.5-9 9 1992—July 2 3-3.5 Oel. 8 11-12 12 n 9 9 7 } 10 12 12 Nov. 21 8 5-9 8.5 26 8.5 8.5 1994—May 17 3-3.5 3 5 1980— Feti. 5 12-13 13 Dec. 24 8 8 18 3.5 3.5 19 13 13 Aug. 16 3.5^t 4 May 29 12-13 13 1985—May 20 7.5-8 7.5 18 4 4 .10 12 12 24 7.5 7.5 Nov. 15 4—1.75 4.75 June 13 11-12 11 17 4.75 4.75 16 1 1 II 1986—Mar. 7 7-7.5 7 July 28 10-11 10 10 7 7 1995—Feh. 1 4.75-5.25 5.25 29 10 10 Apr. 21 6.5-7 6.5 9 5.25 5 25 .Sept. 26 ) | II 23 6.5 6.5 Nov. 17 12 12 July II 6 6 1996—Jan 31 5.00-525 5.00 Dec. 5 12-13 13 Aug. 21 5.5-6 5.5 Feb. 5 5.0(1 5 (10 8 13 13 22 5.5 5.5 1981 —May 5 13-14 14 1998—Oct. 15 4.75-5.00 4.75 8 14 14 1987—Sept. 4 5.5-6 6 Oct. 16 4.75 4.75 1 j 1998—Nuv 17 4.50-4.75 4.50 Nov. 19 4.50 4.50 In effect Mar. 12, 1999 4.50 4.50 I Available on a .short-term basis to help depository institutions meet temporary needs for of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a funds that cannot be met through reasonable alternative sources. The highest rate established flexible rale 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 (hat result from a major operating problem at the borrower's facility. period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis 2. Available to help relatively small depository institutions meet regular seasonal needs for points. funds that arise from a clear pattern of intrayearly movements in their deposits and loan1; 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 Likes Monetary StunntU-y 1914-1941. and 1941-1970; and the Annual Statistwal Digest, 197(1into 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 K> 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 olber sruuees, inchiding special industry lenders. Such credit may in effect from Mar. 17, 19X0. through May 7, 19X0. A surcharge of 2 percent was reimposed be provided when exceptional circumstances (including sustained deposit drains, impaired on Nov. 17, 1^80; the surcharge was subsequently raised to 3 percent on Dec. 5. 1980, and to access to money market funds, or sudden deteri oral ion 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, orlo meet the needs of institutions experiencing and to 2 percent effective Oct 12, 1981. As of Oct. I, 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 disinicrnieduuioni The discount rate applicable to adjustment credit ordinarily is surcharge was eliminated on No\ 17, 1981 charged on extended-credit loans outstanding less than thirty days; however, at the discretion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Financial Statistics • April 1999 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS' Requirement Type of deposit Percentage of Effective date deposits Net transaction accounts2 1 $0 million-$46.5 million3 3 12/31/98 2 More than $46.5 million4 10 12/31/98 3 Nonpersonal time deposits'1 0 12/27/90 4 Eurocurrency liabilities6 0 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve Banks succeeding calendar year by 80 percent of the percentage increase in 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 accounls 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 mainienance period beginning December 31, 1998, for depository institutions that report include commercial banks, savings banks, savings and loan associations, credit unions, weekly, and with the period beginning January 14, 1999, for institutions that report quarterly, agencies and branches of foreign banks, and Edge Act corporations. the exemption was raised from $4.7 million to $4.9 million. 2. Transaction accounls 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 ior the purpose of making payments to third report quarterly. persons or others. However, accounts subject to the rules that permit no more than six ?. For institutions that report weekly, the reserve requirement on nonpersonal time deposits preauthorized, automatic, or other transfers per month (of which no more than three may be with an original maturity of less than 1 '/2 years was reduced from 3 percent to 1 '/i 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 X The Monetary Control Act of 1980 requires that the amount of transaction accounts nonpersonal lime 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 accounls held by all depository institutions, determined The reserve requirement on nonpersonal time deposits with an original maturity of 1 [/i 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, 199°, for institutions thai report quarterly, the amount was decreased in the same manner and on the same dates as the reserve requirement on nonpersonal time from $47.8 million to $46.5 million. deposits with an original maturity of less ihan 11/2 years tsee note 5). Under the Garn-St Germain Depository Institutions Act of 1982, the Board adjusts the amount of reservable liabilities subject to a zero percent reserve requirement each year for the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS' Millions of dollars 1998 Typ a e n d o f m tr a a tu n r s i a t c y tion 1996 1997 1998 June July Aug. Sept. Oct. Nov. Dec. US. TREASURY SECURITIES2 Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 9.901 9.147 3,550 0 0 0 0 0 0 0 2 Gross sales 0 0 0 0 0 0 0 0 0 0 3 Exchanges 426,928 436,257 450,835 32.830 40,312 34,607 33,140 40.712 34,957 41,393 4 For new bills 426.928 435.907 450,835 32,830 40.312 34,607 33,140 40.712 34,957 41,393 5 Redemptions 0 0 2,000 0 0 0 0 0 0 0 Others within one year 6 Gross purchases 524 5.549 6,297 0 0 986 1,038 741 662 0 7 Gross sales 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts 30.512 41,716 46,062 1.520 2,638 b.367 2,301 2.423 5,444 2,539 9 Exchanges -41,394 -27,499 -49,434 -5.084 -2,242 -8.964 -2.242 -400 -8,093 - 2.555 10 Redemptions 2.015 1.996 2,676 0 1,311 0 0 602 0 0 One lo five years 1 Gross purchases 3.898 19,680 12,901 0 0 535 3,989 725 2,397 0 L2 Gross sales 0 0 0 0 0 0 0 0 0 0 13 Maturity shifts -25.022 -37,987 -37,777 - 1,520 -2,638 -2,168 -2,301 -2,423 -4,574 - 2,539 14 Exchanges 31.459 20,274 37,154 5.084 1,842 5,828 2,242 0 6,013 2.555 Five to ten years 15 Gross purchases 1,116 3,849 2,294 0 0 303 351 0 862 0 16 Gross sales 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts -5,469 -1,954 -5,908 0 0 -3.411 0 0 718 0 18 Exchanges 6,666 5.215 7,439 0 0 1.364 0 400 1,135 0 More than ten years 19 Gross purchases 1.655 5.897 4,884 0 0 1.769 0 1,674 698 0 20 Gross sales 0 0 0 0 0 0 0 0 0 0 21 Maturity shifts -10 -1.775 -2,377 0 0 -789 0 0 -1.589 (1 22 Exchanges 3.270 2.360 4,842 0 400 1,772 0 0 945 0 All maturities 23 Gross purchases 17.094 44,122 29,926 0 0 3.593 5,377 3.140 4.619 0 24 Gross sales 0 0 0 0 0 0 0 0 0 0 2? Redemptions 2.015 1.996 4.676 0 1,311 0 0 602 0 0 Marched transactions 26 Gross purchases 3 092 399 3 577 954 4,395,430 369 "8 W285 446 245 380 594 402.581 358,438 418,538 27 Gross sales 3,094,769 3.580.274 4,399,330 370.569 371.142 348.318 382.063 400.995 359,256 420,397 Repurchase agreements 28 Gross purchases 457.568 810,485 512,671 57.098 52.116 39.078 63,924 40,823 23,884 49,296 29 Gross sales 450.359 809,268 514.186 41,414 63.531 38.402 59,731 48,672 19,200 38.592 30 Net change in U.S. Treasury securities 19,919 41,022 19.835 14,473 -10.584 2,196 8.101 -3,725 8,484 8,845 FEDERAL AGENCY OBLIGATIONS Outright transactions 31 Gross purchases 0 0 0 0 0 0 0 0 0 0 32 Gross sales 0 0 2S 0 I) 0 0 0 0 33 Redemptions 409 1.540 322 25 0 50 48 15 20 30 Repurchase agreements 34 Gross purchases 75,354 160,409 284,316 14,548 11,236 33,431 18,486 51,471 51,419 48,815 35 Gross sales 74.842 159.369 276,266 12.913 12.341 30,625 19.953 50,0.32 48,785 44.285 36 Net change in federal agency obligations 103 -500 7.703 1.610 -1.105 2.731 -1,515 1.424 2,614 4,500 37 Total net change in System Open Market Account. . . 20.021 40,522 27,538 16.083 -11,689 4.927 6.586 -2,301 11,098 13,345 1. Sales, redemplions. and negaine figures reduce holdings of ihe S\siem Open Market 2. Transactions exclude changes in compensation for the effects of" inflation on the principal Account, all other figures increase such holdings of inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Financial Statistics • April 1999 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 1998 1999 1998 1999 Dec. 30 Jan. 6 Jan. 13 Jan. 20 Jan. 27 Nov. 30 Dec. 31 Jan. 31 Consolidated condition statement ASSETS 1 Gold certificate account 11,046 11,046 11,046 11,046 11,046 11,041 11,046 11,048 2 Special drawing rights certiticate account 9,200 9,200 9,200 9.200 9,200 9,200 9,200 9,200 3 Coin 360 35.3 386 410 439 391 358 459 4 To depository institutions 1.669 108 152 78 12 17 17 60 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 338 338 338 338 336 368 338 336 8 Held under repurchase agreements 7,388 3,353 4.472 3,958 4.027 6,172 10,702 2,535 470,321 460,152 460 111 460,008 464,429 462,961 471,815 458.924 454,772 455,645 456,411 453,868 454,538 453,991 452,141 454,439 11 Bills 197,404 198,277 199,042 196,992 197,662 196,631 194,772 196,948 12 Notes .... 187.895 187,895 187,895 187,403 187,403 187.888 187,895 187.403 13 Bonds 69,474 69,474 69.474 69.474 69,474 69.472 69,474 70.089 14 Held under repurchase agreements 15,549 4,507 3,700 6,140 9,891 8,970 19,674 4.485 15 Total loans and securities 479,716 463,951 465,073 464.382 468,804 469,517 482,872 461.855 16 Items in process of collection 8,895 13,060 10.114 16,278 7,289 2,899 6,933 5 325 17 Bank premises 1,297 1,300 1,300 1,300 1.301 1.294 1,300 1,299 Mm assets 1 18 Denominated in foreign currencies" 18,980 19,776 19.784 19,793 19,802 18,943 19,767 19.235 19 All other'1 16 829 14 748 14 995 15 331 16 548 14,456 16,625 16 165 20 Total assets 546,322 533,434 531,897 537,740 534,429 527,740 548,101 524,586 LIABILITIES 21 Federal Reserve notes 492,524 489.345 484.456 482,814 481,049 4K 1,438 491,657 479.689 22 Total deposits 29,435 19,062 23,150 27,308 29,985 27.260 34,165 23,682 23 Depository institutions 18,931 13,765 17,730 19,459 22,563 21,493 26.306 15 577 10.174 4,960 5,006 7,466 7,038 5,219 6,086 7,623 25 Foreign—Official accounts 166 170 214 177 168 167 234 26 Other 164 162 200 206 217 337 1,605 246 27 Deferred credit items 7,406 8,561 7,678 10,991 6,785 2,463 5,924 4.948 28 Other liabilities and accrued dividends5 4.464 4,089 4,194 4,226 4,192 4,456 4,450 4,183 29 Total liabilities 533,829 521,057 519,478 525,340 522,011 515,617 536,197 512,501 CAPITAL ACCOUNTS- 5,951 5,960 5,960 5,964 5,955 5,931 5,952 5.955 31 Surplus 5,246 5,952 5,952 5,952 5,952 5.205 5,952 5.943 32 Other capital accounts 1,296 465 507 484 511 987 0 188 33 Total liabilities and capital accounts 546,322 533,434 531,897 537,740 534,429 527,740 548,101 524,586 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 594,076 599,947 600,099 605,156 600,443 596,157 594,076 600,443 Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 612,055 613,734 617,857 621,030 623,737 601,253 611.688 625.230 36 LESS. Held by Federal Reserve Banks 119,530 124,390 133,400 138,216 142,688 119.815 120,030 145,541 37 Federal Reserve notes, net 492,524 489,345 484,456 482,814 481,049 481,438 491,657 479,689 Collateral held against notes, net 38 Gold certificate account 11,046 11,046 11,046 11,046 11,046 11.041 11,046 11,048 39 Special drawing rights certificate account 9,200 9,200 9,200 9.200 9.200 9.200 9,200 9.200 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 472,278 469,099 464.211 462,569 460,803 461.197 471,412 459.441 42 Total collateral 492,524 489,345 484,456 482,814 481,049 481,438 491,657 479,689 1. Some of the data in ihis table also appear in the Board's H.4 ! (503) weekly statistical 3. Valued monthly at market exchange rates release. For ordering address, see inside from cover. 4. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with bills maturing within ninety days. Federal Reserve Banks—and includes compensation that adjusts for the effects of inflation on 5. Includes exchange-translation account reflecting the monthly revaluation at market the principal of inflation-indexed securities. Excludes securities sold and scheduled to be exchange rales 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 Resei-ve Banks A11 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday Type of holding and maturity Dec. 30 Nov. 30 1,669 108 78 16 2 Within fifteen days' 1,668 105 148 78 12 4 143 1 4 4 0 0 12 0 3. Sixteen days to ninety days 465,814 458,877 460,111 457,933 464,429 462,961 467,308 458,924 4 Total U.S. Treasury securities2 23,470 17,251 12,752 16,543 23,513 16,007 16,325 10,051 5 Within fifteen days' 97,252 102,434 103,096 98,021 97,932 100,695 99,127 110,149 6 Sixteen days to ninety days 137,252 130,973 136.043 i35,438 135,053 138,427 143,635 130,178 7 Ninety-one days to one year 107,350 107,730 107.730 107,040 107,040 107,348 107,730 107,040 8 One year to live years 44,822 44,822 44.822 45,222 45.222 44,817 44,822 45,222 9 Five years to ten years 55,668 55,669 55.669 55.669 55.669 55,666 55,668 56,284 10 More than ten years 11 Total federal agency obligations 4,373 2,966 4,810 3,706 4,362 6440 7,687 2,871 12 Within fifteen days' 4,035 2,628 4,474 3,370 4,027 6 202 7,349 2,535 13 Sixteen days to ninety days 27 27 25 25 25 2 27 25 14 Ninety-one days to one year. . . . 75 75 75 75 81 100 75 81 15 One year to five years 61 61 61 61 55 51 61 55 16 Five years to ten years 175 175 175 175 175 185 175 175 17 More than ten vears 0 0 0 0 0 0 0 0 1. Holdings under repurchase agreements are classified as maturing within fifteen days in 2 Includes compensation thai adjusts for the effects of inflation on the principal of accordance with maximum maturity of the agreements. inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Financial Statistics • April 1999 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1998 1999 1995 19% 1997 1998 Dee. Dec. Dec. Dei-. June July Aug. Sept. Oct. Nov. Dec. Jan. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS- I Total reserves3 56.40 50.08 46 67 44.91 45.39 44.81 45.00 44.59 44.39 44.57 44.91 44.87 2 Nonborrowed reserves4 56.14 49.93 46.35 44.79 45.14 44.56 44.73 44.33 44.21 44.49 44 79 44.67 3 Nonborrowed reserves plus extended credit^ 56.14 49.93 46.35 44 79 45.14 44.56 44.73 44.33 44.21 44.49 44.79 44.67 4 Required reserves .... 55.12 48.66 44.99 43.32 43.77 43.45 43.48 42.90 42.81 42.95 43.32 43.34 5 Monetary base6 434.03' 45l.60r 479.39' 512.99' 492.40' 494.62' 498.17' 502.24' 505.77' 509.49' 512.99' 516.57 Nol sci.sonally adjusted 6 Total reserves7 58.02 51.52 47.97 45.17' 45.17 44.69 44.81 44.31 44 24 44 29 45.17' 46.33 7 Nonborrowed reserves 57.76 51.37 47.65 45.06 44.92 44.43 44.54 44.06 44.07 44.21 45.06 46.12 8 Nonborrowed reserves plus extended eredit" 57.76 51.37 47.65 45.1)6 44.92 44.43 44.54 44.06 44.07 44.21 45.06 46.12 9 Required reserves* 56.74 50.10 46.29 43 si 43.55 43.32 4.3.30 42.63 42.67 42.67 43.59 44.80 439.02' 456.71' 485.05' 518.29' 491.11' 495.28' 497.49' 500.99' 504.51' 510.17' 518.29' 519.93 NOT ADJUSTRD FOR CHANGES IN RESERVE REQUIREMENTS'" 57 90 51 24 47 88 45 02 45 10 44 60 4471 44 19 44 1"> 44 15 45.02 46 33 12 Nonborrowed reserves 57.64 51.09 47.56 44.90' 44.84 44 34 44.44 43.94 4194 44.07 44.90' 46.13 13 Nonborrowed reserves plus extended credit1" 57.64 51.09 47.56 44.90' 44.84 44.34 44.44 43.94 43.94 44.07 44.90' 46.13 56 61 49 8' 46 20 43 44' 4148 43 24 43.19 42 51 42 54 42.53 43.44' 44.80 15 Monetary base12 444.44' 463.48' 491.86' 525.02' 497.87' 502.13' 504.39' 507.80r 511.36' 516.94' 525.02' 527.51 1 28 1 A"1 1 68 1 58' 1 62 1 17 1 51 1 68 1 57 1.62 1.58' 1.53 17 Borrowings from the Federal Reserve .26 .16 .32 .12 .25 .26 .27 .25 17 (18 .12 .21 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly 8. To adjj ust reqq uired reserves for discontinuities that are due to reggyu latory changges in statistical release. Historical data starting in 1959 and estimates of Ihe effect on required rreesseerrvvee rreeqquuiirreemmeennttss,, aa mmuullttiipplliiccaattiivvee pprroocceedduurree iiss uusseedd ttoo eessttiimmaattee wwhhaatt rreeqquuiirreedd rreesseerrvveess reserves of changes in reserve requirements arc available from the Money and Reserves wwoouulldd hhaavvee bbeeeenn iinn ppaasstt ppeerriiooddss hhaadd ccuurrrreenntt rreesseerrvvee rreeqquuii rements bbe en ii n cflfele t. BBrekak- Projections Section, Division of Monetary Affairs. Board of Guvextiors of the Federal Reserve adjusted required reserves include required reserves against transactions deposits and nonper- System, Washington. DC 20551. sonal lime and savings deposits (bul nol rescrvable nondeposit liabilities). 2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory O Thp hrpfil'-fiHmcT^H iv\fsi\£»t ir\i K'*t-*> •^jm^lc IM hr^^jL -'iHiiict^ri t(M?al r^cr»n;pc flirts Al nine changes in reserve requirements. (See also table J.JO.) 3. Seasonally adjusted, break-adjusted tola! reserves equal seasonally adjusted, breakadjusled required reserves (line 4) plus excess reserves (line 16). 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted, break-adjusted total reserves (line 1) less total borrowings of depository institutions from the LLjUIJ L. JIIL 111^- 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 ihe effects of discontinuities associated with regulatory changes in conditions established for the extended credit program to help depository inslitutions deal reserve requirements. with sustained liquidity pressures. Because there is not the same need lo repay such 11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserv borrowing promptly as with traditional short-term adjustment credit, the money market effect xiuirements. of extended credit is similar to that of nonborrowed reserves. 6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency component of the money stock, plus (3) (for all quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters 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 requirements. LUILLj.llllJlH.lll [JCIHJU^ l_[IUUIg Ull IVIUllUiiyS. 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess !3. Unadjusted toial reserves (line 1 1) lest, unadjusted required (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' 1999 1995 1996 1997 1998 Dec.' Dec.' Dec.1 Dec.' Oct. Nov. Dec. Jan. Seasonally adjusted Memutet1 1 Ml 1.126.7 1,081.3 1.074.9 1,093.0 1.080.4 1,088.8 1.093.0 1.090.2 2 M2. . . 3.649.1 3.823.9 4,046.6 4,401 5 4,327.0 4.365.1 4,401 5 4.424.0 3 M3 4.618.5 4,955.6 5,404.7 6,005 9 5,876.3 5,945.3 6.005.9 6,027.9 4 Debt 11 695 6 14 424 1 15 167 2 16 128 1 15 956 7 16 048 3 16 P8 1 Ml components 5 Currency1 372.3 394.1 424.5 459.2 453.3 456.4 459.2 462.6 6 Travelers checks"1 8.3 8.0 7.7 7.8 8.3 7.9 7.8 7.8 7 Demand deposits5 389.4 403.0 396.5 377.3 374.7 376.8 377.3 370.7 8 Other checkable deposits6 356.7 276.2 246.2 248.7 244.2 247.6 248.7 249 2 Nontrunsucllon components 9 In M27 2.5224 2.742.6 2,971.8 3.308.4 i.246.6 3,276.3 1.W8.4 3.333.8 10 In M.I only" 969.4 1,131.7 1,358.0 1,604.5 1,549.3 1,580.2 1.604.5 1.604.0 Commercial banks 11 Savings deposits, including MMDAs 775.3 905.2 1,022.9 1,189.8 1,155.3 1,171.1 1,189.8 1,201.3 12 Small time deposits9 575.0 593.7 626.1 626.1 627.5 628.3 626.1 621.9 13 Large time deposits10' " 346.6 414.8 490.2 548.5 535.5 542.7 548.5 558.4 Thrift institutions 14 Savings deposits, including MMDAs 367.1 377.3 415.2 407.8 411.5 415.2 420.2 15 Small time deposits' 356.7 353.8 "<4V2 325.7 330.5 327.5 325.7 324.3 16 Large time deposits'" 74.5 78.4 859 89.1 87.7 87.9 89.1 91.1 17 Relail 455.5 522.8 602.3 751.6 725.5 737.9 751.6 766.1 18 Institution-only 255.9 313.3 379.9 516.2 486.7 503.8 516.2 515.0 Repurchase agreements and Eurodollars 19 Repurchase agreements'2 198.7 211.3 252.8 297.7 283.5 289.5 297.7 291.5 ^0 Eurodollars'2 9^7 113 9 149 "> 153 0 156 0 156"1 153 0 148 0 Debt components 21 Federal debt 3.638.9 3,780.6 3.798.4 3.747.J 3.750 3 3.748.8 3 747.4 n.a 22 Nonfederal debt 10.056.7 10,643.5 11,368.8 12.380.8 12,206.4 12.299 5 12,3808 n.a. Not seasonally adjusted Measures 23 M1 1,152.4 1,104.9 1.097.4 1.115.0 1,076.2 1,094.1 1.115.0 1,097.5 24 M2 3,671.7 3,843.7 4.064.8 4,418.3 4.311.8 4,365.5 4,418.3 4.427 4 25 M3 4,638.0 4,972.5 5,420.8 6,022.0 5.861.3 5,950.2 6.022.0 6.1)358 26 Debt 13,697.0 14.424.4 15.166.8 16,128.5 15.918.3 16.030.4 16.128.5 n.a Ml components 27 Currency1 376.2 397.9 428.9 464.1 452.6 457 5 464.1 462.4 28 Travelers checks4 85 8.3 7.9 8.0 8.2 8.1 8.0 79 29 Demand deposits5 407.2 419 9 412.3 392.1 373.2 381.6 392.1 375.3 30 Other checkable deposits6 360.5 278.8 248.3 250.7 242.2 247.0 250.7 251.9 Nontninsaction components 31 In M27 2,519.3 2.738.9 2.967.4 3,303.3 3.235.6 3,271.4 3,303.3 3,329 9 32 In M3 only" 966.4 1.I28.S 1.356.0 1.603.8 1.549.5 1,584.6 1.60.3.8 1,608.4 Commercial hanks 33 Savings deposits, including MMDAs . 774.1 903.3 1,020.4 1,186.7 1,147.6 1.167.9 1.186.7 1.196.3 34 Small lime deposits'' .573.8 592.7 625.5 628.1 628.4 625.5 622.6 35 Large time deposits"1 " 345.8 413.3 487.7 544.9 538.9 544.9 544.9 544 4 Thrift institutions 36 Savings deposits, including MMDAs 359.2 366.3 376.4 414.1 405.1 410.4 414.1 418.5 37 Small lime deposits 355.9 353.2 342.8 325 4 3.30.8 327.6 325.4 .324.6 38 Large time deposits'" 74 3 78.1 85.4 88.5 88.2 88.3 88.5 88.8 Mone\ market mutual funds 39 Retail . . . 45b. 1 523.2 602.5 751.6 724.1 737.2 75 1.6 767.8 40 Institution-only 257 7 316.0 384.5 523.3 482.9 504.9 523.3 529.3 Repurchase agreements and Eurodollars 41 Repurchase agreements'" 193 8 205.7 246.1 290.3 282.6 290.0 290.3 292.9 42 Eurodollars'2 94 9 115 7 152 3 156 8 156 8 156 6 156 8 153 1 Debt components 4.3 Federal debt 3,645.9 3,787.9 3.805.8 3,754.9 3,727.8 3.746.6 3.754.9 n.a. 44 Nonfederal debl 10,051 1 10.636.5 11.361.0 12,373.5 12.190.5 12.283.9 12.373.5 n.a. Foe-moles appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Financial Statistics • April 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 starting in 1959 are available from the Money and Reserves govemmems, households and nonprofit organizations, nonfinanual 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 notibank 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 Iliose 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 notibank 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. [)emand deposits at commercial banks and foreign-related institutions other than those adjusted 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 (time deposits—including retail RPs—in amounts of less than $100,0001. and (}) share draft account balances, and demand deposits at thrift institutions. balances in reiail money market mutual funds. Excludes individual retirement accounts 7. Sum of (1) savings deposits (including MMDAs). (2) small lime 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. Icnn) of U.S. addressees. M3: M2 plus (1) large-denomination time deposits (in 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 sublrauted 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 Liabilities1 A. All commercial banks Billions of dollars Monthly averages Wednesday figures 1998 July Aug. Sept. Nov.r Dec/ Jan. Jan. 13 Jan. 20 Seasonally adjusted Assets 1 Bank credit 4,155.4' 4.280.5 4,341.6 4,398.9 4,488.3 4,528.2 4,549.1 4,523.1 4^20.3 4,526.9 4,532.4 4318.7 2 Securities in bank credit 1,110.4 1,130.4 1,156.5 1,177.1 1,217.9 1,226.7 1,235.9 1,216.6 1,216.0 1,219.8 1,218.8 1217.5 3 U.S. government securities 762.9 760.7 771.2 767.4 774.6 791.0 793.1 793.9 794.1 795.1 792.2 796.7 4 Other securities 347.5 369.8 385.3 409.7 443.3 435.7 442.8 422.7 421.8 424.7 426.6 420.8 5 Loans and leases in bank credit2 ... 3,045.0 3,150.1 3,185.1' 3221.8' 3,270.5 3301.5 3,313.2 3,306.6 3304.3 3307.1 3,313.5 33013 6 Commercial and industrial 864.2 897.7 906.3' 918.5' 939.1 947.2 945.1 942.2 939.8 941.2 944.6 942.8 7 Real estate 1,234.2 I,271.9r 1281.5' 1,283. / 1,287.8 1,309.3 1323.0 1,324.4 1324.5 1329.5 1323.4 1,318.8 8 Revolving home equity 98.0 97.5 97.6 97.9 96.9 97.3 97.2 96.7 96.6 96.6 96.7 96.8 9 Other 1,136.2 1,174.4' 1,183.8' 1,185.8' 1,190.9 1,212.0 1,225.8 1227.8 1227.9 1233.0 1226.7 1,222.0 10 Consumer 503.5 496.01 494.5' 497.4' 496.7 498.7 501.7 503.1 500.2 502.5 504.3 504.5 11 Security1 117.6 131.9 137.7 142.9 158.9 152.5 151.4 152.7 153.3 150.1 158.3 152.5 12 Other loans and leases 325.6 352.5 365.1' 379.4' 388.1 393.8 392.0 384.1 386.4 383.8 382.9 382.6 13 Interbank loans 201.8 213.2 206.1 219.8 220.3 219.8 214.9 217.0 209.1 213.9 220.0 221.5 14 Cash assets4 261.2 243.5 251.6 253.3 242.9 249.6 249.9 263.5 258.5 256.8 279.5 262.9 15 Other assets5 295.4 312.7 318.1 323.3 322.7 327.1 328.9 333.2 330.4 331.8 337.6 332.4 16 Total assets6 4357.0' 5,0602 5,1373' 5,2163 5,266.7 5,284.7 5,278* 5,2*0.4 5,271.3 53113 5,277.7 Liabilities 17 Deposits 3,121.1 3,191.2 3,221.7 3,244.2 3,267.9 3310.9 3,319.2 3,339.4 3341.1 3,332.4 3,353.7 3326.3 18 Transaction 682.4 664.7 665.3 675.1' 665.9 665.7 664.7 661.7 647.8 648.7 684.2 672.7 19 Nontransaction 2,438.7 2,526.5 2,556.4 2,569.2' 2,602.0 2,645.2 2,654.5 2,677.7 2,693.3 2.683.7 2,669.5 2,653.6 20 Large time 645.9 668.1 680.3 685.8' 697.4 709.0 702.0 713.4 709.8 713.3 715.1 713.3 21 Other 1,792.9 1,858.3 1,876.0 1,883.3 1,904.6 1,936.1 1,952.5 1,964.3 1,983.4 1,970.4 1,954.3 1,940.4 22 Borrowings 828.1 857.7 859.9 888.8 939.4 978.3 987.4 973.4 965.0 974.5 987.1 977.0 23 From banks in the US 290.9 295.3 298.1 308.4 318.6 327.9 325.2 321.2 319.9 325.7 320.5 320.6 24 From others 537.1 562.5 561.9 580.4 620.8 650.3 662.2 652.2 645.0 648.7 666.6 656.4 25 Net due lo related foreign offices 235.0 187.6 203.8 202.7 226.1 218.5 217.1 214.5 212.7 213.6 209.6 213.7 26 Other liabilities 298.2 322.1 334.9 344.2 358.6 340.3 342.0 341.0 341.0 343.5 347.0 337.6 27 Total liabilities 4,482.4 4358.6 4^80.0' 4,792.0 4347.9 43*5.7 43683 4,859.8 4,864.1 43974 4354.6 28 Residual (assets less liabilities)7 374.6r 433.7 439.8' 457.8' 424.5 418.8 419.0 410.6 400.6 407.3 414.1 423.2 Not seasonally adjusted Assets 29 Bank credit 4,162.4 4,274.4 4,328.0' 4,385.7' 4,491.8 4,536.6 4359.8 4,532.3 4344.6 4,539.9 43362 4,514.4 30 Securities in bank credit 1,110.7 1,124.8 1,147.9 1,164.9 12142 1,226.3 1231.0 1218.9 1,220.7 1,221.2 1217.6 1,217.1 31 U.S. government securities 759.5 756.8 766.3 762.3 772.0 792.2 791.7 791.3 792.1 793.1 789.2 791.9 32 Other securities 351.2 368.0 381.6 402.6 442.1 434.1 439.4 427.6 428.6 428.0 428.4 425.1 33 Loans and leases in bank credit2 ... 3,051.7 3,149.6' 3,180.1' 3,220.9 3277.7 3,310.3 3,328.8 3313.4 3,323.9 3318.7 3,318.6 3297.4 34 Commercial and industrial 861.8 897.3 900.3' 9ll.Cf 937.0 945.8 943.1 939.3 940.5 937.2 940.7 938.1 35 Real estate 1,234.3 1274.0* 1285.O1 1,288.6' 1294.5 1316.0 1,326.6 1,324.4 1,326.7 1,332.5 1,323.2 1,315.9 36 Revolving home equity 98.2 97.6 97.8 98.6 97.8 98.0 97.5 96.9 97.2 97.0 97.0 96.9 37 Other 1,136.1' 1,176.4' 1,187.3' 1,190.1' 1,196.8 1218.0 1,229.1 1,227.5 1229.5 1,235.6 1,226.3 1,219.1 38 Consumer 510.2 494.1' 496.2' 500.21 498.5 501.2 508.0 509.9 510.5 510.9 510.7 509.5 39 Security5 117.8 129.7 133.2 139.5 159.3 153.8 154.3 153.1 152.2 151.6 158.0 152.4 40 Other loans and leases 327.6 354.5' 365.4' 379.5' 388.3 393.6 396.9 386.7 393.9 386.4 386.0 381.4 41 Interbank loans 208.7 206.8 199.0 214.2 216.4 226.3 224.8 224.0 2222 224.4 226.4 220.0 42 Cash assets4 272.1 239.1 239.3 251.2 246.7 258.9 268.2 274.2 274.8 268.2 307.4 257.5 43 Other assets5 293.8 314.0 320.0 324.5 321.9 328.2 329.0 331.2 330.2 328.9 334.1 329.2 44 Total assets6 43803 4.V76.6 5,028.9 5,1173r 5219.0 5,291.8 5,323.6 53040 5314.1 53033 5,3463 5,2633 Liabilities 45 Deposits 3,127.2 3,183.7 3.211.5' 3248.4 3271.7 3,329.4 3,351.2 3,344.3 3,383.1 3,354.2 3,361.3 3,288.2 46 Transaction 694.4 659.8 651.9 670.4' 661.9 676.4 698.4 673.2 687.2 669.3 700.3 653.0 47 Nontransaction 2,432.8 2323.8 2.559.6 2378.0* 2,609.7 2,653.0 2,652.8 2,671.2 2,695.8 2,684.9 2,661.0 2,635.2 48 Large time 644.1 664.8 679.4 687.6 701.4 715.2 707.2 711.5 708.8 711.9 712.0 711.4 49 Other 1,788.7 1,859.0 1,880.2 1,890.5 1,908.3 1,937.8 1,945.6 1,959.7 1,987.0 1.973.0 1,949.0 1,923.8 50 Borrowings 834.5 862.1 852.6 892.0' 935.4 974.1 982.5 979.7 955.6 971.1 1,004.6 992.8 51 From banks in the US 294.4 295.4 294.1 307.2 314.5 328.2 329.3 324.8 318.6 327.0 328.0 326.5 52 From others 540.1 566.6 558.6' 584.8' 620.8 645.9 653.2 654.9 637.0 644.2 676.6 666.3 53 Net due to related foreign offices 235.6 189.1 203.6 202.3 223.7 216.6 218.2 216.1 212.6 214.5 211.8 219.7 54 Other liabilities 298.2 321.4 334.9 343.9 358.3 341.6 342.9 341.1 340.7 343.2 346.8 338.4 55 Total liabilities 4495.6 4356J 4.602.6 4,686.6 4,789.0 4361.7 43948 43813 4391.9 4383.0 4»245 4339.1 56 Residual (assets less liabilities)7 385.O1 420.3 426.21 431.2' 430.0 430.0 428.9 422.6 422.2 420.5 422.0 424.7 MEMO 57 Revaluation gains on off-balance-sheet items8 94.4 92.? 96.1' 110.4' 130.7 110.6 117.2 111.6 111.3 110.5 112.4 111.1 58 Revaluation losses on off-balancesheet items8 95.9 90.6 96.4' 110.6' 128.0 109.3 115.0 107.6 107.4 107.3 107.7 107.0 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • April 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 1998 1998 1999 1999 Jan. July Aug. Sept. Oct.' Nov.' Dec' Jan. Jan. 6 Jan. 13 Jan. 20 Jan. 27 Seasonally adjusted Assets 1 Bank credit 3,580.5 3,708.4 3,753.2 3.794.3' 3,863.6 3.908.0 3,948.0 3,927.6 3,930.1 3,931.8 1.934.3 3,916.0 2 Securities in bank credit 910.8' 929.3 944.1 961.6 995.9 1,002.8 1,019.1 997.3 999.2 1,001.0 999.4 994.6 3 L'.S. government securities 679.3 669.6 677.1 6S5.2 694.4 710.5 712.1 709.7 711.4 711.8 708.6 710.0 4 Other securities 231.4 259.6 266.9 276 5 301.5 292.2 307.0 287.6 287.9 289.2 290.7 284.6 5 Loans and leases in bank credit1 2,669.8 2,779.1 2,809.1' 2,832.7 2,867.7 2,905.3 2,928.8 2,930.3 2,930.8 2.930.8 2,934 9 2,921.4 6 Commercial and industrial 642.6 683.6 692.2' 700.5' 715.3 723.3 727.1 729.0 729.2 728.8 730.2 728.5 7 Real estate 1 206.6 1,247.9' 1,257.6' 1,260.1' 1,264.5 1,287.3 1 302 3 1,303.7 1,304.0 1.308.6 1,302.8 1,298 1 8 Revolving home equity 98.0 97.5 97.6 97.9 96.9 97.3 97.2 96.7 96.6 96.6 96.7 96.8 9 Other 1,108.6 l,150.4r 1,160.0' 1,162.3' 1,167.6 1,190.0 1,205.1 1,207.0 1,207.3 1.212.0 1,206.1 1,201.4 10 Consumer 503.5 496.0' 494.5' 497.4' 496.7 498.7 501.7 503.1 500.2 502.5 504.3 504.5 11 Security1 61.3 69.9 73.5 75.2 89.3 87.6 85.4 84.0 85.7 81.0 87.4 82.1 12 Other loans and leases 255.8 281.6 291.2' 299.4' 302.0 308.4 312.3 310.6 311.8 309.8 310.3 308.2 13 Interbank loans 173.5 192.3 186.1 191.4 194.9 193.3 187.8 188.8 184.2 186.9 189.3 192.3 14 Cash assets4 227.8 208.5 217.8 219.3 207.6 216.1 216.0 228.3 223.4 220.8 241.7 229.5 15 Other assets5 254.7 278.7 282.4 285.5 283.5 290.5 289.8 295.1 292.5 293.5 297.5 295.8 16 Total assets6 4,180.0' 4,330.4 4,382.6 4,433.3 4,492.0 4,550.2 4,583.8 4,582.0 4,572.4 4,575.1 4,605.2 4,576.1 Liabilities 17 Deposits 2.844.0 2.893.6 2,915.8 2,929.7 2,949.1 2,995.6 3,011.9 3,023.2 3,029.8 3.014.0 3.035.3 3,010.5 18 Transaction ^ 670.7 651.0 653 1 659.8' 650.7 653 4 654.0 649.3 636.0 0.369 671.5 660.1 19 Nontransaction 2.173.4' 2.242.6 2,262.7 2,270.0 2,298.3 2.342.2 2,357.9 2,373.9 2,393 S 2,377.2 2,363.8 2,350.4 20 Large time 383.8 385.1 385.1 384.2' 397.4 410.3 409.0 412.3 414.1 409.9 411.8 412.1 21 Other 1,789.6 1,857.5 1,877.7 1,885.7 1,900.9 1,932.0 1,948.9 1,961.6 1,979.7 1,967.2 1,952.0 1,938.3 22 Borrowings 678.5 690 1' 694.7 709.9' 753.9 792.7 808.0 Till 7926 800.5 806.0 799.4 25 From banks in the US 267.2 269.5 276.1 278.2 286.6 294.5 296.7 297.1 298.0 301.5 296.2 296.4 24 From others 411.3 420.5 418.6' 431.7' 467.3 498.2 511.3 500.6 494.6 498.9 509.8 503.0 25 Net due to related foreign offices .... 90.8 79.8 93.6 105.6 116.9 116.3 114.8 115.3 110.9 114.7 II 1.0 119.2 26 Other liabilities 201.2 228.6 235.5 240.2 251.2 237.9 241.2 243.8 244.4 245.2 249.7 240.0 27 Total liabilities 3,814.5 3,892.0 3,939.7' 3,985.4 4,071.1 4,142.5 4,175.9 4,180.0 4,177.8 4,174.3 4,201.9 4,169.0 28 Residual (assets less liabilities)' .... 365.4 438.4 443.0 447.9 420.9 407.6 407.9 401.9 394.7 400.8 403.3 407.1 Not seasonally adjusted Assets 29 Bank credit 3,590.9' 3,699.5 3,737.2 3,786.4 3,867.8 3,924.0 3,960.2 • 3.940.7 3,955.8 3,948.1 3.944.2 3,918.4 30 Securities in bank credit 916.6 920.9 931.3 952.8 991.9 1,007.7 1,018.4 1.005.8 1,009.7 1,007 8 1,005.9 1,001.6 31 U.S. government securities 678.0 666.1 671.5 680.1 691.3 710.8 711.0 709.3 711.2 711.2 707.8 708.8 32 Other securities 238.6 254.8 259.8 272.8 300.6 296.9 307.5 296.5 298.5 296 6 298.1 292.7 33 Loans and leases in bank credit2 2,674.3 2,778.6 2,805.9 2,833.5' 2,875.9 2,916.3 2.941.7 2,934.9 2,946.1 2.940.2 2.938.3 2,916.8 34 Commercial and industrial 639.4 683.5 687.3' 696.1' 713.4 722.2 724.2 725.2 727.5 72.1.8 725 8 723.5 35 Real estate 1.206.7 1,250.3' 1,261.3' 1,265.1' 1,271 0 1,293.7 1.305.8 1.303.6 1,305.9 1,311 6 1,102 6 1,295.4 36 Revolving home equity 98.2 97.6 97.8 98.6 97.8 98.0 97.5 96.9 97.2 97.0 97 0 96.9 37 Other 1,108.5' 1,152.7' 1,163.5' 1,166.5' 1.173.2 1,195.7 1.208.3 1.206.7 1.208.8 1.214.6 1,205 6 1.198.5 38 Consumer 510.2 494.1' 496.2' 500.2' 498.5 501.2 508.0 509.9 510.5 510.9 510.7 509.5 39 Security3 61.4 68.3 69.8 72.2 89.6 89.) 87.2 84.2 B4.3 82.6 87.0 82.4 40 Other loans and leases 256.6 282.4 291.3' 300.0' 303.4 310.1 316.6 311.9 317.9 311.4 3122 306.1 41 Interbank loans 180.4 185.9 179.1 185.8 190.9 199.8 197.7 195.8 197.2 197.4 195.8 190.8 42 Cash assets4 238.7 204.2 205.5 217.1 211.1 224.5 232.7 239.1 239.2 232.2 270.0 224.4 43 Other assets^ 252.7 280.3 283.5 286.7 283.6 291.1 289.2 292.6 291.8 289.9 294.1 292.2 44 Total assets6 . . . 4,206.4 4,312.4 4,347.9' 4,418.4 4,495.8 4,581.5 4,621.9 4,610.7 4,626.7 4.610.0 4,646.6 4,568.6 Liabilities 45 Deposits 2,852.1 2,887.9 2,906.9 2,932.3 2,953.3 3,015.1 3.040.7 3,030.4 3,073.5 3,038.5 3,046.0 2,973.5 46 Transaction 682.8 646.0 639.7 654.4 646.7 664.1 687.2 660.9 675.2 657.6 687.6 640.8 47 Nontransaction 2,169.3 2,241.9 2,267.2 2,277.9' 2,306.6 2,351.1 2,353.5 2.369.5 2,398.3 2,381.0 2,358.4 2,332.7 48 Large time 383.1 384.0 387.4' 387.7' 400.8 415.3 409.4 411.3 412.8 409.5 411.0 410.5 49 Other 1,786.2 1,857.9 1,879.8 1,890.2 1,905.8 1,935.7 1,944.1 1,958.2 1.985.5 1,971.4 1.947.4 1,922.2 50 Borrowings 684.9 694.4 687.4 713.0 749.9 788.5 803.1 804.1 783.2 797.1 823.5 815.2 51 From banks in the US 270.6 269.7 272.1 277.0 282.6 294.8 300.8 300.8 296.7 302.8 303.7 302.4 52 From others 414.2 424.7 415.3' 436.0' 467 3 493.7 502.3 503.3 486.5 494.4 519.8 512.8 53 Net due to related foreign offices . . . 86.5 84.9 96.7 106.8 115.5 113.7 111.3 112.8 106.5 111.6 109.0 118.3 54 Other liabilities 201.2 228.6 235.5 240.2 251.2 237.9 241.2 243.8 244.4 245.2 249.7 240.0 55 Total liabilities 3,824.8 3,895.8r 3,926.6r 3,992.3 4,069.9 4,155.3 4,196.4 4,191.0 4,207.6 4,192.4 4,228.2 4,147.0 56 Residual (assets less liabilities)7 .... 381.7' 416.7 421.4' 426.0' 425.9 426.1 425.5 419.7 419.1 417.6 418.4 421.7 MEMO 57 Revaluation gains on off-balance-sheet items* 49.9 51.0 51.9 61.7 78.7 62.7 69.1 65.7 65.4 63.8 66.7 65.8 58 Revaluation losses on off-balancesheet items8 52.7 50.4 54.2 65.1 80.5 65.1 70.5 65.5 65.4 64.4 65.5 65.4 59 Mortgage-backed securities9 289.9 293.0' 301.2' 313.7' 336.0 346.3 345.9 342.0 346.0 343.7 338.6 338.7 Footnotes appear on p, A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities 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 1998 1998 1999 1999 Jan. July Aug. Sept. Oct.' Nov.' Dec' Jan. Jan. 6 Jan. 13 Jan. 20 Jan. 27 Seasonally adjusted Assets 1 Bank credit 2,199.7' 2215Q 2,305.7' 2,336.8' 2,3926 2,412.7 24347 2.413.5 2,409.3 2.417.3 2,421.7 2.405.7 2 Securities in bank credit 513.5' 521.6' 532.3' 547.1' 572.7 569.5 577.8 555.7 554.3 558.1 558.9 555.3 3 U.S. government securities 366.5' 355.5' 361.4' 361.9 371.9 380.2 376.7 375.4 374.5 376.1 375.2 377.3 4 Trading account 29.1 20.4 21.3 22.0 20.9 23.4 24.0 26.3 26.8 28.3 27.1 27.6 5 Investment account 337.4' 335.1' 340.1' 345.9 351.0 356.8 352.7 349.1 347.7 347.9 348.1 349.7 6 Other securities 147.0 166.1 170.9 179.2 200.8 189.3 201.1 180.3 179.8 182.0 183.7 178.1 7 Trading account 69.6 81.1 83.1 89.5 109.1 92.8 101.7 82.1 80.4 82.7 86.0 81.1 8 Investment account 77.4 85.0 87.7 89.8 91.7 965 99.3 98.2 99.4 99.3 97.7 96.9 9 State and local government . 22.5 22.4 22.6 23.2 23.9 24.6 25.0 25.0 25.2 24.9 25.0 25.0 10 Other 54.9 62.6 65.1 66.6 67.8 71.9 74.4 73.2 74.1 74.4 72.7 72.0 11 Loans and leases in bank credit' , . , 1,686.2' 1,753.3' 1,773.4' 1,789.6' 1,819.8 1,843.2 1,856.9 1,857.8 1,855.0 1.859.2 1,862.8 1,850.4 12 Commercial and industrial 465.4 497.6 5O3.O1 508.9 521.6 527.9 529.7 531.3 531.3 531.1 532.2 531.2 13 Bankers acceptances 1.2 1.3 1.3 1.3 1.2 1.2 1.2 1.3 1.3 1.3 1.3 1.2 14 Other 464.2' 496.4' 501.7 507.7' 520.3 526.6 528.5 530.1 531.6 529.9 530.9 529.9 15 Real estate 673.6' 686.9' 688.1' 685.9 686.5 6989 706.3 703.0 703 0 708.9 702.2 697.3 lb Revolving home equity 69.8 68.7 68.6 68.8 68.0 67.7 67.5 67.3 66.9 67.2 67 4 67.6 17 Other 603.8' 618.2' 619.5' 617.1} 618.5 631.2 638.8 635.7 636.1 641.7 634.8 629.8 18 Consumer 301.8' 294.7' 295.9 298.8' 299.6 30O.6 301.7 305.4 301.0 305.2 306.8 307.1 19 Security' 56.0 63.9 67.4 68.9 82.7 80.8 79.0 77.9 79.4 74.9 81.4 76.3 20 Federal funds sold to and repurchase agreements with broker-dealers 39.6 44.9 48.0 50.1 64.7 63.6 62.8 61.7 61.9 597 63.1 61.2 21 Other 16.4 19.0 19.4 18.8 18.0 17.3 16.3 16.2 17.4 15.1 18.3 15.1 22 State and local government 11.6 11.1 11.5 11.5 11.6 11.9 11.6 11.6 11.5 11.8 11.6 11.5 23 Agricultural 9.9 10.0 10.0 10.0 9.9 10.0 10.1 10.2 10.2 10.2 10.2 10.2 24 Federal funds sold to and repurchase agreements with others 8.0 8.9 10.0 12.4 12.9 12.4 16.2 12.6 13.9 12.6 12.3 12.1 25 All other loans 74.3 83.9 88.9 93.2 93.5 97.9 96.5 97.5 97.5 97.0 98.4 96.5 26 Lease-financing receivables 85.5 96.3 98.7 100.0 101.4 102.8 105.7 108.2 107.2 107.5 107.7 108.1 27 Interbank loans 122.4 124.0' 115.7 117.6' 119.0 119.3 120.6 122.0 117.4 120.7 122.3 124.5 28 Federal funds sold to and repurchase agreements with commercial banks 81.2' 70.1 62.5 M.2 73.6 75.3 73.7 77.9 74.4 76.9 79.5 78.5 29 Other 41.2 53.8 53.2 53.4 45.4 44.0 46.9 44.1 43.0 43.8 42.8 46.1 30 Cash assets4 164.7' 143.9 151.3' 151.3 141.0 147.9 148.3 158.4 155.5 152.3 169.6 158.6 31 Other assets5 196.7 215.8' 219.3 219.9' 215.9 218.2 216.4 220.6 217.1 217.4 223.3 222.4 32 Total assets6 2,645.9' 2,720.6' 2,754.6' 2,788.0" 23603 2382.1 2376.6 2361.4 2369.7 2399.I 2373.5 Liabilities 33 Deposits 1,612.5' 1.620.6' 1.628.3' 1,628.7' 1,640.2 1.666.8 1.673.2 1,671.2 1,676.6 1,663.8 1,682.6 1,658.3 34 Transaction 386.6' 367.9' 369.4' 373.1 366.7 368.3 367.4 363.0 355.6 355.3 380.9 366.1 35 Nontransaction 1,225.9" 1.252.7 1.258.91 1,255.6' 1,273.5 1,298,5 1.305.8 1,308,1 1,321.0 1,308.6 1,301.7 1,292.2 36 Large time 219.8' 216.2' 2]5.Cf 209.9" 221 S 2104 230.2 230.0 212.0 227.7 229.4 229.7 37 Other 1.006.1' 1,036.6' 1.043.9' 1.045.7' 1,052.0 1,068.1 1,075.6 1.078.1 1,089.0 1.080.8 1,072.3 1.062.5 18 Borrowings 528.9' 526.7' 531.9" 544.6' 579 6 610.4 621.8 614.6 605.4 617.9 621.2 617.5 39 From banks in the U.S 198.3 190.5 197.6' 198.4 203.5 207.7 209.0 214.5 212.3 219.1 213.2 214.9 40 From others 3106' 336.2' 334.3' 346.2 176 1 4027 412.8 4001 393.1 398.8 409.9 402.6 41 Net due to related foreign offices 86.5 76.1 89.9 101.8 112.1 112.7 111.2 112.3 107.4 111.6 108.3 116.4 42 Other liabilities 173 7 198.5 204.9 209.6 219.9 205.8 209.2 212.7 212.8 213.7 218.8 209.1 43 Total liabilities 2y401.6r 1422.0' 2y4843r 2^52.0 2595.7 2,615.4 2,610.7 2.602.3 2^07.0 2,632.9 2.601J 44 Residua] (assets less liabilities)7 244.3' 298.7' 299.7 303,2 278.6 264.6 266.7 266.0 259.1 262.7 266.2 272.1 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • April 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 1998 1998 1999 1999 Jan. July Aug. Sept. Oct.' Nov.1" Dec' Jan. Jan. 6 Jan. 13 Jan. 20 Jan. 27 Not seasonally adjusted Assets 45 Bank credit 2,215.3' 2,268.0' 2,290.2' 2,326.7' 2,396.9 2,429.4 2,446.5 2,432.2 2,442.1 2,438.1 2,436.4 2,413.0 46 Securities in bank credit 521.0' 514.6' 520.6' 539.1' 571.7 577.8 579 0 565.7 567.7 566.0 566.3 56.3.2 47 US. government securities 366.6' 353.3' 356.6' 363.2' 371.1 383.3 J77.2 376.3 376.7 376.4 375.3 .177.2 48 Trading account 28.2 19.9 21.2 21.9 21.9 24.6 23.6 25.5 25.6 27.3 26.8 26.5 49 Investment account 3.38.4' 333.4' 335.4' 341.3' 349.1 358.7 353.6 350.8 351.1 H9.0 348.5 350.7 50 Mortgage-backed securities 22.5.5' 219.0' 225.8' 236.4' 255.2 258.2 253.5 250.0 25.3.6 251.4 246.2 247.3 51 Other 113.0 114.4' 109.7 10H.9 9.3.9 100.6 100.1 100.8 97.5 97.7 102.4 103.4 52 One year or less 28.9 30.4 29.0 27.7 26.1 27.2 26.6 27.4 25.9 20.2 28.7 28.2 53 One to five years 55.7' 52.1 48.9 44.2 37.2 38.2 38.4 37.5 36.6 36.1 37.8 38.7 54 More than five years . . . 28.3 31.9 31.8 33.0 30.6 35.2 35.2 35.9 34.9 .35.4 35.9 36.5 55 Other securities 154.4 161.3 164.0 175.9 200.7 194.5 201.8 189.4 191.1 189.6 191.0 186.0 56 Trading account 76.3 77.0 76.8 86.4 108.8 96.8 101.5 90.3 90.2 89.2 92.5 88.6 57 Investment account 78.1 84.3 87.2 89.4 91.9 97.7 100.4 99.1 100.9 100.4 98.5 97.3 58 State and local government . . 22.5 22.3 22.7 23.2 24.0 24.6 25.0 24.9 25.2 24.8 24.9 24.9 59 Other 55.6 62.1 64.6 66.2 67.9 73.) 75.4 74.2 75.6 75.6 73.6 72.4 60 Loans and leases in bank credit- . . 1,694.3' 1.753.4' 1,769.5' 1,787.6' 1,825.2 1,851.7 1,867.5 1,866.5 1,874.3 1,872.1 1,870.1 1,849.9 61 Commercial and industrial 463.0' 497.7 499.6' 506.0 521.3 528.0 527.3 528.4 530.3 527.2 52S.7 527.1 62 Bankers acceptances 1.2 1.2 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.2 63 Other 461.8' 496.5 498.3 504.7' 520.0 526.6 526.0 527.2 529.1 525.9 527.5 5Z5.9 64 Real estate 676.7' 689.2' 691.4' 689.1' 690.5 703.2 708.9 706.2 708.5 714.8 705.2 697.8 65 Revolving home equity . . . 70.1 68.9 68.9 69.4 68.6 68.4 67.8 67.7 67.7 67.7 67.7 67.7 66 Other 369.O/ 383.4' 384.91 380.8' 382.8 393.9 398.4 393.9 397.3 403.0 192.9 384.8 67 Commercial 236.6' 236.91 237.6' 239 o" 239.0 240.9 242.6 244.7 243.5 244.1 244.6 245.3 68 Consumer 306.8' 294.5' 297.4' 3018' 300.5 301.5 305.7 310.6 310.3 311.6 311.3 310.0 69 Security' 56.1 62.3 63.7 65.8 83.1 82.3 80.8 78.2 77.9 76.5 81.1 76.6 70 Federal funds sold to and repurchase agreements with broker-dealers .... 39.6 43.9 45.1 47.6 65.2 65.0 63.7 62.0 60.8 61.2 62 7 61.3 71 Other 16.4 18.5 18.6 18.2 17.9 17.3 17.1 16.2 17.2 15.2 18.3 15.3 72 State and local government 11.5 11.1 11.5 11.6 11.7 12.0 11.7 11.6 11.5 11.8 11.6 11.5 73 Agricultural 9.9 10.3 10.3 10.3 10.1 10.1 10.1 10.1 10.4 10.2 10.0 10.0 74 Federal funds sold to and repurchase agreements with others 8.0 8.9 10.0 12.4 12.9 12.4 16.2 12.6 13.9 12.6 12.3 12.1 75 All other loans 75.0 83.5 88.2 92.7 94.1 99-4 100.6 98.2 101.8 97.5 99.7 94.5 76 Lease-financing receivables .... 87.3 95.8 97.5 98.9 101.0 102.8 106.0 110.5 109.5 110.0 110.2 110.3 77 Interbank loans 127.8 122.9 113.2' 116.4' 116.2 121.4 125.7 127.3 124.1 127.2 128.7 126.7 78 Federal funds sold to and repurchase agreements with commercial banks 85.1 69.4 60.7 63.7 71.0 77.0 77.5 81.7 79.5 81.9 83.8 79.5 79 Other 42.7 53.5 52.5 52.7 45.2 44.4 48.2 45.5 44.6 45.3 44.8 47.2 80 Cash assets4 174.5 140.2 141.2' 149.8 144.6 154.1 161.7 168.1 167.0 162.8 194,3 156.6 81 Other assets5 196.7 215.8' 219.3 219.9' 215.9 218.2 216.4 220.6 217.1 217.4 223.3 222.4 82 Total assets6 2,677.1' 2,708.9r 2,726.1r 2,774.9r 2,835.7 2^85.0 2,910.5 2,912.7 2,907,7 2^(45.1 2,881.4 Liabilities 83 Deposits 1,622.0' 1.620.6' 1,625.9' 1,634.8' 1,646.5 1,680.1 1,694.7 1.679.9 1,711.1 1,686.0 1,694.6 1.636.3 84 Transaction 396.3' 365.7' 360.3' 370.0 364.5 375-0 390.5 372 5 380.8 370.7 394.7 356.5 85 Nontransaction 1,225.6' 1,254.9' 1,265.7' 1,264.7' 1,282.0 1,305.1 1.304.2 1.307.5 1,330.2 1.315.4 1,299 9 1,279.8 86 Large time 219.1' 215.0 217.4' 213.3 224.9 235.4 230.7 229.0 230.7 227.3 2286 228.1 87 Other 1.006.6' 1,039.8' 1,048.3' 1,051.4' 1.057.1 1,069.7 1,073.5 1.078.5 1,099.6 1.088.0 1,071.3 1.051.7 88 Borrowings 534.4' 531.0* 523.2' 544.4' 575.1 606.8 616.2 620.2 601.0 614.5 637.4 629.1 89 From banks in the US 201.3 190.5 192.7 196.1' 200.0 209.1 213.1 217.7 213.3 220.3 219.1 218.9 90 From nonbanks in the U.S 333.1' 340.5' 330.5" 348.3 375.1 397.7 403.1 402.4 387.8 394.2 418.2 410.2 91 Net due to related foreign offices . . . 82.3 81.2 92.9 103.0 110.9 110.1 107.7 109.8 103.0 108.5 106.3 115.5 92 Other liabilities 173.7 198.5 204.9 209.6 219.9 205.8 209.2 212.7 212.8 213.7 218.8 209.1 93 Total liabilities 2,4124' 2,4313' 2,447.0' 2,491.8' 2,552.4 2,602.7 2,627.8 2,622.5 2,627.9 2,622.7 2,657.1 2,590.1 94 Residual (assets less liabilities)7 264.7' 277.7' 279.1 283.1' 283.4 282.3 284.5 288.0 284.8 285.0 288.0 291.3 MEMO 95 Revaluation gains on off-balancesheet items* 49.9 51.0 51.9 61.7 78.7 62 7 69.1 65.7 65.4 63.8 66.7 65.8 96 Revaluation losses on off-balancesheet items8 52.7 50.4 54.2 65.1 80.5 65.1 70.5 65.5 65.4 64.4 65.5 65.4 97 Mortgage-backed securities1' 244.8' 242.9" 249.6' 260.5' 2807 287.0 284.0 279.6 283.3 281.1 276.2 276.6 98 Pass-through securities 164.2' l58.Or 161.3' 167.3' 189 5 196.6 194.8 191.9 194.5 192.7 189 4 191.1 99 CMOs, REMICs, and other mortgage-backed securities 80.6' 84.9* 88.3' 93.2' 91 1 90.3 89 2 87.7 88.8 88.4 86.8 85.4 100 Net unrealized gains (losses) on available-for-sale securities10 . 3.0 3.5 3.1 3.7 4.4 3.1 .3.0 3.0 3.2 32 2.8 2.8 101 Offshore credit to U.S. residents" .. 35.5 35.3 35.6 36.8 38.5 39.1 38.5 38.9 39.3 39.0 39.0 38.2 Fooinotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A19 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued D. Small domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures July Aug. Sept. Oc Nov. Dec. Seasonally adjusted Assets 1 Bank credit 1,433.4 1,447.5 1,457.5 1,471.0 1,495.3 1,513.2 1,514.0 1.520.8 1.514.5 1,512.6 1.510.3 2 Securities in bank credit 407.6 411.8 414.5 423.1 433.3 441.4 441.6 444.9 443.0 440.5 439.3 3 U.S. government securities . 314.2 315.7 317.3 322.4 130.3 335.4 334.3 336.8 335.7 133.4 332.8 4 Other securities 93.5 96.1 97.3 100.7 103.0 106.0 107.2 108.1 107.2 107.1 106.5 5 Loans and leases in bank credit2 1,025.8 1,035.7 1,043.0 1,047.9 1,062.1 1,071.9 1.072.5 1,075.9 1,071.6 1,072.1 1,071.1 6 Commercial and industrial . 186.0 189.2 191.6 193.7 195.5 197.4 197.6 197.9 197.6 198.0 197.3 7 Real estate 561.1 569 5 574.3 578.1 588.4 596.0 600.7 600.9 599.7 600.6 600.8 8 Revolving home equity 28.8 29.0 29.0 •>9.0 29.6 29.7 29.4 29.7 29 4 29.3 29.2 9 Other 532.2 540.5 545.3 549.1 558.8 566 3 571.1 571.2 570.3 571.3 571.6 10 Consumer 201.3 198.7 198.5 197.1 198.1 200.0 197.7 199.3 197.3 197.4 197.4 11 Security' 6.0 6.1 6.3 6.5 6.7 6.4 6.0 6.3 6.1 6.0 5.8 12 Other loans and leases 7!.4 72.2 72.3 72.5 73.4 72.2 70.4 71.5 70.7 70.1 69.8 13 Interbank loans 68.3 70.4 73.9 75.9 74.0 67.3 66.7 66.8 66.2 67.0 67.8 14 Cash assets4 64.6 66.6 68.0 66.5 68.1 67.7 69.9 67.9 68.4 72.1 70.9 15 Other assets5 62.9 63.1 65.6 67.6 72.3 73.4 74.5 75.4 76.1 74.3 73.4 16 Total assets6 1534.0 1.609.7 1,628.0 1,645.2 1,661.4 1,689.8 1,701.7 1.7053 1,711.0 1,7055 1,706.2 1.70Z6 Lutbitilies 17 Deposits 1.231.5 1,273.0 1,287.5 1,301.0 1,308.8 1,328.8 1,338.7 1,352.1 1.353.2 1,350.2 1,352.7 1,352.2 18 Transaction 284.1 283.1 283.7 286.6 284.0 285.0 286.6 286.3 280.4 281.6 290.5 294.0 19 Nontransaction 947.5 9S9.9 1,003.8 1,014.4 1,024.8 1.043.8 1,052.1 1,065.8 1,072.8 1.068.6 1.062.1 1.058.2 20 Large time 164.0 168.9 170.1 174.3 175.9 179.9 178.7 182.3 182.1 IS2.2 182.4 182.4 21 Other 783.5 820.9 833.8 840.0 848.9 863.8 873.4 883.4 890.6 886.4 879.7 875.8 22 Borrowings 149.6 163.3 162.9 165.3 174.3 182.3 186.2 183.1 187.2 182.6 182.8 181.9 23 From banks in the U.S 68.9 79.0 78.6 79.8 83.1 86.8 87.6 82.6 85.7 82.4 82.9 81.5 24 From others 80.7 84.4 84.3 85.4 91.2 95.5 98.5 100.5 101.5 100 1 99.9 100.4 25 Net due to related foreign offices 4.2 3.7 3.7 37 4.7 3.6 3.6 10 3.5 3.1 27 2.8 26 Other liabilities 27.5 30.1 3C.7 30.6 31.4 32.1 31.1 31.5 30.9 30.8 31.6 27 Total liabilities M12.9 1,470.1 1,484.8 1500.6 1519.1 1346.8 15605 1569J 1567.4 1569.0 1567.7 1575.5 28 Residual {assets less liabilities)7 121.1 139.7 143.2 144.6 142.3 143.0 141.1 136.0 138.1 137.1 134.9 135.6 Not seasonally adjusted Assets 29 Bank credit 1.375.6 1.431.5 1,447.0 1.459.7 1,470.8 1,494.6 1,513.7 1.508.6 1,513.7 1.510.0 1,507.8 1.505.4 30 Securities in bank credit 395.6 406.3 410.7 413.8 420 1 430.0 439.4 440.1 442.0 441.9 439.6 438.4 11 U.S. government securities 311.4 312.9 314.9 316.9 320.2 327.5 333.8 333.0 334.5 334.9 132.5 331.7 32 Other securities 84.2 935 95.8 96.9 99.9 102.5 105.6 107.1 107.5 107.0 107.0 1067 33 Loans and leases in bank credit2 980.0 1.025.2 1,0.16.1 1.045.9 1,050.7 1.064.6 1,074.3 1,068.4 1,071.8 1.068.1 1.068.2 1,067 0 34 Commercial and industrial 176.4 185.8 187.7 190.1 192 0 194.3 196.8 196.8 197.2 196.6 197.0 196.4 35 Real estate 530.0 561.1 569.9 576.0 580.5 590.5 596.9 597.4 597.4 596.8 597.4 597.6 36 Revolving home equity 28.1 28.7 28.9 29.2 29.1 29.6 29.6 29.3 29.4 29.3 29.3 29 2 37 Other 501.9 532.4 541.0 546.8 551.4 560.9 567.3 568.1 568.0 567.5 568 1 568.3 38 Consumer 203.4 199.6 1988 199.4 198.0 199.7 202.2 199.4 200.1 199.3 199.4 199.5 39 Security1 53 6.0 6 1 6.3 6.5 6.7 6.4 6.0 6.3 6.1 60 5.8 40 Other loans and leases M.9 72.7 738 74.2 717 73.4 72.0 68.9 70.7 69.3 68.5 67.8 41 Interbank loans 52.5 63.0 65.9 69.5 74.8 78.4 72.0 68.5 73.1 70.2 67.1 64.1 42 Cash assets4 64.2 64.0 64.3 67.2 66.4 70.4 71.0 71.0 72.2 69.5 75.7 67.8 43 Other assets' 56.0 64.6 64.2 66.8 67.8 72.9 72.8 72.0 74.8 72.4 70.8 69.8 44 Total assets* 1529.4 1,6035 1.621.8 1,6435 1,660.1 1,696.4 1,709.6 1,700.2 1,714.0 l,702J 1,7015 1,687.2 Liabilities 45 Deposits 1,230.1 1,267.4 1,281.0 1,297.6 1.306.8 1.335.1 1.346.0 1.350.4 1,362.4 1,352.5 1,351.4 1,337.2 46 Transaction 286.4 280.4 279.5 284.4 282.2 289.1 296.7 288.4 294.4 286.9 292.9 284.3 47 Nontransaclion 943.7 987.0 1,001.5 1,013.2 1,024.6 1.046.0 1,049.3 1,062.0 1,068.0 1,065.6 1,058.5 1,052.9 48 Large nine 164.0 168.9 170.1 174.3 175.9 179.9 178.7 182.3 182.1 182.2 182.4 182.4 49 Other 779.7 818.1 S31.5 838.8 848.8 866.1 870.6 879.7 885.9 883.4 876.2 870.5 50 Borrowings IWS 163.4 164.2 168.6 174.7 181.8 186.9 183.9 182.2 182.6 186.2 186.1 51 From banks in the U.S 69 3 79.2 79.4 81.0 82.6 85.7 87.7 83.0 83.4 82.5 84.6 83.5 52 From others 812 84.2 84.8 87.7 92.2 96.1 99.2 100.9 98.7 100.1 101.6 102.6 53 Net due t-.i related foreign offices 4.2 3.7 17 3.7 4.7 3.6 3.6 3.0 3.5 3.1 2.7 2.8 54 Other liabilities 27.5 30.1 30.7 30.6 31.4 32.2 32.1 31.1 31.6 11.5 30.9 30.8 55 Total liabilities 14124 1,4645 1,479.6 15005 1517.6 1552.6 1568.6 15685 1579.7 1569.7 1571.1 1556.9 56 Residual (assets less liabilities)7 .... 117.0 139.0 142.2 143.0 142.5 143.8 141.0 131.7 134.3 132 6 130.4 130.4 MEMO 57 Mortgage-backed securities4 45.1 50.1 51.6 53.2 55.3 59.3 61.9 62.5 62.7 62.7 62.4 62.1 Foolnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics • April 1999 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities'—Continued E. Foreign-related institutions Billions of dollars Monthly averages Wednesday figures 1999 1999 July Sept. Oct. Nov. Dec. Jan. Jan. 6 Jan. 13 Seasonally adjusted Assets 1 Bank credit 574.9 572.1 588.4 604.6 624.8' 620.2' 601.2' 595.6 590.2 595.1 598.1 602.7 2 Securities in bank credit 199.6 201.1 212.4 215.4 222.r/ 223.9 216.8' 219.3 216.8 218.8 219.4 222.8 3 U.S. government securities . .. 83.5 91.0 94.1 82.2 80.2 80.5 81.0 84.1 82.8 83.2 83.6 86.6 4 Other securities 116.1 110.1 118.4 133.2 141.8r 143.4 135.8' 135.1 134.0 135.5 135.9 136.2 5 Loans and leases in bank credit 375.2 371.0 376.0 389.2 402.8 396.3' 384.4 376.3 373.4 376.4 378.6 379.9 6 Commercial and industrial . . . 221.6 214.1 214.1 218.0 223.8 223.9 218.0 213.2 210.6 212.5 214.4 214.4 7 Real estate 27.6 23.9 23.9 23.6 23.3 22.0 20.7 20.8 20.6 20.9 20.7 20.7 8 Security1 563 62.0 64.2 67.6 69.6 65.0 66.0 68.8 67.6 69.0 71.0 70.5 9 Other loans and leases 59.8 70.9 73.9 80.0 86.1 85.4 79.7 73.5 74.6 73.9 72.6 74.4 10 Interbank loans 28.3 21.0 20.0 28.4 25.4 26.5 27.1 28.2 25.0 27.0 30.7 29.2 11 Cash assets4 33.4 35.0 33.8 34.0 35.4 33.5 33.9 35.2 35.1 36.0 37.8 33.4 12 Other assets5 40.7 34.1 35.7 37.9 39.2 36.6 39.1 38.1 38.0 38.3 40.1 36.6 13 Total assets6 677 A 661.9 677.6 704.6 7245 716.5' 701.0r 696.9 688.0 706J 701.7 Liabilities 14 Deposits 277.1 297.6 305.9 314.5 318.9 315.2' 307.3 316.2 311.3 318.4 318.4 315.8 15 Transaction 11.7 13.7 12.3 15.3 15.2 12.3 10.7 12.4 11.8 11.9 12.8 12.6 16 Nontransaction 265.4 283.9 293.6 299.2 303.7 302.9' 296.6 303.8 299.5 306.5 305.6 303.2 17 Borrowings 149.6 167.7 165.2 178.9 185.5 185.6 179.4 175.6 172.4 174.0 181.1 177.6 18 From banks in the US 23.8 25.8 21.9 30.2 32.0 33.4 28.5 24.0 21.9 24.2 24.3 24.2 19 From others 125.8 141.9 143.3 148.8 153.5 152.2 150.9 151.6 150.5 149.8 156.8 153.5 20 Net due to related foreign offices 144.3 107.8 110.2 97.1 109.1 102.2' 102.3 99.2 101.8 99.0 98.7 94.5 21 Other liabilities 96.9 93.5 99.3 104.0 107.4' 102.3 100.8' 97.2 96.6 98.3 97.3 97.6 22 Total liabilities 6675 666.6 680.7 694.6 720.91- 7054' 689.8 688J 682.0 689.7 695.5 685.6 23 Residual (assets less liabilities)7 . . 9.1 -4.7 -3.1 10.0 II.1 11.2 Not seasonally adjusted Assets 24 Bank credit 571.5 574.9 590.8 599.3 624.1' 612.6' 599.7' 591.6 588.8 591.8 592.0 596.0 25 Securities in bank credit 194.1 203.9 216.6 212.0 222.3' 218.6' 212.6 213.1 211.0 213.3 211.7 215.5 26 U.S. government securities 81.5 90.7 94.8 82.2 80.8 81.4 80.7 82.0 80.9 81.9 81.3 83.1 27 Trading account 14.7 25.3' 3I.0F 20.6' 16.7' 14.4' 15.6 17.9 16.8 17.9 16.9 19.7 28 Investment account 66.8 65.4' 63.8' 61.6' 64.1' 67.01 65.2 64.1 64.1 64.0 64.5 63.4 29 Other securities 112.6 113.2 121.7 129.8 141.5 137.2' 131.9 131.1 130.1 131.4 130.4 132.4 30 Trading account 70.4' 70.7' 76.5' 84.8' 91.8' 84.3' 79.6 79.8 77.5 79.6 78.7 82.4 31 Investment account 42.2 42.5' 45.2' 45.0' 49.8' 52.8' 52.3 51.3 52.6 51.8 51.7 50.0 32 Loans and leases in bank credit2 . . 377.5 371.1 374.3 387.3 401.8' 394.0 387.0 378.5 377.8 378.5 380.3 380.5 33 Commercial and industrial 222.4 213.9 213.0 216.9 223.7 223.6' 218.9 214.1 213.0 213.5 214.9 214.6 3 3 3 3 3 3 7 8 9 4 5 6 C O In a t t h s e h e rb r O R S a a a e e t s n h s c a s k s u e l e e r t r l e t s i o s t s 4 l y 5 o a ta 3 n a t n s e s and leases 4 2 5 7 2 3 1 6 3 1 7 8 . . . . . . 1 4 4 0 6 3 7 2 6 2 3 3 2 3 3 4 1 1 . . . . . . 1 7 7 8 4 0 2 6 7 2 3 3 3 6 3 0 4 3 . . . . . . 8 5 4 0 2 7 2 6 7 2 3 3 4 3 9 7 8 7 . . . . . . 1 5 5 4 4 9 2 6 2 3 3 8 8 9 5 3 5 4 . . . . . . 3 7 7 5 4 8 2 6 8 2 3 3 6 4 4 7 2 3 . . . . . . 5 4 7 0 3 5' 6 2 3 2 8 3 7 5 7 0 9 0 . . . . . . 1 5 1 8 8 3 2 6 7 2 3 3 5 0 8 4 8 8 . . . . . . 1 8 8 8 6 2 2 6 7 2 3 3 5 5 6 8 0 8 . . . . . . 5 0 1 3 7 0 2 6 7 2 3 3 7 6 9 1 9 5 . . . . . . 0 0 0 0 0 0 4 2 7 7 3 3 0 3 7 0 0 1 . . . . . . 0 7 4 7 7 0 7 7 2 3 3 2 3 7 5 9 0 0 . . . . . . 1 0 3 2 0 6 40 Total assets6 674.1 664.2 680.9 6994 7233r 710Jr 701.8' 6933 6874 6915 699.9 695.1 Liabilities 41 Deposits 275.1 295.8 304.6 316.1 318.4 314.2' 310.5 314.0 309.6 315.7 315.3 314.7 42 Transaction 11.6 13.8 12.2 15.9 15.2 12.3 11.2 12.3 12.0 11.8 12.7 12.2 43 Nontransaction 263.5 282.0 292.4 300.1 303.1 302.0 299.3 301.7 297.6 303.9 302.6 302.5 44 Borrowings 149.6 167.7 165.2 178.9 185.5 185.6 179.4 175.6 172.4 174.0 181.1 177.6 45 From banks in the US 23.8 25.8 21.9 30.2 32.0 33.4 28.5 24.0 21.9 24.2 24.3 24.2 46 From others 125.8 141.9 143.3 148.8 153.5 152.2 150.9 151.6 150.5 149.8 156.8 153.5 47 Net due to related foreign offices 149.1 104.2 106.9 95.6 108.1 102.9' 106.9 103.4 106.1 103.0 102.8 101.4 48 Other liabilities 97.0 92.8 99.3 103.7 107.1' 103./ 101.7 97.3 96.3 98.0 97.1 98.4 49 Total liabilities 670.8 6605 676.0 694.3 7i9.r 7064r 6984 690.3 684J 690.6 696J 692.1 50 Residual (assets less liabilities)7 3.3 3.1 2.9 3.6 MEMO 51 Revaluation gains on off-balance-sheet items8 44.5 41.9' 44.2' 48.7' 52.0' 47.91 48.1 46.0 45.9 46.7 45.7 45.4 52 Revaluation losses on off-balancesheet items8 43.2 40.2 42.2' 45.4' 47.6' 44.2' 44.5 42.1 42.0 42.9 42.2 41.6 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A21 NOTES TO TABLE 1.26 NOTE. Tables 1.26, 1.27, and 1.28 have been revised to reflect changes in the Board's H.8 group that contained the acquired bank and put into past data for the group containing the statistical release, "Assets and Liabilities of Commercial Banks in the United States." Table acquiring bank. Balance sheet data for acquired banks are obtained from Call Reports, and a 1.27, "Assets and Liabilities of Large Weekly Reporting Commercial Banks," and table 1.28, ratio procedure is used to adjust past levels. "Large Weekly Reporting U.S. Branches and Agencies of Foreign Banks," are no longer 2. Excludes federal funds sold to, reverse RPs with, and loans made to commercial banks being published in the Bulletin. Instead, abbreviated balance sheets for both large and small in the United States, all of which are included in "Interbank loans." domestically chartered banks have been included in table 1.26, parts C and D. Data are both 3. Consists of reverse RPs with brokers and dealers and loans to purchase and carry merger-adjusted and break-adjusted. In addition, data from large weekly reporting 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 ntta 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 ^classifications government-sponsored enterprises, and private entities. of asselsand liabilities. 10. Difference between fair value and historical cost for securities classified as avaiiable- 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 nonfmancial businesses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Financial Statistics • April 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 1994 1995 1996 1997 1998 July Aug. Sept. Oct. Nov. Dec. Dec. Dec. Dec. Dec. Dec. 1 All issuers 555,075 595,382 674,904 775,371 966,699 1,091,554 1,102,307 1,119,816 1,152,337 1,150,213 1,159,027 Financial companies1 2 Dealer-placed paper2, total 218,947 223,038 275.815 361.147 513,307 597,193 616,382 606.355 639,571 627,170 621,246 3 Directly placed paper3, total 180,389 207,701 210,829 229,662 252,536 276,476 266,022 281,927 271,526 289,184 304,545 4 Nonfinancial companies4 155,739 164,643 188,260 184,563 200.857 217,885 219.904 231,534 241,239 233,859 233,236 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 olher 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), US 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 t a e ge 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 1999—Jan 7.75 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 Capita! Markets Percent per year; figures are averages of business day data unless otherwise noted 1998 1999 1999, week ending Item 1996 1997 1998 Oct. NQV. Dec. Jan. Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 MONEY MARKET INSTRUMENTS 1 Federal funds121 5.30 5.46 5.35 5.07 4.83 4.68 4.63 4.48 4.30 4.75 4.64 4.66 2 Discount window borrowing2'4 5.02 5.00 4.92 4.86 4.63 4.50 4.50 4.50 4.50 4.50 4.50 4.50 Commercial paper56 Nonfinancial 5 57 5 40 5.14 500 5 24 4.80 5 24 481 481 4 78 4 79 4 2-month n.a. 5.57 5.38 5.08 5.14 5.12 4.78 5.02 4.80 4.79 4.77 4.76 5.56 5.34 5.04 5.06 5.00 4.77 4.95 4.78 4.79 4.76 4.75 Financial 5 59 5 42 5 18 504 531 4 83 5 21 4 85 4 85 4 80 4 81 7 2-month n.a. 5.59 5.40 5.12 5.19 5.13 4.81 5.04 4.84 4.84 4.79 4.77 8 3-month n.a. 5.60 5.37 5.09 5.15 5.04 4.81 5.02 4.84 4.84 4.79 4.78 Commercial paper (historical) 9 1 -month 5.43 5.54 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 3-month 5.41 5.58 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5.42 5.62 Finance paper, directly placed (historical)'"" 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 5.29 5.48 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14 6-month 5.21 5.48 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Bankers acceptances'" 15 3-month 5.31 5.54 5.39 5.12 5.15 5.08 4.80 5.14 4.85 4.80 4.76 4.78 5.31 5.57 5.30 4.88 4.92 4.91 4.73 4.99 4.78 4.73 4.68 4.72 Certificates of deposit, secondary marker1'^ 5 15 5 54 5 49 5.24 5 16 5 47 4.89 5.29 4 94 4 90 4.86 4.86 18 3-month 5.39 5.62 5.47 5.21 5.24 5.14 4.89 5.09 4.93 4.91 4.87 4.86 19 6-month 5.47 5.73 5.44 4.99 5.07 5.01 4.90 5.03 4.93 4.92 4.88 4.87 20 Eurodollar deposits, 3-month3'" 5.38 5.61 5.45 5.17 5.21 5.13 4.88 5.06 4.93 4.90 4.84 4.83 U.S. Treasury bills Secondary market^ 5.01 5.06 4.78 3.96 4.41 4.39 4.34 4.44 4.36 4.35 4.26 4.35 22 6-month 5.08 5.18 4.83 4.05 4.42 4.40 4.33 4.45 4.38 4.33 4.30 4.30 5.22 5.32 4.80 3.95 4.33 4.32 4.31 4.38 4.35 4.30 4.29 4.30 Auction high35 l2 5.02 5.07 4.81 4.08 4.44 4.42 4 34 4.52 4.38 4.39 4.28 4.31 25 6-month 5.09 5.18 4.85 4.15 4.43 4.43 4.36 4.53 4.42 4.41 4.31 4.28 26 1-year 5.23 5.36 4.85 4.06 4.40 4.31 4.34 4.34 n.a. U.S. TREASURY NOTES AND BONDS Constant maturities^ 27 1-year 5.52 5.63 5.05 4.12 4.53 4.52 4.51 4.59 4.55 4.51 4.49 4.51 28 2-year 5.84 5.99 5.13 4.09 4.54 4.51 4.62 4.61 4.64 4.61 4.63 4.59 29 3-year 5.99 6.10 5.14 4.18 4.57 4.48 4.61 4.60 4.63 4.61 4.62 4.58 30 5-year 6.18 6.22 5.15 4.18 4.54 4.45 4.60 4.59 4.63 4.61 4.60 4.56 31 7-year 6 34 6 33 5 28 4.46 4 78 4.65 4.80 4.75 4.81 4.83 4.80 4.74 32 10-year 6.44 6.35 5.26 4.53 4.83 4.65 4.72 4.70 4.76 4.75 4.70 4.67 33 20-year . 6.83 6.69 5.72 5.30 5.48 5.36 5.45 5.42 5.47 5.49 5.44 5.39 34 30-year ... 6.71 6.61 5.58 5.01 5.25 5.06 5.16 5.12 5.20 5.17 5.14 5.12 Composite 35 More than 10 years (long-term) 6.80 6.67 5.69 5.24 5.43 5.29 5.39 5.36 5.42 5.43 5.38 5.32 STATE AND LOCAL NOTES AND BONDS Moody's series14 5 52 5 32 4 93 4 76 4 87 4 83 4.85 4.86 4 89 491 4.85 4.75 37 Baa 5.79 5.50 5.14 5.10 5.15 5.17 5.21 5.19 5.21 5.21 5.22 5.19 5 76 5 52 5 09 4 93 5 03 4 98 5.01 500 5.05 5 02 5.01 4.96 CORPORATE BONDS 39 Seasoned issues, all industries 7.66 7.54 6.87 6.77 6.87 6.72 6.76 6.77 6.81 6.78 6.74 6.71 Rating qraup 40 Aaa 7.37 7.27 6.53 6.37 6.41 6.22 6.24 6.26 6.28 6.26 6.22 6.19 41 Aa 7 55 7 48 6 80 6 70 6 79 6.65 6 68 6 68 6.73 6.71 6 66 6.63 42 A 7.69 7.54 6.93 6.85 6.95 6.80 6.84 6.83 6.88 6.86 6.82 6.79 43 Baa 8.05 7.87 7.22 7.18 7.34 7.23 7.29 7.27 7.34 7.30 7.27 7.24 MEMO Dividend-price ratio17 2.19 1.77 1.49 1.59 1.43 1.37 1.30 1.33 1.27 1.31 1.29 1.31 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.15 (519) weekly and 10. An average of dealer offering rates on nationally traded certificates of deposit. G.13 (415) monthly statistical releases. For ordering address, see inside front cover. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Financial Statistics • April 1999 1.36 STOCK MARKET Selected Statistics 1998 1999 Indicator 1996 1997 1998 May June July Aug. Sept. Oct. Nov. Dec. Jan. Prices and trading volume (averages of daily figures)1 Common slock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 357.98 456.99 550.65 574.46 569.76 586.39 539.16 506.56 511.49 564.26 576.05 595.43 453.57 574.97 684.35 712.39 731.01 718.54 665.66 629.51 636.62 704.46 717.14 741.43 3 Transportation 327.30 415.08 468.61 505.02 492.98 503.89 441.36 408.75 396.61 442.95 456.70 479.72 4 Utility 126.36 143.87 190.52 198.25 188.26 189.95 186.24 186.17 195.09 206.29 215.57 224.75 303.94 424.84 516.65 551.28 548.57 579.67 511.22 454.28 448.12 50145 510.31 523.38 6 Standard & Poor's Corporation (1941-43 = 10)2 670.49 873.43 1,085.50 1,108.42 1.108.39 1,156.58 1.074.62 1.020 64 1.032.47 1.144.43 1,190.05 1,248.77 7 American Stock Exchange (Aug. 31, 1973 = 50)' 570.86 628.34 682.69 735.02 704.59 724.83 655.67 621.48 607.16 667.60 660.76 704.22 Volume of trading (thousands of shares) 8 New York Stock Exchange 409,740 523,254 666,534 569,239 605,576 639,744 712,710 790,238 808,816 668.932 680,397 847,135 9 American Stock Exchange 22,567 24.390 28,870 27,004 25.447 26.473 32.721 33.331 31,946 27.266 28.756 31,015 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers4 97,400 126,090 140,980 143,600 147,700 154,370 147,800 137,540 130,160 139,710 140,980 153,240 Free credit balances at brokers^ 11 Margin accounts6 22,540 31,410 40,250 26,200 29.840 31,820 3S.460 41,970 43,500 40.620 40,250 36,880 40,430 52.160 62,450 47,770 51.205 53,780 53,850 54,240 54,610 56.170 62,450 59,600 Margin requirements (percent of market value and effective date)7 Mar. 11. 1968 June 8. 1968 May 6, 1970 Dec 6. 1971 Nov. 24. 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. Daily data on prices are available upon request to the Board of Governors. For ordering 6. Series initiated in June 1984. address, see inside front cover. 7. Margin requirements, slated in regulations adopted by the Board of Governors pursuant 2. In July 1976 a financial group, composed of banks and insurance companies, was added to the Securities Exchange Act of 1934, limit the amount of credit that can be used to to the group of stocks on which the index is based. The index is now based on 400 industrial purchase and cany "margin securities" fas 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; Regulaiion G, effective Mar. II, 1968; and Regulation X. effective Nov. !, 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 1997 1998' Aug. Sept. Oct. US. budget' 1 Receipts, total 1,453,062 1,579,292 1,721,798 111,741 180,936 119,974 113,978 178,646 171,722 2 On-budget 1,085,570 1,187,302 1,305,999 79,135 149,726 90,064 81,836 143,337 129,921 3 Off-budget 367,492 391,990 415,799 32,606 31,210 29,910 32,142 35,309 41,801 4 Outlays, total 1,560,512 1,601,235 1,652,552 122,907 142,725 152,436 131,095 184,056 101,386 5 On-budget 1,259,608 1,290,609 1,335,948 92,555 107,900 123.687 100,078 149,401 102,489 6 Off-budget 300,904 310,626 316,604 30,352 34,814 28.749 31.017 34,655 -1,103 7 Surplus or deficit (-). tola] -107,450 -21,943 69,246 -11,166 38.222 -32,462 -17.117 -5,410 70.336 8 On-budget -174.038 -103,307 -29,949 -13,420 41,826 -33.623 -18,242 -6.064 27,432 9 Off-budget 66,588 81,364 99,195 2,254 -3,604 1,161 1,125 654 42,904 Source of financing (lolal) 10 Borrowing from the public 129,712 38,171 -51,049 33,989 -46,413 15,330 22,364 -5,390 -31,249 11 Operating cash (decrease, or increase {-)).. -6.276 604 4,743 -362 -2,451 2.661 20,335 -1,621 -39,567 12 Other2 -15,986 -16,832 -22,940 -22,461 10.642 14,471 -25,582 12,421 480 MEMO 13 Treasury operating balance (level, end of period) 44,225 43,621 38,878 36,427 38,878 36,217 15,882 17,503 57,070 14 Federal Reserve Banks 7,700 7,692 4,952 6,704 4,952 4,440 5,219 6,086 7,623 15 Tax and loan accounts 36,525 35,930 33,926 29,722 33.926 31,776 10,663 11,417 49,446 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 • April 1999 1.39 US. BUDGET RECEIPTS AND OUTLAYS' Millions of dollars Fiscal year Calendar year Source or type 1998 H2 Jan. All suurces . 1,579,292 1,721,798 845,527 773,812 922,632 824,998 113,978 178,646 171,722 2 Individual income taxes, net 737,466 828,586 400,436 354,072 447,514 392,332 51,341 75.988 99,857 3 Withheld 580,207 646,483 292,252 306.865 316,309 339,144 52,530 69.628 58.527 4 Nonwithheld 250,753 281,527 191.050 58,069 219,136 65,204 2,214 7,094 42.324 5 Refunds 93,560 99,476 82.926 10,869 87,989 12,032 3,404 734 994 Corporation income taxes 6 Gross receipts 204,493 213,249 106,451 104,659 109,353 104,161 4,805 45,123 7.185 7 Refunds 22,198 24,593 9,635 10,135 14,220 14,250 1,364 2.749 2,055 8 Social insurance taxes and contributions, net 539,371 571,831 288,251 260,795 312,713 268,466 45,926 48.601 54,928 9 Employment taxes and contributions2 . . . 506,751 540,014 268,357 247,794 293,520 256,142 42,940 47,869 53,725 10 Unemployment insurance 28.202 27,484 17,709 10,724 17,080 10,121 2,655 315 867 11 Other net receipts* 4,418 4.333 2.184 2,280 2,112 2.202 331 417 337 12 Excise taxes 56,924 57,673 28,084 31,133 29.922 33,366 6,021 5,446 4 806 13 Customs deposits 17,928 18,297 8,619 9,679 8,546 9,838 1,380 1,472 1,286 14 Estate and gift taxes 19,845 24,076 10,477 10,262 12,971 12,359 2,132 2,239 2,206 15 Miscellaneous receipts4 . . . 25,465 32,658 12.866 13,348 15.837 18.735 3,738 2,527 3,509 OUTLAYS 16 All types 1,601,235 1.652,552 797,418 824370 815,886 877.026 131,095 184,056 101.386 17 National defense 270,473 268,456 132,698 140,873 129,351 140.196 18,173 27,178 19,270 18 International affairs 15.228 13,109 5,740 9,420 4,610 8.296 4,924 822 1,179 19 General science, space, and technology. 17.174 18,219 8,938 10.040 9,426 10,142 1,558 1,918 1,398 20 Energy 1,483 1,270 803 411 957 699 -218 151 -107 21 Natural resources and environment .... 21,369 22,396 9,628 11.106 10,051 12,671 2,080 2.545 1.458 22 Agriculture 9,032 12,206 1,465 10,590 2,387 16,757 5,620 3,238 3.939 23 Commerce and housing credit -14,624 1,014 -7,575 -3,526 -2,483 4,046 -701 -1,821 745 24 Transportation 40,767 40,332 16,847 20,414 16.196 20,834 3,447 3,400 2.558 25 Community and regional development . 11,005 9,720 5,678 5.749 4,863 6,972 1,405 1,505 709 26 Education, training, employment, and social services 53,008 54,919 25,080 26,851 27,245 4,111 5.465 5.136 27 Health 123,843 131,440 61,809 63,552 65.053 67.836 10,477 11,757 10,984 28 Social security and Medicare 555,273 572,047 278,863 283,109 286.305 316,809 43,728 79,633 15,248 29 Income security 230.886 233,202 124.034 106,353 125,196 109,481 14,644 21,945 17,349 30 Veterans benefits and services . . . 39,313 41,781 17,697 22,077 19,615 22,750 1,841 5,305 1.828 31 Administration of justice 20,197 22,832 10.670 10,212 11,287 12,041 2,067 2,132 2,090 32 General government 12,768 13,444 6.623 7.302 6,139 9,079 1,418 2,198 188 33 Net interest5 244,013 243,359 122.655 122.620 122,345 116,954 19,350 20,029 19.947 34 Undistributed offsetting receipts6 -49.973 -47,194 -24,235 -22.795 -21.340 -25,795 -2.828 -3,343 •2,530 1. Functional details do nol sum to total outlays for calendar year data because revisions to 4. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts. monthly totals have not been distributed among functions. Fiscal year total for receipts and 5. Includes interest received by trust funds. outlays do not correspond to calendar year data because revisions from the Budget have not 6. Rents and royalties for the outer continental shelf. U.S. government contributions for been fully distributed across months. employee retirement, and certain asset sales. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts SOURCE. Fiscal year totals: U.S. Office of Management and Budget, Budget of the U.S. 3. Federal employee retirement contributions and civil service retirement and Government. Fiscal Year 2000: monthly and half-year totals: U.S. Department of the Treadisability fund. sury, Monthly Treasury Sliitftnt'tit of Receipts and Outlays njthe U.S. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A27 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1996 1997 1998 hem Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding 5,357 5,415 5,410 5,446 5,536 5,573 5,578 5,556 5,643 2 Public debt securities 5,323 5.381 5.376 5.413 5,502 5,542 5.548 5,526 5.614 3 Held by public 3,826 3,874 3,805 3.815 3,847 3,872 3.790 3.761 n.a. 4 Held by agencies 1,497 1.507 1,572 1,599 1.656 1,670 1,758 1,766 n.a. 34 34 34 33 34 31 30 29 29 6 Held by public 27 26 26 26 27 26 26 26 n.a. 7 Held by agencies 8 8 7 7 7 5 4 4 n.a. 8 Debt subject to statutory limit 5,237 5,294 5,290 5,328 5,417 5,457 5,460 5,440 5,530 9 Public debt securities 5,237 5,294 5,290 5.328 5,416 5,456 5,460 5,439 5,530 10 Other debt1 0 0 0 0 0 0 0 0 0 MHMO 11 Statutory debt limit 5,500 5,500 5.500 5,950 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 participation certificates, notes to international lending organizations, and District of Colum- United States and Treasury Bulletin, bia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 1998 Type and holder 1995 1996 1997 1998 Ql Q2 Q3 Q4 1 Total gross public debt 4,988.7 5.323.2 5,502.4 5,614.2 5,542.4 5,547.9 5,526.2 5.614.2 By type 2 Interest-bearing 4,964.4 5,317.2 5,494.9 5,605.4 5.535.3 5,540.2 5,518.7 5,605.4 1 Marketable 3.307.2 3,459.7 3,456.8 3,355.5 3,467.1 3.369.5 3.331.0 3,355.5 4 Bills 760.7 777.4 715.4 691.0 720.1 641.1 637.7 691.0 5 Notes 2,010.3 2.112.3 2,106.1 1,960.7 2,091.9 2.064.6 2,009.1 1,960.7 b Bonds 521.2 555.0 587 ~i 621.2 598.7 598.7 610.4 621 2 7 Inflation-indexed notes and bonds' n.a. n.a. 31.0 50.6 41.5 50.1 41.9 50.6 8 Nonmarketable^ 1,657.2 1.857.5 2,038.1 2,249.9 2,068.2 2,170.7 2.187.7 2,249.9 9 State and local government scries 104.5 101.3 124 1 165.3 139.1 155.0 164.4 165.3 10 Foreign issues 40.8 37.4 36.2 34.3 35.4 36.0 35.1 34.3 11 Government 40.8 47.4 36.2 34.3 36.4 36.0 35.1 34.3 12 Public .0 .0 .0 .0 .0 .0 .0 .0 13 Savings bonds and notes 181.9 182.4 181.2 180.3 181.2 180.7 180.8 180.3 1 ?99 f, 1 505 9 1 666 7 1,840 0 1 681 5 1 769 1 1 777 3 1,840.0 15 Non-intcresl-bearing 24.3 6.0 7^5 7~2 7.7 7.5 8.8 By holder5 16 U.S. Treasury and other federal agencies and trust funds 1,304.5 1,497.2 1,655.7 J 1,670.4 1,757.6 1,765.6 17 Federal Reserve Banks 391.0 410.9 451.9 400.0 458.4 458.1 18 Private investors 3,294.9 3,411.2 3,393.4 3.430.7 3,330.6 3,301.0 19 Commercial banks 278.7 261.8 269.8 278.6 263.7 260.0 20 Money market fund'; 71.5 91.6 88.9 84.8 82.7 84.2 21 Insurance companies 241.5 214.1 224.9 182.2 185.0 IS80 22 Other companies 228.8 258.5 265.0 n.a. 268.1 267.2 271.4 n.a. 2.1 State and local treasuries 469.6 482.5 493.0 444.8 464.7 469 0 Individuals 24 Savings bonds 185.0 187.0 186 5 186.3 186.0 186.0 25 Other securities 162.7 169.6 168.4 165.8 165.0 166.4 26 Foreign and international'1 . . 862.2 1.135.6 1.278.0 1,240.3 1,248.6 1,217.2 27 Other miscellaneous investors •' 794.9 610.5 418.8 579.8 467.7 458.9 1. The U.S. Treasury first issued in flat ion-indexed securities during the first quarter of 7. In March 1996, in a redefinition of series, fully defeased debt backed by nonmarketable 1997. 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 Nonmarkctable series denominated in dollars, and series 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 other 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 U.S. 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 slate and local pension funds. Public Debt of the United States; data by holder, Treasury Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Financial Statistics • April 1999 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 1998 1998, weekending 1999. week ending Dec. Dec. 9 Dec. 16 Dec. 23 Dec. 30 Jan. 6 Jan. 13 Jan. 20 Jan. 27 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 30,362 35,010 30,397 39.754 35,490 31.544 22,028 27,504 33,896 33,260 36,190 26,287 Coupon securities, by maturity 2 Five years or less 131.248 111,370 76,147 93,540 97,507 78,916 61,226 56,767 72,845 118,962 104,193 96,151 3 More than five years 94,390 73,238 47,464 61,330 59,804 52,035 40,259 25,372 59,579 86,526 65,107 59,782 4 Inflation-indexed 386 157 Federal agency 1,497 602 415 259 239 236 3,681 1,200 814 1,188 5 Discount notes 41,600 Coupon securities, by maturity 46,265 43,274 38,998 40,902 38,054 36,437 50,075 41,964 44,280 38.565 6 One year or less 454 7 More than one year, but less than 700 856 716 693 975 953 1,443 1.252 993 866 or equal to five years 4,864 6,101 1,616 8 More than five years 4 640 3,461 3,491r 4.599 2,896 2,720 2,527 1,377 4,396 5,894 8.140 5.777 9 Mortgage-backed 92,708 3,894 2,413 2.048 99,250 2,230 2,378 24,278 5,965 4,790 2,150 3,425 68,053 59,167 62,512 63,416 37,763 77.398 122,401 61,252 72,919 By type of counterparty With interdealer broker 10 U.S. Treasury 146.311 121,806 84,186 104,774 107,472 91.709 65,449 56,682 92.672 132,703 117,858 103,225 11 Federal agency 3,478 2,223 2,193 2,327 3,568 1.806 1,517 1,390 3.582 4,185 4,001 3 347 12 Mortgage-backed 31,293 22,926 20.854 20,633 34,264 23,038 14,505 8,562 24.238 36,511 17,826 22.547 With other 13 US. Treasury 111,185 98,413 70,237 90,109 85,715 71,025 58,300 53,118 77,329 107,245 88,445 80,182 14 Federal agency 52,991 49,261 43,424' 45,914 47,483 42,172 40,778 38,260 58,297 49,715 51,561 45,285 15 Mortgage-backed 61,415 45,127 38,314 41,879 64,986 40,379 23,259 15,716 53,160 85,891 43,425 50,372 FUTURES TRANSACTIONS3 By type of deliverable security 16 U.S. Treasury bills 50 108 Coupon securities, by maturity 17 Five years or less 3,296 3,281 2,731 4,526 2,717 2,936 2,718 1,820 1,901 2,933 2,153 1.844 18 Mare than five years 19,467 16,164 10,292 14,928 12,523 11,200 8,845 5,211 12,874 21,370 14,667 13,964 19 Inflation-indexed 0 0 Federal agency 0 0 0 0 0 0 0 0 0 0 20 Discount notes Coupon securities, by maturity 0 0 0 0 0 0 0 0 0 0 21 One year or less 22 More than one year, but less than 0 0 0 0 0 0 0 0 0 0 or equal to five years 0 0 0 0 0 0 0 0 0 0 23 More than five years 0 0 0 0 0 0 0 0 0 0 24 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 OPTIONS TRANSACTIONS4 By type of underlying security 25 U.S. Treasury bill's Coupon securities, by maturity 26 Five years or less 1.685 1,145 934 1.209 684 1,242 864 733 1,241 1,632 1,818 2,054 27 More than five years 8,125 5,621 3.004 4,418 3,474 3,189 2,737 1,471 4,366 5.064 4,433 4,867 28 Inflation-indexed 0 0 0 0 0 0 0 0 Federal agency 0 0 0 0 29 Discount notes Coupon securities, by maturity 0 0 0 0 30 One year or less 31 More than one year, but less than 0 0 0 0 or equal to five years 0 0 0 0 0 0 0 0 0 0 32 More than five years 0 0 0 0 0 0 0 0 0 0 0 0 33 Mortgage-backed 862 0 0 822 1,258 781 326 743 1,287 1,242 2,319 674 912 806 1. Transactions are market purchases and sales of securities as reported to the Federal Forward transactions are agreements made in the over-the-counter market that specify Reserve Bank of New York by the U.S. government securities dealers on its published list of delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt primary dealers. Monthly averages are based on the number of trading days in the month. securities are included when the time to delivery is more than five business days. Forward Transactions are assumed to be evenly distributed among the trading days of the report week. contracts for mortgage-backed agency securities are included when the time to delivery is Immediate, forward, and futures transactions are reported at principal value, which does not more than thirty business days. include accrued interest; options transactions are reported at the face value of the underlying 3. Futures transactions are standardized agreements arranged on an exchange. All futures securities. transactions are included regardless of time to delivery. Dealers report cumulative transactions for each week ending Wednesday. 4. Options transactions are purchases or sales of put and call options, whether arranged on 2. Outright transactions include immediate and forward transactions. Immediate delivery an organized exchange or in the over-the-counter market, and include options on futures refers to purchases or sales of securities (other than mortgage-backed federal agency securi- contracts on U.S. Treasury and federal agency secunties. ties) for which delivery is scheduled in five business days or less and "when-issued" NOTE, "n.a." indicates thai data are not published because of insufficient activity. securities that 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 thirty 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 1999. week endng Item Oct. Nov. Dec. Dec. 2 Dec. 9 Dec. 16 Dec. 23 Dec. 30 Jan. 6 Jan. 13 Jan. 20 Positions2 NET OUTRIGHT POSITIONS1 Bv type of security 1 U.S. Treasury bills -9,335 -6,782 -4,551 2,294 4,374 -11,472 -9,773 -4,368 2,991 4,374 88 Coupon securities, by maturity 2 Five years or less 1,196 558 -5.388 -2,286 -5,282 -7,691 -5,142 -4,058 -7,257 -9,810 -9,523 3 More than five years 6,412 7,272 3,180 5,717 4,007 3.512 3,304 1,075 3.875 2,353 -1,570 4 Inflation-indexed 2.705 1.798 1,186 1,517 1.241 1,089 1,104 1,099 1,999 2,020 2,015 Federal agency 5 Discount notes 18,395 17,666 20,788 17,333 21,969 22,540 22,223 17,475 20,326 20,409 16,352 Coupon securities, by maturity 6 One year or less 1,870 2,188 2.075 2,251 1,958 2,297 1,895 2,000 2,780 2,726 2,832 7 More than one year, but less than or equal to live years 5,119 3,208 3.093 3,396 4,026 4.415 2,257 1,647 2,665 3,578 4,664 8 More than five years 6,797 5,584 '499 4,866 5,302 4,338 1,964 1,839 4,621 3,873 4,622 9 Mortgage-backed 48.954 37,219 38,689 33,233 41,692 39,932 37,331 37,624 36,834 24,444 20,520 NET FUTURES POSITIONS4 Bv type of deliverable security 10 U.S. Treasury bills n.a. 271 507 551 495 n.a. n.a. n.a. n.a. n.a. n.a. Coupon securities, by maturity 11 Five years or less -9.070 -4,399 -4,012 -6,203 -5,845 -4,215 -2,998 -2,852 -598 -490 -716 12 More than five years -24.562 -27,583 -24,757 -26,539 -26,034 -26,745 -23,356 -22,324 -25,164 -20,011 -18,637 1.1 Inflation-indexed 0 0 0 0 0 0 0 0 0 0 0 Federal agency 14 Discount notes 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 1b More than one year, but less lhan or equal lo live 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 18 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 NET OPTIONS POSITIONS Bv type of deliverable security 19 U.S.'Treasury bills '. 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 20 Five years or less -1,301 -2.128 -3,155 -2,418 -2,535 -3,260 -3,928 -3,282 -1,935 -58 838 21 More than five years -3.788 -1,602 -1,387 -752 -721 -1,275 -1,858 -1,624 -3.135 -1,569 -323 22 Inflation-indexed n.a. n.a. 0 0 0 0 0 0 0 0 0 Federal agency 23 Discount notes 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, bv maturity 24 One year or less 0 0 0 0 0 0 0 0 0 0 0 25 More than one year, but less than or equal lo five years 0 0 0 0 0 0 0 0 0 0 0 26 More than five vears n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 27 Mortgage-backed ' 3.160 2.380 1,213 1,458 479 1,087 1,815 1,286 2,032 3.064 3,736 Financing5 Reverse repurchase agreements 28 Overnight and continuing 278.468 240,639 242,653 248,942 250,409 265,083 226.311 228,433 232,698 231,128 249.350 29 Term 847,663 780,552 807,304 730,585 778.286 814,651 850,670 820,439 716,925 789,354 804,992 Securities borrowed 30 Overnight and continuing 234,431 210,066 205.654 209,357 206,947 205,544 203,289 204,256 216.303 221,630 226,469 31 Term 109,805 107.922 112,684 109,554 110,517 111,511 112,705 117,152 110.907 104,063 105,938 32 Overnight and continuing 2,851 3,174 2,952 3,186 2,816 3,203 3,304 2,478 2.537 2,480 2,537 33 Term 0 63 67 67 67 n.a. n.a. n.a. n.a. n.a. n.a. Repurdutse agreements 34 Overnight and continuing 666,957 588,736 608.988 614,567 612,649 646,524 598,564 576,474 610.018 620,080 674,334 35 Terra ' 777,445 709,894 713,037 634.759 685,047 705,563 758.512 738,282 622,805 668.796 702.050 Securities loaned 36 Overnight and continuing 8,157 8,943 9,369 9,424 9,863 9,803 7,669 9,987 10,325 9,871 10,455 17 Term 3 947 4,008 3,567 3,904 4,409 3,763 2,434 n.a. n.a. n.a. n.a. Securities pledged 38 Overnight and continuing 53.861 46,851 47.565 42,728 45,538 48,618 48.429 48,920 48,513 47,819 48.445 39 Term ." 5.112 3,556 5,075 4.576 4.610 5,279 5,207 5,287 5,483 5,777 5,725 Collateralized loans 40 Total 21.841 23,528 21,850 24.391 22,408 26,182 20,734 18.012 17.205 17,062 16,285 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 arc 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 bui have no specific maturity and can be terminated without advance notice by ha\e 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 thai settle on (he issue date of offering. Net immediate positions tor data are reported in tenns 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 • April 1999 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1998 Agency 1996 July Aug. Sept. Oct. 1 Federal and federally sponsored agencies. 738,928 844,611 925,823 1,022,609 1,172475 n.a. 2 Federal agencies 39,186 37,347 29,380 27,792 26,990 26,668 26,691 26,350 26.315 3 Defense Department1 6 6 6 6 6 6 6 6 6 4 Export-Import Bank2-1 3,455 2,050 1,447 552 n.a. n.a. n.a. Federal Housing Administration 116 97 84 102 156 174 205 Government National Mortgage Association certificates of participation5 n.a. n.a. n.a. n.a. n.a. Postal Service6 . 8,073 5,765 n.a. n.a. n.a. n.a. n.a. n.a. Tennessee Valley Authority 27,536 29,429 27,853 27,786 26,984 26,507 26,685 26,344 26..1O9 United States Railway Association6 n.a. n.a. n.a. n.a. n.a. n.a. 10 Federally sponsored agencies7.. 699,742 807,264 896.443 994,817 1,090,715 1.103,596 1,145,884 11 Federal Home Loan Banks . 205,817 243,194 263.404 313,919 328,009 334,494 343,188 367,274 373,755 12 Federal Home Loan Mortgage Corporation . 93,279 119,961 156,980 169,200 208,800 213,800 232,994 246,708 267,890 13 Federal National Mortgage Association 257,230 299,174 331,270 369,774 415,229 423,188 430,582 431,300 446,377 14 Farm Credit Banks8 53,175 57,379 60,053 63,517 64,528 57,910 64,332 60,720 66,086 15 Student Loan Marketing Association9 50,335 47,529 44,763 37,717 33,270 33,350 33,760 n.a. n.a. 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 Corporation 29,996 29,996 29,996 29,996 29,996 29,996 29.996 29,996 29,996 MEMO 19 Federal Financing Bank debt13 103,817 78,681 58,172 49,090 42,610 42,396 45,955 44,952 44,824 20 E Le 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 ' n d federally " . sponsored agencies 3,449 2,044 1,431 552 t t t 21 Postal Service6 8,073 5,765 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 3,200 24 United States Railway Association6 n.a. n.a. Other lending'4 25 Farmers Home Administration 33,719 21,015 18,325 13,530 10,900 9,756 9,500 9,500 9,500 26 Rural Electrification Administration 17,392 17,144 16,702 14,898 14,126 14,284 14,166 14,191 14,199 27 Other 37,984 29,513 21.714 20,110 17.584 18,356 22,289 21,261 21,125 1. Consists of mortgages assumed by the Defense Department between 1957 and 1963 10. The Financing Corporation, established in August 1987 to recapitalize the Federal under family housing and homeowners assistance programs. Savings and Loan Insurance Corporation, undertook its first borrowing in October 1987. 2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. 11. The Farm Credit Financial Assistance Corporation, established in January 1988 to 3. On-budget since Sept. 30, 1976. provide assistance to the Farm Credit System, undertook its first borrowing in July 1988. 4. Consists of debentures issued in payment of Federal Housing Administration insurance 12. The Resolution Funding Corporation, established by the Financial Institutions Reform, claims. Once issued, these securities may be sold privately on the securities market. Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 1989. 5. Certificates of participation issued before fiscal year 1969 by the Government National 13. The FFB, which began operations in 1974, is authorized to purchase or sell obligations Mortgage Association acting as trustee for the Farmers Home Administration, the Department issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt solely for the of Health, Education, and Welfare, the Department of Housing and Urban Development, the purpose of lending to other agencies, its debt is not included in the main portion of the table to Small Business Administration, and the Veterans Administration. avoid double counting. 6. Off-budget. 14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loans 7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Includes guaranteed by numerous agencies, with the amounts guaranteed by any one agency generally Federal Agricultural Mortgage Corporation, therefore details do not sum to total. Some data being small. The Farmers Home Administration entry consists exclusively of agency assets, are estimated. whereas the Rural Electrification Administration entry consists of both agency assets and 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is guaranteed loans. shown on line 17. 9. Before late 1982, the association obtained financing through the Federal Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A31 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars Type of issue or issuer, or use July Aug. Sept. Dec. 1 All issues, new and refunding1 . ... 171,222 214,694 262,342 29,665 22,599 20,344 17,526 19,528 19,325 24288 16,926 B\ type of issue 2 General obligation 60.409 69,934 87,015 10,135 6.515 5,812 5,619 6,791 5,433 8,632 6,925 3 Revenue 110,813 134,989 175,327 19,530 16,084 14.532 11,907 12,737 13,892 15,656 10,001 By type of issuer 4 State 13,651 18,237 23,506 2,809 1.972 1,483 1,280 1,865 778 2,561 318 5 Special district or statutory authority3 113,228 134,919 178,421 18,099 16,244 14,233 12,490 12,924 13,473 15,937 12,929 6 Municipality, county, or township .. 44,343 70,558 60,173 7,220 5,673 4,628 3,756 4,739 5,073 5.790 3,679 7 Issues for new capital 112,298 135,519 160,568 19341 15,895 11,258 9,106 12,736 12,452 14,517 11,917 By use of proceeds 8 Education 26,851 31,860 36.904 4,911 2.733 2,435 2,041 2,605 2.353 2,766 2,936 9 Transportation 12,324 13,951 19,926 2,962 3.677 1,982 918 1.598 806 1,800 1,706 10 Utilities and conservation 9,791 12,219 21,037 2,368 795 1,179 831 2,785 2,225 984 672 11 Social welfare 24,583 27.794 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 12 Industrial aid 6,287 6,667 8,594 563 1,002 709 315 471 638 1,376 452 13 Other purposes 32.462 35,095 42,450 5,279 4,674 2,764 2,726 3,359 3,242 4,477 4,439 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 Type of issue, offering, or issuer May July Aug. Sept. Nov.' 1 All issues1 n.a. n.a. 84,449 109,687 77,750 60,708 85,833 70,907 104,288 73,001 2 Bonds2 n.a. n.a. 70,313 93,243 68,133 57,145 81,352 62,692 95,910 65,140 By type of offering 3 Public, domestic 465.489 537,880 56,965 78,280 54,266 45,745 71,134 48,256 80,556 54,279 4 Private placement, domestic- n.a. n.a. 7,600 7,600 7,600 7,600 7,600 7,600 7,600 7,600 5 Sold abroad 83,433 103,188 5,748 7,363 6.267 3,800 2,618 6.837 7,754 3,261 By industry group 6 Nonfinancial 20,456 24,444 24,821 20,399 16,562 16,632 31,911 20,400 7 Financial 429,157 n.a. 49,857 68.799 43,313 36,746 64,790 46,060 63,999 44,741 8 Stocks2 122,006 117,880 126,577 14,700 17,111 9,772 3,725 4,640 8,655 8,902 8,492 Bv type of offering 9 Pubitc 117,880 126,577 14,700 17,1 9,772 4,640 8,655 8,902 8,492 10 Private placement3 n.a. n.a. n.a. n.a. By industry group 11 Nonfinancia! 80,460 60,386 73,944 9,271 10,248 6,390 2,560 2,266 5,879 6,145 7,390 12 Financial 41,546 57,494 52,633 5,429 6,863 3,382 1,165 2,374 2,776 2,757 1,102 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 • April 1999 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets' Millions of dollars 1998 1999 Item 1997 1998' June July Aug. Sept. Oct. Nov. Dec.' Jan. 1 Sales of own shares7 1,190,900 1,461,430 122,288 134,801 111,587 118,478 116,471 112,627 140,700 160,486 2 Redemptions of own shares 918,728 1,217,022 97,899 107,368 118,812 107,049 108,838 89,702 134,289 135,683 3 Net sales3 272.172 244,408 24,389 27,433 -7,225 11.429 7,633 22,925 6,412 24,802 4 Assets4 3,409,315 4,173,531 3,986,952 3,957,093 3,479,401 3,625,841 3,804,591 4,002,089 4,173,531 4301,012 5 Cash5 174,154 191,393 199,135 195,966 194,435 211,253 210,026 207,422 191,393 203,663 6 Other 3,235,161 3,982,138 3,787,817 3,761,127 3,284,967 3.414,588 3,594,565 3,794,667 3.982,138 4,097,349 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 reinvestmenl of net income dividends and capital gains distributions and share issue of conversions from one fund to another in the same group. 3. Excludes sales and redemptions resulting from transfers of shares into or out of money market mutual funds within the same fund family. 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars: quarterly data at seasonally adjusted annual rates 1997 1998 Account 1996 1997 1998 Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 1 Profits with inventory valuation and capital consumption adjustment 750.4 817.9 n.a. 794.3 815.5 840.9 820.8 829.2 820.6 827.0 n.a. 2 Profits before taxes 680.2 734.4 n.a. 712.4 729.8 758.9 716.4 719.1 723.5 720.5 n.a. 3 Profits-tax liability 226.1 246.1 n.a. 238.8 241.9 254.2 249.3 239.9 241.6 243.2 n.a. 4 Profits after laxes 454.1 488.3 n.a. 473.6 487.8 504.7 487.1 479 2 481.8 477.3 n.a. 261.9 275 1 279.2 274.1 274.7 275.1 276.4 277.3 278.1 279.0 282.3 6 Undistributed profits 192.3 213.2 n.a. 199.5 213.2 229.5 210.6 201.8 203.7 198.3 n.a. 7 Inventory valuation -1 2 6.9 n.a. 8.1 10.3 4.8 4.3 25.3 7.8 11.7 n.a. S Capita) consumption adjustment 71 4 76.6 92.2 73.8 75.5 77.2 80.1 849 89.4 94.8 99.7 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 Ql Q2 Q3 Q4 Ql Q2 Q3 ASSETS 1 Accounts receivable, gross' 541.7 607.0 637.1 648.0 651.6 660.5 663.3 667.2 676.0 688.6 2 Consumer 201.9 233.0 244.9 249 4 255.1 254.5 256.8 251.7 251.3 254 9 3 Business 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 5 LESS: Reserves for unearned income 5r9 60.7 55.6 51.3 57.2 54.6 52.7 52.1 53.2 52.4 6 Reserves for losses 113 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 3 583.9 581.2 593.1 597.6 601.9 609.6 622.9 8 All other 216.8 250.9 2900 289.6 306.8 289.1 312.4 329.7 340.1 313.7 9 Total assets 696.3 784 4 858 3 873.4 887.9 882.3 910.0 9316 949 7 936 6 LiABim its AND CAPITAL 10 Bank loans 14.8 15.3 19.7 18.4 18.8 20.4 24.1 22.0 22.3 24.9 11 Commercial paper 171.6 168.6 177.6 185.3 193.7 189.6 201.5 211.7 225.9 226.9 Debt 12 Owed to parent 41.8 51.1 60.3 61.0 60.0 61.6 64.7 64.6 60.0 58.3 13 Not elsewhere classified 247.4 300.0 332.5 3246 345.3 322.8 328.8 338.2 348.7 337.6 14 All other liabilities 146.2 163.6 174.7 189.2 171.4 190.1 189.6 193.1 188.9 185.4 15 Capital, surplus, and undivided profits 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 696.3 784.4 858.3 873.4 887.9 882.3 910.0 931.6 949.7 936.6 1. Includes finance company subsidiaries of bank holding companies but not of retailers 2. Before deduction for unearned income and loss and banks. Data are amounts carried on the balance sheets of finance companies; securitized pools are not shown, as they are not on the books. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Market and Corporate Finance A33 1.52 DOMESTIC FINANCE COMPANIES Owned and Managed Receivables' Billions of dollars, amounts outstanding 1998 Type of credit 1996 1997 1998 July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted I Total 761.9 809.8 885.1 840.6 846.4 853.5 867.2 872.7 885.1 307 7 327 7 356 2 336 6 339.1 343 9 351 7 353 8 356 2 3 Real estate 111.9 121.1 135.3 125.2 128.1 128.8 132.3 134.3 135.3 342.4 361.0 393.6 378.7 379.2 380.7 383.2 384.7 393.6 Not seasonally adjusted 5 Total 769.7 818.1 894.3 835.2 842.6 850.0 865.5 874.4 894.3 6 Consumer 310.6 330.9 359.8 336.5 340.5 344.9 351.2 353.9 359.8 86.7 87.0 103.1 91.7 95.3 96.2 97.6 99.0 103.1 8 Motor vehicle leases 92.5 96.8 93.0 97.3 96.9 94.9 94.6 94.4 93.0 9 Revolving" 32.5 38.6 36.0 29.6 30.2 29.3 34.6 34.7 36.0 10 Other3 33.2 34.4 33.2 35.0 34.7 34.6 34.6 34.6 33.2 Securitized assets4 36.8 44.3 54.8 50.2 49.2 51.8 51.6 53.4 54.8 12 Motor vehicle leases 8.7 10.8 14.7 10.8 10.7 14.2 14.4 14.2 14.7 0.0 0.0 6.7 5.3 5.3 5.3 5.3 5.3 6.7 14 Other 20.1 19.0 18.1 18.5 18.2 18.8 18.6 18.4 18.1 15 Real estale 111.9 121.1 135.3 125.2 128.1 128.8 132.3 134.3 135.3 16 One- to four-familv 52.1 59.0 75.1 65.9 68.6 68.4 72.2 74.1 75.1 17 Other 30 5 28.9 31 1 28 5 28.7 30 1 30 2 30.7 31.1 Securitized real estate assets4 28.9 33.0 29.0 30.6 30.7 30.2 29.8 29.4 29.0 19 Other 0.4 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 347 2 366 1 399 2 371 5 374.0 376 2 382 0 386.3 399.2 21 Motor vehicles 67.1 63.5 74.9 61.1 62.5 65.5 68.5 70.9 74.9 25.1 25.6 29.3 29.2 29.6 30.0 30.4 29.4 29.3 23 Wholesale loans5 33.0 27.7 33.5 21.0 22.0 24.2 27.0 30.3 33.5 90 10 2 12 1 10 9 10.9 11 1 11.2 12.1 25 Equipment 194.8 203.9 221.4 212.8 212.0 210.8 211.5 212.0 221.4 59.9 51.5 51.9 51.6 51.8 47.9 47.2 47.8 51.9 27 Leases 134.9 152.3 169.5 161.2 160.2 162.9 164.3 164.2 169.5 28 Other business receivables6 47.6 51.1 59.2 54.5 57.0 58.9 59.6 60.4 59.2 Securiti2ed assets4 29 Motor vehicles 24.0 33.0 27.0 26.3 25.9 24.5 25.0 25.8 27.0 30 Retail loans 2.7 2.4 2.3 2.2 2.1 2.0 1.9 2.4 2.3 21 3 30 5 24 7 24 1 23.8 22.5 23.2 23.4 24.7 32 Leases 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 11.3 10.7 11.5 11.5 11.4 11.3 12.0 11.8 11.5 4.7 4.2 5.2 5.1 4.9 4.9 5.6 5.4 5.2 35 Leases. 6.6 6.5 6.3 6.4 6.4 6.4 6.4 6.4 6.3 36 Other business receivables6 2.4 4.0 5.3 5.4 5.2 5.3 5.2 5.3 5.3 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 ihat 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 eslale loans are now included in this table. The new information has 3. Includes personal cash loans, mobile home loans, and loans to purchase other types of resulted in some ^classification of receivables among the three major categories (consumer, consumer goods such as appliances, apparel, boats, and recreation vehicles. real estate, and businessj 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 earned on the balance sheets of the loan originator. Includes finance company subsidiaries of bank holding companies but not of retailers and 5. Credit arising from transactions between manufacturers and dealers, that is, floor plan banks. Data in this table also appear in the Board's G.20 (422) monthly statistical release. For financing. ordering address, see inside front cover. 6. Includes loans on commercial accounts receivable, factored commercial accounts, and 1. Owned receivables are those carried on the balance sheet of the institution. Managed receivable dealer capital; small loans used primarily for business or farm purposes; and receivables are outstanding balances of pools upon which securities have been issued; these wholesale and lease paper for mobile homes, campers, and travel trailers. balances are no longer carried on the balance sheets of the loan originator. Data are shown Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Financial Statistics • April 1999 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1998 1999 July Aug. Sept. Oct. Nov. Dec. Jan. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 182.4 180.1 195.2 208.7 191.5 192.7 201.4 192.1 206.0 202.3 2 Amount of loan (thousands of dollars) 139.2 140.3 151.1 160.1 150.4 150.8 155.8 148.1 159.0 153.3 3 Loan-lo-pnce ratio (percent) 78.2 80.4 80.0 78.7 81.3 80.9 79.8 79.5 79.4 78.0 4 Maturity (years) 27.2 28.2 28.4 28.5 28.6 28.7 28.6 28.3 28.7 28.4 5 Fees and charges (percent of loan amount) 1.21 1.02 0.89 0.90 0.87 0.85 0.86 0.76 0.98 1.01 Yield {percent per year) 6 Contract rate 7.56 7.57 6.95 6.99 6.95 6.85 6.72 6.68 6.80 6.81 7 Effective rale1' 7.77 7.73 7.08 7.13 7.09 6.98 6.85 6.80 6.94 6.96 8 Contracl rale (HUD series)4 8.03 7.76 7.00 7.05 6.86 6.64 6.86 6.84 6.83 6.80 SECONDARY MARKETS Yield (percent per \ear] 9 FHA mortgages (Section 203)5 8.19 7.89 7.04 7.05 7.03 6.53 7.07 7.02 7.06 7.08 10 GNMA securities6 7.48 7.26 6.43 6.48 6.42 6.05 6.10 6.25 6.18 6.18 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of periodi 1 1 Total 287,052 316,678 414.515 359,827 366,890 375,665 386,452 399,804 414,515 418,323 12 FHA/VA insured 30,592 31,925 33.770 33,036 32 929 32.903 32,814 33,420 ?3.770 3.3,483 256,460 284,753 380.745 326,791 333.961 342,762 353,638 366,384 380,745 384,840 14 Mortgage transactions purchased (during period) 68,618 70,465 188,448 17,326 14,316 15,681 18,967 23,557 26,222 14,005 Mortgage commitments (during period) 15 Issued7 65,859 69,965 193.795 13.217 17.016 16.282 30.551 17,994 16,803 20,754 16 To sell8 130 1 298 1 880 419 233 249 193 0 434 0 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortizcwe htMin^b (end t>f period? 17 Total 137,755 164,421 255.010' 202.582 206.856 216.521 231,458 242.270 255,010' 257,062 18 FHA/VA insured 220 177 785' 456 489 569 569 602 785' 387 19 Conventional 137,535 164.244 254.225' 202,126 206,367 215,952 230,889 241,668 254,225' 256,675 Mortgage transactions (during period) 20 Purchases 125,103 117,401 267.402 22.605 21.507 25.366 20.629 23.986 34,299 27,672 21 Sales 119,702 114,258 250.565 22.263 20.634 24,294 19,472 22,660 28,024 31,422 22 Mortgage commitments contracted (during period)9 128,995 120,089 281.899 23,528 24,694 23,375 25,025 28,903 29,703 23,900 1. Weighted averages based on sample suncys uf mortgages originated by major institu- 6. Average net yields to investors on fully modified pass-through securities backed by tional lender groups for purchase of newly built homes; compiled by the Federal Housing mortgages and guaranteed by the Government National Mortgage Association (GNMA), Finance Board in cooperation with the Federal Deposit Insurance Corporation. assuming prepayment in twelve years on pools of thirty-year mortgages insured by the 2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. seller) to obtain a loan. 7. Does not include standby commitments issued, but includes standby commitments 3. Average effective interest rate on loans closed for purchase of newly built homes, converted. assuming prepayment a; the end of ten years. 8. Includes participation loans as well as whole loans. 4. Average contract rate on new commitments for conventional first mortgages; from U.S. 9. Includes conventional and government-underwritten loans. The Federal Home Loan Department of Housing and Urban Development (HUD). Based on transactions on the first Moitgage Corporation's mortgage commitments and mortgage transactions include activity day of the subsequent month. under mortgage securities ssvap 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 iFHA) for immediate delivery in the private secondary market. Based on transactions on first day of subsequent month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A35 1.54 MORTGAGE DEBT OUTSTANDING' Millions of dollars, end of period Type of holder and property 1995 Q3 Q4 Ql Q3P 1 All holders 4,392,794 4,602.654 4,929,422 5,180,913 5,279,327 5,379,351 5.502,583 5,642,865 Bv type oj 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 of 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 banks2 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 fo'ir-famtly .... 615,861 669,434 698,508 752,323 762,556 779,954 784.957 784.958 9 Mullifamily 39,346 43,837 46,675 49.166 50,642 51,790 52.175 53,049 10 Nonfarm, nonresidential 334,953 353.088 375,32' 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- lo 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 288 331 346 154 369 383 398 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 Mullifamily 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 7 8 8 7 25 Multifamily 0 0 0 0 0 0 0 0 26 Farmers 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 17,30! 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. nonresidentiui 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' Administrations 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 2.051 2,021 1,855 34 Resolution Trust Corporation 10,428 1.864 0 0 0 0 0 0 35 One- to tour-family 5,200 691 0 0 0 0 0 0 36 Multifamily 2.859 647 0 3 0 t) 0 0 37 Nonfarm. nonresidential 2.369 525 0 0 0 0 0 0 38 Farm 0 0 0 0 0 0 0 0 39 Federal Deposit Insurance Corporation 7,821 4,303 2,431 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 Nonfatm. 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.V2 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- lo four-family 3S.882 39.901 41,758 40,953 42.629 44 440 44.597 44,254 52 Muhtfamily 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 11.650 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- lo four-family 487.725 512.238 551,513 567,340 576.846 580.7! 5 607.469 633.124 59 Muliifjinily 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 27,48! 63 Farmers Home Administration4 19 II 3 2 2 64 One- to four-family 0 0 0 0 0 0 65 Multifamily 0 0 0 0 0 0 0 I) 66 Nonfarm. nonresidenlial 9 5 0 0 0 0 0 0 67 Farm 7 4 1 2 2 2 68 Private mortgage conduits 257.857 292,906 353.499 411,841 447,219 483.685 533,865 572,4 II 69 One- to four-family'1 208,500 227,800 261,900 299.400 318,000 .1.36,824 364,316 391.736 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 rbiir-fainily .... 368,366 371,789 375.798 405.988 413,057 421,100 425.010 436.052 75 Mullifamily 69,611 73.524 81,282 81,702 82,387 82,172 82.535 82,921 76 Nonfarm. nonresidential 72,445 75.097 109,143 112,485 112,636 I 13,283 114,182 117,803 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 live or more units. 6. Includes securilized home equity loans. 2. includes loans held hy nondeposil 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 lo 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 Fanners 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 Securilies and other sources the agency indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Financial Statistics • April 1999 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period Holder and type of credit 1996 1991 July Aug. Sepl. Oct. Seasonally adjusted 1 Total 1,181,913 1,233,099 1,308,376 1,269,844 1,277,412 1,285,346 1,297,171 1,301,122' 1,308,376 2 Automobile 392,321 413,369 447,181 428,121 432,240 434,964 436,966 441,342' 447,181 3 Revolving. . 499,486 531,140 558,592 543,612 548,747 552,462 557,093 556,404' 558,592 4 Other2 290.105 288,590 302,603 298,111 296,425 297,920 303,113 303,376' 302,603 Not seasonally adjusted 5 Total 1,211,590 1,264,103 1,340,919 1,262,958 1,277,611 1,288,362 1,299,809 1,309,001' 1,340,919 By major holder 6 Commercial banks 526,769 512,563 513,558 491.507 498.219 497,860 501,982 500,383 513,558 7 Finance companies 152,391 160,022 172,406 156,366 160,151 160,078 166,861 168,262 172,406 8 Credit unions 144,148 152,362 157,066 153,735 154.146 155,167 156,043 156,521' 157,066 9 Savings institutions 44,711 47,172 52,284 48.989 49,648 50,307 50,966 51,625 52.284 10 Nonfinancial business" 77,745 78.927 74,894 65,478 66,004 65,557 65,949 66,632 74,894 11 Pools of securitized assets4 265,826 313,057 370,711 346,883 349,443 359,393 358,008 365,578 370,711 By major type of credit 12 Automobile 395,609 416,962 451,138 429,723 434,924 438,965 442,255 445,467' 451.138 13 Commercial banks 157,047 155,254 157.928 153.203 155,508 156,287 156,788 157,126 157.928 14 Finance companies 86,690 87,015 103,115 91.741 95,257 96,183 97,637 98,954 103,115 15 Pools of securitized assets4 51,719 64,950 72,955 72.470 70,766 72,146 71,788 72,582 72.955 16 Revolving 522,860 555,858 584,516 537,349 545,564 549,786 555,456 559,080' 584,516 17 Commercial banks 228,615 219,826 207,838 197,646 200,424 197,615 199,234 195,377 207,838 18 Finance companies 32,493 38,608 36,047 29,605 30,155 29,312 34,597 34,696 36,047 19 Nonrinancial business3 44,901 44.966 39.193 33,807 34,009 33,743 33,762 33,787 39,193 20 Pools of securitized assets 188,712 221,465 270.594 246.635 251,165 259,348 258,139 265,311 270,594 21 Other 293,121 291,283 305,265 295,886 297,123 299,611 302,098 304,454' 305.265 22 Commercial banks 141,107 137,483 147,792 140,658 142,287 143,958 145,960 147,880 147,792 23 Finance companies 33,208 34,399 33,244 35,020 34,739 34,583 34,627 34,612 33,244 24 Nonfinancial business3 32,844 33,961 35.701 31,671 31,995 31,814 32,187 32,845 35,701 25 Pools of securitized assets4 25,395 26,642 27,162 27,778 27,512 27,899 28,081 27,685 27,162 1. The Board's series on amounts of credit covers most short- and intermediate-term credit 3. Includes retailers and gasoline companies. extended to individuals. Data in this table also appear in the Board's G.19 (421) monthly 4. Outstanding balances of pools upon which securities have been issued; these balances statistical release. For ordering address, see inside front cover. are no longer carried on the balance sheets of the loan originator. 2. Comprises mobile home loans and all other loans that are not included in automobile or 5. Totals include estimates for certain holders for which only consumer credit totals are revolving credit, such as loans for education, boats, trailers, or vacations. These loans may be available. secured or unsecured. 1.56 TERMS OF CONSUMER CREDIT1 Percent per year except as noted July Aug. Sept. Oct. INTEREST RATES Commercial banks 1 48-monlh new car 9.05 9.02 8.72 n.a. n.a. 8.71 8.62 n.a. 2 24-month personal 13.54 13.90 13.74 n.a. n.a. 13.45 13.75 n.a. Credit card plan 3 All accounts 15.63 15.77 15.71 n.a. 15.83 n.a. 15.69 n.a. 4 Accounts assessed interest . . 15.50 15.57 15.63 n.a. 15.85 n.a. 15.72 n.a. Auto finance companies 5 New car 9.84 7.12 6.30 6.02 6.23 6.00 5.92 6.33 6.79 6.43 6 Used car 13.53 13.27 12.64 12.63 12.51 12.68 12.65 12.58 12.41 12.31 OTHER TERMS' Maturity (months) 7 New car 51.6 54.1 52.1 50.9 51.7 53.0 53.1 53.1 52.8 52.2 8 Used car 51.4 51.0 53.5 54.0 54.1 54.1 54.2 54.2 54.3 54.2 Loan-to-value ratio 9 New car 91 92 92 91 92 93 93 92 91 91 10 Used car 100 99 99 100 100 101 101 100 100 100 Amount financed {dollars) 11 New car 16,987 18,077 19,083 18,878 19,084 19.068 19,028 19,199 19,590 19,734 12 Used car 12,182 12,281 12,691 12,698 12,733 12.407 12,731 12,914 13,112 13,202 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 US. CREDIT MARKETS' Billions of dollars; quarterly data at seasonally adjusted annual rates 1997 1998' Transaction category or sector 1993 1994 1995 1996 1497 Q2 C-i Q4 Ql Q2 Q3 04 Nonfinanclal sectors 1 Total net borrowing by domestic nontinancial sectors.... 587.1' S77.I' 703.41" 720.3' 736.9' 612.0r 826.5' 858.3' 904.7 925.4 855.5 1,118.3 By sector and instrument 1 Federal "overmnent 256.1 155.9 144.4 145.0 23.1 -43.5 30 1 40.8 -30 0 -70.9 -136.5 26.9 1 Treasury securities 248.3 155.7 142.9 146.6 23.2 -43.8 31.2 39.0 -27.6 -69.4 -136.1 14.7 4 Budget agency securities and mortgages 7.8 .2 1.5 -1.6 -•' .2 -.9 1.7 -2.4 -1.4 -.4 12.2 5 Nonfederal 331.0' 421.3' 558.9' 575.3' 713.8' 655.6' 796.2' 817.5' 934.7 996.2 991.9 1.091.4 By instrument 6 Commercial paper 10.0 21.4 18.1 _ g 13.7 20.3 14.5 12.8 51.1 3.8 85.6 -43.0 7 Municipal securities and loans 74.8 -35.9 -48.2 2.b 71.4 59.6 88.9 103.2 116.7 100.1 83.6 87.0 S Corporate bonds 75.2 23.3 73.3 72.5 90.7 86.1 122.9 74.4 157.2 160.8 87.1 123.8 l) Bank loans n.e.e 6.4 75.2 101.4' 63.0' 106.3' 114.1' 29.0' 138.6' -2.8 185.3 125.8 144.0 10 Other loans and advances -18.9 34.0 67.2 36.4' 66.2' 20.8 78.1' 142.3' 84.3 34.6 73.5 117.0 11 Mortgages 122.9' 178 4' 208.1' 313.0' 312.9' 295.2' 412.5' 308.4' 471.3 446.8 453.0 596.0 12 Home 156.1' 179.7' 176.0' 256.4' 243.0' 211.7' 3 14 <l' 208.6' 172 8 320.3 361.5 45.3.3 13 Multifamily residential -4.7' .5' 9.7' 17.1' 15.1' 18.9' 14.7' 27.0' 28.3 31.1 12.4 14.3 14 Commercial -29.6' -4.1' 20.9' 36.9' 51.6' 60.1' 60.3' 69.9' 66.8 89.4 74.5 123.7 15 Farm 1.0 2.2 1.6 2.6 3.2' 4.5' 3.5' 2.9' 3.4 6.0 4.6 4.7 16 Consumer credit 60.7 124.9 138.9 88.8 52.5 59.5 50.3 37.8 57.0 64.8 83.4 66.6 By horrtnvini! .sector 17 Household 207.7' 312.6' 345.4' 359.8' 333.6' 328.0' .168.4' 302.1' 437.5 457.2 452.7 592.7 18 Nonfinancial business 57.2r 155.0' 265.0' 222.3' m r 285.1' 355.2' 423.1' 402.9 460.1 466.6 423.3 19 Corporate ... 51.4' 147.4' 2.31.5' 170.7' 257.9' 214.1' 283.8' 341.7' .121.1 357.3 374.6 318.7 ""0 Noiifann noncorporate 3.2 3 3 30.6' 46.8' 59.9' 64.7' 66.7' 72.1' 74.5 95.7 85.9 98.8 21 Farm 2.6 4.4 2.9 4.8 6.2' 6.4' 4.7' 9.2' 7 3 7.2 6.1 5.8 22 Stale and local government 66.2 -J6.2 -51.5 -6.8 56.1 42.5 72.6 92.3 94.3 78.9 72.6 75.4 2} Foreign net borrowing in United States 69 8 - 14.0 71.1 76.9 56.9 61.7 92.5 42.3 67.8 85.") -28 0 -38.0 24 Commercial paper -9.6 -26 1 13.5 11.3 1.7 10.4 -11.6 .7 55.3 -25.5 6.2 -4.7 25 Bonds 82.9 12.2 49.7 55.8 46.7 38.7 100..1 32.4 14.3 107.5 -35.3 -32.9 16 Bank loans nee .7 ! 4 8.5 9.1 85 11.5 7.3 15.7 5.2 8.4 3.6 9.9 21 Other loans and advances -4.2 -1.5 - .5 .8 -2.0 1.2 -3.5 -6.5 -7.0 -4.4 -2.4 -10.3 28 Total domestic plus foreign 656.9r 563.1' 774.51" 797.3r 793.8' 673.71" 919.0' 900.5r 972.5 1,011.3 827.5 1,080.3 Financia sectors 29 Total net borrowing by financial sectors 294.4 468.4 456.2r 552.1' 652.8' 667.9r 601.9' 993.2' 936.4 994.9 1.061.5 1,471.3 By instrument 30 Federal government-related 165.3 287.5 204.1 231.5 212.8 286.2 161.0 298.1 227.3 413.4 561.6 785.7 31 Government-sponsored enterprise securities 80.6 176.9 105 4 90.4 98.4 198.1 46.4 157.9 142.5 166.4 294.0 614.5 32 Mortgage pool securities 84.7 115.4 98.2 141.1 114.4 88.1 114.6 140.3 84 8 247.0 267.5 171.2 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. lr 320.7' 440.0' 381.7' 440.9' 695.0' 709 1 581.5 499.9 685.7 35 Open market paper -5.5 40.5 42.7 92.2 166 7 77.0 168.8 244.2 237.4 134.8 141.0 130.7 3b Corporate bonds 123.1 121.8 196.7 175.5' 208.2' 228.1' 202.3' 337.8' 340.5 176.9 178.3 337.2 37 Bank loans n.ec -14.4 -13.7 4.8' 20.0' 114' -2.0' 25.9' 26.1' 78.6 -21 1 62.0 - 16.3 38 Other loans ami advances 22.4 22.6 3.4 27.9 35.6 61.0 37.5 61.7 32.7 76.0 82.3 173.7 39 Mortgages 3.6 9.8 4.6' 5.0' 16.2' 15.5' 6.5' 25.2' 19.8 14.8 36.3 60.3 Bv bt'rrawing serlor 40 Commercial banking 13.4 20.1 22.5 13.0 46.1 76.4 32.5 61.0 81.5 80.0 61.7 66.5 4] Savings institutions 11.3 12.8 2.6 25.5 19.7 31.9 22.3 41.7 10.6 31.2 63.7 106 8 42 Credit unions .2 2 - l 1 1 .2 2 3 s 2 1.0 4 43 Lite insurance companies 1 3 -.1 1 1 2 .1 2 -.3 0 -.6 1.6 1.8 44 Government-sponsored enteiprises so!& 17Z 1 105.9 90.4 98.4 198.1 46.4 157.9 142.5 166.4 294.0 614.5 45 Federally related mortgage pools 84.7 115 4 98.2 141.1 114.4 88.1 1146 140.3 84 8 247.0 267.5 171.2 4d Issuers of asset-hacked securities (ABSs) R3.6 72.9 141.1 153.6 204.4 120.7 226.2 385.1 282.1 368.1 293.5 324.2 47 Finance companies -1.4 48.7 50.2 45.9 48.7 120.5 8.9 W6 80.1 101.8 -14.0 76.8 48 Mortgage companies .0 -115 .4 12.4 -4.7' -12.2 11.4' -17.4' 40.2 -48.0 2.0 2.0 44 Real estate investment trusts (RElTs) 3.4 13 7 5.6' 7.0' 36.8' 30.6' 30. Sr 58.9' 662 62.1 82.8 50.0 50 Brokers and dealers 12 0 .5 -5.0 -2.0 8.1 34.9 -6.9 7.0 -1.0 20.0 -2.6 12.3 11 Funding corporations ' 6.3 21.1 34.9 64.1 80.7 -21.5 115.3' 99.2 137 9 -33.3 10.1 44.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Financial Statistics • April 1999 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued 1998' Transaction category or sector 1997 Q2 Q3 04 Ql Q2 Q3 Q4 52 Total net borrowing, all sectors 951.4r 1,031.6' 1,230.7' 1^49.4' 1,446.6' 1,341.5' 1,521.0' 1,893.7' 1,908.9 2,006.2 1,889.0 2,551.6 53 Open market paper -5.1 35.7 74.3 102.6 184.1 107.7 171.7 257.7 343.8 113.1 232.7 83.0 54 U.S. government securities 421.4 448.1 348.5 376.5 235.9 242.6 191.3 338.9 197.3 342.5 425.1 812.5 55 Municipal securities 74.8 -35.9 -48.2 2.6 71.4 59.6 88.9 103.2 116.7 100.1 83.6 87.0 56 Corporate and foreign bonds .... 281.2 157.3 319.6 303.8' 345.7' 352.9' 425.5' 444.6' 512.0 645.3 230.1 428.1 57 Bank loans n.e.c -7.2 62.9 1H.7 92.1 128.2' 123.6 62.2 180.5' 81.0 172.7 191.4 137.5 58 Other loans and advances -.8 50.3 70.2 65.1' 99.8r 85.0 112.1' 197.5' 110.0 106.1 153.4 280.5 59 Mortgages 126.5' 188.2' 212.7' 318.0' 329.1' 310.7' 419.0' 333.6' 491.1 461.6 489.4 656.3 60 Consumer credit 60.7 124.9 138.9 88.8 52.5 59.5 50.3 37.8 57.0 64.8 83.4 66.6 Funds raised through mutual funds and corporate equities 61 Total net issues 429.7 125.2 144.3' 234.2 186.4' 173.9' 239.4' 157.7' 213.9 267.8 -118.1 24.8 62 Corporate equities 137.7 24.6 -3.1' -3.4 -78.8' -76.2' -60.5' -103.3' - 107.5 -115.9 -319.0 -171.4 63 Nonfinancial corporations 21.3 -44.9 -58.3 -64.2 -114.4 -100.0 -124.0 -143.3 -139.2 -129.1 -308.4 -474.4 64 Foreign shares purchased by U.S. residents 63.4 48.1 50.4 60.0 41.3 54.4 64.3 ~ ^ 13.6 4.0 -32.9 319.1 65 Financial corporations 53.0 21.4 4.8' .8 -5.6' -30.6' -.8' 40.3' 18.2 9.2 22.2 -16.1 66 Mutual fund shares 292.0 100.6 147.4 237.6 265.1 250.1 299.9 261.0 321.4 383.7 200.9 196.2 1. Data in this table also appear in the Board's Z.I (780) quarterly statistical release, tables F.2 through F.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A39 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1998' Transaction category or sector Q2 Q3 04 Ql 02 Q3 Q4 NET LENDING IN CREDIT MARKETS ] Total net lending in credit markets 9S1.4r 1,031.6' 1,230.7' 1349.4' 1,446.6' 1,341.5' 1,521.0' 1,893.7' 1,908.9 2,006.2 1,889.0 2,551.6 2 Domeslic nonfederal nonfinancial sectors 40.4' 237.7' -95.6' -17.7' -106.7' -56.5' -155.3' 36.4' -218.5 404.7 7.8 -173.8 3 Household -.2' 274.4' -18.4' -124.0' -72.2' -148.7' 8.2' -227.5 310.1 -137.1 -174.4 4 Nonfinancial corporate business 9.1 17.7 20.0 14.8 -28.7 31.7 -2.6 13.2 -45.6 23.3 -11.0 5 Nonfarm noncorporate business -1.1 .6 4.7 4.4 2.7 2.7 2.8 2.9 3.0 3.2 3.3 3.4 6 State and local governments 32.6 -55.0 -91.4 -23.7 -.2' 41.8 -41.0 27.9' -7.3 137.1 118.3 8.2 7 Federal government -18.4 -27.5 -.2 -7.7 4.9 5.7 3.3 9.0 15.5 12.8 13.9 10.7 8 Rest of the world 129.3 132.3 273.9 417.3' 310.1' 308.5' 402.9 208.7' 238.6 314.2 58.6 385.1 9 Financial sectors 800.01 689.0' 1,052.5' 957.6' 1,238.3' 1,083.8' 1.270.0' 1,639.7' 1,873.3 1,274.5 1,808.7 2,329.6 10 Monetary authority 36.2 31.5 12.7 12.3 38.3 42.9 22.9 52.9 27.4 7.7 48.3 .8 11 Commercial banking 142.2 163.4 265.9 187 5 324.3 290.0 226.2 464.9 292.9 136.1 242.6 554.6 12 U.S.-chartered banks 149.6 148.1 186.5 119.6 274.9 286.7 220.7 386.2 260.5 130.5 286.7 569.7 13 Foreign banking offices in United Stales -9.8 11.2 75.4 63.3 40.2 -3.6 4.6 58.2 11.6 18.1 -53.1 -24.1 14 Bank holding companies .0 .9 -.3 3.9 5.4 5.1 -5.0 19.4 15.3 -17.6 6.0 -7.4 15 Banks in US-affiliated areas 2.4 3.3 4.2 .7 3.7 1.8 5.8 1.1 5.5 5.1 2.9 16.4 16 Savings institutions -23.3 6.7 -7.6 19.9 -4 7 23.8 -35.3 -2.0 10.1 -1.8 33.9 101.1 17 Credit unions 21.7 28.1 16.2 25.5 16.8 25.2 13.6 7.7 16.5 22.7 20.5 28.1 18 Bank personal trusts and estates 9.5 7.1 -8.3 -7.7 7.6 10.7 7.3 8.8 2.4 3.1 2.0 3.9 19 Life insurance companies 100.4' 72.0' 100.0' 69.6' 94.3' 171.3' 92.9' 34.1' 95.7 66.5 87.8 136.6 20 Other insurance companies 27.7 24.9 21.5 22.5 25.2 28.0 32.0 34.7 23.4 -1.5 -7.7 3.0 21 Private pension funds 50.2' 46.1' 56.01 52.3' 65.5' 61.6' 64.6' 79.5' 74.5 130.1 95.5 174.4 22 State and local government retirement funds 22.7 22.3 27.5 45.9 36.6 34.6 79.1 9.5 81.7 60.6 50.9 75.1 23 Money market mutual funds 20.4 30.0 86.5 88.8 87.5 26.1 121.5 144.2 172.0 200.1 247.5 356.4 24 Mutual funds 159.5 -7.1 52.5 48.9 80.9 90.0 108.0 61.8 143.6 152.6 93.5 98.6 25 Closed-end funds 20.0 -3.7 10.5 4.7 -3.4 -3.4 -3.4 -3.4 -2.4 -2.4 -2.4 -2.0 26 Government-sponsored enterprises 87.8 117.8 86.7' 84.2' 94.3' 118.9' 55.6' 158.5' 165.2 140.4 250.0 401.0 27 Federally related mortgage pools 84.7 115.4 98.2 141.1 114.4 88.1 114.6 140.3 84.8 247.0 267.5 171.2 28 Asset-backed securities issuers (ABSs) 81.0 65.8 119.3 123.4 166.0 105.9 163.7 332.2 223.0 337.0 248.0 292.9 29 Finance companies -20.9 48.3 49.9 18.4 21.9 .9 68.3 -21.3 28.7 27.1 79.7 119.4 30 Mortgage companies .0 -24.0 -3.4 8.2 -9.1' -24.4 82.9 -93.6' 58.8 -56.4 4.5 6.0 31 Real estate investment trusts (REITs) .6 4.7 2.2 3.8' 8.8' 8.4' 7.2' 17.6' 13.2 9.3 -2.4 -10.0 32 Brokers and dealers 14.8 -44.2 90.1 -15.7 14.9' -17.4' 18.01 71.7' 245.8 -183.1 77.0 -230.5 33 Funding corporations -35.1' -16.2 -23.8' 24.C 58.4' 2.8' 30.4' 141.4' 115.9 -20.5 -27.9 49.1 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets 1,031.6' 1,230.7' 1,349.4' 1,446.6' 1,341.5' 1,521.0' 1,893.7' 1,908.9 2,006.2 1^89.0 2,551.6 Other financial sources 35 Official foreign exchange -5.8 -6.3 .7 .4 2.4 17.5 1.0 8.1 11.4 8.6 36 Special drawing rights certificates .0 .0 2.2 -.5 -.5 .0 .0 .0 .0 .0 .0 .0 37 Treasury currency .4 .7 .6 .1 .0 .2 1.3 -1.9 .3 .2 1.7 -2.3 38 Foreign deposits -18.5 52.9 35.3 85.9 107.4 23.9 116.1 103.0 -45.3 89.0 87.3 36.8 39 Net interbank transactions 50.5 89.8 9.9 -51.6 -19.7' -56.3' -25.0' 79.8' -107.1 46.6 14.3 -103.3 40 Checkable deposits and currency 117.3 -9.7 -12.7 15.8 41.5 50.6 -38.4 71.9 65.6 109.3 -61.7 81.3 41 Small time and savings deposits -70.3 -39.9 96.6 97.2 97.1 34.0 47.0 155.9 154.9 36.2 115.2 313.6 42 Large time deposits -23.5 19.6 65.6 114.0 122.5 174.7 188.4 70.7 186.2 -16.5 81.5 115.1 43 Money market fund shares 20.2 43.3 142.3 145.8 157.6 98.9 226.2 147.8 248.0 186.4 400.7 306.6 44 Security repurchase agreements 71.3 78.2 110.5' 41.4' 120.9' 202.9' 115.5' 117.9' 259.5 -113.6 228.6 -153.4 45 Corporate equities 137.7 24.6 -3.1' -3.4 -78.8' -76.2' -60.5' -103.3' -107.5 -115.9 -319.0 -171.4 46 Mutual fund shares 292.0 100.6 147.4 237.6 265.1 250.1 299.9 261.0 321.4 383.7 200.9 196.2 47 Trade payables 52.2 94.0 101.5 76.9 99.2' 48.7' 136.1' 151.91 88.5 4.9 81.4 77.4 48 Security credit 61.4 -.1 26.7 52.4 111.0' 124.4' 91.1' 116.8' 165.3 128.3 179.6 -71.0 49 Life insurance reserves 37.1' 35.5' 45.8' 44.5' 54.3' 62.4' 63.9/ 37.4' 49.3 38.3 31.7 49.0 50 Pension fund reserves 267.4' 258.9' 228.5' 243.6' 306.9' 326.5' 337.3' 300.3' 261.5 284.9 278.0 352.6 51 Taxes payable 11.4 2.6 6.2 16.2 14.6 14.1 30.1' -7.7' 9.7 -2.7 34.0 -57 52 Investment in bank personal trusts .9 17.8 4.0 -8.6 75.0 71.8 80.8 78.4 50.3 57.5 47.8 67.1 53 Noncorporate proprietors' equity 25.91 50.3' 62.1' 43.3' 25.1' 39.6' 38.7' -26.8' 20.2 -8.7 -43.1 15.8 54 Miscellaneous 340.9' 248.3' 448.8' 568.9' 523.0' 554.3' 404.1' 1,206.6 224.8 637.4 556.8 55 Total financial sources 2,326.3' 2,093.3' 2,767.8' 2,942.6' 3^15.4' 3,255.0' 3,726.3' 3,868.4' 4,737.4 3,347.3 3,896.7 4421.6 Liabilities not identified as assets (—) 56 Treasury currency -.2 -.2 -.5 -.9 -.6 -.5 .7 -2.4 -.2 -.3 1.1 -3.0 57 Foreign deposits -5.7 43.0 25.1 59.4 107.4 10.7 93.8 148.3 -94.6 148.3 69.2 31.3 58 Net interbank liabilities 4.2 -2.7 -3.1 -3.3 -19.9 -26.7 -50.0 -33.0 30.7 11.4 19.4 -48.4 59 Security repurchase agreements 46.4 69.4 17.5' .6' 65.3' 168.9' 23.9' 190.8' 115.2 -175.3 90.5 .7 60 Taxes payable 15.8 16.6 21.1 20.4 17.2 29.3 15.2' 5.C 6.8 5.0 25.8 .8 61 Miscellaneous -169.5' -155.9' -198.5' -61.C -228.4' -396.1' -42.4' -550.3' 95.0 -75.8 -105.0 -79.1 Floats not included in assets ( —) 62 Federal government checkable deposits -1.5 -4.8 -6.0 .5 -2.7 -8.3 10.0 -7.9 7.5 -41.7 24.1 20.4 63 Other checkable deposits -1.3 -2.8 -3.8 -4.0 -3.9 -4.3 -3.0 -5.0 -4.0 -3.0 -3.2 -2.1 64 Trade credit -4.0 1.5 -11.7 -26.7' 21.5' -58.7 72.6' 81.9' 10.4 -110.7 -58.0 -30.8 65 Total identified to sectors as assets 2,442.0' 2,129.3' 2,927.7' 2,957.6' 3359.5' 3,540.7' 3,605.4' 4,040.9' 4,570.6 3,589.6 3,832.9 4,333.5 1. Data in this table also appear in the Board's Z.1 (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. F. 1 and F.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Financial Statistics • April 1999 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1997 1998' Transaction category or sector 1994 1995 1996 1997 Q2 Q3 Q4 Ql Q2 Q3 Q4 Nonnnancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 13,018.6' 13,721.9' 14,442.3' 15,177.6' 14,721.3' 14,924.5' 15,177.6' 15,405.6 15,598.7 15,809.8 16,130.1 By sector and instrument 2 Federal government 3,492.3 3.636.7 3.781.8 3.S04.9 3.760.6 3,771.2 3.804.9 3,830.8 3.749 0 3.720.2 3,752.2 3 Treasury securities 3,465.6 3,608.5 3,755.1 3,778."! 3 734.3 3.745.1 3.778.3 3.804.8 3,723.4 3,694.7 3,723.7 4 Budget agency securities and mortgages 26.7 28.2 26.6 26.5 26.3 26.1 26.5 25.9 25.6 25.5 28.5 5 Nonfederal 9,526.3' 10.085.2' 10,660.5' 11.372.7' 10,960.7' 11,153.3' 11,372.7' 11,574.9 11,849.8 12,089.6 12,377.8 By mwiimjem 6 Commercial paper 139.2 157.4 156.4 168.6 179.3 176.6 168.6 193.1 202.5 21b.9 193.0 7 Municipal securities and loans 1,341.7 1.293.5 1,296.0 1,367.5 1.326.8 1.340.2 1.367.5 1,397.1 1,429.3 1.439.9 1,464.3 8 Corporate bonds 1,253.0 1.326.3 1.398.8 1,489.5 1.440.2 1,470.9 1,489.5 1,528.8 1,569.0 1,590.8 1,621.8 9 Bank loans n.e.c 759.9 861.3' 924.3' 1.030.7' 995.9' 995.2' 1,030.7' 1,0320 1,084 4 1,107.1 1,143.7 10 Other loans and advances 669.6 736.9 773.2' 839.5' 788.5 802.9 839.5' 866.1 873.5 886.1 916.8 11 Mortgages 4,378.9' 4.587.0' 4,900.1' 5,212.9' 5 024.9' 5.140.7' 5.212.9' 5.321.8 5.434.4 5,561.5 5,704.7 12 Home 3,357.0' 3,533.0' S.755.7' 3,998.8' 3.855.3' 3.951.5' 3.998.8' 4.083.0 4.164.0 4.268.1 4,375.7 13 Multifamily residential 269.5' 279.2' 300.0' 315.1' 304.6' 308.3' 315.1' 322.1 329.9 333.0 336.6 14 Commercial 669.5' 690.3' 757.2' 808.8' 776.3' 791.3' 808.8' 825.5 847.9 866.5 897.4 15 Farm 83.0 84.6 87.1 90.3' 88.7 89.6' 90.3' 91.2 92.6 93.8 95.0 16 Consumer credit 983 9 1.122.8 1.211.6 1.264.1 1,205.0 1.226.7 1.264 1 1,236.0 1,256.8 1,287 4 1.333.6 By borrowing secwr 17 Household 4,454.0' 4,804.3' 5,135.4' 5,471.7' 5,261.2' 5,373.0' 5,471.7' 5,529.3 5,651.4 5,786.2 5.958.3 18 Nonfinancial business 3,950.6' 4,210.7' 4,461.7' 4.781.6' 4,613.5' 4,684.8' 4.781.6' 4,901.2 5,027.6 5,124.7 5.219.8 19 Corporate 2,686.6' 2.913.2' 3,1126' 3.366.4' 3 2V.6' 3.289 1' 3.366.4' 3,468.3 3,565.3 3,639.7 3.709.3 20 Nont'arm noncorporate 1,121.8 1,152.4' 1,199.2' 1.259.1' 1.224.4' 1.240.4' 1,259.1' 1.277.8 1,301.6 1,3225 1.347.8 21 Farm 142.2 145.1 149.9 156.1' 153.5' 155.2' 156.1' 155.1 160.6 162.5 162.7 22 State and local government 1,121.7 1,070.2 1,063.4 1.119.5 1.086.1 1,095.5 1,119.5 1,144.3 1,170.8 1,178.8 1,199.8 23 Foreign credit market debt held in United States 370.8 441.9 518.8 569.6 539.2 557.7 569.6 584.1 606.6 600.2 591.6 24 Commercial paper 42.7 56.2 67.5 65.1 71.3 64.3 65.1 7o.7 71.4 74.0 72.9 25 Bonds 242.3 291.9 347.7 394.4 361.2 386.3 394.4 398.0 424.9 416.0 407.8 26 Bank loans nee 26.1 ^4.6 43.7 52.1 46.4 48.2 52 1 53.4 55.5 56.4 58.9 27 Other loans and advances 59.8 59.3 60.0 58.0 60.3 58.9 58.0 55.9 54.8 53.8 52.0 28 Total credit market debt owed by nonnnancial sectors, domestic and foreign 13,389.4' 14,163.8' 14,961.1r 15,747.2' 15.260.5' 15,482.2' 15,747.2' 15,989.7 16,205.3 16,410.0 16,721.7 Financial sectors 29 Total credit market debt owed by financial sectors 3,822.2 4,281.0' 4,833.2' 5,452.9' 5,086.3' 5,208.3' 5,452.9' 5,682.0 5,935.5 6,205.7 6.568.9 By instrument 30 Federal government-related 2,172.7 2,376.8 2.608.3 2.821.0 2,706.2 2,746.5 2.821.0 2,877 9 2,981.2 3,121.6 3,318.0 31 Government-sponsored enterprise securities 700.6 806.5 896.9 995.3 944.2 955.8 995.3 1,030.9 1,072.5 1,146.0 1,299.6 32 Mortgage pool securities 1,472.1 1.570.3 1,711.4 1.825.8 1,762.1 1,790.7 1,825.8 1,847.0 1,908.7 1.975.6 2,018.4 33 Loans trom U.S. government .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 1,649.5 1.904.2' 2.224 9' 2,631.9' 2 380.1' 2,461.8' 2.631.9' 2,804.1 2,954.3 3.084.2 3.250.9 35 Open market paper 441.6 486.9 579.1 745.7 642.5 684.7 745.7 804.9 838.9 874.2 906.7 36 Corporale bonds 1,008.8 1,205.4 1.380.9' 1,556.1' 1.453.9' 1.476.2' 1.556.1' 1.637.0 1,735.7 1.785.4 1,864.4 37 Bank loans n.e.c 48.9 53.7' 73.7' 87.1' 73.5' 79.7' 87.1' 106 1 101.0 116.1 112.9 38 Other loans and advances . .' 131.6 135.0 162.9 198.5 173.7 183.0 198.S 206.6 225.6 246.2 289.6 39 Mortgages 18.7 23.3' 28.3' 44.5' 36.6' 38.2 44.5' 49.4 53.2 62.2 77.3 By borrowing sector 40 Commercial banks 94.5 102.6 113.6 140.6 125.7 130 0 140.6 148.7 159.6 169.6 188.7 41 Bank holding companies 133.6 148.0 150.0 168.6 160.5 164.0 168.6 181.2 190.5 196.1 193.5 42 Savings institutions 112.4 115.0 140.5 160.3 144.3 149.8 160.3 162.9 170.7 186.6 213.3 43 Credit unions .5 .4 .4 .6 .4 .5 .6 .7 .8 1.0 I.I 44 Life insurance companies .6 .5 1.6 1.8 1.8 1.9 IS 1.8 1.6 2.0 2.5 45 Government-sponsored enterprises 700.6 806.5 896.9 995 1 944.2 955.8 995.3 1.030.9 1,072.5 1,146.0 1.299.6 46 Federally related mortgage pools ... 1,472.1 1,570.3 1,711.4 1.825.8 1.762.1 1.790.7 1,825.8 1,847.0 1,908.7 1,975.6 2,018.4 47 Issuers of asset-backed .securities (ABSsj 579.0 720.1 873.8 1,089.3 917.9 989.0 1,089.3 1.154.1 1,243.9 1,321.2 1.406.2 48 Brokers and dealers 34.3 29.3 27.3 35.3 35.3 33.6 35.3 35.1 40.1 39.4 42.5 49 Finance companies 433.7 483.9 529.8 554.5 557.8 532.7 554.5 571 9 596.9 589.4 615.6 50 Mortgage companies 18.7 19.1 31.5 268' 28.3 31.2' 26.8' 39.1 27.1 27.6 28.1 51 Real estate investment trusts (REITs) 31.1 36.7' 43.7' 80.4' 58.0' 65.7' 80.4' 97.0 112 5 133.2 145 7 52 Fundine corporations 211.0 248.6 312.7 373.7' 350.O 363.4 373.7' 411.6 4105 417.9 413.6 All sectors 53 Total credit market debt, domestic and foreign 17,211.6' 18,444.9' 19,794.3' 21,200.2' 20,346.8' 20,690.5' 21,200.2' 21,671.7 22,140.8 22.615.8 23,290.6 54 Open market paper 623.5 700.4 803.0 979.4 893 1 925.7 979.4 1,074.8 1,112.7 1,165.1 1,172.6 55 U.S. government securities 5,665.0 6.013.6 6,390.0 6.625.9 6.466.8 6.517.7 6.625.9 6.708.6 6.730.2 6.841.8 7.070.2 56 Municipal securities 1,341.7 1,293.5 1,296.0 1,367.5 1.326.8 1.340 2 1,367.5 1,397.1' 1,429.3 1.439.9 1,464.3 57 Corporate and foreign bonds 2,504.0 2,823.6 3.127.5' 3.440.1' 3.255.3' 1,313.4' 3,440.1' 3,563.9 3,729.6 3.792.2 *.893 9 58 Bank loans ae.c 8.34.9 949.6 1,041.7 1.169.8' 1.115.8 1.123.1 1,169.8' 1.191.5 1.240.9 1,279.7 1.315.5 59 Other loans and advances 860.9 931.1 996.2' 1.095.9' 1.022.4' 1,044.9 1,095.9' 1,128.7 1,153.9 1,186.1 1,258.4 60 Mortgages 4.397.6' 4.610.4' 4.928.4' 5.257.4' 5 061.5' 5,178 9' 5.257 4' 5.371.2 5,487.5 5,623.7 5.782.0 6) Consumer credit 983.9 1,122.8 1.211.6 1.264.1 1.205.0 1.226.7 1.264.1 1.236.0 1,256.8 1,287 4 1.3.33.6 ]. Dala in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables L.2 through L.4. For ordering address, sec inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period Transaction category or sector Q2 Q3 04 Ql Q2 Q4 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 17,211.6' 18,444.9' 19,794.3' 21,200.2' 20,346.8' 20,690.5' 21,200.2' 21,671.7 22,140.8 22,615.8 23,290.6 2 Domestic nonfedera] nonfinancial sectors 3,035.9' 2,899.1' 2,921.5' 2,764.8' 2,801.5' 2,744.2' 2.764.8' 2,706.9 2,766.5 2,785.4 2.771.3 3 Household 1,979.2' 1,937.8' 1,968.9' 1.794.91 1,853.2' 1,798.4' 1,794.9' 1,756.5 1,787.4 1,770.3 1.737.7 4 Nonfinancial corporate business 289.2 280.4 291.0 305.8 281.4 290.4 305.8 289.6 280.1 287.7 302.3 5 Nonfarm noncorporate business 37.6 42.3 46.7 49.5' 48.0 48.7 49.5' 50.2 51.0 51.8 52.7 6 State and local governments 729.9 638.6 614.8 614.6' 618.9 606.6 614.6' 610.6 648.0 675.5 678.7 7 Federal government 203.4 203.2 195.5 200.4 197.3 198.2 200.4 204.3 207.5 210.9 213.6 8 Rest of the world 1,216.0 1,530.3 1,933.8' 2,259.0' 2,095.0 2,196.4 2,259.0' 2,324.0 2,401.2 2,416.4 2,508.1 9 Financial sectors 12,756.3' 13,812.3' 14,743.5' 15,975.9' 15,252.9' 15,551.8' 15,975.9' 16,436.5 16,765.6 17,203.0 17,797.5 10 Monetary authority 368.2 380.8 393.1 431.4 412.4 412.7 431.4 433.8 440.3 446.5 452.5 11 Commercial banking 3,254.3 3.520.1 3,707.7 4,031.9 3,856.8 3,912.9 4,031.9 4,093.3 4,136.4 4,195.7 4,337.0 12 US-chartered banks 2,869.6 3,056.1 3,175.8 3,450.7 3,295.2 3,351.9 3,450.7 3,505.1 3,543.6 3,616.2 3,761.1 13 Foreign banking offices in United States 337.1 412.6 475.8 516.1 501.8 501.0 516.1 517.9 525.6 510.1 504.2 14 Bank holding companies 18.4 18.0 22.0 27.4 23.8 22.5 27.4 31.2 26.8 28.3 26.5 15 Banks in US.-afiiliated areas 29.2 33.4 34.1 37.8 36.1 37.5 37.8 39.2 40.4 41.1 45.2 16 Savings institutions 920.8 913.3 933.2 928.5 937.8 929.0 928.5 931.0 930.6 939.0 964.3 17 Credit unions 246.8 263.0 288.5 305.3 299.9 303.9 305.3 306.7 315.1 320.8 327.2 18 Bank personal trusts and estates 248.0 239.7 232.0 239.5 235.5 237.3 239.5 240.1 240.9 241.4 242.4 19 Life insurance companies 1,487.5' 1.587.5' 1,657.0' 1,751.3' 1,723.7' 1,746.7' 1,751.3' 1,779.1 1,796.0 1,817.6 1,847.9 20 Other insurance companies 446.4 468.7 491.2 515.3 498.6 506.6 515.3 521.1 520.8 518.9 519.6 21 Private pension funds 660.9' 716.9' 769.2' 834.7' 798.7' 814.8' 834.7' 853.4 885.9 909.8 953.4 22 State and local government retirement funds 455.8 483.3 529.2 565.8 542.7 562.0 565.8 582.5 600.2 613.1 632.9 23 Money market mutual funds 459.0 545.5 634.3 721.9 656.5 678.7 721.9 775.0 815.9 869.9 965.9 24 Mutual funds 718.8 771.3 820.2 901.1 861.3 890.4 901.1 939.3 977.6 1,003.4 1,023.2 25 Closed-end funds 86.0 96.4 101.1 97.7 99.4 98.5 97.7 97.1 96.5 95.9 95.4 26 Government-sponsored enterprises 663.3 750.0' 807.91 902.2' 848.6' 862.5' 902.2' 942.9 978.5 1,041.0 1,141.3 27 Federally related mortgage pools 1.472.1 1,570.3 1,711.4 1.825.8 1.762.1 1,790.7 1,825.8 1,847.0 1,908.7 1,975.6 2,018.4 28 Asset-backed securities issuers (ABSs) 541.7 661.0 784.4 950.4 818.9 863.3 950.4 1,000.4 1.082.4 1,148.3 1.225.6 29 Finance companies 476.2 526.2 544.5 566.4 553.1 564.4 566.4 572.0 579.0 592.7 630.2 30 Mortgage companies 36.5 33.0 41.2 32.1' 34.8 55.5 32.1' 46.8 32.7 33.8 35.3 31 Real estate investment trusts (REITs) 13.3 15.5 19.3' 28.1' 21.9' 23.7' 28.1' 31.5 33.8 33.2 30.7 32 Brokers and dealers 93.3 183.4 167.7 182.6' 160.2' 164.7' 182.6' 244.0 198.3 217.5 159.9 33 Funding corporations 107.5' 86.3' 110.3' 164.0' 130.0' 133.4' 164.0' 199.5 196.2 189.0 194.6 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 17,211.6' 18,444.9' 19,794.3' 21,200.2' 20,346.8' 20,6*0.5' 21,200.2' 21,671.7 22,140.8 22,615.8 23,290.6 Other liabilities 35 Official foreign exchange 53.2 63.7 53.7 48.9 46.7 46.1 48.9 48.2 50.1 54.5 60.1 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 18.7 18.3 18.4 18.4 18.8 18.3 38 Foreign deposits 373.9 418.8 516.1 619.4 568.8 597.8 619.4 608.1 630.4 652.2 661.4 39 Net interbank liabilities 280.1 290.7 240.8 219.4' 197.5' 189.0' 219.4' 182.4 197.8 196.3 184.0 40 Checkable deposits and currency 1.242.0 1.229.3 1,245.1 1.286.6 1.265.3 1.234.2 1,286.6 1,259.4 1,321.0 1,282.7 1,335.2 41 Small time and savings deposits 2,183.2 2.279.7 2.377.0 2,474.1 2,432.3 2,438.8 2,474.1 2.525.2 2.530.8 2,554.4 2,629.1 42 Large time deposits 411.2 476.9 590.9 713.4 646.7 696.1 713.4 750.9 754.0 776.5 805.0 43 Money market fund shares 602.9 745.3 891.1 1.048.7 952.4 1,005.1 1,048.7 1,130.7 1,153.7 1.249.7 1.334.2 44 Security repurchase agreements 549.5 660.0' 701.5' 822.4' 768.rf 797.7' 822.4' 891.0 861.5 919.8 877.7 45 Mutual fund shares 1,477.3 1,852.8 2,342.4 2,989.4 2,717.5 2,973.6 2,989.4 3,340.2 3,439.0 3,151.9 3,626.1 46 Security credit 279.0 305.7 358.1 469.1' 414.3' 431.8' 469.1' 505.3 540.6 579.0 569.6 47 Life insurance reserves 520.3' 566.2' 610.6' 665.V 639.6' 655.6' 665.0' 677.3 686.9 694.8 707.0 48 Pension fund reserves 5,057.5' 5.821.1' 6,567.8' 7,680.9' 7,169.4' 7,556.3' 7,680.9' 8,246.8 8,349.4 7,810.4 8,770.1 49 Trade payables 1,140.6 1,242.2 1,319.0 1,418.2' 1,319.8 1,353.5' 1,418.2' 1,407.7 1,414.6 1,434.8 1.481.3 50 Taxes payable 101.4 107.6 123.8 138.3' 133.9 143.1' 138.3' 149.5 141.4 151.7 147 2 51 Investment in bank personal trusts 699.4 803.0 871.7 1,082.8 982.9 1.058.9 1,082.8 1,179.3 1.207.2 1,112.4 1.291.0 52 Miscellaneous 5,326.6' 5,693.7' 6,012.0' 6,461.5' 6,258.4' 6.449.8' 6,461.5' 6,746.4 6.784.3 7,042.9 6.848.0 53 Total liabilities 37,535.5' 41,029.9' 44,643.8' 49,365.7' 46,888.0' 48.346.0' 49365.7' 51357.4 52,230.9 52307.5 54.644.9 Financial assets not included in liabilities ( + ) 54 Gold and special drawing rights 21.1 22.1 21.4 21.1 21.1 21.0 21.1 21.2 21.0 21.2 21.6 55 Corporate equities 6,237.9 8,331.3 10,062.4 12,776.0 11,627.0 12,649.4 12,776.0 14,397.6 14,556.1 12,758.4 15,437.7 56 Household equity in noncorporate business . .. 3.370.5' 3,578.3' 3,776.1' 4.097.4' 3,964.4' 4,030.7' 4,097.4' 4,108.8 4,136.2 4.153.7 4,164.4 Liabilities not identified as assets ( —) 57 Treasury currency -5.4 -5.8 -6.7 -7.3 -6.9 -6.7 -7.3 -7.4 -7.4 -7.2 -7.9 58 Foreign deposits 325.4 360.2 431.2 534.5 478.1 501.5 534.5 510.8 547.9 565.2 573.0 59 Net interbank transactions -6.5 -9.0 -10.6 -32.2 -8.1 -22.1 -32.2 -21.2 -17.1 -15.4 -27.0 60 Security repurchase agreements 67.8 85.3' 86.0' 151.2' 96.6' 113.1' 151.2' 183.5 134.4 167.4 159.0 61 Taxes payable 48.8 62.4 76.9 91.4' 77.6 87.9' 91.4' 87.4 92.6 98.8 97.7 62 Miscellaneous 1,046.5' -1,369.3' -1,723.8' -2,110.0' -1,687.0' -1.656.3' -2,110.0' -2,018.7 -2,007.8 -2,012.6 -2,304.1 Floats not included in assets (—) 63 Federal government checkable deposits . 3.4 3.1 -1.6 -8.1 -6.8 -7.8 -8.1 -10.4 -16.1 -12.0 -3.9 64 Other checkable deposits 38.0 34.2 30.1 26.2 27.9 19.5 26.2 21.4 24.2 15.7 23.1 65 Trade credit -245.9 -257.6 -284.2' -273.8' -366.6 -366.2' -273.8' -323.8 -363.2 -383.7 -319.5 66 Total identified to sectors as assets 47,985.7' 54,058.1r 59,906.5' 67,88«.3C 63,895.6' 66^84.2' 67,888.3' 71,463.4 72,556.7 70,824.6 76,078.2 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. L.I and L.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • April 1999 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1992=100, except as noted 1998 1999 Measure 1996 1997 1998 May June July Aug. Sept. Oct.' Nov.' Dec. Jan. 1 Industrial production1 119.5 126.8 131.4 131.9 130.6 130.5 132.4 131.9 132.4 132.3 132.5' 132.5 Market groupings 1 Products total 114.4 119.6 123.6' 124.5 123.6 123.3 124.9 124.1 124 9 124.5 124.7' 124.6 3 Final, total 115.5 121.1 125.5' 126.6 125.5 124.7 126.8 126.0 126.7 126.3 126.2' 126.0 4 Consumer goods 111.3 114.1 115.2' 116.8 115.1 114.0 116.1 114.8 115.2 115.1 115.4' 115.4 5 Equipment 122.7 133.9 144.1' 144.2 144.1 143.9 146.0 146.2 147.5 146.4 145.5' 145.0 6 Intermediate 110.9 115.2 118.0' 118.2 118.0 1 19.1 119.1 118.3 119.0 119.1 120.2' 120.4 7 Materials 127.8 138.2 144.0 143.6 141.8 141.9 144.4 144.4 144.5 144.8 145.2' 145.3 Indusux groupings 8 Manufacturing 121.4 129.7 135.1 135.4 133.7 133.6 135.7 1J3.2 136.1 13b.4 136.6' 136.7 9 Capacity utilization, manufacturing (percent)". . ' 81.4 82.0 80.8' 81.6 80.2 79.8 80.7 80.1 80.3 80.1 79.9 79.6 10 Construction contracts^ 130.9 142.6' 151.0' 153r/ 152.0' 155.0' 154.0 150.0' 148.0 152.0 153.0' 147.0 11 Nonagricultural employment, total4 117.3 120.3 123.4 123.2 123.3 123.5 123.8 123.9 124.1 124.4 124.7 124.9 12 Goods-producing, total 2.4 24 2.3 102.5 102.6 101.9 102.4 102.3 102.2 102.1 102.4 102.4 13 Manufacturing, total 97.4 98.2 98.5 99.0 98.9 97.9 98.4 98.4 98.1 97 8 97.7 97.6 14 Manufacturing, production workers 98.6 99.6 99.6 100.1 99.9 98.4 99.1 99.3 99.0 98.6 98.5 98.5 15 Service-producing 123.1 126.5 130.1 129.7 130.0 130.4 130.6 130.9 131.1 131.5 131.8 132.1 16 Personal income, total 165.2 174.5 183.2 182.2 182.7 183.4 184.2 184.8 185.5 186.3 187.3 n.a. 17 Wages and salary disbursements 159.8 171.2 182.6 181.5 181.8 182.8 184.1 184.6 185.6 186.6 187.5 n.a. 18 Manufacturing 135.7 144.7 151.1 151.5 150.5 149.6 151.3 152.1 151.7 151.4 151.8 n.a. 19 Disposable personal income5 164.0 171.7 178.6 177.5 177.9 178.7 179.4 179.9 180.7 181.4 182.3 n.a. 20 Retail sales5 159.6 166.9 175.3 175.8 176.0 174.8 174.9 175.6 177.7 178.9 180.7' 181.1 Prices'1 21 Consumer (1982-84=100) 156.9 160.5 163.0 162.8 163.0 163.2 163.4 163.6 164.0 164.0 163.9 164.3 22 Producer finished goods (1982= 100) 131.3 131.8 130.7 130.6 130.7 131.0 130.7 130.6 1314 130.8 131.0 131.5 1. Daia in this table appear in the Board's G.17 (419) monthly statistical release. The data 3. Index of dollar value of total construction contracts, including residential, nonresidenare ako available on the Board's web site. hllp://www.federalreserve.gov/releases/gl7. The lial. and heavy engineering, from McGraw-Hill Information Systems Company, F.W. Dodge iaiesi historical revision of the industrial production index and Ihe capacity utilization rates Division. was released in November 1998. The remit annual revision is described in an article in the A. Based on dala from U.S. Department of Labor. Employment and Earnings. Series covers Januaiy 1999 issue of the Bulletin. For a description of the methods of estimating industrial employeu-s only, excluding personnel in the armed forces. production and capacity utilization, see "Industrial Production and Capacity Utilization: 5. Based on data from U.S. Department of Commerce. Surrey of Current Business. Historical Revision and Recent Development." Federal Risen-e Bulletin, vol. 83 (February b. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the price 1997), pp. 67-92, and the references cited Iherein 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, see "Industrial Production: 1989 Developments and Monthly Labor Review. Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. NOTE. Basic data (not 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 Survey 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 1999 Category 1996 1997 1998 June July 'Vug. Sept. Oct. Nov' Dec.1 Jan. HOUSEHOLD SURVEY DATA1 1 Civilian labor force' 133,943 136,297 137.673 137,498 137,407 137,481 138,081 138,116 138.193 138,547 139,347 Employment 2 Nonagricultural industries^ 123,264 126.159 128,085 127,890 127,753 127,772 128,348 128,300 128,765 129,304 130,097 3 Agriculture 3.443 3,399 3.378 3,363 3,423 3.492 3,470 3,558 3,348 3,222 3,299 Unemployment 4 Number 7,236 6,739 6.210 6.245 6,231 6.217 6,263 6,258 6.080 6.021 5.950 5 Rale (percent of civilian labor force) 5.4 4.9 4.5 4.5 4.5 4.5 4.5 4.5 4.4 4.3 4.3 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 119,608 122,690 125,833 125,751 125,849 126,191 126,363 126,527 126,804 127,102 127,347 7 Manufacturing 18,495 18,657 18.716 18,780 18,594 18,693 18,692 18,633 18,573 18.557 18,544 8 Mining 580 592 575 578 571 571 568 564 560 555 546 9 Contract construction 5.418 5,686 5,965 5.946 5,970 5,989 5,981 6,012 6,051 6,150 6.165 [0 Transportation and public utilities 6,253 6,395 6,551 6.538 6.550 6,570 6,579 6.595 6,604 6,629 6,651 11 Trade 28,079 28,659 29.299 29.269 29,374 29,383 29,454 29.453 29,549 29,595 29,653 12 Finance 6,911 7,091 7,341 7,333 7,370 7,372 7,393 7,417 7,441 7,459 7,481 13 Service 34,454 36,040 37,525 37.494 37,614 37,691 37,768 37.905 38,040 38,137 38,251 14 Government 19,419 19,570 19,862 19.813 19,826 19,922 19.928 19,948 19,986 20,020 20,056 1. Beginning January 1994, reflects redesign of current population survey and population 4 Includes all full- and part-time employees who worked during, or received pay for, the controls from the 1990 census. pay period thai includes the twelfth day of Ihe month; excludes proprietors, self-employed 2. Persons sixteen years of age and older, including Residenl Armed Forces. Monthly persons, household and unpaid family workers, and members of Ihe armed forces. Data are figures are based on sample data collected during the calendar week that contains the twelfth adjusted lo the March 1992 benchmark, and only seasonally adjusted data are available at this day; annual data arc averages of monthly figures. By definition, seasonality does not exist in time. population figures. SOURCE. Based on data from U.S. Department of Labor. Employment and Earnings. 3. Includes self-employed, unpaid family, and domestic service workers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A43 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1998 1998 1998 Series 1 01 02 Q3 Q4' 01 Q2 Q3 Q4 Qi 02 03 Q4' Output (1992=100) Capacity (percent of 1992 output) Capacity utilization rale (percent) 1 Total industry 130.4 131.3 131.6 132.4 157.6 159.6 161.5 163.5 82.7 82.3 81.5 81.0 2 Manufacturing 133.8 134.7 134.8 136.4 163.5 165.8 168.1 170.3 81.8 81.2 80.2 80.1 3 Primary processing 121.2 121.1 120.2 120.3 143.0 144.0 145.1 146.1 84.8 84.1 82.9 82.3 4 Advanced processing4 140.1 141.4 142.1 144.5 173.5 176.4 179.2 182.0 80.8 80.2 79.3 79.4 5 Durable goods 154.4 156.1 157.9 161.2 190.2 193.9 197.5 201.2 81.2 80.5 79.9 80.1 6 Lumber and products 115.6 116.4 117.7 119.0 142.0 143.0 143.9 144.9 81.4 81.4 81.8 82.1 7 Primary melals 128.2 125.3 122.4 119.6 140.8 142.0 143.2 144.4 91.0 88.3 85.5 82.8 8 Iron and steel 128.3 124.0 118.7 112.7 140.9 142.8 144.6 146.5 91.0 86.9 82.1 76.9 9 Nonferrous 128.0 127.0 126.8 127.9 140.4 140.8 141.3 141.7 91.2 90.1 89.7 90.3 10 Induslrial machinery and equipment 194.1 203.0 207.9 212.2 226.5 234.7 242.9 251.6 85.7 86.5 85.6 84.3 11 Electrical machinery 278.2 282.8 292.7 304.5 351.2 366.6 381.6 396.7 79.2 77.1 76.7 76.8 12 Motor vehicles and parts 140.8 135.3 137.2 148.6 182.8 183.9 184.9 186.0 77.0 73.6 74.2 79.9 13 Aerospace and miscellaneous transportation equipment 102.7 106.1 106.6 105.5 127.0 127.5 128.0 128.5 80.8 83.2 83.3 82.1 14 Nondurable goods 112.7 112.7 111.3 111.4 135.8 136.6 137.5 138.4 83.1 82.5 80.9 80.5 15 Textile mill products 113.6 113.2 112.1 111.1 1.34.8 134.9 135.1 135.2 84.3 83.9 83.0 82.2 16 Paper and products 115.5 115.0 115.0 114.0 130.6 131.6 132.5 133.4 88.5 87.4 86.8 85.5 17 Chemicals and products 116.8 116.9 114.4 113.7 147.1 148.0 148.9 149.7 79.4 79.0 76.8 75.9 18 Plastics materials 127.3 127.5 128.4 130.0 139.4 140.7 141.9 143.2 91.3 90.6 90.5 90.8 19 Petroleum products 111.6 112.0 112.7 112.3 116.2 116.5 116.8 117.1 96.1 96.1 96.5 95.9 20 Mining 107 0 IO"i 3 103 6 101.2 119.7 119.9 120.1 120.5 89.4 87.8 86.2 84.0 21 Utilities 110.9 115.6 119.6 114.0 125.9 126.2 126.5 126.7 88.1 91.6 94.6 89.9 22 Electric 112.8 118.3 121.2 117.3 123.5 123.8 124.0 124.3 91.3 95.6 97.7 94.4 1973 1975 Previous cycles Latest cycle6 1998 1998 1999 High Low High Low High Low Jan. Aug. Sept. Oct.' Nov.' Dec. Jan.p Capacity utlization rate (percent) 1 Total industry 89.2 72.6 87.3 71.1 85.4 78.1 83.0 82.0 81.3 81.3 80.9 80.8 80.5 2 Manufacturing? 88.5 70.5 86.9 69.0 85.7 76.6 82.2 80.7 80.1 80.3 80.1 79.9 79.6 3 Primary processing 91.2 68.2 88.1 66.2 88.9 77.7 85.2 83.1 82.1 82.4 82.3 82.4 82.1 4 Advanced processing 87.2 71.8 86.7 70.4 84.2 76.1 81.0 79.9 79.5 79.6 79.5 79.1 78.8 5 Durable goods 89.2 68.9 87.7 63.9 84.6 73.1 81.4 80.9 80.3 80.6 80.1 79.7 79.5 6 Lumber and products 88.7 61.2 87.9 60.8 93.6 75.5 81.3 82.3 81.1 81.6 81.5 83.1 83.4 7 Primary metals 100.2 65.9 94.2 45.1 92.7 7.3.7 92.1 86.9 83.7 83.7 82.1 82.7 82.1 8 Iron and steel 105.8 66.6 95.8 37.0 95.2 71.8 91.9 84.7 78.1 78.4 74.9 77.4 76.8 9 Nonfcrrous 90.8 59.8 91.1 60.1 89.3 74.2 92.4 89.7 90.6 90.4 91.1 89.3 88.7 10 Industrial machinery and equipment 96.0 74.3 93.2 64.0 85.4 72.3 85.7 85.2 84.5 84.9 84.3 83.8 8.3.1 11 Electrical machinery 89.2 64.7 89.4 71.6 84.0 75.0 80.2 76.2 77.0 77.2 76.9 76.2 76.3 12 Motor vehicles and parts 93.4 51.3 95.0 45.5 89.1 55.9 77.8 83.4 80.9 80.9 80.0 78.8 79.1 13 Aerospace and miscellaneous transportation equipment 78.4 67.6 81.9 66.6 87.3 79.2 79.5 83.5 82.6 83.3 82.1 80.9 80.0 14 Nondurable goods 87.8 71.7 87.5 76.4 87.3 80.7 83.5 80.9 80.2 80.3 80.6 80.5 80.3 15 Textile mill products 91.4 60.0 91.2 72.3 90.4 111 85.3 82.8 82.3 83.2 82.3 81.1 81.2 16 Paper and products 97.1 69.2 96.1 80.6 93 5 85.0 88.8 87.0 85.7 86.7 84.2 85.5 85.7 17 Chemicals and products S7.6 69.7 84.6 69.9 86.2 79.3 79.7 76.7 75.9 75.7 76.3 75.8 75.8 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 9.3.4 92.9 87.1 89.1 94.1 89.1 89.6 19 Petroleum products 96.7 81.1 90.0 66.8 88.5 85.1 95.8 97.7 94.7 94.4 96.3 97.0 97.4 20 Mining 94.3 88.2 96.0 80.3 88.0 87 0 90.0 86.3 85.2 84.7 84.2 83.1 81.6 21 Utilities 96.2 82.9 89.1 75.9 92.6 83.4 87.2 95.1 95.0 92.0 87.9 90.0 90.1 22 Electric 99.0 82.7 88.2 78.9 95.0 87.1 90.2 97.8 98.8 96.9 92.2 94.1 93.7 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 clu1* u uls; synthetic are also available on the Board's web :>ite, http://www.fedcralreserve.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 products such as drugs and toiletries; agricultural chemicals; leather production and capacity 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 Reser\'e 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 • April 1999 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1998 1998 1999 pro- 1998 Group por- ave. tion Apr. May July Aug. Sept. Oct.r Nov.r Dec. Jan.p Index (1992= 100) MAJOR MARKETS 1 Total index 100.0 131.4 1303 130.2 130.7 131.3 131.9 130.6 130.5 132.4 131.9 132.4 132.3 132.5 132.5 2 Products 60.5 123.6 122.6 122.5 123.2 124.0 124.5 123.6 123.3 124.9 124.1 124.9 124.5 124.7 124.6 3 Final products 46.3 125.5 124.5 124.2 125.3 126.2 126.6 125.5 124.7 126.8 126.0 126.7 126.3 126.2 126.0 4 Consumer goods, total 29.1 115.2 116.0 115.2 115.8 116.4 116.8 115.1 114.0 116.1 114.8 115.2 115.1 115.4 115.4 5 Durable consumer goods 6.1 135.8 135.1 134 5 135.9 136.9 138.3 130.7 124.6 140.1 137.4 140.5 139.9 139.6 140.0 6 Automotive products 2.6 132.9 133.0 131.5 132.7 134.6 136.8 121.7 107.3 141.7 136.4 141.1 139.6 139.1 140.0 7 Autos and trucks 1.7 137.8 141.0 138.6 138.9 141.3 143.5 118.2 92.8 151.4 143.4 150.6 149.1 147.7 149.4 8 Autos, consumer .9 109.2 115.1 104.8 106.5 107.4 108.4 93.8 75.8 124.4 128.3 119.9 113.7 115.5 111.7 9 Trucks, consumer .7 166.2 166.1 170.5 169.8 173.8 177.1 142.2 110.0 178.9 161.1 181.0 183.2 179.0 185.2 10 Auto parts and allied goods .9 124.9 120.5 120.3 122.7 123.7 126.0 125.4 125.6 127.6 125.9 127.4 125.9 126.8 126.6 11 Other 3.5 138.0 136.7 136.9 138.5 138.8 139.4 137.8 138.7 138.5 138.0 139.7 139.9 139.7 139.8 12 Appliances, televisions, and conditioners 1.0 206.1 195.5 197.9 203.8 203.4 202.7 199.9 207.8 209.4 209.9 215.2 222.3 224.1 224.7 13 Carpeting and furniture .8 117.1 119.2 115.8 114.3 115.9 119.1 117.0 117.3 116.7 116.3 120.3 117.7 114.4 117.8 14 Miscellaneous home goods 1.6 115.1 115.6 116.8 118.3 118.2 117.9 117.1 115.9 115.3 114.5 113.6 113.0 113.8 111.9 15 Nondurable consumer goods 23.0 110.2 111.3 110 5 110.8 111.4 111.5 111.2 mi 110.3 109.3 109.1 109.1 109.6 109.5 16 Foods and tobacco 10.3 109.0 110.4 110.1 109.1 110.2 110.8 108.5 108.5 107.5 106.9 108.0 109.6 109.6 109.6 17 Clothing 2.4 97.8 100.7 99.3 100.4 99.9 98.8 98.8 98.4 97.7 97.1 95.4 94.5 94.3 93.0 18 Chemical products 4.5 120.6 121.3 121.2 121.3 123.2 122.5 122.8 122.2 119.0 118.0 117.2 119.2 120.0 120.2 19 Paper products 2.9 105.8 109.2 107.7 106.3 106.2 105.7 105.3 106.3 106.6 105.9 105.2 104.1 103.4 102.2 20 Energy 2.9 112.7 109.1 106.5 113.2 111.5 112.5 118.2 118.4 120.1 116.8 115.0 107.8 111.1 112.4 21 Fuels .8 110.5 111.0 110.4 111.2 111.6 110.9 111.4 112.9 112.1 108.3 108.4 109.1 109.5 112.2 22 Residential utilities 2.1 113.2 107.6 104.0 113.7 111.0 112.9 121.2 120.7 123.7 120.7 117.8 106.5 111.3 111.9 23 Equipment 17.2 144.1 139.5 140.3 142.4 143.6 144.2 144.1 143.9 146.0 146.2 147.5 146.4 145.5 145.0 24 Business equipment 13.2 163.5 156.3 157.0 160.1 162.2 163.1 163.6 163.5 166.6 167.4 169.0 168.0 168.0 167.7 25 Information processing and related 5.4 209.9 195.3 199.2 202.3 206.0 209.2 210.3 211.8 213.1 217.3 219.0 219.5 221.1 222.1 26 Computer and office equipment 1.1 646.3 520.3 547.4 584.9 601.5 620.6 638.6 654.6 671.6 693.6 716.7 746.7 761.7 784.6 27 Industrial 4.0 140.0 138.4 136.6 139.4 139.4 138.1 142.9 144.2 142.3 139.5 141.6 139.8 141.2 140.4 28 Transit 2.5 133.7 126.0 126.8 130.3 133.6 135.5 128.2 121.9 141.6 140.1 141.6 140.4 139.1 138.0 29 Autos and trucks 1.2 124.6 126.2 120.9 121.6 123.4 125.1 108.6 91.7 136.9 135.6 136.1 136.4 136.3 135.8 30 Other 1.3 138.9 137.7 136.9 139.8 140.8 139.6 141.7 146.6 132.6 140.9 141.1 138.5 132.7 132.7 31 Defense and space equipment 3.3 75.7 76.2 76.3 75.9 75.9 76.0 75.8 76.1 76.5 75.5 76.4 75.5 74.1 73.0 32 Oil and gas well drilling .6 134.7 153.9 157.4 155.7 147.6 147.1 136.7 131.9 127.7 123.4 119.4 115.2 103.2 99.2 33 Manufactured homes .2 149.2 147.1 149.6 148.0 148.0 149.0 146.1 151.1 145.7 147.8 150.9 154.6 156.6 157.5 34 Intermediate products, total 14.2 118.0 117.0 117.1 116.9 117.3 118.2 118.0 119.1 119.1 118.3 119.0 119.1 120.2 120.4 35 Construction supplies 5.3 127.1 125.5 125.7 124.7 125.4 126.6 126.1 128.5 128.0 126.9 128.4 129.1 130.3 130.3 36 Business supplies 8.9 112.7 112.0 112.1 112.2 112.5 113.3 113.2 113.6 113.8 113.3 113.5 113.2 114.3 114.5 37 Materials 39.5 144.0 142.6 142.5 142.7 143.1 143.6 141.8 141.9 144.4 144.4 144.5 144.8 145.2 145.3 38 Durable goods materials 20.8 176.4 173.6 173.5 173.7 174.5 175.4 171.7 171.8 177.4 177.7 178.8 180.0 180.6 181.4 39 Durable consumer parts 4.0 144.0 143.1 144.2 143.7 144.4 147.9 131.9 129.7 149.6 147.7 146.2 145.6 144.4 143.9 40 Equipment parts 7.6 277.4 263.4 264.5 265.8 266.9 268.6 271.0 274.1 278.0 282.7 287.0 290.3 293.2 298.0 41 Other 9.2 129.0 130.7 129.7 129.7 130.3 129.6 128.3 128.1 128.3 127.7 128.4 129.3 129.6 129.2 42 Basic metal materials 3.1 121.3 126.1 125.9 123.7 123.5 123.0 120.1 120.2 121.9 118.2 118.3 117.4 117.6 117.0 43 Nondurable goods materials 8.9 113.4 114.8 114.9 114.2 114.4 114.1 113.9 114.1 113.1 112.0 111.7 111.9 111.3 111.1 44 Textile materials I.I 109.3 109.9 111.1 110.6 110.5 111.0 110.2 110.1 107.7 107.6 108.8 106.8 106.2 105.6 45 Paper materials 1.8 115.8 117.2 117.0 116.3 116.3 115.5 117.3 117.3 116.4 115.0 115.8 112.7 113.1 114.0 46 Chemical materials 3.9 114.1 117.2 116.5 115.6 116.2 115.6 114.8 114.6 113.6 111.8 111.1 112.2 109.8 109.4 47 Other 2.1 111.5 110.0 111.4 111.0 110.9 111.2 110.6 111.7 111.6 111.5 110.4 113.1 115.0 114.3 48 Energy materials 9.7 103.7 103.0 102.8 103.7 103.8 104.3 104.8 104.8 104.4 105.2 103.7 102.2 103.4 102.4 4 5 9 0 C Pr o im nv a e r r y t e e d n e fu rg el y materials 6 3 . . 3 3 1 10 0 8 1 . . 1 4 1 1 0 0 5 1 . . 8 6 1 1 0 0 5 1 . . 6 4 1 1 0 0 1 9 . . 0 0 1 10 0 8 1 . . 6 3 1 11 0 0 1 . . 8 0 1 1 1 0 0 1 . . 7 8 1 10 0 8 2 . . 6 9 1 1 0 1 1 0 . . 2 7 1 11 0 0 2 . . 9 3 1 10 0 6 2 . . 1 6 1 1 0 0 0 5 . . 6 3 1 10 0 7 1 . . 1 5 1 9 0 9 7 . . 9 4 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.1 131.3 130.2 130.2 130.7 131.3 131.8 131.2 131.6 132.1 131.7 132.1 132.0 132.3 132.2 52 Total excluding motor vehicles and parts 95.1 130.8 129.7 129.7 130.3 130.9 131.3 131.2 131.7 131.3 131.0 131.5 131.5 131.9 131.8 53 Total excluding computer and office equipment 98.2 127.1 126.7 126.4 126.7 127.3 127.7 126.4 126.2 128.0 ill A 127.8 127.5 127.7 127.6 54 Consumer goods excluding autos and trucks 27.4 114.0 114.7 113.9 114.5 115.1 115.3 114.8 114.9 114.3 113.2 113.4 113.3 113.7 113.6 55 Consumer goods excluding energy 26.2 115.6 116.8 116.2 116.1 117.0 117.3 114.7 113.5 115.7 114.6 115.3 116.0 115.9 115.8 56 Business equipment excluding autos and trucks 161.1 164.6 166.7 167.4 170.0 171.8 169.9 171.0 172.7 171.5 171.5 57 Business equipment excluding computer and office equipment 12.1 142.4 138.8 138.7 140.8 142.3 142.6 142.7 142.2 144.8 145.1 146.2 144.5 144.1 143.4 58 Materials excluding energy 29.8 156.6 155.0 155.0 154.9 155.5 156.0 153.4 153.6 156.9 156.7 157.3 158.1 158.3 158.7 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 1998 1998 1999 Group SIC pro- 1998 code por- avg. tion Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct.' Nov.r Dec. Jan.p Index (1992 = 100) MAJOR INDUSTRIES 59 Ibtal index 100.0 131.4 130.3 130.2 130.7 131.3 131.9 130.6 130.5 132.4 131.9 132.4 132.3 132.5 132.5 60 Manufacturing 85.4 135.1 133.8 133.7 134.1 134 9 135.4 133.7 133.6 135.7 135.2 136.1 136.4 136.6 136.7 61 Primary processing 26.5 120.6 121.6 121.1 121.0 121.5 121.4 120.2 120.7 120.6 119.3 120.1 120.2 120.6 120.5 62 Advanced processing 58.9 142.1 139.8 140.0 140.6 141.6 142.3 140.4 139.9 143.3 143.2 144.2 144.7 144.7 144.9 63 Durable goods 45.0 157.5 153.9 154.0 155.2 156.2 157.2 154.S 154.4 159.8 159.6 161.2 161.0 161.4 161.6 64 Lumber and products 24 2.0 117.0 115.2 116.2 115.3 116.1 116.4 116.7 117.5 118.5 117.0 118.0 118.2 120.7 121.4 65 Furniture and fixtures 25 1.4 121.5 119.4 118.6 121.5 121.0 120.6 122.0 120.8 120.1 121.6 124.5 123.7 123.6 124.8 66 Stone, clay, and glass products 32 2.1 126.1 124.6 124.0 124.5 124.0 124.5 123.5 125.4 127.0 126.6 128.3 130.4 130.2 130.4 67 Primary metals 33 3.1 123.9 129.2 128.1 127.1 127.5 126.5 122.1 122.6 124.4 120.1 120.6 118.6 119.7 119.1 68 Iron and steel 331,2 1.7 121.0 128.9 128.2 127.7 126.7 125.5 119.8 120.2 122.5 113.4 114.4 109.7 113.9 113.4 69 Raw steel 331PT .1 115.7 122.5 123.3 120.0 122.4 121.9 116.0 118.3 120.3 112.6 109.7 100.2 102.0 103.0 70 Nonferrous 333-6,9 1.4 127.2 129.7 28.0 126.4 128.4 127.6 124.9 125.4 126.7 128.1 128.0 129.2 126.6 126.0 71 Fabricated metal products. . . 34 5.0 127.2 127.6 126.6 127.2 127.8 128.7 128.0 127.8 126.3 126.2 126.9 127.5 128.3 127.5 72 Industrial machinery and equipment 35 8.0 203.8 191.8 192.3 198.4 200.6 202.5 205.8 209.0 207.0 207.7 211.2 212.0 213.4 213.8 73 Computer and office equipment 357 1.8 649.4 526.3 552.6 589.6 605.4 623 9 641.4 657.0 673.6 695.5 718.5 748.4 763 5 786 4 74 Electrical machinery 36 7.3 291.8 277.7 278.5 278.2 280.8 282.0 285.5 289.4 290.8 297.7 302.4 304.9 306.3 310.3 75 Transportation equipment.. . 37 9.5 123.0 121.3 121.5 122.3 123.3 125.2 114.2 108.2 130.3 127.6 128.4 127.0 125.3 125.0 76 Motor vehicles and parts . 371 4.9 141.1 141.9 140.4 140.0 140.8 144.1 121.1 107.6 154.2 149.9 150.2 148.8 146.8 147.5 77 Autos and light trucks . 371PT 2.6 128.5 132.0 128.2 128 8 130.9 132.7 110.1 86.9 142.0 1 '6.5 140.4 138.1 137.3 117 9 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.6 104.9 100.9 102.6 104.5 105.7 106.3 106.3 107.1 106.9 105.8 106.9 105.5 104.1 103.0 79 Instruments 38 5.4 113.0 111.5 112.5 112.8 113.0 113.8 112.4 112.6 113.0 114.2 114.6 114.1 114.4 114.3 80 Miscellaneous 39 1.3 117.6 119.7 119.9 120.0 120.1 119.1 118.5 118.5 117.7 117.0 115.9 114.0 115.0 113.8 81 Nondurable goods 40.4 111.9 113.1 112.8 112.4 113.0 113.0 112.0 112.1 111.3 110.6 110.9 111.6 111.6 111.6 82 Foods 20 94 109.6 110.5 109.9 109.7 110.3 110.7 109.2 109.0 107.9 107.7 109.1 111.3 111.2 111.7 83 Tobacco products 21 1.6 106.0 110.1 112.7 105.3 109.8 111.5 104.7 106.0 107.0 104.2 101.9 99.8 100.1 96.9 84 Textile mill products 22 1.8 112.6 115.0 113.2 112.6 113.3 114.5 112.0 113.2 111.8 111.2 112.4 111.2 109.7 109.8 85 Apparel products 23 2.2 99.2 102.5 101.1 101.6 101.0 100.4 100.5 1O0.1 99.2 98.3 97.3 95^5 95.2 94.4 86 Faper and products 26 3.6 114.9 115.7 115.9 115.0 115.2 115.0 114.9 115.9 115.3 113.9 115.4 112.3 114.4 114.8 87 Printing and publishing 27 6.7 105.1 106.4 106.4 105.4 105.5 105.6 105.5 105.4 104.9 104.6 104.2 105.4 105.2 104.8 88 Chemicals and products .... 28 9.9 115.4 117.0 116.7 116.6 117.7 116.9 116.2 115.7 114.3 113.3 113.1 1142 113.7 113.8 89 Petroleum products 29 1 4 112.1 111.2 110.5 113.0 112.8 111.5 111.6 113.4 114.1 110.7 110.4 112.8 11.1.7 114.2 90 Rubber and plastic products . 30 3.5 132.6 131.0 131.1 131.4 133.2 133.1 132.4 132.7 132.2 132.6 133.4 135.0 135.5 135.1 91 Leather and products 31 .3 75.3 77.3 78.3 77.9 76.3 75.8 74.5 75.3 74.0 73.5 72.8 73.9 73.2 71.5 92 Mining 6.9 104.1 107.6 107.5 105.8 105.7 105.4 104.7 104.6 103.7 102.4 102.0 101.4 100.3 98.5 93 Metal 10 .5 110.5 110.9 123.2 109.3 106.9 108.5 108.0 105.7 109.0 106.4 113.6 112.2 112.2 110.4 94 Coal 12 1.0 109.7 112.4 104.1 103.4 107.2 106.0 110.4 112.8 109.7 115.8 110.8 108.6 114.1 102.0 95 Oil and gas extraction 13 4.8 99.8 103.6 104.6 104.0 102.9 102.4 100.4 100.0 99.2 96.8 96.8 95.2 92.8 93.0 % Stone and earth minerals 14 .6 124.3 127.5 123.1 120.0 123.3 124.4 125.6 125.4 124.3 120.3 118.8 128.2 124.4 124.8 97 Utilities 7.7 114.3 109.8 109.0 114.0 112.8 115.2 118.7 1183 120.2 120.1 116.5 111.4 114.1 114.3 98 Electric 491.493PT 6.2 117.4 111.4 111.2 115.7 115.2 118.9 121.0 119.8 121.2 122.6 120.3 114.6 117.0 116.6 99 Gas 492.493PT 1.6 103.0 102.2 99.3 106.3 102.0 98.3 108.4 111.7 115.7 109.7 98.7 96.5 100.6 103.9 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.5 134.7 133.4 133.4 133.8 134.6 134.9 134.5 135.1 134.6 134.4 135.3 135.8 136.1 136.1 101 Manufacturing excluding computer and office equipment 83.6 130.1 129.6 129.4 129.5 130.2 130.6 128.8 128.6 130.6 130.0 130.8 130.9 131.0 131.0 102 Computers, communications equipment, and semiconductors 5.9 515.6 459.3 467.6 473.4 482.7 490.7 502.9 511.8 522.5 538.3 552.1 564.1 572.4 585.4 103 Manufacturing excluding computers and semiconductors 81.1 120.1 120.3 120.1 120.2 120.9 121.1 119.2 118.9 120.6 119.9 120.4 120.4 120.4 120.1 104 Manufacturing excluding computers, communications equipment, and semiconductors 79.5 118.5 118.8 118.5 118.7 119.3 119.5 117.5 117.2 119.0 118.1 118.7 118.8 118.8 118.6 Gross value (billions of 1992 dollars, annual rates) Major Markets 105 Products, total 2,001.9 2,481.4 2,462.9 2,456.2 2,474.5 2,489.8 2,498.5 2,470.3 2,454.6 2,525.1 2,501.0 2,519.7 2,514.5 2,520.4 2,524.8 106 Final 1.552.1 1,952.2 1,935.8 1.928.6 1,948.1 1,961.6 1,966.1 1.938.2 1,915.6 1.985.9 1,966.4 1,982.3 1,977.1 1,976.9 1 980.5 107 Consumer goods 1,049.6 1,210.0 1 ^20 1 1.210.8 1,218.7 1 224 8 1 225 2 1 201 8 1 185 0 1 227 4 1 208 2 1 217 1 1,216.9 1,219.4 1 224.8 108 Equipment '502.5 744.3 '718.2 720.6 732.5 739.9 744.2 740.1 734.3 762.5 762.7 769.8 764.5 761.7 759.6 109 Intermediate 449.9 530.7 528.0 528.3 527.6 529.7 533.6 512.6 538.4 540.3 535.7 538.7 538.5 544.0 544.9 I. 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, voi. 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 Bulteiin. 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 • April 1999 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1998 Mar. Apr. May June July Aug. Sept. Oct Nov.' Dec. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,426 1,441 1,604 1,569 1,517 1,543 1,517 1,581 1,618 1,544 1.690 1,656 1,729 2 One-family 1,070 1,062 1,184 1,136 1.145 1,152 1,128 1,173 1,180 1,164 1,198 1.238 1,306 3 Two-family or more 356 379 421 433 372 391 389 408 438 380 492 418 423 4 Started 1,477 1,474 1,616 1,583' 1,542' 1,541' 1,626' 1,719' 1,615' 1,576' 1,698 1,654 1,738 5 One-family 1,161 1,134 1,271 1,234' 1,235' 1,221' 1,274' 1,306' 1,264' 1,251' 1,298 1,375 1,378 6 Two-family or more 316 340 345 349' 307' 320' 352' 413' 351' 325' 400 279 360 7 Under constroction al end of period1. 820 834 936 911 911 917 930 937 940 948 969 972 1,001 8 One-family 584 570 638 616 619 627 639 643 645 650 658 666 690 9 Two-family or more 235 264 298 295 292 290 291 294 295 298 311 306 311 10 Completed 1,405 1,407 1,474 1,486 1,509 1.458 1,484 1,549 1,515 1,466 1,441 1,602 1,408 11 One-family 1,123 1,122 1,157 1,130 1,198 1.112 1,166 1,225 1,178 1,185 1,155 1.253 1,132 12 Two-family or more 283 285 318 356 311 346 318 324 337 281 286 349 276 13 Mobile homes shipped 361 354 372 374 370 374 362 380 368 369 352 389 382 Merchant builder activity in one-family units 14 Number sold 757 804 888 836 892 892 919 877 839 845' 907 1,015 978 15 Number for sale at end of period1.. 326 287 303 285 286 287 287 284 285 2<Xf 293 293 297 Price of units sold (thousands of dollars)1 16 Median 140.0 146.0 151.6 152.0 148.0 153.2 148.0 149.9 154.9 151.0 150.0 151.3 17 Average 166.4 176.2 181.3 178.9 176.7 183.5 175.9 179.8 186.5 182.7' 181.2 175.6 182.2 EXISTING UNITS (one-family) 18 Number sold 4,087 4,215 4,785 4,890 4,770 4,830 4,740 4,910 4,730 4,690 4,770 4,880 5,030 Price of units sold (thousands of dollars)1 19 Median 118.2 124.1 130.6 127.1 128.2 130.5 134.0 133.8 132.9 131.2 130.7 131.7 130.6 20 Average 145.5 154.2 162.9 157.2 159.7 162.3 169.2 168.4 165.9 162.9 161.8 163.9 163.0 Value of new construction (millions of dollars) CONSTRUCTION 21 Total put in place 581,813 618,051 655,922 639,913 645,974 6353% 650341 658,673 663^00 670,133 670,218 676,694 688,529 22 Private 444,743 470,969 509,608 494,333 500,078 496,495 503,592 511.514 516,601 521,050 525.106 530,662 537,161 23 Residential 255,570 265,536 296,142 286,045 289,666 288,003 291,907 299.300 300,612 304,993 306,090 310,297 315,338 24 Nonresidential 189,173 205.433 213,466 208,288 210,412 208,492 211,685 212,214 215,989 216,057 219,016 220,365 221,823 25 Industrial buildings 32,563 31.417 30,267 31.474 31,457 29,642 30,067 28,616 32,302 30,300 29,246 30,087 28,025 26 Commercial buildings 75,722 83.727 88,178 83,981 86,064 86,321 88,480 88,310 86,243 87,553 91,042 93,564 96,619 27 Other buildings 30,637 37,382 38,116 37,812 39,168 37,678 37,334 37,406 38,305 38,309 37,536 37,689 39,307 28 Public utilities and other 50,252 52,906 56,905 55,021 53,723 54,851 55,804 57,882 59,139 59,895 61,192 59,025 57,872 29 Public 137,070 147,082 146,314 145,580 145.896 138,901 146,749 147,159 146,699 149,083 145,112 146,031 151,368 30 Military 2,639 2,625 2,730 2,818 2,850 2,471 2,659 3,325 3.187 2,325 2,577 2,522 2,639 31 Highway 41,326 45.246 45,129 45,559 46.175 42,030 44,541 43,809 44,291 45,719 45,563 44,145 48,083 32 Conservation and development. 5,926 5,628 5,527 5,488 4,985 5,146 5,989 5,475 5,442 5,904 5.143 5,513 5,652 33 Other 87,179 93,583 92,928 91.715 91,886 89,254 93.560 94,550 93,779 95,135 91.829 93,851 94,994 1. Not at annual rates. SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, whichare 2. Not seasonally adjusted. private, domestic shipments as reported by the Manufactured Housing Institute and seaasson- 3. Recent data on value of new construction may not be strictly comparable with data for ally adjusted by the Census Bureau, and (2) sales and prices of existing units, which are previous periods because of changes by the Bureau of the Census in its estimating techniques. published by the National Association of Realtors. All back and current figures are available For a description of these changes, see Construction Reports (C-30-76-5), issued by the from the originating agency. Permit authorizations are those reported to the Census Bureau Census Bureau in July 1976. from 19,000 jurisdictions beginning in 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data except as noted Change from 12 Change from 3 months earlier Change from 1 month earlier months earlier (annual rate) Index level, 1998r 1999 Jan. 1998 1999 1999' Jan. Jan. Sept. Sept. Oct. Nov. Dec. CONSUMER PRICES^ (1982-84=100) 1 All items 1.6 1.7 .7 2.2 1.5 2.0 164.3 2 Food 2.1 1.3 2.3 2.5 2.8 .1' .1 .1' 163.6 3 Energy items -6.5 -7.4 -17.2 -3.4 -9.0 -5.1 -1.2' -.3' -1.1' 98.1 4 All items less food and energy. 2.2 2.4 2.4 2.6 2.3 2.5 .2 .1' 3 175.3 5 Commodities .4 1.2 .0 1.7 1.1 25 -.1 .6 143.7 6 Services 3.0 2.8 3.5 3.0 2.5 .3 .2 193.2 PRODUCER PRICES (1982=100) 7 Finished goods -1.7 .9 -2.7 -.3 1.5 .4 .5 131.5 8 Consumer foods -.7 1.9 -.9 -.6 -.3 -.4' Sf !.(> 135.6 9 Consumer energy -10.4 -7.5 -25.5 -3.1 -9.2 -10.4 -1.5' -2.3 1.8 71.7 10 Other consumer goods .4 4.0 4.2 1.4 3.0 8.0 .0 .1 1.8' -.) 151.6 11 Capital equipment .0 -1.2 .9 -.1' .1 .0' -.1 137.7 Intermediate materials 12 Excluding foods and feeds -1.5 -2.4 -4.1 -1.6 -2.2 -3.8 -.2 -.3' -.5' 121.5 13 Excluding energy .1 -1.6 -.9 -1.2 -1.8 -2.4 -.2' -.2 -.2 132.1 Crude materials 14 Foods -6.0 -3.7 -14.6 -3.3 -19.6 -6.2 -.9' 2.9' -4.1' 5.1 101.6 15 Energy -37.3 -16.7 -53.5 -14.6 -25.3 -1.3 -3.6' 5.1' .0 -5.2 .6 62.4 16 Other -3.9 -14.5 -12.4 -5.8 -19.9 -24.6 -1.2' -2.7 -2.7' -1.6' 128.7 1. Not seasonally adjusted. SOURCE. US 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 D April 1999 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1997 1998 04 01 02 03 04 GROSS DOMI.STIC PRODI ICI 1 Total 7.661.6 8.110.9 8,508.9 8,254.5 8.384.2 8.440.6 8,537.9 8,672.8 BY source 5.215.7 5,493.7 5,806.0 5.593.2 5.676.5 5.771.7 5.846.7 5.927.1 3 Durable goods 643.3 673.0 72.1.5 682.2 705.1 720.1 718.9 749.8 4 Nondurable goods 1.539.2 1,600.6 1.662.0 1.611.2 1.611.1 1.655.2 1 670 0 1.689.5 5 Services 1,033.2 3,220.1 3.420.5 3.297.8 3.138.2 1.198.4 1.457.7 3.487.8 1.131.') l,"'56.0 1,369.^ 1.29">.O 1.366.6 1.345.0 [. 164.4 1.400.9 7 Fixed investment 1.099.8 1,188.6 1.308.8 1.220.1 1.271.1 1.105.8 1.107.5 1.150.9 8 Nonrcsitiential 787.') 860.7 919.4 882.8 921.3 941 9 911.6 962.9 9 Structures 216.9 240.2 246.8 246.4 245.0 245.4 246.2 250.6 10 Producers' durable equipment 571.0 620.5 692.6 636.4 676.3 696.6 685.4 712.1 11 Residential Mrucliircs 311.8 327.9 369.4 337.4 349.8 365 8 175.8 .188.1 12 Change in business inventories 32.1 67.4 60.4 71.9 95.5 19.2 57.0 50.0 I ^ Nontarni ^4 s 61 1 517 66 9 90 5 11 i 49 1 41 1 -91.: -93.4 -154.] -98.8 -121.7 -159.3 -165.5 -167.8' LS Hxpoits K73.8 965.4 958.5 988.6 971.1 949.6 936.2 975.1 16 Imports 965.1) 1.058.8 1.1 12.6 1.087.4 1.097.1 1,108.9 1,101.7 1.142.9 1 497 1 IS Federal 5 1 8.4 5202 520.7 520.1 511.6 520.7 519.4 531.0 14 State and local 8R6.X 934.4 967.1 947.9 953.3 960.4 972.9 981.6 flv nitij(>r rv/h' of product ^0 Final sales total 7.629.5 8,(143.5 8.448.5 8,182.6 8,288.7 8.401.3 8,480.9 8.62^ 8 2 1 Goods 2.780.1 2,911.2 3.041 4 2.948.7 1.005.8 1.025.1 1,029.0 3.105.6 2.1. Durahle 1.228.8 1.310.1 1,189.1 1.334.3 1.376.9 1,380.8 1.171.0 1.426.5 23 Nondurable 1.55 1 f> 1.601.0 1.652.1 1.614.4 1.628.8 1.644.4 1.655.9 1.679.1 "M Services 4.179.5 4.414 1 4.641.0 4,501.2 4.538.4 4.619.5 4,678.5 4.727.7 25 Structures 669.7 718.3 766.1 732.7 744.6 756.6 773.5 789.6 32.1 67.4 60.4 71.9 95.5 39.2 57 0 50.0 27 Durable goods 20.8 11.6 25.8 14.0 49.9 4.5 19.5 29.4 28 Nondurable goods 1 1.4 31.8 34.6 37.9 45.6 34.7 17.5 20.5 Ml-M() 29 Total GDP in chained 1992 dollars 6.994.8 7,269.8 7,549.9 7.J64.6 7.464.7 7,498.6 7,566.5 7.670.0 NATIONAL INCOMH 30 Total 6,256.0 6,646.5 ,,.a. 6,767.9 6.875.0 6.945.5 7.032.3 n.a. 3 1 Compensation of employees 4,409.0 4,687.2 4.980.1 4.798.0 4.882.8 4.945.2 5.011.6 5.081.8 32 Wages and salaries ' 3.640.4 3.893.6 4.151.2 3,993.6 4.065 9 4.121.6 4.181.1 4.244.1 33 Government and government enterprises 640.9 664.2 689.5 671.4 679.5 685.8 692 7 700 1 34 Other 1 2.999.5 3 229 4 3,463.7 1 1">^ ~> 3.3864 1.435.8 1,488.4 1.543.9 35 Supplement to wages mid salaries 768.6 791.7 827.1 804.4 816.8 821.5 830.5 817.7 36 Hmployer eonlribtuions lor social insurance 381.7 400.7 420.2 407.4 414.1 417 9 422.1 426.7 37 Other labor income 387.0 392.9 406.9 197.0 402.8 405 7 408.4 41 1.0 527.7 551.2 575.5 558.0 564.2 571.7 576.1 590.0 V) Busing and prolessionul1 488.8 515.8 548.4 526 6 516.8 544.0 550.9 561 7 40 Farm1 38.9 35.5 27.1 M.4 27.4 27 7 25.2 28.3 4! Rental income ot persons2 150.2 158.2 162.0 158.8 158.1 161 0 161.6 165.0 42 Corporate profits1 750.4 817.9 n.a. 820.8 829.2 820.6 827.0 n.a 43 Profits before tax1 6K0.2 754.4 n.a. 736.4 719.1 723.5 720.5 n.a. 6 9 4.1 25.1 7.8 1 1.7 n.a. 4? Capital consumption adjustment 71.4 76.6 80.1 84.9 89.4 94.8 99 7 46 Nel interest 4 IK.6 432.0 n.a. 412.4 440.5 447.1 454.0 n..i. I With inventory valuation and capital consumption adju: 3. For after-tax profits, dividends, and the like.,ee table I 4S. 2. With capital consumption adjustment. SOURCK. U.S. Department of Commerce, Survcof CitiTvm Bw 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 1997 1998 04 Ql Q2 Q3 Q4 PERSONAL INCOME AND SAVING I Total personal income 6,425.2 6,784.0 7,123.6 6,904.9 7,003.9 7,081.9 7,160.8 7,247.9 2 Wage and salary disbursements 3,631.1 3,889.8 4,149.2 3.989.9 4,061.9 4,117.6 4,177.1 4,240.0 3 Commodity-producing industries 909.0 975.0 1,026.9 1,003.7 1,019.0 1,023.2 1,028.0 1,037.3 674.6 719.5 751.5 741.3 750.4 750.8 750.9 753.9 823.3 879.8 938.5 904.5 918.9 932.2 945.8 957.1 1,257.9 1,370.8 1,494.3 1.410.2 1,444.5 1,476.4 1,510.6 1,545.5 640.9 664.2 689 5 671 4 679 5 685 8 692 7 700.1 387.0 392.9 406.9 397.0 402.8 405.7 408.4 411.0 9 Proprietors' income1 527.7 551.2 575.5 558.0 564.2 571.7 576.1 590.0 488.8 515.8 548.4 526.6 536.8 544.0 550.9 561.7 11 Farm1 38.9 35.5 27.1 31.4 27.4 27.7 25.2 28.3 150.2 158.2 162.0 158.8 158.3 161.0 163.6 165.0 248.2 260.3 263.1 261.3 261.6 262.1 263.0 265.7 14 Personal interest income 719.4 747.3 764.9 753.0 757.0 763.0 769.2 770.2 1 068.0 1 110 4 1,149 5 1,120.5 1 139 0 1 145 8 1 152 9 1,160.2 16 Old-age survivors, disability, and health insurance benefits 538.0 565.9 586.7 572.2 581.6 585.0 589.0 591.3 306.3 326.2 347.4 333.6 3409 345.1 349.5 354.2 18 EQUALS: Personal income 6,425.2 6,784.0 7,123.6 6,904.9 7,003.9 7,081.9 7,160.8 7,247.9 19 LESS: Personal tax and nontax payments 890.5 989.0 1,098.1 1,025.5 1.066.8 1,092.9 1,108.4 1,124.3 5 534 7 5,795.1 6,025.5 5,879.4 5,937 1 5 988 9 6,052 4 6,123.6 1376 2 5,674 1 5,998.1 5,781.2 5,864.0 5 963 3 6 039 8 6 125 4 158 5 121 0 27 4 98.2 73.0 25 6 126 -1 8 MEMO Per capita (chained 1992 dollars) 23 Gross domestic product 26,335.8 27,136.2 27,942.0 27,398.2 27.718.8 27,783.0 27,972.1 28,292.1 24 Personal consumption expenditures 17,893.1 18,340.9' 19,064.4 18,530.5 18,771.1 19,007.8 19,156.3 19,320.5 18 989 0 19 349 0 19,785.0 19,478.0 19,632.0 19,719.0 19 829 0 19,958.0 26 Saving rate (percent) 2.9 2.1 .5 1.7 1.2 .4 .2 .0 GROSS SAVING 27 Gross saving 1,274.5 1,4063 n.a. 1,428.0 1,482.5 1,448.5 1,474.5 n.a. 28 Gross private saving 1,114.5 1.141.6 n.a. 1,131.6 1,130.1 1,079.0 1,078.7 n.a. 158.5 121.0 27.4 98.2 73.0 25.6 12.6 -1.8 262.4 296.7 n.a. 295.0 312.0 300.9 304.8 n.a. -1.2 6.9 n.a. 4.3 25.3 7.8 11.7 Capital consumption allowances 32 Corporate 452.0 477.3 500.7 487.7 492.5 497.8 503.1 509.4 232.3 242.8 252 6 247 0 248.6 250.7 254.2 257.2 160.0 264.7 n.a. 296.4 352.4 369.4 395.7 35 Federal -39.6 49.5 72.3 128.7 143.9 161.6 n.a. 70.6 70.6 69.7 70.2 69.9 69.5 69.6 69.7 -110.3 — 21.1 n.a. 2.2 58.8 74.4 92.0 n.a. 38 State and local 199.7 215.2 224.1 223.7 225.6 234.2 77.1 81.1 85.0 82.7 83.5 84.3 85.4 86.6 122.6 114.1 141.4 140.2 141.3 148.7 41 Gross investment 1,242.3 1,350.5 n.a. 1360.7 1,428.4 1,362.7 1372.5 n.a. 1,131.9 1,256.0 1,369.2 1,292.0 1,366.6 1,345.0 1,364.4 1,400.9 43 Gross government investment 229.7 235.4 237.4 236.5 237.4 232.5 239.7 239.9 -119.2 -140.9 n.a. -167.8 -175.6 -214.8 -231.6 n.a. 45 Statistical discrepancy -32.2 -55.8 n.a. -67.3 -54.1 -85.7 -102.0 1. Wilh inventory valuation and capital consumption adjustments. SOURCE. U.S. Department of Commerce, Survey of Current Business. 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 International Statistics • April 1999 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted execpt as noted1 1997 1998 llem credits or debits 03 04 01 Q2 Qi 1 Balance on current account -115,254 -134,915 -155.215 - 38,094 -45,043 -46,735 -56,690 -hi,299 -173,729 -191,337 -197,954 -49,296 -49,839 -55,698 -64,443 -64,360 575 845 611,983 679,325 172,302 174,284 171,469 164,821 163,560 -749,574 -803,320 -877,279 -221,598 -224.123 -227,167 -229,264 -227.920 4,769 4,684 6,781 1,945 1.10.1 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 19,275 14,236 -5.318 -1,544 -4,247 - 2,248 -1,377 -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 -4.13 194 12 Change in U.S. 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) -808 170 - 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 -123.023 -118,946 -44,816 -107,409 -46.22(1 18 Bank-reported claims1 -75,108 -91,555 -147,439 -29,577 -27,539 3,074 -24,615 - 28,335 19 Nonbank-rcportcd claims -45,286 -86.333 -120,403 -24.791 -47,907 -6,596 -14,327 -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 -21.243 22 Change in foreign official assets in United States (increase, +) 109,768 127,344 15.817 21,258 -26,979 11,324 -10.274 -46.170 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 US liabilities reported by U S banks 34,008 5,704 21.928 12.439 -3.250 -607 9,380 -12.607 27 Other foreign official assets^ 3,265 1,323 -654 633 1,007 -956 832 -2.444 28 Change in foreign private assets in United States (increase. +1 355,681 436,013 717,624 160,180 247,470 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-rcported 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 32 U.S. currency Hows 12,300 17.362 24,782 6.576 9.900 746 2,149 7,277 96.367 130,151 196,845 60.327 36.783 77,019 71.017 22.938 34 Foreign direct investments in United States, net 57,653 77,622 93,449 18.964 28.453 25.931 19.141 27,065 35 Allocation of special drawing rights (I 0 0 0 0 0 0 0 36 Discrepancy -22,742 -59,641 -99.724 -20,027 -52.007 -1.146 1.618 -3,511 -10,018 3,528 6,217 1,474 -10,760 38 Before seasonal adjustment -22.742 -59,641 -99,724 -10,009 -55.535 -9.363 144 7.249 MEMO Changes in official assets 39 U.S. official reserve assets (increase, -) -9.742 6.668 -1,010 -730 -4.524 -444 -1,945 -2,026 40 Foreign official assets in United States, excluding line 25 (increase, +1 109,985 127,706 18,338 22,425 -26.735 12.383 -9.852 -45,956 41 Change in Organization ot Petroleum Exporting Countries official assets in United States (part of line 22) 4,239 14,911 10,822 3.0.11 -1,282 -968 -494 -12.013 1. Seasonal factors are not calculated for line* 12-16, 18-20, 22-34, and 38^10 4. As iated pri ly with military sales contracts and other transaction1; arranged wiih 2. Data are on an international accounts basis. The data differ from (he Census basis data, or through foreiign ofri<ial agencies. shown in table 3.11, for reasons of coverage and timing. Military exports arc excluded from 5. Consists of inve:.tments in U.S. corporate stocks and in debt securities of private merchandise trade data and are included in line 5. corporations and state nd local governments. 3. Reporting banks include all types of depository institutions as well as some brokers and SOURCE. U.S. Depaitnent 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 TRADE' Millions of dollars: monthly dala seasonally adjusted 1998 Hem 1996' 1997' 1998 June' July' Aug.' Sept.' Oct.1 Nov, Dec.11 I Goods and services, balance -108,574 -110,207 -168,587 -14,325 -15.028 -16,785 -14,481 -13,700 -15,257 -13,786 2 Merchandise -191,337 -197,955 -247,985 -20,642 -21.140 -22,846 -20,913 -20,279 -21,668 -20,328 i Services 82,76.3 87,748 79,398 6.317 6,112 6.061 6,432 6.579 6,411 6,542 4 Goods and services, exports 850,775 "37.59? 931.315 76,132 74,902 74,895 77.374 80,126 78,958 78,496 5 Merchandise 611,983 679.325 671,055 54.674 53,733 53,769 55.912 58,246 57,110 56.552 238,792 258.268 260.260 21,458 21,169 21,126 21.462 21.880 21.848 21,944 7 Goods and services, imports -959,349 -1,047 799 - 1 099.902 -90,457 -89,930 -91,680 -91,855 -9i.82b -94,215 -92,282 8 Merchandise -803,320 -877,279 -919,(140 -75,316 -74,873 -76,615 -76,825 -78.525 -78.778 -76,880 9 Services -156,029 -170,520 -18(1.862 -15,141 -15,057 -15,065 -15,030 -15.301 -15,437 -15,402 I. Dala show monthly values consistent with quarterly figures in ihe U.S. balance of SOURCE. FT900, U.S. Department of Commerce. Bureau of the Census and Bureau ol payments accounts. Economic Analysis. 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1998 1999 Asset 1995 1996 1997 June July Aug. Sept. Oct. Nov. Dec. Jan.1* 1 Total 85,832 75,090 69,954 71,161 72,264 73,544 75.66 79,183 77,683 81,755 80.675 2 Gold stock, including Exchange Stabilization Fund1 11,050 11,049 11.050 11,047 1 1,046 11,046 11,044 11,041 11,041 1 1,041 1 1 ,(«6 3 Special drawing rights2'"' 11.037 10.312 10.027 10.001 9,586 9,891 10,106 10,379 10.393 10,603 10,465 4 Reserve position in International Monetary Fund" 14,649 15.435 18.071 18.945 20.780 21,161 21,644 22,278 22.049 24,1 11 24,129 5 Foreign currencies 49,096 38.294 30.809 31.168 30,852 31,446 32,882 35,485 34.200 36,001 35,035 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 labile 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. I 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 Ihe currencies of member countries. Froin July 1974 through December 4. Valued at current market exchange rates. 1980. sixteen currencies were used: since January 1981, five currencies have been used. U.S. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1998 1999 Asset 1995 1996 1997 June July Aug. Sept. Oct. Nov. Dec. Jan.' 1 Deposits 386 167 457 200 161 161 347 154 211 167 233 ih'ld in tusloily 2 US, Treasury securities" 522.170 638.049 620,885 616,569 613,893 588,337 578.401 588,768 608,060 607,574 612,670 < tiamtarked gold1 11.702 11.197 10.763 10.617 10,586 10,510 10,457 10,403 10.355 10.343 10.343 1. Eidudes deposits and U.S. Treasury securities held lor international and regional 3. Held in foreign and international accounts and valued at $42.22 per tine troy ounce; not organizations. included in the gold stock of the United Slates. 2. Marketable U.S. Treasury bills, notes, and bonds and nonmarkelable U.S. Treasury securities, in each case measured at face (not market) value. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 International Statistics • April 1999 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1998 Item 1996 1997 June July Aug. Sept. Oct. Nov. Dec.p 1 Total1 758,624 778,596 781,205 775,372 760,864 735,121 747,243' 753,706' 759,061 By type 2 Liabilities reported by banks in the United States" 113,098 135,384 144,235 142,375 144,120 131,551 134,822' 125,265' 122,947 3 U.S. Treasury bills and certificates3 198,921 148,301 134,324 131,089 130,398 128,146 128,598 133,702 134,152 U.S. Treasury bonds and notes 4 Marketable 379,497 423,456 428,216 428,685 411,765 401,461 410,462 422,305 427,579 5,968 5,994 6,229 6,269 6,311 6,350 5,997 6,035 6,067 6 U.S. securities other than U.S. Treasury securities5 61,140 65,461 68,201 66,954 68,270 67,613 67,364 66,399 68,316 By area 257,915 263.221 264,718 270,355 266,600 258.234 270.630' 271,960' 266,558 8 Canada 21,295 18,749 19,396 19,963 16,387 16,170 17,216 19,457 19,287 9 Latin America and Caribbean 80,623 97.616 100,924 100,901 98,480 79,838 78,143' 77,433' 80,004 10 Asia 385,484 382.363 378 113 367,687 363,902 365,631 367.784' 371,578' 380,459 11 Africa 7,379 10,118 11,555 11,904 11,501 11,721 11,113 10,221 10,196 12 Other countries 5,926 6,527 6.497 4,560 3,992 3,525 2,355 3,055 2,555 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 US. government corporations and federally sponsored agencies, and 3. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official U.S. corporate stocks and bonds. institutions of foreign countries. SOURCE. Based on U.S. Department of the Treasury data and on data reported to the 4. Excludes notes issued to foreign official nonreserve agencies. Includes current value of department by banks {including Federal Reserve Banks) and securities dealers in the United zero-coupon Treasury bond issues to foreign governments as follows: Mexico, beginning States, and on the 1989 benchmark survey of foreign portfolio investment in the United March 1988, 20-year maturity issue and beginning March 1990, 30-year maturity issue; States. 3.16 LIABILITIES TO, AND CLAIMS ON, FOREIGNERS Reported by Banks in the United States1 Payable in Foreign Currencies Millions of dollars, end of period 1997 1998 Item 1994 1995 1996 Dec. Mar. June Sept. 1 Banks' liabilities 89,258 109,713 103,383 117,524 100,638 87,889 93,815 60,711 74,016 66,018 83,038 82,209 68,286 67,813 19,661 22,696 22,467 28,661 28,127 27,387 27,293 4 Other claims 41,050 51,320 43,551 54,377 54,082 40,899 40,520 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 States' Payable in U.S. dollars Millions oi dollars, end of period 1998 lleni 1996 1997 1998 June July Aug. Sept. Oct.' Nov. Dee.1' BY HOI.DI.R \ND TYPh Of LIABILITY 1 Total, all foreigners 1,162.148 1,283,787 1.344,175 1.288,032 1,306,155 1,341,295 1,350,292 1,371,998 1,346,154 1,344,175 2 Banks' own liabilities 758.998 883.740 884,504 884,734 896,972 928,182 917,008 911.258 S80.6I6 884,504 3 Demand deposits 27,034 32,104 29,275 36,246 30,928 33,038 33,547 32,071 32.104 29 275 4 Time deposits2 1X6.910 198,546 151.444 186.686 188,056 183,556 174,173 158.664 149.746 151.444 5 Ochei"' 143,510 168,1)1 1 140.022 183,402 192.536 190,542 165,205 153,269 143.341 140.022 6 Own foreign olliees' 401.544 485,079 56.1.76.1 478,400 485.452 521.046 544.083 567.254 555.425 56.1.763 7 Banks' custodial liabilities' 403.150 400,047 459.671 403,298 409,183 413,113 433,284 460,740 465.538 459 671 X U.S. Treasury bills anil ccrlilicnlcsb 236.874 193,239 18X393 169.225 164.274 162,235 160,598 168,764 IK2.9I7 183,393 9 Other negotiabkyind readily Iransterable instruments 72.011 93,641 139,615 112,598 117,433 123,378 142,169 151,2.19 142.399 139.615 10 Other 94.265 113.167 136,663 121,475 127.476 127,500 130,517 140.737 140.222 136.663 1 1 Nonmonelary inlenialional ;ind regional organizations^ 13.972 11.690 11,810 14.10,3 14,314 15,188 15,215 12.810 13.207 1 1,810 12 Banks' own liabilities " 13.355 1 1,486 10.827 13,441 12.188 13,684 I3.S62 1 1.644 12.267 10,827 13 Demand deposits 29 16 72 226 19 59 408 97 234 72 14 Time deposits' 5,784 5,466 5.878 6.784 6.354 6.252 5,763 5,418 5,802 5,878 15 Other 7.542 6.004 4,877 6.431 5.815 7.373 7,691 6,129 6,231 4,877 617 i()4 983 662 2 126 I 504 1 353 1 166 940 983 17 U..S. Treasury bills and cerlilicatcs" 352 69 636 338 349 490 435 .509 570 636 IS Other negotiable;and readily transferable instruments' 265 133 347 322 1.777 1,012 818 657 370 347 1" Other 0 i 0 •> 0 2 100 0 0 0 20 Olheial institutions'' 312,019 783 685 ^57 099 178 559 173 464 ^74 518 259 697 263.420 258.967 257.099 21 Banks' own liabilities 79,406 102,028 78.704 102.392 102.275 101,608 85,310 84,826 79.450 78.704 22 Demand deposits 2,314 2,786 2.582 3.560 3,456 3,607 3,325 2,744 2,786 23 Time deposits" 15.136 41.396 28,677 36,044 36.333 35.578 28,076 26,148 25.659 28,677 24 Other1 44.559 58.31X 47,241 63,766 62,382 62.574 53,627 55,353 51.047 47,241 2? Banks' custodial liabilities' 232.613 181.657 178,395 176.167 171,189 172,910 174,387 178,594 179,517 17X.W5 26 U.S. Treasury bills and certificates" 198.921 148.301 134.152 134,324 131,089 130.398 128.146 128.598 133.702 134.152 27 Other negotiable and readily transferable instruments 31.266 1.1.151 43.569 41.180 39.792 41.759 45,684 49.691 45.346 4.1.569 2S Other 426 205 674 663 308 753 557 305 469 674 •") Banks1" 694,835 8 16.007 884,810 809,091 824.652 852,890 876.463 898.909 885.634 884,810 W Banks' own liabilities 562.898 642.207 677,224 632,872 643,722 673.127 687.824 690.862 673.486 677,224 31 Unanibalcd foreign banks 161,354 157.128 113,461 154,472 158,270 152,081 143.741 123,608 118,061 113,461 32 Demand deposits 1 1,692 17,527 14,105 20,772 15.097 16,063 15.799 15,802 15,119 14,105 V Time deposits' 89,765 83.433 46,273 75,231 78.252 74,201 71.259 56.193 51,352 46,273 34 Other' 57.897 56,168 53,083 58.469 64,921 61,817 56,Mil 51.613 51,590 53.083 35 Own foreign olliees4 401,544 485,079 563,763 478.4IK) 485,452 521,046 544.083 567.254 555 475 563,763 36 Banks' custodial liabilities' 131,937 173,800 207,586 176,219 180,930 179,763 188,631 208.047 212,148 207,586 37 U.S. Treasury bills and certilicates" 23.106 3 1.915 35,466 25,337 22,929 20.696 21.563 27.556 35,213 35,466 38 Other negotiable and readily transferable instruments' 17.(127 35.393 44,574 38.122 19.203 40,180 44.S07 48,240 44.999 44,574 39 Other 9I.S04 106,492 127.546 1 12.760 118.798 118.887 122.269 132.251 131,936 127,546 40 Other foreigners 141.322 172.405 190.456 186.279 193,725 198.699 198,917 196,859 188.346 190.456 41 Banks' own liabilities 103.339 128,019 117,749 136.029- 138,787 139,763 130,012 123,926 115,413 117,749 42 Demand deposits 1 1,802 12,247 12,312 12.666 12.2.52 13,460 13,733 12,847 14,007 12,312 4^ Time deposits" 58 025 68 ^51 70,616 68.627 67,117 67,525 69,075 70,905 66,933 70,616 44 Other 33.512 47,521 34.821 54,736 59,418 58,778 47,204 40,174 34.473 34,821 45 Banks' custodial liabilities' 37,983 44,386 72.707 50.250 54.938 58,936 68,905 72,933 72,933 72.707 46 U.S. Treasury bills and eerlilieales'' 14.495 1 2,954 1.1.139 9,226 9,907 10,651 10.454 12.101 13.432 13.139 47 Olhei negotiable and readily transferable instruments' 21.453 24.964 51,125 32,974 36,661 40,427 50 860 52.651 51.684 51.125 4« Other 2.035 6,468 8.443 S.050 8,370 7,858 7,591 8,181 7,817 8.443 Mr.MO 49 Negotiable time certificates ol deposil in custody loi foreigners 14.571 16,083 26,969 21.229 22.847 25,867 27.391 29,933 28.793 26.969 1, Reporting banks include all lypes of depositor} institutions as well as some brokers and 6. Includes nonmarketublc certificates of indebtedness and Treasury hills issued to ollicial 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 m "Other negotia- 7. Principally bankers acceptances, commercial paper, and negotiable time certilieates o|' ble and readily transferable insirumenis." deposil. .V Includes borrowing under repurchase agreements. 8. Principally Ihc International Bank For Reconstruction and Development, the Inter- •4. For I'.S. banks, includes amounts owed to ovwi foreign branches and foreign subsidiar- American Development Bank, and the Asian Development Bank, Excludes "holdings of ies consolidated in quarterly Consolidated Reports of Condition tiled with bank regulatory dollars" of the lnlernational Monetary Fund. agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists 9. Foreign mural banks, foreign central governments, and the Bank for International principally o( amounts owed to the head otlice or parent foreign bank, and to foreign Settlements. branches, agencies, or wholly owned subsidiaries of the head ollice or parent foreign bank. 10. Excludes centra! banks, which are included in "'Oflkial institutions.1' \ Financial claims on residents of the United Stales, other than loni;-term securities, held by or through reporting banks for foreign customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • April 1999 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued 1998 Item 1996 1997 1998 June July Aug. Sept. Oct. Nov. Dec.!1 AREA 50 Total, all foreigners 1,162,148 1,283,787 1,344,175 1,288,032 1,306,155 1,341,295 1,350,292 l,371,998r 1.346,154' 1.344,175 51 Foreign countries 1,148,176 1,272,097 1,332,365 1,273,921 1,291,841 1,326,107 1,335,077 l,359,188r 1,332,947' 1,332,365 52 Europe 376,590 420,432 426.980 402,101 431.783 457,537 450,587 451.350' 449,567' 426,980 53 Austria 5,128 2,717 3.181 2,268 2,602 2,671 3,137 2,799 2,824' 3,181 54 Belgium and Luxembourg 24,084 41,007 42.819 35,454 33,845 35,086 33,934 39.91 1 42,014 42.819 55 Denmark 2,565 1,514 1.430 1.989 2,013 2.128 1,578 1.813 1,675 1,430 56 Finland 1,958 2,246 1,862 1,438 1.211 1,350 1,181 1,193 1,706 1,862 57 France 35,078 46,607 44,630 46,162 47,140 48.328 50,405 47,348 48,169' 44,630 58 Germany 24,660 23,737 21 357 25,470 23,730 28,751 25,811 22,024' 22,606' 21,357 59 Greece 1,835 1,552 2.066 2,429 2.784 2,941 2,544 2,901 2.444 2,066 60 Italy 10.946 11,378 7,104 11,509 11,114 10,625 9 183 7,124 6,378 7,104 61 Netherlands 11,110 7,385 10.760 6,845 7.097 9.239 8,066 7,251' 9,298 10,760 62 Norway 1,288 317 710 607 1,179 1,469 688 1,149 797 710 63 Portugal 3,562 2.262 3,235 2,334 2,823 2.424 2,292 2.377 2,400 3,235 64 Russia 7 621 7.968 2,442 4,654 6,398 2.718 i.085 1,735 2,698 2,442 65 Spain 17.707 18.989 15,775 11,649 12,079 14,283 20,485 26.569 27,017' 15,775 66 Sweden 1.623 1.628 3,027 3,148 2,198 1,769 3,285 3.257 3,857 3,027 67 Switzerland 44.538 39,023 50,654 38,986 44,676 39.362 48,393 47,332 50,167 50,654 68 Turkey 6.738 4.054 4.286 4,894 5,077 4.317 4,264 4,105 3,842 4,286 69 United Kingdom 153.420 181,904 181.540 176.703 196,859 219 197 204,915 202,536' 195.099' 181,540 70 Yugoslavia" 206 239 258 234 322 242 253 362 271 258 71 Other Europe and other former U.S.S.R.12 22.521 25,905 29.844 25,330 28.636 30.637 27.088 27.564 26.31)5 29,844 72 Canada 38,92(1 28.341 30,212 28.864 29.526 27.844 28,701 31,278 29,249' 30.212 73 Latin America and Caribbean 467 529 536 393 554,526 568.228 564,055 556.699 561,502 575,837' 545,251' 554.526 74 Argentina 13,877 20.199 19,012 18.502 21,010 21,655 18,384 17,706 18,892 19.012 75 Bahamas 88,895 112.217 118,050 116.435 115,309 113,543 124,249 128.893 1 15,598 118,050 76 Bermuda 5,527 6,911 6,841 7.769 7,216 7.332 7,920 7.247 7,241 6,841 77 Brazil 27,701 31,037 15,790 35,345 34,292 27.824 18,453 17.308 13,370' 15,790 78 British West Indies 251.465 276,418 302,011 295,321 290,009 291.098 298,697 310,058' 298.260' 302,011 79 Chile 2.915 4,072 5,008 4,356 4,987 4,726 5,725 5,598 4,778' 5,008 SO Colombia 3.256 3,652 4,615 4,805 4.023 4,102 4.475 4.888 4 124" 4,615 81 Cuba 21 66 62 63 63 62 62 57 63 62 82 Ecuador 1,767 2,078 1,572 1,616 1,772 1,608 1,540 1,679 1.510' 1,572 83 Guatemala 1.282 1,494 1,331 1,363 1,273 1,237 1.241 1.232 1.204' 1,331 84 Jamaica 628 450 539 522 519 550 541 578 524 539 85 Mexico 31,240 33,972 37,143 38,044 38,554 38,087 35.681 18 058 36.720' 37,14? 86 Netherlands Antilles 6.099 5,085 5.019 6,861 8,922 8,340 8.588 6,255' 6,009' 5,019 87 Panama 4,099 4,241 3,860 3.723 3.596 3.675 3.826 3,793 3.774' 3,860 88 Peru 834 893 840 925 984 900 843 799 814 840 89 Uruguay 1,890 2.582 2,445 1.982 2,097 2,091 2,276 2,223 2,199 2.445 90 Venezuela 17,363 21.601 19,887 20,442 19,492 20,125 19,180 19,6r>2 19,631' 19,887 91 Other 8.670 9.625 10,501 10,154 9,937 9,744 9,821 9,803 10,540 10,501 92 Asia 249,083 269.379 305,633 254,412 247.952 266.480 275.745 284,441' 293,584' 305.633 China 93 Mainland 30,438 18.252 13,040 21,558 18,919 18,506 18,523 15,814' 13,784' 13.040 94 Taiwan 15,995 11.840 12,708 11,619 11,333 11,290 12,080 12,802' 12,361' 12.70S 95 Hong Konc 18,789 17.722 20,820 19,720 15,826 18,349 16,627 16,508 16,739 20.820 96 India 3,930 4,567 5,258 4,821 4.678 6.437 5,144 5,337 5,089 5.258 97 Indonesia 2,298 3,554 8,288 3,848 3,938 5.651 5,470 5,671 6,247 8.288 98 Israel 6,051 6,281 7,749 6,095 5.969 5,296 5,984 4,781 8,106 7.749 99 Japan 117,316 143,401 168,162 118,669 123.167 131,376 142,767 156,340' 164,311 168.162 100 Korea (South) 5,949 13,060 12,454 13,269 12.713 12,491 12.971 12.505' 12,396' 12.454 101 Philippines 3,378 3,250 3,324 3,418 2.609 2,777 2.712 2,539 2,849 3.324 102 Thailand 10,912 6,501 7,360 7,148 6.780 7,869 6.664 7,134 6,788 7,360 103 Middle Eastern oil-exporting countries'3 16,285 14,959 15,123 13,829 13.902 14,532 16.627 14.718 16,370 15.123 104 Other 17,742 25,992 31,347 30,418 28.118 31,904 30,176 30.292 28.544 31,347 105 Africa 8,116 10.347 8,907 10,735 10,788 10,562 11,098 9,749 8.889 8,907 106 Et-vpt 2012 1 663 1 339 1,523 1,319 1,459 1.616 1.288 1,498 1,339 107 Morocco 112 M8 97 84 74 76 88 78 75 97 108 South Africa 458 2,158 1,517 2.642 2,446 2,428 2,658 2.358 1.659 1,517 109 Zaire 10 10 5 5 7 35 6 7 12 110 Oil-exporting countries14 2,626 3,060 3.088 3,552 3,893 3,684 3.727 3.291 3,017 3.088 11 1 Other 2,898 3,318 2.861 2.929 3.049 2.880 3,003 2.727 2.628 2,861 112 Other 7,938 7,205 6.107 9,587 7,737 6,985 7,444 6.5 3? 6,407 6,107 113 Australia 6,479 6.304 4.969 8,510 6,490 5,931 6,427 5.372 5,180 4,969 114 Other 1,459 901 1.138 1.077 1,247 1,054 1,017 1,161 1,227 1,138 115 Nonmonetary international and regional organizations 13,972 11,690 11.810 14,103 14,314 15,188 15,215 12,810' 13.207' 11,810 116 International15 12,099 10,517 9 998 12.548 11.220 12,825 12.782 10,519' 11,298' 9.998 117 Latin American regional'*1 1,339 424 794 694 750 721 803 1,008 598 794 118 Other regional17 534 749 1,018 861 2,344 1,642 1,630 1,283 i.311 1.018 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 Monciary Fund. included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia, 16. Principally the Inter-American Development Bank. 13. Comprises Bahrain. Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 17. Asian, African. Middle Eastern, and European regional organizations, except the Bank Emirates (Trucial States). for International Settlements, which is included in "Other Europe." 14. Comprises Algeria. Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A55 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 1998 Area or country 1996 1997 1998 June July Aug. Sept. Oct. Nov. Dec.P 1 Total, all foreigners 599,925 708,225 737,207 727,960 740,227 764.878 768,427 749.543' 756,099' 737,207 2 Foreign countries 597,321 705,762 733,589 725.045 735.817 760,488 763.105 744.153r 751,861' 733,589 3 Europe . . 165,76" 199.880 234.477 22.1.277 229,928 227.688 234,967 224,661 228.922' 234.477 4 Austria 1.662 1,354 1.043 1,259 1,892 1,856 1,849 2,358r 2,311 1.043 5 Belgium and Luxembourg 6.727 6.641 7,187 7,782 8.459 6,779 8,200 9,245r 7,409 7,187 6 Denmark 492 980 2.584 1.198 933 1,374 1.059 1.768 2,524 2,584 7 Finland 971 1,233 1.070 1.146 1,032 1,161 1.073 1,149 1,050' 1,070 8 France 15,246 16,239 15,251 15,474 14,421 17,314 17,077 16.307 18,881' 15,251 9 German} 8,472 12,676 15,922 15,751 11,327 12,029 15,375 15.121 17.997 15,922 10 Greece ' 568 402 575 164 450 530 373 415 510 575 1 1 Italv 6,457 6,230 7.283 6.435 6,345 8.617 6,510 7.153 6,544' 7.283 12 Netherlands 7.117 6.141 5.713 5.763 5,642 4.321 4,803 5.230 5,686 5,733 13 Norway BOS 555 827 680 553 1,110 640 662 385 827 14 Portugal 418 777 694 888 1.156 725 975 885 679 694 15 Russia 1.669 1.248 775 1,057 1.345 1.209 920 883 760 775 16 Spain 3.21 ! 2,942 5,736 5,560 6.424 5.225 7,980 6.051 5,234 5,736 17 Sweden 1J.VJ 1.854 4,223 3,069 4.553 4,456 4,319 4,508 5.087 4.223 18 Switzerland 19,798 28,846 46,942 34.970 49,359 49,258 55,798 43,337 45.858 46,942 19 Turkev 1,109 1,558 1,981 2,414 2,010 1,990 1,900 1,848 1.915 1,981 20 United Kingdom 85.234 103,143 106.713 109,755 104,397 99 174 97,436 98.746 97,072 106,713 21 Yugoslavia2 115 52 53 53 79 53 53 53 53 53 22 Other Kuiope and other former U.S.S.R.' 3,956 7,009 9.885 9,659 9,551 10.507 8,627 8.942 8,967 9,885 23 Canada 26,436 27.189 47.212 32.701 36,007 41.402 41,165 37.316 44,830' 47,212 24 Latin America and Caribbean 274,153 .143,730 343,496 165.814 159,277 379.383 373.237 168 194 368,212' 34.1.496 25 Argentina 7.400 8,924 9,518 8,518 8,421 8,724 8.777 9,087 9,2.25 9.518 26 Bahamas 71.871 89.379 97,906 77,595 78.770 77,875 86.867 88,923 91,171 97.906 27 Bermuda 4,129 8,782 4.90S 9.452 10.622 9,629 10.610 6,585 5,702 4,908 28 Brazil 17,259 21,696 16.222 24,552 24,187 23,530 19.071 17,644 17,801' 16,222 29 British West Indies 105,510 145,471 153.138 176,825 166,203 192,334 182,757 183.122 179,223' 153,138 30 Chile 5.136 7,913 8,312 8,497 8,434 8,307 8,345 8.549 8,824' 8,312 11 Colombia ... .... 6.247 6.945 6,493 7,102 6,914 6.905 6,813 6 764 6,639 6,493 32 Cuba 0 0 0 0 0 0 0 0 0 0 .13 Ecuador 1,031 1.311 1,399 1.410 1.649 1.518 1,458 1.444 1,351' 1,199 14 Guatemala 620 8S6 1,126 932 911 950 1.166 947 1.483 1.126 15 J-imaica 345 424 333 320 .135 318 105 330 ^99 333 36 Mexico IS.425 19,428 21,126 20,371 20.062 20,078 20,677 22,039 22.483 21,126 37 Netherlands Antilles 2\209 17.838 6,779 14,294 16,278 12,939 10,294 7,323 7.696 6,779 38 Panama 2,736 4,364 3,614 4,233 4,308 4,157 4,226 4.011 .1.864' 3.614 19 Peru 2,720 3,491 3.260 3,965 4 009 4,061 3.829 3,706 3,618' 3,260 40 Uruguay 5S9 629 1,126 959 1,154 1,055 955 958 1.040 1,126 41 Venezuela 1.702 2,129 3.103 2,495 2,436 2,649 2,638 2.689 2,788 3,103 42 Other 3.174 4,120 5.133 4.274 4,584 4.354 4,447 4.273 5.005 5,133 43 Asia 122,478 125,092 9K.656 94.825 100,187 102.382 104.61 A 104,781' 100.759' 98,656 China 44 Mainland 1,401 1.579 l.lll 1,989 1,679 2,703 1,380 2.275 2,488' 1,311 45 Taiwan 1,894 922 1,042 836 585 65! 1,011 1.079 957 1,042 46 Honiz Kong 12,802 13,991 9,069 12,870 11 045 13,821 10.548 8,244 8,238 9,069 47 India 1,946 2.200 1,468 1,972 1,822 1,878 1.82.1 1.582 1,533 1,468 48 Indonesia 1.762 2,651 1,951 2.098 2.010 2,031 2,108 2,044' 2,069' 1,951 49 Israel 633 768 1,166 954 1,116 898 941 1,504 916' 1.166 50 Japan 59.967 59,549 46,712 43.005 45.566 44,822 52,213 52.904 48,406 46.712 51 Korea (South) 18.901 18,162 8.003 11,027 12.863 11,508 9,823 9.733 8,947' 8,003 52 Philippines 1,697 1,689 1,471 1,541 1.244 1,259 1.280 1.I2S 1.619 1.471 5? Thailand 2.679 2,259 1,835 1.889 1,820 1.883 2,129 1.952 1.884 1,815 54 Middle Eastern oil-exporting countries4 10.424 10.790 16,269 8.448 11,207 12.136 12,681 13.531 15,079 16,269 55 Other 8.172 10,532 8,359 8.196 9,210 8,792 8.657 8,805 8.62.1 8,359 S6 Africa "• 776 3 530 1 P2 2 484 1.497 1 262 3012 2,785 2 61 1 1,122 57 Egypt 247 247 257 283 294 279 272 322 259 257 58 Morocco 524 511 372 430 471 426 390 405 390 372 59 South Africa 584 805 643 653 630 653 694 665 704 643 60 Zaire 0 0 0 0 0 0 0 0 0 0 61 Oil-exporling countries^ 420 1.212 936 308 1,331 1.046 787 533 454 916 62 Other 1.001 755 914 810 771 858 869 860 804 914 63 Other 5.709 6,341 6.626 5.944 6,921 6.371 6,1 10 6.216 6,527 6,626 64 ^uwalia 4,577 5.100 6.167 5.418 6,067 5.999 5.783 5.809 6.008 6.167 65 Othei 1,1.12 1.041 459 506 854 372 327 407 519 459 66 Nonmonelary international and regional organizations'* . . . 2.604 2,463 3,618 2.915 4.410 4,390 5,322 5.390 4.238 3,618 1. Reporting hank.s 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 IS)92, has excluded Bosnia, Croatia, and Slovenia. 5. Comprises Algeria, Gabon, Libya, and Nigeria. 3. Includes ihc Bank for International Settlements. Since December 1<J92. has included all 6. Excludes the Bank for International Settlements, which is included in "Other Europe." parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • April 1999 3.19 BANKS1 OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 199K Type ol claim 1996 1997 199S June July Aug. Sept. Oct.1 Nm. Dec1' 1 Total 743,919 852.852 880,836 926,478 2 Banks' L'laims 599,925 708,225 717.207 727,960 740,227 764.878 768.427 749,543 756.099 737.207 1 Foreign public borrowers 22.216 20.581 23.543 27,780 35,635 29.758 26.377 28.164 25.993 2.1.54.1 4 Own foreign oliices2 341.574 431,685 486.840 435,201 446,536 466,019 486.452 476.973 487.610 486.K40 5 Unafliliated foreign banks 113.682 109,230 105.560 107.832 101,956 106.034 108.972 109.140 117.919 105.566 6 Deposits 33.S26 10.995 28,454 22.843 23,283 24.593 30.426 26.713 14.149 28.454 7 Oilier 79.856 7S.235 77.112 84,989 78.673 81.441 78.546 82.427 8.1.770 77.1 12 8 All other foreigners 122.453 146.729 121.258 157.147 156.100 163.067 146.626 135.266 1 24.557 121.258 9 Claims of banks' domestic customers' .... 143.994 144.627 152.876 158,051 10 Deposits 77.657 71.110 86.008 89.602 11 Negotiable and readily transferable instruments4 51,207 53,967 52.171 5.1.512 12 Outstanding collections and other claims 15.130 17.550 14.697 14.917 MhMO 13 Customer liability on acceptances 10,388 9.624 6.599 6.068 14 Dollar deposits in banks abroad, reported by nonhanking business enterprises in the Uniled States5 39,661 33.816' 39.978 24.402' 11.927' 28.4.16' 2X082' U.265 12.888 39.978 1, For banks' claims, data arc monthly; tor claim1- of banks' domestic customers, data are principally of amounts due from the head oil ice or parent loreign bank, and Irom Inreign for quarter ending with month indicated. branches, agencies, or \vholl\ owned subsidiaries-, of the head oihee or parent loreign bank. Reporting hanks include all types of depository institution as well as some brokers and 3. Assets held by reporlim: banks in (he accounts of their domestic customers. dealers. 4. Principally negotiable lime ueiiilicates ol deposit, bankers acceptances, and commercial 2. For II.S banks, includes amounts due from own foreign branches and foreign subsidiar- paper. ies consolidated in quarterly Consolidated Reports nf Condition hied with bank regulatory 5. Includes demand and lime deposit1* and ncgoiiahlc and iiouneiiotiahle certitiuiles ol agencies. Foi agencies, hnmehev and majority-owned subsidiaries of foreign banks, consist's deposit denominated in U.S. dnllars Usual b> h.niks abroud. 3.20 BANKS" OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported hy Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 1997 1998 Malurity, bv borrower and area |s>94 1995 1996 Dec M.n June Sepl 1 Total '.... 202.282 224,932 258.106 276,550 285.570 292.747 281.085 liy hnrnwi-r 2 Maturity ol one year or less 170.41 ] I7S.X57 21 I.S59 205,781 214.779 211.347 208.392 3 Foreign public borrower*. . . . . 15,415 14 995 1 54 1 I 12.081 16,965 16/197 14.61 1 4 All other foreigners IM.97f> 163.862 196.448 193.700 197. KI4 194.150 191.779 31 87 1 46,075 46 ^47 70 769 70 791 SI 400 6 Foreign public borrowers 7.S38 7,522 6.790 8.499 i 1.265 10.647 1 o!s75 7 All other foreigners 24.033 38,553 39.457 62.270 59.526 70.713 61,818 fly area Matiuity of one year or less 8 Europe . . .. . ... 56.381 55,622 55.690 58.294 6*1.150 73.787 69,010 9 Canada 6,690 6,751 8.139 >).l> 1 7 9.297 8.766 8 951 10 Latin America and Caribbean 59.58.3 72.504 103.254 97.207 IOI.07O 99.61 1 99.650 1 1 Asia 40,567 40.296 38.078 Vf 964 28.75 1 21.570 22.110 !2 Africa 1.379 1,295 1,316 2.211 2.227 I.I 16 1.762 13 All oilier1 5.811 2.389 5.182 4.188 4.284 4.497 6.687 Maturity of more than one year 14 Europe 4.158 4,995 6.965 13.240 15.1 18 I.Vf06 15.181 15 Canada 3.505 2.751 2.645 2.525 2.765 2, 71 2.982 16 Latin America and Caribbean 15,717 27,681 24.943 42.049 .10.161 47. 69 19.1.14 17 Asia 5.323 7.941 9.392 10.215 10.786 1 2.89 12.122 18 Africa 1.581 1.421 1.361 1.236 1.254 | 59 1.170 19 All other' 1,385 1,286 941 1.484 1.505 1..06 1.904 I. Reporting hanks include all types of depository institutions as well Mime brokers and 2. Maturity is. time remaining until maturity. dealers v Includes nonmone!ai\ mlernaiional and regional orgai 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. Total.. 499.5 551.9 586.2 645.3 647.6 678.8 711.0 726.0 739.1 746.6 2 G-10 countries and Switzerland 191.2 206.0 220.0 228.3 231.4 250.0 247.8 242.8 249.0 275.0 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 19.1 194 17.4 16.6 19.7 17.9 20.2 15.4 15.5 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 11.8 11.5 15.2 16.0 14.4 20.2 19.3 15.5 19.7 19.5 7 Netherlands 3.6 17 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 11 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 18 Norway 2.0 3.2 3.0 8.0 5.3 4.7 4.6 3.6 4.0 3.4 19 PPlortugal . 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 1.2 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 28.0 23.1 23.2 20.0 25 OPEC2 24.1 22.1 19.2 19.7 21.8 22.3 22.9 26.0 25.7 25.3 26 Ecuador .5 .7 .9 1.1 1.1 .9 1.2 1.3 1.3 1.2 27 Venezuela 3.7 2.7 2.3 2.4 1.9 2.1 2.2 2.5 3.3 3.2 28 Indonesia 3.8 4.8 5.4 5.2 4.9 5.6 6.5 6.7 5.5 5.1 29 Middle East countries 15.3 13.3 10.2 10.7 13.2 12.5 11.8 14.4 14.3 15.5 30 African countries .9 .6 .4 .4 .7 1.2 1.1 1.2 1.4 .3 31 Non-OPEC developing countries 96.0 112.6 128.1 138.7 147.4 144.4 Latin America Argentina 11.2 12.9 15.0 14.3 14.3 164 17.1 18.4 19.3 20.2 Brazil 8.4 13.7 17.8 20.7 22.0 27.3 26.1 28.6 32.4 29.9 Chile 6.1 6.8 6.6 7.0 6.8 7.6 8.0 8.7 9.0 9.1 Colombia 2.6 2.9 3.1 4.1 3.7 3.3 3.4 1.4 3.3 3.6 Mexico 18.4 17.3 16.3 16.2 17.2 16.6 16.4 17.4 17.7 17.9 Peru .5 1.3 1.6 1.6 1.4 1.8 2.0 2.1 2.2 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 2.1 4.9 5.7 6.8 7.3 6.2 5.4 5.5 4.9 47 Other Asia 4.7 4.5 4.3 4.7 4.5 4.3 4.2 3.7 Africa 48 Egypt .3 4 7 1.1 .9 .9 1.0 1.5 49 Morocco.... .6 .7 .7 .6 .7 .7 .6 .6 .6 50 Zaire .0 .0 .0 .1 .0 .0 .0 .0 .0 .0 51 Other Africa1 .8 .9 1.0 .9 .9 .9 .9 .8 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 Panamas 1.3 1.4 1.7 2.0 2.0 2.6 2.1 3.1 3.2 3.3 61 Lebanon I .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 I .1 2 65 Miscellaneous and unallocated7 66.9 57.6 50.0 59.6 59.6 57.6 99.1 101.3 95.6 1. The banking offices covered by these data include U.S. offices and foreign branches of 2. Organization of Petroleum Exporting Countries, shown individually; other members of U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not covered OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria. Qatar, Saudi Arabia, and United include U.S. agencies and branches of foreign banks. Beginning March 1994. the data include Arab Emirates); and Bahrain and Oman (not formally members of OPEC). large foreign subsidiaries of U.S. banks. The data also include other types of US. 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 • April 1999 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1997 1998 Type of liability, and area or country 1994 1995 1996' June Sept. Dec. Mar. June Sept. 1 Total 54,309 46,448 61,782 56,445r 55,891 60,037' 58.040 51J70r 49,215 2 Payable in dollars 38.298 11.903 19.542 38,651 39,746 41.956' 42.25S 39,963' 38.146 ? Payable in foreign currencies Ift.O II 12.545 22.240 17.794' 16,145 18.081' 15.782 11,407' 10,869 4 Financial liabilities 32,954 24,241 33.049 28,207' 26,461 29.532' 28.050 22,322 19,331 5 Payable in dollars 18.818 12,903 11,911 11,442 1 1,487 1 3.043' 13,568 11,988 9,812 6 Payable in foreign currencies 14,136 11,338 21,136 16,765' 14,974 16.489' 14,482 10,334 9,519 7 Commercial liabilities 21,355 22,207 28,733 28,238 29,430 30.505 29,990 29,048' 29,884 8 Trade payablcs 10,005 11,013 12,720 11,040 10,885 10.904 10,107 9,537' 10.276 9 Advance receipts and other liabilities 11,350 11.194 16.013 17,198 18,545 19.601 19,883 19,511 19,608 10 Payable in dollars 19,480 21.000 27,629 27,209 28,259 28,913 28,690 27,975' 28,514 1 1 Payable in foreign currencies 1,875 1.207 1.104 1.029 1.171 1.592 1,300 1.073' 1,350 Rv tiicn or country Financial liabilities 12 Europe 21.703 15,622 23.179 18.474' 18.019 19,657' 20,307 15,468 12,905 13 Belgium and Luxembourg 495 369 632 238 89 186 127 75 150 14 France - - ... 1,727 999 1.091 1.280 1,114 1,684 1,795 1,699 1,457 15 Germany 1,961 1.974 1,834 1,765 1.730 2.018 2.578 2,441 2,167 16 Netherlands 552 466 556 466 507 494 472 484 417 17 .Switzerland 688 895 699 591 645 lib 345 189 179 18 United Kingdom 15.541 10.138 17.161 12.912' 12.165 12,737' 13,145 8,765 6,610 19 Canada 629 632 1.401 1.616 651 2.392 1,045 5.19 .389 20 Latin America and Caribbean 2,034 1,78.1 1,668 1.285 1,067 1.386 965 1,320 1,351 21 Bahamas 101 59 236 124 10 141 17 6 1 i? Bermuda 80 147 50 55 64 229 86 49 73 ">3 Bra7il 207 57 7S 97 52 143 91 76 154 24 British West Indies 998 866 1.030 775 669 604 517 845 834 25 Mexico 0 12 17 15 76 26 21 51 23 26 Venezuela 5 2 1 1 1 1 1 1 1 27 Asia 8,401 5,988 6,421 6.248 6,239 5.394 5,024 4,315 4,005 28 Japan 7,314 5.436 5,869 5.668 5,725 5.085 4,767 3,869 3,754 29 Middle Eastern oil-exporting countries' 35 27 25 39 23 12 21 0 0 30 Africa 135 150 38 29 11 60 33 29 31 31 Oil-exporting countries2 123 122 0 0 0 0 0 0 0 32 All other1 50 66 340 555 452 643 676 651 650 Commercial liabilities 33 Europe 6,771 7 700 9,767 8,683 9.343 10,228 9 951 9.924' 10,947 34 Belgium and Luxembourg 241 331 479 736 703 666 565 557 621 35 France 728 481 680 708 782 764 840 6ir 740 36 Germany 604 767 1,002 845 945 1,274 1,068 1.219' 1,408 37 Netherlands 722 500 766 288 452 439 443 485' 440 38 Switzerland 327 413 624 429 400 375 407 349' 507 39 United Kingdom 2,444 3.568 4,303 3.818 3.829 4,086 4,041 3.741' 4,286 40 Canada 1.037 1.040 1.090 1,136 1,150 1,175 1,347 1.206 1,504 41 Latin America and Caribbean 1.857 1.740 2,574 2,500 2,224 2,176 2,051 2.285' 1,840 42 Bahamas 19 1 63 33 38 16 27 14 48 43 Bermuda 345 205 297 397 ISO 203 174 209 168 44 Brazil 161 98 196 225 213 220 249 246 256 45 British West Indies 23 56 14 26 23 12 5 27 46 Mexico 574 416 665 594 562 565 520 557 511 47 Venezuela 276 221 328 304 322 261 219 196 230 48 Asia 10,741 10,421 13.422 13,875 14,628 14,966 14,672 13,611' 13,5.18 49 Japan 4.555 3,315 4,614 4,430 4,553 4,500 4,372 3,995' 3,779 50 Middle Eastern oil-exporting countries1 1,576 1,912 2,168 2,420 2,984 3,111 3,138 3.194 .1,582 51 Africa 428 619 1.040 941 929 874 83.1 921 810 52 Oil-exporting countries 256 254 532 423 504 408 376 354 372 51 Other 519 6X7 840 1.103 1,156 1.086 1.136 1.101 1,245 I, Comprises Bahrain, Iran. Iraq. Kuwait, Oman, Qatar. Saudi Arabia, and United Arab 2. Comprises Algeria. Gabon. Libya, and Nigeria Emirates (Trucial Stales). 3. Includes nontnoneuiry international und regional organization: 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 1998 Type ot claim, and area or country 1994 1995 1996' June Sept. Dec. Mar. June Sept. 1 Toral 57,888 52,509 65,897 68.264r 70,506r 68,128r 71,004 63,265r 68,039r 2 Payable in dollars 53.805 48,711 59,156 62,080' 64,144 62,173 65,359 57,664' 62,097' 3 Payable in foreign currencies 4.083 3.798 6.741 6,184 6,362' 5,955' 5.645 5.601' 5.942' By type 4 Financial claims 33.897 27,398 37,523 40,715' 41.805' 16,959' 40,301 32,355' 37,262 5 Deposils 1 S.507 15,133 21.624 24,106' 21,951' 22.909' 20,863 14,762 15,406 6 Payable in dollars 18.026 14.654 20.852 22,615' 22,392' 21,060' 19,155 13.084 13,374 7 Payable in foreign currencies 4SI 479 772 1,491 1,559 1,849 1.708 1,678 2,032 X Other financial claims 15,390 12,265 15,899 16,609' 17,854' 14,050' 19,438 17.593' 21,856 '>• Payable in dollars 14,306 10,976 12,374 13.352' 14,795' 11,806' 16.981 14,918' 19,867 10 Payable in foreign currencies 1,084 1,289 3.525 3.257 3,059' 2,244' 2,457 2,675 1,989 1 1 Commercial claims 23,991 25,111 28,374 27.549 28,701 31,169 30.703 30,910' 30,777' 12 Trade receivables 21,158 22.998 25.751 24.858 25,110 27,536 26.888 26,827' 26,393' 13 Advance payments and other claims 2,833 2.113 2.623 2,691 3,591 3.633 3.815 4,083 4,384 14 Payable in dollars 21,471 23,081 25,930 26,113 26.957 29,307 29.223 29,662' 28,856' 15 Payable in foreign currencies 2 518 2,030 2.444 1,436 1.744 1,862 1,480 1,248' 1,921' By area tir imtntiv Financial claims 16 Europe 7.936 7,609 11.085 12,904 15.608' 14.999' 14.187 14,105' 14,473 17 Belgium and Luxembourg 86 193 185 203 360 406 378 518 496 18 France ~. 800 803 694 6S0 1,111 1,015 902 810' 1,140 19 Germany 540 436 276 281 352 427 393 290 359 20 Netherlands 429 517 493 519 764 677 911 975 867 21 Swilzerland 523 498 474 447 448 434 401 403 409 22 United Kingdom 4,649 4,303 7,922 9,814 11.000' 10.337' 9.289 9,639 9,849 23 Canada 3,581 2,851 3.442 6,420' 4,279 3.313 4.688 3,020 4,090 24 Latin America and Caribbean 19,536 14,500 20,032 18,725 19,176 15.543 18,207 11,967 15.758 25 Bahamas 2.424 1,965 1,553 2.064 2 442 2.308' 1,316 1.306 2,105 26 Bermuda 27 81 140 188 190 108 66 48 63 27 Brazil 520 830 1,468 1.617 1.501 1.313 1,408 1,394 710 28 British West Indies 15,228 10.393 15,536 13.551 12,957 10,462' 13.551 7,349 10,960 29 Mexico 723 554 457 497 508 537 967 1.089 1.122 30 Venezuela 35 32 31 21 15 36 47 57 50 31 Asia 1.S71 1.579 2,221 1.934 2,015 2,133 2.174 2,376 2,121 32 Japan 953 871 1.035 766 999 823 791 886 928 33 Middle Easiern oil-exporting countries' 141 3 22 20 15 11 9 12 13 34 Africa 373 276 174 179 I7J 319 125 155 157 35 Oil-exporting cnunlrics2 0 5 14 15 16 15 16 15 16 16 All other' 600 583 569 553 553 652 720 732 663 Commercial claims 37 Europe 9.540 9.824 10.443 9,603 10.4H6 12,120 12,854 12,945' 13,092' 38 Belgium and Luxembourg 213 231 226 127 331 328 2.32 216' 219' 39 France 1.881 1,830 1.644 1.177 1,642 1,796 1.939 1,955' 2,098' 40 Germany l,0">7 1.070 1.337 1.229 1.395 1.614 1.670 1,757' 1.502' 41 Netherlands 311 452 562 613 571 597 534 492' 46 V 42 Swilzerland 557 520 642 189 381 554 476 418' 546' 43 United Kingdom 2,556 2.656 2,946 2,836 2.904 3,660 4.828 4,664' 4,681' 44 Canada 1.988 1,951 2,165 2.464 2,649 2,660 2,882 2.779 2.291' 45 Latin America and Caribbean 4,117 4.304 5.276 5,241 5,028 5.750 5.481 6,082' 5.773' 46 Ualiamas 9 10 35 29 27 13 12 39 47 Bermuda 234 272 275 197 128 244 2.18 359' 173' 48 Brazil . . 612 898 1.303 1,136 1,101 1.162 1,128 1,183 1,062 49 British West Indies 81 79 190 98 98 109 88 1 10 91 50 Mexico 1,241 991 1,128 1.140 1,219 1,392 1,302 1.462 1.356 51 Venezuela 148 285 157 451 418 576 441 585 566 52 Asia 6.982 7,312 8.376 8,460 8.576 8,713 7.618 7,367' 7,190' 53 Japan 2.655 1,870 2.003 2,079 2,048 1,976 1,713 1.757' 1,789' 54 Middle Eastern oil-exporting countries' 708 974 971 1,014 987 1,107 987 1.127 967 55 Africa ^ 454 654 746 618 764 680 613 657 740 56 Oil-exporting countries" 67 87 166 81 207 119 122 116 128 57 Other1 910 1,006 1,368 1,161 1.198 1,246 1.235 1,080 1,691 1. Comprises Bahrain, Iran, Iraq. Kuwaii, Oman, Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon, Libya, and Nigeria. Fmirates (Trueial States). 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • April 1999 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars Transaction, and area or counln 1997 Jan.— Dec. July Aug. Sept. U.S. corporate securities STOCKS 1 Foreign purchases . . 1,097,958 1,596,136 1,596,136 146,147 152,833 141,566 137,418 145,588 126,494 138,900 2 Foreign sates 1,028.361 1,542,003 1,542.003 142,591 150,308 147,891 142,831 118,996 134,256 139,722 3 Net purchases, or sales (-) 69.597 54,133 54,133 2,525 -10,473 2,757 7,498 4,644 1,844 4 Foreign countries 69,754 54,513 54,513 3,581 2,739 -10,430 2,754 7,515 4,642 1,843 5 Europe 62,688 72,338 72,338 7,227 6,983 2,182 -249 4,386 2,450 6 France 6,641 6,099 6,099 1,734 199 5,459 85 360 50 -614 7 Germany 9,059 10,609 10,609 1,020 1,503 988 1,281 68 372 -189 8 Netherlands 3,831 8,326 8,326 830 1.265 1,326 876 1,009 1,816 332 9 Switzerland 7,848 6,269 6,269 1,490 1,092 163 -307 -1,974 -420 -314 10 United Kingdom 22.478 24,336 24,336 695 1,154 -277 700 632 1,902 3,154 11 Canada -1,406 -4,764 -4,764 -1,600 -443 1,740 195 -507 -198 -977 12 Latin America and Caribbean 5,203 781 781 1,798 -614 -276 -11,766 2,058 3,691 3,088 13 Middle East1 383 -1,082 -1,082 286 -134 610 148 -177 -334 -219 14 Other Asia 2,072 -12,554 -12,554 -3,949 -2,905 -157 -678 1,823 -8 155 15 Japan 4,787 -1,407 -1,407 -540 -306 -4.112 519 597 822 141 16 Africa 472 624 624 204 -14 214 -98 -217 41 16 17 Other countries 342 -830 -830 -385 -134 159 23 -63 129 160 18 Nonmonetary international and regional organizations -380 -214 -43 -17 19 Foreign purchases 610.116 905,268 905,268 74.891 74,951 67,529 100,186 108,678' 81,941' 58,882 53.464 64,461 58,678 92,663 105.437' 60,480' 41,130 20 Foreign sales 475,958 727.855 727,855 21,427 10,490 8,851 7323 3,241' 21,461' 17,752 21 Net purchases, or sales (—) 134,158 177,413 177,413 21,328 10367 8,813 7,473 3,230' 22,431r 17,674 22 Foreign countries 133,595 177,756 177,756 71,631 127,943 127,943 12,630 8,650 5,813 12.323 12,062' 16,717' 9.110 23 Europe 3,300 3,390 3,390 667 451 233 184 701 235 -170 2245 GFrearnmcaeny 2,742 4.381 4,381 203 806 139 268 -135 435 217 26 Netherlands 3,576 3,490 3,490 369 -859 32 275 704 64 996 27 Switzerland 187 4,856 4,856 404 234 100 1.003 -50 251 -36 28 United Kingdom 54,134 97,694 97,694 9,283 5,665 3,924 9.760 10,182' 13,777' 6,874 29 Canada 6,264 6,077 6,077 607 640 439 443 292 558 184 30 Latin America and Caribbean 34,733 24,727 24.727 6,346 1,730 1,592 - 2.927 -11,135 2,293 2,686 31 Middle East' 2,155 4,994 4.994 162 171 -188 -58 2 835 2,472 32 Other Asia 16,996 12,679 12,679 1,253 -597 1,709 -1.847 1,185 1,904' 3.152 33 Japan 9,357 8,381 8,381 527 -511 -10 -713 1,624 1.194 2,238 34 Africa 1.005 190 190 101 -48 -17 -61 55 24 16 35 Other countries 811 1,146 1,146 229 21 -535 -400 769 100 54 36 Nonmonetary international and regional organizations 563 -343 38 -970 Foreign securities 37 Stocks, nel purchases, or sales ( —) -40.942 8,009 8,009 2,502 -3.537 5,557 6,107 8,046 -2,644' 262 38 Foreign purchases 756,015 940,506 940,506 88,610 82,247 74,376 89,496 90,407 70,245' 69,563 39 Foreign sales 796,957 932,497 932,497 86,108 85,784 68,819 83,389 82,361 72,889' 69,301 40 Bonds, net purchases, or sales (-) -48.171 -18,695 -18,695 -12,413 3,076 1,049 3,384 15,980 -918' -4,422 41 Foreign purchases 1.451,704 1,335,274 1,335,274 151,482 118.922 139,393 152,88) 102,202 55,573 56.805 42 Foreign sales 163,895 115,846 138.344 149,497 86,222 56,491' 61,227 1.499,875 1,353,969 1,353,969 43 Net purchases, or sales (->, of stocks and bonds -9,911 -461 6,606 9,491 24,026 -3,562r -4,160 -89,113 -10,686 -10,686 44 Foreign countries -9,885 -390 6,623 9,492 24,119 -3,556' -4,000 -88,921 -10357 -10,357 45 Europe -29,874 10,469 10,469 -7,273 2,281 1,202 6,007 10,792 2,243' 2,485 46 Canada -3,085 -1.163 -1,163 161 2,201 2,667 -1.118 946 562 —4,828 47 Latin America and Caribbean -25,258 -12,423 -12,423 -2,553 -4,838 -1,196 1,214 4,585 -3,907 25! 48 Asia 25,123 -3,326 -3,326 516 -59 4,227 3,550 6,699 -2,064' -1,489 49 Japan -10,001 -1,663 -1,663 -38 -316 1,741 2,239 6,134 -2,390 -1,882 50 Africa -3,293 -1,411 -1,411 -32 -269 -122 -163 4 -56 5 51 Other countries -2,288 -2,503 -2.503 -704 294 -155 1,093 -334 -424 52 Nonmonetary international and regional organizations -26 -71 -17 -93 -6 -160 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 A61 .V25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions' Million', of dollars; net purchases, or sales ( —) during period 1998 11>98 Area or countr\ 1997 1998 Jan.- June July Aug. Sept Oel Nciv. Dec.11 Dcc. 1 Total estimated 184,171 46,677 46,677 1,506 -4.454 -15.795 -5,2711 -2.I9.V 25.456r 10.541* 2 ["nrcign countries 181.688 44.208 44,208 1.810 -4.507 -15.795 -5.261 -2.855' 25.556' 9.426 3 httrope 144,921 21,586 21,586 229 -6.465 -2.823 -2.771 - 9.869' 75' 8 077 -1 Belgium and Luxembourg 3.427 3.805 3.805 -513 215 667 1 11 - 606 10 2.148 5 Germany 22.471 148 148 -1.181 82 - 1.799 894 1.171 07 -556 6 Netherlands 1.746 -5,533 -5.553 543 -675 -5.081 -579 1.541 -1. 56 898 7 Sweden ... -465 I.4K6 1 486 355 -•V) -152 -330 193 86 581 8 Su K/er!ai)d . .. . .. 6.02<8 5.240 5.241) -971 -827 - 680 363 2.811 31 175 9 Lniled Kingdom 98.253 12.120 12.120 - 1.543 -5.921 8.000 2.217 -11,168 \ 07 1.074 10 Othei huropc and funnel US S.R. 1.1.461 4.320 4.320 1.761 422 -5,778 -5,449 -I.8I31 1 .90' 1.757 1 1 Canada -81 1 572 572 83 -619 -2,088 -663 -1,188 V)94 614 12 Latin America and Caribbean -2.554 -3.735 -3.735 2.912 685 -5.940 -1.233 491 1.'61 -1.817 1 1 Venezuela 655 59 59 818 108 - 1.308 6 -35 27 I0K 14 Othci Latin America and Caribbean -549 9.450 9.450 1.722 2,185 1.914 2,982 -1.288 -5. 11 -165 15 Nclhcilamls Antilles ... . - 2.660 -13.244 -13.244 -1.628 -1.808 -8.546 -4.221 832 7.145 - 1 760 16 Asia 19.567 27.38.1 27.383 -1.152 1.326 .1.856 207 7.756 11.>32' 4.347 17 Japan 20,360 13.048 13.IMS • 2.442 774 299 128 1.23.1 7. 11 1,750 18 Afiica 1.524 751 751 145 22 62 SI 87 145 16 I1) Other 1.041 -2.349 -2.349 -241 588 - 1.150 468 850 649 189 481 i 4oo 104 Q - a 66 "* 00 1 I '1 21 International . . . 621 1.502 1.502 -MS Us 10 -288 64 s - 19 1.084 22 Latin American regional . 170 199 199 0 192 8 II -6 1 Mr-Mci 2} foreign countries .... 181.688 44.208 44.208 1.810 -4.507 -15.795 -5.26i -2.855' 25.556' 9.426 24 Olfieial institutions 43.959 4,123 4,123 -3,486 469 -16.920 -10.104 9.001 1 1.843 5.274 25 Other loreign 1 19.729 40.085 40,085 5,296 -4.976 1.125 5.041 -11.856' 13.711' 4.152 26 Middle hast ' 7.616 -16.554 -16.554 - 1.388 -2.578 -4.160 5.837 -276 233 -2.442 27 Africa' 2 » 2 0 0 1 0 0 0 0 I. OlHcial aiul private transacti in marketable US Treasury secuntic having ;m 2. Comprises Bahrain, Iran, Iraq. Kuwait. Oman. Qatar. Saudi Arabia ,ind United Arab ,m,,nal mah,m> ,,i more ihan on ur Data are based on monthly transact MIS reports. Hniirates ITITILIIII Suilcs). kxdmlcs nonmaikuiihk- US. IYLMM londs and notes held b\ official insiiinm s nrtbreiyii ^ CompnsL-s Algeria. Gabon. Lib\a. and Nigmii. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • April 1999 3.28 FOREIGN EXCHANGE RATES AND INDEXES OF THE FOREIGN EXCHANGE VALUE OF THE U.S. DOLLAR' Currency units per dollar except as noted 1998 1999 Item 1996 1997 1998 Sept. Ocl. Nov. Dec. Jan. Feb. Exchange Rates COUNTRY/CURRENCY UNIT 1 Australia/dollar2 78.28 74.37 62.91 58.89 61.79 63.49 61.82 63.20 63.99 10.589 12.206 12.379 11.955 11.524 11.840 11.746 n.a. n.a. 30.97 35.81 36.31 35.05 33.81 14.71 34.44 n.a. n.a. 1.0051 1.0779 1.1605 1.1805 1.1889 1.1932 1.2052 1.5120 1.9261 1.36*8 1.3849 1.4836 1.52)8 1.54S2 1.5404 1.5433 1.5194 1.4977 6 China, P.RVyuan 8.3389 8.3193 8.3008 8.3055 8.2778 8.2778 8.2780 8.2789 8.2755 7 Denmark/krone 5.8003 6.6092 6.7030 6.4717 6.2294 6.3960 6.3531 6.4194 6.6379 8 European Monetary Union/euro1 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 1.1591 1.1203 9 Finland/markka 4 5948 5.1956 5.3473 5.1734 4.9845 5.1163 5.0769 n.a. n.a. 5.1158 5.8393 5.8995 5.6969 5.4925 5.6422 5.5981 n.a. n.a. 11 Germany/deutsche mark 1.5049 1.7348 1.7597 1.6990 1.638) 1.6827 1.6698 n.a. n.a. 12 Greece/drachma 240.82 273.28 295.70 292.47 281.64 282.64 280.43 278.91 287.41 13 Hong Kong/dollar 7.7345 7.7431 7.7467 7.7480 7.7483 7.7432 7.7471 7.7486 7.7490 35.51 36.36 41.36 42.58 42 39 42.43 42.59 42 55 42.53 15 Ireland/pound2 159.95 151.63 142.48 147.24 152.21 147.77 148.76 n.a. n.a. 1,542.76 1,703.81 1,736.85 1,678.92 1,620.96 1,664.91 1,653.23 17 Japan/yen 108.78 121.06 130.99 134.48 121.05 120.29 117.07 113.29 116.67 18 Malaysia/ringgit 2.5154 2.8173 3.9254 3.8050 3.8000 3.8000 3.8014 3.8000 3.8000 19 Mexico/peso 7.600 7.918 9.152 10.219 10.159 9.969 9.907 10.128 10.006 20 Netherlands/guilder 1.6863 1.9525 1.9837 1.9169 1.8479 1.8969 1.8816 n.a. n.a. 21 New Zealand/dollar2 68.77 66.25 53.61 50.44 52.13 53.40 52.23 53.88 M 35 22 Norway/krone 6.4594 7.0857 7.5521 7.5564 7.4294 7.4562 7.6050 7.4532 7.7240 23 Portugal/escudo 154.28 175.44 180.25 174.19 168.01 172.52 171.19 n.a. n.a. 24 Singapore/dollar 1.4100 1.4857 1.6722 1.7226 1.6378 1.6378 1.6515 1.6791 1.7004 25 South Africa/rand 4.3011 4.6072 5.5417 6.0966 5.7991 5.6511 5.9030 5.9931 6.1146 26 South Korea/won 805.00 950.77 1,400.40 1.375.54 1,344.14 1.294.01 1,213.22 1.175.11 J.I 88.84 27 Spain/peseta 126.68 146.53 149.41 144.33 139.23 143.05 142.08 n.a. n.a. 55.289 59.026 65.006 66.260 66.345 67.578 68.117 68.630 69.070 29 Sweden/krona 6.7082 7.6446 7.9522 7.8816 7.8395 8.0140 8.0716 7.8188 7.9532 30 Switzerland/franc 1.2361 1.4514 1.4506 1.4000 1.3373 1.3852 1.3604 1.3856 1.4272 31 Taiwan/dollar.. 27.468 28.775 33.547 34.646 33.121 32.603 32.337 32.300 32.564 32 Thailand/baht 25.359 31.072 41.262 40.402 38.118 36.527 36.276 36.622 37.137 33 United Kingdom/pound 156.07 163.76 165.73 168.23 169.44 166.11 167.08 164.98 162.76 34 Venezuela/holivar 417.19 488.39 548.39 583.85 570.68 569.66 565.89 569.80 577.32 Indexes1 NOMINAL 35 G-10 (March 1973= 100)4 87.34 96.38 98.85 97.17 93.69 95.46 94.61 n.a. n.a. 36 Broad (January 1997= 100)5 97.43 104.47 116.25 118.85 115.46 115.34 114.56 114.68' 116.37 37 Major currencies (March I973 = 1OO)6 85.23 91.85 96.52 96.99 93.46 94.23 93.40 92.37' 93.76 38 Other important trading partners (January 1997= 100)7 98.25 104.67 125.70 131.38 129.02 127.31 126.80 128.98' 130.83 REAL 39 Broad (March 1973 = 1OO)5 85.95 90.56 98.43 100.1 1 97.10 96.67 95.89 95.86 96.89 40 Major currencies (March 1973= 100)' 85.83 93.20 98.33 99.04 95.47 96.21 95 44 94.61 96.09 41 Other important trading partners (March 1973= 100)7 92.52 93.62 105.83 109.02 106.62 104.45 103.59 104.71 105.18 1. Averages of certified noon buying rates in New York for cable transfers. Data in this table also appear in the Board's G.5 (405) monthly statistical release. For ordering address, see inside front cover. 2. Value in U.S. cenis. Series revised as of August 1978 (see Fed'eral Resen-e Bulletin, vol. 64 (August 1978) 3. As of January 1999, the euro is reported in place of the individual euro-area currencies. These currency rates can be derived from the euro rate by using the fixed conversion rates (in currencies per euro) as shown below: Euro equals neasure of the importance to U.S. exporters of that country's trade in third coun 13.7603 Austrian schillings 1936.27 Italian lire —T » » F r I . 1 J* . 1. . f • 1. . I . . . f . I ¥ T *"• III ' 40.3399 Belgian francs 40.3399 Luxembourg francs 5.94573 Finnish markkas 2.20371 Netherlands guilders 6.55957 French francs 200.482 Portuguese escudos index sum to one. 1.95583 German marks 166.386 Spanish pesetas 8. Weighted average of the foreign exchange value of the U.S. dollar against a subset of .787564 Irish pounds broad index currencies that do not circulate widely outride the country of issue. The weight for each currency is its broad index weight scaled so that the weights of the subset of 4. For more information on the indexes of the foreign exchange value of the dollar, see currencies in the index sum to one. Federal Reserve Bulletin, vol. 84 (October 1998), pp. 811-18. 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 March31, 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 March31, 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 June30, 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 Federal Reserve Bulletin • April 1999 Index to Statistical Tables References are to pages A3-A62 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Federal finance Assets and liabilities (Sec ulso Foreigners) Debt subject to statutory liniitauou. and types and ownership Commercial banks. 15-21 of gross debt. 27 Domestic finance companies. 32, 33 Receipts and outlays. 25. 26 Federal Reserve Banks, 10 Treasury linancing of surplus, or deficit. 25 Foreign-related institutions. 20 Treasury operating balance. 25 Automobiles Federal Financing Bank. 30 Consumer credit. 36 Federal funds. 23. 25 Production, 44. 45 Federal Home Loan Banks. 30 Federal Home Loan Mortgage Corporation. 30, 34. 35 BANKERS acceptances. 5. 10. 22, 23 Federal Housing Administration. 30. 34. 35 Bankers balances, 15-21. (See also Foreigners) Federal Land Banks, 35 Bonds (See also U.S. government securities) Federal National Mortgage Association, 30. 34, 35 New issues, 31 Federal Reserve Banks Rates. 23 Condition statement. 10 Business activity, nonfinancial, 42 Discount rates (See Interest rates) Business loans (See Commercial and industrial loans) U.S. government securities held. 5. 10, 11, 27 Federal Reserve credit. 5. 6. 10, 12 CAPACITY utilization. 43 Federal Reserve notes. 10 Capital accounts Federally sponsored credit agencies. 30 Commercial banks.. 1,.5,--.21 Finance companies Federal Reserve Banks. 10 Assets and liabilities. 32 Certificates of deposit. 23 Business credit. 33 Commercial and industrial loans Loans. 36 Commercial banks. 15-21 Paper, 22. 23 Weekly reporting banks, 17, 18 Float, 5 Commercial banks Flow of funds, 37-41 Assets and liabilities. 15-21 Foreign currency operations. 10 Commercial and industrial loans. 15-21 Foreign deposits in U.S. banks. 5 Consumer loans held, by type and terms, 36 Foreign exchange rates. 62 Real estate mortgages held, by holder and property, 35 Foreign-related institutions. 20 Time and savings deposits. 4 Foreign trade, 51 CoDmmmmeericial paper, 22, 23, 32 Foreigners C" ond"ittiiion statements (See Assets and liabilities) Claims on, 52. 55. 56. 57, 59 Construncrtliinonn. 4-P2 . 4466 Liabilities to. 51. 52. 53. 58. 60. 61 Consumer credit, 30 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 sjiecific types of debt or securities) Insurance companies. 27, 35 Demand deposits. 15-21 Interest rates Depository institutions Bonds, 23 Reserve requirements. 8 Consumer credit. 36 Reserves and related items, 4. 5. 6. 12 Federal Reserve Banks, 7 Deposits (See ulso .specific types) Money and capital markets, 23 Commercial hanks. 4. 15-21 Mortgages. 34 Federal Reserve Banks. 5, 10 Prime rate. 22 Interest rates, 14 International capital transactions of United States. 50-61 Discount rales at Reserve Banks and at foreign central banks and International organizations. 52, 53. 55, 58. 59 foreign countries {See Interest rates) Inventories, -18 Discounts and advances by Reserve Banks (See Loans) Investment companies, issues and assets. 32 Dividends, corporate. 32 Investments (See also specific types) Commercial banks, 4. 15-21 EMPLOYMENT, 42 Federal Reserve Banks, 10. 11 Financial institutions. 35 FARM mortgage loans. 35 Federal agency'obligations. 5. 9. 10. I 1. 28. 29 LABOR force, 42 Federal credit agencies, 30 Life insurance companies (See Insurance companies) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A65 Loans (See also specific types) Savings institutions, 35. 36, 37—41 Commercial banks, 15-21 Savings deposits (See Time and savings deposits) Federal Reserve Banks, 5, 6, 7, 10. 11 Securities (See also specific types) Financial institutions, 35 Federal and federally sponsored credit agencies. 30 Insured or guaranteed by United States, 34, 35 Foreign transactions, 60 New issues, 31 MANUFACTURING Prices, 24 Capacity utilization, 43 Special drawing rights, 5, 10, 50, 51 Production, 43, 45 State and local governments Margin requirements, 24 Holdings of U.S. government securities, 27 Member banks (See also Depository institutions) New security issues, 31 Reserve requirements, 8 Rates on securities, 23 Mining production, 45 Stock market, selected statistics, 24 Mobile homes shipped, 46 Stocks (See also Securities) Monetary and credit aggregates, 4, 12 New issues, 31 Money and capital market rates, 23 Prices, 24 Money stock measures and components, 4, 13 Student Loan Marketing Association, 30 Mortgages (See Real estate loans) Mutual funds, 13, 32 TAX receipts, federal, 26 Mutual savings banks (See Thrift institutions) Thrift institutions, 4. (See also Credit unions and Savings institutions) NATIONAL defense outlays, 26 Time and savings deposits, 4, 13, 15-21 National income, 48 Trade, foreign, 51 Treasury cash. Treasury currency, 5 OPEN market transactions, 9 Treasury deposits, 5, 10, 25 Treasury operating balance, 25 PERSONAL income. 49 Prices Consumer and producer, 42. 47 UNEMPLOYMENT, 42 Stock market, 24 U.S. government balances Prime rate, 22 Commercial bank holdings, 15-21 Producer prices, 42, 47 Treasury deposits at Reserve Banks, 5, 10, 25 Production, 42. 44 U.S. government securities Profits, corporate, 32 Bank holdings, 15-21,27 Dealer transactions, positions, and financing, 29 REAL estate loans Federal Reserve Bank holdings, 5, 10, 11. 27 Banks, 15-21,35 Foreign and international holdings and Terms, yields, and activity, 34 transactions. 10, 27, 61 Type of holder and property mortgaged, 35 Open market transactions, 9 Reserve requirements, 8 Outstanding, by type and holder, 27, 28 Reserves Rates, 23 Commercial banks. 15-21 U.S. international transactions, 50-62 Depository institutions. 4, 5. 6, 12 Utilities, production, 45 Federal Reserve Banks. 10 U.S. reserve assets, 51 VETERANS Administration, 34, 35 Residential mortgage loans, 34, 35 Retail credit and retail sales, 36, 42 WEEKLY reporting banks, 17, 18 Wholesale (producer) prices, 42, 47 SAVING Flow of funds, 37-41 National income accounts, 48 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 Federal Reserve Bui letin • April 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 DIVISION OF BANKING JOYCE K. ZICKLER, Assistant Director 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 RICHARD D. PORTER, Deputy Associate Director JAMES V. HOUPT, Deputy Associate Director VINCENT R. REINHART, Deputy Associate Director JACK P. JENNINGS, 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 DIVISION OF CONSUMER HOWARD A. AMER, Assistant Director 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 C. SCHNEIDER, JR., 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

A67 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 STEPHEN J. CLARK. Associate Director. Finance Function JOSEPH H. HAYES, JR., Assistant Director DARRELL R. PAULEY, Associate Director, Human Resources JEFFREY C. MARQUARDT, Assistant Director Function MARSHA REIDHILL, Assistant Director JEFF STEHM, Assistant Director SHEILA CLARK, EEO Programs Director OFFICE OF THE INSPECTOR GENERAL DIVISION OF SUPPORT SERVICES 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

A68 Federal Reserve Bulletin • April 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 JAMIE B. STEWART, JR. JACK GUYNN ROBERT T. PARRY STAFF DONALD L. KOHN, Secretary and Economist STEPHEN G. CECCHETTI, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary PETER HOOPER III, Associate Economist LYNN S. FOX, Assistant Secretary WILLIAM C. HUNTER, Associate Economist GARY P. GILLUM, Assistant Secretary RICHARD W. LANG, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel DAVID E. LINDSEY, Associate Economist THOMAS C. BAXTER, JR., Deputy General Counsel ARTHUR J. ROLNICK, Associate Economist MICHAEL J. PRELL, Economist HARVEY ROSENBLUM, Associate Economist KAREN H. JOHNSON, Economist LAWRENCE SLIFMAN, Associate Economist LEWIS S. ALEXANDER, Associate Economist DAVID J. STOCKTON, Associate Economist PETER R. FISHER, Manager, System Open Market Account FEDERAL ADVISORY COUNCIL ROBERT W. GILLESPIE, President KENNETH D. LEWIS,Vice President LAWRENCE K. FISH, First District NORMAN R. BOBINS, Seventh District DOUGLAS A. WARNER HI, 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

A69 CONSUMER ADVISORY COUNCIL YVONNE S. SPARKS STRAU [ HER. St. Louis, Missouri, Chairman DWIGHT GOLANN, Boston. Massachusetts. Vice Chairman LAUREN ANDERSON. New Orleans. Louisiana JOHN C. LAMB. Sacramento. California WAITER J. BOYER. Garland. Texas ANNE S. LI. Trenton, New Jersey WAYNE-KENT A. BRADSHAW, LOS Angeles, California MARTHA W. MILLER. Greensboro. North Carolina MALCOLM M. BUSH, Chicago, Illinois DANIEL W. MORTON. Columbus. Ohio MARY ELLEN DOMEIER. New Ulm. Minnesota CAROL J. PARRY. New York. New York JEREMY D. EISLER, Biloxi, Mississippi PHILIP PRICE, JR.. Philadelphia. Pennsylvania ROBERT F. ELLIOT, Prospect Heights, Illinois MARTA RAMOS. San Juan, Puerto Rico JOHN C. GAMBOA. San Francisco. California DAVID L. RAMP, St. Paul. Minnesota ROSE M. GARCIA. El Paso. Texas MARILYN ROSS, Omaha. Nebraska VINCENT J. GIBLIN. West Caldwell, New Jersey ROBERT G. SCHWEMM, Lexington, Kentucky KARLA S. IRVINE. Cincinnati, Ohio DAVID J. SHIRK, Eugene. Oregon WILLIE M. JONES, Boston, Massachusetts GAIL M. SMALL, Lame Deer, Montana JANET C. KOEMLER. Jacksonville. Florida GARY S. WASHINGTON. Chicago. Illinois GWENN S. KYZ.KR, Allen, Texas ROBERT L. WYNN, II. Madison, Wisconsin THRIFT INSTITUTIONS ADVISORY COUNCIL WILLIAM A. FITZGERALD, Omaha, Nebraska, President F. WEI LER MEYER. Falls Church. Virginia. Vice President GAROLD R. BASE. Piano. Texas BABETI'K E. HEIMBUCH. Santa Monica. California JAMES C. BLAINE. Raleigh, North Carolina THOMAS S. JOHNSON, New York, 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

A70 Federal Reserve Bulletin • April 1999 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, Rates for subscribers outside the United States are as follows MS-127, Board of Governors of the Federal Reserve System. and include additional air mail costs. Washington, DC 20551, or telephone (202) 452-3244, or FAX Federal Reserve Regulatory Service, $250.00 per year. (202) 728-5886. You may also use the publications order Each Handbook, $90.00 per year. form available on the Board's World Wide Web site FEDERAL RESERVE REGULATORY SERVICE FOR PERSONAL (http://www.federalreserve.gov). When a charge is indicated, pay- COMPUTERS. CD-ROM; updated monthly. ment should accompany request and be made payable to the Standalone PC. $300 per year. Board of Governors of the Federal Reserve System or may be Network, maximum 1 concurrent user. $300 per year. ordered via Mastercard, Visa, or American Express. Payment from Network, maximum 10 concurrent users. $750 per year. foreign residents should be drawn on a U.S. bank. Network, maximum 50 concurrent users. $2,000 per year. Network, maximum 100 concurrent users. $3,000 per year. Subscribers outside the United States should add $50 to cover BOOKS AND MISCELLANEOUS PUBLICATIONS additional airmail costs. THE FEDERAL RESERVE SYSTEM —PURPOSES AND FUNCTIONS. THE FEDERAL RESERVE ACT AND OTHER STATUTORY PROVISIONS 1994. 157 pp. AFFECTING THE FEDERAL RESERVE SYSTEM, as amended ANNUAL REPORT, 1997. through October 1998. 723 pp. $20.00 each. ANNUAL REPORT: BUDGET REVIEW, 1998-99. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or $2.50 COUNTRY MODEL, May 1984. 590 pp. $14.50 each. each in the United States, its possessions. Canada, and INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. Mexico. Elsewhere, $35.00 per year or $3.00 each. 440 pp. $9.00 each. ANNUAL STATISTICAL DIGEST: period covered, release date, num- FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. ber of pages, and price. December 1986. 264 pp. $10.00 each. 1981 October 1982 239 pp. $ 6.50 FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- 1982 December 1983 266 pp. $ 7.50 SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1983 October 1984 264 pp. $11.50 RISK MEASUREMENT AND SYSTEMIC RISK: PROCEEDINGS OF A 1984 October 1985 254 pp. $12.50 JOINT CENTRAL BANK RESEARCH CONFERENCE. 1996. 1985 October 1986 231pp. $15.00 578 pp. $25.00 each. 1986 November 1987 288 pp. $15.00 1987 October 1988 272 pp. $15.00 1988 November 1989 256 pp. $25.00 EDUCATION PAMPHLETS 1980-89 March 1991 712 pp. $25.00 Short pamphlets suitable for classroom use. Multiple copies are 1990 November 1991 185 pp. $25.00 available without charge. 1991 November 1992 215 pp. $25.00 1992 December 1993 215 pp. $25.00 1993 December 1994 281 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages 1994 December 1995 190 pp. $25.00 Consumer Handbook to Credit Protection Laws 1990-95 November 1996 404 pp. $25.00 A Guide to Business Credit for Women, Minorities, and Small Businesses Series on the Structure of the Federal Reserve System SELECTED INTEREST AND EXCHANGE RATES —WEEKLY SERIES OF The Board of Governors of the Federal Reserve System CHARTS. Weekly. $30.00 per year or $.70 each in the United The Federal Open Market Committee States, its possessions, Canada, and Mexico. Elsewhere, Federal Reserve Bank Board of Directors $35.00 per year or $.80 each. Federal Reserve Banks REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL A Consumer's Guide to Mortgage Lock-Ins RESERVE SYSTEM. A Consumer's Guide to Mortgage Settlement Costs ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— A Consumer's Guide to Mortgage. Refinancings Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Home Mortgages: Understanding the Process and Your Right Vol. II (Irregular Transactions). 1969. 116 pp. Each volume to Fair Lending $5.00. How to File a Consumer Complaint GUIDE TO THE FLOW OF FUNDS ACCOUNTS. 672 pp. $8.50 each. Making Sense of Savings FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated SHOP: The Card You Pick Can Save You Money monthly. (Requests must be prepaid.) Welcome to the Federal Reserve Consumer and Community Affairs Handbook. $75.00 per year. When Your Home is on the Line: What You Should Know Monetary Policy and Reserve Requirements Handbook. $75.00 About Home Equity Lines of Credit per year. Keys to Vehicle Leasing Securities Credit Transactions Handbook. $75.00 per year. Looking for the Best Mortgage The Payment System Handbook. $75.00 per year. Federal Reserve Regulatory Service. Four vols. (Contains all four Handbooks plus substantial additional material.) $200.00 per year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 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 arc 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

A72 Federal Reserve Bulletin • April 1999 Maps of the Federal Reserve System 1 9 2 UOSION VlfNMiM'OI.IS • • 7 12 • , • "1 • N i vv YORK CHIIAIIO (.LIATI AND Fill! \DI LPHIA 10 4 • SAN FRW LSCO KANSAS Cirv P •• • • Ku'HMOND Sr. 1OUIS 5 8 6 • 11 • All ASIA DALLAS ALASKA HAWAII LEGEND Both pages Facing page • Federal Reserve Bank city • Federal Reserve Branch city E3 Board of Governors of the Federal — Branch boundary Reserve System. Washington, D.C. NOTE The Federal Reserve officially identifies Districts by num- of Puerto Rico and the U.S. Virgin Islands; the San Franber and Reserve Bank city (shown on both pages) and by cisco Bank serves American Samoa, Guam, and the Comletter (shown on the facing page). monwealth of the Northern Mariana Islands. The Board of In the 12th District, the Seattle Branch serves Alaska, Governors revised the branch boundaries of the System and the San Francisco Bank serves Hawaii. most recently in February 1996. The System serves commonwealths and territories as follows: the New York Bank serves the Commonwealth Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 1 A 2-B 3-C 4-D 5-E i n Pittsburgh Baltimore MD vr NH 1 Cincinnati MA • NY "It* CT BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H "ill Birmingham Wl B, ) I )otroil • J L«»isville Mm MO T~ Jacksonville ^ • Bf Memphis , ifiir *" IL New Orleans Miami ATLANTA CHICAGO ST. LOUIS 9-1 MT Ml • Helena SD MINNEAPOLIS 10-J 12-L M • ii Olllail.i* M-l S.M KANSAS CITY U-K Salt Lake Cpity NM I' Pa-..) •Los Angeles S.ni Antonio AZ DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Federal Reserve Bulletin • April 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. Cerino' 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. Tignanelli' 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. Hawkins' Miami 33152 Mark T. Sodders James T. Curry HI Nashville 37203 N. Whitney Johns Melvyn K. Purcel!' New Orleans 70161 R. Glenn Pumpelly Robert J. Musso1 CHICAGO* 60690 Lester H. McKeever, Jr. Michael H. Moskow Arthur C. Martinez William C. Conrad Detroit 48231 Florine Mark David R. Allardice' ST. LOUIS 63166 Susan S. Elliott William Poole Charles W. Mueller W. LeGrande Rives Little Rock 72203 Diana T. Hueter Robert A. Hopkins Louisville 40232 Roger Reynolds Thomas A. Boone Memphis 38101 Mike P. Sturdivant, Jr. 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 Tenence 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 Patricia Z. Holland-Branch Sammie C. Clay Houston 77252 Edward O. Gaylord Robert Smith, III' San Antonio 78295 Bartell Zachry James L. Stull' SAN FRANCISCO 94120 Gary G. Michael Robert T. Parry Nelson C. Rising John F. Moore Los Angeles 90051 Lonnie Kane MarkL. Mullinix1 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